Abbeycrest faces challenging conditions

In a trading update for the period March 1 to July 19, Abbeycrest said it had been operating in "challenging conditions".

The company said that both its Essentials and Brands divisions remained exposed to the rising gold price, which affected overall consumer demand, the group's margins and its working capital funding requirement.

In a statement, Abbeycrest said: "As noted in the final results, the group was at risk of breaching its profit covenants at June 30 2010 with its senior lender, Burdale Financial. This has now occurred and the management is working closely with Burdale to reset these covenants.

"The group is also in negotiations to increase the level of and improve access to the existing facilities with its long-standing finance partner in Thailand, Siam Commercial Bank. The directors are confident of a successful conclusion to both these discussions.

"The group continues to monitor and manage its exposure to further increases in the gold price and any resulting effects on the group's working capital requirement.

"Despite the challenges referred to above, the board re-confirms its belief that the group is now much better positioned to capitalise on opportunities in the global jewellery market."