Last checked at 24 Jul 2008 07:00
Colefax Group plc
CFX
COLEFAX GROUP PLC
("Colefax" or "the Group")
Preliminary Results for the year ended 30th April 2008
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 & Tout, Jane Churchill, Manuel Canovas and Larsen.
Highlights
Sales up 10% to £78.18m (2007 - £71.01m) and up by 11% on a constant currency basis
Pre-tax profit increased by 2% to £5.94m (2007 - £5.81m)
Earnings per share rose by 11% to 27.5p (2007 - 24.8p)
Strong cash generation of £3.13m before dividends and share buybacks (2007 - £4.09m)
Net funds at year end of £2.42 million (2007 - £363,000)
Proposed final dividend of 2.65p (2007 - 2.55p), giving total dividend of 4.20p (2007 - 4.00p), an increase of 5% on last year
Market conditions increasingly challenging
David Green, Chairman of Colefax, commented,
"We ended the year with a strong balance sheet which puts us in a good position to handle current market conditions"
Enquiries:
| Colefax Group plc | David B. Green, Chairman | Tel: 020 7448 1000 (today) |
| Robert M. Barker, Finance Director | ||
| Biddicks | Katie Tzouliadis | Tel: 020 7448 1000 |
| KBC Peel Hunt Ltd | David Anderson | Tel: 020 7418 8900 |
| (Nominated Adviser & Broker) | Alina Savych | |
CHAIRMAN'S STATEMENT
Financial Results
The Group's pre-tax profit for the year to 30th April 2008 increased by 2% to £5.94 million (2007 - £5.81 million) on sales up 10% at £78.18 million (2007 - £71.01 million). Earnings per share increased by 11% to 27.5p (2007 - 24.8p). The Group ended the year with net funds of £2.42 million (2007 - £363,000).
During the year the Group purchased for cancellation 303,932 shares at an average price of £1.53 per share and representing 1.9% of the Group's issued share capital at the start of the year.
The Board has decided to recommend that the final dividend is increased by 4% to 2.65p per share (2007 - 2.55p), making a total for the year of 4.20p (2007 - 4.00p) an increase of 5%. The final dividend will be paid on 10th October 2008 to shareholders on the register at the close of business on 12th September 2008.
Trading conditions remained good throughout the year although our two major markets, the US and the UK started weakening in the last quarter of the year. The decline of the US dollar adversely impacted our results by £823,000 on a constant currency basis during the year and the re-organisation of the Accessories Division in France resulted in £413,000 of exceptional costs being taken during the year. We ended the year with a strong balance sheet which puts us in a good position to handle current market conditions.
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, increased by 7% to £62.15 million (2007 - £58.29 million) and by 8% on a constant currency basis.
Sales in the US, which represent 50% (2007- 52%) of the Fabric Division's sales, increased by 8% on a constant currency basis (2007 - 5%). We are expanding our agent showroom in Florida which is an important market. We are also refurbishing our Los Angeles showroom which is a significant market offering good growth opportunities.
UK sales, which represent 21% (2007 - 21%) of the Fabric Division's sales, increased by 10% (2007 - 16%). This performance reflects favourable trading conditions throughout the year. Sales growth slowed towards the end of the year and we expect market conditions to become progressively more difficult.
Sales in Continental Europe, which represent 25% (2007 - 24%) of the Fabric Division sales, increased by 5% (2007 - 11%) on a constant currency basis. The majority of European countries performed well during the year but sales in France, which is our largest market, were down by 5% on a constant currency basis. This has reduced the overall growth in Europe.
Sales in the rest of the world, which represent 4% (2007 - 3%) of the Fabric Division's sales, increased by 13% (2007 - 32%) on a constant currency basis although it is still a small proportion of overall sales. We are starting to see growth in newer markets such as Russia and China and believe that these trends will continue.
Sales of Kingcome furniture, which account for 4% (2007 - 4%) of Group sales, increased by 10% to £2.92 million (2007 - £2.65 million) and produced a good profit for the year. However, as this area of the Group's activities is the most sensitive to the current problems in the UK, we expect a weakening in trading.
Manuel Canovas is based in Paris and sales which comprise beachwear and scented candles account for 3% (2007 - 4%) of Group sales. During the year sales decreased by 12% to £2.47 million (2007 - £2.82 million). As reported in our interim results, a full review of this activity has been carried out and this resulted in a complete change of management together with certain operational changes. These changes incurred a one-off cost of £413,000 in the year. We now have a new team in place and a strategy that should return this activity to profit.
Interior Decorating Division
Interior decorating sales which account for 14% of Group sales (2007 - 10%), increased by 47% to £10.64 million (2007 - £7.26 million) during the year, producing our best result for over 10 years. The decorating order book remains healthy and as this part of the Group operates in a market less affected by the current economic problems, we are optimistic for the coming year. However, we do not expect results for the current financial year to match the excellent performance reported for the year to 30th April 2008. This is partly due to lower antique sales, which are being affected by the downturn in the UK and US.
Prospects
Current trading conditions in our two principal markets, the US and UK, look increasingly challenging due to the downturn in the housing markets and are difficult to forecast with any certainty. Historically we have been last in to a recession and last out and my experience of any downturn is that it is always deeper and lasts longer than everyone forecasts. For now our focus will be on conserving our cash and reducing costs where possible but not to the long term detriment of the Group. We have a strong balance sheet and are well placed to handle any downturn and take advantage of any market opportunities which may arise.
David B. Green
Chairman
24th July 2008
GROUP INCOME STATEMENT
For the year ended 30th April 2008
| Notes | 2008 | 2007 | |
| £'000 | £'000 | ||
| Revenue | 78,181 | 71,013 | |
| Cost of sales | 36,467 | 31,602 | |
| Gross profit | 41,714 | 39,411 | |
| Operating expenses | 35,633 | 33,569 | |
| Profit from operations | 6,081 | 5,842 | |
| Finance income | 127 | 138 | |
| Finance expense | (266) | (174) | |
| (139) | (36) | ||
| Profit before taxation | 5,942 | 5,806 | |
| Tax expense - UK - Overseas | (1,899) 22 | (1,247) (660) | |
| (1,877) | (1,907) | ||
| Profit for the year attributable to equity holders of the parent | 4,065 | 3,899 | |
| Basic earnings per share | 2 | 27.5p | 24.8p |
| Diluted earnings per share | 2 | 26.1p | 23.9p |
All activity has arisen from continuing operations.
GROUP BALANCE SHEET
At 30th April 2008
| 2008 | 2007 | ||
| £'000 | £'000 | ||
| Non-current assets: | |||
| Property, plant and equipment | 4,960 | 5,135 | |
| Deferred tax asset | 1,991 | 2,164 | |
| 6,951 | 7,299 | ||
| Current assets: | |||
| Inventories and work in progress | 13,357 | 12,045 | |
| Trade and other receivables | 10,561 | 9,558 | |
| Cash and cash equivalents | 3,862 | 4,113 | |
| 27,780 | 25,716 | ||
| Trade and other payables: | |||
| Current corporation tax | 995 | 1,529 | |
| Other amounts falling due in one year | 14,152 | 15,979 | |
| 15,147 | 17,508 | ||
| Net current assets | 12,633 | 8,208 | |
| Total assets less current liabilities | 19,584 | 15,507 | |
| Non-current liabilities: | |||
| Deferred tax liability | 123 | 35 | |
| Pension liability | 232 | 203 | |
| 355 | 238 | ||
| Net assets | 19,229 | 15,269 | |
| Capital and reserves attributable to equity holders of the Company: | |||
| Called up share capital | 1,536 | 1,565 | |
| Share premium account | 11,148 | 11,141 | |
| Capital redemption reserve | 1,338 | 1,308 | |
| ESOP share reserve | (20) | (157) | |
| Share based payment reserve | 664 | 508 | |
| Foreign exchange reserve | 124 | (539) | |
| Retained earnings | 4,439 | 1,443 | |
| Total equity | 19,229 | 15,269 |
The financial statements were approved by the board of directors and authorised for issue on 24th July 2008.
D. B. Green Director
R. M. Barker Director
GROUP CASHFLOW STATEMENT
For the year ended 30th April 2008
| 2008 | 2007 | ||
| £'000 | £'000 | ||
| Operating activities | |||
| Profit before taxation | 5,942 | 5,806 | |
| Finance income | (127) | (138) | |
| Finance expense | 266 | 174 | |
| Depreciation | 1,690 | 1,629 | |
| Cashflows from operations before changes in working capital | 7,771 | 7,471 | |
| Increase in inventories and contracts in progress | (1,215) | (1,355) | |
| (Increase)/decrease in trade and other receivables | (672) | 394 | |
| Increase in trade and other payables | 1,143 | 1,524 | |
| Cash generated from operations | 7,027 | 8,034 | |
| Taxation paid | |||
| UK corporation tax paid | (2,002) | (1,432) | |
| Overseas tax paid | (307) | (393) | |
| (2,309) | (1,825) | ||
| Net cash inflow from operating activities | 4,718 | 6,209 | |
| Investing activities | |||
| Payments to acquire property, plant and equipment | (1,448) | (1,648) | |
| Receipts from sales of property, plant and equipment | 10 | 45 | |
| Interest received | 125 | 129 | |
| Net cash outflow from investing | (1,313) | (1,474) | |
| Financing activities | |||
| Purchase of own shares | (465) | (3,093) | |
| Repayment of long-term loan | - | (500) | |
| Interest paid | (280) | (150) | |
| Equity dividends paid | (604) | (600) | |
| Net cash outflow from financing | (1,349) | (4,343) | |
| Increase in cash in the year | 2,056 | 392 | |
GROUP STATEMENT OF RECOGNISED INCOME AND EXPENSES
For the year ended 30th April 2008
| 2008 | 2007 | ||
| £'000 | £'000 | ||
| Profit for the financial year | 4,065 | 3,899 | |
| Currency translation differences on foreign currency net investments | 704 | (861) | |
| Deferred tax on long-term loan foreign currency movements | (41) | 322 | |
| Total recognised income and expenses relating to the year | 4,728 | 3,360 |
NOTES TO THE ACCOUNTS
At 30th April 2008
1. Basis of Preparation
The final results have been prepared in accordance with the accounting policies of the Group under International Financial Reporting Standards (IFRS). A full restatement of these policies and reconciliation of the resultant changes has been disclosed in the financial statements for the year ended 30th April 2008 which are the Group's first full set of IFRS financial statements.
The Group has applied IFRS 1 'First-time Adoption of IFRS' in preparing this final report. The Group's transition date is 1st May 2006 and its IFRS adoption date is 30th April 2007. In preparing this final report in accordance with IFRS 1, the Group has applied the mandatory exemption from full retrospective application of IFRS.
2. Earnings Per Share
Basic earnings per share have been calculated on the basis of profit on ordinary activities after tax of £4,065,000 (2007 - £3,899,000) and on 14,784,331 (2007 - 15,719,278) 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 £4,065,000 (2007 - £3,899,000) and on 15,553,508 (2007 - 16,339,872) being the weighted average number of shares in issue during the year, calculated as follows:
| 2008 | 2007 | |
| Basic weighted average number of shares | 14,784,331 | 15,719,278 |
| Dilutive potential ordinary shares, including shares under option owned by the Colefax Group Plc ESOP Trust | 769,177 | 620,594 |
| 15,553,508 | 16,339,872 |
3. Cash and Financing
For the purposes of the consolidated cash flow statement, cash and cash equivalents comprise the following:
| 2008 | 2007 | |
| £'000 | £'000 | |
| Cash at bank and in hand | 3,862 | 4,113 |
| Bank overdrafts | (1,443) | (3,750) |
| 2,419 | 363 | |
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 for the first time, does not constitute statutory accounts as defined in Section 240 of the Companies Act 1985. The financial information for the year ended 30th April 2008 has been extracted from the statutory accounts on which an unqualified audit opinion has been issued.
Statutory accounts for the year ended 30th April 2008 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 2007 restated for IFRS. Those original accounts, upon which the auditors issued an unqualified opinion, have been delivered to the Registrar of Companies.
The annual accounts for the year ended 30th April 2008 are expected to be posted to shareholders on or around Monday 28th July 2008 and will be available from the Company's website on www.colefaxgroupplc.com.
5. Annual General Meeting
The Annual General Meeting of Colefax Group plc will be held at 19-23 Grosvenor Hill, London W1K 3QD on 16th September 2008 at 11.00 a.m.