Preliminary Results

RNS Number : 7190P

Colefax Group PLC

22 July 2010

 



Colefax Group plc

CFX

22nd July 2010

COLEFAX GROUP PLC

("Colefax" or "the Group")

Preliminary Results for the year ended 30th April 2010

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 from continuing operations down by 8% to £67.38m (2009 - £73.05m) and down by 10% on a constant currency basis

·          Pre-tax profit from continuing operations increased by 51% to £4.39m (2009 - £2.91m)

·          Earnings per share from continuing operations up by 53% to 21.6p (2009 - 14.1p)

·          Strong cash generation of £3.18m before dividends and share buybacks (2009 - £1.87m)

·          Net cash at year end of £5.47m (2009 - £3.08m)

·          Proposed final dividend of 1.55p (2009 - 1.33p), giving a total dividend of 3.10p (2009 - 2.88p), an increase of 8% on last year

David Green, Chairman of Colefax, commented,

"This year's results have benefitted from the cost saving measures implemented towards the end of last year, the strengthening of the US Dollar and a strong performance from the Decorating Division.  These three factors are the principal reasons for the improvement in the Group's performance this year. 

The main challenge facing the Group has been the difficult market conditions in the Group's major market, the US where sales declined by a further 20%. Towards the end of the year we have seen a small improvement in sales and believe that this market may finally be starting to recover.

While trading in the second half of the year was better than expected it is still very difficult to accurately forecast how the Group will perform in this financial year given the current economic climate. This year will be about striking the right balance between controlling our costs and investing in the future to make sure that we are in a strong position to take full advantage of any recovery."

Enquiries:

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

COLEFAX GROUP PLC

CHAIRMAN'S STATEMENT

Financial Results

The Group's pre-tax profit from continuing operations for the year to 30th April 2010 increased by 51% to £4.39 million (2009 - £2.91 million) on sales down 8% at £67.38 million (2009 - £73.05 million).  Earnings per share from continuing operations increased by 53% to 21.6p (2009 - 14.1p) and the Group ended the year with net cash of £5.47 million (2009 - £3.08 million).

During the year, the Group purchased for cancellation 105,000 shares at an average price of £1.30 per share, representing 0.7% of the Group's issued share capital at the start of the year.

The Board has decided to increase the final dividend by 17% to 1.55p per share (2009 - 1.33p), making a total for the year of 3.10p (2009 - 2.88p), an increase of 8%.  The final dividend will be paid on 12th October 2010 to shareholders on the register at the close of business on 17th September 2010.

This year's results have benefitted from the cost saving measures implemented towards the end of last year, the strengthening of the US Dollar and a strong performance from the Decorating Division.  These three factors are the principal reasons for the improvement in the Group's performance this year. 

The main challenge facing the Group has been the difficult market conditions in the Group's major market, the US where sales declined by a further 20%. 

Prior to our year end, we made a decision to dispose of the Manuel Canovas Beachwear Division which was a non-core activity.  Since our year end, we have exchanged contracts to sell this activity to the existing management team under a licence agreement.  The loss on this discontinued activity, including a provision for disposal costs, amounted to £757,000 after tax.

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 80% of Group sales from continuing operations, decreased by 11% to £54.20 million (2009 - £61.08 million).

Sales in the US, which represent 47% of the Fabric Division's sales, decreased by 20% on a constant currency basis.  This significant sales reduction in our largest market is the most challenging issue currently facing the Group.  The performance has been weak right across the US although the East Coast has suffered slightly more than the rest.  We are currently refurbishing our flagship showroom in New York which will create sales synergies and reduce costs.  This project will be completed in October 2010.  Towards the end of the year we have seen a small improvement in sales and believe that this market may finally be starting to recover.

UK sales which represent 22% of the Fabric Division's sales, decreased by 4% during the year.  Sales for the first six months decreased by 17% and there was a strong recovery in the second half of the year.  Current trading conditions are still good but there is growing evidence of problems ahead for the UK housing market and therefore, I am cautious about our prospects for the remainder of the current financial year.

Sales in Continental Europe, which represent 28% of the Fabric Division's sales, were down by 9% on a constant currency basis with most of the decline in the first half of the year.  Many European countries are now seeing tougher trading conditions and whilst their decline has not been as dramatic as the US, I am concerned that they will remain weak.  Our principal markets are France, Italy and Germany which account for just over 65% of sales in this area and with no other country representing more than 5% of European sales. 

Sales in the rest of the world, which represent just 3% of the Fabric Division's sales, were down by 5% in the year. We are looking to strengthen our position in some of these markets, which do not appear to be suffering as badly as our major markets.

·      Furniture - Kingcome Sofas

Sales of Kingcome furniture, which account for 4% of Group sales from continuing operations, increased by 3% to £2.55 million (2009 - £2.47 million) and achieved a good result for the year.  The relative strength of the London property market has helped furniture sales this year.  The current order book is good and as a result, we are optimistic about prospects for the coming year.

Interior Decorating Division

 

Interior decorating sales, which account for 16% of Group sales from continuing operations, increased by 12% to £10.63 million (2009 - £9.50 million) which represents an exceptional performance.  During the year, we completed a number of major contracts both in the UK and overseas and saw a good recovery in sales of antiques.  Whilst the current order book is healthy we expect results for the current financial year will be below the performance of last year.

Prospects

While trading in the second half of the year was better than expected it is still very difficult to accurately forecast how the Group will perform in this financial year given the current economic climate.  The most significant piece of good news is the current strength of the US Dollar which will increase our margins in the US and offset some of the sales decline of the last two years.  However, we are currently experiencing significant cost pressure from suppliers following sharp increases in the cost of raw materials and this will offset some of the benefit from the Dollar.  This year will be about striking the right balance between controlling our costs and investing in the future to make sure that we are in a strong position to take full advantage of any recovery. 

David Green

Chairman

22^nd July 2010

COLEFAX GROUP PLC

GROUP INCOME STATEMENT

For the year ended 30th April 2010

		2010		2009
		£'000		£'000
	Continuing operations:
	Revenue	67,380		73,051
	Cost of sales	30,445		34,687
	Gross profit	36,935		38,364
	Operating expenses	32,548		35,446
	Profit from operations	4,387		2,918
	Finance income	11		45
	Finance expense	(10)		(52)
		1		(7)
	Profit before taxation	4,388		2,911
	Tax expense
	-UK	(1,236)		(535)
	-Overseas	(19)		(373)
		(1,255)		(908)
	Profit from continuing operations	3,133		2,003
	Trading loss on discontinued operations, net of tax	(357)		(173)
	Provision on disposal, net of tax	(400)		-
	Loss on discontinued operations, net of tax	(757)		(173)
	Profit for the year attributable to equity holders of the parent	2,376		1,830
	Basic earnings per share	16.4	p	12.9	p
	Diluted earnings per share	16.1	p	12.4	p
	Continuing operations:
	Basic earnings per share	21.6	p	14.1	p
	Diluted earnings per share	21.2	p	13.5	p

COLEFAX GROUP PLC

GROUP STATEMENT OF COMPREHENSIVE INCOME

For the year ended 30th April 2010

		2010		2009
		£'000		£'000
	Profit for the year	2,376		1,830
	Other comprehensive income:
	Currency translation differences on foreign currency net investments	(412)		2,961
	Cash flow hedges:
	Gains / (losses) recognised directly in equity	596		(1,808)
	Transferred to profit and loss for the year	(71)		1,294
	Tax on components of other comprehensive income	(49)		(886)
	Total other comprehensive income	64		1,561
	Total comprehensive income for the year attributable to the equity holders of the parent	2,440		3,391

COLEFAX GROUP PLC

GROUP STATEMENT OF FINANCIAL POSITION

At 30th April 2010

	2010	2009
	£'000	£'000
Non-current assets:
Property, plant and equipment	5,309	5,718
Deferred tax asset	1,639	1,590
	6,948	7,308
Current assets:
Inventories and work in progress	11,886	13,255
Trade and other receivables	12,380	11,661
Cash and cash equivalents	5,897	3,079
	30,163	27,995
Current liabilities:
Trade and other payables	12,598	13,298
Current corporation tax	532	387
Provisions	606	-
	13,736	13,685
Net current assets	16,427	14,310
Total assets less current liabilities	23,375	21,618
Non-current liabilities:
Pension liability	320	485
Net assets	23,055	21,133
Capital and reserves attributable to equity holders of the Company:
Called up share capital	1,470	1,481
Share premium account	11,148	11,148
Capital redemption reserve	1,404	1,393
ESOP share reserve	(18)	(30)
Share based payment reserve	196	475
Foreign exchange reserve	1,741	2,055
Cash flow hedge reserve	8	(370)
Retained earnings	7,106	4,981
Total equity	23,055	21,133

The financial statements were approved by the board of directors and authorised for issue on 22nd July 2010.

D. B. Green Director

R. M. Barker Director

COLEFAX GROUP PLC

GROUP STATEMENT OF CASH FLOWS

For the year ended 30th April 2010

	2010	2009
	£'000	£'000
Operating activites
Profit before taxation - continuing operations	4,388	2,911
Loss before taxation - discontinued operations	(1,147)	(262)
Finance income	(11)	(45)
Finance expense	10	52
Depreciation	1,883	1,795
Cash flows from operations before changes in working capital	5,123	4,451
Decrease in inventories and work in progress	1,193	1,032
Increase in trade and other receivables	(848)	(310)
(Decrease) / increase in trade and other payables	(39)	3
Cash generated from operations	5,429	5,176
Taxation paid
UK corporation tax paid	(530)	(1,343)
Overseas tax paid	(106)	(237)
	(636)	(1,580)
Net cash inflow from operating activities	4,793	3,596
Investing activities
Payments to acquire property, plant and equipment	(1,716)	(1,729)
Receipts from sales of property, plant and equipment	106	33
Interest received	11	38
Net cash outflow from investing	(1,599)	(1,658)
Financing activities
Purchase of own shares	(137)	(895)
Interest paid	(10)	(72)
Equity dividends paid	(412)	(592)
Net cash outflow from financing	(559)	(1,559)
Net increase in cash and cash equivalents	2,635	379
Cash and cash equivalents at beginning of year	3,078	2,419
Exchange (losses) / gains on cash and cash equivalents	(241)	280
Cash and cash equivalents at end of year	5,472	3,078

COLEFAX GROUP PLC

GROUP STATEMENT OF CHANGES IN EQUITY

For the year ended 30th April 2010

	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 2009	1,481	11,148	1,393	(30)	475	2,055	(370)	4,981	21,133
Total comprehensive income for the year	-	-	-	-	-	(314)	378	2,376	2,440
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
At 1 May 2008	1,536	11,148	1,338	(20)	664	124	-	4,439	19,229
Total comprehensive income for the year	-	-	-	-	-	1,931	(370)	1,830	3,391
Share buybacks	(55)	-	55	-	-	-	-	(895)	(895)
Share option lapsed	-	-	-	(10)	(21)	-	-	31	-
Share options exercised	-	-	-	-	(168)	-	-	168	-
Dividends paid	-	-	-	-	-	-	-	(592)	(592)
At 30 April 2009	1,481	11,148	1,393	(30)	475	2,055	(370)	4,981	21,133

COLEFAX GROUP PLC

NOTES TO THE FINANCIAL INFORMATION

At 30th April 2010

1. Earnings per share

Basic earnings / (loss) per share has been calculated using the following data:
	2010	2009
	£'000	£'000
Profit after tax from continuing operations	3,133	2,003
Loss after tax on discontinued operations	(757)	(173)
Total	2,376	1,830
	No.	No.
Weighted average number of ordinary shares in issue	14,520,877	14,215,866
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:
	2010	2009
	£'000	£'000
Profit after tax from continuing operations	3,133	2,003
Loss after tax on discontinued operations	(757)	(173)
Total	2,376	1,830
	No.	No.
Weighted average number of ordinary shares in issue	14,520,877	14,215,866
Dilutive effect of shares under option	235,000	595,000
	14,755,877	14,810,866

2. Cash and cash equivalents

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

	2010	2009
	£'000	£'000
Cash at bank and in hand	5,897	3,079
Bank overdrafts	(425)	(1)
	5,472	3,078

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 2010 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 2009 which have been delivered to the Registrar of Companies.

4. Annual general meeting

The Annual General Meeting of Colefax Group plc will be held at 19-23 Grosvenor Hill, London W1K 3QD on 14th September 2010 at 11.00 a.m.

 

END

 

 

FR BUGDRRDDBGGB