RNS Number:0497G
Hacas Group PLC
13 January 2003
HACAS
GROUP PLC
FOR RELEASE 7.00 AM 13 January 2003
HACAS Group PLC ("HACAS")
(The leading UK social housing consultancy with offices throughout the United
Kingdom)
PRELIMINARY RESULTS FOR THE YEAR 30 SEPTEMBER 2002
and
Acquisition of the Business of
Stratford Development Partnership Ltd
Highlights
2002 2001 Change
Turnover #13.25m #11.26m +18%
Profit before tax #3.04m #2.04m +49%
Earnings per share (basic) 7.05p 4.77p +48%
Earnings per share (diluted) 6.93p 4.73p +47%
Dividend 2.00p 1.35p +48%
Assets per share (basic) 33p 27p +22%
* Acquisition of the business of Stratford Development Partnership Ltd
* All business streams doing well
* Continuing success of key research projects
* Now in the top 10 recruiters' league for the UK public and voluntary
sector.
* HACAS Exchequer Services has advised on fundraising of over #1.2 billion.
* David Tolson appointed as Managing Director of the streamlined HACAS
Chapman Hendy board
* Extended range of consultancy products
* Broadening our client base
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
The social housing sector is the Group's primary operating market. The sector
comprises housing associations, local authority and other public sector housing
providers together with the related government departments, regulators, trade
bodies, suppliers and funders. This sector comprises about 20% of the UK's
housing stock.
Government policy encourages area regeneration and substantial investment in
repairing and modernising local authority housing. For more than one hundred
and fifty authorities this involves the transfer of housing stock to a new or
existing housing association and substantial funding from the commercial loans
market. Other councils are setting up Arm's Length Management Organisations and
a variety of partnership bodies. Advice to local authorities and such new
housing organisations is a key area of the Group's work.
The HACAS Group and its clients
The HACAS Group comprises three main operating companies of which HACAS Chapman
Hendy Ltd is the largest. These companies advise over 120 local authorities
including some of the largest (such as Glasgow and Bradford). They also advise
a majority of the largest housing associations. Our 500 most regular housing
association clients hold assets ranging between #50 million and #1.4 billion.
Other clients include government departments, The Housing Corporation, Scottish
Executive and National Assembly for Wales, Northern Ireland Housing Executive,
National Audit Office and the Audit Commission.
The Group carries out research for government departments and regulators and
also advises financial institutions, commercial companies involved in the social
housing sector, as well as Eastern European governments.
HACAS Chapman Hendy Ltd
HACAS Chapman Hendy is the main operating company and was formed from the merger
of HACAS Consulting and Chapman Hendy Associates in 2000. It provides a wide
range of consultancy and outsourcing services to local authorities, housing
associations and other organisations operating in the social housing sector.
The company is now organized into the following eight consultancy teams:
* Local authority (finance, regeneration & transfers)
* Housing association finance and commercial
* Finance Director placements
* Best value and other housing association services
* North team (full range of services from Leeds base)
* Asset management services
* Human Resources
* Information Technology
SDP Regeneration Services Ltd is the new company formed to take over the
business of Stratford Development Partnership. It administers many of London's
Single Regeneration Budget programmes and supports six of the New Deal for
Communities programmes. It has a growing consultancy workload that fits well
with the range of regeneration initiatives undertaken by HACAS Chapman Hendy
Ltd.
HACAS Exchequer Services Ltd is FSA registered and advises housing associations
and local authorities on funding and treasury management. It is active in the
stock transfer market and in advising on the refinancing of existing housing
debt. It has recently developed new special purpose treasury vehicles for
housing associations and this innovation has strengthened demand for its
services.
HCH Scotland Ltd operates from Glasgow and provides 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.
Acquisition of the business of Stratford Development Partnership
HACAS Group PLC completed the acquisition of the business of Stratford
Development Partnership on 6 January 2003. This was a complex transaction
because Stratford Development Partnership was a charitable company limited by
guarantee. Its protected reserves have been transferred to a successor charity
called Stratford Development Partnership for Regeneration. The Charity's objects
are the promotion for the public benefit of urban rural regeneration in areas of
social economic deprivation (and in particular London). The existing business
of Stratford Development Partnership has been transferred into a new subsidiary
of HACAS Group PLC called SDP Regeneration Services Ltd.
The total cost of acquiring the continuing business was #2.80 million. This was
shared between the new charity and an Employee Benefit Trust. The Charity has
received #0.6 million in cash. The Employee Benefit Trust will receive #2.2
million in cash and will utilise #1.15 million in subscribing for new shares of
HACAS Group PLC. In a separate transaction, it is intended to purchase the long
lease of the office building occupied by SDP in Stratford (E. London) for its
market value of #580,000. The cash element of the purchase price is coming out
of HACAS Group PLC's existing cash balances.
The new subsidiary company of HACAS Group PLC that received the transfer of
business is SDP Regeneration Services Ltd. It administers many of London's
Single Regeneration Budget programmes and supports six of the New Deal for
Communities programmes. It has a growing consultancy workload that fits well
with the range of regeneration initiatives undertaken by HACAS Chapman Hendy
Ltd.
In its financial year ended 31 March 2002, Stratford Development Partnership
made a profit before tax of #464,590 on turnover of #3,422,506. As the company
was limited by guarantee, its corporation tax liabilities were restricted to
those liabilities arising from investment income. At 31 December 2002 Stratford
Development Partnership had 58 employees. All employees are on standard
employment contracts and the acquisition by the Group will be regarded as
continuous employment. The Chief Executive, Stephen Jacobs OBE, who is also
Non-Executive Chair of Newham Primary Health Care Trust, joins the Group Board
on similar contractual terms.
In terms of assessing the impact of the transferring business on HACAS Group PLC
then these profits should be considered as pre-tax profits. We would also
expect to reward staff with a profit related bonus. In a full year post
transfer, we would expect SDP Regeneration Services Ltd to make a similar
contribution.
We expect that SDP Regeneration Services Ltd will be able to grow more rapidly
as a company within the group. In particular, we expect it to be able to win
contracts beyond its current London focus. At the same time, we expect its
unique regeneration expertise to add a new dimension to the regeneration
services offered by HACAS Chapman Hendy.
Chairman's Statement
We have now completed our second full year of operations since the acquisition
and merger of Chapman Hendy Associates with HACAS Consulting to form HACAS
Chapman Hendy. The resulting company has now consolidated its position as
market leader in the provision of housing related services to both local
authorities and housing associations. The benefits of the merger have continued
to flow through in terms of enhanced growth and excellent performance across the
full range of the company's work.
Results
We are pleased once again to report improved results for the year. All parts of
the Group have performed well. Group turnover increased by 18% to #13.2
million. Profits before tax increased by 49% to #3.044 million and earnings per
share by 48% to 7.049p.
Dividends
We declared an interim dividend of 0.675p per share in May 2002 and propose a
final dividend of 1.325p per share payable on 10 April 2003 to shareholders on
the register at 7 March 2003. This will make a total dividend for the year of
2p per share, an increase of 48%.
Growth and Acquisitions
There was steady underlying growth in the core business during the year as
outlined in the Group Managing Director's report. We have welcomed further
excellent consultants into the Group. The social housing and local authority
sector is a substantial market (providing around 20% of UK housing) and the
sector includes many small consultancy and service company providers. We are
continuing our strategy of seeking to acquire other consultancies and companies
that will complement and extend the work of the Group.
I am pleased to report that we have successfully concluded negotiations with
Stratford Development Partnership (a substantial company in the regeneration
field) for the transfer of its business. SDP Regeneration Services Ltd provides
a unique range of regeneration services in London and we consider that it has
strong growth prospects across a wider area. We welcome its Chief Executive,
Stephen Jacobs OBE, to the Group board.
Staffing
Consultancy is a people business and we value our staff highly. Most of our
staff are also shareholders and this long term interest in the Group's future
has been strengthened by the extension of our share option schemes and the
innovative arrangement for the purchase of the business of Stratford Development
Partnership which will see all its staff acquire shareholdings if they remain
for three years. We have paid careful attention to the long term future of the
Group and its operating companies. The Board of HACAS Chapman Hendy has been
re-shaped and I am delighted to report the appointment of David Tolson as
Managing Director of the Group's principal subsidiary. Our thanks go to all
members of the Group for their strong performance.
Outlook
The agenda for regeneration is continuing with broad political support.
Economic and other uncertainties have increased the pressure to come up with
solutions that 'stretch' public funding with private finance. Housing stock
transfers, Best Value, Arms Length Companies and similar initiatives are
expected to continue. These are all areas where we have particular expertise.
Indeed, we are at the forefront through our research for a range of
non-departmental public bodies and government departments. We are also advising
on many of the 'pilot' projects through which new initiatives are being tested.
In the first three months of the current financial year turnover is ahead of the
same period last year. All parts of the Group are operating profitably and our
core businesses are performing well. We operate in a sector that requires very
specific technical competencies which we have built up over 25 years. We are
confident that this will be a strong platform for our continuing progress.
Julian Ashby
Chairman
13 January 2003
Managing Director's Report
This is my fifth review as Managing Director of HACAS Group PLC. The Company
floated and acquired The Royal Borough of Kensington and Chelsea Assured Homes
PLC in August 1998 and acquired Chapman Hendy Associates in 2000.
Operations
Throughout 2002 we have achieved sustained growth in all our main operating
areas. The integration of HACAS Consulting and Chapman Hendy to form HACAS
Chapman Hendy increased our capacity by some 60% and broadened our range of
services. It has strengthened our 'one stop shop' approach and this key
strength has contributed to our growth in a growing market. Highlights from some
of our various business streams include:
* We have been awarded a 2 year commission by the Office of the
Deputy Prime Minister to evaluate the new financial framework for local
authority housing.
* We have continued to provide advice to some of the UK's largest
housing authorities including Glasgow, Birmingham, Edinburgh, Wakefield and
Bradford.
* We have worked for more than 300 housing associations and 120
local authorities during the course of the year.
* The HR team has launched its Executive Selection service and
carried out over 150 senior level recruitments. We are now in the top 10
recruiters' league for the UK public sector.
* HACAS Exchequer Services has advised on fundraising of over #1.2
billion.
* Our growing team of finance professionals has provided 'stand
in' management services in another excellent year.
* HACAS Asset Management Services has successfully increased its
staffing, range of work and profitability.
Our leading role in the development of national housing strategies is reflected
in work for the Office of the Deputy Prime Minister, the Scottish Executive and
the Welsh Assembly Government. We have been involved in key pilot projects for
the establishment of Arms Length Management Organisations and specialist
regeneration companies and undertaken ground breaking research on Community Land
Trusts.
We have broadened the range of our work in the public sector. This includes
further advice to Thames Valley Police Authority on key worker housing. We are
in a partnership undertaking a ten year business process enhancement programme
for the Defence Housing Executive. We have been commissioned to undertake a
detailed study of private sector leasing for the Housing Corporation.
The increased profit and earnings per share is only part of the story of the
year. We have broadened the range of both our service and our client base. We
believe that this strategy makes us well placed to continue progress in spite of
an uncertain economic outlook. The business generates strong cashflow with
available cash balances after the acquisition of Stratford Development
Partnership of around #6m.
Acquisitions
The acquisition of the business of Stratford Development Partnership Ltd was a
complex transaction because of its status as a company limited by guarantee.
The total cost of acquiring the continuing business was #2.80 million. This was
shared between the new charity and an Employee Benefit Trust. The Charity has
received #0.6 million in cash. The Employee Benefit Trust will receive #2.2
million in cash and will utilise #1.15 million in subscribing for new shares of
HACAS Group PLC. In a separate transaction, it is intended to purchase the long
lease of the office building occupied by SDP in Stratford (E. London) for its
market value of #580,000. The cash element of the purchase price is coming out
of HACAS Group PLC's existing cash balances.
The new company that received the transfer of business is SDP Regeneration
Services Ltd. It administers many of London's Single Regeneration Budget
programmes and supports six of the New Deal for Communities programmes. It has
a growing consultancy workload that fits well with the range of regeneration
initiatives undertaken by HACAS Chapman Hendy Ltd.
Information Technology
Our information technology arrangements enable our consultants and
administrative staff to access our network from home or when they are on the
move. This has contributed to increased productivity. We have continued to
improve communication within the company, develop a core knowledge management
system and strengthen our disaster recovery arrangements. Shareholders are
encouraged to visit our web site at www.hch.eu.com.
Marketing
During the year we have exhibited at the main housing sector and related
conferences and been guest speakers at many others. We have enhanced our
website which is increasingly used by both existing and prospective clients. 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 success of 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 Beyond
bricks and mortar for the Chartered Institute of Housing, Community Land
Trusts: a feasibility study published by the Confederation of Co-operative
Housing and 'Virtual Reality' for community consultation in housing and
regeneration for the Housing Corporation. Our three regular news sheets -
Resource , Spreadsheet and Asset Manager are well received and increase
awareness of our services to specialist audiences.
Derek Joseph
Managing Director
13 January 2003
HACAS Group PLC
CONSOLIDATED PROFIT AND LOSS ACCOUNT
for the year ended 30 September 2002
Total Total
2002 2001
# #
TURNOVER
Fees receivable 13,252,065 11,255,631
13,252,065 11,255,631
Operating expenses (10,423,646) (9,099,616)
Other operating income 8,834 19,203
OPERATING PROFIT 2,837,253 2,175,218
Amounts written off investments (20,000) (295,000)
(Loss)/profit on disposal of investment properties (4,129) (11,484)
Investment income 231,609 169,774
PROFIT ON ORDINARY ACTIVITIES BEFORE TAXATION 3,044,733 2,038,508
Taxation (981,505) (675,868)
PROFIT FOR THE FINANCIAL YEAR 2,063,228 1,362,640
Dividends (588,410) (394,133)
RETAINED PROFIT ON ORDINARY ACTIVITIES AFTER TAXATION 1,474,818 968,507
EARNINGS PER SHARE - Basic 7.049p 4.767p
- Diluted 6.928p 4.729p
The operating profit for the year arises from the company's continuing operations.
HACAS Group PLC
GROUP BALANCE SHEET
30 September 2002
2002 2001
# #
FIXED ASSETS
Goodwill 1,106,211 1,171,282
Negative goodwill (100,807) (201,615)
Tangible assets 291,351 417,903
Investments 215,004 235,004
1,511,759 1,622,574
CURRENT ASSETS
Work in progress 836,462 1,146,069
Debtors 2,203,024 2,543,715
Investments 54,390 32,492
Cash at bank and in hand 7,728,646 4,749,354
10,822,522 8,471,630
CREDITORS: Amounts falling due within one year 2,714,525 2,179,203
NET CURRENT ASSETS 8,107,997 6,292,427
TOTAL ASSETS LESS CURRENT LIABILITIES 9,619,756 7,915,001
CAPITAL AND RESERVES
Called up share capital 2,951,491 2,945,002
Share premium account 2,081,537 2,066,129
Revaluation reserve 11,158 96,560
Profit and loss account 4,575,570 2,807,310
EQUITY SHAREHOLDERS' FUNDS 9,619,756 7,915,001
Approved by the board on 13 January 2003
Julian Ashby Director
Derek Joseph Director
HACAS Group PLC
CONSOLIDATED CASH FLOW STATEMENT
for the year ended 30 September 2002
2002 2001
# #
Cash flow from operating activities 3,858,515 1,606,560
Returns on investments and servicing of finance 231,609 169,774
Taxation (719,213) (681,283)
Capital expenditure and financial investment 28,482 363,184
Equity dividends paid (420,101) (358,887)
CASH INFLOW BEFORE FINANCING 2,979,292 1,099,348
Management of liquid resources (207,834) (465,508)
Financing - 316,263
INCREASE IN CASH IN THE PERIOD 2,771,458 950,103
RECONCILIATION OF NET CASH FLOW TO MOVEMENT IN NET FUNDS
#
Increase in cash in the period 2,771,458
Cash inflow from increase in liquid resources 207,834
MOVEMENT IN NET FUNDS IN PERIOD 2,979,292
NET FUNDS AT 1 OCTOBER 2001 4,749,354
NET FUNDS AT 30 SEPTEMBER 2002 7,728,646
CASH FLOWS 2002 2001
# #
Reconciliation of operating profit to net cash inflow from
operating activities
Operating profit 2,837,253 2,175,218
Profit on sale of fixed assets (26,380) (12,316)
Depreciation 120,321 180,545
Decrease/(increase) in work in progress 309,607 (141,867)
Decrease/(increase) in debtors 349,464 (319,975)
Increase in creditors 512,027 63,115
Goodwill written back (100,808) (403,231)
Goodwill written off 65,071 65,071
Non cash movement on reserves (208,040) -
Net cash flow from operating activities 3,858,515 1,606,560
This information is provided by RNS
The company news service from the London Stock Exchange
END
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