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| Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
|---|---|---|---|---|---|
| Belvoir Group Plc | LSE:BLV | London | Ordinary Share | GB00B4QY1P51 | ORD 1P |
| Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
|---|---|---|---|---|---|---|---|---|---|---|
| 0.00 | 0.00% | 279.00 | 0.00 | 01:00:00 |
| Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
|---|---|---|---|---|---|
| 0 | 0 | N/A | 0 |
From Apr 2019 to Apr 2024
TIDMBLV
RNS Number : 9572K
Belvoir Group PLC
03 September 2019
3 September 2019
BELVOIR!
BELVOIR GROUP PLC
(the "Company", "Group" or "Belvoir")
Interim Results for the six months ended 30 June 2019
Strong trading and growth continues
Belvoir Group PLC (AIM: BLV), the UK's largest property franchise, is pleased to announce interim results for the six months ended 30 June 2019.
Financial Highlights
-- 48% increase in Group revenue to GBP9,047,000 (H1 2018: GBP6,123,000) -- 5% increase in Management Service Fees (MSF) to GBP4,201,000 (H1 2018: GBP4,015,000)
-- Financial Services division revenue up significantly to GBP3,969,000 (H1 2018: GBP1,311,000) benefitting from November 2018 acquisition of MAB (Gloucester) Limited ("MAB Glos")
-- 18% increase in gross profit to GBP6,198,000 (H1 2018: GBP5,242,000) -- 23% increase in adjusted profit before tax to GBP2,999,000 (H1 2018: GBP2,429,000)
-- MAB Glos and the underlying business each contributed around 50% of the increased gross profit and adjusted profit before tax
-- Adjusted earnings per share up by 21% to 6.9p (H1 2018: 5.7p) and basic earnings per share of 6.1p (2018: 6.9p - included exceptional GBP0.8m credit to profit)
-- Interim dividend is maintained at 3.4p with interim dividend cover at 2.0x
Operational Highlights
-- 300 (2018: 300) property franchise offices having opened in four new territories and merged four into adjacent offices
-- Net increase of 100 financial services advisers bringing total to 136 (H1 2018: 36) of which 87 were acquired with MAB Glos
-- 16 franchisee assisted acquisitions completed in the year to date comprising GBP4,194,000 of acquired franchisee turnover
-- Gross profit split of 66% lettings: 15% sales: 19% financial services (H1 2018: 74%:17%:9%) reflects continued lettings bias and growing investment in financial services
-- Number of managed properties increased 6% to 64,650 (H1 2018: 61,100)
Dorian Gonsalves, Chief Executive Officer of Belvoir Group, commenting on the results, said:
"I am delighted to report another half year of further strategic and trading progress for the Group, with our diversification into financial services building on the growth of the underlying business. Trading across lettings, sales and financial services continues to outperform their respective markets and deliver strong results for the Group.
"The further take-up of property sales, financial services and franchisee-led acquisitions demonstrates the entrepreneurial spirit of our franchisees in the face of even more challenging market conditions.
"I am pleased to further report that Belvoir has achieved a promising start to the second half, and as such the Company is on track to meet management expectations for the full year."
For further details:
Belvoir Group PLC 01476 584900 Dorian Gonsalves, Chief Executive Officer investorrelations@belvoirgroup.com Louise George, Chief Financial Officer finnCap 0207 894 7000 Julian Blunt, Kate Bannatyne & Teddy www.finncap.com Whiley (Corporate Finance) Tim Redfern (ECM) Buchanan Charles Ryland, Victoria Hayns, Tilly Abraham 0207 466 5000
Belvoir will host an analyst meeting today at 10.30am at the offices of Buchanan, 107 Cheapside, EC2V 6DN.
About Belvoir Group PLC
Founded in 1995 and listed on AIM in 2012 (BLV.L), Belvoir operates a nationwide property franchise group with 372 offices across four brands specialising in residential lettings, property management, residential sales and property-related financial services. With its Central Office in Grantham, Lincolnshire, the Group manages 64,650 properties and reported record revenues of GBP13.7m in 2018 making Belvoir the largest property franchise group in the UK.
For further information, please visit: www.belvoirgroup.com
Chief Executive's Report
It gives me great pleasure to report on the Group's interim results for the six months ended 30 June 2019.
Performance
Over the first six months of the year the Group has continued to outperform the three markets in which it operates; lettings, property sales and financial services, reporting strong growth from both the underlying business and from our 2018 investment in financial services.
During a period when the sector is witnessing offices closures among both small independent and larger networks, Belvoir has maintained its presence on the high street with 300 (H1 2018: 300) franchise offices across the UK. The Group opened in four new locations, each off the back of an Assisted Acquisition for an existing franchise owner, and six offices have been resold. Meanwhile, four franchise owners have merged one of their offices into an adjacent office, none of which have resulted in a reduction in the lettings book. The Group continues to attract new franchisees with three having joined to acquire an existing office from a retiring franchisee. Our focus on supporting franchisees and their business development means that our franchisees are not just surviving, but thriving with the average revenue per office up 6% to GBP133,000 (H1 2018: GBP125,000).
Lettings
Our core recurring revenue stream, lettings MSF, was up 4% on H1 2018 compared with a rental index of 1.3%(1) . This was mainly the result of our entrepreneurial franchisees acquiring a local competitor under our successful Assisted Acquisitions programme. Belvoir now manages a nationwide portfolio of 64,650 (H1 2018: 61,100) rented properties, providing a reliable and recurring income for both our franchisees and the Group. This further strengthens Belvoir's position as managing the second largest lettings portfolio within the UK.
Property sales
The Belvoir Group continued to deliver growth from property sales with MSF up 7% against house price inflation of 0.9%(2) and property transactions down by 2.2%(3) in the first six months of 2019 compared with the same period last year. Greater emphasis on estate agency has seen our lettings-biased networks, Belvoir and Northwood, boost their revenue from estate agency by 17% having embraced sales as an additional revenue stream. We continue to see sales as a real growth opportunity for our network.
As a result of increased revenue from both lettings and sales, our overall MSF growth was 5%. The lettings to sales revenue ratio from our 300 offices remained unchanged at 81:19 as the growth in estate agency within the Northwood and Belvoir networks was matched by our increased lettings book under the Assisted Acquisitions programme.
Financial Services
Financial services, a real differentiator for Belvoir, contributed 19% of gross profit following the 2017 acquisition of Brook Financial Services ("Brook") and the November 2018 acquisition of MAB Glos. Brook has continued its strong growth path increasing its income by 21% in H1, having grown by 20% in 2018. MAB Glos has also started well contributing approximately 50% of increased Group profitability in H1. Our number of advisers is up 11% since the start of the year, and we now have a total of 136 advisers, compared with just 13 at the end of 2016. Our growth strategy for financial services is two-fold; firstly through extending the number of advisers working with independent lead sources and secondly from pairing advisers with our group franchise offices. We now have 66 group offices introducing leads to our financial services adviser network and are working to achieve further penetration. Ongoing recruitment of advisers into new territories is critical to our long-term objective of providing each of our offices access to a specialist mortgage adviser either by phone or within their office.
Sector
The most significant change for the sector has been the introduction of a ban on tenant fees on 1 June. As a Group, Belvoir has taken proactive measures to enable our franchisees to mitigate the impact of the tenant fee ban by increasing onsite support visits fourfold, delivering growth workshops, providing increased training and introducing new revenue streams. As a result, our assessment of the impact has been borne out by trading since 1 June.
The Government continues to announce initiatives aimed at professionalising the sector. The regulation of property agents (ROPA) report was published on 18 July 2019 which sets out seven initiatives including licensing of agents, mandatory qualifications and new codes of conduct. We welcome all efforts to improve standards across the sector, as Belvoir has provided its franchisees with in-depth training and has self-regulated for many years. Such increased regulation is likely to drive further consolidation and we believe that our well-trained and well-supported franchisees are best placed to respond to the impact of these changes.
Technology
In recognition of the productivity gains that technology brings to the traditional estate agency model, the Group has committed to a new software platform that will enable our franchisees to benefit from productivity tools and will improve the customer journey. We are ten months through a two year programme to roll this system out to all our franchise offices. Our appointment of a Head of Digital as of April this year reinforced our ongoing commitment to improving technology across the Group.
Board changes
I would like to take this opportunity to thank Mike Goddard, Belvoir's founder and previous Chairman, who stepped down from the Board in May, for his inspirational and entrepreneurial leadership of the Belvoir Group over the past 24 years; and to welcome Michael Stoop, who joined the Board in March 2018 and has 40 years' experience of the property franchise sector, into his new role as Non-Executive Chairman.
Outlook
Having reported significant growth in the first half of 2019, underpinned by clear strategic progress for the Group, I am pleased to report further that, despite the tough market conditions, Belvoir has achieved a promising start to the second half of the year, and is trading in line with management expectations for the full year.
Dorian Gonsalves
Chief Executive Officer
(1) https://www.ons.gov.uk/economy/inflationandpriceindices/bulletins/indexofprivatehousingrentalprices/july2019
(2) http://landregistry.data.gov.uk/app/ukhpi#targetText=Current%20index,compared%20to%20the%20previous%20year.
(3) https://www.gov.uk/government/statistics/monthly-property-transactions-completed-in-the-uk-with-value-40000-or-above
Financial Review
Revenue
The first six months of 2019 saw strong performance across the Belvoir Group with revenue up 48% to GBP9,047,000 (H1 2018: GBP6,123,000), an increment of GBP2,924,000 of which GBP2,342,000 reflects the November 2018 acquisition of MAB Glos, and the remaining GBP582,000 represents a growth of 10% in the underlying business.
Within our property franchise division, MSF increased by 5% to GBP4,201,000 (H1 2018: GBP4,015,000) with the lettings element growing by 4%. The introduction of the tenant fee ban on 1 June 2019 reduced organic growth in the period to around 0.5% with the balance arising from franchisee-led acquisitions under the Belvoir Assisted Acquisitions programme.
In the year to date the Group completed on 16 Assisted Acquisitions with a total deal value of GBP3,942,000 (H1 2018: GBP5,492,000) of which GBP663,000 (H1 2018: GBP437,000) was funded by a Central Office loan. Based on their historic results, these acquisitions added GBP4,194,000 (H1 2018: 5,113,000) to our franchisee network revenue, brought in 2,432 additional managed properties and increased annualised recurring MSF of GBP300,000 with a contribution of GBP200,000 to MSF expected in 2019.
Meanwhile, MSF from property sales increased by 7% which resulted mainly from our focus on sales as an additional income stream to help our franchisees combat the impact of the tenant fee ban.
Revenue from corporate-owned offices was up 26% to GBP600,000 (H1 2018: GBP475,000) having acquired two local lettings agencies to bolt onto our Newton Fallowell Grantham corporate-owned office; one in September 2018 and the other in May 2019.
Franchise fees and other income, including insurance, conveyancing and other commissions, and fees for other services to franchisees, contributed GBP277,000 (H1 2018: GBP322,000).
Financial services increased revenue by GBP2,658,000 to GBP3,969,000 (H1 2018: GBP1,311,000). The further investment in financial services, through the acquisition of MAB Glos, added GBP2,342,000 whilst revenue from our existing financial services business, Brook, was up 21%, adding a further GBP316,000.
Gross profit
Gross profit increased by 18%, to GBP6,198,000 (2018: 5,242,000) with an almost equal additional contribution from each of the underlying business and MAB Glos, adding GBP482,000 and GBP474,000 respectively.
As a result of the significant element of distribution from the financial services income to our advisers, gross profit now represents the key metric in determining contribution from the different elements of the business. Gross profit performance by our property franchise division was up 6% to GBP5,078,000 (H1 2018: GBP4,805,000) and our financial services division was up 156% to GBP1,120,000 (H1 2018: GBP436,000). In addition to the 474,000 contribution from MAB Glos, the underlying financial services business delivered GBP646,000 (2018: GBP436,000) in gross profit representing impressive growth of 48%. Financial services now represents 18% of gross profit and is a key part of the Group's strategy to diversify into property-related services that support franchisee growth.
Administrative expenses
Ongoing administrative expenses increased to GBP3,437,000 (H1 2018: GBP3,159,000), an increase of GBP278,000 of which GBP170,000 related to operating MAB Glos and GBP58,000 arose from the increase in staffing and overheads associated with the two small lettings books acquired by Newton Fallowell Grantham. Otherwise, overheads were broadly consistent with the prior period.
Exceptional items
There were no exceptional items in the period under review compared to a net credit of GBP745,000 in the first half of 2018 relating to the final settlement of the Northwood contingent consideration being less than the provision for contingent consideration assessed at completion.
Profit before taxation
Profit before taxation for the period was GBP2,695,000 (H1 2018: GBP2,869,000). Having adjusting for the exceptional credit last year, share-based payments and amortisation of acquired intangibles, adjusted profit before taxation was up 23% to GBP2,999,000 (2018: GBP2,429,000).
Taxation
The effective rate of corporation tax for the period was 21% (H1 2018: 15.5%), with the low effective rate last year reflecting the exceptional credit arising from the reduction in contingent consideration.
Profit after taxation
Profit after taxation for the period was GBP2,121,000 (H1 2018: GBP2,425,000) with adjusted profit after taxation up 22% to GBP2,425,000 (H1 2018: GBP1,985,000).
Earnings per share
Basic earnings per share was 6.1p (H1 2018: 6.9p) based on an average number of shares in issue in the period of 34,938,606 (H1 2018: 34,938,606). Diluted basic earnings per share was 5.7p (H1 2018: 6.5p) based on an average number of shares in issue in the period of 37,078,679 (H1 2018: 37,255,046). As adjusted for the exceptional credit last year, share-based payments and the amortisation of acquired intangibles, the adjusted diluted earnings per share was 6.5p (H1 2018: 5.3p). See note 5 to the interim statements for detailed breakdown of adjustments to profit and EPS calculations.
Dividend
The Board is proposing that the interim dividend for 2019 be maintained at 3.4p per share. The Group aims to offer a reliable and growing income stream to investors whilst also investing in the business to further its strategic growth objectives. The interim dividend is payable to shareholders on 24 October 2019 based upon the register on 13 September 2019. The ex-dividend date will be 12 September 2019. The adjusted interim dividend cover is at 2.0x (H1 2018: 1.6x).
Cash flow
On an operational level, the Group was highly cash generative with net cash inflow from operating activities after taxation at GBP2,366,000 (H1 2018: GBP1,788,000) reflecting the enlarged Group.
In May the Group acquired a small lettings portfolio for the Newton Fallowell Grantham office for GBP206,000 and in January GBP223,000 was paid to the vendors of MAB Glos and GBP20,000 to the vendors of Uplong. Also, during the period there was a net outflow from the franchisee loan book of GBP225,000 (H1 2018: inflow 733,000) with GBP663,000 advanced to franchisees under the Assisted Acquisitions programme.
Liquidity and capital resources
The Group had cash balances of GBP1,419,000 (H1 2018: GBP2,392,000) and a term loan of GBP10,915,000 (H1 2018: GBP6,199,000) leaving net debt of GBP9,496,000 (H1 2018: GBP3,807,000). The increased borrowing since H1 2018 was applied to the settlement of GBP4,236,000 deferred and contingent consideration on Northwood and GBP3,536,000 consideration for MAB Glos. The term loan is repayable in half yearly payments of GBP445,000 with a final repayment of GBP7,868,000 in March 2023 and bears interest at 1.95% over the LIBOR rate.
Financial position
The Group continues to operate from a sound financial platform generating sufficient cash from the operations of the enlarged Group to meet the interest and capital payable on the loan facility and dividends to shareholders. At the end of June 2019, the Group was comfortably inside its bank covenants with the debt service cover at 3.1 times (H1 2018: 3.7). The Group maintains a franchisee loan book, currently at GBP3,925,000 (H1 2018: GBP4,028,000), which provides financial assistance to franchisees under the Assisted Acquisitions programme to accelerate their growth and therein contribute towards increased Group revenue.
The Group's operational and diversified business model has helped to consistently deliver profit growth, and the Group's capital allocation policy provides a reliable dividend with an attractive yield for investors, whilst retaining funding for the Group's growth strategy.
Louise George
Chief Financial Officer
Condensed Group Statement of Comprehensive Income
For the six months ended 30 June 2019
Hot Features
Premium
Notes Unaudited Unaudited Audited
Six months Six months Year
ended ended ended
30 June 30 June 31 December
2019 2018 2018
GBP'000 GBP'000 GBP'000
------------ ------------ -------------
Continuing operations
Revenue 2 9,047 6,123 13,702
Cost of sales (2,849) (881) (2,372)
------------ ------------ -------------
Gross profit 6,198 5,242 11,330
Administrative expenses
Non exceptional (3,437) (3,159) (6,616)
Exceptional - - (169)
------------ ------------ -------------
(3,437) (3,159) (6,785)
Operating profit 2,761 2,083 4,545
Changes in fair value to contingent
consideration - 745 809
Finance costs (179) (103) (226)
Finance income 113 144 265
Other income - - 87
Profit before taxation 2,695 2,869 5,480
Taxation 4 (574) (444) (1,106)
------------ ------------ -------------
Profit and total comprehensive income
for the financial period 2,121 2,425 4,374
Profit for the period attributable to the
equity holders of the parent company 2,121 2,425 4,374
------------ ------------ -------------
Basic earnings per share from continuing
operations 5 6.1p 6.9p 12.5p
Diluted basic earnings per share from
continuing operations 5 5.7p 6.5p 11.8p
Adjusted earnings per share from continuing
operations 5 6.9p 5.7p 12.4p
Adjusted diluted earnings per share
from continuing operations 5 6.5p 5.3p 11.7p
------------- ------------ -------------
Consolidated Statement of Financial Position
As at 30 June 2019
Unaudited Unaudited Audited
At At At
30 June 30 June 31 December
2019 2018 2018
GBP'000 GBP'000 GBP'000
---------- ---------- -------------
Assets
Non-current assets
========== ========== =============
Intangible assets 29,217 26,204 29,156
Financial assets 159 - 159
Property, plant and equipment 650 630 646
Right-of-use assets 705 - -
Trade and other receivables 2,095 3,017 2,768
========== ========== =============
32,826 29,851 32,729
========== ========== =============
Current assets
========== ========== =============
Trade and other receivables 4,767 2,830 3,729
Cash and cash equivalents 1,419 2,392 1,798
========== ========== =============
6,186 5,222 5,527
---------- ---------- -------------
Total assets 39,012 35,073 38,256
Liabilities
Non-current liabilities
========== ========== =============
Interest bearing loans
and borrowings 10,022 5,499 10,452
Lease liabilities 502 - -
Deferred tax 2,049 1,992 2,018
========== ========== =============
12,573 7,491 12,470
Current liabilities
========== ========== =============
Trade and other payables 2,014 1,527 2,499
Interest bearing loans
and borrowings 893 700 925
Lease liabilities 203 - -
Contingent consideration 86 4,155 -
Tax payable 764 463 769
========== ========== =============
3,960 6,845 4,193
---------- ---------- -------------
Total liabilities 16,533 14,336 16,663
---------- ---------- -------------
Total net assets 22,479 20,737 21,593
---------- ---------- -------------
Equity
Shareholders' equity
========== ========== =============
Share capital 349 349 349
Share premium 12,006 12,006 12,006
Share based payment reserve 430 242 337
Other components of equity 162 162 162
Merger reserve (5,774) (5,774) (5,774)
Retained earnings 15,306 13,752 14,513
========== ========== =============
Total equity 22,479 20,737 21,593
========== ========== =============
Consolidated Statement of Changes in Shareholders' Equity
For the six months ended 30 June 2019
Share Share Share Merger Other components Retained Total
capital premium based reserve of equity earnings equity
payment
reserve
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
--------- --------- --------- --------- ----------------- ---------- --------
Balance at 1 January
2018 (Audited) 349 12,006 148 (5,774) 162 12,550 19,441
Share based payments - - 94 - - - 94
Dividends - - - - - (1,223) (1,223)
Transactions with owners - - 94 - - (1,223) (1,129)
Profit and total comprehensive
income for the six month
period - - - - - 2,425 2,425
--------- --------- --------- --------- ----------------- ---------- --------
Balance at 30 June 2018
(Unaudited) 349 12,006 242 (5,774) 162 13,752 20,737
--------- --------- --------- --------- ----------------- ---------- --------
Share based payments - - 95 - - - 95
Dividends - - - - - (1,188) (1,188)
--------- --------- --------- --------- ----------------- ---------- --------
Transactions with owners - - 95 - - (1,188) (1,188)
Profit and total comprehensive
income for the six month
period - - - - - 1,949 1,949
========= ========= ========= ========= ================= ========== ========
Balance at 31 December
2018 (Audited) 349 12,006 337 (5,774) 162 14,513 21,593
========= ========= ========= ========= ================= ========== ========
Share based payments - - 93 - - - 93
Dividends - - - - - (1,328) (1,328)
--------- --------- --------- --------- ----------------- ---------- --------
Transactions with owners - - 93 - - (1,328) (1,235)
Profit and total comprehensive
income for the six month
period - - - - - 2,121 2,121
--------- --------- --------- --------- ----------------- ---------- --------
Balance at 30 June 2019
(Unaudited) 349 12,006 430 (5,774) 162 15,306 22,479
--------- --------- --------- --------- ----------------- ---------- --------
Consolidated Statement of Cash Flows
For the six months ended 30 June 2019
Notes Unaudited Unaudited Audited
30 June 30 June 31 December
2019 2018 2018
GBP'000 GBP'000 GBP'000
---------- ---------- -------------
Operating activities
========== ========== =============
Cash generated from operating
activities 6 2,939 2,318 5,612
Tax paid (573) (540) (1,018)
========== ========== =============
Net cash flows generated from
operating activities 2,366 1,778 4,594
Investing activities
========== ========== =============
Capital expenditure on property,
plant and equipment (74) (56) (140)
Acquisitions net of cash acquired (206) - (3,595)
Settlement of contingent consideration (243) (100) (4,236)
Return of funds from escrow - 100 145
Corporate office disposals - 48 45
Disposals of assets - 3 -
Franchisee loans granted (663) (444) (729)
Loans repaid by franchisees 438 1,177 1,806
Finance income 113 144 265
========== ========== =============
Net cash (used in)/from investing
activities (635) 872 (6,439)
Financing activities
========== ========== =============
Finance costs (183) (210) (296)
Bank loan advance - 6,500 12,000
Loan repayments (493) (6,675) (7,000)
Lease repayments (106) - -
Equity dividends paid (1,328) (1,223) (2,411)
========== ========== =============
Net cash (used in)/from financing
activities (2,110) (1,608) 2,293
---------- ---------- -------------
Net change in cash and cash equivalents (379) 1,042 448
Cash and cash equivalents at the
beginning of the financial period 1,798 1,350 1,350
---------- ---------- -------------
Cash and cash equivalents at the
end of the period 1,419 2,392 1,798
---------- ---------- -------------
Notes to the Interim Financial Statements
1 General information and basis of preparation
The financial information set out in these condensed consolidated interim financial statements for the six months ended 30 June 2019 and the comparative figures are unaudited.
They have been prepared taking into account the requirements of relevant accounting standards and the AIM rules. They do not constitute statutory accounts within the meaning of Section 434(3) of the Companies Act and do not contain all the information required for full annual financial statements. This is the first set of the Group's financial statements where IFRS 16 (Leases) have been applied. Changes to significant accounting policies are disclosed below.
The statutory audited accounts for the year ended 31 December 2018 have been delivered to the Registrar of Companies in England and Wales. The Auditor's report on these accounts was unqualified and did not contain statements under Section 498 of the Companies Act 2006.
The condensed consolidated interim financial statements are presented in sterling, which is also the functional currency of the parent company.
Belvoir Group PLC is the group's ultimate parent company. The company is a Public Limited Company incorporated and domiciled in the United Kingdom.
The Group's registered office and principal place of business is The Old Courthouse, 60a London Road, Grantham, Lincolnshire, NG31 6HR. Its shares are listed on the AIM market of the London Stock Exchange.
The condensed interim financial statements for Belvoir Group PLC have been approved for issue by the Board of Directors on 3 September 2019.
Significant accounting policies
The condensed consolidated interim financial statements have been prepared under the historical cost convention. Being listed on the AIM of the London Stock Exchange, the company is required to present its consolidated financial statements in accordance with International Financial Reporting Standards ("IFRS's") as adopted by the European Union and with those parts of the Companies Act 2006 applicable to companies reporting under IFRS.
The accounting policies have been applied consistently throughout the group for the purposes of preparation of these condensed consolidated interim financial statements with the exception of the new standard, IFRS 16 Leases.
IFRS 16 Leases
IFRS 16 Leases became effective for annual periods beginning on or after 1 January 2019. The Group has applied the simplified transition approach and has not restated comparative amounts for the six months to 30 June 2018 or for the year ended 31 December 2018. All right-of-use assets have been measured at the amount of the lease liability on adoption, adjusted for any prepaid or accrued lease expenses.
IFRS 16 Leases addresses the definition of a lease, recognition and measurement of leases, and establishes principles for reporting useful information to users of financial statements about the leasing activities of both lessees and lessors. A key change arising from IFRS 16 is that most operating leases are accounted for on balance sheet for lessees. The Directors have reviewed the contracts for all property, vehicle and equipment leases held by the Group to identify any additional lease arrangements that need to be recognised under IFRS 16. As a result, GBP783,000 has been recognised as additional right of use assets together with an additional lease liability as of 1 January 2019, and the operating charge of approximately GBP106,000 in the six months to 30 June 2019 has been replaced by a depreciation charge of GBP94,000 and an interest charge of GBP11,000. This is not considered to have had a material impact on our reporting of operating profit.
2 Segmental information
The Executive Committee of the Board, as the chief operating decision maker, reviews financial information for and makes decisions about the Group's overall franchising business. In the six months ended 30 June 2019 the Board identified two operating segments, that of franchisor of property agents and property-related financial services.
The Directors consider gross profit as the key performance measure. The reported segment is consistent with the Group's internal reporting for performance measurement and resources allocation.
Management does not report on a geographical basis and no customer represents greater than 10% of total revenue in either of the periods reported. The Directors believe there to be: three material property franchise income streams, which are management service fees, revenue from corporate-owned offices and fees on the sale or resale of franchise territory fees; and one material financial services income stream, which is commission receivable on financial services. These revenue streams are split as follows:
Lettings Property sales Total revenue
------------- ----------------- ------ ------------------------ ------------------------------
Unaudited Unaudited Audited Unaudited Unaudited Audited Unaudited Unaudited Audited
H1 H1 FY H1 H1 FY H1 H1 FY
2019 2018 2018 2019 2018 2018 2019 2018 2018
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
========= =========== ======== =========== ========= ======== ========= ========= ========
Management
service fees 3,556 3411 7,107 645 604 1,349 4,201 4,015 8,456
Corporate owned
outlets 328 228 481 272 247 540 600 475 1,021
========= =========== ======== =========== ========= ======== ========= ========= ========
3,884 3,639 7,588 917 851 1,889 4,801 4,490 9,477
========= =========== ======== =========== ========= ========
Franchise fees 65 102 198
Other income 212 220 468
========= ========= ========
Franchise property division 5,078 4,812 10,143
========= ========= ========
Commission receivable on financial
services 3,969 1,311 3,559
========= ========= ========
Financial
services
division 3,969 1,311 3,559
--------- --------- --------
Total revenue 9,047 6,123 13,702
--------- --------- --------
Gross profit for the two divisions is split as follows:
Unaudited Unaudited Audited
H1 H1 FY
2019 2018 2018
GBP'000 GBP'000 GBP'000
========= ========= ========
Property franchise division 5,078 4,812 10,143
Financial services division 1,120 430 1,187
========= ========= ========
Total gross profit 6,198 5,242 11,330
========= ========= ========
3 Dividends
The company will pay an interim dividend of 3.4p pence per share (GBP1,188,000) on 24 October 2019 to the shareholders on the register on 13 September 2019.
4 Taxation
Taxation has been calculated by applying the forecast full year effective rate of tax to the results for the period.
5 Earnings per share
Basic earnings per share is calculated by dividing the profit after tax for the financial period by the weighted average number of ordinary shares deemed to be in issue in the period. The calculation of diluted earnings per share is derived from the basic earnings per share, adjusted to allow for the issue of shares under share option plans.
Adjusted earnings per share and diluted adjusted earnings per share are calculated in the same way but having adjusted the profit for the year for exceptional items, amortisation of acquired intangibles and the share-based payment charge.
Unaudited Unaudited Audited
six months six months Year
ended ended Ended
30 June 30 June 31 December
2019 2018 2018
GBP'000 GBP'000 GBP'000
Profit for the financial period 2,121 2,425 4,374
Exceptional items - (745) (640)
Amortisation of acquired intangibles 211 211 422
Share-based payment charge 93 94 189
Tax on deductible exceptional items - - (10)
============ ============ =============
Adjusted profit for the financial
period 2,425 1,985 4,335
Weighted average number of ordinary
shares - basic 34,639 34,939 34,939
Weighted average number of ordinary
shares - diluted 37,088 37,255 37,110
Basic earnings per share 6.1p 6.9p 12.5p
Diluted earnings per share 5.7p 6.5p 11.8p
Adjusted basic earnings per share 6.9p 5.7p 12.4p
Adjusted diluted earnings per share 6.5p 5.3p 11.7p
============ ============ =============
6 Reconciliation of profit before taxation to cash generated from operations
Unaudited Unaudited Audited
30 June 30 June 31 December
2019 2018 2018
GBP'000 GBP'000 GBP'000
Profit before taxation 2,695 2,869 5,480
Depreciation and amortisation charges 398 285 581
Share based payments 93 95 189
Impairment of franchisee loan book 39 - 272
Impairment on sale of Newton Fallowell
Newark trade & assets - - 88
Loss on disposal of corporate offices - - 15
Changes in fair value to contingent
consideration - (745) (809)
Amortisation of debt costs - - 52
Finance costs 179 144 226
Finance income (113) (144) (265)
MAB share option recognition - - (87)
3,291 2,504 5,742
Increase in trade and other receivables (196) (153) (1,393)
Decrease/(increase) in trade and other
payables (156) (33) 1,263
---------- ---------- -------------
Cash generated from operations 2,939 2,318 5,612
---------- ---------- -------------
This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact rns@lseg.com or visit www.rns.com.
END
IR LLFSEAEIFIIA
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September 03, 2019 02:00 ET (06:00 GMT)
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