Strong cost control and a change in the revenue mix enabled public relations and healthcare communications specialist Huntsworth to crank up first half profits despite flat revenues.
Turnover in the six months to the end of June at £107.1m was barely changed from the £108.0m racked up in the first half of 2011, yet profit before tax was up by more than half at £9.6m from £6.2m the year before. Like-for-like revenue was up 0.5% year-on-year.
Diluted earnings per share (EPS) improved to 3.1p from 2.1p the year before. Adjusted EPS, which exclude amortisation of intangible assets, restructuring costs, additional litigation costs in the period and acquisition related costs, rose to 3.5p from 3.1p in the first half of last year.
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Net debt at the end of June stood at £69.6m versus debt of £71.1m a year earlier. Cash generation remains good, which should enable the group to reduce gearing, especially as earn-out clauses from previous acquisitions are set to tail off.
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Peter Chadlington, Chief Executive of Huntsworth, said the secret to its profits increase on flat revenues was "rigorous cost control combined with the changing profile of the group's revenue stream gathering pace with global and multi-office revenues growing strongly in the period and now accounting for almost half of group revenues."
Chadlington explained that large multi-office account wins, which are typically on multi-year contracts, have taken time to come on stream but are now established and providing a firm revenue base across most markets.
Revenue from global and multi-office clients grew by 8.4% on a like-for-like basis, to account for 49% of total revenue; just three years earlier, they accounted for just one-third of revenues.
Management continues to keep a tight control of costs and expects the improved margins over 2011 to be maintained in the second half. "We naturally remain cautious given the macro environment but progress in our multi-office and digital revenues, along with the increase in our international pipeline of new business is encouraging," the group said.
The interim dividend has been maintained at 1.0p.
The shares were up 2.5p to 50.5p in the afternoon session.
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