CREIGHTONS PLC — Management Reports 2022

Aug 1, 2022

Contents

Highlights		3
	Group strategic report	5
•	Chairman's statement	6
•	The business model	11
•	A fair review of the Group's business	11
•	Strategy, objectives and future developments	14
•	Key performance indicators	15
•	Principal risks and uncertainties	19
•	Section 172 statement	22
•	Corporate and social responsibility	26
•	Task Force on Climate-Related Financial disclosures (TCFD) report	29
•	Non-financial Information Statement	34
•	Going concern	36
	Supplementary material
•	Directors' remuneration report	37
•	Directors' remuneration policy report	48
•	Consolidated income statement	55
•	Consolidated balance sheet	57
•	Consolidated cash flow statement	60
	Notice of meeting	62
	Contact and other useful information	69

This strategic report with supplementary material is a summary of information derived from the company's annual report. The Annual Report for 2022, together with this strategic report with supplementary material and notice of the annual general meeting, which contains other information required by section 311A of the Companies Act 2006, is available on our website at www.creightonsplc.com or by post, free of charge, by writing to Creightons Plc, 1210 Lincoln Road, Peterborough, Cambridgeshire PE4 6ND.

The auditor has issued unqualified reports on the full annual financial statements, the auditable part of the directors' remuneration report and on the consistency of the strategic report and the directors' report with those annual financial statements. Their report on the full annual financial statements and the auditable part of the directors' remuneration report contained no statement under sections 498(2) or 498(3) of the Companies Act 2006.

Creightons plc Group

Highlights

Financial highlights

• Revenue from core business excluding hygiene and acquisitions increased by £10.3m (21.8%) to £57.3m (2021: £47.0m).
• Total revenue decreased by only 0.7% to £61.2m (2021: £61.6m).
• EBITDA of £5.9m (2021: £6.9m).
• Operating profit decreased by 19.1% to £4.37m (2021: £5.39m).
• Operating profit margin of 7.1% (2021: 8.8%).
• A tax charge of £0.3m (2021: £0.8m) equates to an effective tax rate of 10.0% (2021: 16.2%).
• The profit after tax for the year has decreased by £1.2m to £3.1m (2021: £4.3m).
• The profit reduction together with the issue of shares has reduced the fully diluted earnings per share to 3.98p (2021: 5.89p).
• Balance sheet remains strong and includes new intangible assets of £10.1m arising from acquisitions. We have continued to invest in working capital, product development and fixed assets to support the growth and efficiency of the business.
• Net cash on hand (cash and cash equivalents less short-term element of obligations under finance leases and borrowings) is negative £2.1m (2021: positive £6.2m).
• The Directors do not propose a final dividend for the year ended 31 March 2022 (2021: 0.50p per ordinary share).

Highlights

continued

Operational highlights

• We have successfully replaced the previous year's "one off" hygiene sales generated by the Covid-19 pandemic which were a total of £14.6m with growth across each of the branded, private label and contract manufacturing business units.
• Sales growth momentum maintained in the core business despite the impact of Covid-19:
• Our own branded sales (excluding hygiene products) have grown by 37.7%.
• Sales of retailer own label products increased by 9.5%.
• Contract manufacturing sales increased by 29.3%.
• Total overseas sales have increased by 45.6% to £10.0m (2021: £6.9m).
• Successfully completed acquisition of two businesses; Emma Hardie and Brodie & Stone. Their integration is progressing well and the full benefits will emerge in the new financial year.
• Combined sales from acquisitions during the year amounted to £3.6m. Emma Hardie revenue £2.3m from 28 July 2021 and Brodie and Stone £1.3m from 24 September 2021.
• Cash on hand at March 2021 has been invested in the acquisitions of Emma Hardie and Brodie & Stone in the year as well as increased investment in working capital, product development and plant & equipment to support the business growth.
• In common with most manufacturing businesses we have had to deal with unprecedented increases in our input and energy prices together with significant disruption in the global supply chain. We have developed a detailed cost indexing system which monitors all cost increases and have engaged proactively with our customers.
• Brexit Impact of Brexit on operations has not been significant.
• Costs of Covid-19 defences were significantly reduced compared to previous year. Sales of hygiene products which were a significant feature of last year's activities with a turnover of £14.6m have reduced to £0.3m and are not expected to recur in the future. Most of our customers have returned to pre-Covid-19 activities. We have removed Covid-19 restrictions at both our manufacturing sites but remain vigilant in the face of the ongoing Covid-19 threat.

This strategic report has been prepared solely to provide additional information to enable shareholders to assess the Group's strategies and the potential for those strategies to succeed.

The strategic report contains certain forward-looking statements. These statements are made by the directors in good faith based on the information available to them up to the time of their approval of this report and such statements should be treated with caution due to the inherent uncertainties, including both economic and business risk factors, underlying any such forward-looking information.

In preparing this strategic report, the directors have complied with s414C of the Companies Act 2006.

The strategic report has been prepared for the Group and therefore gives greater emphasis to those matters that are significant to Creightons Plc and its subsidiary undertakings when viewed as a whole.

The strategic report discusses the following areas:

• Chairman's statement
• The business model
• A fair review of the Group's business
• Strategy, objectives and future developments
• Key performance indicators
• Principal risks and uncertainties
• Section 172 statement
• Corporate and social responsibility
• Task Force on Climate-Related Financial disclosures (TCFD) report
• Non-financial information statement
• Going concern

I am pleased to report that the Group has made excellent progress in maintaining revenue during the year ended March 2022. Core sales have increased by £10.3m (21.8%), which together with the £3.6m of sales from new acquisitions, has substantially replaced the Covid-19 related hygiene sales of £14.6m which were a one-off feature of the previous year. The Group's performance reflects management's ability to take advantage of available opportunities and manage potential risks.

The Group's vertically integrated model continues to give it a competitive advantage allowing it to respond quickly and effectively to customer requirements. It provided for a rapid pivot in production to meet market demand for sanitant product at the beginning of the Covid outbreak, and likewise allowed it to respond to the post-covid demand for more output. 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 underpin this vertical model.

Acquisitions

During the year the Group completed two acquisitions – Emma Hardie and Brodie & Stone. These acquisitions significantly extend the branded offering of the business and provide opportunity for further growth in the UK and internationally. The acquisitions provide opportunities for manufacturing and other synergies (see Note 8 to the full accounts for further details).

Emma Hardie provides the opportunity to move into more premium skincare with a higher end group of consumers, retailers and digital platforms.

The Brodie & Stone acquisition included the T-Zone, Natural World and Janina brands. These brands complement our existing customer and product range and we see opportunities to drive growth through our existing customer network.

Revenue

Revenue from core business excluding hygiene and acquisitions increased by £10.3m (21.8%) to £57.3m (2021: £47.0m). Overall Group sales were £61.2m for the year ended March 2022 (2021: £61.6m) a reduction of £0.4m. Sales of hygiene products which were a short term feature of the previous year declined by £14.3m to £0.3m (2021: £14.6m). We have been successful in substantially replacing the one-off hygiene sales by growth in each of the three business units. Branded sales (excluding hygiene and acquisitions) increased by 37.7% from £12.0m to £16.5m with a strong performance from Feather & Down and Balance Active brands. Private label sales have increased from £22.8m to £24.9m with the re-opening of the High Street and the addition of a large contract with a key grocer. Contract manufacturing sales have increased from £12.3m to £15.9m with all major

continued

customers responding to increased consumer demand. Sales of Emma Hardie of £2.3m and Brodie & Stone of £1.3m have been included from the dates of acquisition of 28 July 2021 and 24 September 2021 respectively.

The Group's total overseas business, including the Australian subsidiary and non-own branded customers, increased by 45.6% to £10.0m (2021: £6.9m).

Margin and cost of sales

Our gross margin was 42.8% for the year ended 31 March 2022 (2021: 40.6%). Whilst sales mix has been a contributor to the margin increase, last year included additional Covid-19 related costs which have not repeated in the current year.

Distribution costs and Administrative expenses

Distribution costs have increased by 5.4% to £3.5m (2021: £3.4m), driven by increased operational charges at third-party logistics providers and also growth in the core business and the required investment in inventory.

Administrative expenses have increased by 12.4% to £18.3m in the year (2021: £16.2m) as the Group has seen a general rise in overhead costs in particular in energy prices and insurance costs. Prior year costs included £0.8m of Covid-19 costs which were not repeated as the impact of the virus reduces. We will continue to manage our overhead cost base requirements to ensure they are aligned with the anticipated sales levels of the Group.

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.

EBITDA

The Group has generated Earnings before Interest, Tax, Depreciation and Amortisation (EBITDA) of £5,944,000 (2021: £6,942,000). This represents a reduction of £998,000 (14.4%).

Tax

The Group's tax charge for the year was £345,000 (2021: £837,000) which equates to a rate of 10.0% (2021: 16.2%). The effective rate of tax is significantly less than the standard rate of 19.0% (2021: 19.0%). The main reason for this reduction is the R&D relief claims for the current year of £213,000 (2021: £206,000) and the reduction due to the tax charge associated with share options exercised in the period of £49,000 (2021: £66,000).

continued

Exceptional items

The Group incurred acquisition costs of £218,000 on the purchase of Emma Hardie and Brodie & Stone. Provision has also been made for a further £384,000 of cost in relation to the share price agreement on the acquisition of Emma Hardie (see Note 8 to the full accounts).

Profit after tax

The Group's profit after tax has reduced by 28.2% to £3,110,000 for the year ended 31 March 2022 (2021: £4,334,000).

Earnings per share

The diluted earnings per share of 3.98p (2021: 5.89p) is a decrease of 32.4%. The EPS has been adversely impacted by the reduction in profit after tax including the exceptional costs of £0.6m and also by the increase in the number of shares in issue (acquisition related shares of 2.6m and share options).

Cash on hand and working capital

The Group acquired 2 brands during the year with a total cash outflow of £8.9m, these acquisitions were funded using cash resources and bank facilities. Net cash on hand (cash and cash equivalents less short-term element of obligations under finance leases and borrowings) is negative £2.1m (2021: positive £6.2m). The reduction in cash is mainly attributable to business acquisitions and related increase in working capital. The Group generated £2.0m (2021: £6.2m) from operating activities.

Return on Capital Employed

The Group has invested in two businesses in the year through acquiring their share capital as part of the Group's strategic goals of increasing its branded business. This has increased capital employed, which has not yet had a corresponding increase in operating profit leading to a decrease in Return on Capital Employed from 22.4% to 12.9% (see page 18). The expected improvement on the returns on acquisitions in the year will commence in the year to March 2023. The Group continues to look for opportunities to invest in brands that will help drive faster growth in profits.

Net gearing

Net gearing of 28.7% (2021: negative 13.0%) has increased by 41.7 percentage points in the year following the new loan of £3.0m and invoice finance utilisation to fund the investment in the two acquisitions and in working capital (see page 18).

continued

Dividend

The Directors do not propose a final dividend for the year ended 31 March 2022, (2021: 0.50 pence per ordinary share) 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 2022 is 0.15 pence (2021: 0.65 pence).

Covid-19 statement

Covid-19 had a reduced impact on the operations of the Group during the year ended 31 March 2022 compared to the previous year although we continued to take appropriate measures to protect the safety of all employees. Costs of Covid-19 defences were significantly reduced compared to previous year. We have now removed Covid-19 restrictions at both our manufacturing sites but remain vigilant in the face of the ongoing Covid-19 threat.

Brexit

Brexit has resulted in some increased long-term costs associated with the regulatory management, and import and export administration. These have not materially impacted the Group's performance and are not expected to have a material impact in the future.

Supply chain

In common with many UK manufacturing businesses, we have experienced global supply chain and inflationary pressures during the second half of the financial year. These pressures have manifested in the form of delayed deliveries from suppliers, higher input, energy and overhead costs. These pressures are expected to continue. 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.

Conclusion

This has been a transformational year for the Group with the successful acquisition of two brandbased companies strengthening our branded offering and giving a firm foothold in premium skincare which we can build on very quickly given our global distribution, development and manufacturing capabilities.

However, the last six months of the financial year have been extremely challenging.

continued

Our response has therefore been urgent and robust. The Group's senior managers have all experienced changes in the macro-economic environment and understand the need and how to adjust the business in response to rapid change in the economic cycle. Accordingly, we have embarked on a programme of overhead cost reduction and of improving manufacturing efficiencies which should significantly reduce operational costs by the end of the year ended 31 March 2023, a lot of which will be delivered and be adding to the bottom line by the end of September 2022.

Manufacturing efficiency improvements are the planned result of significant investment in higher grade machinery and equipment within the last 18 months. It will enable us to move towards one shift across the group. Already the underlying throughput rates and efficiencies have improved by more than 10% in the last three months and will continue to do so.

In summary the Board believes that good management, strong customer relationships and financial position will continue to enable the Group to manage the current crisis 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.

I would like to take this opportunity to thank every one of our employees who as always give of their best with hard work and expertise. All have responded very commendably to the speed of change required and pressures associated with these exceptional times.

Thanks also to our customers and suppliers, especially those who have responded so positively through this challenging period.

William McIlroy Chairman, 11 July 2022

The business model

The principal activity of the Group is the development, marketing and manufacture of toiletries and fragrances, which includes the development of brands. A review of the operations of the Group during the year and current developments are referred to in the Chairman's statement on pages 6 to 10.

The subsidiary undertakings affecting the results of the Group in the year are detailed in note 17 to the financial statements.

A fair review of the Group's business

History

Creightons Plc was registered in 1975 to continue the business of manufacturing and marketing toiletries made exclusively from natural products first established in 1953. It created a number of proprietary brands, although it focused mainly on private label and contract manufacturing. It was listed on the London Stock Exchange in 1987. The Group consolidated its manufacturing at the Potter and Moore Innovations plant in Peterborough following the acquisition of the Potter and Moore business in 2003 and disposal of the Storrington site in 2005. The Group acquired the business and assets of the Broad Oak Toiletries site in Tiverton in February 2016 further increasing the Group's sales reach in terms of product and premium customers and adding to manufacturing capability and capacity. In June 2019 the Group bought the Balance Active Formula brand. In the year ended March 2022 the Group completed the acquisition of Emma Hardie and Brodie & Stone businesses.

An interim dividend of 0.15p was paid during the year. However the directors do not recommend the payment of a final dividend due to the challenging and volatile economic conditions facing the Group and the need to be prudent about utilisation of cash resources. (Full year 2021: 0.65p).

Operating Environment

The toiletries sector principally encompasses products for haircare, skincare, bath & body and male grooming. The market is relatively mature although it is constantly evolving as brands seek to differentiate their offering in order to generate sales opportunities. This has resulted in a fragmentation of different sectors, for example, with haircare products developed to treat different hair types and conditions. Whilst adding some complexity, this segmentation creates opportunities for our business.

Consumers purchase our products through a range of retail and internet outlets, from high quality department stores to value-driven discounters, with the High Street supermarkets and drug stores in the middle. A significant amount of the Group's products are sold in the UK, although increasing amounts are sold overseas, either direct to retailers or through distributors.

continued

Producers and manufacturers providing products in this marketplace range from major multinational corporations to small businesses. Production is now world-wide, with many competitors sourcing a significant proportion of their products from outside the UK, either due to greater economies of scale or due to a lower cost base.

The Group purchases its raw materials and components from an extensive range of suppliers in the UK and internationally and has built up a significant contact network to keep up to date with prices and market developments. We have a skilled team of employees working throughout the supply chain, including procurement, technical, manufacturing and logistics.

All products the Group manufactures conform to EU regulation No. EU 1223:2009 and the equivalent UK regulations, which applies to toiletries and cosmetic products. The sites hold appropriate accreditations to conform to this regulation.

The Group's operations are broadly organised into three business streams:

• our own branded business which develops, markets, sells and distributes products we have developed and own the rights to or brands we have licensed. These sales are increasingly made direct to consumers. All stock is manufactured to forecast. Key brands include Feather and Down, Balance Active and The Curl Company and the brands added during the current year Emma Hardie and T-Zone.
• private label business which focuses on high quality private label products for major high street retailers and supermarket chains, with the majority of stock manufactured to forecast.
• contract manufacturing business, which develops and manufactures products on behalf of thirdparty brand owners and typically manufactured to order.

Each of these business streams is supported by commercial and marketing teams.

In general, markets have returned to their pre Covid-19 levels and we have seen an increase across all areas of the business as customers return to pre Covid-19 behaviour. In the year to 31 March 2021 the Group generated significant one-off sales of hygiene related products which did not repeat in the year to 31 March 2022. However the Group has been successful in replacing this hygiene business by growth in its underlying core business and through acquisitions.

continued

Each business stream uses central creative, planning, sourcing, finance and administration operations based in Peterborough with manufacturing, sales, research and development and logistics operations located at both Peterborough and Tiverton. Each business stream is pro-active in the development of new sales and product development opportunities for their respective customers.

	2021/22 £000's	2020/21 £000's	Movement
Branded products (core)	16,491	11,980	Increase of 37.7%
Branded products (acquisitions)	3,630	–
Private label	24,908	22,751	Increase of 9.5%
Contract manufacturing	15,866	12,275	Increase of 29.3%
Hygiene products*	256	14,587	Decrease of 98.2%
Other	6	12	Decrease of 50%
Total	61,157	61,605	Decrease of 0.7%

The sales generated by each sales stream are:

* Hygiene products relate to the sales which increased in the prior year due to the Covid-19 pandemic and have not been repeated in the current year.

The Group considers the acquisition, development and investment in new brands to be key in adding value to the business. We will dispose of brands which we have successfully grown but are no longer part of our core business.

Position of Group business

It is the directors' view that the financial position of the Group at the year-end is strong and that the Group has sufficient resources to meet its obligations in the normal course of business for the next 12 months.

Current operations

The Group operates through the three main business streams described above, utilising its extensive brand management, product development and manufacturing capabilities encompassing toiletries, skincare, hair care, fragrances and home fragrance. The Group has extended its research and development and sales expertise to maximise the opportunities afforded by these capabilities. Some

continued

of this work has been capitalised and is being amortised over the estimated life of the products in accordance with IFRS requirements.

The Group has continued its aggressive development programme of new ranges of branded toiletries, haircare and skincare products, with Feather & Down and Bambeautiful brands illustrating the potential that can be derived from this investment. The Group continues to extend and develop those recently acquired, such as Emma Hardie, T Zone and Balance Active, or developed internally and successfully launched such as The Curl Company.

The Group invests significant resources in developing new products, ensuring the group adheres to regulations in all of the markets it operates in and is forward looking to address future developments in what is a highly regulated market.

Strategy, objectives and future developments

The primary objective of the Group is to deliver an adequate and sustainable return for shareholders whilst guarding against commercial risks. We aim to deliver this by pursuing the following broad strategies:

• Expand our customer base across all three sales streams (private label, contract manufacturing and own brands) within the UK and increasingly overseas.
• Invest in our Business to Consumer business to take advantage of the change in consumer purchasing patterns.
• Continuously review, develop and enhance our product offering to meet the consumers' requirement for high quality, excellent value products and thereby help our customers grow their businesses.
• Ensure that we exceed our customers' expectations for first-rate quality products and excellent customer service and use this to expand opportunities within our existing customer base.
• Manage our gross and net margins through efficient product sourcing, continuously improving production efficiencies, asset management and cost control.
• Make fully appraised investment in brands that will help us maintain and grow our business and create brand value, which can be crystallised through disposals to third parties.
• Develop our staff and skill base to meet all of the needs of the business and ensure all employees are rewarded, through profit related bonuses and share options, for their contribution to the success of the business.

Strategic report with supplementary material and Notice of Annual General Meeting 14 For the year ended 31 March 2022

continued

The process for outsourcing the warehousing and distribution of the finished goods to a third-party logistics provider was completed in the year ended March 2021. This has been, and will continue to be, key to allow the Group to deliver sales growth within the constraints of the current facilities. Raw materials and components continue to be stored on site adjacent to the manufacturing facilities at Peterborough and Tiverton.

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 to maximise the Group's market share and deliver new opportunities for growth. The spend in the year on research and development was £852,000 (2021: £832,000).

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.

Key performance indicators

Management and monitoring of performance

The directors are mindful that although Creightons Plc is a UK Listing Authority "premium" listed company, given its size many of the 'big business' features common in premium listed companies are inappropriate. Recent years' profitable results have been achieved as a result of considerable hard work in focusing management and staff efforts on more productive product ranges, improving production and stock holding efficiencies, ensuring high levels of customer service and eliminating overhead inefficiencies. This report has been prepared with that in mind and is commensurate with the size of the Group's business.

As a consequence, the Group has limited personnel or other non-financial Key Performance Indicators (KPIs) or targets. Each position that becomes vacant is reviewed against our strategic objectives for necessity before authorisation is given for it to be filled through either recruitment or promotion.

The Board regularly monitors performance against several key financial indicators, including gross margin, overhead cost control, cash/borrowing and stocking levels. Performance is monitored monthly against both budget and prior year.

continued

Financial key performance indicators

These Key Performance Indicators are used to gauge and compare performance in terms of meeting our strategic and operational goals.

• Sales shows the growth of the business.
• Gross margin % (revenue less cost of goods sold, over revenue) indicates production and purchasing efficiencies.
• Operating profit (gross margin less operating expenses) shows profit earned from the normal business operations.
• Profit for the year shows the return to shareholders.
• EBITDA (Earnings before Interest, Tax, Depreciation & Amortisation) provides a reflection of the operating profitability of the business.
• Return on capital employed (Operating profit/Employed Capital + Long & short term debt) ensures that the business generates sufficient returns to pay for its cost of capital.
• Net Gearing (Total net debt/Shareholders' funds) shows the extent to which operations are funded by lenders versus shareholders.
• Net cash on hand shows the immediately available cash for use in operating activities or available for investments.
• Stocking levels shows the working capital currently invested in inventory.

continued

	2021/22 £000	2020/21 £000	Movement
Sales	61,157	61,605	Decrease of 0.7%
Gross Margin	42.8%	40.6%	Improvement of 2.2%
Profit for the year	3,110	4,334	Decrease of 28.2%
Operating profit	4,365	5,393	Decrease of 19.1%
Operating margin	7.1%	8.8%	Reduction of 1.7%
EBITDA	5,944	6,942	Decrease of 14.4%
Return on capital employed	12.9%	22.4%	Reduction of 9.5%
Net gearing (including obligations under leases)	28.7%	(13.0%)	Increase of 41.7%
Net cash on hand	(2,126)	6,155	Decrease of 134.3%
Stocking levels	12,479	8,318	Increase of 50.0%

EBITDA is calculated by adjusting the operating profit for depreciation and amortised development costs as detailed below.

	2022 £000	2021 £000	Movement
Operating Profit	4,365	5,393	Decrease of 19.1%
Depreciation	1,144	1,052	Increase of 8.7%
Amortisation	435	497	Decrease of 12.5%
EBITDA	5,944	6,942	Decrease of 14.4%

continued

Net Gearing is calculated by taking the total net borrowings over the total equity as detailed below.

	2022 £000	2021 £000	Movement
Total Lease liabilities	1,167	1,143	Increase of 2.1%
Total Borrowings	7,049	2,812	Increase of 150.7%
Less cash on hand	840	6,558	Decrease of 87.2%
Total net borrowings	7,376	(2,603)	Increase of 383.4%
Net equity attributable to the equity
shareholders of the parent Company	25,678	20,086	Increase of 27.8%
Net gearing %	28.7%	(13.0%)	Increase of 41.7%

Return on Capital Employed is calculated by dividing operating profit by net equity plus lease liabilities and borrowings. See below.

	2022	2021
	£000	£000
Operating Profit	4,365	5,393
Net Equity	25,678	20,086
Lease liabilities	1,167	1,143
Borrowings	7,049	2,812
Return on Capital Employed	12.9%	22.4%

Health and Safety

There was 1 incident involving employees or contractors on the Group's sites which was required to be reported to the Health & Safety Executive during the year (2021: 2). This did not result in adverse HSE reports or recommendations. The individual involved has fully recovered and was able to return to work with no long-term effects after their incident. The Group continuously monitors and revises its operating, training and monitoring procedures as appropriate to ensure that the safety of employees and contractors is maintained to a high standard and ensures there is no deterioration in compliance with these standards.

continued

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 Covid-19 business risks facing the business, the impact of Brexit, the economic situation and potential emerging risks, and their impact 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. 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 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. Further details are set out in Notes 23 and 24 to the full accounts.

At 31 March 2022 the invoicing financing is in a utilised position of £1,267,000 as this facility has been utilised to fund the acquisitions during the year (2021: surplus of £1,232,000, due to cash received from customers immediately before the year end and not yet transferred to the bank account). At 31 March 2022 the Group had utilised £495,000 (2021: £Nil) 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.

continued

Brexit

Whilst the Brexit outcome did not result in any increase in duty costs, the resulting increased paperwork associated with importing and exporting to the EU incurred, by ourselves and our partners, has increased costs but the impact has been minimal. At a Group and business level we continue to monitor changes in legislation, trade agreements and working practices to take advantage of any opportunities that may arise and to mitigate any risks associated with Brexit. The Group operates globally with significant direct and indirect trading relationships within the EU. The Group put mitigating actions in place including the registration in December 2018 of Potter & Moore Ltd based in Ireland as an EU base for recording regulatory information and a new subsidiary Creightons GmbH in June 2020 to trade directly with EU customers as required. 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.

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 directors have carried out an assessment of the potential impact of Russian forces entering Ukraine 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.

Credit risk

Our credit risk is that our customers are unable to pay and we believe this risk is elevated currently due to 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.

continued

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. Global supply chains are stretched and face significant upwards price pressures. 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 responded by a significant investment 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.

Covid-19

Covid-19 had a reduced impact on the operations of the Group during the year ended 31 March 2022 compared to the previous year although we continued to take appropriate measures to protect the safety of all employees. Costs of Covid-19 defences were significantly reduced compared to the previous year. We have now removed Covid-19 restrictions at both our manufacturing sites but remain vigilant in the face of the ongoing Covid-19 threat.

continued

No further Government schemes were used in the year ended March 2022. During the previous year the Group utilised the Government's Furlough scheme for shielding employees. It also deferred paying approximately £990,000 of VAT in relation to March 2020, which has been repaid over the 10 months commencing March 2021. No further Government schemes were used.

Section 172 statement

This section serves as our section 172 statement. Section 172 of the Companies Act 2006 requires Directors to take into consideration the interests of stakeholders in their decision-making. The Directors continue to have regard to the interests of the Group's employees and other stakeholders, including the impact of its activities on the community, the environment and the Group's reputation, when making decisions. Acting in good faith and fairly between members, the Directors consider what is most likely to promote the success of the Group for its members in the long term. Whilst the importance of giving due consideration to our stakeholders is not new, we are explaining in more detail how the Board engages with our stakeholders to comply with the requirement to include a statement setting out how our Directors have discharged this duty.

The Directors are fully aware of their responsibilities to promote the success of the Group in accordance with section 172 of the Companies Act 2006.

The Board regularly reviews our principal stakeholders and how we engage with them. The stakeholder voice is brought into the boardroom throughout the annual cycle through information provided by management and by direct engagement with stakeholders where appropriate. The relevance of each stakeholder group may increase or decrease depending on the matter or issue in question, so the Board seeks to consider the needs and priorities of each stakeholder group during its discussions and as part of its decision-making. Details of our principal stakeholders, how and why we engage with them is detailed below:

Shareholders

The Group's principal means of communicating with shareholders is through the Annual Report and Financial Statements. This is supported by bi-annual presentations to shareholders where attendees question the executive directors on the Groups' performance and direction. These sessions are available to view on the Group's website.

continued

Customers

We work closely with all of our customers to ensure fair trading agreements in place and we strive to work closely to identify shared opportunities to increase sales to ensure mutual growth in sales and profits. Our customers range from high quality department stores to value-driven discounters, with the high street supermarkets and drug stores in the middle together with brand owners within our contract division.

Employees

The Board continues to enhance its methods of engagement with the workforce. With thorough regular briefings, direct communications through text messages and regular meetings with employee representatives through works councils. The Group has a profit related bonus system which ensures our employees participate in the ongoing success of the business.

Suppliers

We aim to work responsibly with our suppliers. We monitor our suppliers' performance including adherence to our Modern Slavery and Human Trafficking Statement that sets out the steps taken to prevent modern slavery in our business and supply chains. We ensure all suppliers are treated fairly when negotiating trading terms, including prompt payment for goods and services. We work proactively with our suppliers to support our vegan and cruelty-free claims on our products and to ensure we are up to date with the latest technology and market trends.

continued

Community

We are aware of the impact the business can have on the quality of life, environment and economy of those in the location in which the Group operates.

Key decisions made during the year, all of which have long-term implications for the ultimate success of the Group and the section 172 and stakeholder considerations are set out below.

Key Board Decision	Section 172 and Stakeholder Consideration
Acquisition of Emma Hardie	• The acquisition strengthens our brand portfolio and offering by moving the own brand business into a higher end group of consumers, retailers and digital platforms. This will drive an increased return for shareholders and secure employment for the Group's employees.
Acquisition of Brodie & Stone	• The acquisition enhances the current brand portfolio by strengthening the coverage and category presence with key mainstream retailers in the UK and international markets, in the core performing categories of both skincare and haircare and delivering an increased return for shareholders.
Acquisitions of both Emma Hardie and Brodie & Stone	• Opportunities for manufacturing and management synergies will drive a higher return in the brand, as well as significant opportunities for extending the distribution of the brands in the UK market and in international markets and will deliver an increased return for shareholders.
	• The investment in acquisitions increases gearing, although this reduces security for creditors this remains strong beforehand, and investment has been made to the benefit of the future strength of the Group and increasing security for creditors in the longer term.
New loan & extended bank facilities	• Provided ongoing funding to ensure continued adequate resources for the business to ensure the Group can continue to operate for the benefit all of stakeholders.

continued

Supply chain	•	In response to global supply chain pressures we have engaged collaboratively on a strategic level with a number of key suppliers to ensure ongoing continuity of supply for the business at competitive prices for the benefit of employees, customers, suppliers and shareholders.
Customer price recovery	•	Established ongoing levels of communication with our customers to facilitate transparent dialogue in relation to the requirement for cost price increases and cost mitigation measures.
Effective employee engagement	•	Conducted our first employee engagement survey and have committed to respond positively for the benefit of all employees.
Investment in our online sales via own website and third party platforms	•	To maximise the sales opportunities as consumers moved to online purchasing to the benefit of all stakeholders.
Continue to assess and mitigate the risks associated with Brexit and the potential impact on the business	• • •	Established a structure and procedures to mitigate the risks and manage the costs associated with imports from the EU. Ensure all products and materials are registered in and meet the technical requirements of both the EU and UK to ensure all customers' needs are satisfied. Re-organise sales to EU customers to minimise their risks and costs and ensure the smooth movement of goods and maximise sales opportunities for the benefit of all stakeholders.
Ongoing operational impact of Covid-19	•	Continued to manage the risks to the Group by creating a safe and secure workplace for our employees so that the opportunities can be delivered.
	•	Replaced the £14.6m of hygiene sales in the previous year for the benefit of all stakeholders.

continued

Sustainability	•	Introduced TCFD reporting for the first time as detailed in TCFD reporting on pages 29 to 34.
	•	Prepared for implementation of the Plastic packaging tax including measures to reduce plastic content in our componentry. This includes collaborative working with customers on product reengineering.
Share Options issues during the year	•	Continue to incentivise the Group's employees, rewarding their loyalty and success, whilst also contributing to the growth of the business and thereby enhancing shareholder value over the long term.
Dividend policy	•	The Directors do not propose a final dividend for the year ended 31 March 2022 due to the challenging and volatile economic conditions facing the Group. This is consistent with the directors' objective to align future dividend payments to the future underlying earnings and cash requirements of the business and the need to be prudent about utilisation of cash resources.

The Board ensures that items requiring Board approval highlight relevant stakeholder considerations to be reviewed when making decisions. As required, the Company Secretary will provide support to the Board to help ensure that sufficient consideration is given to stakeholder issues.

Corporate and social responsibility

The Group is mindful of its wider responsibilities as a significant local employer in both its principal locations and of the contribution it makes to the local economy both where it and its suppliers are based. The Group adheres to Modern Slavery and Human Trafficking Policies and adheres to best practice with regard to employment practices. All employees are paid the National Living Wage Foundations earnings when bonuses are included and the Group is targeting to pay this in their basic earnings.

The Group is committed to operating in an honest way and without the use of corrupt practices or acts of bribery to obtain an unfair advantage. The Group has an Anti-bribery policy which prohibits bribes, gifts, inappropriate entertainment and hospitality as well as the avoidance of conflict of interest through personal or other relationships.

continued

We value and respect our employees and endeavour to engage their talent and ability fully. Whilst the Group does not operate a formal personal performance appraisal process, individual managers and supervisors undertake continuous performance monitoring and appraisal for their subordinates, and routinely report the results of these to their own managers and this assessment forms part of bonus payments. Part of this monitoring and appraisal includes assessment of training required for personal development as well as succession planning within the Group, and all employees are encouraged to undertake appropriate training to develop their skills and enhance their career opportunities.

The Group has formally adopted an Environmental Policy, which requires management to work closely with local environmental protection authorities and agencies, and as a minimum, meet all environmental legislation. The Group uses significant amounts of plastics, cardboard packaging and chemicals in its products. It ensures it meets all regulations covering their use and has specific programmes covering;

• Sustainable palm oil; we are a member of Roundtable for Sustainable Palm Oil, holding their supply chain accreditation. 98% of palm oil derivatives purchased by the Group are sustainably sourced.
• Packaging waste; all plastic and cardboard waste generated by the Group is recycled.
• Post-Consumer Recycled materials; we have an active development programme to use 'postconsumer recycled' materials in the manufacture of our products where practicable.
• Prepared for implementation of the Plastic packaging tax in April 2022 including measures to reduce plastic content in our componentry. This includes collaborative working with customers on product reengineering.
• TCFD measures are in the early stages, we have engaged with consultants, begun developing our strategy and have in place a detailed plan for the next 12 months.

continued

The tables below show the number of employees by gender in the Group as at 31 March 2022 and 31 March 2021.

	Group 2022		Company 2022
	Female	Male	Female	Male
Directors, including Non-executive Directors	1	6	1	6
Senior Managers	3	5	–	–
Other employees	325	183	–	–
	Group 2021		Company 2021
	Female	Male	Female	Male
Directors, including Non-executive Directors	1	6	1	6
Senior Managers	2	3	–	–
Other employees	343	194	–	–

The Group has formal Staff Handbooks, which cover all major aspects of staff discipline and grievance procedure, Health and Safety regulations, and the Group's non-discrimination policy.

Disabled persons

The Group's policy is to fully consider all applications for employment from disabled persons in relation to the vacancy concerned. In the event of existing staff members becoming disabled, every effort would be made to enable them to maintain their present position or to provide appropriate training and find an alternative role within another department.

continued

Task Force on Climate-Related Financial disclosures (TCFD) reporting

The Group is committed to the challenge of improving climate-related risk assessment and risk management as part of a wider sustainability strategy that endorses and adopts the key recommendations of TCFD. As a premium listed company and in accordance with FCA rules the statement below discloses where we are on our sustainability journey in terms of implementing the key recommendations of TCFD. The plan is in the early stages, where we have engaged consultants, begun developing our strategy and have in place a detailed plan for the next 12 months.

Governance

The Board's oversight of climate-related risks and opportunities

The business has appointed Martin Stevens, Group Managing Director of Manufacturing since April 2022 and previous to that Group Technical Director and Deputy Managing Director, and a member of the Creightons plc Board since 2015, with the responsibility for climate change and sustainabilityrelated matters since then.

The Board have addressed sustainability issues related to climate change in 2021/22 on a case-by-case basis. For example, the Board have signed off on capital expenditure for energy efficiency and process improvement projects including replacement boilers, LED lighting and compressed air. On a strategic level the Board has commissioned appraisals of an automated CIP (clean-in-place) for the main plant in Peterborough and the feasibility of installing solar panels at both production sites. There is a plan for formal updates in 2022/23 on a half yearly basis comprising the outputs of risk assessments, KPIs and progress against targets.

The Board have also been responsible for the approach adopted by the Group in its day to day business. When developing products with customers, the business has been proactive in its approach to considering whole life costs and implementing sustainable options across raw materials and packaging to ensure customers can achieve their sustainability commitments.

Management's role in assessing and managing climate-related risks and opportunities

The business has established an environmental committee and three meetings were held in 2021/22. The senior management team met on two occasions subsequently to review the sustainability strategy overall during which the composition and remit of the environmental committee was reviewed. It has been agreed to formalise the role of the environmental committee to become the sustainability committee with representatives from across the business including Finance, Heads of Production (both plants), Quality, Procurement, Packaging, and R&D and to adopt a more rigorous risk assessment process. The sustainability committee will play a significant role in developing the strategy in 2022/23 through a programme of workshops with our external consultants.

continued

Strategy

The climate-related risks and opportunities the organisation has identified over the short, medium and longterm

The following time horizons are used by the business for corporate planning and business strategy:

Short-term: 0-12 months Medium-term: 1-3 years Long-term: 3-10 years

Sustainability issues are inherent to and incorporated into the business strategy but the formal process for the identification, assessment and management of climate-related risks and opportunities, does require further enhancement, making it difficult to separate them over the short, medium and longterm.

Key aspects in the short and medium-term include working with customers to include sustainable raw materials without compromising on product performance, recommending suitable sustainable options or alternatives in packaging and investing in ways to improve energy efficiency and reduce waste in the manufacturing process.

We expect customer preferences to move in the long or medium term towards suppliers and products with low environmental impact. We must ensure that we and our supply chain are able to respond to these changing consumer trends. The current business investment in a comprehensive sustainability strategy leading to a net zero carbon roadmap in 2022 will mitigate this risk and exploit the potential for more sustainable products as a competitive advantage.

The next short-term step is to implement a series of workshops in 2022 under the guidance of external consultants, who have already been engaged, to help develop the net zero carbon roadmap for the business. This will include a specific review of climate-related risks and opportunities to sit alongside areas of product development where there has been substantial progress, such as the responsible sourcing of palm oil and investment in energy efficiency. The Group does have a risk assessment process in place and some sustainability issues have been assessed. It is recognised that there is a need to link climate-related risks more formally to the business strategy and it is planned for this to be effective by the end of 2022.

The impact of climate-related risks and opportunities on the organisation's businesses, strategy and financial planning

Sustainability and climate-related considerations are integrated into the business strategy across a number of different areas:

continued

The business works with customers to enhance the sustainability of the products we manufacture helping them to meet their sustainability commitments. This includes prioritising the use of sustainably sourced palm oil, with the Company being a member of the Roundtable for Sustainable Palm Oil (RSPO) and has held its Supply Chain Certification Standard since 2014. In 2021/22, 98% of palm derived materials used are from an RSPO sustainable source. The remaining 2% are covered by RSPO PalmTrace certificates. All raw natural raw materials are checked on the IUCN Red List to ensure no threatened plant species are used in products. The business is committed to minimizing packaging, using FSC board wherever possible, and promoting the use of post-consumer resin (PCR) as appropriate across all substrates PE, PET and PP.

There has been a focus to onshore some supplier manufacturing activities to reduce transportation and distribution distances and associated emissions and the business is starting to engage further with suppliers about their actions to improve sustainability and reduce environmental impacts.

Onshoring of manufacturing will also deliver greater traceability of products and higher social and environmental standards. Capital projects are evaluated with reference to financial returns on a whole lifecycle basis and on their impact on sustainability metrics e.g. energy or waste reduction, with a number of key projects ongoing.

From an adaptation and mitigation perspective a potential flooding risk has been identified at our principal manufacturing site at Peterborough and business continuity plans have been reviewed across both sites. The risk is considered to be low but these plans help mitigate the impact of any potential disruption that may occur from the physical impacts of climate change such as extreme weather events or flooding.

The financial planning of the business incorporates the risk management by Procurement of a number of key materials where availability may be affected by climate risks, including palm oil.

Potential acquisitions are evaluated for sustainability along with other key criteria given the growth potential in this part of the market.

The resilience of the organisation's strategy, taking into consideration different climate-related scenarios, including a 2 degree C or lower scenario

The business has not performed climate-related scenario analysis at this stage and is non-compliant on this point. Given that the business is relatively early on in the implementation of its strategic review of sustainability (currently at stage 1 of a 3-stage process via our sustainability consultants) then scenario planning is best scheduled once the risk assessment has been completed and other recommendations

continued

have been strengthened further. It is expected, based on the workshop schedule in place for 2022/23, that scenario analysis will take place in early 2023.

Risk management

The organisation's processes for identifying and assessing climate-related risks

The board of directors are responsible for the Group's system of internal control and for reviewing its effectiveness whilst the role of management is to implement the Board policies on risk management and control. The system of control is designed to manage rather than eliminate risk of failure to achieve the Group's business objectives.

Consideration is given to broad sustainability and related climate change issues in customer strategy and product development, such as the sustainable sourcing of raw materials, recyclable and recycled content in packaging and meeting customer expectations around sustainability. The further addition of specific climate-related risks to the current risk assessment management process is planned for 2022/23. For example, several key customers have committed to achieving net zero emissions by 2040 as well as other specific commitments to improve the sustainability of products. The overall risk assessment takes account of the fact that customers need the right supply partners for the long term and will buy elsewhere if expectations cannot be met. Moreover, consumers are increasingly expressing a preference for sustainable products in general and for products that do not contribute to climate change in particular.

The organisation's processes for managing climate-related risks

Climate-related risks would be managed by the Group in the same way as other principal business risks. The system of control is designed to manage rather than eliminate risk of failure to achieve the Group's business objectives and can only provide a reasonable not absolute assurance against material misstatement or loss. The Board has established a process for managing the significant risks faced by the Group with this ongoing process reviewed regularly by the Board and in accordance with the internal control guidance issued by the Financial Reporting Council.

The business is proactively working with customers to enhance the sustainability of products and is developing its own strategy to achieve net zero in line with customer commitments.

continued

Processes for identifying, assessing and managing climate-related risks are integrated into the organisation's overall risk management

As per the above points on Risk Management, processes for managing climate-related risks are integrated into the overall risk management framework. The specific risk assessment for climaterelated risks will be part of the 2022 consultancy workshops and will result in an enhanced process by the end of 2022/23.

Metrics and Targets

The metrics used by the organisation to assess climate-related risks and opportunities in line with its strategy and risk management process

Scope 1 and 2 emissions are quantified as part of Streamlined Energy and Carbon Reporting (SECR) and an emissions intensity target has also been established. A number of sustainability metrics are also recorded such as energy and water usage, recycled content in packaging materials, and the use of responsibly sourced palm oil. Further metrics are under review by the sustainability committee for formal submission to the Board.

An assessment of Scope 3 emissions is planned in 2022 to identify key emission hotspots within the value chain.

There is a commitment from the Board to align to the British Retail Consortium Climate Action Roadmap with the goal of reaching net-zero emissions by 2040. As part of this commitment the Board will review the inclusion of a Science-Based Target (SBT) in the future to strengthen the target.

Disclose Scope 1, Scope 2, and if appropriate Scope 3 Greenhouse Gas (GHG) emissions, and the related risks

Streamlined Energy and Carbon Reporting disclosures can be found on page 18 to the financial statements.

Scope 1 and 2 emissions are quantified in the SECR disclosure and a screening assessment of Scope 3 emissions is planned for FY 2022/23. There is a plan in the carbon roadmap workshops for 2022 to identify key emission sources and ways to enhance emission reduction activities.

continued

The targets used by the organisation to manage climate-related risks and opportunities and performance against targets

The emissions intensity target established in 2019 is to reduce tonnes CO2 per £m cost of sales by 5% per annum against the 2019 baseline over 5 years ending Mar 24. It is planned to introduce a SBT to replace the intensity target in March 2023 which is linked to Scope 1, 2 and 3 emissions.

Given current performance as reported in the SECR disclosure and the commitment to the netzero carbon roadmap to be developed in 2022/23 the ambition of this target will be reviewed in preparation for the FY 2022/23 annual report.

Non-financial information statement

This Annual Report and in particular this Strategic Report, contains the information required to comply with the Companies, Partnerships and Groups (and Non-Financial Reporting) Regulations 2016, as contained in sections 414CA and 414CB of the Companies Act 2006.

The table below provides key references to information that, in conjunction with the TCFD Report, comprises the Non-Financial Information Statement for the year ended March 2022.

Reporting requirement	Group Policies that guide our approach	Information and risk management, with page references
Environmental matters	Group Environmental, Health, Safety, Energy and Sustainability Policy	• TCFD report on pages 29 to 34 • Section 172 statement on pages 22 to 26 • Strategy, objectives and future developments on pages 14 and 15
Employees	Group Environmental, Health, Safety, Energy and Sustainability Policy	• Section 172 statement on pages 22 to 26 • Disabled persons on page 28 • Health and Safety on page 18
Social matters	Corporate and social responsibility policy	• Corporate and social responsibility on pages 26 to 28

Strategic report with supplementary material and Notice of Annual General Meeting

continued

Respect for human rights	Modern Slavery and Human • Trafficking Policies	Corporate and social responsibility on pages 26 to 28
	•	Suppliers on page 23
Anti-corruption and anti-bribery matters	Group Anti-Bribery and • Corruption Policy	Corporate and social responsibility on pages 26 to 28
Description of the business model	Environmental As a manufacturing business we understand that we must continue to evolve in order to meet the needs of our stakeholders. The Group continues to improve its environmental credentials in a commercially viable manner. We are taking proactive steps to build on this as set out in our first report under the TCFD framework on pages 29 to 34.
	Social The foundation of the Group's strength is its people. The Group's policy is to employ people who embody its core values of quality, service and innovation. These values apply to all employees regardless of position.
	Governance The Group's arrangements are set out in the Corporate Governance section on pages 23 to 25 of the full report.
Description of the principal risks in relation to the above matters, including business relationships, products and services likely to affect those areas of risk, and how the Group manages the risks	•	Principal risks and uncertainties on pages 19 to 22
Non-financial key performance indicators	•	TCFD report on pages 29 to 34

The Modern Slavery policy can be located at www.potterandmoore.com

continued

Going concern

The directors are pleased to report that the Group continues to meet its debt obligations and expects to operate comfortably within its available borrowing facilities. The Group's cash on hand at 30 June 2022 is negative £0.6m. We have carried out a review of our cash requirements for the next 12 months. Scenarios modelled included the removal of the Group's largest customer and increases of 20% in costs of raw materials or overheads. These models show that even without management tackling current overhead levels or increasing prices to customers, the Group would not fully utilise available working capital resources over the next 12 months. The directors have therefore formed a judgement, at the time of approving the financial statements, that there is a reasonable expectation that the Group has adequate resources to continue in operational existence for the foreseeable future being at least twelve months from the date of this report. For this reason, the directors continue to adopt the going concern basis in preparing the financial statements.

This report was approved by the board of directors on 11 July 2022 and signed on its behalf by:

Bernard Johnson Managing Director

Directors' remuneration report

Relations with shareholders

The objective of the Board is to create increased shareholder value by growing the business in a way that delivers sustainable improvements in earnings over the medium to long term.

The Board considers the Annual General Meeting as an important opportunity to communicate with private investors in particular. Directors make themselves available to shareholders at the Annual General Meeting, at the presentation of full-year and interim results and on an ad hoc basis, subject to normal disclosure rules.

This report is on the activities of the Remuneration Committee for the year to 31 March 2022. It sets out the remuneration policy and remuneration details for the Executive and Non-executive Directors of the Company. It has been prepared in accordance with Schedule 8 of The Large and Medium-sized Companies and Groups (Accounts and Reports) Regulations 2008 (the "Regulations") as amended in June 2019.

The report is split into three main areas:

• Statement by the chair of the Remuneration Committee;
• Annual report on directors' remuneration (subject to audit); and
• Policy report.

The policy report was subject to a binding shareholder resolution at the 2021 Annual General Meeting and the policy took effect for the financial year beginning on 1 April 2021. The annual report on directors' remuneration provides details on remuneration in the period and some other information required by the Regulations. It will be subject to an advisory shareholder vote at the 2022 Annual General Meeting.

The Companies Act 2006 requires the auditor to report to the shareholders on certain parts of the directors' remuneration report and to state whether, in their opinion, those parts of the report have been properly prepared in accordance with the Regulations. The parts of the annual remuneration report that are subject to audit are indicated in that report. The statement by the chair of the Remuneration Committee and the policy report are not subject to audit.

continued

Statement by the chair of the Remuneration Committee

The directors' remuneration report has been prepared on behalf of the Board by the Remuneration Committee. The current members of the Remuneration Committee are William Glencross, who is the Chairman of the Committee, Nicholas O'Shea who is a Non-executive Director, and acts as secretary to the committee and Paul Forster who joined the committee upon his appointment as a Non-executive Director on 1 April 2021.

The Remuneration Committee determines the remuneration of each Executive Director. During the year ended 31 March 2022, the Remuneration Committee agreed changes to the salaries of the Executive Directors in line with other employees, which became effective on 1 April 2022.

It is envisaged that the other remuneration components for Executive Directors for the year ended 31 March 2022 will be similar to those in place for the year ended 31 March 2021.

Annual report on directors' remuneration

The information provided in this part of the Directors' Remuneration Report is subject to audit

The tables below represent the directors' remuneration for the years ended 31 March 2022 and 31 March 2021. These emoluments are normally paid in the year except for the bonus payments which are paid following the approval of the financial statements.

				2022
Director Note		Salary and fees £000's	Annual bonuses £000's	Pension £000's	Total £000's	Total Fixed Remuneration £000's	Total Variable Remuneration £000's
WO McIlroy	1	27	71	-	98	27	71
BJM Johnson	2	92	71	-	163	92	71
P Clark		114	3	6	123	120	3
M Stevens		99	3	9	111	108	3
Total		332	148	15	495	347	148

Executive directors' remuneration as a single figure

Mr B Johnson and Mr W McIlroy were entitled to a bonus of £177,000 in respect of the year ended 31 March 2022. They have each waived their entitlement to £106,000 of this bonus and will each receive a bonus of £71,000 and this amount is included in the table above. In waiving this

continued

entitlement, they have enabled the Group to pay a bonus to employees with no adverse incremental impact on earnings.

Equity settled share based payments have been included within the bonus figure, and these have been calculated as their intrinsic value as at the date of grant. No grants in the year ended 31 March 2022 met this criteria.

				2021
Director	Note	Salary and fees £000's	Annual bonuses* £000's	Pension £000's	Total £000's		Total Fixed Remuneration £000's	Total Variable Remuneration £000's
WO McIlroy	1	26	265	–	291	26	265
BJM Johnson	2	92	133	–	225	92	133
P Clark		109	37	6	152	115	37
M Stevens		96	23	9	128	105	23
P Forster		70	23	3	96	73	23
Total		393	481	18	892	411	481

* The 2021 directors' remuneration as a single figure table has been restated for the equity settled share based payments which were granted within the 2021 year which had not been included at their intrinsic value. The effect was to increase the amount included in annual bonus for the following Directors; P Clark £28,000, M Stevens £14,000 and P Forster £14,000.

Mr B Johnson was entitled to a bonus of £265,000 in respect of the year ended March 2021. Mr B Johnson waived £132,000 of his bonus entitlement, and in doing so, enabled the Group to increase bonuses available for other employees with no adverse incremental impact on earnings.

During the year ended 31 March 2022 the following share options were granted at 97.73p which was the market price at the time of grant. There were no share options granted at a discount during the year ended 31 March 2022 and therefore no amount is included in annual bonuses in respect of the equity settled share based payments.

During the year ended 31 March 2021 share options were granted under the Creightons Plc Share Option Plan 2018, at an exercise price of 36p representing a discount of 14p from the market at the time of grant. The Board considered it appropriate to issue these shares at a discount as an exceptional incentive for these directors. The Board decided not to repeat the issue of share options at a discount during the year ended 31 March 2022.

continued

Director	2022		2021
	Number of Options	Exercise price	Number of Options	Exercise price
WO McIlroy	225,000	97.73p	–	–
BJM Johnson	225,000	97.73p	–	–
P Clark	–	–	200,000	36.0p
M Stevens	–	–	100,000	36.0p
P Forster	–	–	100,000	36.0p

Non-executive Directors' remuneration as a single figure

					2022
Director	Note	Salary and fees £000's	Annual bonuses £000's	Taxable benefit £000's	Total £000's	Total Fixed Remuneration £000's	Total Variable Remuneration £000's
NDJ O'Shea	3	18	1	–	19	18	1
W T Glencross		17	1	1	19	18	1
P Forster		20	1	3	24	23	1
Total		55	3	4	62	59	3

				2021
Director	Note	Salary and fees £000's	Taxable benefit £000's	Total £000's	Total Fixed Remuneration £000's	Total Variable Remuneration £000's
NDJ O'Shea	3	17	–	17	17	–
W T Glencross		17	2	19	19	–
Total		34	2	36	36	–

Note

• 1 Mr McIlroy earned a salary of £27,000 with all other payments made to Mr McIlroy's service company, Oratorio Developments Ltd.
• 2 Mr Johnson earns a salary of £10,000 per annum with a service fee of £82,000 and any bonus payments made to his service company, Carty Johnson Limited.
• 3 Mr O'Shea earned a salary of £18,000 for his services as a non-executive director.
• 4 All other directors' remuneration is paid directly to the individual directors.

continued

Taxable benefits

The taxable benefits for Mr William Glencross & Mr Paul Forster relate to their membership of the Group's medical scheme, which commenced prior to them stepping down as Executive Directors.

Payments for loss of office

No Executive Directors left the Company during the year ended 31 March 2022 and therefore no payments in respect of compensation for loss of office were paid or payable to any director (2021: Nil).

Share options

During the year ended 31 March 2022 options were exercised by the following directors.

Director	Number of Options	Exercise price	Market value on date of exercise	Gain on exercise £000's
P Clark	200,000	4.50p	108.00p	207
P Clark	100,000	26.80p	110.00p	83
M Stevens	70,000	26.80p	96.00p	48
M Stevens	111,940	26.80p	78.50p	58
BJM Johnson	200,000	26.80p	95.60p	138
NDJ O'Shea	15,000	26.80p	102.50p	11
W T Glencross	18,500	26.80p	102.50p	14

No share options were exercised by directors during the year ended 31 March 2021.

During the year ended 31 March 2022 the Company has granted a further 225,000 share options to Mr B Johnson and Mr W McIlroy on 10 November 2021, at an exercise price of 97.73p, the market at the time of grant (the "Grant"). These are shown in the table on page 42 and can be exercised between 2024-2031.

During the year ended 31 March 2021 three directors were awarded share options on 8 July 2020, these are shown in the table below and can be exercised between 2023-2030 at an exercise price of 36p, a discount of 14p from the market price at the time of grant.

continued

There is a vesting period of over 3 years for all share options. The share options were awarded to the directors as part of the Company's ongoing compensation and remunerations plans as a motivation for continuing to deliver success to the Group, its shareholders and employees. There are no service conditions associated with the award of the share options.

Directors' shareholdings

The directors who held office at 31 March 2022 had the following beneficial interests in the 1p ordinary shares of the Company:

	At 31 March 2022
	Shares			Share Options
Director	Number of shares	Exercise period of 2017 – 2024 price 5.50p Vested	Exercise period of 2019 – 2025 price 4.50p Vested	Exercise period of 2021 – 2028 price 26.80p Vested	Exercise period of 2023 – 2030 price 36p Not vested	Exercise period of 2024 – 2031 price 36p Not vested	Total Options held
Mr W O McIlroy	16,219,275	1,300,000	–	900,000	–	225,000	2,425,000
Mr B JM Johnson	5,245,844	–	–	700,000	–	225,000	925,000
Mr N DJ O'Shea	115,000	–	–	135,000	–	–	135,000
Mr W T Glencross	86,000	–	–	131,500	–	–	131,500
Ms P Clark	851,818	–	–	500,000	200,000	–	700,000
Mr M Stevens	993,758	–	–	218,060	100,000	–	318,060
Mr P Forster	1,078,318	–	–	300,000	100,000	–	400,000

continued

There are no performance measures attributable to the share options. There are no requirements for a director to own shares.

			At 1 April 2021
	Shares		Share Options
Director	Number of shares	Exercise period of 2017 – 2024 price 5.50p Vested	Exercise period of 2019 – 2025 price 4.50p Vested	Exercise period of 2021 – 2028 price 26.80p Not vested	Exercise period of 2023 – 2030 price 36p Not vested	Total Options held
Mr William O McIlroy	16,219,275	1,300,000	–	900,000	–	2,200,000
Mr Bernard JM Johnson	5,087,844	–	–	900,000	–	900,000
Mr Nicholas DJ O'Shea	100,000	–	–	150,000	–	150,000
Mr William T Glencross	67,500	–	–	150,000	–	150,000
Ms P Clark	651,818	–	200,000	600,000	200,000	1,000,000
Mr M Stevens	881,818	–	–	400,000	100,000	500,000
Mr P Forster	1,143,318	–	–	300,000	100,000	400,000

All of the above options relate to ordinary shares in Creightons plc. The market prices of these shares are included in the table below.

Market price
At 31 March 2022	Lowest during period	Highest during period
60.5p	54.0p	134.0p

Mr McIlroy's holding noted above includes 14,450,000 (2021: 14,450,000) shares held in the name of Oratorio Developments Ltd, a private company of which Mr McIlroy is a Director and controlling shareholder.

continued

The information provided in this part of the Annual Report on remuneration is not subject to audit

Performance graph and CEO remuneration table

The following graph shows the Group's performance, measured by total shareholder return, compared with the FTSE All-Share index, which the directors have always considered the most suitable comparator given the small number of quoted companies of a similar size in the Company's sector; and the typical portfolio style of management for most investors, meaning that investments in the Company would be compared against investment portfolios based on FTSE All-Share index performance.

Strategic report with supplementary material and Notice of Annual General Meeting 44 For the year ended 31 March 2022

continued

Table of Historical Data

The table below sets out the remuneration of the highest paid director.

Year	Single figure of total remuneration	Annual bonus pay-out against maximum %	Share option scheme exercised against maximum %
2022	163	40% after waiver	22%
2021	291	100%	n/a
2020	291	100%	100%
2019	301	100%	0%
2018	177	100%	n/a
2017	170	100%	n/a
2016	156	100%	n/a
2015	47	100%	n/a
2014	29	100%	100%
2013	20	100%	n/a
2012	16	100%	n/a

continued

Percentage change in remuneration of the executive directors

The table below shows the percentage increase in remuneration of the directors and the Group's employees as a whole between the years ended 31 March 2021 and 31 March 2022.

			2021
	Salary and fees	All taxable benefits	Annual bonus	Total	Salary and fees	All taxable benefits	Annual bonus	Total
W McIlroy	3.8%	–	(73.2%)	(66.3%)	4.0%	–	33.2%	29.9%
B Johnson	0.0%	–	(46.6%)	(27.6%)	0.0%	–	(33.2%)	(22.7%)
P Clark	4.6%	0.0%	(91.9%)	(19.1%)	18.5%	50.0%	362.5%	46.2%
M Stevens	3.1%	0.0%	(87.0%)	(13.3%)	11.6%	0.0%	187.5%	24.3%
P Forster	(71.4%)	(66.7%)	(95.7%)	(77.1%)	(16.7%)	(62.5%)	228.6%	(3.0%)
N O'Shea	5.9%	–	–	11.8%	(22.7%)	–	–	(22.7%)
W Glencross	(10.5%)	–	–	(5.3%)	5.6%	–	–	5.6%

Pay ratios

The table below sets out the ratio of the highest paid director to the median, 25th and 75th percentile full-time equivalent remuneration of the Group's employees.

Year	Method	25th percentile pay ratio	Median pay ratio	75th percentile ratio
2022	Option B	8:1	7:1	6:1
2021	Option B	14:1	14:1	12:1
2020	Option B	15:1	13:1	11:1

The pay ratio has reduced from previous years as the highest paid Director has waived their entitlement to 60% of their bonus for the year ended 31 March 2022.

Option B under the reporting requirements has been chosen to identify the employees at the median, 25th and 75th percentiles as it provides the most effective method to identify the reference employees for calculation purposes. The reference employees pay has been calculated from their annual salary, bonuses and pension at the close of the financial year.

continued

In line with the regulations, the following table sets out the total pay and benefits, and the salary element for the highest paid director and employees at each percentile.

	Base salary	Total pay and benefits
	£000's	£000's
Highest paid director	92	163
75th percentile employee	25	28
50th percentile employee	21	23
25th percentile employee	19	21

Relative importance of spend on pay

The table below shows the total expenditure of the Group for all employees compared to retained profits and distributions to shareholders for the years ended 31 March 2022 and 31 March 2021 and the year on year change.

	Year ended 31 March 2022	Year ended 31 March 2021	Change
	£000's	£000's	%
Employee costs	15,489	16,221	(4.5%)
Profit for the year	3,110	4,334	(28.2%)
Dividends paid	428	421	1.7%

continued

Voting at general meeting

The Group is committed to ongoing shareholder dialogue and takes an active interest in voting outcomes. Where there are substantial votes against resolutions in relation to directors' remuneration, the reasons for any such vote will be sought, and any actions in response will be detailed here.

The following table sets out actual voting in respect of the approval of the Directors' Remuneration report and policy in respect of the year ended 31 March 2021:

Resolution	Number of votes cast for	% of votes cast for	Number of votes cast against	% of votes cast against	Total votes cast	Number of votes cast withheld
Directors'
Remuneration Report	26,914,409	99.58%	105,893	0.39%	27,028,496	8,194
Directors'
Remuneration Policy	26,755,371	98.99%	106,750	0.39%	27,028,496	166,375

Policy report

Remuneration Committee

The Board has established a Remuneration Committee to determine the remuneration of directors of the Company.

Consideration by the directors of matters relating to Directors' remuneration

The members of the Committee during the prior year were Nicholas O'Shea and William Glencross and Paul Forster joined the Committee during the year ended 31 March 2022. In determining the directors' remuneration, the Committee consulted the Chairman. There have been 3 meetings of the Committee during the period, attended by Mr Glencross, Mr O'Shea and Mr Forster. The committee has considered market rates and increases awarded to all employees in determining the base salary increases for the executive directors. The Committee has not sought advice from any consultants during the period.

Statement of consideration of employee employment conditions elsewhere in the company

When determining the remuneration of Executive Directors, the Committee considers the pay of employees across the Group. When conducting salary reviews, the average base salary increase awarded to the UK workforce and senior managers across the Group provides a key reference point when determining levels of increase for Executive Director remuneration.

continued

Illustrations of application of the Remuneration Policy

Under the Remuneration Policy a significant portion of the remuneration is variable for Mr McIlroy and Mr Johnson. The variable element of the remuneration is directly linked to the profit of the Group as detailed in the policy below. The remuneration for Ms Clark and Mr Stevens is reviewed in line with all other employees of the Group and also contains a variable element which is payable only if the Group hits the profit target for the period.

The charts below indicate the level of remuneration that could be received by each executive director in accordance with the Directors' Remuneration Policy at different levels of performance.

Note: The bonuses for Directors are uncapped and directly related to profits. The charts above illustrate the level of remuneration based on the level of profit as at 31 March 2022 and an increase in profit of 50% from this level. These bonuses are not impacted by an increase in the share price.

continued

Statement of implementation of remuneration policy in the following financial year

There has been no change to the directors' remuneration during the year ended 31 March 2022.

Policy on directors' remuneration

The policy of the Company on executive remuneration including that for Executive Directors is to reward individual performance and motivate and retain existing Executive Directors so as to promote the best interests of the Group and enhance shareholder value. The remuneration packages for executives and Executive Directors include a basic annual salary, performance related bonus and a share option programme. The remuneration packages for Non-executive Directors include a salary or fee. The Committee has reviewed the policy for the year ahead and has concluded that the key features of the remuneration policy remain appropriate.

In setting Executive Directors' remuneration, the Committee is mindful of the pay and conditions enjoyed by other employees. It considers revisions to their arrangements only when other employees' pay and conditions are also reviewed, and this is always done in the light of market conditions and overall Group performance. However, the Committee does not automatically increase the pay and conditions for directors in line with either inflation or at the same rate that those for other employees may be increased.

Both Executive and Non-executive Directors may accept appointment as directors of other companies and retain any fees paid to them, although directors are required to notify the company of all such appointments and may not accept appointments which would be incompatible with their role with the Group, such as with direct competitors or major suppliers and customers.

Salary and benefits

Executive Directors' salary and benefits packages are determined by the Committee on appointment or when responsibilities or duties change substantially, and are reviewed annually in line with those of employees. The last review was undertaken during 2021 and two of the Executive Directors received pay increases and bonuses in line with other employees of the Group. The Committee considers that improved performance should be recognised by achievement of performance bonuses. Whilst no absolute maximum is prescribed, increases will take account of other salary increases across the Group. However, in certain circumstances, including changing roles and responsibilities, market levels and individual and group performance, the committee will have discretion to award larger increases.

continued

Pensions

Pension contributions for Executive Directors are broadly in line with other employees. Contracts for Ms Clark and Mr Stevens include contributions to an auto-enrolment pension and fixed defined contributions to Company pension schemes. Pension contributions for the year ended 31 March 2022 were as follows; Ms Clark £6,000 and Mr Stevens £9,000.

The Group has not complied with the requirements of Paragraph 13 of Schedule 8 of The Large and Medium-sized Companies and Groups (Accounts and Reports) Regulations 2008 that requires disclosure of the cash benefits due to individual Directors as at the year end for any company operated Defined Contribution Pension Schemes. The assets of these Defined Contribution Schemes are held independently of the Group and the Group does not have recourse to the assets of the Schemes. The information was not available to the Group at the time of preparing the financial statements.

In the opinion of the Directors this does not mislead the users of the financial statements and their understanding of the business.

Directors' performance bonuses

Bonuses are used to reward contribution to the performance of the Group, aligned to shareholder interests. Whilst no absolute maximum is prescribed the annual bonus is aligned to the performance of the group.

Both Mr McIlroy and Mr Johnson have contracts which provide for bonuses should the Group achieve profitability, and Mr McIlroy's also provides for a bonus should a complete or partial sale of the Group's toiletries business be achieved. The profit criterion was met in 2022, and as a consequence, provision for payment of the profit related performance bonus has been made in the financial statements, and will be paid as required by the contracts within one month of the approval and publication of these financial statements.

The contract for Mr McIlroy's services as a director provides for a bonus to be paid after the deduction of tax and National Insurance by the Company to Oratorio Developments Ltd in respect of the Group's net profits before tax at the rate of 12.5% in respect of net profits up to £50,000, 7.5% of net profits between £50,001 and £100,000, and 5% of net profits in excess of £100,000. During the year, a bonus of £177,000 was payable for Mr McIlroy. Mr McIlroy has chosen to waive £106,000 (60%) of his bonus for the year ended 31 March 2022. 40% has been waived to allow for employee bonuses and 20% has been fully waived for the year ended 31 March 2022.

continued

A further bonus of 10% of the net sale proceeds is also payable to Oratorio Developments Ltd if the Company sells the whole of the toiletries business undertaken by the Company at 16 January 2002 for a price in excess of £1,500,000, or if the Company sells a part of that toiletries business for a price in excess of £500,000 and the net book value of the assets disposed of is less than one-third of the value of the net assets of the Company.

The contract for Mr Johnson's services as a Managing Director provides for a performance bonus to be paid after the deduction of tax and National Insurance by the Company to Carty Johnson Limited in respect of the Group's net profits before tax at the rate of 12.5% in respect of net profits up to £50,000, 7.5% of net profits between £50,001 and £100,000, and 5% of net profits in excess of £100,000. During the year, a bonus of £177,000 was payable to Mr Johnson. Mr Johnson has chosen to waive £106,000 (60%) of his bonus for the year ended 31 March 2022. 40% has been waived to allow for employee bonuses and 20% has been fully waived for the year ended 31 March 2022.

Messrs McIlroy's and Johnson's contracts have been revised for 2022 for all payment to be made to them in compliance with current HMRC requirements.

The contracts for Ms Clark and Mr Stevens include a Group bonus scheme, where employees are entitled to a bonus of 7.5% of basic pay if the Group hits the profit target for the period and additional payments of up to 14% of earnings (10% for other employees) in relation to key performance indicator targets which were partially achieved during the year. During the year, a bonus of £3,000 was paid to Ms Clark and £3,000 to Mr Stevens, in respect of the year ended 31 March 2022 (2021: Ms Clark £9,000 and Mr Stevens £9,000).

There are no performance conditions against share price for directors. None of the Directors remuneration is paid or payable in shares, therefore a 50% increase in share price would have a £nil effect on remuneration.

Share option schemes

The policy of the Company is to grant share options to all employees including both Executive and Non-executive Directors as a further incentive to align with the interests of shareholders. Options are granted periodically at the discretion of the Board and on approval by the Remuneration Committee to Directors and certain key employees who in the opinion of the Board are in a position to contribute to the long-term growth of the business.

Options will normally be granted at market value on the date of grant with a vesting period of three years. However the options may be granted at a discount to the market value upon approval by the Remuneration Committee.

continued

Recruitment

On appointment or promotion, base salary levels will be set taking into account a range of factors including market levels, experience, internal relativities and cost. If an individual is appointed on a base salary below the desired market positioning, the Committee retains the discretion to re-align the base salary, contingent on individual performance, which may result in a higher rate of annualised increase above ordinary levels.

Loss of office

Any loss of office payment will be approved by the Remuneration Committee. Any payment will be made at discretion and on a case-by-case basis. Any payments made beyond contractual and statutory obligations would be exceptional in nature either due to additional obligations taken on by the departing Director or due to specific circumstance and always benchmarked against market practice.

Name of Director	Date of service contract	Date contract last amended	Notice periods
WO McIlroy (chairman's contract)	6 Feb 2003	1 Apr 2022	12 months
WO McIlroy (director's contract with employer)	16 Jan 2002	1 Apr 2022	12 months
BJM Johnson (director's contract)	16 Jan 2002	1 Apr 2022	12 months
BJM Johnson (manager's contract with employer)	16 Jan 2002	1 Apr 2022	12 months
NDJ O'Shea (non-executive)	5 Jul 2001	1 Apr 2022	3 months
WT Glencross (non-executive)	31 Jul 2005	1 Apr 2022	3 months
P Clark (Deputy Managing Director)	9 Feb 2015	1 Apr 2022	3 months
M Stevens (Deputy Managing Director)	9 Feb 2015	1 Apr 2022	3 months
P Forster (Group Finance & Commercial Director) (non-executive from 1 April 2021)	1 Apr 2021	1 Apr 2022	3 months

Service contracts

continued

All contracts were revised on 1 April 2022 to reflect current legislation and salaries.

It is the Company's policy that service contracts for the directors are for an indefinite period, terminable by either party with a maximum period of notice of either 3 months or 12 months. Any payments in lieu of notice should not exceed the director's salary or fees for the unexpired term of the notice period. Within that policy, information relating to individual directors is scheduled above.

The fees for Non-executive Directors are reviewed annually and determined in the light of market practice and with reference to the time commitment and responsibilities associated with each Nonexecutive Director's role and responsibilities.

The Board as a whole considers the policy and structure for the Non-executive Directors' fees on the recommendation of the Chairman. The Non-executive Directors do not participate in discussions on their specific levels of remuneration.

Non-executive Directors are eligible for share options but may not participate in any personal performance bonus, and are only eligible for statutory contributions to workplace pensions. The fees paid for Non-executive Directors consist of a flat annual fee based on the involvement each is anticipated to be required to commit to the Group, together with the Group-wide bonus relating to the Group's overall performance that all employees are entitled to, and both the time commitments and fee basis are reviewed annually. Any additional time commitments over these are paid on a pro rata per diem basis. The fees paid for the Chairman and Non-executive Directors also include an element of profit-related bonus based on the overall performance of the Group and for the Chairman of sales value-related bonus for the disposal of all or parts of the toiletries business.

Approval

In the opinion of the Remuneration Committee, the Company has complied with Section D of the Code, and in forming the remuneration policy the Committee has given full consideration to that section of the Code.

The Directors' Remuneration Report was approved by the Board of Directors on 11 July 2022 and signed on its behalf by:

Mr Nicholas O'Shea Remuneration Committee

continued

Consolidated income statement

	Year ended 31 March 2022 £000	Year ended 31 March 2021 £000
Revenue	61,157	61,605
Cost of sales	(35,001)	(36,623)
Gross profit	26,156	24,982
Distribution costs	(3,535)	(3,353)
Administrative expenses	(18,256)	(16,236)
Operating profit	4,365	5,393
Exceptional items	(602)	–
Finance costs	(308)	(222)
Profit before tax	3,455	5,171
Taxation	(345)	(837)
Profit for the year from operations attributable to the equity
shareholders	3,110	4,334

continued

Consolidated statement of comprehensive income

	Year ended	Year ended
	31 March 2022 £000	31 March 2021
		£000
Profit for the year	3,110	4,334
Items that may be subsequently reclassified to profit and loss:
Exchange differences on translating foreign operations	(7)	9
Other comprehensive income for the year	(7)	9
Total comprehensive income for the year attributable to the
equity shareholders	3,103	4,343

Dividends

	Year ended 31 March 2022 £000	Year ended 31 March 2021 £000
Final dividend paid – 0.50p (2021: 0.50p) per share	324	324
Interim dividend paid – 0.15p (2021: 0.15p) per share	104	97
Total dividend paid in year – 0.65p (2021: 0.65p) per share	428	421
Proposed – 0.00p (2021: 0.50p) per share	–	324

Earnings per share

	Year ended 31 March 2022	Year ended 31 March 2021
Basic	4.62p	6.69p
Diluted	3.98p	5.89p

continued

Consolidated balance sheet

	31 March	31 March
	2022 £000	2021 £000
Non-current assets
Goodwill	2,853	331
Other intangible assets	10,867	818
Property, plant and equipment	6,065	5,857
Right-of-use assets	1,120	1,090
Deferred tax Asset	–	339
	20,905	8,435
Current assets
Inventories	12,479	8,318
Trade and other receivables	13,624	10,236
Cash and cash equivalents	840	6,558
	26,943	25,112
Total assets	47,848	33,547
Current liabilities
Trade and other payables	10,127	9,177
Corporation tax payable	–	329
Lease liabilities	303	237
Borrowings	2,663	166
Deferred and contingent consideration	1,187	–
	14,280	9,909
Net current assets	12,663	15,203

continued

Consolidated balance sheet

continued

	31 March 2022	31 March 2021
Non-current liabilities	£000	£000
Deferred tax liability	2,640	–
Lease liabilities	864	906
Borrowings	4,386	2,646
	7,890	3,552
Total liabilities	22,170	13,461
Net assets	25,678	20,086
Equity
Share capital	697	648
Share premium account	4,427	1,410
Other reserves	(211)	25
Translation reserve	23	30
Retained earnings	20,742	17,973
Total equity attributable to the equity shareholders
of the parent Company	25,678	20,086

These financial statements were approved by the board of directors and authorised for issue on 11 July 2022. They were signed on its behalf by:

Bernard Johnson Managing Director

continued

Consolidated statement of changes in equity

	Share capital £000	Share premium account £000	Other reserves £000	Translation reserve £000	Retained earnings £000	Total equity £000
At 1 April 2020	647	1,406	25	21	13,467	15,566
Comprehensive income for the year
Profit for the year	–	–	–	–	4,334	4,334
Exchange differences on translation of foreign
operations	–	–	–	9	–	9
Total comprehensive income for the year	–	–	–	9	4,334	4,343
Contributions by and distributions to owners
Exercise of options	1	4	–	–	–	5
Share-based payment charge	–	–	–	–	195	195
Deferred tax through Equity	–	–	–	–	398	398
Dividends	–	–	–	–	(421)	(421)
Total contributions by and distributions to
owners	1	4	–	–	172	177
At 31 March 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	3,017	(236)	–	(341)	2,489
At 31 March 2022	697	4,427	(211)	23	20,742	25,678

Strategic report with supplementary material and Notice of Annual General Meeting

For the year ended 31 March 2022 59

continued

Consolidated cash flow statement

	Year ended	Year ended
	31 March 2022	31 March 2021
	£000	£000
Profit from operations	4,365	5,393
Adjustments for:
Depreciation on property, plant and equipment	888	846
Depreciation on right of use assets	256	206
Amortisation of intangible assets	435	497
(Profit)/Loss on disposal of property, plant and equipment	(10)	4
Loss on disposal of Right-of-use assets	-	5
Share based payment charge	330	195
	6,264	7,146
(Increase) in inventories	(2,515)	(924)
(Increase) in trade and other receivables	(1,820)	(1,369)
Increase in trade and other payables	59	1,337
Cash generated from operations	1,988	6,190
Taxation paid	(575)	(684)
Net cash generated from operating activities	1,413	5,506
Investing activities
Purchase of property, plant and equipment	(1,106)	(869)
Purchase of right-of-use assets	(286)	(34)
Proceeds from sale and lease back	264	174
Purchase of intangible assets	(338)	(344)
Acquisition of Brodie & Stone	(3,507)	–
Acquisition of Emma Hardie	(2,775)	–
Exceptional costs in relation to acquisitions	(343)	–
Net cash used in investing activities	(8,091)	(1,073)

continued

Consolidated cash flow statement

continued

	Year ended 31 March 2022	Year ended 31 March 2021
Financing activities	£000	£000
Proceeds on issue of shares	564	5
Principal paid on lease liabilities	(240)	(188)
Interest on lease liabilities	(117)	(139)
Interest paid on mortgage loan	(83)	(89)
Interest paid on overdrafts and loans	(108)	(4)
Increase in invoice financing facilities	1,267	–
Increase/(decrease) of borrowings	495	(554)
Draw down of loan facility	3,000	–
Repayment on term loan	(314)	–
Repayment on mortgage loan facility	(169)	(164)
Repayment of debt – Emma Hardie	(2,201)	–
Repayment of debt – Brodie & Stone	(463)	–
Dividends paid to owners of the parent	(428)	(421)
Purchase of own shares via EBT	(236)	–
Net cash generated from/(used in) financing activities	967	(1,554)
Net increase in cash and cash equivalents	(5,711)	2,879
Cash and cash equivalents at start of year	6,558	3,670
Effect of foreign exchange rate changes	(7)	9
Cash and cash equivalents at end of year	840	6,558

Following the lifting of most Covid-19-related restrictions, this year's AGM will not be the closed meeting we have had to hold for the last couple of years and shareholders will be able to attend the AGM in person. However, due to on-going outbreaks of Covid-19 and continued circulation of new variants, the directors would strongly encourage shareholders to exercise their voting rights in relation to the resolutions set out in the Notice (the "Resolutions") by appointing a proxy using one of the methods set out in the notes to the Notice. A form of proxy is enclosed with the Notice.

The Company will also continue to welcome questions from shareholders on the business of the AGM, or any other matters relating to the Company, which should be submitted by e-mail to cosec@creightons.com by 12:00 noon on 22 August 2022. Questions should include: the shareholder's full name, number of shares held and telephone contact details. Responses will be given at the meeting and either by e-mail or by publication on the Company's website at the appropriate time.

The Company will monitor guidance and regulations relating to Covid-19 and if there are any further changes to the relevant restrictions, the Company will consider whether or not to make other changes to arrangements for the AGM in accordance with the relevant guidelines applicable at the time. The Company will publish any changes to these arrangements on its website and/or by an announcement via a regulatory news service.

Notice is hereby given that the Annual General Meeting of the company will be held at the offices of Potter & Moore Innovations Ltd, 1210 Lincoln Road, Peterborough, PE4 6ND on 24 August 2022 at 12:00 noon in order to consider and, if thought fit, pass the following resolutions.

• 1. To receive and consider the Group's financial statements and reports of the directors and auditor for the year ended 31 March 2022.
• 1. To receive and approve the directors' remuneration report for the year ended 31 March 2022.
• 1. To approve the directors' remuneration policy as detailed in pages 48 to 54 of the directors' remuneration report.
• 1. To re-elect Mr William Glencross, who is retiring by rotation under the provisions of Article 76 of the Articles of Association, who, being eligible, offers himself for re-election as a director of the company.
• 1. To re-elect Mr Nicholas O'Shea, who is retiring by rotation under the provisions of Article 76 of the Articles of Association, who, being eligible, offers himself for re-election as a director of the company.

continued

• 1. To re-appoint Mazars LLP as auditors and to authorise the directors to determine their remuneration.
• 1. As an ordinary resolution:-

"That, in terms of Article 6 of the company's Articles of Association, the directors of the company be and they are hereby generally and unconditionally authorised for the purposes of Section 551 of the Companies Act 2006 to exercise all the powers of the company to allot relevant securities (within the meaning of the said Section 551) of the company up to an aggregate nominal value of £232,520.61 (representing approximately one third of the current issued ordinary share capital) provided that this authority shall expire on the date of the next annual general meeting of the company after the passing of this resolution or, if earlier, fifteen months after the passing of this resolution unless previously renewed, varied or revoked by the company in the general meeting and provided that the company may before such expiry make an offer or agreement which would or might require relevant securities to be allotted after such expiry and the directors may allot relevant securities in pursuance of such an offer or agreement as if the authority conferred hereby had not expired, this authority to replace any existing like authority given prior to the date hereof which is hereby revoked with immediate effect."

1. As a special resolution:-

"That, without prejudice to any existing powers in terms of Article 6 of the company's Articles of Association, the directors of the company be and they are hereby empowered pursuant to Section 570 of the Companies Act 2006 to allot equity securities (within the meaning of Section 560 of the said Act) for cash pursuant to the authority conferred upon them by Section 551 of the said Act by resolution 7 above as if Section 561(I) of the said Act did not apply to any such allotment provided that this power shall be limited:

• (a) to the allotment of equity securities in connection with an offer or issue to or in favour of ordinary shareholders on the register on a date fixed by the directors where the equity securities respectively attributable to the interest of all ordinary shareholders are proportionate (as nearly as may be) to the respective numbers of ordinary shares held by them on that date but the directors may make such exclusions or other arrangements as they consider expedient in relation to fractional entitlements, legal or practical problems under the laws in any territory or the requirements of any regulatory body or stock exchange; and
• (b) to the allotment (otherwise than pursuant to sub-paragraph (a) above) of equity securities up to an aggregate nominal value of £34,878.09 (representing approximately 5% of the current issued ordinary share capital);

continued

and shall expire on the earlier of the date which is fifteen months after the date of the passing of this resolution and the date of the next annual general meeting of the company after the passing of this resolution save that the company may before such expiry make an offer or agreement which would or might require securities to be allotted after such expiry and the directors may allot equity securities in pursuance of such an offer or agreement as if the powers conferred hereby had not expired and so that all previous authorities of the directors pursuant to Section 95 of the said Act be and are hereby revoked."

1. As a special resolution:

"That the company be and is hereby generally and unconditionally authorised pursuant to Section 701 of the Companies Act 2006 to make market purchase (as defined in Section 693(4) of the said Act) of its own ordinary shares of 1p each ("Ordinary Shares") in such a manner and on such terms as the directors may from time to time determine provided that:

• (a) the authority hereby conferred shall expire on the earlier of the date which is fifteen months after the date of the passing of this resolution and the conclusion of the next Annual General Meeting of the company after the passing of this resolution unless renewed or extended prior to or at such meeting, except that the company may before the expiry of such authority make any contract of purchase of Ordinary Shares which will or might be completed wholly or partly after such expiry and to purchase Ordinary Shares in pursuance of such contract as if the authority conferred hereby had not expired;
• (b) the maximum number of Ordinary Shares hereby authorised to be purchased shall not exceed 3,487,809 Ordinary Shares (representing 5% of the company's issued share capital as at 19 July 2021); and
• (c) the maximum price which may be paid for each Ordinary Share pursuant to this authority hereby conferred is an amount equal to 105% of the average of the middle market quotations for Ordinary Shares (derived from The London Stock Exchange Daily Official List) for the five business days prior to the date of purchase and the minimum price of 1p."

By order of the board

Mr Bernard Johnson Managing Director

1210 Lincoln Road Peterborough PE4 6ND 11 July 2022

continued

IMPORTANT NOTE REGARDING ATTENDANCE IN PERSON:

Due to on-going outbreaks of Covid-19 and continued circulation of new variants, the directors would strongly encourage shareholders to exercise their voting rights by appointing a proxy using one of the methods set out in the notes to the Notice. A form of proxy is enclosed with the Notice.

Notice of Meeting Notes:

The following notes explain your general rights as a shareholder and your right to attend and vote at this Meeting or to appoint someone else to vote on your behalf.

• 1. To be entitled to attend and vote at the Meeting (and for the purpose of the determination by the Company of the number of votes they may cast), shareholders must be registered in the Register of Members of the Company at close of trading on 22 August 2022. Changes to the Register of Members after the relevant deadline shall be disregarded in determining the rights of any person to attend and vote at the Meeting.
• 1. Shareholders are entitled to appoint another person as a proxy to exercise all or part of their rights to attend and to speak and vote on their behalf at the Meeting. A shareholder may appoint more than one proxy in relation to the Meeting provided that each proxy is appointed to exercise the rights attached to a different ordinary share or ordinary shares held by that shareholder. A proxy need not be a shareholder of the Company.
• 1. In the case of joint holders, where more than one of the joint holders purports to appoint a proxy, only the appointment submitted by the most senior holder will be accepted. Seniority is determined by the order in which the names of the joint holders appear in the Company's Register of Members in respect of the joint holding (the first named being the most senior).
• 1. A vote withheld is not a vote in law, which means that the vote will not be counted in the calculation of votes for or against the resolution. If no voting indication is given, your proxy will vote or abstain from voting at his or her discretion. Your proxy will vote (or abstain from voting) as he or she thinks fit in relation to any other matter which is put before the Meeting.
• 1. You can vote either:
• by logging on to www.signalshares.com and following the instructions;
• You may request a hard copy form of proxy directly from the registrars, Link Group, on Tel: 0371 664 0300. Calls are charged at the standard geographic rate and will vary by provider.

continued

Calls outside the United Kingdom will be charged at the applicable international rate. Lines are open between 09:00 – 17:30, Monday to Friday excluding public holidays in England and Wales.

• In the case of CREST members, by utilising the CREST electronic proxy appointment service in accordance with the procedures set out below.

In order for a proxy appointment to be valid a form of proxy must be completed. In each case the form of proxy must be received by Link Group at PXS1, 10th Floor, Central Square, 29 Wellington Street, Leeds LS1 4DL by 12 pm on 22 August 2022.

• 1. If you return more than one proxy appointment, either by paper or electronic communication, the appointment received last by the Registrar before the latest time for the receipt of proxies will take precedence. You are advised to read the terms and conditions of use carefully. Electronic communication facilities are open to all shareholders and those who use them will not be disadvantaged.
• 1. If you are an institutional investor you may be able to appoint a proxy electronically via the Proxymity platform, a process which has been agreed by the Company and approved by the Registrar. For further information regarding Proxymity, please go to www.proxymity.io. Your proxy must be lodged by 12 pm on 22 August 2022 in order to be considered valid or, if the meeting is adjourned, by the time which is 48 hours before the time of the adjourned meeting. Before you can appoint a proxy via this process you will need to have agreed to Proxymity's associated terms and conditions. It is important that you read these carefully as you will be bound by them and they will govern the electronic appointment of your proxy.
• 1. CREST members who wish to appoint a proxy or proxies through the CREST electronic proxy appointment service may do so for the Meeting (and any adjournment of the Meeting) by using the procedures described in the CREST Manual (available from www.euroclear.com/ site/public/EUI). CREST Personal Members or other CREST sponsored members, and those CREST members who have appointed a service provider(s), should refer to their CREST sponsor or voting service provider(s), who will be able to take the appropriate action on their behalf.

continued

• 1. In order for a proxy appointment or instruction made by means of CREST to be valid, the appropriate CREST message (a 'CREST Proxy Instruction') must be properly authenticated in accordance with Euroclear UK & Ireland Limited's specifications and must contain the information required for such instructions, as described in the CREST Manual. The message must be transmitted so as to be received by the issuer's agent (ID RA10) by 12 pm on 22 August 2022. For this purpose, the time of receipt will be taken to mean the time (as determined by the timestamp applied to the message by the CREST application host) from which the issuer's agent is able to retrieve the message by enquiry to CREST in the manner prescribed by CREST. After this time, any change of instructions to proxies appointed through CREST should be communicated to the appointee through other means.
• 1. CREST members and, where applicable, their CREST sponsors or voting service providers should note that Euroclear UK & Ireland Limited does not make available special procedures in CREST for any particular message. Normal system timings and limitations will, therefore, apply in relation to the input of CREST Proxy Instructions. It is the responsibility of the CREST member concerned to take (or, if the CREST member is a CREST personal member, or sponsored member, or has appointed a voting service provider(s), to procure that his CREST sponsor or voting service provider(s) take(s)) such action as shall be necessary to ensure that a message is transmitted by means of the CREST system by any particular time. In this connection, CREST members and, where applicable, their CREST sponsors or voting system providers are referred, in particular, to those sections of the CREST Manual concerning practical limitations of the CREST system and timings. The Company may treat as invalid a CREST Proxy Instruction in the circumstances set out in Regulation 35(5)(a) of the Uncertificated Securities Regulations 2001.
• 1. Any corporation which is a shareholder can appoint one or more corporate representatives who may exercise on its behalf all of its powers as a shareholder provided that no more than one corporate representative exercises powers in relation to the same shares.
• 1. As at 21 July 2022 (being the latest practicable business day prior to the publication of this Notice), the Company's ordinary issued share capital consists of 70,017,983 ordinary shares, carrying one vote each. Therefore, the total voting rights in the Company as at 21 July 2022 are 70,017,983.

continued

• 1. Under Section 527 of the Companies Act 2006, shareholders meeting the threshold requirements set out in that section have the right to require the Company to publish on a website a statement setting out any matter relating to: (i) the audit of the Company's financial statements (including the Auditor's Report and the conduct of the audit) that are to be laid before the Meeting; or (ii) any circumstances connected with an auditor of the Company ceasing to hold office since the previous meeting at which annual financial statements and reports were laid in accordance with Section 437 of the Companies Act 2006 (in each case) that the shareholders propose to raise at the relevant meeting. The Company may not require the shareholders requesting any such website publication to pay its expenses in complying with Sections 527 or 528 of the Companies Act 2006. Where the Company is required to place a statement on a website under Section 527 of the Companies Act 2006, it must forward the statement to the Company's auditor not later than the time when it makes the statement available on the website. The business which may be dealt with at the Meeting for the relevant financial year includes any statement that the Company has been required under Section 527 of the Companies Act 2006 to publish on a website.
• 1. Any shareholder attending the Meeting has the right to ask questions. The Company must cause to be answered any such question relating to the business being dealt with at the Meeting but no such answer need be given if: (a) to do so would interfere unduly with the preparation for the Meeting or involve the disclosure of confidential information; (b) the answer has already been given on a website in the form of an answer to a question; or (c) it is undesirable in the interests of the Company or the good order of the Meeting that the question be answered.
• 1. The following documents are available for inspection during normal business hours at the registered office of the Company on any business day from the date of this Notice until the time of the Meeting and may also be inspected at the Meeting venue, as specified in this Notice, from 9:00 am on the day of the Meeting until the conclusion of the Meeting:

Copies of the Directors' letters of appointment or service contracts.

1. You may not use any electronic address (within the meaning of Section 333(4) of the Companies Act 2006) provided in either this Notice or any related documents (including the form of proxy) to communicate with the Company for any purposes other than those expressly stated. A copy of this Notice, and other information required by Section 311A of the Companies Act 2006, can be found on the Company's website at www.creightonsplc.com

Contact information and useful information

Directors

Bernard JM Johnson Managing Director

William O McIlroy Executive Chairman and Chief Executive William T Glencross Non-executive Director Nicholas DJ O'Shea Non-executive Director Philippa Clark Deputy Managing Director Martin Stevens Deputy Managing Director Paul Forster Non-executive Director

Company Secretary

Saxon Coast Consultants Ltd

Registered Office and number

1210 Lincoln Road Peterborough PE4 6ND Registered in England & Wales No 1227964

Registrars

Shareholder information

Link Group is our registrar and they offer many services to make managing your shareholding easier and more efficient.

Signal shares

Signal shares is a secure online site where you can manage your shareholding quickly and easily. You can:

• View your holding and get an indicative valuation
• Change your address
• Arrange to have dividends paid into your bank account
• View your dividend payment history
• Buy and sell shares and access a wealth of stock market news and information
• Download a stock transfer form

Contact information and useful information

continued

To register for Signal shares just visit www.signalshares.com. All you need is your investor code, which can be found on your share certificate.

Customer Support Centre

Alternatively, you can contact Link's Customer Support Centre which is available to answer any queries you have in relation to your shareholding:

By phone – UK – 0871 664 0300 (UK calls cost 12p per minute plus network extras). From overseas – +44 371 664 0300.

Lines are open 9.00am to 5.30pm, Monday to Friday, excluding public holidays.

By email – shareholderenquiries@linkgroup.co.uk

By post – Link Group, 10th Floor, Central Square, 29 Wellington Street, Leeds LS1 4DL.