RNS No 7058e
DAVID GLASS ASSOCIATES PLC
22nd July 1997
PART 2
APPENDIX I
CONDITIONS AND FURTHER TERMS OF THE OFFER AND THE CASH ALTERNATIVE
The Offer, which in this Appendix includes where relevant
references to the Cash Alternative, which is being made by
Guinness Mahon on behalf of Hercules, is subject to the terms and
conditions set out below, elsewhere in this announcement and in
the Form of Acceptance.
A. THE OFFER IS SUBJECT TO THE FOLLOWING CONDITIONS:-
(a) valid acceptances of the Offer being received (and not,
where permitted, withdrawn) by 3.00 p.m. on 12th August, 1997 (or
such later time(s) and/or date(s) as Hercules may, subject to the
Code, decide) in respect of not less than 90 per cent. (or such
lesser percentage (being not less than 50 per cent.) as Hercules
may decide) in nominal value of the David Glass Shares to which
the Offer relates provided that this condition will not be
satisfied unless Hercules or its subsidiaries or persons acting
in concert with it shall have acquired or agreed to acquire,
whether pursuant to the Offer or otherwise directly or
indirectly, David Glass Shares carrying more than 50 per cent.
of the voting rights then exercisable at a general meeting of
David Glass, including in each case, to the extent (if any)
required by the Panel, any voting rights attaching to any David
Glass Shares which are unconditionally allotted or issued before
the Offer becomes or is declared unconditional as to acceptances
pursuant to the exercise of any outstanding conversion, option
or subscription rights or otherwise. For the purposes of this condition:-
(i) David Glass Shares which have been unconditionally allotted
shall be deemed to carry the voting rights which they will carry
upon issue; and
(ii) the expression "David Glass Shares to which the Offer
relates" shall be construed in accordance with Sections 428 to
430F of the Companies Act 1985;
(b) the London Stock Exchange announcing its decision to admit
to trading on AIM the new Hercules Shares and (unless determined
by Hercules and subject to the consent of the Panel) such
admission becoming effective in accordance with the AIM Rules;
(c) the passing, at an extraordinary general meeting (or any
adjournment thereof) of Hercules, of the resolution to approve,
implement and effect the Offer, the acquisition of David Glass
pursuant thereto and the Placing and Open Offer contained in the
notice of extraordinary general meeting set out in the Prospectus;
(d) the Placing Agreement becoming unconditional and not being
terminated prior to the time when the Offer would otherwise
become or be declared wholly unconditional;
(e) the passing at an extraordinary general meeting of Safeland,
(or any adjournment thereof) of a resolution to approve, ratify
and confirm the undertaking given by it to accept the Offer and
to authorise the directors of Safeland to do all such further
things as they shall consider necessary or advisable to accept
the Offer on behalf of Safeland;
(f) Hercules not having discovered or otherwise becoming aware
(by the date when the Offer would otherwise become unconditional
in all respects) that the Secretary of State for Trade and
Industry intends to refer the proposed acquisition of David Glass
by Hercules, or any matter arising therefrom, to the Monopolies
and Mergers Commission;
(g) no government or governmental, quasi-governmental,
supranational, regional, local statutory, regulatory or
investigative body, authority, court, trade agency, professional
association or institution or any other similar person or body
whatsoever in any relevant jurisdiction (each a "Relevant
Authority") having decided to take, institute, implement or
threaten any action, proceedings, suit, investigation, enquiry
or reference or having made, proposed or enacted any statute,
regulation, order or decision or having done anything which would or might:
(i) make the Offer or its implementation, or the acquisition or
the proposed acquisition by Hercules of any shares in, or control
of, David Glass pursuant to the Offer, void, illegal or
unenforceable in any jurisdiction, or otherwise directly or
indirectly restrain, prohibit, restrict or materially delay the
same or impose additional onerous conditions or financial or
other obligations of a material nature with respect thereto, or
otherwise challenge or interfere therewith;
(ii) require, prevent or materially delay the divestiture by any
member of the Hercules Group of any David Glass Shares or of any
shares in a member of the David Glass Group or the Hercules Group;
(iii) require, prevent or materially delay the divestiture by any
member of the Hercules Group or by any member of the David Glass
Group of all or any portion of their respective businesses,
assets or property, or (to an extent which is material in the
context of the Offer or the group concerned taken as a whole)
impose any limit on the ability of any of them to conduct their
respective businesses (or any of them) or own their respective
assets or properties or any part thereof;
(iv) impose any limitation on or result in any material delay in
the ability of any member of the Hercules Group to acquire,
directly or indirectly, or to hold or to exercise effectively all
or any rights of ownership of David Glass Shares or securities
convertible into David Glass Shares or to exercise management
control over any member of the David Glass Group or on the
ability of David Glass or any member of the David Glass Group to
hold or exercise effectively all or any rights of ownership of
shares or securities convertible into shares in any member of the
David Glass Group or to exercise management control over any such
member of the David Glass Group in any such case to an extent
which is material in the context of the Hercules Group or the
David Glass Group as the case may be, taken as a whole;
(v) require any member of the Hercules Group or of the David
Glass Group to offer to acquire or repay any shares in any member
of the David Glass Group owned by any third party, and/or to
repay any indebtedness owed by any member of the David Glass
Group to any third party such acquisition or repayment being
material in the context of the Hercules Group or David Glass
Group taken as a whole;
(vi) impose any material limitation on any member of the Hercules
Group or of the David Glass Group to integrate its business, or
any material part of it, with the business of any member of the
David Glass Group or of the Hercules Group respectively in any
such case to an extent which is material in the context of the
Hercules Group or the David Glass Group as the case may be, taken
as a whole; or
(vii) otherwise adversely affect any or all of the businesses,
assets, prospects or profits of any member of the David Glass
Group or any member of the Hercules Group to an extent which is
material in the context of the Offer or the Hercules Group or the
David Glass Group in each case taken as a whole;
and all applicable waiting (and other time) periods during which
any Relevant Authority could institute, implement or threaten any
such action, proceedings, suit, investigation, enquiry or
reference under the laws of any relevant jurisdiction, having
expired, lapsed or been terminated;
(h) all necessary filings having been made and all necessary
waiting periods under any applicable legislation or regulations
of any jurisdiction having expired, lapsed or been terminated and
all statutory or regulatory obligations in any relevant
jurisdiction having been complied with in connection with the
Offer and its implementation or the proposed acquisition by
Hercules of any shares in, or control of, David Glass and all
authorisations, orders, recognitions, grants, consents,
clearances, confirmations, licences, certificates, permissions
and approvals deemed necessary or appropriate by Hercules in
respect of the Offer or the proposed acquisition by Hercules of
any shares in, or control of, David Glass or in relation to the
affairs of any member of the David Glass Group having been
obtained in terms and in a form satisfactory to Hercules from all
appropriate Relevant Authorities and all such authorisations,
orders, recognitions, grants, consents, clearances,
confirmations, licences, certificates, permissions and approvals
remaining in full force and effect and there being no intimation
of any intention to revoke or not renew the same;
(i) except as publicly announced by David Glass prior to the date
hereof there being no provision of any arrangement, agreement,
licence, permit, franchise or other instrument to which any
member of the David Glass Group is a party or to which any such
member or any of its respective assets may be bound, entitled or
be subject and which, in consequence of the making or
implementation of the Offer or the proposed acquisition of any
shares in, or control of, David Glass by Hercules or because of
a change in the control or management of David Glass or
otherwise, would or might result in:
(i) any indebtedness of any member of the David Glass Group being
or becoming repayable or capable of being declared repayable
immediately or prior to its stated maturity or the ability of any
such member to incur any indebtedness being withdrawn or inhibited;
(ii) the creation of any mortgage, charge or other security
interest over the whole or any part of the business, property or
assets of any such member or any such security (whenever arising
or having arisen) becoming enforceable;
(iii) any such arrangement, agreement, licence, permit, franchise
or instrument or the rights, liabilities, obligations, or
interests of any member of the David Glass Group under any such
arrangement, agreement, licence or instrument (or any arrangement
relating to any such right, liability, obligation, interest or
business) being terminated or adversely modified or affected or
any adverse action being taken or any onerous obligation arising thereunder;
(iv) any asset or interest of any member of the David Glass Group
being or falling to be disposed of or charged (otherwise than in
the ordinary course of trading) or any right arising under which
any such asset or interest could be required to be disposed of
or charged (otherwise than in the ordinary course of business);
(v) any member of the David Glass Group ceasing to be able to
carry on business under any name under which it presently does so;
(vi) the value or financial or trading position or prospects of
any member of the David Glass Group being prejudiced or adversely
affected in a manner which would be material in the context of
the David Glass Group taken as a whole;
and no event having occurred since the date hereof and prior to
the date on which the Offer otherwise becomes unconditional in
all respects which under any provision of any arrangement,
agreement, licence, permit or other instrument to which any
member of the David Glass Group is a party or by which any such
member or any of its assets may be bound, entitled or be subject
could result in any of the events or circumstance as are referred
to in sub-paragraphs(i) to (vi) of this paragraph(i) in any case
where such result would be material in the context of the David
Glass Group taken as a whole;
(j) except as publicly announced by David Glass prior to the date
hereof and/or, as disclosed in its audited accounts for the year
ended 31st March, 1997 no member of the David Glass Group having
since 31st March, 1997:
(i) issued or agreed to issue or authorised or proposed the issue
of additional shares of any class, or securities convertible
into, or rights, warrants or options to subscribe for or acquire,
any such shares or convertible securities or redeemed, purchased
or reduced any part of its share capital;
(ii) declared, made or paid or proposed to declare, make or pay
any bonus, dividend or other distribution whether payable in cash
or otherwise other than any distribution by any wholly-owned
subsidiary within the David Glass Group and other than the 3p
(net) dividend payable in respect of the year ended 31st March, 1997;
(iii) authorised or proposed or announced its intention to
propose any change in its share or loan capital in each case
which would be material in the context of the David Glass Group
taken as a whole;
(iv) authorised or proposed or announced its intention to propose
any merger, demerger or any acquisition or disposal or transfer
of assets or shares (other than in the ordinary course of
trading) in each case which would be material in the context of
the David Glass Group taken as a whole;
(v) disposed of or transferred (other than in the ordinary course
of trading) or mortgaged, charged or encumbered any asset or any
right, title or interest in any asset or shares or trade
investments (other than in the normal course of trading) or
entered into or varied any agreement, arrangement, contract,
transaction or commitment (other than in the ordinary course of
trading and whether in respect of capital expenditure or
otherwise) which is of a loss making, long term or unusual or
onerous nature or magnitude, or which involves or is likely to
involve an obligation of such a nature or magnitude, in each case
which is material in the context of the David Glass Group taken as a whole;
(vi) save as referred to in the Offer Document entered into or
varied any agreement, contract, transaction, arrangement or
commitment (other than in the ordinary course of trading) with
any David Glass Director or any person connected with him for the
purposes of section346 of the Act or which is material in the
context of the David Glass Group taken as a whole;
(vii) entered into or varied any contract, transaction or
arrangement which would be restrictive on the business of any
member of the David Glass Group;
(viii) issued, authorised or proposed the issue of any
debentures, or (other than in the ordinary course of trading)
incurred or increased any indebtedness or contingent liability
which is material in the context of the David Glass Group taken as a whole;
(ix) save as disclosed in writing to Hercules prior to the date
hereof made, or announced any proposal to make, any change or
addition to any retirement, death or disability benefit of or in
respect of any of its directors, employees, former directors or
former employees;
(x) granted any lease or third party rights in respect of any of
the leasehold or freehold property owned or occupied by it or
transferred or otherwise disposed of any such property;
(xi) entered into or varied the terms of any service agreement
with any director of David Glass;
(xii) taken any corporate action or had any legal proceedings
started or threatened against it for its winding up, dissolution
or reorganisation or for the appointment of a receiver,
administrator, administrative receiver, trustee or similar
officer of all or any of its assets or revenues in each case
which would be material in the context of the David Glass Group
taken as a whole;
(xiii) entered into any reconstruction or amalgamation otherwise
than in the ordinary course of trading which is material in the
context of the David Glass Group taken as whole;
(xiv) waived or compromised any claim, save in the ordinary
course of trading, which is material in the context of the David
Glass Group taken as a whole;
(xv) entered into an agreement or arrangement or commitment or
passed any resolution or any offer which remains open for
acceptance with respect to or announced an intention to effect
or to propose any of the transactions, matters or events referred
to in this paragraph (j);
(xvi) made any alterations to its memorandum or articles of association; or
(xvii) proposed any voluntary winding up;
(k) except as publicly announced by David Glass prior to the date
hereof or disclosed in the audited accounts of David Glass for
the year ended 31st March, 1997:
(i) there having been no material adverse change or deterioration
in the business, financial or trading position or profits or
prospects of the David Glass Group taken as a whole;
(ii) no litigation, arbitration proceedings, prosecution or other
legal proceedings to which any member of the David Glass Group
is or may become a party (whether as plaintiff or defendant or
otherwise), and no investigation by any Relevant Authority,
against or in respect of any member of the David Glass Group,
having been threatened, announced or instituted or remaining
outstanding by, against or in respect of any member of the David
Glass Group in any such case in circumstances where such
litigation, arbitration proceedings, prosecution or other legal
proceedings or investigation might reasonably be expected to have
a material adverse effect on the financial or trading position
of the David Glass Group taken as a whole;
(iii) no contingent or other liability (otherwise than in the
ordinary course of business) having arisen or become apparent
which might be likely in either case to have a material adverse
effect on the David Glass Group taken as a whole; and
(iv) there having been no receiver, administrative receiver or
other encumbrancer appointed over any of the assets of any member
of the David Glass Group or any analogous proceedings or steps
having taken place under the laws of any jurisdiction and there
having been no petition presented for the winding up or
administration of any member the David Glass Group or any
equivalent proceedings or steps taken under the laws of any other jurisdictions;
(l) Hercules not having discovered prior to the date when the
Offer would otherwise become unconditional in all respects (i)
that any financial or business information concerning David Glass
or the David Glass Group which is contained in the information
publicly disclosed at any time by any member of the David Glass
Group either contains a material misrepresentation of or omits
to state a fact necessary to make the information contained
therein not materially misleading, (ii) any information which
materially and adversely affects the import of any such
information or (iii) that any member of the David Glass Group is
subject to any liability, contingent or otherwise, which is not
disclosed in the Prospectus to be posted today; in each case
which is material in the context of the David Glass Group taken as a whole.
Hercules reserves the right to waive, in whole or in part, all
or any of conditions (e) to (l) inclusive, in whole or in part,
subject to the provisions of the Code.
The Offer will lapse if the proposed acquisition by Hercules of
David Glass is referred to the Monopolies and Mergers Commission
before 3.00p.m. on the first closing date of the Offer or the
date when the Offer is declared unconditional as to acceptances,
or such later date as the Panel may agree, whichever is the latest.
Conditions (b) to (l) inclusive must be satisfied as at, or (if
capable of waiver) waived on or before, the 21st day after the
later of (i) 12th August 1997 and (ii) the date on which
condition (a) is fulfilled (or such later date as Hercules may
with the consent of the Panel may decide) provided that Hercules
shall be under no obligation to waive or treat as fulfilled any
of conditions (e) to (l) inclusive by a date earlier than the
latest date specified above for the fulfilment thereof
notwithstanding that the other conditions of the Offer may at
such earlier date have been fulfilled and that there are at such
earlier date no circumstances indicating that any of such
conditions may not be capable of fulfilment.
Hercules reserves the right to make such changes to the above
conditions as may be appropriate in the event that the conditions
of the Offer are required to be amended to comply with Rule 9 of the Code.
The Offer will extend to any David Glass shares which are
unconditionally allotted or issued prior to the date on which the
Offer closes (or such earlier date as Hercules may direct,
subject to the Code, not being earlier than the date on which the
Offer becomes unconditional as to acceptances or, if later, the
first closing date of the Offer) including any such shares
allotted or issued pursuant to the exercise of options under the
David Glass Share Option Scheme.
FURTHER PRINCIPAL TERMS OF THE OFFER
The making of the Offer (including the Cash Alternative) in, or
to certain persons who are citizens, residents or nationals of,
jurisdictions outside the United Kingdom may be affected by laws
of the relevant jurisdiction. David Glass shareholders who are
citizens, residents or nationals of jurisdictions outside the
United Kingdom should inform themselves about and observe any
applicable legal requirements. It is the responsibility of any
David Glass shareholder outside the United Kingdom wishing to
accept the Offer to satisfy himself as to the full observance of
the laws of the relevant jurisidiction or territory in connection
therewith, including the obtaining of any governmental or other
consents which may be required, the compliance with other
necessary formalities and the payment of any issue, transfer or
other taxes due in such jurisdiction. Any such David Glass
shareholder will be responsible for the payment of any issue,
transfer or other taxes or other requisite payments due in such
jurisdiction by whomsoever payable and Hercules and Guinness
Mahon and any person acting on their behalf and any person to
whom new Hercules Shares are allotted pursuant to the Cash
Alternative shall be entitled to be fully indemnified and held
harmless by such shareholder for any such issue, transfer or
other taxes as such person may be required to pay.
In particular, the Offer is not being made, directly or
indirectly, in the United States, Canada, Australia or Japan, or
by use of the mails or by any means or instrumentality of
interstate or foreign commerce of, or of any facilities of a
national securities exchange of, the United States, Canada,
Australia or Japan. This includes, but is not limited to, the
post, facsimile transmission, telex and telephone. The Offer
cannot be accepted by any such use, means or instrumentality or
from within the United States, Canada, Australia or Japan.
Accordingly, copies of this announcement, the Form of Acceptance,
the Prospectus and any related offering documents are not being
posted or otherwise distributed or sent into the United States,
Canada, Australia or Japan, including to David Glass shareholders
with registered addresses in the United States, Canada, Australia
or Japan, or to persons whom Hercules knows to be nominees,
trustees or custodians holding David Glass shares for such
persons. Persons receiving such documents (including without
limitation custodian, nominees and trustees) must not distribute
or send them in, into or from the United States, Canada,
Australia or Japan, or use such mails or any such means of
instrumentality for any purpose, directly or indirectly, in
connection with the Offer, and doing so will render invalid any
related purported acceptance of the Offer. Persons wishing to
accept the Offer must not use such mails or any such means,
instrumentality or facility for any purpose directly or
indirectly related to the acceptance of the Offer. Envelopes
containing a Form of Acceptance must not be postmarked in the
United States, Canada, Australia or Japan, or otherwise
despatched from the United States, Canada, Australia or Japan,
and all acceptors must provide addresses outside the United
States, Canada, Australia or Japan for the despatch of new
Hercules Shares, the remittance of cash or the return of the Form
of Acceptance, David Glass share certificate(s) and/or other
document(s) of title.
No prospectus in relation to the Offer of the new Hercules Shares
to be issued pursuant thereto has been lodged with, or registered
by, the Australian Securities Commission. The new Hercules
Shares have not been, and will not be, registered under the
United States Securities Act of 1933 (as amended) or under any
relevant securities laws in Japan. Furthermore, the relevant
clearances have not been and will not be obtained from the
securities commission of any province of Canada. Acordingly, the
new Hercules Shares may not be offered, sold, resold or
delivered, directly or indirectly, in or into the United States,
Canada, Australia or Japan. Accordingly, the Offer is not being
made in the United States, Canada, Australia or Japan.
Notwithstanding the above, Hercules may at its sole discretion
allot new Hercules Shares to a person in or resident of the
United States, Canada, Australia or Japan if requested to do so
by or on behalf of that person and if Hercules is satisfied in
that particular case that to do so will not consitute a breach
of any securities or other relevant legislation of the United
States, Canada, Australia or Japan.
APPENDIX II
DEFINITIONS
The following definitions apply throughout this announcement,
unless the context otherwise requires:
"Act" the Companies Act 1985 (as amended)
"Admission" the admission of the new Hercules
Shares to trading on AIM
"AIM" the Alternative Investment Market of
the London Stock Exchange
"AIM Admission Rules" Chapter 16 of the Rules of the London Stock Exchange
"Annual General the 1997 Annual General Meeting of
Meeting" or "AGM" Hercules to be convened for 11.00 a.m.
on 14th August, 1997
"Application Form" the application form relating to the
Open Offer being sent to Qualifying
shareholders with the Prospectus
"Cash Alternative" the cash alternative under which
holders of David Glass shares who
validly accept the Offer may elect to
receive cash in lieu of some or all of
the new ordinary shares of Hercules
to which they would otherwise be
entitled under the Offer.
"Code" The City Code on Takeovers and Mergers
"Company" or "Hercules" Hercules Property Services Group plc
"David Glass" David Glass Associates plc
"David Glass Group" David Glass, its subsidiaries and
subsidiary undertakings
"David Glass Shares" the existing unconditionally allotted
or issued and fully paid ordinary
shares of 1p each in the capital of
David Glass and any further such
shares which are unconditionally
allotted or issued and fully paid
whilst the Offer remains open for
acceptance (or by such earlier date
as Hercules may, subject to the Code, decide)
"David Glass holders of David Glass Shares
Shareholders"
"David Glass Share the David Glass Associates plc 1995
Option Scheme" Employee Share Option Scheme
"Directors" or the directors of the Company,
"Board"
"Enlarged Group" Hercules and its subsidiaries
following completion of the
acquisition of David Glass
"Extraordinary the extraordinary general meeting of
General Meeting" or the Company to be held on 14th
"EGM" August 1997
"Form of Proxy" the blue form of proxy for use by
Hercules shareholders in connection with the EGM
"Guinness Mahon" Guinness Mahon & Co. Limited
"Harman Healy" Harman Healy Limited
"Hercules Group" Hercules Property Services Group plc
"Hercules shareholders" the holders of Hercules Shares
"Hercules Shares" the ordinary shares of 5p each in the
capital of Hercules
"Hercules Share Option the Hercules Property Services PLC
Scheme" 1996 Unapproved Executive Share Option Scheme 1996
"Heritage" Heritage Insurance Services Limited
"HPS" HPS Property Limited, the immediate
holding company of Heritage, Harman Healy and Resolute
"Issue Price" the price of 240p per share for the
Placing and Open Offer Shares
"London Stock the London Stock Exchange Limited
Exchange"
"New Hercules Shares" the new ordinary shares of 5p each in
Hercules to be issued pursuant to
the Offer, the Placing and Open Offer
"Offer" the recommended offer being made by
Guinness Mahon on behalf of Hercules
to acquire the David Glass Shares
"Offer document" the document dated 22nd July 1997
addressed to David Glass shareholders
relating to the Offer to be posted later today
"Offer Shares" up to 2,990,561 new Hercules Shares to
be issued credited as fully paid
pursuant to the Offer
"Open Offer" the conditional open offer by Guinness
Mahon on behalf of Hercules to
Qualifying shareholders of the Open
Offer Shares on the terms set out in
this announcement and in the Prospectus
"Open Offer Shares" up to 1,173,624 new Hercules Shares
which are to be made available to
Qualifying Hercules Shareholders
pursuant to the Open Offer
"Placing" the conditional placing by Guinness
Mahon on behalf of Hercules of the
Placing Shares, pursuant to the
Placing Agreement, subject in part to
clawback under the terms of the Open
Offer and to scaling down to the
extent that David Glass shareholders
do not accept the Cash Alternative
"Placing Agreement" the conditional agreement providing for
the Placing and Open Offer as
summarised in the Prospectus
"Placing Shares" Up to 2,347,249 new Hercules Shares
being placed pursuant to the Placing,
up to 1,173,624 of which are available
to Qualifying shareholders pursuant to the Open Offer
"the POS Regulations" the Public Offers of Securities Regulations 1995
"Prospectus" the prospectus to be despatched later
today to qualifying Hercules
Shareholders relating to, inter alia,
the Placing and Open Offer
"Qualifying holders of Hercules Shares on the
Shareholders" register of members of Hercules on the
Record Date (except for certain
overseas shareholders as described in Appendix I)
"Raphael Zorn Hemsley" Raphael Zorn Hemsley Limited
"Record date" the close of business on 14 July, 1997
"Resolute" Resolute Property Management Limited
"Simmonds" Simmonds & Partners Limited
"Safeland" Safeland plc and, where appropriate, its subsidiaries
APPENDIX III
Hercules
PRELIMINARY ANNOUNCEMENT OF THE AUDITED RESULTS FOR THE 15
MONTHS ENDED 30 JUNE 1997
CHAIRMAN'S STATEMENT
It gives me great pleasure to report on the Group's first
period as an independent business following its de-merger from
Safeland Plc and its listing on the Alternative Investment
Market last May. During the 15 months to 30th June, 1997
Hercules Property Services Plc ("Hercules") has grown
substantially and today the Company's market capitalisation is
approximately #8.6 million compared to only #1.5 million when
it was floated on AIM.
This has fully vindicated our view at the time of the
flotation that the true value of the businesses which formed
Hercules was not being fully recognised while they formed part
of Safeland Plc. The progress that the company has made,
especially the constituent businesses, Harman Healy, Heritage
Insurance Services and Resolute Property Management, has been
reflected in a share price that has risen from 48p to 250p.
In the 15 months to the end of June 1997, pre-tax profits were
#853,000 against #256,000 for the year ended 31st March 1996,
which is substantially higher than forecast at the time of the
float. At the heart of this improved performance was Heritage
with pre-tax profits rising 255 per cent. to #488,000 due to a
substantial increase in the amount of business. Shareholders
should be aware that the period under review covers two April
quarters which include Safeland's insurance renewals and
therefore is not reflective of an annualised position.
Against this background earnings per share are now 17.9p. EPS
has been calculated on a weighted average of shares issued in
the 15 month period and includes almost 800,000 shares issued
to the Rotch Property Group in November 1996. As a result the
EPS has been distorted by the fact that the Rotch insurance
renewal is on 1stJuly and no profit has been booked in respect
of this transaction apart from a #40,000 compensatory payment.
The Board is recommending a final dividend of 3p net per
ordinary share payable on 2nd January, 1998 to shareholders on
the register as at 12th December, 1997.
Shareholders will also be aware that earlier today a
recommended offer with a full cash alternative was announced
for David Glass Associates ("DGA"). The basic terms of the
offer value DGA at approximately #8.3 million.
DGA specialises in managing ground rent portfolios for a wide
variety of mainly private clients and complements our existing
property management and insurance services businesses. We
believe this is a major step forward for Hercules and lays the
foundations for further growth both in terms of profits as
well as acquisitions.
With the proposed acquisition of DGA, Hercules is now able to
offer clients a wide range of property management skills and
services irrespective of the type of property they own. In
addition each management company is normally responsible for
securing appropriate insurance cover for the property under
management which creates natural business opportunities for Heritage.
As shareholders will appreciate this has been an extremely
exciting time for Hercules. Just before the period end we
announced the acquisition of Simmonds and Partners for a
maximum cash consideration of #510,500. Simmonds is a North
West London based chartered surveying practice specialising in
residential property management as well as undertaking other
professional activities such as property valuations and surveys.
It is interesting to note the rapid expansion at Heritage
since last May's flotation. We announced at the time of the
interim results in November that Heritage had acquired a
contract to secure the insurance of more than #400 million
worth of commercial property owned by the Rotch Group. The
acquisition was satisfied through the issue of 788,759
ordinary 5p shares at 50p per share.
The acquisition of that contract virtually doubled the amount
of property on which Heritage secures insurance to in excess
of #800 million. This will double again to #1.6 billion
following the Simmonds and the DGA acquisitions increasing
gross insurance turnover to more than #1.5 million in a full year.
We expect continued growth in the amount of property under
insurance contract with Heritage as we are able to build on
both the synergy created from the enlarged Group and also
through our improved buying abilities.
We now believe that the future for Hercules is particularly
bright. With healthy levels of cash the Company is perfectly
positioned to continue its acquisition programme, as and when
the right opportunities present themselves, while also
ensuring that the Group's existing companies continue to maximise their profits.
Larry Lipman
Chairman
22nd July, 1997
REVIEW OF OPERATIONS
The past 15 months has seen all the companies in the Group
grow substantially reflecting an improved and stronger
property market both for residential and commercial property.
At the same time the Group itself has grown through
acquisition with two key purchases during the period: the
Rotch Property Group insurance contract and the acquisition of
the business of Simmonds & Partners, a property management business.
Hercules now focuses on three specific and related areas of
property activity: commercial property auctions, commercial
and residential property management and the provision of
property insurance. We believe there now exists tremendous
synergy between the different businesses and companies within
the group with plenty of scope for inter company business activity.
Harman Healy
Harman Healy is one of London's leading commercial property
auctioneers but in addition it also values and manages a wide
range of commercial and residential property.
The company has been well placed to take full advantage of the
improved economic climate and the corresponding upturn in
demand for investment properties as an increasing number of
buyers returned to the auction room. As a result, auction
turnover during the 15 months to 30th June, 1997 has more than
doubled to #60 million compared with only #25 million during
the previous 12 months. Naturally, there has been a
corresponding improvement in fee income which has risen to
#790,000 over the period.
While the auction activities are what catches the public eye
the company has a substantial property management arm that
produces long term and stable fee income.
As a result of the demerger which created Hercules, Harman
Healy took over the management of Resolute Property Management
Ltd. whose main client is Safeland Plc, substantially
increasing the number of properties under management to in
excess of 1,000. The company's property management activities
are likely to receive a boost from better rental growth
prospects as there is a noticeable increase in fees generated
from rent review work.
Earlier this year Harman Healy took advantage of an
opportunity to acquire the freehold of an office building in
Grays Inn Road for its new corporate headquarters. Refurbished
prior to occupation the building now provides a first class
working environment which, combined with a substantial
investment in computing capacity, has improved operating
efficiency, enhanced client service and allows for future expansion.
Overall the business environment in which the company operates
is more buoyant than at any time since 1989 and prospects for
future profitability are bright.
Heritage Insurance Services
Heritage secures insurance cover for owners of both
residential and commercial property. At the year end Heritage
sourced insurance cover for property valued in excess of #800
million and generated turnover of over #1.5 million.
Since the demerger and flotation Heritage has been able to
offer an efficient and competitive service for property owners
resulting in a dramatic growth in the amount of insurance
cover secured over the past year. New business is being won
from other parts of the group as well as from independent sources.
The largest single new client came with the acquisition of the
#407 buildings property insurance contract from the Rotch
Group which more than doubled the amount of property on which
Heritage secured insurance cover.
Hercules' acquisition of Simmonds & Partners last month will
also provide a source of potential business as the practice
manages large residential property portfolios.
Simmonds & Partners
The business of Simmonds & Partners was acquired last month
for a maximum cash consideration of #510,500. Simmonds &
Partners is a North West London based chartered surveying
practice specialising in residential property management as
well as providing other professional services such as
valuations and surveys. Established over 50 years ago,
Simmonds is a highly regarded professional firm that currently
manages in excess of 85 blocks of flats.
SUMMARY
We believe there are substantial opportunities to expand the
business not only because of the natural synergy which exists
between Simmonds and other parts of the Group but also the
financial strength it now has by being part of Hercules.
There can be little doubt about the wisdom of de-merging
Hercules Property Services from Safeland plc.
As an independent group of companies, Hercules has
demonstrated its ability to take full advantage of an active
property market and grow. Shareholders can look forward to the
company continuing this trend with further acquisitions as the
Board looks to create a substantial property service business.
CONSOLIDATED PROFIT AND LOSS ACCOUNT
15 month period from 1st April, 1996 to 30th June 1997
15 months
ended Year ended
30th June 31st March
1997 1996
#'000 #'000
TURNOVER: continuing operations 2,699 1,166
Cost of sales (929) (322)
------ ------
Gross profit 1,770 844
Administrative expenses (954) (606)
------ ------
Operating profit: continuing operations 816 238
Interest receivable and similar income 50 18
Interest payable and similar charges (13) -
------ -----
Profit on ordinary activities
before taxation 853 256
Tax on profit on ordinary activities (305) (83)
------ -----
Profit on ordinary activities
after taxation 548 173
Equity minority interest (76) (13)
------ -----
Profit for the financial period/year 472 160
Equity dividends (99) (850)
------ -----
Retained profit for the fnancial
period/year 373 (690)
------ -----
Earnings per ordinary share 17.9p
There have been no recognised gains or losses attributable to
shareholders other than the profit(loss) for the current
period and preceding financial year and, accordingly no
statement of total recognised gains and loss is shown.
Hercules Property Services PLC was incorporated on 2nd
January, 1996. The financial year end for the Group was
changed from 31st March to 30th June. The consolidated
results of the Group are disclosed for the period from 1st
April, 1996 to 30th June, 1997 and for the prior years from
1st April, 1995 to 31st March, 1996 in accordance with merger
accounting principles.
The Company did not trade between its incorporation and 1st
April, 1996. The latest financial statement of the
subsidiaries are for the 15 months ended 30th June, 1997.
Accordingly, the consolidated profit and loss account which
the Company is required to produce under section 227 of the
Companies Act 1985 for the period from incorporation to 30th
June, 1997 would be identical to the statement shown above and
should be taken to be the consolidated profit and loss account so required.
CONSOLIDATED BALANCE SHEET
30th June, 1997
30th June 31st March
1997 1996
#'000 #'000
FIXED ASSETS
Tangible assets 507 50
Investments 394 -
----- -----
CURRENT ASSETS 901 50
Work in progress 34 -
Debtors 545 211
Cash at bank and in hand 496 385
----- -----
1,075 596
CREDITORS: amounts falling due
within one year (919) (356)
----- -----
NET CURRENT ASSETS 156 240
----- -----
TOTAL ASSETS LESS CURRENT LIABILITIES 1,057 290
CREDITORS: amounts falling due after
more than one year (231) -
PROVISIONS FOR LIABILITES AND CHARGES (250) -
Equity minority interest (74) (73)
------ -----
NET ASSETS 502 217
====== =====
CAPITAL AND RESERVES
Called up equity share capital 165 113
Share premium account 1,621 1,311
Profit and loss account 505 132
Merger reserve (1,339) (1,339)
Goodwill reserve (450) -
------ ------
EQUITY SHAREHOLDERS' FUNDS 502 217
====== ======
These financial statements were approved by the Board of
Directors on 22nd July 1997.
Signed on behalf of the Board of Directors
L G Lipman
P M Davis
Directors
Notes:
1 The financial information set out in this statement does
not constitute Hercules's statutory accounts for the 15 months
ended 30th June 1997 and the year ended 31st March 1996.
Statutory accounts for 1996 have been delivered to the
Registrar of Companies. The auditors have reported on the
1997 and 1996 accounts, their reports were unqualified and did
not contain any statement uder section 237(2) and (3) of the
Companies Act 1985. The 1997 accounts have not yet been
delivered to the Registrar of Companies.
2 The 1997 Annual Report and Accounts will be sent to
shareholders in due course. Further copies are available from
Hercules's Registered Office at: 340 Gray's Inn Road, London WC1X 8BJ.
END
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