Colefax Group plc

CFX

24th July 2013

COLEFAX GROUP PLC

(“Colefax” or the “Group”)

 

Preliminary Results for the year ended 30th April 2013

 

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,

 

“The increase in the Group’s profit was mainly due to improved profitability in the Fabric Division although overall sales remained flat. The Decorating Division was affected by delays to several key projects and as a result profits were well below expectations.

 

Trading conditions in our main market, the US, have continued to improve and we are optimistic about growth prospects. However trading in the UK and Europe remains difficult and we have budgeted for a further sales decline in the current year. We hope that these markets will bottom out this year and we will then see a return to growth. As a result we will continue to invest in our portfolio of brands in anticipation of more favourable market conditions.”

 

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 year to 30th April 2013 increased by 13% to £3.55 million (2012: £3.15 million) on flat sales of £70.62 million (2012: £70.40 million).  Earnings per share increased by 15% to 18.2p (2012: 15.8p).  The Group ended the year with net cash of £7.63 million (2012: £8.52 million).

 

On 13th September 2012 the Group returned £4 million of surplus cash to shareholders by way of a Tender Offer to purchase for cancellation 1.6 million shares at a price of £2.50 per share. The shares cancelled represented 11.5% of the Group’s issued share capital at the start of the year.

 

The Board has decided to propose an increase in the final dividend of 5% to 2.10p per share (2012: 2.00p) making a total for the year of 4.00p, an increase of 4% (2012: 3.85p). The final dividend will be paid on 10th October 2013 to shareholders on the register at the close of business on 13th September 2013.

 

The increase in the Group’s profit was mainly due to improved profitability in the Fabric Division although overall sales remained flat. Sales increased by 6% in the US but this increase was offset by a sales decline of 9% in the UK and 4% in Europe. The Decorating Division was affected by delays to several key projects and as a result profits were well below expectations.

 

 

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 87% of Group turnover, were flat at £61.13 million (2012: £61.27 million). Profit from operations increased by 7% to £3.41 million (2012: £3.18 million) mainly due to an increase in margin resulting from a stronger US Dollar which averaged $1.57 compared to $1.60 last year.

 

Sales in the US, which represent 54% of the Fabric Division’s turnover, increased by 6% on a constant currency basis.  The US market continued to recover throughout the year reflecting a significant improvement in the housing market and growth in the general economy. Sales in the US are still 21% below the peak achieved in 2008 and we believe that there is considerable scope for further recovery.  We are continuing to invest in our sales network and later this year we are planning to move to a new showroom in our Washington DC territory.

 

Sales in the UK, which represent 19% of the Fabric Division’s turnover, decreased by 9% during the year reflecting challenging market conditions. The strength of the high end housing market in London has not been sufficient to offset difficult trading in the wider UK market and we believe that trading conditions will remain subdued until there is a sustained improvement in the housing market.

 

Sales in Continental Europe, which represent 24% of the Fabric Division’s turnover, were down 4% on a constant currency basis.  This performance was better than we expected at the start of the year especially in our largest market, France, where sales increased by 1%. In Italy, trading conditions were extremely difficult and sales declined by 10%. Sales in Germany were flat and this country has now overtaken Italy as our second largest market in Europe. Overall we expect trading conditions in Europe to remain challenging for at least another year and we are particularly concerned about France where there are signs that the economy is weakening.

 

 

 

Sales in the rest of the world, which represent just 3% of the Fabric Division’s turnover, decreased by 8% mainly due to one large contract order in the prior year. Our largest markets in the rest of the world are China, Russia and the Middle East and we will continue to focus on these territories to grow sales from a low base.

 

 

·         Furniture – Kingcome Sofas

 

Sales of Kingcome furniture, which account for 3% of Group turnover, were flat at £2.28 million (2012: £2.28 million). Operating profit was £79,000 compared to £63,000 last year. Market conditions for high end furniture have been extremely difficult and we expect this to continue in the current year. Furniture is the Group’s only manufacturing activity and profits are very sensitive to small fluctuations in sales.

 

 

Interior Decorating Division

 

Decorating sales, which account for 10% of Group turnover, increased by 5% to £7.21 million (2012: £6.85 million). The division made a small operating profit of £54,000 compared to a loss of £87,000 last year. At the start of the year we were expecting a significant improvement in decorating profits and this year’s disappointing result was largely due to delays to building work outside of our control. However, as a result of these delays the division has started the current year with a very healthy level of deposits.

 

 

Prospects

 

Trading conditions in our main market, the US, have continued to improve and we are optimistic about growth prospects. However trading in the UK and Europe remains difficult and we have budgeted for a further sales decline in the current year. We hope that these markets will bottom out this year and we will then see a return to growth. As a result we will continue to invest in our portfolio of brands in anticipation of more favourable market conditions. The Group has a strong balance sheet with cash of £7.6 million and is well placed to benefit from any recovery in trading conditions.

 

 

 

David Green

Chairman

23rd July 2013

 

 

 


COLEFAX GROUP PLC

GROUP INCOME STATEMENT

For the year ended 30th April 2013

 

 

 

2013

 

2012

 

 

 

 

£'000

 

£'000

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Revenue

     70,619

 

     70,399

 

 

 

Cost of sales

       31,518

 

       31,595

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Gross profit

       39,101

 

       38,804

 

 

 

Operating expenses

      35,554

 

      35,653

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Profit from operations

         3,547

 

         3,151

 

 

 

 

 

 

 

 

 

 

Finance income

              1

 

              -

 

 

 

Finance expense

(1)

 

(3)

 

 

 

 

-

 

             (3)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Profit before taxation

         3,547

 

         3,148

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Tax expense

 

 

 

 

 

 

-UK

(554)

 

(691)

 

 

 

-Overseas

(659)

 

(262)

 

 

 

 

(1,213)

 

(953)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Profit for the year attributable to equity holders of the parent

         2,334

 

         2,195

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic earnings per share

           18.2

p

           15.8

p

 

 

 

 

 

 

 

 

 

Diluted earnings per share

           18.2

p

           15.8

p

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

GROUP STATEMENT OF COMPREHENSIVE INCOME

For the year ended 30th April 2013

 

 

 

2013

 

2012

 

 

£'000

 

£'000

 

 

 

 

 

 

 

 

 

 

 

Profit for the year

   2,334

 

   2,195

 

 

 

 

 

 

 

 

 

 

 

Other comprehensive income / (expense):

 

 

 

 

 

 

 

 

 

Exchange differences on translation of foreign operations

517

 

(62)

 

 

 

 

 

 

Cash flow hedges:

 

 

 

 

Losses recognised directly in equity

     (50)

 

      (120)

 

Transferred to profit and loss for the year

(181)

 

(400)

 

 

 

 

 

 

Tax on components of other comprehensive income

(77)

 

57

 

 

 

 

 

 

 

 

 

 

 

Total other comprehensive income / (expense)

     209     

 

    (525)

 

 

 

 

 

 

 

 

 

 

 

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

       2,543

 

       1,670

 

 

 

 

 

 

 

 

 

 

 


COLEFAX GROUP PLC

GROUP STATEMENT OF FINANCIAL POSITION

At 30th April 2013

 

 

2013

2012

 

£'000

£'000

 

 

 

 

 

 

Non-current assets:

 

 

Property, plant and equipment

        7,699

        7,319

Deferred tax asset

        499

        1,062

 

        8,198

        8,381

 

 

 

Current assets:

 

 

Inventories and work in progress

      13,176

      12,215

Trade and other receivables

      9,995

      8,894

Cash and cash equivalents

        7,630

        8,519

 

      30,801

      29,628

 

 

 

Current liabilities:

 

 

Trade and other payables

13,785

11,064

Current corporation tax

            666

            438

 

      14,451

      11,502

 

 

 

 

 

 

Net current assets

       16,350

       18,126

 

 

 

Total assets less current liabilities

       24,548

       26,507

 

 

 

Non-current liabilities:

 

 

Pension liability

           265

           253

 

 

 

Net assets

       24,283

       26,254

 

 

 

Capital and reserves attributable to equity holders of the Company:

 

 

Called up share capital

        1,231

        1,391

Share premium account

       11,148

       11,148

Capital redemption reserve

         1,643

         1,483

ESOP share reserve

(113)

(96)

Share based payment reserve

            -

            19

Foreign exchange reserve

         1,622

         1,238

Cash flow hedge reserve

            28

            203

Retained earnings

       8,724

       10,868

Total equity

       24,283

       26,254

 

 

 

The financial statements were approved by the board of directors and authorised for issue on 23rd July 2013.

 

D. B. Green Director

R. M. Barker Director


COLEFAX GROUP PLC

GROUP STATEMENT OF CASH FLOWS

For the year ended 30th April 2013

 

 

2013

2012

 

£'000

£'000

 

 

 

 

 

 

Operating activities

 

 

Profit before taxation

        3,547

        3,148

Finance income

(1)

-

Finance expense

              1

              3

Depreciation

         2,036

         1,991

 

 

 

Cash flows from operations before changes in working capital

         5,583

         5,142

 

 

 

(Increase) / decrease in inventories and work in progress

     (880)

     115

(Increase) / decrease in trade and other receivables

(1,189)

3,213

Increase / (decrease) in trade and other payables

2,521

(1,355)

 

 

 

Cash generated from operations

         6,035

         7,115

 

 

 

 

 

 

Taxation paid

 

 

UK corporation tax paid

(610)

(919)

Overseas tax received

130

383

 

(480)

(536)

 

 

 

Net cash inflow from operating activities

         5,555

         6,579

 

 

 

 

 

 

Investing activities

 

 

Payments to acquire property, plant and equipment

(2,178)

(3,460)

Receipts from sales of property, plant and equipment

            56

            20

Interest received

              1

              -

Net cash outflow from investing

(2,121)

(3,440)

 

 

 

 

 

 

Financing activities

 

 

Purchase of own shares

(4,000)

(342)

Interest paid

(1)

(3)

Equity dividends paid

(478)

(534)

 

 

 

Net cash outflow from financing

(4,479)

(879)

 

 

 

 

 

 

Net (decrease) / increase in cash and cash equivalents

         (1,045)

         2,260

Cash and cash equivalents at beginning of year

       8,519

       6,298

Exchange gains / (losses) on cash and cash equivalents

156

(39)

 

 

 

Cash and cash equivalents at end of year

        7,630

        8,519

 

 


 

COLEFAX GROUP PLC

GROUP STATEMENT OF CHANGES IN EQUITY

For the year ended 30th April 2013

 

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 2012

1,391

 11,148

  1,483

(96)

     19

1,238

203

 10,868

26,254

Profit for the year

-

-

-

-

-

-

-

2,334

2,334

Foreign exchange

-

-

-

-

-

517

-

-

517

 

Cash flow hedges:

 

 

 

 

 

 

 

 

 

Losses

-

-

-

-

-

-

(50)

-

(50)

Transfers

-

-

-

-

-

-

(181)

-

(181)

 

Tax on other comprehensive income

-

-

-

-

-

(133)

56

-

(77)

Share buybacks

(160)

          -

         160

          -

             -

              -

             -

(4,000)

(4,000)

Share options lapsed

             -

             -

                -

(17)

(19)

              -

             -

         -

             (36)

Dividends paid

           -

           -

              -

           -

              -

              -

             -

(478)

(478)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

At 30 April 2013

      1,231

    11,148

         1,643

(113)

         -

    1,622

         28

   8,724

24,283

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

At 1 May 2011

1,405

 11,148

  1,469

(96)

     94

1,383

583

 9,474

25,460

Profit for the year

-

-

-

-

-

-

-

2,195

2,195

Foreign exchange

-

-

-

-

-

(62)

-

-

(62)

 

Cash flow hedges:

 

 

 

 

 

 

 

 

 

Losses

-

-

-

-

-

-

(120)

-

(120)

Transfers

-

-

-

-

-

-

(400)

-

(400)

 

Tax on other comprehensive income

-

-

-

-

-

(83)

140

-

57

Share buybacks

(14)

          -

         14

          -

             -

              -

             -

(342)

(342)

Share options exercised

             -

             -

                -

             -

(75)

              -

             -

         75

             -

Dividends paid

           -

           -

              -

           -

              -

              -

             -

(534)

(534)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

At 30 April 2012

      1,391

    11,148

         1,483

(96)

         19

    1,238

         203

   10,868

26,254

 

 

 

 

 

 

 

 

 

 


 

COLEFAX GROUP PLC

NOTES TO THE FINANCIAL INFORMATION

At 30th April 2013

 

 

1. Earnings per share

Basic earnings per share have been calculated on the basis of profit on ordinary activities after tax of £2,334,000 (2012: £2,195,000) and on 12,846,164 (2012: 13,918,662) ordinary shares, being the weighted average number of ordinary shares in issue during the year. Shares owned by the Colefax Group Plc Employees’ Share Ownership Plan (ESOP) Trust are excluded from the basic earnings per share calculation.

 

Diluted earnings per share have been calculated on the basis of profit on ordinary activities after tax of £2,334,000 (2012: £2,195,000) and on 12,846,164 (2012: 13,933,662) ordinary shares, being the weighted average number of ordinary shares in issue during the year, calculated as follows:

 

 

 

 

 

No.

No.

 

 

 

Weighted average number of ordinary shares in issue

12,846,164

13,918,662

Dilutive effect of shares under option

     -

  15,000

 

 

 

 

 

 

 

12,846,164

13,933,662

 

 

 

 

 

 

2. Cash and cash equivalents

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

 

2013

2012

 

£’000

£’000

 

 

 

Cash at bank and in hand

7,630

8,519

Bank overdrafts

-

-

 

 

 

 

 

 

 

7,630

8,519

 

 

The fair value of cash and cash equivalents are considered to be their book value.

 

 

 

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 2013 has been extracted from the statutory accounts which will be delivered to the Registrar of Companies following the company’s annual general meeting. The comparative financial information is based on the statutory accounts for the financial year ended 30th April 2012 which have been delivered to the Registrar of Companies. The Independent Auditors’ Report on both of those financial statements was unqualified and did not contain a statement under Section 498(2) and Section 498(3) of the Companies Act 2006.

 

 

 

4. Annual general meeting

The Annual General Meeting of Colefax Group plc will be held at 19-23 Grosvenor Hill, London W1K 3QD on 10th September 2013 at 11.00 a.m.