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Share Name Share Symbol Market Type Share ISIN Share Description
Hml Holdings Plc LSE:HMLH London Ordinary Share GB00B16DFY89 ORD 1.5P
  Price Change % Change Share Price Bid Price Offer Price High Price Low Price Open Price Shares Traded Last Trade
  0.00 0.0% 25.50 24.00 27.00 25.50 25.50 25.50 0.00 08:00:00
Industry Sector Turnover (m) Profit (m) EPS - Basic PE Ratio Market Cap (m)
Real Estate Investment & Services 28.1 1.7 3.0 8.5 12

HML Holdings PLC Half-year Report

26/11/2019 7:00am

UK Regulatory (RNS & others)


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TIDMHMLH

RNS Number : 6011U

HML Holdings PLC

26 November 2019

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 GBP15.5m (2018: GBP13.6m) 
   --      Adjusted operating profit has reduced by 5% to GBP1.07m (2018: GBP1.12m)* 
   --      Cash generated from operations was GBP1.39m (2018: GBP1.56m) 
   --      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 GBP15.5m (2018: GBP13.6m). Acquisitions since 30 September 2018 contributed GBP0.9m 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 GBP0.05m fall in earnings before interest, share based payments, amortisation and tax which are GBP1.07m for the six-month period (2018: GBP1.12m). 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

Six months ended 30 September 2019

 
                                                        Unaudited 
                                                         6 months        Unaudited        Audited 
                                                               to      6 months to     Year ended 
                                                     30 September     30 September       31 March 
                                                             2019             2018           2019 
  Continuing operations                    Notes          GBP'000          GBP'000        GBP'000 
-------------------------------------  ---------  ---------------  ---------------  ------------- 
  Revenue                                                  15,492           13,557         28,110 
-------------------------------------  ---------  ---------------  ---------------  ------------- 
  Direct operating expenses                              (13,743)         (11,788)       (24,332) 
-------------------------------------  ---------  ---------------  ---------------  ------------- 
 
  Central operating overheads                               (681)            (649)        (1,365) 
  Share based payment charge                                 (25)             (18)           (37) 
  Amortisation of intangible 
   assets                                                   (355)            (320)          (640) 
-------------------------------------  ---------  ---------------  ---------------  ------------- 
  Total central operating overheads                       (1,061)            (987)        (2,042) 
-------------------------------------  ---------  ---------------  ---------------  ------------- 
  Operating expenses                                     (14,804)         (12,775)       (26,374) 
-------------------------------------  ---------  ---------------  ---------------  ------------- 
  Profit from operations                                      688              782          1,736 
  Finance costs                                              (54)             (26)           (50) 
  Profit before taxation                       4              634              756          1,686 
  Income tax charge                                         (120)            (140)          (305) 
-------------------------------------  ---------  ---------------  ---------------  ------------- 
  Profit for the period attributable 
   to equity holders of the parent                            514              616          1,381 
  Other comprehensive income                                    -                -              - 
-------------------------------------  ---------  ---------------  ---------------  ------------- 
  Total comprehensive income 
   for the period attributable 
   to equity holders of the parent                            514              616          1,381 
-------------------------------------  ---------  ---------------  ---------------  ------------- 
 
  Earnings per share 
  Basic                                        5             1.1p             1.4p           3.0p 
  Diluted                                      5             1.1p             1.3p           3.0p 
-------------------------------------  ---------  ---------------  ---------------  ------------- 
  Adjusted earnings per share 
  Basic                                        5             2.1p             2.2p           4.6p 
  Diluted                                      5             2.0p             2.1p           4.6p 
-------------------------------------  ---------  ---------------  ---------------  ------------- 
 

HML HOLDINGS PLC

CONSOLIDATED STATEMENT OF FINANCIAL POSITION

COMPANY NUMBER: 5728008

30 September 2019

 
                                         Unaudited        Unaudited      Audited 
                                      30 September     30 September     31 March 
                                              2019             2018         2019 
                                           GBP'000          GBP'000      GBP'000 
--------------------------------   ---------------  ---------------  ----------- 
  ASSETS 
  Non-Current Assets 
  Goodwill                                  12,330           10,510       11,384 
  Other intangible assets                    8,279            7,748        8,373 
  Property, plant and equipment              6,437            1,060        1,030 
                                            27,046           19,318       20,787 
 --------------------------------  ---------------  ---------------  ----------- 
  Current Assets 
  Trade and other receivables                3,010            3,225        3,804 
  Cash at bank                                   -              516          235 
                                             3,010            3,741        4,039 
 --------------------------------  ---------------  ---------------  ----------- 
  TOTAL ASSETS                              30,056           23,059       24,826 
---------------------------------  ---------------  ---------------  ----------- 
 
  LIABILITIES 
  Current Liabilities 
  Trade and other payables                   5,498            5,198        6,602 
  Bank overdraft and borrowings              1,092              529          529 
  Lease liabilities                          1,239                -            - 
  Current tax liabilities                      381              341          357 
---------------------------------  ---------------  ---------------  ----------- 
                                             8,210            6,068        7,488 
 --------------------------------  ---------------  ---------------  ----------- 
  Non-Current Liabilities 
  Bank borrowing                               414              943        1,268 
  Deferred tax                               1,267            1,124          679 
  Lease liabilities                          4,108                -            - 
  Non-current tax liabilities                  120              140            - 
---------------------------------  ---------------  ---------------  ----------- 
                                             5,909            2,207        1,947 
 --------------------------------  ---------------  ---------------  ----------- 
  TOTAL LIABILITIES                         14,119            8,275        9,435 
---------------------------------  ---------------  ---------------  ----------- 
  NET ASSETS                                15,937           14,784       15,391 
---------------------------------  ---------------  ---------------  ----------- 
 
    EQUITY 
  Share capital                                688              686          687 
  Share premium                              2,504            2,485        2,498 
  Other reserves                              (87)             (88)         (87) 
  Merger reserve                              (15)             (15)         (15) 
  Retained earnings                         12,847           11,716       12,308 
---------------------------------  ---------------  ---------------  ----------- 
  TOTAL EQUITY                              15,937           14,784       15,391 
---------------------------------  ---------------  ---------------  ----------- 
 

HML HOLDINGS PLC

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

Six months ended 30 September 2019

 
     Share       Share       Other      Merger     Retained       Total 
   capital     premium     reserve     reserve     earnings      equity 
   GBP'000     GBP'000     GBP'000     GBP'000      GBP'000     GBP'000 
 
 
  Balance at 1 April 
   2018                  682    2,450    (88)    (15)    11,082    14,111 
---------------------  -----  -------  ------  ------  --------  -------- 
 
 
  Total comprehensive 
   income for the period     -     -    -    -    616    616 
  Share based payment 
   charge                    -     -    -    -     18     18 
  Share capital issued       4    35    -    -      -     39 
 
 
  Balance at 30 September 
   2018                       686    2,485    (88)    (15)    11,716    14,784 
--------------------------  -----  -------  ------  ------  --------  -------- 
 
 
  Total comprehensive 
   income for the period     -     -    -    -      765      765 
  Share based payment 
   charge                    -     -    -    -       19       19 
  Share capital issued       1    13    -    -        -       14 
  Share sold by EBT          -     -    1    -        -        1 
  Dividend                   -     -    -    -    (192)    (192) 
 
 
  Balance at 31 March 
   2019                   687    2,498    (87)    (15)    12,308    15,391 
----------------------  -----  -------  ------  ------  --------  -------- 
 
 
  Total comprehensive 
   income for the period     -    -    -    -    514    514 
  Share based payment 
   charge                    -    -    -    -     25     25 
  Share capital issued       1    6    -    -      -      7 
 
 
  Balance at 30 September 
   2019                       688    2,504    (87)    (15)    12,847    15,937 
--------------------------  -----  -------  ------  ------  --------  -------- 
 

HML HOLDINGS PLC

CONSOLIDATED STATEMENT OF CASH FLOWS

Six months ended 30 September 2019

 
                                                                       Unaudited        Unaudited        Audited 
                                                                        6 months         6 months     Year ended 
                                                                              to               to       31 March 
                                                          Notes     30 September     30 September           2019 
                                                                            2019             2018        GBP'000 
                                                                         GBP'000          GBP'000 
----------------------------------------------------  ---------  ---------------  ---------------  ------------- 
  Operating activities 
  Cash generated from operations                              6            1,389            1,562          3,606 
  Income taxes refunded/(paid)                                                23              (8)          (297) 
  Interest paid                                                             (19)             (26)           (50) 
  Net cash from operating activities                                       1,393            1,528          3,259 
----------------------------------------------------  ---------  ---------------  ---------------  ------------- 
  Investing activities 
  Purchase of property, plant and equipment                                (235)            (454)          (629) 
  Acquisition of own shares                                                    -                -              1 
  Purchase of software                                                     (128)            (120)            245 
  Acquisition of businesses                                              (1,050)              (6)          (994) 
  Payment of deferred/contingent consideration                             (520)            (476)          (759) 
 
  Net cash used in investing activities                                  (1,933)          (1,056)        (2,626) 
----------------------------------------------------  ---------  ---------------  ---------------  ------------- 
  Financing activities 
  Repayment of loans                                                       (265)            (264)          (528) 
  Net movement in overdraft                                                  563                -              - 
  Shares issued                                                                7               39             53 
  Dividend payment                                                             -                -          (192) 
  Net cash from/(used in) financing activities                               305            (225)          (667) 
----------------------------------------------------  ---------  ---------------  ---------------  ------------- 
  Increase in cash and cash equivalents                                    (235)              247           (34) 
   Cash and cash equivalents at beginning of period                          235              269            269 
----------------------------------------------------  ---------  ---------------  ---------------  ------------- 
  Cash and cash equivalents at end of period                                   -              516            235 
====================================================  =========  ===============  ===============  ============= 
 

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.

 
  4.         Profit before interest, share             Unaudited        Unaudited        Audited 
          based payments charges, amortisation          6 months      6 months to     Year ended 
                      and taxation                            to     30 September       31 March 
                                                    30 September             2018           2019 
                                                            2019          GBP'000        GBP'000 
                                                         GBP'000 
       ----------------------------------------  ---------------  ---------------  ------------- 
   Operating profit before interest, 
    share based payment charges, 
    amortisation and taxation                              1,068            1,120          2,413 
   Finance costs                                            (54)             (26)           (50) 
 ----------------------------------------------  ---------------  ---------------  ------------- 
   Operating profit before share 
    based payment charges, amortisation 
    and taxation                                           1,014            1,094          2,363 
   Share based payment charge                               (25)             (18)           (37) 
   Amortisation of intangible 
    assets                                                 (355)            (320)          (640) 
   Profit before taxation                                    634              756          1,686 
 ----------------------------------------------  ---------------  ---------------  ------------- 
 
 
  5.     Earnings per share                       Unaudited        Unaudited        Audited 
                                                   6 months      6 months to     Year ended 
                                                         to     30 September       31 March 
                                               30 September             2018           2019 
                                                       2019 
       -----------------------------------  ---------------  ---------------  ------------- 
   Profit after tax for the period 
    (GBP'000s) 
    (used to calculate the basic 
    and diluted earnings per share) 
    Add back:                                           514              616          1,381 
   Share based payment charge                            25               18             37 
   Amortisation of intangible 
    assets                                              355              320            640 
   Finance costs                                         54               26             50 
 -----------------------------------------  ---------------  ---------------  ------------- 
   Adjusted profit after tax for 
    the period (GBP'000s) (used 
    to calculate the basic and 
    diluted adjusted earnings per 
    share)                                              948              980          2,108 
 -----------------------------------------  ---------------  ---------------  ------------- 
         Weighted average number of 
          shares (000s) 
   For basic earnings per share                      45,840           45,526         45,630 
         Effect of dilutive potential 
          ordinary shares: 
   - share options                                      474              696            494 
   Fully diluted                                     46,314           46,222         46,124 
 
         Earnings per share 
   Basic                                               1.1p             1.4p           3.0p 
   Diluted 
    Adjusted earnings per share                        1.1p             1.3p           3.0p 
   Basic                                               2.1p             2.2p           4.6p 
   Diluted                                             2.0p             2.1p           4.6p 
 -----------------------------------------  ---------------  ---------------  ------------- 
 
 
  6.     Notes to the cash flow statement         Unaudited        Unaudited        Audited 
          Cash generated from operations           6 months      6 months to     Year ended 
                                                         to     30 September       31 March 
                                               30 September             2018           2019 
                                                       2019          GBP'000        GBP'000 
                                                    GBP'000 
       -----------------------------------  ---------------  ---------------  ------------- 
   Profit from operations                              *688            **782          1,736 
         Adjustments for: 
   Share-based payment charge                            25               18             37 
   Depreciation of plant and 
    equipment                                           210              180            385 
   Amortisation of intangible 
    assets                                              355              320            640 
 
     Operating cash flows before 
     movements in working capital                     1,278            1,300          2,798 
 
     Decrease in trade and other 
     receivables                                        794              705            126 
   (Decrease)/increase in trade 
    and other payables                                (683)            (443)            682 
   Cash generated from operations                     1,389            1,562          3,606 
 -----------------------------------------  ---------------  ---------------  ------------- 
 
 

*Profit from operations is stated after charging depreciation of right of use assets totalling GBP580,000

**Profit from operations is stated after charging rent of GBP522,000

   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:

 
                                        Right of                   Lease    Income statement 
                                       use asset              obligation             GBP'000 
                                         GBP'000                 GBP'000 
 ---------------------------------  ------------  ----------------------  ------------------ 
   Balance on transition                       -                       -                   - 
 
   Additions                               5,962                 (5,962)                   - 
   Depreciation                            (580)                       -               (580) 
   Interest                                    -                    (35)                (35) 
   Lease payments                              -                     614                 614 
   Carrying value at 30 September 
    2019                                   5,382                 (5,382)                   - 
 ---------------------------------  ------------  ----------------------  ------------------ 
 

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

This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact rns@lseg.com or visit www.rns.com.

END

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