Last checked at 26 Jan 2010 07:00
CFX
26 January 2010
COLEFAX GROUP PLC
("Colefax" or the "Group")
Half Year Results
for the six months ended 31 October 2009
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
Performance ahead of expectations but outlook cautious as current trading remains mixed
Sales of £30.97m (2008: £36.72m)
Pre-tax profit of £1.14m (2008: £2.48m)
Earnings per share of 5.4p (2008: 11.6p)
Net cash of £4.43m (2008: £2.24m)
Interim dividend maintained at 1.55p per share (2008: 1.55p per share)
UK market better than expected but US market exceptionally weak
David Green, Chairman, commenting, said:
"Our results for the first six months to 31 October 2009, whilst significantly down on the same period last year, are better than we expected when we announced our final results in July 2009. The reduction in profits is mainly due to exceptionally weak trading conditions in the US which is our most important market but this has been partially offset by a better than expected performance in the UK.
Current trading remains very mixed. Until we see some clear evidence of a pick up in demand in our major market, the US, we will remain cautious about future prospects. Our results for the full year will be better than we expected and, whilst I am less pessimistic than I was in July 2009, it is too early to say that we are on the road to recovery."
Enquiries:
| Colefax Group plc | David Green, Chairman | Tel: 020 7493 2231 |
| KBC Peel Hunt | David Anderson | Tel: 020 7418 8900 |
| (Nominated Adviser & Broker) | Matthew Tyler | |
| Biddicks | Katie Tzouliadis | Tel: 020 7448 1000 |
COLEFAX GROUP PLC
CHAIRMAN'S STATEMENT
Financial Results
The Group's pre-tax profit for the six months to 31 October 2009 decreased by 54% to £1.14 million (2008: £2.48 million) on sales down 16% at £30.97 million (2008: £36.72 million). Earnings per share decreased by 53% to 5.4p (2008: 11.6p). The Group ended the six months with net cash of £4.43 million (2008: £2.24 million).
Our results for the first six months to 31 October 2009, whilst significantly down on the same period last year, are better than we expected when we announced our final results in July 2009. The reduction in profits is mainly due to exceptionally weak trading conditions in the US which is our most important market but this has been partially offset by a better than expected performance in the UK.
During the period, the Group purchased for cancellation 17,500 shares at an average price of £1.09 per share, representing 0.12% of the Group's issued share capital at the start of the year.
The Board has decided to maintain the interim dividend at 1.55p per share (2008: 1.55p per share). The interim dividend will be paid on 1 April 2010 to shareholders on the register at the close of business on 5 March 2010. In the current economic climate, we will keep our dividend policy under review, dependent upon our results.
Product Division
Sales in the Fabric Division, which represent 83% of the Group's sales, decreased by 18% to £25.82 million (2008: £31.40 million) and by 25% on a constant currency basis.
Sales in the US, which represent 48% of the Fabric Division's turnover, decreased by 31% on a constant currency basis. The sales decline started in August 2008 and has continued in the current financial year. In response we have reduced costs wherever possible and focused on tight control of working capital. For the period January to April 2010, sales will be measured against very weak comparatives for the prior year and this should give a clear indication as to whether market conditions are finally starting to improve.
Sales in the UK, which represent 21% of the Fabric Division's turnover, were down by 17% during the period. However, the start of the second half of the year has seen a significant improvement in sales with the eight weeks to 31 December 2009 up by 16%. Although this increase is against weak comparatives, it suggests that the UK market is holding up better than we originally expected. We believe that the improvement in sales is due to an increase in refurbishment activity and expenditure deferred from the early part of the year.
Sales in Continental Europe, which represent 27% of the Fabric Division's turnover, were down by 18% on a constant currency basis. There has been a wide variation in performance by country. Our strongest markets have been France, Germany and Austria. Our weakest markets have been Eire, Spain and Portugal. In France, we have just reopened our enlarged and refurbished trade showroom in Paris which will benefit sales in this market.
Sales in the rest of the world, which represent just 3% of the Fabric Division's turnover, decreased by 12% during the period.
Sales for the six months to October 2009 were down by 11%. The majority of sales are in the UK market and trading conditions have been better than we expected at the start of the year. Last year we took action to reduce costs and we are benefitting from this action in the current year. The current order book is significantly ahead of the very low level of the previous year.
Accessories comprise sales of beachwear and scented candles and the majority of sales take place in the second half of the year. Although we have reduced costs and made operational improvements, trading conditions remain extremely challenging and orders are running below the level of last year.
Interior Decorating Division
Decorating sales increased by 5% during the current period. Antiques performed particularly well with sales up by 53% against a weak comparative. During the period we have gained a number of significant decorating projects and as a result we expect this division to deliver a strong performance for the full year.
Prospects
Current trading remains very mixed. Until we see some clear evidence of a pick up in demand in our major market, the US, we will remain cautious about future prospects. Although the UK market was particularly strong in November and December, there are a number of factors that could undermine this improvement in 2010, notably increases in the top rate of income tax and the general election. Our results for the full year will be better than we expected and, whilst I am less pessimistic than I was in July 2009, it is too early to say that we are on the road to recovery.
David GreenChairman
26 January 2010
COLEFAX GROUP PLC
| INTERIM GROUP INCOME STATEMENT | |||
| Unaudited Six months to 31 Oct 2009 | Unaudited Six months to 31 Oct 2008 | Audited Year to 30 April 2009 | |
| £'000 | £'000 | £'000 | |
| Revenue | 30,969 | 36,723 | 75,562 |
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| Profit from operations | 1,137 | 2,486 | 2,656 |
| Finance income | 8 | 41 | 45 |
| Finance expense | (6) | (46) | (52) |
| 2 | (5) | (7) | |
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| Profit before taxation | 1,139 | 2,481 | 2,649 |
| Tax expense | (353) | (819) | (819) |
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| Profit for the period attributable to the equity holders of the parent |
786 |
1,662 |
1,830 |
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| Basic earnings per share | 5.4p | 11.6p | 12.9p |
| Diluted earnings per share | 5.3p | 11.1p | 12.4p |
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| INTERIM GROUP STATEMENT OF COMPREHENSIVE INCOME | |||
| Unaudited Six months to 31 Oct 2009 | Unaudited Six months to 31 Oct 2008 | Audited Year to 30 April 2009 | |
| £'000 | £'000 | £'000 | |
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| Profit for the period | 786 | 1,662 | 1,830 |
| Currency translation differences on foreign currency net investments | (861) |
1,590 |
2,961 |
| Cash flow hedges: | |||
| Gains / (losses) recognised directly in equity | 1,087 | (822) | (514) |
| Transferred to profit and loss for the period | (72) | - | - |
| Tax on components of other comprehensive income | 25 | (386) | (886) |
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| Total comprehensive income for the period attributable to the equity holders of the parent |
965 |
2,044 |
3,391 |
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COLEFAX GROUP PLC
| INTERIM GROUP STATEMENT OF FINANCIAL POSITION | |||
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| Unaudited | Unaudited | Audited | |
| As at 31 Oct 2009 | As at 31 Oct 2008 | As at 30 April 2009 | |
| £'000 | £'000 | £'000 | |
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| Non-current assets: | |||
| Property, plant and equipment | 5,433 | 5,296 | 5,718 |
| Deferred tax asset | 1,505 | 2,079 | 1,590 |
| 6,938 | 7,375 | 7,308 | |
| Current assets: | |||
| Inventories and work in progress | 12,133 | 14,918 | 13,255 |
| Trade and other receivables | 10,394 | 10,149 | 11,661 |
| Cash and cash equivalents | 4,490 | 2,668 | 3,079 |
|
| 27,017 | 27,735 | 27,995 |
| Trade and other payables: | |||
| Current corporation tax | 448 | 1,017 | 387 |
| Other amounts falling due in one year | 11,180 | 13,555 | 13,298 |
| 11,628 | 14,572 | 13,685 | |
| Net current assets | 15,389 | 13,163 | 14,310 |
| Total assets less current liabilities | 22,327 | 20,538 | 21,618 |
| Non-current liabilities: | |||
| Deferred tax liability | - | 284 | - |
| Pensions liability | 436 | 247 | 485 |
| 436 | 531 | 485 | |
| Net assets | 21,891 | 20,007 | 21,133 |
| Capital and reserves attributable to equity holders of the Company: | |||
| Called up share capital | 1,479 | 1,481 | 1,481 |
| Share premium account | 11,148 | 11,148 | 11,148 |
| Capital redemption reserve | 1,395 | 1,393 | 1,393 |
| ESOP share reserve | (30) | (20) | (30) |
| Share based payment reserve | 208 | 664 | 475 |
| Foreign exchange reserve | 1,503 | 1,098 | 2,055 |
| Cash flow hedge reserve | 361 | (592) | (370) |
| Retained earnings | 5,827 | 4,835 | 4,981 |
| Total equity | 21,891 | 20,007 | 21,133 |
COLEFAX GROUP PLC
| INTERIM GROUP STATEMENT OF CASH FLOWS | |||
| Unaudited Six months to 31 Oct 2009 | Unaudited Six months to 31 Oct 2008 | Audited Year to 30 April 2009 | |
| £'000 | £'000 | £'000 | |
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| Operating activities | |||
| Profit before taxation | 1,139 | 2,481 | 2,649 |
| Finance income | (8) | (41) | (45) |
| Finance expense | 6 | 46 | 52 |
| Depreciation | 875 | 847 | 1,795 |
| Cash flows from operations before changes in working capital | 2,012 | 3,333 | 4,451 |
| Decrease / (increase) in inventories and work in progress | 806 | (903) | 1,032 |
| Decrease / (increase) in trade and other receivables | 1,559 | 732 | (310) |
| (Decrease) / increase in trade and other payables | (1,458) | (991) | 3 |
| Cash generated from operations | 2,919 | 2,171 | 5,176 |
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| Taxation paid | |||
| UK corporation tax paid | (11) | (907) | (1,343) |
| Overseas tax (paid) / received | (237) | 128 | (237) |
| (248) | (779) | (1,580) | |
| Net cash inflow from operating activities | 2,671 | 1,392 | 3,596 |
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| Investing activities | |||
| Payments to acquire property, plant and equipment | (896) | (693) | (1,729) |
| Receipts from sales of property, plant and equipment | - | 7 | 33 |
| Interest received | 8 | 33 | 38 |
| Net cash outflow from investing | (888) | (653) | (1,658) |
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| Financing activities | |||
| Purchase of own shares | (19) | (895) | (895) |
| Interest paid | (7) | (46) | (72) |
| Equity dividends paid | (188) | (373) | (592) |
| Net cash outflow from financing | (214) | (1,314) | (1,559) |
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| Net increase / (decrease) in cash and cash equivalents | 1,569 | (575) | 379 |
| Cash and cash equivalents at beginning of period | 3,078 | 2,419 | 2,419 |
| Exchange (losses) / gains on cash and cash equivalents | (220) | 393 | 280 |
| Cash and cash equivalents at end of period | 4,427 | 2,237 | 3,078 |
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 2009, except as described below. |
| In the current financial year, the Group will adopt IAS 1 'Presentation of Financial Statements' (Revised) in its full statutory accounts for the year ended 30 April 2010 and therefore the presentation of the primary statements has been updated. The Group has opted to retain the Income Statement with a supplementary Statement of Comprehensive Income. As this standard is concerned with presentation only it does not have any impact on the results or net assets of the Group. | |
| 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 2009, the Company paid a final dividend for the year ended 30 April 2009 of 1.33p per ordinary share giving a total dividend of £188,369. |
| The proposed interim dividend of 1.55p (2008: 1.55p) per share is payable on 1 April 2010 to qualifying shareholders on the register at the close of business on 5 March 2010. | |
| 3. | Basic earnings per share have been calculated on the basis of earnings of £786,000 (2008: £1,662,000) and on 14,483,488 (2008: 14,268,557) 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 £786,000 (2008: £1,662,000) and on 14,753,488 (2008: 15,035,512) ordinary shares being the weighted average number of ordinary shares in the period adjusted to assume conversion of all dilutive potential ordinary shares of 270,000 (2008: 766,955). |
| 5. | The financial information for the year ended 30 April 2009 does not constitute the full statutory accounts for that period. The Annual Report and Financial Statements for the year ended 30 April 2009 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 2009 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. |