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RNS Number:1414P
Huveaux PLC
03 March 2008
3 March 2008
Huveaux PLC
2007 PRELIMINARY RESULTS
Financial Highlights
- Revenue up 2% to £46.1 million (2006: £45.0 million)
- EBITDA down 19% to £5.8 million (2006: £7.2 million)*
- Profit for the year of £0.4 million (2006: £2.3 million)
- Basic EPS of 0.24 pence per share (2006: 1.59 pence)
- Normalised EPS down 38% to 1.82 pence per share (2006: 2.93 pence)**
- Dividend recommended in line with results at 0.75 pence per share
(2006: 1.21 pence)
Operating Highlights
- Results for the year were impacted by a fall in the market for
pharmaceutical advertising in France and a reduction in UK public
sector learning spend
- We reacted to these changed market conditions by adapting our
business models and creating new sources of revenue
- Actions taken as part of a Group wide cost reduction programme will
realise £2.5 million of annualised cost savings
- EBITDA in our Education Division increased by 25% on a like for like
basis
- Our European political business showed encouraging growth, enhanced
by the acquisition of the European Public Affairs Directory
- Conferences and exhibitions performed strongly
- Our Learning Division now has new management teams in place
Summary of Results
£'000 2007 2006
Revenue 46,069 45,028
Profit for the year 362 2,288
EBITDA* 5,801 7,174
Normalised earnings per share (basic)** 1.82p 2.93p
Earnings per share (basic) 0.24p 1.59p
Dividend per share 0.75p 1.21p
* EBITDA is calculated as earnings before interest, tax, depreciation,
amortisation of intangible assets acquired through business combinations, and
non-trading items.
** Normalised earnings per share is stated before amortisation of intangible
assets acquired through business combinations, non-trading items and related
tax.
Non-trading items are items which in management's judgement need to be disclosed
by virtue of their size, incidence or nature. Such items are included within
the income statement caption to which they relate and are separately disclosed
either in the notes to the consolidated financial statements or on the face of
the consolidated income statement.
These results are the Group's first to be prepared under International Financial
Reporting Standards as endorsed by the International Accounting Standards Board
and as adopted by the EU ("Adopted IFRS"). The December 2006 comparative
figures have been restated accordingly.
An analyst presentation will be held at 09.30am today at Dresdner Kleinwort, 30
Gresham Street, London EC2P 2XY, with coffee available from 09.00am.
John van Kuffeler, Non-Executive Chairman of Huveaux, commented:
"2007 was a disappointing year for Huveaux with a 19 per cent fall in normalised
EBITDA.
We responded to the changing market conditions by adapting parts of our business
model. This included a series of successful new business initiatives and the
lowering of our cost base.
As a result, we won good levels of new business in December and this has ensured
a good start to 2008."
For further information, please contact:
Huveaux
John van Kuffeler, Non-Executive Chairman 020 7245 0270
Gerry Murray, Chief Executive Officer
Brewin Dolphin Limited (NOMAD) 0131 225 2566
Sandy Fraser
Note to Editors:
Huveaux PLC is a public limited company listed on the Alternative Investment
Market (ticker HVX.L).
The Company was formed in 2001 with the objective of building a substantial,
high-quality media group. Huveaux has completed and successfully integrated 13
acquisitions over the past six years and employs 500 staff in London, Paris,
Brussels, Edinburgh and four other UK regional offices.
The Group now consists of four Divisions, each of which has strong brands and
market leading positions:
Political Division
The market leader in political business-to-business publishing in the UK and EU,
serving both the political and public affairs communities. The Division
comprises Dods Parliamentary Companion, The House Magazine, Epolitix.com and
numerous other political magazines, reference books, monitoring products and
revenue-generating websites as well as events, awards and recruitment services.
Learning Division
A leading provider of resources to learning communities in the UK, including
e-learning solutions for the public and private sector and blended learning
solutions, seminars and events for the political, public affairs and training
markets. The Division comprises Epic, the UK market leader in e-learning; The TJ
magazine; and the highly acclaimed Westminster Explained conferences and
seminars business.
Education Division
The leading supplier of study aids and revision guides in the UK, with full
product coverage across all subjects and stages of the entire curriculum in UK
schools. The Division comprises Lonsdale, Letts Educational and Leckie & Leckie.
Healthcare Division
One of the leading providers of specialist B2B publications and online education
for the medical sector in France. The Division comprises Panorama du Medecin, a
leading weekly magazine for French doctors, Le Concours Medical and La Revue du
Praticien, market-leading Continuing Medical Education magazines; Egora.fr, the
leading medical information website; a medical conference business; and a number
of other magazines and reference materials.
CHAIRMAN'S STATEMENT
2007 Overview
2007 was a disappointing year for your Company. Revenue grew by £1.1 million to
£46.1 million despite two sizable acquisitions in the previous year, and
earnings before interest, tax, amortisation and non-trading items (EBITDA)
declined from £7.2 million to £5.8 million, a 19 per cent per cent fall.
Normalised earnings per share decreased by 38 per cent to 1.82 pence and basic
earnings per share fell to 0.24 pence (2006: 1.59 pence).
Non-trading items amounted to a total of £0.9 million, including the costs of
the abortive deal process for the Company (£0.4 million) and the impact of the
Group initiative to reduce costs (£0.7 million), less profit on disposal of
assets (£0.2 million).
Your Board is recommending a dividend in line with our financial performance of
0.75 pence per share (2006 - 1.21 pence), a reduction of 38 per cent compared to
last year.
The Board explored the possibility of an offer for the Company from a private
equity house in the last quarter of 2007 but conditions, particularly in the
financial markets, were not conducive to effecting a successful transaction, and
the talks were terminated on 12 December 2007.
Strategy
Our first priority is to deliver a good set of results in 2008 to restore
investor confidence in our business. We are well placed to do this as we have
successfully restructured both Epic and our Political Knowledge businesses,
leading to major contract wins which will flow through to profit in the first
quarter of this year. This, combined with the impact of the cost reduction
measures undertaken throughout the Group, should allow us to deliver on this
priority.
At the same time we are concentrating our resources on driving new development
in the businesses which are showing good organic growth, principally in the
Political and Education Divisions. This is reflected in our new exhibition and
conference business and the further developments in expanding our digital
portfolio within the Political Division. It is equally apparent in the Education
Division where digital developments are now gathering pace while our revision
guide portfolio continues to expand.
We are also adapting the business model of our French Healthcare business by
containing the effects of the structural decline in pharmaceutical advertising
revenues while growing our Continuing Medical Education business. We are
examining any opportunities to optimise shareholder value from this Division.
Achieving these strategic priorities will migrate Huveaux's business and
financial profile towards one of strong organic revenue and EBITDA growth with
good margins in attractive B2B sectors with significant digital and events
revenue.
The Board, Management and People
I would like to thank our management and staff for their considerable efforts
during such a difficult year. Much has been achieved in reducing costs and
winning new business which is a direct result of their hard work.
There have also been three changes at Board level. Dan O'Brien, our Finance
Director for the last two years, is leaving to take up a high profile
appointment with another media company and intends to step down from the Board
on 4 March. I am pleased to announce that we are today announcing the
appointment of his successor Rupert Levy, Finance Director within the Haymarket
Group, who will join us on 22 April this year. Mike Arnaouti, our Company
Secretary and Director of Corporate Services, has also stepped down after two
and a half active and eventful years. He is succeeded by Sue De Cesare. Finally,
I am moving from Executive Chairman to Non-Executive Chairman, which gives
Huveaux the benefit of a conventional Board structure with a Non-Executive
Chairman and a Chief Executive. The net result of these three changes is a
significant cost saving for the Group.
Outlook
The Board is mindful that the external economic environment in 2008 is likely to
be difficult, implying that both corporate profits and Government tax revenues
are likely to be under pressure. This background has conditioned our strategy
for 2008, namely to focus on organic growth, cost control and margin
improvement, guided by the new management teams that have been put in place in
2007. In addition, 2008 will benefit from the full impact of the cost saving
measures introduced in 2007. As a result, your Board is confident that the group
can deliver a satisfactory performance in the year ahead, notwithstanding the
overall market environment.
The Board is not planning any material acquisitions and continues to review the
optimum structure for the group to ensure that shareholder value is maximized.
CHIEF EXECUTIVE'S BUSINESS AND FINANCIAL REVIEW
Introduction
In a year when some of our markets have seen considerable turmoil and presented
major challenges, we have worked hard to reorganise our company, reduce our
costs and move forward in a business climate which remains difficult for all
media owners. However, we are confident that the changes we have made will drive
substantial improvement in the year ahead.
Business Overview
Our performance this year has been impacted by fundamental changes in the global
pharmaceutical market, public sector cutbacks in the UK and a flat public
affairs market. We have changed our business model in response to each of these
and the efforts of management throughout the group have been directed at
developing new initiatives to grow future revenues while eliminating costs where
we can, without damaging the prospects for the businesses going forward. In
addition we have very substantially reduced our central costs in line with the
strategic needs of our company.
In our French Healthcare Division advertising volumes fell throughout the year.
We have continued to grow our online and Continuing Medical Education (CME)
revenues but not at sufficient pace to make up for lost advertising income in
our three major healthcare magazines. The final divisional result of £1.8
million EBITDA for the year was disappointing but still represented more than a
15 per cent return on the acquisition cost. The fall in the pharmaceutical
advertising market is driven by the inexorable rise in the use of generic drugs,
as governments around the world attempt to cut healthcare costs. It is our view
that this will persist for the foreseeable future. We continue to examine the
options for the future of this business.
Cost efficiencies in the UK civil service have led to reduced spending on public
sector training. Whilst this adversely impacted our e-learning and civil service
training business during the year, we have recently seen a return to growth in
this sector and are confident of better market conditions going forward. We have
refined our business model for face-to-face training and implemented an
efficiency programme at Epic. Both these changes have already had a positive
effect on our recent performance, and December was a record month for new
business orders, which will be realised as profit in 2008. Our training business
at Fenman had a very good year with the cost reduction exercise we implemented
during 2006 helping us achieve more than 80 per cent growth in EBITDA.
In our Education Division we have continued to expand our portfolio and have
seen year on year underlying EBITDA growth in excess of 25 per cent as a result.
Revenue growth was substantial in our Scottish business, Leckie & Leckie, and
indeed all our education companies showed double digit EBITDA growth. The
integration of Letts was completed during the year and it showed very pleasing
growth in its sales direct to schools where historically it has not been strong.
We will continue our portfolio expansion throughout 2008 both in print and
online, and are very confident of the future for this business.
Our Political Division had a mixed year with good growth in our European and
Government business but with a disappointing performance from our parliamentary
magazines. We had a flat party conference season and the subsequent uncertainty
around a possible general election caused confusion in our markets. This gave us
a poor final quarter for the division though for the whole year revenue was
slightly up on 2006, driven principally by a strong performance of the EU unit
in Brussels. EBITDA for the Political Division fell to £1.8 million as we
absorbed the costs of several new developments which will benefit the Group from
2008 onwards.
2008 Priorities
Huveaux was established with the intention of creating a substantial B2B media
group. Throughout 2005 and 2006 we made good progress with this objective
showing double digit earnings per share growth in both years.
There is no doubt that the difficult trading conditions we have faced during
2007, particularly in France, have interrupted that progress. However, we enter
2008 a much leaner and fitter organisation. Management overhead and central
costs have been substantially reduced in line with more conservative growth
ambitions. Divisional management costs have also been reduced and cost control
and margin improvement are central to our business improvement strategy for
2008. During the second half of 2007 a cost reduction programme was put in
place, as a result of which £2.5 million of costs will be saved on an annualised
basis. The full benefit of these will be seen in 2008.
The trading environment for all media companies in 2008 is predicted to be
challenging. Whilst much of our advertising is 'defensive' in nature, we will
not be entirely immune to an economic downturn .We can expect very little in the
way of growth in advertising. Progress during a period such as this is driven by
concentration on new events and digital content, and on costs and margin
management. That is the task we are determined to complete in the next 12
months and we feel confident that this will deliver a good result to
shareholders.
Political Division
£'000 2007 2006
Revenue 10,825 10,578
EBITDA* 1,791 2,428
*A reconciliation between EBITDA and operating profit is provided in Schedule A
on page 22.
As the country awaited the long transition from Tony Blair to Gordon Brown, and
in the autumn the new Prime Minister decided against a general election, the
public affairs market in Westminster in 2007 was flat.
For us it was a year of investment for our Political Division. It was a year
where we invested in our people, technology and products to secure expansion
into growing markets and new services.
Highlights:
- Our government business grew its revenues by 29 per cent and expanded
its online and events income.
- Revenues in our European political publishing business increased by
18 per cent with our Regional Review magazine growing by more than 50
per cent.
- We became the clear leader in EU political monitoring and this
business more than doubled in size.
- We now run over 100 political events across the Group.
- We have launched Civil Service Live, the first ever exhibition for
the civil service showcasing best practice and innovation in public
sector delivery.
We have now successfully expanded into the civil service market. Our government
business, which operates under the brand of Whitehall and Westminster World,
grew by 29 per cent in 2007. In just three years it has developed into a
thriving newspaper, online and events business, and has established itself as an
indispensable resource to senior civil servants. This was highlighted when the
Prime Minister Gordon Brown and the Cabinet Secretary Sir Gus O'Donnell gave
presentations at our Whitehall and Westminster World Civil Service Awards
ceremony in November.
In 2008 our government business will take a major leap forward through the
launch of Civil Service Live. This is the first ever exhibition dedicated to
the UK civil service. It will bring together more than 5,000 senior civil
servants over three days to inspire innovation amongst the people running
today's and tomorrow's civil service. It will showcase best practice and
innovation in the civil service and will be the must-attend event for senior
civil servants.
Civil Service Live is a significant brand extension for Whitehall and
Westminster World and it moves our successful events business into major
exhibitions. In 2004 Dods held just one event; in 2008 it will hold over 50.
We have successfully expanded in the Brussels market through the solid growth of
our European political magazine business. In 2007 revenue for this business
grew by 18 per cent. The Parliament Magazine, our magazine for the European
Parliament has become an increasingly influential channel for EU Commissioners
to communicate to MEPs.
The Regional Review, our magazine focussing on the regions of the EU, saw
revenue grow by 58 per cent last year. Michel Delaberre, the President of the
Committee of the Regions, gave the closing address at the inaugural Regional
Review Awards.
In 2007 Dods acquired the European Public Affairs Directory (EPAD), the
definitive guide to who's who in public affairs in Brussels. This is an
excellent addition to our market leading portfolio of books and we plan to
launch the inaugural EPAD Awards in 2008.
In 2008 we expect further growth in our Europe business, especially through the
growing demand for policy forums and networking events in Brussels.
In 2007 our online information business showed solid growth, especially our EU
monitoring information service which grew by an exceptional 150 per cent. We
expect our EU monitoring service to continue this significant growth in 2008.
We have invested heavily in our digital information products as we see this as a
key growth area in future years.
In 2008 we will be launching a new version of ePolitix.com, our website for
parliamentarians and policymakers. We will also be launching an improved
version of Dodonline which will offer much greater functionality reflecting our
clients' changing needs.
Our recruitment business Electus showed good profit growth in 2007. Although
the recruitment market is increasingly competitive, the demand for public
affairs recruitment services remains strong.
Last year Public Affairs News, our magazine for the public affairs industry
showed strong profit growth. In July, four hundred public affairs practitioners
gathered at the Cafe Royal for our annual Public Affairs News Awards dinner.
In the summer of 2008 Dods will hold a major exhibition in Westminster Hall in
the Palace of Westminster, lasting three months. The 'Your Parliament'
Exhibition will celebrate 175 years of Dods serving Parliament and will also
reveal how Parliament has made dramatic changes to our society over this time.
We are proud to be working with Parliament through this exhibition to encourage
people, and especially young people, to engage more in the democratic process.
In 2007 we invested in our future growth by expanding into new markets,
particularly government and the EU. We invested in technology to drive our
digital products forward and by further developing the expertise to grow our
highly successful events business. In 2008 we will deliver on these ambitious
and exciting expansion plans.
Learning Division
£'000 2007 2006
Revenue 10,544 12,718
EBITDA* 798 1,888
*A reconciliation between EBITDA and operating profit is provided in Schedule A
on page 22.
Our Learning Division had a very mixed and ultimately disappointing year. Severe
public sector training cuts across all government departments seriously impacted
our Political Knowledge and Epic businesses in the first half of the year. This
slowly turned around in the second half of the year, but too late for what is
clearly a very disappointing result. Throughout all this our Fenman training
business, which also saw revenue downturn, was able to increase its profits by
over 80 per cent to record levels. This was due entirely to the cost reduction
programme undertaken in the final quarter of 2006.
We ended the year on a high at both Political Knowledge and Epic where newly
installed management and record levels of sales have given us much increased
visibility on future revenues, and renewed confidence for a very different
financial picture in 2008.
Highlights:
- Fenman increased its profits year on year by 87 per cent and launched
two web based interactive training services: TrainerActive and Good
Practice.
- The Political Knowledge business won its largest ever contract in
December 2007 with the Equality and Human Rights Commission to deliver
training to its staff in the first quarter of 2008.
- Westminster Explained and Westminster Briefing launched new websites
in July 2007 enabling clients to book courses on-line. This has proved
popular and approximately 25 per cent of places are now reserved
through the website. This proportion is expected to grow in 2008.
- Epic had its largest ever sales month in December with well over £1
million of orders. This business now has a new management team and has
completed an efficiency programme resulting in a 15 per cent headcount
reduction.
Market conditions in 2007 were very tough in the public sector. Training budgets
were under pressure and many organizations opted to save money by delivering
training internally or ensuring value for money through competitively procured
solutions.
In our classroom training business, Westminster Explained, we have traditionally
relied on an "open courses" model with off the shelf content. This model has
worked well when budgets are available; however in leaner times it simply does
not offer sufficient value to the customer. In light of this we have developed a
much more customized option for government departments. This complementary model
has the added advantage of creating a much closer relationship with the customer
and giving a much greater degree of visibility of revenue going forward. As a
result we started winning significant new business in the final months of 2007.
More to follow, for following part double-click [nRN1C1414P]
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