Preliminary Results

RNS Number : 7640K

Colefax Group PLC

21 July 2011

 



Colefax Group plc

CFX

COLEFAX GROUP PLC

("Colefax" or the "Group")

Preliminary Results for the year ended 30th April 2011

Colefax is an international designer and distributor of luxury 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 and Tout, Jane Churchill, Manuel Canovas and Larsen.

Highlights

·      Sales from continuing operations increased 12% to £77.72m (2010: £69.19m)

·      Exceptional performance from the Decorating Division

·      Pre-tax profits from continuing operations up 49% to £6.52m (2010: £4.39m)

·      Earnings per share from continuing operations up 53% to 33.0p (2010: 21.6p)

·      Net cash at the year end of £6.30m (2010: £5.47m)

·      Proposed final dividend of 2.00p per share (2010: 1.55p per share), giving total dividend of 3.85p (2010: 3.10p), an increase of 24%

·      Cautious outlook but Group well placed to take advantage of any upturn in markets

David Green, Chairman of Colefax, commented,

"This is a strong set of results helped by an exceptional performance from our Decorating Division. We have seen growth in all of our major markets but I still feel that full recovery from the recession is a long way off.

The Group has a strong balance sheet and we are confident that we are well placed to take advantage of any improvements in our markets but until then we will work on cost controls and take a cautious view of the future."

Enquiries:

Colefax Group plc	David Green, Chairman	Tel: [phone] (today)
	Robert Barker, Finance Director
Biddicks	Katie Tzouliadis	Tel: [phone]
	Sophie Lane
Peel Hunt LLP	Dan Webster	Tel: [phone]
(NOMAD & Broker)	Richard Brown

COLEFAX GROUP PLC

CHAIRMAN'S STATEMENT

Financial Results

The Group's pre-tax profit from continuing operations for the year to 30th April 2011 increased by 49% to £6.52 million (2010 - £4.39 million) on sales up 12% at £77.72 million (2010 - £69.19 million).  Earnings per share from continuing operations increased by 53% to 33.0p (2010 - 21.6p) and the Group ended the year with net cash of £6.30 million (2010 - £5.47 million).

During the year, the Group purchased for cancellation 655,000 shares at an average price of £2.81 per share, representing 4.5% of the Group's issued share capital at the start of the year.

The Board has decided to increase the final dividend by 29% to 2.00p per share (2010 - 1.55p), making a total for the year of 3.85p (2010 - 3.10p), an increase of 24%. The final dividend will be paid on 11th October 2011 to shareholders on the register at the close of business on 16th September 2011.

This year's results have benefited from a very strong performance from the Decorating Division which should be seen as exceptional. In the Product Division a good recovery in the UK helped offset a disappointing year in the US. The principal challenge at the moment is dealing with some very significant increases in the cost of raw materials which are having a negative impact on the Group's margin. Currently raw material prices are showing no signs of returning to more historic levels.

Product Division

·      Fabric - Portfolio of Five Brands: "Colefax and Fowler", "Cowtan and Tout", "Jane Churchill", "Manuel Canovas" and "Larsen"

Sales in the Fabric Division, which represent 79% of Group sales from continuing operations, increased by 9% to £61.20 million (2010 - £56.00 million). Profit from operations increased by 41% to £4.23 million (2010 - £3.01 million).

Sales in the US, which represent 49% of the Fabric Division's sales, increased by 10% on a constant currency basis.  This sales increase must be seen as disappointing when compared with the dramatic fall in sales of the previous year. We completed the refurbishment of our New York showroom in May 2011 and this should increase sales in our most important US territory. We are in the process of relocating our warehouse and operations to a new location in Manhattan which will be completed by the end of August 2011. The move brings together the design studio and operations for the first time in one location and establishes a long term base for the Group in Manhattan.

UK sales, which represent 21% of the Fabric Division's sales, increased by 10% during the year. There was a stronger recovery in the first half of the year but current trading conditions are weaker and showing signs of further weakening over the next 12 months.

Sales in Continental Europe, which represent 27% of the Fabric Division's sales, increased by 6% on a constant currency basis with most of the increase in the first half of the year.  Many European countries are cautious about the next 12 months and with the current problems in the Eurozone I am not optimistic that we can expect to see continued growth in this area.

Sales in the rest of the world, which represent just 3% of the Fabric Division's sales, were up by 4% in the year. There are a number of opportunities to grow some of these markets such as Russia and China although they currently remain a small part of total sales.

·      Furniture - Kingcome Sofas

Sales of Kingcome furniture, which account for 3% of Group sales from continuing operations, decreased by 4% to £2.44 million (2010 - £2.55 million). Profit from operations was £211,000 (2010 - £280,000) which represents a reasonable performance for the year given the challenging trading conditions. The majority of furniture sales are made in the UK and it is this area of the Group's activities which is most at risk from a downturn in the market.

Interior Decorating Division

 

Interior decorating sales, which account for 18% of Group sales from continuing operations, increased by 32% to £14.08 million (2010 - £10.63 million). This represents an exceptional performance and resulted in a profit from operations of £2.01 million (2010 - £1.10 million).  During the year, we completed a number of significant projects for a single client which contributed to the near doubling of profits in this division. We are unlikely to produce this level of results again and they must be seen as a one off.

Prospects

Trading in the second half of the year was weaker than expected and it is still very difficult to accurately forecast how the Group will perform in the next financial year given the current economic climate. I still feel that full recovery from the recession is a long way off. The recovery in our largest market the US is slower than we would have hoped and sales are still well below pre-recession levels. The UK market recovered well last year but we are now starting to see signs of weakness. These factors combined with the Decorating Division returning to more normal levels of activity will mean that our results for the coming year are likely to be lower than this year.  

The Group has a strong balance sheet and we are confident that we are well placed to take advantage of any improvements in our markets but until then we will work on cost controls and take a cautious view of the future.

David Green

Chairman

21^st July 2011

COLEFAX GROUP PLC

GROUP INCOME STATEMENT

For the year ended 30th April 2011

				Restated
		2011		2010
		£'000		£'000
	Continuing operations:
	Revenue	77,722		69,188
	Cost of sales	34,929		31,287
	Gross profit	42,793		37,901
	Operating expenses	36,345		33,514
	Profit from operations	6,448		4,387
	Finance income	74		11
	Finance expense	(1)		(10)
		73		1
	Profit before taxation	6,521		4,388
	Tax expense
	-UK	(1,329)		(1,236)
	-Overseas	(436)		(19)
		(1,765)		(1,255)
	Profit from continuing operations	4,756		3,133
	Trading loss on discontinued operations, net of tax	(111)		(357)
	Loss on disposal, net of tax	(72)		(400)
	Loss on discontinued operations, net of tax	(183)		(757)
	Profit for the year attributable to equity holders of the parent	4,573		2,376
	Basic earnings per share	31.8	p	16.4	p
	Diluted earnings per share	31.5	p	16.1	p
	Continuing operations:
	Basic earnings per share	33.0	p	21.6	p
	Diluted earnings per share	32.8	p	21.2	p

COLEFAX GROUP PLC

GROUP STATEMENT OF COMPREHENSIVE INCOME

For the year ended 30th April 2011

		2011		2010
		£'000		£'000
	Profit for the year	4,573		2,376
	Other comprehensive income:
	Currency translation differences on foreign currency net investments	(610)		(412)
	Cash flow hedges:
	Gains recognised directly in equity	1,012		596
	Transferred to profit and loss for the year	(235)		(71)
	Tax on components of other comprehensive income	50		(49)
	Total other comprehensive income	217		64
	Total comprehensive income for the year attributable to equity holders of the parent	4,790		2,440

COLEFAX GROUP PLC

GROUP STATEMENT OF FINANCIAL POSITION

At 30th April 2011

	2011	2010
	£'000	£'000
Non-current assets:
Property, plant and equipment	5,909	5,309
Deferred tax asset	1,372	1,639
	7,281	6,948
Current assets:
Inventories and work in progress	12,283	11,886
Trade and other receivables	12,640	12,380
Cash and cash equivalents	7,132	5,897
	32,055	30,163
Current liabilities:
Trade and other payables	13,042	12,598
Current corporation tax	388	532
Provisions	205	606
	13,635	13,736
Net current assets	18,420	16,427
Total assets less current liabilities	25,701	23,375
Non-current liabilities:
Pension liability	241	320
Net assets	25,460	23,055
Capital and reserves attributable to equity holders of the Company:
Called up share capital	1,405	1,470
Share premium account	11,148	11,148
Capital redemption reserve	1,469	1,404
ESOP share reserve	(96)	(18)
Share based payment reserve	94	196
Foreign exchange reserve	1,383	1,741
Cash flow hedge reserve	583	8
Retained earnings	9,474	7,106
Total equity	25,460	23,055

The financial statements were approved by the board of directors and authorised for issue on 21st July 2011.

D. B. Green Director

R. M. Barker Director

COLEFAX GROUP PLC

GROUP STATEMENT OF CASH FLOWS

For the year ended 30th April 2011

	2011	2010
	£'000	£'000
Operating activites
Profit before taxation - continuing operations	6,521	4,388
Loss before taxation - discontinued operations	(278)	(1,147)
Finance income	(74)	(11)
Finance expense	1	10
Depreciation	2,044	1,883
Cash flows from operations before changes in working capital	8,214	5,123
(Increase) / decrease in inventories and work in progress	(566)	1,193
Decrease / (increase) in trade and other receivables	316	(848)
Decrease in trade and other payables	(205)	(39)
Cash generated from operations	7,759	5,429
Taxation paid
UK corporation tax paid	(1,280)	(530)
Overseas tax paid	(279)	(106)
	(1,559)	(636)
Net cash inflow from operating activities	6,200	4,793
Investing activities
Payments to acquire property, plant and equipment	(2,885)	(1,716)
Receipts from sales of property, plant and equipment	29	106
Interest received	74	11
Purchase of ESOP shares	(95)	-
Net cash outflow from investing	(2,877)	(1,599)
Financing activities
Purchase of own shares	(1,840)	(137)
Interest paid	(1)	(10)
Equity dividends paid	(486)	(412)
Net cash outflow from financing	(2,327)	(559)
Net increase in cash and cash equivalents	996	2,635
Cash and cash equivalents at beginning of year	5,472	3,078
Exchange losses on cash and cash equivalents	(170)	(241)
Cash and cash equivalents at end of year	6,298	5,472

 COLEFAX GROUP PLC

GROUP STATEMENT OF CHANGES IN EQUITY

For the year ended 30th April 2011

	Share capital	Share premium account	Capital redemption reserve	ESOP share reserve	Share based payment reserve	Foreign exchange reserve	Cash flow hedge reserve	Retained earnings	Total equity
	£'000	£'000	£'000	£'000	£'000	£'000	£'000	£'000	£'000
At 1 May 2010	1,470	11,148	1,404	(18)	196	1,741	8	7,106	23,055
Profit for the year	-	-	-	-	-	-	-	4,573	4,573
Foreign exchange	-	-	-	-	-	(610)	-	-	(610)
Cash flow hedges:
Gains	-	-	-	-	-	-	1,012	-	1,012
Transfers	-	-	-	-	-	-	(235)	-	(235)
Tax on other comprehensive income	-	-	-	-	-	252	(202)	-	50
Share buybacks	(65)	-	65	-	-	-	-	(1,840)	(1,840)
ESOP shares granted	-	-	-	17	19	-	-	-	36
Share options exercised	-	-	-	-	(121)	-	-	121	-
Dividends paid	-	-	-	-	-	-	-	(486)	(486)
Purchase of ESOP shares	-	-	-	(95)	-	-	-	-	(95)
At 30 April 2011	1,405	11,148	1,469	(96)	94	1,383	583	9,474	25,460
At 1 May 2009	1,481	11,148	1,393	(30)	475	2,055	(370)	4,981	21,133
Profit for the year	-	-	-	-	-	-	-	2,376	2,376
Foreign exchange	-	-	-	-	-	(412)	-	-	(412)
Cash flow hedges:
Gains	-	-	-	-	-	-	596	-	596
Transfers	-	-	-	-	-	-	(71)	-	(71)
Tax on other comprehensive income	-	-	-	-	-	98	(147)	-	(49)
Share buybacks	(11)	-	11	-	-	-	-	(137)	(137)
ESOP shares granted	-	-	-	16	15	-	-	-	31
Share options exercised	-	-	-	-	(294)	-	-	294	-
Dividends paid	-	-	-	-	-	-	-	(412)	(412)
Other movements	-	-	-	(4)	-	-	-	4	-
At 30 April 2010	1,470	11,148	1,404	(18)	196	1,741	8	7,106	23,055

COLEFAX GROUP PLC

NOTES TO THE FINANCIAL INFORMATION

At 30th April 2011

1. Accounting policies

The principal accounting policies adopted by the Group have been applied consistently to the years presented, except as stated below.

Revenue has been restated in 2010 to reclassify sampling and freight income which had previously been reported within cost of sales and operating expenses. The reclassification does not result in a change to profit from operations or the statement of financial position.

2. Earnings per share

Basic earnings / (loss) per share has been calculated using the following data:
	2011	2010
	£'000	£'000
Profit after tax from continuing operations	4,756	3,133
Loss after tax on discontinued operations	(183)	(757)
Total	4,573	2,376
	No.	No.
Weighted average number of ordinary shares in issue	14,396,731	14,520,877
Shares owned by the Colefax Group plc Employees' Share Ownership Plan (ESOP) Trust are excluded
from the basic earnings per share calculation.
Diluted earnings / (loss) per share has been calculated using the following data:
	2011	2010
	£'000	£'000
Profit after tax from continuing operations	4,756	3,133
Loss after tax on discontinued operations	(183)	(757)
Total	4,573	2,376
	No.	No.
Weighted average number of ordinary shares in issue	14,396,731	14,520,877
Dilutive effect of shares under option	115,000	235,000
	14,511,731	14,755,877

 

3. Cash and cash equivalents

For the purposes of the consolidated statement of cash flows, cash and cash equivalents comprise the following:

	2011	2010
	£'000	£'000
Cash at bank and in hand	7,132	5,897
Bank overdrafts	(834)	(425)
	6,298	5,472

Cash at bank earns interest at floating rates based on daily bank deposit rates.  The fair value of cash and cash equivalents are considered to be their book value.

4.  The above financial information, which has been prepared in accordance with International Financial Reporting Standards as endorsed by the European Union, does not constitute statutory accounts as defined in Section 435 of the Companies Act 2006.

The financial information for the year ended 30th April 2011 has been extracted from the statutory accounts which will be delivered to the Registrar of Companies following the company's annual general meeting. The Independent Auditors' Report on those financial statements was unqualified and did not contain a statement under Section 498(2) and Section 498(3) of the Companies Act 2006. The comparative financial information is based on the statutory accounts for the financial year ended 30th April 2010 which have been delivered to the Registrar of Companies.

5. Annual general meeting

The Annual General Meeting of Colefax Group plc will be held at 19-23 Grosvenor Hill, London W1K 3QD on 13th September 2011 at 11.00 a.m.

 

END

 

 

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