Acquisition

RNS Number : 2543P

Creightons PLC

16 February 2016

 

For Immediate Release                                                                                                16 February 2016

Creightons plc (the "Company", "Creightons" or "Cplc")

Acquisition of certain assets of Broad Oak Toiletries Ltd (in Administration) ("BOT")

The Company announces that today Potter & Moore (Devon) Ltd ("PMD"), a wholly-owned subsidiary of Creightons plc, has purchased certain assets of Broad Oak Toiletries Ltd (in Administration) to include all unencumbered plant and equipment but excluding assets subject to HP, all stock and the IP including formulations, manufacturing methods, manufacturing and component specifications.

BOT is a private UK company which operated in a similar area of the toiletries contract manufacturing market to the Company, mainly supplying small batch high value products to its customers. It is proposed that the assets being acquired will be used as part of the Company's operations in that market to increase capacity and the range of products available to customers. 

The last available audited accounts for BOT for the year ended 31 January 2015 reported a Loss before tax of £770,000 attributable to the assets subject to this purchase although this was based on Turnover of £19.081million. Given the current condition of BOT's business, the Company believes it can achieve sales of £3.2million for the year to 31 January 2017 thus making a positive contribution to the results of the Group. The Company anticipates that the wider range of production capabilities together with its existing excellent reputation for customer service will enable the Company to re-build relationships with BOT's customers and generate increased sales for the enlarged operation.

The total consideration for the purchase is £600,002 which will be paid in cash from the current reserves of the Company.

The gross value of the consideration amounting to £600,002 of the assets acquired will be allocated as follows in the consolidated accounts of Company:

-      Fixed assets                       £540,000

-      IP                                            £10,002

-      Stock                                     £50,000

Total                                              £600,002

Stock valued at £168,000 will be acquired by PMD for £50,000 and therefore the Company will account for this as a debit to Gross Assets but then a credit to goodwill as negative goodwill of £118,000. This is because PMD will acquire it as part of the transaction for £50,000 and may only be able to realise value from it if existing contracts are retained.

The Company anticipates that the additional assets will enable it to increase consolidated group sales by some £3.2million in the first full year through additional capacity, supplying new customers and offering existing customers products previously manufactured by BOT.

Neither PMD nor the Company has agreed to take on any employees from BOT, and the Company understands that all were made redundant before the acquisition of these assets. 

Speaking after the transaction had been completed, the Company's Chairman, Mr William McIlroy said: "We are very excited by this acquisition which complements the Company's existing production capabilities which we are confident will add to both the Company's sales and profits by enabling us to produce and supply new product ranges such as Soap, Candles and Powder products to an enlarged customer base who will benefit from our superior supply chain management."

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For further information, contact Mr Paul Forster, MD UK Operations or Mr Nick O'Shea, Company Secretary on 01733 281000

 

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