28th Jun 2010 07:00
28 June 2010
Theo Fennell PLC
("Theo Fennell" or "the Company")
Final results for the year ended 31 March 2010
HIGHLIGHTS:
Financial:
- Like for like sales increased 6% to £12.6m (2009: £11.9m)
- Loss on ordinary activities before taxation and exceptional items reduced from £2.0m to £0.25m
- Like for like sales increased by 23% in second half of the year
- Successful £1.5m fund raising in April 2010
- Repayment and cancellation of £0.3m Convertible Loan Note
- Operational: First new collection for two years, PHI, launched in September and has exceeded expectations
- Wholesale business increased by 115% with strong growth from International markets
- New international wholesale openings in Moscow and Barbados
Outlook:
- Strong start to year with like for like retail sales 23% ahead in first ten weeks of year
- New collections launched in 2010 - Bee Collection in June 2010 and one-off pieces
- Major new initiative to be launched in October; an affordable silver diffusion jewellery line
- International wholesale roll out with openings in the South of France and Kiev later in the year and others planned
- Redevelopment of our website including online store to be launched in October 2010.
Rupert Hambro, Chairman commented:
"The New Board's main focus during the year was to re-structure and re-establish the Theo Fennell business. As reflected in strong current trading this has largely been achieved and I believe the business has now turned the corner and is positioned for profitability.
We have some major developments underway which have the potential to grow the business beyond previous successes."
28 June 2010
Enquiries:
|
Theo Fennell |
Barbara Snoad |
020 7591 5000 |
|
Pelham Bell Pottinger |
James Henderson / Lucy Frankland |
020 7861 3160 |
|
Seymour Pierce Limited |
Mark Percy / Catherine Leftley
|
020 7107 8000 |
CHAIRMAN'S STATEMENT
After a difficult financial year ended 31 March 2009, the Company has already made significant steps forward in this financial year re-establishing Theo Fennell PLC in its market place. We are now well positioned to take the business forward. There were significant changes to the board during the year and the new team is now in place. We are building a strategy based on the strengths of the business, the design led ethos and developing the core jewellery business. We have now begun to see the results of this strategy which is reflected in encouraging current retail trading figures.
Financial
For the year ended 31 March 2010 the Company, as expected, made a small loss on ordinary activities before taxation and exceptional items of £0.25m. This is a significantly improved performance when compared to the loss of over £2 million made in the last financial year and reflects the significant progress the new board has made this year.
Sales in the first half of the year continued to be difficult. The Company's strong performance in the second half of the current financial year has resulted in like for like sales 6 % above the prior year despite the weak first half. Like for like trading in the second half of the year was up 23 %. These results would have been even better if sales in January had not been adversely impacted by the extreme snow conditions with little customer traffic in our stores and concessions.
Design, Product and Strategy
Theo's return to the business as Creative Director, with responsibility for all creative aspects of the Company, has provided the Company with the direction missing in the last year.
His new creative impetus enabled the Company to launch an exciting selection of new one-off products, collections and unique silver pieces for the key Christmas selling period. In addition, the first new collection for two years, 'PHI', was launched in September. The result was a positive improvement in sales in the second half of the year.
The development of new product is already significantly ahead of this point last year. The new Bee collection was launched in June 2010 and we have a number of new unique one off jewellery pieces ready for the important summer period in our department store concessions. Further collections will be launched in September to support the key Christmas trading period.
We will launch a more affordable diffusion line of Silver jewellery priced from under £100 to over £2,000 in October 2010. This will enable the business to compete in this growing key jewellery sector providing more affordable jewellery while remaining true to the core design values and quality of Theo Fennell producing well crafted but affordable jewellery. We expect this to significantly expand our customer profile and provide product to support our wholesale and internet sales growth.
In the coming year we will embark on a major redevelopment of our website which will include a new online store. We expect our online presence to become an increasingly important part of the business and as an important way of communicating the uniqueness of the business to our clients across all markets.
International
As part of our strategy for the business the board has developed the wholesale offer around the Theo Fennell brand and extended our International presence targetting high growth International markets. Our focus on the expansion of our International wholesale business has shown immediate results, with sales this year more than double the previous year. We are well represented in Dubai and we expect to expand further in the Middle East. We have secured a new wholesale partner in Russia which opened on Moscow's premium shopping street, Stoleshnikov Street, in December 2009 and an additional outlet in Barbados which opened at The Crane in December 2009.
We continue to explore opportunities with a number of new partners in key International markets including the Far East and expect to secure additional distribution outlets. We have secured new wholesale partners this year opening in the South of France and in Kiev in the Ukraine in 2010.
The Company now has a strong wholesale base from which to expand. We believe that Theo Fennell offers a unique design led jewellery with a distinct position in the International market place. While the Company is very much at the initial stages of its International growth, we expect further significant expansion in the coming year.
Convertible Loan Note
On 23 December 2009 the Company repaid and cancelled the total outstanding secured convertible loan notes of £300,000 at par. The loan notes were issued pursuant to an instrument dated 3 September 2003 paying interest at 7 % per annum and convertible into shares at the rate of 30 pence per ordinary 5 pence share equivalent to one million ordinary shares.
Fund Raising
In addition, the Company raised £1.5 million (gross) through a placing of 3,947,368 new ordinary shares of 5 pence at a price of 38 pence each with new and existing shareholders. The Board is pleased that its largest institutional shareholders supported this fundraising along with a number of new investors.
The net funds will be used to continue the development and investment in product and for general working capital. This will allow us to accelerate the growth of the business. Specifically expansion of the International business together with the development of our website business and the new silver diffusion jewellery line.
The Original Design Partnership
As announced on 23 June, the Company purchased a minority interest (20%) in The Original Design Partnership, a company founded by Theo Fennell in May 2008 to provide design services and other related products not under the Theo Fennell name and nurture new design talent in jewellery. This, in addition to the already agreed Collaboration Agreement, will further cement our relationship with Theo and the ODP team of designers.
Outlook
Your board is very pleased by the progress the Company has made since Theo's return and we are confident that the first steps have been taken to return the Company to profitability. Current trading has been encouraging with retail like for like sales up 23 % to 13 June 2010. The new very exciting initiatives planned for the coming year will continue to enhance the potential for the future growth of the business.
Rupert Hambro
Chairman
Summarised Profit and Loss Account For the year ended 31 March 2010
|
|
Note |
|
2010 £ |
|
2009 £ |
|
TurnoverContinuing operations Discontinued operations |
|
|
12,558,409 _ |
|
11,885,938 9,936,410 |
|
|
Total turnover |
2 |
|
12,558,409 |
|
21,822,348 |
|
|
Cost of sales Exceptional cost of sales |
3 |
|
(11,037,831 _ |
)
|
(21,507,904 (1,063,358 |
) ) |
|
Total cost of sales |
|
|
(11,037,831 |
) |
(22,571,262 |
) |
|
Gross profit / (loss) |
2 |
|
1,520,578 |
|
(748,914 |
) |
|
Administrative expenses Exceptional administrative expenses |
3 |
|
(1,687,137 (105,166 |
) ) |
(2,310,646 (248,700 |
) ) |
Total administrative expenses |
|
|
(1,792,303 |
) |
(2,559,346 |
) |
Operating lossContinuing operations Discontinued operations |
|
|
(271,725 _ |
)
|
(2,463,057 (845,203 |
) ) |
|
Total operating loss |
2 |
|
(271,725 |
) |
(3,308,260 |
) |
|
Net interest payable |
|
|
(78,040 |
) |
(32,868 |
) |
|
Loss on ordinary activities before taxation |
|
|
(349,765 |
) |
(3,341,128 |
) |
|
Tax on loss on ordinary activities |
4 |
|
_ |
|
391,394 |
|
|
Retained loss for the year |
|
|
(349,765 |
) |
(2,949,734 |
) |
|
Basic loss per share |
5 |
|
(1.86 |
)p |
(15.70 |
)p |
|
Diluted loss per share |
5 |
|
(1.86 |
)p |
(15.70 |
)p |
|
Basic loss per share from continuing operations |
5 |
|
(1.86 |
)p |
(11.20 |
)p |
|
Diluted loss per share from continuing operations |
5 |
|
(1.86 |
)p |
(11.20 |
)p |
Summarised Balance Sheet as at 31 March 2010
|
|
Note |
|
|
2010 |
|
|
|
2009 |
|
|
|
|
£ |
|
|
£ |
£ |
|
£ |
|
|
Fixed assets Tangible assets |
|
|
|
429,537 |
|
|
|
594,829 |
|
|
Current assets Stocks Debtors Cash at bank and in hand |
6 7 |
7,168,270 1,119,136 1,021,812 |
|
|
|
8,506,093 1,295,645 1,418,330 |
|
|
|
|
|
|
9,309,218 |
|
|
|
11,220,068 |
|
|
|
|
Creditors: amounts falling due within one year |
8 |
(3,087,922 |
) |
|
|
(2,951,860 |
) |
|
|
|
Net current assets |
|
|
|
6,221,296 |
|
|
|
8,268,208 |
|
|
Total assets less current liabilities |
|
|
|
6,650,833 |
|
|
|
8,863,037 |
|
|
Creditors: amounts falling due after more than one year |
|
|
|
|
|
|
|
|
|
|
Convertible loan note |
9 |
- |
|
|
|
(300,000 |
) |
|
|
|
Other |
9 |
- |
|
|
|
(1,563,917 |
) |
|
|
|
|
|
|
|
- |
|
|
|
(1,863,917 |
) |
|
Net assets |
|
|
|
6,650,833 |
|
|
|
6,999,120 |
|
|
Capital and reserves Called up share capital Share premium account Profit and loss account Share options reserve |
10 11 11 11 |
|
|
940,533 4,572,857 1,102,041 35,402 |
|
|
|
940,533 4,572,857 1,451,806 33,924 |
|
|
Equity shareholders' funds |
|
|
|
6,650,833 |
|
|
|
6,999,120 |
|
Summarised Cash Flow Statement For the year ended 31 March 2010
|
|
|
|
|
2010 |
|
|
|
2009 |
|
|
|
|
£ |
|
£ |
|
£ |
|
£ |
|
|
Net cash inflow/(outflow) from operating activities |
|
|
|
216,315 |
|
|
|
(608,259 |
) |
|
Returns on investments and servicing of finance Interest paid on bank loans, overdrafts and other loans Interest element of finance lease payments Interest received |
|
(80,211)
(2,005) 4,176 |
|
|
|
(68,820
(1,572 37,524 |
)
) |
|
|
|
|
|
|
|
(78,040) |
|
|
|
(32,868 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
Capital expenditure Purchase of tangible fixed assets Receipt from sale of fixed assets |
|
(111,090)
- |
|
|
|
(355,072
50,000 |
)
|
|
|
|
|
|
|
|
(111,090) |
|
|
|
(305,072 |
) |
|
Net cash inflow/(outflow) before financing
|
|
|
|
27,185 |
|
|
|
(946,199 |
)
|
|
Financing Share issuance Convertible loan note Capital element of finance lease payments Bank loan |
|
|
|
- (300,000) (2,818)
(120,885) |
|
|
|
25,000 - (6,302
1,387,823 |
)
|
|
(Decrease)/Increase in cash |
|
|
|
(396,518) |
|
|
|
460,322 |
|
1. Basis of preparation
The financial statements have been prepared under the historical cost convention and in accordance with applicable United Kingdom accounting standards. The principal accounting policies have remained unchanged from the previous year. These policies have been applied consistently in dealing with items in relation to the Company's financial statements and have been reviewed in accordance with Financial Reporting Standard 18 "Accounting Policies".
Going concern
The current economic conditions continue to create uncertainty over the level of demand for the Company's products and the Board have therefore undertaken extensive detailed forecasting of the Company's activities, including sensitivity analysis, through to September 2011.
Cash flow projections are based on conservative assumptions and continued overdraft and loan facilities of £3m. A new agreement is currently being negotiated with Clydesdale Bank plc regarding overdraft and loan facilities which are due for renewal on 31 July 2010. Should these negotiations be successful, the Board do not envisage a shortfall in working capital during the coming twelve months. The Board are encouraged that after initial discussions with the bank no matters have been brought to their attention to suggest that renewal may not be agreed on satisfactory terms.
Accordingly, based on the Company's plans for 2010/11 and after making enquiries, the Directors have a reasonable expectation that the Company has adequate resources available from funds generated from trading and from banking facilities to continue operations for at least 12 months from the date of signing of these financial statements.
The directors are therefore satisfied that the Company has adequate resources to continue in business for the foreseeable future. Accordingly, the financial statements of the Company have been prepared on a going concern basis.
2.Analysis of continuing and discontinued operations
|
|
Continuing operations |
|
Discontinued operations |
|
Total |
|
|
|
2010 |
|
2010 |
|
2010 |
|
|
|
£ |
|
£ |
|
£ |
|
|
Turnover |
12,558,409 |
|
- |
|
12,558,409 |
|
|
Cost of sales |
(11,037,831 |
) |
- |
|
(11,037,831 |
) |
|
Gross profit |
1,520,578 |
|
- |
|
1,520,578 |
|
|
Administrative expenses Exceptional administrative expenses |
(1,687,137 (105,166 |
)) |
- - |
|
(1,687,137 (105,166 |
) |
|
Total administrative expenses |
(1,792,303 |
) |
- |
|
(1,792,303 |
) |
|
Total operating loss |
(271,725 |
) |
- |
|
(271,725 |
) |
|
|
Continuing operations |
|
Discontinued operations |
|
Total |
|
|
|
2009 |
|
2009 |
|
2009 |
|
|
|
£ |
|
£ |
|
£ |
|
|
Turnover |
11,885,938 |
|
9,936,410 |
|
21,822,348 |
|
|
Cost of sales |
(11,716,300 |
) |
(9,791,604 |
) |
(21,507,904 |
) |
|
Exceptional cost of sales |
(553,350 |
) |
(510,008 |
) |
(1,063,358 |
) |
|
Total cost of sales |
(12,269,650 |
) |
(10,301,612 |
) |
(22,571,262 |
) |
|
Gross loss |
(383,712 |
) |
(365,202 |
) |
(748,914 |
) |
|
Administrative expenses Exceptional administrative expenses |
(1,830,645 (248,700 |
)) |
(480,001 - |
) |
(2,310,646 (248,700 |
) |
|
Total administrative expenses |
(2,079,345 |
) |
(480,001 |
) |
(2,559,346 |
) |
|
Total operating loss |
(2,463,057 |
) |
(845,203 |
) |
(3,308,260 |
) |
3.Exceptional items
|
|
2010 |
|
2009 |
|
|
|
£ |
|
£ |
|
|
Exceptional cost of sales continuing operations |
|
|
|
|
|
Write off of Fragrance license costs, development costs of new Fragrance and provision against obsolete stock |
- |
|
283,088 |
|
|
Write down of stock |
- |
|
172,630 |
|
|
Write off of branded Watch development costs |
- |
|
45,754 |
|
|
Write off of aborted design projects and rebranding exercise |
- |
|
51,878 |
|
|
|
- |
|
553,350 |
|
|
Exceptional cost of sales discontinued operations |
|
|
|
|
|
Costs of luxury watch Harrods closure |
- |
|
329,663 |
|
|
Costs of withdrawal from Brown Thomas Ireland |
- |
|
180,345 |
|
|
|
- |
|
510,008 |
|
|
|
|
|
|
|
|
Total exceptional cost of sales |
- |
|
1,063,358 |
|
Exceptional administrative expenses
The exceptional administrative charge in the year to 31 March 2010 relates to the costs of the departure of the previous Chairman and other staff.
The exceptional administrative charge in the year to 31 March 2009 relates to the costs of the departure of the previous Chief Executive and Retail Director.
4. Tax on loss on ordinary activities
The taxation charge is based on the loss for the year and represents:
|
|
2010 |
|
2009 |
|
|
|
£ |
|
£ |
|
|
Current tax: |
|
|
|
|
|
UK Corporation tax at 28% (2009: 28%) |
- |
|
- |
|
|
Adjustment in respect of prior years |
- |
|
(461,717 |
) |
|
|
- |
|
(461,717 |
) |
|
Deferred tax: |
|
|
|
|
|
Origination and reversal of timing differences |
- |
|
70,323 |
|
|
|
- |
|
(391,394 |
) |
5. Loss per share
Loss per share is calculated by dividing the loss attributable to ordinary shareholders by the weighted average number of ordinary shares during the year. Share options are generally dilutive if the exercise price was below the average market price for the year ended 31 March 2010 of 37.0p.
|
|
Continuing operations |
|
Discontinued operations |
|
Total |
|
|
|
2010 |
|
2010 |
|
2010 |
|
|
|
£ |
|
£ |
|
£ |
|
|
Loss for the financial year |
(349,765 |
) |
- |
|
(349,765) |
|
|
Weighted average number of ordinary shares |
18,810,661 |
|
18,810,661 |
|
18,810,661 |
|
|
Loss per share - basic |
(1.86) |
p |
- |
p |
(1.86) |
p |
|
Loss per share - diluted |
(1.86) |
p |
- |
p |
(1.86) |
p |
|
|
Continuing operations |
|
Discontinued operations |
|
Total |
|
|
|
2009 |
|
2009 |
|
2009 |
|
|
|
£ |
|
£ |
|
£ |
|
|
Loss for the financial year |
(2,104,531 |
) |
(845,203 |
) |
(2,949,734) |
|
|
Weighted average number of ordinary shares |
18,793,994 |
|
18,793,994 |
|
18,793,994 |
|
|
Loss per share - basic |
(11.20) |
p |
(4.50) |
p |
(15.70) |
p |
|
Loss per share - diluted |
(11.20) |
p |
(4.50) |
p |
(15.70) |
p |
Loss per share excluding post tax exceptional items are calculated as follows;
|
|
2010 |
|
2009 |
|
|
|
£ |
|
£ |
|
|
Loss for the financial year |
(349,765 |
) |
(2,949,734 |
) |
|
Exceptional cost of sales |
- |
|
765,615 |
|
|
Exceptional administrative expenses |
75,720 |
|
179,067 |
|
|
Adjusted loss excluding exceptional items for basic earnings per share |
(274,045 |
) |
(2,005,052 |
) |
|
Effect of convertible loan note |
- |
|
- |
|
|
Adjusted loss excluding exceptional items for dilutive earnings per share |
(274,045 |
) |
(2,005,052 |
) |
|
|
|
|
|
|
|
Weighted average number of ordinary shares |
18,810,661 |
|
18,793,994 |
|
|
Effect of dilutive share options |
- |
|
- |
|
|
Effect of convertible loan note |
- |
|
- |
|
|
Adjusted weighted average number of ordinary shares |
18,810,661 |
|
18,793,994 |
|
|
|
|
|
|
|
|
Loss per share excluding exceptional items - basic |
(1.46 |
)p |
(10.67 |
)p |
|
Loss per share excluding exceptional items - diluted |
(1.46 |
)p |
(10.67 |
)p |
|
6. Stocks |
2010 |
|
2009 |
|
|
|
£ |
|
£ |
|
|
Raw materials |
692,849 |
|
664,147 |
|
|
Work in progress |
55,102 |
|
38,206 |
|
|
Finished goods |
6,420,319 |
|
7,803,740 |
|
|
|
7,168,270 |
|
8,506,093 |
|
The Company held £2,586,774 of stock on consignment as at 31 March 2010 (2009: £1,598,829) which is not recorded on the balance sheet. The principal terms of the consignment agreements, which can generally be terminated by either side, are such that the Company can return any or all of the stock to the relevant suppliers without financial and commercial penalties and the supplier can vary stock prices.
7. Debtors
|
|
2010 |
|
2009 |
|
|
|
£ |
|
£ |
|
|
Trade debtors |
815,662 |
|
1,011,055 |
|
|
Other debtors |
10,567 |
|
5,194 |
|
|
Prepayments and accrued income |
292,907 |
|
279,396 |
|
|
|
1,119,136 |
|
1,295,645 |
|
8. Creditors: amounts falling due within one year
|
|
2010 |
|
2009 |
|
|
|
£ |
|
£ |
|
|
Bank loans |
1,563,917 |
|
120,886 |
|
|
Trade creditors |
915,045 |
|
1,229,633 |
|
|
Corporation tax |
- |
|
- |
|
|
Social security and other taxes |
325,781 |
|
736,310 |
|
|
Other creditors |
77,460 |
|
94,670 |
|
|
Accruals and deferred income |
205,719 |
|
767,543 |
|
|
Amounts due under finance lease agreements |
- |
|
2,818 |
|
|
|
3,087,922 |
|
2,951,860 |
|
The bank loans and overdrafts are secured by a debenture over the assets and undertakings of the Company.
9. Creditors: amounts falling due after more than one year
|
|
2010 |
|
2009 |
|
|
|
£ |
|
£ |
|
|
Convertible loan note |
- |
|
300,000 |
|
|
Bank loans |
- |
|
1,563,917 |
|
|
|
- |
|
1,863,917 |
|
The convertible loan note was issued on 3 September 2003. Interest is payable quarterly at 7 % per annum. The loan note may be converted to ordinary shares at a conversion price of 30p per ordinary share. During the year the loan note of £300,000 was repaid on 24th December 2009.
10. Share capital
|
|
2010 |
|
2009 |
|
|
|
£ |
|
£ |
|
|
Authorised |
|
|
|
|
|
30,000,000 Ordinary Shares of 5p |
1,500,000 |
|
1,500,000 |
|
|
Allotted, called up and fully paid |
|
|
|
|
|
18,810,661 Ordinary Shares of 5p |
940,533 |
|
940,533 |
|
11. Reserves
|
|
|
Share premium account |
|
Profit and loss account |
|
Share options reserve |
|
|
|
|
£ |
|
£ |
|
£ |
|
|
At 1 April 2009 |
|
4,572,857 |
|
1,451,806 |
|
33,924 |
|
|
Loss for the year |
|
- |
|
(349,765 |
) |
- |
|
|
Transferred to profit and loss account |
|
- |
|
- |
|
1,478 |
|
|
At 31 March 2010 |
|
4,572,857 |
|
1,102,041 |
|
35,402 |
|
12. Dividend
The Company does not propose to pay a dividend for the year ended 31 March 2010.
13. Publication of Non-Statutory Accounts
The financial information set out in this preliminary announcement does not constitute the company's statutory accounts as defined in Section 435 of the Companies Act 2006 in respect of 2010 accounts or Section 240(3) of the Companies Act 1985 in respect of 2009 accounts.
The summarised balance sheet at 31 March 2010 and the summarised profit and loss account, summarised cash flow statement and associated notes for the year then ended have been extracted from the Company's 2010 audited statutory financial statements.
This announcement includes extracts from the audited statutory accounts for the year to 31 March 2010 upon which the auditors' opinion is modified with an emphasis of matter opinion in relation to going concern. The comparative figures relating to the year to 31 March 2009 are taken from the audited statutory accounts for that year.
The Annual Report and Accounts for the year ended 31 March 2010 is being posted to shareholders and will be made available on the Company's website www.theofennell.com.
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