Jewellery Abbeycrest slips into the red

JEWELLERY group Abbeycrest today blamed difficult market conditiions as it slumped to an annual loss of £3m.

The Leeds-based jewellery designer and manufacturer, which previously breached its banking covenants before re-signing them, said consumer demand had been hit by the sustained rise in gold prices.

Abbeycrest made a pre-tax loss, after exceptional costs, of £3m, compared to a £1.6m profit the previous year (which included a £1.5m exceptional gain).

Revenue slipped to £38.5m, from £39.7m.

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Simon Ashton, executive chairman, said: “Although trading conditions in our core markets remain difficult, the group has made a satisfactory start to the current financial year.

“The benefits of consolidating our Hong Kong and Thailand operations are becoming evident and our Essentials division is trading in line with the board’s expectations, albeit against a continuing backdrop of long-term pressure on precious metal prices.

“The board remains firmly of the view that the strategy of moving towards higher value-added, branded jewellery collections is aligned to current and expected global jewellery trends and we are seeing definite signs of progress”.

Turnover in Abbeycrest’s Essentials division, which serves volume markets with mainstream precious metal jewellery products, fell five per cent to £25.8m, although the firm said that restating 2011 sales at 2010 gold prices would indicate a like-for-like reduction closer to 15 per cent.

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The firm said it had begun several initiatives to improve the contribution to fixed overheads and deliver more effective product development.

“In April, we completed the consolidation of Abbeycrest Hong Kong’s activities into Abbeycrest Thailand’s operations. This will result in the transfer of previously outsourced product, and associated margin, into the group’s own manufacturing resource, coupled with tighter control on new product development.”

Earlier this month Abbeycrest signed new and extended banking facilities with its Irish and Thai lenders. The firm, which has been battered by high precious metals prices and tough markets, had been in breach of its banking covenants with its senior lender, Burdale Financial, since the end of 2010. It was forced to cut costs and streamline. Burdale, a subsidiary of Bank of Ireland, agreed to extend the renewal date of its UK bank facility to March 2014 and to re-set associated covenants

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