TIDMHUNT
RNS Number : 8099N
Hunters Property PLC
26 May 2020
RNS to be Embargoed until 07:00am Tuesday 26 May 2020
The information communicated in this announcement contains
inside information for
the purposes of Article 7 of EU Regulation 596/2014.
Hunters Property PLC
("Hunters" or "the Group")
Final Results 2019
Hunters Property Plc ("Hunters" or the "Company" or the "Group"
(AIM: HUNT)), the UK's largest franchised sales and lettings agency
brand, is pleased to provide its final results for the year ended
31 December 2019.
Operational Headlines:
- A strong finish to 2019, with Network Income(1) for the year up 7%
- Opened 20 new branches which had an average Network Income
GBP278,000 per branch (2018: GBP186,000)
- Branches that have been with us for four years to Dec-19 have
increased their income by 25%
- Subsequent to the year-end , Covid-19 has disrupted the
market. To address this risk , we have taken timely and significant
steps to reduce operating costs whilst retaining flexible working
arrangements to maintain core services
- Latest indications are that the housing market is showing
early signs of activity despite the disruption caused
Financial Headlines:
- Network Income GBP42.3m (2018: GBP39.4m) +7%
- EBITDA GBP2.76m* (2018: GBP2.28m) +21%
- aPBT GBP2.06m (2018: GBP2.02m)
- aEPS 5.86p (2018: 5.93p)
- In the five years since flotation aEPS has risen to 5.86p (2014: 3.63p)
- We have secured a further GBP3.5m facility
- Customer satisfaction 96% (2018: 96 %)
- Since the year end extended banking facilities. As at 30 April
retained cash of GBP1.6m. Banking facilities of GBP9.2m, of which
GBP4.6m remain undrawn.
* aEBITDA excluding the impact of IFRS16 for 2019 was
GBP2.24m
Kevin Hollinrake, Chairman, said:
"For a company that has increased aEPS over its five years since
float to 5.86p (2014: 3.63p), at first glance 2019 was a
disappointing year with EBITDA, excluding adjustments for IFRS16,
falling back from GBP2.28m to GBP2.24m. However, this must be seen
in the context of the ban on tenant fees (which generated income of
GBP0.43m in the equivalent period in 2018, a further 3.4%(2)
reduction in sales transactions across the UK market and the
underperformance in our ten group-owned sales offices - income here
having dropped by GBP1.6m since 2016. It is particularly pleasing
however to report overall across the network that Network Income
increased by 7% to GBP42.3m (2018: GBP39.4m) and our mitigation
against the tenant fee ban having been a success. In Franchising
further our adding of 20 new branches, as well as in February 2020
the franchising off of the first of our group branches to limit our
dependency and management focus on the group sales market.
Our future is in providing technology and support services to
our franchise network, which continues to grow and excel. In terms
of 2019, we are pleased to be able to report a strong finish to the
year across the network with Lettings rising by 12% and Sales
rising by 5%. The new branches we recruited averaged before joining
us GBP278,000 in Network Income (2018: 186,000) and the average
Network Income per branch across the whole network for the year
rose 3% to GBP205,000 (2018: 200,000). Branches that converted to
Hunters and have been with us for the four years to December 2019
have seen an average increase in their income of 25%. New
franchisees generally join us due to the significant portal
discounts we are able to pass on, strong national brand and
inclusive marketing, support and training functions. We believe
that the Government's proposed regulation and licensing of agents
will mean that more independent agents seek the benefits of these
services.
Adjusted profit before tax was GBP2.06m (2018: GBP2.02m). In the
five years since flotation, Network Income has doubled, branch
numbers have increased 63% and aEPS has risen to 5.86p (2014:
3.63p). We have over this period increased average Network Income
per Branch by 12% each year over and above the reported market
activity. The Group's continued expansion resulted in further
progress towards our ambition to become the nation's favourite
estate agency brand and we are now the third largest brand in the
UK for homes sold (subject to contract). Our Customer Satisfaction
rating is 96% (2018: 96%) exceeding 90% for our eighth successive
year. Our biggest strength, without doubt, is our executive team
led by CEO, Glynis Frew and I would like to thank them for their
passion, expertise and professionalism.
2020 had started very positively with sales valuations up 17% in
the two months to February compared to the same period last year.
Of course, the effects of Covid-19 are hard to predict but will
certainly significantly impact on results. We took a timely
decision to implement a range of cost savings , such as significant
utilisation of Government support such as the Job Retention Scheme
and securing an additional GBP3.5 million facility , whilst
continuing our core operations. The short, medium and long-term
effects of Covid-19 are impossible to predict accurately, however,
we are confident that our mitigation measures will put us in a
strong position to take advantage of the economic recovery.
We have developed a practical, best - in - class social
distancing strategy to reflect our assessment of the fallout from
Covid-19 whilst at the same time safeguarding the well-being and
safety of staff and customers.
Our significant investment in our new bespoke software as a
service technology, SKIPA, is proving timely. SKIPA will ensure
that our customers and agents benefit from the latest technological
experiences and capabilities and enhance productivity and
efficiencies across our network. It will also facilitate a more
flexible way of working and automate many normally labour-intensive
processes, leaving our agents free to list, sell and let more
homes. This is being led by our experienced Chief Operating
Officer, Dan Rafferty, having previously built similar
best-in-class systems for one of the UK's leading estate agency
brands. The roll out of SKIPA to our network is scheduled to
commence towards the end of this year.
We are pleased, as we expected, that our sector has been
included in the first tranche of business types allowed back to
work and to have recommenced viewings, valuations, lettings and
sales. We are already seeing some positive early indications that
the initial releases from national lockdown are releasing pent up
property demand.
I look forward to updating you further in due course."
For further information please contact:
Hunters Property PLC Tel: 01904 756 197
Glynis Frew, Chief Executive
Ed Jones, Chief Financial Officer
SPARK Advisory Partners Limited Tel: 0113 370 8975
Mark Brady and Andrew Emmott
(Nominated Adviser)
Dowgate Capital Limited Tel: 020 3903 7715
James Serjeant (Corporate Broking)
Notes:
(1) Network Income is the gross sales and lettings revenue of
the Franchisee and Owned branch network.
(2) Source: TwentCI, 14 January 2020
Chairman's statement
As we report on our strong performance for 2019 and the
beginning of 2020 Covid-19 has disrupted the market. To address
this risk, we have taken timely and significant steps to reduce
operating costs whilst retaining flexible working arrangements to
maintain core services. We are pleased to have noted the initial
lifting of the national lockdown as regards Covid-19 and to report
that we have seen activity lift already.
We have we believe a best in class social distancing strategy to
keep our staff and customers safe. We hope and expect that our
sector will be included in the first tranche of business types
allowed to recommence views, valuations, lets and sales. We
continue to invest in new technologies that will enable our
customers, franchise partners and those seeking new opportunities
due to the crisis to trade in much more efficient, effective and
productive ways without needing to work from an office.
In relation to our 2019 year, despite the tenant fee ban and a
challenging market we are delighted to report a strong set of
results for the year, outperforming market expectations and with an
increase in average branch performance. The Group continued its
expansion and progress towards becoming the nation's favourite
estate agency brand jumping to third this year for homes sold
(subject to contract). We believe we are the fastest growing listed
business in our sector in terms of organic expansion, which
delivers a much better return on investment compared to growth
through acquisition. Gross revenue for the Group's network
('Network Income') reached GBP42.3m in 2019 (2018: GBP39.4m), a 7%
increase on the previous year. Our total branch network at the year
end numbered 206 branches. We continue to attract good quality
independent businesses who see the benefits of a national brand,
marketing and best-in-class training, business support, purchasing
power, reduced operating costs, our investment in technology and
opportunities to grow their income.
Our assisted acquisition strategy as well as our focus and
systems helped the lettings side of the network grow by 12% last
year. Sales in the network grew by 5%, our 5th year of market
outperformance. Our average branch's Network Income increased 3% to
GBP205,000 (2018: GBP200,000). We are pleased with these
achievements against the background of the tenant fee ban and the
national market for residential sales having reduced by 3.4% for
the year1. Our EBITDA reached GBP2.76m (2018: GBP2.28m) a record
and an increase of 21% on the previous year, adopting this year
IFRS 16. Adjusted EPS is 5.86p (2018: 5.93p).
A strong foundation
Our business model focuses on supporting independent agents and
our success is measured by both the number we retain and the
underlying performance of those branches. We invest a great deal of
time and resource helping to improve each branch's revenue and our
outperformance against the market is testament to this approach.
Our strategy works for the long term, as well as the short-term
gains. Independent agents that converted to the Hunters brand
during 2016, have grown their contribution to Network Income by 10%
for the year to December 2019. Those in the four years to December
2019 have grown their revenue by 25%. This is confirmation of our
ability to improve revenue for our network partners even in
challenging markets. On top of this, our economies of scale and
purchasing power significantly reduce branches' key operating
costs.
On behalf of the Board, I would very much like to thank everyone
in the network who has worked so hard to meet these challenges.
Their enthusiasm and drive were critical in the delivery of these
excellent results in what has unquestionably been a challenging
market. We would like to say thank you too, to our customers. We
are, of course, delighted to secure record numbers of loyal
customers and record customer service ratings from our sellers,
landlords, buyers and renters right across the network. We look
forward to continue being 'here to get them there'.
Covid-19
In accordance with Government guidance we physically closed our
branch network on 24 March but remained open for business through
our capability to work remotely. We have been very pleased with the
level of work we have been able to continue because of the quality
of our network and the investment and quality in our systems and
technology. We firmly believe the future of this business is based
on professional, well served and technology-based solutions.
We have worked closely with our network and where they have
needed additional help, I am pleased to report we have been able to
step in and guide them through the myriad of complications this
unprecedented situation has generated.
Current trading & outlook
The 2020 year and sales activity began ahead of the Board's
expectations and lettings was ahead and remains so against the full
year effect of the tenant fee ban. This reflects well on the
strategies we have adopted. The market will remain challenging
whilst the fallout from Covid-19 unwinds and it is too early to
assess the scale and timing of Covid-19's impact. We are pleased to
announce however the securing of a GBP3.5m Covid-19 facility to
ensure we can continue driving the business through these
unchartered times. We are working with our franchisees to make sure
they, our customers and our respective staff remain safe and
well.
The industry continues to be a focus for a Government drive to a
more stringent regulatory approach including plans to license all
sales and letting agencies. We believe that this should provide us
with a rich vein of opportunities to expand our branch network as
independent agents seek the shelter of a network that can provide a
comprehensive, cost-effective and efficient training function.
Our pipeline of prospects remains healthy and I look forward to
updating you as the year progresses.
Investing in profitable growth
Our main focus this year is in terms of our technology. For 2019
online valuations increased by 20% and traffic from social media
directed to our website increased by over 60%. In 2019 we announced
our intention to develop our new bespoke CRM system. Our investment
is scheduled for completion later this year when we will commence
rollout. We are excited about its potential in terms of this
central service assisting our branches' productivity. Essentially,
it will allow our franchisees to do more business with less cost
and resource. There is no competitor in this marketplace that is
making such a strategic investment for the future. It reaffirms our
commitment to independent businesses that want to excel in their
local markets through their local relationships and expertise
whilst simultaneously taking advantage of central support in
technology and training. Today's marketplace means agents and
agencies need to embrace technology, digital marketing and social
media and we will develop a package that incorporates all that and
allows the local agent to do what they do best; talk to customers.
We are confident that it will deliver an outstanding win-win
solution for our franchise partners and their customers and I look
forward to updating you as we develop.
Dividend
Taking into account the impact already experienced through
Covid-19 and the unknown fallout of on the property market then the
Board has taken the decision not to look to propose a dividend at
this time, despite the strong performance of 2019.
On behalf of the Board
Kevin Hollinrake
Chairman
25 May 2020
1 Source: TwentyCI 14 January 2020.
Chief Executive's statement
Our strong customer focus delivers its rewards with outstanding
Customer Satisfaction results and a growing network of committed
agents.
Customer satisfaction remains our primary focus and I am
delighted to retain this year our 96% customer satisfaction rating
over the entire year (2018: 96%), our eighth year in a row over
90%. We consider this rating underpins our core customer focus and
it is very much our intention to remain significantly higher than
the industry average. Our business and our network partners each
commit to delivering for our customers. This understanding
reinforces our belief that business owners paid on results will
work harder and deliver better results than a network of employees
or self-employed operatives on short-term contracts or those
motivated to only list properties rather than actually selling or
letting a home.
The Group has jumped to third in 2019 with regard to the brand
with the largest number of sold properties, subject to contract,
during the year. Despite market transaction volumes having reduced
by 3.4%1, Network Income, EBITDA adjusted earnings and adjusted EPS
have each increased.
2020 conditions had been widely declared as improving prior to
Covid-19. Our activity reports for the three months to mid-March
are ahead by between 14% and 51% as compared to the same period
last year. We have had experience of what has widely been described
as
a lift in sentiment following the uncertainties of most of last
year with Brexit having moved on and with us being ahead as regards
the full year impact of the tenant fee ban.
Whilst we were encouraged by property market conditions the
situation regarding Covid-19 remains uncertain. We are monitoring
its effect continually mindful that it may create headwinds that
affect the residential property market. As and when the impact on
the Group becomes clearer, we will provide updates as
necessary.
Excluding tenant fees for the first 5 months of both years and
adjusting out the effect of IFRS 16 on 2019, we increased aEBITDA
by 21% to GBP2.24m (2018: GBP1.85m). The Group has grown aEPS at
10% pa since 2014.
Maintenance in the quality of the network remains key to our
success. We started the year with 197 branch locations. A number of
our franchisees have further consolidated branches this year, a
pattern we again expect to continue as franchisees look to gain
efficiencies. We received 166 (2018: 215) enquiries resulting in 20
(2018: 10) new openings under the Hunters brand. These openings
consisted of 19 (2018: 10) conversions of existing independent
estate agency businesses. The number must be taken in context with
both average branch performance and improvement or otherwise
against previous years and as against the market's level of
activities. Against a market down 3% in 2019 (2018: down 7%) I am
delighted to be able to announce that the average revenue per
branch increased by 3% to GBP205,000 (2018: GBP200,000). We were
delighted that we have converted some noticeably stronger
independents this year with the average of their incomes before
conversion across at GBP278,000 (2018: GBP186,000) being a 82%
increase on the GBP153,000 average in 2016, a strong sign of our
increasing strength in attracting and supporting increasingly
stronger businesses.
The Group implements a rigorous franchisee selection process.
Approximately 80% are rejected at an early stage. This ensures, as
far as possible, that new franchisees are committed to the Group's
high standards. For branches that joined in the four years to
December 2019 are up, on average, by 25%. Improvement is not just
short-term, those who have been converted for 8 years are up, on
average, by 91%. All in, the Network Income has increased over the
last ten-year period 2008 to 2019 on average at a Compound
Annualised Growth Rate ('CAGR') of 20%. Against a market that, to
2019 has declined every year since 2014 we are proud of that
achievement.
All business is about people and that is especially true of
ours
It is our investment in our people as well as in our technology
and marketing that delivers this success. We have devoted over
GBP500,000 this year in training and have provided 142 courses,
resulting in 340 people (2018: 261) completing the Hunters National
Qualification, endorsed by Propertymark. We adopted a Branch
Accreditation process only available to branches where every member
of their team in both sales and lettings has already been
accredited. We are delighted that over 100 have qualified
already.
In terms of marketing, 2019 saw us secure the annual National
Award for Marketing in recognition of a varied and successful
programme of activity which included Hunters being showcased in
Channel 4's TV series 'When I Grow Up' which aired in May. Our
digital paid advertising campaign broke previous year's
performances with 3,555 tracked conversions in the form of
valuation bookings and calls and a strong campaign ROI of 293%. We
escalated our activity on social media across our network through
an enhanced delivery of materials, training and support for
branches, resulting in a 60% increase in users to our website from
social media channels. These channels allow us to reach even more
people and campaigns of this type continue in 2020.
Technology: Enhances the customer experience and enables
improvement efficiencies
We will never lose sight of local customer contact and local
expertise so it's important to Hunters that our investment in
technology reflects customer needs and enhances our customers'
experience. We are committed to that approach. 2019 saw a continued
uplift in our development in technology, including the roll out of
the UK's first property valuation tool driven by voice, available
from Amazon Alexa. We also bolstered our technological offering
through adopting a leading lettings software platform. This is a
customer facing platform which enables the management of the
lettings process and subsequent property management, efficiently
and effectively by automating as much of the process as possible.
It also enables landlords, tenants, guarantors and agents to
interact and carry out processes 24/7 in a fully compliant
environment.
However, I also echo the Chairman's view of our positive
investment in technology. The Company announced the appointment of
Dan Rafferty in March 2019 as Chief Operating Officer, who leads
this project. It includes the developments of a new, bespoke CRM
system for the business with a roll out plan in place for
2020-2021. It is designed specifically to strengthen our customer
offering and drive productivity for our branch network. It will
facilitate strategic partnerships and integration with suppliers
and enhance flexible working and therefore will provide a long term
as well as short term advantage versus our competitors.
Looking forward
2020 started well in the two months to the end of February.
Sales valuations were up 17% versus the prior year. Covid-19 has
significantly altered our outlook for 2020 although, having said
that we remain ahead of where we had expected to be in lettings and
in mitigating the effect on tenant fees. Though it is pleasing to
see the lockdown partially lifted it is too early to forecast the
impact on the wider economy. We have however adopted plans to deal
with the situation, taken advantage of a range of Government
introduced schemes and secured a significant finance facility to
allow us to look positively to the future. We continue to speak
with good prospect enquiries and we look forward to welcoming them
to the network in due course.
We have a truly outstanding and experienced team who are
committed to Hunters and our quest to become the Nation's Favourite
Estate Agent. They are industry professionals and our results could
not be achieved without their sterling efforts and we are grateful
to them for their dedication.
Glynis Frew
Chief Executive
1 Source: TwentyCI 14 January 2020.
Financial review
Network income
Network Income is gross sales and lettings revenue of the
franchisee and owned branch network. Network Income for the
financial year ended 31 December 2019 increased by 7% to GBP42.3m
(2018: GBP39.4m). Highlights included the following factors:
-- Full year equivalent of 10 new franchisee branches that joined the Group in 2018;
-- 20 new franchisee branches that joined the Network in 2019;
-- Franchised lettings revenue grew despite the tenant fee ban,
as we introduced lettings to new franchisees and continued to grow
our existing lettings offices. Network Income for Lettings grew 12%
(2018: 13%); and
-- Franchised sales revenue increased this year by 5%.
Average Network Income per branch increased by 3% to GBP205,000
(2016: GBP200,000).
Revenue
Group revenue for the financial year ended 31 December 2019
remained at GBP14.0m (2018: GBP14.0m). This included the following
factors:
-- Franchise revenue increased to GBP5.7m (2018: GBP4.9m) as a
result of Network Income increasing by 7% to GBP42.3m (2018:
GBP39.4m);
-- Lettings revenue increasing to GBP3.5m (2018: GBP3.3m),
despite the impact of the tenant fee ban since 1 June 2019 at
Corporate branches;
-- Residential sales revenue reducing to GBP3.4m (2018: GBP3.9m)
against a backdrop of a sales market that contracted by 3.4% during
the year; and
-- Other income at GBP1.3m (2018: GBP1.9m) having reclassified
GBP499,000 from other to franchising in respect of the
reclassification of this revenue stream.
EBITDA (Operating profit before depreciation, amortisation,
impairments and profit/loss on disposal
of non-current assets, acquisition, restructuring, and
share-based payment expenses)
EBITDA provides a key measure of progress made. EBITDA for the
year to December 2019 was GBP2.76m, an increase of 21% on the same
period last year (2018: GBP2.28m) with the adoption of IFRS 16.
Excluding the impact of IFRS 16, 2019 EBITDA would have been
GBP2.24m.
Administrative expenses decreased by GBP0.5m during the year.
Lower costs in 2019 were predominately due to the adoption of IFRS
16.
Adjusted EBITDA (EBITDA adjusted to exclude the impact of IFRS
16 and removing tenant fees for the same period in both years)
2019 2018
Adjusted EBITDA GBPm GBPm
EBITDA 2.76 2.28
IFRS16 (0.52) -
Tenant fees removed
Jun-Dec - (0.43)
------ ------
Adjusted EBITDA 2.24 1.85
Adjusted Earnings (Profit after tax adjusted to exclude
amortisation and profit/loss on disposal of intangibles, time-value
interest costs (including lease interest under IFRS 16), business
combination acquisition expenses, share-based payments, other gains
and losses and finance income)
Adjusted earnings was GBP1.89m (2018 restated: GBP1.89m).
Amortisation and disposal costs remained similar to last year, as
the Group continued
its growth through the build and improve elements of its
strategy.
2019 2018
Adjusted earnings GBPm GBPm
Profit after tax 0.73 0.84
Time-value interest
costs 0.13 0.01
Amortisation and disposal
of intangibles 0.93 0.95
Business combination
expenses 0.03 0.01
Interest income - (0.01)
Share-based payments 0.08 0.06
Other gains (0.01) 0.02
------ ------
Adjusted earnings 1.89 1.89
Tax 0.17 0.13
------ ------
Adjusted profit before
tax 2.06 2.02
Earnings per share
Basic earnings per share for the year ended 31 December 2019 was
2.27p (2018: 2.65p) based on a weighted average of 32,279,006
shares (2018: 31,822,604) in issue during the year.
Adjusted Earnings per share
Adjusted earnings per share was 5.86p (2018: 5.93p).
2019 2018
Income Summary GBPm GBPm Movement
Network Income 42.3 39.4 +7.4%
Turnover 14.0 14.0 -
EBITDA 2.76 2.28 +21%
aEBITDA 2.24 1.84 +21%
Adjusted profit
before tax 2.06 2.02 +2.0%
Adjusted earnings 1.89 1.89 -
EPS 2.27p 2.65p -14%
Adjusted EPS
(aEPS) 5.86p 5.93p -1.2%
DPS 0.87p 2.40p -64%
Dividend cover
(aEPS/DPS) 6.7x 2.5x
Dividends
The Board are not proposing a final dividend. The Board intends
to retain a cautious approach to future dividends in the current
environment.
2019 2018
Balance Sheet Summary GBPm GBPm
Cash 1.3 1.7
Net Assets 7.6 7.7
Net Debt* 3.2 2.4
Net Debt / EBITDA 1.2x 1.0x
Liquidity
The Group had cash balances of GBP1.3 million at 31 December
2019 (2018: GBP1.7 million). Total bank facilities available to the
Group at 31 December 2019 stood at GBP5.7 million (2018: GBP5.8
million) of which GBP4.6 million (2018: GBP4.1 million) is
drawn.
Subsequent to the year end the Group has extended its borrowing
facilities by GBP3.5 million to support its plans. The Group
retains facilities now of GBP9.2 million including quarterly
repayments of GBP22,500 and from June 2021 annual repayments
scheduled at GBP700,000 per year.
Financial position
The Group has generated cashflow from operations of GBP1.9
million (2018: GBP1.6 million). This bedrock together with our
underlying business, our undrawn facilities and including the
headroom provided by our Coronavirus Business Interruption Loan
underpin the Group's outlook. After consideration of the Group's
detailed forecasts, for further information see the Directors
Report and Note 29 of the Financial Statements, the Board has
concluded that the Group has the resources to continue as a going
concern, meet its financial obligations and operate within its bank
covenants for the foreseeable future.
Ed Jones
Chief Financial Officer
Consolidated statement of comprehensive income
For the year ended 31 December 2019
2019 2018
Notes GBP000s GBP000s
Revenue 3 13,994 13,982
Administrative expenses (11,238) (11,698)
-------- --------
Operating profit before depreciation,
amortisation, impairments and profit/loss
on disposal of non-current assets, acquisition,
restructuring, and share-based payment
expenses 2,756 2,284
Depreciation and profit on disposal 4 (494) (80)
Amortisation, impairments, and loss
on disposal 4 (924) (949)
Business combination and restructuring
expenses (30) (13)
Share-based payment expense 25 (83) (62)
-------- --------
Operating profit 4 1,225 1,180
Finance income 7 1 13
Finance costs 8 (336) (201)
Other gains and losses 10 (23)
-------- --------
Profit before taxation 900 969
Taxation 9 (166) (127)
-------- --------
Profit for the financial year 734 842
-------- --------
Total comprehensive income for the year 734 842
Profit and total comprehensive income
for the financial year attributable
to:
Equity holders of the Parent 734 842
-------- --------
734 842
======== ========
Earnings per share
Basic (pence per share) 11 2.27 2.65
Diluted (pence per share) 11 2.15 2.55
The Group's results are derived entirely from continuing
operations.
Consolidated statement of financial position
As at 31 December 2019
2019 2018
Notes GBP000s GBP000s
Non-current assets
Goodwill 12 4,626 4,626
Other intangible assets 12 7,219 6,588
Property, plant and equipment 13 2,726 282
Investment properties 14 433 -
Investments 15 54 28
Deferred tax assets 23 167 90
-------- --------
15,225 11,614
-------- --------
Current assets
Trade and other receivables 16 1,855 1,608
Cash and cash equivalents 1,308 1,718
-------- --------
3,163 3,326
-------- --------
Total assets 18,388 14,940
======== ========
Current liabilities
Borrowings 17 (81) (80)
Obligations under leases 18 (424) (21)
Current tax liabilities (145) (129)
Trade and other payables 19 (2,155) (2,068)
-------- --------
(2,805) (2,298)
-------- --------
Non-current liabilities
Borrowings 17 (4,451) (4,001)
Obligations under leases 18 (2,843) (42)
Other payables 20 (19) (19)
-------- --------
(7,313) (4,062)
-------- --------
Provisions for liabilities
Provisions 22 (40) (65)
Deferred tax liability 22, 23 (680) (758)
(720) (823)
-------- --------
Net assets 7,550 7,757
======== ========
Equity
Attributable to the owners of the Parent:
Share capital 26 1,311 1,273
Share premium account 27 4,450 4,107
Merger reserve 1.12 899 899
Share option reserve 1.12 170 -
Retained earnings 720 1,478
-------- --------
7,550 7,757
-------- --------
Total equity 7,550 7,757
======== ========
The financial statements were approved by the Board of Directors
and authorised for issue on 25 May 2020 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 2019
2019 2018
Notes GBP000s GBP000s
Non-current assets
Investments 15 4,916 1,251
Current assets
Trade and other receivables 16 2,543 6,010
-------- --------
Total assets 7,459 7,261
======== ========
Current liabilities
Current tax liabilities (5) (34)
Trade and other payables 19 (40) (31)
-------- --------
(45) (65)
-------- --------
Net assets 7,414 7,196
======== ========
Equity
Share capital 26 1,311 1,273
Share premium account 27 4,450 4,107
Share option reserve 1.12 170 379
Retained earnings 1,483 1,437
-------- --------
Total equity 7,414 7,196
======== ========
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 GBP839,000.
The financial statements were approved by the Board of Directors
and authorised for issue on 25 May 2020 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 2019
Total
equity
attributable
Share Share to owners
Share premium option Merger Retained of the
capital account reserve reserve earnings Parent
Notes GBP000s GBP000s GBP000s GBP000s GBP000s GBP000s
Balance at 1 January
2018 1,272 4,105 - 899 1,320 7,596
Year ended 31 December
2018:
Profit and total comprehensive
income
for the year - - - - 842 842
Issue of share capital 26 1 2 - - - 3
Dividends 10 - - - - (732) (732)
Credit to equity for
equity settled share
-- based payments 25 - - - - 62 62
Deferred tax on share-based
payment transactions - - - - (14) (14)
-------- -------- -------- -------- --------- -------------
Balance at 31 December
2018 1,273 4,107 - 899 1,478 7,757
Year ended 31 December
2019:
Effect of IFRS 16 transition 33 - - - - (442) (442)
Deferred tax on IFRS
16 transition 33 75 75
Reclassification to
share option reserve 1.12 - - 379 - (379) -
Profit and total comprehensive
income
for the year - - - - 734 734
Issue of share capital 26 38 51 - - - 89
Dividends 10 - - - - (793) (793)
Credit to equity for
equity settled share
-- based payments 25 - - 83 - - 83
Deferred tax on share-based
payment transactions - - - - 47 47
Exercise of share options - 292 (292) - - -
-------- -------- -------- -------- --------- -------------
Balance at 31 December
2019 1,311 4,450 170 899 720 7,550
======== ======== ======== ======== ========= =============
Company statement of changes in equity
For the year ended 31 December 2019
Share Share
Share premium option Retained
capital account reserve earnings Total
Notes GBP000s GBP000s GBP000s GBP000s GBP000s
Balance at 1 January 2018 1,272 4,105 317 929 6,623
Year ended 31 December 2018:
Profit and total comprehensive
income for the year - - - 1,240 1,240
Issue of share capital 26 1 2 - - 3
Dividends 10 - - - (732) (732)
Share based payment expense
of subsidiary 15 - - 62 - 62
-------- -------- -------- --------- --------
Balance at 31 December 2018 1,273 4,107 379 1,437 7,196
Year ended 31 December 2019:
Profit and total comprehensive
income for the year - - - 839 839
Issue of share capital 26 38 51 - - 89
Dividends 10 - - - (793) (793)
Share based payment expense
of subsidiary 15 - - 83 - 83
Exercise of share options - 292 (292) - -
-------- -------- -------- --------- --------
Balance at 31 December 2019 1,311 4,450 170 1,483 7,414
======== ======== ======== ========= ========
Consolidated statement of cash flows
For the year ended 31 December 2019
2019 2018
Notes GBP000s GBP000s
Cash flows from operating activities
Operating profit 1,226 1,180
Adjustments for:
Share-based payment expense 25 83 62
Depreciation of property, plant and
equipment 13,14 494 107
Gain on disposal of property, plant
and equipment 4 - (27)
Amortisation of intangible assets 12 935 836
Impairment of intangible assets 12 - 42
Loss/(gain) on disposal of intangible
assets 4 (11) 71
Increase/(release) of provisions 22 (31) 10
Costs of acquisition - -
Share exchange transactions 15 - (50)
Changes in working capital:
(Increase)/decrease in trade and other
receivables 16 (368) 37
Increase/(decrease) in trade and other
payables 19 90 (223)
-------- --------
Cash generated from operations 2,418 2,045
Interest paid (301) (173)
Income taxes paid (185) (260)
-------- --------
Net cash inflow from operating activities 1,932 1,612
-------- --------
Investing activities
Purchase of intangible assets 12 (1,616) (850)
Proceeds on disposal of intangibles 61 283
Purchase of property, plant and equipment 13 (61) (46)
Proceeds on disposal of property, plant
and equipment 45 28
Business acquisitions, net of cash acquired - (350)
Purchase of investments (1) -
Interest received 7 1 13
-------- --------
Net cash used in investing activities (1,571) (922)
-------- --------
Financing activities
Proceeds from issue of own shares 89 2
Proceeds of new bank loans 17 516 564
Repayment of bank loans and borrowings 17 (90) (370)
Payment of lease obligations 18 (493) (18)
Dividends paid 10 (793) (732)
-------- --------
Net cash used in financing activities (771) (554)
-------- --------
Net (decrease)/increase in cash and
cash equivalents (410) 136
Cash and cash equivalents at beginning
of year 1,718 1,582
-------- --------
Cash and cash equivalents at end of
year 1,308 1,718
======== ========
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 1 January Financing New Other At 31 December
2019 IFRS 16 adoption cash flows leases changes 2019
GBP000s GBP000s GBP000s GBP000s GBP000s GBP000s
Bank loans 4,081 - 426 - 25 4,532
Lease liabilities 63 2,829 (493) 861 7 3,267
------------ ---------------- ----------- -------- -------- --------------
Total liabilities from financing
activities 4,144 2,829 (67) 861 32 7,799
============ ================ =========== ======== ======== ==============
The other changes in bank loans represent the unwinding of bank
loan establishment fees (refer to note 17).
Company Statement of Cash Flows
The Company has not held any cash and cash-equivalents during
the year or the comparative year. During the year the Company
entered into
a number of equity and Group reconstruction transactions which
were enacted via intercompany accounts. Accordingly, the Directors
have not presented a Company Statement of Cash Flows.
Restricted cash balances
Included within cash and cash equivalents are cash balances
which the Group consider to be restricted due to delegation of
control totalling GBP92,000 (2018: GBP69,000). The balance can be
contractually withheld from the Group for a period of up to 5
years.
Major non-cash transactions
During the year the Group entered into a number of non-cash
transactions as follows:
The Group recognised non-cash additions to its property, plant
and equipment of GBP2,348,369 as a result of the adoption of IFRS
16, and an associated increase in its lease liability of
GBP2,830,264. The Group also entered into new leases with an
inception value of GBP860,670.
The Group undertook a swap of a loan note with value GBP15,000
for listed shares with comparable value.
In the prior year, the Group was issued 30,303 shares in a
listed entity in settlement of a fee raised to a third party
property portal entity whom the Group use as part of their
trading
Notes to the financial statements
For the year ended 31 December 2019
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, 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 2019
or 2018, but is derived from those accounts. Statutory accounts for
2018 have been delivered to the Registrar of Companies and those
for 2019 will be delivered following the Company's Annual General
Meeting. The auditor has reported on those accounts: their report
was 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, modified to include the revaluation of certain
financial instruments at fair value.
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.
Business combinations
The Group applies the acquisition method of accounting for
business combinations enacted after the date of creation of the
Group following incorporation of Hunters Property Plc, as detailed
further in note 1.12. 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.
1.3 Going concern
As at the year-end the Group has net current assets and unused
facilities in its bank financing as disclosed in note 17. The
Directors have considered the ongoing post balance sheet impact of
Covid-19 and its uncertainties and potential impact on trading
activities in the UK, as detailed further in the Strategic Report.
The housing market is expected to be broadly resistant to the worst
financial downturn, whilst operationally the Group can run through
the use of home-working staff and video conferencing. As set out in
note 29, the Group has also secured an additional GBP3.5m Covid-19
funding facility. At a Group level, the Directors have explored a
range of cash-flow forecast scenarios caused by Covid-19, covering
the next 12 months and beyond . The Directors have run a range of
scenarios up to 100% reduction in sales and 80% reduction in
franchising for six months and a 30% reduction in lettings for four
months, each from April 2020 and each then recovering over 12
months. Taking all these factors into account, as at the date of
approving these financial statements, the Board has a reasonable
expectation that the Group has the resources it requires to
continue in operational existence for the foreseeable future.
Accordingly, the financial statements are prepared on a going
concern basis.
1.4 Revenue
Under IFRS 15, the Group applies the 5-step method to identify
contracts with its customers, determine performance obligations
arising under those contracts, set an expected transaction price,
allocate that price to the performance obligations, and then
recognises revenues as and when those obligations are
satisfied.
Revenue from residential, commercial and land sales
This represents revenue from the sale of residential property,
sale of commercial property or the sale of land. The revenue is
recognised at the point the Group has performed its performance
obligation to see the transaction through to the exchange of
contracts between a buyer and a vendor.
Lettings revenue
This represents revenue from commission earned as letting
agents. The Group's performance obligations under these contracts
are to provide services to manage the letting of properties. Where
the performance obligation relates to letting of a property the
revenue is recognised at the point the property has been let. Where
the performance obligation relates to the management of a lettings
property, revenue is recognised over the period the property is
managed.
Franchise revenue
Upfront fees - This represents revenue at the inception of a
Franchisee contract. The Group's performance obligation is to
provide time, knowledge and expertise required to be able to set up
a functioning franchised branch. This involves but is not limited
to; finding and assessing suitable premises, providing support and
training to the new Franchisee prior to launching the new office,
providing branding services and marketing materials.
Management service fees - This represents revenue from
Franchisee management service fees charged for operating a Group's
franchise. Revenue is recognised monthly in arrears, calculated by
reference to the terms of the contract and the value of sales
attributable to each Franchisee.
Central marketing fund - This represents revenue from
Franchisees for providing marketing services. The Group's
performance obligation is to arrange for the provision of services
to promote the Franchisees businesses through national marketing
campaigns. The Group does not control the specified service
provided to the Franchisees so is considered an agent under IFRS
15. As such the balance is recognised net of the cost of the
services provided.
Software sales - This represents revenue from the provision of
estate agency software. The Group's obligation is to provide the
Franchisees with access to the software throughout the term of the
agreement. Revenue is recognised in the month the service is
provided.
Other
Financial services revenue represents commission receivable from
partner customers from the sale financial products associated with
the sale or let of a property. The Group's performance obligation
under the contract is to provide an introduction of prospective
policyholders to partners. The performance obligation has been
satisfied at the point of successful placement or renewal of a
financial product.
Survey revenue represents fees earned from survey and valuation
work. The Group's obligation is to provide a professional survey or
valuation by
a surveyor. Revenue is recognised when the professional survey
or valuation has been completed.
Rental income represents rent received from short term lease or
licensing arrangements, entered into to make use of vacant office
space. The Group's obligation is to provide office accommodation
throughout the period of the contract. Revenue is recognised over
the period of the lease or licence.
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. After initial
recognition, goodwill is measured at cost less accumulated
impairment losses. See note 1.10 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. 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 Over the life of the franchise contract (typically
grants 10-15 years)
Brands 10 years
Customer lists 5-15 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 25% Reducing balance or 10%-33% straight line
equipment
Motor vehicles 25% Straight line
Right of use assets Over the life of the lease
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 Investment properties
Investment property, which is property held to earn rentals
and/or for capital appreciation, is initially recognised at cost,
which includes the purchase cost and any directly attributable
expenditure. Subsequently it is measured at historical cost less
accumulated depreciation at the reporting end date.
Investment property comprises a property held under a lease
within Hunters Property Group Limited which is subleased to an
independent third party. The investment property is held at
historical cost as permitted by IAS 40, 'Investment Properties' as
an accounting policy choice.
1.9 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.
1.10 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 to the year end date
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.
1.11 Financial instruments
Financial assets
Financial assets are recognised in the statement of financial
position when, and only when, the Group becomes a party to the
contractual provisions of the instrument.
Financial assets are initially recognised at fair value plus
directly attributable transaction costs.
After initial recognition, financial assets are measured at
amortised cost using the effective interest method. Discounting is
omitted where the effect of discounting is immaterial.
Charges to the Income Statement are recognised on trade
receivables where applicable, being measured based on estimated
expected credit losses.
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 IFRS 9. 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.
The Group applies a forward-looking model of IFRS 9 to create an
estimation of the expected credit losses arising in the next year
on its financial assets, using an expectation derived from
historical irrecoverable percentages as adjusted for predicted
credit risk adjustments arising through forecast market
changes.
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.
1.12 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 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 Group. 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.
In the current year the Directors have reclassified to the share
option reserve, as an adjustment to opening reserves, the amounts
held within Group retained profits which represent cumulative
amounts expensed in respect of share-based payments not yet
exercised as equity instruments. The adjustment is to align the
Group accounting policy in respect of this with the policy applied
to the Parent Company's own financial statements.
The Group 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.
1.13 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.
1.14 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 is measured at
present value the unwinding of the discount is recognised as a
finance cost in profit or loss in the period it arises.
1.15 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.
1.16 Retirement benefits
Payments to defined contribution retirement benefit schemes are
charged as an expense as they fall due.
1.17 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, with this
estimation of ultimate vesting being revised each year. Full
disclosure of the calculation models is given in note 25.
1.18 Leases
The Group has initially adopted IFRS 16 Leases from 1 January
2019, replacing the current lease guidance including IAS 17.
Previously all of the Company's leases were accounted for as
operating leases with the relatively minor exception of a few hire
purchase contract arrangements.
Under IFRS 16 leases are accounted for on the right of use
model. The Income Statement presentation and expense recognition
pattern is similar to that required for finance leases by IAS 17
previously adopted by the Group. At inception, the Group assesses
whether a contract contains a lease. This assessment involved the
exercise of judgement about whether the Group obtains substantially
all the economic benefits from the use of that asset, and whether
the Group has the right to direct the use of the asset.
1.19 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's financial statements:
-- Amendments to IFRS 9 'Financial Instruments' for prepayment
features with negative compensation
-- Amendments to IAS 28 'Investments in Associates and Joint
Ventures' for long term interests in associates and joint
ventures
-- Amendments to IAS 19 'Employee benefits' for plan amendments, curtailments and settlements
-- Amendments to IFRS 3 'Business combinations' for previously
held interests in a joint operation
-- Amendments to IFRS 11 'Joint arrangements' for previously
held interests in a joint operation
-- Amendments to IAS 12 'Income taxes' for the income tax
consequences of payments on financial instruments classified as
equity
-- Amendments to IAS 23 'Borrowing costs' around borrowing costs eligible for capitalisation
-- IFRIC 23 'Uncertainty over Income Tax Treatments'
1.20 Standards, amendments and interpretations in issue but not
yet effective
The following mentioned standards, amendments and
interpretations will be adopted in future years:
EU effective
date - period
beginning
on or after
1 January
Amendments to the Conceptual Framework for Financial Reporting 2020
1 January
Definition of 'Material' (amendments to IAS 1 IAS 8) 2020
1 January
Definition of a Business (amendments to IFRS 3) 2020*
Interest rate benchmark reform (amendments to IFRS 9, IAS 1 January
39 and IFRS 7) 2020
1 January
IFRS 17 'Insurance Contracts' 2023*
IAS 1 Presentation of Financial Statements: Classification 1 January
of Liabilities as Current or Non-current 2022*
* These standards, amendments and interpretations have not yet
been endorsed by the EU and the dates shown are the expected
dates.
The Directors have undertaken a project to review the above
standards, amendments and interpretations. The impact of the
amendments
to IFRS 3 are likely to result in a simplified asset that would
apply to future intangible asset acquisitions previously accounted
for as business combinations, however there will be no transitional
impact to the Group's reported results as these would apply before
the date of transition
to the revised standard. Except for this, management do not
expect these standards to materially impact the 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
Franchisee revenue and 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. FDGs are considered to
meet the definition of intangible assets under IAS 38 and are
therefore accounted for under this accounting standard.
At each reporting period end date the Directors assess the
recoverability of the intangible assets on a value in use basis, or
if there are indications of trading risks underlying with the
Franchisee the expected contractually recoverable value of that FDG
as discounted in accordance with the expected credit loss model
that is applied to trade receivables, which is explained in the Key
sources of estimation uncertainty.
Capitalised development costs
In the current year the Group has commenced a new software
development project. As part of this project, management have
assessed whether this meets the criteria for recognition under IAS
38, in particular on the percentage of completion and likely
associated success, and the future benefits which are expected to
flow to the Group. As the project is under development as at the
year end, the asset is classified as under construction and
therefore is not amortised until the project has been substantially
completed and brought into use.
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, either for liabilities or
against receivables, is the best estimate of the consideration
required to settle the present obligation at the reporting date or
the expected credit loss that the Group is projected to incur on
that receivable. Each period the Directors assess the risks and
uncertainties surrounding balances 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 notes 16 and 22.
Goodwill
The Directors test annually for impairment of the Group's
intangible assets and goodwill, details of which are given in note
12.
IFRS 16
As part of the Group's first time adoption of IFRS 16, the
liabilities were measured at the present value of the remaining
lease payments, discounted using the lessee's incremental borrowing
rate as of 1 January 2019. All leases were discounted using an
estimated implicit rate
of 4.50%, with almost all leases by value relating to
properties.
All other estimates and judgements involved in applying IFRS 16
are explained in note 33.
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's principal operating segments are Residential Sales,
Lettings, and Franchising. The Group has a further segment, Other,
containing individual insignificant items. 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
Residential Central
sales Lettings Franchising Other Overheads Group
GBP000s GBP000s GBP000s GBP000s GBP000s GBP000s
2018 Revenue 3,941 3,319 4,871 1,851 13,982
2019 Reconciliation
Revenue 3,490 3,441 5,746 1,317 - 13,994
Costs (1,975) (1,930) (3,676) (972) (2,685) (11,238)
----------- -------- ----------- -------- ---------- --------
EBITDA 1,515 1,511 2,070 345 (2,685) 2,756
----------- -------- ----------- -------- ---------- --------
Margin 43% 44% 36% 26% - 20%
Depreciation and profit on
disposal (478)
Amortisation, impairments,
and loss on disposal (924)
Business combination and restructuring
expenses (30)
Share-based payment expense (83)
Finance income 1
Finance costs (331)
Other gains and losses 10
--------
Profit before taxation 900
========
Revenue analysed by geographical market
2019 2018
GBP000s GBP000s
United Kingdom 13,994 13,982
======== ========
The comparative segmental analysis includes a transfer of
GBP499,000 from 'Other' to 'Franchising' in respect of a revenue
stream that management have reclassified in the current year.
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.
All of the above revenue has arisen from contracts with
customers. The revenue presented above has been disaggregated to
provide revenue amounts for material categories of services
provided by the Group in accordance with the disclosure
requirements of IFRS 15 'Revenue from Contracts with
Customers'.
4 Operating profit
2019 2018
GBP000s GBP000s
Operating profit for the year is stated after charging/(crediting):
Depreciation of owned property, plant and equipment 73 78
Depreciation of property, plant and equipment held under
leases 380 29
Gain on disposal of property, plant and equipment - (27)
Depreciation of investment property 41 -
Amortisation of intangible assets 935 836
Impairment of intangible assets - 42
(Gain)/loss on disposal of intangible assets (11) 71
Share-based payments (note 25) 83 62
Operating lease charges (including property rent) - 708
======== ========
The Group's subsidiary Realcube Limited has undertaken Research
& Development activities on which tax credits were received
totalling GBP24,000 (2018: GBP48,000). Expenses in relation to this
are included within employment costs.
5 Auditor's remuneration
2019 2018
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 22 20
Audit of the Company's subsidiaries 30 26
-------- --------
52 46
======== ========
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
2019 2018 2019 2018
Number Number Number Number
Directors 5 5 5 5
Sales and administration 169 191 - -
------- ------- ------- -------
174 196 5 5
======= ======= ======= =======
Their aggregate remuneration comprised:
Group Company
2019 2018 2019 2018
GBP000s GBP000s GBP000s GBP000s
Wages and salaries 5,285 5,316 - -
Social security costs 507 426 - -
Pension costs 139 111 - -
-------- -------- -------- --------
5,931 5,853 - -
======== ======== ======== ========
Details of Directors' remuneration is provided in note 30.
7 Finance income
2019 2018
GBP000s GBP000s
Interest income
Interest on bank and similar deposits 1 13
-------- --------
Total income 1 13
Interest income includes the following:
Interest on financial assets not measured at fair value
through profit or loss 1 13
======== ========
8 Finance costs
2019 2018
GBP000s GBP000s
Interest on financial liabilities measured at amortised
cost:
Interest on bank overdrafts and loans 203 189
Interest on leases 127 7
-------- --------
330 196
-------- --------
Other finance costs:
Unwinding of discount on provisions 6 5
-------- --------
6 5
-------- --------
Total finance costs 336 201
======== ========
9 Taxation
2019 2018
GBP000s GBP000s
Current tax
UK corporation tax on profits for the current period 225 274
Adjustments in respect of prior periods (24) (48)
-------- --------
Total current tax 201 226
-------- --------
Deferred tax
Origination and reversal of temporary differences (63) (86)
Changes in tax rates 2 -
Deferred tax on share-based payments charge 26 (13)
-------- --------
Total deferred tax (35) (99)
-------- --------
Total tax charge 166 127
======== ========
The charge for the year can be reconciled to the profit per the
Consolidated Statement of Comprehensive Income as follows:
2019 2018
GBP000s GBP000s
Profit before taxation 900 969
======== ========
Expected tax charge based on a corporation tax rate of
19% (2018: 19.25%) 171 184
Tax effect of expenses that are not deductible in determining
taxable profit 2 18
Gains not taxable (2) -
Tax effect of utilisation of tax losses not previously
recognised - (17)
Effect of change in corporation tax rate 7 -
Depreciation on assets not qualifying for tax allowances 30 3
Amortisation on assets not qualifying for tax allowances 14 14
Research and development tax credit (51) (48)
Share based payment charge (7) (14)
Other adjustments 2 (13)
-------- --------
Total tax charge 166 127
======== ========
In addition to the amount charged to the Consolidated Statement
of Comprehensive Income, the following amounts relating to tax have
been recognised directly in equity:
2019 2018
GBP000s GBP000s
Deferred tax:
Change in estimated excess tax deductions related to share
based payments (47) 14
-------- --------
The UK corporation tax rate was 19% throughout the year.
A reduction in the UK corporation tax rate from 19% to 17%
(effective from 1 April 2020) was enacted in March 2017. Deferred
tax balances at the reporting date are measured at 17% (2018:
17%).
10 Dividends
2019 2018 2019 2018
per share per share GBP000s GBP000s
Amounts recognised as distributions to equity
holders:
Final paid (pence per share) 1.60 1.50 508 477
Interim paid (pence per share) 0.87 0.80 285 255
---------- ---------- -------- --------
2.47 2.30 793 732
---------- ---------- -------- --------
The proposed final dividend for the year ended 31 December 2019
is:
2019 2018
Total Per share
Per share GBP000s GBP000s Total
Ordinary shares (pence per share) - - 1.60 509
========= ======== ========= =====
11 Earnings per share
The calculation of the basic and diluted earnings per share is
based on the following data:
2019 2018
GBP000s GBP000s
Earnings
Earnings for the purpose of basic earnings per share being
net profit attributable to owners of the Parent 734 842
Effects of dilutive potential ordinary shares - -
-------- --------
Earnings for the purposes of diluted earnings per share 734 842
======== ========
2019 2018
No. No.
Number of shares
Weighted average number of ordinary shares for the purposes
of basic earnings per share 32,279,006 31,822,604
Net weighted average number of dilutive potential ordinary
shares for the purposes of dilutive earnings per share 1,825,758 1,175,658
---------- ----------
Weighted average number of ordinary shares for the purposes
of diluted earnings per share 34,104,764 32,998,262
========== ==========
Basic earnings per share (pence per share) 2.27 2.65
========== ==========
Diluted earnings per share (pence per share) 2.15 2.55
========== ==========
In each period there were share options outstanding. As at 31
December 2019, 95% of these options were in the money, and are due
to expire at various stages over the next 9 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 calculation of these Adjusted Earnings now takes into
account the impact of all lease interest with the comparative lease
interest of GBP7,000 restated to reflect this. The previously
reported Adjusted Earnings for the year ended 31 December 2018 were
GBP1.881m and reported Basic Adjusted Earnings per Share was
5.91p.
The calculated Adjusted Earnings for the current period is as
follows:
2018
2019 Restated
GBP000s GBP000s
Profit after taxation attributable to equity owners of
the Parent 734 842
Adjusted for:
Time-value interest costs (including lease interest under
IFRS 16) 133 13
Interest income (1) (13)
Amortisation, impairments, and adjustments on disposal
of intangible assets 924 949
Costs of business combinations and restructuring 30 13
Share-based payment expense 83 62
Other gains and losses (10) 23
-------- ---------
Adjusted Earnings 1,893 1,889
======== =========
Basic Adjusted Earnings per share (pence per share) 5.86 5.93
======== =========
During the year, the Group adopted IFRS 16 and applied the
standard prospectively from 1 January 2019. If IFRS 16 had not been
adopted in the current year, then the comparable adjusted earnings
per share would be 5.36p.
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 2018 4,661 758 2,563 637 4,487 13,106
Additions - separately acquired - 74 768 - 8 850
Additions - business combinations - - - - 422 422
Disposals - (5) (454) - - (459)
-------- -------- ----------- -------- -------- --------
At 31 December 2018 4,661 827 2,877 637 4,917 13,919
Additions - 198 1,410 - 8 1,616
Disposals - - (77) - - (77)
-------- -------- ----------- -------- -------- --------
At 31 December 2019 4,661 1,025 4,210 637 4,925 15,458
-------- -------- ----------- -------- -------- --------
Amortisation and impairment
At 1 January 2018 35 215 446 206 1,030 1,932
Amortisation charged for the
year - 136 210 65 425 836
Impairment losses - - 42 - - 42
Disposals - (6) (99) - - (105)
-------- -------- ----------- -------- -------- --------
At 31 December 2018 35 345 599 271 1,455 2,705
Amortisation charged for the
year - 160 278 64 433 935
Disposals - - (27) - - (27)
-------- -------- ----------- -------- -------- --------
At 31 December 2019 35 505 850 335 1,888 3,613
Carrying amount
At 31 December 2019 4,626 520 3,360 302 3,037 11,845
======== ======== =========== ======== ======== ========
At 31 December 2018 4,626 482 2,278 366 3,462 11,214
======== ======== =========== ======== ======== ========
The Company had no intangible assets as at 31 December 2019 or
31 December 2018.
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 recognises an impairment as provision against
impairment losses arising from early terminations of franchise
agreements, where at the year end there exists financial or
non-financial indicators that franchisees are reasonably certain to
terminate within the near future and the Group expects to recover
less than the net book amount of the relevant FDG.
Software additions of GBP118,718 have not been amortised during
the year as they had not been put into use by the Group.
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 2024, 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 11% 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.
The Group carries exposure to two significant uncertainties,
being political uncertainties around the ultimate outcome of Brexit
after 31 December 2020, and the ongoing market and operational
risks arising from the Covid-19 outbreak, neither of which are
unique to
the Group. In light of these the Group has applied further
sensitivities in assessing the value in use in the short to medium
term. A 5% reduction
against Brexit sensitivities compared to the base case revenues
over each year of the 5 year forecast horizon period have no impact
on the assessment of impairment. Whilst undertaking these
sensitivities for risk assessment purposes, Covid-19 is considered
a non-adjusting
subsequent event as set out in Note 29.
The carrying amounts of goodwill have been assigned to the
following cash-generating units:
Group
2019 2018
GBP000s GBP000s
Residential sales 1,330 1,330
Lettings 561 561
Franchising 2,735 2,701
Other - 34
-------- --------
4,626 4,626
======== ========
13 Property, plant and equipment
Leasehold Fixtures, Right
land and Plant fittings Motor of use
buildings and machinery and equipment vehicles assets Total
Group GBP000s GBP000s GBP000s GBP000s GBP000s GBP000s
Cost
At 1 January 2018 16 548 212 40 - 816
Additions - 42 4 - - 46
Disposals - (95) (7) (31) - (133)
---------- -------------- -------------- --------- -------- --------
At 31 December 2018 16 495 209 9 - 729
Impact of IFRS 16 transition - - (115) - 4,679 4,564
---------- -------------- -------------- --------- -------- --------
Revised brought forward 16 495 94 9 4,679 5,293
Additions - 42 19 - 860 921
Disposals - (7) (2) - (763) (772)
---------- -------------- -------------- --------- -------- --------
At 31 December 2019 16 530 111 9 4,776 5,442
---------- -------------- -------------- --------- -------- --------
Depreciation and impairment
At 1 January 2018 12 354 75 31 - 472
Depreciation charged in the
year 1 60 41 5 - 107
Eliminated in respect of disposals - (95) (6) (31) - (132)
---------- -------------- -------------- --------- -------- --------
At 31 December 2018 13 319 110 5 - 447
Impact of IFRS 16 transition - - (62) - 2,606 2,544
---------- -------------- -------------- --------- -------- --------
Revised brought forward 13 319 48 5 2,606 2,991
Depreciation charged in the
year 1 58 12 1 381 453
Eliminated in respect of disposals - (7) (3) - (718) (728)
---------- -------------- -------------- --------- -------- --------
At 31 December 2019 14 370 57 6 2,269 2,716
---------- -------------- -------------- --------- -------- --------
Carrying amount
At 31 December 2019 2 160 54 3 2,507 2,726
========== ============== ============== ========= ======== ========
At 31 December 2018 3 176 99 4 - 282
========== ============== ============== ========= ======== ========
The Company had no property, plant and equipment assets at 31
December 2019 or 31 December 2018.
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 Investment property
Group Company
2019 2019
GBP000s GBP000s
Cost
At 1 January 2019 - -
Impact of IFRS 16 transition 619 -
-------- --------
Revised brought forward 619 -
-------- --------
At 31 December 2019 619 -
-------- --------
Accumulated depreciation
At 1 January 2019 - -
Impact of IFRS 16 transition 145 -
-------- --------
Revised brought forward 145 -
Charge for the year 41 -
-------- --------
At 31 December 2019 186 -
-------- --------
Carrying value
At 31 December 2019 433 -
======== ========
At 31 December 2018 - -
======== ========
Investment property comprises a property held under operating
lease within Hunters Property Group Limited which is subleased
under an arrangement of less than 5 years to an independent third
party. The investment property is held at historical cost less
accumulated depreciation.
The fair value of the investment property is estimated to be
GBP800,000 based on a rental yield of 8%.
15 Investments
Group Company
2019 2018 2019 2018
Notes GBP000s GBP000s GBP000s GBP000s
Investments in subsidiaries 32 - - 4,449 867
Other investments in subsidiaries 32 - - 467 384
Listed investments 52 27 - -
Unlisted investments 2 1 - -
-------- -------- -------- --------
54 28 4,916 1,251
======== ======== ======== ========
Movements in non-current investments
Shares
Group GBP000s
Cost or valuation
At 1 January 2018 1
Additions 50
Unwinding of discount (23)
--------
At 31 December 2018 28
Additions 34
Movement in fair value (8)
--------
At 31 December 2019 54
--------
Carrying amount
At 31 December 2019 54
========
At 31 December 2018 28
========
Movements in non-current investments
Equity Other
investments investments
in subsidiaries in subsidiaries Total
Company GBP000s GBP000s GBP000s
Cost
At 1 January 2018 867 322 1,189
Additions through share based payment expense - 62 62
---------------- ---------------- --------
At 31 December 2018 867 384 1,251
Additions through share based payment expense - 83 83
Additions from Group companies 3,582 - 3,582
---------------- ---------------- --------
At 31 December 2019 4,449 467 4,916
Impairment
At 1 January 2019 - - -
---------------- ---------------- --------
At 31 December 2019 - - -
Carrying amount
At 31 December 2019 4,449 467 4,916
================ ================ ========
At 31 December 2018 867 384 1,251
================ ================ ========
16 Trade and other receivables
Group Company
2019 2018 2019 2018
GBP000s GBP000s GBP000s GBP000s
Amounts falling due within one year:
Trade receivables 1,021 1,034 - -
Amounts due from subsidiary undertakings - - 2,493 5,989
Other receivables 108 156 50 21
Prepayments and accrued income 726 418 - -
-------- -------- -------- --------
1,855 1,608 2,543 6,010
======== ======== ======== ========
Trade receivables at the reporting date are shown above net of
provisions. Expected lifetime credit losses have been estimated in
accordance with IFRS 9 across the entire population of trade
receivables, all of which have been recognised as a result of
contracts with customers as defined in IFRS 15, with no material
financing element embedded within these contracts.
Trade receivables are stated net of impairment for estimated
irrecoverable amounts of GBP153,681 (2018: GBP143,805). To measure
the expected credit losses that comprise the irrecoverable amounts,
trade receivables have been grouped based on shared credit risk
characteristics, typically limited to the number of days past
due.
The expected loss rates are then applied to this ageing profile
using the simplified approach to expected credit losses as
prescribed by IFRS 9, which permits the Group to use a provision
matrix to measure the lifetime expected losses. These losses are
based on historical loss rates for similar aged debts, assuming
that these are representative of the days past due. These
historical rates are adjusted, where appropriate, to reflect the
current and forward-looking information affecting the ability of
the customers to settle the receivables, unless a receivable is
already provided for in full as a specific credit loss. The rates
used in this provision matrix are shown in the table below.
Included within prepayments and accrued income is an amount of
GBP33,122 (2018: GBP35,904) relating to accrued revenues,
calculated in accordance with IFRS 15. Also included in prepayments
and accrued income are staged payments of GBP321,000 for R&D
qualifying expenditure in relation to the construction of a
software intangible asset.
Movement on the allowance for irrecoverable amounts on trade
receivables are as follows:
2019 2018
GBP000s GBP000s
Beginning of the year 144 76
Specific impairment charge 28 77
Additional expected credit loss provision 18 -
Released during the year (36) (9)
-------- --------
End of the year 154 144
======== ========
An analysis of the trade receivables:
2019 2018
GBP000s GBP000s
Less than 60 days 686 885
60 to 120 days 189 89
More than 120 days 300 204
Less provision (154) (144)
-------- --------
Total trade receivables 1,021 1,034
======== ========
The Directors consider the credit quality of trade and other
receivables that are neither past due nor impaired to be good.
The ageing analysis of the trade receivables and related
specific provisions for impairment as at 31 March 2019 were as
follows:
Age of receivable - days overdue
31-60 61-90 Over 91
Current 0-30 days days days days Total
Gross receivable 639 70 106 96 264 1,175
Expected credit loss provision (14) (4) (6) (22) (108) (154)
------- --------- ----- ----- ------- -----
Trade receivables value 625 66 100 74 156 1,021
======= ========= ===== ===== ======= =====
As % of total 61% 6% 10% 7% 15% 100%
Provision % of gross receivable 2% 6% 6% 23% 41% 13%
17 Borrowings
Group
2019 2018
GBP000s GBP000s
Bank loans 4,532 4,081
-------- --------
4,532 4,081
======== ========
Payable within one year 81 80
Payable after one year 4,451 4,001
-------- --------
4,532 4,081
======== ========
The Group holds two flexible loan facilities.
The first loan has a maximum facility amounting to GBP5,550,000,
at the year end GBP4,383,517 had been drawn down. The loan has
flexible repayment terms and bears interest at 2.80% above
Libor.
The second loan had an amount of GBP149,487 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 GBP37,776
(2018: GBP61,575) which are netted off the total liability
presented. The fees are expensed to the Statement of Comprehensive
Income 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, excluding
ROU assets.
All of the Group's borrowings are due for repayment within five
years.
18 Obligations under leases
Future minimum lease payments due under leases:
Group
2019 2018
GBP000s GBP000s
Within one year 562 26
In one to five years 1,871 46
In over five years 1,487 -
-------- --------
3,920 72
Less: future finance charges (653) (9)
-------- --------
3,267 63
======== ========
The above is disclosed in the Statement of Financial Position
net of future finance charges as follows:
Payable within one year 424 21
Payable after one year 2,843 42
-------- --------
3,267 63
======== ========
The above includes leases relating to office equipment included
within non-current assets. There are no lease incentives or
contingent elements attaching to the leases.
In addition, the 2019 year includes leases for office rentals
and office equipment previously recognised as operating leases
under IAS 17. The Group has transitioned to IFRS 16 in the current
year and has taken the transitional exemptions which permit it to
not recognise the adjustment to the comparative year. These assets
are represented by right of use assets which are disclosed in note
13, whilst the overall impact of the transition to IFRS 16 is shown
in note 33.
19 Current trade and other payables
Group Company
2019 2018 2019 2018
GBP000s GBP000s GBP000s GBP000s
Other taxation and social security 526 564 - -
Trade payables 650 569 - -
Other payables 104 208 - -
Accruals and deferred income 875 727 40 31
-------- -------- -------- --------
2,155 2,068 40 31
======== ======== ======== ========
Included within accruals and deferred income is an amount of
GBP62,755 (2018: GBP73,255) relating to deferred revenues,
calculated in accordance with IFRS 15. The amount of deferred
income relating to the prior year has been fully released in the
current financial year.
20 Non-current trade and other payables
Group Company
2019 2018 2019 2018
GBP000s GBP000s GBP000s GBP000s
Other payable 19 19 - -
======== ======== ======== ========
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 GBP4.571m
(2018: GBP4.172m), excluding loan arrangement fees which are netted
off against the carrying value in these financial statements. 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 GBP118,000 (2018: GBP108,000).
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 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
2019 2018 2019 2018
GBP000s GBP000s GBP000s GBP000s
Carrying amount of financial assets
Debt instruments measured at amortised cost 2,366 2,908 2,543 6,010
Equity instruments measured at cost less
impairment 2 1 4,916 1,250
Equity instruments held at fair value through
profit or loss 52 27 - -
-------- -------- -------- --------
2,420 2,936 7,459 7,260
======== ======== ======== ========
Carrying amount of financial liabilities
Measured at amortised cost 7,925 4,714 40 31
======== ======== ======== ========
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
and less From 3 From 12
than 3 to 12 months From 2
Financial assets months months to 2 years to 5 years Total
Trade and other receivables 1,190 - - - 1,190
Cash and cash equivalents 1,718 - - - 1,718
--------- ------- ----------- ----------- -----
As at 31 December 2018 2,908 - - - 2,908
========= ======= =========== =========== =====
Trade and other receivables 1,268 - - - 1,268
Cash and cash equivalents 1,308 - - - 1,308
--------- ------- ----------- ----------- -----
As at 31 December 2019 2,576 - - - 2,576
========= ======= =========== =========== =====
Demand
and less From 3 From 12
than 3 to 12 months From 2
Financial liabilities months months to 2 years to 5 years Total
Trade and other payables 777 - - - 777
Bank loans and overdrafts 66 68 90 3,948 4,172
Other loans - 19 - - 19
Leases 6 19 26 21 72
--------- ------- ----------- ----------- -----
As at 31 December 2018 849 106 116 3,969 5,040
========= ======= =========== =========== =====
Trade and other payables 754 - - - 754
Bank loans and overdrafts 38 68 90 4,375 4,571
Other loans - 19 - - 19
Leases 130 353 519 2,075 3,077
--------- ------- ----------- ----------- -----
As at 31 December 2019 922 440 609 6,450 8,421
========= ======= =========== =========== =====
22 Provisions for liabilities
Group
2019 2018
Notes GBP000s GBP000s
Office dilapidations provision 40 65
-------- --------
40 65
Deferred tax liabilities 23 680 758
-------- --------
720 823
======== ========
Movements on provisions apart from deferred tax liabilities:
Office
dilapidations
provision
Group GBP000s
At 1 January 2018 55
Additional provisions in the year 5
Unwinding of discount 5
--------------
At 31 December 2018 65
Additional provisions in the year 4
Release of provision (35)
Unwinding of discount 6
--------------
At 31 December 2019 40
==============
22 Provisions for liabilities continued
The office dilapidations provision has been created in respect
of restoration costs anticipated for an office leased by the Group.
The provision was anticipated to result in an ultimate cash outflow
of GBP75,000 by the end of 2019, however following a re-estimation
in light of the current status of the office the Directors now
consider this cash outflow to be GBP40,000, and have released the
provision in light of this.
23 Deferred taxation
The following is the analysis of the deferred tax balances for
financial reporting purposes:
Liabilities Assets
2019 2018 2019 2018
Group GBP000s GBP000s GBP000s GBP000s
Accelerated capital allowances 54 52 - -
Fair value adjustments to intangible assets 597 692 - -
Share based payments - - 85 67
Dilapidations provision - - 7 12
Financial instrument spreading 12 14 - -
Other provisions and accruals - - 11 11
Spreading of IFRS 16 transitional tax impacts - - 64 -
R&D capitalisation difference 17 - - -
-------- -------- -------- --------
680 758 167 90
======== ======== ======== ========
The Company did not have any deferred tax balances as at 31
December 2019 or 31 December 2018.
Group
2019 2018
Movements in the year: GBP000s GBP000s
Net liability at 1 January 2019 668 681
Impact of IFRS 16 transition (75) -
Revised brought forward 593 681
Credit to profit and loss (35) (99)
Charge to equity (47) 14
Effect of change in tax rate - income statement 2 -
Acquired on business combinations - 72
-------- --------
Net liability at 31 December 2019 513 668
======== ========
Movements by category of deferred tax are as follows:
Liability/(Asset) Effect Acquired Liability/(Asset)
at Credit/(charge) of change on business at
1 January to profit in tax combinations 31 December
2019 and loss rate & other 2019
GBP000s GBP000s GBP000s GBP000s GBP000s
Accelerated capital allowances 51 3 - - 54
Fair value adjustments to intangible
assets 693 (96) - - 597
Dilapidations provision (12) 5 - - (7)
Share based payments (67) 27 2 (47) (85)
Financial instrument spreading 14 (2) - - 12
Other provisions and accruals (11) - - - (11)
Spreading of IFRS 16 transitional
tax impacts - 11 - (75) (64)
R&D capitalisation differences - 17 - - 17
----------------- --------------- ---------- ------------- -----------------
Net deferred tax movement 668 (35) 2 (122) 513
================= =============== ========== ============= =================
Liability/(asset) Effect Acquired Liability/(asset)
at Credit/(charge) of change on business at
1 January to profit in tax combinations 31 December
2018 and loss rate & other 2018
GBP000s GBP000s GBP000s GBP000s GBP000s
Accelerated capital allowances 36 15 - - 51
Fair value adjustments to intangible
assets on business combinations 716 (95) - 72 693
Dilapidations provision (10) (2) - - (12)
Share based payments (68) (13) - 14 (67)
Financial instrument spreading 16 (2) - - 14
Other provisions and accruals (9) (2) - - (11)
----------------- --------------- ---------- ------------- -----------------
Net deferred tax movement 681 (99) - 86 668
================= =============== ========== ============= =================
Within RealCube Limited there exists tax losses totalling
GBP449,657 (2018: GBP359,076) 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
2019 2018
GBP000s GBP000s
Defined contribution schemes
Charge to profit and loss in respect of defined contribution
schemes 139 111
======== ========
A defined contribution pension scheme is operated for all
qualifying employees. The assets of the scheme are held separately
from those of the Group and are independently administered.
At the year end, an amount of GBP17,560 (2018: GBP15,748) was
held in other creditors, in respect of accrued unpaid pension
contributions.
25 Share-based payment transactions
Number of share Weighted average
options exercise price
2019 2018 2019 2018
Group Number Number GBP GBP
Outstanding at 1 January 2019 1,870,000 1,983,000 0.23 0.22
Granted 1,500,000 - 0.04 -
Exercised (950,000) (12,500) 0.09 0.16
Expired (269,500) (100,500) 0.53 0.48
--------- --------- -------- --------
Outstanding at 31 December 2019 2,150,500 1,870,000 0.09 0.23
========= ========= ======== ========
Exercisable at 31 December 2019 650,500 1,545,000 0.30 0.28
========= ========= ======== ========
The options exercised during the year had a weighted average
exercise price on the date of exercise of GBP0.09.
The options outstanding at 31 December 2019 had an exercise
price ranging from GBP0.04 to GBP0.73, and a remaining contractual
life ranging between January 2020 and January 2029.
The options exist at 31 December 2019 across the following share
option schemes:
Exercise
price
Number per share Fair value Vesting
Option name & date of issue of shares (GBP) of scheme period
Employee share options 325,000 0.16 - 3 years
Options issued January 2015 75,000 0.40 4,727 3 years
Options issued December 2015 100,500 0.73 460 3 years
Options issued January 2016 - 4 150,000 0.04 81,681 3.25 years
Senior options July 2019 - 1 500,000 0.04 99,135 1.5 years
Senior options July 2019 - 2 500,000 0.04 122,582 2.5 years
Senior options July 2019 - 3 500,000 0.04 123,199 3.5 years
---------- ----------
2,150,500 431,784
========== ==========
The fair value of the schemes are being expensed over the
vesting period. All share options expire 10 years after the date of
issue.
Fair value of options granted
The weighted average fair value of options granted during the
year was GBP0.23 per share. Fair value was measured using the
Black-Scholes model.
Inputs were as follows:
Senior Senior Senior
options options options
- 1 - 2 - 3
GBP GBP GBP
Weighted average share price 0.37 0.37 0.37
Weighted average exercise price 0.04 0.04 0.04
Expected volatility 42.00% 36.47% 32.30%
Risk free rate 0.38% 0.51% 0.52%
Expected dividends yields 6.50% 6.50% 6.50%
The estimated fair value for all 1,500,000 Ordinary share
options as at the date of grant was GBP413,317. This fair value has
been adjusted through expectation of the number of options which
are expected to vest to GBP344,916, with this charge being spread
between the grant date and assumed vesting date; these dates are
spread over a period of 1.5 - 3.5 years from grant of the options.
Accordingly, a share-based payments charge of GBP72,072 has been
recognised in the Statement of Comprehensive Income in the year
ended 31 December 2019 in respect of these options.
At the end of each reporting period the Group revises its
estimates of the number of options that are expected to vest based
on the non-market conditions and recognises the impact of the
revision to original estimates, if any, in the Statement of
Comprehensive Income.
Group Company
2019 2018 2019 2018
GBP000s GBP000s GBP000s GBP000s
Expenses recognised in the year
Arising from equity settled share based
payment transactions 83 62 - -
======== ======== ======== ========
26 Share capital
Group and Company
2019 2018
Ordinary share capital GBP000s GBP000s
Issued and fully paid
32,777,088 (2018: 31,827,088) Ordinary shares of 4p each 1,311 1,273
========= ========
The Company's sole class of equity shares carry one vote per
share, and rank pari-passu in respect of dividend and capital
distribution rights.
Reconciliation of movements during the year:
Ordinary
Number
At 1 January 2019 31,827,088
Issue of fully paid shares 950,000
----------
At 31 December 2019 32,777,088
==========
During the year, 950,000 (2018: 12,500) ordinary shares of 4p
each were issued for a total cash consideration of GBP89,000 (2018:
GBP2,000); accordingly, a premium of GBP51,000 (2018: GBP1,500) has
been recognised on this issue which represents cash proceeds
received in excess of the nominal value of these shares.
27 Share premium account
Group Company
2019 2018 2019 2018
GBP000s GBP000s GBP000s GBP000s
At beginning of year 4,107 4,105 4,107 4,105
Issue of new shares 51 - 51 -
Exercise of share options 292 2 292 2
-------- -------- -------- --------
At end of year 4,450 4,107 4,450 4,107
======== ======== ======== ========
During the year the Group and Company issued 950,000 Ordinary
shares with a nominal value of 4p per share, for total cash
consideration of GBP89,000, of which GBP51,000 was recognised
within the share premium. All shares issued represented the
exercise of share options, where fair values were held within in
the share option reserve at a weighted fair value of 30.76p per
share. On exercising of the options a transfer of GBP292,324 has
been made from the share option reserve to the share premium
account.
28 Guarantees and contingent liabilities
At 31 December 2019 the Group held client monies in approved
client accounts amounting to GBP4,522,393 (2018: GBP4,802,186).
Neither the cash asset nor any corresponding obligation has been
recognised by the Group.
The Company had no contingent liabilities as at 31 December 2019
(2018: none).
29 Events after the reporting date
Conversion of owned branch into franchised branch
On 29 February 2020 the Group entered into a franchising
agreement whereby a Branch office owned by the Group was converted
into a franchised branch. The physical assets, contracts,
receivables and payables related to that Branch have been
transferred to the Franchisee, whilst the intellectual property
associated with the Group has been retained by the Group whilst
being subject to a right of access under the new franchise
agreement.
The transfer has been enacted for no consideration on the part
of the Franchisee. The Group has benefited from not incurring costs
to assist with the setup of a new franchise site as is typical in
its business model.
The Branch returned revenues of GBP311,000, EBITDA of
GBP146,000, and profit before tax of GBP146,000 in the year ended
31 December 2019. After taking its share of central costs,
allocated on a pro-rata basis, it contributed GBP82,000 to the
Group's profits. Had the Branch been franchised for the same year,
it would have returned Franchisee fees to the Group of GBP61,000.
Although the replacement fees show a reduction in profits to the
Group, the Directors consider the change in status to de-risk the
Group's involvement in the site and therefore the benefits obtained
from this derisking process exceed the reduction in profits
highlighted above.
Covid-19
A post balance sheet event is adjusting if it provides more
information about circumstances that existed at the year-end. The
Group has concluded that Covid-19 is a non-adjusting post balance
sheet event at 31 December 2019. As a network we continue to follow
the government's guidelines on Covid-19 and we have undertaken a
number of initiatives to help the network, ensuring that our
offices can access the support and resources they need to see them
through this difficult time. We are in regular contact with our
franchisees so that we can continue to monitor their individual
situation and offer more direct support where it is needed. We
closely monitor and have cut back our costs and have reduced all
non-essential expenditure. We continue to offer the network a
comprehensive range of support, which is assisting franchisees to
operate their businesses remotely and access the various government
schemes available to assist them while the lockdown continues.
Given the unknown and unprecedented risk and response to the
outbreak it is difficult to predict the financial impact that
Covid-19 will have on asset valuations in particular within the
Group in 2020. Asset valuations within these financial statements
do not take into account Covid-19 on the basis that it is a
non-adjusting subsequent event.
The Group has secured an additional GBP3.5m Covid-19 funding
facility subsequent to the reporting date.
30 Directors' remuneration and transactions
2019 2018
GBP000s GBP000s
Remuneration for qualifying services 504 473
Company pension contributions to defined contribution
schemes 54 36
-------- --------
558 509
======== ========
The number of Directors for whom retirement benefits are
accruing under defined contribution schemes amounted to 3 (2018:
3).
During the year to 31 December 2019 the Directors received
remuneration as follows:
Benefits
Salary Bonus in kind Pension Total
Director GBP000s GBP000s GBP000s GBP000s GBP000s
Mrs G J Frew 119 56 14 33 222
Mr H D Hill 50 - - - 50
Mr K P Hollinrake 50 - 11 6 67
Mr E A Jones 106 46 12 15 179
Mr D A Fielding 40 - - - 40
-------- -------- -------- -------- --------
Total 365 102 37 54 558
======== ======== ======== ======== ========
During the year to 31 December 2018 the Directors received
remuneration as follows:
Benefits
Salary Bonus in kind Pension Total
Director GBP000s GBP000s GBP000s GBP000s GBP000s
Mrs G J Frew 121 45 2 21 189
Mr H D Hill 50 - - - 50
Mr K P Hollinrake 59 - 2 5 66
Mr E A Jones 115 38 1 10 164
Mr D A Fielding 40 - - - 40
-------- -------- -------- -------- --------
Total 385 83 5 36 509
======== ======== ======== ======== ========
Share options
In the current year, three Directors exercised share options
covering 950,000 shares. The total exercise price was GBP89,000
with the total market value of shares received for this price being
GBP347,250. The values have not been included in the above
disclosure. No Directors exercised share options in the prior
year.
During the year the Directors of the Group received dividends as
follows:
2019 2018
Director GBP000s GBP000s
Mrs G J Frew 45 41
Mr H D Hill 7 2
Mr K P Hollinrake 105 97
Mr E A Jones 95 87
Mr D A Fielding 2 1
-------- --------
254 228
======== ========
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 2019 are as
follows:
% Held
Class
Name of undertaking and country of
of incorporation or residency Nature of business shareholding Direct Indirect
Hunters Property Group England &
Limited Wales Estate agents Ordinary 100.00
Greenrose Network (Franchise) England & Franchising of estate
Limited Wales agents Ordinary 100.00
England & Lettings and management
Hapollo Limited Wales of office spaces Ordinary 100.00
England &
Herriot Cottages Limited Wales Dormant Ordinary 100.00
Hunters (Midlands) England &
Limited Wales Estate agents Ordinary 100.00
Hunters Financial Services England &
Limited Wales Financial services Ordinary 100.00
Hunters Franchising England & Franchising of estate
Limited Wales agents Ordinary 100.00
England & Intermediate holding
Hunters Group Limited Wales company Ordinary 100.00
Hunters Land & New England &
Homes Limited Wales Dormant Ordinary 100.00
England &
Hunters Partners Limited Wales Dormant Ordinary 100.00
Hunters Survey & Valuation England &
Limited Wales Dormant Ordinary 100.00
England &
Maddison James Limited Wales Dormant Ordinary 100.00
England &
RealCube Limited Wales Software Ordinary 100.00
RealCube Technology England & Intermediate holding
Limited Wales 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.
33 IFRS 16 Leases Transitional Impact
Leases are shown as follows in the balance sheet and Income
statement for the year ending 31 December 2019:
Restated Cumulative
Adjustment extracts adjustment
as at as at as at
1 January 1 January 31 December
2019 2019 2019
GBP000's GBP000's GBP000's
Statement of Financial Position
Non-current assets
Property, plant and equipment 2,020 2,302 2,485
Investment property 474 474 432
Deferred tax assets 75 165 64
Current assets
Prepayments (107) 311 (125)
Current liabilities
Obligations under leases (381) (402) (395)
Non-current liabilities
Obligations under leases (2,448) (2,490) (2,812)
---------- ---------- ------------
Net assets * (367) 360 (352)
========== ========== ============
Equity
Retained earnings * (367) 1,111 (352)
---------- ---------- ------------
(367) 1,111 (352)
========== ========== ============
* Note that the above balances, marked with a *, represent
extracts of the balances which are impacted by the adoption of IFRS
16, rather than a restatement of the Statement of Financial
Position inclusive of all balances.
Impact
of IFRS
16 in
the year
to
31 December
2019
GBP000's
Statement of Profit and Loss
Rent (483)
Printing (36)
Depreciation 377
Finance Costs 116
Deferred taxation 11
------------
Total (gain)/loss on Income Statement (15)
============
Reconciliation of lease liability:
Lease liability as at 1 January 2019 2,829
Lease additions in the year 842
Lease disposals in the year (46)
Interest payable 121
Lease payments (538)
------------
3,208
============
Reconciliation of prior year minimum operating lease
payments
Reconciliation of prior year minimum operating lease payments
to opening lease liability:
Operating lease minimum lease payments at 31 December 2018 3,565
Discount for time-value for recognition as future interest charges (535)
Elimination of prepayments carried at 31 December 2018 (107)
Other adjustments (94)
-----
Adjustment as shown above (due in less and more than one year) 2,829
=====
Short term leases of less than 12 months at inception and low
value leases are charged to the Income Statement evenly over the
life of the lease. In the year ending 31 December 2019, GBPnil
relating to short period and low value leases were included in
operating expenses.
The liabilities were measured at the present value of the
remaining lease payments, discounted using the lessee's incremental
borrowing rate as of 1 January 2019. All leases were discounted
using an estimated implicit rate of 4.50%, with almost all leases
by value relating to properties.
In applying IFRS 16 for the first time, the Group has used the
following practical expedients permitted by the standard:
-- The use of a single discount rate to a portfolio of leases
with reasonably similar characteristics.
-- Reliance on previous assessments on whether leases are
onerous, but with additional impairments recognised where
identified.
-- The use of hindsight in determining the lease term where the
contract contains options to extend or terminate the lease.
The Group has also elected not to reassess whether a contract
is, or contains, a lease at the date of initial application.
Instead, for contracts entered into before the transition the date
the Group relied on its assessment made applying IAS 17 and IFRIC 4
'Determining whether an arrangement contains a lease'.
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
END
FR SEMFMEESSEFI
(END) Dow Jones Newswires
May 26, 2020 02:00 ET (06:00 GMT)
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