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Preliminary Results

12 Apr 2017 07:41

RNS Number : 2299C
Hunters Property PLC
12 April 2017
 



Embargoed 7.00a.m. - 12 April 2017

Dissemination of a Regulatory Announcement that contains inside information according to REGULATION (EU) No 596/2014 (MAR).

Hunters Property Plc

Preliminary Results

For the year ended 31 December 2016

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 2016.

Financial Highlights:

Network Income rose 17% to £35.4m (2015: £30.2m);Revenue increased by 15% to £13.8m (2015: £12.0m);EBITDA increased by 31% to £2.06m (2015: £1.57m);Adjusted profit before tax (excluding amortisation, acquisition costs, investment income and notional finance costs) increased by 31% to £1.86m (2015: £1.42m);Adjusted EPS increased 25% to 5.92p (2015: 4.74p);Net assets stood at £5.6m (2015: £5.0m);Cash balance £1.2m (2015: £1.2m);Proposed 30% increase in Final dividend to 1.30p, increasing full year then by +27% to 1.90p (2015: 1.50p) for the year.

 

Operational Highlights:

Opened 30 new branches, including the conversion of 20 independent estate agency branches so in aggregate 93 new branches, excluding acquisitions, over the last three years;Independent agents who have converted to Hunters have on average seen their income grow. For those for whom 2016 was their 2nd full calendar year their revenue has grown by 41%;The network's sales and lettings income has grown at a cumulative average growth rate since 2008 of 26% (2015: 27%);As at December, network stood at 186 branches (2015: 170); Developed and integrated into our in-house software in July an online valuation and appointment booking capability which has delivered on average 100 valuations per week;September launched the Hunters Vocational Qualification, endorsed by ARLA and NAEA;Customer service rating 96% (2015: 96%) against a national average of 73% (Source: 2015 survey by The Property Academy);Average revenue per network branch increased by 7% to £190,000 (2015: £178,000).

 

Post-Year End:

Acquired franchise network of Besley Hill which comprises 15 branches in the Bristol and surrounding areas; Q1 trading is in line with budget, which is slightly off last year and in line with the Board's expectations;Retain a robust pipeline of enquiries from agents interested in joining the network;Confident in the continued growth of our network and meeting the Board's expectations for the full year.

 

Kevin Hollinrake, Chairman, commented:

"In our first full year as a public company I am pleased to report figures ahead of the market's expectation despite the UK property market facing various challenges, namely the increase in Stamp Duty and the political uncertainty following the EU referendum result. The Company has shown impressive growth, opening 30 new branches including converting 20 existing businesses. We continued to retain our 96% customer satisfaction rating and increasing revenue per branch by 7% against a market estimated to have been down 2% (Source: Rightmove Market Activity Report, February 2017) versus a year ago.

I am also delighted to welcome the branches of Besley Hill into the Hunters network. We have secured a leading and long established network of offices; the ongoing roles of management; and management's long term commitment by committing their three branches to new franchise agreements as part of the deal. The first quarter has therefore started well taking us past 200 branches. We continue to out-perform general market activity, our instructions are up on last year and our pipeline of new branch prospects remains healthy. I look forward to updating you as the year progresses."

 

For further details, please contact:

 

Hunters Property Plc

Kevin Hollinrake, Chairman

Glynis Frew, Chief Executive Officer

Ed Jones, Chief Financial Officer

 

Tel: 01904 756 197

Smithfield Consultants Limited

Alex Simmons

 

Tel: 020 7360 4900

SPARK Advisory Partners Limited

Mark Brady and Neil Baldwin (Nominated Adviser)

Dowgate Capital Stockbrokers

James Sergeant (Corporate Broking)

Tel: 020 3368 3551

 

Tel: 01293 517 744

 

 

PRELIMINARY RESULTS FOR THE YEAR ENDED 31 DECEMBER 2016

CHAIRMAN'S REVIEW

We are pleased to report that our first set of full year results as a public company were ahead of market expectations. Despite the changes to Stamp Duty Land Tax and uncertainties following the EU Referendum result, the Group continued its expansion towards becoming the nation's favourite estate agent. In the year we added 30 new branches to the network, including 20 independent businesses, reaching 186 branches by the year end. The further 15 due to the recent Bristol-based Besley Hill acquisition in March 2017 has now taken our network past the 200 mark. 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. Organically, we believe we are the fastest growing listed business in our sector having opened 93 branches over the last three years and a further 30 branches through acquisition in that period.

 

Gross revenue for the Group's network ("Network Income") reached £35.4 million in 2016 (2015: £30.2 million) a 17% increase on the previous year. Our average branch revenue rose by 7% to £190,000 (2015: £178,000). This was a tremendous achievement against the background of national activity having reduced by 2% for the year (Source: Rightmove Market Activity Report, February 2017). Our adjusted EBITDA reached £2.06 million (2015: £1.57 million) an increase of 31% on the previous year. Adjusted EPS grew similarly 25% to 5.92p (2015: 4.74p).

 

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 and our increase in revenue 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 for whom 2016 was their second full year as part of the network, have on average increased revenue per branch by 41%; illustrating that our well known national brand, quality and good reputation has delivered improved revenue for our network partners, 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 we improved from the half year, to June, to achieve a 96% customer satisfaction rating over the year as a whole for the 2nd year running. We have increased this score year-on-year since 2012 and it remains significantly higher than the industry average of 73% (Source: 2015 survey by The Property Academy). Our business and our network partners commit within the network 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 'get them there'.

 

Current trading and outlook

Reports to date suggest that market activity levels are likely to be similar, or slightly lower than 2016 (Source: LSL trading update 7 March 2017 and Numis Broker comment of same date) and we had reflected that in our budget given the disproportionate timing effect of the Stamp Duty changes in the market in Q1 last year which caused an early year surge. We continue to see our numbers outperforming these market conditions with our instructions for the first two months up 9% versus the same period last year. Indications are therefore that exchanges in the latter half of the year look promising. The Government's intention to ban lettings tenant fees was confirmed in the Housing White Paper, but we do not believe we will be significantly impacted given our franchise and sales bias and expect fair notice of any intended changes. We may benefit from such a ban in any event as independent agents seek the assistance of networks to grow replacement revenue. Our pipeline of new outlets remains healthy and I look forward to updating you as the year progresses.

 

Dividend

The Company is committed to a progressive dividend policy and proposes an increased final dividend of 1.30p per share, making 1.90p for the year, an increase of 27%.

 

 

Kevin HollinrakeChairman

 

 

CHIEF EXECUTIVE'S STATEMENT

As we reported in our December trading update, the United Kingdom property market experienced various challenges during 2016, with the principal issues being consumer uncertainty as a result of the EU Referendum, the changes in Stamp Duty rules and a shortage of homes both to sell and to let.

The Stamp Duty increases in our view adversely affected homes particularly for properties over £2 million, but this has had little impact on the Group as we have limited exposure to prime Central London. Market activity was down 2% in 2016 (Source: Rightmove Market Activity Report, February 2017) but despite these tougher market conditions the Group has, aided by the additional branches added to the network throughout the year, performed very well and increased the Company's market share of homes sold and let, resulting in material increases in both turnover and pre-tax profitability.

Activity in 2017, despite an ongoing shortage of property for sale or to let, the uncertainty of the BREXIT agreement and ever-increasing levels of competition between traditional and online-only agents, looks promising. We entered the year with good ongoing buyer and tenant demand and a Government that remains openly very supportive of accelerated 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 2016, 3,648 (2015: 3,121) customers provided feedback resulting in a 96% (2015: 96%) customer satisfaction rating.

Maintenance in the quality of the network is key to our success. We started the year with 170 branch locations. We received 268 (2015: 244) enquiries resulting in 30 (2015: 32) new openings under the Hunters brand. These openings consisted of 20 (2015: 23) conversions of existing independent estate agency businesses and 10 (2015: 9) new "cold start" locations, of which seven were current franchisees expanding into new markets.

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 continue to invest in our people and our technology, marketing and networks. We have devoted over £500,000 this year in training and now provide 81 courses, a 35% increase. In September we were delighted to launch the Hunters Vocational Qualification, endorsed by the Association of Residential Letting Agents and The National Association of Estate Agents. We developed 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. 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 have increased and augmented our national campaign around our brand promise 'Here to get you there' which 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 41% in the last two years.

Finishing the year with 186 branches I am delighted to report the effects of working with Hunters since 2013. Against a market down 2% (2015: down 3.4%) those that converted and traded as Hunters for the whole of 2016 as their first full year increased their revenue by 11%, that's a 13% outperformance. Those who converted the year before have in aggregate improved on average by 41%. Nor is improvement just short term, those who have been converted for three whole years to December 2016 have increased their revenues on average by 61%. Our 5 year group, from our 2011 network acquisition are up, on average, by 54%. Every region we trade in has increased over the three year period 2013 to 2016 on average at a Compound Annualised Growth Rate ("CAGR") of 33%.

Franchise prospects for 2017 have started well given the tight market and uncertainty, with a proceeding pipeline of 34 (2015: 21) new branches being processed and enquiry levels on target to exceed those of 2016. We have expanded the team to improve the process and allow more ongoing support. A full marketing plan is in place, heavily focused on direct marketing to suitable independent businesses, increased online presence and existing franchisee expansion are integral elements of this growth.

We are delighted that Besley Hill chose us over other suitors so giving us the opportunity to bring a culture that we believe will suit their network as they look to grow and also expand with us. It is expected that 2017 will see continued network growth, both through conversions of existing businesses and cold starts. Hunters' market leading conversion package is designed to allow independent agencies to join with minimal cost, whilst benefiting from a full estate agency package which provides an average first year revenue growth and growth of 41% by their second full year. Conversions are expected to account for a significant portion of branch growth.

These excellent results come from our latest systems, our support, our experience and our ongoing drive and effort and could not have been achieved without sterling efforts from our employees, our leading and wider back office systems, support from our network franchise partners and our suppliers. 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 FrewChief Executive Officer

 

 

FINANCIAL REVIEW

Income Summary

2016

£m

2015

£m

Movement

Network Income

35.4

30.2

+17%

Turnover

13.8

12.0

+15%

EBITDA

2.06

1.57

+31%

Adjusted profit before tax

1.86

1.42

+31%

EPS

2.84p

2.76p

+3%

Adjusted EPS

5.92p

4.74p

+25%

DPS

1.90p

1.50p

+27%

 

Balance Sheet Summary

2016

£m

2015

£m

Cash

1.2

1.2

Net Assets

5.6

5.0

Net Debt

1.2

1.1

Net Debt / EBITDA

0.6x

0.7x

 

Revenue

Group revenue for the financial year ended 31 December 2016 increased by 15% to £13.8 million (2015: £12.0 million). This was driven by the following factors:

· Management Service Fees ("MSF") from franchised branches increased due to the 32 new franchisee branches that joined the Group in 2015 and a further 30 new franchisee branches that joined the Group in 2016;

· Full year equivalent following the acquisition of the 23 branch network, Country Properties, operating in and around Hertfordshire, Bedfordshire and Cambridgeshire in May 2015;

· Lettings revenue grew as we introduced lettings to new franchisees and continued to grow our existing lettings offices. Network Income for Lettings grew 19% (2015: 28%).

Adjusted EDBITDA (earnings before interest, tax, one off costs and depreciation/amortisation)

Adjusted EBITDA provides a key measure of progress made. Adjusted EBITDA for the year to December 2016 was £2.06 million, an increase of 31% on the same period last year (2015: £1.57 million).

Administrative expenses increased by £1.3 million during the year. Higher costs in 2016 were in part due to full year additional running costs associated with being a publically quoted company and also the first full year of costs since the acquisitions of Country Properties and RealCube.

Adjusted profit before tax (adjusted to exclude amortisation, amortised finance costs, acquisition costs, one off costs and finance income)

Adjusted profit before tax was £1.86 million, an increase of 31% over the prior period (2015: £1.42 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.

Earnings per share

Basic earnings per share for the year ended 31 December 2016 was 2.84p (2015: 2.76p) based on a weighted average of 28,365,454 shares (2015: 26,317,492) 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 2016, was 5.92p (2015: 4.74p) an increase of 25%.

Dividends

The Board is proposing a final dividend of 1.30p per share for 2016, which subject to shareholder approval at the AGM on the 19 May 2017, will be paid to shareholders by 24 May 2017 based on the register of shareholders as at 27 April 2017. Taking this together with the interim dividend of 0.6p paid to shareholders on 19 October 2016, this equates to a total dividend for the year of 1.90p an increase of 27%. The Company intends to pay a progressive dividend going forwards.

Liquidity

The Group had cash balances of £1.2 million at 31 December 2016 (2015: £1.2 million).

In September 2016 the Group refinanced and secured facilities totaling £5.0 million to support the ongoing expansion of its franchising activities. The facility is a quarterly rolling facility with repayments of £22.5k each quarter.

Total bank facilities available to the Group are £5.0 million of which £2.2 million is drawn.

Financial Position

The Group has generated strong cashflow from operations of £1.7m (2016: £0.9m) which is expected to continue in 2017. 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.

 

Ed JonesChief Financial Officer

 

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

FOR THE YEAR ENDED 31 DECEMBER 2016

 

 

2016

 

2015

 

 

Notes

 

£000s

 

£000s

 

 

Revenue

3

 

13,833

 

12,045

 

 

Administrative expenses

 

(11,772)

 

(10,471)

 

 

 

 

 

 

 

Operating profit before depreciation, amortisation, acquisition & share-based payment expenses

2,061

 

1,574

 

 

Depreciation and profit on disposal

4

 

(104)

 

(162)

Amortisation and profit on disposal

4

 

(584)

 

(368)

Business combination acquisition expenses

15

 

(30)

 

(57)

Share-based payment expense

25

 

(192)

 

(12)

 

 

 

 

 

 

 

Operating profit

4

 

1,151

 

975

 

 

Finance income

7

 

4

 

88

 

Finance costs

8

 

(168)

 

(183)

 

 

 

 

 

 

 

Profit before taxation

987

 

880

 

 

Taxation

9

 

(181)

 

(158)

 

 

 

 

 

 

 

Profit for the financial year

 

806

 

722

 

 

Other comprehensive income

 

-

 

-

 

 

 

 

 

 

 

 

Total comprehensive income for the year

 

806

 

722

 

 

 

 

 

 

 

 

Profit and total comprehensive income for the financial year attributable to:

 

Equity holders of the parent

806

 

726

 

Non-controlling interests

-

 

(4)

 

 

 

 

 

 

 

 

806

 

722

 

 

 

 

 

 

 

 

Earnings per share

 

Basic (pence per share)

11

 

2.84

 

2.76

 

 

 

 

 

 

 

 

Diluted (pence per share)

11

 

2.72

 

2.66

 

 

 

 

 

 

 

            

 

 

 

CONSOLIDATED STATEMENT OF FINANCIAL POSITION

AS AT 31 DECEMBER 2016

 

 

2016

 

2015

 

 

Notes

£000s

 

£000s

 

 

Non-current assets

 

Goodwill

12

3,973

 

3,973

 

Other intangible assets

12

4,078

 

3,439

 

Property, plant and equipment

13

429

 

340

 

Investments

14

1

 

1

 

Deferred tax assets

23

82

 

43

 

 

 

 

 

 

 

 

 

8,563

 

7,796

 

 

 

 

 

 

 

 

Current assets

 

Trade and other receivables

16

1,452

 

1,629

 

Cash and cash equivalents

 

1,187

 

1,211

 

 

 

 

 

 

 

 

 

2,639

 

2,840

 

 

 

 

 

 

 

 

Total assets

11,202

 

10,636

 

 

 

 

 

 

 

 

Current liabilities

 

 

Borrowings

17

 

(366)

 

(1,014)

Obligations under finance leases

18

 

(47)

 

(37)

Current tax liabilities

 

(117)

 

(162)

Trade and other payables

19

 

(2,376)

 

(2,492)

 

 

 

 

 

 

 

 

(2,906)

 

(3,705)

 

 

 

 

 

 

 

Non-current liabilities

 

Borrowings

17

 

(1,993)

 

(1,309)

Obligations under finance leases

18

 

(81)

 

(30)

Other payables

20

 

(52)

 

(68)

 

 

 

 

 

 

 

 

(2,126)

 

(1,407)

 

 

 

 

 

 

 

Provisions for liabilities

 

Provisions

22

 

(66)

 

(75)

Deferred tax liability

23

 

(456)

 

(465)

 

 

 

 

 

 

 

 

(522)

 

(540)

 

 

 

 

 

 

 

Net assets

5,648

 

4,984

 

 

 

 

 

 

 

           

 

Equity

 

Attributable to the owners of the parent:

 

Share capital

26

1,145

 

1,131

Share premium account

27

2,633

 

2,579

Merger reserve

 

899

 

899

Retained earnings

 

971

 

375

 

 

 

 

 

 

 

5,648

 

4,984

 

 

 

 

 

 

Total equity

5,648

 

4,984

 

 

 

 

 

 

The financial statements were approved by the board of directors and authorised for issue on 11 April 2017.

 

 

       

 

COMPANY STATEMENT OF FINANCIAL POSITION

AS AT 31 DECEMBER 2016

 

 

2016

 

2015

 

 

Notes

 

£000s

 

£000s

 

 

Non-current assets

 

Investments

14

 

1,071

 

879

 

 

Current assets

 

Trade and other receivables

16

 

3,120

 

2,929

 

 

 

 

 

 

 

 

Total assets

 

4,191

 

3,808

 

 

 

 

 

 

 

 

Current liabilities

 

 

Current tax liabilities

 

(20)

 

-

 

Trade and other payables

19

 

(27)

 

(26)

 

 

 

 

 

 

 

 

(47)

 

(26)

 

 

 

 

 

 

 

Net assets

 

4,144

 

3,782

 

 

 

 

 

 

 

 

Equity

 

Share capital

26

 

1,145

 

1,131

 

Share premium account

 

 

2,633

 

2,579

 

Share option reserve

 

 

203

 

12

 

Retained earnings

 

 

163

 

60

 

 

 

 

 

 

 

 

Total equity

 

4,144

 

3,782

 

 

 

 

 

 

 

 

The financial statements were approved by the board of directors and authorised for issue on 11 April 2017.

 

            

 

 

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

FOR THE YEAR ENDED 31 DECEMBER 2016

 

 

Share capital

Share premium account

Merger reserve

Retained earnings

Total equity attributable to owners of the parent

Non-controlling interests

Total equity

 

 

Notes

£000s

£000s

£000s

£000s

£000s

£000s

£000s

 

 

Balance at 1 January 2015

 

-

-

1,662

 

(222)

1,440

8

1,448

 

 

Year ended 31 December 2015:

 

Profit and total comprehensive income for the year

 

-

-

-

726

726

 

(4)

722

 

Issue of share capital

26

1,131

2,579

104

-

3,814

-

3,814

 

Dividends

10

-

-

-

 

(141)

(141)

-

 

(141)

Credit to equity for equity settled share-based payments

25

-

-

-

12

12

-

12

 

Share for share exchange

 

-

-

 

(867)

-

 

(867)

(4)

(871)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance at 31 December 2015

 

1,131

2,579

899

375

4,984

-

4,984

 

 

Year ended 31 December 2016:

 

Profit and total comprehensive income for the year

 

-

-

-

806

806

-

806

 

Issue of share capital

26

14

53

-

-

67

 

67

 

Dividends

10

-

-

-

 

(453)

(453)

-

 

(453)

Credit to equity for equity settled share-based payments

25

-

-

-

192

192

-

192

 

Deferred tax on share-based payment transactions

 

-

-

-

52

52

-

52

 

Exercise of share options

 

-

1

-

 

(1)

-

-

-

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance at 31 December 2016

1,145

2,633

899

971

5,648

-

5,648

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

                      

 

 

COMPANY STATEMENT OF CHANGES IN EQUITY

FOR THE YEAR ENDED 31 DECEMBER 2016

 

 

Share capital

Share premium account

Share option reserve

Retained earnings

Total

 

 

Notes

£000s

£000s

£000s

£000s

£000s

 

 

Balance at 1 January 2015

 

-

-

-

-

-

 

Period ended 31 December 2015:

 

Profit and total comprehensive income for the year

 

-

-

-

201

201

 

Issue of share capital

26

1,131

2,579

-

-

3,710

 

Dividends

10

-

-

-

 

(141)

(141)

Transfers

 

-

-

12

-

12

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance at 31 December 2015

 

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

 

 

 

 

 

 

 

 

 

 

 

 

 

                

 

 

CONSOLIDATED STATEMENT OF CASH FLOWS

FOR THE YEAR ENDED 31 DECEMBER 2016

 

 

2016

 

2015

 

 

Notes

£000s

 

£000s

 

 

Cash flows from operating activities

 

 

Operating profit

1,151

 

975

 

Adjustments for:

 

 

Share-based payment expense

25

192

 

12

 

Depreciation of property, plant and equipment

13

134

 

162

 

Gain on disposal of property, plant and equipment

4

 

(17)

 

(30)

Amortisation and impairment of intangible assets

12

597

 

368

 

Gain on disposal of intangible assets

4

 

(13)

 

-

 

Release of provisions

22

 

(16)

 

(5)

Costs of acquisition

15

30

 

57

 

Changes in working capital:

 

 

Decrease/(increase) in trade and other receivables

16

177

 

(392)

(Decrease)/increase in trade and other payables

19

 

(130)

 

2

 

 

 

 

 

 

 

 

Cash generated from operations

 

2,105

 

1,149

 

Interest paid

8

 

(111)

 

(85)

Income taxes paid

 

(292)

 

(180)

 

 

 

 

 

 

 

Net cash inflow from operating activities

1,702

 

884

 

 

 

 

 

 

 

 

Investing activities

 

Purchase of intangible assets

12

 

(887)

 

(866)

Proceeds on disposal of intangibles

42

 

-

 

Purchase of property, plant and equipment

13

 

(124)

 

(76)

Proceeds on disposal of property, plant and equipment

 

20

 

32

 

Business acquisitions, net of cash acquired

15

 

(325)

 

(1,390)

Payment of deferred considerations

 

(23)

 

(89)

Purchase of investments

 

-

 

(192)

Proceeds on disposal of investments

 

-

 

263

 

Interest received

7

4

 

5

 

 

 

 

 

 

 

 

Net cash used in investing activities

 

(1,293)

 

(2,313)

 

 

 

 

 

 

Financing activities

 

Proceeds from issue of own shares

 

68

 

2,700

 

Share issue costs

 

-

 

(558)

Proceeds from issue of subsidiary shares prior to acquisition

 

-

 

104

 

Repayment of deferred consideration debentures

17

 

(375)

 

(470)

Proceeds of new bank loans

2,175

 

380

 

Repayment of bank loans and borrowings

17

 

(1,807)

 

(495)

Payment of finance leases obligations

18

 

(41)

 

(26)

Dividends paid

10

 

(453)

 

(141)

 

 

 

 

 

 

 

Net cash (used in)/generated from financing activities

 

(433)

 

1,494

 

 

 

 

 

 

 

 

Net (decrease)/increase in cash and cash equivalents

 

(24)

 

65

 

 

Cash and cash equivalents at beginning of year

1,211

 

1,146

 

 

 

 

 

 

 

 

Cash and cash equivalents at end of year

1,187

 

1,211

 

 

 

 

 

 

 

 

Major non-cash transactions

 

During the year the Group entered into a number of non-cash transactions as follows:

1. The Group has entered into new finance lease contracts with an inception value of £101,787.

 

 

 

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 Flows.

 

           

 

 

NOTES TO THE FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 DECEMBER 2016

 

1

Accounting policies

 

 

 

 

Basis of Preparation

 

 

The financial information set out above does not constitute the Company's statutory accounts for the years ended 31 December 2016 or 2015, but is derived from those accounts. Statutory accounts for 2015 have been delivered to the Registrar of Companies and those for 2016 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

 

 

 

 

2

Judgements and key sources of estimation uncertainty

 

 

 

 

The preparation of the financial statements in conformity with IFRS requires management to make judgments, 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

 

 

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.

 

 

 

 

 

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 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.

 

 

 

 

 

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

 

 

 

 

 

2016

2015

 

 

£000s

£000s

 

 

 

 

Residential sales

5,042

4,840

 

 

Lettings sales

3,176

2,460

 

 

Franchising sales

4,035

3,271

 

 

Other

1,580

1,474

 

 

 

 

 

 

 

 

 

 

 

13,833

12,045

 

 

 

 

 

 

 

 

 

 

 

Revenue analysed by geographical market

 

 

 

2016

2015

 

 

£000s

£000s

 

 

 

 

United Kingdom

13,833

12,045

 

 

 

 

 

 

 

 

 

 

 

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

 

 

 

2016

2015

 

 

 

£000s

£000s

 

 

 

Operating profit for the year is stated after charging/(crediting):

 

 

 

 

 

Depreciation of owned property, plant and equipment

120

149

 

 

 

Depreciation of property, plant and equipment held under finance leases

14

13

 

 

 

Gain on disposal of property, plant and equipment

 

(30)

(30)

 

 

Amortisation of intangible assets

597

368

 

 

 

Write back of loans

-

80

 

 

 

Gain on disposal of intangible assets

 

(13)

-

 

 

 

Research and Development tax credits

-

 

(46)

 

 

Share-based payments (note 25)

192

12

 

 

 

Operating lease charges (including rent)

724

459

 

 

 

 

 

 

 

 

 

 

 

 

 

The Group's subsidiary RealCube Limited has undertaken research and development activities on which tax credits were received in the prior year. Expenses in relation to this are included within employment costs.

 

 

 

 

 

5

Auditor's remuneration

 

 

 

2016

2015

 

 

 

Fees payable to the Company's auditor and its associates:

£000s

£000s

 

 

 

 

 

For audit services

 

 

 

Audit of the financial statements of the Group and Company

15

15

 

 

 

Audit of the Company's subsidiaries

 

25

25

 

 

 

 

 

 

 

 

 

 

 

 

 

40

40

 

 

 

 

 

 

 

 

 

 

 

 

 

No non-audit services were provided to the Group by its auditors.

 

 

 

 

 

6

Employees

 

 

 

 

 

The average monthly number of persons (including Directors) employed by the Group during the year was:

 

 

 

 

 

 

2016

2015

 

 

 

Number

Number

 

 

 

 

 

Sales and administration

184

180

 

 

 

Directors

5

5

 

 

 

 

 

 

 

 

 

 

 

 

 

189

185

 

 

 

 

 

 

 

 

 

 

 

Their aggregate remuneration comprised:

 

 

 

 

2016

2015

 

 

£000s

£000s

 

 

 

 

Wages and salaries

5,718

5,087

 

 

Social security costs

511

508

 

 

Pension costs

89

110

 

 

 

 

 

 

 

 

 

 

 

6,318

5,705

 

 

 

 

 

 

 

 

 

 

 

Details of Directors' remuneration is provided in note 31.

 

 

 

 

 

7

Finance income

 

 

 

2016

2015

 

 

£000s

£000s

 

 

Interest income

 

 

 

Interest on bank & similar deposits

4

1

 

 

Interest on other financial instruments

-

3

 

 

Finance income on financial assets held at amortised cost

-

13

 

 

 

 

 

 

 

 

 

 

 

Total interest revenue

4

17

 

 

 

 

Income from non-current asset investments

 

 

 

Gain on disposal of financial assets held for trading

-

71

 

 

 

 

 

 

 

 

 

 

 

Total income

4

88

 

 

 

 

 

 

 

 

 

 

 

Investment income includes the following:

 

 

 

 

 

 

Interest on financial assets not measured at fair value through profit or loss

4

15

 

 

 

 

 

 

 

 

8

Finance costs

 

 

 

2016

2015

 

 

£000s

£000s

 

 

Interest on financial liabilities measured at amortised cost:

 

 

 

Interest on bank overdrafts and loans

98

71

 

 

Interest on finance leases

13

14

 

 

 

 

 

 

 

 

 

 

 

111

85

 

 

 

 

 

 

 

 

 

 

 

Other finance costs:

 

 

 

Unwinding of discount on loans and borrowings

50

89

 

 

Unwinding of discount on provisions

7

9

 

 

 

 

 

 

 

 

 

 

 

57

98

 

 

 

 

 

 

 

 

 

 

 

Total finance costs

168

183

 

 

 

 

 

 

 

 

9

Taxation

 

 

 

2016

2015

 

 

 

£000s

£000s

 

 

 

Current tax

 

 

 

UK corporation tax on profits for the current period

246

221

 

 

 

Adjustments in respect of prior periods

 

(1)

(1)

 

 

 

 

 

 

 

 

 

 

 

 

Total current tax

245

220

 

 

 

 

 

 

 

 

 

 

 

 

 

Deferred tax

 

 

 

Origination and reversal of temporary differences

 

(31)

(58)

 

 

Changes in tax rates

 

(21)

(4)

 

 

Deferred tax on share-based payments charge

 

(12)

-

 

 

 

 

 

 

 

 

 

 

 

 

 

Total deferred tax

 

(64)

(62)

 

 

 

 

 

 

 

 

 

 

 

 

Total tax charge

181

158

 

 

 

 

 

 

 

 

 

 

 

 

 

The charge for the year can be reconciled to the profit per the Consolidated Statement of Comprehensive Income as follows:

 

 

 

 

 

 

2016

2015

 

 

 

£000s

£000s

 

 

 

 

 

Profit before taxation

987

880

 

 

 

 

 

 

 

 

 

 

 

 

 

Expected tax charge based on a corporation tax rate of 20% (2015 - 20%)

197

176

 

 

 

Tax effect of expenses that are not deductible in determining taxable profit

4

31

 

 

 

Tax effect of utilisation of tax losses not previously recognised

 

(6)

-

 

 

 

Change in unrecognised deferred tax assets

-

 

(7)

 

 

Effect of change in corporation tax rate

 

(21)

(4)

 

 

Permanent capital allowances in excess of depreciation

-

 

(3)

 

 

Depreciation on assets not qualifying for tax allowances

2

-

 

 

 

Amortisation on assets not qualifying for tax allowances

8

-

 

 

 

Share based payment charge

 

(5)

2

 

 

 

Under provided in prior years

 

(1)

(1)

 

 

Other adjustments

3

 

(36)

 

 

 

 

 

 

 

 

 

 

 

 

Total tax charge

181

158

 

 

 

 

 

 

 

 

 

 

 

 

 

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:

 

 

 

 

 

 

2016

2015

 

 

£000s

£000s

 

 

 

 

Deferred tax:

 

 

 

Change in estimated excess tax deductions related to share based payments

 

(52)

-

 

 

 

 

 

 

 

 

 

 

 

The UK corporation tax rate was 20%, throughout the year.

 

A reduction in the UK corporation tax rate from 20% to 19% (effective from 1 April 2017) was substantively enacted in October 2015. Further reduction to 17% (effective from 1 April 2020) was substantively enacted in September 2016. These rates have therefore been considered when calculating deferred tax at the reporting date. Deferred tax balances at the reporting date are measured at 18% (2015: 19%), except for on share options which are expected to be exercised before 1 April 2020 and as such are measured at 19%.

 

 

 

 

 

10

Dividends

 

 

2016

2015

2016

2015

 

 

per share

per share

£000s

£000s

 

 

 

 

Amounts recognised as distributions to equity holders:

 

 

 

 

 

Final paid (pence per share)

1.00

-

283

-

 

 

Interim paid (pence per share)

0.60

0.50

170

141

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

1.60

0.50

453

141

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

The proposed final dividend for the year ended 31 December 2016 is:

 

 

 

 

2016

 

 

Per share

Total

 

 

£000s

 

 

Ordinary shares (pence per share)

 

1.30

372

 

 

 

 

 

 

 

 

 

 

 

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:

 

 

 

 

 

2016

2015

 

 

 

Earnings

£000s

£000s

 

 

 

Earnings for the purpose of basic earnings per share being net profit attributable to owners of the parent

806

726

 

 

 

Effects of dilutive potential ordinary shares

-

-

 

 

 

 

 

 

 

 

 

 

 

 

 

Earnings for the purposes of diluted earnings per share

806

726

 

 

 

 

 

 

 

 

 

 

 

 

 

2016

2015

 

 

 

Number of shares

No.

No.

 

 

 

Weighted average number of ordinary shares for the purposes of basic earnings per share

28,365,454

26,317,492

 

 

 

 

 

Net weighted average number of diluted potential ordinary shares for the purposes of diluted earnings per share

1,264,396

945,051

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted average number of ordinary shares for the purposes of diluted earnings per share

29,629,850

27,262,543

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic earnings per share (pence per share)

2.84

2.76

 

 

 

 

 

 

 

 

 

 

 

 

 

Diluted earnings per share (pence per share)

2.72

2.66

 

 

 

 

 

 

 

 

 

 

 

 

 

In each period there were share options outstanding. As at 31 December 2016 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, investment revenue, 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:

 

 

 

 

 

 

Profit after taxation attributable to equity owners of the parent

806

726

 

 

 

Adjusted for:

 

 

 

Time-value interest costs

57

99

 

 

 

Investment revenues

 

(4)

(15)

 

 

Amortisation

597

368

 

 

 

Costs of acquisition

30

57

 

 

 

Share-based payment expense

192

12

 

 

 

 

 

 

 

 

 

 

 

 

 

Adjusted Earnings

1,678

1,247

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic Adjusted Earnings per share (pence per share)

5.92

4.74

 

 

 

 

 

 

 

 

 

 

 

 

12

Goodwill and other intangible assets

 

 

Group

Goodwill

Software

FDG's & rebrands

Brands

Customer lists

Total

 

 

£000s

£000s

£000s

£000s

£000s

£000s

 

 

Cost

 

At 1 January 2015

3,579

-

348

465

164

4,556

 

 

Additions - separately acquired

-

86

780

-

-

866

 

 

Additions - business combinations

429

507

-

169

1,498

2,603

 

 

Disposals

-

-

 

(10)

-

-

 

(10)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

At 31 December 2015

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

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Amortisation and impairment

 

At 1 January 2015

35

-

45

19

136

235

 

 

Amortisation charged for the year

-

40

84

58

186

368

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

At 31 December 2015

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

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Carrying amount

 

At 31 December 2016

3,973

495

1,686

496

1,401

8,051

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

At 31 December 2015

3,973

553

989

557

1,340

7,412

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

The Company had no intangible assets as at 31 December 2016 or 31 December 2015.

 

 

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 2021, using growth rates of 0% - 6% 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. A discount rate of 7% has been used based on the Group's estimated cost of capital.

 

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.

 

 

 

The carrying amounts of goodwill have been assigned to the following cash-generating units:

 

 

 

Group

 

 

2016

2015

 

 

£000s

£000s

 

 

Residential sales

 

1,330

1,330

 

 

Lettings

 

561

561

 

 

Franchising

 

2,048

2,048

 

 

Other

 

34

34

 

 

 

 

 

 

 

 

 

3,973

3,973

 

 

 

 

 

 

 

13

Property, plant and equipment

 

 

 

 

 

Group

Leasehold land and buildings

Plant and machinery

Fixtures, fittings and equipment

Motor vehicles

Total

 

 

 

£000s

£000s

£000s

£000s

£000s

 

 

 

Cost

 

 

 

At 1 January 2015

102

307

22

122

553

 

 

 

Additions

3

54

10

9

76

 

 

 

Business combinations

-

1

5

-

6

 

 

 

Disposals

-

-

-

 

(48)

(48)

 

                                                          

 

Transfers

 

(93)

93

-

-

-

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

At 31 December 2015

12

455

37

83

587

 

 

 

Additions

4

43

174

5

226

 

 

Disposals

-

 

(1)

-

 

(48)

(49)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

At 31 December 2016

16

497

211

40

764

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Depreciation and impairment

 

 

At 1 January 2015

5

96

5

27

133

 

 

Depreciation charged in the year

6

91

13

52

162

 

 

Eliminated in respect of disposals

-

-

-

 

(48)

(48)

 

Transfers

 

(2)

2

-

-

-

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

At 31 December 2015

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

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Carrying amount

 

 

At 31 December 2016

5

221

178

25

429

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

At 31 December 2015

3

266

19

52

340

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

The Company had no property, plant and equipment assets at 31 December 2016 or 31 December 2015.

 

 

 

 

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 £24,622 (2015 - £13,125) for the year.

 

 

 

 

Group

 

 

 

2016

2015

 

 

£000s

£000s

 

 

 

 

Fixtures, fittings and equipment

 

172

-

 

 

Plant and machinery

 

-

64

 

 

Motor vehicles

 

11

27

 

 

 

 

 

 

 

 

 

 

 

183

91

 

 

 

 

 

 

 

 

 

 

 

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

 

 

 

2016

2015

2016

2015

 

 

Notes

£000s

£000s

£000s

£000s

 

 

 

 

Investments in subsidiaries

33

-

-

867

867

 

 

Other investments in subsidiaries

33

-

-

204

12

 

 

Unlisted investments

1

1

-

-

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

1

1

1,071

879

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Movements in non-current investments

 

 

Group

Loans

Shares

Total

 

 

£000s

£000s

£000s

 

 

Cost or valuation

 

 

At 1 January 2015

74

1

75

 

 

Additions

-

192

192

 

 

Unwinding of discount

7

-

7

 

 

Transfer to intercompany receivable

 

(81)

-

 

(81)

 

Disposals

-

 

(192)

(192)

 

 

 

 

 

 

 

 

 

 

At 31 December 2015

-

1

1

 

 

 

Additions

-

-

-

 

 

Disposals

-

-

-

 

 

 

 

 

 

 

 

 

 

 

At 31 December 2016

-

1

1

 

 

 

 

 

 

 

 

 

 

 

Impairment

 

 

At 1 January 2015 & 31 December 2015

-

-

-

 

 

 

 

 

 

 

 

 

 

 

Carrying amount

 

 

At 31 December 2016

-

1

1

 

 

 

 

 

 

 

 

 

 

 

At 31 December 2015

-

1

1

 

 

 

 

 

 

 

 

 

 

 

 

Movements in non-current investments

 

 

 

Company

 

Equity investments in subsidiaries

Other investments in subsidiaries

Total

 

 

£000s

£000s

£000s

 

 

Cost or valuation

 

 

 

At 1 January 2015

 

-

-

-

 

 

Additions

 

867

-

867

 

 

Additions through share based payment expense

 

-

12

12

 

 

 

 

 

 

 

 

 

 

 

 

 

At 31 December 2015

 

867

12

879

 

 

 

 

Additions through share based payment expense

 

-

192

192

 

 

 

 

 

 

 

 

 

 

 

 

 

At 31 December 2016

 

867

204

1,071

 

 

 

 

 

 

 

 

 

 

 

 

 

Impairment

 

 

 

At 31 December 2016

 

-

-

-

 

 

 

 

 

 

 

 

 

 

 

 

 

At 31 December 2016

 

-

-

-

 

 

 

 

 

 

 

 

 

 

 

 

 

Carrying amount

 

 

 

At 31 December 2016

 

867

204

1,071

 

 

 

 

 

 

 

 

 

 

 

 

 

At 31 December 2015

 

867

12

879

 

 

 

 

 

 

 

 

 

 

 

 

 

15

Business combinations

 

 

 

Acquisition of two Manchester lettings books

 

 

During the year, the Group acquired two Manchester lettings books. The consideration paid totalled £310,000, being settled in cash.

 

As part of the acquisitions, the Directors have identified intangible assets, being the lettings books. 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 an appropriate discount rate and an assumption of a useful life of each lettings book to estimate the fair value of this intangible.

 

 

 

Carrying value

Fair value adjustments

Fair value recognised on acquisition

 

 

Assets

 

£000s

£000s

£000s

 

 

Intangible assets

 

-

378

378

 

 

 

 

 

 

 

 

 

 

 

Total assets

 

-

378

378

 

 

 

Liabilities

 

 

Deferred tax liabilities

 

-

68

68

 

 

 

 

 

 

 

 

 

 

 

Total liabilities

 

-

68

68

 

 

 

 

 

 

 

 

 

 

 

Total identifiable net assets

 

-

310

310

 

 

 

 

 

 

 

 

 

 

 

Goodwill arising on acquisition

 

-

 

 

 

 

 

 

 

Purchase consideration transferred

 

310

 

 

 

 

 

 

 

The analysis of the cash flows on acquisition is:

 

 

£000s

 

 

Transaction costs of the acquisition

 

(15)

 

Cash and cash equivalents acquired on combination

 

-

 

 

Cash and cash equivalents paid for the combination

 

(310)

 

 

 

 

 

 

Net cash flow on acquisition

 

(325)

 

 

 

 

 

 

From the date of acquisition, the lettings books contributed £107,675 of revenue and £65,988 of profit before tax from continuing operations of the Company.

 

In addition to the above, the business combination acquisition expenses disclosed on the face of the Consolidated Statement of Comprehensive Income includes £15,000 (2015 - £nil) of expenses accrued for due diligence performed on a target business, which was completed on 21 March 2017 as disclosed further in note 30.

 

 

 

 

16

Trade and other receivables

 

 

Group

 

Company

 

 

2016

2015

2016

2015

 

 

Amounts falling due within one year:

£000s

£000s

£000s

£000s

 

 

 

Trade receivables

852

871

-

-

 

 

Amounts due from subsidiary undertakings

-

-

3,120

2,929

 

 

Other receivables

144

266

-

-

 

 

Prepayments and accrued income

456

492

-

-

 

 

 

 

 

 

 

 

 

 

 

 

 

1,452

1,629

3,120

2,929

 

 

 

 

 

 

 

 

 

 

 

 

 

Trade receivables at the reporting date are shown above net of provisions.

 

Trade receivables are stated net of impairment for estimated irrecoverable amounts of £93,271 (2015: £124,957). 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:

 

 

 

 

2016

2015

 

 

£000s

£000s

 

 

Beginning of the year

125

41

 

 

Acquired on business combinations

-

30

 

 

Provision for bad receivables

15

69

 

 

Released during the year

 

(47)

(15)

 

 

 

 

 

 

 

 

End of the year

93

125

 

 

 

 

 

 

 

 

 

An analysis of the trade receivables past due but not impaired is:

 

 

2016

2015

 

 

£000s

£000s

 

 

60 to 120 days

27

66

 

 

More than 120 days

135

129

 

 

Less provision

 

(93)

(125)

 

 

 

 

 

 

 

 

Total trade receivables past due but not impaired

69

70

 

 

Add:

-

-

 

 

Less than 60 days

783

801

 

 

 

 

 

 

 

 

 

Net trade receivables

852

871

 

 

 

 

 

 

 

 

 

The Directors consider the credit quality of trade and other receivables that are neither past due nor impaired to be good.

 

17

Borrowings

 

 

Group

 

 

 

2016

2015

 

 

£000s

£000s

 

 

 

Deferred consideration debenture loans

 

287

618

 

 

Bank loans

 

2,072

1,705

 

 

 

 

 

 

 

 

 

2,359

2,323

 

 

 

 

 

 

 

 

 

Payable within one year

 

366

1,014

 

 

Payable after one year

 

1,993

1,309

 

 

 

 

 

 

 

 

 

During the year, the Group replaced the five bank loans with two new flexible loan facilities.

 

The first loan has a maximum facility amounting to £4,550,000; at the year end £1,725,106 had been drawn down and is disclosed as payable after one year. The loan has flexible repayment terms and bears interest at 2.80% above Libor.

 

The second loan received in the year amounted to £450,000; at the year end £434,913 was outstanding. The loan is repayable at £90,000 per annum and bears interest at 2.80% above Libor.

 

Included within the above are establishment fees of £88,000 (2015 - £nil) which are netted off the total liability presented.

 

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 are redeemable in full on 31 July 2017. These are carried at their present value, determined using the Company's discount rate of 10%, and are carried at £287,382 as at the year end. Finance costs are recognised as the debenture loan unwinds towards maturity.

 

 

 

18

Obligations under finance leases

 

 

 

Future minimum lease payments due under finance leases:

 

 

Group

 

 

2016

2015

 

 

£000s

£000s

 

 

Within one year

 

58

44

 

 

In two to five years

 

97

32

 

 

 

 

 

 

 

 

 

155

76

 

 

Less: future finance charges

 

(27)

(9)

 

 

 

 

 

 

 

 

128

67

 

 

 

 

 

 

 

 

 

The finance leases relate to improvements and furniture for use in the Head Office, and to motor vehicles included within non-current assets. There are no lease incentives or contingent elements attracting to the leases.

 

 

 

 

 

19

Current trade and other payables

 

 

Group

 

Company

 

 

 

2016

2015

2016

2015

 

 

£000s

£000s

£000s

£000s

 

 

 

                                                           

 

Other taxation and social security

 

711

925

-

-

 

 

Trade payables

 

645

556

-

-

 

 

Other payables

260

213

-

-

 

 

Accruals and deferred income

760

798

27

26

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2,376

2,492

27

26

 

 

 

 

 

 

 

 

 

 

 

 

 

 

20

Non-current trade and other payables

 

 

 

Group

 

Company

 

 

 

2016

2015

2016

2015

 

 

£000s

£000s

£000s

£000s

 

 

 

 

Other payables

52

68

-

-

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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 whereby 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.

 

In the year the Group refinanced its bank borrowings as further explained in note 17. 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 £2,160,019 (2015 - £1,705,295). 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 £43,000 (2015 - £31,000).

 

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.

 

 

 

 

 

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. The most substantial change during the year to 31 December 2016 is the replacement of bank borrowing arrangements.

 

 

 

 

 

 

Group

 

Company

 

 

 

2016

2015

2016

2015

 

 

£000s

£000s

£000s

£000s

 

 

Carrying amount of financial assets

 

 

 

Debt instruments measured at amortised cost

2,182

2,348

3,120

2,929

 

 

Equity instruments measured at cost less impairment

1

1

-

-

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2,183

2,349

3,120

2,929

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Carrying amount of financial liabilities

 

 

 

Measured at amortised cost

3,442

3,227

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.

 

 

 

 

 

Financial assets

Demand and less than 3 months

From 3 to 12 months

From 12 months to 2 years

From 2 to 5 years

Total

 

 

 

 

Trade and other receivables

1,137

-

-

-

1,137

 

 

Cash and cash equivalents

1,211

-

-

-

1,211

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

As at 31 December 2015

2,348

-

-

-

2,348

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Trade and other receivables

996

-

-

-

996

 

 

Cash and cash equivalents

1,187

-

-

-

1,187

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

As at 31 December 2016

2,183

-

-

-

2,183

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Financial liabilities

Demand and less than 3 months

From 3 to 12 months

From 12 months to 2 years

From 2 to 5 years

Total

 

 

Trade and other payables

751

182

23

39

995

 

Debenture loans

-

375

295

-

670

 

Bank loans and overdrafts

130

477

485

614

1,706

 

Other loans

-

19

-

-

19

 

Finance leases

9

28

30

-

67

 

 

 

 

 

 

 

 

 

 

 

 

 

As at 31 December 2015

890

1,081

833

653

3,457

 

 

 

 

 

 

 

 

 

 

 

 

 

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

 

 

 

 

 

 

 

 

 

 

 

 

22

Provisions for liabilities

 

 

Group

 

 

2016

2015

 

Notes

£000s

£000s

 

 

Contingent acquisition costs

 

20

37

 

Office dilapidations provision

 

46

38

 

 

 

 

 

 

 

66

75

 

Deferred tax liabilities

 

23

456

465

 

 

 

 

 

 

 

522

540

 

 

 

 

 

 

 

 

Movements on provisions apart from deferred tax liabilities:

 

 

 

Contingent acquisition costs

Office dilapidations provision

Total

 

 

 

Group

 

£000s

£000s

£000s

 

 

 

At 1 January 2015

119

32

151

 

 

 

Additional provisions in the year

-

3

3

 

 

 

Reversal of provision

 

(5)

-

 

(5)

 

 

Utilisation of provision

 

(83)

-

 

(83)

 

 

Unwinding of discount

6

3

9

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

At 31 December 2015

37

38

75

 

 

 

 

 

Additional provisions in the year

-

4

4

 

 

 

Reversal of provision

 

(20)

-

 

(20)

 

 

Unwinding of discount

3

4

7

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

At 31 December 2016

20

46

66

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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, with £20,000 (£19,462 discounted) falling contingently payable in July 2017.

 

 

 

 

 

 

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 £75,000 by the end of 2019.

 

 

 

 

 

23

Deferred taxation

 

 

 

 

 

The following is the analysis of the deferred tax balances for financial reporting purposes:

 

 

 

 

 

 

Liabilities

 

Assets

 

 

 

2016

2015

2016

2015

 

 

 

Group

£000s

£000s

£000s

£000s

 

 

 

 

 

Accelerated capital allowances

46

19

-

-

 

 

 

Decelerated capital allowances

-

-

-

17

 

 

 

Fair value adjustments to intangible assets on business combinations

410

446

-

-

 

 

 

Share based payments

-

-

64

-

 

 

 

Dilapidations provision

-

-

8

7

 

 

 

Other provisions and accruals

-

-

10

19

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

456

465

82

43

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

The Company did not have any deferred tax balances as at 31 December 2016 or 31 December 2015.

 

 

 

 

 

Group

 

 

 

2016

2015

 

 

 

Movements in the year:

 

£000s

£000s

 

 

 

Net liability at 1 January 2016

 

422

74

 

 

 

Credit to profit and loss

 

(43)

(58)

 

 

Charge to equity

 

(52)

-

 

 

 

Effect of change in tax rate - income statement

 

(21)

(4)

 

 

Acquired on business combinations

 

68

410

 

 

 

 

 

 

 

 

 

 

 

 

 

Net liability at 31 December 2016

 

374

422

 

 

 

 

 

 

 

 

 

 

 

 

 

Movements by category of deferred tax are as follows:

 

 

 

 

 

Liability/(asset) at 1 January 2015

Charge to profit or loss

Effect of change in tax rate

Acquired on business combinations & other

Liability/(asset) at 31 December 2015

 

 

 

Accelerated capital allowances

28

 

(9)

-

-

19

 

 

                                                           

 

Decelerated capital allowances

 

(17)

-

-

-

 

(17)

 

 

Fair value adjustments to intangible assets on business combinations

108

 

(68)

(4)

410

446

 

 

 

Dilapidations provision

 

(6)

(1)

-

-

 

(7)

 

 

Other provisions and accruals

 

(11)

(8)

-

-

 

(19)

 

 

Prior year adjustment

 

(28)

28

-

-

-

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net deferred tax movement

74

 

(58)

(4)

410

422

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Liability/(asset) at 1 January 2016

Charge to profit or loss

Effect of change in tax rate

Acquired on business combinations & other

Liability/(asset) at 31 December 2016

 

 

 

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

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Within RealCube Limited there exists tax losses totalling £431,528 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

 

 

 

2016

2015

 

 

Defined contribution schemes

 

£000s

£000s

 

 

 

 

Charge to profit and loss in respect of defined contribution schemes

89

110

 

 

 

 

 

 

 

 

 

 

 

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

 

 

 

 

Group

Number of share options

Weighted average exercise price

 

 

 

2016

2015

2016

2015

 

 

Number

Number

£

£

 

 

 

 

Outstanding at 1 January 2016

1,794,967

931,250

0.43

0.16

 

 

Granted

675,000

887,156

0.04

0.54

 

 

Exercised

 

(349,657)

(23,439)

0.19

0.42

 

 

Expired

 

(53,250)

-

0.73

-

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Outstanding at 31 December 2016

2,067,060

1,794,967

0.23

0.28

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Exercisable at 31 December 2016

935,060

353,467

0.25

0.43

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

The options exercised during the year had a weighted average share price on the date of exercise of £0.773.

 

The options outstanding at 31 December 2016 had an exercise price ranging from £0.04 to £0.73, and a remaining contractual life ranging between May 2017 and January 2026.

 

 

 

 

The options exist at 31 December 2016 across the following share option schemes:

 

 

 

 

 

Option name & date of issue

Number of shares

Exercise price per share (£)

Fair value of scheme

Vesting period

 

 

Employee share options

625,000

0.16

-

3 years

 

 

Options issued January 2015

150,000

0.40

9,455

3 years

 

 

Options issued May 2015

310,060

0.42

7,233

2 months

 

 

Options issued December 2015

307,000

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

 

 

Options issued January 2016 - 4

150,000

0.04

81,681

Up to 3.25 years

 

 

 

 

 

 

 

 

 

 

 

 

2,067,060

 

391,756

 

 

 

 

 

 

 

 

 

 

 

 

 

The fair value of the schemes are being expensed over the vesting period. All share options expire 10 years after the date of issue.

 

 

 

 

 

Fair value of options granted

 

 

 

The weighted average fair value of options granted during the year was £0.55 per share. Fair value was measured using the Black-Scholes model.

 

 

 

 

 

 

Inputs were as follows:

 

 

 

January options 1

January options 2

January options 3

January options 4

 

 

£

£

£

£

 

 

Weighted average share price

0.76

0.76

0.76

0.76

 

 

Weighted average exercise price

0.04

0.04

0.04

0.04

 

 

Expected volatility

2.30%

2.30%

2.30%

2.30%

 

 

Risk free rate

0.61%

0.61%

0.61%

0.61%

 

 

Expected dividends yields

1.90%

1.90%

1.90%

1.90%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

The 4th options were granted to a member of the Board and are contingent on certain events occurring, for which it is not possible to specify an exact date. Once such an event has taken place, the options can be immediately exercised. The Directors have modelled the probability of that event occurring and have determined that on a weighted average basis the options are most likely to have an exercise date of 30 April 2019, and accordingly the expense of these share options is being recognised to that date.

 

The expected volatility is based on an assessment of the Group's historical volatility, adjusted where applicable for anticipated changes in the market.

 

 

 

 

 

Group

Group

Company

Company

 

 

 

2016

2015

2016

2016

 

 

 

£000s

£000s

£000s

£000s

 

 

 

Expenses recognised in the year

 

 

 

Arising from equity settled share based payment transactions

192

12

-

-

 

 

 

 

 

 

 

 

 

 

 

 

 

 

26

Share capital

 

 

Group and Company

 

 

2016

2015

 

 

Ordinary share capital

£000s

£000s

 

 

Issued and fully paid

 

 

28,636,649 Ordinary of 4p each

1,145

1,131

 

 

 

 

 

 

 

 

 

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.

 

 

 

 

Reconciliation of movements during the year:

 

 

Ordinary

 

 

Number

 

 

 

At 1 January 2016

28,286,992

 

 

Issue of fully paid shares

349,657

 

 

 

 

 

 

 

At 31 December 2016

28,636,649

 

 

 

 

 

 

 

During the year, 349,657 share options were exercised at a total premium of £53,245.

 

 

 

27

Share premium account

 

 

Group

 

Company

 

 

2016

2015

2016

2015

 

 

£000s

£000s

£000s

£000s

 

 

 

At beginning of year

2,579

-

2,579

-

 

 

Issue of new shares

53

3,337

53

3,337

 

 

Share issue expenses

-

 

(758)

-

 

(758)

 

Other movements

1

-

1

-

 

 

 

 

 

 

 

 

 

 

 

 

 

At end of year

2,633

2,579

2,633

2,579

 

 

 

 

 

 

 

 

 

 

 

 

 

During the period, shares were issued at a premium of £53,245, which related to the exercise of share options granted in prior periods. On exercise, a transfer of £1,013 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 2016, the Group and Company had no guarantees or contingent liabilities (2015 - none) other than the borrowings disclosed in note 17 and secured over the assets of the Group including the Company.

 

At 31 December 2016 the Group held client monies in approved bank accounts amounting to £4,481,494 (2015: £3,496,720). Neither the cash asset nor any corresponding obligation has been recognised by the Group.

 

 

 

 

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:

 

 

 

 

 

 

Group

 

 

 

2016

2015

 

 

£000s

£000s

 

 

Land and buildings

 

 

 

Within one year

 

617

614

 

 

Between two and five years

 

1,661

1,937

 

 

In over five years

 

1,763

2,265

 

 

 

                                                             

 

 

 

 

 

 

 

 

4,041

4,816

 

 

 

 

 

 

 

 

 

 

 

Other

 

 

 

Within one year

 

22

40

 

 

Between two and five years

 

1

21

 

 

 

 

 

 

 

 

 

 

 

23

61

 

 

 

 

 

 

 

 

 

 

 

4,064

4,877

 

 

 

 

 

 

 

 

 

 

 

 

30

Events after the reporting date

 

 

 

 

 

Acquisitions

On 24 March 2017, the Group purchased the trade and assets of Besley Hill Franchising Limited ("Besley Hill") for £2,300,000 in cash, together with £250,000 settled by way of issue of 421,578 new ordinary shares at a premium of £0.55301 per share, with these shares subject to a twelve month lock-in agreement. The most recent accounts of Besley Hill, to 31 March 2016, showed revenue of £914,570 and an unadjusted profit before tax of £18,238. As at the date of approval of the financial statements, the Directors are still assessing the fair values acquired and accordingly have not presented further information in respect of the acquisition nor on its expected impact on Group results.

 

Other than the issue of shares to the vendors as noted above, the acquisition was financed through a combination of existing cash, a £1,000,000 extension to the group's revolving credit facility, and the new issue of 2,400,000 ordinary shares at a premium of £0.51 per share.

 

Besley Hill currently operates from fifteen offices across counties in the south west of England, all of which will come into the Hunters network through their franchise agreements, and the business combination will increase the Group's geographic penetration in the south west.

 

 

 

 

 

31

Directors' remuneration and transactions

 

 

 

2016

2015

 

 

 

£000s

£000s

 

 

 

 

 

Remuneration for qualifying services

465

397

 

 

 

Remuneration recognised in share premium

-

33

 

 

 

Company pension contributions to defined contribution schemes

25

28

 

 

 

 

 

 

 

 

 

 

 

 

 

490

458

 

 

 

 

 

 

 

 

 

 

 

 

 

The number of Directors for whom retirement benefits are accruing under defined contribution schemes amounted to 3 (2015 - 3).

 

 

 

 

 

During the year to 31 December 2016 the Directors received remuneration as follows:

 

 

 

 

Director

Salary

Bonus

Benefits in kind

Pension

Total

 

 

 

£000s

£000s

£000s

£000s

£000s

 

 

 

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

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

During the year to 31 December 2015 the Directors received remuneration as follows:

 

 

 

 

Director

Salary

Bonus

Benefits in kind

Pension

Total

 

 

 

£000s

£000s

£000s

£000s

£000s

 

 

 

Ms G Frew

91

37

12

8

148

 

 

 

Mr H Hill

50

-

-

-

50

 

 

 

Mr K Hollinrake

71

-

11

10

92

 

 

 

Mr E Jones

89

35

11

10

145

 

 

 

Mr D Fielding

23

-

-

-

23

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total

324

72

34

28

458

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Share options

 

 

On 28 January 2016 awards were made under the Hunters Property Senior Executive Share Option Scheme (the "Share Scheme") to certain Executive Directors. Chief Executive, Harry Hill was separately granted share options as described below.

 

The Share Scheme has been introduced in order to incentivise and retain key members of the executive management team, and to drive shareholder value creation. Share options granted over ordinary shares of 4p each in the Company ("Ordinary Shares") under the Share Scheme ("Share Options") vest, subject to the achievement of certain earnings per share performance conditions, as to one third following the end of each of the Company's current and two subsequent financial years. The exercise price of the Share Options is 4 pence per Ordinary Share. Share Options which have vested are exercisable following the preliminary announcement of the Company's results for the financial year. Subject to the rules of the Scheme, Share Options lapse 10 years after the date of grant.

 

 

 

 

Director

 

Number of options granted under the share scheme

% of the existing issued share capital at grant date

 

 

Kevin Hollinrake

 

100,000

 

0.35%

 

 

 

Glynis Frew

 

150,000

 

0.53%

 

 

 

Ed Jones

 

150,000

 

0.53%

 

 

 

 

 

Options award to Chief Executive

 

 

On 28 January 2016 Harry Hill was granted an option over 150,000 Ordinary shares, exercisable at a price of 4 pence per Ordinary share, which vests upon the fulfilment of certain strategic performance conditions. The option may be exercisable in whole or in part (in tranches of not less than 25,000 Ordinary shares) at any time after it has vested. Subject to the provisions of the option agreement between the Company and Harry Hill, the option lapses 10 years after the date of grant.

 

 

 

No Directors exercised share options during the current or prior year.

 

During the year the Directors of the Group received dividends as follows:

 

 

2016

2015

 

 

Director

 

£000s

£000s

 

 

Ms G Frew

 

28

9

 

 

Mr H Hill

 

3

-

 

 

Mr K Hollinrake

 

67

21

 

 

Mr E Jones

 

58

18

 

 

Mr D Fielding

 

1

-

 

 

 

 

 

 

 

 

 

157

48

 

 

 

 

 

 

 

 

 

The Directors advanced loans to the Group in the prior year as follows:

 

 

2016

2015

 

 

Ms G Frew

£000s

£000s

 

 

Brought forward

 

-

13

 

 

Advanced during the year

 

-

-

 

 

Repaid during the year

 

-

 

(13)

 

 

 

 

 

 

 

 

Carried forward

 

-

-

 

 

 

 

 

 

 

 

 

Mr K Hollinrake

 

 

Brought forward

 

-

12

 

 

Advanced during the year

 

-

-

 

 

Repaid during the year

 

-

 

(12)

 

 

 

 

 

 

 

 

Carried forward

 

-

-

 

 

 

 

 

 

 

 

 

Mr E Jones

 

 

Brought forward

 

-

27

 

 

Advanced during the year

 

-

-

 

 

Repaid during the year

 

-

 

(27)

 

 

 

 

 

 

 

 

Carried forward

 

-

-

 

 

 

 

 

 

 

32

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 31 for details of key management personnel remuneration.

 

 

 

 

 

Transactions with related parties

 

 

 

During the year the Group entered into the following transactions with related parties:

 

 

 

 

 

 

Purchase of services

 

 

 

2016

2015

 

 

£000s

£000s

 

 

Group

 

 

 

RealCube Limited (prior to acquisition by Group)

-

49

 

 

 

 

 

 

 

 

 

 

 

No guarantees have been given or received by the Group,

 

 

 

 

 

 

33

Subsidiaries

 

 

 

 

 

Details of the Company's subsidiaries at 31 December 2016 are as follows:

 

 

 

 

 

 

Name of undertaking and country of

Nature of business

Class of

% Held

 

 

 

incorporation or residency

 

shareholding

Direct

Indirect

 

 

 

 

Hunters Property Group Limited

England & Wales

Estate agents

Ordinary

100.00

 

 

 

Hunters Franchising Limited

England & Wales

Franchising of estate agents

Ordinary

 

100.00

 

 

Hunters Partners Limited

England & Wales

Franchising of estate agents

Ordinary

 

100.00

 

 

Greenrose Network (Franchise) Limited

England & Wales

Franchising of estate agents

Ordinary

 

100.00

 

 

Hunters Group Limited

England & Wales

Intermediate holding company

Ordinary

 

100.00

 

 

Hunters (Midlands) Limited

England & Wales

Estate agents

Ordinary

 

100.00

 

 

RealCube Technology Limited

England & Wales

Intermediate holding company

Ordinary

 

100.00

 

 

RealCube Limited

England & Wales

Software

Ordinary

 

100.00

 

 

Hunters Financial Services Limited

England & Wales

Financial services

Ordinary

 

100.00

 

 

Hapollo Limited

England & Wales

Lettings and management of office spaces

Ordinary

 

100.00

 

 

Hunters Land & New Homes Limited

England & Wales

Dormant

Ordinary

 

100.00

 

 

Maddison James Limited

England & Wales

Dormant

Ordinary

 

100.00

 

 

Hunters Survey & Valuation Limited

England & Wales

Dormant

Ordinary

 

100.00

 

 

Herriot Cottages Limited

England & Wales

Dormant

Ordinary

 

100.00

 

 

 

 

The registered office of Hunters Group Limited, Hunters (Midlands) 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 Company.

 

The investments in subsidiaries are all stated at cost less impairment in the financial statements.

 

 

 

                                 

 

 

~ ENDS~

This information is provided by RNS
The company news service from the London Stock Exchange
 
END
 
 
FR EADLFFSDXEFF
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