Property Franchise Group (LON:TPFG) saw its stock rise during trading on Tuesday after posting modest progress in the fiscal year ended December 31, 2019.
The company’s statement to shareholders reads:
“The Group successfully navigated a difficult year for UK residential property, performing in line with market expectations and delivering growth in both revenue and management service fees. The Group’s hybrid brand EweMove, which has successfully reduced the impact of the rent ban significantly and achieved a record performance in rental income, is also expected to see a further significant improvement in profits compared to the previous year. ”
The property franchise group said the difficult situation was due in part to the impact of the Tenant Fee Prohibition Act passed in June 2019, as well as broader macroeconomic factors.
Despite the difficult circumstances, the group reported an increase in overall revenue from £11.2m to £11.4m compared to the previous year. As a result, the company’s management services fee increased from £9.4m to £9.6m, and the number of tenant managed properties it serviced increased from 55,000 to 58,000 over the same period.
The company added that its Acquisition Assistance Program supported 24 franchisee acquisitions and added 2,381 properties under management during fiscal year 2019. The company went on to say that it continues to invest in technology and has seen a 54% increase in leads to up to 47,000 leads through pay-per-click campaigns across traditional high street brands’ customer websites.
TPFG appears to have managed to join the ranks of successful companies despite adverse conditions that have worried some of its more established peers.
AFI Development (LON:AFRB), for example, pointed to “challenging market conditions” as the reason for its underwhelming performance. The Russia-focused company said the decline in profits and home sales could be attributed to the state of the domestic economy.
Similarly, Schroders Real Estate Investment Trust (LON: SREI) complained of a “challenging market” backdrop that has reduced its base value and forced it to adjust its strategy.
Comments from real estate franchise group
The company’s CEO, Ian Wilson, responded to the latest information by saying:
“Our ability to achieve revenue growth and continued business progress throughout the year despite market headwinds is a testament to the strength of our business and franchise model.”
“Looking to the future, there are many opportunities to build further momentum across the business as we continue to invest in our heritage brands and EweMove remains strong. We will continue to focus on growing our national mortgage brokerage network.”
“While this is my last year at TPFG, I am pleased to continue the progress we began with our IPO in December 2013, increasing our dividend significantly each year. We are committed to continuing to create value for our customers, and we are confident that we will continue to do so in the year ahead.”
Memo for investors
Property Franchise Group’s share price increased by 8.37% (18.00 pence) to 233.00 pence per share at the end of Tuesday’s session at 17:08 GMT 28/01/28.
Looking to the future, the company says:
“Early signs of improving market conditions support our expectation that home sales volumes will increase in 2020. The rental market is also expected to remain healthy, with rising rents and increased confidence supporting our expectation that home sales volumes will increase in 2020. There will be increased opportunities for our franchisees to acquire a competitor’s book of business than was available in 2019. ”
“Following the end of the period, the Group announced the launch of its ‘Buy and Build’ financial services division and the appointment of Mark Graves to the new role of Financial Services Director. ”
Broker forecasts were not available for this stock, but the group has a P/E of 16.17 and a decent dividend yield of 3.61%.
