Final Results

RNS Number : 2091O

Creightons PLC

25 June 2010

 



Creightons Plc

Preliminary announcement

For the year ended 31 March 2010

Review of the year

I am pleased to report a pre-tax profit of £303,000 for the year ended 31 March 2010 (2009: £378,000).  Whilst this is a decrease we consider it to be a good performance given the difficult trading over the year. 

We continue to see consumers focused on lower priced products which offer a value proposition with increased use of promotions.   We have continued our drive to re-engineer products to be able to achieve sustainable margins on the lower price points.

Raw material price pressure abated over the year and whilst we were not able to increase our selling prices we were therefore better able to manage our margins over the year.

We have refocused our efforts on sales and development during the period and have increased the resources allocated to selling and new product development.  This means that whilst our headcount has remained static resources have been focused on winning business for the future.

We have also expanded our new product development programme in order to support our customers and to maximise opportunities presented by the changing retail scene.

Financial results

Consolidated Group sales this year were £1,565,000 lower than last year (a decrease of 10.3%) at £13,590,000 (2009: £15,155,000).  The main reason for the sales decrease was the reduced level of sales associated with Christmas gifts. 

The benefits of product re-engineering and more stable raw material prices have resulted in an improvement in gross margin percentage by 1.6% to 42.3% (2009 - 40.7%).  Changes in the sales mix has resulted in higher distribution costs as a percentage of sales which have increased to 3.8% from 3.4% in 2009.

Profit before tax for the year of £303,000 (2009: £378,000) represents a 20% reduction due mainly to contraction of the size of the business. Lower advertising and promotional expenditure was a significant contributor to the fall in overheads which limited the decline in pre tax profits to only £75,000.

Interest costs were also lower with reduced average borrowings and lower interest rates combining to reduce the year's charge to £31,000 (2009: £97,000).

Profit after tax of £303,000 (2009: £378,000) therefore shows a very satisfactory performance given the unprecedented trading environment.  Diluted earnings per share fell to 0.51p from 0.63 p in 2009 as a result of the reduced Company earnings.  The directors do not consider it is in the best interests of the Company to declare a dividend at the moment, instead using the funds generated from this year's successful trading to manage future working capital requirements.

Net borrowings (bank overdraft and loans less bank and cash on hand) has increased by £127,000 to £167,000 (2009  £40,000). The main reason for the increase in borrowing is the higher working capital at the end of the year.  The increase in trade debtors is primarily due to higher sales in the final quarter of the year although debtor days have increased as a result of changes in customer mix and unavoidable increases in payment terms imposed by some of our customers.  Stock levels have also increased in the main to support the new ranges launched in the final quarter of the year.

Current year developments

The Group continues to develop and strengthen its branded portfolio, with emphasis continuing to be placed on offering a wider range of value brands at very competitive prices, and this strategy has succeeded in attracting a number of new customers for these value brands. 

We continue to face competitive price pressures with new business opportunities being converted at the expense of margin.  We anticipate that levels of Christmas gift business will continue to decrease as customers increasingly source direct from the Far East.  We therefore believe that sales may continue at depressed levels for the foreseeable future and we will continue to face increased pressure on margins.

We also expect our main private label customers to continue to adopt value strategies with sales opportunities in lower priced products offsetting lower sales levels on higher priced products.  This too is likely to adversely affect our turnover and margins in the current year.

There has been some softening of price pressure in the last few months, however recent adverse movements in the Euro and US dollar are likely to increase raw material prices and create further margin pressure.   We are continuing to develop our supplier network on a global basis to provide the lowest prices for the quality components required to support our business.  We will also continue our successful programme of redeveloping and re-engineering our products in order to manage our margins in this exceptionally difficult trading environment.

We will continue to manage our overhead cost base and working capital requirements to ensure they are aligned with the anticipated sales levels of the Group whilst retaining the skills necessary to meet growth opportunities as they arise.

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

I would like to take this opportunity to thank each and every one of the Group's employees for the hard work and effort they have put in over what has been a challenging year.

William McIlroy

Chairman, 24 June 2010

Consolidated income statement

		Year ended 31 March	Year ended 31 March
		2010	2009
	Note	£000	£000
Revenue		13,590	15,155
Cost of sales		(7,837)	(8,994)
Gross profit		5,753	6,161
Distribution costs		(511)	(518)
Administrative expenses		(4,908)	(5,180)
Operating profit		334	463
Investment revenues		-	12
Finance costs		(31)	(97)
Profit before tax		303	378
Income tax expense		-	-
Profit for the period from continuing operations		303	378

Earnings per share

Basic	1	0.56p	0.70p
Diluted	1	0.51p	0.63p

Consolidated statement of comprehensive income

		Year ended 31 March	Year ended 31 March
		2010	2009
		£000	£000
Profit for the period from continuing operations		303	378
Exchange differences on translating foreign operations		18	(76)
Gains on cash flow hedges taken to equity		-	179
Release of Cash Flow Hedge to income statement		(179)	-
Total  comprehensive income  for the period attributable to the equity holders of the parent		142	481

Consolidated balance sheet - at 31 March 2010

		31 March	31 March
		2010	2009
	Note	£000	£000
Non-current assets
Goodwill		331	331
Other intangible assets		154	112
Property, plant and equipment		394	435
		879	878
Current assets
Inventories		2,770	2,550
Trade and other receivables		2,013	1,537
Cash and cash equivalents		49	194
Derivative financial instruments		-	191
		4,832	4,472
Total assets		5,711	5,350
Current liabilities
Trade and other payables		1,822	1,576
Obligations under finance leases		14	14
Bank overdrafts and loans		216	234
		2,052	1,824
Net current assets		2,780	2,648
Non-current liabilities
Obligations under finance leases		9	24
		9	24
Total liabilities		2,061	1,848
Net assets		3,650	3,502
Equity
Share capital	2	543	543
Share premium account		1,229	1,229
Other reserves		38	38
Share-based payment reserve		69	63
Retained earnings		1,824	1,521
Hedging reserve		-	179
Translation reserve		(53)	(71)
Total equity attributable to the equity shareholders of the parent company		3,650	3,502

Consolidated statement of changes in equity

	Share capital	Share premium account	Other reserves	Share-based payment reserve	Hedging reserve	Translation reserve	Retained earnings	Total equity
	£000	£000	£000	£000	£000	£000	£000	£000
At 1 April 2008	543	1,229	38	56	-	5	1,143	3,014
Gain on cash flow hedges	-	-	-	-	179	-	-	179
Exchange differences on translation of foreign operations	-	-	-	-	-	(76)	-	(76)
Additional provision	-	-	-	7	-	-	-	7
Net profit for the year	-	-	-	-	-	-	378	378
At 31 March 2009	543	1,229	38	63	179	(71)	1,521	3,502
Release of cash flow hedge to income statement	-	-	-	-	(179)	-	-	(179)
Exchange differences on translation of foreign operations	-	-	-	-	-	18	-	18
Additional provision	-	-	-	6	-	-	-	6
Net profit for the year	-	-	-				303	303
At 31 March 2010	543	1,229	38	69	-	(53)	1,824	3,650

 

Consolidated cash flow statement

		Year ended 31 March	Year ended 31 March
		2010	2009
	Note	£000	£000
Net cash inflow from operating activities	3	151	1,438
Cash flow from investing activities
Purchase of property, plant and equipment		(77)	(69)
Expenditure on intangible assets		(182)	(125)
Net cash used in investing activities		(259)	(194)
Cash flow from financing activities
Repayment of finance lease obligations		(15)	(14)
Decrease in bank loans		(18)	(1,115)
Net cash used in financing activities		(32)	(1,129)
Net (decrease)/ increase in cash and cash equivalents		(141)	115
Cash and cash equivalents at start of period		194	79
Effect of foreign exchange rate changes		(4)	-
Cash and cash equivalents at end of period		49	194

Notes to preliminary announcement

1    Earnings per share

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

		Year ended 31 March	Year ended 31 March
		2010	2009
		£000	£000
Earnings
Net profit attributable to the equity holders of the parent company		303	378

		Year ended 31 March	Year ended 31 March
		2010	2009
		Number	Number
Number of shares
Weighted average number of ordinary shares for the purposes of basic earnings per share		54,275,876	54,275,876
Effect of dilutive potential ordinary shares relating to share options		5,426,550	5,426,550
Weighted average number of ordinary shares for the purposes of diluted earnings per share		59,702,426	59,702,426

2.   Share capital

		Ordinary shares of 1p each
		2010		2009
		£000	Number	£000	Number
Authorised		1,223	122,346,000	1,223	122,346,000
Issued and fully paid		543	54,275,876	543	54,275,876

The Company has one class of ordinary shares which carry no right to fixed income.

3. Notes to consolidated cash flow statement

		Year ended 31 March	Year ended 31 March
		2010	2009
		£000	£000
Profit from operations		334	463
Adjustments for:
Depreciation on property plant and equipment		118	129
Amortisation of intangible assets		140	76
Share based payment charge		6	7
Other non cash items		12	(88)
		610	587
(Increase)/decrease in inventories		(224)	357
(Increase)/decrease in trade and other receivables		(483)	528
Increase in trade and other payables		279	63
Cash generated from operations		182	1,535
Interest paid		(31)	(97)
Cash  inflow from operating activities		151	1,438

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

The financial information above, which was approved by the Board of Directors on 23 June 2010, does not constitute full accounts within the meaning of section 434 of the Companies Act 2006. The financial information presented above has been prepared in accordance with the accounting policies published in the financial statements for the year ended 31 March 2009.  The full accounts for the year ended 31 March 2009, which contained an unqualified audit report under section 235 of the Companies Act 1985 and which did not make any statement under section 237 of the Companies Act 1985, have been delivered to the Registrar of Companies in accordance with section 242 of the Companies Act 1985.

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

Copies of the annual report and consolidated financial statements for the year ended 31 March 2010 will be sent to shareholders in due course.   Further copies will be available from the Company's registered office at 1210 Lincoln Road, Peterborough, PE4 6ND.

 

END

 

 

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