UK-based insight and communications group Creston has reported an 8% drop in first half revenues for its Insight division, partly attributable to the underperformance of market research agencies CML and MSTS, now merged into other companies.
Brand specialist CML is now part of ICM, and sensory panel company MSTS was integrated into Creston's product development specialist agency Marketing Sciences in 2008.
Costs resulting from the closures and a goodwill write-off contributed to a pre-tax loss of £1.7m for the division.
Its core agencies ICM and Marketing Sciences reported a 1% decrease in revenue, predominantly caused by a delay in commissioned projects that are now either underway or completed.
CEO Don Elgie commented: 'The under performance of our two small niche research companies (CML and MSTS) could no longer be justified and action was taken to close each agency. This action meant that our operating cost base is now aligned with revenue, and this aggressive management of operating costs enabled us to reduce annualised payroll by approximately £2m and achieve an approximate £1m saving in the second half of this financial year.'
Overall, the group reported a 6% decrease in revenue to £38.7m (2008: £41.3m) during the first half of the financial year.
The firm says the majority of this decline was the result of writing off goodwill (a non-cash charge) for CML following the decision to close it. Other adjustments include redundancy charges (£314k) in the Communications Division, the closure costs (£296k) in the Insight Division and a non-cash charge for deemed remuneration (£254k).
Creston shares rose 1.2% to 82.5 pence earlier today.
Web site: www.creston.com .