Creightons Plc Annual Report 2014
Registered Number 1227964
0
Creightons Plc Annual Report 2014
Contents
Chairman’s statement
Group strategic report
Directors’ report
Corporate governance statement
Directors’ remuneration report
Directors’ responsibilities statement
Independent auditor’s report to the members of Creightons plc
Consolidated income statement
Consolidated and company statement of comprehensive income
Consolidated balance sheet
Company balance sheet
Consolidated and company statement of changes in equity
Consolidated and company cash flow statement
Notes to the financial statements
Directors and advisers
Page
2
3
7
10
12
18
19
21
21
22
23
24
25
26
49
1
Chairman’s statement
Creightons Plc Annual Report 2014
I am pleased to report another year of growth and improved profitability. The Group’s profit before taxation for the
year ended 31 March 2014 was £471,000 (2013: £302,000). This continued improvement in profits has been achieved
despite the on-going tough trading environment with our customers seeking to improve the value of the offer to their
end consumer. Our private label ranges have faced increased price and promotion pressure from the big brands and
the growth of the value market, which has eroded their market share and 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. Much of this growth has come from developing ranges to meet the
needs of customers in the value market. Profit margins remain under pressure with customers seeking to recover lost
margin and with sales growth coming from lower margin products. We continue to manage 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 of £19,352,000 are £2,026,000 (12%) higher than last year (2013: £17,326,000), increasing 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 manufacturing with all three strands of our
business showing growth in excess of 10% as against last year. Much of this growth has been driven by new ranges
and new customer listings for existing ranges. In addition a planned programme to de-list poor performing ranges was
also completed in the period under review.
Changes in product and customer mix resulted in a reduced gross margin percentage of 40.8%, a reduction of 2.0%
on last year (2013: 42.8%). Winning business with a lower than average margin has helped deliver the 12% sales
growth noted above. Administration costs, which include product research and development as well as sales promotion
and product support, have risen as we invest resources to support the growth of the business, with savings in
promotional support for discontinued ranges reducing the impact of this increase to 4.1%.
Profit before taxation and interest for the year of £503,000 (2013: £333,000) represents an increase of 51%. Group
profit after tax of £471,000 (2013: £302,000) therefore shows a further improved performance especially given the
trading environment of the past year. Diluted earnings per share rose from 0.51p in 2013 to 0.79p for 2014 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 reduced by £272,000
to £602,000 (2013: £874,000). Cash generated by the business, together with £72,000 generated from employees
exercising share options, has been partly utilised to fund the increase in working capital required to support the
expansion of the business.
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.
We are continuing to work hard to manage cost pressure through managing customer prices, product re-engineering
and enhancing our product portfolio with higher margin products. We continue to develop new sales opportunities and
ranges to further expand our sales opportunities.
We expect our main private label customers to respond to the pressures in the current economic climate with value
strategies resulting in sales opportunities, which we intend to exploit with lower priced products to offset lower sales
levels on higher priced products. 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 reducing 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.
On 23 May 2014 the Group completed the sale of its share in one of our partner brands, Twisted Sista, for an
approximate profit of £375,000. The Group will utilise the proceeds of this disposal to invest in the development of
new ranges.
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. I would also like to thank our customers, shareholders
and suppliers for their support and loyalty to the Group.
William McIlroy
Chairman, 30 June 2014
2
Group strategic report
Creightons Plc Annual Report 2014
This strategic report has been prepared solely to provide additional information to shareholders to assess the Group’s
strategies and the potential for those strategies to succeed.
The strategic report contains certain forward looking statements. These statements are made by the directors in good
faith based on the information available to them up to the time of their approval of this report and such statements
should be treated with caution due to the inherent uncertainties, including both economic and business risk factors,
underlying any such forward looking information.
The directors in preparing this strategic report have complied with s414C of the Companies Act 2006.
The strategic report has been prepared for the Group and therefore gives greater emphasis to those matters which are
significant to Creightons Plc and its subsidiary undertakings when viewed as a whole.
The strategic report discusses the following areas:
The business model
Fair review of the Group’s business
Strategy and objectives
Key performance indicators
Principal risks and uncertainties
Corporate and social responsibility
Going concern
The business model
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 2.
The principal subsidiary undertakings affecting the results of the Group in the year are detailed in note 15 to the
financial statements.
A fair review of the Group’s business
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. Since then, the Group has consolidated its manufacturing at the Potter and 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; 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 economies 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.
3
Group strategic report (continued)
Creightons Plc Annual Report 2014
The Group does not operate in a ‘regulated’ market in the sense that pharmaceutical product manufacturers do, but
there has been increasing regulation covering; potentially hazardous substances, consumer protection, waste and
disposal of environmentally hazardous products and packaging materials.
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 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.
As the Group operated the three streams within its overall activities of the creation and manufacture of toiletries and
fragrances, it regards these as one for segmental purposes and focuses on the geographic location of its trading
businesses for segmental reporting, as further disclosed in note 6.
Over the past few years the Group has invested in a number of brands along with the existing brand owners. These
operate 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 with the brand owners to
benefit from the Group’s wide range of trade outlets, low-cost quality manufacturing and sourcing strengths.
Current Operations
The Group 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 and
Groomed.
Strategy and objectives
The primary objective of the Group is to deliver an adequate and sustainable return for shareholders whilst guarding
against commercial risks. We aim to deliver this by pursuing the following broad strategies:
Expand our customer base across all three sales streams (private label, contract and owned brands) within
the UK and increasingly overseas.
Continuously develop and enhance our product offering to meet the consumers’ requirement for high quality
excellent value products and thereby help our customers grow their businesses.
Ensure that we exceed our customers’ expectations for first rate quality products and excellent customer
service and use this to expand opportunities within our existing customer base.
Manage our gross and net margins through; efficient product sourcing, continuously improving production
efficiencies, asset management and cost control.
Make fully appraised investment in brands and assets which will help us maintain and grow our business and
reduce costs.
Key performance indicators
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 and staff 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.
4
Group strategic report (continued)
Creightons Plc Annual Report 2014
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 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.
The Group 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.
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)
2013/14
£19,352,000
40.8%
£503,000
2.6%
9.5%
£602,000
12.2%
2012/13
£17,326,000
42.8%
£333,000
1.9%
6.9%
£874,000
20%
Movement
Increase by 11.7%
Decrease of 2.0%
Increase by 51.1%
Increase of 0.7%
Increase of 2.6%
Decreased by 31.1%
Decreased by 7.8%
There were two incidents involving employees or contractors on the Group’s sites which were required to be reported
to the Health & Safety Executive during the year (2013:1)
Principal risks and uncertainties
Risks
The Board regularly monitors exposure to key risks, such as those related to production efficiencies, cash position and
competitive position relating to sales. It has also taken account of the economic situation over the past 12 months,
and the impact that has had on costs and consumer purchases.
It also monitors those risks not directly or specifically financial, but capable of having a major impact on the business’s
financial performance if there is any failure, such as product contamination and manufacture outside specification,
maintenance of satisfactory levels of customer and consumer service, accident ratios, failure to meet environmental
protection standards or any of the areas of regulation mentioned above. Further details of financial risks are set out in
Note 19.
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 21 - 24.
Corporate and social responsibility
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.
Environment
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 meet all environmental legislation.
Employees
We value and respect our employees and endeavour to engage their talent and ability fully. 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.
5
Creightons Plc Annual Report 2014
Group strategic report (continued)
The table below shows the number of employees by gender in the Group as at 31st March 2014.
Directors, including Non-Executive Director’s
Senior Managers
Other employees
Group 2014
Company 2014
Female
Male
Female
Male
1
2
113
4
4
83
1
-
-
4
-
-
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.
Going concern
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
being at least twelve months from the date of this report. For this reason the directors continue to adopt the going
concern basis in preparing the financial statements.
This report was approved by the board of directors on 3 July 2014 and signed on its behalf by:
Bernard Johnson
Managing Director
6
Directors’ report
Creightons Plc Annual Report 2014
The directors present their annual report on the affairs of the Group, together with the financial statements and
auditor’s report, for the year ended 31 March 2014. The corporate governance statement set out on pages 10 to 11
forms part of this report.
Details of significant events since the balance sheet date are contained in note 31 to the financial statements. An
indication of likely future developments in the business of the Group and details of research and development activities
are included in the strategic report.
Dividends
The directors do not recommend the payment of a dividend to ordinary shareholders for the year ended 31 March
2014 (2013 – nil).
Greenhouse gas (GHG) emissions
GHG emissions data for the year from 1 April to 31 March
Combustion of fuel and operation of facilities
Electricity, heat, steam and cooling purchased for own use
Total
Tonnes of Co2e per £m of cost of sales
Global tonnes of Co2e
2014
2013
528
547
1,075
93.8
573
521
1,094
110.5
The reduction by 1.7% from 31 March 2013 to 31 March 2014 is due to the milder winter and does not fully represent
a reduction in controllable Co2e.
We have reported on all of the emissions sources required under the Large and Medium-sized Companies and Groups
(Accounts and Reports) Regulation 2008 as amended in August 2013. The reporting boundary used for the collation of
the above data is consistent with that used for consolidation purposes in the financial statements. We have used GHG
Protocol Corporate Accounting and Reporting Standard (revised edition), data gathered to fulfil our requirements under
the CRC Energy Efficiency scheme, and emission factors from the UK Governments GHG Conversion Factors for
Company Reporting 2014 to calculate the above disclosures.
The key sources for emissions are gas and electricity. We have not included Co2e emissions from Group employees’
travel which we consider to be immaterial.
The Group has set a target of reducing tonnes of Co2e per £m of cost of sales by 5% (based on the figures reported in
the year ended 31 March 2013) over the 5 years ending 31 March 2018. This will be achieved by ensuring that
activities are monitored with the aim of reducing waste and that capital expenditure plans take into consideration the
impact on the Group’s consumption of Co2e.
Capital structure
Details of the issued share capital are shown in note 23. The company has one class of ordinary shares which carry no
rights to fixed income. Each share carries one vote at general meetings of the company.
There are no specific restrictions on the size of a holding nor on the transfer of shares, which are governed by the
general provisions of the Articles of Association and prevailing legislation. The directors are not aware of any
agreements between holders of the company’s shares that may result in restrictions on the transfers of shares or their
voting rights.
Details of the employee share schemes are set out in note 25.
No person has any special rights of control over the company’s share capital and all issued shares are fully paid.
With regard to the appointment and replacement of directors, the company is governed by its Articles of Association,
the UK Corporate Governance Code, the Companies Act and related legislation. The Articles themselves may be
amended by special resolution of the shareholders. The powers of the directors are governed by the Companies Acts,
the Articles of the Company and the corporate governance statement on pages 10 to 11.
Under its Articles of Association, the company has the authority to issue 2,917,771 ordinary shares.
A resolution will be proposed at the forthcoming Annual General Meeting to approve new Articles of Association. The
primary changes will be:
to enable website communications,
update the articles relating to directors conflicts of interest to meet the requirements of the Companies Act
2006,
Remove the limit on the remuneration of non-executive directors, which is now addressed by the Company’s
remuneration policy,
Remove the monetary limit on the Directors’ borrowing powers
7
Directors report (continued)
Creightons Plc Annual Report 2014
There are a number of other agreements that alter or terminate upon a change of control of the Company or
subsidiary companies such as commercial agreements, bank facility agreements, property leases and employee share
plans. None of these are expected to be considered significant in terms of their likely impact on the business of the
Group taken as a whole. The directors are not aware of any agreements between the company and its directors or
employees that provide for compensation for loss of office or employment that occurs because of a takeover bid.
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)
Directors indemnities
There are no director indemnities.
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 date of this report.
Directors standing for re-election
Mrs Mary Carney and Mr William Glencross retire by rotation at the next annual general meeting and, being eligible to
do so, offer themselves for re-election.
Mary Carney is a freelance tax consultant and a former senior tax partner with Grant Thornton, Chartered
Accountants, Belfast. She is also a member of the Chartered Institute of Taxation, and prior to joining Grant Thornton,
was a tax inspector. Ms Carney has been a director of the Company since November 1999.
William Glencross has many years' experience in both the branded and private label businesses, having been Sales &
Marketing Director and Managing Director of Potter & Moore. He was previously general manager of the Fine fragrance
division of Shulton G.B. ltd, part of Cyanamid Group. Mr Glencross was appointed to the Board in July 2005, and made
a non-executive director on his retirement in 2006.
Substantial shareholdings
At 31 March 2014 the company had been notified, in accordance with chapter 5 of the Disclosure and Transparency
Rules, of the following substantial interests, being 3% or more of the ordinary shares in issue:
Shareholder
Number of shares % held
Mr WO McIlroy (including Oratorio Developments Ltd)
Mr BJM Johnson
Mr Tim Amies
Mr D Abell
Mr B Dale
16,219,275
4,787,844
4,360,000
3,807,150
2,451,740
27.79%
8.20%
7.47%
6.52%
4.20%
During the period between the 31 March 2014 and 30 June 2014 the company did not receive any notifications under
chapter 5 of the Disclosure and Transparency Rules.
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 Group's financial statements and reports of the directors and auditor for the year
ended 31 March 2014.
2. To receive and approve the directors’ remuneration report for the year ended 31 March 2014.
3. To approve the directors’ remuneration policy as detailed in pages 15 to 16 of the directors remuneration
report.
4. To re-appoint Ms Mary Carney retiring by rotation under the provisions of Article 103 of the Articles of
Association, as a director of the company.
8
Directors report (continued)
Creightons Plc Annual Report 2014
5. To re-appoint Mr William Glencross retiring by rotation under the provisions of Article 103 of the Articles of
Association, as a director of the company.
6. To re-appoint Chantrey Vellacott DFK LLP as auditor and to authorise the directors to determine their
remuneration.
7. 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 £194,518.08, being a further one third of the
company’s present issued share capital as a rights issue.
8. As an ordinary resolution to adopt the Creighton plc Share Option Plan 2014 which will operate alongside the
existing scheme and ultimately replace it. This will enable the directors to issue options to employees in order
to motivate them to make improvements to the Group’s performance and improve the return for
shareholders.
9. 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 £29,177.71, being
5% of the company’s present issued share capital, without first offering them as a rights issue to existing
shareholders.
10. 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 £29,177.71, being 5% of the company's present issued share
capital, at 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.
11. As a special resolution, to approve new Articles and Memorandum of Association of the Company which will
bring these in line with current regulations and best practice.
Directors confirmations
Each of the persons, who is a director at the date of approval of this annual report, confirms that:
so far as the director is aware, there is no relevant audit information of which the Group’s auditor is not
aware; and
the director has taken all the steps that he/she ought to have taken as a director in order to make
himself/herself aware of any relevant audit information and to establish that the Group’s auditor is aware
of that information.
This confirmation is given and should be interpreted in accordance with the provisions of s418 of the Companies Act
2006.
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
3 July 2014
9
Creightons Plc Annual Report 2014
Corporate governance statement
Compliance
The Listing Rules of the Financial Conduct Authority (‘’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 Composition of the Board
Details of all the 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
Independent Non-executive Director
Independent Non-executive Director
The Role of the Board
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 service 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 8 occasions during the year, including meetings by telephone. The
attendance at meetings held during the year to 31 March 2014 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
8
8
8
8
-
-
1
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.
Board Committees
The Board has delegated specific responsibilities to the Nomination, Remuneration and Audit Committees. The Board
considers that all the members of each Committee have the appropriate experience and none of them has interests
which conflict with their positions on the Committees.
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.
10
Creightons Plc Annual Report 2014
Corporate governance statement (continued)
Directors’ remuneration
The executive directors are salaried in their capacity as directors. Their management and operational services are
provided via service 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, shareholdings and share options are noted in the Directors’ Remuneration
Report on pages 12 to 17.
Internal control
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 missstatement 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 review 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 auditor’s 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;
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;
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.
Relations with shareholders
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.
11
Directors’ remuneration report
Creightons Plc Annual Report 2014
This report is on the activities of the Remuneration Committee for the year to 31 March 2014. It sets out the
remuneration policy and remuneration details for the executive and non-executive directors of the company. It has
been prepared in accordance with Schedule 8 of The Large and Medium-sized Companies and Groups (Accounts and
Reports) Regulations 2008 as amended in August 2013. This is the first time the Group has prepared the report in
accordance with the amended Regulations
The report is split into three main areas:
Statement by the chair of the Remuneration Committee;
Annual report on directors remuneration (subject to audit); and
Policy report.
The policy report will be subject to a binding shareholder resolution at the 2014 Annual General Meeting and the policy
will take effect for the financial year beginning on 1 April 2015. The annual report on directors’ remuneration provides
details on remuneration in the period and some other information required by the Regulations. It will be subject to an
advisory shareholder vote at the 2014 Annual General Meeting.
The Companies Act 2006 requires the auditor to report to the shareholders on certain parts of the directors’
remuneration report and to state whether, in their opinion, those parts of the report have been properly prepared in
accordance with the Regulations. The parts of the annual remuneration report that are subject to audit are indicated
in that report. The statement by the chair of the Remuneration Committee and the policy report are not subject to
audit.
Statement by the chair of the Remuneration Committee
The Directors remuneration report has been prepared on behalf of the Board by the Remuneration Committee. The
current members of the Remuneration Committee are Mr Nick O’Shea (Chairman) and Mrs Mary Carney, both of whom
are Non-Executive directors.
The Remuneration Committee determines the remuneration of each director. During the year ended 31 March 2014
the Remuneration Committee proposed that the fees paid to Mr Bernard Johnson’s service company were increased
from £77,500 to £79,000. There were no other changes in the remuneration of the executive or Non-executive
directors.
It is envisaged that the remuneration components for executive directors for the year ended 31 March 2015 will be
similar to those in place for the year ended 31 March 2014 as shown in the ‘single figure’ tables shown below.
Annual report on directors’ remuneration
The information provided in this part of the Directors Remuneration Report is subject to audit.
The ‘single figure’ tables below represent the directors remuneration for the years ended 31 March 2014 and 31 March
2013. These emoluments are normally paid in the year except for the bonus payments which are paid following the
approval of the financial statements.
Executive directors’ remuneration as a single figure
Director
Note
Salary
and fees
£000’s
2014
Annual
bonuses
£000’s
Total
£000’s
Salary
and fees
£000’s
WO McIlroy
BJM Johnson
Total
1
2
-
89
89
29
29
58
29
118
147
-
88
88
2013
Annual
bonuses
£000’s
20
20
40
Total
£000’s
20
108
128
The remuneration of the non-executive directors for the years ended 31 March 2014 and 31 March 2013 is made up as
follows:
Non-executive directors’ remuneration as a single figure
Director
Note
3
MT Carney
NDJ O’Shea
W T Glen
cross
Total
Salary
and fees
£000’s
2014
Taxable
Benefit
£000’s
8
12
12
32
-
-
1
1
Total
£000’s
Salary
and fees
£000’s
8
12
13
8
12
12
33
32
2013
Taxable
Benefit
£000’s
Total
£000’s
-
-
1
1
8
12
13
33
12
Directors’ remuneration report (continued)
Creightons Plc Annual Report 2014
Note
1
2
3
All payments are made to Mr McIlroy’s service company, Lesmac Securities Limited.
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 directly to the individual directors.
Taxable benefits
The taxable benefit for Mr William Glencross relates to his membership of the Group’s medical scheme.
Payments for loss of office
No Executive directors left the company during the year ended 31 March 2014 and therefore no payments in respect of
compensation for loss of office were paid or payable to any director (2013 – nil).
Share options
The directors exercised the following share options during the year ended 31 March 2014.
Number of
shares
Exercise
price
Date exercised
WO McIlroy
BJM Johnson
1,303,275 2.0p
1,303,275 2.0p
24 March 2014
24 March 2014
The directors have no share options outstanding at 31 March 2014.
Directors' shareholdings
The directors who held office at 31 March 2014 had the following beneficial interests in the 1p ordinary shares of the
company:
Director
31 March 2014
1 April 2013
Number of
shares
Options
Number of
shares
Options
Mr William O McIlroy
Mr Bernard JM Johnson
Mr Nicholas DJ O’Shea
Mr William T Glencross
16,219,275
4,787,844
31,000
67,500
-
-
-
-
14,916,000
3,484,569
31,000
67,500
1,303,275
1,303,275
-
-
Mr McIlroy’s holding noted above includes 14,450,000 (2013: 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 2014 and 30 June 2014.
13
Directors’ remuneration report (continued)
Creightons Plc Annual Report 2014
The information provided in this part of the Annual Report on remuneration is not subject to audit
Performance graph and CEO remuneration table
The following graph shows the Group’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
p
/
e
c
l
i
r
P
e
r
a
h
S
c
P
s
n
o
t
h
g
e
r
C
i
4.50
4.00
3.50
3.00
2.50
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-10
31-Mar-11
31-Mar-12
31-Mar-13
31-Mar-14
Creightons Plc Share price - pence
FTSE All Share Index
Table of Historical Data
The table below sets out the remuneration of the director undertaking the role of Chief Executive officer.
Year
2014
2013
2012
2011
2010
CEO Single figure
of total
remuneration
£000’s
Annual bonus pay-out
against maximum %
29
20
16
12
20
100%
100%
100%
100%
100%
Percentage change in remuneration of director undertaking the role of Chief Executive officer
The table below shows the percentage increase in remuneration of the director undertaking the role of Chief Executive
Officer and the Group’s employees as a whole between the years ended 31 March 2013 and 31 March 2014.
Percentage
2014 compared with remuneration in 2013
in remuneration
increase
in
Salary and Fees
All taxable benefits
Annual bonus
Total
Employees
2.3%
0.0%
6.7%
9.2%
CEO
n/a
n/a
45%
45%
14
Creightons Plc Annual Report 2014
Directors’ remuneration report (continued)
Statement of implementation of remuneration policy for the year ended 31 March 2015
As this is the first year of implementation there is nothing to report.
Relative importance of spend on pay
The table below shows the total expenditure of the Group for all employees compared to retained profits and
distributions to shareholders for the years ended 31 March 2014 and 31 March 2013 and the year on year change.
Year ended
31 March
2014
£000’s
Year ended
31 March
2013
£000’s
Change
%
Employee costs
Profit for the year
4,862
471
4,311
302
12.8
56.0
Service contracts
Mrs Mary Carney and Mr William Glencross who are proposed for re-election at the next Annual General Meeting have
service contracts which provide for no notice period.
Voting at general meeting
The Group is committed to on-going shareholder dialogue and takes an active interest in voting outcomes. Where
there are substantial votes against resolutions in relation to directors’ remuneration, the reasons for any such vote will
be sought, and any actions in response will be detailed here.
The following table sets out actual voting in respect of the approval of the Directors’ Remuneration report in respect of
the year ended 31 March 2014:
Number of
votes cast
for
14,714,216
% of votes
cast for
Number of
votes cast
against
% of votes
cast
against
Total votes
cast
Number of
votes cast
withheld
99.98
3,605
0.02
14,717,821
-
No reasons were sought for the votes cast against the remuneration report due to the small number of votes cast
against the report.
Policy report
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 Group 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 packages for non-executive
directors include a salary or fee. The committee has 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 conditions 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 Group 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 Group, such as with direct competitors or major
suppliers and customers.
15
Creightons Plc Annual Report 2014
Directors’ remuneration report (continued)
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 2013-14, 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 bonuses
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 2014, and as a consequence, provision for payment of the profit related performance bonus has
been made in the financial statements, and will be paid 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.
Executive share option scheme
The policy of the company is to grant share options to executive directors and other senior managers as an incentive
to enhance shareholder value. Those options held by members of the Board at 31 March 2013 were exercised during
the year. A resolution will be put to shareholders at the forthcoming Annual General Meeting to authorise a new share
option scheme which will further incentivise the executive directors and the senior managers in Group to further
enhance shareholder value.
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 of £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.
16
Creightons Plc Annual Report 2014
Directors’ remuneration report (continued)
Approval
In the opinion of the Remuneration Committee, the company has complied with Section D of the Code, and in forming
the remuneration policy the committee has given full consideration to that section of the Code.
The Directors’ remuneration report was approved by the Board of Directors on 3 July 2014 and signed on its behalf by:
Mr Nicholas O’Shea
Company Secretary
17
Directors’ responsibilities statement
Creightons Plc Annual Report 2014
The directors are responsible for preparing the Annual Report and the Financial Statements in accordance with
applicable laws and regulations.
Company law requires the directors to prepare such financial statements for each financial year. Under that law the
directors are required to prepare the Group consolidated financial statements in accordance with International
Financial Reporting Standards (IFRS) as adopted by the European Union and Article 4 of International Accounting
Standards (IAS) regulation and have also chosen to prepare the parent company financial statements under IFRS’s as
adopted by the European Union. 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 Group and of the profit or loss of the
Group for that period. In preparing these financial statements, IAS1 requires that the directors:
properly select and 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 Group’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
Group’s transactions and disclose with reasonable accuracy at any time the financial position of the Group 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 Group and hence for taking reasonable steps to prevent and detect fraud and other
irregularities.
Under applicable law and regulations, the directors are also responsible for preparing a, Strategic report, 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 Group’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 – Periodic Financial Reporting
We confirm that to the best of our knowledge:
1.
2.
3.
the financial statements, prepared in accordance with International Financial Reporting Standards (IFRS) as
adopted by the EU, give a true and fair view of the assets, liabilities, financial position and profit or loss of the
company and the undertakings included in the consolidation taken as a whole;
the strategic report includes a fair review of the development and performance of the business and the
position of the company and the undertakings included in the consolidation taken as a whole, together with
the description of the principal risks and uncertainties that they face; and
the report and financial statements, taken as a whole, are fair, balanced and understandable and provide the
information necessary for shareholders to assess the Group’s performance and business model and strategy.
By order of the board
Bernard Johnson
Managing Director
03 July 2014
18
Creightons Plc Annual Report 2014
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 2014 which comprise the
consolidated income statement, the consolidated and parent company statements 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) (‘ISAs 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 and to identify any information that is apparently materially
incorrect based on, or materially inconsistent with, the knowledge acquired by us in the course of performing the
audit. If we become aware of any apparent material misstatements or inconstancies we consider the implications for
our report.
An overview of the scope of our audit
The Group financial statements consolidate the financial statements of Creightons Plc and its subsidiary undertakings.
The Group operates through two trading subsidiary undertakings and the Group’s financial statements consolidate
these entities together with a number of dormant subsidiary undertakings as set out in note 15. In establishing our
overall approach to the Group audit we determined the type of work that needed to be performed in respect of each
subsidiary. This consisted of auditing the financial information of all subsidiaries considered to be significant
components of the Group.
We tested and examined information using controls testing, substantive and non substantive techniques to the extent
considered necessary to provide us with sufficient reliable audit evidence to draw conclusions. These procedures gave
us the evidence that we needed for our opinion on the Group’s financial statements as a whole and, in particular,
helped mitigate the risks of material misstatements mentioned below.
Our assessment of risks of material misstatement
We considered the following areas to be those that required particular focus in the current year. This is not a complete
list of all areas of risk identified in our audit but summarises the key areas which were highlighted with the Audit
Committee in our planning discussions:
we performed substantive testing relating to revenue recognition as well as analytical procedures, in
particular in relation to year end cut-off and the issue of credit notes;
we considered the appropriateness of inventory provisions, challenged management regarding the basis of
their estimation and reviewed the outcome of prior year provisions.
Our application of materiality
We set certain thresholds for materiality based on a weighted calculation of revenue and assets criteria. These help us
establish transactions and misstatements that are significant to the financial statements as a whole, to determine the
nature, timing and extent of our audit procedures and to evaluate the effect of misstatements, both individually on
balances and on the financial statements as a whole.
Based on our methodology and professional judgement we determined materiality for the Group financial statements
as a whole to be £118,000. Furthermore, we calculated a performance materiality for each significant component of
the Group we audited to enable us to calculate sample sizes.
We agreed with the Audit Committee that we would report to them the misstatements identified during our audit
above £6,000.
19
Creightons Plc Annual Report 2014
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 2014 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 strategic report and the directors' report for the financial year for which the
financial statements are prepared is consistent with the financial statements.
Matters on which we are required to report by exception
We have nothing to report in respect of the following:
Under the ISAs (UK and Ireland), we are required to report to you if, in our opinion, information in the annual report
is:
materially inconsistent with the information in the audited financial statements; or
apparently materially incorrect based on, or materially inconsistent with, our knowledge of the Group
acquired in the course of performing our audit; or
otherwise misleading.
In particular, we are required to consider whether we have identified any inconsistencies between our knowledge
acquired during the audit and the directors’ statement that they consider the annual report is fair, balanced and
understandable and whether the annual report appropriately discloses those matters that we communicated to the
Audit Committee which we consider should have been disclosed.
Under the Companies Act 2006 we are required 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 6 in relation to going concern;
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.
DAVID JAMES (Senior Statutory Auditor)
for and on behalf of CHANTREY VELLACOTT DFK LLP
Chartered Accountants and Statutory Auditor
London
3 July 2014
20
Consolidated income statement
Creightons Plc Annual Report 2014
Revenue
Cost of sales
Gross profit
Distribution costs
Administrative expenses
Operating profit
Finance costs
Profit before tax
Taxation
Profit for the year from continuing operations
Earnings per share
Basic
Diluted
Consolidated statement of comprehensive income
Profit for the year from continuing operations
Exchange differences on translating foreign operations
Total comprehensive income for the year attributable to the
equity holders of the parent
Company statement of comprehensive income
Loss for the year from continuing operations
Total comprehensive expense for the year
Note
5
7
9
10
11
11
Year ended 31
March
2014
£000
Year ended 31
March
2013
£000
19,352
(11,460)
7,892
(802)
(6,587)
503
(32)
471
-
471
17,326
(9,902)
7,424
(763)
(6,328)
333
(31)
302
-
302
0.81p
0.79p
0.55p
0.51p
Year ended
31 March
2014
£000
Year ended
31 March
2013
£000
471
42
513
302
(22)
280
Year ended
31 March
2014
£000
Year ended
31 March
2013
£000
-
-
(3)
(3)
21
Consolidated balance sheet
Creightons Plc Annual Report 2014
31 March
2014
£000
31 March
2013
£000
Note
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
Borrowings
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
12
13
14
16
17
18
20
21
22
21
23
24
343
259
590
1,192
3,704
3,464
11
7,179
343
295
525
1,163
3,526
2,811
18
6,355
8,371
7,518
2,777
20
613
3,410
2,219
19
892
3,130
3,769
3,225
28
28
48
48
3,438
3,178
4,933
4,340
584
1,264
38
-
(13)
3,060
545
1,231
38
51
(55)
2,530
4,933
4,340
These financial statements were approved by the board of directors and authorised for issue 3 July 2014. They were
signed on its behalf by:
Bernard Johnson
Managing Director
22
Creightons Plc Annual Report 2014
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
2014
31 March
2013
Note
£000
£000
15
17
20
23
72
72
72
72
2,126
2,126
2,046
2,046
2,198
2,118
35
35
35
35
2,091
2,011
35
35
2,163
2,083
584
1,264
18
1,441
-
(1,144)
545
1,231
18
1,441
51
(1,203)
2,163
2,083
These financial statements were approved by the board of directors and authorised for issue on 3 July 2014. They
were signed on its behalf by:
Bernard Johnson
Managing Director
Company registration number 1227964
23
Consolidated statement of changes in equity
Creightons Plc Annual Report 2014
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 2012
Exchange
differences on
translation of
foreign operations
Share-based
payment charge
Profit for the year
At 31 March 2013
Issue of share
options
Exchange
differences on
translation of
foreign operations
Share-based
payment charge
Transfer – see note
below
Profit for the year
At 31 March 2014
545
-
1,231
-
-
-
545
39
-
-
-
-
-
1,231
33
-
-
-
-
584
-
1,264
38
-
-
-
38
-
-
-
-
-
38
44
-
7
-
51
-
-
8
(59)
-
-
(33)
(22)
2,228
-
4,053
(22)
-
-
(55)
-
42
-
(13)
-
7
302
2,530
-
-
-
59
471
3,060
302
4,340
72
42
8
471
4,933
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 2012
Share based payment
charge
Loss for the year
At 31 March 2013
Issue of share options
Share-based payment
charge
Transfer – see note below
At 31 March 2014
545
-
-
545
39
-
-
584
1,231
-
-
1,231
33
-
-
1,264
18
-
-
18
-
-
-
18
1,441
-
-
1,441
-
-
-
1,441
44
7
-
51
-
8
(1,200)
-
(3)
(1,203)
-
-
2,079
7
(3)
2,083
72
8
(59)
59
-
-
(1,144)
2,163
During the year, the Directors decided to release the share-based payment reserve to retained earnings as allowed
under IFRS 2 (Share-based Payment).
24
Consolidated cash flow statement
Creightons Plc Annual Report 2014
Net cash from operating activities
Investing activities
Purchase of property, plant and equipment
Purchase of intangible assets
Net cash used in investing activities
Financing activities
Repayment of finance lease obligations
Proceeds on issue of shares
(Decrease)/increase in bank loans and invoice finance facilities
Net cash (used in)/ generated from financing activities
Net (decrease) in cash and cash equivalents
Cash and cash equivalents at start of year
Effect of foreign exchange rate changes
Cash and cash equivalents at end of year
Company cash flow statement
Net cash used in operating activities
Financing activities
Proceeds of share issue
Net cash generated from financing activities
Net change in cash and cash equivalents
Cash and cash equivalents at start of year
Cash and cash equivalents at end of year
Year ended
31 March
2014
£000
Year ended
31 March
2013
£000
689
306
Note
30
(211)
(258)
(97)
(334)
(469)
(431)
(19)
72
(279)
(226)
(6)
18
(1)
11
(19)
-
54
35
(90)
106
2
18
Note
30
Year ended
31 March
2014
£000
Year ended
31 March
2013
£000
(72)
72
72
-
-
-
-
-
-
-
-
-
25
Creightons Plc Annual Report 2014
Notes to the financial statements
1. General information
Creightons Plc (the Company) was incorporated in the United Kingdom under the Companies Act. The address of
the registered office is given on page 49; it is a public company, with a premium listing on the London Stock
Exchange. The nature of the Group’s operations and its principal activities are set out in the strategic report on
pages 3 to 6.
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 3.
2 Adoption of new and revised Standards
In the current year, the following new and revised Standards and interpretations have been adopted with no
material impact on the amounts reported in these financial statements:
IFRS 10 Consolidated Financial Statements (effective 1 January 2014)
IFRS 11 Joint Arrangements (effective 1 January 2014)
IFRS 12 Disclosure of Interests in Other Entities (effective 1 January 2014)
New standards and interpretations currently in issue but not effective for accounting periods commencing on 1
April 2014 are:
IFRS 9 Financial Instruments (effective 1 January 2015)
As of 31 March 2014, the following standards and interpretations are in issue but not yet adopted by the EU:
IFRS 15 Revenue from contracts with customers (effective 1 January 2017)
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.
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 2013.
3 Significant accounting policies
Basis of accounting
The financial statements have been prepared in accordance with IFRS adopted by the European Union and
therefore the Group financial statements comply with Article 4 of the EU IAS regulations.
The financial statements have also been prepared on the historical cost basis, except for the revaluation of
financial instruments that are measured at revalued amounts or fair values at the end of each reporting period, as
explained in the accounting policies below. Historical cost is generally based on the fair value of the consideration
given in exchange for goods and services. The principal accounting policies adopted are set out below.
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 when the Company:
has power over the investee;
is exposed, or has rights, to variable return from its involvement with the investee; and
has the ability to use its power to affect its returns.
The Company reassesses whether or not it controls an investee if facts and circumstances indicate that there are
changes to one or more of the three elements of control listed above.
When the Company has less than a majority of the voting rights of an investee, it considers that it has the power
over the investee when the voting rights are sufficient to give it the practical ability to direct the relevant activities
of the investee unilaterally. The Company considers all of the relevant facts and circumstances in assessing
whether or not the Company’s voting rights in an investee are sufficient to give it power, including:
the size of the Company’s holding of voting rights relative to the size and dispersion of holdings of other
vote holders;
potential voting rights held by the Company, other vote holders or other parties;
26
Creightons Plc Annual Report 2014
Notes to the financial statements
3 Significant accounting policies (continued)
rights arising from other contractual arrangements, and
any additional facts and circumstances that indicate that the Company has, or does not have, the current
ability to direct the relevant activities at the time that decisions need to be made, including voting
patterns at previous shareholder meetings.
Consolidation of a subsidiary begins when the Company obtains control over the subsidiary and ceases when the
Company loses control of the subsidiary. Specifically, the results of subsidiaries acquired or disposed of during
the year are included in the consolidated income statement from the date the Company gains control until the
date the Company ceases to control the subsidiary.
Profit or loss and each component of other comprehensive income are attributed to owners of the Company and to
the non-controlling interests. Total comprehensive income of the subsidiaries is attributed to the owners of the
company and to non-controlling interests even if this results in the non-controlling interests having a debit
balance.
Where necessary, adjustments are made to the financial statements of subsidiaries to bring the accounting
policies used into line with the Group’s accounting policies.
All intragroup assets and liabilities, equity, income, expenses and cash flows relating to transactions between
members of the Group are eliminated on consolidation.
Going concern
The directors have, at the time of approving the financial statements, a reasonable expectation that the Group has
adequate resources to continue in operational existence for the foreseeable future. Thus they continue to adopt
the going concern basis of accounting in the preparing the financial statements. Further detail is included in the
strategic report on pages 3 to 6.
Business combinations
Acquisition of subsidiaries and businesses are accounted for using the acquisition method. The consideration
transferred in a business combination is measured at fair value, which is calculated as the sum of the acquisition-
date fair values of assets transferred to the Group, less liabilities incurred in exchange for control of the acquiree.
Acquisition related costs are recognised in profit or loss as incurred.
At the acquisition date, the identifiable assets acquired and the liabilities assumed are recognised at their fair
value, except:
deferred tax assets or liabilities and assets or liabilities related to employee benefit arrangements that
are recognised and measured in accordance with IAS 12 Income Taxes and IAS 19 Employee Benefits
respectively; and
assets that are classified as held for sale in accordance with IFRS 5 Non-current Assets Held for Sale and
Discontinued Operations are measured in accordance with that standard.
Goodwill is measured as the excess of the sum of the consideration transferred, the amount of any non-controlling
interests in the acquiree, and the fair value of the acquirer’s previously held equity interests in the acquiree (if
any) over the net of the acquisition-date amounts of the identifiable assets acquired and the liabilities assumed.
If, after reassessment, the net of the acquisition-date amounts of the identifiable assets acquired and liabilities
assumed exceeds the sum of the consideration transferred, the amount of any non-controlling interest in the
acquiree and the fair value of the acquirer’s previously held interests in the acquiree (if any), the excess is
recognised immediately in the profit or loss as a purchase gain.
Goodwill
Goodwill is initially recognised and measured as set out above.
Goodwill is not amortised but is reviewed for impairment at least annually. 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. An impairment loss recognised for
goodwill is not reversable in subsequent periods.
On disposal of a subsidiary, the attributable amount of goodwill is included in the determination of the profit or
loss on disposal.
27
Creightons Plc Annual Report 2014
Notes to the financial statements
3 Significant accounting policies (continued)
Revenue recognition
Revenue is measured at the fair value of the consideration received or receivable in the year and represents
amounts receivable for goods provided in the normal course of business, net of discounts, VAT and other sales
related taxes.
Revenue from the sale of goods is recognised when all the following conditions are satisfied:
the Group has transferred to the buyer the significant risks and rewards of ownership of the goods;
the Group retains neither continuing managerial involvement to the degree normally associated with
ownership nor effective control over the goods sold;
the amount of revenue can be measured reliably;
it is probable that the economic benefits associated with the transaction will flow to the entity; and
the costs incurred or to be incurred in respect of the transaction can be measured reliably.
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 expenses and reduction of the lease obligation so as to achieve
a constant rate of interest on the remaining balance of the liability. Finance expenses are recognised immediately
in profit or loss.
Rentals payable under operating leases are charged against income on a straight-line basis over the term of the
relevant lease.
In the event that lease incentives are received to enter into operating leases, such incentives are recognised as a
liability. The aggregate benefit of incentives is recognised as a reduction of rental expense on a straight line basis
over the term of the lease, except where another more systemic basis is more representative of the time pattern
in which economic benefits from the leased asset are consumed.
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 result and financial position of each group company is presented in pounds sterling, which is 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 that date.
Exchange differences are recognised in profit or loss in the period in which they arise except for exchange
difference on:
transactions entered into to hedge certain currency risks (see below under financial instruments / hedge
accounting); and
monetary items receivable from or payable to a foreign operation for which settlement is neither planned
nor likely to occur in the foreseeable future (therefore forming part of the net investment in the foreign
operation), which are recognised initially in other comprehensive income and reclassified from equity to
profit or loss on disposal or partial disposal of the next investment.
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 recognised in other comprehensive income and accumulated in equity.
On the disposal of a foreign operation (i.e. a disposal of the Group’s entire interest in a foreign operation, or a
disposal involving loss of control over a subsidiary that includes a foreign operation, loss of joint control over a
jointly controlled entity that includes a foreign operations, or loss of significant influence over an associate that
includes a foreign operation) all of the accumulated exchange differences in respect of that operation attributable
to the Group are reclassified to profit or loss.
28
Creightons Plc Annual Report 2014
Notes to the financial statements
3 Significant accounting policies (continued)
In addition, in relation to a partial disposal of a subsidiary that includes a foreign operation that does not result in
the Group losing control over the subsidiary, the proportionate share of accumulated exchange differences are re-
attributed to non-controlling interests and are not recognised in profit or loss. For all other partial disposals (i.e.
partial disposals of associates or joint arrangements that do not result in the Group losing significant influence or
joint control), the proportionate share of the accumulated exchange differences is reclassified to profit or loss.
Borrowing costs
All borrowing costs are recognised in the profit or loss in the period in which they are incurred.
Operating profit
Operating profit is stated 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 recognised as an expense when employees
have rendered service entitling them to the contributions.
Taxation
The tax expense represents the sum of tax currently payable and deferred tax.
Current 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
deductible. 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
Deferred tax is the tax expected to be payable or recoverable on material 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.
The carrying amount of deferred tax assets is reviewed at each balance sheet date and reduced to the extent that
it is no longer probable that sufficient taxable profits will be available to allow all or part of the asset to be
recovered.
Deferred tax is calculated at tax rates that are expected to apply in the period when the liability is settled or the
asset is realised based on tax laws and rates that have been enacted or substantially enacted at the balance sheet
date. Deferred tax is charged or credited to the income statement, except when it relates to items charged or
credited to other comprehensive income, in which case the deferred tax is also dealt with in other comprehensive
income.
The measurement of deferred tax liabilities and assets reflects the tax consequences that would follow from the
manner in which the Group expects, at the end of the reporting period, to recover or settle the carrying amount of
its assets or liabilities.
Deferred tax assets and liabilities are offset when there is a legally enforceable right to set off current tax assets
against current tax liabilities and when they relate to income taxes levied by the same taxation authority and the
Group intends to settle its current tax assets and liabilities on a net basis.
Current and deferred tax for the year
Current and deferred tax are recognised in profit or loss, except when they relate to items that are recognised in
other comprehensive income or directly in equity, in which case, the current and deferred tax are also recognised
in other comprehensive income or directly in equity respectively. When current tax or deferred tax arises from
the initial accounting for a business combination, that tax effect is included in the accounting for the business
combination.
29
Creightons Plc Annual Report 2014
Notes to the financial statements
3 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 - 20
20 - 33
The estimated useful lives, residual values and depreciation method used are reviewed at the end of each
reporting period, with the effect of any changes in the estimate accounted for on a prospective basis.
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.
An item of property, plant and equipment is derecognised upon disposal or when no future economic benefits are
expected to arise from the continued use of the asset. The gain or loss arising on the disposal or scrappage 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 of up to two
years. Where no internally generated intangible assets can be recognised, development expenditure is recognised
as an expense in the period in which it is incurred.
Intangible assets acquired separately
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 its estimated
useful life as follows:
Acquired licences
Computer software
- Over three years
- Over three to five years
Impairment of tangible and intangible assets excluding goodwill
At each balance sheet date, the Group reviews the carrying amount of its tangible and intangible assets to
determine whether there is any indication that those assets suffered an impairment loss. If any such indication
exists, the recoverable amount of the asset is estimated to determine the extent of the impairment loss, if any.
Where the asset does not generate cash flows that are independent from other assets, the Group estimates the
recoverable amount of the cash generating unit to which the asset belongs.
Recoverable amount is the higher of the fair value less cost to sell and value in use. In assessing value in use, the
estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects the
current market assessment of the time value of money and the risk specific to the asset for which the asset for
which the estimates of future cash flows have not been adjusted.
If the recoverable amount of an asset (or cash generating unit) is estimated to be less than its carrying amount,
the carrying amount of the asset (or cash generating unit) is reduced to its recoverable amount. An impairment
loss is recognised immediately in profit or loss, unless the relevant asset is carried at a revalued amount, in which
case the impairment loss is treated as a revaluation decrease.
Where an impairment loss subsequently reverses, the carrying amount of the asset (or cash generating unit) is
increased to the revised estimate of its recoverable amount, but so that the increased carrying amount does not
exceed the carrying amount that would have been determined had no impairment loss been recognised for the
asset (or cash generating unit) in prior years. A reversal of an impairment loss is recognised immediately in profit
30
Creightons Plc Annual Report 2014
Notes to the financial statements
3 Significant accounting policies (continued)
or loss, unless the relevant asset is carried at a revalued amount, in which case the reversal of the impairment
loss is treated as a revaluation increase.
Investments
Investments in subsidiary companies are stated at cost less any recognised impairment loss.
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. Cost is calculated using standard costing basis. Net realisable value
represents the estimated selling price less all estimated costs to completion and costs to be incurred in marketing,
selling and distribution.
Financial assets and liabilities
Financial assets and liabilities are recognised in the Group’s balance sheet when the Group becomes party to a
contractual provision of the instrument.
Trade receivables are initially recognised at fair value. Appropriate allowances for estimated irrecoverable
amounts are recognised in profit or loss when there is objective evidence, such as an increase in delayed
payments, that the asset is impaired.
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 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,
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
Equity-settled share-based payments to employees and others providing similar services are measured at the fair
value at the grant date. The fair value excludes the effect of non-market based vesting conditions. Details
regarding the determination of the fair value of equity-settled share-based payments are set out in note 25.
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. At each
balance sheet date the Group revises its estimate of the number of shares expected to vest as a result of the
effect of non-market based vesting conditions. The impact of the revision of the original estimate, if any, is
recognised in profit or loss such that the cumulative expense reflects the revised estimate, with a corresponding
adjustment to equity reserves.
31
Creightons Plc Annual Report 2014
Notes to the financial statements
3 Significant accounting policies (continued)
4.
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 3, 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.
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 3 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.
5 Revenue
All of the Group’s revenue is derived from the sale of goods. There are no discontinued operations.
6 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 2014
Year ended 31 March 2013
External
revenue
£000
Inter-
segment
revenue
£000
Total
segment
revenue
£000
External
revenue
£000
Inter-
segment
revenue
£000
Total
segment
revenue
£000
18,236
1,116
142
-
18,378
1,116
15,782
1,544
346
-
16,128
1,544
19,352
142
19,494
17,326
346
17,672
United Kingdom
North America
Total
Information about major customers
Included in revenues arising from the United Kingdom for the year ended 31 March 2014 are revenues from three
customers that exceeded 10% of total revenue being; £2,633,000, £2,211,000 and £1,881,000 respectively.
32
Creightons Plc Annual Report 2014
Notes to the financial statements
6 Business and geographic segments (continued)
Profit by segment
Year ended 31 March 2014
Group
North
America
£000
United
Kingdom
£000
£000
Year ended 31 March 2013
Group
North
United
America
Kingdom
£000
£000
£000
Segment results
1,337
(2)
1,335
1,017
129
1,146
Central costs
Operating profit
Finance costs
Profit for the year
Segmental operating profit is stated after charging:
(832)
503
(32)
471
(813)
333
(31)
302
Year ended 31 March 2014
Group
North
America
£000
United
Kingdom
£000
£000
Year ended 31 March 2013
Group
North
United
America
Kingdom
£000
£000
£000
Depreciation
Amortisation
Write-downs of inventory recognised
as an expense
146
293
107
-
-
69
146
293
176
128
301
174
-
-
14
128
301
188
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
Year ended
31 March
2014
£000
Year ended
31 March
2013
£000
1,192
-
1,163
-
1,192
1,163
6,855
324
5,874
481
7,179
6,355
8,047
324
7,037
481
8,371
7,518
33
Creightons Plc Annual Report 2014
Notes to the financial statements
6 Business and geographic segments (continued)
Segment liabilities
United Kingdom
North America
Total liabilities
Year ended
31 March
2014
£000
Year ended
31 March
2013
£000
3,346
92
3,124
54
3,438
3,178
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
3.
7. Operating profit
Operating profit is stated after charging/(crediting):
Net foreign exchange (loss)/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 consolidated financial statements
Fees payable to the company’s auditor for other services:
The audit of the company’s subsidiaries, pursuant to legislation
Tax services
34
Year ended
31 March
2014
£000
Year ended
31 March
2013
£000
(42)
29
11,460
9,699
176
301
129
17
293
188
323
111
17
301
-
3
4,862
4,311
30
28
350
34
350
38
Year ended
31 March
2014
£000
Year ended
31 March
2013
£000
22
6
2
21
6
1
Creightons Plc Annual Report 2014
Notes to the financial statements
8. 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
2014
Number
Year ended
31 March
2013
Number
9
48
140
197
9
47
130
186
Year ended
31 March
2014
£000
Year ended
31 March
2013
£000
4,433
406
23
4,862
3,933
355
23
4,311
Details of directors’ emoluments are set out in the directors’ remuneration report.
9. Finance costs
Interest on bank overdrafts and loans
Interest on obligations under finance leases
Total
10. Taxation
Current tax
Deferred tax
Total
Year ended
31 March
2014
£000
Year ended
31 March
2013
£000
29
3
32
Year ended
31 March
2014
£000
Year ended
31 March
2013
£000
-
-
-
28
3
31
-
-
-
35
Creightons Plc Annual Report 2014
Notes to the financial statements
10. Taxation (continued)
The charge for the year can be reconciled to the profit per the income statement as follows:
Year ended
31 March
2014
£000
Year ended
31 March
2014
%
Year ended
31 March
2013
£000
Year ended
31 March
2013
%
Profit before taxation
471
Tax charge at the UK corporation tax
rate of 23% (2013 – 24%)
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
(108)
(23.0)
(2)
(0.5)
110
23.5
-
-
302
(72)
(2)
74
-
(24.0)
(0.7)
24.7
-
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 £2,207,000 (2013 - £2,649,000) 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.
11. 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
2014
£000
Year ended
31 March
2013
£000
471
302
Year ended
31 March
2014
Number
Year ended
31 March
2013
Number
58,355,426
54,478,876
Effect of dilutive potential ordinary shares relating to share
options
1,570,000
5,126,550
Weighted average number of ordinary shares for the purposes
of diluted earnings per share
59,925,426
59,605,426
36
Creightons Plc Annual Report 2014
Notes to the financial statements
12. Goodwill
Cost
At 1 April 2012, 31 March 2013 and 31 March 2014
Accumulated impairment losses
At 1 April 2012
Charge in the year
At 31 March 2013 and 31 March 2014
Carrying amount
At 1 April 2012
At 31 March 2013 and 31 March 2014
Year ended
31 March
£000
379
33
3
36
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 which was sold on 23 May 2014 - see note 31.
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 9% 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.
13. Other intangible assets
Group
Cost
At 1 April 2012
Additions
Disposals
At 31 March 2013
Additions
Disposals
At 31 March 2014
Accumulated amortisation
At 1 April 2012
Amortisation for the year
Disposals
At 31 March 2013
Amortisation for the year
Disposals
At 31 March 2014
Carrying value
At 1 April 2012
At 31 March 2013
At 31 March 2014
Acquired
computer
software
£000
Product
development
costs
£000
Total
£000
98
8
-
106
8
-
114
60
16
-
76
16
-
92
38
30
22
592
326
(48)
870
250
(139)
981
368
285
(48)
605
277
(138)
744
690
334
(48)
976
258
(139)
1,095
428
301
(48)
681
293
(138)
836
224
262
265
295
237
259
37
Creightons Plc Annual Report 2014
Notes to the financial statements
14. Property, plant and equipment
Group
Cost
At 1 April 2012
Additions
At 31 March 2013
Additions
Disposals
At 31 March 2014
Accumulated depreciation
At 1 April 2012
Depreciation for the year
At 31 March 2013
Depreciation for the year
Disposals
At 31 March 2014
Carrying value
At 1 April 2012
At 31 March 2013
At 31 March 2014
Property ,
plant and
equipment
£000
2,142
97
2,239
211
(32)
2,418
1,586
128
1,714
146
(32)
1,828
556
525
590
Included within property, plant and equipment are assets held under finance leases with a carrying value of
£93,000 (2013 - £111,000) on which depreciation of £17,000 (2013 - £17,000) has been charged during the
year.
15. Investment in subsidiaries
Company
Cost
At 1 April 2012
Additions
At 31 March 2013 and 31 March 2014
Impairment charge
At 1 April 2012
Impairment for the year
At 31 March 2013 and 31 March 2014
Carrying value
At 1 April 2012
At 31 March 2013
At 31 March 2014
38
Investments
£000
72
3
75
-
3
3
75
72
72
Creightons Plc Annual Report 2014
Notes to the financial statements
15. Investment in subsidiaries (continued)
Details of the Company’s subsidiaries at 31 March 2014 and 31 March 2013 are as follows:
Name
Place of incorporation
Registration 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
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
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
55%
100%
55%
55%
55%
The activity of Potter & Moore Innovations Limited 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 2014 and 31 March 2013.
Under the terms of the shareholder agreements with partners in the following subsidiaries:
TS Ventures Limited
Miamoo Limited
Miamoo Limited,
Amie Skincare Limited, and
the partner shareholders have the right, in certain circumstance, to purchase the Company’s shareholding upon
the exercise of a valid exercise option. Our partner in TS Ventures Limited exercised their option and the
Company’s shareholding in TS Ventures Limited was sold on 23 May 2014 – see note 31.
16. Inventories
Raw materials
Work in progress
Finished goods
Group
2014
£000
2013
£000
Company
2014
£000
2013
£000
1,085
267
2,352
836
218
2,472
3,704
3,526
-
-
-
-
-
-
-
-
Inventories with a carrying value of £3,704,000 (2013 - £3,526,000) have been pledged as security for the
Group’s bank overdrafts. Directors believe that net realisable value approximates to fair value.
39
Creightons Plc Annual Report 2014
Notes to the financial statements
17. Trade and other receivables
Group
201
£000
2013
£000
Company
2014
£000
2013
£000
Trade receivables
Amounts receivable from subsidiaries
Prepayments and other receivables
3,337
-
127
2,641
-
170
-
2,126
-
-
2,046
-
3,464
2,811
2,126
2,046
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
2014
£000
2013
£000
Company
2014
£000
2013
£000
3,361
(24)
2,665
(24)
3,337
2,641
-
-
-
The movement in the trade receivables impairment provision is as follows:
Group
2014
£000
2013
£000
Company
2014
£000
2013
£000
At 1 April
Charge in current year income statement
At 31 March
24
-
24
24
-
24
-
-
-
-
-
-
-
-
-
There were £111,000 (2013 - £76,000) trade receivables that were overdue at the balance sheet date that have
not been provided against. There are no indications as at 31 March 2014 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 2014 that were overdue for payment
was 3.3% (2013 -2.8%).
18. 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
2014
£000
2013
£000
Company
2014
£000
2013
£000
1
-
10
11
-
18
-
18
-
-
-
-
-
-
-
-
40
Creightons Plc Annual Report 2014
Notes to the financial statements
19. 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 17.
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 2014 would increase/decrease by £12,000 (2013 – £11,000). 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 11% (2013 – 12%) of the Group’s income is denominated
in US dollars and 1% (2013 - 0.5%) in Euros. Approximately 7% (2013 – 12%) of the Group’s expenditure is
denominated in US dollars and 5% (2013 – 5%) in Euros.
Foreign currency sensitivity
A 5% strengthening of sterling would result in a £44,000 (2013 - £38,000) reduction in profits and equity. A 5%
weakening in sterling would result in a £49,000 (2013 - £42,000) increase in profits and equity.
When appropriate the Group utilises currency derivatives to hedge against significant future transactions and cash
flows. The Group is party to a foreign currency forward contract in the management of its exchange risk exposure
at 31 March 2014 (2013 – nil). The instruments purchased are in the currency used by the Group’s principal
overseas suppliers.
The Group does not designate its foreign currency forward exchange contracts as hedging instruments as they do
not qualify for hedge accounting under IAS39.
At the balance sheet date the fair value of the Group’s derivatives was a liability of under £1,000 (2013 - nil)
which has been booked as a loss in the period.
At the balance sheet date the Group has committed to £785,000 (2013 nil) of forward foreign currency contracts.
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 2015. 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 2014 the
group had available £2,300,000 (2013 - £1,497,000) of undrawn committed borrowing facilities in respect of
which all conditions precedent had been met.
41
Creightons Plc Annual Report 2014
Notes to the financial statements
20. Trade and other payables
Trade payables
Social security and other taxes
Accrued expenses
Amounts payable to subsidiary undertakings
Group
2014
£000
2013
£000
Company
2014
£000
2013
£000
1,823
499
455
-
1,681
360
178
-
2,777
2,219
-
-
-
35
35
-
-
-
35
35
The directors consider the carrying amount of trade payables approximates to fair value.
21. 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
2014
£000
2013
£000
20
28
48
19
48
67
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.
22. Bank overdrafts and loans
Bank overdraft
Borrowings under invoice finance facilities
Group
2014
£000
2013
£000
Company
2014
£000
2013
£000
260
353
613
233
659
892
-
-
-
-
-
-
The borrowings are repayable on demand or within one year.
Borrowings totalling £271,000 (2013 - £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
2014
%
2013
%
Company
2014
%
2013
%
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 Group.
The invoice finance facility is secured on the trade receivables and a floating charge on all of the assets of the
Group.
42
Creightons Plc Annual Report 2014
Notes to the financial statements
23. Share capital
At 01 April 2012 and 31 March 2013
Issued in the year
At 31 March 2014
Ordinary shares of 1p each
£000
Number
545
39
584
54,478,876
3,876,550
58,355,426
The Company has one class of ordinary shares which carry no right to fixed income. All of the share are issued
and fully paid. The total proceeds from the issue of shares in the year was £72,000 (2013 – nil).
24. Other reserves
Group
Capital
reserve
Special
Reserve
Capital
redemption
reserve
Total
Other
reserves
£000
£000
£000
£000
At 1 April 2012, 31 March 2013 and 31 March 2014
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 2014 goodwill written off amounts to £2,575,000 (2013 - £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.
43
Creightons Plc Annual Report 2014
Notes to the financial statements
25. 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 10 years from the date of grant, the option expires. Options are forfeited if the employee leaves
the Group before options vest.
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.
Ordinary shares of 1p each
Number
2014
Weighted
average
exercise price
Number
2013
Weighted
average
exercise price
5,126,550
1.93p
5,376,550
1.90p
Outstanding at the beginning of the
period
Granted in the period
Exercised in the period
Lapsed in the period
320,000
(3,876,550)
-
4.29p
(1.90p)
-
-
-
(250,000)
-
-
(1.38p)
Outstanding at the end of the period
1,570,000
2.48p
5,126,550
1.93p
Share options outstanding at the end of the year have the following expiry dates and exercise prices:
Granted
January 2007
December 2008
February 2011
July 2013
December 2013
Exercise
period
Number
Exercise
price
2010 – 2017
2011 – 2018
2014 – 2021
2016 – 2023
2016 – 2023
50,000
200,000
1,000,000
50,000
270,000
4.75p
1.38p
2.00p
4.50p
4.25p
Outstanding at the end of the period
1,570,000
2.48p
The weighted average contractual life for the outstanding options based on last exercise date is 6.6 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
2014
Year ended
31 March
2013
2.48p
2.48p
29.2% - 155.8%
3
5.8%
-
1.93p
1.93p
29.2% - 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 £8,000 (2013- £7,000) related to share-based payments.
44
Creightons Plc Annual Report 2014
Notes to the financial statements
26. 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
(2013 - £23,000) and cash contributions were £23,000 (2013: £23,000).
27. 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
2014
£000
Year ended
31 March
2013
£000
Year ended
31 March
2014
£000
Year ended
31 March
2013
£000
Minimum lease payments under operating
leases recognised as an expense in the year
384
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
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
28. Capital commitments
Group
2014
£000
2013
£000
Company
2014
£000
2013
£000
377
1,424
345
384
1,424
695
2,146
2,503
-
-
-
-
Group
2014
£000
2013
£000
Company
2014
£000
2013
£000
350
1,400
345
350
1,400
695
2,095
2,445
-
-
-
-
Group
2014
£000
2013
£000
Company
2014
£000
2013
£000
27
24
51
34
24
58
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Group
2014
£000
2013
£000
Company
2014
£000
2013
£000
Contracts placed for future capital expenditure not
provided for in the financial statements
11
3
-
-
45
Creightons Plc Annual Report 2014
Notes to the financial statements
29. 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
2014
£000
Year ended
31 March
2013
£000
2,126
2,046
(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:
Rental charges
Re-imbursement of property insurance costs
Total
Amounts owed to Oratorio Developments Ltd
Amounts payable
Carty Johnson Limited
Year ended
31 March
2014
£000
Year ended
31 March
2013
£000
350
18
368
350
17
367
Year ended
31 March
2014
£000
Year ended
31 March
2013
£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
2014
£000
Year ended
31 March
2013
£000
Charges for internet support services
14
14
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 17.
Salaries and other short term benefits
Total
46
Year ended
31 March
2014
£000
Year ended
31 March
2013
£000
180
180
161
161
Creightons Plc Annual Report 2014
Notes to the financial statements
30. 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
(Increase)/decrease in trade and other receivables
Increase/(decrease) in trade and other payables
Cash generated from operations
Interest paid
Net cash from operating activities
Analysis of changes in net debt
Year ended
31 March
2014
£000
Year ended
31 March
2013
£000
503
333
146
-
293
8
128
3
301
7
950
772
(210)
(661)
642
721
(32)
689
(230)
235
(440)
337
(31)
306
Cash and bank balances
Borrowings
Net debt
Cash and cash equivalents
At 01 April
2013
£000’s
Cash Flow
£000’s
Non-cash
movements
£000’s
At 31
March 2014
£000’s
18
(892)
(874)
(6)
279
273
(1)
-
(1)
11
(613)
(602)
Cash and bank balances
Bank overdraft and borrowings under invoice finance
Net cash and cash equivalents
Company
Loss from operations
Adjustments for:
Share based payment charge
Goodwill impairment charge
Decrease in trade and other receivables
Net cash used in operating activities
47
Year ended
31 March
2014
£000
Year ended
31 March
2013
£000
11
(613)
(602)
18
(892)
(874)
Year ended
31 March
2014
£000
Year ended
31 March
2013
£000
-
8
-
8
(80)
(72)
(3)
7
3
7
(7)
-
Creightons Plc Annual Report 2014
Notes to the financial statements
31. Post balance sheet event
On 23 May 2014 the Group completed the disposal of its 55 % interest in TS Ventures Limited which holds the
intellectual property rights to the Twisted Sista brand of hair care products for a cash consideration of £448,000.
The 55 % interest in TS Ventures Limited is being sold to Mr. Stephen Durham, the owner of the 45 % interest not
owned by the Company. The Company anticipates reporting a profit of approximately £375,000 in the interim
financial report for the six months ended 30 September 2014 in relation to the disposal.
As part of the disposal Potter & Moore Innovations Limited, the Company’s main trading subsidiary, has entered into
a five year exclusive manufacturing agreement with Twisted Sista LLC, a US based corporation, which will be the
main trading business and owner of the Intellectual Property Rights in the Twisted Sista brand.
48
Creightons Plc Annual Report 2014
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
49