9th Sep 2014 09:26
LONDON (Alliance News) - MartinCo PLC Tuesday posted a slight fall in pretax profit in the first half as a rise in administrative expenses offset an uptick in revenue in the period, but expressed optimism for its traditionally stronger second half on the back of the strength of the UK property market.
Pretax profit for the estate agent was GBP796,225 in the six months to June 30, down from the GBP833,118 posted a year earlier. Revenue rose to GBP2.3 million, from GBP2 million last year, but that was offset by higher administrative expenses and cost of sales as it invested in its franchise network and expanded.
Administrative expenses in the period were up to GBP1.3 million, from GBP1 million last year, while its cost of sales increased to GBP191,609 from GBP87,239.
Despite the fall in profitability, the group said it would pay an interim dividend of 1.3 pence per share.
The company said its management service fees increased by 10% over the year to GBP1.8 million, from GBP1.6 million last year. It now has 145 offices offering estate agency services, up from 97 at the end of 2013. Its office network has increased to 193, against 189 at the end of 2013. Over the year, it recruited a total of 12 new franchisees, up from the 3 recruited in the corresponding period in 2013.
In its lettings business, the company said a record number of tenants vacated over the half year, with those properties re-let to new tenants and generating re-letting fees and commission income for its franchisees. It said the volumes were driven by the improving sales market and said the re-letting of the properties provides evidence of the ongoing strength of demand in the market.
MartinCo said its acquisition strategy has been progressing slower than expected and, in the half year, was in talks with a number of potential acquisition targets. It did complete one deal in the period, the purchase of Saltaire, West Yorkshire-based Village Estates, which added 375 tenanted properties to its portfolio.
Elsewhere, the company completed the roll out of its cloud-based letting and estate agency operating software to its offices. The roll out of the platform enabled the company to create a national contact database for e-marketing purposes, MartinCo said.
"The group achieved record revenue in the first half of the year and saw a significant uplift in the rate of recruiting new franchisees," said Ian Wilson, Chief Executive of MartinCo.
"The business has traditionally performed more strongly in the second half of the year, with an influx of franchise enquiries in September and October leading to new lettings. We also expect that our new estate agency operation will continue to make good progress in spite of a market where very strong recent growth rates have slowed somewhat," Wilson added.
MartinCo shares were down 5.3% to 113.123 pence on Tuesday.
By Sam Unsted; [email protected]; @SamUAtAlliance
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