Last checked at 21 Jul 2011 07:00
Colefax Group plc
CFX
COLEFAX GROUP PLC
("Colefax" or the "Group")
Preliminary Results for the year ended 30th April 2011
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 and Tout, Jane Churchill, Manuel Canovas and Larsen.
Highlights
·; Sales from continuing operations increased 12% to £77.72m (2010: £69.19m)
·; Exceptional performance from the Decorating Division
·; Pre-tax profits from continuing operations up 49% to £6.52m (2010: £4.39m)
·; Earnings per share from continuing operations up 53% to 33.0p (2010: 21.6p)
·; Net cash at the year end of £6.30m (2010: £5.47m)
·; Proposed final dividend of 2.00p per share (2010: 1.55p per share), giving total dividend of 3.85p (2010: 3.10p), an increase of 24%
·; Cautious outlook but Group well placed to take advantage of any upturn in markets
David Green, Chairman of Colefax, commented,
"This is a strong set of results helped by an exceptional performance from our Decorating Division. We have seen growth in all of our major markets but I still feel that full recovery from the recession is a long way off.
The Group has a strong balance sheet and we are confident that we are well placed to take advantage of any improvements in our markets but until then we will work on cost controls and take a cautious view of the future."
Enquiries:
Colefax Group plc | David Green, Chairman | Tel: 020 3178 6378 (today) |
Robert Barker, Finance Director | ||
Biddicks | Katie Tzouliadis | Tel: 020 3178 6378 |
Sophie Lane | ||
Peel Hunt LLP | Dan Webster | Tel: 020 7418 8900 |
(NOMAD & Broker) | Richard Brown |
COLEFAX GROUP PLC
CHAIRMAN'S STATEMENT
Financial Results
The Group's pre-tax profit from continuing operations for the year to 30th April 2011 increased by 49% to £6.52 million (2010 - £4.39 million) on sales up 12% at £77.72 million (2010 - £69.19 million). Earnings per share from continuing operations increased by 53% to 33.0p (2010 - 21.6p) and the Group ended the year with net cash of £6.30 million (2010 - £5.47 million).
During the year, the Group purchased for cancellation 655,000 shares at an average price of £2.81 per share, representing 4.5% of the Group's issued share capital at the start of the year.
The Board has decided to increase the final dividend by 29% to 2.00p per share (2010 - 1.55p), making a total for the year of 3.85p (2010 - 3.10p), an increase of 24%. The final dividend will be paid on 11th October 2011 to shareholders on the register at the close of business on 16th September 2011.
This year's results have benefited from a very strong performance from the Decorating Division which should be seen as exceptional. In the Product Division a good recovery in the UK helped offset a disappointing year in the US. The principal challenge at the moment is dealing with some very significant increases in the cost of raw materials which are having a negative impact on the Group's margin. Currently raw material prices are showing no signs of returning to more historic levels.
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 79% of Group sales from continuing operations, increased by 9% to £61.20 million (2010 - £56.00 million). Profit from operations increased by 41% to £4.23 million (2010 - £3.01 million).
Sales in the US, which represent 49% of the Fabric Division's sales, increased by 10% on a constant currency basis. This sales increase must be seen as disappointing when compared with the dramatic fall in sales of the previous year. We completed the refurbishment of our New York showroom in May 2011 and this should increase sales in our most important US territory. We are in the process of relocating our warehouse and operations to a new location in Manhattan which will be completed by the end of August 2011. The move brings together the design studio and operations for the first time in one location and establishes a long term base for the Group in Manhattan.
UK sales, which represent 21% of the Fabric Division's sales, increased by 10% during the year. There was a stronger recovery in the first half of the year but current trading conditions are weaker and showing signs of further weakening over the next 12 months.
Sales in Continental Europe, which represent 27% of the Fabric Division's sales, increased by 6% on a constant currency basis with most of the increase in the first half of the year. Many European countries are cautious about the next 12 months and with the current problems in the Eurozone I am not optimistic that we can expect to see continued growth in this area.
Sales in the rest of the world, which represent just 3% of the Fabric Division's sales, were up by 4% in the year. There are a number of opportunities to grow some of these markets such as Russia and China although they currently remain a small part of total sales.
·; Furniture - Kingcome Sofas
Sales of Kingcome furniture, which account for 3% of Group sales from continuing operations, decreased by 4% to £2.44 million (2010 - £2.55 million). Profit from operations was £211,000 (2010 - £280,000) which represents a reasonable performance for the year given the challenging trading conditions. The majority of furniture sales are made in the UK and it is this area of the Group's activities which is most at risk from a downturn in the market.
Interior Decorating Division
Interior decorating sales, which account for 18% of Group sales from continuing operations, increased by 32% to £14.08 million (2010 - £10.63 million). This represents an exceptional performance and resulted in a profit from operations of £2.01 million (2010 - £1.10 million). During the year, we completed a number of significant projects for a single client which contributed to the near doubling of profits in this division. We are unlikely to produce this level of results again and they must be seen as a one off.
Prospects
Trading in the second half of the year was weaker than expected and it is still very difficult to accurately forecast how the Group will perform in the next financial year given the current economic climate. I still feel that full recovery from the recession is a long way off. The recovery in our largest market the US is slower than we would have hoped and sales are still well below pre-recession levels. The UK market recovered well last year but we are now starting to see signs of weakness. These factors combined with the Decorating Division returning to more normal levels of activity will mean that our results for the coming year are likely to be lower than this year.
The Group has a strong balance sheet and we are confident that we are well placed to take advantage of any improvements in our markets but until then we will work on cost controls and take a cautious view of the future.
David Green
Chairman
21st July 2011
COLEFAX GROUP PLC
GROUP INCOME STATEMENT
For the year ended 30th April 2011
Restated | ||||||
2011 | 2010 | |||||
£'000 | £'000 | |||||
Continuing operations: | ||||||
Revenue | 77,722 | 69,188 | ||||
Cost of sales | 34,929 | 31,287 | ||||
Gross profit | 42,793 | 37,901 | ||||
Operating expenses | 36,345 | 33,514 | ||||
Profit from operations | 6,448 | 4,387 | ||||
Finance income | 74 | 11 | ||||
Finance expense | (1) | (10) | ||||
73 | 1 | |||||
Profit before taxation | 6,521 | 4,388 | ||||
Tax expense | ||||||
-UK | (1,329) | (1,236) | ||||
-Overseas | (436) | (19) | ||||
(1,765) | (1,255) | |||||
Profit from continuing operations | 4,756 | 3,133 | ||||
Trading loss on discontinued operations, net of tax | (111) | (357) | ||||
Loss on disposal, net of tax | (72) | (400) | ||||
Loss on discontinued operations, net of tax | (183) | (757) | ||||
Profit for the year attributable to equity holders of the parent | 4,573 | 2,376 | ||||
Basic earnings per share | 31.8 | p | 16.4 | p | ||
Diluted earnings per share | 31.5 | p | 16.1 | p | ||
Continuing operations: | ||||||
Basic earnings per share | 33.0 | p | 21.6 | p | ||
Diluted earnings per share | 32.8 | p | 21.2 | p | ||
COLEFAX GROUP PLC
GROUP STATEMENT OF COMPREHENSIVE INCOME
For the year ended 30th April 2011
2011 | 2010 | |||
£'000 | £'000 | |||
Profit for the year | 4,573 | 2,376 | ||
Other comprehensive income: | ||||
Currency translation differences on foreign currency net investments | (610) | (412) | ||
Cash flow hedges: | ||||
Gains recognised directly in equity | 1,012 | 596 | ||
Transferred to profit and loss for the year | (235) | (71) | ||
Tax on components of other comprehensive income | 50 | (49) | ||
Total other comprehensive income | 217 | 64 | ||
Total comprehensive income for the year attributable to equity holders of the parent | 4,790 | 2,440 | ||
COLEFAX GROUP PLC
GROUP STATEMENT OF FINANCIAL POSITION
At 30th April 2011
2011 | 2010 | |
£'000 | £'000 | |
Non-current assets: | ||
Property, plant and equipment | 5,909 | 5,309 |
Deferred tax asset | 1,372 | 1,639 |
7,281 | 6,948 | |
Current assets: | ||
Inventories and work in progress | 12,283 | 11,886 |
Trade and other receivables | 12,640 | 12,380 |
Cash and cash equivalents | 7,132 | 5,897 |
32,055 | 30,163 | |
Current liabilities: | ||
Trade and other payables | 13,042 | 12,598 |
Current corporation tax | 388 | 532 |
Provisions | 205 | 606 |
13,635 | 13,736 | |
Net current assets | 18,420 | 16,427 |
Total assets less current liabilities | 25,701 | 23,375 |
Non-current liabilities: | ||
Pension liability | 241 | 320 |
Net assets | 25,460 | 23,055 |
Capital and reserves attributable to equity holders of the Company: | ||
Called up share capital | 1,405 | 1,470 |
Share premium account | 11,148 | 11,148 |
Capital redemption reserve | 1,469 | 1,404 |
ESOP share reserve | (96) | (18) |
Share based payment reserve | 94 | 196 |
Foreign exchange reserve | 1,383 | 1,741 |
Cash flow hedge reserve | 583 | 8 |
Retained earnings | 9,474 | 7,106 |
Total equity | 25,460 | 23,055 |
The financial statements were approved by the board of directors and authorised for issue on 21st July 2011.
D. B. Green Director
R. M. Barker Director
COLEFAX GROUP PLC
GROUP STATEMENT OF CASH FLOWS
For the year ended 30th April 2011
2011 | 2010 | |
£'000 | £'000 | |
Operating activites | ||
Profit before taxation - continuing operations | 6,521 | 4,388 |
Loss before taxation - discontinued operations | (278) | (1,147) |
Finance income | (74) | (11) |
Finance expense | 1 | 10 |
Depreciation | 2,044 | 1,883 |
Cash flows from operations before changes in working capital | 8,214 | 5,123 |
(Increase) / decrease in inventories and work in progress | (566) | 1,193 |
Decrease / (increase) in trade and other receivables | 316 | (848) |
Decrease in trade and other payables | (205) | (39) |
Cash generated from operations | 7,759 | 5,429 |
Taxation paid | ||
UK corporation tax paid | (1,280) | (530) |
Overseas tax paid | (279) | (106) |
(1,559) | (636) | |
Net cash inflow from operating activities | 6,200 | 4,793 |
Investing activities | ||
Payments to acquire property, plant and equipment | (2,885) | (1,716) |
Receipts from sales of property, plant and equipment | 29 | 106 |
Interest received | 74 | 11 |
Purchase of ESOP shares | (95) | - |
Net cash outflow from investing | (2,877) | (1,599) |
Financing activities | ||
Purchase of own shares | (1,840) | (137) |
Interest paid | (1) | (10) |
Equity dividends paid | (486) | (412) |
Net cash outflow from financing | (2,327) | (559) |
Net increase in cash and cash equivalents | 996 | 2,635 |
Cash and cash equivalents at beginning of year | 5,472 | 3,078 |
Exchange losses on cash and cash equivalents | (170) | (241) |
Cash and cash equivalents at end of year | 6,298 | 5,472 |
COLEFAX GROUP PLC
GROUP STATEMENT OF CHANGES IN EQUITY
For the year ended 30th April 2011
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 2010 | 1,470 | 11,148 | 1,404 | (18) | 196 | 1,741 | 8 | 7,106 | 23,055 |
Profit for the year | - | - | - | - | - | - | - | 4,573 | 4,573 |
Foreign exchange | - | - | - | - | - | (610) | - | - | (610) |
Cash flow hedges: | |||||||||
Gains | - | - | - | - | - | - | 1,012 | - | 1,012 |
Transfers | - | - | - | - | - | - | (235) | - | (235) |
Tax on other comprehensive income | - | - | - | - | - | 252 | (202) | - | 50 |
Share buybacks | (65) | - | 65 | - | - | - | - | (1,840) | (1,840) |
ESOP shares granted | - | - | - | 17 | 19 | - | - | - | 36 |
Share options exercised | - | - | - | - | (121) | - | - | 121 | - |
Dividends paid | - | - | - | - | - | - | - | (486) | (486) |
Purchase of ESOP shares | - | - | - | (95) | - | - | - | - | (95) |
At 30 April 2011 | 1,405 | 11,148 | 1,469 | (96) | 94 | 1,383 | 583 | 9,474 | 25,460 |
At 1 May 2009 | 1,481 | 11,148 | 1,393 | (30) | 475 | 2,055 | (370) | 4,981 | 21,133 |
Profit for the year | - | - | - | - | - | - | - | 2,376 | 2,376 |
Foreign exchange | - | - | - | - | - | (412) | - | - | (412) |
Cash flow hedges: | |||||||||
Gains | - | - | - | - | - | - | 596 | - | 596 |
Transfers | - | - | - | - | - | - | (71) | - | (71) |
Tax on other comprehensive income | - | - | - | - | - | 98 | (147) | - | (49) |
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 |
COLEFAX GROUP PLC
NOTES TO THE FINANCIAL INFORMATION
At 30th April 2011
1. Accounting policies
The principal accounting policies adopted by the Group have been applied consistently to the years presented, except as stated below.
Revenue has been restated in 2010 to reclassify sampling and freight income which had previously been reported within cost of sales and operating expenses. The reclassification does not result in a change to profit from operations or the statement of financial position.
2. Earnings per share
Basic earnings / (loss) per share has been calculated using the following data: | ||
2011 | 2010 | |
£'000 | £'000 | |
Profit after tax from continuing operations | 4,756 | 3,133 |
Loss after tax on discontinued operations | (183) | (757) |
Total | 4,573 | 2,376 |
No. | No. | |
Weighted average number of ordinary shares in issue | 14,396,731 | 14,520,877 |
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: | ||
2011 | 2010 | |
£'000 | £'000 | |
Profit after tax from continuing operations | 4,756 | 3,133 |
Loss after tax on discontinued operations | (183) | (757) |
Total | 4,573 | 2,376 |
No. | No. | |
Weighted average number of ordinary shares in issue | 14,396,731 | 14,520,877 |
Dilutive effect of shares under option | 115,000 | 235,000 |
14,511,731 | 14,755,877 | |
3. Cash and cash equivalents
For the purposes of the consolidated statement of cash flows, cash and cash equivalents comprise the following:
2011 | 2010 | |
£'000 | £'000 | |
Cash at bank and in hand | 7,132 | 5,897 |
Bank overdrafts | (834) | (425) |
6,298 | 5,472 |
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.
4. 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 2011 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 2010 which have been delivered to the Registrar of Companies.
5. Annual general meeting
The Annual General Meeting of Colefax Group plc will be held at 19-23 Grosvenor Hill, London W1K 3QD on 13th September 2011 at 11.00 a.m.