Final Results

RNS Number : 7630U

Creightons PLC

30 June 2009

 



Creightons Plc

Preliminary announcement

For the year ended 31 March 2009

Chairman's statement

Review of the year

I am pleased to report a pre tax profit of £378,000 for the year ended 31 March 2009 (2008- £503,000). Whilst this is a decrease we consider it to be a creditable performance given the unprecedented trading conditions faced by the Group in the second half of the year.  As mentioned in our interim report the trading environment has become very difficult and whilst Christmas trade was in line with expectations underlying sales of all year round products have fallen as consumers cut back their spending and customers have reduced stock levels.

We continue to see consumers switch their allegiance to lower priced products which offer a value proposition. In the second half of the year we focused on maximising the opportunities afforded by this change in consumer buying patterns. We have re-positioned our selling prices and have re-engineered existing and developed new products to take advantage of this change. 

This re-positioning strategy has been applied to The Real Shaving Company brand which has seen sales growth and increased market penetration in both the UK and North America. As part of this strategy we will reduce the level of advertising and promotional expenditure. 

Raw material prices have increased during the year with a combination of scarce supply in the first half of the year and the high dollar and euro towards the end of the year adversely affecting raw material costs. We have successfully managed to mitigate against the impact of this through an ongoing cost reduction and product review programme.

We have continued to reduce headcount through natural wastage and some targeted redundancies, for which the Group made a P&L charge of £28,000 in the year which has already achieved pay back.  We will continue our programme to reduce overheads whilst still retaining our capability to respond to changing circumstances into the coming year.

We have continued with extensive new product development programmes in order to support our customers and to maximise opportunities presented by the changing retail scene.

Financial results

Consolidated Group sales this year were £214,000 lower than last year (a decrease of 1.4%) at £15,155,000 (2008: £15,369,000). The sales performance of our branded product ranges aimed at price conscious consumers partially offset falling sales to private label and contract customers.  

The fall in gross margins was largely in line with the fall in sales. Increased raw material costs, driven by raw material prices did result in a small erosion for gross margin percentage to 40.7% of sales from 40.9% of sales in 2008.

Operating profit before tax for the year was £378,000 (2008: £503,000) representing a 25% reduction. Higher advertising and promotional expenditure together were a significant factor in overheads not falling as far as we would have liked, but it was felt that this expenditure was justifiable and necessary to counter consumer purchasing resistance as the economic situation worsened particularly in the second half of the year.

Interest costs fell with reduced borrowings and lower interest rates combining to reduce the year's charge to £97,000 (2008: £167,000).

Profit after tax of £378,000 (2008: £503,000) therefore shows a very satisfactory performance given the unprecedented trading environment. Diluted earnings per share fell to 0.63p from 0.84 p in 2008 as a result of the reduced Company earnings.  The directors do not consider it is in the best interests of the Company to declare a dividend at the moment, using the funds generated from this year's successful trading to reduce the Group's borrowings.

The Group has made significant progress in reducing its financing requirement with borrowing net of cash in hand falling by £1,230,000 to £40,000 (2008: £1,270,000) largely driven by cash generated from operations and reduced working capital requirements.

Current year developments

As I reported to you last year, the Group continues to develop and strengthen its branded portfolio, with greater emphasis being placed on seeking to offer a wider range of value brands at very competitive prices. This strategy has resulted in a number of new customers for these value brands in both the UK and North America.  

We believe that sales will continue at depressed levels for the foreseeable future with customers switching to lower price alternatives, which is exemplified by our 2009 Christmas programme with the average price points falling. Coupled with lower purchase and stock commitments from customers, this will inevitably impact adversely on our sales over the next couple as years until consumer and retailer behaviour changes again as the economy recovers.

We also expect our main private label customers to continue to adopt value strategies with sales opportunities in lower priced products offsetting lower sales levels on higher priced products. This too is likely to adversely affect our turnover and margins in the coming year.

There has been some softening of price pressure in the last few months but not sufficient to reduce raw material costs significantly with the impact of weaker sterling continuing to impact adversely on dollar and euro denominated raw materials. We are continuing to develop our supplier network on a global basis to provide the lowest prices for the quality components required to support our business. We will also continue our successful programme of redeveloping and re-engineering our products in order to manage our margins in this exceptionally difficult trading environment.

We will continue to manage our overhead cost base and working capital requirements to ensure they are aligned with the anticipated sales levels of the Group whilst retaining the skill sets necessary to meet any opportunities as they arise.

As in previous years, your board is continuing to seek opportunities to acquire brands or companies that would complement the existing businesses by offering synergies in manufacturing, sourcing and marketing due to similarities in product alignment, sourcing or outlets.

I would like to take this opportunity to thank each and every one of the Group's employees for the hard work and effort they have put in over what has been a challenging year.

William McIlroy

Chairman, 29 June 2009

Consolidated income statement

		Year ended 31 March	Year ended 31 March
		2009	2008
	Note	£000	£000
Revenue		15,155	15,369
Cost of sales		(8,994)	(9,088)
Gross profit		6,161	6,281
Distribution costs		(518)	(435)
Administrative expenses		(5,180)	(5,176)
Operating profit		463	670
Investment revenues		12	-
Finance costs		(97)	(167)
Profit before tax		378	503
Tax		-	-
Profit for the period from continuing operations attributable to the equity holders of the parent company		378	503

Earnings per share from continuing operations

Basic	1	0.70p	0.93p
Diluted	1	0.63p	0.84p

The profit of the parent company was nil (2008 - nil).

Consolidated statement of recognised income and expense

		Year ended 31 March	Year ended 31 March
		2009	2008
	Note	£000	£000
Net income recognised directly in equity
Exchange differences on translation of foreign operations		(76)	5
Gains on cash flow hedges taken to equity		179	-
Profit for the period		378	503
Total recognised income and expense for the period wholly attributable to the equity holders of the parent		481	508

Consolidated balance sheet - at 31 March 2009

		31 March	31 March
		2009	2008
	Note	£000	£000
Non-current assets
Goodwill		331	331
Other intangible assets		112	63
Property, plant and equipment		435	495
		878	889
Current assets
Inventories		2,550	2,907
Trade and other receivables		1,537	2,065
Cash and cash equivalents		194	79
Derivative financial instruments		191	-
		4,472	5,051
Total assets		5,350	5,940
Current liabilities
Trade and other payables		1,576	1,513
Obligations under finance leases		14	14
Bank overdrafts and loans		234	1,349
Derivative financial instruments		-	12
		1,824	2,888
Net current assets		2,648	2,163
Non-current liabilities
Obligations under finance leases		24	38
		24	38
Total liabilities		1,848	2,926
Net assets		3,502	3,014
Equity
Share capital	2	543	543
Share premium account	3	1,229	1,229
Capital redemption reserve	3	18	18
Capital reserve	3	7	7
Special reserve	3	13	13
Share-based payment reserve	3	63	56
Retained earnings	3	1,521	1,143
Foreign exchange reserves	4	108	5
Total equity available to the holders of the parent company		3,502	3,014

Company balance sheet - at 31 March 2009

		31 March	31 March
		2009	2008
	Note	£000	£000
Non-current assets
Investment in subsidiaries		60	60
		60	60
Current assets
Trade and other receivables		2,025	2,018
		2,025	2,018
Total assets		2,085	2,078
Current liabilities
Trade and other payables		35	35
		35	35
Net current assets		1,990	1,983
Total liabilities		35	35
Net assets		2,050	2,043
Equity
Share capital	2	543	543
Share premium account	3	1,229	1,229
Capital redemption reserve	3	18	18
Special reserve	3	1,441	1,441
Share-based payment reserve	3	63	56
Retained earnings	3	(1,244)	(1,244)
Total equity available to the holders of the parent company		2,050	2,043

Consolidated cash flow statement 

		Year ended 31 March	Year ended 31 March
		2009	2008
	Note	£000	£000
Net cash inflow from operating activities	5	1,438	830
Cash flow from investing activities
Purchase of property, plant and equipment		(69)	(122)
Expenditure on intangible assets		(125)	(28)
Net cash used in investing activities		(194)	(150)
Cash flow from financing activities
Repayment of finance lease obligations		(14)	(13)
Decrease in bank overdrafts		(1,115)	(602)
Net cash used in financing activities		(1,129)	(615)
Net increase in cash and cash equivalents		115	65
Cash and cash equivalents at start of period		79	14
Cash and cash equivalents at end of period		194	79

The Company cash flow statement is not disclosed as there were no movements after net cash from operating activities during the two years ended 31 March 2009.

Notes to preliminary announcement

1    Earnings per share

The calculation of the basic and diluted earnings per share is based on the following data:

		Year ended 31 March	Year ended 31 March
		2009	2008
		£000	£000
Earnings
Net profit attributable to the equity holders of the parent company		378	503

		Year ended 31 March	Year ended 31 March
		2009	2008
		Number	Number
Number of shares
Weighted average number of ordinary shares for the purposes of basic earnings per share		54,275,876	54,275,876
Effect of dilutive potential ordinary shares relating to share options		5,426,550	5,426,550
Weighted average number of ordinary shares for the purposes of diluted earnings per share		59,702,426	59,702,426

2.    Share capital

		Ordinary shares of 1p each
		2009		2008
		£000	Number	£000	Number
Authorised		1,223	122,346,000	1,223	122,346,000
Issued and fully paid		543	54,275,876	543	54,275,876

The Company has one class of ordinary shares which carry no right to fixed income.

   3. Statements of reserves and changes in equity

Group

	Share capital	Share premium account	Capital redemption reserve	Capital reserve	Special reserve	Share-based payment reserve	Retained reserve	Total equity
	£000	£000	£000	£000	£000	£000	£000	£000
At 1 April 2007	543	1,229	18	7	13	52	640	2,502
Additional provision	-	-	-	-	-	4	-	4
Net profit for the year	-	-	-	-	-	-	503	503
At 31 March 2008	543	1,229	18	7	13	56	1,143	3,009
Additional provision	-	-	-	-	-	7	-	7
Net profit for the year	-	-	-	-		-	378	378
At 31 March 2009	543	1,229	18	7	13	63	1,521	3,394

Company

	Share capital	Share premium account	Capital redemption reserve	Special reserve	Share-based payment reserve	Retained reserve	Total equity
	£000	£000	£000	£000	£000	£000	£000
At 1 April 2007	543	1,229	18	1,441	52	(1,244)	2,039
Additional provision	-	-	-	-	4		4
Net loss for the year	-	-	-	-	-	-	-
At 31 March 2008	543	1,229	18	1,441	56	(1,244)	2,043
Additional provision	-	-	-	-	7	-	7
Net loss for the year	-	-	-	-	-	-	-
At 31 March 2009	543	1,229	18	1,441	63	(1,244)	2,050

    The Company obtained a court ruling dated 19 March 1997 under which the reduction in share premium was credited to a special reserve. The special reserve was first used to write off the deficit on the company profit and loss account and then to write off the goodwill arising on the acquisition of Crestol Limited to the Group profit and loss account. At 31 March 2009 goodwill written off amounts to £2,575,000 (2008: £2,575,000).

    Under the court ruling, the special reserve may be used to write-off goodwill on any further acquisition. To the extent that there shall remain any sum standing to the credit of the reserve, it shall be treated as unrealised profit and as a non-distributable reserve, until such time as the creditors existing at the date of the ruling have been satisfied or consent to its distribution.

4. Hedging and translation reserves

Group

	Hedging reserve	Translation  reserve	Total
	£000	£000	£000
At 1 April 2007	-	-	-
Exchange differences on translation of foreign operations	-	5	5
At 31 March 2008	-	5	5
Gain on cash flow hedges	179	-	179
Exchange differences on translation of foreign operations		(76)	(76)
At 31 March 2009	179	(71)	108

5. Notes to cash flow statement

    Group

		Year ended 31 March	Year ended 31 March
		2009	2008
		£000	£000
Profit from operations		463	670
Adjustments for:
Depreciation on property plant and equipment		129	158
Amortisation of intangible assets		76	101
Share based payment charge		7	4
Other non cash items		(88)	13
		587	946
Decrease in inventories		357	906
Decrease/(increase) in trade and other receivables		528	(9)
Increase/(decrease) in trade and other payables		63	(846)
Cash generated from operations		1,535	997
Interest paid		(97)	(167)
Cash inflow from operational activity		1,438	830

Company

		Year ended 31 March	Year ended 31 March
		2009	2008
		£000	£000
Profit from operations		-	-
Adjustments for:
Share based payment charge		7	4
		7	4
(Increase) in trade and other receivables		(7)	(4)
Cash outflow		-	-

Cash and cash equivalents (which are presented as a single asset on the face of the balance sheet) comprise cash at bank and in hand.

The financial information above does not constitute full accounts within the meaning of section 240 of the Companies Act 1985. The financial information presented above has been prepared in accordance with the accounting policies published in the financial statements for the year ended 31 March 2008.

The preliminary statement of results has been reviewed and agreed with the Company's auditor, Chantrey Vellacott DFK LLP, who have indicated that they will be giving an unqualified opinion in their report on the statutory financial statements.

Copies of the annual report and consolidated financial statements for the year ended 31 March 2009 will be sent to shareholders in due course. Further copies will be available from the Company's registered office at 1210 Lincoln Road, Peterborough, PE4 6ND.

 

END

 

 

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