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Creston Unlimited

Creston’s pre-tax profits slump but analysts remain positive thanks to new business wins

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By Jennifer Faull, Deputy Editor

November 24, 2015 | 3 min read

Creston’s pre-tax profits fell to £1.1m in the second half of 2015 compared to £4m in the first half of the year, the bulk of which was as a result of a £2m impairment charge following the closure of its market research firm FieldworkUK.com. However, recent new business and a tight grip on costs has left analysts feeling positive about the marketing communications group.

Despite the profit drop, revenue rose by eight per cent to £40.3m in the six months to the end of September. Like-for-like revenue was up one per cent at £37.7m and headline pre-tax profits rose by seven per cent to £4m.

Chief executive Barrie Brien said he was pleased with both revenue and headline profit-before-tax being up despite the “slower start to the first half.”

“The Group also made good progress against its five-year strategy broadening its unlimited offer through a mix of acquisitions, investments, startups and partnerships and this strategic progress is underpinning a continuing strong new business performance,” he added.

Among the investments of late has been the acquisition of a minority stake in 18 Feet & Rising that it hopes will allow all its agencies to dip into the creative shop's above-the-line expertise.

Fiona Orford-Williams, analyst at Edison Investment Research, said Creston’s first half progress was impeded mostly by factors outside its control, such as currency and project delays.

“But it kept good control of costs and has had a strong performance in new business, adding some very strong names to the new client roster, most recently British Airways, its first airline client,” she said.

In recent months, Creston has also added Vodafone, Sony Mobile and McLaren's to its books.

Orford-Williams continued: “The shares are trading on a substantial discount to peers, which we expect to start to close when the news flow becomes more consistently positive as the new business momentum gets translated into a more robustly improving earnings stream.”

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