Conduit Hldg Regulatory News (CRE)

28 July 2015

Creston plc (the 'Company')

Annual Report and Accounts 2015

The Company announces that, in accordance with Listing Rule 9.6.1., the following documents have today been submitted to the UK Listing Authority and will shortly be available for inspection via the National Storage Mechanism at www.hemscott.com/nsm.do:

- Annual Report and Accounts 2015;

- Notice of Annual General Meeting of the Company to be held at 12 noon on 7 September 2015 at the offices of Olswang LLP at 90 High Holborn, London WC1V 6XX; and

- Form of Proxy for the 2015 Annual General Meeting.

The Annual Report and Accounts 2015 and Notice of Annual General Meeting are also available on the Company's website at www.creston.com/investors.

A condensed set of the Company's financial statements and information on important events that have occurred during the financial year and their impact on the financial statements were included in the Company's preliminary announcement released on 9 June 2015. That information, together with the information set out below, extracted from the Annual Report and Accounts 2015, constitutes the material required by Disclosure and Transparency Rule 6.3.5. which is to be communicated to the media in full unedited text through a Regulatory Information Service. This announcement is not a substitute for reading the full Annual Report and Accounts 2015. Page and note references in the text below refer to page numbers in the Annual Report and Accounts 2015.

Appendix

OUR RISKS AND UNCERTAINTIES

Key risks facing the Group, with associated mitigating controls, include:

A fast-moving communications industry with high levels of competition, partly due to low barriers to entry, increasingly complex technological change and a greater international focus, leads to pressures on client retention, budgets and price.

The Group focuses on building strong long-term client relationships and conducts regular independent client satisfaction surveys to identify the changing demands of clients. Senior agency staff are members of industry bodies, which keeps them informed of market developments. Employees attend industry conferences and regular training sessions. The Group proactively seeks to hire people with experience and skills in new areas of the market.

Loss of key clients leads to reduced revenues and impacts the Group's financial performance.

The Group has long-term relationships with a number of its key clients and has built a history as their trusted advisor. The agencies seek to provide added value to clients to ensure they are satisfied with the service provided. Client relationships are not focused on a single person and the Group Chief Executive conducts relationship meetings with key clients. The Group seeks to target new clients in new sectors in order to reduce its client concentration. The Group often undertakes work across different client departments which can reduce reliance on specific individuals. Operating companies' bonus schemes are also partly linked to a client satisfaction survey to encourage management to retain key clients.

Turbulence in the macro-economic environment affects the Group's financial performance and may lead to volatility in revenues and expenses, and clients and suppliers going out of business.

The Group has a diverse range of operating companies and is not overly reliant on any single client industry sector. The client mix is reviewed by the Creston plc Board on a regular basis. Open communication and strong relationships are maintained to retain clients and keep clients satisfied. The Group produces detailed forecast models every six months and provides regular forecast updates in between which give the Board visibility of future performance and monitors actual progress against budget. Initial and ongoing supplier and client checks ensure that any financial difficulties or problems faced by these parties are identified.

Loss of key staff leads to inability to deliver projects, potential loss of clients and potential inability to obtain new clients. 

The Group provides employees with personal and career development opportunities, incentive schemes and a comprehensive annual review process. The Group conducts an annual staff satisfaction survey and any adverse issues identified are addressed. Customised training is provided for new line managers and all employees have regular performance reviews. Succession planning exists for all key positions and client relationships are maintained as a team rather than focused on an individual. All senior employees enter into restrictive covenants upon entering employment with the Group.

Increased pressure from new and existing clients to reduce their costs, leading to increased potential of scope creep, reduced prices for services provided and longer payment terms for clients.

Agencies agree a scope of work with clients before work commences, and track this on a regular basis as required to ensure scope creep does not occur. If additional work is required, this will be negotiated and reviewed between clients and agencies. Agencies perform regular reviews on a project-by-project basis to ensure that contracts and terms are agreed. External legal advice from a recognised law firm is provided, assisting in client contract negotiations.

Changes to regulations and legal requirements restrict or burden the Group's activities.

Regulatory requirements and industry standards are managed on a company-by-company basis, with the help of the Group where appropriate. Each company has a lead expert who will implement the necessary controls and practices required and expected by the industry. This is particularly important for the Insight and Health companies. Where appropriate, independent audits are performed to ensure that best practice is maintained, and to provide training for new employees. At a Group level, legal and regulatory matters are outsourced to one of two respected legal firms or other market-leading experts who advise the Board.

Insufficient security or ineffective operational management of IT and data management systems leads to compromised client relationships, delays to client work, falling foul of data protection requirements and impacts reputation.

All Group companies have an IT support function which monitors and assists IT processes, including data management. Appropriate IT security is undertaken for all key processes to keep the IT environment safe including gaining ISO 27001 compliance. Websites tend to be hosted by specialist third-party providers who provide around-the-clock support which is monitored by the Group. Hardware and software requirements are regularly reviewed. External access to data is protected and encrypted where appropriate. There is also Group oversight of operating company disaster recovery plans which include the IT environment and a business continuity plan in the event of disaster. These plans include regular back-up of data, which is stored off-site.

Acquired businesses perform poorly which impacts the Group's overall performance and results in an impairment of goodwill.

The Group takes advice from professional advisors to assess the viability of potential acquisition targets and Board approval is obtained on all acquisitions following a thorough review. Significant commercial, financial, tax and legal due diligence is performed in advance of any acquisition. This will identify potential areas of risk. Where significant risks are identified, market standard indemnities and warranties are obtained where appropriate. Acquisition consideration is spread over a significant period of time and is linked to the target's financial performance over that period. Some of the acquisition consideration is allocated to employees. This ensures that their interests are aligned with those of the Group. Goodwill is tested on an annual basis by the Group and by the external auditors to ensure its carrying value is appropriate.

Directors' interests in transactions and shares and other related party transactions

Mr D C Marshall, a Non-Executive Director of Creston plc during the year is a Director of City Group P.L.C. and Western Selection P.L.C. which held 3,000,000 Ordinary Shares in Creston plc at 31 March 2015. During the year total fees of £52,930 (2014: £63,390) were paid to City Group P.L.C., £29,597 (2014: £28,960) for the provision of secretarial services and £23,333 (2014: £35,000) for the services of Mr D C Marshall. As at 31 March 2015 £8,967 (2014: £19,323) was due to City Group P.L.C.

There were no other related party transactions during the year.

Statement of Directors' responsibilities

As set out above, the following responsibility statement is repeated here solely for the purpose of complying with Disclosure and Transparency Rule 6.3.5. This statement relates to and is extracted from page 58 of the Annual Report and Accounts 2015. Responsibility is for the full Annual Report and Accounts 2015 not the extracted information presented in this announcement or the preliminary announcement released on 9 June 2015.

The Directors are responsible for preparing the Annual Report and Accounts, which includes the Directors' Report, the Directors' Remuneration Report and the Financial Statements in accordance with applicable law and regulations.

Company law requires the Directors to prepare financial statements for each financial year. Under that law the Directors have prepared the Group and Company Financial Statements in accordance with International Financial Reporting Standards (IFRSs) as adopted by the European Union. Under company law the Directors must not approve the Financial Statements unless they are satisfied that they give a true and fair view of the state of affairs of the Company and the Group and of the profit of the Company and Group for that period. In preparing these Financial Statements, the Directors are required to:

■ select suitable accounting policies and then apply them consistently;

■ make judgements and accounting estimates that are reasonable and prudent;

■ state whether applicable IFRSs as adopted by the European Union have been followed, subject to any material departures disclosed and explained in the financial statements; and

■ prepare the Financial Statements on the going concern basis unless it is inappropriate to presume that the Company will continue in business.

The Directors are responsible for keeping adequate accounting records that are sufficient to show and explain the Company's and the Group's transactions and disclose with reasonable accuracy at any time the financial position of the Company and the Group and enable them to ensure that the Financial Statements, the Directors' Report and the Directors' Remuneration Report comply with the Companies Act 2006 and, as regards the Group Financial Statements, Article 4 of the IAS Regulation. They are also responsible for safeguarding the assets of the Company and the Group and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.

The Directors are responsible for the maintenance and integrity of the Company's website. Legislation in the United Kingdom governing the preparation and dissemination of financial statements may differ from legislation in other jurisdictions.

The Directors consider that the Annual Report and Accounts, taken as a whole, is fair, balanced and understandable and provides the information necessary for shareholders to assess a company's performance, business model and strategy.

Each of the Directors, whose names and functions are listed on page 27 confirm that, to the best of their knowledge:

■ the Group Financial Statements, which have been prepared in accordance with IFRSs as adopted by the European Union, give a true and fair view of the assets, liabilities, financial position and profit of the Group; and

■ the Strategic Report includes a fair review of the development and performance of the business and the position of the Group and Company, together with a description of the principal risks and uncertainties that it faces.

In accordance with Section 418 of the Companies Act 2006, each of the Directors as at the date the Directors' Report is approved confirms that:

a) so far as the Director is aware, there is no relevant audit information of which the Company's auditors are unaware; and

b) they have taken all the steps that they ought to have taken as a Director in order to make themselves aware of any relevant audit information and to establish that the Company's auditors are aware of that information.