Colefax Group plc

CFX

22nd July 2010

COLEFAX GROUP PLC

 

(“Colefax” or “the Group”)

 

Preliminary Results for the year ended 30th April 2010

 

Colefax is an international designer and distributor of luxury furnishing fabrics & wallpapers and owns a leading interior decorating business. The Group trades under five brand names, which serve different segments of the soft furnishings marketplace; these are Colefax and Fowler, Cowtan & Tout, Jane Churchill, Manuel Canovas and Larsen.

 

Highlights

 

·                Sales from continuing operations down by 8% to £67.38m (2009 - £73.05m) and down by 10% on a constant currency basis

 

·                Pre-tax profit from continuing operations increased by 51% to £4.39m (2009 - £2.91m)

 

·                Earnings per share from continuing operations up by 53% to 21.6p (2009 - 14.1p)

 

·                Strong cash generation of £3.18m before dividends and share buybacks (2009 - £1.87m)

 

·                Net cash at year end of £5.47m (2009 - £3.08m)

 

·                Proposed final dividend of 1.55p (2009 – 1.33p), giving a total dividend of 3.10p (2009 – 2.88p), an increase of 8% on last year

 

 

David Green, Chairman of Colefax, commented,

 

“This year’s results have benefitted from the cost saving measures implemented towards the end of last year, the strengthening of the US Dollar and a strong performance from the Decorating Division.  These three factors are the principal reasons for the improvement in the Group’s performance this year. 

 

The main challenge facing the Group has been the difficult market conditions in the Group’s major market, the US where sales declined by a further 20%. Towards the end of the year we have seen a small improvement in sales and believe that this market may finally be starting to recover.

While trading in the second half of the year was better than expected it is still very difficult to accurately forecast how the Group will perform in this financial year given the current economic climate. This year will be about striking the right balance between controlling our costs and investing in the future to make sure that we are in a strong position to take full advantage of any recovery.”

Enquiries:

 

Colefax Group plc

David Green, Chairman

Tel: 020 7448 1000 (today)

 

Robert Barker, Finance Director

 

 

 

 

Biddicks

Katie Tzouliadis

Tel: 020 7448 1000

 

 

 

KBC Peel Hunt Ltd

David Anderson

Tel: 020 7418 8900

(Nominated Adviser & Broker)

Dan Webster

 

 

COLEFAX GROUP PLC

CHAIRMAN’S STATEMENT

 

Financial Results

 

The Group’s pre-tax profit from continuing operations for the year to 30th April 2010 increased by 51% to £4.39 million (2009 - £2.91 million) on sales down 8% at £67.38 million (2009 - £73.05 million).  Earnings per share from continuing operations increased by 53% to 21.6p (2009 – 14.1p) and the Group ended the year with net cash of £5.47 million (2009 - £3.08 million).

During the year, the Group purchased for cancellation 105,000 shares at an average price of £1.30 per share, representing 0.7% of the Group’s issued share capital at the start of the year.

The Board has decided to increase the final dividend by 17% to 1.55p per share (2009 - 1.33p), making a total for the year of 3.10p (2009 – 2.88p), an increase of 8%.  The final dividend will be paid on 12th October 2010 to shareholders on the register at the close of business on 17th September 2010.

This year’s results have benefitted from the cost saving measures implemented towards the end of last year, the strengthening of the US Dollar and a strong performance from the Decorating Division.  These three factors are the principal reasons for the improvement in the Group’s performance this year. 

 

The main challenge facing the Group has been the difficult market conditions in the Group’s major market, the US where sales declined by a further 20%. 

 

Prior to our year end, we made a decision to dispose of the Manuel Canovas Beachwear Division which was a non-core activity.  Since our year end, we have exchanged contracts to sell this activity to the existing management team under a licence agreement.  The loss on this discontinued activity, including a provision for disposal costs, amounted to £757,000 after tax.

 

Product Division

 

·         Fabric - Portfolio of Five Brands: “Colefax and Fowler”, “Cowtan and Tout”, “Jane Churchill”, “Manuel Canovas” and “Larsen”

 

Sales in the Fabric Division, which represent 80% of Group sales from continuing operations, decreased by 11% to £54.20 million (2009 - £61.08 million).

 

Sales in the US, which represent 47% of the Fabric Division’s sales, decreased by 20% on a constant currency basis.  This significant sales reduction in our largest market is the most challenging issue currently facing the Group.  The performance has been weak right across the US although the East Coast has suffered slightly more than the rest.  We are currently refurbishing our flagship showroom in New York which will create sales synergies and reduce costs.  This project will be completed in October 2010.  Towards the end of the year we have seen a small improvement in sales and believe that this market may finally be starting to recover.

UK sales which represent 22% of the Fabric Division's sales, decreased by 4% during the year.  Sales for the first six months decreased by 17% and there was a strong recovery in the second half of the year.  Current trading conditions are still good but there is growing evidence of problems ahead for the UK housing market and therefore, I am cautious about our prospects for the remainder of the current financial year.

 

Sales in Continental Europe, which represent 28% of the Fabric Division’s sales, were down by 9% on a constant currency basis with most of the decline in the first half of the year.  Many European countries are now seeing tougher trading conditions and whilst their decline has not been as dramatic as the US, I am concerned that they will remain weak.  Our principal markets are France, Italy and Germany which account for just over 65% of sales in this area and with no other country representing more than 5% of European sales. 

 

Sales in the rest of the world, which represent just 3% of the Fabric Division’s sales, were down by 5% in the year. We are looking to strengthen our position in some of these markets, which do not appear to be suffering as badly as our major markets.

 

·         Furniture – Kingcome Sofas

 

Sales of Kingcome furniture, which account for 4% of Group sales from continuing operations, increased by 3% to £2.55 million (2009 - £2.47 million) and achieved a good result for the year.  The relative strength of the London property market has helped furniture sales this year.  The current order book is good and as a result, we are optimistic about prospects for the coming year.

 

Interior Decorating Division

 

Interior decorating sales, which account for 16% of Group sales from continuing operations, increased by 12% to £10.63 million (2009 - £9.50 million) which represents an exceptional performance.  During the year, we completed a number of major contracts both in the UK and overseas and saw a good recovery in sales of antiques.  Whilst the current order book is healthy we expect results for the current financial year will be below the performance of last year.

 

Prospects

 

While trading in the second half of the year was better than expected it is still very difficult to accurately forecast how the Group will perform in this financial year given the current economic climate.  The most significant piece of good news is the current strength of the US Dollar which will increase our margins in the US and offset some of the sales decline of the last two years.  However, we are currently experiencing significant cost pressure from suppliers following sharp increases in the cost of raw materials and this will offset some of the benefit from the Dollar.  This year will be about striking the right balance between controlling our costs and investing in the future to make sure that we are in a strong position to take full advantage of any recovery. 

 

 

 

David Green

Chairman

22nd July 2010

 

 

 

COLEFAX GROUP PLC

GROUP INCOME STATEMENT

For the year ended 30th April 2010

 

 

 

2010

 

2009

 

 

 

 

£'000

 

£'000

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Continuing operations:

 

 

 

 

 

 

 

 

 

 

 

 

 

Revenue

     67,380

 

       73,051

 

 

 

Cost of sales

       30,445

 

      34,687

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Gross profit

       36,935

 

       38,364

 

 

 

Operating expenses

      32,548

 

       35,446

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Profit from operations

         4,387

 

        2,918

 

 

 

 

 

 

 

 

 

 

Finance income

              11

 

              45

 

 

 

Finance expense

(10)

 

(52)

 

 

 

 

                1

 

(7)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Profit before taxation

         4,388

 

         2,911

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Tax expense

 

 

 

 

 

 

-UK

(1,236)

 

(535)

 

 

 

-Overseas

(19)

 

(373)

 

 

 

 

(1,255)

 

(908)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Profit from continuing operations

         3,133

 

         2,003

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Trading loss on discontinued operations, net of tax

(357)

 

(173)

 

 

 

 

 

 

 

 

 

 

Provision on disposal, net of tax

(400)

 

                -

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Loss on discontinued operations, net of tax

(757)

 

(173)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Profit for the year attributable to equity holders of the parent

         2,376

 

         1,830

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic earnings per share

           16.4

p

           12.9

p

 

 

 

 

 

 

 

 

 

Diluted earnings per share

           16.1

p

           12.4

p

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Continuing operations:

 

 

 

 

 

 

Basic earnings per share

           21.6

p

           14.1

p

 

 

 

 

 

 

 

 

 

Diluted earnings per share

           21.2

p

           13.5

p

 

 

 

 

 

 

 

 

 

COLEFAX GROUP PLC

GROUP STATEMENT OF COMPREHENSIVE INCOME

For the year ended 30th April 2010

 

 

 

 

2010

 

2009

 

 

£'000

 

£'000

 

 

 

 

 

 

 

 

 

 

 

Profit for the year

   2,376

 

     1,830

 

 

 

 

 

 

 

 

 

 

 

Other comprehensive income:

 

 

 

 

 

 

 

 

 

Currency translation differences on foreign currency net investments

(412)

 

     2,961

 

 

 

 

 

 

Cash flow hedges:

 

 

 

 

Gains / (losses) recognised directly in equity

        596

 

(1,808)

 

Transferred to profit and loss for the year

(71)

 

     1,294

 

 

 

 

 

 

Tax on components of other comprehensive income

(49)

 

(886)

 

 

 

 

 

 

 

 

 

 

 

Total other comprehensive income

    64

 

1,561

 

 

 

 

 

 

 

 

 

 

 

Total comprehensive income for the year attributable to the equity holders of the parent

       2,440

 

         3,391

 

 

 

 

 

 

 

 

 

 

 

 

COLEFAX GROUP PLC

GROUP STATEMENT OF FINANCIAL POSITION

At 30th April 2010

 

 

2010

2009

 

£'000

£'000

 

 

 

 

 

 

Non-current assets:

 

 

Property, plant and equipment

        5,309

         5,718

Deferred tax asset

        1,639

         1,590

 

        6,948

         7,308

 

 

 

Current assets:

 

 

Inventories and work in progress

      11,886

       13,255

Trade and other receivables

      12,380

       11,661

Cash and cash equivalents

        5,897

         3,079

 

      30,163

      27,995

 

 

 

Current liabilities:

 

 

Trade and other payables

12,598

13,298

Current corporation tax

            532

            387

Provisions

       606

      -

 

      13,736

       13,685

 

 

 

 

 

 

Net current assets

       16,427

      14,310

 

 

 

Total assets less current liabilities

       23,375

      21,618

 

 

 

Non-current liabilities:

 

 

Pension liability

           320

           485

 

 

 

Net assets

       23,055

      21,133

 

 

 

Capital and reserves attributable to equity holders of the Company:

 

 

Called up share capital

        1,470

         1,481

Share premium account

       11,148

     11,148

Capital redemption reserve

         1,404

        1,393

ESOP share reserve

(18)

(30)

Share based payment reserve

            196

            475

Foreign exchange reserve

         1,741

        2,055

Cash flow hedge reserve

                8

(370)

Retained earnings

         7,106

        4,981

Total equity

       23,055

       21,133

 

 

 

The financial statements were approved by the board of directors and authorised for issue on 22nd July 2010.

 

D. B. Green Director

R. M. Barker Director

COLEFAX GROUP PLC

GROUP STATEMENT OF CASH FLOWS

For the year ended 30th April 2010

 

 

2010

2009

 

£'000

£'000

 

 

 

 

 

 

Operating activites

 

 

Profit before taxation - continuing operations

        4,388

        2,911

Loss before taxation - discontinued operations

(1,147)

(262)

Finance income

(11)

(45)

Finance expense

              10

              52

Depreciation

         1,883

        1,795

 

 

 

Cash flows from operations before changes in working capital

         5,123

         4,451

 

 

 

Decrease in inventories and work in progress

     1,193

        1,032

Increase in trade and other receivables

(848)

(310)

(Decrease) / increase in trade and other payables

(39)

                3

 

 

 

Cash generated from operations

         5,429

         5,176

 

 

 

 

 

 

Taxation paid

 

 

UK corporation tax paid

(530)

(1,343)

Overseas tax paid

(106)

(237)

 

(636)

(1,580)

 

 

 

Net cash inflow from operating activities

         4,793

         3,596

 

 

 

 

 

 

Investing activities

 

 

Payments to acquire property, plant and equipment

(1,716)

(1,729)

Receipts from sales of property, plant and equipment

            106

             33

Interest received

              11

             38

Net cash outflow from investing

(1,599)

(1,658)

 

 

 

 

 

 

Financing activities

 

 

Purchase of own shares

(137)

(895)

Interest paid

(10)

(72)

Equity dividends paid

(412)

(592)

 

 

 

Net cash outflow from financing

(559)

(1,559)

 

 

 

 

 

 

Net increase in cash and cash equivalents

         2,635

            379

Cash and cash equivalents at beginning of year

       3,078

        2,419

Exchange (losses) / gains on cash and cash equivalents

(241)

           280

 

 

 

Cash and cash equivalents at end of year

        5,472

         3,078

 

 

 

COLEFAX GROUP PLC

GROUP STATEMENT OF CHANGES IN EQUITY

For the year ended 30th April 2010

 

 

Share capital

Share premium account

Capital redemption reserve

ESOP share reserve

Share based payment reserve

Foreign exchange reserve

Cash flow hedge reserve

Retained earnings

Total equity

 

£'000

£'000

£'000

£'000

£'000

£'000

£'000

£'000

£'000

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

At 1 May 2009

1,481

 11,148

  1,393

(30)

     475

2,055

(370)

 4,981

21,133

Total comprehensive income for the year

             -

             -

                -

             -

                -

(314)

         378

      2,376

      2,440

Share buybacks

(11)

          -

         11

          -

             -

              -

             -

(137)

(137)

ESOP shares granted

             -

             -

                -

          16

              15

              -

             -

             -

          31

Share options exercised

             -

             -

                -

             -

(294)

              -

             -

         294

             -

Dividends paid

           -

           -

              -

           -

              -

              -

             -

(412)

(412)

Other movements

           -

           -

              -

(4)

              -

            -

           -

          4

          -

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

At 30 April 2010

      1,470

    11,148

         1,404

(18)

         196

    1,741

         8

   7,106

23,055

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

At 1 May 2008

 1,536

11,148

   1,338

(20)

     664

  124

     -

4,439

19,229

Total comprehensive income for the year

             -

             -

                -

             -

                -

       1,931

(370)

      1,830

      3,391

Share buybacks

(55)

           -

            55

           -

              -

              -

             -

(895)

(895)

Share option lapsed

             -

             -

                -

(10)

(21)

              -

             -

          31

             -

Share options exercised

             -

             -

                -

             -

(168)

              -

             -

         168

             -

Dividends paid

           -

           -

              -

           -

              -

            -

           -

(592)

(592)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

At 30 April 2009

      1,481

    11,148

         1,393

(30)

        475

   2,055

(370)

  4,981

21,133

 

 

 

 

 

 

 

 

 

 

 

 

 

COLEFAX GROUP PLC

NOTES TO THE FINANCIAL INFORMATION

At 30th April 2010

 

1. Earnings per share

Basic earnings / (loss) per share has been calculated using the following data:

 

2010

2009

 

£'000

£'000

 

 

 

 

 

 

Profit after tax from continuing operations

         3,133

         2,003

Loss after tax on discontinued operations

(757)

(173)

 

 

 

Total

         2,376

         1,830

 

 

 

 

 

 

 

No.

No.

 

 

 

Weighted average number of ordinary shares in issue

 14,520,877

 14,215,866

 

 

 

 

 

 

Shares owned by the Colefax Group plc Employees' Share Ownership Plan (ESOP) Trust are excluded

from the basic earnings per share calculation.

 

 

 

 

 

 

 

 

Diluted earnings / (loss) per share has been calculated using the following data:

 

2010

2009

 

£'000

£'000

 

 

 

 

 

 

Profit after tax from continuing operations

         3,133

         2,003

Loss after tax on discontinued operations

(757)

(173)

 

 

 

Total

         2,376

         1,830

 

 

 

 

 

 

 

No.

No.

 

 

 

Weighted average number of ordinary shares in issue

14,520,877

14,215,866

Dilutive effect of shares under option

     235,000

  595,000

 

 

 

 

 

 

 

14,755,877

14,810,866

 

 

 

 

 

2. Cash and cash equivalents

For the purposes of the consolidated statement of cash flows, cash and cash equivalents comprise the following:

 

 

2010

2009

 

£’000

£’000

 

 

 

Cash at bank and in hand

5,897

3,079

Bank overdrafts

(425)

(1)

 

 

 

 

 

 

 

5,472

3,078

 

 

Cash at bank earns interest at floating rates based on daily bank deposit rates.  The fair value of cash and cash equivalents are considered to be their book value.

 

 

 

 

 

COLEFAX GROUP PLC

NOTES TO THE FINANCIAL INFORMATION

At 30th April 2010

 

 

3.  The above financial information, which has been prepared in accordance with International Financial Reporting Standards as endorsed by the European Union, does not constitute statutory accounts as defined in Section 435 of the Companies Act 2006.

 

The financial information for the year ended 30th April 2010 has been extracted from the statutory accounts which will be delivered to the Registrar of Companies following the company’s annual general meeting. The Independent Auditors’ Report on those financial statements was unqualified and did not contain a statement under Section 498(2) and Section 498(3) of the Companies Act 2006. The comparative financial information is based on the statutory accounts for the financial year ended 30th April 2009 which have been delivered to the Registrar of Companies.

 

 

4. Annual general meeting

The Annual General Meeting of Colefax Group plc will be held at 19-23 Grosvenor Hill, London W1K 3QD on 14th September 2010 at 11.00 a.m.

END

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