HMLH.L Regulatory News (HMLH)

30 Jun 2006 07:02

HML Holdings PLC30 June 2006 30 June 2006 HML Holdings plc Dealings commence on AIM HML Holdings plc ("HML" or "the Group"), the provider of property management,insurance and ancillary services to residential properties blocks, announcestoday that dealings in its shares will commence on AIM under the symbol "HMLH". Formed in 1991, the Group currently provides property management services to arange of blue-chip clients as well as over 19,000 residential customers. Todate, HML has grown principally through acquisitions which have been structuredgeographically to create hubs of local property management operations throughoutthe Greater London region. HML has property management offices situated insouth, west, north and central London and further additions to this network areplanned on a regional basis. The flotation will allow the Group to follow a strategy of growth bothorganically and by acquisition, in order to fulfil its ambition of establishingHML as a national brand in the property services market. Smith & Williamson Corporate Finance Limited is nominated adviser and broker tothe float. Commenting on the float, Richard Smith, chairman, said: "We expect the demandfor high quality property management services to increase due to rising servicequality expectations from consumers and by virtue of the growth in the numbersof apartment blocks as a result of continual pressures on housing supply. "The current fragmentation in our market provides us with a significantopportunity to grow by acquisition and consolidate the market. We have alreadyidentified a number of potential acquisitions and becoming a public company isthe first stage in this consolidation process." "We now look forward to growing the company and to delivering shareholder valuegoing forward." A copy of the admission document is available from the offices of Smith &Williamson Corporate Finance, 25 Moorgate, London, EC2R 6AY. For further information: HML Holdings PLC: 020 7795 1881Richard Smith, executive chairmanRobert Plumb, chief executive Tavistock Communications Group: 020 7920 3150/0771 340 6291Richard Sunderland Smith & Williamson Corporate Finance Limited: 020 7131 4171Azhic Basirov, Jo du Plessis Notes to editors, about HML: Introduction HML Holdings plc is a recently incorporated company, formed to act as a holdingcompany for the HML Group following its demerger from LTC Holdings plc on 2 June2006. The Group provides a range of property services to the residentialproperty sector, including property management, insurance brokerage andancillary services. The provision of services by the Group is focusedprincipally on the management of residential blocks rather than the managementof individual units. The Group has grown organically and by acquisition over the last five years andcurrently provides property management and other services to a range ofcorporate and other clients covering over 19,000 residential customers. TheDirectors believe that the property management and services market is fragmentedand that there is significant opportunity to grow by acquisition and consolidatethe market. The Directors also believe that there is considerable scope fororganic growth by focusing on the provision of a high level of service to blocksof flats and estates. History and Development HML was originally set up in 1991 to promote and manage Business ExpansionScheme property companies and their property portfolios and subsequentlyembarked on an expansion programme in 2001. Since then it has grownsignificantly, principally through acquisitions. Key milestones in the development of the HML Group are as follows: Jan 1991 HML set up to promote and manage Business Expansion Scheme propertycompanies and their property portfolios Feb 1998 LTC Holdings plc acquired HML for shares Jul 2001 Acquisition of 51 per cent. of the business of Anderton & Son May 2002 Acquisition of Tecton Services Limited Nov 2003 Acquisition of 51 per cent. of the business of Dunlop ManagementServices Apr 2004 Acquisition of the remaining 49 per cent. of the business of Anderton &Son Jun 2004 Acquisition of the business of Mandells Oct 2005 Appointment of Robert Plumb as Chief Executive of HML Nov 2005 Acquisition of the remaining 49 per cent. of the business of DunlopManagement Services Jan 2006 Appointment of James Howgego as Finance Director of HML Mar 2006 HMLH incorporated to become the new holding company for the HML Group Apr 2006 Acquisition of 72.5 per cent. of Shaw & Company (Property Management)Limited May 2006 Acquisition of the remaining 27.5 per cent. of Shaw & Company (PropertyManagement) Limited June 2006 Demerger of the HML Group from the LTC Group completed To date, the acquisitions made by HML have been structured geographically tocreate hubs of local property management operations throughout the GreaterLondon region. The property management operations are supported by centralisedbuilding surveying (Tecton Services Limited) and insurance broking (AlexanderBonhill Limited) practices. The growth of HML resulted in a decision by thedirectors of LTC to separate the HML Group from the LTC Group, to allow both HMLand LTC to focus more strongly on their respective markets. The completion of the Demerger took place on 2 June 2006. The HML Group currently employs 107 permanent staff. Business overview and principal activities The HML Group's principal activity is to provide property management services,principally the management of residential blocks rather than individual units.The HML Group also provides other property related services, including buildingsurveying and insurance brokerage services. The breakdown of revenue by servicetype for the year ended 31 March 2006 (including the results of Shaw & Company(Property Management) Limited, which became a member of the HML Group on 3 April2006) is as follows: Service type % Property management 70 Building surveying 9 Insurance brokerage 10 Ancillary 11 Market and Competition The Directors believe that the supply of residential property managementservices and particularly residential block management within the United Kingdomis fragmented. Service providers range from 'corner shop' estate agencies andlocal block management specialists through to embedded operations in theintegrated national real estate consultancies. The Directors believe that inmany cases the quality of service provision suffers from lack of investment inboth systems and training. The sector is also subject to an increasing imposition of regulatory andlegislative burden from both the Government and the European Union. In commonwith other service businesses, customer expectations of service levels areincreasing. As a result, there is pressure for the market to consolidate assmaller businesses find it difficult to obtain the resources to respond to thesecombined pressures. Additionally, there is evidence that the integrated 'shops'are beginning to unbundle their residential block management operations as theyconcentrate on their core business of residential estate agency sales andlettings. The Directors expect the demand for high quality property management services toincrease due to rising service quality expectations from consumers and by virtueof the growth of apartment blocks, particularly in urban areas, to satisfyfuture housing demand. Competition for business arises from both the small local estate agencies andthe larger integrated regional or national estate agencies, together with a fewspecialist quoted and unquoted companies. Competitive Strengths The Directors believe that the Group is well-placed to provide an enhancedservice offering to customers. They aim to achieve this by focusing on the management of blocks of flats in particular and by cross-selling the additional services that are provided within the HML Group, such as building surveying and insurance broking. The geographic component of the Group's strategy is well advanced in the Greater London region, which creates a strong platform for expansion into other metropolitan areas in the United Kingdom. The Board has considerable experience in residential property management, corporate acquisitions and in the key strategic and operational aspects of the business. The Board is confident of enhancing its management team to achieve the Group's strategic objectives. Strategy The Directors believe that there is an opportunity to create a national brand inthe Group's current niche market. By virtue of focusing on property managementand directly related products and services, excluding property sales (which isthe principal aim of many of the Group's competitors), the Directors believe theGroup will be able to provide an efficient service at attractive margins. TheDirectors aim to grow shareholder value through geographic acquisitions anddeveloping new organic business which will further improve both economies ofscale and service efficiencies. Additionally, the Directors intend to continueimproving both customer service and margins through investment in standardisedhigh quality operational processes, improved training and employeeincentivisation schemes. Considerable investment has already taken place insoftware and systems which will underpin the Group's operational efficiencyobjectives. The Directors have identified a number of potential acquisitions which theyconsider will help to expand the business in certain geographic locations whichthey have prioritised. In the longer term consideration will be given toexpansion into overlapping or adjacent markets where the Group can leverage itscompetitive strengths to generate additional revenues and profits. The Directors Richard Smith - Chairman (aged 53)Richard qualified as a chartered surveyor with DTZ Tie Lung and has over 25years of experience in the property industry. In 1981 he founded Smith Frenchand Partners, a property services and consultancy business, which wassubsequently sold to London and Manchester Assurance in 1987. During this time he also carried out a variety of residential and commercialproperty developments. In 1989 he co-founded and was managing director ofArtesian Estates plc, a Business Expansion Scheme residential propertyinvestment company which along with two related companies, of which he was alsomanaging director, raised £13.5 million by public subscription. These threecompanies subsequently merged and were floated on the London Stock Exchange in1997. In 1991 Richard founded HML, of which he was chief executive and majorityshareholder. HML promoted and managed Business Expansion Scheme residentialproperty investment companies (and their property portfolios) with a combinedgross property value of over £25 million. HML was sold to LTC for shares in 1998and Richard continued to grow HML in his role as chief executive. He wasappointed chairman of LTC in 2000 and continues to hold this position. Robert Plumb - Chief Executive (aged 52)Rob qualified as a chartered accountant at Ernst & Young in South Africa andsubsequently transferred to their London office as an audit manager. In 1981 hejoined the American financial services conglomerate, Avco Trust plc, and becamemanaging director of its United Kingdom operations in 1992. His work at AvcoTrust plc included growing the European business to operate in five additionalEuropean countries and overseeing the management of over 1,000 employees in 120retail branch offices and call centres. He became the chief executive ofEuropean operations at Associates Capital Corporation when it acquired Avco in1999. His responsibilities included overseeing its operations in the UnitedKingdom, the Republic of Ireland, Sweden, Norway, Spain and France. In 2000, Robjoined Hercules Property Services Plc, a company quoted on the London StockExchange, as managing director. During his four year tenure at Hercules, hemanaged the integration and consolidation of a number of acquisitions. Asmanaging director, he led the growth of shareholder value prior to the sale ofHercules to Erinaceous plc in 2004. Rob was appointed as Chief Executive of HMLin 2005. James Howgego - Finance Director (aged 37)James qualified as a chartered accountant at Smith & Williamson Limited in 1996.He subsequently moved to Ernst & Young to work in the entrepreneurial servicesdivision as an audit manager. He managed a portfolio of entrepreneurial andmultinational clients and gained experience working on several company listings.In 2001, he moved to Grant Thornton Corporate Finance, where he gainedsubstantial experience in acquisitions, disposals and other companytransactions. In 2003, James left Grant Thornton to take up the position ofFinance Director in an acquisitive, venture capitalist backed pub group calledThe Bar Group Limited, where he assisted in the acquisition and integration oftwo managed pub groups. James was appointed as Finance Director of HML inJanuary 2006. Geoffrey Griggs - Non-executive Director (aged 52)Geoffrey qualified as a chartered accountant in 1978 with Peat Marwick Mitchelland then moved to Spicer and Pegler where he became director of finance. He waslater appointed managing director of MM&K Limited, a firm of City basedspecialist financial advisers, at the time of joining an associated company ofMorgan Grenfell. He has been a director of a wide range of companies and is amember of the Securities & Investment Institute and a Fellow of the RoyalSociety of Arts. He is also a non-executive director of LTC. The Company intends to seek and appoint a further independent non-executivedirector in due course. This information is provided by RNS The company news service from the London Stock Exchange