TIDMCRE
RNS Number : 2371F
Creston PLC
13 June 2012
13 June 2012
Creston plc
('Creston' or the 'Group')
Unaudited Full Year Results for the Year Ended 31 March 2012
Creston plc (LSE: CRE), the Insight and Communications Group,
today announces its full year results for the year ended 31 March
2012.
Financial Highlights
-- Revenue increased by 11 per cent to GBP74.9 million (2011: GBP67.8 million)
-- Headline(1) Diluted Earnings Per Share broadly flat with
prior year at 12.34 pence (2011: 12.39 pence)
-- Operating cash flow increased by 8 per cent to GBP10.7 million (2011: GBP9.9 million)
-- Broadly net debt free at year end, post initial consideration payment for The Corkery Group
-- Total full year dividend up 17 per cent to 3.50 pence per share (2011: 3.00 pence per share)
Corporate and Operational Highlights
-- Acquisition of The Corkery Group, a New York-based health and
medical public relations company, complementing Creston's US
healthcare company Cooney/Waters
-- Digital and online revenue increased by 13 per cent in
absolute terms, to represent 41 per cent of Group revenue (2011: 41
per cent)
-- International revenue increased by 37 per cent in absolute
terms, to represent 30 per cent of Group revenue (2011: 25 per
cent)
-- Invested in organic growth initiatives: Vitaris Research
Consultancy (healthcare) and Grapevine (healthcare local
marketing)
Group Financial Results
Headline Reported
---------------- --------------------------------------- ---------------------------------------
2012 2011 % change 2012 2011 % change
GBP million GBP million GBP million GBP million
---------------- ------------- ------------- --------- ------------- ------------- ---------
Revenue 74.9 67.8 11% 74.9 67.8 11%
---------------- ------------- ------------- --------- ------------- ------------- ---------
PBT 10.3 10.4 -2% 10.8 8.4 29%
---------------- ------------- ------------- --------- ------------- ------------- ---------
Diluted EPS
(pence) 12.34 12.39 0% 15.08 9.41 60%
---------------- ------------- ------------- --------- ------------- ------------- ---------
Dividend per
share (pence) 3.50 3.00 17% 3.50 3.00 17%
---------------- ------------- ------------- --------- ------------- ------------- ---------
1.Headline results reflect the underlying performance of the
Group and excludes acquisition, start-up and restructuring related
costs, movement in fair value of deferred consideration,
amortisation of acquired intangible assets, deemed remuneration and
notional finance costs from Reported results. A full reconciliation
is presented in note 4 to this statement.
Commenting on the results, Don Elgie, Group Chief Executive of
Creston plc, said:
"The Group has continued with its corporate development during
the year by investing in organic growth initiatives and acquiring
The Corkery Group. This drove an increase in revenue of 11 per cent
to GBP74.9 million, while the Group remained broadly net debt free
at the year end.
"Naturally we remain cautious in these challenging
macro-economic conditions, however we are confident in our
strategy, which includes focusing on digital and other high growth
areas of marketing services as well as expanding our offer to meet
the international opportunities from our blue chip client base.
"With our exceptional people, cash generative businesses, a full
year contribution from our recent acquisition and a good new
business pipeline, the Group is positioned for profitable
growth."
There will be a presentation for analysts today at 9.30am at the
offices of Investec, 2 Gresham Street, London, EC2V 7QP.
For further information on the Group's preliminary results or
about the analyst meeting please contact:
Creston plc + 44 (0)20 7930 9757
Don Elgie, Group Chief Executive
Barrie Brien, COO/CFO
M:Communications +44 (0)20 7920 2339
Elly Williamson
About Creston plc
Creston plc (LSE: CRE) is a marketing services company focused
on insight-led communications. The Group delivers a range of
marketing services, including advertising, brand consultancy, CRM,
digital and direct marketing, health communications, local
marketing, market research, PR and social media marketing to a
broad spectrum of blue-chip global clients. Our insight companies
give us a real edge, providing the analytic intelligence to enable
us to truly understand, influence and inspire consumers and it's
that insight-led intelligence that drives our creativity.
www.creston.com
Group Chief Executive's Statement
Overview
The Group has continued on its growth trend, increasing revenue
by 11 per cent to GBP74.9 million (2011: GBP67.8 million).
Like-for-like revenue was in-line with the prior year and Headline
PBT was GBP10.3 million (2011: GBP10.4 million). We are pleased
with our continued corporate development during the year, including
investment in organic growth initiatives and the acquisition of The
Corkery Group, and remained broadly net debt free at the year end
for the second year running.
Our decision to focus investment on international development
and the high growth areas of marketing services such as digital
resulted in the Group recording a 37 per cent increase in its
international revenue to represent 30 per cent of the Group's total
revenue; and a 13 per cent increase in its digital and online
revenue to represent 41 per cent of the Group's total revenue. Our
expertise in digital has seen us appointed to Unilever's European
and Diageo's Western European roster for digital marketing and
contributed to our overall net new business total of GBP3.4 million
revenue for the year. Other major new business wins for the Group
during the year included: BBC, Brother, T-Mobile, Walkers
Sensations and World Hepatitis Alliance, as well as the expansion
of our relationship with many existing clients.
Following good like-for-like growth of 5 per cent over the first
three quarters of our financial year, the final quarter revenue
performance in certain operating companies was impacted by a
shortfall in new business and client budgets. Compounding this
revenue shortfall versus management's expectations in the final
quarter, was a cost base which reflected increased staffing levels
for the revenue growth experienced earlier in the year.
Consequently, where agencies were impacted by the lower sales
levels, immediate actions were undertaken to re-align the cost base
for improved future profitability.
This reduction in operating costs is expected to deliver savings
of GBP3.1 million, for which there is an associated exceptional
restructuring charge of GBP1.8 million included in the year ended
31 March 2012. The cost savings will only have a marginal positive
impact on profitability in the new financial year as a result of
the lower sales levels.
Operating environment and divisional review
2012 Revenue Headline PBIT
---------------- ------------------ ------------------
GBPm % of Group GBPm % of Group
---------------- ----- ----------- ----- -----------
Communications 43.0 57% 6.3 49%
---------------- ----- ----------- ----- -----------
Health 18.1 24% 4.6 35%
---------------- ----- ----------- ----- -----------
Insight 13.8 19% 2.1 16%
---------------- ----- ----------- ----- -----------
Communications division
Whilst clients remain cautious in their outlook, the IPA
Bellwether Report for Q1 2012 showed the third consecutive
quarterly increase in marketing spend. Key sectors of activity,
particularly within the digital sphere, are generating the bulk of
the growth in marketing budgets and represent key areas of
investment for the Group. Indeed, Internet Advertising Bureau
figures for the UK show that growth in digital advertising spend
has accelerated to its highest level in five years, whilst
advertising budgets for mobile media rose 157 per cent year-on-year
in 2011 as digital platforms play an increasingly prominent role in
the marketing mix. These are areas which the Group is well placed
to exploit and will continue to invest in, in order to fully
capitalise on the growing opportunity.
The Group intends to continue to build on the concept of
'Insight Inside' - bringing the deep sector and consumer knowledge
from our Insight division into its communications agencies. This,
coupled with some unique perspectives, such as shopper behaviour
and influence of store layout and packaging design, has for example
allowed us to develop an unparalleled Shopper Marketing capability
combining the expertise of TMW and Marketing Sciences. We have now
included our unique local knowledge from EMO and are taking this to
market.
Effective measurement and evaluation will be another key
priority for the new financial year. The Communications division,
in conjunction with the Insight division, is developing a
Group-wide dashboard and methodology with a particular focus on
growth areas such as social media and mobile. As pressure continues
from clients to demonstrate efficiency of marketing spend and a
return on investment, this potentially lucrative offering will
become invaluable to our clients.
Expanding the division's international footprint remains a
significant growth opportunity and one that we will continue to
explore over the medium term.
The Communications division reported an increase in revenue and
Headline PBIT of 5 and 2 per cent respectively. It accounts for 57
per cent of Group revenue (2011: 61 per cent) and 49 per cent of
Group Headline PBIT before head office costs (2011: 45 per cent).
The division contributed revenue of GBP43.0 million (2011: GBP41.1
million) and Headline PBIT of GBP6.3 million (2011: GBP6.2
million). On a Reported basis, PBIT was GBP4.7 million (2011:
GBP6.1 million).
Financial year Financial year
ended ended
31 March 2012 31 March 2011
--------------------------------- --------------- ---------------
Revenue from digital and online 57% 55%
--------------------------------- --------------- ---------------
Revenue from international 23% 25%
--------------------------------- --------------- ---------------
Revenue per head GBP74,700 GBP72,300
--------------------------------- --------------- ---------------
Headline PBIT per head GBP11,000 GBP10,900
--------------------------------- --------------- ---------------
Headline PBIT margin 15% 15%
--------------------------------- --------------- ---------------
Driven by our exposure to high growth areas such as digital,
mobile and social media, TMW, The Real Adventure and the Nelson
Bostock Group delivered strong Headline PBIT growth. During the
year TMW introduced a new proposition, Intelligent Influence - a
unique approach in understanding how to actively influence the way
people behave, feel and purchase. This has already led to greater
engagement with existing clients such as Unilever and Diageo and
attracted new business from companies such as Caesars Casino, Open
University and Sue Ryder.
EMO delivered an increase in revenue year-on-year, as demand
continued to grow for its unique local marketing offer. However,
following the decision by one of its major automotive clients to
suspend its dealer marketing spend due to their sales success, the
business experienced a slowdown in performance against management's
expectations in the final quarter of the financial year.
As a result of the slowdown at EMO, and the co-location of the
four south west offices of The Real Adventure and EMO into one
shared space in Bristol, headcount was reduced and it is
anticipated that these actions will improve the future
profitability of the division.
Health division
The global healthcare market is still undergoing a period of
transformation, including political reform in the US and UK, and a
shift from blockbuster drugs to higher value medicines for specific
diseases for specific sub-sets of patients. These changes are
leading to emerging opportunities that the Group is taking
advantage of. For example, in the UK, where the Group has launched
Grapevine, its healthcare local marketing offer; and in the US,
where the Group is specifically targeting the fast growing Hispanic
population through its new start-up Cultur Health.
In addition to expanding our capabilities organically into new
areas, we have added complementary expertise in healthcare
reputation management through the acquisition of The Corkery Group,
which delivered a good performance during the four months since
acquisition.
The Health division accounts for 24 per cent of Group revenue
(2011: 17 per cent) and 35 per cent of Group Headline PBIT before
head office costs (2011: 25 per cent). The division contributed
revenue of GBP18.1 million (2011: GBP11.8 million) and Headline
PBIT of GBP4.6 million (2011: GBP3.4 million). On a Reported basis,
PBIT was GBP7.4 million (2011: GBP1.9 million). The material
difference between Headline and Reported PBIT is due to the
revaluation of the estimated deferred consideration for
Cooney/Waters and the subsequent adjustment being credited to the
income statement under the accounting rules of IFRS 3 (revised), as
further explained in note 4 to the full year results statement.
Financial year Financial year
ended ended
31 March 2012 31 March 2011
--------------------------------- --------------- ---------------
Revenue from digital and online 10% 3%
--------------------------------- --------------- ---------------
Revenue from international 67% 45%
--------------------------------- --------------- ---------------
Revenue per head GBP136,900 GBP132,600
--------------------------------- --------------- ---------------
Headline PBIT per head GBP34,500 GBP38,600
--------------------------------- --------------- ---------------
Headline PBIT margin 25% 29%
--------------------------------- --------------- ---------------
The division saw revenue and Headline PBIT grow by 53 per cent
and 33 per cent respectively as a result of the acquisition of The
Corkery Group in November 2011 and full year contribution from
Cooney/Waters. In like-for-like terms, however, the division has
declined reflecting a reduction in marketing spend in the sector in
the face of the uncertainty over healthcare reform and a reduction
in spend from one of our key clients. We continue to believe
however, the long-term market fundamentals for the health sector
are good both in the UK and the US and believe our agencies are
well positioned to meet the needs of the healthcare industry, as it
continues to transform.
Insight division
According to The Market Research Society Quarterly Trends
Analysis, conditions for the UK market research industry remain
challenging, however internationally, the report shows continued
potential for growth, with turnover growing by over 5 per cent
during the 12 months to March 2012. Within the UK, specialist areas
such as healthcare research remain resilient, and during the second
half of the year the Group launched Vitaris Research Consultancy, a
new healthcare research offer to capitalise on this
opportunity.
The relative buoyancy of the international market research
sector provides the Insight division with a clear opportunity for
growth, building on the fact that the division already conducts
fieldwork in 50 countries, for clients such as Aviva and Reckitt
Benckiser. The division will continue to leverage Marketing
Sciences' Research Alliance network, whilst exploring opportunities
to build a physical presence in key markets such as the US and
Asia.
Other key initiatives from the division during the year include
the development of online qualitative research techniques, the
introduction of neuro-science and eye-tracking to new areas and
further growth in sensory research. Our increased expertise in the
technology sector and digital platforms will help drive continued
growth in these areas.
The Insight division accounts for 19 per cent of Group revenue
(2011: 22 per cent) and 16 per cent of Group Headline PBIT before
head office costs (2011: 30 per cent). The division contributed
revenue of GBP13.8 million (2011: GBP14.8 million) and Headline
PBIT of GBP2.1 million (2011: GBP4.1 million). On a Reported basis,
PBIT was GBP1.4 million (2011: GBP3.9 million).
Financial year Financial year
ended ended
31 March 2012 31 March 2011
--------------------------------- --------------- ---------------
Revenue from digital and online 35% 29%
--------------------------------- --------------- ---------------
Revenue from international 6% 7%
--------------------------------- --------------- ---------------
Revenue per head GBP94,200 GBP103,800
--------------------------------- --------------- ---------------
Headline PBIT per head GBP14,500 GBP28,600
--------------------------------- --------------- ---------------
Headline PBIT margin 15% 28%
--------------------------------- --------------- ---------------
The division's two major operating companies delivered
contrasting performances during the year. Rebranded, and with
greater embedded digital expertise, Marketing Sciences grew both
revenue and Headline PBIT. ICM however, experienced a shortfall in
revenue against management's expectations during the fourth quarter
of the year as a result of a shortfall in new business and a
decline in some client activity, which produced a drag on
performance for the division as a whole.
Due to the fourth quarter revenue performance, immediate actions
were taken to re-align costs at ICM. This included a review of its
data collection processes, reflecting the switch in demand away
from telephone based interviewing to online and mobile techniques;
redundancies; and a reduction in property and infrastructure costs
through co-location. The Insight division is now united under a
single divisional head, encouraging greater synergies and sharing
of innovative thinking across our insight companies.
Group Strategy
During the year, we made good progress against our five-point
strategy to achieve our vision to be the insight and communications
group that delivers intelligent creativity:
-- Adapting to change - meeting constant change with constant innovation
-- Sharing knowledge - leveraging learning across the Group to innovate through collaboration
-- Nurturing the best talent - attracting, motivating and
retaining the best people in our industry
-- Investing for growth - fostering entrepreneurialism to expand the Group's offer
-- Group diversification - gaining exposure to new markets and growing with our clients.
Among the key strategic developments during the course of the
year were the launch of Vitaris Research Consultancy, bringing
together expertise from our Insight and Health divisions; the
launch of Grapevine, a joint initiative between our Communications
and Health divisions; continued investment in digital (including
the expansion of social media and mobile capabilities); and the
opening of Nelson Bostock Asia.
Driven by our clients' needs, international markets continue to
represent a significant growth opportunity for all three of our
divisions and now account for just under one third of Group
revenue. To continue to serve our global clients we are focused on
growing our international business further, by looking to build a
physical presence in key markets, through organic and acquisitive
growth.
In November 2011 Cooney/Waters acquired The Corkery Group, a New
York-based, health and medical public relations company. The
acquisition was immediately earnings enhancing and complements
Cooney/Waters, the Group's prior-year acquisition in the US
healthcare communications sector.
Alongside our wholly owned operations we will continue to
leverage our existing affiliate international networks: The Health
Collective (healthcare public relations), Indigenus (healthcare
marketing communications), The Research Alliance (market research)
and Compass (public relations).
Additionally, we have always believed that bringing our
companies physically closer together can help to unlock value
through winning more joint projects, referring more clients to one
another and creating the ideal forum to 'innovate through
collaboration'. To this end, we have recently co-located EMO and
The Real Adventure to a brand new space in Bristol, creating a
major marketing force outside London. This move follows the
co-location of our UK healthcare businesses in Richmond-upon-Thames
last year. Our US businesses will relocate to a shared space in New
York this year and our London companies are looking to co-locate
during 2013 as their current leases come to an end.
Our people hold the key to our Better Together ethos, providing
the innovative thinking and entrepreneurial spirit that enables our
strategy to succeed. I would like to thank all Creston employees
for the enthusiasm, ambition and intelligence that they continue to
bring to our business.
Dividend
Following another year of good cash conversion, in conjunction
with the Group's outlook, the Board recommends a final dividend of
2.67 pence per share (2011: 2.25 pence per share). This, combined
with the interim dividend of 0.83 pence per share (2011: 0.75 pence
per share), gives a total full year dividend of 3.50 pence per
share (2011: 3.00 pence per share), representing a 17 per cent
increase compared to the prior year.
In light of the Group's history of strong cash generation and
low gearing level, the Board intends to maintain a progressive
dividend policy.
Board Change
In September 2011, the Group appointed Richard Huntingford to
the Board as Non-Executive Director and Chairman of its
Remuneration Committee. Richard has over 25 years' experience in
Board level positions, the majority of which has been in the media
industry.
Outlook
Naturally we remain cautious in these challenging macro-economic
conditions, however we are confident in our strategy, which
includes focusing on digital and other high growth areas of
marketing services as well as expanding our offer to meet the
international opportunities from our blue chip client base.
With our exceptional people, cash generative businesses, a full
year contribution from The Corkery Group and a good new business
pipeline, the Group is positioned for profitable growth.
Don Elgie
Group Chief Executive
Financial Review
For the financial year ended 31 March 2012, Group revenue
increased by 11 per cent (2011: 11 per cent) to GBP74.9 million
(2011: GBP67.8 million), driven predominantly by a full year's
contribution from Cooney/Waters and the acquisition of The Corkery
Group. As a result of the Headline PBIT margin reducing two
percentage points to 14 per cent (2011: 16 per cent), Headline PBIT
for the year was GBP10.4 million (2011: GBP10.8 million). Headline
PBT for the year was GBP10.3 million (2011: GBP10.4 million); and
Headline Diluted Earnings Per Share (DEPS) was 12.34 pence (2011:
12.39 pence).
Reported PBIT increased by 27 per cent to GBP11.1 million (2011:
GBP8.7 million) and resulted in a Reported PBIT margin of 15 per
cent (2011: 13 per cent). Reported PBT increased 29 per cent to
GBP10.8 million (2011: GBP8.4 million). Reported DEPS increased 60
per cent to 15.08 pence (2011: 9.41 pence). The material growth in
our Reported results has been caused by the revaluation of the
estimated deferred consideration for Cooney/Waters and the
subsequent adjustment being credited to the income statement under
the new accounting rules of IFRS 3 (revised). Note 4 to the full
year results statement provides further explanation of this
adjustment and presents a reconciliation between Headline and
Reported results.
Key performance indicators
The Group manages its operational performance through a number
of key performance indicators (KPIs), the principal ones are as
follows:
Financial year Financial year
ended ended
31 March 2012 31 March 2011
--------------------------------- ---------------- ----------------
Revenue GBP74.9 million GBP67.8 million
--------------------------------- ---------------- ----------------
Revenue from digital and online 41% 41%
--------------------------------- ---------------- ----------------
Revenue from international 30% 25%
--------------------------------- ---------------- ----------------
Revenue per head GBP86,300 GBP83,400
--------------------------------- ---------------- ----------------
Headline PBIT GBP10.4 million GBP10.8 million
--------------------------------- ---------------- ----------------
Headline PBIT per head GBP12,000 GBP13,200
--------------------------------- ---------------- ----------------
Headline PBIT margin 14% 16%
--------------------------------- ---------------- ----------------
Cash conversion 91% 82%
--------------------------------- ---------------- ----------------
Net Debt GBP0.1 million GBP0.0 million
--------------------------------- ---------------- ----------------
Total Debt : Headline EBITDA
ratio 0.6 0.7
--------------------------------- ---------------- ----------------
Acquisition of The Corkery Group
During the year the Group acquired The Corkery Group for an
initial consideration payment to the shareholder and key employees
of GBP3.8 million (US$6.0 million). Deferred consideration payments
are due in June 2013 and June 2015 and will be based on the
combined average Headline PBIT of Cooney/Waters and The Corkery
Group (together known as 'The Cooney/Waters Group') over the period
to 31 March 2015. The maximum deferred consideration payment is
GBP6.1 million (US$9.7 million), however, the fair value recorded
in the balance sheet at 31 March 2012 is GBP3.2 million (US$5.2
million) after discounting for notional interest. In addition to
the deferred consideration, further acquisition related payments
will be made to certain key employees of The Corkery Group, which
are based on the same performance metrics as the deferred
consideration. These costs are referred to as deemed remuneration
charges and will become due in June 2013 and July 2016, of which
GBP0.1 million has been charged to the income statement in 2012
(2011: GBPnil). The current estimated full pay-out for deemed
remuneration for The Corkery Group is GBP1.1 million (US$1.8
million).
New Bank Facility and Balance Sheet
In November 2011 the Group agreed with Barclays Corporate a new
GBP20 million revolving credit facility expiring on 30 September
2015, plus an accordion loan facility of up to an additional GBP10
million. This new facility offers the Group maximum flexibility in
terms of draw down and has been agreed on terms which the Board
regards as favourable. The majority of the GBP20 million bank
facility remains unutilised.
As at 31 March 2012, the Group was virtually debt free with net
debt of GBP0.1 million (2011: GBP0.0 million). Total debt,
including deferred consideration, reduced from GBP8.4 million to
GBP7.0 million. This represents a gearing level of 7 per cent
(2011: 9 per cent) and a total debt to Headline EBITDA ratio of 0.6
times (2011: 0.7 times).
Cash flow performance
During the financial year, the operating cash flow increased 8
per cent to GBP10.7 million (2011: GBP9.9 million). The cash
conversion ratio of operating cash flow to Headline EBITDA was 91
per cent (2011: 82 per cent). Management continues to place
significant emphasis on managing working capital effectively and
this has resulted in a five-year cumulative cash conversion of 97
per cent.
Capital expenditure during the year was GBP2.5 million (2011:
GBP1.5 million) with investment mainly resulting from the
co-location of our four south west offices into one shared office
in Bristol and continued investment in our IT and digital
platforms.
Net finance costs
Headline net finance costs reduced to GBP0.1 million (2011:
GBP0.3 million). This decrease was driven by the positive cash
generation during the year and the historically low LIBOR. The
Group's average interest rate margin paid over LIBOR was 1.3 per
cent during the year. Headline net finance costs were covered by
Headline EBITDA 91 times (2011: 39 times).
The Reported net finance cost was GBP0.2 million (2011: GBP0.4
million), which includes notional finance costs relating to the
deferred consideration payments of GBP0.1 million (2011: GBP0.1
million).
Effective tax rate
The Group's Headline tax rate was 28 per cent (2011: 29 per
cent). This rate is higher than the current UK statutory rate of 26
per cent as a result of items of expenditure that are not
deductible for tax purposes. The Reported effective tax rate was 16
per cent (2011: 32 per cent) and is lower than the statutory rate
of 26 per cent because of the non-taxable credit recognised on the
revaluation of deferred consideration.
Barrie Brien
Chief Operating and Financial Officer
UNAUDITED CONSOLIDATED INCOME STATEMENT
for the year ended 31 March 2012
Unaudited Headline Unaudited Audited Headline Audited
Before items total Before items total
Headline (note Headline (note
items 4) items 4)
2012 2012 2011 2011
Note GBP'000 2012 GBP'000 GBP'000 2011 GBP'000
GBP'000 GBP'000
----------------------------------- ------ ---------- --------- ---------- ---------- --------- ---------
Continuing operations:
Turnover (billings) 3 109,968 - 109,968 100,542 - 100,542
----------------------------------- ------ ---------- --------- ---------- ---------- --------- ---------
Revenue 3 74,924 - 74,924 67,769 - 67,769
Operating costs (64,506) 659 (63,847) (57,008) (2,015) (59,023)
----------------------------------- ------ ---------- --------- ---------- ---------- --------- ---------
Profit before finance
income, finance costs
and taxation 10,418 659 11,077 10,761 (2,015) 8,746
----------------------------------- ------ ---------- --------- ---------- ---------- --------- ---------
Finance income - - - 1 - 1
Finance costs (130) (116) (246) (314) (68) (382)
----------------------------------- ------ ---------- --------- ---------- ---------- --------- ---------
Profit before taxation 10,288 543 10,831 10,448 (2,083) 8,365
----------------------------------- ------ ---------- --------- ---------- ---------- --------- ---------
Taxation (2,833) 1,114 (1,719) (2,981) 286 (2,695)
----------------------------------- ------ ---------- --------- ---------- ---------- --------- ---------
Profit for the financial
year from continuing operations 7,455 1,657 9,112 7,467 (1,797) 5,670
----------------------------------- ------ ---------- --------- ---------- ---------- --------- ---------
Discontinued operations:
Profit/(loss) for the
year from discontinued
operations 5 - - - 125 (3,448) (3,323)
----------------------------------- ------ ---------- --------- ---------- ---------- --------- ---------
Profit for the year 7,455 1,657 9,112 7,592 (5,245) 2,347
----------------------------------- ------ ---------- --------- ---------- ---------- --------- ---------
Basic and Diluted earnings/(loss)
per share (pence) 6
Continuing operations 12.34 15.08 12.39 9.41
Discontinued operations - - 0.20 (5.52)
----------------------------------- ------ ---------- --------- ---------- ---------- --------- ---------
12.34 15.08 12.59 3.89
----------------------------------- ------ ---------- --------- ---------- ---------- --------- ---------
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME for the year
ended 31 March 2012
Unaudited Audited
2012 2011
Note GBP'000 GBP'000
Profit for the year 9,112 2,347
------------------------------------------------ ------ ---------- ---------
Other comprehensive income/(expense)
Exchange differences on translation of foreign
operations 17 (190)
Cash flow hedge:
Fair value gain in year 10 - 188
Tax effect of fair value gain - (53)
Other comprehensive income/(expense) for the
year, net of tax 17 (55)
Total comprehensive income for the year 9,129 2,292
------------------------------------------------ ------ ---------- ---------
CONSOLIDATED BALANCE SHEET as at 31 March 2012
Unaudited Audited
As at As at
31 March 31 March
Note 2012 2011
GBP'000 GBP'000
--------------------------------------------- ------ ----------- ----------
Non-current assets
Intangible assets
Goodwill 8 107,050 101,280
Other 1,473 1,379
Property, plant and equipment 3,390 2,144
Deferred tax asset 592 688
--------------------------------------------- ------ ----------- ----------
112,505 105,491
--------------------------------------------- ------ ----------- ----------
Current assets
Inventories and work in progress 1,202 1,444
Trade and other receivables 25,982 29,053
Cash 12 1,818 1,677
--------------------------------------------- ------ ----------- ----------
29,002 32,174
--------------------------------------------- ------ ----------- ----------
Current liabilities
Trade and other payables (27,636) (27,713)
Corporation tax payable (1,419) (3,087)
Obligations under finance leases 12 (2) (7)
Bank overdraft, loans and loan notes 12 (1,908) (1,716)
--------------------------------------------- ------ ----------- ----------
(30,965) (32,523)
--------------------------------------------- ------ ----------- ----------
Net current liabilities (1,963) (349)
Total assets less current liabilities 110,542 105,142
--------------------------------------------- ------ ----------- ----------
Non-current liabilities
Provision for other liabilities and charges (6,929) (8,376)
Obligations under finance leases 12 - (2)
Deferred tax liability (118) -
--------------------------------------------- ------ ----------- ----------
(7,047) (8,378)
--------------------------------------------- ------ ----------- ----------
Net assets 103,495 96,764
--------------------------------------------- ------ ----------- ----------
Equity
Called up share capital 6,134 6,134
Share premium account 35,943 35,943
Own shares (656) (779)
Shares to be issued 1,079 1,545
Other reserves 30,822 30,822
Foreign currency translation reserve (173) (190)
Retained earnings 30,346 23,289
--------------------------------------------- ------ ----------- ----------
Total equity 103,495 96,764
--------------------------------------------- ------ ----------- ----------
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY for the year ended
31 March 2012
Called Share Own Shares Other Foreign Retained Total
up share premium shares to be reserves currency earnings equity
capital account issued translation
reserve
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
-------------------------- ---------- --------- -------- -------- ---------- ------------- ---------- --------
Changes in equity
for 2012 (Unaudited)
-------------------------- ---------- --------- -------- -------- ---------- ------------- ---------- --------
At 1 April 2011 6,134 35,943 (779) 1,545 30,822 (190) 23,289 96,764
-------------------------- ---------- --------- -------- -------- ---------- ------------- ---------- --------
Profit for the year - - - - - - 9,112 9,112
Other comprehensive
income:
Exchange differences
on translation of
foreign operations - - - - - 17 - 17
-------------------------- ---------- --------- -------- -------- ---------- ------------- ---------- --------
Total comprehensive
income for the year - - - - - 17 9,112 9,129
-------------------------- ---------- --------- -------- -------- ---------- ------------- ---------- --------
Debit for share-based
incentive schemes - - - (151) - - - (151)
Exercise of share
award - - 123 (315) - - - (192)
Gain on employee benefit
trust - - - - - - 81 81
Fair value adjustment
of own shares - - - - - - (274) (274)
Dividends (note 7) - - - - - - (1,862) (1,862)
-------------------------- ---------- --------- -------- -------- ---------- ------------- ---------- --------
At 31 March 2012 6,134 35,943 (656) 1,079 30,822 (173) 30,346 103,495
-------------------------- ---------- --------- -------- -------- ---------- ------------- ---------- --------
Called Share Own Shares Other Foreign Retained Total
up share premium shares to be reserves currency earnings equity
capital account issued translation
reserve
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
-------------------------- ---------- --------- -------- -------- ---------- ------------- ---------- --------
Changes in equity for
2011 (Audited)
-------------------------- ---------- --------- -------- -------- ---------- ------------- ---------- --------
At 1 April 2010 6,134 35,943 (801) 1,461 31,357 - 21,860 95,954
Profit for the year - - - - - - 2,347 2,347
Other comprehensive
income:
Exchange differences
on translation of
foreign
operations - - - - - (190) - (190)
Fair value gain on
financial
liability - - - - - - 188 188
Tax effect of fair value
gain - - - - - - (53) (53)
-------------------------- ---------- --------- -------- -------- ---------- ------------- ---------- --------
Total comprehensive
income for the year - - - - - (190) 2,482 2,292
-------------------------- ---------- --------- -------- -------- ---------- ------------- ---------- --------
Credit for share-based
incentive schemes - - - 112 - - - 112
Exercise of share award - - 22 (28) - - - (6)
Gain on treasury
scheme/employee
benefit trust - - - - - - 6 6
Fair value adjustment
of own shares - - - - - - (4) (4)
Dividends (note 7) - - - - - - (1,055) (1,055)
Disposal of investment - - - - (535) - - (535)
-------------------------- ---------- --------- -------- -------- ---------- ------------- ---------- --------
At 31 March 2011 6,134 35,943 (779) 1,545 30,822 (190) 23,289 96,764
-------------------------- ---------- --------- -------- -------- ---------- ------------- ---------- --------
CONSOLIDATED STATEMENT OF CASH FLOWS for the year ended 31 March
2012
Note Unaudited Audited
2012 2011
GBP'000 GBP'000
Operating cash flow 11 10,713 9,937
---------------------------------------------- ----- ---------- ---------
Tax paid (3,176) (1,593)
Cash outflow from discontinued operating
activities - (1,058)
---------------------------------------------- ----- ---------- ---------
Net cash generated from operating activities 7,537 7,286
---------------------------------------------- ----- ---------- ---------
Investing activities
Finance income - 1
Purchase of subsidiary undertakings (3,545) (9,010)
Net cash acquired with subsidiaries 453 497
Purchase of property, plant and equipment (2,296) (1,381)
Proceeds from sale of property, plant and
equipment 17 4
Purchase of intangible assets (247) (164)
Net proceeds from disposal of subsidiary - 27,374
Cash outflow from discontinued investing
activities - (1,373)
---------------------------------------------- ----- ---------- ---------
Net cash (outflow)/inflow from investing
activities (5,618) 15,948
---------------------------------------------- ----- ---------- ---------
Financing activities
Finance costs (107) (324)
Net decrease in borrowings - (24,600)
Dividends paid 7 (1,862) (1,055)
Capital element of finance lease payments (7) (7)
---------------------------------------------- ----- ---------- ---------
Net cash outflow from financing activities (1,976) (25,986)
---------------------------------------------- ----- ---------- ---------
Decrease in cash and cash equivalents 12 (57) (2,752)
---------------------------------------------- ----- ---------- ---------
Cash and cash equivalents at start of year 12 (19) 2,778
---------------------------------------------- ----- ---------- ---------
Effect of foreign exchange rates (4) (45)
Cash and cash equivalents at end of year 12 (80) (19)
---------------------------------------------- ----- ---------- ---------
NOTES TO THE FULL YEAR RESULTS STATEMENT for the year ended 31
March 2012
1. Basis of Preparation
The financial information set out herein does not constitute the
company's statutory accounts for the years ended 31 March 2012 or
2011, within the meaning of section 434 of the Companies Act 2006.
Statutory accounts for 2011 have been delivered to the registrar of
companies. The auditors have reported on these 2011 accounts and
their report was (i) unqualified, (ii) did not include references
to any matters to which the auditors drew attention by way of
emphasis without qualifying their report and (iii) did not contain
statements under section 498(2) or (3) of the Companies Act 2006.
Copies of the statutory accounts for 31 March 2012 will be
distributed to shareholders in advance of the Annual General
Meeting and will be delivered to the registrar of companies upon
approval.
The information has been prepared in accordance with the
EU-adopted International Financial Reporting Standards (IFRS) and
IFRIC interpretations and with those parts of the Companies Act
2006 which are applicable to companies reporting under IFRS,
however, this full year statement in itself does not contain
sufficient information to comply with IFRS.
2. Accounting policies
The full year results were prepared in accordance with the
policies disclosed in the 2011 audited Annual Report and Accounts
subject to the following new standards, amendments and
interpretations:
Standards, amendments and interpretations not yet effective and
have not been early adopted by the Group:
-- Amendment to IAS 12, 'Income taxes' (effective for periods
beginning on or after 1 January 2012). This amendment introduces an
exception to the existing principle for the measurement of deferred
tax assets or liabilities arising on investment property measured
at fair value. As a result of the amendments, SIC 21, 'Income taxes
- recovery of revalued non-depreciable assets', will no longer
apply to investment properties carried at fair value. The
amendments also incorporate into IAS 12 the remaining guidance
previously contained in SIC 21, which is withdrawn.
-- Amendment to IAS 1, 'Financial statement presentation'
(effective for periods beginning on or after 1 July 2012). The main
change resulting from these amendments is a requirement for
entities to group items presented in Other comprehensive income on
the basis of whether they are potentially reclassifiable to profit
or loss subsequently (reclassification adjustments).
-- IFRS 10, 'Consolidated financial statements' (effective for
periods beginning on or after 1 January 2013). This standard builds
on existing principles by identifying the concept of control as the
determining factor in whether an entity should be included within
the consolidated financial statements. The standard provides
additional guidance to assist in determining control where this is
difficult to assess.
-- IFRS 13, 'Fair value measurement' (effective for periods
beginning on or after 1 January 2013). This standard aims to
improve consistency and reduce complexity by providing a precise
definition of fair value and a single source of fair value
measurement and disclosure requirements for use across IFRSs.
3. Segmental Analysis
The chief operating decision-maker has been identified as the
Executive Board of Directors ('the Board') which makes 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 Communications, Health and
Insight.
The principal activities of the three divisions are as
follows:
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, customer relationship marketing (CRM), digital
marketing, direct marketing, local marketing, social media
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, advocacy, digital and direct
marketing, public relations, issues and reputation management and
medical education.
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 data collection techniques.
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 exceptional charges from the
operating segments, such as amortisation of acquired intangible
assets, acquisition, start-up and restructuring related costs,
movement in fair value of deferred consideration, future
acquisition payments to employees deemed as remuneration and
notional finance costs on deferred consideration.
Accounting policies are consistent across the reportable
segments.
All significant assets and liabilities are located within the UK
and US. The Board does not review the assets and liabilities of the
Group on a divisional basis and therefore has chosen to adopt the
amendments to IFRS 8 of not segmenting the assets of the Group.
Other information provided to the Board of Directors is measured
in a manner consistent with that in the financial statements.
The analysis below has been presented on a continuing operations
basis.
Segmental analysis by business
Turnover, revenue, Headline and Reported profit before finance
income, finance costs and taxation (PBIT), and profit before tax
attributable to Group activities are shown below.
Communications Health Insight Head Office Group
2012 (Unaudited) GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
----------------------------------- --------------- --------- --------- ------------ ---------
Turnover (billings) 64,718 22,117 23,133 - 109,968
----------------------------------- --------------- --------- --------- ------------ ---------
Revenue 43,009 18,066 13,849 - 74,924
----------------------------------- --------------- --------- --------- ------------ ---------
Headline PBIT 6,308 4,559 2,137 (2,586) 10,418
----------------------------------- --------------- --------- --------- ------------ ---------
Acquisition, start-up
and restructuring related
costs (1,595) (791) (728) - (3,114)
Movement in fair value
of deferred consideration - 4,763 - - 4,763
Amortisation of acquired
intangible assets - (110) - - (110)
Future acquisition payments
to employees deemed
as remuneration - (1,017) - 137 (880)
----------------------------------- --------------- --------- --------- ------------ ---------
Reported PBIT 4,713 7,404 1,409 (2,449) 11,077
----------------------------------- --------------- --------- --------- ------------ ---------
Finance costs - - - (130) (130)
Notional finance cost
on future deferred consideration - (116) - - (116)
----------------------------------- --------------- --------- --------- ------------ ---------
Profit before taxation 4,713 7,288 1,409 (2,579) 10,831
----------------------------------- --------------- --------- --------- ------------ ---------
Taxation (1,719)
----------------------------------- --------------- --------- --------- ------------ ---------
Profit for the year 9,112
----------------------------------- --------------- --------- --------- ------------ ---------
Communications Health Insight Head office Group
2011 (Audited) GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
------------------------------------- --------------- --------- --------- ------------ ---------
Turnover (billings) 60,096 14,866 25,580 - 100,542
------------------------------------- --------------- --------- --------- ------------ ---------
Revenue 41,142 11,799 14,828 - 67,769
------------------------------------- --------------- --------- --------- ------------ ---------
Headline PBIT 6,197 3,437 4,094 (2,967) 10,761
Acquisition, start-up and
restructuring related costs (144) (1,173) (240) - (1,557)
Amortisation of acquired
intangible assets - (219) - - (219)
Future acquisition payments
to employees deemed as remuneration - (110) - (129) (239)
Reported PBIT 6,053 1,935 3,854 (3,096) 8,746
------------------------------------- --------------- --------- --------- ------------ ---------
Finance income - - - 1 1
Finance costs - - - (314) (314)
Notional finance costs on
future deferred consideration - (68) - - (68)
Profit/(loss) before taxation 6,053 1,867 3,854 (3,409) 8,365
------------------------------------- --------------- --------- --------- ------------ ---------
Taxation (2,695)
------------------------------------- --------------- --------- --------- ------------ ---------
Profit for the financial
year 5,670
------------------------------------- --------------- --------- --------- ------------ ---------
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.
Turnover Revenue
----------------------------------- ------------------------ ------------------------
(Unaudited) (Audited) (Unaudited) (Audited)
2012 2012
2011 2011
GBP'000 GBP'000 GBP'000 GBP'000
----------------------------------- ------------ ---------- ------------ ----------
UK 79,741 77,787 52,086 51,127
Rest of Europe 15,173 16,103 11,347 11,673
Rest of the World (including USA) 15,054 6,652 11,491 4,969
----------------------------------- ------------ ---------- ------------ ----------
109,968 100,542 74,924 67,769
----------------------------------- ------------ ---------- ------------ ----------
4. Reconciliation of Headline profit to Reported profit
In order to enable a better understanding of the underlying
trading of the Group, the Board refer to Headline PBIT, PBT and PAT
which eliminate certain amounts from the Reported figures. These
break down into two parts:
(i) Certain accounting policies which have a material impact and
introduce volatility to the Reported figures. These are
amortisation of acquired intangible assets, movement in the fair
value of deferred consideration, future acquisition payments to
employees deemed as remuneration and notional finance costs on
future deferred consideration. These charges will cease once all
the relevant earn-out and related obligations have been settled;
and
(ii) Exceptional non-recurring operating charges, which consist
of acquisition, start-up and restructuring related costs.
PBIT PBT PAT
2012 (Unaudited) GBP'000 GBP'000 GBP'000
-------------------------------------------------- --------- --------- ---------
Headline 10,418 10,288 7,455
-------------------------------------------------- --------- --------- ---------
Acquisition, start-up and restructuring
related costs (3,114) (3,114) (3,114)
Movement in fair value of deferred consideration 4,763 4,763 4,763
Amortisation of acquired intangible assets (110) (110) (110)
Future acquisition payments to employees
deemed as remuneration (880) (880) (880)
Notional finance cost on future deferred
consideration - (116) (116)
Taxation impact 1,114
-------------------------------------------------- --------- --------- ---------
Reported 11,077 10,831 9,112
-------------------------------------------------- --------- --------- ---------
PBIT PBT PAT
2011 (Audited) GBP'000 GBP'000 GBP'000
-------------------------------------------------- --------- --------- ---------
Headline 10,761 10,448 7,467
-------------------------------------------------- --------- --------- ---------
Acquisition, start-up and restructuring
related costs (1,557) (1,557) (1,557)
Amortisation of acquired intangible assets (219) (219) (219)
Future acquisition payments to employees
deemed as remuneration (239) (239) (239)
Notional finance costs on future deferred
consideration - (68) (68)
Taxation impact 286
-------------------------------------------------- --------- --------- ---------
Reported 8,746 8,365 5,670
-------------------------------------------------- --------- --------- ---------
The reduction in deferred consideration due to Cooney/Waters,
and the resulting credit to the income statement, is due to the
acquisition of The Corkery Group and management's revision of
expected trading performance during the earn-out period. Under the
terms of The Corkery Group acquisition a proportion of future
deferred consideration previously due to Cooney/Waters has been
re-assigned to The Corkery Group. Under IFRS 3 (revised) any
changes in fair value of future deferred consideration is
charged/credited through the comprehensive income statement.
5. Discontinued Operations
In the prior year the Group disposed of Delaney Lund Knox Warren
and Partners, Dialogue DLKW and The Composing Room ('DLKW') for
GBP28.0 million. DLKW was therefore reported as a discontinued
operation in the prior year.
Below shows the financial information of DLKW for the year
ending 31 March 2011.
Year ended
31 March
2011
GBP'000
Turnover (billings) 9,180
-------------------------- -----------
Revenue 4,472
-------------------------- -----------
Headline operating costs (4,307)
-------------------------- -----------
Headline PBIT 165
-------------------------- -----------
Loss on disposal (3,474)
Reported loss before tax (3,309)
-------------------------- -----------
Taxation (14)
-------------------------- -----------
Loss for the year (3,323)
-------------------------- -----------
6. Earnings per share
Headline Reported
Unaudited Audited Unaudited Audited
2012 2011 2012 2011
GBP'000 GBP'000 GBP'000 GBP'000
Earnings
Profit for the year from continuing
operations 7,455 7,467 9,112 5,670
Profit/(loss) from discontinued
operations - 125 - (3,323)
---------------------------------------- ----------- ----------- ----------- -----------
7,455 7,592 9,112 2,347
---------------------------------------- ----------- ----------- ----------- -----------
Number of shares
---------------------------------------- ----------- ----------- ----------- -----------
Weighted average number of shares 60,413,845 60,285,576 60,413,845 60,285,576
---------------------------------------- ----------- ----------- ----------- -----------
Earnings per share
Basic and diluted earnings/(loss)
per share (pence):
* continuing operations 12.34 12.39 15.08 9.41
* discontinued operations - 0.20 - (5.52)
---------------------------------------- ----------- ----------- ----------- -----------
12.34 12.59 15.08 3.89
---------------------------------------- ----------- ----------- ----------- -----------
A reconciliation from Headline to Reported profit after tax is
provided in note 4.
7. Dividends
Unaudited Audited
2012 2011
GBP'000 GBP'000
Amounts recognised as distributions to shareholders
in the year
Prior year final dividend of 2.25 pence per
share (2011: 1.00 pence per share) 1,360 603
Interim dividend of 0.83 pence per share
(2011: 0.75 pence per share) 502 452
----------------------------------------------------- ---------- ---------
Total 1,862 1,055
----------------------------------------------------- ---------- ---------
A final dividend of 2.67 pence per share (2011: 2.25 pence per
share) equivalent to GBP1,614,254 is recommended to be paid on 12
September 2012 to shareholders on the register on 5 August 2012.
The final dividend will be recognised in the 2013 accounts, should
it be approved by shareholders at the AGM.
8. Goodwill
Goodwill represents the excess of cost of acquisition over the
fair value of the Group's share of the net identifiable assets of
the acquired subsidiary at the date of acquisition.
Goodwill on
consolidation
GBP'000
------------------------------ ---------------
Cost
At 1 April 2010 (Audited) 119,081
Disposals (30,533)
Additions 12,975
Exchange differences (243)
------------------------------ ---------------
At 31 March 2011 (Audited) 101,280
------------------------------ ---------------
Additions (note 9) 5,902
Exchange differences (132)
------------------------------ ---------------
At 31 March 2012 (Unaudited) 107,050
------------------------------ ---------------
Net book amount
------------------------------ ---------------
At 31 March 2012 (Unaudited) 107,050
------------------------------ ---------------
At 31 March 2011 (Audited) 101,280
------------------------------ ---------------
The Group disposed of DLKW and acquired Cooney/Waters in the
year to 31 March 2011. The Corkery Group was acquired in the year
to 31 March 2012.
In accordance with the Group's accounting policy, the carrying
values of goodwill and other intangible assets are not subject to
systematic amortisation but are reviewed annually for impairment.
The review assesses whether the carrying value of goodwill could be
supported by the present value of future cash flows derived from
operating activities. Future cash flows are calculated with
reference to each subsidiary's two year business plan (approved in
March 2012) which is subject to a rigorous review and challenge
process. The residual growth rate thereafter is at a nominal rate
of 3 per cent for all units and after year six, a terminal value
with zero growth has been applied.
For acquisitions made within the last two years, the Group uses
the relevant company's current year Headline performance and
applies a 3 per cent growth for the following four years with zero
growth on the terminal value. This is then adjusted for any related
deemed remuneration charges relevant for that cash generating unit.
Management believe this method to be more appropriate as it allows
them to work with any new acquisitions through one complete
budgeting and performance cycle.
The pre-tax discount rate used to assess the carrying value of
goodwill is 9.4 per cent (2011: 8.3 per cent). As all the cash
generating units are similar in nature, the risk profile is
considered the same across countries. As a result the same discount
rate is used for each.
The review performed at the year end did not result in the
impairment of goodwill for any cash-generating unit as the
estimated recoverable amount exceeded the carrying value in all
cases.
Components of goodwill at 31 March 2012 and 2011 are:
Unaudited Audited
2012 2011
GBP'000 GBP'000
Communications
EMO 4,362 4,362
NBC 6,434 6,434
TMW 28,541 28,541
TRA 5,281 5,281
---------------------- ---------- ---------
44,618 44,618
---------------------- ---------- ---------
Health
Cooney/Waters 12,975 12,975
PAN 9,599 9,599
RDC 7,668 7,668
The Corkery Group 5,902 -
Exchange differences (375) (243)
---------------------- ---------- ---------
35,769 29,999
---------------------- ---------- ---------
Insight
ICM 19,030 19,030
MSL 7,633 7,633
---------------------- ---------- ---------
26,663 26,663
---------------------- ---------- ---------
Total 107,050 101,280
---------------------- ---------- ---------
9. Acquisitions
The Corkery Group
On 30 November 2011, the Group acquired 100 per cent of the
share capital of The Corkery Group through its wholly owned
subsidiary Cooney Waters LLC. The Corkery Group is a New York based
health and medical public relations company specialising in product
and issues communications for the world's leading health
organisations.
The fair value of the net assets acquired and the consideration
are detailed below.
Fair value Provisional
Book value adjustments fair value
2012 (Unaudited) GBP'000 GBP'000 GBP'000
Non-current assets
Intangible assets
- Other - 209 209
Property, plant and equipment 101 - 101
------------------------------- ------------ ------------- ------------
101 209 310
------------------------------- ------------ ------------- ------------
Current assets
Trade and other receivables 787 - 787
Cash and short term deposits 453 - 453
------------------------------- ------------ ------------- ------------
1,240 - 1,240
------------------------------- ------------ ------------- ------------
Current liabilities (431) (10) (441)
------------------------------- ------------ ------------- ------------
Net current assets 809 (10) 799
------------------------------- ------------ ------------- ------------
Net assets 910 199 1,109
------------------------------- ------------ ------------- ------------
Goodwill (note 8) 5,902
------------------------------- ------------ ------------- ------------
Total 7,011
------------------------------- ------------ ------------- ------------
Satisfied by:
2012 (Unaudited) GBP'000
Cash 3,213
Working capital payment 487
Deferred consideration 3,311
------------------------- --------
7,011
------------------------- --------
The fair value adjustment relates to the recognition of other
intangible assets and holiday pay accrual under IFRS as
follows:
2012 (Unaudited) GBP'000
Customer contracts 113
Brand names 96
Holiday pay adjustment (10)
------------------------ --------
Total 199
------------------------ --------
As part of the sale and purchase agreement, there was an agreed
working capital and cash threshold required on the balance sheet at
the acquisition completion date. Any excess/shortfall from the
threshold would be paid to/collected from the seller. At the time
of completion there was a working capital excess of GBP487,000
which has been settled as a cash payment after the year end.
In addition to the GBP3.2 million (US$5.0 million) initial
consideration paid to the seller, GBP0.6 million (US$1.0 million)
was paid to key employees of The Corkery Group giving a total
initial cash outflow of GBP3.8 million (US$6.0 million) being paid
on the completion date. An additional deferred consideration
payment is due which is contingent upon the average annual PBIT
achieved by the Cooney/Waters Group during the period to 31 March
2015.
The maximum (undiscounted) deferred consideration payable under
the amended Cooney/Waters sale and purchase agreement is GBP12.3
million (US$19.7 million) of which a maximum of GBP6.1 million
(US$9.7 million) is in respect of The Corkery Group. The fair value
of the deferred consideration for The Corkery Group at date of
acquisition was GBP3.3 million (US$5.1 million) and was estimated
by applying the income approach. The fair value estimates are based
on a discount rate of 3.3 per cent and assumed probability-adjusted
profit in The Corkery Group.
The fair value of the deferred consideration recognised at 31
March 2012 was GBP3.2 million (US$5.2 million). The difference
between the GBP3.3 million shown above and the year-end balance of
GBP3.2 million is the notional interest charge and the foreign
exchange adjustment. Deferred consideration will be paid in cash,
in accordance with the associated sale and purchase agreement.
These payments are due in June 2013 and June 2015.
IFRS 3 (revised) now requires companies to expense acquisition
costs. As a consequence GBP0.6 million has been charged to the
income statement in relation to the acquisition of The Corkery
Group.
Profit and cash flow:
The subsidiary undertaking acquired during the year made the
following contributions to, and utilisations of, Group profit and
cash flow:
2012 (Unaudited) GBP'000
------------------------------------------------------------ --------
Profit before finance income, finance costs and taxation 22
------------------------------------------------------------ --------
Acquisition payments to the employees of The Corkery Group
deemed as remuneration 641
Depreciation of property, plant and equipment 20
Increase in trade and other receivables (25)
Decrease in trade and other payables (226)
Tax paid (25)
Purchase of property, plant and equipment (2)
------------------------------------------------------------ --------
Cash flow 405
------------------------------------------------------------ --------
The Corkery Group contributed revenue of GBP1.8 million and
Headline PBIT of GBP0.7 million to the results of the Group since
acquisition. If the acquisition had been completed at the beginning
of the financial year, management estimate that Group revenue for
the year would have been GBP78.6 million and Group Headline PBIT
would have been GBP11.3 million (note that the revenue and profit
figures for The Corkery Group for the period before the acquisition
have not been audited due to this not being a requirement for a US
incorporated entity).
10. Derivative financial instrument
A forward contract matured in August 2010. This contract
qualified for hedge accounting and was treated as a cashflow hedge
and therefore the effective portion of the change in fair value was
recognised within the 2011 statement of comprehensive income. The
ineffective portion was recognised directly in the income
statement.
11. Reconciliation of profit for the year to operating cash flow
Unaudited Audited
2012 2011
GBP'000 GBP'000
Profit for the year 9,112 5,670
Taxation 1,719 2,695
----------------------------------------------- ---------- ---------
Profit before taxation 10,831 8,365
----------------------------------------------- ---------- ---------
Finance costs 246 382
Finance income - (1)
----------------------------------------------- ---------- ---------
Profit before finance income, finance
costs and taxation 11,077 8,746
----------------------------------------------- ---------- ---------
Depreciation of property, plant and equipment 1,118 955
Amortisation of intangible assets 347 599
Share based (credits)/payments (41) 17
Future acquisition payments to employees
deemed as remuneration 880 239
Movement in the fair value of deferred (4,763) -
consideration
Loss/(profit) on disposal of property,
plant and equipment 11 (1)
Loss on disposal of intangible assets 14 22
Decrease in inventories and work in progress 251 196
Decrease/(increase) in trade and other
receivables 3,861 (468)
Decrease in trade and other payables (2,042) (368)
----------------------------------------------- ---------- ---------
Operating cash flow 10,713 9,937
----------------------------------------------- ---------- ---------
12. Analysis of net and total debt
Audited Unaudited Unaudited Unaudited Unaudited
As at
31 March Foreign At 31 March
2011 Acquisitions Cash flow exchange 2012
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Cash 1,677 453 (310) (2) 1,818
Bank overdraft, revolving
credit facility and bank
loans (1,696) (3,545) 3,343 - (1,898)
-------------------------------------- ---------- -------------- ----------- ---------- -------------
Cash and cash equivalents (19) (3,092) 3,033 (2) (80)
Acquisition loan notes (20) - 10 - (10)
Finance leases (9) - 7 - (2)
-------------------------------------- ---------- -------------- ----------- ---------- -------------
Net debt (48) (3,092) 3,050 (2) (92)
-------------------------------------- ---------- -------------- ----------- ---------- -------------
Provision for deferred consideration (8,376) 1,447 - - (6,929)
-------------------------------------- ---------- -------------- ----------- ---------- -------------
Total debt (8,424) (1,645) 3,050 (2) (7,021)
-------------------------------------- ---------- -------------- ----------- ---------- -------------
Included within the acquisitions related movement was an initial
cash consideration of GBP3.2 million paid for the acquisition of
The Corkery Group and GBP0.4 million paid for the working capital
payment for Cooney/Waters.
13. Related-party transactions
Mr D C Marshall, a Non-Executive Director of Creston plc is a
Director of City Group P.L.C. and Western Selection P.L.C. which
held 3,000,000 Ordinary Shares in Creston plc at 31 March 2012.
During the year total fees of GBP63,069 (2011: GBP61,321) were paid
to City Group P.L.C., GBP28,069 (2011: GBP31,321) for the provision
of secretarial services and assistance on the acquisitions and
GBP35,000 (2011: GBP30,000) for the services of Mr D C Marshall. As
at 31 March 2012 GBP17,260 (2011: GBP15,874) was due to City Group
P.L.C..
During the year the Group, through its wholly owned subsidiary
Emery McLaven Orr Limited, provided services to Vanessa Knox
Limited, a company owned by Vanessa Knox, the wife of Mr B C Brien,
a Director of Creston plc. The value of the services amounted to
GBP17,500 (2011:GBPnil). As at 31 March 2012 GBPnil (31 March 2011:
GBPnil) was due from Vanessa Knox Limited. All transactions were
conducted on an arm's length basis.
14. Availability of the Annual Report and Accounts
Copies of the Annual Report and Accounts are available on the
Company's website www.creston.com.
This information is provided by RNS
The company news service from the London Stock Exchange
END
FR LLFEARTIFLIF
Conduit (LSE:CRE)
과거 데이터 주식 차트
부터 6월(6) 2024 으로 7월(7) 2024
Conduit (LSE:CRE)
과거 데이터 주식 차트
부터 7월(7) 2023 으로 7월(7) 2024
