Hasgrove positive despite slump in earnings

PROFITS have slumped at marketing and lobbying group Hasgrove but the business has started to see signs of economic recovery.

In the year to December 31 revenue fell by 11.3% to £32.4m, while pre-tax profits dropped 65% to £1.4m. At a pre-exceptional operating level profits came in at £2.8m, down 44%.

The Manchester-based group, which is listed on AIM, was hit by the recession as customers slashed their budgets. It embarked on a redundancy programme in a bid to reduce its cost base by £1m.

These jobs cuts, together with an office move for its Manchester-based digital marketing agency Amaze, and a bad debt in Germany, have cost the business £1m. The business now says it is in better shape and saw an increase in demand during the second half.

But despite tough economic conditions Hasgrove has continued to grow, particularly in the digital arena. It has recently bought the MCL Digital consultancy, which is a specialist in the education sector and also develops applications for iPhones

In October it snapped-up London-based digital and electronic customer relationship management firm Underwired, whose clients include media giant News International. Net debt increased to £6.5m, up 8%, largely due to acquisition costs and earn-out payments.

Chief executive Rod Hyde said: “In anticipation of the challenging economic conditions in 2009 we integrated our businesses into two divisions and closely controlled costs in order to protect margins and cash. New business opportunities increased in the latter part of 2009, particularly with a number of important project wins which are having a positive impact in the current financial year. Momentum in new and existing client activity has continued to build in early 2010.”

The board is proposing to maintain the dividend of 0.5p a share which will be paid on July 21.