Creightons Plc
Annual report
For the year ended 31 March 2013
Registered Number 1227964
0
Creightons Plc
Annual report
For the year ended 31 March 2013
Contents
Directors and advisers
Chairman’s statement
Corporate governance report
Directors’ report
Directors’ remuneration report
Directors’ responsibility statement
Independent auditor’s report to the members of Creightons plc
Consolidated income statement
Consolidated statement of comprehensive income
Company statement of comprehensive income
Consolidated balance sheet
Company balance sheet
Consolidated statement of changes in equity
Company statement of changes in equity
Consolidated cash flow statement
Company cash flow statement
Notes to the financial statements
2
3
5
7
12
16
17
19
19
19
20
21
22
22
23
23
24
1
Creightons Plc
Annual report
For the year ended 31 March 2013
Directors and advisers
Directors
William O McIlroy
Bernard JM Johnson
William T Glencross
Mary T Carney
Nicholas DJ O’Shea
Executive Chairman and Chief Executive
Managing Director
Non-executive Director
Non-executive Director
Non-executive Director
Registered Office and number
Company Secretary
1210 Lincoln Road
Peterborough
PE4 6ND
Registered in England & Wales No 1227964
Nicholas DJ O’Shea, BSc ACMA CGMA
Auditor
Chantrey Vellacott DFK LLP
Russell Square House
10-12 Russell Square
London
WC1B 5LF
Bankers
HSBC Bank Plc
Cathedral Square
Peterborough
PE1 1XL
Financial Advisers
Cairn Financial Advisers LLP
61 Cheapside
London
EC2V 6AX
Registrars
Capita Registrars Limited
Northern House
Woodsome Park
Fenay Bridge
Huddersfield
HD8 0GA
Solicitors
Coole & Haddock
5 The Steyne
Worthing
West Sussex
BN11 3DT
2
Creightons Plc
Annual report
For the year ended 31 March 2013
Chairman’s statement
I am pleased to report that in 2012/13 we achieved another year of growth and consolidation, and that the
consolidated Group pre-tax profit for the year ended 31 March 2013 was £302,000 (2012: £223,000). This continued
improvement in profits has been achieved despite the on-going tough trading environment with customers seeking
improving value to offer the consumer. In particular our private label ranges have faced increased price and
promotion pressure from the big brands which has adversely affected sales volumes.
To combat the effects of lower underlying demand we have successfully generated sales growth by introducing new
customers and developing new product ranges. The new business generated over the past couple of years is more
evenly spread through the year, virtually eliminating the seasonality that characterised the business in previous years.
Margins remain under pressure with customers seeking to recover lost margin. We will continue our programme of
managing costs and our product offering in order to be in a position to respond to customer pressure whilst
maintaining our own profitability.
Financial results
Group sales this year at £17,326,000 are £993,000 (6%) higher than last year (2012: £16,333,000), continuing the
upward growth in sales volumes we have been recording over the past three years. This year’s growth has come from
a combination of our own UK branded ranges, private label and contract manufacture, representing all three strands of
our business. Much of this growth has been driven by new ranges and new customer listings for existing ranges with
limited growth from on-going sales with existing customers.
Changes in product mix, particularly relating to new ranges, together with improved purchasing and production
efficiencies have resulted in an increased gross margin percentage of 42.8%, an increase of 0.7% on last year (2012:-
42.1%). Administration costs, which include product research and development as well as sales promotion and
product support, have risen as we invest in support and promotional activity to drive new sales opportunities.
Profit before tax and interest for the year of £333,000 (2012: £257,000) represents an increase of 30% (with an
increase of 99% compared to 2011). Lower average borrowings than in the previous period resulted in slightly lower
interest costs of £31,000 (2012: £34,000).
Group profit after tax of £302,000 (2012: £223,000) therefore shows a further improved performance especially given
the trading environment during the past year. Diluted earnings per share rose from 0.37p in 2012 to 0.51p for 2013
as a result of the increased earnings.
Net borrowings (bank overdraft and loans less cash at bank and in hand) at the year-end have increased by £142,000
to £874,000 (2012: £732,000). The main reason for the increase in borrowing is the higher working capital
requirement at the end of the year. Inventories have increased as we have invested in new ranges and continued our
drive to support customers with 100% product availability.
Current year developments
The Group continues to develop and strengthen its branded portfolio. This is being achieved through developing our
own brand offering and developing relationships with the owners of existing brands, often through investing in existing
brands when opportunities arise.
We are continuing to work hard to manage cost pressure through a combination of measures including managing
customer prices, product re-engineering and enhancing our product portfolio with higher margin products. We have
continued to develop new sales opportunities to compensate for the decline in the previously significant Christmas gifts
part of the business.
As we expected, our main private label customers have responded to the pressures in the current economic climate
with value strategies resulting in sales opportunities which we have exploited through lower priced products which
have offset lower sales levels on higher priced products. Whilst we had anticipated that this would adversely affect
margins, we have managed to counter this effect through a mix of continued cost control, increasing our branded
product sales and margins and ensuring we seek value for money in product support, development and administration
expenditure. We will continue to manage our overhead cost base and working capital requirements to ensure they are
aligned with the anticipated sales levels of the Group whilst retaining the skills necessary to meet growth opportunities
as they arise. We are undertaking a major review of our planning and purchasing procedures in order to continue to
improve our stock turn whilst maintaining customer service levels and reduce investment in working capital.
As in previous years, your Board is continuing to seek opportunities to acquire brands or companies that would
complement the existing businesses by offering synergies in manufacturing, sourcing and marketing due to similarities
in product alignment, sourcing or outlets.
3
Creightons Plc
Annual report
For the year ended 31 March 2013
Chairman’s statement
The board has considered whether to declare a dividend this year, but although we have seen a further increase in
annual profits, it feels that it continues to be more appropriate to retain profits to help fund the continued investment
in growth than to reduce available funds through dividend distribution.
I would like to take this opportunity to thank each and every one of the Group’s employees for the hard work and
effort they have put in over what has been a challenging year.
William McIlroy
Chairman, 20 June 2013
4
Creightons Plc
Annual report
For the year ended 31 March 2013
Corporate governance report
Compliance
The Listing Rules of the FCA require listed companies to disclose how they have applied the principles set out in The
UK Corporate Governance Code (the Code) issued by the Financial Reporting Council and whether or not they have
complied with its provisions. The Board is committed to the principles set out in the Code but judges that some of the
processes are disproportionate or less relevant to the Company, given the relative small size and minimal complexity
of the business.
The Company has not complied with the Code since its issue as regards the following:
No formal training programme is in place for non-executive directors.
The role of the Chairman and Chief Executive is combined.
The Board
Details of the all directors are set out below:
William McIlroy
Bernard Johnson
Nicholas O’Shea
Mary Carney
William Glencross
Executive Chairman and Chief Executive
Managing Director
Company Secretary and Independent non-executive Director
Senior Independent non-executive Director
Independent non-executive Director
The Board’s principal task is to set the Group’s strategy, which is devised to deliver optimum value for shareholders.
Other matters reserved for decision by the full Board include approval of the annual report, authorisation of all
acquisitions and disposals, sanction of all major capital expenditure, the raising of equity or debt finance and investor
relations.
The Board does not operate a formal process of performance evaluation; however the Chairman regularly reviews the
performance of all members of the Board.
Both William McIlroy and Bernard Johnson have continued with their roles with their management companies and Mr
McIlroy has continued with his role with Oratorio Developments Ltd. There has been no change in these commitments
over the past year.
The directors have met as a full board on 7 occasions during the year, including meetings by telephone. The
attendance at meetings held during the year to 31 March 2013 for each of the Directors is as follows:
Director
Board
meetings
Remuneration
Committee
Audit
Committee
William McIlroy
Bernard Johnson
Nicholas O’Shea
Mary Carney
William Glencross
7
7
7
6
6
-
-
1
1
-
-
-
1
1
-
Procedures are in place to enable the directors to take appropriate independent professional advice at the Company’s
expense if that is necessary for the furtherance of their duties. All directors have access to the advice and services of
the Company Secretary.
The Articles of Association require one third of the Board to retire by rotation each year and for those directors
appointed during the year to stand for re-election at the following Annual General Meeting.
Nomination Committee
The Board as a whole has undertaken the duties of the Nomination Committee. The Committee is responsible for
proposing candidates for the Board having regard to the balance and structure of the Board. There were no
appointments made during the year.
Remuneration Committee
The Remuneration Committee consisted of Mary Carney and Nicholas O’Shea. In determining policy for the executive
directors, the Committee has given due consideration to the Code. The remuneration packages are designed to
attract, retain and motivate executive directors of the required calibre. The Committee reviews the appropriateness of
all aspects of directors’ pay and benefits by taking into account the remuneration packages of similar businesses.
5
Creightons Plc
Annual report
For the year ended 31 March 2013
Corporate governance report
Directors’ remuneration
The executive directors are salaried in their capacity as directors. Their management and operational services are
provided via management companies on a basic fee basis. Additional fees are contingent on the levels of pre-tax
profits.
In addition the executive directors participate in a share option scheme. The Board believes that in accordance with
the best practice provisions, this approach aligns the interests of shareholders and executive directors. The Company
has a policy that share options may not be granted to non-executive directors.
Full details of directors’ remuneration and share options are noted in the Directors’ Remuneration Report on page 12
Details of the directors’ shareholdings are shown in the Directors’ Report on page 7.
The directors are responsible for the Group’s systems of internal control and for reviewing its effectiveness whilst the
role of management is to implement Board policies on risk management and control. It should be recognised that the
Group’s system of internal control is designed to manage rather than eliminate risk of failure to achieve the Group’s
business objectives and can only provide reasonable and not absolute assurance against material miss-statement or
loss.
The Board has established a process for managing the significant risks faced by the Group. This on-going process is
reviewed regularly by the Board and accords with the internal control guidance issued by the Turnbull Committee.
The key procedures designed to provide effective internal controls are:
A clearly defined organisational structure with the appropriate delegation of authority to operational
management.
A comprehensive planning and budgeting process which requires the Chief Executive’s approval.
Management information systems to monitor financial and other operating statistics.
Aspects of internal control are regularly reviewed and where circumstances dictate new procedures are
instigated.
The Group does not have an internal audit function. However the Board periodically reviews the need for such a
function. The current conclusion is that this is not necessary given the scale and complexity of the Group’s activities.
The Board has reviewed the effectiveness of the internal controls in operation and this process will continue.
Audit Committee
The Audit Committee consists of Mary Carney and Nicholas O’Shea. Its role is to:
Monitor the integrity of the financial statements of the Group and any formal announcements relating to the
group’s financial performance and reviewing significant financial reporting judgements contained therein;
Review the Group’s internal financial controls and the Group’s internal control and risk management
systems;
Review whether it is appropriate to introduce an internal audit function;
Make recommendations to the Board, for a resolution to be put to the shareholders for their approval in
general meeting, on the appointment of the external auditor and the approval of the remuneration and
terms of engagement of the external auditor;
Review and monitor the external auditors independence and objectivity and the effectiveness of the audit
process, taking into consideration relevant UK professional and regulatory requirements;
Develop and implement policy on the engagement of the external auditor to supply non-audit services,
taking into account relevant guidance regarding provision of non-audit services by the external audit firm;
To advise the Board on whether the annual report is fair, balanced and understandable and provides
information necessary for the users to assess the Group’s performance, business model and strategy;
To report to the Board on how it has discharged its responsibility.
The terms of reference of the Audit Committee are not set out in writing.
The Group receives non-audit taxation advice from the Group’s auditor. The Audit Committee assesses the
independence of the external auditor by means of an internal review of the relationship with the auditor.
Shareholder Relations
The objective of the Board is to create increased shareholder value by growing the business in a way that delivers
sustainable improvements in earnings over the medium to long term.
The Board considers the Annual General Meeting as an important opportunity to communicate with private investors in
particular. Directors make themselves available to shareholders at the Annual General Meeting and on an ad hoc
basis, subject to normal disclosure rules.
6
Creightons Plc
Annual report
For the year ended 31 March 2013
Directors’ report
The directors present their report on the affairs of the Group, together with the financial statements for the year ended
31 March 2013.
Principal activities
The principal activity of the Group continued to be the creation and manufacture of toiletries and fragrances. A review
of the operations of the Group during the year and current developments are referred to in the Chairman's statement
on page 3.
The principal subsidiary undertakings affecting the results of the Group in the year are detailed in note 13 to the
financial statements.
Business Review
History
Creightons plc was registered in 1975 to continue the business of manufacturing and marketing toiletries made
exclusively from natural products first established in 1953. It created a number of proprietary brands, although it
focused mainly on private label and contract manufacturing. It was first listed on the London Stock Exchange in 1987.
By 2003, it was seeking to expand both organically and by acquisition, and launched several of its new range of
brands, including The Real Shaving Company. In March 2003, it purchased the mainly private label and contract filling
business of Potter & Moore out of administration. Since then, the Group has consolidated its manufacturing at the
more modern and efficient Potter & Moore Innovations plant in Peterborough.
By March 2006, the Group had closed and disposed of its operations in Storrington, transferring Creightons’
manufacturing to the Potter & Moore Innovations factory in Peterborough. Part of the Storrington site originally in the
Company’s ownership had been disposed of several years previously, the remaining manufacturing and office facilities
were disposed of in 2005. In March 2007, the Group established a sales and distribution operation in New York in
order to market the Group’s branded products in North America.
The Group consolidated its on-going manufacturing at the Potter & Moore Innovations factory in Peterborough some
years ago, and continues to spend modest amounts of capital on improving the filling lines and mixing facilities to
improve efficiency and flexibility to handle a wider range of products.
Having previously experienced a number of years with major losses, the years since the acquisition of Potter & Moore
Innovations have seen Creightons plc return to sustained and gradually increasing profitability.
Operating Environment
The toiletries sector encompasses products ranging from haircare to footcare, excluding medical and therapeutical
products. There has been a significant fragmentation of the individual markets in the sector in recent years; with for
example shampoos and conditioners for different coloured hair and different preparations addressing various perceived
consumer needs such as frizziness.
Consumers purchase these through a range of retail outlets, from high quality department stores to low-cost
discounters, with the high street supermarkets and drug stores somewhere in the middle. The majority of the Group’s
production is sold into the UK and North America.
Producers and manufacturers providing products in this market place range from major multinational corporations to
small businesses, such as Creightons. Also, production and manufacturing in the toiletries market is now world-wide,
with many competitors sourcing a significant proportion of their products from outside the UK or EU, either due to
greater efficiency of scale or due to a lower cost base, although the cost advantage some Far Eastern producers
enjoyed previously has been deteriorating in the past few years.
The Group does not operate in a ‘regulated’ market in the sense that pharmaceutical product manufacturers do, but
there has been increasing regulation covering the use, handling and transportation of potentially hazardous
substances, of consumer protection, as well as increasing restrictions and regulations on waste and disposal of
potentially environmentally hazardous products and packaging materials.
Objectives
The principal objectives of the business are to supply high quality personal care products to its customers, meeting
high levels of product quality and consumer satisfaction. Clearly, a critical goal for the Board over the past few years
has been to maintain the Group’s profitability in the difficult trading environment created by the recession. The main
private label manufacturing business operates in a market which is comparatively low-margin, and susceptible to
changes in consumer purchasing, loss of major contracts and increases in primary raw material prices, especially for
oil-based products. The unprecedented economic situation of the last four years has made trading conditions far more
challenging than at any time in the past decade. In the short term, until the economy recovers, with consumer and
customer purchasing and confidence returning to historic levels, the Board has made sustaining profitability a key
objective.
7
Creightons Plc
Annual report
For the year ended 31 March 2013
Directors’ report
Strategy
The Board’s strategy to achieve its objectives and goals whilst guarding against commercial risks has been to ensure
high quality and efficiency in all manufactured and bought-in products, to continuously develop and enhance its
product ranges, both branded and for its private label customers, to seek to source its raw materials as cost-effectively
as possible, and to ensure its manufacturing processes are constantly being improved both in terms of quality and
efficiency. The Board is particularly aware that over reliance upon a small number of contract customers could put the
business into jeopardy, and so is seeking to develop the branded business, whilst of course recognising the continuing
importance of, and still looking after and expanding, the core private label and contract manufacturing side.
Recent Developments
The Group has broadly organised its operations into three business streams:
private label business which focuses on high quality private label products for major High Street retailers and
supermarket chains;
contract manufacturing business, which develops and manufactures products on behalf of third party brand
owners’ and
branded sales business which markets, sells and distributes our branded products. This business includes
the North American operation which was established in 2007.
All of these business streams use the central creative, research and development, sourcing, manufacturing and
distribution operations based in Peterborough and each is pro-active in the development of new sales and product
development opportunities for their respective customers.
Over the past few years, the Group has invested in a number of brands along with the existing brand owners. The
brands operate as brands within the existing branded products business stream. We will continue exploring further
opportunities of this nature, which enable the Group to benefit from existing, established or developed brands, and the
brand owners to benefit from the Group’s wide range of trade outlets and our low-cost quality manufacturing and
sourcing strengths.
Current Operations
The Group therefore operates through the three main business streams described above, utilising its extensive brand
management, product development and manufacturing capabilities encompassing toiletries, skincare, hair care and
fragrances. The Group has extended its research and development and sales expertise to maximise the opportunities
afforded by these capabilities. Some of this work has been capitalised and is being amortised over the estimated life of
the products in accordance with IFRS requirements.
The Group has continued its aggressive development programme of new ranges of branded toiletries, hair care and
skincare products and continues to extend those already successfully launched such as The Real Shave Company, St
James’s and Natural Grooming.
Management and monitoring of performance
Your directors are mindful that although Creightons plc is a UK Listing Authority listed company, in size it is really only
medium sized and therefore many of the ‘big business’ features common in listed companies are inappropriate. This
year’s profitable result has been achieved only as a result of considerable hard work over several years in focusing
management, staff and production workers’ efforts on more productive product ranges, improving production and
stock holding efficiencies, ensuring high levels of customer service and eliminating overhead inefficiencies.
Consequently, they have continued the ‘minimalist’ approach to micro-management of the business that would
otherwise add significantly to costs whilst delivering at best minimal added benefits to shareholders.
The Group does not operate a formal personal performance appraisal process, but individual managers and supervisors
undertake continuous performance monitoring and appraisal for their subordinates, and routinely report the results of
these to their own managers. Part of this monitoring and appraisal includes assessment of training required for
personal development as well as succession planning within the Group, and all employees are encouraged to
undertake appropriate training to develop their skills and enhance their career opportunities. The Group therefore has
no formal personnel or other non-financial Key Performance Indicators (KPIs) or targets, and each position that
becomes vacant is reviewed for necessity and criticality before authorisation is given for it to be filled through either
recruitment or promotion. The Group has a formal Staff Handbook which covers all major aspects of staff discipline
and grievance procedure, Health and Safety regulations, and the Group’s non-discrimination policy. There was one
incident involving employees or contractors on the Group’s sites which was required to be reported to the Health &
Safety Executive during the year (2012:0)
The Group is mindful of its wider responsibilities as a significant local employer and of the contribution it makes to the
local economy both where it and its suppliers are based. The Group has a formally adopted Environmental Policy
which requires management to work closely with the local environmental protection authorities and agencies, and as a
minimum to meet all environmental legislation.
The Board regularly monitors performance against several key financial indicators, including gross margin, production
efficiency, overhead cost control, cash / borrowing and stocking levels. Performance is monitored monthly against both
budget and prior year.
8
Creightons Plc
Annual report
For the year ended 31 March 2013
Directors’ report
Financial Key Performance Indicators
Sales
Gross Margin as a % of Revenue
Operating profit
Operating profit - as a % of Revenue
Return on capital employed
Bank overdraft and loans less cash in hand
Gearing (including obligations under finance
leases)
Risks
2012/13
£17,326,000
42.8%
£333,000
1.9%
6.9%
£874,000
20%
2011/12
£16,333,000
42.1%
£257,000
1.6%
5.5%
£732,000
20%
Movement
Increase by 6.1%
Increase of 0.7%
Increase by 30%
Increase of 0.3%
Increased of 1.4%
Increased by 19.4%
Unchanged
The Board regularly monitors exposure to key risks, such as those related to production efficiencies, the cash position,
competitive position relating to sales, both related to contract and private label manufactured products and branded
lines. It has also taken account of the economic situation over the past 12 months, and the impact that has had on
costs and consumer purchases.
It also monitors those 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, or failure to meet environmental protection
standards or any of the areas of regulation mentioned above. Further details of financial risks are set out in Note 17.
Capital structure, cash flow and liquidity
Having achieved profitability after a number of years of substantial losses, and repaid loans used at the time of the
purchase of the Potter & Moore business, the Group’s cash flow has improved substantially since the Potter and Moore
acquisition in 2003. The business is funded using retained earnings and invoice discounting, a bank facility secured
against its assets. Further details are set out in Notes 19 - 22.
Financial
The profit for the year is shown in the consolidated income statement on page 19. The directors do not recommend
the payment of a dividend (2012: nil).
Research and development
The Group has a policy of continual product development. The costs associated with the development of ranges where
the Group can identify probable future economic benefit are treated as intangible assets and are amortised over the
period over which those economic benefits are expected to arise. Further details are set out on note 11.
Directors
The directors who held office during the year were as follows:
William O McIlroy (Executive Chairman and Chief Executive)
Mary T Carney (Non-executive)
Nicholas DJ O’Shea (Non-executive)
Bernard JM Johnson (Managing Director)
William T Glencross (Non-executive)
The directors retiring by rotation are William McIlroy and Nicholas O’Shea.
Directors' interests
The directors who held office at 31 March 2013 had the following beneficial interests in the shares of the Company: -
31 March 2013
1p ordinary shares
1 April 2012
1p ordinary shares
Director
Number of
shares
Options
Number of
shares
Options
William O McIlroy
Bernard JM Johnson
Nicholas DJ O’Shea
William T Glencross
14,916,000
3,484,569
31,000
67,500
1,303,275
1,303,275
-
-
14,916,000
3,484,569
31,000
67,500
1,303,275
1,303,275
-
-
9
Creightons Plc
Annual report
For the year ended 31 March 2013
Directors’ report
Mr McIlroy’s holding noted above includes 14,450,000 (2012: 14,450,000) shares held in the name of Oratorio
Developments Ltd, a private company of which Mr McIlroy is a director and controlling shareholder.
There have been no changes between 31 March 2013 and 01 July 2013.
The share options detailed above as at 31 March 2013 were granted on 18 February 2011 to Messrs McIlroy and
Johnson in accordance with the rules of the share option scheme. The Company does not make grants of share options
to non-executive directors. See note 23 for further detail.
Directors’ insurance
During the year the Company has purchased insurance cover for the directors against liabilities arising in relation to
the Group, which remained in force at the end of this report.
Substantial interests
At 01 July 2013 the following substantial interests, being 3% or more of the ordinary shares in issue, had been notified
to the Company:
Shareholder
Number of shares
% held
Mr WO McIlroy (including Oratorio Developments Ltd)
Mr T Amies
Mr D Abell
Mr BJM Johnson
Mr B Dale
Share structure and rights are included in Note 21.
Going concern
14,916,000
4,360,000
3,807,150
3,484,569
2,451,740
27.38%
8.00%
6.99%
6.40%
4.50%
The Directors are pleased to report that the Group has significant unused borrowing facilities, continues to meet its
debt obligations and expects to operate comfortably within its available borrowing facilities 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. For
this reason the Directors continue to adopt the going concern basis in preparing the financial statements.
Creditor payment policy
The Group does not follow any code or standard on payment practice as it is the Group’s policy to settle creditors
promptly on mutually agreed terms. The number of days’ billings from suppliers outstanding at 31 March 2013 was 51
days (2012: 47 days).
Resolutions to be proposed at the Annual General Meeting
The Board will be proposing the following resolutions at the AGM. The detailed wording of the resolutions is contained
within the notice of the AGM. They have the support of all Board members, who will vote in favour of them with all
their own shareholdings and those under their control, and with any discretionary proxies granted to them personally
or in the capacity of chairman of the meeting.
1. To receive and consider the Company's financial statements and reports of the directors and auditor for the
year ended 31 March 2013.
2. To receive and approve the directors’ remuneration report for the year ended 31 March 2013.
3. To reappoint Mr WO McIlroy retiring by rotation under the provisions of Article 103 of the Articles of
Association, as a director of the Company.
4. To reappoint Mr NDJ O’Shea retiring by rotation under the provisions of Article 103 of the Articles of
Association, as a director of the Company.
5. To reappoint Chantrey Vellacott DFK LLP as auditor and to authorise the directors to determine their
remuneration.
6. To give authority to the directors to allot shares pursuant to Section 551 of the Companies Act 2006.
This authorises the Company for a period of up to 15 months, or until the next AGM if sooner, to allot 1p
Ordinary Shares up to an aggregate nominal value of £181,596.25, being a further one third of the
Company’s present issued share capital as a rights issue.
10
Creightons Plc
Annual report
For the year ended 31 March 2013
Directors’ report
7. As a special resolution, to grant a limited disapplication of the statutory pre-emption rights contained in
Section 570 of the Companies Act 2006. This authorises the Company for a period of up to 15 months, or
until the next AGM if sooner, to allot 1p Ordinary Shares up to an aggregate nominal value of £27,239.44,
being 5% of the Company’s present issued share capital, without first offering them as a rights issue to
existing shareholders.
8. As a special resolution, to give a limited power to the Company to purchase its own shares. This authorises
the Company for a period of up to 15 months, or until the next AGM if sooner, to purchase 1p Ordinary
Shares up to a maximum aggregate nominal value of £27,239.44, being 5% of the Company's present issued
share capital, at a no more than 105% of the average of the middle market quotations for Ordinary Shares
for the five business days prior to the date of purchase and the minimum price of 1p.
Directors standing for re-election
William McIlroy, who has served as the Company’s Chairman and Chief Executive for 13 years has extensive
knowledge and experience of the personal care industry.
Nicholas O’Shea has been the company secretary for nearly 16 years and a director since 2001. A CIMA qualified
management accountant, he is finance director with several privately-owned SMEs.
Directors confirmations
In the case of each of the persons who are acting as directors of the Company at the date this report was approved:
so far as each of the directors is aware, there is no relevant audit information (as defined in the Companies
Act 2006) of which the Company’s auditor is not aware; and
each of the directors has taken all the steps that he/she ought to have taken as a director to make
himself/herself aware of any relevant audit information (as defined) and to establish that the company’s
auditor is aware of that information.
Auditor
Chantrey Vellacott DFK LLP have expressed their willingness to continue in office as auditor and a resolution to
reappoint them will be proposed at the forthcoming Annual General Meeting.
By order of the Board
Nicholas O'Shea
Company Secretary
04 July 2013
1210 Lincoln Road
Peterborough PE4 6ND
11
Creightons Plc
Annual report
For the year ended 31 March 2013
Directors’ remuneration report
This report has been prepared in accordance with Schedule 8 to the Accounting Regulations under the Companies Act
2006. A resolution to approve this report will be proposed at the Annual General Meeting of the company at which the
annual accounts for the year are approved.
The above regulations also require that the auditor shall report to the company’s members on the auditable part of the
directors’ remuneration report and state whether in their opinion that part of the directors’ remuneration report has
been properly prepared in accordance with the Accounting Regulations. This report has therefore been divided into
separate sections for audited and unaudited information.
In the opinion of the Remuneration Committee, the company has complied with Section D of the UK Corporate
Governance Code (the Code), and in forming the remuneration policy, the Committee has given full consideration to
that section of the Code.
Unaudited information
Remuneration Committee
The Board has established a Remuneration Committee to determine the remuneration of directors of the Company.
The members of the Committee during the year and the prior year were Nicholas O’Shea and Mary Carney. In
determining the directors’ remuneration the committee consulted the Executive Chairman, William McIlroy. There has
been one meeting of the Committee during the period, attended by both Ms Carney and Mr O’Shea.
Policy on directors’ remuneration
The policy of the Company on executive remuneration including that for executive directors is to reward individual
performance and motivate and retain existing executive directors so as to promote the best interests of the Company
and enhance shareholder value. The remuneration packages for executives and executive directors include a basic
annual salary, performance related bonus and a share option programme. The remuneration of non-executive
directors includes a salary or fee. The Committee have reviewed the policy for the year ahead and have concluded that
the key features of the remuneration policy remain appropriate.
In setting executive directors’ remuneration, the Committee is mindful of the pay and a condition enjoyed by other
employees. It considers revisions to their arrangements only when other employees’ pay and conditions are also
reviewed, and this is always done in the light of market conditions and overall company performance. However, the
Committee does not automatically increase the pay and conditions for directors in line with either inflation or at the
same rate that those for other employees’ may be increased.
Both executive and non-executive directors may accept appointment as directors of other companies and retain any
fees paid to them, although directors are required to notify the Company of all such appointments and may not accept
appointments which would be incompatible with their role with the Company, such as with direct competitors or major
suppliers and customers.
Salary and benefits
Executive directors’ salary and benefits packages are determined by the Committee on appointment or when
responsibilities or duties change substantially, and are reviewed annually. The last review was undertaken during the
first quarter of this year, but no changes were proposed to the executive directors’ remuneration packages. The
Committee considers that improved performance should be recognised by achievement of performance bonuses.
Directors’ performance bonus
Both executive directors’ contracts provide for performance bonuses should the Group achieve profitability, and Mr
McIlroy’s also provides for a bonus should a successful sale of the Group’s toiletries business be achieved. The profit
criterion was met in 2013, and as a consequence, provision for payment of the profit related performance bonus has
been made in the financial statements, and will be made as required by the contracts within one month of the
approval and publication of these financial statements.
The contract for Mr McIlroy’s services as a director provides for a performance bonus payment to Mr McIlroy’s
employer (Lesmac Securities Ltd) should the Group achieve profitability, on a scale of 12½ % of the pre-tax audited
profits up to £50,000, 7½% of pre-tax audited profits between £50,001 and £100,000 and 5% of pre-tax audited
profits in excess of £100,000. The contract also provides for a success bonus payment to Mr McIlroy’s employer should
the Group dispose of the toiletries business. This bonus is 10% of the proceeds of a complete disposal should the sale
price exceed £1.5m, or of a partial disposal should the sale price exceed £0.5m and be for not more than 1/3 of the
book value of the net assets of the Group so disposed.
The contract for Mr Johnson’s services as a manager provides for a performance bonus payment to Mr Johnson’s
employer (Carty Johnson Ltd) should the Group achieve profitability, on a scale of 12½ % of the pre-tax audited
profits up to £50,000, 7½% of pre-tax audited profits between £50,001 and £100,000 and 5% of pre-tax audited
profits in excess of £100,000.
12
Creightons Plc
Annual report
For the year ended 31 March 2013
Directors’ remuneration report
Executive share option scheme
The policy of the Company is to grant options to executive directors and other senior managers as an incentive to
enhance shareholder value. Those options held by members of the Board are exercisable at 2p per share, between 23
February 2014 and 22 February 2021.
Further detail of share options held by directors is given below, and of all options granted by the Company in note 23
(Share Based Payments).
Pension arrangements
The Company does not make any pension arrangements or contributions for the directors.
Benefits
William Glencross is a member of the Group’s medical scheme.
Service contracts
It is the Company’s policy that service contracts for the executive directors are for an indefinite period, terminable by
either party with a maximum period of notice of 12 months. Any payments in lieu of notice should not exceed the
director’s salary or fees for the unexpired term of the notice period. Within that policy, information relating to
individual directors is scheduled below:
Name of Director
WO McIlroy (executive contract)
WO McIlroy (director’s contract with employer)
BJM Johnson (director’s contract)
BJM Johnson (manager’s contract with employer)
MT Carney (non-executive)
NDJ O’Shea (non-executive)
WT Glencross (non-executive)
Date of service
contract
6 Feb 2003
16 Jan 2002
16 Jan 2002
16 Jan 2002
29 Nov 1999
5 Jul 2001
31 Jul 2005
Date contract
last amended
Notice period
12 months
12 months
12 months
12 months
None
None
None
20 Mar 2003
1 Jan 2002
1 Sep 2006
Non-executive directors
The fees for non-executive directors are reviewed annually and determined in the light of market practice and with
reference to the time commitment and responsibilities associated with each non-executive director’s role and
responsibilities.
Non-executives’ fees are determined within the overall aggregate limit or £40,000 authorised by the Company’s
Articles of Association. The board as a whole considers the policy and structure for the non-executive directors’ fees on
the recommendation of the Chairman and Chief Executive. The non-executive directors do not participate in
discussions on their specific levels of remuneration.
Non-executive directors may not be granted share options nor participate in any performance bonus, and are not
eligible for pension contributions. The fees paid for non-executive directors consist of a flat annual fee based on the
involvement each is anticipated to be required to commit to the Group, and both the time commitments and fee basis
are reviewed annually. Any additional time commitments over these are paid on a pro rata per diem basis.
13
Creightons Plc
Annual report
For the year ended 31 March 2013
Directors’ remuneration report
Performance graph
The following graph shows the Company’s performance, measured by total shareholder return, compared with the
FTSE All-Share index, which the directors have always considered the most suitable comparator given the small
number of quoted companies of a similar size in the Company’s sector and the typical portfolio style of management
for most investors, meaning that investments in the Company would be compared against investment portfolios based
on FTSE All-Share index performance.
Creightons Plc - Total Shareholder Return compared to FTSE All-Share Index
4.00
3.50
3.00
p
/
2.50
e
c
i
r
P
e
r
a
h
S
c
P
s
n
o
t
h
g
e
r
C
l
i
2.00
1.50
1.00
0.50
0.00
5000
4500
4000
3500
3000
2500
2000
1500
1000
500
0
x
e
d
n
I
e
r
a
h
S
l
l
A
E
S
T
F
31-Mar-09
31-Mar-10
31-Mar-11
31-Mar-12
31-Mar-13
Creightons Plc Share price - pence
FTSE All Share Index
The market price at 31 March 2013 was 3.375p.
Audited Information
Directors’ emoluments
Note
Salaries/
Fees
£000
Bonus
Benefits
£000
£000
Total
2013
£000
Total
2012
£000
WO McIlroy
MT Carney
BJM Johnson
NDJ O’Shea
W T Glencross
Total
1
2
3
-
8
88
12
12
120
20
-
20
-
-
40
-
-
-
-
1
1
20
8
108
12
13
161
16
8
104
15
13
156
Note
1
2
3
All payments are made to Mr McIlroy’s service company, Lesmac Securities Ltd.
Mr Johnson earns a salary of £10,000 per annum with all other payments made to his service company, Carty
Johnson Limited.
All payments are made to Mr O’Shea’s employer Saxon Coast Consulting Limited.
All other directors’ remuneration is paid direct to the director.
14
Creightons Plc
Annual report
For the year ended 31 March 2013
Directors’ remuneration report
Share options
As at 31 March 2013 and 2012
Number of
share
Exercise
price
Date from which
exercisable
Expiry Date
WO McIlroy
BJM Johnson
1,303,275 2.0p
1,303,275 2.0p
23 February 2014
23 February 2014
22 February 2021
22 February 2021
All share options have performance criteria which require the share price to have achieved and remained for a period
of not less than three consecutive trading days at a premium of at least one third over the share price at the time of
grant before they become exercisable.
Pension entitlements
No pension contributions are made in respect of directors.
Approval
The Directors’ remuneration report was approved by the Board of Directors on 04 July 2013 and signed on its behalf
by
Nicholas O’Shea
Company Secretary
Remuneration Committee
15
Creightons Plc
Annual report
For the year ended 31 March 2013
Directors’ responsibility statement
The directors are responsible for preparing the Annual Report and the Financial Statements. The directors are required
to prepare financial statements for the group in accordance with International Financial Reporting Standards (IFRS) as
adopted by the European Union and have also elected to prepare financial statements for the company in accordance
with IFRS. Company law requires the directors to prepare such financial statements in accordance with IFRS, the
Companies Act 2006 and Article 4 of the IAS Regulation. 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
for that period.
International Accounting Standard 1 requires that the financial statements present fairly for each financial year the
Company’s financial position, financial performance and cash flows. This requires the faithful representation of the
effects of transactions, other events and conditions in accordance with the definitions and recognition criteria for
assets, liabilities, income and expenses set out in the International Accounting Standard Board’s Framework for the
Preparation and Presentation of Financial Statements’. In virtually all circumstances, a fair presentation will be
achieved by compliance with all applicable International Financial Reporting Standards. The directors are also required
to:
properly select then apply accounting policies;
present information, including accounting policies, in a manner that provides relevant, reliable, comparable
and understandable information;
provide additional disclosure when compliance with the specific requirements in IFRS is insufficient to enable
users to understand the impact of particular transactions, other events and conditions on the Group’s
financial position and financial performance; and
make an assessment of the company’s ability to continue as a going concern
The directors are responsible for maintaining proper accounting records that are sufficient to show and explain the
Company’s transactions and disclose with reasonable accuracy at any time the financial position of the company and
enable them to ensure that its financial statements comply with the Companies Act 2006. They are also responsible
for safeguarding the assets of the Company and hence for taking such steps as are reasonably open to them to
safeguard the assets of the Group and to prevent and detect fraud and other irregularities.
Under applicable law and regulations, the directors are also responsible for preparing a Directors’ Report, Directors’
Remuneration Report and a Corporate Governance Statement that comply with that law and those regulations.
The directors are responsible for the maintenance and integrity of the corporate and financial information included on
the Company’s website.
Legislation in the United Kingdom governing the preparation and dissemination of financial statements may differ from
legislation in other jurisdictions.
Directors’ responsibility statement pursuant to DTR4
Each of the directors confirms to the best of their knowledge that:
The Group and Company financial statements in this report have been prepared in accordance with
International Financial Reporting Standards (IFRS) as adopted by the EU, IFRIC interpretations, Companies
Act 2006 applicable to companies reporting under IFRS and give a true and fair view of the assets, liabilities,
financial position and profit or loss of the issuer and the undertakings included in the consolidation; and
The contents of this report include a fair review of the development and performance of the business and the
position of the Company and the Group taken as a whole, together with a description of the principal risks
and uncertainties that they face.
Approval
The Directors’ Responsibility Statement was approved by the Board of Directors on 04 July 2013 and signed on its
behalf by
Nicholas O’Shea
Company Secretary
16
Creightons Plc
Annual report
For the year ended 31 March 2013
INDEPENDENT AUDITOR'S REPORT TO THE MEMBERS OF CREIGHTONS PLC
We have audited the financial statements of Creightons Plc for the year ended 31 March 2013 which comprise the
consolidated income statement, the consolidated and parent company statement of comprehensive income, the
consolidated and parent company balance sheets, the consolidated and parent company statements of changes in
equity, the consolidated and parent company cash flow statements and the related notes. The financial reporting
framework that has been applied in their preparation is applicable law and International Financial Reporting Standards
(IFRS) as adopted by the European Union and as regards the parent company financial statements, as applied in
accordance with the provisions of the Companies Act 2006.
This report is made solely to the Company’s members, as a body, in accordance with Chapter 3 of Part 16 of the
Companies Act 2006. Our audit work has been undertaken so that we might state to the Company’s members those
matters we are required to state to them in an auditor’s report and for no other purpose. To the fullest extent
permitted by law, we do not accept or assume responsibility to anyone other than the Company and the Company’s
members as a body, for our audit work, for this report, or for the opinions we have formed.
Respective responsibilities of directors and auditor
As explained more fully in the Directors' Responsibilities Statement, the directors are responsible for the preparation of
the financial statements and for being satisfied that they give a true and fair view. Our responsibility is to audit and
express an opinion on the financial statements in accordance with applicable law and International Standards on
Auditing (UK and Ireland). Those standards require us to comply with the Auditing Practices Board's Ethical Standards
for Auditors.
Scope of the audit of the financial statements
An audit involves obtaining evidence about the amounts and disclosures in the financial statements sufficient to give
reasonable assurance that the financial statements are free from material misstatement, whether caused by fraud or
error. This includes an assessment of: whether the accounting policies are appropriate to the Group's and the parent
company's circumstances and have been consistently applied and adequately disclosed; the reasonableness of
significant accounting estimates made by the directors; and the overall presentation of the financial statements.
In addition, we read all the financial and non-financial information in the Annual Report to identify material
inconsistencies with the audited financial statements. If we become aware of any apparent material misstatements or
inconstancies we consider the implications in our report.
Opinion on financial statements
In our opinion:
the financial statements give a true and fair view of the state of the Group's and of the parent company's
affairs as at 31 March 2013 and of the Group's profit for the year then ended;
the Group financial statements have been properly prepared in accordance with IFRS as adopted by the
European Union;
the parent company financial statements have been properly prepared in accordance with IFRS as adopted by
the European Union and as applied in accordance with the provisions of the Companies Act 2006; and
the financial statements have been prepared in accordance with the requirements of the Companies Act 2006
and, as regards the Group financial statements, Article 4 of the IAS Regulation.
Opinion on other matters prescribed by the Companies Act 2006
In our opinion:
the part of the Directors' Remuneration Report to be audited has been properly prepared in accordance with
the Companies Act 2006; and
the information given in the Directors' Report for the financial year for which the financial statements are
prepared is consistent with the financial statements.
17
Creightons Plc
Annual report
For the year ended 31 March 2013
Matters on which we are required to report by exception
We have nothing to report in respect of the following where the Companies Act 2006 requires us to report to you if, in
our opinion:
adequate accounting records have not been kept by the parent company, or returns adequate for our audit
have not been received from branches not visited by us; or
the parent company financial statements and the part of the directors' remuneration report to be audited are
not in agreement with the accounting records and returns; or
certain disclosures of directors' remuneration specified by law are not made; or
we have not received all the information and explanations we require for our audit.
Under the Listing Rules we are required to review:
the directors' statement set out on page 10 in relation to going concern; and
the part of the Corporate Governance Statement relating to the company's compliance with the nine
provisions of the UK Corporate Governance Code specified for our review.
certain elements of the report to the shareholders by the Board on directors’ remuneration.
DAVID JAMES (Senior Statutory Auditor)
for and on behalf of CHANTREY VELLACOTT DFK LLP
Chartered Accountants and Statutory Auditor
London
04 July 2013
18
Creightons Plc
Annual report
For the year ended 31 March 2013
Consolidated income statement
Year ended 31
March
2013
£000
Year ended 31
March
2012
£000
17,326
(9,902)
7,424
(763)
(6,328)
333
(31)
302
-
302
16,333
(9,461)
6,872
(686)
(5,929)
257
(34)
223
-
223
0.55p
0.51p
0.41p
0.37p
Note
4
5
7
8
9
9
Year ended
31 March
2013
£000
Year ended
31 March
2012
£000
302
(22)
280
223
(1)
222
Year ended
31 March
2013
£000
Year ended
31 March
2012
£000
(3)
(3)
-
-
Revenue
Cost of sales
Gross profit
Distribution costs
Administrative expenses
Operating profit
Finance costs
Profit before tax
Taxation
Profit for the period from continuing operations
Earnings per share
Basic
Diluted
Consolidated statement of comprehensive income
Profit for the period from continuing operations
Exchange differences on translating foreign operations
Total comprehensive income for the period attributable to
the equity holders of the parent
Company statement of comprehensive income
Loss for the period from continuing operations
Total comprehensive income for the period
19
Creightons Plc
Annual report
For the year ended 31 March 2013
Consolidated balance sheet
Non-current assets
Goodwill
Other intangible assets
Property, plant and equipment
Current assets
Inventories
Trade and other receivables
Cash and cash equivalents
Total assets
Current liabilities
Trade and other payables
Obligations under finance leases
Bank overdrafts and loans
Net current assets
Non-current liabilities
Obligations under finance leases
Total liabilities
Net assets
Equity
Share capital
Share premium account
Other reserves
Share-based payment reserve
Translation reserve
Retained earnings
Total equity attributable to the equity shareholders of the parent
company
31 March
2013
£000
31 March
2012
£000
Note
10
11
12
14
15
16
18
19
20
19
21
22
343
295
525
1,163
3,526
2,811
18
6,355
346
262
556
1,164
3,271
3,040
106
6,417
7,518
7,581
2,219
19
892
3,130
2,604
19
838
3,461
3,225
2,956
48
48
67
67
3,178
3,528
4,340
4,053
545
1,231
38
51
(55)
2,530
545
1,231
38
44
(33)
2,228
4,340
4,053
These financial statements were approved by the board of directors and authorised for issue on 04 July 2013. They
were signed on its behalf by:
Bernard Johnson
Managing Director
20
Creightons Plc
Annual report
For the year ended 31 March 2013
Company balance sheet
Non-current assets
Investment in subsidiaries
Current assets
Trade and other receivables
Total assets
Current liabilities
Trade and other payables
Net current assets
Total liabilities
Net assets
Equity
Share capital
Share premium account
Capital redemption reserve
Special reserve
Share-based payment reserve
Retained earnings
Total equity attributable to the equity shareholders of the
parent company
31 March
2013
31 March
2012
Note
£000
£000
13
15
18
21
72
72
75
75
2,046
2,046
2,039
2,039
2,118
2,114
35
35
35
35
2,011
2,004
35
35
2,083
2,079
545
1,231
18
1,441
51
(1,203)
545
1,231
18
1,441
44
(1,200)
2,083
2,079
These financial statements were approved by the board of directors and authorised for issue on 04 July 2013. They
were signed on its behalf by:
Bernard Johnson
Managing Director
Company registration number 1227964
21
Creightons Plc
Annual report
For the year ended 31 March 2013
Consolidated statement of changes in equity
Share
capital
Share
premium
account
Other
reserves
(note
22)
Share-
based
payment
reserve
Translation
reserve
Retained
earnings
Total
equity
£000
£000
£000
£000
£000
£000
£000
At 1 April 2011
Share issue
Exchange
differences on
translation of
foreign operations
Share based
payment charge
Net profit for the
year
At 31 March 2012
Exchange
differences on
translation of
foreign operations
Share based
payment charge
Net profit for the
year
At 31 March 2013
543
2
-
1,229
2
-
-
-
-
-
545
-
1,231
-
-
-
-
-
38
-
-
-
-
38
-
-
-
30
-
14
-
44
-
7
-
(32)
-
(1)
-
-
(33)
(22)
-
-
2,005
-
-
-
223
2,228
-
-
302
3,813
4
(1)
14
223
4,053
(22)
7
302
545
1,231
38
51
(55)
2,530
4,340
Company statement of changes in equity
Share
capital
Share
premium
account
Capital
redemption
reserve
Special
reserve
Retained
earnings
Total
equity
Share-
based
payment
reserve
£000
£000
£000
£000
£000
£000
£000
At 1 April 2011
Share issue
Share based payment
charge
At 31 March 2012
Share based payment
charge
Net loss for the year
At 31 March 2013
543
2
-
545
-
-
545
1,229
2
-
1,231
-
-
1,231
18
-
-
18
-
-
18
1,441
-
-
1,441
-
-
1,441
30
-
14
44
7
-
51
(1,200)
-
-
2,061
4
14
(1,200)
-
2,079
7
(3)
(3)
(1,203)
2,083
22
Creightons Plc
Annual report
For the year ended 31 March 2013
Consolidated cash flow statement
Year ended
31 March
2013
£000
Year ended
31 March
2012
£000
306
339
Note
28
(97)
(334)
(308)
(333)
(431)
(641)
(19)
-
-
54
35
(90)
106
2
18
(18)
97
4
227
310
8
96
2
106
Note
28
Year ended
31 March
2013
£000
Year ended
31 March
2012
£000
-
-
-
-
-
-
-
(1)
4
(3)
1
-
-
-
Net cash inflow from operating activities
Cash flow from investing activities
Purchase of property, plant and equipment
Expenditure on intangible assets and goodwill
Net cash used in investing activities
Cash flow from financing activities
Repayment of finance lease obligations
New finance lease
Proceeds of share issue
Increase in bank loans and invoice finance facilities
Net cash generated from financing activities
Net (decrease)/increase in cash and cash equivalents
Cash and cash equivalents at start of period
Effect of foreign exchange rate changes
Cash and cash equivalents at end of period
Company cash flow statement
Net cash outflow from operating activities
Cash flow from investing activities
Proceeds of share issue
Investment in subsidiaries
Net cash generated from investing activities
Net change in cash and cash equivalents
Cash and cash equivalents at start of period
Cash and cash equivalents at end of period
23
Creightons Plc
Annual report
For the year ended 31 March 2013
Notes to the financial statements
1. General information
Creightons Plc (the Company) was incorporated on 29 September 1975 in England; it is a public company, with a
premium listing on the London Stock Exchange and domiciled in the United Kingdom.
These Financial Statements are presented in pounds sterling because that is the currency of the primary economic
environment in which the Group operates. Foreign operations are included in accordance with the policies set out
in note 2.
2 Significant accounting policies
Basis of accounting
The financial statements have been prepared in accordance with International Financial Reporting Standards as
adopted for use by the European Union and comply with Article 4 of the IAS regulation, and the Companies Act
2006 applicable to companies reporting under IFRS.
The financial statements have been prepared on a going concern basis and there are no concerns for the
foreseeable future that would change the basis on which the financial statements have been prepared.
The financial statements have also been prepared on the historical cost basis, except for the revaluation of
financial instruments. The principal accounting policies adopted are set out below. These policies have been
applied consistently to all years presented unless otherwise stated.
Initial application of new IFRS and International Financial Reporting Interpretations Committee (IFRIC)
interpretations effective for current reporting period or any amendments to such standards have been reflected in
these financial statements. Application of these did not have a material impact on the financial statements and did
not require a change in any significant accounting policies.
The Group has adopted all of the new and revised Standards and Interpretations issued by the International
Accounting Standards Board (IASB) and the International Financial Reporting Interpretations Committee (IFRIC) of
the IASB that are relevant to its operations and effective for accounting periods beginning 1 April 2012.
New standards and interpretations currently in issue but not effective for accounting periods commencing on 1
April 2012 are:
IFRS 9 Financial Instruments (effective 1 January 2015)
IFRS 10 Consolidated Financial Statements (effective 1 January 2013)
IFRS 11 Joint Arrangements (effective 1 January 2013)
IFRS 12 Disclosure of Interests in Other Entities (effective 1 January 2013)
IFRS 13 Fair Value Measurement (effective 1 January 2013)
IAS 19 Employee Benefits (Revised June 2012) (effective 1 January 2013)
IAS 27 (Revised), Separate Financial Statements (effective 1 January 2013)
IAS 28 (Revised), Investments in Associates and Joint Ventures (effective 1
January 2013)
Deferred Tax: Recovery of Underlying Assets - Amendments to IAS 12 Income
Taxes (effective 1 January 2013)
Presentation of Items of Other Comprehensive Income - Amendments to IAS 1
(effective 1 July 2013)
As of 31 March 2013, the following standards and interpretations are in issue but not yet adopted by the EU:
IFRS 9 Financial Instruments (effective 1 January 2015)
IFRS 10 Consolidated Financial Statements (effective 1 January 2013)
IFRS 11 Joint Arrangements (effective 1 January 2013)
IFRS 12 Disclosure of Interests in Other Entities (effective 1 January 2013)
IFRS 13 Fair Value Measurement (effective 1 January 2013)
IAS 19 Employee Benefits (Revised June 2012) (effective 1 January 2013)
IAS 27 (Revised), Separate Financial Statements (effective 1 January 2013)
IAS 28 (Revised), Investments in Associates and Joint Ventures (effective 1 January 2013)
IFRS 7 (amendments), Offsetting Financial assets and Financial Liabilities (effective 1 January 2013)
IAS 32 (amendments), Offsetting Financial assets and Financial Liabilities (effective 1 January 2014)
Disclosures - Transfers of Financial Assets - Amendments to IFRS 7 (effective 1 July 2012)
Deferred Tax: Recovery of Underlying Assets - Amendments to IAS 12 Income Taxes (effective 1 January
2013)
Severe Hyperinflation and Removal of Fixed Dates for First-time Adopters - Amendments to IFRS 1 First-
time Adoption of International Financial Reporting Standards (effective 1 July 2012)
Presentation of Items of Other Comprehensive Income - Amendments to IAS 1 (effective 1 July 2013)
24
Creightons Plc
Annual report
For the year ended 31 March 2013
Notes to the financial statements
2 Significant accounting policies (continued)
The directors anticipate that the adoption of these Standards and Interpretations in future periods will have no
material impact on the financial statements of the Group.
Basis of consolidation
The consolidated financial statements incorporate the financial statements of the Company and entities controlled
by the Company (its subsidiaries), made up to the 31 March each year. Control is achieved where the company
has the power to govern the financial and operating policies of an investee entity so as to obtain benefits from its
activities.
The results of subsidiaries acquired or disposed of during the year are included in the consolidated comprehensive
income statement from the effective date of acquisition or up to the effective date of disposal, as appropriate.
Where necessary, adjustments are made to the financial statements of subsidiaries to bring the accounting policies
into line with those used by the Group.
All intra-group transactions, balances, income, expenses and unrealised profits are eliminated on consolidation.
A separate income statement for the Company has not been presented as permitted by section 408 of the
Companies Act 2006.
Goodwill
Goodwill on consolidation represents the excess of the purchase price over the fair value of the identifiable assets
and liabilities of a business acquired at the date of acquisition. Goodwill is initially recognised as an asset at cost
and is subsequently measured at cost less any accumulated impairment losses. Goodwill is tested at least
annually for impairment and is carried at cost less accumulated impairment losses. Any impairment is recognised
immediately in the income statement and is not subsequently reversed. No amortisation is charged.
For the purposes of impairment testing, goodwill is allocated to each of the Group’s cash-generating units
expected to benefit from the synergies of the combination. Cash-generating units to which goodwill has been
allocated are tested for impairment annually, or more frequently when there is an indication that the unit may be
impaired. If the recoverable amount of the cash-generating unit is less than the carrying amount of the unit, the
impairment loss is first allocated to reduce the carrying amount of the goodwill allocated to the unit and then to
the other assets of the unit on a pro-rata basis of the carrying amount of each asset in the unit.
On disposal of an acquired business the attributable amount of goodwill is included in the determination of the
profit or loss on disposal.
Revenue recognition
Revenue is measured at the fair value of the consideration received or receivable and represents amounts
receivable for goods provided in the normal course of business, net of discounts, VAT and other sales related
taxes.
Sales of goods are recognised when goods are delivered and title has passed.
Interest income is accrued on a time basis, by reference to the principal outstanding and the effective interest rate
applicable.
Dividend income from investments is recognised when shareholder’s rights to receive payment have been
established.
Leases
Leases are classified as finance leases whenever the terms of the lease transfer substantially all the risks and
rewards of ownership to the lessee. All other leases are classified as operating leases.
Assets held under finance leases are recognised as assets of the Group at the fair value or, if lower, at the present
value of the minimum lease payments, each determined at the inception of the lease. The corresponding liability
to the lessor is included in the balance sheet as a finance lease obligation. Lease payments are apportioned
between finance charges and reduction of the lease obligation so as to achieve a constant rate of interest on the
remaining balance of the liability. Finance charges are charged directly against income.
Rentals under operating leases are charged against income on a straight-line basis over the term of the relevant
lease.
Benefits received and receivable as an incentive to enter into operating leases are spread on a straight-line basis
over the term of the lease.
25
Creightons Plc
Annual report
For the year ended 31 March 2013
Notes to the financial statements
2 Significant accounting policies (continued)
Foreign currencies
The individual financial statements of each group company are presented in the currency of the primary economic
environment in which it operates (its functional currency). For the purposes of consolidated financial statements,
the results and financial position of each group company are presented in pound sterling, which are the functional
currency of the Company, and the presentation currency for the consolidated financial statements.
In preparing the financial statements of individual companies, transactions in currencies other than the entity’s
functional currency (foreign currencies) are recorded at the rates of exchange prevailing on the dates of the
transactions. At each balance sheet date, monetary assets and liabilities that are denominated in foreign
currencies are retranslated at the rates ruling at the balance sheet date.
Exchange differences arising on the settlement of monetary items, and on the retranslation of monetary items,
are included in the income statement in the period they arise.
For the purposes of presenting consolidated financial statements, the assets and liabilities of the Group’s foreign
operations are translated at exchange rates prevailing on the balance sheet date. Income and expense items are
translated at the average exchange rate for the period, unless exchange rates fluctuate significantly during that
period, in which case the exchange rates at the date of transactions are used. Exchange differences arising, if
any, are classified as equity and recognised in the Group’s foreign currency translation reserve. Such translation
differences are recognised as income or as an expense in the period in which the operation is disposed of.
In order to hedge its exposure to certain foreign exchange risks the Group enters into forward exchange contracts
and options when appropriate to do so.
Operating profit
Operating profit is stated after charging restructuring costs and other exceptional items but before investment
income and finance costs.
Retirement benefit costs
The Group companies contribute to a defined contribution retirement benefit scheme.
Payments to the defined contribution retirement benefit scheme are charged as an expense as they fall due.
Social Security costs are dealt with as payments to defined contribution schemes where the Group’s obligations
are equivalent to those arising in a defined contribution retirement benefit scheme.
Taxation
The tax expense represents the sum of tax currently payable and deferred tax.
The tax currently payable is based on the taxable profit for the year. Taxable profit differs from net profit as
reported in the income statement because it excludes items of income or expenditure that are taxable or
deductible in other years and it further excludes items of income or expenditure that are never taxable or
allowable. The Group’s liability for current tax is calculated using tax rates that have been enacted or
substantively enacted by the balance sheet date.
Deferred tax is the tax expected to be payable or recoverable on differences between the carrying amounts of
assets and liabilities in the financial statements and the corresponding tax bases used in the computation of
taxable profit, and is accounted for using the balance sheet liability method. Deferred tax liabilities are generally
recognised for all temporary differences and deferred tax assets are recognised to the extent that it is probable
that taxable profits will be available against which deductible temporary timing differences can be utilised. Such
assets and liabilities are not recognised if the temporary differences arise from the initial recognition of goodwill or
from the initial recognition of other assets and liabilities in a transaction that affects neither taxable profit nor
accounting profit.
Deferred tax is calculated using tax rates and laws that have been enacted or substantially enacted by the balance
sheet date and that are expected to apply in the period when the liability is settled or the asset is realised.
26
Creightons Plc
Annual report
For the year ended 31 March 2013
Notes to the financial statements
2 Significant accounting policies (continued)
Property, plant and equipment
Property, plant and equipment are stated at cost less accumulated depreciation and any recognised impairment
loss.
Depreciation is charged so as to write off the cost of the assets less any residual values over their estimated
useful lives using the straight line method on the following basis:
Plant and machinery
Fixtures and fittings
Computers
% per annum
10 - 20
10 - 33
25 - 33
Assets held under finance leases are depreciated over their expected useful lives on the same basis as owned
assets or, where shorter, over the term of the relevant lease.
The gain or loss arising on the disposal or retirement of an asset is determined as the difference between the
sales proceeds and the carrying amount of the asset and is recognised in the income statement.
Research and development expenditure
Expenditure on research activities is recognised as an expense in the period in which it is incurred.
An internally generated intangible asset arising from the Group’s product development is recognised only if the
following conditions are met:
an asset is created that can be identified with a specific product or range of products;
it is probable that the asset created will generate future economic benefits; and
the development cost of the asset can be measured reliably
Internally generated intangible assets are amortised on a straight-line basis over their useful lives. Where no
internally generated intangible assets can be recognised, development expenditure is recognised as an expense in
the period in which it is incurred.
Other intangible assets
Other intangible assets are carried at cost less accumulated amortisation and accumulated annual impairment.
Amortisation begins when an asset is available for use and is calculated on a straight-line basis over their
estimated useful lives as follows:
Product development
Computer software
- Over three years
- Over three to four years
Impairment of assets (excluding goodwill)
At each reporting date, the Group assesses whether there is any indication that an asset may be impaired. Where
an indicator of impairment exists, the Group makes an estimate of the recoverable amount. Recoverable amount
is the higher of the fair value less cost to sell and value in use and is determined for an individual asset. If the
asset does not generate cash inflows that are largely independent of those from other assets or groups of assets,
the recoverable amount of the cash generating unit to which the asset belongs is determined. Discount rates
reflecting the asset specific risks and the time value of money are used for the value in use calculation.
Investments
Investments in subsidiary companies are stated at cost less any provision for impairment.
Inventories
Inventories are stated at the lower of cost or net realisable value. The standard cost comprises direct materials
and where applicable direct labour costs and those overheads that have been incurred in bringing the inventories
to their present location and condition. Net realisable value represents the estimated selling price less all
estimated costs to completion and costs to be incurred in marketing, selling and distribution.
27
Creightons Plc
Annual report
For the year ended 31 March 2013
Notes to the financial statements
2 Significant accounting policies (continued)
Trade receivables
Trade receivables are initially recognised at fair value. Appropriate allowances for estimated irrecoverable
amounts are recognised in the income statement when there is objective evidence, such as an increase in delayed
payments, that the asset is impaired.
Cash and cash equivalents
Cash and cash equivalents comprise cash on hand and demand deposits and other short term highly liquid
investments that are readily convertible to a known amount of cash and are subject to insignificant risk of change
of value.
Trade payables and loans
Trade payables and loans are initially measured at their cost which approximates to their fair value.
Derivative financial instruments
The Group’s activities expose it primarily to the financial risks of changes in foreign currency exchange rates. The
Group uses foreign exchange forward contracts to hedge against foreign exchange rate risk where considered
appropriate. The group does not use derivative financial instruments for speculative purposes.
Derivatives are initially recognised at fair value at the date a derivative contract is entered into and are
subsequently re-measured to their fair value at each balance sheet date. The resulting gain or loss is recognised
in the income statement immediately unless the derivative is designated and effective as a hedging instrument, in
which event the timing of the recognition in the income statement depends upon the nature of the hedge
relationship. The Group designates certain derivatives as either hedges of the fair value of the recognised assets
or liabilities or firm commitments (fair value hedges), hedges of highly probable forecast transactions or hedges of
foreign currency risk of firm commitments (cash flow hedges), or hedges of net investment in foreign operations.
A derivative is presented as a non-current asset or non-current liability if the remaining maturity of the instrument
is more than 12 months and it is not expected to be realised or settled within 12 months. Other derivatives are
treated as current assets or liabilities.
Share-based payments
The Group issues equity-settled share-based payments to certain employees. Equity-settled share-based
payments are measured at fair value (excluding the effect of non-market based vesting conditions) at the date of
grant. The fair value determined at the grant date of the equity-settled share-based payments is expensed on a
straight-line basis over the vesting period, based on the group’s estimate of shares that will eventually vest and
adjusted for the effect of non-market based vesting conditions.
Fair value is calculated using the Black-Scholes model. The expected life used in the model has been adjusted,
based on management’s best estimate, for the non-transferability, exercise restrictions and behavioural
considerations.
3 Critical accounting judgements and sources of estimation uncertainty
Critical judgements in applying the Group’s accounting policies
In the process of applying the Group’s accounting policies, which are described in note 2, management have made
the following judgement that has the most significant effect on the amounts recognised in the financial
statements.
Corporation tax
A judgement is required in determining the provision for Corporation tax. There are some calculations for which
the ultimate tax determination is uncertain in the ordinary course of business. The Group recognises tax liabilities
on the best estimate of whether tax liabilities will be due. Where the final tax outcome is different from the
amounts that were initially recorded, such differences will impact the income and deferred tax provisions in the
period in which such determination is made. No deferred tax asset has been accounted due to the economic and
trading uncertainties facing the Group.
Key sources of estimation uncertainty
The key assumptions concerning the future, and other key sources of estimation uncertainty at the balance sheet
date, that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities
within the next financial year, are discussed below.
28
Creightons Plc
Annual report
For the year ended 31 March 2013
Notes to the financial statements
3 Critical accounting judgements and sources of estimation uncertainty (continued)
Impairment of goodwill
Determining whether goodwill is impaired requires an estimation of the value in use of the cash-generating unit to
which goodwill is allocated. The value in use requires the entity to estimate the future. No impairment provision
was considered necessary against this carrying value.
Impairment of product development costs
Management review the recoverability of capitalised product development costs throughout the year and will
charge amortisation to reflect any impairment arising from a reduction in the anticipated lifecycle of the products.
At the balance sheet date all products were considered to have product lifecycles which were in line with the
accounting policies noted in 2 above.
Provisions
The Group assesses provisions as the Directors’ best estimate of the expenditure required to settle obligations at
the balance sheet date. These estimates are made taking account of information available and different possible
outcomes. Estimates relating to the net realisable value of inventories and recoverability of trade receivables are
areas where the Directors’ best estimates have been applied in the current financial year.
4 Business and geographic segments
For management purposes the Group reports operations internally from two segments one based in the United
Kingdom and one based in North America. Appropriate segmental information is as follows:
Revenue by segment
Year ended 31 March 2013
Year ended 31 March 2012
External
revenue
£000
Inter-
segment
revenue
£000
Total
segment
revenue
£000
External
revenue
£000
Inter-
segment
revenue
£000
Total
segment
revenue
£000
15,782
1,544
346
-
16,128
1,544
14,850
1,483
342
-
15,192
1,483
17,326
346
17,672
16,333
342
16,675
United Kingdom
North America
Total
Information about major customers
Included in revenues arising from the United Kingdom for the year ended 31 March 2013 are revenues from three
customers that exceeded 10% of total revenue being; £2,474,000; £2,084,000 and £1,992,000 respectively.
Profit by segment
Year ended 31 March 2013
Group
North
America
£000
United
Kingdom
£000
£000
Year ended 31 March 2012
Group
North
United
America
Kingdom
£000
£000
£000
Segment results
1,017
129
1,146
905
115
1,020
Central costs
Operating profit
Finance costs
Profit for the period from continuing
operations
(813)
333
(31)
302
(763)
257
(34)
223
29
Creightons Plc
Annual report
For the year ended 31 March 2013
Notes to the financial statements
4 Business and geographic segments (continued)
Segmental operating profit is stated after charging:
Year ended 31 March 2013
Group
North
America
£000
United
Kingdom
£000
£000
Year ended 31 March 2012
Group
North
United
America
Kingdom
£000
£000
£000
Depreciation
Amortisation
Write-downs of inventory recognised
as an expense
128
301
174
-
-
14
128
301
188
128
236
87
-
-
18
128
236
105
The profit reported by each segment represents the profit earned before central management costs, including
directors’ remuneration, and finance costs.
Segment assets
Non-current assets
United Kingdom
North America
Total non-current assets
Current assets
United Kingdom
North America
Total current assets
Total assets
United Kingdom
North America
Total assets
Segment liabilities
United Kingdom
North America
Total liabilities
Year ended
31 March
2013
£000
Year ended
31 March
2012
£000
1,163
-
1,164
-
1,163
1,164
5,874
481
5,694
723
6,355
16,417
7,037
481
6,858
723
7,518
7,581
Year ended
31 March
2013
£000
Year ended
31 March
2012
£000
3,124
54
3,285
243
3,178
3,528
All of the Group’s capital expenditure depreciation and amortisation is within the United Kingdom segment. The
accounting policies for the reportable segment are the same as the Group’s accounting policies described in Note
2.
30
Creightons Plc
Annual report
For the year ended 31 March 2013
Notes to the financial statements
5. Operating profit
Operating profit is stated after charging:
Net foreign exchange gain
Cost of inventories recognised as expense
Write downs of inventories recognised as an expense
Research and development costs
Depreciation of property plant and equipment
- owned assets
- leased assets
Amortisation of intangible assets (included in
administrative expenses)
Impairment loss
Staff costs
Auditor’s remuneration
Operating lease rental expense
- Land & buildings
- Other
The analysis of auditor’s remuneration is as follows:
Audit services
Fees payable to the company’s auditor for the audit of
the parent company and the group financial statements
Fees payable to the company’s auditor for other
services:
The audit of the company’s subsidiaries, pursuant to
legislation
Tax services
Year ended
31 March
2013
£000
Year ended
31 March
2012
£000
29
38
9,699
8,271
188
323
111
17
301
105
266
111
17
236
3
-
4,311
3,985
28
28
350
38
350
37
Year ended
31 March
2013
£000
Year ended
31 March
2012
£000
21
21
6
1
6
1
31
Creightons Plc
Annual report
For the year ended 31 March 2013
Notes to the financial statements
6. Staff costs
The average number of employees (including directors) was:
Management
Administration
Production
Total
Their aggregate remuneration comprised:
Wages and salaries
Social security costs
Pension contributions
Total
Year ended
31 March
2013
Number
Year ended
31 March
2012
Number
9
47
130
186
9
47
114
170
Year ended
31 March
2013
£000
Year ended
31 March
2012
£000
3,933
355
23
4,311
3,626
335
24
3,985
Details of directors’ emoluments are set out in the directors’ remuneration report.
7. Finance costs
Interest on bank overdrafts and loans
Interest on obligations under finance leases
Total
Year ended
31 March
2013
£000
Year ended
31 March
2012
£000
28
3
31
31
3
34
32
Creightons Plc
Annual report
For the year ended 31 March 2013
Notes to the financial statements
8. Taxation
Current tax
Deferred tax
Total
Year ended
31 March
2013
£000
Year ended
31 March
2012
£000
-
-
-
-
-
-
The charge for the year can be reconciled to the profit per the income statement as follows:
Year ended
31 March
2013
£000
Year ended
31 March
2013
%
Year ended
31 March
2012
£000
Year ended
31 March
2012
%
Profit before tax
302
Tax charge at the UK corporation tax
rate of 24% (2012 – 26%)
Tax effect of expenses that are not
deductible in determining taxable
profit
Tax effect of utilisation of brought
forward tax losses
Total expense and effective rate for
the year
(72)
(24.0)
(2)
(0.7)
74
24.7
-
-
223
(58)
(4)
62
-
(26.0)
(1.8)
27.8
-
There is no charge to deferred tax for the Group or the Company.
At the balance sheet date, the Group has unused tax losses of £2,649,000 (2012 - £2, 877,000) available for
offset against future profits. No deferred tax asset has been recognised in respect of these losses due to the
unpredictability of future profit streams. All losses may be carried forward indefinitely and utilised against profits
of the same trade.
9 Earnings per share
The calculation of the basic and diluted earnings per share is based on the following data:
Earnings
Net profit attributable to the equity holders of the parent
company
Number of shares
Weighted average number of ordinary shares for the purposes
of basic earnings per share
Year ended
31 March
2013
£000
Year ended
31 March
2012
£000
302
223
Year ended
31 March
2013
Number
Year ended
31 March
2012
Number
54,478,876
54,478,876
Effect of dilutive potential ordinary shares relating to share
options
5,126,550
5,376,550
Weighted average number of ordinary shares for the purposes
of diluted earnings per share
59,605,426
59,855,426
33
Creightons Plc
Annual report
For the year ended 31 March 2013
Notes to the financial statements
10. Goodwill
Cost
At 1 April 2011
Additions
At 31 March 2012
Additions
At 31 March 2013
Accumulated impairment losses
At 1 April 2011 and 31 March 2012
Charge in the year
At 31 March 2012
Carrying amount
At 1 April 2011
At 31 March 2012
At 31 March 2013
Year ended
31 March
£000
376
3
379
-
379
33
3
36
343
346
343
Goodwill relates to the Potter & Moore business acquired in March 2003 and the costs associated with setting up
TS Ventures Ltd in August 2010 and Miamoo in July 2011.
The Group tests goodwill annually for impairment or more frequently if there are indications that goodwill might
be impaired.
The recoverable amount is determined from a value in use calculation. The key assumptions used for the value in
use calculation are the discount rate, sales and margin projections, expected changes in direct and indirect costs
during the five year forecast, a growth rate of 0% and a discount rate of 6.0%. No likely change in these
assumptions would give rise to impairment.
The growth rates are based on the average growth rate experienced by the cash generating unit which is in line
with historical growth rates for the business sector. The pre-tax discount rate is based upon the Group’s weighted
average cost of capital adjusted for specific risks relating to the sector and country, as this is believed to be the
most appropriate to be used.
34
Creightons Plc
Annual report
For the year ended 31 March 2013
Notes to the financial statements
11. Other intangible assets
Group
Cost
At 1 April 2011
Additions
Disposals
At 31 March 2012
Additions
Disposals
At 31 March 2013
Accumulated amortisation
At 1 April 2011
Amortisation for the year
Disposals
At 31 March 2012
Amortisation for the year
Disposals
At 31 March 2013
Carrying value
At 1 April 2011
At 31 March 2012
At 31 March 2013
Acquired
computer
software
£000
Product
development
costs
£000
Total
£000
82
16
-
98
8
-
106
43
17
-
60
16
-
76
39
38
30
301
314
(23)
592
326
(48)
870
172
219
(23)
368
285
(48)
605
383
330
(23)
690
334
(48)
976
215
236
(23)
428
301
(48)
681
129
168
224
262
265
295
35
Creightons Plc
Annual report
For the year ended 31 March 2013
Notes to the financial statements
12. Property, plant and equipment
Group
Cost
At 1 April 2011
Additions
At 31 March 2012
Additions
At 31 March 2013
Accumulated depreciation
At 1 April 2011
Depreciation for the year
At 31 March 2012
Depreciation for the year
At 31 March 2013
Carrying value
At 1 April 2011
At 31 March 2012
At 31 March 2013
Property ,
plant and
equipment
£000
1,834
308
2,142
97
2,239
1,458
128
1,586
128
1,714
376
556
525
Included within plant and equipment are assets held under finance leases with a carrying value of £111,000
(2012- £128,000) on which depreciation of £17,000 (2012 - £17,000) has been charged during the year.
13. Investment in subsidiaries
Company
Cost
At 1 April 2011
Additions
At 31 March 2012 and 31 March 2013
Impairment charge
At 1 April 2011 and 31 March 2012
Impairment for the year
At 31 March 2013
Carrying value
At 1 April 2011
At 31 March 2012
At 31 March 2013
36
Investments
£000
72
3
75
-
3
3
72
75
72
Creightons Plc
Annual report
For the year ended 31 March 2013
Notes to the financial statements
13. Investment in subsidiaries (continued)
Details of the Company’s subsidiaries at 31 March 2013 and 31 March 2012 are as follows:
Name
Place of incorporation
and operation
Proportion of
ownership interest
and voting power
held
Potter & Moore Innovations Limited
England
Potter and Moore International Inc
United States of America
The Real Shaving Company Limited
The Natural Grooming Company Limited
St James Perfumery Co Limited
Ashworth & Claire Limited
The Haircare Studio Limited
The Hair Design Studio Limited
The Sensual Secrets Company Limited
Creightons Naturally Limited
Groomed Limited
TS Ventures Limited
Twisted Sista Limited
Mother Goose Limited
Miamoo Limited
Amie Skincare Limited
We Only Want You For Your Body Limited
All shareholdings are in ordinary shares.
England
England
England
England
England
England
England
England
England
England
England
England
England
England
England
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
55%
100%
75%
55%
55%
55%
The activity of Potter & Moore Innovations Ltd is the creation and manufacture of toiletries and fragrances. The
activity of Potter and Moore International Inc is a distribution of personal care products. All other subsidiaries were
dormant throughout the years ended 31 March 2013 and 31 March 2012.
14. Inventories
Raw materials
Work in progress
Finished goods
Group
2013
£000
2012
£000
Company
2012
£000
2011
£000
836
218
2,472
881
307
2,083
3,526
3,271
-
-
-
-
-
-
-
-
Inventories with a carrying value of £3,526,000 (2012 - £3,271,000) have been pledged as security for the
Group’s bank overdrafts. Management believe that net realisable value approximates to fair value.
37
Creightons Plc
Annual report
For the year ended 31 March 2013
Notes to the financial statements
15. Trade and other receivables
Group
2013
£000
2012
£000
Company
2013
£000
2012
£000
Trade receivables
Amounts receivable from subsidiaries
Prepayments and other receivables
2,641
-
170
2,876
-
164
-
2,046
-
-
2,039
-
2,811
3,040
2,046
2,039
Trade receivables have been pledged as security for the Group’s borrowings under invoice finance facilities and
the Group’s bank overdrafts.
The carrying value of trade and other receivables represents their fair value.
Trade receivables have been reported in the balance sheet net of provisions as follows:
Trade receivables
Less impairment provision
Group
2013
£000
2012
£000
Company
2013
£000
2012
£000
2,665
(24)
2,900
(24)
2,641
2,876
-
-
-
The movement in the trade receivables impairment provision is as follows:
Group
2013
£000
2012
£000
Company
2013
£000
2012
£000
At 01 April
Charge in current year income statement
At 31 March
24
-
24
15
9
24
-
-
-
-
-
-
-
-
-
There were £76,000 (2012 - £34,000) trade receivables that were overdue at the balance sheet date that have
not been provided against. There are no indications as at 31 March 2013 that the debtors will not meet their
payment obligations in respect of the amount of trade receivables recognised in the balance sheet that are
overdue and not provided. The proportion of trade receivables at 31 March 2013 that were overdue for payment
was 2.8% (2012 -0.9%)
16. Cash and cash equivalents
Cash and cash equivalents comprise cash held by the Group and short term bank deposits with an original
maturity rate of three months or less. The carrying amounts of these assets approximates to their fair value. An
analysis of the amounts at the year-end is as follows:
Cash at bank and in hand
Sterling equivalent of deposit
denominated in US dollars
Sterling equivalent of deposit
denominated in Euro’s
Group
2013
£000
2012
£000
Company
2013
£000
2012
£000
-
18
-
18
59
46
1
106
-
-
-
-
-
-
-
-
38
Creightons Plc
Annual report
For the year ended 31 March 2013
Notes to the financial statements
17. Financial instruments and treasury risk management
Exposures to credit, interest and currency risks arise in the normal course of the Group’s business. Risk
management policies and hedging activities are outlined below.
Credit risk
Trading exposures are monitored by the operational companies against agreed policy levels. Credit insurance is
employed where it is considered to be cost effective. 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 in the UK and North America are with retail customers. The maximum exposure
to credit risk is represented by the carrying amount of each financial asset in the balance sheet.
Impairment provisions on trade receivables have been disclosed in note 15.
Interest rate risk
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.
Interest rate sensitivity
The interest rate sensitivity is based upon the Group’s weighted average borrowings over the year assuming a 1%
increase or decrease which is used when reporting interest rate risk internally to key management personnel.
If interest rates had been 1% higher/lower and all other variables were held constant, the Group’s profit for the
year ended 31 March 2013 would increase/decrease by £11,000 (2012 – £13,000). The Group’s sensitivity to
interest rates has increased during the current year mainly due to the increase in the average working capital
facilities used in the year.
Foreign currency risks
The Group is exposed to foreign currency transaction and translation risks.
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 12% (2012 – 13.0%) of the Group’s income is
denominated in US dollars and 0.5% (2012 - 0.4%) in Euros. Approximately 12% (2012 – 14%) of the Group’s
expenditure is denominated in dollars and 5%(2012 – 3%) denominated in Euros.
Foreign currency sensitivity
A 5% strengthening of sterling would result in a £38,000 (2012 - £32,000) increase profits and equity. A 5%
weakening in Sterling would result in a £42,000(2011 - £35,000) decrease in profits and equity.
When appropriate the Group utilises currency derivatives to hedge against significant future transactions and cash
flows. The Group is not party to foreign currency forward contracts in the management of its exchange risk
exposure at 31 March 2013. The instruments purchased are in the currency used by the Group’s principal
overseas suppliers.
Liquidity risk
The Group has no long term borrowing requirements and manages its working capital requirements through
overdrafts and invoice finance facilities. These facilities are due to be renewed in March 2014. 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 all of the terms of these facilities. At 31 March 2013 the
group had available £1,497,000 (2012 - £1,798,000) of undrawn committed borrowing facilities in respect of
which all conditions precedent had been met.
39
Creightons Plc
Annual report
For the year ended 31 March 2013
Notes to the financial statements
18. Trade and other payables
Trade payables
Social security and other taxes
Accrued expenses
Amounts payable to subsidiary undertakings
Group
2013
£000
2012
£000
Company
2013
£000
2012
£000
1,681
360
178
-
1,836
478
290
-
2,219
2,604
-
-
-
35
35
-
-
-
35
35
The directors consider the carrying amount of trade payables approximates to fair value.
19. Obligations under finance leases
Group
Amounts payable under finance leases
Within one year
Between two to five years
Total minimum lease payments
Minimum
lease payments
2013
£000
2012
£000
19
48
67
19
67
86
All lease obligations are denominated in sterling and the fair value of the Group’s lease obligations approximate to
their carrying value.
The Group’s obligations under finance leases are secured by the lessors’ rights over the leased assets.
20. Bank overdrafts and loans
Bank overdraft
Borrowings under invoice finance facilities
Group
2013
£000
2012
£000
Company
2013
£000
2012
£000
233
659
892
-
838
838
-
-
-
The borrowings are repayable on demand or within one year.
Borrowings totalling £40,000 are denominated in US Dollars all other borrowings are denominated in Sterling.
The directors estimate that the fair value of the Group’s borrowings approximates to the carrying value.
The weighted interest rates paid were as follows:
Group
2013
%
2012
%
Company
2013
%
2012
%
Bank overdrafts
Borrowings under invoice finance facilities
3.2
2.7
3.2
2.7
-
-
-
-
-
-
-
The bank overdraft is secured by fixed and floating charges over all the assets of the company and its
subsidiaries.
The invoice finance facility is secured on the trade receivables and a floating charge on all of the assets of the
Group.
40
Creightons Plc
Annual report
For the year ended 31 March 2013
Notes to the financial statements
21. Share capital
Ordinary shares of 1p each
2013
2012
£000
Number
£000
Number
Issued and fully paid
545
54,478,876
545 54,478,876
The Company has one class of ordinary shares which carry no right to fixed income.
22. Other reserves
Group
Capital
reserve
Special
reserve
Capital
redemption
reserve
Total
Other
reserves
£000
£000
£000
£000
At 1 April 2011, 31 March 2012 and 31 March 2013
7
13
18
38
The Company obtained a court ruling dated 19 March 1997 under which the reduction in share premium was
credited to a special reserve. The special reserve was first used to write off the deficit on the company profit and
loss account and then to write off the goodwill arising on the acquisition of Crestol Limited to the Group profit
and loss account. At 31 March 2013 goodwill written off amounts to £2,575,000 (2012: £2,575,000).
Under the court ruling, the special reserve may be used to write-off goodwill on any further acquisition. To the
extent that there shall remain any sum standing to the credit of the reserve, it shall be treated as unrealised
profit and as a non-distributable reserve, until such time as the creditors existing at the date of the ruling have
been satisfied or consent to its distribution.
23. Equity settled share-based payments
The Company has a share option scheme which is open to any employee of the Group. Options granted under
the scheme are for nil consideration and are exercisable at a price equal to the quoted market price of the
Company’s shares on the date of the grant. The vesting period is 3 years. If the options remain unexercised
after a period of 7 years from the date of grant, the option expires. Options are forfeited if the employee leaves
the Group before options vest.
Ordinary shares of 1p each
Number
2013
Weighted
average
exercise price
Number
2012
Weighted
average
exercise price
5,376,550
1.90p
5,426,550
21.93p
Outstanding at the beginning of the
period
Granted in the period
Lapsed in the period
-
(250,000)
-
(1.38p)
(50,000)
(4.75p)
Outstanding at the end of the period
5,126,550
1.93p
5,376,550
1.90p
Share options outstanding at the end of the year have the following expiry dates and exercise prices:
Granted
January 2007
December 2008
February 2011
Outstanding at the end of the period
41
Exercise
period
Number
Exercise
price
2010 - 2014
2011 - 2015
2014 - 2021
50,000
820,000
4,256,550
5,126,550
4.75p
1.38p
2.00p
Creightons Plc
Annual report
For the year ended 31 March 2013
Notes to the financial statements
23. Equity settled share-based payments (continued)
The weighted average contractual life for the options based on last exercise date is 6.8 years.
The share options granted during each period have been valued using a Black-Scholes model. The inputs to the
Black-Scholes model are as follows:
Weighted average share price (pence)
Weighted average exercise price (pence)
Expected volatility (%)
Expected life -years
Risk free rate (%)
Expected dividends (pence)
Year ended
31 March
2013
Year ended
31 March
2012
1.93p
1.93p
22.9% - 122.9%
3
5.8%
-
1.93p
1.93p
22.9% - 122.9%
3
5.8%
-
Expected volatility was determined by calculating the historical volatility of the Group’s share price over the
previous year. The expected life used in the model has been adjusted, based on management’s best estimate, for
the effects of non-transferability, exercise restrictions, and behavioural considerations.
The Group recognised total expenses of £7,000 (2012- £14,000) related to share-based payments.
24. Retirement benefit scheme
The Group operates a defined contribution scheme for certain employees. The assets of the scheme are held
separately from those of the Group. The charge in the consolidated income statement in the year was £23,000
(2012 - £24,000) and cash contributions were £23,000 (2012: £24,000).
25. Operating lease arrangements
The Group leases property, plant and equipment under non-cancellable operating lease agreements. These leases
have varying terms, escalation clauses and renewal rights.
Group
Company
Year ended
31 March
2013
£000
Year ended
31 March
201
£000
Year ended
31 March
2013
£000
Year ended
31 March
2012
£000
Minimum lease payments under operating
leases recognised as an expense in the year
388
387
-
-
An analysis of the total minimum lease payments under non-cancellable operating leases is set out below:
Total operating leases
Within one year
In the second to fifth years inclusive
After five years
Total
Group
2013
£000
2012
£000
Company
2013
£000
2012
£000
384
1,424
695
396
1,415
1,045
2,503
2,856
-
-
-
-
-
-
-
-
42
Creightons Plc
Annual report
For the year ended 31 March 2013
Notes to the financial statements
25. Operating lease arrangements (continued)
Lease for land and buildings
Within one year
In the second to fifth years inclusive
After five years
Total
Other operating leases
Within one year
In the second to fifth years inclusive
Total
26. Capital commitments
Group
2013
£000
2012
£000
Company
2013
£000
2012
£000
350
1,400
695
350
1,400
1,045
2,445
2,795
-
-
-
-
Group
2013
£000
2012
£000
Company
2013
£000
2012
£000
34
24
58
46
15
61
-
-
-
-
-
-
-
-
-
-
Group
2013
£000
2012
£000
Company
2013
£000
2012
£000
Contracts placed for future capital expenditure not
provided for in the financial statements
3
-
-
-
27. Related party transactions
Transactions between the parent company and its subsidiaries
The amounts owed by and to subsidiary companies are:
Amounts receivable from subsidiary undertakings
Amounts payable to subsidiary undertakings
Oratorio Developments Limited
Year ended
31 March
2013
£000
Year ended
31 March
2012
£000
2,046
2,039
(35)
(35)
On 24 July 2006 Oratorio Developments Limited, a company of which Mr McIlroy is a director and controlling
shareholder, acquired the premises occupied by Potter & Moore Innovations Limited. The following amounts were
charged under the terms of the lease:
Year ended
31 March
2013
£000
Year ended
31 March
2012
£000
350
17
367
350
15
365
Rental charges
Re-imbursement of property insurance costs
Total
43
Creightons Plc
Annual report
For the year ended 31 March 2013
Notes to the financial statements
27. Related party transactions (continued)
Amounts owed to Oratorio Developments Ltd
Amounts payable
Carty Johnson Limited
Year ended
31 March
2013
£000
Year ended
31 March
2012
£000
105
105
Carty Johnson Limited, a company of which Mr Johnson is a director and controlling shareholder provides internet
support services. The following amounts were charged in the year:
Year ended
31 March
2013
£000
Year ended
31 March
2012
£000
Charges for internet support services
14
12
Remuneration of key management personnel
The remuneration of the directors, who are the key management personnel of the Group, is set out below in
aggregate for each of the categories specified in IAS 24, ‘Related Party Disclosure’. Further information about the
remuneration of individual directors is provided in the audited part of the Directors’ Remuneration Report on
pages 12 to 14.
Salaries and other short term benefits
Total
Year ended
31 March
2013
£000
Year ended
31 March
2012
£000
161
161
156
156
44
Creightons Plc
Annual report
For the year ended 31 March 2013
Notes to the financial statements
28. Notes to cash flow statement
Group
Profit from operations
Adjustments for:
Depreciation on property, plant and equipment
Goodwill impairment charge
Amortisation of intangible assets
Share based payment charge
(Increase) in inventories
Decrease/(increase) in trade and other receivables
(Decrease)/increase in trade and other payables
Cash generated from operations
Interest paid
Cash inflow from operating activities
Year ended
31 March
2013
£000
Year ended
31 March
2012
£000
333
257
128
3
301
7
128
-
236
14
772
635
(230)
235
(440)
337
(31)
306
(244)
(462)
444
373
(34)
339
Cash and cash equivalents (which are presented as a single asset on the face of the balance sheet) comprise cash
at bank and in hand.
Company
Loss from operations
Adjustments for:
Share based payment charge
Goodwill impairment charge
Year ended
31 March
2013
£000
Year ended
31 March
2012
£000
(3)
7
3
7
-
14
-
14
(Decrease) in trade and other receivables
(7)
(15)
Cash outflow from operating activity
-
(1)
Cash and cash equivalents (which are presented as a single asset on the face of the balance sheet) comprise cash
at bank and in hand.
45