20th Dec 2012 07:00
20 December 2012
THEO FENNELL PLC
("Theo Fennell" or "the Company")
Interim results for the six months ended 30 September 2012
Theo Fennell PLC, the international luxury jeweller, announces interim results for the six months ended 30 September 2012.
HIGHLIGHTS:
·; Financial performance for first half in line with Board expectations:
- Turnover down 8% at £4.94 million (2011: £5.36 million)
- Losses more than halved to £610,083 (2011: loss of £1,390,739)
·; Online performed strongly with sales up 176%
·; Wholesale sales up 12%
·; New wholesale concessions launched in Kuwait and in Baku, Azerbaijan
·; Frank McKay appointed as a non-executive director
·; Ongoing investment in unique one off pieces including a series of opening rings, sculptured flora and fauna suites and portrait brooches
·; Launch of new pieces and collections including the Tryst and Wild Rose collections, new Spangle pieces and the new Meadow collection within the Alias range
Rupert Hambro, Chairman, commented:
"These results reflect the substantial cuts to overheads, which together with the restructuring of the business, have significantly reduced our losses for the period.
The major focus of the business is to increase sales which will return the Company to profit. We continue to explore exciting opportunities for Theo Fennell in overseas markets including the Far East, Middle East and Eastern Europe.
The outlook for the economy and the retail sector remains uncertain however the work that we have undertaken in the last period ensures we are better positioned for the future."
Enquiries: |
|
Theo Fennell Plc Theo Fennell |
Tel: 020 7591 5000 |
Pelham Bell Pottinger James Henderson Lucy Miles |
Tel: 020 7861 3885 |
Seymour Pierce Limited Mark Percy/ Catherine Leftley (Corporate Finance) David Banks/ Katie Ratner (Corporate Broking) Opus Corporate Finance Malcolm Strang / John McElroy (Rule 3 advisor) |
Tel: 020 7107 8000
Tel: 0207 025 3600 |
CHAIRMAN'S STATEMENT
Overview
I write this report about the Company's trading results for the six months to 30th September 2012. The Company has performed encouragingly over the last six months. Despite sales being down 8% versus the prior year, the loss for the period has been more than halved, which is in line with our expectations, and is the lowest it has been for the past four years. We are therefore pleased with the progress that has been made. We do however remain cautious as we enter the Christmas trading period due to the continued economic uncertainty impacting the UK retail sector.
Financial
Sales in the first six months of the year reduced by 8% to £4.94 million (2011: £5.36 million). The bulk of these sales were lost during the key summer months due to the reduction in international clients because of the Olympics. The Company made a first half loss before taxation of £610,083 compared to a first half loss for the same period last year of £1,390,739.
Operations & product
We have continued to invest in unique one-off pieces which we believe give us a clear advantage in the jewellery market. These include our opening rings which have had extensive press coverage, detailed and sculptured flora and fauna suites and portrait brooches.
We have extended our Spangle range into new and colourful styles and the Tryst range is being developed into new products. We will also present a new diamond collection in Spring 2013; it is a quirky and original collection which will have a broad price range and appeal. The new Meadow collection in our Alias range is proving very popular and we will be expanding this in the coming year.
Website
We have continued the development of our website including the online store. Sales for the period were 176% ahead of the same period last year, albeit from a low base.
Our online sales currently account for 1.4% of our overall business and we see this as a key growth area for the Company.
International
We are exploring opportunities in key international markets including the Far East, Middle East and Eastern Europe. We have opened a new wholesale concession in Kuwait and continue to have discussions with distributors and potential partners in the important Far East and Chinese markets. The Ukraine, Russia and Kazakhstan continue to do good business and we have recently opened a concession in Baku, Azerbaijan. The ongoing economic uncertainty continues to make discussions with new partners more protracted than we had expected but we hope to secure additional distribution outlets in the latter part of this financial year. We remain focused on appointing the right partners to represent the Theo Fennell brand.
The Board
On 24th September 2012, we announced the appointment of Frank McKay as a non-executive director. As I said at the time, we are delighted that Frank has joined us. He has extensive experience of improving Company performance and has been involved in a number of public and private companies.
On 27th November we announced that Gavin Saunders, Finance Director, would resign from the board on the 7th December and that Alasdair Hadden-Paton, currently executive Deputy Chairman, would replace him. Theo Fennell continues in the role of Managing Director.
Offer talks
As notified in a recent statement, we are in ongoing discussions with EME Capital about a potential takeover of the business and will inform the market when there are further developments to report.
Outlook
Our immediate focus is the important Christmas period and in the New Year we will be reviewing our strategic business plan to accelerate the development of the brand and our international network. We remain cautious about the outlook as we enter the key Christmas period given the challenging economic environment; however we believe strongly in the long term potential of the brand.
DIRECTORS' RESPONSIBILITY STATEMENT
We confirm that to the best of our knowledge:
• | The condensed set of financial statements gives a true and fair view of the assets, liabilities, financial position and profit or loss of the issuer and have been prepared in accordance with pronouncements on interim reporting issued by the Accounting Standards Board; |
• | The interim management report includes a fair review of the information required by: |
a) DTR 4.2.7R of the Disclosure and Transparency Rules, being an indication of important events during the first six months of the financial year and their impact on the condensed set of financial statements; and a description of the principal risks and uncertainties for the remaining six months of the year; and
b) DTR 4.2.8R of the Disclosure and Transparency Rules, being related party transactions that have taken place in the first six months of the current financial year and that have materially affected the financial position or performance of the entity during that period; and any changes in the related party transactions described in the last annual report that could do so.
Related parties transactions are disclosed in note 8.
The directors of Theo Fennell plc are listed in the Directors and Advisors page of this interim report.
On behalf of the Board
Rupert Hambro
Chairman
20 December 2012
Condensed Profit and Loss Account (Unaudited)for the six months ended 30 September 2012
Six months ended 30 September 2012£ | Six months ended 30 September 2011£ | Yearended 31 March2012£ | ||||
Turnover | 4,937,363 | 5,364,775 |
12,383,774 | |||
Cost of sales | (2,286,255 | ) | (2,454,716 | ) | (5,727,887 | ) |
Gross profit | 2,651,108 | 2,910,059 | 6,655,887 | |||
Selling & distribution expenses Administrative expenses Exceptional administrative expenses | (2,444,672 (754,879
| ) ) - | (2,862,540 (1,043,247 (345,000) | ) ) | (5,896,236 (1,870,049 (488,442) | ) ) |
Total expenses | (3,199,551 | ) | (4,250,787 | ) | (8,254,727 | ) |
Operating loss | (548,443 | ) | (1,340,728 | ) | (1,598,840 | ) |
Net interest payable | (61,640 | ) | (50,011 | ) | (103,781 | ) |
Loss on ordinary activities before taxation | (610,083 | ) | (1,390,739 | ) | (1,702,621 | ) |
Tax on loss on ordinary activities | - | - | - | |||
Retained loss for the financial period | (610,083 | ) | (1,390,739) | (1,702,621 | ) | |
Basic loss per share | (2.63)p | (6.05)p | (7.39)p | |||
Diluted loss per share | (2.63)p | (6.05)p | (7.39)p |
All transactions arise from continuing operations
Condensed Balance Sheet (Unaudited)as at 30 September 2012
As at 30 September 2012£ | As at 30 September 2011£ | As at 31 March2012£ | ||||
Fixed assetsTangible assets Investments |
612,414 182,000 | 594,420 182,000 | 522,542 182,000 |
| ||
794,414 | 776,420 | 704,542 | ||||
Current assetsStocksDebtorsCash at bank and in hand | 7,618,287 1,704,588 3,628 | 8,793,216 1,640,050 28,862 | 7,658,812 1,529,321 - | |||
9,326,503 | 10,462,128 | 9,188,133 | ||||
Creditors: amounts fallingdue within one year | (4,740,973 | ) | (3,813,372 | ) | (3,958,036) | |
Net current assets | 4,585,530 | 6,648,756 | 5,230,097 | |||
Total assets less current liabilities | 5,379,944 | 7,425,176 | 5,934,639 | |||
Creditors: amounts fallingdue after one year | (44,395 |
) | (1,216,881) |
|
- |
|
Net assets | 5,335,549 | 6,208,295 | 5,934,639 | |||
Capital and reservesCalled up share capitalShare premium accountProfit and loss account Share options reserve | 1,157,901 5,741,166 (1,758,042 194,524 | )
| 1,157,901 5,741,166 (836,079) 145,307 | 1.157,901 5,741,166 (1,147,959) 183,531 |
| |
Shareholders' funds | 5,335,549 | 6,208,295 | 5,934,639 |
Condensed Cash Flow Statement (Unaudited)for the six months ended 30 September 2012
Six months ended 30 September 2012£ | Six months ended 30 September 2011£ | Yearended 31 March2012£ | ||||
Net cash outflow from operating activities | (766,068 | ) | (773,539 | ) | 32,853 | |
Returns on investment and servicing of finance Net interest paid | (61,640 | ) | (50,011 | ) | (103,781) | |
Taxation Corporation tax paid/repayment | - | - | - | |||
Capital expenditure & financial investment Purchase of fixed assets
| (243,346
|
)
|
(65,971
|
)
|
(165,027)
|
|
Net cash outflow before financing | (1,071,054 | ) | (889,521 | ) | (235,955) | |
Financing Issue of shares Expenses of share issue Bank loan repayments | - - (1,083,267 |
) | 68,000
(79,466 |
- ) | 68,000 - (160,810) |
|
Decrease in cash | (2,154,321 | ) | (900,987 | ) | (328,765) |
Notes
1. The financial information for the period under review has not been audited or reviewed by the Company's auditors, Grant Thornton UK LLP. The Company is not required to adopt IFRS and the Board considers there would be no advantage to do so voluntarily, so will continue to prepare the financial statements under UK GAAP.
2. The financial information set out in this interim report does not constitute statutory accounts as defined in Section 435 of the Companies Act 2006. The Company's statutory financial statements for the year ended 31 March 2012, prepared in accordance with United Kingdom Generally Accepted Accounting Practice (UKGAAP), have been filed with the Registrar of Companies. The auditor's report on those financial statements was unqualified. The report did not contain a statement under Section 498(2) of the Companies Act 2006.
3. The financial information set out in this interim report has been prepared in accordance with pronouncements on interim reporting issued by the Accounting Standards Board.
4. Loss per share and diluted loss per share. Average market price for the six months ended 30 September 2012 was 10.58p (31 March 2012: 11.25p)
| Six months ended 30 September 2012£ | Six months ended 30 September 2011£ | Yearended 31 March2012£ | ||
Loss for the financial period | (610,083) | (1,390,739) | (1,702,621) | ||
Weighted average number of ordinary shares |
23,158,029 |
22,998,466 |
23,034,696 | ||
Effect of dilutive share options | - | - | - | ||
Adjusted weighted average number of ordinary shares |
23,158,029 |
22,998,466 |
23,034,696 | ||
Loss per share - basic and diluted | (2.63p) | (6.05p) | (7.39p) |
5. Cash flow from operating activities:
Six months ended 30 September 2012£ | Six months ended 30 September 2011£ | Yearended 31 March2012£ |
| ||||
Operating loss Depreciation charges Share option charge Decrease / (increase) in stocks (Increase) / decrease in debtors (Decrease) / increase in creditors | (548,443) 153,474 10,993 40,525 (175,267) (247,350) |
| (1,340,728 160,418 26,199 (286,404 (43,082 710,058 | )
) )
|
(1,598,840) 331,352 64,423 848,000 67,647 320,271 |
| |
Net cash outflow from operating activities | (766,068) | (773,539 | ) | 32,853 |
| ||
6. The exceptional administrative charge for the six months to 30 September 2011 relates to the costs of the departure of the Chief Executive and legal fees in relation to the defence of an employment tribunal hearing.
7. The Company purchased a minority interest (20%) in the Original Design Partnership on 23 June 2010. This is treated as a fixed asset investment as the Company does not exert significant influence over ODP.
8. Related party transactions. For the six months to 30 September 2012 the Original Design Partnership were paid design/consultancy fees of £157,650 (2011: £157,650), purchases of stock £26,819 (2011: £34,615), and expenses £Nil (2011: £Nil). The Company also held £123,511 (2011: £102,153) of consignment stock from the Original Design Partnership. The Original Design Partnership qualifies as a related party because it is an entity under the control of an individual (Theo Fennell) who is key management personnel of Theo Fennell plc
9. Creditors: amounts falling due within one year
Six months ended 30 September 2012£ | Six months ended 30 September 2011£ | Yearended 31 March2012£ | ||||
Bank loans Bank overdrafts Trade creditors Social security and other taxes Other creditors Accruals and deferred income | 172,488 2,850,221 852,501 230,793 57,279 577,691 |
| 164,611 1,293,357 1,082,906 363,702 160,673 748,123 |
|
1,300,148 692,271 642,776 354,429 214,847 753,565 |
|
4,740,973 | 3,813,372 | 3,958,036 |
During the six months to 30 September 2012 the £1million bank loan was repaid, the banking facility has been restructured and this amount is now payable as part of the bank overdraft.
10. Burlington Arcade opened 18 July 2012 and capital expenditure during the six months to 30 September 2012 was £196,640.
11. The Company has changed its accounting policy in respect of the overheads attributable to cost of sales, as the change more appropriately and clearly represents the Company's actual cost of sales. The overheads previously attributed to cost of sales are now separately disclosed as selling and distribution expenses. All comparatives in the financial information have been restated in accordance with the above changes in accounting policy.
12. The current economic conditions continue to create uncertainty over the level of demand for the Company's products and the Board has therefore undertaken detailed forecasting of the Company's activities, including sensitivity analysis, through to March 2014. Cash flow projections are based on conservative assumptions and the continued availability of an overdraft facility totalling £3 million to 31 January 2013, reducing to £2.5 million thereafter to 31 July 2013. Our bank overdraft with Clydesdale Bank plc currently runs until 31 July 2013. Based on the continued availability of this facility the board do not envisage a shortfall in working capital during the coming twelve months. Accordingly, based on the Company's plans for 2012/13 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.
13. A copy of the interim statement will be posted to shareholders and made available to the public at the Company's Registered Office, 2b Pond Place, London SW3 6TF for one month from the date thereof.
14. No interim dividend is declared on the ordinary shares.
Related Shares:
TFL.L