12th Jun 2007 07:01
Humberts Group PLC12 June 2007 12 June 2007 Humberts Group PLC ("Humberts" or "the Group") Interim results show benefit of strong organic growth and successful acquisition programme Humberts (AIM: HUM), the national group of full service estate agents andvaluers, announces interim results for the six months ended 31 March 2007. Financial Highlights:• Group turnover rose 176% to £13.6 million (2006: £4.9 million)• Like-for-like sales from existing operations grew 21% to £5.9 million (2006: £4.9 million)• Profit before taxation up 315% to £1.6 million (2006: £0.39 million)• Underlying* profit before tax up 207% to £2.1 million (2006: £0.68 million)• Fully diluted earnings per share up 154% to 2.11 pence (2006: 0.83 pence)• Underlying* diluted earnings per share up 92% to 2.77 pence (2006: 1.44 pence)• Maiden interim dividend of 0.7 pence per share • New £10 million bank facility being finalised, providing additional resources to continue acquisition strategy *Underlying figures adjusted for FRS20, exceptional items, amortisation ofgoodwill and notional interest on deferred acquisition consideration. Operational Highlights:• Earnings enhancing acquisition strategy has brought branch numbers to 69 (2006: 40) and increased market share• Humberts continues to establish itself as a market leading national brand• Successful ongoing integration of new businesses• Strong pipeline of potential acquisitions Post Period Events • Acquisition of The Gale and Dunn Partnership, a Kent and Sussex based architect's practice• Position in London residential market strengthened with the acquisition of Wellingtons• Strong pipeline of instructions for summer months Max Ziff, chief executive, commented, "Humberts moves into the key summertrading months with strong pipelines. There has been minimal adverse impact fromthe proposed new Home Information Pack legislation, or the increases in interestrates. If trading continues as currently expected we should report yet anotherset of strong results for the full year. Furthermore, we have a significantpipeline of possible acquisitions, having agreed the heads of terms with anumber of businesses, which we expect to have a significant earnings enhancingimpact on the business going forward." Humberts Group plc: Tavistock Communications:Max Ziff, chief executive officer Richard SunderlandNigel Cartwright, chief financial officer Rachel Drysdale020 7318 1273 020 7920 3150 [email protected] Chairman's Statement During the first half of our current financial year to 31 March 2007, we have continued to make solid progress in establishing Humberts as a market leader in its chosen fields and in building a diversified property services group. In addition to our core Residential Sales and Lettings divisions, we continue to grow our business in our other key New Homes, Rural, Commercial and Professional divisions which provide us with a diverse range of products which we can offer to our clients. We continue to make earnings enhancing acquisitions of profitable businesses which will benefit from the synergies associated with being part of a larger group and a strong brand presence. This strategy has seen us grow from 40 offices, at this time last year, to 65 at the end of the period and 69 today. At the same time, we are successfully integrating these new businesses in to the Group, whilst constantly looking at ways in which we can improve performance and organic growth. The Group's unaudited results for the six months to 31 March 2007 underline the progress we have made. Group turnover rose 176% to £13.6 million (2006: £4.9 million), producing an underlying profit before tax which was up 207% over the same period last year to £2.1 million (2006: £0.68 million). Humberts underlying turnover also grew, with like-for-like sales from existing operations growing 21% to £5.9 million (2006: £4.9 million). We have also seen significant contributions from acquired businesses which gives us confidence in the Group's full year performance assuming the summer trading months are in line with expectations. Underlying Diluted Earnings Per Share were up 92% to 2.77 pence (2006: 1.44 pence) and we are delighted to be able to announce the introduction of an interim dividend of 0.7 pence per share, which underlines our continued confidence in the Group's future. This will be paid on 23 August 2007 to shareholders on the register on 22 June 2007. Our balance sheet remains strong with currently over £8 million of cash, and we are currently finalising the implementation of a new £10 million bank facility, providing additional resources to continue our growth strategy. These results show the benefits of the ongoing development of the Humberts brand, which allows us to continue to gain market share and improve profitability which is further enhanced following the re-branding exercise we have undertaken and the extensive refurbishment programme of all the offices across our network. During the period we completed 11 acquisitions totalling 21 offices: • October 2006 Blenheim Bishop Limited in Mayfair, London, a residential and land and new homes development business • October 2006 BTF Lister, a Kent based rural and commercial practise with a residential lettings business in Canterbury and Benenden • October 2006 the Humberts franchise in Worcester and Malvern • October 2006 Calcutt Maclean Standen, West Kent, a residential estate agency business operating in Cranbrook and Rye • November 2006 Calcutt Maclean Standen, East Kent, a residential estate agency business operating in Canterbury and Wye • November 2006 Calcutt Maclean Standen Fine Art Limited, a fine art auction house operating in Kent and the surrounding areas • November 2006 CMS Lettings Limited, a residential lettings business incorporating Mulberry Cottages Limited, specialising in holiday cottage lettings • January 2007 Harveys Chartered Surveyors, a residential estate agency business operating from Truro in Cornwall • January 2007 the Humberts franchise in Chichester • February 2007 the Humberts franchises in Grantham, Lincoln, Newark, Nottingham, Melton Mowbray and Stamford • March 2007 Spencer Ridley Property Ltd, a lettings business operating in Hawkhurst, Kent ------------------------------------------------------------------------------- Post-period acquisitions:-------------------------------------------------------------------------------• April 2007 Wellingtons, a residential sales and lettings business with three offices in South West London • April 2007 The Gale and Dunn Partnership Ltd, an architectural practice in Rye, East Sussex • May 2007 the Humberts franchise in Horsham The Group is in advanced negotiations with a number of businesses across the UK which we expect to put us firmly on track to reach our target of at least 90 offices by December 2007 and we already have scalable systems in place to augment the Group beyond this number. Through our strategic acquisition programme, we have created and continue to develop a leading national brand with exceptional local insight and presence. Each new acquisition must fulfil stringent criteria and systematically extend or consolidate our geographic reach. New Humberts branches, and in turn the Group, can therefore benefit from reduced overheads over time through the centralisation of administrative, IT, marketing and other functions. Residential MarketsWe experienced a strong performance across the business during the first four months of the year, to the end of January, followed by the usual slowing off of business in February and March in line with seasonal expectations. Activity levels in April and May were a little slower than expected, perhaps as a result of the very strong performance through the Christmas period. However we move in to June with a solid pipeline of agreed deals and a strong register of properties available for sale. Our new systems, which we continue to roll-out across our recent acquisitions,allow us to monitor the performance of our branches within the residentialdivision on a daily basis. This leaves us well placed both to deal with anyissues that may arise almost instantly and to observe trends in the market as afunction of external factors. From the data we have obtained, we have created the Humberts Activity Indexwhich allows us to compare the number of instructions received and exchangeswhich have taken place, directly with the changes to interest rates. SinceOctober 2006, when we began collecting the information, the data has underpinnedour belief that, due to the low level of gearing in the mid to prime end of themarket in which we operate, interest rates have had little, if any, negativeimpact on our business. As the Company grows and data is obtained from more branches, we expect theHumberts Activity Index to be an increasingly useful tool for trackingperformance and monitoring trends against external factors. HIPSThe situation regarding HIPS has been well documented and, as a Group, we are prepared for their introduction, whether in August or at a later stage. Our view is that the restriction in scope of HIPs to properties with four bedrooms or more, which is currently being tabled, is likely to ensure a minimal impact on the property market as a whole. Rural MarketsLand values are moving towards an all time high, having increased by 18% during the second half of 2006. This has been driven by a diverse purchaser profile incorporating lifestyle and farm buyers from the UK and overseas, together with those investing for tax reasons. This increase coincides with the strategic growth of Humberts' Rural Division across the UK, including a newly established Farm and Estates' Sales team at our Humberts Mayfair office. Commercial MarketsOur commercial division continues to experience a strong investment market, caused largely by a limited supply of quality stock, although the rise in interest rates is beginning to fuel concerns that values may not rise as precipitously as has been seen recently. The occupational sector continues to be active with particular strength in letting activity coming from owner occupiers seeking to buy premises. This division is especially busy undertaking professional work, such as valuations, management, rent reviews and lease renewals and will continue to expand our expertise and geographic offering in this area through both acquisition and organic growth. Land & New HomesThe market for land remains exceptionally strong, being driven by equity and debt from both the UK and overseas and, in particular, Ireland, where a burgeoning property market is producing surplus cash which is being heavily invested in development transactions. The new homes market is still underpinned by investors, with rising prices causing potential first time buyers to rent. The markets in Central London and emerging locations are still very buoyant, despite some cooling outside prime locations. Humberts currently has a potential pipeline of 3,000 new homes with a gross development value of in excess of £500 million in London and the South of England. Current Trading and OutlookSince the end of the period, we have acquired The Gale and Dunn Partnership, a Kent and Sussex based high-end architect's practice, in line with our strategy of diversifying our revenue streams and expanding our overall offering. Additionally, we have strengthened our position in the London residential estate agency market through the acquisitions of Wellingtons estate agents. We expect these acquisitions to be earnings enhancing in the current year. Traditionally the summer months of June through until September have contributed significant revenues across our business areas, and, whilst it is too early to make predictions, if trading continues as currently expected during the summer months, we should produce yet another set of strong figures for the full year to 30 September 2007. Timothy JamesChairman12 June 2007 Group profit and loss account (Restated) (Restated) Six months Year ended ended 30 September 31 March 2006 Six months ended 31 March 2006 (Unaudited) (Unaudited) (Audited) Notes Continuing Acquisitions Total Total Total operations £'000 £'000 £'000 £'000 £'000-----------------------------------------------------------------------------------------------Turnover 2 9,744 3,875 13,619 4,935 13,580----------------------------------------------------------------------------------------------- Staff costs 3 (5,516) (1,804) (7,320) (2,790) (7,164)Administrative and establishment expenses (3,216) (1,217) (4,433) (1,643) (4,715) Exceptional operating costs (90) (6) (96) (178) (428) Depreciation of tangiblefixed assets (244) (17) (261) (44) (212) Amortisation of goodwill (57) - (57) (52) (109)-----------------------------------------------------------------------------------------------Total operating costs (9,123) (3,044) (12,167) (4,707) (12,628)-----------------------------------------------------------------------------------------------Operating profit 621 831 1,452 228 952Profit on sale of fixed - - - - 144 asset investmentNet interest receivable and similar items 4 203 (56) 147 157 347----------------------------------------------------------------------------------------------- Profit on ordinary activities before tax 824 775 1,599 385 1,443 Tax on profit on ordinary activities 5 (249) (238) (487) (103) (409)----------------------------------------------------------------------------------------------- Profit for the financial year 10 575 537 1,112 282 1,034=============================================================================================== Earnings per share -basic 7 2.20p 0.84p 2.84p -diluted 7 2.11p 0.83p 2.82p=============================================================================================== Statement of group total recognised gains and losses (Restated) (Restated) Six months ended Six months ended Year ended 30 31 March 2007 31 March 2006 Sept 2006 (Unaudited) (Unaudited) (Audited) Notes Total Total Total £'000 £'000 £'000-------------------------------------------------------------------------------------------------------Profit for the period 1,112 282 1,034------------------------------------------------------------------------------------------------------- Unrealised surplus on revaluationof properties 10 50 - --------------------------------------------------------------------------------------------------------Total recognised gains for the period 1,162 282 1,034------------------------------------------------------------------------------------------------------- Prior period adjustment- FRS 20 (142)-------------------------------------------------------------------------------------------------------Total gains recognised since last annual report 1,020======================================================================================================= Group balance sheet (Restated) (Restated) 31 March 2007 31 March 2006 30 Sept 2006 Notes (Unaudited) (Unaudited) (Audited) £'000 £'000 £'000Fixed assets Intangible fixed assets 8 24,688 7,239 13,550Tangible fixed assets 2,600 1,002 1,227Investments - 25 ---------------------------------------------------------------------------------------------------------- 27,288 8,266 14,777--------------------------------------------------------------------------------------------------------- Current assetsDebtors 6,349 2,206 4,123Cash at bank and in hand 10,693 9,551 7,584--------------------------------------------------------------------------------------------------------- 17,042 11,757 11,707Creditors: amounts falling due within one year (6,833) (1,779) (4,394)---------------------------------------------------------------------------------------------------------Net current assets 10,209 9,978 7,313---------------------------------------------------------------------------------------------------------Total assets less current liabilities 37,497 18,244 22,090 Creditors: amounts falling due aftermore than one year (1,553) (373) (301) Provision for liabilities and charges (4,061) (2,421) (4,202)--------------------------------------------------------------------------------------------------------- 31,883 15,450 17,587 Capital and reservesCalled up share capital 9 2,848 2,870 2,953Share premium account 10 18,011 7,093 8,051Other reserves 10 4,474 370 595Profit and loss account 10 6,550 5,117 5,988---------------------------------------------------------------------------------------------------------Shareholders' funds 31,883 15,450 17,587--------------------------------------------------------------------------------------------------------- Group cash flow statement (Restated) Six months ended Six months ended Year ended Notes 31 March 2007 31 March 30 September 2006 2006 (Unaudited) (Unaudited) (Audited) £'000 £'000 £'000 Cash inflow from operating activities 11 624 550 1,380---------------------------------------------------------------------------------------------------------Returns on investments and servicing of finance 221 148 347---------------------------------------------------------------------------------------------------------Taxation (207) - (217)---------------------------------------------------------------------------------------------------------Capital expenditurePurchase of tangible fixed assets (944) (42) (355)Sale of tangible fixed assets 3 4 4--------------------------------------------------------------------------------------------------------- (941) (38) (351)---------------------------------------------------------------------------------------------------------AcquisitionsPurchase of subsidiary undertakings (6,719) (2,502) (5,570)Net cash/ (overdraft) acquired with subsidiaries 202 (554) 168 Sale of fixed asset investment - - 169--------------------------------------------------------------------------------------------------------- (6,517) (3,056) (5,233) Equity dividends paid (788) (259) (259)---------------------------------------------------------------------------------------------------------Net cash outflow before financing (7,608) (2,655) (4,333)---------------------------------------------------------------------------------------------------------FinancingIssue of share capital 10,935 7,522 7,533Purchase of own shares (95) - (200)Capital element of finance lease payments (123) (4) (103)--------------------------------------------------------------------------------------------------------- 10,717 7,518 7,230---------------------------------------------------------------------------------------------------------Increase in cash in the period 3,109 4,863 2,897--------------------------------------------------------------------------------------------------------- Notes to the interim report 1 Basis of preparation This interim report, which has been neither audited nor reviewed by theCompany's auditors, was approved by the board of directors on the 11 June 2007.It has been prepared following the accounting policies set out in the Group 2006Annual Report and Accounts except for the adoption of Financial ReportingStandard 20 (FRS 20), "Share-based payment". The impact of first time adoptionof FRS 20 is detailed in notes 3 and 5 and the comparatives have been restatedaccordingly. Due to its material nature, deferred consideration has been discounted andnotional interest charged during the period (see note 4). The 2006 annual report and accounts received an unqualified auditors' report andhas been filed with the registrar of companies. 2 Segmental reporting All turnover arose in the UK. Turnover was generated on a divisional basis asfollows: Six months ended Six months ended Year ended 31 March 2007 31 March 2006 30 Sept 2006 (Unaudited) (Unaudited) (Audited) £'000 % £'000 % £'000 %---------------------------------------------------------------------------------------------Residential sales 7,598 56 2,473 50 7,898 58Professional and commercial 1,791 13 918 19 2,211 16servicesRural services 1,389 10 807 16 1,571 12New homes and land services 989 7 - - - -Lettings services 1,351 10 439 9 1,083 8Financial services 71 1 298 6 817 6Fine arts 95 1 - - - -Other services 335 2 - - - ---------------------------------------------------------------------------------------------- 13,619 100 4,935 100 13,580 100--------------------------------------------------------------------------------------------- 3 Staff costs (Restated) (Restated) Six months ended Six months ended Year ended 31 March 2007 31 March 2006 September 2006 (Unaudited) (Unaudited) (Audited) £'000 £'000 £'000 Staff costs before FRS 20 charge 7,082 2,722 6,981Share-based payment (FRS 20) 238 68 183-------------------------------------------------------------------------------- 7,320 2,790 7,164-------------------------------------------------------------------------------- 4 Interest (Restated) (Restated) Six months ended Six months ended Year ended 31 March 2007 31 March 2006 30 September 2006 (Unaudited) (Unaudited) (Audited) £'000 £'000 £'000 Interest receivable 261 153 359Interest payable and similar charges (114) (6) (12)-------------------------------------------------------------------------------- 147 147 347-------------------------------------------------------------------------------- Included in interest payable is a notional interest charge of £110,000 on thediscounted deferred consideration. 5 Taxation The tax assessed in the period is at the expected effective rate of corporationtax in the UK of 30% (2006: 28%). A deferred tax asset has been created against the share-based payment chargewhich has resulted in a reduction in the tax charge of £71,000 (2006: £60,000). 6 Dividends The directors propose an interim dividend of 0.7 pence per share in respect ofthe period ending 31 March 2007. It will be paid on 23 August 2007 toshareholders who are on the register of members at the close of business on 29June 2007. No interim dividend was paid for 2006. The decision with regard to the payment of a final dividend in respect of theyear ending 30 September 2007 will be taken once the results for that period areagreed. The final dividend for 2006 of 1.4 pence per share was paid in March2007 (see note 10). 7 Earnings per share Reported earnings per share (Restated) (Restated) Six months ended Six months ended Year endedOrdinary shares of 5p each 31 March 2007 31 March 2006 30 Sept 2006 (Unaudited) (Unaudited) (Audited) £'000 £'000 £'000 Profit attributable to shareholders 1,112 282 1,034 Number ('000) Number ('000) Number ('000) Weighted average number of shares 50,656 33,580 36,463Dilutive effect of share options 1,729 346 333Dilutive effect of warrants and loan notes 417 46 46Diluted weighted average number of shares in issue 52,802 33,972 36,842--------------------------------------------------------------------------------------------------- Reported earnings per shareBasic earnings per share 2.20p 0.84p 2.84pDiluted earnings per share 2.11p 0.83p 2.81p--------------------------------------------------------------------------------------------------- Prior year earnings and the dilutive effect of share options have been restatedin line with first time adoption of FRS 20,"Share-based payments" (see note 3). Adjusted earnings per share before FRS 20 (Restated) (Restated) Six months ended Six months ended Year endedOrdinary shares of 5p each 31 March 2007 31 March 2006 30 Sept 2006 (Unaudited) (Unaudited) (Audited) £'000 £'000 £'000 Adjusted profit attributable to shareholders 1,279 330 1,162 Number ('000) Number ('000) Number ('000) Weighted average number of shares 50,656 33,580 36,463Dilutive effect of share options 1,972 543 549Dilutive effect of warrants and loan notes 417 46 46Diluted weighted average number of shares in issue 53,045 34,169 37,058 Adjusted earnings per shareAdjusted basic earnings per share 2.52p 0.98p 3.19pAdjusted diluted earnings per share 2.41p 0.96p 3.14p--------------------------------------------------------------------------------------------------- 8 Acquisitions The Group purchased 11 businesses during the period (See Chairman's Statement)for a total consideration of £11.2m. An analysis of the provisional fair value ofall the assets acquired and provisional consideration is presented below. Book value Adjustments Provisional Fair value £'000 £'000 £'000 Fixed assets 355 (112) 243Debtors 2,174 (763) 1,411Cash 250 - 250Overdraft (33) - (33)Other creditors (2,159) 277 (1,882)--------------------------------------------------------------------------------Net assets 587 (598) (11) Goodwill 11,163 Consideration 11,152--------------------------------------------------------------------------------Consideration satisfied by:Shares issued 1,424Cash 5,147Associated costs 380Deferred share consideration 716Deferred cash consideration 1,532Contingent consideration 1,953-------------------------------------------------------------------------------- 11,152-------------------------------------------------------------------------------- The adjustments mainly relate to the write down of fixed assets (£112,000) andthe change in policy of recognising new homes and land revenue (£763,000) with aresulting downward adjustment to corporation tax liability (£254,000). Finally, there was an adjustment to reflect the fact that there was not anobligation under finance lease agreements relating to a number of motor vehicles(£23,000). There is no amortisation of goodwill on the basis that, in the opinion of thedirectors, it has an indefinite life. 9 Share capital Six months ended Six months ended Year ended 31 March 2007 31 March 2006 30 Sept 2006 (Unaudited) (Unaudited) (Audited) £'000 £'000 £'000 Ordinary shares of 5p eachBalance at beginning of period 2,013 1,176 1,176Issue of shares 803 754 837Transfer from shares to be issued reserve 32 - -Balance at end of period 2,848 1,930 2,013 Deferred shares of 20p eachBalance at beginning of period 940 940 940Cancellation of shares (940) - -Balance at end of period - 940 940 Total share capital 2,848 2,870 2,953------------------------------------------------------------------------------------------------ On 12 December 2006, 14,213,310 ordinary shares of 5p each were issued fullypaid for cash at 80p per share. The share premium arising of £10.7m has been credited to the share premiumaccount. In addition 1,651,793 ordinary shares of 5p each were issued as part ofthe purchase consideration for acquisitions conducted during the period. There were 643,940 ordinary shares of 5p issued at 66p per share in respect ofthe purchase of the CJ Hole group of companies. This had already been providedfor in the shares to be issued reserve. The premium arising of £393,000 has beencredited to the merger reserve account. During the period, all 4,700,000 deferred shares of 20p each were cancelled andthe equity transferred to a capital contribution reserve. 10. Reserves Capital Shares to Own share Non- Profit Share Merger contribution Warrant Revaluation be issued purchase distributable and loss premium reserve reserve reserve reserve reserve reserve reserve account £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000---------------------------------------------------------------------------------------------------------------------- At 1 October 2006As previouslyreported 8,051 - - 60 50 485 (200) 200 5,928Prior yearadjustment (see note 3) - - - - - - - - 60---------------------------------------------------------------------------------------------------------------------- As restated 8,051 - - 60 50 485 (200) 200 5,988 Share issuearising on placing 10,660 - - - - - - - - Share issuecosts re placing (485) - - - - - - - - Share issuearising on acquisitions 420 922 - - - - - - - Transfer tomerger reserve (675) 675 - - - - - - - Share issuearising on exercise of share options 40 - - - - - - - - Cancellation of deferred shares(see note 9) - - 940 - - - - - - Employee shareschemes (FRS 20) - - - - - - - - 238 Revaluationof investment properties - - - - 50 - - - - Deferred sharesto be issued inrespect of Humberts Partnership - - - - - 737 - - - Shares issuedin respect of C J Hole (see note 9) - 393 - - - (425) - - - Deferred shareconsideration arising on current year acquisitions - - - - - 681 - - - Purchase of own shares - - - - - - (94) - - Retained profitfor the period - - - - - - - - 1,112 Dividends - - - - - - - - (788)----------------------------------------------------------------------------------------------------------------------As at 31March 2007 18,011 1,990 940 60 100 1,478 (294) 200 6,550---------------------------------------------------------------------------------------------------------------------- 11 Cash flow from operating activities (Restated) (Restated) Six months ended Six months ended Year ended 31 March 2007 31 March 2006 30 Sept 2006 (Unaudited) (Unaudited) (Audited) £'000 £'000 £'000 Operating profit 1,452 228 952Depreciation 261 137 212(Loss)/ profit on disposal of fixed assets - (1) 93Amortisation of goodwill 57 52 109(Increase)/ decrease in debtors (690) (18) (1,275)(Decrease)/ increase in creditors (694) 84 1,106Employee share schemes (FRS 20) 238 68 183-----------------------------------------------------------------------------------------------Net cash from operating activities 624 550 1,380----------------------------------------------------------------------------------------------- 12 Post balance sheet events The Group completed the purchase of the following businesses after 31 March 2007: Business name Consideration Acquisition date Type of business £'000 ---------------------------------------------------------------------------------Wellingtons Estate Agent 2,600 10 April 2007 London residential and lettings agencyGale and Dunn Partnership Limited 1,750 11 April 2007 Architectural practiceHumberts Horsham franchise 120 18 April 2007 Residential estate agency---------------------------------------------------------------------------------- All consideration values included above are based on preliminary informationusing estimates for contingent consideration. 13 Interim Statement A copy of this statement will be sent to shareholders. Additional copies areavailable on request from the Company's registered office: 17 Hanover Square, London, W1S 1HU. This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
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