TIDMCRE
RNS Number : 5777P
Creston PLC
09 June 2015
Creston plc
('Creston' or the 'Group')
Unaudited Full Year Results for the Year Ended 31 March 2015
Creston plc (LSE: CRE), the marketing communications group,
today announces its full year results for the year ended 31 March
2015.
Financial Highlights
-- Revenue up 3 per cent to GBP76.9 million (2014: GBP74.9 million)
-- Like-for-like(1) revenue up 2 per cent to GBP76.6 million
(2014: GBP74.9 million), constant currency(2) like-for-like revenue
up 3 per cent
-- Headline(3) PBIT(4) up 2 per cent to GBP10.0 million (2014:
GBP9.8 million), constant currency Headline PBIT up 3 per cent
-- Headline PBT(5) up 2 per cent to GBP9.9 million (2014: GBP9.6
million), constant currency Headline PBT up 3 per cent
-- Headline DEPS(6) up 11 per cent to 13.07 pence (2014: 11.79 pence)
-- Proposed full year dividend up 8 per cent to 4.20 pence per
share (2014: 3.90 pence per share)
-- Net cash of GBP8.3 million (2014: GBP7.5 million)
Operational and Corporate Highlights
-- Launch of new strategy including new Group brand and offer,
Creston Unlimited, alongside rebranding of Group companies
-- International partnership with Serviceplan Gruppe
('Serviceplan') to extend the Group's European offer
-- Acquisition of niche, market-leading neuroscience specialist, Walnut Unlimited
-- Increased new business wins in the period
-- Digital and online revenue up 7 per cent in absolute terms
representing 55 per cent (2014: 53 per cent) of Group revenue
-- Group share buy-back in year of 1,572,359 shares for GBP1.8
million at an average price of 111 pence per share
-- New Board appointments following succession planning
Post period end
-- Acquisition of 51 per cent of How Splendid Ltd, a digital
design and development consultancy, to create Splendid
Unlimited
-- Strategic investment for a 27 per cent stake in advertising agency, 18 Feet & Rising Ltd
-- Partnerships with Future Foundation (Global Consumer Trends);
The Digital Consultancy (Digital Strategy) and Propeller
Communications (Digital Healthcare Communications in the US)
-- Appointment of Nigel Lingwood as Non-Executive Director
Commenting on the results, Barrie Brien, Group Chief Executive
of Creston plc, said:
"One year into our new five year strategy there is a real
feeling of momentum and energy across our Group. A fantastic team
effort has seen us achieve a huge amount in the last 12 months. The
launch of a new Group brand and offer, a Group-wide rebrand, three
acquisitions and four partnerships have all been delivered
alongside award-winning work for our global clients, a strong new
business performance, growth in our financial results, and an
increased dividend to our shareholders.
We are encouraged by the early successes in our new strategy
which give us a strong platform to deliver value to shareholders
over the medium term."
Group Financial Results
2015 2014 % change
----------------------- ------ ------ ---------
Revenue (GBP million) 76.9 74.9 3%
----------------------- ------ ------ ---------
Headline PBIT (GBP
million) 10.0 9.8 2%
----------------------- ------ ------ ---------
Reported PBIT (GBP
million) 9.8 7.4 32%
----------------------- ------ ------ ---------
Headline PBIT margin
(%) 13% 13% 0%
----------------------- ------ ------ ---------
Headline DEPS (pence) 13.07 11.79 11%
----------------------- ------ ------ ---------
Reported DEPS (pence) 12.45 8.52 46%
----------------------- ------ ------ ---------
Dividend per share
(pence) 4.20 3.90 8%
----------------------- ------ ------ ---------
There will be a presentation for analysts today at 9.30am at the
offices of Rothschild, New Court, St Swithin's Lane, London EC4N
8AL
For further information on the Group's full 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
Group Chief Executive's Statement
Overview
In the 12 months under review, the Group has delivered a good
financial and operational performance and achieved significant
progress in implementing its five year strategic plan.
The Group is reporting year-on-year growth across full year
revenue, Headline PBT, Headline Diluted EPS and dividend. Revenue
grew 3 per cent against the prior year to GBP76.9 million (2014:
GBP74.9 million) with like-for-like revenue up 2 per cent to
GBP76.6 million (2014: GBP74.9 million); Headline PBT rose 2 per
cent to GBP9.9 million (2014: GBP9.6 million); while Headline
Diluted EPS was 13.07 pence (2014: 11.79 pence), an 11 per cent
increase.
On a constant currency basis higher growth was achieved, with
like-for-like revenue growth of 3 per cent to GBP76.8 million
(2014: GBP74.9 million) and Headline PBT growth of 3 per cent to
GBP9.9 million (2014: GBP9.6 million). Due to the slight
strengthening of sterling against the US dollar there is a currency
exchange impact on our US operations' results which merits this
separate reporting in constant currency.
The proposed full year dividend also increased 8 per cent to
4.20 pence per share (2014: 3.90 pence per share). At the year end,
the Group had a strong balance sheet with net cash of GBP8.3
million (2014: GBP7.5 million).
Strategy
At the start of the year I set out, and we began, the
implementation of the new Group strategy for the next five
years.
In summary this strategy is to:
-- build an agency group brand
-- develop a group full service client offer
-- develop our consultancy offer
-- invest in our existing companies' offer and services
-- grow our international services
Following the launch of our new agency group brand and offer,
Creston Unlimited in November 2014, and the simultaneous rebrand of
all Creston companies with the Unlimited suffix, we have spent the
subsequent six months beginning to build out this offer. Having
previously identified with the Board where the gaps in our full
service lie, we have commenced a programme of targeted investments,
acquisitions and partnerships to add these complementary skills and
expertise to the Group.
To this end, on 22 April 2015 we announced the acquisition of 51
per cent of How Splendid Ltd, a digital design and development
consultancy, to form Splendid Unlimited. The acquisition is
consistent with Creston's strategy to continue growing its digital
marketing consultancy offer, which will help clients with a key
element of their brand's digital transformation and the
complementary services are expected to create significant cross
selling and client referral opportunities with the rest of the
Group. The acquisition also adds some significant new clients to
the Group such as Barclaycard, Boots, Gamesys, News UK, Skrill, SSE
and Star Alliance, two of which will enter the Group's Top 20
clients in terms of revenue.
Furthermore we announced today our strategic investment for a 27
per cent stake in advertising agency, 18 Feet & Rising, thereby
adding another key discipline to our offer. When working jointly on
new or existing clients, 18 Feet & Rising will be known as 18
Feet & Rising Unlimited.
To manage the growth of our business in a prudent manner and to
ensure we retain a strong balance sheet, the Board has approved a
programme of building strong partnerships in addition to
undertaking strategic acquisitions. During the course of FY15, and
post the period end, we have entered into four such partnerships -
each in a very distinct and complementary area, and in each case
when working jointly with Creston Unlimited the partner will adopt
the Unlimited brand.
Our international services, which represent almost one third of
Group revenue, have been enhanced through signing two new recent
partners. In November 2014, we signed a partnership agreement with
Serviceplan, the leading independent marketing communications
agency group in Europe. Having worked with Serviceplan in the past,
this agreement cemented our existing relationship and has already
resulted in a number of new client referrals and joint pitches.
Indeed, since our formal partnership, Creston Unlimited and
Serviceplan have already won joint CRM assignments for Danone in
Germany and the Middle East.
In April 2015 we signed our second international partner,
Propeller Communications - a digital healthcare communications
agency based in the US. Also in April we signed with Future
Foundation, the global consumer trends and insight consultancy, to
complement our insight offer and with the digital strategist, The
Digital Consultancy, to add to our consultancy offer alongside
Splendid Unlimited.
Embedded in the Creston Unlimited proposition is our ability to
work together collaboratively, creating agile bespoke teams to
solve the big brand and business challenges that our clients face.
We've already seen some early successes and are pleased with the
level of opportunities arising from this new way of working.
Not only does the launch of Creston Unlimited allow us to pitch
for new full service business, but it is also facilitating the
referral of clients across multiple disciplines, as clients
recognise us as a more united innovative Group. For example, long
standing clients Canon and Danone now have five and six Unlimited
companies servicing them respectively, compared to just two Group
companies four years ago.
Additionally, while playing a full part in Creston Unlimited,
our individual companies have continued to service clients in their
core markets and disciplines and have had a successful year in
terms of new business revenue, which has grown year-on-year. This
growth has been predominantly driven by our leading innovative
digital capabilities, as evidenced by the rise in our digital and
online revenue which increased 7 per cent in absolute terms to
represent 55 per cent (2014: 53 per cent) of Group revenue.
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, the former Communications and Insight
divisions are reported as one division, 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:
2015 Revenue Headline PBIT
---------------- ------------------------- ------------------------------------
GBP million % of Group GBP million % of Group (excluding
Head Office
costs)
---------------- ------------ ----------- ------------ ----------------------
Communications
& Insight 56.2 73% 8.1 65%
---------------- ------------ ----------- ------------ ----------------------
Health 20.7 27% 4.3 35%
---------------- ------------ ----------- ------------ ----------------------
Communications & Insight
2015 2014
------------------------------- ----- -----
Revenue (GBP million) 56.2 53.6
------------------------------- ----- -----
Contribution to Group revenue
(%) 73% 72%
------------------------------- ----- -----
Headline PBIT (GBP million) 8.1 8.3
------------------------------- ----- -----
Reported PBIT (GBP million) 7.9 7.3
------------------------------- ----- -----
Headline PBIT margin (%) 14% 15%
------------------------------- ----- -----
Revenue for Communications & Insight increased by 5 per cent
during the period to GBP56.2 million (2014: GBP53.6 million).
Headline PBIT declined slightly to GBP8.1 million (2014: GBP8.3
million) due to the adverse impact of the weakening Euro in the
second half of the year on a few Euro based revenue contracts, and
temporary additional freelancer costs incurred following a strong
new business performance.
Whilst, as previously reported, the division carried an
additional GBP0.5 million of property related costs in the first
half of the year, we have managed to fully mitigate this
incremental cost following a successful rates review across a
number of our properties in the latter part of the year.
Significant new business wins during the period include work for
new and existing clients: Activision, Allianz Arthritis Research
UK, ASDA, Barilla, Bentley, Deezer, McCarthy & Stone, Mclaren,
Mind Candy, Sainsbury's Energy, Sky, Sony Mobile, Superfast
Broadband and Vue Cinemas. Post period end wins include Costa and
further assignments from Canon.
Health
2015 2014
------------------------------- ----- -----
Revenue (GBP million) 20.7 21.3
------------------------------- ----- -----
Contribution to Group revenue
(%) 27% 28%
------------------------------- ----- -----
Headline PBIT (GBP million) 4.3 4.5
------------------------------- ----- -----
Reported PBIT (GBP million) 4.7 4.0
------------------------------- ----- -----
Headline PBIT margin (%) 21% 21%
------------------------------- ----- -----
Health reported a revenue decline of 3 percent to GBP20.7
million (2014: GBP21.3 million) and Headline PBIT decline of 4 per
cent to GBP4.3 million (2014: GBP4.5 million). Like-for-like
revenue, adjusting for the acquisition of Liberation Unlimited on 1
August 2013, declined 4 per cent to GBP20.5 million (2014: GBP21.3
million).
On a constant currency basis, the decline was reduced, with
revenue decreasing by 2 per cent to GBP20.8 million (2014: GBP21.3
million), like-for-like revenue decreasing by 3 per cent to GBP20.6
million (2014: GBP21.3 million) and Headline PBIT decreasing 3 per
cent to GBP4.3 million (2014: GBP4.5 million).
Following a strong first half revenue growth of 6 per cent, and
as reported in our Q3 IMS on 3 February 2015, our third quarter
revenue performance was impacted by some client budget cuts and
project delays within the UK health business, which also affected
the division's final quarter revenue. Consequently, where required,
actions were taken in the fourth quarter to re-align the cost base
to this revenue.
Reported PBIT for the division was GBP4.7 million (2014: GBP4.0
million), with the difference between Headline and Reported PBIT
largely due to a revaluation credit of the contingent deferred
consideration for DJM Unlimited, which was reported within our half
year results statement on 25 November 2014. This was due to project
delays and cancellations, partly in relation to a failed clinical
trial in the first half of the year.
Significant new business wins during the period include work for
Abbott, Baxter, Bayer, Danone, International AIDS Society, Parent
Project Muscular Dystrophy and Unilever and we've continued to
expand our remit with existing clients including: CDC, Novartis,
National Meningitis Association, Pfizer and Sanofi.
People
It's been an incredibly busy year for everyone in the Group and
I would like to thank all my colleagues for their continued hard
work for our clients, and the enthusiasm and support they have
shown for our new strategy. Implementing a new strategic plan is
very time consuming and we can be proud of how much we have
achieved together in a short space of time.
Recognition by our industry in the form of awards is a very
compelling endorsement and I am proud of every award our Group
wins. I have no doubt we have some of the most innovative, forward
thinking people in our sector and it's great to see this reflected
by the year-on-year growth in awards - 35 awards and 61 shortlists
in the calendar year 2014.
Board
As previously announced a number of plc Board changes took
effect during the year. 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 Group's AGM on 8 September 2014, and was replaced
as Non-Executive Chairman and Chairman of the Nomination Committee
by Richard Huntingford, an existing member of the Board.
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
and, effective 30 November 2014, David Marshall stepped down from
the Board as Non-Executive Director.
Finally, post period end on 5 June 2015, the Group announced
that, effective 1 July 2015, Nigel Lingwood will join the Board as
Non-Executive Director. Following the AGM in September 2015, Nigel
will become Senior Independent Director and Chairman of the Audit
Committee. At the same time the Group announced that, after nine
years, and following a handover to Nigel in September 2015 of the
Audit Chair, Andrew Dougal will step down from the Board as
Non-Executive Director at the end of November 2015.
Dividend
Following the growth in Headline Diluted EPS and the Group's net
cash position combined with our outlook, the Board recommends a
final dividend of 2.85 pence per share (2014: 2.70 pence per
share). This, with the half year dividend of 1.35 pence per share
(2014: 1.20 pence per share), gives a proposed full year dividend
of 4.20 pence per share (2014: 3.90 pence per share), representing
an 8 per cent increase compared to the prior year.
Summary and Outlook
One year into our new five year strategy there is a real feeling
of momentum and energy across our Group. A fantastic team effort
has seen us achieve a huge amount in the last 12 months. The launch
of a new Group brand and offer, a Group-wide rebrand, three
acquisitions and four partnerships have all been delivered
alongside award-winning work for our global clients, a strong new
business performance, growth in our financial results, and an
increased dividend to our shareholders.
We are encouraged by the early successes in our new strategy
which give us a strong platform to deliver value to shareholders
over the medium term.
Barrie Brien
Group Chief Executive
Financial Review
Headline results
For the financial year ended 31 March 2015, Group revenue
increased by 3 per cent to GBP76.9 million (2014: GBP74.9 million)
and Group Headline PBIT increased by 2 per cent to GBP10.0 million
(2014: GBP9.8 million) maintaining the Headline PBIT margin at 13
per cent (2014: 13 per cent). Group Headline PBT increased by 2 per
cent to GBP9.9 million (2014: GBP9.6 million) and Headline Diluted
Earnings Per Share (DEPS) increased 11 per cent to 13.07 pence
(2014: 11.79 pence) with this growth being enhanced due to a
reduction in the Group's effective tax rate and its share buy-back
programme.
Growth in Headline results was delivered despite Sterling
continuing to strengthen against the Euro during the year. With a
few Euro based revenue contracts the Group's revenue and Headline
PBIT growth has unfortunately been impacted by these currency
movements. Given that further GBP:EUR volatility is expected
management are working to renegotiate Euro denominated contracts
where possible, and are considering available hedging
arrangements.
Headline items
Headline items consist of certain items which are eliminated
from Reported results to enable a better understanding of the
underlying performance of the Group (see note 4 and note 5 for
further detail), the material items of which were:
(i) Creston Unlimited rebranding
Creston Unlimited rebranding costs of GBP0.4 million have been
excluded from the Headline PBIT measure. These incremental and
non-recurring costs are as a result of the launch of our new agency
group brand and offer, Creston Unlimited, in November 2014 and the
simultaneous rebrand of all our Creston companies with the
Unlimited suffix.
(ii) Movement in fair value of contingent deferred consideration
Following the end of the earn out period for DJM Unlimited and
Cooney Waters Unlimited there has been a reduction of contingent
deferred consideration resulting in a credit to the Consolidated
income statement of GBP0.3 million and GBP0.04 million
respectively. This credit has been excluded from the Headline PBIT
measure.
(iii) Acquisition and start-up related costs
Acquisition and start-up costs of GBP0.3 million have been
excluded from the Headline PBIT measure. These include GBP0.2
million in deal related costs incurred during the year in relation
to the post year end acquisition of Splendid Unlimited with the
remaining balance relating to trading losses associated with the
brand and creative consultancy, Loooped Unlimited in its first year
of trading.
Reported results
Group Reported PBIT increased by 32 per cent to GBP9.8 million
(2014: GBP7.4 million) primarily due to one-off costs that were
incurred in the prior year following the London co-location and
restructuring within the Insight division. As a result the Group
Reported PBIT margin has increased to 13 per cent (2014: 10 per
cent), and Group Reported PBT increased 34 per cent to GBP9.6
million (2014: GBP7.2 million). Group Reported DEPS increased 46
per cent to 12.45 pence (2014: 8.52 pence) with this growth being
enhanced due to a reduction in the Group's effective tax rate and
its share buy-back programme. Note 4 to the full year results
presents a reconciliation between Headline and Reported
results.
Key performance indicators
The Group manages its operational performance through a number
of key performance indicators (KPIs). The principal ones are as
follows:
Financial Financial
year ended year ended
31 March 31 March
2015 2014
Revenue GBP76.9 million GBP74.9 million
Revenue from digital and online 55% 53%
Revenue from international 32% 32%
Revenue per head GBP90,100 GBP91,900
Headline EBITDA GBP11.7 million GBP11.6 million
Headline PBIT GBP10.0 million GBP9.8 million
Headline PBIT per head GBP11,700 GBP12,000
Headline PBIT margin 13% 13%
*Adjusted cash conversion 74% 65%
Net cash GBP8.3 million GBP7.5 million
Net cash including contingent deferred consideration GBP6.9 million GBP5.7 million
----------------------------------------------------- --------------- ---------------
*Adjusted cash conversion is the ratio of adjusted operating
cash flow to Headline EBITDA, where adjusted operating cash flow
excludes the movement in net proceeds on operating lease as
described in note 12. The movement in net proceeds on operating
lease impacts the adjusted operating cash flow for FY14 only.
Balance sheet
As at 31 March 2015, the Group was in a net cash position of
GBP8.3 million (2014: GBP7.5 million). The net cash including
contingent deferred consideration liabilities of GBP1.4 million
(GBP0.3 million for the Cooney Waters Group Unlimited and GBP1.1
million for DJM Unlimited) was GBP6.9 million (2014: GBP5.7
million).
Cash flow performance
During the financial year, the adjusted operating cash flow was
GBP8.6 million (2014: GBP7.5 million). The working capital position
increased to GBP4.2 million (2014: GBP1.9 million) which resulted
in a cash conversion ratio of adjusted operating cash flow to
Headline EBITDA of 74 per cent (2014: 65 per cent). The increase in
working capital position was predominantly due to a reduction in
deferred revenue, where scope for pre-billing has reduced across a
few of our clients. Management continues to place significant
emphasis on managing working capital effectively and this has
resulted in a five year cumulative cash conversion of 83 per
cent.
Net finance costs
Despite the Group being in a net cash position throughout the
year, Headline net finance costs were GBP0.1 million (2014: GBP0.1
million) due to the interest paid as a non-utilisation fee for the
revolving credit facility. Headline net finance costs were covered
by Headline EBITDA 78 times (2014: 78 times).
The Reported net finance costs were GBP0.2 million (2014: GBP0.2
million), which includes a notional finance charge relating to the
deferred consideration payments of GBP0.03 million (2014: GBP0.1
million).
Refinance
The Group's banking facility has been successfully renegotiated
post year end to include a GBP25 million revolving credit facility
on improved terms plus an optional GBP10 million accordion.
Effective tax rate
The Headline tax rate is 21 per cent (2014: 25 per cent) and the
Reported tax rate is 23 per cent (2014: 27 per cent). The Reported
tax rate is slightly higher than the Headline rate as it includes
the deferred tax charge on amortisation deductions claimed in
respect of Goodwill acquired in the US, which is added back as a
Headline adjustment. Both the Headline and Reported rates have
fallen from 2014 as a result of the drop in the UK statutory tax
rate from 23 per cent down to 21 per cent, in addition to the
release of a prior year US tax provision, to reflect the correct
closing liability following the agreement of prior period
returns.
In future periods we would expect the Headline tax rate to be
slightly higher than the UK statutory rate as a consequence of the
higher tax rates in the US.
Share buy-back
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 31 March 2015, a
total of 1,572,359 shares had been bought back during the financial
year costing GBP1.8 million at an average price of 111 pence. The
remaining balance of GBP0.2 million will be utilised dependent on
the share price performance.
Post year end acquisition
On the 22 April 2015 the Group acquired 51 per cent of the share
capital of How Splendid Ltd ('Splendid'), a London-based digital
design and development consultancy.
On completion there was an initial cash consideration payment of
GBP8.7 million funded from Group's existing cash resources and
Splendid retained net current assets of c.GBP2 million, including
cash of GBP1 million. A balance sheet surplus payment will be made
of c.GBP0.2 million for the net current assets in the completion
balance sheet in excess of the pre-agreed minimum requirement of
GBP1.1 million. There will be a further final cash consideration
payment of up to GBP7 million in June 2017 for the 51 per cent
holding, based on average profit before interest and tax from April
2015 to March 2017.
For the remaining share capital there are no put options,
however Creston will have the option to acquire a further 24 per
cent from April 2017 for a value up to GBP8.6 million and for the
remaining 25 per cent from April 2019 for a value up to GBP11.9
million. The consideration for both these call options, payable in
cash, will be calculated at a pre-agreed multiple applied to the
average profit before interest and tax for the year in which the
call option is exercised and the two years preceding the call.
Today the Group made a strategic investment in 18 Feet &
Rising, a London based advertising agency. The investment
represents a 27 per cent stake, and 50 per cent of the GBP1 million
cash payment for the shareholding will be invested in the business
to help accelerate its future growth. For the financial year ended
31 December 2014, 18 Feet & Rising grew revenue by over 24 per
cent to GBP2.7 million.
Kathryn Herrick
Chief Financial Officer
UNAUDITED CONSOLIDATED INCOME STATEMENT
for the year ended 31 March 2015
Note Unaudited Audited
Year ended Year ended
31 March 31 March
2015 2014
GBP'000 GBP'000
Turnover (billings) 100,135 101,850
---------------- ------------
Revenue 5 76,878 74,878
Operating costs (67,081) (67,471)
---------------- ------------
Profit before finance income,
finance costs and taxation 4 9,797 7,407
Finance income 10 -
Finance costs (184) (203)
---------------- ------------
Profit before taxation 4 9,623 7,204
Taxation 6 (2,216) (1,969)
---------------- ------------
Profit for the year 4 7,407 5,235
---------------- ------------
Attributable to:
Equity holders of the parent 7,321 5,128
Non-controlling interest 86 107
---------------- ------------
7,407 5,235
---------------- ------------
Basic earnings per share
(pence) 7 12.48 8.55
Diluted earnings per share
(pence) 7 12.45 8.52
---------------- ------------
Headline profit before finance
income, finance costs and
taxation 4 10,001 9,766
Headline profit before taxation 4 9,852 9,617
Headline profit for the
year 4 7,775 7,207
---------------- ------------
UNAUDITED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
for the year ended 31 March 2015
Unaudited Audited
Year ended Year ended
31 March 2015 31 March
2014
GBP'000 GBP'000
Profit for the year 7,407 5,235
--------------- ------------
Other comprehensive income/(expense):
Items that may be reclassified
subsequently to profit and loss:
Exchange differences on translation
of foreign operations 1,298 (1,007)
Other comprehensive income/(expense)
for the year, net of tax 1,298 (1,007)
--------------- ------------
Total comprehensive income for
the year 8,705 4,228
--------------- ------------
Attributable to:
Equity holders of the parent 8,619 4,121
Non-controlling interest 86 107
--------------- ------------
8,705 4,228
--------------- ------------
UNAUDITED CONSOLIDATED BALANCE SHEET
as at 31 March 2015
Note Unaudited Audited
as at as at
31 March 31 March
2015 2014
GBP'000 GBP'000
Non-current assets
Intangible assets
Goodwill 9 105,381 103,792
Other 1,256 1,193
Property, plant and equipment 3,985 4,619
Deferred tax assets 1,141 987
---------- ----------
111,763 110,591
Current assets
Inventories and work in progress 1,001 905
Trade and other receivables 28,195 28,948
Cash and cash equivalents 11 8,312 7,452
---------- ----------
37,508 37,305
Current liabilities
Trade and other payables (25,559) (28,519)
Corporation tax payable (1,328) (1,147)
Provision for contingent deferred
consideration 10 (1,384) -
(28,271) (29,666)
Net current assets 9,237 7,639
---------- ----------
Total assets less current liabilities 121,000 118,230
---------- ----------
Non-current liabilities
Trade and other payables (2,078) (2,674)
Provision for contingent deferred
consideration 10 - (1,711)
Provision for other liabilities
and charges (841) (782)
Deferred tax liabilities (808) (505)
(3,727) (5,672)
Net assets 117,273 112,558
---------- ----------
Equity
Called up share capital 6,134 6,134
Share premium account 35,943 35,943
Own shares (3,371) (1,679)
Shares to be issued 423 929
Other reserves 30,822 30,822
Foreign currency translation reserve 568 (730)
Retained earnings 46,668 41,032
---------- ----------
Equity attributable to equity holders
of parent 117,187 112,451
---------- ----------
Non-controlling interest 86 107
---------- ----------
Total equity 117,273 112,558
---------- ----------
UNAUDITED STATEMENT OF CHANGES IN EQUITY
for the year ended 31 March 2015
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
2015 (Unaudited)
At 1 April
2014 6,134 35,943 (1,679) 929 30,822 (730) 41,032 112,451 107 112,558
--------------- -------- -------- -------- -------- --------- ------------ --------- ------------- ---------------- --------
Profit for
the year - - - - - - 7,321 7,321 86 7,407
Other
comprehensive
income:
Exchange
differences
on
translation
of foreign
operations - - - - - 1,298 - 1,298 - 1,298
--------------- -------- -------- -------- -------- --------- ------------ --------- ------------- ---------------- --------
Total
comprehensive
income for
the year - - - - - 1,298 7,321 8,619 86 8,705
--------------- -------- -------- -------- -------- --------- ------------ --------- ------------- ---------------- --------
Credit for
share-based
incentive
schemes - - - 335 - - - 335 - 335
Transfer
between
reserves
in respect
of lapsed
share options - - - (683) - - 683 - - -
Exercise
of share
award - - 60 (158) - - - (98) - (98)
Gain on
employee
benefit trust - - - - - - 16 16 - 16
Purchase
of treasury
shares - - (1,752) - - - - (1,752) - (1,752)
Dividends
(note 8) - - - - - - (2,384) (2,384) (107) (2,491)
--------------- -------- -------- -------- -------- --------- ------------ --------- ------------- ---------------- --------
At 31 March
2015 6,134 35,943 (3,371) 423 30,822 568 46,668 117,187 86 117,273
--------------- -------- -------- -------- -------- --------- ------------ --------- ------------- ---------------- --------
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 2014
(Audited)
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 year - - - - - (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 year ended 31 March 2015
Note Unaudited Audited
Year ended Year ended
31 March 31 March
2015 2014
GBP'000 GBP'000
Profit for the year 7,407 5,235
Taxation 2,216 1,969
------------ ------------
Profit before taxation 9,623 7,204
------------ ------------
Finance income (10) -
Finance costs 184 203
------------ ------------
Profit before finance income, finance costs
and taxation 9,797 7,407
------------ ------------
Depreciation of property, plant and equipment 1,491 1,657
Amortisation of intangible assets 162 282
Share based payments charge 490 267
Charge for future acquisition payments
to employees deemed as remuneration 12 252
Movement in fair value of contingent deferred
consideration (384) (29)
Loss on disposal of property, plant and
equipment 4 56
Loss on disposal of intangible assets 1 2
(Increase)/decrease in inventories and
work in progress (78) 160
Decrease/(increase) in trade and other
receivables 982 (3,617)
(Decrease)/increase in trade and other
payables (3,828) 1,080
------------ ------------
Adjusted operating cash inflow 8,649 7,517
------------ ------------
Outflow of proceeds on operating
lease 12 - (3,688)
------------ ------------
Operating cash inflow 8,649 3,829
------------ ------------
Tax paid (2,003) (2,647)
------------ ------------
Net cash inflow from operating activities 6,646 1,182
------------ ------------
Investing activities
Finance income 10 -
Purchase of property, plant
and equipment (787) (1,513)
Proceeds from sale of property, 5 -
plant and equipment
Purchase of intangible assets (181) (152)
------------ ------------
Net cash outflow from investing activities (953) (1,665)
------------ ------------
Financing activities
Finance costs (200) (112)
Net decrease in borrowings - (10)
Dividends paid (2,384) (2,323)
Dividends paid to non-controlling
interest (107) (58)
Purchase of treasury shares (1,752) (1,023)
------------ ------------
Net cash outflow from financing activities (4,443) (3,526)
------------ ------------
Increase/(decrease) in cash and cash equivalents 1,250 (4,009)
Cash and cash equivalents
at start of year 11 7,452 11,208
------------ ------------
Effect of foreign exchange
rates (390) 253
Cash and cash equivalents
at end of year 11 8,312 7,452
------------ ------------
NOTES TO THE FULL YEAR RESULTS STATEMENT
for the year ended 31 March 2015
1. Presentation of financial information
The financial information set out herein does not constitute the
company's statutory accounts for the years ended 31 March 2015 or
2014, within the meaning of section 434 of the Companies Act 2006.
Statutory accounts for 2014 have been delivered to the Registrar of
Companies. The auditors have reported on these 2014 accounts and
their report was (i) unqualified, (ii) did not include references
to any matters to which the auditors drew attention by way of
emphasis without qualifying their report and (iii) did not contain
statements under section 498(2) or (3) of the Companies Act 2006.
Copies of the statutory accounts for 31 March 2015 will be
distributed to shareholders in advance of the Annual General
Meeting and will be delivered to the Registrar of Companies upon
approval.
2. Basis of Preparation
The information has been prepared in accordance with the
EU-adopted International Financial Reporting Standards (IFRS) and
IFRIC interpretations and with those parts of the Companies Act
2006 which are applicable to companies reporting under IFRS,
however, this full year statement in itself does not contain
sufficient information to comply with IFRS. The Group Financial
Statements are consolidated and include all Group entities. The
Company's domicile and country of incorporation is England and
Wales, and both its registered office and Head Office are located
at Creston House, 10 Great Pulteney Street, London W1F 9NB.
The financial statements have been prepared in sterling, the
currency in which the majority of the Group's transactions are
denominated, on the historical cost basis, except where IFRS as
adopted by the European Union requires a fair value adjustment, and
on a going concern basis.
3. Accounting policies
The full year results were prepared in accordance with the
policies disclosed in the 2014 audited Annual Report and Accounts
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.
Year ended 31 March 2015
PBIT PBT PAT
GBP'000 GBP'000 GBP'000
Headline 10,001 9,852 7,775
Acquisition and start-up related costs (271) (271) (271)
Property related costs 88 88 88
Creston Unlimited rebranding (393) (393) (393)
Movement in fair value of contingent
deferred consideration 384 384 384
Future acquisition payments to employees
deemed as remuneration (12) (12) (12)
Notional finance cost on future contingent
deferred consideration - (25) (25)
Deferred tax charge on amortisation of
goodwill - - (223)
Taxation impact - - 84
--------- --------- ---------
Reported 9,797 9,623 7,407
--------- --------- ---------
Headline Basic EPS (pence) 13.10
Headline Diluted EPS (pence) 13.07
Reported Basic EPS (pence) 12.48
Reported Diluted EPS (pence) 12.45
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 year 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, Creston Unlimited rebranding, 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
Year ended
31 March 2015 GBP'000 GBP'000 GBP'000 GBP'000
Turnover (billings) 76,599 23,536 - 100,135
Revenue 56,156 20,722 - 76,878
--------------- ---------- ------------ ----------
Headline PBIT 8,112 4,319 (2,430) 10,001
--------------- ---------- ------------ ----------
Acquisition and start-up
related costs (240) (31) - (271)
Property related costs 88 88
Creston Unlimited rebranding - - (393) (393)
Movement in fair value
of contingent deferred
consideration - 384 - 384
Future acquisition payments
to employees deemed
as remuneration (20) 8 - (12)
--------------- ---------- ------------ ----------
Reported PBIT 7,852 4,680 (2,735) 9,797
--------------- ---------- ------------ ----------
Finance income - - 10 10
Finance costs - - (159) (159)
Notional finance cost
on future contingent
deferred consideration - (25) - (25)
--------------- ---------- ------------ ----------
Profit before taxation 7,852 4,655 (2,884) 9,623
--------------- ---------- ------------ ----------
Taxation (2,216)
--------------- ---------- ------------ ----------
Profit for the period 7,407
--------------- ---------- ------------ ----------
Acquisition and start-up costs of GBP0.3 million have been
excluded from the Headline PBIT measure for the year ended 31 March
2015. These include GBP0.2 million in deal related costs incurred
during the year in relation to the post year end acquisition of
Splendid Unlimited with the remaining balance relating to trading
losses associated with the brand and creative consultancy, Loooped
in its first year of trading.
A property related credit of GBP0.1 million has been excluded
from the Headline PBIT measure following a rebate of costs incurred
during the vacant period of Creston House which were previously
excluded from the Headline PBIT measure in a prior period.
Creston Unlimited rebranding costs of GBP0.4 million have been
excluded from the Headline PBIT measure for the year ended 31 March
2015. These incremental and non-recurring costs are as a result of
the launch of our new agency group brand and offer, Creston
Unlimited, in November 2014 and the simultaneous rebrand of all our
Creston companies with the Unlimited suffix.
Following the end of the earn out period for DJM Unlimited and
Cooney Waters Unlimited there has been a reduction of contingent
deferred consideration resulting in a credit to the Consolidated
income statement of GBP0.3 million and GBP0.04 million respectively
for the year ended 31 March 2015. These amounts have been excluded
from the Headline PBIT measure.
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 brand and creative
consultancy, Loooped in its first year of trading.
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
Year ended Year ended Year ended Year ended
31 March 31 March 31 March 31 March
2015 2014 2015 2014
GBP'000 GBP'000 GBP'000 GBP'000
UK 66,404 70,376 52,282 50,949
Rest of Europe 19,209 18,471 12,383 12,779
Rest of the World
(including USA) 14,522 13,003 12,213 11,150
--------------- ----------- --------------- -----------
100,135 101,850 76,878 74,878
--------------- ----------- --------------- -----------
6. Taxation
The Headline tax rate is 21 per cent (2014: 25 per cent) and the
Reported tax rate is 23 per cent (2014: 27 per cent). The Reported
tax rate is slightly higher than the Headline rate as it includes
the deferred tax charge on amortisation deductions claimed in
respect of Goodwill acquired in the US, which is added back as a
Headline adjustment. Both the Headline and Reported rates have
fallen from 2014 as a result of the drop in the UK statutory tax
rate from 23 per cent down to 21 per cent, in addition to the
release of a prior year US tax provision, to reflect the correct
closing liability following the agreement of prior period
returns.
In future periods we would expect the Headline tax rate to be
slightly higher than the UK statutory rate as a consequence of the
higher tax rates in the US.
7. Earnings per share
Headline Reported
Year ended Year ended Year ended Year ended
31 March 31 March 31 March 31 March
2015 2014 2015 2014
Earnings
Profit for the year (GBP'000) 7,775 7,207 7,407 5,235
----------- ----------- ----------- -----------
Attributable to:
----------- ----------- ----------- -----------
Non-controlling interest
(GBP'000) 86 107 86 107
----------- ----------- ----------- -----------
Equity holders of the
parent (GBP'000) 7,689 7,100 7,321 5,128
----------- ----------- ----------- -----------
Number of shares
Weighted average number
of shares 58,679,091 59,951,901 58,679,091 59,951,901
Dilutive effect of shares 140,664 244,459 140,664 244,459
----------- ----------- ----------- -----------
58,819,755 60,196,360 58,819,755 60,196,360
----------- ----------- ----------- -----------
Earnings per share
----------- ----------- ----------- -----------
Basic earnings per share
(pence): 13.10 11.84 12.48 8.55
----------- ----------- ----------- -----------
Diluted earnings per share
(pence): 13.07 11.79 12.45 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 604,349 employee share options which were
outstanding as at 31 March 2015 (31 March 2014: 714,059).
8. Dividends
Unaudited Audited
2015 2014
GBP'000 GBP'000
Amounts recognised as distributions to shareholders
in the year:
Prior year final dividend of 2.70 pence per share
(2014: 2.67 pence per share) 1,600 1,610
Interim dividend of 1.35 pence per share (2014:
1.20 pence per share) 784 713
----------------------------------------------------- ---------- ---------
Total 2,384 2,323
----------------------------------------------------- ---------- ---------
A final dividend of 2.85 pence (2014: 2.70 pence) per share
equivalent to GBP1,652,255 is recommended to be paid on 11
September 2015 to shareholders on the register on 7 August 2015.
The final dividend will be recognised in the FY16 accounts, should
it be approved by shareholders at the AGM.
9. Goodwill
Goodwill represents the excess of cost of acquisition over the
fair value of the Group's share of the net identifiable assets of
the acquired subsidiary at the date of acquisition.
Goodwill on
consolidation
GBP'000
------------------------------ ---------------
Cost
At 1 April 2013 (Audited) 105,022
Exchange differences (1,230)
------------------------------ ---------------
At 31 March 2014 (Audited) 103,792
------------------------------ ---------------
Exchange differences 1,589
At 31 March 2015 (Unaudited) 105,381
------------------------------ ---------------
Net book amount
------------------------------ ---------------
At 31 March 2015 (Unaudited) 105,381
------------------------------ ---------------
At 31 March 2014 (Audited) 103,792
------------------------------ ---------------
In accordance with the Group's accounting policy, the carrying
value of goodwill and other intangible assets are not subject to
systematic amortisation but are reviewed annually for impairment.
The review assesses whether the carrying value of goodwill could be
supported by the recoverable amount which is determined through
value in use calculations of each cash generating unit ('CGU'). The
key assumptions applied in the value in use calculations are the
discount rate and the projected cash flows.
The recoverable amounts of all CGUs are based on the same key
assumptions.
Discount rates
Management estimates discount rates using pre-tax rates that
reflect current market assessments of the time value of money. In
assessing the discount rate applicable to the Group the following
factors have been considered:
(i) 12-month cost of debt;
(ii) the cost of equity based on a two-year industry average
beta of 0.58. We consider this to be an appropriate period since
the Group is of an acquisitive nature and therefore has changed
significantly during the last five years;
(iii) the risk free rate for a 20-year UK government bond;
and
(iv) the risk premium to reflect the increased risk of investing
in equities.
Using a consistent methodology, the above assumptions have
resulted in a decline in our calculated weighted average cost of
capital to 7.9 per cent (2014: 9.9 per cent). However management
have adopted a more conservative pre-tax discount rate of 9.9 per
cent (2014: 9.9 per cent) in assessing the carrying value of
goodwill.
As all the CGUs are similar in nature, the risk profile is
considered the same across countries. As a result the same discount
rate is used for each.
Projected cash flows
Projected cash flows are calculated with reference to each CGU's
latest budget and business plan (approved in March 2015) which is
subject to a rigorous review and challenge process. Operating
company management prepare the budgets through an assessment of
historic revenues from existing clients, the pipeline of new
projects, historic pricing, and the required resource base needed
to service new and existing clients, coupled with their knowledge
of wider industry trends and the economic environment.
Projected cash flows are calculated using the first two years of
approved budgets followed by a residual growth rate of 3 per cent
(2014: 3 per cent) and after year five, a terminal value with 2.5
per cent (2014: 2.5 per cent) growth has been applied. Where a
specific business issue means that the expected cash flows in the
following three-year period are expected to be materially different
to the residual growth rate of 3 per cent, the expected cash flows
are used instead. Expected cash flows have been used in determining
the recoverable amount at PAN Unlimited and ICM Unlimited instead
of a residual growth rate of 3 per cent.
For acquisitions made within the last two years, the Group uses
the relevant CGU's current year Headline performance for the first
two years and applies a 3 per cent growth (2014: 3 per cent) for
the following three years with 2.5 per cent (2014: 2.5 per cent)
growth on the terminal value. This is then adjusted for any related
deemed remuneration charges relevant for that CGU. Management
believes this method to be more appropriate as it allows them to
work with any new acquisitions through one complete budgeting and
performance cycle.
Sensitivity analysis
The review performed at the year end did not result in the
impairment of goodwill for any CGU with the estimated recoverable
amount exceeding the carrying value in all cases.
Management also tested the sensitivity of key assumptions by
increasing the discount rate by 10 per cent to 10.9 per cent, and
maintaining the discount rate at 9.9 per cent whilst applying a 10
per cent decrease to the projected future cash flows. Whilst the
latter results in no impairment, increasing the discount rate to
10.9% would lead to an impairment in PAN Unlimited.
Through further sensitivity analysis, management determined that
the CGUs that are most sensitive to a change in key assumptions
used in the calculation of the recoverable amount are PAN Unlimited
and ICM Unlimited, with their value in use exceeding their carrying
value by GBP1.3 million and GBP2.8 million respectively. The key
assumption that is subject to possible change, on which management
has based its determination of the CGUs' recoverable amount, is the
projected future cash flows over the five year period. If the
discount rate remained at 9.9 per cent then in order for the CGUs'
recoverable amount to be equal to their carrying value a decrease
in all of the five year projected future cash flows of 12 per cent
and 13 per cent would be required for PAN Unlimited and ICM
Unlimited respectively.
Components of goodwill at 31 March 2015 and 2014 are:
Unaudited Audited
2015 2014
GBP'000 GBP'000
Communications & Insight
EMO Unlimited 4,362 4,362
NBG Unlimited 6,434 6,434
TMW Unlimited 28,541 28,541
TRA Unlimited 5,281 5,281
ICM Unlimited 19,030 19,030
MSL Unlimited 7,633 7,633
71,281 71,281
-------------------------- ---------- ---------
Health
CWG Unlimited 13,716 13,716
DJM Unlimited 2,183 2,183
PAN Unlimited 9,599 9,599
RDC Unlimited 7,668 7,668
Exchange differences 934 (655)
-------------------------- ---------- ---------
34,100 32,511
-------------------------- ---------- ---------
Total 105,381 103,792
-------------------------- ---------- ---------
10. Provision for contingent deferred consideration
The contingent deferred consideration obligations are set out
below:
As at As at
31 March 31 March
2015 2014
GBP'000 GBP'000
Brought forward 1,711 1,714
Movement in fair value of contingent deferred
consideration (384) (29)
Exchange differences 32 (28)
Income statement:
- Notional finance cost on future contingent
deferred consideration 25 54
Carried forward 1,384 1,711
---------- ----------
As at As at
31 March 31 March
2015 2014
GBP'000 GBP'000
Analysed as:
---------- ----------
Current liabilities 1,384 -
Non-current liabilities - 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 (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 GBP0.4 million has been recognised due to the revaluation
of the contingent deferred consideration for DJM Unlimited and
Cooney Waters Unlimited.
11. Analysis of net cash
Year ended 31 March 2015 As at Acquisition Cash flow Foreign As at
1 April related* exchange 31 March
2014 2015
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Cash and cash equivalents 7,452 - 1,250 (390) 8,312
--------- ------------ ---------- ---------- ----------
Net cash 7,452 - 1,250 (390) 8,312
--------- ------------ ---------- ---------- ----------
Provision for contingent
deferred consideration
(note10) (1,711) 327 - - (1,384)
--------- ------------ ---------- ---------- ----------
Net cash including contingent
deferred consideration 5,741 327 1,250 (390) 6,928
--------- ------------ ---------- ---------- ----------
Year ended 31 March 2014 As at Acquisition Cash flow Foreign As at
1 April related* 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 year to 31 March 2015 GBPnil (2014: GBP3.7 million) of the
operating lease proceeds were utilised to fulfil the dilapidations
obligation and settle the associated VAT liability.
13. Related-party transactions
Mr D C Marshall, a Non-Executive Director of Creston plc during
the year is a Director of City Group P.L.C. and Western Selection
P.L.C. which held 3,000,000 Ordinary Shares in Creston plc at 31
March 2015. During the year total fees of GBP52,930 (2014:
GBP63,390) were paid to City Group P.L.C., GBP29,597 (2014:
GBP28,960) for the provision of secretarial services and GBP23,333
(2014: GBP35,000) for the services of Mr D C Marshall. As at 31
March 2015 GBP8,967 (2014: GBP19,323) was due to City Group
P.L.C.
14. Post balance sheet event
On the 22 April 2015 Creston plc acquired 51 per cent of the
share capital of How Splendid Ltd, a London-based digital design
and development consultancy.
On the 9 June 2015 Creston plc acquired 27 per cent of the share
capital of 18 Feet & Rising Ltd, a London-based advertising
agency.
On the 5 June 2015 Creston plc announced the appointment of
Nigel Lingwood to the Board as Non-Executive Director effective 1
July 2015. Following the AGM in September 2015, Nigel will become
Senior Independent Director and Chairman of the Audit
Committee.
15. Availability of the Annual Report and Accounts
Copies of the Annual Report and Accounts are available on the
Company's website www.creston.com.
______________ (1) 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. (2) Constant currency disclosures calculate
the impact of retranslating overseas' operating results at prior
year exchange rates. (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 full
year announcement.
(4) Profit before finance costs, finance income and taxation (PBIT).
(5) Profit before taxation (PBT).
(6) Diluted earnings per share (DEPS).
This information is provided by RNS
The company news service from the London Stock Exchange
END
FR UGURGQUPAPUR
Conduit (LSE:CRE)
과거 데이터 주식 차트
부터 6월(6) 2024 으로 7월(7) 2024
Conduit (LSE:CRE)
과거 데이터 주식 차트
부터 7월(7) 2023 으로 7월(7) 2024
