16th Mar 2005 07:00
Huntsworth PLC16 March 2005 Huntsworth PLC - 2004 Results Unaudited Preliminary Results for the year ended 31 December 2004 SUCCESSFUL INTEGRATION OF NEWLY ACQUIRED COMPANIES Huntsworth PLC, the international public relations group, has today announcedits preliminary results for the year to 31 December 2004. Highlights (All results exclude discontinued operations) • Revenues from continuing operations of £44.9 million (2003 - £22.0 million). • Operating profit before exceptional items and goodwill increased to £5.4 million (2003 - £2.3 million). Statutory operating profit increased to £3.1million (2003 - £2.0 million) • Operating company margins - 18.9 per cent. • Operating cash flow before exceptional items of £6.6million. Statutory operating cash flow increased to £4.6million (2003 - £0.3 million outflow) • Adjusted earnings per share, based on profit before exceptional items and goodwill: 1.5 pence (2003 - 1.2 pence). Basic earnings per share was 0.5 pence (2003 - 0.8 pence) • Special dividend of 0.1 pence per share declared, bringing total for year to 0.2 pence per share. • Integration of Grayling, Trimedia and other acquisitions made during the year, ahead of expectations. • Proposed merger with Incepta Group plc. Jon Foulds, Chairman of Huntsworth, said: "These are excellent results. Margins continue to improve and we are now veryclose to achieving the 20 per cent. target we have set for the Group. At£6.6million trading cash flow was particularly strong. I am also pleased toreport that the momentum which characterised the last quarter's trading hascontinued into the first quarter of 2005" Contacts: Peter Chadlington, Chief Executive, Huntsworth PLC: +44 (0) 20 7408 2232 Roger Selman, Finance Director, Huntsworth PLC: +44 (0) 20 7408 2232 Jonathan Shillington, The Global Consulting Group: + 44 (0) 20 7796 4133 Preliminary Results for Year to 31 December 2004 Financial performance I am pleased to report that the results for the year to 31 December 2004 reflectthe successful early integration of the recently acquired companies. Operatingprofit from continuing operations, before exceptional items and goodwillamortisation, was £5,368,000, compared with £2,330,000 for the year to 31December 2003, an increase of some 130 per cent. After losses from discontinued operations of £165,000, exceptional items of£1,929,000, goodwill amortisation of £413,000, and share of loss at an associateof £15,000, the profit on ordinary activities before interest and tax was£2,846,000 (2003 - £1,674,000). Earnings and revenues Profits attributable to ordinary shareholders amounted to £1,393,000 (2003 -£1,233,000) after interest of £547,000, tax of £528,000 and minority interestsof £378,000. Adjusted earnings per share (excluding discontinued operations, exceptionalitems and goodwill amortisation) were 1.5 pence (2003 - 1.2 pence). Basic anddiluted earnings per share were 0.5 pence (2003 - both 0.8 pence). Huntsworth generated revenues to 31 December 2004 of £44.9 million (excludingdiscontinued operations), an increase of 104 per cent. compared with 2003 (£22.0million). Operating company margins achieved by the continuing operations were 18.9 percent., before central costs and excluding exceptional items. Exceptional items (comprising severance costs, other reorganisation costs,transaction abort fees and the write off of an investment in an associate)totalled some £1,929,000. Goodwill amortisation amounted to £413,000. Treasury In the year Huntsworth generated positive operating cash flow, beforeexceptional items and discontinued operations, of £6,579,000 (2003 -£1,349,000). The placing and open offer completed in April, 2004 raised £20.4 million net ofcosts. Of this amount £12.0 million was used to fund acquisitions and thebalance to reduce bank borrowings. Huntsworth has a committed three-year unsecured overdraft and guarantee facilityof £15 million from Lloyds TSB Bank. The facility is multi-currency, with aninterest rate of 1 per cent. over Sterling base rate or equivalent for othercurrencies. EBITDA interest cover (excluding discontinued operations andexceptional items) was 11.7x. Huntsworth has protected its US dollar and Euro earnings for 2005 by taking outaverage rate options. It is also protected against the effects of interest rateincreases by a base interest rate cap on £5 million. This cap runs to August,2007. Tax Huntsworth incurred a tax charge of £528,000 or 11.4 per cent. of profits(before exceptional items and goodwill). With an increased proportion ofoverseas operations, and brought forward tax losses not available for all newbusinesses, tax as a percentage of profits is expected to continue to increasein future. UK tax losses carried forward amount to over £7 million. Balance Sheet As at 31 December 2004 net bank debt amounted to £4.1 million (compared with£10.1 million at 31 December 2003) and shareholders' funds amounted to £50.8million (compared with £16.3 million at 31 December 2003). Acquisition payments Acquisition payments made in the year, including net debt acquired withsubsidiaries, totalled £16.8 million. A total of 41.7 million shares were issuedin respect of acquisitions. Further earn-out payments are estimated at £7.8 million of which £5.1 million ispayable in cash or in shares at Huntsworth's option, and £2.7 million is payablein cash. In addition, there are payments totalling £2.1 million due in respectof loan notes related to acquisitions. The timing of the aggregate of thesepayments is £3.1m in 2005, £0.6m in 2006, £5.5m in 2007 and £0.7m in 2008. Operational Review Revenues and margins On a like-for-like basis revenues in 2004 were down 0.5 per cent. compared with2003, and up 0.6 per cent. during the second half. The like-for-like comparisonis at constant currency rates and includes all operations (other than Rose &Kindel acquired in December 2004) on a full year basis. As mentioned in theinterim results, although Harrison Cowley was profitable in 2004 it had adifficult year, and excluding Harrison Cowley revenue growth was 1.6 per cent.for the year and 3.7 per cent. in the second half. After carrying out a detailedreview of Harrison Cowley's operations and a reorganisation of Harrison Cowley'sinfrastructure, together with its acquisition of Sinclair Mason in February2005, the business is expected to produce significantly improved results in2005. The Group achieved margins of 18.9 per cent. for the year at operating companylevel, with all businesses acquired in the year trading profitably and making asubstantial contribution to operating profits. Margins for companies owned at 31December 2003 were 19.1 per cent. Excluding Harrison Cowley, these companiesachieved margins of 22.4 per cent., which is above our target. The margins ofacquired companies were 18.8 per cent. In order to maintain high margins we will restructure our operations wherenecessary. To this end, in December we closed a UK fulfilment operation, andsold a US consumer PR business. Their results have been treated as discontinued. Acquisitions In April 2004 we completed the acquisitions of the Trimedia group and ofGrayling. Their results have been consolidated since mid April. Trimedia is one of Europe's leading multi-disciplinary public relations andcommunications firms with offices in Switzerland, Austria, Germany and France.Grayling is an international public relations, public affairs and eventsmanagement firm with a strong brand. It substantially increases Huntsworth'soffering in the UK and provides us with expanded international reach. During the year, Global Consulting Group (GCG), our financial PR and publicaffairs business, acquired 60 per cent. of Hudson Sandler, a leading Cityfinancial PR consultancy (March) and Summit, a Chicago based public affairs andcorporate communications firm (May). GCG also acquired Ergo, a London basedpublic affairs and corporate communications firm (July), which, together withHudson Sandler (now GCG Hudson Sandler) gives GCG a substantial UK presence. InDecember GCG acquired Rose & Kindel, a public affairs consultancy based in LosAngeles and Sacramento, servicing the important California market. Our healthcare communications business, PBC, has expanded significantly as aresult of two acquisitions, namely VB Communications, a UK healthcareadvertising, public relations and medical education business, based inBeaconsfield (July), and Avenue HKM, a UK healthcare public relations andmedical education business (August). Harrison Cowley acquired Strategy, a Bristol based public relations company inMay, and since the year end has acquired Sinclair Mason, a Leeds based publicrelations company, which will be integrated into the existing Harrison Cowleyoperations in the North of England. Our updated profile • Approximately a third of our operations are outside the UK. We have offices in 11 countries, with nearly 90 per cent. of our revenues in public relations. • We provide services to 18 constituent companies of the FTSE 100, 45 in the Fortune 500 and 48 in the Eurotop 300. • We now represent 69 clients in more than one country, and 60 clients are serviced by more than one of our brands. These are substantial increases since June when these numbers were 39 and 37 respectively. In the year our companies won net new business for 2004 of over £12 million. Clients New clients to the Group include Casio, Clear Channel Communications Inc.,DreamWorks Animation SKG Inc., Jaguar Cars UK, Nikon, Pimms and Sun ChemicalCorporation. Existing clients who have awarded new assignments to Group companies includeBristol Myers -Squibb Company, H J Heinz Co Ltd, Henkel, Novartis,sanofi-aventis, United Biscuits and Wolverhampton & Dudley Breweries PLC. Dividends The Board has declared a special dividend of 0.1p per share bringing the totaldividend for 2004 to 0.2 pence. The record date for this dividend is 18 March2005 and it will be payable on 19 April 2005. Proposed Merger We have recently announced a proposed merger between Huntsworth and Incepta. TheBoard is very enthusiastic about the benefits that this merger will bring to ourclients, staff and shareholders. A circular setting out full details of theproposed merger will be posted to shareholders as soon as possible. Outlook We are very pleased with the performance of the group and particularly of thecompanies which have joined us in 2004. These companies have been integratedinto the group quickly and efficiently. The significant increase in the number of clients using our services in morethan one country and across more than one brand is testimony to the success ofour strategy of building an international business, with a range of servicesfocussing primarily on public relations, and fostering a strong group culture.Our successful group of senior managers is key to achieving our objective ofcreating increased opportunities for Group companies to work together. Our strong portfolio of brands includes Global Consulting Group, Grayling andTrimedia and such successful specialist agencies as Counsel and EHPR. Ourexpanded healthcare group integrated particularly well and is now a powerfulforce in healthcare communications in the UK. We remain confident that ourcompanies can deliver strong growth. Margins continue to improve and we are now very close to achieving our target of20 per cent. across the Group. The momentum which characterised the lastquarter's trading has continued into the first quarter of 2005. H Jon FouldsChairman 16 March 2005 Consolidated Profit & Loss Account 12 months to 31 December 2004 12 months to 31 December 2003 £000 £000 £000 £000 £000 £000 Continuing Discontinued Total Continuing Discontinued Total TurnoverExcluding acquisitions 30,886 694 31,580 28,704 575 29,279Acquisitions 32,689 - 32,689 - - - 63,575 694 64,269 28,704 575 29,279Cost of sales (18,713) (200) (18,913) (6,671) (387) (7,058)RevenueExcluding acquisitions 22,956 494 23,450 22,033 188 22,221Acquisitions 21,906 - 21,906 - - - 44,862 494 45,356 22,033 188 22,221Operating expenses -including exceptional itemsand goodwill Excluding acquisitions (22,379) (750) (23,129) (20,052) (499) (20,551)Acquisitions (19,366) - (19,366) - - - (41,745) (750) (42,495) (20,052) (499) (20,551) Operating profit/(loss)Excluding acquisitions 577 (256) 321 1,981 (311) 1,670Acquisitions 2,540 - 2,540 - - -Group operating profit/(loss) 3,117 (256) 2,861 1,981 (311) 1,670 Exceptional items 1,838 91 1,929 179 - 179Goodwill amortisation 413 - 413 170 - 170Operating profit/(loss)before exceptional items andgoodwillExcluding acquisitions 1,847 (165) 1,682 2,330 (311) 2,019Acquisitions 3,521 - 3,521 - - - 5,368 (165) 5,203 2,330 (311) 2,019Net interest payable (547) - (547) (441) - (441)Profit/(loss) before tax, 4,821 (165) 4,656 1,889 (311) 1,578exceptional items andgoodwillShare of operating (loss) / (15) 4profit of associateTotal operating profit 2,846 1,674Net interest payable (547) (441)Profit on ordinary activities 2,299 1,233before taxTaxation (528) -Profit on ordinary activities 1,771 1,233after taxMinority interests - equity (378) -Profit attributable to 1,393 1,233members of the parent companyOrdinary dividend on equity (607) (163)sharesRetained profit 786 1,070 Earnings Per Share: Basic and diluted - pence 0.5 0.8Adjusted - pence 1.5 1.2 Consolidated Statement of Total Recognised Gains and Losses 12 months to 31 December 2004 12 months to 31 December 2003 £000 £000 Profit for the year 786 1,070Exchange differences on (183) (12)retranslation of net assetsof subsidiary undertakingsTotal recognised gains and 603 1,058losses relating to the year Consolidated Balance Sheet 31 December 2004 31 December 2003 £000 £000 Fixed assets Intangible assets 60,043 26,097Tangible assets 2,680 1,918Investments - 173 62,723 28,188Current assets Work in progress 1,148 226Debtors 18,046 6,818Cash at bank and in hand 2,773 80 21,967 7,124Creditors due within one year (21,774) (6,633) Net current assets 193 491 Total assets less current liabilities 62,916 28,679 Creditors due after more than one year (6,889) (10,263) Provisions for liabilities and charges (5,215) (2,110) 50,812 16,306 Capital and reserves Called up share capital 30,444 16,309Share premium account 23,615 13,148Other reserves 7,902 3,459Shares to be issued 7,157 2,995Investment in own shares (8) (5)Profit and loss account (18,997) (19,600)Equity shareholders' funds 50,113 16,306 Minority interests - equity 699 - 50,812 16,306 Consolidated Cash Flow Statement 12 months to 12 months to 31 December 2004 31 December 2003 £000 £000 £000 £000 Net cash inflow/ (outflow) from operating activities 4,635 (322) Returns on investments and servicing of finance Interest received 75 34Interest paid (528) (379)Finance lease interest paid (42) (36)Exceptional finance charge paid - (60)Dividends paid to minority interests (130) -Net cash outflow from returns on investments and (625) (441)servicing of financeEquity dividends paid (467) -Taxation UK corporation tax paid (319) (111) Overseas corporation tax paid (230) - UK corporation tax received 8 - Overseas corporation tax received 19 - Net cash outflow from taxation (522) (111) Capital expenditure and financial investment Disposal of tangible fixed assets 65 90Purchase of tangible fixed assets (380) (350)Net cash outflow from capital expenditure and financial (315) (260)investmentAcquisitions Purchase of subsidiary undertakings (17,714) (2,933)Purchase of associate undertaking - (169)Purchase of unincorporated business - (104)Net cash/(debt) acquired with subsidiaries 927 (1,098) Net cash outflow from acquisitions (16,787) (4,304) Net cash outflow before financing (14,081) (5,438) Financing and net cash inflow from financingNet proceeds from the issue of ordinary share capital 20,436 -Purchase of own shares (3) (5)Repayment of capital element of finance leases (272) (210)(Decrease)/increase in long term borrowings (3,303) 4,980 16,858 4,765Increase/(decrease) in cash in the year 2,777 (673) Notes to Consolidated Cash Flow Statement Reconciliation of net cash flow to movement in net debt 12 months to 12 months to 31 December 2004 31 December 2003 £000 £000 Increase/(decrease) in cash 2,777 (673)Cash inflow/(outflow) from increase in long term 3,303 (4,980)borrowings borrowingsss tertermtermbborrborrowingsRepayment of capital element of finance leases 272 210Change in net debt resulting from cash flows 6,352 (5,443)Finance leases acquired with subsidiaries (60) (95)New finance leases (137) (155)Disposal of finance leases 43 -Loan notes issued (2,080) -Exchange differences (99) (39)Decrease/(increase) in net debt 4,019 (5,732) Net debt at beginning of year (10,491) (4,759)Net debt at end of year (6,472) (10,491) Reconciliation of operating profit/(loss) to net cash inflow/(outflow)from operating activities 12 months to 31 December 2004 12 months to 31 December 2003 Before Exceptionals, Total Before Exceptionals, Total exceptionals, discontinued exceptionals, discontinued discontinued operations and discontinued operations and goodwill goodwill operations,and operations,and goodwill goodwill £000 £000 £000 £000 £000 £000 Operating profit/(loss) 5,368 (2,507) 2,861 2,330 (660) 1,670Depreciation 1,049 10 1,059 593 2 595Write down of investment - 151 151 - - -in associatedundertakingTangible fixed assets - 50 50 - 4 4written offLoss on disposal of 5 62 67 12 2 14tangible fixed assetsAmortisation of goodwill - 413 413 - 170 170Decrease/(increase) in 239 (25) 214 (18) 35 17work in progress(Increase)/decrease in (1,655) 44 (1,611) (844) 213 (631)debtorsIncrease/(decrease) in 1,573 167 1,740 (724) (301) (1,025)creditors(Decrease) in provision - (309) (309) - (1,136) (1,136)for liabilities andchargesNet cash inflow/ 6,579 (1,944) 4,635 1,349 (1,671) (322)(outflow) from operatingactivities Notes to Consolidated Cash Flow Statement 1 January Cash flow Other 31 December 2004 2004Analysis of net debt £000 £000 £000 £000 Cash at bank and in hand 80 2,652 41 2,773Overdraft repayable on demand (126) 125 (140) (141)Net cash /(overdraft) (46) 2,777 (99) 2,632Committed overdraft repayable between one and (10,030) 3,303 - (6,727)two yearsFinance leases (415) 272 (154) (297)Loan notes issued - - (2,080) (2,080)Net debt (10,491) 6,352 (2,333) (6,472) Notes: i) EPS Adjusted is undiluted and is calculated using profits excludingdiscontinued operations and before all exceptional items and goodwill but afterinterest and tax. ii) The preliminary statement has been prepared using the accounting policiesset out in the 31 December 2003 accounts iii) The financial information set out herein does not constitute statutoryaccounts within the meaning of Section 240 of the Companies Act 1985. Thefigures for the 12 months to 31 December 2003 are abridged from the Group's fullaccounts for that period which have been filed with the Registrar of Companies,received an unqualified auditors' report and did not contain a statement underSection 237(2) or (3) of the Companies Act 1985. iv) The results set out herein have not been audited by the Group's auditors. v) This preliminary statement was approved by the Board of Directors on 15 March2005. This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
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