Colefax Grp. Regulatory News (CFX)

24 Jan 2008 07:01

Colefax Group PLC24 January 2008 CFX COLEFAX GROUP PLC ("Colefax" or "the Group") Interim Results for the six months ended 31 October 2007 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 softfurnishings marketplace; these are Colefax and Fowler, Cowtan & Tout, JaneChurchill, Manuel Canovas and Larsen. Key Points • Strong trading in all major markets and an exceptional performance by interior decorating division: - US - sales up 12%, the strongest growth for the last 3 years - UK - sales up 13%, reflecting continued strength of high end property market - Continental Europe - sales up 11% • Sales increased by 14% to £38.61m (2006: £33.76m) • Pre-tax profit rose by 34% to £3.32m (2006: £2.48m) • Earnings per share rose by 49% to 15.02p (2006: 10.09p) • Interim dividend increased by 7% to 1.55p per share (2006: 1.45p) • Interior Decorating Division - sales up 70% - reflecting strength of UK market and helped by completion of significant contracts - on track for a very good year • Current trading good but slowing property market in UK and US is a concern - strengthening of US dollar should help to cushion any slowdown David Green, Chairman, commenting, said, "Trading conditions have been strong in all our major markets. Fabric sales inour most important marketplace, the US, showed the strongest growth we have seenin the last three years, increasing by 12% on a like-for-like basis. However,the very weak US dollar did negatively impact results. We are particularlypleased with the performance of our Interior Decorating Division, which is ontrack for an exceptionally good year. Current trading has remained robust in the UK and Continental Europe, with aslight slowdown in the US. The US dollar appears to be strengthening and if thiscontinues, it will cushion any slowdown in sales We are continuing to invest in all areas of our business and should have aclearer view of economic conditions and prospects for next year following ourimportant spring trading months." Enquiries: Colefax Group plc David Green, Chairman Tel: 020 7493 2231 KBC Peel Hunt David Anderson Tel: 020 7418 8900 Biddicks Katie Tzouliadis Tel: 020 7448 1000 CHAIRMAN'S STATEMENT Financial Results The financial accounts for the six months to 31st October 2007 have beenprepared for the first time under International Financial Reporting Standards('IFRS') and accordingly the Group's comparative results have been restated. Theimpact of the adoption of IFRS has not been material. The Group's pre-tax profit for the six months to 31st October 2007 increased by34% to £3.32 million (2006: £2.48 million) on sales up 14% at £38.61 million(2006: £33.76 million). Earnings per share increased by 49% to 15.02p (2006:10.09p). Group net borrowings increased to £745,000 in line with the Group'snormal working capital cycle. The Board has decided to recommend that the interim dividend be increased by 7%to 1.55p per share (2006: 1.45p). The interim dividend will be paid on 10thApril 2008 to shareholders on the register at the close of business on 14thMarch 2008. Trading conditions have been strong in all our major markets, especially the UKand Continental Europe. As reported in July, the demand at the high end hasremained buoyant and on a constant currency basis Group sales increased by 18%.The increase in the Group's interim profits is partly due to a very strongperformance by our Decorating Division and this helped to offset the impact ofthe weak US dollar which negatively affected the Group's results. Product Division • Fabric - Portfolio of Five Brands: "Colefax and Fowler", "Cowtan and Tout", "Jane Churchill", "Manuel Canovas" and "Larsen" Sales in the US, which represent 52% of the Fabric Division's turnover,increased by 12% on a constant currency basis. This compares to growth of 3% inthe equivalent period last year and is the strongest period of growth in thelast 3 years. We are expanding our showrooms in Atlanta and Florida and expectthe refurbishment to be completed by the end of April. Sales in the UK, which represent 21% of the Fabric Division's turnover,increased by 13% during the period. This reflects the continued strength of thehigh end property market and the success of our new collections. Sales in Europe, which represent 24% of the Fabric Division's turnover,increased by 11% on a constant currency basis. In France sales remaineddifficult and therefore the increase was driven by an even stronger performancefrom the remainder of Continental Europe. We are currently making changes toaddress the underperformance in France and we hope this will lead to a return togrowth in our principal European market. Sales in the rest of the world, which represent 3% of the Fabric Division'sturnover, increased by 42%. Although this remains a small part of the Group'sturnover, we are constantly looking at ways to expand in new markets that willoffer growth. • Furniture - Kingcome Sofas Sales of furniture, which account for 4% of Group sales, increased by 11% duringthe period. The continued strong demand for furniture reflects the strength ofthe market at the high end and is heavily focused in and around London. • Accessories - Manuel Canovas We have completed a review of the Accessories Division looking at the markets inwhich we operate, the diversity of the product line and those employeesresponsible for specific areas. Following that review certain operationalchanges are being made which will be a cost for the current year but should leadto an improved performance in the years to come. Interior Decorating Division Decorating sales increased by 70% which is partly due to timing differences inthe completion of significant contracts but also reflecting the strength of theUK market. This strong performance has resulted in a significant increase ininterim profits. Currently we still have a good order book and expect a verygood performance for the full year. Prospects Current trading through the end of the calendar year has remained similar tothat of the early part of the year with a slight slowdown in the US. It isdifficult to accurately gauge current market trends as history shows that ourbusiness activities tend to lag any slowdown in the general economy. We areconcerned about the well publicised slowdown in the UK and US property markets. The good news on the horizon appears to be the strengthening of the US dollarwhich, if this continues, will help to cushion any slowdown in sales next year. We are continuing to invest in all areas of our business and should have aclearer view of economic conditions and prospects for next year following ourimportant spring trading months. David Green Chairman GROUP INCOME STATEMENTFor the six months ended 31st October 2007 Restated Restated Unaudited Unaudited Unaudited Six Months Six Months Year to 31st Oct to 31st Oct to 30th April 2007 2006 2007 £'000 £'000 £'000 Revenue 38,608 33,764 71,013 Profit from operations 3,373 2,453 5,842 Finance income 76 60 138 Finance charge (127) (36) (174) --------- --------- --------- (51) 24 (36) --------- --------- --------- Profit on ordinaryactivities before taxation 3,322 2,477 5,806 Taxation (1,096) (851) (1,907) --------- --------- --------- Profit for the period 2,226 1,626 3,899 ========= ========= =========Earnings per share 15.02p 10.09p 24.80pDiluted earnings per share 14.44p 9.74p 23.86pDividend per share 2.55p 2.37p 4.00p GROUP BALANCE SHEETAs at 31 October 2007 Restated Restated Unaudited Unaudited Unaudited At 31st Oct At 31st Oct At 30th April 2007 2006 2007 £'000 £'000 £'000 Property, plant andequipment 5,056 5,402 5,135 Current assets:Inventories and contracts inprogress 13,118 11,878 12,045Trade and other receivables 13,125 10,620 11,722Cash and cash equivalents 5,623 4,366 4,113 --------- --------- --------- 31,866 26,864 27,880 --------- --------- --------- Trade and other payables:amounts falling due withinone year 19,585 16,899 17,508 Net current assets 12,281 9,965 10,372 --------- --------- ---------Total assets less currentliabilities 17,337 15,367 15,507 --------- --------- --------- Non-current liabilities:Deferred taxation 130 33 35Pensions liability 195 227 203 --------- --------- --------- 325 260 238 --------- --------- ---------Net assets 17,012 15,107 15,269 ========= ========= ========= Capital and reserves:Called up share capital 1,565 1,664 1,565Share premium account 11,141 11,087 11,141Capital redemption reserve 1,308 1,202 1,308ESOP share reserve (287) (287) (157)ESOP capital reserve 228 228 508Foreign exchange reserve (105) (370) (539)Profit and loss account 3,162 1,583 1,443 --------- --------- ---------Total equity 17,012 15,107 15,269 ========= ========= ========= GROUP STATEMENT OF TOTAL RECOGNISED INCOME AND EXPENSESFor the six months ended 31st October 2007 Restated Restated Unaudited Unaudited Unaudited Six Months Six Months Year to 31st Oct to 31st Oct to 30th April 2007 2006 2007 £'000 £'000 £'000 Profit for the period 2,226 1,626 3,899 Currency translationdifferences on foreigncurrency netinvestments 62 (149) (108) Currency translationdifferences on foreigncurrency intercompanyloans (288) (378) (753) Deferred tax onlong-term intercompanyloan foreign currencymovements 121 157 322 --------- --------- --------Total recognisedincome relating to theperiod 2,121 1,256 3,360 ========= ========= ======== GROUP CASH FLOW STATEMENTFor the six months ended 31st October 2007 Unaudited Unaudited Unaudited Six months Six months Year to 31st Oct to 31st Oct to 30th April 2007 2006 2007 £'000 £'000 £'000 Operating activities Profit fromoperations beforeinterest and tax 3,373 2,453 5,842Depreciation 814 807 1,629 --------- --------- ---------Profit fromoperations beforechanges in workingcapital 4,187 3,260 7,471 Increase ininventories (1,156) (1,058) (1,355)(Increase)/decreasein trade and otherreceivables (1,510) 1,009 394(Decrease)/increase in trade and otherpayables (157) 826 1,524 --------- --------- ---------Cash generated fromoperations 1,364 4,037 8,034 Taxation paidUK corporation taxpaid (955) (649) (1,432)Overseas tax paid (127) (256) (393) --------- --------- --------- (1,082) (905) (1,825)Net cash inflowfrom operatingactivities 282 3,132 6,209 --------- --------- ---------Investing activities Payments to acquiretangible property,plant and equipment (828) (966) (1,648)Receipts from salesof property, plantand equipment 10 35 45Interest received 76 54 129 --------- --------- ---------Net cash outflowfrom investing (742) (877) (1,474) --------- --------- ---------Financing activities Purchase of ownshares - (897) (3,093)Repayment oflong-term loan - (250) (500)Interest paid (100) (53) (150)Equity dividendspaid (378) (382) (600) --------- --------- ---------Net cash outflowfrom financing (478) (1,582) (4,343) --------- --------- ---------(Decrease)/increasein cash in theperiod (938) 673 392 ========= ========= ========= NOTES 1. The interim results have been prepared in accordance with the accounting policies of the Group under International Financial Reporting Standards (IFRS) as set out in the 'Statement on the Impact of Adoption of International Financial Reporting Standards', which was issued on 24th January 2008 and can be found on the Group's website. This statement includes reconciliations between prior year accounts and the restated comparatives included in this interim report. A full restatement of these policies and reconciliation of the resultant changes will be disclosed in the financial statements for the year ended 30th April 2008 which will be the Group's first full set of IFRS financial statements. The Group has applied IFRS 1 'Transition to IFRS' in preparing this consolidated interim report. The Group's transition date is 1st May 2006 and its IFRS adoption date is 30th April 2007. In preparing this interim report in accordance with IFRS 1, the Group has applied the mandatory exception from full retrospective application of IFRS. 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 31st October 2007, the Company paid a final dividend for the year ended 30 April 2007 of 2.55p per ordinary share giving a total dividend of £378,212. The proposed interim dividend of 1.55p (2006: 1.45p) per share is payable on 10th April 2008 to qualifying shareholders on the register at the close of business on 14th March 2008. 3. Earnings per share have been calculated on the basis of earnings of £2,226,000 (2006 restated: £1,626,000) and on 14,816,510 (2006: 16,111,464) 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 £2,226,000 (2006 restated: £1,626,000) and on 15,408,152 (2006: 16,698,371) ordinary shares being the weighted average number of ordinary shares in the period adjusted to assume conversion of all dilutive potential ordinary shares 591,642 (2006: 586,907). 5. The interim accounts are unaudited. The above financial information does not comprise full accounts within the meaning of Section 240 of the Companies Act 1985 (as amended). A copy of the statutory accounts for the year ended 30th April, which were prepared under UK GAAP, has been delivered to the Registrar of Companies. The auditor's report on those accounts was unqualified and did not contain a statement under section 237 (2)-(3) of the Companies Act 1985 (as amended). 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. This information is provided by RNS The company news service from the London Stock Exchange