Conduit Share Discussion Threads

[qs99] 12/6/2013 17:52

Wonder if those rumours from last year (?) may return with such a massive discount to sector....and emphasis on digital hitting over 50%, interesting IMO....

[phoenix1234] 12/6/2013 17:46

Creston - full-year results, shares offering value? - hxxp://www.shareprophets.com/views/651/creston-full-year-results-shares-offering-value

[smithie6] 12/6/2013 15:51

Interesting that only 45k shares as current options....according to the accounts....


while there are 3M to the 2 execs. ..approx. 3% of the company....one assumes that they can not be exercised yet....and hence are not counted


call me a cynic
....but I wonder if the fall in value of the acquisitions
is part of a game plan to artificially bump up the reported EPS

('cause that fall in value is fed straight into the EPS number, how that happens, beats me !, since imo it is not what I call 'profit', noting that a fall in value of intangibles would reduce the profits, not increase them)

....so that the performance conditions for the large share options for the 2 execs. can/will be met (even if the underlying PBT is flat, in which case the perf. conditions to exercise the options would NOT be met)


"The conditional shares subject to the Awards granted will vest in three years, contingent on the individual's continued employment and stretching performance criteria which are based on the performance of the Group's Diluted Earnings Per Share (DEPS), over the three year performance period, compared to UK Gross Domestic Product (GDP)."

[markie7] 12/6/2013 15:03

"absolutely incorrect"?

hardly. It is paid for research. They therefore cannot be "very much independent". I agree their quality is increasing though, as they recruit better analysts from the shrunken traditional broking sector.

[smithie6] 12/6/2013 14:52

Riv
ref. Edison

past 'analyst' writes from them that I recall.....
...gives future expected EBITDA, PBT, tax, interest cost, EPS....for 2 future years....for microcaps after the fin. year that a company is in....

with many microcaps doing turnarounds or struggling with high debt costs as % of EBITDA....or changing their product range etc....
any analyst that writes down what he expects the PBT or interest cost to be for the fin. year 2 years later than the current one a company is in....makes me not have much confidence in their analysis...

it might be valid to put some words to say things could go well if new product X sells wells, or something....but to pencil in an EPS number so far in the future for a microcap, too much imo.
(noting that many microcaps see their results, and share price !, go up and down over the years as they try to grow.....)
----

I note that for the 'analyst' or broker reports out today....
I think that none of them have mentioned the loss of business that happened at USA subsidiary in recent Q4. ...which one expects to be seen in current Q1. imo a balanced view should make some mention of that.

[rivaldo] 12/6/2013 14:21

Coverage in the WSJ with comments from the CEO:

hxxp://online.wsj.com/article/BT-CO-20130612-704138.html?mod=googlenews_wsj

"June 12, 2013, 7:55 a.m. ET.Internet Marketing to Account for More Than 50% of Creston Sales
By Rory Gallivan

LONDON--Advertising and public relations group Creston PLC (CRE.LN) said Wednesday Internet-based activities will account for more than half of revenue in the current financial year, after strong digital growth helped it post a slight rise in pretax profit for the year ended March 31.

Creston, which provides marketing and PR services to companies such as the online fashion retailer ASOS PLC (ASC.LN) and personal care products company Reckitt Benckiser Group PLC (RB.LN), said that digital activities accounted for 48% of total revenue, up from 41% the previous year.

"We are well ahead of our initial target to hit a 50 per cent digital revenue split in FY15 and now expect to exceed 50 per cent in the current financial year," the company said.

Pretax profit rose to 11 million pounds ($17.1 million) from GBP10.8 million the previous year on revenue that climbed to GBP75.2 million from GBP74.9 million. The final dividend was kept at 2.67 pence, making for a full year payout of 3.67 pence, up from 3.5 pence last year.

Creston's strategy of increasing its digital focus is in line with that of peers such as Huntsworth PLC (HNT.LN) and Next Fifteen Communications Group PLC (NFC.LN). PR companies have adapted to their clients freezing their marketing budgets amid difficult economic conditions and devoting more of that spending to Internet-focused campaigns.

Chief Executive Don Elgie told Dow Jones Newswires that while digital activities are playing an increasing role in companies' marketing efforts, traditional media such as television will remain important.

"Digital is great when you know about the brand and want to know more, but terrestrial TV is best for spontaneous awareness," he said. He added that Creston doesn't believe in standalone digital agencies, but thinks their activities should also address traditional media.

Creston, which has offices in New York, London and Bristol, consists of more than 20 agencies and has recently been seeking to group them into fewer locations to improve co-operation. This will result in the number of leases the company operates falling from 21 to eight, Mr. Elgie said. He added that the agencies will retain their distinct identities despite sharing offices.

"We are a house of brands not a branded house," he said.

Shares at 1133 GMT, up 6 pence, or 6.5%, at 99 pence valuing the company at GBP57 million."

[rivaldo] 12/6/2013 12:17

Smithie, Edison are paid by the companies. But the research they produce is in my experience reasonably objective as long as you have your eyes open.

Going by the style/narrative of their more recent reports I'd say their objectivity and facility for criticism is increasing, though there are exceptions to this rule where they try to justify patently ludicrous valuations (biotechs, high-tech companies with little revenues etc) - but then that could be said of all analysts/brokers.

It's absurd to take one example of a stock! Everyone gets some right and some wrong. Find me an analysis of 100 of their reports, review their conclusions and the result might be worth something :o))

[smithie6] 12/6/2013 12:16

Feb 2013 RNS
"Save As You Earn (SAYE) scheme and share buyback

In January 2013 the Group launched a new three year SAYE share incentive scheme for its employees. In addition to supporting the retention and motivation of its talent, the Group believes the scheme is also beneficial in aligning the interests of its employees with those of existing shareholders. In order to avoid any dilution from the SAYE scheme, the Group will shortly commence a share buyback programme. The invitation to join the SAYE scheme closes on 8 February 2013 and the Group will update the market on the scheme's uptake and subsequent share buyback programme in due course."

"the Group will shortly commence a share buyback programme"
"the Group will update the market on the scheme's uptake"

Was there any news on that between Feb 2013 and now ??

(sp fell 8-10p over next 2-3 months...so, if they did buy any shares to later meet options for staff...they didnt buy enough to hold up the share price !)

[interceptor2] 12/6/2013 12:15

Also brought back in today on the back of better than expected results. And the chart looks very strong imo, if you look back 2 years the chart shows a cup and handle formation. A rather long one I admit, but we have a break out break out today.

ic2...

[smithie6] 12/6/2013 12:06

Question
Is it logical to be paying 200k/year in finance costs when the co. holds around 10M nett cash ??

[smithie6] 12/6/2013 12:00

must admit I thought that Edison were paid to write notes on companies
unless I have mixed them up with other co.
...Edison or similar paid writer 'glowed' about ILX at 25-30p...now 10p.

[rivaldo] 12/6/2013 11:50

Absolutely incorrect Markie7. Edison are very much independent.

I went to a meeting with Silverdell this week, and they were absolutely firm on this point. You only have to read a number of Edison's reports, including that on SID, to note that they're quite often critical if they want to be.

I've also found their valuations are in many cases pretty conservative.

[smithie6] 12/6/2013 11:18

Toffeeman
"I feel for the middle management who bought stock at over 150p!"

and some institutions who put in millions in new share issues at higher prices than now

---

share buy back and share options to staff..
from around current prices I think/assume

while the exec. dirs. got bucket loads of share options at 50-60p not long ago...

' to motive you, my hard working staff, I give you share options at 100p/share....while I got mine at 50-60p'

doesnt look very fair/just to me
---

sp is up..
at last
..but headline EBITDA and PBT is basically the same as it was a year before....so while there is some good news such as share buy backs and reducing the number of locations (why have share buy backs not already done ??, it was announced months ago !...and could have been done at lower share prices, giving greater benefit to shareholders)....
those headline EBITDA and PBT numbers are dull imo...while it is good news that in a tough economic climate that the numbers havent fallen...

[markie7] 12/6/2013 11:11

paid for research = advertising, and is not independent. It is a sector that is growing though, as small cap coverage continue to decrease

[rivaldo] 12/6/2013 11:09

Edison have a new report out, with a 123p valuation:

hxxp://www.edisoninvestmentresearch.com/research/index.php

"Valuation: Discount overdone

Creston trades at a substantial discount to its peers of over 30% on EV/EBITDA. We attribute this to historic issues related to the group's management of acquisition-led growth, now giving way to a more balanced growth strategy leveraged on a larger operational infrastructure.

The strength of the balance sheet is now no longer in any doubt and deferred consideration payments are easily manageable. While some level of discount is justifiable on the grounds that growth has not yet come through to earnings (and acknowledging some execution risk), we would argue that the current position is overdone. A 15% discount equates to a share price of 123p, a level backed up by our DCF analysis."

[toffeeman] 12/6/2013 10:55

I always worry about share buy-backs - what can a business do with surplus cash?

1. invest in the business (should be the best use if they know what they are doing!)

2. give the cash to shareholders (because the management can't find a use for it in the business) who are then able to choose where to re-invest.

3. buy their own shares (because they can't do no 1 and the senior management don't want the tax liability of No2!)

I feel for the middle management who bought stock at over 150p!

[markie7] 12/6/2013 10:44

fair comment on singers - missed that.

the fact is that the consensus slipped down a lot when the broker changed and Investec dropped coverage during the year.

[rivaldo] 12/6/2013 10:25

CRE beat forecasts by a large amount in PBT terms - see my earlier post.

You are also incorrect - Singer have CRE as a Hold.

[markie7] 12/6/2013 10:16

so, they slightly beat a massively reduced EBIT number. I see Singers still have this as a sell.

[funkmasterp12] 12/6/2013 10:05

Great result, congrats to all holding!

[madengland] 12/6/2013 08:53

Yes it's way undervalued. Was a lth which I won't be again, too grizzled by DE, but it does look rude not to take a wee punt right now, some interesting value

[cfro] 12/6/2013 08:48

Quite liked the results and very strong chart, so bought a few for my ISA this morning.

[madengland] 12/6/2013 08:25

Back in...,,,so bad omen for all holders :-). Riv good to see you still holding court. Gla

[qs99] 12/6/2013 08:17

Share buy back IMO is the key to progression and hoping for push on through a pound and beyond.....IMO under rated vs others in sector...

[rivaldo] 12/6/2013 08:07

I wonder how quickly the share buyback programme will start to kick in?

There was only one acquisition last year (DJM), and that was only at the back end of the year. It was also tiny in a Group context, although it seems to be performing rather well.

Corkery put in a full year's contribution, but again this was also not exactly substantial in a Group context.

I'd rather note that in the current climate CRE's revenues have not only held up well, but they've managed to perform extremely well profit-wise and taken the correct actions cost-wise - whilst continuing to shift the company's focus to the digital sector.

Also CRE only received £6.5m re the property - the balance is still to come. I have a strong suspicion that CRE will be able to utilise this money rather well :o))