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Preliminary Results

12th Apr 2017 07:41

RNS Number : 2299C

Hunters Property PLC

12 April 2017

Embargoed 7.00a.m. - 12 April 2017

Dissemination of a Regulatory Announcement that contains inside information according to REGULATION (EU) No 596/2014 (MAR).

Hunters Property Plc

Preliminary Results

For the year ended 31 December 2016

Hunters Property Plc ("Hunters" or the "Company" or the "Group"), one of the UK's largest national sales and lettings estate agency businesses, is pleased to announce its preliminary results for the year ended 31 December 2016.

Financial Highlights:

Network Income rose 17% to £35.4m (2015: £30.2m);Revenue increased by 15% to £13.8m (2015: £12.0m);EBITDA increased by 31% to £2.06m (2015: £1.57m);Adjusted profit before tax (excluding amortisation, acquisition costs, investment income and notional finance costs) increased by 31% to £1.86m (2015: £1.42m);Adjusted EPS increased 25% to 5.92p (2015: 4.74p);Net assets stood at £5.6m (2015: £5.0m);Cash balance £1.2m (2015: £1.2m);Proposed 30% increase in Final dividend to 1.30p, increasing full year then by +27% to 1.90p (2015: 1.50p) for the year.

Operational Highlights:

Opened 30 new branches, including the conversion of 20 independent estate agency branches so in aggregate 93 new branches, excluding acquisitions, over the last three years;Independent agents who have converted to Hunters have on average seen their income grow. For those for whom 2016 was their 2nd full calendar year their revenue has grown by 41%;The network's sales and lettings income has grown at a cumulative average growth rate since 2008 of 26% (2015: 27%);As at December, network stood at 186 branches (2015: 170); Developed and integrated into our in-house software in July an online valuation and appointment booking capability which has delivered on average 100 valuations per week;September launched the Hunters Vocational Qualification, endorsed by ARLA and NAEA;Customer service rating 96% (2015: 96%) against a national average of 73% (Source: 2015 survey by The Property Academy);Average revenue per network branch increased by 7% to £190,000 (2015: £178,000).

Post-Year End:

Acquired franchise network of Besley Hill which comprises 15 branches in the Bristol and surrounding areas; Q1 trading is in line with budget, which is slightly off last year and in line with the Board's expectations;Retain a robust pipeline of enquiries from agents interested in joining the network;Confident in the continued growth of our network and meeting the Board's expectations for the full year.

Kevin Hollinrake, Chairman, commented:

"In our first full year as a public company I am pleased to report figures ahead of the market's expectation despite the UK property market facing various challenges, namely the increase in Stamp Duty and the political uncertainty following the EU referendum result. The Company has shown impressive growth, opening 30 new branches including converting 20 existing businesses. We continued to retain our 96% customer satisfaction rating and increasing revenue per branch by 7% against a market estimated to have been down 2% (Source: Rightmove Market Activity Report, February 2017) versus a year ago.

I am also delighted to welcome the branches of Besley Hill into the Hunters network. We have secured a leading and long established network of offices; the ongoing roles of management; and management's long term commitment by committing their three branches to new franchise agreements as part of the deal. The first quarter has therefore started well taking us past 200 branches. We continue to out-perform general market activity, our instructions are up on last year and our pipeline of new branch prospects remains healthy. I look forward to updating you as the year progresses."

For further details, please contact:

Hunters Property Plc

Kevin Hollinrake, Chairman

Glynis Frew, Chief Executive Officer

Ed Jones, Chief Financial Officer

Tel: 01904 756 197

Smithfield Consultants Limited

Alex Simmons

Tel: 020 7360 4900

SPARK Advisory Partners Limited

Mark Brady and Neil Baldwin (Nominated Adviser)

Dowgate Capital Stockbrokers

James Sergeant (Corporate Broking)

Tel: 020 3368 3551

Tel: 01293 517 744

PRELIMINARY RESULTS FOR THE YEAR ENDED 31 DECEMBER 2016

CHAIRMAN'S REVIEW

We are pleased to report that our first set of full year results as a public company were ahead of market expectations. Despite the changes to Stamp Duty Land Tax and uncertainties following the EU Referendum result, the Group continued its expansion towards becoming the nation's favourite estate agent. In the year we added 30 new branches to the network, including 20 independent businesses, reaching 186 branches by the year end. The further 15 due to the recent Bristol-based Besley Hill acquisition in March 2017 has now taken our network past the 200 mark. We continue to attract good quality independent businesses who see the benefits of a support network, reduced operating costs and opportunities to improve their income. Organically, we believe we are the fastest growing listed business in our sector having opened 93 branches over the last three years and a further 30 branches through acquisition in that period.

Gross revenue for the Group's network ("Network Income") reached £35.4 million in 2016 (2015: £30.2 million) a 17% increase on the previous year. Our average branch revenue rose by 7% to £190,000 (2015: £178,000). This was a tremendous achievement against the background of national activity having reduced by 2% for the year (Source: Rightmove Market Activity Report, February 2017). Our adjusted EBITDA reached £2.06 million (2015: £1.57 million) an increase of 31% on the previous year. Adjusted EPS grew similarly 25% to 5.92p (2015: 4.74p).

Our model is about both the number and the underlying performance of our branches. We invest a great deal of time and resource helping to improve each branch's revenue and our increase in revenue per branch reflects that investment, those improvements and then the underlying increased strength of the component parts of our network. This is not just a short-term success but a long term strategy. Independent agents that converted to the Hunters brand for whom 2016 was their second full year as part of the network, have on average increased revenue per branch by 41%; illustrating that our well known national brand, quality and good reputation has delivered improved revenue for our network partners, as well as significantly reducing their cost of key operating costs, such as portal subscriptions, through our economies of scale and purchasing power.

Customer satisfaction is always a key measure and we improved from the half year, to June, to achieve a 96% customer satisfaction rating over the year as a whole for the 2nd year running. We have increased this score year-on-year since 2012 and it remains significantly higher than the industry average of 73% (Source: 2015 survey by The Property Academy). Our business and our network partners commit within the network to deliver for our customers. This underpins our belief that business owners will work harder and deliver better results than a network of employees, self-employed operatives on short term contracts or those engaged to simply list a home rather than actually selling or letting a property. On behalf of the Board, I would like to thank everyone in the network who has worked so hard to deliver these excellent results and our customer service teams for working with our clients to help 'get them there'.

Current trading and outlook

Reports to date suggest that market activity levels are likely to be similar, or slightly lower than 2016 (Source: LSL trading update 7 March 2017 and Numis Broker comment of same date) and we had reflected that in our budget given the disproportionate timing effect of the Stamp Duty changes in the market in Q1 last year which caused an early year surge. We continue to see our numbers outperforming these market conditions with our instructions for the first two months up 9% versus the same period last year. Indications are therefore that exchanges in the latter half of the year look promising. The Government's intention to ban lettings tenant fees was confirmed in the Housing White Paper, but we do not believe we will be significantly impacted given our franchise and sales bias and expect fair notice of any intended changes. We may benefit from such a ban in any event as independent agents seek the assistance of networks to grow replacement revenue. Our pipeline of new outlets remains healthy and I look forward to updating you as the year progresses.

Dividend

The Company is committed to a progressive dividend policy and proposes an increased final dividend of 1.30p per share, making 1.90p for the year, an increase of 27%.

Kevin HollinrakeChairman

CHIEF EXECUTIVE'S STATEMENT

As we reported in our December trading update, the United Kingdom property market experienced various challenges during 2016, with the principal issues being consumer uncertainty as a result of the EU Referendum, the changes in Stamp Duty rules and a shortage of homes both to sell and to let.

The Stamp Duty increases in our view adversely affected homes particularly for properties over £2 million, but this has had little impact on the Group as we have limited exposure to prime Central London. Market activity was down 2% in 2016 (Source: Rightmove Market Activity Report, February 2017) but despite these tougher market conditions the Group has, aided by the additional branches added to the network throughout the year, performed very well and increased the Company's market share of homes sold and let, resulting in material increases in both turnover and pre-tax profitability.

Activity in 2017, despite an ongoing shortage of property for sale or to let, the uncertainty of the BREXIT agreement and ever-increasing levels of competition between traditional and online-only agents, looks promising. We entered the year with good ongoing buyer and tenant demand and a Government that remains openly very supportive of accelerated new home-building and ownership. We are therefore looking set to deliver another successful year.

Delivering outstanding customer service is at the heart of our operation. At exchange of a property or at the let of a property a vendor or landlord is contacted by a member of our customer service team. In 2016, 3,648 (2015: 3,121) customers provided feedback resulting in a 96% (2015: 96%) customer satisfaction rating.

Maintenance in the quality of the network is key to our success. We started the year with 170 branch locations. We received 268 (2015: 244) enquiries resulting in 30 (2015: 32) new openings under the Hunters brand. These openings consisted of 20 (2015: 23) conversions of existing independent estate agency businesses and 10 (2015: 9) new "cold start" locations, of which seven were current franchisees expanding into new markets.

The Group implements a rigorous franchisee selection process. This ensures, as far as is possible, that new franchisees are committed to the Group's high standards. Approximately 80% are rejected at an early stage. Additionally, underperforming branches can be reinvigorated through training and support or alternatively the sale of a franchise to a new team or individual.

We continue to invest in our people and our technology, marketing and networks. We have devoted over £500,000 this year in training and now provide 81 courses, a 35% increase. In September we were delighted to launch the Hunters Vocational Qualification, endorsed by the Association of Residential Letting Agents and The National Association of Estate Agents. We developed our in-house, market leading software to enhance the digital side of the business, for example we launched an online valuation booking capability in July. Just as importantly we retain the levels of service that our customers require so as to secure and safeguard a long term future. In terms of marketing we have increased and augmented our national campaign around our brand promise 'Here to get you there' which will continue to be our message in the year ahead. Having been one of the first estate agents to launch a national TV advert in 2015, our TV advertising campaign has been followed by a number of our larger and better funded peers. Hunters website traffic has risen by 41% in the last two years.

Finishing the year with 186 branches I am delighted to report the effects of working with Hunters since 2013. Against a market down 2% (2015: down 3.4%) those that converted and traded as Hunters for the whole of 2016 as their first full year increased their revenue by 11%, that's a 13% outperformance. Those who converted the year before have in aggregate improved on average by 41%. Nor is improvement just short term, those who have been converted for three whole years to December 2016 have increased their revenues on average by 61%. Our 5 year group, from our 2011 network acquisition are up, on average, by 54%. Every region we trade in has increased over the three year period 2013 to 2016 on average at a Compound Annualised Growth Rate ("CAGR") of 33%.

Franchise prospects for 2017 have started well given the tight market and uncertainty, with a proceeding pipeline of 34 (2015: 21) new branches being processed and enquiry levels on target to exceed those of 2016. We have expanded the team to improve the process and allow more ongoing support. A full marketing plan is in place, heavily focused on direct marketing to suitable independent businesses, increased online presence and existing franchisee expansion are integral elements of this growth.

We are delighted that Besley Hill chose us over other suitors so giving us the opportunity to bring a culture that we believe will suit their network as they look to grow and also expand with us. It is expected that 2017 will see continued network growth, both through conversions of existing businesses and cold starts. Hunters' market leading conversion package is designed to allow independent agencies to join with minimal cost, whilst benefiting from a full estate agency package which provides an average first year revenue growth and growth of 41% by their second full year. Conversions are expected to account for a significant portion of branch growth.

These excellent results come from our latest systems, our support, our experience and our ongoing drive and effort and could not have been achieved without sterling efforts from our employees, our leading and wider back office systems, support from our network franchise partners and our suppliers. We believe that we have some truly outstanding industry professionals associated with the business and are grateful to them for their dedication to Hunters.

Glynis FrewChief Executive Officer

FINANCIAL REVIEW

Income Summary	2016 £m	2015 £m	Movement
Network Income	35.4	30.2	+17%
Turnover	13.8	12.0	+15%
EBITDA	2.06	1.57	+31%
Adjusted profit before tax	1.86	1.42	+31%
EPS	2.84p	2.76p	+3%
Adjusted EPS	5.92p	4.74p	+25%
DPS	1.90p	1.50p	+27%

Balance Sheet Summary	2016 £m	2015 £m
Cash	1.2	1.2
Net Assets	5.6	5.0
Net Debt	1.2	1.1
Net Debt / EBITDA	0.6x	0.7x

Revenue

Group revenue for the financial year ended 31 December 2016 increased by 15% to £13.8 million (2015: £12.0 million). This was driven by the following factors:

· Management Service Fees ("MSF") from franchised branches increased due to the 32 new franchisee branches that joined the Group in 2015 and a further 30 new franchisee branches that joined the Group in 2016;

· Full year equivalent following the acquisition of the 23 branch network, Country Properties, operating in and around Hertfordshire, Bedfordshire and Cambridgeshire in May 2015;

· Lettings revenue grew as we introduced lettings to new franchisees and continued to grow our existing lettings offices. Network Income for Lettings grew 19% (2015: 28%).

Adjusted EDBITDA (earnings before interest, tax, one off costs and depreciation/amortisation)

Adjusted EBITDA provides a key measure of progress made. Adjusted EBITDA for the year to December 2016 was £2.06 million, an increase of 31% on the same period last year (2015: £1.57 million).

Administrative expenses increased by £1.3 million during the year. Higher costs in 2016 were in part due to full year additional running costs associated with being a publically quoted company and also the first full year of costs since the acquisitions of Country Properties and RealCube.

Adjusted profit before tax (adjusted to exclude amortisation, amortised finance costs, acquisition costs, one off costs and finance income)

Adjusted profit before tax was £1.86 million, an increase of 31% over the prior period (2015: £1.42 million).

Amortisation and acquisition costs increased significantly during the period, as the Group continued to accelerate its growth through the acquisition element of its strategy.

Earnings per share

Basic earnings per share for the year ended 31 December 2016 was 2.84p (2015: 2.76p) based on a weighted average of 28,365,454 shares (2015: 26,317,492) in issue during the year.

Adjusted earnings per share

Adjusted earnings per share, excluding amortisation and acquisition costs, finance timing and investment income and using standard tax rates for the year to December 2016, was 5.92p (2015: 4.74p) an increase of 25%.

Dividends

The Board is proposing a final dividend of 1.30p per share for 2016, which subject to shareholder approval at the AGM on the 19 May 2017, will be paid to shareholders by 24 May 2017 based on the register of shareholders as at 27 April 2017. Taking this together with the interim dividend of 0.6p paid to shareholders on 19 October 2016, this equates to a total dividend for the year of 1.90p an increase of 27%. The Company intends to pay a progressive dividend going forwards.

Liquidity

The Group had cash balances of £1.2 million at 31 December 2016 (2015: £1.2 million).

In September 2016 the Group refinanced and secured facilities totaling £5.0 million to support the ongoing expansion of its franchising activities. The facility is a quarterly rolling facility with repayments of £22.5k each quarter.

Total bank facilities available to the Group are £5.0 million of which £2.2 million is drawn.

Financial Position

The Group has generated strong cashflow from operations of £1.7m (2016: £0.9m) which is expected to continue in 2017. These cashflows, together with undrawn facilities available, ensure the Group is in a strong financial position from which to carry out its strategy to grow the franchise business both organically and through acquisition in the coming year.

Ed JonesChief Financial Officer

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

FOR THE YEAR ENDED 31 DECEMBER 2016

		2016		2015
	Notes	£000s		£000s

Revenue	3	13,833		12,045

Administrative expenses			(11,772)		(10,471)



Operating profit before depreciation, amortisation, acquisition & share-based payment expenses		2,061		1,574

Depreciation and profit on disposal	4		(104)		(162)
Amortisation and profit on disposal	4		(584)		(368)
Business combination acquisition expenses	15		(30)		(57)
Share-based payment expense	25		(192)		(12)



Operating profit	4	1,151		975

Finance income	7	4		88
Finance costs	8		(168)		(183)



Profit before taxation		987		880

Taxation	9		(181)		(158)



Profit for the financial year		806		722

Other comprehensive income		-		-



Total comprehensive income for the year		806		722



Profit and total comprehensive income for the financial year attributable to:
Equity holders of the parent		806		726
Non-controlling interests		-			(4)



		806		722



Earnings per share
Basic (pence per share)	11	2.84		2.76



Diluted (pence per share)	11	2.72		2.66

CONSOLIDATED STATEMENT OF FINANCIAL POSITION

AS AT 31 DECEMBER 2016

		2016		2015
	Notes	£000s		£000s

Non-current assets
Goodwill	12	3,973		3,973
Other intangible assets	12	4,078		3,439
Property, plant and equipment	13	429		340
Investments	14	1		1
Deferred tax assets	23	82		43



		8,563		7,796



Current assets
Trade and other receivables	16	1,452		1,629
Cash and cash equivalents		1,187		1,211



		2,639		2,840



Total assets		11,202		10,636



Current liabilities

Borrowings	17		(366)		(1,014)
Obligations under finance leases	18		(47)		(37)
Current tax liabilities			(117)		(162)
Trade and other payables	19		(2,376)		(2,492)



			(2,906)		(3,705)



Non-current liabilities
Borrowings	17		(1,993)		(1,309)
Obligations under finance leases	18		(81)		(30)
Other payables	20		(52)		(68)



			(2,126)		(1,407)



Provisions for liabilities
Provisions	22		(66)		(75)
Deferred tax liability	23		(456)		(465)



			(522)		(540)



Net assets		5,648		4,984

Equity
Attributable to the owners of the parent:
Share capital	26	1,145	1,131
Share premium account	27	2,633	2,579
Merger reserve		899	899
Retained earnings		971	375



		5,648	4,984



Total equity		5,648	4,984



The financial statements were approved by the board of directors and authorised for issue on 11 April 2017.

COMPANY STATEMENT OF FINANCIAL POSITION

AS AT 31 DECEMBER 2016

		2016		2015
	Notes	£000s		£000s

Non-current assets
Investments	14	1,071		879

Current assets
Trade and other receivables	16	3,120		2,929



Total assets		4,191		3,808



Current liabilities

Current tax liabilities			(20)	-
Trade and other payables	19		(27)		(26)



			(47)		(26)



Net assets		4,144		3,782



Equity
Share capital	26	1,145		1,131
Share premium account		2,633		2,579
Share option reserve		203		12
Retained earnings		163		60



Total equity		4,144		3,782



The financial statements were approved by the board of directors and authorised for issue on 11 April 2017.

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

FOR THE YEAR ENDED 31 DECEMBER 2016

		Share capital	Share premium account	Merger reserve		Retained earnings		Total equity attributable to owners of the parent		Non-controlling interests		Total equity
	Notes	£000s	£000s	£000s		£000s		£000s		£000s		£000s

Balance at 1 January 2015		-	-	1,662			(222)		1,440	8		1,448

Year ended 31 December 2015:
Profit and total comprehensive income for the year		-	-	-		726		726			(4)		722
Issue of share capital	26	1,131	2,579	104		-		3,814		-		3,814
Dividends	10	-	-	-			(141)		(141)		-		(141)
Credit to equity for equity settled share-based payments	25	-	-	-		12		12		-		12
Share for share exchange		-	-		(867)		-		(867)		(4)		(871)



Balance at 31 December 2015		1,131	2,579	899		375		4,984		-		4,984

Year ended 31 December 2016:
Profit and total comprehensive income for the year		-	-	-		806		806		-		806
Issue of share capital	26	14	53	-		-		67				67
Dividends	10	-	-	-			(453)		(453)		-		(453)
Credit to equity for equity settled share-based payments	25	-	-	-		192		192		-		192
Deferred tax on share-based payment transactions		-	-	-		52		52		-		52
Exercise of share options		-	1	-			(1)		-	-		-



Balance at 31 December 2016		1,145	2,633	899		971		5,648		-		5,648

COMPANY STATEMENT OF CHANGES IN EQUITY

FOR THE YEAR ENDED 31 DECEMBER 2016

		Share capital	Share premium account	Share option reserve		Retained earnings		Total
	Notes	£000s	£000s	£000s		£000s		£000s

Balance at 1 January 2015		-	-	-		-		-
Period ended 31 December 2015:
Profit and total comprehensive income for the year		-	-	-		201		201
Issue of share capital	26	1,131	2,579	-		-		3,710
Dividends	10	-	-	-			(141)		(141)
Transfers		-	-	12		-		12



Balance at 31 December 2015		1,131	2,579	12		60		3,782



Year ended 31 December 2016:
Profit and total comprehensive income for the year		-	-	-		556		556
Issue of share capital	26	14	53	-		-		67
Dividends	10	-	-	-			(453)		(453)
Share based payment expense of subsidiary	14	-	-	192		-		192
Exercise of share options		-	1		(1)		-	-



Balance at 31 December 2016		1,145	2,633	203		163		4,144

CONSOLIDATED STATEMENT OF CASH FLOWS

FOR THE YEAR ENDED 31 DECEMBER 2016

		2016		2015
	Notes	£000s		£000s

Cash flows from operating activities

Operating profit		1,151		975
Adjustments for:

Share-based payment expense	25	192		12
Depreciation of property, plant and equipment	13	134		162
Gain on disposal of property, plant and equipment	4		(17)		(30)
Amortisation and impairment of intangible assets	12	597		368
Gain on disposal of intangible assets	4		(13)	-
Release of provisions	22		(16)		(5)
Costs of acquisition	15	30		57
Changes in working capital:

Decrease/(increase) in trade and other receivables	16	177			(392)
(Decrease)/increase in trade and other payables	19		(130)	2



Cash generated from operations		2,105		1,149
Interest paid	8		(111)		(85)
Income taxes paid			(292)		(180)



Net cash inflow from operating activities		1,702		884



Investing activities
Purchase of intangible assets	12		(887)		(866)
Proceeds on disposal of intangibles		42		-
Purchase of property, plant and equipment	13		(124)		(76)
Proceeds on disposal of property, plant and equipment		20		32
Business acquisitions, net of cash acquired	15		(325)		(1,390)
Payment of deferred considerations			(23)		(89)
Purchase of investments		-			(192)
Proceeds on disposal of investments		-		263
Interest received	7	4		5



Net cash used in investing activities			(1,293)		(2,313)


Financing activities
Proceeds from issue of own shares		68		2,700
Share issue costs		-			(558)
Proceeds from issue of subsidiary shares prior to acquisition		-		104
Repayment of deferred consideration debentures	17		(375)		(470)
Proceeds of new bank loans		2,175		380
Repayment of bank loans and borrowings	17		(1,807)		(495)
Payment of finance leases obligations	18		(41)		(26)
Dividends paid	10		(453)		(141)



Net cash (used in)/generated from financing activities			(433)	1,494



Net (decrease)/increase in cash and cash equivalents			(24)	65

Cash and cash equivalents at beginning of year		1,211		1,146



Cash and cash equivalents at end of year		1,187		1,211



Major non-cash transactions
During the year the Group entered into a number of non-cash transactions as follows: 1. The Group has entered into new finance lease contracts with an inception value of £101,787.

Company Statement of Cash Flows
The Company has not held any cash and cash-equivalents during the year or the comparative year. During the prior year the Company entered into a number of equity transactions which were enacted via intercompany accounts. Accordingly, the Directors have not presented a Company Statement of Cash Flows.

NOTES TO THE FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 DECEMBER 2016

1	Accounting policies

	Basis of Preparation
	The financial information set out above does not constitute the Company's statutory accounts for the years ended 31 December 2016 or 2015, but is derived from those accounts. Statutory accounts for 2015 have been delivered to the Registrar of Companies and those for 2016 will be delivered following the Company's Annual General Meeting. The auditors have reported on those accounts: their reports were unqualified, did not draw attention to any matters by way of emphasis and did not contain a statement under Sections 498(2) or (3) of the Companies Act 2006. These consolidated financial statements have been prepared in accordance with International Financial Reporting Standards (IFRSs) as adopted by the European Union and the Companies Act 2006 applicable to companies reporting under IFRS. The consolidated financial statements have been prepared under the historical cost convention

2	Judgements and key sources of estimation uncertainty

	The preparation of the financial statements in conformity with IFRS requires management to make judgments, estimates and assumptions that affect the application of policies and reported amounts of assets and liabilities, income and expenses. The estimates and associated assumptions are based on historical experience and various other factors that are believed to be reasonable under the circumstances, the results of which form the basis of making the judgements about carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates. Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised and in any future periods affected.

	Critical judgements
	The following judgements (apart from those involving estimates) have had the most significant effect on amounts recognised in the financial statements:

	Basis of consolidation
	The Group was formed on 27 March 2015 when Hunters Property PLC acquired shares in its subsidiaries through a share-for-share exchange. This type of common control transaction falls outside the scope of IFRS 3 and therefore UK GAAP has been referred to for best practice guidance. The result is that the Group adopted merger accounting as a basis for the Group consolidation.

	Franchisee revenue
	Franchisee sign up fees are recognised upfront at the inception of a franchisee contract, which in the Directors' opinion matches to the estimated cost of time and knowledge to create the franchiser-franchisee contractual arrangement.

	Key sources of estimation uncertainty
	The estimates and assumptions which have a significant risk of causing a material adjustment to the carrying amount of assets and liabilities are as follows:

	Provisions
	The amount recognised as a provision is the best estimate of the consideration required to settle the present obligation at the reporting date. Each period the Directors assess the risks and uncertainties surrounding the obligation and review the discount rates applied when calculating the present value. When reviewing the discount rates the Directors refer to the Group weighted average cost of capital. Further details on the assumptions made for specific provisions are disclosed in note 22.

	Business combinations and goodwill
	The Group has made acquisitions during the year and comparative year. Judgements and estimations are made in respect of the measurement of the provisional fair values of assets and liabilities acquired and the consideration transferred. Furthermore, estimation techniques have been used to value the intangibles acquired. The Directors test annually for impairment of the Group's intangible assets and goodwill, details of which are given in note 12.

3	Revenue

	IFRS 8, Operating Segments, requires operating segments to be identified on the basis of internal reports of the Group that are regularly reviewed by the Group's chief operating decision maker. The chief operating decision maker of the Group is considered to be the Board of Directors. The Group has operating segments: Residential Sales, Lettings, and Franchising. Due to the specific nature of the Group's market, each component of revenue naturally falls within one of these segments. The operating segments are monitored by the Group's chief operating decision maker and strategic decisions are made on the basis of adjusted segment operating results. All assets, liabilities and revenues are located in, or derived in, the United Kingdom. The Group does not have any major customers which account for 10% or more of revenues.

	Segmental analysis of revenue

																		2016								2015
																		£000s								£000s

	Residential sales																	5,042								4,840
	Lettings sales																	3,176								2,460
	Franchising sales																	4,035								3,271
	Other																	1,580								1,474



																		13,833								12,045



	Revenue analysed by geographical market
																		2016								2015
																		£000s								£000s

	United Kingdom																	13,833								12,045



	Further disclosure of the segmental analysis of goodwill is made in note 12. Due to the nature of operations, the Directors, as the chief operating decision-making body, review financial information for the Group's overall business and have identified a single operating segment at cost and asset / liability levels. Accordingly, further disclosure has not been made of these elements.

4	Operating profit
																		2016								2015
																		£000s								£000s
	Operating profit for the year is stated after charging/(crediting):

	Depreciation of owned property, plant and equipment																	120								149
	Depreciation of property, plant and equipment held under finance leases																	14								13
	Gain on disposal of property, plant and equipment																			(30)								(30)
	Amortisation of intangible assets																	597								368
	Write back of loans																	-								80
	Gain on disposal of intangible assets																			(13)								-
	Research and Development tax credits																	-										(46)
	Share-based payments (note 25)																	192								12
	Operating lease charges (including rent)																	724								459



	The Group's subsidiary RealCube Limited has undertaken research and development activities on which tax credits were received in the prior year. Expenses in relation to this are included within employment costs.

5	Auditor's remuneration
																		2016								2015
	Fees payable to the Company's auditor and its associates:																	£000s								£000s

	For audit services
	Audit of the financial statements of the Group and Company																	15								15
	Audit of the Company's subsidiaries																	25								25



																		40								40



	No non-audit services were provided to the Group by its auditors.

6	Employees

	The average monthly number of persons (including Directors) employed by the Group during the year was:

																		2016								2015
																		Number								Number

	Sales and administration																	184								180
	Directors																	5								5



																		189								185


	Their aggregate remuneration comprised:
																		2016								2015
																		£000s								£000s

	Wages and salaries																	5,718								5,087
	Social security costs																	511								508
	Pension costs																	89								110



																		6,318								5,705



	Details of Directors' remuneration is provided in note 31.

7	Finance income
																		2016								2015
																		£000s								£000s
	Interest income
	Interest on bank & similar deposits																	4								1
	Interest on other financial instruments																	-								3
	Finance income on financial assets held at amortised cost																	-								13



	Total interest revenue																	4								17

	Income from non-current asset investments
	Gain on disposal of financial assets held for trading																	-								71



	Total income																	4								88



	Investment income includes the following:

	Interest on financial assets not measured at fair value through profit or loss																	4								15


8	Finance costs
																		2016								2015
																		£000s								£000s
	Interest on financial liabilities measured at amortised cost:
	Interest on bank overdrafts and loans																	98								71
	Interest on finance leases																	13								14



																		111								85



	Other finance costs:
	Unwinding of discount on loans and borrowings																	50								89
	Unwinding of discount on provisions																	7								9



																		57								98



	Total finance costs																	168								183


9	Taxation
																		2016								2015
																		£000s								£000s
	Current tax
	UK corporation tax on profits for the current period																	246								221
	Adjustments in respect of prior periods																			(1)								(1)



	Total current tax																	245								220



	Deferred tax
	Origination and reversal of temporary differences																			(31)								(58)
	Changes in tax rates																			(21)								(4)
	Deferred tax on share-based payments charge																			(12)								-



	Total deferred tax																			(64)								(62)



	Total tax charge																	181								158



	The charge for the year can be reconciled to the profit per the Consolidated Statement of Comprehensive Income as follows:

												2016															2015
												£000s															£000s

	Profit before taxation											987															880



	Expected tax charge based on a corporation tax rate of 20% (2015 - 20%)											197															176
	Tax effect of expenses that are not deductible in determining taxable profit											4															31
	Tax effect of utilisation of tax losses not previously recognised													(6)															-
	Change in unrecognised deferred tax assets											-																	(7)
	Effect of change in corporation tax rate													(21)															(4)
	Permanent capital allowances in excess of depreciation											-																	(3)
	Depreciation on assets not qualifying for tax allowances											2															-
	Amortisation on assets not qualifying for tax allowances											8															-
	Share based payment charge													(5)															2
	Under provided in prior years													(1)															(1)
	Other adjustments											3																	(36)



	Total tax charge											181															158



	In addition to the amount charged to the income statement and other comprehensive income, the following amounts relating to tax have been recognised directly in equity:

													2016														2015
													£000s														£000s

	Deferred tax:
	Change in estimated excess tax deductions related to share based payments														(52)														-



	The UK corporation tax rate was 20%, throughout the year. A reduction in the UK corporation tax rate from 20% to 19% (effective from 1 April 2017) was substantively enacted in October 2015. Further reduction to 17% (effective from 1 April 2020) was substantively enacted in September 2016. These rates have therefore been considered when calculating deferred tax at the reporting date. Deferred tax balances at the reporting date are measured at 18% (2015: 19%), except for on share options which are expected to be exercised before 1 April 2020 and as such are measured at 19%.

10	Dividends
					2016				2015										2016								2015
					per share				per share										£000s								£000s

	Amounts recognised as distributions to equity holders:

	Final paid (pence per share)				1.00				-										283								-
	Interim paid (pence per share)				0.60				0.50										170								141



					1.60				0.50										453								141



	The proposed final dividend for the year ended 31 December 2016 is:
																											2016
																			Per share								Total
																											£000s
	Ordinary shares (pence per share)																		1.30								372



	The proposed final dividend is subject to approval by shareholders and has not been included as a liability in these financial statements.

11	Earnings per share

	The calculation of the basic and diluted earnings per share is based on the following data:

																2016								2015
	Earnings															£000s								£000s
	Earnings for the purpose of basic earnings per share being net profit attributable to owners of the parent															806								726
	Effects of dilutive potential ordinary shares															-								-



	Earnings for the purposes of diluted earnings per share															806								726



																2016								2015
	Number of shares															No.								No.
	Weighted average number of ordinary shares for the purposes of basic earnings per share															28,365,454								26,317,492

	Net weighted average number of diluted potential ordinary shares for the purposes of diluted earnings per share															1,264,396								945,051



	Weighted average number of ordinary shares for the purposes of diluted earnings per share															29,629,850								27,262,543



	Basic earnings per share (pence per share)															2.84								2.76



	Diluted earnings per share (pence per share)															2.72								2.66



	In each period there were share options outstanding. As at 31 December 2016 these were mostly in the money, and are due to expire at various stages over the next 10 years.

	The Directors use adjusted earnings before time-value interest, investment revenue, amortisation, costs of acquisition, and share-based payment expenses ("Adjusted Earnings") as a measure of ongoing profitability and performance. The calculated Adjusted Earnings for the current period of accounts is as follows:

	Profit after taxation attributable to equity owners of the parent															806								726
	Adjusted for:
	Time-value interest costs															57								99
	Investment revenues																(4)								(15)
	Amortisation															597								368
	Costs of acquisition															30								57
	Share-based payment expense															192								12



	Adjusted Earnings															1,678								1,247



	Basic Adjusted Earnings per share (pence per share)															5.92								4.74



12	Goodwill and other intangible assets

	Group	Goodwill		Software			FDG's & rebrands				Brands												Customer lists									Total
		£000s		£000s			£000s				£000s												£000s									£000s
	Cost
	At 1 January 2015	3,579		-			348				465												164									4,556
	Additions - separately acquired	-		86			780				-												-									866
	Additions - business combinations	429		507			-				169												1,498									2,603
	Disposals	-		-				(10)			-												-										(10)



	At 31 December 2015	4,008		593			1,118				634												1,662									8,015

	Additions - separately acquired	-		27			857				3												-									887
	Additions - business combinations	-		-			-				-												378									378
	Disposals	-		-				(36)			-												-										(36)



	At 31 December 2016	4,008		620			1,939				637												2,040									9,244



	Amortisation and impairment
	At 1 January 2015	35		-			45				19												136									235
	Amortisation charged for the year	-		40			84				58												186									368



	At 31 December 2015	35		40			129				77												322									603

	Amortisation charged for the year	-		85			131				64												317									597
	Disposals	-		-				(7)			-												-										(7)



	At 31 December 2016	35		125			253				141												639									1,193



	Carrying amount
	At 31 December 2016	3,973		495			1,686				496												1,401									8,051



	At 31 December 2015	3,973		553			989				557												1,340									7,412



	The Company had no intangible assets as at 31 December 2016 or 31 December 2015.

	Franchise Development Grants ("FDG's") and rebrand costs are expenses incurred at the inception of certain contracts with franchisees in order to assist with the transition to using the Hunters brand name. The amounts invested are amortised over the minimum life of the underlying franchise contract, typically 10 to 15 years.
	The Group tests goodwill annually for impairment, or more frequently if events or changes in circumstances indicate that the asset might be impaired. Goodwill is assessed for impairment by comparing the carrying values with the value-in-use calculation, which is determined by calculating the net present value (NPV) of future cash flows arising from the original acquired business. The NPV of future cash flows is based on budgets and forecasts for the next 5 years to 2021, using growth rates of 0% - 6% based on past experience and outlook. Thereafter growth is assumed to be 0-3% in to perpetuity based on long term housing sector growth rates. A discount rate of 7% has been used based on the Group's estimated cost of capital. The key sensitivities in assessing the value in use of goodwill are forecast cashflows and the discount rate applied as follows: · A 1% reduction in long term growth rates would have no impact on carrying values; and · A 2% increase in the discount applied would have no impact on carrying values.

	The carrying amounts of goodwill have been assigned to the following cash-generating units:

																			Group
																			2016								2015
																			£000s								£000s
	Residential sales																		1,330								1,330
	Lettings																		561								561
	Franchising																		2,048								2,048
	Other																		34								34



																			3,973								3,973


13	Property, plant and equipment

	Group		Leasehold land and buildings			Plant and machinery				Fixtures, fittings and equipment											Motor vehicles									Total
			£000s			£000s				£000s											£000s									£000s
	Cost
	At 1 January 2015		102			307				22											122									553
	Additions		3			54				10											9									76
	Business combinations		-			1				5											-									6
	Disposals		-			-				-												(48)									(48)

	Transfers			(93)					93			-							-							-



	At 31 December 2015		12					455				37							83							587

	Additions		4					43				174							5							226
	Disposals		-						(1)				-							(48)							(49)



	At 31 December 2016		16					497				211							40							764



	Depreciation and impairment
	At 1 January 2015		5					96				5							27							133
	Depreciation charged in the year		6					91				13							52							162
	Eliminated in respect of disposals		-					-				-								(48)							(48)
	Transfers			(2)					2			-							-							-



	At 31 December 2015		9					189				18							31							247

	Depreciation charged in the year		2					87				15							30							134
	Eliminated in respect of disposals		-					-				-								(46)							(46)



	At 31 December 2016		11					276				33							15							335



	Carrying amount
	At 31 December 2016		5					221				178							25							429



	At 31 December 2015		3					266				19							52							340



	The Company had no property, plant and equipment assets at 31 December 2016 or 31 December 2015.

	The net carrying value of property, plant and equipment includes the following in respect of assets held under finance leases or hire purchase contracts, which are secured by the lessors' title to the assets. The depreciation charge in respect of such assets amounted to £24,622 (2015 - £13,125) for the year.
															Group
															2016							2015
															£000s							£000s

	Fixtures, fittings and equipment														172							-
	Plant and machinery														-							64
	Motor vehicles														11							27



															183							91



	Bank borrowings are secured by a fixed and floating charge over the current and future assets of the Group that include the property plant and equipment, as disclosed further in note 17.

14	Investments
					Group										Company
					2016					2015					2016							2015
		Notes			£000s					£000s					£000s							£000s

	Investments in subsidiaries	33			-					-					867							867
	Other investments in subsidiaries	33			-					-					204							12
	Unlisted investments				1					1					-							-



					1					1					1,071							879



	Movements in non-current investments
	Group									Loans					Shares							Total
										£000s					£000s							£000s
	Cost or valuation
	At 1 January 2015									74					1							75
	Additions									-					192							192
	Unwinding of discount									7					-							7
	Transfer to intercompany receivable										(81)						-							(81)
	Disposals									-							(192)							(192)



	At 31 December 2015									-					1							1

	Additions									-					-							-
	Disposals									-					-							-



	At 31 December 2016									-					1							1



	Impairment
	At 1 January 2015 & 31 December 2015									-					-							-



	Carrying amount
	At 31 December 2016									-					1							1



	At 31 December 2015									-					1							1



	Movements in non-current investments
	Company									Equity investments in subsidiaries					Other investments in subsidiaries							Total
										£000s					£000s							£000s
	Cost or valuation
	At 1 January 2015									-					-							-
	Additions									867					-							867
	Additions through share based payment expense									-					12							12



	At 31 December 2015									867					12							879

	Additions through share based payment expense									-					192							192



	At 31 December 2016									867					204							1,071



	Impairment
	At 31 December 2016									-					-							-



	At 31 December 2016									-					-							-



	Carrying amount
	At 31 December 2016									867					204							1,071



	At 31 December 2015									867					12							879



15	Business combinations

	Acquisition of two Manchester lettings books
	During the year, the Group acquired two Manchester lettings books. The consideration paid totalled £310,000, being settled in cash. As part of the acquisitions, the Directors have identified intangible assets, being the lettings books. This was determined to be equal to the amount paid for the book, after adjustment for deferred tax. Historical data and forecasts have been used, together with an appropriate discount rate and an assumption of a useful life of each lettings book to estimate the fair value of this intangible.

							Carrying value							Fair value adjustments							Fair value recognised on acquisition
	Assets						£000s							£000s							£000s
	Intangible assets						-							378							378



	Total assets						-							378							378

	Liabilities
	Deferred tax liabilities						-							68							68



	Total liabilities						-							68							68



	Total identifiable net assets						-							310							310



	Goodwill arising on acquisition																				-



	Purchase consideration transferred																				310



	The analysis of the cash flows on acquisition is:
																					£000s
	Transaction costs of the acquisition																						(15)
	Cash and cash equivalents acquired on combination																				-
	Cash and cash equivalents paid for the combination																						(310)



	Net cash flow on acquisition																						(325)



	From the date of acquisition, the lettings books contributed £107,675 of revenue and £65,988 of profit before tax from continuing operations of the Company. In addition to the above, the business combination acquisition expenses disclosed on the face of the Consolidated Statement of Comprehensive Income includes £15,000 (2015 - £nil) of expenses accrued for due diligence performed on a target business, which was completed on 21 March 2017 as disclosed further in note 30.

16	Trade and other receivables
						Group										Company
						2016				2015						2016							2015
	Amounts falling due within one year:					£000s				£000s						£000s							£000s

	Trade receivables					852				871						-							-
	Amounts due from subsidiary undertakings					-				-						3,120							2,929
	Other receivables					144				266						-							-
	Prepayments and accrued income					456				492						-							-



						1,452				1,629						3,120							2,929



	Trade receivables at the reporting date are shown above net of provisions. Trade receivables are stated net of impairment for estimated irrecoverable amounts of £93,271 (2015: £124,957). This impairment has been determined by reference to past default experience and known issues. Write offs are made when the irrecoverable amount becomes certain. The Directors consider that the carrying amount of trade and other receivables approximates to their fair value. Movement on the allowance for irrecoverable amounts on trade receivables are as follows:

																2016							2015
																£000s							£000s
	Beginning of the year															125							41
	Acquired on business combinations															-							30
	Provision for bad receivables															15							69
	Released during the year																	(47)							(15)



	End of the year															93							125



	An analysis of the trade receivables past due but not impaired is:
																2016							2015
																£000s							£000s
	60 to 120 days															27							66
	More than 120 days															135							129
	Less provision																	(93)							(125)



	Total trade receivables past due but not impaired															69							70
	Add:															-							-
	Less than 60 days															783							801



	Net trade receivables															852							871



	The Directors consider the credit quality of trade and other receivables that are neither past due nor impaired to be good.
17	Borrowings
																Group
																2016							2015
																£000s							£000s

	Deferred consideration debenture loans															287							618
	Bank loans															2,072							1,705



																2,359							2,323



	Payable within one year															366							1,014
	Payable after one year															1,993							1,309



	During the year, the Group replaced the five bank loans with two new flexible loan facilities. The first loan has a maximum facility amounting to £4,550,000; at the year end £1,725,106 had been drawn down and is disclosed as payable after one year. The loan has flexible repayment terms and bears interest at 2.80% above Libor. The second loan received in the year amounted to £450,000; at the year end £434,913 was outstanding. The loan is repayable at £90,000 per annum and bears interest at 2.80% above Libor. Included within the above are establishment fees of £88,000 (2015 - £nil) which are netted off the total liability presented. Both the above bank loans are secured by a fixed and floating charge over the current and future assets of the Group. All of the Group's borrowings are due for repayment within five years. Debenture loans relate to non-interest bearing loan notes issued as deferred consideration which are redeemable in full on 31 July 2017. These are carried at their present value, determined using the Company's discount rate of 10%, and are carried at £287,382 as at the year end. Finance costs are recognised as the debenture loan unwinds towards maturity.

18	Obligations under finance leases

	Future minimum lease payments due under finance leases:
																Group
																2016							2015
																£000s							£000s
	Within one year															58							44
	In two to five years															97							32



																155							76
	Less: future finance charges																	(27)							(9)



																128							67



	The finance leases relate to improvements and furniture for use in the Head Office, and to motor vehicles included within non-current assets. There are no lease incentives or contingent elements attracting to the leases.

19	Current trade and other payables
						Group										Company
						2016				2015						2016							2015
						£000s				£000s						£000s							£000s

	Other taxation and social security					711				925			-				-
	Trade payables					645				556			-				-
	Other payables					260				213			-				-
	Accruals and deferred income					760				798			27				26



						2,376				2,492			27				26



20	Non-current trade and other payables
						Group							Company
						2016				2015			2016				2015
						£000s				£000s			£000s				£000s

	Other payables					52				68			-				-



21	Financial instruments

	Market and liquidity risks
	The Group trades entirely within the UK property market, and accordingly there is a risk relating to the underlying performance of that market; this creates an exposure to the risk of large-scale failure in the property trading market which would have a corresponding impact on the results of the Group. The Directors monitor this risk closely with the intention to foresee downturns in trade. Within the Group there exists a sizeable lettings division which generates a fixed percentage income based on the letting and management of properties owned by third parties, and the Directors consider this to be a more secure income stream and a suitable diversification of the trade and corresponding risk, based on historic performance whereby a downturn in the property trading market creates more buoyancy within the lettings market, and vice versa. As such, the Directors believe that the Group maintains sufficient liquidity and flexibility to continue trading through a potential downturn in the UK property market. In the year the Group refinanced its bank borrowings as further explained in note 17. The Group has a bank loan and loan facility upon which interest is charged at 2.8% over the Bank of England base rate. The outstanding value of these bank loans at the year end are £2,160,019 (2015 - £1,705,295). The directors do not consider that the Group is exposed to a material risk from fluctuations in these interest rates; had the base rate been 2.0% higher throughout the increased interest costs would have been approximately £43,000 (2015 - £31,000). The Group makes use of structured loans to finance its acquisitions and ongoing trading activities as an alternative to overdraft financing, due to the certainty of repayment timings and predictable lower interest rates which attract to this. Accordingly, the Directors consider that the market risks arising from these interest-bearing loans are acceptable and minimal on a risk-reward profile compared to overdraft finance. Similarly, fixed rate finance lease agreements are used to acquire property, plant and equipment; this ensures that the Group maintains its existing working capital and ensures certainty of costs at the point of acquisition of those assets. The Group does not trade in overseas markets and has no financial instruments denominated in non-Sterling currencies, and accordingly it has no exposure to currency risks.

	Credit risk
	The Group does not make sales under the traditional credit term agreement model, with cash typically being recognised at the completion date of property or upon receipt of regular rent from tenants; credit is, however, granted to franchisees, financial services partners and survey & valuation partners. The highest risk exposure is in relation to loans and franchisees. The Group closely monitors the performance of its franchisees, on a frequent and ongoing basis. Operationally the Group are actively involved in the running of the franchising businesses, including frequent exchange of financial and key performance data, and are able to manage their own credit risk by using this knowledge to minimise exposure to potential bad debt. Additionally, franchisees are encouraged to remit via Direct Debit arrangements, which helps to maintain the Group's working capital whilst mitigating against long-term credit risk exposure. Only reputable and accredited partners are used, and ledger balances are carefully monitored to minimise exposure to material credit risk.

	Capital management
	The Group's objectives when managing capital are to safeguard the Group's ability to continue as a going concern in order to provide returns for shareholders and other stakeholders. The Group manages the capital structure, being cash and cash equivalents, availability of longer term bank funding, and reinvestment of a proportion of profits generated, and makes changes in light of movements in economic conditions. In order to maintain or adjust the capital structure, the Group may adjust its borrowings and investment decisions. The most substantial change during the year to 31 December 2016 is the replacement of bank borrowing arrangements.

							Group						Company
							2016			2015			2016				2015
							£000s			£000s			£000s				£000s
	Carrying amount of financial assets
	Debt instruments measured at amortised cost						2,182			2,348			3,120				2,929
	Equity instruments measured at cost less impairment						1			1			-				-



							2,183			2,349			3,120				2,929



	Carrying amount of financial liabilities
	Measured at amortised cost						3,442			3,227			26				26



	The undiscounted contractual maturity analysis for Group financial instruments is shown below. The maturity analysis reflects the contractual undiscounted cashflows, including future interest charges, which may differ from the carrying value of the liabilities as at the reporting date.

	Financial assets			Demand and less than 3 months			From 3 to 12 months			From 12 months to 2 years			From 2 to 5 years				Total

	Trade and other receivables			1,137			-			-			-				1,137
	Cash and cash equivalents			1,211			-			-			-				1,211



	As at 31 December 2015			2,348			-			-			-				2,348



	Trade and other receivables			996			-			-			-				996
	Cash and cash equivalents			1,187			-			-			-				1,187



	As at 31 December 2016			2,183			-			-			-				2,183




	Financial liabilities				Demand and less than 3 months			From 3 to 12 months		From 12 months to 2 years				From 2 to 5 years				Total

	Trade and other payables				751			182		23				39				995
	Debenture loans				-			375		295				-				670
	Bank loans and overdrafts				130			477		485				614				1,706
	Other loans				-			19		-				-				19
	Finance leases				9			28		30				-				67



		As at 31 December 2015			890			1,081		833					653				3,457



		Trade and other payables			887			17		23					17				944
		Debenture loans			-			295		-					-				295
		Bank loans and overdrafts			23			56		90					1,904				2,073
		Other loans			-			19		-					-				19
		Finance leases			8			38		26					55				127



		As at 31 December 2016			918			425		139					1,976				3,458



22		Provisions for liabilities
															Group
															2016				2015
										Notes					£000s				£000s

		Contingent acquisition costs													20				37
		Office dilapidations provision													46				38



															66				75
		Deferred tax liabilities								23					456				465



															522				540



		Movements on provisions apart from deferred tax liabilities:
										Contingent acquisition costs			Office dilapidations provision				Total
		Group								£000s			£000s				£000s
		At 1 January 2015								119			32				151
		Additional provisions in the year								-			3				3
		Reversal of provision									(5)			-				(5)
		Utilisation of provision									(83)			-				(83)
		Unwinding of discount								6			3				9



		At 31 December 2015								37			38				75

		Additional provisions in the year								-			4				4
		Reversal of provision									(20)			-				(20)
		Unwinding of discount								3			4				7



		At 31 December 2016								20			46				66



		The contingent acquisition costs relate to amounts provided in respect of contingent payments due arising from the acquisition of Hunters Group Limited during the year to 31 December 2014. The provision is discounted to present value, with £20,000 (£19,462 discounted) falling contingently payable in July 2017.

		The office dilapidations provision has been created in respect of restoration costs anticipated for an office leased by the Group. The provision is anticipated to result in an ultimate cash outflow of £75,000 by the end of 2019.

23		Deferred taxation

		The following is the analysis of the deferred tax balances for financial reporting purposes:

							Liabilities						Assets
							2016			2015			2016				2015
		Group					£000s			£000s			£000s				£000s

		Accelerated capital allowances					46			19			-				-
		Decelerated capital allowances					-			-			-				17
		Fair value adjustments to intangible assets on business combinations					410			446			-				-
		Share based payments					-			-			64				-
		Dilapidations provision					-			-			8				7
		Other provisions and accruals					-			-			10				19



							456			465			82				43



		The Company did not have any deferred tax balances as at 31 December 2016 or 31 December 2015.

												Group
												2016				2015
	Movements in the year:											£000s				£000s
	Net liability at 1 January 2016											422				74
	Credit to profit and loss											(43)				(58)
	Charge to equity											(52)				-
	Effect of change in tax rate - income statement											(21)				(4)
	Acquired on business combinations											68				410



	Net liability at 31 December 2016											374				422



	Movements by category of deferred tax are as follows:

			Liability/(asset) at 1 January 2015				Charge to profit or loss			Effect of change in tax rate		Acquired on business combinations & other				Liability/(asset) at 31 December 2015
	Accelerated capital allowances		28						(9)	-		-				19

	Decelerated capital allowances			(17)					-		-			-									(17)
	Fair value adjustments to intangible assets on business combinations		108						(68)		(4)					410					446
	Dilapidations provision			(6)					(1)		-			-									(7)
	Other provisions and accruals			(11)					(8)		-			-									(19)
	Prior year adjustment			(28)					28		-			-							-



	Net deferred tax movement		74						(58)		(4)					410					422



			Liability/(asset) at 1 January 2016			Charge to profit or loss					Effect of change in tax rate			Acquired on business combinations & other							Liability/(asset) at 31 December 2016
	Accelerated capital allowances		19			30						(3)				-					46
	Decelerated capital allowances			(17)					17		-			-							-
	Fair value adjustments to intangible assets on business combinations		446						(85)		(19)					68					410
	Dilapidations provision			(7)					(1)		-			-									(8)
	Share based payments		-						(12)		-					(52)							(64)
	Other provisions and accruals			(19)					8		1			-									(10)



	Net deferred tax movement		422						(43)		(21)					16					374



		Within RealCube Limited there exists tax losses totalling £431,528 on which no deferred tax asset is recognised, due to restrictions on the use of these losses and uncertainty on timing of potential utilisation.

24		Retirement benefit schemes
																	2016						2015
		Defined contribution schemes															£000s						£000s

		Charge to profit and loss in respect of defined contribution schemes															89						110



		A defined contribution pension scheme is operated for all qualifying employees. The assets of the scheme are held separately from those of the Group in an independently administered fund.

25		Share-based payment transactions

		Group			Number of share options										Weighted average exercise price
					2016						2015				2016							2015
					Number						Number				£							£

		Outstanding at 1 January 2016			1,794,967						931,250				0.43							0.16
		Granted			675,000						887,156				0.04							0.54
		Exercised						(349,657)			(23,439)							0.19				0.42
		Expired						(53,250)			-				0.73							-



		Outstanding at 31 December 2016			2,067,060						1,794,967				0.23							0.28



		Exercisable at 31 December 2016			935,060						353,467				0.25							0.43





		The options exercised during the year had a weighted average share price on the date of exercise of £0.773. The options outstanding at 31 December 2016 had an exercise price ranging from £0.04 to £0.73, and a remaining contractual life ranging between May 2017 and January 2026.
		The options exist at 31 December 2016 across the following share option schemes:

		Option name & date of issue			Number of shares						Exercise price per share (£)				Fair value of scheme							Vesting period
		Employee share options			625,000						0.16				-							3 years
		Options issued January 2015			150,000						0.40				9,455							3 years
		Options issued May 2015			310,060						0.42				7,233							2 months
		Options issued December 2015			307,000						0.73				1,063							3 years
		Options issued January 2016 - 1			175,000						0.04				99,371							1 year
		Options issued January 2016 - 2			175,000						0.04				97,429							2 years
		Options issued January 2016 - 3			175,000						0.04				95,524							3 years
		Options issued January 2016 - 4			150,000						0.04				81,681							Up to 3.25 years



					2,067,060										391,756



		The fair value of the schemes are being expensed over the vesting period. All share options expire 10 years after the date of issue.

		Fair value of options granted
		The weighted average fair value of options granted during the year was £0.55 per share. Fair value was measured using the Black-Scholes model.

		Inputs were as follows:
							January options 1				January options 2						January options 3						January options 4
							£				£						£						£
		Weighted average share price					0.76				0.76						0.76						0.76
		Weighted average exercise price					0.04				0.04						0.04						0.04
		Expected volatility					2.30%				2.30%						2.30%						2.30%
		Risk free rate					0.61%				0.61%						0.61%						0.61%
		Expected dividends yields					1.90%				1.90%						1.90%						1.90%



		The 4th options were granted to a member of the Board and are contingent on certain events occurring, for which it is not possible to specify an exact date. Once such an event has taken place, the options can be immediately exercised. The Directors have modelled the probability of that event occurring and have determined that on a weighted average basis the options are most likely to have an exercise date of 30 April 2019, and accordingly the expense of these share options is being recognised to that date. The expected volatility is based on an assessment of the Group's historical volatility, adjusted where applicable for anticipated changes in the market.

							Group				Group						Company						Company
							2016				2015						2016						2016
							£000s				£000s						£000s						£000s
		Expenses recognised in the year
		Arising from equity settled share based payment transactions					192				12						-						-



26		Share capital
																			Group and Company
																			2016					2015
		Ordinary share capital																	£000s					£000s
		Issued and fully paid
		28,636,649 Ordinary of 4p each																	1,145					1,131



		The Company's sole class of equity shares carry one vote per share, and rank pari-passu in respect of dividend and capital distribution rights.

		Reconciliation of movements during the year:
																								Ordinary
																								Number

		At 1 January 2016																						28,286,992
		Issue of fully paid shares																						349,657



		At 31 December 2016																						28,636,649



		During the year, 349,657 share options were exercised at a total premium of £53,245.

27		Share premium account
										Group									Company
										2016		2015							2016					2015
										£000s		£000s							£000s					£000s

		At beginning of year								2,579		-							2,579					-
		Issue of new shares								53		3,337							53					3,337
		Share issue expenses								-			(758)							-					(758)
		Other movements								1		-							1					-



		At end of year								2,633		2,579							2,633					2,579



		During the period, shares were issued at a premium of £53,245, which related to the exercise of share options granted in prior periods. On exercise, a transfer of £1,013 has been recognised from other reserves in respect of the fair value of share options expensed matching to the shares issued.

28		Guarantees and contingent liabilities

		At 31 December 2016, the Group and Company had no guarantees or contingent liabilities (2015 - none) other than the borrowings disclosed in note 17 and secured over the assets of the Group including the Company. At 31 December 2016 the Group held client monies in approved bank accounts amounting to £4,481,494 (2015: £3,496,720). Neither the cash asset nor any corresponding obligation has been recognised by the Group.

29		Operating lease commitments

		Lessee
		Operating leases relating to land and buildings are on normal commercial terms with no rent-free periods or other incentives, and include requirements to restore sites at the end of the agreements for which amounts have been provided for. Other agreements relate to motor vehicles on terms of one to three years, with no lease incentives.

		At the reporting end date the Group had outstanding commitments for future minimum lease payments under non-cancellable operating leases, which fall due as follows:

																		Group
																		2016					2015
																		£000s					£000s
		Land and buildings
		Within one year																617					614
		Between two and five years																1,661					1,937
		In over five years																1,763					2,265



								4,041			4,816



	Other
	Within one year							22			40
	Between two and five years							1			21



								23			61



								4,064			4,877



30	Events after the reporting date

	Acquisitions On 24 March 2017, the Group purchased the trade and assets of Besley Hill Franchising Limited ("Besley Hill") for £2,300,000 in cash, together with £250,000 settled by way of issue of 421,578 new ordinary shares at a premium of £0.55301 per share, with these shares subject to a twelve month lock-in agreement. The most recent accounts of Besley Hill, to 31 March 2016, showed revenue of £914,570 and an unadjusted profit before tax of £18,238. As at the date of approval of the financial statements, the Directors are still assessing the fair values acquired and accordingly have not presented further information in respect of the acquisition nor on its expected impact on Group results. Other than the issue of shares to the vendors as noted above, the acquisition was financed through a combination of existing cash, a £1,000,000 extension to the group's revolving credit facility, and the new issue of 2,400,000 ordinary shares at a premium of £0.51 per share. Besley Hill currently operates from fifteen offices across counties in the south west of England, all of which will come into the Hunters network through their franchise agreements, and the business combination will increase the Group's geographic penetration in the south west.

31	Directors' remuneration and transactions
									2016			2015
									£000s			£000s

	Remuneration for qualifying services								465			397
	Remuneration recognised in share premium								-			33
	Company pension contributions to defined contribution schemes								25			28



									490			458



	The number of Directors for whom retirement benefits are accruing under defined contribution schemes amounted to 3 (2015 - 3).

	During the year to 31 December 2016 the Directors received remuneration as follows:

	Director		Salary		Bonus	Benefits in kind			Pension			Total
			£000s		£000s	£000s			£000s			£000s
	Ms G Frew		112		50	3			11			176
	Mr H Hill		54		-	-			-			54
	Mr K Hollinrake		59		-	2			3			64
	Mr E Jones		104		49	2			11			166
	Mr D Fielding		30		-	-			-			30



	Total		359		99	7			25			490



	During the year to 31 December 2015 the Directors received remuneration as follows:

	Director		Salary		Bonus	Benefits in kind			Pension			Total
			£000s		£000s	£000s			£000s			£000s
	Ms G Frew		91		37	12			8			148
	Mr H Hill		50		-	-			-			50
	Mr K Hollinrake		71		-	11			10			92
	Mr E Jones		89		35	11			10			145
	Mr D Fielding		23		-	-			-			23



	Total		324		72	34			28			458



	Share options
	On 28 January 2016 awards were made under the Hunters Property Senior Executive Share Option Scheme (the "Share Scheme") to certain Executive Directors. Chief Executive, Harry Hill was separately granted share options as described below. The Share Scheme has been introduced in order to incentivise and retain key members of the executive management team, and to drive shareholder value creation. Share options granted over ordinary shares of 4p each in the Company ("Ordinary Shares") under the Share Scheme ("Share Options") vest, subject to the achievement of certain earnings per share performance conditions, as to one third following the end of each of the Company's current and two subsequent financial years. The exercise price of the Share Options is 4 pence per Ordinary Share. Share Options which have vested are exercisable following the preliminary announcement of the Company's results for the financial year. Subject to the rules of the Scheme, Share Options lapse 10 years after the date of grant.

	Director				Number of options granted under the share scheme				% of the existing issued share capital at grant date
	Kevin Hollinrake					100,000						0.35%
	Glynis Frew					150,000						0.53%
	Ed Jones					150,000						0.53%

	Options award to Chief Executive
	On 28 January 2016 Harry Hill was granted an option over 150,000 Ordinary shares, exercisable at a price of 4 pence per Ordinary share, which vests upon the fulfilment of certain strategic performance conditions. The option may be exercisable in whole or in part (in tranches of not less than 25,000 Ordinary shares) at any time after it has vested. Subject to the provisions of the option agreement between the Company and Harry Hill, the option lapses 10 years after the date of grant.

	No Directors exercised share options during the current or prior year. During the year the Directors of the Group received dividends as follows:
									2016			2015
	Director								£000s			£000s
	Ms G Frew								28			9
	Mr H Hill								3			-
	Mr K Hollinrake								67			21
	Mr E Jones								58			18
	Mr D Fielding								1			-



									157			48



	The Directors advanced loans to the Group in the prior year as follows:
									2016			2015
	Ms G Frew								£000s			£000s
	Brought forward								-			13
	Advanced during the year								-			-
	Repaid during the year								-				(13)



	Carried forward								-			-



	Mr K Hollinrake
	Brought forward								-			12
	Advanced during the year								-			-
	Repaid during the year								-				(12)



	Carried forward								-			-



	Mr E Jones
	Brought forward								-			27
	Advanced during the year								-			-
	Repaid during the year								-				(27)



	Carried forward								-			-


32	Related party transactions

	Remuneration of key management personnel
	The key management personnel are considered to be the Board of Directors and members. Refer to note 31 for details of key management personnel remuneration.

	Transactions with related parties
	During the year the Group entered into the following transactions with related parties:

								Purchase of services
								2016			2015
								£000s			£000s
	Group
	RealCube Limited (prior to acquisition by Group)							-			49



	No guarantees have been given or received by the Group,

33	Subsidiaries

	Details of the Company's subsidiaries at 31 December 2016 are as follows:

	Name of undertaking and country of			Nature of business			Class of			% Held
	incorporation or residency						shareholding			Direct				Indirect

	Hunters Property Group Limited	England & Wales		Estate agents			Ordinary			100.00
	Hunters Franchising Limited	England & Wales		Franchising of estate agents			Ordinary							100.00
	Hunters Partners Limited	England & Wales		Franchising of estate agents			Ordinary							100.00
	Greenrose Network (Franchise) Limited	England & Wales		Franchising of estate agents			Ordinary							100.00
	Hunters Group Limited	England & Wales		Intermediate holding company			Ordinary							100.00
	Hunters (Midlands) Limited	England & Wales		Estate agents			Ordinary							100.00
	RealCube Technology Limited	England & Wales		Intermediate holding company			Ordinary							100.00
	RealCube Limited	England & Wales		Software			Ordinary							100.00
	Hunters Financial Services Limited	England & Wales		Financial services			Ordinary							100.00
	Hapollo Limited	England & Wales		Lettings and management of office spaces			Ordinary							100.00
	Hunters Land & New Homes Limited	England & Wales		Dormant			Ordinary							100.00
	Maddison James Limited	England & Wales		Dormant			Ordinary							100.00
	Hunters Survey & Valuation Limited	England & Wales		Dormant			Ordinary							100.00
	Herriot Cottages Limited	England & Wales		Dormant			Ordinary							100.00

	The registered office of Hunters Group Limited, Hunters (Midlands) Limited, Hunters Financial Services Limited, and Hunters Survey & Valuation Limited is 1626 High Street, Knowle, Solihull, West Midlands, B93 0JU. All other subsidiaries have the same registered office as the Company. The investments in subsidiaries are all stated at cost less impairment in the financial statements.

~ ENDS~

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