Operator
Good afternoon and welcome to the Property Franchise Group PLC Interim Results 2026 Investor Presentation. Throughout this recorded presentation, investors will be in listen-only mode. Questions are encouraged and they can be submitted at any time using the Q&A tab situated on the right-hand corner of your screen. Simply type in your questions and press send. Before we begin, I would like to submit the following poll. And I would now like to hand you over to CEO Gareth Samples. Good afternoon to you.
Good afternoon and thank you. Good afternoon, everybody. I'm delighted to be able to talk to you today about our recently delivered results, another record for the group, a record first six months performance. Ben and I are going to run you through that performance and talk about some of the things that we're working on in readiness for the remainder of the year and into 2027. So what we're going to cover today highlights, highlights financial review our strategy and that's an ever sort of developing strategy outlook in the sort of short and medium term and then at the end of the presentation give you the opportunity to ask any questions so so straight into highlights so so just for those who are new to the story we are the UK's largest multi-brand property franchise group We have a proven multi-brand franchise model with 18 regional and national brands operating in sales, lettings, and financial services. We've been very acquisitive since inception. We've done eight acquisitions, the two biggest in 2024, when we combined with our biggest competitor, Belvoir, along with the Guild and Fine & Country, did that in March of 2024 and May of 2024. and since those two acquisitions we created a very large property services business so we're now from a footprint perspective the largest in the UK with 1900 businesses that are part of the group and as a result of the Belvoir acquisition we also had a financial services business which is Mortgage Advice Bureau's largest introducer and that business today ran by Michelle Brooke has 290 employed and self-employed financial advisors and that business will do circa 25,000 mortgages this year why do people like the story well 46% of our revenue is recurring we are dominant in the letting space so although we do sales and lettings like most estate agency businesses our business is very much weighted towards lettings and that drives that recurring revenue we have a fine in country international business that operates in 19 distinct countries and have recently opened in Uruguay, Barbados, Dublin, Dubai so you know really good uptake on that finding country international model we have really strong free cash generation in the first six months of the year 13.4 million pounds as a result of bringing the business together in the size we now have we've also invested in our senior leadership team which is highly experienced and and we have a a number of group group mds that run each of the businesses um and we have progressive dividend policy and again that's pushed forward again this year with a 10% increase in the interim dividend so that gives you a little bit of understanding about the group and the scale as a result of the coming together we changed the way we reported so we split the business into three divisions and we've sort of added a fourth as we've integrated the new businesses together so franchising is our biggest division and always will be and that's where you know our franchisees pay us a percentage of turnover on a monthly basis a big financial services business have always already talked about 290 financial advisors mortgage advice bureaus biggest introducer and that's a business that over the last five years we've committed to a buy and build strategy so we are continually looking at opportunities to increase the size of that business we did a an acquisition in january um a business called safs and you know it's likely we'll do another acquisition this year in that financial services space and then we've got licensing which is very akin to franchising it's a recurring revenue model but this is where estate agents independent estate they just pay us a monthly fee for a range of services so it's recurring they're on a one-year contract with a one-year notice period so very sticky and again very good from a recurring revenue perspective and then the platform element which which we've worked on extensively over the last sort of 18 months because we've now got 1900 uh branches that are a part of the group um we believe the platform being able to offer distinct services and negotiating on behalf of all of our members the keenest price for the right products and then being able to spread that across the network um gives us a huge opportunity and you know the first element of that sort of platform model was privilege and we'll touch on that a little bit later we've also launched market more which is an enhanced marketing services package we're working and will soon launch our AI services package that will spread across the group and there are a number of the options that we're looking at in the insurance space conveyancing space auction space that will further enhance that sort of platform model so think of the platform as really that sort of engine for growth going forward from an organic perspective so utilizing the size of the group to take more of this sort of businesses spend into very cost effective complementary products for each of the businesses. So that gives you a little bit of insight into our business. Operational highlights, our managed portfolio is the largest in the sort of estate agency space. We look after 149,000 properties on behalf of landlords, slightly down on 2025 due to the introduction of the Renters Rights Bill, which again, we'll touch on later, but actually probably a better number than we thought. We launched our Privilege Programme, which had three elements to it. One was a Compliance Saver, so a range of products that a business owner needs, things like PI insurance, all at a very attractive price, and most of our network have taken that product a rent guarantee product that gave the landlord comfort that if a tenant didn't pay their rent the rent guarantee product would kick in pay the rent pay for the court cost to evict that tenant and pay for any damage that that tenant did while you were getting them evicted and that's gone incredibly well we've got nearly 50 of the total book covered which which gives both us our franchisees and our landlords huge comfort that's been a real success and then the third element of privilege is is the deposit income that historically has been lodged within each of the individual businesses that we've now pulled into one centralized account that will enable us to earn interest on that money and pay our franchisees some of that money back financial services division had a record half year they did 13 400 mortgages in the first half against 12 800 last year we have been working on our ai solutions for probably 15 months now and i'm delighted to say we've got four of those trials in place across the network and actually have some franchisees also trialing that technology and i'll give you some examples a little bit later in the presentation but AI is moving at pace and I think we'll launch that over the next sort of four to six weeks we've made a strategic investment in a survey business Meridian which is some part there was the old legal and general surveying business two reasons for that one it was a very very good business two it was sort of a hedge you know this talk about um another sort of hips home information pack um type uh product coming back into the market to try and speed up the transaction cycle um and our view was if that if that was to happen we would need to guarantee our our offices some survey supply so um i think that's a really good strategic investment and we'll work with the guys at meridian to move that business forward over time and then as i've already touched on we've already done a financial services acquisition at the start of 20 2026 so they would be the operational highlights i'm now going to hand you over to ben who's going to talk you through the financial highlights ben perfect thanks gareth Good afternoon, everybody.
In terms of key financial highlights, revenue for the first half of the year was up 7% year over year to 43.3 million. Of that 43.3 million, 46% we would define as recurring. That percentage has just dipped very slightly compared to last year, And I think that demonstrates the high level of growth that we've showed in financial services compared to the other divisions, which has just moved that backwards very slightly because financial services is typically non-recurring in nature. adjusted profit before tax 15.5 million up again seven percent year over year and we've proposed an interim dividend of 7.7p which is up 10 percent year over year in terms of balance sheet and cash flow net debt again improved versus this time last year down to 8.1 million and that obviously reflects not only the dividends that we've paid out during that time and the debt we've had to pay down, but also the acquisitions that Gareth alluded to earlier on clearly leverage down at a very low level, which again, we're very happy with. And cash from operations up 2% to 13.4 million. The reason why it's only up 2% compared to say the profitability improvement of 7% is because some of the elements that we've been looking at, particularly privilege, have a slightly or I have a longer cash cycle so we'll talk a little bit more about privilege later on but very simplistically the commission that we're earning on some on the rent guarantee whilst we're able to recognize it in full at the point that the policy goes live we're actually only receiving the cash evenly over the 12 month length of the policy so you've in effect got an accrued revenue with a trade receivable whilst that cash is coming through and clearly as we've actually penetrated more and grown the level of landlords that are on cover, that's obviously also increased the trade receivable. Still very strong, still very good cash generation, but that's why we've just seen that slight difference there. And adjusted basic EPS, again, up 8% to 19.8p. So again, overall, particularly in the backdrop of the wider market and potentially some of our peers actually a really kind of good first half set of results at a top level. Just to go down a little bit, just to kind of give you a feel for the split between the three divisions, you can see that franchising still very much is the core of what we do as a business, making it well over 50% of our revenue and over 75% of our profit, then followed by financial services and then finally licensing and you can see those pink numbers at the bottom just showing you the revenue growth in each of those divisions so you can see financial services certainly from a revenue perspective improving significantly and even from profitability perspective albeit there's been some reclassification that's making that look slightly better than it really should do. Again, improving in financial services. Probably the most disappointing, and we'll talk a little bit more about it later on, is the fact that licensing has largely remained flat and actually from a profitability perspective gone backwards a little bit. And that profitability is because of some additional provisions that we've had to put in on the fine and country side. And we have been working at the start of H2 already in terms of a number of the initiatives that will help to improve and reverse that trend but clearly H1 we'd have liked to have got that in quicker so that just gives you a very quick overview if we just deep dive briefly into each of the divisions so Gareth's already alluded to some of those kind of key KPIs that we monitor and if you've seen this presentation before what we're we're trying to highlight too is what the key operational kpis that we monitor to ensure that we're driving the right ultimate results breakdown of the revenue to kind of give you a feel for how that's a little bit more color for how it's made up within each of the divisions and then obviously some of the key maybe financial results that we're seeing uh coming out of the other end so kpis um managed lets as gareth already alluded to 149 000 down very slightly but in the context of the renters rights act and the risk of landlords exiting actually we're happy um that um actually since the december year end it's stabilized and is flat and certainly from this time last year there's only a small reduction number of sales again um look down and are down in in terms of volume but the from a comparative perspective h1 of 2025 had the stamp duty holiday implication which meant that the first quarter there was a huge rush of transactions going going through so actually a slightly peaked comparative and as you can see we've still managed to achieve overall kind of MSF sales growth and then the third kind of key KPI which is again very key to to us is how we're driving kind of productivity so the average msf so if in effect almost the average revenue that we're driving per franchisee as you can see that's increased up to 20.6k as well so it's not just about those key almost volume metrics it's it's how much are we working with those franchisees to make sure that they're driving more revenue and therefore we're getting more revenue in absolute terms as well you can see in terms of the revenue splits in franchising it's stayed very uh consistent lettings still makes up um a significant part of our franchising business almost at almost 50 percent um sales has largely remained uh flat as has the income from our owned offices and that other is where we're seeing uh some of the additional privilege income coming in and then just on the right hand side again get in the in the context of the wider market both in lettings with the renters right tax and some of the uncertainty around that to achieve two percent lettings growth actually we're reasonably happy with sales growth again it's it's a reasonably kind of um subdued market and again if you compare that to the 2025 uh first half which had that stamp duty change and to still be increasing the revenue despite lower uh volumes just demonstrates that some of our work that we're doing with franchisees to increase the overall kind of absolute commission or the commission percentage that they are achieving on a sale is is coming through and is working and as you can see you know it's still an incredibly strong business both in terms of its operating margin at 56 percent and the recurring percentage of recurring revenue at 68 percent just quickly then for financial services similarly number of advisors has dropped very slightly since this time last year, down to 290. The number of transactions has increased up to 13,400. And again, on the productivity measure, again, really key for us to make sure we're maximizing productivity of our advisors up to 44.9K from just over 40.3K. You can see there that in terms of the mix between employed advisors and business partners, actually, it's taken a bit more of a shift to employed advisors. And you will have heard us speak before that whilst business partners remains part of our model, we're very keen to be pushing the and focusing on those employed advisors. Because, again, when it comes back to productivity, there's more ability to be able to influence our employed advisors versus the business partners and therefore drive overall profitability. Revenue growth of 6%, the adjusted operating profit up to 20% as a result of some of the actions that we've taken with MAB and some of that reduction in the number of business partners and a small level of recurring income as the result of the nature of this particular division.
And then just finally, licensing.
So again, those kind of two key KPIs, operational KPIs that we monitor, number of licensees, actually up very slightly to 1039 the average license fee per licensee has actually come down that in uh in practical terms is not because we are charging any less it's actually because on a few examples within the fine and country business we've had to put some provisions in against a couple of licensees where they are struggling in some of the in the market that is a bit subdued in that kind of top upper quartile and so that's just brought down the overall result a little bit again it's this division is very much a tale of of two halves and two businesses you've got finding country which certainly from a licensee perspective is doing is doing well it's continuing to grow both domestically and internationally it is operating in a sector which in part of the market which is probably finding a little bit more challenging at the moment that kind of upper quartile over a million pound kind of area is has definitely slowed down a little and we're hearing that from the feedback from our fine and country members and whilst the I suppose the beauty of the licensing model means that the pure license fee doesn't necessarily change obviously over the long term if that licensee is struggling commercially that can have challenges in terms of debt and the like which is why we're very closely managing that when it comes to the guild on the on the other side that's where we've historically seen a little bit of attrition within the number of advisors we've relaunched that proposition in the first half of this year and actually then doing some pricing uh changes at the beginning of the second half of the year that will help to see our margin improving um going forward so certainly helping to improve that revenue that that flat revenue growth that we saw in h1 but also importantly trying to move that adjusted operating profit up into and over above 30 percent um just more generally and a slide that i think is really key to understanding and ever more important um uh right now to be able to demonstrate um when uh times are a little bit more difficult If you go back to when this business first listed and look at the dividend, the adjusted earnings per share and the adjusted profit before tax that this business has earned over that time, you can see from this slide that with the exception of the dividend paid in the COVID year, almost without exception, each one of those metrics has increased year over year. we've shown this slide before and i suppose we're demonstrating that certainly in 2025 we continued that um uh that trend and clearly the first half of this year has put us in a great position to be able to deliver the consensus which will continue that trend even further and i think really important to flag that um that's uh obviously easy or easier to to do in a time when the market looks great and uh the sales market is is very buoyant and the letters martin similarly if you think about some of the challenges that we've been uh having to navigate as a business with the renters right act and a slightly slowing down sales uh sales market and and still managed to deliver this result um even when perhaps some of our peers are struggling to do the same i think it demonstrates the resilience of this resilience of this business and the reason why again to to reiterate why it's so resilient is because of really principally two things it's the fact that we are predominantly lettings and we have that high level of recurring income which means we have the stability and consistency of income almost regardless of some of the wider economic conditions but also secondly that franchise model means that if there are large movements in say the sales market actually the impact on our pnl because we're only broadly taking that 10 msf charge is absolutely diluted and so therefore we're able to navigate those ups and downs with other opportunities as we as we see fit and you know we're really excited with where we can continue to take this graph um going forward and then probably just finally from me on the finance section and then i'll hand back uh to gareth uh in terms of capital allocation our strategy remains really quite consistent with what it has been previously when we've presented to you. Financial resilience, clearly very important for us. We've continued to pay our bank debt down. Organic growth investment, where we're able to, we look for those opportunities to invest organically. This is a principally capital-like model. It doesn't require a huge amount of organic investment. But that said, we have done small bits in AI that Gareth has already referred to and we'll talk a little bit further about later on. And we've also been exploring some financial incentives for agent conversion, which, again, Gareth will refer to later on. Progressive dividend. Obviously, as I mentioned earlier on, we've increased by 10 percent for the half year dividend. M&A activity again Gareth has alluded to the two the acquisition and the investment that we've done in both smart advice financial services and Meridian and then in terms of surplus capital we've not done say any specific buyback programs or anything like that however because the we believe that the share price has been at a at a point that would be economically advantageous for us to buy some shares in we've been buying some shares into our ebt to make sure that we're making the most of that current price and therefore reducing down any future dilution to
to shareholders from from awards to to management so that's how we've been looking at capital allocation the strategies very much stayed stayed the same and that's how we've been applying it within the first half of the year and i think with that i'll hand back over to gareth to take you through the market thank you um so so just an update on the market so lettings obviously been disruptive with getting ready for renters rights act so the first sort of five months of the year for us as the franchisor was very much about ensuring we were ready and then ensuring that our franchisees were trained and understood the act and understood the new processes and procedures and systems um so that was quite distracting but overall with everything going on in the lettings market it's still very strong you know rent inflation is probably slightly down on last year running about two two and a half percent as opposed to 3.4 last year but again i think that's because everyone's been distracted um in terms of getting ready um uh the the number of properties becoming available and the demand for those properties is really good so there's eight people for every property that becomes vacant so we're able to fill those properties really really quickly so the demand for letting properties still sound so the fundamentals in the lettings market irrespective of what's going on in the economy are still really really strong and we're really pleased about that financial services in the first six months of the year has been a record result which is great and that's partly due to increased individual productivity which is something we talked about last year and we focused on it and Michelle's done a really good job on that partly to do with the improved commercials and partly to do with the fact that you know Michelle's been running that business now for whatever 15 years has built an incredible reputation in the space has a really high quality back book of her customers so even when the transaction cycle reduces she's got a big backboard where she can do product transfers and remortgages that then boost those numbers up so so we're really confident that irrespective of the market you know for the remainder of this year and next year even if transactions fall slightly we'll be able to make up the difference through the high quality back book that Michelle has built over the the long term and then you've got sales and sales haven't been that bad this year we always guide all of our investors that normal for us is 1.1 million transactions and last year was 1.15 so a bit better and we think this year will be a million and 50 to a million and 80 so slightly down on 1.1 um but but no disaster so it's running about five percent less than last year um however there are some sort of um uh headwinds there but basically um got worse i guess in the last three to four weeks so the the key driver to housing transactions is mortgage rates so if the five-year mortgage rate goes above um six percent that will have a detrimental effect on volume um if it goes above 5.5 it'll also have a debt driver so we're watching the sort of mortgage rates really really closely we've come out of the summer and the activity is reasonable um i think our nervousness is probably the last two or three weeks uh with everything you've seen on the news so um so we're watching that with interest the market at the moment excluding central London which we're not that represented in is relatively good we've got a budget coming up on October the 28th so you know we'll see what if any stimulus for the housing market is included in the budget I think there is an understanding and we will tell everybody that will listen to us that you know strong economy requires a strong housing market so so we'll wait to see what comes in the budget but but you know ultimately second half of 2026 and 2027 depending on interest rates we think will be somewhere between a million and 1.1 million transactions and if that is the case then you know and numbers will be fine the last time there was the million transactions was just after the list trust budget in 2023 so we're sort of going back to the activity levels from 2023 and you'll see from our numbers back then that that they were still pretty positive so that's a little bit about the market I think I'm now handing back to you Ben on strategy yeah so for those of you that have listened to Gareth and I've previously we've we've talked about a strategy which has
been around how we drive sales how we're driving uh lettings within the business um how we're potentially driving some of the financial services and i think we've um realized as part of the platform strategy that we've been working on but also the evolution of the business through the combination of um with belvoir and gpa you know two years ago that actually the strategy itself is now becoming um much more evolved and um uh much more driven around that kind of platform and so our strategy really and we now look at our strategy aspects in three kind of key uh almost buckets the first one is about growing the core business and what do we mean by that well that's looking at how we are growing the number of franchisees that we have the number of financial advisors the number of licensees the the size of that network and whether that's growing number of franchisees through converting agents through a better proposition whether that's attracting new licensees again by the fact that we have the best proposition because of the size and scale but it's not just about the volume of our network it's actually the productivity it's the core operating performance almost of that network so again you know referencing back to what i said earlier on how are we driving um the productivity per advisor how are we making sure that the msf per franchisee is um as as high as we can as high as we can uh make it so that's really i suppose one element which is growing that kind of core business the second then is is how we're looking at driving cross-platform synergies. So we obviously have the three divisions now. And probably the best example of this and the easiest to explain is how are we making sure that the financial services division is being fed by the franchising division or the licensing division in terms of leads and opportunities for new mortgages or protection products. And there are a number of other examples where between the three divisions there are synergies to be made particularly around our customer data but also the way that we're sharing services and technology in order to be able to optimize how the combined output of those three divisions is working and then the third aspect is really how we expanding the platform so we've talked about the benefits of having this platform and being able to push and apply products for the benefit of our network across the network and actually that's worked incredibly well so what other things are there that we can look to do and either organically and internally by creating it such as our market more marketing agency proposition or acquire or invest in such as the meridian survey opportunity that is an additional offering that we're able to then apply across that across that network and that's really the third element and that is also therefore those three buckets are also driving how we're thinking about acquisitions so certainly obviously in the growing the core business it's whether there are still any franchise businesses to acquire it's the buy and build that we've talked about previously in terms of financial services businesses it's letting portfolios to drive that recurring income into our owned offices but again in the expanding the platform it's what complementary businesses are there out there that provide that either allow for us to be able to support the greater proportion of a franchisees or a network members uh wallet spend or be in that kind of wider ecosystem of the property buying and letting kind of process and you can see we've made quite a lot of progress on all three of those aspects within 2026 you can in the first half of 2026 we've driven the um productivity really uh and increased the number of been working on acquiring the number of advisors into financial services we've revisited the guild value proposition in terms of those cross-platform synergies and making sure that we're working as one combined group certainly when it came to the renters right tax we took a group-wide approach on that to make sure that our licenses and our franchises and where where relevant the advisors were absolutely supported as best as we possibly could we increased partner income across the group again by using utilizing those synergies and And then on the expanding the platform side, clearly we've invested in Meridian, we've rolled out the privilege and further kind of driven the penetration of that product throughout the first half. So you can see how we're trying to drive this business going forward and it really being around taking the scale, growing that core business and continuing to grow that scale and applying it where we possibly can across the platform for the benefit of the overall group. And I think with that, I'll probably move on to Outlook.
Brilliant. Thanks, Ben. So some really exciting stuff to share with you all in terms of AI. And those that have listened to me and Ben over the last year, 18 months, will know that this was a real focus in terms of how could we utilise technology to drive either increased lead generation for our franchisees and ultimately turnover, or could we look at the efficiencies for our franchisees to make them more profitable and we've made huge progress in the last nine months we're now a trial stage some of you will know that we've got 11 owned offices as part of the group so all of the trials we do in our owned offices so if we're going to make any mistakes there are mistakes and I think that's really important in terms of credibility with our franchisees um and currently we've got four um different um ai trials going on and i'll probably talk about a couple of them now yeah um so the first one which i'm really excited about is property management and and again i said last year property management for us as a group is probably more important than it would be for others because we are predominantly a lettings business. So getting that property management triage via technology correct is sort of game changing for us. So we turned on live about six weeks ago in our own offices, the property management AI negotiator. Four weeks ago, we had a lady at half past nine at night ring into the office and say, I've got no hot water. The virtual negotiator said, sorry to hear that let me take some details took some details um and then said i'm now going to transfer you over to whatsapp i'm going to send you a link open that link and we'll continue the conversation send the link press the link continued the conversation um the virtual neg said um please take a photo of your boiler for the boiler um please take a photo of the pipework beneath boiler took a photo sent it then advised to open one of the taps and re-pressurize the boiler did that lady had hot water about 35 minutes later and we've seen and listened to the call all the way through and it was seamless it was amazing you then start to think about what would that look like without AI so lady would have rang in at half nine in the evening nobody would have been there they'd left a message on the answer machine the staff coming in in the morning would have hopefully prioritized the answering messages but maybe not but let's say by 10 30 they'd have had a return call i'm not sure one of our property managers would have advised the repressuring of the boiler i think they may well have um uh said we'll get a plumber out here that plumber may have taken a day or two days at best it would have been towards the end of the day after she reported the issue so we've gone from a 30 minute situation where the ladies got hot water to something it could have been one two or three days later that that lady got hot water so and as I say the actual flow of that conversation was amazing I was blown away by it better than we we could have hoped for so it's now been in all of the owned offices for about three weeks and what we've what we've learned so far um is so far without human intervention he's been able to solve 31 of the issues that have come in we thought between 20 and 30 so the fact that it's over 30 is a really good thing but he's also identified other stuff that's been really clever as well in terms of being able to automatically uh get a locksmith out and stuff like that so um so that um is really exciting We've got loads of our franchisees that want that. So that's really, really important. Second trial that I'll talk about today is financial services appointment generation. So we've turned this live with our Youmove brand. So every single customer that goes through a journey with Youmove is now talked to via AI regarding their mortgage arrangements. And every single customer is asked whether they need a mortgage. and for the ones that say yes they need a mortgage AI then takes them on a data capture exercise so you'll remember I talked earlier in the financial services section about individual productivity historically the only way when somebody says they'd like mortgage advice to be able to start that journey is to put them in front of a financial advisor and that financial advisor may spend 20 minutes establishing that that individual can't get a mortgage. So what we're trying to do is take some of that abortive time away from the financial consultant, do some of the data capture via technology so that we are passing to the financial consultant a better quality lead with more likelihood of signing up. Now we thought we'd get something like a 6% strike rate on the number of buyers coming through the U-Move journey and that's currently running at 18% so three times what we thought it was going to be so again that's again quite embryonic we're tweaking it the conversations we're looking at how much more information we can take but that is now taking information and then booking appointments into the financial consultants diary so do I think we can increase productivity yeah do I think I can increase efficiency absolutely so those two you know those two things that we talk about um absolutely can be proven on the financial services um test case so um so we're working with a bespoke partner in that ai space who's delivering tech that's unique for us um and uh we've got good levels of demand from our franchise network so that will become um probably from september our next platform um product um and i think we'll have you know 100 to 200 franchisees that want to take that technology put it into their business um and and and look at where that goes the final angle on ai is this customer for life journey so i've talked before about the 18 and a half million data records that the group has access to um and you know if i look back over the last 20 years everybody's told you that data is gold um but nobody's ever been able to commercialize it um and i do believe data is gold but you need a cost effective way of being able to interact with that data and i think technology finally is there that's going to enable us to do that so building this customer for life journey with multiple touch points with each of the consumer being able to deliver really relevant incredible content to the end user with the right call to action with the right products that are going to you know i think is a huge opportunity for this group um and and you know is it is a big part of what we're to be doing in the next six to nine months um so you know we've got the people we need to have the journey we need the technology and then we need the the strategy in terms of how we're going to communicate with those customers but that will then deliver me valuations that i can give to my franchisees mortgage appointments i can give to my franchisees which will increase their market share and increase their turnover um so that's the other objective with our technology the the other piece which i think is really exciting moving forward the big opportunity for growth over the next three to five years is aging conversion so we now believe we've built a proposition that is compelling and um uh we've test drove it on our franchisees okay so privilege went really well market more gone really well ai service is really really good um we also do loads of commercial deals that no individual business could go and negotiate on their own and get the rates that we get on crms or portals on insurance or everything so we're now at a point where i genuinely believe we can give more back to a franchisee than they give to us in financial return so i get 10 percent of turnover on average so let's say it's turning over half a million pounds i get 50 000 pounds i believe with everything i can now provide and offer um we give more than that back and that's an that's a unique position for a franchisor to be in um and you then look at the market outside of of us and there's 18 and a half thousand small independent estate agents that you know on a day-to-day basis have to um run their own website run their own technology department run their own CRM run their own commercial department run their own compliance department you know look at their marketing you know all of the things they've got to do I'm surprised they've got any time to sell or let a house yeah and all of that cost takes time out of the business in terms of generating income but also cost more money than those products that I can provide at a better price for them so I can do it better and I can do it cheaper so our next step and this will be in half to 2026 the second half of this year is to go out and start to talk to independent state agents let's say there's 18 and a half thousand of them I've currently got about 700 franchises so if I get one in 20 of that 18 and a half thousand to agree with me and say yeah actually that proposition is fantastic um then i double the size of my franchise business okay um so that's a really exciting growth opportunity that we want to explore now we've built that platform now we've built that sort of product range um and yeah and i'm really excited about that so um so then the thing's going to be working on in the second half of the year um and finally just just finish with you know we've got a really resilient business model um i think that slide that ben showed you the continual sort of uh growth of this business when you know our peers if you put some of our peers on that graph it would look nothing like our graph um should give you all confidence that you know we deliver you know every half year every full year um and we don't believe that will change um and and our full year trading is um or remains in line with expectations so So I think that's the final slide, Ben, yeah? It is, yep. Okay, so one, thanks for listening. Two, we're going to move on to questions, I think, Ben.
Operator
That's great. Gareth, Ben, thank you very much indeed for your presentation. Ladies and gentlemen, please do continue to submit your questions using the Q&A tab situated on the top right corner of your screen. While the company take a few moments to review those questions submitted today, I would like to remind you that recording of this presentation, along with a copy of the slides and the published Q&A, can be accessed via Invested Dashboard. Gareth, Ben, if I may, I will get us straight into the Q&A session. The first question here has many parts to it and reads as follows. Management described the departure of three financial services, business partner hubs at the end of 2025 as managed. Could you please explain who initiated the departures and why? How many advisors were involved? The FY25 gross revenue, retained net commission and profit contribution. whether their departure was already reflected in FY26 forecasts, whether any further hub departures are anticipated, and how the lost revenue profit contribution has been replaced.
Okay, all right, well there's a fair amount to try and unpack there. So let me try and summarise as best I can and try and cover off as much of that as I possibly can. So you'll remember that financial sorry business partners are effectively akin to franchisees within financial services so they are working with us as the appointed representative of Mab in order to be able to trade so in effect using us as the middleman because they are typically too small to be of interest to Mab to deal with directly and that's actually a really important point for why these certainly two out of the three left. The third one was actually just a mutual departure. It was only two advisors anyway, so it wasn't really an issue. But the two key business partners that moved to Mortgage Advice Bureau was effectively because they had come to the end of their five-year agreement with ourselves, with Brooke, and they had grown during that time period to a size where actually Mortgage Advice Bureau would deal with them directly. So commercially, it made more sense for those business partners to contract directly with Mortgage Advice Bureau than it did to retain with TPFG, who, as you can imagine, being in the middle are taking a proportion of that value chain and so therefore taking us out and going directly to Mortgage Advice Bureau meant that they were going to get better terms. Now there's a couple of things around this so answering I think some of the specifics in terms of the amount of advisors that were involved there was about 25 across those two businesses in terms of the amount of revenue and the profitability as I've talked about before the business partners whilst an established part of the business model up to this point is not particularly profitable because we are just taking that small chunk as the commission passes through unfortunately though under the accounting rules we have to um recognize the revenue gross so in terms of the amount of revenue that we uh that they um reflected it was about a million pounds literally just under a million pounds and the profitability was some of the region were about 0.1 million. So you can see pretty small in the grand scheme of things. Was it in the 2026 forecasts? Yes, but obviously in terms of our ability to be able to replace that is through some of the renegotiation that we've done with Mortgage Advice Bureau. And the other very quick point I will make here is clearly the The right question to be asking would be, why would we continue to do the business partners if they're just going to get to a certain size and then move over to Mortgage Advice Bureau? And we had the exact same conversation with Mortgage Advice Bureau and made sure that in a scenario where that does happen, that there is still some commercial benefit coming to us from Mortgage Advice Bureau. And the final thing on this particular point is, do we expect this to be happening every month? And are there lots more to go? Those two came at a particular, just came across both at the same time. It was a timing issue rather than anything else. If I look forward the next 12 months, because obviously we have visibility of when contracts are coming to an end, we have foresight as to whether these risks come up. And generally, actually, the size of the businesses that we have remaining within that business partner are not sufficient enough, even if they were coming to the end of their five year term in order to be able to contract directly with MAP. So we don't see this as being a particularly ongoing issue where we're going to see a significant amount of decrease over time. But we have also tried to protect ourselves financially. So, yeah, so that would be the answer to that question.
Operator
That's great. Thank you, Ben, for the detailed answer. Another question here asks, you'll be aware of the success of Rent Guarantor Holdings PLC and the Rent Guarantee Service. Do you offer a similar product to franchisees? And if so, how is it performing?
I mean, we've been asked this question a lot over the last couple of days actually, so just to sort of context, the rent guarantee we offer is for landlords and it guarantees rent in the event of a tenant not paying their rent, the court costs to evict them and any damage that tenant does. okay um rent guarantor is guaranteeing the tenant um uh and is usually um for students or overseas students who um who uh need a guarantor or for people that um haven't passed the traditional lettings reference or for some people that may be on benefits so um they're completely different markets we have a student business that does have guarantor insurance and most of the other insurers offer a product that is similar so instead of having your mum and dad guarantee the rent in in the event of default you take out an insurance policy with rent guarantor that will cover that rent um in in uh in the event of default okay um and i think it's for two months um so um so we have a similar policy um but it's a very small part of our market thank you gareth moving on you did well to get better terms with mortgage advice bureau what is the background did you
Operator
just lower the rate or is it a volume discount or similar? And why did they agree? Could you step up the margin further by negotiating something even better?
So obviously we don't want to get into specific details around commercials with one of our kind of key partners but I think that what we can probably share is we have a fantastic relationship with Peter at Mortgage Advice Bureau and the entire senior management team there, we were able to negotiate a reduction in our core rate. And how was that able to come about? Well, I think there was a general reflection, despite how good that relationship is, is in the size and the percentage that TPFG makes up of the Mortgage Advice Bureau book and the volume and the scale that we'd grown to warranted some form of commercial improvement. So it wasn't too much with Peter's arm behind his back. I think it was a general reflection of how the relationship has grown over time along with our business.
Switching gears here, a question regarding your 10 percent annual adjusted pvt growth target do you view that 10 figure as a conservative baseline where organic growth and platform execution cover the target even in quiet markets or do you see 10 as a realistic midterm ceiling across a full property market cycle yeah no really good question i think 10 in terms of the the stuff we're doing now the organic growth the rent inflation the portfolio acquisitions at a franchisee level and indeed a franchise all level into our own offices um is reasonable you know it's it's always been between five and ten percent that organic growth obviously as we get bigger it gets more more challenging but i think there's so much more to be excited about and um yeah so so but you know the the the organic might be down one year but one of the initiatives may deliver more so i think i think it's i think it's a realistic target uh for people to focus on i think if the agent conversion thing goes beyond our dreams that would supercharge it if we were able to do a big complementary acquisition that would supercharge it um so um and you know we're looking through both those things all of the time if ai takes off and 700 franchisees take it that would supercharge it so I think there are enough levers for us to be comfortable of achieving that level but you know as I say we keep talking about the market the market is it's not easy you know when you look at our peers and the results they're delivering we are you know booking the trend so to deliver the result we have done in 2026 with with everything that's been going on has been a challenge but also really really satisfying hope that answers the question perfect thank you next up is please could you talk more about the potential for interest income on pooled deposits how much could it be how would you share it out and what is the timeline yeah i'm happy to do that so um so if we just try and keep the numbers uh simple for the time being
so we mentioned earlier on we've got 149 000 um policies uh sorry policies uh managed properties I think out of that, in terms of probably the total value of deposits that we could achieve is, I think, a ceiling is probably in the range of about $130 million. The way that we set up the scheme was always supposed to be about providing benefits to the franchisees on something that they just weren't earning any income on. So very broadly, the insured scheme that we're using as a cost of about, let's say, 2%, if I'm able to achieve a well-rounded kind of 4% in terms of interest, then we're then splitting that 50-50 between ourselves and the franchisee. So let's say 1% on 130 million would therefore be about 1.3 million pounds worth of financial benefit to us a year. I do think it's worth flagging here that whilst this is absolutely star plan, we started this and I think we talked about it as far back as 2024. We're already rolling out. We've got about 30 million in that bank account right now. and that will, over time, trend up as new deposits come into the account. But the government has signalled over the last few months that they may look to stop allowing these insured schemes to be in existence and just focus on custodial schemes where that interest isn't available.
Operator
So this is something where we're continuing on with the plan. we're taking advantage of it whilst it's available but i think it would be wrong of us to say that it's in our long term kind of five to ten year plan purely because of the messaging that's come from the government perfect thank you and squeezing this last question and as we reach the end of the session you've spoken in the lot in the past about potential acquisitions of competitors some listed given the market is tougher at present does this make does this make it more or less likely that you can agree a deal how would you finance a bigger a bigger deal so uh conscious
of time so i'll keep it trying really quick so in terms of uh more or less likely i suppose you would argue that potentially there are better uh opportunities and maybe on the face of it better values out there um that said it's obviously very much down to the board and its shareholders in terms of what it's willing to accept in their own uh i suppose depiction of what the perception of what the value of that business uh is so i don't think it's always necessarily as simplistic as that um but are there potentially opportunities out there um yes um how would we finance a bigger deal again depends particularly obviously in a list environment how we structured it so um we could potentially depending on whether it reflected the appropriate kind of change in value it might be and it might warrant and drive better value for our shareholders if we were to end up ultimately a lower value but a higher level of maybe shares provided as part of the consideration clearly if we try and maximize the cash element of it that can reduce down the impact on the earnings per share, but then does similarly have an impact on the potential premium that you might have to add. So there are very much kind of levers to and fro that we'd have to consider in terms of how much financing is available to us. I mean, on our business alone, a 30 million EBITDA that we achieved in 2025, there is, I would say, easily the ability to be able to get 60 to 75 million pounds worth of debt if we so um if we so needed it on our own performance let alone before taking into account anybody else so there are options out there that's great well look gareth ben thank you for addressing those questions for investors today and of course the company can review all questions submitted today and we'll publish those responses on the platform where appropriate to do so post the meeting but gareth before i redirect investors to provide you with their feedback which one is particularly important to yourself and the company could i please just ask you for few closing comments absolutely as always thanks for taking any interest in the business i hope
Operator
you're as excited as we are about the future and the opportunities that we've got and i look forward to updating you in the next six months thank you very much fantastic thank you once again for updating investors today could i please ask investors not to close this session as you now be automatically redirected to provide your feedback which will help the company better understand your views and expectations on behalf of the management team we would like to thank you for attending today's presentation and good afternoon to you
