TIDMCRE
RNS Number : 1248U
Creston PLC
28 November 2013
28 November 2013
Creston plc
('Creston' or the 'Group')
Half year results for the six months ended 30 September 2013
Creston plc (LSE: CRE), the digitally focused insight and
communications group, today announces its half year results for the
six months to 30 September 2013 ('the Period').
Group Financial Highlights
-- Revenue of GBP35.7 million (H1 2013: GBP37.2 million)
-- Headline(1) EBITDA(2) of GBP4.6 million (H1 2013: GBP5.4 million)
-- Headline PBIT(3) of GBP3.6 million (H1 2013: GBP4.4 million)
-- Headline DEPS(4) of 4.35 pence (H1 2013: 7.44 pence)
-- Half year dividend per share increased by 20 per cent to 1.20 pence (H1 2013: 1.00 pence) per share
-- Total cash(5) of GBP0.1 million (H1 2013: Total debt(5) of GBP4.9 million)
Corporate and Operational Highlights
-- Strong new business performance:
o Net new business wins with annualised revenue of GBP7.9
million (H1 2013: GBP3.1 million)
o New clients include Bentley, HSBC, Novartis, Reckitt Benckiser
and Sony PlayStation
o Performance continuing - further two major contracts won post
Period
-- Progress made in Group:
o Digital and online revenue growth of 11 per cent, representing
52 per cent of Group revenue (H1 2013: 45 per cent)
o 'Better Together' strategy supported by completion of
co-location strategy - from over 20 property leases to eight
o Insight division recovery with growth and a return to an 18
per cent PBIT margin
o Health division strengthened with the launch of conflict PR
agency Liberation Communications and start-up brand and creative
consultancy Loooped
-- Positioned to capitalise on first half new business wins and
improvement in prospects for the industry
Commenting on the results, Don Elgie, Group Chief Executive of
Creston plc, said:
"Revenue and profits for the six months are lower than
previously anticipated, primarily as a result of volatility related
to the phasing of some client work across the Group and the
exceptional amount of time incurred in new business activity. It
has been a successful first half for the Group in many other
respects, particularly in terms of net new business wins, having
secured an annualised GBP7.9 million of work for new clients
compared to GBP3.1 million in the prior year period. These wins
will start to benefit the Group in the second half of the year and
will help compensate for the volatility in some of our clients'
activity. As in previous periods we anticipate increased revenues
in the second half of the year, with full year revenues being
broadly flat year-on-year.
"We also completed the co-location of our UK businesses in the
period and, whilst this has increased our operating costs, we are
already seeing significant benefits in terms of client referrals
and successful joint pitches.
"The Group is therefore well-positioned for future revenue and
profit growth and our confidence is further underpinned by signs of
improvement in the prospects for our industry, such as the latest
IPA Bellwether survey showing the fastest growth rates in
advertising spending recorded. The work we have done in recent
years to position Creston in the fast growing areas of
communications, such as digital, will see us well placed to take
advantage as volatility reduces and client budgets are under less
pressure."
Group Financial Results
Headline results Reported results
---------------------- ---------------------------- ----------------------------
H1 2014 H1 2013 H1 2014 H1 2013
GBP million GBP million GBP million GBP million
---------------------- ------------- ------------- ------------- -------------
Revenue 35.7 37.2 35.7 37.2
---------------------- ------------- ------------- ------------- -------------
PBIT 3.6 4.4 1.7 7.9
---------------------- ------------- ------------- ------------- -------------
DEPS (pence) 4.35 7.44 1.82 13.66
---------------------- ------------- ------------- ------------- -------------
Dividend per share
(pence) 1.20 1.00 1.20 1.00
---------------------- ------------- ------------- ------------- -------------
Operating margin (%) 10% 12% 5% 21%
---------------------- ------------- ------------- ------------- -------------
(1.) Headline results reflect the underlying performance of the
Group and excludes property related costs, acquisition, start-up
and restructuring related costs, movement in fair value of deferred
consideration, amortisation of acquired intangibles, deemed
remuneration charges and notional finance costs. A full
reconciliation is presented in note 4 to this interim
announcement.
(2.) Earnings before finance costs, finance income, taxation,
depreciation and amortisation (EBITDA).
(3.) Profit before finance income, finance costs and taxation
(PBIT).
(4.) Diluted earnings per share (DEPS).
(5.) Total cash/debt is cash less borrowings together with the
provision for deferred consideration.
There will be a presentation for analysts today at 09.30 at
Creston House, 10 Great Pulteney Street, London, W1F 9NB.
For further information on the Group's half year results or
about the analyst meeting please contact:
Creston plc + 44 (0)20 7930 9757
Don Elgie, Group Chief Executive
Barrie Brien, COO/CFO
Bell Pottinger +44 (0)20 7861 3232
David Rydell/Elly Williamson/
Malika Shermatova
About Creston plc
Creston plc (LSE: CRE) is a digitally focused insight and
communications group. 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 deliver
original thinking that engages audiences, invites participation and
influences future trends. www.creston.com
Chief Executive's Statement
Group Performance
During the first six months of the current financial year, Group
revenue was below expectations at GBP35.7 million (H1 2013: GBP37.2
million), primarily as a result of volatility related to the
phasing of some client work across the Group and the exceptional
amount of time incurred in new business activity. The high level of
new business pitching activity has led to net new business wins
with annualised revenue of GBP7.9 million - over twice as much
compared with the prior year period - and includes material new
client contracts from HSBC and Reckitt Benckiser. These wins, added
to the signs of improvement in the UK advertising spend, will have
a positive impact on the second half and beyond.
During the first six months of the current financial year, our
UK-based companies have performed well, with revenue growing by 3
per cent and Headline PBIT by 19 per cent compared with H1 2013. As
expected, our US-based agency, the Cooney Waters Group, declined in
the Period and has made good progress in replacing its previously
announced lost client. Through new client wins it is positioned to
have a much stronger second half and beyond, similar to the UK
group.
The reduced US revenue and profits, plus the increased property
costs of our new offices resulting from the completion of our long
term co-location strategy have given rise to the lower financial
performance compared to the prior year Period, with Group Headline
EBITDA of GBP4.6 million (H1 2013: GBP5.4 million), Group Headline
PBIT of GBP3.6 million (H1 2013: GBP4.4 million) and Group Headline
PBT of GBP3.6 million (H1 2013: GBP4.4 million). Headline DEPS
decreased to 4.35 pence per share (H1 2013: 7.44 pence) and a
decline was expected due to the tax credit taken in the same prior
year period (see note 6 to this interim announcement).
Reported PBT was GBP1.6 million (H1 2013: GBP7.9 million), with
the difference between Headline and Reported PBT largely due to the
one-off property related costs resulting from the co-location of
our London-based companies. The prior year included the revaluation
credit of the estimated deferred consideration (see note 4 for
reconciliation from Headline to Reported).
Digital and online work is central to our client offer with
growth in revenues during the Period of 11 per cent, representing
52 per cent (2013: 45 per cent) of Group revenue during the Period.
The target had been for our digital and online revenue to be
greater than half of the Group's revenue in FY15 and to exceed this
target by H1 FY14 demonstrates that the Group's transition
continues apace. Innovative campaigns and high-profile reactive
social media work are helping to position Creston as one of the
leaders in the provision of integrated digital marketing
solutions.
We remain committed to strengthening our client offer and
investing for growth. The launch of a small healthcare public
relations company, Liberation Communications, was completed during
the Period for the purpose of servicing conflict business. We have
also launched a health brand and creative consultancy post Period,
Loooped, after attracting two senior industry figures from a
competitor group.
Over half of the Group has relocated into our new flagship
London office in the Period as the Group's long term co-location
strategy was concluded. This increased our operating costs in H1
and will add approximately GBP0.8 million in FY14 but this is an
important investment in order to work more collaboratively in the
future, providing our existing and new clients a continually
innovative service. The London-based companies, which completed
their co-location by the end of September, have already referred
three client opportunities to each other and the close working
relationship under our Better Together ethos has accelerated.
As previously reported, there have been associated one-off costs
with the London co-location, such as double rent and rates and
onerous lease provisions and in the Period there has been a related
charge of GBP1.4 million added back to our Headline figures in
order to show the underlying operating performance. This charge is
a mixture of cash and non-cash items and is funded by the GBP7.2
million received in the previous financial year for the reverse
premium and contribution to the dilapidations obligation (see note
13 for further detail). There will be no further material one-off
charges associated with the co-location.
Business Review
The respective revenue, Headline PBIT and percentage
contributions per division are as follows:
H1 2014 Revenue Headline PBIT
---------------- ------------------------- ------------------------------------
GBP million % of Group GBP million % of Group (excluding
Head Office
costs)
---------------- ------------ ----------- ------------ ----------------------
Communications 19.9 56% 2.5 49%
---------------- ------------ ----------- ------------ ----------------------
Health 9.7 27% 1.5 29%
---------------- ------------ ----------- ------------ ----------------------
Insight 6.1 17% 1.1 22%
---------------- ------------ ----------- ------------ ----------------------
Communications
H1 2014 H1 2013
GBP million GBP million
------------------------------- ------------- -------------
Revenue 19.9 20.7
------------------------------- ------------- -------------
Contribution to Group revenue
(%) 56% 55%
------------------------------- ------------- -------------
Headline PBIT 2.5 3.1
------------------------------- ------------- -------------
Reported PBIT 2.4 3.1
------------------------------- ------------- -------------
Headline PBIT margin (%) 12% 15%
------------------------------- ------------- -------------
The Group's Communications division saw a busy start to the
financial year, with the very high level of new business activity
pointing to a second half that should be stronger in revenue and
Headline PBIT margin than both H2 2013 and H1 2014. The revenue
decline to GBP19.9 million (H1 2013: GBP20.7 million) reflects the
phasing and volatility in some of our clients' budgets and
workflow, alongside the significant unbillable time invested in new
business pitching. We continue to manage the cost base very closely
and, as expected, the increased property costs have impacted
profitability. As a result of this, plus the lower revenue,
Headline PBIT declined to GBP2.5 million (H1 2013: GBP3.1
million).
The Communications division has been working hard to benefit
from its position on the Government Procurement Services roster,
requiring a large time commitment to pitch for campaigns which are
initially relatively small but we believe should grow in size
throughout the life of the contract. Whilst it has impacted margins
in the short term, this resource investment is important since it
is a three to five-year contract and the reduction in the number of
marketing agencies utilised by the Government suggests significant
new business potential over the life of the contract. To date, the
Communications division has won four campaigns related to child
benefits, benefit fraud, fire safety and child maintenance. We have
a successful track record of working for public sector clients and
as the campaigns begin to grow, so should the associated
revenue.
In addition to the Government Procurement Services contracts,
other material and exciting new client wins in the first half of
the year for the Communications division include Bentley, HSBC,
Reckitt Benckiser and Sony PlayStation. These new accounts have
long term growth potential, similar to existing long term clients
such as Diageo, Unilever and Sainsbury's which we have continued to
grow from winning additional brands or being added to additional
rosters to provide new services, such as the digital marketing
roster for Sainsbury's.
Following the new client and additional brand wins, a stronger
second half will also be supported by the growing international
reach of the division. Clients such as Diageo, Danone, Infiniti and
Unilever have helped to increase the division's international
revenue to 22 per cent (H1 2013: 20 per cent). This growth reflects
clients' willingness to commission more multi-country digital
marketing from one central hub location.
A number of the companies within the division have received
recognition for their client offer during the Period. NBG has been
recognised by PR Week as a Top 10 Tech PR Agency, a Top 15 Consumer
PR Agency and a Top 10 Digital PR Agency. TMW was ranked at 21 in
Econsultancy's first Top 100 Digital Agencies listings. TMW has
also received a lot of attention for its 'always on' social media
offer following high profile work for Reckitt Benckiser which was
highlighted by Twitter as an example of how to use social media
effectively. The significant amount of media coverage of this work
is reflective of the increasing importance of digital expertise to
clients.
Health
H1 2014 H1 2013
GBP million GBP million
------------------------------- ------------- -------------
Revenue 9.7 11.0
------------------------------- ------------- -------------
Contribution to Group revenue
(%) 27% 30%
------------------------------- ------------- -------------
Headline PBIT 1.5 2.6
------------------------------- ------------- -------------
Reported PBIT 1.2 6.1
------------------------------- ------------- -------------
Headline PBIT margin (%) 15% 24%
------------------------------- ------------- -------------
As expected, revenue for the Health division declined during the
Period, primarily driven by the previously reported loss of the US
Sanofi business in Q4 2013. This has been partly offset by the
continued growth of the digital healthcare agency DJM Digital
Solutions ("DJM"), acquired in the second half of last financial
year. The division's revenue declined to GBP9.7 million (H1 2013:
GBP11.0 million) and Headline PBIT to GBP1.5 million (H1 2013:
GBP2.6 million); and due to the US group performance, like-for-like
revenue declined by 21 per cent and Headline PBIT margin declined
to 15 per cent. The UK Health companies have performed well and
grown revenue by 3 per cent against the same prior year period. The
difference between the Reported PBIT versus the prior year is due
to the revaluation credit of the estimated deferred consideration
taken in the same prior year period.
As previously reported, the lost Sanofi revenue will take time
to replace and will impact the reported financials in FY14 but good
progress has been made to date with new business wins including
Alere, TA Sciences, Novartis, Center to Advance Palliative Care and
further Gilead brands. Despite the decline in its financial
performance, the Cooney/Waters Group remains a profitable top five
US healthcare PR group and these recent wins demonstrate the
continued strength of the offer. DJM continues to bed-down well in
the division, winning business through joint pitches, introductions
from PAN, from RDC and independently. The launch of DJM's New York
presence during the Period will help support the growing demand for
digital expertise and innovation across the division's US client
base, already contributing to some of the new business
successes.
The wins in the US are helping to replace last year's lost
client and to position the division for higher revenue in H2, with
an improved Headline PBIT margin. With this improved financial
performance, we have continued to broaden our client service offer.
In the UK, there had been a growing number of opportunities that
conflicted with existing client business and, consequently, the
division was unable to pursue them. To resolve this conflict, the
launch of the small specialist health agency Liberation
Communications was completed during the Period. This demonstrates
our commitment to building and evolving the division, as does the
recent launch of a health and healthcare brand and creative
consultancy called Loooped, which will provide a strong strategic
and creative resource within the division. The two founding
directors of Loooped have joined Creston from a competitor, drawn
by the prospect of working within an entrepreneurial group
committed to growing its health and healthcare offer.
The Health division continues to demonstrate the relevance of
our Better Together proposition among sector clients, with
cross-agency wins during the Period including Novartis, World
Health Organisation and Otsuka/Lundbeck. Furthermore, contracts for
the United Nations Water Supply and Sanitation Collaborative
Council and GAVI Alliance have been won by our US Health companies
post Period.
Insight
H1 2014 H1 2013
GBP million GBP million
------------------------------- ------------- -------------
Revenue 6.1 5.5
------------------------------- ------------- -------------
Contribution to Group revenue
(%) 17% 15%
------------------------------- ------------- -------------
Headline PBIT 1.1 0.04
------------------------------- ------------- -------------
Reported PBIT 0.4 0.04
------------------------------- ------------- -------------
Headline PBIT margin (%) 18% 1%
------------------------------- ------------- -------------
The Insight division has delivered a strong first half
performance with revenue rising by 10 per cent to GBP6.1 million
(H1 2013: GBP5.5 million) and a significant Headline PBIT rise to
GBP1.1 million (H1 2013: GBP0.04 million). This is a good
improvement for the division, with the revenue growth and the
realignment of the cost base resulting in a much improved margin of
18 per cent.
Marketing Sciences continues to show very strong growth on the
back of a major retail client, coupled with ICM continuing its
recovery. Innovative research and the early adoption of digital
data collection technologies have certainly had a positive impact,
with Marketing Sciences exceeding one million tablet-based surveys
during the Period and ICM winning a Digital Impact Award for its
work on the MySainsbury's colleague community. The division was
also involved in a high-profile research project around social
media return on investment alongside the IAB (Internet Advertising
Bureau UK).
The market research industry has been challenging, with
technology accelerating the change and needs of clients,
consequently impacting the size of surveys and the associated
budgets. Since the improvement in the operations of the division
and the subsequent increased profitability, new business
development has been a key focus, resulting in the broadening of
the client base. New clients during the Period include Mobile By
Sainsbury's and HM Passport Office. Although profitable in H1 2013
(GBP0.1 million), the challenging market place has sadly impacted
Vitaris, our small healthcare research consultancy, which was
closed during the Period. Its lack of critical mass in the highly
competitive area of healthcare research meant that it has not
performed as budgeted. As such, the offer has been closed and all
associated closure costs of GBP0.3 million have been added back to
the Headline figures (see note 5 for further detail).
The recent MRS Quarterly Trends Analysis reports on the best
quarterly growth since December 2008 and improved confidence in the
sector, something which we look forward to benefitting from.
Balance sheet and cash flow
As at 30 September 2013, the Group was in a net cash position of
GBP1.8 million (31 March 2013: GBP11.2 million). Including deferred
consideration liabilities of GBP1.7 million (GBP0.3 million for the
Cooney/Waters Group and GBP1.4 million for DJM), the Group was debt
free with a total cash position of GBP0.1 million (31 March 2013:
total cash of GBP9.5 million).
During the Period the adjusted operating cash outflow was
GBP0.6m (H1 2013: GBP1.7 million inflow). The cash conversion ratio
of adjusted operating cash flow to Headline EBITDA was negative 14
per cent (H1 2013: positive 32 per cent). The cash outflow in the
Period has reversed the negative working capital position of GBP1.3
million at the year end to a more normalised positive working
capital position of GBP2.8 million as at 30 September 2013 (30
September 2012: GBP3.4 million). Management continues to place
significant emphasis on managing working capital effectively and
this has resulted in a five-year cumulative cash conversion of 100
per cent.
Dividend
In light of the Group's history of strong cash generation and
low gearing, it is the Board's intention to maintain a progressive
dividend policy. Reflecting this, the Board has declared a half
year dividend of 1.20 pence (H1 2013: 1.00 pence) per share to be
paid on 10 January 2014 to shareholders registered at 6 December
2013. This represents a 20 per cent increase on the prior year.
However, this growth rate is higher than the expectation for the
full year dividend as the Board looks to move towards a
one-third/two-thirds allocation between the half year/final
dividend payment respectively.
Outlook
Recent industry data shows improved prospects for the marketing
services sector and the work we have done in recent years to
position Creston in the fast growing areas of communications, such
as digital, sees us well-placed to benefit from this forecast
growth.
We continue to see good new business and client referral
opportunities across the Group and this, combined with the business
won to date, will result in a stronger H2 and beyond. As in
previous periods we anticipate increased revenues in the second
half of the year, with full year revenues being broadly flat
year-on-year. As previously advised, full year operating costs will
reflect the increased property costs of the UK co-location
strategy.
The operational progress that has been made across the group and
our continuing strength in the field of digital marketing, which
has contributed significantly to our recent new business success,
gives us confidence that we are well-positioned for future revenue
and profits growth.
Don Elgie
Group Chief Executive
UNAUDITED CONSOLIDATED INCOME STATEMENT
for the six months ended 30 September 2013
Note Six months Six months Audited
ended 30 September ended 30 September Year ended
2013 2012 31 March
2013
GBP'000 GBP'000 GBP'000
Turnover (billings) 48,547 52,865 107,088
-------------------- -------------------- ------------
Revenue 5 35,677 37,165 75,189
Operating costs (32,043) (32,736) (65,024)
-------------------- -------------------- ------------
Headline profit before finance
income, finance costs and
taxation 4 3,634 4,429 10,165
Headline items 4 (1,912) 3,450 841
-------------------------------- ----- -------------------- -------------------- ------------
Profit before finance income,
finance costs and taxation 4 1,722 7,879 11,006
Finance costs (102) (12) -
-------------------- -------------------- ------------
Profit before taxation 4 1,620 7,867 11,006
Taxation 6 (472) 392 (1,212)
-------------------- -------------------- ------------
Profit for the period 4 1,148 8,259 9,794
-------------------- -------------------- ------------
Attributable to:
Equity holders of the parent 1,100 8,259 9,736
Non-controlling interest 48 - 58
-------------------- -------------------- ------------
1,148 8,259 9,794
-------------------- -------------------- ------------
Basic and diluted earnings
per share (pence): 7 1.82 13.66 16.10
-------------------- -------------------- ------------
UNAUDITED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
for the six months ended 30 September 2013
Six months Six months Audited
ended 30 September ended 30 September Year ended
2013 2012 31 March
2013
GBP'000 GBP'000 GBP'000
Profit for the period 1,148 8,259 9,794
-------------------- -------------------- ------------
Other comprehensive (expense)/income:
Exchange differences on translation
of foreign operations (677) (185) 450
Other comprehensive (expense)/income
for the period, net of tax (677) (185) 450
-------------------- -------------------- ------------
Total comprehensive income for
the period 471 8,074 10,244
-------------------- -------------------- ------------
Attributable to:
Equity holders of the parent 423 8,074 10,186
Non-controlling interest 48 - 58
-------------------- -------------------- ------------
471 8,074 10,244
-------------------- -------------------- ------------
UNAUDITED CONSOLIDATED BALANCE SHEET
as at 30 September 2013
Note As at As at Audited as
30 September 30 September at
2013 2012 31 March
2013
GBP'000 GBP'000
GBP'000
Non-current assets
Intangible assets
Goodwill 9 104,195 106,850 105,022
Other 9 1,267 1,388 1,359
Property, plant and equipment 9 4,709 3,721 4,442
Deferred tax assets 652 754 582
-------------- -------------- -----------
110,823 112,713 111,405
Current assets
Inventories and work in progress 945 1,088 1,070
Trade and other receivables 25,634 26,196 25,373
Cash and cash equivalents 12 2,780 1,189 11,208
-------------- -------------- -----------
29,359 28,473 37,651
Current liabilities
Trade and other payables (23,802) (23,903) (28,647)
Corporation tax payable (137) (1,047) (1,549)
Obligations under finance
leases 12 - (2) -
Bank overdraft, loans and
loan notes 12 (1,000) (3,210) (10)
Derivative financial instrument 11 - (40) -
(24,939) (28,202) (30,206)
Net current assets 4,420 271 7,445
-------------- -------------- -----------
Total assets less current
liabilities 115,243 112,984 118,850
-------------- -------------- -----------
Non-current liabilities
Trade and other payables (2,971) - (5,160)
Provision for other liabilities
and charges 10 (1,692) (2,849) (1,714)
Deferred tax liabilities (489) (118) (368)
(5,152) (2,967) (7,242)
Net assets 110,091 110,017 111,608
-------------- -------------- -----------
Equity
Called up share capital 6,134 6,134 6,134
Share premium account 35,943 35,943 35,943
Own shares (1,098) (656) (656)
Shares to be issued 867 1,141 1,167
Other reserves 30,822 30,822 30,822
Foreign currency translation
reserve (400) (358) 277
Retained earnings 37,717 36,991 37,863
-------------- -------------- -----------
Equity attributable to equity
holders of parent 109,985 110,017 111,550
-------------- -------------- -----------
Non-controlling interest 106 - 58
-------------- -------------- -----------
Total equity 110,091 110,017 111,608
-------------- -------------- -----------
UNAUDITED STATEMENT OF CHANGES IN EQUITY
Six months ended 30 September 2013
Called Share Own Shares Other Foreign Retained Total Non-controlling Total
up premium shares to reserves currency earnings attributable interest equity
share be translation to equity
capital issued reserve holders
of parent
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Changes
in equity
for the
period
At 1 April
2013 6,134 35,943 (656) 1,167 30,822 277 37,863 111,550 58 111,608
--------------- -------- -------- -------- -------- --------- ------------ --------- ------------- ---------------- --------
Total
comprehensive
income for
the period - - - - - (677) 1,100 423 48 471
--------------- -------- -------- -------- -------- --------- ------------ --------- ------------- ---------------- --------
Credit for
share-based
incentive
schemes - - - 64 - - - 64 - 64
Transfer
between
reserves
in respect
of lapsed
share options - - - (364) - - 364 - - -
Purchase
of treasury
shares - - (442) - - - - (442) - (442)
Dividends
(note 8) - - - - - - (1,610) (1,610) - (1,610)
--------------- -------- -------- -------- -------- --------- ------------ --------- ------------- ---------------- --------
At 30
September
2013 6,134 35,943 (1,098) 867 30,822 (400) 37,717 109,985 106 110,091
--------------- -------- -------- -------- -------- --------- ------------ --------- ------------- ---------------- --------
Called Share Own Shares Other Foreign Retained Total Non-controlling Total
up premium shares to reserves currency earnings attributable interest equity
share be translation to equity
capital issued reserve holders
of parent
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Changes in
equity for
the period
At 1 April
2012 6,134 35,943 (656) 1,079 30,822 (173) 30,346 103,495 - 103,495
--------------- -------- -------- -------- -------- --------- ------------ --------- ------------- ---------------- --------
Total
comprehensive
income for
the period - - - - - (185) 8,259 8,074 - 8,074
--------------- -------- -------- -------- -------- --------- ------------ --------- ------------- ---------------- --------
Credit for
share-based
incentive
schemes - - - 62 - - - 62 - 62
Dividends
(note 8) - - - - - - (1,614) (1,614) - (1,614)
--------------- -------- -------- -------- -------- --------- ------------ --------- ------------- ---------------- --------
At 30
September
2012 6,134 35,943 (656) 1,141 30,822 (358) 36,991 110,017 - 110,017
--------------- -------- -------- -------- -------- --------- ------------ --------- ------------- ---------------- --------
Called Share Own Shares Other Foreign Retained Total Non-controlling Total
up premium shares to reserves currency earnings attributable interest equity
share be translation to equity
capital issued reserve holders
of parent
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Changes in
equity for
the year
At 1 April
2012 6,134 35,943 (656) 1,079 30,822 (173) 30,346 103,495 - 103,495
-------- -------- -------- -------- --------- ------------ --------- ------------- ---------------- ---------
Total
comprehensive
income for
the period - - - - - 450 9,736 10,186 58 10,244
-------- -------- -------- -------- --------- ------------ --------- ------------- ---------------- ---------
Credit for
share-based
incentive
schemes - - - 88 - - - 88 - 88
Dividends
(note 8) - - - - - - (2,219) (2,219) - (2,219)
-------- -------- -------- -------- --------- ------------ --------- ------------- ---------------- ---------
At 31 March
2013 6,134 35,943 (656) 1,167 30,822 277 37,863 111,550 58 111,608
-------- -------- -------- -------- --------- ------------ --------- ------------- ---------------- ---------
UNAUDITED CONSOLIDATED STATEMENT OF CASHFLOWS
for the six months ended 30 September 2013
Note Six months Six months Year ended
ended 30 September ended 30 September 31 March
2013 2012 2013
GBP'000 GBP'000 GBP'000
Profit for the period 1,148 8,259 9,794
Taxation 472 (392) 1,212
-------------------- -------------------- -----------
Profit before taxation 1,620 7,867 11,006
-------------------- -------------------- -----------
Finance costs 102 12 -
-------------------- -------------------- -----------
Profit before finance income, finance
costs and taxation 1,722 7,879 11,006
-------------------- -------------------- -----------
Depreciation of property, plant and
equipment 828 793 1,615
Amortisation of intangible assets 176 135 263
Share based payments charge 64 62 88
Charge/(credit) for future acquisition
payments to employees deemed as remuneration 155 150 (299)
Movement in fair value of deferred
consideration (30) (4,032) (6,799)
Impairment of goodwill - - 5,161
Loss on disposal of property, plant
and equipment 63 6 15
Loss on disposal of intangible assets - - 13
Decrease in inventories and work in
progress 123 114 149
(Increase)/decrease in trade and other
receivables (250) (274) 1,002
(Decrease)/increase in trade and other
payables (3,485) (3,139) 48
-------------------- -------------------- -----------
Adjusted operating cash (outflow)/inflow (634) 1,694 12,262
-------------------- -------------------- -----------
(Outflow)/inflow of proceeds
on operating lease 13 (3,688) - 6,529
-------------------- -------------------- -----------
Operating cash (outflow)/inflow (4,322) 1,694 18,791
-------------------- -------------------- -----------
Tax paid (1,803) (196) (926)
-------------------- -------------------- -----------
Net cash (outflow)/inflow
from operating activities (6,125) 1,498 17,865
-------------------- -------------------- -----------
Investing activities
Purchase of subsidiary undertakings - (491) (1,648)
Net cash acquired with subsidiaries - - 413
Purchase of property, plant
and equipment 9 (1,205) (1,150) (2,598)
Proceeds from sale of property,
plant and equipment - 6 9
Purchase of intangible assets 9 (110) (50) (143)
-------------------- -------------------- -----------
Net cash outflow from investing
activities (1,315) (1,685) (3,967)
-------------------- -------------------- -----------
Financing activities
Finance costs (77) (70) (176)
Net increase in borrowings 990 1,000 -
Dividends paid (1,610) (1,614) (2,219)
Capital element of finance
lease payments - - (2)
Purchase of treasury shares (442) - -
-------------------- -------------------- -----------
Net cash outflow from financing
activities (1,139) (684) (2,397)
-------------------- -------------------- -----------
(Decrease)/increase in cash
and cash equivalents (8,579) (871) 11,501
Cash and cash equivalents
at start of period 11,208 (80) (80)
-------------------- -------------------- -----------
Effect of foreign exchange
rates 151 (60) (213)
Cash and cash equivalents
at end of period 12 2,780 (1,011) 11,208
-------------------- -------------------- -----------
NOTES TO THE HALF YEAR REPORT
for the six months ended 30 September 2013
1. Presentation of financial information
The financial information contained in this half year report
does not constitute statutory accounts within the meaning of
Section 434 of the Companies Act 2006.
Statutory accounts for the year ended 31 March 2013 were
approved by the Board of Directors on 3 July 2013 and delivered to
the Registrar of Companies. The report of the auditors by
PricewaterhouseCoopers LLP on those accounts was unqualified, did
not contain an emphasis of matter paragraph and did not contain any
statement under Section 448 of the Companies Act 2006.
The half year report has not been audited or reviewed by the
Group's auditors.
2. Basis of Preparation
The half year report of Creston plc for the six months ended 30
September 2013 has been prepared in accordance with the Disclosure
and Transparency Rules of the Financial Conduct 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 half year consolidated financial information
should be read in conjunction with the annual financial statements
for the year ended 31 March 2013 which have been prepared in
accordance with IFRS as adopted by the European Union.
3. Accounting policies
The half year consolidated financial statements of Creston plc
for the six months ended 30 September 2013 have been prepared in
accordance with the accounting policies contained in the Group's
Annual Report and Accounts 2013 and the policies as described in
note 2 above.
The following standards, amendments and interpretations are
relevant to the Group, but not yet effective and have not been
early adopted by the Group:
IFRS 10, 'Consolidated financial statements' (effective for
periods beginning on or after 1 January 2014). 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. This new standard might impact the entities
that a group consolidates as its subsidiaries.
Amendment to IAS 32, 'Financial instruments: Presentation'
(effective for periods beginning on or after 1 January 2014). This
amendment updates the application guidance in IAS 32, 'Financial
instruments: Presentation', to clarify some of the requirements for
offsetting financial assets and financial liabilities on the
balance sheet.
IFRS 9 'Financial instruments' (effective for periods beginning
on or after 1 January 2015). This standard on classification and
measurement of financial assets and financial liabilities will
replace IAS 39, 'Financial instruments: Recognition and
measurement'. IFRS 9 has two measurement categories: amortised cost
and fair value. All equity instruments are measured at fair value.
A debt instrument is measured at amortised cost only if the entity
is holding it to collect contractual cash flows and the cash flows
represent principal and interest. For liabilities, the standard
retains most of the IAS 39 requirements.
4. Reconciliation of Headline profit to Reported profit
In order to enable a better understanding of the underlying
trading of the Group, the Board refers 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 acquisition
related costs, 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 start-up and restructuring related costs, property related costs
and the impairment of goodwill.
Six months ended 30 September 2013
PBIT PBT PAT
GBP'000 GBP'000 GBP'000
Headline 3,634 3,559 2,677
Property related costs (1,422) (1,422) (1,422)
Acquisition, start-up and restructuring
related costs (305) (305) (305)
Movement in fair value of deferred consideration 30 30 30
Amortisation of acquired intangibles (60) (60) (60)
Future acquisition payments to employees
deemed as remuneration (155) (155) (155)
Notional finance cost on future deferred
consideration - (27) (27)
Deferred tax charge on amortisation of
goodwill - - (121)
Taxation impact - - 531
--------- --------- ---------
Reported 1,722 1,620 1,148
--------- --------- ---------
Headline Basic EPS (pence) 4.36
Headline Diluted EPS (pence) 4.35
Reported Basic and Diluted EPS (pence) 1.82
Six months ended 30 September 2012
PBIT PBT PAT
GBP'000 GBP'000 GBP'000
Headline 4,429 4,354 4,499
Property related costs (432) (432) (432)
Movement in fair value of deferred consideration 4,032 4,032 4,032
Future acquisition payments to employees
deemed as remuneration (150) (150) (150)
Notional finance credit on future deferred
consideration - 63 63
Taxation impact - - 247
--------- --------- ---------
Reported 7,879 7,867 8,259
--------- --------- ---------
Headline Basic and Diluted EPS (pence) 7.44
Reported Basic and Diluted EPS (pence) 13.66
Year ended 31 March 2013
PBIT PBT PAT
GBP'000 GBP'000 GBP'000
Headline 10,165 10,011 8,924
Property related costs (944) (944) (944)
Acquisition related costs (152) (152) (152)
Movement in fair value of deferred consideration 6,799 6,799 6,799
Impairment of goodwill (5,161) (5,161) (5,161)
Credit for future acquisition payments
to employees deemed as remuneration 299 299 299
Notional finance credit on future deferred
consideration - 154 154
Deferred tax charge on amortisation of
goodwill - - (268)
Taxation impact - - 143
--------- --------- ---------
Reported 11,006 11,006 9,794
--------- --------- ---------
Headline Basic and Diluted EPS (pence) 14.66
Reported Basic and Diluted EPS (pence) 16.10
5. Segmental analysis
The chief operating decision-maker has been identified as the
Executive Board of Directors, which makes the strategic decisions.
The Executive Board has determined the operating segments in a
manner consistent with the internal reporting provided to the
Executive Board. The Executive Board considers the business from a
divisional perspective, these 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 pharmaceutical 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 face-to-face, telephone
and online data collection techniques.
The Executive Board assesses the performance of the operating
segments based on a measure of revenue and Headline PBIT. This
measurement basis excludes the effects of certain amounts from the
operating segments, such as amortisation of acquired intangible
assets, acquisition, start-up and restructuring related costs,
property related costs, movement in fair value of deferred
consideration, impairment of goodwill, 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 the USA. The Executive 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 which permit 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.
Divisional segmentation
Turnover, revenue, Headline and Reported profit before finance
income and finance costs (PBIT), and profit before tax (PBT)
attributable to Group activities are shown below:
Communications Health Insight Head Office Group
Six months ended
30 September 2013 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Turnover (billings) 26,592 10,885 11,070 - 48,547
Revenue 19,944 9,667 6,066 - 35,677
--------------- ---------- ---------- ------------ ----------
Headline PBIT 2,468 1,461 1,114 (1,409) 3,634
--------------- ---------- ---------- ------------ ----------
Property related costs (76) - (440) (906) (1,422)
Acquisition, start up
and restructuring related
costs - (29) (276) - (305)
Movement in fair value
of deferred consideration - 30 - - 30
Amortisation of acquired
intangibles - (60) - - (60)
Future acquisition payments
to employees deemed
as remuneration - (155) - - (155)
--------------- ---------- ---------- ------------ ----------
Reported PBIT 2,392 1,247 398 (2,315) 1,722
--------------- ---------- ---------- ------------ ----------
Finance costs - - - (75) (75)
Notional finance cost
on future deferred consideration - (27) - - (27)
--------------- ---------- ---------- ------------ ----------
Profit before taxation 2,392 1,220 398 (2,390) 1,620
--------------- ---------- ---------- ------------ ----------
Taxation (472)
--------------- ---------- ---------- ------------ ----------
Profit for the period 1,148
--------------- ---------- ---------- ------------ ----------
Property related costs of GBP1.4 million have been excluded from
the Headline PBIT measure for the six month period ending 30
September 2013. These costs consist of GBP0.5 million relating to
exit of existing leases and have been recognised within the
respective divisional result, and GBP0.9 million recognised within
the head office result, relating to the costs incurred during the
vacant period of Creston House, including double rent, rates and
service charge.
Restructuring related costs of GBP0.3 million have been excluded
from the Headline PBIT measure for the six month period ending 30
September 2013. These consist of the associated closure costs of
Vitaris and its trading losses during the Period.
Communications Health Insight Head Office Group
Six months ended
30 September 2012 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Turnover (billings) 29,044 13,308 10,513 - 52,865
Revenue 20,650 10,978 5,537 - 37,165
--------------- ---------- ---------- ------------ ----------
Headline PBIT 3,125 2,600 38 (1,334) 4,429
--------------- ---------- ---------- ------------ ----------
Property related costs - (432) - - (432)
Movement in fair value
of deferred consideration - 4,032 - - 4,032
Future acquisition payments
to employees deemed
as remuneration - (150) - - (150)
--------------- ---------- ---------- ------------ ----------
Reported PBIT 3,125 6,050 38 (1,334) 7,879
--------------- ---------- ---------- ------------ ----------
Finance costs - - - (75) (75)
Notional finance credit
on future deferred consideration - 63 - - 63
--------------- ---------- ---------- ------------ ----------
Profit before taxation 3,125 6,113 38 (1,409) 7,867
--------------- ---------- ---------- ------------ ----------
Taxation 392
--------------- ---------- ---------- ------------ ----------
Profit for the period 8,259
--------------- ---------- ---------- ------------ ----------
Communications Health Insight Head Office Group
Year ended
31 March 2013 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Turnover (billings) 58,511 26,426 22,151 - 107,088
Revenue 41,142 21,949 12,098 - 75,189
--------------- ---------- ---------- ------------ ----------
Headline PBIT 6,164 5,081 1,404 (2,484) 10,165
--------------- ---------- ---------- ------------ ----------
Property related costs (361) (583) (944)
Acquisition related
costs - (152) - - (152)
Movement in fair value
of deferred consideration - 6,799 - - 6,799
Impairment of goodwill - (5,161) - - (5,161)
Credit for future acquisition
payments to employees
deemed as remuneration - 299 - - 299
--------------- ---------- ---------- ------------ ----------
Reported PBIT 6,164 6,505 1,404 (3,067) 11,006
--------------- ---------- ---------- ------------ ----------
Finance costs - - - (154) (154)
Notional finance credit
on future deferred consideration - 154 - - 154
--------------- ---------- ---------- ------------ ----------
Profit before taxation 6,164 6,659 1,404 (3,221) 11,006
--------------- ---------- ---------- ------------ ----------
Taxation (1,212)
--------------- ---------- ---------- ------------ ----------
Profit for the period 9,794
--------------- ---------- ---------- ------------ ----------
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
Six months Six months Year ended Six months Six months Year ended
ended 30 ended 30 31 March ended 30 ended 30 31 March
September September 2013 September September 2013
2013 2012 2013 2012
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
UK 33,635 35,808 73,922 23,875 24,268 48,951
Rest of Europe 8,621 8,127 15,508 6,320 5,302 12,278
Rest of the World
(including USA) 6,291 8,930 17,658 5,482 7,595 13,960
----------- ----------- ----------- ----------- ----------- -----------
48,547 52,865 107,088 35,677 37,165 75,189
----------- ----------- ----------- ----------- ----------- -----------
6. Taxation
The Reported tax rate of 29 per cent is higher than the UK
statutory rate of 23 per cent as a result of higher rates of tax
charged on US income.
The Headline tax rate of 25 per cent is higher than the UK
statutory rate because of the impact of non-deductible expenditure.
A similar Headline tax rate is expected for the full year,
following on from the artificially low tax rate in the year ended
31 March 2013. During the year ended 31 March 2013 tax provisions
totalling GBP1.6 million were released following the resolution of
the enquiry into the deductibility of goodwill written off on the
closure of CML Research Ltd. In future periods we expect the
Headline tax rate to remain at a similar level to this year, as a
higher tax rate on growing US income is offset by a falling UK
statutory tax rate.
7. Earnings per share
Headline Reported
Six months Six months Year ended Six months Six months Year ended
ended 30 ended 30 31 March ended 30 ended 30 31 March
September September 2013 September September 2013
2013 2012 2013 2012
Earnings
Profit for the
period (GBP'000) 2,677 4,499 8,924 1,148 8,259 9,794
----------- ----------- ----------- ----------- ----------- -----------
Attributable to:
----------- ----------- ----------- ----------- ----------- -----------
Non-controlling
interest (GBP'000) 48 - 58 48 - 58
----------- ----------- ----------- ----------- ----------- -----------
Equity holders
of the parent
(GBP'000) 2,629 4,499 8,866 1,100 8,259 9,736
----------- ----------- ----------- ----------- ----------- -----------
Number of shares
Weighted average
number of shares 60,347,772 60,458,946 60,458,946 60,347,772 60,458,946 60,458,946
Dilutive effect
of shares 91,591 - - 91,591 - -
----------- ----------- ----------- ----------- ----------- -----------
60,439,363 60,458,946 60,458,946 60,439,363 60,458,946 60,458,946
----------- ----------- ----------- ----------- ----------- -----------
Earnings per share
----------- ----------- ----------- ----------- ----------- -----------
Basic earnings
per share (pence): 4.36 7.44 14.66 1.82 13.66 16.10
----------- ----------- ----------- ----------- ----------- -----------
Diluted earnings
per share (pence): 4.35 7.44 14.66 1.82 13.66 16.10
----------- ----------- ----------- ----------- ----------- -----------
The Headline EPS and Headline DEPS are based on the Headline PBT
attributable to the equity holders of the parent 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.
Diluted earnings per share has been calculated based on the
dilutive impact of 867,465 employee share options which were
outstanding as at 30 September 2013 (30 September 2012: nil).
8. Dividends
The prior year final dividend of 2.67 pence (H1 2013: 2.67
pence) per share was paid to shareholders on 12 September 2013
giving a total of GBP1,609,782 (H1 2013: GBP1,614,254).
The Board has declared a half year dividend to be paid on 10
January 2014 of 1.20 pence (H1 2013: 1.00 pence) per share to all
ordinary shareholders on the register at 6 December 2013.
9. Non-current assets
Six months ended
30 September 2013
Property, plant Intangible assets Intangible assets
and equipment - goodwill - other Total
GBP'000 GBP'000 GBP'000 GBP'000
---------------- ------------------ ------------------- ----------
Net book amount at
1 April 2013 4,442 105,022 1,359 110,823
---------------- ------------------ ------------------- ----------
Additions 1,205 - 110 1,315
Disposals (63) - - (63)
Depreciation and amortisation (828) - (176) (1,004)
Exchange differences (47) (827) (26) (900)
---------------- ------------------ ------------------- ----------
Net book amount at
30 September 2013 4,709 104,195 1,267 110,171
---------------- ------------------ ------------------- ----------
Six months ended
30 September 2012
Property, plant Intangible assets Intangible assets
and equipment - goodwill - other Total
GBP'000 GBP'000 GBP'000 GBP'000
---------------- ------------------ ------------------- ----------
Net book amount at
1 April 2012 3,390 107,050 1,473 111,913
---------------- ------------------ ------------------- ----------
Additions 1,150 - 50 1,200
Disposals (12) - - (12)
Depreciation and amortisation (793) - (135) (928)
Exchange differences (14) (200) - (214)
---------------- ------------------ ------------------- ----------
Net book amount at
30 September 2012 3,721 106,850 1,388 111,959
---------------- ------------------ ------------------- ----------
Year ended 31 March
2013
Property, plant Intangible assets Intangible assets-
and equipment - goodwill other Total
GBP'000 GBP'000 GBP'000 GBP'000
---------------- ------------------ ------------------- ----------
Net book amount at
1 April 2012 3,390 107,050 1,473 111,913
---------------- ------------------ ------------------- ----------
Additions 2,598 - 143 2,741
Disposals (24) - (13) (37)
Acquisition of subsidiary 58 2,183 - 2,241
Impairment - (5,161) - (5,161)
Charge for the year (1,615) - (263) (1,878)
Exchange differences 35 950 19 1,004
---------------- ------------------ ------------------- ----------
Net book amount at
31 March 2013 4,442 105,022 1,359 110,823
---------------- ------------------ ------------------- ----------
10. Provisions for other liabilities and charges
The deferred consideration obligations are set out below:
As at As at As at
30 September 30 September 31 March
2013 2012 2013
GBP'000 GBP'000 GBP'000
Brought forward 1,714 6,929 6,929
Movement in fair value of
deferred consideration (30) (4,032) (6,799)
Acquisitions made during the
financial year - - 1,387
Exchange differences (19) 15 351
Income statement:
- Notional finance cost/(credit)
on future deferred consideration 27 (63) (154)
Carried forward 1,692 2,849 1,714
-------------- -------------- ----------
As at As at As at
30 September 30 September 31 March
2013 2012 2013
GBP'000 GBP'000 GBP'000
Analysed as:
Non-current liabilities 1,692 2,849 1,714
-------------- -------------- ----------
The Group considers that the above liabilities approximate to
their fair value. The notional interest rate used during the Period
was 3.3 per cent (H1 2013: 3.3 per cent).
The earn-out obligations will be paid in cash, in accordance
with the associated sale purchase agreement. These payments become
due in July 2015.
Under IFRS 3 the Group recognises any changes in the fair value
of the deferred consideration for previous acquisitions through the
Consolidated income statement. During the Period a credit of
GBP0.03 million has been recognised due to the revaluation of the
deferred consideration of the Cooney/Waters Group.
11. Derivative financial instrument
In the prior year the Group managed its foreign currency risk
through a derivative financial instrument which expired on 26 March
2013. The derivative financial instrument was designated as a cash
flow hedge with an estimated net fair value liability of GBP40,000
recognised on the balance sheet as at 30 September 2012. In the
current period the Group has not entered into any hedging
arrangements and as such there is no derivative financial
instrument to recognise as at 30 September 2013.
12. Analysis of net and total cash/(debt)
Six months ended 30 September As at Acquisitions* Cash flow Foreign As at
2013 1 April exchange 30 September
2013 2013
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Cash and cash equivalents 11,208 - (8,579) 151 2,780
Bank overdraft - - - - -
--------- -------------- ---------- ---------- --------------
Net cash and cash equivalents 11,208 - (8,579) 151 2,780
--------- -------------- ---------- ---------- --------------
Revolving credit facility - - (1,000) - (1,000)
Acquisition loan notes (10) - 10 - -
Finance leases - - - - -
--------- -------------- ---------- ---------- --------------
Net cash 11,198 - (9,569) 151 1,780
--------- -------------- ---------- ---------- --------------
Provision for deferred consideration (1,714) 22 - - (1,692)
--------- -------------- ---------- ---------- --------------
Total cash 9,484 22 (9,569) 151 88
--------- -------------- ---------- ---------- --------------
Six months ended 30 September As at Acquisitions* Cash flow Foreign As at
2012 1 April exchange 30 September
2012 2012
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Cash and cash equivalents 1,818 - (569) (60) 1,189
Bank overdraft (1,898) - (302) - (2,200)
--------- -------------- ---------- ---------- --------------
Net cash and cash equivalents (80) - (871) (60) (1,011)
--------- -------------- ---------- ---------- --------------
Revolving credit facility - - (1,000) - (1,000)
Acquisition loan notes (10) - - - (10)
Finance leases (2) - - - (2)
--------- -------------- ---------- ---------- --------------
Net debt (92) - (1,871) (60) (2,023)
--------- -------------- ---------- ---------- --------------
Provision for deferred consideration (6,929) 4,080 - - (2,849)
--------- -------------- ---------- ---------- --------------
Total debt (7,021) 4,080 (1,871) (60) (4,872)
--------- -------------- ---------- ---------- --------------
Year ended 31 March 2013 As at Acquisitions* Cash flow Foreign As at
1 April exchange 31 March
2012 2013
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Cash and cash equivalents 1,818 (1,235) 10,838 (213) 11,208
Bank overdraft (1,898) - 1,898 - -
--------- -------------- ---------- ---------- ----------
Net cash and cash equivalents (80) (1,235) 12,736 (213) 11,208
--------- -------------- ---------- ---------- ----------
Acquisition loan notes (10) - - - (10)
Finance leases (2) - 2 - -
--------- -------------- ---------- ---------- ----------
Net (debt)/cash (92) (1,235) 12,738 (213) 11,198
--------- -------------- ---------- ---------- ----------
Provision for deferred consideration (6,929) 5,215 - - (1,714)
--------- -------------- ---------- ---------- ----------
Total (debt)/cash (7,021) 3,980 12,738 (213) 9,484
--------- -------------- ---------- ---------- ----------
* Includes both cash and non-cash items.
13. Proceeds on operating lease
On 7 January 2013 the Group entered into an operating lease for
the new London office. On signing the lease, the Group received a
one-off cash payment of GBP7.2 million (including VAT) in relation
to a reverse premium and agreed dilapidations obligation. As at 31
March 2013 net proceeds of GBP6.5 million on the operating lease
remained and were recognised as part of the Group's operating cash
flow. Excluding the GBP6.5 million from the Group's operating cash
flow of GBP18.8 million for the year ending 31 March 2013 resulted
in an adjusted operating cash flow of GBP12.3 million.
During the Period to 30 September 2013 GBP3.7 million of the
operating lease proceeds have been utilised to fulfil the
dilapidations obligation and settle the associated VAT liability.
Excluding the GBP3.7 million (H1 2013: GBPnil) from the Group's
operating cash outflow of GBP4.3 million (H1 2013: inflow of GBP1.7
million) results in an adjusted operating cash outflow of GBP0.6
million (H1 2013: inflow GBP1.7 million).
14. Related-party transactions
During the six months ended 30 September 2013 total fees of
GBP32,500 (H1 2013: GBP32,500) were incurred in relation to City
Group P.L.C., GBP15,000 (H1 2013: GBP15,000) for the provision of
company secretarial services and GBP17,500 (H1 2013: GBP17,500) for
the services of Mr D C Marshall, a Non-Executive Director. The
balance due at 30 September 2013 was GBPnil (30 September 2012:
GBPnil). All transactions were conducted on an arm's length
basis.
15. Principal risks and uncertainties
Details of our principal risks and uncertainties were previously
disclosed on pages 39 to 40 of the 2013 Annual Report and Accounts.
In that disclosure we referred to our mitigation procedures which
remain relevant to the risks outlined below:
-- A fast-moving communications industry with high levels of
competition, partly due to low barriers to entry, could lead to
pressures on client retention, budgets and price.
-- Turbulence in the macro-economic environment could affect the
Group's financial performance due to volatility in revenues and
expenses, and clients or suppliers going out of business.
-- Loss of key clients will lead to reduced revenues and impact
the Group's financial performance.
-- Loss of key staff could lead to inability to deliver
projects, potential loss of clients and potential inability to
obtain new clients.
-- Acquired businesses could perform poorly, which could impact
the Group's overall performance and result in an impairment of
goodwill.
-- Inadequate services provided by third-party outsourced
suppliers could lead to poor client delivery, loss of clients,
increasing operating costs and negative impact on reputation.
-- Poor working capital or overall capital position could lead
to the Group being unable to repay liabilities when they fall due,
impacting its reputation and impairing its ability to raise
finances or make further acquisitions.
-- Tougher procurement-led client tendering could lead to
reduced prices for services provided and longer payment terms from
clients.
-- Failure of data management or IT systems could lead to delays
to client work or fall foul of data protection requirements.
Unauthorised access could compromise client relationships.
Reputation could also be affected.
-- Changes to regulations and legal requirements could restrict
or burden the Group's activities.
These principal risks and uncertainties have the potential to
impact our results or financial position during the remaining six
months of the financial year.
16. Statement of Directors' responsibilities
The Directors confirm that to the best of their knowledge these
condensed consolidated set of financial statements have been
prepared in accordance with IAS 34 as adopted by the European
Union. The half year management report includes a fair review of
the information required by DTR 4.2.7R and DTR 4.2.8R; 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 2013. A list of current Directors is
maintained on the Creston website: www.creston.com.
By order of the Board
Don Elgie
28 November 2013
Group Chief Executive
17. Forward-looking statements
Certain statements in this half year 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.
As 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.
18. Availability of the half year report
Copies of the half year report 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
IR EAPFXASNDFFF
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