HMLH.L Regulatory News (HMLH)

HML HOLDINGS Plc

("HML" or the "Group")

HALF YEAR RESULTS

HML Holdings Plc (AIM: HMLH), the property management services group, today announces its interim results for the six months to 30 September 2019.

Highlights for the six-month period:

·; Revenue up 14% to £15.5m (2018: £13.6m)

·; Adjusted operating profit has reduced by 5% to £1.07m (2018: £1.12m)*

·; Cash generated from operations was £1.39m (2018: £1.56m)

·; Adjusted earnings per share fell to 2.1p (2018: 2.2p)**

·; Units under management increased to 82,000 (2018: 76,000)

*before interest, share based payment charges, amortisation and tax (see note 4)

**before interest, share based payment charges, amortisation and tax (see note 5)

Commenting on the results, Robert Plumb, Chief Executive Officer of HML Holdings Plc said:

"We are pleased to report continuous growth for the group in challenging market conditions. Our ability to buy and successfully integrate acquisitions is improving, and while we are yet to see the full benefits flow through, we are confident that our strategy will deliver significant value to shareholders in the long-term."

For further information:

www.hmlgroup.com

HML Holdings Plc Tel: 020 8439 8529

Robert Plumb, Chief Executive Officer

James Howgego, Chief Financial Officer

Alec Guthrie, Chief Operating Officer

Tavistock Communications Limited Tel: 020 7920 3150

Jeremy Carey

James Verstringhe

FinnCap Tel: 020 7220 0500

Ed Frisby/Giles Rolls - Corporate Finance

Camille Gochez/Tim Harper - ECM

REVIEW OF BUSINESS

We are pleased to report ongoing growth with revenues rising by 14% to £15.5m (2018: £13.6m). Acquisitions since 30 September 2018 contributed £0.9m or 7% of that revenue growth.

Reductions in a number of revenue lines that are more susceptible in this slower economic environment have however contributed to a £0.05m fall in earnings before interest, share based payments, amortisation and tax which are £1.07m for the six-month period (2018: £1.12m). While we have seen strong growth in some of our more resilient revenue lines, such as insurance which is up 15% on last year, others including pre-contract enquiries and surveying have not increased in line with the growth in our business generally.

HML has also experienced, as others in high employee cost sectors such as property services, a proportionately high increase in salary costs. This is contrary to the downward pressure typically associated with economic turndowns. We have found that salary expectations in sectors with a comparatively high level of employment, like our own, have increased relative to the inflationary levels achievable in the fees for our services.

HML has however made significant progress both in further developing our back-office functions and our acquisitions integration methodology. While the value from these improvements is yet to truly flow to the bottom line our confidence in them has grown considerably. Our processes for transferring portfolios on to our systems have improved and shortened the time in which acquisitions remain on legacy systems. This brings forward the time when we are able to offer our ancillary services to our new clients.

The much-anticipated implementation of changes to the regulatory environment governing property management and leasehold continue to be delayed. While this is understandable in our current political environment, it remains a frustration for those managing agents, like HML, which operate in the Residential Management Company market, who are striving for a greater professionalisation and standardisation of service standards. The polarisation of compliant and non-compliant agents in this competitive, but unregulated market, appears to have grown. The costs of conforming for those who adhere to professional standards are felt both in having to build the infrastructure to deliver a compliant service and in being at a competitive disadvantage when dealing with those who are prepared, for the sake of lower costs, to ignore their obligations as owners of communal properties.

There are several factors currently contributing to the growth of non-qualified players in the specialised area of block management. For example, the fall in property sales across the market has encouraged estate agents to enter, or re-enter, the property management market. This is something that has occurred in previous economic downturns and tends to reverse when transactional income is restored. We also anticipate that greater regulation of the property management sector in the future will prevent this happening.

The ongoing restlessness in our fragmented market continues to create opportunities for those experienced in and capable of making acquisitions in the sector. The benefits of economy of scale and the revenue growth opportunities inherent in HML's full-service infrastructure continue to become more evident as we selectively acquire attractive businesses. Equally, despite the current circumstances in our market, we remain confident in the resilience and future benefits of our strategy and business model and look forward to delivering continued shareholder value as we build the Group.

Robert Plumb

Chief Executive Officer

25 November 2019

HML HOLDINGS PLC

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

HML HOLDINGS PLC

CONSOLIDATED STATEMENT OF FINANCIAL POSITION

COMPANY NUMBER: 5728008

30 September 2019

HML HOLDINGS PLC

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

Six months ended 30 September 2019

HML HOLDINGS PLC

CONSOLIDATED STATEMENT OF CASH FLOWS

Six months ended 30 September 2019

HML HOLDINGS PLC

NOTES TO THE ACCOUNTS

Six months ended 30 September 2019

1. General Information

The interim unaudited financial information was approved by the board on 25 November 2019.

The results for the year ended 31 March 2019 have been audited whilst the results for the six months ended 30 September 2018 and 30 September 2019 are unaudited. The financial information contained in this interim report does not constitute statutory accounts for the year ended 31 March 2019. The statutory accounts for that year, which were prepared under International Financial Reporting Standards ('IFRS'), have been delivered to the Registrar of Companies. The auditor's opinion on those accounts was unqualified, did not draw attention to any matters by way of emphasis and did not contain a statement under section 498 (2) or 498 (3) of the Companies Act 2006.

Copies of the interim report are available from www.hmlgroup.com or from the Company Secretary at HML Holdings plc, 9-11 The Quadrant, Richmond, Surrey, TW9 1BP.

2. International Financial Reporting Standards

The consolidated financial information has been prepared using accounting policies consistent with IFRS as adopted by the European Union.

The accounting policies applied are consistent with those expected to apply for the year ended 31 March 2020. IFRS 16 Leases been applied for the first time in preparing the interim financial information. Note 7 sets out the key impacts on the Statement of Comprehensive Income and the Statement of Financial Position of the adoption of the new standard. 

Whilst the financial figures included in this interim report have been computed in accordance with IFRS, this interim report does not contain sufficient information to constitute an interim financial report as that term is defined in IAS 34.

3. Taxation

Taxation for the six months to 30 September 2019 is based on the effective rate of taxation of 19% which is estimated to apply for the year ending 31 March 2020.

*Profit from operations is stated after charging depreciation of right of use assets totalling £580,000

**Profit from operations is stated after charging rent of £522,000

7. Adoption of accounting standard IFRS 16

The Group has adopted IFRS 16 using the modified retrospective approach with the effect of applying this standard at the date of initial recognition of 1 April 2019, consequently comparatives have not been restated.

As a lessee, the Group has previously classified leases as operating or finance leases based on whether the lease transferred significantly all of the risks and rewards incidental to the ownership of the underlying asset. Under IFRS 16, the Group recognises right-of-use assets and lease liabilities for all leases on its balance sheet.

The key impacts on the Statement of Comprehensive Income and the Statement of Financial Position are as follows:

The above IFRS 16 adjustment relates to the leases on the 24 offices rented by the Group.