Interim Results

RNS Number : 1330R

MartinCo PLC

09 September 2014

 



MARTINCO PLC

("Martin & Co", the "Company" or the "Group")

Interim Results for the six months ended 30 June 2014

Record revenue performance, up 16% year-on-year to £2.3m, with roll-out of estate agency service supplementing organic growth of lettings and a targeted acquisition programme

MartinCo Plc, one of the UK's largest property franchises, today announces its maiden interim results for the period ended 30 June 2014.

FINANCIAL HIGHLIGHTS

§  Revenue increased by 16% to £2.3m (H1 2013: £2.0m)

§  Management Service Fees ("royalties") increased by 10% to £1.8m (H1 2013: £1.6m)

§  Gross profit increased by 11% to £2.1m (H1 2013: £1.9m)

§  Operating profit fell marginally to £0.77m (H1 2013: £0.83m) following investment in Group and franchisee network

§  Trading operating margin of 40% (H1 2013: 42%)

§  Strong balance sheet with a net cash position of £5.5m at 30 June 2014 (H1 2013: £0.2m)

§  Interim dividend of 1.3p per share

OPERATIONAL HIGHLIGHTS

§  145 offices now offering estate agency service (FY 2013: 97)

§  12 new franchisees recruited

§  Office network grown to 193 (FY 2013: 189)

§  30,902 , tenanted properties under management (H1 2013: 29,704)

§  First Plc funded acquisition completed in June

§  Completed roll-out of cloud-based operating software 

§  Launched online estate agency service at the start of September

Ian Wilson, CEO commented:

"The Group achieved record revenue in the first half of the year and saw a significant uplift in the rate of recruiting new franchisees. The roll-out of our estate agency business is now making a modest but growing contribution to Group revenue. In lettings, we have continued to drive growth with a welcome increase in our managed property portfolio..

"I am also pleased to announce that the Group's major project to implement new IT software across the network, which begun in 2012, has completed successfully. The new platform enhances our capability to collect data from our franchisees and deliver more effective e-marketing initiatives, such as the Group's weekly e-newsletter, which is distributed to over 36,000 current and potential landlord clients.

"The business has traditionally performed more strongly in the second half of the year, with an influx of franchise enquiries in September and October leading to new lettings. We also expect that our new estate agency operation will continue to make good progress in spite of a market where very strong recent growth rates have slowed somewhat."

-Ends-

For further information, please contact:

MartinCo Plc        Ian Wilson, Chief Executive Officer David Raggett, Chief Financial Officer	01202 292829
Panmure Gordon Dominic Morley (Corporate Finance) Charles Leigh-Pemberton (Corporate Broking)	020 7886 2500
Bell Pottinger       David Rydell, Charles Goodwin	020 3772 2500

Chief Executives' Review

I am delighted to report that the Group achieved record revenue for the period while at the same time implementing significant operational changes, including the further roll out of our estate agency service and fully implementing new IT software for the entire Martin & Co network. The Board believes the important progress made during the period positions the Group strongly for the traditionally busier second half of the year.

Franchise sales

The Group added to its UK footprint with new franchised office openings in Inverness, Guisborough and Sunderland. Further new franchised offices are scheduled to launch later this year in Fitzrovia, in London's West End, Wilmslow, in Cheshire, and Kingston-upon-Thames, in Surrey.

In total 12 new franchisees have been recruited in the period, which is a pleasing turnaround from the 3 we saw in H1 2013. Six of the new franchisees purchased existing Martin & Co franchises and, as with previous such sales to new franchisees, the Group expects these businesses to experience a significant uplift in revenue in the first twelve months under new ownership. In addition, three Martin & Co franchises (Macclesfield, Dundee and Wirral Bebbington) changed hands due to adjacent and well-established franchisees being in a position to purchase their neighbouring franchisee's business.

As at 30 June 2014, the Group has 193 offices of which 192 are franchised and one company owned (Worthing).

Estate Agency

The Group's diversification into estate agency, together with improving UK housing market conditions, resulted in total income earned by franchisees from this activity rising from £400,741 (H1 2013) to £1,013,221 (H1 2014). The roll-out of estate agency services continued during the period, with the number of offices offering the service growing to 145 by the period end (FY2013: 97).

Since the period end, Martin & Co launched its online estate agency service at the start of September. Martin & Co is now the only single brand operator offering prospective vendors a choice between the traditional, commission-based high street service, and an upfront flat fee online agency service. The Group looks forward to updating on the progress of this service when it reports its full year results.

IT projects

A significant milestone was reached with the completed roll-out of proprietary "cloud" based letting and estate agency operating software to all of the Group's offices, creating a national contact database for e-marketing purposes. Using the database, the Group has launched a weekly e-newsletter which is distributed to over 36,000 current and potential landlord clients.

Lettings

A record number of tenants vacated, and the properties re-let to new tenants, generated re-letting fees and commission income for franchisees. This is a function of the improving sales market, and the fact that the properties were re-let is evidence that tenant demand remains strong. This demand offset a 13% reduction in the number of new properties being instructed to Martin & Co and allowed the Group's managed property portfolio to continue growing and pass 31,000 for the first time.

Acquisition strategy

The Group has been pursuing a targeted acquisition programme and at the half year there were discussions ongoing in relation to several potential acquisitions. Whilst progress here has been slower than expected, during the period the acquisition of Village Estates in Saltaire, West Yorkshire, was completed with Martin & Co purchasing the right to manage 375 tenanted properties. The Group has seen evidence of recent inflation in seller's price expectations, but it remains disciplined and will only purchase portfolios or businesses which meet its strict investment criteria.

Outlook

The UK housing market remains strong and the Group believes it is better positioned to capitalise on growing activity now that it offers both lettings and estate agency services.

The Group is experiencing the benefits of being a Plc, such as increased recognition of the Martin & Co brand and interest from potential franchisees. During the first half of the year franchisee recruitment activity increased and our strategic decision to offer an estate agency service started to deliver positive results. We have geared up our acquisition programme and, whilst progress so far has been disappointing, there are an increasing number of opportunities which the Group is assessing. The Group has always been weighted to the second half of the year with peak months for lettings activity, portfolio growth and lettings fee income still to be reported. Our estate agency business has gained momentum in respect of offices trading, new instructions and sales agreed. With several acquisition targets in our sights and high visibility towards the end of the year we are confident in our ability to deliver substantial value to our shareholders over the next year.

Ian Wilson, Chief Executive

Financial Review

Revenue

Revenue from continuing activities for the six months ended 30 June 2014 was £2.3m (H1 2013: £2.0m), an increase of £0.3m (16%) over the comparative period. This was driven by strong growth in Management Service Fees (royalties) of £0.2m (10%) over the comparative period and ancillary services to support MSF generation. Almost all of this increase was attributed to organic growth from the existing office network.

On 3 June 2014, Martin & Co acquired its first portfolio of managed letting property contracts and certain other assets. The consideration paid totalled £296,000 of which £29,600 was deferred and remains unpaid. The Company immediately resold the other (non-core) assets for £25,000 to its local franchisee in Saltaire. The portfolio is managed by Martin & Co Saltaire under a service agreement entered into between the parties.

Operating profit

Operating profit from continuing activities was £0.77m for the six months ended 30 June 2014 (H1 2013:  £0.83m) following investment in the Group and franchise network. While turnover increased by £0.3m, costs of these sales increased by £0.1m as did the costs of the regional franchise team, recruited to drive revenue, (up £0.1m) and the staff costs of the ancillary support services (up £0.1m). There were savings of administrative costs in other areas of £0.1m which offset the costs associated with the parent company.

Earnings per share

Earnings per share for the six months ended 30 June 2014 was 2.9p (H1 2013:  3.5p). The income attributable to the owners was £0.6m (H1 2013: £0.6m).

Dividends

As we stated at the time of our admission to AIM, it is expected that dividends will be declared twice a year at the time of the Company's interim and final results, with any interim dividend representing approximately one-third of the total dividend for the year as a whole. The Board intends to pursue a progressive dividend policy providing an attractive yield to shareholders with the intention that the dividend should be covered approximately twice by underlying earnings. The Group intends to make its first interim dividend payment of 1.3p per share on 30 September 2014 to shareholders on the register on 19 September 2014.

Cash flow

The net cash inflow from operating activities in the first six months of 2014 was £0.9m (H1 2013: £0.4m) as the Group continued to generate strong cash inflows.

As a result of the purchase of its first portfolio of managed letting contracts, the Group had net cash outflows from investing activities of £0.3m (H1 2013: £0.1m).

Overall cash increased in the first six months of 2014 by £0.6m (H1 2013: £0.4m outflow).

Liquidity

The Group had cash balances of £5.5m at 30 June 2014 compared to £0.2m at 30 June 2013.

Financial position

The Group is strongly cash generative which, combined with our robust balance sheet, puts it in a strong position to fulfil the acquisition element of our strategic plan.

David Raggett, Chief Financial Officer

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

FOR THE SIX MONTHS ENDED 30 JUNE 2014

			Unaudited		Unaudited		Audited
			6 Months Ended		6 Months Ended		12 Months Ended
			30.06.14		30.06.13		31.12.13
	Notes		£		£		£
CONTINUING OPERATIONS
Revenue	6		2,268,978		1,954,235		4,144,318
Cost of sales			(191,609)		(87,239)		(201,031)
GROSS PROFIT			2,077,369		1,866,996		3,943,287
Administrative expenses			(1,306,661)		(1,036,128)		(2,328,066)
			770,708		830,868		1,615,221
Exceptional items	7		--		--		(742,517)
OPERATING PROFIT			770,708		830,868		872,704
Finance income			25,517		2,250		11,476
PROFIT BEFORE INCOME TAX			796,225		833,118		884,180
Tax expense	8		(165,083)		(201,453)		(372,183)
PROFIT AND TOTAL COMPREHENSIVE INCOME FOR THE PERIOD FROM CONTINUING OPERATIONS
			631,142		631,665		511,997
DISCONTINUED OPERATIONS
Profit/(Loss) and total comprehensive income for the period from discontinued operations
			4,405		(9,572)		126,820
PROFIT AND TOTAL COMPREHENSIVE INCOME FOR THE PERIOD ATTRIBUTABLE TO OWNERS
			635,547		622,093		638,817
Earnings per share - continuing activities			2.9p		3.5p		2.8p
Earnings per share - discontinued activities			0.0p		0.0p		0.7p
Total Earnings per share	9		2.9p		3.5p		3.5p
Diluted earnings per share - continuing activities			2.8p		3.5p		2.7p
Diluted earnings per share - discontinued activities			0.0p		0.0p		0.6p
Diluted earnings per share	9		2.8p		3.5p		3.3p

CONSOLIDATED STATEMENT OF FINANCIAL POSITION

AS AT 30 JUNE 2014

				Unaudited		Unaudited		Audited
				As at		As at		As at
				30.06.14		30.06.13		31.12.13
	Notes			£		£		£
ASSETS
NON-CURRENT ASSETS
Intangible assets		10		378,479		75,000		75,000
Property, plant and equipment				82,685		90,096		84,486
Deferred tax				89,960		--		34,654
				551,124		165,096		194,140
CURRENT ASSETS
Trade and other receivables		11		626,655		1,272,522		865,569
Cash and cash equivalents				5,461,878		232,384		4,817,520
				6,088,533		1,504,906		5,683,089
Assets of disposal group classified as held for sale		16		212,618		741,136		215,129
				6,301,151		2,246,042		5,898,218
TOTAL ASSETS				6,852,275		2,411,138		6,092,358
EQUITY
SHAREHOLDERS' EQUITY
Share capital		12		220,000		179,900		220,000
Share premium		13		3,790,000		--		3,790,000
Merger reserve		14		(179,800)		(179,800)		(179,800)
Retained earnings				1,739,674		1,129,503		1,104,127
Share based payment reserve		14		96,179		--		40,874
TOTAL EQUITY				5,666,053		1,129,603		4,975,201
LIABILITIES
NON-CURRENT LIABILITIES
Deferred tax				--		10,760		--
				--		10,760		--
CURRENT LIABILITIES
Trade and other payables		15		572,893		526,644		653,270
Tax payable				582,068		543,577		415,779
				1,154,961		1,070,221		1,069,049
Liabilities of disposal group classified as held for sale		16		31,261		200,554		48,108
				1,186,222		1,270,775		1,117,157
TOTAL LIABILITIES				1,186,222		1,281,535		1,117,157
TOTAL EQUITY AND LIABILITIES				6,852,275		2,411,138		6,092,358

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

FOR THE SIX MONTHS ENDED 30 JUNE 2014

		Called up share capital	Retained earnings	Share premium	Other reserves		Total equity
		£	£	£	£		£
Balance at 1 January 2013		179,900	717,810	--	(179,800)		717,910
Profit and total comprehensive income		--	622,093	--	--		622,093
Dividends		--	(210,400)	--	--		(210,400)
Balance at 30 June 2013 (unaudited)		179,900	1,129,503	--	(179,800)		1,129,603
Profit and total comprehensive income		--	16,724	--	--		16,724
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		--	(42,100)	--	--		(42,100)
Deferred tax on share based payments		--	--	--	40,874		40,874
Total transactions with owners		40,100	(42,100)	3,790,000	40,874		3,828,874
Balance at 31 December 2013 (audited)		220,000	1,104,127	3,790,000	(138,926)		4,975,201
Profit and total comprehensive income		--	635,547	--	--		635,547
Deferred tax on share based payments		--	--	--	55,305		55,305
Balance at 30 June 2014 (unaudited)		220,000	1,739,674	3,790,000	(83,621)		5,666,053

CONSOLIDATED STATEMENT OF CASH FLOWS

FOR THE SIX MONTHS ENDED 30 JUNE 2014

											Unaudited		Unaudited		Audited
											6 Months Ended		6 Months Ended		12 Months Ended
											30.06.14		30.06.13		31.12.13
											£		£		£
Cash flows from operating activities
Profit before income tax											801,836		823,546		1,049,417
Depreciation and amortisation charges											9,900		62,357		(98,565)
Finance income											(25,517)		(2,250)		(11,497)
Operating cash flow before changes in working capital											786,219		883,653		939,355
(Increase)/Decrease in trade and other receivables											(17,107)		(291,731)		6,117
Decrease in trade and other payables											(126,824)		(155,737)		(59,815)
Cash generated from operations											642,288		436,185		885,657
Tax paid											--		--		(341,486)
Net cash generated from operations											642,288		436,185		544,171
Cash flows from investing activities
Purchase of intangible assets											(277,450)		(95,135)		(222,475)
Purchase of tangible assets											(5,424)		(31,682)		(39,669)
Proceeds from sale of intangible assets											259,428		--		258,956
Proceeds from sale of tangible assets											--		12,630		50,160
Interest received											25,517		--		11,497
Net cash generated from/(used in) investing activities											2,071		(114,187)		58,469
Cash flows from financing activities
Share issue											--		--		3,830,100
Net cash outflow on Directors Loans											--		(520,108)		(1,509)
Equity dividends paid											--		(208,295)		(252,500)
Net cash generated from/(used in) investing activities											--		(728,403)		3,576,091
Increase/(Decrease) in cash and cash equivalents											644,358		(406,405)		4,178,731
Cash and cash equivalents at the beginning of the period											4,817,520		638,789		638,789
Cash and cash equivalents at end of period											5,461,878		232,384		4,817,520

NOTES TO THE CONSOLIDATED STATEMENT OF CASHFLOWS

FOR THE SIX MONTHS ENDED 30 JUNE 2014

						Unaudited		Unaudited		Audited
						6 Months Ended		6 Months Ended		12 Months Ended
						30.06.14		30.06.13		31.12.13
						£		£		£
	Continuing operations
	Profit before income tax					796,225		833,118		884,180
	Adjustments for
		Depreciation				6,329		3,467		15,890
		Profit on disposal of property, plant and equipment				--		--		(10,210)
		Amortisation				3,571		--		32,577
		Finance income				(25,517)		(2,250)		(11,497)
	Changes in working capital
		Increase in trade and other receivables				(20,514)		(352,502)		(58,004)
		(Decrease)/Increase in trade and other payables				(109,978)		(113,396)		55,334
	Cash inflow from continuing operations					650,116		368,437		908,270
	Discontinued operations
	Profit/(loss) before income tax					5,611		(9,572)		165,237
	Adjustments for
		Depreciation				--		3,943		--
		Profit on disposal of property, plant and equipment				--		--		(136,822)
		Amortisation				--		54,947		--
	Changes in working capital
		Decrease in trade and other receivables				3,407		60,771		64,121
		Decrease in trade and other payables				(16,847)		(42,341)		(115,149)
	Cash (outflow)/inflow from discontinued operations					(7,829)		67,748		(22,613)
	Cash generated from operations					642,287		436,185		885,657

NOTES TO THE INTERIM RESULTS

FOR THE SIX MONTHS ENDED 30 JUNE 2014

1.       GENERAL INFORMATION

The principal activity of MartinCo plc and its subsidiary 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.         GOING CONCERN

The interim financial information has been prepared on the basis that the Group is a going concern.

When assessing the foreseeable future the directors have looked at a period of 12 months from the date of approval of the interim financial information. The directors have a reasonable expectation that the Group has adequate resources to continue to trade for the foreseeable future and, therefore, consider it appropriate to prepare the Group's interim financial information on a going concern basis.

3.         BASIS OF PREPARATION

The consolidated interim financial information for the six months ended 30 June 2014 was approved by the Board and authorised for issue on 8^th September 2014. The results for 30 June 2014 and 30 June 2013 are unaudited and have not been reviewed by our auditors. The disclosed figures are not statutory accounts in terms of Section 435 of the Companies Act 2006. Statutory accounts for the year ended 31 December 2013 on which the auditors gave an audit report which was unqualified and did not contain a statement under Section 498(2) or (3) of the Companies Act 2006, have been filed with the Registrar of Companies. The annual financial statements of the Group are prepared in accordance with International Financial Reporting Standards as adopted by the European Union.

This interim report has been prepared on a basis consistent with the accounting policies expected to be applied for the year ended 31 December 2014, and uses the same accounting policies and methods of computation applied for the year ended 31 December 2013.

4.         BASIS OF CONSOLIDATION

The Group's interim financial information includes those of the parent company and its subsidiary, drawn up to 30 June 2014. Subsidiaries are entities over which the Group obtains and exercises control though voting rights. Income, expenditure, unrealised gains and intra-group balances arising from transactions within the Group are eliminated.

On 10 December 2013 the Company acquired the shares of Martin & Co (UK) Limited in exchange for its own shares. The Company issued 17,990,000 1p shares in exchange for the entire share capital of Martin & Co (UK) Limited. The acquisition of its principal subsidiary by the Group did not meet the definition of a business combination and therefore falls outside the scope of IFRS3. As IFRS does not provide specific guidance in relation to group reorganisations it defers to the next appropriate GAAP being UK GAAP.

The acquisition has therefore been accounted for in accordance with the principles of merger accounting as set out in Financial Reporting Standard 6 - Acquisitions and Mergers. Accordingly the financial information for the Group has been presented as if Martin & Co (UK) Limited has been owned by the Company throughout the current and preceding periods.

The corresponding figures of the previous year includes the results of the merged entity, the assets and liabilities at the previous balance sheet date and the shares issued by the Company as consideration as if they had always been in issue.

The difference between the capital and reserves of Martin & Co (UK) Limited and the nominal value of shares and share premium issued by the Company to acquire the merged entity were taken to reserves.

NOTES TO THE INTERIM RESULTS

                     FOR THE SIX MONTHS ENDED 30 JUNE 201

5.         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.

6.         REVENUE

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

			Unaudited		Unaudited		Audited
			6 Months Ended		6 Months Ended		12 Months Ended
			30.06.14		30.06.13		31.12.13
			£		£		£
Management service fee			1,803,200		1,632,959		3,477,855
Franchise sales			160,024		109,576		176,683
Other			305,754		211,700		489,780
			2,268,978		1,954,235		4,144,318

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

                Other revenue represents the income earned in providing services to the franchise network to support them in generating fees and, thereby, management services fees for the Group. These include helpdesk support for the cloud based operating software, the recruitment of new employees and training.

7.         EXCEPTIONAL ITEMS

The exceptional costs reported in the Consolidated Statement of Comprehensive Income are £743k and all relate to the placing and listing on AIM. These costs were fully stated in the Admission Document.

8.         TAXATION

The underlying tax charge is based on the expected effective tax rate for the full year to December 2014.

NOTES TO THE INTERIM RESULTS

                     FOR THE SIX MONTHS ENDED 30 JUNE 2014

9.         EARNINGS PER SHARE

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

		Unaudited		Unaudited		Audited
		6 Months Ended		6 Months Ended		12 Months Ended
		30.06.14		30.06.13		31.12.13
Basic earnings per share
Weighted average number of shares		22,000,000		17,990,000		18,325,833
Profit for the period from continuing activities		631,142		631,665		511,997
Profit/(loss)  for the period from discontinued activities		4,405		(9,572)		126,820
Total profit for the period		635,547		622,093		638,817
Earnings per share - continuing activities		2.9p		3.5p		2.8p
Earnings per share - discontinued activities		0.0p		0.0p		0.7p
Total Earnings per share		2.9p		3.5p		3.5p

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.                                                        

In the six months ended 30 June 2013 there were no share options with a dilutive effect on earnings per share and therefore no figures are shown below for this period.

		Unaudited		Unaudited		Audited
		6 Months Ended		6 Months Ended		12 Months Ended
		30.06.14		30.06.13		31.12.13
Diluted earnings per share
Weighted average number of shares		22,000,000		17,990,000		18,325,833
Dilutive effect of share options on ordinary shares		845,040		0		845,817
		22,845,040		17,990,000		19,171,650
Diluted earnings per share - continuing activities		2.8p		3.5p		2.7p
Diluted earnings per share - discontinued activities		0.0p		0.0p		0.6p
Diluted earnings per share		2.8p		3.5p		3.3p

NOTES TO THE INTERIM RESULTS

                     FOR THE SIX MONTHS ENDED 30 JUNE 2014

.

10.       INTANGIBLE ASSETS

			Customer Lists		Goodwill		Total
			£		£		£
Cost
Balance at 1 January 2013			654,532		75,000		729,532
Additions			214,773		--		214,773
Transferred to assets held for sale			(869,305)		--		(869,305)
Balance at 30 June 2013 (Unaudited) and balance at 31 December 2013 (Audited)			--		75,000		75,000
Additions			307,050		--		307,050
Balance at 30 June 2014 (Unaudited)			307,050		75,000		382,050
Amortisation
Balance at 1 January 2013			132,551		--		132,551
Charge for period			54,947		--		54,947
Transferred to assets held for sale			(187,498)		--		(187,498)
Balance at 30 June 2013 (Unaudited) and balance at 31 December 2013 (Audited)			--		--		--
Charge for period			3,571		--		3,571
Balance at 30 June 2014 (Unaudited)			3,571		--		3,571
Net book value
30 June 2013 (Unaudited)			--		75,000		75,000
31 December 2013 (Audited)			--		75,000		75,000
30 June 2014 (Unaudited)			303,479		75,000		378,479

The carrying amount of goodwill relates entirely to one cash generating unit, and reflects the difference between the fair value of consideration transferred and the fair value of assets and liabilities purchased. The Directors do not consider goodwill to be impaired.

Additions in the period to 30^th June 2014 include the acquisition by the Group of its first portfolio of managed letting property contracts and certain other assets together with the costs borne in bringing an independent agent and its existing portfolio into Martin & Co.

The consideration paid for the portfolio of managed letting property contracts totalled £296,000 of which £29,600 was deferred and remains unpaid. The Company immediately resold the other (non-core) assets for £25,000 to its local franchisee in Saltaire giving a net addition at cost of £271,000.The portfolio is managed by Martin & Co Saltaire under a service agreement entered into between the parties.

NOTES TO THE INTERIM RESULTS

                     FOR THE SIX MONTHS ENDED 30 JUNE 2014

11.       TRADE AND OTHER RECEIVABLES

			Unaudited		Unaudited		Audited
			As at		As at		As at
			30.06.14		30.06.13		31.12.13
			£		£		£
Trade receivables			56,100		153,602		65,165
Loans to franchisees			36,000		--		45,000
Prepayments and accrued income			383,737		345,232		321,737
Other receivables			150,818		255,089		433,667
Directors' current accounts			--		518,599		--
			626,655		1,272,522		865,569

12.       CALLED UP SHARE CAPITAL

	Unaudited As at 30.06.14				Unaudited As at 30.06.13				Audited As at 31.12.13
	Number		£		Number		£		Number		£
Group
Authorised, allotted issued and fully paid Ordinary Shares of 1p each	22,000,000		220,000		17,990,000		179,900		22,000,000		220,000

	Group number
As at 1 January 2013 and 30 June 2013	17,990,000
Initial allotment	10,000
Issued on admission to Alternative Investment Market	4,000,000
As at 31 December 2013 and 30 June 2014	22,000,000

MartinCo plc was incorporated on 7^th October 2013 and 10,000 ordinary shares of 1p each were issued. On 10^th 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 17^th December a further 4,000,000 shares were placed at £1 each.

13.    SHARE PREMIUM ACCOUNT

  On 17th 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.

NOTES TO THE INTERIM RESULTS

  FOR THE SIX MONTHS ENDED 30 JUNE 2014

14.  OTHER RESERVES

		Merger  Reserve		Share Based Payment Reserve		Total
		£		£		£
1 January 2013		(179,800)		--		(179,800)
30 June 2013		(179,800)		--		(179,800)
31 December 2013 (Audited)		(179,800)		40,874		(138,926)
30 June 2014		(179,800)		96,179		(83,621)

Merger Reserve

The acquisition of its principal subsidiary by the Group does not meet the definition of a business combination and therefore, falls outside of the scope of IFRS 3. The Group has been 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). As these shares had a nominal value of £179,900, the merger reserve in the Company is £17,810,100.

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).

IAS 27, 'Consolidated and separate financial statements', requires a company to record its investments in its separate financial statements at cost or in accordance with IAS 39, 'Financial Instruments: Recognition and measurement.'

Merger relief is an absolute relief from recognising share premium. However it is not available to the company due to the provisions of IAS 27. The excess premium over the nominal value of share capital issued has therefore been credited to a merger reserve.

Share based payment reserve

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

15.       TRADE AND OTHER PAYABLES

			Unaudited		Unaudited		Audited
			As at		As at		As at
			30.06.14		30.06.13		31.12.13
			£		£		£
Trade payables			76,372		139,680		170,717
Accruals			214,617		173,031		304,335
Other taxes and social security			236,162		196,178		178,218
Other payables			45,742		17,755		--
			572,893		526,644		653,270

NOTES TO THE INTERIM RESULTS

                     FOR THE SIX MONTHS ENDED 30 JUNE 2014

16.       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 in April 2013 the offices in Birmingham Kings Heath and Bournemouth were sold on 30 August 2013, in Coventry on 1 October 2013 and in Portsmouth on 19 December 2013. One office remains, Worthing which continues to be marketed.

ASSETS OF DISPOSAL GROUP			Unaudited		Unaudited		Audited
CLASSIFIED AS HELD FOR SALE			As at		As at		As at
			30.06.14		30.06.13		31.12.13
			£		£		£
Intangible assets			181,347		681,807		181,347
Property, plant and equipment			24,016		45,317		23,120
Other current assets			7,255		14,012		10,662
			212,618		741,136		215,129
LIABILITIES OF DISPOSAL GROUP			Unaudited		Unaudited		Audited
CLASSIFIED AS HELD FOR SALE			As at		As at		As at
			30.06.14		30.06.13		31.12.13
			£		£		£
Trade and other payables			31,261		200,554		48,108
			31,261		200,554		48,108

			Unaudited		Unaudited		Audited
ANALYSIS OF THE RESULTS OF DISCONTINUED ACTIVITIES			6 Months Ended		6 Months Ended		12 Months Ended
			30.06.14		30.06.13		31.12.13
			£		£		£
Revenue			95,645		350,642		816,718
Expenses			(90,034)		(360,214)		(651,481)
Profit/(loss) before tax
Trading operations			5,611		(9,572)		28,416
Sales of operations			--		--		136,821
			5,611		(9,572)		165,237
Tax			(1,206)		--		(38,417)
Profit/(loss) for the period			4,405		(9,572)		126,820

 

END

 

 

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