This morning the Property Franchise Group – whose brands include Martin & Co, and online subsidiary EweMove – reported strong rises in both revenue and profit.
This was despite last week issuing a statement saying that EweMove had lost £300,000 on revenues of £900,000 in the first six months of this year, which would knock overall group performance.
However, this morning the PFG reported overall revenue up 28%, to £4.7m, and pre-tax profits up 36%, to £3.1m.
The group also raised its interim dividend by 5%, to 2.1p.
Group CEO Ian Wilson said: “We have delivered a strong performance at our traditional high street brands, which grew market share despite the general challenging market backdrop.
“In line with our strategy, we have also invested in experienced individuals and technology capabilities, translating insights gained from our online business, EweMove, to our five traditional high street brands. The Company has continued to support our franchisees operationally and financially with local acquisition opportunities, as smaller competitors decide to exit the lettings market.
“With the appointment of a new managing director for EweMove and a new focus on recruiting experienced estate agents as EweMove’s local franchisees, management is confident of rapidly improving trading performance in this strategically important subsidiary.”
In specific reference to EweMove, which was acquired a year ago, Wilson this morning told the City: “As announced on 6 September 2017, the disruption caused by the early departure of the EweMove co-founders on 30 June 2017, has meant that EweMove’s trading position is behind management expectations.
“EweMove has recorded losses at the half year to 30 June of £0.3m against a target loss of £0.1m, on revenues of £0.9m.
“Despite this, the board remains committed to its strategy of rapidly scaling EweMove, which the board believes will contribute significantly to earnings in the medium term. The appointment of a new managing director in Nick Neill, a successful EweMove franchisee, means the brand now has focused and dedicated leadership.
“EweMove has over 100 franchisees. Progress so far has been promising with the brand recruiting 18 new franchisees in the first six months of 2017.”
Today’s report also states that on acquisition the founders of EweMove – David Laycock and Glenn Ackroyd – received £5m in cash and £3m in shares. The pair would have been due £7m in a performance-related earn-out but instead quit in June. However, they are being paid a further £1m in two instalments – the first was payable in July and the second on December 31.
Today’s report states: “Following evidence suggesting that the business value of EweMove may have been impaired, a revaluation was undertaken. This has resulted in an impairment charge of £0.5m against goodwill.”