Final Results

Colefax Group PLC 22 July 2003 22 July 2003 For immediate release COLEFAX GROUP PLC FINAL RESULTS FOR THE YEAR TO 30 APRIL 2003 Colefax Group designs and distributes furnishing fabrics & wallpaper and owns a leading interior decorating subsidiary. The Group's five major fabric brands are Colefax and Fowler, Cowtan & Tout, Jane Churchill, Manuel Canovas and Larsen. Key Points •Pre-tax profits of £2.8 million •Earnings per share of 8.9p •Sales of £64.4 million •Proposed final dividend of 2.06p, making a total of 3.40p for the year David Green, chairman and chief executive, commented, 'This year's results have been achieved in a very challenging trading environment. Considering these difficult market conditions and the sudden weakness of the US dollar, I believe we produced a creditable performance reflecting the considerable strength of our brands.' Enquiries: Colefax Group plc David Green, chairman Tel: 020 7448 1000 Biddicks Zoe Biddick/Katie Tzouliadis Tel: 020 7448 1000 CHAIRMAN'S STATEMENT FINANCIAL RESULTS The Group generated a pre-tax profit for the year to 30th April 2003 of £2.8 million (2002 - £3.9 million) on sales down 4% at £64.4 million (2002 - £67.3 million). Earnings per share decreased by 20% to 8.9p (2002 - 11.1p). Group net borrowings at the year end were £5.0 million (2002 - £4.8 million), which represents gearing of 38% to net assets. The Board has decided to recommend that the final dividend is maintained at 2.06p (2002 - 2.06p) making a total for the year of 3.40p (2002 - 3.40p). The final dividend will be paid on 10th October 2003 to shareholders on the register at the close of business on 12th September 2003. This year's results have been achieved in a very challenging trading environment. Our prime market, the US, has been in decline throughout the year. The UK market remained flat and Continental Europe weakened significantly in the second half of the year. Considering these difficult market conditions and the sudden weakness of the US dollar, I believe we produced a creditable performance reflecting the considerable strength of our brands and the loyal support of our customers. PRODUCT DIVISION Fabric - Portfolio of Brands: Colefax and Fowler, Cowtan & Tout, Jane Churchill, Manuel Canovas and Larsen. Sales in the US, which represent 55% of the Fabric Division's sales, decreased by 3% on a constant currency basis. This market has remained difficult throughout the year. We have consolidated our distribution centre into one location at 111 Eighth Avenue in New York and extended our lease so we will not need to relocate in the near future. UK sales, which represent 20% of the Fabric Division's turnover, decreased by 2% during the year and the market is showing signs of getting tougher. This reflects the weak state of the high end housing market. Sales in Continental Europe, which represent 22% of the Fabric Division's turnover, decreased by 5% during the year on a constant currency basis. Our principal market, France, deteriorated sharply towards the end of the year and currently market conditions in our three main markets of France, Italy and Germany are very challenging. Sales in the Rest of the World, which represent 3% of the Fabric Division sales, increased by 12% during the year. We exhibited for the first time at the INDEX show in Dubai and we have seen an increase in orders from the Middle East, a market in which we were traditionally very weak. We will continue to try and grow in this market and are currently seeing some growth in the Far East. Furniture - Kingcome Sofas Sales of furniture decreased by 9% during the year in a particularly difficult market. We have reduced costs in our manufacturing facility and refocused our sales effort with the introduction of an exclusive Kingcome range of fabrics. The early signs are that this is proving successful and I am confident of an improvement this year. Accessories - Manuel Canovas Manuel Canovas accessories had a good year during which sales grew by 41% and now represent 5% of total Group sales. We are currently investing in this activity so the design, origination and marketing costs are significant. I believe there is a good future for this type of product which will ultimately make a meaningful contribution to the Group's profits. DECORATING DIVISION Interior Decorating sales were down by just 2% during the year and antique sales remained flat. Activity is currently reasonable for this area of the Group and we have started a number of significant new projects which will keep our decorating teams busy in the current year. PROSPECTS Currently there are no real signs of improvement in any of our major markets. The current exchange rate of the dollar to the pound will have a negative effect on our results if these rates persist. There is little in the short term that will improve our results but we are well placed to take advantage of the upturn when it comes. David B. Green Chairman GROUP PROFIT AND LOSS ACCOUNT For the year ended 30th April 2003 Notes 2003 2002 £'000 £'000 Turnover 64,422 67,307 Cost of sales 28,088 29,235 ---------- ---------- Gross profit 36,334 38,072 Operating expenses 33,297 33,847 ---------- ---------- Operating profit 3,037 4,225 Interest (236) (366) ---------- ---------- Profit on ordinary activities before 2,801 3,859 taxation Tax on profit on ordinary activities UK (445) (608) Overseas (562) (716) ---------- ---------- (1,007) (1,324) ---------- ---------- Profit on ordinary activities after 1,794 2,535 taxation Dividends on equity shares (594) (741) ---------- ---------- Retained profit for the year 1,200 1,794 ---------- ---------- Basic earnings per share 1 8.9p 11.1p Diluted earnings per share 1 8.8p 10.9p Dividends per share 3.40p 3.40p All activity has arisen from continuing operations. GROUP BALANCE SHEET At 30th April 2003 Notes 2003 2002 £'000 £'000 Fixed assets Tangible assets 7,068 7,759 Investments 687 687 ----------- ----------- 7,755 8,446 ----------- ----------- Current assets: Stocks and contracts in progress 13,039 13,489 Debtors 9,211 8,397 Cash at bank and in hand 3 1,639 1,911 ----------- ----------- 23,889 23,797 ----------- ----------- ----------- ----------- Creditors: amounts falling due within one year 16,683 16,522 ----------- ----------- Net current assets 7,206 7,275 ----------- ----------- Total assets less current 14,961 15,721 liabilities ----------- ----------- Creditors: amounts falling due after more than one year 1,500 1,029 Provision for liabilities and charges: Deferred taxation 130 52 ----------- ----------- 13,331 14,640 ----------- ----------- Capital and reserves: Called up share capital 2,009 2,332 Share premium account 11,087 11,055 Capital redemption account 857 521 Profit and loss account (622) 732 ----------- ----------- Equity shareholders' funds 13,331 14,640 ----------- ----------- GROUP CASH FLOW STATEMENT For the year ended 30th April 2003 Notes 2003 2002 £'000 £'000 Net cash inflow from operating 2 6,191 6,909 activities --------- -------- Returns on investments and servicing of finance: Interest received 40 54 Interest paid (262) (468) --------- -------- (222) (414) --------- -------- Taxation: UK Corporation tax paid (572) (562) Overseas tax paid (668) (1,039) --------- -------- (1,240) (1,601) --------- -------- Capital expenditure and financial investment: Payments to acquire tangible fixed (2,106) (2,194) assets Receipts from sales of tangible fixed 93 235 assets --------- -------- (2,013) (1,959) --------- -------- Equity dividends paid (661) (756) --------- -------- Cash inflow before financing 2,055 2,179 --------- -------- Financing: Purchase of own shares (2,414) (928) New long-term loan 2,000 - Repayment of long-term loan (957) (1,045) --------- -------- Net cash outflow from financing (1,371) (1,973) --------- -------- Increase in cash in the period 3 684 206 --------- -------- GROUP STATEMENT OF TOTAL RECOGNISED GAINS AND LOSSES For the year ended 30th April 2003 2003 2002 £'000 £'000 Profit for the period 1,794 2,535 Currency translation differences on foreign currency net investments 258 (57) Currency translation differences on foreign (674) (196) currency loans Deferred tax on long-term loan foreign currency 276 57 movements --------- -------- Total recognised gains and losses relating to the 1,654 2,339 period --------- -------- NOTES TO THE ACCOUNTS At 30th April 2003 1. Earnings per share Basic earnings per share have been calculated on the basis of earnings of £1,794,000 (2002 - £2,535,000) and on 20,176,029 (2002 - 22,844,735) 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 earnings of £1,794,000 (2002 - £2,535,000) and on 20,476,029 (2002 - 23,166,795) being the weighted average number of shares in issue during the year, calculated as follows: 2003 2002 Basic weighted average number of shares 20,176,029 22,844,735 ----------- ----------- Dilutive potential ordinary shares, including shares under option owned by the Colefax Group Plc ESOP Trust 300,000 322,060 ----------- ----------- 20,476,029 23,166,795 ----------- ----------- 2. Operating profit Cash flow statement Reconciliation of operating profit to net cash inflow from operating activities: 2003 2002 £'000 £'000 Operating profit 3,037 4,225 Depreciation charges 2,454 2,646 Profit on sale of tangible fixed assets (22) (144) Decrease in stocks 171 1,333 (Increase)/decrease in debtors (200) 282 Increase/(decrease) in creditors 751 (1,433) ----------- ----------- Net cash inflow from operating activities 6,191 6,909 ----------- ----------- 3. Reconciliation of net cash flow to movement in net debt 2003 2002 £000 £000 Increase in cash 684 206 New bank loan (2,000) - Repayment of bank loan 957 1,045 ----------- ----------- Movement in net debt resulting from cash flows (359) 1,251 Translation differences 78 17 ----------- ----------- Movement in net debt in the period (281) 1,268 Net debt at 1st May (4,761) (6,029) ----------- ----------- Net debt at 30th April (5,042) (4,761) ----------- ----------- At 1st May 2002 Cash flow Other Exchange At 30th April differences 2003 £'000 £'000 £'000 £'000 £'000 Analysis of net debt Cash at bank 1,911 (188) - (84) 1,639 and in hand Overdrafts (4,614) 872 - - (3,742) --------- -------- ------- -------- --------- (2,703) 684 - (84) (2,103) --------- -------- ------- -------- --------- Debt due (1,029) 957 (1,457) 90 (1,439) within one --------- -------- ------- -------- --------- year Debt due (1,029) (2,000) 1,457 72 (1,500) after one --------- -------- ------- -------- --------- year Net debt (4,761) (359) - 78 (5,042) --------- -------- ------- -------- --------- 4. The above financial information, which has been prepared on the same basis as set out in the 2002 annual accounts, does not constitute statutory accounts as defined in Section 240 of the Companies Act 1985. The financial information for the year ended 30th April 2003 has been extracted from the statutory accounts on which an unqualified audit opinion has been issued. Statutory accounts for the year ended 30th April 2003 will be delivered to the Registrar in due course. The comparative financial information is based on the statutory accounts for the financial year ended 30th April 2002. Those accounts, upon which the auditors issued an unqualified opinion, have been delivered to the Registrar of Companies. 5. The Annual General Meeting of Colefax Group plc will be held at 39 Brook Street, London W1K 4JE on 18th September 2003 at 11.00 a.m. This information is provided by RNS The company news service from the London Stock Exchange

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