Conduit Hldg Regulatory News (CRE)

4 Dec 2006 07:02

Creston PLC04 December 2006 Date: 4 December 2006On behalf of: Creston plc ("Creston" or "the Group")Embargoed until: 0700hrs Creston plc Interim Results for the year ended 30 September 2006 & Acquisition Creston plc, the diversified marketing services group, today announced itsinterim results for the six months ended 30 September 2006. The highlights,which demonstrate the Group's continuing ability to acquire and manage best inclass companies in a dynamic market, are: FINANCIAL HIGHLIGHTS Headline Performance* • Increase in Turnover (billings) of 43% to £53.5m (2005: £37.4m) • Increase in Revenue (fees earned) of 49% to £30.8m (2005: £20.7m) • Increase in Profit before finance costs, income from investments and taxation (PBIT) of 35% to £5.2m (2005: £3.9m) • Increase in Profit before taxation (PBT) of 35% to £4.9m (2005: £3.6m) • Increase in Basic Earnings per share (EPS) of 2% to 6.93 pence (2005: 6.82 pence) • Increase in Diluted EPS of 2% to 6.85 pence (2005: 6.70 pence) • PBIT Margin of 17% continues to exceed the industry average • Growth in Operating Company like-for-like Revenue of 4% • Growth in Divisional like-for-like PBIT of 11%, 7% and 15% in BRANDCOM, Insight and Public Relations (PR), respectively Reported Performance • Increase in Turnover (billings) of 43% to £53.5m (2005: £37.4m) • Increase in Revenue (fees earned) of 49% to £30.8m (2005: £20.7m) • Increase in PBIT of 20% to £3.4m (2005: £2.8m) • Increase in PBT of 8% to £2.1m (2005: £1.9m) • Increase in Dividend per Share of 10% to 0.88 pence (2005: 0.80 pence) • Basic EPS of 2.06 pence (2005: 2.14 pence) • Diluted EPS of 2.04 pence (2005: 2.10 pence) * Headline performance measures exclude the impact of deferred considerationdeemed as remuneration, notional finance costs on deferred consideration andamortisation of intangible assets. A reconciliation of Headline PBIT, PBT andProfit after taxation (PAT) to their Reported equivalents is set out in Note 3of the Interim Report. OPERATIONAL HIGHLIGHTS • Acquisition of ICM Group (ICM) completed on 17 May 2006 for a maximum consideration of £37.2m. ICM was one of the UK's largest independent market research groups. The acquisition adds significant depth and added disciplines to Creston's Insight Division. • Acquisition of Tullo Marshall Warren Ltd together with its sister company Colombus Communications Ltd (TMW) completed on 17 May 2006 for a maximum consideration of £38.3m. TMW was one of the UK's largest independent direct marketing companies. The acquisition adds considerable strength, especially in digital and data, to Creston's MARCOMS Division. • Launch of New Vista, an online market research entity within the Insight Division. Since launch, New Vista has enjoyed exceptional growth and allows Creston companies to offer clients a fully integrated traditional and on line research capability. • Launch of 'e-Influence', an online brand management and influencer initiative between the PR and MARCOMS Divisions. • Appointment of Andrew Dougal as non-executive director and Chairman of the Audit Committee on 6 September 2006. Andrew holds non-executive directorships including Chairman of the Audit Committee at Taylor Woodrow Plc and was formerly Finance Director of Hanson Plc, the conglomerate, and after its demerger, CEO of Hanson the international building materials company. • Major client wins in the period include Morrisons by DLKW, Vodafone online research by ICM, Sony Ericsson qualitative research by CML and pan-European Nissan direct marketing by TMW. • Synergy between group companies has enjoyed its highest levels and we are proud of wins such as Canon, Alfa Romeo, Hyundai and Kia, World Heart Foundation, BMW and Nutricia. POST BALANCE SHEET EVENT • The Board is pleased to announce the acquisition of PAN Advertising Ltd (PAN) for a maximum consideration of £18.8m. PAN was one of the UK's largest independent healthcare advertising and communication companies. The acquisition was completed on 3 December 2006 and is part of Creston's strategy to build its international health care offering. Commenting on today's announcement, Don Elgie, Group Chief Executive, said: "Our strategy of building a diversified international marketing services groupthrough a combination of organic growth and selective acquisitions continues toprogress well. We are pleased to have delivered a good performance for ourshareholders in the first half of the year and to have acquired threeexceptional companies which are undoubtedly leaders in their fields. The depthof new business wins and the exciting new initiatives in the online arena, givea strong foundation for the second half of the year. Trading since Septembercontinues to be in line with the Board's expectations." FOR FURTHER INFORMATION, PLEASE CONTACT: Creston plc 020 7930 9757Don Elgie, Chief ExecutiveBarrie Brien, COO/CFOwww.creston.com Redleaf Communications 020 7822 0200Emma Kane/Sanna Lehtinen/Susan Quigley NOTES TO EDITORS • Publication quality photographs are available through Redleaf on the numbers shown above. About Creston plc • Creston's strategy is to build a diversified international marketing services group through a combination of organic growth and selective acquisitions. The Board's aim is to identify synergistic benefits between currently independent marketing services companies offering premium services such as market research, direct marketing, advertising, public relations, research and digital; and to build a diversified Group that offers clients solutions to both existing and future marketing needs. • Creston's companies boast a range of blue-chip clients including the AA, AstraZeneca United Kingdom, BA, Bacardi-Martini, Bayer, BT, Burger King, Canon, COI Communications, Cow & Gate, Diageo, eBay, General Motors, George Wimpey, GlaxoSmithKline, Halifax, Kimberly-Clark, Lloyds, Lloyds Black Horse, Morrisons, Nestle Rowntree, Nissan, Norwich Union, Pfizer, Roche Diagnostics, Scottish Courage, Tesco, Toshiba, T-Mobile, Tropicana, Unilever, Vodafone, Walkers and WHSmith. • Creston's share price is quoted in the Financial Times, The Daily Telegraph, The Times and the London Evening Standard. CHAIRMAN AND CHIEF EXECUTIVE'S STATEMENT • The Board is pleased to present the Group's interim results for the six months ended 30 September 2006. Creston has continued the successful implementation of its strategy of building a diversified international marketing services group through a combination of organic growth and selective acquisitions. The acquisitions on 17 May 2006 of ICM Group (ICM), one of the UK's largest independent market research groups and Tullo Marshall Warren (TMW), one of the UK's largest independent direct marketing companies supported this strategy. The acquisition of PAN Advertising (PAN), one of the UK's largest independent healthcare advertising and communication companies, on 3 December 2006, continues the Board's strategy of investing in category specific expertise. • The Group has invested heavily in the first half of the year in building its online digital expertise, via the initiatives of online research in New Vista and online brand management and influencer in 'e-Influence'. These core strategic initiatives added to the expertise within the recently acquired TMW Digital division of TMW, compliment the impressive and world class offering to our clients. Results Overall, trading during the first six months of the year ending 31 March 2007has been in line with expectations. Turnover, which represents billings to ourcustomers, grew by 43 per cent to £53.5m (6 months ended 2005: £37.4m). Moreimportantly Revenue, which represents our income earned, increased by 49 percent to £30.8m (2005: £20.7m). Headline PBIT increased by 35 per cent to £5.2m(2005: £3.9m) and reported PBIT increased by 20 per cent to £3.4m (2005: £2.8m).Total staff numbers increased from 515 to 801 on a full-time equivalent basisfollowing the acquisitions of ICM and TMW. Headline PBIT has been driven by the acquired profits of ICM and TMW and thelike-for-like growth in our companies representing 4 per cent of Revenue. Alldivisions have grown Revenue on a like-for-like basis, with the best performancefrom PR at 17 per cent. Reported PBIT increased by 20 per cent from £2.8m to £3.4m. This growth has beenimpacted by the non-recurring non-cash impact of the deferred considerationdeemed as remuneration, and in particular amortisation of intangible assets of£0.6m (2005: £0.4m) during the first half of the year related to ICM and TMW. Headline Basic EPS increased to 6.93 pence (2005: 6.82 pence) and HeadlineDiluted EPS increased to 6.85 pence (2005: 6.70 pence). Reported Basic EPS was2.06 pence (2005: 2.14 pence) and reported Diluted EPS was 2.04 pence (2005:2.10 pence). Reported figures are impacted by accounting charges for theacquisitions in the period, specifically the amortisation of intangibles. At 30 September 2006, Creston had net cash balances of £3.6m (2005: £3.2m) andtotal bank loans, loan notes and finance lease obligations of £18.5m (2005:£7.9m). The resulting net bank debt of £14.8m (2005: £4.7m) represents aprudent gearing level of 19 per cent (2005: 11 per cent). Creston continues tomaintain significant headroom in its banking covenants. Net finance costs coveris 3 times on a Reported basis (2005: 3 times) and 16 times on a Headline basis(2005: 15 times). Dividend An interim dividend per share of 0.88 pence (2005: 0.80 pence) is to be paid on8 January 2007 to shareholders on the register at 15 December 2006. This is inline with the Board's stated strategy of implementing a progressive dividendpolicy. Divisional Performance, like-for-like growth and new business The Directors are of the opinion that as Creston is an acquisitive companycertain accounting policies relating to deferred consideration deemed asremuneration, notional finance costs on deferred consideration and amortisationof intangible assets have a material impact on the reported results andintroduce volatility to the reported figures. In order to enable a betterunderstanding of the underlying divisional performance of the Group, Crestonrefers to Headline PBIT, which eliminates these non-recurring non-cash chargesincluded in the reported figures. BRANDCOM Division The BRANDCOM Division has contributed Revenue of £7.1m (2005: £7.0m) and PBIT of£1.4m (2005: £1.2m), which represents PBIT growth of 11 per cent. The Divisionhas achieved another excellent performance in the six months due to strong newbusiness performance with wins including Morrisons, Marstons and CharlesWorthington plus further Opel and COI business. These gains generatedlike-for-like PBIT growth of 11 per cent. The PBIT margin has increased to 19per cent and remains strong for this sector. Insight Division The Insight Division has contributed Revenue of £6.8m (2005: £3.3m) and PBIT of£2.0m (2005: £1.0m), which represents growth of 105 per cent and 97 per centrespectively. The Division continues to perform very well, due to the strongperformance of ICM Research since acquisition and the on-line research sales,which are growing rapidly since the investment in New Vista. There waslike-for-like Revenue growth of 6 per cent and PBIT growth of 7 per cent. TheHeadline PBIT margin remains exceptional at 30 per cent. MARCOMS Division The MARCOMS Division has contributed Revenue of £12.5m (2005: £7.3m) and PBIT of£2.1m (2005: £1.9m), which represents growth of 71 per cent and 10 per centrespectively. Like-for-like Revenue growth was 1 per cent, following thepreviously reported loss of a large part of the BMW account in EMO. Afteradjusting for the BMW loss, which was a material contract in the same periodlast year, the like-for-like Revenue growth was 11 per cent. The Division's PBITmargin is 17 per cent which continues to be good for the sector but wassuppressed by the BMW loss and some one-off and restructuring costs in the firsthalf of the year. EMO is now regaining momentum with the recent wins from George Wimpey and TheCo-operative Group added to the first half wins of Lotus and Alfa Romeo. TheBoard is confident that EMO will continue to replace the lost Revenue and ispleased that there will be less dependency on one major client in the future.This Division has been enhanced by the acquisition of TMW in May 2006, thebenefits of which will be fully realised in the second half of the year. PR Division The PR Division has contributed Revenue of £4.3m (2005: £3.0m) and PBIT of £1.2m(2005: £0.9m), which represents growth of 45 per cent and 36 per centrespectively. Our healthcare company, RDC has performed especially well with anumber of new client wins including Chiron, GE Healthcare and Novo NordiskInternational. The Division has contributed excellent like-for-like Revenue andPBIT growth of 17 per cent and 15 per cent respectively and the PBIT marginremained high at 28 per cent. Acquisitions During the period, the Group acquired the business and assets of ICM and TMW,both of which were completed on 17 May 2006. ICM was acquired for a maximum consideration of £37.2m plus costs. ICM, basedin London is one of Britain's leading market research groups. ICM's clientsinclude BT, Dixons, Norwich Union and Vodafone. TMW was acquired for a maximum consideration of £38.3m plus costs. TMW, basedin London is one of Britain's leading direct marketing groups. TMW's clientsinclude BA, COI, Diageo, Nissan, T-Mobile and Unilever. On 1 December 2006 PAN was acquired for a maximum consideration of £18.8m pluscosts. PAN, based in Richmond, Surrey, is one of Britain's leading healthcareadvertising and communication companies. PAN's clients include Bristol-MyersSquibb, Boehringer Ingelheim, GlaxoSmithKline, Schering, Servier and Wyeth.This acquisition has no impact on the reported results, as it occurred after thebalance sheet date. Plc Board and Incentive Schemes We were pleased to appoint Andrew Dougal as non-executive director and Chairmanof the Audit Committee on 6 September 2006. Andrew is non-executive director ofPremier Farnell Plc and Chairman of the Audit Committee at Taylor Woodrow Plc.He was formerly Finance Director of Hanson Plc, the conglomerate, and after itsdemerger, CEO of Hanson the international building materials company. There was a third offering under the Group's Sharesave scheme, which was offeredto all employees. The take up under the Sharesave scheme continues to beexcellent with 298 employees, representing 37 per cent of eligible employees,participating in this scheme. Outlook Creston has had a successful first six months with some major new business winsand additional assignments across all divisions from many of our Top 30 clients,such as Canon, COI, General Motors, Lloyds, Unilever and Vodafone. These newbusiness wins and additional assignments provide a good foundation for thesecond half of the year. The Group will also benefit from a full six monthscontribution to profits from the acquisitions of ICM and TMW, as well as the newinitiatives of New Vista and 'e-Influence'. Following the acquisitions of ICM,TMW and PAN the Board is confident that there will be further opportunities toleverage cross selling and client referrals across Group companies, which willadd to the considerable success we have already enjoyed in synergy. The overall market continues to exhibit growth and is stimulated by the growthof digital platforms. We believe clients will reward those diversified Groupsthat are able to offer insight driven media neutral planning, that is executedwith integrated and compelling multi channel creative. Creston companies bothindividually and collaboratively, are demonstrating their ability to fulfillthese emerging client needs by developing class leading initiatives such as theon-line research panel New Vista and the internet reputation management product'e-Influence'. In summary, we are pleased with the Group's performance in the reported period.The Group continues to demonstrate a positive trading performance and with thelatest acquisitions and online initiatives the Board is confident of Creston'sgrowth plans and future prospects. David Marshall Don ElgieChairman Chief Executive 4 December 2006 UNAUDITED CONSOLIDATED INCOME STATEMENTfor the six months ended 30 September 2006 Note Six months ended Six months ended Year ended 30 September 2006 30 September 2005 31 March £'000 £'000 2006 £'000 Turnover (billings) 53,484 37,352 81,472 Revenue (fees earned) 30,755 20,654 43,503Operating costs (27,390) (17,853) (37,234) Profit before finance costs, incomefrom investments and taxation 3,365 2,801 6,269Finance income 115 84 182Finance costs (1,387) (949) (1,836)Income from investments - - 109 Profit before taxation 2,093 1,936 4,724 Taxation (1,076) (1,171) (1,797) Profit for the period 1,017 765 2,927 Basic earnings per share (pence) 6 2.06 2.14 8.04Diluted earnings per share (pence) 6 2.04 2.10 7.67 The results above arise wholly from continuing operations. UNAUDITED CONSOLIDATED BALANCE SHEETas at 30 September 2006 As at As at As at 30 September 30 September 31 March 2006 2005 2006 As restated £'000 £'000 £'000 Non-current assetsIntangible assets Goodwill 111,799 67,166 66,535 Other 1,080 350 350Property, plant and equipment 4,529 2,535 3,006Trade and other receivables 1,158 - 1,162Investments - available for sale 10 550 550 550Deferred tax assets 1,500 210 906 120,616 70,811 72,509Current assetsInventories and work in progress 3,676 2,050 2,907Trade and other receivables 24,383 15,129 19,961Cash and cash equivalents 3,644 3,215 5,317 31,703 20,394 28,185 Current liabilitiesTrade and other payables (24,692) (16,647) (22,497)Corporate income tax payable (825) (1,849) (1,452)Obligations under finance leases (132) (149) (196)Bank overdraft, loans and loan notes (5,595) (1,687) (2,525)Short term provisions (1,131) - (7,046) (32,375) (20,332) (33,716) Net current (liabilities)/assets (672) 62 (5,531) Total assets less current liabilities 119,944 70,873 66,978 Non current liabilitiesBank loans and loan notes (12,740) (5,938) (5,073)Obligations under finance leases - (157) (9)Long term provisions (29,877) (20,037) (14,502) (42,617) (26,132) (19,584) Net assets 77,327 44,741 47,394 EquityCalled up share capital 5,497 3,712 3,759Share premium account 33,345 19,333 19,734Own shares (139) (70) (46)Shares to be issued 3,120 1,679 1,836Other reserves 30,943 17,694 17,682Retained earnings 4,561 2,393 4,429 Total equity 77,327 44,741 47,394 UNAUDITED STATEMENT OF CHANGES IN EQUITYfor the 6 months ended 30 September 2006 Share Share Own Shares to Other Retained Total capital premium shares be issued reserves earnings £'000 £'000 £'000 £'000 £'000 £'000 £'000 Changes in equity for the periodAt 1 April 2006 3,759 19,734 (46) 1,836 17,682 4,429 47,394 New shares issued 1,738 13,611 53 - 13,288 - 28,690Credit for share based incentivescheme - - - 1,284 - - 1,284Own shares purchased - - (146) - - - (146)Loss on treasury scheme - - - - (27) - (27)Profit for the period - - - - - 1,017 1,017Dividends - - - - - (885) (885)At 30 September 2006 5,497 33,345 (139) 3,120 30,943 4,561 77,327 for the 6 months ended 30 September 2005 Share Share Own Shares to Other Retained Total capital premium shares be issued reserves earnings As As restated restated £'000 £'000 £'000 £'000 £'000 £'000 £'000 Changes in equity for the periodAt 1 April 2005 as restated (Note10) 3,493 19,168 - 1,426 15,434 2,312 41,833New shares issued 219 165 - - 2,260 - 2,644Credit for share based incentivescheme - - - 253 - - 253Own shares purchased - - (70) - - - (70)Loss on treasury scheme - - - - - -Profit for the period - - - - - 765 765Dividends - - - - - (508) (508)At 30 September 2005 3,712 19,333 (70) 1,679 17,159 2,393 44,206 for the year ended 31 March 2006 Share Share Own Shares to Other Retained Total capital premium shares be issued reserves earnings £'000 £'000 £'000 £'000 £'000 £'000 £'000 Changes in equity for the yearAt 1 April 2005 3,493 19,168 - 1,426 15,434 2,312 41,833New shares issued 266 566 - - 2,258 - 3,090Credit for share based incentivescheme - - - 410 - - 410Own shares purchased - - (46) - - - (46)Loss on treasury scheme - - - - (10) - (10)Profit for the year - - - - - 2,927 2,927Dividends - - - - - (810) (810)At 31 March 2006 3,759 19,734 (46) 1,836 17,682 4,429 47,394 UNAUDITED CONSOLIDATED CASH FLOW STATEMENTfor the six months ended 30 September 2006 Note Six months Six months Year ended ended ended 30 September 30 September 31 March 2006 2005 2006 £'000 £'000 £'000 Operating cash flow 8 2,999 3,308 7,970 Net finance costs (336) (257) (303)Tax paid (1,374) (434) (1,908)Net cash inflow from operating activities 1,289 2,617 5,759 Investing activitiesPurchase of subsidiary undertakings (31,062) (4,240) (4,240)Net cash acquired with subsidiaries 9,140 1,779 1,779Purchase of property, plant andequipment (1,030) (1,110) (2,262)Sale of property, plant and equipment - 32 117Decrease in restricted cash deposits - 12 27Net cash (outflow) from investing (22,952) (3,527) (4,579)activities Financing activitiesIssue of shares 14,564 185 642Share repurchases (146) (30) (30)Net increase/(decrease) in borrowings 6,530 (814) (841)Equity dividends paid (885) (508) (810)Capital element of finance lease payments (73) (115) (216) Net cash inflow/(outflow) from financing 19,990 (1,282) (1,255) (Decrease) in cash and cash equivalents (1,673) (2,192) (75) Cash and cash equivalents at start ofperiod 5,282 5,357 5,357 Cash and cash equivalents at end of period 3,609 3,165 5,282 NOTES TO THE INTERIM REPORTfor the six months ended 30 September 2006 1. Presentation of financial information The financial information contained in this Interim Report does not constitutestatutory accounts within the meaning of the Companies Act 1985 and has not beenaudited or reviewed by the Group's auditors. The financial information for the year to 31 March 2006 does not constitutestatutory accounts within the meaning of Section 240 of the Companies Act 1985.It is extracted from the statutory accounts for that year that were preparedunder IFRS, on which the Group's auditors at that time, Grant Thornton UK LLP,gave an unqualified audit report. Statutory accounts for the year ended 31 March2006 have been delivered to the Registrar of Companies. During the period Grant Thornton UK LLP resigned as auditors.PricewaterhouseCoopers LLP have been appointed as the Group's auditors. 2. Accounting policies basis of preparation The interim consolidated financial statements of Creston plc for the six monthsended 30 September 2006 have been prepared in accordance with the accountingpolicies the group adopted in its 2006 Annual Report. These accounting policiesare based on the EU-adopted International Financial Reporting Standards (IFRS)and IFRIC interpretations that are applicable at this time. The policies set out in the 2006 Annual Report have been consistently applied toall the periods presented. These consolidated interim financial statements have been prepared under thehistorical cost convention, as modified by the revaluation of derivativeinstruments at fair value through the Income Statement. The preparation of financial statements requires the use of certain criticalaccounting estimates. It also requires management to exercise judgment in theprocess of applying the Group's accounting policies. 3. Reconciliation of Headline profit to Reported profit The Directors are of the opinion that as Creston is an acquisitive companycertain accounting policies relating to deferred consideration deemed asremuneration, notional finance costs on deferred consideration and amortisationof intangible assets have a material impact on the reported results andintroduce volatility to the reported figures. In order to enable a betterunderstanding of the underlying trading of the Group, Creston refer to HeadlinePBIT, PBT and PAT which eliminates these non-recurring non-cash charges from thereported figures, as follows: Six months ended 30 September 2006 PBIT PBT PAT £'000 £'000 £'000 Headline 5,220 4,884 3,421Future acquisition payments to employees deemed as remuneration (1,230) (1,230) (1,230)Amortisation of intangible assets (625) (625) (625)Notional finance costs on future deferred consideration - (936) (936)Taxation impact - - 387Reported 3,365 2,093 1,017Headline Basic EPS (pence) 6.93Headline Diluted EPS (pence) 6.85Reported Basic EPS (pence) 2.06Reported Diluted EPS (pence) 2.04 Six months ended 30 September 2005 PBIT PBT PAT £'000 £'000 £'000 Headline 3,868 3,611 2,440Future acquisition payments to employees deemed as remuneration (714) (714) (714)Amortisation of intangible assets (353) (353) (353)Notional finance costs on future deferred consideration - (608) (608)Reported 2,801 1,936 765Headline Basic EPS (pence) 6.82Headline Diluted EPS (pence) 6.70Reported Basic EPS (pence) 2.14Reported Diluted EPS (pence) 2.10 The contingent consideration deemed as remuneration arises on payments made byCreston to non-shareholding employees in respect of the deferred considerationon the business acquisitions. The notional finance costs also relate to thedeferred consideration. Both of these charges will cease once the relevantearn-outs have been settled. The amortisation of intangible assets is also anon-recurring non-cash charge relating to the acquisitions. Headline EPScalculations are adjusted for the costs disclosed above. 4. Segmental analysis Turnover, Revenue and PBT attributable to Creston activities are shown below.Turnover represents billings to customers. Revenue represents fees earned bythe companies. Turnover Revenue Profit before tax Six months Six months Six months Six months Six months Six months ended ended ended ended ended ended 30 September 30 September 30 September 30 September 30 September 30 September 2006 2005 2006 2005 2006 2005 £'000 £'000 £'000 £'000 £'000 £'000 BRANDCOM 14,761 16,012 7,124 7,041 1,384 1,248Insight 11,978 5,700 6,761 3,293 2,030 1,032MARCOMS 19,691 11,767 12,538 7,329 2,107 1,922PR 7,054 3,873 4,332 2,991 1,214 891Total 53,484 37,352 30,755 20,654 6,735 5,093Unallocated corporate expenses (3,370) (2,292)Profit before finance costs, income frominvestments and taxation 3,365 2,801Net finance costs (1,272) (865)Profit before tax 2,093 1,936 It is not possible to present a segmental split of deferred consideration deemedas remuneration, notional finance costs on deferred consideration andamortisation of intangible assets as these charges cannot be allocated betweenthe business segments. As divisional PBT excludes these items, they have beenincluded in unallocated corporate expenses and a segmental split is presented onthat basis. 5. Dividends The Board has recommended an interim dividend of 0.88 pence (2005: 0.80 pence)per share to all ordinary shareholders on the register at 15 December 2006.This dividend is not reflected in the Income Statement for the six months to 30September 2006 as it was not approved by the Board until 28 November 2006.However, the final dividend of 1.60 pence per share for the year to 31 March2006 was recognised during the period after it was approved at the AGM on 3August 2006. 6. Earnings per share The calculation of the basic EPS is based on the Profit attributable to ordinaryshareholders divided by the weighted average number of shares in issue for eachperiod, which was 49,372,200 for the period ended 30 September 2006 (year ended31 March 2006: 36,383,218 and period ended 30 September 2005: 35,768,390). Thecalculation of the diluted EPS is based on the Profit attributable to ordinaryshareholders divided by the weighted average number of diluted shares in issuefor each period, which was 49,936,791 for the period ended 30 September 2006(year ended 31 March 2006: 38,145,702 and period ended 30 September 2005:36,436,925). The Headline EPS and Headline diluted EPS are based on the Headline PBT analysedin note 3 less attributable tax and divided by the weighted average number ofshares and by the weighted average number of diluted shares respectively. 7. Acquisitions ICM The acquisition of ICM was completed on 17 May 2006. The maximum considerationpayable (including deemed remuneration and notional finance costs) for ICM is£37.2m plus legal and professional costs of £0.7m. It is satisfied by aninitial consideration of £19.4m, an estimated further £1.1m dependent upon thefinal determination of the net assets acquired and a deferred consideration ofup to £16.7m, which is dependent on the financial performance of ICM in theperiod to 31 March 2009. As part of the acquisition, 3,068,829 new ordinaryshares were issued and listed on the London Stock Exchange on 19 May 2006. At acquisition ICM had (subject to audit) net assets of £6.2m comprising fixedassets of £0.6m and net current assets of £4.5m. The results for the period from completion to 30 September were £6.1m Turnover,£3.5m Revenue and £1.1m PBIT. The results have been included within theunaudited consolidated results. TMW The acquisition of TMW was completed on 17 May 2006. The maximum considerationpayable (including deemed remuneration and notional finance costs) for TMW is£38.3m plus legal and professional costs of £0.8m. It is satisfied by aninitial consideration of £21.3m and a deferred consideration of up to £17m,which is dependent on the financial performance of TMW in the period to 31 March2009. As part of the acquisition, 3,928,101 new ordinary shares were issued andlisted on the London Stock Exchange on 19 May 2006. At acquisition TMW had (subject to audit) net assets of £4.7m comprising fixedassets of £0.8m and net current assets of £3.6m. The results for the period from completion to 30 September were £8.5m Turnover,£5.6m Revenue and £1.1m PBIT. The results have been included within theunaudited consolidated results. 8. Reconciliation of Profit before finance costs income from investmentsand taxation to Operating cash flow Six months Six months Year ended ended Ended 30 September 30 September 31 March 2006 2005 2006 £'000 £'000 £'000 Profit before finance costs, income from 3,365 2,801 6,269investments and taxationDepreciation 842 400 1,019Amortisation of intangible assets 625 353 528Share based payments 166 88 245Deemed remuneration 1,230 714 1,225Profit on disposal of property, plant andequipment - (8) (46)Decrease/(increase) in inventories and workin progress 259 (247) (1,097)Decrease/(increase) in trade and other 2,535 (189) (4,887)receivables(Decrease)/increase in trade and other (6,023) (604) 4,714payables Operating cash flow 2,999 3,308 7,970 9. Analysis of debt As at Cash Flow Acquisitions As at 1 April 30 September 2006 2006 £'000 £'000 £'000 £'000 Cash at bank and in hand 5,282 (1,673) - 3,609Acquisition loan notes (128) - (4,207) (4,335)Bank loans (7,470) (6,530) - (14,000)Finance leases (205) 73 - (132)Net (debt) (2,521) (8,130) (4,207) (14,858)Restricted cash deposits 35 - - 35Net (debt) including restrictedcash deposits (2,486) (8,130) (4,207) (14,823) The restricted cash deposits are maintained in a designated account as securityfor the loan notes issued on the acquisition of MSL and are, therefore, notfreely available to the Group. 10. Investments - available for sale Investments available for sale and other reserves have each been adjusted by£535,000 to state the 15% investment in BJK&E at fair value and by £176,000relating to other matters as disclosed in the financial statements for the yearended 31 March 2006. This adjustment is to align the treatment in the periodended 30 September 2005 comparatives with that reported in the financialstatements for the year ended 31 March 2006. 11. Post balance sheet events On 3 December 2006 the company acquired PAN Advertising Limited, a healthcareadvertising and communication company, for a total maximum consideration of£18.8m. The consideration for this transaction included the issue of 793,809ordinary shares. 12. Availability of the Interim Report Copies of the Interim Report will be sent to shareholders in due course and areavailable from the Company's registered office at City Group P.L.C., 30 CityRoad, London, EC1Y 2AG and on the company's website www.creston.com. This information is provided by RNS The company news service from the London Stock Exchange