Creightons Regulatory News (CRL)

26 Jun 2008 14:44

Creightons Plc

Preliminary announcement

For the year ended 31 March 2008

Chairman's Statement

Review of the year

As I reported to you last November with our interim report for the first half of the financial year, we have been driving to expand our business, and as you will see below, I am pleased to be able to say that we have continued the growth I told you about then. 

We have also been focusing on developing our higher margin business, discontinuing products with lower margins, whilst continuing to strive to be a low cost producer in what is an increasingly competitive and price conscious commercial environment.  We have experienced significant price resistance from not only our own customers, both the High Street supermarkets and specialist retailers for whom we manufacture private label branded products and undertake contract manufacture, but also consumers who buy our own branded products through these outlets. 

Development of our own brands has continued apace, with the launch of The Real Shaving Company's products in the North American market, where we established a new wholly-owned subsidiary to manage sales and marketing in May 2007. We recently launched the Natural Grooming range of shaving products in the UK, and continue to roll-out new private label brands.

Financial results

Consolidated Group sales this year were up £2,452,000 (an increase of 19.0%) at £15,369,000 (2007: £12,917,000). This significantly improved result has been achieved mainly through increases in the volume of private label and contract manufactured product. Sales and gross profit were again up in the second half of the year due to seasonal contractual business at Christmas. 

Operating profit before tax for the year was £670,000 (2007: £461,000) a 45.3% increase of £209,000. Several factors contributed to this increase being significantly ahead of sales growth, including the flow through of cost saving initiatives invested in during previous years which I have previously reported to you, continued focus on achieving low-cost producer status despite significant cost inflation, and further rationalisation of our product ranges to eliminate low margin items or contracts.

We have experienced an increase in interest charges mainly as a result of financing higher levels of inventory during the year which were required to service new branded and private label product introductions. 

Profit after tax of £503,000 (2007: £383,000) shows a very satisfactory growth of £120,000, 31.3% over last year, with diluted earnings per share of 0.84p (2007: 0.65p). The directors do not consider it is in the best interests of the Company to declare a dividend at the moment, using the funds generated from this year's successful trading to reduce the Group's borrowings.

Current year developments

As in previous years, the Group continues to develop and strengthen its branded portfolio, with new brands launched into the premium and middle markets.

Since the beginning of the current financial year however, a number of adverse factors have started to affect our business, including the down-turn in consumer confidence and spending that is affecting all sections of the economy, inflationary pressures on raw material prices in general, and on oil-based products in particular (which as manufacturers of personal care products make up a significant element of our costs).  We are also suffering the adverse impact of the recent decline in the value of sterling, since we purchase a significant proportion of our raw materials in US dollars and Euros and so have further cost pressures.

In response to consumer demand for more natural based products, we have just launched improved versions of our Real Shave and Natural Grooming ranges which are free from Parabens, Sodium Lauryl Ethyl Sulphate and Alcohol. Recognising the contribution we all need to make in combating global warming, we are also well advanced with plans for many of our products and brands to become carbon neutral next year.

We are continuing to exploit and develop our branded product ranges in the North American market, although keeping actual investment to a minimum whilst ensuring they have adequate support and distribution in this highly attractive but very competitive market.

We are also meeting the challenges of tighter consumer spending at home by seeking to offer a wider range of value brands at very competitive prices. We are combating the upward pressure on costs I mention above by reorganising our buying and product development departments to operate on the basis that we buy globally at the lowest possible price and use our development skills to reap the benefits of economies of scale and by using the same components in different ranges, although we ensure that this is without damaging the individual characteristics of our branded products. 

We are also continuing to manage our working capital and stocks in order to keep borrowing to a minimum given the present high cost of capital.

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 the past year.

William McIlroy

Chairman, 26 June 2008

Consolidated income statement

Earnings per share from continuing operations

The company has elected to take exemption under S230 of the Companies Act 1985 not to present the parent company's income statement.

The loss of the parent company was nil (2007 - £5,000).

Consolidated statement of recognised income and expense

Consolidated balance sheet - at 31 March 2008

Company balance sheet - at 31 March 2008

Consolidated cash flow statement 

The Company cash flow statement is not disclosed as there were no movements after net cash from operating activities during the two years ended 31 March 2008.

Notes to preliminary announcement

1 Earnings per share

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

2. Share capital

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

3. Statements of reserves and changes in equity

Group

Company

The Company obtained a court ruling dated 19 March 1997 under which the reduction in share premium was credited to a special reserve. The special reserve was first used to write off the deficit on the company profit and loss account and then to write off the goodwill arising on the acquisition of Crestol Limited to the Group profit and loss account. At 31 March 2008 cumulative goodwill written off amounted to £2,575,000 (2007: £2,575,000)

Under the court ruling, the special reserve may be used to write-off goodwill on any further acquisition. To the extent that there shall remain any sum standing to the credit of the reserve, it shall be treated as unrealised profit and as a non-distributable reserve, until such time as the creditors existing at the date of the ruling have been satisfied or consent to its distribution.

4. Notes to cash flow statement

Group

Additions to plant and equipment during the year amounting to £14,000 (2007 - £47,000) were financed by new finance leases.

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.

Company

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 does not constitute full accounts within the meaning of section 240 of the Companies Act 1985. 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 2007.

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 2008 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.