Interim Results

Colefax Group PLC 19 January 2004 COLEFAX GROUP INTERIM RESULTS FOR THE SIX MONTHS TO 31 OCTOBER 2003 Colefax Group designs and distributes furnishing fabrics and wallpaper and owns a leading interior decorating subsidiary. Portfolio of five major fabric brands: 'Colefax and Fowler', 'Cowtan & Tout', 'Jane Churchill', 'Manuel Canovas' and 'Larsen' Key points •Pre-tax profit increased by 7% to £1.76m (2002: £1.65m) •Earnings per share increased by 20% to 6.15p (2002: 5.11p) •Sales of £31.25m, down by 3% (2002: £32.19m) •Maintained interim dividend of 1.34p per share (2002: 1.34p) David Green, chairman and chief executive, commented, 'We believe that the Group has performed reasonably well given current market conditions, and we are benefiting from prior year cost savings, particularly in France. Although we are seeing signs of growth in our major market, the US, the rapid decline of the US dollar against Sterling and the Euro, and its continuing weakness, will continue to impact the Group's performance.' Enquiries: Colefax Group plc David Green, Chairman Tel: 020 7448 1000 Biddicks Katie Tzouliadis / Kathryn van der Kroft Tel: 020 7448 1000 CHAIRMAN'S STATEMENT Financial results The Group's pre-tax profit for the six months to 31st October 2003 increased by 7% to £1.76 million (2002: £1.65 million) on sales down 3% at £31.25 million (2002: £32.19 million). Earnings per share increased by 20% to 6.15p (2002: 5.11p) with 11% of this increase due to the effect of share buybacks in the current and prior periods. The Board has decided to recommend a flat interim dividend of 1.34p per share (2002: 1.34p). This reflects uncertainties relating to the current weakness of the US dollar. The interim dividend will be paid on 8th April 2004 to shareholders on the register at the close of business on 5th March 2004. Group net borrowings increased by £0.4 million to £5.4 million, which represents gearing of 40% to net tangible assets. The Group's operating cash inflow during the period was £1.9 million compared to £4.4 million in the prior year. This is mainly due to differences in the timing of creditor payments and deposit receipts. During the period, the Group purchased and cancelled 382,000 shares at a cost of £278,000 and representing 1.9% of the Group's issued share capital. Product Division Fabric - Portfolio of Five Brands: 'Colefax and Fowler', 'Cowtan and Tout', 'Jane Churchill', 'Manuel Canovas' and 'Larsen' Sales in the US, which represent 56% of the fabric division's turnover, were 1% down on a like-for-like basis. Since the end of October 2003, there is some evidence of an increase in activity in this market and we are cautiously optimistic about sales prospects for the remainder of the year Sales in the UK, which represent 20% of the fabric division's turnover, were down 2% on a like-for-like basis. The high end housing market in the UK is still difficult and coupled with a lack of contract activity, we do not expect any significant short-term improvement in this market. Sales in Continental Europe, which represent 21% of the fabric division's sales decreased by 7% on a like-for-like basis. This area has seen the largest decline in all our markets during the first six months and although market conditions have improved slightly, we expect trading conditions to remain generally difficult. Sales in the rest of the world, which represent 3% of the fabric division's sales, were flat during the period. We continue to look for growth opportunities in the Far East and the Middle East, although this market will remain relatively insignificant in overall Group terms. Furniture - Kingcome Sofas Sales in the first six months of the year were up 34% mainly due to the introduction of new models and Kingcome's own fabric range. Both retail and trade sales reported good increases compared to a difficult trading period last year. The improved sales, together with the cost savings made last year, mean that this division will return to profitability in the current year. Accessories - Manuel Canovas This division of the Group, based in Paris, has been adversely affected by the strength of the Euro. This has reduced gross profit margins in certain export markets, particularly the US. We have reduced costs to mitigate the currency situation and continue to explore options for improving margins. Interior Decorating Division Interior decorating sales for the first six months decreased by 11% to £3.4 million. Antique sales have continued to suffer from a lack of overseas visitors, especially from the US. The weak dollar will make it increasingly difficult for us to obtain work in the US, which is traditionally a strong market for this division. As a result, we expect trading to remain challenging over the next twelve months. Prospects We believe that the Group has performed reasonably well given current market conditions, and we are benefiting from prior year cost savings, particularly in France. Although we are seeing signs of growth in our major market, the US, the rapid decline of the US dollar against Sterling and the Euro, and its continuing weakness, will continue to impact the Group's performance. David Green Chairman GROUP PROFIT AND LOSS ACCOUNT For the six months ended 31 October 2003 Six months to Six months to 31 Oct 31 Oct 2003 2002 £'000 £'000 Turnover 31,254 32,188 Operating profit 1,878 1,772 Interest payable (116) (119) ------------- ------------- Profit before taxation 1,762 1,653 Taxation (599) (579) ------------- ------------- Profit after taxation 1,163 1,074 Dividends (248) (211) ------------- ------------- Retained profit for the year 915 863 ------------- ------------- Earnings per share 6.15p 5.11p Diluted earnings per share 6.05p 5.02p Dividend per share 1.34p 1.34p GROUP BALANCE SHEET At 31 October 2003 At 31 Oct At 31 Oct At 30 April 2003 2002 2003 £'000 £'000 £'000 Fixed assets 7,450 8,222 7,755 Current assets: Stocks and contracts in 12,882 13,387 13,039 progress Debtors 8,872 8,165 9,211 Cash at bank and in hand 1,989 1,677 1,639 --------- --------- --------- 23,743 23,229 23,889 --------- --------- --------- Creditors: amounts falling due within 16,234 17,637 16,683 one year Net current assets 7,509 5,592 7,206 --------- --------- --------- Total assets less current 14,959 13,814 14,961 liabilities --------- --------- --------- Creditors: amounts falling due after one 1,250 482 1,500 year Provision for liabilities and 130 54 130 charges --------- --------- --------- 13,579 13,278 13,331 --------- --------- --------- Capital and reserves: Called up share capital 1,971 2,076 2,009 Share premium account 11,087 11,055 11,087 Capital redemption reserve 895 777 857 Profit and loss account (374) (630) (622) --------- --------- --------- 13,579 13,278 13,331 --------- --------- --------- GROUP CASH FLOW STATEMENT For the six months ended 31 October 2003 Six months to Six months to 31 Oct 31 Oct 2003 2002 £'000 £'000 Net cash inflow from operating 1,851 4,438 activities =========== =========== Returns on investments and servicing of finance Interest received 3 10 Interest paid (118) (142) ----------- ----------- (115) (132) Taxation UK corporation tax paid (211) (178) Overseas tax paid (123) (427) ----------- ----------- (334) (605) Capital expenditure and financial investment Payments to acquire tangible fixed (1,057) (1,247) assets Receipts from sales of tangible fixed 20 54 assets ----------- ----------- (1,037) (1,193) Equity dividends paid (392) (406) ----------- ----------- Cash (outflow)/inflow before financing (27) 2,102 ----------- ----------- Financing Purchase of own shares (278) (1,870) Repayment of long-term loan (1,164) (487) ----------- ----------- Net cash outflow from financing (1,442) (2,357) ----------- ----------- (Decrease) in cash in the period (1,469) (255) ----------- ----------- GROUP STATEMENT OF TOTAL RECOGNISED GAINS AND LOSSES For the six months ended 31 October 2003 Six months to Six months to 31 Oct 31 Oct 2003 2002 £000 £000 Profit for the period 1,163 1,074 Currency translation differences on foreign (128) (65) currency net investments Currency translation differences on foreign (442) (492) currency loans Deferred tax on long-term loan foreign currency movements 181 202 =========== ========== Total recognised gains and losses relating to 774 719 the period =========== ========== NOTES TO THE INTERIM FINANCIAL STATEMENTS 1.Cash flow statement Six months Six months to 31 Oct to 31 Oct 2003 2002 £'000 £'000 Reconciliation of operating profit to net cash inflow from operating activities Operating profit before interest and tax 1,878 1,772 Depreciation charges 1,153 1,212 (Profit) on sale of tangible fixed assets (12) (35) (Increase) in stocks (72) (147) Decrease in debtors 196 340 (Decrease)/increase in creditors (1,292) 1,296 ----------- ----------- Net cash inflow from operating activities 1,851 4,438 ----------- ----------- 2. The interim dividend is payable on 8th April 2004 to qualifying shareholders on the register at the close of business on 5th March 2004. 3. Earnings per share have been calculated on the basis of earning of £1,163,400 (2002: £1,074,000) and on 18,929,635 (2002: 21,018,289) ordinary shares being the weighted average number of ordinary shares in issue during the period. 4. Diluted earnings per share have been calculated on the basis of £1,163,400 (2002: £1,074,000) and on 19,220,712 (2002: 21,396,762) ordinary shares being the weighted average number of ordinary shares in the period adjusted to assume conversion of all dilutive potential ordinary shares 291,077 (2002: 378,473). 5. The interim accounts are unaudited. The above financial information does not comprise full accounts within the meaning of Section 240 of the Companies Act 1985 (as amended). 6. Copies of the interim report are being sent to shareholders and will also be made available on request to members of the public at the Company's registered office at 39 Brook Street, London W1K 4JE. This information is provided by RNS The company news service from the London Stock Exchange

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