Creston: Trading In Line With Expectations
Edison | Sep 06, 2016 03:29AM ET
Creston Plc (LON:CRCRE)’s AGM statement this morning confirms that trading is in line with expectations for the current year and our forecasts for both FY17 and FY18 are unchanged.
Revenue in the first four months of FY17e was broadly flat over the previous year, but profits are more strongly ahead. This is partly currency-related, partly reflecting improvements to margins stemming from FY16’s operational initiatives showing through more strongly.
The valuation remains at a marked discount to peers, despite the strong balance sheet and well-covered, premium dividend yield.
Overhead management
The trading story is little changed from that at the prelims; revenues from good new business gains have been offset by delays and postponements on client projects. This is particularly true of the UK health-facing segment, which continues to be a turbulent market, with a concentration in Creston’s client base in the larger accounts and a fall-off in the business from the long tail of clients.
Prompt moves on managing overheads and the ongoing benefits of the group’s Unlimited initiative are helping buoy margins, along with some benefit from weaker sterling compared to the prior year. An annualised £1.2m was taken out of non-client facing operating costs in FY16 (£0.7m in Comms and Insight, £0.5m in Health).
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