TIDMCRE
RNS Number : 2461D
Creston PLC
30 November 2009
30 November 2009
Interim Results for the six months ended 30 September 2009
Highlights
* Revenue decreased by 6 per cent to GBP38.7 million (2008: GBP41.3 million)
* Headline1 PBT2 increased by 1 per cent to GBP6.3 million (2008: GBP6.3 million)
* Headline PBIT3 margin constant at 17 per cent (2008: 17 per cent) due to
efficient cost control
* Digital revenue increased to 31 per cent of total Group revenue (2008: 25 per
cent)
* Operating cash flow increased by 51 per cent to GBP6.3 million (2008: GBP4.2
million)
* Cash conversion equalled 86 per cent of Headline EBITDA4 (2008: 51 per cent)
* Total debt reduced since year end by GBP7 million (17 per cent)
* GBP3.3 million fundraising from existing shareholders successfully completed
* Annualised new business wins of GBP7 million. Wins include Amazon, BBC, Bausch &
Lomb, COI, E-on, Evian, Facebook, Mercedes, Nucletron, Reckitt Benckiser and
several new brands from existing clients including Astra Zeneca, Roche, GSK, COI
and Unilever
* Post period end, the appointment of David Grigson as Chairman-elect.
Financial Results
+---------------------+----------+----------+----------+----------+----------+---------+
| | Headline results | Reported results |
+---------------------+--------------------------------+-------------------------------+
| | 2009 | 2008 | Change | 2009 | 2008 | Change |
| | GBP | GBP | | GBP | GBP | |
| | million | million | | million | million | |
+---------------------+----------+----------+----------+----------+----------+---------+
| Revenue | 38.7 | 41.3 | - 6% | 38.7 | 41.3 | - 6% |
+---------------------+----------+----------+----------+----------+----------+---------+
| PBIT | 6.6 | 7.0 | - 6% | 1.9 | 5.6 | - 66% |
+---------------------+----------+----------+----------+----------+----------+---------+
| PBT | 6.3 | 6.3 | +1% | 1.5 | 4.4 | - 67% |
+---------------------+----------+----------+----------+----------+----------+---------+
| EPS (pence) diluted | 8.40 | 8.24 | + 2% | 0.76 | 5.45 | - 86% |
+---------------------+----------+----------+----------+----------+----------+---------+
Commenting on the results, Don Elgie, Chief Executive of Creston plc, said:
"Reporting a small increase in Headline profit before tax, a constant Headline
operating profit margin, an increase in Headline diluted earnings per share and
a fifty one per cent increase in our operating cash flow bears testament to the
resilience and quality of our diversified earnings. I believe this performance
demonstrates we have exceptional talent that delivers to clients what they need
in these difficult economic times.
In this period we have also continued to invest in our digital and on-line
client offer, which has driven a fifteen per cent increase in our digital
revenues and meets our vision of providing clients insight and communications
for the 21st century. We have an active new business pipeline and we are well
positioned for the remainder of the year"
1Headline results reflect the underlying performance of the Group and excludes
goodwill write-off, restructuring and deemed remuneration charges from the
Reported results. A full reconciliation is presented in Note 4.
2Profit before Taxation (PBT).
3 Profit before Interest and Tax (PBIT) is defined as Profit before finance
income, finance costs, income from financial assets and taxation.
4 Headline EBITDA is defined as Headline PBIT plus depreciation, amortisation
and charges in respect of share based payments
Chief Executive's Statement
Creston has performed robustly in the first half of its 2010 financial year in a
difficult economic climate. Revenue declined on a like-for-like basis by 6 per
cent, although this was after a 5 per cent rise in the first half of the last
financial year. The revenue performance varied across the Group's three
divisions, with growth of 6 per cent in Health and a 1 per cent decline in
Insight for the continuing operations. Communications' revenue declined 8 per
cent, which was less severe than the advertising market average.
As in any people-based professional services business, the biggest challenge is
to align employment costs to sudden declines in revenue without compromising
client service. At the beginning of the financial year, many of the client fee
pressures had been anticipated and salary costs were reduced accordingly. The
under performance of our two small niche research companies (CML and MSTS) could
no longer be justified and action was taken to close each agency, whilst
continuing to provide their services elsewhere in the division. This action
meant that our operating cost base is now aligned with revenue. Consequently,
our Headline PBIT margin remained at 17 per cent (2008: 17 per cent) and well
above the industry average. The GBP2.7 million decline in revenue converted to a
decline in Headline PBIT of only GBP0.5 million. This aggressive management of
operating costs enabled us to reduce annualised payroll by approximately GBP2
million and achieve an approximate GBP1 million saving in the second half of
this financial year.
Accelerating organic growth
At the start of this financial year the Group introduced a new three divisional
structure: Insight, Communications and Health. Each division has a separate
board with executive responsibility to drive profits, share best practice,
maximise cost efficiencies and develop marketing solutions that take advantage
of the diversified disciplines within each division and the Group as a whole. In
the first six months of the new Group structure, there have been notable
successes in new business and integration. Not only are the agencies in each
division working more closely together, but the divisions themselves are working
more closely with each other.
To accelerate our organic growth, we introduced a Centres of Excellence
strategy. This means that the Group invests once and utilises the experience and
skills across the whole Group in order to develop market leading products and
services for all agencies to offer clients. By adopting a shared investment
strategy all agencies are involved in the business planning and product
development stages, which will lead to a greater long term success for the
product or service. Recent new products and centres of excellence developed
include:
Insight
* Online research
* Healthcare research
* Telephone research
Communications
* Mobile marketing
* Social media
* Search engine optimisation
Health
* Digital health
* Medical education
New Business Wins
The new business wins we have achieved in the first half of the year are an
effective barometer of whether our services and proposition are relevant in the
changing market. We have had some notable successes in the period, securing GBP7
million of new business revenue on an annualised basis. The Insight wins this
year include Reckitt Benckiser appointing Marketing Sciences on a worldwide
basis for packaging research, and GSK appointing ICM to conduct an 11-country
tracking study. Within the Communications Division wins included DLKW winning
the E-on full service advertising account, and COI engaging TMW for its National
Blood Service CRM strategy. New business wins with Amazon, BBC, COI, Facebook
and Mercedes were secured through the new consumer public relations division of
NBC, and Evian chose The Real Adventure for its digital marketing.Within the
Health Division Bausch & Lomb selected tmwdigitalhealth for its new vision care
website across Europe, the Middle East and Africa in association with Red Door
Communications and The Real Adventure; and Nucletron appointed Rock Medical
Communications for an integrated campaign with PAN Advertising.
We are proud of our blue chip client list and the long standing trusted
relationships we have with clients that has resulted in additional brands and
accounts from existing clients, such as, COI (Vulnerable workers and NHS Blood &
Transplant), BMW (Motorrad), Unilever (Bertolli and Domestos), Danone (Evian),
Roche (Herceptin) and GSK (Urology).
New business activity has gained momentum in the second half of the year and we
have an active pipeline of opportunities. The second half will benefit from the
new business won so far and the opportunities yet to be converted.
Financial Overview
Revenue decreased by 6 per cent to GBP38.7 million (2008: GBP41.3 million)
during the first half of the financial year. In addition, the Group notes that
during the first half of the calendar year, revenue remained flat compared with
the corresponding period in 2008 and therefore exceeded the industry average,
which was a decline. Headline PBIT decreased 6 per cent to GBP6.6 million (2008:
GBP7.0 million), whilst the PBIT margin remained constant at 17% and
demonstrated the Group's control of its cost base. Reported PBIT declined GBP3.7
million to GBP1.9 million. The majority of this decline was the result of
writing off goodwill (a non-cash charge) for CML following the decision to close
it. The other Headline adjustments are redundancy charges (GBP314k) in the
Communications Division, the closure costs (GBP296k) in the Insight Division and
a non-cash charge for deemed remuneration (GBP254k).
Although Headline PBIT has decreased 6 per cent year-on-year, the Group's
interest charge has fallen significantly because of positive cash management and
a reduction in LIBOR. Our effective average interest rate for the period was
below 2 per cent and this contributed to the 1 per cent increase in Headline PBT
compared to 2008.
Headline DEPS increased 2 per cent to 8.40 pence (2008: 8.24 pence). As a result
of writing off of goodwill for CML, Reported DEPS fell to 0.76 pence (2008: 5.45
pence).
Divisional Performance
Insight Division
+------------------------+-----------------+-----------------+---------------+
| | 2009 | 2008 | Change |
| | GBP million | GBP million | % |
+------------------------+-----------------+-----------------+---------------+
| Revenue | 7.8 | 8.5 | -8% |
+------------------------+-----------------+-----------------+---------------+
| Headline PBIT | 2.4 | 2.4 | -1% |
+------------------------+-----------------+-----------------+---------------+
| Reported PBIT | -1.7 | 2.2 | -178% |
+------------------------+-----------------+-----------------+---------------+
| Headline PBIT Margin | 30% | 28% | |
| (%) | | | |
+------------------------+-----------------+-----------------+---------------+
During the first half of the year the Insight division saw revenue decline by
8 per cent. However, this decline is attributable to the underperformance of
CML and MSTS, both of which have now been closed. The core companies, ICM and
Marketing Sciences, saw revenue decrease by 1 per cent, predominantly caused by
a delay in commissioned projects that are now either underway or completed.This
compares favourably to the wider market research sector which has seen a 5 per
cent decline in the second quarter of 2009 (source: Market Research Society).
Headline PBIT has remained almost in line with the prior year despite declining
revenue in the division. This has been achieved by the closure of the loss
making subsidiaries MSTS and CML. It also explains the difference between the
Headline and Reported performance of the division. GBP3.8 million of the GBP3.9
million decline in Reported PBIT is attributed to the closure costs of CML and
the related write off of goodwill.
Communications Division
+------------------------+-----------------+-----------------+---------------+
| | 2009 | 2008 | Change |
| | GBP million | GBP million | % |
+------------------------+-----------------+-----------------+---------------+
| Revenue | 26.6 | 28.8 | -8% |
+------------------------+-----------------+-----------------+---------------+
| Headline PBIT | 4.0 | 5.1 | -21% |
+------------------------+-----------------+-----------------+---------------+
| Reported PBIT | 3.5 | 4.2 | -16% |
+------------------------+-----------------+-----------------+---------------+
| Headline PBIT Margin | 15% | 18% | |
| (%) | | | |
+------------------------+-----------------+-----------------+---------------+
The revenue decline has been caused by the expected reduction in clients'
marketing budgets because of the recession. The impact of the budget cuts has
been less severe than many of our competitors, because of our weighting towards
direct, digital, local marketing and PR and as a consequence of our new business
success. There has been a notable performance by EMO, our local marketing
agency. After its recent Jaguar, Land Rover, Toyota and the COI's anti-smoking
campaign wins, EMO has almost doubled in size.
As revenue declined during the first half of the year we made the necessary
reductions in our resource base. In many cases this resulted in the Group
reducing non-digital resources, and ensuring the Group was well placed for
continuing growth in digital marketing services, which represented 37 per cent
of the division's revenue (2008: 29 per cent). The redundancy charge in the
period for the division was GBP314k, with an annualised saving of approximately
GBP2 million and an expected saving of GBP1 million in the second half of this
financial year.
Health
+------------------------+-----------------+-----------------+---------------+
| | 2009 | 2008 | Change |
| | GBP million | GBP million | % |
+------------------------+-----------------+-----------------+---------------+
| Revenue | 4.2 | 4.0 | +6% |
+------------------------+-----------------+-----------------+---------------+
| Headline PBIT | 1.4 | 1.1 | +28% |
+------------------------+-----------------+-----------------+---------------+
| Reported PBIT | 1.4 | 1.2 | +14% |
+------------------------+-----------------+-----------------+---------------+
| Headline PBIT Margin | 33% | 27% | |
| (%) | | | |
+------------------------+-----------------+-----------------+---------------+
The encouraging performance of this division, in terms of growth and margin, are
the result of the strong new business wins in the period. PAN Advertising and
Red Door Communications collaborate on a number of client accounts and are
increasing their number of referred and joint clients. Whilst they possess
digital capabilities themselves, both agencies are able to call upon the
technical expertise of tmwdigitalhealth when necessary, or on the Insight
division's healthcare capabilities for expert research and analytics.
Cash Management and Net Debt
The Group's cash performance during the first half of the year was good.
Operating cash flow increased 51 per cent to GBP6.3 million (2008: GBP4.2
million) as a result of effective management of working capital, which resulted
in a cash conversion (ratio of operating cash flow to Headline EBITDA) of 86 per
cent (2008: 51 per cent). Our average working capital balance during the period
reduced to between GBP3 million to GBP4 million (2008: GBP7 million to GBP8
million).
In addition to the strong operating cash flow, the Group raised GBP3.3
million (gross) in July 2009 from existing shareholders. These funds are being
used to invest in new client offers to accelerate organic growth, reduce net
debt and create further headroom in our banking facility.
Total debt has been reduced by GBP6.9 million since March 2009. As all earn
outs have completed, there is no further deferred consideration and therefore
net debt and total debt are the same. Of the GBP34.7 million total debt (as at
30 September 2009), GBP15.0 million is bank debt and GBP19.7 million are loan
notes issued in settlement of the final deferred consideration. These loan notes
will be paid in January 2010 and July 2010, utilising future operating cash flow
and our current unutilised GBP23.0 million bank revolving credit facility.
+--------------------------+----------+-------------+------------+------------+
| | March | March | March | September |
| | 2007 | 2008 | 2009 | 2009 |
| | GBP'm | GBP'm | GBP'm | GBP'm |
+--------------------------+----------+-------------+------------+------------+
| 12 month rolling | 15.9 | 17.5 | 18.0 | 17.2 |
| Headline EBITDA | | | | |
+--------------------------+----------+-------------+------------+------------+
| Bank Debt | 21.4 | 16.4 | 18.6 | 15.0 |
+--------------------------+----------+-------------+------------+------------+
| Loan notes | 0.3 | 1.4 | - | 19.7 |
+--------------------------+----------+-------------+------------+------------+
| Deferred Consideration | 34.2 | 31.6 | 23.0 | - |
+--------------------------+----------+-------------+------------+------------+
| Total Debt | 55.9 | 49.4 | 41.6 | 34.7 |
+--------------------------+----------+-------------+------------+------------+
| Total Debt : Headline | 3.5 x | 2.8 x | 2.3 x | 2.0 x |
| EBITDA | | | | |
+--------------------------+----------+-------------+------------+------------+
| Gearing (%) | 70% | 60% | 47% | 38% |
+--------------------------+----------+-------------+------------+------------+
The Group remains predominantly UK based, however in the first half of the year
the Group generated over 18 per cent of its revenue from outside the UK (2008:
23 per cent).Due to the significant level of overseas trading and increasing
exchange rate volatility the Board decided to mitigate this foreign exchange
risk by entering into a twelve month fixed forward contract with the value of EUR5
million and a maturity date of August 2010.
Taxation
The effective tax rate at 70 per cent of Reported PBT has been distorted by
writing off the CML goodwill, which materially reduced PBT. The underlying tax
rate will be lower than the historic 29 per cent because of the release of
certain tax provisions.
Dividend
The Board has decided to continue its strategy of paying down debt, reduce
gearing and investing in organic growth initiatives. Given this objective of
debt reduction, the Board believes that it is not in shareholders' best
interests to pay an interim dividend but will review payment of a final dividend
at the year end.
Our business objectives over the next 12 months
Our new divisional structure, although only six months in place, is already
working well and it has a clear objective to continue to maximise the synergies
(both client referrals and product launches) within and between our three
divisions.
We will also continue our effective management of costs in line with future
revenues to maintain our key performance indicators, including operating profit
margin, that are in the upper quartile for the industry.
We have again demonstrated the cash generative nature of the Group and will
continue to reduce the gearing levels through proactive working capital
management and the resilience and quality of our earnings.
An important objective continues to be integrating digital and on-line at the
heart of our client offer. There is increasing evidence that clients need
effective services that integrate on and off-line capability. Through our
Centres of Excellence strategy we have grown our digital revenue by 15 per cent
representing 31% of Group revenue in the half year.
Appointment of Chairman-elect
On 26 November, after the period end, we were delighted to announce the
appointment of David Grigson as a non-executive director of Creston and
Chairman-elect. David has had a distinguished career in the media sector, most
recently as Chief Financial Officer at Reuters, and he will be a highly valued
member of the Creston Board as we steer the Group through its next phase of
growth.
David Grigson's joining marks the end of an era for David Marshall, our current
Chairman who has been with the Group since its inception as an insight and
communications company in 2001. David Marshall will retire as Chairman at the
end of the Group's current financial year on 31 March 2010 when David Grigson
will take up the role. We are very grateful for his contribution through the
start up years and beyond.
Outlook
The signs for the second half of the year are more encouraging than those
experienced during the first half, with delays in budget decisions and material
reductions in client budgets now less likely than six months ago. However, there
obviously continues to be economic uncertainty and we will remain cautious in
our outlook.
The new Group structure is working well and driving momentum across the business
and our recent digital start-ups will help accelerate organic growth. With the
improvements in cash management and reduction in debt, the Group's gearing has
reduced and we maintain headroom across all of our banking covenants. We have
had a resilient performance in the first half, our operating costs are under
control and the actions taken in the period will benefit future trading
results. We have an active new business pipeline and we are well positioned for
the remainder of the year.
Don Elgie
Chief Executive Officer
UNAUDITED CONSOLIDATED INCOME STATEMENT
for the six months ended 30 September 2009
+--------------------------+------+---------------+--+--------------+--+------------+
| | Note | Six months | | Six months | | Year ended |
| | | ended | | ended | | 31 March |
| | | 30 September | | 30 September | | 2009 |
| | | 2009 | | 2008 | | GBP'000 |
| | | GBP'000 | | GBP'000 | | |
+--------------------------+------+---------------+--+--------------+--+------------+
| | | | | | | |
+--------------------------+------+---------------+--+--------------+--+------------+
| Turnover (billings) | | 62,794 | | 69,653 | | 138,472 |
+--------------------------+------+---------------+--+--------------+--+------------+
+--------------------------+------+---------------+--+--------------+--+------------+
| | | | | | | |
+--------------------------+------+---------------+--+--------------+--+------------+
| Revenue | | 38,681 | | 41,341 | | 83,795 |
+--------------------------+------+---------------+--+--------------+--+------------+
| Operating costs | | (36,756) | | (35,753) | | (71,492) |
+--------------------------+------+---------------+--+--------------+--+------------+
+--------------------------+------+---------------+--+--------------+--+------------+
| | | | | | | |
+--------------------------+------+---------------+--+--------------+--+------------+
| Profit before finance | 4 | 1,925 | | 5,588 | | 12,303 |
| income, finance costs, | | | | | | |
| income from financial | | | | | | |
| assets and taxation | | | | | | |
+--------------------------+------+---------------+--+--------------+--+------------+
| Finance income | | 1 | | 39 | | 45 |
+--------------------------+------+---------------+--+--------------+--+------------+
| Finance costs | | (455) | | (1,364) | | (2,487) |
+--------------------------+------+---------------+--+--------------+--+------------+
| Income from financial | | - | | 150 | | 150 |
| assets | | | | | | |
+--------------------------+------+---------------+--+--------------+--+------------+
+--------------------------+------+---------------+--+--------------+--+------------+
| | | | | | | |
+--------------------------+------+---------------+--+--------------+--+------------+
| Profit before taxation | 4 | 1,471 | | 4,413 | | 10,011 |
| | | | | | | |
+--------------------------+------+---------------+--+--------------+--+------------+
| Taxation | 6 | (1,036) | | (1,462) | | (3,414) |
+--------------------------+------+---------------+--+--------------+--+------------+
+--------------------------+------+---------------+--+--------------+--+------------+
| Profit for the period | 4 | 435 | | 2,951 | | 6,597 |
+--------------------------+------+---------------+--+--------------+--+------------+
+--------------------------+------+---------------+--+--------------+--+------------+
| | | | | | | |
+--------------------------+------+---------------+--+--------------+--+------------+
| Basic earnings per share | 7 | 0.76 | | 5.46 | | 12.21 |
| (pence) | | | | | | |
+--------------------------+------+---------------+--+--------------+--+------------+
| Diluted earnings per | 7 | 0.76 | | 5.45 | | 12.10 |
| share (pence) | | | | | | |
+--------------------------+------+---------------+--+--------------+--+------------+
The results above arise wholly from continuing operations.
UNAUDITED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
for the six months ended 30 September 2009
+--------------------------+------+---------------+--+--------------+--+------------+
| | Note | Six months | | Six months | | Year ended |
| | | ended | | ended | | 31 March |
| | | 30 September | | 30 September | | 2009 |
| | | 2009 | | 2008 | | GBP'000 |
| | | GBP'000 | | GBP'000 | | |
+--------------------------+------+---------------+--+--------------+--+------------+
| | | | | | | |
+--------------------------+------+---------------+--+--------------+--+------------+
| Profit for the period | | 435 | | 2,951 | | 6,597 |
+--------------------------+------+---------------+--+--------------+--+------------+
+--------------------------+------+---------------+--+--------------+--+------------+
| | | | | | | |
+--------------------------+------+---------------+--+--------------+--+------------+
| Other comprehensive | | | | | | |
| (expenses)/income | | | | | | |
+--------------------------+------+---------------+--+--------------+--+------------+
| Cash flow hedge: | 10 | (287) | | - | | - |
| Fair value loss in | | | | | | |
| period | | | | | | |
+--------------------------+------+---------------+--+--------------+--+------------+
| Tax effect of fair value | | 80 | | - | | - |
+--------------------------+------+---------------+--+--------------+--+------------+
| Other comprehensive | | (207) | | - | | - |
| (expense)/income for the | | | | | | |
| period, net of tax | | | | | | |
+--------------------------+------+---------------+--+--------------+--+------------+
+--------------------------+------+---------------+--+--------------+--+------------+
| Total comprehensive | | 228 | | 2,951 | | 6,597 |
| income for the period | | | | | | |
+--------------------------+------+---------------+--+--------------+--+------------+
UNAUDITED CONSOLIDATED BALANCE SHEET
as at 30 September 2009
+-------------------------------+------+-------------+--+------------+--+------------+
| |Note | As at | | As at | | As at |
| | | 30 | | 30 | | 31 March |
| | | September | | September | | 2009 |
| | | 2009 | | 2008 | | GBP'000 |
| | | GBP'000 | | GBP'000 | | |
+-------------------------------+------+-------------+--+------------+--+------------+
| | | | | | | |
+-------------------------------+------+-------------+--+------------+--+------------+
| Non-current assets | | | | | | |
+-------------------------------+------+-------------+--+------------+--+------------+
| Intangible assets | | | | | | |
+-------------------------------+------+-------------+--+------------+--+------------+
| Goodwill | 9 | 119,081 | | 119,277 | | 122,856 |
+-------------------------------+------+-------------+--+------------+--+------------+
| Other | 9 | 1,619 | | 1,429 | | 1,582 |
+-------------------------------+------+-------------+--+------------+--+------------+
| Property, plant and equipment | 9 | 2,401 | | 3,201 | | 2,514 |
+-------------------------------+------+-------------+--+------------+--+------------+
| Financial assets - available | | 550 | | 614 | | 550 |
| for sale | | | | | | |
+-------------------------------+------+-------------+--+------------+--+------------+
| Deferred tax assets | | 889 | | 869 | | 800 |
+-------------------------------+------+-------------+--+------------+--+------------+
| | | 124,540 | | 125,390 | | 128,302 |
+-------------------------------+------+-------------+--+------------+--+------------+
| Current assets | | | | | | |
+-------------------------------+------+-------------+--+------------+--+------------+
| Inventories and work in | | 2,522 | | 3,261 | | 1,665 |
| progress | | | | | | |
+-------------------------------+------+-------------+--+------------+--+------------+
| Trade and other receivables | | 29,175 | | 36,126 | | 30,814 |
+-------------------------------+------+-------------+--+------------+--+------------+
| Cash and short term deposits | | 16 | | 19 | | 2,828 |
+-------------------------------+------+-------------+--+------------+--+------------+
| | | 31,713 | | 39,406 | | 35,307 |
+-------------------------------+------+-------------+--+------------+--+------------+
| | | | | | | |
+-------------------------------+------+-------------+--+------------+--+------------+
| Current liabilities | | | | | | |
+-------------------------------+------+-------------+--+------------+--+------------+
| Trade and other payables | | (28,663) | | (30,261) | | (29,984) |
+-------------------------------+------+-------------+--+------------+--+------------+
| Corporation tax payable | | (1,458) | | (1,673) | | (2,026) |
+-------------------------------+------+-------------+--+------------+--+------------+
| Obligations under finance | | (4) | | (34) | | (8) |
| leases | | | | | | |
+-------------------------------+------+-------------+--+------------+--+------------+
| Bank overdraft, loans and | | (24,695) | | (18,624) | | (9,823) |
| loan notes | | | | | | |
+-------------------------------+------+-------------+--+------------+--+------------+
| Derivative financial | 10 | (287) | | - | | - |
| instrument | | | | | | |
+-------------------------------+------+-------------+--+------------+--+------------+
| Provisions for other | 11 | - | | (16,967) | | (19,413) |
| liabilities and charges | | | | | | |
+-------------------------------+------+-------------+--+------------+--+------------+
| | | (55,107) | | (67,559) | | (61,254) |
+-------------------------------+------+-------------+--+------------+--+------------+
| | | | | | | |
+-------------------------------+------+-------------+--+------------+--+------------+
| Net current liabilities | | (23,394) | | (28,153) | | (25,947) |
+-------------------------------+------+-------------+--+------------+--+------------+
| | | | | | | |
+-------------------------------+------+-------------+--+------------+--+------------+
| Total assets less current | | 101,146 | | 97,237 | | 102,355 |
| liabilities | | | | | | |
+-------------------------------+------+-------------+--+------------+--+------------+
| | | | | | | |
+-------------------------------+------+-------------+--+------------+--+------------+
| Non-current liabilities | | | | | | |
+-------------------------------+------+-------------+--+------------+--+------------+
| Bank loans and loan notes | | (10,000) | | (13,000) | | (11,600) |
+-------------------------------+------+-------------+--+------------+--+------------+
| Provisions for other | 11 | - | | - | | (2,887) |
| liabilities and charges | | | | | | |
+-------------------------------+------+-------------+--+------------+--+------------+
| | | (10,000) | | (13,000) | | (14,487) |
+-------------------------------+------+-------------+--+------------+--+------------+
| | | | | | | |
+-------------------------------+------+-------------+--+------------+--+------------+
| | | | | | | |
+-------------------------------+------+-------------+--+------------+--+------------+
| Net assets | | 91,146 | | 84,237 | | 87,868 |
+-------------------------------+------+-------------+--+------------+--+------------+
| | | | | | | |
+-------------------------------+------+-------------+--+------------+--+------------+
| Equity | | | | | | |
+-------------------------------+------+-------------+--+------------+--+------------+
| Called up share capital | 12 | 6,134 | | 5,576 | | 5,576 |
+-------------------------------+------+-------------+--+------------+--+------------+
| Share premium account | | 35,943 | | 33,345 | | 33,345 |
+-------------------------------+------+-------------+--+------------+--+------------+
| Own shares | | (851) | | (1,077) | | (1,054) |
+-------------------------------+------+-------------+--+------------+--+------------+
| Shares to be issued | | 1,643 | | 2,635 | | 2,706 |
+-------------------------------+------+-------------+--+------------+--+------------+
| Other reserves | | 31,357 | | 31,357 | | 31,357 |
+-------------------------------+------+-------------+--+------------+--+------------+
| Retained earnings | | 16,920 | | 12,401 | | 15,938 |
+-------------------------------+------+-------------+--+------------+--+------------+
| | | | | | | |
+-------------------------------+------+-------------+--+------------+--+------------+
| Total equity | | 91,146 | | 84,237 | | 87,868 |
+-------------------------------+------+-------------+--+------------+--+------------+
| | | | | | | |
+-------------------------------+------+-------------+--+------------+--+------------+
UNAUDITED STATEMENT OF CHANGES IN EQUITY
Six months ended 30 September 2009
+------------------------+------------------------+---------+---------+---------+----------+----------+---------+
| | Share | Share | Own | Shares | Other | Retained | Total |
| | capital | premium | shares | to be | reserves | earnings | GBP'000 |
| | GBP'000 | GBP'000 | GBP'000 | issued | GBP'000 | GBP'000 | |
| | | | | GBP'000 | | | |
+------------------------+------------------------+---------+---------+---------+----------+----------+---------+
| Changes in equity for | | | | | | | |
| the period | | | | | | | |
+------------------------+------------------------+---------+---------+---------+----------+----------+---------+
| At 1 April 2009 | 5,576 | 33,345 | (1,054) | 2,706 | 31,357 | 15,938 | 87,868 |
+------------------------+------------------------+---------+---------+---------+----------+----------+---------+
| Profit for the period | - | - | - | - | - | 435 | 435 |
+------------------------+------------------------+---------+---------+---------+----------+----------+---------+
| Other comprehensive | | | | | | | |
| income: | | | | | | | |
+------------------------+------------------------+---------+---------+---------+----------+----------+---------+
| Fair value loss on | | | | | | (287) | (287) |
| financial liability | | | | | | | |
+ +------------------------+---------+---------+---------+----------+ + +
| | - | - | - | - | - | | |
+------------------------+------------------------+---------+---------+---------+----------+----------+---------+
| Tax effect of fair | - | - | - | - | - | 80 | 80 |
| value loss | | | | | | | |
+------------------------+------------------------+---------+---------+---------+----------+----------+---------+
| Total comprehensive | - | - | - | - | - | 228 | 228 |
| income for the period | | | | | | | |
+------------------------+------------------------+---------+---------+---------+----------+----------+---------+
| Debit for share-based | - | - | - | (123) | - | - | (123) |
| incentive schemes | | | | | | | |
+------------------------+------------------------+---------+---------+---------+----------+----------+---------+
| Exercise of share | - | - | 203 | (940) | - | - | (737) |
| award | | | | | | | |
+------------------------+------------------------+---------+---------+---------+----------+----------+---------+
| Loss on treasury | | | | | | | |
| scheme/ employee | | | | | | | |
| benefit trust | | | | | | | |
+ +------------------------+---------+---------+---------+----------+----------+---------+
| | - | - | - | - | - | (11) | (11) |
+------------------------+------------------------+---------+---------+---------+----------+----------+---------+
| Gain on treasury | | | | | | | |
| scheme/ employee | | | | | | | |
| benefit trust | | | | | | | |
+ +------------------------+---------+---------+---------+----------+----------+---------+
| | - | - | - | - | - | 177 | 177 |
+------------------------+------------------------+---------+---------+---------+----------+----------+---------+
| Fair value adjustment | - | - | - | - | - | 588 | 588 |
| of own shares issued | | | | | | | |
+------------------------+------------------------+---------+---------+---------+----------+----------+---------+
| Proceeds from shares | 558 | 2,788 | - | - | - | - | 3,346 |
| issued | | | | | | | |
+------------------------+------------------------+---------+---------+---------+----------+----------+---------+
| Costs associated with | - | (190) | - | - | - | - | (190) |
| shares issued | | | | | | | |
+------------------------+------------------------+---------+---------+---------+----------+----------+---------+
| At 30 September 2009 | 6,134 | 35,943 | (851) | 1,643 | 31,357 | 16,920 | 91,146 |
+------------------------+------------------------+---------+---------+---------+----------+----------+---------+
Six months ended 30 September 2008
+------------------------+------------------------+---------+---------+---------+----------+----------+---------+
| | Share | Share | Own | Shares | Other | Retained | Total |
| | capital | premium | shares | to be | reserves | earnings | GBP'000 |
| | GBP'000 | GBP'000 | GBP'000 | issued | GBP'000 | GBP'000 | |
| | | | | GBP'000 | | | |
+------------------------+------------------------+---------+---------+---------+----------+----------+---------+
| Changes in equity for | | | | | | | |
| the period | | | | | | | |
+------------------------+------------------------+---------+---------+---------+----------+----------+---------+
| At 1 April 2008 | 5,576 | 33,345 | (233) | 2,447 | 31,357 | 10,412 | 82,904 |
+------------------------+------------------------+---------+---------+---------+----------+----------+---------+
| Profit/ total | - | - | - | - | - | 2,951 | 2,951 |
| comprehensive income | | | | | | | |
| for the period | | | | | | | |
+------------------------+------------------------+---------+---------+---------+----------+----------+---------+
| Credit for share-based | - | - | - | 282 | - | - | 282 |
| incentive scheme | | | | | | | |
+------------------------+------------------------+---------+---------+---------+----------+----------+---------+
| Exercise of share | - | - | 91 | (94) | - | - | (3) |
| award | | | | | | | |
+------------------------+------------------------+---------+---------+---------+----------+----------+---------+
| Loss on treasury | - | - | - | - | - | (65) | (65) |
| scheme/employee | | | | | | | |
| benefit trust | | | | | | | |
+------------------------+------------------------+---------+---------+---------+----------+----------+---------+
| Fair value adjustment | | | | | | | |
| of own shares issued | | | | | | | |
+ +------------------------+---------+---------+---------+----------+----------+---------+
| | - | - | - | - | - | 74 | 74 |
+------------------------+------------------------+---------+---------+---------+----------+----------+---------+
| Own shares purchased | - | - | (935) | - | - | - | (935) |
+------------------------+------------------------+---------+---------+---------+----------+----------+---------+
| Dividends | - | - | - | - | - | (971) | (971) |
+------------------------+------------------------+---------+---------+---------+----------+----------+---------+
| At 30 September 2008 | 5,576 | 33,345 | (1,077) | 2,635 | 31,357 | 12,401 | 84,237 |
+------------------------+------------------------+---------+---------+---------+----------+----------+---------+
Year ended 31 March 2009
+----------------------+---------+---------+---------+---------+----------+----------+---------+
| | Share | Share | Own | Shares | Other | Retained | Total |
| | capital | premium | shares | to be | reserves | earnings | GBP'000 |
| | GBP'000 | GBP'000 | GBP'000 | issued | GBP'000 | GBP'000 | |
| | | | | GBP'000 | | | |
+----------------------+---------+---------+---------+---------+----------+----------+---------+
| Changes in equity | | | | | | | |
| for the year | | | | | | | |
+----------------------+---------+---------+---------+---------+----------+----------+---------+
| At 1 April 2008 | 5,576 | 33,345 | (233) | 2,447 | 31,357 | 10,412 | 82,904 |
+----------------------+---------+---------+---------+---------+----------+----------+---------+
| Profit/ total | - | - | - | - | - | 6,597 | 6,597 |
| comprehensive income | | | | | | | |
| for the year | | | | | | | |
+----------------------+---------+---------+---------+---------+----------+----------+---------+
| Credit for | - | - | - | 654 | - | - | 654 |
| share-based | | | | | | | |
| incentive scheme | | | | | | | |
+----------------------+---------+---------+---------+---------+----------+----------+---------+
| Exercise of share | - | - | 114 | (355) | - | - | (241) |
| award | | | | | | | |
+----------------------+---------+---------+---------+---------+----------+----------+---------+
| Loss on treasury | | | | | | | |
| scheme/ | | | | | | | |
+----------------------+---------+---------+---------+---------+----------+----------+---------+
| employee benefit | - | - | - | - | - | (74) | (74) |
| trust | | | | | | | |
+----------------------+---------+---------+---------+---------+----------+----------+---------+
| Gain on treasury | | | | | | | |
| scheme/ | | | | | | | |
+----------------------+---------+---------+---------+---------+----------+----------+---------+
| employee benefit | - | - | - | - | - | 13 | 13 |
| trust | | | | | | | |
+----------------------+---------+---------+---------+---------+----------+----------+---------+
| Fair value | | | | | | | |
| adjustment of own | | | | | | | |
+----------------------+---------+---------+---------+---------+----------+----------+---------+
| shares issued | - | - | - | - | - | 315 | 315 |
+----------------------+---------+---------+---------+---------+----------+----------+---------+
| Own shares purchased | - | - | (935) | - | - | - | (935) |
+----------------------+---------+---------+---------+---------+----------+----------+---------+
| Transfer of lapsed | - | - | - | (40) | - | 40 | - |
| option costs | | | | | | | |
+----------------------+---------+---------+---------+---------+----------+----------+---------+
| Dividends | - | - | - | - | - | (1,365) | (1,365) |
+----------------------+---------+---------+---------+---------+----------+----------+---------+
| At 31 March 2009 | 5,576 | 33,345 | (1,054) | 2,706 | 31,357 | 15,938 | 87,868 |
+----------------------+---------+---------+---------+---------+----------+----------+---------+
UNAUDITED CONSOLIDATED STATEMENT OF CASHFLOWS
for the six months ended 30 September 2009
+--------------------------------+-------------+------------+--+-------------+--+-----------+
| | Note | Six months | | Six months | | Year |
| | | | | ended | | ended |
| | | ended | | 30 | | 31 March |
| | | 30 | | September | | 2009 |
| | | September | | 2008 | | GBP'000 |
| | | 2009 | | GBP'000 | | |
| | | GBP'000 | | | | |
+--------------------------------+-------------+------------+--+-------------+--+-----------+
| Operating cash flow | 13 | 6,261 | | 4,157 | | 20,829 |
+--------------------------------+-------------+------------+--+-------------+--+-----------+
| Tax paid | | (1,640) | | (1,952) | | (3,447) |
+--------------------------------+-------------+------------+--+-------------+--+-----------+
| Net cash inflow from operating | | 4,621 | | 2,205 | | 17,382 |
| activities | | | | | | |
+--------------------------------+-------------+------------+--+-------------+--+-----------+
| | | | | | | |
+--------------------------------+-------------+------------+--+-------------+--+-----------+
| Investing activities | | | | | | |
+--------------------------------+-------------+------------+--+-------------+--+-----------+
| Finance income | | 1 | | 39 | | 45 |
+--------------------------------+-------------+------------+--+-------------+--+-----------+
| Income from financial assets | | - | | 150 | | 150 |
+--------------------------------+-------------+------------+--+-------------+--+-----------+
| Purchase of subsidiary | | (3,150) | | (2,385) | | (15,284) |
| undertakings | | | | | | |
+--------------------------------+-------------+------------+--+-------------+--+-----------+
| Purchase of property, plant | | (654) | | (735) | | (1,149) |
| and | | | | | | |
| equipment | | | | | | |
+--------------------------------+-------------+------------+--+-------------+--+-----------+
| Proceeds from sale of | | 16 | | - | | 37 |
| property, plant and equipment | | | | | | |
+--------------------------------+-------------+------------+--+-------------+--+-----------+
| Purchase of intangible assets | | (123) | | - | | (284) |
| Decrease in restricted cash | | 8 | | - | | - |
| deposits | | | | | | |
+--------------------------------+-------------+------------+--+-------------+--+-----------+
| Proceeds from vendors under | | - | | 935 | | 935 |
| sale and purchase agreement | | | | | | |
+--------------------------------+-------------+------------+--+-------------+--+-----------+
| Net cash outflow from | | (3,902) | | (1,996) | | (15,550) |
| investing activities | | | | | | |
+--------------------------------+-------------+------------+--+-------------+--+-----------+
| | | | | | | |
+--------------------------------+-------------+------------+--+-------------+--+-----------+
| Financing activities | | | | | | |
+--------------------------------+-------------+------------+--+-------------+--+-----------+
| Net proceeds from issuance of | | | | | | |
| ordinary shares | | | | | | |
+ + +------------+ +-------------+ +-----------+
| | | 3,156 | | - | | - |
+--------------------------------+-------------+--------------------------------+--+-------------+--+------------+
| Finance costs | | (275) | | (758) | | (1,703) |
+--------------------------------+-------------+------------+--+-------------+--+-----------+
| Share repurchases | | - | | (935) | | (935) |
+--------------------------------+-------------+------------+--+-------------+--+-----------+
| Net (decrease)/increase in | | (6,400) | | (3,203) | | 1,243 |
| borrowings | | | | | | |
+--------------------------------+-------------+------------+--+-------------+--+-----------+
| Dividends paid | | - | | (971) | | (1,365) |
+--------------------------------+-------------+------------+--+-------------+--+-----------+
| Capital element of finance | | (4) | | (5) | | (29) |
| lease payments | | | | | | |
+--------------------------------+-------------+------------+--+-------------+--+-----------+
| Net cash outflow from | | (3,523) | | (5,872) | | (2,789) |
| financing | | | | | | |
+--------------------------------+-------------+------------+--+-------------+--+-----------+
| | | | | | | |
+--------------------------------+-------------+------------+--+-------------+--+-----------+
| (Decrease) in cash and cash | | (2,804) | | (5,663) | | (957) |
| equivalents | | | | | | |
+--------------------------------+-------------+------------+--+-------------+--+-----------+
| | | | | | | |
+--------------------------------+-------------+------------+--+-------------+--+-----------+
| Cash and cash equivalents at | | 2,806 | | 3,763 | | 3,763 |
| start of period | | | | | | |
+--------------------------------+-------------+------------+--+-------------+--+-----------+
| | | | | | | |
+--------------------------------+-------------+------------+--+-------------+--+-----------+
| Cash and cash equivalents at | 14 | 2 | | (1,900) | | 2,806 |
| end of period | | | | | | |
+--------------------------------+-------------+------------+--+-------------+--+-----------+
NOTES TO THE INTERIM REPORT
for the six months ended 30 September 2009
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 2006 and has not been
audited or reviewed by the Group's auditors.
The financial information for the year to 31 March 2009 does not constitute
statutory accounts within the meaning of Section 434 of the Companies Act 2006.
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. Statutory accounts for the year ended 31
March 2009 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 2009 has
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 condensed interim consolidated financial information should be read in
conjunction with the annual financial statements for the year ended 31 March
2009 which have been prepared in accordance with IFRS as adopted by the European
Union.
3. Accounting policies
The interim consolidated financial statements of Creston plc for the six months
ended 30 September 2009 have been prepared in accordance with the accounting
policies contained in the Group's Annual Report and Accounts 2009 and the
policies as described in Note 2 above.
The following new standards, amendments to standards and interpretations are
mandatory for the financial year beginning 1 April 2009:
IAS 1 (revised), 'Presentation of financial statements'. The revised standard
prohibits the presentation of 'non-owner changes in equity' in the statement of
changes in equity. All 'non-owner changes in equity' are required to be shown in
a performance statement. Under the revised standard, entities can choose whether
to present one performance statement (the statement of comprehensive income) or
two statements (the income statement and statement of comprehensive income). The
Group has elected to present two statements: the income statement and a
statement of comprehensive income. The interim financial statements have been
prepared under the revised disclosure requirements; and
IFRS 8, 'Operating segments' replaces IAS 14, 'Segment reporting', and requires
a 'management approach' to be adopted, under which segment information is
presented on the same basis as that used for internal reporting purposes. The
new standard, combined with the management divisional restructuring, has
resulted in a new segmental format being presented by the Group.
The following new standards, amendments to standards or interpretations are
mandatory for the first time for financial years beginning 1 April 2009, but are
not currently relevant for the group:
IAS 23 (amendment), 'Borrowing costs';
IAS 28, 'Investments in associates';
IAS 31 (amendment), 'Interests in joint ventures';
IAS 32 (amendment) Annual improvements to IFRS;
IFRS 2 (amendment) 'Share-based payment'; and
IFRS 7 (amendment), 'Financial instruments: Disclosure'.
The following new standards, amendments to standards or interpretations have
been issued, but are not effective for the financial year beginning 1 April 2009
and have not been early adopted:
IFRS 3 (amendment), 'Business combinations'; and
IAS 27 (amendment), 'Consolidated and separate financial statements'.
4. Reconciliation of Headline profit to Reported profit
In order to enable a better understanding of the underlying trading of the
Group, the Directors refer to Headline PBIT, PBT and PAT which eliminate
non-recurring charges from the Reported figures. These break down into two
parts:
(i)Certain accounting policies that have a material impact and introduce
volatility to the Reported figures. These are acquisition related charges
deemed as remuneration arising on payments made by Creston to non-shareholding
employees in respect of the consideration on the business acquisitions; and
notional finance costs relating to the deferred consideration and will cease
once the relevant earn-outs have been settled.
(ii)Exceptional non-recurring operating charges, which in 2009, consist of
restructuring costs, closure costs relating to CML and MSTS and the write off of
goodwill in respect of CML. In 2008 there were advisor fees incurred in
connection with the aborted offer for the company.
+----------------------------------------------------+---------+---------+---------+
| Six months ended 30 September 2009 | PBIT | PBT | PAT |
+----------------------------------------------------+---------+---------+---------+
| | GBP'000 | GBP'000 | GBP'000 |
+----------------------------------------------------+---------+---------+---------+
| Headline | 6,575 | 6,310 | 4,779 |
+----------------------------------------------------+---------+---------+---------+
| Restructuring costs | (610) | (610) | (610) |
+----------------------------------------------------+---------+---------+---------+
| Goodwill write off | (3,786) | (3,786) | (3,786) |
+----------------------------------------------------+---------+---------+---------+
| Future acquisition payments to employees deemed as | (254) | (254) | (254) |
| remuneration | | | |
+----------------------------------------------------+---------+---------+---------+
| Notional finance costs on future deferred | - | (189) | (189) |
| consideration | | | |
+----------------------------------------------------+---------+---------+---------+
| Taxation impact | | | 495 |
+----------------------------------------------------+---------+---------+---------+
| Reported | 1,925 | 1,471 | 435 |
+----------------------------------------------------+---------+---------+---------+
| Headline Basic EPS (pence) | | | 8.40 |
+----------------------------------------------------+---------+---------+---------+
| Headline Diluted EPS (pence) | | | 8.40 |
+----------------------------------------------------+---------+---------+---------+
| Reported Basic EPS (pence) | | | 0.76 |
+----------------------------------------------------+---------+---------+---------+
| Reported Diluted EPS (pence) | | | 0.76 |
+----------------------------------------------------+---------+---------+---------+
+----------------------------------------------------+---------+---------+---------+
| Six months ended 30 September 2008 | PBIT | PBT | PAT |
+----------------------------------------------------+---------+---------+---------+
| | GBP'000 | GBP'000 | GBP'000 |
+----------------------------------------------------+---------+---------+---------+
| Headline | 7,031 | 6,269 | 4,458 |
+----------------------------------------------------+---------+---------+---------+
| Restructuring costs | (784) | (784) | (784) |
+----------------------------------------------------+---------+---------+---------+
| Advisor fees on aborted offer | (160) | (160) | (160) |
+----------------------------------------------------+---------+---------+---------+
| Future acquisition payments to employees deemed as | (499) | (499) | (499) |
| remuneration | | | |
+----------------------------------------------------+---------+---------+---------+
| Notional finance costs on future deferred | - | (413) | (413) |
| consideration | | | |
+----------------------------------------------------+---------+---------+---------+
| Taxation impact | | | 349 |
+----------------------------------------------------+---------+---------+---------+
| Reported | 5,588 | 4,413 | 2,951 |
+----------------------------------------------------+---------+---------+---------+
| Headline Basic EPS (pence) | | | 8.25 |
+----------------------------------------------------+---------+---------+---------+
| Headline Diluted EPS (pence) | | | 8.24 |
+----------------------------------------------------+---------+---------+---------+
| Reported Basic EPS (pence) | | | 5.46 |
+----------------------------------------------------+---------+---------+---------+
| Reported Diluted EPS (pence) | | | 5.45 |
+----------------------------------------------------+---------+---------+---------+
+----------------------------------------------------+---------+---------+---------+
| Year ended 31 March 2009 | PBIT | PBT | PAT |
+----------------------------------------------------+---------+---------+---------+
| | GBP'000 | GBP'000 | GBP'000 |
+----------------------------------------------------+---------+---------+---------+
| | | | |
+----------------------------------------------------+---------+---------+---------+
| Headline | 15,605 | 14,193 | 10,128 |
+----------------------------------------------------+---------+---------+---------+
| Restructuring costs | (784) | (784) | (784) |
+----------------------------------------------------+---------+---------+---------+
| TRA Asia investment impairment | (64) | (64) | (64) |
+----------------------------------------------------+---------+---------+---------+
| Advisor fees on aborted offer | (160) | (160) | (160) |
+----------------------------------------------------+---------+---------+---------+
| Future acquisition payments to employees deemed as | (2,294) | (2,294) | (2,294) |
| remuneration | | | |
+----------------------------------------------------+---------+---------+---------+
| Notional finance costs on future deferred | - | (880) | (880) |
| consideration | | | |
+----------------------------------------------------+---------+---------+---------+
| Taxation impact | | | 651 |
+----------------------------------------------------+---------+---------+---------+
| Reported | 12,303 | 10,011 | 6,597 |
+----------------------------------------------------+---------+---------+---------+
| Headline Basic EPS (pence) | | | 18.75 |
+----------------------------------------------------+---------+---------+---------+
| Headline Diluted EPS (pence) | | | 18.58 |
+----------------------------------------------------+---------+---------+---------+
| Reported Basic EPS (pence) | | | 12.21 |
+----------------------------------------------------+---------+---------+---------+
| Reported Diluted EPS (pence) | | | 12.10 |
+----------------------------------------------------+---------+---------+---------+
| | | | |
+----------------------------------------------------+---------+---------+---------+
5. Segmental analysis
Divisional segmentation
Turnover, revenue, Headline and Reported profit before financial income, finance
costs, income from financial assets and taxation (PBIT), and profit before tax
attributable to group activities are shown below.
+------------------------+----------+----------------+---------+-----------+------------+
| Six months ended | Insight | Communications | Health | Head | Group |
| | | | | office | |
+------------------------+----------+----------------+---------+-----------+------------+
| 30 September 2009 | GBP'000 | GBP'000 | GBP'000 | GBP'000 | GBP'000 |
+------------------------+----------+----------------+---------+-----------+------------+
| | | | | | |
+------------------------+----------+----------------+---------+-----------+------------+
| Turnover (billings) | 13,749 | 44,146 | 4,899 | - | 62,794 |
+------------------------+----------+----------------+---------+-----------+------------+
| Revenue | 7,845 | 26,605 | 4,231 | - | 38,681 |
+------------------------+----------+----------------+---------+-----------+------------+
| Headline PBIT | 2,373 | 4,003 | 1,390 | (1,191) | 6,575 |
+------------------------+----------+----------------+---------+-----------+------------+
| Restructuring costs | (296) | (314) | - | - | (610) |
+------------------------+----------+----------------+---------+-----------+------------+
| Goodwill write off | (3,786) | - | - | - | (3,786) |
+------------------------+----------+----------------+---------+-----------+------------+
| Future acquisition | (36) | (213) | (5) | - | (254) |
| payments to employees | | | | | |
| deemed as remuneration | | | | | |
+------------------------+----------+----------------+---------+-----------+------------+
| Reported PBIT | (1,745) | 3,476 | 1,385 | (1,191) | 1,925 |
+------------------------+----------+----------------+---------+-----------+------------+
| Finance income | - | - | - | 1 | 1 |
+------------------------+----------+----------------+---------+-----------+------------+
| Finance costs | (89) | (97) | (3) | (266) | (455) |
+------------------------+----------+----------------+---------+-----------+------------+
| Profit before taxation | (1,834) | 3,379 | 1,382 | (1,456) | 1,471 |
+------------------------+----------+----------------+---------+-----------+------------+
| Taxation | | | | | (1,036) |
+------------------------+----------+----------------+---------+-----------+------------+
| Profit for the period | | | | | 435 |
+------------------------+----------+----------------+---------+-----------+------------+
+----------------------+-----------+----------------+---------+------------+----------+
| Six months ended | Insight | Communications | Health | Head | Group |
| | | | | office | |
+----------------------+-----------+----------------+---------+------------+----------+
| 30 September 2008 | GBP'000 | GBP'000 | GBP'000 | GBP'000 | GBP'000 |
| | | | | | |
+----------------------+-----------+----------------+---------+------------+----------+
| | | | | | |
+----------------------+-----------+----------------+---------+------------+----------+
| Turnover (billings) | 14,570 | 50,248 | 4,835 | - | 69,653 |
+----------------------+-----------+----------------+---------+------------+----------+
| Revenue | 8,507 | 28,844 | 3,990 | - | 41,341 |
+----------------------+-----------+----------------+---------+------------+----------+
| Headline PBIT | 2,387 | 5,055 | 1,088 | (1,499) | 7,031 |
+----------------------+-----------+----------------+---------+------------+----------+
| Restructuring costs | (78) | (706) | - | - | (784) |
+----------------------+-----------+----------------+---------+------------+----------+
| Advisor fees on | - | - | - | (160) | (160) |
| aborted offer | | | | | |
+----------------------+-----------+----------------+---------+------------+----------+
| Future acquisition | (70) | (190) | 122 | (361) | (499) |
| payments to | | | | | |
| employees deemed as | | | | | |
| remuneration | | | | | |
+----------------------+-----------+----------------+---------+------------+----------+
| Reported PBIT | 2,239 | 4,159 | 1,210 | (2,020) | 5,588 |
+----------------------+-----------+----------------+---------+------------+----------+
| Finance income | - | - | - | 39 | 39 |
+----------------------+-----------+----------------+---------+------------+----------+
| Finance costs | (147) | (332) | 67 | (952) | (1,364) |
+----------------------+-----------+----------------+---------+------------+----------+
| Income from | - | 150 | - | - | 150 |
| financial assets | | | | | |
+----------------------+-----------+----------------+---------+------------+----------+
| Profit before | 2,092 | 3,977 | 1,277 | (2,933) | 4,413 |
| taxation | | | | | |
+----------------------+-----------+----------------+---------+------------+----------+
| Taxation | | | | | (1,462) |
+----------------------+-----------+----------------+---------+------------+----------+
| Profit for the | | | | | 2,951 |
| period | | | | | |
+----------------------+-----------+----------------+---------+------------+----------+
+---------------------+-------------+----------------+---------------------+-------------+---------+
| Year ended | Insight | Communications | Health | Head | Group |
| | | | | office | |
+---------------------+-------------+----------------+---------------------+-------------+---------+
| 31 March 2009 | GBP'000 | GBP'000 | GBP'000 | GBP'000 | GBP'000 |
+---------------------+-------------+----------------+---------------------+-------------+---------+
| | | | | | |
+---------------------+-------------+----------------+---------------------+-------------+---------+
| Turnover (billings) | 28,213 | 100,206 | 10,053 | - | 138,472 |
+---------------------+-------------+----------------+---------------------+-------------+---------+
| Revenue | 16,679 | 58,690 | 8,426 | - | 83,795 |
+---------------------+-------------+----------------+---------------------+-------------+---------+
| Headline PBIT | 4,498 | 11,597 | 2,677 | (3,167) | 15,605 |
+---------------------+-------------+----------------+---------------------+-------------+---------+
| Restructuring costs | (78) | (706) | - | - | (784) |
+---------------------+-------------+----------------+---------------------+-------------+---------+
| TRA Asia investment | - | (64) | - | - | (64) |
| impairment | | | | | |
+---------------------+-------------+----------------+---------------------+-------------+---------+
| Advisor fees on | - | - | - | (160) | (160) |
| aborted offer | | | | | |
+---------------------+-------------+----------------+---------------------+-------------+---------+
| Future acquisition | (148) | (1,513) | 51 | (684) | (2,294) |
| payments to | | | | | |
| employees deemed as | | | | | |
| remuneration | | | | | |
+---------------------+-------------+----------------+---------------------+-------------+---------+
| Reported PBIT | 4,272 | 9,314 | 2,728 | (4,011) | 12,303 |
+---------------------+-------------+----------------+---------------------+-------------+---------+
| Finance income | - | - | - | 45 | 45 |
+---------------------+-------------+----------------+---------------------+-------------+---------+
| Finance costs | (298) | (648) | 66 | (1,607) | (2,487) |
+---------------------+-------------+----------------+---------------------+-------------+---------+
| Income from | - | 150 | | | 150 |
| financial assets | | | | | |
+ + + +---------------------+-------------+ +
| | | | - | - | |
+---------------------+-------------+----------------+---------------------+-------------+---------+
| Profit before | 3,974 | 8,816 | 2,794 | (5,573) | 10,011 |
| taxation | | | | | |
+---------------------+-------------+----------------+---------------------+-------------+---------+
| Taxation | | | | | (3,414) |
+---------------------+-------------+----------------+---------------------+-------------+---------+
| Profit for the | | | | | 6,597 |
| period | | | | | |
+---------------------+-------------+----------------+---------------------+-------------+---------+
The new requirements under IFRS 8, 'operating segments', combined with the
management divisional restructuring, has resulted in a new segmental format
being presented by the Group, and therefore the comparatives for 2009 have been
reported under the new segmental format.
The chief operating decision-maker has been identified as the Board of Directors
('the Board') who make the strategic decisions. The Board has determined the
operating segments in a manner consistent with the internal reporting provided
to the Board. The Board considers the business from a divisional perspective,
that being Insight, Communications and Health.
The principal activities of the three divisions are as follows:
Insight
The Insight division performs a complete range of market research services on
behalf of its clients, through both qualitative and quantitative means using the
mediums of face-to-face, telephone and online techniques.
Communications
The Communications division offers clients an integrated approach to their
marketing and communication strategy, offering a range of services which include
advertising, brand strategy, channel marketing, relationship marketing (CRM),
digital marketing, direct marketing, promotional marketing and public relations.
Health
The Health division provides an integrated communications solution to the
healthcare and pharmaceuticals sector and offers services which include
advertising, direct marketing, digital marketing, public relations, issue
management, market research and medical education.
The Board assesses the performance of the operating segments based on a measure
of revenue and Headline PBIT. This measurement basis excludes the effects of
non-recurring charges from the operating segments, such as restructuring costs,
write off of goodwill, notional interest and deemed remuneration charges.
Accounting policies are consistent across the reportable segments.
All significant assets and liabilities are located within the UK. The Board
does not review the assets and liabilities of the Group on a divisional basis
and therefore have chosen to adopt early amendments to IFRS 8 of not segmenting
the assets and liabilities of the Group.
Other information provided to the Board of Directors is measured in a manner
consistent with that in the financial statements.
Geographical segmentation
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 |
+--------------+---------------------------------+----------------------------------+
| | Six | Six | Year | Six | Six | Year |
| | months | months | ended | months | months | ended 31 |
| | ended 30 | ended 30 | 31 | ended 30 | ended | March |
| | September | September | March | September | 30 | 2009 |
| | 2009 | 2008 | 2009 | 2009 | September | |
| | | | | | 2008 | |
+--------------+-----------+-----------+---------+-----------+-----------+----------+
| | GBP'000 | GBP'000 | GBP'000 | GBP'000 | GBP'000 | GBP'000 |
+--------------+-----------+-----------+---------+-----------+-----------+----------+
| | | | | | | |
+--------------+-----------+-----------+---------+-----------+-----------+----------+
| UK | 31,667 | 31,950 | 66,312 | 51,901 | 55,421 | 110,093 |
+--------------+-----------+-----------+---------+-----------+-----------+----------+
| Rest of | 5,341 | 8,634 | 15,208 | 8,966 | 13,344 | 25,650 |
| Europe | | | | | | |
+--------------+-----------+-----------+---------+-----------+-----------+----------+
| Rest of the | 1,673 | 757 | 2,275 | 1,927 | 888 | 2,729 |
| World | | | | | | |
+--------------+-----------+-----------+---------+-----------+-----------+----------+
| | 38,681 | 41,341 | 83,795 | 62,794 | 69,653 | 138,472 |
+--------------+-----------+-----------+---------+-----------+-----------+----------+
6. Taxation
The effective Reported tax rate for the period ended 30 September 2009 is 70%
(the effective Reported tax rate for the period ended 30 September 2008 was
33%). The rate for this period is high due to the goodwill write off for CML.
Creston is currently in discussion with the HMRC with regards to obtaining
further tax relief on this goodwill write off.
The effective Headline tax rate for the period ended 30 September 2009
is 24% (the effective Headline tax rate for the six months ended 30 September
2008 was 29%). This rate is lower than previous years due to the release of tax
provisions.
7. Earnings per share
+----------+-----------+------------+----------+--+-----------+------------+---------+
| | Reported earnings per share | | Headline earnings per share |
| | for the six months ended 30 | | for the six months ended 30 |
| | September 2009 | | September 2009 |
+----------+-----------------------------------+--+----------------------------------+
| | Reported | Weighted | Pence | | Headline | Weighted | Pence |
| | profit | average | per | | profit | average | per |
| | for the | number | share | | for the | number | share |
| | financial | of | | | financial | of | |
| | period | shares | | | period | shares | |
+----------+-----------+------------+----------+--+-----------+------------+---------+
| | GBP'000 | | | | GBP'000 | | |
+----------+-----------+------------+----------+--+-----------+------------+---------+
| Basic | 435 | 56,898,349 | 0.76 | | 4,779 | 56,898,349 | 8.40 |
| earnings | | | | | | | |
| per | | | | | | | |
| share | | | | | | | |
+----------+-----------+------------+----------+--+-----------+------------+---------+
| Dilutive | - | - | - | | - | - | - |
| effect | | | | | | | |
| of | | | | | | | |
| shares | | | | | | | |
+----------+-----------+------------+----------+--+-----------+------------+---------+
| Diluted | 435 | 56,898,349 | 0.76 | | 4,779 | 56,898,349 | 8.40 |
| earnings | | | | | | | |
| per | | | | | | | |
| share | | | | | | | |
+----------+-----------+------------+----------+--+-----------+------------+---------+
| | Reported earnings per share | | Headline earnings per share |
| | for the six months ended 30 | | for the six months ended 30 |
| | September 2008 | | September 2008 |
+----------+-----------------------------------+--+----------------------------------+
| | Reported | Weighted | Pence | | Headline | Weighted | Pence |
| | profit | average | per | | profit | average | per |
| | for the | number | share | | for the | number | share |
| | financial | of | | | financial | of | |
| | period | shares | | | period | shares | |
+----------+-----------+------------+----------+--+-----------+------------+---------+
| | GBP'000 | | | | GBP'000 | | |
+----------+-----------+------------+----------+--+-----------+------------+---------+
| Basic | 2,951 | 54,007,428 | 5.46 | | 4,458 | 54,007,428 | 8.25 |
| earnings | | | | | | | |
| per | | | | | | | |
| share | | | | | | | |
+----------+-----------+------------+----------+--+-----------+------------+---------+
| Dilutive | - | 125,640 | (0.01) | | - | 125,640 | (0.01) |
| effect | | | | | | | |
| of | | | | | | | |
| shares | | | | | | | |
+----------+-----------+------------+----------+--+-----------+------------+---------+
| Diluted | 2,951 | 54,133,068 | 5.45 | | 4,458 | 54,133,068 | 8.24 |
| earnings | | | | | | | |
| per | | | | | | | |
| share | | | | | | | |
+----------+-----------+------------+----------+--+-----------+------------+---------+
+----------+-----------+-------------+------------+--+-----------+-------------+--------+
| | Reported earnings per share for | | Headline earnings per share |
| | the year ended 31 March 2009 | | for the year ended 31 March |
| | | | 2009 |
+----------+--------------------------------------+--+----------------------------------+
| | Reported | Weighted | Pence per | | Headline | Weighted | Pence |
| | profit | average | share | | profit | average | per |
| | for the | number | | | for the | number of | share |
| | financial | of | | | financial | shares | |
| | period | shares | | | period | | |
+----------+-----------+-------------+------------+--+-----------+-------------+--------+
| | GBP'000 | | | | GBP'000 | | |
+----------+-----------+-------------+------------+--+-----------+-------------+--------+
| Basic | 6,597 | 54,011,332 | 12.21 | | 10,128 | 54,011,332 | 18.75 |
| earnings | | | | | | | |
| per | | | | | | | |
| share | | | | | | | |
+----------+-----------+-------------+------------+--+-----------+-------------+--------+
| Dilutive | - | 507,041 | (0.11) | | - | 507,041 | (0.17) |
| effect | | | | | | | |
| of | | | | | | | |
| shares | | | | | | | |
+----------+-----------+-------------+------------+--+-----------+-------------+--------+
| Diluted | 6,597 | 54,518,373 | 12.10 | | 10,128 | 54,518,373 | 18.58 |
| earnings | | | | | | | |
| per | | | | | | | |
| share | | | | | | | |
+----------+-----------+-------------+------------+--+-----------+-------------+--------+
Diluted Earnings Per Share (DEPS) has been calculated based on the following
dilutive element:
nil restricted shares have vested but not been issued at the balance sheet date
(2008: 125,640).
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 nil interim dividend (2008: 0.73 pence) per share.
9. Non-current assets
+------------------------------------+------------+--+------------+--+------+------------+
| Six months ended 30 September 2009 | Property, | | Intangible | | Intangible |
| | plant and | | assets - | | assets - |
| | equipment | | goodwill | | other |
+------------------------------------+------------+--+------------+---------+------------+
| | GBP'000 | | GBP'000 | | GBP'000 |
+------------------------------------+------------+--+------------+---------+------------+
| Net book amount at 1 April 2009 | 2,514 | | 122,856 | | 1,582 |
+------------------------------------+------------+--+------------+---------+------------+
| Additions | 654 | | - | | 123 |
+------------------------------------+------------+--+------------+---------+------------+
| Disposals | (19) | | - | | - |
+------------------------------------+------------+--+------------+---------+------------+
| Transfer from tangibles/ to | (65) | | - | | 65 |
| intangibles | | | | | |
+------------------------------------+------------+--+------------+---------+------------+
| Write off of goodwill | - | | (3,786) | | - |
+------------------------------------+------------+--+------------+---------+------------+
| Adjustments to consideration | - | | 11 | | - |
+------------------------------------+------------+--+------------+---------+------------+
| Depreciation and amortisation | (683) | | - | | (151) |
+------------------------------------+------------+--+------------+---------+------------+
| Net book amount at 30 September | 2,401 | | 119,081 | | 1,619 |
| 2009 | | | | | |
+------------------------------------+------------+--+------------+---------+------------+
| |
| |
+----------------------------------------------------------------------------------------+
| Six months ended 30 September 2008 | Property, | | Intangible | | Intangible |
| | plant and | | assets - | | assets - |
| | equipment | | goodwill | | other |
+------------------------------------+------------+--+------------+---------+------------+
| | GBP'000 | | GBP'000 | | GBP'000 |
+------------------------------------+------------+--+------------+---------+------------+
| Net book amount at 1 April 2008 | 3,622 | | 119,565 | | 1,440 |
+------------------------------------+------------+--+------------+---------+------------+
| Additions | 735 | | - | | - |
+------------------------------------+------------+--+------------+---------+------------+
| Adjustments to consideration | - | | (288) | | - |
+------------------------------------+------------+--+------------+---------+------------+
| Depreciation and amortisation | (1,156) | | - | | (11) |
+------------------------------------+------------+--+------------+---------+------------+
| Net book amount at 30 September | 3,201 | | 119,277 | | 1,429 |
| 2008 | | | | | |
+------------------------------------+------------+--+------------+---------+------------+
| | | | | | |
+------------------------------------+------------+--+------------+--+-------------------+
| Year ended 31 March 2009 | Property, | | Intangible | | Intangible |
| | plant and | | assets - | | assets - |
| | equipment | | goodwill | | other |
+------------------------------------+------------+--+------------+---------+------------+
| | GBP'000 | | GBP'000 | | GBP'000 |
+------------------------------------+------------+--+------------+---------+------------+
| Net book amount at 1 April 2008 | 3,622 | | 119,565 | | 1,440 |
+------------------------------------+------------+--+------------+---------+------------+
| Additions | 1,149 | | - | | 284 |
+------------------------------------+------------+--+------------+---------+------------+
| Disposals | (19) | | - | | (21) |
+------------------------------------+------------+--+------------+---------+------------+
| Transfer from tangibles/ to | (292) | | - | | 292 |
| intangibles | | | | | |
+------------------------------------+------------+--+------------+---------+------------+
| Adjustments to consideration | - | | 3,218 | | - |
+------------------------------------+------------+--+------------+---------+------------+
| Depreciation and amortisation | (1,946) | | - | | (413) |
+------------------------------------+------------+--+------------+---------+------------+
| Fair value adjustment | - | | 73 | | - |
+------------------------------------+------------+--+------------+---------+------------+
| Net book amount at 31 March 2009 | 2,514 | | 122,856 | | 1,582 |
+------------------------------------+------------+--+------------+--+------+------------+
10. Derivative financial instrument
The derivative financial instrument has been calculated by assessing the
movement in fair value of the forward contract. This contract qualifies for
hedge accounting and has been treated as a cashflow hedge, and therefore the
effective portion of the change in fair value is recognised within the statement
of comprehensive income. The ineffective portion is recognised directly in the
income statement.
11. Provisions for other liabilities and charges
In prior years, short term and long term provisions for other liabilities and
charges represent the fair value of deferred consideration. The deferred
consideration would have been settled by a mixture of shares, cash and loan
notes, dependent on the terms of the relevant sale and purchase agreement. The
deferred consideration has now been settled by a mixture of cash and loan notes
dependent on the terms of the relevant sale and purchase agreement. There is no
further outstanding deferred consideration.
12. Share capital
The Group issued 5,576,100 new Ordinary Shares at 60 pence per share to raise
approximately GBP3.3m (gross) on 10 July 2009. The number of called up, allotted
and fully paid shares at 30 September 2009 is 61,337,338 (30 September 2008:
55,761,238).
13. Reconciliation of profit for the period to operating cash flow
+----------------------------------+-------------+--+-------------+--+------------+
| | Six months | | Six months | | Year |
| | ended | | ended | | Ended |
| | 30 | | 30 | | 31 March |
| | September | | September | | 2009 |
| | 2009 | | 2008 | | GBP'000 |
| | GBP'000 | | GBP'000 | | |
+----------------------------------+-------------+--+-------------+--+------------+
| Profit for the period | 435 | | 2,951 | | 6,597 |
+----------------------------------+-------------+--+-------------+--+------------+
| Taxation | 1,036 | | 1,462 | | 3,414 |
+----------------------------------+-------------+--+-------------+--+------------+
| Profit before taxation | 1,471 | | 4,413 | | 10,011 |
+----------------------------------+-------------+--+-------------+--+------------+
| Income from financial assets | - | | (150) | | (150) |
+----------------------------------+-------------+--+-------------+--+------------+
| Finance costs | 455 | | 1,364 | | 2,487 |
+----------------------------------+-------------+--+-------------+--+------------+
| Finance income | (1) | | (39) | | (45) |
+----------------------------------+-------------+--+-------------+--+------------+
| Profit before finance income, | 1,925 | | 5,588 | | 12,303 |
| finance costs, income from | | | | | |
| financial assets and taxation | | | | | |
+----------------------------------+-------------+--+-------------+--+------------+
| Depreciation of property, plant | 683 | | 1,156 | | 1,946 |
| and equipment | | | | | |
+----------------------------------+-------------+--+-------------+--+------------+
| Amortisation of intangible | 151 | | 11 | | 413 |
| assets | | | | | |
+----------------------------------+-------------+--+-------------+--+------------+
| Share based payments | (123) | | 10 | | 109 |
+----------------------------------+-------------+--+-------------+--+------------+
| Goodwill write off | 3,786 | | | | |
+----------------------------------+-------------+--+-------------+--+------------+
| Deemed remuneration | 254 | | 499 | | 2,294 |
+----------------------------------+-------------+--+-------------+--+------------+
| Loss on disposal of property, | 3 | | - | | 17 |
| plant and equipment | | | | | |
+----------------------------------+-------------+--+-------------+--+------------+
| (Increase)/decrease in | (857) | | (1,329) | | 267 |
| inventories and work in progress | | | | | |
+----------------------------------+-------------+--+-------------+--+------------+
| Decrease/(increase) in trade and | 1,575 | | (2,478) | | 2,834 |
| other receivables | | | | | |
+----------------------------------+-------------+--+-------------+--+------------+
| (Decrease)/increase in trade and | (1,136) | | 700 | | 646 |
| other payables | | | | | |
+----------------------------------+-------------+--+-------------+--+------------+
| Operating cash flow | 6,261 | | 4,157 | | 20,829 |
+----------------------------------+-------------+--+-------------+--+------------+
14. Analysis of net debt
+----------------------------+----------+--+----------+--+--------------+--+------------+
| Six months ended 30 | As at | | Cash | | Acquisitions | | As at |
| September 2009 | 1 April | | Flow | | GBP'000 | | 30 |
| | 2009 | | GBP'000 | | | | September |
| | GBP'000 | | | | | | 2009 |
| | | | | | | | GBP'000 |
+----------------------------+----------+--+----------+--+--------------+--+------------+
| | | | | | | | |
+----------------------------+----------+--+----------+--+--------------+--+------------+
| Cash and short term | 2,806 | | (2,804) | | - | | 2 |
| deposits | | | | | | | |
+----------------------------+----------+--+----------+--+--------------+--+------------+
| Bank overdrafts and | (7,000) | | 5,000 | | - | | (2,000) |
| revolving | | | | | | | |
| credit facility | | | | | | | |
+----------------------------+----------+--+----------+--+--------------+--+------------+
| Acquisition loan notes | (23) | | 8 | | (19,680) | | (19,695) |
+----------------------------+----------+--+----------+--+--------------+--+------------+
| Bank loans | (14,400) | | 1,400 | | | | (13,000) |
+----------------------------+----------+--+----------+--+--------------+--+------------+
| Finance leases | (8) | | 4 | | | | (4) |
+----------------------------+----------+--+----------+--+--------------+--+------------+
| Net (debt) | (18,625) | | 3,608 | | (19,680) | | (34,697) |
+----------------------------+----------+--+----------+--+--------------+--+------------+
| Restricted cash deposits | 22 | | (8) | | | | 14 |
+----------------------------+----------+--+----------+--+--------------+--+------------+
| Net (debt) including | (18,603) | | 3,600 | | (19,680) | | (34,683) |
| restricted cash deposits | | | | | | | |
+----------------------------+----------+--+----------+--+--------------+--+------------+
+----------------------------+----------+--+----------+--+--------------+--+------------+
| Six months ended 30 | As at | | Cash | | Acquisitions | | As at |
| September 2008 | 1 April | | Flow | | GBP'000 | | 30 |
| | 2008 | | GBP'000 | | | | September |
| | GBP'000 | | | | | | 2008 |
| | | | | | | | GBP'000 |
+----------------------------+----------+--+----------+--+--------------+--+------------+
| | | | | | | | |
+----------------------------+----------+--+----------+--+--------------+--+------------+
| Cash and short term | 3,763 | | (3,763) | | - | | - |
| deposits | | | | | | | |
+----------------------------+----------+--+----------+--+--------------+--+------------+
| Bank overdrafts | - | | (1,900) | | - | | (1,900) |
| Revolving credit facility | (3,000) | | 1,000 | | - | | (2,000) |
| Acquisition loan notes | (1,432) | | 2,385 | | (13,720) | | (12,767) |
+----------------------------+----------+--+----------+--+--------------+--+------------+
| Bank loans | (17,157) | | 2,200 | | - | | (14,957) |
+----------------------------+----------+--+----------+--+--------------+--+------------+
| Finance leases | (39) | | 5 | | - | | (34) |
+----------------------------+----------+--+----------+--+--------------+--+------------+
| Net (debt) | (17,865) | | (73) | | (13,720) | | (31,658) |
+----------------------------+----------+--+----------+--+--------------+--+------------+
| Restricted cash deposits | 22 | | (3) | | - | | 19 |
+----------------------------+----------+--+----------+--+--------------+--+------------+
| Net (debt) including | (17,843) | | (76) | | (13,720) | | (31,639) |
| restricted cash deposits | | | | | | | |
+----------------------------+----------+--+----------+--+--------------+--+------------+
+-------------------------+-------------+--+----------+--+--------------+--+------------+
| Year ended 31 March | As at | | Cash | | Acquisitions | | As at |
| 2009 | 1 April | | Flow | | GBP'000 | | 31 March |
| | 2008 | | GBP'000 | | | | 2009 |
| | GBP'000 | | | | | | GBP'000 |
+-------------------------+-------------+--+----------+--+--------------+--+------------+
| | | | | | | | |
+-------------------------+-------------+--+----------+--+--------------+--+------------+
| Cash and short term | 3,763 | | (957) | | - | | 2,806 |
| deposits | | | | | | | |
+-------------------------+-------------+--+----------+--+--------------+--+------------+
| Bank overdrafts and | (3,000) | | (4,000) | | - | | (7,000) |
| revolving credit | (1,432) | | 15,275 | | (13,866) | | (23) |
| facility | (17,157) | | 2,757 | | - | | (14,400) |
| Acquisition loan notes | | | | | | | |
| Bank loans | | | | | | | |
+-------------------------+-------------+--+----------+--+--------------+--+------------+
| Finance leases | (39) | | 31 | | - | | (8) |
+-------------------------+-------------+--+----------+--+--------------+--+------------+
| Net (debt) | (17,865) | | 13,106 | | (13,866) | | (18,625) |
| Restricted cash | 22 | | - | | - | | 22 |
| deposits | | | | | | | |
+-------------------------+-------------+--+----------+--+--------------+--+------------+
| Net (debt) including | (17,843) | | 13,106 | | | | |
| restricted cash | | | | | (13,866) | | (18,603) |
| deposits | | | | | | | |
+-------------------------+-------------+--+----------+--+--------------+--+------------+
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:-
+----------------------------------+-------------+--+-------------+--+------------+
| Current | 30 | | 30 | | 31 March |
| Non-current | September | | September | | 2009 |
| | 2009 | | 2008 | | GBP'000 |
| | GBP'000 | | GBP'000 | | 9,823 |
| | 24,695 | | 18,624 | | 11,600 |
| | 10,000 | | 13,000 | | |
+----------------------------------+-------------+--+-------------+--+------------+
| | 34,695 | | 31,624 | | 21,423 |
+----------------------------------+-------------+--+-------------+--+------------+
15. Related-party transactions
During the six months ended 30 September 2009 total fees of GBP29,082 (six
months ended 30 September 2008: GBP31,789) were paid to City Group P.L.C.
GBP14,082 (2008: GBP16,789) for the provision of secretarial services and
GBP15,000 (2008: GBP15,000) for the services of Mr D C Marshall.
16. Key risks and uncertainties
As detailed on page 32 of the 2009 Annual Report and Accounts, the Group's key
risks and uncertainties are associated with the retention of key personnel and
customers. These risks are not considered to have changed since the 2009 Annual
Report and Accounts were published, however due to the fluctuations in the Euro
exchange rate and Creston having a contractual obligation to bill certain
clients in euros, the Board decided to enter into a forward contract for EUR5
million maturing in August 2010.
17. 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; namely:
* an indication of important events that have occurred during the first six months
and their impact on the condensed set of financial statements, and a description
of the principal risks and uncertainties for the remaining six months of the
financial year; and
* material related-party transactions in the first six months and any material
changes in the related party transactions described in the last annual report.
The Directors are responsible for the maintenance and integrity of the Company
website. Legislation in the United Kingdom governing the preparation and
dissemination of financial statements may differ from legislation in other
jurisdictions.
The Directors of Creston plc are listed in the Creston Group Annual Report and
Accounts 2009. A list of current directors is maintained on the Creston website:
www.creston.com.
By order of the Board
Don Elgie
30 November 2009
Chief Executive Officer
18. 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 of new information, future events or otherwise.
19. Availability of the Interim Report
Copies of the Interim Report 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 EAPFXALENFFE
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