Last checked at 25 Jun 2010 07:00
Creightons Plc
Preliminary announcement
For the year ended 31 March 2010
Review of the year
I am pleased to report a pre-tax profit of £303,000 for the year ended 31 March 2010 (2009: £378,000). Whilst this is a decrease we consider it to be a good performance given the difficult trading over the year.
We continue to see consumers focused on lower priced products which offer a value proposition with increased use of promotions. We have continued our drive to re-engineer products to be able to achieve sustainable margins on the lower price points.
Raw material price pressure abated over the year and whilst we were not able to increase our selling prices we were therefore better able to manage our margins over the year.
We have refocused our efforts on sales and development during the period and have increased the resources allocated to selling and new product development. This means that whilst our headcount has remained static resources have been focused on winning business for the future.
We have also expanded our new product development programme in order to support our customers and to maximise opportunities presented by the changing retail scene.
Financial results
Consolidated Group sales this year were £1,565,000 lower than last year (a decrease of 10.3%) at £13,590,000 (2009: £15,155,000). The main reason for the sales decrease was the reduced level of sales associated with Christmas gifts.
The benefits of product re-engineering and more stable raw material prices have resulted in an improvement in gross margin percentage by 1.6% to 42.3% (2009 - 40.7%). Changes in the sales mix has resulted in higher distribution costs as a percentage of sales which have increased to 3.8% from 3.4% in 2009.
Profit before tax for the year of £303,000 (2009: £378,000) represents a 20% reduction due mainly to contraction of the size of the business. Lower advertising and promotional expenditure was a significant contributor to the fall in overheads which limited the decline in pre tax profits to only £75,000.
Interest costs were also lower with reduced average borrowings and lower interest rates combining to reduce the year's charge to £31,000 (2009: £97,000).
Profit after tax of £303,000 (2009: £378,000) therefore shows a very satisfactory performance given the unprecedented trading environment. Diluted earnings per share fell to 0.51p from 0.63 p in 2009 as a result of the reduced Company earnings. The directors do not consider it is in the best interests of the Company to declare a dividend at the moment, instead using the funds generated from this year's successful trading to manage future working capital requirements.
Net borrowings (bank overdraft and loans less bank and cash on hand) has increased by £127,000 to £167,000 (2009 £40,000). The main reason for the increase in borrowing is the higher working capital at the end of the year. The increase in trade debtors is primarily due to higher sales in the final quarter of the year although debtor days have increased as a result of changes in customer mix and unavoidable increases in payment terms imposed by some of our customers. Stock levels have also increased in the main to support the new ranges launched in the final quarter of the year.
Current year developments
The Group continues to develop and strengthen its branded portfolio, with emphasis continuing to be placed on offering a wider range of value brands at very competitive prices, and this strategy has succeeded in attracting a number of new customers for these value brands.
We continue to face competitive price pressures with new business opportunities being converted at the expense of margin. We anticipate that levels of Christmas gift business will continue to decrease as customers increasingly source direct from the Far East. We therefore believe that sales may continue at depressed levels for the foreseeable future and we will continue to face increased pressure on margins.
We also expect our main private label customers to continue to adopt value strategies with sales opportunities in lower priced products offsetting lower sales levels on higher priced products. This too is likely to adversely affect our turnover and margins in the current year.
There has been some softening of price pressure in the last few months, however recent adverse movements in the Euro and US dollar are likely to increase raw material prices and create further margin pressure. We are continuing to develop our supplier network on a global basis to provide the lowest prices for the quality components required to support our business. We will also continue our successful programme of redeveloping and re-engineering our products in order to manage our margins in this exceptionally difficult trading environment.
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.
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 what has been a challenging year.
William McIlroy
Chairman, 24 June 2010
Consolidated income statement
|
|
| Year ended 31 March | Year ended 31 March |
|
|
| 2010 | 2009 |
|
| Note | £000 | £000 |
|
|
|
| |
| Revenue |
| 13,590 | 15,155 |
| Cost of sales |
| (7,837) | (8,994) |
|
|
|
|
|
| Gross profit |
| 5,753 | 6,161 |
|
|
|
|
|
| Distribution costs |
| (511) | (518) |
| Administrative expenses |
| (4,908) | (5,180) |
|
|
|
|
|
| Operating profit |
| 334 | 463 |
|
|
|
|
|
| Investment revenues |
| - | 12 |
| Finance costs |
| (31) | (97) |
|
|
|
|
|
| Profit before tax |
| 303 | 378 |
|
|
|
|
|
| Income tax expense |
| - | - |
|
|
|
|
|
| Profit for the period from continuing operations |
| 303 | 378 |
Earnings per share
| Basic | 1 | 0.56p | 0.70p |
| Diluted | 1 | 0.51p | 0.63p |
Consolidated statement of comprehensive income
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| Year ended 31 March | Year ended 31 March |
|
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| 2010 | 2009 |
|
|
| £000 | £000 |
|
|
|
| |
| Profit for the period from continuing operations |
| 303 | 378 |
|
|
|
|
|
| Exchange differences on translating foreign operations |
| 18 | (76) |
|
|
|
|
|
| Gains on cash flow hedges taken to equity |
| - | 179 |
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|
|
|
|
| Release of Cash Flow Hedge to income statement |
| (179) | - |
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|
|
|
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| Total comprehensive income for the period attributable to the equity holders of the parent |
| 142 | 481 |
Consolidated balance sheet - at 31 March 2010
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| 31 March | 31 March |
|
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| 2010 | 2009 |
|
| Note | £000 | £000 |
| Non-current assets |
|
|
|
| Goodwill |
| 331 | 331 |
| Other intangible assets |
| 154 | 112 |
| Property, plant and equipment |
| 394 | 435 |
|
|
| 879 | 878 |
| Current assets |
|
|
|
| Inventories |
| 2,770 | 2,550 |
| Trade and other receivables |
| 2,013 | 1,537 |
| Cash and cash equivalents |
| 49 | 194 |
| Derivative financial instruments |
| - | 191 |
|
|
| 4,832 | 4,472 |
|
|
|
|
|
| Total assets |
| 5,711 | 5,350 |
|
|
|
|
|
| Current liabilities |
|
|
|
| Trade and other payables |
| 1,822 | 1,576 |
| Obligations under finance leases |
| 14 | 14 |
| Bank overdrafts and loans |
| 216 | 234 |
|
|
| 2,052 | 1,824 |
|
|
|
|
|
| Net current assets |
| 2,780 | 2,648 |
|
|
|
|
|
| Non-current liabilities |
|
|
|
| Obligations under finance leases |
| 9 | 24 |
|
|
| 9 | 24 |
|
|
|
|
|
| Total liabilities |
| 2,061 | 1,848 |
|
|
|
|
|
| Net assets |
| 3,650 | 3,502 |
|
|
|
|
|
| Equity |
|
|
|
| Share capital | 2 | 543 | 543 |
| Share premium account |
| 1,229 | 1,229 |
| Other reserves |
| 38 | 38 |
| Share-based payment reserve |
| 69 | 63 |
| Retained earnings |
| 1,824 | 1,521 |
| Hedging reserve |
| - | 179 |
| Translation reserve |
| (53) | (71) |
|
|
|
|
|
| Total equity attributable to the equity shareholders of the parent company |
| 3,650 | 3,502 |
Consolidated statement of changes in equity
|
| Share capital | Share premium account | Other reserves | Share-based payment reserve | Hedging reserve | Translation reserve | Retained earnings | Total equity |
|
| £000 | £000 | £000 | £000 | £000 | £000 | £000 | £000 |
|
|
|
|
|
|
|
|
|
|
| At 1 April 2008 | 543 | 1,229 | 38 | 56 | - | 5 | 1,143 | 3,014 |
| Gain on cash flow hedges | - | - | - | - | 179 | - | - | 179 |
| Exchange differences on translation of foreign operations | - | - | - | - | - | (76) | - | (76) |
| Additional provision | - | - | - | 7 | - | - | - | 7 |
| Net profit for the year | - | - | - | - | - | - | 378 | 378 |
| At 31 March 2009 | 543 | 1,229 | 38 | 63 | 179 | (71) | 1,521 | 3,502 |
| Release of cash flow hedge to income statement | - | - | - | - | (179) | - | - | (179) |
| Exchange differences on translation of foreign operations | - | - | - | - | - | 18 | - | 18 |
| Additional provision | - | - | - | 6 | - | - | - | 6 |
| Net profit for the year | - | - | - |
|
|
| 303 | 303 |
| At 31 March 2010 | 543 | 1,229 | 38 | 69 | - | (53) | 1,824 | 3,650 |
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Consolidated cash flow statement
|
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| Year ended 31 March | Year ended 31 March |
|
|
| 2010 | 2009 |
|
| Note | £000 | £000 |
|
|
|
| |
| Net cash inflow from operating activities | 3 | 151 | 1,438 |
|
|
|
|
|
| Cash flow from investing activities |
|
|
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| Purchase of property, plant and equipment |
| (77) | (69) |
| Expenditure on intangible assets |
| (182) | (125) |
|
|
|
|
|
| Net cash used in investing activities |
| (259) | (194) |
|
|
|
|
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| Cash flow from financing activities |
|
|
|
| Repayment of finance lease obligations |
| (15) | (14) |
| Decrease in bank loans |
| (18) | (1,115) |
| Net cash used in financing activities |
| (32) | (1,129) |
|
|
|
|
|
| Net (decrease)/ increase in cash and cash equivalents |
| (141) | 115 |
|
|
|
|
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| Cash and cash equivalents at start of period |
| 194 | 79 |
|
|
|
|
|
| Effect of foreign exchange rate changes |
| (4) | - |
|
|
|
|
|
| Cash and cash equivalents at end of period |
| 49 | 194 |
Notes to preliminary announcement
1 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 |
|
|
| 2010 | 2009 |
|
|
| £000 | £000 |
| Earnings |
|
|
|
| Net profit attributable to the equity holders of the parent company |
| 303 | 378 |
|
|
| Year ended 31 March | Year ended 31 March |
|
|
| 2010 | 2009 |
|
|
| Number | Number |
| Number of shares |
|
|
|
| Weighted average number of ordinary shares for the purposes of basic earnings per share |
| 54,275,876 | 54,275,876 |
|
|
|
|
|
| Effect of dilutive potential ordinary shares relating to share options |
| 5,426,550 | 5,426,550 |
|
|
|
|
|
| Weighted average number of ordinary shares for the purposes of diluted earnings per share |
| 59,702,426 | 59,702,426 |
2. Share capital
|
|
| Ordinary shares of 1p each | |||
|
|
| 2010 | 2009 | ||
|
|
| £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 |
|
|
|
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| |
The Company has one class of ordinary shares which carry no right to fixed income.
3. Notes to consolidated cash flow statement
|
|
| Year ended 31 March | Year ended 31 March |
|
|
| 2010 | 2009 |
|
|
| £000 | £000 |
|
|
|
|
|
| Profit from operations |
| 334 | 463 |
|
|
|
|
|
| Adjustments for: |
|
|
|
| Depreciation on property plant and equipment |
| 118 | 129 |
| Amortisation of intangible assets |
| 140 | 76 |
| Share based payment charge |
| 6 | 7 |
| Other non cash items |
| 12 | (88) |
|
|
|
|
|
|
|
| 610 | 587 |
|
|
|
|
|
| (Increase)/decrease in inventories |
| (224) | 357 |
| (Increase)/decrease in trade and other receivables |
| (483) | 528 |
| Increase in trade and other payables |
| 279 | 63 |
|
|
|
|
|
| Cash generated from operations |
| 182 | 1,535 |
|
|
|
|
|
| Interest paid |
| (31) | (97) |
|
|
|
|
|
| Cash inflow from operating activities |
| 151 | 1,438 |
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, which was approved by the Board of Directors on 23 June 2010, 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 2009. The full accounts for the year ended 31 March 2009, which contained an unqualified audit report under section 235 of the Companies Act 1985 and which did not make any statement under section 237 of the Companies Act 1985, have been delivered to the Registrar of Companies in accordance with section 242 of the Companies Act 1985.
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 2010 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.