Interim Results - 6 Months to 30 September 1999
Creightons PLC
15 February 2000
Creightons PLC
Interim results of Creightons for the six months ended 30
September 1999
Chairman's Statement
Board and management changes
The first half of the year was characterised by
significant change in the management of your Company.
Peter Somers and Michael Gubbins both resigned from the
Board in September 1999. Bill Hamilton joined the Board
as Chief Executive in July 1999. On 4 November 1999,
William McIlroy joined the Board. William is a director
and shareholder of Oratorio developments Limited, the
Company's largest shareholder. Mary Carney also joined
the Board on the same date as an independent non-
executive director. On 23 December 1999, Barry Dale
resigned as chairman of the Board and left the Company
and I took over as non-executive chairman on that date.
Trading review
Until the appointment of Bill Hamilton, the Company had
continued to suffer from high overhead costs and
deteriorating sales level and margins. Following his
arrival, Bill carried out a thorough review of the
business and recommended immediate cost reduction
measures which were implemented from August 1999 onwards,
which involved reducing the costs of administrative staff
and site costs.
Bill's executive management was strengthened in September
and October 1999 with the appointment of Roger Roberts
and Martin Stevens with responsibility for sales and
technical departments respectively. The new management
team's task has been to rebuild the customer base,
improve margins and reduce overhead costs.
Much has been achieved to date, although reorganisation
costs have had to be borne at the expense of cash flow.
The decline in sales levels and margins has, we believe,
been stemmed, but much work still needs to be done in
this area. Sales margins have, we believe, been
stabilised.
Most important, the losses in the previous financial year
have been significantly reduced in the first half and
this trend is continuing in the second half of the
financial year.
Results
The results for the 6 months to 30 September 1999 show an
improvement on the corresponding period last year but
remain unsatisfactory. Turnover in the 6 months was
£2.646 million (1998: £2.867 million), and the loss on
ordinary activities before taxation was £874,000 (1998:loss
£1,369,000). The loss per share was 4.4p (1998: loss 6.9p).
Net assets were £1.311 million (1998: £2.754 million).
Net indebtedness at 30 September 1999
was £1,926,000.
Fund raising
As explained in the commentary above, progress is being
made in stemming losses and restoring profits. The
turnaround has, however, involved a substantial cash cost
and the Company urgently needs additional funds to
provide it with sufficient working capital for its needs.
On 1 February 2000 we announced that we were in
discussions with our major shareholders to raise
additional capital for the Company. Details of an open
offer are set out in the prospectus of the Company dated 15
February 2000.
Future strategy
The past two years have been spent endeavouring to return
the core manufacturing operation to profit and grow it by
acquisition. For various reasons, this strategy has not
been successful. With the business now established, and,
following the proposed fund raising, with sufficient
working capital to allow it to expand over the next few
months, it is intended to seek to dispose of the
manufacturing business and turn the Company into a cash
shell. Suitable acquisition opportunities will then be
reviewed in sectors of the market more
favoured by investors.
Roger Lane-Smith
Non-executive Chairman
15 February 2000
Consolidated Profit and Loss Account
for the six months ended 30 September 1999
6 months to 6 months to Year
30 September 30 September
1999 1998 1999
£'000 £'000 £'000
Turnover 2,646 2,867 5,589
Cost of sales (1,962) (2,562) (4,737)
Exceptional cost of sales - - (235)
Gross profit 684 305 617
Operating expenses (1,049) (1,231) (2,185)
Exceptional operating (447) (421) (355)
expenses
Operating loss (812) (1,347) (1,923)
Net interest payable (62) (22) (56)
Loss on ordinary activities (874) (1,369) (1,979)
before taxation
Taxation - - 41
Loss on ordinary activities
after taxation and loss
sustained for the period (874) (1,369) (1,938)
Earnings/(loss) per share (4.4)p (6.9)p (9.8)p
Earnings/(loss) per share (2.1)p (4.8)p (6.8)p
before exceptional items
Earnings/(loss) per share (2.3)p (2.1)p (3.0)p
on exceptional items
Fully diluted (4.4)p (6.9)p (8.9)p
earnings/(loss) per share
See note 3 concerning the
calculation of diluted
earnings per share.
Consolidated Balance Sheet
as at 30 September 1999
30 September 30 September 31 March
1999 1998 1999
£'000 £'000 £'000
Fixed Assets
Tangible assets 3,368 3,642 3,522
Current Assets
Stocks 898 1,370 1,046
Debtors 877 942 913
1,775 2,312 1,959
Creditors
Amounts falling due within (3,340) (2,588) (2,746)
one year
Net current liabilities (1,565) (276) (787)
Total assets less current 1,803 3,366 2,735
liabilities
Creditors
Amounts falling due after (492) (612) (550)
more than one year
Net Assets 1,311 2,754 2,185
Capital and Reserves
Called up share capital 3,975 3,975 3,975
Share premium account 196 196 196
Other reserves 38 38 38
Profit and loss account (2,898) (1,455) (2,024)
Equity Shareholders' Funds 1,311 2,754 2,185
Notes to the Interim Report
1. The interim report has been prepared using the same
accounting policies as were used for the annual
report and financial statements for the year ended
31 March 1999.
The 1998 profit and loss account corresponding
figures have been restated to show a more
appropriate allocation of costs between cost of
sales and operating expenses. There has been no
impact on operating loss.
The interim financial statements do not constitute
statutory accounts as they are unaudited. They have,
however, been reviewed by the auditors, whose report
is included. Full year figures for the year ended 31
March 1999 have been extracted from the annual
report and financial statements for that year which
received an unqualified audit opinion and have been
filed with the Registrar of Companies.
2. The interim financial information has been prepared
on a going concern basis. The Directors have
prepared projected cash flow information for a
period of more than two years from the date of this
interim report which assumes that the current open
offer to raise £1.3 million net of cash expenses is
successfully completed and that the current banking
facilities are renewed at the next review date of 30
June 2000. Pending receipt of the funds from the
open offer, the Company has agreed with a major
shareholder, Oratorio Developments Limited
('Oratorio') that Oratorio will provide an unsecured
bridging loan to enable the Company to meet its
immediate commitments.
On the basis of these assumptions the Directors
consider that the Company and the Group will
continue to operate within the facilities currently
agreed with its bankers which are repayable on
demand. However, inherently, there can be no
certainty in relation to these matters.
The interim financial information does not include
any adjustments that would result from a failure to
raise funds from the open offer or from a withdrawal
of the bridging loan from Oratorio or the overdraft
and other facilities by the Company's bankers.
3. Earnings/(loss) per share for the six months ended
30 September 1999 has been calculated on 19,876,523
shares, being the average number of shares in issue
during the period. The earnings/(loss) per share for
the year ended 31 March 1999 and the six months
ended 30 September 1998 have been calculated on
19,876,523 shares, being the average number of
shares in issue during both these periods.
Fully diluted earnings/(loss) per share is
calculated by adding share options where the price
payable is below the market price. Share options are
not taken into account where it is considered
unlikely that the individuals concerned would
exercise those options, for example where the
exercise price is significantly higher than the
market price. Since all the existing share options
have exercise prices that are significantly higher
than the market prices during the period, it has
been assumed that none would be exercised.
Consequently, the fully diluted earnings/(loss) and
costs per share are the same as those calculated on
an undiluted basis.
4. No taxation charge has been included in view of the
loss sustained and the significant accumulated
losses available from previous periods.
5. The interim report is being sent to shareholders.
Further copies can be obtained from the Company's
registered office, Unit 1, Water Lane Industrial
Estate, Storrington, Pulborough, West Sussex, RH20
3DP.
Review Report by the Auditors
We have reviewed the interim financial information for
the six months ended 30 September 1999 set out on pages 2
to 4 which is the responsibility of, and has been
approved by, the Directors. Our responsibility is to
report on the results of our review.
Our review was carried out having regard to the bulletin
'Review of Interim Financial Information', issued by the
Auditing Practices Board. The review consisted
principally of applying analytical procedures to the
underlying financial data, assessing whether accounting
policies have been consistently applied and making
enquiries of management responsible for financial and
accounting policies.
Going concern
In forming our opinion, we have considered the adequacy
of the disclosures made in note 2 concerning the
uncertainty as the adequacy of the Company's bank
overdraft facility and the requirement to raise funds
from the Open Offer and from a bridging loan from a
Shareholder. In view of the significance of this
uncertainty, we consider that it should be drawn to your
attention, but our opinion is not qualified in this
respect.
On the basis of our review:
In our opinion, the interim financial information
has been prepared using the accounting policies
consistent with those adopted by Creightons plc in its
financial statements for the year ended 31 March 1999;
and
We are not aware of any material modifications that
should be made to the interim financial information as
presented.
KPMG Audit Plc
Chartered Accountants
Crawley
15 February 2000
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