Interim Results

Colefax Group PLC 26 January 2005 COLEFAX GROUP INTERIM RESULTS FOR THE SIX MONTHS TO 31 OCTOBER 2004 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 to £1.82m (2003: £1.76m) • Earnings per share increased by 11.7% to 6.87p (2003: 6.15p) • Sales of £31.70m (2003: £31.25m) • Maintained interim dividend of 1.34p per share (2003: 1.34p) David Green, chairman and chief executive, commenting on prospects, said, 'I believe that the trading environment in the US, our most important market, will remain favourable for the remainder of the year. In contrast, trading in Europe and the UK could become more difficult. The most significant factor affecting the Group's results is the continuing weakness of the US dollar and its impact on our ability to make improvements to profitability.' Enquiries: Colefax Group plc David Green, Chairman Tel: 020 7448 1000 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 2004 increased by 3% to £1.82 million (2003: £1.76 million) on sales up 1% at £31.70 million (2003: £31.25 million). On a constant currency basis, Group sales increased by 7%. Earnings per share increased by 11.7% to 6.87p (2003: 6.15p) partly due to the effect of share buybacks in the current and prior periods. The Board has decided to maintain the interim dividend at 1.34p per share (2003: 1.34p). This reflects continuing uncertainty over the current weakness of the US dollar. The interim dividend will be paid on 13th April 2005 to shareholders on the register at the close of business on 11th March 2005. During the period, the Group purchased and cancelled one million shares at a cost of £930,000 and representing 5.24% of the Group's issued share capital. Mainly due to the share buyback, Group net borrowings increased by £1.3 million to £4.1 million, which represents gearing of 32% to net tangible assets. Our results for the six months reflect a continuing improvement in trading conditions in the US, which, as we stated in our year-end results announcement in July, markedly improved at the beginning of 2004. The benefit of the sales increase, however, has been offset by the continued weakness of the US dollar. 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 12% on a constant currency basis. This market has performed well throughout the whole of 2004. We have recently opened our own showroom in Washington DC, which represents an important market for us, and this will help to grow sales. Sales in the UK, which represent 21% of the fabric division's turnover, increased by 5% during the period. However, we expect the slowing of activity in the high-end property sector will have an adverse impact on sales. Sales in Europe and the rest of the world, which represent 24% of the fabric division's turnover increased by 7% on a constant currency basis. Our principal markets, France, Germany and Italy remain difficult whilst certain of the lesser markets are seeing more significant growth. • Furniture - Kingcome Sofas Sales of furniture, which account for 3% of Group sales, decreased by 5% during the period. This reflected the challenging conditions in the UK furniture market. We have recently signed a new lease on a showroom next to our Colefax and Fowler showroom on the Fulham Road and expect to relocate Kingcome Sofas to this new site in the early part of 2005. The improved location should have a beneficial impact on sales. • Accessories - Manuel Canovas The majority of accessories sales, which represent approximately 3% of the Group total, take place in the second half of the year. We anticipate that sales will show a small increase on a like-for-like basis. However, as the US is a major market for this activity, the continued weakness of the dollar will have an adverse effect on sales growth. Interior Decorating Division Interior decorating sales for the first six months increased by 14%, although trading conditions have weakened slightly in the second half of the year. Antique sales have remained difficult, primarily due to a shortage of overseas customers. The current level of decorating deposits remains healthy and we anticipate a satisfactory performance for the year. Prospects I believe that the trading environment in the US, our most important market, will remain favourable for the remainder of the year. In contrast, trading in Europe and the UK could become more difficult. The most significant factor affecting the Group's results is the continuing weakness of the US dollar and its impact on our ability to make improvements to profitability. David Green Chairman PROFIT AND LOSS ACCOUNT For the six months ended 31 October 2004 Six months to Six months to Year to 31 Oct 31 Oct 30 April 2004 2003 2004 £'000 £'000 £'000 Turnover 31,701 31,254 63,381 ---------- ---------- --------- Operating profit 1,984 1,878 3,187 Interest (168) (116) (277) ---------- ---------- --------- Profit before taxation 1,816 1,762 2,910 Taxation (627) (599) (977) ---------- ---------- --------- Profit after taxation 1,189 1,163 1,933 Dividends (217) (248) (596) ---------- ---------- --------- Retained profit for the period 972 915 1,337 ---------- ---------- --------- Earnings per share 6.87p 6.15p 10.40p Diluted earnings per share 6.80p 6.05p 10.20p Dividend per share 1.34p 1.34p 3.40p GROUP BALANCE SHEET At 31 October 2004 At 31 Oct At 31 Oct At 30 April 2004 2003 2004 £'000 £'000 £'000 (Restated) (Restated) Fixed assets 5,978 6,763 6,113 --------- --------- --------- Current assets: Stocks and contracts in progress 13,117 12,882 11,470 Debtors 8,266 8,872 8,697 Cash at bank and in hand 2,944 1,989 1,769 --------- --------- --------- 24,327 23,743 21,936 --------- --------- --------- Creditors: amounts falling due within one year 16,811 16,061 14,198 Net current assets 7,516 7,682 7,738 --------- --------- --------- Total assets less current liabilities 13,494 14,445 13,851 --------- --------- --------- Creditors: amounts falling due after one year 750 1,250 1,000 Provision for liabilities and charges 106 130 106 --------- --------- --------- 12,638 13,065 12,745 --------- --------- --------- Capital and reserves: Called up share capital 1,809 1,971 1,909 Share premium account 11,087 11,087 11,087 Capital redemption reserve 1,057 895 957 Profit and loss account (1,315) (888) (1,208) --------- --------- --------- 12,638 13,065 12,745 --------- --------- --------- STATEMENT OF TOTAL RECOGNISED GAINS AND LOSSES For the six months ended 31 October 2004 Six months to Six months to Year to 31 Oct 31 Oct 30 April 2004 2003 2004 £000 £000 £000 Profit for the period 1,189 1,163 1,933 Currency translation differences on foreign currency net investments 53 (128) (238) Currency translation differences on foreign currency loans (290) (442) (756) Deferred tax on long-term loan foreign currency movements 121 181 319 ----------- ---------- ---------- Total recognised gains and losses relating to the period 1,073 774 1,258 ----------- ---------- ---------- CASH FLOW STATEMENT For the six months ended 31 October 2004 Six months to Six months to Year to 31 Oct 31 Oct 30 April 2004 2003 2004 £'000 £'000 £'000 Net cash inflow from operating activities 1,778 1,851 6,499 ---------- ---------- ---------- Returns on investments and servicing of finance Interest received 8 3 9 Interest paid (170) (118) (273) ---------- ---------- ---------- (162) (115) (264) ---------- ---------- ---------- Taxation UK corporation tax paid (593) (211) (679) Overseas tax refunded/ (paid) 13 (123) (141) ---------- ---------- ---------- (580) (334) (820) ---------- ---------- ---------- Capital expenditure and financial investment Payments to acquire tangible fixed assets (1,057) (1,057) (1,771) Receipts from sales of tangible fixed assets 4 20 96 ---------- ---------- ---------- (1,053) (1,037) (1,675) ---------- ---------- ---------- Equity dividends paid (354) (392) (634) ---------- ---------- ---------- Cash (outflow)/inflow before financing (371) (27) 3,106 ---------- ---------- ---------- Financing Purchase of own shares (930) (278) (782) Repayment of long-term loan (250) (1,164) (1,371) ---------- ---------- ---------- Net cash outflow from financing (1,180) (1,442) (2,153) ---------- ---------- ---------- (Decrease)/increase in cash in the period (1,551) (1,469) 953 ---------- ---------- ---------- NOTES TO THE INTERIM FINANCIAL STATEMENTS 1. Cash flow statement Six months to Six months to Year to 31 31 Oct 2004 31 Oct 2003 April 2004 £'000 £'000 £'000 Reconciliation of operating profit to net cash inflow from operating activities Operating profit before interest and tax 1,984 1,878 3,187 Depreciation charges 1,095 1,153 2,315 (Profit) on sale of tangible fixed assets (2) (12) (24) (Increase)/decrease in stocks (1,564) (72) 1,206 Decrease in debtors 392 196 646 (Decrease) in creditors (127) (1,292) (831) ----------- ---------- --------- Net cash inflow from operating activities 1,778 1,851 6,499 ----------- ---------- --------- 2. Adoption of new accounting requirement The Company has adopted UITF 38 'Accounting for ESOP trusts' at 1 May 2004, which requires an entity's own shares held in an employee share trust to be deducted in arriving at shareholders' funds rather than being disclosed as an asset. The adoption of the new accounting requirement represents a change in accounting policy, requiring previously reported figures to be restated in this year's interim financial information. This has had the effect of reducing shareholders' funds by £498,000 at 31 October 2004, £466,000 at 30 April 2004 and £514,000 at 31 October 2003. 3. The interim dividend is payable on 13 April 2005 to qualifying shareholders on the register at the close of business on 11 March 2005. 4. Earnings per share have been calculated on the basis of earnings of £1,189,000 (2003: £1,163,400) and on 17,311,708 (2003: 18,929,635) 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 £1,189,000 (2003: £1,163,400) and on 17,490,129 (2003: 19,220,712) ordinary shares being the weighted average number of ordinary shares in the period adjusted to assume conversion of all dilutive potential ordinary shares 178,421 (2003: 291,077). 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). 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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