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| Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
|---|---|---|---|---|---|
| Hunters Property Plc | LSE:HUNT | London | Ordinary Share | GB00BYMW5L71 | ORD 4P |
| Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
|---|---|---|---|---|---|---|---|---|---|---|
| 0.00 | 0.00% | 70.00 | 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
TIDMHUNT
RNS Number : 6387K
Hunters Property PLC
12 April 2018
Embargoed 7.00a.m. - 12 April 2018
Dissemination of a Regulatory Announcement that contains inside information according to REGULATION (EU) No 596/2014 (MAR).
Hunters Property Plc
Notice of Results
For the year ended 31 December 2017
Hunters Property Plc ("Hunters" or the "Company" or the "Group"), one of the UK's largest national sales and lettings estate agency businesses, is pleased to announce its preliminary results for the year ended 31 December 2017.
Financial highlights
-- Network Income rose 10% to GBP38.9m (2016: GBP35.4m); -- Revenue increased by 3% to GBP14.2m (2016: GBP13.8m); -- EBITDA increased by 8% to GBP2.23m (2016: GBP2.06m)
-- Adjusted Profit Before Tax (*adjusted to exclude amortisation, acquisition costs, investment income and notional finance costs) increased by 4% to GBP1.94m (2016: GBP1.86m);
-- Adjusted EPS* decreased by 1% to 5.84p (2016: 5.92p); -- Net Assets stood at GBP7.6m (2016: GBP5.6m);
-- Proposed 15% increase in Final dividend to 1.50p, increasing full year then by 16% to 2.20p (2016: 1.90p) for the year.
Operational highlights
-- Opened 37 new branches, including the conversion of 15 independent estate agency branches and the acquisition in the South West of the Besley Hill franchise network
-- 213 branches as at 31 December 2017 (31 December 2016: 186) -- Average Network Income per branch is GBP182,000 (2016: GBP190,000) -- 30 or more new branches in each of the last four years
-- Independent agents that have converted to Hunters, during the three years to 2015, have increased their revenue by 29%
-- Average Network Income per converting branch has risen to GBP173,000 (2016: GBP153,000) -- Customer satisfaction rating 95% (2016: 96%)
Kevin Hollinrake, Chairman, commented:
"We are delighted to report a robust set of figures, despite subdued the market conditions. This performance highlights the robustness of our model and the quality and commitment of our franchisees and their teams across the network. We would expect this current market and recently announced additional regulatory requirements to provide us with even more opportunities to expand our branch network and strengthen our market position still further. A strong national brand, free best-in-class training and significant cost reductions for network members make the case for independent operators to join the Hunters family even more compelling. We are already experiencing strong levels of enquiries from high quality independent businesses. We remain in line with the Market's expectation and I look forward to updating you as the year progresses."
For further details, please contact:
Hunters Property Plc Tel: 01904 756 197 Kevin Hollinrake, Chairman Glynis Frew, Chief Executive Officer Ed Jones, Chief Financial Officer SPARK Advisory Partners Limited Tel: 020 3368 3551 Mark Brady and Neil Baldwin (Nominated Adviser) Tel: 01293 517 744 Dowgate Capital Stockbrokers James Sergeant (Corporate Broking)
Chairman's statement
We are pleased to report that the Group has delivered a strong result in 2017. Network Income has increased by 10% despite subdued market conditions. The Group continued its expansion towards becoming the nation's favourite estate agent. Organically, we believe we are the fastest growing listed business in our sector having opened 114 branches over the last four years and a further 46 branches through acquisition in that period.
In the year we added 37 (2016: 30) new branches to the network, including 15 (2016: 20) independent businesses, reaching 213 (2016: 186) branches by the year end. This included the addition of the Besley Hill franchised network, expanding our coverage in the South West. We are pleased to report we have already rebranded those branches as Hunters, ahead of schedule, and we look forward to helping them to grow their business. We continue to attract good quality independent businesses who see the benefits of a support network, reduced operating costs and opportunities to improve their income.
Gross income of the Group's franchisee and owned branch network ("Network Income") reached GBP38.9 million in 2017 (2016: GBP35.4 million) a 10% increase on the previous year. Our average branch revenue is GBP182,000 (2016: GBP190,000). This was a tremendous achievement against the background of national sales activity having reduced by 15% for the year1. We have out-performed the market each year over the last three years by on average 10%. Our adjusted EBITDA reached GBP2.23 million (2016: GBP2.06 million) an increase of 8% on the previous year. Adjusted EPS is 5.84p (2016: 5.92p).
We have out-performed the market each year over the last three years by on average 10%. Our model is about both the number and the underlying performance of our branches. We invest a great deal of time and resource helping to improve each branch's revenue. Our outperformance against the market per branch reflects that investment, those improvements and then the underlying increased strength of the component parts of our network. This is not just a short-term success but a long-term strategy. Independent agents that converted to the Hunters brand during the three years to December 2015 have produced revenue in 2017 that is 29% higher; illustrating that our well known national brand, quality and good reputation has delivered improved revenue for our network partners, even against a challenging backdrop as well as significantly reducing their cost of key operating costs, such as portal subscriptions, through our economies of scale and purchasing power.
Customer satisfaction is always a key measure and at 95% customer satisfaction rating over the year (2016: 96%) is our sixth year in a row at over 90%, which remains significantly higher than the industry average of 73%2. Our business and our network partners commit to deliver for our customers. This underpins our belief that business owners will work harder and deliver better results than a network of employees, self-employed operatives on short-term contracts or those engaged to simply list a home rather than actually selling or letting a property. On behalf of the Board, I would like to thank everyone in the network who has worked so hard to deliver these excellent results and our customer service teams for working with our clients to help us 'get them there'.
CURRENT TRADING & OUTLOOK
We expect the current subdued levels of transactions to continue in 2018. Hunters' performance to date in the year is in line with the Board's expectations, given our more limited London exposure we are not expecting to be as affected as other players have reported already3 although we have built in an increase in churn for consolidation within this sector. We would expect this market to provide us with an enhanced opportunity to expand our branch network further and strengthen our brand. The case to encourage independent operators becomes even more persuasive in providing a way to be part of a stronger group that can also offer significant cost reductions, particularly in terms of portal charges for Rightmove, Zoopla and OnTheMarket.
We are already seeing an improved level of enquiries from high quality independent businesses. Our robust balance sheet and relatively low level of gearing will enable us to both expand our network and reward shareholders with an attractive dividend.
Our pipeline of new outlets remains healthy and I look forward to updating you as the year progresses.
DIVID
The Company is committed to a progressive dividend policy and proposes an increased final dividend of 1.50p per share, making 2.20p for the year, an increase of 16%.
On behalf of the Board
Kevin Hollinrake
Chairman
11 April 2018
1 Source: Price Paid Data to December 2017, Land Registry 2 Source: 2015 survey by The Property Academy
3 Source: Countrywide plc - 8th March 2018, Foxtons plc - 28th February 2018, LSL Property Services plc - 6th March 2018
Chief executive's statement
We're delighted to report that despite a softer market, our strategy has delivered an improved performance with an increase in branch numbers and a strong set of results.
The Group has grown its market share of homes sold and let in 2017. So despite market transaction volumes having reduced by 15% turnover, EBITDA and pre-tax profitability have increased. This was aided by our limited exposure to the London market and by the additional branches added to the network throughout the year as well as the acquisition of the Besley Hill network.
We entered the year with good ongoing customer demand and a Government that remains openly very keen to accelerate new home-building and ownership. We are therefore looking set to deliver another successful year.
Delivering outstanding customer service is at the heart of our operation. At exchange of a property or at the let of a property a vendor or landlord is contacted by a member of our customer service team. In 2017, 4,155 (2016: 3,648) customers provided feedback resulting in a 95% (2016: 96%) customer satisfaction rating. Our customer satisfaction ratio has been over 90% since 2011.
Maintenance in the quality of the network is key to our success. We started the year with 186 branch locations. We received 228 (2016: 268) enquiries resulting in 37 (2016: 30) new openings under the Hunters brand. These openings consisted of 15 (2016: 20) conversions of existing independent estate agency businesses and 6 (2016: 10) new "cold start" locations, of which four were current franchisees expanding into new markets. We were delighted that we have converted some stronger independents this year with the average of their incomes before conversion at GBP173,000 (2016: GBP153,000) a sign of our increasing success in attracting increasingly stronger businesses.
The Group implements a rigorous franchisee selection process. This ensures, as far as is possible, that new franchisees are committed to the Group's high standards. Approximately 80% are rejected at an early stage. Additionally, underperforming branches can be reinvigorated through training and support or alternatively the sale of a franchise to a new team or individual. We were delighted that we have converted some stronger independents this year with the average of their incomes before conversion at GBP173,000 (2016: GBP153,000) a sign of our increasing success in attracting increasingly stronger businesses.
We continue to invest in our people and our technology, marketing and networks. We have devoted over GBP500,000 this year in training and now provide 114 courses, a 41% increase through the Hunters Vocational Qualification, endorsed by Propertymark. We continued to develop our in-house, market leading software to enhance the digital side of the business, for example we launched an online valuation booking capability in July which has already directed over GBP5m of property to the network. Just as importantly we retain the levels of service that our customers require so as to secure and safeguard a long-term future. In terms of marketing we augmented our national campaign around both our brand promise 'Here to get you there' and local ownership and local expertise. This will continue to be our message in the year ahead. Having been one of the first estate agents to launch a national TV advert in 2015, our TV advertising campaign has been followed by a number of our larger and better funded peers. Hunters' website traffic has risen by 70% in the last three years.
Finishing the year with 213 branches, I am delighted to report how since 2014 businesses have been able to improve through working with Hunters. Against a market down 15% in 2017 (2016: down 2%) the average revenue per branch has beaten the market by 10% on average each year. For branches that joined in the three years to December 2015 their revenue is up, on average, by 29%.
Nor is improvement just short-term, those who have been converted for 6 years are up, on average, by 84%. Every region we trade in has increased over the last four-year period 2013 to 2017 on average at a Compound Annualised Growth Rate ("CAGR") of 27%.
Franchise prospects for 2018 have started well given the tight market and uncertainty, with a proceeding pipeline of 27 (2017: 34) new branches being processed and enquiry levels on target to exceed those of 2017. We have expanded the team further to improve the process and allow more ongoing support. Our marketing plan is heavily focused on direct marketing to suitable independent businesses, increased online presence and existing franchisee expansion are integral elements of this growth.
It is expected that 2018 will see continued network growth, both through conversions of existing businesses and cold starts although we expect conversions to account for a more significant portion of branch growth. We see the uncertainty and impact of proposed tenant fee ban as driving enquiries towards Hunters' market leading conversion package, designed to allow independent agencies to join with minimal cost, whilst benefiting from a full estate agency package.
This increases the offering to landlords and vendors now able to market their properties to the widest possible audience for buyers and tenants. We are delighted to have been one of the first in the industry to offer this service.
We have an outstanding and experienced team that are committed to Hunters and our quest to become the nation's favourite estate agent. This could not be achieved without their sterling efforts. We believe that we have some truly outstanding industry professionals associated with the business and are grateful to them for their dedication to Hunters.
Glynis Frew
Chief Executive
Financial review
REVENUE
Group revenue for the financial year ended 31 December 2017 increased by 3% to GBP14.2 million (2016: GBP13.8 million). This was driven by the following factors:
-- Management Service Fee ("MSF") from franchised branches increased due to the 30 new franchisee branches that joined the Group in 2016 and a further 37 new franchisee branches that joined the Group in 2017;
-- Nine months of MSF revenue from the acquisition of the Besley Hill network in March 2017;
-- Lettings revenue grew as we introduced lettings to new franchisees and continued to grow our existing lettings offices. Network Income for Lettings grew 16% (2016: 19%).
ADJUSTED EBITDA (operating profit before depreciation, amortisation, acquisition and share-based payments expenses)
Adjusted EBITDA provides a key measure of progress made. Adjusted EBITDA for the year to December 2017 was GBP2.23 million, an increase of 8% on the same period last year (2016: GBP2.06 million).
Administrative expenses increased by GBP0.2 million during the year. Higher costs in 2017 were in part due to the additional running costs associated with the acquisition of Besley Hill.
ADJUSTED PROFIT BEFORE TAX (adjusted to exclude amortisation, amortised finance costs, acquisition costs, share-based payments and
finance income)
Adjusted profit before tax was GBP1.94 million, an increase of 5% over the prior period (2016: GBP1.86 million). Amortisation and acquisition costs increased significantly during the period, as the Group continued to accelerate its growth through the acquisition element of its strategy.
Hot Features
Premium
Adjusted profit 2017 2016
before tax GBPm GBPm
Profit before
tax 1.03 0.99
Other finance
costs 0.01 0.06
Amortisation 0.75 0.60
Costs of acquisition 0.05 0.03
Interest income (0.02) (0.01)
Share-based payments 0.12 0.19
------ ------
Adjusted profit
before tax 1.94 1.86
EARNINGS PER SHARE
Basic earnings per share for the year ended 31 December 2017 was 2.89p (2016: 2.84p) based on a weighted average of 31,022,076 shares (2016: 28,365,454) in issue during the year.
ADJUSTED EARNINGS PER SHARE
Adjusted earnings per share, excluding amortisation and acquisition costs, finance timing and investment income and using standard tax rates for the year to December 2017, was 5.84p (2016: 5.92p) a decrease of 1%.
2017 2016
Income Summary GBPm GBPm Movement
Network
Income 38.9 35.4 +10%
Turnover 14.2 13.8 +3%
EBITDA 2.23 2.06 +8%
Adjusted
profit
before
tax 1.94 1.86 +4%
EPS 2.89p 2.84p +3%
Adjusted
EPS 5.84p 5.92p -1%
DPS 2.20p 1.90p +16%
DIVIDS
The Board is proposing a final dividend of 1.50p per share for 2017, which subject to shareholder approval at the AGM on the 18 May 2018, will be paid to shareholders by 23 May 2018 based on the register of shareholders as at 27 April 2018. Taking this together with the interim dividend of 0.7p paid to shareholders on 20 October 2017, this equates to a total dividend for the year of 2.20p an increase of 16%. The Company intends to pay a progressive dividend going forwards.
LIQUIDITY
The Group had cash balances of GBP1.6 million at 31 December 2017 (2016: GBP1.2 million). In March 2017, the Group secured an extension of GBP1.0m to its facilities to support the acquisition of Besley Hill. The facility continues to be a quarterly rolling facility with repayments of GBP22.5k each quarter. Total bank facilities available to the Group at 31 December 2017 stood at GBP6.0 million of which GBP3.8 million is drawn.
FINANCIAL POSITION
The Group has generated strong cashflow from operations of GBP1.6m (2016: GBP1.7m) which is expected to continue in 2018. These cashflows, together with undrawn facilities available, ensure the Group is in a strong financial position from which to carry out its strategy to grow the franchise business both organically and through acquisition in the coming year.
Balance Sheet 2017 2016 Summary GBPm GBPm Cash 1.6 1.2 Net Assets 7.6 5.6 Net Debt 2.3 1.2 Net Debt / EBITDA 1.0x 0.6x
Ed Jones
Chief Financial Officer
Consolidated statement of comprehensive income
For the year ended 31 December 2017
2017 2016
Notes GBP000s GBP000s
Revenue 3 14,169 13,833
Administrative expenses (11,938) (11,772)
-------- --------
Operating profit before depreciation,
amortisation,
acquisition & share-based payment
expenses 2,231 2,061
Depreciation and profit on disposal 4 (137) (104)
Amortisation and profit on disposal 4 (731) (584)
Business combination acquisition
expenses 15 (50) (30)
Share-based payment expense 25 (118) (192)
-------- --------
Operating profit 4 1,195 1,151
Finance income 7 18 4
Finance costs 8 (185) (168)
-------- --------
Profit before taxation 1,028 987
Taxation 9 (133) (181)
-------- --------
Profit for the financial year 895 806
Other comprehensive income - -
-------- --------
Total comprehensive income for
the year 895 806
======== ========
Profit and total comprehensive
income for the financial year
attributable to:
Equity holders of the parent 895 806
-------- --------
895 806
======== ========
Earnings per share
Basic (pence per share) 11 2.89 2.84
======== ========
Diluted (pence per share) 11 2.77 2.72
======== ========
Consolidated statement of financial position
As at 31 December 2017
2017 2016
Notes GBP000s GBP000s
Non-current assets
Goodwill 12 4,626 3,973
Other intangible assets 12 6,548 4,078
Property, plant and equipment 13 344 429
Investments 14 1 1
Deferred tax assets 23 87 82
-------- --------
11,606 8,563
-------- --------
Current assets
Trade and other receivables 16 1,645 1,452
Cash and cash equivalents 1,582 1,187
-------- --------
3,227 2,639
-------- --------
Total assets 14,833 11,202
======== ========
Current liabilities
Borrowings 17 (77) (366)
Obligations under finance leases 18 (19) (47)
Current tax liabilities (163) (117)
Trade and other payables 19 (2,291) (2,376)
-------- --------
(2,550) (2,906)
-------- --------
Non-current liabilities
Borrowings 17 (3,783) (1,993)
Obligations under finance leases 18 (62) (81)
Other payables 20 (19) (52)
-------- --------
(3,864) (2,126)
-------- --------
Provisions for liabilities
Provisions 22 (55) (66)
Deferred tax liability 23 (768) (456)
-------- --------
(823) (522)
-------- --------
Net assets 7,596 5,648
======== ========
Equity
Attributable to the owners of
the parent:
Share capital 26 1,272 1,145
Share premium account 27 4,105 2,633
Merger reserve 1.2 899 899
Retained earnings 1,320 971
-------- --------
7,596 5,648
-------- --------
Total equity 7,596 5,648
======== ========
The financial statements were approved by the board of directors and authorised for issue on 11 April 2018 and are signed on its behalf by:
Mr E A Jones
Director
Company Registration No. 09448465
Company statement of financial position
As at 31 December 2017
2017 2016
Notes GBP000s GBP000s
Non-current assets
Investments 14 1,189 1,071
Current assets
Trade and other receivables 16 5,482 3,120
-------- --------
Total assets 6,671 4,191
======== ========
Current liabilities
Current tax liabilities (22) (20)
Trade and other payables 19 (26) (27)
-------- --------
(48) (47)
-------- --------
Net assets 6,623 4,144
======== ========
Equity
Share capital 26 1,272 1,145
Share premium account 4,105 2,633
Share option reserve 317 203
Retained earnings 929 163
-------- --------
Total equity 6,623 4,144
======== ========
As permitted by s408 Companies Act 2006, the Company has not presented its own Statement of Comprehensive Income. The Company's profit for the year was GBP1,421,000 (2016: GBP556,000).
The financial statements were approved by the board of directors and authorised for issue on 11 April 2018 and are signed on its behalf by:
Mr E A Jones
Director
Company Registration No. 09448465
Consolidated statement of changes in equity
For the year ended 31 December 2017
Total
equity
attributable
Share to owners
Share premium Merger Retained of the
capital account reserve earnings parent
Notes GBP000s GBP000s GBP000s GBP000s GBP000s
Balance at 1 January 2016 1,131 2,579 899 375 4,984
Year ended 31 December 2016:
Profit and total comprehensive
income for the year - - - 806 806
Issue of share capital 26 14 53 - - 67
Dividends 10 - - - (453) (453)
Credit to equity for equity settled
share-based payments 25 - - - 192 192
Deferred tax on share-based payment
transactions - - - 52 52
Exercise of share options - 1 - (1) -
-------- -------- -------- --------- -------------
Balance at 31 December 2016 1,145 2,633 899 971 5,648
Year ended 31 December 2017:
Profit and total comprehensive
income for the year - - - 895 895
Issue of share capital 26 127 1,544 - - 1,671
Dividends 10 - - - (634) (634)
Credit to equity for equity settled
share-based payments 25 - - - 118 118
Deferred tax on share-based payment
transactions - - - (26) (26)
Costs of raising equity 26 - (76) - - (76)
Exercise of share options - 4 - (4) -
-------- -------- -------- --------- -------------
Balance at 31 December 2017 1,272 4,105 899 1,320 7,596
======== ======== ======== ========= =============
Company Statement of Changes in Equity
For the year ended 31 December 2017
Share Share
Share premium option Retained
capital account reserve earnings Total
Notes GBP000s GBP000s GBP000s GBP000s GBP000s
Balance at 1 January 2016 1,131 2,579 12 60 3,782
Year ended 31 December 2016:
Profit and total comprehensive
income for the year - - - 556 556
Issue of share capital 26 14 53 - - 67
Dividends 10 - - - (453) (453)
Share based payment expense of
subsidiary 14 - - 192 - 192
Exercise of share options - 1 (1) - -
-------- -------- -------- --------- --------
Balance at 31 December 2016 1,145 2,633 203 163 4,144
Year ended 31 December 2017:
Profit and total comprehensive
income for the year - - - 1,400 1,400
Issue of share capital 26 127 1,544 - - 1,671
Dividends 10 - - - (634) (634)
Costs of raising equity 26 - (76) - - (76)
Share based payment expense of
subsidiary 14 - - 118 - 118
Exercise of share options - 4 (4) - -
-------- -------- -------- --------- --------
Balance at 31 December 2017 1,272 4,105 317 929 6,623
======== ======== ======== ========= ========
Consolidated statement of cash flows
For the year ended 31 December 2017
2017 2016
Notes GBP000s GBP000s
Cash flows from operating activities
Operating profit 1,195 1,151
Adjustments for:
Share-based payment expense 25 118 192
Depreciation of property, plant
and equipment 13 137 134
Gain on disposal of property,
plant and equipment 4 - (17)
Amortisation and impairment
of intangible assets 12 755 597
Gain on disposal of intangible
assets 4 (24) (13)
Release of provisions 22 (16) (16)
Costs of acquisition 15 50 30
Changes in working capital:
(Increase)/decrease in trade
and other receivables 16 (193) 177
Decrease in trade and other
payables 19 (64) (130)
-------- --------
Cash generated from operations 1,958 2,105
Interest paid (147) (111)
Income taxes paid (246) (292)
-------- --------
Net cash inflow from operating
activities 1,565 1,702
-------- --------
Investing activities
Purchase of intangible assets 12 (868) (887)
Proceeds on disposal of intangibles 114 42
Purchase of property, plant
and equipment 13 (52) (124)
Proceeds on disposal of property,
plant and equipment - 20
Business acquisitions, net of
cash acquired 15 (2,460) (325)
Payment of deferred considerations (52) (23)
Interest received 7 18 4
-------- --------
Net cash used in investing activities (3,300) (1,293)
-------- --------
Financing activities
Proceeds from issue of own shares 1,345 68
Repayment of deferred consideration
debentures 17 (295) (375)
Proceeds of new bank loans 1,851 2,175
Repayment of bank loans and
borrowings 17 (90) (1,807)
Payment of finance leases obligations 18 (47) (41)
Dividends paid 10 (634) (453)
-------- --------
Net cash generated from/(used
in) financing activities 2,130 (433)
-------- --------
Net increase/(decrease) in cash
and cash equivalents 395 (24)
Cash and cash equivalents at
beginning of year 1,187 1,211
-------- --------
Cash and cash equivalents at
end of year 1,582 1,187
======== ========
Changes in liabilities arising from financing activities
The table below details changes in the Group's liabilities arising from financing activities, including both cash and non-cash changes. Liabilities arising from financing activities are those for which cash flows were, or future cash flows will be, classified in the Group's Consolidated Statement of Cash Flows as cash flows from financing activities.
At At
1 January Financing Other 31 December
2017 cash flows changes 2017
Bank loans 2,072 1,761 27 3,860
Finance lease liabilities 128 (47) 81
Deferred consideration 287 (295) 8 -
---------- ----------- -------- ------------
Total liabilities from financing
activities 2,487 1,419 35 3,941
========== =========== ======== ============
Major non-cash transactions
During the year the Group entered into a number of non-cash transactions as follows:
The Group issued shares as part consideration for the acquisition of Besley Hill, as disclosed further in note 15.The fair value of these shares was GBP250,000.
Company Statement of Cash Flows
The Company has not held any cash and cash-equivalents during the year or the comparative year. During the prior year the Company entered into a number of equity transactions which were enacted via intercompany accounts. Accordingly, the Directors have not presented a Company Statement of Cash Flow
Notes to the financial statements
For the year ended 31 December 2017
1 Accounting policies
Company information
Hunters Property Plc ("the Company") is a public limited company domiciled and incorporated in England and Wales. The registered office is Apollo House, Eboracum Way, York, North Yorkshire, YO31 7RE. The consolidated financial information (or "financial statements") incorporate the financial information of the Company and entities (its subsidiaries) controlled by the Company (collectively comprising the "Group").
The principal activity of the Group is the provision of property services to consumers and businesses which include sales, lettings, franchising and related services.
1.1 Accounting convention
The financial information set out above does not constitute the Company's statutory accounts for the years ended 31 December 2017 or 2016, but is derived from those accounts. Statutory accounts for 2016 have been delivered to the Registrar of Companies and those for 2017 will be delivered following the Company's Annual General Meeting. The auditors have reported on those accounts: their reports were unqualified, did not draw attention to any matters by way of emphasis and did not contain a statement under Sections 498(2) or (3) of the Companies Act 2006.
These consolidated financial statements have been prepared in accordance with International Financial Reporting Standards (IFRSs) as adopted by the European Union and the Companies Act 2006 applicable to companies reporting under IFRS. The consolidated financial statements have been prepared under the historical cost convention
1.2 Basis of consolidation
The Group financial information consolidates those of the Company and the subsidiaries that the Company has control of. Control is established when the Company is exposed, or has rights, to variable returns from its involvement with the subsidiary and has the ability to affect those returns through its power over the subsidiary.
Where a subsidiary undertaking, or unincorporated business, is acquired/disposed of during the year, the consolidated profits or losses are recognised from/until the effective date of the acquisition/disposal.
All inter-company balances and transactions between group companies have been eliminated on consolidation.
Where necessary, adjustments are made to the financial information of subsidiaries to bring the accounting policies used into line with those used by the Group.
The Group applies the acquisition method of accounting for business combinations enacted after the date of creation of the Group following incorporation of Hunters Property Plc, as detailed further below. The consideration transferred by the Group to obtain control of a subsidiary or unincorporated business is calculated as the sum of the acquisition-date fair value of assets transferred by the Group, liabilities incurred by the Group to the former owners of the acquiree and the equity interest issued by the Group. Acquisition costs are expensed as incurred.
The Group recognises identifiable assets acquired and liabilities assumed in a business combination regardless of whether they have been previously recognised in an acquired subsidiary's (or unincorporated business's) financial information prior to the acquisition. Assets acquired and liabilities assumed are measured at their acquisition-date fair values.
Goodwill is stated after separate recognition of identifiable intangible assets. It is calculated as the excess of the fair value of consideration transferred, over the Group's share of the acquisition-date fair values of identifiable net assets. If the fair values of identifiable net assets exceed the sum calculated above, the excess amount (i.e. gain on a bargain purchase) is recognised in profit or loss immediately.
A change in the ownership interest of a subsidiary or unincorporated business, without a loss of control, is accounted for as an equity transaction.
If the Group loses control over a subsidiary or unincorporated business, it derecognises the related assets (including goodwill), liabilities, non-controlling interest and other components of equity while any resultant gain or loss is recognised in profit or loss. Any investment retained is recognised at fair value.
The Group has applied the principles of merger accounting in consolidating the results, as control was only acquired by Hunters Property Plc via a share-for-share exchange on 27 March 2015. Merger accounting requires that the results of the Group are presented as if the Group has always been in its present form, and does not require a re-evaluation of fair values as at the point of acquisition. Accordingly, as a result of this merger accounting a merger reserve is recognised within equity which represents the difference between the net assets of the Group and the retained profits recognised by the Group as at 27 March 2015.
1.3 Going concern
As at the year end the Group has net current assets. The nature of the Group's trade is that there exist intangibles which generate significant cashflows, and are expected to continue doing so. The Group has sufficient unused facility available in its bank financing as disclosed in note 17.
The Directors have considered 12 month cashflow forecasts from the date of approval of the financial statements, and do not foresee any cashflow issues arising. Taking these factors into account, as at the time of approving the financial statements, the Directors have a reasonable expectation that the Group has adequate resources to continue in operational existence for the foreseeable future. Thus Directors continue to adopt the going concern basis of accounting in preparing the financial statements.
1.4 Revenue
Revenue represents the amount receivable for the provision of services during the year, excluding VAT and trade discounts. Revenue is recognised to the extent that it is probable that economic benefits will flow to the Group and the revenue can be measured reliably.
Revenue from residential, commercial and land sales is recognised on the basis of exchange of contract.
Revenue from commission earned as letting agents is recognised in the month in which the income is received and when there is fulfilment of all but inconsequential or perfunctory actions.
At inception of a franchisee contract, revenue is recognised upfront which matches to the profile of estimated incurred costs of time and knowledge to create the franchiser-franchisee contractual arrangement. No amounts are deferred as the Directors are of the opinion that virtually all inception costs are incurred at the outset, and hence although contracts run for several years this policy is considered to be the fairest presentation to comply with the matching and accruals concepts.
Revenue from franchisee management service fees are recognised monthly in arrears, calculated by reference to the terms of the contract and the value of sales attributable to each franchisee.
Financial services revenue is recognised at the later of the policy inception date or confirmation of entitlement to the commission.
Deferred income arises where services are invoiced in advance of performance. The amount is released to the profit or loss in subsequent periods in reference to the stage of completion of the transaction at the reporting date.
Where the Group identifies rights to the economic benefits of other sources of income through fulfilment of certain performance criteria, the income is recognised in the relevant accounting period when those conditions are fulfilled, net of VAT.
1.5 Intangible fixed assets - goodwill
Goodwill represents the future economic benefits arising from other assets acquired in a business combination that are not individually identifiable and separately recognised. See note 15 for information on how goodwill is initially determined. After initial recognition, goodwill is measured at cost less accumulated impairment losses. See note 1.9 for a description of impairment testing procedures.
1.6 Intangible fixed assets other than goodwill
Intangible assets are initially measured at cost. Where intangible assets are acquired as part of a business combination, cost is determined by reference to a fair value estimation technique as disclosed further in note 15. After initial recognition, intangible assets are recognised at cost less any accumulated amortisation and any accumulated impairment losses.
The depreciable amount of an intangible asset with a finite useful life is allocated on a systematic basis over its useful life. Amortisation begins when the asset is available for use, i.e. when it is in the location and condition necessary for it to be capable of operating in the manner intended by management.
The amortisation period and the amortisation method for intangible assets with a finite useful life is reviewed each financial year-end. If the expected useful life of the asset is different from previous estimates, the amortisation period is changed accordingly.
Research expenditure is written off against profits in the year in which it is incurred. Identifiable development expenditure is capitalised to the extent that the technical, commercial and financial feasibility can be demonstrated.
Amortisation is recognised so as to write off the cost or valuation of assets less their residual values over their useful lives on the following bases:
Software 3-7 years or over the life of the license
Franchise development costs Over the life of the franchise contract (typically 10-15 years)
Brands 10 years Customer lists 2-15 years 1.7 Property, plant and equipment
Property, plant and equipment are recognised as an asset only if it is probable that future economic benefits associated with the item will flow to the Group and the cost of the item can be measured reliably.
An item of property, plant and equipment that qualifies for recognition as an asset is measured at its cost. Cost of an item of property, plant and equipment comprises the purchase price, any costs directly attributable to bringing the asset to the location and condition necessary for it to be capable of operating in the manner intended by management.
After recognition, all property, plant and equipment are carried at cost less any accumulated depreciation and any accumulated impairment losses.
Depreciation is provided at rates calculated to write down the cost of assets, less estimated residual value, over their expected useful lives on the following basis:
Leasehold land and buildings Straight line over the life of the lease Plant and machinery 25% Reducing balance
Fixtures, fittings and equipment 25% Reducing balance or 10%-33% straight line
Motor vehicles 25% Straight line
The residual value and the useful life of an asset are reviewed at least at each financial year-end and if expectations differ from previous estimates, the changes are accounted for as a change in an accounting estimate in accordance with IAS 8 Accounting Policies, Changes in Accounting Estimates and Errors.
Gains or losses arising on the disposal of property, plant and equipment are determined as the difference between the disposal proceeds and the carrying value of the asset and are recognised in profit or loss.
1.8 Non-current investments
A subsidiary is an entity controlled by the Group. Control is the power to govern the financial and operating policies of the entity so as to obtain benefits from its activities.
Other investments in equity instruments that have a quoted market price in an active market and other equity instruments whose fair value can be reliably measured are measured at fair value; otherwise investments in equity instruments are measured at cost less accumulated impairment losses.
1.9 Impairment of non-current assets
For impairment assessment purposes, assets are grouped at the lowest levels for which there are largely independent cash flows. As a result, some assets are tested individually for impairment and some are tested at cash-generating unit level. Goodwill is allocated to those cash-generating units that are expected to benefit from synergies of the related business combination and represent the lowest level within the Group at which management monitors goodwill.
Cash-generating units to which goodwill has been allocated are tested for impairment at least annually. All other individual assets or cash-generating units are tested for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable.
An asset or cash-generating unit is impaired when its carrying amount exceeds its recoverable amount. The recoverable amount is measured as the higher of fair value less cost of disposal and value in use. The value in use is calculated as being net projected cash flows based on financial forecasts discounted back to present value.
The impairment loss is allocated to reduce the carrying amount of the asset, first against the carrying amount of any goodwill allocated to the cash-generating unit, and then to the other assets of the unit pro-rata on the basis of the carrying amount of each asset in the unit. With the exception of goodwill, all assets are subsequently reassessed for indications that an impairment loss previously recognised may no longer exist. An impairment loss is reversed if the asset's or cash-generating unit's recoverable amount exceeds its carrying amount.
1.10 Financial instruments
Loans and receivables
Financial assets are recognised in the statement of financial position when, and only when, the Group becomes a party to the contractual provisions of the instrument.
All financial assets excluding investments are classified as loans and receivables; these comprise trade and other receivables and cash and cash equivalents. Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market.
Financial assets are initially recognised at fair value plus directly attributable transaction costs.
After initial recognition, loans and receivables are measured at amortised cost using the effective interest method. Discounting is omitted where the effect of discounting is immaterial.
If there is objective evidence that there is an impairment loss on loans and receivables, the amount of the loss is measured as the difference between the asset's carrying amount and the present value of estimated future cash flows discounted at the financial asset's original effective interest rate (i.e. the effective interest rate computed at initial recognition). The carrying amount of the asset is reduced either directly or through use of an allowance account.
A financial asset is derecognised when the contractual rights to the cash flows from the financial asset expire, or when the financial asset and all substantial risks and rewards are transferred.
Financial assets held for trading
Financial assets at fair value through profit or loss include financial assets held for trading and financial assets designated upon initial recognition at fair value through profit or loss. Financial assets are classified as held for trading if they are acquired for the purpose of selling in the near term. This category includes derivative financial instruments entered into by the Company that are not designated as hedging instruments in hedge relationships as defined by IAS 39. The Company has not designated any financial assets upon initial recognition as at fair value through profit or loss.
Derivatives, including separated embedded derivatives, are also classified as held for trading unless they are designated as effective hedging instruments.
Financial assets at fair value through profit and loss are carried in the Statement of Financial Position at fair value with changes in fair value recognised in finance revenue or finance expense in the Statement of Comprehensive Income.
Impairment of financial assets
Financial assets, other than those held at fair value through profit and loss, are assessed for indicators of impairment at each reporting end date.
Financial assets are impaired where there is objective evidence that, as a result of one or more events that occurred after the initial recognition of the financial asset, the estimated future cash flows have been affected. If an asset is impaired, the impairment loss is the difference between the carrying amount and the present value of the estimated cash flows discounted at the asset's original effective interest rate. The impairment loss is recognised in profit or loss.
If there is a decrease in the impairment loss arising from an event occurring after the impairment was recognised, the impairment is reversed. The reversal is such that the current carrying amount does not exceed what the carrying amount would have been, had the impairment not previously been recognised. The impairment reversal is recognised in profit or loss.
Derecognition of financial assets
Financial assets are derecognised only when the contractual rights to the cash flows from the asset expire or are settled, or when the Group transfers the financial asset and substantially all the risks and rewards of ownership to another entity, or if some significant risks and rewards of ownership are retained but control of the asset has transferred to another party that is able to sell the asset in its entirety to an unrelated third party.
Classification of financial liabilities
Financial liabilities include borrowings and trade and other payables.
Financial liabilities are obligations to pay cash or other financial assets and are recognised in the statement of financial position when,
and only when, the Group becomes a party to the contractual provisions of the instrument.
Financial liabilities are initially recognised at fair value adjusted for any directly attributable transaction costs.
After initial recognition, financial liabilities are measured at amortised cost using the effective interest method, with the effective interest recognised as an expense in finance costs.
Derecognition of financial liabilities
Financial liabilities are derecognised when the Group's contractual obligations expire or are discharged or cancelled.
1.11 Equity instruments
Share capital represents the nominal value of shares that have been issued.
Share premium represents the excess consideration received over share capital upon the sale of shares, less any incidental costs of issue.
Retained earnings include all current and prior period retained profits.
Equity instruments issued by the group are recorded at the proceeds received, net of direct issue costs. Dividends payable on equity instruments are recognised as liabilities once they are no longer at the discretion of the group.
The merger reserve has arisen as described in note 1.2.
Within the Company, the share option reserve is recognised in respect of the cumulative fair value of share options recognised, net of issues made, where the benefit of the services received under the share option are recognised within subsidiaries of the Company. Once the share option is exercised, the element included within this reserve for fair values expensed is transferred to the share premium account. Full details on share options existing as at the year end is given in note 25.
1.12 Taxation
The tax expense represents the sum of the tax currently payable and deferred tax.
Current tax
The tax currently payable is based on taxable profit for the year. Taxable profit differs from net profit as reported in the income statement because it excludes items of income or expense that are taxable or deductible in other years and it further excludes items that are never taxable or deductible. The Group's liability for current tax is calculated using tax rates that have been enacted or substantively enacted by the reporting end date.
Deferred tax
Deferred taxes are calculated using the liability method on temporary differences between the carrying amounts of assets and liabilities and their tax bases.
A deferred tax asset is recognised for all deductible temporary differences to the extent that it is probable that taxable profit will be available against which the deductible temporary difference can be utilised, unless the deferred tax asset arises from the initial recognition of an asset or liability in a transaction that is not a business combination and at the time of the transaction, affects neither accounting profit nor taxable profit (tax loss). However, for deductible temporary differences associated with investments in subsidiaries a deferred tax asset is recognised when the temporary difference will reverse in the foreseeable future and taxable profit will be available against which the temporary difference can be utilised.
Deferred tax assets and liabilities are measured at the tax rates that are expected to apply to the period when the asset is realised or the liability is settled, based on tax rates and tax laws that have been enacted or substantively enacted by the end of the reporting period.
1.13 Provisions
Provisions are recognised when the Group has a legal or constructive present obligation as a result of a past event, it is probable that the Group will be required to settle that obligation and a reliable estimate can be made of the amount of the obligation.
The amount recognised as a provision is the best estimate of the consideration required to settle the present obligation at the reporting end date, taking into account the risks and uncertainties surrounding the obligation.
Where the effect of the time value of money is material, the amount expected to be required to settle the obligation is recognised at present value. When a provision in measured at present value the unwinding of the discount is recognised as a finance cost in profit or loss in the period it arises.
1.14 Employee benefits
The costs of short-term employee benefits are recognised as a liability and an expense, unless those costs are required to be recognised as part of the cost of stock or non-current assets.
The cost of any unused holiday entitlement is recognised in the period in which the employee's services are received.
Termination benefits are recognised immediately as an expense when the Company is demonstrably committed to terminate the employment of an employee or to provide termination benefits.
1.15 Retirement benefits
Payments to defined contribution retirement benefit schemes are charged as an expense as they fall due.
1.16 Share-based payments
The fair value of equity-settled share based payments to employees is determined at the date of grant and is expensed on a straight-line basis over the vesting period based on the Group's estimate of shares or options that will eventually vest. Full disclosure of the calculation models is given in note 25.
1.17 Leases
The economic ownership of a leased asset is transferred to the lessee if the lessee bears substantially all the risks and rewards of ownership of the leased asset. Where the Group is a lessee in this type of arrangement, the related asset is recognised at the inception of the lease at the fair value of the leased asset or, if lower, the present value of the lease payments plus incidental payments, if any. A corresponding amount is recognised as a finance lease liability.
This liability is reduced by lease payments net of finance charges. The interest element of lease payments represents a constant proportion of the outstanding capital balance and is charged to profit or loss, as finance costs over the period of the lease.
Rentals payable under operating leases, including any lease incentives received, are charged to income on a straight line basis over the term of the relevant lease except where another more systematic basis is more representative of the time pattern in which economic benefits from the lease asset are consumed.
1.18 Standards, amendments and interpretations adopted in the year
The current standards, amendments and interpretations have been adopted in the year and have not had a material impact on the reported results in the Group and Company's financial statements:
-- IAS 7 'Statement of Cash Flows': amendments in respect of the disclosure initiative.
-- IAS 12 'Income Taxes': amendment in relation to the recognition of deferred tax assets for unrealised losses.
-- Annual improvements to IFRS's (2012-2014).
Disclosures have been extended in the current reporting period to reflect the updated requirements of IAS 7 'Statement of Cash Flows'.
1.19 Standards, amendments and interpretations in issue but not yet effective
At the authorisation of these financial statements, the Group has not applied the following new and revised standards that have been issued but are not effective yet and in some cases have not been adopted by the EU:
EU effective
date - period
beginning on
or after
Amendments to IAS 40 'Investment Property' 1 January 2018
for transfers of investment property *
Amendments to IAS 28 'Long-term Interests 1 January 2019
in Associates and Joint Ventures' around *
the application of
the equity method
IFRS 9 'Financial Instruments' 1 January 2018
Amendments to IFRS 9 'Financial Instruments' 1 January 2019
for termination rights *
IFRS 16 'Leases' 1 January 2019
Annual improvements to IFRS's (2015-2017) 1 January 2019
*
IFRIC 22 'Foreign Currency Transactions 1 January 2018
and Advance Consideration' *
Amendments to IFRS 4 'Insurance Contracts' 1 January 2018
around interaction with IFRS 9
IFRIC 23 'Uncertainty over Income Tax 1 January 2019
Treatments' *
Amendments to IFRS 2 'Share-based Payment' 1 January 2018
for classification and measurement *
of share-based payment transactions
IFRS 17 'Insurance Contracts' and subsequent 1 January 2021
withdrawal of IFRS 4 'Insurance Contracts' *
IFRS 15 'Revenue from Contracts with 1 January 2018
Customers', including clarifications
made to the standard since initial
release
* These standards, amendments and interpretations have not yet been endorsed by the EU and the dates shown are the expected dates.
The adoption of IFRS 16 'Leases' is expected to have a material impact on the reported assets and liabilities on the Statement of Financial Position, although there is not expected to be any material impact from this standard on the reported results of the Group. The adoption of IFRS 9 'Financial Instruments' is not expected to impact on the reported values in the financial statements as the Group does not use complex financial instruments, although the standard may require some minor disclosure adjustments.
All other amendments, including the adoption of IFRS 15, are not expected to have a material impact on the Group's financial statements.
2 Judgements and key sources of estimation uncertainty
The preparation of the financial statements in conformity with IFRS requires management to make judgements, estimates and assumptions that affect the application of policies and reported amounts of assets and liabilities, income and expenses. The estimates and associated assumptions are based on historical experience and various other factors that are believed to be reasonable under the circumstances, the results of which form the basis of making the judgements about carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates.
Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised and in any future periods affected.
Critical judgements
The following judgements (apart from those involving estimates) have had the most significant effect on amounts recognised in the financial statements:
Basis of consolidation
The Group was formed on 27 March 2015 when Hunters Property PLC acquired shares in its subsidiaries through a share-for-share exchange. This type of common control transaction falls outside the scope of IFRS 3 and therefore UK GAAP has been referred to for best practice guidance. The result is that the Group adopted merger accounting as a basis for the Group consolidation.
Franchisee revenue & intangible assets
Franchisee sign up fees are recognised upfront at the inception of a franchisee contract, which in the Directors' opinion matches to the estimated cost of time and knowledge to create the franchiser-franchisee contractual arrangement.
Franchisee Development Grants ("FDG's") are recognised at the inception of certain contracts with franchisees, and are provided in order to assist with the transition of franchisees to the Hunters brand name. These intangibles are amortised over the life of the franchise contract, typically 10-15 years.
Key sources of estimation uncertainty
The estimates and assumptions which have a significant risk of causing a material adjustment to the carrying amount of assets and liabilities are as follows:
Provisions
The amount recognised as a provision is the best estimate of the consideration required to settle the present obligation at the reporting date. Each period the Directors assess the risks and uncertainties surrounding the obligation and review the discount rates applied when calculating the present value. When reviewing the discount rates the Directors refer to the Group weighted average cost of capital. Further details on the assumptions made for specific provisions are disclosed in note 22.
Business combinations and goodwill
The Group has made acquisitions during the year and comparative year. Judgements and estimations are made in respect of the recognition of the acquisition as a separable business, and of measurement of the provisional fair values of assets and liabilities acquired and the consideration transferred. Furthermore, estimation techniques have been used to value the intangibles acquired.
The Directors test annually for impairment of the Group's intangible assets and goodwill, details of which are given in note 12.
Accounting for acquired lettings books
The Group has acquired lettings books in the current and comparative year. Although each of these books are subsumed within the overall trade of the Group, the originally acquired book is separable and tradable in its own right, although following acquisition is managed by existing Group staff and systems. The Directors consider that recognition under IFRS 3 'Business Combinations' is the most suitable accounting treatment.
3 Revenue
IFRS 8, Operating Segments, requires operating segments to be identified on the basis of internal reports of the Group that are regularly reviewed by the Group's chief operating decision maker. The chief operating decision maker of the Group is considered to be the Board of Directors.
The Group has operating segments: Residential Sales, Lettings, and Franchising. Due to the specific nature of the Group's market, each component of revenue naturally falls within one of these segments. The operating segments are monitored by the Group's chief operating decision maker and strategic decisions are made on the basis of adjusted segment operating results. All assets, liabilities and revenues are located in, or derived in, the United Kingdom.
The Group does not have any major customers which account for 10% or more of revenues.
Segmental analysis of revenue
2017 2016
GBP000s GBP000s
Residential sales 4,609 5,042
Lettings sales 3,210 3,176
Franchisee revenues 4,648 4,035
Other 1,702 1,580
-------- --------
14,169 13,833
======== ========
Revenue analysed by geographical market
2017 2016
GBP000s GBP000s
United Kingdom 14,169 13,833
======== ========
Further disclosure of the segmental analysis of goodwill is made in note 12. Due to the nature of operations, the Directors, as the chief operating decision-making body, review financial information for the Group's overall business and have identified a single operating segment at cost and asset / liability levels. Accordingly, further disclosure has not been made of these elements.
4 Operating profit
2017 2016
GBP000s GBP000s
Operating profit for the year is
stated after charging/(crediting):
Depreciation of owned property, plant
and equipment 107 120
Depreciation of property, plant and
equipment held under finance leases 30 14
Gain on disposal of property, plant
and equipment - (30)
Amortisation of intangible assets 755 597
Gain on disposal of intangible assets (24) (13)
Share-based payments (note 25) 118 192
Operating lease charges (including
property rent) 668 724
======== ========
The Group's subsidiary Realcube Limited has undertaken Research & Development activities on which tax credits were received totalling GBP22,000 (2016 - GBPnil). Expenses in relation to this are included within employment costs.
5 Auditor's remuneration
2017 2016
GBP000s GBP000s
Fees payable to the Company's auditor
and its associates:
For audit services
Audit of the financial statements
of the Group and Company 15 15
Audit of the Company's subsidiaries 27 25
-------- --------
42 40
======== ========
In addition to the above, there were GBP1,000 of non-audit fees paid to the Group's auditors for a review of compliance with financing covenants in each of the current and comparative years.
6 Employees
The average monthly number of persons (including Directors) employed by the Group during the year was:
Group Company
2017 2016 2017 2016
Number Number Number Number
Directors 5 5 5 5
Sales and administration 184 184 - -
------- ------- ------- -------
189 189 5 5
======= ======= ======= =======
Their aggregate remuneration comprised:
Group Company
2017 2016 2017 2016
GBP000s GBP000s GBP000s GBP000s
Wages and salaries 5,530 5,718 - -
Social security costs 522 511 - -
Pension costs 128 89 - -
-------- -------- -------- --------
6,180 6,318 - -
======== ======== ======== ========
Details of Directors' remuneration is provided in note 30.
7 Finance income
2017 2016
GBP000s GBP000s
Interest income
Interest on bank & similar deposits 18 4
-------- --------
Total income 18 4
Interest income includes the following:
Interest on financial assets not
measured at fair value through profit
or loss 18 4
======== ========
8 Finance costs
2017 2016
GBP000s GBP000s
Interest on financial liabilities
measured at amortised cost:
Interest on bank overdrafts and loans 163 98
Interest on finance leases 11 13
-------- --------
174 111
-------- --------
Other finance costs:
Unwinding of discount on loans and
borrowings 6 50
Unwinding of discount on provisions 5 7
-------- --------
11 57
-------- --------
Total finance costs 185 168
======== ========
9 Taxation
2017 2016
GBP000s GBP000s
Current tax
UK corporation tax on profits for
the current period 314 246
Adjustments in respect of prior periods (22) (1)
-------- --------
Total current tax 292 245
-------- --------
Deferred tax
Origination and reversal of temporary
differences (84) (31)
Changes in tax rates (45) (21)
Deferred tax on share-based payments
charge (30) (12)
-------- --------
Total deferred tax (159) (64)
-------- --------
Total tax charge 133 181
======== ========
The charge for the year can be reconciled to the profit per the Consolidated Statement of Comprehensive Income as follows:
2017 2016
GBP000s GBP000s
Profit before taxation 1,028 987
======== ========
Expected tax charge based on a corporation
tax rate of 19.25% (2016 - 20%) 198 197
Tax effect of expenses that are not
deductible in determining taxable
profit 4 4
Tax effect of utilisation of tax
losses not previously recognised - (6)
Effect of change in corporation tax
rate (45) (21)
Depreciation on assets not qualifying
for tax allowances 3 2
Amortisation on assets not qualifying
for tax allowances 17 8
Share based payment charge (25) (5)
Under provided in prior years (in
respect of R&D) (22) (1)
Other adjustments 3 3
-------- --------
Total tax charge 133 181
======== ========
In addition to the amount charged to the income statement and other comprehensive income, the following amounts relating to tax have been recognised directly in equity:
2017 2016
GBP000s GBP000s
Deferred tax:
Change in estimated excess tax deductions
related to share based payments 26 (52)
======== ========
The UK corporation tax rate was 20% until 31 March 2017, and 19% thereafter.
A reduction in the UK corporation tax rate from 19% to 17% (effective from 1 April 2020) was enacted in March 2017. These rates have therefore been considered when calculating deferred tax at the reporting date. Deferred tax balances at the reporting date are measured at 17% (2016: 18%) except when the timing difference is expected to be substantially unwound before 1 April 2020, in which case a rate of 19% has been used to measure the balance.
10 Dividends
2017 2016 2017 2016
Per share Per share GBP000s GBP000s
Amounts recognised as distributions
to equity holders:
Final paid (pence per share) 1.30 1.00 412 283
Interim paid (pence per share) 0.70 0.60 222 170
---------- ---------- -------- --------
2.00 1.60 634 453
---------- ---------- -------- --------
The proposed final dividend for the year ended 31 December 2017 is:
2017 2016
Total Total
Per share GBP000s Per share GBP000s
Ordinary shares (pence
per share) 1.50 477 1.30 412
========= ======== ========= ========
The proposed final dividend is subject to approval by shareholders and has not been included as a liability in these financial statements.
11 Earnings per share
The calculation of the basic and diluted earnings per share is based on the following data:
2017 2016
GBP000s GBP000s
Earnings
Earnings for the purpose of basic
earnings per share being net
profit attributable to owners of
the parent 895 806
Effects of dilutive potential ordinary
shares - -
-------- --------
Earnings for the purposes of diluted
earnings per share 895 806
======== ========
2017 2016
No. No.
Number of shares
Weighted average number of ordinary
shares for the purposes of basic
earnings per share 31,022,076 28,365,454
Net weighted average number of dilutive
potential ordinary shares for the
purposes of dilutive earnings per
share 1,282,143 1,264,396
---------- ----------
Weighted average number of ordinary
shares for the purposes of diluted
earnings per share 32,304,219 29,629,850
========== ==========
Basic earnings per share (pence per
share) 2.89 2.84
========== ==========
Diluted earnings per share (pence
per share) 2.77 2.72
========== ==========
In each period there were share options outstanding. As at 31 December 2017 these were mostly in the money, and are due to expire at various stages over the next 10 years.
The Directors use adjusted earnings before time-value interest, interest income, amortisation, costs of acquisition, and share-based payment expenses ("Adjusted Earnings") as a measure of ongoing profitability and performance. The calculated Adjusted Earnings for the current period of accounts is as follows:
2017 2016
GBP000s GBP000s
Profit after taxation attributable
to equity owners of the parent 895 806
Adjusted for:
Time-value interest costs 11 57
Interest income (18) (4)
Amortisation 755 597
Costs of acquisition 50 30
Share-based payment expense 118 192
-------- --------
Adjusted Earnings 1,811 1,678
======== ========
Basic Adjusted Earnings per share
(pence per share) 5.84 5.92
======== ========
12 Goodwill and other intangible assets
FDG's Customer
Goodwill Software & rebrands Brands lists Total
Group GBP000s GBP000s GBP000s GBP000s GBP000s GBP000s
Cost
At 1 January 2016 4,008 593 1,118 634 1,662 8,015
Additions - separately
acquired - 27 857 3 - 887
Additions - business
combinations - - - - 378 378
Disposals - - (36) - - (36)
-------- -------- ----------- -------- -------- --------
At 31 December
2016 4,008 620 1,939 637 2,040 9,244
Additions - separately
acquired - 138 730 - - 868
Additions - business
combinations 653 - - - 2,447 3,100
Disposals - - (106) - - (106)
-------- -------- ----------- -------- -------- --------
At 31 December
2017 4,661 758 2,563 637 4,487 13,106
-------- -------- ----------- -------- -------- --------
Amortisation and
impairment
At 1 January 2016 35 40 129 77 322 603
Amortisation charged
for the year - 85 131 64 317 597
Disposals - - (7) - - (7)
-------- -------- ----------- -------- -------- --------
At 31 December
2016 35 125 253 141 639 1,193
Amortisation charged
for the year - 90 209 65 391 755
Disposals - - (16) - - (16)
-------- -------- ----------- -------- -------- --------
At 31 December
2017 35 215 446 206 1,030 1,932
-------- -------- ----------- -------- -------- --------
Carrying amount
At 31 December
2017 4,626 543 2,117 431 3,457 11,174
======== ======== =========== ======== ======== ========
At 31 December
2016 3,973 495 1,686 496 1,401 8,051
======== ======== =========== ======== ======== ========
The Company had no intangible assets as at 31 December 2017 or 31 December 2016.
Franchise Development Grants ("FDG's") and rebrand costs are expenses incurred at the inception of certain contracts with franchisees in order to assist with the transition to using the Hunters brand name. The amounts invested are amortised over the minimum life of the underlying franchise contract, typically 10 to 15 years.
The Group tests goodwill annually for impairment, or more frequently if events or changes in circumstances indicate that the asset might be impaired. Goodwill is assessed for impairment by comparing the carrying values with the value-in-use calculation, which is determined by calculating the net present value (NPV) of future cash flows arising from the original acquired business.
The NPV of future cash flows is based on budgets and forecasts for the next 5 years to 2022, using growth rates of 0% - 3% based on past experience and outlook. Thereafter growth is assumed to be 0% - 3% in to perpetuity based on long term housing sector growth rates and current housing transaction volumes. A discount rate of between 10% and 12% has been used based on the Group's estimated cost of capital, and varied based on the risk profile of the underlying asset.
The key sensitivities in assessing the value in use of goodwill are forecast cashflows and the discount rate applied as follows:
-- A 1% reduction in long term growth rates would have no impact on carrying values; and -- A 2% increase in the discount applied would have no impact on carrying values.
No reasonably possible change in assumptions has been identified that would lead to a material impairment.
The carrying amounts of goodwill have been assigned to the following cash-generating units:
2017 2016
Group GBP000s GBP000s
Residential sales 1,330 1,330
Lettings 561 561
Franchising 2,701 2,048
Other 34 34
-------- --------
4,626 3,973
======== ========
13 Property, plant and equipment
Leasehold Fixtures,
land Plant fittings Motor
and buildings and machinery and equipment vehicles Total
Group GBP000s GBP000s GBP000s GBP000s GBP000s
Cost
At 1 January 2016 12 455 37 83 587
Additions 4 43 174 5 226
Disposals - (1) - (48) (49)
-------------- -------------- -------------- --------- --------
At 31 December 2016 16 497 211 40 764
Additions - 51 1 - 52
-------------- -------------- -------------- --------- --------
At 31 December 2017 16 548 212 40 816
-------------- -------------- -------------- --------- --------
Depreciation and impairment
At 1 January 2016 9 189 18 31 247
Depreciation charged
in the year 2 87 15 30 134
Eliminated in respect
of disposals - - - (46) (46)
-------------- -------------- -------------- --------- --------
At 31 December 2016 11 276 33 15 335
Depreciation charged
in the year 1 78 42 16 137
Eliminated in respect
of disposals - - - - -
-------------- -------------- -------------- --------- --------
At 31 December 2017 12 354 75 31 472
-------------- -------------- -------------- --------- --------
Carrying amount
At 31 December 2017 4 194 137 9 344
============== ============== ============== ========= ========
At 31 December 2016 5 221 178 25 429
============== ============== ============== ========= ========
The Company had no property, plant and equipment assets at 31 December 2017 or 31 December 2016.
The net carrying value of property, plant and equipment includes the following in respect of assets held under finance leases or hire purchase contracts, which are secured by the lessors' title to the assets. The depreciation charge in respect of such assets amounted to GBP40,901 (2016 - GBP24,622) for the year.
2017 2016
Group GBP000s GBP000s
Fixtures, fittings and equipment 81 172
Motor vehicles - 11
-------- --------
81 183
======== ========
Bank borrowings are secured by a fixed and floating charge over the current and future assets of the Group that include the property plant and equipment, as disclosed further in note 17.
14 Investments
Group Company
2017 2016 2017 2016
Notes GBP000s GBP000s GBP000s GBP000s
Investments in subsidiaries 32 - - 867 867
Other investments
in subsidiaries 32 - - 322 204
Unlisted investments 1 1 - -
-------- -------- -------- --------
1 1 1,189 1,071
======== ======== ======== ========
Movements in non-current investments
Shares
Group GBP000s
Cost or valuation
At 1 January 2016, 31 December 2016 and 31
December 2017 1
Carrying amount
--------
At 31 December 2017 1
========
At 31 December 2016 1
========
Equity
investments Other investments
in subsidiaries in subsidiaries Total
Company GBP000s GBP000s GBP000s
Cost
At 1 January 2016 867 12 879
Additions through share based
payment expense - 192 192
---------------- ----------------- --------
At 31 December 2016 867 204 1,071
Additions through share based
payment expense - 118 118
---------------- ----------------- --------
At 31 December 2017 867 322 1,189
Impairment
At 1 January 2017 - - -
At 31 December 2017 - - -
Carrying amount
At 31 December 2017 867 322 1,189
================ ================= ========
At 31 December 2016 867 204 1,071
================ ================= ========
15 Business combinations
Acquisition of Besley Hill
On 24 March 2017 the Group acquired Besley Hill, in a trade acquisition. The consideration paid totalled GBP2,500,000, being settled by GBP2,250,000 paid in cash, and an issue of GBP250,000 worth of Ordinary shares in Hunters Property Plc.
As part of the acquisition, the Directors have identified an intangible asset, being the franchisee contracts, including a renewal expectation, being determined by using the average value of the contracts, growing at 2% per annum, and discounted at 12% per annum to determine the present value.
Fair value
Carrying Fair value recognised
value adjustments on acquisition
GBP000s GBP000s GBP000s
Assets
Intangible assets - customer
lists - 2,253 2,253
-------- ------------ ---------------
Total assets - 2,253 2,253
Liabilities
Deferred tax liabilities - (406) (406)
-------- ------------ ---------------
Total liabilities - (406) (406)
-------- ------------ ---------------
Total identifiable net assets - 1,847 1,847
======== ============ ===============
Goodwill arising on acquisition 653
---------------
Purchase consideration transferred 2,500
===============
The analysis of the cash flows on acquisition is:
GBP000s
Transaction costs of the acquisition (45)
Cash and cash equivalents acquired on combination -
Cash and cash equivalents paid for the combination (2,250)
-------
Net cash flow on acquisition (2,295)
=======
From the date of acquisition, Besley Hill contributed GBP367,264 of revenue and GBP110,027 of profit before tax from continuing operations of the Group. The directors do not consider it practical to disclose revenues and profits had the acquisition taken place at the start of the year.
Acquisition of a lettings book
In March 2017 the Group acquired a lettings book. The consideration paid totalled GBP160,000, being settled in cash.
As part of the acquisition, the Directors have identified an intangible asset, being the lettings book. This was determined to be equal to the amount paid for the book, after adjustment for deferred tax. Historical data and forecasts have been used, together with a 10% discount rate (reduced to reflect the relatively low risk profile of a lettings book acquisition) and an assumption of a useful life of 12 years for the lettings book to estimate the fair value of this intangible.
Fair value
Carrying Fair value recognised
value adjustments on acquisition
GBP000s GBP000s GBP000s
Assets
Intangible assets - customer
lists - 194 194
-------- ------------ ---------------
Total assets - 194 194
Liabilities -
Deferred tax liabilities - (34) (34)
-------- ------------ ---------------
Total liabilities - (34) (34)
-------- ------------ ---------------
Total identifiable net assets - 160 160
======== ============ ===============
Goodwill arising on acquisition -
---------------
Purchase consideration transferred 160
===============
The analysis of the cash flows on acquisition is:
GBP000s
Transaction costs of the acquisition (5)
Cash and cash equivalents acquired with the
lettings book -
Cash and cash equivalents paid for the lettings
book (160)
-------
Net cash flow on acquisition (165)
=======
From the date of acquisition, the lettings book contributed GBP35,691 of revenue and GBP22,141 of profit before tax from continuing operations of the Group. The directors do not consider it practical to disclose revenues and profits had the acquisition taken place at the start of the year.
16 Trade and other receivables
Group Company
2017 2016 2017 2016
GBP000s GBP000s GBP000s GBP000s
Amounts falling due within one
year:
Trade receivables 1,103 852 - -
Amounts due from subsidiary undertakings - - 5,482 3,120
Other receivables 78 144 - -
Prepayments and accrued income 464 456 - -
-------- -------- -------- --------
1,645 1,452 5,482 3,120
======== ======== ======== ========
Trade receivables at the reporting date are shown above net of provisions.
Trade receivables are stated net of impairment for estimated irrecoverable amounts of GBP76,361 (2016: GBP93,271). This impairment has been determined by reference to past default experience and known issues. Write offs are made when the irrecoverable amount becomes certain. The Directors consider that the carrying amount of trade and other receivables approximates to their fair value.
Movement on the allowance for irrecoverable amounts on trade receivables are as follows:
2017 2016
GBP000s GBP000s
Beginning of the year 93 125
Provision for bad receivables 2 15
Released during the year (19) (47)
-------- --------
End of the year 76 93
======== ========
An analysis of the trade receivables past due but not impaired is:
2017 2016
GBP000s GBP000s
60 to 120 days 86 27
More than 120 days 72 135
Less provision (76) (93)
-------- --------
Total trade receivables past due but
not impaired 82 69
Add:
Less than 60 days 1,021 783
-------- --------
Net trade receivables 1,103 852
======== ========
The Directors consider the credit quality of trade and other receivables that are neither past due nor impaired to be good.
17 Borrowings
2017 2016
Group GBP000s GBP000s
Deferred consideration debenture loans - 287
Bank loans 3,860 2,072
-------- --------
3,860 2,359
======== ========
Payable within one year 77 366
Payable after one year 3,783 1,993
======== ========
The Group holds two flexible loan facilities.
The first loan has a maximum facility amounting to GBP5,550,000; at the year end GBP3,597,106 had been drawn down and is disclosed as payable after one year. The loan has 5 year repayment terms and bears interest at 2.80% above Libor.
The second loan had an amount of GBP349,329 outstanding at the year end. The loan is repayable at GBP90,000 per annum and bears interest at 2.80% above Libor.
Included within the above are establishment fees of GBP85,000 (2016 - GBP88,000) which are netted off the total liability presented. The fees are expensed to the Income Statement on a straight line basis over the term of the loan.
Both the above bank loans are secured by a fixed and floating charge over the current and future assets of the Group. All of the Group's borrowings are due for repayment within five years.
Debenture loans relate to non-interest bearing loan notes issued as deferred consideration which were fully redeemed on 31 July 2017. These were carried at their present value, determined using the Company's discount rate of 10%. Finance costs were recognised as the debenture loan unwound towards maturity.
18 Obligations under finance leases
Future minimum lease payments due under finance leases:
2017 2016
Group GBP000s GBP000s
Within one year 26 58
In two to five years 71 97
-------- --------
97 155
Less: future finance charges (16) (27)
-------- --------
81 128
======== ========
The finance leases relate to office equipment included within non-current assets. There are no lease incentives or contingent elements attaching to the leases.
19 Current trade and other payables
Group Company
2017 2016 2017 2016
GBP000s GBP000s GBP000s GBP000s
Other taxation and social security 575 711 - -
Trade payables 752 645 - -
Other payables 249 260 - -
Accruals and deferred income 715 760 26 27
-------- -------- -------- --------
2,291 2,376 26 27
======== ======== ======== ========
20 Non-current trade and other payables
Group Company
2017 2016 2017 2016
GBP000s GBP000s GBP000s GBP000s
Other payables 19 52 - -
======== ======== ======== ========
21 Financial instruments
Market and liquidity risks
The Group trades entirely within the UK property market, and accordingly there is a risk relating to the underlying performance of that market; this creates an exposure to the risk of large-scale failure in the property trading market which would have a corresponding impact on the results of the Group. The Directors monitor this risk closely with the intention to foresee downturns in trade.
Within the Group there exists a sizeable lettings division which generates a fixed percentage income based on the letting and management of properties owned by third parties, and the Directors consider this to be a more secure income stream and a suitable diversification of the trade and corresponding risk, based on historic performance where typically a downturn in the property trading market creates more buoyancy within the lettings market, and vice versa. As such, the Directors believe that the Group maintains sufficient liquidity and flexibility to continue trading through a potential downturn in the UK property market.
The Group has a bank loan and loan facility upon which interest is charged at 2.8% over the Bank of England base rate. The outstanding value of these bank loans at the year end are GBP3.945 million (2016 - GBP2.160 million). The directors do not consider that the Group is exposed to a material risk from fluctuations in these interest rates; had the base rate been 2.0% higher throughout the increased interest costs would have been approximately GBP88,000 (2016 - GBP43,000).
The Group makes use of structured loans to finance its acquisitions and ongoing trading activities as an alternative to overdraft financing, due to the certainty of repayment timings and predictable lower interest rates which attract to this. Accordingly, the Directors consider that the market risks arising from these interest-bearing loans are acceptable and minimal on a risk-reward profile compared to overdraft finance.
Similarly, fixed rate finance lease agreements are used to acquire property, plant and equipment; this ensures that the Group maintains its existing working capital and ensures certainty of costs at the point of acquisition of those assets.
The Group does not trade in overseas markets and has no financial instruments denominated in non-Sterling currencies, and accordingly it has no exposure to currency risks.
Credit risk
The Group does not make sales under the traditional credit term agreement model, with cash typically being recognised at the completion date of property or upon receipt of regular rent from tenants; credit is, however, granted to franchisees, financial services partners and survey & valuation partners.
The highest risk exposure is in relation to loans and franchisees. The Group closely monitors the performance of its franchisees, on a frequent and ongoing basis. Operationally the Group are actively involved in the running of the franchising businesses, including frequent exchange of financial and key performance data, and are able to manage their own credit risk by using this knowledge to minimise exposure to potential bad debt. Additionally, franchisees are encouraged to remit via Direct Debit arrangements, which helps to maintain the Group's working capital whilst mitigating against long-term credit risk exposure.
Only reputable and accredited partners are used, and ledger balances are carefully monitored to minimise exposure to material credit risk. The Group's maximum exposure is represented by the carrying amounts in the financial statements, which are shown in the table below.
Capital management
The Group's objectives when managing capital are to safeguard the Group's ability to continue as a going concern in order to provide returns for shareholders and other stakeholders. The Group manages the capital structure, being cash and cash equivalents, availability of longer term bank funding, and reinvestment of a proportion of profits generated, and makes changes in light of movements in economic conditions. In order to maintain or adjust the capital structure, the Group may adjust its borrowings and investment decisions, as evidenced when bank borrowing arrangements were replaced during the comparative year.
Group Company
2017 2016 2017 2016
GBP000s GBP000s GBP000s GBP000s
Carrying amount of financial assets
Debt instruments measured at amortised
cost 2,762 2,182 5,483 3,120
Equity instruments measured at
cost less impairment 1 1 1,188 1,071
-------- -------- -------- --------
2,763 2,183 6,671 4,191
======== ======== ======== ========
Carrying amount of financial liabilities
Measured at amortised cost 4,962 3,442 26 26
======== ======== ======== ========
The undiscounted contractual maturity analysis for Group financial instruments is shown below. The maturity analysis reflects the contractual undiscounted cashflows, including future interest charges, which may differ from the carrying value of the liabilities as at the reporting date.
Demand From From
and less From 12 months 2 to
than 3 to to 2 5
Financial assets 3 months 12 months years years Total
Trade and other receivables 996 - - - 996
Cash and cash equivalents 1,187 - - - 1,187
--------- ---------- ---------- ------ -----
As at 31 December 2016 2,183 - - - 2,183
========= ========== ========== ====== =====
Trade and other receivables 1,181 - - - 1,181
Cash and cash equivalents 1,582 - - - 1,582
--------- ---------- ---------- ------ -----
As at 31 December 2017 2,763 - - - 2,763
========= ========== ========== ====== =====
Demand
and
less From From
than 3 to From 12 months 2 to
Financial liabilities 3 months 12 months to 2 years 5 years Total
Trade and other payables 887 17 23 17 944
Debenture loans - 295 - - 295
Bank loans and overdrafts 23 56 90 1,904 2,073
Other loans - 19 - - 19
Finance leases 8 38 26 55 127
--------- ---------- -------------- -------- -----
As at 31 December 2016 918 425 139 1,976 3,458
========= ========== ============== ======== =====
Trade and other payables 1,001 - - - 1,001
Other loans - 19 - - 19
Bank loans and overdrafts 23 55 90 3,693 3,861
Finance leases 4 14 21 42 81
--------- ---------- -------------- -------- -----
As at 31 December 2017 1,028 88 111 3,735 4,962
========= ========== ============== ======== =====
22 Provisions for liabilities
Group
2017 2016
Notes GBP000s GBP000s
Contingent acquisition costs - 20
Office dilapidations provision 55 46
-------- --------
55 66
Deferred tax liabilities 23 768 456
-------- --------
823 522
======== ========
Movements on provisions apart from deferred tax liabilities:
Contingent Office
acquisition dilapidations
costs provision Total
Group GBP000s GBP000s GBP000s
At 1 January 2016 37 38 75
Additional provisions in the
year - 4 4
Utilisation of provision (20) - (20)
Unwinding of discount 3 4 7
------------ -------------- --------
At 31 December 2016 20 46 66
Additional provisions in the
year - 4 4
Release of provision (20) - (20)
Unwinding of discount - 5 5
------------ -------------- --------
At 31 December 2017 - 55 55
============ ============== ========
The contingent acquisition costs relate to amounts provided in respect of contingent payments due arising from the acquisition of Hunters Group Limited during the year to 31 December 2014. The provision is discounted to present value, and was cleared in July 2017 when the amount was ultimately found to not be due.
The office dilapidations provision has been created in respect of restoration costs anticipated for an office leased by the Group. The provision is anticipated to result in an ultimate cash outflow of GBP75,000 by the end of 2019.
23 Deferred taxation
The following is the analysis of the deferred tax balances for financial reporting purposes:
Liabilities Assets
2017 2016 2017 2016
Group GBP000s GBP000s GBP000s GBP000s
Accelerated capital allowances 36 46 - -
Fair value adjustments to intangible
assets on business combinations 716 410 - -
Share based payments - - 68 64
Dilapidations provision - - 10 8
Financial instrument spreading 16 - - -
Other provisions and accruals - - 9 10
-------- -------- -------- --------
768 456 87 82
======== ======== ======== ========
The Company did not have any deferred tax balances as at 31 December 2017 or 31 December 2016.
2017 2016
Group GBP000s GBP000s
Movements in the year:
Net liability at 1 January 2017 374 422
Credit to profit and loss (114) (43)
Credit to equity 26 (52)
Effect of change in tax rate - income
statement (45) (21)
Acquired on business combinations 440 68
-------- --------
Net liability at 31 December 2017 681 374
======== ========
Movements by category of deferred tax are as follows:
Charge Effect
Liability/(asset) to of change Acquired Liability/(asset)
at profit in on business at
1 January or tax combinations 31 December
2016 loss rate & other 2016
GBP000s GBP000s GBP000s GBP000s GBP000s
Accelerated capital
allowances 19 30 (3) - 46
Decelerated capital
allowances (17) 17 - - -
Fair value adjustments
to intangible
assets on business
combinations 446 (85) (19) 68 410
Dilapidations provision (7) (1) - - (8)
Share based payments - (12) - (52) (64)
Other provisions
and accruals (19) 8 1 - (10)
----------------- -------- ---------- ------------- -----------------
Net deferred tax
movement 422 (43) (21) 16 374
================= ======== ========== ============= =================
Charge Effect
Liability/(asset) to of change Acquired
at profit in on business Liability/(asset)
1 January or tax combinations at 31 December
2017 loss rate & other 2017
GBP000s GBP000s GBP000s GBP000s GBP000s
Accelerated capital
allowances 46 (7) (3) - 36
Fair value adjustments
to intangible
assets on business
combinations 410 (92) (42) 440 716
Dilapidations provision (8) (2) - - (10)
Share based payments (64) (30) - 26 (68)
Financial instrument
spreading - 16 - - 16
Other provisions
and accruals (10) 1 - - (9)
----------------- -------- ---------- ------------- -----------------
Net deferred tax
movement 374 (114) (45) 466 681
================= ======== ========== ============= =================
Within RealCube Limited there exists tax losses totalling GBP449,657 (2016 - GBP431,528) on which no deferred tax asset is recognised, due to restrictions on the use of these losses and uncertainty on timing of potential utilisation.
24 Retirement benefit schemes
2017 2016
GBP000s GBP000s
Defined contribution schemes
Charge to profit and loss in respect
of defined contribution schemes 128 89
======== ========
A defined contribution pension scheme is operated for all qualifying employees. The assets of the scheme are held separately from those of the Group in an independently administered fund.
25 Share-based payment transactions
Number of share Weighted average exercise
options price
2016 2016
2017 Number 2017 GBP
Group Number (As restated) GBP (As restated)
Outstanding at 1 January 2017 2,492,060 2,219,967 0.23 0.43
Granted - 675,000 - 0.04
Exercised (356,363) (349,657) 0.28 0.19
Expired (152,697) (53,250) 0.42 0.73
--------- -------------- ------ -------------------
Outstanding at 31 December 2017 1,983,000 2,492,060 0.22 0.23
========= ============== ====== ===================
Exercisable at 31 December 2017 972,750 935,060 0.10 0.25
========= ============== ====== ===================
The options exercised during the year had a weighted average share price on the date of exercise of GBP0.541.
The options outstanding at 31 December 2017 had an exercise price ranging from GBP0.04 to GBP0.73, and a remaining contractual life ranging between January 2018 and January 2026.
2016 has been restated to split out the pre-listing Director share options.
The options exist at 31 December 2017 across the following share option schemes:
Exercise
price
Number per share Fair value Vesting
of shares (GBP) of scheme period
Option name & date of issue
Pre-listing Employee share options 575,000 0.16 - 3 years
Pre-listing Director share options 425,000 0.16 - 3 years
Options issued January 2015 150,000 0.40 9,455 3 years
Options issued December 2015 158,000 0.73 1,063 3 years
Options issued January 2016 - 1 175,000 0.04 99,371 1 year
Options issued January 2016 - 2 175,000 0.04 97,429 2 years
Options issued January 2016 - 3 175,000 0.04 95,524 3 years
Up to 3.25
Options issued January 2016 - 4 150,000 0.04 81,681 years
---------- ----------
1,983,000 384,523
========== ==========
The fair value of the schemes are being expensed over the vesting period. All share options expire 10 years after the date of issue.
Group Company
2017 2016 2017 2016
GBP000s GBP000s GBP000s GBP000s
Expenses recognised in the year
Arising from equity settled share
based
payment transactions 118 192 - -
======== ======== ======== ========
26 Share capital
2017 2016
Group and Company GBP000s GBP000s
Ordinary share capital
Issued and fully paid
31,814,590 (2016 - 28,636,649) Ordinary
shares of 4p each 1,272 1,145
======== ========
The Company's sole class of equity shares carry one vote per share, and rank pari-passu in respect of dividend and capital distribution rights.
Ordinary
Number
Reconciliation of movements during the year:
At 1 January 2017 28,636,649
Issue of fully paid shares 3,177,941
----------
At 31 December 2017 31,814,590
==========
During the year, 3,177,941 shares were issued at a total premium of GBP1,548,242. The Company incurred transaction costs relating to the issue of new shares of GBP75,933.
27 Share premium account
Group Company
2017 2016 2017 2016
GBP000s GBP000s GBP000s GBP000s
At beginning of year 2,633 2,579 2,633 2,579
Issue of new shares 1,544 53 1,544 53
Share issue expenses (76) - (76) -
Exercise of share options 4 1 4 1
-------- -------- -------- --------
At end of year 4,105 2,633 4,105 2,633
======== ======== ======== ========
During the period, shares were issued at a premium of GBP1,543,805, which related to a new issue enacted to fund the acquisition of Besley Hill, and also the exercise of share options granted in prior periods. On exercise, a transfer of GBP4,437 has been recognised from other reserves in respect of the fair value of share options expensed matching to the shares issued.
28 Guarantees and contingent liabilities
At 31 December 2017 the Group held client monies in approved client accounts amounting to GBP4,768,610 (2016: GBP4,481,494). Neither the cash asset nor any corresponding obligation has been recognised by the Group.
The Company had no other contingent liabilities as at 31 December 2017.
29 Operating lease commitments
Lessee
Operating leases relating to land and buildings are on normal commercial terms with no rent-free periods or other incentives, and include requirements to restore sites at the end of the agreements for which amounts have been provided for. Other agreements relate to motor vehicles on terms of one to three years, with no lease incentives.
At the reporting end date the Group had outstanding commitments for future minimum lease payments under non-cancellable operating leases, which fall due as follows:
2017 2016
Group GBP000s GBP000s
Land and buildings
Within one year 526 617
Between two and five years 1,674 1,661
In over five years 1,696 1,763
-------- --------
3,896 4,041
-------- --------
Other
Within one year 63 22
Between two and five years 56 1
-------- --------
119 23
-------- --------
4,015 4,064
======== ========
30 Directors' remuneration and transactions
2017 2016
GBP000s GBP000s
Remuneration for qualifying services 463 465
Company pension contributions to defined
contribution schemes 28 25
-------- --------
491 490
======== ========
The number of Directors for whom retirement benefits are accruing under defined contribution schemes amounted to 3 (2016 - 3).
During the year to 31 December 2017 the Directors received remuneration as follows:
Benefits
Salary Bonus in kind Pension Total
GBP000s GBP000s GBP000s GBP000s GBP000s
Director
Ms G Frew 118 49 3 11 181
Mr H Hill 50 - - - 50
Mr K Hollinrake 59 - 2 5 66
Mr E Jones 109 42 1 12 164
Mr D Fielding 30 - - - 30
-------- -------- -------- -------- --------
Total 366 91 6 28 491
======== ======== ======== ======== ========
During the year to 31 December 2016 the Directors received remuneration as follows:
Benefits
Salary Bonus in kind Pension
GBP000s GBP000s GBP000s GBP000s Total GBP000s
Director
Ms G Frew 112 50 3 11 176
Mr H Hill 54 - - - 54
Mr K Hollinrake 59 - 2 3 64
Mr E Jones 104 49 2 11 166
Mr D Fielding 30 - - - 30
-------- -------- -------- -------- -------------
Total 359 99 7 25 490
======== ======== ======== ======== =============
Share options
No Directors exercised share options during the current or prior year.
During the year the Directors of the Group received dividends as follows:
2017 2016
GBP000s GBP000s
Director
Ms G Frew 35 28
Mr H Hill 2 3
Mr K Hollinrake 84 67
Mr E Jones 74 58
Mr D Fielding 1 1
-------- --------
196 157
======== ========
31 Related party transactions
Remuneration of key management personnel
The key management personnel are considered to be the Board of Directors and members. Refer to note 30 for details of key management personnel remuneration.
32 Subsidiaries
Details of the Company's subsidiaries at 31 December 2017 are as follows:
% Held
Name of undertaking and
country Class
of incorporation or of
residency Nature of business shareholding Direct Indirect
Hunters Property England
Group Limited & Wales Estate agents Ordinary 100.00
Greenrose Network England Franchising of
(Franchise) Limited & Wales estate agents Ordinary 100.00
Lettings and
England management of
Hapollo Limited & Wales office spaces Ordinary 100.00
Herriot Cottages England
Limited & Wales Dormant Ordinary 100.00
Hunters (Midlands) England
Limited & Wales Estate agents Ordinary 100.00
Hunters Financial England
Services Limited & Wales Financial services Ordinary 100.00
Hunters Franchising England Franchising of
Limited & Wales estate agents Ordinary 100.00
Hunters Group England Intermediate
Limited & Wales holding company Ordinary 100.00
Hunters Land & England
New Homes Limited & Wales Dormant Ordinary 100.00
Hunters Partners England Franchising of
Limited & Wales estate agents Ordinary 100.00
Hunters Survey England
& Valuation Limited & Wales Dormant Ordinary 100.00
Maddison James England
Limited & Wales Dormant Ordinary 100.00
England
RealCube Limited & Wales Software Ordinary 100.00
RealCube Technology England Intermediate
Limited & Wales holding company Ordinary 100.00
The registered office of Hunters Group Limited, Hunters Financial Services Limited, and Hunters Survey & Valuation Limited is 1626 High Street, Knowle, Solihull, West Midlands, B93 0JU. All other subsidiaries have the same registered office as the Parent Company.
The investments in subsidiaries are all stated at cost less impairment in the financial statements.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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