Hercules Property - Interim Results
February 09 1998 - 2:30AM
UK Regulatory
RNS No 7277k
HERCULES PROPERTY SERVICES PLC
9th February 1998
HERCULES PROPERTY SERVICES PLC:
INTERIM RESULTS FOR SIX MONTHS TO 31st DECEMBER 1997 AND
#4m ACQUISITION OF PROPERTY MANAGEMENT BUSINESS
H I G H L I G H T S
* TURNOVER FROM CONTINUING OPERATIONS RISES TO #2.578m + 160%
* PRE-TAX PROFITS INCREASE TO #1.093m + 180%
* EARNINGS PER SHARE ADVANCE TO 14.5p + 25%
* MAIDEN INTERIM DIVIDEND OF 1p DECLARED
* HARMAN HEALY AUCTION SALES TOTAL OVER #35m + 30%
* HERITAGE NOW PROVIDES INSURANCE COVER FOR #1.7bn OF PROPERTY -
MORE THAN DOUBLE JUNE 1997 LEVEL
* ACQUISITION OF BRIGHTON PROPERTY MANAGEMENT BUSINESS FOR #4m
CASH AGAINST WARRANTED ANNUAL PRE-TAX PROFITS OF #675,000 -
SUBSTANTIAL OVERHEAD SAVINGS EXPECTED FOLLOWING INTEGRATION
* "I firmly believe that the quality of income, as well as the
natural synergy, provided by this latest acquisition will add
significantly to the group's overall profitability. At the same
time our existing businesses are enjoying profitable growth and
it is against this background that I view the remainder of the
year, and beyond, with great confidence," Larry Lipman, Chairman.
CHAIRMAN'S STATEMENT
It gives me great pleasure to report on a period which has been the
company's most active six months since its incorporation in May 1996 and,
even more importantly, its most profitable half year ever. Shareholders
should note, however, that strict comparisons with last year's interims
are inappropriate as it covers a different period following a change to
the year end.
I am pleased to be able to tell shareholders that there has been a near
threefold rise in pre-tax profits to #1.093m for the six months to 31st
December 1997 against #390,000 recorded for the interim period to 30th
September 1996. It is also pleasing to note that Hercules' existing
businesses have performed extremely well over the period with profits
increasing by more than 100% to #776,000 against #376,000. Earnings per
share rose by 25% to 14.5p compared with 11.62p in 1996.
The Board has declared its first interim dividend of 1p per ordinary share
(1996: Nil) which is payable on 10th June 1998 to those shareholders on
the register on 15th May 1998.
The period under review was notable for the fact that Hercules completed
the acquisition of David Glass Associates, a well established AIM listed
North London based property management company, for #8.3m. This
represented the company's largest acquisition to date and further
extended Hercules' property services activities, particularly in the
area of residential property management where there is clear synergy
between the existing business and David Glass.
Although the acquisition was completed during the period under review,
David Glass has only contributed three months profits to these results and
we are extremely pleased with the progress made by the company since
becoming part of the group. The same is also true of Simmonds & Partners,
a chartered surveying practice based in North-West London acquired last June,
which is now fully integrated into Hercules and performing well.
During the first half of the year Harman Healy, our auctioneers, held
three auctions and properties with a combined value of more than #35m were
sold reflecting a 30% increase over the previous three auctions.
It is pleasing to report that Heritage Insurance Services now provides
insurance cover for properties with a value approaching #1.7bn, which is
more than twice the level as at 30 June 1997, and property to the value
of approximately #25m is being added to the portfolio each month. Heritage
has been one of the principal beneficiaries of the upturn in business from
both Harman Healy and Simmonds & Partners.
Today we announce our latest acquisition aimed at further extending our
residential activities through the purchase of the contracted property
management business of Brighton-based Property Connections Limited.
We are paying #4m in cash on completion for the residential property
management business of Property Connections Limited which manages
approximately 4,100 flats and houses, against warranted pre-tax profits
of at least #675,000 p.a. for the next three years. These profits are
expected to rise substantially once the business has been consolidated
into David Glass Associates and it is anticipated that this integration
should be completed within the first three months of ownership. The
consideration is being funded by a mixture of bank debt and existing
cash resources.
Simultaneously we are acquiring, for #200,000 cash, a 51% shareholding in
Waterglen Limited, a private company that owns the freeholds of the flats
and houses managed by Property Connections. By acquiring a majority
shareholding in Waterglen's freehold interests, that have been valued at
#2.1m against which there is a #1.7m commercial mortgage, we have secured
the property management and ground rent income stream in perpetuity.
I firmly believe that the quality of income, as well as the natural
synergy, provided by this latest acquisition will add significantly to the
group's overall profitability. At the same time our existing businesses
are enjoying profitable growth and it is against this background that I
view the remainder of the year, and beyond, with great confidence.
Larry Lipman
Chairman
CONSOLIDATED PROFIT AND LOSS ACCOUNT
Six months Six months 15 months
ended ended ended
31 December 30 September 30 June
1997 1996 1997
(Unaudited) (Unaudited) (Audited)
#'000 #'000 #'000
TURNOVER:
Acquisitions 662 - -
Continuing operations 2,578 992 2,699
_______ _______ _______
3,240 992 2,699
Cost of sales (1,015) (259) (929)
_______ _______ _______
GROSS PROFIT 2,225 733 1,770
Administrative expenses (1,169) (357) (954)
_______ _______ _______
OPERATING PROFIT:
Acquisitions 280 - -
Continuing operations 776 376 816
_______ _______ _______
1,056 376 816
Interest receivable and similar income 53 14 50
Interest payable and similar charges (16) - (13)
_______ _______ _______
Profit on ordinary activities
before taxation 1,093 390 853
Tax on profit on ordinary activities (362) (127) (305)
_______ _______ _______
Profit on ordinary activities
after taxation 731 263 548
Equity minority interest (61) (49) (76)
_______ _______ _______
Profit for the financial period 670 214 472
Equity dividends (66) - (99)
_______ _______ _______
Retained profit for the financial period 604 214 373
======= ======= =======
Earnings per ordinary share 14.5p 11.6p 17.9p
Dividend per share 1.0p - 3.0p
Basis of preparation
The interim results have been prepared in accordance with applicable
Accounting Standards, using the historical cost convention. The financial
information for the two half-years has not been audited and does not
constitute statutory accounts as defined in Section 240 of the Companies
Act 1985. The results for the 15 months to 30 June 1997 have been
extracted from the Annual Report and Accounts which received an
unqualified auditors' report and have been delivered to the Registrar
of Companies.
CONSOLIDATED BALANCE SHEET
31 December 30 September 30 June
1997 1996 1997
(Unaudited) (Unaudited) (Audited)
#'000 #'000 #'000
FIXED ASSETS
Tangible assets 586 54 507
Investments - - 394
_______ _______ _______
586 54 901
_______ _______ _______
CURRENT ASSETS
Stocks and work in progress 142 - 34
Debtors 1,643 341 545
Cash at bank and in hand 1,586 687 496
_______ _______ _______
3,371 1,028 1,075
CREDITORS:
Amounts falling due within one year (1,636) (561) (919)
_______ _______ _______
NET CURRENT ASSETS 1,735 467 156
_______ _______ _______
TOTAL ASSETS LESS CURRENT LIABILITIES 2,321 521 1,057
CREDITORS:
Amounts falling due after
more than one year (399) - (231)
PROVISIONS FOR LIABILITIES AND CHARGES (317) - (250)
Equity minority interest (135) (122) (74)
_______ _______ _______
NET ASSETS 1,470 399 502
======= ======= =======
CAPITAL AND RESERVES
Called up equity share capital 329 126 165
Share premium account 9,565 1,267 1,621
Profit and loss account 1,109 346 505
Merger reserve (1,339) (1,340) (1,339)
Goodwill reserve (8,194) - (450)
_______ _______ _______
EQUITY SHAREHOLDERS' FUNDS 1,470 399 502
======= ======= =======
CONSOLIDATED CASH FLOW STATEMENT
Six months Six months 15 months
ended ended ended
31 December 30 September 30 June
1997 1996 1997
(Unaudited) (Unaudited) (Audited)
Note #'000 #'000 #'000
Cash inflow from operating
activities 1 403 452 1,067
Returns on investments and
servicing of finance 37 14 37
Taxation paid (19) (127) (74)
Capital expenditure and
financial investment (38) (4) (847)
Acquisitions and disposals (7,366) - (274)
Equity dividends paid - - (75)
_______ _______ _______
Cash (outflow)/inflow before financing (6,983) 335 (166)
Financing 8,108 (33) 277
_______ _______ _______
Increase in cash in the period 1,125 302 111
======= ======= =======
RECONCILIATION OF NET CASH FLOW TO MOVEMENT IN NET FUNDS
Six months Six months 15 months
ended ended ended
31 December 30 September 30 June
1997 1996 1997
(Unaudited) (Unaudited) (Audited)
#'000 #'000 #'000
Increase in cash in the period 1,125 302 111
Cash outflow from increase in
debt and lease financing - - (248)
_______ _______ _______
Change in net debt resulting from
cash flows 1,125 302 (137)
Loans acquired with subsidiary - - (19)
_______ _______ _______
1,125 302 (156)
_______ _______ _______
Net funds brought forward 229 385 385
_______ _______ _______
Net funds carried forward 1,354 687 229
======= ======= =======
NOTE TO THE CONSOLIDATED CASH FLOW STATEMENT
1. RECONCILIATION OF OPERATING PROFIT FOR THE PERIOD TO NET CASH
INFLOW FROM OPERATING ACTIVITIES
Six months Six months 15 months
ended ended ended
31 December 30 September 30 June
1997 1996 1997
(Unaudited) (Unaudited) (Audited)
#'000 #'000 #'000
Operating profit 1,056 376 816
Depreciation charges 23 - 21
(Increase)/decrease in stocks and
work in progress (1) - 1
(Increase)/decrease in debtors (501) (130) 77
(Decrease)/increase in creditors (241) 206 (158)
Increase in provision for liabilities 67 - 310
_______ _______ _______
Net cash inflow from
operating activities 403 452 1,067
======= ======= =======
Contact: Hercules Property Services Tel: 0181-203 9099
Larry Lipman, Chairman
Paul Davis, Finance Director
Baron Phillips Associates Tel: 0171-224 1302
Baron Phillips
Guinness Mahon & Co Tel: 0171-623 9333
Jagjit Mundi
END
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