Conduit Hldg Regulatory News (CRE)

Creston plc

('Creston' or the 'Group')

Half year results for the six months ended 30 September 2015

Creston plc (LSE: CRE), the marketing communications group, today announces its half year results for the six months to 30 September 2015.

Group Financial Highlights

· Revenue up 8 per cent to £40.3 million (H1 2015: £37.3 million)

· Like-for-like1 revenue up 1 per cent to £37.7 million (H1 2015: £37.3 million)

· Headline2 PBT3 up 7 per cent to £4.0 million (H1 2015: £3.8 million)

· Headline DEPS4 consistent with prior year at 4.98 pence (H1 2015: 4.98 pence)

· Reported PBT at £1.1 million (H1 2015: £4.0 million), including £2.0 million impairment charge following a company closure

· Reported DEPS at 0.47 pence (H1 2015: 5.24 pence)

· Half year dividend per share increased by 5 per cent to 1.42 pence (H1 2015: 1.35 pence)

· Net debt after contingent deferred consideration of £2.5 million (31 March 2015: net cash after contingent deferred consideration of £6.9 million)

Operational and Corporate Highlights

· Slower first half due to Euro and client budget weaknesses

· Anticipated full year results slightly behind expectations, despite improved performance 

· New business driving improved performance

· Good progress in developing Creston Unlimited's offer, in line with five year strategy

· Acquisition of 51 per cent of How Splendid Ltd ("Splendid"), a digital design and development consultancy, to create Splendid Unlimited

· Strategic investment for a 27 per cent stake in advertising agency, 18 Feet & Rising Ltd

· Partnerships with Future Foundation (Global Consumer Trends); The Digital Consultancy (Digital Strategy) and Propeller Communications (Digital Healthcare Communications in the US)

· New offer and product launches: Search Unlimited, Reflected Life and RealData

Commenting on the results, Barrie Brien, Group Chief Executive of Creston plc, said:

"I am pleased with both revenue and headline PBIT being up 8 per cent and a 5 per cent growth in our dividend, 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, start-ups and partnerships and this strategic progress is underpinning a continuing strong new business performance."

 Group Financial Results

1 Profit before finance income, finance costs and taxation (PBIT)

For further information on the Group's half year results or about the analyst meeting please contact:

About Creston plc

Creston plc (LSE: CRE), incorporating the Creston Unlimited group offer, is a marketing communications group delivering a range of digital technology-based marketing solutions to blue-chip global clients. Encompassing consultants and discipline experts from across the industry and beyond, Creston Unlimited unlocks the power of creative collaboration to realise the opportunities that exist for brands and businesses in today's rapidly evolving world. www.creston.com / www.creston-unlimited.com  

Chief Executive's Statement

Group Performance

In the period under review, the Group continued to make good progress against its five-year strategy, broadening the Unlimited brand offer. This progress has helped the Group report year-on-year growth across revenue, headline PBT and dividend, as well as underpin another strong new business performance, during the first six months of this financial year.

The Group reported revenue of £40.3 million (H1 2015: £37.3 million) and headline PBIT of £4.2 million (H1 2015: £3.8 million), both up 8 per cent. There has also been an improvement in headline PBT, which increased by 7 per cent to £4.0 million (H1 2015: £3.8 million), with headline DEPS consistent with the prior year at 4.98 pence (H1 2015: 4.98 pence).

Our Unlimited strategy continues to bear fruit through increased inter-agency and partner cross-referrals; and a growing number of invitations to pitch for multi-discipline and international accounts. In terms of new business we have seen a strong start to the year, adding a mix of new clients and brands such as Logitech and Costa, and assignments from existing clients such as Canon, Danone and Diageo, with many of the wins, for example Novartis, involving two or more of our companies under the new Unlimited proposition. In H1 FY16, 38 per cent of our top 50 clients were served by two or more Unlimited companies. Our new business success is continuing into the second half, including our win of the Vodafone Customer Value Marketing account, our appointments as both Sony Mobile and McLaren's global lead digital strategy agency and most recently Creston Unlimited's appointment as British Airways' CRM and data strategy adviser.

The Group's like-for-like revenue growth was 1 per cent at £37.7 million (H1 2015: £37.3 million) and we are budgeting for improved growth in our second half. The factors behind this lower than expected growth were, firstly, weaker trading by a small number of our larger retail and consumer tech clients causing budget cuts; secondly, an adverse financial impact of c.£0.4 million year-on-year attributed to the weakening Euro on our Euro-based revenue contracts which have grown during the period; and thirdly, a slower performance in our UK health advertising offer, predominantly due to the healthcare industry's growing need for integrated channel neutral and more patient centric campaigns. As a consequence of this third factor and growing client opportunity, we took the decision to combine the offers of DJM Unlimited and PAN Unlimited to launch DJM PAN Unlimited - a multi-channel agency borne out of advertising and digital excellence.

Due to the ongoing proactive management of costs, headline PBIT margin has remained at 10.3 per cent (H1 2015: 10.3 per cent) in the period and this includes our committed investment in the Creston Unlimited team to help drive our profile and new business development.

Reported PBT was £1.1 million (H1 2015: £4.0 million), with the difference between headline and reported PBT due to acquisition related costs and accounting, investments in a number of start-ups and an impairment charge following the closure of a company (see note 4 for reconciliation from headline to reported).

Corporate Development

As previously announced, we identified with the Board the gaps in our full service offer and commenced a programme of targeted investments, acquisitions and partnerships, adding complementary skills and expertise to the Group.

To this end, on 22 April 2015 we announced the acquisition of 51 per cent of Splendid, a digital design and development consultancy, to form Splendid Unlimited. The acquisition is consistent with Creston's strategy of continuing to grow its marketing consultancy offer and having Splendid Unlimited's consultancy services in-house is already starting to create opportunities for us.

Furthermore we announced on 9 June 2015 our strategic investment for a 27 per cent stake in advertising agency, 18 Feet & Rising Ltd, thereby adding another key discipline to our offer.

The Group also entered into three new partnerships in the period - each in a very distinct and complementary area. In April 2015 we signed our second international partner, Propeller Communications - a digital healthcare communications agency based in the US. Also in April we signed with Future Foundation, the global consumer trends and insight consultancy, to complement our insight offer and with the digital strategist, The Digital Consultancy, to add to our consultancy offer alongside Splendid Unlimited.

Business Review

The respective revenue, headline PBIT and percentage contributions for Communications & Insight and Health are as follows:

Communications & Insight

Driven by the Splendid Unlimited acquisition announced on 22 April 2015 and the wider impact of new business wins, revenue for Communications & Insight increased by 14 per cent during the period to £30.6 million (H1 2015: £27.0 million), while headline PBIT increased by 24 per cent to £4.0 million (H1 2015: £3.2 million).

Reported PBIT for the division was £1.2 million (H1 2015: £3.2 million) due to acquisition related costs and accounting, investments in a number of start-ups and an impairment charge following the closure of a company (see below and note 4 and 5).

Overall, there has been a good performance by the division, resulting in like-for-like revenue growth of 4 per cent to £28.0 million (H1 2015: £27.0 million), in spite of the impacts mentioned earlier.

As our industry continually evolves and changes, we will constantly monitor the relevance and growth opportunities of all our disciplines across the Group. The structural changes in the market research industry are well documented, specifically in the area of data collection, which has continued to move from traditional methods to on-line. As a consequence, our offer of face-to-face fieldwork has continued to decline over the years and now with marginal profit contribution to the Group, and little expectation of future growth, the decision was made to close the company FieldworkUK.com Ltd. There is a close down charge of £0.1 million for redundancy and associated costs plus an impairment charge against goodwill of £2.0 million.

There have been two major product launches during the period. First, Reflected Life, a joint venture between ICM Unlimited and Marketing Sciences Unlimited, which allows us to measure, track and understand a consumer's digital behaviour and experience across multiple devices, providing insight that helps our clients to influence future behaviours. Second, The Real Adventure Unlimited has launched RealData, a new data offering, strengthening our data capabilities by using our insight data and analytical innovations.

In addition to those mentioned above, other new significant business wins during the period included work for Emmi Caffe Latte (referred from our international partner Serviceplan) and Mitsubishi (referred from Asian marketing network, Hakuhodo) and further assignments from existing client SSE. Post period end wins include projects for Barclaycard and Sky's on-demand box sets.

Our partnership with Serviceplan Unlimited, and our close working relationship with Hakuhodo, contributed to the 19 per cent increase in revenue derived from our international work for clients to 21 per cent of Communications & Insight revenue (H1 2015: 20 per cent).

Our agencies have also delivered a strong awards performance, with TMW Unlimited alone being shortlisted for, or winning, over 55 awards so far this year, including 9 DMAs and 19 Social Buzz Awards. A recent standout award achievement for TMW Unlimited was at the Euro Effie Awards which recognise marketing communications effectiveness. The agency collected three trophies for its 'Turn Off To Turn On' campaign for Durex, alongside being placed third in the Agency of the Year category across Europe.

Health

During the period, Health reported revenue of £9.7 million (H1 2015: £10.3 million) and headline PBIT of £1.6 million (H1 2015: £1.7 million), both down 6 per cent. However, through proactively managing our costs, margin has remained at 16 per cent.

As mentioned above, following a slower performance in our health advertising offer and the healthcare industry's growing need for integrated channel neutral and more patient centric campaigns, we have combined DJM Unlimited and PAN Unlimited to create DJM PAN Unlimited. With almost all clients shared, uniting the two businesses more formally made sense and recognised the growing opportunity for digital to drive a brand's creative agenda to ensure it is both modern and relevant. The new combined offering is a distillation of both agencies' methodologies, combining PAN Unlimited's Influential Creativity and DJM Unlimited's digital-first thinking to create a more powerful formula for delivering solutions to brand challenges.

Health had some significant new client wins and projects for existing clients during the period including Abbvie, AstraZeneca, Bristol Myers Squibb, CDC, Columbia Neurosurgery, Gilead, International AIDS Society, National Meningitis Association, Norgine, Novartis, Pfizer, Seqirus and Takeda.

The period also saw the launch of Search Unlimited, a specialist search engine optimisation (SEO) and search engine marketing (SEM) agency for the healthcare sector, offering natural search, paid search and paid social solutions to a number of global pharma companies and consumer healthcare brands looking to reach the right consumers with their campaigns.

Balance sheet and cash flow

As at 30 September 2015, the Group was in a net debt position of £2.5 million, after funding the acquisitions and remaining contingent deferred consideration payments both totalling £10.2 million (31 March 2015: net cash after deferred consideration of £6.9 million). During the period the Group delivered an operating cash inflow of £3.2 million (H1 2015: operating cash inflow £3.3 million). This reflects an improved cash conversion ratio of operating cash flow to reported EBITDA of 79 per cent (H1 2015: operating cash flow to reported EBITDA of 72 per cent).

Following a year end working capital position of £4.2 million, our working capital position was £5.5 million as at 30 September 2015 (30 September 2014: £3.0 million). Management continues to place significant emphasis on managing working capital effectively and has a five-year cumulative cash conversion of 87 per cent.

Tax

The headline tax rate of 20 per cent (H1 2015: 21 per cent) has fallen as a result of the drop in the UK statutory tax rate from 21 per cent down to 20 per cent. The reported tax rate of 68 per cent (H1 2015: 22 per cent) is significantly higher than the UK statutory rate of 20 per cent due to no tax relief being granted on the goodwill impairment charge. In future periods we expect a small increase in the headline tax rate to reflect the higher levels of tax on growing US income.

Board Changes

As previously announced, effective 1 July 2015, Nigel Lingwood joined the Board as Non-Executive Director and following the AGM in September 2015, became Senior Independent Director and Chairman of the Audit Committee.

The Group has also announced that, after nine years, Andrew Dougal will step down from the Board as Non-Executive Director at the end of November 2015. I would like to thank Andrew, on behalf of Creston and its shareholders, for the major contribution that he has made to the development of the Group during his time on the Board.

Dividend

In light of the Group's history of strong cash generation and low gearing, it is the Board's intention to maintain a progressive dividend policy. The Board has accordingly declared a half year dividend of 1.42 pence (H1 2015: 1.35 pence) per share to be paid on 8 January 2016 to shareholders on the register at 4 December 2015. This represents a 5 per cent increase on the prior year.

Outlook

I am pleased with the progress the Group continues to make against its five-year strategy and the breadth of offer we are building under the Unlimited brand, which is underpinning our new business success. While our slower growth in Q1 has been followed by a stronger performance in Q2 and start of H2, we are anticipating our full year performance to fall slightly behind expectations. Overall, with the combination of our good progress against the Group's strategy and continued growth, we remain confident in the Group's ability to deliver ongoing value to shareholders.

Barrie Brien

Group Chief Executive 

UNAUDITED CONSOLIDATED INCOME STATEMENT

for the six months ended 30 September 2015

UNAUDITED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOMEfor the six months ended 30 September 2015

UNAUDITED CONSOLIDATED BALANCE SHEET

as at 30 September 2015

UNAUDITED STATEMENT OF CHANGES IN EQUITY

Six months ended 30 September 2015

 UNAUDITED CONSOLIDATED STATEMENT OF CASHFLOWS

NOTES TO THE HALF YEAR REPORTfor the six months ended 30 September 2015

1. Presentation of financial information

The financial information contained in this half year report does not constitute statutory accounts within the meaning of Section 434 of the Companies Act 2006.

Statutory accounts for the year ended 31 March 2015 were approved by the Board of Directors on 14 July 2015 and delivered to the Registrar of Companies. The report of the auditors by PricewaterhouseCoopers LLP on those accounts was unqualified, did not contain an emphasis of matter paragraph and did not contain any statement under Section 448 of the Companies Act 2006.

The half year report has not been audited or reviewed by the Group's auditors.

2. Basis of Preparation

The half year report of Creston plc for the six months ended 30 September 2015 has been prepared in accordance with the Disclosure and Transparency Rules of the Financial Conduct Authority and with IAS 34, 'Interim financial reporting' as adopted by the European Union.

The accounting policies applied in the preparation of the annual financial statements are based on the European Union adopted International Financial Reporting Standards (IFRS) and IFRS IC interpretations that are applicable at this time.

The condensed half year consolidated financial information should be read in conjunction with the annual financial statements for the year ended 31 March 2015 which have been prepared in accordance with IFRS as adopted by the European Union.

3. Accounting policies

The half year consolidated financial statements of Creston plc for the six months ended 30 September 2015 have been prepared in accordance with the accounting policies contained in the Group's Annual Report and Accounts 2015 and the policies as described in note 2 above.

The following standards, amendments and interpretations are relevant to the Group, but not yet effective and have not been early adopted by the Group:

· IFRS 9 'Financial instruments' (effective for periods beginning on or after 1 January 2018). This standard on classification and measurement of financial assets and financial liabilities will replace IAS 39, 'Financial instruments: Recognition and measurement'. IFRS 9 has two measurement categories: amortised cost and fair value. All equity instruments are measured at fair value. A debt instrument is measured at amortised cost only if the entity is holding it to collect contractual cash flows and the cash flows represent principal and interest. For liabilities, the standard retains most of the IAS 39 requirements.

· IFRS 15, 'Revenue from contracts with customers', effective for accounting periods beginning on or after 1 January 2017 (subject to EU endorsement). The standard establishes principles for reporting useful information to users of financial statements about the nature, amount, timing and uncertainty of revenue and cash flows arising from an entity's contracts with customers. Revenue is recognised when a customer obtains control of a good or service and thus has the ability to direct the use and obtain the benefits from the good or service. The standard replaces IAS 18 'Revenue' and IAS 11 'Construction contracts' and related interpretations. The Group has not undertaken a detailed review to assess the impact of IFRS 15.

· Amendment to IAS 1, 'Presentation of financial statements' on the disclosure initiative, effective for annual periods beginning on or after 1 January 2016 (subject to EU endorsement). These amendments are a part of the IASB initiative to improve presentation and disclosure in financial reports. The Group has not assessed the impact of this standard.

· Amendments to IFRS 10, 'Consolidated financial statements' and IAS 28, 'Investments in associates and joint ventures', effective for annual periods beginning on or after 1 January 2016 (subject to EU endorsement). These amendments address an inconsistency between the requirements in IFRS 10 and those in IAS 28 in dealing with the sale or contribution of assets between an investor and its associate or joint venture. The main consequence of the amendments is that a full gain or loss is recognised when a transaction involves a business (whether it is housed in a subsidiary or not). A partial gain or loss is recognised when a transaction involves assets that do not constitute a business, even if these assets are housed in a subsidiary. The Group has not assessed the impact of this standard. 

· Annual improvements 2014, effective for annual periods beginning on or after 1 January 2016, subject to EU endorsement. These set of amendments impacts four standards: IFRS 5, 'Non-current assets held for sale and discontinued, operations' regarding methods of disposal, IFRS 7, 'Financial instruments: Disclosures', (with consequential amendments to IFRS 1) regarding servicing contracts, IAS 19, 'Employee benefits' regarding discount rates and IAS 34, 'Interim financial reporting' regarding disclosure of information. The Group has not assessed the impact of this standard

4. Reconciliation of headline profit to reported profit

In order to enable a better understanding of the underlying trading of the Group, the Board refers to headline PBIT, PBT, PAT and DEPS which eliminate certain amounts from the reported figures. These break down into two parts:-

(i) Certain accounting policies which have a material impact and introduce volatility to the reported figures. These include acquisition related costs, amortisation of acquired intangible assets, movement in the fair value of contingent deferred consideration, future acquisition payments to employees deemed as remuneration, acquisition related share based payment charges and notional finance costs on future contingent deferred consideration. These adjustments will cease once all the relevant earn-out and related obligations have been settled; and

(ii) exceptional non-recurring operating charges, which consist of start-up related net losses and restructuring related costs, property related costs, Creston Unlimited rebranding costs and the impairment of goodwill. Start-up losses are defined as the net operating result in the period of the trading activities that relate to new products, or new organically started businesses. These trading activities will cease being separately identified where, in the opinion of the directors, the activities show evidence of becoming sustainably profitable or are closed, whichever is earlier. In any event start-up net losses will cease being separately identified after one year from the commencement of the activity.

See note 5, segmental analysis, for further explanation of the nature of headline items incurred within the respective periods.

Six months ended 30 September 2015

Six months ended 30 September 2014

5. Segmental analysis

The chief operating decision maker has been identified as the Executive Board of Directors, which makes the strategic decisions. The Executive Board reviews the performance of the Group using two divisions, these being Communications & Insight, and Health.

The principal activities of the two divisions are as follows:-

Communications & Insight

The Communications & Insight division delivers a range of digital technology based marketing solutions to blue-chip global clients. Services include: advertising, brand strategy, customer relationship marketing (CRM), digital and direct marketing, local marketing, market research using qualitative and quantitative face-to-face, telephone and online data collection techniques, social media marketing and public relations.

Health

The Health division provides an integrated communications solution to the healthcare and pharmaceutical sector and offers services which include advertising, advocacy, digital and direct marketing, public relations, issues and reputation management and medical education.

The Executive Board assesses the performance of the operating segments based on a measure of revenue and headline PBIT. This measurement basis excludes the effects of certain amounts from the operating segments, such as amortisation of acquired intangible assets, acquisition, start-up and restructuring related costs, property related costs, Creston Unlimited rebranding, movement in fair value of contingent deferred consideration, impairment of goodwill, future acquisition payments to employees deemed as remuneration and notional finance costs on contingent deferred consideration.

Accounting policies are consistent across the reportable segments.

All significant assets and liabilities are located within the UK and the USA. The Executive Board does not review the assets and liabilities of the Group on a divisional basis and therefore has chosen to adopt the amendments to IFRS 8 which permit not segmenting the assets and liabilities of the Group.

Other information provided to the Board of Directors is measured in a manner consistent with that in the Financial Statements.

Divisional segmentation

Turnover, revenue, headline and reported profit before finance income and finance costs (PBIT), and profit before tax (PBT) attributable to Group activities are shown below:

Acquisition related costs of £0.1 million have been incurred during the half year in relation to the acquisition of Splendid (£0.1 million) and our investment in 18 Feet and Rising (£0.04 million).

Start-up business trading losses totalling £0.2m have been incurred during the half year. These cost are associated with Reflected Life, RealData, and Search Unlimited, in their first year of trading. Along with Creston Unlimited rebranding costs of £0.03 million representing incremental and non-recurring costs as a result of the launch of our new agency group brand and offer, Creston Unlimited, in November 2014 and the simultaneous rebrand of all our Creston companies with the Unlimited suffix.

In relation to the acquisition of Splendid, there has been a £0.3 million amortisation expense relating to the acquired intangible asset - customer relationships. In addition, £0.2 million has been expensed as a share based payment charge relating to the valuation of the liquidity foregone of the non-controlling interest shareholders (refer to note 9).

Restructuring costs of £0.1 million have been incurred during the period, comprised of £0.05 million incurred in the closure of FieldworkUK.com Limited, and £0.09 million for the restructuring resulting from combining DJM PAN Unlimited. A goodwill impairment cost of £2.0 million has been recognised as a result of the closure of FieldworkUK.com Limited a subsidiary of ICM Research Limited, which is part of the ICM cash generating unit (refer to note 10).

Acquisition and start-up costs of £0.3 million have been excluded from the headline PBIT measure for the year ended 31 March 2015. These include £0.2 million in deal related costs incurred during the year in relation to the post year end acquisition of Splendid Unlimited with the remaining balance relating to trading losses associated with the brand and creative consultancy, Loooped in its first year of trading.

A property related credit of £0.1 million has been excluded from the headline PBIT measure following a rebate of costs incurred during the vacant period of Creston House which were previously excluded from the headline PBIT measure in a prior period.

Creston Unlimited rebranding costs of £0.4 million have been excluded from the headline PBIT measure for the year ended 31 March 2015. These incremental and non-recurring costs are as a result of the launch of our new agency group brand and offer, Creston Unlimited, in November 2014 and the simultaneous rebrand of all our Creston companies with the Unlimited suffix.

Following the end of the earn-out period for DJM Unlimited and Cooney Waters Unlimited there has been a reduction of contingent deferred consideration resulting in a credit to the Consolidated Income Statement of £0.3 million and £0.04 million respectively for the year ended 31 March 2015. These amounts have been excluded from the headline PBIT measure.

Geographical segmentation

The following table provides an analysis of the Group's turnover and revenue by geographical market, irrespective of the origin of the services:

6. Taxation

The headline tax rate of 20 per cent (H1 2015: 21 per cent) has fallen from H1 2015 as a result of the drop in the UK statutory tax rate from 21 per cent down to 20 per cent.

The reported tax rate of 68 per cent (H1 2015: 22 per cent) is higher than the headline rate as there is no tax relief on the impairment charge and it includes the deferred tax charge on amortisation deductions claimed in respect of Goodwill acquired in the US, which is added back as a headline adjustment.

In future periods we would expect the headline tax rate to be slightly higher than the UK statutory rate as a consequence of the higher tax rates in the US.

 7. Earnings per share

The headline EPS and DEPS are based on the headline PAT attributable to the respective equity holders and is divided by the weighted average number of shares and by the weighted average number of diluted shares respectively. Headline DEPS is also adjusted to assume an accrued dividend for the non-controlling interest in Splendid.

Diluted earnings per share has been calculated based on the dilutive impact of 499,143 employee share options which were outstanding as at 30 September 2015 (30 September 2014: 647,203).

8. Dividends

The prior year final dividend of 2.85 pence (H1 2015: 2.70 pence) per share was paid to shareholders on 11 September 2015 giving a total of £1,652,255 (H1 2015: £1,599,932).

The Board has declared a half year dividend to be paid on 8 January 2016 of 1.42 pence (H1 2015: 1.35 pence) per share to all ordinary shareholders on the register at 4 December 2015.

9. Acquisitions

How Splendid Limited

Announced on 22 April 2015, Creston plc acquired 51 per cent of the share capital of Splendid, a London-based digital design and development consultancy. The following table summarises the consideration paid for Splendid, the fair value of assets acquired, liabilities assumed and the non-controlling interest at the acquisition date.

Acquisition related costs of £0.1 million have been charged to professional and legal expenses in the consolidated income statement for the half year ended 30 September 2015.

A working capital surplus of £0.2 million was paid representing the surplus of net current assets in the completion balance sheet in excess of the pre-agreed minimum requirement of £1.1 million. There is potential for a further additional consideration payment of up to £7 million in June 2017 relating to the 51 per cent shareholding, based on average profit before interest and tax from April 2015 to March 2017. This payment would be considered deemed remuneration and will be expensed to the income statement as the provision is recognised. Currently there is zero deferred consideration due to first half project variability, and this will be re-assessed at each future reporting period thereafter.

The fair value of identified intangible assets of £3.3 million representing customer relationships, will be amortised over a 4.5 year period.

The fair value of non-controlling interest in Splendid is deemed to be nil on acquisition, due to restrictions on the 49% non-controlling shareholding which links the ownership of those shares to continuing employment for two years from the date of the signing of the acquisition. As such a share based payment charge will be recognised to value this liquidity foregone to build up a balance in equity, from the date of acquisition to the two year anniversary of the deal. At the anniversary of the deal this will convert to non-controlling interest provided the sellers are still in employment at that date. The forecast value of the liquidity foregone of the non-controlling interest at the 2 year period is forecast to be £0.7 million. At 30 September 2015, a share based payment charge of £0.2 million has been recognised (refer to notes 4 and 5).

For the remaining share capital there are no put options, however Creston will have the option to acquire a further 24 per cent from April 2017, for a maximum value up to £8.6 million and the remaining 25% from April 2019 for a maximum value up to £11.9 million. The consideration for both these call options, payable in cash, will be calculated at a pre-agreed multiple applied to the average profit before interest and tax for the year in which the call option is exercised and the two years preceding the call.

Since 21 April 2015, Splendid has contributed revenue of £2.7 million and profit of £0.7 million to the Group's consolidated statement of comprehensive income. Had Splendid been consolidated from 1 April 2015, the consolidated statement of income would show pro-forma revenue of £2.9 million and profit of £0.7 million.

18 Feet & Rising Limited

On 9 June 2015, Creston plc, made a strategic investment in 18 Feet & Rising Limited, a London-based advertising agency. Consideration of £1.0 million was paid for a 27 per cent shareholding in the business.

10. Non-current assets

During the period a decision was taken to close the company FieldworkUK.com Limited, a subsidiary of ICM Research Limited, due to declining demand of face-to-face market research data collection. As a consequence of this decision, the Group carried out a further review of the carrying value of goodwill using updated forecasts to reflect current expectations of the future performance of this cash generating unit ("CGU") based on the prevailing conditions prior to future restructuring and investment. Following this review, goodwill in this CGU has been impaired by £2.0 million.

The value in use calculation has been calculated using a consistent methodology to that disclosed in the 2015 Annual Report and Accounts.  

11. Provision for contingent deferred consideration

The contingent deferred consideration obligations are set out below:

The Group considers that the above liabilities approximate to their fair value. During the period there was £nil notional interest charge (H1 2015: £13,000) recognised in relation to this provision. The notional interest rate used during the Period was 3.3 per cent (H1 2015: 3.3 per cent).

During the half year period the earn-out obligations were paid in cash, in accordance with the associated sale purchase agreement.

12. Analysis of net cash