Colefax Grp. Regulatory News (CFX)

20 Jul 2005 07:00

Colefax Group PLC20 July 2005 COLEFAX GROUP PLC FINAL RESULTS FOR THE YEAR TO 30 APRIL 2005 Colefax Group designs and distributes furnishing fabrics & wallpapers and owns a leading interior decorating business. The Group's five major fabric brands are Colefax and Fowler, Cowtan & Tout, Jane Churchill, Manuel Canovas and Larsen. Key Points • Pre-tax profits increased by 8% to £3.15m (2004: £2.91m) • Earnings per share rose by 26% to 13.1p (2004: 10.4p) • Sales up by 2% to £64.46m (2004: £63.38m) • Proposed final dividend of 2.16p, making a total of 3.50p for the year, a rise of 3% David Green, Chairman and Chief Executive, commented, "The most pleasing feature in this year's results was the significant increasein sales in the US, which is the Group's most important trading area. The UKproduced a satisfactory result with a small sales increase and there were mixedresults across our major markets in Continental Europe. However, for themajority of the year, the US dollar remained very weak and this continued toadversely affect our margin in the US." Enquiries: Colefax Group plc David B. Green, Chairman Tel: 020 7448 1000 (today) Biddicks Katie Tzouliadis Tel: 020 7448 1000 CHAIRMAN'S STATEMENT Financial Results The Group's pre-tax profit for the year to 30th April 2005 increased by 8% to£3.15 million (2004 - £2.91 million) on sales up 2% at £64.46 million (2004 -£63.38 million). Earnings per share increased by 26% to 13.1p (2004 - 10.4p).Excluding the effect of share buybacks, earnings per share increased by 11%.Group net borrowings at the year-end were £4.05 million (2004 - £2.77 million),which represents gearing of 34% to net assets. The increase in borrowings of£1.28 million includes £1.9 million spent on share buybacks during the year. The Board has decided to recommend that the final dividend be increased by 5% to2.16p (2004 - 2.06p) making a total for the year of 3.50p (2004 - 3.40p), anincrease of 3%. The final dividend will be paid on 12th October 2005 toshareholders on the register at the close of business on 9thSeptember 2005. The most pleasing feature in this year's results was the significant increase insales in the US,which is the Group's most important trading area. The UKproduced a satisfactory result with a small sales increase and there were mixedresults across our major markets in Continental Europe. However, for themajority of the year, the US dollar remained very weak and this continued toadversely affect our margin in the US. Product Division • Fabric Division - Portfolio of Brands: "Colefax and Fowler", "Cowtan & Tout", "Jane Churchill", "Manuel Canovas" and "Larsen". Fabric Division sales increased by 3% over last year and accounted for 81% ofthe Group's total turnover. Sales in the US, which represent 54% of the Fabric Division's sales, increasedby 12% on a constant currency basis. This market remained strong throughout theyear, with the most significant event being the opening of our own showroom inWashington DC. This is an important market for us and we are starting to seesignificant sales growth as a result of the new showroom. UK sales, which represent 21% of the Fabric Division's turnover, increased by 4%on a like for like basis. With the weakening of the high-end property market, weexpect sales growth to slow this year. Sales in Continental Europe, which represent 23% of the Fabric Division'sturnover, increased by 6% on a constant currency basis. Particularly encouragingwas the fact that our two most important markets, France and Italy, showed areturn to growth. Germany remains difficult and produced flat sales for theyear. There are opportunities for the Group to increase sales in Europe butthere needs to be an improvement in market conditions. Sales in the rest of the world, which represent 2% of the Fabric Division'ssales, decreased by 14% during the year mainly due to a difficult year inAustralia which is our largest territory in this market. The limited potentialof this market means that it is not a major focus for the Group. We are planning major launches of new fabric collections this year for all ourbrands and particularly exciting will be the introduction of our US fabricbrand, Cowtan & Tout, into Europe for the first time in January 2006. • Furniture - Kingcome Sofas Sales of furniture, which account for 3% of Group sales, decreased by 12%,reflecting the current state of the furniture market in the UK. We relocated ourLondon retail showroom in June and are planning a number of marketinginitiatives to increase sales but do not expect any real improvement in marketconditions over the short-term. • Accessories - Manuel Canovas Manuel Canovas accessories, which comprise sales of beachwear and scentedcandles, and account for 4% of Group sales, increased by 7% on a like for likebasis. We have just launched our new 2006 collection and the input of a newstylist has resulted in a more fashionable collection. We are optimistic aboutthis area of the Group's activities for the current year. Decorating Division Interior decorating and antique sales, which together account for 12% of Groupsales, increased by 3% during the year. The Division is seeing signs ofimprovement with a number of significant interior decorating contracts havingbeen started this year. However, antique sales remain weak and continue to beaffected by the weak US dollar. Prospects Trading conditions in our principal market, the US, remain strong and we areoptimistic about the outcome for sales growth for this year. Trading in the UK,however, is showing signs of becoming tougher, and combined with unfavourablemarket conditions in Continental Europe, total sales growth for the productdivision will probably be less than last year. It is disappointing that whilst we are achieving good sales growth in the US,the weakness of the US dollar continues to adversely affect the Group's abilityto translate growth into a significant improvement in profitability. However,there are opportunities within certain markets and we are confident that therewill be an improvement in the Group's performance in the medium-term. David B. GreenChairman GROUP PROFIT AND LOSS ACCOUNTFor the year ended 30th April 2005 Notes 2005 2004 £'000 £'000 Turnover 64,455 63,381Cost of sales 29,335 28,187 -------- -----------Gross profit 35,120 35,194Operating expenses 31,681 32,007 -------- -----------Operating profit 3,439 3,187Interest (292) (277) -------- -----------Profit on ordinary activities before taxation 3,147 2,910Tax on profit on ordinary activities UK (924) (987) Overseas (14) 10 -------- ----------- (938) (977) -------- -----------Profit on ordinary activities after taxation 2,209 1,933Dividends on equity shares (567) (596) -------- -----------Retained profit for the year 1,642 1,337 -------- -----------Basic earnings per share 2 13.1p 10.4pDiluted earnings per share 2 13.0p 10.2pDividends per share 3.5p 3.4p All activity has arisen from continuing operations. GROUP BALANCE SHEETAt 30th April 2005 Notes 2005 As restated 2004 £'000 £'000Fixed assets:Tangible assets 5,792 6,113 ----------- ----------- Current assets:Stocks and contracts in progress 12,167 11,470Debtors 9,559 8,697Cash at bank and in hand 4 1,736 1,769 ----------- ----------- 23,462 21,936 ----------- -----------Creditors: amounts falling due within one year 16,614 14,198 ----------- -----------Net current assets 6,848 7,738 ----------- -----------Total assets less current liabilities 12,640 13,851 ----------- -----------Creditors: amounts falling due after more thanone year 500 1,000Provision for liabilities and charges:Deferred taxation 64 106 ----------- ----------- 12,076 12,745 ----------- -----------Capital and reserves:Called up share capital 1,709 1,909Share premium account 11,087 11,087Capital redemption reserve 1,157 957ESOP share reserve 1 (499) (466)Profit and loss account (1,378) (742) ----------- -----------Equity shareholders' funds 12,076 12,745 ----------- ----------- GROUP CASH FLOW STATEMENTFor the year ended 30th April 2005 Notes 2005 2004 £'000 £'000 Net cash inflow from operating activities 3 4,786 6,499 --------- --------Returns on investments and servicing of finance:Interest received 20 9Interest paid (311) (273) --------- -------- (291) (264) --------- --------Taxation:UK Corporation tax paid (1,074) (679)Overseas tax paid - (141) --------- -------- (1,074) (820) --------- --------Capital expenditure and financial investment:Payments to acquire tangible fixed assets (2,179) (1,771)Receipts from sales of tangible fixed assets 32 96 --------- -------- (2,147) (1,675) --------- --------Equity dividends paid (571) (634) --------- --------Cash inflow before financing 703 3,106 --------- --------Financing:Purchase of own shares (1,900) (782)Repayment of long-term loans (500) (1,371) --------- --------Net cash outflow from financing (2,400) (2,153) --------- --------(Decrease)/increase in cash in the period 4 (1,697) 953 --------- -------- GROUP STATEMENT OF TOTAL RECOGNISED GAINS AND LOSSESFor the year ended 30th April 2005 2005 2004 £'000 £'000 Profit for the financial year 2,209 1,933Currency translation differences on foreign currency netinvestments (62) (238)Currency translation differences on foreign currency loans (546) (756)Deferred tax on long-term loan foreign currency movements 230 319 -------- --------Total recognised gains and losses relating to the year 1,831 1,258 -------- -------- NOTES TO THE ACCOUNTSAt 30th April 2005 1. Adoption of new accounting requirement The Group has adopted UITF Abstract 38 'Accounting for ESOP trusts' as at 1st 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 financial information. This has had the effect of reducing shareholders' funds by £466,000. Had this acounting policy not changed, current year net assets would have been £499,000 higher. 2. Earnings per share Basic earnings per share have been calculated on the basis of profit on ordinary activities after tax of £2,209,000 (2004 - £1,933,000) and on 16,846,893 (2004 - 18,630,756) 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 £2,209,000 (2004 - £1,933,000) and on 17,031,297 (2004 - 18,960,402) being the weighted average number of shares in issue during the year, calculated as follows: 2005 2004 Basic weighted average number of shares 16,846,893 18,630,756 Dilutive potential ordinary shares, including shares under option owned by the Colefax Group Plc ESOP Trust 184,404 329,646 ----------- --------- 17,031,297 18,960,402 ----------- --------- 3. Operating profit Cash flow statement Reconciliation of operating profit to net cash inflow from operating activities: 2005 2004 £'000 £'000 Operating profit 3,439 3,187 Depreciation charges 2,271 2,315 Profit on sale of tangible fixed assets (12) (24) (Increase)/decrease in stocks (918) 1,206 (Increase)/decrease in debtors (547) 646 Increase/(decrease) in creditors 553 (831) --------- --------- Net cash inflow from operating activities 4,786 6,499 --------- --------- 4. Reconciliation of net cash flow to movement in net debt 2005 2004 £'000 £'000 (Decrease)/increase in cash (1,697) 953 Repayment of bank loans 500 1,371 --------- --------- Movement in net debt resulting from cash flows (1,197) 2,324 Exchange differences (81) (55) --------- --------- Movement in net debt in the period (1,278) 2,269 Net debt at 1st May (2,773) (5,042) --------- --------- Net debt at 30th April (4,051) (2,773) --------- --------- At 1st May Cash flow Other Exchange At 30th April 2004 differences 2005 £'000 £'000 £'000 £'000 £'000 Analysis of net debt Cash at bank and in hand 1,769 48 - (81) 1,736 Overdrafts (3,042) (1,745) - - (4,787) ------- ------- ------ --------- -------- (1,273) (1,697) - (81) (3,051) ------- ------- ------ --------- -------- Debt due within within one year (500) 500 (500) - (500) ------- ------- ------ --------- -------- Debt due after one year (1,000) - 500 - (500) ------- ------- ------ --------- -------- Net debt (2,773) (1,197) - (81) (4,051) ------- ------- ------ --------- -------- 5. The above financial information, which has been prepared on the same basis as set out in the 2004 annual accounts, as restated in accordance with note 1, does not constitute statutory accounts as defined in Section 240 of the Companies Act 1985. The financial information for the year ended 30th April 2005 has been extracted from the statutory accounts on which an unqualified audit opinion has been issued. Statutory accounts for the year ended 30th April 2005 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 2004. Those accounts, upon which the auditors issued an unqualified opinion, have been delivered to the Registrar of Companies. 6. The Annual General Meeting of Colefax Group plc will be held at 39 Brook Street, London W1K 4JE on 13th September 2005 at 11.00 a.m. This information is provided by RNS The company news service from the London Stock Exchange