TIDMHGV
RNS Number : 6791M
Hasgrove PLC
20 September 2012
20 September 2012
Hasgrove plc
Half year results
Hasgrove plc (AIM: HGV, 'Hasgrove', or the 'Group'), the digital
and communications services group, announces its half year results
for the six month period to 30 June 2012.
Headlines
-- Revenue of GBP12.2m, up 16% on a like-for-like basis (H1 2011: GBP10.5m)
-- Gross profit of GBP9.1m, up 11% on a like-for-like basis (H1 2011: GBP8.2m)
-- Headline operating profit GBP0.8m (H1 2011: GBP0.8m)
-- Pre-tax profit GBP0.7m (H1 2011: GBP0.1m)
-- Basic EPS 2.0p (H1 2011: 0.5p)
-- Net debt down to GBP1.0m (31 December 2011: GBP1.5m)
-- Operating cash flow of GBP1.5m, representing a cash conversion ratio of 203%
-- First deferred payment of EUR375,000 following the sale of Interel (received in July 2012)
-- Remaining earn-outs reduced to GBP0.4m (31 December 2011: GBP0.9m)
-- No exceptional costs expected in 2012, following completion
of restructuring and office integration
-- Future revenue pipeline remains strong across Group
Paul Sanders, Group Chief Executive, said:
"The first half of 2012 has seen a significant improvement on
the second half of last year. Our focus on the provision of digital
solutions for global organisations, along with our restructuring,
has paid dividends resulting in improved efficiency, better
delivery of projects and good new business wins.
"The pipelines of both Amaze and Interact are strong, having
secured wins with prestigious clients, giving us confidence in
achieving our full year expectations."
Enquiries:
Hasgrove plc
Paul Sanders, Group Chief Executive 0161 242 5650
Stephen Collins, Group Finance Director
College Hill
Adrian Duffield/Rozi Morris 020 7457 2020
Peel Hunt LLP (Nominated adviser and
broker)
Richard Kauffer/Daniel Harris 020 7418 8900
Overview
Hasgrove is a focused Digital and Communication Services
business with more than 260 personnel, serving a broad client base
of more than 500 clients. The Group comprises Amaze, Interact
(formerly Odyssey Interactive), and the Chase.
The first half of 2012, in comparison with the second half of
last year, has seen a significant improvement in the performance of
Amaze and Interact with improved efficiencies and greater control
of projects. While the macro-economic environment remains a
challenge, the businesses have been successful in winning sizeable
projects from large global organisations.
The rationalisation and integration of the Group's businesses is
now largely complete and whilst the cost base continues to be
reviewed, the Board does not expect any further exceptional
costs.
Financial Highlights
The results for the Group and prior year comparisons are based
on the continuing operations of Amaze, Interact and The Chase. The
Group disposed of its subsidiary, Underwired Amaze, to its
management on 27 March 2012 for a nominal amount. The results of
Underwired Amaze, together with the loss on disposal, have been
reported as part of the operating result for the period, as the
disposal does not meet the criteria for classification as a
discontinued operation as per IFRS 5. Similarly, prior period
comparatives have not been restated to reflect the disposal.
Group revenue for continuing operations increased by 16% to
GBP12.2m (H1 2011: GBP10.5m), and gross profit was GBP9.1m (H1
2011: GBP8.2m), an increase of 11%
Operating profit was GBP0.7m (H1 2011: GBP0.3m), an increase of
140%.
The Group incurred no exceptional items in the period. The
restructuring undertaken in previous periods is now largely
complete.
Headline operating profit was GBP0.8m (H1 2011: GBP0.8m)
(excluding exceptional items in the prior period and the non-cash
items in respect of notional finance costs and share option
charges).
Group profit before tax was GBP0.7m (H1 2011: GBP0.1m), after
the exceptional items of 2011 and the non-cash items of notional
finance costs and share options charges. The effective tax rate was
25%.
Headline basic earnings per share was 2.1p (H1 2011: 2.4p) and
reported basic earnings per share from continuing operations was
2.0p (H1 2011: 0.5p).
Operating cash flow before tax was very strong at GBP1.5m (H1
2011: GBP1.4m), representing a cash conversion rate of 203%.
The Group's net debt on 30 June 2012 was GBP1.0m (31 December
2011: GBP1.5m). The reduction is after the payment of earn-outs
(GBP0.5m) and the buy-back of shares (GBP0.2m). The first deferred
payment of EUR375,000 due following the sale of Interel in 2011 was
received in early July.
At the period end, the estimate of future liabilities relating
to earn-outs was GBP0.4m (31 December 2011: GBP0.9m).
Operational Review
Amaze
Amaze is a leading full-service marketing and technology
company, boasting a depth of understanding of technology and human
behaviour. The agency's work is global - spanning 104 countries in
28 languages.
Using its insights into consumer expectations, attitudes and
motivations, Amaze delivers marketing and technology solutions,
from strategy through to implementation, that enable organisations
to identify and act upon the opportunities created by this changing
digital world. Clients include Bridgestone, Coats plc, Coca-Cola,
the Co-operative Group, Dyson, Eurocamp, Lexus, ODEON Cinemas,
Toyota and Unilever.
Amaze delivered a gross profit of GBP6.6m and continued to
strengthen its expertise of working with central teams (marketing,
technical and commerce) within large global organisations to
deliver strategy and multi-market, multi-lingual digital solutions.
New business activity has continued to be successful, securing
significant pan-European and global accounts, particularly in
growth areas such as e-commerce. Encouragingly, significant
projects in the first half have been delivered in line with
expectations.
In 2012, Amaze ranked 18(th) in the UK's Top 100 Interactive
Agencies by New Media Age (NMA) and The Drum, and third in the
website design and build category by NMA- - a top five position it
has held for the past three years.
Amaze also ranks 10(th) in Marketing Magazine's Digital Agency
League Table and has been named within the UK's Top 10 Interactive
Agencies by Forrester.
Interact
Interact is a leading supplier of intelligent intranet software
and is one of the fastest growing intranet software companies.
Organisations using Interact Intranet report improved efficiency,
greater productivity, increased employee engagement, better
decision-making and cost savings.
Interact delivered a gross profit of GBP1.5m and recorded its
highest ever figure for new business sales of its flagship
software, Interact Intranet, including three intranet sales each in
excess of GBP100,000. The average sales value for an intranet
continues to increase and support revenues should now exceed
GBP0.8m on an annualised basis.
During the period, Interact added Age UK, Flight Centre, Lease
Plan and Signet Trading to its client list.
Following the recruitment of two experienced sales staff in the
US in mid-February, four intranets have been sold in the US in the
second quarter and the pipeline is developing ahead of
expectations. This is extremely encouraging and there will be
continued and equal focus on both UK and non-UK sales, where recent
success has come in sales to both Continental European and
Australian-based companies in addition to the US.
A product roadmap for Interact Intranet is being developed and
an update will be provided in due course. Interact is now firmly
established in the exciting social business software space and
developments are underway to ensure that Interact capitalises on
this position.
The Chase
The Chase is a UK creative and design consultancy, which is
consistently one of the front runners in the annual Design Week
creative league tables.
The Chase delivered a gross profit of GBP1.0m. It had a
difficult start to the year due to delayed spend from a major
client for the second consecutive year. However, there has been an
increased effort in new business development and cost reduction to
manage this temporary situation.
Outlook
Due to the improved performance of both Amaze and Interact, the
new business wins combined with the improved efficiencies and
project delivery, the Board is confident of achieving its full year
targets.
Unaudited Consolidated Income Statement
Six months ended 30 June 2012
Note Audited
6 months 6 months Year to
to 30 Jun to 30 Jun 31 Dec
12 11 11
GBP'000 GBP'000 GBP'000
Continuing operations
Revenue 2 12,150 10,490 22,759
Cost of sales (3,087) (2,332) (6,297)
---------------------------------------- ------- ------------ ------------ -----------
Gross profit 9,063 8,158 16,462
---------------------------------------- ------- ------------ ------------ -----------
Administrative expenses before
separately identified items (8,311) (7,322) (15,530)
Headline operating profit 2 752 836 932
Share option charges (33) (55) (89)
Exceptional costs - (481) (902)
Goodwill Impairment - - (2,709)
---------------------------------------- ------- ------------ ------------ -----------
Total administrative expenses (8,344) (7,858) (19,230)
Operating profit/(loss) 2 719 300 (2,768)
Finance income - 1 1
Notional finance cost on deferred
consideration (2) (41) (19)
Finance cost (65) (124) (214)
---------------------------------------- ------- ------------ ------------ -----------
Total finance costs (67) (164) (232)
Headline profit before tax 687 713 719
Share option charge (33) (55) (89)
Exceptional costs - (481) (902)
Goodwill Impairment - - (2,709)
Notional finance cost on deferred
consideration (2) (41) (19)
Profit/(loss) before tax 652 136 (3,000)
Tax (181) (23) (75)
---------------------------------------- ------- ------------ ------------ -----------
Profit/(loss) for the period from
continuing operations 471 113 (3,075)
Discontinued operations
Loss for the period from Discontinued
Operations 6 - (5,129) (6,680)
Profit/(loss) for the period 471 (5,016) (9,755)
Basic earnings/(loss) per share
(pence) - from continuing operations 3 2.0p 0.5p (12.9)p
Diluted earnings/(loss) per share
(pence) - from continuing operations 3 1.9p 0.5p (12.9)p
Basic earnings/(loss) per share
(pence) - total 3 2.0p (21.0)p (40.9)p
Diluted earnings/(loss) per share
(pence) - total 3 1.9p (21.0)p (40.9)p
---------------------------------------- ------- ------------ ------------ -----------
Unaudited Consolidated Statement of Comprehensive Income
Six months ended 30 June 2012
Audited
6 months 6 months Year to
to 30 Jun to 30 Jun 31 Dec 11
12 11 GBP'000
GBP'000 GBP'000
Profit/(loss) for the period 471 (5,016) (9,755)
Other comprehensive income
Losses on a hedge of a net investment - (202) -
taken to equity
Exchange differences on translation
of foreign operations (3) 480 -
------------------------------------------ ------------- ------------- -----------
Other comprehensive income for the - 278 -
period
Total comprehensive income/(expense)
for the period 468 (4,738) (9,755)
Unaudited Consolidated Statement of Financial Position
At 30 June 2012
Audited
30 Jun 12 30 Jun 11 31 Dec 11
GBP'000 GBP'000 GBP'000
Non-current assets
Goodwill 17,067 23,013 17,064
Other intangible assets 601 728 613
Property, plant and equipment 1,076 1,199 1,117
Deferred tax asset 73 27 73
18,817 24,967 18,867
Current assets
Inventories - 155 -
Trade and other receivables 5,033 5,270 5,965
Corporation tax receivable - - 63
Cash and cash equivalents 1,523 - 1,069
Assets held for sale - 11,214 -
6,556 16,639 7,097
------------------------------------ ------------ ------------ -----------
Total assets 25,373 41,606 25,964
------------------------------------ ------------ ------------ -----------
Current liabilities
Trade and other payables (4,848) (4,586) (5,377)
Current tax liabilities (120) (63) -
Obligations under finance leases (112) (158) (131)
Borrowings (725) (4,695) (241)
Deferred consideration (365) (1,116) (764)
Liabilities associated with assets - (2,885) -
held for sale
------------------------------------ ------------ ------------ -----------
(6,170) (13,503) (6,513)
------------------------------------ ------------ ------------ -----------
Net current assets/ (liabilities) 386 3,136 584
------------------------------------ ------------ ------------ -----------
Non-current liabilities
Borrowings (1,691) (4,014) (2,175)
Deferred consideration - (371) (90)
Deferred tax liability (929) (752) (929)
(2,620) (5,137) (3,194)
------------------------------------ ------------ ------------ -----------
Total liabilities (8,790) (18,640) (9,707)
------------------------------------ ------------ ------------ -----------
Net assets 16,583 22,966 16,257
------------------------------------ ------------ ------------ -----------
Equity
Share capital 2,356 2,383 2,414
Share premium account 15,079 14,959 15,079
Capital redemption reserve 58 - -
Translation reserve (3) 2,036 -
Retained earnings (907) 3,588 (1,236)
------------------------------------ ------------ ------------ -----------
Total equity 16,583 22,966 16,257
------------------------------------ ------------ ------------ -----------
Unaudited Consolidated Statement of Changes in Equity
Six months ended 30 June 2012
Capital redemption
Share Share premium reserve GBP'000 Translation Retained
capital account reserve earnings Total
GBP000 GBP000 GBP000 GBP000 GBP000
Balance at 1 January
2012 2,414 15,079 - - (1,236) 16,257
Purchase of own Shares (58) - 58 - (175) (175)
Profit for the period - - - 471 471
Other comprehensive
income for the period - - - (3) - (3)
Credit to equity for
equity-settled share
based payments - - - - 33 33
Balance at 30 June
2012 2,356 15,079 58 (3) (907) 16,583
Unaudited Consolidated Statement of Cash Flows
for the six months ended 30 June 2012
Audited
Note 6 months 6 months Year ended
to 30 Jun to 30 Jun 31 Dec
12 11 11
GBP'000 GBP'000 GBP'000
Cash generated by operations 5 1,528 1,415 2,226
Tax paid 33 (205) (53)
------------------------------------------- ------- ------------- ------------- ----------------
Net cash from operating activities 1,561 1,210 2,173
------------------------------------------- ------- ------------- ------------- ----------------
Cash flows from investing activities
Interest paid (65) (124) (214)
Interest received - 1 1
Purchase of property, plant and
equipment (183) (154) (591)
Expenditure on product development (155) (230) (321)
Payment of deferred consideration (495) (803) (912)
Disposal of Subsidiary (14) - 5,177
Net cash used in investing activities (912) (1,310) 3,140
Cash flows from financing activities
Dividend paid - - (119)
Purchase of own shares (175)
New loan received 41 - 2,522
Drawdown of borrowings - 1,792 -
Repayment of borrowings (60) (813) (6,136)
(Decrease)/ increase in revolving - (2,009) -
loan
Net cash outflow from financing
activities (194) (1,030) (3,733)
------------------------------------------- ------- ------------- ------------- ----------------
Net decrease in cash and cash equivalents 455 (1,130) 1,580
Cash and cash equivalents at start
of period 1,069 (467) (467)
Effect of foreign exchange rate
changes (1) (256) (44)
Cash and cash equivalents at end
of period 1,523 (1,853) 1,069
Notes to financial information
1. Basis of preparation
These consolidated interim financial statements, which are
condensed and unaudited, for the six months ended 30 June 2012,
have been prepared in accordance with the accounting policies which
the Group expects to adopt in its 2012 Annual Report and are
consistent with those adopted in the consolidated financial
statements for the year ended 31 December 2011. These accounting
policies are based on the EU-adopted International Financial
Reporting Standards (IFRS) and International Financial Reporting
Interpretations Committee (IFRIC) interpretations that the Group
expects to be applicable at that time. The IFRS and IFRIC
interpretations that will be applicable at 31 December 2012,
including those that will be applicable on an optional basis, are
not known with certainty at the time of preparing these interim
financial statements.
These condensed consolidated interim financial statements for
the six months ended 30 June 2012 have been prepared in accordance
with the historical cost convention. The information relating to
the six months ended 30 June 2012 and 30 June 2011 is unaudited and
does not constitute statutory financial statements as defined in
Section 434 of the Companies Act 2006. The comparative figures for
the year ended 31 December 2011 have been extracted from the Group
Report and Accounts. The auditors reported on those accounts, their
report was unqualified, did not draw attention to any matters by
way of emphasis and did not contain a statement under section 498
(2) or (3) of the Companies Act 2006. The Group Report and Accounts
for the year ended 31 December 2011 have been filed with the
Registrar of Companies.
2. Segmental analysis
6 months to 6 months to Year ended
30 June 12 30 Jun 11 31 Dec 11
Operating Operating Operating
Revenue profit Revenue profit Revenue profit
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
By division:
Amaze 9,376 656 8,028 867 17,386 838
Interact 1,584 383 1,202 225 2,485 447
The Chase 1,190 10 1,260 (113) 2,888 93
----------------------- -------- ---------- -------- ---------- -------- ----------
12,150 1,049 10,490 979 22,759 1,378
Unallocated corporate
expense (297) (143) (446)
Share option
charge (33) (55) (89)
Exceptional costs - (481) (902)
Goodwill Impairment - - (2,709)
Profit/(loss)
from continuing
operations 719 300 (2,768)
3. Earnings per share
The calculation of the basic and diluted earnings/(loss) per
share is based on the following data:
6 months 6 months Year ended
to 30 Jun to 30 Jun 31 Dec
12 11 11
GBP'000 GBP'000 GBP'000
Earnings
Earnings for the purposes of total
basic earnings per share being net
profit/(loss) 471 (5,016) (9,755)
-------------------------------------------- ------------- ------------- -------------
Earnings for the purposes of continuing
basic earnings per share being net
profit/(loss) 471 113 (3,075)
-------------------------------------------- ------------- ------------- -------------
No. No. No.
000's 000's 000's
Number of shares
Weighted average number of ordinary
shares for the purposes of basic earnings
per share 24,099 23,831 23,863
Effect of dilutive potential ordinary
shares:
Share options 86 292 280
-------------
Weighted average number of ordinary
shares for the purposes of diluted
earnings per share 24,185 24,123 24,143
-------------------------------------------- ------------- ------------- -------------
Headline earnings per share
The calculation of headline earnings per share is based on the
earnings after adjustments as follows:
6 months 6 months Year ended
to 30 Jun to 30 Jun 31 Dec
12 11 11
GBP'000 GBP'000 GBP'000
Net profit/(loss) 471 (5,016) (9,755)
Exceptional costs (net of tax relief) - 361 663
Share option charges 33 55 89
Notional finance cost on deferred
consideration 2 41 19
Goodwill impairment - - 2,709
Discontinued operations - (483) (399)
Loss on disposal of subsidiary - 5,612 7,079
Headline earnings from continuing
operations 506 570 405
--------------------------------------- ----------- ----------- -----------
4. Disposal of Subsidiary
On 27 March 2012 the Group disposed of its interest in
Underwired Amaze Limited for a nominal amount.
The net assets of Underwired Amaze Limited at the date of
disposal, 30 June 2011 and at 31 December 2011 were as follows:
27 March 30 June 31 December
2012 2011 2011
GBP'000 GBP'000 GBP'000
Property, plant and equipment 9 9 8
Intangible assets - 30 -
Trade receivables 153 230 230
Other receivables 6 31 5
Bank balances and cash 2 33 154
Current tax liability (31) - (31)
Intergroup creditor - (31) (162)
Trade payables (23) (102) (71)
Other payables (76) (188) (73)
Net Assets 40 12 60
Loss on disposal (52)
Costs of disposal 12
Total consideration -
Net cash outflow arising on disposal:
Consideration received -
Costs of disposal (12)
Less: cash and cash equivalents disposed
of (2)
(14)
The loss on disposal of GBP52,000 together with a trading loss
of GBP20,000 for the period from 1 January 2012 to the date of
disposal are reported as part of the operating result for the
period as the disposal does not meet the criteria for
classification as a discontinued operation as per IFRS 5.
Similarly, prior period comparatives have not been restated to
reflect the disposal.
5. Reconciliation of profit on ordinary activities before
finance costs, income from investments and taxation to operating
cash flow
6 months 6 months Year to
to 30 June to 30 June 31 Dec 11
12 11
GBP'000 GBP'000 GBP'000
Profit/(loss) on ordinary activities
before finance costs, income from
investments and taxation 719 836 (2,768)
Operating (loss)/profit from discontinued
operations - - 574
Loss/(profit) on disposal of subsidiary 52 - -
Depreciation 227 308 557
Amortisation 155 84 290
Share option charge 33 55 89
Impairment of goodwill - - 2,709
------------------------------------------- ------------ ------------ -----------
Operating cash flows before movements
in working capital 1,186 1,283 1,451
(Increase)/decrease in inventories - (98) 57
Decrease/(increase) in trade receivables 773 (85) (301)
(Decrease)/increase in trade payables (431) 315 1,019
Operational cash flow 1,528 1,415 2,226
------------------------------------------- ------------ ------------ -----------
6. Discontinued operations
The results of the Group have been restated to reflect the
disposal of the Interel Group on 14 July 2011, which carried out
all of the Group's Public Affairs and Corporate Communications
operations.
The results of the discontinued operations which have been
included in the consolidated income statement for each of the
periods, were as follows:
6 months to 30 Jun 12 6 months to 30 Jun 11 Year to
GBP'000 GBP'000 31 Dec 11
GBP'000
Revenue - 6,541 6,903
Expenses - (5,897) (6,329)
Loss before tax - 644 574
Attributable tax expense - (161) (175)
Loss for the period from discontinued operations - 483 399
Loss on disposal of discontinued operations - (5,612) (7,079)
Net loss attributable to discontinued operations - (5,129) (6,680)
7. Approval
The Interim Statement was approved by the Board on 20 September
2012. Copies of this statement are available on our web site:
www.hasgrove.com or by request from the Registered Office at: 6(th)
Floor, Number One, First Street, Manchester, M15 4FN.
This information is provided by RNS
The company news service from the London Stock Exchange
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