Residential lettings adviser MartinCo joined AIM on 18 December and the shares went to a 17% premium on the first day.
MartinCo raised £4m gross at 100p a share, valuing the company at £22m, and the share price ended the day at 117p.
The flotation will help MartinCo to raise the profile of the Martin & Co brand and provide cash to expand the business.
Bournemouth-based MartinCo has two owned offices plus 157 franchisees trading from 187 branches and managing 30,000 properties. There are 95 franchisees that offer estate agency services in order to take advantage of the upturn in the property market. Network turnover is expected to reach £37m in 2013. MartinCo is selling its owned offices.
There is an initial franchise fee and a management service fee of 9% of turnover. There is a fixed term of five years plus potential to renew. Franchises can be sold on with MartinCo’s approval.
Revenues improved from £2.87m in 2010 to £3.71m in 2012. The top 10 franchisees account for 17% of franchise management revenues. Pre-tax profit rose from £1.17m to £1.4m over the same period. Cash generation is strong and in some years cash generated is higher than profit.
Interim revenues edged up from £1.83m to £1.95m, while pre-tax profit improved from £742,000 to £833,000. There was £232,000 in the bank at the end of June 2013. In the three and a half years to June 2013, MartinCo has paid more than £2.5m in dividend. MartinCo intends to pay two dividends a year with the first to be declared with the 2014 interim figures.
The issue was oversubscribed and MartinCo is a profitable and highly cash generative business with plenty of scope to expand geographically. Existing shareholders raised £6.35m from disposals. The cost of the flotation was £1m, including £150,000 payable to Sports Resource Group Ltd for corporate finance advice. Loans totalling £729,000 from Richard Martin will be repaid.
Chairman Richard Martin and his wife Kathryn Martin founded the business and still own 49.9%.
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