CREIGHTONS PLC — Interim / Quarterly Report 2017

Nov 22, 2017

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RNS Number : 1435X

Creightons PLC

22 November 2017

For Immediate Release                                                                                  22 November 2017

Creightons plc Group

(the "Group" or "Creightons")

Unaudited interim financial report

for the six months ended 30 September 2017

Financial highlights

·      Revenue increased by 7% £16.7m. (2016: £15.6m).

·      Operating profit margin of 5.8% (2016 5.1%).

·      Profit before tax increased by 21% to £956,000 (2016: £790,000).

·      Diluted EPS 1.09p (2016: 1.00p)

·      ROCE 10.7% (2016: 9.5%)

·      Paid final dividend of 0.23p per ordinary share in August 2017 (2016: No dividend).

·      Interim dividend of 0.15p per ordinary share to be paid in December 2017

Chairman's statement

The Group has continued to make progress in the first half of the year and the impact of the continuing growth can be seen in the results for the period ending 30 September 2017.

Sales

Group Sales were £16,734,000 for the six months ended 30 September 2017 (2016: £15,600,000) an increase of 7.3%.  This has been achieved in conjunction with an order intake during the period which is 13.5% up on the same period last year.  Sales have increased for the period through growth with key existing customers and by bringing on new customers.  Sales of our branded products for the first 6 months have exceeded group growth at 12% through existing customers, new export markets and ongoing development of licenced brands. During the period we have focused on winning and extending business with key UK retailers which are growing their personal care and beauty market share as well as a realignment of key contract accounts based on margin performance.

Margin and overheads

Our gross margin was 42.1% in the six months to 30 September 2017 (2016: 41.0%). We have continued to benefit from the economies of scale generated by the sales growth in the year to March 2017 and on supplier base consolidation. We intend to focus efforts to improve our margins through targeted investment in plant and machinery which will increase production capacity and improve unit cost of manufacture. This will be key to our success especially in the current economic climate as we continue to see the trend of consumers in the UK focussing on value.

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.

Profit before tax

Profit before tax was £956,000 (2016: £790,000), which represents an increase of 21.0%. The increased sales together with the tight control on costs results in an operating profit margin of 5.8% (2016: 5.1%).

Tax

It should be noted that the Group utilised all of its historic tax losses in the financial year to 31 March 2017 and therefore we have provided a tax charge within these results of £232,000 (2016: £119,000 - reduced rate due to utilization of historic losses).

Earnings per share

I am pleased to report that the impact of the above is a diluted earnings per share of 1.09p (2016: 1.00p) an increase of 9%.

Dividend Payments

The Board is pleased to announce that it will be paying an interim dividend of 0.15 pence per ordinary share, reflecting the continued strong performance the group has shown in the first half. I anticipate that this will be paid before Christmas. This is in addition to the dividend of 0.23 pence per ordinary share we paid in August 2017, the charge for which is shown in the accounts to 30 September 2017. The total payment in relation to the dividend paid in August was £139,000 (2016: £0).

Working capital and loans

Net cash on hand (cash and cash equivalents less short term borrowings and loans) is a net borrowing of £246,000 (2016: £43,000). The main reason for the decrease in net cash on hand is the higher working capital requirement to support the sales growth during the period. 

The Board and I believe that this half year's sales of £16,734,000 and profit after tax of £724,000 continues to place the Group in a good position to take advantage of any opportunities that may arise.

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 period. I would also like to thank our customers, shareholders and suppliers for their support and loyalty to the Group.

W O McIlroy

Executive Chairman                                                                                                                     21 November 2017

Responsibility statement

The names and functions of the Directors of the Company are as follows:

William O McIlroy            Executive Chairman

Bernard Johnson             Executive Managing Director

Mary T Carney                Non-executive Director

Nicholas O'Shea              Non-executive Director

William Glencross            Non-executive Director

Martin Stevens                Deputy Managing Director

Pippa Clark                    Group Sales and Marketing Director

Paul Forster                    Group Finance and Commercial Director

The Board confirms that to the best of its knowledge the condensed set of financial statements gives a true and fair view of the assets and liabilities, financial position and profit of the Group and has been prepared in accordance with IAS 34 'Interim Financial Reporting', as adopted by the European Union and that the interim management report includes a fair review of the information required by the Disclosure and Transparency Rules as issued by the Financial Conduct Authority, namely:

·      DTR 4.2.7:  An indication of important events that have occurred during the first six months of the financial year, and their impact on the condensed set of financial statements, and a description of the principal risks and uncertainties for the remaining six months of the financial year.

·    DTR 4.2.8:  Details of related party transactions that have taken place in the first six months of the current financial year and that have materially affected the financial position or performance of the enterprise during that period. Together with any changes in the related parties transactions described in the last annual report that could have a material effect on the enterprise in the first six months of the current financial year.

By order of the Board

Nicholas O'Shea

Company Secretary and Director                                                                                       21 November 2017

Principal risks and uncertainties

Risks

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 the impact that has had on costs and consumer purchases.

It also monitors those 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.

Capital structure, cash flow and liquidity

The business is funded using retained earnings and invoice discounting, with a bank facility secured against its assets.

Consolidated income statement - unaudited

		Six months ended 30 September (Unaudited)		Year ended 31 March  (Audited)
		2017	2016	2017
	Note	£000	£000	£000
Revenue		16,734	15,600	30,586
Cost of sales		(9,691)	(9,201)	(17,598)
Gross profit		7,043	6,399	12,988
Distribution costs		(626)	(605)	(1,280)
Administrative expenses		(5,452)	(4,995)	(10,195)
Operating profit		965	799	1,513
Finance costs		(9)	(9)	(24)
Profit before tax		956	790	1,489
Taxation	3	(232)	(119)	(238)
Profit for the period from continuing operations attributable to the equity shareholders of the parent company		724	671	1,251

Dividend		Six months ended 30 September  (Unaudited)	Six months ended 30 September (Unaudited)	Year ended 31 March  (Audited)
		2017	2016	2017
Dividend Paid in period (£'000)		139	-	-
Paid in period (pence per share)		0.23	-	-

Earnings per share

		Six months ended 30 September (Unaudited)		Year ended 31 March (Audited)
	Note	2017	2016	2017
##### Basic	2	1.20p	1.12p	2.09p
Diluted	2	1.09p	1.00p	1.88p

Consolidated statement of comprehensive income - Unaudited

		Six months ended 30 September (Unaudited)		Year ended 31 March (Audited)
		2017	2016	2017
		£000	£000	£000
##### Profit for the year		724	671	1,251
Exchange differences on translating of foreign operations		-	-	3
Exercise of derivatives		30	-	26
Total comprehensive income for the period attributable to the equity holders of the company		754	671	1,280

Consolidated balance sheet - unaudited

		30 September		31 March
		2017 (Unaudited)	2016 (Unaudited)	2017 (Audited)
		£000	£000	£000
##### Non-current assets
Goodwill		331	331	331
Other intangible assets		320	180	212
Property, plant and equipment		1,767	1,582	1,637
		2,418	2,093	2,180
##### Current assets
Inventories		5,736	4,554	4,024
Trade and other receivables		7,901	6,373	4,861
Cash and cash equivalents		213	1,001	2,631
Derivative financial instruments		56	14	19
		13,906	11,942	11,535
Total assets		16,324	14,035	13,715
##### Current liabilities
Trade and other payables		6,618	5,097	4,564
Short term borrowings		459	455	68
Bank loan - under 12 months		-	132	116
Derivative financial instruments		-	40	56
		7,077	5,724	4,804
Net current assets		6,829	6,218	6,731
Non-current liabilities
Deferred tax liability		66	-	26
Bank loan		-	457	418
		66	457	444
Total liabilities		7,143	6,181	5,248
Net assets		9,181	7,854	8,467
##### Equity
Share capital		606	599	606
Share premium account		1,260	1,249	1,259
Other reserves		25	25	25
Translation reserve		(9)	(12)	(9)
Cash flow hedge reserve		56	(26)	(37)
Retained earnings		7,243	6,019	6,623
Total equity attributable to the equity shareholders		9,181	7,854	8,467

Statement of changes in shareholders' equity - unaudited

	Share capital	Share premium account	Other reserves	Translation reserve	Cash flow hedge reserve	Retained earnings	Total
	£000	£000	£000	£000	£000	£000	£000
Balance at 1 April 2016	599	1,249	25	(12)	(26)	5,307	7,142
Profit for six months ended 30 September 2016	-	-	-	-	-	671	671
Share based payments	-	-	-	-	-	41	41
Exercise of derivatives	-	-	-	-	26	-	26
Charge in relation to derivative financial instruments	-	-	-	-	(26)	-	(26)
Balance at 30 September 2016	599	1,249	25	(12)	(26)	6,019	7,854
Profit for six months ended 31 March 2017	-	-	-	-	-	580	580
Share based payments	-	-	-	-	-	49	49
Exchange differences on translation of foreign operations				3	-	-	3
Exercise of options	7	10	-	-	-	-	17
Charge in relation to derivative financial instruments	-	-	-		(11)	-	(11)
Deferred tax through Equity						(25)	(25)
Balance at 31 March 2017	606	1,259	25	(9)	(37)	6,623	8,467
Profit for six months ended 30 September 2017	-	-	-	-	-	724	724
Payment of dividend	-	-	-	-	-	(139)	(139)
Share based payments	-	-	-	-	-	35	35
Exercise of options	-	1	-	-	-	-	1
Exercise of derivatives	-	-	-	-	30	-	30
Charge in relation to derivative financial instruments	-	-	-	-	63	-	63
Balance at 30 September 2017	606	1,260	25	(9)	56	7,243	9,181

Consolidated cash flow statement - unaudited

	Note	Six months ended 30 September (Unaudited)		Year ended 31 March (Audited)
		2017	2016	2017
		£000	£000	£000
Net cash (outflow) / inflow from operating activities	4	(1,532)	(403)	2,058
##### Cash flow from investing activities
Purchase of property, plant and equipment		(296)	(350)	(551)
Expenditure on intangible assets		(309)	(98)	(306)
##### Net cash (used in) investing activities		(605)	(448)	(857)
##### Cash flow from financing activities
Repayment of finance lease obligations		-	(7)	(7)
Proceeds on issue of shares		1	-	17
Payment of dividend		(139)	-	-
(Repayment) / increase of bank loans and invoice finance facilities		(143)	1,044	602
##### Net cash (used in) / generated from financing activities		(281)	1,037	612
Net (decrease) / increase in cash and cash equivalents		(2,418)	186	1,813
Cash and cash equivalents at start of period		2,631	814	814
Effect of foreign exchange rate changes		-	1	4
Cash and cash equivalents at end of period		213	1,001	2,631

Notes to the unaudited interim financial report

1.   Basis of preparation

The interim financial statements for the six months ended 30 September 2016 and 30 September 2017 and for the twelve months ended 31 March 2017 do not constitute statutory accounts for the purposes of Section 434 of the Companies Act 2006. The Annual Report and Financial Statements for the year ended 31 March 2017 have been filed with the Registrar of Companies. The Independent Auditors' Report on the Annual Report and Financial Statements for the year ended 31 March 2017 was unqualified, did not draw attention to any matters by way of emphasis, and did not contain a statement under sections 498(2) or 498(3) of the Companies Act 2006. The 30 September 2017 statements were approved by the Board of Directors on 21 November 2017. This unaudited interim report has not been audited or reviewed by auditors pursuant to the Financial Reporting Council guidance on Review of Interim Financial Information.

The condensed financial statements in this Interim Report have been prepared in accordance with the requirements of IAS 34 'Interim Financial Reporting' as adopted by the European Union.

As required by the Disclosure and Transparency Rules of the UK's Financial Conduct Authority, the condensed set of financial statements has been prepared by applying the accounting policies and presentation that were applied in the preparation on the Company's published consolidated financial statements for the year ended 31 March 2017, which were prepared in accordance with International Financial Reporting Standards as adopted by the European Union.

The condensed interim financial statements for the six months ended 30 September 2017 and the comparative figures for the six months ended 30 September 2016 are unaudited. The figures for the year ended 31 March 2017 have been extracted from the Annual Report on which the Auditors issued an unqualified audit report and which have been filed with the Registrar of Companies.

2.   Earnings per share

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

		Six months ended 30 September (Unaudited)		Year ended 31 March (Audited)
		2017	2016	2017
		£000	£000	£000
Earnings
Net profit attributable to the equity holders of the parent company		724	671	1,251

		Six months ended 30 September (Unaudited)		Year ended 31 March (Audited)
		2017	2016	2017
		Number	Number	Number
Number of shares
Weighted average number of ordinary shares for the purposes of basic earnings per share		60,563,551	59,837,243	59,905,805
Effect of dilutive potential ordinary shares relating to Share options		5,928,689	7,005,000	6,850,137
Weighted average number of ordinary shares for the purposes of diluted earnings per share		66,492,240	66,842,243	66,755,942

3.   Taxation

		Six months ended 30 September (Unaudited)		Year ended 31 March (Audited)
		2017	2016	2017
		£000	£000	£000
Current tax		192	119	237
Deferred tax		40	-	1
Total		232	119	238

The charge for the period can be reconciled to the profit per the income statement as follows:

		Six months ended 30 September (Unaudited)		Year ended 31 March (Audited)
		2017	2016	2017
		£000	£000	£000
##### Profit before taxation		956	790	1,489
##### Tax charge at the UK corporation tax rate of 19% (2016 - 20%)		(182)	(158)	(298)
##### Tax effect of expenses that are not deductible in determining taxable profit		(7)	-	(1)
##### Deferred tax charge on temporary differences		(1)	-	(1)
##### Deferred tax credited directly to retained earnings		-	-	25
##### Adjustment in respect of prior periods		(56)	-	-
##### Tax effect of utilisation of brought forward tax losses		-	54	54
##### Adjust closing deferred tax to average rate		(12)	-	5
##### Adjust opening deferred tax to average rate		(3)	-	1
##### Deferred tax not recognised		-	-	9
Other differences		29	(15)	(32)
Total expense and effective rate for the year		(232)	(119)	(238)

4.   Notes to cash flow statement

		Six months ended 30 September (Unaudited)		Year ended 31 March (Audited)
		2017	2016	2017
				£000
##### Profit from operations		733	680	1,275
Adjustments for:
Depreciation on property, plant and equipment		166	142	288
Amortisation of intangible assets		201	157	333
Share based payment charge		35	41	90
		1,135	1,020	1,986
Increase in inventories		(1,712)	(640)	(112)
Increase in trade and other receivables		(3,040)	(2,324)	(813)
Increase in trade and other payables		2,054	1,551	1,021
Increase in deferred tax provision		40	-	26
Movement in non-cash derivatives		-	-	(26)
Cash (utilised in) / generated from operations		(1,523)	(393)	2,082
Interest (paid)		(9)	(8)	(24)
Net cash (outflow) / inflow from operating activities		(1,532)	(401)	2,058

5.    Related party transactions

The related party transactions that occurred in the six months ended 30 September 2017 are not materially different in size or nature to those reported in the Company's Annual Report for the year ended 31 March 2017.

6.    Availability of Interim Report

The Interim Report is being made available to shareholders on the company website www.creightonsplc.com. Further copies can be obtained from the Company's Registered Office, 1210 Lincoln Road, Peterborough, PE4 6ND.

This announcement contains inside information for the purposes of Article 7 of EU Regulation 596/2014

For more information:

Nicholas O'Shea, Director, Creightons plc                    01733 281000

Roland Cornish, Beaumont Cornish Limited                 0207 628 3396

This information is provided by RNS

The company news service from the London Stock Exchange

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