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| Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
|---|---|---|---|---|---|
| Property Franchise Group Plc (the) | LSE:TPFG | London | Ordinary Share | GB00BH0WFH67 | ORD 1P |
| Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
|---|---|---|---|---|---|---|---|---|---|---|
| 5.00 | 1.30% | 390.00 | 385.00 | 395.00 | 390.00 | 385.00 | 385.00 | 40,976 | 15:11:15 |
| Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
|---|---|---|---|---|---|
| Real Estate Agents & Mgrs | 27.16M | 7.23M | 0.2256 | 17.29 | 124.96M |
From May 2022 to May 2024
TIDMTPFG
RNS Number : 1875Z
Property Franchise Group PLC (The)
13 September 2022
13 September 2022
THE PROPERTY FRANCHISE GROUP PLC
(the "Company" or the "Group")
Interim Results for the six months ended 30 June 2022
Full Year results anticipated to be in-line with market expectations
The Property Franchise Group PLC, the UK's largest property franchisor, is pleased to announce its interim results for the period ended 30 June 2022.
Financial Highlights
Hot Features
Premium
-- Group revenue increased 18% to GBP13.1m (H1 2021: GBP11.1m)*
-- Management Service Fees ("royalties") increased 5% to GBP7.5m (H1 2021: GBP7.1m)
-- Adjusted operating margin** 41% (H1 2021: 47%)
-- Adjusted EBITDA*** increased 8% to GBP5.7m (H1 2021: GBP5.3m)
-- Profit before tax increased 9% to GBP3.8m (H1 2021: GBP3.5m)
-- Adjusted basic earnings per share of 14.1p (H1 2021: 15.3p). The 8% decrease reflects the 10% increase to the shares in issue as a result of the Hunters acquisition.
-- Highly cash generative with net debt of GBP2.6m at 30 June 2022 (30 June 2021: GBP5.4m). -- Increased interim dividend by 11% to 4.2p (H1 2021: 3.8p)
* Hunters acquired 19 March 2021 and Mortgage Genie acquired 6 September 2021. Full 6 months trading for both in H1 2022.
**before share-based payments charge, exceptional items and amortisation arising on consolidation
*** before share-based payments charge and exceptional items
Operational Highlights
-- Sales agreed pipeline increased 15% to GBP33.8m (H1 2021: GBP29.5m) -- Managing 74,000 rental properties (H1 2021: 73,000)
-- 8 acquisitions at the franchisee level (H1 2021: 5), added 1,001 managed properties (H1 2021: 647) contributing GBP1.0m (H1 2021 GBP0.5m) of managed income per annum to franchisee turnover
-- EweMove sold 19 new territories (H1 2021: 37), now totalling 178 territories -- Hunters sold 5 personal agent territories (H1 2021: nil)
Gareth Samples, Chief Executive Officer of The Property Franchise Group, said:
"Reflecting on the first half of the year and the challenges businesses and consumers have faced, I am particularly delighted to report robust results for the Group's half year period. We have traded in line with the Board's expectations, against a comparative period in which we benefitted from the buoyant sales market.
"While factors such as the cost-of-living crisis and inflation are driving a challenging macro-environment, we are secure in the quality of our business and our ability to successfully navigate a more difficult backdrop. We have an excellent team in place, a very experienced group of franchisees and a proven strategy, which we expect to continue delivering growth.
"We are extremely well-placed in the current environment and have a substantial growth opportunity to capitalise on. Post period end activity indicates the second half will perform at least as strongly as the first and ahead of H2 2021. As a result, the Board expects the full year results to be in-line with market expectations and this confidence is reflected in the interim dividend for 2022, which I am pleased to report is up 11% on 2021."
Investor presentation
The Company is hosting a live private investor presentation on Tuesday 13 September 2022 at 13.00. All existing and potential private investors interested in attending are asked to register using the following link: https://bit.ly/TPFG_interim_results
For further information, please contact:
The Property Franchise Group PLC Gareth Samples, Chief Executive Officer David Raggett, Chief Financial Officer 01202 405549 Canaccord Genuity Limited (Nominated Adviser and Broker) Max Hartley Tom Diehl 0207 523 8000 Alma PR 020 3405 0205 Justine James propertyfranchise@almapr.co.uk Joe Pederzolli
About The Property Franchise Group PLC:
The Property Franchise Group PLC (AIM: TPFG) is the largest property franchisor in the UK and manages the second largest estate agency network and portfolio of lettings properties in the UK.
The Company was founded in 1986 and has since grown to a diverse portfolio of nine brands operating throughout the UK, comprising longstanding high-street focused brands and a hybrid, no sale no fee agency.
The Property Franchise Group's brands are Martin & Co, EweMove, Hunters, CJ Hole, Ellis & Co, Parkers, Whitegates, Mullucks & Country Properties.
Headquartered in Bournemouth, UK, the Company was listed on AIM on the London Stock Exchange in 2013. More
information is available at www.propertyfranchise.co.uk
Chief Executive Officer's Statement
I am delighted to be reporting on a period of solid progress for the Group, in which we have seen continued growth in many key metrics, including revenue, Management Service Fees and profit. The improved performance against H1 2021 is made all the more pleasing given that 2021 was an exceptionally strong year for the residential housing market, especially in the first half year, and demonstrates the many advantages of a focused franchise model with a multitude of income streams. To have performed in line with our expectations during such uncertain times is indicative of the resilience of our offering.
I would like to use this opportunity to thank the entire central team and our franchisees, who have once more shown what can be achieved with hard work, ingenuity and teamwork, driving the success of the Group and Network.
The six months ended 30 June 2022 represented a period of continued execution against our stated strategic initiatives, with the growth in revenue driven by the acquisitions of Hunters and Mortgage Genie in 2021. The increased lettings revenue and developing financial services revenue from our long-standing businesses offset the impact on them of the market-led reduction in sales transactions. Our hybrid offerings also continued to perform in-line with expectations.
Whilst the macro-economic environment has unquestionably become more challenging, our Group has continued to benefit from a resilient lettings' income stream and growth from strategic acquisitions, as well as our highly capable and experienced senior management team. By leveraging our position, we believe further growth opportunities exist which we will be able to capitalise on over the next twelve months.
Operational review
Group revenue increased 18% to GBP13.1m (H1 2021: GBP11.1m) and the key element of that, Management Service Fees ("MSF"), increased 5% to GBP7.5m (H1 2021: GBP7.1m). The mix of MSF was 56% lettings and 44% sales. On a like for like basis, Group revenue reduced by 9%, lettings MSF increased by 7% and sales MSF reduced by 21%.
Seasonally adjusted UK Property Transactions at 621,000 for H1 2022 were 28% lower than the same period in 2021, reflecting the softening of the market when compared to the exceptional prior period. However, we continue to see a very healthy sales agreed pipeline for the Group, an increase of 15% against an exceptional 2021. We have during the period been faced with lengthening sales' completion times which have impacted both our franchisees' sales revenues and our owned offices' revenues. This has started to improve post period end.
We are seeing additional opportunities within the current market for lettings portfolio acquisitions. As such we are aiming to capitalise on this and bolster our number of managed properties by the end of the year, with 1,001 properties having already been acquired in H1 contributing GBP1.0m to franchisees' managed income per annum. Across our managed properties, we have seen rent increases of 10% to 15%, in line with the increases reported by Rightmove and Homelet for June 2022
Our two hybrid offerings, EweMove and Hunters Personal, both continue to perform well, selling 19 and 5 new territories in H1 respectively. This represents a very strong performance against the macro environment, and we look forward to building on the hybrid opportunity even further moving forwards.
Strategic progress
Over the period there has been clear progress made against our six core areas of strategic focus, as outlined below:
Lettings growth
Like-for-like lettings MSF was up 7% in H1. The increase in lettings MSF reflects the increase in rents across circa 40% of the 74,000 managed properties on the market, alongside continued demand for rental properties.
We are also seeing significant opportunities within the lettings market for portfolio acquisitions. Our franchisees completed on 8 transactions in H1, adding GBP1.0m of managed income on an annualised basis. There have been a further 4 transactions completed since the period end and, we expect to achieve more than 1,000 managed properties added in H2. We are aiming for at least 3,000 managed properties to be acquired in 2023.
Develop sales activity in the high street-led brands
Sales revenues via our high street-led brands have performed slightly better than our expectations of a 25% reduction but that reduction would have been lower still if sales completion times had not steadily increased in H1 2022. The sales are still there in the pipelines. Indeed, looking at the performance of our brands including Hunters for a full H1 2021*, sales agreed were only down 12% on the corresponding very buoyant period and listings were virtually unchanged at 17,071 (H1 2021: 17,081). Our increased support for our high-street led brands appears to be making their sales functions stronger.
Financial services growth
Mortgage Genie is performing strongly with turnover of GBP0.8m in H1 and profits of GBP0.1m. We are recruiting to expand its capabilities. We also continue to see progress in the partnering of our franchisees with representatives of the PRIMIS network and the number of franchisees running their own financial services businesses is also increasing.
EweMove recruitment
EweMove recruited 19 new territories in the period, increasing current operations to 178 territories. We had a target to double the network to 230 territories by the end of 2022 but the uncertainty in the economy is having an impact on recruitment and we expect to achieve close to 200 territories under contract by the end of 2022 with further expansion expected thereafter.
Acquisitions at franchisor level
Our acquired businesses are almost fully integrated into the Group and continue to perform well.
Digital marketing
We operate best-in-class digital marketing, providing local solutions for franchisees and a Group-wide customer journey management. New campaigns are driving pleasing levels of results for the network. The IT focus during the year gives us the ability to drive our brands through digital marketing.
Current Trading and Outlook
We have been encouraged by the levels of trading in July and August helped by an improvement in sales completion times and the number of potential acquisition opportunities for our franchisees.
We are delighted with the synergies we have achieved with the Hunters acquisition and by the year end we expect to have achieved all those set out in our original plan.
The Group has traded in line with expectations to the half-year, ahead of the comparative period which was propelled by the buoyant sales market and, whilst H2 2021 was less buoyant, the signs so far are that this second half year will perform better. For these reasons, the Board remains confident of achieving market expectations for the full year results and further reflected that confidence in its interim dividend for 2022, up 11% on 2021.
While factors such as the cost-of-living crisis and inflation are driving a challenging macro-environment, we are secure in the quality of our business and our ability to successfully navigate a more difficult backdrop. We have an excellent team in place, a strong and, for the main, very experienced group of franchisees and a proven strategy, which we expect to continue delivering growth over many years to come. In addition, we remain highly cash generative which should see us move into a net cash position before the year end and remain committed to our progressive and resilient dividend policy. All in all, we are extremely well-placed in the current environment and have a substantial growth opportunity to capitalise on.
Gareth Samples, Chief Executive Officer
Financial Review for 2022 Interim Results
Revenue
Revenue for the six months ended 30 June 2022 increased 18% to GBP13.1m (H1 2021: GBP11.1m). The increase is due to owning Hunters and Mortgage Genie throughout the period; contributing an additional GBP1.4m and GBP0.8m respectively whilst franchise sales reduced by GBP0.2m. Like for like revenue reduced by 9%, impacted by the 28% reduction in completions in the sales market.
Excluding Hunters and Mortgage Genie, revenue was almost unchanged on H1 2021 at GBP7.2m which is significant given that we had two outstanding sales months in March 2021 and June 2021 driven by the stamp duty holiday and by a reduction in the rate of sales completions in H1 2022.
Management Service Fees ("MSF")
MSF from our franchised network increased by 5% to GBP7.5m (H1 2021: GBP7.1m). The increase of GBP0.4m resulted from an increase in Hunters of GBP0.5m (+38%) resulting from a full 6 months of contribution in H1 2022, an increase of GBP0.1m (+3%) from EweMove and a reduction in the other high-street brands of GBP0.2m (-6%).
H1 2022 Total Like Total Like Total Like for Prior
Growth for Like Result for Like Mix Like Mix Period
Growth Result
Lettings
MSF 14% 7% GBP4.2m GBP3.9m 56% 59% GBP3.6m
-------- ---------- -------- ---------- ------ ---------- --------
Sales MSF -5% -21% GBP3.3m GBP2.8m 44% 41% GBP3.5m
-------- ---------- -------- ---------- ------ ---------- --------
Total Lettings MSF growth of 14% was underpinned by like for like growth of 7% with higher rents being agreed on new lets (despite a lower number of lets). The mix of lettings MSF improved due to longer sales completion rates and the slowing sales market.
With two significant Sales MSF months in H1 2021 due to the stamp duty holiday, our forecast of a 25% reduction in sales transactions in 2022 and the increase in the time taken to complete sales so far in 2022, a reduction in Sales MSF was inevitable in H1 2022. As a result, there was a like for like reduction of 21%, albeit with the full six months contribution from Hunters in 2022, the total reduction in Sales MSF was only 5%.
We finished the period with a sales' agreed pipeline of GBP33.8m, as high as at any time during 2021. There were also the first glimpses of a reduction in the time taken to complete sales transactions which should bode well for Sales MSF in H2 2022 if this trend continues.
Our hybrid brand EweMove, which charges a monthly licence fee per territory occupied and a fee per completed transaction, generated a 3% increase in MSF to GBP1.6m (H1 2021: GBP1.5m).
Owned Offices
Hunters operates 10 owned offices. All 10 offering letting agency services and 8 offering sales agency services. These offices contributed GBP2.5m to revenue in H1 2022 whereas in the 15 weeks post acquisition to June 21 they contributed GBP2.0m. On a like for like basis comparing the revenue generated from 19 March 2022 to 30 June 2022 with the corresponding period, Hunters owned offices generated GBP1.4m of revenue compared to the GBP2.0m in the corresponding period, a reduction of 30%. This reduction is slightly more than our own forecasts reflecting lower sales than expected in our Midlands offices.
Franchise Sales
Franchise sales income was GBP0.1m (H1 2021: GBP0.3m) mainly generated through the sale of 19 territories (H1 2021: 37) in EweMove.
There were 3 (H1 2021: 8) resales of high-street led franchises in the period and 3 (H1 2021: 5) new franchise sales in the high-street led brands. The latter keeping up a trend that started last year of new found interest by existing franchisees to invest in further territories.
Other
Other income increased by 67% to GBP2.9m (H1 2021: GBP1.7m). This category consists of services provided to franchisees generating GBP2.0m (H1 2021: GBP1.7m) where the growth results from a full six months contribution by Hunters in H1 2022 and income from financial services generating GBP0.9m (H1 2021: nil) primarily derived from the acquisition of Mortgage Genie in September 2021.
Cost of Sales
Cost of sales increased by 86% to GBP2.8m (H1 2021: GBP1.5m). The significant changes since H1 2020 when cost of sales was GBP0.4m result from the acquisitions of Hunters and Mortgage Genie where the direct costs relating to the provision of services to their customers are cost of sales.
Of the GBP1.3m increase, a full six months of operating the owned offices in Hunters cost an additional GBP0.8m which was at a similar run rate per month to the prior period and Mortgage Genie, not acquired until September 2021, incurred cost of sales of GBP0.5m.
Administrative expenses
Administrative expenses are unchanged at GBP5.7m (H1 2021: GBP5.7m).
The prior year includes significant exceptional costs of GBP0.9m, not detailed on the face of the P&L as is the current practice, relating to the acquisition of Hunters. So there has been an increase in the administrative expenses over H1 2021. Moreover, these exceptional costs reduce the comparative numbers in H1 2021 for EBITDA, operating profit, operating margin, profit before tax and earnings. To aide with the comparisons, these key indicators of financial performance have been adjusted for the exceptional costs, as well as the amortisation arising on consolidation and share-based payment charges and are provided below.
The increase in administrative expenses after excluding the exceptional costs from H1 2021 is explained by a full six months of amortisation for Hunters (GBP0.3m) and operation of Hunters (GBP0.2m), Mortgage Genie (GBP0.3m) and the costs of a larger franchise network in EweMove (GBP0.1m). Notably an additional 11 weeks of operational costs in Hunters in this half year has only resulted in an increase in costs of GBP0.2m (10%) over the comparative period.
The comparative has been restated to take account of a charge of GBP0.3m relating to the purchase of shares from employees by the TPFG Employee Benefit Trust which has been moved to Own share reserve. It reflects the treatment in the audited financial statements for the year ended 31 December 2021.
EBITDA
The Group's EBITDA increased 22% to GBP5.1m (H1 2021: GBP4.2m). Adjusting for the share-based payment charges and exceptional costs in the prior period, adjusted EBITDA increased 8% to GBP5.7m (H1 2021: GBP5.3m).
Operating profit
Operating profit increased 11% to GBP4.0m (H1 2021: GBP3.6m) and operating margin was 31% (H1 2021: 32%). Adding back the share-based payments charges, amortisation arising on consolidation and the exceptional costs in the prior period, adjusted operating profit increased 3% to GBP5.4m (H1 2021: GBP5.2m). Adjusted operating margin was 41% (H1 2021: 47%) indicating the margin being derived from the underlying activities.
Profit before income tax
Profit before taxation increased 9% to GBP3.8m (H1 2021: GBP3.5m). Adding back the share-based payments charges, amortisation arising on consolidation and the exceptional costs in the prior period, adjusted profit before tax was GBP5.2m (H1 2021: GBP5.1m).
Taxation
The effective rate of corporation tax for the period was 20.9% (H1 2021: 23.3%). The Budget announced in March 2021 signalled an increase in the corporation tax rate to 25% from April 2023 onwards. This rate was substantially enacted in May 2021. However, as it was announced two weeks prior to the acquisition of Hunters, a restatement of GBP1.5m to our prior year tax charge has been required, taking it from GBP0.8m to GBP2.3m. It reflects the treatment in the audited financial statements for the year ended 31 December 2021.
Profit after taxation
Profit after taxation for the period increased by 172% to GBP3.2m (H1 2021: GBP1.2m). This is after restating for the GBP1.5m of deferred tax charge highlighted in the taxation section above.
Earnings per share
Basic earnings per share increased 200% to 9.9p (H1 2021: 3.3p) based on a weighted average number of shares in issue in the period of 32,041,966 (H1 2021: 29,178,704). This is after restating for the GBP1.5m of deferred tax charge highlighted in the taxation section above.
Adjusted basic earnings per share decreased 8% to 14.1p (H1 2021: 15.3p) based on a weighted average number of shares in issue in the period of 32,041,966 (H1 2021: 29,178,704).
Both measures in H1 2022 reflect the full dilution brought about by the acquisition of Hunters in March 2021 with the average weighted number of shares in issue increasing by 10% over H1 2021.
See note 8 to the interim statements for the detailed EPS calculations.
Dividends
The Board has pursued a progressive dividend policy since the IPO. The Group has again made progress this year with its strategic objectives. Its profit performance has kept pace with the prior buoyant period as demonstrated by the adjusted profit before tax.
The Board expects the full year profit to be in-line with market expectations despite the significant uncertainty that exists in the economy. As a result, the Board is pleased to announce an 11% increase in the interim dividend to 4.2p (H1 2021: 3.8p). It will be paid on 7 October 2022 to all shareholders on the register on 23 September 2022. Our shares will be marked ex-dividend on 22 September 2022. The total amount payable is GBP1,346k.
Summary of Key Financials
H1 2022 H1 2021 Growth
Revenue GBP13.1m GBP11.1m 18%
--------- --------- -------
MSF GBP7.5m GBP7.1m 5%
--------- --------- -------
Cost of sales GBP2.8m GBP1.5m 86%
--------- --------- -------
Admin expenses GBP5.7m GBP5.7m -
--------- --------- -------
EBITDA GBP5.1m GBP4.2m 22%
--------- --------- -------
Adjusted EBITDA GBP5.7m GBP5.3m 8%
--------- --------- -------
Operating profit GBP4.0m GBP3.6m 11%
--------- --------- -------
Adjusted operating profit GBP5.4m GBP5.2m 3%
--------- --------- -------
Profit before tax GBP3.8m GBP3.5m 9%
--------- --------- -------
Adjusted profit before
tax GBP5.2m GBP5.1m 1%
--------- --------- -------
Earnings per share (basic) 9.9p 3.3p 200%
--------- --------- -------
Adjusted earnings per share
(basic) 14.1p 15.3p -8%
--------- --------- -------
Adjusted earnings per share
(diluted) 14.1p 15.1p -7%
--------- --------- -------
Dividend 4.2p 3.8p 11%
--------- --------- -------
Net cash generated from
operations GBP3.3m GBP4.4m -25%
--------- --------- -------
EweMove
We often get asked about the financial performance of EweMove, our hybrid brand, which has steadily improved its financial performance over the last few years. It is expected to achieve a similar full year result to last year due to investing in additional support for its new entrants and replacing its operating software alongside the challenging economic environment.
H1 2022 H1 2021 Growth
Revenue GBP2.0m GBP2.0m -
-------- -------- -------
Costs GBP1.3m GBP1.2m 8%
-------- -------- -------
Profit before tax GBP0.7m GBP0.8m -13%
-------- -------- -------
Profit margin 34% 40%
-------- -------- -------
Cash flow
At an operational level, the Group remains as highly cash generative as in past years although not immediately obvious in the numbers for H1 2022 due to the increase in trade debtors. These are debts with partners which are due for payment in H2. As a result, net cash generated from operations decreased by 25% to GBP3.3m (H1 2021: GBP4.4m). That represents 83% conversion of operating profit into net cash generated from operations (H1 2021: 123%).
EweMove is just about to go live with a new operating system for its franchisees. The costs of acquiring rights to use and modify existing third-party software are the majority of the GBP356k shown against purchase of intangible assets.
On 27 May 2022, the Group paid a final dividend of 7.8p for 2021 which amounted to GBP2.5m.
The Group agreed a bank facility with Barclays Bank Plc on 27 January 2021 consisting of a revolving credit line of GBP5.0m and a term loan of GBP7.5m. It then drew the GBP12.5m to fund the acquisition of Hunters in March 2021. The repayments were GBP0.9m (H1 2021: nil) and the total value of the loans outstanding at the end of the period were GBP10.1m (H1 2021: GBP12.5m)
During the period bank loan interest of GBP0.2m (H1 2021: GBP0.1m) was paid. The interest rates are similar for each loan at 2.2% and 2.4% respectively plus, in each case, the Bank of England's Bank Rate.
Overall, the cash balances of the Group increased by GBP0.5m (7%) to GBP7.6m (H1 2021: GBP7.1m).
Liquidity
The Group had a net debt balance of GBP2.6m at the end of the period (H1 2021: GBP5.4m).
Financial position
The Group has a consistent history of strong and improving cash generating capabilities. Reduction in net debt so far this year has been slower due to the increase in working capital mainly because of the debts already mentioned above and the decision to purchase new operating software for EweMove. The Group continues to operate within its covenants.
The Group has enhanced its cash generating capabilities over the last 18 months. It has also improved its balance sheet strength with equity attributable to the owners increasing 11% to GBP34.7m in the period.
The Board intends to pursue its progressive dividend policy to generate an attractive return for shareholders. At the same time, with the Group's continually improving balance sheet strength, the Board will continue to pursue corporate acquisitions as and when they arise and to fulfil the other elements of its strategic plan.
David Raggett, Chief Financial Officer
THE PROPERTY FRANCHISE GROUP PLC
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
FOR THE SIX MONTHSED 30 JUNE 2022
Restated*
Unaudited Unaudited Audited
6 Months 6 Months 12 Months
Ended Ended Ended
30.06.22 30.06.21 31.12.21
Notes GBP'000 GBP'000 GBP'000
CONTINUING OPERATIONS
Revenue 5 13,089 11,122 24,042
Cost of sales (2,770) (1,487) (3,697)
----------------- -------------- -------------
GROSS PROFIT 10,319 9,635 20,345
Administrative expenses (5,679) (5,739) (12,719)
Share-based payments charge (644) (301) (970)
OPERATING PROFIT 3,996 3,595 6,656
Finance income 15 2 4
Finance costs (220) (118) (320)
Other gains and losses - - 83
----------------- -------------- -------------
PROFIT BEFORE INCOME TAX EXPENSE 3,791 3,479 6,423
Income tax expense 6 (608) (2,309) (2,745)
----------------- -------------- -------------
PROFIT FROM CONTINUING OPERATIONS 3,183 1,170 3,678
(Loss) / profit on discontinued
operation, net of tax 7 - (185) (169)
-------------- -------------
PROFIT AND TOTAL COMPREHENSIVE
INCOME FOR THE PERIOD 3,183 985 3,509
================= ============== =============
PROFIT AND TOTAL COMPREHENSIVE
INCOME FOR THE PERIOD ATTRIBUTABLE
TO:
Owners of the parent 3,169 954 3,469
Non-controlling minority
interest 14 31 40
----------------- -------------- -------------
3,183 985 3,509
----------------- -------------- -------------
Earnings per share
attributable to owners
of the parent 8 9.9p 3.3p 11.3p
Diluted earnings per share
attributable to owners
of the parent 8 9.9p 3.3p 11.3p
Adjusted results (note 8)Adjusted profit for the period 4,534 4,424 8,256
Earnings per share attributable
to owners of parent 14.1p 15.3p 27.0p
Diluted Earnings per share attributable
to owners of parent 14.1p 15.1p 26.9p
------------------------------------------ -------------- ----- ------------
* See note 3 for details regarding the restatement as a result of reflecting
the accounting treatment used in the audited financial statements for
the year ended 31 December 2021.
THE PROPERTY FRANCHISE GROUP PLC
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
AS AT 30 JUNE 2022
Restated*
Unaudited Unaudited Audited
As at 30.06.22 As at 30.06.21 As at 31.12.21
GBP'000 GBP'000 GBP'000
ASSETS
NON-CURRENT ASSETS
Intangible assets 46,100 46,320 46,498
Property, plant and
equipment 224 254 217
Investment property 233 281 256
Investments 169 86 169
Right of use assets 1,358 1,555 1,568
Prepaid assisted
acquisitions
support 391 517 424
48,475 49,013 49,132
---------- -------------- -----------------
CURRENT ASSETS
Trade and other receivables 3,892 3,513 2,820
Cash and cash equivalents 7,578 7,107 8,413
---------- -------------- -----------------
11,470 10,620 11,233
Assets in a disposal group - 212 -
classified as held for
sale
---------- -------------- -----------------
11,470 10,832 11,233
---------- -------------- -----------------
TOTAL ASSETS 59,945 59,845 60,365
========== ============== =================
ISSUED CAPITAL AND RESERVES
ATTRIBUTABLE TO OWNERS OF PARENT
Share capital 320 320 320
Share premium 4,129 4,129 4,129
Merger reserve 14,345 14,345 14,345
Own share reserve (348) (348) (348)
Retained earnings 14,679 12,671 13,999
Other reserves 1,594 196 905
---------- -------------- -----------------
34,719 31,313 33,350
NON-CONTROLLING INTEREST 20 40 6
TOTAL EQUITY 34,739 31,353 33,356
---------- -------------- -----------------
LIABILITIES
NON-CURRENT LIABILITIES
Borrowings 8,281 10,156 9,219
Lease liabilities 2,002 2,335 2,275
Provisions 212 197 212
Deferred tax 5,153 5,986 5,570
15,648 18,674 17,276
---------- -------------- -----------------
CURRENT LIABILITIES
Borrowings 1,875 2,344 1,875
Trade and other payables 5,979 5,934 6,280
Lease liabilities 502 473 465
Tax payable 1,202 875 1,113
---------- -------------- -----------------
9,558 9,626 9,733
Liabilities directly - 192 -
associated
with assets in a disposal
group classified as held
for sale
---------- -------------- -----------------
9,558 9,818 9,733
---------- -------------- -----------------
TOTAL LIABILITIES 25,206 28,492 27,009
---------- -------------- -----------------
TOTAL EQUITY AND
LIABILITIES 59,945 59,845 60,365
========== ============== =================
* See note 3 for details regarding the restatement as a result of reflecting the accounting treatment used in the audited financial statements for the year ended 31 December 2021.
THE PROPERTY FRANCHISE GROUP PLC
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE SIX MONTHSED 30 JUNE 2022
Called up Retained Share Own Merger Other Total Non-controlling Total
share capital earnings premium share reserve reserves interest equity
reserve
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Balance at 1 January
2021
(audited) 258 12,690 4,040 - 2,796 779 20,563 9 20,572
---------------------- -------- --------- -------- -------- -------- --------- -------- ---------------- --------
Profit and total
comprehensive
income - 954 - - - - 954 31 985
---------------------- -------- --------- -------- -------- -------- --------- -------- ---------------- --------
Share-based payments
charge - - - - - 301 301 - 301
Shares issued -
acquisition
consideration 55 - - - 11,549 - 11,604 - 11,604
Share issued - share
option
exercises 7 731 89 - - (731) 96 - 96
Net settlement of
PAYE on options
by EBT - - - - - (72) (72) - (72)
Purchase of shares by
Employee
Benefit Trust - - - (348) - - (348) - (348)
Release of deferred
tax on
share options - - - - - (81) (81) - (81)
Dividends - (1,704) - - - - (1,704) - (1,704)
---------------------- -------- --------- -------- -------- -------- --------- -------- ---------------- --------
Total transactions
with owners 62 (973) 89 (348) 11,549 (583) 9,796 - 9,796
---------------------- -------- --------- -------- -------- -------- --------- -------- ---------------- --------
Balance at 30 June
2021 (unaudited) 320 12,671 4,129 (348) 14,345 196 31,313 40 31,353
---------------------- -------- --------- -------- -------- -------- --------- -------- ---------------- --------
Profit and total
comprehensive
income - 2,515 - - - - 2,515 9 2,524
---------------------- -------- --------- -------- -------- -------- --------- -------- ---------------- --------
Disposal of
subsidiary - - - - - - - (43) (43)
Dividends - (1,218) - - - - (1,218) - (1,218)
Share issued - share
option
exercises - 31 - - - (31) - - -
Net settlement of
PAYE on options
by EBT - - - - - 72 72 - 72
Share-based payments
charge - - - - - 668 668 - 668
---------------------- -------- --------- -------- -------- -------- --------- -------- ---------------- --------
Total transactions
with owners - (1,187) - - - 709 (478) - (521)
---------------------- -------- --------- -------- -------- -------- --------- -------- ---------------- --------
Balance at 31
December 2021
(audited) 320 13,999 4,129 (348) 14,345 905 33,350 6 33,356
---------------------- -------- --------- -------- -------- -------- --------- -------- ---------------- --------
Profit and total
comprehensive
income - 3,169 - - - - 3,169 14 3,183
---------------------- -------- --------- -------- -------- -------- --------- -------- ---------------- --------
Share-based payments
charge - - - - - 644 644 - 644
Deferred tax on share
options - - - - - 45 45 - 45
Dividends - (2,489) - - - - (2,489) - (2,489)
---------------------- -------- --------- -------- -------- -------- --------- -------- ---------------- --------
Total transactions
with owners - (2,489) - - - 689 (1,800) - (1,800)
---------------------- -------- --------- -------- -------- -------- --------- -------- ---------------- --------
Balance at 30 June
2022 (unaudited) 320 14,679 4,129 (348) 14,345 1,594 34,719 20 34,739
---------------------- -------- --------- -------- -------- -------- --------- -------- ---------------- --------
THE PROPERTY FRANCHISE GROUP PLC
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE SIX MONTHSED 30 JUNE 2022
Restated
Unaudited Unaudited Audited
6 Months 6 Months 12 Months
Ended Ended Ended
30.06.22 30.06.21 31.12.21
GBP'000 GBP'000 GBP'000
Cash flows from operating activities
Profit before income tax 3,791 3,479 6,423
Depreciation and amortisation charges 1,095 555 1,878
Revaluation of investments in shares - 32 (83)
Share-based payments charge 644 301 970
Loss on discontinued operations, net of
tax - 140 152
Finance costs 220 119 320
Finance income (15) (2) (4)
------------ ----------- ----------
Operating cash flow before changes
in working capital 5,735 4,624 9,656
(Increase) / Decrease in trade and other
receivables (1,071) (445) 247
Increase / (Decrease) in trade and other
payables (281) 921 953
------------ ----------- ----------
Cash generated from operations 4,383 5,100 10,856
Interest paid (162) (42) (232)
Tax paid (908) (625) (1,679)
Net cash generated from operations 3,313 4,433 8,945
------------ ------------ ---------
Cash flows from investing activities
Purchase of subsidiaries net of cash acquired
- Hunters - (13,041) (13,041)
Purchase of subsidiaries net of cash acquired
- Mortgage Genie - - (103)
Cash in disposal group held for sale - (327) -
Disposal of subsidiary undertakings net
of cash disposed of - - (323)
Purchase of intangible assets (356) (13) (116)
Purchase of tangible assets (58) - (87)
Payment of assisted acquisitions support (87) (31) (57)
Interest received 15 2 4
Net cash used in investing activities (486) (13,410) (13,723)
------------ ------------ ---------
Cash flows from financing activities
Issue of ordinary shares - 96 96
Equity dividends paid (note 9) (2,489) (1,704) (2,922)
Purchase of shares by Employee Benefit Trust - (348) (348)
Bank loan drawn - 12,500 12,500
Bank loan repaid (938) (3,013) (4,419)
Principal paid on lease liabilities (177) (187) (399)
Interest paid on lease liabilities (58) (31) (88)
------------ ------------ ---------
Net cash (used in)/ from financing activities (3,662) 7,313 4,420
------------ ------------ ---------
Decrease in cash and cash equivalents (835) (1,664) (358)
Cash and cash equivalents at the beginning
of the period 8,413 8,771 8,771
Cash and cash equivalents at end of the
period 7,578 7,107 8,413
============ ============ =========
THE PROPERTY FRANCHISE GROUP PLC
NOTES TO THE INTERIM RESULTS
FOR THE SIX MONTHSED 30 JUNE 2022
1. GENERAL INFORMATION
The principal activity of The Property Franchise Group plc and its subsidiaries continues to be that of a UK residential property franchise business. The company is a public limited company incorporated and domiciled in the UK. The address of its head office and registered office is 2 St Stephen's Court, St Stephen's Road, Bournemouth, Dorset, UK.
2. BASIS OF PREPARATION
The consolidated interim financial information for the six months ended 30 June 2022 was approved by the Board and authorised for issue on 13 September 2022. The results for 30 June 2022 and 30 June 2021 are unaudited. The disclosed figures are not statutory accounts in terms of Section 435 of the Companies Act 2006. Statutory accounts for the year ended 31 December 2021 on which the auditors gave an audit report which was unqualified and did not contain a statement under Section 498(2) or (3) of the Companies Act 2006, have been filed with the Registrar of Companies. The annual financial statements of the Group are prepared in accordance with UK adopted international accounting standards and, as regards the Parent Company financial statements, as applied in accordance with the provisions of the Companies Act 2006.
This interim report has been prepared on a basis consistent with the accounting policies expected to be applied for the year ending 31 December 2022, and uses the same accounting policies and methods of computation applied for the year ended 31 December 2021.
Going concern
When assessing the foreseeable future the directors have looked at a period of 12 months from the date of approval of the interim financial information. The directors have a reasonable expectation that the Group has adequate resources to continue to trade for the foreseeable future and, therefore, consider it appropriate to prepare the Group's interim financial information on a going concern basis.
Significant accounting policies
The Group's interim financial information includes those of the parent company and its subsidiaries, drawn up to 30 June 2022. Subsidiaries are all entities over which the Group has control. The Group controls an entity when the Group is exposed to, or has rights to, variable returns from its involvement with the entity and has the ability to affect those returns through its power over the entity. Subsidiaries are fully consolidated from the date on which control is transferred to the Group. They are deconsolidated from the date that control ceases.
The Group applies the acquisition method to account for business combinations. The consideration transferred for the acquisition of a subsidiary is the fair values of the assets transferred, the liabilities incurred to the former owners of the acquiree and the equity interests issued by the Group. Identifiable assets acquired and liabilities and contingent liabilities assumed in a business combination are measured initially at their fair values at the acquisition date. Acquisition-related costs are expensed as incurred.
Inter-company transactions, balances and unrealised gains on transactions between Group companies are eliminated. Unrealised losses are also eliminated. When necessary amounts reported by subsidiaries have been adjusted to conform with the Group's accounting policies.
3. RESTATEMENT OF PRIOR PERIOD
The unaudited figures for the 6 months ended 30 June 2021 presented in these financial statements have been amended to reflect the accounting treatment in the audited financial statements for the year ended 31 December 2021, so therefore there are some differences to what was presented last year. The balances affected relate to the Hunters acquisition accounting, share option exercise and deferred tax rate change. The overall impact on the Statement of Comprehensive income is a reduction in profit of GBP1.2m for the 6 months ended 30 June 2021 compared to the unaudited financial statements presented last year. The main elements were GBP1.5m deferred tax charge (note 6) less GBP0.3m purchase of shares by TPFG employee benefit trust moved out of costs to Own share reserve.
THE PROPERTY FRANCHISE GROUP PLC
NOTES TO THE INTERIM RESULTS
FOR THE SIX MONTHSED 30 JUNE 2022
4. SEGMENTAL REPORTING
The directors consider there to be two operating segments being Property Franchising and Other.
For the six months ended 30 June 2022:
Property
Franchising Other Total
Continuing GBP'000 GBP'000 GBP'000
------------------------- --- ---------------- -------- --------
Revenue 12,211 878 13,809
Segment profit before
tax 3,575 216 3,791
Property
Franchising Other Total
Discontinued GBP'000 GBP'000 GBP'000
------------------------ --- --------------- -------- --------
Revenue - - -
Segment profit before
tax - - -
For the six months ended 30 June 2021:
Property
Franchising Other Total
Continuing GBP'000 GBP'000 GBP'000
------------------------- --- ---------------- -------- --------
Revenue 11,122 - 11,122
Segment profit before
tax 3,479 - 3,479
Property
Franchising Other Total
Discontinued GBP'000 GBP'000 GBP'000
------------------------- --- ----------------- --- -------- --------
Revenue - 242 242
Segment profit before
tax - 155 155
For the year ended 31 December 2021:
Property
Franchising Other Total
Continuing GBP'000 GBP'000 GBP'000
------------------------- --- ---------------- -------- --------
Revenue 23,595 447 24,042
Segment profit before
tax 6,363 60 6,423
Property
Franchising Other Total
Discontinued GBP'000 GBP'000 GBP'000
------------------------- --- ----------------- --- -------- --------
Revenue - 267 267
Segment profit before
tax - 153 153
The Other segment related to Financial Services in all periods. There was no inter-segment revenue in any period. See note 7 for details of discontinued operations
THE PROPERTY FRANCHISE GROUP PLC
NOTES TO THE INTERIM RESULTS
FOR THE SIX MONTHSED 30 JUNE 2022
5. REVENUE
Unaudited Unaudited Audited
6 Months 6 Months 12 Months
Ended Ended Ended
30.06.22 30.06.21 31.12.21
GBP GBP GBP
Management service fee 7,496 7,145 14,706
Owned offices revenue 2,548 1,950 4,708
Franchise sales 147 291 589
Other 2,898 1,736 4,039
--------- ---------- ----------
13,089 11,122 24,042
--------- ---------- ----------
All revenue is earned in the UK and no customer represents greater than 10 per cent of total revenue in the periods reported.
6. TAXATION
The underlying tax charge is based on the expected effective tax rate for the full year to December 2022. The majority of the tax arises from applying this effective tax rate to the profit on ordinary activities. The periods ended 30 June 2021 and 31 December 2021 include a one-off deferred tax charge of GBP1.5m in relation to the rate change from 19% to 25% which was substantially enacted in May 2021.
7. HELD FOR SALE
On 22 July 2021 the sale of Aux Group Limited and Auxilium Partnership Limited to Mark Graves completed. The terms of the sale were agreed prior to the period end and at 30 June 2021 there was a strong expectation that the completion was imminent. As such the assets and liabilities were disclosed as 'held for sale' at 30 June 2021 in the financial statements and an impairment loss had been recognised through the profit and loss account being the difference between the proceeds received on sale and the assets to be disposed of which were estimated at GBP0.3m. The profit for the year of Auxilium was shown as discontinued operations in the profit and loss account, GBP0.08m was attributable to the owners of the parent, therefore the net loss in the profit and loss account in relation to the period for Auxilium is GBP0.2m.
8. EARNINGS PER SHARE
Earnings per share is calculated by dividing the profit for the financial period by the weighted average number of shares during the period.
Restated
Unaudited Unaudited Audited
6 Months 6 Months 12 Months
Ended Ended Ended
30.06.22 30.06.21 31.12.21
GBP'000 GBP'000 GBP'000
Profit for the period attributable
to owners of parent 3,169 954 3,469
Amortisation on acquired intangibles 721 478 1,214
Share-based payments charge 644 301 970
Exceptional acquisition costs - 853 853
Deferred tax rate change from
19% to 25% - 1,540 1,540
Discontinued operations - loss
on disposal - 298 293
Gain on revaluation of listed
investments - - (83)
---------- ----------- ----------
Adjusted profit for the period 4,534 4,424 8,256
---------- ----------- ----------
THE PROPERTY FRANCHISE GROUP PLC
NOTES TO THE INTERIM RESULTS
FOR THE SIX MONTHS ENDED 30 JUNE 2022
8. EARNINGS PER SHARE (CONTINUED)
Unaudited Unaudited Audited
6 Months 6 Months 12 Months
Ended Ended Ended
30.06.22 30.06.21 31.12.21
Weighted average number of
shares 32,041,966 29,178,704 30,622,102
Dilutive effect of share options
on ordinary shares 99,667 99,590 99,590
32,141,633 29,278,294 30,721,692
Restated
Unaudited Unaudited Audited
6 Months 6 Months 12 Months
Ended Ended Ended
30.06.22 30.06.21 31.12.21
Basic earnings per share 9.9p 3.3p 11.3p
Diluted earnings per share 9.9p 3.3p 11.3p
Adjusted basic earnings per
share 14.1p 15.3p 27.0p
Adjusted diluted earnings
per share 14.1p 15.1p 26.9p
9. DIVIDENDS
Unaudited Unaudited Audited
As at As at As at
30.06.22 30.06.21 31.12.21
GBP'000 GBP'000 GBP'000
Final dividend paid 2,489 1,704 1,704
Dividend per share paid 7.8p 6.6p 6.6p
Interim dividend paid - - 1,218
Dividend per share paid - - 3.8p
Total Dividends paid 2,489 1,704 2,922
An interim dividend for 2022 of 4.2p per share has been declared and will be paid on 7 October 2022 to all shareholders on the register on 23 September 2022. Our shares will be marked ex-dividend on 22 September 2022. The total amount payable is GBP1.346m.
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