Colefax Grp. Regulatory News (CFX)

23 Jul 2007 07:00

Colefax Group PLC23 July 2007 CFX.L COLEFAX GROUP PLC ("Colefax" or "the Group") Preliminary Results for the year ended 30 April 2007 Colefax is an international designer and distributor of furnishing fabrics &wallpapers and owns a leading interior decorating business. The Group tradesunder five brand names, which serve different segments of the soft furnishingsmarketplace; these are Colefax and Fowler, Cowtan & Tout, Jane Churchill, ManuelCanovas and Larsen. Highlights • Record sales and pre-tax profits due to favourable conditions in all main geographical markets • Pre-tax profit increased by 45% to £5.93m (2006 - £4.09m) • Sales up 4% to £71.01m (2006 - £68.36m) and up by 8% on a like for like basis • Earnings per share rose by 45% to 25.3p (2006 - 17.4p) • Strong cash generation of £4.36m before dividends and share buybacks • Borrowings eliminated - net funds at year end of £363,000 • Proposed final dividend of 2.55p (2006 - 2.37p), giving total dividend of 4.00p (2006 - 3.75p), an increase of 7% on last year • Market conditions remain healthy but weak US dollar will impact earnings in current year David Green, Chairman of Colefax, commented, "The Group has achieved very good growth in most major markets this yearreflecting the buoyant trading conditions which have continued into the currentyear" 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 COLEFAX GROUP PLCCHAIRMAN'S STATEMENT Financial Results The Group's pre-tax profit for the year to 30th April 2007 increased by 45% to£5.93 million (2006 - £4.09 million) on sales up 4% at £71.01 million (2006 -£68.36 million). Earnings per share increased by 45% to 25.3p (2006 - 17.4p).Net funds at the year-end were £363,000 (2006 - net debt of £300,000). The increase in profitability resulted in strong cash generation during the yearof £4.36 million before dividends and share buybacks. During the year the Groupbought for cancellation 1.51 million shares at a total cost of £3.09 million,representing 9% of the issued share capital at the start of the year. The Board has decided to recommend that the final dividend is increased by 8% to2.55p (2006 - 2.37p), making a total for the year of 4.00p (2006 - 3.75p), anincrease of 7%. The final dividend will be paid on 11th October 2007 toshareholders on the register at the close of business on 14th September 2007. The principal reason for the improvement in profitability was favourable tradingconditions in all the Group's main geographical markets. This reflects growingdemand for luxury household goods. On a constant currency basis Group salesincreased by 8% (2006 - 3%). The increased profitability has been achieved inspite of a significant deterioration in the US dollar exchange rate whichadversely impacts margins in the US, our major market which accounts for 43% oftotal Group sales (2006 - 46%). Product Division • Fabric - Portfolio of Brands: "Colefax and Fowler", "Cowtan & Tout", "JaneChurchill", "Manuel Canovas", and "Larsen". Sales in the Fabric Division, which represent 82% of Group sales, increased by4% to £58.29 million (2006 - £56.01 million) and by 9% on a constant currencybasis. Sales in the US, which represent 52% (2006 - 57%) of the Fabric Division'ssales, increased by 5% on a constant currency basis (2006 - 6%). The continuedgrowth in the US reflects the strength of the high end housing market which doesnot seem to have been affected by the housing slowdown in the wider economy. UK sales, which represent 21% (2006 - 18%) of the Fabric Division's turnover,increased by an exceptional 16% (2006 - 4%). The key factor driving sales growthhas been the strength of the high end housing market. Sales in Continental Europe, which represent 24% (2006 - 23%) of the FabricDivision's turnover, increased by 11% (2006 - 2%) on a constant currency basis.In France, our largest European market, sales increased by just 4% on a constantcurrency basis and this has reduced the overall rate of increase in Europe. MostEuropean countries are performing well reflecting the continued growth of theEuropean economy. Sales in the rest of the world, which represents 3% (2006 - 2%) of the FabricDivision's sales, increased by 32% although it is still small proportion ofoverall sales. The majority of our sales growth came from Australia, Russia andthe Middle East and we consider that there are good opportunities for furthergrowth in these markets. • Furniture - Kingcome Sofas Sales of Kingcome furniture, which account for 4% (2006 - 3%) of Group sales,increased by 26% to £2.65 million (2006 - £2.09 million) and this growth hasresulted in significantly improved profitability. The majority of furnituresales are in the UK and the exceptional sales growth reflects the very stronghigh end housing market, particularly in London. The current year has startedwell with a healthy level of deposits. • Accessories - Manuel Canovas Manuel Canovas is based in Paris and sales comprise beachwear and scentedcandles which account for 4% (2006 - 4%) of Group revenue. During the year,sales increased by 1% (2006 - 2%) to £2.82 million (2006 - £2.80 million).Approximately 35% of sales are invoiced in US dollars and the weakness of the USdollar has adversely impacted reported sales and margins although the divisionachieved a small profit for the year. Decorating Division Interior decorating and antique sales which together account for 10% of Groupsales (2006 - 11%), decreased by 2% to £7.26 million (2006 - £7.40 million)during the year. Antiques sales increased by 9% which is encouraging afterseveral years of difficult trading. Decorating sales decreased by 4% but thisreflects the timing of the completion of contracts rather than marketconditions. The decorating order book is extremely healthy with deposits up by46% over last year. Prospects The Group has achieved very good growth in most major markets this yearreflecting the buoyant trading conditions which have continued into the currentyear. We believe that the trend of rising interest rates in the UK and Europewill have some impact on the high end housing market and this is likely toimpact our overall growth rates. In addition the extreme weakness of the USdollar will have a significant adverse impact on our margins in the US if itremains at this level for the remainder of the year. We will continue to investin our strong portfolio of brands which will benefit the Group and itsshareholders in the future. David B. GreenChairman23rd July 2007 COLEFAX GROUP PLCGROUP PROFIT AND LOSS ACCOUNTFor the year ended 30th April 2007 Notes 2007 2006 £'000 £'000Turnover 71,013 68,361Cost of sales 31,602 30,575 -----------------------Gross profit 39,411 37,786Operating expenses 33,465 33,367 -----------------------Operating profit 3 5,946 4,419Profit/loss on disposal of fixed assets 16 (177) -----------------------Profit on ordinary activities before interest and taxation 5,962 4,242Interest (36) (148) -----------------------Profit on ordinary activities before taxation 5,926 4,094 -----------------------Tax on profit on ordinary activities - UK (1,250) (933)- Overseas (705) (337) ----------------------- (1,955) (1,270) -----------------------Profit for the financial year 3,971 2,824 -----------------------Basic earnings per share 2 25.3p 17.4pDiluted earnings per share 2 24.3p 16.8p ----------------------- All activity has arisen from continuing operations. COLEFAX GROUP PLCGROUP BALANCE SHEETAt 30th April 2007 2007 2006 £'000 £'000Fixed assets:Tangible assets 5,135 5,403 ----------------------Current assets:Stocks and contracts in progress 12,045 10,942Debtors 11,384 11,498Cash at bank and in hand 4,113 2,347 ---------------------- 27,542 24,787 ---------------------- Creditors: amounts falling due within one year 16,831 14,493 ----------------------Net current assets 10,711 10,294 ----------------------Total assets less current liabilities 15,846 15,697Provision for liabilities:Deferred taxation 35 57 ----------------------Net assets excluding pension liability 15,811 15,640Pension liability 120 134 ----------------------Net assets including pension liability 15,691 15,506 ----------------------Capital and reserves:Called up share capital 1,565 1,709Share premium account 11,141 11,087Capital redemption reserve 1,308 1,157ESOP share reserve (157) (287)ESOP capital reserve 508 228Profit and loss account 1,326 1,612 ----------------------Shareholders' funds 15,691 15,506 ---------------------- The financial statements were approved by the board of directors and authorisedfor issue on 23rd July 2007. D. B. Green DirectorR. M. Barker Director COLEFAX GROUP PLCGROUP CASHFLOW STATEMENTFor the year ended 30th April 2007 Notes 2007 2006 £'000 £'000Net cash inflow from operating activities 3 8,034 7,556Returns on investments and servicing offinance:Interest received 129 80Interest paid (150) (247) ---------------------- (21) (167) ----------------------Taxation:UK Corporation tax paid (1,432) (988)Overseas tax paid (393) (411) ---------------------- (1,825) (1,399) ----------------------Capital expenditure and financialinvestment:Payments to acquire tangible fixed assets (1,648) (1,781)Receipts from sales of tangible fixed assets 45 64 ---------------------- (1,603) (1,717)Equity dividends paid (600) (574) ----------------------Cash inflow before financing 3,985 3,699 ----------------------Financing:Purchase of own shares (3,093) -Repayment of long-term loans (500) (500) ----------------------Net cash outflow from financing (3,593) (500) ----------------------Increase in cash in the period 4 392 3,199 ---------------------- GROUP STATEMENT OF TOTAL RECOGNISED GAINS AND LOSSESFor the year ended 30th April 2007 2007 2006 £'000 £'000Profit for the financial year 3,971 2,824Currency translation differences on foreign currency net investments (133) 127Currency translation differences on foreign currency loans (753) 453Deferred tax on long-term loan foreign currency movements 322 (189) ---------------------Total recognised gains and losses relating to the year 3,407 3,215 --------------------- COLEFAX GROUP PLCNOTES TO THE ACCOUNTSAt 30th April 2007 1. Adoption of New Accounting Requirements In preparing these financial statements the Group has adopted for the first timeUITF 44 'Group and Treasury Share Transactions'. UITF 44 requires the fair valueof the award of share options to subsidiary employees to be treated as a capitalcontribution. The change in accounting policy has resulted in an increase of £439,000 in thecost of investments in subsidiaries at 30th April 2006 and a decrease in amountsdue from subsidiary undertakings in the parent company's books. There is noimpact on profit for the year or net assets at 30th April 2006. 2. Earnings Per Share Basic earnings per share have been calculated on the basis of profit on ordinaryactivities after tax of £3,971,000 (2006 - £2,824,000) and on 15,719,278 (2006 -16,227,578) ordinary shares, being the weighted average number of ordinaryshares in issue during the year. Shares owned by the Colefax Group PlcEmployees' Share Ownership Plan (ESOP) Trust are excluded from the basicearnings per share calculation. Diluted earnings per share have been calculated on the basis of profit onordinary activities after tax of £3,971,000 (2006 - £2,824,000) and on16,339,872 (2006 - 16,728,940) being the weighted average number of shares inissue during the year, calculated as follows: 2007 2006Basic weighted average number of shares 15,719,278 16,227,578Dilutive potential ordinary shares, includingshares under option owned by the Colefax Group PlcESOP Trust 620,594 501,362 ------------------------ 16,339,872 16,728,940 ------------------------ 3. Reconciliation of operating profit to net cash inflow from operatingactivities 2007 2006 £'000 £'000Operating profit 5,946 4,419Depreciation charges 1,629 2,116(Increase)/decrease in stocks (1,355) 1,442Decrease/(increase) in debtors 394 (1,615)Increase in creditors 1,420 1,194 ---------------------------Net cash inflow from operating activities 8,034 7,556 --------------------------- 4. Cash and Financing Reconciliation of Net Cash Flow to Movement in Net Funds/(Debt) 2007 2006 £'000 £'000Increase in cash 392 3,199Repayment of bank loan 500 500 -------------------------Movement in net debt resulting from cash flows 892 3,699Translation differences (229) 52 -------------------------Movement in net debt in the period 663 3,751Net debt at 1st May (300) (4,051) -------------------------Net funds/(debt) at 30th April 363 (300) ------------------------- At At 1st May Exchange 30th April 2006 Cash flow differences 2007 £'000 £'000 £'000 £'000Analysis of Net Funds/(Debt)Cash at bank and in hand 2,347 1,995 (229) 4,113Overdrafts (2,147) (1,603) - (3,750) --------------------------------------------- 200 392 (229) 363Debt due within one year (500) 500 - - ---------------------------------------------Net funds/(debt) (300) 892 (229) 363 --------------------------------------------- 5. The above financial information, which has been prepared on the same basis asset out in the 2006 annual accounts, except for the adoption of the accountingstandard described in note 1, does not constitute statutory accounts as definedin Section 240 of the Companies Act 1985. The financial information for the yearended 30th April 2007 has been extracted from the statutory accounts on which anunqualified audit opinion has been issued. Statutory accounts for the year ended 30th April 2007 will be delivered to theRegistrar in due course. The comparative financial information is based on thestatutory accounts for the financial year ended 30th April 2006. Those accounts,upon which the auditors issued an unqualified opinion, have been delivered tothe Registrar of Companies. The annual accounts for the year ended 30th April 2007 are expected to be postedto shareholders shortly and will be available from the Company's website onwww.colefaxgroupplc.com. 6. Annual General Meeting The Annual General Meeting of Colefax Group plc will be held at 19-23 GrosvenorHill, London W1K 3QD on 18th September 2007 at 11.00 a.m. This information is provided by RNS The company news service from the London Stock Exchange