RNS Number:8423I
Creston PLC
30 November 2007
30 November 2007
Creston plc Reports Interim Results 2007
Excellent growth in revenue and profit underpinned by good like-for-like growth
Creston plc (LSE: CRE), the Insight and Communications group, today announced
its interim results for the six months ended 30 September 2007.
Highlights
* Reported and Headline Diluted EPS up 159% (4.10 pence) and 5% (7.18 pence)
respectively
* Like-for-like revenue and operating company PBIT growth of 11% and 10%
respectively
* Like-for-like revenue growth in the Insight and Communications divisions
of 15% and 10% respectively
* Revenue from digital and on-line up to 16% of revenue Group (2006: 12%)
with a 39% like-for-like growth
* Headline operating margin maintained at 17%
* EBITDA increase of 24% to #7.7 million (2006: #6.2 million)
* Dividend increase of 10% to 0.97 pence per share
* Annualised net new business wins of over #5 million driven by blue chip
client wins
Financial Results
Headline results ** Reported results
2007 2006 Change 2007 2006 Change
(restated)
Revenue 39.2 30.8 +27% 39.2 30.8 +27%
PBIT* 6.6 5.2 +26% 5.6 3.1 +82%
Pre-tax profit 5.8 4.9 +18% 3.9 1.8 +117%
Diluted EPS (pence) 7.18 6.85 +5% 4.10 1.58 +159%
Dividends per share (pence) 0.97 0.88 +10% 0.97 0.88 +10%
* Profit before Interest and Tax (PBIT) is defined as Profit before finance
income, finance costs, income from financial assets and taxation. It has been
restated to reflect the accounting treatment of deemed remuneration as described
in Note 2 of the Interim Report.
** Headline performance measures exclude the impact of deemed remuneration,
notional finance costs on deferred consideration and amortisation of intangible
assets. A reconciliation of Headline PBIT, PBT and Profit after taxation (PAT)
to their Reported equivalents is set out in Note 4 of the Interim Report.
Commenting on today's announcement, Don Elgie, Group Chief Executive, said:
"We have had one of our best ever commercial performances. This has translated
into a 27% increase in revenue and 39% like-for-like growth in digital and
on-line revenue. The number of new business wins and the new products and
services utilising web based platforms give a solid foundation for the second
half of the year. Our confidence is reflected in a 10% increase in dividend to
0.97 pence per share. "
FOR FURTHER INFORMATION, PLEASE CONTACT:
Creston plc 020 7930 9757
Don Elgie, Chief Executive
Barrie Brien, COO/CFO
www.creston.com
Hogarth Partnership Limited 020 7357 9477
Chris Matthews/Sarah Macleod
About Creston plc
* Creston is an Insight and Communications marketing services group. The
Board's aim is to identify synergistic benefits between its marketing
services companies offering premium services such as market research, direct
and interactive marketing, advertising, public relations, insight and to
build a Group that offers clients solutions to both existing and future
marketing needs across both on-line and off-line channels.
* Creston's companies boast a range of blue-chip clients including the AA,
AstraZeneca, BA, Bayer, BMW, BT, Burger King, Canon, COI Communications,
Cow & Gate, Diageo, eBay, General Motors, George Wimpey, GlaxoSmithKline,
Halifax, Kimberly-Clark, Lexus, Lloyds Black Horse, Morrisons, Nestle
Rowntree, Nissan, Norwich Union, Pfizer, Roche Diagnostics, Sainsbury's,
Tesco, Toshiba, T-Mobile, Tropicana, Unilever, Vodafone, Walkers and WHSmith.
* Creston's share price is quoted in the Financial Times, The Daily Telegraph,
The Times and the London Evening Standard.
CHAIRMAN'S AND CHIEF EXECUTIVE'S STATEMENT
The Board is pleased to report a strong first half performance, building on a
successful record of delivery against financial and strategic objectives. During
the first half of the 2008 financial year, Creston has benefited from the new
digital and on-line initiatives introduced in the prior year, which have proven
to be a success in the Group's integrated on and off-line offerings to clients.
The growth in revenue, operating profit and earnings per share, supported by a
strong like-for-like of 11% and 10% in revenue and Headline PBIT respectively,
demonstrate the robustness and relevance of our business model and client
focused structure.
The period has seen Creston respond to the changing dynamics of the industry and
clients' demand for an integrated approach and accordingly the Group has changed
its operational framework to a two divisional structure consisting of the
Insight and Communications divisions. The latter division encompasses those
businesses previously included within the BRANDCOM, MARCOMS and PR divisions,
while the former incorporates Creston's research offerings and remains
unchanged. The Group's continued investment in its employees and its range of
client offerings, combined with the internal reorganisation of the business into
two divisions, has ensured that Creston remains well positioned to benefit from
client demands in a changing marketing environment.
We were delighted that DLKW was ranked 14th (2006: 24th) and digitaltmw 25th
(2006: 41st) in the recent NMA Interactive Agencies 2007 league tables - on a
combined turnover basis this would place Creston's digital offering 7th in the
UK. Overall our on-line and digital investment is proving successful. On-line
and digital revenues have increased 39 per cent on a like-for-like basis and now
contribute 16 per cent (2006: 12 per cent) to Group revenues. The Group is very
pleased with this increased contribution from internet derived activity and that
it is meeting its target of keeping apace with, if not ahead of the overall
growth of the digital market. We are also pleased that this objective, which is
crucial to our long-term growth, has been met with no reduction in Headline
operating margin.
Strategic goals
As we announce these results, there is much publicised change and volatility in
the financial markets as well as continued change and fragmentation in how
consumers absorb brands and communication. In regard to the marketing services
industry, the Board believes that there is more opportunity than ever for a
diversified, entrepreneurial and dynamic Group such as Creston to gain market
share by helping its clients in these rapidly changing times.
We believe that our business model is of sound logic and we remain committed to
building the group both organically and acquisitively in the long-term. However,
with the global economic uncertainty, particularly in the US and also growing
concerns about the UK, together with the effect this has had on equity markets,
we have decided to focus on organic growth in the short term by redoubling our
efforts on synergy and operational efficiencies in each of our two divisions.
Until clarity emerges on consumers' resilience and normality returns to the
equity markets, our investments in the short to medium term will focus on
enabling our operating companies to win a greater proportion of clients'
budgets. Our investments will be in five distinct areas:
* digital and on-line initiatives, such as newvista research and Sway
online marketing;
* increase of digital resource to service the growth in this segment;
* organisational structure to make our client proposition relevant and
compelling, such as DLKW's integrated offer;
* client-driven opportunities overseas where on-the-ground representation
is commercially beneficial; and
* sector expertise, where we will seek to build further on our sector
specialisations, eg in healthcare, technology and telecommunications
Net new business
The Group has continued its impressive record of net new business wins.
Annualised net new business wins of #5m included:
* new clients such as Alton Towers, Capital One, Freeview, Homeform, Marie
Curie, Pricerunner, Royal Mail, Thorpe Park, T-Mobile and Smart;
* new wins from existing clients such as Alfa Romeo, Astellas, Bayer, BT,
eBay, General Motors, GSK, Nissan (Infiniti Pan European launch), Opel,
Pepsico, Roche, Sainsbury's Bank, T-Mobile and Unilever; and
* synergy wins from Andreas Stihl, AstraZeneca, Canon, eBay, The Financial
Times, Freeview, Morrisons, Pepsico and Toshiba.
The Partners' Board has proved to be an excellent mechanism for our companies to
establish new business opportunities, culminating in our highest ever level of
joint pitches and cross referrals.
Results
Overall, trading for the first six months of the year ending March 2008 has been
in line with expectations. Revenue has increased by 27 per cent to #39.2m (2006:
#30.8m) and Headline PBIT has increased by 26 per cent to #6.6m (2006: #5.2m).
Reported PBIT has increased by 82 per cent to #5.6m (2006: #3.1m). This Reported
PBIT performance has been driven by a mixture of the underlying Headline growth
and the impact of the non-recurring charges for consideration deemed as
remuneration of #1.0m (2006: #1.5m) plus amortisation of intangible assets
related to acquisitions of nil (2006: #0.6m).
The revenue and Headline PBIT has been driven by new business wins and the
like-for-like growth of 11 per cent and 10 per cent respectively plus the
inclusion of a full six months performance for the companies acquired in 2006
(ICM, PAN and TMW).
Headline Basic EPS has increased by 4 per cent to 7.21 pence (2006: 6.93 pence)
and Headline Diluted EPS has increased by 5 per cent to 7.18 pence (2006: 6.85
pence). Reported Basic EPS has increased by 158 per cent to 4.12 pence (2006:
1.60 pence) and Reported Diluted EPS has increased by 159 per cent to 4.10 pence
(2006: 1.58 pence).
Divisional performance
To enable a better understanding of the underlying divisional performance of the
Group, Creston refers to Headline PBIT, which eliminates the non-recurring
non-cash charges associated with the acquisitions included in the reported
figures.
Insight Division
The Insight Division has contributed revenue of #9.0m (2006: #6.8m) and PBIT of
#2.8m (2006: #2.0m), which represents growth of 33 per cent and 37 per cent
respectively. On the Reported basis the PBIT was #2.6m (2006: #1.6m). This
division continues to perform strongly, generating like-for-like revenue and
PBIT growth of 15 per cent (2006: 6 per cent) and 14 per cent (2006: 7 per cent)
respectively. The PBIT margin remains strong at 31 per cent (2006: 30 per cent).
The growth of this division has been led by the excellent performances of all
our companies but also by the expansion of newvista research, which now boasts
an on-line market research panel in excess of 100,000 members. On-line research
now represents 19 per cent of the Insight Division's revenue (2006: 10 per cent)
and has generated like-for-like revenue growth of 108 per cent. Our on-line
turnover in Insight exceeded #2.4m for the six months (2006: #1.1m) and as an
annualised turnover, this would rank newvista research amongst the market
leaders in on-line research.
The division has a prestigous client base that includes BT, Burger King, Coca
Cola, COI, Danone, Norwich Union, Nutricia, O2, Orange, Tesco and Vodafone. This
has been supplemented by new business wins including Britvic, Heinz Foods, Shell
and T-Mobile and by group synergy referrals including Canon, eBay, Morrisons and
Toshiba.
Within the Insight Division healthcare research has continued to develop with
the group investing in additional senior management resources to support its
expanding client base of EPMRA, GE Healthcare, Intervet, Merial, the NHS,
Novartis and Solvay. The Group's healthcare capabilities were further enhanced
by the launch of businessvista research, an on-line panel of professional
experts, which includes a specific panel of GPs and other medical practitioners.
Communications Division
The Communications Division generated revenue of #30.2m (2006: #24.0m) and PBIT
of #5.7 m (2006: #4.7m), which represents growth of 26 per cent and 23 per cent
respectively. On the Reported basis the PBIT was #5.2m (2006: #3.2m). This
division has performed strongly, generating like-for-like revenue growth of 10
per cent (2006: 3 per cent) and like-for-like PBIT growth of 8 per cent (2006:
decreased 13 per cent). The PBIT margin is good at 19 per cent (2006: 19 per
cent). On the same divisional basis as the prior year the BRANDCOM, MARCOMS and
PR divisions would have reported like-for-like PBIT growth of 8 per cent, 6 per
cent and 10 per cent, respectively.
The division has an enviable client base which includes the AA, Alfa Romeo,
Astra Zeneca, British Airways, Burger King, Canon, COI, eBay, General Motors,
GSK, HBOS, Lexus, Lloyds, Morrisons, Nissan, Nutricia, PepsiCo, Roche,
Sainsburys, SPMSD, T-Mobile, Unilever and WH Smith. This has been enlarged by
new business wins including Alton Towers, Capital One, Freeview, GM Eco Green
campaign, GSK, Homeform, Infiniti, Pricerunner, Royal Mail and Sainsbury's Bank
and by Group synergy referrals including AstraZeneca, Freeview and The Financial
Times.
Net debt
The Group generated positive operating cash flow of #5.9 million (2006: #3.0
million) for the period, which represents a conversion from reported PBIT of 103
per cent (2006: 98 per cent) and demonstrates an improvement in the Group's
management of working capital.
At 30 September 2007, Creston had net debt of #24.4m (March 2007: #21.7m), which
represents a gearing level of 30 per cent (March 2007: 27 per cent). The
increase since the year end has been caused by the settlement of the deferred
consideration for NBC and RDC by issuing loan notes. Settling deferred
consideration predominantly in loan notes, rather than by the issue of shares,
continues the Board's objective to use strong cash flow to maximise earnings per
share. There are no deferred consideration liabilities to be settled in the
second half of the financial year. The next settlement of deferred consideration
of #13.0 million is due next financial year and is therefore now treated as a
short term liability. This will be settled through a combination of operating
cashflow and draw downs from our unused available banking facilities. Creston
continues to maintain significant headroom in its banking covenants.
Dividends
An interim dividend per share of 0.97 pence (2006: 0.88 pence) will be paid on
14 January 2008 to shareholders on the register at 14 December 2007. This
continues the Group's progressive dividend policy and represents an increase in
the interim dividend per share of 10 per cent.
Principal risks and uncertainties
Creston's principal operating risks and uncertainties are associated with the
retention of key personnel and customers. In common with many businesses in the
marketing services sector, the loss of certain key personnel could jeopardise
the continuing success of the business. The Group seeks to mitigate these risks
via non-compete and non-solicit covenants, incentivising its key personnel
through LTIP and bonus arrangements and it has a good track record of retaining
key personnel.
The Group derives much revenue from contracts with its major customers. The
Group has instigated a system of customer satisfaction reviews to identify areas
for improving its service and is continuously working towards reducing client
concentration.
Creston US
Creston US, led by Steve Blamer, commenced operations at the beginning of the
current financial period. His task is to build the profile and offering of our
UK companies to a US client base. This objective was to be achieved by a mixture
of organic growth by our UK companies and occasional highly selective bolt on
acquisitions. However, in light of recent concerns about an economic downturn in
the US, we have reviewed our acquisition strategy and timing and decided not to
pursue such acquisitions at this time. We will continue to build Creston's
profile and offering of our UK companies to a US client base.
Outlook
The Group's results have historically been weighted toward the second half of
the year due to the timing of our year end in March and client spending patterns
and the Board sees no exception to this trend. Our companies are not
experiencing any declines in client marketing budgets and are conversely
benefiting from their unique ability to position themselves and deliver to
clients effective Insight and Communication solutions. Our wins in the first
half of the year and full new business pipelines give us good momentum to
deliver another solid performance for the year.
David Marshall Don Elgie
Chairman Chief Executive
( 2007)
UNAUDITED CONSOLIDATED INCOME STATEMENT
for the six months ended 30 September 2007
Six months Year
Note Six months ended ended
ended 30 September 31 March
30 September 2006 2007
2007 (restated) (restated)
#'000 #'000 #'000
Turnover (billings) 68,643 53,484 117,621
----------- ----------- ----------
Revenue (fees earned) 39,199 30,755 69,665
Operating costs (33,612) (27,692) (59,353)
----------- ----------- ----------
Profit before finance income, finance
costs, income from financial assets
and taxation 4 5,587 3,063 10,312
Finance income 28 115 199
Finance costs (1,724) (1,387) (3,095)
Income from financial assets - - 241
----------- ----------- ----------
Profit before taxation 4 3,891 1,791 7,657
Taxation 6 (1,611) (1,001) (3,212)
----------- ----------- ----------
Profit for the period 4 2,280 790 4,445
----------- ----------- ----------
Basic earnings per share (pence) 7 4.12 1.60 8.50
Diluted earnings per share (pence) 7 4.10 1.58 8.41
The results above arise wholly from continuing operations.
UNAUDITED CONSOLIDATED BALANCE SHEET
as at 30 September 2007
Note As at As at As at
30 September 30 September 31 March
2007 (restated) (restated)
#'000 2006 2007
#'000 #'000
Non-current assets
Intangible assets
Goodwill 9 123,475 110,009 122,984
Other 9 1,369 1,080 1,290
Property, plant and equipment 9 4,042 4,529 4,267
Trade and other receivables - 1,158 1,325
Investments - available for sale 550 550 550
Deferred tax assets 1,443 962 1,347
---------- --------- ---------
130,879 118,288 131,763
---------- --------- ---------
Current assets
Inventories and work in progress 3,811 3,676 5,080
Trade and other receivables 30,946 24,383 29,454
Cash and cash equivalents 22 3,644 1,655
---------- --------- ---------
34,779 31,703 36,189
Current liabilities
Trade and other payables (25,222) (24,692) (28,208)
Corporate income tax payable (1,829) (825) (1,601)
Obligations under finance leases (53) (132) (61)
Bank overdraft, loans and loan
notes (7,208) (5,595) (7,309)
Short term provisions 10 (12,955) (1,131) (4,139)
---------- --------- ---------
(47,267) (32,375) (41,318)
---------- --------- ---------
Net current liabilities (12,488) (672) (5,129)
---------- --------- ---------
Total assets less current
liabilities 118,391 117,616 126,634
Non-current liabilities
Bank loans and loan notes (17,200) (12,740) (16,000)
Long term provisions 10 (20,418) (29,877) (31,430)
---------- --------- ---------
(37,618) (42,617) (47,430)
---------- --------- ---------
Net assets 80,773 74,999 79,204
---------- --------- ---------
Equity
Called up share capital 5,576 5,497 5,576
Share premium account 33,345 33,345 33,345
Own shares (233) (139) (104)
Shares to be issued 2,394 1,492 1,998
Other reserves 31,357 30,943 31,357
Retained earnings 8,334 3,861 7,032
---------- --------- ---------
Total equity 80,773 74,999 79,204
---------- --------- ---------
UNAUDITED STATEMENT OF CHANGES IN EQUITY
Six months ended 30 September 2007
Share capital Share premium Own shares Shares to be Other reserves Retained Total
issued earnings
#'000 #'000 #'000 #'000 #'000 #'000 #'000
Changes
in equity
for the
period
At 1
April
2007 (as
restated) 5,576 33,345 (104) 1,998 31,357 7,032 79,204
Credit
for
share
based
incentive
scheme - - - 396 - - 396
Own
shares
purchased - - (129) - - - (129)
Profit
for the
period - - - - - 2,280 2,280
Dividends - - - - - (978) (978)
------ ------- ------ ------ ------ ------- -------
At 30
September
2007 5,576 33,345 (233) 2,394 31,357 8,334 80,773
------ ------- ------ ------ ------ ------- -------
Six months ended 30 September 2006
Share capital Share premium Own shares Shares to be Other reserves Retained Total
issued earnings
#'000 #'000 #'000 (restated) #'000 (restated) (restated)
#'000 #'000 #'000
Changes in
equity for
the period
At 1 April
2006 3,759 19,734 (46) 1,836 17,682 4,429 47,394
Prior
period
adjustment - - - (829) - (473) (1,302)
------ ------- ------ ------- ------ ------- -------
At 1 April
2006 (as
restated) 3,759 19,734 (46) 1,007 17,682 3,956 46,092
New shares
issued 1,738 13,611 53 - 13,288 - 28,690
Credit for
share
based
incentive
scheme - - - 485 - - 485
Own shares
purchased - - (146) - - - (146)
Loss on
treasury
scheme - - - - (27) - (27)
Profit for
the
period - - - - - 790 790
Dividends - - - - - (885) (885)
------ ------- ------ ------- ------ ------- -------
At 30
September
2006
(as
restated) 5,497 33,345 (139) 1,492 30,943 3,861 74,999
------ ------- ------ ------- ------ ------- -------
Year ended 31 March 2007
Share capital Share premium Own shares Shares to be Other reserves Retained Total
issued earnings
#'000 #'000 #'000 (restated) #'000 (restated) (restated)
#'000 #'000 #'000
Changes in
equity for
the year
At 1 April
2006 3,759 19,734 (46) 1,836 17,682 4,429 47,394
Prior
period
adjustment - - - (829) - (473) (1,302)
------ ------- ------ ------- ------ ------- -------
At 1 April
2006 (as
restated) 3,759 19,734 (46) 1,007 17,682 3,956 46,092
New shares
issued 1,817 13,611 96 - 13,669 - 29,193
Credit for
share
based
incentive
scheme - - - 991 - - 991
Own shares
purchased - - (154) - - - (154)
Profit on
treasury
scheme - - - - 6 - 6
Profit for
the
year - - - - - 4,445 4,445
Dividends - - - - - (1,369) (1,369)
------ ------- ------ ------- ------ ------- -------
At 31
March
2007 5,576 33,345 (104) 1,998 31,357 7,032 79,204
------ ------- ------ ------- ------ ------- -------
UNAUDITED CONSOLIDATED CASH FLOW STATEMENT
for the six months ended 30 September 2007
Note Six months Six months Year
ended ended ended
30 September 30 September 31 March
2007 2006 2007
#'000 #'000 #'000
Operating cash flow 11 5,850 2,999 8,700
Finance income 28 115 199
Finance costs (474) (451) (1,180)
Income from financial assets - - 241
Tax paid (1,479) (1,374) (4,173)
--------- ---------- ---------
Net cash inflow from operating
activities 3,925 1,289 3,787
Investing activities
Purchase of subsidiary
undertakings (2,511) (31,062) (44,501)
Net cash acquired with
subsidiaries - 9,140 10,663
Purchase of property, plant and (742) (1,030) (1,738)
equipment
Sale of property, plant and
equipment - - 99
--------- ---------- ---------
Purchase of intangible assets (145) - (399)
Decrease in restricted cash
deposits - - 13
--------- ---------- ---------
Net cash outflow from investing
activities (3,398) (22,952) (35,863)
Financing activities
Issue of shares for cash - 15,109 15,164
Share issues costs - (545) (545)
Share repurchases (129) (146) (154)
Net (decrease)/increase in
borrowings (1,500) 6,530 15,530
Equity dividends paid (978) (885) (1,369)
Capital element of finance lease
payments (8) (73) (199)
--------- ---------- ---------
Net cash (outflow)/inflow from
financing (2,615) 19,990 28,427
--------- ---------- ---------
Decrease in cash and cash
equivalents (2,088) (1,673) (3,649)
Cash and cash equivalents at start
of period 1,633 5,282 5,282
--------- ---------- ---------
Cash and cash equivalents at end
of period 12 (455) 3,609 1,633
--------- ---------- ---------
NOTES TO THE INTERIM REPORT
for the six months ended 30 September 2007
1. Presentation of financial information
The financial information contained in this Interim Report does not constitute
statutory accounts within the meaning of the Companies Act 1985 and has not
been audited or reviewed by the Group's auditors.
The financial information for the year to 31 March 2007 does not constitute
statutory accounts within the meaning of Section 240 of the Companies Act 1985.
It is extracted from the statutory accounts for that year that were prepared
under IFRS, on which the Group's auditors at that time, PricewaterhouseCoopers
LLP, gave an unqualified audit report and amended in the period as described in
Note 2 below. Statutory accounts for the year ended 31 March 2007 have been
delivered to the Registrar of Companies.
2. Basis of Preparation
The Interim Report of Creston plc for the six months ended 30 September 2007
have been prepared in accordance with the Disclosure and Transparency Rules of
the Financial Services Authority and with IAS 34, "Interim financial reporting"
as adopted by the European Union.
The accounting policies applied in the preparation of the annual financial
statements are based on the European Union adopted International Financial
Reporting Standards (IFRS) and IFRIC interpretations that are applicable at this
time.
The preparation of financial statements requires the use of certain critical
accounting estimates. It also requires management to exercise judgment in the
process of applying the Group's accounting policies.
The following new standards, amendments to standards and interpretations are
mandatory for the first time for the financial year ending 31 March 2008:
*IFRS 7, 'Financial instruments: Disclosures', effective for annual
periods beginning on or after 1 January 2007. IAS 1, 'Amendments to capital
disclosures', effective for annual periods beginning on or after 1 January
2007. As this interim report contains only condensed financial statements,
and as there are no material financial instrument-related transactions in
the period, full IFRS 7 disclosures are not required at this stage. The full
IFRS 7 disclosures, including the sensitivity analysis to market risk and
capital disclosures required by the amendment of IAS 1, will be given in the
annual financial statements.
*IFRIC 8, 'Scope of IFRS 2', effective for annual periods beginning on or
after 1 May 2006. This interpretation has not had any impact on the
recognition of share-based payments in the Group.
*IFRIC 9 'Reassessment of embedded derivatives', effective for annual
periods beginning on or after 1 June 2006. This interpretation has not had
any impact on the reassessment of embedded derivatives as the group already
assessed if embedded derivatives should be separated using principles
consistent with IFRIC 9.
*IFRIC 10, 'Interims and Impairment', effective for annual periods
beginning on or after 1 November 2006. This interpretation has not had any
impact on the group's accounts.
*IFRIC 11, 'IFRS 2 - Group and treasury share transactions', effective for
annual periods beginning on or after 1 March 2007.
The following new standards, amendments to standards and interpretations have
been issued, but are not effective for the financial year ending 31 March 2008
and have not been early adopted:
*IFRS 8, 'Operating segments', effective for annual periods beginning on or
after 1 January 2009, subject to EU endorsement. Management do not currently
foresee any changes to the group's business segments.
*IFRIC 12, 'Service concession arrangements', effective for annual periods
beginning on or after 1 January 2008. Management do not expect this
interpretation to be relevant for the Group.
Prior period adjustment
The treatment of share awards under long term incentive plans in respect of
acquisitions has been amended in the period. Such awards were previously
included as an acquisition cost and hence as part of goodwill, but are now
recognised in the income statement (as deemed remuneration) over the related
vesting period.
This change has resulted in a restatement of the comparative figures. The impact
on the balance sheet at 1 April 2006 is to decrease goodwill by #1,122,000,
decrease shares to be issued by #827,000, decrease deferred tax assets by
#180,000 and decrease retained earnings by #475,000. The income statement charge
for the year ended 31 March 2007 is #629,000 and for the comparative six month
period ended 30 September 2006 is #302,000. The corresponding tax effect for the
year ended 31 March 2007 is #142,000 and for the six month period ended 30
September 2006 is #75,000.
Basic reported earnings per share and diluted reported earnings per share were
reduced by 0.93 pence and 0.92 pence respectively for the year ended 31 March
2007 and by 0.46 pence and 0.46 pence respectively for the period ended 30
September 2006.
3. Accounting policies
The interim consolidated financial statements of Creston plc for the six months
ended 30 September 2007 have been prepared in accordance with the accounting
policies contained in the Group's 2007 Annual Report and the policies as
described in Note 2 above.
4. Reconciliation of Headline profit to Reported profit
The Directors are of the opinion that certain accounting policies relating to
charges deemed as remuneration, notional finance costs on deferred consideration
and amortisation of intangible assets have a material impact on the reported
results and introduce volatility to the reported figures. In order to enable a
better understanding of the underlying trading of the Group, Creston refer to
Headline PBIT, PBT and PAT which eliminates these non-recurring non-cash charges
from the reported figures, as follows:
Six months ended 30 September 2007 PBIT PBT PAT
#'000 #'000 #'000
Headline 6,597 5,757 3,989
Future acquisition payments to employees deemed
as remuneration (1,010) (1,010) (1,010)
Notional finance costs on future deferred
consideration - (856) (856)
Taxation impact - - 157
------- ------- -------
Reported 5,587 3,891 2,280
------- ------- -------
Headline Basic EPS (pence) 7.21
Headline Diluted EPS (pence) 7.18
Reported Basic EPS (pence) 4.12
Reported Diluted EPS (pence) 4.10
Six months ended 30 September 2006(restated) PBIT PBT PAT
#'000 #'000 #'000
Headline 5,220 4,884 3,421
Future acquisition payments to employees deemed
as remuneration (1,532) (1,532) (1,532)
Amortisation of intangible assets (625) (625) (625)
Notional finance costs on future deferred
consideration - (936) (936)
Taxation impact - - 462
------- ------- -------
Reported 3,063 1,791 790
------- ------- -------
Headline Basic EPS (pence) 6.93
Headline Diluted EPS (pence) 6.85
Reported Basic EPS (pence) 1.60
Reported Diluted EPS (pence) 1.58
Year ended 31 March 2007(restated) PBIT PBT PAT
#'000 #'000 #'000
Headline 14,003 13,263 9,173
Future acquisition payments to employees deemed
as remuneration (2,536) (2,536) (2,536)
Amortisation of intangible assets (1,155) (1,155) (1,155)
Notional finance costs on future deferred
consideration - (1,915) (1,915)
Taxation impact - - 878
------- ------- -------
Reported 10,312 7,657 4,445
------- ------- -------
Headline Basic EPS (pence) 17.54
Headline Diluted EPS (pence) 17.35
Reported Basic EPS (pence) 8.50
Reported Diluted EPS (pence) 8.41
The acquisition related charges deemed as remuneration arises on payments made
by Creston to non-shareholding employees in respect of the consideration on the
business acquisitions. The notional finance costs relate to the deferred
consideration and will cease once the relevant earn-outs have been settled. The
amortisation of intangible assets is also a non-recurring non-cash charge
relating to the acquisitions. Headline EPS calculations are adjusted for the
costs disclosed above.
5. Segmental analysis
The Group has changed its operational framework to a two divisional structure
consisting of the Insight and Communications divisions. The latter division now
encompasses those businesses previously included within the BRANDCOM, MARCOMS
and PR divisions while the former incorporates Creston's research offerings and
remains unchanged.
Insight Communications Head office Group
#'000 #'000 #'000 #'000
Six months
ended 30
September 2007
Turnover
(billings) 15,562 53,081 - 68,643
Revenue 8,994 30,205 - 39,199
Profit before
finance
income,
finance costs,
income from
financial
assets and
taxation
(segment
result) 2,609 5,179 (2,201) 5,587
Finance income - - 28 28
Finance costs (195) (661) (868) (1,724)
Income from
financial
assets - - - -
---------- ---------- ---------- ----------
Profit before
taxation 2,414 4,518 (3,041) 3,891
Taxation (1,611)
----------
Profit for the
period 2,280
----------
Insight Communications Head office Group
#'000 #'000 #'000 #'000
Six months
ended 30
September 2006
(restated)
Turnover
(billings) 11,978 41,506 - 53,484
Revenue 6,761 23,994 - 30,755
Profit before
finance
income,
finance costs,
income from
financial
assets and
taxation
(segment
result) 1,620 3,212 (1,769) 3,063
Finance income - - 115 115
Finance costs (103) (833) (451) (1,387)
Income from
financial
assets - - - -
---------- ---------- ---------- ----------
Profit before
taxation 1,517 2,379 (2,105) 1,791
Taxation (1,001)
-----------
Profit for the 790
period -----------
Insight Communications Head office Group
#'000 #'000 #'000 #'000
Year ended 31 March 2007
(restated)
Turnover (billings) 27,575 90,046 - 117,621
Revenue 15,386 54,279 - 69,665
Profit before finance
income, finance costs,
income from financial
assets and taxation
(segment result) 4,306 9,704 (3,698) 10,312
Finance income - - 199 199
Finance costs (244) (1,671) (1,180) (3,095)
Income from financial - - 241 241
assets ------- ---------- --------- --------
Profit before taxation 4,062 8,033 (4,438) 7,657
Taxation (3,212)
--------
Profit for the financial 4,445
year -----------
Secondary segmental analysis by geography
The following table provides an analysis of the Group's turnover and revenue by
geographical market, irrespective of the origin of the services.
Revenue Turnover
Period Period ended 30 Year ended 31 Period ended 30 Period ended 30 Year ended 31
September 2006 March 2007 September 2007 September 2006 March 2007
ended 30
September
2007
#'000 #'000 #'000 #'000 #'000 #'000
UK 30,697 24,748 60,230 53,310 43,394 95,994
Rest of 7,830 5,632 7,968 14,241 8,276 18,628
Europe
Overseas 672 375 1,467 1,092 1,814 2,999
-------- --------- -------- --------- -------- -------
39,199 30,755 69,665 68,643 53,484 117,621
-------- --------- -------- --------- -------- -------
All significant assets and liabilities are located within the UK with the
exception of certain trade receivables which relate to the turnover and revenue
noted above and the net working capital associated with Creston US (which is not
significant).
6. Taxation
Taxation is recognised based on management's best estimate of the weighted
average annual income tax rate expected for the full financial year. The
estimated average annual tax rate used for the year to 31 March 2008 is 49% (the
estimated tax rate for the six months ended 30 September 2006 was 56%).
The Headline average annual tax rate for 31 March 2008 is expected to be 31%
(the estimated Headline tax rate for the six months ended 30 September 2006 was
30%).
7. Earnings per share
Reported earnings per share for the period Headline earnings per share for the period
ended 30 September 2007 ended 30 September 2007
Reported profit Weighted Pence per share Headline profit Weighted Pence per share
for the average number for the average number
financial of shares financial of shares
period period
#'000 #'000
Basic
earnings
per
share 2,280 55,290,839 4.12 3,989 55,290,839 7.21
Options - 278,387 (0.02) - 278,387 (0.03)
Diluted
earnings
per
share 2,280 55,569,226 4.10 3,989 55,569,226 7.18
Reported earnings per share for the period Headline earnings per share for the period
ended 30 September 2006 (restated) ended 30 September 2006
Reported profit Weighted Pence per share Headline profit Weighted Pence per share
for the average number for the average number
financial of shares financial of shares
period period
#'000 #'000
Basic
earnings
per
share 790 49,372,200 1.60 3,421 49,372,200 6.93
Options - 564,591 (0.02) - 564,591 (0.08)
Diluted
earnings
per
share 790 49,936,791 1.58 3,421 49,936,791 6.85
Reported earnings per share for the year ended Headline earnings per share for the year ended
31 March 2007 (restated) 31 March 2007
Reported profit Weighted Pence per share Headline profit Weighted Pence per share
for the average number for the average number
financial of shares financial of shares
period period
#'000 #'000
Basic
earnings
per
share 4,445 52,294,443 8.50 9,173 52,294,443 17.54
Options - 573,674 (0.09) - 573,674 (0.19)
Diluted
earnings
per
share 4,445 52,868,117 8.41 9,173 52,868,117 17.35
DEPS has been calculated based on the following dilutive elements. An estimate
of 278,387 options (2006: 564,591) remain outstanding that would have been
issued based on the average share price (this includes SAYE, EMI and unapproved
options). The contingent shares in 2006 related to the equity element of the
deferred consideration due within one year.
The Headline EPS and Headline diluted EPS are based on the Headline PBT analysed
in note 4 less attributable tax and divided by the weighted average number of
shares and by the weighted average number of diluted shares respectively.
8. Dividends
The Board has declared an interim dividend to be paid on 14 January 2008 of 0.97
pence (2006: 0.88 pence) per share to all ordinary shareholders on the register
at 14 December 2007. This dividend is not reflected in the Income Statement for
the six months to 30 September 2007 as it was not approved by the Board until 29
November 2007. However, the final dividend of 1.76 pence per share for the year
to 31 March 2007 was recognised during the period after it was approved at the
AGM on 30 July 2007 and paid on 3 August 2007.
9. Capital expenditure
Six months ended 30 September 2007
Property, plant Intangible Intangible
and equipment assets - assets - other
goodwill
(restated)
#'000 #'000 #'000
Net book
amount at 1
April 2007 4,267 122,984 1,290
Additions 742 - 145
Adjustments to
consideration - 491 -
Depreciation
and
amortisation (967) - (66)
---------- ---------- ----------
Net book
amount at 30
September 2007 4,042 123,475 1,369
---------- ---------- ----------
Six months ended 30 September 2006
Property, plant Intangible Intangible
and equipment assets - assets - other
goodwill
(restated)
#'000 #'000 #'000
Net book
amount at 1
April 2006 3,006 65,413 350
Additions 1,030 43,374 -
Adjustments to
consideration - 1,222 -
Depreciation
and
amortisation (842) - (625)
Acquired on
acquisition of
subsidiary 1,335 - 1,355
---------- ---------- ----------
Net book
amount at 30
September 2006 4,529 110,009 1,080
---------- ---------- ----------
Year ended 31 March 2007
Property, plant Intangible Intangible
and equipment assets - assets - other
goodwill
(restated)
#'000 #'000 #'000
Net book
amount at 1
April 2006 3,006 65,413 350
Additions 1,793 55,336 399
Disposals (69) - -
Transfers
(from)/to
intangibles (206) - 206
Adjustments to consideration - -
Depreciation
and
amortisation (1,776) 2,535 (1,270)
Acquired on
acquisition of
subsidiary 1,519 - 1,605
---------- ---------- ----------
Net book
amount at 31
March 2007 4,267 122,984 1,290
---------- ---------- ----------
10. Short term and long term provisions
Short term and long term provisions represent the fair value of deferred
consideration. The deferred consideration will be settled by a mixture of cash,
loan notes and new ordinary shares, dependent on the terms of the relevant sale
and purchase agreement.
11. Reconciliation of profit before finance costs income from investments and
taxation to operating cash flow
Six months Six months Year
ended ended Ended
30 September 30 September 31 March
2007 2006 (restated) 2007 (restated)
#'000 #'000 #'000
Profit for the period 2,280 790 4,445
Taxation 1,611 1,001 3,212
Profit before taxation 3,891 1,791 7,657
Income from financial assets (241)
Finance costs 1,724 1,387 3,095
Finance income (28) (115) (199)
Profit before finance costs,
income 5,587 3,063 10,312
from investments and taxation
Depreciation of property, plant
and 967 842 1,776
equipment
Amortisation of intangible 66 625 1,270
assets
Share based payments 99 166 400
Deemed remuneration 1,010 1,532 2,536
Profit on disposal of property,
plant and equipment - - (30)
Decrease/(increase) in
inventories 1,269 259 (1,042)
and work in progress
(Increase)/decrease in trade and
other receivables (429) 2,535 (2,080)
(Decrease) in trade and other
payables (2,719) (6,023) (4,442)
---------- ---------- ----------
Operating cash flow 5,850 2,999 8,700
---------- ---------- ----------
12. Analysis of net debt
As at Cash Flow Acquisitions As at
1 April #'000 #'000 30 September
2007
2007 #'000
#'000
Cash and short term deposits 1,633 (1,633) - -
Bank overdrafts - (455) - (455)
Revolving credit facility (3,000) 1,500 - (1,500)
Acquisition loan notes (309) (2,144) (2,453)
Bank loans (20,000) - (20,000)
Finance leases (61) 8 - (53)
-------- -------- -------- ---------
Net (debt) (21,737) (2,724) - (24,461)
Restricted cash deposits 22 - - 22
-------- -------- -------- ---------
Net (debt) including restricted
cash deposits (21,715) (2,724) - (24,439)
-------- -------- -------- ---------
As at Cash Flow Acquisitions As at
1 April #'000 #'000 30 September
2006
2006 #'000
#'000
Cash and short term deposits 5,282 (1,673) - 3,609
Acquisition loan notes (128) - (4,207) (4,335)
Bank loans (7,470) (6,530) - (14,000)
Finance leases (205) 73 - (132)
_______ _______ _______ ________
Net (debt) (2,521) (8,130) (4,207) (14,858)
Restricted cash deposits 35 - - 35
Net (debt) including restricted _______ _______ _______ _______
cash deposits
(2,486) (8,130) (4,207) (14,823)
_______ _______ _______ _______
As at Cash Flow Acquisitions Non-cash items As at
1 April #'000 #'000 #'000 31 March 2007
2006 #'000
#'000
Cash and short
term deposits 5,282 (3,649) - - 1,633
Bank
overdrafts - (3,000) - - (3,000)
and
revolving
credit
facility
Acquisition
loan (128) 7,025 (7,206) - (309)
notes
Bank loans (7,470) (12,530) - - (20,000)
Finance leases (205) 199 - (55) (61)
_______ _______ _______ _______ _______
Net (debt) (2,521) (11,955) (7,206) (55) (21,737)
Restricted
cash 35 (13) - - 22
deposits
Net (debt) _______ _______ _______ _______ _______
including
restricted
cash deposits
(2,486) (11,968) (7,206) (55) (21,715)
_______ _______ _______ _______ _______
Non-cash items relate to #55,000 of new finance leases entered into during the
year ended 31 March 2007.
The restricted cash deposits are maintained in a designated account as security
for the loan notes issued on the acquisition of MSL and are, therefore, not
freely available to the Group.
The bank overdrafts, revolving credit facility, acquisition loan notes and bank
loans are as follows:-
30 September 30 September 31 March 2007
2007 2006
#'000 #'000 #'000
Non-current 17,200 12,740 16,000
Current 7,208 5,595 7,309
---------- ---------- ---------
24,408 18,335 23,309
---------- ---------- ---------
On 14 August 2007, the Group restructured its banking arrangements to more fully
align its financial structure with the Group's development plans. The principals
changes were:-
(i) the undrawn term loan facility of #10.0 million at 31 March 2007 converted
to a revolving credit facility which will remain available until 31 March 2012;
and
(ii) the repayments of the drawn term loan of #20.0 million have been re-phased.
13. Related-party transactions
During the six months ended 30 September 2007 total fees of #15,741 (six months
ended 30 September 2006: #18,486) were paid to City Group P.L.C. and #12,741
(2006: #10,486) for the provision of secretarial services and #13,000 (2006:
#8,000) for the services of Mr D C Marshall.
14. Statement of directors' responsibilities
The directors confirm that this condensed set of financial statements has been
prepared in accordance with IAS 34 as adopted by the European Union, and that
the interim management report herein includes a fair review of the information
required by DTR 4.2.7 and DTR 4.2.8.
The directors of Creston plc are listed in the Creston plc Annual Report for 31
March 2007, with the exception that as noted in the Annual Report Mr D Hanger
and Mr P Cunard resigned as directors on 30 July 2007. A list of current
directors is maintained on the Creston plc website: www.creston.com.
15. Forward-looking statements
Certain statements in this interim report are forward-looking. Although the
Group believes that the expectations reflected in these forward-looking
statements are reasonable, we can give no assurance that these expectations will
prove to have been correct. Because these statements involve risks and
uncertainties, actual results may differ materially from those expressed or
implied by these forward-looking statements.
We undertake no obligation to update any forward-looking statements whether as a
result or new information, future events or otherwise.
16. Availability of the Interim Report
Copies of the Interim Report will be sent to shareholders in due course and are
available from the Company's registered office at City Group P.L.C., 30 City
Road, London, EC1Y 2AG and on the company's website www.creston.com
This information is provided by RNS
The company news service from the London Stock Exchange
END
IR GGBDBDSXGGRG
Conduit (LSE:CRE)
과거 데이터 주식 차트
부터 6월(6) 2024 으로 7월(7) 2024
Conduit (LSE:CRE)
과거 데이터 주식 차트
부터 7월(7) 2023 으로 7월(7) 2024
