Interim Results - 6 Months to 31 October 1999

Colefax Group PLC 13 January 2000 COLEFAX GROUP PLC INTERIM RESULTS FOR THE SIX MONTHS TO 31 OCTOBER, 1999 Colefax is a leading international designer and distributor of fabrics and wallpaper and a leading international decorating company. Portfolio of five major fabric brands: 'Colefax and Fowler', 'Cowtan & Tout', 'Jane Churchill', 'Manuel Canovas' and 'Larsen'. Key Points * Profit before tax increased by 15% to £1.98m (1998: £1.71m). * Earnings per share rose by 14% to 4.83p (1998: 4.23p). * Interim dividend up 6.8% to 1.25p (1998: 1.17p). * Board strengthened with appointment of Key Hall - chief executive officer of US subsidiary, Cowtan & Tout - to take effect 1 February 2000. * Continuing strong performance in our largest market of US (57% of Product Division sales). * Sales strengthened in Continental Europe (21% of Product Division sales) while trading in UK (19% of Product Division sales) remained flat. * Interior Decorating Division enjoyed good performance, in line with expectations - although below record results of previous period. * Holding company name shortened to 'Colefax Group' - reflecting the diversity of our portfolio of brands within the Product Division and the international nature of our business. * Commenting on the results and prospects, David Green, Chairman, said, ' I am delighted to report on another very good set of interim results... a significant factor contributing to our encouraging performance was the continued strength of our largest market, the United States. We are now in a position to concentrate all our efforts on increasing sales in all of our major markets... Current trading is encouraging and I am confident that the improvement made in the first six months will continue for the rest of the year ...' Enquiries: Colefax Group plc David Green, Chairman Tel: 020 7377 6677 Biddick Associates Zoe Biddick / Katie Tzouliadis Tel: 020 7377 6677 CHAIRMAN'S STATEMENT I am delighted to report on another very good set of interim results for the six months to 31st October 1999. A significant factor contributing to our encouraging performance was the continued strength of our largest market, the United States, which represents approximately 55% of our Group's sales. Financial Results The Group's pre-tax profit for the six months to 31st October 1999 increased by 15% to £1.98 million (1998: £1.71 million) on sales slightly lower at £30.2 million (1998: £31.2 million). The 3% reduction in sales is principally accounted for by the rationalisation of the Manuel Canovas product range and lower sales from the Interior Decorating Division following an exceptional performance in 1998. Earnings per share rose by 14% to 4.83p (1998: 4.23p). Group net borrowings at the year end were £5.98 million which represents gearing of 57% to net tangible assets. The Board has decided to recommend an interim dividend of 1.25p per share (1998: 1.17p), a rise of 6.8%. The interim dividend will be paid on the 7th April 2000 to shareholders on the register at the close of business on the 10th March 2000. Product Division - Portfolio of Brands; 'Colefax and Fowler', 'Cowtan & Tout', 'Jane Churchill', 'Manuel Canovas' and 'Larsen'. Sales in the United States, which represent 57% of the Product Division's turnover, increased on a like-for-like basis by 8%. I am especially pleased to report that the most significant increase came from our Larsen brand. During the period, we continued to make excellent progress in refurbishing our showrooms. The refurbishment of our showroom in New York, our most significant territory, will be completed by the end of January and we anticipate that the expansion of our Boston showroom will be finished by the end of March. In San Francisco, we will be moving to larger premises, which we expect to be operational by September and following the appointment of a new agent in Texas, we have improved our representation in Dallas and Houston. The opening of the new San Francisco showroom in the Autumn will mark the substantial completion of our three year investment programme to upgrade our presence and build a solid platform for future growth across the major US markets. The UK market, which represents 19% of sales, has been flat during the period. Following our all important product launch in September, we have started to see signs of improvement and our Chelsea Harbour showroom has experienced a significant increase in activity. Recent trading has been encouraging and we are therefore optimistic of growth in this market in the second half. Sales in Continental Europe, which represent 21% of the total, increased on a like-for-like basis by 3%. Following the acquisition of Manuel Canovas in April 1998, the focus of our activity has been to rationalise and consolidate our network of sales agents across Europe and improve our showroom presence where necessary in order to take advantage of the growth opportunities that exist within this important marketplace. We are in the process of refurbishing our Paris showrooms and these will be ready to reopen in mid January. In Italy, our second largest market in Continental Europe, we are relocating our showroom to Milan. We expect the move to be completed by the end of January to coincide with the opening of the Milan textile exhibition, Incontri, where we will be exhibiting. The most exciting event of the second half of the year will be the launch of our first major Manuel Canovas collection since we acquired the company. The launch of the new collection will take place at Heimtextil in Frankfurt in January and will be introduced across Europe. Sales in the rest of the world, which account for 3% of the total, are 4% down on a like-for-like basis on last year, mainly as a result of the impact of a strong pound on trading conditions in Australia. We are currently amalgamating the distribution of the Manuel Canovas brand with our existing distributors in Australia and New Zealand. Interior Decorating Division - Sibyl Colefax & John Fowler After an exceptional trading period last year, with our lead interior decorators completing a number of substantial contracts, sales during the first half returned to more normal levels of trading. This still represented a good overall performance and was in line with our expectations. Our interior decorating teams have commenced a number of new contracts and we anticipate a buoyant second half. Board Appointment I am delighted to announce that Key Hall will be appointed to the Board of Colefax Group plc with effect from 1 February 2000. Key joined the Group in 1994 and since March 1999 has been Chief Executive Officer of our US subsidiary, Cowtan & Tout. Prospects The Group has now completed its integration programme following the acquisition of Manuel Canovas. We are now in a position to concentrate all our efforts on increasing sales in all of our major markets . The United States, our most important market, remains strong. The UK has strengthened in recent months and Continental Europe is starting to improve although it is still adversely affected by the strength of sterling. Current trading is encouraging and I am confident that the improvement made in the first six months will continue for the rest of the year and produce a good end of year result for our shareholders. David Green Chairman GROUP PROFIT AND LOSS ACCOUNT For the six months ended 31st October, 1999 1999 1998 Total Total £'000 £'000 Turnover 30,189 31,225 ____________________ 30,189 31,225 Cost of sales 13,088 13,469 ____________________ Gross profit 17,101 17,756 Operating expenses 14,913 15,803 ____________________ Operating profit 2,188 1,953 ____________________ Profit on ordinary activities before interest 2,188 1,953 Net interest payable (213) (248) ___________________ Profit on ordinary activities before taxation 1,975 1,705 Tax on profit on ordinary activities (652) (528) ___________________ Profit on ordinary activities after taxation 1,323 1,177 Dividends (298) (326) ___________________ Retained profit for the year 1,025 851 Earnings per share 4.83p 4.23p Diluted earnings per share 4.80p 4.21p Dividend per share 1.25p 1.17p GROUP BALANCE SHEET At 31st October, 1999 31st Oct 31st Oct 30th April 1999 1998 1999 £'000 £'000 £'000 Fixed assets: Tangible assets 6,920 7,831 7,363 Investments 419 419 419 __________________________ 7,339 8,250 7,782 Current assets: Stocks and contracts in progress 13,391 14,449 12,884 Debtors 7,183 8,253 8,396 Cash at bank and in hand 1,976 1,739 1,554 __________________________ 22,550 24,441 22,834 __________________________ Creditors: amounts falling due within one year 15,740 19,143 15,115 __________________________ Net current assets 6,810 5,298 7,719 __________________________ Total assets less current liabilities 14,149 13,548 15,501 __________________________ Creditors: amounts falling due after one year 3,389 3,033 3,831 Provision for liabilities and charges 285 468 285 __________________________ 10,475 10,047 11,385 __________________________ Capital and reserves: Called up share capital 2,661 2,853 2,853 Share premium account 9,514 11,053 11,055 Capital redemption reserve 1,734 - - Profit and loss account (3,434) (3,859) (2,523) __________________________ 10,475 10,047 11,385 __________________________ GROUP CASH FLOW STATEMENT For the six months ended 31st October, 1999 1999 1998 £'000 £'000 Net cash inflow from operating activities 3,194 2,279 Returns on investment and servicing of finance Interest received 34 7 Interest paid (274) (216) ___________________ (240) (209) Taxation UK corporation tax received 15 - ACT paid - (73) Overseas tax paid (237) (168) ___________________ (222) (241) Capital expenditure and financial investment Payments to acquire tangible fixed assets (921) (2,514) Receipts from sales of tangible fixed assets 5 67 ___________________ (916) (2,447) Equity dividends paid (484) (474) ___________________ Cash inflow/(outflow) before financing 1,332 (1,092) Financing Issue of ordinary share capital - 85 Purchase of own shares (1,734) - ____________________ Net cash (outflow)/inflow from financing (1,734) 85 ____________________ Decrease in cash in the period (402) (1,007) ____________________ GROUP STATEMENT OF TOTAL RECOGNISED GAINS AND LOSSES For the six months ended 31st October, 1999 1999 1998 £'000 £'000 Profit for the period 1,323 1,177 Currency translation differences on foreign currency net investments (202) 57 __________________ Total recognised gains and losses relating to the period 1,121 1,234 __________________ NOTES TO THE INTERIM FINANCIAL STATEMENTS 1. The interim dividend is payable on 7th April 2000 to qualifying shareholders on the register at the close of business on the 10th March 2000. 2. Earnings per share have been calculated on the basis of earnings of £1,323,000 (1998: £1,177,000) and on 27,393,536 (1998: 27,836,970) ordinary shares being the weighted average number of ordinary shares in issue during the period. 3. Diluted earnings per share have been calculated on the basis of earnings of £1,323,000 (1998: £1,177,000) and on 27,588,352 (1998: 27,940,936) ordinary shares being the weighted average number of ordinary shares in issue during the period adjusted to assume conversion of all dilutive potential ordinary shares 194,816 (1998: 103,966). 4. 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). 5. Copies of the interim report are being sent to shareholders and will also be made available upon request to members of the public at the Company's registered office at 39, Brook Street, London W1Y 2JE.

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