TIDMCRL
RNS Number : 2638F
Creightons PLC
07 July 2023
07 July 2023
Creightons Plc
Audited Preliminary results
Annual General Meeting
Creightons Plc (the "Group" or "Creightons") brand owners and
manufacturers of personal care, beauty, and fragrance products, is
pleased to announce its preliminary results for the year ended 31
March 2023.
The Company's annual report and financial statements for the
year ended 31 March 2023 will be made available from the Company's
website at: https://www.creightonsplc.com
In addition, the document will be uploaded to the National
Storage Mechanism and will be available for viewing at
https://data.fca.org.uk/#/nsm/nationalstoragemechanism
The Company's Annual General Meeting will take place at the
offices of Potter & Moore Innovations Ltd, 1210 Lincoln Road,
Peterborough, PE4 6ND on 13 September 2023 at 12:00 noon.
Financial highlights
-- Significantly improved performance for the second half of the
year due to remedial actions taken by management with operating
profit (before exceptional items) increasing from GBP0.3m in the
first half to GBP1.3m in the second half. Full year operating
profit (before exceptional items) of GBP1.6m.
-- Cash generated from operating activities has increased from
GBP1.4m in the first half of the year to GBP4.5m in the second half
of the year. Full year cash from operating activities generated of
GBP5.9m.
-- Balance sheet remains strong with Group net assets at the
balance sheet date of GBP25.5m (2022: GBP25.7m).
-- Revenue for the year was GBP58.6m (2022: GBP61.2m), a reduction of 4.2%.
-- EBITDA for the year was GBP3.0m (2022: GBP5.9m).
-- Operating profit decreased by 67.5% to GBP1.4m (2022: GBP4.4m).
-- Operating profit margin of 2.4% (2022: 7.1%).
-- A tax charge of GBP0.2m (2022: GBP0.3m) equates to an
effective tax rate of 25.2% (2022: 10.0%).
-- The profit after tax for the year has decreased by GBP2.6m to GBP0.5m (2022: GBP3.1m).
-- The profit reduction together with the issue of shares has
reduced the fully diluted earnings per share to 0.65p (2022:
3.98p).
-- Net cash on hand (cash and cash equivalents less short-term
element of obligations under finance leases and borrowings) is
negative GBP1.2m (2022: negative GBP2.1m).
-- The Directors do not propose a final dividend for the year
ended 31 March 2023 (2022: GBPNil).
Operational highlights
-- Sales growth momentum has been maintained in the branded and
export business despite the economic downturn:
-- Overall branded sales have increased by 11.7% to GBP22.8m.
-- Sales of retailer own label products decreased by 11.7% to GBP22.0m.
-- Contract manufacturing sales decreased by 13.1% to GBP13.8m.
-- Total overseas sales have increased by 5.6% to GBP10.6m
-- Integration of previous year acquisitions is substantially
completed with the full benefits emerging in the new financial
year.
-- The Group has responded proactively to the unprecedented
challenges facing the business due to supply chain constraints,
higher commodity, and energy prices. The remedial measures were
intended to restore profitability, reduce costs and inventory and
to return to positive cash flow. Specifically, actions were taken
in the following six areas:
o Increase in selling prices to our customers
o Reduction in overheads
o Increase efficiency and capacity in each factory so as to
maximise the benefit of single shift working
o Relocating the customer facing side of the business,
warehousing, picking packing and logistics back to the Peterborough
site
o Reduction in stock levels, targeting GBP2m reduction v
previous year
o New and non-critical capital expenditure cancelled unless
payback less than 9 months
The combined effect of these measures, carried out in the second
half of the year, has been to return the business to profitability
and positive cashflow.
Commenting on the results, William McIlroy, Chairman of
Creightons Plc, said:
"This represented among the most challenging trading years ever
faced by the Group due to the supply chain and inflationary
pressures from the global economic downturn. I am pleased to report
that we have responded to these challenges and made excellent
progress in the second half of the year in returning the business
to profitability and positive cash flow. Our branded business,
boosted by the acquisitions in the previous year, has grown to
almost GBP23m. We are well placed to respond proactively to the
challenging market conditions and remain open to further business
opportunities."
Commenting on the results, Bernard Johnson, Managing Director,
said:
"This has been a year of two halves. Our response to the
challenging market conditions experienced in the first half was to
implement as a six-point programme to restore margins, reduce
costs, lower stocks levels and improve cash. This programme has
helped us deliver significantly improved results in the second
half. We look forward to developing new sales opportunities in the
year ahead leveraging on the strength of our brands, including Emma
Hardie, and our in-house technical expertise.'
Enquiries - Analysts and Investors:
Nicholas O'Shea, Director, Creightons Plc 01733 281000
Roland Cornish / Felicity Geidt, Beaumont Cornish Limited 0207 628 3396
Overview
This represented among the most challenging trading years ever
faced by the Group. As reported in the Chairman's statement in the
half year interim RNS announcement in November 2022 the Group faced
significant supply chain and inflationary pressures in the second
half of the previous financial year which continued into the first
part of the current financial year. These pressures contributed to
higher input and overhead costs and reduced profitability. Our
response was to embark upon a six-point programme designed to
restore margins, reduce costs, lower stocks levels and return the
business to positive cashflow. This included moving to a single
shift at the Peterborough site. I am pleased to report that we have
made significant progress in all of these areas in the second half
of the financial year with Profit before tax and exceptional items
increasing from GBP0.1m in the first half to GBP1.1m in the second
half. Full year Profit before tax and exceptional items was GBP1.2m
(2022: GBP4.1m). We have also improved our net cash on hand by
GBP3.6m during the second half of the year reflecting the improved
trading performance and the success of the inventory reduction
programme.
We remain committed to seeking further cost and overhead
reductions and to restoring margin and overall profitability to
previous levels. In spite of the significant challenges faced by
the Group and the wider economy, I am pleased to report that the
Group has been successful in increasing its branded turnover by an
impressive 11.7% which partially offsets the decline in the private
label and contract manufacturing business.
The Group's vertically integrated model continues to give it
competitive advantage allowing it to respond quickly and
effectively to customer requirements. It previously provided for a
rapid pivot in production to meet market demand for sanitary
product at the beginning of the Covid outbreak, and more recently
allowed it to respond flexibly to the current challenging economic
environment. It also provides a competitive advantage with
post-acquisition integration by providing synergies not available
to all market participants. Over the reporting period the Group
continued to invest in its manufacturing and in its research and
development capabilities which contributed to improved
manufacturing efficiencies.
Summary of Half 1 and Half 2 results:
H1 (Unaudited) H2 (Unaudited) Year ended
31 March
2023
GBP000 GBP000 GBP000
----------------- --------------------
Revenue 29,676 28,891 58,567
----------------- ----------------- --------------------
Gross profit 11,990 12,358 24,348
----------------- ----------------- --------------------
Gross profit % 40.4% 42.8% 41.6%
----------------- ----------------- --------------------
Operating profit before exceptional
items 281 1,303 1,584
----------------- ----------------- --------------------
Operating profit 130 1,289 1,419
----------------- ----------------- --------------------
Profit before tax and exceptional
items 104 1,060 1,164
----------------- ----------------- --------------------
Profit before tax (359) 1,046 687
----------------- ----------------- --------------------
(Loss) / Profit after tax (385) 899 514
----------------- ----------------- --------------------
Year ended
31 March
H1 (Unaudited) H2 (Unaudited) 2023
GBP000 GBP000 GBP000
---------------- -------------------
Cash generated from operating
activities 1,352 4,522 5,874
---------------- -------------------
At 30 At 31 Movement
September March 2023
2022 (Unaudited)
GBP000 GBP000 GBP000
------------------ ---------------- -------------------
Net cash on hand (4,672) (1,090) 3,582
------------------ ---------------- -------------------
Revenue
Overall Group sales were GBP58.6m for the year ended March 2023
(2022: GBP61.2m) a reduction of GBP2.6m. Overall Branded sales have
increased by 11.7% from GBP20.4m to GBP22.8m with a strong
performance from Feather & Down and Balance Active brands.
Private label sales have decreased from GBP24.9m to GBP22.0m due
mainly to the non-recurrence of a one-off private contract in the
previous year. Contract manufacturing sales have decreased from
GBP15.9m to GBP13.8m reflecting the difficulty faced by certain
brand owners in the challenging economic environment.
The Group's total overseas business increased by 5.6% to
GBP10.6m (2022: GBP10.0m).
Margin and cost of sales
Our gross margin was 41.6% for the year ended 31 March 2023
(2022: 42.8%). Gross margin has improved in the second half of the
year to 42.8%, compared to the first half 40.4% due to proactive
measures taken by management in the areas of customer price
increases, cost mitigation and product re-engineering and reduced
labour costs due to shift rationalisation and efficiency
improvements.
Distribution costs and Administrative expenses
Distribution costs have increased by 10.4% to GBP3.9m (2022:
GBP3.5m), driven by increased operational charges at third-party
logistics providers and also a full year impact of the
acquisitions.
Administrative expenses have increased by 3.3% to GBP18.9m in
the year (2022: GBP18.3m) as the Group has seen a general rise in
overhead costs in particular in energy prices and insurance costs.
Overhead savings have been achieved across most cost headings
including indirect payroll.
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.
Creightons Plc has continued to invest in R&D throughout
year ending 31 March 2023 to expand its portfolio of product
offering and capabilities, with key areas of focus being the
development of unique and technically challenging formulations
across Skin care and Cleansing. Utilising advanced technologies we
have successfully launched a range of Vitamin C skincare products
that demonstrate enhanced skin brightening and anti-ageing
performance coupled with novel textures at an affordable price
point. New launches with key trend materials such as ceramides,
peptides, prebiotics and exfoliating acids continue to demonstrate
our ability to keep up with new trends and formulation development,
delivering new product development quickly and effectively. Given
the challenges in the market place, cost mitigation has also been a
key focus with raw material sourcing and validation offering
solutions to avoid excessive cost increases and maintain margins on
existing products.
Looking forward the team are continuing to invest time and
resource into exploring new categories and technologies. The
importance of SPF in the skincare and sun care categories is a key
area of focus and consumer demand. We are investing in delivering
cutting edge, futureproofed formulations, delivering high UV
protection in formats that offer improved performance and product
aesthetics. Lastly, as part of the Group's expansion into new
market territories product compliance becomes a key area of
development with formulation redevelopment underway to allow for
registration into the Chinese market whilst maintaining product
quality. The team continues to support the wider business with
trend-based developments focusing on the increased demand for
cleaner, natural formulations.
EBITDA
The Group has generated Earnings before Interest, Tax,
Depreciation and Amortisation (EBITDA) of GBP3.0m (2022: GBP5.9m).
This represents a reduction of GBP2.9m (49.5%).
Tax
The Group's tax charge for the year was GBP0.2m (2022: GBP0.3m)
which equates to a rate of 25.2% (2022: 10.0%). The effective rate
of tax is more than the standard rate of 19.0% (2022: 19.0%). The
tax charge in the current year reflects a higher deferred tax
liability due to increase in future corporation tax rate to
25%.
Exceptional items
As reported in September 2022 there was an additional charge in
respect of the acquisition of the Emma Hardie business should the
Company's share price fail to attain GBP1.25 on the first
anniversary of the sale. The excess over the amount paid at 31
March 2022 amounted to GBP0.3m and has been treated as an
exceptional cost.
Redundancy costs incurred of GBP0.2m in respect of the closure
of the second shift at Peterborough have also been included in
exceptional costs.
Profit after tax
The Group's profit after tax has reduced by 83.5% to GBP0.5m for
the year ended 31 March 2023 (2022: GBP3.1m).
Earnings per share
The diluted earnings per share of 0.65p (2022: 3.98p) is a
decrease of 83.7%. The EPS has been adversely impacted by the
reduction in profit after tax including the exceptional costs of
GBP0.5m and also by the increase in the number of shares in issue
(prior year acquisition related shares of 1.0m and share
options).
Cash on hand and working capital
Net cash on hand (cash and cash equivalents less short-term
element of obligations under finance leases and borrowings) is
negative GBP1.2m (2022: negative GBP2.1m). The improvement in cash
is mainly attributable to improved business trading performance in
the second half of the year together with inventory level
reduction. The Group generated cash of GBP5.9m (2022: GBP2.0m) from
operating activities.
Return on Capital Employed
The Group has increased capital employed following the two
acquisitions completed in the previous year.
These investments have not yet delivered a full return on
Capital Employed, which together with the reduction in current year
operating profit has had the effect of reducing the Return on
Capital Employed from 12.9% to 4.3%. The expected improvement on
the returns on acquisitions in the year will increase in the year
to March 2024. The Group continues to look for opportunities to
invest in brands that will help drive faster growth in profits.
Net gearing
Net gearing of 22.1% (2022: 28.7%) has decreased by 6.6%
percentage points in the year.
Dividend
The Directors do not propose a final dividend for the year ended
31 March 2023, (2022: GBPNil) due to the challenging and volatile
economic conditions facing the Group and the need to be prudent
about utilisation of cash resources. This is consistent with the
Directors' objective to align future dividend payments to the
future underlying earnings and cash requirements of the business.
The total dividend paid for the year ended 31 March 2023 was nil
(2022: GBP0.15) per ordinary share.
Supply chain
In common with many UK manufacturing businesses, we have
experienced global supply chain and inflationary pressures
particularly during the first half of the financial year. These
pressures have manifested in the form of delayed deliveries from
suppliers, higher input, energy and overhead costs. The commodity
pressures have eased somewhat in the second half of the financial
year, but the level of domestic inflation remains a cause for
concern. We will continue to be proactive in our response to these
challenges and in particular we will seek out new opportunities and
endeavour to mitigate any price increases through price recovery,
product reengineering, alternative sourcing and other cost control
measures .
Future opportunities
Looking forward we intend to invest in formulation development,
market knowledge and manufacturing know how to enter the sizeable
Suncare category. Consumer demand for Sun Protection Factor (SPF)
protection is increasing in both the skincare category but also in
more usage of sun protection products. This presents a significant
opportunity in both the private label and contract manufacturing
categories. We also continue to advance in SPF formulation
development in the skincare category where consumer demand is also
in growth.
We also intend to develop key markets in both the USA and China
with our leading brands Emma Hardie and Feather & Down.
Considerable time and investment has already been undertaken in
China with the Emma Hardie brand where we are now launched on a
number of digital platforms including Tmall and Douyin. Our next
step is the finalisation of China Health Registrations to enable
the brand to also be sold in market in China. Both brands are
launching on Amazon in the USA market, a key development to then
enable both brands to move into more traditional retail
distribution as we demonstrate success on marketplaces.
We expect to extend distribution of Creightons core brands, in
particular TZone and Balance Active both in the UK discount and
grocery sectors along with international markets.
Conclusion
This has been a challenging year for the Group brought on by the
war in Ukraine and global economic challenges.
In response we have been resolute and focused in restoring
profitability and positive cash flow and in reducing the overall
cost base. Our result for the second half of the year provides
evidence that we are on the right track.
Manufacturing efficiency improvements have continued as a result
of significant investment in higher grade machinery and equipment
within the last 18 months. This has enabled the move to one shift
across the Group.
In summary the Board believes that good management, strong
customer relationships and financial position will continue to
enable the Group to manage the current economic situation and that
the Group is well placed to proactively manage new challenges and
take advantage of any new opportunities that may arise.
We are still keen to expand but will only do so when the
infrastructure is fully repositioned to deal with the volatile
conditions we are facing.
Thanks also to our employees, customers and suppliers,
especially those who have responded so positively through this
challenging period.
Directors' responsibilities statement
The Directors whose names and functions are set out on in the
full report are responsible for preparing the Annual Report and the
Financial Statements in accordance applicable law and
regulation.
Company law requires the Directors to prepare financial
statements for each financial year. Under that law the Directors
have prepared the Group financial statements in accordance with
UK-adopted international accounting standards and parent Company
financial statements in accordance with United Kingdom Generally
Accepted Accounting Practice (United Kingdom Accounting Standards,
comprising FRS 101 'Reduced Disclosure Framework', and applicable
law). Under 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;
-- state whether UK-adopted international accounting standards
have been followed for the group financial statements and United
Kingdom Accounting Standards, comprising FRS 101, have been
followed for the Company financial statements, subject to any
material departures disclosed and explained in the financial
statements;
-- make judgements and accounting estimates that are reasonable and prudent; 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 safeguarding the assets of the
group and parent Company and hence for taking reasonable steps for
the prevention and detection of fraud and other irregularities.
The Directors are responsible for keeping adequate accounting
records that are sufficient to show and explain the Group and
parent Company's transactions and disclose with reasonable accuracy
at any time the financial position of the Group and parent Company
and enable them to ensure that the financial statements and the
Directors' Remuneration Report comply with the Companies Act
2006.
The Directors are responsible for the maintenance and integrity
of the parent Company's website. Legislation in the United Kingdom
governing the preparation and dissemination of financial statements
may differ from legislation in other jurisdictions.
Directors' confirmations
The Directors consider that the Annual Report and accounts,
taken as a whole, is fair, balanced and understandable and provides
the information necessary for shareholders to assess the group and
parent Company's position and performance, business model and
strategy. Each of the Directors, whose names and functions are
listed in Directors and Advisers on page 101 to the full accounts
confirm that to the best of their knowledge:
1. the parent Company financial statements, which have been
prepared in accordance with United Kingdom Generally Accepted
Accounting Practice (United Kingdom Accounting Standards,
comprising FRS 101 'Reduced Disclosure Framework', and applicable
law), give a true and fair view of the assets, liabilities,
financial position and profit of the Company; and
2. the group financial statements, which have been prepared in
accordance with UK-adopted international accounting standards, give
a true and fair view of the assets, liabilities, financial position
and profit of the group; and
3. 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
4. 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 risks facing the business from the challenging economic
environment including inflationary pressures, higher interest rates
and their impact on consumer demand. Further details of mitigating
measures taken by management are set out in the operational
highlights.
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. The key risks and the measures
taken to manage these risks are noted below.
Capital structure, cash flow and liquidity
The Group has a strong balance sheet. Acquisitions during the
previous year were financed by internal cash resources and bank
funding. The business is funded using; retained earnings, a long
term mortgage, term loan and sale and lease back arrangements to
support investments in fixed assets, invoice financing and
overdraft facilities for working capital.
At 31 March 2023 the invoicing financing is in a utilised
position of GBP1,557,000 as this facility has been utilised to fund
the activities during the year (2022: GBP1,267,000). At 31 March
2023 the Group had utilised GBP26,000 (2022: GBP495,000) of its
overdraft facility.
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,
ethical and quality audits covering both accreditations held and a
number of specific operating standards our customers require us to
comply with.
Global economic environment
On 24 February 2022 Russian forces entered Ukraine, resulting in
Western nations reactions including announcements of sanctions
against Russia and Russian interests worldwide and an economic
ripple effect on the global economy. The immediate impact was a
significant upward spike in energy and commodity prices, which
continued into the first half of the current financial year. In
addition, BOE base interest rates have increased from 0.75% to
4.25% in response to inflationary pressures. This has had a
negative impact on consumer demand and the viability of many
businesses. The rate of increase in commodities has eased in the
second half of the current financial year but core domestic
inflation and the prospect of prolonged higher interest rates
remains a cause for concern. The Directors have carried out an
assessment of the potential global economic impact on the business,
including the impact of mitigation measures and uncertainties, and
have concluded that the greatest impact on the business is expected
to be from price increases.
The Directors have taken account of these potential impacts in
their going concern assessments and have concluded that the direct
impact is not significant to the business, with the indirect impact
of price increases being reviewed on a regular basis. In the face
of these challenges the focus of the business will be on positive
cash generation and restoration of profitability.
Credit risk
Our credit risk is that our customers are unable to pay, and we
believe this risk is elevated currently due to the current global
economic climate. We proactively manage the risks faced by our
customers by working closely with them and by increasing debtor
management and expanding our credit insurance. All customers'
debtor balances, are within insured credit limits or they pay on a
pro-forma basis. Credit control processes are in place to manage
credit risk including setting appropriate credit limits and the
enforcement of credit terms and ongoing dialogue with all
customers. We minimise the risk from concentration of customers
through implementation of these credit processes and this risk is
mitigated through the diversity of our customer base both by
channel and geography. We remain vigilant to the credit risks in
light of the challenging economic environment.
Supplier sourcing and costs
Cost increases as a result of inflation together with pressures
on supply of materials globally are our key supplier-related risks.
The pressure on global supply chains has eased but there remains
uncertainty around future commodity pricing. We continue to work
closely with suppliers and have used our improved sourcing
capabilities to expand our supply base to ensure that we can meet
the demand from our existing and new customers and minimise the
impact of cost price increases. We have an ongoing dialogue and
communication with our customers to mitigate the impact on the
business.
Environmental protection standards and sustainability
The Group's technical department continues to monitor all
relevant environmental regulations that the Group must adhere to,
to ensure continued compliance. We have successfully operated at
both manufacturing sites without a cessation in production due to
an environmental incident. The risk of cessation of production from
an environmental breach is considered to be low but in such an
event we would be able to move production to the other site or to
outsource to third party manufacturers in the short term.
The Group's objective is to keep ahead of the move towards more
sustainable products and processes. There is a risk that if we do
not take action we will be left behind and unable to meet our
customers' requirements. However, the Group sees the move towards
sustainability as an opportunity for business growth.
Cyber security
Cyber Security remains a significant threat to all businesses.
The Group has continued to invest in new software and resources to
minimise the risk of anyone accessing our systems and information.
We have enhanced our ongoing training programme for employees to
ensure that they are constantly aware of their role in protecting
the business from all cyber security threats.
Consolidated income statement
Year ended Year ended
31 March 2023 31 March
2022
GBP000 GBP000
--------------- -----------
Revenue 58,567 61,157
--------------- -----------
Cost of sales (34,219) (35,001)
--------------- -----------
Gross profit 24,348 26,156
--------------- -----------
Distribution costs (3,902) (3,535)
--------------- -----------
Administrative expenses (18,862) (18,256)
--------------- -----------
Exceptional items - Redundancy (165) -
costs
--------------- -----------
Operating profit 1,419 4,365
--------------- -----------
Exceptional items - Acquisition
costs (312) (602)
--------------- -----------
Finance costs (420) (308)
--------------- -----------
Profit before tax 687 3,455
--------------- -----------
Taxation (173) (345)
--------------- -----------
Profit for the year from operations
attributable to the equity shareholders 514 3,110
------------------------------------------- --------------- -----------
Consolidated statement of comprehensive income
Year ended Year ended
31 March 31 March
2023 2022
---------------------------------------------
GBP000 GBP000
----------- -----------
Profit for the year 514 3,110
----------- -----------
Items that may be subsequently reclassified
to profit and loss:
----------- -----------
Exchange differences on translating foreign
operations (9) (7)
----------- -----------
Other comprehensive income for the year (9) (7)
----------- -----------
Total comprehensive income for the year
attributable to the equity shareholders 505 3,103
---------------------------------------------- ----------- -----------
Earnings per share
Year ended Year ended
31 March 31 March
Note 2023 2022
----- ----------- -----------
Basic 5 0.74p 4.62p
----- ----------- -----------
Diluted 5 0.65p 3.98p
----- ----------- -----------
Dividends
Year ended Year ended
31 March 31 March
------------------------------------------------- -----------
2023 2022
----------- -----------
GBP000 GBP000
----------- -----------
Final dividend paid - Nil (2022: 0.50p) per
share - 324
----------- -----------
Interim dividend paid Nil (2022: 0.15p) per
share - 104
----------- -----------
Total dividend paid in year - Nil (2022: 0.65p)
per share - 428
----------- -----------
Proposed - Nil (2022: Nil) per share - -
----------- -----------
Consolidated balance sheet
31 March 31 March
2023 2022
----- --------- ---------
Note GBP000 GBP000
----- --------- ---------
Non-current assets
----- --------- ---------
Goodwill 2,857 2,853
----- --------- ---------
Other intangible assets 10,894 10,867
----- --------- ---------
Property, plant and equipment 5,890 6,065
----- --------- ---------
Right-of-use assets 1,285 1,120
----- --------- ---------
20,926 20,905
----- --------- ---------
Current assets
----- --------- ---------
Inventories 10,228 12,479
----- --------- ---------
Trade and other receivables 12,733 13,624
----- --------- ---------
Cash and cash equivalents 1,653 840
----- --------- ---------
24,614 26,943
----- --------- ---------
Total assets 45,540 47,848
----- --------- ---------
Current liabilities
----- --------- ---------
Trade and other payables 9,836 10,127
----- --------- ---------
Corporation tax payable 3 -
----- --------- ---------
Lease liabilities 373 303
----- --------- ---------
Borrowings 2,502 2,663
----- --------- ---------
Deferred and contingent consideration 4 - 1,187
----- --------- ---------
12,714 14,280
----- --------- ---------
Net current assets 11,900 12,663
----- --------- ---------
Non-current liabilities
----- --------- ---------
Deferred tax liability 2,942 2,640
----- --------- ---------
Lease liabilities 917 864
----- --------- ---------
Borrowings 3,488 4,386
----- --------- ---------
7,347 7,890
----- --------- ---------
Total liabilities 20,061 22,170
----- --------- ---------
Net assets 25,479 25,678
----- --------- ---------
Equity
----- --------- ---------
Share capital 700 697
----- --------- ---------
Share premium account 2,022 1,951
----- --------- ---------
Merger reserve 2,476 2,476
----- --------- ---------
Treasury shares (576) -
----- --------- ---------
Other reserves (211) (211)
----- --------- ---------
Translation reserve 14 23
----- --------- ---------
Retained earnings 21,054 20,742
----- --------- ---------
Total equity attributable to the
equity shareholders of the parent
Company 25,479 25,678
--------------------------------------- ----- --------- ---------
Consolidated statement of changes in equity
Share Share Merger Treasury Other Translation Retained
capital premium reserve Shares reserves reserve earnings Total
account equity
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
--------- --------- --------- --------- ---------- --------------- ----------
At 1 April 2021 648 1,410 - - 25 30 17,973 20,086
--------- --------- --------- --------- ---------- --------------- ---------- ---------
Comprehensive
income for the
year
--------- --------- --------- --------- ---------- --------------- ---------- ---------
Profit for the
year - - - - - - 3,110 3,110
--------- --------- --------- --------- ---------- --------------- ---------- ---------
Exchange differences
on translation
of foreign
operations - - - - - (7) - (7)
Total comprehensive
income for the
year - - - - - (7) 3,110 3,103
Contributions
by and distributions
to owners
--------- --------- --------- --------- ---------- --------------- ---------- ---------
Exercise of
options 23 541 - - - - - 564
--------- --------- --------- --------- ---------- --------------- ---------- ---------
Shares issued
on acquisitions 26 - 2,476 - - - - 2,502
--------- --------- --------- --------- ---------- --------------- ---------- ---------
Purchase of
own shares by
EBT - - - - (236) - - (236)
--------- --------- --------- --------- ---------- --------------- ---------- ---------
Share-based
payment charge - - - - - - 330 330
--------- --------- --------- --------- ---------- --------------- ---------- ---------
Deferred tax
through Equity - - - - - - (243) (243)
--------- --------- --------- --------- ---------- --------------- ---------- ---------
Dividends - - - - - - (428) (428)
--------- --------- --------- --------- ---------- --------------- ---------- ---------
Total contributions
by and distributions
to owners 49 541 2,476 - (236) - (341) 2,489
--------- --------- --------- --------- ---------- --------------- ---------- ---------
At 31 March
2022 697 1,951 2,476 - (211) 23 20,742 25,678
---------------------- --------- --------- --------- --------- ---------- --------------- ---------- ---------
Comprehensive
income for the
year
--------- --------- --------- --------- ---------- --------------- ---------- ---------
Profit for the
year - - - - - - 514 514
--------- --------- --------- --------- ---------- --------------- ---------- ---------
Exchange differences
on translation
of foreign
operations - - - - - (9) - (9)
--------- --------- --------- --------- ---------- --------------- ---------- ---------
Total comprehensive
income for the
year - - - - - (9) 514 505
--------- --------- --------- --------- ---------- --------------- ---------- ---------
Contributions
by and distributions
to owners
--------- --------- --------- --------- ---------- --------------- ---------- ---------
Exercise of
options 3 71 - - - - - 74
--------- --------- --------- --------- ---------- --------------- ---------- ---------
Purchase of
own shares - - - (576) - - - (576)
--------- --------- --------- --------- ---------- --------------- ---------- ---------
Share-based
payment charge - - - - - - 101 101
--------- --------- --------- --------- ---------- --------------- ---------- ---------
Deferred tax
through Equity - - - - - - (303) (303)
--------- --------- --------- --------- ---------- --------------- ---------- ---------
Total contributions
by and distributions
to owners 3 71 - (576) - - (202) (704)
--------- --------- --------- --------- ---------- --------------- ---------- ---------
At 31 March
2023 700 2,022 2,476 (576) (211) 14 21,054 25,479
---------------------- --------- --------- --------- --------- ---------- --------------- ---------- ---------
Consolidated cash flow statement
Year ended Year ended
31 March 31 March
2023 2022
------------------------------------- ----------- -----------
GBP000 GBP000
----------- -----------
Profit from operations 1,419 4,365
----------- -----------
Adjustments for:
----------- -----------
Depreciation on property, plant
and equipment 1,000 888
----------- -----------
Depreciation on right of use
assets 294 256
----------- -----------
Amortisation of intangible assets 288 435
----------- -----------
Loss/(Profit) on disposal of
Right of Use assets 34 (10)
----------- -----------
Share based payment charge 101 330
----------- -----------
3,136 6,264
------------------------------------- ----------- -----------
Decrease/(increase) in inventories 2,250 (2,515)
----------- -----------
Decrease/(increase) in trade
and other receivables 776 (1,820)
----------- -----------
(Decrease)/increase in trade
and other payables (288) 59
----------- -----------
Cash generated from operations 5,874 1,988
----------- -----------
Taxation paid (62) (575)
----------- -----------
Net cash generated from operating
activities 5,812 1,413
-------------------------------------- ----------- -----------
Investing activities
----------- -----------
Purchase of property, plant
and equipment (825) (1,106)
----------- -----------
Purchase of right-of-use assets - (286)
----------- -----------
Proceeds from sale and lease
back - 264
----------- -----------
Purchase of intangible assets (315) (338)
----------- -----------
Acquisition of Brodie & Stone (75) (3,507)
----------- -----------
Acquisition of Emma Hardie (1,424) (2,775)
----------- -----------
Exceptional costs in relation
to acquisitions - (343)
----------- -----------
Net cash used in investing
activities (2,639) (8,091)
----------- -----------
Financing activities
----------- -----------
Proceeds on issue of shares 74 564
----------- -----------
Cancellation of leases (35) -
----------- -----------
Principal paid on lease liabilities (436) (240)
----------- -----------
Interest on lease liabilities - (117)
----------- -----------
Interest paid on mortgage loan - (83)
----------- -----------
Interest paid on overdrafts - (108)
----------- -----------
Increase in invoice financing
facilities 290 1,267
----------- -----------
(Decrease)/increase of borrowings (600) 495
----------- -----------
Draw down of loan facility - 3,000
----------- -----------
Repayment on term loan (816) (314)
----------- -----------
Repayment on mortgage loan facility (252) (169)
----------- -----------
Dividends paid to owners of
the parent - (428)
----------- -----------
Purchase of own shares via EBT - (236)
----------- -----------
Purchase of shares - Share buy (576) -
back
----------- -----------
Repayment of debt - Emma Hardie - (2,201)
----------- -----------
Repayment of debt - Brodie &
Stone - (463)
----------- -----------
Net cash generated from/(used
in) financing activities (2,351) 967
----------- -----------
Net increase in cash and cash
equivalents 822 (5,711)
----------- -----------
Cash and cash equivalents at
start of year 840 6,558
----------- -----------
Effect of foreign exchange rate
changes (9) (7)
----------- -----------
Cash and cash equivalents at
end of year 1,653 840
-------------------------------------- ----------- -----------
Notes to preliminary announcement
1. Significant accounting policies
Basis of accounting
T he Group financial statements have been prepared in accordance
with UK-adopted international accounting standard in conformity
with the requirements of the Companies Act 2006.
The IFRSs applied in the Group financial statements are subject
to ongoing amendment by the IASB and therefore subject to possible
change in the future. Further standards and interpretations may be
issued that will be applicable for financial years beginning on or
after 1 April 2023 or later accounting periods but may be adopted
early.
The preparation of financial statements in accordance with IFRS
requires the use of certain accounting estimates. It also requires
management to exercise its judgement in the process of applying the
Group's accounting policies.
The primary statements within the financial information
contained in this document have been presented in accordance with
IAS1 Presentation of Financial Statements.
The financial statements have been prepared on the historical
cost basis as modified for the fair value of business combinations.
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.
The Company has taken advantage of the exemption allowed under
section 408 of the Companies Act 2006 and has not presented its own
Statement of Comprehensive Income in these financial
statements.
Adoption of new and revised accounting standards
None of the standards adopted during the year had a material
impact on the Group's financial statements for the year ended 31
March 2023.
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.
2. Financial instruments and treasury risk management
Market risk
Market risk is the risk that arises from movements in stock
prices, interest rates, exchange rates, and commodity prices.
Market risk for the 31 March 2023 year end is reflected within
the interest rate and foreign currency risk which are discussed
further below.
Credit risk
Credit risk is the risk of financial loss to the Group if a
customer fails to meet its contractual obligations.
Trading exposures are monitored by the operational companies
against agreed policy levels. Credit insurance with a world leading
insurer is employed across the majority of our trade debtors. At 31
March 2023 all trade debtors (2022: all) are covered by credit
insurance with a cover of 90% of the debtor balances. 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 in the full accounts.
The credit risk on liquid funds such as cash and cash
equivalents is limited because the counterparties are banks with
high credit-ratings assigned by international credit-rating
agencies.
Interest rate risk
The Group's interest rate exposure arises mainly from its
interest-bearing borrowings.
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,
11.5 years remaining, secured on the property with an interest rate
of 3.04% fixed for the first 10 years, 6.5 years remaining, of the
loan, therefore reducing the interest rate risk. The interest
charge on the mortgage for the year ended 31 March 2023 was
GBP77,000 (2022: GBP83,000).
On 3 September 2021, the Company took out a term loan of
GBP3,000,000 to fund part of the purchase of the acquisitions in
the prior year. The term loan is for a 4 year term secured on the
assets of the Group with an interest rate of 2.70% above the Bank
of England base rate. The interest charge on the term loan for the
period to 31 March 2023 was GBP111,000 (2022: GBP43,000). A 1%
increase in the interest rate would have resulted in an additional
charge of GBP22,000 (2022: GBP13,000).
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 GBP114,000 (2022: GBP75,000). A 1% decrease would have
the opposite effect. The Group's sensitivity to interest rates has
changed during the current year due to the current economic
climate, which has had the impact of increasing BOE base rates.
Foreign currency risks
The Group operates in a number of markets across the world and
is exposed to foreign currency transaction and translation risks
arising on the purchase and sales of goods in particular with
respect to the US dollar and Euro.
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 0% (2022: 0%) of the Group's
income is denominated in US dollars and 2% (2022: 2%) in Euros.
Approximately 4% (2022: 4%) of the Group's expenditure is
denominated in US dollars and 4% (2022: 5%) in Euros.
Foreign currency sensitivity
A 5% strengthening of sterling would result in a GBP145,000
(2022: GBP163,000) increase in profits and equity. A 5% weakening
in sterling would result in a GBP161,000 (2022: GBP180,000)
reduction 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 2023 or 31 March
2022.
Cash flow and liquidity risk
Liquidity risk arises from the Group's management of working
capital. It is the risk that the Group will encounter difficulty in
meeting its financial obligations as they fall due.
The Group manages its working capital requirements through
overdrafts and invoice finance facilities. These facilities were
renewed in March 2023 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 the terms of these facilities.
At 31 March 2023 the Group had available GBP4,327,000 (2022:
GBP6,288,000) of undrawn committed borrowing facilities in respect
of which all conditions precedent had been met. The Group has a
fixed rate mortgage for a 15 year term secured on the property with
an interest rate of 3.04% fixed for the next 6.5 years of the loan.
The Company also took out a term loan of GBP3,000,000 to fund part
of the purchase of the acquisitions in the prior year. The term
loan is for a 4 year term secured on the assets of the Group with
an interest rate of 2.70% above the Bank of England base rate.
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
2023 2022
-------- --------------
GBP000 GBP000
-------- --------------
Trade and other receivables 12,220 12,819
-------- --------------
Cash and cash equivalents 1,653 840
-------- --------------
Total 13,873 13,659
-------- --------------
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.
At 31 March 2023
Group
------------------------------------------------------
Less Between Between Over Total
than 6 months 1 and 5 years
6 months and 1 5 years
year
---------- ---------- --------- --------- --------
GBP000 GBP000 GBP000 GBP000 GBP'000
---------- ---------- --------- --------- --------
Trade payables 5,974 - - - 5,974
---------- ---------- --------- --------- --------
Accruals 2,723 - - - 2,723
---------- ---------- --------- --------- --------
Obligations under leases 194 179 874 43 1,290
---------- ---------- --------- --------- --------
Overdraft and invoice
financing 1,583 - - - 1,583
---------- ---------- --------- --------- --------
Loan 453 466 1,977 1,511 4,407
---------- ---------- --------- --------- --------
Total 10,927 645 2,851 1,554 15,977
---------- ---------- --------- --------- --------
For the year to 31 March 2023 contingent consideration of GBPNil
(2022:GBP1,028,000) is held at FVTPL within financial liabilities.
The contingent consideration is based on quoted investments and is
therefore designated as level 1 in the fair value hierarchy.
At 31 March 2022
Group
----------------------------------------------------------------
Less Between Between More Total
than 6 months 1 and than
6 months and 1 5 years 5 years
year
---------- -------------- -------------- ----------- -------
GBP000 GBP000 GBP000 GBP000 GBP000
---------- -------------- -------------- ----------- -------
Trade payables 6,211 - - - 6,211
---------- -------------- -------------- ----------- -------
Accruals 3,016 - - - 3,016
---------- -------------- -------------- ----------- -------
Obligations under leases 153 150 864 - 1,167
---------- -------------- -------------- ----------- -------
Overdraft and invoice
financing 1,762 - - - 1,762
---------- -------------- -------------- ----------- -------
Loans 447 454 2,670 1,716 5,287
---------- -------------- -------------- ----------- -------
Deferred consideration 159 - - - 159
---------- -------------- -------------- ----------- -------
Total 11,748 604 3,534 1,716 17,602
---------- -------------- -------------- ----------- -------
5. Earnings per share
The calculation of the basic and diluted earnings per share is
based on the following data:
Year ended Year ended
31-Mar 31-Mar
2023 2022
----------- -----------
GBP000 GBP000
----------- -----------
Earnings
----------- -----------
Net profit attributable to the equity holders
of the parent company 514 3,110
----------- -----------
Year ended Year ended
31-Mar 31-Mar
2023 2022
----------- -----------
Number Number
----------- -----------
Number of shares
----------- -----------
Weighted average number of ordinary shares
for the purposes of basic earnings per share 69,166,461 67,372,553
----------- -----------
Effect of dilutive potential ordinary shares
relating to share options 9,534,475 10,681,836
----------- -----------
Weighted average number of ordinary shares
for the purposes of diluted earnings per share 78,700,936 78,054,389
----------- -----------
Basic 0.74p 4.62p
Diluted 0.65p 3.98p
------ ------
6. Share capital
Ordinary shares of
1p each
---------------------
GBP000 Number
------- ------------
At 1 April 2021 648 64,852,243
------- ------------
Issued in the year 49 4,903,940
------- ------------
At 31 March 2022 697 69,756,183
-------------------- ------- ------------
Issued in the year 3 273,400
------- ------------
At 31 March 2023 700 70,029,583
-------------------- ------- ------------
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 GBP74,000 (2022: GBP564,000).
7. Notes to cash flow statement
Analysis of changes in net debt
Overdraft Invoice Mortgage Loan Total
Financing
GBP000 GBP000 GBP000 GBP000 GBP000
--------------- ---------------- -------------- ------------ --------------
At 1 April 2022 495 1,267 2,642 2,645 7,049
--------------- ---------------- -------------- ------------ --------------
Cash flows (600) 290 (252) (816) (1,378)
--------------- ---------------- -------------- ------------ --------------
Interest accruing 131 - 77 111 319
--------------- ---------------- -------------- ------------ --------------
At 31 March 2023 26 1,557 2,467 1,940 5,990
------------------------ --------------- ---------------- -------------- ------------ --------------
Overdraft Invoice Mortgage Loan Total
Financing
GBP000 GBP000 GBP000 GBP000 GBP000
--------------- ---------------- -------------- ---------------- -----------------
At 1 April 2021 - - 2,812 - 2,812
--------------- ---------------- -------------- ---------------- -----------------
Cash flows 495 1,267 (253) 2,603 4,112
--------------- ---------------- -------------- ---------------- -----------------
Interest accruing - - 83 42 125
--------------- ---------------- -------------- ---------------- -----------------
At 31 March 2022 495 1,267 2,642 2,645 7,049
------------------------ --------------- ---------------- -------------- ---------------- -----------------
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 2023 or 2022, but is derived
from these financial statements. The financial statements for the
year ended 31 March 2022 have been delivered to the Registrar of
Companies. The financial statements for the year ended 31 March
2023 have been prepared in accordance with international financial
reporting standards adopted pursuant to Regulation (EC) No
1606/2002 as it applies in the European Union. The financial
statements for the year ended 31 March 2023 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
2023 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
2023 will be uploaded to the National Storage Mechanism and will be
available for viewing shortly at
https://data.fca.org.uk/#/nsm/nationalstoragemechanism
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
13 September 2023 at 12:00 noon.
This information is provided by RNS, the news service of the
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END
FR NKABBOBKDAOK
(END) Dow Jones Newswires
July 07, 2023 02:00 ET (06:00 GMT)
Creightons (LSE:CRL)
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