RNS No 6103e
HERCULES PROPERTY SERVICES PLC
8th September 1998
HERCULES PROPERTY SERVICES PLC ("Hercules"):
ACQUISITION OF THE BUSINESS AND ASSETS OF DUNLOP HEYWOOD & CO.
LIMITED FOR #5m, PLACING AND OPEN OFFER AT 300P PER NEW SHARE
TO RAISE #5.77m AND PRELIMINARY RESULTS FOR 12 MONTHS TO
30TH JUNE 1998
H I G H L I G H T S
* Proposed acquisition of the business and assets of a long established
Manchester based surveyor and commercial property consultancy Dunlop
Heywood for #5m, payable in cash
* Dunlop Heywood also operates from West End and City of London together
with franchise offices in Leeds and Bradford
* Dunlop Heywood complements Hercules' existing activities, increases
exposure to commercial property market and expands geographical coverage
* Placing and Open Offer to raise #5.15m net of expenses
* Pre-tax profits of #2.65m reflecting 210% increase over preceding
15 month period
* Earnings per share increase by 64% to 29.3p
* Final dividend of 4p per ordinary share recommended making a total
of 5p per share for the year - a rise of 66%
"I believe the acquisition of Dunlop Heywood will add a further exciting
dimension to Hercules' range of highly integrated and profitable
services. Our results demonstrate the success of our acquisitions
programme, the full benefit of which has yet to be felt, which
reflects the truly synergistic nature of the operating companies
within the Group. I am sure this latest acquisition will prove
equally as exciting and complentary to Hercules as our previous
purchases," Larry Lipman, Chairman.
HERCULES PROPERTY SERVICES PLC
ACQUISITION AND PLACING AND OPEN OFFER
PRELIMINARY ANNOUNCEMENT OF AUDITED RESULTS
FOR THE YEAR ENDED 30 JUNE, 1998
INTRODUCTION
The Board of Hercules announces that the Company has entered into a
conditional agreement to acquire the business and assets of Dunlop
Heywood, an established property consultancy and surveying business. The
consideration payable in respect of the Acquisition is #5 million in cash
plus the assumption of the trade creditors of the Dunlop Heywood business.
#0.75 million of the consideration will be settled on the ESOP Trustees
who it is intended will then utilise such funds to subscribe for the ESOP
Shares at the Issue Price.
The cash element of the consideration for the Acquisition is to be funded
from the proceeds of the Placing and Open Offer. In addition, the Placing
and Open Offer will raise a further #0.9 million (net of expenses) in
order to provide additional working capital for the Enlarged Group.
The new Shares will represent approximately 24.4 per cent. of the issued
ordinary share capital of the Company on Admission, and will rank pari
passu in all respects with the existing Shares save that they will not
rank for the final dividend payable in respect of the year ended 30 June,
1998.
The Board also announces the audited results of Hercules for the year
ended 30 June, 1998. These show a profit before tax for the year of
#2.65 million, an increase of approximately 210 per cent. over the profit
before tax achieved in the fifteen months ended 30 June, 1997. The
preliminary results for the year ended 30 June, 1998, along with the
Chairman's statement and Review of Operations, are set out below. The
report and accounts of the Company for the year ended 30 June, 1998,
which contain the notice of AGM, are expected to be sent to Shareholders
later today.
Application will be made for the new Shares to be admitted to trading on
AIM. It is expected that trading on AIM in the new Shares will commence
on 7 October, 1998.
TERMS OF THE ACQUISITION
Hercules has conditionally agreed to acquire, through a wholly-owned
subsidiary, the business and assets of Dunlop Heywood for #5 million in
cash plus the assumption of the trade creditors of the Dunlop Heywood
business.
Pursuant of the terms of the Acquisition Agreement, #0.75 million of the
cash consideration is to be settled on the ESOP Trustees who it is
intended will utilise such funds to subscribe at completion for the ESOP
Shares at the Issue Price. The ESOP Shares will be available for
allocation to senior employees of the business of Dunlop Heywood in due
course in accordance with the performance criteria stipulated in the trust
deed or as otherwise specified by the ESOP Trustees.
The Acquisition is conditional, inter alia, on the passing of resolutions
1 and 3 to be proposed at the EGM and on Admission.
INFORMATION ON DUNLOP HEYWOOD
Dunlop Heywood provides a wide and integrated range of property services
including professional advice, property management, agency and specialised
services. It operates out of three offices situated in Manchester, the
City of London and the West End of London. In addition, there are
franchise offices in Leeds and Bradford. Its clients cover diverse
sectors, including banking, insurance, manufacturing, investment and
the professions, as well as Government departments, local and public
authorities and trusts and charities.
In a recent survey of UK surveying firms by an industry journal (source:
Estates Gazette, January 1998) Dunlop Heywood was ranked in the top 50 UK
surveying firms by turnover.
Summary financial information on Dunlop Heywood is set out below:
Year ended
1 March 1 March 28 February
1996 1997 1998
#000 #000 #000
_________ _________ _________
Turnover 5,391 4,858 5,951
Operating profit 526 328 680
Dunlop Heywood currently has in excess of 90 employees (of which
approximately 60 are Manchester-based and the balance are London-based).
REASONS FOR THE ACQUISITION
The Board believes that the Acquisition represents a significant step in
the Group's development as a supplier of property-related services and
will offer the potential for enhanced profitability. The Directors believe
that the principal benefits of the Acquisition for Hercules will include:
* the acquisition of an established, profitable business, the activities
of which complement the Group's own;
* expansion of the Group's geographical coverage, particularly in the
north of England given the presence of Dunlop Heywood in Manchester,
and Bradford and Leeds through franchised offices;
* the potential for increased cross-selling of services within the
Enlarged Group, with particular emphasis on the opportunities for
increasing the property portfolio insured by Heritage and auction
business put through Harman Healy;
* the addition of a significant portfolio of managed commercial property,
thus improving the balance across the Group between managed commercial
property and managed residential property; and
* an enhanced profile for the Group.
INTEGRATION OF DUNLOP HEYWOOD
The general policy of the Company with regard to acquisitions is to allow
the businesses it acquires to maintain and develop their own identity
within the Group. The Company aims to utilise the expertise available at
Board level in order to maximise the performance of the individual
businesses within the Group and their contribution to the Group's growth.
The business and assets of Dunlop Heywood will be purchased by a wholly-
owned subsidiary of the Company. The new subsidiary will be consolidated
into the Group's accounts from the date of completion of the Acquisition,
and the senior management will report to the Board.
The Board intends that the business of Dunlop Heywood will form an
integral part of the Group's activities and will also benefit from the
other operations comprised within the Group. In order to promote these
objectives, the Board will seek to develop strong links with the senior
management of Dunlop Heywood. Such an approach will, in the opinion of the
Directors, assist the Enlarged Group in taking advantage of the greater
cross-selling opportunities which will exist within the Enlarged Group as
a result of its broader range of services and geographical presence.
THE PLACING AND OPEN OFFER
The Company is proposing to raise approximately #5.77 million gross
(approximately #5.15 million net of expenses) by the Placing and Open
Offer, which has been fully underwritten by Guinness Mahon.
Pursuant to the Placing, which has been arranged by Raphael Zorn Hemsley
Limited, as agent for Guinness Mahon, the Open Offer Shares have been
conditionally placed with institutional and other investors at the Issue
Price subject to clawback by Qualifying Shareholders. Safeland PLC, which
is a related party to Hercules pursuant to the AIM Admission Rules, on
account of its shareholding of approximately 13.89 per cent. in the
Company, has undertaken to subscribe for up to 303,678 Open Offer Shares
pursutant to the Placing. The Directors, who have consulted on this matter
with Guinness Mahon, consider that the terms of Safeland PLC's
participation in the Placing are fair and reasonable so far as the
shareholders of Hercules are concerned. In addition, N Brown Group PLC has
agreed to subscribe for 83,334 Open Offer Shares pursuant to the Placing.
Qualifying Shareholders will be given the opportunity to subscribe under
the Open Offer for the Open Offer Shares at the Issue Price free of
expenses, pro rata to their existing shareholdings, on the basis of
2 Open Offer Shares for every 7 existing Shares
held at the close of business on the Record Date and so in proportion for
any greater or smaller number of existing Shares then held. The amount due
in respect of each application for Open Offer Shares is payable in full on
application. Entitlements to Open Offer Shares will be rounded down to the
nearest whole Share. Fractional entitlements will not be allotted and will
be disregarded. The maximum entitlement of a Qualifying Shareholder is
indicated on the Application Form, which is personal to the Qualifying
Shareholder(s) named thereon and may not be transferred except to satisfy
bona fide market claims. Applications for Open Offer Shares in excess of
such maximum entitlement will be treated as applications for the maximum
pro rata entitlement. Any Open Offer Shares not taken up under the Open
Offer will be subscribed for pursuant to the terms of the Placing and
otherwise in accordance with the terms of the Underwriting Agreement.
The Open Offer will close at 3.00 p.m. on 30 September, 1998.
The Open Offer Shares will be issued credited as fully paid and will rank,
at the time of issue, pari passu in all respects with the existing Shares
save that they will not rank for the final dividend payable in respect of
the year ended 30 June, 1998.
The Placing and Open Offer are conditional, inter alia, on:
(i) the passing of resolutions 1 and 3 to be proposed at the EGM;
(ii) the Underwriting Agreement becoming unconditional, save for
Admission, by no later than 6 October, 1998 (or such later date,
being no later than 20 October, 1998, as the Company and Guinness
Mahon may agree) and not having been terminated in accordance with
its terms; and
(iii) Admission.
Dealings in the Open Offer Shares, fully paid, are expected to commence
on AIM on 7 October, 1998.
AUDITED RESULTS AND CURRENT TRADING AND PROSPECTS
The Directors are pleased to report that profit before tax for the year
ended 30 June, 1998 increased significantly to #2.65 million (fifteen
months to 30 June, 1997: #0.85 million) on considerably improved turnover
of approximately #7.1 million (fifteen months to 30 June, 1997: #2.70
million). This improved profit before tax represents an increase of
approximately 210 per cent. on that achieved in the fifteen months to 30
June, 1997. The corresponding undiluted earnings per Share for the year
ended 30 June, 1998 was 29.3p (fifteen months ended 30 June, 1997: 17.9p).
With the demonstrated success of the Group and the expected contribution
from the business of Dunlop Heywood, the Directors remain positive about
the future prospects of the Enlarged Group.
The preliminary results of the Company for the year ended 30 June, 1998,
along with the Chairman's statement and Review of Operations, are set out
below. The annual report and accounts of the Company for that period are
expected to be sent to Shareholders later today. Copies of this document
can be obtained from the Company's offices at 340 Gray's Inn Road, London
WC1X 8BJ.
DIVIDEND POLICY
The Company has declared both a maiden interim dividend (being 1p net) and
a final dividend (being 4p net) for the year ended 30 June, 1998. It is
the Directors' intention that the Company will continue to pay both an
interim and a final dividend in forthcoming years. The level of future
dividends will reflect the Directors' policy that the Company should
retain sufficient of its earnings to facilitate the Board's plans for
the continued growth of Hercules both organically and through acquisition.
AMENDMENT TO THE HERCULES SHARE OPTION SCHEME AND GRANTS OF OPTIONS
The rules of the Hercules Share Option Scheme currently limit the number
of options that may be granted to any individual. The limit is that the
amount paid or payable by an individual on the exercise of options
granted to him under the Hercules Share Option Scheme and under any
other discretionary share option scheme established by the Company in
the previous ten years must not exceed four times his basic annual salary
and bonuses for the current or preceding year of assessment. In the case
of two of the Directors, Larry Lipman and Paul Davis, this limit has
become unduly restrictive as a result of those Directors only receiving
nominal remuneration from the Company. Accordingly, it is proposed that
the opportunity be taken at the EGM to seek Shareholders' approval to
amend the rules of the scheme to permit the grant to each of Larry Lipman
and Paul Davis of 180,000 and 96,984 options respectively at the Issue
Price (such grants providing each of Mr Lipman and Mr Davis with such
number of options which, when aggregated with his current holdings of
options, have a total value equal to four times notional commercial
market salaries of #150,000 and #85,000 respectively).
The Association of British Insurers has indicated that they would support
proposals for the grant to Directors of options to a value of four times
commercial market remuneration notwithstanding that Directors were not
receiving remuneration at that level.
In addition, the Company wishes to seek the approval of Shareholders at
the EGM to amend the rules of the Hercules Share Option Scheme to enable
the Company to
- make arrangements to collect tax and national insurance contributions
arising as a result of participation in the Hercules Share Option
Scheme;
- clarify that share options can be adjusted to reflect the variation of
the Company's share capital pursuant to an open offer;
- reflect the fact that due to recent tax changes, options granted under
unapproved schemes can now be exercisable for up to 10 years from the
date of grant without adverse tax consequences; and
- make certain other minor amendments.
IRREVOCABLE UNDERTAKINGS
Safeland Holdings Corporation, Jonathan Radgick and Larry Lipman have
given irrevocable undertakings to the Company not to take up the Open
Offer Shares to which they are entitled given their respective holdings
of existing Shares on the Record Date of 1,144,204 Shares (representing
approximately 17.0 per cent. of the existing issued ordinary share capital
of the Company). Accordingly, the Open Offer Shares to which they are entitled
have been conditionally placed at the Issue Price by Raphael Zorn Hemsley
Limited, acting as agent for Guinness Mahon, with institutional and other
investors.
EXTRAORDINARY GENERAL MEETING
An extraordinary general meeting of the Company has been convened to be
held at 11.10 a.m. (or immediately following the conclusion of the AGM,
whichever is later) on 1 October, 1998. At the EGM, three resolutions
will be proposed, the first and third as special resolutions and the
second as an ordinary resolution, for the following purposes:
1. (a) to increase the authorised share capital of Hercules from #440,000
to #750,000;
(b) to confer on the Directors authority under section 80 of the Act to
allot, inter alia, the new Shares;
(c) to empower the Directors to allot equity shares for cash other than
pro rata to Shareholders in connection with the Placing and Open
Offer and in respect of a further 445,238 Shares representing
approximately five per cent. of the enlarged issued share capital
as it will be following Admission;
2. to approve and amend the rules of the Hercules Share Option Scheme as
described above; and
3. to authorise the Directors to issue Shares to the ESOP Trustees.
If resolutions 1 and 3 are passed and the Proposals are implemented, the
Company will have an authorised share capital of 15 million Shares of
which 8,906,555 Shares will be in issue.
ANNUAL GENERAL MEETING
A notice convening the annual general meeting of the Company for
11.00 a.m. on 1 October, 1998 is set out in the report and accounts
of the Company for the year ended 30 June, 1998. At the AGM, resolutions
will be proposed, inter alia, to approve such report and accounts and to
re-appoint those Directors who are due to retire in compliance with the
Company's Articles of Association.
PROSPECTUS
A prospectus detailing the Proposals is to be sent to
Shareholders (except certain overseas Shareholders) later today.
Copies of the Prospectus will be available to the public, free of
charge, from the offices of Guinness Mahon & Co. Limited, 32 St Mary at
Hill, London EC3P 3AJ for a period of 14 days from the date of publication.
TIMETABLE OF PRINCIPAL EVENTS
1998
Record date for the Open Offer 28 August
Latest time and date for splitting Application
Forms in respect of the Open Offer (to satisfy
bona fide market claims only) 3.00 p.m. 28 September
Latest time and date for receipt of AGM
Forms of Proxy 11.00 a.m. 29 September
Latest time and date for receipt of EGM
Forms of Proxy 11.10 a.m. 29 September
Latest time and date for receipt of completed
Application Forms and payment in full in respect
of the Open Offer 3.00 p.m. 30 September
Annual General Meeting 11.00 a.m. 1 October
Extraordinary General Meeting 11.10 a.m. 1 October
Dealings commence on AIM in the new Shares 7 October
Definitive share certificates for the new
Shares despatched by 14 October
Preliminary Results for the year ended 30 June 1998
Chairman's Statement
I am delighted to be able to report on a year that has been both exciting
and tremendously rewarding and reflects not only a number of successful
corporate acquisitions concluded during the 12 months to 30 June 1998, but
also a high level of organic growth in all businesses.
Hercules' activities have been expanded through the acquisition or more
than #12 million of complementary business since the beginning of June
1997. These acquisitions have helped fuel investor interest in Hercules -
reflected in a near 55% share price growth - and an impressive profits
growth - demonstrating the synergy of the strategic acquisition programme,
and the growth in all divisions.
For the period under review profits before tax more than tripled to #2.65
million compared with the #853,000 reported for the 15 months to 30 June
1997. It is a pleasure to report that this leap in pre-tax profits is not
solely due to the acquisitions but also to the healthy progress of the
existing Group companies. All the companies owned at the start of the
year contributed higher than forecast profits.
As an example of this, Heritage's operating profit has risen from
#534,000 in the 15 months ended June 1997 to #1.02 million in the current
year and likewise Harman Healy's operating profit has almost doubled
from #213,000 to #416,000 over the same period comparison.
As a result, earnings per share increased to 29.3p, a 64% rise over last
year's 17.9p. The Board is recommending a final dividend of 4p per
ordinary share which makes a total for the year of 5p a share, an increase
of 67% over last year's 3p a share. The final dividend will be payable
on 4 January 1999 to shareholders on the register as at 4 December 1998.
In the past 12 months we have sought to expand Hercules' range of
activities within the property services area and expect this trend to
continue for the foreseeable future. The acquisitions completed since the
beginning of June 1997 reflect our corporate strategy of ensuring that
there is clear synergy between Hercules' existing businesses and any new
company joining the Group, whilst broadening the range of services
offered, all capable of generating a high quality of income stream.
It is our belief that as true synergy exists between all the Hercules
businesses, there are greater rewards to be reaped and our ability to
increase profits is substantially enhanced.
We believe this philosophy is clearly demonstrated by the acquisitions
completed during the past year. The largest acquisition was that of the
AIM listed property management company DGA which we purchased last July,
for #8.3 million through the issue of 3,285,660 new ordinary Hercules
shares. Based in North West London, DGA specialises in the management
and insurance of residential property on behalf of the freeholder or
residents' association.
In June 1997 we announced the acquisition of a smaller residential
property management and chartered surveying practice, Simmonds. Simmonds
is performing extremely well and is now fully integrated into Hercules.
Last February our residential management activities were further expanded
through the #4 million purchase of the contracted property management
business of Brighton-based PCL. At the same time we acquired a 51%
shareholding in Waterglen, the company that owns the freeholds of the
flats and houses managed by PCL. By acquiring this majority interest,
we secured the property management and ground rent income stream in
perpetuity.
As a result of acquisitions made over the past year Hercules is now
responsible for the management of in excess of 18,000 flats and houses
as well as providing a range of professional property services.
In addition to these acquisitions it is worth noting that we also
purchased the minority interest in our auctioneers Harman Healy previously
owned by Jonathan Radgick and we acquired the property insurance book of
DAH Insurance Services Limited for #40,000 cash.
While activity has been vibrant on the corporate front, I would like to
emphasise that our existing businesses have all performed well during the
year with Harman Healy achieving record auction sales averaging more than
#10 million per auction while our property insurance company, Heritage,
now secures insurance cover for more than #2 billion of property, and
continues to enjoy strong growth.
Over the past year the bias of our acquisition programme has been towards
the residential sector of the property market. Partly to redress the
balance, but, more importantly, to open up new areas of activity for the
Group we have today announced details of an #5.77 million placing and open
offer and the proposed acquisition of the long established commercial
property surveying firm of Dunlop Heywood & Co. Limited for #5 million.
Based in Manchester and London, Dunlop Heywood & Co. Limited operates in
all the main aspects of commercial property surveying including
professional services, such as valuation and portfolio management, agency,
investment and property management activities. I believe this is a very
exciting addition to our range of property services and will create
further opportunities to enhance profitability through cross-selling
with other members of the Hercules Group.
Now that all the past year's purchases have been successfully integrated
into Hercules and all the Group companies are trading profitably, the
latest acquisition looks set to take us into the next stage of our
development. Against this background I firmly believe the future for
Hercules continues to look extremely bright and I regard prospects for
further expansion of profitability as being very encouraging.
Larry Lipman 8 September 1998
Chairman
Review of Operations
Last year saw the Group's greatest period of expansion since gaining its
AIM listing in May 1996 with the acquisition of two companies, a majority
stake in a third, and the business activities of a further two companies.
Our total expenditure since the beginning of June 1997 amounts to in
excess of #12 million including the purchase of the minority interest
in Harman Healy, our auctioneering subsidiary.
It is pleasing to report that despite the increased level of activity we
have successfully integrated all these new businesses into Hercules and
that they are enjoying strong growth independently whilst exploiting
profit potential as a result of cross-selling thus ensuring that,
wherever possible, the maximum level of profit remains within the Group.
HARMAN HEALY
Auctioneers, Commercial Property Managers, Valuers and Surveyors
Harman Healy remains one of the country's leading commercial property
auctioneers and during the last year the firm has benefited from the
increase in commercial property activity. There has been a substantial
uplift in the number of lots offered at auction, from 420 to 512, while
auction sales have averaged more than #10 million per auction during the
year. In turn the fee income generated from the auctions has risen by
over 25% to in excess of #1 million compared with #799,000 for the 15
month period to 30 June 1997.
Although it is better known for its auctions, Harman Healy also has a
thriving management and professional practice. These areas have grown
well during the year, as the firm has been able to attract new clients
as well as servicing the needs of its existing customer base.
Through its increased level of auction activity, Harman Healy has been
able to introduce new business not only to its own divisions but also to
other parts of the Group such as Heritage.
The other major event at Harman Healy was the purchase by Hercules of
Managing Director, Jonathan Radgick's outstanding 25% minority interest.
HERITAGE
Property Insurance Intermediary
From incorporation less than five years ago it is pleasing to be able to
report that over the past year the amount of property for which Heritage
secures insurance cover has passed through the #2 billion barrier. This
is more than twice the level we reported a year ago and reflects the
amount of progress we have been able to make on this side of our business.
Clearly Heritage's performance, in part, demonstrates the benefits of our
acquisition programme. Approximately 50% of the uplift in the amount of
property insured derived from the DGA and PCL acquisitions. The
remainder, amounting to about #550 million of property, has come
from existing inter-group referrals and new clients.
SIMMONDS
Chartered Surveyors, Valuers and Residential Managing Agents
Acquired in June 1997, Simmonds is a highly focused chartered surveying
practice that specialises in managing blocks of flats and associated
professional services such as valuation. Although a relatively small
acquisition, Simmonds has been able to take on all the professional work
generated by DGA thereby demonstrating the synergy of our acquisition
programme.
During the year the firm has increased its own client base and has
taken on the management of additional residential buildings as well
as generating new professional services business.
DGA
Residential Ground Rent Managing Agents and Surveyors
Primarily a ground rent manager, DGA became part of the Group in September
1997. It manages more than 13,000 residential units and as a result is a
leading name in residential ground rent management.
DGA's activities were further enhanced in February through the acquisition
of the business of PCL which manages the ground rents of approximately
4,100 residential units. PCL's business has now been amalgamated with DGA
with the consequent saving of overheads. At the same time there has been
a continuous stream of new instructions.
As part of DGA's expansion plans, the firm has moved into new and larger
premises. In addition, there has been an investment in the latest
available computer hardware and software as the company strives to
maintain efficiency and effectiveness.
Although the rate of expansion has been dramatic over the past year it is
the ability of all the companies in the Group to do business with each
other that is both exciting and pleasing. It is the level of inter-group
activity which, we believe, demonstrates the benefits of our acquisition
programme as well as the high degree of true synergy between all the
companies within the Group.
Consolidated Profit and Loss Account
Year ended Year ended Year 15 months
30 June 1998 30 June ended ended
(continuing 1998 30 June 30 June
operations) (acquisitions) 1998 1997
#'000 #'000 #'000 #'000
Turnover 4,691 2,404 7,095 2,699
Cost of sales (1,699) (312) (2,011) (929)
_______ _______ _______ _______
Gross Profit 2,992 2,092 5,084 1,770
Administrative expenses (1,566) (802) (2,368) (954)
_______ _______ _______ _______
Operating profit 1,426 1,290 2,716 816
Interest receivable and
similar income 153 50
Interest payable and similar charges (219) (13)
_______ _______
Profit on ordinary activities before taxation 2,650 853
Tax on profit on ordinary activities (886) (305)
_______ _______
Profit on ordinary activities after taxation 1,764 548
Equity minority interest (19) (76)
_______ _______
Profit for the financial year/period 1,745 472
Equity dividends (338) (99)
_______ _______
Retained profit for the financial year/period 1,407 373
======= =======
EARNINGS PER ORDINARY SHARE 29.3p 17.9p
======= =======
Consolidated Balance Sheet
1998 1997
#'000 #'000
Fixed Assets
2,754 507
Tangible fixed assets - 394
_______ _______
Gross Profit 2,754 901
_______ _______
Current Assets
Work in progress - 34
Debtors 2,524 545
Cash at bank and in hand 1,741 496
_______ _______
4,265 1,075
Creditor: amounts falling due within one year (3,702) (919)
_______ _______
Net Current Assets 563 156
_______ _______
Total Assets less Current Liabilities 3,317 1,057
Creditor: amounts falling due after more than one year (4,915) (231)
Provisions for Liabilities and Charges (310) (250)
Equity minority interest (186) (74)
_______ _______
NET (LIABILITIES)/ASSETS (2,094) 502
======= =======
Capital and Reserves
Called up equity share capital 339 165
Share premium account 10,244 1,621
Profit and loss account 1,912 505
Merger reserve (1,339) (1,339)
Goodwill reserve (13,250) (450)
_______ _______
EQUITY SHAREHOLDERS' (DEFICIT)/FUNDS (2,094) 502
Consolidated Cash Flow Statement
Year 15 Months
ended ended
30 June 30 June
1998 1997
#'000 #'000
Cash inflow from operating activities 2,292 1,067
Returns on investments and servicing of finance (66) 37
Taxation paid (245) (74)
Capital expenditure and financial investment (165) (847)
Acquisitions and disposals (4,166) (274)
Equity dividends paid (165) (75)
_______ _______
Cash outflow before financing (2,515) (166)
Financing 3,760 277
_______ _______
INCREASE IN CASH IN THE YEAR/PERIOD 1,245 111
======= =======
Notes to the statement for the year ended 30 June 1998
1. The above results for the year ended 30 June 1998 are an abridged
version of the Group's statutory financial statements which have not
been filed with the Registrar of Companies. The balance sheet, profit
and loss account and cashflow statement do not constitute statutory
statements within the meaning of Section 240 of the Act.
The results for the 15 months ended 30 June 1997 have been extracted
from the financial statements for that period which have been delivered
to the Registrar of Companies and on which the auditors have given an
unqualified report.
2. Earnings per share
Basic earnings per share of 29.3p (1997-17.9p) are based on the profit
for the financial year of #1,745,000 (1997: #472,000) and on 5,959,712
ordinary shares (1997: 2,630,751 ordinary shares) being the weighted
average number of shares in issue throughout the year.
3. Segmental Analysis
The analysis of turnover, profit on ordinary activities before taxation
and net assets attributable to the different classes of the Group's
business all of which were carried out in the United Kingdom after
consolidation adjustments were as follows:
Year Ended 15 Months Ended
30 June 1998 30 June 1997
#'000 #'000
Turnover
Management services 2,901 218
Insurance 3,014 1,642
Auctions 1,074 799
Other 106 40
_______ _______
7,095 2,699
Profit on ordinary activities before taxation
Management services 1,397 79
Insurance 1,076 753
Auctions 445 113
Other (268) (92)
_______ _______
2,650 853
_______ _______
Net assets/(liabilities)
Management services (2,210) 402
Insurance 943 52
Auctions 584 140
Other (1,411) (92)
_______ _______
(2,094) 502
_______ _______
4. Reconciliation of movements in shareholders' funds
1998 1997
#'000 #'000
Profit for the year 1,745 472
Dividends (338) (99)
_______ _______
1,407 373
Other recognised gains and losses - -
Issue of shares 9,014 553
Acquisition/merger expenses written off (217) (191)
Goodwill written off (12,800) (450)
Net (reduction in)/addition to equity
shareholders' funds (2,596) 285
Opening shareholder's funds 502 217
_______ _______
Closing equity shareholders' funds (2,094) 502
_______ _______
5. Equity Dividends
Year ended Year ended
30 June 1998 30 June 1997
#'000 #'000
Interim equity dividend paid of
1p per share (1997: nil p) 66 -
Final proposed equity dividend of
4p per share (1997: 3p) 272 99
_______ _______
338 99
_______ _______
ANNOUNCEMENT
Copies of this announcement will be available to the public, free of
charge, from the offices of Guinness Mahon & Co. Limited, 32 St Mary
at Hill for a period of 14 days from the date of publication.
DEFINITIONS
The following definitions apply throughout this announcement, unless
the context otherwise requires:
"Acquisition" the proposed acquisition of the business
and assets of Dunlop Heywood by a wholly-
owned subsidiary of the Company,
pursuant to the Acquisition Agreement
"Acquisition Agreement" the conditional agreement made on 7
September, 1998 for the purpose of the
Acquisition
"Act" the Companies Act 1985 (as amended)
"Admission" the admission of the new Shares to
trading on AIM becoming effective in
accordance with Chapter 16 of the Rules
of the London Stock Exchange Limited
"AIM" the Alternative Investment Market of
the London Stock Exchange
"Annual General Meeting" the annual general meeting of the
or "AGM" Company convened to be held at
11.00 a.m. on 1 October, 1998, notice
of which is set out in the report and
accounts of the Company for the year
ended 30 June, 1998
"Application Form" the application form relating to the
Open Offer being sent to Qualifying
Shareholders
"Company" or "Hercules" Hercules Property Services PLC
"DGA" David Glass Associates plc
"Directors" or "Board" the directors of Hercules
"Dunlop Heywood" Dunlop Heywood & Co. Limited
"Enlarged Group" the Group as enlarged by the Acquisition
"ESOP" the Employee Share Ownership Plan to be
constituted at completion of the
Acquisition by Hercules in accordance
with the Acquisition Agreement
"ESOP Shares" the 250,000 new Shares to be issued to
the ESOP Trustees at the Issue Price
"ESOP Trustees the Trustees of the ESOP
"Existing Shares" the 6,732,896 Shares in issue as at of
the date of this document
"Extraordinary General Meeting" the extraordinary general meeting of
or "EGM the Company convened to be held on 1
October, 1998
"Group" Hercules, its subsidiaries and it's
subsidiary undertakings
"Guinness Mahon" Guinness Mahon Co. Limited
"Harman Healy" Harman Healy Limited
"Hercules Share Option Scheme" the Hercules Property Services PLC 1996
Unapproved Executive Share Option Scheme
"Heritage" Heritage Insurance Services Limited
"HPS" HPS Property Limited, the immediate
holding company of Heritage, Harman
Healy and Resolute Property Management
Limited
"Issue Price" 300p per new Share
"new Shares" together the 2,173,679 Shares to be
issued pursuant to the Placing and Open
Offer and the ESOP Shares
"Open Offer" the conditional open offer by Guinness
Mahon on behalf of the Company to
Qualifying Shareholders of the Open
Offer Shares at the Issue Price and on
the terms and conditions set out in the
prospectus of the Company due to be sent
to Shareholders later today and in the
Application Form
"Open Offer Shares" up to 1,923,679 new Shares which are to
be made available to Qualifying
Shareholders pursuant to the Open Offer,
and which have been conditionally placed
by Guinness Mahon pursuant to the Placing
"PCL" Property Connection Limited
"Placing" the conditional placing by Guinness
Mahon on behalf of Hercules of the Open
Offer Shares at the Issue Price,
pursuant to the Underwriting Agreement,
subject to full clawback under the terms
of the Open Offer
"Proposals" the Acquisition, the Placing and
Open Offer and the allotment of the ESOP
Shares
"Qualifying Shareholders" holders of Shares on the register of
members of Hercules on the Record Date
(except for certain overseas
shareholders)
"Record Date" the close of business on 28 August, 1998
"Shareholders" the holders of Shares
"Shares" ordinary shares of 5p each in the
capital of Hercules
"Simmonds" Simmonds & Partners Limited
"Underwriting Agreement" the agreement relating to the Placing
and Open Offer
CONTACT:
Hercules Property Services PLC Tel: 0181-203 9099
Larry Lipman, Chairman
Guinness Mahon & Co. Limited Tel: 0171-623 9333
Jagjit Mundi, Director
Baron Phillips Associates Tel: 0171-224 1302
Baron Phillips
END
COMGRGBCDSGCCII
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