TIDMTFL
RNS Number : 7436K
Theo Fennell PLC
01 August 2013
1(st) August 2013
Theo Fennell PLC
("Theo Fennell" or "the Company")
Final results for the year ended 31 March 2013
Theo Fennell plc, the luxury jewellery brand, announces results
for the year ended 31 March 2013.
HIGHLIGHTS
Financial & Operational
-- Turnover of GBP10.71m (2012: GBP12.38m)
-- Loss for the year has been substantially reduced by
GBP824,000 to GBP878,616 (2012: Loss GBP1,702,621)
-- Sales in the first half of the financial year were in line
with Board expectations with turnover down by 8% at GBP4.94m (2012
H1: GBP5.36m), however second half sales were down 18% at GBP5.77m
(2012 H2: GBP7.02m)
-- Cost base further restructured to bring costs in line with trading performance
-- Completed a full upgrade of the IT network and hardware
-- Wholesale sales were up 16% with new concession openings in Kuwait and in Baku, Azerbaijan
Product & Design
-- Launch of new pieces and collections including the Tryst,
Wild Rose, Tropical & Safari Animal 'Arts collections, and new
Spangle pieces
-- Alias, the silver jewellery range, launched the Meadow
collection during the year which has performed well, and new 'Arts
launched late in the year
-- New men's range with launch of gold and enamelled cufflinks which are selling well
-- Ongoing investment in unique one-off pieces to meet current
demand from clients for truly bespoke products
Outlook & Strategy
-- Focused on international growth with plans to open with a
wholesale partner in Qatar in September
-- On-going positive discussions with partners in South East Asia and China
-- Introducing Limited Edition ranges in the coming year
including Magical Dawn and Woodland Animal 'Arts
-- Further new collections include the Bud & Vita ranges
-- Expanding gold and enamelled bespoke cufflinks targeted at male market
-- Large amount of diamond stock supported by consignment partners
-- Targeting wholesale and online as primary channels to grow sales further
-- Focused on growing the brands 'Bespoke' and 'One-off'
offering and highlighting the craftsmanship element of these
products
Recommended offer by Mirfield 1964 Plc
The Independent Directors are pleased to announce a recommended
offer by Mirfield 1964 Plc (incorporated for the purpose of making
the recommended offer on behalf of EME Capital LLP and its
co-investors). The details regarding Mirfield's strategic plans for
the business are outlined in today's announcement of the proposed
offer. We believe that this recommended offer will be in the best
interests of shareholders, employees and customers.
Rupert Hambro, Chairman of Theo Fennell, commented:
"Although it has been another challenging year for the Company,
we have made some solid progress having expanded our product
ranges, upgraded our IT systems and strengthened our overseas
network. We have continued to reduce costs and restructured our
wholesale division. We are confident that these changes will
enhance the Company's performance.
Sales for the first three months of last year were encouraging
but there is no doubt we suffered alongside many other retailers
during the Olympics and Christmas was again disappointing. Whilst
we remain cautious in the short term given the on-going economic
challenges which are affecting consumer spending and constraints we
face from lack of capital, we believe firmly in the long term
potential of the brand.
As you know we have been in takeover talks with a number of
parties since we announced on 5 September 2012 that we were in very
preliminary talks with EME Capital LLP which has been a significant
investment of time and resource.
Following these discussions, we are pleased to announce today a
recommended offer from Mirfield 1964 Plc (incorporated for the
purpose of making the recommended offer on behalf of EME Capital
LLP and its co-investors), as set out in our offer document dated
today.
Theo Fennell, Interim MD & Founder of Theo Fennell
commented:
"Our focus in the coming year is to return the Company to
profit. We continue to launch exciting new collections and expand
our range of pieces. Our online sales have performed strongly and
we will continue to build this side of the business. We are also
focused on developing the brand internationally with our overseas
concessions and partners.
The shift in customer mind set back to the values of
craftsmanship, originality and individuality plays very much to our
strengths and we are very focused on marketing these points of
difference."
Enquiries:
Theo Fennell PLC Theo Fennell 020 7591 5000
Pelham Bell Pottinger Lucy Miles 020 7861 3885
Cantor Fitzgerald Europe Mark Percy/ Catherine Leftley 020 7894 7000
CHAIRMAN'S STATEMENT
Chairman's Statement
The Company's results for this year were disappointing. After an
encouraging first three months of the year, during which sales were
up by 3%, trading during the remainder of the year was more
difficult with sales 18% below the prior year, mainly due to the
Olympics, a poor Christmas and the generally depressed UK consumer
market.
In view of the challenges faced over the past year and in
response to the on-going uncertainties regarding the economic
environment, the Company has continued the restructuring of its
cost base.
In the coming year we will focus the business on growing sales
through our directly operated retail stores in London, which
benefit from a broad range of International clients. The price
point for a number of potential clients has risen dramatically over
the last year or two and we have therefore taken steps to partner
with diamond dealers who will provide us with the stones we need,
on consignment.
Although international wholesale was up on the previous year it
suffered from political problems in certain countries. The Bahrain
outlet was closed down due to political unrest. There were also a
number of issues releasing stock from customs in the former Soviet
states. With planned new openings in Qatar, and possibly Nigeria,
we expect to see a marked improvement in our wholesale revenues in
the coming year.
Our long term strategy remains the same; to build on the unique
strengths of the business and its design-led ethos. We intend to
grow the core jewellery business while developing our product
offering, particularly at the high end, and growing our
international distribution and client base.
Financial
For the year ended 31 March 2013 the Company achieved sales of
GBP10.7m, well below the prior year, and made a loss on ordinary
activities before taxation and exceptional items of GBP0.71m (2012:
loss of GBP1.21m).
The restructuring and refocus of the business has taken longer
than we had hoped to produce an improvement in the performance of
the business. Current sales in the first three months of the
financial year to 31 March 2014 are GBP1.98m versus GBP2.53m in the
same period last year.
Design, Product and Operations
In the year we have continued to invest in unique one-off pieces
which we believe clearly differentiates our product from our
competitors in the jewellery market. These pieces are at the
forefront of British design and craftsmanship and utilise the very
best skills from our workshop. Most recent examples of this are the
expanded range of the Opening Rings. These have not only been
showcased in our Fulham Road store, but also by key wholesale
partners and were exhibited at Masterpiece in London in July
2013.
In the current year we will launch Magical Dawn, the third in
our series of Limited Edition keys, crosses and Phi's following the
success of our Enchanted Pool and Secret Garden Limited Editions.
Our 'Arts collection will be expanded with the introduction of a
series of Woodland Animal 'Arts including the Fox, Badger, Owl and
Mouse. We have recognised the limited offer in the fine jewellery
market for men's cufflinks and extended our range of unique and
individual gold and enamelled cufflinks.
The Alias range continues to be refined and we will launch new
collections later in the year.
Website
The website has continued to perform well and online sales for
this financial year were 172% higher than the prior year, turnover
amounted to GBP255.3k (2012: GBP93.8k). We are also encouraged by
the performance in the first quarter of the current year with sales
5.8% above the prior year. We will continue to refine and develop
the website and support it with a tailored marketing campaign. We
expect this to be a growing part of our business and an important
communication channel to our clients.
Retail Stores
We continue to focus our directly operated retail stores on the
London market which benefits from an affluent international client
base.
We are disappointed to report that the new boutique in the
Burlington Arcade, Mayfair, had a slower than expected start.
However, since the beginning of the current financial year, it is
beginning to show good signs of improvement.
International and Wholesale
Apart from the political problems, the wholesale channel did not
perform as well as anticipated. We have taken action to address the
poor performance and restructured our wholesale division.
I am pleased to report a solid start in the first quarter of the
current financial year. We have seen a good performance from our
partners in Dubai and Eastern Europe. We have also secured a new
wholesale opening in Qatar with Amiri Gems which will be opening in
September 2013.
We continue to explore opportunities in key international
markets including the Middle East, Far East and USA. We expect to
secure at least one new significant wholesale opening in the
current year but remain focused on appointing the right partners to
represent the Theo Fennell brand, particularly in the Chinese
market.
The Board
On 24 September 2012 we announced that Frank McKay joined the
Board as a non-executive director.
On 7 December 2012, we announced that Gavin Saunders, Finance
Director of Theo Fennell Plc, had left the Company and was replaced
by Alasdair Hadden-Paton.
Banking
I am pleased to report that we have renewed our banking
facilities with the Clydesdale Bank until July 2014. However,
whilst having renewed the facility and being generally supportive,
Clydesdale Bank has informed the Board that it wishes to have its
facilities to the Company replaced within two years.
Outlook
As shareholders will be aware, the Company has experienced
challenging trading conditions over the last few years with the
tough economic environment affecting consumer spending. As
previously announced, the Company experienced weak Christmas
trading. The Board has responded by significantly reducing costs
and restructuring the wholesale division. The Company has also been
proactive in launching new jewellery ranges and expanding online
sales. These actions have resulted in a significant reduction in
the losses of the business.
Recommended offer by Mirfield 1964 Plc
The Independent Directors are pleased to announce a recommended
offer by Mirfield 1964 Plc (incorporated for the purpose of making
the recommended offer on behalf of EME Capital LLP and its
co-investors).
Rupert Hambro
Chairman
31 July 2013
Summarised Profit and Loss Account
For the year ended 31 March 2013
2013 2012
Note GBP GBP
Turnover 10,706,341 12,383,774
Cost of sales (4,841,534) (5,727,887)
----------- -----------
Gross profit 5,864,807 6,655,887
Selling and distribution expenses (5,213,059) (5,896,236)
Administrative expenses (1,232,486 ) (1,870,049 )
Exceptional administrative expenses 2 (167,000 ) (488,442 )
----------- -----------
Total administrative expenses (6,612,545) (8,254,727)
Total operating loss (747,738) (1,598,840)
Net interest payable (130,878) (103,781)
----------- -----------
Loss on ordinary activities before
taxation (878,616) (1,702,621)
Tax on loss on ordinary activities 3 _ _
----------- -----------
Retained loss for the year (878,616) (1,702,621)
=========== ===========
Basic & diluted loss per share 4 (3.79 )p (7.39 )p
----------- -----------
Summarised Balance Sheet
as at 31 March 2013
Company Number 01955534
Note 2013 2012
GBP GBP GBP GBP
Fixed assets
Tangible assets 499,198 522,542
Investments 5 50,000 182,000
549,198 704,542
------------ ------------
Current assets
Stocks 6 6,649,711 7,658,812
Debtors 7 1,499,834 1,529,321
------------ ------------
8,149,545 9,188,133
Creditors: amounts
falling due within
one year 8 (3,620,734 ) (3,958,036 )
------------ ------------
Net current assets 4,528,811 5,230,097
------------ ------------
Total assets less
current liabilities 5,078,009 5,934,639
Net assets 5,078,009 5,934,639
============ ============
Capital and reserves
Called up share capital 9 1,157,901 1,157,901
Share premium account 10 5,741,166 5,741,166
Profit and loss account 10 (2,026,575 ) (1,147,959 )
Share options reserve 10 205,517 183,531
------------ ------------
Equity shareholders'
funds 5,078,009 5,934,639
============ ============
Summarised Cash Flow Statement
For the year ended 31 March 2013
2013 2012
Note GBP GBP GBP GBP
Net cash inflow from
operating activities 201,184 32,853
Returns on investments
and servicing of finance
Interest paid on bank
loans, overdrafts and
other loans
Interest received
(130,916 ) (103,844 )
38 63
---------- ----------
(130,878) (103,781)
Capital expenditure
Purchase of tangible
fixed assets (296,874 ) (165,027 )
---------- ----------
(296,874) (165,027)
Net cash outflow before
financing (226,568 ) (235,955 )
Financing
Share issuance, net
of costs - 68,000
Bank loan (1,168,502 ) (160,810 )
------------ ----------
Decrease in cash (1,395,070) (328,765)
============ ==========
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 which are
set out below 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 detailed forecasting of the Company's
activities, including sensitivity analysis, through to 31 March
2015.
The Company meets its day-to-day working capital requirements
through an overdraft facility of GBP2.5m from Clydesdale Bank plc
that has been renewed until 31 July 2014. The Directors have
prepared cash flow projections based on conservative assumptions
which show that the Company should be able to operate within the
level of the facility for the next 12 months. Additionally if the
recommended offer by Mirfield 1964 Plc completes as envisaged,
further funds in excess of GBP2.0m will be available for working
capital purposes.
If the Mirfield 1964 Plc offer were not to complete and trade
was to deteoriate significantly the Directors have concluded that
the combination of these circumstances represents a material
uncertainty that may cast significant doubt on the Company's
ability to continue as a going concern. Nevertheless after making
enquiries, and considering the uncertainties described above, the
Directors have a reasonable expectation that the Company has
adequate resources to continue in operational existence for the
foreseeable future. For these reasons, they continue to adopt the
going concern basis in preparing the annual report and
accounts.
2. Exceptional administrative expenses 2013 2012
GBP GBP
Departure of previous Chief Executive Officer - 315,000
Costs of defending the employment tribunal
case by a senior employee and the associated
compensation - 123,105
Cost of withdrawal from Harvey Nichols Manchester
and associated restructuring costs - 50,337
Impairment on ODP investment 132,000
Costs of professional advice in relation to
the discussions with EME Capital LLP 35,000 -
Total exceptional administrative expenses 167,000 488,442
======== =========
3. Tax on loss on ordinary activities
2013 2012
GBP GBP
Current tax:
UK Corporation tax at 24% (2012: 26%) - -
Adjustment in respect of prior years - -
---- ----
- -
Deferred tax:
Origination and reversal of timing differences - -
---- ----
- -
==== ====
4. 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 end
31 March 2013 of 10.75p.
2013 2012
GBP GBP
Loss for the financial year (878,616) (1,702,621)
Weighted average number of ordinary shares 23,158,029 23,034,696
Effect of dilutive share options - -
---------- ----------
Adjusted weighted average number of ordinary
shares 23,158,029 23,034,696
---------- ----------
Loss per share - basic & diluted (3.79 )p (7.39 )p
========== ==========
5. Fixed assets investments
2013 2012
GBP GBP
At 1 April 2012 182,000 182,000
Additions - -
Impairment on investment (132,000) -
-------- -------
At 31 March 2013 50,000 182,000
======== =======
For the year ended 31 March 2013 the Original Design Partnership
made a loss before tax of GBP96,770 (2012: profit before tax of
GBP14,773) and the total capital and reserves was GBP27,653 (2012:
GBP119,002).
This is treated as a fixed asset investment as the Company does
not exert significant influence over The Original Design
Partnership. The Company is not involved in the strategic,
operational and financial decision making of The Original Design
Partnership and we do not have independent Board
representation.
6. Stocks 2013 2012
GBP GBP
Raw materials 637,046 775,699
Work in progress 58,156 53,144
Finished goods 5,954,509 6,829,969
--------- ---------
6,649,711 7,658,812
========= =========
The Company held GBP3,274,144 of stock on consignment as at 31
March 2013 (2012: GBP2,422,286) 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 2013 2012
GBP GBP
Trade debtors 991,609 1,212,181
Other debtors 134,086 11,309
Prepayments and accrued income 374,139 305,831
--------- ---------
1,499,834 1,529,321
========= =========
8. Creditors: amounts falling due within one 2013 2012
year
GBP GBP
Bank loans 131,646 1,300,148
Bank overdrafts 2,087,341 692,271
Trade creditors 690,243 642,776
Social security and other taxes 282,003 354,429
Other creditors 91,782 214,847
Accruals and deferred income 337,719 753,565
3,620,734 3,958,036
========= =========
The bank loans are secured by a debenture over the assets and
undertakings of the Company.
9. Share capital 2013 2012
GBP GBP
Allotted, called up and fully paid
23,158,029 (2012: 23,158,029) Ordinary Shares
of 5p 1,157,901 1,137,901
========= =========
10. Reserves Share Profit Share options
premium and loss reserve
account account
GBP GBP GBP
At 1 April 2012 5,741,166 (1,147,959) 183,531
Loss for the year
Premium on shares issued during the year,
net of - (878,616) -
Costs - - -
Recognition of equity settled share based
payments
in the year - - 21,986
At 31 March 2013 5,741,166 (2,026,575) 205,517
========= ========== =============
11. 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
2013 accounts and 2012 accounts.
The summarised balance sheet at 31 March 2013 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 2013 audited statutory financial statements which
continued to include a modification within the auditors' opinion
with an emphasis of matter opinion in relation to going concern.
The comparative figures relating to the year to 31 March 2012 are
taken from the audited statutory accounts for that year.
The Annual Report and Accounts for the year ended 31 March 2013
will be being posted to shareholders and will be made available on
the Company's website www.theofennell.com.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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