Results for the first half of the financial year for H&H Group show strength amidst economic turbulence.
Unaudited EBITA (Earnings Before Interest, Tax, Depreciation and Amortisation) for the group amounted to £1.5m for the 6 months to December 31, 2022, with a pre-tax profit of £0.9m. The corresponding period’s pre-tax profits in 2021 was higher, at £1.3m but turnover increased by over 10% from £8.5m to £9.4m.
Group chair, Michael Scott, congratulated the team for their efforts on a positive performance during a time of challenging economic conditions. He said: “In the face of historically high cost inflation we have grown the Group’s turnover by more than 10%, and limited the downturn in our profits to a similar level.
“I cannot stress enough how unprecedented the increase in costs has been, not just in the headline rises in energy prices, but also in fundamental aspects of our financial management such as interest rates. The scale and impact of these cost rises is starkly highlighted by the contrast between our growth in turnover and dip in profit margin, and the Group has risen to the challenge of adapting to these conditions to safeguard our performance in the second half the year.
“Despite strong headwinds in the economy, H&H Insurance Brokers and H&H Land & Estates have managed to hit or exceed their first 6 months’ budget to 31st December 2022. After an exceptional half-year in last year’s results the Group’s livestock marketing sector, Harrison & Hetherington has been unable to replicate the same financial performance this year. Although volumes have grown, some stock values have fallen and the exceptional dry summer was a major detrimental factor on the autumn sales. In addition to this, costs have inevitably been higher than budgeted predictions.”
Insurance Brokers, Reeds and Land & Estates
H&H Insurance Brokers acquired Tynedale Insurance services last year and are working to expand to offer new products and services. The brokers was the recipient of the UK’s Independent Insurance Broker of the Year at the 2022 Insurance Times Awards.
H&H Reeds, the Group’s design, print and signage division, is continuing its recovery since the challenges of the pandemic. However, the business is feeling the strain of the rising input costs which is having a significant impact on the bottom line.
Mr Scott said that H&H Land & Estates’ success is growing: “H&H Land & Estates has had a very positive start to the year with several farms and blocks of land brought forward for sale, the most notable a block of Cumbrian land selling for a staggering £20k per acre.
Dividends and shares
Mr Scott reported that the average share price for the group was £20.24 compared to £21.25 for the same period last year. Net Assets for the Group have increased from £22.5m to £23.5m. He said: “The Board are very mindful of the increased costs facing all aspects of our businesses, over and above that anticipated, for example interest costs which have doubled in recent months.
“With no sign of any change to this situation before our year end, but acknowledging the need to recognise our shareholders, the board are pleased to recommend an interim dividend of 5p per share. However, to act responsibly and remain prudent, payment of this will be deferred to protect the Group’s cash flow in these uncertain times.”
Rising interest cost, input costs and inflation continue to be a challenge, but Mr Scott said that the team are seeking new ways to reduce costs without detracting from the value to customers and clients. He said: “We serve a predominantly rural business base profoundly affected not only by the same economic pressures we face, but also by changes in Government policy that threaten their future viability. So our services and support have never been more important, and we will adapt our businesses to be fit for a successful future at the same time as we are helping our customers to secure a sustainable future for theirs.”