TIDMACR
RNS Number : 8927U
Abbeycrest PLC
25 October 2010
Interim Results 2010
Abbeycrest plc, a leading international jewellery designer and manufacturing
company, announces its unaudited interim results for the six months ended 31
August 2010.
Financial Highlights
Key financial highlights for the six months to 31 August 2010
+------+----------------------------------------------------------+
| · | Revenue increased by 5% to GBP18.8m (2009: GBP17.9m) |
| | |
+------+----------------------------------------------------------+
| · | Operating loss pre-exceptional items of GBP0.1m (2009: |
| | profit GBP0.2m) |
| | |
+------+----------------------------------------------------------+
| · | No exceptional items (2009: exceptional profit GBP1.5m) |
| | |
+------+----------------------------------------------------------+
| · | Pre tax loss after exceptional items of GBP0.5m (2009: |
| | profit GBP1.3m) |
| | |
+------+----------------------------------------------------------+
| · | Inventory in line with prior year at GBP8.6m (2009: |
| | GBP8.5m) |
| | |
+------+----------------------------------------------------------+
| · | Reduced net debt by 14% to GBP7.0m (2009: GBP8.1m) |
+------+----------------------------------------------------------+
Commenting on the interim results, Simon Ashton, Executive Chairman of
Abbeycrest, said: "The outcome for this financial year is, as usual, dependent
upon the key Christmas trading period and underlying retail conditions in our
existing markets. Notwithstanding this, the Board believes that the Group's
performance has now stabilised sufficiently to ensure that it will benefit
incrementally as the effects of the recent restructuring are felt and the
strategic shift to design-led product gains traction."
For further information:
+----------------------------------+----------------------------+
| Abbeycrest plc | |
+----------------------------------+----------------------------+
| Simon Ashton, Executive | Tel:+44 (0) 113 3970 865 |
| Chairman | |
+----------------------------------+----------------------------+
| | www.abbeycrest.co.uk |
+----------------------------------+----------------------------+
| Evolution Securities Limited | |
+----------------------------------+----------------------------+
| Joanne Lake / Peter Steel | Tel: +44 (0)113 243 1619 |
+----------------------------------+----------------------------+
| joanne.lake@evosecurities.com | www.evosecurities.com |
+----------------------------------+----------------------------+
| | |
+----------------------------------+----------------------------+
| Rawlings Financial PR Limited | |
+----------------------------------+----------------------------+
| Catriona Valentine | Tel: +44 (0) 1653 618016 |
+----------------------------------+----------------------------+
| catriona@rawlingsfinancial.co.uk | |
+----------------------------------+----------------------------+
Chairman's Interim Statement
I am pleased to be able to report a continuation of the steady state of affairs
established under our 'Straight Edge' programme, despite the difficult economic
conditions prevailing across Abbeycrest's traditional markets.
Results
Whilst our Brands Division showed a marginal improvement in profitability, the
Group's pre-tax loss before exceptional items widened by GBP0.22m to GBP0.46m
(2009: GBP0.24m) as operating profits from the Abbeycrest Essentials Division
reduced by GBP0.30m. This Division, which serves the mass market and is
particularly sensitive to volume and margin pressures, remains affected by
faltering consumer confidence and rising commodity prices.
Group revenue increased by 5% to GBP18.8m (2009: GBP17.9m), largely due to the
effect of the rising gold price. The average gold price for the period was
GBP788 per ounce, compared to GBP596 over the equivalent period in 2009.
Restating 2010 revenue at 2009 prices would reveal a like-for-like decline of
around 10% in the first half year.
Total net debt, including short-term and long-term balances net of cash and
inclusive of leased gold and finance leases, was reduced further by GBP1.1m to
GBP7.0m as at 31 August 2010 (2009: GBP8.1m).
Market and strategy
There appears to be general consensus that the global jewellery market is
showing signs of recovery in 2010. This is being spearheaded by the less
price-sensitive 'luxury segment' and the more recession-proof 'Asia-Pacific
region'; areas on which Abbeycrest's strategy is clearly focussed but where the
Group has yet to establish a material market presence. Conversely, the mass
market consumers in the UK, Europe and US, Abbeycrest's traditional hunting
grounds, continue to be influenced by fears of tax increases, welfare cuts and
redundancies.
These trends serve to reinforce the Board's strategy, and we continue to believe
that our growth lies in:
· Further product and service differentiation to increase share of mass
market consumption
· Penetration of developing markets such as China, India and South-East
Asia
· Exploitation of the expanding luxury segment and growing enthusiasm
for brands
The Group's directors and senior managers are acutely aware of the need to
capitalise on the platform offered by 'Straight Edge'; which was largely
concluded by the beginning of this financial year. The increase in revenue and
margin envisaged under our 'Leading Edge' initiatives is currently being
addressed, as previously reported, through:
· Abbeycrest Essentials Division - heightened product differentiation
and targeted geographical expansion
· Brands Division - branded jewellery collections and supporting
consumer communications
This will take the best part of a trading cycle to deliver, but we are already
beginning to see some early signs of progress.
In support of the above, we recently completed the reorganisation of the
Abbeycrest Essentials Division to encourage a more ambitious demand-driven
strategy in chosen international markets. We have also sought to strengthen the
management team at Brown & Newirth in order to capitalise on its robust market
position.
Board changes
On 30 September 2010 we announced that Graham Partridge had resigned from the
Board and that Simon Lazenby had replaced him as Group Finance Director. I would
like to thank Graham for his help and wish him every success. I would also like
to welcome Simon back to the Group and look forward to his help with the
challenges that lie ahead.
At the same time we announced that Nick Hamley had stepped down from the Board
to focus his attention on developing the potential of Brown & Newirth. This is
part of our endeavour to invest in and grow key areas of value creation across
the Group.
Funding
In our Annual Report & Financial Statements 2010, we reported that we were
seeking to extend our working capital facilities and agree covenants with our
senior lender. On 11 August 2010 we announced that we had negotiated an increase
of GBP2.1m to our seasonal working capital facilities with the long standing
finance provider of our Thai-based operations, Siam Commercial Bank PCL.
I am very pleased to report that last week we announced, as anticipated, that we
have reset and extended our covenants with Burdale Financial Limited, our senior
lender, until 28 February 2012.
Outlook
The outcome for this financial year is, as usual, dependent upon the key
Christmas trading period and underlying retail conditions in our existing
markets. Notwithstanding this, the Board believes that the Group's performance
has now stabilised sufficiently to ensure that it will benefit incrementally as
the effects of the recent restructuring are felt and the strategic shift to
design-led product gains traction.
Simon Ashton
Executive Chairman
Condensed Consolidated Interim Income Statement
For the six months ended 31 August 2010
+------------------------+------+-----------+-----------+----------+
| | | Six | Six | Year |
| | | months | months | to 28 |
| | | to 31 | to 31 | February |
| | | August | August | 2010 |
| | Note | 2010 | 2009 | Audited |
| | | Unaudited | Unaudited | GBP'000 |
| | | GBP'000 | GBP'000 | |
+------------------------+------+-----------+-----------+----------+
| Revenue | | 18,790 | 17,852 | 39,663 |
+------------------------+------+-----------+-----------+----------+
| Operating costs | | (18,864) | (16,143) | (37,257) |
+------------------------+------+-----------+-----------+----------+
| Operating | | (74) | 1,709 | 2,406 |
| (loss)/profit | | | | |
+------------------------+------+-----------+-----------+----------+
| | | | | |
+------------------------+------+-----------+-----------+----------+
| Finance costs | | (387) | (451) | (851) |
+------------------------+------+-----------+-----------+----------+
| | | | | |
+------------------------+------+-----------+-----------+----------+
| (Loss)/profit before | | (461) | 1,258 | 1,555 |
| taxation | | | | |
+------------------------+------+-----------+-----------+----------+
| Analysis of (loss)/profit | | | |
| before taxation | | | |
+-------------------------------+-----------+-----------+----------+
| (Loss)/profit before | (461) | (241) | 55 |
| taxation and exceptional | | | |
| items | | | |
+-------------------------------+-----------+-----------+----------+
| Exceptional items - | | - | 1,499 | 1,500 |
| operating costs | | | | |
+------------------------+------+-----------+-----------+----------+
| (Loss)/profit before | | (461) | 1,258 | 1,555 |
| taxation | | | | |
+------------------------+------+-----------+-----------+----------+
| | | | | |
+------------------------+------+-----------+-----------+----------+
| Tax on (loss)/profit | | - | - | - |
+------------------------+------+-----------+-----------+----------+
| (Loss)/profit for the | | (461) | 1,258 | 1,555 |
| period | | | | |
+------------------------+------+-----------+-----------+----------+
| | | | | |
+------------------------+------+-----------+-----------+----------+
| (Loss)/profit per | | | | |
| share | | | | |
+------------------------+------+-----------+-----------+----------+
| - basic and diluted | 3 | (1.0)p | 4.4p | 3.2p |
+------------------------+------+-----------+-----------+----------+
Condensed Consolidated Interim Statement of Comprehensive Income
For the six months ended 31 August 2010
+------------------------+----+-----------+-----------+----------+
| | | Six | Six | Year |
| | | months | months | to 28 |
| | | to 31 | to 31 | February |
| | | August | August | 2010 |
| | | 2010 | 2009 | Audited |
| | | Unaudited | Unaudited | GBP'000 |
| | | GBP'000 | GBP'000 | |
+------------------------+----+-----------+-----------+----------+
| (Loss)/profit for the | | (461) | 1,258 | 1,555 |
| period | | | | |
+------------------------+----+-----------+-----------+----------+
| | | | | |
| Other comprehensive | | | | |
| (costs)/income | | | | |
+------------------------+----+-----------+-----------+----------+
| Exchange losses on | | (341) | (770) | (70) |
| retranslation of | | | | |
| foreign operations | | | | |
+------------------------+----+-----------+-----------+----------+
| Total comprehensive | | (802) | 488 | 1,485 |
| (costs)/income for the | | | | |
| period attributable to | | | | |
| equity holders of the | | | | |
| Parent | | | | |
+------------------------+----+-----------+-----------+----------+
Condensed Consolidated Interim Balance Sheet
As at 31 August 2010
+------------------------+------+-----------+-----------+----------+
| | | 31 | 31 | 28 |
| | | August | August | February |
| | | 2010 | 2009 | 2010 |
| |Note | Unaudited | Unaudited | Audited |
| | | GBP'000 | GBP'000 | GBP'000 |
+------------------------+------+-----------+-----------+----------+
| Assets | | | | |
+------------------------+------+-----------+-----------+----------+
| Non-current assets | | | | |
+------------------------+------+-----------+-----------+----------+
| Goodwill | | 1,866 | 1,880 | 1,866 |
+------------------------+------+-----------+-----------+----------+
| Other intangible | | 398 | 336 | 358 |
| assets | | | | |
+------------------------+------+-----------+-----------+----------+
| Property, plant and | | 4,054 | 4,089 | 4,240 |
| equipment | | | | |
+------------------------+------+-----------+-----------+----------+
| Deferred tax assets | | 102 | 102 | 102 |
+------------------------+------+-----------+-----------+----------+
| | | 6,420 | 6,407 | 6,566 |
+------------------------+------+-----------+-----------+----------+
| Current assets | | | | |
+------------------------+------+-----------+-----------+----------+
| Inventories | | 8,575 | 8,519 | 8,046 |
+------------------------+------+-----------+-----------+----------+
| Trade and other | | 6,440 | 7,222 | 5,982 |
| receivables | | | | |
+------------------------+------+-----------+-----------+----------+
| Cash and cash | | 134 | 233 | 493 |
| equivalents | | | | |
+------------------------+------+-----------+-----------+----------+
| | | 15,149 | 15,974 | 14,521 |
+------------------------+------+-----------+-----------+----------+
| Liabilities | | | | |
+------------------------+------+-----------+-----------+----------+
| Current liabilities | | | | |
+------------------------+------+-----------+-----------+----------+
| Borrowings | | (6,974) | (8,193) | (5,920) |
+------------------------+------+-----------+-----------+----------+
| Trade and other | | (4,355) | (5,559) | (3,896) |
| payables | | | | |
+------------------------+------+-----------+-----------+----------+
| | | (11,329) | (13,752) | (9,816) |
+------------------------+------+-----------+-----------+----------+
| | | | | |
+------------------------+------+-----------+-----------+----------+
| Net current assets | | 3,820 | 2,222 | 4,705 |
+------------------------+------+-----------+-----------+----------+
| Non-current | | | | |
| liabilities | | | | |
+------------------------+------+-----------+-----------+----------+
| Borrowings | | (197) | (143) | (176) |
+------------------------+------+-----------+-----------+----------+
| Provisions | 6 | (1,056) | (1,564) | (1,326) |
+------------------------+------+-----------+-----------+----------+
| | | (1,253) | (1,707) | (1,502) |
+------------------------+------+-----------+-----------+----------+
| Net assets | | 8,987 | 6,922 | 9,769 |
+------------------------+------+-----------+-----------+----------+
| Shareholders' equity | | | | |
+------------------------+------+-----------+-----------+----------+
| Share capital | | 3,371 | 2,922 | 3,371 |
+------------------------+------+-----------+-----------+----------+
| Share premium account | | 7,066 | 5,665 | 7,066 |
+------------------------+------+-----------+-----------+----------+
| Merger reserve | | 199 | 199 | 199 |
+------------------------+------+-----------+-----------+----------+
| Cumulative translation | | 2,013 | 1,654 | 2,354 |
| reserve | | | | |
+------------------------+------+-----------+-----------+----------+
| Retained earnings | | (3,662) | (3,518) | (3,221) |
+------------------------+------+-----------+-----------+----------+
| Total shareholders' | | 8,987 | 6,922 | 9,769 |
| equity | | | | |
+------------------------+------+-----------+-----------+----------+
Consolidated Statement of Changes in Equity
For the six months ended 31 August 2010
+----------------+---------+---------+---------+-------------+----------+---------+
| | | Share | Merger | Cum | Retained | Total |
| | Share | premium | reserve | translation | earnings | GBP'000 |
| | capital | GBP'000 | GBP'000 | reserve | GBP'000 | |
| | GBP'000 | | | GBP'000 | | |
+----------------+---------+---------+---------+-------------+----------+---------+
| Balance at 1 | 3,371 | 7,066 | 199 | 2,354 | (3,221) | 9,769 |
| March 2010 | | | | | | |
+----------------+---------+---------+---------+-------------+----------+---------+
| | | | | | | |
+----------------+---------+---------+---------+-------------+----------+---------+
| Loss for the | - | - | - | - | (461) | (461) |
| period | | | | | | |
+----------------+---------+---------+---------+-------------+----------+---------+
| Exchange | - | - | - | (341) | - | (341) |
| losses on | | | | | | |
| retranslation | | | | | | |
| of foreign | | | | | | |
| operations | | | | | | |
+----------------+---------+---------+---------+-------------+----------+---------+
| Total | - | - | - | (341) | (461) | (802) |
| comprehensive | | | | | | |
| income for the | | | | | | |
| period | | | | | | |
+----------------+---------+---------+---------+-------------+----------+---------+
| Share based | - | - | - | - | 20 | 20 |
| payment | | | | | | |
+----------------+---------+---------+---------+-------------+----------+---------+
| Balance at 31 | 3,371 | 7,066 | 199 | 2,013 | (3,662) | 8,987 |
| August 2010 | | | | | | |
| (unaudited) | | | | | | |
+----------------+---------+---------+---------+-------------+----------+---------+
+----------------+---------+---------+---------+-------------+----------+---------+
| | Share | Share | Merger | Cum | Retained | Total |
| | capital | premium | reserve | translation | earnings | GBP'000 |
| | GBP'000 | GBP'000 | GBP'000 | reserve | GBP'000 | |
| | | | | GBP'000 | | |
+----------------+---------+---------+---------+-------------+----------+---------+
| Balance at 1 | 2,922 | 5,665 | 199 | 2,424 | (4,776) | 6,434 |
| March 2009 | | | | | | |
+----------------+---------+---------+---------+-------------+----------+---------+
| | | | | | | |
+----------------+---------+---------+---------+-------------+----------+---------+
| Profit for the | - | - | - | - | 1,258 | 1,258 |
| period | | | | | | |
+----------------+---------+---------+---------+-------------+----------+---------+
| Exchange | - | - | - | (770) | - | (770) |
| losses on | | | | | | |
| retranslation | | | | | | |
| of foreign | | | | | | |
| operations | | | | | | |
+----------------+---------+---------+---------+-------------+----------+---------+
| Total | - | - | - | (770) | 1,258 | 488 |
| comprehensive | | | | | | |
| income for the | | | | | | |
| period | | | | | | |
+----------------+---------+---------+---------+-------------+----------+---------+
| Balance at 31 | 2,922 | 5,665 | 199 | 1,654 | (3,518) | 6,922 |
| August 2009 | | | | | | |
| (unaudited) | | | | | | |
+----------------+---------+---------+---------+-------------+----------+---------+
+----------------+---------+---------+---------+-------------+----------+---------+
| | Share | Share | Merger | Cum | Retained | Total |
| | capital | premium | reserve | translation | earnings | GBP'000 |
| | GBP'000 | GBP'000 | GBP'000 | reserve | GBP'000 | |
| | | | | GBP'000 | | |
+----------------+---------+---------+---------+-------------+----------+---------+
| Balance at 1 | 2,922 | 5,665 | 199 | 2,424 | (4,776) | 6,434 |
| March 2009 | | | | | | |
+----------------+---------+---------+---------+-------------+----------+---------+
| | | | | | | |
+----------------+---------+---------+---------+-------------+----------+---------+
| Loss for the | - | - | - | - | 1,555 | 1,555 |
| period | | | | | | |
+----------------+---------+---------+---------+-------------+----------+---------+
| Exchange gains | - | - | - | (70) | - | (70) |
| on | | | | | | |
| retranslation | | | | | | |
| of foreign | | | | | | |
| operations | | | | | | |
+----------------+---------+---------+---------+-------------+----------+---------+
| Total | - | - | - | (70) | 1,555 | 1,485 |
| comprehensive | | | | | | |
| income for the | | | | | | |
| period | | | | | | |
+----------------+---------+---------+---------+-------------+----------+---------+
| | | | | | | |
+----------------+---------+---------+---------+-------------+----------+---------+
| Gross issue of | 449 | 1,797 | - | - | - | 2,246 |
| share capital | | | | | | |
+----------------+---------+---------+---------+-------------+----------+---------+
| Issue costs | - | (396) | - | - | - | (396) |
+----------------+---------+---------+---------+-------------+----------+---------+
| Balance at 28 | 3,371 | 7,066 | 199 | 2,354 | (3,221) | 9,769 |
| February 2010 | | | | | | |
| (audited) | | | | | | |
+----------------+---------+---------+---------+-------------+----------+---------+
Condensed Consolidated Interim Cash Flow Statement
For the six months ended 31 August 2010
+------------------------+----+-----------+-----------+----------+
| | | Six | Six | Year to |
| | | months | months | 28 |
| | | to | to | February |
| | | 31 | 31 | 2010 |
| | | August | August | Audited |
| | | 2010 | 2009 | GBP'000 |
| | | Unaudited | Unaudited | |
| | | GBP'000 | GBP'000 | |
+------------------------+----+-----------+-----------+----------+
| Cash flow from | | | | |
| operating activities | | | | |
+------------------------+----+-----------+-----------+----------+
| (Loss)/profit after | | (461) | 1,258 | 1,555 |
| tax | | | | |
+------------------------+----+-----------+-----------+----------+
| Depreciation and | | 437 | 436 | 874 |
| amortisation | | | | |
+------------------------+----+-----------+-----------+----------+
| Share based payment | | 20 | - | 230 |
+------------------------+----+-----------+-----------+----------+
| Finance costs | | 387 | 451 | 851 |
+------------------------+----+-----------+-----------+----------+
| | | 383 | 2,145 | 3,510 |
+------------------------+----+-----------+-----------+----------+
| (Increase)/decrease in | | (812) | 824 | 1,298 |
| inventories | | | | |
+------------------------+----+-----------+-----------+----------+
| (Increase)/decrease in | | (686) | 3,253 | 4,721 |
| receivables | | | | |
+------------------------+----+-----------+-----------+----------+
| Increase/(decrease) in | | 158 | (5,718) | (7,503) |
| payables | | | | |
+------------------------+----+-----------+-----------+----------+
| Finance costs paid | | (387) | (451) | (851) |
+------------------------+----+-----------+-----------+----------+
| Taxation paid | | - | (66) | (65) |
+------------------------+----+-----------+-----------+----------+
| Net cash | | (1,344) | (13) | 1,110 |
| (outflow)/inflow from | | | | |
| operating activities | | | | |
+------------------------+----+-----------+-----------+----------+
| Cash flow from | | | | |
| investing activities | | | | |
+------------------------+----+-----------+-----------+----------+
| Purchase of property, | | (68) | (84) | (284) |
| plant and equipment | | | | |
+------------------------+----+-----------+-----------+----------+
| Proceeds from sale of | | - | - | 3 |
| property, plant and | | | | |
| equipment | | | | |
+------------------------+----+-----------+-----------+----------+
| Purchase of intangible | | (22) | (43) | (89) |
| fixed assets | | | | |
+------------------------+----+-----------+-----------+----------+
| Net cash used in | | (90) | (127) | (370) |
| investing activities | | | | |
+------------------------+----+-----------+-----------+----------+
| | | | | |
+------------------------+----+-----------+-----------+----------+
| Cash flow from | | | | |
| financing activities | | | | |
+------------------------+----+-----------+-----------+----------+
| Issue of ordinary | | - | - | 1,620 |
| shares | | | | |
+------------------------+----+-----------+-----------+----------+
| Proceeds of borrowings | | 1,126 | 318 | 185 |
+------------------------+----+-----------+-----------+----------+
| Repayment of | | - | - | (2,776) |
| borrowings | | | | |
+------------------------+----+-----------+-----------+----------+
| Leased gold facility | | (56) | 88 | 859 |
| movement | | | | |
+------------------------+----+-----------+-----------+----------+
| Capital element of | | (59) | (270) | (297) |
| finance lease rental | | | | |
| payments | | | | |
+------------------------+----+-----------+-----------+----------+
| | | | | |
+------------------------+----+-----------+-----------+----------+
| Net cash generated | | 1,011 | 136 | (409) |
| from/(used in) | | | | |
| financing activities | | | | |
+------------------------+----+-----------+-----------+----------+
| Net | | (423) | (4) | 331 |
| (decrease)/increase in | | | | |
| cash | | | | |
+------------------------+----+-----------+-----------+----------+
| Cash and cash | | 213 | (118) | (118) |
| equivalents at | | | | |
| beginning of period | | | | |
+------------------------+----+-----------+-----------+----------+
| Cash and cash | | (210) | (122) | 213 |
| equivalents at end of | | | | |
| period | | | | |
+------------------------+----+-----------+-----------+----------+
| | | | | |
+------------------------+----+-----------+-----------+----------+
| Cash and cash | | | | |
| equivalents comprise: | | | | |
+------------------------+----+-----------+-----------+----------+
| Cash and cash | | 134 | 233 | 493 |
| equivalents in the | | | | |
| balance sheet | | | | |
+------------------------+----+-----------+-----------+----------+
| Bank overdrafts | | (344) | (355) | (280) |
+------------------------+----+-----------+-----------+----------+
| | | (210) | (122) | 213 |
+------------------------+----+-----------+-----------+----------+
Notes to the Condensed Consolidated Interim Financial Statements
For the six months ended 31 August 2010
1 Basis of preparation
1.1 Reporting entity
The condensed consolidated interim financial statements of Abbeycrest plc ("the
Company") as at and for the six months ended 31 August 2010 comprises the
Company and its subsidiaries ("the Group").
These primary statements and selected notes comprise the unaudited condensed
consolidated interim financial results of the Company for the six months ended
31 August 2010 and 2009.
The financial information for the year ended 28 February 2010 does not comprise
statutory accounts within the meaning of Section 434(3) of the Companies Act
2006. Statutory accounts for the year ended 28 February 2010 were approved by
the Board of Directors on 29 June 2010. The auditors' report on those accounts
was unqualified and did not contain a statement under section 498(2) or 498(3)
of the Companies Act 2006. The auditors' report did include reference to the
material uncertainty in respect of the requirement for the Group to raise
additional financing or reduce its working capital requirement by GBP0.6m before
September 2010. The Group also anticipated breaching its profit covenants with
its senior lender and had not agreed covenants for the full twelve month period
from the date of the balance sheet.
The Company announced on 11 August 2010 that Abbeycrest Thailand, the Group's
wholly owned subsidiary, had negotiated an increase of GBP2.1m to its seasonal
working capital facilities with its long standing finance provider, Siam
Commercial Bank PCL. The Company has also agreed revised covenants with its
senior lender.
After making enquiries, the directors have a reasonable expectation that the
Company and the Group have adequate resources to continue in operational
existence for the foreseeable future. Accordingly, they continue to adopt the
going concern basis in preparing the half yearly condensed consolidated
financial statements.
The consolidated financial statements of the Group as at and for the year ended
28 February 2010 are available upon request from the Company's registered office
at 4100 Park Approach, Thorpe Park, Leeds, LS15 8GB or via the Company's website
at www.abbeycrest.co.uk.
1.2 Statement of compliance
The directors, Simon Ashton, Simon Lazenby, Sarah Carpin, Kathryn Davenport and
Albert Cheesebrough, confirm that to the best of their knowledge:
· the condensed set of financial statements has been prepared in accordance
with IAS 34 Interim Financial Reporting as adopted by the EU;
· 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 that have occurred 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.
These condensed consolidated interim financial statements were approved by the
Board of Directors and signed on behalf of the Board by Simon Ashton on 22
October 2010.
These condensed consolidated interim financial statements have been neither
audited nor reviewed pursuant to guidance issued by the Auditing Practices
Board.
1.3 Changes in accounting policies
The interim financial statements have been prepared under the same accounting
policies, presentation and methods of computation as were applied in the Group's
latest annual audited financial statements except as described below.
In the current financial year, the Group has adopted a number of revised
standards and interpretations but these have not had a material impact on the
Group's reporting.
1.4 Estimates
The preparation of the interim financial statements requires management to make
judgements, estimates and assumptions that affect the application of accounting
policies and the reported amounts of assets and liabilities, income and expense.
Actual results may differ from these estimates.
The principal risks and uncertainties as disclosed in the financial statements
for the year ended 28 February 2010 are expected to remain applicable for the
remainder of the current financial year.
In preparing these condensed consolidated interim financial statements, the
significant judgements made by management in applying the Group's accounting
policies and the key sources of the uncertainty of estimations were the same as
those that applied to the consolidated financial statements as at and for the
year ended 28 February 2010.
2 Exceptional items
Operating costs include the following exceptional income and costs:
+--------------------------+-----------+-----------+----------+
| | Six | Six | Year to |
| | months | months | 28 |
| | to | to | February |
| | 31 | 31 | 2010 |
| | August | August | Audited |
| | 2010 | 2009 | GBP'000 |
| | Unaudited | Unaudited | |
| | GBP'000 | GBP'000 | |
+--------------------------+-----------+-----------+----------+
| Exceptional items - | | | |
| operating costs | | | |
+--------------------------+-----------+-----------+----------+
| Cost of Abbeycrest | - | (1,499) | (1,500) |
| Essentials restructuring | | | |
+--------------------------+-----------+-----------+----------+
| Total exceptional items | - | (1,499) | (1,500) |
+--------------------------+-----------+-----------+----------+
The Group benefited from the write-back of exceptional operating costs for the
year ended 28 February 2010 of GBP1.5m as a result of the agreement with its
landlord to grant an option to break the lease at the Group's former Head Office
premises at Wilmington Grove in Leeds, in September 2011.
3 (Loss)/profit per share
Basic (loss)/profit per share and diluted earnings per share have been
calculated using the weighted average number of shares in issue during the
period of 47,353,495 (2009: 28,623,641).
There are potentially dilutive options over 6,666,708 ordinary shares
outstanding at 31 August 2010. The above instruments are potentially dilutive
but are not included in the calculation of diluted loss per share because they
were not dilutive for the six months ended 31 August 2010 as their conversion to
ordinary shares would have had the effect of decreasing the loss per share
reported.
4 Segmental analysis
The Group has two main reportable segments:
· Brands Division - this Division is the Group's vehicle for increased
penetration of higher value segments of the jewellery market. Its objective is
to appeal to the most fashion conscious buyers through the creation of highly
innovative branded jewellery collections and differentiated service
propositions.
· Abbeycrest Essentials Division - this Division represents the bulk of the
retained historic business of Abbeycrest. Its role is to continue to exploit
the Group's supply capabilities across existing mainstream markets in much the
same way as before; only with heightened consumer focus, product differentiation
and account management. This is the Group's foundation.
Factors that management used to identify the Group's reportable segments
The Group's reportable segments are strategic business units that offer
different products. They are managed separately because each business requires
different marketing strategies.
Measurement of operating segment profit or loss, assets and liabilities
The Group evaluates performance on the basis of EBITDA and profit or loss from
operations before tax not including non-recurring losses, such as restructuring
costs and goodwill impairment, and also excluding the effects of share based
payments.
Segment assets exclude tax assets and assets used primarily for corporate
purposes. Segment liabilities exclude tax liabilities. Even though loans and
borrowings arise from finance activities rather than operating activities, they
are allocated to the segments based on relevant factors (e.g. funding
requirements). Details are provided in the reconciliation from segment assets
and liabilities to the Group position.
The following shows the revenue and results by reportable segment in the six
months ended 31 August 2010:
+------------------------+-----+------------+----------+---------+
| | | Abbeycrest | Brands | Total |
| | | Essentials | Division | GBP'000 |
| | | Division | GBP'000 | |
| | | GBP'000 | | |
+------------------------+-----+------------+----------+---------+
| Revenue | | 11,130 | 7,660 | 18,790 |
+------------------------+-----+------------+----------+---------+
| | | | | |
+------------------------+-----+------------+----------+---------+
| Segment result | | 55 | 443 | 498 |
+------------------------+-----+------------+----------+---------+
| | | | | |
+------------------------+-----+------------+----------+---------+
| Unallocated costs | | | | (572) |
+------------------------+-----+------------+----------+---------+
| Finance costs | | | | (387) |
+------------------------+-----+------------+----------+---------+
| Loss before income tax | | | | (461) |
+------------------------+-----+------------+----------+---------+
| Tax charge | | | | - |
+------------------------+-----+------------+----------+---------+
| Loss for the period | | | | (461) |
+------------------------+-----+------------+----------+---------+
Unallocated costs relate to central costs
Operating profit margins
+-----------------------+------------+----------+-------------+---------+
| | Abbeycrest | Brands | Unallocated | Total |
| | Essentials | Division | GBP'000 | GBP'000 |
| | Division | GBP'000 | | |
| | GBP'000 | | | |
+-----------------------+------------+----------+-------------+---------+
| EBITDA before | 412 | 523 | (572) | 363 |
| exceptional items | | | | |
+-----------------------+------------+----------+-------------+---------+
| Less | | | | |
+-----------------------+------------+----------+-------------+---------+
| Depreciation of | (296) | (67) | - | (363) |
| tangible fixed assets | | | | |
+-----------------------+------------+----------+-------------+---------+
| Amortisation of | (61) | (13) | - | (74) |
| intangible fixed | | | | |
| assets | | | | |
+-----------------------+------------+----------+-------------+---------+
| Operating | 55 | 443 | (572) | (74) |
| profit/(loss) | | | | |
+-----------------------+------------+----------+-------------+---------+
| | | | | |
+-----------------------+------------+----------+-------------+---------+
| EBITDA margin before | 3.7% | 6.8% | - | 1.9% |
| exceptional items | | | | |
+-----------------------+------------+----------+-------------+---------+
| | | | | |
+-----------------------+------------+----------+-------------+---------+
| Operating margin | 0.5% | 5.8% | - | -0.4% |
| before exceptional | | | | |
| items | | | | |
+-----------------------+------------+----------+-------------+---------+
Segmental assets as at 31 August 2010 were as follows:
+---------------+------------+----------+-------------+----------------+---------+
| | Abbeycrest | Brands | Unallocated | Reconciliation | Total |
| | Essentials | Division | GBP'000 | GBP'000 | GBP'000 |
| | Division | GBP'000 | | | |
| | GBP'000 | | | | |
+---------------+------------+----------+-------------+----------------+---------+
| Total assets | 31,232 | 16,979 | 21,089 | (47,731) | 21,569 |
+---------------+------------+----------+-------------+----------------+---------+
The reconciling items relate to the elimination of inter-company balances of
GBP39,826,000 and fixed asset investments of GBP7,905,000 on consolidation.
Non-current asset additions totalled GBP90,000 of which GBP59,000 related to the
Brands Division and GBP31,000 related to the Abbeycrest Essentials Division.
The following shows the revenues and results by reportable segment in the six
months ended 31 August 2009:
+-------------------------------+------------+----------+---------+
| | Abbeycrest | Brands | Total |
| | Essentials | Division | GBP'000 |
| | Division | GBP'000 | |
| | GBP'000 | | |
+-------------------------------+------------+----------+---------+
| Revenue | 10,831 | 7,021 | 17,852 |
+-------------------------------+------------+----------+---------+
| | | | |
+-------------------------------+------------+----------+---------+
| Segment result | 359 | 417 | 776 |
+-------------------------------+------------+----------+---------+
| | | | |
+-------------------------------+------------+----------+---------+
| Unallocated income | | | 933 |
+-------------------------------+------------+----------+---------+
| Finance costs | | | (451) |
+-------------------------------+------------+----------+---------+
| Profit before income tax | | | 1,258 |
+-------------------------------+------------+----------+---------+
| Tax charge | | | - |
+-------------------------------+------------+----------+---------+
| Profit for the period | | | 1,258 |
+-------------------------------+------------+----------+---------+
Unallocated income relates to central costs and income
Operating profit margins
+-----------------------+------------+----------+-------------+---------+
| | Abbeycrest | Brands | Unallocated | Total |
| | Essentials | Division | GBP'000 | GBP'000 |
| | Division | GBP'000 | | |
| | GBP'000 | | | |
+-----------------------+------------+----------+-------------+---------+
| EBITDA before | 739 | 473 | (566) | 646 |
| exceptional items | | | | |
+-----------------------+------------+----------+-------------+---------+
| Less | | | | |
+-----------------------+------------+----------+-------------+---------+
| Depreciation of | (317) | (50) | - | (367) |
| tangible fixed assets | | | | |
+-----------------------+------------+----------+-------------+---------+
| Amortisation of | (63) | (6) | - | (69) |
| intangible fixed | | | | |
| assets | | | | |
+-----------------------+------------+----------+-------------+---------+
| Operating profit | 359 | 417 | (566) | 210 |
| before exceptional | | | | |
| items | | | | |
+-----------------------+------------+----------+-------------+---------+
| Exceptional items - | - | - | 1,499 | 1,499 |
| operating income | | | | |
+-----------------------+------------+----------+-------------+---------+
| Operating profit | 359 | 417 | 933 | 1,709 |
+-----------------------+------------+----------+-------------+---------+
| | | | | |
+-----------------------+------------+----------+-------------+---------+
| EBITDA margin before | 6.8% | 6.7% | - | 3.6% |
| exceptional items | | | | |
+-----------------------+------------+----------+-------------+---------+
| Operating margin | 3.3% | 5.9% | - | 1.2% |
| before exceptional | | | | |
| items | | | | |
+-----------------------+------------+----------+-------------+---------+
Segmental assets as at 31 August 2009 were as follows:
+--------------+------------+----------+-------------+----------------+---------+
| | Abbeycrest | Brands | Unallocated | Reconciliation | Total |
| | Essentials | Division | GBP'000 | GBP'000 | GBP'000 |
| | Division | GBP'000 | | | |
| | GBP'000 | | | | |
+--------------+------------+----------+-------------+----------------+---------+
| Total assets | 30,319 | 16,335 | 20,975 | (45,248) | 22,381 |
+--------------+------------+----------+-------------+----------------+---------+
The reconciling items relate to the elimination of inter-company balances of
GBP33,572,000 and fixed asset investments of GBP11,676,000 on consolidation.
Non-current asset additions totalled GBP127,000 of which GBP102,000 relate to
the Brands Division and GBP25,000 relate to the Abbeycrest Essentials Division.
The following shows the revenues and results by reportable segment in the year
ended 28 February 2010:
+-------------------------------+------------+----------+---------+
| | Abbeycrest | Brands | Total |
| | Essentials | Division | GBP'000 |
| | Division | GBP'000 | |
| | GBP'000 | | |
+-------------------------------+------------+----------+---------+
| Revenue | 27,185 | 12,478 | 39,663 |
+-------------------------------+------------+----------+---------+
| | | | |
+-------------------------------+------------+----------+---------+
| Segment result | 1,555 | 411 | 1,966 |
+-------------------------------+------------+----------+---------+
| | | | |
+-------------------------------+------------+----------+---------+
| Unallocated income | | | 440 |
+-------------------------------+------------+----------+---------+
| Finance costs | | | (851) |
+-------------------------------+------------+----------+---------+
| Profit before income tax | | | 1,555 |
+-------------------------------+------------+----------+---------+
| Tax charge | | | - |
+-------------------------------+------------+----------+---------+
| Profit for the period | | | 1,555 |
+-------------------------------+------------+----------+---------+
Unallocated income relates to central costs and income
Operating profit margins
+-----------------------+------------+----------+-------------+---------+
| | Abbeycrest | Brands | Unallocated | Total |
| | Essentials | Division | GBP'000 | GBP'000 |
| | Division | GBP'000 | | |
| | GBP'000 | | | |
+-----------------------+------------+----------+-------------+---------+
| EBITDA before | 2,288 | 547 | (1,060) | 1,775 |
| exceptional items | | | | |
+-----------------------+------------+----------+-------------+---------+
| Less | | | | |
+-----------------------+------------+----------+-------------+---------+
| Depreciation of | (611) | (136) | - | (747) |
| tangible fixed assets | | | | |
+-----------------------+------------+----------+-------------+---------+
| Amortisation of | (122) | - | - | (122) |
| intangible fixed | | | | |
| assets | | | | |
+-----------------------+------------+----------+-------------+---------+
| Operating profit | 1,555 | 411 | (1,060) | 906 |
| before exceptional | | | | |
| items | | | | |
+-----------------------+------------+----------+-------------+---------+
| Exceptional items - | - | - | 1,500 | 1,500 |
| operating income | | | | |
+-----------------------+------------+----------+-------------+---------+
| Operating profit | 1,555 | 411 | 440 | 2,406 |
+-----------------------+------------+----------+-------------+---------+
| | | | | |
+-----------------------+------------+----------+-------------+---------+
| EBITDA margin before | 8.4% | 4.4% | - | 4.5% |
| exceptional items | | | | |
+-----------------------+------------+----------+-------------+---------+
| Operating margin | 5.7% | 3.3% | - | 2.3% |
| before exceptional | | | | |
| items | | | | |
+-----------------------+------------+----------+-------------+---------+
Segmental assets as at 28 February 2010 were as follows:
+--------------+------------+----------+-------------+----------------+---------+
| | Abbeycrest | Brands | Unallocated | Reconciliation | Total |
| | Essentials | Division | GBP'000 | GBP'000 | GBP'000 |
| | Division | GBP'000 | | | |
| | GBP'000 | | | | |
+--------------+------------+----------+-------------+----------------+---------+
| Total assets | 19,501 | 12,942 | 14,035 | (25,391) | 21,087 |
+--------------+------------+----------+-------------+----------------+---------+
The reconciling items relate to the elimination of inter-company balances of
GBP17,486,000 and fixed asset investments of GBP7,905,000 on consolidation.
Non-current asset additions totalled GBP373,000 of which GBP169,000 related to
the Brands Division and GBP204,000 related to the Abbeycrest Essentials
Division.
5 Property plant and equipment
Acquisitions and disposals
During the six months ended 31 August 2010, the Group purchased property, plant
and equipment with a cost of GBP68,000 (six months to 31 August 2009:
GBP84,000).
Capital commitments
At 31 August 2010, the Group had no capital commitments (2009: GBPnil).
6 Provisions
+------------------------+--+-----------+-----------+----------+
| | | Six | Six | Year |
| | | months | months | to |
| | | to | to | 28 |
| | | 31 | 31 | February |
| | | August | August | 2010 |
| | | 2010 | 2009 | Audited |
| | | Unaudited | Unaudited | GBP'000 |
| | | GBP'000 | GBP'000 | |
+------------------------+--+-----------+-----------+----------+
| Onerous lease | | | | |
| provision | | | | |
+------------------------+--+-----------+-----------+----------+
| At 1 March 2010 | | 1,326 | 3,500 | 3,500 |
+------------------------+--+-----------+-----------+----------+
| Utilised during the | | (270) | (437) | (674) |
| period | | | | |
+------------------------+--+-----------+-----------+----------+
| Released during the | | - | (1,499) | (1,500) |
| period | | | | |
+------------------------+--+-----------+-----------+----------+
| At 31 August 2010 | | 1,056 | 1,564 | 1,326 |
+------------------------+--+-----------+-----------+----------+
The Group had a tenancy agreement for property at Wilmington Grove, Leeds which
did not expire until June 2021. As part of the reorganisation of the UK
business during the year ended 28 February 2009, a decision was made to vacate
the premises and management considered the tenancy agreement to be onerous.
During the year ended 28 February 2010, management negotiated a break clause for
September 2011 and reassessed the lease provision.
Management have assessed the obligations under the tenancy agreement and
associated unavoidable costs of GBP1.1m. Management have not included any
income against the cash outflows due to the sub-lease potential being assessed
as low. The net cash outflows have been discounted at a rate of 4.5%,
considered to be the markets current assessment of the time value of money.
7 Share-based payments
On 14 April 2010, following approval by the Company's Remuneration Committee,
the Group granted each of its executive Directors options under the Abbeycrest
2010 Approved Executive Share Option Plan and the Abbeycrest 2010 Unapproved
Executive Share Option Plan. In total 9,430,949 ordinary shares of 1 pence each
in the share capital of the Company were granted for GBPnil consideration.
The options granted under the Unapproved Plan have an exercise price of 9.00
pence per Ordinary share. The options granted under the Approved Plan have an
exercise price of 7.38 pence per Ordinary share. The exercise of options is
dependent upon eligible employees meeting performance criteria. The options are
settled in equity once exercised.
If the options remain unexercised after a period of ten years from the date of
grant, the options expire. Options are forfeited if the employee leaves the
Group before the options vest.
Details of the schemes are given below:
+--------+-----------+-----------+-------------+----------+----------+---------+
| | | | | | Earliest | |
| Grant | Employees | Number | Performance | Exercise | exercise | Expiry |
| date | entitled | of | conditions | price | date | date |
| | | options | | (p) | | |
+--------+-----------+-----------+-------------+----------+----------+---------+
| Approved Plan | | | | | |
+--------------------+-----------+-------------+----------+----------+---------+
| 14 | 3 | 1,219,512 | Time | 7.38 | 14 | 14 |
| April | | | served | | April | April |
| 2010 | | | | | 2010 | 2020 |
+--------+-----------+-----------+-------------+----------+----------+---------+
| Unapproved | | | | | |
| Plan | | | | | |
+--------------------+-----------+-------------+----------+----------+---------+
| 14 | 3 | 666,677 | Time | 9.00 | 14 | 14 |
| April | | | served | | April | April |
| 2010 | | | | | 2010 | 2020 |
+--------+-----------+-----------+-------------+----------+----------+---------+
| 14 | 3 | 2,829,284 | Share | 9.00 | 30 | 14 |
| April | | | price | | June | April |
| 2010 | | | target | | 2011 | 2020 |
| | | | and | | | |
| | | | EPS | | | |
| | | | target | | | |
+--------+-----------+-----------+-------------+----------+----------+---------+
| 14 | 3 | 4,715,476 | Share | 9.00 | 30 | 14 |
| April | | | price | | June | April |
| 2010 | | | target | | 2012 | 2020 |
| | | | and | | | |
| | | | EPS | | | |
| | | | target | | | |
+--------+-----------+-----------+-------------+----------+----------+---------+
The number and weighted average exercise price of share options under the
Approved Plan are as follows:
+------------------------+-----------+----------+--------+----------+
| | | 2010 | | 2009 |
| | | Weighted | | Weighted |
| | | | | average |
| | 2010 | average | 2009 | exercise |
| | Number | exercise | Number | price |
| | | | | |
| | | price | | |
+------------------------+-----------+----------+--------+----------+
| Outstanding at 1 | - | - | - | - |
| September | | | | |
+------------------------+-----------+----------+--------+----------+
| Granted | 1,219,512 | 7.38 | - | - |
+------------------------+-----------+----------+--------+----------+
| Lapsed | (406,504) | (7.38) | - | - |
+------------------------+-----------+----------+--------+----------+
| Outstanding at 31 | 813,008 | 7.38 | - | - |
| August | | | | |
+------------------------+-----------+----------+--------+----------+
| Exercisable at 31 | 813,008 | 7.38 | - | - |
| August | | | | |
+------------------------+-----------+----------+--------+----------+
The number and weighted average exercise price of share options under the
Unapproved Plan are as follows:
+------------------------+-------------+----------+--------+----------+
| | | 2010 | | 2009 |
| | | Weighted | | Weighted |
| | | | | average |
| | 2010 | average | 2009 | exercise |
| | Number | exercise | Number | price |
| | | | | |
| | | price | | |
+------------------------+-------------+----------+--------+----------+
| Outstanding at 1 | - | - | - | - |
| September | | | | |
+------------------------+-------------+----------+--------+----------+
| Granted | 8,211,437 | 9.00 | - | - |
+------------------------+-------------+----------+--------+----------+
| Lapsed | (2,357,737) | (9.00) | - | - |
+------------------------+-------------+----------+--------+----------+
| Outstanding at 31 | 5,853,700 | 9.00 | - | - |
| August | | | | |
+------------------------+-------------+----------+--------+----------+
| Exercisable at 31 | 601,634 | 9.00 | - | - |
| August | | | | |
+------------------------+-------------+----------+--------+----------+
Charge to the income statement
+------------------------------------------+---------+---------+
| | Six | Six |
| | months | months |
| | to 31 | to 31 |
| | August | August |
| | 2010 | 2009 |
| | GBP'000 | GBP'000 |
+------------------------------------------+---------+---------+
| Share based payment charge | 20 | - |
+------------------------------------------+---------+---------+
Fair value assumptions of share based payments
The estimate of the fair value of share based awards is calculated using the
Black-Scholes option pricing model. The following assumptions were used for
options granted during the period:
+------------------------------------------+----------+------------+
| | Approved | Unapproved |
| | 14 April | 14 April |
| Grant date | | 2010 |
| | 2010 | |
+------------------------------------------+----------+------------+
| Share price at date of grant (p) | 7.38 | 7.38 |
+------------------------------------------+----------+------------+
| Exercise price (p) | 7.38 | 9.00 |
+------------------------------------------+----------+------------+
| Vesting period (days) | 1 | 617 |
+------------------------------------------+----------+------------+
| Expected volatility | 50% | 50% |
+------------------------------------------+----------+------------+
| Option life (years) | 10 | 10 |
+------------------------------------------+----------+------------+
| Expected life (years) | 2.2 | 2.2 |
+------------------------------------------+----------+------------+
| Risk-free rate | 1.49% | 1.49% |
+------------------------------------------+----------+------------+
| Expected dividends expressed as a | 0% | 0% |
| dividend yield | | |
+------------------------------------------+----------+------------+
The expected volatility is based on the historic volatility of the Company's
share price.
8 Seasonality of operations
The Group is subject to seasonal fluctuations, particularly the effect of
Christmas. As a consequence the first half year typically results in lower
revenues than the second half year.
The Group attempts to minimise the seasonal impact through the management of
inventories to meet demand.
This information is provided by RNS
The company news service from the London Stock Exchange
END
IR LLFFSIRLFFII
Abbeycrest (LSE:ACR)
Historical Stock Chart
From Feb 2025 to Mar 2025
Abbeycrest (LSE:ACR)
Historical Stock Chart
From Mar 2024 to Mar 2025
