27/06/2006
A highly acquisitive expansion strategy and strong growth across its existing operations is helping marketing services group Creston become a serious player in this most dynamic of sectors.
The group, led by chief executive Don Elgie, notched up another record year in the 12 months to March, with revenues more than doubled to £43.5m and profits before tax surging 82 per cent to £4.7m. The headline sales figures, which includes total billings at the firm, were £81m (as opposed to £36m last time).
The results were complimented by the contribution of Red Door Communications, a venture it picked up in July 2005 for £13.5m, helping improve its standing in the healthcare sector.
Since its year end in March, Elgie has been an active man, buying ICM, a leading market research outfit for £37.2m and Tullo Marshall Warren, a direct marketing agency, for £38.3m.
The results marked Creston's fifth year of record results, a trend that is likely to continue this year following the above acquisitions. To assist the group in integrating its new businesses and improve efficiencies throughout the entire company, a synergy and strategy director in the shape of Simon Williams, a man with experience at WPP amongst other firms.
Says Elgie 'we want to be seen as mid-market player as we are now the fourth largest listed marketing services player in the UK. With our 18% operating margins we are probably one of the most profitable, and although we have been highly acquisitive, we have used the markets well to ensure our net debt position is very low.'
For this year, revenues should hit £66m and headline profits increase to around £16m. Its market value of £87.4m therefore seems too low. The underlying growth at Creston is strong, cashflow is healthy, earnings growth vigorous and the management team executing a buy-and-build strategy that is leaving many of its competitors in the shade. Buy.
| Market cap: | £87.44m |
| Share price: | CRE |
| LSE | £13.94m |
25.00p
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