CFX

29 January 2013

COLEFAX GROUP PLC

(“Colefax” or the “Group”)

 

Half Year Results

for the six months ended 31 October 2012

 

Colefax is an international designer and distributor of furnishing fabrics & wallpapers and owns a leading interior decorating business.

 

The Group trades under five brand names, serving different segments of the soft furnishings marketplace; these are Colefax and Fowler, Cowtan & Tout, Jane Churchill, Manuel Canovas and Larsen.

 

Key Points

 

 

 

 

 

 

 

 

 

David Green, Chairman, said

 

“The Group’s results for the six months to 31 October 2012 were broadly in line with expectations and reflect challenging market conditions in most of our major markets, especially the UK and Europe.

 

Current trading conditions are still extremely challenging but we are cautiously optimistic about growth in our major market, the USA. Our other principal markets remain weak and I think this situation will continue for at least another year.”

 

 

 

Enquiries:

 

Colefax Group plc

David Green, Chairman

Tel: 020 3178 6378 (today)

 

Robert Barker, Finance Director

 

 

 

 

Biddicks

Katie Tzouliadis

Tel: 020 3178 6378

 

Alex Shilov

 

 

 

 

Peel Hunt LLP

Dan Webster

Tel: 020 7418 8900

(NOMAD & Broker)

Matthew Armitt

 

 

Richard Brown

 


COLEFAX GROUP PLC

 

CHAIRMAN’S STATEMENT

 

Financial Results

 

The Group’s pre-tax profit for the six months to 31 October 2012 decreased by 10% to £1.79 million (2011: £1.98 million) on sales down by 3% at £34.04 million (2011: £35.14 million).  Earnings per share decreased by 11% to 8.8p (2011: 9.9p).  The Group ended the half year with net cash of £5.59 million (2011: £5.30 million).

 

On 13 September 2012 the Group returned £4 million of surplus cash to shareholders through a Tender Offer to purchase and cancel 1.6 million shares at a price of £2.50 per share. The shares purchased represented 11.5% of the Group’s issued share capital.

 

The Board has decided to increase the interim dividend by 3% to 1.90p per share (2011: 1.85p). The interim dividend will be paid on 10 April 2013 to shareholders on the register at the close of business on 8 March 2013.

 

The Group’s results for the six months to 31 October 2012 were broadly in line with expectations and reflect challenging market conditions in most of our major markets, especially the UK and Europe. Profits in the core Fabric Division were up by 4% compared to the prior year and the decline in the Group’s interim profits was due to a weaker first half performance by the Decorating Division and expenses of £130,000 relating to the Tender Offer.

 

 

Product Division

 

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

 

Sales in the Fabric Division, which represent 89% of the Group’s sales, decreased by 2% to £30.21 million (2011: £30.95 million). On a constant currency basis sales were also down by 2% with the impact of a weaker euro offset by a slightly stronger US dollar.

 

Sales in the US, which represent 55% of the Fabric Division’s sales, increased by 3% on a constant currency basis.  Sales are still more than 20% below the peak sales we achieved in 2008 and the pace of recovery remains slow. There are some encouraging signs of an improvement in the US housing market but continued recovery will depend on the performance of the wider economy.

 

Sales in the UK, which represent 19% of the Fabric Division’s sales, were down by 9% compared to last year. London performed slightly better than the rest of the country but overall market conditions were more challenging than we expected. We believe that any recovery will be closely tied to an improvement in the housing market where the number of transactions remains at historically low levels.

 

Sales in Continental Europe, which represent 23% of the Fabric Division’s sales, were down 4% on a constant currency basis.  This is slightly better than we expected at the start of the financial year and reflects more stable economic conditions in the Eurozone. The performance by country has been very mixed. In France, which is our largest European market, sales were down by just 1% but we are concerned about the impact of recent tax rises on the luxury fabric market. In Italy, our second largest market, sales were down 11% reflecting increasingly challenging trading conditions. In Germany, sales increased by 3% helped by our new showroom in Munich which opened in September.

 

Sales in the rest of the world, which represent just 3% of the Fabric Division’s sales, decreased by 16% mainly due to a significant contract order in the prior year. Our focus in the rest of the world is to grow sales from a low base in Russia and the Middle East.

 

·         Furniture – Kingcome Sofas

 

Sales for the six months to October 2012 were flat at £1.12 million and the company made a small profit during the period. Most furniture sales are in the UK and we consider this a reasonable performance given the difficult market for high end furniture. The order book is currently slightly below the level at the same time last year.

 

 

Interior Decorating Division

 

Decorating sales decreased by 12% to £2.71 million (2011: £3.07 million) and the Division made a first half loss of £393,000 compared to a loss of £248,000 last year. Sales and profits vary significantly according to the timing of major projects and this year a high proportion of sales are expected to take place in the second half of the year.

 

 

Prospects

 

Current trading conditions are still extremely challenging but we are cautiously optimistic about growth in our major market, the USA. Our other principal markets remain weak and I think this situation will continue for at least another year. Our business tends to be the last in and the last out of a recession so we will continue to focus on cash generation and run the business in a conservative manner until there is a clear sign of an improvement in market conditions.

 

 

 

 

David Green

Chairman

 

29 January 2013


  COLEFAX GROUP PLC

 

INTERIM GROUP INCOME STATEMENT

 

 

 

 

 

 

 

 

Unaudited

Unaudited

Audited

 

Six months to 31 Oct 2012

Six months to 31 Oct 2011

Year to  30 April 2012

 

£'000

£'000

£'000

 

 

 

 

 

 

 

 

Revenue

       34,038

     35,140

     70,399

 

 

 

 

 

 

 

 

Profit from operations

         1,790

       1,978

       3,151

Finance income

              -

4             

            -

Finance expense

             -

(1)

(3)

 

              -

            3

            (3)

 

 

 

 

 

 

 

 

Profit before taxation

         1,790

       1,981

       3,148

Tax expense

(609)

(595)

(953)

 

 

 

 

 

 

 

 

Profit for the period attributable to equity holders of the parent

         1,181

       1,386

       2,195

 

 

 

 

 

 

 

 

Basic earnings per share

8.8p

9.9p

15.8p

Diluted earnings per share

8.8p

9.9p

15.5p

 

 

 

 

 

 

 

 

 

 

INTERIM GROUP STATEMENT OF COMPREHENSIVE INCOME

 

 

 

 

 

 

 

 

Unaudited

Unaudited

Audited

 

Six months to 31 Oct 2012

Six months to 31 Oct 2011

Year to  30 April 2012

 

£'000

£'000

£'000

 

 

 

 

 

 

 

 

Profit for the period

         1,181

       1,386

       2,195

 

 

 

 

 

 

 

 

Other comprehensive income / (expense):

 

 

 

Currency translation differences on foreign currency net investments

40

202

(62)

 

 

 

 

Cash flow hedges:

 

 

 

Gains / (losses) recognised directly in equity

         70

       (198)

       (120)

Transferred to profit and loss for the period

(155)

(156)

(400)

 

 

 

 

Tax on components of other comprehensive income

(4)

          (10)

57

 

 

 

 

 

 

 

 

Total other comprehensive expense

         (49)

        (162)

        (525)

 

 

 

 

 

 

 

 

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

         1,132

       1,224

       1,670

 

 

 

 

 

 

COLEFAX GROUP PLC

 

INTERIM GROUP STATEMENT OF FINANCIAL POSITION

 

 

 

 

 

 

 

Unaudited

Unaudited

Audited

 

As at 31 Oct 2012

As at 31 Oct 2011

As at 30 April 2012

 

£'000

£'000

£'000

 

 

 

 

 

 

 

 

Non-current assets:

 

 

 

Property, plant and equipment

7,561

7,506

7,319

Deferred tax asset

1,064

1,343

1,062

 

8,625

8,849

8,381

 

 

 

 

Current assets:

 

 

 

Inventories and work in progress

12,777

13,481

12,215

Trade and other receivables

8,510

11,886

8,894

Cash and cash equivalents

5,592

5,661

8,519

 

26,879

31,028

29,628

 

 

 

 

Current liabilities:

 

 

 

Trade and other payables

11,446

13,013

11,064

Current corporation tax

729

502

438

 

12,175

13,515

11,502

 

 

 

 

Net current assets

14,704

17,513

18,126

 

 

 

 

Total assets less current liabilities

23,329

26,362

26,507

 

 

 

 

Non-current liabilities:

 

 

 

Pension liability

224

228

253

 

 

 

 

Net assets

23,105

26,134

26,254

 

 

 

 

Capital and reserves attributable to equity holders of the Company:

 

 

 

Called up share capital

1,231

1,394

1,391

Share premium account

11,148

11,148

11,148

Capital redemption reserve

1,643

1,480

1,483

ESOP share reserve

(113)

(96)

(96)

Share based payment reserve

-

19

19

Foreign exchange reserve

1,254

1,483

1,238

Cash flow hedge reserve

138

320

203

Retained earnings

7,804

10,386

10,868

 

 

 

 

Total equity

23,105

26,134

26,254

 

 

 


COLEFAX GROUP PLC

 

INTERIM GROUP STATEMENT OF CASH FLOWS

 

 

 

 

Unaudited

Unaudited

Audited

 

Six months to 31 Oct 2012

Six months to 31 Oct 2011

Year to 30 April 2012

 

£'000

£'000

£'000

 

 

 

 

 

 

 

 

Operating activities

 

 

 

Profit before taxation

1,790

1,981

3,148

Finance income

-

(4)

-

Finance expense

-

1

3

Depreciation

992

1,026

1,991

Cash flows from operations before changes in working capital

2,782

3,004

5,142

(Increase) / decrease in inventories and work in progress

(549)

(1,139)

115

Decrease in trade and other receivables

306

447

3,213

Increase / (decrease) in trade and other payables

330

127

(1,355)

 

 

 

 

Cash generated from operations

2,869

2,439

7,115

 

 

 

 

 

 

 

 

Taxation paid

 

 

 

UK corporation tax paid

(311)

(649)

(919)

Overseas tax (paid) / received

(2)

208

383

 

(313)

(441)

(536)

 

 

 

 

Net cash inflow from operating activities

2,556

1,998

6,579

 

 

 

 

 

 

 

 

Investing activities

 

 

 

Payments to acquire property, plant and equipment

(1,205)

(2,571)

(3,460)

Receipts from sales of property, plant and equipment

34

17

20

Interest received

-

4

-

Net cash outflow from investing

(1,171)

(2,550)

(3,440)

 

 

 

 

 

 

 

 

Financing activities

 

 

 

Purchase of own shares

(4,000)

(270)

(342)

Interest paid

-

(1)

(3)

Equity dividends paid

(245)

(277)

(534)

Net cash outflow from financing

(4,245)

(548)

(879)

 

 

 

 

 

 

 

 

Net (decrease) / increase in cash and cash equivalents

(2,860)

(1,100)

2,260

Cash and cash equivalents at beginning of period

8,519

6,298

6,298

Exchange (losses) / gains on cash and cash equivalents

(67)

97

(39)

 

 

 

 

Cash and cash equivalents at end of period

5,592

5,295

8,519

 

 

 

 

 

COLEFAX GROUP PLC

 

NOTES

 

 

1.

The Group prepares its annual financial statements in accordance with International Financial Reporting Standards (IFRS). These interim results have been prepared in accordance with the accounting policies expected to be applied in the next annual financial statements for the year ending 30 April 2013.

 

 

 

These standards and interpretations are subject to ongoing review and endorsement by the EU or possible amendment by interpretive guidance from the International Financial Reporting Interpretations Committee ('IFRIC') and are therefore still subject to change.

 

 

2.

During the financial period ended 31 October 2012, the Company paid a final dividend for the year ended 30 April 2012 of 2.00p per ordinary share amounting to £245,000.

 

 

 

The proposed interim dividend of 1.90p (2011: 1.85p) per share is payable on 10 April 2013 to qualifying shareholders on the register at the close of business on 8 March 2013.

 

 

3.

Basic earnings per share have been calculated on the basis of earnings of £1,181,000 (2011: £1,386,000) and on 13,432,609 (2011: 13,959,892) ordinary shares being the weighted average number of ordinary shares in issue during the period.

 

 

4.

Diluted earnings per share have been calculated on the basis of earnings of £1,181,000 (2011: £1,386,000) and on 13,432,609 (2011: 13,974,892) ordinary shares being the weighted average number of ordinary shares in the period adjusted to assume conversion of all dilutive potential ordinary shares of nil (2011: 15,000).

 

 

5.

The financial information for the year ended 30 April 2012 does not constitute the full statutory accounts for that period.  The Annual Report and Financial Statements for the year ended 30 April 2012 have been filed with the Registrar of Companies.  The Independent Auditors' Report on the Annual Report and Financial Statements for the year ended 30 April 2012 was unqualified, did not draw attention to any matters by way of emphasis, and did not contain a statement under 498(2) or 498(3) of the Companies Act 2006.

 

 

6.

Copies of the interim report are being sent to shareholders and will be available from the Company's website on www.colefaxgroupplc.com.  Copies will also be made available on request to members of the public at the Company's registered office at 39 Brook Street, London W1K 4JE.