Creightons Plc Annual Report 2015
Registered Number 1227964
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Creightons Plc Annual Report 2015
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 and company 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
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4
8
12
15
21
22
24
25
26
27
28
29
30
52
1
Chairman’s statement
Creightons Plc Annual Report 2015
I am pleased to report another year of growth and improved profitability. The Group’s profit attributable to the equity
shareholders of the parent company has increased to £851,000 from £471,000 in 2014. This includes a profit of
£375,000 on the sale of the Group’s 55% interest in TS Ventures Ltd, which was announced on 27 May 2014. The
Group’s profit excluding the exceptional profit relating to the sale of TS Ventures Ltd is £476,000 compared to
£471,000 in 2014.
On 28 May 2015 the Group completed the disposal of “The Real Shaving Company’’ business for £1,000,000 which is
expected to generate an exceptional profit of £844,000. These two disposals illustrate the Group’s effectiveness in
creating and developing brands which add to shareholder value. The Directors consider the creation and development
of brands to be an ongoing feature of the business.
The growth in sales has been achieved in a highly competitive retail environment where our customers are seeking to
improve the value of the offer to their end consumer. Our private label ranges continue to face increased price and
promotion pressure from 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 continued to successfully
generate sales growth by introducing new product ranges for new and existing customers and by expanding our reach
into export markets.
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 £21,093,000 are £1,741,000 (9%) higher than last year (2014: £19,352,000), continuing the
upward growth in sales volumes we have been recording over the past three years. This year’s sales growth has
mainly come from our branded and contract business with only marginal growth from private label customers. The
disposal of the Twisted Sista brand has reduced the level of business generated through our North American
subsidiary. Our strategy of developing the market for branded products exported from the UK has been particularly
successful with sales growth of 95%.
Changes in product and customer mix and price pressure from private label customers has resulted in a reduced gross
margin percentage of 39.8%, a reduction of 1.0% on last year (2014: 40.8%). Winning business with a lower than
average margin has helped deliver the 9% sales growth noted above. Administration costs, which include product
research and development as well as sales promotion and product support, have risen by 5.7% (2014 – 4.1%) as we
invest resources to support the growth of the business.
Group profit after tax of £851,000 (2014: £471,000) shows a significant improvement in shareholder value. Profit after
tax and before the exceptional item of £476,000 (2014: £471,000) represents a solid performance in view of the
market pressures and the investments made to support future development. Diluted earnings per share rose from
0.79p in 2014 to 1.27p for 2015.
Net borrowings (bank overdraft and loans less cash at bank and in hand) at the year-end have reduced by £527,000
to £75,000 (2014: £602,000). Cash generated by the business, together with £387,000 generated from the sale of the
Twisted Sista brand, 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 expanding our
brand offering and refining the range offering within existing brands. We will also seek to acquire brands which are
complementary to our existing portfolio and where our sales, marketing and product development expertise will enable
the Group to drive growth.
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. This is likely to result in margin pressure over the coming years. 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.
There has been a slight increase in raw material prices after a relatively benign period and we have focused attention
on maximising our buying potential.
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.
As mentioned above the Group completed the sale of The Real Shaving Company business for an anticipated profit of
£844,000. The Group intends to utilise the proceeds of this disposal to invest in the development of new ranges and to
invest in resources to help improve productivity and staff development. We are finalising plans to invest approximately
£100,000 to improve our manufacturing and logistics organisations. This one-off expenditure, which will impact on the
results for this year, will provide us with the structure capable of delivering long term increases in productivity and
capacity and improve our competitiveness.
2
Creightons Plc Annual Report 2015
The Board has considered and decided not to declare a dividend this year. As part of this review the Board also
decided that it should aim to introduce dividend payments for the year ended 31 March 2016, should the underlying
level of profits and cash generation continue to improve.
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, 18 June 2015
3
Group strategic report
Creightons Plc Annual Report 2015
This strategic report has been prepared solely to provide additional information to enable 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
A 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 is the development, marketing and manufacture of toiletries and fragrances which
includes the development of brands. 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 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.
Since then, the Group has consolidated its manufacturing at the Potter and Moore Innovations plant in Peterborough.
Having previously experienced a number of years with major losses, the years since the acquisition of Potter & Moore
Innovations in 2003 have seen the group return to sustained and gradually increasing profitability.
Operating Environment
The toiletries sector encompasses products from haircare, skincare, bath & body and male grooming, amongst others.
The market is relatively mature and is constantly evolving as brands seek to differentiate their offering in order to
generate sales opportunities. This has resulted in a fragmentation of different sectors with; for example haircare
products being developed to treat different hair types and conditions such as; colour, ethnicity and frizziness. This
fragmentation whilst adding some complexity creates opportunities for our business.
Consumers purchase our products 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
products are sold in the UK, with increasing amounts sold overseas, either direct to retailers or through distributors.
Producers and manufacturers providing products in this market place range from major multinational corporations to
small businesses, such as Creightons. Production and manufacturing 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.
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.
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Creightons Plc Annual Report 2015
Group strategic report (continued)
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
our own branded business which develops, markets, sells and distributes products we have developed and
own the rights to.
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.
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 where the benefits of developing existing established brands with the brand owners will add contribution to
profits and value to the brand.
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 Amie Skincare and our
Creightons Haircare brands.
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 which will help us maintain and grow our business and create
brand value which can crystallise through disposals to third parties.
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.
5
Group strategic report (continued)
Creightons Plc Annual Report 2015
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 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.
Financial Key Performance Indicators
Sales
Gross Margin as a % of Revenue
Profit for the year
Operating profit – excluding exceptional profit
Operating profit - excluding exceptional profit -
as a % of Revenue
Return on
exceptional profit
Bank overdraft and loans less cash in hand
Gearing (including obligations under finance
leases)
capital employed – excluding
2014/15
£21,093,000
39.8%
£851,000
£476,000
2.2%
2013/14
£19,352,000
40.8%
£471,000
£471,000
2.4%
Movement
Increase by 9.0%
Decrease of 1.0%
Increase by 80.6%
Increase by 1.1%
Decrease of 0.2%
8.2%
9.5%
Decrease of 1.3%
£75,000
1.3%
£602,000
12.2%
Decreased by 87.5%
Decreased by 10.9%
There were no incidents involving employees or contractors on the Group’s sites which were required to be reported to
the Health & Safety Executive during the year (2014: 2)
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.
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Creightons Plc Annual Report 2015
Group strategic report (continued)
The table below shows the number of employees by gender in the Group as at 31 March 2015.
Directors, including Non-Executive Directors
Senior Managers
Other employees
Group 2015
Company 2015
Female
Male
Female
Male
2
2
6
2
126
102
2
-
-
6
-
-
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 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 23 July 2015 and signed on its behalf by:
Bernard Johnson
Managing Director
7
Directors’ report
Creightons Plc Annual Report 2015
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 2015. The corporate governance statement set out on pages 12 to 14
forms part of this report.
Details of significant events since the balance sheet date are contained in note 32 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
2015 (2014 – 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
2015
2014
563
618
1,181
93.0
528
547
1,075
93.8
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 of 110.5 tonnes of Co2e per £m of cost of sales) 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 12 to 14.
Under its Articles of Association, the company has the authority to issue 2,917,771 ordinary shares.
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.
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Creightons Plc Annual Report 2015
Directors’ report (continued)
Directors
The directors who held office during the year were as follows:
William O McIlroy (Executive Chairman and Chief Executive)
Mary T Carney (Senior Non-executive)
Nicholas DJ O’Shea (Non-executive)
Bernard JM Johnson (Managing Director)
William T Glencross (Non-executive)
Philippa Clark (Global Sales & Marketing Director)
Martin Stevens (Deputy Managing Director)
Paul Forster (Director of UK Operations)
Directors indemnities
There are no director indemnities.
Directors’ insurance
Appointed 9 Feb 2015
Appointed 9 Feb 2015
Appointed 9 Feb 2015
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
Mr William McIlroy and Mr Bernard Johnson retire by rotation at the next annual general meeting and, being eligible to
do so, offer themselves for re-election.
William McIlroy has served as the company’s Chairman and Chief Executive for over 14 years He has extensive
knowledge and experience of the personal care industry. The Board in its capacity as Nominations Committee endorses
Mr McIlroy for re-election on the basis of his record of providing strategic direction and guidance to the company,
which have resulted in its recovery from a poor trading and funding position, delivering sustained profit and earnings
growth for over a decade.
Bernard Johnson has been with the company for 12 years working as Managing Director. He has been in similar senior
positions with manufacturing businesses over the past 30 years, in many cases brought in on a rescue and recovery
basis. The Board in its capacity as the Nominations Committee endorses Mr Johnson for re-election on the basis of his
record of success in both turning round and then growing the business during his time as Managing Director and
believes that he can continue to contribute substantially to the on-going success of the business.
Ms Philippa Clark, Mr Martin Stevens and Mr Paul Forster all stand for election at the next annual general meeting as
newly appointed directors.The Board in its capacity as the Nominations Committee endorses their election, considering
that they each bring significant experience and ability to the board and as members of the management team for over
a decade have demonstrated their ability to build and lead the company.
Philippa Clark has worked within the industry for 18 years in a wide and extensive range of sales, marketing and
commercial roles across private label, branded and contract businesses. In recent years she has headed up the
development of the Creightons branded portfolio, growing and extending the reach of the company's award winning
brands into multiple channels and international markets whilst also overseeing the development of the strengthening
private label division of the business. She has held the position of Global Marketing Director since her appointment to
the Board in February.
Martin Stevens is a Chartered Chemist and has worked in the cosmetics industry for 32 years with extensive
experience across the personal care and household sector in Research & Development, Quality Assurance, Production
and Procurement. Martin has been Technical Director at Potter & Moore Innovations Ltd (the Company's principal
trading business) and Creightons Plc for the past 14 years. He has previously been Technical Director of Norit Body
Care Toiletries, Technical Director at the manufacturing division of AAH Pharmaceuticals Ltd, Chief Chemist at
Columbia Products Co Ltd after initially entering the industry with L'Oreal working with brands such as Lancôme and
Cacharel. Martin was appointed as Group Deputy Managing Director when he joined the Board in February.
Paul Forster was appointed Director of UK Operations when he joined the Board in February, a new role with
responsibility encompassing manufacturing, logistics and procurement. Paul has been with the Potter & Moore
Innovations business for 24 years, primarily working as Chief Financial Officer but also including spells overseeing
manufacturing. Previously he was Finance Director of Beauty International Fragrance Ltd (BIF), who distributed the
Coty fragrance range throughout Europe and the Far East. Prior to joining BIF Paul qualified as a Chartered
Accountant with Touche Ross.
9
Creightons Plc Annual Report 2015
Directors report (continued)
Substantial shareholdings
At 31 March 2015 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 B Geary
Mr BJM Johnson
Mr T Amies
Mr D Abell
Mr B Dale
16,219,275
6,705,000
4,787,844
4,360,000
3,807,150
2,451,740
27.24%
11.26%
8.04%
7.32%
6.39%
4.12%
During the period between 31 March 2015 and 20 July 2015 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 2015.
2. To receive and approve the directors’ remuneration report for the year ended 31 March 2015.
3. To approve the directors’ remuneration policy as detailed in pages 18 to 20 of the directors’ remuneration
report.
4. To re-elect Mr William McIlroy, who is retiring by rotation under the provisions of Article 103 of the
Articles of Association, who, being eligible, offers himself for re-election as a director of the company.
5. To re-elect Mr Bernard Johnson who is retiring by rotation under the provisions of Article 103 of the
Articles of Association, who, being eligible, offers himself for re-election as a director of the company.
6. To appoint Ms Philippa Clark who was appointed a director on 9 February 2015 so retires at the next
annual general meeting and, being eligible, offers herself for re-election.
7. To appoint Mr Martin Stevens who was appointed a director on 9 February 2015 so retires at the next
annual general meeting and, being eligible, offers himself for re-election.
8. To appoint Mr Paul Forster who was appointed a director on 9 February 2015 so retires at the next annual
general meeting and, being eligible, offers himself for re-election.
9. To appoint Moore Stephens LLP as auditor and to authorise the directors to determine their remuneration.
10. 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 £198,457.47, being a further one third of the
company’s present issued share capital as a rights issue.
11. 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 £29,768.62,
being 5% of the company’s present issued share capital, without first offering them as a rights issue to
existing shareholders.
12. 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 £29,768.62, 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.
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Creightons Plc Annual Report 2015
Directors report (continued)
Directors confirmations
Each 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 merged its practice with Moore Stephens LLP on 1 May 2015 and is now practising under
the name of Moore Stephens LLP. A resolution to appoint Moore Stephens LLP is being proposed at the forthcoming
Annual General Meeting.
By order of the Board
Nicholas O'Shea
Company Secretary
23 July 2015
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Creightons Plc Annual Report 2015
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 specifically for non-executive directors.
The role of the Chairman and Chief Executive are combined.
The non-executive directors are not limited to a period of office.
There is only one director considered by the board to be independent, and she has served on the board for
more than 5 years.
With the growth of the Company and increasingly prescriptive compliance requirements, the Board is reviewing its
governance arrangements with the intention of ensuring that it continues to be as compliant with guidelines and best
practice as is appropriate and practical for a company of our size and resources.
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
Philippa Clark
Martin Stevens
Paul Forster
Executive Chairman and Chief Executive
Managing Director
Company Secretary and Non-executive Director
Senior Independent Non-executive Director
Non-executive Director
Global Sales & Marketing Director (appointed 9 February 2015)
Deputy Managing Director (appointed 9 February 2015)
Director of UK Operations (appointed 9 February 2015)
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 has considered that the Group was too small for the distinction between Chairman and Chief Executive to
be practical.
The Board considers it would be difficult to replace the existing non-executive directors with persons of similar
competence, experience and understanding without incurring significant additional costs both in terms of executive
search and then both the fees such new non-executive directors would expect and the cost of training them.
Consequently, it feels that it remains appropriate for the existing non-executive directors to be nominated for re-
election when their terms expire under the company’s articles.
The Board has also considered the position of independence of the non-executive directors, and considers that only Ms
Carney is ‘independent’ in the context of corporate governance. She does not fulfil tasks outside of those delegated by
virtue of her role as a non-executive director (i.e. considering the directors remuneration, director contracts, accounts
and corporate governance), she does not complete any other project work in respect of the company, she does not
hold shares in the company and she does not work in the industry.
The Board operates a formal process of performance evaluation with the Chairman and Remunerations Committee
regularly reviewing the performance of all members of the Board.
Both William McIlroy and Bernard Johnson continued with their roles with their service companies and Mr McIlroy has
continued with his role with Oratorio Developments Ltd during the year. There has been no change in these
commitments over the past year.
12
Corporate governance statement (continued)
Creightons Plc Annual Report 2015
The directors have met as a full board on 7 occasions during the year, including meetings by telephone. The
attendance at meetings held during the year to 31 March 2015 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
Philippa Clark*
Martin Stevens*
Paul Forster*
7
7
6
7
5
-
-
1
-
-
1
1
-
-
-
-
-
1
1
1
-
-
-
-
Note *: following their appointment on 9 February 2015, these directors were only in office for one meeting of the
board during the year. Their attendance at previous meetings is not included as they were not in office at the time.
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
Under the formal terms of reference of the 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 undertakes 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 three appointments
made during the year which are reported on elsewhere in the Director’s Report.
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.
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 15 to 20.
13
Creightons Plc Annual Report 2015
Corporate governance statement (continued)
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 misstatement 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 Chairman’s and Managing Director’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 currently 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.
14
Directors’ remuneration report
Creightons Plc Annual Report 2015
This report is on the activities of the Remuneration Committee for the year to 31 March 2015. 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 (the “Regulations”) as amended in August 2013.
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 was subject to a binding shareholder resolution at the 2014 Annual General Meeting and the policy
took 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 2015 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 Mary Carney, who is the chairman of the Committee and the
senior non-executive director and considered by the board to be independent, and Nicholas O’Shea who is also a non-
executive director.
The Remuneration Committee determines the remuneration of each executive director. During the year ended 31
March 2015 the Remuneration Committee proposed that the fees paid to Mr Bernard Johnson’s service company were
increased from £79,000 to £82,142. 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 2016 will be
similar to those in place for the year ended 31 March 2015 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 tables below represent the directors’ remuneration for the years ended 31 March 2015 and 31 March 2014. 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
2015
Salary
and fees
Annual
bonuses
Pension
Total
WO McIlroy
BJM Johnson
P Clark
M Stevens
P Forster
Total
1
2
3
3
3
£000’s
£000’s
-
92
11
11
10
124
47
47
1
1
1
97
£000’s
-
-
-
1
1
2
£000’s
47
139
12
13
12
223
Salary
and
fees
£000’s
-
89
-
-
-
89
2014
Annual
bonuses
Pension
Total
£000’s
£000’s
£000’s
29
29
-
-
-
58
-
-
-
-
-
-
29
118
-
-
-
147
15
Directors’ remuneration report (continued)
Creightons Plc Annual Report 2015
The remuneration of the non-executive directors for the years ended 31 March 2015 and 31 March 2014 is made up as
follows:
Non-executive directors’ remuneration as a single figure
Director
Note
Salary
and fees
£000’s
2015
Taxable
Benefit
£000’s
Total
£000’s
Salary
and fees
£000’s
2014
Taxable
Benefit
£000’s
Total
£000’s
MT Carney
NDJ O’Shea
W T Glencross
Total
4
8
12
12
32
-
-
1
1
8
12
13
33
8
12
12
32
-
-
1
1
8
12
13
33
Note
1
2
3
4
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.
Figures show the earnings for the Directors since their appointments on 9 Feb 2015.
All payments are made to Mr O’Shea’s employer Saxon Coast Consultants 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, which
commenced prior to him stepping down as an executive director.
Payments for loss of office
No executive directors left the company during the year ended 31 March 2015 and therefore no payments in respect of
compensation for loss of office were paid or payable to any director (2014 – nil).
Share options
The directors did not exercise any share options during the year ended 31 March 2015.
Directors' shareholdings
The directors who held office at 31 March 2015 had the following beneficial interests in the 1p ordinary shares of the
company:
Director
31 March 2015
1 April 2014
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
Ms P Clark
Mr M Stevens
Mr P Forster
16,219,275
4,787,844
31,000
67,500
401,818
181,818
549,318
1,300,000
1,300,000
-
-
500,000
800,000
700,000
16,219,275
4,787,844
31,000
67,500
-
-
-
-
-
-
-
-
-
-
Mr McIlroy’s holding noted above includes 14,450,000 (2014: 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 2015 and 20 July 2015.
16
Directors’ remuneration report (continued)
Creightons Plc Annual Report 2015
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
7.00
6.00
5.00
p
/
e
c
l
i
r
P
e
r
a
h
S
c
P
s
n
o
t
h
g
e
r
C
i
4.00
3.00
2.00
1.00
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
31-Mar-15
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
2015
2014
2013
2012
2011
2010
CEO Single figure
of total
remuneration
£000’s
Annual bonus pay-out
against maximum %
47
29
20
16
12
20
100%
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 2014 and 31 March 2015.
Percentage
2015 compared with remuneration in 2014
in remuneration
increase
in
Salary and Fees
All taxable benefits
Annual bonus
Total
CEO
n/a
n/a
62%
62%
17
Employees
5.0%
0.0%
5.0%
5.0%
Creightons Plc Annual Report 2015
Directors’ remuneration report (continued)
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 2015 and 31 March 2014 and the year on year change.
Year ended
31 March
2015
£000’s
Year ended
31 March
2014
£000’s
Change
%
Employee costs
Profit for the year
5,491
851
4,862
471
12.9
80.7
Service contracts
Mrs Mary Carney, Mr Nicholas O’Shea and Mr William Glencross 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
8,142,165
% of votes
cast for
Number of
votes cast
against
% of votes
cast
against
Total votes
cast
Number of
votes cast
withheld
99.97
2,525
0.03
8,144,690
10,000
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 Chairman. 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 has 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.
18
Creightons Plc Annual Report 2015
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 2014-15, 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 Mr McIlroy and Mr Johnson have contracts which provide for bonuses should the Group achieve profitability, and
Mr McIlroy’s also provides for a bonus should a complete or partial sale of the Group’s toiletries business be achieved.
The profit criterion was met in 2015, 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 bonus to be paid by the company to Lesmac
Securities Limited in respect of the Group’s net profits before tax at the rate of 12.5% in respect of net profits up to
£50,000, 7.5% of net profits between £50,001 and £100,000, and 5% of net profits in excess of £100,000. A further
bonus of 10% of the net sale proceeds is also payable to Lesmac Securities Limited if the company sells the whole of
the toiletries business undertaken by the company at 16 January 2002 for a price in excess of £1,500,000, or if the
company sells a part of that toiletries business for a price in excess of £500,000 and the net book value of the assets
disposed of is less than one-third of the value of the net assets of the company.
The contract for Mr Johnson’s services as a managing director provides for a performance bonus to be paid by the
company to Carty Johnson Limited in respect of the Group’s net profits before tax at the rate of 12.5% in respect of
net profits up to £50,000, 7.5% of net profits between £50,001 and £100,000, and 5% of net profits in excess of
£100,000.
The contracts for Ms Clark, Mr Stevens and Mr Forster all include a Group bonus scheme, where employees are
entitled to a bonus of 7.5% of earnings if the Group hits the profit target for the period.
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. A resolution was approved during the year to authorise a new share option scheme
which will further incentivise the executive directors and the senior managers in the Group to further enhance
shareholder value.
Employee shareholder scheme
During the year the directors approved the issue of shares under the government’s employee shareholder scheme,
where the employee gives up statutory rights which have been replaced by contractual rights in line with guidance
issued by HMRC, in return the employee takes on extra responsibilities.
Service contracts
Name of Director
WO McIlroy (chairman’s 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)
P Clark (Global Sales & Marketing Director)
M Stevens (Deputy Managing Director)
P Forster (Director of UK Operations)
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
9 Feb 2015
9 Feb 2015
9 Feb 2015
Date contract
last amended
Notice period
20 Mar 2003
1 Jan 2002
1 Sep 2006
12 months
12 months
12 months
12 months
None
None
None
3 months
3 months
3 months
It is the company’s policy that service contracts for the 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 above.
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.
The Board as a whole considers the policy and structure for the non-executive directors’ fees on the recommendation
of the Chairman. The non-executive directors do not participate in discussions on their specific levels of remuneration.
19
Directors’ remuneration report (continued)
Creightons Plc Annual Report 2015
Non-executive directors may not be granted share options nor participate in any personal 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. The
fees paid for the chairman also include an element of profit-related bonus based on the performance of the company
and of sales value related bonus for the disposal of all or parts of the toiletries business.
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 23 July 2015 and signed on its behalf
by:
Mr Nicholas O’Shea
Company Secretary
20
Directors’ responsibilities statement
Creightons Plc Annual Report 2015
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 regulation and have also chosen to prepare the parent company financial statements under IFRS 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 company and the Group and of the profit or
loss of the Group for that period. In preparing these financial statements, the directors are required to:
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
Each of the directors confirms that to the best of their knowledge:
1.
2.
3.
the financial statements, prepared in accordance with International Financial Reporting Standards 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
23 July 2015
21
INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF CREIGHTONS PLC
Creightons Plc Annual Report 2015
We have audited the Group financial statements of Creightons plc for the year ended 31 March 2015 which comprise
the consolidated and company income statements, the consolidated and company statements of comprehensive
income, the consolidated and company balance sheets, the consolidated and company statements of changes in
equity, the consolidated and company cash flow statements and the related notes. The financial reporting framework
that has been applied in their preparation is applicable law and International Financial Reporting Standards (IFRS) as
adopted by the European Union and, as regards the parent company financial statements, as applied in accordance
with the provisions of the Companies Act 2006.
This report is made solely to the company’s members, as a body, in accordance with Chapter 3 of Part 16 of the
Companies Act 2006. Our audit work has been undertaken so that we might state to the company’s members those
matters we are required to state to them in an auditor’s report and for no other purpose. To the fullest extent
permitted by law, we do not accept or assume responsibility to anyone other than the company and the company’s
members as a body, for our audit work, for this report, or for the opinions we have formed.
Respective responsibilities of directors and auditor
As explained more fully in the directors’ responsibilities statement, the directors are responsible for the preparation of
the financial statements and for being satisfied that they give a true and fair view. Our responsibility is to audit and
express an opinion on the financial statements in accordance with applicable law and International Standards on
Auditing (UK and Ireland). Those standards require us to comply with the Auditing Practices Board’s Ethical Standards
for Auditors.
Scope of the audit of the financial statements
An audit involves obtaining evidence about the amounts and disclosures in the financial statements sufficient to give
reasonable assurance that the financial statements are free from material misstatement, whether caused by fraud or
error. This includes an assessment of: whether the accounting policies are appropriate to the group’s and the
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 remainder of 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 inconsistencies we consider the
implications for our report.
An overview of the scope of our audit
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, in particular the trading subsidiaries and the parent company, which were all subject to full
scope audits.
We tested and examined information using controls testing and substantive techniques to the extent considered
necessary to provide us with sufficient audit evidence to draw conclusions. These procedures gave us the evidence
that we need 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 two areas to be those that required particular focus in the current year, as both are the
principal areas that influence the reported results and the achievement of management targets. 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:
Revenue recognition - 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;
Inventory valuation - 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 helped
us to 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 £134,000. Furthermore, we calculated a performance materiality for each entity we audited at an
appropriate percentage of the overall materiality and applied this in our risk assessments and in determining relevant
audit procedures.
We agreed with the Audit Committee that we would report to them the misstatements identified during our audit
above £6,700.
22
Creightons Plc Annual Report 2015
Opinion on financial statements
In our opinion:
the financial statements give a true and fair view of the state of the Group’s and the parent company’s affairs
as at 31 March 2015 and of the Group’s and the parent company’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 Group’s 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 matters:
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
is 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 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 Moore Stephens LLP,
Chartered Accountants and Statutory Auditor
Russell Square House
10-12 Russell Square
London
WC1B 5LF
23 July 2015
23
Consolidated income statement
Creightons Plc Annual Report 2015
Revenue
Cost of sales
Gross profit
Distribution costs
Administrative expenses
Operating profit
Profit on disposal of TS Ventures Ltd
Profit after exceptional item
Finance costs
Profit after exceptional items and before tax
Taxation
Profit for the year from continuing operations attributable to
the equity shareholders of the parent company
Earnings per share
Basic
Diluted
Company income statement
Revenue
Administration expenses
Profit for the year attributable to the equity shareholders
Note
5
7
31
9
10
11
11
Year ended 31
March
2015
£000
Year ended 31
March
2014
£000
21,093
(12,707)
8,386
(922)
(6,966)
498
375
873
(22)
851
-
851
19,352
(11,460)
7,892
(802)
(6,587)
503
-
503
(32)
471
-
471
1.43p
1.27p
0.81p
0.79p
Year ended
31 March
2015
£000
Year ended
31 March
2014
£000
169
(12)
157
-
-
-
24
Consolidated statement of comprehensive income
Creightons Plc Annual Report 2015
Profit for the year
Exchange differences on translating foreign operations
Total comprehensive income for the year attributable to the
equity shareholders of the parent
Company statement of comprehensive income
Profit for the year
Total comprehensive income for the year
Year ended
31 March
2015
£000
Year ended
31 March
2014
£000
851
(2)
849
471
42
513
Year ended
31 March
2015
£000
Year ended
31 March
2014
£000
157
157
-
-
25
Consolidated balance sheet
Creightons Plc Annual Report 2015
31 March
2015
£000
31 March
2014
£000
Note
Non-current assets
Goodwill
Other intangible assets
Property, plant and equipment
Current assets
Inventories
Trade and other receivables
Cash and cash equivalents
Derivative financial instruments
Total assets
Current liabilities
Trade and other payables
Obligations under finance leases
Borrowings
Derivative financial instruments
Net current assets
Non-current liabilities
Obligations under finance leases
Total liabilities
Net assets
Equity
Share capital
Share premium account
Other reserves
Currency reserve
Retained earnings
Total equity attributable to the equity shareholders of the parent
company
12
13
14
16
17
18
19
20
21
22
19
21
23
24
331
283
574
1,188
4,074
3,591
9
17
7,691
343
259
590
1,192
3,704
3,464
11
-
7,179
8,879
8,371
2,956
22
84
13
3,075
2,777
20
613
-
3,410
4,616
3,769
7
7
28
28
3,082
3,438
5,797
4,933
596
1,248
25
(10)
3,938
584
1,264
38
(13)
3,060
5,797
4,933
These financial statements were approved by the board of directors and authorised for issue 23 July 2015. They were
signed on its behalf by:
Bernard Johnson
Managing Director
26
Company balance sheet
Creightons Plc Annual Report 2015
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
Retained earnings
Total equity attributable to the equity shareholders of the
parent company
31 March
2015
31 March
2014
Note
£000
£000
15
17
20
23
60
60
72
72
2,305
2,305
2,126
2,126
2,365
2,198
35
35
35
35
2,270
2,091
35
35
2,330
2,163
596
1,248
18
-
468
584
1,264
18
1,441
(1,144)
2,330
2,163
These financial statements were approved by the board of directors and authorised for issue on 23 July 2015. They
were signed on its behalf by:
Bernard Johnson
Managing Director
Company registration number 1227964
27
Consolidated statement of changes in equity
Creightons Plc Annual Report 2015
Share
capital
Share
premium
account
Other
reserves
(note 24)
Share-
based
payment
reserve
Currency
reserve
Retained
earnings
Total
equity
£000
£000
£000
£000
£000
£000
£000
At 1 April 2013
Share issues
Exchange differences
on translation of
foreign operations
Share-based
payment charge
Transfer – see note
below
Profit for the year
At 31 March 2014
Issue of employee
shares
Exchange differences
on translation of
foreign operations
Employee share
holder scheme
charge
Share-based
payment charge
Transfer
Charge in relation to
derivative financial
instruments
Profit for the year
At 31 March 2015
545
39
-
-
-
-
584
12
-
-
-
-
-
1,231
33
-
-
-
-
1,264
(12)
-
(4)
-
-
-
-
596
-
1,248
38
-
-
-
-
-
38
-
-
-
-
(13)
-
-
25
51
-
-
8
(59)
-
-
-
-
-
-
-
-
-
-
(55)
-
42
-
-
-
(13)
-
(2)
-
-
-
5
2,530
-
-
-
59
471
3,060
-
-
-
14
13
-
4,340
72
42
8
-
471
4,933
-
(2)
(4)
14
-
5
-
(10)
851
3,938
851
5,797
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 2013
Share issues
Share based payment
charge
Transfer – see note below
At 31 March 2014
Issue of employee shares
Employee share holder
scheme charge
Share-based payment
charge
Transfer – see note 24
Profit for the year
545
39
-
-
584
12
-
-
-
-
1,231
33
-
-
1,264
(12)
(4)
-
-
-
At 31 March 2015
596
1,248
18
-
-
-
18
-
-
-
-
-
18
1,441
-
-
-
1,441
-
-
-
(1,441)
-
-
51
-
8
(59)
-
-
-
-
-
-
-
(1,203)
-
-
59
(1,144)
-
-
2,083
72
8
-
2,163
-
(4)
14
14
1,441
157
-
157
468
2,330
During the previous year, the Directors released the share-based payment reserve to retained earnings as allowed
under IFRS 2 (Share-based Payment).
28
Consolidated cash flow statement
Creightons Plc Annual Report 2015
Net cash from operating activities
Investing activities
Purchase of property, plant and equipment
Purchase of intangible assets
Proceeds on disposal of Twisted Sista
Net cash used in investing activities
Financing activities
Repayment of finance lease obligations
Proceeds on issue of shares
Repayment of bank loans and invoice finance facilities
Net cash used in 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
2015
£000
Year ended
31 March
2014
£000
677
689
Note
30
(159)
(358)
387
(211)
(258)
-
(130)
(469)
(19)
-
(529)
(548)
(1)
11
(1)
9
(19)
72
(279)
(226)
(6)
18
(1)
11
Note
30
Year ended
31 March
2015
£000
Year ended
31 March
2014
£000
-
-
-
-
-
-
(72)
72
72
-
-
-
29
Creightons Plc Annual Report 2015
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 52; 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 4 to 7.
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 accounting standards
There have been no new IFRS, IAS or amendments to existing standards requiring implementation by the Group in
the year ended 31 March 2015.
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 2018)
IFRS 14 Regulatory Deferral Accounts (effective 1 January 2016)
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 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.
3 Significant accounting policies
Basis of accounting
The financial statements have been prepared in accordance with IFRS adopted by the European Union and 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 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.
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.
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 intra-group assets and liabilities, equity, income, expenses and cash flows relating to transactions between
members of the Group are eliminated on consolidation.
30
Creightons Plc Annual Report 2015
Notes to the financial statements
3 Significant accounting policies (continued)
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 4 to 7.
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 reversible 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.
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.
31
Creightons Plc Annual Report 2015
Notes to the financial statements
3 Significant accounting policies (continued)
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.
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.
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.
32
Creightons Plc Annual Report 2015
Notes to the financial statements
3 Significant accounting policies (continued)
Borrowing costs
All borrowing costs are recognised in 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.
The Group also set up an auto-enrolment pension scheme during the year.
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.
33
Creightons Plc Annual Report 2015
Notes to the financial statements
3 Significant accounting policies (continued)
Property, plant and equipment
Property, plant and equipment is 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
34
Creightons Plc Annual Report 2015
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.
Hedge accounting
The group designates certain hedging instruments, which include derivatives and non-derivatives in respect of
foreign currency risks as either fair value hedges or cash flow hedges. Hedges of foreign exchange on firm
commitments are accounted for as cash flow hedges.
At the inception of the hedge relationship, the entity documents the hedge relationship between the hedging
instrument and the hedged item, along with its risk management objectives and its strategy for undertaking
various hedge transactions. Furthermore, at the inception of the hedge and on an ongoing basis, the Group
documents whether the hedging instrument that is used in a hedging relationship is highly effective in offsetting
changes in fair values or cash flows of the hedged item.
Note 19 sets out details of the fair values of the derivative instruments used for hedging purposes. Movements in
the hedging reserve in equity are also detailed in the statement of changes in equity within the currency reserve.
35
Creightons Plc Annual Report 2015
Notes to the financial statements
3 Significant accounting policies (continued)
Cash flow hedge
The effective portion of change in the fair value of derivatives that are designated and qualify as cash flow hedges
are deferred and recognised in equity. The gain or loss relating to the ineffective portion is recognised
immediately in profit or loss, and is included in the ‘other gains or losses’ line of the income statement.
Amounts deferred in equity are recycled in profit or loss in the period when the hedged item is recognised in profit
or loss, in the same line of the income statement as the recognised hedged item. However when the forecast
transaction that is hedged results in recognition of a non-financial asset or non-financial liability, the gains and
losses previously deferred in equity are transferred from equity and included in the initial measurement of the cost
of the asset or liability.
Hedge accounting is discontinued when the Group revokes the hedging relationship, the hedging instrument
expires or is sold, terminated or exercised, or no longer qualifies for hedge accounting. Any cumulative gain or
loss deferred in equity at that time remains in equity and is recognised when the forecast transaction is ultimately
recognised in the profit or loss. When a forecast transaction is no longer expected to occur, the cumulative gain
or loss that was deferred in equity is recognised immediately in profit or loss.
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.
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 has 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 for 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. No adjustment has been made for discontinued
operations as they are not material.
36
Creightons Plc Annual Report 2015
Notes to the financial statements
6 Business and geographic segments
This section is no longer required as the Group no longer has more than one material reporting segment.
7. Operating profit
Operating profit is stated after charging/(crediting):
Net foreign exchange loss
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)
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
Year ended
31 March
2015
£000
Year ended
31 March
2014
£000
5
42
12,709
11,460
207
348
158
17
334
176
301
129
17
293
5,491
4,862
39
30
350
34
350
34
Year ended
31 March
2015
£000
Year ended
31 March
2014
£000
24
6
9
22
6
2
37
Creightons Plc Annual Report 2015
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
2015
Number
Year ended
31 March
2014
Number
8
53
166
227
9
48
140
197
Year ended
31 March
2015
£000
Year ended
31 March
2014
£000
4,970
456
65
5,491
4,433
406
23
4,862
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
2015
£000
Year ended
31 March
2014
£000
20
2
22
Year ended
31 March
2015
£000
Year ended
31 March
2014
£000
-
-
-
29
3
32
-
-
-
38
Creightons Plc Annual Report 2015
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
2015
£000
Year ended
31 March
2015
%
Year ended
31 March
2014
£000
Year ended
31 March
2014
%
Profit before taxation
851
471
Tax charge at the UK corporation tax
rate of 21% (2014 – 23%)
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
(179)
(21.0)
(108)
(23.0)
(4)
(0.6)
(2)
(0.5)
183
21.6
110
23.5
-
-
-
-
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 £1,565,000 (2014 - £2,207,000) 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
2015
£000
Year ended
31 March
2014
£000
851
471
Year ended
31 March
2015
Number
Year ended
31 March
2014
Number
59,537,243
58,355,426
Effect of dilutive potential ordinary shares relating to share
options
7,405,000
1,570,000
Weighted average number of ordinary shares for the purposes
of diluted earnings per share
66,942,243
59,925,426
Earnings per share before exceptional item
Basic
Diluted
0.80p
0.71p
0.81p
0.79p
39
Creightons Plc Annual Report 2015
Notes to the financial statements
12. Goodwill
Cost
At 1 April 2013 and 31 March 2014
Disposal
At 31 March 2015
Accumulated impairment losses
At 1 April 2013, 1 April 2014 and 31 March 2015
Carrying amount
At 1 April 2013 and 31 March 2014
At 31 March 2015
Year ended
31 March
£000
379
(12)
367
36
343
331
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%. 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 2013
Additions
Disposals
At 31 March 2014
Additions
Disposals
At 31 March 2015
Accumulated amortisation
At 1 April 2013
Amortisation for the year
Disposals
At 31 March 2014
Amortisation for the year
Disposals
At 31 March 2015
Carrying value
At 1 April 2013
At 31 March 2014
At 31 March 2015
Computer
software
£000
Product
development
costs
£000
Total
£000
106
8
-
114
4
-
118
76
16
-
92
9
-
101
30
22
18
870
250
(139)
981
354
(56)
1,279
605
277
(138)
744
326
(56)
1,014
976
258
(139)
1,095
358
(56)
1,397
681
293
(138)
836
334
(56)
1,114
265
295
237
259
265
283
40
Creightons Plc Annual Report 2015
Notes to the financial statements
14. Property, plant and equipment
Group
Cost
At 1 April 2013
Additions
Disposals
At 31 March 2014
Additions
Disposals
At 31 March 2015
Accumulated depreciation
At 1 April 2013
Depreciation for the year
Disposals
At 31 March 2014
Depreciation for the year
Disposals
At 31 March 2015
Carrying value
At 1 April 2013
At 31 March 2014
At 31 March 2015
Property,
plant and
equipment
£000
2,239
211
(32)
2,418
159
-
2,577
1,714
146
(32)
1,828
175
-
2,003
525
590
574
Included within property, plant and equipment are assets held under finance leases with a carrying value of
£76,000 (2014 - £93,000) on which depreciation of £17,000 (2014 - £17,000) has been charged during the year.
15. Investment in subsidiaries
Company
Cost
At 1 April 2013 and 1 April 2014
Additions
At 31 March 2015
Impairment charge
At 1 April 2013, 1 April 2014 and 31 March 15
Disposal
At 31 March 2015
Carrying value
At 1 April 2013
At 31 March 2014
At 31 March 2015
41
Investments
£000
75
-
75
3
12
15
72
72
60
Creightons Plc Annual Report 2015
Notes to the financial statements
15. Investment in subsidiaries (continued)
Details of the company’s subsidiaries at 31 March 2015 and 31 March 2014 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
Creightons Naturally Limited
Groomed Limited
Twisted Sista Limited
Amie Skincare Limited
We Only Want You For Your Body Limited
Potter & Moore International Ltd
The Herbal Hair Company Ltd
Curl Therapy 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%
55%
100%
100%
100%
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 2015 and 31 March 2014 and are therefore exempt from
preparing and filing individual accounts in accordance with the Companies Act 2006.
Under the terms of the shareholder agreements with the partners in Amie Skincare Limited the partner
shareholder has the right, in certain circumstance, to purchase the company’s shareholding upon the exercise of a
valid exercise option. The directors consider the value of this option to be immaterial.
16. Inventories
Raw materials
Work in progress
Finished goods
Group
2015
£000
2014
£000
Company
2014
£000
2014
£000
1,039
361
2,674
1,085
267
2,352
4,074
3,704
-
-
-
-
-
-
-
-
Inventories with a carrying value of £4,074,000 (2014 - £3,704,000) have been pledged as security for the
Group’s bank overdrafts. Directors believe that net realisable value approximates to fair value.
42
Creightons Plc Annual Report 2015
Notes to the financial statements
17. Trade and other receivables
Group
2015
£000
2014
£000
Company
2015
£000
2014
£000
Trade receivables
Amounts receivable from subsidiaries
Prepayments and other receivables
3,413
-
178
3,337
-
127
-
2,297
-
-
2,126
-
3,591
3,464
2,297
2,126
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
2015
£000
2014
£000
Company
2015
£000
2014
£000
3,416
(3)
3,361
(24)
3,413
3,337
-
-
-
The movement in the trade receivables impairment provision is as follows:
Group
2015
£000
2014
£000
Company
2015
£000
2014
£000
At 1 April
Charge in current year income statement
At 31 March
24
(21)
3
24
-
24
-
-
-
-
-
-
-
-
-
There were £139,000 (2014 - £111,000) trade receivables that were overdue at the balance sheet date that have
not been provided against. There are no indications as at 31 March 2015 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 2015 that were overdue for payment
was 4.1% (2014 - 3.3%).
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
2015
£000
2014
£000
Company
2015
£000
2014
£000
1
8
-
9
1
-
10
11
-
-
-
-
-
-
-
-
43
Creightons Plc Annual Report 2015
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 2015 would increase/decrease by £6,000 (2014 – £12,000). The Group’s sensitivity to
interest rates has decreased during the current year mainly due to the decrease 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 9% (2014 – 11%) of the Group’s income is denominated
in US dollars and 1% (2014 - 1%) in Euros. Approximately 4% (2014 – 7%) of the Group’s expenditure is
denominated in US dollars and 4% (2014 – 5%) in Euros.
Foreign currency sensitivity
A 5% strengthening of sterling would result in a £34,000 (2014 - £44,000) reduction in profits and equity. A 5%
weakening in sterling would result in a £37,000 (2014 - £49,000) 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 designates its foreign currency forward exchange contracts as hedging instruments as they qualify for
hedge accounting under IAS39. The Group is party to foreign currency forward contracts in the management of its
exchange risk exposure; they are not held for speculative purposes. The instruments purchased are in the
currencies used by the Group’s overseas customers and suppliers.
Current assets
Derivatives that are designated and effective
as hedging instruments carried at fair value
Forward foreign currency contracts
Group
2015
£000
2014
£000
Company
2015
£000
2014
£000
17
17
-
-
-
-
-
-
44
Creightons Plc Annual Report 2015
Notes to the financial statements
19. Financial instruments and treasury risk management (continued)
Current liabilities
Financial assets carried at fair value through
the profit or loss
Forward foreign currency contracts
Group
2015
£000
2014
£000
Company
2015
£000
2014
£000
13
13
-
-
-
-
-
-
The Group has entered into forward exchange contracts (for terms not exceeding 12 months) to hedge the
exchange rate risk arising from commitments to purchase raw materials denominated in Euros and to sell in US
dollars, which are designated as cash flow hedges.
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 2016. 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 2015 the
group had available £3,166,000 (2014 - £2,300,000) of undrawn committed borrowing facilities in respect of
which all conditions precedent had been met. The directors do not consider that a more detailed maturity analysis
is necessary.
20. Trade and other payables
Trade payables
Social security and other taxes
Accrued expenses
Amounts payable to subsidiary undertakings
Group
2015
£000
2014
£000
Company
2015
£000
2014
£000
2,178
402
376
-
1,823
499
455
-
2,956
2,777
-
-
-
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
2015
£000
2014
£000
22
7
29
20
28
48
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.
45
Creightons Plc Annual Report 2015
Notes to the financial statements
22. Bank overdrafts and loans
Bank overdraft
Borrowings under invoice finance facilities
Group
2015
£000
2014
£000
Company
2014
£000
2014
£000
16
68
84
260
353
613
-
-
-
-
-
-
The borrowings are repayable on demand or within one year.
Borrowings totalling £29,000 (2014 - £271,000) 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
2015
%
2014
%
Company
2015
%
2014
%
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.
23. Share capital
At 1 April 2013
Issued in the year
At 31 March 2014
Issued in the year
At 31 March 2015
Ordinary shares of 1p each
£000
Number
545
39
584
12
596
54,478,876
3,876,550
58,355,426
1,181,817
59,537,243
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 Nil (2014 – £72,000), as the shares were
issued from the share premium account.
24. Other reserves
Group
Capital
reserve
Special
Reserve
Capital
redemption
reserve
Total
Other
reserves
£000
£000
£000
£000
At 1 April 2013 and 31 March 2014
Transfer of special reserve
At 31 March 2015
7
-
7
13
(13)
-
18
-
18
38
(13)
25
The company obtained a court ruling dated 19 March 1997 under which a 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 2015 goodwill written off amounts to £2,575,000 (2014 - £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.
46
Creightons Plc Annual Report 2015
Notes to the financial statements
The company, after taking legal advice, has concluded that all of the creditors referred to in the court ruling have
been satisfied. The balance on the special reserve has been transferred to retained earnings.
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 as below.
Ordinary shares of 1p each
Number
2015
Weighted
average
exercise price
Number
2014
Weighted
average
exercise price
Outstanding at the beginning of the
period
Exercised in the period
Granted in the period
Lapsed in the period
1,570,000
2.48p
5,126,550
1.93p
-
6,200,000
(365,000)
-
5.50p
(2.73p)
(3,876,550)
320,000
-
(1.90p)
4.29p
-
Outstanding at the end of the period
7,405,000
5.00p
1,570,000
2.48p
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
November 2014
Exercise
period
Number
Exercise
price
2010 – 2017
2011 – 2018
2014 – 2021
2016 – 2023
2016 – 2023
2017 – 2024
50,000
200,000
750,000
25,000
180,000
6,200,000
4.75p
1.38p
2.00p
4.50p
4.25p
5.50p
Outstanding at the end of the period
7,405,000
5.00p
The weighted average contractual life for the outstanding options based on last exercise date is 9.0 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
2015
Year ended
31 March
2014
4.70p
5.00p
71.4%
3
5.8%
-
2.48p
2.48p
102.5 - 115.6%
3
5.8%
-
Expected volatility was determined by calculating the historical volatility of the Group’s share price over the
previous year.
The Group recognised total expenses of £14,000 (2014- £8,000) related to share-based payments.
47
Creightons Plc Annual Report 2015
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 Group also entered into the auto-enrolment pension scheme on 1 April
2015.
The charge in the consolidated income statement in the year was £65,000 (2014: £23,000) and cash
contributions were £65,000 (2014: £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
2015
£000
Year ended
31 March
2014
£000
Year ended
31 March
2014
£000
Year ended
31 March
2014
£000
Minimum lease payments under operating
leases recognised as an expense in the year
384
384
-
-
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
28. Capital commitments
Group
2015
£000
2014
£000
Company
2015
£000
2014
£000
370
1,398
-
377
1,424
345
1,768
2,146
-
-
-
-
-
-
-
-
Group
2015
£000
2014
£000
Company
2015
£000
2014
£000
Contracts placed for future capital expenditure not
provided for in the financial statements
11
11
-
-
48
Creightons Plc Annual Report 2015
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
Year ended
31 March
2015
£000
Year ended
31 March
2014
£000
2,305
2,126
(35)
(35)
During the year the company was charged £14,000 (2014: £8,000) by Potter & Moore Innovations Limited in
relation to share-based payment charges, transferred cash to Potter & Moore Innovations Limited of £157,000 from
the sale of the TS Ventures Limited (2014: £72,000 from share issues) and received £4,000 (2014: £nil) in relation
to costs of issue of employee shares.
Oratorio Developments Limited
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 Limited
Amounts payable
Carty Johnson Limited
Year ended
31 March
2015
£000
Year ended
31 March
2014
£000
350
18
368
350
18
368
Year ended
31 March
2015
£000
Year ended
31 March
2014
£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:
Charges for internet support services
13
14
Year ended
31 March
2015
£000
Year ended
31 March
2014
£000
49
Creightons Plc Annual Report 2015
Notes to the financial statements
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
15 to 20.
Year ended
31 March
2015
£000
Year ended
31 March
2014
£000
254
254
180
180
Year ended
31 March
2015
£000
Year ended
31 March
2014
£000
498
503
175
334
14
1,021
(370)
(127)
179
(4)
699
(22)
677
146
293
8
950
(210)
(661)
642
-
721
(32)
689
At 01 April
2014
£000’s
Cash Flow
£000’s
Non-cash
movements
£000’s
At 31
March 2015
£000’s
11
(613)
(602)
(1)
529
528
(1)
-
(1)
9
(84)
(75)
Salaries and other short term benefits
Total
30. Notes to cash flow statement
Group
Profit from operations
Adjustments for:
Depreciation on property, plant and equipment
Amortisation of intangible assets
Share based payment charge
Increase in inventories
Increase in trade and other receivables
Increase in trade and other payables
Movement in non-cash derivatives
Cash generated from operations
Interest paid
Net cash from operating activities
Analysis of changes in net debt
Cash and bank balances
Borrowings
Net debt
Cash and cash equivalents
Cash and bank balances
Bank overdraft and borrowings under invoice finance
Net cash and cash equivalents
50
Year ended
31 March
2015
£000
Year ended
31 March
2014
£000
9
(84)
(75)
11
(613)
(602)
Creightons Plc Annual Report 2015
Notes to the financial statements
Company
Profit from discontinued operations
Adjustments for:
Share based payment charge
Goodwill relating to disposal of TS Ventures Ltd
Charge in relation to issue of employee share scheme
Increase in trade and other receivables
Net cash used in operating activities
31. Profit on disposal of TS Ventures Limited
Year ended
31 March
2015
£000
Year ended
31 March
2014
£000
157
14
12
(4)
179
(179)
-
-
8
-
-
8
(80)
(72)
On 23 May 2014 the Group completed the disposal of its 55% interest in TS Ventures Limited which holds the
intellectual property rights to the Twisted Sista brand of hair care products for a cash consideration of £448,000.
The 55% interest in TS Ventures Limited has been sold to Urban Therapy LLC, the owner of the 45% interest not
owned by the company. The Group is reporting a profit of £375,000 in the financial report for the year ended 31
March 2015 in relation to the disposal.
32. Post balance sheet event – Sale of Real Shaving Company brand
On 28 May 2015 the Group completed the sale of the business and assets of The Real Shaving Company brand
including the trademark and associated intellectual property. The consideration comprised £1,000,000, which was
paid on completion and £150,000 for stock which was paid subsequently.
The Group post-tax profit arising from the sale of the brand will be £844,000.
51
Creightons Plc Annual Report 2015
Directors and advisers
Directors
William O McIlroy
Bernard JM Johnson
William T Glencross
Mary T Carney
Nicholas DJ O’Shea
Philippa Clark
Martin Stevens
Paul Forster
Chairman
Managing Director
Non-executive Director
Senior Independent Non-executive Director
Non-executive Director
Global Sales & Marketing Director
Deputy Managing Director
Director of UK Operations
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
Moore Stephens 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
52