TIDMCRE
RNS Number : 4001P
Creston PLC
17 November 2016
17 November 2016
Creston plc
('Creston' or the 'Group')
Half year results for the six months ended 30 September 2016
Creston plc (LSE: CRE), the marketing communications group,
today announces its half year results for the six months to 30
September 2016.
Group Financial Highlights
-- Revenue broadly flat at GBP40.0 million (H1 2016: GBP40.3 million)
-- Like-for-like(1) revenue decline of 4% to GBP38.7million
-- International revenue up 11% to GBP14.2 million (H1 2016: GBP12.8 million)
-- Growth on Headline PBIT and margin due to on-going operational efficiencies
-- Headline(2) PBT(3) up 13 per cent to GBP4.5 million (H1 2016: GBP4.0 million)
-- Headline DEPS(4) up 16 per cent to 5.77 pence (H1 2016: 4.98 pence)
-- Reported PBT at GBP3.8 million (H1 2016: GBP1.1 million)
-- Reported DEPS at 4.70 pence (H1 2016: 0.47 pence)
-- Net cash of GBP1.4 million (31 March 2016: net cash of GBP1.4 million), with nil deferred consideration
-- Half year dividend per share maintained at 1.42 pence (H1 2016: 1.42 pence)
-- Post period end cash offer of 125 pence per share in Creston announced today
Commenting on the results, Barrie Brien, Group Chief Executive
of Creston plc, said:
"Despite the challenging economic and trading environment, the
Group's headline profits grew 13 per cent in the first half of the
year. Creston has achieved steady progress in implementing the
Group's five-year strategy of growing the breadth of services to
clients under the Unlimited offer and, as a result, our top 20
clients and international revenue have grown by 12 per cent and 11
per cent respectively.
Today, the Independent Directors of the Board have also
announced their intention to unanimously recommend to shareholders
a cash offer for the entire share capital of Creston plc by DBAY
Advisors. As the business and our clients' requirements continue to
develop, and in light of uncertain market conditions, the Board of
Creston has given careful thought about how best it pursues this
strategy to deliver value for shareholders, clients and staff.
As such, the Independent Directors of Creston consider that
recommending this cash offer will provide most shareholders with
the opportunity to realise value from their investment in cash at
an attractive premium. Furthermore, it offers the business, with
the support of DBAY Advisors, the ability to continue to grow the
Unlimited Group as a private company, which we believe is in the
best interests of our clients and staff."
Group Financial Results
(1) Like-for-like compares current year performance to the prior
year, adjusting the current year, and prior year if applicable, to
exclude results from acquisitions and company closures, the impact
of foreign exchange rate movements on overseas results and Euro
denominated contracts, of which both are retranslated at prior year
average rates.
(2) Headline results reflect the underlying performance of the
Group and exclude exceptional charges including impairment of
goodwill and other headline items including property related costs,
start-up net losses, acquisition 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, acquisition
related share based payment charges and notional finance costs. A
full reconciliation is presented in note 4 to this
announcement.
(3) Profit before taxation (PBT).
(4) Headline diluted earnings per share (DEPS). A full
reconciliation is presented in note 4 to this announcement.
Earnings before interest, taxation, depreciation and
amortisation (EBITDA).
Free cash flow represents operating cash flow less the cash flow
impact of taxation, net interest and capital expenditure relating
to both plant, property and equipment and intangibles.
H1 2017 H1 2016
----------------------- -------- --------
Revenue (GBP million) 40.0 40.3
----------------------- -------- --------
Headline PBIT(1)
(GBP million) 4.6 4.2
----------------------- -------- --------
Headline PBIT
margin (%) 12% 10%
----------------------- -------- --------
Headline PBT (GBP
million) 4.5 4.0
----------------------- -------- --------
Headline DEPS
(pence) 5.77 4.98
----------------------- -------- --------
Reported PBIT
(GBP million) 3.9 1.2
----------------------- -------- --------
Reported PBT (GBP
million) 3.8 1.1
----------------------- -------- --------
Reported DEPS
(pence) 4.70 0.47
----------------------- -------- --------
Dividend per share
(pence) 1.42 1.42
----------------------- -------- --------
(1) Profit before finance income, finance costs and taxation
(PBIT)
For further information on the Group's half year results or
about the analyst meeting please contact:
+ 44 (0)20 7930
Creston plc 9757
Barrie Brien, Group Chief
Executive
Kathryn Herrick, Chief
Financial Officer
+44 (0)20 3772
Bell Pottinger 2491
David Rydell/Lucy Stewart
About Creston plc
Creston plc (LSE: CRE), incorporating the Unlimited Group, is an
integrated marketing and communications group delivering a range of
digital and technology-based marketing solutions to blue-chip
global clients. The Unlimited Group brings together talent and
expertise into bespoke teams, drawn from its network of specialist
agencies, uniquely blended for each challenge. Unlimited enables
smarter and more agile ways of working to solve its clients'
evolving business and marketing challenges. www.creston.com /
www.unlimitedgroup.com
Chief Executive's Statement
Group Performance
In the six months under review, the Group reported broadly flat
revenue of GBP40.0 million (H1 2016: GBP40.3 million), an increase
in both headline PBT of 13 per cent to GBP4.5 million (H1 2016:
GBP4.0 million) and in headline Diluted EPS of 16 per cent to 5.77
pence (H1 2016: 4.98 pence) on the prior year.
Reported PBT was GBP3.8 million (H1 2016: GBP1.1 million), with
the difference between headline and reported PBT predominantly due
to acquisition, accounting and deal related costs (see note 4 for
reconciliation from headline to reported).
Creston continued to make steady progress on its five-year
strategy, further growing the offer of the Unlimited Group. This
strategic progress contributed to the continued diversification of
Group revenue, in terms of breadth of services and geographies, and
the Group's ongoing focus on strengthening and deepening its
relationships with its largest clients. International revenue was
up 11 per cent, driven by expansion of the Danone and Sony Mobile
global engagements, and a strong performance of Health Unlimited in
the US. The period has seen its Unlimited companies referring more
clients to one another than ever before, with newly shared clients
including National Trust, National Citizens Service, Grünenthal and
Novartis. As a result, the top 20 clients from the comparable prior
year period grew reported revenues by 12 per cent and these clients
now represent 59 per cent of total revenue versus 52 per cent in
FY16. In addition to this growth, 40 per cent of the top 50 clients
were served by two or more companies, up from 38 per cent in H1
FY16.
There was revenue growth during the first half of FY17 across
the top 20 and also top 50 clients, however, the first quarter
revenue growth for the Group was off-set in the second quarter as a
result of the uncertainty caused by the EU referendum. This has
created headwinds and market uncertainty causing variability and
uncertainty in budgets amongst existing clients, both before and
after the vote, especially from the Group's smaller UK clients.
There has also been a resulting decline in new business
opportunities both from existing and new clients across both
divisions.
The increased economic uncertainty adds to the challenges
already faced by clients as they experience their own business
transformations within their markets, together with a number of
procurement led re-alignments. In total, these factors contributed
to the Group's like-for-like revenue decline of 4 per cent to
GBP38.7 million (H1 2016: GBP40.1 million).
The Group has added a broad roster of new global brands to its
client list, despite the reduced number of new business pitches
across the UK industry and a lower level of marketer financial
confidence. These wins include the EMEA PR responsibilities for
Sony PlayStation, health communications for Global Blood
Therapeutics in the US, digital and social media responsibilities
for Ferrero brands (Raffaelo, Bueno and Tic Tac), brand
partnerships and PR for the forthcoming live attraction Dinosaurs
in the Wild and a post-period win of an additional Unilever
brand.
As Creston transitions from a Group of agencies to one Agency
Group under the Unlimited brand, management has continued to review
the Group's organisational and operational structure to reduce
duplication and overhead. In addition to this, there has been
ongoing proactive planning of resource to revenue, especially as
client budgets have become more variable. The consequence of these
initiatives together with GBP0.3 million of currency gains have
improved Headline PBIT by 12 per cent and grown Headline PBIT
margin to 11.6 per cent (H1 2016: 10.3 per cent) in the period.
The Group has continued to evolve under its new strategy with a
particular focus on servicing more of its top 50 clients' marketing
and communication needs, whilst reducing the single discipline
engagements with smaller clients, which often have more variable
budgets. The Group continues to fill gaps in its full service
offer, via targeted investments, acquisitions and partnerships. On
the 15 September 2016, the Group announced a partnership with
independent media agency Goodstuff. With pitches for integrated
marketing activity on the rise, partnerships such as Goodstuff add
to the Group's ability to offer clients a full service offer, made
up of owned companies and trusted collaborators, all under the
Unlimited banner.
Business Review
The respective revenue, headline PBIT and percentage
contributions for Communications & Insight and Health are as
follows:
H1 2017 Revenue Headline PBIT
---------------- --------------------------- ----------------------------
% of Group
(excluding
GBP million % of Group GBP million Head Office
costs)
---------------- ------------- ------------ ------------- -------------
Communications
& Insight 30.2 76% 4.3 73%
---------------- ------------- ------------ ------------- -------------
Health 9.8 24% 1.6 27%
---------------- ------------- ------------ ------------- -------------
Communications & Insight
H1 2017 H1 2016
----------------------- -------- --------
Revenue (GBP million) 30.2 30.6
----------------------- -------- --------
Headline PBIT (GBP
million) 4.3 4.0
----------------------- -------- --------
Reported PBIT (GBP
million) 3.6 1.2
----------------------- -------- --------
Headline PBIT margin
(%) 14% 13%
----------------------- -------- --------
Total revenue from our top 20 Communications & Insight
clients, which now represents 67 per cent (H1 2016: 61 per cent) of
total Communications & Insight revenue, has grown by 8 per cent
from the comparable prior year period. This has been driven by the
success of the Unlimited strategy, as more Unlimited companies are
being engaged by existing clients. Revenue has grown specifically
with Danone, Sony Mobile, Sony Playstation, Boots, Vodafone, and
Costa, the latter two being new business wins in the prior year.
This positive revenue growth has been off-set by a decline in the
smaller clients outside the division's top 50 and the fewer new
business opportunities, as mentioned above. The combination of
these two factors meant that revenue for the division decreased by
1 per cent during the period to GBP30.2 million (H1 2016: GBP30.6
million); and with the strengthening of the Euro, like-for-like
revenue for the division was down 3 per cent to GBP29.5 million (H1
2016: GBP30.4 million).
The companies within the division continue to manage resourcing
closely to the variable revenue levels and this focus has
contributed to the improved operating margin and headline PBIT has
increased by 7 per cent to GBP4.3 million (H1 2016: GBP4.0
million).
Reported PBIT for the division was GBP3.6 million (H1 2016:
GBP1.2 million) and is lower than Headline PBIT, due predominantly
to acquisition, accounting and deal related costs (see below and
note 4 and 5).
In addition to those mentioned above, significant new business
wins during the period include additional work for Sony Mobile, the
UKTI, Danone and Nissan. Post-period end wins include further work
for Unilever and the division is now seeing the new business
opportunities increasing in number.
As a result of the increasing work the Group performs outside of
the UK together with the Unlimited partnerships with Serviceplan
and Ariadna, international revenue has grown by 2 per cent and now
contributes 22 per cent of Communications & Insight revenue (H1
2016: 21 per cent).
The agencies have also delivered a strong awards performance,
having won 50 awards so far this year and being shortlisted for 62
more. A recent standout award achievement was for TMW Unlimited,
selected Agency of the Year at The Drum Dream Awards. The
#BiggerIssues campaign for Unilever brand Lynx with charity CALM
continues to win high profile accolades across disciplines,
including at the Marketing Week Data Storytelling Awards, Digital
Impact Awards, The Drum Masters of Marketing Awards and a
prestigious Cannes Lions for Creative Data.
Health
H1 2017 H1 2016
----------------------- -------- --------
Revenue (GBP million) 9.8 9.7
----------------------- -------- --------
Headline PBIT (GBP
million) 1.6 1.6
----------------------- -------- --------
Reported PBIT (GBP
million) 1.6 1.5
----------------------- -------- --------
Headline PBIT margin
(%) 16% 16%
----------------------- -------- --------
During the period, Health reported a 1 per cent increase in
revenue to GBP9.8 million (H1 2016: GBP9.7 million), driven by a
strong US performance and the strengthening of the US dollar
against sterling.
There was a slower than anticipated performance in the UK Health
market, causing a divisional like-for-like revenue decrease of 6
per cent to GBP9.1 million (H1 2016: GBP9.7 million), although we
expect recovery in the second half of the year, given the stronger
new business performance since 30 September. This has been helped
by an increase in pitching as a single Health Unlimited brand and
access to new clients through partnerships, such as the recently
announced global partnership with the health social network
HealthUnlocked. New business wins include Global Blood
Therapeutics, plus a number of new projects from existing clients,
such as CDC, Danone, Gilead and UCB, as they increasingly engage
with the single integrated Health Unlimited offer.
Headline PBIT of GBP1.6 million (H1 2016: GBP1.6 million) is in
line with prior year and the margin has remained at 16 per cent.
The division has benefitted from some of the staff cost saving
initiatives commenced last year and these will continue to benefit
the second half, whilst continuing to invest in the US resource to
service its revenue growth.
Balance sheet and cash flow
As at 30 September 2016, the Group was in a net cash position of
GBP1.4 million with no deferred consideration liabilities (31 March
2016: GBP1.4 million). During the period the Group delivered an
operating cash inflow of GBP3.1 million (H1 2016: GBP3.2 million),
which equates to a cash conversion ratio of operating cash flow to
reported EBITDA of 64 per cent (H1 2016: 79 per cent).
Following a year end working capital position of GBP3.9 million,
the half year position has increased to GBP6.1 million due to a
temporary increase in work in progress and accrued income and a
general reduction in accruals. Despite this temporary increase in
working capital, free cash flow has increased to GBP1.9 million (H1
2016: GBP1.0 million). Management continues to place significant
emphasis on managing working capital effectively and has a
five-year actual cumulative cash conversion of 90 per cent. Net
current assets have also significantly improved to GBP6.4 million,
up from GBP1.9 million the previous half year.
Tax
The headline tax rate of 23 per cent (H1 2016: 20 per cent) has
increased due to the proportionate increase in the Group's US
income. This is because US income is taxed at a significantly
higher rate than the UK statutory rate of 20 per cent. The reported
tax rate of 28 per cent (H1 2016: 68 per cent) is significantly
lower than H1 2016. This is because in H1 2016 there was a goodwill
impairment charge for which no tax relief was available. In future
periods we expect a small increase in the headline tax rate to
reflect the higher levels of tax on growing US income.
Board Changes
Nigel Lingwood has continued to act as Non-Executive Chairman on
an interim basis whilst the Board has carried out a search for a
replacement Chairman. In early October the Board had identified an
appropriate candidate for the role as Chairman, but in light of the
proposed Offer announced today, confirmation of this appointment
has been postponed.
Dividend
The Board has declared a half year dividend of 1.42 pence (H1
2016: 1.42 pence) per share, which will be paid on 20 December 2016
to shareholders on the register at 2 December 2016.
Barrie Brien
Group Chief Executive
UNAUDITED CONSOLIDATED INCOME STATEMENT
for the six months ended 30 September 2016
Six months Six months Audited
ended ended Year ended
30 September 30 September 31 March
Note 2016 2015 2016
GBP'000 GBP'000 GBP'000
Turnover (billings) 53,092 51,602 108,044
Cost of sales (13,090) (11,253) (25,399)
-------------- -------------- ------------
Revenue 5 40,002 40,349 82,645
Impairment charge - (2,000) (15,156)
Operating costs (36,119) (37,161) (74,762)
-------------- -------------- ------------
Profit/(Loss) before
finance income, finance
costs and taxation 4 3,883 1,188 (7,273)
Finance income - 1 1
Finance costs (104) (132) (248)
Share of loss of investments (28) - (64)
Profit/(Loss) before
taxation 4 3,751 1,057 (7,584)
Income tax expense 6 (1,033) (722) (1,990)
-------------- -------------- ------------
Profit/(Loss) for the
period 4 2,718 335 (9,574)
-------------- -------------- ------------
Attributable to:
Equity holders of the
parent 2,742 271 (9,683)
Non-controlling interest (24) 64 109
-------------- -------------- ------------
2,718 335 (9,574)
-------------- -------------- ------------
Basic earnings/(loss)
per share (pence): 7 4.70 0.47 (16.66)
Diluted earnings/(loss)
per share (pence): 7 4.70 0.47 (16.63)
-------------- -------------- ------------
Headline profit before
finance income, finance
costs and taxation 4 4,628 4,150 10,087
Headline profit before
taxation 4 4,528 4,019 9,854
Headline profit for
the period 4 3,502 3,236 7,838
Headline DEPS (pence) 7 5.77 4.98 12.02
UNAUDITED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
for the six months ended 30 September 2016
Six months Six months
ended ended Audited
30 September 30 September Year ended
2016 2015 31 March
GBP'000 GBP'000 2016
GBP'000
Profit/(Loss) for the
period 2,718 335 (9,574)
-------------- -------------- ------------
Other comprehensive income/(expense):
Items that may be reclassified
subsequently to profit
and loss:
Exchange differences
on translation of foreign
operations 1,553 (290) 417
Other comprehensive income/(expense)
for the period, net of
tax 1,553 (290) 417
-------------- -------------- ------------
Total comprehensive income/(expense)
for the period 4,271 45 (9,157)
-------------- -------------- ------------
Attributable to:
Equity holders of the
parent 4,295 (19) (9,266)
Non-controlling interest (24) 64 109
-------------- -------------- ------------
4,271 45 (9,157)
-------------- -------------- ------------
UNAUDITED CONSOLIDATED BALANCE SHEET
as at 30 September 2016
As at As at Audited
30 September 30 September as at
Note 2016 2015 31 March
GBP'000 GBP'000 2016
GBP'000
Non-current assets
Intangible assets
Goodwill 9 97,383 108,113 95,725
Other 9 3,928 4,212 4,071
Property, plant and
equipment 9 2,917 3,644 3,244
Investment in associates 908 1,000 936
Deferred tax assets 1,009 1,183 955
-------------- -------------- ----------
106,145 118,152 104,931
Current assets
Inventories and work
in progress 1,493 1,098 735
Trade and other receivables 29,852 31,035 29,380
Cash and cash equivalents 10 1,350 906 1,441
-------------- -------------- ----------
32,695 33,039 31,556
Current liabilities
Trade and other payables (25,572) (26,622) (26,776)
Corporation tax payable (708) (1,137) (38)
Bank overdraft 10 - (3,421) -
(26,280) (31,180) (26,814)
Net current assets 6,415 1,859 4,742
-------------- -------------- ----------
Total assets less current
liabilities 112,560 120,011 109,673
-------------- -------------- ----------
Non-current liabilities
Trade and other payables (1,188) (1,782) (1,485)
Provision for other
liabilities and charges (806) (871) (784)
Deferred tax liabilities (1,748) (1,566) (1,655)
(3,742) (4,219) (3,924)
Net assets 108,818 115,792 105,749
-------------- -------------- ----------
Equity
Called up share capital 6,134 6,134 6,134
Share premium account 35,943 35,943 35,943
Own shares (2,946) (3,231) (3,267)
Shares to be issued 86 336 199
Other reserves 30,822 30,822 30,822
Foreign currency translation
reserve 2,538 278 985
Retained earnings 36,172 45,444 34,836
-------------- -------------- ----------
Equity attributable
to equity holders of
parent 108,749 115,726 105,652
-------------- -------------- ----------
Non-controlling interest 69 66 97
-------------- -------------- ----------
Total equity 108,818 115,792 105,749
-------------- -------------- ----------
UNAUDITED STATEMENT OF CHANGES IN EQUITY
Six months ended 30 September 2016
Total
Called Foreign attributable
up Shares currency to equity Non-controlling
share Share Own to Other translation Retained holders interest Total
capital premium shares be reserves reserve earnings of parent equity
issued
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
2016 6,134 35,943 (3,267) 199 30,822 985 34,836 105,652 97 105,749
--------------- -------- -------- -------- -------- --------- ------------ --------- ------------- ---------------- --------
Profit/(loss)
for the
period - - - - - - 2,742 2,742 (24) 2,718
Other
comprehensive
expense:
Exchange
differences
on
translation
of foreign
operations - - - - - 1,553 - 1,553 - 1,553
--------------- -------- -------- -------- -------- --------- ------------ --------- ------------- ---------------- --------
Total
comprehensive
income/
(expense)
for the
period - - - - - 1,553 2,742 4,295 (24) 4,271
--------------- -------- -------- -------- -------- --------- ------------ --------- ------------- ---------------- --------
Credit
for
share-based
incentive
schemes - - - - - - 172 172 - 172
Exercise
of share
award - - 321 (113) - - - 208 - 208
Gain on
employee
benefit
trust - - - - - - 166 166 - 166
Dividends
(note 8) - - - - - - (1,744) (1,744) (4) (1,748)
--------------- -------- -------- -------- -------- --------- ------------ --------- ------------- ---------------- --------
At
30 September
2016 6,134 35,943 (2,946) 86 30,822 2,538 36,172 108,749 69 108,818
--------------- -------- -------- -------- -------- --------- ------------ --------- ------------- ---------------- --------
Total
Called Foreign attributable
up Shares currency to equity Non-controlling
share Share Own to Other translation Retained holders interest Total
capital premium shares be reserves reserve earnings of parent equity
issued
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
2015 6,134 35,943 (3,371) 423 30,822 568 46,668 117,187 86 117,273
------------------ -------- -------- -------- -------- --------- ------------ --------- ------------- ---------------- --------
Profit
for the
period - - - - - - 271 271 64 335
Other
comprehensive
expense:
Exchange
differences
on translation
of foreign
operations - - - - - (290) - (290) - (290)
------------------ -------- -------- -------- -------- --------- ------------ --------- ------------- ---------------- --------
Total
comprehensive
income/(expense)
for the
period - - - - - (290) 271 (19) 64 45
------------------ -------- -------- -------- -------- --------- ------------ --------- ------------- ---------------- --------
Credit
for share-based
incentive
schemes - - - 72 - - 152 224 - 224
Transfer
between
reserves
in respect
of lapsed
share options - - - (31) - - 31 - - -
Exercise
of share
award - - 140 (128) - - - 12 - 12
Loss on
employee
benefit
trust - - - - - - (20) (20) - (20)
Dividends
(note 8) - - - - - - (1,658) (1,658) (84) (1,742)
------------------ -------- -------- -------- -------- --------- ------------ --------- ------------- ---------------- --------
At
30 September
2015 6,134 35,943 (3,231) 336 30,822 278 45,444 115,726 66 115,792
------------------ -------- -------- -------- -------- --------- ------------ --------- ------------- ---------------- --------
Total
Called Foreign attributable
up Shares currency to equity Non-controlling
share Share Own to Other translation Retained holders interest Total
capital premium shares be reserves reserve earnings of parent equity
issued
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
2015 6,134 35,943 (3,371) 423 30,822 568 46,668 117,187 86 117,273
------------------ -------- -------- -------- -------- --------- ------------ --------- ------------- ---------------- --------
(Loss)/Profit
for the
year - - - - - - (9,683) (9,683) 109 (9,574)
Other
comprehensive
income:
Exchange
differences
on translation
of foreign
operations - - - -` - 417 - 417 - 417
------------------ -------- -------- -------- -------- --------- ------------ --------- ------------- ---------------- --------
Total
comprehensive
income/(expense)
for the
period - - - - - 417 (9,683) (9,266) 109 (9,157)
------------------ -------- -------- -------- -------- --------- ------------ --------- ------------- ---------------- --------
(Debit)/Credit
for share-based
incentive
schemes - - - (65) - - 324 259 - 259
Transfer
between
reserves
in respect
of lapsed
share options - - - (31) - - 31 - - -
Exercise
of share
award - - 140 (128) - - - 12 - 12
Loss on
employee
benefit
trust - - - - - - (20) (20) - (20)
Purchase
of treasury
shares - - (36) - - - - (36) - (36)
Dividends - - - - - - (2,484) (2,484) (98) (2,582)
------------------ -------- -------- -------- -------- --------- ------------ --------- ------------- ---------------- --------
At 31 March
2016 6,134 35,943 (3,267) 199 30,822 985 34,836 105,652 97 105,749
------------------ -------- -------- -------- -------- --------- ------------ --------- ------------- ---------------- --------
UNAUDITED CONSOLIDATED STATEMENT OF CASHFLOWS
Six months Six months Audited
ended ended Year ended
30 September 30 September 31 March
Note 2016 2015 2016
GBP'000 GBP'000 GBP'000
------------------------------------- ------ -------------- -------------- ------------
Profit/(Loss) for the period 2,718 335 (9,574)
------------------------------------- ------ -------------- -------------- ------------
Taxation 1,033 722 1,990
------------------------------------- ------ -------------- -------------- ------------
Profit/(Loss) before taxation 3,751 1,057 (7,584)
------------------------------------- ------ -------------- -------------- ------------
Finance Income - (1) (1)
------------------------------------- ------ -------------- -------------- ------------
Finance costs 104 132 248
------------------------------------- ------ -------------- -------------- ------------
Investment loss 28 - 64
------------------------------------- ------ -------------- -------------- ------------
Profit/(Loss) before finance
income, finance costs and
taxation 3,883 1,188 (7,273)
------------------------------------- ------ -------------- -------------- ------------
Depreciation of property,
plant and equipment 756 756 1,527
------------------------------------- ------ -------------- -------------- ------------
Amortisation of intangible
assets 463 376 789
------------------------------------- ------ -------------- -------------- ------------
Share based payments charge 172 263 201
------------------------------------- ------ -------------- -------------- ------------
Charge for future acquisition
payments to employees deemed
as remuneration 24 - 102
------------------------------------- ------ -------------- -------------- ------------
Impairment on Goodwill - 2,000 15,156
------------------------------------- ------ -------------- -------------- ------------
Loss on disposal of property,
plant and equipment - 7 8
------------------------------------- ------ -------------- -------------- ------------
(Increase)/decrease in inventories
and work in progress (772) (122) 291
------------------------------------- ------ -------------- -------------- ------------
(Increase)/decrease in trade
and other receivables (431) (1,117) 379
------------------------------------- ------ -------------- -------------- ------------
Decrease in trade and other
payables (1,019) (184) (544)
------------------------------------- ------ -------------- -------------- ------------
Operating cash inflow 3,076 3,167 10,636
------------------------------------- ------ -------------- -------------- ------------
Tax paid (484) (1,557) (3,279)
------------------------------------- ------ -------------- -------------- ------------
Net cash inflow from operating
activities 2,592 1,610 7,357
------------------------------------- ------ -------------- -------------- ------------
Investing activities
------------------------------------- ------ -------------- -------------- ------------
Finance income - 1 1
------------------------------------- ------ -------------- -------------- ------------
Purchase of subsidiary undertakings
net of cash acquired - (7,843) (7,843)
------------------------------------- ------ -------------- -------------- ------------
Purchase of investments - (1,000) (1,000)
------------------------------------- ------ -------------- -------------- ------------
Payment of deferred consideration - (1,387) (1,387)
------------------------------------- ------ -------------- -------------- ------------
Purchase of property, plant
and equipment 9 (386) (397) (767)
------------------------------------- ------ -------------- -------------- ------------
Purchase of intangible assets 9 (243) (38) (295)
------------------------------------- ------ -------------- -------------- ------------
Net cash outflow from investing
activities (629) (10,664) (11,291)
------------------------------------- ------ -------------- -------------- ------------
Financing activities
------------------------------------- ------ -------------- -------------- ------------
Finance costs (60) (175) (209)
------------------------------------- ------ -------------- -------------- ------------
Net increase in borrowings - 3,421 -
------------------------------------- ------ -------------- -------------- ------------
Proceeds from SAYE exercise 312 - -
------------------------------------- ------ -------------- -------------- ------------
Dividends paid (1,744) (1,658) (2,484)
------------------------------------- ------ -------------- -------------- ------------
Dividends paid to non-controlling
interest (4) (84) (98)
------------------------------------- ------ -------------- -------------- ------------
Purchase of treasury shares - - (36)
------------------------------------- ------ -------------- -------------- ------------
Net cash (outflow)/inflow
from financing activities (1,496) 1,504 (2,827)
------------------------------------- ------ -------------- -------------- ------------
Increase/(decrease) in cash
and cash equivalents 467 (7,550) (6,761)
------------------------------------- ------ -------------- -------------- ------------
Cash and cash equivalents
at start of period 10 1,441 8,312 8,312
------------------------------------- ------ -------------- -------------- ------------
Effect of foreign exchange
rates (558) 144 (110)
------------------------------------- ------ -------------- -------------- ------------
Cash and cash equivalents
at end of period 10 1,350 906 1,441
------------------------------------- ------ -------------- -------------- ------------
NOTES TO THE HALF YEAR REPORT
for the six months ended 30 September 2016
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 2016 were
approved by the Board of Directors on 11 July 2016 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 2016 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 IFRS IC
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 2016 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 2016 have been prepared in
accordance with the accounting policies contained in the Group's
Annual Report and Accounts 2016 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 - not yet endorsed by EU).
This is a new standard which enhances the ability of investors and
other users of financial information to understand the accounting
for financial assets and reduces complexity. The standard uses a
single approach to determine whether a financial asset is measured
at amortised cost or fair value, replacing the various rules in IAS
39.
-- IFRS 15 'Revenue from contracts with customers' (effective
for periods beginning on or after 1 January 2018 - not yet endorsed
by EU). The standard establishes principles for reporting useful
information to users of financial statements about the nature,
amount, timing and uncertainty of revenue and cash flows arising
from an entity's contracts with customers. Revenue is recognised
when a customer obtains control of a good or service and thus has
the ability to direct the use and obtain the benefits from the good
or service. The standard replaces IAS 18 'Revenue' and IAS 11
'Construction Contracts' and related interpretations.
-- IFRS 16 'Leases' (effective for periods beginning on or after
1 January 2019 - not yet endorsed by EU). This is a new standard
which sets out the principles for the recognition, measurement,
presentation and disclosure of leases for both parties to a
contract. The standard eliminates the classification of leases as
either operating or finance leases as required by IAS 17, and
instead, introduces a single lessee accounting model. A lessee will
be required to recognise assets and liabilities for all leases with
a term of more than 12 months and depreciated lease assets
separately from interest in the income statement. The standard
replaces IAS 17 'Leases'.
The following standards, amendments and interpretations were
adopted by the Group during the period:
There are no other standards that are not yet effective and that
would be expected to have a material impact on the entity in the
current or future reporting periods and on foreseeable future
transactions.
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, PAT
and DEPS 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 include
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, acquisition related share based payment charges and
notional finance costs on future contingent deferred consideration.
These adjustments 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 related net losses and restructuring related costs,
property related costs, Creston Unlimited rebranding costs and the
impairment of goodwill. Start-up losses are defined as the net
operating result in the period of the trading activities that
relate to new products, or new organically started businesses.
These trading activities will cease being separately identified
where, in the opinion of the directors, the activities show
evidence of becoming sustainably profitable or are closed,
whichever is earlier. In any event start-up net losses will cease
being separately identified after one year from the commencement of
the activity.
Six months ended 30 September 2016
PBIT PBT PAT
GBP'000 GBP'000 GBP'000
Headline 4,628 4,528 3,502
Headline exceptional items:
Impairment of goodwill - - -
--------- --------- ---------
Total headline exceptional - - -
items
--------- --------- ---------
Other headline items:
Acquisition, accounting and
deal related costs (620) (620) (620)
Start-up related net losses (125) (125) (125)
Interest expense - (32) (32)
Deferred tax charge on amortisation
of goodwill - - (120)
Taxation impact - - 113
--------- --------- ---------
Total other headline items (745) (777) (784)
--------- --------- ---------
Reported 3,883 3,751 2,718
--------- --------- ---------
Headline Basic EPS (pence) 5.77
Headline Diluted EPS (pence) 5.77
Reported Basic EPS (pence) 4.70
Reported Diluted EPS (pence) 4.70
Acquisition, accounting and deal related costs of GBP0.6 million
have been incurred during the half year comprising of amortisation
of intangibles recognised on acquisition of Splendid Unlimited
(GBP0.3 million) and share based payment charge in relation to
Splendid Unlimited for valuation of liquidity foregone for the
non-controlling interest (GBP0.2 million) and deal related costs
(GBP0.1 million).
Start-up related net losses of GBP0.1 million have been excluded
from the Headline PBIT measure. This represents the net losses of
two start-ups in the Communication and Insight division being
Affinity Unlimited and Navigate Unlimited that commenced activity
in H2 of FY16.
Six months ended 30 September 2015
PBIT PBT PAT
GBP'000 GBP'000 GBP'000
Headline 4,150 4,019 3,236
Headline exceptional items:
Impairment of goodwill (2,000) (2,000) (2,000)
--------- --------- ---------
Total headline exceptional
items (2,000) (2,000) (2,000)
--------- --------- ---------
Other headline items:
Acquisition, accounting and
deal related costs (598) (598) (598)
Restructuring and closure related
costs (140) (140) (140)
Start-up related net losses (224) (224) (224)
Deferred tax charge on amortisation
of goodwill - - (87)
Taxation impact - - 148
--------- --------- ---------
Total other headline items (962) (962) (901)
--------- --------- ---------
Reported 1,188 1,057 335
--------- --------- ---------
Headline Basic EPS (pence) 4.99
Headline Diluted EPS (pence) 4.98
Reported Basic EPS (pence) 0.47
Reported Diluted EPS (pence) 0.47
An exceptional non-cash impairment charge to the carrying value
of goodwill of GBP2.0 million was excluded from the Headline PBIT
measure, recognised in relation to the closure of FieldworkUK.com
Limited a subsidiary of ICM Research Limited, which is part of the
ICM cash generating unit.
Acquisition, accounting and deal related costs amounting to
GBP0.6 million were excluded from the Headline PBIT measure for
period ended 30 September 2015. This comprises of acquisition costs
for Splendid Unlimited and 18 Feet (GBP0.1 million), amortisation
of intangibles recognised on acquisition of Splendid Unlimited
(GBP0.3m) and share based payment charge in relation to Splendid
Unlimited for valuation of liquidity foregone for the
non-controlling interest (GBP0.2 million).
Start-up related net losses of GBP0.2 million have been excluded
from the Headline PBIT measure. This represents the net losses of
three start-ups being Reflected Life and Real Data in the
Communications and Insight division and Search Unlimited in the
Health division.
Restructuring and closure related costs of GBP0.1 million have
been incurred in relation to the closure of FieldworkUK.com Limited
(GBP0.05 million) and resulting from combining DJM PAN Unlimited
(GBP0.09 million).
Year ended 31 March 2016
PBIT PBT PAT
GBP'000 GBP'000 GBP'000
Headline 10,087 9,854 7,838
Headline exceptional items:
Impairment of goodwill (15,156) (15,156) (15,156)
--------- --------- -----------------
Total headline exceptional
items (15,156) (15,156) (15,156)
--------- --------- -----------------
Other headline items:
Acquisition, accounting, and
deal related costs (1,349) (1,349) (1,349)
Restructuring and closure related
costs (497) (497) (497)
Start-up related net losses (358) (358) (358)
Interest expense - (55) (55)
Loss from investment - (23) (23)
Deferred tax charge on amortisation
of goodwill - - (321)
Taxation impact - - 347
--------- --------- -----------------
Total other headline items (2,204) (2,282) (2,256)
--------- --------- -----------------
Reported (7,273) (7,584) (9,574)
--------- --------- -----------------
Headline Basic EPS (pence) 12.04
Headline Diluted EPS (pence) 12.02
Reported Basic EPS (pence) (16.66)
Reported Diluted EPS (pence) (16.63)
An exceptional non-cash impairment charge to the carrying value
of goodwill of GBP15.2 million was excluded from the Headline PBIT
measure.
Acquisition, accounting and deal related costs amounting to
GBP1.3 million were excluded from the Headline PBIT measure for
year ended 31 March 2016. This comprises of acquisition costs for
Splendid Unlimited and 18 Feet (GBP0.2 million), amortisation of
intangibles recognised on acquisition of Splendid Unlimited
(GBP0.7m) and share based payment charge in relation to Splendid
Unlimited for valuation of liquidity foregone for the
non-controlling interest (GBP0.3 million). In relation to the
acquisition of DJM Unlimited and Cooney Waters Group Unlimited
GBP0.1 million has been recognised as acquisition payments to
employees deemed as remuneration.
Start-up related net losses of GBP0.4 million have been excluded
from the Headline PBIT measure. This represents the net losses of
five start-ups being Reflected Life, Real Data, Affinity Unlimited,
Navigate Unlimited and Search Unlimited.
Restructuring and closure related costs of GBP0.5 million have
been incurred in relation to the reorganisation of UK Health
regional board, the combination of DJM Unlimited and PAN Unlimited
to form DJM PAN Unlimited and the closure of the company
FieldworkUK.com Limited.
5. Segmental analysis
The chief operating decision maker has been identified as the
Executive Board of Directors, which makes the strategic decisions.
The Executive Board reviews the performance of the Group using two
divisions, these being Communications & Insight, and
Health.
The principal activities of the two divisions and Head Office
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.
Head office
Head office segment comprises the operating costs of the parent
company and the sales, marketing and PR for the Unlimited
Group.
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:
Six months ended Communications
30 September 2016 Note & Insight Health Head Group
Office
GBP'000 GBP'000 GBP'000 GBP'000
Turnover (billings) 41,155 11,310 627 53,092
Revenue 30,227 9,760 15 40,002
----------------- -------- -------- --------
Headline PBIT 4,267 1,580 (1,219) 4,628
----------------- -------- -------- --------
Other headline items 4 (664) (24) (57) (745)
Reported PBIT 3,603 1,556 (1,276) 3,883
----------------- -------- -------- --------
Finance income - - - -
Finance costs - - (104) (104)
Share of loss from
investment (28) - - (28)
Profit before taxation 3,575 1,556 (1,380) 3,751
----------------- -------- -------- --------
Taxation (1,033)
----------------- -------- -------- --------
Profit for the period 2,718
----------------- -------- -------- --------
Six months ended Communications
30 September 2015 Note & Insight Health Head Group
Office
GBP'000 GBP'000 GBP'000 GBP'000
Turnover (billings) 40,729 10,700 173 51,602
Revenue 30,658 9,688 3 40,349
--------------- -------- -------- --------
Headline PBIT 3,993 1,578 (1,421) 4,150
--------------- -------- -------- --------
Headline exceptional
items 4 (2,000) - - (2,000)
Other headline items 4 (813) (119) (30) (962)
--------------- -------- -------- --------
Reported PBIT 1,180 1,459 (1,451) 1,188
--------------- -------- -------- --------
Finance income - - 1 1
Finance costs - - (132) (132)
Profit before taxation 1,180 1,459 (1,582) 1,057
--------------- -------- -------- --------
Taxation (722)
--------------- -------- -------- --------
Profit for the period 335
--------------- -------- -------- --------
Year ended Communications
31 March 2016 Note & Insight Health Head Group
Office
GBP'000 GBP'000 GBP'000 GBP'000
Turnover (billings) 85,718 21,727 599 108,044
Revenue 62,924 19,721 - 82,645
--------------- -------- -------- ---------
Headline PBIT 8,995 3,964 (2,872) 10,087
--------------- -------- -------- ---------
Headline exceptional
items 4 (10,636) (4,520) - (15,156)
Other headline items 4 (1,541) (578) (85) (2,204)
Reported PBIT (3,182) (1,134) (2,957) (7,273)
--------------- -------- -------- ---------
Finance income - - 1 1
Finance costs - - (250) (250)
Notional finance
cost on future contingent
deferred consideration - 2 - 2
Share of loss from
investment (64) - - (64)
--------------- -------- -------- ---------
Loss before taxation (3,246) (1,132) (3,206) (7,584)
--------------- -------- -------- ---------
Taxation (1,990)
--------------- -------- -------- ---------
Loss for the period (9,574)
--------------- -------- -------- ---------
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 Six months Six months
ended ended Year ended ended Year
30 September 30 September ended 30 September 30 September ended
2016 2015 31 March 2016 2015 31 March
2016 2016
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
UK 33,565 34,804 73,984 25,830 27,561 54,706
Rest of Europe 11,673 9,597 18,935 7,456 6,981 16,077
Rest of the
World (including
USA) 7,854 7,201 15,125 6,716 5,807 11,862
-------------- -------------- ---------- -------------- -------------- ----------
53,092 51,602 108,044 40,002 40,349 82,645
-------------- -------------- ---------- -------------- -------------- ----------
6. Taxation
The headline tax rate of 23 per cent (H1 2016: 20 per cent) has
increased due to the proportionate increase in the group's US
income. This is because US income is taxed at a significantly
higher US tax rate than the UK statutory rate of 20 per cent.
The reported tax rate of 28 per cent (H1 2016: 68 per cent) is
significantly lower than H1 2016. This is due to the fact that in
H1 2016 there was a goodwill impairment charge for which no tax
relief was available. The reported tax rate of 28 per cent is
higher than the headline rate of 23 per cent, 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.
In future periods we would expect the headline tax rate to be
higher than the UK statutory rate as a consequence of the higher
tax rates in the US.
7. Earnings/(Loss) per share
Headline Reported
Six months Six months Six months Six months
ended ended Year ended ended Year
30 September 30 September ended 30 September 30 September ended
2016 2015 31 March 2016 2015 31 March
2016 2016
Earnings
Profit/(Loss)
for the period
(GBP'000) 3,502 3,236 7,838 2,718 335 (9,574)
-------------- -------------- ----------- -------------- -------------- -----------
Attributable
to:
-------------- -------------- ----------- -------------- -------------- -----------
non-controlling
interest (GBP'000) (24) 64 109 (24) 64 109
accrued dividend
for the non-controlling
interest (GBP'000) 162 274 731 - - -
-------------- -------------- ----------- -------------- -------------- -----------
equity holders
of the parent
(GBP'000) 3,364 2,898 6,998 2,742 271 (9,683)
-------------- -------------- ----------- -------------- -------------- -----------
Number of shares
Weighted average
number of shares 58,316,170 58,053,043 58,108,610 58,316,170 58,053,043 58,108,610
Dilutive effect
of shares 5,008 196,864 117,415 5,008 196,864 117,415
-------------- -------------- ----------- -------------- -------------- -----------
58,321,178 58,249,907 58,226,025 58,321,178 58,249,907 58,226,025
-------------- -------------- ----------- -------------- -------------- -----------
Earnings/(losses)
per share
-------------- -------------- ----------- -------------- -------------- -----------
Basic earnings/(loss)
per share
(pence): 5.77 4.99 12.04 4.70 0.47 (16.66)
-------------- -------------- ----------- -------------- -------------- -----------
Diluted earnings/(loss)
per share (pence): 5.77 4.98 12.02 4.70 0.47 (16.63)
-------------- -------------- ----------- -------------- -------------- -----------
The headline EPS and DEPS are based on the headline PAT
attributable to the respective equity holders and is divided by the
weighted average number of shares and by the weighted average
number of diluted shares respectively. The non-controlling interest
charge comprises of the results of DJM PAN Unlimited and Loooped
Unlimited. Headline DEPS is also adjusted to assume an accrued
dividend for the non-controlling interest in Splendid.
Diluted earnings per share has been calculated based on the
dilutive impact of 28,496 employee share options which were
outstanding as at 30 September 2016 (30 September 2015: 499,143).
During the period, the 2013 Creston SAYE scheme matured on 1 April
2016 which resulted in exercises of share options during the
current period.
8. Dividends
The prior year final dividend of 2.99 pence (H1 2016: 2.85
pence) per share was paid to shareholders on 9 September 2016
giving a total of GBP1,744,000 (H1 2016: GBP1,652,255). The Board
has declared a half year dividend to be paid on 20 December 2016 of
1.42 pence (H1 2016: 1.42 pence) per share to all ordinary
shareholders on the register at 2 December 2016.
9. Non-current assets
Six months ended Intangible Intangible Property,
30 September assets - assets - plant and Total
2016 goodwill other equipment GBP'000
GBP'000 GBP'000 GBP'000
----------- ----------- ----------------- ----------
Net book amount
at
1 April 2016 95,725 4,071 3,244 103,040
----------- ----------- ----------------- ----------
Additions - 243 386 629
Transfer to/from
intangible assets/property,
plant and equipment - 24 (24) -
Depreciation
and amortisation - (463) (756) (1,219)
Impairment - - - -
Exchange differences 1,658 53 67 1,778
----------- ----------- ----------------- ----------
Net book amount
at 30 September
2016 97,383 3,928 2,917 104,228
----------- ----------- ----------------- ----------
Six months ended Intangible Intangible Property,
30 September assets - assets - plant and Total
2015 goodwill other equipment GBP'000
GBP'000 GBP'000 GBP'000
----------- ----------- ----------------- ----------
Net book amount
at
1 April 2015 105,381 1,256 3,985 110,622
----------- ----------- ----------------- ----------
Additions - 38 397 435
Acquisition of
subsidiary 5,051 3,302 47 8,400
Disposals - - (7) (7)
Depreciation
and amortisation - (376) (756) (1,132)
Impairment (2,000) - - (2,000)
Exchange differences (319) (8) (22) (349)
----------- ----------- ----------------- ----------
Net book amount
at
30 September
2015 108,113 4,212 3,644 115,969
----------- ----------- ----------------- ----------
Year ended Intangible Intangible Property,
31 March 2016 assets - assets - plant and Total
goodwill other equipment GBP'000
GBP'000 GBP'000 GBP'000
----------- ----------- ----------------- ----------
Net book amount
at 1 April 2015 105,381 1,256 3,985 110,622
----------- ----------- ----------------- ----------
Additions - 295 722 1,017
Acquisition of
subsidiary 5,051 3,302 47 8,400
Disposals - - (7) (7)
Charge for the
year - (789) (1,527) (2,316)
Impairment (15,156) - - (15,156)
Exchange differences 449 7 24 480
----------- ----------- ----------------- ----------
Net book amount
at
31 March 2016 95,725 4,071 3,244 103,040
----------- ----------- ----------------- ----------
10. Analysis of net cash
As at
Six months ended As at Acquisition Foreign 30 September
30 September 2016 1 April related Cash exchange 2016
2016 flow
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Cash and cash equivalents 1,441 - 467 (558) 1,350
Net cash 1,441 - 467 (558) 1,350
--------- ------------- -------- ---------- --------------
Provision for contingent - - - - -
deferred consideration
--------- ------------- -------- ---------- --------------
Net cash including
contingent deferred
consideration 1,441 - 467 (558) 1,350
--------- ------------- -------- ---------- --------------
As at
Six months ended As at Acquisition Foreign 30 September
30 September 2015 1 April related Cash exchange 2015
2015 flow
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Cash and cash equivalents 8,312 (10,230) 2,680 144 906
Bank overdraft - - (3,421) - (3,421)
Net cash/(debt) 8,312 (10,230) (741) 144 (2,515)
--------- ------------- -------- ---------- --------------
Provision for contingent
deferred consideration (1,384) 1,384 - - -
--------- ------------- -------- ---------- --------------
Net cash/(debt)
including contingent
deferred consideration 6,928 (8,846) (741) 144 (2,515)
--------- ------------- -------- ---------- --------------
As at
Year ended As at Acquisition Foreign 31 March
31 March 2016 1 April related Cash exchange 2016
2015 flow
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Cash and cash equivalents 8,312 (10,230) 3,469 (110) 1,441
Net cash 8,312 (10,230) 3,469 (110) 1,441
--------- ------------- -------- ---------- ----------
Provision for contingent
deferred consideration (1,384) 1,384 - - -
--------- ------------- -------- ---------- ----------
Net cash including
contingent deferred
consideration 6,928 (8,846) 3,469 (110) 1,441
--------- ------------- -------- ---------- ----------
11. Related-party transactions
The ultimate controlling party of the Group is Creston plc
(incorporated in the United Kingdom). The Group has a related-party
relationship with its subsidiaries and with its Directors.
Transactions between the Company and its subsidiaries have been
eliminated on consolidation and are not disclosed in this note.
There have been no related party transactions with Directors during
the period.
12. Principal risks and uncertainties
Details of our principal risks and uncertainties have been
disclosed on pages 18 to 20 of the 2016 Annual Report and Accounts.
In that disclosure we referred to our mitigation and monitoring
procedures which remain relevant to the risks outlined below:
-- Failure to adapt the business model to an increasingly
fast-moving industry. In a rapidly evolving industry closely linked
to technological progression, the failure to adapt could have a
direct impact on client retention and operational efficiency.
-- Globalisation and macro-economic events affecting client
decision-making process. Globalisation and macro-economic events
such as the recent result of the EU referendum have transformed
client decision making processes, reactiveness and budget
allocation. A volatile macro-economic environment could result in a
short-term and dynamic budget reallocation process, thus resulting
in strategic decisions being independent of performance and client
satisfaction.
-- Loss of key clients. Loss of key clients would lead to loss
of revenues, impacting the Group's financial performance.
-- Failure to understand evolving client needs and to respond to
an increasingly competitive pressure on client acquisition. Client
needs evolve under the influence of technological, cultural, and
socio-political factors. Failure to understand and anticipate
client needs would affect the quality of our work and ultimately
lead to the loss of key accounts. Competitive pressure on client
acquisition and client retention could lead the Group to face the
threat of committing to unfavourable terms of business.
-- Performance of newly acquired businesses is below forecasts
and market expectations. Acquired businesses may not perform in
line with forecasts could result in underperformance against market
expectations. Post-deal integration issues could result in
operational inefficiencies and increased integration costs.
Performance issues related to acquired business could lead to
impairment of Goodwill and intangible assets. Strategic
partnerships may not perform in line with expectations creating
operational gap. In addition, sub-optimal synergies heighten the
risk of litigation.
-- Loss of key staff. Loss of key staff could impair the ability
to deliver projects and indirectly affect client retention. In
addition, creative edge and brand reputation are equally affected
by the loss of key creative talent.
-- Failure to respond to the increasing threat on data
protection and cyber security. Ineffective protection of data may
expose the Group to various types of confidentiality breach both
from an information and from a cyber security perspective.
Cyber-attacks could lead to unauthorised circulation of
confidential information or vulnerability to ransom demands, which
could result in significant reputational loss, and ultimately
negatively impact existing and potential business.
-- Systems, IT and technology are managed ineffectively across
the Group. Ineffective operational management of systems, IT and
technology could lead to loss of operational effectiveness and
significantly weakens security processes. This would also
negatively affect the ability of the Group to present a competitive
offering to potential and existing clients and would increase
vulnerability to external attacks.
-- Failure to adhere to changing legal and compliance
requirements. Changes to regulations and legal requirements could
restrict or burden the Group's activities. Failure to adhere to
compliance requirements could lead to financial and reputational
damage to the Group.
These principal risks and uncertainties have the potential to
impact our results or financial position during the remaining six
months of the financial year.
13. 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:-
-- the condensed set of financial statements, which has been
prepared in accordance with applicable set of accounting standards,
gives a true and fair view of the assets, liabilities, financial
position and profit or loss of the issuer, or the undertakings
included in the consolidation as a whole as required by DTR
4.2.4;
-- 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 2016. A list of current Directors is
maintained on the Creston website: www.creston.com.
By order of the Board
Kathryn Herrick
17 November 2016
Chief Financial Officer
14. 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.
15. Availability of the half year report
Copies of the half year report are available on the Company's
website www.creston.com.
This information is provided by RNS
The company news service from the London Stock Exchange
END
IR DMMMMGVZGVZZ
(END) Dow Jones Newswires
November 17, 2016 02:01 ET (07:01 GMT)
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