Colefax Group plc

CFX

28th July 2015

COLEFAX GROUP PLC

(“Colefax” or the “Group”)

 

Preliminary Results for the year ended 30th April 2015

 

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

 

  • Results reflect a good performance from the Fabric Division which offset a challenging year in the Decorating Division

 

  • Sales down by 2% to £76.80 million (2014: £78.04 million) 

 

  • Pre-tax profit up 3% to £5.03m (2014: £4.89m)

 

  • Earnings per share up 15% to 32.2p (2014: 27.9p)

 

  • Strong operating cash flow of £8.74 million (2014: £4.87 million)

 

  • £1.6m of cash returned to shareholders via share buybacks

 

  • Net cash of £6.86m (2014: £4.06m)

 

  • Proposed increase in final dividend to 2.30p per share, taking total for the year to 4.40p, an increase of 5% (2014: 4.20p)

 

  • Fabric Division – good performance with profits up 28% to £5.01 million on sales up 3% to £66.31m:

 

-       Sales in core US market up 7%, UK sales up 1% and Europe flat (on a constant currency basis)

 

  • Positive trading outlook for the Fabric Division with continued improvement in the US and UK although Continental Europe remains difficult

 

David Green, Chairman of Colefax, commented,

 

This year’s results reflect a good performance from the Fabric Division with an increase in operating profits of 28% to £5.0 million mainly due to the continued recovery of the US market and a significant strengthening of the US Dollar in the second half of the year. In contrast the Decorating Division had a challenging year reporting a loss of £139,000 on sales down 28% at £8.0 million

 

Trading conditions in our two principal markets, the US and UK, continue to improve and we are optimistic about further growth in our core Fabric Division. Although we are cautious about prospects for our Decorating Division we expect to see increased activity in all the other areas of our business and as a result we are optimistic about our overall performance.”

 

Enquiries:

 

Colefax Group plc

David Green, Chairman

Tel: 020 3178 6378 (today)

 

Robert Barker, Finance Director

 

 

 

 

KTZ Communications

Katie Tzouliadis

Tel: 020 3178 6378

 

 

 

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 for the year to 30th April 2015 increased by 3% to £5.03 million (2014: £4.89 million) on sales down by 2% to £76.80 million (2014: £78.04 million).  Earnings per share increased by 15% to 32.2p (2014: 27.9p). The Group ended the year with net cash of £6.86 million (2014: £4.06 million).

 

The Board is proposing to raise the final dividend by 5% to 2.30p per share (2014: 2.20p) making a total for the year of 4.40p, an increase of 5%. The final dividend will be paid on 9th October 2015 to shareholders on the register at the close of business on 11th September 2015.

 

During the year the Group returned £1.6 million of surplus cash to shareholders by purchasing 418,982 shares at an average price of 372.5p representing 3.7% of the Group’s issued share capital.

 

This year’s results reflect a good performance from the Fabric Division with an increase in operating profits of 28% to £5.0 million mainly due to the continued recovery of the US market and a significant strengthening of the US Dollar in the second half of the year. In contrast the Decorating Division had a challenging year reporting a loss of £139,000 on sales down 28% at £8.0 million.  This compares to a profit of £985,000 last year and mainly reflects fluctuations in the timing of major projects but also a weak trading environment for antiques.

 

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 86% of Group turnover, increased by 3% to £66.31 million (2014: £64.52 million) and by 4% on a constant currency basis. Operating profit increased by 28% to £5.01 million (2014: £3.91 million) mainly due to increased sales in our two major markets, the US and the UK, and the benefit of a strong US Dollar in the second half of the year.

 

Sales in the US, which represent 56% of the Fabric Division’s turnover, increased by 8% and by 7% on a constant currency basis.  The US market continues to improve and we are confident that market conditions will remain positive for the remainder of this year.  We have taken over the distribution of our product from our agent in Boston and will be opening a new showroom within the next 12 months.  We now operate our own showrooms in seven of the major US territories which now account for approximately 65% of sales in this market. 

 

Sales in the UK, which represent 19% of the Fabric Division’s turnover, increased by 1% during the year.  During the second half of the year the high end housing market was adversely affected by the threat of the mansion tax and a significant increase in stamp duty. Whilst the mansion tax threat has been removed by the election result, the rise in stamp duty is still having a negative effect on high end housing transactions. Overall we are optimistic that this market will perform well in the current year due to the underlying strength of the economy.

 

Sales in Continental Europe, which represent 22% of the Fabric Division’s turnover, were down by 7% but flat on a constant currency basis. There has been little improvement in any of the major markets in Continental Europe and trading in France, our largest European market, remains challenging. However, we believe that the dual benefits of quantitative easing and a much weaker exchange rate will provide a boost to eurozone economies and help to improve trading conditions for us in the second half of the year. We are seeing some positive benefit from our new showroom in Milan and there are encouraging signs of an improvement in some of our smaller European markets although they will not have a material impact on our overall results.  

 

Sales in the Rest of the World increased by 3% to £1.95 million (2014 £1.9 million). In Australia, China and the Middle East, we are continuing to see reasonable growth but this has been partially offset by a significant decline in sales in Russia. 

 

·                     Furniture – Kingcome Sofas

 

Sales of Kingcome furniture, which are included within the Product Division and account for 3% of Group turnover, increased by 8% to £2.45 million (2014: £2.27 million). Operating profit was £171,000 compared to £24,000 last year reflecting the high level of operational gearing in this business. Market conditions for high end furniture have continued to improve and we are continuing to explore opportunities for this division to make a more significant contribution to the Group’s results.

 

Interior Decorating Division

 

Decorating sales, which account for 10% of Group turnover, decreased by 29% to £8.03 million (2014: £11.24 million) following an exceptional performance last year. The division made a loss of £139,000 compared to a profit of £985,000 last year.  This is a disappointing result which mainly reflects the uneven timing of major projects. In addition we experienced a decline in antique sales and with demand for antiques remaining weak we do not envisage a significant improvement in this part of the business. As a result we are cautious about prospects for the year ahead despite a reasonable level of decorating deposits. 

 

Prospects

 

Trading conditions in our two principal markets, the US and UK, continue to improve and we are optimistic about further growth in our core Fabric Division. Continental Europe remains difficult but we are hopeful that trading conditions will start to improve in the second half of the year. Our strategy is to continue to invest in our portfolio of brands and in our distribution network with particular emphasis on markets which offer the most growth potential. We will maintain our focus on cash generation through tight control of working capital.

 

Although we are cautious about prospects for our Decorating Division we expect to see increased activity in all the other areas of our business and as a result we are optimistic about our overall performance. 

 

 

 

 

 

 

David Green

Chairman

 

28th July 2015

 

 

 

 


COLEFAX GROUP PLC

GROUP INCOME STATEMENT

For the year ended 30th April 2015

 

 

 

2015

 

2014

 

 

 

 

£'000

 

£'000

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Revenue

     76,796

 

     78,035

 

 

 

Cost of sales

       34,760

 

       36,418

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Gross profit

       42,036

 

       41,617

 

 

 

Operating expenses

      36,999

 

      36,695

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Profit from operations

         5,037

 

         4,922

 

 

 

 

 

 

 

 

 

 

Finance income

              4

 

              4

 

 

 

Finance expense

(12)

 

(41)

 

 

 

 

(8)

 

           (37)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Profit before taxation

         5,029

 

         4,885

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Tax expense

 

 

 

 

 

 

-  UK

(651)

 

(875)

 

 

 

-  Overseas

(836)

 

(657)

 

 

 

 

(1,487)

 

(1,532)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Profit for the year attributable to equity holders of the parent

         3,542

 

         3,353

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic earnings per share

           32.2

p

           27.9

p

 

 

 

 

 

 

 

 

 

Diluted earnings per share

           32.2

p

           27.9

p

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

GROUP STATEMENT OF COMPREHENSIVE INCOME

For the year ended 30th April 2015

 

 

2015

 

2014

 

 

 

£'000

 

£'000

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Profit for the year

3,542

 

   3,353

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other comprehensive income / (expense):

 

 

 

 

 

 

 

 

 

 

 

Exchange differences on translation of foreign operations

299

 

(797)

 

 

 

 

 

 

 

 

Cash flow hedges:

 

 

 

 

 

(Losses) / gains recognised directly in equity

     (103)

 

      135

 

 

Transferred to profit and loss for the year

160

 

(171)

 

 

 

 

 

 

 

 

Tax on components of other comprehensive income

(313)

 

248

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total other comprehensive income / (expense)

     43     

 

    (585)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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

       3,585

 

       2,768

 

 

 

 

 

 

 

 

 

 

 

 


COLEFAX GROUP PLC

GROUP STATEMENT OF FINANCIAL POSITION

At 30th April 2015

 

2015

2014

 

£'000

£'000

 

 

 

 

 

 

Non-current assets:

 

 

Property, plant and equipment

        7,257

        6,810

Deferred tax asset

        285

        590

 

        7,542

        7,400

 

 

 

Current assets:

 

 

Inventories and work in progress

      12,296

      13,526

Trade and other receivables

      9,681

      10,055

Cash and cash equivalents

        6,861

        4,298

 

      28,838

      27,879

 

 

 

Current liabilities:

 

 

Trade and other payables

10,812

11,386

Current corporation tax

            230

            425

 

      11,042

      11,811

 

 

 

 

 

 

Net current assets

       17,796

       16,068

 

 

 

Total assets less current liabilities

       25,338

       23,468

 

 

 

Non-current liabilities:

 

 

Deferred rent

1,433

1,140

Pension liability

           148

           117

 

 

 

Net assets

       23,757

       22,211

 

 

 

Capital and reserves attributable to equity holders of the Company:

 

 

Called up share capital

        1,083

        1,125

Share premium account

       11,148

       11,148

Capital redemption reserve

         1,791

         1,749

ESOP share reserve

(113)

(113)

Foreign exchange reserve

         1,062

         1,065

Cash flow hedge reserve

            46

            -

Retained earnings

       8,740

       7,237

Total equity

       23,757

       22,211

 

 

 

The financial statements were approved by the board of directors and authorised for issue on 27th July 2015.

 

D. B. Green Director

R. M. Barker Director


COLEFAX GROUP PLC

GROUP STATEMENT OF CASH FLOWS

For the year ended 30th April 2015

 

 

2015

2014

 

£'000

£'000

 

 

 

 

 

 

Operating activities

 

 

Profit before taxation

        5,029

        4,885

Finance income

(4)

(4)

Finance expense

              12

              41

Depreciation

         2,028

         2,078

 

 

 

Cash flows from operations before changes in working capital

         7,065

         7,000

 

 

 

Decrease/(increase) in inventories and work in progress

     1,409

     (503)

Decrease/(increase) in trade and other receivables

655

(380)

Decrease in trade and other payables

(388)

(1,250)

 

 

 

Cash generated from operations

         8,741

         4,867

 

 

 

 

 

 

Taxation paid

 

 

UK corporation tax paid

(765)

(660)

Overseas tax paid

(894)

(967)

 

(1,659)

(1,627)

 

 

 

Net cash inflow from operating activities

         7,082

         3,240

 

 

 

 

 

 

Investing activities

 

 

Payments to acquire property, plant and equipment

(2,213)

(1,583)

Receipts from sales of property, plant and equipment

            32

            17

Interest received

              4

              4

Net cash outflow from investing

(2,177)

(1,562)

 

 

 

 

 

 

Financing activities

 

 

Purchase of own shares

(1,567)

(4,362)

Interest paid

(10)

(29)

Equity dividends paid

(472)

(478)

 

 

 

Net cash outflow from financing

(2,049)

(4,869)

 

 

 

 

 

 

Net increase / (decrease) in cash and cash equivalents

         2,856

         (3,191)

Cash and cash equivalents at beginning of year

       4,057

       7,630

Exchange losses on cash and cash equivalents

(52)

(382)

 

 

 

Cash and cash equivalents at end of year

        6,861

        4,057

 

 


 

COLEFAX GROUP PLC

GROUP STATEMENT OF CHANGES IN EQUITY

For the year ended 30th April 2015

 

Share capital

Share premium account

Capital redemption reserve

ESOP share reserve

Foreign exchange reserve

Cash flow hedge reserve

Retained earnings

Total equity

 

£'000

£'000

£'000

£'000

£'000

£'000

£'000

£'000

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

At 1 May 2014

1,125

 11,148

  1,749

(113)

1,065

-

7,237

22,211

Profit for the year

-

-

-

-

-

-

3,542

3,542

Foreign exchange

-

-

-

-

299

-

-

299

 

Cash flow hedges:

 

 

 

 

 

 

 

 

Losses

-

-

-

-

-

(103)

-

(103)

Transfers

-

-

-

-

-

160

-

160

 

Tax on other comprehensive income

-

-

-

-

(302)

(11)

-

(313)

Share buybacks

(42)

          -

         42

          -

              -

             -

(1,567)

(1,567)

Dividends paid

           -

           -

              -

           -

              -

             -

(472)

(472)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

At 30 April 2015

      1,083

    11,148

         1,791

(113)

    1,062

         46

   8,740

23,757

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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

 

 

 

 

 

 

 

 

 


 

COLEFAX GROUP PLC

NOTES TO THE FINANCIAL INFORMATION

At 30th April 2015

 

 

1. Earnings per share

Basic earnings per share have been calculated on the basis of profit on ordinary activities after tax of £3,542,000 (2014: £3,353,000) and on 10,984,807 (2014: 12,025,641) 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 £3,542,000 (2014: £3,353,000) and on 10,984,807 (2014: 12,025,641) 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:

 

2015

2014

 

£’000

£’000

 

 

 

Cash at bank and in hand

6,861

4,298

Bank overdrafts

-

(241)

 

 

 

 

 

 

 

6,861

4,057

 

 

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 2015 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 2014 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 2015 at 11.00 a.m.

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