RNS Number:8888A
Huveaux PLC
26 July 2007
Huveaux PLC
Interim Results for the six months ended 30 June 2007
Financial Highlights
* Revenue up 8% to #21.7 million
* EBITDA at #1.0 million (2006: #1.8 million)*
* Profit before tax of #0.1 million (2006: #1.4 million)**
* EPS of 0.02 pence (2006: 0.68 pence)**
Operational Highlights
* Significant sales and profits growth in Education Division
* Strong outlook for Political Division following change of Prime Minister
* Healthcare Division impacted by very weak French pharmaceutical
advertising
* Learning Division impacted by lower public sector training spend
* Strategy in place to drive near-term financial and operational
performance
Summary of Results Six months to Six months to
30 June 2007 30 June 2006
#'000 Unaudited Unaudited
and Restated***
Turnover 21,663 20,075
EBITDA* 963 1,780
Normalised (loss)/profit before tax** 58 1,380
(Loss)/profit before tax (1,525) 497
Normalised earnings per share (basic)** 0.02p 0.68p
(Loss)/earnings per share (basic) (0.75)p 0.24p
* EBITDA is calculated as operating profit before amortisation, depreciation
and restructuring costs
** Normalised profit is stated before amortisation of intangible assets
*** Restated for conversion to IFRS
John van Kuffeler, Executive Chairman of Huveaux, commented:
"Our first half performance has been impacted by the very weak French
pharmaceutical advertising market, which has affected our Healthcare Division
and UK government cutbacks in training budgets, which have affected our Learning
Division.
However, the outlook for the second half is encouraging across much of the
Group. Although the French pharmaceutical advertising market continues to be
difficult, the political environment across Europe remains buoyant and the
Education Division is trading well, with many new products in the pipeline.
Recent weeks have seen some recovery in public sector training spending and the
Learning Division therefore looks set to achieve a satisfactory performance in
the second half.
The Board has initiated an operational and profit improvement programme which it
is confident will return us to growth in 2008."
For further information, please contact:
Huveaux
John van Kuffeler, Executive Chairman 020 7245 0270
Gerry Murray, Chief Executive Officer
Dan O'Brien, Group Finance Director
Finsbury
Don Hunter 020 7251 3801
Peter Russell
An analyst presentation will be held at 9.30am at Dresdner Kleinwort, 30 Gresham
Street, London EC2P 2XY, with coffee available from 9am.
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 more than 500 staff in London,
Paris, Brussels, Edinburgh and four other UK regional offices.
The Group 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 (established 1 January 2007)
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.
OPERATING AND FINANCIAL REVIEW
Group Performance
The first half of 2007 saw an 8% growth in revenue to #21.7 million (2006: #20.1
million), driven by the acquisition of Letts and Leckie & Leckie in September
2006. Organic revenue growth in the Political and Education divisions has been
offset by decreases in revenue in the Learning and Healthcare divisions.
EBITDA decreased from #1.8 million to #1.0 million, reflecting the market
conditions in France and lower public sector training spend in the UK. Earnings
per share decreased from 0.68 pence to 0.02 pence.
Operating Review
* Political Division
The Political Division had first half revenues of #4.6 million (2006: #4.1m).
With the appointment of Gordon Brown as Prime Minister, the second half of 2007
will prove to be an even busier period than usual for our Political Division.
The timing of his appointment has meant that a number of our regular
publications, which would normally be produced in the first half of the year,
have been moved into the third quarter of 2007. This, together with the new
launch activity detailed below, will increase the usual second half weighting of
the profits in the division.
The first half has seen us release two new books following the recent devolved
elections: the Scottish Parliament Companion and the National Assembly for Wales
Companion.
Our European business is showing excellent growth in both online and print. The
Regional Review will expand to publish six times a year and this incorporates
the launch of two further titles in Brussels, the Research Review and the
Employment and Learning Review.
Our portfolio in Brussels has been enhanced by the acquisition of the European
Public Affairs Directory (EPAD) for #0.2 million cash in April. The acquisition
of EPAD is expected to be earnings neutral in 2007.
In France, following the recent presidential and parliamentary elections, our
print and online sales are good and will be ahead of last year.
Our awards and events businesses in London, Paris and Brussels go from strength
to strength and forward sales into the busy party conference season are strong.
With our expanded portfolio, an increasing number of awards and events and a
buoyant political market across Europe, we expect the Political Division to
deliver good revenue and profit growth across the board in 2007.
* Learning Division
The Learning Division had revenues of #5.2 million in the first half of 2007
compared to #6.6 million last year. The division experienced a slowdown in
public sector training spend in the first half ahead of the appointment of the
new Prime Minister and Cabinet. This adversely affected both our Westminster
Explained and Epic businesses.
At Fenman, we have substantially increased our profit levels while continuing to
reduce our reliance on the sale of training resources for trainers. The TJ
Events business continues to grow and TJ Online has been successfully launched.
This year we have established a conference business within the Learning
Division, with a total of 18 conferences planned for 2007, 15 of which will take
place in the second half of the year. Our Westminster Briefing business
continues to expand at a healthy rate.
Epic continues to win significant public sector contracts and its current win
rate is one in three for new competitive tenders.
We have reorganised the senior and local management teams within the Learning
Division and have reduced the cost base as a result. In recent weeks we have
seen an increase in public sector training bookings and the outlook for the
second half of the year is more positive, with growth in revenue expected from
the increased number of events and awards.
* Education Division
Following the successful integration of Letts and Leckie & Leckie, which were
acquired in September 2006, we created a separate Education Division from the
start of this year, comprising both these companies together with our existing
Lonsdale business. The division's sales in the first half of 2007 amounted to
#5.5 million, compared to #1.2 million in the first half of 2006, with the
increase largely driven by the two acquisitions made last September.
Lonsdale has seen 10% organic growth in the first half of the year driven mainly
by increased sales volumes of its Science curriculum products at Key Stage 4.
Organic sales at Leckie & Leckie have also been strong and the historic sales
decline at Letts has been halted. Encouragingly, sales to schools have risen
over 20% across the division.
Additionally, the division has also delivered an impressive increase in profits
with Lonsdale's EBITDA increasing 34%. Profits across the division have
benefited from synergies including reduced distribution costs, print savings and
more efficient use of the publishing cost base.
There has also been substantial investment in new publishing with 51 new titles
released in the first half of the year and a further 164 new titles scheduled to
be published in the second half. This includes the launch of a new range of
revision guides, Essentials GCSE Science, which has 26 titles in book format,
together with a corresponding digital e-learning product developed jointly with
Epic.
This investment reinforces Huveaux's position as the leading publisher in the UK
revision market. As we approach the key trading period ahead of the new academic
year, the overall outlook for the Education Division is for further good growth
in revenue and profitability in 2007.
* Healthcare Division
The Healthcare Division's sales in the first half were #6.3 million, compared to
#8.2 million in the corresponding period last year. This year's first half
performance has been significantly impacted by the 19% year-on-year decrease in
the French pharmaceutical advertising market. This has arisen due to
pharmaceutical companies reducing their advertising budgets to the primary care
sector in response to the sharp rise in generic drugs and the lack of new
blockbuster drug launches.
In June 2007 we disposed of our non-core contract publishing business for #0.6
million in cash. This divestment is expected to have a neutral impact on the
Group's earnings in 2007 and beyond.
The revenues from our Continuing Medical Education and Evaluation of Medical
Practice accredited product offerings have started to flow through, with #0.3
million recognised in the first half. These are anticipated to provide a growing
revenue stream in the second half of 2007.
Overall, the outlook for the Healthcare Division in 2007 is for sales and EBITDA
to be significantly lower than in 2006. Nevertheless, this expected performance
will still generate at least a 15% pre-tax return on the original cost of
acquisition - well in excess of our cost of capital. Longer term the focus for
the division remains on controlling the costs of our print publications and
growing CME revenue streams.
Financial Review
Net debt at 30 June 2007 amounted to #18.5 million. During the first half we
generated #2.7 million of operating cash flows, particularly from positive
working capital movements. In addition, the Group repaid #1.6 million of its
outstanding loans and paid #1.8 million in satisfaction of the 2006 final
dividend. The level of gearing for the Group, with net debt to EBITDA of 3.1
times, provides a robust financial position going forward.
On 11 May 2007, the Company announced its adoption of International Financial
Reporting Standards (IFRS) for the year ended 31 December 2007. The comparative
financial information for the six months to 30 June 2006 and the year ended 31
December 2006 has been restated accordingly.
Profit Improvement Programme
The Board remain committed to increasing shareholder value and have initiated an
operational and profit improvement programme. This consists of revenue growth,
driven principally from new conferences and exhibitions and by new publications
across the four divisions as summarised above. In addition, we have completed a
print and paper review which will yield significant savings in 2008. We have
reduced the cost base of the management team in the Learning Division and
completed plans to reduce our central overhead by more than 20%.
Outlook
The second half of the financial year is always seasonally more important for
Huveaux, as it coincides with the start of the academic and parliamentary years
in September and October respectively. The second-half weighting is heightened
this year by the appointment of a new Prime Minister and the impact of this on
the timing of our political publications and the expected increase in public
sector training spend.
The outlook for Huveaux in the second half of 2007 is encouraging across much of
the Group. The political market remains buoyant and the Education Division is
performing well. There has been some recovery in public sector training spend in
recent weeks and the Learning Division therefore looks set to achieve a
satisfactory performance in the second half. The pharmaceutical advertising
market in France remains difficult, with revenues in France expected to continue
at levels well below those of previous years. Our focus in the Healthcare
Division is on controlling costs and accelerating our CME revenue streams.
HUVEAUX PLC
CONSOLIDATED INCOME STATEMENT
For the six For the six For the year
months ended months ended ended
30 June 30 June 31 December
2007 2006 2006
Unaudited Unaudited Unaudited
Note # 000s # 000s # 000s
Revenue 3 21,663 20,075 45,028
Cost of sales (14,231) (12,443) (26,408)
----------------------------------------
Gross profit 7,432 7,632 18,620
--------------------------------------------------------------------------------
Administrative expenses
before amortisation and
impairment (6,734) (6,100) (12,597)
Amortisation of intangible
assets (1,583) (883) (2,132)
--------------------------------------------------------------------------------
Total administrative expenses (8,317) (6,983) (14,729)
(Loss)/profit from operations (885) 649 3,891
Financing income 112 46 161
Financing costs (752) (198) (872)
----------------------------------------
(Loss)/profit before taxation (1,525) 497 3,180
Income tax credit/(expense) 4 378 (162) (892)
----------------------------------------
(Loss)/profit for the period (1,147) 335 2,288
========================================
Earnings per share - basic 5 (0.75 p) 0.24 p 1.59 p
Earnings per share - diluted 5 (0.75 p) 0.24 p 1.58 p
HUVEAUX PLC
CONSOLIDATED BALANCE SHEET
As at As at As at
30 June 30 June 31 December
2007 2006 2006
Unaudited Unaudited Unaudited
Note # 000s # 000s # 000s
----------------------------------------
Goodwill 6 28,046 19,869 28,165
Intangible assets 7 43,083 35,222 44,778
Property, plant and equipment 1,125 886 991
Non-current assets 72,254 55,977 73,934
----------------------------------------
Inventories 3,657 1,941 3,268
Trade and other receivables 10,571 10,889 15,158
Derivative financial instruments 140 87 140
Cash and cash equivalents 2,925 1,033 4,307
Assets held for sale - 189 188
----------------------------------------
Current assets 17,293 14,139 23,061
Income tax payable (163) (252) (412)
Provisions for liabilities and charges (86) (615) (368)
Trade and other payables (18,226) (13,559) (19,871)
----------------------------------------
Current liabilities (18,475) (14,426) (20,651)
Net current (liabilities)/assets (1,182) (287) 2,410
----------------------------------------
Total assets less current liabilities 71,072 55,690 76,344
Interest bearing loans and borrowings (18,022) (9,328) (19,855)
Employee benefits (156) (137) (156)
Deferred tax liability (7,768) (5,645) (8,248)
Other non-current liabilities - - (96)
----------------------------------------
Non current liabilities (25,946) (15,110) (28,355)
----------------------------------------
Net assets 45,126 40,580 47,989
========================================
Capital and reserves
Issued capital 15,200 14,017 15,200
Share premium 30,816 26,795 30,816
Other reserves 409 409 409
Retained (loss)/earnings (1,299) (641) 1,564
----------------------------------------
Equity shareholders' funds 8 45,126 40,580 47,989
========================================
HUVEAUX PLC
CONSOLIDATED STATEMENT OF CASH FLOWS
For the six For the six For the year
months ended months ended ended
30 June 30 June 31 December
2007 2006 2006
Unaudited Unaudited Unaudited
Note # 000s # 000s # 000s
Cash flows from operating
activities
(Loss)/profit for the period (1,147) 335 2,288
Depreciation of property, plant
and equipment 265 248 511
Amortisation of intangible
assets 1,583 883 2,132
Profit on disposal of property,
plant and equipment (67) - -
Profit on disposal of
discontinued operation 5 - -
Credits on defined benefit
scheme - - (1)
Share based payments charges 125 117 153
Net finance costs 640 152 711
Income tax expense (378) 162 892
Cash flow relating to
restructuring provisions (282) (937) (1,824)
----------------------------------------
Operating cash flows before
movements in working capital 744 960 4,862
Change in inventories (389) 209 199
Change in receivables 4,375 647 (1,449)
Change in payables (2,023) (1,127) 1,000
----------------------------------------
Cash generated by operations 2,707 689 4,612
Interest and similar expenses
paid (296) (198) (1,066)
Income tax paid (280) - (745)
----------------------------------------
Net cash from operating
activities 2,131 491 2,801
----------------------------------------
Cash flows from investing
activities
Interest and similar income
received 112 46 153
Proceeds from sale of property,
plant and equipment 275 - -
Proceeds from sale of
investments - - 55
Escrow received on acquisition
of Letts and Leckie 400 - -
Disposal of discontinued
operation 370 - 131
Acquisition of subsidiary, net
of overdraft acquired - - (16,842)
Deferred consideration paid on
Political Wizard (500) - -
Acquisition of property, plant
and equipment (325) (548) (854)
Acquisition of publishing rights (164) - -
Acquisition of other intangible
assets (277) (75) (312)
----------------------------------------
Net cash used in investing
activities (109) (577) (17,669)
----------------------------------------
Cash flows from financing
activities
Proceeds from issue of share
capital - - 5,500
New loans acquired - - 13,400
Payment of transaction costs - - (296)
Repayment of borrowings (1,569) - (516)
Dividends paid (1,839) (1,542) (1,542)
----------------------------------------
Net cash used in financing
activities (3,408) (1,542) 16,546
----------------------------------------
Net decrease in cash and cash
equivalents 9 (1,386) (1,628) 1,678
Opening cash and cash
equivalents 4,307 2,678 2,678
Effect of exchange rate
fluctuations on cash held 4 (17) (49)
----------------------------------------
Closing cash and cash
equivalents 9 2,925 1,033 4,307
========================================
HUVEAUX PLC
Notes to the Accounts
30 June 2007
1 Statement of Accounting Policies
The accounting policies set out below, have, unless otherwise stated, been
applied consistently to all periods presented in these Group financial
statements and in preparing an opening IFRS balance sheet at 1 January 2006.
Basis of preparation
The consolidated financial statements of Huveaux PLC have been prepared in
accordance with International Financial Reporting Standards as adopted by the EU
("adopted IFRS").
The unaudited financial information presented in this document has been prepared
on the basis of the expected accounting policies which the Group will comply
with in the accounts to 31 December 2007 and on the basis of all International
Financial Reporting Standards ("IFRS"), including International Accounting
Standards ("IAS") and interpretations issued by the International Accounting
Standards Board ("IASB") and its committees, as adopted by the EU. These are
subject to ongoing amendment by the IASB and subsequent endorsement by the
European Commission and are therefore subject to possible change. As a result,
information contained within this release will require updating for any
subsequent amendment to IFRS required for first time adoption or those new
standards that the Group may elect to adopt early.
The financial statements have been prepared in accordance with applicable
accounting standards, and under the historical cost accounting rules, except for
derivative financial instruments which are stated at their fair value, and
non-current assets and disposal groups held for sale which are stated at the
lower of previous carrying value and fair value less costs to sell.
IFRS 1 exemptions
IFRS 1 "First time adoption of International Financial Reporting Standards" sets
out procedures that the Group must follow when IFRS is adopted for the first
time as the basis for preparing Group consolidated financial statements. It
provides a number of exemptions that are available on first time adoption to
assist companies in the transition to reporting under adopted IFRS. The
following exemptions have been taken:
The Group has taken advantage of the exemption from restating all previous
acquisitions under IFRS 3
"Business Combinations" and has chosen to restate all business combinations from
1 October 2003 onwards; and
The Group has set its cumulative translation differences to zero at the date of
transition to adopted IFRS.
Basis of consolidation
The consolidated financial statements incorporate the financial statements of
the Group controlled by the Company and its subsidiaries (the "Group"). Control
is achieved where the Group has the power to govern the financial and operating
policies of an investee entity so as to obtain benefits from its activities. The
results of subsidiaries acquired or sold are included in the consolidated
financial statements from the date control commences to the date control ceases.
Where necessary, adjustments are made to the results of the acquired
subsidiaries to align their accounting policies with those of the Group. All
intra-group transactions, balances, income and expenditure are eliminated on
consolidation.
Business combinations
The acquisition of subsidiaries is accounted for using the purchase method. The
cost of acquisition is measured at the aggregate of the fair values, at the date
of exchange, of assets given, liabilities incurred or assumed, and equity
instruments issued by the Group in exchange for control of the acquiree, plus
any costs attributable to the business combination. The acquiree's identifiable
assets, liabilities and contingent liabilities that meet the conditions for
recognition under IFRS 3 "Business Combinations" are recognised at fair value at
the acquisition date, except for non-current assets (or disposal groups) that
are classified as held for sale in accordance with IFRS 5 "Non-Current Assets
Held for Sale and Discontinued Operations", which are recognised and measured at
fair value less costs to sell.
Revenue recognition - sale of goods
Revenue is measured at the fair value of consideration received or receivable
and represents amounts receivable for goods and services provided in the normal
course of business, net of discounts, VAT and other sales-related taxes, and
provisions for returns and cancellations.
Revenue in respect of advertising services is recognised on publication. Where
publications are printed and distributed in more than one volume, the fair value
of the revenue attributable to each volume is recognised as it is distributed.
Revenue on books or magazines provided for clients is recognised when the
significant risks and rewards of ownership of the goods have passed to the buyer
and the amount of revenue can be measured reliably.
When books are sold on a sale or return basis, revenue is recognised on
distribution less a provision for expected returns.
Revenue recognition - sale of services
Revenue in respect of subscription-based services, including online services, is
recognised on a straight line basis over the period of subscription. The
unrecognised element is carried within creditors as deferred revenue.
Where the outcome of an e-learning contract can be estimated reliably, revenue
is recognised on a stage of completion basis based on the percentage of costs
incurred at the balance sheet date. Where the outcome of an e-learning contract
cannot be estimated reliably, contract revenue is recognised to the extent of
contract costs incurred that it is probable will be recoverable. Contract costs
are recognised as expenses in the period in which they are incurred and work in
progress amounts are recorded in the balance sheet at cost. Costs consist of
salaries of staff allocated to specific contracts on the basis of time spent on
the contract, and any materials directly incurred on that contract. Costs do not
include an apportionment of overheads. When it is probable that total contract
costs will exceed total contract revenue, the expected loss is recognised as an
expense immediately.
Where long term training is provided together with training materials, the fair
value of the materials provided to delegates is recognised as revenue upon
distribution. The remaining revenue is recognised in stages as courses occur.
When long term training programmes are designed on a client's behalf, revenue
relating to the conception, set-up and design of the programme is recognised
when the first event occurs. Revenue in relation to the organisation and
administration of the programme is recognised over the programme's life. Revenue
on all one-off events and conferences is recognised as they occur.
Leases
Operating lease rentals are charged to the income statement on a straight line
basis over the period of the lease. Lease incentives are recognised in the
income statement as an integrated part of the total lease expense.
Post retirement benefits - defined contribution
The Group contributes to independent defined contribution pension schemes. The
assets of the schemes are held separately from those of the Group in
independently administered funds. The amount charged to the profit and loss
account represents the contributions payable to the schemes in respect of the
accounting period.
Post retirement benefits - defined benefit
The Group operates a defined benefit pension scheme in France providing benefits
on final pensionable pay. The assets of the scheme are held separately from
those of the Group. Pension scheme assets are measured using market values.
Pension scheme liabilities are measured using a projected unit method and
discounted at the current rate of return on a high quality corporate bond of
equivalent term and currency to the liability. The pension scheme deficit is
recognised in full. The movement in the scheme deficit is split between
operating charges, finance items and, in the statement of total recognised
income and expense, actuarial gains and losses. The Group recognises all
actuarial gains and losses in the period in which they are valued.
The value of the defined benefit obligations at 30 June 2007 was #156,000.
Share based payment
The Group operates a number of equity-settled, share-based compensation plans.
The fair value of the employee services received in exchange for the grant of
the options is recognised as an expense with a corresponding increase in equity.
The total amount to be expensed over the vesting period is determined by
reference to the fair value of the options granted, excluding the impact of any
non-market vesting conditions. Non-market vesting conditions are included in
assumptions about the number of options that are expected to vest. At each
balance sheet date, the Group revises its estimates of the number of options
that are expected to vest. It recognises the impact of the revision to original
estimates, if any, in the income statement, with a corresponding adjustment to
equity.
Deferred tax is recognised where it is likely that share relief will be
available on the difference between exercise price and market price at the
balance sheet date.
Taxation
The tax expense represents the sum of the tax currently payable and deferred
tax.
Current tax is based on taxable profit for the year and any adjustment to tax
payable in respect of previous years. Taxable profit differs from net profit as
reported in the income statement because it excludes items of income or expense
that are taxable or deductible in other years and it further excludes items that
are never taxable or deductible. The Group's liability for current tax is
calculated using tax rates that have been enacted or substantively enacted by
the balance sheet date.
Deferred tax is expected to be payable or recoverable on differences between the
carrying amounts of assets and liabilities in the financial statements and the
corresponding tax bases used in the computation of taxable profit, and is
accounted for using the balance sheet liability method. Deferred tax liabilities
are generally recognised for all taxable temporary differences and deferred tax
assets are recognised to the extent that it is probable that taxable profit will
be available against which temporary differences can be utilised. Such assets
and liabilities are not recognised if the temporary difference arises from the
initial recognition of goodwill or from the initial recognition of other assets
and liabilities in a transaction that affects neither the tax nor the accounting
profit.
Deferred tax liabilities are recognised for taxable temporary differences
arising on investments in subsidiaries except where the Group is able to control
the reversal of the temporary difference and it is probable that the temporary
difference will not reverse in the foreseeable future.
The carrying amount of the deferred tax asset is reviewed at each balance sheet
date and reduced to the extent that it is no longer probable that sufficient
taxable profits will be available to allow all or part of the asset to be
recovered.
Deferred tax is calculated at the tax rates that are expected to apply in the
period when the liability is settled or the asset is realised. Deferred tax is
charged or credited to the income statement, except when it relates to items
charged or credited directly to equity, in which case the deferred tax is also
dealt with in equity.
Deferred tax assets and liabilities are offset when there is a legally
enforceable right to set off current tax assets against current tax liabilities
and when they relate to income taxes levied by the same taxation authority and
the Group intends to settle its current tax assets and liabilities on a net
basis.
Intangible assets
Intangible assets acquired by the Group are stated at cost less accumulated
amortisation and impairment losses. Intangible assets are amortised on a
straight-line basis over their useful lives in accordance with IAS 38
"Intangible Assets". Assets are not revalued. The amortisation period and method
are reviewed at each financial year end and are changed in accordance with IAS 8
"Accounting Policies, Changes in Accounting Estimates and Errors" if this is
considered necessary. The estimated useful lives are as follows:
Publishing rights 10-75 years
Brand name 15-20 years
Customer relationships 1-8 years
Customer lists 4 years
Order books 1 year
Other assets 1 year
Software which is not integral to a related item of hardware is included in
intangible assets and amortised over its estimated useful life of 3 years.
For new publications and other new products, development costs are deferred and
amortised over periods of between one and five years following the first release
of the new product for sale. The costs of the design and development of revision
material ("plate costs") are capitalised on individual projects where the future
recoverability of the costs can be foreseen with reasonable certainty. Plate
costs are stated at their direct cost less accumulated amortisation. Full
provision is made for any plate costs where the revision material titles are
excess to requirements or where they will no longer be used in the business.
Amortisation is provided to write off the plate costs over one to three years at
varying rates to match the anticipated future income streams.
In respect of acquisitions prior to 1 October 2003, publishing rights are held
at deemed cost, which represents the amount recorded under UK GAAP. Under UK
GAAP these assets were not amortised. Management have reviewed this accounting
policy and consider it more appropriate to assign useful lives to these assets
in accordance with the policy adopted for other publishing rights as detailed
above.
The effect of amortising these assets over their useful lives has been to
increase the loss for the period by #216,000 and to reduce intangible assets by
the same amount.
Goodwill
Goodwill represents the difference between the cost of acquisition of a business
and the fair value of identifiable assets, liabilities and contingent
liabilities acquired. Identifiable intangibles are those which can be sold
separately or which arise from legal rights regardless of whether those rights
are separable. Goodwill is stated at cost less any accumulated impairment
losses. Goodwill is allocated to cash generating units and is tested annually
for impairment. Any impairment is recognised immediately in profit or loss and
is not subsequently reversed.
Property, plant and equipment
Depreciation is provided to write off the cost less estimated residual value of
tangible fixed assets by equal instalments over their estimated useful economic
lives as follows:
Leasehold improvements Over the remaining life of the lease
Equipment, fixtures and fittings 5 years
Database development costs 5 years
Motor vehicles 4 years
IT systems 3 years
Non-current assets held for sale
Non-current assets (and disposal groups) classified as held for sale are
measured at the lower of carrying amount and fair value less costs to sell.
Non-current assets and disposal groups are classified as held for sale if their
carrying amount will be recovered through a sale transaction rather than through
continuing use. This condition is regarded as met only when the sale is highly
probable and the asset (or disposal group) is available for immediate sale in
its present condition. Management must be committed to the sale which should be
expected to qualify for recognition as a completed sale within one year from the
date of classification.
Inventories, work in progress and long term contracts
Inventories are stated at the lower of cost and net realisable value. Work in
progress consists of internal and third party editorial and production costs
prior to print, which are capitalised for new publications and substantial
updates of continuing publications. Work in progress is valued at the lower of
cost and net realisable value being the recoverable amount based on anticipated
forward sales from the first print run.
The amount of profit attributable to the stage of completion of a long term
contract is recognised when the outcome of the contract can be foreseen with
reasonable certainty. Contract work in progress is stated at costs incurred,
less those transferred to the income statement, after deducting foreseeable
losses and payments on account not matched with turnover. Amounts recoverable on
contracts are included in debtors and represent turnover recognised in excess of
payments on account.
Cash and cash equivalents
Cash and cash equivalents comprise cash on hand and demand deposits, and other
short-term highly liquid investments that are readily convertible (with a
maturity of three months or less) to a known amount of cash and are subject to
an insignificant risk of changes in value.
Provisions
A provision is recognised in the balance sheet when the Group has a present
legal or constructive obligation as a result of a past event, and it is probable
that an outflow of economic benefits will be required to settle the obligation.
If the effect is material, provisions are determined by discounting the expected
future cash flows at a pre tax rate that reflects current market assessments of
the time value of money and, where appropriate, the risks specific to the
liability.
Derivative financial instruments
The Group's activities expose it primarily to the financial risks of changes in
foreign currency exchange rates and interest rates. The group uses foreign
exchange forward contracts and interest rate caps to hedge these exposures. The
group does not use derivative financial instruments for speculative purposes.
Derivative financial instruments are recognised at fair value. The gain or loss
on remeasurement to fair value is recognised immediately in the income
statement. The fair value of interest rate caps is the estimated amount that the
Group would receive or pay to terminate the cap at the balance sheet date.
Financial liabilities and equity instruments
Financial assets and financial transaction are recognised on the Group's balance
sheet when the Group becomes a party to the contractual provisions of the
instrument.
Financial liabilities and equity instruments are classified according to the
substance of the contractual arrangements entered into. An equity instrument is
any contract that evidences a residual interest in the assets of the Group after
deducting all of its liabilities, and includes no contractual obligations upon
the Group to deliver cash or other financial assets or to exchange financial
assets or financial liabilities with another party under conditions that are
potentially unfavourable to the Group, or, where the instrument will or may be
settled in the Company's own equity instruments, it is either a non-derivative
that includes no obligation to deliver a variable number of the Company's own
equity instruments or is a derivative that will be settled by the Company's
exchanging a fixed amount of cash or other financial assets for a fixed number
of its own equity instruments.
Interest bearing bank loans and overdrafts are recorded at the proceeds
received, net of direct issue costs. Finance charges, including premiums payable
on settlement or redemption and incremental costs directly attributable to the
issue, are accounted for on an accruals basis as part of finance expenses in the
income statement using the effective interest rate method and are added to the
carrying amount of the instrument to the extent that they are not settled in the
period that they arise.
Equity instruments issued by the Company are recorded at the proceeds received,
net of direct issue costs.
Foreign currencies
The individual financial statements of each group company are presented in the
currency of the primary economic environment in which it operates (its
functional currency). For the purpose of the consolidated financial statements,
the results and financial position of each Group company are expressed in pounds
sterling, which is the functional currency of the Group, and the presentation
currency for the consolidated financial statements.
In preparing the financial statements of the individual companies, transactions
in currencies other than the entity's functional currency (foreign currencies)
are recorded at the rates of exchange prevailing on the dates of the
transactions. At each balance sheet date, monetary assets and liabilities that
are denominated in foreign currencies are retranslated at the rates prevailing
on the balance sheet date. Non-monetary items carried at fair value that are
denominated in foreign currencies are translated at the rates prevailing at the
date when the fair value was determined. Non-monetary items that are measured in
terms of historical cost in a foreign currency are not retranslated but remain
at the exchange rate at the date of the transaction.
Exchange differences arising on the settlement of monetary items, and on the
retranslation of monetary items, are included in profit or loss for the period.
Exchange differences arising on the retranslation of non-monetary items carried
at fair value are included in the income statement for the period except for
differences arising on the retranslation of non-monetary items in respect of
which gains and losses are recognised directly in equity. For such non-monetary
items, any exchange component of that gain or loss is also recognised directly
in equity.
For the purpose of presenting consolidated financial statements, the assets and
liabilities of the Group's foreign operations are translated at exchange rates
prevailing on the balance sheet date. Income and expense items are translated at
the average exchange rates for the period ended on the balance sheet date.
Income and expense items are translated at the average exchange rates for the
period, unless exchange rates fluctuate significantly during that period, in
which case the exchange rates at the date of transactions are used.
Exchange rate differences arising, if any, are recognised directly in equity in
the Group's translation reserve. Such translation differences are recognised as
income or as expense in the period in which the operation is disposed of.
2 Nature of information
The interim accounts for the six months ended 30 June 2007 and the comparative
figures for the six months ended 30 June 2006 are not audited by the Company's
auditors. The comparative figures for the twelve months ended 31 December 2006
are not the Company's statutory accounts within the meaning of Section 240 of
the Companies Act 1985 but are abridged from such accounts and then restated
under IFRS.
The financial statements for the twelve months ended 31 December 2006 as
previously stated (under UK GAAP) have been reported on by the Company's
auditors and delivered to the Registrar of Companies. The report of the auditors
on such accounts was unqualified and did not contain any statement under
Sections 237(2) or 237(3) of the Companies Act 1985.
3 Segmental information
Segment information is presented in respect of the Group's business and
geographical segments. The primary format, business segments, is based on the
Group's management and internal reporting structure. The secondary segment
represents geographical destination of turnover.
Six months Six months Year ended
ended ended
30 June 30 Jun 31 December
2007 2006 2006
Unaudited Unaudited Unaudited
Turnover (primary segment) # 000s # 000s # 000s
Political 4,624 4,112 10,578
Learning 5,232 6,567 12,718
Education 5,528 1,233 6,798
Healthcare 6,279 8,163 14,934
----------------------------------------
21,663 20,075 45,028
----------------------------------------
Turnover (secondary segment)
United Kingdom 14,243 11,020 27,921
Continental Europe and rest
of the world 7,420 9,055 17,107
----------------------------------------
21,663 20,075 45,028
----------------------------------------
Six months Six months Year ended
ended ended
30 June 30 June 31 December
2007 2006 2006
Unaudited Unaudited Unaudited
EBITDA from operations (primary segment)* # 000s # 000s # 000s
Political 195 393 2,428
Learning 209 926 1,888
Education 904 383 2,159
Healthcare 448 1,048 2,366
Head Office (793) (970) (1,667)
----------------------------------------
963 1,780 7,174
----------------------------------------
EBITDA from operations (secondary
segment)*
United Kingdom 449 612 4,327
Continental Europe and rest
of the world 514 1,168 2,847
----------------------------------------
963 1,780 7,174
----------------------------------------
*EBITDA is defined by the Directors as being earnings before interest, tax,
depreciation, amortisation and fundamental restructuring costs (previously
classified as exceptional items under UK GAAP).
A reconciliation between EBITDA and profit from operations is shown in Schedule
A.
4 Taxation
The taxation charge for the six months ended 30 June 2007 is based on the
expected annual tax rate.
5 Earnings per Share
Six months Six months Year ended
ended ended
30 June 30 June 31 December
2007 2006 2006
Unaudited Unaudited Unaudited
# 000s # 000s # 000s
Profit attributable to
shareholders (1,147) 335 2,288
Add: costs relating to
fundamental restructuring* - - 640
Add: amortisation of
intangibles 1,583 883 2,132
Less: tax thereon (403) (272) (845)
----------------------------------------
Adjusted profit
attributable to
shareholders 33 946 4,215
========================================
Shares Shares Shares
Weighted average number of shares
In issue during the year -
basic 151,998,453 140,170,496 143,994,329
Dilutive potential ordinary
shares 950,981 513,854 698,200
----------------------------------------
Diluted 152,949,434 140,684,350 144,692,529
========================================
Earnings per share - basic
(pence) (0.75) 0.24 1.59
Earnings per share -
diluted (pence) (0.75) 0.24 1.58
Adjusted earnings per share before
fundamental
restructuring costs and
amortisation of intangibles
(pence) 0.02 0.68 2.93
*previously disclosed as exceptional items under UK GAAP
6 Goodwill
Six months Six months Year ended
ended ended
30 June 30 June 31 December
2007 2006 2006
Unaudited Unaudited Unaudited
# 000s # 000s # 000s
Cost & Net book value
Opening balance 28,165 19,869 19,869
Additions 98 - 343
Acquisitions through
business combinations - - 5,031
Disposals (133) - -
Movements in deferred tax
asset (84) - 2,922
------------------------------------------------
Closing balance 28,046 19,869 28,165
================================================
7 Intangible fixed assets
Six months Six months Year ended
ended ended
30 June 30 June 31 December
2007 2006 2006
Unaudited Unaudited Unaudited
Assets acquired on acquisition # 000s # 000s # 000s
Cost
Opening balance 47,927 37,843 37,843
Acquisitions through
business combinations 164 - 10,084
Disposals (477) - -
---------------------------------------------
Closing balance 47,614 37,843 47,927
=============================================
Amortisation
Opening balance 4,097 1,965 1,965
Charge for the period 1,583 883 2,132
Disposals (23) - -
---------------------------------------------
Closing balance 5,657 2,848 4,097
=============================================
Net book value
------------ ----------- ---------
Opening balance 43,830 35,878 35,878
============ =========== =========
------------ ----------- ---------
Closing balance 41,957 34,995 43,830
============ =========== =========
Other intangible assets
Net book value
---------------------------------------------
Opening balance 948 210 210
=============================================
---------------------------------------------
Closing balance 1,126 227 948
=============================================
Net intangible assets
---------------------------------------------
Opening balance 44,778 36,088 36,088
=============================================
---------------------------------------------
Closing balance 43,083 35,222 44,778
=============================================
During the period the Group acquired the European Public Affairs Directory for a
consideration of #164,000. The Group also disposed of its French cardiology
publications for #572,000, of which #202,000 represents deferred consideration
and is held within receivables.
All acquisition entries have been recorded on a provisional basis. Experience
may result in revisions to fair values during the year to 31 December 2007 and
the subsequent accounting period.
8 Reconciliation of movements in equity shareholders' funds
Total equity
shareholders'
funds
Unaudited
# 000s
Profit for the period (1,147)
Payment of 2006 dividend (1,839)
Share-based payments charges 125
Currency translation differences on foreign currency net
investments (2)
----------
Net decrease in equity shareholders' funds (2,863)
Equity shareholders' funds at 31 December 2006 47,989
----------
Equity shareholders' funds at 30 June 2007 45,126
==========
9 Analysis of net debt
At beginning Non-cash Exchange At end
of period Cash flow movements movement of period
# 000s # 000s # 000s # 000s # 000s
Cash at bank and
in hand 4,307 (1,386) - 4 2,925
Debt due within
one year (3,140) 1,569 (1,821) 1 (3,391)
Debt due after one
year (19,855) - 1,821 12 (18,022)
----------------------------------------------------------
(18,688) 183 - 17 (18,488)
==========================================================
10 Reconciliation of comparative information to previously reported information
A reconciliation between results previously published under UK GAAP and the
results presented above under IFRS was provided in the IFRS Conversion Statement
released by the Group on 11 May 2007. Please refer to that document for a full
reconciliation. A copy of the document can be found on the Group's website,
www.huveauxplc.com.
Schedule A
Reconciliation between profit from operations and non-statutory measure
The following tables reconcile profit from operations as stated above to EBITDA,
a non-statutory measure which the Directors believe is the most appropriate
measure in assessing the performance of the Group.
EBITDA is defined by the Directors as being earnings before interest, tax,
depreciation, amortisation and fundamental restructuring costs*.
Six months ended 30 June 2007
Political Learning Education Healthcare Head Office Total
# 000s # 000s # 000s # 000s # 000s # 000s
(Loss)/profit
from operations (496) (163) 367 209 (802) (885)
Amortisation 585 307 502 189 - 1,583
Depreciation 106 65 35 50 9 265
--------------------------------------------------------------------------------
EBITDA 195 209 904 448 (793) 963
--------------------------------------------------------------------------------
Year ended 31 December 2006
Political Learning Education Healthcare Head Office Total
# 000s # 000s # 000s # 000s # 000s # 000s
Profit/(loss)
from operations 1,187 984 1,711 1,704 (1,695) 3,891
Amortisation 915 646 227 344 - 2,132
Depreciation 224 152 30 77 28 511
Restructuring
costs* 102 106 191 241 - 640
--------------------------------------------------------------------------------
EBITDA 2,428 1,888 2,159 2,366 (1,667) 7,174
--------------------------------------------------------------------------------
Six months ended 30 June 2006
Political Learning Education Healthcare Head Office Total
# 000s # 000s # 000s # 000s # 000s # 000s
(Loss)/profit
from operations (106) 529 368 842 (984) 649
Amortisation 388 323 - 172 - 883
Depreciation 111 74 15 34 14 248
--------------------------------------------------------------------------------
EBITDA 393 926 383 1,048 (970) 1,780
--------------------------------------------------------------------------------
*previously disclosed as exceptional items under UK GAAP
This information is provided by RNS
The company news service from the London Stock Exchange
END
IR BIGDRSUDGGRU
Huveaux (LSE:HVX)
Historical Stock Chart
From Oct 2024 to Nov 2024
Huveaux (LSE:HVX)
Historical Stock Chart
From Nov 2023 to Nov 2024
