Hipstar announces loss owing to HIPs
Network Data Holdings, parent company of Hipstar have just announced a full year pre-tax loss owing to the delayed rollout of HIPs and the burden of carrying the costs for the additional 6 months.
Reading the annual report its fairly upbeat on the mortgage intermediary (29.6mil revenue) and the surveying side of the business (2mil revenue) but HIPs generated just 742,000 which is probably only 2200-2500 Packs in 2007. Of course it was a slow and staggered rollout but these number confirm my thoughts that I am not sure Hipstar hs the market share that many thought the might have achieved given their advertising.
In terms of spend on HIPs in 2007, its 4.3mil so an overall loss of 3.5mil, so thats a huge investment and of course there was a scaling back in the team when a number of them were released during 2007.
92 franchise areas were sold in 2007 (was 31 in 2006)
What is more remarkable is that the report suggests that Hipstar expect to sell the remaining franchises during 2008 and this should contribute to the finances in FY2008. Personally I am still very concerned that this model is not appropriate for franchising, but no doubt Hipstar franchisees will be working hard during 2008 so I'd love to be proved wrong.
Hipstar franchisees training to be personal search agents!
In a remarkable twist, the report (p8) states that up to 50 of its franchisees will train to become personal search agents in order to generate additional revenue. I am less convinced by the Chief Executives comment that "There are a number of benefits in the same person obtaining the local authority search and visting the property in question for the production of the energy performance certificate."
If we were talking about HCRs and cases such as flying freeholds came into play, then yes a Home Inspector that could carry out searches could highlight and resolve these peculiarities but as for a DEA carrying out an EPC helping things along by carrying out the search- I don't buy it, its as helpful as the DEA buying a binding machine and compiling hard copies themselves for local distribution. Its non-core business and there is some danger here in my mind that there are a number of companies losing focus on what they do- Hipstar produce HIPs, now all of a sudden, they also train franchisees to be search providers.
No wonder refinancing was required
The annual summary shows just 25,000 in the bank at the end of the financial year, of course this doesn't take into account the overdraft facility nor the fact that a lot of money would be owed to the company but as with all companies, cashflow can be a killer. Anyway, the recent refinancing was covered elsewhere in this blog.
Its a pity that more HIP companies are not publicly listed, well not yet they aren't anyway, as it makes it difficult to compare Hipstar with any of the other big names.
Network Data Holdings Plc. slipped to a full-year pretax loss blaming the regulatory delays surrounding the implementation of Home Information Packs (HIPs) as well as the impact of the global credit crunch.
The AIM-listed property and mortgage services company, which maintained a dividend of 0.35 pence per share, said the results were in line with market expectations following its revised announcement in November.
Group sales rose 11 percent to 32.4 million pounds while gross profits came in at 8.2 mln pounds, up 6 pct over last year. However as a result of the requirement to carry the HIPs business for longer than expected, it posted a pretax loss of 1.105 million pounds for the year to end-December compared with a restated profit of 271,000 pounds in the year-ago period.
Loss per share was 2.9p against earnings per share of 0.5p in 2006.
Reading the annual report its fairly upbeat on the mortgage intermediary (29.6mil revenue) and the surveying side of the business (2mil revenue) but HIPs generated just 742,000 which is probably only 2200-2500 Packs in 2007. Of course it was a slow and staggered rollout but these number confirm my thoughts that I am not sure Hipstar hs the market share that many thought the might have achieved given their advertising.
In terms of spend on HIPs in 2007, its 4.3mil so an overall loss of 3.5mil, so thats a huge investment and of course there was a scaling back in the team when a number of them were released during 2007.
92 franchise areas were sold in 2007 (was 31 in 2006)
What is more remarkable is that the report suggests that Hipstar expect to sell the remaining franchises during 2008 and this should contribute to the finances in FY2008. Personally I am still very concerned that this model is not appropriate for franchising, but no doubt Hipstar franchisees will be working hard during 2008 so I'd love to be proved wrong.
Hipstar franchisees training to be personal search agents!
In a remarkable twist, the report (p8) states that up to 50 of its franchisees will train to become personal search agents in order to generate additional revenue. I am less convinced by the Chief Executives comment that "There are a number of benefits in the same person obtaining the local authority search and visting the property in question for the production of the energy performance certificate."
If we were talking about HCRs and cases such as flying freeholds came into play, then yes a Home Inspector that could carry out searches could highlight and resolve these peculiarities but as for a DEA carrying out an EPC helping things along by carrying out the search- I don't buy it, its as helpful as the DEA buying a binding machine and compiling hard copies themselves for local distribution. Its non-core business and there is some danger here in my mind that there are a number of companies losing focus on what they do- Hipstar produce HIPs, now all of a sudden, they also train franchisees to be search providers.
No wonder refinancing was required
The annual summary shows just 25,000 in the bank at the end of the financial year, of course this doesn't take into account the overdraft facility nor the fact that a lot of money would be owed to the company but as with all companies, cashflow can be a killer. Anyway, the recent refinancing was covered elsewhere in this blog.
Its a pity that more HIP companies are not publicly listed, well not yet they aren't anyway, as it makes it difficult to compare Hipstar with any of the other big names.
posted by Neil Kurz at
00:20
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