TIDMHUNT
RNS Number : 6387K
Hunters Property PLC
12 April 2018
Embargoed 7.00a.m. - 12 April 2018
Dissemination of a Regulatory Announcement that contains inside
information according to REGULATION (EU) No 596/2014 (MAR).
Hunters Property Plc
Notice of Results
For the year ended 31 December 2017
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 2017.
Financial highlights
-- Network Income rose 10% to GBP38.9m (2016: GBP35.4m);
-- Revenue increased by 3% to GBP14.2m (2016: GBP13.8m);
-- EBITDA increased by 8% to GBP2.23m (2016: GBP2.06m)
-- Adjusted Profit Before Tax (*adjusted to exclude
amortisation, acquisition costs, investment income and notional
finance costs) increased by 4% to GBP1.94m (2016: GBP1.86m);
-- Adjusted EPS* decreased by 1% to 5.84p (2016: 5.92p);
-- Net Assets stood at GBP7.6m (2016: GBP5.6m);
-- Proposed 15% increase in Final dividend to 1.50p, increasing
full year then by 16% to 2.20p (2016: 1.90p) for the year.
Operational highlights
-- Opened 37 new branches, including the conversion of 15
independent estate agency branches and the acquisition in the South
West of the Besley Hill franchise network
-- 213 branches as at 31 December 2017 (31 December 2016: 186)
-- Average Network Income per branch is GBP182,000 (2016: GBP190,000)
-- 30 or more new branches in each of the last four years
-- Independent agents that have converted to Hunters, during the
three years to 2015, have increased their revenue by 29%
-- Average Network Income per converting branch has risen to GBP173,000 (2016: GBP153,000)
-- Customer satisfaction rating 95% (2016: 96%)
Kevin Hollinrake, Chairman, commented:
"We are delighted to report a robust set of figures, despite
subdued the market conditions. This performance highlights the
robustness of our model and the quality and commitment of our
franchisees and their teams across the network. We would expect
this current market and recently announced additional regulatory
requirements to provide us with even more opportunities to expand
our branch network and strengthen our market position still
further. A strong national brand, free best-in-class training and
significant cost reductions for network members make the case for
independent operators to join the Hunters family even more
compelling. We are already experiencing strong levels of enquiries
from high quality independent businesses. We remain in line with
the Market's expectation and I look forward to updating you as the
year progresses."
For further details, please contact:
Hunters Property Plc Tel: 01904 756 197
Kevin Hollinrake, Chairman
Glynis Frew, Chief Executive
Officer
Ed Jones, Chief Financial Officer
SPARK Advisory Partners Limited Tel: 020 3368 3551
Mark Brady and Neil Baldwin
(Nominated Adviser) Tel: 01293 517 744
Dowgate Capital Stockbrokers
James Sergeant (Corporate Broking)
Chairman's statement
We are pleased to report that the Group has delivered a strong
result in 2017. Network Income has increased by 10% despite subdued
market conditions. The Group continued its expansion towards
becoming the nation's favourite estate agent. Organically, we
believe we are the fastest growing listed business in our sector
having opened 114 branches over the last four years and a further
46 branches through acquisition in that period.
In the year we added 37 (2016: 30) new branches to the network,
including 15 (2016: 20) independent businesses, reaching 213 (2016:
186) branches by the year end. This included the addition of the
Besley Hill franchised network, expanding our coverage in the South
West. We are pleased to report we have already rebranded those
branches as Hunters, ahead of schedule, and we look forward to
helping them to grow their business. 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.
Gross income of the Group's franchisee and owned branch network
("Network Income") reached GBP38.9 million in 2017 (2016: GBP35.4
million) a 10% increase on the previous year. Our average branch
revenue is GBP182,000 (2016: GBP190,000). This was a tremendous
achievement against the background of national sales activity
having reduced by 15% for the year1. We have out-performed the
market each year over the last three years by on average 10%. Our
adjusted EBITDA reached GBP2.23 million (2016: GBP2.06 million) an
increase of 8% on the previous year. Adjusted EPS is 5.84p (2016:
5.92p).
We have out-performed the market each year over the last three
years by on average 10%. 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. Our
outperformance against the market 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 during the three years to
December 2015 have produced revenue in 2017 that is 29% higher;
illustrating that our well known national brand, quality and good
reputation has delivered improved revenue for our network partners,
even against a challenging backdrop 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 at 95%
customer satisfaction rating over the year (2016: 96%) is our sixth
year in a row at over 90%, which remains significantly higher than
the industry average of 73%2. Our business and our network partners
commit 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 us 'get them there'.
CURRENT TRADING & OUTLOOK
We expect the current subdued levels of transactions to continue
in 2018. Hunters' performance to date in the year is in line with
the Board's expectations, given our more limited London exposure we
are not expecting to be as affected as other players have reported
already3 although we have built in an increase in churn for
consolidation within this sector. We would expect this market to
provide us with an enhanced opportunity to expand our branch
network further and strengthen our brand. The case to encourage
independent operators becomes even more persuasive in providing a
way to be part of a stronger group that can also offer significant
cost reductions, particularly in terms of portal charges for
Rightmove, Zoopla and OnTheMarket.
We are already seeing an improved level of enquiries from high
quality independent businesses. Our robust balance sheet and
relatively low level of gearing will enable us to both expand our
network and reward shareholders with an attractive dividend.
Our pipeline of new outlets remains healthy and I look forward
to updating you as the year progresses.
DIVID
The Company is committed to a progressive dividend policy and
proposes an increased final dividend of 1.50p per share, making
2.20p for the year, an increase of 16%.
On behalf of the Board
Kevin Hollinrake
Chairman
11 April 2018
1 Source: Price Paid Data to December 2017, Land Registry
2 Source: 2015 survey by The Property Academy
3 Source: Countrywide plc - 8th March 2018, Foxtons plc - 28th
February 2018, LSL Property Services plc - 6th March 2018
Chief executive's statement
We're delighted to report that despite a softer market, our
strategy has delivered an improved performance with an increase in
branch numbers and a strong set of results.
The Group has grown its market share of homes sold and let in
2017. So despite market transaction volumes having reduced by 15%
turnover, EBITDA and pre-tax profitability have increased. This was
aided by our limited exposure to the London market and by the
additional branches added to the network throughout the year as
well as the acquisition of the Besley Hill network.
We entered the year with good ongoing customer demand and a
Government that remains openly very keen to accelerate 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 2017, 4,155 (2016: 3,648) customers provided feedback
resulting in a 95% (2016: 96%) customer satisfaction rating. Our
customer satisfaction ratio has been over 90% since 2011.
Maintenance in the quality of the network is key to our success.
We started the year with 186 branch locations. We received 228
(2016: 268) enquiries resulting in 37 (2016: 30) new openings under
the Hunters brand. These openings consisted of 15 (2016: 20)
conversions of existing independent estate agency businesses and 6
(2016: 10) new "cold start" locations, of which four were current
franchisees expanding into new markets. We were delighted that we
have converted some stronger independents this year with the
average of their incomes before conversion at GBP173,000 (2016:
GBP153,000) a sign of our increasing success in attracting
increasingly stronger businesses.
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 were
delighted that we have converted some stronger independents this
year with the average of their incomes before conversion at
GBP173,000 (2016: GBP153,000) a sign of our increasing success in
attracting increasingly stronger businesses.
We continue to invest in our people and our technology,
marketing and networks. We have devoted over GBP500,000 this year
in training and now provide 114 courses, a 41% increase through the
Hunters Vocational Qualification, endorsed by Propertymark. We
continued to develop 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 which has already
directed over GBP5m of property to the network. 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
augmented our national campaign around both our brand promise 'Here
to get you there' and local ownership and local expertise. This
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 70% in the last three years.
Finishing the year with 213 branches, I am delighted to report
how since 2014 businesses have been able to improve through working
with Hunters. Against a market down 15% in 2017 (2016: down 2%) the
average revenue per branch has beaten the market by 10% on average
each year. For branches that joined in the three years to December
2015 their revenue is up, on average, by 29%.
Nor is improvement just short-term, those who have been
converted for 6 years are up, on average, by 84%. Every region we
trade in has increased over the last four-year period 2013 to 2017
on average at a Compound Annualised Growth Rate ("CAGR") of
27%.
Franchise prospects for 2018 have started well given the tight
market and uncertainty, with a proceeding pipeline of 27 (2017: 34)
new branches being processed and enquiry levels on target to exceed
those of 2017. We have expanded the team further to improve the
process and allow more ongoing support. Our marketing plan is
heavily focused on direct marketing to suitable independent
businesses, increased online presence and existing franchisee
expansion are integral elements of this growth.
It is expected that 2018 will see continued network growth, both
through conversions of existing businesses and cold starts although
we expect conversions to account for a more significant portion of
branch growth. We see the uncertainty and impact of proposed tenant
fee ban as driving enquiries towards Hunters' market leading
conversion package, designed to allow independent agencies to join
with minimal cost, whilst benefiting from a full estate agency
package.
This increases the offering to landlords and vendors now able to
market their properties to the widest possible audience for buyers
and tenants. We are delighted to have been one of the first in the
industry to offer this service.
We have an outstanding and experienced team that are committed
to Hunters and our quest to become the nation's favourite estate
agent. This could not be achieved without their sterling efforts.
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 Frew
Chief Executive
Financial review
REVENUE
Group revenue for the financial year ended 31 December 2017
increased by 3% to GBP14.2 million (2016: GBP13.8 million). This
was driven by the following factors:
-- Management Service Fee ("MSF") from franchised branches
increased due to the 30 new franchisee branches that joined the
Group in 2016 and a further 37 new franchisee branches that joined
the Group in 2017;
-- Nine months of MSF revenue from the acquisition of the Besley Hill network in March 2017;
-- Lettings revenue grew as we introduced lettings to new
franchisees and continued to grow our existing lettings offices.
Network Income for Lettings grew 16% (2016: 19%).
ADJUSTED EBITDA (operating profit before depreciation,
amortisation, acquisition and share-based payments expenses)
Adjusted EBITDA provides a key measure of progress made.
Adjusted EBITDA for the year to December 2017 was GBP2.23 million,
an increase of 8% on the same period last year (2016: GBP2.06
million).
Administrative expenses increased by GBP0.2 million during the
year. Higher costs in 2017 were in part due to the additional
running costs associated with the acquisition of Besley Hill.
ADJUSTED PROFIT BEFORE TAX (adjusted to exclude amortisation,
amortised finance costs, acquisition costs, share-based payments
and
finance income)
Adjusted profit before tax was GBP1.94 million, an increase of
5% over the prior period (2016: GBP1.86 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.
Adjusted profit 2017 2016
before tax GBPm GBPm
Profit before
tax 1.03 0.99
Other finance
costs 0.01 0.06
Amortisation 0.75 0.60
Costs of acquisition 0.05 0.03
Interest income (0.02) (0.01)
Share-based payments 0.12 0.19
------ ------
Adjusted profit
before tax 1.94 1.86
EARNINGS PER SHARE
Basic earnings per share for the year ended 31 December 2017 was
2.89p (2016: 2.84p) based on a weighted average of 31,022,076
shares (2016: 28,365,454) 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 2017, was 5.84p (2016:
5.92p) a decrease of 1%.
2017 2016
Income Summary GBPm GBPm Movement
Network
Income 38.9 35.4 +10%
Turnover 14.2 13.8 +3%
EBITDA 2.23 2.06 +8%
Adjusted
profit
before
tax 1.94 1.86 +4%
EPS 2.89p 2.84p +3%
Adjusted
EPS 5.84p 5.92p -1%
DPS 2.20p 1.90p +16%
DIVIDS
The Board is proposing a final dividend of 1.50p per share for
2017, which subject to shareholder approval at the AGM on the 18
May 2018, will be paid to shareholders by 23 May 2018 based on the
register of shareholders as at 27 April 2018. Taking this together
with the interim dividend of 0.7p paid to shareholders on 20
October 2017, this equates to a total dividend for the year of
2.20p an increase of 16%. The Company intends to pay a progressive
dividend going forwards.
LIQUIDITY
The Group had cash balances of GBP1.6 million at 31 December
2017 (2016: GBP1.2 million). In March 2017, the Group secured an
extension of GBP1.0m to its facilities to support the acquisition
of Besley Hill. The facility continues to be a quarterly rolling
facility with repayments of GBP22.5k each quarter. Total bank
facilities available to the Group at 31 December 2017 stood at
GBP6.0 million of which GBP3.8 million is drawn.
FINANCIAL POSITION
The Group has generated strong cashflow from operations of
GBP1.6m (2016: GBP1.7m) which is expected to continue in 2018.
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.
Balance Sheet 2017 2016
Summary GBPm GBPm
Cash 1.6 1.2
Net Assets 7.6 5.6
Net Debt 2.3 1.2
Net Debt / EBITDA 1.0x 0.6x
Ed Jones
Chief Financial Officer
Consolidated statement of comprehensive income
For the year ended 31 December 2017
2017 2016
Notes GBP000s GBP000s
Revenue 3 14,169 13,833
Administrative expenses (11,938) (11,772)
-------- --------
Operating profit before depreciation,
amortisation,
acquisition & share-based payment
expenses 2,231 2,061
Depreciation and profit on disposal 4 (137) (104)
Amortisation and profit on disposal 4 (731) (584)
Business combination acquisition
expenses 15 (50) (30)
Share-based payment expense 25 (118) (192)
-------- --------
Operating profit 4 1,195 1,151
Finance income 7 18 4
Finance costs 8 (185) (168)
-------- --------
Profit before taxation 1,028 987
Taxation 9 (133) (181)
-------- --------
Profit for the financial year 895 806
Other comprehensive income - -
-------- --------
Total comprehensive income for
the year 895 806
======== ========
Profit and total comprehensive
income for the financial year
attributable to:
Equity holders of the parent 895 806
-------- --------
895 806
======== ========
Earnings per share
Basic (pence per share) 11 2.89 2.84
======== ========
Diluted (pence per share) 11 2.77 2.72
======== ========
Consolidated statement of financial position
As at 31 December 2017
2017 2016
Notes GBP000s GBP000s
Non-current assets
Goodwill 12 4,626 3,973
Other intangible assets 12 6,548 4,078
Property, plant and equipment 13 344 429
Investments 14 1 1
Deferred tax assets 23 87 82
-------- --------
11,606 8,563
-------- --------
Current assets
Trade and other receivables 16 1,645 1,452
Cash and cash equivalents 1,582 1,187
-------- --------
3,227 2,639
-------- --------
Total assets 14,833 11,202
======== ========
Current liabilities
Borrowings 17 (77) (366)
Obligations under finance leases 18 (19) (47)
Current tax liabilities (163) (117)
Trade and other payables 19 (2,291) (2,376)
-------- --------
(2,550) (2,906)
-------- --------
Non-current liabilities
Borrowings 17 (3,783) (1,993)
Obligations under finance leases 18 (62) (81)
Other payables 20 (19) (52)
-------- --------
(3,864) (2,126)
-------- --------
Provisions for liabilities
Provisions 22 (55) (66)
Deferred tax liability 23 (768) (456)
-------- --------
(823) (522)
-------- --------
Net assets 7,596 5,648
======== ========
Equity
Attributable to the owners of
the parent:
Share capital 26 1,272 1,145
Share premium account 27 4,105 2,633
Merger reserve 1.2 899 899
Retained earnings 1,320 971
-------- --------
7,596 5,648
-------- --------
Total equity 7,596 5,648
======== ========
The financial statements were approved by the board of directors
and authorised for issue on 11 April 2018 and are signed on its
behalf by:
Mr E A Jones
Director
Company Registration No. 09448465
Company statement of financial position
As at 31 December 2017
2017 2016
Notes GBP000s GBP000s
Non-current assets
Investments 14 1,189 1,071
Current assets
Trade and other receivables 16 5,482 3,120
-------- --------
Total assets 6,671 4,191
======== ========
Current liabilities
Current tax liabilities (22) (20)
Trade and other payables 19 (26) (27)
-------- --------
(48) (47)
-------- --------
Net assets 6,623 4,144
======== ========
Equity
Share capital 26 1,272 1,145
Share premium account 4,105 2,633
Share option reserve 317 203
Retained earnings 929 163
-------- --------
Total equity 6,623 4,144
======== ========
As permitted by s408 Companies Act 2006, the Company has not
presented its own Statement of Comprehensive Income. The Company's
profit for the year was GBP1,421,000 (2016: GBP556,000).
The financial statements were approved by the board of directors
and authorised for issue on 11 April 2018 and are signed on its
behalf by:
Mr E A Jones
Director
Company Registration No. 09448465
Consolidated statement of changes in equity
For the year ended 31 December 2017
Total
equity
attributable
Share to owners
Share premium Merger Retained of the
capital account reserve earnings parent
Notes GBP000s GBP000s GBP000s GBP000s GBP000s
Balance at 1 January 2016 1,131 2,579 899 375 4,984
Year ended 31 December 2016:
Profit and total comprehensive
income for the year - - - 806 806
Issue of share capital 26 14 53 - - 67
Dividends 10 - - - (453) (453)
Credit to equity for equity settled
share-based payments 25 - - - 192 192
Deferred tax on share-based payment
transactions - - - 52 52
Exercise of share options - 1 - (1) -
-------- -------- -------- --------- -------------
Balance at 31 December 2016 1,145 2,633 899 971 5,648
Year ended 31 December 2017:
Profit and total comprehensive
income for the year - - - 895 895
Issue of share capital 26 127 1,544 - - 1,671
Dividends 10 - - - (634) (634)
Credit to equity for equity settled
share-based payments 25 - - - 118 118
Deferred tax on share-based payment
transactions - - - (26) (26)
Costs of raising equity 26 - (76) - - (76)
Exercise of share options - 4 - (4) -
-------- -------- -------- --------- -------------
Balance at 31 December 2017 1,272 4,105 899 1,320 7,596
======== ======== ======== ========= =============
Company Statement of Changes in Equity
For the year ended 31 December 2017
Share Share
Share premium option Retained
capital account reserve earnings Total
Notes GBP000s GBP000s GBP000s GBP000s GBP000s
Balance at 1 January 2016 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
Year ended 31 December 2017:
Profit and total comprehensive
income for the year - - - 1,400 1,400
Issue of share capital 26 127 1,544 - - 1,671
Dividends 10 - - - (634) (634)
Costs of raising equity 26 - (76) - - (76)
Share based payment expense of
subsidiary 14 - - 118 - 118
Exercise of share options - 4 (4) - -
-------- -------- -------- --------- --------
Balance at 31 December 2017 1,272 4,105 317 929 6,623
======== ======== ======== ========= ========
Consolidated statement of cash flows
For the year ended 31 December 2017
2017 2016
Notes GBP000s GBP000s
Cash flows from operating activities
Operating profit 1,195 1,151
Adjustments for:
Share-based payment expense 25 118 192
Depreciation of property, plant
and equipment 13 137 134
Gain on disposal of property,
plant and equipment 4 - (17)
Amortisation and impairment
of intangible assets 12 755 597
Gain on disposal of intangible
assets 4 (24) (13)
Release of provisions 22 (16) (16)
Costs of acquisition 15 50 30
Changes in working capital:
(Increase)/decrease in trade
and other receivables 16 (193) 177
Decrease in trade and other
payables 19 (64) (130)
-------- --------
Cash generated from operations 1,958 2,105
Interest paid (147) (111)
Income taxes paid (246) (292)
-------- --------
Net cash inflow from operating
activities 1,565 1,702
-------- --------
Investing activities
Purchase of intangible assets 12 (868) (887)
Proceeds on disposal of intangibles 114 42
Purchase of property, plant
and equipment 13 (52) (124)
Proceeds on disposal of property,
plant and equipment - 20
Business acquisitions, net of
cash acquired 15 (2,460) (325)
Payment of deferred considerations (52) (23)
Interest received 7 18 4
-------- --------
Net cash used in investing activities (3,300) (1,293)
-------- --------
Financing activities
Proceeds from issue of own shares 1,345 68
Repayment of deferred consideration
debentures 17 (295) (375)
Proceeds of new bank loans 1,851 2,175
Repayment of bank loans and
borrowings 17 (90) (1,807)
Payment of finance leases obligations 18 (47) (41)
Dividends paid 10 (634) (453)
-------- --------
Net cash generated from/(used
in) financing activities 2,130 (433)
-------- --------
Net increase/(decrease) in cash
and cash equivalents 395 (24)
Cash and cash equivalents at
beginning of year 1,187 1,211
-------- --------
Cash and cash equivalents at
end of year 1,582 1,187
======== ========
Changes in liabilities arising from financing activities
The table below details changes in the Group's liabilities
arising from financing activities, including both cash and non-cash
changes. Liabilities arising from financing activities are those
for which cash flows were, or future cash flows will be, classified
in the Group's Consolidated Statement of Cash Flows as cash flows
from financing activities.
At At
1 January Financing Other 31 December
2017 cash flows changes 2017
Bank loans 2,072 1,761 27 3,860
Finance lease liabilities 128 (47) 81
Deferred consideration 287 (295) 8 -
---------- ----------- -------- ------------
Total liabilities from financing
activities 2,487 1,419 35 3,941
========== =========== ======== ============
Major non-cash transactions
During the year the Group entered into a number of non-cash
transactions as follows:
The Group issued shares as part consideration for the
acquisition of Besley Hill, as disclosed further in note 15.The
fair value of these shares was GBP250,000.
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 Flow
Notes to the financial statements
For the year ended 31 December 2017
1 Accounting policies
Company information
Hunters Property Plc ("the Company") is a public limited company
domiciled and incorporated in England and Wales. The registered
office is Apollo House, Eboracum Way, York, North Yorkshire, YO31
7RE. The consolidated financial information (or "financial
statements") incorporate the financial information 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.
1.1 Accounting convention
The financial information set out above does not constitute the
Company's statutory accounts for the years ended 31 December 2017
or 2016, but is derived from those accounts. Statutory accounts for
2016 have been delivered to the Registrar of Companies and those
for 2017 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
1.2 Basis of consolidation
The Group financial information consolidates those of the
Company and the subsidiaries that the Company has control of.
Control is established when the Company 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 undertaking, or unincorporated business, is
acquired/disposed of during the year, 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.
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 or unincorporated business 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 an acquired subsidiary's
(or unincorporated business'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 or
unincorporated business, without a loss of control, is accounted
for as an equity transaction.
If the Group loses control over a subsidiary or unincorporated
business, 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, as a result of this merger accounting a
merger reserve is recognised within equity which represents the
difference between the net assets of the Group and the retained
profits recognised by the Group as at 27 March 2015.
1.3 Going concern
As at the year end the Group has net current assets. The nature
of the Group's trade is that there exist intangibles which generate
significant cashflows, and are expected to continue doing so. The
Group has sufficient unused facility available in its bank
financing as disclosed in note 17.
The Directors have considered 12 month cashflow forecasts from
the date of approval of the financial statements, and do not
foresee any cashflow issues arising. Taking these factors into
account, as at the time of approving the financial statements, the
Directors have a reasonable expectation that the Group has adequate
resources to continue in operational existence for the foreseeable
future. Thus Directors continue to adopt the going concern basis of
accounting in preparing the financial statements.
1.4 Revenue
Revenue represents the amount receivable for the provision of
services during the year, 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.
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 profile of estimated incurred costs 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.
Financial services revenue is recognised at the later of the
policy inception date or confirmation of entitlement to the
commission.
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.
Where the Group identifies rights to the economic benefits of
other sources of income through fulfilment of certain performance
criteria, the income is recognised in the relevant accounting
period when those conditions are fulfilled, net of VAT.
1.5 Intangible fixed assets - goodwill
Goodwill represents the future economic benefits arising from
other assets acquired in a business combination that are not
individually identifiable and separately recognised. See note 15
for information on how goodwill is initially determined. After
initial recognition, goodwill is measured at cost less accumulated
impairment losses. See note 1.9 for a description of impairment
testing procedures.
1.6 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 as disclosed further in note 15. 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 year-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 license
Franchise development costs Over the life of the franchise
contract (typically 10-15 years)
Brands 10 years
Customer lists 2-15 years
1.7 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 cost 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 life 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 year-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.
1.8 Non-current investments
A subsidiary is an entity controlled by the Group. Control is
the power to govern the financial and operating policies of the
entity so as to obtain benefits from its activities.
Other investments in equity instruments that have a quoted
market price in an active market and other equity instruments whose
fair value can be reliably measured are measured at fair value;
otherwise investments in equity instruments are measured at cost
less accumulated impairment losses.
1.9 Impairment of non-current assets
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.
1.10 Financial instruments
Loans and receivables
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 assets held for trading
Financial assets at fair value through profit or loss include
financial assets held for trading and financial assets designated
upon initial recognition at fair value through profit or loss.
Financial assets are classified as held for trading if they are
acquired for the purpose of selling in the near term. This category
includes derivative financial instruments entered into by the
Company that are not designated as hedging instruments in hedge
relationships as defined by IAS 39. The Company has not designated
any financial assets upon initial recognition as at fair value
through profit or loss.
Derivatives, including separated embedded derivatives, are also
classified as held for trading unless they are designated as
effective hedging instruments.
Financial assets at fair value through profit and loss are
carried in the Statement of Financial Position at fair value with
changes in fair value recognised in finance revenue or finance
expense in the Statement of Comprehensive Income.
Impairment of financial assets
Financial assets, other than those held at fair value through
profit and loss, are assessed for indicators of impairment at each
reporting end date.
Financial assets are impaired where there is objective evidence
that, as a result of one or more events that occurred after the
initial recognition of the financial asset, the estimated future
cash flows have been affected. If an asset is impaired, the
impairment loss is the difference between the carrying amount and
the present value of the estimated cash flows discounted at the
asset's original effective interest rate. The impairment loss is
recognised in profit or loss.
If there is a decrease in the impairment loss arising from an
event occurring after the impairment was recognised, the impairment
is reversed. The reversal is such that the current carrying amount
does not exceed what the carrying amount would have been, had the
impairment not previously been recognised. The impairment reversal
is recognised in profit or loss.
Derecognition of financial assets
Financial assets are derecognised only when the contractual
rights to the cash flows from the asset expire or are settled, or
when the Group transfers the financial asset and substantially all
the risks and rewards of ownership to another entity, or if some
significant risks and rewards of ownership are retained but control
of the asset has transferred to another party that is able to sell
the asset in its entirety to an unrelated third party.
Classification of 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.
Derecognition of financial liabilities
Financial liabilities are derecognised when the Group's
contractual obligations expire or are discharged or cancelled.
1.11 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.
Equity instruments issued by the group are recorded at the
proceeds received, net of direct issue costs. Dividends payable on
equity instruments are recognised as liabilities once they are no
longer at the discretion of the group.
The merger reserve has arisen as described in note 1.2.
Within the Company, the share option reserve is recognised in
respect of the cumulative fair value of share options recognised,
net of issues made, where the benefit of the services received
under the share option are recognised within subsidiaries of the
Company. Once the share option is exercised, the element included
within this reserve for fair values expensed is transferred to the
share premium account. Full details on share options existing as at
the year end is given in note 25.
1.12 Taxation
The tax expense represents the sum of the tax currently payable
and deferred tax.
Current tax
The tax currently payable is based on taxable profit for the
year. Taxable profit differs from net profit as reported in the
income statement because it excludes items of income or expense
that are taxable or deductible in other years and it further
excludes items that are never taxable or deductible. The Group's
liability for current tax is calculated using tax rates that have
been enacted or substantively enacted by the reporting end
date.
Deferred tax
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.
1.13 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 end 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 in measured at
present value the unwinding of the discount is recognised as a
finance cost in profit or loss in the period it arises.
1.14 Employee benefits
The costs 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.
1.15 Retirement benefits
Payments to defined contribution retirement benefit schemes are
charged as an expense as they fall due.
1.16 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. Full
disclosure of the calculation models is given in note 25.
1.17 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.
Rentals payable under operating leases, including any lease
incentives received, are charged to income on a straight line basis
over the term of the relevant lease except where another more
systematic basis is more representative of the time pattern in
which economic benefits from the lease asset are consumed.
1.18 Standards, amendments and interpretations adopted in the
year
The current standards, amendments and interpretations have been
adopted in the year and have not had a material impact on the
reported results in the Group and Company's financial
statements:
-- IAS 7 'Statement of Cash Flows': amendments in respect of the disclosure initiative.
-- IAS 12 'Income Taxes': amendment in relation to the
recognition of deferred tax assets for unrealised losses.
-- Annual improvements to IFRS's (2012-2014).
Disclosures have been extended in the current reporting period
to reflect the updated requirements of IAS 7 'Statement of Cash
Flows'.
1.19 Standards, amendments and interpretations in issue but not
yet effective
At the authorisation of these financial statements, the Group
has not applied the following new and revised standards that have
been issued but are not effective yet and in some cases have not
been adopted by the EU:
EU effective
date - period
beginning on
or after
Amendments to IAS 40 'Investment Property' 1 January 2018
for transfers of investment property *
Amendments to IAS 28 'Long-term Interests 1 January 2019
in Associates and Joint Ventures' around *
the application of
the equity method
IFRS 9 'Financial Instruments' 1 January 2018
Amendments to IFRS 9 'Financial Instruments' 1 January 2019
for termination rights *
IFRS 16 'Leases' 1 January 2019
Annual improvements to IFRS's (2015-2017) 1 January 2019
*
IFRIC 22 'Foreign Currency Transactions 1 January 2018
and Advance Consideration' *
Amendments to IFRS 4 'Insurance Contracts' 1 January 2018
around interaction with IFRS 9
IFRIC 23 'Uncertainty over Income Tax 1 January 2019
Treatments' *
Amendments to IFRS 2 'Share-based Payment' 1 January 2018
for classification and measurement *
of share-based payment transactions
IFRS 17 'Insurance Contracts' and subsequent 1 January 2021
withdrawal of IFRS 4 'Insurance Contracts' *
IFRS 15 'Revenue from Contracts with 1 January 2018
Customers', including clarifications
made to the standard since initial
release
* These standards, amendments and interpretations have not yet
been endorsed by the EU and the dates shown are the expected
dates.
The adoption of IFRS 16 'Leases' is expected to have a material
impact on the reported assets and liabilities on the Statement of
Financial Position, although there is not expected to be any
material impact from this standard on the reported results of the
Group. The adoption of IFRS 9 'Financial Instruments' is not
expected to impact on the reported values in the financial
statements as the Group does not use complex financial instruments,
although the standard may require some minor disclosure
adjustments.
All other amendments, including the adoption of IFRS 15, are not
expected to have a material impact on the Group's financial
statements.
2 Judgements and key sources of estimation uncertainty
The preparation of the financial statements in conformity with
IFRS requires management to make judgements, 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 & intangible assets
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.
Franchisee Development Grants ("FDG's") are recognised at the
inception of certain contracts with franchisees, and are provided
in order to assist with the transition of franchisees to the
Hunters brand name. These intangibles are amortised over the life
of the franchise contract, typically 10-15 years.
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
recognition of the acquisition as a separable business, and of
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.
Accounting for acquired lettings books
The Group has acquired lettings books in the current and
comparative year. Although each of these books are subsumed within
the overall trade of the Group, the originally acquired book is
separable and tradable in its own right, although following
acquisition is managed by existing Group staff and systems. The
Directors consider that recognition under IFRS 3 'Business
Combinations' is the most suitable accounting treatment.
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
2017 2016
GBP000s GBP000s
Residential sales 4,609 5,042
Lettings sales 3,210 3,176
Franchisee revenues 4,648 4,035
Other 1,702 1,580
-------- --------
14,169 13,833
======== ========
Revenue analysed by geographical market
2017 2016
GBP000s GBP000s
United Kingdom 14,169 13,833
======== ========
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
2017 2016
GBP000s GBP000s
Operating profit for the year is
stated after charging/(crediting):
Depreciation of owned property, plant
and equipment 107 120
Depreciation of property, plant and
equipment held under finance leases 30 14
Gain on disposal of property, plant
and equipment - (30)
Amortisation of intangible assets 755 597
Gain on disposal of intangible assets (24) (13)
Share-based payments (note 25) 118 192
Operating lease charges (including
property rent) 668 724
======== ========
The Group's subsidiary Realcube Limited has undertaken Research
& Development activities on which tax credits were received
totalling GBP22,000 (2016 - GBPnil). Expenses in relation to this
are included within employment costs.
5 Auditor's remuneration
2017 2016
GBP000s GBP000s
Fees payable to the Company's auditor
and its associates:
For audit services
Audit of the financial statements
of the Group and Company 15 15
Audit of the Company's subsidiaries 27 25
-------- --------
42 40
======== ========
In addition to the above, there were GBP1,000 of non-audit fees
paid to the Group's auditors for a review of compliance with
financing covenants in each of the current and comparative
years.
6 Employees
The average monthly number of persons (including Directors)
employed by the Group during the year was:
Group Company
2017 2016 2017 2016
Number Number Number Number
Directors 5 5 5 5
Sales and administration 184 184 - -
------- ------- ------- -------
189 189 5 5
======= ======= ======= =======
Their aggregate remuneration comprised:
Group Company
2017 2016 2017 2016
GBP000s GBP000s GBP000s GBP000s
Wages and salaries 5,530 5,718 - -
Social security costs 522 511 - -
Pension costs 128 89 - -
-------- -------- -------- --------
6,180 6,318 - -
======== ======== ======== ========
Details of Directors' remuneration is provided in note 30.
7 Finance income
2017 2016
GBP000s GBP000s
Interest income
Interest on bank & similar deposits 18 4
-------- --------
Total income 18 4
Interest income includes the following:
Interest on financial assets not
measured at fair value through profit
or loss 18 4
======== ========
8 Finance costs
2017 2016
GBP000s GBP000s
Interest on financial liabilities
measured at amortised cost:
Interest on bank overdrafts and loans 163 98
Interest on finance leases 11 13
-------- --------
174 111
-------- --------
Other finance costs:
Unwinding of discount on loans and
borrowings 6 50
Unwinding of discount on provisions 5 7
-------- --------
11 57
-------- --------
Total finance costs 185 168
======== ========
9 Taxation
2017 2016
GBP000s GBP000s
Current tax
UK corporation tax on profits for
the current period 314 246
Adjustments in respect of prior periods (22) (1)
-------- --------
Total current tax 292 245
-------- --------
Deferred tax
Origination and reversal of temporary
differences (84) (31)
Changes in tax rates (45) (21)
Deferred tax on share-based payments
charge (30) (12)
-------- --------
Total deferred tax (159) (64)
-------- --------
Total tax charge 133 181
======== ========
The charge for the year can be reconciled to the profit per the
Consolidated Statement of Comprehensive Income as follows:
2017 2016
GBP000s GBP000s
Profit before taxation 1,028 987
======== ========
Expected tax charge based on a corporation
tax rate of 19.25% (2016 - 20%) 198 197
Tax effect of expenses that are not
deductible in determining taxable
profit 4 4
Tax effect of utilisation of tax
losses not previously recognised - (6)
Effect of change in corporation tax
rate (45) (21)
Depreciation on assets not qualifying
for tax allowances 3 2
Amortisation on assets not qualifying
for tax allowances 17 8
Share based payment charge (25) (5)
Under provided in prior years (in
respect of R&D) (22) (1)
Other adjustments 3 3
-------- --------
Total tax charge 133 181
======== ========
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:
2017 2016
GBP000s GBP000s
Deferred tax:
Change in estimated excess tax deductions
related to share based payments 26 (52)
======== ========
The UK corporation tax rate was 20% until 31 March 2017, and 19%
thereafter.
A reduction in the UK corporation tax rate from 19% to 17%
(effective from 1 April 2020) was enacted in March 2017. These
rates have therefore been considered when calculating deferred tax
at the reporting date. Deferred tax balances at the reporting date
are measured at 17% (2016: 18%) except when the timing difference
is expected to be substantially unwound before 1 April 2020, in
which case a rate of 19% has been used to measure the balance.
10 Dividends
2017 2016 2017 2016
Per share Per share GBP000s GBP000s
Amounts recognised as distributions
to equity holders:
Final paid (pence per share) 1.30 1.00 412 283
Interim paid (pence per share) 0.70 0.60 222 170
---------- ---------- -------- --------
2.00 1.60 634 453
---------- ---------- -------- --------
The proposed final dividend for the year ended 31 December 2017
is:
2017 2016
Total Total
Per share GBP000s Per share GBP000s
Ordinary shares (pence
per share) 1.50 477 1.30 412
========= ======== ========= ========
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:
2017 2016
GBP000s GBP000s
Earnings
Earnings for the purpose of basic
earnings per share being net
profit attributable to owners of
the parent 895 806
Effects of dilutive potential ordinary
shares - -
-------- --------
Earnings for the purposes of diluted
earnings per share 895 806
======== ========
2017 2016
No. No.
Number of shares
Weighted average number of ordinary
shares for the purposes of basic
earnings per share 31,022,076 28,365,454
Net weighted average number of dilutive
potential ordinary shares for the
purposes of dilutive earnings per
share 1,282,143 1,264,396
---------- ----------
Weighted average number of ordinary
shares for the purposes of diluted
earnings per share 32,304,219 29,629,850
========== ==========
Basic earnings per share (pence per
share) 2.89 2.84
========== ==========
Diluted earnings per share (pence
per share) 2.77 2.72
========== ==========
In each period there were share options outstanding. As at 31
December 2017 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,
interest income, 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:
2017 2016
GBP000s GBP000s
Profit after taxation attributable
to equity owners of the parent 895 806
Adjusted for:
Time-value interest costs 11 57
Interest income (18) (4)
Amortisation 755 597
Costs of acquisition 50 30
Share-based payment expense 118 192
-------- --------
Adjusted Earnings 1,811 1,678
======== ========
Basic Adjusted Earnings per share
(pence per share) 5.84 5.92
======== ========
12 Goodwill and other intangible assets
FDG's Customer
Goodwill Software & rebrands Brands lists Total
Group GBP000s GBP000s GBP000s GBP000s GBP000s GBP000s
Cost
At 1 January 2016 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
Additions - separately
acquired - 138 730 - - 868
Additions - business
combinations 653 - - - 2,447 3,100
Disposals - - (106) - - (106)
-------- -------- ----------- -------- -------- --------
At 31 December
2017 4,661 758 2,563 637 4,487 13,106
-------- -------- ----------- -------- -------- --------
Amortisation and
impairment
At 1 January 2016 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
Amortisation charged
for the year - 90 209 65 391 755
Disposals - - (16) - - (16)
-------- -------- ----------- -------- -------- --------
At 31 December
2017 35 215 446 206 1,030 1,932
-------- -------- ----------- -------- -------- --------
Carrying amount
At 31 December
2017 4,626 543 2,117 431 3,457 11,174
======== ======== =========== ======== ======== ========
At 31 December
2016 3,973 495 1,686 496 1,401 8,051
======== ======== =========== ======== ======== ========
The Company had no intangible assets as at 31 December 2017 or
31 December 2016.
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 2022, using growth rates of 0% - 3% 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 and current housing transaction volumes. A discount rate of
between 10% and 12% has been used based on the Group's estimated
cost of capital, and varied based on the risk profile of the
underlying asset.
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.
No reasonably possible change in assumptions has been identified
that would lead to a material impairment.
The carrying amounts of goodwill have been assigned to the
following cash-generating units:
2017 2016
Group GBP000s GBP000s
Residential sales 1,330 1,330
Lettings 561 561
Franchising 2,701 2,048
Other 34 34
-------- --------
4,626 3,973
======== ========
13 Property, plant and equipment
Leasehold Fixtures,
land Plant fittings Motor
and buildings and machinery and equipment vehicles Total
Group GBP000s GBP000s GBP000s GBP000s GBP000s
Cost
At 1 January 2016 12 455 37 83 587
Additions 4 43 174 5 226
Disposals - (1) - (48) (49)
-------------- -------------- -------------- --------- --------
At 31 December 2016 16 497 211 40 764
Additions - 51 1 - 52
-------------- -------------- -------------- --------- --------
At 31 December 2017 16 548 212 40 816
-------------- -------------- -------------- --------- --------
Depreciation and impairment
At 1 January 2016 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
Depreciation charged
in the year 1 78 42 16 137
Eliminated in respect
of disposals - - - - -
-------------- -------------- -------------- --------- --------
At 31 December 2017 12 354 75 31 472
-------------- -------------- -------------- --------- --------
Carrying amount
At 31 December 2017 4 194 137 9 344
============== ============== ============== ========= ========
At 31 December 2016 5 221 178 25 429
============== ============== ============== ========= ========
The Company had no property, plant and equipment assets at 31
December 2017 or 31 December 2016.
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 GBP40,901 (2016 - GBP24,622) for the year.
2017 2016
Group GBP000s GBP000s
Fixtures, fittings and equipment 81 172
Motor vehicles - 11
-------- --------
81 183
======== ========
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
2017 2016 2017 2016
Notes GBP000s GBP000s GBP000s GBP000s
Investments in subsidiaries 32 - - 867 867
Other investments
in subsidiaries 32 - - 322 204
Unlisted investments 1 1 - -
-------- -------- -------- --------
1 1 1,189 1,071
======== ======== ======== ========
Movements in non-current investments
Shares
Group GBP000s
Cost or valuation
At 1 January 2016, 31 December 2016 and 31
December 2017 1
Carrying amount
--------
At 31 December 2017 1
========
At 31 December 2016 1
========
Equity
investments Other investments
in subsidiaries in subsidiaries Total
Company GBP000s GBP000s GBP000s
Cost
At 1 January 2016 867 12 879
Additions through share based
payment expense - 192 192
---------------- ----------------- --------
At 31 December 2016 867 204 1,071
Additions through share based
payment expense - 118 118
---------------- ----------------- --------
At 31 December 2017 867 322 1,189
Impairment
At 1 January 2017 - - -
At 31 December 2017 - - -
Carrying amount
At 31 December 2017 867 322 1,189
================ ================= ========
At 31 December 2016 867 204 1,071
================ ================= ========
15 Business combinations
Acquisition of Besley Hill
On 24 March 2017 the Group acquired Besley Hill, in a trade
acquisition. 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.
Fair value
Carrying Fair value recognised
value adjustments on acquisition
GBP000s GBP000s GBP000s
Assets
Intangible assets - customer
lists - 2,253 2,253
-------- ------------ ---------------
Total assets - 2,253 2,253
Liabilities
Deferred tax liabilities - (406) (406)
-------- ------------ ---------------
Total liabilities - (406) (406)
-------- ------------ ---------------
Total identifiable net assets - 1,847 1,847
======== ============ ===============
Goodwill arising on acquisition 653
---------------
Purchase consideration transferred 2,500
===============
The analysis of the cash flows on acquisition is:
GBP000s
Transaction costs of the acquisition (45)
Cash and cash equivalents acquired on combination -
Cash and cash equivalents paid for the combination (2,250)
-------
Net cash flow on acquisition (2,295)
=======
From the date of acquisition, Besley Hill contributed GBP367,264
of revenue and GBP110,027 of profit before tax from continuing
operations of the Group. The directors do not consider it practical
to disclose revenues and profits had the acquisition taken place at
the start of the year.
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 a 10% discount rate (reduced to reflect the
relatively low risk profile of a lettings book acquisition) and an
assumption of a useful life of 12 years for the lettings book to
estimate the fair value of this intangible.
Fair value
Carrying Fair value recognised
value adjustments on acquisition
GBP000s GBP000s GBP000s
Assets
Intangible assets - customer
lists - 194 194
-------- ------------ ---------------
Total assets - 194 194
Liabilities -
Deferred tax liabilities - (34) (34)
-------- ------------ ---------------
Total liabilities - (34) (34)
-------- ------------ ---------------
Total identifiable net assets - 160 160
======== ============ ===============
Goodwill arising on acquisition -
---------------
Purchase consideration transferred 160
===============
The analysis of the cash flows on acquisition is:
GBP000s
Transaction costs of the acquisition (5)
Cash and cash equivalents acquired with the
lettings book -
Cash and cash equivalents paid for the lettings
book (160)
-------
Net cash flow on acquisition (165)
=======
From the date of acquisition, the lettings book contributed
GBP35,691 of revenue and GBP22,141 of profit before tax from
continuing operations of the Group. The directors do not consider
it practical to disclose revenues and profits had the acquisition
taken place at the start of the year.
16 Trade and other receivables
Group Company
2017 2016 2017 2016
GBP000s GBP000s GBP000s GBP000s
Amounts falling due within one
year:
Trade receivables 1,103 852 - -
Amounts due from subsidiary undertakings - - 5,482 3,120
Other receivables 78 144 - -
Prepayments and accrued income 464 456 - -
-------- -------- -------- --------
1,645 1,452 5,482 3,120
======== ======== ======== ========
Trade receivables at the reporting date are shown above net of
provisions.
Trade receivables are stated net of impairment for estimated
irrecoverable amounts of GBP76,361 (2016: GBP93,271). 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:
2017 2016
GBP000s GBP000s
Beginning of the year 93 125
Provision for bad receivables 2 15
Released during the year (19) (47)
-------- --------
End of the year 76 93
======== ========
An analysis of the trade receivables past due but not impaired
is:
2017 2016
GBP000s GBP000s
60 to 120 days 86 27
More than 120 days 72 135
Less provision (76) (93)
-------- --------
Total trade receivables past due but
not impaired 82 69
Add:
Less than 60 days 1,021 783
-------- --------
Net trade receivables 1,103 852
======== ========
The Directors consider the credit quality of trade and other
receivables that are neither past due nor impaired to be good.
17 Borrowings
2017 2016
Group GBP000s GBP000s
Deferred consideration debenture loans - 287
Bank loans 3,860 2,072
-------- --------
3,860 2,359
======== ========
Payable within one year 77 366
Payable after one year 3,783 1,993
======== ========
The Group holds two flexible loan facilities.
The first loan has a maximum facility amounting to GBP5,550,000;
at the year end GBP3,597,106 had been drawn down and is disclosed
as payable after one year. The loan has 5 year repayment terms and
bears interest at 2.80% above Libor.
The second loan had an amount of GBP349,329 outstanding at the
year end. The loan is repayable at GBP90,000 per annum and bears
interest at 2.80% above Libor.
Included within the above are establishment fees of GBP85,000
(2016 - GBP88,000) which are netted off the total liability
presented. The fees are expensed to the Income Statement on a
straight line basis over the term of the loan.
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 were fully redeemed on 31 July
2017. These were carried at their present value, determined using
the Company's discount rate of 10%. Finance costs were recognised
as the debenture loan unwound towards maturity.
18 Obligations under finance leases
Future minimum lease payments due under finance leases:
2017 2016
Group GBP000s GBP000s
Within one year 26 58
In two to five years 71 97
-------- --------
97 155
Less: future finance charges (16) (27)
-------- --------
81 128
======== ========
The finance leases relate to office equipment included within
non-current assets. There are no lease incentives or contingent
elements attaching to the leases.
19 Current trade and other payables
Group Company
2017 2016 2017 2016
GBP000s GBP000s GBP000s GBP000s
Other taxation and social security 575 711 - -
Trade payables 752 645 - -
Other payables 249 260 - -
Accruals and deferred income 715 760 26 27
-------- -------- -------- --------
2,291 2,376 26 27
======== ======== ======== ========
20 Non-current trade and other payables
Group Company
2017 2016 2017 2016
GBP000s GBP000s GBP000s GBP000s
Other payables 19 52 - -
======== ======== ======== ========
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 where typically 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.
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 GBP3.945
million (2016 - GBP2.160 million). 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
GBP88,000 (2016 - GBP43,000).
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. The Group's maximum exposure is represented by the
carrying amounts in the financial statements, which are shown in
the table below.
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, as evidenced when bank borrowing arrangements
were replaced during the comparative year.
Group Company
2017 2016 2017 2016
GBP000s GBP000s GBP000s GBP000s
Carrying amount of financial assets
Debt instruments measured at amortised
cost 2,762 2,182 5,483 3,120
Equity instruments measured at
cost less impairment 1 1 1,188 1,071
-------- -------- -------- --------
2,763 2,183 6,671 4,191
======== ======== ======== ========
Carrying amount of financial liabilities
Measured at amortised cost 4,962 3,442 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.
Demand From From
and less From 12 months 2 to
than 3 to to 2 5
Financial assets 3 months 12 months years years Total
Trade and other receivables 996 - - - 996
Cash and cash equivalents 1,187 - - - 1,187
--------- ---------- ---------- ------ -----
As at 31 December 2016 2,183 - - - 2,183
========= ========== ========== ====== =====
Trade and other receivables 1,181 - - - 1,181
Cash and cash equivalents 1,582 - - - 1,582
--------- ---------- ---------- ------ -----
As at 31 December 2017 2,763 - - - 2,763
========= ========== ========== ====== =====
Demand
and
less From From
than 3 to From 12 months 2 to
Financial liabilities 3 months 12 months to 2 years 5 years Total
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
========= ========== ============== ======== =====
Trade and other payables 1,001 - - - 1,001
Other loans - 19 - - 19
Bank loans and overdrafts 23 55 90 3,693 3,861
Finance leases 4 14 21 42 81
--------- ---------- -------------- -------- -----
As at 31 December 2017 1,028 88 111 3,735 4,962
========= ========== ============== ======== =====
22 Provisions for liabilities
Group
2017 2016
Notes GBP000s GBP000s
Contingent acquisition costs - 20
Office dilapidations provision 55 46
-------- --------
55 66
Deferred tax liabilities 23 768 456
-------- --------
823 522
======== ========
Movements on provisions apart from deferred tax liabilities:
Contingent Office
acquisition dilapidations
costs provision Total
Group GBP000s GBP000s GBP000s
At 1 January 2016 37 38 75
Additional provisions in the
year - 4 4
Utilisation of provision (20) - (20)
Unwinding of discount 3 4 7
------------ -------------- --------
At 31 December 2016 20 46 66
Additional provisions in the
year - 4 4
Release of provision (20) - (20)
Unwinding of discount - 5 5
------------ -------------- --------
At 31 December 2017 - 55 55
============ ============== ========
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, and was cleared in July
2017 when the amount was ultimately found to not be due.
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 GBP75,000 by the end of 2019.
23 Deferred taxation
The following is the analysis of the deferred tax balances for
financial reporting purposes:
Liabilities Assets
2017 2016 2017 2016
Group GBP000s GBP000s GBP000s GBP000s
Accelerated capital allowances 36 46 - -
Fair value adjustments to intangible
assets on business combinations 716 410 - -
Share based payments - - 68 64
Dilapidations provision - - 10 8
Financial instrument spreading 16 - - -
Other provisions and accruals - - 9 10
-------- -------- -------- --------
768 456 87 82
======== ======== ======== ========
The Company did not have any deferred tax balances as at 31
December 2017 or 31 December 2016.
2017 2016
Group GBP000s GBP000s
Movements in the year:
Net liability at 1 January 2017 374 422
Credit to profit and loss (114) (43)
Credit to equity 26 (52)
Effect of change in tax rate - income
statement (45) (21)
Acquired on business combinations 440 68
-------- --------
Net liability at 31 December 2017 681 374
======== ========
Movements by category of deferred tax are as follows:
Charge Effect
Liability/(asset) to of change Acquired Liability/(asset)
at profit in on business at
1 January or tax combinations 31 December
2016 loss rate & other 2016
GBP000s GBP000s GBP000s GBP000s GBP000s
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
================= ======== ========== ============= =================
Charge Effect
Liability/(asset) to of change Acquired
at profit in on business Liability/(asset)
1 January or tax combinations at 31 December
2017 loss rate & other 2017
GBP000s GBP000s GBP000s GBP000s GBP000s
Accelerated capital
allowances 46 (7) (3) - 36
Fair value adjustments
to intangible
assets on business
combinations 410 (92) (42) 440 716
Dilapidations provision (8) (2) - - (10)
Share based payments (64) (30) - 26 (68)
Financial instrument
spreading - 16 - - 16
Other provisions
and accruals (10) 1 - - (9)
----------------- -------- ---------- ------------- -----------------
Net deferred tax
movement 374 (114) (45) 466 681
================= ======== ========== ============= =================
Within RealCube Limited there exists tax losses totalling
GBP449,657 (2016 - GBP431,528) 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
2017 2016
GBP000s GBP000s
Defined contribution schemes
Charge to profit and loss in respect
of defined contribution schemes 128 89
======== ========
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
Number of share Weighted average exercise
options price
2016 2016
2017 Number 2017 GBP
Group Number (As restated) GBP (As restated)
Outstanding at 1 January 2017 2,492,060 2,219,967 0.23 0.43
Granted - 675,000 - 0.04
Exercised (356,363) (349,657) 0.28 0.19
Expired (152,697) (53,250) 0.42 0.73
--------- -------------- ------ -------------------
Outstanding at 31 December 2017 1,983,000 2,492,060 0.22 0.23
========= ============== ====== ===================
Exercisable at 31 December 2017 972,750 935,060 0.10 0.25
========= ============== ====== ===================
The options exercised during the year had a weighted average
share price on the date of exercise of GBP0.541.
The options outstanding at 31 December 2017 had an exercise
price ranging from GBP0.04 to GBP0.73, and a remaining contractual
life ranging between January 2018 and January 2026.
2016 has been restated to split out the pre-listing Director
share options.
The options exist at 31 December 2017 across the following share
option schemes:
Exercise
price
Number per share Fair value Vesting
of shares (GBP) of scheme period
Option name & date of issue
Pre-listing Employee share options 575,000 0.16 - 3 years
Pre-listing Director share options 425,000 0.16 - 3 years
Options issued January 2015 150,000 0.40 9,455 3 years
Options issued December 2015 158,000 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
Up to 3.25
Options issued January 2016 - 4 150,000 0.04 81,681 years
---------- ----------
1,983,000 384,523
========== ==========
The fair value of the schemes are being expensed over the
vesting period. All share options expire 10 years after the date of
issue.
Group Company
2017 2016 2017 2016
GBP000s GBP000s GBP000s GBP000s
Expenses recognised in the year
Arising from equity settled share
based
payment transactions 118 192 - -
======== ======== ======== ========
26 Share capital
2017 2016
Group and Company GBP000s GBP000s
Ordinary share capital
Issued and fully paid
31,814,590 (2016 - 28,636,649) Ordinary
shares of 4p each 1,272 1,145
======== ========
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.
Ordinary
Number
Reconciliation of movements during the year:
At 1 January 2017 28,636,649
Issue of fully paid shares 3,177,941
----------
At 31 December 2017 31,814,590
==========
During the year, 3,177,941 shares were issued at a total premium
of GBP1,548,242. The Company incurred transaction costs relating to
the issue of new shares of GBP75,933.
27 Share premium account
Group Company
2017 2016 2017 2016
GBP000s GBP000s GBP000s GBP000s
At beginning of year 2,633 2,579 2,633 2,579
Issue of new shares 1,544 53 1,544 53
Share issue expenses (76) - (76) -
Exercise of share options 4 1 4 1
-------- -------- -------- --------
At end of year 4,105 2,633 4,105 2,633
======== ======== ======== ========
During the period, shares were issued at a premium of
GBP1,543,805, which related to a new issue enacted to fund the
acquisition of Besley Hill, and also the exercise of share options
granted in prior periods. On exercise, a transfer of GBP4,437 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 2017 the Group held client monies in approved
client accounts amounting to GBP4,768,610 (2016: GBP4,481,494).
Neither the cash asset nor any corresponding obligation has been
recognised by the Group.
The Company had no other contingent liabilities as at 31
December 2017.
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:
2017 2016
Group GBP000s GBP000s
Land and buildings
Within one year 526 617
Between two and five years 1,674 1,661
In over five years 1,696 1,763
-------- --------
3,896 4,041
-------- --------
Other
Within one year 63 22
Between two and five years 56 1
-------- --------
119 23
-------- --------
4,015 4,064
======== ========
30 Directors' remuneration and transactions
2017 2016
GBP000s GBP000s
Remuneration for qualifying services 463 465
Company pension contributions to defined
contribution schemes 28 25
-------- --------
491 490
======== ========
The number of Directors for whom retirement benefits are
accruing under defined contribution schemes amounted to 3 (2016 -
3).
During the year to 31 December 2017 the Directors received
remuneration as follows:
Benefits
Salary Bonus in kind Pension Total
GBP000s GBP000s GBP000s GBP000s GBP000s
Director
Ms G Frew 118 49 3 11 181
Mr H Hill 50 - - - 50
Mr K Hollinrake 59 - 2 5 66
Mr E Jones 109 42 1 12 164
Mr D Fielding 30 - - - 30
-------- -------- -------- -------- --------
Total 366 91 6 28 491
======== ======== ======== ======== ========
During the year to 31 December 2016 the Directors received
remuneration as follows:
Benefits
Salary Bonus in kind Pension
GBP000s GBP000s GBP000s GBP000s Total GBP000s
Director
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
======== ======== ======== ======== =============
Share options
No Directors exercised share options during the current or prior
year.
During the year the Directors of the Group received dividends as
follows:
2017 2016
GBP000s GBP000s
Director
Ms G Frew 35 28
Mr H Hill 2 3
Mr K Hollinrake 84 67
Mr E Jones 74 58
Mr D Fielding 1 1
-------- --------
196 157
======== ========
31 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 30 for details of key
management personnel remuneration.
32 Subsidiaries
Details of the Company's subsidiaries at 31 December 2017 are as
follows:
% Held
Name of undertaking and
country Class
of incorporation or of
residency Nature of business shareholding Direct Indirect
Hunters Property England
Group Limited & Wales Estate agents Ordinary 100.00
Greenrose Network England Franchising of
(Franchise) Limited & Wales estate agents Ordinary 100.00
Lettings and
England management of
Hapollo Limited & Wales office spaces Ordinary 100.00
Herriot Cottages England
Limited & Wales Dormant Ordinary 100.00
Hunters (Midlands) England
Limited & Wales Estate agents Ordinary 100.00
Hunters Financial England
Services Limited & Wales Financial services Ordinary 100.00
Hunters Franchising England Franchising of
Limited & Wales estate agents Ordinary 100.00
Hunters Group England Intermediate
Limited & Wales holding company Ordinary 100.00
Hunters Land & England
New Homes Limited & Wales Dormant Ordinary 100.00
Hunters Partners England Franchising of
Limited & Wales estate agents Ordinary 100.00
Hunters Survey England
& Valuation Limited & Wales Dormant Ordinary 100.00
Maddison James England
Limited & Wales Dormant Ordinary 100.00
England
RealCube Limited & Wales Software Ordinary 100.00
RealCube Technology England Intermediate
Limited & Wales holding company Ordinary 100.00
The registered office of Hunters Group 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
Parent Company.
The investments in subsidiaries are all stated at cost less
impairment in the financial statements.
This information is provided by RNS
The company news service from the London Stock Exchange
END
FR MMGMDVMGGRZM
(END) Dow Jones Newswires
April 12, 2018 02:00 ET (06:00 GMT)
Hunters Property (LSE:HUNT)
Historical Stock Chart
From Apr 2024 to May 2024
Hunters Property (LSE:HUNT)
Historical Stock Chart
From May 2023 to May 2024