Disposal

RNS Number : 1584I

Creightons PLC

27 May 2014

 



Creightons plc (the "Company" or the "Group")

Disposal

The Company is pleased to announce the disposal of its 55 per cent. interest in the joint venture which holds the intellectual property rights to the Twisted Sista ("TS") brand of hair care products for a cash consideration of £448,000 (the "Disposal"). The 55 per cent. interest in the joint venture is being sold to Mr. Stephen Durham, the owner of the 45 per cent. interest not owned by the Company. The Company anticipates reporting a profit of approximately £375,000 after deducting the £52,000 of gross assets the subject of the Disposal and £21,000 costs associated with the transaction.  This one-off profit will be recorded in the interim financial report for the six months ended 30 September 2014.

As part of the Disposal Potter & Moore Innovations Ltd ("Potter & Moore"), the Company's main trading subsidiary, has entered into a five year exclusive manufacturing agreement (the "Manufacturing Agreement") with Twisted Sista LLC, a US based corporation, which will be the main trading business and owner of the Intellectual Property Rights in the TS brand.

Potter & Moore currently sells products under the TS brand to retail and wholesale customers, split equally between  the UK and USA.  Potter & Moore has entered into transitional arrangements to facilitate the transfer of the business to Twisted Sista LLC.  In the case of the US this is for 90 days and in the case of the UK it is for 12 months.

The net effect on Group profits of the Disposal for the year ended 31 March 2013 would have been a reduction in pre-tax profits of £36,500, assuming there was no transitional arrangement in the UK or US.  The longer the UK and US transitional arrangements and the Manufacturing Agreement continue, the lower the profit impact will be in the financial periods following the Disposal.

The ongoing relationship with TS through the Manufacturing Agreement means that the Group will continue to benefit from the future success that the new owners anticipate arising from their further development of the Twisted Sista brand following Disposal.

The proceeds from the Disposal will be used to reduce borrowings and to enable the Group to continue to develop new and existing brands which will help it grow its business base.

Nicholas O'Shea, ACMA

Director

 

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