Freshwater posts highest operating profit since onset of credit crunch

Freshwater UK has posted an operating profit of £234,923 for the six months ended 28 February, its best result for six years, though turnover has dropped slightly.

Steve Howell: looking to take advantage of an improving economy
Steve Howell: looking to take advantage of an improving economy

The figure was a leap from the year-on-year operating profit of £88,671, though its turnover of £1.983m was slightly down year on year, compared to £2.097m.

A statement from the agency pointed to improved trading and cost-cutting as driving profits. There were no earn-out liabilities and bank borrowings were reduced by 42 per cent, to £235,248 year on year. 

The results come after last year's PRWeek Top 150 list of agencies revealed that fee income for Freshwater, which has offices across the four UK capitals, had dropped by 14 per cent in 2012 to £3.15m.

The latest operating profit is the highest since Feburary 2008, when the agency posted figures of £446,000 and revenue of £4.096m shortly before the full impact of the credit crunch was felt. 

In a letter to shareholders, chairman David Howell and CEO Steve Howell said: "These half-year results are an encouraging snapshot of the progress we have made. The board and senior management team have devoted considerable attention over the past 18 months to reducing unnecessary office costs while maintaining and growing revenue in our strongest sectors, regions and specialisms.

"Our overall running costs are 11 per cent lower than in the same period last year, despite adding to our teams in markets where we are seeing profitable revenue growth or have the potential to grow.

"However, this is still a work in progress, with the next phase being to build on the growth we have achieved in some parts of the business and take full advantage of the emerging economic recovery."

Freshwater’s top ten clients/revenue sources in the period (accounting for 55 per cent of total revenue) were: Thompsons Solicitors; Imperial College Healthcare NHS Trust; Welsh Government (several departments); Medway NHS Foundation Trust; Unite; Specsavers; bon prix; BT; City & Guilds; and a conference on planning major infrastructure projects.

Geographically, London and the South-East was the most buoyant market and is now contributing more than 60 per cent of group revenue, though some of this is serviced from other offices.

Shareholders at the group, which employs 55 staff, include Howell’s Hillco Investments (15.5 per cent), Finance Wales (10.93 per cent), IBIS Media VCT (10.87 per cent) and Steve Howell (8.67 per cent). 

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