Creston made a £2.8 million profit in the half year to 30 September after increasing its revenue by 14%, but its operating profit margin on continuing activities has slipped from 13.8% to 11.8%.
Much of the revenue increase was derived from the acquisition of healthcare specialist Cooney/Waters in the United States last December. However, the healthcare division has suffered a fall in profit margin since the acquisition, but Creston’s chief operating officer Barrie Brien attributed this to the cost of developing the division’s local health Grapevine service in the UK.
Referring to the overall fall in margin, Brien said it reflected the investment made in the UK companies. “Despite the underlying revenue growth we have continued to invest in the team and are confident the margin will return in the second half”, he said.
The profit for the half year compares with a loss of £133,000 in the corresponding period last year. The loss arose after writing off £3.2 million relating to the DLKW agency that has been sold to Interpublic.
Creston has recently renegotiated its bank facilities and believes the new arrangement provides a “solid financial base” to invest in growth.
Recent acquisitions have resulted in the combination of net debt and deferred purchase payments growing to £14.4 million. The cumulative amount paid for goodwill relating to past acquisitions now totals £101 million and exceeds the £98 million invested in the group by its shareholders.
Today Creston announced the acquisition of another US healthcare communications business The Corkery Group (see Creston pays initial £3.8m for US healthcare PR agency) at an initial cash cost of £3.8 million.