Propty Franchis Regulatory News (TPFG)

28 January 2020

THE PROPERTY FRANCHISE GROUP PLC

("TPFG", the "Company" or the "Group")

Pre-Close Trading Update and Notice of Full Year Results

The Property Franchise Group PLC, one of the UK's largest property franchises, is pleased to provide a trading update for the year ended 31 December 2019 ("FY19"), ahead of reporting its final results on Tuesday, 31 March 2020.

The Group has successfully navigated a difficult year for UK residential property and performed in line with market expectations, delivering growth in both revenues and management service fees. Our franchisees successfully mitigated much of the impact of the tenant fee ban and achieved a record performance for lettings revenue. The Group's hybrid brand, EweMove, is also anticipated to show another significant improvement in profit over the prior year.

Despite the wider lettings market being adversely impacted by the tenant fee ban, the Group increased overall revenue to £11.4m* (2018: £11.2m). Furthermore, Management Service Fees (royalties) rose to £9.6m* (2018: £9.4m) and the number of tenanted managed properties serviced increased to c.58,000 at the year-end (2018: c.55,000).

During the financial year, the Group's assisted acquisitions programme supported 24 acquisitions by franchisees and added 2,381 managed properties. The Group has continued to invest in technology to enhance opportunities and is pleased to report a 54% increase in leads through its pay-per-click campaign via the traditional high street brands' customer websites, from c.30,000 to c.47,000.

The Group maintains a strong balance sheet, with nil debt and net cash of £4.0m* at the year-end. 

*Unaudited

Outlook

As previously announced, the Group encouraged its franchisees to follow a mitigation plan to alleviate the impact of the tenant fee ban which became effective in England & Wales on 1 June 2019. As expected, the ban tempered lettings revenues in H2 2019, however the Group has made good progress with this initiative and is now confident that the objective of full mitigation will be attained by June 2020, a full six months ahead of the Group's original plan.

Early indications of improving market conditions underpin our expectation that the volume of house sales should increase in 2020. The lettings market is also anticipated to remain healthy, with rising rents and increased confidence leading to more opportunities for the Group's franchisees to acquire competitors' books than were available in 2019.

Post period end, the Group announced the launch of its "buy and build" Financial Services division and the appointment of Mark Graves to the new role of Financial Services Director.

Through this new division, the Group believes that it can significantly enhance longer term profitability through the creation of a financial services franchise as well as building its own financial services business serving the residential property market.

Chief Executive Ian Wilson commented,

"Our ability to deliver revenue growth and continued operational progress over the year, notwithstanding the market headwinds, is testament to the strength of our business and the franchise model.

"Looking ahead, there are numerous opportunities for us to now build further momentum across the business, as we continue to invest in our traditional brands and EweMove remains robust. In parallel we will focus our attention on growing a national mortgage brokerage network under our newly created financial services division.

"This is my last year with TPFG and I'm delighted that we have continued the journey that we started with our IPO in December 2013, having materially increased the dividend every year. We are dedicated to continuing to create value for all our stakeholders and are confident we will continue to do so in the year ahead."

For further information, please contact:

About The Property Franchise Group PLC:

The Property Franchise Group PLC (AIM: TPFG) is one of the largest property franchises in the UK. The Company was founded in 1986 and has since grown to a diverse portfolio of six brands operating throughout the UK, comprising longstanding high-street brands and a hybrid, no sale no fee agency.

The Property Franchise Group's brands include: 

·; Martin & Co: a national lettings focused brand

·; EweMove: a national, digitally enabled, hybrid sales and lettings brand

·; CJ Hole: a full-service estate agency serving the West Country for 151 years

·; Ellis & Co: a full-service estate agency serving London for 168 years

·; Parkers: a full-service estate agency serving the M4 corridor for 70 years

·; Whitegates: a full-service estate agency serving the Midlands and North of England for 40 years

Headquartered in Bournemouth, UK, the Company was listed on AIM on the London Stock Exchange in 2013. More information is available at www.propertyfranchise.co.uk