The Property Franchise Group, the UK's largest property franchisor, has provided a trading update ahead of publishing its interim results on Tuesday 13 September 2022.
In the latest of a week of trading updates - which included Purplebricks' annual results on Tuesday and LSL's half-year results yesterday - the Group says it has achieved strong growth in the first half of this year, with revenue significantly increasing versus H1 2021. This is despite 2021 having been a very strong year for the residential housing market as the stamp duty holiday was still in play and the 'race for space' continued to dominate.
The main takeaways from the half year update were:
- The Group's revenue rose 18% to £13.1 million, up from £11.1 million in H1 2021.
- Management Service Fees increased 1% to £7.4 million, up from £7.3 million in H1 2021.
- Its sales agreed pipeline increased 15% to £33.8 million, up from £29.5 million in H1 2021.
It also revealed it is now managing 74,000 rental properties, up 1,000 from the first half of last year, while one of its main brands, EweMove, sold 19 new territories, down from 37 in H1 2021.
The Group now has net debt of £2.6 million, down from £5 million on December 31 2021, following 'another period of strong cash generation'.
The growth in Group revenue was driven primarily by the high-profile acquisition of Hunters in 2021, as well as Mortgage Genie. Revenue growth from the existing businesses contributed £0.2 million.
The trading update revealed that the growth in lettings management service fees of 12% helped to offset the reduction in sales fees as the residential sales market normalised after a year of record highs. Sustained demand for lettings properties and rental inflation means lettings management service fees continue to be a 'highly resilient revenue stream' for the Group, contributing 55% of total MSF in the first half of the year..
While the Group says its sales pipeline remains 'very healthy', lead times have also lengthened, and supply continues to be restricted. "We still believe that our forecast of 1.2 million UK transactions for 2022 remains achievable and we expect H2 to generate a similar level of Sales MSF to H1," the update said.
"EweMove and Hunters Personal, our two hybrid offerings, have performed well in the first half, selling 24 new territories. We believe this model continues to be attractive during more uncertain macro-economic times, allowing franchisees to benefit from a low-cost base and increased flexibility."
It added: "Our network of franchisees continues to benefit from the strength and experience of the senior management team, who are focused on the execution of our six strategic growth initiatives. Support from an experienced central team, dedicated to increasing business activity and profitability, is invaluable during more challenging periods. In addition, we are confident that further growth opportunities, for example the acquisition of lettings portfolios, will arise over the next twelve months, which we are well positioned to capitalise on.
Gareth Samples, chief executive of The Property Franchise Group, commented: “We are very pleased with the numbers announced today, particularly given the increasingly uncertain macro backdrop. Our performance demonstrates the many advantages of operating a focused franchise model, which has a multitude of income streams, franchise brands and ways of meeting consumers’ requirements. Our team works tirelessly to help our franchisees navigate challenges and explore growth opportunities. As such, the Board are confident that trading remains in line with market expectations for the full year.”