Preliminary Results

RNS Number : 7351X

Creightons PLC

02 September 2020

 

02 September 2020

Creightons Plc

Preliminary results

Creightons Plc (the "Group" or "Creightons") is pleased to announce its preliminary results for the year ended 31 March 2020.

Financial highlights

· Revenue increased by 8.6% to £47.8m (2019: £44.0m).

· Operating profit increased by 29.4% to £3.8m (2019: £2.9m).

· Operating profit margin of 7.9% (2019: 6.6%).

· A tax charge of £384,000 equates to an effective tax rate of 10.8% (2019: tax credit of £22,000 includes a prior year R&D credit of £361,000).

· The profit for the year has increased by £0.3m to £3.2m (2019: £2.9m).

· The profit increase has improved the fully diluted earnings per share to 4.34p (2019: 4.16p).

· Acquired the Freehold site in Peterborough for £4.0m partially funded by a long-term loan of £3.0m.

· Balance sheet remains strong after significant investment in working capital, product development and fixed assets to support organic growth.

· Proposed final dividend 0.50p per ordinary share (2019: 0.40p).

Operational highlights

· Sales growth momentum maintained:

· Sales of retailer own label products increased by 29.8%

· Contract sales declined by 20.3%

· Our own branded sales have grown by 18.3%

· Total overseas sales have increased by 43.4% to £7.2m (2019: £5.0m).

· Successful transitioning of brands with higher price point products and wider retail distribution.

· Brand acquired for £0.5m, which generated £1.2m sales in the period and contributed towards the gross margin improvement.

· Cash generated from operations invested in working capital, product development and plant & equipment to support the business growth.

· Investment in Far East sourcing is showing in improved margins.

· Outsourcing the warehousing and distribution of the majority of our finished goods to third-party logistics providers.

· Covid 19 -  impact in the period;

· £400,000 of delayed sales

· Small increase in operational costs

· No impact on year-end stock or debtor provisions.

· Covid 19 - impact post the year end;

o  Increased sales arising from pivot to supplying hygiene products

o  Higher operational costs arising on creating a safe working environment.

Commenting on the results, William McIlroy, Chairman of Creightons Plc, said:

"The Group has continued its recent trend of delivering year on year organic sales growth supplemented by the contribution from the acquired brand, delivering continued improvements in operating profit. The cash generated by the Group's growth has enabled the Group to fund investments for the long term future and puts it in an excellent position to manage the risks and take advantage of any opportunities arising from the impact of the Covid-19 pandemic."

Commenting on the results, Bernard Johnson, Managing Director, said:

"The team across the Group has performed exceptionally well to cope with challenges and pressures associated with the Covid-19 pandemic. They have enabled the Group to respond rapidly to the changes; resurrecting and developing new products at pace, scouring the world for components and enabling the Group to meet the changing demand. The strong financial position of the Group has allowed it fund these changes, whilst supporting some customers through a difficult period. We are glad to say that the team has continued to grow and develop, and we have lost no customers."

Enquiries - Analysts and Investors:

Nicholas O'Shea, Director, Creightons Plc      01733 281000

Roland Cornish / Felicity Geidt, Beaumont Cornish Limited                    0207 628 3396

Press Nigel Szembel, Anagallis Communications Limited  07802 362088  [e-mail]

Overview  

The Group has continued its recent expansion with organic sales growth of 6.0%, supported by the sales from the brand acquired in the year, resulting in sales of £47.8m for the year ended 31 March 2020 (2019: £44.0m). This has driven a 29.4% increase in operating profit to £3,754,000 (2019: £2,900,000).

Sales

Group sales have increased across private label and branded sales streams, increasing by 29.8% and 18.3% respectively. Major range extensions with our largest customer and the continued growth with a major retailer in the UK were the main drivers of this increase. Contract sales decreased by 20.3% in the period, the main reason being one major customer moving production in-house.  The fact that overall sales growth is not reliant on one business stream illustrates the resilience of our business model. Sales in the month of March 2020 were adversely impacted by approximately £400,000 due to Covid-19 related delays and cancelled orders. Sales growth of our branded products was driven by higher retail position brands such as Feather & Down, which continues to perform with current customers and extended distribution, and The Curl Company with wider distribution in both the UK and overseas. The discount sector continues to be a competitive market with many of the grocers moving away from brands to focus on their private label offering.

The Group's total overseas business, including the Australian subsidiary and non-own branded customers, has grown by 43.4% to £7,178,000 (2019: £5,005,000).

Margin and cost of goods

Our gross margin was 42.2% for the year ended 31 March 2020 (2019: 39.4%). The main driver has been a change in sales mix in the period with a higher proportion of sales from higher margin branded sales, including contribution from the acquired brand. All outsourced production, which had no incremental cost in the year (2019: £68,000) has been brought back in house. We have benefited from the economies of scale generated by; sales growth, continued improvements in productivity and the successful re-sourcing of many raw materials during the year that have more than offset the impact of underlying raw material price increases and increases in the minimum wage. The re-sourcing exercise is continuing with an expanded overseas sourcing structure.

Distribution costs and Overheads

Distribution costs have increased by 11.0% to £2,447,000 (2019: £2,204,000), partly driven by organic growth but also due to the decision to outsource the warehousing and distribution of our finished goods to a third-party logistics provider. This process is largely complete and was critical in enabling the Group to deliver current future sales growth.

Overhead costs have increased by 14.3% (2019: 10.9%) in the year as the Group has invested in increased resources as it builds a team capable of delivering the growth anticipated for the future. We will continue to manage our overhead cost base requirements to ensure they are aligned with the anticipated sales levels of the Group.

Acquisition and disposal

On 21 June 2019, the Company acquired a new brand for £500,000 as well as their existing stock. The acquisition adds to the Group's growing range of beauty and well-being products contributing £1,164 ,000 to sales for this period. On 13 August 2019 the Group sold its 55% interest in the equity of Amie Skincare Ltd with negligible impact on sales and profit.

The Company acquired the freehold property of the site it occupies in Peterborough for a total cost of £4,038,000 on 16 October 2019, which has a carrying value of £3,941,000 at 31 March 2020. The purchase is partly funded by a 15- year term loan of £3.04m secured on the property. The interest rate on the first 10 years of this loan is fixed at 3.04%.  The amount of the loan outstanding at 31 March 2020 is £2,975,000 of which £159,000 is treated as short-term borrowings. The net benefit to operating profit in the period is £29,000.

Research and Development

The Group invests significant resources in research and product development. As the Group has developed its business towards more leading-edge products, the nature of the research and development has become more sophisticated.  The total investment in research and development expenditure where we have made claims for R&D tax relief in the year is £1,121,000 (2019: £937,000, excluding claims in respect of prior years).

Tax

The Group's tax charge for the year was £384,000 (2019: credit of £22,000) which equates to a rate of 10.8% (2019: minus 0.80% which includes prior year R&D credit of £361,000). The effective rate of tax is significantly less than the standard rate of 19.0% (2019: 19.0%). The main reason for this reduction is the R&D relief claims for the current year of £213,000 and the reduction due to the tax charge associated with share options exercised in the period. The previous year's tax credit was due to the cumulative impact of three year's R&D tax credit.

Profit after tax

The Group's profit after tax has increased by 9.6% to £3,168,000 for the year ended 31 March 2020 (2019: £2,891,000)

Chairman's statement (continued)

Earnings per share

The diluted earnings per share of 4.34p (2019: 4.16p) is an increase of 4.3%.

Working capital

Net cash on hand (cash and cash equivalents less short-term element of the bank loan and short-term borrowings) is £2,957,000 (2019: Net cash borrowings of £383,000). The Group generated £6,612,000 (2019: £989,000) from operating activities, which enabled the company to acquire the Peterborough site and the Balance Active Formula brand and still improve its already strong financial position. 

Return on Capital Employed

Despite the investment in the new brand, the Group has continued to increase its Reserves, which has resulted in a slight reduction in the Return on Capital Employed from 22.9% to 20.6%. The Group continues to look for opportunities to invest in brands that will help drive faster growth in profits.

IFRS 16 - Operating leases

The Group has adopted IFRS 16 from 1 April 2019 requiring all leases to be recognised on the balance sheet as an asset and a lease obligation, but the Group has not restated comparatives. Previously operating leases, including property rentals costs were charged to the Statement of Comprehensive Income. The resulting impact to profit is £50,000 extra cost with additional finance costs of £136,000 and depreciation of £142,000 compared to operating rental costs of £228,000. At 1 April 2019 balance sheet recognition resulted in an increase in right-of-use assets and obligations under leases (short and long term) of £900,000.

Dividend

The Board proposes a final dividend of 0.50 pence per ordinary share, subject to approval at the AGM, (2019: 0.40p). This is in line with the directors' intention to align future dividend payments to the underlying earnings and cash flow of the business. Together with the interim dividend of 0.15p per share paid last December, the total dividend paid for the year ended 31 March 2020 is 0.55p (2019: 0.38p).

Covid-19 statement

Whilst the Company has faced a number of challenges since the outbreak of Covid-19 and has incurred significant costs associated with managing the risks associated with Covid-19, it has also found opportunity to deliver product types currently in demand by consumers, industry and Health Care providers. In particular, the Company has been able to introduce its new Pure Touch brand of hand sanitisers and hand washes, available through all channels of distribution that require and need anti-viral hygiene products; and a newly developed anti-viral alcohol-free hand cream. Trading to the 31 July 2020 is ahead of last year, which has enabled the Group to absorb the increased costs and risks associated with the pandemic.

Mary Carney

The board was sad to announce the death in November of our long-standing Non-executive director, Mary Carney who passed away that month. They would like to recognise the contribution she made to the Group's success over the past 20 years and feel her insight and contribution will be missed.

Conclusion

The Board believes that the Groups strong customer relationships and robust financial position has enabled the Group to manage the current crisis and puts it in a good position to proactively manage any new challenges and take advantage of any new opportunities that may arise.

I would like to take this opportunity to thank every one of the Group's employees for the hard work and effort both during and after the year-end.  It has been commendable how they have responded to the speed of change required and pressures associated with these exceptional times. I would also like to thank our customers and suppliers that have responded positively through this challenging period. 

William McIlroy

Chairman, 1 September   2020

Directors' responsibilities statement

The directors whose names and functions are set out in the full report are responsible for preparing the Annual Report and the Financial Statements in accordance with applicable laws and regulations. 

UK company law requires the directors to prepare such financial statements for each financial year. Under that law the directors are required to prepare the Group consolidated financial statements in accordance with International Financial Reporting Standards (IFRS) as adopted by the European Union and Article 4 of International Accounting Standards regulation and have also chosen to prepare the parent company financial statements under IFRS as adopted by the European Union. Under UK company law the directors must not approve the financial statements unless they are satisfied that they give a true and fair view of the state of affairs of the Company and the Group and of the profit or loss of the Group for that period. In preparing these financial statements, the directors are required to:

· select suitable accounting policies and then apply them consistently;

· make judgements and accounting estimates that are reasonable and prudent;

· state whether the finance statements have been prepared in accordance with IFRS as adopted by the European Union; and

· prepare the financial statements on the going concern basis unless it is inappropriate to presume that the company will continue in business.

The directors are responsible for maintaining proper accounting records that are sufficient to show and explain the Group's transactions and disclose with reasonable accuracy at any time the financial position of the Group and enable them to ensure that its financial statements comply with the Companies Act 2006 and Article 4 of International Accounting Standards regulation. They are also responsible for safeguarding the assets of the Group and hence for taking reasonable steps to prevent and detect fraud and other irregularities.

The directors are responsible for the maintenance and integrity of the corporate and financial information included on the Group's website.

Legislation in the United Kingdom governing the preparation and dissemination of financial statements may differ from legislation in other jurisdictions.

Directors' responsibility statement pursuant to DTR4 - Periodic Financial Reporting

Each of the directors confirms that to the best of their knowledge:

1.  the financial statements, prepared in accordance with International Financial Reporting Standards as adopted by the EU, give a true and fair view of the assets, liabilities, financial position and profit or loss of the Company and the undertakings included in the consolidation taken as a whole;

2.  the strategic report includes a fair review of the development and performance of the business and the position of the company and the undertakings included in the consolidation taken as a whole, together with the description of the principal risks and uncertainties that they face; and

3.  the report and financial statements, taken as a whole, are fair, balanced and understandable and provide the information necessary for shareholders to assess the Group's position and performance, business model and strategy.

Principal risks and uncertainties

The Board regularly monitors exposure to key risks, such as those related to production efficiencies, cash position and competitive position relating to sales. It has also taken account of the economic situation over the past 12 months and potential emerging risks, and the impact that has had on costs and consumer purchases.

It also monitors risks not directly or specifically financial, but capable of having a major impact on the business's financial performance if there is any failure; such as product contamination and manufacture outside specification, maintenance of satisfactory levels of customer and consumer service, accident ratios, failure to meet environmental protection standards or any of the areas of regulation mentioned above. Further details of financial risks are set out in Note 2.

Capital structure, cash flow and liquidity

The Group has a strong balance sheet with working capital investment at the year-end. The business is funded using; retained earnings, a long term mortgage and sale and lease back arrangements to support investments in fixed assets, and invoice financing and overdraft facilities for working capital. Further details are set out in Note 2.

At 31 March 2020 the invoicing financing is in a surplus position of £336,000 (2019: £4,000), due to cash received from customers immediately before the year end and not yet transferred to the bank account.

Competitive environment

The Group operates in a highly competitive environment in which demand for products can vary and customers have the opportunity to transfer business to other suppliers. The Group works to minimise this risk by developing close relationships with customers offering quality, service and innovation throughout the business. This risk is also further reduced through the development of its branded product portfolio and by the diversity of customers and products offered.

Quality

The Group treats quality as its key requirement for all products and strives to deliver quality products for every price point. Failure to achieve the required quality and safety standards would have severe consequences for the Group, from financial penalties to the damage to customer relationships. The Group has a robust product development process to mitigate risk wherever possible and to ensure all products are safe and fit for purpose. The Group is subject to frequent internal and external safety, environmental and quality audits covering both accreditations held and a number of specific operating standards our customers require us to comply with.

Research and development

The Group undertakes significant research and development to identify new brands, proprietary products and improved formulations to existing products that address expected market trends and customer and consumer demands to maximise the Group's market share and deliver new opportunities for growth.

The Group's principal focus in R&D is maintenance and development of brands and products in its existing markets and product ranges. As our brands evolve the Group now develops ranges which involve greater innovative development and claims substantiation which has changed the nature of our research and development over recent years. One impact of this development is improved claims for research and development tax relief.

Brexit

As the UK Government continues its negotiations, uncertainty remains as to the extent to which our operations and financial performance will be affected in the longer term. At a Group and business level, we have continued to prepare for changes in legislation, trade agreements and working practices in order to take advantage of any opportunities arising and to mitigate risk. The Group operates globally and may be affected by Brexit developments, which could provide a number of challenges. The Group is continuously monitoring events and putting mitigating actions in place including the registration of a new subsidiary Potter & Moore Ltd based in Ireland as an EU base for recording regulatory information. Trading with our EU customers and suppliers could be more complex. Any actual or perceived barriers to free trade are an obvious area of concern for us. Brexit increases the Group's exposure to potential currency fluctuations and tariff changes. Brexit and trade barriers continue to be an integral part of the Group's ongoing risk management and review process, for which solutions to address the risks are identified and implemented. Although there is still uncertainty surrounding the outcome of Brexit, we do not expect the direct consequences of Brexit to have a material impact on the Group.
 

Covid-19

Like all businesses, Covid-19 presents significant risks to our customer base, supply chain and the infection risk faced by our employees.

We proactively managed the risks faced by our customers by working closely with them and by increasing debtor management and expanding our credit insurance.  All customers' debtor limits, apart from the Department of Health and Social Care, are within insured credit limits or they pay on a pro-forma basis.

We have worked closely with suppliers and used our improved Far East sourcing capabilities to expand our supply base to ensure that we can meet the demand from our existing and new customers. This has increased costs as high demand for scarce raw materials drove up prices and we increased the use of air freighting to ensure we could meet the increased demand for hygiene products. We managed these increased costs with our customers to mitigate the impact on the business.

We appointed a team of senior managers to monitor risks to our employees, and which manages these risks on a daily basis.  Amongst other action, we have;

· Introduced a Covid-19 testing regime for all employees who cannot work from home,

· Increased use of PPE and installed screens to ensure social distancing can be maintained,

· Expanded all cleaning regimes in our sites,

· Managed site access through new security and temperature testing processes,

· Minimised the risks associated with car sharing by providing our own transport for employees who cannot get to work by other means.

Whilst this has increased our costs, it has ensured we can continue to service our customers and ensure our workforce has as safe an environment to operate in as possible. The Group utilised the Governments Furlough scheme for a short period, deferred paying Vat until March 2021 but did not need to access any further Government schemes.

Consolidated income statement

		Year ended 31 March 2020	Year ended 31 March 2019
	Note	£000	£000
Revenue		47,808	44,030
Cost of sales		(27,625)	(26,690)
Gross profit		20,183	17,340
Distribution costs		(2,447)	(2,204)
Administrative expenses		(13,982)	(12,236)
Operating profit		3,754	2,900
Profit on disposal of subsidiary		11	-
Finance costs		(213)	(31)
Profit before tax		3,552	2,869
Taxation		(384)	22
Profit for the year from operations attributable to the equity shareholders of the parent Company		3,168	2,891

 

Dividends

		Year ended 31 March	Year ended 31 March
	Note	2020	2019
Paid in year (£000)		347	233
Paid in year (pence per share)		0.55p	0.38p
Proposed (£000)		324	253
Proposed (pence per share)		0.50p	0.40p

 

 

Earnings per share

		Year ended 31 March	Year ended 31 March
	Note	2020	2019
Basic	5	4.99p	4.69p
Diluted		4.34p	4.16p

Consolidated statement of comprehensive income

		Year ended 31 March	Year ended 31 March
		2020	2019
		£000	£000
Profit for the year		3,168	2,891
Items that may be subsequently reclassified to profit and loss:
Exchange differences on translating foreign operations		21	-
Other comprehensive income for the year		21	-
Total comprehensive income for the year attributable to the equity shareholders of the parent		3,189	2,891

Consolidated balance sheet

		31 March	31 March
		2020	2019
	Note	£000	£000
Non-current assets
Goodwill		331	331
Other intangible assets		971	418
Property, plant and equipment		5,956	2,363
Right-of-use assets		1,120	-
		8,378	3,112
Current assets
Inventories		7,394	8,015
Trade and other receivables		8,867	8,280
Cash and cash equivalents		3,670	349
		19,931	16,644
Total assets		28,309	19,756
Current liabilities
Trade and other payables		8,016	6,339
Obligations under leases		193	40
Borrowings		713	732
		8,922	7,111
Net current assets		11,009	9,533
Non-current liabilities
Deferred tax liability		29	25
Obligations under leases		976	154
Borrowings		2,816	-
		3,821	179
Total liabilities		12,743	7,290
Net assets		15,566	12,466
Equity
Share capital	6	647	625
Share premium account		1,406	1,329
Other reserves		25	25
Translation reserve		21	-
Retained earnings		13,467	10,487
Total equity attributable to the equity shareholders of the parent Company		15,566	12,466

Consolidated statement of changes in equity

	Share capital (note 26)	Share premium account	Other reserves	Translation reserve	Retained earnings	Total equity
	£000	£000	£000	£000	£000	£000
At 1 April 2018	607	1,262	25	-	7,711	9,605
Comprehensive income for the year
Profit for the year	-	-	-	-	2,891	2,891
Total comprehensive income for the year	-	-	-	-	2,891	2,891
Contributions by and distributions to owners
Exercise of options	18	67	-	-	-	85
Share-based payment charge	-	-	-	-	69	69
Deferred tax through Equity	-	-	-	-	49	49
Dividends	-	-	-	-	(233)	(233)
Total contributions by and distributions to owners	18	67	-	-	(115)	(30)
At 31 March 2019	625	1,329	25	-	10,487	12,466
Comprehensive income for the year
Profit for the year	-	-	-	-	3,168	3,168
Exchange differences on translation of foreign operations	-	-	-	21	-	21
Total comprehensive income for the year	-	-	-	24	3,194	3,215
Contributions by and distributions to owners
Exercise of options	22	77	-	-	-	99
Share-based payment charge	-	-	-	-	133	133
Deferred tax through Equity	-	-	-	-	26	26
Dividends	-	-	-	-	(347)	(347)
Total contributions by and distributions to owners	22	77	-	-	(188)	(89)
At 31 March 2020	647	1,406	25	21	13,467	15,566

Consolidated cash flow statement

		Year ended 31 March	Year ended 31 March
		2020	2019
		£000	£000
Profit from operations		3,754	2,900
Adjustments for:
Depreciation on property, plant and equipment		615	489
Depreciation on right of use assets		192	-
Amortisation of intangible assets		555	514
Loss on disposal of property, plant and equipment		-	6
Share based payment charge		133	69
		5,249	3,978
Decrease/(increase) in inventories		621	(2,516)
Increase in trade and other receivables		(759)	(442)
Increase in trade and other payables		1,501	297
Cash generated from operations		6,612	1,317
Taxation paid		(6)	(328)
Net cash generated from operating activities		6,606	989
Investing activities
Purchase of property, plant and equipment		(4,631)	(1,026)
Proceeds from sale and lease back		238	-
Purchase of intangible assets		(1,103)	(583)
Proceeds of disposal on investments		11	-
Net cash used in investing activities		(5,485)	(1,609)
Financing activities
Proceeds on issue of shares		99	85
Proceeds from sale and lease back		-	198
Principal paid on lease liabilities (2019 - principal paid on finance leases)		(157)	(5)
Interest on leases liabilities (2019: interest on finance leases)		(146)	(1)
Interest paid on mortgage loan		(51)	-
Interest paid on overdrafts and loans		(16)	(31)
(Decrease)/increase in invoice financing facilities		(398)	398
Increase/(decrease) of borrowings		220	(413)
Draw down of loan facility		3,040	-
Repayment on loan facility		(65)	-
Dividends paid to owners of the parent		(347)	(233)
Net cash generated from/(used in) financing activities		2,179	(1)
Net increase/(decrease) in cash and cash equivalents		3,300	(621)
Cash and cash equivalents at start of year		349	968
Effect of foreign exchange rate changes		21	2
Cash and cash equivalents at end of year		3,670	349

Notes to preliminary announcement

1.  Significant accounting policies

Basis of accounting

The financial statements have been prepared in accordance with IFRS adopted by the European Union, Companies Act 2006 and the Group financial statements comply with Article 4 of the EU IAS regulations.

The financial statements have also been prepared on the historical cost basis. Historical cost is generally based on the fair value of the consideration given in exchange for goods and services. The principal accounting policies adopted are set out below.

Adoption of new and revised accounting standards

New standards impacting on the Group have been adopted in its financial statements for the year ended 31 March 2020 and have given rise to changes in the Group's accounting policies are:

· IFRS 16, Leases

· IFRIC 23, Uncertainty over Income Tax Treatments.

Detail of the impact the two standards have had are given in note 34 of the Groups Annual Report.

There are a number of standards, amendments to standards, and interpretations which have been issued by the IASB that are effective in future accounting periods that the Group has decided not to adopt early. The Group does not expect any of the standards issued by the IASB, but not yet effective, to have a material impact on the Group.

Exposures to credit, interest and currency risks arise in the normal course of the Group's business. Risk management policies and hedging activities are outlined below.

2  Financial instruments and treasury risk management

Credit risk

Trading exposures are monitored by the operational companies against agreed policy levels. Credit insurance with a world leading insurer is employed where it is considered to be cost effective.  Non-trading financial exposures are incurred only with the Group's bankers or other institutions with prior approval of the Board of directors.

The majority of trade receivables are with retail customers. The maximum exposure to credit risk is represented by the carrying amount of those financial assets in the balance sheet.

Impairment provisions on trade receivables have been disclosed in note 19 of the Groups Annual Report.

Interest rate risk

The Group also secured a fixed rate mortgage for a 15 year term secured on the property with an interest rate of 3.04% fixed for the first 10 years of the loan, therefore reducing the risk to interest rate risk.

The Group finances its operations through a mixture of debt associated with working capital facilities and equity.  The Group is exposed to changes in interest rates on its floating rate working capital facilities. The variability and scale of these facilities is such that the Group does not consider it cost effective to hedge against this risk. The Group also secured a fixed rate mortgage for a 15 year term secured on the property with an interest rate of 3.04% fixed for the first 10 years of the loan, therefore reducing the risk to interest rate risk.

Interest rate sensitivity

The interest rate sensitivity is based upon the Group's borrowings over the year assuming a 1% increase or decrease which is used when reporting interest rate risk internally to key management personnel.

A 1% increase in bank base rates would reduce Group pre-tax profits by £9,000 (2019: £7,000). A 1% decrease would have the opposite effect. The Group's sensitivity to interest rates has not changed during the current year.

Foreign currency risks

The Group is exposed to foreign currency transaction and translation risks. 

Transaction risk arises on income and expenditure in currencies other than the functional currency of each group  company. The magnitude of this risk is relatively low as the majority of the Group's income and expenditure are denominated in the functional currency. Approximately 3% (2019: 2%) of the Group's income is denominated in US dollars and 2% (2019: 2%) in Euros. Approximately 2% (2019: 1%) of the Group's expenditure is denominated in US dollars and 6% (2019: 7%) in Euros.

Foreign currency sensitivity

A 5% strengthening of sterling would result in a £22,000 (2019: £46,000) reduction in profits and equity.  A 5% weakening in sterling would result in a £25,000 (2019: £50,000) increase in profits and equity.

When appropriate the Group utilises currency derivatives to hedge against significant future transactions and cash flow. There were no outstanding contracts as at 31 March 2019 or 31 March 2020.

Cash flow and liquidity risk

The Group manages its working capital requirements through overdrafts and invoice finance facilities. These facilities were renewed in March 2020 for a further 12 months. The maturity profile of the committed bank facilities is reviewed regularly and such facilities are extended or replaced well in advance of their expiry. The Group has complied with all of the terms of these facilities. At 31 March 2020 the Group had available £6,160,000 (2019: £4,744,000) of undrawn committed borrowing facilities in respect of which all conditions precedent had been met. The Group has also secured a fixed rate mortgage for a 15 year term secured on the property with an interest rate of 3.04% fixed for the first 10 years of the loan.

3  Financial assets

Financial assets are included in the Statement of financial position within the following headings. These are valued at amortised cost and are detailed below.

		Group		Company
		2020	2019	2020	2019
		£000	£000	£000	£000
Trade and other receivables		8,628	7,862	1,754	2,614
Cash and cash equivalents		3,670	349	-	-
Total		12,298	8,211	1,754	2,614

4  Financial liabilities

Financial liabilities are included in the Statement of financial position within the following headings. These are valued at amortised cost and are detailed below.

Year ended 31 March 2020

		Group
		Less than 6 months	Between 6 months and 1 year	Between 1 and 5 years	More than 5 years	Total
		£000	£000	£000	£'000	£000
Trade payables		5,063	-	-	-	5,063
Accruals		1,441	-	-	-	1,441
Obligations under leases		96	97	793	183	1,169
Overdraft and invoice financing		554	-	-	-	554
Loan		79	80	702	2,114	2,975
Total		7,233	177	1,495	2,297	11,202

Year ended 31 March 2019

		Group
		Less than 6 months	Between 6 months and 1 year	Between 1 and 5 years	More than 5 years	Total
		£000	£000	£000	£'000	£000
Trade payables		4,459	-	-	-	4,459
Accruals		1,441	-	-	-	1,441
Obligations under finance leases		20	20	154	-	194
Overdraft and invoice financing		732	-	-	-	732
Total		6,652	20	154	-	6,826

5  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
		2020	2019
		£000	£000
Earnings
Net profit attributable to the equity holders of the parent company		3,168	2,891

		Year ended 31 March	Year ended 31 March
		2020	2019
		Number	Number
Number of shares
Weighted average number of ordinary shares for the purposes of basic earnings per share		63,431,622	61,587,535
Effect of dilutive potential ordinary shares relating to share options		9,507,807	7,888,968
Weighted average number of ordinary shares for the purposes of diluted earnings per share		72,939,429	69,476,503

Earnings per share

Basic		4.99p	4.69p
Diluted		4.34p	4.16p

6  Share capital

		Ordinary shares of 1p each
		£000	Number
At 1 April 2018		607	60,638,152
Issued in the year		18	1,907,991
At 31 March 2019		625	62,546,143
Issued in the year		22	2,200,000
At 31 March 2020		647	64,746,143

The company has one class of ordinary shares, which carry no right to fixed income. All of the shares are issued and fully paid. The total proceeds from the issue of shares from the exercise of share options in the year was £99,000 (2019: £85,000).

7  Notes to cash flow statement

Analysis of changes in net debt

	Overdraft	Invoice Financing	Mortgage	Total
	£000	£000	£000	£000
At 1 April 2019	334	398	-	732
Cash flows	204	(398)	2,924	2,730
Interest accruing	16	-	51	67
At 31 March 2020	554	-	2,975	3,529

	Overdraft	Invoice Financing	Mortgage	Total
	£000	£000	£000	£000
At 1 April 2018	747	-	-	747
Cash flows	(435)	389	-	(46)
Interest accruing	22	9	-	31
At 31 March 2019	334	398	-	732

8  Status of information

In accordance with section 435 of the Companies Act 2006, the directors advise that the financial information set out in this announcement does not constitute the Group's statutory financial statements for the year ended 31 March 2020 or 2019, but is derived from these financial statements. The financial statements for the year ended 31 March 2019 have been delivered to the Registrar of Companies. The financial statements for the year ended 31 March 2020 have been prepared in accordance with International Financial Reporting Standards as adopted by the European Union. The financial statements for the year ended 31 March 2020 will be forwarded to the Registrar of Companies following the Company's Annual General Meeting. The Auditors have reported on these financial statements; their reports were unqualified and did not contain statements under Section 498(2) or (3) of the Companies Act 2006.

The consolidated statement of financial position at 31 March 2020 and the consolidated statement of comprehensive income , consolidated statement of changes in equity and consolidated statement of cash flows for the year then ended have been extracted from the Group's financial statements. Those financial statements have not yet been delivered to the Registrar.  

The strategic report with supplementary material is expected to be posted to Shareholders shortly. The annual report and accounts will also be available on the Company's website at: www.creightonsplc.com and in hard copy to shareholders upon request from the Company's registered office at 1210 Lincoln Road, Peterborough, PE4 6ND .

The annual report and accounts for the period ended 31 March 2020 will be uploaded to the National Storage Mechanism and will be available for viewing shortly at http://www.morningstar.co.uk/uk/NSM

The Directors will notify shareholders when the accounts are posted and have been uploaded to the website and to the NSM.

The Company's AGM will take place at the offices of Potter & Moore Innovations Ltd, 1210 Lincoln Road, Peterborough, PE4 6ND on 30 September 2020 at 12:00 noon.

 

END

 

 

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