Preliminary Results

RNS Number : 5284I

Colefax Group PLC

26 July 2012

 



CFX

COLEFAX GROUP PLC

("Colefax" or the "Group")

Preliminary Results for the year ended 30th April 2012

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 of £70.40m (2011: £77.72m)

·      Pre-tax profit of £3.15m (2011: £6.52m)

·      Earnings per share of 15.8p (2011: 33.0p)

·      Net cash of £8.52m (2011: £6.30m)

·      Final dividend maintained at 2.00p per share (2011: 2.00p per share), taking total dividend for the year to 3.85p (2011: 3.85p)

·      Results impacted by very weak performance from the Decorating Division

·      Strong financial position but outlook remains cautious

David Green, Chairman of Colefax, commented,

"The principal reason for the decline in our pre-tax profits was a very weak performance from the Decorating Division which made a loss of £87,000 compared to an exceptional profit of £2.01 million last year. Sales in the Product Division were flat reflecting difficult trading conditions in all of our major markets.

The current economic conditions prevailing in our most important markets make it difficult to be optimistic about short term growth prospects.  The Group has a strong balance sheet and is well placed to deal with adverse market conditions. Until we are confident of an improvement we will continue to run the business prudently focussing on cash flow and tight control of working capital."

Enquiries:

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

COLEFAX GROUP PLC

CHAIRMAN'S STATEMENT

Financial Results

 

The Group's pre-tax profit for the year to 30th April 2012 decreased by 52% to £3.15 million (2011 - £6.52 million) on sales down 9% at £70.40 million (2011 - £77.72 million).  Earnings per share decreased by 52% to 15.8p (2011 - 33.0p) and the Group ended the year with net cash of £8.52 million (2011 - £6.30 million).

 

During the year, the Group purchased for cancellation 140,000 shares at an average price of £2.44 per share, representing 1.0% of the Group's issued share capital at the start of the year.

 

The Board has decided to maintain the final dividend at 2.00p per share (2011 - 2.00p), making a total for the year of 3.85p (2011 - 3.85p).  The final dividend will be paid on 9th October 2012 to shareholders on the register at the close of business on 14th September 2012.

 

As stated when we announced our Interim Results the principal reason for the decline in our pre-tax profits was a very weak performance from the Decorating Division which made a loss of £87,000 compared to an exceptional profit of £2.01 million last year. Sales in the Product Division were flat reflecting difficult trading conditions in all of our major markets.

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 87% of Group sales, increased by 1% to £61.27 million on a constant currency basis (2011 - £61.20 million).  Profit from operations decreased by 25% to £3.18 million (2011 - £4.23 million).

 

Sales in the US, which represent 50% of the Fabric Division's sales, increased by 4% on a constant currency basis.  Trading conditions in all our main territories have been difficult especially New York which is our largest territory. During the year we moved our US operations to new premises in New York and we have continued to invest in our network of showrooms in the firm belief that this market will recover. We recently assumed full responsibility for our agent showroom in Florida which we believe will increase sales in this important territory. 

 

UK sales, which represent 21% of the Fabric Division's sales, decreased by 1% during the year following a 10% increase in the previous year. I am still surprised by the relative strength of this market and therefore remain concerned that it will continue at this level. The UK housing market is still showing no sign of recovery and the UK economy is being affected by the on going problems in the Eurozone.

 

Sales in Continental Europe, which represent 26% of the Fabric Division's sales, decreased by 3% on a constant currency basis. There was a wide variation in performance between countries. In our top three markets, sales in France were flat, sales in Italy were down 14% and sales in Germany were up 5%. I believe that, with the possible exception of Germany, all these markets will remain very difficult in the near future.  We are about to relocate our showroom in Munich to a far more prominent position which will improve our presence in this important market.

 

Sales in the rest of the world, which represent 3% of the Fabric Division's sales, were down by 2% in the year.  There are opportunities to grow in certain markets and we are targeting the Middle East and Russia as the two principal markets for growth in the coming year. 

·      Furniture - Kingcome Sofas

Sales of Kingcome furniture, which account for 3% of Group sales, decreased by 7% to £2.28 million (2011 - £2.44 million).  Operating profit was £63,000 (2011 - £211,000) and whilst this result was disappointing, it reflects very challenging market conditions. The majority of furniture sales are made in the UK and we are currently exploring opportunities to increase export sales in selected markets.

Interior Decorating Division

 

Interior decorating sales, which account for 10% of Group sales, decreased by 51% to £6.85 million (2011 - £14.08 million). This resulted in a loss for the year of £87,000 compared to a profit of £2.01 million last year.  The weak performance this year follows an exceptional performance last year and is not unusual after the completion of a number of major projects.

  

Prospects

 

Trading in all our major markets remains difficult.  However, over the last two months, we have seen a small improvement in our largest market, the US. The current economic conditions prevailing in our most important markets make it difficult to be optimistic about short term growth prospects.  The Group has a strong balance sheet and is well placed to deal with adverse market conditions. Until we are confident of an improvement we will continue to run the business prudently focussing on cash flow and tight control of working capital.

David Green

Chairman

COLEFAX GROUP PLC

GROUP INCOME STATEMENT

For the year ended 30th April 2012

		2012		2011
		£'000		£'000
	Continuing operations:
	Revenue	70,399		77,722
	Cost of sales	31,595		34,929
	Gross profit	38,804		42,793
	Operating expenses	35,653		36,345
	Profit from operations	3,151		6,448
	Finance income	-		74
	Finance expense	(3)		(1)
		(3)		73
	Profit before taxation	3,148		6,521
	Tax expense
	-UK	(691)		(1,329)
	-Overseas	(262)		(436)
		(953)		(1,765)
	Profit from continuing operations	2,195		4,756
	Trading loss on discontinued operations, net of tax	-		(111)
	Loss on disposal, net of tax	-		(72)
	Loss on discontinued operations, net of tax	-		(183)
	Profit for the year attributable to equity holders of the parent	2,195		4,573
	Basic earnings per share	15.8	p	31.8	p
	Diluted earnings per share	15.8	p	31.5	p
	Continuing operations:
	Basic earnings per share	15.8	p	33.0	p
	Diluted earnings per share	15.8	p	32.8	p

COLEFAX GROUP PLC

GROUP STATEMENT OF COMPREHENSIVE INCOME

For the year ended 30th April 2012

		2012		2011
		£'000		£'000
	Profit for the year	2,195		4,573
	Other comprehensive (expense) / income:
	Currency translation differences on foreign currency net investments	(62)		(610)
	Cash flow hedges:
	(Losses) / gains recognised directly in equity	(120)		1,012
	Transferred to profit and loss for the year	(400)		(235)
	Tax on components of other comprehensive income	57		50
	Total other comprehensive (expense) / income	(525)		217
	Total comprehensive income for the year attributable to equity holders of the parent	1,670		4,790

COLEFAX GROUP PLC

GROUP STATEMENT OF FINANCIAL POSITION

At 30th April 2012

	2012	2011
	£'000	£'000
Non-current assets:
Property, plant and equipment	7,319	5,909
Deferred tax asset	1,062	1,372
	8,381	7,281
Current assets:
Inventories and work in progress	12,215	12,283
Trade and other receivables	8,894	12,640
Cash and cash equivalents	8,519	7,132
	29,628	32,055
Current liabilities:
Trade and other payables	11,064	13,042
Current corporation tax	438	388
Provisions	-	205
	11,502	13,635
Net current assets	18,126	18,420
Total assets less current liabilities	26,507	25,701
Non-current liabilities:
Pension liability	253	241
Net assets	26,254	25,460
Capital and reserves attributable to equity holders of the Company:
Called up share capital	1,391	1,405
Share premium account	11,148	11,148
Capital redemption reserve	1,483	1,469
ESOP share reserve	(96)	(96)
Share based payment reserve	19	94
Foreign exchange reserve	1,238	1,383
Cash flow hedge reserve	203	583
Retained earnings	10,868	9,474
Total equity	26,254	25,460

The financial statements were approved by the board of directors and authorised for issue on 25th July 2012.

D. B. Green Director

R. M. Barker Director

COLEFAX GROUP PLC

GROUP STATEMENT OF CASH FLOWS

For the year ended 30th April 2012

	2012	2011
	£'000	£'000
Operating activites
Profit before taxation - continuing operations	3,148	6,521
Loss before taxation - discontinued operations	-	(278)
Finance income	-	(74)
Finance expense	3	1
Depreciation	1,991	2,044
Cash flows from operations before changes in working capital	5,142	8,214
Decrease / (increase) in inventories and work in progress	115	(566)
Decrease in trade and other receivables	3,213	316
Decrease in trade and other payables	(1,355)	(205)
Cash generated from operations	7,115	7,759
Taxation paid
UK corporation tax paid	(919)	(1,280)
Overseas tax received / (paid)	383	(279)
	(536)	(1,559)
Net cash inflow from operating activities	6,579	6,200
Investing activities
Payments to acquire property, plant and equipment	(3,460)	(2,885)
Receipts from sales of property, plant and equipment	20	29
Interest received	-	74
Purchase of ESOP shares	-	(95)
Net cash outflow from investing	(3,440)	(2,877)
Financing activities
Purchase of own shares	(342)	(1,840)
Interest paid	(3)	(1)
Equity dividends paid	(534)	(486)
Net cash outflow from financing	(879)	(2,327)
Net increase in cash and cash equivalents	2,260	996
Cash and cash equivalents at beginning of year	6,298	5,472
Exchange losses on cash and cash equivalents	(39)	(170)
Cash and cash equivalents at end of year	8,519	6,298

COLEFAX GROUP PLC

GROUP STATEMENT OF CHANGES IN EQUITY

For the year ended 30th April 2012

	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 2011	1,405	11,148	1,469	(96)	94	1,383	583	9,474	25,460
Profit for the year	-	-	-	-	-	-	-	2,195	2,195
Foreign exchange	-	-	-	-	-	(62)	-	-	(62)
Cash flow hedges:
Losses	-	-	-	-	-	-	(120)	-	(120)
Transfers	-	-	-	-	-	-	(400)	-	(400)
Tax on other comprehensive income	-	-	-	-	-	(83)	140	-	57
Share buybacks	(14)	-	14	-	-	-	-	(342)	(342)
Share options exercised	-	-	-	-	(75)	-	-	75	-
Dividends paid	-	-	-	-	-	-	-	(534)	(534)
At 30 April 2012	1,391	11,148	1,483	(96)	19	1,238	203	10,868	26,254
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

COLEFAX GROUP PLC

NOTES TO THE FINANCIAL INFORMATION

At 30th April 2012

1. Earnings per share

Basic earnings / (loss) per share has been calculated using the following data:
	2012	2011
	£'000	£'000
Profit after tax from continuing operations	2,195	4,756
Loss after tax on discontinued operations	-	(183)
Total	2,195	4,573
	No.	No.
Weighted average number of ordinary shares in issue	13,918,662	14,396,731
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:
	2012	2011
	£'000	£'000
Profit after tax from continuing operations	2,195	4,756
Loss after tax on discontinued operations	-	(183)
Total	2,195	4,573
	No.	No.
Weighted average number of ordinary shares in issue	13,918,662	14,396,731
Dilutive effect of shares under option	15,000	115,000
	13,933,662	14,511,731

2. Cash and cash equivalents

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

	2012	2011
	£'000	£'000
Cash at bank and in hand	8,519	7,132
Bank overdrafts	-	(834)
	8,519	6,298

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.

3.  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 2012 has been extracted from the statutory accounts which will be delivered to the Registrar of Companies following the company's annual general meeting. The comparative financial information is based on the statutory accounts for the financial year ended 30th April 2011 which have been delivered to the Registrar of Companies. The Independent Auditors' Report on both of those financial statements was unqualified and did not contain a statement under Section 498(2) and Section 498(3) of the Companies Act 2006.

4. Annual general meeting

The Annual General Meeting of Colefax Group plc will be held at 19-23 Grosvenor Hill, London W1K 3QD on 11th September 2012 at 11.00 a.m.

 

END

 

 

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