4th Jun 2007 07:02
Theo Fennell PLC04 June 2007 4 June 2007 Theo Fennell PLC ("Theo Fennell" or "the Group") Preliminary Results for the year ended 31 March 2007 HIGHLIGHTS: Financial - another record year • Turnover up 30% at £25.4 million (2006: £19.4 million) • More than doubled profit before tax before exceptional item - £1.626 million (£732,451 in 2006) • Strong growth despite modest capital investment • Additional investment in Stock of £1 million • Continuing positive cashflow Operational • During the year expanded the global network with additional wholesale openings in Dublin and Moscow, while continuing to grow and expand our existing network • Record Christmas sales • Launched additional collections and extended the successful 'Arts collection • Expanded licensing revenue stream with the successful launch of Theo Fennell Scent in February 2007 Corporate • Strong start to 2007 • Focused on accelerating existing business plan through further investment • New openings in 2007/8 to include additional standalone store in Dubai, second site in Moscow, additional location in Hong Kong and new Theo Fennell branded wholesale areas in Kazakhstan and Bahrain • The Board continues to assess opportunities to enter the important US market and is investigating standalone locations in New York as well as potential wholesale distribution opportunities • A major new collection of Theo Fennell watches is being developed for launch in 2008/9 • Theo Fennell Scent is being launched internationally this year. Men's fragrance will be launched next year Richard Northcott, Chairman commented: "Following two record years, sales have increased over that period in aggregateby 56% and profits by £1.5 million. This growth has been driven by thepopularity of our design-led and distinctive products, the strength of ourbrand, our strong established team and our focused expansion programme. Thissuccess highlights the huge potential for the Group both in the UK andInternationally. I am delighted with the continuing success of the business todate and we are extremely well positioned to maximise and accelerateopportunities." 4 June 2007 Theo Fennell Richard Northcott 020 7591 5000 [email protected] Pelham Public Relations James Henderson 020 7743 6673 [email protected] Seymour Pierce Limited Mark Percy 020 7107 8000 Theo Fennell PLC CHAIRMAN'S STATEMENT Overview The last year has been a record one for Theo Fennell with continued sales growthsurpassing the Group's high growth rates of the past two years. Turnoverincreased 30% to £25.4 million (2006: £19.4 million) with profit before taxbefore exceptional items doubling to £1.62 million (2006: £732,451). The Groupincurred an exceptional charge of £256,000 relating to Director's nationalinsurance on the partial redemption of the convertible loan note in March 2007.The conversion of the loan note has led to a tax credit of £600,000 resulting ina net profit after tax for the year of £1,554,957 (2006: £491,038). Thisexceptional growth has once again been achieved with minimum capital expenditureof approximately £100,000. During the year the Group also invested an additional£1 million in stock which should continue to have a positive impact on thisyear's sales. Theo Fennell's development as a luxury brand continues rapidly. During the yearthe Group expanded both its global and domestic network with new wholesaleopenings in Dublin and Moscow and further extension of the existing network. The Group also benefited from record Christmas trading; fuelled by the successof new collections. Operational Our stores and concessions have shown exceptional sales gains and all continueto make a positive contribution. This year the management team has focused on expanding the Group'srepresentation overseas. This has been achieved to good effect with alloperations performing well ahead of management expectations. In 2007/8 the Group will increase its International network with new openingsincluding; an additional standalone store in Dubai, a second site in Moscow, afurther location in Hong Kong and new Theo Fennell branded wholesale areas inKazakhstan and Bahrain. The Group is exploring the opportunity to enter the important US market and isinvestigating standalone locations in New York as well as potential wholesaledistribution opportunities. Licence Arrangements The Theo Fennell Scent was successfully launched exclusively in Harrods inFebruary 2007. The Scent is being launched globally this year and the Group isworking on extending this range and also planning to enter the men's market latenext year. Product The 'Arts range which was launched last year continues to be one of the mostpopular collections to date. This, alongside the ''Trellis'' and ''Skull''collections which were launched this year have sold extremely well. In addition there has been a continued demand for Theo's haute couture pieces aswell as the increased use of unique and beautiful gem stones that retail at apremium price point. A major new collection of Theo Fennell watches is being developed which will belaunched in 2008/9. Corporate Development To date the brand's development has been funded internally. We wish toaccelerate this development and are therefore having discussions with a numberof potential strategic partners. Outlook 2006/7 was a record year; this continues in the current year with trading in thefirst two months outperforming the corresponding period last year. In the yearahead the Group will focus on developing the brand with the expansion of itsinternational network, the introduction of new collections and continued highlevel marketing. We believe we have all the fundamentals in place for anothersuccessful year. Richard NorthcottChairman4 June 2007 Profit and Loss AccountFor the year ended 31 March 2007 2007 2006 £ £Turnover 25,360,518 19,433,422 Cost of sales (21,828,970) (16,924,808) Gross profit 3,531,548 2,508,614Administrative expenses (1,854,190) (1,639,368) Exceptional administrative expenses (255,999) - Total administrative expenses (2,110,189) (1,639,368)Operating profit 1,421,359 869,246 Net interest payable (51,040) (136,795)Profit on ordinary activities before taxation 1,370,319 732,451Tax on profit on ordinary activities 184,638 (241,413)Retained profit for the year 1,554,957 491,038Basic earnings per share 9.57p 3.04pDiluted earnings per share 7.81p 2.77p There were no recognised gains or losses other than the profit for the financialyear. All turnover arises from continuing operations. Balance Sheetas at 31 March 2007 2007 2006 £ £ £ £Fixed assetsTangible assets 641,964 923,983 Current assetsStocks 9,024,623 8,053,624Debtors 4,542,854 3,024,332Cash at bank and in hand 10,972 12,515 13,578,449 11,090,471 Creditors: amounts falling duewithin one year (5,036,722) (4,347,156)Net current assets 8,541,727 6,743,315Total assets less currentliabilities 9,183,691 7,667,298Creditors: amounts falling dueafter more than one year Convertible loan note (400,000) (1,000,000)Other (9,121) (122,768) (409,121) (1,122,768)Net assets 8,774,570 6,544,530 Capital and reservesCalled up share capital 913,791 808,892Share premium account 4,423,850 3,879,752 Profit and loss account 3,410,843 1,855,886Share options reserve 26,086 -Equity shareholders' funds 8,774,570 6,544,530 Cash Flow StatementFor the year ended 31 March 2007 2007 2006 £ £ £ £Net cash inflow from operatingactivities 642,586 985,984Returns on investments andservicing of finance Interest paid on bank loans,overdrafts and other loans (140,456) (182,262)Interest element of finance lease payments (5,814) (14,764)Interest received 98,365 54,946 (47,905) (142,080) TaxationCorporation tax paid (211,638) (1,909)Capital expenditurePurchase of tangible fixed assets (95,459) (359,293) (95,459) (359,293)EquityIssue of share options 75,086 - Net cash inflow before financing 362,670 482,702Financing Capital element of finance leasepayments (46,542) (52,968)Bank loan (118,365) (111,127)Increase in cash 197,763 318,607 1. 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,apart from the Company recognising the presentation and disclosure requirementsof Financial Reporting Standard 20 "Share-based Payment" (FRS 20). Norestatement of the prior period is necessary as the effect in respect of thecurrent and prior years is not considered material. These policies have beenapplied consistently in dealing with items which are considered material inrelation to the Company's financial statements and have been reviewed inaccordance with Financial Reporting Standard 18 "Accounting Policies". The financial statements have been prepared on a going concern basis whichassumes that the company will continue in operational existence for theforeseeable future, and that the Company's banking facilities will continue tobe available. The directors therefore believe that it is appropriate for thefinancial statements to be prepared on a going concern basis. 2. Exceptional administrative expenses The exceptional charge of £255,999 to administrative expenses relates toemployers' national insurance payable on the effective gain made on theredemption of the convertible loan note by certain directors in March 2007. The Company benefits from tax relief available on the effective gain made on theconversion of the Loan Note resulting in a tax credit of £600,000. By alsotaking into account the corporation tax effect of the exceptional administrativeexpenses the net effect of the loan note conversion on the current year resultshas been to increase the Profit after tax by £420,800. 3. Tax on profit on ordinary activities The taxation charge is based on the profit for the year and represents: 2007 2006 £ £Current tax:UK Corporation tax at 30% (2006: 30%) (140,130) 219,755Adjustment in respect of prior years (12,874) (5,366) (153,004) 214,389Deferred Tax:Origination and reversal of timing differences (31,634) 27,024 (184,638) 241,413 4. Earnings per share Profit per share is calculated by dividing the profit attributable to ordinaryshareholders by the weighted average number of ordinary shares during the year.Share options are generally dilutive if the exercise price was below the averagemarket price for the year end 31 March 2007 of £0.90. 2007 2006 £ £Profit for the financial year 1,554,957 491,038Effect of convertible loan note 49,000 49,000Adjusted profit for dilutive earnings per share 1,603,957 540,038 Weighted average number of ordinary shares 16,243,353 16,177,831Effect of dilutive share options 966,916 12,050Effect of convertible loan note 3,316,893 3,333,333Adjusted weighted average number of ordinary shares 20,527,162 19,523,214 Earnings per share - basic 9.57p 3.04pEarnings per share - diluted 7.81p 2.77p Earnings per share excluding exceptional items is calculated as follows; 2007 £Profit for the financial year 1,554,957Effect of partial redemption of convertible loan note (note 2) (420,800)Adjusted profit excluding exceptional items for basic earnings share 1,134,157Effect of convertible loan note 49,000Adjusted profit excluding exceptional items for dilutive earnings per share 1,183,157 Weighted average number of ordinary shares 16,243,353Effect of dilutive share options 966,916Effect of convertible loan note 3,316,893Adjusted weighted average number of ordinary shares 20,527,162 Earnings per share excluding exceptional items - basic 6.98pEarnings per share excluding exceptional items - diluted 5.76p The earnings per share excluding exceptional items shows the basic and dilutedearnings per share had the partial redemption of the convertible loan note notoccurred during the year (refer note 2). There is no effect on the basic anddiluted earnings per share for 2006. 5. Share Capital 2007 2006 £ £Authorised30,000,000 Ordinary Shares of 5p 1,500,000 1,500,000Allotted, called up and fully paid18,275,829 Ordinary Shares of 5p 913,791 808,892 During the year 98,000 shares were issued as a result of the exercise of shareoptions. The nominal value of these shares was £4,900 and the consideration was£48,998. Loan notes were converted during the year resulting in the issue of1,999,998 shares. The nominal value of these shares was £100,000 and theconsideration was £600,000. 6. Dividend The Group does not propose to pay a dividend for the year ended 31 March 2007. 7. Publication of Non-Statutory Accounts The financial information set out in this preliminary announcement does notconstitute statutory accounts as defined in section 240 of the Companies Act1985. The summarised balance sheet at 31 March 2007 and the summarised profitand loss account, summarised cash flow statement and associated notes for theyear then ended have been extracted from the Company's audited financialstatements. Those financial statements have not yet been delivered to theregistrar of companies. This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
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