REG - Creightons PLC - Half-year Report
01/12/2022 07:00
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RNS Number : 1662I Creightons PLC 01 December 2022
THIS ANNOUNCEMENT CONTAINS INSIDE INFORMATION AS STIPULATED UNDER THE UK
VERSION OF THE MARKET ABUSE REGULATION NO 596/2014 WHICH IS PART OF ENGLISH
LAW BY VIRTUE OF THE EUROPEAN (WITHDRAWAL) ACT 2018, AS AMENDED
Creightons plc
Unaudited interim financial report
for the six months ended 30 September 2022
Financial highlights
· Sales for the first half of the financial year were £30m (2021:
£30m); including £2.6m (2021: £0.8m) from recent acquisitions. This
represents a very commendable performance given the challenges outlined at the
March 2022 results presentation.
· The gross margin averaged 40.4% (2021: 42.7%) reflecting the
ongoing struggle to pass on significant direct cost increases to retailers,
contract customers and consumers. We anticipate that selling price improvement
now agreed will help the gross margin continue on the upward trend evident in
recent months.
· During the period since November 21 the company suffered direct
annualised cost increases approximating to £4m, reflecting the scale of the
margin challenge. High street retailers agreed to take price increases varying
from 5% to 15% to stabilise their supply. "No agreement - no supply" had to be
the rule to ensure our return to profit.
· Most cost increases have now been successfully passed on to the
retailers, contract customers or consumers. A small number of price increases
remain outstanding, which will be addressed by cost mitigation or cessation of
supply.
· Other overheads, mainly energy costs, increased dramatically with
the potential to drive annualised overheads up by at least £0.7m. A strategy
to drive down annualised overheads by £2m thus reducing the breakeven point
and protecting margin has been implemented and already contributed £0.1m to
the turnaround to profit in the six months.
· The operating profit before exceptional costs was £0.3m (2021:
£2.6m). Operating losses in the first four months were turned to operating
profit for each of the subsequent months from August 22 to end of October 22,
reflecting the continuing success of the remedial actions taken.
· Operating profit before exceptional costs as a percentage of
sales decreased by 7.7% points to 0.9% (2021: 8.6%). Although small, this
reflects strong signals of a sharp recovery to profit.
· EBITDA (excluding exceptional) for the first half of the
financial year 2022 was £1.1m (2021: £3.35m).
· Diluted EPS was negative 0.48p (2021: 2.61p).
· Net short-term borrowings (cash and cash equivalents less
short-term element of obligations under finance leases and borrowings) at 30
September 2022 were £4.7m (2021: £2.9m). This included the final payment for
Emma Hardie Ltd of £1.4m and a share buyback of £0.6m. Similarly for cash
flow, large negatives in the early months of the year have been reduced to a
positive cash flow in November with positives expected in the future months of
this financial year and beyond. The positive cashflow has been enabled by the
realignment of buying and stock holding policy together with cost reduction
measures.
· Against this challenging economic climate, the integration of the
acquisitions, despite their long-term importance, were put on hold for several
months whilst the ship was steadied. Revenue generated from Brodie and Stone
brands was £1.2m (2021: £Nil), Emma Hardie Ltd was £1.4m (2021: £0.8m from
date of acquisition).
Operational highlights
· The key priority of the business has been to re-establish
profitability and embed a structure to protect against losses on a month to
month basis in this highly inflationary and volatile economic environment.
· At a macro level this meant aiming to pass on approximately £6m
(annualised) of selling price increases to customers and consumers and
reducing overhead and potential overhead costs by £2m from previous year
levels.
· At a more detailed level this involved:
o Sales team setting up Cost Price Increase (C.P.I) monitors across all
categories of supply as negotiating levers with the big retailers, which has
proved successful (with the obvious time lag in passing on increases which
affected margins in the earlier part of the year).
o Manufacturing team reducing to one shift at both production sites
(excluding soap production). This was made possible by ensuring that previous
investment in machinery and equipment was brought into play - efficiencies and
line utilisation made this possible. Unfortunately, 34 people were made
redundant out of the direct labour pool and a further 13 people as indirect
labour at a total cost of £0.15m as shown in exceptional costs.
o The one shift policy reduced energy costs. Energy savings were further
enhanced by a reduction in energy consumption and implementation of an
efficient energy management/reduction policy.
o The spare capacity on one shift is currently around 25% due to efficiency
gains.
o Restructuring warehousing and logistics to bring back in house the picking
and packing of all goods; a task that is already in progress and will be
finalised by the end of January 2023 with considerable cost reductions in the
region of £0.3m annualised.
o Stock reductions based on a four-week buying and stock holding policy and
reducing lead times are targeted at £2m. This will improve cash flow and will
also reduce costs. We have achieved stock reductions of £1.2m to the end of
October 2022 without any reduction in effective service level.
· Exceptional costs also include £0.31m in relation to the
finalisation of the Emma Hardie transaction.
· Integration of Emma Hardie, though delayed, is now progressing
well and the full benefits are expected to emerge during the second half of
the financial year and beyond. Planned profit improvements include bringing
operation and manufacturing in house whilst also developing new bricks and
mortar listing in UK and USA under a newly appointed Sales Director as we
transition from the previous owners.
· The same is true on the Brodie and Stone brands, which have
experienced stock shortages on some products caused by the global logistics
issues earlier in the year.
· Most importantly we can now focus on building sales in all
sectors; the most recent success is being listed with two sophisticated high
street retailers in the convenience area which are experiencing significant
growth.
· In the mass to masstige area we are pushing our three key brands
(in the hair, sleep and skin categories) in addition to Emma Hardie in the
premium skincare sector.
· We expect to hold our sales levels for the next six months before
we start to build steadily again on a profitable business.
Creightons plc
Unaudited interim financial report
for the six months ended 30 September 2022
Chairman's statement
As we indicated in the Chairman's statement in July 2022, we experienced
global supply chain and inflationary pressures during the second half of the
last financial year which have continued into this year. These pressures have
manifested in the form of delayed deliveries from suppliers, higher input,
energy and overhead costs. We have therefore continued our proactive response
to these challenges and have striven to mitigate the on-going increases in
cost of raw materials, components and energy through price recovery where
possible, product reengineering, alternative sourcing and other cost control
measures, including reduction in the work force and reversion to single-shift
working. This has resulted in redundancy costs of £0.15m. In spite of these
challenges, I am pleased to report that the Group has made significant
progress in growing its branded business during the first half of the year
ended 30 September 2022. Overall sales are broadly in line with last year,
with sales from the two branded acquisitions offsetting the decline in other
areas. The Group's performance is a tribute to the tenacity and resilience of
the teams who have again demonstrated the ability to take advantage of
available opportunities and manage potential risks.
Sales and margin
Branded sales contribute an increasingly important part of the business with
branded sales increasing from £8.8m to £10.8m. This includes the turnover
from acquisitions of £2.6m (2021: £0.8m).
Private label sales declined from £13.1m to £11.2m due mainly to a one-off
customer order in the previous period. Contract sales reduced from £8.1m to
£7.7m.
Our gross margin was 40.4% in the six months to 30 September 2022 (2021:
42.7%). Gross margin has declined in the period due to a lag in the recovery
from our customers of higher input costs. The level of cost price increases
has abated in recent months and we have made significant progress in securing
price increases from customers and therefore we expect to achieve an improved
gross margin in the next six months.
Overheads
Distribution costs have increased by 17.4% to £2.0m (2021: £1.7m) and now
represent 6.6% of sales (2021: 5.5%). Underlying costs associated with
outsourcing the warehousing have increased in line with domestic supply
pressures. Most of our finished goods are currently stored at third parties
but we are in the process of taking back the storage and picking of finished
goods within Peterborough, which will result in savings in the second half.
Administration costs have increased by 14.2% to £9.8m (2021: £8.6m). These
include admin support costs within Emma Hardie Limited of £0.6m (2021: £0.2m
- 2 months post acquisition), which are required to support the brand during
the transition period. Other cost increases include energy cost increases of
£0.3m, I.T. and security of £0.1m which will reduce in the second half of
the year.
Exceptional Costs
· In our report on the results for March 2022, we indicated that
there would be 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 accrued at 31 March
2022 amounted to £0.31m and has been treated as an exceptional cost.
· Redundancy costs incurred of £0.15m in respect of the closure of
the second shift at Peterborough have also been included in exceptional costs.
Operating profit before exceptional costs
Operating profit before exceptional costs was £0.3m (2021: £2.6m), which
represents a decrease of £2.3m. The reduction in gross margin together with
the increased overhead costs results in an operating profit margin before
exceptional costs of 0.9% (2021: 8.6%).
Tax
The tax charge provided in the accounts is £0.03m (2021: £0.28m).
Earnings per share
The diluted earnings per share was negative 0.48p (2021: 2.61p).
Dividend Payments
The Board does not propose an interim dividend (2021: 0.15 pence per ordinary
share), reflecting 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.
Working capital and short term borrowings
Net short term borrowings were £4.7m (2021: £2.9m). The increase in short
term borrowings is largely a result of the Emma Hardie acquisition, which
resulted in a cash out flow of £2.0m. The Group has access to cash by way of
an invoicing finance facility that is currently in place and could support the
cash position by up to a further £4.4m. Working capital is broadly in line
with March 22 with increases in trade debtors and inventories offset by an
increase in trade creditors. We plan to make further reduction in inventories
in the second half of the year.
Supply chain
In common with most UK manufacturing businesses, we are operating in a period
of significant inflationary pressures and weakening consumer demand. Our
objective is to meet our customer expectations and to deliver top line sales
growth whilst also relentlessly focusing on the areas within our control
including recovery/mitigation of cost price increases, delivery of cost
reduction programme and reduction in stock levels.
The result for this half year is much in line with what was anticipated, but
we are confident that the margin recovery and pro-active cost reduction
measures we have taken will deliver an improved performance in the second half
of the year. I would like to take this opportunity to thank each and every one
of the Group's employees who have continued to pull together through an
exceptionally difficult period to enable the Group to deliver a strong trading
performance. I would also like to thank our customers, shareholders and
suppliers for their support and loyalty to the Group.
W O McIlroy
Executive Chairman
30 November 2022
Responsibility statement
The names and functions of the Directors of the Company are as follows:
William O McIlroy Executive Chairman and Chief Executive
Bernard JM Johnson Executive Managing Director
Nicholas DJ O'Shea Non-executive Director and Group Company
Secretary
William T Glencross Non-executive Director
Martin Stevens Deputy Managing Director
Philippa Clark Deputy Managing Director
Paul Forster Non-executive Director
The Board confirms that to the best of its knowledge the condensed set of
financial statements gives a true and fair view of the assets and liabilities,
financial position and loss of the Group and has been prepared in accordance
with IAS 34 'Interim Financial Reporting', as endorsed by the UK and that the
interim management report includes a fair review of the information required
by the Disclosure and Transparency Rules as issued by the Financial Conduct
Authority, namely:
· DTR 4.2.7: An indication of important events that have occurred
during the first six months of the financial year, and their impact on the
condensed set of financial statements, and a description of the principal
risks and uncertainties for the remaining six months of the financial year.
· DTR 4.2.8: Details of related party transactions that have taken
place in the first six months of the current financial year and that have
materially affected the financial position or performance of the enterprise
during that period. Together with any changes in the related party
transactions described in the last annual report that could have a material
effect on the enterprise in the first six months of the current financial
year.
Going Concern
The directors are pleased to report that the Group continues to meet its debt
obligations and expects to operate comfortably within its available borrowing
facilities. The Group's cash on hand at 30 November 2022 is negative £2.4m.
We have carried out a review of our cash requirements for the next 12 months.
Scenarios modelled included the removal of the Group's largest customer and
increases of 20% in costs of raw materials or overheads. These models show
that even without management tackling current overhead levels or increasing
prices to customers, the Group would not fully utilise available working
capital resources over the next 12 months. The directors have therefore formed
a judgement, at the time of approving the financial statements, that there is
a reasonable expectation that the Group has adequate resources to continue in
operational existence for the foreseeable future being at least twelve months
from the date of this report. For this reason, the directors continue to adopt
the going concern basis in preparing the financial statements.
By order of the Board
Nicholas O'Shea
Group Company Secretary and
Director
30 November 2022
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 economic situation over the past 6
months, and the impact that has had on costs and consumer purchases.
It also monitors those risks not directly or specifically financial, but
capable of having a major impact on the business's financial performance if
there is any failure, such as product contamination and manufacture outside
specification, maintenance of satisfactory levels of customer and consumer
service, accident ratios, failure to meet environmental protection standards
or any of the areas of regulation mentioned above.
The principal risks and uncertainties and their associated mitigating and
monitoring controls which may affect the Group's performance in the next six
months are consistent with those detailed in the Annual Report and Financial
Statements 2022. The main risk facing the Group relates to the inflationary
pressures and weak economic environment. These are covered in detail in the
Chairman's statement.
Creightons plc
Unaudited interim financial report
for the six months ended 30 September 2022
Consolidated income statement - unaudited
Six months ended 30 September 2022 Six months ended 30 September 2021 Year ended 31 March 2022
Note £000 £000 £000
Revenue 29,676 30,005 61,157
Cost of sales (17,686) (17,201) (35,001)
Gross profit 11,990 12,804 26,156
Distribution costs (1,951) (1,662) (3,535)
Administrative expenses (9,758) (8,547) (18,256)
Operating profit 281 2,595 4,365
Exceptional items 9 (463) (221) (602)
Finance costs 6 (177) (108) (308)
(Loss) / Profit before tax (359) 2,266 3,455
Taxation 4 (26) (278) (345)
(Loss) / Profit for the period from operations attributable to the equity (385) 1,988 3,110
shareholders of the parent Company
Dividends
Note Six months ended 30 September 2022 Six months ended 30 September 2021 Year ended 31 March 2022
(Unaudited)
(Unaudited)
(Audited)
Paid in year (£000) - - 428
Paid in year (pence per share) - - 0.65p
Proposed (£000) - 98 -
Proposed (pence per share) - 0.15p -
Earnings per share
Note Six months ended 30 September 2022 Six months ended 30 September 2021 Year ended 31 March 2022
(Unaudited)
(Unaudited)
(Audited)
Basic 3 (0.55)p 3.05p 4.62p
Diluted (0.48)p 2.61p 3.98p
Consolidated statement of comprehensive income - Unaudited
Six months ended 30 September 2022 Six months ended 30 September 2021 Year ended 31 March 2022
(Unaudited)
(Unaudited)
(Audited)
£000 £000 £000
(Loss) / Profit for the period (385) 1,988 3,110
Items that may be subsequently reclassified to profit and loss:
Exchange differences on translating foreign operations (68) (39) (7)
Other comprehensive income for the period (68) (39) (7)
Total comprehensive income for the period attributable to the equity (453) 1,949 3,103
shareholders of the parent
Consolidated balance sheet - unaudited
30 September 2022 30 September 2021 31 March 2022
(Unaudited)
(Unaudited)
(Audited)
Note £000 £000 £000
Non-current assets
Goodwill 2,853 331 2,853
Other intangible assets 10,883 10,951 10,867
Property, plant and equipment 6,165 6,012 6,065
Right-of-use assets 1,107 977 1,120
Deferred tax asset - 503 -
21,008 18,774 20,905
Current assets
Inventories 12,802 13,178 12,479
Trade and other receivables 14,518 15,608 13,624
Cash and cash equivalents 765 1,013 840
28,085 29,799 26,943
Total assets 49,093 48,573 47,848
Current liabilities
Trade and other payables 11,308 12,192 10,127
Corporation tax payable - 200 -
Lease liabilities 301 249 303
Borrowings 5,136 3,669 2,663
Deferred and contingent consideration - 1,628 1,187
16,745 17,938 14,280
Net current assets 11,340 11,861 12,663
Non-current liabilities
Deferred tax liability 3,006 - 2,640
Lease liabilities 838 777 864
Borrowings 3,900 4,827 4,386
7,744 5,604 7,890
Total liabilities 24,489 23,542 22,170
Net assets 24,604 25,031 25,678
Equity
Share capital 700 675 697
Share premium account 4,498 3,886 4,427
Treasury shares 8 (576) - -
Other reserves (211) 25 (211)
Translation reserve (45) (9) 23
Retained earnings 20,238 20,454 20,742
Total equity attributable to the equity shareholders of the parent Company 24,604 25,031 25,678
Statement of changes in shareholders' equity - unaudited
Share capital Share premium account Treasury shares Other reserves Translation reserve
Retained Total
earnings equity
£000 £000 £000 £000 £000 £000 £000
At 1 April 2021 648 1,410 - 25 30 17,973 20,086
Comprehensive income for the period
Profit for the six-month period - - - - - 1,988 1,988
Exchange differences on translation of foreign operations - - - - (39) - (39)
Total comprehensive income for the six months ended 30 September 2021 - - - - (39) 1,988 1,949
Contributions by and distributions to owners
Shares issued on acquisitions 27 2,476 - - - - 2,503
Share-based payment charge - - - - - 165 165
Deferred tax through Equity - - - - - 328 328
Total contributions by and distributions to owners 27 2,476 - - - 493 2,996
At 30 September 2021 675 3,886 - 25 (9) 20,454 25,031
Comprehensive income for the period
Profit for the six-month period - - - - - 1,122 1,122
Exchange differences on translation of foreign operations - - - - 32 - 32
Total comprehensive income for the six months ended 31 March 2022 - - - - 32 1,122 1,154
Contributions by and distributions to owners
Exercise of options 22 541 - - - - 563
Purchase of own shares by EBT - - - (236) - - (236)
Share-based payment charge - - - - - 165 165
Deferred tax through Equity - - - - - (571) (571)
Dividends - - - - - (428) (428)
Total contributions by and distributions to owners 22 541 - (236) - (834) (507)
At 31 March 2022 697 4,427 - (211) 23 20,742 25,678
Comprehensive income for the period
Profit for the six-month period - - - - - (385) (385)
Exchange differences on translation of foreign operations - - - - (68) - (68)
Total comprehensive income for the six months ended 30 September 2022 - - - - (68) (385) (453)
Contributions by and distributions to owners
Exercise of options 3 71 - - - - 74
Purchase of own shares - - (576) - - (576)
Share-based payment charge - - - - - 179 179
Deferred tax through Equity - - - - - (298) (298)
Total contributions by and distributions to owners 3 71 (576) - - (119) (621)
At 30 September 2022 700 4,498 (576) (211) (45) 20,238 24,604
Consolidated cash flow statement - unaudited
Note Six months ended 30 September 2022 Six months ended 30 September 2021 Year ended 31 March 2022
(Unaudited)
(Unaudited)
(Audited)
£000 £000 £000
Profit from operations 281 2,595 4,365
Adjustments for:
Depreciation on property, plant and equipment 505 432 888
Depreciation on right of use assets 149 113 256
Amortisation of intangible assets 150 209 435
(Profit)/Loss on disposal of property, plant and equipment 8 10 (10)
Share based payment charge 179 165 330
Redundancy payments (150) - -
1,122 3,524 6,264
(Increase)/decrease in inventories (323) (3,211) (2,515)
(Increase) /decrease in trade and other receivables (779) (3,931) (1,820)
Increase/(decrease) in trade and other payables 1,182 1,894 59
Taxation paid (70) (291) (575)
Net cash from operating activities 1,132 (2,015) 1,413
Investing activities
Purchase of property, plant and equipment (605) (608) (1,106)
Purchase of right of use assets (171) - (286)
Proceeds from sale and lease back (IAS 17) - - 264
Purchase of intangible assets (166) (167) (338)
Acquisition of Brodie & Stone - (2,807) (3,507)
Acquisition of Emma Hardie 7 (1,424) (2,775) (2,775)
Exceptional costs in relation to acquisitions - (221) (343)
Net cash used in investing activities (2,366) (6,578) (8,091)
Financing activities
Proceeds on issue of shares 73 - 564
Principal paid on lease liabilities (117) (116) (240)
Interest on leases liabilities (53) (62) (117)
Interest paid on mortgage loan (41) (44) (83)
Interest paid on overdrafts and loans (83) (2) (108)
(Decrease)/increase in invoice financing facilities 2,845 1,344 1,267
Increase/(decrease) of overdraft (405) 948 495
Draw down of loan facility - 3,000 3,000
Repayment on term loan (332) - (314)
Repayment on mortgage loan facility (84) (82) (169)
Repayment of debt - Emma Hardie - (1,457) (2,201)
Repayment of debt - Brodie & Stone - (489) (463)
Dividends paid to owners of the parent - - (428)
Purchase of own shares via EBT - - (236)
Purchase of shares - EH buy back 8 (576) - -
Net cash used in financing activities 1,227 3,040 967
Net decrease in cash and cash equivalents (7) (5,553) (5,711)
Cash and cash equivalents at start of period 840 6,558 6,558
Effect of foreign exchange rate changes (68) 8 (7)
Cash and cash equivalents at end of period 765 1,013 840
Notes to the unaudited interim financial report
1. Basis of preparation
The interim financial statements for the six months ended 30 September 2021
and 30 September 2022 and for the twelve months ended 31 March 2022 do not
constitute statutory accounts for the purposes of Section 434 of the Companies
Act 2006. The Annual Report and Financial Statements for the year ended 31
March 2022 have been filed with the Registrar of Companies. The Independent
Auditors' Report on the Annual Report and Financial Statements for the year
ended 31 March 2022 was unqualified, did not draw attention to any matters by
way of emphasis, and did not contain a statement under sections 498(2) or
498(3) of the Companies Act 2006. The 30 September 2022 statements were
approved by the Board of Directors on 30 November 2022. This
unaudited interim report has not been audited or reviewed by auditors pursuant
to the Financial Reporting Council guidance on Review of Interim Financial
Information.
The condensed financial statements in this Interim Report have been prepared
in accordance with the requirements of IAS 34 'Interim Financial Reporting' as
endorsed by the UK.
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 2022, which were prepared in accordance with
International Financial Reporting Standards as endorsed by the UK.
The condensed interim financial statements for the six months ended 30
September 2022 and the comparative figures for the six months ended 30
September 2021 are unaudited. The figures for the year ended 31 March 2022
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. Significant accounting policies
Adoption of new and revised accounting standards
No new standards impacting on the Group have been adopted in its financial
statements for the year ended 31 March 2022 or the interims ended 30 September
2022.
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.
3. Earnings per share
The calculation of the basic and diluted earnings per share is based on the
following data:
Six months ended 30 September 2022 Six months ended 30 September 2021 Year ended 31 March 2022
(Unaudited)
(Unaudited)
(Audited)
£000 £000 £000
Earnings
Net profit attributable to the equity holders of the parent company (385) 1,988 3,110
Six months ended 30 September 2022 Six months ended 30 September 2021 Year ended 31 March 2022
(Unaudited)
(Unaudited)
(Audited)
Number Number Number
Number of shares
Weighted average number of ordinary shares for the purposes of basic earnings 69,832,186 65,196,505 67,372,553
per share
Effect of dilutive potential ordinary shares relating to share options 9,862,002 10,915,679 10,681,836
Weighted average number of ordinary shares for the purposes of diluted 79,694,188 76,112,184 78,054,389
earnings per share
Basic (0.55)p 3.05p 4.62p
Diluted (0.48)p 2.61p 3.98p
4. Taxation
Six months ended 30 September 2022 Six months ended 30 September 2021 Year ended 31 March 2022
(Unaudited)
(Unaudited)
(Audited)
£000 £000 £000
Current tax (43) 162 100
Deferred tax liability 69 116 245
Total 26 278 345
5. Notes to cash flow statement
Analysis of changes in net debt
6 months ended 30 September 2022 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 (405) 2,762 (127) (402) 1,828
Interest accruing - 83 41 35 159
At 30 September 2022 90 4,112 2,556 2,278 9,036
6 months ended 30 September 2021 Overdraft Invoice Financing Mortgage Loan Total
£000 £000 £000 £000 £000
At 1 April 2021 - - 2,812 - 2,812
Cash flows 948 1,818 (126) 3,000 5,640
Interest accruing - - 44 - 44
At 30 September 2021 948 1,818 2,730 3,000 8,496
12 months ended 31 March 2022 Overdraft Invoice Financing Mortgage Loan Total
£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
6. Finance costs
Six months ended 30 September 2022 Six months ended 30 September 2021 Year ended 31 March 2022
(Unaudited)
(Unaudited)
(Audited)
£000 £000 £000
Interest on bank overdrafts and loans 83 2 108
Interest on mortgage 41 44 83
Interest on lease liabilities 53 62 117
Total 177 108 308
7. Final consideration paid to the Sellers under the SPA of Emma Hardie
Limited:
Further to the sale and purchase agreement ("SPA") relating to the acquisition
of the entire share capital of Emma Hardie Limited as announced on 28 July
2021, the Group has made the final payment due to be made under the SPA to the
sellers and the Company and also entered a settlement and share buyback
agreement with the sellers in respect of certain matters related to the
acquisition.
The final payment amounted to £1,424,000. This consisted of two components.
The first of which pertained to the SPA agreement. Under the SPA, if on the
date of twelve months from completion the volume weighted average middle
market quoted price of an Ordinary Share for the last 5 Business days prior to
that date (as derived from the Daily Official List of London Stock Exchange
Plc) were to be less than £1.25, then an additional amount would be payable
to the sellers in cash equal to such difference in price multiplied by the
number of Consideration Shares issued. This equated to £1,333,664. The second
component was in relation to the adjustment payment and the deferred payment
amounting in aggregate to £90,336. No further amount is due to be paid by the
Group under the SPA.
8. Share Buy Back of the Consideration Shares
Separately, it has been agreed with the two sellers that the Company buy back
800,000 Consideration Shares from each of them for a consideration of
£288,000, being an aggregate consideration of £576,000 (together the
"Buyback"). The consideration is based on the price of 36p per ordinary
share being the on-market price at the time of the transaction. The Buyback
took place on 26 September 2022.
The Company intends the total of 1,600,000 re-purchased shares to be held as
treasury shares.
9. Exceptional items
Redundancy costs from the cessation of the second shift
To counteract the challenging market conditions borne by increase in supply
chain costs the business has undertaken a significant cost reduction
improvement with the objective of improving profitability. This includes
moving to a single shift operation in Peterborough which has been made
possible by the efficiency-driven investment in the previous year. This
unfortunately did result in redundancies which cost the business c.£0.15m.
Finalisation of Emma Hardie Limited SPA liability
As of the 31 March 2022 £1,027,500 had been accrued in anticipation of the
final consideration paid to the Sellers under the SPA of Emma Hardie Limited.
A further £84,000 had been accrued in relation to the adjustment payment and
the deferred consideration as part of the SPA of Emma Hardie Limited. As
discussed in note 7 the actual payment amounted to £1,424,000. The shortfall
in the amount provided at the end of 31 March 2022 had a P&L impact of
£312,500.
10. Related party transactions
The related party transactions that occurred in the six months ended 30
September 2022 are not materially different in size or nature to those
reported in the Company's Annual Report for the year ended 31 March 2022.
11. 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.
For more information:
Nicholas O'Shea, Director, Creightons
plc 01733 281000
Roland Cornish, Beaumont Cornish Limited 0207
628 3396
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