Hunters has announced its half-year results to the City, saying that it is confident of meeting expectations for the full year, despite a drop in profits.
In interim results for the six months to the end of June, Hunters announced that its EBITDA figure had dropped from £923,000 for the same period last year to £800,000.
Pre-tax profits also dropped, from £389,000 to £191,000.
However, Hunters is paying an increased interim dividend of 0.7p, up from 0.6p per share last year.
It stressed that with a full second half contribution from Besley Hill – the franchise business with 15 branches that it acquired for £2.5m in March – the board has confidence in the full year outcome.
Glynis Frew, chief executive of Hunters, said: “We have delivered robust results in the six months to June 2017 against a backdrop of markets that contracted in terms of new instructions during this period by 9.5% as against the same period last year.
“We are bolstered in part with our strategy to grow and develop the franchise network and we are encouraged by the pipeline of future franchisees interested in joining the network.”
Chairman Kevin Hollinrake, who co-founded the business and is now an MP, said the group had built successfully on its 25-year track record.
Network income – that paid by franchisees – grew by 4% to £17.6m in the first six months of this year, and 24 new branches including Besley Hill joined the network.
The group said in its results that the primary risk to the business was the state of the UK property market, saying: “Caution has crept into the market place since the triggering of Article 50 and an element of expected uncertainty as a result of the Brexit negotiations, as well as the proposal to ban unfair tenant fees.”
However, it added that the group’s balance between franchising, sales and lettings, and geographical mix, allowed it to mitigate the risks.
Comments (1)
How can the performance be described as robust when reporting a 13.3% fall in EBITDA and a 51% drop in pre tax? This is approaching the achievement levels of CW.
Noted that operating margins are only 4.5% with pre tax at just over 1% of turnover – a dangerously slim margin especially when market volumes are reducing.
Someone has taken their eye off the overall management of the business. Growth is via acquisitions and not through the organic development of the existing business and franchisees.
I wonder what the effect of losing revenue from tenants will have on the bottom line? Or perhaps another business model that has had its day? Franchisees beware.