Creightons Regulatory News (CRL)

27 Jul 2007 09:46

Creightons PLC27 July 2007 CREIGHTONS PLC PRELIMINARY RESULTS FOR THE YEAR ENDED 31 MARCH 2007 Chairman's Statement Review of the year. The integration of our manufacturing facilities onto the one - Potter & MooreInnovations - site at Peterborough was completed during the year, and I ampleased to be able to report to you that the consequential cost savings weanticipated have now begun to flow through into the Group income statement. All production has therefore now been very successfully consolidated onto thePeterborough site, with retention of all significant customers who hadpreviously been sourced from Storrington. Our customer service levels haveremained consistently high, and we are also seeing the effect of improvedefficiencies now that the bedding in of the transferred products has beenachieved. We have continued with our policy of investment in and development of our rangesof branded products, and believe this investment is paying-off in the increasein sales and profits for our branded businesses, as well as enabling us to beextremely competitive in formulating new and aspirational products for ourprivate label customers. Financial Results Consolidated Group sales this year were up £349,000 (an increase of 2.8%) at£12,917,000 (2006: £12,568,000). This improvement over last year's result hasbeen due in particular to increased sales to our branded and contract products.Sales and gross profit were again both higher in the second half due to theseasonal contract business at Christmas. As in previous years, the Group hascontinued to strive for low cost producer status, without compromising onproduct or service level quality. We have also continued to make furtherinvestment in marketing, sales, and technical R&D support. I reported to you in the interim statement that the board took the decision atthe beginning of the year to make a significant investment in resources to copewith the high level of new product development associated with the brandeddevelopment programme and a major re-launch with a key private label customer.It was hoped that the benefit of this investment will be seen in the next yearwith a full year of sales of the new products. I am pleased to say that we arealready seeing the first benefits of this investment, as sales of the newproducts came on stream after Christmas, and contributed to this year'sincreased sales level. This investment has however resulted in increasedoverhead costs. Interest costs have fallen as borrowings have been repaid. Operating profit before tax and interest for the year was £461,000 (2006:£926,000). Last year's result includes the net profit from the closure anddisposal of the Storrington operation and resultant restructuring costs, aone-off net income of £393,000. Significant overhead and operational costsavings are now flowing through to profits from the closure of the Storringtonsite. Financing costs are reduced further due to the lower borrowings levels, theproceeds from the site disposal and the improved profitability of the business,providing the group with the significant amount of the working capital requiredfor the Christmas stock build. Profit after tax was £383,000 (2006: £823,000), with diluted earnings per sharefrom continuing operations of 0.65p (2006: 1.40p). At this stage, the directorsdo not believe a dividend would be in the best interests of the Group sincethese earnings have been applied to consolidate the Group's financial position. Current year developments The Group continues to develop and strengthen its branded portfolio, with newbrands that have been launched into the premium and middle markets. We haverecently established a wholly-owned subsidiary in the US to facilitate expansionof our branded product portfolio in the highly strategic North American market. 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 inproduct 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. William McIlroy Chairman, 27 July 2007 Consolidated income statement Year ended 31 Year ended 31 March March 2007 2006 Note £000 £000 Revenue 12,917 12,568Cost of sales (7,789) (7,686) Gross Profit 5,128 4,882 Distribution costs (378) (299)Administrative expenses (4,289) (4,099)Profit on disposal of property - 442 Operating profit 461 926 Investment revenues 1 3Finance costs (79) (121) Profit before tax 383 808 Tax - 15 Profit for the period from continuing operations attributable 383 823to the equity holders of the parent company Earnings per share from continuing operations Basic 1 0.71p 1.52p Diluted 1 0.65p 1.40p The company has elected to take exemption under S230 of the Companies act 1985not to present the parent company's income statement. The loss of the parent company was £5,000. Consolidated statement of recognised income and expense Year ended Year ended 31 March 31 March 2007 2006 Note £000 £000 Net income recognised directly in equity Profit for the period 4 383 823 Total recognised income and expense for the period wholly 383 823attributable to the equity holders of the parent Consolidated balance sheet - at 31 March 2007 31 March 31 March 2007 2006 As restated Note £000 £000Non-current assets Goodwill 331 331Other intangible assets 136 84Property, plant and equipment 517 336 984 751Current assets Inventories 3,813 1,805Trade and other receivables 2,056 1,328Cash and cash equivalents 14 77 5,883 3,210 Total assets 6,867 3,961 Current liabilities Trade and other payables 2,359 1,491Obligations under finance leases 11 3Bank overdrafts and loans 1,951 340Derivative financial instruments 4 - 4,325 1,834 Net current assets 1,558 1,376 Non-current liabilitiesObligations under finance leases 40 13 40 13 Total liabilities 4,365 1,847 Net assets 2,502 2,114 Equity Share capital 2 543 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 52 47Retained earnings 4 640 257 Total equity available to the holders of the parent company 2,502 2,114 Company balance sheet - at 31 March 2007 31 March 31 March 2007 2006 Note £000 £000Non-current assets Investment in subsidiaries 60 60 60 60Current assets Trade and other receivables 2,014 2,103 2,014 2,103 Total assets 2,074 2,163 Current liabilities Trade and other payables 35 124 35 124 Net current assets 1,979 1,979 Total liabilities 35 124 Net assets 2,039 2,039 Equity Share capital 2 543 543Share premium account 4 1,229 1,229Capital redemption reserve 4 18 18Special reserve 4 1,441 1,441Share-based payment reserve 4 52 47Retained earnings 4 (1,244) (1,239) Total equity available to the holders of the parent company 2,039 2,039 Consolidated cash flow statement Year ended Year ended 31 March 31 March 2007 2006 Note £000 £000 Net cash (outflow)/inflow from operating activities 7 (1,310) 580 Cash flow from investing activities Proceeds on disposal of property, plant and equipment 8 1,596Purchase of property, plant and equipment (251) (152)Expenditure on intangible assets (107) (86) Net cash (used in)/from investing activities (350) 1,358 Cash flow from financing activities Repayment of borrowings - (1,534)Repayment of finance lease obligations (14) (47)Increase /(decrease) in bank overdrafts 1,611 (281)Net cash from/(used in) used in financing activities 1,597 (1,862) Net (decrease)/increase in cash and cash equivalents (63) 76 Cash and cash equivalents at start of period 77 1 Cash and cash equivalents at end of period 14 77 Company cash flow statement Year ended Year ended 31 March 31 March 2007 2006 Note £000 £000 Net cash outflow from operating activities 7 - (649) Cash flow from investing activities Interest received - 113Proceeds on disposal of property, plant and equipment - 1,667Purchase of property, plant and equipment - (20) Net cash from investing activities 1,760 Cash flow from financing activities Repayment of borrowings - (881)Decrease in bank overdrafts - (230) Net cash used in financing activities - (1,111) Net increase in cash and cash equivalents - - Cash and cash equivalents at start of period - - Cash and cash equivalents at end of period - - 1 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 2007 2006 £000 £000EarningsNet profit attributable to the equity holders of the parent 383 823company Year ended 31 Year ended March 31 March 2007 2006 Number NumberNumber of sharesWeighted average number of ordinary shares for the purposes of 54,275,876 54,275,876basic earnings per share Effect of dilutive potential ordinary shares relating to Share 4,256,550 4,582,203options Weighted average number of ordinary shares for the purposes of 58,532,426 58,858,079diluted earnings per share 2. Share capital Ordinary shares of 1p each 2007 2006 £000 Number £000 Number Authorised 1,223 122,346,000 1,223 122,346,000 Issued and fully paid 543 54,275,876 543 54,275,876 The Company has one class of ordinary shares which carry no right to fixedincome. 3 Prior year adjustment An adjustment has been made reducing the value of the Goodwill disclosed in thefinancial statements. The introduction of IFRS allowed for the carrying valueat the transition date to form the basis of the ongoing valuation, which wouldthen be subject to impairment tests. The value originally used at thetransition date incorrectly excluded the accumulated depreciation of £33,000 atthat date. This error has been corrected in the financial statements byadjusting the carrying value of Goodwill and retained earnings. 4. Reserves and changes in equity Group 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 £000 At 1 April 2005 543 1,229 18 7 13 26 (533) 1,303 Prior year - - - - - - (33) (33)adjustmentAt 1 April 2005 543 1,229 18 7 13 26 (566) 1.270(restated)Additional - - - - - 21 - 21provisionNet profit for - - - - - - 823 823the yearAt 31 March 543 1,229 18 7 13 47 257 2,1142006Additional - - - - - 5 - 5provisionNet profit for - - - - - - 383 383the yearAt 31 March 543 1,229 18 7 13 52 640 2,5022007 Company Share Share premium Capital Special Share-based Retained Total capital account redemption payment reserve reserve reserve reserve equity £000 £000 £000 £000 £000 £000 £000 At 1 April 2005 543 1,229 18 1,441 26 (2,035) 1,222Additional provision - - - - 21 - 21Net profit for the year - - - - - 796 796At 31 March 2006 543 1,229 18 1,441 47 (1,239) 2,039Additional provision - - - - 5 - 5Net (loss) for the year - - - - - (5) (5)At 31 March 2007 543 1,229 18 1,441 52 (1,244) 2,039 The Company obtained a court ruling dated 19 March 1997 under which thereduction in share premium was credited to a special reserve. The specialreserve was first used to write off the deficit on the company profit and lossaccount and then to write off the goodwill arising on the acquisition of CrestolLimited to the Group profit and loss account. At 31 March 2007 goodwill writtenoff amounts to £2,575,000 (2006: £2,575,000). Under the court ruling, the special reserve may be used to write-off goodwill onany further acquisition. To the extent that there shall remain any sum standingto the credit of the reserve, it shall be treated as unrealised profit and as anon-distributable reserve, until such time as the creditors existing at the dateof the ruling have been satisfied or consent to its distribution. 5. Share-based payments The Company has a share option scheme which is open to any employee of theGroup. Options granted under the scheme are for nil consideration and areexercisable at a price equal to the quoted market price of the Company's shareson the date of the grant. The vesting period is 3 years. If the options remainunexercised after a period of 7 years from the date of grant, the optionexpires. Options are forfeited if the employee leaves the group before optionsvest. Ordinary shares of 1p each 2007 2006 Number Weighted Number Weighted average average exercise price exercise price Outstanding at the beginning of the 4,682,203 2.75p 5,182,203 2.75pperiod Forfeited in the period (425,653) 2.75p (500,000) 2.75p Outstanding at the end of the period 4,256,550 2.75p 4,682,203 2.75p The options were granted on 9 January 2004 and are exercisable between 9 January2007 and 8 January 2011. The inputs into the Black-Scholes model are as follows: Year ended 31 March 2006 & 2007 Weighted average share price (pence) 3.00PWeighted average exercise price (pence) 2.75p Expected volatility (%) 41.8%Expected life (years) 1.3Risk free rate (%) 4.5%Expected dividends (pence) - Expected volatility was determined by calculating the historical volatility ofthe Group's share price over the previous year. The expected life used in themodel has been adjusted, based on management's best estimate, for the effects ofnon-transferability, exercise restrictions, and behavioural considerations. The Group recognised total expenses of £5,000 (2006 - £21,000) related to sharebased payments. 6. Related party transactions Transactions between the parent company and its subsidiary During the year group entered into the following transactions with itssubsidiaries: - Year ended 31 Year ended March 31 March 2007 2006 £000 £000 Sale of assets on transfer of business - 613Charges for management services 40 -Interest charged on inter company financing - 113 The assets and trade formerly undertaken by Creightons Plc was transferred toits wholly owned subsidiary, Potter & Moore Innovations Ltd, on 31 March 2006.The amounts owed by and to subsidiary companies are: Year ended 31 Year ended March 31 March 2007 2006 £000 £000 Amounts receivable from subsidiary undertakings 2,014 2,088 Amounts payable to subsidiary undertakings (35) (35) Whiskin Limited Group companies entered into the following transactions with Whiskin Limited, acompany of which Mr McIlroy is a director and controlling shareholder: Year ended 31 Year ended March 31 March 2007 2006 £000 £000Loan payable to Whiskin Limited Start of period - 653Interest charged - 32Repayments of interest and capital - (685) End of period - - Oratorio Developments limited On 24 July 2006 Oratorio Developments Limited, a company of which Mr McIlroy isa director and controlling shareholder, acquired the premises occupied by thePotter & Moore Innovations Limited. The following amounts were charged underthe terms of the lease: Year ended 31 Year ended March 31 March 2007 2006 £000 £000 Rental charges 84 -Re-imbursement of utility charges. 5 - Total 89 - Remuneration of key management personnel The remuneration of the directors', who are the key management personnel of theGroup, is set out below in aggregate for each of the categories specified in IAS24, 'Related Party Disclosure'. Further information about the remuneration ofindividual directors is provided in the audited part of the Director'Remuneration Report . Year ended 31 Year ended 31 March March 2007 2006 £000 £000 Salaries and other short term benefits 208 196Post employment benefits 3 4Share based payments 12 16 Total 223 216 7. Notes to cash flow statement Group Year ended 31 Year ended March 31 March 2007 2006 £000 £000 Profit from operations 461 926 Adjustments for:Investment revenues 1 3Depreciation on property plant and equipment 117 267Amortisation of intangible assets 55 5(Gain) on disposal of property, plant and equipment (6) (442)Share based payment charge 5 21Other non cash items 4 - 637 780 Decrease /(Increase) in inventories (2,008) 283Decrease / (Increase) in trade and other receivables (728) 278(Decrease) / Increase in trade and other payables 868 (640) Cash generated from operations (1,231) 701 Interest paid (79) (121) Net cash (outflow)/inflow from operating activities (1,310) 580 Additions to plant and equipment during the year amounting to £ 49,000 (2006 -16,000) 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. Company Year ended 31 Year ended March 31 March 2007 2006 £000 £000 (Loss)/profit from operations (5) 719 Adjustments for:Depreciation on property plant and equipment - 185Amortisation of intangible assets - 3(Gain)/loss on disposal of property, plant and equipment - (442)Share based payment charge 5 21 - 486 Decrease in inventories - 611Decrease /(increase) in trade and other receivables 89 (861)(Decrease) in trade and other payables (89) (849) Cash generated from operations - (613) Interest paid - (36) Net cash (outflow) from operating activities - (649) Cash and cash equivalents (which are presented as a single asset on the face ofthe balance sheet) comprise cash at bank and in hand. 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 2007 will be sent to shareholders in due course. Further copieswill be available from the Company's registered office, at 1210 Lincoln Road,Peterborough, PE4 6ND. This information is provided by RNS The company news service from the London Stock Exchange