RNS Number:8226W
Hacas Group PLC
8 January 2001
HACAS
GROUP PLC
FOR RELEASE 7.00 AM 8 JANUARY 2001
HACAS Group PLC ("HACAS")
(The leading UK social housing consultancy with offices in London, Coventry,
Leeds, Edinburgh and Glasgow)
PRELIMINARY RESULTS FOR THE YEAR 30 SEPTEMBER 2000
Highlights
2000 1999 Change
Turnover #6.43m #4.74m +35%
Profit before tax #1.45m #1.13m +28%
Earnings per share (basic) 4.0p 2.90p +38%
Dividend 1.2p 1.1p +9%
Assets per share (basic) 23p 16p +43%
* Core consultancy business shows substantial growth
* Merger with Chapman Hendy Associates completed successfully
* Work on 772 projects (600 in 1999) for 402 clients (275 in 1999) during
the year
- 46% housing associations
- 39% local authorities
- 15% other clients
* HACAS Asset Management Services growing rapidly
* First quarter turnover ahead of same period last year
For further information:
Julian Ashby (Chairman) 020 7609 9491
Derek Joseph (Managing Director) 020 7609 9491
Oliver Scott (Peel Hunt) 020 7418 8900
Background note:
The Market HACAS Chapman Hendy Ltd
The social housing sector is the Group's HACAS Chapman Hendy is the main
primary operating market. The sector operating company providing a wide
comprises housing associations, local range of consultancy and outsourcing
authority and other public sector services to local authorities, housing
housing providers together with the associations and other organisations
related government departments, operating in the social housing
regulators, trade bodies, suppliers and sector.
funders. This sector owns over 25% of
the UK housing stock. As a result of the merger with Chapman
Hendy, the enlarged company is now
Government policy encourages area organized into the following nine
regeneration and substantial investment consultancy teams:
in repairing and modernising local
authority housing. This often involves * Local authority (finance,
the transfer of the local authority's regeneration & transfers)
housing stock to a new or existing * Housing association finance and
housing association and substantial commercial
funding from the commercial loans * Finance Director placements
market. It is anticipated that some #13 * Best value and housing
billion of such funding will be required association (general)
over the next ten years. This is a key * North team (full range of
area of the Group's work. services from Leeds base)
* Asset management services
The HACAS Group and its clients * Human Resources
* Information Technology
The HACAS Group comprises three main * Care
operating companies of which HACAS
Chapman Hendy Ltd is the largest. These Other Group subsidiaries
companies advise over 120 local
authorities including some of the HACAS Exchequer Services Ltd advises
largest (such as Birmingham City housing associations and local
Council). They also advise a majority of authorities on funding and treasury
the largest housing associations. Our management. Exchequer Services
500 most regular housing association obtained SFA registration in June 200
clients hold assets ranging between #50 and is active in the growing stock
million and #1.4 billion. Other clients transfer market and in advising on the
include government departments, Housing refinancing of existing housing debt.
Corporation, Scottish Homes, National Work is currently being undertaken
Audit Office and the Audit Commission. with the National Housing Federation
to provide treasury management
The Group carries out research for training across the social housing
government departments and regulators sector.
and also advises financial institutions,
commercial companies involved in the HCH Scotland Ltd operates from offices
social housing sector, as well as in Glasgow and Edinburgh and provides
Eastern European governments. a wide range of services to Scottish
housing associations, local
authorities and other clients.
The Royal Borough of Kensington and
Chelsea Assured Homes PLC was
established under the Business
Expansion Scheme in 1990. The
Directors have taken advantage of the
strong property market to sell most of
the portfolio. The remaining
properties are on assured short-hold
tenancies and provide a good return on
capital.
Chairman's Statement
We have now completed our second full year of operations since HACAS Group PLC
was listed on AIM in July 1998. The most significant event of the year for us
was the acquisition of Chapman Hendy Ltd in July 2000. Chapman Hendy is the
market leader in local authority housing consultancy. Because of the
significant level of overlap in services provided, Chapman Hendy has been
merged with HACAS Consulting to form HACAS Chapman Hendy. The resulting
company is market leader in the provision of housing related services to both
local authorities and housing associations.
Results
We are happy to report excellent results for the year to 30 September 2000.
All parts of the Group have performed well. The results reflect only two
months of the merger with Chapman Hendy Ltd. Group turnover has increased by
35% to #6.43 million. Profits before tax increased by 28% to #1.45 million and
earnings by 38% to 4.0p per share. In addition, The Royal Borough of
Kensington and Chelsea Assured Homes PLC's property disposals programme
contributed a further 'below the line' profit of #369,111. There has also been
steady underlying growth in the core business.
Dividends
We declared an interim dividend of 0.55p per share in May 2000 and propose a
final dividend of 0.65p per share payable on 12 April 2001 to shareholders in
the register at ii January 2000. This will make a total dividend for the year
of 1.2p per share, an increase of 9%.
Growth, Acquisitions and New Ventures
We continue to expand through organic growth and have welcomed a number of
excellent consultants into the Group. The social housing and local authority
sector (providing around 25% of UK housing) has many small consultancy and
service company providers of which we are now one of the largest. Following
completion of the merger with Chapman Hendy, the Group's strategy is to seek
to acquire other consultancies that extend the work of the Group. We are
currently at an advanced stage of negotiations with a smaller consultancy firm
which has a strong reputation and client base and are hopeful of an early
announcement.
Staffing
Consultancy is a people business and we value our staff highly. The HACAS and
Chapman Hendy teams have coped well with the uncertainties and anxieties that
any merger creates and have integrated successfully. The strong performance in
the year has been due to the supporting efforts of all staff. Most of our
staff are also shareholders and this long term interest in the Group's future
is being strengthened by the operation of our existing share option scheme and
the introduction of the new opportunities for employee share ownership
announced by the government. We thank all members of the Group for their
contribution.
Outlook
The government is continuing with an ambitious regeneration and Best Value
agenda. Housing stock transfers and improvements requiring substantial private
funding are expected to continue. Changes to the local authority financial
framework and proposals for restructuring housing association rents have
created a strong demand for our specialist services. We have also been
undertaking some of the key research which is informing government policies in
these areas. We are at the forefront of a range of regeneration, New Deal and
PFI schemes and advise many authorities on the impact of resource accounting.
In the first three months of the current financial year turnover is ahead of
the same period last year and all parts of the Group are operating profitably.
I am confident that we will be able to maintain good progress through the
year.
Julian Ashby
Chairman
Managing Director's Report
This is my third review as Managing Director of HACAS Group PLC since the
successful completion of the reverse takeover of General Industries PLC in
July 1998 and the acquisition of The Royal Borough of Kensington and Chelsea
Assured Homes PLC in August 1998.
Operations
Throughout 2000 we have achieved sustained growth in all our main operating
areas. The merger of HACAS Consulting with Chapman Hendy to form HACAS Chapman
Hendy has consolidated our position as market leaders with both local
authority and housing association clients. Our research and policy development
roles have been strengthened considerably. Both companies have successful and
talented consultancy teams and the merger has increased our consulting
capacity by over 80%. This is a key strength in a growing market.
We have advised over 100 local authorities on housing stock reinvestment and
transfer options during the year. We have continued to take a lead in the
development of innovative approaches to regeneration. We are involved with New
Deal for Communities schemes, 'pathfinder' PFI schemes and have helped to
establish Urban Regeneration Companies and specialist key worker housing
companies. We have also developed a number of innovative approaches to funding
through special purpose vehicles.
We have undertaken further flagship research work for the Department of
Environment, Transport & the Regions on rent issues which has enhanced our
status. We have also undertaken substantial 'Innovation & Good Practice'
funded research leading to publications that have achieved considerable
prominence in the social housing sector.
Advice and services to commercial companies has seen significant growth during
the year. We provide consultancy and director services to three companies and
have undertaken two 'due diligence' studies. Where we consider the long term
prospects are good, we have taken a strategic investment stake. Our decision
in 1998 to acquire The Royal Borough of Kensington and Chelsea Assured Homes
PLC has been beneficial. During the year we sold 11 properties which
contributed a substantial (but non-recurring) contribution to 'below the line'
profits of #369,111. We will dispose of the remainder of the portfolio as
opportunities arise.
Operating margins are being maintained or improved over all our areas of
activity. Together with a broadening client base, this makes us well placed to
increase turnover and profits. The business generates a strong cashflow and we
now have available balances of around #3.3m. The Group has no borrowings and
bad debts continue at minimal levels.
Range of work
The range of work we undertake within the social housing sector is continuing
to broaden. While housing associations account for the largest percentage of
our work, we have experienced growth in every sector shown. During the year we
completed over 772 projects (600 in 1999) for 402 clients (275 in 1999).
We consider that the diversity of clients within this niche sector is a source
of strength to the Group. Many of the Group's clients that are not either
housing associations or local authorities are high profile and include the
Department of Environment, Transport and the Regions, Audit Commission,
National Audit Office, Housing Corporation and major financial institutions.
Information Technology
Our information technology arrangements enable our consultants and admin staff
to access our network from home or when they are on the move. This has
contributed to increased productivity. We have also successfully upgraded our
accounting and billing software during the year. We continue to develop our
use of new technology and you are welcome to visit our web site at hch.eu.com.
Marketing
During the year we exhibited at the two main housing sector conferences and
been guest speakers at many others. We continue to be in demand to provide
articles for the trade press. Our expanding senior executive recruitment work
places our name in front of the key decision makers on a regular basis and
contributes to the 'hits' at our web site as applicants can browse for jobs,
receive job details and send in applications 'on line'.
We have authored a number of key specialist publications which have sold well
and demonstrate our special expertise in the sector. These include Best Value
for Housing staff, New Structures for Council Housing?, Sustaining success and
Winning structures for the Chartered Institute of Housing, Rent arrears
standard for the Housing Corporation, Living with risk for the National
Housing Federation and Performance pay in RSLs which we publish ourselves.
Derek Joseph
Managing Director
Acquisitions Continuing Total Total
2000 2000 2000 1999
# # # #
TURNOVER
Rental income - 47,542 47,542 140,015
Fees receivable 696,358 5,683,964 6,380,322 4,597,608
696,358 5,731,506 6,427,864 4,737,623
Other operating expenses 649,316 4,491,118 5,140,434 3,747,711
(net)
OPERATING PROFIT 47,042 1,240,388 1,287,430 989,912
Profit on disposal of 5,521 43,890
investment properties
Investment income 157,382 93,841
PROFIT ON ORDINARY ACTIVITIES
BEFORE TAXATION 1,450,333 1,127,643
Taxation (400,568) (378,241)
Dividends (325,245) (283,926)
RETAINED PROFIT ON ORDINARY
ACTIVITIES AFTER TAXATION 724,520 465,476
EARNINGS PER SHARE - Basic 4.007p 2.908p
- Diluted 3.917p 2.863p
2000 1999
# #
Profit for the financial year 1,049,765 749,402
Unrealised surplus on revaluation of investment 47,700 498,131
properties
Total recognised gains and losses relating to 1,097,465 1,247,533
the year
NOTE OF HISTORICAL COST PROFITS AND LOSSES
for the year ended 30 September 2000
2000 1999
# #
Profit on ordinary activities before taxation 1,450,333 1,127,643
Realisation of property valuation gains of 369,111 -
previous years
Historical cost profit on ordinary activities 1,819,444 1,127,643
before taxation
Historical cost profit for the year retained after
taxation and dividends 1,093,631 465,476
2000 1999
# #
FIXED ASSETS
Goodwill 1,236,353 -
Negative goodwill (604,846) (795,785)
Tangible assets 886,800 1,971,785
Investments 530,004 50,004
2,048,311 1,226,004
CURRENT ASSETS
Work in progress 1,004,202 293,376
Debtors 2,223,740 996,971
Cash at bank and in hand 3,333,743 2,828,580
6,561,685 4,118,927
CREDITORS: Amounts falling due within one 2,076,257 1,117,842
year
NET CURRENT ASSETS 4,485,428 3,001,085
TOTAL ASSETS LESS CURRENT LIABILITIES 6,533,739 4,227,089
PROVISIONS FOR LIABILITIES AND CHARGES 10,000 72,000
6,523,739 4,155,089
CAPITAL AND RESERVES
Called up share capital 2,822,345 2,582,493
Share premium account 1,840,031 483,453
Revaluation reserve 176,720 498,131
Profit and loss account 1,684,643 591,012
SHAREHOLDERS' FUNDS 6,523,739 4,155,089
2000 1999
# #
Cash flow from operating activities 790,425 725,847
Returns on investments and servicing of (167,863) (34,775)
finance
Taxation (419,972) (165,156)
Capital expenditure and servicing of finance 621,313 124,239
Acquisitions and disposals (393,740) (132,997)
CASH INFLOW BEFORE FINANCING 430,163 517,158
Financing 75,000 28,215
INCREASE IN CASH IN THE PERIOD 505,163 545,373
RECONCILIATION OF NET CASH FLOW TO MOVEMENT IN NET CASH
#
Increase in cash in the period 505,163
MOVEMENT IN NET CASH IN PERIOD 505,163
NET CASH AT 1 OCTOBER 1999 2,828,580
NET CASH AT 30 SEPTEMBER 2000 3,333,743
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