Colefax Group plc

CFX

21st July 2011

COLEFAX GROUP PLC

 

(“Colefax” or the “Group”)

 

Preliminary Results for the year ended 30th April 2011

 

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 and Tout, Jane Churchill, Manuel Canovas and Larsen.

 

Highlights

 

 

 

 

 

 

 

 

 

David Green, Chairman of Colefax, commented,

 

“This is a strong set of results helped by an exceptional performance from our Decorating Division. We have seen growth in all of our major markets but I still feel that full recovery from the recession is a long way off.

The Group has a strong balance sheet and we are confident that we are well placed to take advantage of any improvements in our markets but until then we will work on cost controls and take a cautious view of the future.”

 

 

Enquiries:

 

Colefax Group plc

David Green, Chairman

Tel: 020 3178 6378 (today)

 

Robert Barker, Finance Director

 

 

 

 

Biddicks

Katie Tzouliadis

Tel: 020 3178 6378

 

Sophie Lane

 

 

 

 

Peel Hunt LLP

Dan Webster

Tel: 020 7418 8900

(NOMAD & Broker)

Richard Brown

 

 


COLEFAX GROUP PLC

CHAIRMAN’S STATEMENT

 

Financial Results

 

The Group’s pre-tax profit from continuing operations for the year to 30th April 2011 increased by 49% to £6.52 million (2010 - £4.39 million) on sales up 12% at £77.72 million (2010 - £69.19 million).  Earnings per share from continuing operations increased by 53% to 33.0p (2010 – 21.6p) and the Group ended the year with net cash of £6.30 million (2010 - £5.47 million).

 

During the year, the Group purchased for cancellation 655,000 shares at an average price of £2.81 per share, representing 4.5% of the Group’s issued share capital at the start of the year.

 

The Board has decided to increase the final dividend by 29% to 2.00p per share (2010 - 1.55p), making a total for the year of 3.85p (2010 – 3.10p), an increase of 24%.  The final dividend will be paid on 11th October 2011 to shareholders on the register at the close of business on 16th September 2011.

 

This year’s results have benefited from a very strong performance from the Decorating Division which should be seen as exceptional. In the Product Division a good recovery in the UK helped offset a disappointing year in the US. The principal challenge at the moment is dealing with some very significant increases in the cost of raw materials which are having a negative impact on the Group’s margin. Currently raw material prices are showing no signs of returning to more historic levels.

 

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 79% of Group sales from continuing operations, increased by 9% to £61.20 million (2010 - £56.00 million). Profit from operations increased by 41% to £4.23 million (2010 - £3.01 million).

 

Sales in the US, which represent 49% of the Fabric Division’s sales, increased by 10% on a constant currency basis.  This sales increase must be seen as disappointing when compared with the dramatic fall in sales of the previous year. We completed the refurbishment of our New York showroom in May 2011 and this should increase sales in our most important US territory. We are in the process of relocating our warehouse and operations to a new location in Manhattan which will be completed by the end of August 2011. The move brings together the design studio and operations for the first time in one location and establishes a long term base for the Group in Manhattan.

UK sales, which represent 21% of the Fabric Division's sales, increased by 10% during the year. There was a stronger recovery in the first half of the year but current trading conditions are weaker and showing signs of further weakening over the next 12 months.

 

Sales in Continental Europe, which represent 27% of the Fabric Division’s sales, increased by 6% on a constant currency basis with most of the increase in the first half of the year.  Many European countries are cautious about the next 12 months and with the current problems in the Eurozone I am not optimistic that we can expect to see continued growth in this area.

 

Sales in the rest of the world, which represent just 3% of the Fabric Division’s sales, were up by 4% in the year. There are a number of opportunities to grow some of these markets such as Russia and China although they currently remain a small part of total sales.

 

 

 

 

·         Furniture – Kingcome Sofas

 

Sales of Kingcome furniture, which account for 3% of Group sales from continuing operations, decreased by 4% to £2.44 million (2010 - £2.55 million). Profit from operations was £211,000 (2010 - £280,000) which represents a reasonable performance for the year given the challenging trading conditions. The majority of furniture sales are made in the UK and it is this area of the Group’s activities which is most at risk from a downturn in the market.

 

Interior Decorating Division

 

Interior decorating sales, which account for 18% of Group sales from continuing operations, increased by 32% to £14.08 million (2010 - £10.63 million). This represents an exceptional performance and resulted in a profit from operations of £2.01 million (2010 - £1.10 million).  During the year, we completed a number of significant projects for a single client which contributed to the near doubling of profits in this division. We are unlikely to produce this level of results again and they must be seen as a one off.

 

Prospects

 

Trading in the second half of the year was weaker than expected and it is still very difficult to accurately forecast how the Group will perform in the next financial year given the current economic climate. I still feel that full recovery from the recession is a long way off. The recovery in our largest market the US is slower than we would have hoped and sales are still well below pre-recession levels. The UK market recovered well last year but we are now starting to see signs of weakness. These factors combined with the Decorating Division returning to more normal levels of activity will mean that our results for the coming year are likely to be lower than this year.  

The Group has a strong balance sheet and we are confident that we are well placed to take advantage of any improvements in our markets but until then we will work on cost controls and take a cautious view of the future.

 

 

David Green

Chairman

21st July 2011

 

 

 


COLEFAX GROUP PLC

GROUP INCOME STATEMENT

For the year ended 30th April 2011

 

 

 

 

 

Restated

 

 

 

 

2011

 

2010

 

 

 

 

£'000

 

£'000

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Continuing operations:

 

 

 

 

 

 

 

 

 

 

 

 

 

Revenue

     77,722

 

     69,188

 

 

 

Cost of sales

       34,929

 

       31,287

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Gross profit

       42,793

 

       37,901

 

 

 

Operating expenses

      36,345

 

      33,514

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Profit from operations

         6,448

 

         4,387

 

 

 

 

 

 

 

 

 

 

Finance income

              74

 

              11

 

 

 

Finance expense

(1)

 

(10)

 

 

 

 

              73

 

                1

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Profit before taxation

         6,521

 

         4,388

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Tax expense

 

 

 

 

 

 

-UK

(1,329)

 

(1,236)

 

 

 

-Overseas

(436)

 

(19)

 

 

 

 

(1,765)

 

(1,255)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Profit from continuing operations

         4,756

 

         3,133

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Trading loss on discontinued operations, net of tax

(111)

 

(357)

 

 

 

 

 

 

 

 

 

 

Loss on disposal, net of tax

(72)

 

(400)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Loss on discontinued operations, net of tax

(183)

 

(757)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Profit for the year attributable to equity holders of the parent

         4,573

 

         2,376

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic earnings per share

           31.8

p

           16.4

p

 

 

 

 

 

 

 

 

 

Diluted earnings per share

           31.5

p

           16.1

p

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Continuing operations:

 

 

 

 

 

 

Basic earnings per share

           33.0

p

           21.6

p

 

 

 

 

 

 

 

 

 

Diluted earnings per share

           32.8

p

           21.2

p

 

 

 

 

 

 

 

 

 


COLEFAX GROUP PLC

GROUP STATEMENT OF COMPREHENSIVE INCOME

For the year ended 30th April 2011

 

 

 

 

2011

 

2010

 

 

£'000

 

£'000

 

 

 

 

 

 

 

 

 

 

 

Profit for the year

   4,573

 

   2,376

 

 

 

 

 

 

 

 

 

 

 

Other comprehensive income:

 

 

 

 

 

 

 

 

 

Currency translation differences on foreign currency net investments

(610)

 

(412)

 

 

 

 

 

 

Cash flow hedges:

 

 

 

 

Gains recognised directly in equity

     1,012

 

        596

 

Transferred to profit and loss for the year

(235)

 

(71)

 

 

 

 

 

 

Tax on components of other comprehensive income

50

 

(49)

 

 

 

 

 

 

 

 

 

 

 

Total other comprehensive income

    217

 

    64

 

 

 

 

 

 

 

 

 

 

 

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

       4,790

 

       2,440

 

 

 

 

 

 

 

 

 

 

 

 


COLEFAX GROUP PLC

GROUP STATEMENT OF FINANCIAL POSITION

At 30th April 2011

 

 

2011

2010

 

£'000

£'000

 

 

 

 

 

 

Non-current assets:

 

 

Property, plant and equipment

        5,909

        5,309

Deferred tax asset

        1,372

        1,639

 

        7,281

        6,948

 

 

 

Current assets:

 

 

Inventories and work in progress

      12,283

      11,886

Trade and other receivables

      12,640

      12,380

Cash and cash equivalents

        7,132

        5,897

 

      32,055

      30,163

 

 

 

Current liabilities:

 

 

Trade and other payables

13,042

12,598

Current corporation tax

            388

            532

Provisions

       205

       606

 

      13,635

      13,736

 

 

 

 

 

 

Net current assets

       18,420

       16,427

 

 

 

Total assets less current liabilities

       25,701

       23,375

 

 

 

Non-current liabilities:

 

 

Pension liability

           241

           320

 

 

 

Net assets

       25,460

       23,055

 

 

 

Capital and reserves attributable to equity holders of the Company:

 

 

Called up share capital

        1,405

        1,470

Share premium account

       11,148

       11,148

Capital redemption reserve

         1,469

         1,404

ESOP share reserve

(96)

(18)

Share based payment reserve

            94

            196

Foreign exchange reserve

         1,383

         1,741

Cash flow hedge reserve

            583

                8

Retained earnings

         9,474

         7,106

Total equity

       25,460

       23,055

 

 

 

The financial statements were approved by the board of directors and authorised for issue on 21st July 2011.

 

D. B. Green Director

R. M. Barker Director


COLEFAX GROUP PLC

GROUP STATEMENT OF CASH FLOWS

For the year ended 30th April 2011

 

 

2011

2010

 

£'000

£'000

 

 

 

 

 

 

Operating activites

 

 

Profit before taxation - continuing operations

        6,521

        4,388

Loss before taxation - discontinued operations

(278)

(1,147)

Finance income

(74)

(11)

Finance expense

              1

              10

Depreciation

         2,044

         1,883

 

 

 

Cash flows from operations before changes in working capital

         8,214

         5,123

 

 

 

(Increase) / decrease in inventories and work in progress

     (566)

     1,193

Decrease / (increase) in trade and other receivables

316

(848)

Decrease in trade and other payables

(205)

(39)

 

 

 

Cash generated from operations

         7,759

         5,429

 

 

 

 

 

 

Taxation paid

 

 

UK corporation tax paid

(1,280)

(530)

Overseas tax paid

(279)

(106)

 

(1,559)

(636)

 

 

 

Net cash inflow from operating activities

         6,200

         4,793

 

 

 

 

 

 

Investing activities

 

 

Payments to acquire property, plant and equipment

(2,885)

(1,716)

Receipts from sales of property, plant and equipment

            29

            106

Interest received

              74

              11

Purchase of ESOP shares

(95)

-

Net cash outflow from investing

(2,877)

(1,599)

 

 

 

 

 

 

Financing activities

 

 

Purchase of own shares

(1,840)

(137)

Interest paid

(1)

(10)

Equity dividends paid

(486)

(412)

 

 

 

Net cash outflow from financing

(2,327)

(559)

 

 

 

 

 

 

Net increase in cash and cash equivalents

         996

         2,635

Cash and cash equivalents at beginning of year

       5,472

       3,078

Exchange losses on cash and cash equivalents

(170)

(241)

 

 

 

Cash and cash equivalents at end of year

        6,298

        5,472

 

 


 

COLEFAX GROUP PLC

GROUP STATEMENT OF CHANGES IN EQUITY

For the year ended 30th April 2011

 

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 2010

1,470

 11,148

  1,404

(18)

     196

1,741

8

 7,106

23,055

Profit for the year

-

-

-

-

-

-

-

4,573

4,573

Foreign exchange

-

-

-

-

-

(610)

-

-

(610)

 

Cash flow hedges:

 

 

 

 

 

 

 

 

 

Gains

-

-

-

-

-

-

1,012

-

1,012

Transfers

-

-

-

-

-

-

(235)

-

(235)

 

Tax on other comprehensive income

-

-

-

-

-

252

(202)

-

50

Share buybacks

(65)

          -

         65

          -

             -

              -

             -

(1,840)

(1,840)

ESOP shares granted

             -

             -

                -

          17

              19

              -

             -

             -

          36

Share options exercised

             -

             -

                -

             -

(121)

              -

             -

         121

             -

Dividends paid

           -

           -

              -

           -

              -

              -

             -

(486)

(486)

Purchase of ESOP shares

           -

           -

              -

(95)

              -

            -

           -

          -

          (95)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

At 30 April 2011

      1,405

    11,148

         1,469

(96)

         94

    1,383

         583

   9,474

25,460

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

At 1 May 2009

1,481

 11,148

  1,393

(30)

     475

2,055

(370)

 4,981

21,133

Profit for the year

-

-

-

-

-

-

-

2,376

2,376

Foreign exchange

-

-

-

-

-

(412)

-

-

(412)

 

Cash flow hedges:

 

 

 

 

 

 

 

 

 

Gains

-

-

-

-

-

-

596

-

596

Transfers

-

-

-

-

-

-

(71)

-

(71)

 

Tax on other comprehensive income

-

-

-

-

-

98

(147)

-

(49)

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

 

 

 

 

 

 

 

 

 

 


 

COLEFAX GROUP PLC

NOTES TO THE FINANCIAL INFORMATION

At 30th April 2011

 

 

1. Accounting policies

The principal accounting policies adopted by the Group have been applied consistently to the years presented, except as stated below.

 

Revenue has been restated in 2010 to reclassify sampling and freight income which had previously been reported within cost of sales and operating expenses. The reclassification does not result in a change to profit from operations or the statement of financial position.

 

 

 

2. Earnings per share

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

 

2011

2010

 

£'000

£'000

 

 

 

 

 

 

Profit after tax from continuing operations

         4,756

3,133

Loss after tax on discontinued operations

(183)

(757)

 

 

 

Total

         4,573

         2,376

 

 

 

 

 

 

 

No.

No.

 

 

 

Weighted average number of ordinary shares in issue

 14,396,731

 14,520,877

 

 

 

 

 

 

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:

 

2011

2010

 

£'000

£'000

 

 

 

 

 

 

Profit after tax from continuing operations

         4,756

         3,133

Loss after tax on discontinued operations

(183)

(757)

 

 

 

Total

         4,573

         2,376

 

 

 

 

 

 

 

No.

No.

 

 

 

Weighted average number of ordinary shares in issue

14,396,731

14,520,877

Dilutive effect of shares under option

     115,000

  235,000

 

 

 

 

 

 

 

14,511,731

14,755,877

 

 

 

 

 

 

 

 

 

 

 

 

 

 

COLEFAX GROUP PLC

NOTES TO THE FINANCIAL INFORMATION

At 30th April 2011

 

 

3. Cash and cash equivalents

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

 

2011

2010

 

£’000

£’000

 

 

 

Cash at bank and in hand

7,132

5,897

Bank overdrafts

(834)

(425)

 

 

 

 

 

 

 

6,298

5,472

 

 

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.

 

 

 

4.  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 2011 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 2010 which have been delivered to the Registrar of Companies.

 

 

 

5. Annual general meeting

The Annual General Meeting of Colefax Group plc will be held at 19-23 Grosvenor Hill, London W1K 3QD on 13th September 2011 at 11.00 a.m.