Interim Results

Creightons PLC 22 December 2005 Creightons PLC 22 December 2005 CREIGHTONS plc ('the Company') Interim results for the six months ended 30 September 2005 The Company is pleased to announce its interim results as of 30 September 2005. Chairman's Statement The consolidated interim financial statements have been prepared in accordance with International Financial Reporting Standards (IFRS) in issue and expected to be endorsed by the European Union by 31 December 2005. Comparative results for 2004 have been restated accordingly. The first half of this year saw the completion of the disposal of Unit 6, Water Lane Trading Estate in Storrington and the sale of Units 1-5a, Water Lane, Storrington became unconditional. The net proceeds from the sale of Unit 6 was Â£887,000 with Â£452,000 used to reduce the term loan and the balance used to provide funding for the significant stock build required for the Christmas season. The net proceeds from the sale of Units 1-5 of Â£680,000 will be used to repay the balance of the term loan and to repay Â£200,000 of the loan from Whiskin Limited. There has been a slight reduction in sales at Â£5,209,000 (2004: Â£5,530,000) due to the continuing impact of our programme to rationalise sales, concentrating on higher margin lines, which has resulted in improved percentage gross margins. Administration and distribution costs have been held in line with last year at Â£1,991,000 (2004: Â£2,015,000). We have made further investment in marketing, sales support and product development resources, giving additional support to our developing branded business and with special emphasis on the Christmas gift programmes which are gaining in importance to the business, and for which we have undertaken a significant stock build as we go into the second half. Consequently the Group made a trading profit of Â£87,000 (2004: Â£138,000) before the gain from the property disposal of Â£413,000 (2005: nil), which was Â£12,000 higher than anticipated in the circular due to a successful subsequent renegotiation of the sales price. Lower financing costs of Â£93,000 (2004: Â£114,000) due to reduced borrowings, and nil tax charges due to the brought forward losses (2005: nil), resulted in a net profit after tax of Â£407,000 (2004: Â£24,000). W O McIlroy Executive Chairman 22 December 2005 Independent review report to Creightons plc Introduction We have been instructed by the company to review the financial information for the six months ended 30 September 2005 which comprises the income statement, group balance sheet, statement of changes in shareholders' equity, group cash flow statement and related notes. We have read the other information contained in the interim report and considered whether it contains any apparent misstatements or material inconsistencies with the financial information. Directors' responsibilities The interim report, including the financial information contained therein, is the responsibility of, and has been approved by, the directors. The directors are responsible for preparing the interim report in accordance with the Listing Rules of the Financial Services Authority. As disclosed in note 2, the next annual financial statements of the Group will be prepared in accordance with accounting standards issued by the International Accounting Standards Board and adopted by the European Union. Review work performed We conducted our review in accordance with the guidance contained in Bulletin 1999/4 issued by the Auditing Practices Board for use in the United Kingdom. A review consists principally of making enquiries of group management and applying analytical procedures to the financial information and underlying financial data and based thereon, assessing whether the disclosed accounting policies have been applied. A review excludes audit procedures such as tests of controls and verification of assets, liabilities and transactions. It is substantially less in scope than an audit and therefore provides a lower level of assurance. Accordingly, we do not express an audit opinion on the financial information. This report, including the conclusion, has been prepared for and only for the company for the purpose of the Listing Rules of the Financial Services Authority and for no other purpose. We do not, in producing this report, accept or assume responsibility for any other purpose or to any other person to whom this report is shown or into whose hands it may come save where expressly by our prior consent in writing. Review conclusion On the basis of our review we are not aware of any material modifications that should be made to the financial information as presented for the six months ended 30 September 2005. Chantrey Vellacott DFK LLP Chartered Accountants Registered Auditors Croydon 22 December 2005 Consolidated income statement - unaudited Six months ended 30 September Year ended 31 March 2005 2004 2005 Note Â£000 Â£000 Â£000 Revenue 5,209 5,530 11,354 Cost of sales (3,131) (3,390) (7,040) Gross Profit 2,078 2,140 4,314 Other operating income - 13 7 Distribution costs (125) (146) (277) Administration costs (1,866) (1,869) (3,815) Restructuring costs 4 - - (431) Exceptional profit 5 413 - - Profit/(loss) from operations 500 138 (202) Finance costs (93) (114) (161) Profit/(loss) before tax 407 24 (363) Tax 6 - - - Profit/(loss) for the period attributable to the holders 407 24 (363) of the parent company Earnings per share Basic 7 0.75p 0.04p (0.67)p Diluted 7 0.69p 0.04p (0.61)p Consolidated balance sheet - unaudited 30 September 31 March 2005 2004 2005 Note Â£000 Â£000 Â£000 Non-current assets Goodwill 364 364 364 Other intangible assets 1 6 3 Property, plant and equipment 445 1,658 1,589 810 2,028 1,956 Current assets Inventories 3,127 2,124 2,088 Trade and other receivables 2,776 2,224 1,606 Cash and cash equivalents 5 - 1 5,908 4,348 3,695 Total assets 6,718 6,376 5,651 Current liabilities Trade and other payables 2,029 1,937 2,131 Short term borrowings 8 2,954 1,845 1,310 4,983 3,782 3441 Non-current liabilities Long term borrowings - 900 892 Deferred tax 15 15 15 15 915 907 Total liabilities 4,998 4,697 4,348 Net assets 1,720 1,679 1,303 Equity Share capital 543 543 543 Share premium account 1,229 1,229 1,229 Capital redemption reserve 18 18 18 Capital reserve 7 7 7 Special reserve 13 13 13 Share-based payment reserve 36 15 26 Retained earnings (126) (146) (533) Total equity available to the holders of the parent 1,720 1,679 1,303 company Statement of changes in shareholders equity - unaudited Share Share Other Share-based Retained Total capital premium reserves payment earnings reserve Â£000 Â£000 Â£000 Â£000 Â£000 Balance at 1 April 2004 543 1,229 38 - (199) 1,611 Changes in accounting policy - - - 5 29 34 Restated at 1 April 2004 543 1,229 38 5 (170) 1,645 Profit for six months ended 30 - - - - 24 24 September 2004 Credit to equity for share based - - - 10 - 10 payments Balance at 30 September 2004 543 1,229 38 15 (146) 1,679 Loss for six months ended 31 March 2005 - - - - (387) (387) Credit to equity for share based - - - 11 - 11 payments Balance at 31 March 2005 543 1,229 38 26 (533) 1,303 Profit for six months ended 30 - - - - 407 407 September 2005 Credit to equity for share based - - - 10 - 10 payments Balance at 30 September 2005 543 1,229 38 36 (126) 1,720 Consolidated cash flow statement - unaudited Six months ended Year ended 30 September 31 March 2005 2004 2005 Note Â£000 Â£000 Â£000 Net cash (outflow)/ inflow from operating activities 9 (2,218) (467) 117 Cash flow from investing activities Interest received - - 1 Proceeds on disposal of property, plant and equipment 1,567 10 10 Purchase of property, plant and equipment (97) (55) (96) Net cash from/(used in) investing activities 1,470 (45) (85) Cash flow from financing activities Repayment of borrowings (452) (28) (258) New bank loans - 900 900 Increase/(decrease) in bank overdrafts 1,204 (361) (674) Net cash from /(used in) financing activities 752 511 (32) Net increase/(decrease) in cash and cash equivalents 4 (1) 0 Cash and cash equivalents at start of period 1 1 1 Cash and cash equivalents at end of period 5 0 1 Notes to the interim financial report 1. General information The interim report does not constitute statutory financial statements as defined in section 240 of the Companies Act 1985, but should be read in conjunction with the most recently prepared statutory financial statements, being those for the year ended 31 March 2005. A copy of the statutory financial statements for that year has been delivered to the Registrar of Companies. The auditors' report on those financial statements was unqualified. 2. Accounting policies The interim financial report has been prepared in accordance with International financial reporting Standards (IFRSs), including IAS1 'First Time Adoption of International Financial Reporting Standards' and IAS34 'Interim Financial Reporting'. European Union law requires that the next annual financial statements of the company for the year ended 31 March 2006 will be prepared in accordance with International Financial Reporting Standards adopted for use in the European Union. The same accounting policies and methods of computation are followed in the interim financial report as published by the company on 28 September 2005, except for: Goodwill Goodwill represents the excess of the purchase price over the fair value of the net assets of business acquired at the date of acquisition. Goodwill is tested at least annually for impairment and is carried at cost less accumulated impairment losses. No amortisation is charged. Other intangible assets Other intangible assets are carried at cost less accumulated amortisation and accumulated annual impairment. Amortisation begins when an asset is available for use and is calculated on a straight-line basis over their estimated useful lives as follows: Acquired licences - Over three years Share based payments The Group has applied the requirements of IFRS2 'Share Based Payment'. In accordance with the transitional provisions, IFRS 2 has been applied to all grants of options after 7 November 2002 that were unvested at 1 January 2005. The group issues equity-settled share based payment to certain employees. Equity-settled share-based payments are measured at fair value (excluding the effect of non market-based vesting conditions) at the date of grant. The fair value determined at the grant date of the equity-settled share-based payments is expensed on a straight-line basis over the vesting period, based on the group's estimate of shares that will eventually vest and adjusted for the effect of non market-based vesting conditions. Fair value is calculated using the Black-Scholes model. The expected life used in the model has been adjusted, based on managements best estimate, for the non-transferability, exercise restrictions and behavioural considerations. Segmental reporting The Group trades in only one business sector and one geographic region. There is therefore, no segmental reporting required. 3. Operations in the interim period The business is involved in the sale of personal care products. An important feature of this trade is the increased sales of gift products for the Christmas season. These sales largely occur after the reporting period covered by the interim report, however a significant investment in inventories to support these sales occurs in the period to 30 September 2005. Changes in retail patterns and improved logistics means that an increasing portion of the seasonal sales occurs after 30 September. Trade and other receivables include Â£680,000 for the sale of Units 1-5a, Water Lane, Storrington, which was completed on 1 November 2005. 4. Restructuring costs The exceptional costs relate to a provision to cover the anticipated costs of relocating the operations carried out at Storrington following a decision to dispose of the freehold property. 5. Exceptional profit The exceptional profit relates to the profit on the disposal of two freehold sites in Storrington. 6 Tax There is no liability to UK Corporation tax on the results for the interim period. There is no liability to tax on the disposal of the properties. The Group has trading losses which, subject to agreement with the HM Revenue and Customs, can be carried forward and relieved against future profits of the same trade. 7 Earnings per share The calculation of the basic and diluted earnings per share is based on the following data: Six months ended Year ended 30 September 31 March 2005 2004 2005 Â£000 Â£000 Â£000 Earnings Net profit/(loss) attributable to the equity holders of 407 24 (363) the parent company Six months ended Year ended 30 September 31 March 2005 2004 2005 Number Number Number Number of shares Weighted average number of ordinary shares for the 54,275,876 54,275,876 54,275,876 purposes of basic earnings per share Effect of dilutive potential ordinary shares relating 4,882,203 5,182,203 5,182,203 to Share options Weighted average number of ordinary shares for the 59,158,079 59,458,079 59,458,079 purposes of diluted earnings per share 8 Short term borrowings Six months ended Year ended 30 September 31 March 2005 2004 2005 Â£000 Â£000 Â£000 Bank overdraft and other short term borrowings 1,861 934 621 Short term element of long term borrowings 440 27 36 Other loans 653 884 653 End of period 2,954 1,845 1,310 Â£452,000 of the bank term loan was repaid out of the proceeds of the sale of Unit 6, Water Lane Trading Estate, Storrington, which was completed on 7 July 2005. The balance of the term loan, amounting to Â£440,000 has been re-classified as a short-term loan as it was repaid when the sale of Units 1-5a, Water Lane Trading Estate, Storrington was completed on 1 November 2005. 9 Notes to cash flow statement Six months ended Year ended 30 September 31 March 2005 2004 2005 Â£000 Â£000 Â£000 Profit/(loss) from operations 500 138 (202) Adjustments for: Depreciation on property plant and equipment 87 97 196 Amortisation of intangible assets 2 2 5 (Gain)/loss on disposal of property, plant and (413) (10) 1 equipment Share based payment charge 10 10 21 Operating cash flows before movements in working 186 237 21 capital Increase in inventories (1,039) (587) (551) (Increase)/decrease in receivables (1,170) (278) 340 (Decrease)/increase in payables (114) 275 469 Cash (utilised in)/generated from operations (2,137) (353) 279 Interest paid (81) (114) (162) Net cash (outflow)/inflow from operating activities (2,218) (467) 117 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. 10 Related party transactions Transactions between the company and its subsidiary, which are related parties, have been eliminated on consolidation and are not disclosed in this note. During the period, group companies entered into the following transactions with Whiskin Limited, a related party who is not a member of the group: Six months ended Year ended 30 September 31 March 2005 2004 2005 Â£000 Â£000 Â£000 Loan payable to Whiskin Limited Start of period 653 854 854 Interest earned 26 39 53 Repayments of interest and capital (14) (39) (254) End of period 665 854 653 Whiskin Limited is a company of which Mr McIlroy is a director and controlling shareholder. The amounts outstanding are unsecured and will be settled in cash. No guarantee has been given or received. 11 Explanation of transition to IFRS The reconciliation of profits, equity and cash flow statements for the comparative periods and at 01 April 2004, the date of transition, between those previously published under UK GAAP and those required by IFRS is detailed below. Reconciliation of consolidated income statement for the six months ended 30 September 2004 UK GAAP Goodwill Share based IFRS Amortisation payments Â£000 Â£000 Â£000 Â£000 Revenue 5,530 - - 5,530 Cost of sales (3,390) - - (3,390) Gross Profit 2,140 - - 2,140 Other operating income 13 - - 13 Distribution costs (146) - - (146) Administration costs (1,876) 17 (10) (1,869) Profit from operations 131 17 (10) 138 Finance costs (114) - - (114) Profit before tax 17 17 (10) 24 Tax - - - - Profit for the period attributable to the 17 17 (10) 24 holders of the parent company Reconciliation of consolidated income statement for the year ended 31 March 2005 UK GAAP Goodwill Share based IFRS Amortisation payments Â£000 Â£000 Â£000 Â£000 Revenue 11,354 - - 11,354 Cost of sales (7,040) - - (7,040) Gross Profit 4,314 - - 4,314 Other operating income 7 - - 7 Distribution costs (277) - - (277) Administration costs (3,828) 34 (21) (3,815) Other operating expenses - - - - Restructuring costs (431) - - (431) Exceptional profit - - - - (Loss) from operations (215) 34 (21) (202) Finance costs (161) - - (161) (Loss) before tax (376) 34 (21) (363) Tax - - - - (Loss) for the period attributable to the (376) 34 (21) (363) holders of the parent company 11. Explanation of transition to IFRS (continued) An explanation of the impact of the principal differences and resulting adjustments between UK GAAP and IFRS as they apply to Creighton's consolidated income statement for the six months ended 30 September 2004 and for the year ended 31 March 2005 is set out below. (i) Goodwill amortisation Under UK GAAP, goodwill was amortised over its useful economic life, not exceeding 20 years. Under IFRS, goodwill is not amortised but is tested at least annually for impairment. For the six months to September 2005 and year to 31 March 2005 under IFRS, goodwill amortisation of Â£17,000 and Â£34,000 respectively expensed has been reversed. (ii) Share based payments Under UK GAAP, no expense was recognised for share options at the time of grant. Under IFRS an expense is recognised for all equity options granted after January 2004 based on the fair value of the options at the date of grant calculated using the appropriate pricing model. For the six months ended 30 September 2004 and the year ended 31 March 2005 under IFRS operating expenses increase by Â£10,000 and Â£21,000 respectively. Reconciliation of consolidated net assets at 30 September 2004 UK GAAP Goodwill Share base IFRS Amortisation payments Â£000 Â£000 Â£000 Â£000 Non-current assets Goodwill 313 51 - 364 Other intangible assets 6 - - 6 Property, plant and equipment 1,658 - - 1,658 1,977 51 - 2,028 Current assets Inventories 2,124 - - 2,124 Trade and other receivables 2,224 - - 2,224 Cash and cash equivalents - - - - 4,348 - - 4,348 Total assets 6,325 51 - 6,376 Current liabilities Trade and other payables 1,937 - - 1,937 Short term borrowings 1,845 - - 1,845 3,782 - - 3,782 Non-current liabilities Long term borrowings 900 - - 900 Deferred tax 15 - - 15 915 - - 915 Total liabilities 4,697 - - 4,697 Net assets 1,628 51 - 1,679 Equity Share capital 543 - - 543 Share premium account 1,229 - - 1,229 Capital redemption reserve 18 - - 18 Capital reserve 7 - - 7 Special reserve 13 - - 13 Share-based payment reserve - - 15 15 Retained earnings (182) 51 (15) (146) Total equity available to the holders of the 1,628 51 - 1,679 parent company Reconciliation of consolidated net assets at 31 March 2005 UK GAAP Goodwill Share base IFRS Amortisation payments Â£000 Â£000 Â£000 Â£000 Non-current assets Goodwill 296 68 - 364 Other intangible assets 3 - - 3 Property, plant and equipment 1,589 - - 1,589 1,888 68 - 1,956 Current assets Inventories 2,088 - - 2,088 Trade and other receivables 1,606 - - 1,606 Cash and cash equivalents 1 - - 1 3,695 - - 3,695 Total assets 5,583 68 - 5,651 Current liabilities Trade and other payables 2,131 - - 2,131 Short term borrowings 1,310 - - 1,310 3,441 - - 3441 Non-current liabilities Long term borrowings 892 - - 892 Deferred tax 15 - - 15 907 - - 907 Total liabilities 4,348 - - 4,348 Net assets 1,235 68 - 1,303 Equity Share capital 543 - - 543 Share premium account 1,229 - - 1,229 Capital redemption reserve 18 - - 18 Capital reserve 7 - - 7 Special reserve 13 - - 13 Share-based payment reserve - - 26 26 Retained earnings (575) 68 (26) (533) Total equity available to the holders of the 1,235 68 - 1,303 parent company Reconciliation of consolidated net assets at 1 April 2004 (Transition date) UK GAAP Goodwill Share base IFRS Amortisation payments Â£000 Â£000 Â£000 Â£000 Non-current assets Goodwill 330 34 - 364 Other intangible assets 8 - - 8 Property, plant and equipment 1,700 - - 1,700 2,038 34 - 2,072 Current assets Inventories 1,537 - - 1,537 Trade and other receivables 1,946 - - 1,946 Cash and cash equivalents 1 - - 1 3,484 - - 3,484 Total assets 5,522 34 - 5,556 Current liabilities Trade and other payables 1,662 - - 1,662 Short term borrowings 2,188 - - 2,188 3,850 - - 3,850 Non-current liabilities Long term borrowings 46 - - 46 Deferred tax 15 - - 15 61 - - 61 Total liabilities 3,911 - - 3,911 Net assets 1,611 34 - 1,645 Equity Share capital 543 - - 543 Share premium account 1,229 - - 1,229 Capital redemption reserve 18 - - 18 Capital reserve 7 - - 7 Special reserve 13 - - 13 Share-based payment reserve - - 5 5 Retained earnings (199) 34 (5) (170) Total equity available to the holders of the 1,611 34 - 1,645 parent Reconciliation of consolidated cash flow statement for the six months ended 30 September 2004 UK GAAP Goodwill Share base IFRS Amortisation payments Â£000 Â£000 Â£000 Â£000 Net cash from operating activities (467) - - (467) Cash flow from investing activities Proceeds on disposal of property, plant and 10 - - 10 equipment Purchase of property, plant and equipment (55) - - (55) Net cash used in investing activities (45) - - (45) Cash flow from financing activities Repayment of borrowings (28) - - (28) New bank loans 900 - - 900 Increase/(decrease) in bank overdrafts (361) - - (361) Net cash (used in)/ from financing activities 511 - - 511 Net increase/(decrease) in cash and cash (1) - - (1) equivalents Cash and cash equivalents at start of period 1 - - 1 Net increase/(decrease) in cash and cash (1) - - (1) equivalents Cash and cash equivalents at end of period 0 - - 0 Reconciliation of note to consolidated cash flow statement UK GAAP Goodwill Share base IFRS Amortisation payments Â£000 Â£000 Â£000 Â£000 Profit from operations 131 17 (10) 138 Adjustments for: Depreciation on property plant and equipment 97 - - 97 Amortisation of goodwill 17 (17) - - Amortisation of intangible assets 2 - - 2 (Gain)/loss on disposal of property, plant and (10) - - (10) equipment Share based payment charge - - 10 10 Operating cash flows before movements in working 237 - - 237 capital Decrease/(increase) in inventories (587) - - (587) Decrease/(increase) in receivables (278) - - (278) Increase/(decrease in payables 275 - - 275 Cash (utilised in)/generated from operations (353) - - (353) Interest paid (114) - - (114) Net cash from operating activities (467) - - (467) Reconciliation of consolidated cash flow statement for the year ended 31 March 2005 UK GAAP Goodwill Share base IFRS Amortisation payments Â£000 Â£000 Â£000 Â£000 Net cash from operating activities 117 - - 117 Cash flow from investing activities Interest received 1 -- - 1 Proceeds on disposal of property, plant and 10 - - 10 equipment Purchase of property, plant and equipment (96) - - (96) Net cash used in investing activities (85) - - (85) Cash flow from financing activities Repayment of borrowings (258) - - (258) New bank loans 900 - - 900 Increase/(decrease) in bank overdrafts (674) - - (674) Net cash (used in)/ from financing activities (32) - - (32) Net increase/(decrease) in cash and cash 0 - - 0 equivalents Cash and cash equivalents at start of period 1 - - 1 Net increase/(decrease) in cash and cash 0 - - 0 equivalents Cash and cash equivalents at end of period 1 - - 1 Reconciliation of note to consolidated cash flow statement UK GAAP Goodwill Share base IFRS Amortisation payments Â£000 Â£000 Â£000 Â£000 (Loss) from operations (215) 34 (21) (202) Adjustments for: Depreciation on property plant and equipment 196 - - 196 Amortisation of goodwill 34 (34) - - Amortisation of intangible assets 5 - - 5 (Gain)/loss on disposal of property, plant and 1 - - 1 equipment Share based payment charge 21 21 Operating cash flows before movements in working 21 - - 21 capital Decrease/(increase) in inventories (551) - - (551) Decrease/(increase) in receivables 340 - - 340 Increase/(decrease in payables 469 - - 469 Cash (utilised in)/generated from operations 279 - - 279 Interest paid (162) - - (162) Net cash from operating activities 117 - - 117 The interim report is being sent to shareholders. Further copies can be obtained from the Company's registered office, 1210 Lincoln Road, Peterborough, Cambridgeshire, PE4 6ND. END This information is provided by RNS The company news service from the London Stock Exchange

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