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Huntsworth's reshaping bears fruit

TIP UPDATE: A new global focus is paying off at Huntsworth - with new two big deals secured
March 23, 2011

Public relations specialist Huntsworth had a tough year - it lost £2m in fees due to public sector spending cuts. But exposure to this sector is now minimal and chief executive Peter Chadlington says 72 per cent of 2011's revenues are already committed.

IC TIP: Buy

Having reshaped the business to become more global, Huntsworth won three big deals - including one with British Airways. Global and multi-office clients now account for 44 per cent of revenues, with four global clients now paying fees of over £3m. Average fees per client have also increased 18 per cent to £69,000. A new focus on larger, global deals, for longer durations, means deals will take longer to generate revenues. So Mr Chadlington warns that fees will be second-half weighted - but he expects organic revenue growth of at least 7 per cent this year; organic sales fell 0.7 per cent in 2010.

On a divisional level, Huntsworth Health's sales rose 3.3 per cent to £51.4m, while sales at niche PR business Red remained stable at £12.9m. That helped offset weaker performances from Cititgate and Grayling, where revenues contracted 4.2 per cent and 2 per cent to £26.3m and £83.2m, respectively.

Broker Peel Hunt expects adjusted pre-tax profit of £20m for 2011, giving EPS of 9p.

ORD PRICE:72pMARKET VALUE:£176.2m
TOUCH:71-72p12-MONTH HIGH:89pLOW:65p
DIVIDEND YIELD:4.9%PE RATIO:10
NET ASSET VALUE:84p*NET DEBT:26%

Year to 31 DecTurnover (£m)Pre-tax profit (£m)Earnings per share (p)Dividend per share (p)
20061404.01.51.9
200715210.85.92.5
200815920.14.82.7
2009209-10.0-4.22.9
201022421.87.43.5
% change+7-319-276+21

Ex-div: 25 May

Payment: 6 Jul

*Includes intangible assets of £291.9m, or 119p a share

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