Interim Management Statement

RNS Number : 9929W

Creston PLC

04 February 2013

 



4 February 2013

Creston plc

Interim Management Statement

Creston plc ('Creston' or the 'Group') (LSE: CRE), the Insight and Communications Group, announces its interim management statement for the period 1 October 2012 to date.

Group Headline¹ PBIT² grew for the three months to 31 December 2012 (the 'Period') compared to the strong prior year period, driven by a Headline PBIT improvement in all three divisions. The Group has also had a good recent new business performance winning some significant new clients and additional brands from existing clients.  

Reported Group revenue for the year to date is flat, while Group revenue for the Period declined as expected by 3 per cent compared to the same period last year. On a like-for-like³ basis, Group revenue for the year to date declined by 7 per cent, and for the Period declined by 8 per cent compared to the same prior year periods.

Communications

The division grew its Headline PBIT for the Period compared to the prior year period despite the decline in revenue, which was principally driven by the cessation of a client's budget as previously reported in the prior year. The Board remains focussed on replacing this lost revenue, but this will impact the division's FY13 trading and as a consequence divisional revenue and Headline PBIT for the full year is expected to be lower than the prior year.

New business wins during the Period included the social media account for Durex, the division's first Reckitt Benckiser brand; a CRM programme across France and Portugal for Danacol, part of Danone; and, following work with EE and T-Mobile, the corporate and consumer PR for Orange.

Health

TheHealth division increased its reported revenue and Headline PBIT in the Period versus the prior year period, owing to the full quarter effect of The Corkery Group acquisition. For the full year, the division also expects reported revenue and Headline PBIT growth and this is despite a decline in like-for-like revenue in the Period versus the prior year period.

The Board is pleased with the integration of its latest acquisition DJM Digital Solutions Ltd ('DJM'), and the positive impact it has already had on creating and converting new business opportunities, particularly as part of an inter-agency team. Indeed, Creston Health has recently been appointed by Gilead to look after its Hepatitis C business across Europe and Australia. This puts in place the first major global piece of business to comprise all the Creston Health agencies, including DJM and the Group looks to build on this success with future client pitches.

¹ Headline results reflect the underlying performance of the Group and excludes acquisition, start-up and restructuring related costs, deemed remuneration charges, non-recurring property-related costs, movement in fair value of deferred consideration and notional finance costs.

² Profit before finance income, finance costs and taxation (PBIT).

³ Like-for-like excludes the results from any acquisitions made during the current year, it compares current year performance to the prior year, adjusting the current year to only include the results of prior year acquisitions for the commensurate period of ownership.

Insight

The division's Headline PBIT showed a small increase during the Period against the prior year period, as a result of the management action taken earlier in the year and despite the expected decline in revenue. Quarter on quarter ICM continues to demonstrate progress and it has reported improvements in its Headline PBIT. Meanwhile the rest of the division had a strong Period, with both revenue and Headline PBIT growth compared to the prior year period and it is expected to continue delivering a strong performance into the fourth quarter.

Cash flow

Following a strong cash conversion, with operating cash flow ahead of Board expectations, the Group expects to be in a net cash position at the year end.

In line with the Group's stated co-location strategy, on 7 January 2013 it completed the signing of a lease for 10 Great Pulteney Street, in London's Soho. From May 2013 onwards, all of Creston's London offices will start to co-locate into the one property. On signing the new lease, the Group received a one-off cash payment of £7.2 million (including VAT) in relation to a reverse premium and agreed dilapidations obligation, which is in addition to the above cash position.

Save As You Earn (SAYE) scheme and share buyback

In January 2013 the Group launched a new three year SAYE share incentive scheme for its employees. In addition to supporting the retention and motivation of its talent, the Group believes the scheme is also beneficial in aligning the interests of its employees with those of existing shareholders. In order to avoid any dilution from the SAYE scheme, the Group will shortly commence a share buyback programme. The invitation to join the SAYE scheme closes on 8 February 2013 and the Group will update the market on the scheme's uptake and subsequent share buyback programme in due course.

Outlook

While we remain cautious in light of the macro-environment and on-going market volatility, the Group is pleased with the integration of its latest acquisition, DJM Digital Solutions, and the number of new business opportunities it continues to see and convert across the wider business.

For further information please contact:

Creston plc	+ 44 (0)20 7930 9757
Don Elgie, Group Chief Executive
Barrie Brien, COO/CFO
M:Communications	[phone]
Elly Williamson/Matthew Neal

About Creston plc

Creston plc (LSE: CRE) is a marketing services company focused on insight-led communications. The Group delivers a range of marketing services, including advertising, brand consultancy, CRM, digital and direct marketing, health communications, local marketing, market research, PR and social media marketing to a broad spectrum of blue-chip global clients. Our insight companies give us a real edge, providing the analytic intelligence to enable us to truly understand, influence and inspire consumers and it's that insight-led intelligence that drives our creativity. www.creston.com

 

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