Interim Results & Acquisition
Creston PLC
04 December 2006
Date: 4 December 2006
On behalf of: Creston plc ("Creston" or "the Group")
Embargoed until: 0700hrs
Creston plc
Interim Results for the year ended 30 September 2006 & Acquisition
Creston plc, the diversified marketing services group, today announced its
interim results for the six months ended 30 September 2006. The highlights,
which demonstrate the Group's continuing ability to acquire and manage best in
class companies in a dynamic market, are:
FINANCIAL HIGHLIGHTS
Headline Performance*
• Increase in Turnover (billings) of 43% to £53.5m (2005: £37.4m)
• Increase in Revenue (fees earned) of 49% to £30.8m (2005: £20.7m)
• Increase in Profit before finance costs, income from investments and
taxation (PBIT) of 35% to £5.2m (2005: £3.9m)
• Increase in Profit before taxation (PBT) of 35% to £4.9m (2005: £3.6m)
• Increase in Basic Earnings per share (EPS) of 2% to 6.93 pence
(2005: 6.82 pence)
• Increase in Diluted EPS of 2% to 6.85 pence (2005: 6.70 pence)
• PBIT Margin of 17% continues to exceed the industry average
• Growth in Operating Company like-for-like Revenue of 4%
• Growth in Divisional like-for-like PBIT of 11%, 7% and 15% in BRANDCOM,
Insight and Public Relations (PR), respectively
Reported Performance
• Increase in Turnover (billings) of 43% to £53.5m (2005: £37.4m)
• Increase in Revenue (fees earned) of 49% to £30.8m (2005: £20.7m)
• Increase in PBIT of 20% to £3.4m (2005: £2.8m)
• Increase in PBT of 8% to £2.1m (2005: £1.9m)
• Increase in Dividend per Share of 10% to 0.88 pence (2005: 0.80 pence)
• Basic EPS of 2.06 pence (2005: 2.14 pence)
• Diluted EPS of 2.04 pence (2005: 2.10 pence)
* Headline performance measures exclude the impact of deferred consideration
deemed as remuneration, notional finance costs on deferred consideration and
amortisation of intangible assets. A reconciliation of Headline PBIT, PBT and
Profit after taxation (PAT) to their Reported equivalents is set out in Note 3
of the Interim Report.
OPERATIONAL HIGHLIGHTS
• Acquisition of ICM Group (ICM) completed on 17 May 2006 for a
maximum consideration of £37.2m. ICM was one of the UK's largest
independent market research groups. The acquisition adds significant depth
and added disciplines to Creston's Insight Division.
• Acquisition of Tullo Marshall Warren Ltd together with its
sister company Colombus Communications Ltd (TMW) completed on 17 May 2006
for a maximum consideration of £38.3m. TMW was one of the UK's largest
independent direct marketing companies. The acquisition adds considerable
strength, especially in digital and data, to Creston's MARCOMS Division.
• Launch of New Vista, an online market research entity within
the Insight Division. Since launch, New Vista has enjoyed exceptional
growth and allows Creston companies to offer clients a fully integrated
traditional and on line research capability.
• Launch of 'e-Influence', an online brand management and influencer
initiative between the PR and MARCOMS Divisions.
• Appointment of Andrew Dougal as non-executive director and
Chairman of the Audit Committee on 6 September 2006. Andrew holds
non-executive directorships including Chairman of the Audit Committee at
Taylor Woodrow Plc and was formerly Finance Director of Hanson Plc, the
conglomerate, and after its demerger, CEO of Hanson the international
building materials company.
• Major client wins in the period include Morrisons by DLKW,
Vodafone online research by ICM, Sony Ericsson qualitative research by CML
and pan-European Nissan direct marketing by TMW.
• Synergy between group companies has enjoyed its highest levels and we are
proud of wins such as Canon, Alfa Romeo, Hyundai and Kia, World Heart
Foundation, BMW and Nutricia.
POST BALANCE SHEET EVENT
• The Board is pleased to announce the acquisition of PAN
Advertising Ltd (PAN) for a maximum consideration of £18.8m. PAN was one of
the UK's largest independent healthcare advertising and communication
companies. The acquisition was completed on 3 December 2006 and is part of
Creston's strategy to build its international health care offering.
Commenting on today's announcement, Don Elgie, Group Chief Executive, said:
"Our strategy of building a diversified international marketing services group
through a combination of organic growth and selective acquisitions continues to
progress well. We are pleased to have delivered a good performance for our
shareholders in the first half of the year and to have acquired three
exceptional companies which are undoubtedly leaders in their fields. The depth
of new business wins and the exciting new initiatives in the online arena, give
a strong foundation for the second half of the year. Trading since September
continues to be in line with the Board's expectations."
FOR FURTHER INFORMATION, PLEASE CONTACT:
Creston plc 020 7930 9757
Don Elgie, Chief Executive
Barrie Brien, COO/CFO
www.creston.com
Redleaf Communications 020 7822 0200
Emma Kane/Sanna Lehtinen/Susan Quigley
NOTES TO EDITORS
• Publication quality photographs are available through Redleaf
on the numbers shown above.
About Creston plc
• Creston's strategy is to build a diversified international
marketing services group through a combination of organic growth and
selective acquisitions. The Board's aim is to identify synergistic benefits
between currently independent marketing services companies offering premium
services such as market research, direct marketing, advertising, public
relations, research and digital; and to build a diversified Group that
offers clients solutions to both existing and future marketing needs.
• Creston's companies boast a range of blue-chip clients
including the AA, AstraZeneca United Kingdom, BA, Bacardi-Martini, Bayer,
BT, Burger King, Canon, COI Communications, Cow & Gate, Diageo, eBay,
General Motors, George Wimpey, GlaxoSmithKline, Halifax, Kimberly-Clark,
Lloyds, Lloyds Black Horse, Morrisons, Nestle Rowntree, Nissan, Norwich
Union, Pfizer, Roche Diagnostics, Scottish Courage, Tesco, Toshiba,
T-Mobile, Tropicana, Unilever, Vodafone, Walkers and WHSmith.
• Creston's share price is quoted in the Financial Times, The
Daily Telegraph, The Times and the London Evening Standard.
CHAIRMAN AND CHIEF EXECUTIVE'S STATEMENT
• The Board is pleased to present the Group's interim results
for the six months ended 30 September 2006. Creston has continued the
successful implementation of its strategy of building a diversified
international marketing services group through a combination of organic
growth and selective acquisitions. The acquisitions on 17 May 2006 of ICM
Group (ICM), one of the UK's largest independent market research groups and
Tullo Marshall Warren (TMW), one of the UK's largest independent direct
marketing companies supported this strategy. The acquisition of PAN
Advertising (PAN), one of the UK's largest independent healthcare
advertising and communication companies, on 3 December
2006, continues the Board's strategy of investing in category specific
expertise.
• The Group has invested heavily in the first half of the year
in building its online digital expertise, via the initiatives of online
research in New Vista and online brand management and influencer in
'e-Influence'. These core strategic initiatives added to the expertise
within the recently acquired TMW Digital division of TMW, compliment the
impressive and world class offering to our clients.
Results
Overall, trading during the first six months of the year ending 31 March 2007
has been in line with expectations. Turnover, which represents billings to our
customers, grew by 43 per cent to £53.5m (6 months ended 2005: £37.4m). More
importantly Revenue, which represents our income earned, increased by 49 per
cent to £30.8m (2005: £20.7m). Headline PBIT increased by 35 per cent to £5.2m
(2005: £3.9m) and reported PBIT increased by 20 per cent to £3.4m (2005: £2.8m).
Total staff numbers increased from 515 to 801 on a full-time equivalent basis
following the acquisitions of ICM and TMW.
Headline PBIT has been driven by the acquired profits of ICM and TMW and the
like-for-like growth in our companies representing 4 per cent of Revenue. All
divisions have grown Revenue on a like-for-like basis, with the best performance
from PR at 17 per cent.
Reported PBIT increased by 20 per cent from £2.8m to £3.4m. This growth has been
impacted by the non-recurring non-cash impact of the deferred consideration
deemed as remuneration, and in particular amortisation of intangible assets of
£0.6m (2005: £0.4m) during the first half of the year related to ICM and TMW.
Headline Basic EPS increased to 6.93 pence (2005: 6.82 pence) and Headline
Diluted EPS increased to 6.85 pence (2005: 6.70 pence). Reported Basic EPS was
2.06 pence (2005: 2.14 pence) and reported Diluted EPS was 2.04 pence (2005:
2.10 pence). Reported figures are impacted by accounting charges for the
acquisitions in the period, specifically the amortisation of intangibles.
At 30 September 2006, Creston had net cash balances of £3.6m (2005: £3.2m) and
total bank loans, loan notes and finance lease obligations of £18.5m (2005:
£7.9m). The resulting net bank debt of £14.8m (2005: £4.7m) represents a
prudent gearing level of 19 per cent (2005: 11 per cent). Creston continues to
maintain significant headroom in its banking covenants. Net finance costs cover
is 3 times on a Reported basis (2005: 3 times) and 16 times on a Headline basis
(2005: 15 times).
Dividend
An interim dividend per share of 0.88 pence (2005: 0.80 pence) is to be paid on
8 January 2007 to shareholders on the register at 15 December 2006. This is in
line with the Board's stated strategy of implementing a progressive dividend
policy.
Divisional Performance, like-for-like growth and new business
The Directors are of the opinion that as Creston is an acquisitive company
certain accounting policies relating to deferred consideration deemed as
remuneration, notional finance costs on deferred consideration and amortisation
of intangible assets have a material impact on the reported results and
introduce volatility to the reported figures. In order to enable a better
understanding of the underlying divisional performance of the Group, Creston
refers to Headline PBIT, which eliminates these non-recurring non-cash charges
included in the reported figures.
BRANDCOM Division
The BRANDCOM Division has contributed Revenue of £7.1m (2005: £7.0m) and PBIT of
£1.4m (2005: £1.2m), which represents PBIT growth of 11 per cent. The Division
has achieved another excellent performance in the six months due to strong new
business performance with wins including Morrisons, Marstons and Charles
Worthington plus further Opel and COI business. These gains generated
like-for-like PBIT growth of 11 per cent. The PBIT margin has increased to 19
per cent and remains strong for this sector.
Insight Division
The Insight Division has contributed Revenue of £6.8m (2005: £3.3m) and PBIT of
£2.0m (2005: £1.0m), which represents growth of 105 per cent and 97 per cent
respectively. The Division continues to perform very well, due to the strong
performance of ICM Research since acquisition and the on-line research sales,
which are growing rapidly since the investment in New Vista. There was
like-for-like Revenue growth of 6 per cent and PBIT growth of 7 per cent. The
Headline PBIT margin remains exceptional at 30 per cent.
MARCOMS Division
The MARCOMS Division has contributed Revenue of £12.5m (2005: £7.3m) and PBIT of
£2.1m (2005: £1.9m), which represents growth of 71 per cent and 10 per cent
respectively. Like-for-like Revenue growth was 1 per cent, following the
previously reported loss of a large part of the BMW account in EMO. After
adjusting for the BMW loss, which was a material contract in the same period
last year, the like-for-like Revenue growth was 11 per cent. The Division's PBIT
margin is 17 per cent which continues to be good for the sector but was
suppressed by the BMW loss and some one-off and restructuring costs in the first
half of the year.
EMO is now regaining momentum with the recent wins from George Wimpey and The
Co-operative Group added to the first half wins of Lotus and Alfa Romeo. The
Board is confident that EMO will continue to replace the lost Revenue and is
pleased that there will be less dependency on one major client in the future.
This Division has been enhanced by the acquisition of TMW in May 2006, the
benefits of which will be fully realised in the second half of the year.
PR Division
The PR Division has contributed Revenue of £4.3m (2005: £3.0m) and PBIT of £1.2m
(2005: £0.9m), which represents growth of 45 per cent and 36 per cent
respectively. Our healthcare company, RDC has performed especially well with a
number of new client wins including Chiron, GE Healthcare and Novo Nordisk
International. The Division has contributed excellent like-for-like Revenue and
PBIT growth of 17 per cent and 15 per cent respectively and the PBIT margin
remained high at 28 per cent.
Acquisitions
During the period, the Group acquired the business and assets of ICM and TMW,
both of which were completed on 17 May 2006.
ICM was acquired for a maximum consideration of £37.2m plus costs. ICM, based
in London is one of Britain's leading market research groups. ICM's clients
include BT, Dixons, Norwich Union and Vodafone.
TMW was acquired for a maximum consideration of £38.3m plus costs. TMW, based
in London is one of Britain's leading direct marketing groups. TMW's clients
include BA, COI, Diageo, Nissan, T-Mobile and Unilever.
On 1 December 2006 PAN was acquired for a maximum consideration of £18.8m plus
costs. PAN, based in Richmond, Surrey, is one of Britain's leading healthcare
advertising and communication companies. PAN's clients include Bristol-Myers
Squibb, Boehringer Ingelheim, GlaxoSmithKline, Schering, Servier and Wyeth.
This acquisition has no impact on the reported results, as it occurred after the
balance sheet date.
Plc Board and Incentive Schemes
We were pleased to appoint Andrew Dougal as non-executive director and Chairman
of the Audit Committee on 6 September 2006. Andrew is non-executive director of
Premier Farnell Plc and Chairman of the Audit Committee at Taylor Woodrow Plc.
He was formerly Finance Director of Hanson Plc, the conglomerate, and after its
demerger, CEO of Hanson the international building materials company.
There was a third offering under the Group's Sharesave scheme, which was offered
to all employees. The take up under the Sharesave scheme continues to be
excellent with 298 employees, representing 37 per cent of eligible employees,
participating in this scheme.
Outlook
Creston has had a successful first six months with some major new business wins
and additional assignments across all divisions from many of our Top 30 clients,
such as Canon, COI, General Motors, Lloyds, Unilever and Vodafone. These new
business wins and additional assignments provide a good foundation for the
second half of the year. The Group will also benefit from a full six months
contribution to profits from the acquisitions of ICM and TMW, as well as the new
initiatives of New Vista and 'e-Influence'. Following the acquisitions of ICM,
TMW and PAN the Board is confident that there will be further opportunities to
leverage cross selling and client referrals across Group companies, which will
add to the considerable success we have already enjoyed in synergy.
The overall market continues to exhibit growth and is stimulated by the growth
of digital platforms. We believe clients will reward those diversified Groups
that are able to offer insight driven media neutral planning, that is executed
with integrated and compelling multi channel creative. Creston companies both
individually and collaboratively, are demonstrating their ability to fulfill
these emerging client needs by developing class leading initiatives such as the
on-line research panel New Vista and the internet reputation management product
'e-Influence'.
In summary, we are pleased with the Group's performance in the reported period.
The Group continues to demonstrate a positive trading performance and with the
latest acquisitions and online initiatives the Board is confident of Creston's
growth plans and future prospects.
David Marshall Don Elgie
Chairman Chief Executive
4 December 2006
UNAUDITED CONSOLIDATED INCOME STATEMENT
for the six months ended 30 September 2006
Note Six months ended Six months ended Year ended
30 September 2006 30 September 2005 31 March
£'000 £'000 2006
£'000
Turnover (billings) 53,484 37,352 81,472
Revenue (fees earned) 30,755 20,654 43,503
Operating costs (27,390) (17,853) (37,234)
Profit before finance costs, income
from investments and taxation 3,365 2,801 6,269
Finance income 115 84 182
Finance costs (1,387) (949) (1,836)
Income from investments - - 109
Profit before taxation 2,093 1,936 4,724
Taxation (1,076) (1,171) (1,797)
Profit for the period 1,017 765 2,927
Basic earnings per share (pence) 6 2.06 2.14 8.04
Diluted earnings per share (pence) 6 2.04 2.10 7.67
The results above arise wholly from continuing operations.
UNAUDITED CONSOLIDATED BALANCE SHEET
as at 30 September 2006
As at As at As at
30 September 30 September 31 March
2006 2005 2006
As restated
£'000 £'000 £'000
Non-current assets
Intangible assets
Goodwill 111,799 67,166 66,535
Other 1,080 350 350
Property, plant and equipment 4,529 2,535 3,006
Trade and other receivables 1,158 - 1,162
Investments - available for sale 10 550 550 550
Deferred tax assets 1,500 210 906
120,616 70,811 72,509
Current assets
Inventories and work in progress 3,676 2,050 2,907
Trade and other receivables 24,383 15,129 19,961
Cash and cash equivalents 3,644 3,215 5,317
31,703 20,394 28,185
Current liabilities
Trade and other payables (24,692) (16,647) (22,497)
Corporate income tax payable (825) (1,849) (1,452)
Obligations under finance leases (132) (149) (196)
Bank overdraft, loans and loan notes (5,595) (1,687) (2,525)
Short term provisions (1,131) - (7,046)
(32,375) (20,332) (33,716)
Net current (liabilities)/assets (672) 62 (5,531)
Total assets less current liabilities 119,944 70,873 66,978
Non current liabilities
Bank loans and loan notes (12,740) (5,938) (5,073)
Obligations under finance leases - (157) (9)
Long term provisions (29,877) (20,037) (14,502)
(42,617) (26,132) (19,584)
Net assets 77,327 44,741 47,394
Equity
Called up share capital 5,497 3,712 3,759
Share premium account 33,345 19,333 19,734
Own shares (139) (70) (46)
Shares to be issued 3,120 1,679 1,836
Other reserves 30,943 17,694 17,682
Retained earnings 4,561 2,393 4,429
Total equity 77,327 44,741 47,394
UNAUDITED STATEMENT OF CHANGES IN EQUITY
for the 6 months ended 30 September 2006
Share Share Own Shares to Other Retained Total
capital premium shares be issued reserves earnings
£'000 £'000 £'000 £'000 £'000 £'000 £'000
Changes in equity for the period
At 1 April 2006 3,759 19,734 (46) 1,836 17,682 4,429 47,394
New shares issued 1,738 13,611 53 - 13,288 - 28,690
Credit for share based incentive
scheme - - - 1,284 - - 1,284
Own shares purchased - - (146) - - - (146)
Loss on treasury scheme - - - - (27) - (27)
Profit for the period - - - - - 1,017 1,017
Dividends - - - - - (885) (885)
At 30 September 2006 5,497 33,345 (139) 3,120 30,943 4,561 77,327
for the 6 months ended 30 September 2005
Share Share Own Shares to Other Retained Total
capital premium shares be issued reserves earnings
As As
restated restated
£'000 £'000 £'000 £'000 £'000 £'000 £'000
Changes in equity for the period
At 1 April 2005 as restated (Note
10) 3,493 19,168 - 1,426 15,434 2,312 41,833
New shares issued 219 165 - - 2,260 - 2,644
Credit for share based incentive
scheme - - - 253 - - 253
Own shares purchased - - (70) - - - (70)
Loss on treasury scheme - - - - - -
Profit for the period - - - - - 765 765
Dividends - - - - - (508) (508)
At 30 September 2005 3,712 19,333 (70) 1,679 17,159 2,393 44,206
for the year ended 31 March 2006
Share Share Own Shares to Other Retained Total
capital premium shares be issued reserves earnings
£'000 £'000 £'000 £'000 £'000 £'000 £'000
Changes in equity for the year
At 1 April 2005 3,493 19,168 - 1,426 15,434 2,312 41,833
New shares issued 266 566 - - 2,258 - 3,090
Credit for share based incentive
scheme - - - 410 - - 410
Own shares purchased - - (46) - - - (46)
Loss on treasury scheme - - - - (10) - (10)
Profit for the year - - - - - 2,927 2,927
Dividends - - - - - (810) (810)
At 31 March 2006 3,759 19,734 (46) 1,836 17,682 4,429 47,394
UNAUDITED CONSOLIDATED CASH FLOW STATEMENT
for the six months ended 30 September 2006
Note Six months Six months Year
ended ended ended
30 September 30 September 31 March
2006 2005 2006
£'000 £'000 £'000
Operating cash flow 8 2,999 3,308 7,970
Net finance costs (336) (257) (303)
Tax paid (1,374) (434) (1,908)
Net cash inflow from operating activities 1,289 2,617 5,759
Investing activities
Purchase of subsidiary undertakings (31,062) (4,240) (4,240)
Net cash acquired with subsidiaries 9,140 1,779 1,779
Purchase of property, plant and
equipment (1,030) (1,110) (2,262)
Sale of property, plant and equipment - 32 117
Decrease in restricted cash deposits - 12 27
Net cash (outflow) from investing (22,952) (3,527) (4,579)
activities
Financing activities
Issue of shares 14,564 185 642
Share repurchases (146) (30) (30)
Net increase/(decrease) in borrowings 6,530 (814) (841)
Equity dividends paid (885) (508) (810)
Capital element of finance lease payments (73) (115) (216)
Net cash inflow/(outflow) from financing 19,990 (1,282) (1,255)
(Decrease) in cash and cash equivalents (1,673) (2,192) (75)
Cash and cash equivalents at start of
period 5,282 5,357 5,357
Cash and cash equivalents at end of period 3,609 3,165 5,282
NOTES TO THE INTERIM REPORT
for the six months ended 30 September 2006
1. Presentation of financial information
The financial information contained in this Interim Report does not constitute
statutory accounts within the meaning of the Companies Act 1985 and has not been
audited or reviewed by the Group's auditors.
The financial information for the year to 31 March 2006 does not constitute
statutory accounts within the meaning of Section 240 of the Companies Act 1985.
It is extracted from the statutory accounts for that year that were prepared
under IFRS, on which the Group's auditors at that time, Grant Thornton UK LLP,
gave an unqualified audit report. Statutory accounts for the year ended 31 March
2006 have been delivered to the Registrar of Companies.
During the period Grant Thornton UK LLP resigned as auditors.
PricewaterhouseCoopers LLP have been appointed as the Group's auditors.
2. Accounting policies basis of preparation
The interim consolidated financial statements of Creston plc for the six months
ended 30 September 2006 have been prepared in accordance with the accounting
policies the group adopted in its 2006 Annual Report. These accounting policies
are based on the EU-adopted International Financial Reporting Standards (IFRS)
and IFRIC interpretations that are applicable at this time.
The policies set out in the 2006 Annual Report have been consistently applied to
all the periods presented.
These consolidated interim financial statements have been prepared under the
historical cost convention, as modified by the revaluation of derivative
instruments at fair value through the Income Statement.
The preparation of financial statements requires the use of certain critical
accounting estimates. It also requires management to exercise judgment in the
process of applying the Group's accounting policies.
3. Reconciliation of Headline profit to Reported profit
The Directors are of the opinion that as Creston is an acquisitive company
certain accounting policies relating to deferred consideration deemed as
remuneration, notional finance costs on deferred consideration and amortisation
of intangible assets have a material impact on the reported results and
introduce volatility to the reported figures. In order to enable a better
understanding of the underlying trading of the Group, Creston refer to Headline
PBIT, PBT and PAT which eliminates these non-recurring non-cash charges from the
reported figures, as follows:
Six months ended 30 September 2006 PBIT PBT PAT
£'000 £'000 £'000
Headline 5,220 4,884 3,421
Future acquisition payments to employees deemed as remuneration (1,230) (1,230) (1,230)
Amortisation of intangible assets (625) (625) (625)
Notional finance costs on future deferred consideration - (936) (936)
Taxation impact - - 387
Reported 3,365 2,093 1,017
Headline Basic EPS (pence) 6.93
Headline Diluted EPS (pence) 6.85
Reported Basic EPS (pence) 2.06
Reported Diluted EPS (pence) 2.04
Six months ended 30 September 2005 PBIT PBT PAT
£'000 £'000 £'000
Headline 3,868 3,611 2,440
Future acquisition payments to employees deemed as remuneration (714) (714) (714)
Amortisation of intangible assets (353) (353) (353)
Notional finance costs on future deferred consideration - (608) (608)
Reported 2,801 1,936 765
Headline Basic EPS (pence) 6.82
Headline Diluted EPS (pence) 6.70
Reported Basic EPS (pence) 2.14
Reported Diluted EPS (pence) 2.10
The contingent consideration deemed as remuneration arises on payments made by
Creston to non-shareholding employees in respect of the deferred consideration
on the business acquisitions. The notional finance costs also relate to the
deferred consideration. Both of these charges will cease once the relevant
earn-outs have been settled. The amortisation of intangible assets is also a
non-recurring non-cash charge relating to the acquisitions. Headline EPS
calculations are adjusted for the costs disclosed above.
4. Segmental analysis
Turnover, Revenue and PBT attributable to Creston activities are shown below.
Turnover represents billings to customers. Revenue represents fees earned by
the companies.
Turnover Revenue Profit before tax
Six months Six months Six months Six months Six months Six months
ended ended ended ended ended ended
30 September 30 September 30 September 30 September 30 September 30 September
2006 2005 2006 2005 2006 2005
£'000 £'000 £'000 £'000 £'000 £'000
BRANDCOM 14,761 16,012 7,124 7,041 1,384 1,248
Insight 11,978 5,700 6,761 3,293 2,030 1,032
MARCOMS 19,691 11,767 12,538 7,329 2,107 1,922
PR 7,054 3,873 4,332 2,991 1,214 891
Total 53,484 37,352 30,755 20,654 6,735 5,093
Unallocated corporate expenses (3,370) (2,292)
Profit before finance costs, income from
investments and taxation 3,365 2,801
Net finance costs (1,272) (865)
Profit before tax 2,093 1,936
It is not possible to present a segmental split of deferred consideration deemed
as remuneration, notional finance costs on deferred consideration and
amortisation of intangible assets as these charges cannot be allocated between
the business segments. As divisional PBT excludes these items, they have been
included in unallocated corporate expenses and a segmental split is presented on
that basis.
5. Dividends
The Board has recommended an interim dividend of 0.88 pence (2005: 0.80 pence)
per share to all ordinary shareholders on the register at 15 December 2006.
This dividend is not reflected in the Income Statement for the six months to 30
September 2006 as it was not approved by the Board until 28 November 2006.
However, the final dividend of 1.60 pence per share for the year to 31 March
2006 was recognised during the period after it was approved at the AGM on 3
August 2006.
6. Earnings per share
The calculation of the basic EPS is based on the Profit attributable to ordinary
shareholders divided by the weighted average number of shares in issue for each
period, which was 49,372,200 for the period ended 30 September 2006 (year ended
31 March 2006: 36,383,218 and period ended 30 September 2005: 35,768,390). The
calculation of the diluted EPS is based on the Profit attributable to ordinary
shareholders divided by the weighted average number of diluted shares in issue
for each period, which was 49,936,791 for the period ended 30 September 2006
(year ended 31 March 2006: 38,145,702 and period ended 30 September 2005:
36,436,925).
The Headline EPS and Headline diluted EPS are based on the Headline PBT analysed
in note 3 less attributable tax and divided by the weighted average number of
shares and by the weighted average number of diluted shares respectively.
7. Acquisitions
ICM
The acquisition of ICM was completed on 17 May 2006. The maximum consideration
payable (including deemed remuneration and notional finance costs) for ICM is
£37.2m plus legal and professional costs of £0.7m. It is satisfied by an
initial consideration of £19.4m, an estimated further £1.1m dependent upon the
final determination of the net assets acquired and a deferred consideration of
up to £16.7m, which is dependent on the financial performance of ICM in the
period to 31 March 2009. As part of the acquisition, 3,068,829 new ordinary
shares were issued and listed on the London Stock Exchange on 19 May 2006.
At acquisition ICM had (subject to audit) net assets of £6.2m comprising fixed
assets of £0.6m and net current assets of £4.5m.
The results for the period from completion to 30 September were £6.1m Turnover,
£3.5m Revenue and £1.1m PBIT. The results have been included within the
unaudited consolidated results.
TMW
The acquisition of TMW was completed on 17 May 2006. The maximum consideration
payable (including deemed remuneration and notional finance costs) for TMW is
£38.3m plus legal and professional costs of £0.8m. It is satisfied by an
initial consideration of £21.3m and a deferred consideration of up to £17m,
which is dependent on the financial performance of TMW in the period to 31 March
2009. As part of the acquisition, 3,928,101 new ordinary shares were issued and
listed on the London Stock Exchange on 19 May 2006.
At acquisition TMW had (subject to audit) net assets of £4.7m comprising fixed
assets of £0.8m and net current assets of £3.6m.
The results for the period from completion to 30 September were £8.5m Turnover,
£5.6m Revenue and £1.1m PBIT. The results have been included within the
unaudited consolidated results.
8. Reconciliation of Profit before finance costs income from investments
and taxation to Operating cash flow
Six months Six months Year
ended ended Ended
30 September 30 September 31 March
2006 2005 2006
£'000 £'000 £'000
Profit before finance costs, income from 3,365 2,801 6,269
investments and taxation
Depreciation 842 400 1,019
Amortisation of intangible assets 625 353 528
Share based payments 166 88 245
Deemed remuneration 1,230 714 1,225
Profit on disposal of property, plant and
equipment - (8) (46)
Decrease/(increase) in inventories and work
in progress 259 (247) (1,097)
Decrease/(increase) in trade and other 2,535 (189) (4,887)
receivables
(Decrease)/increase in trade and other (6,023) (604) 4,714
payables
Operating cash flow 2,999 3,308 7,970
9. Analysis of debt
As at Cash Flow Acquisitions As at
1 April 30 September
2006 2006
£'000 £'000 £'000 £'000
Cash at bank and in hand 5,282 (1,673) - 3,609
Acquisition loan notes (128) - (4,207) (4,335)
Bank loans (7,470) (6,530) - (14,000)
Finance leases (205) 73 - (132)
Net (debt) (2,521) (8,130) (4,207) (14,858)
Restricted cash deposits 35 - - 35
Net (debt) including restricted
cash deposits (2,486) (8,130) (4,207) (14,823)
The restricted cash deposits are maintained in a designated account as security
for the loan notes issued on the acquisition of MSL and are, therefore, not
freely available to the Group.
10. Investments - available for sale
Investments available for sale and other reserves have each been adjusted by
£535,000 to state the 15% investment in BJK&E at fair value and by £176,000
relating to other matters as disclosed in the financial statements for the year
ended 31 March 2006. This adjustment is to align the treatment in the period
ended 30 September 2005 comparatives with that reported in the financial
statements for the year ended 31 March 2006.
11. Post balance sheet events
On 3 December 2006 the company acquired PAN Advertising Limited, a healthcare
advertising and communication company, for a total maximum consideration of
£18.8m. The consideration for this transaction included the issue of 793,809
ordinary shares.
12. Availability of the Interim Report
Copies of the Interim Report will be sent to shareholders in due course and are
available from the Company's registered office at City Group P.L.C., 30 City
Road, London, EC1Y 2AG and on the company's website www.creston.com.
This information is provided by RNS
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