There has been evidence recently that the cyclical advertising market was moving back to growth after several years of contraction. The recovery, though, isn't universal across the sector, which is why full-service advertising and PR agency Creston (CRE) reported an underlying revenue decline of 6 per cent after a weak fourth quarter in 2012 spilled over into some business areas. Net earnings were also flattered by a very low tax rate of 11 per cent, compared with 28 per cent in the previous year, after Creston reached an agreement with HMRC over the tax deductibility of goodwill.
Operationally, there was evidence of revenue diversification, with international sales now accounting for more than a third of the total after including a full-year's contribution from the acquisition of US-based medical PR company Corkery. That helped drive revenues in the health division up over 20 per cent and operating profit 11 per cent higher to £5.1m, although turnover would have been down by 4 per cent if you strip out acquisitions. Creston won a notable contract with consumer goods giant Reckitt Benckiser to run the digital advertising for 19 of its brands, but profits in the core communications were flat at £6.2m, on revenues down 4.5 per cent, after a poor quarter from marketing agency EMO in late 2012 continued to hit performance.
Broker Liberum Capital expects adjusted pre-tax profits to rise 13 per cent from £10m to £11.3m in 2014, but EPS to be down from 14.6p to 12.9p due to a higher tax charge.
CRESTON (CRE) | ||||
|---|---|---|---|---|
| ORD PRICE: | 99p | MARKET VALUE: | £60.7m | |
| TOUCH: | 98-100p | 12-MONTH HIGH: | 99p | LOW: 50p |
| DIVIDEND YIELD: | 3.7% | PE RATIO: | 6 | |
| NET ASSET VALUE: | 182p* | NET CASH: | £11.2m | |
| Year to 31 Mar | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2009 | 83.8 | 10.0 | 12.1 | nil |
| 2010 | 61.2 | 5.0 | 4.9 | 1.00 |
| 2011 | 67.7 | 8.4 | 9.4 | 3.00 |
| 2012 | 74.9 | 10.8 | 15.1 | 3.50 |
| 2013 | 75.2 | 11.0 | 16.1 | 3.67 |
| % change | - | +2 | +7 | +5 |
Ex-div: 31 Jul Payment: 12 Sep *Includes intangible assets of £106m, or 173p a share | ||||
