Huntsworth Interim Results

Huntsworth has published its interims results today - those for the six months from January 1 to June 30 2012.

I always believe in looking at the bad news first!

In our case, the one aspect about which we are least happy is top line growth - the increase in our fee revenues. These are virtually flat at £88.2m compared with £88.1m last year. However, we should remember that these are exceptionally difficult economic conditions - particularly for a company like Huntsworth which has 56% of its business in the European Union.  

But there is good news in the revenue stream as well. You will remember that we reorganised and rebranded much of our Group a couple of years ago so we could attract more international and multi office business.

We knew that there would - partly because of the reorganisation and partly because of the gathering economic storms - be some significant attrition in the smaller, one office accounts. That has continued this first half and has declined by 5.9% compared to the comparable period last year.

But we are continuing to attract more and more multi office and international work - it was up 8.4% in the period more than compensating for the loss of the smaller single office contracts.

So, our policy is working, but we have been held up in seeing real growth in the top line because of the economic situation of many of our smaller clients in agencies which have come into the Huntsworth Group over the last few years.

Of course, analysts rightly want to see top line growth. However, whatever happens on the top line they must see rising profits and cash generated from our operations.

And this is where our story looks really good. Pre-tax profits are up 20.8% to £11.6m (£9.6m in 2011) from greatly improved margins both at operating company level at 20.5% (17.8% in 2011) and at post central cost level at 15.5%  (13.1% in 2011).

And over the last four or five years, we have been investing large amounts of cash as we pay for the acquisitions which we made to build our international Group. These payments are now coming to an end. We have total earn-outs of £10.6m over the next three years, after we have paid £4.8m in the balance of this year.

Our debt is therefore falling from its peak, as those payments decline and we generate more profits. This de-leveraging strengthens the balance sheet and the financial profile of the Group.

In these very difficult economic circumstances, our intention is to, first, do great work and keep our existing clients happy: second, pitch aggressively for new business and be sensitive to the financial pressures which our prospective clients are facing: third, continue to be vigilant over cost and cash control: fourth, make sure that we continue to produce sector leading margins and profits.

If you would like to read more about our numbers go to our website and you will find the full Stock Exchange statement there.You will find it on

Please do ask me any questions about our financial results.