Creston warns on profits but core remains strong
Marketing group Creston has warned full year results will miss targets after the first half was hit by weakness in the euro, client budget restraints and a decline in healthcare advertising sales.
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Yet the core communications business performed well and all delayed contracts were indicated to now be on track, with slower growth in the first quarter followed by a stronger performance in the second quarter and start of the second half.
Results for the six months to 30 September showed revenue of £40.3m, which was 8% higher than than same period last year despite the £0.4m euro effect, with like-for-like sales up only 1% to £37.7m.
Headline profit before tax rose 7% to £4m, with reported PBT down 75% to £1.1m as a £2m impairment hit from the closure of a face-to-face market research unit.
The half-year dividend increased 5% to 1.42p per share.
Chief executive Barrie Brien was pleased with both revenue and headline growth, despite the slower start to the first half, and hailed the progress against five-year strategy of broadening the company's offer.
As well as the Splendid acquisition, June saw the purchase of a 27% in advertising agency 18 Feet & Rising and entered into three new partnerships a second international partner in digital healthcare communications, a global consumer trends and insight consultancy, and a digital strategist.
Due to the slower performance of the UK health advertising offer, predominantly due to the healthcare industry's growing need for "integrated channel neutral and more patient centric campaigns", Brien took the decision to combine the offers of the group's DJM and PAN agencies to launch DJM PAN Unlimited as a multi-channel.
Broker N+1 Singer said while the main engine, communications, performed during the period the overall performance was impacted by a weak acquisition performance, euro weakness and a soft start for a healthcare unit.
But communications growth was 4% and contract wins during the period paint a bright outlook for the second half, and expects the reorganised health offer to result in the performance improving.
"The Splendid acquisition however has suffered a delay in contract starts due to client system integrators delays. This has impacted H1 results, but everything that has been delayed is now indicated to be on track."