Colefax Group plc

CFX

17th July 2014

COLEFAX GROUP PLC

(“Colefax” or the “Group”)

 

Preliminary Results for the year ended 30th April 2014

 

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

 

  • Sales up 11% to £78.04m (2013: £70.62m)

 

  • Pre-tax profit up 38% to £4.89m (2013: £3.55m)

 

  • Earnings per share up 53% to 27.9p (2013: 18.2p)

 

  • £4.25m of cash returned to shareholders via a Tender Offer

 

  • Net cash of £4.06m (2013: £7.63m)

 

  • Proposed increase in final dividend to 2.20p per share, taking total for the year to 4.20p, an increase of 5% (2013: 4.00p)

 

  • Fabric Division - sales in core US market up by 7%, with UK sales up 8% and Europe up 4% (on a constant currency basis)

 

  • Decorating Division – exceptionally strong performance, benefitting from completion of last year’s delayed projects

 

  • Positive trading outlook with continuing recovery in the US and UK – but adverse impact from the strength of Sterling against the US dollar

 

David Green, Chairman of Colefax, commented,

 

“The main reason for the 38% increase in the Group’s pre-tax profit was a strong performance from the Decorating Division. In the Group’s Fabric Division, sales increased by 6% on a constant currency basis, reflecting the ongoing recovery in our core US market and an improvement in UK trading in the second half of the year.  In contrast, trading in Europe remained challenging in most of our major markets.

 

Trading conditions in our two principal markets, the US and UK, continue to trend upwards but in low single figures and Continental Europe remains challenging. Although we remain optimistic about growth prospects, the high proportion of Group sales made in the US market and invoiced in US dollars means that the strength of Sterling will have an adverse impact on profitability.  In addition, the Decorating Division is expected to return to a more normal level of activity following an exceptional performance last year. 

 

We remain optimistic about the long term future and will continue to invest in new product and strengthening our distribution network.”

 

 

 

 

Enquiries:

 

Colefax Group plc

David Green, Chairman

Tel: 020 3178 6378 (today)

 

Robert Barker, Finance Director

 

 

 

 

KTZ Communications

Katie Tzouliadis

Tel: 020 3178 6378

 

Deborah Walter

 

 

 

 

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 2014 increased by 38% to £4.89 million (2013: £3.55 million) on sales up by 11% to £78.04 million (2013: £70.62 million).  Earnings per share increased by 53% to 27.9p (2013: 18.2p).  The Group ended the year with net cash of £4.06 million (2013: £7.63 million).

 

On 13th February 2014 the Group returned £4.25 million of surplus cash to shareholders through a Tender Offer which resulted in the purchase and cancellation of 1.06 million shares at a price of £4.00 per share. The shares cancelled represented 8.6% of the Group’s issued share capital at the start of the year.

 

The Board has decided to increase the final dividend by 5% to 2.20p per share (2013: 2.10p) making a total for the year of 4.20p (2013: 4.00p), an increase of 5%. The final dividend will be paid on 9th October 2014 to shareholders on the register at the close of business on 12th September 2014.

 

The main reason for the 38% increase in the Group’s pre-tax profit was a strong performance from the Decorating Division, which made an operating profit of £985,000 compared to a profit of £54,000 last year.  This improvement was partly due to the completion of projects delayed from the prior year.  In the Group’s Fabric Division, sales increased by 6% on a constant currency basis, reflecting the ongoing recovery in our core US market and an improvement in UK trading in the second half of the year.  In contrast, trading in Europe remained challenging in most of our major markets.

 

 

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 83% of Group turnover, increased by 6% to £64.52 million (2013: £61.13 million). Operating profit increased by 15% to £3.91 million (2013: £3.41 million) but was adversely impacted by the progressive weakening of the US dollar in the second half of the year.

 

Sales in the US, which represent 53% of the Fabric Division’s turnover, increased by 5% and by 7% on a constant currency basis.  The US market continued to recover although sales were still 16% below the peak achieved prior to the financial crisis.  We believe that growth in the second half was affected by the severe cold weather which affected much of North America from December to March. The US is our largest and most important market and we have continued to invest in our distribution network with a new showroom in Washington which is now scheduled to open in October 2014.

 

Sales in the UK, which represent 20% of the Fabric Division’s turnover, increased by 8% during the year reflecting the significant improvement in the UK housing market which started in September 2013. Trading was particularly strong in London although all regions showed growth in the second half of the year.

 

Sales in Continental Europe, which represent 24% of the Fabric Division’s turnover, increased by 6% and by 4% on a constant currency basis.  Trading performance varied significantly from country to country. In France, which is our largest market, sales decreased by 3% on a constant currency basis. In Germany, which has now overtaken Italy as our second largest market, sales increased by 8% on a constant currency basis and, in Italy, sales declined by 5%.  We are opening a new showroom in Milan in October as part of our long term commitment to the Italian market and we believe it will help to stabilise and grow sales. 

 

Sales in the rest of the world, which represent just 3% of the Fabric Division’s turnover, increased by 10%.  This increase was mainly due to growth in the Middle East and Russia and we will continue to focus on growing these two important territories. 

 

 

·         Furniture – Kingcome Sofas

 

Sales of Kingcome furniture, which account for 3% of Group turnover, were £2.27 million (2013: £2.28 million) and operating profit was £24,000 compared to £79,000 last year. Furniture is the Group’s only manufacturing activity and profitability is very sensitive to small fluctuations in sales due to the relatively fixed factory costs. 

 

 

Interior Decorating Division

 

Decorating sales, which account for 14% of Group turnover, increased by 56% to £11.24 million (2013: £7.21 million). Operating profit was £985,000 compared to £54,000 last year with the strong performance partly due to the completion of a number of projects which were delayed from the second half of last year. The nature of this business is that profits fluctuate from year to year according to the timing of major projects.  The Decorating Division includes sales of antiques which increased by 1% to £1.38 million (2013: £1.36 million).

 

 

Prospects

 

Trading conditions in our two principal markets, the US and UK, continue to trend upwards but in low single figures.  The rate of increase is slightly lower than expected given the current strength of the housing recovery in both these markets, but we do tend to lag any changes. Continental Europe remains challenging and there are currently no signs of recovery in any of our major countries.  Sales in the rest of the world are mixed, but overall we expect continued growth.

 

Although we remain optimistic about growth prospects, the high proportion of Group sales made in the US market and invoiced in US dollars means that the strength of Sterling will have an adverse impact on profitability.  Since the beginning of September Sterling has strengthened against the US dollar by 13% and there is no sign that this will reverse in the short term. In addition, the Decorating Division is expected to return to a more normal level of activity following an exceptional performance last year.  We remain optimistic about the long term future and will continue to invest in new product and strengthening our distribution network.

 

 

 

David Green

Chairman

16th July 2014

 

 

 


COLEFAX GROUP PLC

GROUP INCOME STATEMENT

For the year ended 30th April 2014

 

 

 

2014

 

2013

 

 

 

 

£'000

 

£'000

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Revenue

     78,035

 

     70,619

 

 

 

Cost of sales

       36,418

 

       31,518

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Gross profit

       41,617

 

       39,101

 

 

 

Operating expenses

      36,695

 

      35,554

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Profit from operations

         4,922

 

         3,547

 

 

 

 

 

 

 

 

 

 

Finance income

              4

 

              1

 

 

 

Finance expense

(41)

 

(1)

 

 

 

 

(37)

 

             -

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Profit before taxation

         4,885

 

         3,547

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Tax expense

 

 

 

 

 

 

-UK

(875)

 

(554)

 

 

 

-Overseas

(657)

 

(659)

 

 

 

 

(1,532)

 

(1,213)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Profit for the year attributable to equity holders of the parent

         3,353

 

         2,334

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic earnings per share

           27.9

p

           18.2

p

 

 

 

 

 

 

 

 

 

Diluted earnings per share

           27.9

p

           18.2

p

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

GROUP STATEMENT OF COMPREHENSIVE INCOME

For the year ended 30th April 2014

 

 

2014

 

2013

 

 

£'000

 

£'000

 

 

 

 

 

 

 

 

 

 

 

Profit for the year

3,353

 

   2,334

 

 

 

 

 

 

 

 

 

 

 

Other comprehensive (expense) / income :

 

 

 

 

 

 

 

 

 

Exchange differences on translation of foreign operations

(797)

 

517

 

 

 

 

 

 

Cash flow hedges:

 

 

 

 

Gains / (losses) recognised directly in equity

     135

 

      (50)

 

Transferred to profit and loss for the year

(171)

 

(181)

 

 

 

 

 

 

Tax on components of other comprehensive income

248

 

(77)

 

 

 

 

 

 

 

 

 

 

 

Total other comprehensive (expense) / income

     (585)     

 

    209

 

 

 

 

 

 

 

 

 

 

 

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

       2,768

 

       2,543

 

 

 

 

 

 

 

 

 

 

 


COLEFAX GROUP PLC

GROUP STATEMENT OF FINANCIAL POSITION

At 30th April 2014

 

2014

2013

 

£'000

£'000

 

 

 

 

 

 

Non-current assets:

 

 

Property, plant and equipment

        6,810

        7,699

Deferred tax asset

        590

        499

 

        7,400

        8,198

 

 

 

Current assets:

 

 

Inventories and work in progress

      13,526

      13,176

Trade and other receivables

      10,055

      9,995

Cash and cash equivalents

        4,298

        7,630

 

      27,879

      30,801

 

 

 

Current liabilities:

 

 

Trade and other payables

12,526

13,785

Current corporation tax

            425

            666

 

      12,951

      14,451

 

 

 

 

 

 

Net current assets

       14,928

       16,350

 

 

 

Total assets less current liabilities

       22,328

       24,548

 

 

 

Non-current liabilities:

 

 

Pension liability

           117

           265

 

 

 

Net assets

       22,211

       24,283

 

 

 

Capital and reserves attributable to equity holders of the Company:

 

 

Called up share capital

        1,125

        1,231

Share premium account

       11,148

       11,148

Capital redemption reserve

         1,749

         1,643

ESOP share reserve

(113)

(113)

Share based payment reserve

            -

            -

Foreign exchange reserve

         1,065

         1,622

Cash flow hedge reserve

            -

            28

Retained earnings

       7,237

       8,724

Total equity

       22,211

       24,283

 

 

 

The financial statements were approved by the board of directors and authorised for issue on 16th July 2014.

 

D. B. Green Director

R. M. Barker Director


COLEFAX GROUP PLC

GROUP STATEMENT OF CASH FLOWS

For the year ended 30th April 2014

 

 

2014

2013

 

£'000

£'000

 

 

 

 

 

 

Operating activities

 

 

Profit before taxation

        4,885

        3,547

Finance income

(4)

(1)

Finance expense

              41

              1

Depreciation

         2,078

         2,036

 

 

 

Cash flows from operations before changes in working capital

         7,000

         5,583

 

 

 

Increase in inventories and work in progress

     (503)

     (880)

Increase in trade and other receivables

(380)

(1,189)

(Decrease) / increase in trade and other payables

(1,250)

2,521

 

 

 

Cash generated from operations

         4,867

         6,035

 

 

 

 

 

 

Taxation paid

 

 

UK corporation tax paid

(660)

(610)

Overseas tax (paid) / received

(967)

130

 

(1,627)

(480)

 

 

 

Net cash inflow from operating activities

         3,240

         5,555

 

 

 

 

 

 

Investing activities

 

 

Payments to acquire property, plant and equipment

(1,583)

(2,178)

Receipts from sales of property, plant and equipment

            17

            56

Interest received

              4

              1

Net cash outflow from investing

(1,562)

(2,121)

 

 

 

 

 

 

Financing activities

 

 

Purchase of own shares

(4,362)

(4,000)

Interest paid

(29)

(1)

Equity dividends paid

(478)

(478)

 

 

 

Net cash outflow from financing

(4,869)

(4,479)

 

 

 

 

 

 

Net decrease in cash and cash equivalents

         (3,191)

         (1,045)

Cash and cash equivalents at beginning of year

       7,630

       8,519

Exchange (losses) / gains on cash and cash equivalents

(382)

156

 

 

 

Cash and cash equivalents at end of year

        4,057

        7,630

 

 


 

COLEFAX GROUP PLC

GROUP STATEMENT OF CHANGES IN EQUITY

For the year ended 30th April 2014

 

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 2013

1,231

 11,148

  1,643

(113)

     -

1,622

28

 8,724

24,283

Profit for the year

-

-

-

-

-

-

-

3,353

3,353

Foreign exchange

-

-

-

-

-

(797)

-

-

(797)

 

Cash flow hedges:

 

 

 

 

 

 

 

 

 

Gains

-

-

-

-

-

-

135

-

135

Transfers

-

-

-

-

-

-

(171)

-

(171)

 

Tax on other comprehensive income

-

-

-

-

-

240

8

-

248

Share buybacks

(106)

          -

         106

          -

             -

              -

             -

(4,362)

(4,362)

Dividends paid

           -

           -

              -

           -

              -

              -

             -

(478)

(478)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

At 30 April 2014

      1,125

    11,148

         1,749

(113)

         -

    1,065

         -

   7,237

22,211

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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

 

 

 

 

 

 

 

 

 

 


 

COLEFAX GROUP PLC

NOTES TO THE FINANCIAL INFORMATION

At 30th April 2014

 

 

1. Earnings per share

Basic earnings per share have been calculated on the basis of profit on ordinary activities after tax of £3,353,000 (2013: £2,334,000) and on 12,025,641 (2013: 12,846,164) 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 £3,353,000 (2013: £2,334,000) and on 12,025,641 (2013: 12,846,164) ordinary shares, being the weighted average number of ordinary shares in issue during the year.

 

 

 

 

2. Cash and cash equivalents

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

 

2014

2013

 

£’000

£’000

 

 

 

Cash at bank and in hand

4,298

7,630

Bank overdrafts

(241)

-

 

 

 

 

 

 

 

4,057

7,630

 

 

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 2014 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 2013 which have been delivered to the Registrar of Companies. The Independent Auditors’ Report on both of those financial statements was unqualified, did not draw attention to any matters by way of emphasis 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 17th September 2014 at 11.00 a.m.

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