8 Dec 2008 11:05
HML HOLDINGS Plc
("HML or "the Group")
INTERIM RESULTS
HML Holdings plc (AIM: HMLH), the property management service group, today announces its interim results for the six months to 30 September 2008.
Highlights:
Turnover increased by 30% to £4.3 million (2007: £3.3 million)
Operating profit before amortisation and share based payments increased by 7% to £204,000 (2007: £190,000)
New management instructions up 60% comparable to equivalent period last year
Successful acquisition and integration of Grovewood Property Management Limited and Grovewood Property Management (South West) Limited
Commenting on the results, Robert Plumb, Chief Executive of HML Holdings plc, said: "In this difficult economic climate it is pleasing to be able to report a growth in revenues and earnings. The Group continues to grow the number of residential units under management which augurs well for the ongoing growth of fixed management fees.
Ancillary income has been impacted by a substantial reduction in fees earned from the preparation of sale information packs in a market experiencing a significant fall in residential property transactions. Similarly the unprecedented low interest rate environment has and will further affect income through lower treasury management fees. These economic factors have contributed to the board's view that earnings for the year will be below those previously anticipated in the market.
Although the board anticipates an ongoing organic growth in management fees it expects the prevailing market conditions to continue to impact ancillary income throughout 2009."
For further information:
| HML Holdings Plc Robert Plumb, Chief Executive James Howgego, Financial Director | Tel: 020 8439 8529 |
| Tavistock Communications Limited Paul Young/John West | Tel: 020 7920 3150 |
| Daniel Stewart & Company Plc Simon Leathers/Charlotte Stranner | Tel: 020 7776 6550 |
We are pleased to report that despite what has clearly been a challenging economic climate for the property services industry we are pleased to report a 30% growth in revenues and a 7% growth in operating profits (before share based payments and amortisation charges) for the six months under review.
Although revenues have grown overall we have experienced a reduction in the contribution of some areas of our transactional income. In particular fees earned from the preparation of accounting information packages for the sale of apartments have, in line with sales generally in the residential property market, reduced significantly. This has however been offset in part by the growth in fixed management fees resulting from the higher numbers of residential units that we manage. The fall in ancillary transaction income inevitably impacts our margins however the growth in management instructions bodes well for more sustainable income in future years.
Historically HML has benefited from long term relationships with house builders who have been a continuous source of new business and growth. The Group has in recent years minimised its reliance on the new build market and has focused sales and marketing efforts on winning a greater share of the existing blocks of flats market. Our change of strategy has served us well in the current market conditions. While new build developments have slowed down considerably the Group is currently managing record levels of new business enquiries. Similarly the growth in the pipeline for "confirmed management instructions" for existing blocks has been healthy. We are pleased to report that the Group has recorded a growth in new management instructions of over 60% in the first six months of this year versus the equivalent period last year.
As was first reported in the Chairman's and Chief Executive Report in our last financial statements in April this year we have purchased the software for the systems which support our business infrastructure. This has enabled us to progress the automation of our businesses both in terms of additional functionality and through the conversion of legacy systems within our acquired businesses. Our most significant undertaking this year was the conversion of our North London operation (HML Mandells) to our standard systems and procedures. The ongoing conversion of the client base in this region from one predominantly professional landlord in nature to one more balanced with owner occupied clients has negatively impacted the earnings of this business. The recent successful recruitment of experienced property managers and a growing enquiries list for new management instructions gives us confidence in both the ongoing improvements we have made and in the future performance of this company.
We also announced in August the purchase of Grovewood Property Management, a block management company serving the Bristol area. We are pleased to report the successful integration of the business into our southern region (HML Andertons) and a confident outlook for business growth in this area.
Despite the uncertainties facing the property market in the short and medium term, the Group remains confident in the sustainability of our profitability and the growth potential of our business.
| Richard Smith Chairman 8 December 2008 | Robert Plumb Chief Executive |
CONSOLIDATED INCOME STATEMENT
Six months ended 30 September 2008
| | Notes | Unaudited 6 months to 30 September 2008 £’000 | Unaudited 6 months to 30 September 2007 £’000 | Audited Year ended 31 March 2008 £’000 | |
| Continuing operations Revenue | | 4,346 | 3,345 | 7,497 | |
| Direct operating expenses | | (3,742) | (2,801) | (6,336) | |
| Central operating overheads | | (400) | (354) | (709) | |
| Share based payment charge | | (29) | (30) | (71) | |
| Amortisation of intangible assets | | (73) | (18) | (58) | |
| Total operating expenses | | (4,244) | (3,203) | (7,174) | |
| Operating Profit | | 102 | 142 | 323 | |
| Finance income | | - | 1 | 3 | |
| Finance costs | | (2) | (11) | (14) | |
| Profit before Taxation | | 100 | 132 | 312 | |
| Taxation | | (17) | (18) | (52) | |
| Profit for the Period | | 83 | 114 | 260 | |
| | | | | | |
| Earnings per share (in pence) | | | | | |
| Basic | 4 | 0.3 | 0.6 | 1.1 | |
| Diluted | 4 | 0.3 | 0.6 | 1.1 | |
Profit before share based payments and amortisation reconciliation
| Unaudited 6 months to 30 September 2008 £'000 | Unaudited 6 months to 30 September 2007 £'000 | Audited Year ended 31 March 2008 £'000 | ||
| Operating profit per income statement | 102 | 142 | 323 | |
| Addback: | ||||
| Share based payment charge | 29 | 30 | 71 | |
| Amortisation of intangible assets | 73 | 18 | 58 | |
| Operating profit before share based payments and amortisation | 204 | 190 | 452 |
CONSOLIDATED BALANCE SHEET
30 September 2008
| | Notes | Unaudited 30 September 2008 £’000 | Unaudited 30 September 2007 £’000 | Audited 31 March 2008 £’000 | |
| ASSETS | | | | | |
| Non Current Assets | | | | | |
| Goodwill | | 4,212 | 3,801 | 4,102 | |
| Other intangible assets | | 2,625 | 1,434 | 2,011 | |
| Property, plant and equipment | | 338 | 235 | 301 | |
| | | 7,175 | 5,470 | 6,414 | |
| Current Assets | | | | | |
| Trade and other receivables | | 1,327 | 1,180 | 1,189 | |
| Cash and cash equivalents | | - | 720 | 380 | |
| | | 1,327 | 1,900 | 1,569 | |
| TOTAL ASSETS | | 8,502 | 7,370 | 7,983 | |
| | | | | | |
| LIABILITIES | | | | | |
| Current Liabilities | | | | | |
| Trade and other payables | | (1,209) | (1,121) | (1,226) | |
| Borrowings | | (497) | - | (125) | |
| Current tax liabilities | | (69) | (17) | (80) | |
| | | (1,775) | (1,138) | (1,431) | |
| Non-Current Liabilities | | | | | |
| Provisions | | - | (125) | (125) | |
| Deferred tax | | (174) | (18) | (157) | |
| Borrowings | | (171) | - | - | |
| | | (345) | (143) | (282) | |
| | TOTAL LIABILITIES | | (2,120) | (1,281) | (1,713) |
| | | | | | |
| | NET ASSETS | | 6,382 | 6,089 | 6,270 |
| EQUITY | | | | | |
| Share capital | | 473 | 365 | 473 | |
| Share premium | | 6,331 | 4,642 | 6,331 | |
| Other reserves | | - | 1,798 | - | |
| Merger reserve | | (15) | (15) | (15) | |
| Retained earnings | | (407) | (701) | (519) | |
| TOTAL EQUITY | | 6,382 | 6,089 | 6,270 | |
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
Six months ended 30 September 2008
| | Notes | Unaudited 6 months to 30 September 2008 £’000 | Unaudited 6 months to 30 September 2007 £’000 | Audited Year ended 31 March 2008 £’000 | |
| Profit for the period | | 83 | 114 | 260 | |
| Total recognised income and expense for the period | | 83 | 114 | 260 | |
| Shares issued in the period | | - | 2,063 | 3,855 | |
| | Share based payment | | 29 | 30 | 71 |
| Loan note reclassification | | - | 1,623 | (175) | |
| Net change in equity in the period | | 112 | 3,830 | 4,011 | |
| | Opening equity | | 6,270 | 2,259 | 2,259 |
| | Closing equity | | 6,382 | 6,089 | 6,270 |
CONSOLIDATED CASH FLOW STATEMENT
Six months ended 30 September 2008
| | Notes | Unaudited 6 months to 30 September 2008 £’000 | Unaudited 6 months to 30 September 2007 £’000 | Audited Year ended 31 March 2008 £’000 | |
| Operating activities | | | | | |
| Cash generated from operations | 5 | 2 | 236 | 747 | |
| Income taxes paid | | (11) | - | 11 | |
| Interest received | | - | 1 | 3 | |
| Interest paid | | (2) | (11) | (14) | |
| Net cash from operating activities | | (11) | 226 | 747 | |
| Investing activities Purchases of property, plant and equipment | | (95) | (78) | (186) | |
| Purchase of software | | (302) | - | - | |
| Acquisition of businesses | | (515) | (1,624) | (2,501) | |
| Net cash used in investing activities | | (912) | (1,702) | (2,687) | |
| Financing activities | | | | | |
| Proceeds from issuance of ordinary shares | | - | 1,934 | 1,827 | |
| | Share issue expenses | | - | (106) | - |
| Increase in debt | | 300 | - | - | |
| Net cash from financing activities | | 300 | 1,828 | 1,827 | |
| Increase/(decrease) in cash and cash equivalents | | (623) | 352 | (113) | |
| Cash and cash equivalents at the start of period | | 255 | 368 | 368 | |
| Cash and cash equivalents at the end of the period | | (368) | 720 | 255 | |
1. General Information
The interim unaudited financial information was approved by the board on 1 December 2008.
The results for the year ended 31 March 2008 have been audited whilst the results for the six months ended 30 September 2007 and 30 September 2008 are unaudited. The financial information contained in this interim report does not constitute statutory accounts as defined in section 240 of the Companies Act 1985. The statutory accounts for the previous year, which were prepared under IFRS, have been delivered to the Registrar of Companies. The auditors' opinion on those accounts was unqualified and did not contain a statement under section 237 (2) or (3) of the Companies Act 1985.
Copies of the interim report are available from www.hmlholdings.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 International Financial Reporting Standards ('IFRS') as adopted by the European Union applied in accordance with the provisions of the Companies Act 1985.
3. Taxation
Taxation for the six months to 30 September 2008 is based on the effective rate of taxation which is estimated to apply for the year ending 31 March 2009.
| 4. | Earnings per share | Unaudited 6 months to 30 September 2008 | Unaudited 6 months to 30 September 2007 | Audited Year ended 31 March 2008 | | |||||
| | Profits for basic and diluted earnings per share (£’000) | | | | | |||||
| | Profit for the period | 83 | 114 | 260 | | |||||
| | Weighted average number of shares (000s) | | | | | |||||
| | For basic earnings per share | 31,544 | 19,029 | 23,966 | | |||||
| | Effect of dilutive potential ordinary shares: | | | | | |||||
| | - convertible loan notes | - | 53 | - | | |||||
| | - share options | - | 425 | 397 | | |||||
| | Fully diluted | 31,544 | 19,507 | 24,363 | | |||||
| | | | | | | |||||
| | Earnings per share | | | | | |||||
| | Basic | 0.3p | 0.6p | 1.1p | | |||||
| | Diluted | 0.3p | 0.6p | 1.1p | | |||||
| | | | | | | |||||
| | | | | | | |||||
| 5. | Notes to the cash flow statement | Unaudited 6 months to 30 September 2008 £’000 | Unaudited 6 months to 30 September 2007 £’000 | Audited 6 months to 31 March 2008 £’000 | | |||||
| | Cash generated from operations | | | | | |||||
| | Operating profit | 102 | 142 | 323 | | |||||
| | Share-based payment | 29 | 30 | 71 | | |||||
| | Depreciation of plant and equipment | 58 | 62 | 104 | | |||||
| | Amortisation of intangible assets | 73 | 18 | 58 | | |||||
| | (Increase) in trade and other receivables | (138) | (111) | (120) | | |||||
| | (Decrease)/ Increase in trade and other payables | (122) | 95 | 311 | ||||||
| | Cash generated from operations | 2 | 236 | 747 | ||||||
| | | | | | ||||||
6. Acquisitions
On 5 September 2008, HML Andertons Limited purchased 100% of the share capital of Grovewood Property Management Limited and Grovewood Property Management (South West) Limited, two property management businesses based in Somerset.
The fair value of the assets acquired and the liabilities assumed are set out in the table below:
| | | | | Fair value £’000 |
| | Intangible assets | | | 100 |
| | Property, plant and equipment | | | 6 |
| | Current assets | | | 16 |
| | Current liabilities | | | (20) |
| | Net assets acquired | | | 102 |
| | Goodwill | | | 98 |
| | Satisfied by cash paid to vendors | | | 200 |
| | | | | |