The Property Franchise Group PLC yesterday issued a trading update for the year ended 31 December 2020 (“FY20”), for the Group and Hunters.

The addition of Hunters makes TPFG the No.2 player in the lettings market with 73,000 properties under management.

Connells and Countrywide, which have around 145,000 [corrected from earlier edition] properties between them ranks  No 1.

FY20 was a volatile year for the estate and lettings agency industry as companies navigated an unprecedented period of full closure and various levels of restrictions for the remainder of the year.

While constructive Government initiatives such as the stamp duty holiday had a positive impact on underlying activity levels, extended lead times meant that this surge of activity will largely flow through into fees in early 2021.

Both TPFG and Hunters performed very well despite the circumstances, demonstrating the strength and resilience of the franchise model and the quality of their respective management teams.

As previously announced, both companies had a keen focus on cost management over the year, as was prudent given the uncertain environment, which together with stable revenues has led to a positive impact on profitability.

The Property Franchise Group

Network income increased to £94m (2019: £93m)

Revenue increased to £11.5m (2019: £11.4m)

Management Service Fees of £9.4m (2019: £9.7m) 70% Lettings and 30% Sales

Average branch revenue of c.£333,000 (2019: c.£321,000) excluding EweMove

Tenanted managed properties remained stable at c.58,000 (2019: c.58,000)

Sales agreed pipeline at year-end almost double December 2019 at £10.3m (2019: £5.2m)

11 assisted portfolio acquisitions by franchisees, adding 1,305 managed properties

The Group maintains a strong balance sheet, with net cash of £8.8m [unaudited] at the year-end (2019: net cash £4.0m)

Hunters

The highlights below relate to the year ended 31 December 2020, prior to the completion of the acquisition.

Network income increased to £43m (2019: £42m)

Adjusted revenue [Adjusted for offices franchised in 2020 and changes to portal charging] decreased by 4% to £12.5m (2019: £13.0m)

Management Service Fees of £3.4m (2019: £3.2m) 64% Sales and 36% Lettings

Average branch revenue of c.£207,000 (2019: c.£205,000)

Tenanted managed properties of c.15,000 (2019: c.14,000)

Sales agreed pipeline increased 84% to £17.3m (2019: £9.4m)

Improved balance strength with zero net debt at the year-end* (2019: net debt £3.2m)

Current trading and Outlook

With the strong pipeline and momentum generated late FY20 continuing into the current year, TPFG and Hunters both came into 2021 with sales agreed pipelines in their networks up more than 80% on the end of the prior year.

The sales pipeline has continued at strong levels. As a result, at the end of February 2021, the sales agreed pipeline had only reduced by 6% since the end of 2020, when they were at record highs.

Sales agreed pipelines have also started to convert into completions at faster rates. Consequently, TPFG and Hunters have benefited from significantly increased turnover from sales activities over the comparative period for FY20.

Sales valuations and listings, as well as Lettings’ instructions and lettings, have started more slowly in 2021 than they did in 2020 when we experienced the confidence following the UK general election. However, the confirmation of the extension of the stamp duty holiday by the Chancellor in his March 2021 Budget and the intended easing of lockdown restrictions should both help to improve performance over the coming months.

Underpinning the lettings income of both TPFG and Hunters is the portfolio of managed properties which now stands at c73,000 properties.

Whilst the outlook for the UK economy remains difficult to predict, we are confident that an exciting year of progress is ahead of the Group. Aside from external market conditions, in the year ahead TPFG looks forward to pursuing the new opportunities available to it following the Hunters acquisition, leveraging its significantly enhanced scale and continuing to execute on its ambitious growth strategy.