Last checked at 11 Nov 2015 11:30
Creightons plc Group
Interim financial report
For the six months ended 30 September 2015
Chairman's Statement
The Group has continued to make progress against a background of increasing competition in the first half of the year recording a profit of £1,050,000 in the six months to 30 September 2015 (2014: £589,000). Profit before exceptional items for the six months to 30 September 2015 was £206,000 (2014: £214,000). The profit includes an exceptional item of £844,000 on the disposal of "The Real Shaving Company" business which was completed on 28 May 2015 (2014: £375,000 on the disposal of TS Ventures Ltd).
The Group has maintained sales for the period despite the disposal of The Real Shaving Company which was completed on 28 May 2015. Underlying sales excluding "The Real Shaving Company" were £10,594,000 for the six months (2014: £10,171,000) an increase of 4.2% for the period. These sales were generated by new product launches with own label customers and growth of branded ranges in key retailers.
Our gross margin was 40.8% in the six months to 30 September 2015 (2014: 38.6%). This improvement is due to a reduction in product support costs for the period and improved production efficiencies. Improvements have also been made in purchasing efficiencies and raw material price increases have not been a significant factor in the period. We are focusing efforts to improve our margins through product re-engineering, targeted investment in inventory and investment in plant and machinery which will improve output at lower costs.
We have continued to review our sales strategy in the period and have trimmed a number of brands and products considered peripheral to our core activity. We continue to see opportunities to develop our brands in overseas markets and to develop good quality products at a competitive price in the UK. We have increased resources and investments to achieve this goal.
As communicated in the Annual Report to 31 March 2015 the Group is investing to improve our manufacturing and logistics operations. This has resulted in one-off costs of £43,000 in relation to the reorganisation of the management structure which are included in the administrative expenses for the period. This will reduce production overhead costs in the second half of the year.
We continue to be cautious regarding the underlying level of retail sales and continue to see the trend of consumers in the UK focussing on value. This will present sales opportunities but may impact on margins.
Our net cash position at the end of the period has improved with net cash increasing by £1,469,000 to £946,000 (2014: net borrowing of £523,000).
I believe that this half year's sales of £10,752,000 despite the sale of the Real Shaving Company and profit after tax of £1,050,000 is a good performance and continues to place the Company in a good position to take advantage of any opportunities that may arise.
W O McIlroy
Executive Chairman 11 November 2015
Responsibility statement
We confirm that to the best of our knowledge:
a) The condensed set of financial statements has been prepared in accordance with IAS 34;
b) The interim management report includes a fair review of the information required by DTR 4.2.7R (indication of important events during the first six months and description of principal risks and uncertainties for the remaining six months of the year); and
c) The interim management report includes a fair review of the information required by DTR 4.2.8R (disclosure of material related party transactions and changes therein).
By order of the Board
Nicholas O'Shea
Company Secretary and Director 11 November 2015
Creightons plc
Interim financial report
For the six months ended 30 September 2015
Consolidated income statement - unaudited
Six months ended 30 September | Year ended 31 March | |||
2015 | 2014 | 2015 | ||
Note | £000 | £000 | £000 | |
Revenue | 10,752 | 10,693 | 21,093 | |
Cost of sales | (6,368) | (6,568) | (12,707) | |
Gross profit | 4,384 | 4,125 | 8,386 | |
Distribution costs | (477) | (470) | (922) | |
Administrative expenses | (3,699) | (3,430) | (6,966) | |
Operating profit | 208 | 225 | 498 | |
Profit on disposal of Real Shaving Co | 4 | 844 | - | - |
Profit on disposal of TS Ventures Ltd | 5 | - | 375 | 375 |
Finance costs | (2) | (11) | (22) | |
Profit after exceptional items and before tax | 1,050 | 589 | 851 | |
Taxation | - | - | - | |
Profit for the period from continuing operations attributable to the equity holders of the parent company | 1,050 | 589 | 851 | |
Earnings per share
| Basic | 2 | 1.76p | 1.01p | 1.43p |
Diluted | 2 | 1.57p | 0.98p | 1.27p |
Earnings per share before exceptional item
| Basic | 2 | 0.35p | 0.37p | 0.80p |
Diluted | 2 | 0.31p | 0.36p | 0.71p |
Consolidated statement of comprehensive income
Six months ended 30 September | Year ended 31 March | |||
2015 | 2014 | 2015 | ||
£000 | £000 | £000 | ||
| Profit for the year | 1,050 | 589 | 851 | |
Exchange differences on translating of foreign operations | (4) | 1 | (2) | |
Total comprehensive income for the period attributable to the equity holders of the company | 1,046 | 590 | 849 | |
Consolidated balance sheet - unaudited
30 September | 31 March | |||
2015 | 2014 | 2015 | ||
£000 | £000 | £000 | ||
| Non-current assets | ||||
Goodwill | 331 | 331 | 331 | |
Other intangible assets | 292 | 300 | 283 | |
Property, plant and equipment | 559 | 586 | 574 | |
1,182 | 1,217 | 1,188 | ||
| Current assets | ||||
Inventories | 3,754 | 4,071 | 4,074 | |
Trade and other receivables | 4,049 | 4,004 | 3,591 | |
Cash and cash equivalents | 983 | 40 | 9 | |
Derivative financial instruments | 5 | - | 17 | |
8,791 | 8,115 | 7,691 | ||
Total assets | 9,973 | 9,332 | 8,879 | |
| Current liabilities | ||||
Trade and other payables | 3,068 | 3,205 | 2,956 | |
Obligations under finance leases | 18 | 19 | 22 | |
Short term borrowings | 37 | 563 | 84 | |
Derivative financial instruments | 18 | - | 13 | |
3,141 | 3,787 | 3,075 | ||
Net current assets | 5,650 | 4,328 | 4,616 | |
Non-current liabilities | ||||
Obligations under finance leases | - | 20 | 7 | |
- | 20 | 7 | ||
Total liabilities | 3,141 | 3,807 | 3,082 | |
Net assets | 6,832 | 5,525 | 5,797 | |
| Equity | ||||
Share capital | 596 | 584 | 596 | |
Share premium account | 1,248 | 1,264 | 1,248 | |
Other reserves | 25 | 38 | 25 | |
Share-based payment reserve | - | 2 | - | |
Retained earnings | 4,994 | 3,649 | 3,938 | |
Translation reserve | (31) | (12) | (10) | |
Total equity attributable to the equity shareholders | 6,832 | 5,525 | 5,797 | |
Statement of changes in shareholders' equity - unaudited
Share capital
| Share premium account | Other reserves | Retained earnings | Translation reserve | Total | |
£000 | £000 | £000 | £000 | £000 | £000 | |
Balance at 1 April 2014 | 584 | 1,264 | 38 | 3,060 | (13) | 4,933 |
Profit for six months ended 30 September 2014 | - | - | - | 589 | - | 589 |
Share based payments | - | - | - | 2 | - | 2 |
Exchange differences on translation of foreign operations | - | - | - | - | 1 | 1 |
Balance at 30 September 2014 | 584 | 1,264 | 38 | 3,651 | (12) | 5,525
|
Profit for six months ended 31 March 2015 | - | - | - | 262 | - | 262 |
Share based payments | - | - | - | 12 | - | 12 |
Employee share holder scheme charge | - | (4) | - | - | - | (4) |
Issue of employee shares | 12 | (12) | - | - | - | - |
Transfer | - | - | (13) | 13 | - | - |
Charge in relation to derivative financial instruments | - | - | - | - | 5 | 5 |
Exchange differences on translation of foreign operations | - | - | - | - | (3) | (3) |
Balance at 31 March 2015 | 596 | 1,248 | 25 | 3,938 | (10) | 5,797 |
Profit for six months ended 30 September 2015 | - | - | - | 1,050 | - | 1,050 |
Share based payments | - | - | - | 6 | - | 6 |
Charge in relation to derivative financial instruments | - | - | - | - | (17) | (17) |
Exchange differences on translation of foreign operations | - | - | - | - | (4) | (4) |
Balance at 30 September 2015 | 596 | 1,248 | 25 | 4,994 | (31) | 6,832
|
Consolidated cash flow statement - unaudited
Six months ended 30 September | Year ended 31 March | |||
2015 | 2014 | 2015 | ||
£000 | £000 | £000 | ||
Net cash inflow / (outflow) from operating activities | 293 | (2) | 677 | |
| Cash flow from investing activities | ||||
Purchase of property, plant and equipment | (79) | (63) | (159) | |
Expenditure on intangible assets | (183) | (235) | (358) | |
Proceeds from sale of Real Shaving Company brand | 1,000 | - | - | |
Proceeds from sale of Joint Venture | - | 387 | 387 | |
| Net cash generated from / (used in) investing activities | 738 | 89 | (130) | |
| Cash flow from financing activities | ||||
Repayment of finance lease obligations | (10) | (9) | (19) | |
(Decrease) in bank loans | (47) | (50) | (529) | |
| Net cash used in financing activities | (57) | (59) | (548) | |
Net increase /(decrease) in cash and cash equivalents | 974 | 28 | (1) | |
Cash and cash equivalents at start of period | 9 | 11 | 11 | |
Effect of foreign exchange rate changes | - | 1 | (1) | |
Cash and cash equivalents at end of period | 983 | 40 | 9 | |
Notes to the interim financial report
1. Basis of preparation
The condensed financial statements in this Interim Report have been prepared in accordance with the requirements of IAS 34 'Interim Financial Reporting' as adopted by the European Union.
As required by the Disclosure and Transparency Rules of the UK's Financial Conduct Authority, the condensed set of financial statements has been prepared by applying the accounting policies and presentation that were applied in the preparation on the Company's published consolidated financial statements for the year ended 31 March 2015, which were prepared in accordance with International Financial Reporting Standards as adopted by the European Union.
The condensed interim financial statements for the six months ended 30 September 2015 and the comparative figures for the six months ended 30 September 2014 are unaudited. The figures for the year ended March 2015 have been extracted from the Annual Report on which the Auditors issued an unqualified audit report and which have been filed with the Registrar of Companies.
2. Earnings per share
The calculation of the basic and diluted earnings per share is based on the following data:
Six months ended 30 September | Year ended 31 March | |||
2015 | 2014 | 2015 | ||
£000 | £000 | £000 | ||
Earnings | ||||
Net profit before tax attributable to the equity holders of the parent company | 1,050 | 589 | 851 | |
Net profit before disposals attributable to the equity holders of the parent company | 206 | 214 | 476 | |
Six months ended 30 September | Year ended 31 March | |||
2015 | 2014 | 2015 | ||
Number | Number | Number | ||
Number of shares | ||||
Weighted average number of ordinary shares for the purposes of basic earnings per share | 59,537,243 | 58,355,426 | 59,537,243 | |
Effect of dilutive potential ordinary shares relating to Share options | 7,405,000 | 1,570,000 | 7,405,000 | |
Weighted average number of ordinary shares for the purposes of diluted earnings per share | 66,942,243 | 59,925,426 | 66,942,243 | |
3. Related party transactions
The related party transactions that occurred in the six months ended 30 September 2015 are not materially different in size or nature to those reported in the Company's Annual Report for the year ended 31 March 2015.
4. Exceptional item - Sale of The Real Shaving Company
On 28 May 2015 the Group completed the sale of the business and assets of The Real Shaving Company brand including the trademark and associated intellectual property. The consideration comprised £1,000,000, which was paid on completion and £150,000 for stock which was paid subsequently.
The Company is reporting a profit of £844,000 in the interim financial report for the six months ended 30 September 2015 in relation to the disposal.
5. Exceptional item - Sale of TS Ventures Ltd
On 23 May 2014 the Group completed the disposal of its 55% interest in TS Ventures Limited which holds the intellectual property rights to the Twisted Sista brand of hair care products for a cash consideration of £448,000. The 55% interest in TS Ventures Limited has been sold to Urban Therapy LLC, the owner of the 45% interest not owned by the Company. The Company reported a profit of £375,000 in the interim financial report for the six months ended 30 September 2014 in relation to the disposal.
6. Availability of Interim Report
The Interim Report is being made available to shareholders on the company website www.creightonsplc.com. Further copies can be obtained from the Company's Registered Office, 1210 Lincoln Road, Peterborough, PE4 6ND.