Canford’s annual report for the year ending 31 October 2020 reveals the cost and trading difficulties brought about by the Coronavirus pandemic.
From its headquarters in Washington, Tyne & Wear, Canford manufactures and distributes professional audio equipment. The Canford brand is renowned and widely respected, both for quality of service and for the diversity of stock lines on offer.
Canford has a broad customer base, but the business of many significant customers was heavily impacted by the Covid pandemic and its consequences. Sales were ahead of budget up to the third week of March 2020, at which point they fell sharply.
In response, the experienced leadership team reduced expenditure to a minimum. Staff costs were reduced as the company made full use of the Government’s Jobs Retention Scheme. In addition, there was a redundancy programme, with about two thirds of the reduction needed comprising voluntary redundancies. Members of the Board of Directors reduced their own salaries very sharply, resulting in an 18% reduction in directors’ salaries for the year as a whole.
Cash flow was adverse as working capital settled down to a lower level of regular business, and it took a little while to reduce the value of inventories by well over £500,000 - so the group took out a government guaranteed bank loan of £600,000. At the date of approving these accounts, that loan has been repaid in full, and the group is meeting all its financial obligations.
We were able to maintain continuous service to our customers, thus building on the excellent relations with our customer base that have been developed over many years. The sales team (largely working from their homes) developed new methodologies during this period, responding more proactively to customers’ enquiries, and broadening the range of active customers.
As a result of all these measures, the group continued to make trading profits in every quarter of 2020 and this is continuing in 2021. As sales began to recover, we reduced dependence on the Coronavirus Job Retention Scheme, leaving it altogether by the end of May 2021. We intend to strengthen the sales team to build on their excellent work over the past year.John Francis, Canford Chairman
Turnover fell from £17,799,183 (2018-19) to £14,322,434 (2019-20) while gross profit remained fairly steady at 30.4% (31.2%) supported by a slight increase in sales of Canford manufactured goods to 32.6% (32.1% 2018-19).
The group continues to expand and develop its fibre termination facilities in order to meet rapidly increasing customer demand. The production workspace has been significantly enlarged, together with recruitment and training of additional staff.
Canford’s fibre termination work mainly involves assembly of the complex connectors and cables used for video and audio connections, both installed in infrastructure and deployable for outside work. The majority is for use with high definition 4K UHDTV cameras used in premium live broadcasts and in broadcast studios. These products are significantly in demand for Canford’s export business with applications in national sports stadiums and broadcast centres, with significant sales to the Middle East.
The demand for custom metal connection panels continues to increase, with Canford now recognised as market leader in this sector. Canford is now architect-specified for audio and video connection points in many of the highest profile sports stadiums in both Europe and the Middle East, as well as theatres and conference facilities. This sustained growth supports further investment in Canford’s manufacturing site on the Isle of Portland, UK.
A significant sale during the period was for several hundred NEAL interview recorders for a UK government department. Sales of these iconic units, manufactured by Canford at Washington since 1995, is aided by their regular appearance on TV, including major series such as “Line of Duty” and the north-east’s own “Vera”.
Despite the significant cash inflows and outflows occasioned by the events narrated above, the group ended the financial year in a strong position.
Canford has plenty of expertise in exporting, with almost 40% of its revenue derived from international sales. The company was as ‘prepared’ for Brexit as it was possible to be. Significant efforts were made to ensure that EU customers understood Canford would be continuing “business as usual” for them. Very significantly, this included setting up systems to clear EU customs in France, so purchases would be “internal” in the single market, and not an “import” to the EU. This eliminates paperwork and other “hassles”, identified as being the biggest risk to customer retention.
Having a long-established subsidiary company in France proved extremely useful in enabling customs clearance of shipments.
The final extent to which European sales will be impacted by Brexit (as distinct from the pandemic) will not be known for some while, although no downturn has been seen since the exit. Brexit has brought additional costs but no benefit whatsoever to the business; remaining in the single market would have been a far better option. Meanwhile, Canford’s international sales team continues to develop new business in core export territories – Europe, the Middle East, Russia and North Africa, aided by local staff presence in France and Dubai. Use of customer languages has always been a focus of Canford’s international business, with Russian and several other eastern European languages offered, as well as all the principal tongues of the EU.Iain Elliott, Founder & CEO
Canford’s own brands are an important source of sales growth, with continuing high demand for both standard products and custom variations. New products continue to be developed for both the metal production and electronic products departments, which have been shown to be very strong performers with great customer trust in relevance and quality.
Canford is the market leader for professional audio and video cables for installations, and a significant investment is now being made in new designs that reach the CPR Class Cca “reaction to fire” standard which is increasingly being specified for public buildings.
Further development of Canford’s unique technology for level-limiting professional use headphones continues, with developments of noise-cancelling types for the security services markets.