Property Franchise Group PLC (The) – Pre-Close Trading Update and Notice of Results
The Property Franchise Group PLC, one of the UK’s largest property franchises, is pleased to provide the following trading update for the year ended 31 December 2018 (“FY18”), ahead of reporting its final results on Tuesday, 9 April 2019.
The Group performed well over the year with all its brands outperforming the market. Its hybrid brand, EweMove, traded profitably throughout the year and will show a significant improvement over FY17. Consequently, the Company expects to report trading for FY18 in line with market expectations and to show a material improvement on FY17 with enhanced margins.
- Revenue increased by 10% to £11.2m* (2017: £10.2m)
- Management service fees (royalties) increased by 14% to £9.5m* (2017: £8.3m)
- The Group was servicing c.55,000 tenanted managed properties at the year-end (2017: c.52,000)
- Assisted acquisitions programme supported 28 acquisitions by franchisees (2017: 12) and added 3,115 managed properties (2017: 2,012)
- Pay-per-click campaigns via the traditional high street brands’ customer websites delivered an 83% increase in leads to 30,474 (2017: 16,609)
- Heavily weighted toward lettings, which accounts for 68% of Management Service Fees (2017: 70%)
- A strong balance sheet, with net cash of £2.2m* at the year-end
The early signs are that 2019 will be another challenging year for the property market with ongoing Brexit uncertainty having the potential to dampen sales transaction volumes. The tenant fee ban, due for introduction on 1st June 2019 in England was previously anticipated in April 2019 and whilst it will reduce the Group’s lettings revenues by circa £0.5m in FY19, this impact will be less than anticipated.
Other regulatory changes proposed, aimed at professionalising the lettings sector, should provide the Group with opportunities for growth as smaller, independent agents may find a downturn in revenues and increased regulation more challenging. The Group’s brands are well-positioned to take advantage of these opportunities which may arise through the acquisition of portfolios of tenanted managed properties, and the reduction in competitors.
Overall, despite the challenges ahead, the Group’s strong balance sheet and well-balanced exposure to certain opportunities which exist in a changing property marketplace gives the Board confidence for the year ahead.
Chief Executive Ian Wilson commented,
“The resilience of our franchise network model has proved itself time and time again over the last five years. When you couple that with a strong underlying revenue stream from managing let properties, the benefits in an underperforming property market have been all too clear to see.
“In a year when the “online/hybrid” property sector failed to make any inroads into the market share of traditional high street agency and a number of the sector’s players struggled financially or failed, we continued to make good progress with EweMove, and increased its profitability. The secret of our success is the offer, “no sale, no fee”, harnessed to the entrepreneurial drive of a local owner.
“Against a backdrop of uncertain political and macro-economic conditions in 2019, we are confident that our assisted acquisitions programme, the “thinning out” of independent agents, our drive into digital marketing and our strong balance sheet will allow us to continue outperforming the market.”