It was a year ago this week that Huntsworth's merger with Incepta propelled Lord Chadlington (formerly Peter Gummer) back into the big league of PR consultancies.
Having presided over the rise and fall of the Shandwick PR behemoth during the 1980s and 90s, his effective takeover of the troubled Incepta in April 2005 led him once more to the helm of the largest UK-based PR group.
Today, as the group announces its first year's results, global fee income for 2006 is set to reach £140m.
Headquartered in modest offices in Huntsworth Mews, a short walk from London's Baker Street, chief executive Chadlington, his executive committee of seven, and around a dozen support staff, now oversee a powerful gathering of agencies. They range from the pinstriped Citigate Dewe Rogerson to the consumer-focused The Red Consultancy.
Chadlington himself has never seemed happier. There is a tell-tale sparkle in his eyes when he talks of vying globally with Martin Sorrell's WPP and his fellow Conservative peer Tim Bell, chairman of Chime.
Most intriguingly, Huntsworth is taking an opposing business strategy to that of Chime, focusing almost purely on PR. So while Chime was snapping up advertising agency VCCP last year, Huntsworth was busy disposing of most of its non-PR interests, selling Incepta Marketing Intelligence to Media Square in October 2005 (PRWeek,
30 September 2005).
And while Chime's PR division – recently rebranded as the Bell Pottinger Group (PRWeek, 17 March) – contributes 63 per cent of Chime's operating income, Huntsworth's PR interests represent more than 90 per cent of its revenue. Forty-four per cent of this comes from financial communications and public affairs, 42 per cent from
full-service PR businesses, and the rest from healthcare PR.
'Our clients know we will not try to sell them other channels of communication,' explains Chadlington. 'We are a PR company, which also has a specialisation in healthcare, and this is why the quality of our work, our people and our business is improving so quickly. Focus is everything.'
Clearly Chadlington is accepting that PR is the business he understands best. He also favours a marketing services group that runs the vast majority of its business on a client retainer basis, 'because this allows great visibility of income'.
But achieving this clarity has proved a tough task over the past 12 months. Chadlington had hoped that the new group would be edging into the FTSE 350 this year, but this goal was compromised by the decision to sell off nearly a third of its operations (Incepta Marketing). And Sally Withey, Huntsworth's chief operating officer, admits that this alone has taken up a 'huge amount' of senior executives' time and effort.
The group's other priorities for the first 12 months – reducing net debt from £80m to £20m and pushing operating margins towards the golden 20 per cent level – have been largely achieved.
Chadlington set out to streamline the rather bureaucratic Incepta group and claims to have made annualised savings of around £5m. This includes reductions in staff costs of £3.3m (around 20 staff were cut from the combined head office), property costs of £1m (Incepta's City HQ was brought into Huntsworth Mews) and administrative costs of £600,000.
'The integration following the merger is now complete and we're already delivering a margin of 18.6 per cent, which is close to our target,' he says.
This margin is already an improvement on the 17.8 per cent the business posted when it released its first six-monthly results back
'The momentum we developed in 2005 has continued into 2006 and current trading indicates Huntsworth is set to exceed market expectations this year,' he adds.
Again unlike Chime, which is currently reducing the number of PR agency brands in its ranks, Huntsworth is determined to leave its current names intact. Indeed, Alison Clark – a former CEO of Shandwick Welbeck in London and now Huntsworth's group business development director – uses the mantra: 'A group of brands, not a branded group.'
This will be reassuring to the principals of Huntsworth agencies such as Grayling and Citigate, some of which have spent decades building client equity in their brands.
The name of the group itself, however, is under review (PRWeek, 14 April). Withey says the board is keen to draw a line under the first 12 months and look forward to 'a fresh start with a new clarity of vision'. Equally, agency heads can expect Chadlington, occupied until now with the restructure, to become more closely involved with the group's client portfolio.
Withey says the emphasis for the next 12 months will be on 'stability rather than review'. However, growth is still important to the group. A priority for Chadlington is to increase market share, which will be 'partly acquisitive, partly organic'.
His other main aim, of which the group rebrand is just part, is to improve communication, both internally and externally. With 1,500 staff worldwide, and Chadlington facing the industry-wide challenge of finding and retaining talented staff, Huntsworth now sees internal communications as paramount. To this end, late last year the group hired Tracey Reid (from Capital Radio plc, now GCAP media) as human resources director with a brief to make the organisation more 'people-focused'.
In terms of improving Huntsworth's wider image, its design specialist Holmes & Marchant is working on the group ID project, while Citigate Dewe Rogerson's Simon Rigby has been charged with upping corporate profile and wooing analysts.
At the time of writing, Huntsworth's share price was 87.5p (with a market capitalisation of £164.6m) and the board is determined
to edge this upwards during the second half of 2006.
Andrew Walsh, media analyst at Bridgewell, says: 'Huntsworth has spent more time than it expected sorting out the problems of the Incepta portfolio. The sale of Incepta Marketing Intelligence and US subsidiary Citigate Sard Verbinnen (51 per cent of which is being sold to CSV executives on 1 January 2007, and the remainder by 2009), did not fit into Chadlington's proven template for managing PR subsidiaries.
'However, the business emerges with limited debt and a clear mandate for further, tuck-in acquisitions.'
For this reason and others, many senior industry figures expect Huntsworth's 'year of stability' to be anything but mundane.
Huntsworth: 2005 figures
Selected (unaudited) figures for Huntsworth plc – year ended 31 December 2005
Continuing operating income (global) £108.3m
Huntsworth operating income in 12 months to December 2004 £42.8m
Continuing operating companies margins 18.6%
(before IFRS-related charges and merger, restructuring and other non-recurring costs)
Like - for-like operating income growth of continuing operations 2.8%
Head office and regional cost savings circa £5m
One - off cash cost of implementing these savings [£1.6m]
Agencies by sector
City and corporate
Capital Communications, CapitalBridge, Citigate, Citigate Dewe Rogerson, Citigate First Financial, Hudson Sandler, The Global Consulting Group
Citigate Public Affairs, Grayling, The Global Consulting Group
Full-service PR & specialist brands
Citigate, EHPR, Grayling, Harrison Cowley, Haslimann Taylor PR, NBS Public Relations, Park Avenue, RS Live, SCPR London, The Red Consultancy, Trimedia
Avenue HKM, Brand Health International, Broadstreet, Huntsworth Health, Jago Pearce, PBC Group, VB Communications
Key facts: staffing and income
2,500 clients including 37 companies in FTSE 100
45 offices in 21 countries
Income split (geographical)
UK: 51 per cent
US: 24 per cent
Europe: 22 per cent
Rest of the world: 3 per cent
Income split (by sector)
City and PA: 44 per cent
Full service: 42 per cent
Healthcare and non-PR:
14 per cent
Peter Gummer launches Shandwick Public Relations. Within seven years it becomes the UK's largest PR agency – a position it holds uninterrupted for the next 17 years.
Shandwick's share price tumbles after net income figures show a fall of 10.3 per cent year-on-year. UK CEO Colin Trusler is dismissed and Lord Chadlington takes over.
Chadlington sells Shandwick to the Interpublic Group of Companies in a stock deal valued at $170m (£97m).
Chadlington returns to PR with the launch of Huntsworth plc. He explains he did not want his children 'to have a geriatric father, sitting at home with little to do'.