Final Results

RNS Number : 6300X

Creightons PLC

26 June 2008

 

Creightons Plc

Preliminary announcement

For the year ended 31 March 2008

Chairman's Statement

Review of the year

As I reported to you last November with our interim report for the first half of the financial year, we have been driving to expand our business, and as you will see below, I am pleased to be able to say that we have continued the growth I told you about then. 

We have also been focusing on developing our higher margin business, discontinuing products with lower margins, whilst continuing to strive to be a low cost producer in what is an increasingly competitive and price conscious commercial environment.  We have experienced significant price resistance from not only our own customers, both the High Street supermarkets and specialist retailers for whom we manufacture private label branded products and undertake contract manufacture, but also consumers who buy our own branded products through these outlets. 

Development of our own brands has continued apace, with the launch of The Real Shaving Company's products in the North American market, where we established a new wholly-owned subsidiary to manage sales and marketing in May 2007. We recently launched the Natural Grooming range of shaving products in the UK, and continue to roll-out new private label brands.

Financial results

Consolidated Group sales this year were up £2,452,000 (an increase of 19.0%) at £15,369,000 (2007: £12,917,000). This significantly improved result has been achieved mainly through increases in the volume of private label and contract manufactured product. Sales and gross profit were again up in the second half of the year due to seasonal contractual business at Christmas. 

Operating profit before tax for the year was £670,000 (2007: £461,000) a 45.3% increase of £209,000. Several factors contributed to this increase being significantly ahead of sales growth, including the flow through of cost saving initiatives invested in during previous years which I have previously reported to you, continued focus on achieving low-cost producer status despite significant cost inflation, and further rationalisation of our product ranges to eliminate low margin items or contracts.

We have experienced an increase in interest charges mainly as a result of financing higher levels of inventory during the year which were required to service new branded and private label product introductions. 

Profit after tax of £503,000 (2007: £383,000) shows a very satisfactory growth of £120,000, 31.3% over last year, with diluted earnings per share of 0.84p (2007: 0.65p). 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.

Current year developments

As in previous years, the Group continues to develop and strengthen its branded portfolio, with new brands launched into the premium and middle markets.  

Since the beginning of the current financial year however, a number of adverse factors have started to affect our business, including the down-turn in consumer confidence and spending that is affecting all sections of the economy, inflationary pressures on raw material prices in general, and on oil-based products in particular (which as manufacturers of personal care products make up a significant element of our costs).  We are also suffering the adverse impact of the recent decline in the value of sterling, since we purchase a significant proportion of our raw materials in US dollars and Euros and so have further cost pressures.

In response to consumer demand for more natural based products, we have just launched improved versions of our Real Shave and Natural Grooming ranges which are free from Parabens, Sodium Lauryl Ethyl Sulphate and Alcohol. Recognising the contribution we all need to make in combating global warming, we are also well advanced with plans for many of our products and brands to become carbon neutral next year.

We are continuing to exploit and develop our branded product ranges in the North American market, although keeping actual investment to a minimum whilst ensuring they have adequate support and distribution in this highly attractive but very competitive market.

We are also meeting the challenges of tighter consumer spending at home by seeking to offer a wider range of value brands at very competitive prices. We are combating the upward pressure on costs I mention above by reorganising our buying and product development departments to operate on the basis that we buy globally at the lowest possible price and use our development skills to reap the benefits of economies of scale and by using the same components in different ranges, although we ensure that this is without damaging the individual characteristics of our branded products. 

We are also continuing to manage our working capital and stocks in order to keep borrowing to a minimum given the present high cost of capital.

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 the past year.

William McIlroy

Chairman, 26 June 2008

Consolidated income statement

		Year ended 31 March	Year ended 31 March
		2008	2007
		£000	£000
Revenue		15,369	12,917
Cost of sales		(9,088)	(7,789)
Gross profit		6,281	5,128
Distribution costs		(435)	(378)
Administrative expenses		(5,176)	(4,289)
Operating profit		670	461
Investment revenues		-	1
Finance costs		(167)	(79)
Profit before tax		503	383
Tax		-	-
Profit for the period from continuing operations attributable to the equity holders of the parent company		503	383

Earnings per share from continuing operations

Basic		0.93p	0.71p
Diluted		0.84p	0.65p

The company has elected to take exemption under S230 of the Companies Act 1985 not to present the parent company's income statement.

The loss of the parent company was nil (2007 - £5,000).

Consolidated statement of recognised income and expense

		Year ended 31 March	Year ended 31 March
		2008	2007
		£000	£000
Net income recognised directly in equity:
Exchange differences on translation of foreign operations		5	-
Profit for the period		503	383
Total recognised income and expense for the period wholly attributable to the equity holders of the parent		508	383

Consolidated balance sheet - at 31 March 2008

		31 March	31 March
		2008	2007
		£000	£000
Non-current assets
Goodwill		331	331
Other intangible assets		63	136
Property, plant and equipment		495	517
		889	984
Current assets
Inventories		2,907	3,813
Trade and other receivables		2,065	2,056
Cash and cash equivalents		79	14
		5,051	5,883
Total assets		5,940	6,867
Current liabilities
Trade and other payables		1,513	2,359
Obligations under finance leases		14	11
Bank overdrafts and loans		1,349	1,951
Derivative financial instruments		12	4
		2,888	4,325
Net current assets		2,163	1,558
Non-current liabilities
Obligations under finance leases		38	40
		38	40
Total liabilities		2,926	4,365
Net assets		3,014	2,502
Equity
Share capital		543	543
Share premium account		1,229	1,229
Capital redemption reserve		18	18
Capital reserve		7	7
Special reserve		13	13
Share-based payment reserve		56	52
Retained earnings		1,148	640
Total equity		3,014	2,502

Company balance sheet - at 31 March 2008

		31 March	31 March
		2008	2007
		£000	£000
Non-current assets
Investment in subsidiaries		60	60
		60	60
Current assets
Trade and other receivables		2,018	2,014
		2,018	2,014
Total assets		2,078	2,074
Current liabilities
Trade and other payables		35	35
		35	35
Net current assets		1,983	1,979
Total liabilities		35	35
Net assets		2,043	2,039
Equity
Share capital		543	543
Share premium account		1,229	1,229
Capital redemption reserve		18	18
Special reserve		1,441	1,441
Share-based payment reserve		56	52
Retained earnings		(1,244)	(1,244)
Total equity		2,043	2,039

Consolidated cash flow statement 

		Year ended 31 March	Year ended 31 March
		2008	2007
		£000	£000
Net cash inflow/(outflow) from operating activities		836	(1,310)
Cash flow from investing activities
Proceeds on disposal of property, plant and equipment		-	8
Purchase of property, plant and equipment		(128)	(251)
Expenditure on intangible assets		(28)	(107)
Net cash used in investing activities		(156)	(350)
Cash flow from financing activities
Repayment of finance lease obligations		(13)	(14)
(Decrease)/increase in bank overdrafts		(602)	1,611
Net cash (used in)/from financing activities		(615)	1,597
Net increase/(decrease) in cash and cash equivalents		65	(63)
Cash and cash equivalents at start of period		14	77
Cash and cash equivalents at end of period		79	14

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 2008.

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
		2008	2007
		£000	£000
Earnings
Net profit attributable to the equity holders of the parent company		503	383

		Year ended 31 March	Year ended 31 March
		2008	2007
		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	4,256,550
Weighted average number of ordinary shares for the purposes of diluted earnings per share		59,702,426	58,532,426

2.    Share capital

		Ordinary shares of 1p each
		2008		2007
		£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 2006	543	1,229	18	7	13	47	257	2,114
Additional provision	-	-	-	-	-	5	-	5
Net profit for the year	-	-	-	-	-	-	383	383
At 31 March 2007	543	1,229	18	7	13	52	640	2,502
Additional provision	-	-	-	-	-	4	-	4
Net profit for the year	-	-	-	-	-	-	508	508
At 31 March 2008	543	1,229	18	7	13	56	1,148	3,014

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 2006	543	1,229	18	1,441	47	(1,239)	2,039
Additional provision	-	-	-	-	5	-	5
Net loss for the year	-	-	-	-	-	(5)	(5)
At 31 March 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

    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 2008 cumulative goodwill written off amounted to £2,575,000 (2007: £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. Notes to cash flow statement

    Group

		Year ended 31 March	Year ended 31 March
		2008	2007
		£000	£000
Profit from operations		670	461
Adjustments for:
Investment revenues		-	1
Depreciation on property plant and equipment		164	117
Amortisation of intangible assets		101	55
(Gain) on disposal of property, plant and equipment		-	(6)
Share based payment charge		4	5
Other non cash items		13	4
		952	637
Decrease/(increase)  in inventories		906	(2,008)
Increase in trade and other receivables		(9)	(728)
(Decrease)/ increase in trade and other payables		(846)	868
Cash generated from / (absorbed by) operations		1,003	(1,231)
Interest paid		(167)	(79)
Cash inflow/(outflow) from operating activities		836	(1,310)

Additions to plant and equipment during the year amounting to £14,000 (2007 - £47,000) were financed by new finance leases.

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.

Company

		Year ended 31 March	Year ended 31 March
		2008	2007
		£000	£000
Loss from operations		-	(5)
Adjustments for:
Share based payment charge		4	5
		4	-
(Increase)/decrease in trade and other receivables		(4)	89
Decrease in trade and other payables		-	(89)
Cash absorbed by operations		-	-
Interest paid		-	-
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 2007.

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 2008 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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