HMLH.L Regulatory News (HMLH)

26 Jun 2007 07:00

HML Holdings PLC26 June 2007 HML Holdings PLC ("HML" or the "Company") Maiden final results underline strategy for growth HML Holdings plc (AIM: HMLH), a leading provider of property management,insurance and ancillary services to residential property blocks, announcesresults for the year ended 31 March 2007. Highlights of the results include: - Successful flotation on AIM in June 2006 - Creation of business infrastructure creating a strong and scaleable platform for future growth - Turnover increased 37% to £5.8 m during the year (2006: £4.2 m) of which 14% of turnover was attributable to Shaw and Company which was acquired in April 2006 - Operating profit, before central costs, amortisation of goodwill and share based payment charges rose by £0.5 m to £0.9m (2006: £0.4 m ) - Operating profit before amortisation of goodwill and share based payment charges of £0.31 m (2006: £0.27 m) - Revenue growth seen across all four business sectors - Revenue from the core property management division grew 33% to £3.9 m (2006: £3.0 m) while fees from the professional building surveying division grew £0.4m to £0.5 m (2006: £0.1 m) - Centralisation and standardisation of key service offerings contributed to an £0.2 m improvement in ancillary fee revenues to £0.9 m (2006: £0.7 m). - HML Concierge Services set up to administer the employment of site staff for a number of our major clients and proving successful - Two property management businesses acquired with a third made shortly after the year end Commenting on the results, Rob Plumb, chief executive said: "The past year hasseen significant progress in the development of the Group, triggered not leastby our successful AIM flotation last June. Our ambition remains to establish HMLas a national brand in the property services market, via the acquisition ofbusinesses, and through organic growth, which is driven by a high quality anddiverse service offering. "The increasingly complicated and regulated property services market and thegrowing demand for residential accommodation units combined with our own abilityto acquire and integrate new businesses gives me great confidence in HML'sbusiness model and its future." For further information: HML Holdings PLC: 020 7352 5179Robert Plumb, chief executive Smith & Williamson Corporate Finance Limited: 020 7131 4000Azhic Basirov, Siobhan Sergeant Tavistock Communications Group: 020 7920 3150Jeremy Carey, Richard Sunderland, Rachel Drysdale CHAIRMAN AND CHIEF EXECUTIVE'S REPORT Following our flotation on AIM in June 2006, this is our first year as apublicly quoted group and we are pleased with the significant progress that hasbeen made both in terms of the improved operational results we have achieved andwith the steps we have taken to build our business infrastructure, ensuring wehave a strong platform for future growth. Turnover increased by 37% to £5.8m during the year (2006: £4.2m), of which 14%was attributable to of the contribution of Shaw and Company (PropertyManagement) Limited, which we acquired in April 2006. The rise in profit contribution from our businesses, before central costs,amortisation of goodwill and the share based payment charge from £0.4m to £0.9mis indicative of the progress we have made. We have seen revenue growth in allfour of our divisions with fees from our core property management divisiongrowing 33 %. The most significant improvement came from the professional building surveying division, where revenues grew £0.4m. The Group has also developed the centralisation and standardisation of a numberof key service offerings. Building surveying is now centrally administered fromour Richmond offices and we have set up HML Company Secretarial Services and ourHealth and Safety Inspections units in our Croydon offices. The streamlining andconsistency of these services have contributed to our £0.2 m improvement inancillary fee revenues. Additionally, we recently set up HML Concierge Services to administer theemployment of site staff for a number of our major clients. This is provingsuccessful so far and we believe that there is scope for further growth in thisdivision in the future. The Group has also made great strides in the establishment of central supportservices. All our businesses now have their accounting and payroll servicesundertaken at our Chelsea headquarters. We have further developed ourcentralised sales and marketing department and strengthened our ability to offergroup services to a greater and broader range of clients. We have alsoestablished a central information systems department which is already addingsignificant value to the development and management of our proprietary software. The Board, recognises that the management of our most valued asset, ouremployees, is pivotal to our future success and continues to encourage thedevelopment of our human resources systems. We have enhanced employeeparticipation in our business, through improved communication tools such asall-employee meetings and our quarterly employee magazine HML News. Similarly weare developing group standardisation of our employee handbook and employeecontracts and are in the process of extending our reward and recognitionprogrammes through the expansion of key performance indicator measurement. We acquired two property management businesses during the course of the yearwith a third made shortly after the year end, all of which have beensuccessfully integrated into the Group. Our management teams have furtherdeveloped their ability to manage the process of acquisition assimilation whichbodes well as we continue to explore opportunities going forward. Our drive to improve the quality of our service offering through both thetraining of our employees and the streamlining of our processes stands us ingood stead to grow in an increasingly complicated and regulated propertyservices market. This, and the growing demand for residential accommodationunits, underpin the Board's confidence in HML's business model and its future. At this stage, the Board is not recommending the payment of a dividend. We would like to extend our thanks to Group employees who have worked soenergetically to make our first year as HML Holdings plc such a successful one. R G Smith R H C PlumbChairman Chief Executive Officer HML HOLDINGS Plc AND SUBSIDIARY UNDERTAKINGSUNAUDITED CONSOLIDATED PROFIT AND LOSS ACCOUNT For the year ended 31 March 2007 Notes 2007 2007 2007 2006 £'000 £'000 £'000 £'000 Continuing Acquisitions Total Total operations TURNOVER 3 4,985 825 5,810 4,224 -------- -------- -------- --------Direct operating expenses 4,205 737 4,942 3,853Central operating overheads 555 - 555 103Share based payment charge 5 59 - 59 -Amortisation of goodwill 8 48 20 68 50 -------- -------- -------- --------Other operating expenses 4,867 757 5,624 4,006 -------- -------- -------- --------OPERATING PROFIT 118 68 186 218 -------- -------- -------- --------Interest receivable 2 1Interest payable and similarcharges (1) - -------- --------PROFIT ON ORDINARY ACTIVITIES 187 219BEFORE TAXATIONTaxation 6 (17) - -------- --------PROFIT ON ORDINARY ACTIVITIES 170 219AFTER TAXATIONMinority interests - (19) -------- --------PROFIT FOR THE FINANCIAL 170 200YEAR ======== ======== EARNINGS PER SHARE 7 1.6p 7.8pBasic 1.3p 7.8pDiluted No separate Statement of Total Recognised Gains and Losses has been presented asall such gains and losses have been dealt with in the Profit and Loss Account. Turnover and operating profit in 2006 arose solely from continuing activities. HML HOLDINGS Plc AND SUBSIDIARY UNDERTAKINGSUNAUDITED GROUP BALANCE SHEET 31 March 2007 Notes 2007 2006 £'000 £'000 -------- --------FIXED ASSETS 8 3,523 2,365Intangible assets 219 249Tangible assets - 4Investments -------- -------- 3,742 2,618 -------- --------CURRENT ASSETS 1,069 900Debtors 368 161Cash at bank and in hand -------- -------- 1,437 1,061 -------- --------Creditors: amounts falling due within one year (1,120) (1,078) -------- --------NET CURRENT ASSETS/(LIABILITIES) 317 (17) -------- --------TOTAL ASSETS LESS CURRENT LIABILITIES 4,059 2,601 -------- --------CREDITORS: amounts falling due after more thanone year (including convertible debt) 9 (1,177) (3,698) -------- --------NET ASSETS/(LIABILITIES) 2,882 (1,097) -------- -------- CAPITAL AND RESERVESCalled up share capital 10 246 39Share premium account 2,617 -Merger reserve 11 (15) (15)Other reserve 9 926 -Profit and loss account (892) (1,121) -------- --------EQUITY SHAREHOLDERS' FUNDS 12 2,882 (1,097) -------- -------- HML HOLDINGS Plc AND SUBSIDIARY UNDERTAKINGSUNAUDITED CONSOLIDATED CASH FLOW STATEMENT For the year ended 31 March 2007 Notes 2007 2006 £'000 £'000Cash flow from operating activities 436 (192)Returns on investments and servicing of finance 1 (19)Capital expenditure and financial investment (67) (187)Acquisitions and disposals (1,104) - -------- --------CASH OUTFLOW BEFORE FINANCING (734) (398)Financing 987 333 -------- --------INCREASE/(DECREASE) IN CASH IN THE YEAR 14 253 (65) ======== ======== Notes 2007 2006 £'000 £'000RECONCILIATION OF NET CASH FLOW TO MOVEMENTIN NET DEBTIncrease/(decrease) in cash in the year 14 253 (65)Cash outflow/(inflow) from change in debt 14 600 (333) -------- --------Change in net debt resulting from cash flows 853 (398) Change in net debt resulting from non-cash changes 14 1,840 - -------- --------MOVEMENT IN NET DEBT IN THE YEAR 2,693 (398)NET DEBT AT 1st APRIL (3,283) (2,885) -------- --------NET DEBT AT 31st MARCH 14 (590) (3,283) ======== ======== HML HOLDINGS Plc AND SUBSIDIARY UNDERTAKINGSNOTES TO THE UNAUDITED FINANCIAL INFORMATION 1. BASIS OF PREPARATION The above financial information does not constitute statutory accounts within the meaning of section 240 of the Companies Act 1985. The figures for the year ended 31 March 2006 are based upon the latest statutory accounts for Hawksworth Management Limited, which have been delivered to the Registrar of Companies; the report of the auditors on those accounts was unqualified and did not contain a statement under Section 237(2) or (3) of the Companies Act 1985. Statutory accounts for the year ended 31 March 2007 will be finalised on the basis of the information presented in this preliminary announcement and will be delivered to the Registrar of Companies following their publication. 2. ACCOUNTING POLICIES The accounting policies for the year ended 31 March 2007 are consistent with those adopted by Hawksworth Management Limited in its 2006. The key accounting policies are summarised below. SHARE BASED PAYMENTS The group has adopted FRS 20 Share Based Payment in the current year. FRS 20 requires the recognition of a charge for share based payment transactions which include, for example share options or restricted shares granted to employees that require a certain length of service before vesting. BASIS OF CONSOLIDATION The consolidated financial statements merge the financial statements of HML Holdings Plc with those of Hawksworth Management Limited and its subsidiaries as if they had always so been owned. Accordingly, the whole of the results, assets, liabilities and shareholders' funds of the merged companies are consolidated, regardless of the actual merger date, and corresponding figures for previous years are re-stated. The consolidated financial statements incorporate the results of other subsidiaries acquired in the year using the acquisition method of accounting. All financial statements are drawn up to 31 March each year. 3. SEGMENTAL INFORMATION All of the group's turnover related to continuing operations, arose in the United Kingdom and was derived from the group's principal activities which can be presented as set out below. Turnover 2007 2006 £'000 £'000 Property management 3,926 2,961 Insurance 505 462 Surveying 475 88 Ancillary 904 713 ------- ------- 5,810 4,224 ======= ======= 4. PROFIT RECONCILIATIONS The reconciliations set out below provide additional information to enable the reader to reconcile to the numbers disclosed in the Chairman and Chief Executive's report. 2007 2006 £'000 £'000 Turnover 5,810 4,224 Direct operating expenses 4,942 3,853 --------- --------- Profit contribution from businesses 868 371 Central overhead expenses 555 103 Net interest receivable 1 1 --------- --------- Profit on ordinary activities before 314 269 share based payment charge, amortisation of goodwill and taxation Share based payment charge 59 - Amortisation of goodwill 68 50 --------- --------- Profit on ordinary activities before 187 219 taxation ========= ========= 5. SHARE BASED PAYMENT CHARGE In accordance with Financial Reporting Standard No. 20 Share based payment, the fair value of shares issued to management prior to flotation and the fair value at date of grant of the group's share options issued on flotation is being charged to the profit and loss account over the vesting period. The share based payment charge for the year is £59,000 (2006:£nil). 6. TAXATION 2007 2006 £'000 £'000 UK Corporation tax: Current tax on profits of the year 17 - -------- -------- 17 - ======== ======== Factors affecting tax charge for the year The tax assessed for the period is lower than the standard rate of corporation tax in the UK (30%). The differences are explained below: Profit on ordinary activities before tax 187 219 -------- -------- Profit on ordinary activities multiplied by the 56 66 standard rate of corporation tax in the UK of 30% (2006 - 30%). Effects of: Expenses not deductible for tax purposes 23 7 Capital allowances less than/(in excess of) 9 (3) depreciation Utilisation of tax losses (67) - Group relief received - (64) Minority interest in profits - (6) Adjustment to tax charge in respect of previous periods (4) - -------- -------- Current tax charge for the period 17 - ======== ======== Future tax charges maybe affected by the fact that no deferred tax asset is recognised in respect of losses carried forward. Deferred tax assets are not recognised until the utilisation of the losses is foreseeable. These losses would be recovered against future profits. The unprovided deferred tax asset in respect of these losses is £143,000 (2006: £154,000) 7. EARNINGS PER SHARE The calculation of the basic and diluted earnings per share is based on the following data Earnings 2007 2006 £'000 £'000 Earnings for the purposes of basic earnings per share 170 200 -------- -------- Earnings for the purposes of diluted earnings per share 170 200 Number of shares 2007 2006 000's 000's Weighted average number of ordinary shares for the 10,651 2,577 purposes of basic earnings per share Effect of dilutive potential ordinary shares: - convertible loan notes 2,174 - - share options 423 - -------- -------- Weighted average number of ordinary shares for the 13,248 2,577 purposes of diluted earnings per share ======== ======== 8. INTANGIBLE FIXED ASSETS Purchased Goodwill £'000 Cost: 1 April 2006 2,488 Additions 1,264 Reduction in contingent deferred consideration in (38) respect of prior year acquisition -------- 31 March 2007 3,714 ======== Amounts written off: 1 April 2006 123 Amortisation charge in the year 68 -------- 31 March 2007 191 ======== Net book value: 31 March 2007 3,523 ======== 31 March 2006 2,365 ======== Additions in the year of £1,264,000 comprise of £1,054,000 in connection with the acquisition of Shaw & Company (Property Management) Limited (see note 13) and £210,000 to acquire the business of London and Provincial Properties. 9. CREDITORS: AMOUNTS FALLING DUE AFTER MORE THAN ONE YEAR 2007 2006 £'000 £'000 Amounts owed to former parent company - 3,398 Deferred purchase consideration 219 300 ------- ------- 219 3,698 Convertible loan notes 958 - ------- ------- 1,177 3,698 ======= ======= During the year, the company issued loan notes to replace the existing debt due to the former parent company, LTC Holdings plc. In accordance with applicable accounting standards, £926,000 of the issued loan notes of £2,798,000 has been reclassified as other reserves within shareholders' funds. The convertible loan notes are redeemable anytime between 30 June 2009 and 30 June 2016 at the option of the holder subject to the holder's shareholding not exceeding 50% of the total issued share capital of the company. The loan notes are convertible into 1.5p ordinary shares at a price of 25p per ordinary share. 10. SHARE CAPITAL 2007 2006 £'000 £'000 Authorised: 163,733,200 (2006: 50,000) ordinary shares of 1.5p 2,456 50 (2006: £1) each --------- -------- 2,456 50 ========= ======== Allotted, issued and fully paid: 16,396,898 (2006: 2,577,143) ordinary shares of 1.5p 246 39 each --------- -------- 246 39 ========= ======== In June 2006, the company issued 2,577,143 1.5p ordinary shares in exchange for 100% of the share capital of Hawksworth Management Limited to facilitate the demerger from LTC Holdings plc. As explained in note 11, this transaction has been accounted for using merger accounting and consequently this share issue is deemed to have taken place by 1 April 2005. During the year, the company issued 5,534,041 1.5p ordinary shares for total cash consideration of £653,000. Also during the year, £1,500,000 of a loan and £1,000,000 of loan notes was converted by LTC Holdings plc into a total of 8,285,000 1.5p ordinary shares. 11. MERGER RESERVE On 15 May 2006, a demerger agreement was entered into whereby LTC Holdings plc agreed to transfer the business of Hawskworth Management Limited and its subsidiaries to a newly incorporated company, HML Holdings plc. The demerger completed on 2 June 2006 when HML Holdings plc issued 2,577,143 1.5p ordinary shares to acquire the entire share capital of Hawksworth Management Limited. This transaction has been accounted for as a group reconstruction and consequently merger accounting has been adopted. The difference of £15,000 between the nominal value of the share capital issued of £39,000 and the share capital and premium account of Hawksworth Management Limited of £24,000 has been recognised as a merger reserve. 12. RECONCILIATION OF THE MOVEMENT IN EQUITY SHAREHOLDERS' FUNDS 2007 £'000 1 April 2006 (1,097) Issue of share capital 3,153 Share issue expenses (243) Equity element of loan notes 840 Profit for financial year 170 Share based payment charge 59 ------- 31 March 2007 2,882 ======= 13. PURCHASE OF SUBSIDIARY UNDERTAKING In April and May 2006, the company purchased the entire share capital of Shaw & Company (Property Management) Limited. 2007 £'000 Net assets acquired: Tangible fixed assets 14 Trade debtors 201 Trade creditors (157) ------- 58 Goodwill 1,054 ------- 1,112 ------- Discharged by: Cash paid 728 Deferred consideration 384 ------- 1,112 ======= 14. ANALYSIS OF CHANGES IN NET DEBT At 1 April Cash flow Non cash At 31 March 2006 changes 2007 £'000 £'000 £'000 £'000 Cash in hand, at bank 161 207 - 368 Overdrafts (46) 46 - - -------- 253 -------- Debt due after more than one year (3,398) 600 1,840 (958) ------- -------- -------- -------- Total (3,283) 853 1,840 (590) ======= ======== ======== ======== The non-cash changes arise from the conversion of £1,000,000 of loan notes into 4,000,000 1.5p shares and a reclassification to equity of £840,000 of the debt to other reserves as explained in note 9. 15. Copies of this announcement are available from www.hmlholdings.com. Copies of the Annual Report and Accounts of the Company for the year ended 31 March 2007 will be sent to shareholders in due course. 26 June 2007 This information is provided by RNS The company news service from the London Stock Exchange