TIDMHGV
RNS Number : 4154E
Hasgrove PLC
10 May 2013
10 May 2013
Hasgrove plc
Final results for the year ended 31 December 2012
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 2012.
Highlights
-- Revenue up 9% to GBP24.9m (2011: GBP22.8m)
-- Gross profit up 16% at GBP19.1m (2011: GBP16.5m)
-- Headline pre-tax profit GBP1.5m (2011: GBP0.7m)(1)
-- Pre-tax profit GBP1.1m (2011: loss GBP3.0m)
-- Basic EPS 5.5p (2011: loss per share 12.9p)(2)
-- Proposed dividend doubled to 2p per share (2011: 1p per share)
-- Net debt at 31 December 2012 substantially reduced to GBP0.1m (2011: GBP1.5m)
- Surplus cash of GBP12.5m as at 10 May 2013
-- Cash generated by operations of GBP3.0m (2011: GBP2.2m)
-- Future revenue pipeline remains strong across the Group
-- Amaze sold to St Ives plc for initial consideration of GBP15.3m in March 2013
-- Separately today, announced GBP10.25m cash return by tender offer at 82p per share, and
De-Listing of shares
1) Results are before taking account of separately identified
items. 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) Earnings based on continuing operations
Paul Sanders, Group Chief Executive, said:
"The last year has seen a good recovery in performance in all
our businesses along with a strong level of new business wins. The
recent sale of Amaze has allowed us to focus on growing our
remaining businesses.
"Having reviewed all the options open to us, we believe that
considering the current size and scale, as well as the needs of the
business, the best return for our Shareholders is now to buy back a
proportion of their shares and delist."
Enquiries:
Hasgrove plc
Paul Sanders, Group Chief Executive 0161 927 3222
Peel Hunt LLP (Nominated adviser and
broker)
Richard Kauffer/Daniel Harris 020 7418 8900
College Hill
Adrian Duffield/Rozi Morris 020 7457 2020
Overview
The Group's performance in 2012 showed a significant and
sustained improvement. The focus on intranet software and the
provision of digital solutions for global organisations resulted in
improved efficiency, better delivery of projects and strong new
business wins. The Group also benefited from the improved
operational structure of the business following the completion of
the restructuring that began in 2011.
On 28 March 2013, Hasgrove sold Amaze, its full service
marketing and technology company, to St Ives Marketing Services for
a total cash consideration comprising a GBP15.3 million initial
payment paid on completion, which includes GBP1.8 million repayment
of intercompany debt, and up to a further GBP9.7 million payable
conditional upon achieving certain stretch profit targets in the
year to 31 December 2013.
Following the sale of Amaze, Hasgrove will own three trading
subsidiaries; Interact, The Chase and Landmarks. The Board believes
that these businesses address key market segments and offer good
growth potential. A proportion of the net disposal proceeds will be
invested to accelerate the growth of Interact, particularly outside
of the UK.
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 GBP18.9m (2011: GBP17.4m) with
operating profits before separately identified items and central
costs of GBP1.7m (2011: GBP0.7m). The gross profit was GBP13.8m
(2011: GBP11.9m).
Amaze continued to strengthen its expertise of working with
central teams (marketing, technical and commerce) within large
global organisations to deliver strategy and multi-market,
multi-lingual digital solutions. New business activity has
continued to be successful, securing significant pan-European and
global accounts, particularly in growth areas such as e-commerce.
New client wins in 2012 include ASICs, BUPA Care Homes, Zurich
Financial and Pizza Hut.
Interact
Interact is a leading supplier of intelligent intranet software.
Organisations using Interact Intranet report improved efficiency,
greater productivity, increased employee engagement, better
decision-making and cost savings.
Interact delivered revenues of GBP3.4m (2011: GBP2.5m) with
gross profit of GBP3.3m (2011: 2.4m) and operating profits before
central costs of GBP0.5m (2011: GBP0.4m).
2012 saw a substantial increase in overall revenue with key
increases in new business software sales and recurring support
revenue due partly to the launch of sales activity into the US
market in early 2012.
In spite of the increased sales, operating profits were flat due
to a number of reasons including:
-- significant investment in product development resulting in
the launch of Interact Intranet 7 in April 2013, which is a SaaS
(Software as a Service) product that can be hosted in the Cloud
-- a changed approach to the recognition of support income,
which resulted in the amount of deferred income held on the balance
sheet increasing by GBP0.3m
-- the incremental write-off of intangible research and
development costs of GBP0.1m due to the new product launch
Interact has benefited significantly from its entry into the US
market in early 2012. This, together with increased enterprise
sales in Europe and Australia, has complemented its already strong
UK base. During the year, Interact added Age UK, Flight Centre,
Lease Plan, G4S Americas, Midland Co-op and Signet Trading to its
client list.
The Chase
The Chase is an award-winning creative design agency. It
experienced a challenging year due to significant delays in client
projects with revenues reducing to GBP2.6m (2011: GBP2.9m), gross
profits reduced to GBP2.0m (2011: GBP2.1m) and operating profits
before central costs flat at GBP0.1m (2011: GBP0.1m).
The Chase's performance during the second half of 2012 was very
encouraging, particularly as one of its largest clients for the
previous three years stopped spending due to internal issues. It
also delivered strong new business wins, which will have an impact
during 2013.
In 2012, The Chase was also named as the overall winner of the
annual Design Week creative league tables for the first time,
whilst also being placed first in the print and branding
categories.
Financial results
The results for the Group are presented based on the continuing
operations of Amaze, Interact and The Chase. The results of the
continuing operations representing Amaze, include those businesses,
which were sold to St Ives plc on 2 April 2013.
The Group's revenue increased by 9.2 % to GBP24.9m (2011:
GBP22.8m), with gross profits of up by 16.3% at GBP19.1m (2011:
GBP16.5m).
Headline operating profit, as defined in the consolidated income
statement, was GBP1.6m (2011: GBP0.9m), an increase of 70%.
Operating profit was GBP1.3m (2011: loss GBP2.8m) with a separately
identifiable item of GBP282k in respect of goodwill impairment
(2011: GBP3.6m), with the prior year costs relating to
restructuring which is now largely complete. Profit before tax was
GBP1.1m (2011: loss GBP3.0m).
The profit on disposal of discontinued operations of GBP0.2m is
associated with the deferred cash consideration for the sale of
Interel in July 2011. At 31 December 2011, the deferred element
relating to shares was valued at 36p per share being the open
market price of Hasgrove plc shares at 31 December 2011 and at 31
December 2012, the share price was 56p per share resulting in a
further gain on disposal of GBP0.2m.
Headline basic earnings per share from continuing operations was
6.8p (2011: 1.7p) and reported basic earnings per share was 6.4p
(2011: loss per share 40.9p).
The Board is proposing to double the dividend to 2.0p per share
(2011: 1.0p per share). Subject to shareholder approval, the
dividend will be paid on 30 August 2013 to all shareholders on the
register at 2 August 2013. The Group's shares go ex-dividend on 31
July 2013.
Cash generated by operations was GBP3.0m (2011: GBP2.2m),
representing a headline operating profit conversion rate of
192%.
The Group's year end net debt reduced to GBP0.1m (31 December
2011: GBP1.5m), which is after the payment of earn-outs of GBP0.7m
and buy back of shares GBP0.2m.
Outlook
The Group's current businesses, Interact, The Chase and
Landmarks have traded steadily since the end of the last financial
year and the good sales performance of Interact last year has
continued into the first quarter. New project briefs for The Chase
have also been encouraging. The Board is optimistic about the
Group's future prospects, particularly following the successful
launch of the new Interact Intranet 7.
Having reviewed all the options open to the Group, including its
size and scale since the sale of Amaze, the Board considers that
the best returns for Shareholders will come from today's proposal
and tender offer to buy back shares and De-List the Group from AIM.
This will allow the Group to focus its full attention on building
the offerings and profitability of its current businesses.
Consolidated Income Statement
Year Ended 31 December 2012
2012 2011
Note GBP000 GBP000
Continuing operations
Revenue 24,858 22,759
Cost of sales (5,717) (6,297)
Gross profit 19,141 16,462
Administrative expenses before separately
identified items (17,557) (15,530)
1,584 932
Headline operating profit
Share option charge (33) (89)
Exceptional costs - (902)
Goodwill impairment (282) (2,709)
Total administrative expenses (17,872) (19,230)
Operating profit/(loss) 1,269 (2,768)
Finance income - 1
Notional finance cost on deferred consideration - (19)
Finance costs (130) (214)
Total finance costs (130) (233)
Headline profit before tax 1,454 719
Share option charge (33) (89)
Exceptional costs - (902)
Goodwill impairment (282) (2,709)
Notional finance cost on deferred consideration - (19)
Profit/(loss) before tax 1,139 (3,000)
Tax 169 (75)
Profit/(loss) for the financial year from
continuing operations 1,308 (3,075)
Discontinued operations
Profit/(loss) from discontinued operations 212 (6,680)
Profit/(loss) for the financial year 1,520 (9,755)
Basic earnings/(loss) per share (pence)
- from continuing operations 3 5.5p (12.9)p
Diluted earnings/(loss) per share (pence)
- from continuing operations 3 5.5p (12.9)p
Basic earnings/(loss) per share (pence)
- total 3 6.4p (40.9)p
Diluted earnings/(loss) per share (pence)
- total 3 6.4p (40.9)p
Consolidated Statement of Comprehensive Income
Year Ended 31 December 2012
2012 2011
GBP000 GBP000
Profit/(loss) for the financial year 1,520 (9,755)
Other comprehensive income
Exchange differences on translation of foreign
operations (1) -
Other comprehensive expense for the year (1) -
Total comprehensive income/(expense) for
the year 1,519 (9,755)
Consolidated Statement of Financial Position
At 31 December 2012
2012 2011
GBP000 GBP000
Non-current assets
Goodwill 16,782 17,064
Other intangible assets 569 613
Property, plant and equipment 989 1,117
Deferred tax asset 194 73
18,534 18,867
Current assets
Inventories 45 -
Trade and other receivables 5,676 5,965
Corporation tax receivable - 63
Cash and cash equivalents 2,112 1,069
7,833 7,097
Total assets 26,367 25,964
Current liabilities
Trade and other payables (5,817) (5,377)
Current tax liabilities (35) -
Obligations under finance
leases (59) (131)
Borrowings (943) (241)
Deferred consideration (186) (764)
(7,040) (6,513)
Net current assets 793 584
Non-current liabilities
Borrowings (1,178) (2,175)
Deferred consideration - (90)
Deferred tax liability (789) (929)
(1,967) (3,194)
Total liabilities (9,007) (9,707)
Net assets 17,360 16,257
Equity
Share capital 2,346 2,414
Share premium account 15,079 15,079
Capital redemption reserve 70 -
Translation reserve (1) -
Retained earnings (134) (1,236)
Total equity 17,360 16,257
Consolidated Statement of Changes in Equity
Year ended 31 December 2012
Capital
Share Share premium redemption Translation Retained
capital account reserve reserve earnings Total
GBP000 GBP000 GBP'000 GBP000 GBP000 GBP000
Balance at 1 January 2011 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
Profit for the year - - - - 1,520 1,520
Other comprehensive loss
for the year - - - (1) - (1)
Total comprehensive income
for the year - - - (1) 1,520 1,519
Issue of share capital 2 - - - - 2
Shares purchased and cancelled (70) 70 (227) (227)
Dividends - - - - (224) (224)
Credit to equity for equity-settled
share based payments - - - - 33 33
Balance at 31 December 2012 2,346 15,079 70 (1) (134) 17,360
Consolidated Statement of Cash Flows
Year ended 31 December 2012
2012 2011
GBP000 GBP000
Cash generated by operations (note 4) 3,038 2,226
Income taxes received/(paid) 37 (53)
Net cash from operating activities 3,075 2,173
Investing activities
Interest paid (130) (214)
Interest received - 1
Purchase of property, plant and equipment (346) (591)
Sale of property, plant and equipment 1 -
Expenditure on product development (421) (321)
Payment of deferred consideration (668) (912)
Receipt of deferred consideration 300 -
Disposal of subsidiary (14) 5,177
Net cash (used in)/generated from investing
activities (1,278) 3,140
Financing activities
Dividends paid (224) (119)
Issue of shares 2 -
Shares purchased and cancelled (227) -
New loan received 31 2,522
Repayments of borrowings (334) (6,136)
Net cash outflow from financing activities (752) (3,733)
Net increase in cash and cash equivalents 1,045 1,580
Cash and cash equivalents at beginning
of year 1,069 (467)
Effect of foreign exchange rate changes (2) (44)
Cash and cash equivalents at end of year 2,112 1,069
Selected explanatory notes
Year ended 31 December 2012
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 2012.
The comparative figures for the year ended 31 December 2011 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 2011 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 2012 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 2012. 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 and current cash on hand as referred to
in the financial highlights section.
3. Earnings/(loss) per share
The calculation of the basic and diluted earnings/(loss) per
share is based on the following data:
Earnings/(loss)
2012 2011
Continuing and discontinued operations GBP000 GBP000
Earnings for the purposes of total basic earnings/(loss)
per share being net profit/(loss) 1,520 (9,755)
Continuing operations
Earnings for the purposes of continuing basic
earnings/(loss) per share being net profit/(loss) 1,308 (3,075)
Number Number
000's 000's
Number of shares
Weighted average number of ordinary shares for
the purposes of basic earnings per share 23,788 23,863
Effect of dilutive potential ordinary shares:
Share options 51 280
Weighted average number of ordinary shares for
the purposes of diluted earnings per share 23,839 24,143
In accordance with IAS 33, anti-dilutive potential ordinary
shares have been disregarded in the calculation of diluted EPS.
Headline earnings per share
The calculation of headline basic and headline diluted earnings
per share is based on the earnings after adjustments as
follows:
2012 2011
GBP000 GBP000
Profit/(Loss) for the financial year 1,520 (9,755)
Share option charges 33 89
Exceptional costs (net of tax relief) - 663
Goodwill impairment 282 2,709
Notional finance cost on deferred consideration - 19
(Profit)/loss from discontinued operations (212) 6,680
Headline earnings 1,623 405
4. Notes to the statement of cash flows
2012 2011
GBP000 GBP000
Operating profit/(loss) for the year 1,269 (2,768)
Adjustments for:
Operating profit from discontinued operations - 574
Depreciation of property, plant and equipment 465 557
Amortisation 465 290
Share-based payment expense 33 89
Loss on disposal of subsidiary 52 -
Currency gain on bank loans (64) -
Impairment of goodwill 282 2,709
Operating cash flows before movements in working
capital 2,502 1,451
(Increase)/decrease in inventories (45) 57
Decrease/(increase) in receivables 42 (301)
Increase in payables 539 1,019
Cash generated by operations 3,038 2,226
Cash and cash equivalents in the statement of financial position
and the cash flow statement are cash balances and deposits held at
call with banks with original maturities of three months or less.
It also includes the overdrafts repayable on demand, on the basis
that these form an integral part of the Group's cash management and
there exists a right of offset. Cash and cash equivalents are made
up as follows:
2012 2011
GBP000 GBP000
Cash balances and deposits 2,112 1,347
Overdrafts repayable on demand - (278)
Cash and cash equivalents 2,112 1,069
5. Other information
The report and accounts of the Group for the twelve months ended
31 December 2012 will be posted to shareholders by 15 June 2012 and
will be available on the Group's website at www.hasgrove.com from
today.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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