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Half year results for the six months
ended 30 September 2014
Barrie Brien, Group Chief Executive
Kathryn Herrick, Chief Financial Officer
25 November 2014
Contents
1.
2.
3.
4.
5.
6.
7.
Highlights
Financial Review
Divisional Performance
Vision and Strategy
Summary and Outlook
Q&A
Appendices
1. Highlights
Highlights
● Positive H1 results with revenue, PBT*, Diluted EPS* and dividend growth
● Board changes including Chairman, CEO, CFO, NED
● Delivering on strategic objectives
● Added to our international blue-chip client list with good new business wins
* These are Headline figures
2. Financial Review
Financial Highlights
● Revenue up 5 per cent to £37.3 million (H1 2014: £35.7 million) and Headline PBT up 6 per cent
to £3.8 million (H1 2014: £3.6 million)
● Constant currency revenue growth of 6 per cent and constant currency Headline PBT up 9 per
cent
● Constant currency like-for-like revenue up 5 per cent
● Headline DEPS up 14 per cent to 4.98 pence (H1 2014: 4.35 pence)
● Half year dividend per share up 13 per cent to 1.35 pence (H1 2014: 1.20 pence)
● Balance sheet continues to remain strong with net cash at 30 September 2014 of £6.3 million
Income Statement
Headline Results
H1 2015 Change v.
H1 2014
Constant currency*
Headline Results
H1 2015 Change v.
H1 2014
£’m
(%)
£’m
(%)
37.3
5%
37.7
6%
3.8
6%
3.9
9%
10%
1%
10%
3%
PBT
3.8
6%
3.9
9%
PAT
3.0
11%
3.1
15%
4.98
14%
5.15
18%
Revenue
PBIT
PBIT margin (%)
Diluted EPS (pence)
* Constant currency disclosures calculate the impact of retranslating overseas’ operating results at prior year exchange rates
•
Growth in DEPS predominantly due
to:
- Earnings growth
- Tax reduction
- Share buy-back
Strong Balance Sheet
● Net cash of £6.3 million (31 March 2014: £7.5 million)
- Driven by healthy operating cash flow
- Outflow of share buy-back and dividend payments
● Net cash of £4.9 million after estimated deferred consideration of £1.4 million
(Cooney/Waters Group Unlimited at £0.3 million and DJM Unlimited at £1.1 million
payable in July 2015)
● Net current assets of £6.4 million (30 September 2013: £4.4 million)
- Driven by improved cash position and working capital
● Banking facility of £20 million to expire 30 September 2015, renewal process to
begin in H2 2014
Improved Operating and Free Cash Flow
H1 2015
£’m
H1 2014
£’m
Headline EBITDA
4.7
4.6
Reported operating cash flow*
3.3
-4.3
Adjusted operating cash flow**
3.3
-0.6
71%
-14%
Adjusted Cash Conversion (Adj. operating cash flow: Headline
EBITDA)
•
•
•
Working capital position at £3.0 million (30 September 2013 at £3.4 million; 31 March 2014 at £1.9 million)
H1 2014 negative adjusted operating cash flow driven by unwinding of an exceptional negative working
capital position at 31 March 2013 of £1.3 million
Free cash inflow*** of £1.7 million (H1 2014: adjusted free cash outflow of £3.8 million)
* Operating cash flow is defined as EBITDA less non-cash charges less movement in working capital
** In H1 2014 there was an outflow of £3.7 million in relation to the one off dilapidation obligation and associated VAT payments
*** Free cash flow is calculated as operating cash flow minus capital expenditure, interest and tax paid
3. Divisional Performance
Group and divisional performance
Revenue
Headline
PBIT Margin
Headline PBIT
H1
2015
£m
H1
2014
£m
Growth
%
H1
2015
£m
H1
2014
£m
Growth
%
H1
2015
%
H1
2014
%
Communications &
Insight
27.0
26.0
4%
3.2
3.6
-10%
12%
14%
Health
10.3
9.7
6%
1.7
1.5
15%
16%
15%
-
-
-
(1.0)
(1.4)
26%
-
-
37.3
35.7
5%
3.8
3.6
6%
10%
10%
Head Office
Group
● Overall margin relatively flat, however H1 2015 absorbing £0.5 million incremental property costs
(margin w/o 12 per cent)
● One-off Head Office cost savings due to change and transition at plc Board
Communications & Insight – KPIs
H1 2015
H1 2014
£27.0m
£26.0m
Revenue from digital and online
61%
61%
Revenue from international*
20%
20%
£3.2m
£3.6m
12%
14%
Revenue
Headline PBIT
Headline PBIT margin
● Revenue growth of 4 per cent due to prior year new business wins including HSBC, Canon and Virgin Trains
● Headline PBIT decline driven by additional property costs (Headline PBIT would have increased to £3.7
million)
● Digital and online revenue growth of 5 per cent
* Derives from work serving markets outside of the UK
Health – KPIs
H1 2015
H1 2014
£10.3m
£9.7m
Revenue from digital and online
24%
27%
Revenue from international
66%
68%
£1.7m
£1.5m
16%
15%
Revenue
Headline PBIT
Headline PBIT margin
● Revenue growth of 6 per cent partly driven by the recovery of the US
•
-
Constant currency revenue growth of 10 per cent
-
Like-for-like revenue growth of 4 per cent (adjusting for the acquisition of Liberation Unlimited)
Constant currency Headline PBIT growth of 22 per cent to £1.8 million
● Conflict PR agency, Liberation Unlimited, acquired in August 2013 performing well; start-up Loooped Unlimited
performing in line with expectation
● DJM Unlimited affected by project delays and cancellations partly due to a failed clinical trial
-
Impacting both Headline PBIT margin and digital revenue metrics
4. Vision and Strategy
Five key areas of focus for the next five years
01 build an agency group brand
02 develop a group full service client offer
03 develop our consultancy offer
04 invest in our existing companies’ offer and services
05 grow our international services
Thinking without limits
www.creston-unlimited.com
www.
Pre-Unlimited branding
Our Group
Common ways of working as one Group
● A unique strategic planning methodology and creative approach to idea generation with input
from all disciplines
● Shared values
● Group Client Leads for top 20 clients
● Unified new business process, lead generation
● Launch of the group-wide leadership development programme
Creston Unlimited
Investments and Partnerships
● Selective small acquisition of Walnut Unlimited, specialist in neuroscience research
● Partnership agreement with Serviceplan (a European marketing group) creating a panEuropean Creston Unlimited client offer
- Worked together for a number of years on Motorrad
- Already won Danone Germany and Middle East
Serviceplan’s European reach and key clients
EMEA
Germany
Spain
Switzerland
France
Austria
Netherlands
Romania
Middle East
Finland
Russia
Belgium
Italy
Our Top 20 clients
Position
Client
No. agencies
Tenure
1
Danone
3
1999
2
Unilever
2
1990
3
Gilead
4
2003
4
Diageo
2
2002
5
Canon
6
2001
6
CDC
1
1999
7
Infiniti
1
2007
8
Tesco
1
1992
9
HSBC
1
2013
10
Sainsbury’s
2
2007
11
Nissan GB
2
1996
12
Toyota
1
2009
13
Reckitt & Benckiser
2
2012
14
Jaguar
1
2008
15
Crown Commercial Services
(formerly GPS)
5
1987
16
Sony Mobile
1
2011
17
Aviva
1
1996
18
Novartis
4
2013
19
Virgin Trains
1
2013
20
GSK
4
2005
● Our top 20 clients make up 55 per cent of
revenue
● Our top 50 clients make up 76 per cent of
revenue
● Of the top 50 clients:
- 19 are served by at least two companies
- 6 are served by three or more companies
● Average tenure of top 20 clients is 11 years
New Business
5. Summary and Outlook
Summary and Outlook
● Continued momentum in our financials and dividend
● New executive management delivering on a focused strategic direction
- Launch of Creston Unlimited
- Strengthened international offer with Serviceplan
● Growth will be targeted from:
-
Organic growth from existing companies
Organic growth from cross-selling and integrated Group pitches under Creston Unlimited
Selected acquisitions and start-ups to complement new client offer
The announced FY15 share buy-back programme
● Remain cautious with second half weighting and some client budget variability
6. Q&A
7. Appendices
Communications & Insight specialisms
PR
Connecting brands locally
Advertising
Digital
Social
Local




CRM
Experiential
Integrated brand and
consumer communications




Tech, media and
business-to-business PR




Experiential marketing,
event management and
consumer engagement

Innovative CRM
strategies, creative and
technology
The intersection of social,
digital, tech & PR
Influential ideas for an
omni-channel world










Communications & Insight specialisms
Data
collection
Market
research
Qualitative, quantitative and
advanced analytics

Delivering clear direction
through clever thinking

Consumer neuroscience to
understand decision making
Online, telephone and face to
face survey data collection
Neuroscience


Health specialisms
PR
Medical
Education
US-based health and wellness
advocacy specialists


US-based healthcare marketing
communications specialists

Global health and NGO
specialists

A global digital healthcare
agency

Boutique healthcare
communications agency


Delivering creative engagement
for lasting change
Advertising





Healthcare advertising agency
Strategic medical
communications consultancy
Consultancy

An integrated healthcare
agency
Global healthcare
communications specialists
Digital



Headline to Reported
PBIT
£’000s
PBT
£’000s
PAT
£’000s
3,847
3,771
2,971
Acquisition and start-up related costs
(63)
(63)
(63)
Creston Unlimited rebranding
(16)
(16)
(16)
Movement in fair value of contingent
deferred consideration
302
302
302
Future acquisition payments to
employees deemed as remuneration
13
13
13
Notional finance cost
-
(13)
(13)
Deferred tax charge on amortisation of
goodwill
-
-
(79)
Taxation impact
-
-
8
4,083
3,994
3,123
Headline
Reported
Balance Sheet
30 September 2014
£’m
31 March 2014
£’m
104.1
103.8
Property, plant and equipment and other intangible assets
5.4
5.8
Deferred tax assets
1.0
1.0
110.5
110.6
6.3
7.5
27.5
29.9
(25.9)
(29.7)
-
-
(1.4)
-
6.4
7.6
(2.4)
(2.7)
-
(1.7)
Provision for other liabilities and charges
(0.8)
(0.8)
Deferred tax liabilities
(0.6)
(0.5)
Non-current liabilities
(3.8)
(5.7)
113.2
112.6
Goodwill
Non-current assets
Cash
Receivables & WIP
Trade and other payables
Bank loans and loan notes
Contingent deferred consideration
Net current assets
Trade and other payables
Contingent deferred consideration
Net assets

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