The Property Franchise Group. Half Year Results September 2016

Transcription

1 The Property Franchise Group Half Year Results September 2016

2 Agenda 2 Overview Ian Wilson, Chief Executive Officer Financial performance David Raggett, Chief Financial Officer Operational performance Ian Wilson, Chief Executive Officer EweMove Sales and Lettings Glenn Ackroyd & David Laycock Founders, Head Shepherds and now Marketing Director & Operations Directors for Martin & Co. Summary & Outlook Ian Wilson, Chief Executive Officer Q&A

3 Overview of performance 3 Strong performance in the first half of the year, continuing year-on-year and month-on-month revenue growth Integration of Xperience completed; first Xperience franchisees now paying 9% MSF Roll out of estate agency service across the group on track with 95% of offices now offering this service Financial Services partner selected in multi-award winning no fees broker London & Country, with Financial Services training 75% completed Pilot programme of agent conversions underway with 1 agent signed up in Newark and 4 further prospects in the pipeline Successful acquisition of online hybrid EweMove

4 Financial performance

5 Financial highlights 5 Group revenue up 12% to 3.7m (H1 2015: 3.4m) Management Service Fees up 10% to 3.2m (H1 2015: 2.9m) Operating profit increased 22% to 1.6m (H1 2015: 1.3m*) EBITDA increased 31% to 1.69m (H1 2015: 1.29m) Profit before tax increased 35% to 1.55m (H1 2015: 1.15m) Operating margin of 42% (H1 2015: 38% before exceptional costs) Earnings per share increased by 36% to 5.7p per share (H1 2015: 4.2p) Interim dividend increased by 11% to 2.0p per share (H1 2015: 1.8p) *Before exceptional reorganization costs of 0.1m following the acquisition of Xperience

6 Millions Millions Millions MARTINCO PLC / THE PROPERTY FRANCHISE GROUP Summary financials 6 Turnover EBITDA* Profit before tax m m* m m 3.7m m* 1.7m m 1.6m FY15 H H FY15 H H FY15 H H Turnover 12% EBITDA* 31% PBT 35% Management Service Fees 10% * After exceptionals

7 MSF ( ) MSF ( ) MARTINCO PLC / THE PROPERTY FRANCHISE GROUP Management Service Fees revenue 7 450, , , , , , , , , , , , ,000 Lettings Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec , , , , , , , , , ,000 90,000 80,000 70,000 60,000 Sales Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

8 Group Management Services Fees Split 8 Financial Services 1% Financial Services 1% Sales 22% Sales 20% Lettings 77% Lettings 79% Lettings MSF Sales MSF Financial Services MSF Management Services Fees received for: 6 months ended 30 June 2016 and 30 June 2015

9 Pence Pence MARTINCO PLC / THE PROPERTY FRANCHISE GROUP Growing returns to shareholders 9 Earnings per share Dividend per share p 5.7p 4.2p FY 2015 H H p 1.8p 2p FY 2015 H H1 2016

10 Strong financial position and balance sheet 10 Strong balance sheet with a net cash position of 4.5m at 30 June 2016 (H1 2015: 3.8m) Immediately post EweMove acquisition: Cash balance 1.3m Bank borrowings 3.625m Headroom on 5m facility of 1.375m with capacity to increase facility and headroom by 1.5m Interest rate of 4% on 1.625m and 2.9% on 2.0m

11 Operational performance

12 Operational highlights 12 Lettings business Tenanted Managed Properties 46,000 (44,000 H1 2015) Management Services Fees from Lettings up 7% across the Group (year-on-year) (6% H1 2015) Tenant demand strong with 65,465 viewings in the period at Martin & Co offices (65,917 H1 2015), and 26,787 viewings at Xperience brand offices (27,001 H1 2015) Landlord supply flat with 5,271 properties newly instructed at Martin & Co offices (5,355 H1 2015) and 1,925 properties newly instructed at Xperience brand offices (1,968 H1 2015) Estate agency business 271 offices now offering estate agency services (H1 2015: 253), 94% of network Martin & Co listed 3,244 properties for sale during the period (H1 2015: 3,079) Xperience offices listed 4,612 properties for sale during the period (H1 2015: 4,730) At period end the transaction value of sales agreed was 3.74m for Xperience (H1 2015: 4.90m), and 1.77m for Martin & Co (H1 2015: 1.7m)

13 Franchisee recruitment 13 7 new franchisees recruited (7 in H1 2015) 4 new offices opened (H1 2015: 5), further 3 offices preparing to open (H1 2015: 7) 3 portfolio acquisitions by franchisees, adding 196 tenanted managed properties Two high value Martin & Co franchise re-sales completed Oxford 710k Basingstoke 550k

14 Acquisition of EweMove Sales and Letting

15 Terms of the deal 15 Total consideration up to 15m 8m initial; 5m cash from balance sheet and existing debt facility and 3m of new ordinary shares 7m deferred; dependent on EBITDA for the enlarged Group for financial year ending 31 December 2018 Launched in January 2014, EweMove has a network of 90+ franchisees, recruiting at an annualised rate of 30 new franchisees 100% franchise model with local property experts allied to a central technology platform Retains traditional full estate agency service and consumer fees predicated on completed sales, rather than listings Ewemove has experienced significant and sustained growth generating revenues and profit before tax of 1.65m and 0.12m respectively (12 months to 30 June 2016) Multi-award winning agency, voted the UK s No.1 Most Trusted Estate Agent by Trust Pilot in 2016

16 Rationale 16 Hybrid/on-line sector developing rapidly June 2015 c.2.5% of all listings, June 2016 c.5% Augments multi-brand strategy; immediate hybrid/on-line capability, and our sixth property brand Leverages Group infrastructure to achieve further operational gearing and deep knowledge of growing franchisees Founders taking up senior positions in Group and demonstrating belief they can add value by accepting earnout criterion based on Group EBITDA

17 Franchisees

18 Core Revenues Franchise Sales Excluded

19 Summary & outlook

20 Outlook 20 June and July trading was weaker than expected, however August recovered well for lettings and sales were above expectation in the North and Midlands and only slightly behind in the South The board remains confident about trading results for the full year and is excited about growth prospects for 2017 The acquisition of EweMove addresses head on the challenge to traditional high street agency from the new generation of hybrid/on-line operators; EweMove is cash generative and further growth will be self-funding Operational gearing from the Xperience acquisition has ended but EweMove will grow its revenue by leveraging the existing Group infrastructure and deep knowledge of growing franchisees MCO in its strongest position since IPO with growth story for 2017 in place

21 Appendix

22 22 Income statement summary H Increase H FY 2015 CONTINUING OPERATIONS Revenue 3,741,409 12% 3,353,937 7,130,967 Cost of sales (232,859) (177,839) (356,844) GROSS PROFIT 3,508,550 10% 3,176,098 6,774,123 Administrative expenses (1,950,127) 3% (1,895,291) (3,880,629) 1,558,423 1,280,807 2,893,494 Exceptional items -- (114,704) (166,069) OPERATING PROFIT 1,558,423 34% 1,166,103 2,727,425 Finance income 32,039 29,271 50,914 Finance costs (37,697) (43,401) (85,572) PROFIT BEFORE TAX 1,552,765 35% 1,151,973 2,692,767 Income tax (307,804) (233,169) (538,667) PROFIT AND TOTAL COMPREHENSIVE INCOME FOR THE PERIOD ATTRIBUTABLE TO OWNERS 1,244,961 35% 918,804 2,154,100

23 23 Cash flow summary Cash flows from operating activities H Increase H FY 2015 (Decrease ) Cash generated from operations 1,578,929 1,172,416 2,871,051 Interest paid (39,416) (49,323) (94,064) Tax paid (264,709) (195,700) (616,402) Net cash from operating activities 1,274,804 37% 927,393 2,160,585 Cash flows from investing activities Net cash generated from/ (used in) investing activities 38, , ,210 Cash flows from financing activities (Repayment of)/proceeds from borrowings (250,000) (250,000) (500,000) Equity dividends paid (902,000) (594,000) (990,000) Net cash generated from/ (used in) financing activities (1,152,000) (844,000) (1,490,000) Increase/(decrease) in cash and cash equivalents 161,644 (59%) 394, ,795 Cash and cash equivalents at beginning of year 4,346,054 3,367,259 3,367,259 Cash and cash equivalents at end of year 4,507,698 3,761,512 4,346,054

24 Balance sheet summary 24 H Increase H FY 2015 (Decrease) ASSETS NON-CURRENT ASSETS Intangible assets 5,898,112 6,149,508 6,014,336 Property, plant and equipment 134,981 89, ,241 6,033,093 (3%) 6,238,657 6,154,577 CURRENT ASSETS Trade and other receivables 994, , ,183 Cash and cash equivalents 4,507,698 3,761,512 4,346,054 5,502,674 16% 4,739,336 5,258,237 TOTAL ASSETS 11,535,767 5% 10,977,993 11,412,814 EQUITY TOTAL EQUITY ATTRIBUTABLE TO THE OWNERS 7,961,879 19% 6,698,434 7,636,813 NON-CURRENT LIABILITIES Borrowings 1,250,000 1,750,000 1,500,000 Deferred tax 557, , ,001 1,807,312 2,425,669 2,058,001 CURRENT LIABILITIES Borrowings 500, , ,000 Trade and other payables 903, , ,924 Tax payable 362, , ,076 1,766,576 1,853,890 1,718,000 TOTAL LIABILITIES 3,573,888 (16%) 4,279,559 3,776,001 TOTAL EQUITY AND LIABILITIES 11,535,767 5% 10,977,993 11,412,814