TIDMHGV
RNS Number : 0890C
Hasgrove PLC
26 April 2012
26 April 2012
Hasgrove plc
Final results for the year ended 31 December 2011
Hasgrove plc (AIM: HGV, 'Hasgrove' or the 'Group'), the digital
and communications services group, announces its audited final
results for the year ended 31 December 2011.
Highlights (1,2)
-- Revenue up 2.4% to GBP22.8m (2010: GBP22.2m)
-- Gross profit of GBP16.5m (2010: GBP17.1m)
-- Headline operating profit GBP0.9m (2010: GBP2.2m)
-- Headline pre tax profit GBP0.7m (2010: GBP2.0m)
-- Pre tax loss GBP3.0m (2010: profit GBP1.1m)
(--) Headline basic EPS 1.7p (2010: 7.2p) (3)
-- Basic loss per share 12.9p (2010: earnings per share 2.6p) (3)
-- Proposed dividend doubled to 1.0p per share (2010: 0.5p per share)
-- Public affairs and strategic communications division,
Interel, sold in July 2011 for a total of EUR9.5m.
-- Net debt at 31 December 2011 substantially reduced to GBP1.5m (2010: GBP6.7m)
-- Cash generated by operations of GBP2.2m (2010: GBP3.5m)
-- Headline operating cash conversion rate of 239% (2010: 157%)
-- Refocusing of Group as digital communications services business
-- Momentum of client wins continuing, good new business pipeline
-- Commencing share buy-back programme
1) All results in this statement are before taking account of
separately identified items unless otherwise indicated. These
comprise share option charges, exceptional costs, goodwill
impairment, notional finance costs on deferred consideration and
non-cash deferred tax on goodwill timing differences and are set
out in the consolidated income statement.
2) The consolidated income statement for 2010 has been restated
to exclude discontinued operations.
3) Earnings based on continuing operations
Paul Sanders, Group Chief Executive, said:
"The impact of the economic climate has meant a challenging year
for Hasgrove. However, the Group's restructuring and focus on
digital communications have resulted in improved controls and
operational efficiencies which are already making an impact.
"We are pleased to have significantly reduced our net debt and
to be making good progress with client projects so far this year.
More than 25% of the Group's expected profits for 2012 have been
generated in the first quarter, substantially more than in previous
years. Our confidence in the Group's potential is reflected by the
doubling of the dividend."
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 020 7418 8900
Daniel Harris
Overview
Following the sale of the group's Public Affairs and Strategic
Communications division, Interel, in July 2011, Hasgrove plc is now
a focused Digital and Communication Services group operating under
the Amaze, Interact and Chase brands. There are now more than 260
personnel in the Group, serving a broad base of over 500
clients.
2011 was a very disappointing year for the Group, albeit in a
difficult economic environment. The Group suffered as a result of a
combination of delayed client spending and overruns on two
significant business solutions projects. As a result, changes have
been made to the way that the Group operates and in particular, how
it monitors project delivery and profitability.
Hasgrove has now completed its restructuring and all office
moves have now taken place. No further exceptional costs relating
to the restructuring are expected. The Group's borrowings were
refinanced following the Interel disposal, reducing considerably
the Group's net debt. The Group can now place a renewed focus on
servicing its clients and improving operational efficiencies.
Operational Review
Amaze
Amaze is a leading pan-European integrated marketing and
technology company, specialising in global digital strategy and
communications, web-based business solutions and public relations.
Amaze delivered revenues of GBP17.4m (2010: GBP16.4m) with
operating profits before separately identified items and central
costs of GBP0.8m (2010: GBP1.4m). The gross profit was GBP11.9m
(2010: GBP12.3m). The reduced profits resulted from delayed client
spend and overruns on certain projects.
In 2011 Amaze continued the consolidation and simplification of
the business units that had previously been acquired. In
particular, the Communications and Design and Build teams merged
into one business, removing management tiers and developing a
stronger, more focused and controlled business.
Following a detailed review of the business in September and
October, a new Amaze Board was formed led by Natalie Gross, now CEO
of Amaze. Amaze Technology was merged into the core business and
the technical team has been strengthened and now operates across
the business.
As the digital sector continues to grow, Amaze has focused on
developing strong points of differentiation to position the
business for future growth. This has focused primarily on key
strategic services including:
-- Digital strategy driven by the launch of a planning and
insight centre, which specialises in business platforms and
audience research and analysis;
-- Technical consulting including SharePoint 2010;
-- Global implementation and roll-out services. Amaze delivers
business solutions across 104 countries, 4 continents and covers
more than 28 languages; and
-- Strong user experience involving creative and interactive
development skills for large technology projects.
This approach has enabled the company to attract global clients
with global solution requirements.
Following this repositioning, Amaze has focused on growing
existing clients such as Unilever and delivering next generation
digital platforms, including mobile, for Lexus and Toyota.
The second half of 2011 saw a number of major new client wins
including Coats plc, East Coast Mainline and ODEON Cinemas. This
has helped to strengthen capabilities in key growth areas such as
e-commerce, transaction-led solutions and mobile. For these types
of projects Amaze is regularly bidding against leading management
consultancies as well as the top interactive agencies.
Amaze also saw significant growth in their B2B client base and
an increased number of digital communications clients such as
Laterooms and Saucy Fish.
As part of the success in winning global clients, Amaze has also
strengthened its technology partnerships with market leaders such
as Enterprise Web Content Management developer, SDL Tridion and has
developed strategic alliances with global management
consultancies.
The company is also focussed on developing products and its own
intellectual property under the AmazeOne brand, with an analytics
toolset currently in development.
In 2011 Amaze opened its new offices in London, moving into a
prime location on Dean Street in Soho, which will allow for growth
to strengthen Amaze's presence in the core areas of client services
and consultancy.
Amaze is currently ranked 15th in the UK's Top 100 Interactive
Agencies by New Media Age and fifth in the website design and build
category. The company is also positioned 10(th) in Marketing's 2011
Digital Agency League Table.
Interact
Interact delivered revenues of GBP2.5m (2010: GBP2.0m) with
operating profits before central costs of GBP0.4m (2010: GBP0.4m).
Gross profit improved to GBP2.4m (2010: GBP2.0m).
2011 saw a substantial increase in overall revenue with key
increases in new business software sales, existing customer sales
and recurring revenue.
In spite of the increased sales, operating profits were flat due
to further investment totalling GBP0.4m, including additional sales
and marketing staff, advertising and promotion in both the UK and
the US and software development.
Intranet new business software sales increased by over 90% and
reflected the repositioning of Interact as an Enterprise platform
with new wins from G4S, Arriva, Yodel, UKAR (formally Bradford and
Bingley and Northern Rock), Northampton NHS, Superdrug and Park
Plaza.
It was encouraging to see customer sales, excluding recurring
support revenue, increase substantially by 350%. These sales relate
to extra licences and additional modules of functionality, both of
which are a very valuable source of revenue.
Recurring support and software updates revenue increased by 28%
to GBP0.6m and retention rates of customers stayed well above the
95% level of 2010. Based on current projections the level of
recurring support and software updates revenue should exceed the
fixed costs within the next three years.
In 2011 Interact strengthened its technical partnerships with
other software companies to facilitate integration of Interact
Intranet with other web based business tools. Such partnerships
included Basecamp (leading web-based project management and
collaboration tool) and Mailchimp (leading e-mail newsletter
portal) in order to strengthen the focus on one platform.
Interact is uniquely placed in the Intranet market between pure
play 'social' platforms, such as Yammer, and more traditional
document management systems like SharePoint. Organisations are now
seeing the benefit that intelligent social Intranets can play and
want to have one platform to connect content, processes and people
- the key USP of Interact.
Development of the Interact Intranet platform in 2011 further
strengthened its position within the global intranet market with
significant development in both product intelligence and social
business. The successful launch of these additional features and
functionality, such as Interact Teams, has enabled customers to
derive more value and has increased adoption. Interact's 2011 US
sales success culminated in the recruitment of an established
Dallas based intranet implementer in February 2012, which marked a
significant milestone in our controlled US expansion strategy.
Interact now has a firm sales, support and implementation base in
the US to service its existing US customers and substantially grow
sales in 2012 and beyond.
Interact's average intranet sales value has tripled over the
last four years, which reflects the move towards working with
larger enterprise organisations. This trend is gathering pace and
is expected to continue.
The Chase
The Chase is an award winning creative design agency. It
experienced a difficult year due to significant delays in client
projects with revenues reducing to GBP2.9m (2010: GBP3.8m) and
operating profits before central costs dropping to GBP0.1m (2010:
GBP0.7m). Gross profit reduced to GBP2.1m (2010: GBP2.9m).
An encouraging performance in the second half of the year
improved a first half loss of GBP125,000 into a full year profit
due to cost restructuring and improved client engagement.
Awards in 2011 included a Cannes Gold and Gold at the New York
Festivals. The Chase continues to be highly placed in the UK
creative leagues tables: second in branding and print and fourth
overall.
Financial Highlights
The results for the Group are presented based on the continuing
operations of Amaze, Interact and The Chase, with the Interel
business, the Group's Public Affairs and Strategic Communications
division, presented as discontinued following its sale in July
2011. The commentary below relates to the Group's continuing
business, unless otherwise stated.
The Group's revenue increased by 2.4 % to GBP22.8m (2010:
GBP22.2m), with gross profits of GBP16.5m (2010: GBP17.1m).
Headline operating profit, as defined in the consolidated income
statement, was GBP0.9m (2010: GBP2.2m), a decrease of 58%.
The operating loss was GBP2.8m (2010: profit GBP1.4m) after
charging separately identified items totalling GBP3.6m (2010:
GBP0.7m).
The separately identified items include a non-cash element
amounting to GBP2.7m in respect of goodwill impairment, primarily
associated with the design business, the Chase. In addition, the
Group incurred a further GBP0.9m of exceptional charges primarily
associated with redundancy costs arising from cost cutting and
business consolidation, completion of office moves which commenced
in 2010 and bank refinancing during the year.
Headline profit before tax, was GBP0.7m (2010: GBP2.0m) after
charging interest of GBP0.2m (2010:GBP0.2m).
Group loss before tax was GBP3.0m (2010: profit GBP1.1m) after
the separately identified items and the non-cash items of notional
finance costs and share option charges.
The loss on disposal of discontinued operations associated with
the sale of Interel amounted to GBP7.1m. Total consideration was
EUR9.5m, of which EUR7.6m was paid on completion, a further EUR0.8m
payable in 2 equal instalments in July 2012 and July 2013 and the
remaining EUR1.1m payable in July 2013 which is secured via a
charge on 1,163,149 ordinary shares in the Company held by Interel
Holdings SA, the buyer. Net assets disposed of amounted to GBP3.4m
and goodwill written off amounted to GBP12.9m.
Headline basic earnings per share from continuing operations was
1.7p (2010: 7.2p) and reported basic loss per share was 40.9p
(2010: earnings per share 6.1p).
The Board is proposing to double the dividend to 1.0p per share
(2010: 0.5p per share). Subject to shareholder approval, the
dividend will be paid on 18 July 2012 to all shareholders on the
register at 22 June 2012. The Company's shares go ex-dividend on 20
June 2012.
Cash generated by operations was encouraging at GBP2.2m (2010:
GBP3.5m), representing a headline operating profit conversion rate
of 239% (2010: 157%) due to a continued focus on working capital
management.
The Group's year end net debt reduced to GBP1.5m (31 December
2010: GBP6.7m), largely as a result of the Interel sale.
Following the sale of Interel, the Group refinanced with
Barclays resulting in total facilities of GBP3.4m. The Facilities
include a EUR2.9m term loan repayable between October 2012 and
January 2015.
Earn-outs paid during the year amounted to GBP0.9m with the
estimate of future earn-outs at the year end being GBP0.9m (2010:
GBP2.3m) of which GBP0.8m is due in 2012.
Outlook
The progress of a number of significant projects that began
towards the end of 2011 is encouraging. In the first quarter of
2012 these projects entered the main development phase and have
been closely managed to ensure both client service and
profitability is maintained.
The Board is also pleased to see continued momentum in both the
number and average size of sales of Interact Intranet both in the
UK and the US.
More than 25% of the Group's forecast profits for 2012 have been
generated in the first quarter, which is substantially more than in
previous years.
Consolidated Income Statement
Year Ended 31 December 2011
2011 2010 Restated
Notes GBP000 GBP000
Continuing operations
Revenue 22,759 22,226
Cost of sales (6,297) (5,087)
Gross profit 16,462 17,139
Administrative expenses before separately
identified items (15,530) (14,906)
Headline operating profit 932 2,233
Share option charge (89) (93)
Exceptional costs (902) (736)
Goodwill impairment (2,709) -
----------------------------------------------------- -------- -------------
Total administrative expenses (19,230) (15,735)
Operating (loss)/profit (2,768) 1,404
Finance income 1 2
Notional finance cost on deferred
consideration (19) (106)
Finance costs (214) (202)
Total finance costs (233) (308)
Headline profit before tax 719 2,033
Share option charge (89) (93)
Exceptional costs (902) (736)
Goodwill impairment (2,709) -
Notional finance cost on deferred
consideration (19) (106)
----------------------------------------------------- -------- -------------
(Loss)/profit before tax (3,000) 1,098
Tax (75) (480)
(Loss)/profit for the financial year
from continuing operations (3,075) 618
Discontinued operations
(Loss)/profit from discontinued operations (6,680) 839
(Loss)/profit for the financial year (9,755) 1,457
Basic (loss)/ earnings per share Note
(pence) - from continuing operations 3 (12.9)p 2.6p
Diluted (loss)/ earnings per share Note
(pence) - from continuing operations 3 (12.9)p 2.6p
Basic (loss)/ earnings per share Note
(pence) - total 3 (40.9)p 6.1p
Diluted (loss)/ earnings per share Note
(pence) - total 3 (40.9)p 6.0p
Consolidated Statement of Comprehensive Income
Year Ended 31 December 2011
2011 2010
GBP000 GBP000
(Loss)/profit for the financial year (9,755) 1,457
Other comprehensive income
Gains on hedges of net investments taken
to equity - 191
Exchange differences on translation of foreign
operations - (786)
Other comprehensive income for the year - (595)
Total comprehensive (expense)/income for
the year (9,755) 862
Consolidated Statement of Financial Position
At 31 December 2011
2011 2010
GBP000 GBP000
Non-current assets
Goodwill 17,064 32,701
Other intangible assets 613 582
Property, plant and equipment 1,117 1,706
Deferred tax asset 73 240
18,867 35,229
Current assets
Inventories - 57
Trade and other receivables 5,965 9,120
Corporation tax receivable 63 -
Cash and cash equivalents 1,069 -
7,097 9,177
Total assets 25,964 44,406
Current liabilities
Trade and other payables (5,377) (6,722)
Current tax liabilities - (241)
Obligations under finance
leases (131) (101)
Borrowings (241) (3,476)
Deferred consideration (764) (1,548)
(6,513) (12,088)
Net current assets/(liabilities) 584 (2,911)
Non-current liabilities
Obligations under finance
leases - (113)
Borrowings (2,175) (3,044)
Deferred consideration (90) (742)
Deferred tax liability (929) (770)
(3,194) (4,669)
Total liabilities (9,707) (16,757)
Net assets 16,257 27,649
Equity
Share capital 2,414 2,383
Share premium account 15,079 14,959
Translation reserve - 1,758
Retained earnings (1,236) 8,549
Total equity 16,257 27,649
Consolidated Statement of changes in equity
Year ended 31 December 2011
Share premium Translation Retained
Share capital account reserve earnings Total
GBP000 GBP000 GBP000 GBP000 GBP000
Balance at 1 January 2010 2,383 14,959 2,353 7,118 26,813
Profit for the year - - - 1,457 1,457
Other comprehensive income
for the year - - (595) - (595)
Total comprehensive income
for the year - - (595) - 862
Dividends - - - (119) (119)
Credit to equity for equity-settled
share based payments - - - 93 93
Balance at 31 December 2010 2,383 14,959 1,758 8,549 27,649
Loss for the year - - - (9,755) (9,755)
Total comprehensive income
for the year - - - (9,755) (9,755)
Transfer on disposal of foreign
operations - - (1,758) - (1,758)
Issue of share capital 31 120 - - 151
Dividends - - - (119) (119)
Credit to equity for equity-settled
share based payments - - - 89 89
Balance at 31 December 2011 2,414 15,079 - (1,236) 16,257
Consolidated Statement of Cash Flows
Year ended 31 December 2011
2011 2010
GBP000 GBP000
Cash generated by operations Note 4 2,226 3,498
Income taxes paid (53) (903)
Net cash from operating activities 2,173 2,595
Investing activities
Interest paid (214) (211)
Interest received 1 2
Purchase of property, plant and
equipment (591) (850)
Expenditure on product development (321) (315)
Payment of deferred consideration (912) (1,273)
Disposal of subsidiary 5,177 -
Net cash generated from/(used in)
investing activities 3,140 (2,647)
Financing activities
Dividends paid (119) (119)
New loan received 2,522 -
Repayments of borrowings (6,136) (588)
Increase/ (decrease) in bank overdrafts
and revolving credit facility - 83
Net cash outflow from financing
activities (3,733) (624)
Net increase/(decrease) in cash
and cash equivalents 1,580 (676)
Cash and cash equivalents at beginning
of year (467) 290
Effect of foreign exchange rate
changes (44) (81)
Cash and cash equivalents at end
of year 1,069 (467)
Selected explanatory notes
Year ended 31 December 2011
1. Financial information
The condensed consolidated financial statements do not include
all of the information and disclosures required for full annual
financial statements, do not comprise statutory accounts within the
meaning of section 435 of the Companies Act 2006 and should be read
in conjunction with the group's annual report and financial
statements for the year ended 31 December 2011.
The comparative figures for the year ended 31 December 2010 do
not comprise the group's statutory accounts for that financial
year. Those accounts were reported upon by the group's auditor and
delivered to the registrar of companies. The report of the auditor
was unqualified and did not include a reference to any matters to
which the auditor drew attention by way of emphasis without
qualifying the audit report. The report for the year ended 31
December 2010 did not contain a statement under section 498(2) or
(3) of the Companies Act 2006.
Copies of the Group's financial statements will be posted to
shareholders in June and after approval at the Annual General
Meeting will be delivered to the Registrar of Companies. Further
copies will be available from the registered office of the
Group.
2. Basis of accounting
The accounting policies, presentation and methods of computation
have been prepared on a basis consistent with the Hasgrove plc
financial statements for the year ended 31 December 2011, and are
prepared in accordance with the recognition and measurement
criteria of International Financial Reporting Standards (IFRSs) as
adopted by the European Union (EU) that are effective for the year
ended 31 December 2011. In preparing this preliminary announcement
on a going concern basis, the directors have satisfied themselves
that the group has adequate resources to continue in operational
existence for the foreseeable future. In reaching this conclusion,
the directors have considered forecasts of future performance and
the group's bank facilities as referred to in the financial
highlights section.
3. (Loss)/earnings per share
The calculation of the basic and diluted (loss)/earnings per
share is based on the following data:
(Loss)/earnings
2011 2010
Continuing and discontinued operations GBP000 GBP000
Earnings for the purposes of total basic
(loss)/ earnings per share being net (loss)/
profit (9,755) 1,457
Continuing operations
Earnings for the purposes of continuing
basic (loss)/ earnings per share being net
(loss)/ profit (3,075) 618
Number Number
000's 000's
Number of shares
Weighted average number of ordinary shares
for the purposes of basic earnings per share 23,863 23,831
Effect of dilutive potential ordinary shares:
Share options 280 292
Weighted average number of ordinary shares
for the purposes of diluted earnings per
share 24,143 24,123
Headline earnings per share
The calculation of headline basic and headline diluted earnings
per share is based on the earnings after adjustments as
follows:
2011 2010
GBP000 GBP000
(Loss)/ profit for the financial year (9,755) 1,457
Share option charges 89 93
Exceptional costs (net of tax relief) 663 691
Goodwill impairment 2,709 -
Notional finance cost on deferred consideration 19 106
Deferred tax timing difference on acquired
goodwill - 218
Discontinued operations (399) (839)
Loss on disposal of subsidiary 7,079 -
Headline earnings 405 1,726
4. Notes to the statement of cash flows
2011 2010
GBP000 GBP000
Operating (loss)/ profit for the year (2,768) 2,442
Adjustments for:
Operating profit from discontinued operations 574 -
Depreciation of property, plant and equipment 557 553
Amortisation 290 99
Share-based payment expense 89 93
Loss on disposal of fixed assets - 162
Impairment of goodwill 2,709 -
Operating cash flows before movements in working
capital 1,451 3,349
Decrease) / (increase) in inventories 57 (16)
(Increase) in receivables (301) (676)
Increase in payables 1,019 841
Cash generated by operations 2,226 3,498
Cash and cash equivalents (which are presented as a single class
of assets on the face of the balance sheet) comprise cash at bank
and other short-term highly liquid investments with a maturity of
three months or less, offset by bank overdrafts where there is a
right of set-off and cash pooling in place.
5. Other information
The report and accounts of the Group for the twelve months ended
31 December 2011 will be posted to shareholders by 31 May 2012 and
will be available on the Group's website at www.hasgrove.com.
This information is provided by RNS
The company news service from the London Stock Exchange
END
FR EAXLSAFLAEFF
Hasgrove (LSE:HGV)
Historical Stock Chart
From Feb 2025 to Mar 2025
Hasgrove (LSE:HGV)
Historical Stock Chart
From Mar 2024 to Mar 2025
