No need to get excited about the giant leaps in pre-tax profits and earnings at marketing specialist Creston (CRE). Winning a long-standing tax case against HMRC bolstered reported profits and also meant a tax credit that boosted the EPS figure in our table. On an underlying basis, pre-tax profits actually fell from £4.8m to £4.4m.
Communications, covering PR, local marketing and social media, is Creston's largest business, accounting for 55 per cent of revenue. Underlying operating profits were up 8 per cent despite a dip in revenues, albeit the focus is on profitable revenue generation and improving recovery rates. Revenues were also flat at the health division if you strip out the contribution from Corkery, a US-based medical PR firm acquired last year. However, market research division Insight saw revenues plunge and £1.7m of profits wiped out due to a weak showing from ICM.
Chief executive Don Elgie is confident Creston's 'co-location' strategy will start to reap benefits. Co-location is not just the sharing of office space by the company's various divisions, but the development of integrated, or cross-division, projects. "I'm currently pitching integrated projects worth about £6m in revenue," he says. Mr Elgie also expects online and digital segments to exceed 50 per cent of turnover next year, up from 45 per cent. The company announced the small acquisition of DJM, a digital healthcare agency, alongside these results.
Broker Liberum Capital forecasts full-year EPS of 11.5p, rising to 12.9p the year after (from 12.3p in 2012).
CRESTON (CRE) | ||||
|---|---|---|---|---|
| ORD PRICE: | 79p | MARKET VALUE: | £48.4m | |
| TOUCH: | 78-80p | 12-MONTH HIGH: | 97p | LOW: 47p |
| DIVIDEND YIELD: | 4.6% | PE RATIO: | 3 | |
| NET ASSET VALUE: | 179p* | NET DEBT: | 2% | |
| Half-year to 30 Sep | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2011 | 36.5 | 4.10 | 4.7 | 0.83 |
| 2012 | 37.2 | 7.87 | 13.7 | 1.00 |
| % change | +2 | +92 | +193 | +20 |
Ex-div: 5 Dec Payment: 10 Jan *Includes intangible assets of £108m, or 177p a share | ||||
