12th Jun 2006 07:00
Farley Group PLC12 June 2006 Farley Group plc Interim Results for the six months ended 31 March 2006 Farley Group plc, the national residential, rural and commercial firm of estateagents and valuers, trading under the Humberts and Farley brands todayannounces interim results for the six months ended 31 March 2006. Based on 6 Months of Farley and Co and 5 months of Humberts trading: • Revenue for the six months was up 351% to £5.134m (2005 - £1.137m).• Profit before tax increased to £453,000 (2005 - £113,000).• Earnings per share increased to 0.98p (2005 - 0.37p). Tim James, Chairman of Farley Group plc, comments: 'I am delighted to report a strong set of half year results. The first half ofthe year has seen a transformation of the Farley Group from a single office to anational chain. Compared with the same period last year we have seen a markedimprovement in our key residential markets, initially in London and the SouthEast but now spreading out over the rest of the country. The growing strength ofour brands both from a geographical and product perspective gives us confidencethat we are well placed to report further growth for the full financial year.' Farley Group plc. Registered in England No. 4058708.Registered Office 17 Hanover Square, London W1S 1HU. For further information, contact: Farley Group 020 7318 1273Max Ziff, Chief Executive OfficerNigel Cartwright , Chief Financial Officer Corporate Synergy Plc 020 7448 4400John Prior Sky Communications 020 7385 699912th June 2006Julia Arnold CHAIRMAN'S STATEMENT With only 5 months trading results from Humberts, I am very pleased to announcethat group turnover increased 351% to £5.134m (2005 - £1.137m) with group profitbefore tax up to £453,000 (2005 - £113,000). This has the effect of boostingearnings per share to 0.98p (2005 - 0.37p) even with the increased share capitalresulting from the issue of new shares in relation to the acquisitions we havemade and the capital raising exercise last November. Growth Strategy Our management team, headed by our Chief Executive Max Ziff, Patricia Farley andour Chief Financial officer, Nigel Cartwright, who now joins the Farley GroupBoard, have had a very busy first six months. During this period we havecompleted the acquisition of Humberts and worked on developing a new technologyplatform for the group and a new financial reporting system commensurate with agroup the size we have become. Since the year end we have also completed theacquisitions of London and Overseas properties (a specialist lettings businessoperating in the Chelsea and Kensington area), Burrough & Co (an estate agentwith offices in Hungerford and Newbury); and expect shortly to complete theacquisition of Moretons (an estate agent and property management business inWestminster), and Westchurch Limited (which operates 12 estate agent branches inSomerset, currently under the CJ Hole Country brand). Based on completion of allthese transactions we will have over 50 offices trading under the Humberts andFarleys brands, with an ambitious expansion plan expected to continue for theforeseeable future. Rebranding and Refurbishment A key element to the rehabilitation of Humberts is its rebranding andrefurbishment programme To this end we are delighted today to be launching theGroup's new logo with the same look and feel both for Humberts and Farleys.With an increased number of offices and additional advertising and marketingspend, we intend to make the Humberts name one of the most readily recognisableproperty professionals across the UK. This will be backed up by a substantialrefurbishment of our offices over the next 12 months that will lift theHumbert's profile. Investing in our People I am particularly grateful to all our staff, particularly our new colleaguesfrom Humberts, for their hard work and commitment to growing and developing thegroup and implementing the management programme we are undertaking. Ourstaff are the key to our future and I am pleased to announce the opening of ourgroup training centre in Salisbury and the new training courses we havedeveloped for all staff. TRADING REVIEW The breakdown of turnover and gross profit by business activity was as follows: Turnover Gross profit (£'000) (£'000) Residential 3,213 1,161Rural/Agricultural 807 272Commercial/Professional 919 264Other 195 86Total 5,134 1,783 Against gross profit of £1,783,000 there were overheads and establishmentexpenses before exceptionals and amortisation of £1,286,000 (of which £224,000related to central management costs), resulting in an operating profitpre-exceptionals and goodwill amortisation of £497,000 (2005 - £81,000). Postthese costs, operating profits are also substantially ahead at £266,000 (2005 -£33,000) This performance should also be considered in light of the fact that we haveincurred the costs of putting in place a central management infrastructurebefore the full benefits of the new management strategy have been fullyrealised. Residential Compared with the same period last year we have seen a marked improvement in ourkey residential markets, initially in London and the South East but nowspreading out over the rest of the country. Whilst there is never enough supplyof quality high end properties, we continue to be optimistic of the full yearprospects based on current pipelines and general levels of market activity. Itis also noteworthy that of the total residential turnover of £3.213 million forthe period, only £457,000 related to income from letting's businesses, whichprovides a significant opportunity going forward as the group seeks to focus ondeveloping its letting's business across the UK. Rural/Agricultural The Rural/Agricultural market in the UK remains challenging. With the market nolonger driven by European subsidies, the turnover in farms has reduceddramatically over the last few years. On the other hand, we are seeing anincreased crossover between the residential and rural markets with more and morefamilies wanting to move to the country and take on agricultural properties withgood residential accommodation. We continue to benefit from our well establishedestate management business. The group is keen to see its rural/agriculturalbusiness expand and continues to look for growth opportunities. Commercial/Professional Whilst the demand for professional and valuation work remains buoyant, we arestarting to see an increase in agency work. As part of its full serviceoffering, the group is keen to see its commercial business grow and expand. Cash Flow and Balance Sheet The group benefits from strong cash flow generation with positive cash inflowfrom operating activities of £520,000 for the 6 months to 31st March 2006compared to an outflow of £23,000 during the same period last year. The group's balance sheet has also strengthened significantly with equityshareholders' funds up to £15.43 million from £6.72 million at the September2005 year end, largely as a result of the recent capital raising exercise, theHumberts acquisition and the solid first half performance. This balance sheetstrength is reflected by cash of £9.55 million which puts the group in a strongposition to expand as the right acquisition opportunities arise. This cashbalance is set to reduce significantly as we complete the various acquisitionscurrently underway and continue to roll out our platform for growth. Outlook The growing strength of our brands both from a geographical and productperspective gives us confidence that we are well placed to report further growthfor the full financial year. Tim James Chairman 12 June 2006 Group profit and loss account Six months ended 31st March 2006 Six months Year ended ended 31st 30th March 2005 September restated 2005 restated (Unaudited) (Unaudited) (Audited) Notes Continuing Acquisitions Total Total Total operations £'000 £'000 £'000 £'000 £'000Turnover 1,508 3,626 5,134 1,137 2,556Cost of sales (859) (2,492) (3,351) (700) (1,432) Gross profit 649 1,134 1,783 437 1,124Administrative and establishment (505) (781) (1,286) (356) (822)expensesExceptional operating costs (134) (45) (179) - -Amortisation of goodwill (52) - (52) (48) (96) (691) (826) (1517) (404) (918) Operating (loss)/ profit (42) 308 266 33 206Interest receivable and similar income 191 2 193 80 184Interest payable (6) - (6) - (2) Profit on ordinary activities before tax 143 310 453 113 388Tax 2 (59) (64) (123) (48) (147) Profit on ordinary activities after tax 84 246 330 65 241Dividends 3 (259) - (259) (174) (174) Retained (deficit)/ profit for the year (175) 246 71 (109) 67Profit brought forward 226 - 226 159 159Retained profits carried forward 7 51 246 297 50 226 Eanings per share -basic 4 0.98p 0.37p 1.29p -diluted 4 0.97p 0.37p 1.25p Group balance sheet 31st March 2006 31st March 2005 30th September 2005 restated restated Notes (Unaudited) (Unaudited) (Audited) £'000 £'000 £'000Fixed assetsInvestments 375 1,804 375Tangible fixed assets 652 375 154Intangible fixed assets 5 7,239 161 1,756 8,266 2,340 2,285Current assetsDebtors 2,186 489 316Cash at bank and in hand 9,551 2,204 4,687 11,737 2,693 5,004Creditors: due within one year (1,779) (422) (538) Net current assets 9,958 2,271 4,466Total assets less current liabilities 18,224 4,611 6,751 Creditors: amounts falling due after more than one year (373) (30) (24)Provision for liabilities and charges (2,421) - (11) 15,430 4,581 6,716Capital and reservesCalled up share capital 6 2,870 1,813 2,116Share premium account 7 7,093 2,668 4,324Warrants reserve 7 120 - -Revaluation reserve 7 50 50 50Non-distributable reserve 7 200 - -Profit and loss account 7 5,097 50 226Equity shareholders' funds 15,430 4,581 6,716 Group cash flow statement Six months ended Six months Year ended ended Notes 31st March 2006 31st March 30th September 2005 2005 (Unaudited) (Unaudited) (Audited) £'000 £'000 £'000 Cash inflow from operating activities 8 520 (23) 484Returns on investments and servicing of finance 178 80 182 Taxation - - (80) Capital expenditurePurchase of tangible fixed assets (42) (6) (12)Sales of tangible fixed assets 4 - 5 (38) (6) (7) AcquisitionsPurchase of subsidiary undertaking (2,502) - -Net overdraft acquired with subsidiaries (554) - - (3,056) - - Equity dividends paid (259) (174) (175) FinancingIssue of share capital 7,522 - 1,959Repayment of hire purchase - - (4)Capital repayment of finance lease (4) - - 7,518 - 1,955Increase/(decrease) in cash in the period 4,863 (125) 2,359 Notes to the interim report 1 Basis of preparation This interim report, which has been neither audited nor reviewed by theCompany's auditors, was approved by the board of directors on the 9th June 2006,and has been prepared following the accounting policies set out in the Group2005 Annual Report and Accounts except for the adoption of Financial ReportingStandard 21, "Events after the balance sheet date". The impact of this change inaccounting policy is detailed in note 7. The 2005 annual report and accountsreceive an unqualified auditors' report and has been filed with the registrar ofcompanies. 2 Taxation Six months ended Six months ended Year ended 31st March 2006 31st March 2005 30th September 2005 (Unaudited) (Unaudited) (Audited) £'000 £'000 £'000 Current taxation 123 48 148Deferred tax charge - - (2) The tax assessed in the period is lower than the standard rate of corporationtax in the UK of 30% primarily due to a tax deduction for acquired amortizationwhich is not charged to profit and loss account.. There is no additionaldeferred tax charged in the period as there are no material timing differencesbetween the capital allowances and depreciation for the period. 3 Dividends The directors do not recommend the payment of an interim dividend. The decision with regard to the payment of a final dividend in respect of theyear ending 30th September 2006 will be taken once the results for that periodare agreed. 4 Earnings per share Six months ended Six months ended Year endedOrdinary shares of 5p each 31st March 2006 31st March 2005 30th September 2005 (Unaudited) (Unaudited) (Audited) £'000 £'000 £'000Profit attributable to shareholders 330 65 241 Number Number NumberWeighted average number of shares in issue 33,579,548 17,465,608 18,631,109Dilution effects of share options 542,406 - 612,942Dilution effects of warrants 32,051 - -Diluted weighted average number of shares in issue 34,154,005 17,465,608 19,244,051 Basic earnings per share 0.98p 0.37p 1.29pDiluted earnings per share 0.97p 0.37p 1.25p 5 Acquisitions 5a Acquisition of certain trade and assets of the Humberts Partnership On the 2nd November 2005 the Group acquired the trade and certain assets of theHumberts Partnership. An analysis of the provisional fair value of the assetsacquired and provisional consideration is presented below. Book value Adjustments Provisional Fair value £'000 £'000 £'000 Fixed assets 208 - 208Debtors 1,768 74 1,842Cash 2 - 2Overdraft (788) - (788)Other creditors (912) (300) (1,212)Net assets 278 226 52 Goodwill 5,356Consideration 5,408 Consideration satisfied by:Shares issued 1,000Cash 1,900Associated costs 268Warrants 120Contingent consideration 2,120 The adjustments relate to the alignment of the accounting treatment for theprovision of professional services with UITF40 and the recognition of certainliabilities associated with leasehold property. There is no amortisation ofgoodwill on the basis that, in the opinion of the directors, it has anindefinite life. 5b Other acquisitions On the 19th December 2005 the Group acquired 100% of the issued equity sharecapital of London Overseas Property Search Limited for a total consideration of£386,000. The consideration comprises cash of £306,000, deferred considerationof £50,000, contingent consideration of £25,000 and costs of £5,000. The bookand fair value of the net assets acquired were £207,000 resulting in goodwill of£179,000 which is being amortised over 10 years. 6 Share capital Ordinary shares of 5p each Six months ended Six months ended Year ended 31st March 2006 31st March 2005 30th September 2005 (Unaudited) (Unaudited) (Audited) £'000 £'000 £'000Balance at beginning of period 2,116 1813 1813Issue of shares 754 - 303 Balance at end of period 2,870 1,813 2,116 On 29th November 2005, 13,333,334 ordinary shares of 5p each were issued fullypaid for cash at 60p per share. The share premium arising of £7,333,334 has beencredited to the share premium account. In addition 1,666,667 ordinary shares of5p each were issued as part of the acquisition consideration for the HumbertsPartnership. 7 Reserves Share Warrants Revaluation Non-distributable Profit and Premium reserve reserve reserve loss account £'000 £'000 £'000 £'000 £'000At 1 October 2005As previously reported 4,324 - 50 - (33)Prior year adjustment - - - - 259As restated 4,324 - 50 - 226 Arising on issue of shares 8,266 - - - -Share issue costs (497) - - - -Capital reorganisation (5,000) 200 4,800Issue of warrants - 120 - - -Retained profit for the - - - - 71period As at 31 March 2006 7,093 120 50 200 5,097 Following the approval of the High Court, £5,000,000 of share premium wasreclassified as distributable reserves during the period subject to therepayment of certain creditors. The proposed final dividend in respect of theyear 30th September 2005 was previously treated as a liability in 2005 andaccordingly included in current liabilities. Following the adoption of FinancialReporting Standard 21, "Events after the balance sheet date", the treatment ofproposed dividends has been changed. As the 2005 dividend was subject toratification at the annual general meeting after the year end, it is no longerpermitted to classify it as a liability at the 30th September 2005 and a prioryear adjustment has been made to reverse it. 8 Cash flow from operating activities Six months ended Six months ended Year ended 31st March 2006 31st March 2005 30th September 2005 (Unaudited) (Unaudited) (Audited) £'000 £'000 £'000 Operating profit 266 33 206Depreciation of tangible fixed 137 17 39assetsAmortisation of goodwill 52 48 96Gain on sale of fixed assets (1) - (2)Decrease/ (increase) in debtors (18) (101) 71Increase/ (decrease) in creditors 84 (20) 74Net cash from operating activities 520 (23) 484 9 Post balance sheet event Following the period end an Employee Trust was set up to hedge against the issueof shares under the employee share option scheme. During April 2006 the Trustacquired 300,000 shares at an average price of 67p. 10 Interim Statement A copy of this statement will be sent to shareholders. Additional copies areavailable on request from the Company's registered office: 17 Hanover Square,London, W1S 1HU. This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
Hummingbird Resources