Interim Results
Huveaux PLC
30 July 2004
HUVEAUX PLC
Interim Results for the six months ended 30 June 2004
Highlights
•Turnover of £4,638,000 (up 440 per cent) in the seasonally quiet first
half. This figure includes £1,446,000 from our two acquisitions this year
and also reflects a full six months' contribution from the businesses we
acquired in 2003.
•Pretax profits of £367,000 before exceptional costs of restructuring our
new acquisition; £66,000 after exceptional costs (£13,000 in first half
2003).
•Earnings per share of 0.35 pence before exceptional costs; 0.06 pence
after exceptional costs (0.02 pence in first half 2003).
•Two acquisitions completed in first half year
•The outlook for the year is for substantial growth in sales and profits.
John van Kuffeler, Chairman of Huveaux PLC, commented:
'The first half of 2004 was one of major achievement for Huveaux. We completed
two acquisitions which almost doubled our size and, in addition, we
substantially increased our sales, profits and earnings per share. Our
businesses have high profit margins and excellent growth prospects and the
outlook is for substantial growth in profits.'
For further information, please contact:
John van Kuffeler, Huveaux PLC 020 7245 0270
Charlotte Lambkin/Geoff Callow, Bell Pottinger Financial 020 7861 3876
CHAIRMAN'S STATEMENT
The first half of 2004 was one of major achievement for Huveaux. We completed
two acquisitions which almost doubled our size and in addition we substantially
increased our sales, profits and earnings per share.
Nevertheless, the first half of the year is our seasonally quiet period.
Accordingly, Huveaux achieved a pre-tax profit of £66,000 as compared to £13,000
in the first half of 2003. Earnings per share were 0.06 pence, treble the figure
for the first half of last year. These results were achieved after taking
account of the £301,000 of restructuring costs incurred, as planned, from
merging our latest acquisition, Parliamentary Communications Limited ('PCL')
into our existing operations. The two new acquisitions completed during the
period are performing well and together with the organic growth from our other
operations has resulted in a good overall result for the first half of 2004.
The results of Huveaux continue to be weighted heavily toward the second half of
the year with a substantial proportion of sales occurring in September and
October with the start of the parliamentary and academic years.
Sales for the first half were £4,638,000 as compared to £859,000 in the first
half of 2003, which reflects a combination of organic growth and acquisitions.
This very substantial increase in turnover illustrates the huge strides Huveaux
has made in its development over the last year.
The results break down as follows:
Sales Pre-tax Profits/(Loss)
£000 £000
Political 1,933 (50)
Education & Training 2,705 813
---------------- ----------------
4,638 763
Head Office - (396)
---------------- ----------------
4,638 367
Restructuring - (301)
---------------- ----------------
4,638 66
================ ================
These results are analysed below:
Political Division
Following the last two acquisitions, Huveaux is now in a pre-eminent position in
the UK and EU political publishing and information markets. Our operations now
comprise:
•7 political magazines and newsletters
•6 political websites
•the leading political and biographical databases in the UK, France and
the EU
•a political monitoring business
•a public affairs recruitment business
•the leading UK political conference and training business
•offices in London, Paris and Brussels
This market is showing significant growth. Huveaux's turnover in this sector was
£1.9 million in the first six months, but the annualised turnover of all our
political businesses is now in the region of £10 million. Key drivers of growth
are:
•the greater volume of proposed legislation affecting both companies and
consumers
•the exponential growth of regulation in all aspects of our lives
•the multiplicity of sources of legislation and regulation e.g.
Westminster, Brussels, Scottish Parliament, Greater London Assembly etc.
•the need for companies, consumers, charities trade and other
organisations to voice their opinion and influence legislation
In order to take full advantage of these market opportunities following the
acquisition of PCL, we immediately merged the management of the UK political
operations of Dod's, PCL and the Public Affairs Newsletter under the collective
name of Dod's Parliamentary Communications. Internationally, we merged the
management of Le Trombinoscope with the EU operation of PCL. The benefits of
these mergers are an integrated sales approach across all our publications and
websites and, in addition, a saving of costs. In this context, we made 18 PCL
staff redundant (an 18% headcount reduction) on the day we completed the
acquisition. The total cost (treated as an exceptional item) of this
restructuring was £301,000 and resulted in an annualised saving on staff of
£620,000.
Even though the management of the businesses has been merged it is possible to
provide a commentary on each of the underlying businesses for the seasonally
quiet first half of 2004.
The business of Dod's is heavily weighted toward the start of the Parliamentary
year in October and consequently some 75 per cent of sales fall in the second
half. Sales in the first half were 4 per cent ahead of last year. Forward sales
indicate that we should see a further year of increased sales and profit for
Dod's in 2004.
The seasonal trend is even more marked at Le Trombinoscope where more than 90
per cent of sales occur in the second half. Encouragingly, forward book,
newsletter and website sales are 16 per cent ahead of last year, with
advertising sales at the same level as last year.
These two heavily seasonal businesses made a combined loss of £304,000 in the
first half which was slightly better than budget, and are each on track to make
a significant profit in the year as a whole.
The Public Affairs Newsletter which was acquired in March, 2004 achieved a
profit of £35,000 which was in line with expectations. Furthermore, we are
seeing indications of an increase in its advertising revenue in the second half.
In PCL's short period under our ownership sales were £1,376,000 and pre-tax
profits were £219,000. The outlook for the remainder of the year is encouraging.
The magazines and websites are benefiting from Government proposals such as
those on healthy diets and fast foods; on the proposed banning of smoking in
public places and the debate over renewable energy sources and the development
of wind farms. Our databases and reference books are currently in demand due to
the enlargement of the EU and the recent EU Parliament elections as well as the
prospect of UK elections in 2005. We are holding over 100 political conferences
this year as compared to 67 in PCL's last financial year. This augurs well for
the results of the year as a whole.
Education and Training Division
The education and training markets are influenced by some of the factors
affecting our Political Division. Government action has brought about many
changes in education. Our Lonsdale Revision Guides provide a quick and
inexpensive solution to assist in the improvement of standards in schools. We
continue to expand the number of titles and Lonsdale looks set for another
record year. The training market comprises both the private and public sector
where the need for good management, professional standards and efficiency
increase year by year. Fenman's position in this market is considerably assisted
by our ownership of The Training Journal which has some 5000 subscribers and is
the leading professional magazine in this field. Sales for the Education and
Training Division totalled £2,705,000 with pre-tax pre-profits of £813,000 in
the six months to 30th June, 2004. Meaningful comparisons for the first half of
2003 cannot be made as the two businesses comprising this division, Lonsdale and
Fenman, were acquired in April and October 2003 respectively. Both businesses
have made a good start to the year and we look forward to them making a
significant contribution to the year as a whole.
Head Office Costs
Head office costs remained under tight control, despite the high level of
activity on acquisitions, and totalled £396,000.
Outlook
We now have a strong position in political databases and publishing in both the
UK and the EU which are benefiting from increased demand. We are also seeing the
benefits of merging our four political businesses with both revenue and cost
benefits flowing through to the bottom line. The Education and Training division
is on track to make a significant contribution to the results of the full year.
The overall outlook for Huveaux for the second half is therefore for substantial
growth in sales and profits.
We have a strong balance sheet with £2.7 million in cash and no borrowings. We
continue with our objective of building a substantial publishing and media group
over the next 10 years. Consequently, we continue to examine a range of further
possible acquisitions as well as achieving significant organic growth.
John van Kuffeler
Chairman
30 July, 2004
CONSOLIDATED PROFIT AND LOSS ACCOUNT
Notes For the For the For the
six months six months year
ended ended ended
30 June 30 June 31 December
2004 2003 2003
Unaudited Unaudited Audited
£000s £000s £000s
Turnover
Continuing operations 3 3,192 382 1,474
Acquisitions 3 1,446 477 3,101
--------------------------------
4,638 859 4,575
Cost of sales (2,006) (344) (1,497)
Gross profit 2,632 515 3,078
Administrative expenses (2,308) (543) (1,969)
Exceptional expenses 4 (301) - -
--------------------------------
Operating profit/(loss)
Continuing operations 3 61 (96) 167
Acquisitions 3, 4 (38) 68 942
23 (28) 1,109
Other interest receivable 52 41 99
Other interest payable (9) - (3)
---------------------------------
Profit on ordinary activities
before taxation 66 13 1,205
Taxation 5 (20) (4) (250)
---------------------------------
Profit after taxation 46 9 955
Dividends - - (629)
---------------------------------
Retained profit for the
period 46 9 326
================================
Earnings per share - basic
and diluted 6 0.06 p 0.02 p 2.01 p
Adjusted earnings per share
before exceptional items 6 0.35 p 0.02 p 2.01 p
CONSOLIDATED BALANCE SHEET
Notes As at As at As at
30 June 30 June 31 December
2004 2003 2003
Unaudited Unaudited Audited
£000s £000s £000s
Fixed assets
Intangible assets 8 37,967 11,430 19,451
Tangible assets 687 329 515
-------------------------------
38,654 11,759 19,966
-------------------------------
Current assets
Stocks 1,022 526 841
Debtors 3,522 523 1,153
Cash at bank and in hand 2,653 3,106 3,710
-------------------------------
7,197 4,155 5,704
Creditors: amounts falling due
within one year (7,390) (849) (2,901)
--------------------------------
Net current (liabilities)/assets (193) 3,306 2,803
--------------------------------
Total assets less current
liabilities 38,461 15,065 22,769
Creditors: amounts falling due
after more than one year - (1,800) (1,162)
Provision for liabilities and charges (38) - (22)
--------------------------------
Net assets 38,423 13,265 21,585
================================
Capital and reserves
Called-up equity share capital issued 10,646 5,095 7,146
Called-up equity share capital not issued 400 - 400
Share premium account 26,450 8,015 13,157
Merger reserve 409 - 409
Profit and loss account 518 155 473
--------------------------------
Equity shareholders' funds 9 38,423 13,265 21,585
================================
CONSOLIDATED CASH FLOW STATEMENT
Notes As at As at As at
30 June 30 June31 December
2004 2003 2003
Unaudited Unaudited Audited
£000s £000s £000s
Cash inflow/(outflow) from
operating activities 10 96 (112) 159
Returns on investment and servicing
of finance
Interest received 52 41 99
Interest paid (9) - (3)
--------------------------------
Net cash inflow from returns on
investment and servicing of finance 43 41 96
Taxation (7) - -
Capital expenditure and financial
investment
Purchase of tangible fixed assets (29) (58) (231)
Purchase of intangible fixed assets - - (9)
-------------------------------
Net cash outflow from capital
expenditure (29) (58) (240)
Acquisitions
Purchase of subsidiary undertakings
and assets (17,084) (5,116) (12,866)
Cash acquired on acquisition of
subsidiaries - - 352
------------------------------
Net cash outflow from acquisitions (17,084) (5,116) (12,514)
Equity dividends paid (629) (155) (155)
-------------------------------
Cash outflow before financing (17,610) (5,400) (12,654)
-------------------------------
Financing
Short-term bank funding received - - 1,380
Short-term bank funding paid - - (1,380)
Issue of ordinary share capital 17,500 7,573 15,573
Expenses paid in connection with
share issue (707) (428) (810)
------------------------------
Cash inflow from financing 16,793 7,145 14,763
(Decrease)/increase in cash for the
period 11 (817) 1,745 2,109
=============================
Notes to the Accounts
30 June 2004
1. These accounts comply with relevant accounting standards and have been
prepared using the accounting policies set out in the Annual Report 2003.
2. The financial information included in this document does not constitute
statutory accounts within the meaning of section 240 of the Companies Act
1985. The accounts for the year ended 31 December 2003, which have been
filed with the Registrar of Companies, received an unqualified audit report
and did not contain a statement under section 237(2) or (3) of the Companies
Act 1985. The financial information contained herein in respect of the six
month period to 30 June 2004 is unaudited.
3. Segmental information
All amounts shown relate to one business segment, that of publishing.
Period Period
ended ended Year ended
30 June 30 June 31 December
2004 2003 2003
Unaudited Unaudited Audited
£000s £000s £000s
Group turnover by geographical area
United Kingdom
Continuing operations 3,101 382 1,474
Acquisitions 1,214 477 2,586
---------------------------------
4,315 859 4,060
---------------------------------
Continental Europe
Continuing operations 91 - -
Acquisitions 232 - 515
---------------------------------
323 - 515
---------------------------------
Total turnover 4,638 859 4,575
=================================
Operating profit by geographical
area
United Kingdom
Continuing operations 239 (96) 167
Acquisitions 261 68 722
---------------------------------
500 (28) 889
---------------------------------
Continental Europe
Continuing operations (178) - -
Acquisitions (299) - 220
---------------------------------
(477) - 220
---------------------------------
Total operating profit/(loss) 23 (28) 1,109
=================================
Net assets by geographical area
United Kingdom
Continuing operations 38,526 13,197 20,706
Acquisitions 106 68 753
----------------------------------
38,632 13,265 21,459
----------------------------------
Continental Europe
Continuing operations 1 - -
Acquisitions (210) - 126
----------------------------------
(209) - 126
----------------------------------
Total net assets 38,423 13,265 21,585
==================================
Turnover by geographic destination is not materially different from turnover by
geographic origin.
4. Exceptional expenses
Period ended Period ended Year ended
30 June 30 June 31 December
2004 2003 2003
Unaudited Unaudited Audited
£000s £000s £000s
Redundancy and related people costs 285 - -
Provisions for vacant property 16 - -
----------------------------------
Total exceptional items 301 - -
==================================
Immediately following the acquisition of Parliamentary Communications Limited
the Group carried out a significant cost reduction exercise in parts of that
business that were loss-making. 18 people left the Group and a property was
vacated. The exceptional charge for the property represents the costs incurred
in vacating it and provisions for future rental cost net of expected rental
income.
5. Taxation
The taxation charge for the six months ended 30 June 2004 is based on the
expected annual tax rate.
6. Earnings per share
Period Period
ended ended Year ended
30 June 30 June 31 December
2004 2003 2003
Unaudited Unaudited Audited
£000s £000s £000s
Profit attributable to shareholders 46 9 955
==================================
Adjusted profit attributable to
shareholders before exceptional
items (net of 30% taxation) 257 9 955
==================================
Weighted average number of shares in
issue during the year - basic and
diluted 74,142,326 35,890,583 47,473,307
Earnings per share - basic and
diluted 0.06 p 0.02 p 2.01 p
Adjusted earnings per share
before exceptional items 0.35 p 0.02 p 2.01 p
7. Acquisitions
Each of the following acquisitions has been accounted for by the acquisition
method. An analysis of the provisional book value and fair value of the net
assets acquired on each is set out below.
Publishing rights have, for each acquisition, been valued to reflect their
estimated fair values, and each publication can be separately identified and
valued.
a) Public Affairs Newsletter
On 5 March 2004 the Group acquired the assets and trade of the Public Affairs
Newsletter, a sole proprietorship, excluding the cash of the business.
The following table sets out the provisional book values of the identifiable
assets and liabilities acquired and their provisional fair value to the group:
Fair value
Book value adjustments Fair value
£000s £000s £000s
Publishing rights - 819 819
Debtors 85 - 85
Creditors (85) - (85)
----------------------------------------------
Net assets acquired - 819 819
Goodwill -
-------
Total consideration 819
=======
Satisfied by:
Cash paid 750
Acquisition costs 69
-------
819
=======
The summarised profit and loss account for the Public Affairs Newsletter for the
year ended 31 January 2004 is given below. No taxation information is given, nor
are the results for the period from 1 February to 5 March, as the Public Affairs
Newsletter was a sole proprietorship and therefore under no obligation to
disclose the taxation or results publicly. The results for the year ended 31
January 2004 are publicly available as they were disclosed in the 2003 Annual
Report.
Year ended
31 January 2004
Unaudited
£000s
Turnover 199
---------------
Pretax profit 119
===============
b) Parliamentary Communications Limited
On 6 May the Group took effective control of Parliamentary Communications
Limited.
As part of the acquisition, a number of loss-making activities were hived out of
Parliamentary Communications Limited prior to completion. The following table
sets out the provisional book values of the identifiable assets and liabilities
acquired and their provisional fair value to the group:
Fair value
Book value Adjustments air value
£000s £000s £000s
Publishing rights 1 17,696 17,697
Tangible fixed assets 607 (439) 168
Stock 25 (10) 15
Debtors 2,407 (44) 2,363
Deferred taxation 285 429 714
Creditors (3,401) (937) (4,338)
---------------------------------------------
Net assets acquired (76) 16,695 16,619
Goodwill -
--------
Total consideration 16,619
========
Satisfied by:
Cash paid 15,679
Deferred consideration 471
Acquisition costs 469
--------
16,619
========
The summarised consolidated profit and loss account for Parliamentary
Communications Limited for the year ended 30 June 2003 (before hive-out of the
loss-making operations) and the period from 1 July 2003 to 30 April 2004 is
given below:
Period ended Year ended
30 April 30 June
2004 2003
Unaudited Audited
£000s £000s
Turnover 7,367 7,980
---------------------------
Operating profit/(loss) 228 (437)
----------------------------
Profit/(loss) before taxation 279 (417)
Taxation (204) (271)
----------------------------
Profit/(loss) after tax 75 (688)
============================
8. Intangible assets
Period ended Period ended Year ended
30 June 30 June 31 December
2004 2003 2003
Unaudited Unaudited Audited
£000s £000s £000s
Opening balance 19,451 4,950 4,950
Additions - - 9
Additions through acquisition 18,516 6,480 14,492
-------------------------------------------
Closing balance 37,967 11,430 19,451
===========================================
9. Reconciliation of movements in equity shareholders' funds
Total equity
Shareholders' funds
Unaudited
£000s
Profit for the period 46
Currency translation differences on foreign currency net
investments (1)
New shares issued 16,793
--------
Net increase in shareholders' funds 16,838
Shareholders' funds at 31 December 2003 21,585
--------
Shareholders' funds at 30 June 2004 38,423
========
10. Reconciliation of operating profit/(loss) to cash inflow/(outflow) from
operating activities
Period ended Period ended Year ended
30 June 30 June 31 December
2004 2003 2003
Unaudited Unaudited Audited
£000s £000s £000s
Operating profit/(loss) 23 (28) 1,109
Depreciation and amortisation 25 5 45
Increase in stocks (166) (144) (106)
Decrease/(increase) in debtors 794 (84) (258)
(Decrease)/increase in creditors (580) 139 (631)
---------------------------------------
Net cash inflow/(outflow) from
operating activities 96 (112) 159
=======================================
11. Analysis and reconciliation of net funds
Period ended Period ended Year ended
30 June 30 June 31 December
2004 2003 2003
Unaudited Unaudited Audited
£000s £000s £000s
Opening balance 3,470 1,361 1,361
Cash flow during the period (817) 1,745 2,109
--------------------------------------------
Closing balance 2,653 3,106 3,470
============================================
Represented by:
Cash at bank and in hand 2,653 3,106 3,710
Short-term loan - - (240)
---------------------------------------------
Total net funds 2,653 3,106 3,470
=============================================
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