Final Results

Colefax Group PLC 20 July 2006 Colefax Group plc CFX.L 20 July 2006 COLEFAX GROUP PLC ('Colefax' or 'the Group') Preliminary Results for the year ended 30 April 2006 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, which serve different segments of the soft furnishings marketplace; these are Colefax and Fowler, Cowtan & Tout, Jane Churchill, Manuel Canovas and Larsen. Highlights • Pre-tax profit increased by 30% to £4.09m (2005 - £3.15m) • Sales up 6% to £68.36m (2005 - £64.46m) • Earnings per share rose by 33% to 17.4p (2005 - 13.1p) • Strong cash generation of £3.7m • Group borrowings reduced to just £0.3 million, representing gearing of 2% to net tangible assets (2005 - 34%) • Proposed final dividend of 2.37p (2005 - 2.16p), giving total dividend of 3.75p, an increase of 7% on last year • Favourable market conditions across the Group's major markets - US market strong - Pick up in demand across European markets, especially Germany - UK boosted by buoyant high end property market • Board confident of continued growth David Green, Chairman of Colefax, commented, 'Our improved results this year were due to favourable trading conditions in all our major markets, particularly the US, which does not yet seem to have been affected by steadily rising interest rates. Trading has recovered in Continental Europe, especially in Germany which is our third largest European market. We will continue to focus on our principal objectives of improving operating profits and margins and using our free cash flow to enhance shareholder value and in addition, we will continue to ensure that our creative quality and capability remain strong. Trading conditions in all our major markets continue to remain favourable and whilst the recent weakness of the US dollar will negatively impact our ability to improve margins, I am optimistic of another year of continued growth.' Enquiries: Colefax Group plc David B. Green, Chairman Tel: 020 7448 1000 (today) Biddicks Katie Tzouliadis Tel: 020 7448 1000 COLEFAX GROUP PLC CHAIRMAN'S STATEMENT Financial Results The Group's pre-tax profit for the year to 30th April 2006 increased by 30% to £4.09 million (2005 - £3.15 million) on sales up 6% at £68.36 million (2005 - £64.46 million). Earnings per share increased by 33% to 17.4p (2005 - 13.1p). Group net borrowings at the year-end were £0.30 million (2005 - £4.05 million), which represents gearing of 2% to net assets (2005 - 34%). The Board has decided to recommend that the final dividend is increased by 10% to 2.37p (2005 - 2.16p), making a total for the year of 3.75p (2005 - 3.50p), an increase of 7%. The final dividend will be paid on 12th October 2006 to shareholders on the register at the close of business on 15th September 2006. Our improved results this year were due to favourable trading conditions in all our major markets particularly the US which does not yet seem to have been affected by steadily rising interest rates. Trading has recovered in Continental Europe especially Germany which is our third largest European market. Product Division Fabric - Portfolio of Brands: 'Colefax and Fowler', 'Cowtan & Tout', 'Jane Churchill', 'Manuel Canovas', and 'Larsen'. Sales in the Fabric Division, which represents 82% of Group sales, increased by 7% to £56.01 million (2005 - £52.24 million) Sales in the US, which represents 57% of the Fabric Division's sales, increased by 6% on a constant currency basis. This market remained strong throughout the year with most territories performing well. UK sales, which represent 18% of the Fabric Division's turnover, increased by 4% on a like for like basis. A strong high end housing market is behind the improvement in market conditions and this has continued into the current year. Sales in Continental Europe, which represents 23% of the Fabric Division's turnover, increased by 2% on a constant currency basis. Particularly encouraging was the fact that two of our most important markets, France and Germany, showed a return to growth and we believe there are good opportunities to increase sales in these markets. Sales in the rest of the world, which represents just 2% of the Fabric Division's sales, increased by 8% during the year mainly due to a strong recovery in Australia which is our largest territory in this market. • Furniture - Kingcome Sofas Sales of Kingcome furniture, which account for 3% of Group sales, increased by 15% to £2.09 million (2005 - £1.81 million) with all of the increase taking place in the second half of the year. The main factor behind the improvement has been the relocation of Kingcome's showroom to new premises next to our Colefax and Fowler showroom in the London's Fulham Road. In January, we closed our trade showroom in the Chelsea Harbour Design Centre realising significant cost savings. Kingcome has a very strong forward order book and we are confident of a good result for the current year. • Accessories - Manuel Canovas Manuel Canovas accessories are based in Paris and comprise sales of beachwear and scented candles which account for 4% of Group sales. During the year, sales decreased by 2% to £2.80 million (2005 - £2.86 million) due mainly to a customer store closure in France. Sales outside of France showed good growth particularly in the newer markets. We have launched our new collections for 2006 and the initial reaction has been encouraging. Decorating Division Interior decorating and antique sales which together account for 11% of Group sales, decreased by 2% to £7.40 million (2005 - £7.52 million) during the year. The decrease reflects very difficult antiques trading offset by a strong performance from our decorating teams. The level of decorating deposits remains healthy and as a result we anticipate a good performance for the current year. Prospects We will continue to focus on our principal objectives of improving operating profits and margins and using our free cash flow to enhance shareholder value and in addition we will continue to ensure that our creative quality and capability remain strong. Trading conditions in all our major markets continue to remain favourable and whilst the recent weakness of the US dollar will negatively impact our ability to improve margins, I am optimistic of another year of continued growth. David B. Green Chairman 20th July 2006 COLEFAX GROUP PLC GROUP PROFIT AND LOSS ACCOUNT For the year ended 30th April 2006 As restated Notes 2006 2005 £'000 £'000 --------- --------- Turnover 68,361 64,455 Cost of sales 30,575 29,335 --------- --------- Gross profit 37,786 35,120 Operating expenses 33,367 31,693 --------- --------- Operating profit 3 4,419 3,427 (Loss)/profit on disposal of fixed assets (177) 12 --------- --------- Profit on ordinary activities before interest 4,242 3,439 and taxation Interest (148) (292) --------- --------- Profit on ordinary activities before taxation 4,094 3,147 --------- --------- Tax on profit on ordinary activities - UK (933) (924) - Overseas (337) (14) --------- --------- (1,270) (938) --------- --------- Profit for the financial year 2,824 2,209 --------- --------- Basic earnings per share 2 17.4p 13.1p Diluted earnings per share 2 16.8p 13.0p --------- --------- All activity has arisen from continuing operations. COLEFAX GROUP PLC GROUP BALANCE SHEET At 30th April 2006 As restated 2006 2005 --------- --------- £'000 £'000 Fixed assets: Tangible assets 5,403 5,792 --------- --------- Current assets: Stocks and contracts in progress 10,942 12,167 Debtors 11,498 9,559 Cash at bank and in hand 2,347 1,736 --------- --------- 24,787 23,462 --------- --------- Creditors: amounts falling due within one year 14,493 16,152 --------- --------- Net current assets 10,294 7,310 --------- --------- Total assets less current liabilities 15,697 13,102 Creditors: amounts falling due after more than one year - 500 Provision for liabilities and charges: Deferred taxation 57 64 --------- --------- Net assets excluding pensions liability 15,640 12,538 Pensions liability 134 112 --------- --------- Net assets including pensions liability 15,506 12,426 --------- --------- Capital and reserves: Called up share capital 1,709 1,709 Share premium account 11,087 11,087 Capital redemption reserve 1,157 1,157 ESOP share reserve (287) (499) ESOP capital reserve 228 - Profit and loss account 1,612 (1,028) --------- --------- Equity shareholders' funds 15,506 12,426 --------- --------- The financial statements were approved by the board of directors and authorised for issue on 20th July 2006. D. B. Green Director R. M. Barker Director COLEFAX GROUP PLC GROUP CASHFLOW STATEMENT For the year ended 30th April 2006 Notes 2006 2005 £'000 £'000 --------- --------- Net cash inflow from operating activities 3 7,556 4,786 Returns on investments and servicing of finance: Interest received 80 20 Interest paid (247) (311) --------- --------- (167) (291) --------- --------- Taxation: UK Corporation tax paid (988) (1,074) Overseas tax paid (411) - --------- --------- (1,399) (1,074) --------- --------- Capital expenditure and financial investment: Payments to acquire tangible fixed assets (1,781) (2,179) Receipts from sales of tangible fixed assets 64 32 --------- --------- (1,717) (2,147) Equity dividends paid (574) (571) --------- --------- Cash inflow before financing 3,699 703 --------- --------- Financing: Purchase of own shares - (1,900) Repayment of long-term loans (500) (500) --------- --------- Net cash outflow from financing (500) (2,400) --------- --------- Increase/(decrease) in cash in the period 4 3,199 (1,697) --------- --------- GROUP STATEMENT OF TOTAL RECOGNISED GAINS AND LOSSES For the year ended 30th April 2006 2006 2005 £'000 £'000 --------- --------- Profit for the financial year 2,824 2,209 Currency translation differences on foreign currency net 127 (62) investments Currency translation differences on foreign currency loans 453 (546) Deferred tax on long-term loan foreign currency movements (189) 230 --------- --------- Total recognised gains and losses relating to the year 3,215 1,831 --------- --------- COLEFAX GROUP PLC NOTES TO THE ACCOUNTS At 30th April 2006 1. Adoption of New Accounting Requirements The Group has adopted FRS 21 'Events after balance sheet date'. Previously, equity dividends declared after the balance sheet date were recognised as liabilities at the year end, as required by company law and SSAP 17 'Accounting for post balance sheet events'. In accordance with FRS 21 and recent changes to the law, if a final equity dividend is declared after the balance sheet date but before the financial statements are authorised for issue, the dividend is not recognised as a liability at the balance sheet date. The adoption of FRS 21 has resulted in an increase in shareholders funds of £350,000 at 1st May 2005 (2004 - £354,000) due to the write back of the dividend proposed at 30th April 2005. The Group has also adopted FRS 17 'Retirement benefits', FRS 22 'Earnings per share', relevant parts of FRS 25 'Financial instruments: disclosure and presentation' and FRS 28 'Corresponding amounts'. The Group has also voluntarily adopted FRS 20 'Share based payments'. There have been no impacts from these accounting policy changes on the comparatives. 2. Earnings Per Share Basic earnings per share have been calculated on the basis of profit on ordinary activities after tax of £2,824,000 (2005 - £2,209,000) and on 16,227,578 (2005 - 16,846,893) 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 £2,824,000 (2005 - £2,209,000) and on 16,728,940 (2005 - 17,031,297) being the weighted average number of shares in issue during the year, calculated as follows: 2006 2005 Basic weighted average number of shares 16,227,578 16,846,893 Dilutive potential ordinary shares, including shares under option owned by the Colefax Group Plc ESOP Trust 501,362 184,404 --------- --------- 16,728,940 17,031,297 --------- --------- 3. Operating Profit Cash flow statement Reconciliation of operating profit to net cash inflow from operating activities: 2006 2005 £'000 £'000 ------------ ------------ Operating profit 4,419 3,427 Depreciation charges 2,116 2,271 Decrease/(increase) in stocks 1,442 (918) (Increase) in debtors (1,615) (547) Increase in creditors 1,194 553 ------------ ------------ Net cash inflow from operating activities 7,556 4,786 ------------ ------------ NOTES TO THE ACCOUNTS (CONT.) At 30th April 2006 4. Cash and Financing Reconciliation of Net Cash Flow to Movement in Net Debt 2006 2005 £'000 £'000 ------------ ------------ Increase/(decrease) in cash 3,199 (1,697) Repayment of bank loan 500 500 ------------ ------------ Movement in net debt resulting from cash flows 3,699 (1,197) Translation differences 52 (81) ------------ ------------ Movement in net debt in the period 3,751 (1,278) Net debt at 1st May (4,051) (2,773) ------------ ------------ Net debt at 30th April (300) (4,051) ------------ ------------ At At 1st May Exchange 30th April 2005 Cash flow Other differences 2006 £'000 £'000 £'000 £'000 £'000 ------- -------- ------- --------- -------- Analysis of Net Debt Cash at bank and in 1,736 559 - 52 2,347 hand Overdrafts (4,787) 2,640 - - (2,147) ------- -------- ------- --------- -------- (3,051) 3,199 - 52 200 ------- -------- ------- --------- -------- Debt due within one (500) 500 (500) - (500) year ------- -------- ------- --------- -------- Debt due after one year (500) - 500 - 0 ------- -------- ------- --------- -------- Net debt (4,051) 3,699 - 52 (300) ------- -------- ------- --------- -------- 'Other' relates to changes in the maturity of debt. 5. The above financial information, which has been prepared on the same basis as set out in the 2005 annual accounts, except for the adoption of the accounting standards described in note 1, does not constitute statutory accounts as defined in Section 240 of the Companies Act 1985. The financial information for the year ended 30th April 2006 has been extracted from the statutory accounts on which an unqualified audit opinion has been issued. Statutory accounts for the year ended 30th April 2006 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 2005. Those accounts, upon which the auditors issued an unqualified opinion, have been delivered to the Registrar of Companies. The annual accounts for the year ended 30 April 2006 are expected to be posted to shareholders on 24th July 2006 and will be available from the Company's website on www.colefaxgroupplc.com. 6. Annual General Meeting The Annual General Meeting of Colefax Group plc will be held at 19-23 Grosvenor Hill, London W1K 3QD on 12th September 2006 at 11.00 a.m. This information is provided by RNS The company news service from the London Stock Exchange

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