Final Results for the Year Ended 31 December 2014

RNS Number : 9260I
MartinCo PLC
31 March 2015
 

MartinCo PLC ("MartinCo or the "Group")

Final Results for the Year Ended 31 December 2014

 

Step-change in Group size as a result of major acquisition

 

MartinCo PLC is the holding group for three master property franchises operating a network of 282 offices stretching from Falmouth to Inverness. The Directors believe that MartinCo PLC is now the 4th largest (by office numbers) lettings and estate agency business in the UK.

 

The vision is to continue to use its successful franchise model to build a significant share of the UK lettings and estate agency market using multiple brands, some of which are strong within regional catchments.

 

Operational Highlights

 

·     Xperience acquisition increases footprint significantly - office numbers increased 49% from 189 to 282 in 49 new locations

 

·    Number of tenanted managed properties increased from 30,623 to 32,210 at Martin & Co. Total across the Group was more than 42,000 at year end

 

·   Total of 14 new Martin & Co franchisees recruited, six new offices opened (Inverness, Guisborough, Sunderland, Fitzrovia, Wilmslow & Sheffield) and two offices preparing to launch (Plymouth & Edinburgh)

 

·     23 offices with annual fee income over £500k of which 11 are Martin & Co and 12 are Xperience brands       

 

·     Group remains heavily weighted toward lettings market, accounting for 78% of Management Services Fees revenue

 

·     Strong cash position of £3.4m at year end with £5m (£2.5m undrawn) debt facility agreed during the period

 

 

Financial Highlights

 

·      Revenue* increased 25% to £5.2m (2013: £4.1m)

 

·      Management Service Fees increased 16% to £4.1m (2013: £3.5m)

 

·      Operating Profit** increased 26% to £2.0m (2013: £1.6m)

 

·      Profit before tax increased 115% to £1.9m (2013: £0.9m)

 

·      Net Assets increased 26% to £6.3m (2013: £5.0m)

 

·      Proposed final dividend of 2.7p per share, making total for 2014 of 4.0p per share

 

 

*Excluding discontinued operations

** Before acquisition costs

 

Chairman's Statement

Our maiden year as a public company has seen strong delivery on the acquisition strategy which was a cornerstone of our IPO proposition to investors.

 

Key strengths

 

·      Pure franchise business model

·      Truly national office footprint

·      Core market (residential lettings) enjoying steady growth

·      Cash generative with a strong balance sheet

·      Experienced management

·      Further acquisition opportunities

 

I am delighted to report strong progress on a number of fronts. Following the fund raise of £4m at IPO our investors' expectations were that we would execute a "buy and build" strategy targeting competitor lettings businesses. Our stated goal was to build our portfolio and reach 40,000 tenanted managed properties within two years of the listing.

 

At our first Board meeting of 2014 we approved an approach to Legal & General PLC to acquire its entire property franchise business ("Xperience"). The Board could see merit in acquiring not only a substantial portfolio of tenanted managed properties (circa 10,000) but additionally 89 franchised offices across four well-respected brands with real depth to their appeal within specific regional markets. We concluded the Xperience acquisition in late October and in the final two months of the financial year it contributed circa £150,000 to our pre-tax profits.

 

When I founded Martin & Co in Yeovil in 1986 it began life as an estate agency. Later I realised that the strong demand for rented properties could provide the business with a recurring and accretive monthly income. When the franchise launched in 1995 we focused primarily on lettings because the rental market was expanding rapidly and serviced by relatively few professional letting specialist companies and none with a national brand profile.

 

Martin & Co has since demonstrated that the residential lettings industry has remained stable through economic cycles. This, combined with the strength of our brand, makes Martin & Co attractive to people who wish to become franchisees and build their own lettings businesses. The Group's strong support network has been essential to the continued development of our franchisees and helping them build a successful franchise business.

 

In 2012, the Group introduced an estate agency service to enhance the Martin & Co brand. With the property market cycle turning in our favour the management team felt the timing was right to accelerate the roll out of the service. I'm delighted to say that by the close of 2014 we had 155 Martin & Co offices offering an estate agency service, now joined by 88 offices from the Xperience brands. The Martin & Co estate agency business achieved a 138% year-on-year increase in Management Service Fee revenue and the Directors believe that there is significant potential for further development of this income stream.

 

In conclusion I believe that the decision of our Board to undertake an IPO has been vindicated by the early results. We have recruited 14 new franchisees compared to 3 in 2013, we have already exceeded our target of 40,000 tenanted managed properties, and we enter 2015 with a business which is 49% greater in size judged by the number of trading offices, up from 189 to 282.

 

I would like to thank the whole team and our franchisees for their commitment to the Group's business. With the support of its new shareholders MartinCo PLC has completed its first year as a public company and as the UK's economic recovery begins to gather momentum, we look forward to the future with confidence.

 

Richard Martin

Chairman

31 March 2015

 

 

Chief Executive's Statement

 

The fund raising at IPO allowed us to execute cleanly the acquisition of Xperience, and this will have major long benefits for the Group.

 

The acquisition of Xperience has extended the Group's footprint and added 44 locations where we had not formerly traded. It strengthened the Group's management, with the appointment of the Xperience Managing Director, Michael Stoop, to the new position of Group Managing Director. Michael brings a lifetime of estate agency and franchise experience to his remit of driving lettings and estate agency revenue across all five brands.

 

The Group has assisted its franchisees operationally and in some cases financially with a number of smaller scale acquisitions throughout the year adding approx. 850 properties to the tenanted managed property portfolio. In addition, the Group purchased the right to manage a portfolio of 374 properties in Saltaire, Yorkshire and appointed its franchisee to carry out the trade.

 

In line with its declared IT strategy, the rollout of cloud-based operational software to all Martin & Co offices was completed.

 

The objective of discontinuing company owned offices was achieved with the last remaining company owned and operated office (Worthing) being sold to a franchisee in December.

 

The relatively young Martin & Co estate agency business made good progress with a 138% year-on-year increase in Management Services Fee revenue and the number of Martin & Co offices offering the estate agency service increased during the period from 97 to 155. The Xperience acquisition adds another 88 offices offering this estate agency service.

 

The £5m loan facility arranged with Santander (£2.5m utilised at year end) and announced in October means that together with the £3.4m cash at year end the Group enjoys a strong financial position and other acquisitions will be pursued where these represent good value for shareholders.

 

Whilst public uncertainty in the prelude to a General Election can dampen housing market activity, nevertheless there are strong drivers which point toward increased lettings activity. A raft of pension reforms come into force on 6 April 2015 and it is the Directors' belief that these reforms will release pension funds which will be invested into buy-to-let properties With net migration running consistently, despite Government policy intervention, at 300,000 per annum, and restrictions on mortgage lending particularly affecting the young, it is the cash-rich older generation who can afford the 25% deposits on buy-to-let properties and there will be no shortage of tenants to occupy them. The Group remains largely lettings-led with a national footprint, diluting the effect of more difficult trading conditions in the London market.

 

I am particularly pleased by the rapid growth of the Group in its IPO maiden year. My only frustration would be that the scale of the Xperience acquisition of necessity distracted us from other opportunities and the deal took 10 months to conclude and therefore had a very limited impact on 2014 profit.

 

I am very positive about the outlook for our enlarged Group. We now have multiple franchise brands each capable of further development, and one of which (CJ Hole) is already a market leader within its geographical catchment of Somerset, Bristol & Gloucestershire. Our core lettings business, where 78% of our franchise royalty income is derived, remains in good health and we will see steady organic growth supplemented by tactical acquisitions. We are now the UK's 4th largest lettings and estate agency business (judged by office numbers) and by lending our Martin & Co letting expertise into the newly acquired Xperience offices, and with our new Group Managing Director, Michael Stoop imparting his lifetime of estate agency expertise into Martin & Co, we occupy a position of strength from which we can leverage advantage for our investors during 2015.

 

 

Ian Wilson

Chief Executive

31 March 2015

 

The Group's franchise model

 

Key strengths

 

·      Five-year franchise, exclusive postcode territory

·      New franchise territories cumulatively profitable by Year 3

·      Franchise renewal subject to qualifying conditions

·      Group control over branding, records and standards

·      Very high levels of franchisee retention

 

Proposition

All franchisees receive initial training and mentoring, followed by ongoing access to regional training programmes, business development advice, legal and IT systems support, marketing campaigns and use of the brand website, assistance with recruiting specialist staff, obtaining start-up and expansion funding and business acquisitions. In return, the Group charges a management service fee of 9% levied on all fee income, in the case of Martin & Co franchisees, and 7.5% (currently) for franchisees of Xperience.

 

New franchisees at Martin & Co come from a wide variety of backgrounds; Xperience franchisees are typically career estate agents and letting agents who converted to franchisees having formerly run a Legal & General owned estate agency office. Typically a new franchisee launches in branded high street office premises with a member of staff and a branded vehicle.

 

A franchisee can only exit via a controlled sale to another franchisee approved by the Group (a 'resale') and a resale typically improves fee income at the business by 30% within 12 months of the change of franchisee.

 

We have built a stable footprint of experienced franchisees with the financial capacity and managerial capability for further business development.

 

Strategy and progress

Our mission is to be the dominant property franchise group in the UK by expanding our brand stable, range of services, network footprint and client base.

 

The Group expects to continue to grow its share of the UK private rental market. The Board believes that 55% of UK private rented sector (households) is now contained within territories occupied by the Group's franchisees. Mainly as a result of the Xperience acquisition the Group now trades in 49 new territories and it will continue to recruit new franchisees, convert competitors to join its franchise brands, and make selective acquisitions to move toward its goal of 500 occupied territories.

 

The Group will continue to develop a supportive environment in which motivated individuals can secure their financial future using a franchise model.

 

Chief Financial Officer's Review

 

The Group's successful acquisition of Xperience increases its earnings potential through an enlarged managed lettings portfolio and estate agency footprint.

 

 

2014

 

2013

 

Continuing

£m

Discontinued

£m

Total

£m

 

Continuing

£m

Discontinued

£m

Total

£m

Revenue

5.2

0.2

5.4

 

4.2

0.8

5.0

Admin Expenses

2.8

0.2

3.0

 

2.3

0.7

3.0

Operating Profit*

2.0

-

2.0

 

1.6

0.2

1.8

Profit before tax*

2.1

-

2.1

 

1.6

0.2

1.8

*before exceptional costs

 

Revenue

Group revenue for the financial year to 31 December 2014 was £5.2m (2013:£4.1m), an increase of £1.1m (25%) over the prior year. This was driven by strong growth in Management Service Fees (royalties) of £0.6m (16%) and franchise sales of £0.2m (140%) over the prior year.

 

Management Service Fees increased £0.3m through organic growth and the acquisition of Xperience (Xperience Franchising Limited and Whitegates Estate Agency Limited) added a further £0.3m. The sale of franchises contributed an increase in revenue of £0.2m through the induction of 14 new Martin & Co franchisees, 5 of which were new offices (2013: 4 new Martin & Co franchisees, 2 of which were new offices). Management Service Fees represent the Group's main source of income and accounted for 78% (2013: 84%) of revenue from continuing operations with the remainder being franchise sales and ancillary services to support MSF generation.

 

In June 2014, the Group acquired its first portfolio of 374 managed lettings properties in Saltaire for £0.3m. This has been managed for the Group by Martin & Co Saltaire under a management services agreement and achieved its budgeted returns. However, portfolios that meet the Group's criteria have been difficult to find either because of the sales price or issues with the quality of the portfolio. On 21 November 2014 T G Fisheries Ltd, the franchisee operating Martin & Co Saltaire, notified the Group of its intention to purchase the portfolio of properties it was managing on behalf of the Group in accordance with the services agreement signed between the parties. At the year-end this asset is classified as held for resale. The sale was completed on 30 January 2015 resulting in the portfolio being disposed of for its net book value of £0.3m. This element of our acquisition strategy will play a minor role for the foreseeable future.

 

At the end of October 2014, the Group acquired Xperience, consisting of two companies - Xperience Franchising Limited and Whitegates Estate Agency Limited from Legal and General Estate Agencies Limited for consideration of £6.1m. Xperience had net assets of £1.1m on acquisition including £1.0m of cash. It was acquired debt free and with no intercompany loans. Xperience is a franchise lettings and estate agency business comprising four highly regarded high street brands CJ Hole, Parkers, Ellis & Co and Whitegates operating in specific regions of the UK from 89 offices. It has increased the number of territories in which the Group is represented by 44. Moreover, it has brought with it a management team of considerable experience in this sector and its Managing Director is now our Group Managing Director. For more information see note 29.

 

Xperience was the first corporate acquisition for the Group generating profit before tax of £0.15m on sales of £0.3m in the two months to 31st December 2014.

 

In December 2014 the final company owned office, Worthing, was sold to an existing franchisee for £0.2m marking the end of the Group's strategy of running company owned offices (of which there were five in 2013). During the year this owned office generated £0.2m (2013: £0.8m) of revenue and profit before tax of nil (2013: £0.2m).This has been classified as discontinued operations in the Consolidated Financial Statements. For more information see note 30.

 

Operating profit before exceptional items

Operating profit, before exceptional items was £2.0m for the year ended 31 December 2014, an increase of £0.4m (26%) over the prior year.

 

Total administrative expenses were £2.8m an increase of £0.5m (20%) over the prior year. The costs of being a plc contributed £0.3m to the increase and the costs attributable to Xperience, another £0.1m. There were administrative cost savings in Martin & Co but these were offset by a larger franchisee support team adding £0.1m.

 

Exceptional items

The exceptional costs reported in the Consolidated Statement of Comprehensive Income are £0.2m (2013: £0.7m) and all relate to the Xperience acquisition on 31 October 2014 whereas in 2013 they all relate to the placing and listing on AIM.

 

Profit before tax

The profit before tax was £1.9m for the year ended 31 December 2014 and increase of £1.0m (115%) over the prior year.

 

Taxation

The effective rate of corporation tax for the year was 21.6% (2013:39%) due to the exceptional costs not being allowable as a deduction from profits. The total tax charge for 2014 is £416k (2013: £411k) of which £411k relates to continuing activities and £5k to discontinued activities.

 

Earnings per share

Earnings per share for the year were 6.9p (2013: 3.5p). The profit attributable to owners was £1.5m (2013: £0.6m).

 

Dividends

The Board is proposing a final dividend of 2.7p per share for 2014 which, together with the interim dividend of 1.3p per share paid to shareholders on 30 September 2014, equates to a total dividend for the financial year of 4.0p. Subject to shareholder approval at the AGM, the final dividend will be paid on 11 May 2015 to all shareholders on the register at the close of business on 24 April 2015.

 

Cash flow

The net cash inflow from operating activities in 2014 was £1.5m (2013: £1.3m) before exceptional costs of £0.2m (2013: £0.7m) as the Group continued to generate strong operating cash inflows.

 

The net cash used in investing activities was £5.0m (2013:£0.1m inflow):-

·    On 3 June 2014, the Group purchased a portfolio of 374 managed lettings properties in Saltaire for £0.3m. 

·    On 31 October 2014 the Group bought all the shares in Xperience Franchising Limited and Whitegates Estate Agency Limited for consideration of £6.1m. The companies had net assets of £1.1m on acquisition including cash of £1.0m (the net assets acquired are not shown separately in the Consolidated Statement of Cash Flows instead being included under their respective constituent headings). Net cash outflow of £5.1m

·    The Worthing office was sold on 30 December 2014 and together with the collection of deferred consideration from three offices sold in 2013, generated a cash inflow of £0.4m (2013: £0.3m).

 

The total consideration for Worthing was £0.2m (2013: £0.7m). The Group agreed to defer consideration on the sale of Worthing as it had for three of the office disposals in 2013 so that £0.3m (2013: £0.4m) of deferred consideration existed at 31st December 2014.

 

The cash inflow resulting from the new facilities agreed with Santander UK plc in October 2014 of £2.5m and the interim dividend payment on 30th September 2014 of £0.3m resulted in net cash inflows from financing activities of £2.2m.

 

Liquidity

The Group had cash balances of £3.4m at the 31st December 2014 compared to £4.8m for the prior year.

 

Financial position

The Group is strongly cash generative which, together with the funds yet to be received on the sale of owned offices and its new facilities with Santander UK plc, puts it in a strong position to assist its franchisees in acquiring managed lettings portfolios and to fulfil the acquisition element of its strategic plan.

 

 

David Raggett

Chief Financial Officer

31 March 2015

 

MartinCo PLC - background

 

The Group operates as a pure franchise model primarily focused on UK residential lettings and property management services offered to private clients. We also have a developing income stream from estate agency services.

 

Traditionally, Martin & Co recruits new franchisees from a wide pool (83% do not come from a property background) and provide intensive training and "hands-on" support. The focus on lettings emanated from growth in this sector and the attraction of a recurring commission income stream from a portfolio of tenanted managed properties. After the financial crisis of 2008, the business recorded its peak flow of new franchisees and retail banks continued to lend support to its start-ups because of the strength of its franchise model.

 

The business added a sales-based estate agency service in 2012 principally to service investment property trades by its existing clients. More recently the service has been promoted to the general house buying public with an innovative "online" advertising service as a defensive play against the virtual estate agents who operate without high street premises.

 

A listing on AIM in December 2013 raised £4m of fresh capital to invest in a lettings business acquisition programme to supplement organic growth. In October 2014 MartinCo purchased the entire property franchise business of Legal & General, which operated as four franchise brands.

 

Based on the 2011 census the Group now contains 55% of total UK private rental households within its occupied franchisee territories, and of these it manages 1.58%.

 

The Group competes for rental instructions against Countrywide, LSL and Foxtons.

 

The newly acquired CJ Hole brand is ranked the No.1 agent based on independent customer satisfaction surveys in Bristol (allagents.co.uk) and No. 16 in the whole of the UK

 

An independent survey has revealed that 94% of Martin & Co landlord clients would recommend its service.

 

Key Group operational metrics

42,000+

Properties under management

282

Offices

243

Offices offering estate agency service

232

Franchisees

49

New franchise territories occupied by year end

14

New franchisees recruited

 

Our brand stable

Martin & Co

Martin & Co was established in 1986 and began franchising in 1995. It is a national brand with 193 offices widely distributed across the UK. Martin & Co is predominantly a specialist lettings and property management business with a truly national client base. The first franchise was sold in 1995 and the franchise has grown every year since The business mix is 94% lettings and 6% estate agency by management services fees revenue, and estate agency revenue grew by 138% year-on-year in 2014.

 

The most significant change in the past year is that the Martin & Co brand is no longer the sole trading brand of MartinCo PLC. As a result of the acquisition of Xperience, MartinCo PLC now operates five brands in parallel through three master franchises. Out of 282 franchise territories only 45 contain two brands from within our brand stable.

 

Xperience

Legal & General established Legal & General Franchising Ltd in 1992 in order to facilitate the transition from a model of directly owned and managed estate agency operations to a franchise model. Thirteen years later the brand "Xperience" was adopted to describe the whole of the property franchise business of Legal & General and selected to communicate the many years' of accumulated experience within its four established regional brands; Ellis and Co, Parkers, CJ Hole and Whitegates.

 

Ellis & Co

Ellis and Co opened its first office in Swiss Cottage, north-west London in 1850. The business expanded substantially in the 1960's and 70's before a period of retrenchment. It now has 20 offices within the M25 and 1 office in Tonbridge, Kent.

 

CJ Hole

CJ Hole was founded in Clifton, Bristol by Charles Joseph Hole in 1867 as a rent collection business.

 

Over the years, the focus of the business changed towards selling property as the company began to expand. Today, CJ Hole is a major force within the estate agency market in the South West with 19 offices throughout Bristol, Somerset and Gloucestershire, 2 of which were additions in 2015.

 

Parkers

Established in Gloucester in 1948, today Parkers is a dominant force in the South of England with a network of 15 offices along the M4 corridor.

 

Whitegates

Established in 1978, Whitegates is an estate agency with 36 offices across the North of England, including Yorkshire, Midlands, the North East, North West and Wrexham in north Wales. Whitegates derives approximately half of its income from lettings activity.

 

Awards

The Group provides lettings, estate agency and property management services to its clients through its network of franchised offices.

 

Martin & Co won 'Gold' for 'Best Large Letting Chain' at the ESTAS (Estate & Letting Agency Awards) in both 2009 and 2012 as well as 'Silver' in 2013 and 'Bronze' in the 2014.  In 2013 Martin & Co won 'Silver' in the Sunday Times 'Lettings Agency of the Year' and again in 2014.

 

CJ Hole won 'Gold' in the Sunday Times South West 'Lettings Agency of the Year' in 2012 and 2014.

 

Ellis & Co won 'Gold' in the Sunday Times 'London Estate Agency of the Year' in 2013.

 

Market overview

In 2012-13, the private rented sector overtook the social rented sector to become the second largest tenure in England. Of the estimated 22.0 million households in England 18% (4.0 million) were private renters. This translates into a doubling in size of the private rented sector since 1999.

 

Underlying tenant demand remains strong and the number of households renting in England is expected to increase by 232,000 per year until 2033 according to DCLG Housing Projections.

 

The profile of renters remains skewed towards the relatively young, with 16 per cent of all private renters aged 16-24, and a further 36 per cent aged 25-34 in 2010-11. This is also the group that is finding it harder to raise the finance necessary to purchase a home.

 

In 2012-13, the average length of residence for owner occupiers was 17.3 years, for social renters it was 11.3 years, while for private renters the average length of residence was just 3.8 years. This means that the number of property letting transactions is approximately 1.0m annually in England of which it is believed 66% are handled by letting agents, a proportion which has been rising in recent years and reflects the fact that the majority of landlords are private individuals (89%), the regulatory environment has become more onerous and only agents can advertise pn the major property portal websites.

 

The UK private rental market is in a strong growth phase and growth has been strongest in the territories which the Group has occupied.

 

Consolidated statement of comprehensive income for the year ended 31 December 2014

 

 

 

Notes

2014

£

2013

£

CONTINUING OPERATIONS

Revenue

 

7

 

5,176,174

 

4,144,318

Cost of sales

 

(354,145)

(201,031)

GROSS PROFIT

 

4,822,029

3,943,287

Administrative expenses

8,9

(2,789,131)

(2,328,066)

OPERATING PROFIT BEFORE EXCEPTIONAL ITEMS

 

2,032,898

1,615,221

Exceptional items

10

(158,741)

(742,517)

OPERATING PROFIT

 

1,874,157

872,704

Finance income

12

51,140

11,476

Finance costs

12

(22,295)

-

PROFIT BEFORE INCOME TAX

 

1,903,002

884,180

Income tax

13

(411,541)

(372,183)

PROFIT AND TOTAL COMPREHENSIVE INCOME FOR THE YEAR FROM CONTINUING OPERATIONS

 

 

1,491,461

 

511,997

DISCONTINUED OPERATIONS

Profit and total comprehensive income for the year from discontinued operations

 

30

 

18,565

 

126,820

PROFIT AND TOTAL COMPREHENSIVE INCOME FOR THE YEAR ATTRIBUTABLE TO OWNERS

 

 

1,510,026

 

638,817

Earnings per share - Continuing

14

6.9p

2.8p

Earnings per share - Discontinued

14

0.0p

0.7p

Total Earnings per share

14

6.9p

3.5p

Diluted Earnings per share - Continuing

14

6.6p

2.7p

Diluted Earnings per share - Discontinued

14

0.0p

0.6p

Total Diluted Earnings per share

14

6.6p

3.3p

 

Consolidated statement of financial position 31 December 2014

 

Notes

 

2014

£

 

2013

£

ASSETS

NON-CURRENT ASSETS

Intangible assets

 

 

17

 

 

6,270,173

 

 

75,000

Property, plant and equipment

18

92,158

84,486

Deferred tax asset

27

-

34,654

 

 

6,362,331

194,140

CURRENT ASSETS

Trade and other receivables

 

20

 

965,319

 

865,569

Cash and cash equivalents

 

3,367,259

4,817,520

 

 

4,332,578

5,683,089

Assets of a disposal group classified as held for sale

30

254,846

215,129

 

 

4,587,424

5,898,218

TOTAL ASSETS

 

10,949,755

6,092,358

EQUITY

SHAREHOLDERS' EQUITY

Called up share capital

 

 

21

 

 

220,000

 

 

220,000

Share premium

22

3,790,000

3,790,000

Other reserves

23

(61,406)

(138,926)

Retained earnings

 

2,328,153

1,104,127

TOTAL EQUITY ATTRIBUTABLE TO THE OWNERS LIABILITIES

NON-CURRENT LIABILITIES

Borrowings

 

 

 

24

6,276,747

 

 

2,000,000

4,975,201

 

 

-

Deferred tax

27

791,136

-

 

CURRENT LIABILITIES

 

2,791,136

-

Borrowings

24

500,000

-

Trade and other payables

25

1,046,530

653,270

Tax payable

 

335,342

415,779

 

 

1,881,872

1,069,049

Liabilities of disposal group classified as held for sale

30

-

48,108

TOTAL LIABILITIES

 

4,673,008

1,117,157

TOTAL EQUITY AND LIABILITIES

 

10,949,755

6,092,358

 

Consolidated statement of changes in equity forthe year ended 31 December 2014

 

 

Called up share

capital

£

Retained earnings

£

Share premium

£

Other reserves

£

Total equity

£

Balance at 31 December 2013

179,900

717,810

-

(179,800)

717,910

Profit and total comprehensive income

-

638,817

-

-

638,817

Issue of share capital 7 October 2013

 

100

 

-

 

-

 

-

 

100

17 December 2013

40,000

-

3,960,000

-

4,000,000

Share issue costs

-

-

(170,000)

-

(170,000)

Dividends

-

(252,500)

-

-

(252,500)

Deferred tax on share based payments

-

-

-

40,874

40,874

Total transactions with owners

40,100

(252,500)

3,790,000

40,874

3,618,474

Balance at 31 December 2013

220,000

1,104,127

3,790,000

(138,926)

4,975,201

Profit and total comprehensive income

-

1,510,026

-

-

1,510,026

Dividends

-

(286,000)

-

-

(286,000)

Deferred tax on share based payments

-

-

-

77,520

77,520

Balance at 31 December 2014

220,000

2,328,153

3,790,000

(61,406)

6,276,747

 

Consolidated statement of cash flows for the year ended 31 December 2014

 

 

 

 

Notes

 

 

2014

£

 

 

2013

£

Cash flows from operating activities

Cash generated from operations

 

1

 

1,937,611

 

885,657

Interest paid

 

(203)

-

Tax paid

 

(609,292)

(341,486)

Net cash from operating activities

 

1,328,116

544,171

Cash flows from investing activities

Purchase of Subsidiary undertakings net of cash acquired

 

2

 

(5,065,902)

 

-

Purchase of intangible assets

 

(326,317)

(222,475)

Purchase of tangible assets

 

(17,520)

(39,669)

Proceeds from sale of intangible assets

 

341,576

258,956

Proceeds from sale of tangible assets

 

24,646

50,160

Interest received

 

51,140

11,497

Net cash (used in)/generated from investing activities

 

(4,992,377)

58,469

Cash flows from financing activities

 

 

 

 

 

 

Share issue

 

-

3,830,100

Bank loan

Net cash outflow on Directors Loans

 

2,500,000

-

(1,509)

Equity dividends paid

 

(286,000)

(252,500)

Net cash generated from financing activities

 

2,214,000

3,576,091

(Decrease)/Increase in cash and cash equivalents

 

(1,450,261)

4,178,731

Cash and cash equivalents at beginning of year

 

4,817,520

638,789

Cash and cash equivalents at end of year

 

3,367,259

4,817,520

 

Notes to the consolidated statement of cash flows for the year ended 31 December 2014

 

1.       Reconciliation of profit before income tax to cash generated from operations

 

 

2014

£

2013

£

Cash flows from operating activities

 

 

Profit before income tax

1,926,502

1,049,417

Depreciation and amortisation charges

74,087

(98,565)

Profit on disposal of intangible assets

(4,007)

  -                  --

Finance costs

22,295

-

Finance income

(51,140)

(11,497)

Operating cash flow before changes in working capital

1,967,737

939,355

(Increase)/Decrease in trade and other receivables

(107,279)

6,117

Increase/(Decrease) in trade and other payables

77,153

(59,815)

Cash generated from operations

1,937,611

885,657

 

 

2014

£

2013

£

Continuing operations

 

 

Profit before tax

1,903,002

884,180

Adjustments for:

 

 

Depreciation of property, plant and equipment

13,283

15,890

Profit on disposal of property, plant and equipment

-

(10,210)

Amortisation

60,804

32,577

Finance costs

22,295

-

Finance income

(51,140)

(11,497)

Changes in working capital

 

 

Increase in trade and other receivables

(117,941)

(58,004)

Increase in trade and other payables

125,261

55,334

Cash inflow from continuing operations

1,955,564

908,270

Discontinued operations

Profit before tax

 

23,500

 

165,237

Adjustments for:

Profit on disposal of intangible assets

 

(4,007)

 

(136,822)

Changes in working capital:

Decrease in trade and other receivables

 

10,662

 

64,121

Decrease in trade and other payables

(48,108)

(115,149)

Cash (outflow) from discontinued operations

(17,953)

(22,613)

Cash generated from operations

1,937,611

885,657

 

2. Purchase of Subsidiary undertakings net of cash acquired

During the year the Group obtained control of Xperience Franchising Limited and Whitegates Estate Agency Limited.

 

 

XPL

£

WEAL

£

Total

£

Consideration

5,118,973

991,311

6,110,284

Less: Cash acquired

(995,088)

(49,294)

(1,044,382)

Purchase of Subsidiary undertakings net of cash acquired

4,123,885

942,017

5,065,902

 

 Notes to the consolidated financial statements for the year ended 31 December 2014

1. General information

The principal activity of MartinCo PLC and its Subsidiaries is that of a UK residential property franchise business. The Group operates in the UK. The Company is a public limited company incorporated and domiciled in the UK. The address of its head office and registered office is 2 St Stephen's Court, St Stephen's Road, Bournemouth, Dorset, UK.

 

2. Basis of preparation

These consolidated financial statements have been prepared in accordance with International Financial Reporting Standards and IFRS Interpretations Committee (IFRS IC) 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. As set out in note 23, the acquisition of Martin & Co (UK) Ltd in 2013 was accounted for as if it had been owned for the whole period.

 

The preparation of financial statements in conformity with IFRS requires the use of certain critical accounting estimates. It also requires management to exercise its judgement in the process of applying the Group's accounting policies. The areas involving a higher degree of judgement or complexity, or areas where assumptions and estimates are significant to the consolidated financial statements are disclosed in note 5.

 

The presentational currency of the financial statements is in British pounds and amounts are rounded to the nearest pound.

 

Going Concern

The Group has produced detailed budgets, projections and cash flow forecasts. The Directors have concluded after reviewing these budgets, projections and forecasts, making appropriate enquiries of the business and having considered uncertainties under the current economic environment, that there is a reasonable expectation that the Group has adequate resources to continue in operation for the foreseeable future. Accordingly, they have adopted the going concern basis in preparing the Financial Statements.

 

New standards, amendments and interpretations issued

Principal standards, amendments and interpretations that became effective in 2014 but have no effect on the Group's operations:

'    IFRS 10 'Consolidated Financial Statements' (effective for annual periods beginning on or after 1 January 2014)

'    IFRS 11 'Joint arrangements' (effective for annual periods beginning on or after 1 January 2014)

'    IFRS 12 'Disclosure of interests in other entities' (effective for annual periods beginning on or after 1 January 2014)

'    IAS 27 'Consolidated and Separate Financial Statements' (effective for annual periods beginning on or after 1 January 2014)

 

The following standards and interpretations, that may be relevant to the Group operations that have not been applied in the Financial Statements, were in issue:

·           IFRS 9 'Financial Instruments' (effective for annual periods beginning on or after 1 January 2015, not yet endorsed).

·           IAS 19 (revised) Employee Benefits - (effective for annual periods beginning on or after 1 July 2014). 

·          IFRS 15 'Revenue from contracts with customers' (effective for annual periods beginning on or after 1 January 2017, not yet endorsed).

The Directors anticipate that the adoption of these standards and interpretations would not have a material impact on the Financial Statements of the Group.

3. Basis of consolidation

The Group financial statements include those of the parent company and its subsidiaries, drawn up to 31 December 2014. Subsidiaries are all (including structured entities) over which the Group has control. The Group controls an entity when the Group is exposed to, or has rights to, variable returns from its involvement with the entity and has the ability to affect those returns through its power over the entity. Subsidiaries are fully consolidated from the date on which control is transferred to the Group. They are deconsolidated from the date that control ceases.

 

On 31 October 2014 the Company acquired the entire issued share capital of Xperience Franchising Limited and Whitegates Estate Agency Limited for a consideration of £6,110,284.

 

The Group applies the acquisition method to account for business combinations. The consideration transferred for the acquisition of a subsidiary is the fair values of the assets transferred, the liabilities incurred to the former owners of the acquiree and the equity interests issued by the Group. Identifiable assets acquired and liabilities and contingent liabilities assumed in a business combination are measured initially at their fair values at the acquisition date. The Group recognises any non-controlling interest in the acquiree on an acquisition-by-acquisition basis, either at fair value or at the non-controlling interest's proportionate share of the recognised amounts of acquiree's identifiable net assets.Acquisition-related costs are expensed as incurred.

 

Inter-company transactions, balances and unrealised gains on transactions between Group companies are eliminated. Unrealised losses are also eliminated. When necessary amounts reported by subsidiaries have been adjusted to conform with the Group's accounting policies.

 

4. Significant accounting policies

 

Revenue recognition

Revenue represents income, net of VAT, from the sale of franchise agreements, management service fees, levied to franchisees monthly based on their turnover, and the provision of training and ongoing support to franchisees.

 

Fees from the sale of franchise agreements are not refundable and are recognised upon the earlier of the receipt of funds or the signing of the franchise agreement. These fees are for the use of the brand along with initial training and support and promotion during the opening phase of the new office. Management service fees are recognised on a monthly basis, with other fees recognised when the training and support is provided to the franchisee.

 

Revenue also includes fees generated by offices operated by the Group. These offices invoice landlords on a monthly basis and so recognise the income during the period in which the work is carried out.

 

Operating profit

Profit from operations is stated before investment income, finance costs and other gains and losses.

 

Intangible assets - goodwill

Goodwill (being the difference between the fair value of consideration paid and the fair value of the identifiable assets at the date of acquisition) is capitalised. Goodwill is not amortised, but subject to an annual review for impairment (or more frequently if necessary). Any impairment is charged to the profit or loss as it arises.

 

An impairment loss is recognised for the amount by which the carrying value of goodwill exceeds its recoverable amount, which the Directors assess on a 'value in use' basis. To determine the value in use, management estimates expected future cash flows from trading operations, each business being one cash generating unit, and determines a suitable growth rate in order to calculate the present value of those cash flows. The discount factor reflects management's assessment of the risk profile of the business.

 

Discontinued operations

Non-current assets are classified as held for sale if their carrying amount will be recovered through a sale transaction rather than through continuing use. This condition is regarded as met only when the sale is highly probable and the asset is available for sale in its immediate condition. Management must be committed to the sale, which should be expected within one year from the date of classification as held for sale.

 

Immediately before classification as held for sale, the assets are remeasured and recognised at the lower of their carrying amount and their fair value less costs to sell if their carrying amount essentially derives from their sale rather than their continued use. Assets classified as held for sale are not depreciated. Impairment losses on initial classification as held for sale and subsequent gains or losses on remeasurement are included in the income statement. Gains are not recognised in excess of any cumulative impairment loss.

 

Profit after tax from operations qualifying as discontinued operations are presented separately as a single amount on the income statement. The assets held for resale and the liabilities held for resale are shown separately on the balance sheet. Results from operations qualifying as discontinued operations as of the balance sheet date for the latest period presented, that have previously been presented as results from continuing operations, are represented as results from discontinued operations for all periods presented.

 

In conditions where the classification of non-current assets as held for sale are no longer met, classification as held for sale ceases. Accordingly, results of operations, previously presented in discontinued operations, are reclassified and included in continuing operations for all periods presented. Non-current assets that cease to be classified as held for sale are remeasured at the lower of their carrying amount before classification as held for sale, adjusted for any depreciation, amortisation or revaluations that would have been recognised had the asset not been classified as held for sale, and its recoverable amount at the date of the subsequent decision to sell.

 

Business combinations

On the acquisition of a business, fair values are attributed to the identifiable assets and liabilities and contingent liabilities unless the fair value cannot be measured reliably in which case the value is subsumed into goodwill. Where the fair values of acquired contingent liabilities cannot be measured reliably, the assumed contingent liability is not recognised but is disclosed in the same manner as other contingent liabilities.

 

Goodwill is the difference between the fair value of the consideration and the fair value of identifiable assets acquired. Goodwill arising on acquisitions is capitalised and subject to an impairment review, both annually and when there is an indication that the carrying value may not be recoverable.

 

Intangible assets

Intangible assets with a finite life are carried at cost less amortisation and any impairment losses. Intangible assets represent items which meet the recognition criteria of IAS 38, in that it is probable that future economic benefits attributable to the assets will flow to the entity and the cost can be measured reliably.

 

In accordance with IFRS 3 Business Combinations, an intangible asset acquired in a business combination is deemed to have a cost to the Group of its fair value at the acquisition date. The fair value of the intangible asset reflects market expectations about the probability that the future economic benefits embodied in the asset will flow to the Group.

 

Amortisation charges are included in administrative expenses in the Statement of Comprehensive Income. Amortisation begins when the intangible asset is first available for use and is provided at rates calculated to write off the cost of each intangible asset over its expected useful life, as follows:

 

Brands

Indefinite life

Customer lists

5 - 25 years

Master franchise agreements

25 years

 

Acquired customer relationships are identified as a separate intangible asset as they are separable and can be reliably measured by valuation of future cash flows. This valuation also assesses the life of the particular relationship. The life of the relationship is assessed annually. Customer relationship assets are being written off over a remaining life of 5 to 25 years.

 

Acquired franchise master agreements are identified as a separate intangible asset as they are separable and can be reliably measured by valuation of future cash flows. The life of the relationship is assessed annually. Master franchise agreements are being written off over a remaining life of 25 years as historical analyses shows that, on average, 4% of franchises will change ownership per annum.

 

Acquired trade names are identified as separate intangible assets where they can be reliably measured by valuation of future cash flows. The trade names which have been identified separately are assessed as having indefinite lives due to their long trading histories.

 

Subsequent to initial recognition, intangible assets are stated at deemed cost less accumulated amortisation and impairment charges.

 

  Property, plant and equipment

Items of property, plant and equipment are stated at cost of acquisition less accumulated depreciation and impairment losses. Depreciation is charged so as to write off the cost of assets over their estimated useful lives on the following bases:

 

Fixtures fittings and office equipment

15% reducing balance

Motor vehicles

25% reducing balance

Short leashold improvements

Over the lease term

 

Income taxes

Current tax is the tax currently payable based on the taxable profit for the year.

 

Deferred tax

Deferred income taxes are calculated using the liability method on temporary differences, at the tax rate that is substantively enacted at the balance sheet date. Deferred tax is generally provided on the difference between the carrying amount of assets and liabilities and their tax bases. However, deferred tax is not provided on the initial recognition of goodwill, nor on the initial recognition of an asset or liability unless the related transaction is a business combination or affects tax or accounting profit. Tax losses available to be carried forward as well as other income tax credits to the Group are assessed for recognition as deferred tax assets.

 

Deferred tax liabilities are provided in full, with no discounting. Deferred tax assets are recognised to the extent that it is probable that the underlying deductible temporary differences will be able to offset against future taxable income. Current and deferred tax assets and liabilities are calculated at tax rates that are expected to apply to their respective period of realisation, provided they are enacted or substantively enacted at the balance sheet date. Changes in deferred tax assets or liabilities are recognised as a component of tax expense in the profit/loss.

 

Operating lease commitments

Rentals applicable to operating leases where substantially all of the benefits and risks of ownership remain with the lessor are charged to profit/loss on a straight-line basis over the period of the lease.

 

Cash and cash equivalents

Cash and cash equivalents are defined as cash balances in hand and in the bank (including short-term cash deposits).

 

Financial assets

The Group only has financial assets classified as loans and receivables. The loans and receivables comprise trade and other receivables and cash and cash equivalents in the Consolidated Statement of Financial Position. Cash and cash equivalents (which exclude any client account monies) include cash in hand and deposits held at call with banks.

 

Loans and receivables

These assets are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. They arise principally through the provision of services to franchisees (e.g. trade receivables), but also incorporate other types of contractual monetary asset. They are initially recognised at fair value plus transaction costs that are directly attributable to their acquisition or issue, and are subsequently carried at amortised cost using the effective interest rate method, less provision for impairment.

 

Impairment provisions are recognised when there is objective evidence (such as significant financial difficulties on the part of the counterparty or default or significant delay in payment) that the Group will be unable to collect all of the amounts due under the terms receivable, the amount of such a provision being the difference between the net carrying amount and the present value of the future

expected cash flows associated with the impaired receivable. For trade receivables, which are reported net, such provisions are recorded in a separate allowance account with the loss being recognised within administrative expenses in the income statement. On confirmation that the trade receivable will not be collectable, the gross carrying value of the asset is written off against the associated provision.

 

Financial liabilities

Financial liabilities are comprised of trade payables, borrowings and other short-term monetary liabilities, which are recognised at amortised cost.

 

Trade payables and other short-term monetary liabilities, are initially recognised at fair value and subsequently carried at amortised cost using the effective interest method.

 

Borrowings are recognised initially at fair value, net of transaction costs incurred. Borrowings are subsequently carried at amortised cost; any difference between the proceeds (net of transaction costs) and the redemption value is recognised in the income statement over the period of the borrowings using the effective interest method.

 

Fees paid on the establishment of loan facilities are recognised as transaction costs of the loan to the extent that it is probable that some or all of the facility will be drawn down. In this case, the fee is deferred until the draw-down occurs. To the extent there is no evidence that it is probable that some or all of the facility will be drawn down, the fee is capitalised as a pre-payment for liquidity services and amortised over the period of the facility to which it relates.

 

Share options

The Company issues equity-settled share-based payments to certain employees. Equity-settled share-based payments are measured at fair value at the date of grant. The fair value determined at the grant date of the equity-settled share-based payments is expensed on a straight-line basis over the vesting period, together with a corresponding increase in equity, based upon the Company's estimate of the shares that will eventually vest.

 

Fair value is measured using the Black-Scholes option pricing model taking into account the following inputs:

'    the exercise price of the option;

'    the life of the option;

'    the market price on the date of the grant of the option;

'    the expected volatility of the share price;

'    the dividends expected on the shares; and

'    the risk free interest rate for the life of the option.

 

The expected life used in the model has been adjusted, based on management's best estimate, for the effects of non-transferability, exercise restrictions and behavioural considerations.

 

5. Critical accounting estimates and judgements and key sources of estimation uncertainty

 

The Company makes certain estimates and assumptions regarding the future. Estimates and judgements are continually evaluated based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances. In the future, actual experience may differ from these estimates and assumptions. The estimates and assumptions that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year are discussed below.

 

Impairment of goodwill

The Group is required to test, where indicators of impairment exist, whether goodwill has suffered any impairment. The recoverable amount is determined based on value in use calculations. The use of this method requires the estimation of future cash flows and the choice of a discount rate in order to calculate the present value of the cash flows. Key assumptions for the value in use calculation are described in note 17.

 

Revenue recognition

Initial franchise fees are recognised upon the earlier of receipt of funds or the signing of the contract. The initial fees are non-refundable and are for the use of the brand along with initial training and support and promotion of the new office. The Directors therefore believe

that the benefits are transferred upon signing the contract and so revenue is recognised at this point. Future benefits from the contract are dealt with in the monthly MSF fee which is spread across the term of the franchise agreement.

 

Valuation of separable intangibles on acquisition

When valuing the intangibles acquired in a business combination, management estimate the expected future cash flows from the asset and choose a suitable discount rate in order to calculate the present value of those cash flows. Separable intangibles valued on acquisitions made in the year were £4.6m as detailed further in note 17.

 

Non-current assets (or disposal groups) held for sale

Non-current assets (or disposal groups) are classified as assets held for sale when their carrying amount is to be recovered principally through a sale transaction and a sale is considered highly probable. They are stated at the lower of carrying amount and fair value less costs to sell.

 

6 Segmental reporting

 

The board of Directors, as the chief operating decision-making body, review financial information for and make decisions about the Group's overall franchising business and have identified a single operating segment, that of property franchising.

 

7 Revenue

 

The Directors believe there to be three material income streams relevant to property franchising which are split as follows:

 

2014

2013

 

£

£

Management Service Fee

4,048,575

3,477,855

Franchise sales

423,779

176,683

Other

703,820

489,780

 

5,176,174

4,144,318

 

All revenue is earned in the UK and no customer represents greater than 10 per cent of total revenue in either of the years reported.

 

8  Administrative expenses

 

Administrative expenses relate to those expenses that are not directly attributable to any specific sales activity.

 

Administrative expenses for the year were as follows:

 

 

2014

£

2013

£

Continuing operations

 

 

Employee costs (see note 9)

1,852,466

1,480,025

Property costs

67,773

63,741

General administrative costs

868,892

784,300

 

2,789,131

2,328,066

 

9  Employees and Directors

 

Average numbers of employees (including Directors), employed during the year:

 

 

2014

No.s

2013

No.s

Continuing operations

 

 

Administration

29

25

Management

7

5

 

36

30

Employee costs (including Directors) during the year amounted to:

 

2014

£

2013

£

Continuing operations

 

 

Wages and salaries

1,676,377

1,356,824

Social security costs

176,089

123,201

 

1,852,466

1,480,025

 

Key management personnel are defined as Directors and executives of the Group. Details of the remuneration of the key management personnel are shown below:

 

 

2014

£

2013

£

Wages and salaries

694,911

560,409

Social security costs

69,937

64,914

 

764,848

625,323

 

10. Exceptional items

 

The exceptional items represent costs relating to the acquisition of Xperience Franchising Limited and Whitegates Estate Agency Limited in the year whereas in 2013 they represented the flotation costs incurred in the listing of the Group on the Alternative Investment Market.

 

11. Operating profit

 

 

2014

 

 

2013

 

£

£

The operating profit from continuing operations is stated after charging/(crediting): Depreciation

 

13,283

 

12,274

Amortisation

60,804

32,577

Profit on disposal of fixed assets

-

(10,210)

Auditor's remuneration (see below)

123,863

159,500

Staff costs (note 9)

1,852,466

1,480,025

Operating lease expenditure

47,311

27,844

Audit services

- Audit of the Company and consolidated accounts

 

18,500

 

15,000

 - Audit the Subsidiaries pursuant to legislation

Tax services

- advisory compliance services

45,000

 

 

2,500

20,000

 

 

-

- advisory services

 

10,363

7,500

Other non-audit services - advisory services

47,500

117,000

 

123,863

159,500

Comprising: Audit services

 

63,500

 

35,000

Non-audit services:

60,363

124,500

 

123,863

159,500

 

12. Finance income and costs

 

 

 

2014

£

2013

£

Finance income: Bank interest

 

38,781

 

141

Other similar income

12,359

11,335

 

51,140

11,476

 

 

2014

£

 

2013

£

Finance costs: Bank interest

 

22,295

 

-

 

22,295

-

 

13. Taxation

 

 

 

2014

£

2013

£

Current tax

411,541

376,723

Deferred tax credit

-

(4,540)

Total tax charge in statement of comprehensive income

411,541

372,183

 

The tax assessed for the period is higher than the standard rate of corporation tax in the UK. The difference is explained below:

 

 

2014

£

2013

£

Profit on ordinary activities before tax

1,903,002

884,180

Profit on ordinary activities multiplied by the effective standard rate of corporation tax in the UK of 21.5%

 

 

(2013: 23.25%)

409,145

205,572

Effects of:

 

 

Expenses not deductible for tax purposes

19,325

173,695

Tax chargeable at different rates

-

145

Depreciation in excess of capital allowances

(18,803)

(9,103)

Losses carried forward

1,874

1,874

Total tax charge in respect of continuing activities

411,541

372,183

 

14.     Earnings per share

 

Earnings per share is calculated by dividing the profit for the financial year by the weighted average number of shares during the year.

 

 

2014

£

2013

£

Earnings per ordinary share

Profit from continuing operations

 

1,491,461

 

511,997

Profit from discontinued operations

18,565

126,820

 

1,510,026

638,817

 

Diluted earnings per ordinary share

The charge relating to share based payments is immaterial and therefore the earnings used in the diluted earnings per ordinary share calculation are the same as that shown above.

 

 

2014

Number

2013

Number

Weighted average number of shares

Number used in basic earnings per share

 

22,000,000

 

18,325,833

Dilutive effect of share options on ordinary shares

832,818

845,817

Number used in diluted earnings per share

22,832,818

19,171,650

 

15.     Profit/(Loss) of Parent Company

 

As permitted by Section 408 of the Companies Act 2006, the income statement of the parent company is not presented as part of these financial statements. The Parent Company's profit for the financial year was £1,072,042 (2013: loss £750,576)

 

16.     Dividends

 

 

2014

£

2013

£

Interim and Final dividend (ordinary share of £0.01 each)

286,000

252,500

Dividend per share

1.3p

1.4p

 

The dividend per share is calculated using the same weighted average number of shares as used in the calculation of earnings per share.

 

17. Intangible assets

 

 

Master Franchise

 

 

Agreement

Brands

Customer Lists

Goodwill

Total

 

£

£

£

£

£

Cost

 

 

 

 

 

Brought forward 1 Jan 2013

-

-

654,532

75,000

729,532

Additions

-

-

222,475

-

222,475

Transferred to assets held for sale

-

-

(877,007)

-

(877,007)

Carried forward 31 Dec 2013

-

-

-

75,000

75,000

Additions - acquired separately

-

-

326,317

-

326,317

Additions - acquired business combinations

4,075,085

571,000

225,204

1,313,217

6,184,506

Transferred to assets held for sale

-

-

(271,000)

-

(271,000)

Carried forward 31 Dec 2014

4,075,085

571,000

280,521

1,388,217

6,314,823

Amortisation

 

 

 

 

 

Brought forward 1 Jan 2013

-

-

132,551

-

132,551

Charge for year

-

-

32,577

-

32,577

Transferred to assets held for sale

-

-

(165,128)

-

(165,128)

Carried forward 31 Dec 2013

-

-

-

-

-

 

Charge for year

 

27,167

 

-

 

33,637

 

-

 

60,804

Transferred to assets held for sale

-

-

(16,154)

-

(16,154)

Carried forward 31 Dec 2014

27,167

-

17,483

-

44,650

Net book value

 

 

 

 

 

At 31 December 2014

4,047,918

571,000

263,038

1,388,217

6,270,173

At 31 December 2013

-

-

-

75,000

75,000

 

The carrying amount of goodwill relates to three cash generating units, and reflects the difference between the fair value of consideration transferred and the fair value of assets and liabilities purchased.

 

Goodwill is assessed for impairment by comparing the carrying value to the value in use calculations. The value for the goodwill purchased from Martin & Co Management of £75,000 has been estimated using cash flow projections based on detailed budgets and forecasts over the period to 31 December 2016. Thereafter revenue growth has been assumed to decline to a long-term growth rate of 2.25%.A discount rate of 10% has been applied; being the Directors' estimate of the Martin & Co (UK) Limited's cost of capital. The budgets and forecasts are based on historical data and the past experience of the Directors in this sector as well as the future plans of the business.

 

The carrying value of the goodwill arising on the acquisitions of Xperience Franchising Limited ("XFL") and Whitegates Estate Agency Limited ("WEAL") is based on actual cash flows to 31 December 2014 and further projections through to 31st December 2016. Thereafter projected revenue growth was assumed to decline linearly to a long-term growth rate of 2.25%.

 

The cash flows arising were discounted by the weighted average cost of capital plus an additional risk premium for the increased risk profile of franchise rights when compared to the risk of each company. These discount rates were 16.0% for XFL and 17% for WEAL, the latter higher rate reflecting WEAL's smaller size and more volatile earnings. This resulted in a total value for each company of the identifiable intangibles assets.

 

The total consideration paid for the two companies of £6,110,284 was allocated to each company by management based on their respective EBITDAs.

 

The Directors do not consider goodwill to be impaired. The Directors believe that no reasonably possible change in assumptions will cause the value in use to fall below the carrying value and hence impair the goodwill.

 

The brand names under which XFL trades of C J Hole, Parkers and Ellis & Co have been in existence for between 67 years and 150 years. Management see them as strong brands with significant future value and has deemed them to have indefinite useful lives as there is no foreseeable limit to the period over which the assets are expected to generate net cash inflows for the Group.

 

The Relief-from-Royalty-Method was used to value the brand names. Looking at independent research of royalty rates, management selected pre-tax royalty rates of between 3% and 5% for the above brand names.

 

The after tax royalty rates were then applied to the projected cash flows of each brand up until December 2029. The projected cash flows being the actual cash flows to 31 December 2014 and further projections through to 31st December 2016. Thereafter projected revenue growth was assumed to decline linearly to a long-term growth rate of 2.25%. The after tax cash flows determined through this process was then discounted at 13.5% to determine a value for each brand name. This discount rate approximated the company's WACC as the risk profile of the brand names was seen as commensurate with that of the overall company.

 

The Directors believe that no reasonably possible change in assumptions will cause the value in use of the brands names CJ Hole, Parkers and Ellis & Co to fall below their carrying values and hence impair their intangible values.

 

The Whitegates brand was valued in a similar manner and deemed to have an immaterial value when the acquisition was made principally due to its lack of profitability over preceding years. It is therefore not recognised separately.

Goodwill and indefinite life intangible assets have been allocated for impairment testing purposes to the following cash-generating units.

 

The carrying values are as follows:

 

 

Goodwill

 

Brands

 

2014

£

2013

£

2014

£

2013

£

Xpereience Franchising Limited

 

912,716

-

571,000

-

Whitegates Estate Agency Limited

 

400,501

-

-

-

Martin & Co (UK) Ltd

 

75,000

75,000

-

-

 

 

1,388,217

75,000

571,000

-

18. Property, plant and equipment

 

 

 

 

 

 

 

Leased Assets

 

Motor Vehicles

 

Office Equipment

 

Fixtures & Fittings

 

 

Total

 

£

£

£

£

£

Cost

Brought forward 1 Jan 2013

 

65,241

 

20,367

 

21,802

 

119,652

 

227,062

Additions

4,152

-

27,881

7,636

39,669

Disposals

(12,630)

-

-

-

(12,630)

Transferred to assets held for sale

(19,729)

(20,367)

(17,499)

(8,685)

(66,280)

Carried forward 31 Dec 2013

37,034

-

32,184

118,603

187,821

Acquisitions

-

-

4,961

-

4,961

Additions

-

-

15,724

270

15,994

Carried forward 31 Dec 2014

37,034

-

52,869

118,873

208,776

Depreciation

Brought forward 1 Jan 2013

 

7,813

 

6,335

 

8,738

 

80,401

 

103,287

Charge for year

4,347

1,283

4,162

6,098

15,890

Eliminated on disposals

(2,526)

-

-

-

(2,526)

Transferred to assets held for sale

(2,575)

(7,618)

(1,431)

(1,692)

(13,316)

Carried forward 31 Dec 2013

7,059

-

11,469

84,807

103,335

Charge for year

3,703

-

4,479

5,101

13,283

Carried forward 31 Dec 2014

10,762

-

15,948

89,908

116,618

Net book value

At 31 December 2014

 

26,272

 

-

 

36,921

 

28,965

 

92,158

At 31 December 2013

29,975

-

20,715

33,796

84,486

 

19. Investments

 

MartinCo PLC was incorporated on 7 October 2013. On the 10 December 2013 a share for share exchange acquisition took place with Martin &Co (UK) Limited; 17,990,000 ordinary shares in MartinCo PLC were exchanged for 100% of the issued share capital in Martin & Co (UK) Limited.

 

On 31 October 2014 the Company acquired the entire issued share capital of Xperience Franchising Limited and Whitegates Estate Agency Limited for a consideration of £6,110,284.

 

The Company's investments at the balance sheet date in the share capital of companies include the following: Subsidiaries

 

 

Share class

% ownership

Country of incorporation

Martin & Co (UK) Limited

Ordinary

100

England

Xperience Franchising Limited

Ordinary

100

England

Whitegates Estate Agency Limited

Ordinary

100

England

 

20. Trade and other receivables

 

2014

£

2013

£

Trade receivables

55,536

65,165

Loans to franchise

190,333

45,000

Other receivables

167,263

433,667

Prepayments and accrued income

552,187

321,737

Tax receivable

-

-

 

965,319

865,569

 

Trade receivables are stated net of bad debt provisions of £nil (2013: £nil).

 

Ageing of trade receivables

 

The following is an analysis of trade receivables that are past due but not impaired. These relate to a number of customers for whom there is no recent history of defaults. The ageing analysis of these trade receivables is as follows:

 

2014

£

2013

£

Not more than 3 months

54,620

48,598

More than 3 months but not more than 6 months

-

15,193

More than 6 months but not than 1 year

916

1,233

More than 1 year

-

141

 

55,536

65,165

 

No allowance has been made against the overdue receivables based on historic default experience. The Directors consider that the carrying value of trade and other receivables represents their fair value.

 

The Group does not hold any collateral as security for its trade and other receivables.

 

21.   Called up share capital

 

 

2014

Number

£

2013

Number

 

Authorised, allotted issued and fully paid ordinary shares of 1p each

 

22,000,000

 

220,000

 

22,000,000

 

 

 

 

Group number

As at 1 January 2013

 

 

17,990,000

Initial allotment

 

 

10,000

Issued in share for share exchange

 

 

-

Issued on admission to Alternative Investment Market

 

 

4,000,000

As at 31 December 2013

 

 

22,000,000

As at 31 December 2014

 

 

22,000,000

 

MartinCo PLC was incorporated on 7th October 2013 and 10,000 ordinary shares of 1p each were issued. On 10th December 2013 a share for share exchange took place whereby a further 17,990,000 shares of 1p each were exchanged for 100% of the issued share capital of Martin & Co (UK) Limited. On 17th December a further 4,000,000 shares were placed at £1 each.

 

22.        Share premium

On 17 December 2013 the Company entered into a Placing Agreement whereby 4m new ordinary shares were placed with institutional investors at £1 per share. The share premium arising from the difference between the value of the shares placed and their nominal value was £3,960,000. The costs of this placing were £170,000 which includes the costs of obtaining HMRC approval that the placing was eligible for relief under the Enterprise Investment Scheme and for investment by Venture Capital Trusts.

 

23.        Other reserves

 

 

Merger

 reserve

£

Share based

payment reserve

 £

Total £

1 January 2013

(179,800)

-

(179,800)

31 December 2013

(179,800)

40,874

(138,926)

Deferred tax on share options

-

77,250

77,520

31 December 2014

(179,800)

118,394

(61,406)

 

 

Merger reserve

The acquisition of Martin & Co (UK) Limited by MartinCo PLC did not meet the definition of a business combination and therefore, falls outside of the scope of IFRS 3. This transaction was in 2013 and accounted for in accordance with the principles of merger accounting as set out in Financial Reporting Standard 6 - Acquisitions and Mergers.

 

The consideration paid to the shareholders of the Subsidiary was £17,990,000 (the value of the investment). On consolidation the investment value of £17,990,000 is eliminated so that the nominal value of the shares remains of £(179,900) and, as there is a difference between the Company value of the investment and the nominal value of the shares purchased in the Subsidiary of £100, this is also eliminated, to generate a merger reserve in the Group of £(179,800).

 

Share-based payment reserve

The share based payments reserve comprises charges made to the income statement in respect of share-based payments and related deferred tax impacts under the Group's equity compensation scheme.

 

 

24. Borrowings

 

 

 

 

 

2014

2013

 

£

£

Repayable within 1 year:

 

 

Bank loan (term loan)

500,000

-

Repayable in more than 1 year:

 

 

Bank loan (term loan)

2,000,000

-

Bank loans due after more than 1 year are repayable as follows:

 

 

Between 1 and 2 years

500,000

-

Between 2 and 5 years

1,500,000

-

 

The term loan of £2.5m is secured with a fixed and floating charge over the Group's assets and a cross guarantee across all companies in the Group. The loan commenced on 30th October 2014 and is repayable over 5 years in equal instalments. Interest is charged quarterly on the outstanding amount and the rate is fixed during the term at 4.08%. At 31st December 2014 the unutilized amount of the facility was £2.5m.

 

25. Trade and other payables

 

 

 

 

 

2014

£

2013

£

Trade payables

178,673

170,717

Other taxes and social security

340,534

178,218

Other payables

23,571

-

Accruals and deferred income

503,752

304,335

 

1,046,530

653,270

 

The Directors consider that the carrying value of trade and other payables approximates their fair value.

 

26. Leasing agreements

 

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

 

 

2014

£

2013

£

 

Within 1 year

 

44,820

 

25,001

Between 1 and 5 years

17,000

33,194

 

61,820

58,195

 

The lease arrangements above consist of those relating to land and buildings and office equipment.

 

 

27. Deferred tax asset/(liability)

 

 

 

 

 

 

2014

£

2013

£

Balance at beginning of year Movement during the year

34,654

(10,760)

Statement of changes in equity

77,520

40,874

 

Acquisitions

Statement of comprehensive income

(903,310)

-            -

 

            -

4,540

 

Balance at end of year

(791,136)

34,654

 

 

Deferred taxation has been provided as follows:

 

 

 

 

 

 

 

 

2014

£

2013

£

 

Accelerated capital allowances

        (6,220)

(6,220)

 

Share-based payments

118,394

40,874

 

Acquired business combinations

(903,310)

             -

 

 

(791,136)

34,654

 
         

 

28. Financial instruments

 

Financial instruments - Risk Management

 

The Group is exposed through its operations to the following financial risks:

'    Credit risk

'    Liquidity risk

'    Interest rate risk

 

In common with all other businesses, the Group is exposed to risks that arise from its use of financial instruments. This note describes the Group's objectives, policies and processes for managing those risks and the methods used to measure them.

 

There have been no substantive changes in the Group's exposure to financial instrument risks, its objectives, policies and processes for managing those risks or the methods used to measure them from previous periods unless otherwise stated in this note.

 

Principal financial instruments

The principal financial instruments used by the Group, from which financial instrument risk arises, are as follows:

'    Receivables

'    Loans to franchisees

'    Cash at bank

'    Trade and other payables

 

Financial assets

Financial assets measured at amortised cost:

 

 

 

 

 

2014

£

2013

£

Loans and receivables: Trade receivables

 

55,536

 

65,165

Loans to franchisees

190,333

45,000

Other receivables

167,263

433,667

Cash and cash equivalents

 

3,367,259

 

4,817,520

 

 

3,780,391

5,361,352

 

Financial liabilities

Financial liabilities measured at amortised cost:

 

 

 

 

 

 

2014

£

2013

£

Other financial liabilities: Bank loan

 

2,750,465

 

-

Trade payables

178,673

170,717

Other payables

23,571

-

Accruals

503,752

304,335

 

3,456,461

475,052

Maturity analysis of financial liabilities:

 

 

 

 

 

2014

£

2013

£

In less than one year: Bank loan

 

590,563

 

 

-

Trade payables

178,673

170,717

Other payables

23,571

-

Accruals

503,752

304,355

 

1,296,559

475,052

In more than one year: Bank loan

 

2,159,902

 

-

 

2,159,902

-

 

All of the financial assets and liabilities above are recorded in the statement of financial position at amortised cost. The above amounts reflect the contractual undiscounted cash flows, including future interest charges, which may differ from carrying values of the liabilities at the reporting date.

 

General objectives, policies and processes

The Board has overall responsibility for the determination of the Group's risk management objectives and policies and, whilst retaining ultimate responsibility for them, it has delegated the authority for designing and operating processes that ensure the effective implementation of the objectives and policies to the finance function. The Board receives monthly reports from the finance function through which it reviews the effectiveness of the processes put in place and the appropriateness of the objectives and policies it sets.

 

The overall objective of the Board is to set policies that seek to reduce risk as far as possible without unduly affecting the Group's competitiveness and flexibility. Further details regarding these policies are set out below:

 

Capital management policy

Management considers capital to be the carrying amount of equity. The Group manages its capital to ensure its operations are adequately provided for, while maximising the return to shareholders through the effective management of its resources. The principal financial risks faced by the Group are liquidity risk and interest rate risk. The Directors review and agree policies for managing each of these risks. These policies remain unchanged from previous years.

 

The Group's objectives when managing capital are to safeguard its ability to continue as a going concern and so provide returns for shareholders. The Group meets its objectives by aiming to achieve growth which will generate regular and increasing returns to the shareholders.

 

The Group manages the capital structure and makes changes in light of changes in economic conditions. In order to maintain or adjust the capital structure, the Group may adjust the amount of dividends paid to shareholders.

 

Credit risk

Credit risk is the risk of financial loss to the Group if a franchisee or counterparty to a financial instrument fails to meet its contractual obligations. It is Group policy to assess the credit risk of new franchisees before entering contracts.

 

The highest risk exposure is in relation to loans to franchises and their ability to service their debt. The Directors have established a credit policy under which each new franchisee is analysed individually for creditworthiness before a franchise is offered. The Group's review includes external ratings, when available, and in some cases bank references. The Group does not consider that it has significant concentration of credit risk.

 

Liquidity risk

Liquidity risk arises from the Group's management of working capital and the finance charges and principal repayments on its debt instruments. It is the risk that the Group will encounter difficulty in meeting its financial obligations as they fall due.

 

In order to maintain liquidity to ensure that sufficient funds are available for ongoing operations and future development, the Group monitors forecast cash inflows and outflows on a monthly basis.

 

Interest rate risk

The Group's exposure to changes in interest rate risk relates primarily to interest earning financial assets and interest bearing financial liabilities. Interest rate risk is managed by the Group on an on-going basis with the primary objective of limiting the effect of an adverse movement in interest rates. Hence the fixed rate of interest on the bank term loan. The Directors monitor movements in interest rates and have not prepared sensitivity analysis in relation to interest rates as they do not believe that any reasonable variance would have a material impact on the Group.

 

Fair values of financial instruments

The fair value of financial assets and liabilities is considered the same as the carrying values.

 

29.     Acquisitions

 

On 31st October 2014, the Group acquired 100% of the share capital of Xperience Franchising Ltd ("XFL") and Whitegates Estate Agency Ltd ("WEAL") both franchisors of lettings and estate agents for cash of £6.1m. The transaction met the definitions of a business combination and is accounted for using the acquisition method under IFRS 3.The assets and liabilities below are shown at their fair values at acquisition.

 

 

XFL

£

WEAL

£

Total

£

 Brand names

 

 

 

 

 Intangible assets

571,000

-

571,000

 Master franchise agreements

3,422,579

652,506

4,075,085

 Customer lists

176,202

49,002

225,204

 Tangible assets

4,335

     626

    4,961

 Trade and other receivables

86,443

51,588

138,031

 Cash

995,088

49,294

1,044,382

Trade and other payables

(261,006)

(97,280)

(358,286)

 Deferred tax

(788,384)

(114,926)

(903,310)

Net assets acquired

4,206,257

590,810

4,797,067

Goodwill

912,716

400,501

1,313,217

Consideration

5,118,973

991,311

6,110,284

Satisfied by: Cash to vendors

 

5,118,973

 

991,311

 

6,110,284

 

The goodwill above represents the value attributable to the new businesses and the assembled and trained workforce. Deferred tax at 20% has been provided on the value of intangible assets defined as brand names and master franchise agreements. Acquisition costs of £158,741 were incurred and charged to exceptional items in the Consolidated Statement of Comprehensive Income.

 

Post acquisition results

 

 

XFL

WEAL

Total

 

£'m

£'m

£'m

Revenue

0.20m

0.10m

0.30m

Profit before tax since acquisition included in the consolidated statement of comprehensive income

0.10m

0.05m

0.15m

 

 

If the acquisitions had completed on the first day of the financial year, Group revenues would have been £7m and Group profit before tax would have been £2.4m (this excludes the restructuring costs incurred pre-acquisition by WEAL).

 

The Group acquired two franchisors of lettings and estate agents operating under 4 brands throughout England and Wales. The acquisitions were made to extend national coverage, increase the Group's market share and develop its sales expertise.

 

30.     Discontinued operations and held for sale assets and liabilities

 

Subsequent to the Board's decision to discontinue the activity of owning and managing its own offices, the offices in BirminghamKings Heath and Bournemouth were sold on 30 August 2013, in Coventry on 1 October 2013, in Portsmouth on 19 December 2013 and in Worthing on 30th December 2014. These are classified as discontinued activities.

 

In June 2014, the Group acquired its first portfolio of 374 managed lettings properties in Saltaire for £0.3m. This has been managed for the Group by Martin & Co Saltaire under a management services agreement and achieved its budgeted returns. However, portfolios that meet the Group's criteria have been difficult to find either because of the sales price or issues with the quality of the portfolio. On 21st November 2014 T G Fisheries Ltd, the franchisee operating Martin & Co Saltaire, notified the Group of its intention to purchase the portfolio of properties it was managing on behalf of the Group in accordance with the services agreement signed between the parties. At the year-end this asset is classified as held for resale but not as a discontinued operation because the Group intends to continue to pursue and acquire portfolios of managed properties which meet its criteria. The sale was completed on 30th January 2015.

 

 

2014

£

2013

£

Non-current assets held for sale and discontinued operations

 

 

Operating cash flows

(17,953)

(22,613)

Investing cash flows

364,743

66,326

Financing cash flows

-

-

Increase in cash and cash equivalents

346,743

43,713

Assets of disposal group classified as held for sale

 

 

Intangible assets

254,846

181,347

Property, plant and equipment

-

23,120

Other current assets

-

10,662

 

254,846

215,129

Liabilities of disposal group classified as held for sale

 

 

Trade and other payables

-

48,108

Analysis of the results from discontinued activities:

 

 

Revenue

204,249

816,718

Expenses

(180,749)

(651,481)

Profit before tax of discontinued operations

23,500

165,237

Made up of:

 

 

Trading operations

19,493

28,416

Sale of operations

4,007

136,821

 

23,500

165,237

Tax

(4,935)

(38,417)

Profit/ (loss) for the year from discontinued operations

18,565

126,820

 

As a result of the sale of the owned offices, the Group generated net cash inflows from investing activities of £365k (2013: £58k). The total consideration was £210k (2013: £697k). However, the Group agreed to defer consideration on Worthing as it had for three of the office disposals in 2013 so that £252k of deferred consideration existed at 31 December 2014 (2013: £408k)

 

31.     Share-based payments

 

Enterprise Management Incentive (EMI) Share Option Scheme

During the period ended 31 December 2013 the Company implemented an Enterprise Management Incentive scheme as part of the remuneration for senior management. The options were granted over a discretionary period and have varying vesting conditions.

 

The Company granted 1,566,000 options over ordinary shares to directors and executives of the Group. Following an independent expert valuation of scheme, the share based payments charge was deemed by the company to be immaterial in the current and prior year to the financial statements and therefore no charge has been recognised in the year.

 

The vesting conditions include performance conditions including a profit before tax target in the year ended 31 December 2016.

 

The maximum term of the options granted is ten years from the grant date. Upon vesting, each option allows the holder to purchase one ordinary share at a exercise price of £0.1764. The number of options granted under the scheme total 1,566,000.

 

The estimated fair value of each share option granted in the EMI plan is 0.97 pence. This was calculated by applying the Black-Scholes option pricing model which takes into account factors specific to share incentive plans, such as the vesting period.

The following principal assumptions were used in the valuation.

 

Valuation: Expected term

6.5 years

Volatility

50%

Option life

August 2013

Risk free interest rate

2.08%

Exercise price

£0.1764

Share price at date of grant

£0.1764

 

Expected volatility is a measure of the amount by which a share price is expected to fluctuate during a period. Movement in the number of share options was as follows:

 

2014

2013

 

£

£

Number of share options

 

 

Outstanding at the beginning of the year

1,566,000

-

Granted

-

1,566,000

Outstanding at the end of the year

1,566,000

1,566,000

Exercisable at the end of the year

-

-

 

The weighted average remaining contractual life of options is 8.7 years (2013: 9.7 years).

 

32. Related party disclosures

 

Transactions with Directors Dividends

During the period dividends were paid to the Directors and their spouses as follows:

 

 

2014

£

2013

£

Interim and Final dividend (ordinary shares of £0.01 each)

142,999

252,500

 

Loans

During 2013 loans were made by the Group to a director, R. Martin. On 18 December 2013, as part of the flotation process, R. Martin fully repaid the total loan of £729,004. At 31 December 2013 and subsequently no loans have existed between the Group and its Directors.

 

Director emoluments

Included within the remuneration of key management and personnel detailed in note 9, the following amounts were paid to the Directors:

 

 

2014

£

2013

£

Wages and salaries

412,433

301,312

Social security costs

34,617

29,511

 

447,050

330,823

 

Transactions with Other Related Parties Transactions with The Landlord Hub Limited

The Landlord Hub Limited is a related party by virtue of common shareholders as Mr R W Martin owns 35%, Mrs K M Martin owns 35%, Mr I Wilson owns 10%, Mrs H Shackell owns 10% and the daughters of Mr and Mrs R W Martin own 5% each.

 

The Group has supplied recruitment services during the year of £18,540 (2013: £5,520) and other services of £801 (2013: £19,637). It has also earned commission on references supplied by The Landlord Hub Limited to its franchise network of £23,767 (2013: nil). At the 31st December 2014, The Landlord Hub Ltd owed the Group £26,282 (2013: £5,948).

 

33.     Subsequent events

On 21st November 2014 T G Fisheries Ltd, the franchisee operating Martin & Co Saltaire, notified the Group of its intention to purchase the portfolio of properties it was managing on behalf of the Group in accordance with the Services Agreement signed between the parties. This transaction completed on 30th January 2015 resulting in the portfolio being disposed of for £255,998 and generating a resulting profit over its net book value of £1,152.

 

 


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