Last checked at 20 Jun 2013 14:34
Creightons Plc
Preliminary announcement
For the year ended 31 March 2013
Chairman's statement
I am pleased to report that in 2012/13 we achieved another year of growth and consolidation, and that the consolidated Group pre-tax profit for the year ended 31 March 2013 was £302,000 (2012: £223,000). This continued improvement in profits has been achieved despite the on-going tough trading environment with customers seeking improving value to offer the consumer. In particular our private label ranges have faced increased price and promotion pressure from the big brands which has adversely affected sales volumes.
To combat the effects of lower underlying demand we have successfully generated sales growth by introducing new customers and developing new product ranges. The new business generated over the past couple of years is more evenly spread through the year, virtually eliminating the seasonality that characterised the business in previous years.
Margins remain under pressure with customers seeking to recover lost margin. We will continue our programme of managing costs and our product offering in order to be in a position to respond to customer pressure whilst maintaining our own profitability.
Financial results
Group sales this year at £17,326,000 are £993,000 (6%) higher than last year (2012: £16,333,000), continuing the upward growth in sales volumes we have been recording over the past three years. This year's growth has come from a combination of our own UK branded ranges, private label and contract manufacture, representing all three strands of our business. Much of this growth has been driven by new ranges and new customer listings for existing ranges with limited growth from on-going sales with existing customers.
Changes in product mix, particularly relating to new ranges, together with improved purchasing and production efficiencies have resulted in an increased gross margin percentage of 42.8%, an increase of 0.7% on last year (2012: 42.1%). Administration costs, which include product research and development as well as sales promotion and product support, have risen as we invest in support and promotional activity to drive new sales opportunities.
Profit before tax and interest for the year of £333,000 (2012: £257,000) represents an increase of 30%. Lower average borrowings than in the previous period resulted in slightly lower interest costs of £31,000 (2012: £34,000).
Group profit after tax of £302,000 (2012: £223,000) therefore shows a further improved performance especially given the trading environment during the past year. Diluted earnings per share rose from 0.37p in 2012 to 0.51p for 2013 as a result of the increased earnings.
Net borrowings (bank overdraft and loans less cash at bank and in hand) at the year-end have increased by £142,000 to £874,000 (2012: £732,000). The main reason for the increase in borrowing is the higher working capital requirement at the end of the year. Inventories have increased as we have invested in new ranges and continued our drive to support customers with 100% product availability.
Current year developments
The Group continues to develop and strengthen its branded portfolio. This is being achieved through developing our own brand offering and developing relationships with the owners of existing brands, often through investing in existing brands when opportunities arise.
We are continuing to work hard to manage cost pressure through a combination of measures including managing customer prices, product re-engineering and enhancing our product portfolio with higher margin products. We have continued to develop new sales opportunities to compensate for the decline in the previously significant Christmas gifts part of the business.
As we expected, our main private label customers have responded to the pressures in the current economic climate with value strategies resulting in sales opportunities which we have exploited through lower priced products which have offset lower sales levels on higher priced products. Whilst we had anticipated that this would adversely affect margins, we have managed to counter this effect through a mix of continued cost control, increasing our branded product sales and margins and ensuring we seek value for money in product support, development and administration expenditure. 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. We are undertaking a major review of our planning and purchasing procedures in order to continue to improve our stock turn whilst maintaining customer service levels and reduce investment in working 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.
The board has considered whether to declare a dividend this year, but although we have seen a further increase in annual profits, it feels that it continues to be more appropriate to retain profits to help fund the continued investment in growth than to reduce available funds through dividend distribution.
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, 20 June 2013
Consolidated income statement
Year ended 31 March | Year ended 31 March | ||
2013 | 2012 | ||
Note | £000 | £000 | |
Revenue | 17,326 | 16,333 | |
Cost of sales | (9,902) | (9,461) | |
Gross profit | 7,424 | 6,872 | |
Distribution costs | (763) | (686) | |
Administrative expenses | (6,328) | (5,929) | |
Operating profit | 333 | 257 | |
Finance costs | (31) | (34) | |
Profit before tax | 302 | 223 | |
Income tax expense | - | - | |
Profit for the period from continuing operations | 302 | 223 |
Earnings per share
| Basic | 2 | 0.55p | 0.41p |
Diluted | 2 | 0.51p | 0.37p |
The loss of the parent company was £3,000 (2012 - nil).
Consolidated statement of comprehensive income
Year ended 31 March | Year ended 31 March | ||
2012 | 2011 | ||
£000 | £000 | ||
| Profit for the period from continuing operations | 302 | 223 | |
Exchange differences on translating foreign operations | (22) | - | |
Total comprehensive income for the period attributable to the equity holders of the parent | 280 | 223 |
Company statement of comprehensive income
Year ended 31 March | Year ended 31 March | ||
2013 | 2012 | ||
£000 | £000 | ||
Loss for the period from continuing operations | (3)
| - | |
Total comprehensive income for the period | (3) | - |
Consolidated balance sheet
31 March | 31 March | ||
2013 | 2012 | ||
Note | £000 | £000 | |
| Non-current assets | |||
Goodwill | 343 | 346 | |
Other intangible assets | 295 | 262 | |
Property, plant and equipment | 525 | 556 | |
1,163 | 1,164 | ||
| Current assets | |||
Inventories | 3,526 | 3,271 | |
Trade and other receivables | 2,811 | 3,040 | |
Cash and cash equivalents | 18 | 106 | |
6,355 | 6,417 | ||
Total assets | 7,518 | 7,581 | |
| Current liabilities | |||
Trade and other payables | 2,219 | 2,604 | |
Obligations under finance leases | 19 | 19 | |
Bank overdrafts and loans | 892 | 838 | |
3,130 | 3,461 | ||
Net current assets | 3,225 | 2,956 | |
Non-current liabilities | |||
Obligations under finance leases | 48 | 67 | |
48 | 67 | ||
Total liabilities | 3,178 | 3,528 | |
Net assets | 4,340 | 4,053 | |
| Equity | |||
Share capital | 545 | 545 | |
Share premium account | 1,231 | 1,231 | |
Other reserves | 38 | 38 | |
Share-based payment reserve | 51 | 44 | |
Translation reserve | (55) | (33) | |
Retained earnings | 2,530 | 2,228 | |
Total equity attributable to the equity shareholders of the parent company | 4,340 | 4,053 |
Consolidated statement of changes in equity
Share capital | Share premium account | Other reserves (note 22) | Share-based payment reserve | Translation reserve | Retained earnings | Total equity | |
£000 | £000 | £000 | £000 | £000 | £000 | £000 | |
At 1 April 2011 | 543 | 1,229 | 38 | 30 | (32) | 2,005 | 3,813 |
Share issue | 2 | 2 | - | - | - | 4 | |
Exchange differences on translation of foreign operations | - | - | - | - | (1) | - | (1) |
Additional provision | - | - | - | 14 | - | - | 14 |
Net profit for the year | - | - | - | - | - | 223 | 223 |
At 31 March 2012 | 545 | 1,231 | 38 | 44 | (33) | 2,228 | 4,053 |
Exchange differences on translation of foreign operations | - | - | - | - | (22) | - | (22) |
Additional provision | - | - | - | 7 | - | - | 7 |
Net profit for the year | - | - | - | - | - | 302 | 302 |
At 31 March 2013 | 545 | 1,231 | 38 | 51 | (55) | 2,530 | 4,340 |
Consolidated cash flow statement
Year ended 31 March | Year ended 31 March | ||
2013 | 2012 | ||
Note | £000 | £000 | |
Net cash inflow from operating activities | 306 | 339 | |
| Cash flow from investing activities | |||
Purchase of property, plant and equipment | (97) | (308) | |
Expenditure on intangible assets and goodwill | (334) | (333) | |
| Net cash used in investing activities | (431) | (641) | |
| Cash flow from financing activities | |||
Repayment of finance lease obligations | (19) | (18) | |
New finance lease | - | 97 | |
Proceeds of share issue | - | 4 | |
Increase in bank loans and invoice finance facilities | 54 | 227 | |
| Net cash generated from in financing activities | 35 | 310 | |
Net (decrease)/increase in cash and cash equivalents | (90) | 8 | |
Cash and cash equivalents at start of period | 106 | 96 | |
Effect of foreign exchange rate changes | 2 | 2 | |
Cash and cash equivalents at end of period | 18 | 106 |
Notes to preliminary announcement
1 Business and geographic segments
For management purposes the Group reports operations from two operations one based in the United Kingdom and one based in North America. The Group's reportable segments under IFRS 8 are therefore as follows:
Revenue by segment
| Year ended 31 March 2013 | Year ended 31 March 2012 | ||||
| External revenue | Inter- segment revenue | Total segment revenue | External revenue | Inter- segment revenue | Total segment revenue |
| £000 | £000 | £000 | £000 | £000 | £000 |
|
|
|
|
|
|
|
United Kingdom | 15,782 | 346 | 16,128 | 14,850 | 342 | 15,192 |
North America | 1,544 | - | 1,544 | 1,483 | - | 1,483 |
Total | 17,326 | 346 | 17,672 | 16,333 | 342 | 16,675 |
Profit by segment
| Year ended 31 March 2013 | Year ended 31 March 2012 | ||||
| United Kingdom | North America | Group | United Kingdom | North America | Group |
| £000 | £000 | £000 | £000 | £000 | £000 |
|
|
|
|
|
|
|
Segment results | 1,017 | 129 | 1,146 | 905 | 115 | 1,020 |
Central costs | (813) | (763) | ||||
Operating profit | 333 | 257 | ||||
Finance costs | (31) | (34) | ||||
Profit for the period from continuing operations | 302 | 223 | ||||
The profit reported by each segment represents the profit earned before central management costs, including directors' remuneration, and finance costs.
Segment assets
Year ended 31 March | Year ended 31 March | ||
2013 | 2012 | ||
£000 | £000 | ||
United Kingdom | 7,037 | 6,858 | |
North America | 481 | 723 | |
Total assets | 7,518 | 7,581 |
1 Business and geographic segments (continued)
Segment liabilities
Year ended 31 March | Year ended 31 March | ||
2013 | 2012 | ||
£000 | £000 | ||
United Kingdom | 3,124 | 3,285 | |
North America | 54 | 243 | |
Total liabilities | 3,178 | 3,528 |
All of the Group's capital expenditure, depreciation and amortisation is within the United Kingdom segment.
The accounting policies for the reportable segment are the same as the Group's accounting policies described in the Group's financial statements for the year ended 31 March 2012.
2 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 | ||
2013 | 2012 | ||
£000 | £000 | ||
Earnings | |||
Net profit attributable to the equity holders of the parent company | 302 | 223 |
Year ended 31 March | Year ended 31 March | ||
2013 | 2012 | ||
Number | Number | ||
Number of shares | |||
Weighted average number of ordinary shares for the purposes of basic earnings per share | 54,478,876 | 54,478,876 | |
Effect of dilutive potential ordinary shares relating to share options | 5,126,550 | 5,376,550 | |
Weighted average number of ordinary shares for the purposes of diluted earnings per share | 59,605,426 | 59,855,426
|
3. Share capital
Ordinary shares of 1p each | |||||
2013 | 2012 | ||||
£000 | Number | £000 | Number | ||
| Issued and fully paid | 545 | 54,478,876 | 545 | 54,478,876 | |
The Company has one class of ordinary shares which carry no right to fixed income.
4. Notes to consolidated cash flow statement
Year ended 31 March | Year ended 31 March | ||
2013 | 2012 | ||
£000 | £000 | ||
| Profit from operations | 333 | 257 | |
Adjustments for: | |||
Depreciation on property, plant and equipment | 128 | 128 | |
Goodwill impairment charge | 3 | - | |
Amortisation of intangible assets | 301 | 236 | |
Share based payment charge | 7 | 14 | |
772 | 635 | ||
(Increase) in inventories | (230) | (244) | |
Decrease/(increase) in trade and other receivables | 235 | (462) | |
Decrease)/increase in trade and other payables | (440) | 444 | |
Cash generated from operations | 337 | 373 | |
Interest paid | (31) | (34) | |
Cash inflow from operating activities | 306 | 339 |
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.
5. Status of information
The financial information above, which was approved by the Board of Directors on 20 June 2013, 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 2012. The full financial statements for the year ended 31 March 2012, which contained an unqualified audit report under section 475 of the Companies Act 2006 and which did not make any statement under section 498 of the Companies Act 2006, have been delivered to the Registrar of Companies in accordance with section 441 of the Companies Act 2006.
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 2013 will be made available to shareholders in due course. Further copies will be available from the Company's registered office at 1210 Lincoln Road, Peterborough, PE4 6ND and on the company's website at www.creightons.com.