8th Jun 2005 07:00
Theo Fennell PLC08 June 2005 Theo Fennell PLC ("Theo Fennell" or "the Group") Preliminary Results for the year ended 31 March 2005 HIGHLIGHTS: Financial: • Turnover up 2% at £16,266,231 (excluding one-off trade sales in 2004) • £511,678 capital investment in the business, with renovation of flagship store and the introduction of a new IT system • Profit before tax of £105,988 (2004: £370,186) • Contribution of £2.8m before central overheads • Strong positive cash flow of £718,333; (2004: (£34,591)) • Debtors, stock and creditors reduced Operational: • Successful performances at Harrods and Selfridges • Good first year's trading by Harvey Nichols, Manchester concession • Expansion of wholesale distribution with commencement of trading in Harrods Duty Free, Heathrow Terminals 3 & 4 • "Tomfoolery" by Theo Fennell at "Designers for Debenhams" successfully launched; additional collections designed and the product range extended • Licensing deal signed for a Theo Fennell fragrance to be launched in the UK in Spring 2006 • Extension of watch offering, with Theo Fennell designed limited editions created for Franck Muller, Jaeger Le Coultre, Jacob & Co and Technomarine Outlook • Sales for the year to date are encouraging and are expected to be ahead of both last year and the budget for the first quarter ending 30 June 2005 • The Board's focus over the last three years has been on developing and investing in the brand which has been funded by the strong contribution from retail outlets. Whilst this investment has a short-term impact on Group profitability, the potential payback in the future is significant. Further development and investment in the brand is underway, which will result in Theo Fennell becoming a leading global luxury goods business. Corporate Development: • The Group has appointed Savigny Partners, the financial advisory firm specialising in luxury goods, to assist in its international roll out strategy and development • Commencement of overseas strategy: • Discussions underway regarding shop in shop concessions in the US and Hong Kong and potential franchise partners in Middle East • Successful show in Moscow with agreement signed to develop wholesale business in the Russian market. • China and South East Asia under consideration as potential new overseas markets Richard Northcott, Chairman commented: "The significant increase in turnover and return to profit over the last threeyears has been achieved through organic development of the brand. Theo Fennelltoday is widely represented in the UK through its stores, concessions andwholesale network. This success has led to overseas demand for Theo Fennell.Whilst continuing to design new products, the focus this year will be on fullyexploiting the Theo Fennell brand overseas and capitalising on the interest wehave received from the USA, Russia and Asia. The appointment of SavignyPartners will help us achieve our objectives." 8 June 2005 Theo Fennell Richard Northcott 020 7591 5032 [email protected] Pelham Public Relations James Henderson 020 7743 6673 [email protected] Chairman's Statement During the year the Group made excellent progress in further developing thebrand, with the launch of its first licensee range, increased wholesaledistribution, renovation of the Fulham Road flagship store, and the roll out ofnew collections. Due to the Group's continued investment and development, TheoFennell today is well recognized as a unique British luxury brand with iconicproducts, a high profile and strong celebrity endorsement. In financial terms the Group's performance in 2005 was creditable given therelatively depressed UK consumer climate in the last quarter of the year whichimpacted Christmas sales. Sales for the year ended 31 March 2005 were£16,266,231 compared with £15,948,491 last year (excluding one-off trade salesof £1.1m). The continuing roll-out of new collections has been an importantdriver of sales growth; with sales over the last three years growing by almost50%. Group profit was affected by the on-going organic investment in the brandboth in the UK, with the renovation of the flagship store, and overseas. Profitbefore tax for the year was £105,988 compared with £370,186 in the previousyear. The contribution before central overheads was £2.8m demonstrating theprofitability of the core business. As our distribution increases with moreoutlets, franchisees and licence agreements coming on-stream, profits shouldquickly accrue to the bottom line. Earnings per share were 0.39p, (2004: 1.69p). The Group's balance sheet looks stronger than for some time with stock,debtors and creditors all lower than the previous year and positive net cashflow of £718,333. Given continued investment in the development of the Group,the Board has decided not to pay a dividend. Operational Update Stores/ Concessions The Group continued to invest in its flagship store, which was renovated duringthe year and now fully reflects the diversity of the brand. Our standalone shopin the Royal Exchange is trading strongly and is one of the best performingstores within the complex. The Group's most recent concession, Harvey Nichols inManchester, had a good first year's trading. Our concessions within Harrods andSelfridges both traded well. The Fine Jewellery Room at Harrods is currentlyundergoing refurbishment and is expected to reopen in September with TheoFennell occupying one of the larger spaces. The Group is extremely confidentthat the newly refurbished room will attract significant trade. Wholesale The launch of high profile stand alone collections continues to attract strongwholesale interest. Collections such as "Strip" and "Outline" are now availablethrough prestigious outlets throughout the UK. Wholesale distribution increasedduring the year with three new wholesale accounts in Leeds, Harrogate,Nottingham, as well as representation in Heathrow Terminals 3 & 4 Duty Freewhich are progressing well. Product Collections launched during the year include "Horn" and "Trellis". Both of thesehave been extremely popular, attracting strong wholesale demand and selling wellwithin our own stores and concessions. "Horn" ,which has now been extended intodifferent colours, has received considerable media coverage and celebrityendorsement. We are planning to extend the "Trellis" collection this year. Theo Fennell has also been at the forefront of creating large rings withbrightly coloured semi-precious stones, which have become internationallyfashionable and have attracted strong demand. Theo Fennell continues to design limited edition watch dials for some of theworld's top watch brands including Franck Muller, TechnoMarine, Jaeger LeCoultre and Jacob. Some of these have become "iconic" pieces and are regularlyfeatured as aspirational products. Licence Agreements Theo Fennell's first licence collection, "Tomfoolery" at "Designers forDebenhams", was launched during the year. Positioned alongside otherinternational designers including Jasper Conran, Matthew Williamson and JulienMacdonald, the collection performed strongly and has been rolled out inDebenham's stores throughout the UK. The product range has been extended and anadditional collection designed. The Group has recently signed a major licensing deal to launch a Theo Fennellfragrance in Spring 2006. Overseas Whilst Theo Fennell enjoys a strong international profile due to its celebrityendorsement and overseas collections, the brand is primarily represented withinthe UK, with overseas representation in Marbella and Barbados. Theo Fennell hasbeen approached by a number of potential international partners regardingopening concessions or franchises in Europe, Russia, the Middle East and Asia.During the year we held a number of overseas shows, which were successful. Inthe year ahead, we intend to consolidate these discussions with potentialpartners, thereby growing our international network. Corporate Development The Group has appointed Savigny Partners, the financial advisory firmspecializing in luxury goods, to assist in its international roll out strategyand development Outlook Sales for the year to date are encouraging and are expected to be ahead of bothlast year and the budget for the first quarter ending 30 June 2005 The Board's focus over the last three years has been on developing and investingin the brand, which has been funded by the strong profitability achieved by ourretail outlets. Whilst this investment has a short-term impact on Groupprofitability, the potential payback in the future is significant. Furtherdevelopment and investment in the brand is underway which we believe will resultin Theo Fennell becoming a leading global luxury goods business. Richard Northcott Chairman 8 June 2005 Profit and Loss Account For the year ended 31 March 2005 2005 2004 £ £Turnover 16,266,231 17,048,491 Cost of sales (14,574,777) (15,217,232) Gross profit 1,691,454 1,831,259Administrative expenses (1,451,356) (1,354,371) Operating profit 240,098 476,888 Net interest payable (134,110) (106,702)Profit on ordinary activities before taxation 105,988 370,186Tax on profit on ordinary activities (42,579) (96,291)Profit for the year 63,409 273,895Dividends - -Retained profit for the year 63,409 273,895Basic and diluted earnings per share 0.39p 1.69p There were no recognised gains or losses other than the profit for the financialyear. All turnover arises from continuing operations. Balance Sheet as at 31 March 2005 2005 2004 £ £ £ £Fixed assetsTangible assets 921,251 689,264Current assetsStocks 7,972,108 8,090,044Debtors 2,281,609 2,712,981Cash at bank and in hand 9,638 9,162 10,263,355 10,812,187Creditors: amounts falling duewithin one year (3,843,417) (4,465,008)Net current assets 6,419,938 6,347,179Total assets less currentliabilities 7,341,189 7,036,443Creditors: amounts falling due aftermore than one year Convertible loan note (1,000,000) (1,000,000)Other (287,697) (46,360) (1,287,697) (1,046,360)Net assets 6,053,492 5,990,083Capital and reservesCalled up share capital 808,892 808,892Share premium account 3,879,752 3,879,752Profit and loss account 1,364,848 1,301,439Equity shareholders' funds 6,053,492 5,990,083 Cash Flow Statement For the year ended 31 March 2005 2005 2004 £ £ £ £Net cash inflow/ (outflow) from operating activities (569,701) 1,083,686Returns on investments and servicing of financeInterest paid on bank loans, overdrafts and other loans (193,998) (100,578) Interest element of finance lease payments (14,781) (6,026)Interest received 58,049 35,324 (150,730) (71,280) TaxationCorporation tax paid (24,435) (85,233) Capital expenditurePurchase of tangible fixed assets (416,083) (358,805) (416,083) (358,805)Net cash inflow/(outflow) before financing 431,640 (1,024,221) FinancingCapital element of finance lease payments (36,604) (10,370)Bank loan 323,297 -Issue of convertible loan note - 1,000,000Increase/ (Decrease) in cash 718,333 (34,591) Notes to the Financial StatementsFor the year ended 31 March 2005 1. Tax on profit on ordinary activities The taxation charge is based on the profit for the year and represents: 2005 2004 £ £Current tax:UK Corporation tax at 20% (2004: 20 %) 12,031 90,056Adjustment in respect of prior years (4,756) - 7,275 90,056Deferred Tax:Origination and reversal of timing differences 35,304 6,235 42,579 96,291 2. Earnings per share The calculation of earnings per share is based upon the profit on ordinaryactivities after taxation of £63,409 (2004: £273,895) and the weighted averagenumber of shares of 16,177,831 (2004: 16,177,831). There is no differencebetween the basic and diluted earnings per share as, during the year, shareoptions and the convertible loan note were anti-dilutive. 3. Share Capital 2005 2004 £ £Authorised30,000,000 Ordinary Shares of 5p 1,500,000 1,500,000Allotted, called up and fully paid16,177,831 Ordinary Shares of 5p 808,892 808,892 4. Basis of preparation The financial statements have been prepared under the historical cost conventionand in accordance with applicable United Kingdom accounting standards. Theprincipal accounting policies have remained unchanged from the previous year andhave been applied consistently in dealing with items which are consideredmaterial in relation to the Group's financial statements. These polices havebeen reviewed in accordance with Financial Reporting Standard 18 AccountingPolicies. The financial statements have been prepared on a going concern basis whichassumes that the Group will continue in operational existence for theforeseeable future, and that the Group's banking facilities will continue to beavailable. The directors therefore believe that it is appropriate for thefinancial statements to be prepared on a going concern basis. The preliminary announcement includes extracts from the draft statutory accountsfor the year to 31 March 2005. The comparative figures relating to the year to31 March 2004 are taken from the audited statutory accounts for that year. 5. Dividend The Group does not propose to pay a dividend for the year ended 31 March 2005. This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
TFL.L