Interim Results

Colefax Group PLC 25 January 2007 CFX.L COLEFAX GROUP PLC ('Colefax' or 'the Group') Interim Results for the six months ended 31 October 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 - Sales up 7.5% on constant currency basis to £33.76m (2005:£32.19m) - Favourable conditions across major markets US, UK and Continental Europe - US sales up 3% (2005: 8%) - UK sales up 17% (2005: Nil) reflecting strong housing market - European sales up 15% (2005: -1%), benefiting from improved economic conditions - Pre-tax profit up 26% to £2.54m (2005: £2.10m) - Earnings per share increased by 27% to 10.31p (2004: 8.09p) - Strong operating cash flow - Net cash of £0.56m - net borrowings eliminated - Interim dividend increased 5% to 1.45p per share (2005:1.38p) - Encouraging outlook for full year David Green, Chairman of Colefax, said, 'During the period, we have experienced favourable trading conditions in all our major markets and in the UK and Europe in particular. This continues the trend reported in our final results announcement last July. Group sales increased by 7.5% on a constant currency basis, which is the fastest rate of growth since the year 2000. Current growth trends seem likely to continue in at least the short term although we do expect a slowdown in the rate of growth in the US. We have continued to invest heavily in our core fabric brands and remain optimistic about the outlook for the full year.' Enquiries: Colefax Group plc David B. Green, Chairman Tel: 020 7448 1000 (today) Biddicks Katie Tzouliadis Tel: 020 7448 1000 CHAIRMAN'S STATEMENT Financial Results The Group's pre-tax profit for the six months to 31st October 2006 increased by 26% to £2.54 million (2005: £2.01 million) on sales up 5% at £33.76 million (2005: £32.19 million). Earnings per share increased by 27% to 10.31p (2005: 8.09p). Group net borrowings decreased by £673,000 eliminating the Group's gearing and giving rise to net cash of £556,000. During the period the Group purchased for cancellation 450,000 shares at an average price of £1.99 per share and representing 2.6% of the Group's issued share capital. The Board has decided to recommend that the interim dividend be increased by 5% to 1.45p per share (2005: 1.38p). The interim dividend will be paid on 12th April 2007 to shareholders on the register at the close of business on 10th March 2007. During the period we have experienced favourable trading conditions in all our major markets and in particular in the UK and Europe. This continues the trend reported in our final results announcement last July. On a constant currency basis Group sales increased by 7.5%, which is the fastest rate of growth since the year 2000. Current growth trends seem likely to continue in at least the short term although we do expect a slowdown in the rate of growth in the US. 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 55% of the Fabric Division's turnover, increased by 3% on a constant currency basis. This compares to growth of 8% in the equivalent period last year and suggests that rising interest rates are starting to have an impact on trading conditions. Our autumn fabric collections have been well received and in spite of the slower growth rate we believe that the high end market will continue to perform well. Sales in the UK, which represent 20% of the Fabric Division's turnover increased by 17% during the period. This reflects the strength of the high end housing market, particularly in London. We expect these favourable trading conditions to continue for the remainder of the financial year. Sales in Europe and the rest of the world, which represent 25% of the Fabric Division's turnover increased by 15% on a constant currency basis. This reflects improving economic conditions throughout most of Europe. Our European sales have benefited from the continued growth of our contemporary Larsen brand which was first launched in Europe in 2001. Overall we expect market conditions to remain generally favourable. • Furniture - Kingcome Sofas Sales of furniture, which account for 4% of Group sales, increased by 46% during the period. We attribute much of this dramatic improvement to the relocation of the trade and retail showroom to premises adjacent to our Colefax and Fowler showroom in London's Fulham Road. The closure of Kingcome's trade showroom in Chelsea Harbour has not adversely affected sales. This saving together with the sales increase will result in significantly improved furniture profits for the current year. • Accessories - Manuel Canovas Accessories sales comprise beachwear and candles and represent approximately 2% of the Group total. The majority of sales take place in the second half of the year. The forward order book is in line with the prior year although accessories profits will be adversely affected by the weak US dollar because almost one third of sales are invoiced in US dollars. Interior Decorating Division Decorating sales decreased by 1% during the period although this is largely due to timing differences in the invoicing of contracts. The level of deposits is up 18% on the prior year. This reflects good trading conditions in the UK and in particular the strength of the high end residential property market in London. Antique sales recovered strongly during the period increasing by 36%. This follows several years of difficult trading. Prospects Current trading conditions in all our major markets continue to remain favourable. We are experiencing a growth slowdown in the US but the trend is gradual rather than dramatic and reflects the general economy. Our main concern is the continued weakness of the US dollar which is having an adverse impact on margins in the US and if sustained will impact profits next year. In Europe, and especially in the UK, we expect market conditions to remain favourable. We have continued to invest heavily in our core fabric brands and remain optimistic about the outlook for the full year. David Green Chairman 25th January 2007 COLEFAX GROUP PLC INTERIM GROUP PROFIT AND LOSS ACCOUNT Unaudited Unaudited Audited Six Months Six Months Year to 31 Oct to 31 Oct to 30 April 2006 2005 2006 £'000 £'000 £'000 Turnover 33,764 32,194 68,361 Operating profit 2,493 2,088 4,419 Profit/(loss) on disposal of fixed assets 19 15 (177) ---------------------- --------- -------- -------- Profit on ordinary activities before interest and taxation 2,512 2,103 4,242 Interest received/(paid) 24 (91) (148) ---------------------- --------- -------- -------- Profit on ordinary activities before taxation 2,536 2,012 4,094 Taxation (875) (702) (1,270) ---------------------- --------- -------- -------- Profit for the period 1,661 1,310 2,824 ==================== ========= ======== ======== Earnings per share 10.31p 8.09p 17.4p Diluted earnings per share 9.95p 8.00p 16.8p Dividend per share 2.37p 2.16p 3.75p COLEFAX GROUP PLC INTERIM GROUP BALANCE SHEET Unaudited Unaudited Audited At 31 Oct At 31 Oct At 30 April 2006 2005 2006 £'000 £'000 £'000 Fixed assets 5,402 5,881 5,403 Current assets: Stocks and contracts in progress 11,878 12,314 10,942 Debtors 10,288 9,477 11,498 Cash at bank and in hand 4,366 3,870 2,347 -------- -------- --------- 26,532 25,661 24,787 -------- -------- --------- Creditors: amounts falling due within one year 16,263 17,324 14,493 Net current assets 10,269 8,337 10,294 -------- -------- --------- Total assets less current liabilities 15,671 14,218 15,697 -------- -------- --------- Creditors: amounts falling due after one year - 250 - Provision for liabilities and charges 33 64 57 -------- -------- --------- Net assets excluding pension liability 15,638 13,904 15,640 Pensions liability 134 112 134 -------- -------- --------- 15,504 13,792 15,506 ======== ======== ========= Capital and reserves: Called up share capital 1,664 1,709 1,709 Share premium account 11,087 11,087 11,087 Capital redemption reserve 1,202 1,157 1,157 ESOP share reserve (287) (499) (287) ESOP capital reserve 228 - 228 Profit and loss account 1,610 338 1,612 -------- -------- --------- 15,504 13,792 15,506 ======== ======== ========= COLEFAX GROUP PLC INTERIM GROUP STATEMENT OF TOTAL RECOGNISED GAINS AND LOSSES Unaudited Unaudited Audited Six Months Six Months Year to 31st Oct to 31st Oct to 30th April 2006 2005 2006 £'000 £'000 £'000 Profit for the period 1,661 1,310 2,824 Currency translation differences on foreign currency net investments (163) 61 127 Currency translation differences on foreign currency intercompany loans (378) 583 453 Deferred tax on long-term intercompany loan foreign currency movements 157 (238) (189) --------- --------- --------- Total recognised gains and losses relating to the period 1,277 1,716 3,215 ========= ========= ========= COLEFAX GROUP PLC INTERIM GROUP CASH FLOW STATEMENT Unaudited Unaudited Audited Six months Six months Year to 31st Oct to 31st Oct to 30th April 2006 2005 2006 £'000 £'000 £'000 Net cash inflow from operating activities 4,037 2,921 7,556 Returns on investments and servicing of finance Interest received 54 26 80 Interest paid (53) (135) (247) ---------- --------- --------- 1 (109) (167) Taxation UK corporation tax paid (649) (536) (988) Overseas tax paid (256) (77) (411) ---------- --------- --------- (905) (613) (1,399) Capital expenditure and financial investment Payments to acquire tangible fixed assets (966) (889) (1,781) Receipts from sales of tangible fixed assets 35 16 64 ---------- --------- --------- (931) (873) (1,717) Equity dividends paid (382) (350) (574) ---------- --------- --------- Cash inflow before financing 1,820 976 3,699 Financing Purchase of own shares (897) - - Repayment of long-term loan (250) (250) (500) ---------- --------- --------- Net cash outflow from financing (1,147) (250) (500) ---------- --------- --------- ---------- --------- --------- Increase in cash in the period 673 726 3,199 ========== ========= ========= COLEFAX GROUP PLC NOTES 1. Cash flow statement Unaudited Unaudited Audited Six months Six months Year to 31st Oct to 31st Oct to 30th April 2006 2005 2006 £'000 £'000 £'000 Reconciliation of operating profit to net cash inflow from operating activities Operating profit before interest and tax 2,493 2,088 4,419 Depreciation charges 807 1,018 2,116 (Increase)/decrease in stocks (1,058) 95 1,442 Decrease/(increase) in debtors 1,009 264 (1,615) Increase/(decrease) in creditors 786 (544) 1,194 --------- --------- -------- Net cash inflow from operating activities 4,037 2,921 7,556 --------- --------- -------- 2. The interim results have been prepared in accordance with applicable Accounting Standards and on the basis of the accounting policies set out in the annual report and accounts for the year ended 30th April 2006, which have remained unchanged. 3. During the financial period ended 31 October 2006, the Company paid a final dividend for the year ended 30 April 2006 of 2.37p per ordinary share giving a total dividend of £382,232. The proposed interim dividend of 1.45p (2005: 1.38p) per share is payable on 12th April 2007 to qualifying shareholders on the register at the close of business on 10th March 2007. 4. Earnings per share have been calculated on the basis of earnings of £1,661,000 (2005: £1,310,000) and on 16,111,464 (2005: 16,197,578) ordinary shares being the weighted average number of ordinary shares in issue during the period. 5. Diluted earnings per share have been calculated on the basis of earnings of £1,661,000 (2005: £1,310,000) and on 16,698,371 (2005: 16,386,128) ordinary shares being the weighted average number of ordinary shares in the period adjusted to assume conversion of all dilutive potential ordinary shares 586,907 (2005: 188,550). 6. 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). The comparatives for the full year ended 30th April 2006 are not the Company's full statutory accounts for that year. A copy of the statutory accounts for that year has been delivered to the Registrar of Companies. The auditor's report on those accounts was unqualified and did not contain a statement under section 237 (2)-(3) of the Companies Act 1985 (as amended). 7. 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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