Final Results

RNS Number : 2064J

Creightons PLC

28 June 2011

 



Creightons Plc

Preliminary Results

for the year ended 31 March 2011

Review of the year

I am pleased to report a consolidated Group pre-tax profit of £135,000 for the year ended 31 March 2011 (2010: £303,000). This profit has been achieved in a difficult trading year with continued reduction in Christmas gift sales as retail customers have bought product direct from China, increased margin pressure arising from increases in raw material costs and the disruption caused by the fire in a warehouse on 14 December 2010.

We have been successful in introducing new customers and developing new brands to offset the loss of Christmas gift business with sales growth for new business more than offsetting the loss of Christmas gift sales. This new business is more evenly spread through the year which will reduce the seasonality of the Group's trade.

Margins have continued to remain under pressure with raw material prices increasing on a regular basis and have been much more pronounced in the last quarter of the year.  We have continued our programme of cost engineering and managing our product offering to improve this position. 

We have continued our focused effort on sales and development that I reported last year as this has been successful in introducing new customers and brands.

Financial results

Consolidated Group sales this year were £540,000 higher than last year (an increase of 4%) at £14,130,000 (2010: £13,590,000).  The underlying sales growth excluding the impact of the reduced Christmas gifts is £1,772,000 (an increase of 13%).

Increased raw material prices and an adverse product mix which have been offset by savings from our ongoing product re-engineering programme have resulted in a slight erosion in gross margin percentage by 0.3% to 42.0% (2010 - 42.3%).  Increased transport costs and changes in the sales mix have resulted in higher distribution costs as a percentage of sales, which have therefore increased to 4.6% from 3.8% in 2010.  Administration costs have risen as we continue to invest in product development and sales resources to drive new sales opportunities.

Profit before tax for the year of £167,000 (2010: £334,000) represents a reduction of 50%.

Lower average borrowings and continued low interest rates ensured that interest costs have remained relatively low at £32,000 (2010: £31,000).

Group Profit after tax of £135,000 (2010: £303,000) therefore shows a satisfactory performance given the trading environment the Group has operated in during the past year.  Diluted earnings per share fell to 0.23p from 0.51p in 2010 as a result of the reduced earnings.  The directors do not consider it is in the best interests of the Company to declare a dividend at the moment, instead using the funds generated from this year's successful trading to manage future working capital requirements.

Net borrowings (bank overdraft and loans less bank and cash on hand) have increased by £388,000 to £515,000 (2010 £167,000). The main reason for the increase in borrowing is the higher working capital requirement at the end of the year.  The increase in trade debtors is primarily due to higher sales in the final quarter of the year although debtor days have increased as a result of changes in customer mix.   Stock levels, particularly in North America, have increased in the main to support the new ranges launched in the final quarter of the year.

Current year developments

The Group continues to develop and strengthen its branded portfolio.  This is being achieved through developing our existing brand offering and developing relationships with the owners of existing brands, often through investing in existing brands when opportunities arise.

We have faced intense price pressures with significant increases in key raw materials over the past six months. We are working hard to pass these on to our customers with some degree of success.  Whilst the price pressure has recently abated we are continuing our efforts to recover lost margin.   

The levels of Christmas gift business will continue to decrease as our major customer is now sourcing the majority of gifts direct from the Far East.  We are continuing to drive new sales opportunities to compensate for this business.

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 current year.

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 skills necessary to meet growth 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.

The Board has reviewed the Group's funding requirements and the Company's dividend policy in light of consistent profits for a number of years. However, given the on-going pressure on cash flow and liquidity and relatively modest annual profits, it feels that it is more appropriate to retain profits to help fund the continued investment in growth than reduce available funds through dividend distribution.

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, 27 June 2011

 

 

Consolidated income statement

		Year ended 31 March	Year ended 31 March
		2011	2010
	Note	£000	£000
Revenue		14,130	13,590
Cost of sales		(8,202)	(7,837)
Gross profit		5,928	5,753
Distribution costs		(654)	(511)
Administrative expenses		(5,107)	(4,908)
Operating profit		167	334
Finance costs		(32)	(31)
Profit before tax		135	303
Income tax expense		-	-
Profit for the period from continuing operations		135	303

Earnings per share

Basic		0.25p	0.56p
Diluted		0.23p	0.51p

The profit of the parent company was nil (2010 - nil).

Consolidated statement of comprehensive income

		Year ended 31 March	Year ended 31 March
		2011	2010
		£000	£000
Profit for the period from continuing operations		135	303
Exchange differences on translating foreign operations		23	18
Release of cash flow hedge to income statement		-	(179)
Total  comprehensive income  for the period attributable to the equity holders of the parent		158	142

There are no movements to be recognised through the parent company statement of comprehensive income in 2011 or 2010.

Consolidated balance sheet - at 31 March 2011

		31 March	31 March
		2011	2010
	Note	£000	£000
Non-current assets
Goodwill		343	331
Other intangible assets		168	154
Property, plant and equipment		376	394
		887	879
Current assets
Inventories		3,025	2,770
Trade and other receivables		2,578	2,013
Cash and cash equivalents		96	49
		5,699	4,832
Total assets		6,586	5,711
Current liabilities
Trade and other payables		2,155	1,822
Obligations under finance leases		6	16
Bank overdrafts and loans		611	216
		2,772	2,054
Net current assets		2,927	2,778
Non-current liabilities
Obligations under finance leases		1	7
		1	7
Total liabilities		2,773	2,061
Net assets		3,813	3,650
Equity
Share capital		543	543
Share premium account		1,229	1,229
Other reserves		38	38
Share-based payment reserve		30	69
Translation reserve		(32)	(53)
Retained earnings		2,005	1,824
Total equity attributable to the equity shareholders of the parent company		3,813	3,650

Consolidated statement of changes in equity

	Share capital	Share premium account	Other reserves (note 22)	Share-based payment reserve	Hedging reserve	Translation reserve	Retained earnings	Total equity
	£000	£000	£000	£000	£000	£000	£000	£000
At 1 April 2009	543	1,229	38	63	179	(71)	1,521	3,502
Release of cash flow hedge to income statement	-	-	-	-	(179)	-	-	(179)
Exchange differences on translation of foreign operations	-	-	-	-	-	18	-	18
Additional provision	-	-	-	6	-	-	-	6
Net profit for the year	-	-	-	-	-	-	303	303
At 31 March 2010	543	1,229	38	69	-	(53)	1,824	3,650
Release of share based payment reserve to retained earnings	-	-	-	(44)	-	-	44	0
Exchange differences on translation of foreign operations	-	-	-	-	-	21	2	23
Additional provision	-	-	-	5		-	-	5
Net profit for the year	-	-	-				135	135
At 31 March 2011	543	1,229	38	30	-	(32)	2,005	3,813

Consolidated cash flow statement

		Year ended 31 March	Year ended 31 March
		2011	2010
	Note	£000	£000
Net cash (outflow)/inflow from operating activities	3	(160)	151
Cash flow from investing activities
Purchase of property, plant and equipment		(108)	(77)
Expenditure on intangible assets and goodwill		(174)	(182)
Proceeds of disposal of plant & equipment		114	-
Net cash used in investing activities		(168)	(259)
Cash flow from financing activities
Repayment of finance lease obligations		(16)	(15)
Increase/(decrease) in bank loans		395	(18)
Net cash used in financing activities		379	(33)
Net increase/(decrease) in cash and cash equivalents		51	(141)
Cash and cash equivalents at start of period		49	194
Effect of foreign exchange rate changes		(4)	(4)
Cash and cash equivalents at end of period		96	49

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
		2011	2010
		£000	£000
Earnings
Net profit attributable to the equity holders of the parent company		135	303

		Year ended 31 March	Year ended 31 March
		2011	2010
		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
		2011		2010
		£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. Notes to consolidated cash flow statement

		Year ended 31 March	Year ended 31 March
		2011	2010
		£000	£000
Profit from operations		167	334
Adjustments for:
Depreciation on property, plant and equipment		114	118
(Gain) on disposal of property, plant & equipment		(102)	-
Amortisation of intangible assets		148	140
Share based payment charge		5	6
Other non cash items		-	12
		332	610
(Increase)  in inventories		(277)	(224)
(Increase) in trade and other receivables		(582)	(483)
Increase in trade and other payables		399	279
Cash (utilised in)/ generated from operations		(128)	182
Interest paid		(32)	(31)
Cash  (outflow)/inflow from operating activity		(160)	151

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.

4. Status of information

The financial information above, which was approved by the Board of Directors on 27 June 2011, does not constitute full accounts within the meaning of section 434 of the Companies Act 2006. 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 2010.  The full financial statements for the year ended 31 March 2010, which contained an unqualified audit report under section 475 of the Companies Act 2006 and which did not make any statement under section 498 of the Companies Act 2006, have been delivered to the Registrar of Companies in accordance with section 441 of the Companies Act 2006.

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 2011 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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