REG - Creightons PLC - Audited preliminary results
07/07/2023 07:00
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RNS Number : 2638F Creightons PLC 07 July 2023
07 July 2023
Creightons Plc
Audited Preliminary results
Annual General Meeting
Creightons Plc (the "Group" or "Creightons") brand owners and manufacturers of
personal care, beauty, and fragrance products, is pleased to announce its
preliminary results for the year ended 31 March 2023.
The Company's annual report and financial statements for the year ended 31
March 2023 will be made available from the Company's website at:
https://www.creightonsplc.com (https://www.creightonsplc.com)
In addition, the document will be uploaded to the National Storage Mechanism
and will be available for viewing at
https://data.fca.org.uk/#/nsm/nationalstoragemechanism
(https://linkprotect.cudasvc.com/url?a=https%3a%2f%2fdata.fca.org.uk%2f%23%2fnsm%2fnationalstoragemechanism&c=E,1,woUdg3DF9ohL3Kfk-PqkqwXc_ntYFf6fwo9IjhUsxZrwQBDrn2FGiVoGLiB8UGBYNh6vWfmNBySxuOKuQ31G16P4DtD1WLkIw6aUHGRcjDY,&typo=1)
The Company's Annual General Meeting will take place at the offices of Potter
& Moore Innovations Ltd, 1210 Lincoln Road, Peterborough, PE4 6ND on 13
September 2023 at 12:00 noon.
Financial highlights
· Significantly improved performance for the second half of the
year due to remedial actions taken by management with operating profit (before
exceptional items) increasing from £0.3m in the first half to £1.3m in the
second half. Full year operating profit (before exceptional items) of £1.6m.
· Cash generated from operating activities has increased from
£1.4m in the first half of the year to £4.5m in the second half of the year.
Full year cash from operating activities generated of £5.9m.
· Balance sheet remains strong with Group net assets at the balance
sheet date of £25.5m (2022: £25.7m).
· Revenue for the year was £58.6m (2022: £61.2m), a reduction of
4.2%.
· EBITDA for the year was £3.0m (2022: £5.9m).
· Operating profit decreased by 67.5% to £1.4m (2022: £4.4m).
· Operating profit margin of 2.4% (2022: 7.1%).
· A tax charge of £0.2m (2022: £0.3m) equates to an effective tax
rate of 25.2% (2022: 10.0%).
· The profit after tax for the year has decreased by £2.6m to
£0.5m (2022: £3.1m).
· The profit reduction together with the issue of shares has
reduced the fully diluted earnings per share to 0.65p (2022: 3.98p).
· Net cash on hand (cash and cash equivalents less short-term
element of obligations under finance leases and borrowings) is negative £1.2m
(2022: negative £2.1m).
· The Directors do not propose a final dividend for the year ended
31 March 2023 (2022: £Nil).
Operational highlights
· Sales growth momentum has been maintained in the branded and
export business despite the economic downturn:
· Overall branded sales have increased by 11.7% to £22.8m.
· Sales of retailer own label products decreased by 11.7% to
£22.0m.
· Contract manufacturing sales decreased by 13.1% to £13.8m.
· Total overseas sales have increased by 5.6% to £10.6m
· Integration of previous year acquisitions is substantially
completed with the full benefits emerging in the new financial year.
· The Group has responded proactively to the unprecedented
challenges facing the business due to supply chain constraints, higher
commodity, and energy prices. The remedial measures were intended to restore
profitability, reduce costs and inventory and to return to positive cash flow.
Specifically, actions were taken in the following six areas:
o Increase in selling prices to our customers
o Reduction in overheads
o Increase efficiency and capacity in each factory so as to maximise the
benefit of single shift working
o Relocating the customer facing side of the business, warehousing, picking
packing and logistics back to the Peterborough site
o Reduction in stock levels, targeting £2m reduction v previous year
o New and non-critical capital expenditure cancelled unless payback less
than 9 months
The combined effect of these measures, carried out in the second half of the
year, has been to return the business to profitability and positive cashflow.
Commenting on the results, William McIlroy, Chairman of Creightons Plc, said:
"This represented among the most challenging trading years ever faced by the
Group due to the supply chain and inflationary pressures from the global
economic downturn. I am pleased to report that we have responded to these
challenges and made excellent progress in the second half of the year in
returning the business to profitability and positive cash flow. Our branded
business, boosted by the acquisitions in the previous year, has grown to
almost £23m. We are well placed to respond proactively to the challenging
market conditions and remain open to further business opportunities."
Commenting on the results, Bernard Johnson, Managing Director, said:
"This has been a year of two halves. Our response to the challenging market
conditions experienced in the first half was to implement as a six-point
programme to restore margins, reduce costs, lower stocks levels and improve
cash. This programme has helped us deliver significantly improved results in
the second half. We look forward to developing new sales opportunities in the
year ahead leveraging on the strength of our brands, including Emma Hardie,
and our in-house technical expertise.'
Enquiries - Analysts and Investors:
Nicholas O'Shea, Director, Creightons
Plc
01733 281000
Roland Cornish / Felicity Geidt, Beaumont Cornish Limited
0207 628 3396
Overview
This represented among the most challenging trading years ever faced by the
Group. As reported in the Chairman's statement in the half year interim RNS
announcement in November 2022 the Group faced significant supply chain and
inflationary pressures in the second half of the previous financial year which
continued into the first part of the current financial year. These pressures
contributed to higher input and overhead costs and reduced profitability. Our
response was to embark upon a six-point programme designed to restore margins,
reduce costs, lower stocks levels and return the business to positive
cashflow. This included moving to a single shift at the Peterborough site. I
am pleased to report that we have made significant progress in all of these
areas in the second half of the financial year with Profit before tax and
exceptional items increasing from £0.1m in the first half to £1.1m in the
second half. Full year Profit before tax and exceptional items was £1.2m
(2022: £4.1m). We have also improved our net cash on hand by £3.6m during
the second half of the year reflecting the improved trading performance and
the success of the inventory reduction programme.
We remain committed to seeking further cost and overhead reductions and to
restoring margin and overall profitability to previous levels. In spite of the
significant challenges faced by the Group and the wider economy, I am pleased
to report that the Group has been successful in increasing its branded
turnover by an impressive 11.7% which partially offsets the decline in the
private label and contract manufacturing business.
The Group's vertically integrated model continues to give it competitive
advantage allowing it to respond quickly and effectively to customer
requirements. It previously provided for a rapid pivot in production to meet
market demand for sanitary product at the beginning of the Covid outbreak, and
more recently allowed it to respond flexibly to the current challenging
economic environment. It also provides a competitive advantage with
post-acquisition integration by providing synergies not available to all
market participants. Over the reporting period the Group continued to invest
in its manufacturing and in its research and development capabilities which
contributed to improved manufacturing efficiencies.
Summary of Half 1 and Half 2 results:
H1 (Unaudited) H2 (Unaudited) Year ended 31 March 2023
£000 £000 £000
Revenue 29,676 28,891 58,567
Gross profit 11,990 12,358 24,348
Gross profit % 40.4% 42.8% 41.6%
Operating profit before exceptional items 281 1,303 1,584
Operating profit 130 1,289 1,419
Profit before tax and exceptional items 104 1,060 1,164
Profit before tax (359) 1,046 687
(Loss) / Profit after tax (385) 899 514
H1 (Unaudited) H2 (Unaudited) Year ended 31 March 2023
£000 £000 £000
Cash generated from operating activities 1,352 4,522 5,874
At 30 September 2022 (Unaudited) At 31 March 2023 Movement
£000 £000 £000
Net cash on hand (4,672) (1,090) 3,582
Revenue
Overall Group sales were £58.6m for the year ended March 2023 (2022: £61.2m)
a reduction of £2.6m. Overall Branded sales have increased by 11.7% from
£20.4m to £22.8m with a strong performance from Feather & Down and
Balance Active brands. Private label sales have decreased from £24.9m to
£22.0m due mainly to the non-recurrence of a one-off private contract in the
previous year. Contract manufacturing sales have decreased from £15.9m to
£13.8m reflecting the difficulty faced by certain brand owners in the
challenging economic environment.
The Group's total overseas business increased by 5.6% to £10.6m (2022:
£10.0m).
Margin and cost of sales
Our gross margin was 41.6% for the year ended 31 March 2023 (2022: 42.8%).
Gross margin has improved in the second half of the year to 42.8%, compared to
the first half 40.4% due to proactive measures taken by management in the
areas of customer price increases, cost mitigation and product re-engineering
and reduced labour costs due to shift rationalisation and efficiency
improvements.
Distribution costs and Administrative expenses
Distribution costs have increased by 10.4% to £3.9m (2022: £3.5m), driven by
increased operational charges at third-party logistics providers and also a
full year impact of the acquisitions.
Administrative expenses have increased by 3.3% to £18.9m in the year (2022:
£18.3m) as the Group has seen a general rise in overhead costs in particular
in energy prices and insurance costs. Overhead savings have been achieved
across most cost headings including indirect payroll.
Research and Development
The Group invests significant resources in research and product development.
As the Group has developed its business towards more leading-edge products,
the nature of the research and development has become more sophisticated.
Creightons Plc has continued to invest in R&D throughout year ending 31
March 2023 to expand its portfolio of product offering and capabilities, with
key areas of focus being the development of unique and technically challenging
formulations across Skin care and Cleansing. Utilising advanced technologies
we have successfully launched a range of Vitamin C skincare products that
demonstrate enhanced skin brightening and anti-ageing performance coupled with
novel textures at an affordable price point. New launches with key trend
materials such as ceramides, peptides, prebiotics and exfoliating acids
continue to demonstrate our ability to keep up with new trends and formulation
development, delivering new product development quickly and effectively. Given
the challenges in the market place, cost mitigation has also been a key focus
with raw material sourcing and validation offering solutions to avoid
excessive cost increases and maintain margins on existing products.
Looking forward the team are continuing to invest time and resource into
exploring new categories and technologies. The importance of SPF in the
skincare and sun care categories is a key area of focus and consumer demand.
We are investing in delivering cutting edge, futureproofed formulations,
delivering high UV protection in formats that offer improved performance and
product aesthetics. Lastly, as part of the Group's expansion into new market
territories product compliance becomes a key area of development with
formulation redevelopment underway to allow for registration into the Chinese
market whilst maintaining product quality. The team continues to support the
wider business with trend-based developments focusing on the increased demand
for cleaner, natural formulations.
EBITDA
The Group has generated Earnings before Interest, Tax, Depreciation and
Amortisation (EBITDA) of £3.0m (2022: £5.9m). This represents a reduction of
£2.9m (49.5%).
Tax
The Group's tax charge for the year was £0.2m (2022: £0.3m) which equates to
a rate of 25.2% (2022: 10.0%). The effective rate of tax is more than the
standard rate of 19.0% (2022: 19.0%). The tax charge in the current year
reflects a higher deferred tax liability due to increase in future corporation
tax rate to 25%.
Exceptional items
As reported in September 2022 there was an additional charge in respect of the
acquisition of the Emma Hardie business should the Company's share price fail
to attain £1.25 on the first anniversary of the sale. The excess over the
amount paid at 31 March 2022 amounted to £0.3m and has been treated as an
exceptional cost.
Redundancy costs incurred of £0.2m in respect of the closure of the second
shift at Peterborough have also been included in exceptional costs.
Profit after tax
The Group's profit after tax has reduced by 83.5% to £0.5m for the year ended
31 March 2023 (2022: £3.1m).
Earnings per share
The diluted earnings per share of 0.65p (2022: 3.98p) is a decrease of 83.7%.
The EPS has been adversely impacted by the reduction in profit after tax
including the exceptional costs of £0.5m and also by the increase in the
number of shares in issue (prior year acquisition related shares of 1.0m and
share options).
Cash on hand and working capital
Net cash on hand (cash and cash equivalents less short-term element of
obligations under finance leases and borrowings) is negative £1.2m (2022:
negative £2.1m). The improvement in cash is mainly attributable to improved
business trading performance in the second half of the year together with
inventory level reduction. The Group generated cash of £5.9m (2022: £2.0m)
from operating activities.
Return on Capital Employed
The Group has increased capital employed following the two acquisitions
completed in the previous year.
These investments have not yet delivered a full return on Capital Employed,
which together with the reduction in current year operating profit has had the
effect of reducing the Return on Capital Employed from 12.9% to 4.3%. The
expected improvement on the returns on acquisitions in the year will increase
in the year to March 2024. The Group continues to look for opportunities to
invest in brands that will help drive faster growth in profits.
Net gearing
Net gearing of 22.1% (2022: 28.7%) has decreased by 6.6% percentage points in
the year.
Dividend
The Directors do not propose a final dividend for the year ended 31 March
2023, (2022: £Nil) due to the challenging and volatile economic conditions
facing the Group and the need to be prudent about utilisation of cash
resources. This is consistent with the Directors' objective to align future
dividend payments to the future underlying earnings and cash requirements of
the business. The total dividend paid for the year ended 31 March 2023 was nil
(2022: £0.15) per ordinary share.
Supply chain
In common with many UK manufacturing businesses, we have experienced global
supply chain and inflationary pressures particularly during the first half of
the financial year. These pressures have manifested in the form of delayed
deliveries from suppliers, higher input, energy and overhead costs. The
commodity pressures have eased somewhat in the second half of the financial
year, but the level of domestic inflation remains a cause for concern. We will
continue to be proactive in our response to these challenges and in particular
we will seek out new opportunities and endeavour to mitigate any price
increases through price recovery, product reengineering, alternative sourcing
and other cost control measures.
Future opportunities
Looking forward we intend to invest in formulation development, market
knowledge and manufacturing know how to enter the sizeable Suncare category.
Consumer demand for Sun Protection Factor (SPF) protection is increasing in
both the skincare category but also in more usage of sun protection
products. This presents a significant opportunity in both the private label
and contract manufacturing categories. We also continue to advance in SPF
formulation development in the skincare category where consumer demand is also
in growth.
We also intend to develop key markets in both the USA and China with our
leading brands Emma Hardie and Feather & Down. Considerable time and
investment has already been undertaken in China with the Emma Hardie brand
where we are now launched on a number of digital platforms including Tmall and
Douyin. Our next step is the finalisation of China Health Registrations to
enable the brand to also be sold in market in China. Both brands are
launching on Amazon in the USA market, a key development to then enable both
brands to move into more traditional retail distribution as we demonstrate
success on marketplaces.
We expect to extend distribution of Creightons core brands, in particular
TZone and Balance Active both in the UK discount and grocery sectors along
with international markets.
Conclusion
This has been a challenging year for the Group brought on by the war in
Ukraine and global economic challenges.
In response we have been resolute and focused in restoring profitability and
positive cash flow and in reducing the overall cost base. Our result for the
second half of the year provides evidence that we are on the right track.
Manufacturing efficiency improvements have continued as a result of
significant investment in higher grade machinery and equipment within the last
18 months. This has enabled the move to one shift across the Group.
In summary the Board believes that good management, strong customer
relationships and financial position will continue to enable the Group to
manage the current economic situation and that the Group is well placed to
proactively manage new challenges and take advantage of any new opportunities
that may arise.
We are still keen to expand but will only do so when the infrastructure is
fully repositioned to deal with the volatile conditions we are facing.
Thanks also to our employees, customers and suppliers, especially those who
have responded so positively through this challenging period.
Directors' responsibilities statement
The Directors whose names and functions are set out on in the full report are
responsible for preparing the Annual Report and the Financial Statements in
accordance applicable law and regulation.
Company law requires the Directors to prepare financial statements for each
financial year. Under that law the Directors have prepared the Group financial
statements in accordance with UK-adopted international accounting standards
and parent Company financial statements in accordance with United Kingdom
Generally Accepted Accounting Practice (United Kingdom Accounting Standards,
comprising FRS 101 'Reduced Disclosure Framework', and applicable law). Under
Company law the Directors must not approve the financial statements unless
they are satisfied that they give a true and fair view of the state of affairs
of the Company and the Group and of the profit or loss of the Group for that
period. In preparing these financial statements, the Directors are required
to:
· select suitable accounting policies and then apply them
consistently;
· state whether UK-adopted international accounting standards have
been followed for the group financial statements and United Kingdom Accounting
Standards, comprising FRS 101, have been followed for the Company financial
statements, subject to any material departures disclosed and explained in the
financial statements;
· make judgements and accounting estimates that are reasonable and
prudent; and
· prepare the financial statements on the going concern basis
unless it is inappropriate to presume that the Company will continue in
business.
The Directors are responsible for safeguarding the assets of the group and
parent Company and hence for taking reasonable steps for the prevention and
detection of fraud and other irregularities.
The Directors are responsible for keeping adequate accounting records that are
sufficient to show and explain the Group and parent Company's transactions and
disclose with reasonable accuracy at any time the financial position of the
Group and parent Company and enable them to ensure that the financial
statements and the Directors' Remuneration Report comply with the Companies
Act 2006.
The Directors are responsible for the maintenance and integrity of the parent
Company's website. Legislation in the United Kingdom governing the preparation
and dissemination of financial statements may differ from legislation in other
jurisdictions.
Directors' confirmations
The Directors consider that the Annual Report and accounts, taken as a whole,
is fair, balanced and understandable and provides the information necessary
for shareholders to assess the group and parent Company's position and
performance, business model and strategy. Each of the Directors, whose names
and functions are listed in Directors and Advisers on page 101 to the full
accounts confirm that to the best of their knowledge:
1. the parent Company financial statements, which have been prepared in
accordance with United Kingdom Generally Accepted Accounting Practice (United
Kingdom Accounting Standards, comprising FRS 101 'Reduced Disclosure
Framework', and applicable law), give a true and fair view of the assets,
liabilities, financial position and profit of the Company; and
2. the group financial statements, which have been prepared in accordance
with UK-adopted international accounting standards, give a true and fair view
of the assets, liabilities, financial position and profit of the group; and
3. the strategic report includes a fair review of the development and
performance of the business and the position of the Company and the
undertakings included in the consolidation taken as a whole, together with the
description of the principal risks and uncertainties that they face; and
4. the report and financial statements, taken as a whole, are fair,
balanced and understandable and provide the information necessary for
shareholders to assess the Group's position and performance, business model
and strategy.
Principal risks and uncertainties
The Board regularly monitors exposure to key risks, such as those related to
production efficiencies, cash position and competitive position relating to
sales. It has also taken account of the risks facing the business from the
challenging economic environment including inflationary pressures, higher
interest rates and their impact on consumer demand. Further details of
mitigating measures taken by management are set out in the operational
highlights.
It also monitors risks not directly or specifically financial, but capable of
having a major impact on the business's financial performance if there is any
failure. The key risks and the measures taken to manage these risks are noted
below.
Capital structure, cash flow and liquidity
The Group has a strong balance sheet. Acquisitions during the previous year
were financed by internal cash resources and bank funding. The business is
funded using; retained earnings, a long term mortgage, term loan and sale and
lease back arrangements to support investments in fixed assets, invoice
financing and overdraft facilities for working capital.
At 31 March 2023 the invoicing financing is in a utilised position of
£1,557,000 as this facility has been utilised to fund the activities during
the year (2022: £1,267,000). At 31 March 2023 the Group had utilised £26,000
(2022: £495,000) of its overdraft facility.
Competitive environment
The Group operates in a highly competitive environment in which demand for
products can vary and customers have the opportunity to transfer business to
other suppliers. The Group works to minimise this risk by developing close
relationships with customers offering quality, service and innovation
throughout the business. This risk is also further reduced through the
development of its branded product portfolio and by the diversity of customers
and products offered.
Quality
The Group treats quality as its key requirement for all products and strives
to deliver quality products for every price point. Failure to achieve the
required quality and safety standards would have severe consequences for the
Group, from financial penalties to the damage to customer relationships. The
Group has a robust product development process to mitigate risk wherever
possible and to ensure all products are safe and fit for purpose. The Group is
subject to frequent internal and external safety, environmental, ethical and
quality audits covering both accreditations held and a number of specific
operating standards our customers require us to comply with.
Global economic environment
On 24 February 2022 Russian forces entered Ukraine, resulting in Western
nations reactions including announcements of sanctions against Russia and
Russian interests worldwide and an economic ripple effect on the global
economy. The immediate impact was a significant upward spike in energy and
commodity prices, which continued into the first half of the current financial
year. In addition, BOE base interest rates have increased from 0.75% to 4.25%
in response to inflationary pressures. This has had a negative impact on
consumer demand and the viability of many businesses. The rate of increase in
commodities has eased in the second half of the current financial year but
core domestic inflation and the prospect of prolonged higher interest rates
remains a cause for concern. The Directors have carried out an assessment of
the potential global economic impact on the business, including the impact of
mitigation measures and uncertainties, and have concluded that the greatest
impact on the business is expected to be from price increases.
The Directors have taken account of these potential impacts in their going
concern assessments and have concluded that the direct impact is not
significant to the business, with the indirect impact of price increases being
reviewed on a regular basis. In the face of these challenges the focus of the
business will be on positive cash generation and restoration of profitability.
Credit risk
Our credit risk is that our customers are unable to pay, and we believe this
risk is elevated currently due to the current global economic climate. We
proactively manage the risks faced by our customers by working closely with
them and by increasing debtor management and expanding our credit insurance.
All customers' debtor balances, are within insured credit limits or they pay
on a pro-forma basis. Credit control processes are in place to manage credit
risk including setting appropriate credit limits and the enforcement of credit
terms and ongoing dialogue with all customers. We minimise the risk from
concentration of customers through implementation of these credit processes
and this risk is mitigated through the diversity of our customer base both by
channel and geography. We remain vigilant to the credit risks in light of the
challenging economic environment.
Supplier sourcing and costs
Cost increases as a result of inflation together with pressures on supply of
materials globally are our key supplier-related risks. The pressure on global
supply chains has eased but there remains uncertainty around future commodity
pricing. We continue to work closely with suppliers and have used our improved
sourcing capabilities to expand our supply base to ensure that we can meet the
demand from our existing and new customers and minimise the impact of cost
price increases. We have an ongoing dialogue and communication with our
customers to mitigate the impact on the business.
Environmental protection standards and sustainability
The Group's technical department continues to monitor all relevant
environmental regulations that the Group must adhere to, to ensure continued
compliance. We have successfully operated at both manufacturing sites without
a cessation in production due to an environmental incident. The risk of
cessation of production from an environmental breach is considered to be low
but in such an event we would be able to move production to the other site or
to outsource to third party manufacturers in the short term.
The Group's objective is to keep ahead of the move towards more sustainable
products and processes. There is a risk that if we do not take action we will
be left behind and unable to meet our customers' requirements. However, the
Group sees the move towards sustainability as an opportunity for business
growth.
Cyber security
Cyber Security remains a significant threat to all businesses. The Group has
continued to invest in new software and resources to minimise the risk of
anyone accessing our systems and information. We have enhanced our ongoing
training programme for employees to ensure that they are constantly aware of
their role in protecting the business from all cyber security threats.
Consolidated income statement
Year ended 31 March 2023 Year ended 31 March 2022
£000 £000
Revenue 58,567 61,157
Cost of sales (34,219) (35,001)
Gross profit 24,348 26,156
Distribution costs (3,902) (3,535)
Administrative expenses (18,862) (18,256)
Exceptional items - Redundancy costs (165) -
Operating profit 1,419 4,365
Exceptional items - Acquisition costs (312) (602)
Finance costs (420) (308)
Profit before tax 687 3,455
Taxation (173) (345)
Profit for the year from operations attributable to the equity shareholders 514 3,110
Consolidated statement of comprehensive income
Year ended Year ended
31 March 2023 31 March 2022
£000 £000
Profit for the year 514 3,110
Items that may be subsequently reclassified to profit and loss:
Exchange differences on translating foreign operations (9) (7)
Other comprehensive income for the year (9) (7)
Total comprehensive income for the year attributable to the equity 505 3,103
shareholders
Earnings per share
Year ended 31 March Year ended 31 March
Note 2023 2022
Basic 5 0.74p 4.62p
Diluted 5 0.65p 3.98p
Dividends
Year ended Year ended 31 March
31 March
2023 2022
£000 £000
Final dividend paid - Nil (2022: 0.50p) per share - 324
Interim dividend paid Nil (2022: 0.15p) per share - 104
Total dividend paid in year - Nil (2022: 0.65p) per share - 428
Proposed - Nil (2022: Nil) per share - -
Consolidated balance sheet
31 March 31 March
2023 2022
Note £000 £000
Non-current assets
Goodwill 2,857 2,853
Other intangible assets 10,894 10,867
Property, plant and equipment 5,890 6,065
Right-of-use assets 1,285 1,120
20,926 20,905
Current assets
Inventories 10,228 12,479
Trade and other receivables 12,733 13,624
Cash and cash equivalents 1,653 840
24,614 26,943
Total assets 45,540 47,848
Current liabilities
Trade and other payables 9,836 10,127
Corporation tax payable 3 -
Lease liabilities 373 303
Borrowings 2,502 2,663
Deferred and contingent consideration 4 - 1,187
12,714 14,280
Net current assets 11,900 12,663
Non-current liabilities
Deferred tax liability 2,942 2,640
Lease liabilities 917 864
Borrowings 3,488 4,386
7,347 7,890
Total liabilities 20,061 22,170
Net assets 25,479 25,678
Equity
Share capital 700 697
Share premium account 2,022 1,951
Merger reserve 2,476 2,476
Treasury shares (576) -
Other reserves (211) (211)
Translation reserve 14 23
Retained earnings 21,054 20,742
Total equity attributable to the equity shareholders of the parent Company 25,479 25,678
Consolidated statement of changes in equity
Share capital Share premium account Merger reserve Treasury Shares Other reserves Translation reserve Retained
earnings Total
equity
£000 £000 £000 £000 £000 £000 £000 £000
At 1 April 2021 648 1,410 - - 25 30 17,973 20,086
Comprehensive income for the year
Profit for the year - - - - - - 3,110 3,110
Exchange differences on translation of foreign operations - - - - - (7) - (7)
Total comprehensive income for the year - - - - - (7) 3,110 3,103
Contributions by and distributions to owners
Exercise of options 23 541 - - - - - 564
Shares issued on acquisitions 26 - 2,476 - - - - 2,502
Purchase of own shares by EBT - - - - (236) - - (236)
Share-based payment charge - - - - - - 330 330
Deferred tax through Equity - - - - - - (243) (243)
Dividends - - - - - - (428) (428)
Total contributions by and distributions to owners 49 541 2,476 - (236) - (341) 2,489
At 31 March 2022 697 1,951 2,476 - (211) 23 20,742 25,678
Comprehensive income for the year
Profit for the year - - - - - - 514 514
Exchange differences on translation of foreign operations - - - - - (9) - (9)
Total comprehensive income for the year - - - - - (9) 514 505
Contributions by and distributions to owners
Exercise of options 3 71 - - - - - 74
Purchase of own shares - - - (576) - - - (576)
Share-based payment charge - - - - - - 101 101
Deferred tax through Equity - - - - - - (303) (303)
Total contributions by and distributions to owners 3 71 - (576) - - (202) (704)
At 31 March 2023 700 2,022 2,476 (576) (211) 14 21,054 25,479
Consolidated cash flow statement
Year ended 31 March Year ended 31 March
2023 2022
£000 £000
Profit from operations 1,419 4,365
Adjustments for:
Depreciation on property, plant and equipment 1,000 888
Depreciation on right of use assets 294 256
Amortisation of intangible assets 288 435
Loss/(Profit) on disposal of Right of Use assets 34 (10)
Share based payment charge 101 330
3,136 6,264
Decrease/(increase) in inventories 2,250 (2,515)
Decrease/(increase) in trade and other receivables 776 (1,820)
(Decrease)/increase in trade and other payables (288) 59
Cash generated from operations 5,874 1,988
Taxation paid (62) (575)
Net cash generated from operating activities 5,812 1,413
Investing activities
Purchase of property, plant and equipment (825) (1,106)
Purchase of right-of-use assets - (286)
Proceeds from sale and lease back - 264
Purchase of intangible assets (315) (338)
Acquisition of Brodie & Stone (75) (3,507)
Acquisition of Emma Hardie (1,424) (2,775)
Exceptional costs in relation to acquisitions - (343)
Net cash used in investing activities (2,639) (8,091)
Financing activities
Proceeds on issue of shares 74 564
Cancellation of leases (35) -
Principal paid on lease liabilities (436) (240)
Interest on lease liabilities - (117)
Interest paid on mortgage loan - (83)
Interest paid on overdrafts - (108)
Increase in invoice financing facilities 290 1,267
(Decrease)/increase of borrowings (600) 495
Draw down of loan facility - 3,000
Repayment on term loan (816) (314)
Repayment on mortgage loan facility (252) (169)
Dividends paid to owners of the parent - (428)
Purchase of own shares via EBT - (236)
Purchase of shares - Share buy back (576) -
Repayment of debt - Emma Hardie - (2,201)
Repayment of debt - Brodie & Stone - (463)
Net cash generated from/(used in) financing activities (2,351) 967
Net increase in cash and cash equivalents 822 (5,711)
Cash and cash equivalents at start of year 840 6,558
Effect of foreign exchange rate changes (9) (7)
Cash and cash equivalents at end of year 1,653 840
Notes to preliminary announcement
1. Significant accounting policies
Basis of accounting
The Group financial statements have been prepared in accordance with
UK-adopted international accounting standard in conformity with the
requirements of the Companies Act 2006.
The IFRSs applied in the Group financial statements are subject to ongoing
amendment by the IASB and therefore subject to possible change in the future.
Further standards and interpretations may be issued that will be applicable
for financial years beginning on or after 1 April 2023 or later accounting
periods but may be adopted early.
The preparation of financial statements in accordance with IFRS requires the
use of certain accounting estimates. It also requires management to exercise
its judgement in the process of applying the Group's accounting policies.
The primary statements within the financial information contained in this
document have been presented in accordance with IAS1 Presentation of Financial
Statements.
The financial statements have been prepared on the historical cost basis as
modified for the fair value of business combinations. Historical cost is
generally based on the fair value of the consideration given in exchange for
goods and services. The principal accounting policies adopted are set out
below.
The Company has taken advantage of the exemption allowed under section 408 of
the Companies Act 2006 and has not presented its own Statement of
Comprehensive Income in these financial statements.
Adoption of new and revised accounting standards
None of the standards adopted during the year had a material impact on the
Group's financial statements for the year ended 31 March 2023.
There are a number of standards, amendments to standards, and interpretations
which have been issued by the IASB that are effective in future accounting
periods that the Group has decided not to adopt early. The Group does not
expect any of the standards issued by the IASB, but not yet effective, to have
a material impact on the Group.
2. Financial instruments and treasury risk management
Market risk
Market risk is the risk that arises from movements in stock prices, interest
rates, exchange rates, and commodity prices.
Market risk for the 31 March 2023 year end is reflected within the interest
rate and foreign currency risk which are discussed further below.
Credit risk
Credit risk is the risk of financial loss to the Group if a customer fails to
meet its contractual obligations.
Trading exposures are monitored by the operational companies against agreed
policy levels. Credit insurance with a world leading insurer is employed
across the majority of our trade debtors. At 31 March 2023 all trade debtors
(2022: all) are covered by credit insurance with a cover of 90% of the debtor
balances. Non-trading financial exposures are incurred only with the Group's
bankers or other institutions with prior approval of the Board of Directors.
The majority of trade receivables are with retail customers. The maximum
exposure to credit risk is represented by the carrying amount of those
financial assets in the balance sheet.
Impairment provisions on trade receivables have been disclosed in note 19 in
the full accounts.
The credit risk on liquid funds such as cash and cash equivalents is limited
because the counterparties are banks with high credit-ratings assigned by
international credit-rating agencies.
Interest rate risk
The Group's interest rate exposure arises mainly from its interest-bearing
borrowings.
The Group finances its operations through a mixture of debt associated with
working capital facilities and equity. The Group is exposed to changes in
interest rates on its floating rate working capital facilities. The
variability and scale of these facilities is such that the Group does not
consider it cost effective to hedge against this risk.
The Group also secured a fixed rate mortgage for a 15 year term, 11.5 years
remaining, secured on the property with an interest rate of 3.04% fixed for
the first 10 years, 6.5 years remaining, of the loan, therefore reducing the
interest rate risk. The interest charge on the mortgage for the year ended 31
March 2023 was £77,000 (2022: £83,000).
On 3 September 2021, the Company took out a term loan of £3,000,000 to fund
part of the purchase of the acquisitions in the prior year. The term loan is
for a 4 year term secured on the assets of the Group with an interest rate of
2.70% above the Bank of England base rate. The interest charge on the term
loan for the period to 31 March 2023 was £111,000 (2022: £43,000). A 1%
increase in the interest rate would have resulted in an additional charge of
£22,000 (2022: £13,000).
Interest rate sensitivity
The interest rate sensitivity is based upon the Group's borrowings over the
year assuming a 1% increase or decrease which is used when reporting interest
rate risk internally to key management personnel.
A 1% increase in bank base rates would reduce Group pre-tax profits by
£114,000 (2022: £75,000). A 1% decrease would have the opposite effect. The
Group's sensitivity to interest rates has changed during the current year due
to the current economic climate, which has had the impact of increasing BOE
base rates.
Foreign currency risks
The Group operates in a number of markets across the world and is exposed to
foreign currency transaction and translation risks arising on the purchase and
sales of goods in particular with respect to the US dollar and Euro.
Transaction risk arises on income and expenditure in currencies other than the
functional currency of each Group Company. The magnitude of this
risk is relatively low as the majority of the Group's income and expenditure
are denominated in the functional currency. Approximately 0% (2022: 0%) of the
Group's income is denominated in US dollars and 2% (2022: 2%) in Euros.
Approximately 4% (2022: 4%) of the Group's expenditure is denominated in US
dollars and 4% (2022: 5%) in Euros.
Foreign currency sensitivity
A 5% strengthening of sterling would result in a £145,000 (2022: £163,000)
increase in profits and equity. A 5% weakening in sterling would result in a
£161,000 (2022: £180,000) reduction in profits and equity.
When appropriate the Group utilises currency derivatives to hedge against
significant future transactions and cash flow. There were no outstanding
contracts as at 31 March 2023 or 31 March 2022.
Cash flow and liquidity risk
Liquidity risk arises from the Group's management of working capital. It is
the risk that the Group will encounter difficulty in meeting its financial
obligations as they fall due.
The Group manages its working capital requirements through overdrafts and
invoice finance facilities. These facilities were renewed in March 2023 for a
further 12 months. The maturity profile of the committed bank facilities is
reviewed regularly and such facilities are extended or replaced well in
advance of their expiry. The Group has complied with the terms of these
facilities. At 31 March 2023 the Group had available £4,327,000 (2022:
£6,288,000) of undrawn committed borrowing facilities in respect of which all
conditions precedent had been met. The Group has a fixed rate mortgage for a
15 year term secured on the property with an interest rate of 3.04% fixed for
the next 6.5 years of the loan. The Company also took out a term loan of
£3,000,000 to fund part of the purchase of the acquisitions in the prior
year. The term loan is for a 4 year term secured on the assets of the Group
with an interest rate of 2.70% above the Bank of England base rate.
3. Financial assets
Financial assets are included in the Statement of financial position within
the following headings. These are valued at amortised cost and are detailed
below.
Group
2023 2022
£000 £000
Trade and other receivables 12,220 12,819
Cash and cash equivalents 1,653 840
Total 13,873 13,659
4. Financial liabilities
Financial liabilities are included in the Statement of financial position
within the following headings. These are valued at amortised cost and are
detailed below.
At 31 March 2023
Group
Less than 6 months Between 6 months and 1 year Between 1 and 5 years Over 5 years Total
£000 £000 £000 £000 £'000
Trade payables 5,974 - - - 5,974
Accruals 2,723 - - - 2,723
Obligations under leases 194 179 874 43 1,290
Overdraft and invoice financing 1,583 - - - 1,583
Loan 453 466 1,977 1,511 4,407
Total 10,927 645 2,851 1,554 15,977
For the year to 31 March 2023 contingent consideration of £Nil
(2022:£1,028,000) is held at FVTPL within financial liabilities. The
contingent consideration is based on quoted investments and is therefore
designated as level 1 in the fair value hierarchy.
At 31 March 2022
Group
Less than 6 months Between 6 months and 1 year Between 1 and 5 years More than 5 years Total
£000 £000 £000 £000 £000
Trade payables 6,211 - - - 6,211
Accruals 3,016 - - - 3,016
Obligations under leases 153 150 864 - 1,167
Overdraft and invoice financing 1,762 - - - 1,762
Loans 447 454 2,670 1,716 5,287
Deferred consideration 159 - - - 159
Total 11,748 604 3,534 1,716 17,602
5. Earnings per share
The calculation of the basic and diluted earnings per share is based on the
following data:
Year ended 31-Mar Year ended
31-Mar
2023 2022
£000 £000
Earnings
Net profit attributable to the equity holders of the parent company 514 3,110
Year ended 31-Mar Year ended
31-Mar
2023 2022
Number Number
Number of shares
Weighted average number of ordinary shares for the purposes of basic earnings 69,166,461 67,372,553
per share
Effect of dilutive potential ordinary shares relating to share options 9,534,475 10,681,836
Weighted average number of ordinary shares for the purposes of diluted 78,700,936 78,054,389
earnings per share
Basic 0.74p 4.62p
Diluted 0.65p 3.98p
6. Share capital
Ordinary shares of 1p each
£000 Number
At 1 April 2021 648 64,852,243
Issued in the year 49 4,903,940
At 31 March 2022 697 69,756,183
Issued in the year 3 273,400
At 31 March 2023 700 70,029,583
The Company has one class of ordinary shares which carry no right to fixed
income. All of the shares are issued and fully paid. The total proceeds from
the issue of shares from the exercise of share options in the year was
£74,000 (2022: £564,000).
7. Notes to cash flow statement
Analysis of changes in net debt
Overdraft Invoice Financing Mortgage Loan Total
£000 £000 £000 £000 £000
At 1 April 2022 495 1,267 2,642 2,645 7,049
Cash flows (600) 290 (252) (816) (1,378)
Interest accruing 131 - 77 111 319
At 31 March 2023 26 1,557 2,467 1,940 5,990
Overdraft Invoice Financing Mortgage Loan Total
£000 £000 £000 £000 £000
At 1 April 2021 - - 2,812 - 2,812
Cash flows 495 1,267 (253) 2,603 4,112
Interest accruing - - 83 42 125
At 31 March 2022 495 1,267 2,642 2,645 7,049
8. Status of information
In accordance with section 435 of the Companies Act 2006, the directors advise
that the financial information set out in this announcement does not
constitute the Group's statutory financial statements for the year ended 31
March 2023 or 2022, but is derived from these financial statements. The
financial statements for the year ended 31 March 2022 have been delivered to
the Registrar of Companies. The financial statements for the year ended 31
March 2023 have been prepared in accordance with international financial
reporting standards adopted pursuant to Regulation (EC) No 1606/2002 as it
applies in the European Union. The financial statements for the year ended 31
March 2023 will be forwarded to the Registrar of Companies following the
Company's Annual General Meeting. The Auditors have reported on these
financial statements; their reports were unqualified and did not contain
statements under Section 498(2) or (3) of the Companies Act 2006.
The consolidated statement of financial position at 31 March 2023 and the
consolidated statement of comprehensive income, consolidated statement of
changes in equity and consolidated statement of cash flows for the year then
ended have been extracted from the Group's financial statements. Those
financial statements have not yet been delivered to the Registrar.
The strategic report with supplementary material is expected to be posted to
Shareholders shortly. The annual report and accounts will also be available on
the Company's website at: www.creightonsplc.com and in hard copy to
shareholders upon request from the Company's registered office at 1210 Lincoln
Road, Peterborough, PE4 6ND.
The annual report and accounts for the period ended 31 March 2023 will be
uploaded to the National Storage Mechanism and will be available for viewing
shortly at https://data.fca.org.uk/#/nsm/nationalstoragemechanism
(https://linkprotect.cudasvc.com/url?a=https%3a%2f%2fdata.fca.org.uk%2f%23%2fnsm%2fnationalstoragemechanism&c=E,1,woUdg3DF9ohL3Kfk-PqkqwXc_ntYFf6fwo9IjhUsxZrwQBDrn2FGiVoGLiB8UGBYNh6vWfmNBySxuOKuQ31G16P4DtD1WLkIw6aUHGRcjDY,&typo=1)
The Directors will notify shareholders when the accounts are posted and have
been uploaded to the website and to the NSM.
The Company's AGM will take place at the offices of Potter & Moore
Innovations Ltd, 1210 Lincoln Road, Peterborough, PE4 6ND on 13 September 2023
at 12:00 noon.
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