TIDMHUNT
RNS Number : 0466Q
Hunters Property PLC
07 September 2017
Embargoed: 7.00a.m.
7 September 2017
Dissemination of a Regulatory Announcement that contains inside
information according to REGULATION (EU) No 596/2014 (MAR).
Interim Results for the period ended 30 June 2017
Highlights:
Hunters Property Plc ("Hunters" or the "Company" or the
"Group"), one of the UK's largest national sales and lettings
estate agency and franchise businesses, is pleased to announce its
interim results for the six months ended 30 June 2017.
'Confident of meeting expectations for the full year'
Financial Highlights:
-- Network Income up 4% to GBP17.6m (six months to June 2016: GBP16.9m);
-- Revenue up 1% to GBP6.7m (2016: GBP6.6m);
-- Adjusted operating profit (operating profit before
depreciation, interest, amortisation and acquisition costs and
share based payments) GBP800,000 (2016: 923,000);
-- Adjusted earnings per share 2.09p (2016: 2.52p); and
-- Interim dividend up 17% to 0.7p per share (2016: 0.6p per share).
Operational Highlights:
-- Acquired the Besley Hill network of 15 branches, in and around the Bristol area;
-- Opened a total of 24 new branches in this period, including
the conversions of six existing businesses expanding our branch
network to 206 (June 2016: 180);
-- Grown lettings income across the network by 16%; and
-- Developed our Online capability and launched a 24/7 vendor
portal. This facilitates customer online tracking and compliments
our online booking and online valuation capability.
Trading update
-- With a full second half contribution from Besley Hill and a
robust pipeline the Board has confidence in the full year
outcome;
-- Independent Businesses continue to join the Hunters network
to mitigate the current uncertainty and challenging backdrop;
and
-- Strong net asset position and facilities available to continue our growth.
Glynis Frew, Chief Executive of Hunters Property Plc,
commented:
"We have delivered robust results in the six months to June 2017
against a backdrop of markets that contracted in terms of new
instructions during this period by 9.5% as against the same period
last year. We are bolstered in part with our strategy to grow and
develop the franchise network and we are encouraged by the pipeline
of future franchisees interested in joining the network. We are
delighted at the increase in strength of prospects we have
registered reinforcing our view, especially in this environment, of
the comparative benefits of joining the Hunters network.
The first half year includes a part contribution from Besley
Hill. We are confident of meeting our expectations for the full
year. The continuing work and support displayed by our staff and
the franchise network is a credit to the Group. I offer, on behalf
of the Board, our gratitude to everyone that has been
involved."
For further details:
Hunters Property Plc Tel: 01904 756 197
Kevin Hollinrake, Chairman
Glynis Frew, Chief Executive Officer
Ed Jones, Chief Financial Officer
Dowgate Capital Stockbrokers Tel: 020 3903 7715
James Sergeant (Corporate Broking)
SPARK Advisory Partners Limited Tel: 020 3368 3551
Mark Brady and Neil Baldwin (Nominated
Adviser)
Smithfield Consultants Limited Tel: 020 7360 4900
Alex Simmons
Chairman's Statement
Overview
On behalf of the Board I am delighted to comment on Hunters'
half year results for 2017. The first six months have seen the
Group build successfully on the track record built up over the last
25 years; Network Income in the six months to June grew by 4% to
GBP17.6m (six months to June 2016: GBP16.9m), 24 new branches
joined the network including Besley Hill, a 15 office network in
and around Bristol.
The Company has delivered robust results in what has been a
challenging market. The comparative period was aided last year by
the increase in sales due to the changes to Stamp Duty legislation.
Turnover has increased by 1% to GBP6.7m (2015: GBP6.6m) culminating
in EBITDA of GBP800,000 (2016: GBP923,000). The Group's strategy is
to grow a predominantly franchise network and during this period
opened 24 branches (2016: 17), including 15 relating to Besley Hill
and six that were existing businesses converting to Hunters. As at
the end of June, the network stood at 206 (June 2016: 180)
branches, of which 195 (2016: 169) are franchised.
This half year we are pleased to report our continued
development of online capabilities, including online booking of
valuations and our vendor portals, allowing customers to track
their property transactions 24/7. Our strategy combines leading
online technologies with genuine local area expertise. We continue
to drive professional standards with over 500 delegates engaging
with the Hunters Training Academy which has now received
authorisation as an approved trainer under RentSmart Wales. Our web
users increased by 21% in the period to July against the same
period last year and our Customer Service Rating to June rose to
96% (to June 2016: 95%) keeping us significantly ahead of the 2015
Property Academy Survey which puts the national average at 73%.
Outlook
With a full second half contribution from Besley Hill and a
robust pipeline the Board has confidence in the full year outcome.
Economic uncertainty provides one more reason why good quality
independent businesses see the benefit of joining the Hunters
network and so it is proving from the number and calibre of
enquiries we are receiving. We continue to look for further
strategic earnings enhancing acquisitions should they become
available.
The Board declares an interim dividend of 0.7p (2016: 0.6p) per
share, an increase of 17% as part of its policy to pay a
progressive dividend whilst maintaining dividend cover of at least
two times. The dividend will be paid on 20 October 2017 to
shareholders on the Register on 22 September 2017.
I look forward to updating you further in due course.
Kevin Hollinrake
Chairman
Financial Report for the six months ended 30 June 2017
H1 2017 H1 2016
Network Income GBP17.61m GBP16.99m +4%
Turnover GBP6,688,000 GBP6,598,000 +1%
EBITDA GBP800,000 GBP923,000 (13%)
Profit before tax, adjusted GBP663,000 GBP808,000 (18%)
Profit before tax GBP191,000 GBP389,000 (51%)
Cash generated (GBP301,000) (GBP315,000) +4%
Net debt GBP3,047,000 Dec-16 GBP1,172,000
Shareholders' funds GBP6,985,000 Dec-16 GBP5,648,000 +24%
Shares in issue 31,691,138 28,286,992
Weighted average number of shares 30,241,422 28,286,992
Earnings after tax GBP157,000 GBP294,000 (47%)
Earnings after tax, adjusted(excluding
amortisation, acquisition costs,
finance timing and investment
income) GBP629,000 GBP711,000 (12%)
EPS 0.52p 1.04p (50%)
Adjusted EPS 2.09p 2.52p (17%)
Dividend 0.7p 0.6p +17%
Branches 206 180 +14%
Revenue
Gross revenue for sales and lettings from the Group's network
("Network income") rose by 4% to GBP17.6m as against GBP16.9m for
the same first half period last year. Turnover rose by 1% to
GBP6.7m (2016: GBP6.6m) in part due to the effect of Besley Hill
joining the group at the end of March 2017.
Profit before tax, adjusted to exclude amortisation, amortised
finance costs, acquisition costs and other finance income
Adjusted profit before tax for the six months ended June 2017
was GBP663,000, a decrease of 18% on the equivalent period last
year (2016: GBP808,000) due to the surge in sales in the
comparative period as a result of the stamp duty increase skewing
the normal seasonality of the business last year.
Adj. EBITDA, earnings before interest, tax and
depreciation/amortisation
Adj. EBITDA for the six months to June 2017 was GBP800,000, a
decrease of 13% on the same period last year (2016:
GBP923,000).
Earnings per share
Basic earnings per share for the six months ended 30 June 2016
was 0.52p (2016: 1.04p). Adjusted earnings per share, excluding
amortisation and acquisition costs, finance timing investment
income and share-based payment expenses for the six months to June
2017 was 2.09p (2016: 2.52p) a decrease of 17% due in part to the
issue of shares around the Besley Hill acquisition part way through
the period.
Dividend
The Board declares an interim dividend of 0.7p (Interim 2016:
0.6p) per share, an increase of 17%, payable on 20 October 2017 to
shareholders on the Register on 22 September 2017.
Cash flow
The Company generated net cash from operations of GBP23,000
during the six months to June 2017. There were further debt
drawdowns in the six months to June 2017 totalling GBP1,617,000 and
a further GBP1,305,000 raised in issued capital by way of a
placing. GBP2,250,000 was used to fund the acquisition of Besley
Hill, with the remaining funds being used to open more franchisee
offices and acquire another lettings book. Following the period end
the Company made its final deferred payment of GBP295,000 for the
Hunters Midlands acquisition.
Liquidity and capital reserves
As at 30 June 2017, the Group's cash balance was GBP886,000
(June 2016: GBP896,000) with net debt of GBP3.05m (December 2016:
GBP1.17m) including vendor Loan Notes, repayable by July 2017,
GBP0.29m (December 2016: GBP0.29m).
Risks
The primary risk to the business continues to be the state of
the UK property market. Caution has crept into the market place
since the triggering of Article 50 and an element of expected
uncertainty as a result of the Brexit negotiations, as well as the
proposal to ban unfair tenant fees. We do not expect either of
these events to conclude this year and our balance between
franchising, sales and lettings and geographical mix allows us to
mitigate against these risks.
Ed Jones
Chief Financial Officer
Consolidated Statement of Comprehensive Income as at 30 June
2017
Notes Year
6 months 6 months ended
ended ended 31 December
30 June 2017 30 June 2016 2016
GBP'000s GBP'000s GBP'000s
Revenue 6,688 6,598 13,833
Ongoing administrative expenses (5,888) (5,675) (11,772)
Operating profit before
depreciation, amortisation,
costs of business combinations
& share-based payments 800 923 2,061
Depreciation & adjustments
on disposal (63) (71) (104)
Amortisation & adjustments
on disposal (349) (287) (584)
Business combination acquisition
expenses (49) (15) (30)
Share-based payment expense (63) (87) (192)
------------- ------------- ------------
Operating profit 276 463 1,151
Investment revenues - 3 4
Finance costs (85) (77) (168)
------------- ------------- ------------
Profit before taxation 191 389 987
Taxation (34) (95) (181)
------------- ------------- ------------
Profit for the period 157 294 806
Other comprehensive income - - -
Total comprehensive income
for the period attributable
to equity owners of the
parent 157 294 806
------------- ------------- ------------
Basic earnings per share 5 0.52p 1.04p 2.84p
Diluted earnings per share 5 0.50p 0.99p 2.72p
------------- ------------- ------------
Consolidated Statement of Financial Position as at 30 June
2017
Notes 30 June 2017 31 December 30 June
2016 2016
GBP'000s GBP'000s GBP'000s
ASSETS
Non-current assets
Goodwill 3 4,626 3,973 3,973
Intangible assets 3 6,449 4,078 3,899
Property, plant and equipment 383 429 286
Investments 1 1 1
Deferred tax assets 62 82 31
------------ ----------- --------
11,521 8,563 8,190
------------ ----------- --------
Current assets
Trade and other receivables 1,687 1,452 1,678
Cash and cash equivalents 886 1,187 896
2,573 2,639 2,574
Total assets 14,094 11,202 10,764
------------ ----------- --------
LIABILITIES
Current liabilities
Borrowings 373 366 1,027
Finance lease liabilities 28 47 39
Current tax liabilities 134 117 276
Trade and other payables 2,000 2,376 2,102
2,535 2,906 3,444
------------ ----------- --------
Non-current liabilities
Borrowings 3,560 1,993 1,617
Finance lease liabilities 72 81 10
Other payables 43 52 60
3,675 2,126 1,687
------------ ----------- --------
Provisions for liabilities
Provisions 50 66 79
Deferred tax liabilities 849 456 472
899 522 551
Net assets 6,985 5,648 5,082
------------ ----------- --------
EQUITY
Share capital 1,268 1,145 1,131
Share premium 4,068 2,633 2,579
Merger reserve 899 899 899
Retained earnings 750 971 473
Total equity attributable
to owners of the parent 6,985 5,648 5,082
------------ ----------- --------
Consolidated Statement of Changes in Equity for the Period ended
30 June 2017
Share Share Merger Retained Total equity
capital premium reserve earnings attributable
to owners
of the parent
GBP'000s GBP'000s GBP'000s GBP'000s GBP'000s
At 1 January 2016 1,131 2,579 899 375 4,984
Profit and total comprehensive income - - - 294 294
Credit to equity for equity settled share-based
payments - - - 87 87
Dividends paid - - - (283) (283)
At 30 June 2016 1,131 2,579 899 473 5,082
--------- --------- --------- ---------- ---------------
Profit and total comprehensive income - - - 512 512
Dividends paid - - - (170) (170)
Credit to equity for equity settled share-based
payments - - - 105 105
Issue of share capital 14 53 - - 67
Deferred tax on share-based payment
transactions - - - 52 52
Exercise of share options - 1 - (1) -
At 31 December 2016 1,145 2,633 899 971 5,648
--------- --------- --------- ---------- ---------------
Profit and total comprehensive income - - - 157 157
Dividends paid - - - (412) (412)
Credit to equity for equity settled share-based
payments - - - 63 63
Issue of share capital 123 1,432 - - 1,555
Deferred tax on share-based payment
transactions - - - (26) (26)
Exercise of share options - 3 - (3) -
At 30 June 2017 1,268 4,068 899 750 6,985
--------- --------- --------- ---------- ---------------
Consolidated Statement of Cashflows for the Period ended 30June
2017
6 months 6 months Year ended
ended ended 30 December
30 June 2017 30 June 2016 2016
GBP'000s GBP'000s GBP'000s
Cash flow from operating activities
Operating profit 276 463 1,151
Adjustment for:
Depreciation of property, plant
and equipment 71 70 134
Amortisation of intangible assets 350 294 597
(Gain)/Loss on disposal of property,
plant and equipment (1) 1 (17)
Profit on disposal of intangible
assets (8) (7) (13)
Share options fair value expense 63 87 192
(Released)/expensed element of
provisions (17) 2 (16)
Costs of acquisitions 49 15 30
Changes in working capital:
(Increase)/Decrease in trade and
other receivables (235) (49) 177
Decrease in trade and other payables (374) (390) (130)
------------- ------------- ------------
Cash generated from/(used in)
operations 174 486 2,105
Interest paid (83) (45) (111)
Income tax paid (68) (30) (292)
Net cash from operating activities 23 411 1,702
------------- ------------- ------------
Cash flow from investing activities
Capital expenditure (tangible
& intangible) (311) (411) (1,011)
Proceeds from sale of tangible
& intangible assets 20 26 62
Business combinations, net of
cash acquired (2,459) (325) (325)
Repayments for deferred consideration (11) (11) (23)
Interest received - 3 4
Net cash used in investing activities (2,761) (718) (1,293)
------------- ------------- ------------
Cash flow from financing activities
Dividends paid to shareholders (412) (283) (453)
Repayment of borrowings (45) (275) (1,807)
Issue of borrowings 1,617 570 2,175
Issue of share capital 1,305 - 68
Repayments for deferred consideration
debentures - - (375)
Repayment of capital element of
finance lease contracts (28) (20) (41)
Net cash from / (used in) investing
activities 2,437 (8) (433)
------------- ------------- ------------
(Decrease) in cash and cash equivalents (301) (315) (24)
Net cash and cash equivalents
at beginning of the period 1,187 1,211 1,211
Net cash and cash equivalents
at end of period 886 896 1,187
------------- ------------- ------------
Notes to the Financial Statements for the Period ended 30 June
2017
1. Corporate information
Hunters Property Plc is a Company incorporated in the United
Kingdom. The registered address of the Company is Apollo House,
Eboracum Way, York, YO31 7RE. The consolidated financial statements
(or "financial statements") incorporate the financial statements of
the Company and entities (its subsidiaries) controlled by the
Company (collectively comprising the "Group").
The principal activity of the Group is the provision of property
services to consumers and businesses which include sales, lettings,
franchising and related services.
2. Accounting policies
2.1. Basis of preparation
These financial statements have been prepared in accordance with
International Financial Reporting Standards ("IFRS") as adopted by
the European Union.
Basis of measurement
The financial statements have been prepared on the historical
cost basis, modified to include the revaluation of certain
financial instruments at fair value.
Functional and presentational currency
The financial statements are presented in sterling, which is the
functional currency of the Parent Company. Monetary amounts in
these financial statements are rounded to the nearest GBP1,000.
Use of estimates and judgments
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 judgments 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.
Basis of preparation
The financial information set out in these interim consolidated
financial statements for the six months ended 30 June 2017 is
unaudited. The financial information presented are not statutory
accounts prepared in accordance with the Companies Act 2006, and
are prepared only to comply with AIM requirements for interim
reporting.
Basis of consolidation
The Group financial information consolidates those of the Parent
Company and the subsidiaries that the Parent has control of.
Control is established when the Parent is exposed, or has rights,
to variable returns from its involvement with the subsidiary and
has the ability to affect those returns through its power over the
subsidiary.
Where a subsidiary is acquired/disposed of during the period,
the consolidated profits or losses are recognised from/until the
effective date of the acquisition/disposal.
All inter-company balances and transactions between group
companies have been eliminated on consolidation.
Where necessary, adjustments are made to the financial
information of subsidiaries to bring the accounting policies used
into line with those used by the Group.
2.2. Business combinations
The Group applies the acquisition method of accounting for
business combinations enacted after the date of creation of the
Group following incorporation of Hunters Property Plc, as detailed
further below. The consideration transferred by the Group to obtain
control of a subsidiary is calculated as the sum of the
acquisition-date fair value of assets transferred by the Group,
liabilities incurred by the Group to the former owners of the
acquiree, and the equity interest issued by the Group. Acquisition
costs are expensed as incurred.
The Group recognises identifiable assets acquired and
liabilities assumed in a business combination regardless of whether
they have been previously recognised in the acquired subsidiary's
financial information prior to the acquisition. Assets acquired and
liabilities assumed are measured at their acquisition-date fair
values.
Goodwill is stated after separate recognition of identifiable
intangible assets. It is calculated as the excess of the fair value
of consideration transferred, over the Group's share of the
acquisition-date fair values of identifiable net assets. If the
fair values of identifiable net assets exceed the sum calculated
above, the excess amount (i.e. gain on a bargain purchase) is
recognised in profit or loss immediately.
A change in the ownership interest of a subsidiary, without a
loss of control, is accounted for as an equity transaction.
If the Group loses control over a subsidiary, it derecognises
the related assets (including goodwill), liabilities,
non-controlling interest and other components of equity while any
resultant gain or loss is recognised in profit or loss. Any
investment retained is recognised at fair value.
The Group has applied the principles of merger accounting in
consolidating the results, as control was only acquired by Hunters
Property Plc via a share-for-share exchange on 27 March 2015.
Merger accounting requires that the results of the Group are
presented as if the Group has always been in its present form, and
does not require a re-evaluation of fair values as at the point of
acquisition. Accordingly, for the Group's comparative statement of
financial position as at 30 June 2015, a merger reserve has been
created which represents the difference between the net assets of
the Group as at that date, and the retained profits recognised by
the Group as at that date.
2.3. Revenue
Revenue represents the amount receivable for the provision of
services and the sale of goods during the period, excluding VAT and
trade discounts. Revenue is recognised to the extent that it is
probable that economic benefits will flow to the Group and the
revenue can be measured reliably.
Revenue from residential, commercial, and land sales is
recognised on the basis of exchange of contract. Financial services
revenue is recognised at the later of the policy inception date or
confirmation of entitlement to the commission.
Revenue from commission earned as letting agents is recognised
in the month in which the income is received and when there is
fulfilment of all but inconsequential or perfunctory actions.
At inception of a franchisee contract, revenue is recognised
upfront which matches to the estimated cost of time and knowledge
to create the franchiser-franchisee contractual arrangement. No
amounts are deferred as the directors are of the opinion that
virtually all inception costs are incurred at the outset, and hence
although contracts run for several years this policy is considered
to be the fairest presentation to comply with the matching and
accruals concepts.
Revenue from franchisee management service fees are recognised
monthly in arrears, calculated by reference to the terms of the
contract and the value of sales attributable to each
franchisee.
Deferred income arises where services are invoiced in advance of
performance. The amount is released to the profit or loss in
subsequent periods in reference to the stage of completion of the
transaction at the reporting date.
2.4. Goodwill
Goodwill represents the future economic benefits arising from
other assets acquired in a business combination that are not
individually identifiable and separately recognised. After initial
recognition, goodwill is measured at cost less accumulated
impairment losses.
2.5. Intangible fixed assets other than goodwill
Intangible assets are initially measured at cost. Where
intangible assets are acquired as part of a business combination,
cost is determined by reference to a fair value estimation
technique. After initial recognition, intangible assets are
recognised at cost less any accumulated amortisation and any
accumulated impairment losses.
The depreciable amount of an intangible asset with a finite
useful life is allocated on a systematic basis over its useful
life. Amortisation begins when the asset is available for use, i.e.
when it is in the location and condition necessary for it to be
capable of operating in the manner intended by management.
The amortisation period and the amortisation method for
intangible assets with a finite useful life is reviewed each
financial period-end. If the expected useful life of the asset is
different from previous estimates, the amortisation period is
changed accordingly.
Research expenditure is written off against profits in the year
in which it is incurred. Identifiable development expenditure is
capitalised to the extent that the technical, commercial and
financial feasibility can be demonstrated.
Amortisation is recognised so as to write off the cost or
valuation of assets less their residual values over their useful
lives on the following bases:
Software 3 - 7 years or over the life of the licence
Franchise development Over the life of the franchise contract
costs (typically 10-15 years)
Brands 10 years
Customer lists 2-12 years
2.6. Property plant and equipment
Property, plant and equipment are recognised as an asset only if
it is probable that future economic benefits associated with the
item will flow to the Group and the cost of the item can be
measured reliably.
An item of property, plant and equipment that qualifies for
recognition as an asset is measured at its cost. Cost of an item of
property, plant and equipment comprises the purchase price, any
costs directly attributable to bringing the asset to the location
and condition necessary for it to be capable of operating in the
manner intended by management.
After recognition, all property, plant and equipment are carried
at costs less any accumulated depreciation and any accumulated
impairment losses.
Depreciation is provided at rates calculated to write down the
cost of assets, less estimated residual value, over their expected
useful lives on the following basis:
Leasehold land and buildings Straight line over the period
of the lease
Plant and machinery 25% reducing balance
Fixtures, fittings and equipment 25% reducing balance or 10-33%
straight line
Motor vehicles 25% straight line
The residual value and the useful life of an asset are reviewed
at least at each financial period-end and if expectations differ
from previous estimates, the changes are accounted for as a change
in an accounting estimate in accordance with IAS 8 Accounting
Policies, Changes in Accounting Estimates and Errors.
Gains or losses arising on the disposal of property, plant and
equipment are determined as the difference between the disposal
proceeds and the carrying value of the asset and are recognised in
profit or loss.
2.7. Impairment of goodwill, other intangible assets and property, plant and equipment
For impairment assessment purposes, assets are grouped at the
lowest levels for which there are largely independent cash flows.
As a result, some assets are tested individually for impairment and
some are tested at cash-generating unit level. Goodwill is
allocated to those cash-generating units that are expected to
benefit from synergies of the related business combination and
represent the lowest level within the Group at which management
monitors goodwill.
Cash-generating units to which goodwill has been allocated are
tested for impairment at least annually. All other individual
assets or cash-generating units are tested for impairment whenever
events or changes in circumstances indicate that the carrying
amount may not be recoverable.
An asset or cash-generating unit is impaired when its carrying
amount exceeds its recoverable amount. The recoverable amount is
measured as the higher of fair value less cost of disposal and
value in use. The value in use is calculated as being net projected
cash flows based on financial forecasts discounted back to present
value.
The impairment loss is allocated to reduce the carrying amount
of the asset, first against the carrying amount of any goodwill
allocated to the cash-generating unit, and then to the other assets
of the unit pro-rata on the basis of the carrying amount of each
asset in the unit. With the exception of goodwill, all assets are
subsequently reassessed for indications that an impairment loss
previously recognised may no longer exist. An impairment loss is
reversed if the asset's or cash-generating unit's recoverable
amount exceeds its carrying amount.
2.8. Investments
Investments in equity instruments that have a quoted market
price in an active market and whose fair value can be reliably
measured are measured at fair value; otherwise investments in
equity instruments are measured at cost.
2.9. Financial instruments
Financial assets
Financial assets are recognised in the statement of financial
position when, and only when, the Group becomes a party to the
contractual provisions of the instrument.
All financial assets excluding investments are classified as
loans and receivables; these comprise trade and other receivables
and cash and cash equivalents. Loans and receivables are
non-derivative financial assets with fixed or determinable payments
that are not quoted in an active market.
Financial assets are initially recognised at fair value plus
directly attributable transaction costs.
After initial recognition, loans and receivables are measured at
amortised cost using the effective interest method. Discounting is
omitted where the effect of discounting is immaterial.
If there is objective evidence that there is an impairment loss
on loans and receivables, the amount of the loss is measured as the
difference between the asset's carrying amount and the present
value of estimated future cash flows discounted at the financial
asset's original effective interest rate (i.e. the effective
interest rate computed at initial recognition). The carrying amount
of the asset is reduced either directly or through use of an
allowance account.
A financial asset is derecognised when the contractual rights to
the cash flows from the financial asset expire, or when the
financial asset and all substantial risks and rewards are
transferred.
Financial liabilities
Financial liabilities include borrowings and trade and other
payables.
Financial liabilities are obligations to pay cash or other
financial assets and are recognised in the statement of financial
position when, and only when, the Group becomes a party to the
contractual provisions of the instrument.
Financial liabilities are initially recognised at fair value
adjusted for any directly attributable transaction costs.
After initial recognition, financial liabilities are measured at
amortised cost using the effective interest method, with the
effective interest recognised as an expense in finance costs.
Discounting is omitted where the effect of discounting is
immaterial.
A financial liability is derecognised only when the contractual
obligation is extinguished, that is, when the obligation is
discharged, cancelled or expires.
2.10. Provisions
Provisions are recognised when the Group has a legal or
constructive present obligation as a result of a past event, it is
probable that the Group will be required to settle that obligation,
and a reliable estimate can be made of the amount of the
obligation.
The amount recognised as a provision is the best estimate of the
consideration required to settle the present obligation at the
reporting date, taking into account the risks and uncertainties
surrounding the obligation.
Where the effect of the time value of money is material, the
amount expected to be required to settle the obligation is
recognised at present value. When a provision is measured at
present value the unwinding of the discount is recognised as a
finance cost in profit or loss in the period it arises.
2.11. Employee benefits
The cost of short-term employee benefits are recognised as a
liability and an expense, unless those costs are required to be
recognised as part of the cost of stock or non-current assets.
The cost of any unused holiday entitlement is recognised in the
period in which the employee's services are received.
Termination benefits are recognised immediately as an expense
when the Company is demonstrably committed to terminate the
employment of an employee, or to provide termination benefits.
Payments to defined contribution retirement benefit schemes are
expensed as they fall due.
2.12. Leased assets
Finance leases
The economic ownership of a leased asset is transferred to the
lessee if the lessee bears substantially all the risks and rewards
of ownership of the leased asset. Where the Group is a lessee in
this type of arrangement, the related asset is recognised at the
inception of the lease at the fair value of the leased asset or, if
lower, the present value of the lease payments plus incidental
payments, if any. A corresponding amount is recognised as a finance
lease liability.
This liability is reduced by lease payments net of finance
charges. The interest element of lease payments represents a
constant proportion of the outstanding capital balance and is
charged to profit or loss, as finance costs over the period of the
lease.
Operating leases
All other leases are treated as operating leases. Where the
Group is a lessee, payments on operating lease agreements are
recognised as an expense on a straight-line basis over the lease
term. Associated costs, such as maintenance and insurance, are
expensed as incurred.
2.13. Cash and cash equivalents
Cash and cash equivalents comprise cash on hand and demand
deposits, together with other short term, highly liquid investments
that are readily convertible into known amounts of cash and are
subject to an insignificant risk of changes in value.
2.14. Income tax
Current income tax assets and/or liabilities comprise
obligations to, or claims from, fiscal authorities relating to the
current or prior reporting periods, that are unpaid/due at the
reporting date. Current tax is payable on taxable profits, which
may differ from profit or loss in the financial statements.
Calculation of current tax is based on the tax rates and tax laws
that have been enacted or substantively enacted at the reporting
period.
Deferred taxes are calculated using the liability method on
temporary differences between the carrying amounts of assets and
liabilities and their tax bases.
A deferred tax asset is recognised for all deductible temporary
differences to the extent that it is probable that taxable profit
will be available against which the deductible temporary difference
can be utilised, unless the deferred tax asset arises from the
initial recognition of an asset or liability in a transaction that
is not a business combination and at the time of the transaction,
affects neither accounting profit nor taxable profit (tax loss).
However, for deductible temporary differences associated with
investments in subsidiaries a deferred tax asset is recognised when
the temporary difference will reverse in the foreseeable future and
taxable profit will be available against which the temporary
difference can be utilised.
Deferred tax assets and liabilities are measured at the tax
rates that are expected to apply to the period when the asset is
realised or the liability is settled, based on tax rates and tax
laws that have been enacted or substantively enacted by the end of
the reporting period.
2.15. Share-based payments
The fair value of equity settled share based payments to
employees is determined at the date of grant and is expensed on a
straight-line basis over the vesting period based on the Group's
estimate of shares or options that will eventually vest.
2.16. Equity instruments
Share capital represents the nominal value of shares that have
been issued. Share premium represents the excess consideration
received over share capital upon the sale of shares, less any
incidental costs of issue.
Retained earnings include all current and prior period retained
profits.
The non-controlling interest reserve is the portion of equity
ownership in subsidiaries which is not attributable to the owners
of the Parent Company.
The merger reserve has arisen as described in note 2.2.
3. Intangible Fixed Assets
Goodwill Software FDG's & Brands Customer
Rebrands Lists Total
GBP'000s GBP'000s GBP'000s GBP'000s GBP'000s GBP'000s
Cost
At 1 January 2017 4,008 620 1,939 637 2,040 9,244
Additions - separately
acquired - 28 257 - - 285
Additions - business
combinations 653 - - - 2,447 3,100
Disposals - - (17) - - (17)
At 30 June 2017 4,661 648 2,179 637 4,487 12,612
-------- -------- --------- ---------------- -------- --------
Amortisations and Impairment
At 1 January 2017 35 125 253 141 639 1,193
Amortisation charged
for the year - 47 87 64 152 350
Amortisation on disposal - - (6) - - (6)
At 30 June 2017 35 172 334 205 791 1,537
-------- -------- --------- ---------------- -------- --------
Carrying amount
At 30 June 2017 4,626 476 1,845 432 3,696 11,075
-------- -------- --------- ---------------- -------- --------
At 31 December 2016 3,973 495 1,686 496 1,401 8,051
-------- -------- --------- ---------------- -------- --------
Franchise Development Grants ("FDG's") and rebrand costs are
externally incurred expenses 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.
4. Business combinations
Acquisition of Besley Hill:
On 24 March 2017 the Group acquired Besley Hill. The
consideration paid totalled GBP2,500,000, being settled by
GBP2,250,000 paid in cash, and an issue of GBP250,000 worth of
Ordinary shares in Hunters Property Plc.
As part of the acquisition, the Directors have identified an
intangible asset, being the franchisee contracts, including a
renewal expectation, being determined by using the average value of
the contracts, growing at 2% per annum and discounted at 12% per
annum to determine the present value.
From the date of acquisition Besley Hill has contributed
GBP105,090 of revenue and GBP70,335 of profit before tax and
amortisation.
Acquisition of Besley Hill: Carrying Fair value
value Fair value recognised
adjustments on acquisition
GBP'000s GBP'000s GBP'000s
Assets
Intangible assets - 2,253 2,253
--------- ------------ ---------------
Total assets - 2,253 2,253
--------- ------------ ---------------
Liabilities
Deferred tax liability - (406) (406)
--------- ------------ ---------------
Total liabilities - (406) (406)
--------- ------------ ---------------
Total identifiable net assets - 1,847 1,847
--------- ------------ ---------------
Goodwill arising on acquisition 653
Purchase consideration transferred 2,500
---------------
In addition, there were costs of acquisition of GBP44,818
relating to the acquisition which have been included on the face of
the Consolidated Statement of Comprehensive Income, and costs of
acquisition of GBP15,000 were recognised in the year to 31 December
2016 in respect of the pre-completion expenses incurred on this
combination.
Acquisition of a lettings book:
In March 2017 the Group acquired a lettings book. The
consideration paid totalled GBP160,000, being settled in cash.
As part of the acquisition, the Directors have identified an
intangible asset, being the lettings book. This was determined to
be equal to the amount paid for the book, after adjustment for
deferred tax. Historical data and forecasts have been used,
together with the 10% group discount rate and an assumption of a
useful life of 12 years for the lettings book to estimate the fair
value of this intangible. Due to the small size of the lettings
book, the Directors have been unable to quantify the direct impact
on results arising from this acquisition.
Acquisition of a lettings Carrying Fair value
book: value Fair value recognised
adjustments on acquisition
GBP'000s GBP'000s GBP'000s
Assets
Intangible assets - 194 194
--------- ------------ ---------------
Total assets - 194 194
--------- ------------ ---------------
Liabilities
Deferred tax liability - (34) (34)
--------- ------------ ---------------
Total liabilities - (34) (34)
--------- ------------ ---------------
Total identifiable net (assets) - - 160
--------- ------------ ---------------
Goodwill arising on acquisition -
Purchase consideration transferred 160
---------------
In addition, there were costs of acquisition of GBP4,660
relating to the acquisition which have been included on the face of
the Consolidated Statement of Comprehensive Income.
5. Earnings per share
The calculation of the basic and diluted earnings per share is
based on the following data:
Earnings 30 June 2017 30 June 2016
GBP'000s GBP'000s
Earnings for the purpose of basic earnings
per share being net profit attributable
to owners of the parent 157 294
Effects of dilutive potential ordinary - -
shares
Earnings for the purposes of diluted earnings
per share 157 294
------------ ------------
Number of shares 30 June 2017 30 June 2016
GBP GBP
Weighted average number of ordinary shares
for the purposes of basic earnings per
share 30,241,422 28,286,992
Effects of dilutive potential ordinary
shares 1,076,661 1,475,988
Weighted average number
of ordinary shares for the
purposes of diluted earnings
per share 31,318,083 29,762,980
------------ ------------
Earnings per share
Pence per weighted average shares 0.52p 1.04p
----- -----
Pence per weighted average diluted
shares 0.50p 0.99p
----- -----
The Directors use adjusted earnings before time-value interest,
investment revenue, amortisation, and costs of acquisition
("Adjusted Earnings") as a measure of ongoing profitability and
performance. The calculated Adjusted Earnings for the current
period of accounts is as follows:
Adjusted Earnings per Share 30 June 2017 30 June 2016
GBP'000s GBP'000s
Profit after taxation 157 294
Adjusted for:
Time-value interest costs 13 31
Investment revenues - (3)
Amortisation 349 287
Costs of acquisition 49 15
Share-based payment expense 63 87
Adjusted Earnings 631 711
------------ ------------
Adjusted Earnings per share
Pence per weighted average shares 2.09p 2.52p
----- -----
Pence per weighted average diluted
shares 2.02p 2.39p
----- -----
This information is provided by RNS
The company news service from the London Stock Exchange
END
IR BQLLBDKFBBBX
(END) Dow Jones Newswires
September 07, 2017 02:01 ET (06:01 GMT)
Hunters Property (LSE:HUNT)
Historical Stock Chart
From Mar 2024 to Apr 2024
Hunters Property (LSE:HUNT)
Historical Stock Chart
From Apr 2023 to Apr 2024