TIDMCRE
RNS Number : 8732X
Creston PLC
25 November 2014
25 November 2014
Creston plc
('Creston' or the 'Group')
Half year results for the six months ended 30 September 2014
Creston plc ('Creston' or the 'Group') (LSE: CRE), the marketing
communications group, today announces its half year results for the
six months to 30 September 2014 (the 'Period').
Group Financial Highlights
-- Revenue up 5 per cent to GBP37.3 million (H1 2014: GBP35.7 million), constant currency(1) revenue up 6 per cent
-- Like-for-like(2) revenue up 4 per cent to GBP37.1 million (H1 2014: GBP35.7 million),
constant currency like-for-like revenue up 5 per cent
-- Headline(3) PBT(4) up 6 per cent to GBP3.8 million (H1 2014: GBP3.6 million), constant
currency Headline PBT up 9 per cent
-- Headline DEPS(5) up 14 per cent to 4.98 pence (H1 2014: 4.35 pence)
-- Half year dividend per share increased by 13 per cent to 1.35 pence (H1 2014: 1.20 pence)
-- Net cash including contingent deferred consideration of GBP4.9 million (H1 2014: GBP0.1 million)
Corporate and Operational Highlights
-- Operating Highlights:
o Significant new business wins in the Period include: McCarthy
& Stone, Allianz, McCain and Danone in two new international
markets
o Digital and online revenue up 4 per cent in absolute terms and
continues to be over 50 per cent of Group revenue
-- Corporate Highlights:
o Appointment of Barrie Brien as Group Chief Executive
o Appointment of Kathryn Herrick to the Board and Group as Chief
Financial Officer
o Appointment of Richard Huntingford as Non-Executive Chairman
of the Group
o Acquisition of niche, market-leading neuroscience specialist,
Walnut Unlimited
-- Post Period end:
o Launch of new agency brand and integrated group offer, Creston
Unlimited, alongside rebranding of Group companies
o Partnership agreement with Serviceplan Gruppe ('Serviceplan')
to extend the Group's international offer
o Appointment of Kate Burns as Non-Executive Director and
Chairman of the Remuneration Committee
Commenting on the results, Barrie Brien, Group Chief Executive
of Creston plc, said:
"The Group has enjoyed good growth over the six months resulting
in increased year-on-year revenue and Headline profit, plus the
addition of some major new clients and brands to our existing
enviable list of international blue chip clients.
A new executive management team has overseen a busy first half
and the delivery of some major cornerstones of the new strategy,
which the Group announced in June 2014. These include the
repositioning of Creston as an integrated agency group of
specialists under the unifying Unlimited brand and our partnership
with Serviceplan to extend our international offer.
The increase in the H1 dividend demonstrates our strong cash
generation, and in light of our continued growth momentum we
anticipate, as in previous years, increased revenues in the second
half of this financial year. Therefore, while we remain cautious in
light of the global macro-economic climate and its potential to
affect our client budgets, the Board confirms that current trading
is in line with its expectations for the full year."
Group Financial Results
H1 2015 H1 2014 % change % change on
a constant
currency basis
----------------------- -------- -------- --------- ----------------
Revenue (GBP million) 37.3 35.7 5% 6%
----------------------- -------- -------- --------- ----------------
Headline PBIT (GBP
million) 3.8 3.6 6% 9%
----------------------- -------- -------- --------- ----------------
Reported PBIT (GBP
million) 4.1 1.7 137% 143%
----------------------- -------- -------- --------- ----------------
Headline PBIT margin
(%) 10% 10% 1% 3%
----------------------- -------- -------- --------- ----------------
Headline DEPS (pence) 4.98 4.35 14% 18%
----------------------- -------- -------- --------- ----------------
Reported DEPS (pence) 5.24 1.82 188% 197%
----------------------- -------- -------- --------- ----------------
Dividend per share
(pence) 1.35 1.20 13% 13%
----------------------- -------- -------- --------- ----------------
(1) Constant currency disclosures calculate the impact of
retranslating overseas' operating results at prior year exchange
rates.
(2) Excluding the results from any acquisitions made during the
current year, like-for-like compares current year performance to
the prior year, adjusting the current year to only include the
results of prior year acquisitions for the commensurate period of
ownership.
(3) Headline results reflect the underlying performance of the
Group and exclude property related costs, acquisition, start-up and
restructuring related costs, the launch of Creston Unlimited and
Group rebranding, movement in fair value of contingent deferred
consideration, amortisation of acquired intangibles, deemed
remuneration charges and notional finance costs. A full
reconciliation is presented in note 4 to this half year
announcement.
(4) Profit before taxation (PBT).
(5) Diluted earnings per share (DEPS).
There will be a presentation for analysts today at 11.30 at the
offices of Liberum Capital Limited, Ropemaker Place, 25 Ropemaker
Street, London, EC2Y 9LY
For further information on the Group's half year results or
about the analyst meeting please contact:
Creston plc + 44 (0)20 7930 9757
Barrie Brien, Group Chief Executive
Kathryn Herrick, Chief Financial
Officer
Bell Pottinger +44 (0)20 3772 2491
Elly Williamson/Lucy Stewart
About Creston plc
Creston plc (LSE: CRE), incorporating the Creston Unlimited
group offer, is a marketing communications group delivering a range
of digital technology-based marketing solutions to blue-chip global
clients. Encompassing consultants and discipline experts from
across the industry and beyond, Creston Unlimited unlocks the power
of creative collaboration to realise the opportunities that exist
for brands and businesses in today's rapidly evolving world.
www.creston.com / www.creston-unlimited.com
Chief Executive's Statement
Group Performance
In an encouraging start to the current financial year, revenue
and Headline PBIT rose by 5 and 6 per cent respectively, and by 6
and 9 per cent respectively on a constant currency basis, during
the first six months.
The Group reported revenue of GBP37.3 million (H1 2014: GBP35.7
million) and a Headline PBIT of GBP3.8 million (H1 2014: GBP3.6
million), which resulted in a small increase in Headline PBIT
margin to 10.3 per cent (H1 2014: 10.2 per cent). On a constant
currency basis higher growth was achieved, with revenue of GBP37.7
million (H1 2014: GBP35.7 million) and Headline PBIT of GBP3.9
million (H1 2014: GBP3.6 million). Like-for-like revenue increased
by 4 per cent to GBP37.1 million (H1 2014: GBP35.7 million), with
constant currency like-for-like revenue growth of 5 per cent to
GBP37.4 million (H1 2014: GBP35.7 million).
The Group also reported an improvement in Headline PBT which
increased by 6 per cent to GBP3.8 million (H1 2014: GBP3.6
million), and an improvement in Headline PBT of 9 per cent to
GBP3.9 million (H1 2014: GBP3.6 million) on a constant currency
basis. Headline DEPS also increased 14 per cent to 4.98 pence (H1
2014: 4.35 pence) due to the underlying earnings growth and a
reduction in the Headline effective tax rate to 21 per cent (H1
2014: 25 per cent).
Due to the strengthening of sterling against the US dollar there
is a material currency exchange impact on our US operations'
results which merits the above separate reporting in constant
currency.
The co-location of the Group's companies has been an important
strategic step which will deliver increased referral and joint
pitching opportunities in the medium to long term. In the short
term there has been an impact on profitability and the Group's H1
results include the effect of a full six month period of the higher
property costs relating to the co-location of the Group's London
based companies. To allow for a prior year comparison, if these
property costs were to be excluded, Headline PBIT would have
increased by 19 per cent to GBP4.3 million.
Reported PBIT was GBP4.1 million (H1 2014: GBP1.7 million) and
after a small interest charge Reported PBT was GBP4.0 million (H1
2014: GBP1.6 million), with the difference between Headline and
Reported PBT largely due to the revaluation credit of the
contingent deferred consideration. The prior year included one-off
property related costs resulting from the co-location of our
London-based companies (see note 4 for reconciliation from Headline
to Reported).
In a continuation of FY14's new business performance, there has
been a good level of new business activity and referrals during the
Period with new clients including: Allianz, Baxter, Bayer, Bentley
and BSkyB.
New digital assignments won in the Period, including McCain and
the Right to Buy digital contract through the Crown Commercial
Service (formerly Government Procurement Service), have contributed
to an increase in digital revenue of 4 per cent in absolute terms
and revenue from digital work continues to be over 50 per cent of
Group revenue. Despite our continued growth in this area, digital
work by its nature can lead to variability in annual income over
the course of a client relationship. For example, an instruction
which often begins as a large website design and build will usually
progress to a content management, hosting and maintenance
instruction.
Corporate Development
As reported in the Group's full year FY14 results, a key
strategic objective for the current financial year was to
reposition Creston as an integrated agency group of specialists
under the unifying Unlimited brand. I am pleased to report that
Creston Unlimited was launched on 18 November 2014 and
simultaneously our existing individual Group companies were
rebranded with the Unlimited suffix. TMW for example is now called
TMW Unlimited. We are confident this new offer will benefit the
service offering to our clients and will importantly provide the
opportunity for us to pitch and win more multi-discipline business
from existing and new clients. The launch of Creston Unlimited and
the group-wide rebranding of our service offerings has an
associated project cost of under GBP0.5 million, the majority of
which will be incurred in the second half of the current financial
year.
Post Period we have also signed a partnership agreement with the
German-owned international marketing communications group
Serviceplan. Founded in 1970, Serviceplan has almost 2,000
employees based in more than 30 office locations worldwide,
including 16 in Europe. Serviceplan has no UK or US presence and so
Creston Unlimited will look to serve Serviceplan's clients in these
markets. In addition Serviceplan will assist Creston Unlimited's
clients in Europe. This partnership agreement will also enable both
Creston and Serviceplan to refer clients to each other and jointly
pitch for pan-European and US opportunities.
Creston and Serviceplan have already successfully partnered
together to win CRM assignments for Danone in Germany and the
Middle East.
Business Review
Following the launch of Creston Unlimited, with its
collaborative team-led approach to meeting client needs, the Group
no longer operates on a divisional basis. The Group's insight
capabilities will be an important part of the Group's new
consultancy offer and will also closely support our communications
companies, and as such, going forwards, the former Communications
and Insight divisions will be reported as one offer, Communications
& Insight. The Group will continue to have an important
specialism in health marketing, which will still be reported
separately.
The respective revenue, Headline PBIT and percentage
contributions for Communications & Insight and Health are as
follows:
H1 2015 Revenue Headline PBIT
---------------- ------------------------- ------------------------------------
GBP million % of Group GBP million % of Group (excluding
Head Office
costs)
---------------- ------------ ----------- ------------ ----------------------
Communications
& Insight 27.0 72% 3.2 66%
---------------- ------------ ----------- ------------ ----------------------
Health 10.3 28% 1.7 34%
---------------- ------------ ----------- ------------ ----------------------
Communications & Insight
H1 2015 H1 2014
----------------------------- -------- --------
Revenue (GBP million) 27.0 26.0
----------------------------- -------- --------
Contribution to revenue
(%) 72% 73%
----------------------------- -------- --------
Headline PBIT (GBP million) 3.2 3.6
----------------------------- -------- --------
Reported PBIT (GBP million) 3.2 2.8
----------------------------- -------- --------
Headline PBIT margin (%) 12% 14%
----------------------------- -------- --------
Revenue for Communications & Insight increased by 4 per cent
during the Period to GBP27.0 million (H1 2014: GBP26.0 million).
Owing to the GBP0.5 million impact of a full six month period of
higher property costs relating to the co-location of the Group's
London based companies, all of which sit within the Communications
& Insight division, Headline PBIT declined to GBP3.2 million
(H1 2014: GBP3.6 million).
Significant new business wins during the Period include work
for: McCarthy & Stone, Sony Mobile, Arthritis Research,
Allianz, BSkyB, Bentley, McCain, Activision, the Right to Buy
digital contract through the Crown Commercial Service (formerly
Government Procurement Service), Vertu, Sainsbury's Energy and the
Department for Work and Pensions.
Revenue derived from our international work for clients served
by Communications & Insight grew by 4 per cent to 20 per cent
of the division's revenue (H1 2014: 20 per cent). We will look to
further grow our international revenues following our partnership
agreement with Serviceplan.
Health
H1 2015 H1 2014
----------------------------- -------- --------
Revenue (GBP million) 10.3 9.7
----------------------------- -------- --------
Contribution to revenue
(%) 28% 27%
----------------------------- -------- --------
Headline PBIT (GBP million) 1.7 1.5
----------------------------- -------- --------
Reported PBIT (GBP million) 2.0 1.2
----------------------------- -------- --------
Headline PBIT margin (%) 16% 15%
----------------------------- -------- --------
Revenue for Health increased by 6 per cent during the Period to
GBP10.3 million (H1 2014: GBP9.7 million) and Headline PBIT rose 15
per cent to GBP1.7 million (H1 2014: GBP1.5 million). Like-for-like
revenue, adjusting for the acquisition of Liberation Unlimited on 1
August 2013, increased by 4 per cent to GBP10.0 million (H1 2014:
GBP9.7 million).
On a constant currency basis, there was higher growth, with
revenue increasing by 10 per cent to GBP10.7 million (H1 2014:
GBP9.7 million) and Headline PBIT rising 22 per cent to GBP1.8
million (H1 2014: GBP1.5 million).
Reported PBIT for the division was GBP2.0 million (H1 2014:
GBP1.2 million), with the difference between Headline and Reported
PBIT largely due to a revaluation credit of the contingent deferred
consideration for DJM Unlimited. This was due to project delays and
cancellations, partly in relation to a failed clinical trial.
In the US, our health business has maintained its good new
business performance with wins during the Period including work for
National Meningitis Association, Parent Project Muscular Dystrophy
and CDC. In the UK, new client work during the Period included
major wins from Sanofi, Baxter, Bayer, Pfizer and Novartis.
Reflecting the great work we have performed for our clients, Health
Unlimited has won 21 industry awards in the Period.
Balance sheet and cash flow
As at 30 September 2014, the Group was in a net cash position of
GBP6.3 million and after contingent deferred consideration of
GBP1.4 million, our net cash position was GBP4.9 million (30
September 2013: GBP0.1 million). During the Period the Group
delivered an operating cash inflow of GBP3.3 million (H1 2014:
adjusted operating cash outflow GBP0.6 million). This reflects an
improved cash conversion ratio of operating cash flow to Headline
EBITDA of 71 per cent (H1 2014: adjusted operating cash flow to
Headline EBITDA of negative 14 per cent).
Following a year end working capital position of GBP1.9 million,
our working capital position was GBP3.0 million as at 30 September
2014 (30 September 2013: 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
91 per cent.
Tax
The Reported tax rate of 22 per cent and the Headline tax rate
of 21 per cent are broadly in line with the UK statutory rate of 21
per cent. The Headline tax rate has fallen in the current period
largely due to the fall in the UK Statutory tax rate from 23 per
cent to 21 per cent. In future periods we expect the Headline tax
rate to increase to reflect the higher levels of tax on growing US
income.
Share buyback
In light of its cash position and share price at the time, the
Group announced on 11 June 2014 that it would commence a share
buy-back programme of up to GBP2 million. As at 24 November, a
total of 1,462,359 shares had been bought back during the financial
year costing GBP1.6 million at an average price of 110 pence.
Board Changes
As previously announced a number of Board changes took effect
during the Period, with two additional changes post Period end. I
became Group Chief Executive on 1 April 2014 and Kathryn Herrick
joined the Board and Group as Chief Financial Officer on 1 July
2014.
David Grigson stepped down from his role as Non-Executive
Chairman at the conclusion of the Group's AGM on 8 September 2014,
and I would like to thank David for the significant contribution he
has made to Creston during his four and a half years as
Chairman.
David has been replaced as Non-Executive Chairman and Chairman
of the Nomination Committee by Richard Huntingford, an existing
member of the Board for three years and former Chairman of the
Remuneration Committee.
The Group also announced two further Board changes on 28 October
2014. Effective 1 November 2014 Kate Burns joined the Board as
Non-Executive Director and Chairman of the Remuneration Committee.
Kate brings with her a strong background in digital media and
technology with senior level experience at Google and AOL, while,
effective 30 November 2014, David Marshall will be stepping down
from the Board as Non-Executive Director. David was Chairman of the
Group from its formation in 2001 until 2010 and I am grateful to
David for the wise counsel and experience which he brought to the
Board during his tenure.
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. The Board has accordingly declared a half year
dividend of 1.35 pence (H1 2014: 1.20 pence) per share to be paid
on 9 January 2015 to shareholders on the register at 5 December
2014. This represents a 13 per cent increase on the prior year.
This growth rate is higher than the expectation for the full year
dividend as the Board looks to complete its move towards a
one-third/two-thirds allocation between the half year/final
dividend payment respectively.
Outlook
Our clients increasingly require international multidiscipline
solutions to their brand and business challenges. The recent launch
of Creston Unlimited, the unifying Unlimited branding across the
Group, and our partnership with Serviceplan, will help us meet this
need and means we have entered the second half of the financial
year with stronger individual businesses as well as a strengthened
core Group offer.
Our strong balance sheet will enable us to invest in and evolve
our offer through organic growth and selective acquisitions as we
look to deliver the more digital technology-based marketing
solutions which our clients require.
The Group is continuing the growth momentum reported in H2 FY14
and, as in previous years, anticipates increased revenues in the
second half of the current financial year. Therefore, while we
remain cautious in light of the global macro-economic climate and
its potential to affect our client budgets in the second half, the
Board confirms that current trading is in line with its
expectations for the full year.
Barrie Brien
Group Chief Executive
UNAUDITED CONSOLIDATED INCOME STATEMENT
for the six months ended 30 September 2014
Note Six months Six months Audited
ended 30 September ended 30 September Year ended
2014 2013 31 March
2014
GBP'000 GBP'000 GBP'000
Turnover (billings) 48,687 48,547 101,850
-------------------- -------------------- ------------
Revenue 5 37,304 35,677 74,878
Operating costs (33,221) (33,955) (67,471)
-------------------- -------------------- ------------
Profit before finance income,
finance costs and taxation 4 4,083 1,722 7,407
Finance costs (89) (102) (203)
-------------------- -------------------- ------------
Profit before taxation 4 3,994 1,620 7,204
Taxation 6 (871) (472) (1,969)
-------------------- -------------------- ------------
Profit for the period 4 3,123 1,148 5,235
-------------------- -------------------- ------------
Attributable to:
Equity holders of the parent 3,110 1,100 5,128
Non-controlling interest 13 48 107
-------------------- -------------------- ------------
3,123 1,148 5,235
-------------------- -------------------- ------------
Basic earnings per share (pence): 7 5.25 1.82 8.55
Diluted earnings per share
(pence): 7 5.24 1.82 8.52
-------------------- -------------------- ------------
Headline profit before finance
income, finance costs and
taxation 4 3,847 3,634 9,766
Headline profit before taxation 4 3,771 3,559 9,617
Headline profit for the period 4 2,971 2,677 7,207
-------------------- -------------------- ------------
UNAUDITED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
for the six months ended 30 September 2014
Six months Six months Audited
ended 30 September ended 30 September Year ended
2014 2013 31 March
2014
GBP'000 GBP'000 GBP'000
Profit for the period 3,123 1,148 5,235
-------------------- -------------------- ------------
Other comprehensive income/(expense):
Items that may be reclassified
subsequently to profit and loss:
Exchange differences on translation
of foreign operations 275 (677) (1,007)
Other comprehensive income/(expense)
for the period, net of tax 275 (677) (1,007)
-------------------- -------------------- ------------
Total comprehensive income for
the period 3,398 471 4,228
-------------------- -------------------- ------------
Attributable to:
Equity holders of the parent 3,385 423 4,121
Non-controlling interest 13 48 107
-------------------- -------------------- ------------
3,398 471 4,228
-------------------- -------------------- ------------
UNAUDITED CONSOLIDATED BALANCE SHEET
as at 30 September 2014
Note As at As at Audited as
30 September 30 September at
2014 2013 31 March
2014
GBP'000 GBP'000
GBP'000
Non-current assets
Intangible assets
Goodwill 9 104,114 104,195 103,792
Other 9 1,217 1,267 1,193
Property, plant and equipment 9 4,220 4,709 4,619
Deferred tax assets 979 652 987
-------------- -------------- -----------
110,530 110,823 110,591
Current assets
Inventories and work in progress 1,138 945 905
Trade and other receivables 26,361 25,634 28,948
Cash and cash equivalents 11 6,290 2,780 7,452
-------------- -------------- -----------
33,789 29,359 37,305
Current liabilities
Trade and other payables (25,093) (23,802) (28,519)
Corporation tax payable (837) (137) (1,147)
Bank overdraft, loans and
loan notes 11 - (1,000) -
Provision for contingent deferred
consideration 10 (1,429) - -
(27,359) (24,939) (29,666)
Net current assets 6,430 4,420 7,639
-------------- -------------- -----------
Total assets less current
liabilities 116,960 115,243 118,230
-------------- -------------- -----------
Non-current liabilities
Trade and other payables (2,376) (2,775) (2,674)
Provision for contingent deferred
consideration 10 - (1,692) (1,711)
Provision for other liabilities
and charges (806) (196) (782)
Deferred tax liabilities (584) (489) (505)
(3,766) (5,152) (5,672)
Net assets 113,194 110,091 112,558
-------------- -------------- -----------
Equity
Called up share capital 6,134 6,134 6,134
Share premium account 35,943 35,943 35,943
Own shares (2,829) (1,098) (1,679)
Shares to be issued 645 867 929
Other reserves 30,822 30,822 30,822
Foreign currency translation
reserve (455) (400) (730)
Retained earnings 42,814 37,717 41,032
-------------- -------------- -----------
Equity attributable to equity
holders of parent 113,074 109,985 112,451
-------------- -------------- -----------
Non-controlling interest 120 106 107
-------------- -------------- -----------
Total equity 113,194 110,091 112,558
-------------- -------------- -----------
UNAUDITED STATEMENT OF CHANGES IN EQUITY
Six months ended 30 September 2014
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
2014 6,134 35,943 (1,679) 929 30,822 (730) 41,032 112,451 107 112,558
--------------- -------- -------- -------- -------- --------- ------------ --------- ------------- ---------------- --------
Profit for
the period - - - - - - 3,110 3,110 13 3,123
Other
comprehensive
income:
Exchange
differences
on
translation
of foreign
operations - - - - - 275 - 275 - 275
--------------- -------- -------- -------- -------- --------- ------------ --------- ------------- ---------------- --------
Total
comprehensive
income for
the period - - - - - 275 3,110 3,385 13 3,398
--------------- -------- -------- -------- -------- --------- ------------ --------- ------------- ---------------- --------
Credit for
share-based
incentive
schemes - - - 129 - - - 129 - 129
Transfer
between
reserves
in respect
of lapsed
share options - - - (256) - - 256 - - -
Exercise
of share
award - - 61 (157) - - - (96) - (96)
Gain on
employee
benefit trust - - - - - - 16 16 - 16
Purchase
of treasury
shares - - (1,211) - - - - (1,211) - (1,211)
Dividends
(note 8) - - - - - - (1,600) (1,600) - (1,600)
--------------- -------- -------- -------- -------- --------- ------------ --------- ------------- ---------------- --------
At 30
September
2014 6,134 35,943 (2,829) 645 30,822 (455) 42,814 113,074 120 113,194
--------------- -------- -------- -------- -------- --------- ------------ --------- ------------- ---------------- --------
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
------------------ -------- -------- -------- -------- --------- ------------ --------- ------------- ---------------- --------
Profit for
the period - - - - - - 1,100 1,100 48 1,148
Other
comprehensive
expense:
Exchange
differences
on translation
of foreign
operations - - - - - (677) - (677) - (677)
------------------ -------- -------- -------- -------- --------- ------------ --------- ------------- ---------------- --------
Total
comprehensive
(expense)/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
year
At 1 April
2013 6,134 35,943 (656) 1,167 30,822 277 37,863 111,550 58 111,608
------------------ -------- -------- -------- -------- --------- ------------ --------- ------------- ---------------- --------
Profit for
the year - - - - - - 5,128 5,128 107 5,235
Other
comprehensive
expense:
Exchange
differences
on translation
of foreign
operations - - - -` - (1,007) - (1,007) - (1,007)
------------------ -------- -------- -------- -------- --------- ------------ --------- ------------- ---------------- --------
Total
comprehensive
(expense)/income
for the
period - - - - - (1,007) 5,128 4,121 107 4,228
------------------ -------- -------- -------- -------- --------- ------------ --------- ------------- ---------------- --------
Credit for
share-based
incentive
schemes - - - 126 - - - 126 - 126
Transfer
between
reserves
in respect
of lapsed
share options - - - (364) - - 364 - - -
Purchase
of treasury
shares - - (1,023) - - - - (1,023) - (1,023)
Dividends - - - - - - (2,323) (2,323) (58) (2,381)
------------------ -------- -------- -------- -------- --------- ------------ --------- ------------- ---------------- --------
At 31 March
2014 6,134 35,943 (1,679) 929 30,822 (730) 41,032 112,451 107 112,558
------------------ -------- -------- -------- -------- --------- ------------ --------- ------------- ---------------- --------
UNAUDITED CONSOLIDATED STATEMENT OF CASHFLOWS
for the six months ended 30 September 2014
Note Six months Six months Audited
ended 30 September ended 30 September Year ended
2014 2013 31 March
GBP'000 GBP'000 2014
GBP'000
Profit for the period 3,123 1,148 5,235
Taxation 871 472 1,969
-------------------- -------------------- ------------
Profit before taxation 3,994 1,620 7,204
-------------------- -------------------- ------------
Finance costs 89 102 203
-------------------- -------------------- ------------
Profit before finance income, finance
costs and taxation 4,083 1,722 7,407
-------------------- -------------------- ------------
Depreciation of property, plant and
equipment 735 828 1,657
Amortisation of intangible assets 92 176 282
Share based payments charge 223 64 267
(Credit)/charge for future acquisition
payments to employees deemed as remuneration (13) 155 252
Movement in fair value of contingent
deferred consideration (302) (30) (29)
Loss on disposal of property, plant
and equipment - 63 56
Loss on disposal of intangible assets - - 2
(Increase)/decrease in inventories
and work in progress (231) 123 160
Decrease/(increase) in trade and other
receivables 2,640 (250) (3,617)
(Decrease)/increase in trade and other
payables (3,890) (3,485) 1,080
-------------------- -------------------- ------------
Adjusted operating cash inflow/(outflow) 3,337 (634) 7,517
-------------------- -------------------- ------------
Outflow of proceeds on operating
lease 12 - (3,688) (3,688)
-------------------- -------------------- ------------
Operating cash inflow/(outflow) 3,337 (4,322) 3,829
-------------------- -------------------- ------------
Tax paid (1,091) (1,803) (2,647)
-------------------- -------------------- ------------
Net cash inflow/(outflow)
from operating activities 2,246 (6,125) 1,182
-------------------- -------------------- ------------
Investing activities
Purchase of property, plant
and equipment 9 (327) (1,205) (1,513)
Proceeds from sale of property, 2 - -
plant and equipment
Purchase of intangible assets 9 (102) (110) (152)
-------------------- -------------------- ------------
Net cash outflow from investing
activities (427) (1,315) (1,665)
-------------------- -------------------- ------------
Financing activities
Finance costs (72) (77) (112)
Net increase/(decrease)
in borrowings - 990 (10)
Dividends paid (1,600) (1,610) (2,323)
Dividends paid to non-controlling
interest - - (58)
Purchase of treasury shares (1,211) (442) (1,023)
-------------------- -------------------- ------------
Net cash outflow from financing
activities (2,883) (1,139) (3,526)
-------------------- -------------------- ------------
Decrease in cash and cash
equivalents (1,064) (8,579) (4,009)
Cash and cash equivalents
at start of period 11 7,452 11,208 11,208
-------------------- -------------------- ------------
Effect of foreign exchange
rates (98) 151 253
Cash and cash equivalents
at end of period 11 6,290 2,780 7,452
-------------------- -------------------- ------------
NOTES TO THE HALF YEAR REPORT
for the six months ended 30 September 2014
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 2014 were
approved by the Board of Directors on 9 July 2014 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 2014 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 2014 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 2014 have been prepared in
accordance with the accounting policies contained in the Group's
Annual Report and Accounts 2014 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 9 'Financial instruments' (effective for periods beginning
on or after 1 January 2018). 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.
The following standards, amendments and interpretations were
adopted by the Group during the period:
IFRS 10, 'Consolidated financial statements' and amendments to
IAS 32, 'Financial instruments: Presentation'. The adoption of
these amendments did not have a material impact on the Financial
Statements.
4. Reconciliation of Headline profit to Reported profit
In order to enable a better understanding of the underlying
trading of the Group, the 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 contingent deferred consideration, future
acquisition payments to employees deemed as remuneration and
notional finance costs on future contingent 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, Creston Unlimited rebranding costs and the impairment of
goodwill.
See note 5, segmental analysis, for further explanation of the
nature of Headline items incurred within the respective
periods.
Six months ended 30 September 2014
PBIT PBT PAT
GBP'000 GBP'000 GBP'000
Headline 3,847 3,771 2,971
Acquisition and start-up related costs (63) (63) (63)
Creston Unlimited rebranding (16) (16) (16)
Movement in fair value of contingent
deferred consideration 302 302 302
Credit for future acquisition payments
to employees deemed as remuneration 13 13 13
Notional finance cost on future contingent
deferred consideration - (13) (13)
Deferred tax charge on amortisation of
goodwill - - (79)
Taxation impact - - 8
--------- --------- ---------
Reported 4,083 3,994 3,123
--------- --------- ---------
Headline Basic EPS (pence) 4.99
Headline Diluted EPS (pence) 4.98
Reported Basic EPS (pence) 5.25
Reported Diluted EPS (pence) 5.24
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 contingent 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 contingent
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
Year ended 31 March 2014
PBIT PBT PAT
GBP'000 GBP'000 GBP'000
Headline 9,766 9,617 7,207
Property related costs (1,446) (1,446) (1,446)
Acquisition, start-up and restructuring
related costs (630) (630) (630)
Amortisation of acquired intangibles (60) (60) (60)
Movement in fair value of contingent
deferred consideration 29 29 29
Future acquisition payments to employees
deemed as remuneration (252) (252) (252)
Notional finance cost on future contingent
deferred consideration - (54) (54)
Deferred tax charge on amortisation of
goodwill - - (147)
Taxation impact - - 588
--------- --------- ---------
Reported 7,407 7,204 5,235
--------- --------- ---------
Headline Basic EPS (pence) 11.84
Headline Diluted EPS (pence) 11.79
Reported Basic EPS (pence) 8.55
Reported Diluted EPS (pence) 8.52
5. Segmental analysis
The chief operating decision maker has been identified as the
Executive Board of Directors, which makes the strategic decisions.
During the Period the way in which the Executive Board review the
performance of the Group's components, and subsequently allocate
resources to these components has changed, and as such the Group's
reportable operating segments have also changed accordingly. The
Executive Board now reviews the performance of the Group using two
divisions, these being Communications & Insight, and
Health.
The principal activities of the two divisions are as
follows:
Communications & Insight
The Communications & Insight division delivers a range of
digital technology based marketing solutions to blue-chip global
clients. Services include: advertising, brand strategy, customer
relationship marketing (CRM), digital and direct marketing, local
marketing, market research using qualitative and quantitative
face-to-face, telephone and online data collection techniques,
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.
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 contingent
deferred consideration, impairment of goodwill, future acquisition
payments to employees deemed as remuneration and notional finance
costs on contingent 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 Head Office Group
& Insight
Six months ended
30 September 2014 GBP'000 GBP'000 GBP'000 GBP'000
Turnover (billings) 36,546 12,141 - 48,687
Revenue 27,018 10,286 - 37,304
--------------- ---------- ------------ ----------
Headline PBIT 3,218 1,677 (1,048) 3,847
--------------- ---------- ------------ ----------
Acquisition and start-up
related costs (24) (39) - (63)
Creston Unlimited rebranding - - (16) (16)
Movement in fair value
of contingent deferred
consideration - 302 - 302
Future acquisition payments
to employees deemed
as remuneration (20) 33 - 13
--------------- ---------- ------------ ----------
Reported PBIT 3,174 1,973 (1,064) 4,083
--------------- ---------- ------------ ----------
Finance costs - - (76) (76)
Notional finance cost
on future contingent
deferred consideration - (13) - (13)
--------------- ---------- ------------ ----------
Profit before taxation 3,174 1,960 (1,140) 3,994
--------------- ---------- ------------ ----------
Taxation (871)
--------------- ---------- ------------ ----------
Profit for the period 3,123
--------------- ---------- ------------ ----------
Due to management's revision of the expected trading performance
of DJM Unlimited during the earn-out period there has been a
reduction of contingent deferred consideration resulting in a
credit to the Consolidated income statement of GBP0.3 million for
the period ended 30 September 2014. This has been excluded from the
Headline PBIT measure.
Communications Health Head Office Group
& Insight
Six months ended
30 September 2013 GBP'000 GBP'000 GBP'000 GBP'000
Turnover (billings) 37,662 10,885 - 48,547
Revenue 26,010 9,667 - 35,677
--------------- ---------- ------------ ----------
Headline PBIT 3,582 1,461 (1,409) 3,634
--------------- ---------- ------------ ----------
Property related costs (516) - (906) (1,422)
Acquisition, start up
and restructuring related
costs (276) (29) - (305)
Movement in fair value
of contingent deferred
consideration - 30 - 30
Amortisation of acquired
intangibles - (60) - (60)
Future acquisition payments
to employees deemed
as remuneration - (155) - (155)
--------------- ---------- ------------ ----------
Reported PBIT 2,790 1,247 (2,315) 1,722
--------------- ---------- ------------ ----------
Finance costs - - (75) (75)
Notional finance cost
on future contingent
deferred consideration - (27) - (27)
--------------- ---------- ------------ ----------
Profit before taxation 2,790 1,220 (2,390) 1,620
--------------- ---------- ------------ ----------
Taxation (472)
--------------- ---------- ------------ ----------
Profit for the period 1,148
--------------- ---------- ------------ ----------
Communications Health Head Office Group
& Insight
Year ended
31 March 2014 GBP'000 GBP'000 GBP'000 GBP'000
Turnover (billings) 77,829 24,021 - 101,850
Revenue 53,592 21,286 - 74,878
--------------- ---------- ------------ ----------
Headline PBIT 8,268 4,497 (2,999) 9,766
--------------- ---------- ------------ ----------
Property related costs (534) - (912) (1,446)
Acquisition, start-up
and restructuring related
costs (435) (195) - (630)
Amortisation of acquired
intangibles - (60) - (60)
Movement in fair value
of contingent deferred
consideration - 29 - 29
Future acquisition payments
to employees deemed
as remuneration - (252) - (252)
--------------- ---------- ------------ ----------
Reported PBIT 7,299 4,019 (3,911) 7,407
--------------- ---------- ------------ ----------
Finance costs - - (149) (149)
Notional finance cost
on future contingent
deferred consideration - (54) - (54)
--------------- ---------- ------------ ----------
Profit before taxation 7,299 3,965 (4,060) 7,204
--------------- ---------- ------------ ----------
Taxation (1,969)
--------------- ---------- ------------ ----------
Profit for the period 5,235
--------------- ---------- ------------ ----------
Property related costs of GBP1.4 million have been excluded from
the Headline PBIT measure for the year ended 31 March 2014. These
costs include 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.
The remaining GBP0.5 million included within the total GBP1.4
million of property related costs for the year relates to move
costs and double rent, rates and service charge on existing leases;
these have been recognised within the respective divisional result.
As the economic benefit obtained during the year ended 31 March
2014 was in excess of the GBP0.5 million incurred under the
existing leases, a provision for these costs was not made as at 31
March 2013.
Acquisition, start up and restructuring related costs of GBP0.6
million have been excluded from the Headline PBIT measure for the
year ended 31 March 2014. These consist of GBP0.4 million in
closure costs and trading losses for Vitaris and restructuring
costs within the Communications & Insight division, and GBP0.2
million in start-up costs associated with the new brand and
creative consultancy, Loooped.
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 2014 September September 2014
2014 2013 2014 2013
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
UK 31,540 33,635 70,376 25,054 23,875 50,949
Rest of Europe 10,554 8,621 18,471 6,601 6,320 12,779
Rest of the World
(including USA) 6,593 6,291 13,003 5,649 5,482 11,150
----------- ----------- ----------- ----------- ----------- -----------
48,687 48,547 101,850 37,304 35,677 74,878
----------- ----------- ----------- ----------- ----------- -----------
6. Taxation
The Reported tax rate of 22 per cent and the Headline tax rate
of 21 per cent are broadly in line with the UK statutory rate of 21
per cent. The Headline tax rate has fallen in the current period
largely due to the fall in the UK Statutory tax rate from 23 per
cent to 21 per cent. In future periods we expect the Headline tax
rate to increase slightly to reflect the higher levels of tax on
growing US income.
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 2014 September September 2014
2014 2013 2014 2013
Earnings
Profit for the
period (GBP'000) 2,971 2,677 7,207 3,123 1,148 5,235
----------- ----------- ----------- ----------- ----------- -----------
Attributable
to:
----------- ----------- ----------- ----------- ----------- -----------
Non-controlling
interest (GBP'000) 13 48 107 13 48 107
----------- ----------- ----------- ----------- ----------- -----------
Equity holders
of the parent
(GBP'000) 2,958 2,629 7,100 3,110 1,100 5,128
----------- ----------- ----------- ----------- ----------- -----------
Number of shares
Weighted average
number of shares 59,254,192 60,347,772 59,951,901 59,254,192 60,347,772 59,951,901
Dilutive effect
of shares 145,117 91,591 244,459 145,117 91,591 244,459
----------- ----------- ----------- ----------- ----------- -----------
59,399,309 60,439,363 60,196,360 59,399,309 60,439,363 60,196,360
----------- ----------- ----------- ----------- ----------- -----------
Earnings per
share
----------- ----------- ----------- ----------- ----------- -----------
Basic earnings
per share (pence): 4.99 4.36 11.84 5.25 1.82 8.55
----------- ----------- ----------- ----------- ----------- -----------
Diluted earnings
per share (pence): 4.98 4.35 11.79 5.24 1.82 8.52
----------- ----------- ----------- ----------- ----------- -----------
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 647,203 employee share options which were
outstanding as at 30 September 2014 (30 September 2013:
867,465).
8. Dividends
The prior year final dividend of 2.70 pence (H1 2014: 2.67
pence) per share was paid to shareholders on 12 September 2014
giving a total of GBP1,599,932 (H1 2014: GBP1,609,782).
The Board has declared a half year dividend to be paid on 9
January 2015 of 1.35 pence (H1 2014: 1.20 pence) per share to all
ordinary shareholders on the register at 5 December 2014.
9. Non-current assets
Six months ended
30 September 2014
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 2014 4,619 103,792 1,193 109,604
---------------- ------------------ ------------------- ----------
Additions 327 - 102 429
Transfer to intangible
assets (8) - 8 -
Disposals (3) - - (3)
Depreciation and
amortisation (735) - (92) (827)
Exchange differences 20 322 6 348
---------------- ------------------ ------------------- ----------
Net book amount at
30 September 2014 4,220 104,114 1,217 109,551
---------------- ------------------ ------------------- ----------
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
---------------- ------------------ ------------------- ----------
Year ended 31 March
2014
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 1,961 - 152 2,113
Transfer to intangible
assets (1) - 1 -
Disposals (56) - (2) (58)
Charge for the year (1,657) - (282) (1,939)
Exchange differences (70) (1,230) (35) (1,335)
---------------- ------------------ ------------------- ----------
Net book amount at
31 March 2014 4,619 103,792 1,193 109,604
---------------- ------------------ ------------------- ----------
10. Provision for contingent deferred consideration
The contingent deferred consideration obligations are set out
below:
As at As at As at
30 September 30 September 31 March
2014 2013 2014
GBP'000 GBP'000 GBP'000
Brought forward 1,711 1,714 1,714
Movement in fair value of
contingent deferred consideration (302) (30) (29)
Exchange differences 7 (19) (28)
Income statement:
- Notional finance cost on
future contingent deferred
consideration 13 27 54
Carried forward 1,429 1,692 1,711
-------------- -------------- ----------
As at As at As at
30 September 30 September 31 March
2014 2013 2014
GBP'000 GBP'000 GBP'000
Analysed as:
-------------- -------------- ----------
Current liabilities 1,429 - -
Non-current liabilities - 1,692 1,711
-------------- -------------- ----------
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 2014: 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 contingent deferred consideration for previous acquisitions
through the Consolidated income statement. During the Period a
credit of GBP0.3 million has been recognised due to the revaluation
of the contingent deferred consideration for DJM Unlimited.
11. Analysis of net cash
Six months ended 30 September As at Acquisitions* Cash flow Foreign As at
2014 1 April exchange 30 September
2014 2014
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Cash and cash equivalents 7,452 - (1,064) (98) 6,290
--------- -------------- ---------- ---------- --------------
Net cash 7,452 - (1,064) (98) 6,290
--------- -------------- ---------- ---------- --------------
Provision for contingent
deferred consideration
(note10) (1,711) 282 - - (1,429)
--------- -------------- ---------- ---------- --------------
Net cash including contingent
deferred consideration 5,741 282 (1,064) (98) 4,861
--------- -------------- ---------- ---------- --------------
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
Revolving credit facility - - (1,000) - (1,000)
Acquisition loan notes (10) - 10 - -
Net cash 11,198 - (9,569) 151 1,780
--------- -------------- ---------- ---------- --------------
Provision for contingent
deferred consideration
(note10) (1,714) 22 - - (1,692)
--------- -------------- ---------- ---------- --------------
Net cash including contingent
deferred consideration 9,484 22 (9,569) 151 88
--------- -------------- ---------- ---------- --------------
Year ended 31 March 2014 As at Acquisitions* Cash flow Foreign As at
1 April exchange 31 March
2013 2014
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Cash and cash equivalents 11,208 - (4,009) 253 7,452
Acquisition loan notes (10) - 10 - -
Net cash 11,198 - (3,999) 253 7,452
--------- -------------- ---------- ---------- ----------
Provision for contingent
deferred consideration
(note10) (1,714) 3 - - (1,711)
--------- -------------- ---------- ---------- ----------
Net cash including contingent
deferred consideration 9,484 3 (3,999) 253 5,741
--------- -------------- ---------- ---------- ----------
* Includes non-cash items.
12. 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. During
the period to 30 September 2013 GBP3.7 million of the operating
lease proceeds were utilised to fulfil the dilapidations obligation
and settle the associated VAT liability. Excluding the GBP3.7
million from the Group's operating cash outflow of GBP4.3 million
resulted in an adjusted operating cash outflow of GBP0.6 million in
FY14.
13. Related-party transactions
During the six months ended 30 September 2014 total fees of
GBP32,500 (H1 2014: GBP32,500) were incurred in relation to City
Group P.L.C., GBP15,000 (H1 2014: GBP15,000) for the provision of
company secretarial services and GBP17,500 (H1 2014: GBP17,500) for
the services of Mr D C Marshall, a Non-Executive Director. The
balance due at 30 September 2014 was GBPnil (30 September 2013:
GBPnil). All transactions were conducted on an arm's length
basis.
14. Principal risks and uncertainties
Details of our principal risks and uncertainties have been
disclosed on page 28 of the 2014 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, increasingly
complex technological change and a greater international focus,
leads to pressures on client retention, budgets and price.
-- Loss of key clients leads to reduced revenues and impacts the
Group's financial performance.
-- Loss of key staff leads to inability to deliver projects,
potential loss of clients and potential inability to obtain new
clients.
-- Increased pressure from new and existing clients to reduce
their costs, leading to increased potential of scope creep, reduced
prices for services provided and longer payment terms for
clients.
-- Turbulence in the macro-economic environment affects the
Group's financial performance due to volatility in revenues and
expenses, and clients or suppliers going out of business.
-- Insufficient security or ineffective operational management
of IT and data management systems leads to compromised client
relationships, delays to client work, falling foul of data
protection requirements and an impact on reputation.
-- Acquired businesses perform poorly which impacts the Group's
overall performance and results in an impairment of goodwill.
-- Changes to regulations and legal requirements 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.
15. 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 2014. A list of current Directors is
maintained on the Creston website: www.creston.com.
By order of the Board
Barrie Brien
25 November 2014
Group Chief Executive
16. 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.
17. 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
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