Creightons Regulatory News (CRL)

26 Jul 2006 11:41

Creightons PLC26 July 2006 CREIGHTONS PLC PRELIMINARY RESULTS FOR THE YEAR ENDED 31 MARCH 2006 Chairman's statement Review of the year This year has seen several successes for the group, including consolidating ourposition as a profitable business during a difficult trading period, reducingour outside debt, and increasing sales by more than 10% over last year. As I reported at the half year, the first half saw the completion of thedisposal of Unit 6, Water Lane Trading Estate in Storrington and the sale of theremaining part of the former Storrington site, Units 1-5a. All production hasnow been very successfully consolidated onto the Peterborough site, withretention of all significant customers who had previously been sourced fromStorrington. Our customer service levels have remained consistently high, andthere is no doubt that there will be improved efficiencies after the bedding inof the transferred products We have continued to invest in and develop our ranges of branded products, andbelieve this investment is already beginning to pay-off in the increase in salesand profits for our branded businesses, as well as enabling us to be extremelycompetitive in formulating new and aspirational products for our private labelcustomers. Financial Results Consolidated Group sales this year were £12,568,000 (2005: £11,354,000). The 10%improvement over last year's result has been due in particular to increasedsales to our private label customers. Sales and gross profit were both higher inthe second half due to this seasonal contract business at Christmas. As inprevious years, the Group has continued to strive for low cost producer status,without compromising on product or service level quality. We have also continuedto make further investment in marketing, sales and technical R&D support. Operating profit before tax and interest for the year was £926,000 (2005: lossof £202,000). This year's result includes the net profit from the closure anddisposal of the Storrington operation and resultant restructuring costs (netincome of £393,000), whereas the prior year's result contained a significantprovision for restructuring (costs of £431,000). Significant overhead andoperational cost savings are now flowing through to profits from the closure ofthe Storrington site, although this year only benefited partially from this. Financing costs are significantly reduced due to the lower borrowings levels,the proceeds from the site disposal and the improved profitability of thebusiness enabling the remaining related party loan and much of the bank debt tobe repaid and providing the group with a significant amount of the workingcapital required for the Christmas stock build. Profit after tax was £823,000 (2005: loss of £363,000), with basic earnings pershare from continuing operations of 1.5p (2005: loss of 0.67p). At this stage,the directors do not believe a dividend would be in the best interests of theCompany since these earnings have been applied to reduce the Group's borrowingsand consolidate the financial position of the Group. Current year developments The Group continues to develop and strengthen its branded portfolio, and anumber of new brands have been launched in recent months into the premium andmiddle markets, As we announced on 30th May 2006, your board has decided to appoint Mr Glencrossas a non-executive director with effect from 31st August, following retirementfrom his present executive position on the Company's main board, and from theboard of Potter & Moore Innovations Limited, the Company's wholly-ownedsubsidiary, where he has served as Managing Director since 14th July 2005 As in previous years, your board is continuing to seek opportunities to acquirebrands or companies that would complement the existing businesses by offeringsynergies 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'semployees for the hard work and effort they have put in over the past year. Ialso appreciate the contribution of our customers and suppliers and we lookforward to developing our relationships as we build our business. William McIlroy Chairman, 26 July 2006 Consolidated income statement Year ended 31 Year ended 31 March March 2006 2005 Note £000 £000 Revenue 12,568 11,354Cost of sales (7,686) (7,040) Gross Profit 4,882 4,314 Other operating income 0 7Distribution costs (299) (277)Administration costs (4,050) (3,815)Restructuring costs 2 (49) (431)Profit on disposal of property 442 - Operating profit/(loss) 926 (202) Investment revenues 3 1Finance costs (121) (162) Profit/(loss) before tax 808 (363) Tax 15 - Profit/(loss) for the period from continuing operations 823 (363)attributable to the equity holders of the parent company Earnings per share from continuing operationsBasic 3 1.5p (0.67)pDiluted 3 1.4p (0.61)p Consolidated balance sheet - at 31 March 2006 31 March 31 March 2006 2005 Note £000 £000Non-current assetsGoodwill 364 364Other intangible assets 84 3Property, plant and equipment 336 1,589 784 1,956Current assetsInventories 1,805 2,088Trade and other receivables 1,328 1,606Cash and cash equivalents 77 1 3,210 3,695 Total assets 3,994 5,651 Current liabilities Trade and other payables 1,491 2,131Obligations under finance leases 3 36Bank overdrafts and loans 340 1,274 1,834 3,441 Net current assets 1,376 254 Non-current liabilitiesBank loans - 881Obligations under finance leases 13 11Deferred tax - 15 13 907 Total liabilities 1,847 4,348 Net assets 2,147 1,303 Equity Share capital 4 543 543Share premium account 4 1,229 1,229Capital redemption reserve 4 18 18Capital reserve 4 7 7Special reserve 4 13 13Share-based payment reserve 4 47 26Retained earnings 4 290 (533) Total equity available to the holders of the parent company 2,147 1,303 Company balance sheet - at 31 March 2006 31 March 31 March 2006 2005 Note £000 £000Non-current assets Other intangible assets - 3Property, plant and equipment - 1,390Investment in subsidiaries 60 60 60 1,453Current assets Inventories - 611Trade and other receivables 2,103 1,242Cash and cash equivalents - - 2,103 1.853 Total assets 2,163 3,306 Current liabilities Trade and other payables 124 973Bank overdrafts and loans - 230 124 1,203 Net current assets 1,979 650 Non-current liabilitiesBank loans - 881 - 881 Total liabilities 124 2,084 Net assets 2,039 1,222 Equity Share capital 543 543Share premium account 1,229 1,229Capital redemption reserve 18 18Special reserve 1,441 1,441Share-based payment reserve 47 26Retained earnings (1,239) (2,035) Total equity available to the holders of the parent company 2,039 1,222 Consolidated cash flow statement Year ended Year ended 31 March 31 March 2006 2005 Note £000 £000 Net cash inflow from operating activities 5 577 117 Cash flow from investing activitiesInterest received 3 1Proceeds on disposal of property, plant and equipment 1,596 10Purchase of property, plant and equipment (168) (96)Expenditure on intangible assets (86) - Net cash from/(used in) investing activities 1,345 (85) Cash flow from financing activitiesRepayment of borrowings (1,534) (258)Repayment of finance lease obligations (47) -New bank loans - 900New Finance lease obligations 16 -Decrease in bank overdrafts (281) (674)Net cash used in financing activities (1,846) (32) Net increase in cash and cash equivalents 76 0 Cash and cash equivalents at start of period 1 1 Cash and cash equivalents at end of period 77 1 Notes to the consolidated financial statements 1. Accounting policies The financial statements have been prepared in accordance with InternationalFinancial Reporting Standards (IFRSs) for the first time. The disclosuresrequired by IFRS 1 concerning the transition from UK GAAP to IFRSs are given innote 6. The financial statements have also been prepared in accordance withIFRSs adopted for use in the European Union and therefore comply with Article 4of the EU IAS. The financial statements have been prepared on the historical cost basis, exceptfor the revaluation of certain properties and financial instruments. Theprincipal accounting policies adopted are set out below. The principal accounting policies changed as a result of preparing financialstatements in accordance with IFRS are: - Goodwill Goodwill represents the excess of the purchase price over the fair value of thenet assets of business acquired at the date of acquisition. Goodwill is testedat least annually for impairment and is carried at cost less accumulatedimpairment losses. No amortisation is charged. Share based payments The Group has applied the requirements of IFRS2 'Share Based Payment'. Inaccordance with the transitional provisions, IFRS 2 has been applied to allgrants 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 theeffect of non market-based vesting conditions) at the date of grant. The fairvalue determined at the grant date of the equity-settled share-based payments isexpensed on a straight-line basis over the vesting period, based on the group'sestimate of shares that will eventually vest and adjusted for the effect of nonmarket-based vesting conditions. Fair value is calculated using the Black-Scholes model. The expected life usedin the model has been adjusted, based on management's best estimate, for thenon-transferability, exercise restrictions and behavioural considerations. 2. Restructuring costs The exceptional costs relate to a provision to cover the anticipated costs ofrelocating the operations carried out at Storrington following a decision todispose of the freehold property. Year ended Year ended 31 March 31 March 2006 2005 £000 £000 Impairment loss recognised in respect of assets - 94Increased cost of working - 252Redundancy costs 49 85 Total 49 431 The exceptional costs relate to a provision to cover the anticipated costs ofrelocating the operations carried out at Storrington following a decision todispose of the freehold property. 3 Earnings per share The calculation of the basic and diluted earnings per share is based on thefollowing data: Year ended 31 Year ended March 31 March 2006 2005 £000 £000EarningsNet profit/(loss) attributable to the equity holders of the 823 (363)parent company Year ended 31 Year ended March 31 March 2006 2005 Number NumberNumber of sharesWeighted average number of ordinary shares for the purposes 54,275,876 54,275,876of basic earnings per share Effect of dilutive potential ordinary shares relating to 4,582,203 5,182,203Share options Weighted average number of ordinary shares for the purposes 58,858,079 59,458,079of diluted earnings per share 4 Statement of changes in equity Share Share Capital Capital Special Share-based Retained Total capital premium redemption reserve payment account reserve reserve reserve reserve equity £000 £000 £000 £000 £000 £000 £000 £000At 1 April 2004 543 1,229 18 7 13 5 (170) 1,645 Additional provision - - - - - 21 - 21Net (loss) for - - - - - - (363) (363)the yearAt 1 April 2005 543 1,229 18 7 13 26 (533) 1,303Additional provision - - - - - 21 - 21Net profit for - - - - - - 823 823the yearAt 31 March 2006 543 1,229 18 7 13 47 290 2,147 5 Note to cash flow statement Year ended 31 Year ended March 31 March 2006 2005 £000 £000Profit/(loss) from operations 926 (202) Adjustments for:Depreciation on property plant and equipment 267 196Amortisation of intangible assets 5 5(Gain)/loss on disposal of property, plant and equipment (442) 1Share based payment charge 21 21 Operating cash flows before movements in working capital 777 21 Decrease/(increase) in inventories 283 (551)Decrease in trade and other receivables 278 340(Decrease)/increase in trade and other payables (640) 469 Cash generated from operations 698 279 Interest paid (121) (162) Net cash inflow from operating activities 577 117 Additions to plant and equipment during the year amounting to £16,000 (2005 -nil) were financed by new finance leases. Cash and cash equivalents (which are presented as a single asset on the face ofthe balance sheet) comprise cash at bank and in hand. 6 Explanation of transition to IFRS This is the first year that the Group has presented its financial statementsunder IFRS. The following disclosures are required in the year of transition. Reconciliation of consolidated income statement for the year ended 31 March 2005 UK GAAP Goodwill Share based IFRS Amortisation payments £000 £000 £000 £000 Revenue 11,354 - - 11,354Cost of sales (7,040) - - (7,040) Gross Profit 4,314 - - 4,314 Other operating income 7 - - 7Distribution costs (277) - - (277)Administration costs (3,828) 34 (21) (3,815)Restructuring costs (431) - - (431) (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 An explanation of the impact of the principal differences and resultingadjustments between UK GAAP and IFRS as they apply to Creighton's consolidatedincome statement 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, notexceeding 20 years. Under IFRS, goodwill is not amortised but is tested atleast annually for impairment. For the year to 31 March 2005 under IFRS, goodwill amortisation of £34,000expensed under UK GAAP 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 afterJanuary 2004 based on the fair value of the options at the date of grantcalculated using the appropriate pricing model. For the year ended 31 March 2005 under IFRS operating expenses increase by£21,000. Reconciliation of consolidated net assets at 31 March 2005 UK GAAP Goodwill Share base IFRS Amortisation payments £000 £000 £000 £000Non-current assetsGoodwill 296 68 - 364Other intangible assets 3 - - 3Property, plant and equipment 1,589 - - 1,589 1,888 68 - 1,956Current assetsInventories 2,088 - - 2,088Trade and other receivables 1,606 - - 1,606Cash and cash equivalents 1 - - 1 3,695 - - 3,695 Total assets 5,583 68 - 5,651 Current liabilitiesTrade and other payables 2,131 - - 2,131Short term borrowings 1,310 - - 1,310 3,441 - - 3441Non-current liabilitiesLong term borrowings 892 - - 892Deferred tax 15 - - 15 907 - - 907 Total liabilities 4,348 - - 4,348 Net assets 1,235 68 - 1,303 Equity Share capital 543 - - 543Share premium account 1,229 - - 1,229Capital redemption reserve 18 - - 18Capital reserve 7 - - 7Special reserve 13 - - 13Share-based payment reserve - - 26 26Retained earnings (575) 68 (26) (533) Total equity available to the holders of the 1,235 68 - 1,303parent company Reconciliation of consolidated net assets at 1 April 2004 (Transition date) UK GAAP Goodwill Share base IFRS Amortisation payments £000 £000 £000 £000Non-current assets Goodwill 330 34 - 364Other intangible assets 8 - - 8Property, plant and equipment 1,700 - - 1,700 2,038 34 - 2,072Current assets Inventories 1,537 - - 1,537Trade and other receivables 1,946 - - 1,946Cash and cash equivalents 1 - - 1 3,484 - - 3,484 Total assets 5,522 34 - 5,556 Current liabilities Trade and other payables 1,662 - - 1,662Short term borrowings 2,188 - - 2,188 3,850 - - 3,850 Non-current liabilitiesLong term borrowings 46 - - 46Deferred tax 15 - - 15 61 - - 61 Total liabilities 3,911 - - 3,911 Net assets 1,611 34 - 1,645 Equity Share capital 543 - - 543Share premium account 1,229 - - 1,229Capital redemption reserve 18 - - 18Capital reserve 7 - - 7Special reserve 13 - - 13Share-based payment reserve - - 5 5Retained earnings (199) 34 (5) (170) Total equity available to the holders of the 1,611 34 - 1,645parent Reconciliation of consolidated cash flow statement for the year ended 31 March 2005 UK GAAP Goodwill Share base IFRS Amortisation payments £000 £000 £000 £000Net cash from operating activities 117 - - 117 Cash flow from investing activities Interest received 1 -- - 1Proceeds on disposal of property, plant and 10 - - 10equipmentPurchase of property, plant and equipment (96) - - (96) Net cash used in investing activities (85) - - (85) Cash flow from financing activitiesRepayment of borrowings (258) - - (258)New bank loans 900 - - 900Increase/(decrease) in bank overdrafts (674) - - (674)Net cash (used in)/ from financing (32) - - (32)activities Net increase/(decrease) in cash and cash 0 - - 0equivalents Cash and cash equivalents at start of period 1 - - 1Net increase/(decrease) in cash and cash 0 - - 0equivalentsCash 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 £000 £000 £000 £000 (Loss) from operations (215) 34 (21) (202)Adjustments for:Depreciation on property plant and equipment 196 - - 196Amortisation of goodwill 34 (34) - -Amortisation of intangible assets 5 - - 5(Gain)/loss on disposal of property, plant and 1 - - 1equipmentShare based payment charge 21 21 Operating cash flows before movements in 21 - - 21working capital Decrease/(increase) in inventories (551) - - (551)Decrease/(increase) in receivables 340 - - 340Increase/(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 preliminary statement of results has been reviewed and agreed with theCompany's auditors, Chantrey Vellacott DFK LLP, who have indicated that theywill be giving an unqualified opinion in their report on the statutory financialstatements. Copies of the annual report and consolidated financial statements for the yearended 31 March 2006 will be sent to shareholders in due course. Further copieswill be available from the Company's registered office, at 1210 Lincoln Road,Peterborough, PE 4 6ND. This information is provided by RNS The company news service from the London Stock Exchange