HMLH.L Regulatory News (HMLH)

HML Holdings Plc

("HML", the "Company" or the "Group")

Final Results for the Year Ended 31 March 2017

HML Holdings plc (AIM: HMLH), the property management services group, is pleased to announce its final results for the year ended 31 March 2017.

Financial and Operational Highlights:

*before interest, share based payment charges, amortisation and tax (see note 1)

**before interest, share based payment charges, depreciation, amortisation and tax

Commenting on the results, Robert Plumb, Chief Executive of HML said: "We are very pleased to report another excellent year of growth at HML. We have made several acquisitions this year and our investment in the management teams and processes necessary to facilitate the integration of these business is really starting to pay off. We remain confident in our ability to manage and balance the growth in our business with the need to improve the infrastructure necessary to support it.

"In a market that is becoming increasingly polarised between those offering services that are compliant with the ethical code and practices of our professional bodies and those that aren't, HML is emerging as one of the largest managing agents in the independent owner-occupied sector and remains well-positioned to benefit from the growing need for independence and professionalism."

For further information:

REVIEW OF BUSINESS

The Board are pleased to report a 13% (2016: 8%) growth in revenues as well as an 18% (2016: 18%) increase in property units under management to 71,000.

Earnings before interest, share based payments, amortisation and tax rose 12% (2016: 6%) to £1,836,000 (2016: £1,634,000). The Group has further expanded the number of office locations to 21 (2016: 15).

This has been a year in which management has focused a significant amount of effort on the integration of acquisitions. In total the Group purchased six block management businesses, three of which were in the first quarter of the year. While all three of these earlier acquisitions have been successful in terms of our primary intragroup services, the value of their incremental earnings potential is only becoming fully realisable as they are integrated onto HML's systems and standardised procedures. The other three acquisitions, substantially larger, were purchased toward the end of the fourth quarter and have not had a material impact on our reported revenues and earnings.

It is pleasing to report higher revenues across all segments of the business with surveying (14% growth) and insurance (8% growth) improving in line with acquisition growth from prior years. Property management continues to enjoy organic and acquisition growth, although it is important to note that this segment would have achieved a further £200,000 in earnings contribution had transactional fees from the sale of properties under management continued at levels of the previous year.

It has been a year in which we have taken several steps forward. We have introduced a new logo and brand for the Group following extensive research and reflection on our values and image. We are progressing towards a single name for our property management offices while accentuating our tailored, personal and local service attributes through the strength in our network of offices. We have also taken significant strides in the centralisation of the management of our human resources not only by upgrading the systems that support them but through a number of initiatives in areas such as recruitment, learning and development, engagement and appraisal. Having grown the staff numbers to over 500 this year, it was pleasing to see some of the early benefits from the investment in these initiatives which are reflected in lower staff turnover and recruitment fees.

We have reported on a number of occasions the emerging differences arising within a market that is more clearly dividing between those offering services that are compliant with the ethical code and practices of our professional bodies and those who seek to compete purely on price with little attention to the peculiarities and complexity of leasehold management. That polarisation has continued with a slowly growing awareness of the susceptibility to the abuse of lessees inherent in the leasehold market. The public light that shone on the recent growth in houses that are unnecessarily sold as leasehold has undoubtedly heightened awareness in this sector. We believe that publicity of practices such as these will support the case for independent and professional managing agents.

We were pleased to welcome new shareholders to our ownership in our December fund raising which facilitated the acquisition of three businesses in the 4th quarter. We are confident that these acquisitions will improve shareholder value.

Our thanks also go to our employees for the hard work that has helped us to accomplish meaningful growth during what has been a challenging year.

HML is emerging as one of the larger managing agents in the independent owner occupied market and remains well positioned to benefit from the growing need for independence and professionalism. We remain determined to build the infrastructure and expertise within our management teams that enables us to accommodate that growth. As such our Board enters the upcoming year with confidence and looks forward to updating shareholders as the year progresses.

HML HOLDINGS PLC

CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS EQUITY

For the year ended 31 March 2017

ATTRIBUTABLE TO THE EQUITY HOLDERS OF THE GROUP

HML HOLDINGS PLC

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

GENERAL INFORMATION

Whilst the financial information included in this preliminary announcement has been prepared in accordance with the recognition and measurement criteria of International Financial Reporting Standards (IFRSs) as adopted by the European Union, this announcement does not itself contain sufficient information to comply with IFRSs.

The financial information is presented in pounds sterling, prepared on a historical cost basis, except for the revaluation of contingent considerations and rounded to the nearest thousand. The financial information set out in this announcement does not comprise the Group's statutory accounts for the years ended 31 March 2017 or 31 March  2016.

The financial information for the year ended 31 March 2016 is derived from the statutory accounts for that year which have been delivered to the Registrar of Companies. The auditors reported on those accounts; their report was unqualified and did not contain a statement under either Section 498 (2) or Section 498 (3) of the Companies Act 2006 and did not include references to any matters to which the auditor drew attention by way of emphasis.

The statutory accounts for the year ended 31 March 2017 have not yet been delivered to the Registrar of Companies, nor have the auditors yet reported on them. This preliminary announcement does not constitute statutory accounts under section 435 of the Companies Act 2006.

HML Holdings plc and its subsidiaries specifically focus on residential property management. The Group operates in the UK. The Company is a public limited company incorporated and domiciled in the United Kingdom. The address of its registered office is 9-11 The Quadrant, Richmond, Surrey, TW9 1BP. The Company is listed on the AIM stock exchange.

The preliminary results were authorised for issue by the board of directors on 3 July 2017.

1. PROFIT RECONCILIATION

The reconciliation set out below provides additional information to enable the reader to reconcile to the numbers discussed in the Chairman's and Chief Executive's report

Direct operating expenses and central operating overheads include depreciation and staff costs.

Set out below is an analysis of other operating expenses;

Amounts payable to the auditor and its related entities in respect of both audit and non-audit services are set out below:

The tax assessed for the period is higher than (2016: lower than) the standard rate of corporation tax in the UK of 20% (2016: 20%). The differences are explained below:

Future tax charges may be affected by the fact that no deferred tax asset is recognised in respect of losses. Deferred tax assets are not recognised until the utilisation of the losses is probable.

The Group has losses carried forward in its subsidiary, HML Hathaways Limited which can be recovered against future profits arising from the same trade. The total tax losses carried forward to future years are £1,243,000 (2016: £1,243,000). Consequently, the unprovided deferred tax asset in respect of these losses is £211,000 (2016: £249,000).

4. EARNINGS PER SHARE

The calculation of the basic and diluted earnings per share is based on the following data

The diluted earnings per share are the basic earnings per share adjusted for the dilutive effect of the conversion into fully paid shares of the outstanding share options.

5. BUSINESS COMBINATIONS (ACQUISITIONS)

On 1 April 2016, HML Andertons Limited purchased the trade and assets of Coupe Property Consultants, a business based in Cheltenham. The acquisition provides the Group with a Cheltenham office and reinforces its' trading position as the leading property manager in the South West.

The fair value of net assets acquired is set out below:

The residual difference between the total consideration paid and the net value of the recognised assets acquired has been capitalised as goodwill. The goodwill recognised on the acquisition is mainly attributable to the skills and knowledge within the business.

On 17 May 2016, HML Hawksworth Limited purchased 100% of the share capital of Homes & Watson Partnership Limited, a business based in Ingatestone. The acquisition will strengthen the Group's position in Essex. On the same day, the trade assets and liabilities of Homes and Watson Partnership Limited were transferred to HML Ashton Chater Limited at net book value as set out below.

The fair value of net assets acquired is set out below:

The residual difference between the total consideration paid and the net value of the recognised assets acquired has been capitalised as goodwill. The goodwill recognised on the acquisition is mainly attributable to the skills and knowledge within the business.

On 25 May 2016, HML Hathaways Limited purchased 100% of the share capital of Arkleygate Limited, a business based in Borehamwood. The trade and assets of

Arkleygate Limited were transferred into HML Hathaways Limited on acquisition.

The fair value of net assets acquired in the acquisition are set out below:

The residual difference between the total consideration paid and the net value of the recognised assets acquired has been capitalised as goodwill. The goodwill recognised on the acquisition is mainly attributable to the skills and knowledge within the business.

On 2 June 2016, HML Andertons Limited purchased 100% of the share capital of Crown Leasehold Management Limited, a property management business based in Bristol. The acquisition will strengthen the Group's position in the South West and gives the business an office in Bristol. The trade and assets of Crown Leasehold Management Limited were transferred to HML Andertons Limited on acquisition.

The fair value of net assets acquired is set out below:

The residual difference between the total consideration paid and the net value of the recognised assets acquired has been capitalised as goodwill. The goodwill recognised on the acquisition is mainly attributable to the skills and knowledge within the business.

On 1 February 2017, HML Andertons Limited purchased 100% of the share capital of Goodacre Property Services Limited, a property management business based in Keston, Kent. On acquisition the trade and assets were transferred to HML Andertons Limited. The acquisition will strengthen the Group's position in Kent and gives the business an office in Keston.

The fair value of net assets transferred is set out below:

The residual difference between the total consideration paid and the net value of the recognised assets acquired has been capitalised as goodwill. The goodwill recognised on the acquisition is mainly attributable to the skills and knowledge within the business.

On 1 March 2017, HML Andertons Limited purchased 100% of the share capital of Gordon & Company (Property Consultants) Limited, a property management business based in Southern England. On acquisition, the trade and assets were transferred to HML Andertons Limited. The acquisition will strengthen the Group's position in the region and gives the business offices in Reigate and Bristol.

The fair value of net assets transferred is set out below:

The residual difference between the total consideration paid and the net value of the recognised assets acquired has been capitalised as goodwill. The goodwill recognised on the acquisition is mainly attributable to the skills and knowledge within the business.

The Directors have proposed paying a dividend of 0.37p per share in relation to the current year (2016: 0.33p per share).