CREIGHTONS PLC — Earnings Release 2015

Jun 19, 2015

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RNS Number : 6143Q

Creightons PLC

19 June 2015

Creightons Plc

Preliminary announcement

For the year ended 31 March 2015

Chairman's statement

I am pleased to report another year of growth and improved profitability. The Group's profit attributable to the equity shareholders of the parent company has increased to £851,000 from £471,000 in 2014.  This includes a profit of £375,000 on the sale of the Group's 55% interest in the Twisted Sista brand, which was announced on 27 May 2014. The Group's profit excluding the exceptional profit relating to the sale of TS Ventures Ltd is £476,000 compared to £471,000 in 2014.

On 28 May 2015 the Group completed the disposal of "The Real Shaving Company'' business for £1,000,000 which is expected to generate an exceptional profit of £844,000.  These two disposals illustrate the Group's effectiveness in creating and developing brands which add to shareholder value. The Directors consider the creation and development of brands to be an ongoing feature of the business.

Growth in sales has been achieved in a highly competitive retail environment where our customers are seeking to improve the value of the offer to their end consumer.  Our private label ranges continue to face increased price and promotion pressure from big brands and the growth of the value market, which has eroded their market share and adversely affected sales volumes. To combat the effects of lower underlying demand we have continued to successfully generate sales growth by introducing new product ranges for new and existing customers and by expanding our reach into export markets.

Profit margins remain under pressure with customers seeking to recover lost margin and with sales growth coming from lower margin products. We continue to manage costs and our product offering in order to be in a position to respond to customer pressure whilst maintaining our own profitability.

Financial results

Group sales this year of £21,093,000 are £1,741,000 (9%) higher than last year (2014: £19,352,000), continuing the upward growth in sales volumes we have been recording over the past three years. This year's sales growth has mainly come from our branded and contract business with only marginal growth from private label customers. The disposal of the Twisted Sista brand has reduced the level of business generated through our North American subsidiary.  Our strategy of developing the market for branded products exported from the UK has been particularly successful with sales growth of 95%.

Changes in product and customer mix and price pressure from private label customers has resulted in a reduced gross margin percentage of 39.8%, a reduction of 1.0% on last year (2014: 40.8%).  Winning business with a lower than average margin has helped deliver the 9% sales growth noted above. Administration costs, which include product research and development as well as sales promotion and product support, have risen by 5.7% (2014 - 4.1%) as we invest resources to support the growth of the business.

Group profit after tax of £851,000 (2014: £471,000) shows a significant improvement in shareholder value. Profit after tax and before the exceptional item of £476,000 (2014: £471,000) represents a solid performance in view of the market pressures and the investments made to support future development. Diluted earnings per share rose from 0.79p in 2014 to 1.27p for 2015. As in previous years no provision has been made for deferred tax due to the availability of unutilised tax losses.

Net borrowings (bank overdraft and loans less cash at bank and in hand) at the year-end have reduced by £527,000 to £75,000 (2014: £602,000). Cash generated by the business, including the £387,000 generated from the sale of the Twisted Sista brand, was partly utilised to fund the increase in working capital required to support the expansion of the business.

Current year developments

The Group continues to develop and strengthen its branded portfolio.  This is being achieved through expanding our brand offering and refining the range offering within existing brands. We will also seek to acquire brands which are complementary to our existing portfolio and where our sales, marketing and product development expertise will enable the Group to drive growth.

We expect our main private label customers to respond to the pressures in the current economic climate with value strategies resulting in sales opportunities, which we intend to exploit with lower priced products to offset lower sales levels on higher priced products. This is likely to result in margin pressure over the coming years. We will continue to manage our overhead cost base and working capital requirements to ensure they are aligned with the anticipated sales levels of the Group, whilst retaining the skills necessary to meet growth opportunities as they arise.

There has been a slight increase in raw material prices after a relatively benign period and we have focused attention on maximising our buying potential.

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

As mentioned above the Group completed the sale of The Real Shaving Company business for an anticipated profit of £844,000. The Group intends to utilise the proceeds of this disposal to invest in the development of new ranges and to invest in resources to help improve productivity and staff development. We are finalising plans to invest approximately £100,000 to improve our manufacturing and logistics organisations.  This one-off expenditure, which will impact on the results for this year, will provide us with the structure capable of delivering long term increases in productivity and capacity and improve our competitiveness.

The Board has considered and decided not to declare a dividend this year.  As part of this review the Board also decided that it should aim to introduce dividend payments for the year ended 31 March 2016, should the underlying level of profits and cash generation continue to improve.

I would like to take this opportunity to thank each and every one of the Group's employees for the hard work and effort they have put in over what has been a challenging year. I would also like to thank our customers, shareholders and suppliers for their support and loyalty to the Group.

William McIlroy

Chairman, 18 June 2015

Consolidated income statement

		Year ended 31 March	Year ended 31 March
		2015	2014
	Note	£000	£000
Revenue		21,093	19,352
Cost of sales		(12,707)	(11,460)
Gross profit		8,386	7,892
Distribution costs		(922)	(802)
Administrative expenses		(6,966)	(6,587)
Operating profit		498	503
Exceptional items		375	-
Profit after exceptional items		873	503
Finance costs		(22)	(32)
Profit after exceptional item and before tax		851	471
Taxation		-	-
Profit for the year from continuing operations attributable to the equity shareholders of the parent company		851	471

Earnings per share

##### Basic	1	1.43p	0.81p
Diluted	1	1.27p	0.79p

Earnings per share before exceptional item

##### Basic	1	0.80p	0.81p
Diluted	1	0.71p	0.79p

Consolidated statement of comprehensive income

		Year ended 31 March	Year ended 31 March
		2015	2014
		£000	£000
##### Profit for the year		851	471
Exchange differences on translating foreign operations		(2)	42
Total comprehensive income  for the year attributable to the equity shareholders of the parent company		849	513

Consolidated balance sheet

		31 March	31 March
		2015	2014
	Note	£000	£000
##### Non-current assets
Goodwill		331	343
Other intangible assets		283	259
Property, plant and equipment		574	590
		1,188	1,192
##### Current assets
Inventories		4,074	3,704
Trade and other receivables		3,591	3,464
Cash and cash equivalents		9	11
Derivative financial instruments		17	-
		7,691	7,179
Total assets		8,879	8,371
Current liabilities
##### Trade and other payables		2,956	2,777
Obligations under finance leases		22	20
Borrowings		84	613
Derivative financial instruments		13	-
		3,075	3,410
Net current assets		4,616	3,769
Non-current liabilities
Obligations under finance leases		7	28
		7	28
Total liabilities		3,082	3,438
Net assets		5,797	4,933
Equity
##### Share capital	2	596	584
Share premium account		1,248	1,264
Other reserves		25	38
Translation reserve		(10)	(13)
Retained earnings		3,938	3,060
Total equity attributable to the equity shareholders of the parent company		5,797	4,933

Consolidated statement of changes in equity

	Share capital	Share premium account	Other reserves	Share-based payment reserve	Translation reserve	Retained earnings	Total equity
	£000	£000	£000	£000	£000	£000	£000
At 1 April 2013	545	1,231	38	51	(55)	2,530	4,340
Issue of share options	39	33	-	-	-	-	72
Exchange differences on translation of foreign operations	-	-	-	-	42	-	42
Share-based payment charge	-	-	-	8	-	-	8
Transfer	-	-	-	(59)	-	59	-
Profit for the year	-	-	-	-	-	471	471
At 31 March 2014	584	1,264	38	-	(13)	3,060	4,933
Issue of employee shares	12	(12)	-	-	-	-	-
Exchange differences on translation of foreign operations	-	-	-	-	(2)	-	(2)
Employee share holder scheme charge	-	(4)	-	-	-	-	(4)
Share-based payment charge	-	-	-	-	-	14	14
Transfer	-	-	(13)	-	-	13	-
Charge in relation to derivative financial instruments	-	-	-	-	5	-	5
Profit for the year	-	-	-	-	-	851	851
At 31 March 2015	596	1,248	25	-	(10)	3,938	5,797

Consolidated cash flow statement

		Year ended 31 March	Year ended 31 March
		2015	2014
	Note	£000	£000
Net cash from operating activities	3	677	689
##### Investing activities
Purchase of property, plant and equipment		(159)	(211)
Purchase of intangible assets		(358)	(258)
Proceeds on disposal of the Twisted Sista  brand		387	-
##### Net cash used in investing activities		(130)	(469)
##### Financing activities
Repayment of finance lease obligations		(19)	(19)
Proceeds on issue of shares		-	72
Decrease in bank loans and invoice finance facilities		(529)	(279)
##### Net cash used in financing activities		(548)	(226)
Net decrease in cash and cash equivalents		(1)	(6)
Cash and cash equivalents at start of year		11	18
Effect of foreign exchange rate changes		(1)	(1)
Cash and cash equivalents at end of year		9	11

Notes to preliminary announcement

1    Earnings per share

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

		Year ended 31 March	Year ended 31 March
		2015	2014
		£000	£000
Earnings
Net profit attributable to the equity shareholders of the parent company		851	471

		Year ended 31 March	Year ended 31 March
		2015	2014
		Number	Number
Number of shares
Weighted average number of ordinary shares for the purposes of basic earnings per share		59,537,243	58,355,426
Effect of dilutive potential ordinary shares relating to share options		7,405,000	1,570,000
Weighted average number of ordinary shares for the purposes of diluted earnings per share		66,942,243	59,925,426

2.   Share capital

		Ordinary shares of 1p each
		£000	Number
##### At 01 April 2013		545	54,478,876
##### Issued in the year		39	3,876,550
##### At 31 March 2014		584	58,355,426
##### Issued in the year		12	1,181,817
##### At 31 March 2015		596	59,537,243

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 in the year was Nil (2014 - £72,000).

3. Notes to consolidated cash flow statement

		Year ended 31 March	Year ended 31 March
		2015	2014
		£000	£000
##### Profit from operations		498	503
Adjustments for:
Depreciation on property, plant and equipment		175	146
Amortisation of intangible assets		334	293
Share based payment charge		14	8
		1,021	950
Increase in inventories		(370)	(210)
Increase in trade and other receivables		(127)	(661)
Increase in trade and other payables		179	642
Movement in non-cash derivatives		(4)	-
Cash generated from operations		699	721
Interest paid		(22)	(32)
Net cash from operating activities		677	689

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

4. Status of information

The financial information above, which was approved by the Board of Directors on 18 June 2015, does not constitute full accounts within the meaning of section 434 of the Companies Act 2006. The financial information presented above has been prepared in accordance with the accounting policies published in the financial statements for the year ended 31 March 2014.  The full financial statements for the year ended 31 March 2014, which contained an unqualified audit report under section 475 of the Companies Act 2006 and which did not make any statement under section 498 of the Companies Act 2006, have been delivered to the Registrar of Companies in accordance with section 441 of the Companies Act 2006.

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

Copies of the annual report and consolidated financial statements for the year ended 31 March 2015 will be made available to shareholders in due course.   Further copies will be available from the Company's registered office at 1210 Lincoln Road, Peterborough, PE4 6ND and on the company's website at www.creightons.com.

This information is provided by RNS

The company news service from the London Stock Exchange

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