Preliminary Results

RNS Number : 7410Z

Colefax Group PLC

24 July 2008

 



Colefax Group plc

CFX

COLEFAX GROUP PLC

('Colefax' or 'the Group')

Preliminary Results for the year ended 30th April 2008

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 & Tout, Jane Churchill, Manuel Canovas and Larsen. 

Highlights

• Sales up 10% to £78.18m (2007 - £71.01m) and up by 11% on a constant currency basis

• Pre-tax profit increased by 2% to £5.94m (2007 - £5.81m)

• Earnings per share rose by 11% to 27.5p (2007 - 24.8p)

• Strong cash generation of £3.13m before dividends and share buybacks (2007 - £4.09m)

• Net funds at year end of £2.42 million (2007 - £363,000)

• Proposed final dividend of 2.65p (2007 - 2.55p), giving total dividend of 4.20p (2007 - 4.00p), an increase of 5% on last year

• Market conditions increasingly challenging 

David Green, Chairman of Colefax, commented,

'We ended the year with a strong balance sheet which puts us in a good position to handle current market conditions'

Enquiries:

Colefax Group plc	David B. Green, Chairman	Tel: [phone] (today)
	Robert M. Barker, Finance Director
Biddicks	Katie Tzouliadis	Tel: [phone]
KBC Peel Hunt Ltd	David Anderson	Tel: [phone]
(Nominated Adviser & Broker)	Alina Savych

CHAIRMAN'S STATEMENT

Financial Results 

The Group's pre-tax profit for the year to 30th April 2008 increased by 2% to £5.94 million (2007 - £5.81 million) on sales up 10% at £78.18 million (2007 - £71.01 million). Earnings per share increased by 11% to 27.5p (2007 - 24.8p). The Group ended the year with net funds of £2.42 million (2007 - £363,000). 

During the year the Group purchased for cancellation 303,932 shares at an average price of £1.53 per share and representing 1.9% of the Group's issued share capital at the start of the year.

The Board has decided to recommend that the final dividend is increased by 4% to 2.65p per share (2007 - 2.55p), making a total for the year of 4.20p (2007 - 4.00p) an increase of 5%. The final dividend will be paid on 10th October 2008 to shareholders on the register at the close of business on 12th September 2008.

Trading conditions remained good throughout the year although our two major markets, the US and the UK started weakening in the last quarter of the year. The decline of the US dollar adversely impacted our results by £823,000 on a constant currency basis during the year and the re-organisation of the Accessories Division in France resulted in £413,000 of exceptional costs being taken during the year. We ended the year with a strong balance sheet which puts us in a good position to handle current market conditions.

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, increased by 7% to £62.15 million (2007 - £58.29 million) and by 8% on a constant currency basis.

Sales in the US, which represent 50% (2007- 52%) of the Fabric Division's sales, increased by 8% on a constant currency basis (2007 - 5%). We are expanding our agent showroom in Florida which is an important market. We are also refurbishing our Los Angeles showroom which is a significant market offering good growth opportunities.

UK sales, which represent 21% (2007 - 21%) of the Fabric Division's sales, increased by 10% (2007 - 16%). This performance reflects favourable trading conditions throughout the year. Sales growth slowed towards the end of the year and we expect market conditions to become progressively more difficult.

Sales in Continental Europe, which represent 25% (2007 - 24%) of the Fabric Division sales, increased by 5% (2007 - 11%) on a constant currency basis. The majority of European countries performed well during the year but sales in France, which is our largest market, were down by 5% on a constant currency basis. This has reduced the overall growth in Europe.

Sales in the rest of the world, which represent 4% (2007 - 3%) of the Fabric Division's sales, increased by 13% (2007 - 32%) on a constant currency basis although it is still a small proportion of overall sales. We are starting to see growth in newer markets such as Russia and China and believe that these trends will continue.

·         Furniture – Kingcome Sofas

Sales of Kingcome furniture, which account for 4% (2007 - 4%) of Group sales, increased by 10% to £2.92 million (2007 - £2.65 million) and produced a good profit for the year. However, as this area of the Group's activities is the most sensitive to the current problems in the UK, we expect a weakening in trading.

 

·         Accessories - Manuel Canovas

Manuel Canovas is based in Paris and sales which comprise beachwear and scented candles account for 3% (2007 - 4%) of Group sales. During the year sales decreased by 12% to £2.47 million (2007 - £2.82 million). As reported in our interim results, a full review of this activity has been carried out and this resulted in a complete change of management together with certain operational changes. These changes incurred a one-off cost of £413,000 in the year. We now have a new team in place and a strategy that should return this activity to profit.

Interior Decorating Division

Interior decorating sales which account for 14% of Group sales (2007 - 10%), increased by 47% to £10.64 million (2007 - £7.26 million) during the year, producing our best result for over 10 years. The decorating order book remains healthy and as this part of the Group operates in a market less affected by the current economic problems, we are optimistic for the coming year. However, we do not expect results for the current financial year to match the excellent performance reported for the year to 30th April 2008. This is partly due to lower antique sales, which are being affected by the downturn in the UK and US. 

Prospects

Current trading conditions in our two principal markets, the US and UK, look increasingly challenging due to the downturn in the housing markets and are difficult to forecast with any certainty. Historically we have been last in to a recession and last out and my experience of any downturn is that it is always deeper and lasts longer than everyone forecasts. For now our focus will be on conserving our cash and reducing costs where possible but not to the long term detriment of the Group. We have a strong balance sheet and are well placed to handle any downturn and take advantage of any market opportunities which may arise.

David B. Green

Chairman

24th July 2008

GROUP INCOME STATEMENT

For the year ended 30th April 2008

	Notes	2008	2007
		£'000	£'000
Revenue		78,181	71,013
Cost of sales		36,467	31,602
Gross profit		41,714	39,411
Operating expenses		35,633	33,569
Profit from operations		6,081	5,842
Finance income		127	138
Finance expense		(266)	(174)
		(139)	(36)
Profit before taxation		5,942	5,806
Tax expense -    UK -    Overseas		(1,899) 22	(1,247) (660)
		(1,877)	(1,907)
Profit for the year attributable to equity holders of the parent		4,065	3,899
Basic earnings per share	2	27.5p	24.8p
Diluted earnings per share	2	26.1p	23.9p

All activity has arisen from continuing operations.

GROUP BALANCE SHEET

At 30th April 2008

		2008	2007
		£'000	£'000
Non-current assets:
Property, plant and equipment		4,960	5,135
Deferred tax asset		1,991	2,164
		6,951	7,299
Current assets:
Inventories and work in progress		13,357	12,045
Trade and other receivables		10,561	9,558
Cash and cash equivalents		3,862	4,113
		27,780	25,716
Trade and other payables:
Current corporation tax		995	1,529
Other amounts falling due in one year		14,152	15,979
		15,147	17,508
Net current assets		12,633	8,208
Total assets less current liabilities		19,584	15,507
Non-current liabilities:
Deferred tax liability		123	35
Pension liability		232	203
		355	238
Net assets		19,229	15,269
Capital and reserves attributable to equity holders of the Company:
Called up share capital		1,536	1,565
Share premium account		11,148	11,141
Capital redemption reserve		1,338	1,308
ESOP share reserve		(20)	(157)
Share based payment reserve		664	508
Foreign exchange reserve		124	(539)
Retained earnings		4,439	1,443
Total equity		19,229	15,269

The financial statements were approved by the board of directors and authorised for issue on 24th July 2008.

D. B. Green Director

R. M. Barker Director

GROUP CASHFLOW STATEMENT

For the year ended 30th April 2008

		2008	2007
		£'000	£'000
Operating activities
Profit before taxation		5,942	5,806
Finance income		(127)	(138)
Finance expense		266	174
Depreciation		1,690	1,629
Cashflows from operations before changes in working capital		7,771	7,471
Increase in inventories and contracts in progress		(1,215)	(1,355)
(Increase)/decrease in trade and other receivables		(672)	394
Increase in trade and other payables		1,143	1,524
Cash generated from operations		7,027	8,034
Taxation paid
UK corporation tax paid		(2,002)	(1,432)
Overseas tax paid		(307)	(393)
		(2,309)	(1,825)
Net cash inflow from operating activities		4,718	6,209
Investing activities
Payments to acquire property, plant and equipment		(1,448)	(1,648)
Receipts from sales of property, plant and equipment		10	45
Interest received		125	129
Net cash outflow from investing		(1,313)	(1,474)
Financing activities
Purchase of own shares		(465)	(3,093)
Repayment of long-term loan		-	(500)
Interest paid		(280)	(150)
Equity dividends paid		(604)	(600)
Net cash outflow from financing		(1,349)	(4,343)
Increase in cash in the year		2,056	392

GROUP STATEMENT OF RECOGNISED INCOME AND EXPENSES

For the year ended 30th April 2008

		2008	2007
		£'000	£'000
Profit for the financial year		4,065	3,899
Currency translation differences on foreign currency net investments		704	(861)
Deferred tax on long-term loan foreign currency movements		(41)	322
Total recognised income and expenses relating to the year		4,728	3,360

NOTES TO THE ACCOUNTS

At 30th April 2008

1. Basis of Preparation

The final results have been prepared in accordance with the accounting policies of the Group under International Financial Reporting Standards (IFRS). A full restatement of these policies and reconciliation of the resultant changes has been disclosed in the financial statements for the year ended 30th April 2008 which are the Group's first full set of IFRS financial statements.

The Group has applied IFRS 1 'First-time Adoption of IFRS' in preparing this final report. The Group's transition date is 1st May 2006 and its IFRS adoption date is 30th April 2007. In preparing this final report in accordance with IFRS 1, the Group has applied the mandatory exemption from full retrospective application of IFRS.

2. Earnings Per Share 

Basic earnings per share have been calculated on the basis of profit on ordinary activities after tax of £4,065,000 (2007 - £3,899,000) and on 14,784,331 (2007 - 15,719,278) ordinary shares, being the weighted average number of ordinary shares in issue during the year. Shares owned by the Colefax Group Plc Employees' Share Ownership Plan (ESOP) Trust are excluded from the basic earnings per share calculation.

Diluted earnings per share have been calculated on the basis of profit on ordinary activities after tax of £4,065,000 (2007 - £3,899,000) and on 15,553,508 (2007 - 16,339,872) being the weighted average number of shares in issue during the year, calculated as follows:

	2008	2007
Basic weighted average number of shares	14,784,331	15,719,278
Dilutive potential ordinary shares, including shares under option owned by the Colefax Group Plc ESOP Trust	769,177	620,594
	15,553,508	16,339,872

3. Cash and Financing 

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

	2008	2007
	£'000	£'000
Cash at bank and in hand	3,862	4,113
Bank overdrafts	(1,443)	(3,750)
	2,419	363

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 for the first time, does not constitute statutory accounts as defined in Section 240 of the Companies Act 1985. The financial information for the year ended 30th April 2008 has been extracted from the statutory accounts on which an unqualified audit opinion has been issued. 

Statutory accounts for the year ended 30th April 2008 will be delivered to the Registrar in due course. The comparative financial information is based on the statutory accounts for the financial year ended 30th April 2007 restated for IFRS. Those original accounts, upon which the auditors issued an unqualified opinion, have been delivered to the Registrar of Companies.

The annual accounts for the year ended 30th April 2008 are expected to be posted to shareholders on or around Monday 28th July 2008 and will be available from the Company's website on www.colefaxgroupplc.com.

5. Annual General Meeting

The Annual General Meeting of Colefax Group plc will be held at 19-23 Grosvenor Hill, London W1K 3QD on 16th September 2008 at 11.00 a.m.

 

END

 

 

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