TIDMHNT
RNS Number : 0805M
Huntsworth PLC
26 July 2017
Huntsworth
Interim results for the six months to 30 June 2017
Continuing recovery with strong organic growth
-- Headline profit before tax up by 58%
-- Interim dividend increased by 10% to 0.55p
-- Strong growth from Huntsworth Health
-- Grayling returns to profit
-- Acquisition of The Creative Engagement Group (TCEG) in July 2017
Huntsworth plc, the healthcare communications and public
relations group, today announces its interim results for the six
months to 30 June 2017.
Financial highlights
30 June 30 June
2017 2016
Revenue GBP94.2m GBP86.6m +9%
Profit / (loss) before GBP9.2m GBP(8.9)m
tax
Diluted profit /
(loss) per share 1.6p (2.7)p
Headline operating
profit(1) GBP11.0m GBP7.3m +50%
Headline profit before
tax(1) GBP10.0m GBP6.4m +58%
Headline basic &
diluted EPS(1) 2.4p 1.7p +41%
Dividend per share 0.55p 0.50p +10%
Net debt GBP26.8m GBP37.1m
Paul Taaffe, CEO of Huntsworth plc, commented:
"The Group grew very strongly through the first half of 2017 led
by Huntsworth Health assisted by favourable movements in exchange
rates. Grayling has responded well to last year's restructuring
with a return to profit. Our momentum going into the second half
remains strong, driven by continued growth at Huntsworth Health,
the first time impact of the TCEG acquisition and improving trading
at Grayling."
Notes:
1. Unless otherwise stated, results have been adjusted to
exclude highlighted items. An explanation of how all adjusted
measures have been calculated is included in Appendix 1.
Enquiries
Huntsworth 020 3861 3999
Paul Taaffe, Chief Executive
Officer
Neil Jones, Chief Financial
Officer
Citigate Dewe Rogerson 020 7638 9571
Simon Rigby
Elizabeth Kittle
Chief Executive's Statement
Group overview
Revenues for the first half of 2017 were GBP94.2 million (2016:
GBP86.6 million), an increase of 9% compared to the prior year, or
7% on a like-for-like(2) basis. Profit before tax and highlighted
items was GBP10.0 million (2016: GBP6.4 million), an increase of
58%.
The first half of the year has seen the Group perform strongly,
driven by Huntsworth Health, which grew its revenue and profits by
nearly 20% on a like-for-like basis, and assisted by a stronger US
dollar. In addition, Grayling has returned to profit in the first
half of the year, with three of its four operating units now making
a positive contribution to the Group. Red has grown well in a flat
market, although growth is expected to slow in H2 as client changes
begin to impact, while Citigate Dewe Rogerson was slightly behind
2016 mainly due to the previously highlighted weaker trading
conditions in Asia.
Our main focus for growth and investment remains Huntsworth
Health. Healthcare is a growing sector as clients seek a more
differentiated and increasingly digital offering for their medical
and marketing communications. To further support this we added The
Creative Engagement Group ('TCEG') to our portfolio of leading
agencies in July 2017 for cash consideration of GBP24.7 million.
TCEG consists of three agencies that provide experiential
marketing, primarily to Healthcare clients, and its acquisition
will further strengthen our ability to provide high quality digital
creativity to clients, whilst allowing TCEG to benefit from access
to the Group's existing Healthcare clients.
The Group's cash flow remained strong during the period, with a
net operating inflow before highlighted items of GBP6.4 million
(2016: GBP0.1 million) representing a cash conversion of 58%, ahead
of our normal H1 average. Net debt at 30 June 2017 was GBP26.8
million (2016: GBP37.1 million).
Notes:
2. Like-for-like revenues are stated at constant exchange rates
and are adjusted to include pre-acquisition revenues and exclude
disposals/closures. A reconciliation of like-for-like measures to
IFRS measures is included in Appendix 1.
Divisional overview
Huntsworth Health
First half-year 2017 revenues grew 33% or 20% on a like-for-like
basis to GBP55.3 million, delivering an operating margin of 19.2%
(H1 2016 19.4%).
Huntsworth Health continues to perform well, with strong
double-digit revenue and operating profit growth. This growth
continues to be driven by our largest agencies, with Evoke Health,
our full service digital consumer agency, growing like-for-like
revenues by 26.4%, and Apothecom, our medical communications and
market access agency, growing like-for-like revenues by 15.3%.
Together these two agencies now represent over 80% of divisional
revenue. Profit margins across the division were in line with 2016
despite continued investment, most notably in a new multicultural
agency within Evoke called Fabric together with market access at
Apothecom. In terms of geographical spilt the division remains
heavily weighted to the US, with nearly 90% of revenues generated
there.
New business momentum remains good going into H2, although
revenue growth will be slower than H1, which was exceptionally
high. Consistent with our growth plan, we have won business from an
expanded client base with wins across our healthcare verticals.
The addition of TCEG's experiential and internal communications
skills to the portfolio brings significant revenues from new and
existing Healthcare clients, and allows the divisional agencies the
ability to offer an expanded range of services, which should allow
TCEG to grow its US revenues from its current level of around one
third of total revenues.
Grayling
Grayling revenues fell 24%, or 13% on a like-for-like basis, to
GBP21.0 million, resulting in a profit of GBP0.4m for the period
(H1 2016: loss of GBP0.1m). This performance is in line with our
expectations as we develop Grayling into a more focused business
that operates profitable agencies.
At 30 June 2017, continental Europe, the UK operations (together
representing circa 70% of divisional revenues) and the Middle East
and Africa region are all now profitable. We have further
restructured the US PR offering with the aim of returning that
business to profitability by the start of 2018.
Performance has differed between regions in the first half of
2017. Continental Europe remains the strongest and most profitable
part of the division but has had a mixed performance in H1 with
good growth in Eastern Europe offset by a disappointing performance
in Western Europe. Overall like-for-like revenues are 6% down on H1
2016.
Following a restructure in 2015/2016 and the elimination of
incremental costs from consolidating the London property portfolio,
the UK business made good progress, retaining a number of major
clients, generating positive net new client wins and attracting
high quality new talent.
After a very difficult 2016, the Middle East & Africa
division has returned to profit. Following its exit from Turkey and
Qatar due to extremely difficult trading and political conditions,
the division is now focused on the UAE and Kenya, both of which
have made strong progress during the period.
The US business consists of a federal lobbying business in
Washington DC, which remains profitable, and a general PR business
which continues to transition to a broader client portfolio.
Red
Red performed well in the first half of the year with revenues
growing by 5% to GBP6.9 million. Operating profit for the half year
grew by 16% to GBP1.4 million, with margins improving from 18.2% to
20.1%. Following some movements in the client portfolio, growth is
expected to be slower in H2.
Citigate Dewe Rogerson (CDR)
CDR's revenues grew by 2% due largely to the impact of positive
exchange rates; on a like-for-like basis revenues fell 3%, to
GBP10.9 million, delivering margins of 13.0% (H1 2016 15.1%).
The decrease was primarily driven by the Asia Pacific offices of
CDR, with like-for-like revenues from Greater China down 14% and
Singapore down 9%, reflecting a quieter transaction market in these
regions.
Trading conditions were mixed in the UK, with a strong
performance from financial PR with some notable project wins,
offset by a weaker performance from corporate PR. Overall the UK
agency saw a small fall in like-for-like revenues and margins,
which resulted in an adjustment to staffing levels.
Continental Europe was broadly flat on H1 2016, with a strong
performance in the Netherlands largely offset by a weaker
performance in France.
Dividend
Given the strength of the Group's H1 performance and the outlook
for the remainder of the year the interim dividend is being raised
by 10% to 0.55p (H1 2016: 0.5p).
Group outlook
We expect to see a continued good performance across the Group
in the second half of the year, again led by the Healthcare
Division, along with the first time inclusion of TCEG. We expect
Grayling to continue to deliver improved profitability, whilst CDR
should benefit from the cost savings implemented in the first half
of the year.
Review of Financial Results
Summary of financial results for the six months ended 30 June
2017
Like-for-like
2017 growth 2016
GBPm % GBPm
---------------------------------- ------ -------------- ------- -------
Revenue
Huntsworth Health 55.4 19.6% 41.5
Grayling 21.0 (13.3)% 27.8
CDR 10.9 (3.2)% 10.7
Red 6.9 5.2% 6.6
================================== ====== ============== ======= =======
Total revenue 94.2 6.6% 86.6
---------------------------------- ------ -------------- ------- -------
2017 Margin 2016 Margin
GBPm % GBPm %
---------------------------------- ------ -------------- ------- -------
Operating profit/(loss)
Huntsworth Health 10.7 19.2% 8.0 19.4%
Grayling 0.4 2.1% (0.1) (0.3)%
CDR 1.4 13.0% 1.6 15.1%
Red 1.4 20.1% 1.2 18.2%
---------------------------------- ------ -------------- ------- -------
Total operations 13.9 14.7% 10.7 12.4%
Central costs (3.0) (3.4)
Associates 0.1 -
---------------------------------- ------ -------------- ------- -------
Operating profit before
highlighted items 11.0 11.5% 7.3 8.5%
Highlighted items (Note
3) (0.9) (15.2)
---------------------------------- ------ -------------- ------- -------
Reported operating profit/(loss) 10.1 (7.9)
---------------------------------- ------ -------------- ------- -------
Adjusted basic & diluted
EPS 2.4p 1.7p
Reported basic & diluted
EPS 1.6p (2.7)p
---------------------------------- ------ -------------- ------- -------
Revenue and profit before highlighted items
Revenue in the six months to 30 June 2017 increased by GBP7.6
million to GBP94.2 million (H1 2016: GBP86.6 million).
On a like-for-like basis, revenues grew by 19.6% in Huntsworth
Health and 5.2% in Red. Revenues declined by 13.3% in Grayling and
3.3% in CDR.
Group operating margins rose from 8.5% to 11.5%, primarily
reflecting strong growth from Huntsworth Health, which has higher
margins, and a return to profitability in Grayling.
Highlighted items
Highlighted items in the first half of 2017 relate primarily to
the amortisation of intangible assets (GBP0.4 million) and
acquisition related costs (GBP0.4 million). Highlighted items in H1
2016 included an impairment of GBP15.0 million in respect of
Grayling goodwill.
After highlighted items, the statutory reported operating profit
was GBP10.1 million (H1 2016: loss of GBP7.9 million).
Currency
The impact of changes in exchange rates against H1 2016 was to
increase revenues by GBP7.9 million and increase operating profits
by GBP2.5 million, which includes GBP1.3 million of incremental
gains on hedging instruments.
Although the average sterling rate in H1 2017 was weaker than H1
2016, sterling actually strengthened between 31 December 2016 and
30 June 2017 resulting in a GBP3.6 million debit to Other
Comprehensive Income and Expense arising from the retranslation of
the Group's overseas assets.
Tax
The total tax charge of GBP3.9 million comprises a tax charge of
GBP2.2 million on underlying earnings and GBP1.7 million on
highlighted items. The pre-highlighted tax expense is based on the
expected full year tax rate of 22% (year ended 31 December 2016:
18%). For the periods ended 30 June 2016 and 31 December 2016 the
Group has reclassified the deferred tax expense on US intangible
assets from profit before tax and highlighted items into
highlighted items. This is on the basis that the deferred tax
expense would only ever crystallise on a sale of the relevant
businesses, which is not anticipated at the current time, and such
a sale would be a highlighted item.
Earnings per share
Profits attributable to ordinary shareholders before highlighted
items were GBP7.8 million (H1 2016: GBP5.5 million). Adjusted basic
and diluted earnings per share increased to 2.4p (H1 2016:
1.7p).
Profits attributable to ordinary shareholders after highlighted
items were GBP5.3 million (H1 2016: loss GBP8.9 million), resulting
in basic and diluted earnings per share of 1.6p (H1 2016: loss of
2.7p).
Dividends
Given the strength of the Group's H1 performance and the outlook
for the remainder of the year the interim dividend is being raised
by 10% to 0.55p (H1 2016: 0.5 pence). The record date for this
dividend will be 29 September 2017 and it is payable on 6 November
2017. A scrip dividend alternative will be available.
Balance sheet and cash flow
Cash inflow from operations totalled GBP6.4 million (H1 2016:
GBP0.1 million), before highlighted cash outflows of GBP1.3
million. Other principal cashflows during the period were net
payments for interest, tax and non-current assets of GBP3.1 million
(H1 2016: GBP5.2 million), offset by the proceeds on the sale of
Whiteboard and Hudson Sandler of GBP2.4 million.
Net debt at 30 June 2017 was GBP26.8 million (30 June 2016:
GBP37.1 million; 31 December 2016: GBP31.6 million) which is within
the Group's available facilities. Financial covenants based on the
Group's facility agreements continue to be comfortably met.
On 3 July 2017, after the period end, the Group exercised its
accordion option to extend its available facilities to GBP80
million, which remain committed until 31 May 2019.
Key risks and uncertainties
The Directors monitor the risks that the Group is exposed to and
the risk management processes and internal controls in place to
mitigate these risks. Our risk management approach is led by the
Risk Committee and is designed to identify risks to the Group using
both a bottom-up and top-down approach.
The Directors have considered whether the nature or level of
risk that the Group is exposed to has changed significantly in the
first half of 2017 and have concluded that whilst uncertainties
remain in the macroeconomic environment, particularly around the
UK's exit from the European Union, the risk profile is largely
unchanged. The Directors continue to review risk levels and will
act to mitigate any increased risks accordingly.
As described more fully on pages 26 to 29 of the 2016 Annual
Report and Accounts, the Group's key risks and uncertainties are
identified as:
-- economic downturn -- this can result in fewer new client mandates, longer procurement processes, pricing
pressures and an increased risk of bad debt;
-- currency risk -- this can cause earnings to fluctuate, particularly as the proportion of the Group's profits made
in the US is increasing;
-- investment decisions fail to deliver expected growth -- investments may be less financially beneficial than
anticipated;
-- service offering fails to evolve to meet changing market needs -- failure to evolve can result in loss of market
share, client losses and pressures on pricing;
-- loss of key clients -- impacting revenue and profit;
-- loss of key talent -- key individuals maintain client relationships and service quality;
-- information systems access and security -- breaches could compromise operations;
-- loan facility and covenant headroom risk -- resulting in reputational damage and/or impairing the Group's ability
to make future acquisitions or settle existing obligations;
-- legal and regulatory compliance -- potentially giving rise to reputational and/or financial damage.
The Group has a number of ongoing processes to identify,
evaluate and manage the key financial, operating and compliance
risks faced by the Group and for determining the appropriate course
of action to manage and mitigate those risks. The Board delegates
the monitoring of these internal control and risk management
processes to the Audit Committee, and in turn to the Risk
Committee. Further details of the risk management processes
undertaken are included on page 36 of the 2016 Annual Report and
Accounts.
Forward looking statements
The interim management report contains certain forward looking
statements in respect of Huntsworth plc and the operation of its
subsidiaries. These statements and forecasts involve risk and
uncertainty because they relate to events and depend upon
circumstances that may or may not occur in the future. There are a
number of factors that could cause actual results or developments
to differ materially from those expressed or implied by these
forward looking statements and forecasts. Nothing in this
announcement should be construed as a profit forecast.
Condensed Consolidated Income Statement
for the six months ended 30 June 2017
Unaudited Unaudited Audited
6 months 6 months Year
ended ended ended
30 June 30 June 31 December
2017 2016 2016
Notes GBP000 GBP000 GBP000
------------------------------------------ ----- --------- --------- ------------
Turnover 111,949 104,818 216,145
------------------------------------------ ----- --------- --------- ------------
Revenue 2 94,200 86,556 180,137
Operating expenses (84,178) (94,436) (194,723)
Share of profit from associate 99 - 57
------------------------------------------ ----- --------- --------- ------------
Operating profit/(loss) 2 10,121 (7,880) (14,529)
------------------------------------------ ----- --------- --------- ------------
Finance income 4 3 5 9
Finance costs 4 (941) (978) (1,982)
------------------------------------------ ----- --------- --------- ------------
Profit/(loss) before tax 9,183 (8,853) (16,502)
------------------------------------------ ----- --------- --------- ------------
Comprising:
Profit before tax and highlighted
items 3 10,039 6,354 16,005
Highlighted items 3 (856) (15,207) (32,507)
------------------------------------------ ----- --------- --------- ------------
9,183 (8,853) (16,502)
Taxation expense 5 (3,882) (26) (1,759)
------------------------------------------ ----- --------- --------- ------------
Profit/(loss) for the period attributable
to Parent Company's equity shareholders 5,301 (8,879) (18,261)
------------------------------------------ ----- --------- --------- ------------
Profit/(loss) per share
Basic - pence 7 1.6 (2.7) (5.6)
Diluted - pence 7 1.6 (2.7) (5.6)
Condensed Consolidated Statement of Comprehensive Income
for the six months ended 30 June 2017
Audited
Unaudited Unaudited Year ended
6 months ended 30 June 2017 6 months ended 30 June 2016 31 December 2016
GBP000 GBP000 GBP000
Profit/(loss) for the period 5,301 (8,879) (18,261)
Other comprehensive income and
expense
Items that may be reclassified
subsequently to the Income
Statement
Currency translation differences (3,607) 10,786 20,095
Tax credit on currency
translation differences 53 386 -
Amounts recognised in the Income
Statement on interest rate swaps 128 96 (664)
Movement in valuation of interest
rate swaps 41 (754) 231
Tax (expense)/credit on interest
rate swaps (32) 132 82
---------------------------------- ----------------------------- ----------------------------- ------------------
Total items that may be
reclassified subsequently to
profit or loss (3,417) 10,646 19,744
Other comprehensive income and
expense for the period (3,417) 10,646 19,744
---------------------------------- ----------------------------- ----------------------------- ------------------
Total comprehensive income and
expense for the period
attributable to Parent Company's
equity
shareholders 1,884 1,767 1,483
---------------------------------- ----------------------------- ----------------------------- ------------------
Condensed Consolidated Balance Sheet
as at 30 June 2017
Unaudited Unaudited
6 months 6 months Audited
ended ended Year ended
30 June 30 June 31 December
2017 2016 2016
Notes GBP000 GBP000 GBP000
------------------------------------- ------
Non-current assets
Intangible assets 8 155,962 172,506 159,797
Property, plant and equipment 10,470 9,950 11,832
Investment in associate 9 281 - 182
Other receivables 717 170 188
Deferred tax assets 1,462 2,377 926
------------------------------------- ------ ---------- ---------- -------------
168,892 185,003 172,925
------------------------------------- ------ ---------- ---------- -------------
Current assets
Work in progress 7,360 5,021 5,396
Trade and other receivables 62,764 54,671 56,087
Current tax receivable 526 574 1,504
Derivative financial assets 10 495 - -
Cash and short-term deposits 13 36,656 10,544 14,978
Assets of disposal group classified
as held for sale - - 3,319
------------------------------------- ------ ---------- ---------- -------------
107,801 70,810 81,284
------------------------------------- ------ ---------- ---------- -------------
Current liabilities
Obligations under finance leases (2) (3) (2)
Bank overdraft (110) - (495)
Trade and other payables (55,285) (47,523) (47,920)
Derivative financial liabilities 10 (232) (581) (154)
Current tax payable (1,542) (1,044) (756)
Provisions 12 (521) (1,322) (1,979)
------------------------------------- ------ ---------- ---------- -------------
(57,692) (50,473) (51,306)
------------------------------------- ------ ---------- ---------- -------------
Non-current liabilities
Bank loans 11 (63,519) (46,280) (45,412)
Obligations under finance leases (3) (26) (4)
Trade and other payables (2,917) (1,814) (2,892)
Derivative financial liabilities 10 (124) (750) (525)
Deferred tax liabilities (199) (199) (202)
Provisions 12 (1,292) (2,147) (1,553)
-------------
(68,054) (51,216) (50,588)
------------------------------------- ------ ---------- ---------- -------------
Net assets 150,947 154,124 152,315
------------------------------------- ------ ---------- ---------- -------------
Equity
Called up share capital 107,188 107,185 107,188
Share premium account 62,926 62,801 62,926
Merger reserve 29,468 29,468 29,468
Foreign currency translation
reserve 40,397 34,695 44,004
Hedging reserve (356) (750) (525)
Treasury shares (1,166) (1,166) (1,166)
Investment in own shares held
in the Employee Benefit Trusts (1,764) (1,867) (1,764)
Retained earnings (85,746) (76,242) (87,816)
------------------------------------- ------ ---------- ---------- -------------
Equity attributable to equity
holders of the parent 150,947 154,124 152,315
------------------------------------- ------ ---------- ---------- -------------
Condensed Consolidated Cash Flow Statement
for the six months ended 30 June 2017
Unaudited Unaudited
6 months 6 months Audited
ended ended Year ended
30 June 30 June 31 December
2017 2016 2016
Notes GBP000 GBP000 GBP000
--------------------------------------- ----- --------- --------- ------------
Cash inflow/(outflow) from operating
activities
Cash inflow/(outflow) from operations 13(a) 5,106 (1,342) 12,640
Interest paid (694) (795) (1,629)
Interest received 3 4 6
Net tax paid (1,352) (505) (2,107)
--------------------------------------- ----- --------- --------- ------------
Net cash inflow/(outflow) from
operating activities 3,063 (2,638) 8,910
--------------------------------------- ----- --------- --------- ------------
Cash inflow/(outflow) from investing
activities
Proceeds from sale of businesses,
net of cash disposed 2,375 - 462
Acquisition of intangible assets - (488) (488)
Cost of internally developed
intangible assets (180) (505) (933)
Purchases of property, plant
and equipment (887) (2,930) (5,053)
Proceeds from sale of property,
plant and equipment - 7 27
--------------------------------------- ----- --------- --------- ------------
Net cash inflow/(outflow) from
investing activities 1,308 (3,916) (5,985)
--------------------------------------- ----- --------- --------- ------------
Cash inflow/(outflow) from financing
activities
Proceeds from sale of own shares
to settle share options - 251 251
Repayment of finance lease liabilities (1) (2) (24)
Net drawdown of borrowings 17,975 6,975 5,975
Dividends paid to equity holders
of the parent - - (5,562)
--------------------------------------- ----- --------- --------- ------------
Net cash inflow from financing
activities 17,974 7,224 640
--------------------------------------- ----- --------- --------- ------------
Increase in cash and cash equivalents 22,345 670 3,565
--------------------------------------- ----- --------- --------- ------------
Movements in cash and cash equivalents
Increase in cash and cash equivalents 22,345 670 3,565
Effects of exchange rate fluctuations
on cash held (282) 956 2,000
Cash and cash equivalents at
1 January 14,483 8,918 8,918
--------------------------------------- ----- --------- --------- ------------
Cash and cash equivalents at
end of period 13(c) 36,546 10,544 14,483
--------------------------------------- ----- --------- --------- ------------
Condensed Consolidated Statement of Changes in Equity
for the six months ended 30 June 2017
Called Foreign
up Share currency Investment
share premium Merger translation Hedging Treasury in Retained Total
own
capital account reserve reserve reserve shares shares earnings Equity
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
------------------- -------- -------- -------- ------------ -------- --------- ----------- --------- --------
At 1 January
2016 (audited) 107,170 62,811 30,369 23,909 (92) (1,166) (4,095) (63,604) 155,302
------------------- -------- -------- -------- ------------ -------- --------- ----------- --------- --------
Loss for the
period - - - - - - - (8,879) (8,879)
Other
comprehensive
income/(expense) - - - 10,786 (658) - - 518 10,646
=================== ======== ======== ======== ============ ======== ========= =========== ========= ========
Total
comprehensive
income/(expense) - - - 10,786 (658) - - (8,361) 1,767
Settlement
of deferred
consideration 15 - 593 - - - - - 608
Settlement
of share options - - - - - - 2,228 (1,977) 251
Share issue
costs - (10) - - - - - - (10)
Charge for
share-based
payments - - - - - - - 269 269
Tax on share-based
payments - - - - - - - 8 8
Equity dividends - - - - - - - (4,071) (4,071)
Transfer - - (1,494) - - - - 1,494 -
------------------- -------- -------- -------- ------------ -------- --------- ----------- --------- --------
At 30 June
2016 (unaudited) 107,185 62,801 29,468 34,695 (750) (1,166) (1,867) (76,242) 154,124
------------------- -------- -------- -------- ------------ -------- --------- ----------- --------- --------
Loss for the
period - - - - - - - (9,382) (9,382)
Other
comprehensive
income/(expense) - - - 9,309 225 - - (436) 9,098
=================== ======== ======== ======== ============ ======== ========= =========== ========= ========
Total
comprehensive
income/(expense) - - - 9,309 225 - - (9,818) (284)
Settlement
of share options - - - - - - 103 (103) -
Share issue
costs - (11) - - - - - - (11)
Credit for
share-based
payments - - - - - - - (35) (35)
Credit for
unclaimed
dividends - - - - - - - 11 11
Tax on share-based
payments - - - - - - - 2 2
Scrip dividends 3 136 - - - - - - 139
Equity dividends - - - - - - - (1,631) (1,631)
------------------- -------- -------- -------- ------------ -------- --------- ----------- --------- --------
At 31 December
2016 (audited) 107,188 62,926 29,468 44,004 (525) (1,166) (1,764) (87,816) 152,315
------------------- -------- -------- -------- ------------ -------- --------- ----------- --------- --------
Profit for
the period - - - - - - - 5,301 5,301
Other
comprehensive
(expense)/income - - - (3,607) 169 - - 21 (3,417)
=================== ======== ======== ======== ============ ======== ========= =========== ========= ========
Total
comprehensive
(expense)/income - - - (3,607) 169 - - 5,322 1,884
Charge for
share-based
payments - - - - - - - 655 655
Tax on share-based
payments - - - - - - - 171 171
Equity dividends - - - - - - - (4,078) (4,078)
At 30 June
2017 (unaudited) 107,188 62,926 29,468 40,397 (356) (1,166) (1,764) (85,746) 150,947
------------------- -------- -------- -------- ------------ -------- --------- ----------- --------- --------
Notes to the Financial Statements
1. Basis of preparation
The condensed consolidated unaudited interim financial
statements for the six months ended 30 June 2017 have been prepared
in accordance with the Disclosure and Transparency Rules of the
Financial Conduct Authority, IAS 34 "Interim Financial Reporting"
and the Group's accounting policies.
The Group's accounting policies are in accordance with
International Financial Reporting Standards as adopted by the
European Union and are set out in the Group's Annual Report and
Accounts 2016 on pages 68 - 73, except as noted below. These are
consistent with the accounting policies which the Group expects to
adopt in its 2017 Annual Report. The Group has not early adopted
any Standard, Interpretation or Amendment that has been issued but
is not yet effective.
The information relating to the six months ended 30 June 2017
and 30 June 2016 is unaudited and does not constitute statutory
financial statements as defined in Section 434 of the Companies Act
2006. The information has however been reviewed by the auditors and
their report to the Board of Huntsworth plc is set out on page 27
of this document. The comparative figures for the year ended 31
December 2016 have been extracted from the Group's Annual Report
and Accounts 2016, on which the auditors gave an unmodified opinion
and did not include a statement under section 498 (2) or (3) of the
Companies Act 2006. The Group Annual Report and Accounts for the
year ended 31 December 2016 have been filed with the Registrar of
Companies.
Changes in accounting policies
A number of new and amended IFRS's have been adopted and none
had any significant impact on the Group's financial statements.
Other than IFRS 15 and IFRS 16, the adoption of the standards,
amendments and interpretations issued but not effective is not
expected to have a material impact on the Group's financial
statements. The Directors are in the process of evaluating the
impact of IFRS 15 and IFRS 16.
Going concern
After reviewing the Group's performance, future forecasted
performance and cash flows, ability to draw down on its facilities
and the covenant requirements of those facilities, and after
considering the key risks and uncertainties set out on page 9, the
Directors consider that the Group has sufficient resources to
continue in operational existence for the foreseeable future. For
this reason, they continue to adopt the going concern basis in
preparing the Group's financial statements.
Reclassification of prior period information
For the periods ended 30 June 2016 and 31 December 2016 the
Group has reclassified the deferred tax expense on US intangible
assets from profit before tax and highlighted items into
highlighted items. This is on the basis that the deferred tax
expense would only ever crystallise on a sale of the relevant
businesses, which is not anticipated at the current time, and such
a sale would be a highlighted item.
Estimates
The preparation of interim financial statements requires
management to make judgements, estimates and assumptions that
affect the application of accounting policies and the reported
amounts of assets and liabilities, income and expense. Actual
results may differ from these estimates. In preparing these
condensed interim financial statements, the significant judgements
made by management in applying the Group's accounting policies and
the key sources of estimation uncertainty were the same as those
that applied to the consolidated financial statements for the year
ended 31 December 2016.
2. Segmental analysis
The following is an analysis of the Group's revenue and
operating profit before highlighted items by reportable
segment.
The Group's business activities are split into four operating
divisions: Citigate Dewe Rogerson (CDR), Grayling, Red and
Huntsworth Health. These divisions are the basis on which
information is reported to the Group's Chief Operating Decision
Maker, which has been determined to be the Group Board. The segment
result is the measure used for the purposes of performance
assessment and represents profit earned by each segment, but before
highlighted operating expenses, net finance costs and taxation.
Huntsworth
CDR Grayling Red Health Total
6 months to 30 June GBP000 GBP000 GBP000 GBP000 GBP000
2017
---------------------------- ------- --------- ------- ----------- -------
Segment revenue 10,890 21,028 6,938 55,344 94,200
---------------------------- ------- --------- ------- ----------- -------
Segment operating
profit before highlighted
items 1,417 442 1,391 10,631 13,881
---------------------------- ------- --------- ------- ----------- -------
Huntsworth
CDR Grayling Red Health Total
6 months to 30 June GBP000 GBP000 GBP000 GBP000 GBP000
2016
----------------------- ------- --------- ------- ----------- -------
Segment revenue 10,655 27,817 6,598 41,486 86,556
----------------------- ------- --------- ------- ----------- -------
Segment operating
profit/(loss) before
highlighted items 1,606 (85) 1,203 8,046 10,770
----------------------- ------- --------- ------- ----------- -------
Huntsworth
CDR Grayling Red Health Total
Year ended 31 December GBP000 GBP000 GBP000 GBP000 GBP000
2016
------------------------ ------- --------- ------- ----------- --------
Segment revenue 22,087 53,862 13,349 90,839 180,137
------------------------ ------- --------- ------- ----------- --------
Segment operating
profit/(loss) before
highlighted items 3,584 (750) 2,710 18,299 23,843
------------------------ ------- --------- ------- ----------- --------
Highlighted items are not presented to the Board on a segmental
basis.
A reconciliation of segment operating profit before highlighted
items to profit/(loss) before tax is provided below:
Unaudited Unaudited Audited
6 months 6 months Year
ended ended ended
30 June 30 June 31 December
2017 2016 2016
GBP000 GBP000 GBP000
-------------------------------------------------- --------- --------- ------------
Segment operating profit before highlighted items 13,881 10,770 23,843
Unallocated costs (3,003) (3,443) (5,922)
Share of profit from associate 99 - 57
-------------------------------------------------- --------- --------- ------------
Operating profit before highlighted items 10,977 7,327 17,978
Highlighted items (856) (15,207) (32,507)
Operating profit/(loss) 10,121 (7,880) (14,529)
Net finance costs (938) (973) (1,973)
Profit/(loss) before tax 9,183 (8,853) (16,502)
-------------------------------------------------- --------- --------- ------------
3. Highlighted items
Unaudited
Unaudited 6 months Audited
6 months ended Year ended
ended 30 30 June 31 December
June 2017 2016 2016
Notes GBP000 GBP000 GBP000
------------------------------------------------------ ----- ---------- --------- ------------
Profit/(loss) before tax 9,183 (8,853) (16,502)
Adjustments charged/(credited) to operating expenses:
Amortisation of intangible assets 8 395 439 840
Goodwill impairment 8 - 15,034 30,499
Impairment of software development costs 8 - - 239
Restructuring costs - 443 1,608
Remeasurement of contingent consideration receivable 102 - -
Acquisition and transaction related charge/(credit) 359 (709) (679)
------------------------------------------------------ ----- ---------- --------- ------------
Total adjustments charged to operating expenses 856 15,207 32,507
------------------------------------------------------ ----- ---------- --------- ------------
Adjusted profit before tax 10,039 6,354 16,005
------------------------------------------------------ ----- ---------- --------- ------------
Unaudited Unaudited Audited
6 months 6 months Year
ended ended ended
30 June 30 June 31 December
2017 2016 2016
Notes GBP000 GBP000 GBP000
----------------------------------------- ----- --------- --------- ------------
Charged to profit before tax 856 15,207 32,507
Taxation expense/(credit) on highlighted
items 5 1,673 (873) (1,132)
----------------------------------------- ----- --------- --------- ------------
Charged to profit for the year 2,529 14,334 31,375
----------------------------------------- ----- --------- --------- ------------
The Group presents highlighted items charged to profit before
tax by making adjustments for costs and credits which management
believe to be significant by virtue of their size, nature or
incidence or which have a distortive effect on current year
earnings. The Group uses these adjusted measures to evaluate
performance and as a method to provide shareholders with clear and
consistent reporting.
Amortisation of intangible assets
Intangible assets are amortised systematically over their
estimated useful lives, which vary from 2 to 20 years depending on
the nature of the asset. The amortisation charge in respect of
intangible assets is excluded from adjusted results as they relate
to historic business combinations rather than normal ongoing
operations.
Goodwill impairment
Impairments totalling GBP30.5 million were recognised relating
to goodwill in the Grayling CGU in 2016. Impairment charges were
individually disclosed and excluded from adjusted results as they
do not relate to underlying trading.
Impairment of software development costs
The 2016 impairment related to significant adverse changes in
the extent to which internally developed software was expected to
be used. The charge was excluded from adjusted results as it did
not relate to underlying trading.
Restructuring costs
Restructuring costs comprised cost-saving and right-sizing
initiatives including severance payments, compensation for loss of
office and other contract termination costs. Property costs
relating to onerous contract provisions raised for property leases
because of restructuring initiatives were included. These costs,
which were part of the new management teams strategic refocus of
the business, were excluded from adjusted results as they do not
relate to underlying trading. These costs have not recurred as the
restructuring was completed in 2016.
Remeasurement of contingent consideration receivable
Effective 1 January 2017 the Whiteboard Advisors business was
sold for initial consideration of $2.5million and a deferred
element based on future performance. The loss of GBP0.1million
relates to remeasuring the receivable to the period end exchange
rate.
Acquisition and transaction related charge/(credit)
Transaction costs are costs incurred in relation to business
acquisitions and disposals. These costs are excluded from adjusted
results as they are one-off in nature. The credits relate to the
subsequent re-measurement of the fair value of deferred contingent
consideration. These credits were excluded from adjusted results as
they relate to historic business combinations rather than ongoing
operations.
Taxation
The tax related to highlighted items is the tax effect of the
items above.
4. Finance costs and income
Unaudited Unaudited Audited
6 months 6 months Year
ended ended ended
30 30 31
June June December
2017 2016 2016
GBP000 GBP000 GBP000
Bank interest payable 935 958 1,955
Finance lease interest - 1 -
Imputed interest on long term payables
and provisions 6 19 27
Finance costs 941 978 1,982
---------------------------------------- ---------- ---------- ----------
Bank interest receivable (1) (1) (2)
Other interest receivable (2) (4) (7)
---------------------------------------- ---------- ---------- ----------
Finance income (3) (5) (9)
---------------------------------------- ---------- ---------- ----------
Net finance costs 938 973 1,973
---------------------------------------- ---------- ---------- ----------
5. Tax
The tax expense for the six months ended 30 June 2017 has been
based on an estimated effective tax rate on profit before tax and
highlighted items for the full year of 22.0% (year ended 31
December 2016): 18.1%). The tax expense is analysed as follows:
Unaudited Unaudited Audited
6 months 6 months Year
ended ended ended
30 June 30 June 31 December
2017 2016 2016
GBP000 GBP000 GBP000
Total:
Current tax 3,099 640 1,113
Deferred tax 783 (614) 646
------------------- ---------- ---------- -------------
Total tax expense 3,882 26 1,759
------------------- ---------- ---------- -------------
Comprising:
Income tax expense on profit before
tax and highlighted items 2,209 899 2,891
Income tax expense/(credit) on
highlighted items 1,673 (873) (1,132)
------------------------------------- ----- ------ ---------------------
3,882 26 1,759
The Finance Act 2016 was substantively enacted on 6 September
2016 and includes legislation to reduce the main rate of UK
corporation tax to 19% from 1 April 2017 and 17% from 1 April 2020.
The impact of this change is reflected in the numbers
presented.
For the periods ended 30 June 2016 and 31 December 2016 the
Group has reclassified the deferred tax expense on US intangible
assets from profit before tax and highlighted items into
highlighted items. This is on the basis that the deferred tax
expense would only ever crystallise on a sale of the relevant
businesses, which is not anticipated at the current time, and such
a sale would be a highlighted item.
6. Dividends
Unaudited Unaudited
6 6 Audited
months months Year
ended ended ended
30 30 31
June June December
2017 2016 2016
GBP000 GBP000 GBP000
---------------------------------------- ---------- ---------- ----------
Equity dividends on ordinary shares
Final dividend for the year ended 2015
- 1.25 pence - 4,071 4,071
Interim dividend for the year ended
2016 - 0.5 pence - - 1,631
Final dividend for the year ended 2016 4,078 - -
- 1.25 pence
---------------------------------------- ---------- ---------- ----------
Total dividend expense 4,078 4,071 5,702
---------------------------------------- ---------- ---------- ----------
The final dividend for the year ended 31 December 2016 of 1.25
pence per share was approved by shareholders at the Annual General
Meeting on 25 May 2017 and was paid on 6 July 2017. This dividend
is included in trade and other payables at 30 June 2017.
The 2017 interim dividend of 0.55 pence per share was approved
by the Board on 25 July 2017. The dividend will be paid on 6
November 2017 to those shareholders on the register on 29 September
2017.
7. Earnings per share
Unaudited Unaudited Audited
6 months 6 months Year
ended ended ended
30 June 30 June 31 December
2017 2016 2016
GBP000 GBP000 GBP000
------------------------------------ --------- --------- ------------
Basic earnings/(loss) per share -
pence 1.6 (2.7) (5.6)
Diluted earnings/(loss) per share
- pence 1.6 (2.7) (5.6)
Adjusted basic earnings per share
- pence 2.4 1.7 4.0
Adjusted diluted earnings per share
- pence 2.4 1.7 4.0
------------------------------------ --------- --------- ------------
The data used in the calculation of the earnings per share
numbers is summarised in the table below:
Unaudited 6 Unaudited 6 Audited Year
months ended months ended ended 31 December
30 June 2017 30 June 2016 2016
----------------------------- ----------------------------- -----------------------------
Earnings/(Loss) Weighted Earnings/(Loss) Weighted Earnings/(Loss) Weighted
GBP000 average GBP000 average GBP000 average
number number number
of shares of shares of shares
000's 000's 000's
------------------ ---------------- ----------- ---------------- ----------- ---------------- -----------
Basic 5,301 326,248 (8,879) 324,446 (18,261) 325,245
Diluted 5,301 332,770 (8,879) 324,446(1) (18,261) 325,245(1)
Adjusted basic 7,830 326,248 5,455 324,446 13,114 325,245
Adjusted diluted 7,830 332,770 5,455 325,574 13,114 329,488
------------------ ---------------- ----------- ---------------- ----------- ---------------- -----------
(1) As the basic EPS results in a loss per share, the diluted
EPS is calculated using the undiluted weighted average number of
shares.
The basic earnings per share calculation is based on the profit
for the period attributable to parent company shareholders divided
by the weighted average number of ordinary shares outstanding
during the period.
Diluted earnings per share is calculated based on the profit for
the period attributable to parent company shareholders divided by
the weighted average number of ordinary shares outstanding during
the period adjusted for the potentially dilutive impact of employee
share option schemes and shares to be issued as part of contingent
consideration on acquisition of subsidiaries.
Adjusted earnings per share is calculated in order to provide
information to shareholders about continuing trading performance
and is based on the profit attributable to parent company
shareholders excluding highlighted items together with related tax
effects as set out below:
Unaudited Unaudited Audited
6 months 6 months Year
ended ended ended
30 June 30 June 31 December
2017 2016 2016
GBP000 GBP000 GBP000
---------- ---------- -------------
Earnings/(loss):
Profit/(loss) for the period attributable
to the Parent Company's shareholders 5,301 (8,879) (18,261)
Highlighted items (net of tax)
attributable to the Parent Company's
shareholders 2,529 14,334 31,375
------------------------------------------- ---------- ---------- -------------
Adjusted earnings 7,830 5,455 13,114
------------------------------------------- ---------- ---------- -------------
Unaudited Unaudited Audited
6 months 6 months Year
ended ended ended
30 June 30 June 31 December
2017 2016 2016
GBP000 GBP000 GBP000
---------- ---------- -------------
Number of shares:
Weighted average number of ordinary
shares - basic and adjusted basic 326,248 324,446 325,245
Effect of share options in issue 6,522 1,128 4,243
Weighted average number of ordinary
shares - diluted and adjusted diluted 332,770 325,574 329,488
---------------------------------------- ---------- ---------- -------------
8. Intangible assets
Software
Customer Intellectual development
Brands relationships Goodwill property costs Total
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
------------------------- ------- --------------- --------- ------------- ------------- --------
Cost
At 1 January
2017 27,875 35,100 336,775 1,754 4,713 406,217
Capitalised development
costs - - - - 125 125
Foreign exchange
movement (399) (1,049) (5,340) 57 (82) (6,813)
------------------------- ------- --------------- --------- ------------- ------------- --------
At 30 June 2017 27,476 34,051 331,435 1,811 4,756 399,529
------------------------- ------- --------------- --------- ------------- ------------- --------
Amortisation
and impairment
charges
At 1 January
2017 24,010 34,769 183,322 1,754 2,565 246,420
Charge for the
period 249 146 - - 142 537
Foreign exchange
movement (391) (1,035) (2,006) 57 (15) (3,390)
------------------------- ------- --------------- --------- ------------- ------------- --------
At 30 June 2017 23,868 33,880 181,316 1,811 2,692 243,567
------------------------- ------- --------------- --------- ------------- ------------- --------
Net book value
at 30 June 2017 3,608 171 150,119 - 2,064 155,962
------------------------- ------- --------------- --------- ------------- ------------- --------
Net book value
at 31 December
2016 3,865 331 153,453 - 2,148 159,797
------------------------- ------- --------------- --------- ------------- ------------- --------
Net book value
at 30 June 2016 4,077 445 165,864 5 2,115 172,506
------------------------- ------- --------------- --------- ------------- ------------- --------
There are no indicators of impairment for any of the CGUs at 30
June 2017.
9. Investment in associate
The carrying amount of equity-accounted investments has changed
as follows in the six months to June 2017:
6 months
ended
30 June
2017
GBP000
----------------------------- --------
Carrying amount
At 1 January 2017 182
Share of profit of associate 99
At 30 June 2017 281
----------------------------- --------
10. Financial risk management and financial instruments
The Group's activities expose it to a variety of financial risks
including foreign exchange risk, interest rate risk, credit risk
and liquidity risk.
The condensed interim financial statements do not include all
financial risk management information and disclosures required in
the annual financial statements; they should be read in conjunction
with the Group's Annual Financial Statements as at 31 December
2016. There have been no changes in the Group's risk management
policies since the year end.
Fair value measurement
The following table provides an analysis of financial
instruments that are measured subsequent to initial recognition at
fair value, grouped into Levels 1 to 3 based on the degree to which
the fair value is observable.
-- Level 1 fair value measurements are those derived from quoted
prices (unadjusted) in active markets for identical assets or
liabilities.
-- Level 2 fair value measurements are those derived from inputs
other than quoted prices included within Level 1 that are
observable for the asset or liability, either directly (i.e. as
prices) or indirectly (i.e. derived from prices).
-- Level 3 fair value measurements are those derived from
valuation techniques that include inputs for the asset or liability
that are not based on observable market data (unobservable
inputs).
Level Level Level
1 2 3 Total
At 30 June 2017 GBP000 GBP000 GBP000 GBP000
---------------------------- -------------------- ----------------------- ------- ----------------
Financial assets
Foreign exchange derivative - 495 - 495
---------------------------- -------------------- ----------------------- ------- ----------------
- 495 - 495
------------------------------------------------- ----------------------- ------- ----------------
Financial liabilities
Interest rate swap - 356 - 356
---------------------------- -------------------- ----------------------- ------- ----------------
- 356 - 356
------------------------------------------------- ----------------------- ------- ----------------
Level Level Level
1 2 3 Total
At 30 June 2016 GBP000 GBP000 GBP000 GBP000
---------------------------- ------- ------- ------- -------
Financial liabilities
Interest rate swap - 750 - 750
Foreign exchange derivative - 581 - 581
---------------------------- ------- ------- ------- -------
- 1,331 - 1,331
---------------------------- ------- ------- ------- -------
Level Level Level
1 2 3 Total
At 31 December 2016 GBP000 GBP000 GBP000 GBP000
---------------------------- ------- ------- ------- -------
Financial liabilities
Interest rate swap - 525 - 525
Foreign exchange derivative - 154 - 154
- 679 - 679
---------------------------- ------- ------- ------- -------
Valuation techniques used to derive Level 2 fair values
Level 2 derivatives comprise foreign exchange derivatives and
interest rate swaps. The foreign exchange derivatives have been
fair valued using exchange rates that are quoted in an active
market. Interest rate swaps are valued using forward interest rates
extracted from observable yield curves.
Fair values of other financial liabilities and assets
All financial assets and financial liabilities have been
recognised at their carrying values which are not materially
different to their fair values.
11. Bank loans and overdrafts
The Group has a GBP65 million multi-currency facility agreement
with Lloyds Bank plc, HSBC Bank plc and Barclays Bank plc and a
GBP5 million committed overdraft facility with Lloyds Bank plc.
This remains unchanged from last year. Both facilities are due to
expire in May 2019.
12. Provisions
Reorganisation
Property and other Total
GBP000 GBP000 GBP000
--------------------------- -------- -------------- -------
At 1 January 2017 2,930 602 3,532
Arising during the year 39 - 39
Released during the year (20) (22) (42)
Utilised (1,194) (415) (1,609)
Transfer (75) - (75)
Foreign exchange movements (35) (3) (38)
Unwind of discount 6 - 6
--------------------------- -------- -------------- -------
At 30 June 2017 1,651 162 1,813
--------------------------- -------- -------------- -------
Current 380 141 521
Non-current 1,271 21 1,292
--------------------------- -------- -------------- -------
Property provisions
Provisions for property represent amounts set aside in respect
of property leases which are onerous and the unavoidable costs of
restoring leasehold properties to the condition specified in the
lease at the end of the contractual term. The quantification of
these provisions has been determined based on external professional
advice and is dependent on the Group's ability to exit the leases
early or to sublet the properties. In general, property costs are
expected to be incurred over a range of one to eight years.
Reorganisation and other provisions
This provision relates principally to redundancy provisions.
13. Cash flow analysis
(a) Reconciliation of operating profit/(loss) to net cash
inflow/(outflow) from operations
Unaudited Unaudited Audited
6 months 6 months Year
ended ended ended
30 June 30 June 31 December
2017 2016 2016
GBP000 GBP000 GBP000
------------------------------------------- ---------- ---------- -------------
Operating profit/(loss) 10,121 (7,880) (14,529)
Share of profit from associate (99) - (57)
Amortisation of intangible assets 537 539 1,046
Impairment of intangible assets - 15,034 30,786
------------------------------------------- ---------- ---------- -------------
Operating profit before non-cash
highlighted items 10,559 7,693 17,246
Depreciation 1,423 1,320 2,737
Share option charge 655 269 234
Loss on disposal of property, plant
and equipment 3 48 72
Unrealised (profit)/loss on foreign
exchange derivatives (649) 581 154
Remeasurement of contingent consideration 102 - -
receivable
Profit on disposal of subsidiaries
and investments - - (436)
------------------------------------------- ---------- ---------- -------------
Operating cash flow before movements
in working capital 12,093 9,911 20,007
Increase in work in progress (2,067) (1,336) (1,712)
Increase in debtors (7,967) (6,874) (6,125)
Increase/(decrease) in creditors 4,426 (1,403) 2,339
Decrease in provisions (1,379) (1,640) (1,869)
------------------------------------------- ---------- ---------- -------------
Net cash inflow/(outflow) from
operations 5,106 (1,342) 12,640
------------------------------------------- ---------- ---------- -------------
Cash flows from highlighted items 1,300 1,399 2,999
------------------------------------------- ---------- ---------- -------------
Net cash inflow from operations
before highlighted items 6,406 57 15,639
------------------------------------------- ---------- ---------- -------------
(b) Reconciliation of net cash flow to movement in net debt
Unaudited Unaudited Audited
6 months 6 months Year
ended ended ended
30 June 30 June 31 December
2017 2016 2016
GBP000 GBP000 GBP000
--------------------------------------- ---------- ---------- -------------
Increase in cash and cash equivalents
in the period 22,345 671 3,565
Cash inflow from movements in debt (17,975) (6,975) (5,975)
Repayment of capital element of
finance leases 1 2 24
--------------------------------------- ---------- ---------- -------------
Change in net debt resulting from
cash flows 4,371 (6,302) (2,386)
Amortisation and write off of loan
fees (132) (133) (264)
New finance lease - (7) (6)
Movement in fair value of derivative
financial instruments 818 (1,239) (587)
Translation differences (282) 956 2,000
--------------------------------------- ---------- ---------- -------------
Decrease/(increase) in net debt 4,775 (6,725) (1,243)
Net debt at beginning of period (31,614) (30,371) (30,371)
--------------------------------------- ---------- ---------- -------------
Net debt at end of period (26,839) (37,096) (31,614)
--------------------------------------- ---------- ---------- -------------
(c) Analysis of net debt
Unaudited Unaudited Audited
6 months 6 months Year
ended ended ended
30 June 30 June 31 December
2017 2016 2016
GBP000 GBP000 GBP000
------------------------------------------- ---------- ---------- -------------
Cash and short-term deposits 36,656 10,544 14,978
Bank overdraft (110) - (495)
Bank loans (63,519) (46,280) (45,412)
Derivative financial assets/(liabilities) 139 (1,331) (679)
Obligations under finance leases (5) (29) (6)
------------------------------------------- ---------- ---------- -------------
Net debt (26,839) (37,096) (31,614)
------------------------------------------- ---------- ---------- -------------
14. Related party transactions
The ultimate controlling party of the Group is Huntsworth plc
(incorporated in the United Kingdom). The Group has a related party
relationship with Directors and executive officers. There were no
material related party transactions other than the remuneration of
key management personnel of GBP1.2 million in the six months ended
30 June 2017 (2016: GBP0.9 million).
15. Post balance sheet events
On 1 July 2017 Huntsworth plc acquired all of the issued shares
in The Creative Engagement Group Limited for cash consideration of
GBP24.7million.
The financial effects of the above transaction have not been
brought into account at 30 June 2017. The operating results and
assets and liabilities of the company will be brought into account
from 1 July 2017. The fair value calculation of assets and
liabilities acquired is on-going.
Independent review report to Huntsworth plc
Report on the consolidated interim financial statements
Our conclusion
We have reviewed Huntsworth plc's consolidated interim financial
statements (the "interim financial statements") in the half year
report of Huntsworth plc for the 6 month period ended 30 June 2017.
Based on our review, nothing has come to our attention that causes
us to believe that the interim financial statements are not
prepared, in all material respects, in accordance with
International Accounting Standard 34, 'Interim Financial
Reporting', as adopted by the European Union and the Disclosure
Guidance and Transparency Rules sourcebook of the United Kingdom's
Financial Conduct Authority.
What we have reviewed
The interim financial statements comprise:
1. the Condensed Consolidated Balance Sheet as at 30 June 2017;
2. the Condensed Consolidated Income Statement and Condensed
Consolidated Statement of Comprehensive Income for the period then
ended;
3. the Condensed Consolidated Cash Flow Statement for the period then ended;
4. the Condensed Consolidated Statement of Changes in Equity for the period then ended; and
5. the explanatory notes to the interim financial statements.
The interim financial statements included in the half year
report have been prepared in accordance with International
Accounting Standard 34, 'Interim Financial Reporting', as adopted
by the European Union and the Disclosure Guidance and Transparency
Rules sourcebook of the United Kingdom's Financial Conduct
Authority.
As disclosed in note 1 to the interim financial statements, the
financial reporting framework that has been applied in the
preparation of the full annual financial statements of the Group is
applicable law and International Financial Reporting Standards
(IFRSs) as adopted by the European Union.
Responsibilities for the interim financial statements and the
review
Our responsibilities and those of the directors
The half year report, including the interim financial
statements, is the responsibility of, and has been approved by, the
directors. The directors are responsible for preparing the half
year report in accordance with the Disclosure Guidance and
Transparency Rules sourcebook of the United Kingdom's Financial
Conduct Authority.
Our responsibility is to express a conclusion on the interim
financial statements in the half year report based on our review.
This report, including the conclusion, has been prepared for and
only for the company for the purpose of complying with the
Disclosure Guidance and Transparency Rules sourcebook of the United
Kingdom's Financial Conduct Authority and for no other purpose. We
do not, in giving this conclusion, accept or assume responsibility
for any other purpose or to any other person to whom this report is
shown or into whose hands it may come save where expressly agreed
by our prior consent in writing.
What a review of interim financial statements involves
We conducted our review in accordance with International
Standard on Review Engagements (UK and Ireland) 2410, 'Review of
Interim Financial Information Performed by the Independent Auditor
of the Entity' issued by the Auditing Practices Board for use in
the United Kingdom. A review of interim financial information
consists of making enquiries, primarily of persons responsible for
financial and accounting matters, and applying analytical and other
review procedures.
A review is substantially less in scope than an audit conducted
in accordance with International Standards on Auditing (UK) and,
consequently, does not enable us to obtain assurance that we would
become aware of all significant matters that might be identified in
an audit. Accordingly, we do not express an audit opinion.
We have read the other information contained in the half year
report and considered whether it contains any apparent
misstatements or material inconsistencies with the information in
the interim financial statements.
PricewaterhouseCoopers LLP
Chartered Accountants
London
25 July 2017
Statement of Directors' Responsibilities
for the six months ended 30 June 2017
We confirm that to the best of our knowledge this interim
report:
- has been prepared in accordance with IAS 34 'Interim Financial
Reporting';
- includes a fair review of the information required by the
Financial Conduct Authority's Disclosure and Transparency Rules
('DTR') 4.2.7R (indication of important events during the first six
months and description of principal risks and uncertainties for the
remaining six months of the year); and
- includes a fair review of the information required by DTR
4.2.8R (disclosure of related party transactions and changes
therein).
By order of the Board
Paul Taaffe
Chief Executive
Appendix 1: non-IFRS measures
This report makes reference to various non-IFRS measures, which
are defined below. All performance based measures are presented to
provide insight into ongoing profit generation, both individually
and relative to other companies.
Headline operating profit/profit before tax
Calculated as operating profit/profit before tax excluding
highlighted items. Highlighted items in the current year comprise
amortisation of intangible assets, acquisition/transaction related
costs and the remeasurement of contingent consideration receivable.
In prior periods, goodwill impairment, restructuring costs and
impairment of software development costs were also included in
highlighted items.
Both headline profit and IFRS profit measures are presented in
the income statement. An analysis of highlighted items is presented
in Note 3.
Margin
Headline operating profit as a percentage of revenue.
Headline basic and diluted EPS
Headline basic EPS is calculated using profit for the period
before highlighted items. Headline diluted EPS is the same
calculation but takes into account the impact of share options in
issue and deferred consideration that could be settled in shares.
Details of the underlying inputs to headline and IFRS measures of
EPS are included in Note 7.
Net debt
Net debt is the total of current and non-current borrowings and
derivative financial instruments, less cash and cash equivalents.
The group uses this as a measure of indebtedness. An analysis of
net debt is included in Note 13.
Highlighted cash flows
Highlighted cash flows are the cash flows directly attributable
to the items presented within highlighted items in the income
statement. A reconciliation of the difference between cash flows
before highlighted items and IFRS cash flows is included in Note
13.
Effective tax rate
The effective tax rate is the tax expense incurred by the Group
on profit before tax and highlighted items, expressed as a
percentage. This provides a more comparable basis to analyse our
tax rate both individually and relative to other companies.
Like-for-like
Like-for-like revenues are stated at constant exchange rates and
are adjusted to exclude disposals/closures. Constant currency
results are calculated by translating prior period foreign currency
results using the current period exchange rate. This provides
insight into the organic growth of the business. A reconciliation
of the material adjustments made between like-for-like revenue
growth and absolute revenue growth are included in the table
below:
6 months ended 30 CDR Grayling Red Huntsworth Total
June 2017 Health Group
-----------------------
GBP000 GBP000 GBP000 GBP000 GBP000
----------------------- ------- --------- ------- ----------- -------
IFRS revenue 10,890 21,028 6,938 55,344 94,200
Business closures - - - - -
----------------------- ------- --------- ------- ----------- -------
Like-for-like revenue 10,890 21,028 6,938 55,344 94,200
----------------------- ------- --------- ------- ----------- -------
6 months ended 30 CDR Grayling Red Huntsworth Total
June 2016 Health Group
-----------------------
GBP000 GBP000 GBP000 GBP000 GBP000
----------------------- ------- --------- ------- ----------- --------
IFRS revenue 10,655 27,817 6,598 41,486 86,556
Constant exchange
rates 600 2,480 - 4,784 7,864
Business closures - (6,045) - - (6,045)
----------------------- ------- --------- ------- ----------- --------
Like-for-like revenue 11,255 24,252 6,598 46,270 88,375
----------------------- ------- --------- ------- ----------- --------
This information is provided by RNS
The company news service from the London Stock Exchange
END
IR LLFSDDTIEFID
(END) Dow Jones Newswires
July 26, 2017 02:00 ET (06:00 GMT)
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