Last checked at 27 Jan 2011 07:00
CFX
COLEFAX GROUP PLC
("Colefax" or the "Group")
Half Year Results
for the six months ended 31 October 2010
Colefax is an international designer and distributor of furnishing fabrics & wallpapers and owns a leading interior decorating business.
The Group trades under five brand names, serving different segments of the soft furnishings marketplace; these are Colefax and Fowler, Cowtan & Tout, Jane Churchill, Manuel Canovas and Larsen.
Key Points
·; Strong performance for the first six months
·; Sales from continuing operations up 16% to £35.68m (2009: £30.76m)
·; Pre-tax profit from continuing operations up 63% to £2.98m (2009: £1.83m)
·; Earnings per share up 130% to 12.4p (2009: 5.4p)
·; Net cash of £7.26m (2009: £4.43m)
·; Interim dividend increased to 1.85p per share (2009: 1.55p per share)
·; UK market better than expected but weak recovery in the US
David Green, Chairman, commenting, said:
"The improvement in our first half profits is primarily due to sales growth in all our major markets, especially the UK, where trading has been particularly strong. Sales in the US have not increased as much as we would have liked against weak prior year comparatives but we have benefitted from an improvement in the strength of the US dollar.
Current trading continues to show improvements over last year but to varying degrees in our different markets. We expect our Decorating Division to produce an outstanding performance this year and make a significant contribution to Group profits but this must be seen as exceptional rather than the norm. Overall, I am confident of a successful outcome for the full year."
Enquiries:
Colefax Group plc | David Green, Chairman | Tel: 020 7448 1000 (today) |
Robert Barker, Finance Director | ||
Biddicks | Katie Tzouliadis | Tel: 020 7448 1000 |
Peel Hunt LLP | Dan Webster | Tel: 020 7418 8900 |
(NOMAD & Broker) |
COLEFAX GROUP PLC
CHAIRMAN'S STATEMENT
Financial Results
The Group's pre-tax profit from continuing operations for the six months to 31 October 2010 increased by 63% to £2.98 million (2009: £1.83 million) on sales up by 16% to £35.68 million (2009: £30.76 million). Earnings per share increased by 130% to 12.4p (2009: 5.4p). The Group ended the six months with net cash of £7.26 million (2009: £4.43 million).
The improvement in our first half profits is primarily due to sales growth in all our major markets, especially the UK, where trading has been particularly strong. Sales in the US have not increased as much as we would have liked against weak prior year comparatives but we have benefitted from an improvement in the strength of the US dollar.
During the period, the Group purchased for cancellation 70,000 shares at an average price of £1.69 per share, representing 0.48% of the Group's issued share capital at the start of the year.
The Board has decided to increase the interim dividend by 19% to 1.85p per share (2009: 1.55p per share). The interim dividend will be paid on 4 April 2011 to shareholders on the register at the close of business on 4 March 2011.
On 17 September 2010 we completed the sale of the Manuel Canovas Beachwear Division to management. The loss on this discontinued activity during the period amounted to £240,000 after tax.
Product Division
·; Fabric Division - Portfolio of Five Brands: "Colefax and Fowler", "Cowtan and Tout", "Jane Churchill", "Manuel Canovas" and "Larsen"
Sales in the Fabric Division, which represent 83% of the Group's sales, increased by 15% to £29.68 million (2009: £25.82 million) and by 12% on a constant currency basis.
Sales in the US, which represent 50% of the Fabric Division's turnover, increased by 10% on a constant currency basis. This improvement is against weak prior year comparatives and we remain concerned about the pace of the recovery in our most significant market. In New York, our largest US territory, we are currently expanding and refurbishing our trade showroom which should help to stimulate sales growth.
Sales in the UK, which represent 21% of the Fabric Division's turnover, were up by 16% during the period. This strong performance exceeded our own expectations and reflects the strength of the high end property market in the UK as well as an increase in refurbishment activity. It is very difficult to forecast how the economy will be affected by government spending cuts and tax increases but sales have remained strong for the remainder of 2010 and we are hopeful that this market will continue to perform well.
Sales in Continental Europe, which represent 26% of the Fabric Division's turnover, increased by 12% on a constant currency basis. Our three principal markets, France, Germany and Italy, all performed well, offsetting weaker trading in some of the smaller European markets. The fact that trading conditions vary so significantly from country to country means that we are cautious about overall prospects in Europe.
Sales in the rest of the world, which represent just 3% of the Fabric Division's turnover, increased by 11% during the period and we are now starting to focus on developing the more important markets in this area.
·; Furniture - Kingcome Sofas
Sales for the six months to October 2010 were flat, which we believe reflects the market's reluctance to spend money on significant items. The majority of our furniture sales are in the UK and are likely to be affected by recent tax increases. The current order book is similar to where it was at the same point last year and we will continue to monitor this activity closely.
Interior Decorating Division
Decorating sales increased by 28% in the six months to 31 October 2010. We are currently working on a couple of very significant contracts which will result in an exceptional full year performance from this Division. Sales of antiques have continued to show a steady improvement and increased by 17% during the period.
Prospects
Current trading continues to show improvements over last year but to varying degrees in our different markets. The US, which is our largest and most important market, has seen growth compared to last year but it is the weakest in terms of recovery and we are not optimistic that there will be any significant improvement in the short term. The UK market remains strong but Europe is starting to weaken and we are concerned that trading will get tougher during the next year. We expect our Decorating Division to produce an outstanding performance this year and make a significant contribution to Group profits but this must be seen as exceptional rather than the norm. Overall, I am confident of a successful outcome for the full year.
David Green
Chairman
27 January 2011
COLEFAX GROUP PLC
INTERIM GROUP INCOME STATEMENT | |||
Unaudited | Unaudited | Audited | |
Six months to 31 Oct 2010 | Six months to 31 Oct 2009 | Year to 30 April 2010 | |
£'000 | £'000 | £'000 | |
Continuing operations: | |||
Revenue | 35,684 | 30,765 | 67,380 |
Profit from operations | 2,908 | 1,825 | 4,387 |
Finance income | 72 | 8 | 11 |
Finance expense | - | (6) | (10) |
72 | 2 | 1 | |
Profit before taxation | 2,980 | 1,827 | 4,388 |
Tax expense | (956) | (587) | (1,255) |
Profit from continuing operations | 2,024 | 1,240 | 3,133 |
Trading loss on discontinued operations, net of tax | (136) | (454) | (357) |
Loss on disposal, net of tax | (104) | - | (400) |
Loss on discontinued operations, net of tax | (240) | (454) | (757) |
Profit for the period attributable to the equity holders of the parent | 1,784 | 786 | 2,376 |
Basic earnings per share | 12.4p | 5.4p | 16.4p |
Diluted earnings per share | 12.2p | 5.3p | 16.1p |
Continuing operations: | |||
Basic earnings per share | 14.0p | 8.6p | 21.6p |
Diluted earnings per share | 13.8p | 8.4p | 21.2p |
COLEFAX GROUP PLC
INTERIM GROUP STATEMENT OF COMPREHENSIVE INCOME | |||
Unaudited | Unaudited | Audited | |
Six months to 31 Oct 2010 | Six months to 31 Oct 2009 | Year to 30 April 2010 | |
£'000 | £'000 | £'000 | |
Profit for the period | 1,784 | 786 | 2,376 |
Other comprehensive income: | |||
Currency translation differences on foreign currency net investments | (399) | (861) | (412) |
Cash flow hedges: | |||
Gains recognised directly in equity | 664 | 1,087 | 596 |
Transferred to profit and loss for the period | (65) | (72) | (71) |
Tax on components of other comprehensive income | (37) | 25 | (49) |
Total other comprehensive income | 163 | 179 | 64 |
Total comprehensive income for the period attributable to the equity holders of the parent | 1,947 | 965 | 2,440 |
COLEFAX GROUP PLC
INTERIM GROUP STATEMENT OF FINANCIAL POSITION | |||
Unaudited | Unaudited | Audited | |
As at 31 Oct 2010 | As at 31 Oct 2009 | As at 30 April 2010 | |
£'000 | £'000 | £'000 | |
Non-current assets: | |||
Property, plant and equipment | 5,395 | 5,433 | 5,309 |
Deferred tax asset | 1,349 | 1,505 | 1,639 |
6,744 | 6,938 | 6,948 | |
Current assets: | |||
Inventories and work in progress | 11,300 | 12,133 | 11,886 |
Trade and other receivables | 12,561 | 10,394 | 12,380 |
Cash and cash equivalents | 7,260 | 4,490 | 5,897 |
31,121 | 27,017 | 30,163 | |
Current liabilities: | |||
Trade and other payables | 12,423 | 11,180 | 12,598 |
Current corporation tax | 476 | 448 | 532 |
Provisions | - | - | 606 |
12,899 | 11,628 | 13,736 | |
Net current assets | 18,222 | 15,389 | 16,427 |
Total assets less current liabilities | 24,966 | 22,327 | 23,375 |
Non-current liabilities: | |||
Pension liability | 306 | 436 | 320 |
Net assets | 24,660 | 21,891 | 23,055 |
Capital and reserves attributable to equity holders of the Company: | |||
Called up share capital | 1,464 | 1,479 | 1,470 |
Share premium account | 11,148 | 11,148 | 11,148 |
Capital redemption reserve | 1,411 | 1,395 | 1,404 |
ESOP share reserve | (18) | (30) | (18) |
Share based payment reserve | 126 | 208 | 196 |
Foreign exchange reserve | 1,472 | 1,503 | 1,741 |
Cash flow hedge reserve | 439 | 361 | 8 |
Retained earnings | 8,618 | 5,827 | 7,106 |
Total equity | 24,660 | 21,891 | 23,055 |
COLEFAX GROUP PLC
INTERIM GROUP STATEMENT OF CASH FLOWS | |||
Unaudited | Unaudited | Audited | |
Six months to 31 Oct 2010 | Six months to 31 Oct 2009 | Year to 30 April 2010 | |
£'000 | £'000 | £'000 | |
Operating activities | |||
Profit before taxation - continuing operations | 2,980 | 1,827 | 4,388 |
Loss before taxation - discontinued operations | (363) | (688) | (1,147) |
Finance income | (72) | (8) | (11) |
Finance expense | - | 6 | 10 |
Depreciation | 922 | 875 | 1,883 |
Cash flows from operations before changes in working capital | 3,467 | 2,012 | 5,123 |
Decrease in inventories and work in progress | 484 | 806 | 1,193 |
Decrease / (increase) in trade and other receivables | 307 | 1,559 | (848) |
Decrease in trade and other payables | (219) | (1,458) | (39) |
Cash generated from operations | 4,039 | 2,919 | 5,429 |
Taxation paid | |||
UK corporation tax paid | (426) | (11) | (530) |
Overseas tax paid | (249) | (237) | (106) |
(675) | (248) | (636) | |
Net cash inflow from operating activities | 3,364 | 2,671 | 4,793 |
Investing activities | |||
Payments to acquire property, plant and equipment | (1,118) | (896) | (1,716) |
Receipts from sales of property, plant and equipment | 14 | - | 106 |
Interest received | 72 | 8 | 11 |
Net cash outflow from investing | (1,032) | (888) | (1,599) |
Financing activities | |||
Purchase of own shares | (119) | (19) | (137) |
Interest paid | - | (7) | (10) |
Equity dividends paid | (224) | (188) | (412) |
Net cash outflow from financing | (343) | (214) | (559) |
Net increase in cash and cash equivalents | 1,989 | 1,569 | 2,635 |
Cash and cash equivalents at beginning of period | 5,472 | 3,078 | 3,078 |
Exchange losses on cash and cash equivalents | (201) | (220) | (241) |
Cash and cash equivalents at end of period | 7,260 | 4,427 | 5,472 |
COLEFAX GROUP PLC
NOTES | |
1. | The interim results have been prepared in accordance with the accounting policies of the Group under International Financial Reporting Standards (IFRS) as adopted by the European Union and on the basis of the accounting policies set out in the annual report and accounts for the year ended 30 April 2010. |
These standards and interpretations are subject to ongoing review and endorsement by the EU or possible amendment by interpretive guidance from the International Financial Reporting Interpretations Committee ('IFRIC') and are therefore still subject to change. | |
2. | During the financial period ended 31 October 2010, the Company paid a final dividend for the year ended 30 April 2010 of 1.55p per ordinary share giving a total dividend of £223,552. |
The proposed interim dividend of 1.85p (2009: 1.55p) per share is payable on 4 April 2011 to qualifying shareholders on the register at the close of business on 4 March 2011. | |
3. | Basic earnings per share have been calculated on the basis of earnings of £1,784,000 (2009: £786,000) and on 14,448,476 (2009: 14,483,488) ordinary shares being the weighted average number of ordinary shares in issue during the period. |
4. | Diluted earnings per share have been calculated on the basis of earnings of £1,784,000 (2009: £786,000) and on 14,633,476 (2009: 14,753,488) ordinary shares being the weighted average number of ordinary shares in the period adjusted to assume conversion of all dilutive potential ordinary shares of 185,000 (2009: 270,000). |
5. | The financial information for the year ended 30 April 2010 does not constitute the full statutory accounts for that period. The Annual Report and Financial Statements for the year ended 30 April 2010 have been filed with the Registrar of Companies. The Independent Auditors' Report on the Annual Report and Financial Statements for the year ended 30 April 2010 was unqualified, did not draw attention to any matters by way of emphasis, and did not contain a statement under 498(2) or 498(3) of the Companies Act 2006. |
6. | Copies of the interim report are being sent to shareholders and will be available from the Company's website on www.colefaxgroupplc.com. Copies will also be made available on request to members of the public at the Company's registered office at 39 Brook Street, London W1K 4JE. |