RNS Number:4254S
Abbeycrest PLC
25 November 2003
For Immediate Release 7.00am 25 November, 2003
Interim Results for the six months ended 31 August 2003
Restoration of Interim dividend; improved working capital controls; reduction in
borrowings; Senior management appointment;
Abbeycrest Plc, the UK's leading jewellery manufacturing and distribution
business announces interim results for the six months ended 31 August 2003.
In his statement to shareholders, Mr Michael Lever, Chairman said:
"Overall trading for the Group has been at similar levels to those for the
comparative period last year. However, the control over working capital together
with the parallel progress towards full year profitability, give the directors
confidence to recommence the payment of an interim dividend."
Key points from the interim statement and results:
*Turnover of #39.4m (2002: #39.0m)
*Operating loss of #0.3m (2002: #2.6m loss)
*Pretax loss of #1.2m (2002: #3.7m loss)
*Basic loss per share of 4.9p (2002: 11.1p loss)
*Interim dividend of 1.0p declared (2002: Nil)
*Borrowings significantly reduced; stocks #3.4m lower than 2002 half year
*Business review of G&A ongoing under new G&A MD, Andrew Clark
*Reorganisation of Essex (Thailand) continuing with consolidation
of manufacturing into one base and opening of sales office and agent in US
*Brown & Newirth continuing to perform excellently
*Phil Walker, currently FD, to become Group Chief Executive, March 2004
*Return to profitability expected at year-end
On current trading and prospects, Mr Lever added:
"Market conditions and resultant sales have been very variable. In the absence
of a marked improvement over the latter part of the year, it is likely that the
results for the full year will fall below expectations. Whilst disappointing,
the Group will return to profit this year and will show significant debt
reduction at the year end."
Enquiries:
Phil Walker, Finance Director, Abbeycrest Plc Tel: 020 7786 9600 (today only)
Abbeycrest Plc Thereafter 0113 284 5702
Paul Vann/Victoria Stephens, Binns & Co PR Limited Tel: 020 7786 9600
Chairman's Interim Statement
Overall trading for the Group has been at similar levels to those for the
comparative period last year. As noted in the AGM statement, the Group's
accounting approach to recognising stock returns and related write-downs has
been much more aggressive than previously with these adjustments being made
immediately that we are aware of a potential obsolescence issue. This approach
more accurately reflects the reality of our seasonal trading profile.
Most pleasing has been the control over working capital, particularly at G&A
Ltd, resulting in stocks being #3.4million lower at the half-year than the prior
year comparative with a commensurate reduction in borrowings.
Results
Turnover for the period was #39.4m compared to #39.0m in the same period last
year. An operating loss of #0.3m was sustained (2002: #2.6m loss) resulting in a
loss before tax of #1.2m (2002: #3.7m). Basic loss per share is 4.9p (2002:
11.1p loss).
Dividends
The re-establishment of excellent working capital controls, together with the
parallel progress towards full-year profitability, give the Directors confidence
to recommence the payment of an interim dividend. The Board recommends an
interim dividend of 1p per share (2002: nil).
Review of activities and current trading
G&A Ltd: (Main UK distribution business)
The arrival of Andrew Clark as Managing Director of G&A in July, has brought
strong leadership to the G&A Board and enabled a fundamental business review to
be undertaken. Although not yet complete, it is clear that opportunities exist
to exit unprofitable areas of the business and concentrate resources on
profitable growth opportunities. A further important output from the review will
be an opportunity to reduce the very high operational gearing of G&A, thus
returning the business to profitability and making it much less susceptible to
downturns in the market.
The UK jewellery market has been quiet over this half-year. This has been
evidenced by a decline of 14% in 9ct gold jewellery submitted to the UK Assay
Offices for the second quarter of 2003. Against this background, G&A's trading
in the late summer has been variable, with clear evidence of customers
maintaining very low inventories and delaying purchases due to prevailing high
gold prices.
Disposal of the excess stocks identified twelve months ago, has continued well,
with the emphasis being on addressing the more difficult stock to dispose of.
Due to this policy, scrapping in the first half of this financial year has
equalled the total for the whole financial year 2002/03. Having addressed this
"difficult" stock, our exposure to obsolete stock is significantly reduced from
last year's level, whilst a prudent level of provisioning has been maintained.
DCL Ltd. (Hong Kong)
The start of the year for Hong Kong based DCL was compromised by the SARS
outbreak in the Far East, resulting in the company being unable to attend
overseas shows. Sales to third parties have subsequently recovered, but
inter-group sales to G & A clearly reflect the patterns noted above.
Essex (Thailand)
The reorganisation of Essex has continued apace. Production in the Chiang Mai
factory ceased in August and was moved to spare capacity within the Abbeycrest
Thailand facility in Lamphun, thus making effective use of this space. Only one
day's production was lost in this transfer, a real credit to the Essex
management. Before the year-end, production at the Bangkok factory will also
move to Lamphun, giving the Group a single Thai manufacturing base rather than
three. This will also allow the freehold in Bangkok to be disposed of, thus
releasing cash.
A sales office and agent has been established in New York, which will
re-establish contact between Essex and its historically strong markets in the
USA. Customer introductions will take place over the second half of the year.
Abbeycrest Thailand Ltd
Assembly of gold jewellery has taken place at the new facility in Lamphun
throughout the first half of the year. The establishment of the operation has
gone well, with excellent production levels being achieved by the new workforce.
Despite initial set-up expenses, the company has made a significant financial
contribution to the half year.
Brown & Newirth Ltd (B & N)
Continued design and production innovation has ensured that B&N has been able to
match last year's excellent first half performance, despite the very difficult
market conditions.
Prospects
As noted above, market conditions and resultant sales have been very variable
with a particularly disappointing September. In the absence of a marked
improvement over the latter part of the year, it is likely that the results for
the full year will fall below expectations. Whilst disappointing, the Group will
return to profit this year and will show significant debt reduction at the
year-end. G&A has undergone a traumatic period over the last three years and has
been operating in unprofitable markets. The management of the business are in
the process of concluding a fundamental review of how G&A will best position
itself strategically to go forward and by the time of the full year
announcement, I will be in a position to outline the new shape of G&A and the
trading directions it will pursue.
Board Change
Following the appointment of Andrew Clark as Managing Director of G&A Limited
and George Marcall as a new Group Non-Executive, I am pleased to announce that I
intend to split the roles of Chairman and Chief Executive. Phil Walker, the
current Finance Director, will be taking over as Group Chief Executive with
effect from lst March 2004.
Michael Lever
Chairman
25 November 2003
Consolidated Profit and Loss Account
For the six months ended 31 August 2003
Six months to Six months to Year to
31 August 31 August 28 February
2003 2002 2003
Unaudited Unaudited Audited
#'000 #'000 #'000
Turnover - Existing 39,429 39,026 99,099
operations
- Less share of (79) (91) (259)
joint venture --------- --------- --------
- Continuing 39,350 38,935 98,840
operations
_________________________________________________________________
Operating - Before goodwill (171) (2,462) 1,956
(loss)/ amortisation
profit
- Goodwill (156) (116) (233)
amortisation
_________________________________________________________________
- Continuing (327) (2,578) 1,723
operations
Share of operating loss in joint (14) (4) (6)
venture
Interest 153 68 241
receivable
Interest payable and similar (1,006) (1,156) (2,521)
charges
Interest payable by joint - (1) -
venture --------- --------- --------
Loss on ordinary activities (1,194) (3,671) (563)
before taxation
Tax on loss on ordinary 262 1,103 132
activities --------- --------- --------
Loss on ordinary activities after (932) (2,568) (431)
taxation
Minority equity interests (247) (137) (568)
--------- --------- --------
Loss for the financial period (1,179) (2,705) (999)
Dividends paid and proposed on (249) - (249)
equity shares --------- --------- --------
Retained loss for the period (1,428) (2,705) (1,248)
--------- --------- --------
Loss per share - basic (4.9)p (11.1)p (4.1)p
- diluted (4.9)p (11.1)p (4.1)p
Dividends per 1p - 1p
share
Consolidated Statement of Total Recognised Gains and Losses
Loss for the financial period (1,179) (2,705) (999)
Profit/(loss) on foreign currency 187 (415) (559)
translation ------ --------- ---------
Total recognised gains and losses relating (992) (3,120) (1,558)
to the period ------ --------- ---------
The accompanying notes are an integral part of this Consolidated Profit and
Loss Account and the Consolidated Statement of Total Recognised Gains and
Losses.
Consolidated Balance Sheet
At 31 August 2003
31 August 2003 31 August 2002 28 February
2003
Unaudited Unaudited Audited
#'000 #'000 #'000
Fixed assets
Goodwill 2,412 2,747 2,579
Negative goodwill (395) (453) (407)
--------- --------- ----------
2,017 2,294 2,172
Tangible fixed 9,897 10,360 10,663
assets
Investments 540 540 540
--------- --------- ----------
12,454 13,194 13,375
Investment in joint venture:
Share of gross 185 180 166
assets
Share of gross liabilities (158) (142) (125)
--------- --------- ----------
----------
12,481 13,232 13,416
--------- --------- ----------
Current assets
Stocks 35,219 38,664 32,200
Debtors 20,912 22,967 17,706
Cash at bank and in hand 5,972 2,149 7,917
--------- --------- ----------
62,103 63,780 57,823
Creditors
Amounts falling due within (43,075) 43,220 37,917
one year
--------- --------- ----------
Net current assets 19,028 20,560 19,906
Total assets less current 31,509 33,792 33,322
liabilities
Creditors
Amounts falling due after more 4,253 6,748 4,909
than one year
Provisions for liabilities and 91 447 123
charges --------- --------- ----------
Net assets 27,165 26,597 28,290
--------- --------- ----------
Capital and
reserves
Called up share 2,488 2,488 2,488
capital
Shares to be issued 580 580 580
Share premium 5,186 5,186 5,186
account
Merger reserve 199 199 199
Profit and loss 17,620 17,548 18,861
account --------- --------- ----------
Equity shareholders' funds 26,073 26,001 27,314
Minority equity 1,092 596 976
interests --------- --------- ----------
Total capital 27,165 26,597 28,290
employed --------- --------- ----------
The accompanying notes are an integral part of this Consolidated Balance Sheet.
Consolidated Cash Flow Statement
For the six months ended 31 August 2003
Six months to Six months to Year to
31 August 31 August 28 February
2003
2003 2002 Audited
Notes Unaudited Unaudited
#'000 #'000 #'000
Net cash (outflow)/inflow 1 (5,935) (12,014) 6,126
from operating
activities
Returns on investments 2 (773) (1,016) (2,468)
and servicing of
finance
Taxation (47) (46) (456)
Capital expenditure and 2 (156) (1,367) (2,809)
financial investment
Equity dividends paid (247) (1,144) (1,045)
----------- ---------- --------
Cash outflow before (7,158) (15,587) (652)
financing
Financing 2 (666) 6,498 2,437
----------- ---------- --------
(Decrease)/increase in 3 (7,824) (9,089) (1,785)
cash in the period ----------- ---------- --------
The accompanying notes are an integral part of this Consolidated Cash Flow
Statement.
Notes to the Interim Financial Information
For the six months ended 31 August 2003
1. Reconciliation of operating(loss)/ profit to net cash (outflow)/inflow from
operating activities
Six months to Six months to Year to
31 August 31 August 28 February
2003 2002 2003
#'000 #'000 #'000
Operating (loss)/profit (327) (2,578) 1,723
Depreciation 897 973 1,961
Amortisation of goodwill 155 116 233
Loss on sale of tangible fixed 55 8 53
assets
Foreign exchange movement - (5) -
(Increase)/decrease in stocks (2,981) (2,488) 4,077
(Increase)/decrease in debtors (2,402) (2,052) 1,937
Decrease in creditors (1,332) (5,988) (3,858)
--------- --------- --------
Net cash (outflow)/inflow from (5,935) (12,014) 6,126
operating activities --------- --------- --------
2. Analysis of cash flows
Returns on investments and
servicing of finance
Interest received 153 68 241
Interest paid (795) (1,082) (2,556)
Interest element of finance lease - (2) (2)
rental payments
Dividend paid to minority (131) - (151)
interest --------- --------- --------
Net cash outflow from returns on (773) (1,016) (2,468)
investments and servicing of --------- --------- --------
finance
Capital expenditure and financial
investment
Purchase of tangible fixed assets (700) (1,480) (3,080)
Sale of tangible fixed assets 544 113 271
--------- --------- --------
Net cash outflow from capital (156) (1,367) (2,809)
expenditure and financial --------- --------- --------
investment
Financing
Issue of ordinary share capital - 10 10
New secured loan - 6,500 6,500
Repayment of secured loan (650) - (650)
Repayment of loan notes - - (3,399)
Capital element of finance lease (16) (12) (24)
rental payments --------- --------- --------
Net cash (outflow)/inflow from (666) 6,498 2,437
financing --------- --------- --------
Notes to the Interim Financial Information
(continued)
3. Analysis of net debt
1 March 31 August
2003 Cashflow 2003
#'000 #'000 #'000
Cash at bank and in 7,917 (1,945) 5,972
hand
Overdrafts (26,252) (5,879) (32,131)
------------ --------- ----------
(18,335) (7,824) (26,159)
Debt due within one (1,300) - (1,300)
year
Debt due after one (4,550) 650 (3,900)
year
Finance leases (58) 16 (42)
------------ --------- ----------
(5,908) 666 (5,242)
------------ --------- ----------
Net debt
(24,243) (7,158) (31,401)
------------ --------- ----------
4. Reconciliation of net cash flow to movement in net debt
Six months to
31 August
2003
#'000
Decrease in cash in the period (7,824)
Cash inflow from decrease in debt and 666
lease financing ----------
(7,158)
Net debt at beginning of period (24,243)
----------
Net debt at end of period (31,401)
----------
Notes to the Interim Financial Information
For the six months ended 31 August 2003 (continued)
5. Basis of accounts
The accounting policies used in the interim accounts for the six months
ended 31 August 2003 are consistent with those applied in the accounts in
respect of the financial period ended 28 February 2003.
Accounts in respect of the financial period ended 28 February 2003 do not
constitute the Company's statutory accounts for that period, but are an
abridged version of the Group's full accounts within the meaning of Section 251
of the Companies Act 1985. Full accounts have been reported on without
qualification by the auditors and have been filed with the Regstrar of
Companies.
The accounts for the six months ended 31 August 2003 have not been audited,nor
have the accounts for the equivalent period in 2002.
Copies of the announcement will be sent to shareholders and are available to
members of the general public from the Company Secretary, Abbeycrest Plc, Peter
Rosenberg House, 11-15 Wilmington Grove, Leeds, LS7 2BQ.
6. Dividends
An Interim dividend of 1p per share will be paid on 9 January 2004 to shareholders
on the register at the close of business on 12 December 2003.
7. Earnings per share
Earnings per share have been calculated using the weighted average number of shares
in issue during the period of 24,276,241 (2002:24,261,005).
This information is provided by RNS
The company news service from the London Stock Exchange
END
IR EASFLADFDFFE
