REG - Colefax Group PLC - Final Results <Origin Href="QuoteRef">CFX.L</Origin>
06/09/2014 16:46
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Colefax Group PLC
17 July 2014
CFX
COLEFAX GROUP PLC
("Colefax" or the "Group")
Preliminary Results for the year ended 30th April 2014
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 up 11% to £78.04m (2013: £70.62m)
· Pre-tax profit up 38% to £4.89m (2013: £3.55m)
· Earnings per share up 53% to 27.9p (2013: 18.2p)
· £4.25m of cash returned to shareholders via a Tender Offer
· Net cash of £4.06m (2013: £7.63m)
· Proposed increase in final dividend to 2.20p per share, taking total
for the year to 4.20p, an increase of 5% (2013: 4.00p)
· Fabric Division - sales in core US market up by 7%, with UK sales up 8%
and Europe up 4% (on a constant currency basis)
· Decorating Division - exceptionally strong performance, benefitting
from completion of last year's delayed projects
· Positive trading outlook with continuing recovery in the US and UK -
but adverse impact from the strength of Sterling against the US dollar
David Green, Chairman of Colefax, commented,
"The main reason for the 38% increase in the Group's pre-tax profit was a
strong performance from the Decorating Division. In the Group's Fabric
Division, sales increased by 6% on a constant currency basis, reflecting the
ongoing recovery in our core US market and an improvement in UK trading in the
second half of the year. In contrast, trading in Europe remained challenging
in most of our major markets.
Trading conditions in our two principal markets, the US and UK, continue to
trend upwards but in low single figures and Continental Europe remains
challenging. Although we remain optimistic about growth prospects, the high
proportion of Group sales made in the US market and invoiced in US dollars
means that the strength of Sterling will have an adverse impact on
profitability. In addition, the Decorating Division is expected to return to
a more normal level of activity following an exceptional performance last
year.
We remain optimistic about the long term future and will continue to invest in
new product and strengthening our distribution network."
Enquiries:
Colefax Group plc David Green, Chairman Tel: 020 3178 6378 (today)
Robert Barker, Finance Director
KTZ Communications Katie Tzouliadis Tel: 020 3178 6378
Deborah Walter
Peel Hunt LLP Dan Webster Tel: 020 7418 8900
(NOMAD & Broker) Matthew Armitt
Richard Brown
COLEFAX GROUP PLC
CHAIRMAN'S STATEMENT
Financial Results
The Group's pre-tax profit for the year to 30th April 2014 increased by 38% to
£4.89 million (2013: £3.55 million) on sales up by 11% to £78.04 million
(2013: £70.62 million). Earnings per share increased by 53% to 27.9p (2013:
18.2p). The Group ended the year with net cash of £4.06 million (2013: £7.63
million).
On 13th February 2014 the Group returned £4.25 million of surplus cash to
shareholders through a Tender Offer which resulted in the purchase and
cancellation of 1.06 million shares at a price of £4.00 per share. The shares
cancelled represented 8.6% of the Group's issued share capital at the start of
the year.
The Board has decided to increase the final dividend by 5% to 2.20p per share
(2013: 2.10p) making a total for the year of 4.20p (2013: 4.00p), an increase
of 5%. The final dividend will be paid on 9th October 2014 to shareholders on
the register at the close of business on 12th September 2014.
The main reason for the 38% increase in the Group's pre-tax profit was a
strong performance from the Decorating Division, which made an operating
profit of £985,000 compared to a profit of £54,000 last year. This
improvement was partly due to the completion of projects delayed from the
prior year. In the Group's Fabric Division, sales increased by 6% on a
constant currency basis, reflecting the ongoing recovery in our core US market
and an improvement in UK trading in the second half of the year. In contrast,
trading in Europe remained challenging in most of our major markets.
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 83% of Group turnover, increased
by 6% to £64.52 million (2013: £61.13 million). Operating profit increased by
15% to £3.91 million (2013: £3.41 million) but was adversely impacted by the
progressive weakening of the US dollar in the second half of the year.
Sales in the US, which represent 53% of the Fabric Division's turnover,
increased by 5% and by 7% on a constant currency basis. The US market
continued to recover although sales were still 16% below the peak achieved
prior to the financial crisis. We believe that growth in the second half was
affected by the severe cold weather which affected much of North America from
December to March. The US is our largest and most important market and we have
continued to invest in our distribution network with a new showroom in
Washington which is now scheduled to open in October 2014.
Sales in the UK, which represent 20% of the Fabric Division's turnover,
increased by 8% during the year reflecting the significant improvement in the
UK housing market which started in September 2013. Trading was particularly
strong in London although all regions showed growth in the second half of the
year.
Sales in Continental Europe, which represent 24% of the Fabric Division's
turnover, increased by 6% and by 4% on a constant currency basis. Trading
performance varied significantly from country to country. In France, which is
our largest market, sales decreased by 3% on a constant currency basis. In
Germany, which has now overtaken Italy as our second largest market, sales
increased by 8% on a constant currency basis and, in Italy, sales declined by
5%. We are opening a new showroom in Milan in October as part of our long
term commitment to the Italian market and we believe it will help to stabilise
and grow sales.
Sales in the rest of the world, which represent just 3% of the Fabric
Division's turnover, increased by 10%. This increase was mainly due to growth
in the Middle East and Russia and we will continue to focus on growing these
two important territories.
· Furniture - Kingcome Sofas
Sales of Kingcome furniture, which account for 3% of Group turnover, were
£2.27 million (2013: £2.28 million) and operating profit was £24,000 compared
to £79,000 last year. Furniture is the Group's only manufacturing activity and
profitability is very sensitive to small fluctuations in sales due to the
relatively fixed factory costs.
Interior Decorating Division
Decorating sales, which account for 14% of Group turnover, increased by 56% to
£11.24 million (2013: £7.21 million). Operating profit was £985,000 compared
to £54,000 last year with the strong performance partly due to the completion
of a number of projects which were delayed from the second half of last year.
The nature of this business is that profits fluctuate from year to year
according to the timing of major projects. The Decorating Division includes
sales of antiques which increased by 1% to £1.38 million (2013: £1.36
million).
Prospects
Trading conditions in our two principal markets, the US and UK, continue to
trend upwards but in low single figures. The rate of increase is slightly
lower than expected given the current strength of the housing recovery in both
these markets, but we do tend to lag any changes. Continental Europe remains
challenging and there are currently no signs of recovery in any of our major
countries. Sales in the rest of the world are mixed, but overall we expect
continued growth.
Although we remain optimistic about growth prospects, the high proportion of
Group sales made in the US market and invoiced in US dollars means that the
strength of Sterling will have an adverse impact on profitability. Since the
beginning of September Sterling has strengthened against the US dollar by 13%
and there is no sign that this will reverse in the short term. In addition,
the Decorating Division is expected to return to a more normal level of
activity following an exceptional performance last year. We remain optimistic
about the long term future and will continue to invest in new product and
strengthening our distribution network.
David Green
Chairman
16th July 2014
COLEFAX GROUP PLC
GROUP INCOME STATEMENT
For the year ended 30th April 2014
2014 2013
£'000 £'000
Revenue 78,035 70,619
Cost of sales 36,418 31,518
Gross profit 41,617 39,101
Operating expenses 36,695 35,554
Profit from operations 4,922 3,547
Finance income 4 1
Finance expense (41) (1)
(37) -
Profit before taxation 4,885 3,547
Tax expense
-UK (875) (554)
-Overseas (657) (659)
(1,532) (1,213)
Profit for the year attributable to equity holders of the parent 3,353 2,334
Basic earnings per share 27.9 p 18.2 p
Diluted earnings per share 27.9 p 18.2 p
GROUP STATEMENT OF COMPREHENSIVE INCOME
For the year ended 30th April 2014
2014 2013
£'000 £'000
Profit for the year 3,353 2,334
Other comprehensive (expense) / income :
Exchange differences on translation of foreign operations (797) 517
Cash flow hedges:
Gains / (losses) recognised directly in equity 135 (50)
Transferred to profit and loss for the year (171) (181)
Tax on components of other comprehensive income 248 (77)
Total other comprehensive (expense) / income (585) 209
Total comprehensive income for the year attributable to equity holders of the parent 2,768 2,543
COLEFAX GROUP PLC
GROUP STATEMENT OF FINANCIAL POSITION
At 30th April 2014
2014 2013
£'000 £'000
Non-current assets:
Property, plant and equipment 6,810 7,699
Deferred tax asset 590 499
7,400 8,198
Current assets:
Inventories and work in progress 13,526 13,176
Trade and other receivables 10,055 9,995
Cash and cash equivalents 4,298 7,630
27,879 30,801
Current liabilities:
Trade and other payables 12,526 13,785
Current corporation tax 425 666
12,951 14,451
Net current assets 14,928 16,350
Total assets less current liabilities 22,328 24,548
Non-current liabilities:
Pension liability 117 265
Net assets 22,211 24,283
Capital and reserves attributable to equity holders of the Company:
Called up share capital 1,125 1,231
Share premium account 11,148 11,148
Capital redemption reserve 1,749 1,643
ESOP share reserve (113) (113)
Share based payment reserve - -
Foreign exchange reserve 1,065 1,622
Cash flow hedge reserve - 28
Retained earnings 7,237 8,724
Total equity 22,211 24,283
The financial statements were approved by the board of directors and
authorised for issue on 16th July 2014.
D. B. Green Director
R. M. Barker Director
COLEFAX GROUP PLC
GROUP STATEMENT OF CASH FLOWS
For the year ended 30th April 2014
2014 2013
£'000 £'000
Operating activities
Profit before taxation 4,885 3,547
Finance income (4) (1)
Finance expense 41 1
Depreciation 2,078 2,036
Cash flows from operations before changes in working capital 7,000 5,583
Increase in inventories and work in progress (503) (880)
Increase in trade and other receivables (380) (1,189)
(Decrease) / increase in trade and other payables (1,250) 2,521
Cash generated from operations 4,867 6,035
Taxation paid
UK corporation tax paid (660) (610)
Overseas tax (paid) / received (967) 130
(1,627) (480)
Net cash inflow from operating activities 3,240 5,555
Investing activities
Payments to acquire property, plant and equipment (1,583) (2,178)
Receipts from sales of property, plant and equipment 17 56
Interest received 4 1
Net cash outflow from investing (1,562) (2,121)
Financing activities
Purchase of own shares (4,362) (4,000)
Interest paid (29) (1)
Equity dividends paid (478) (478)
Net cash outflow from financing (4,869) (4,479)
Net decrease in cash and cash equivalents (3,191) (1,045)
Cash and cash equivalents at beginning of year 7,630 8,519
Exchange (losses) / gains on cash and cash equivalents (382) 156
Cash and cash equivalents at end of year 4,057 7,630
COLEFAX GROUP PLC
GROUP STATEMENT OF CHANGES IN EQUITY
For the year ended 30th April 2014
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 2013 1,231 11,148 1,643 (113) - 1,622 28 8,724 24,283
Profit for the year - - - - - - - 3,353 3,353
Foreign exchange - - - - - (797) - - (797)
Cash flow hedges:
Gains - - - - - - 135 - 135
Transfers - - - - - - (171) - (171)
Tax on other comprehensive income - - - - - 240 8 - 248
Share buybacks (106) - 106 - - - - (4,362) (4,362)
Dividends paid - - - - - - - (478) (478)
At 30 April 2014 1,125 11,148 1,749 (113) - 1,065 - 7,237 22,211
At 1 May 2012 1,391 11,148 1,483 (96) 19 1,238 203 10,868 26,254
Profit for the year - - - - - - - 2,334 2,334
Foreign exchange - - - - - 517 - - 517
Cash flow hedges:
Losses - - - - - - (50) - (50)
Transfers - - - - - - (181) - (181)
Tax on other comprehensive income - - - - - (133) 56 - (77)
Share buybacks (160) - 160 - - - - (4,000) (4,000)
Share options lapsed - - - (17) (19) - - - (36)
Dividends paid - - - - - - - (478) (478)
At 30 April 2013 1,231 11,148 1,643 (113) - 1,622 28 8,724 24,283
COLEFAX GROUP PLC
NOTES TO THE FINANCIAL INFORMATION
At 30th April 2014
1. Earnings per share
Basic earnings per share have been calculated on the basis of profit on ordinary activities after tax of £3,353,000 (2013: £2,334,000) and on 12,025,641 (2013:
12,846,164) 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 £3,353,000 (2013: £2,334,000) and on 12,025,641 (2013: 12,846,164) ordinary shares, being the weighted average number of ordinary shares in issue
during the year.
2. Cash and cash equivalents
For the purposes of the consolidated statement of cash flows, cash and cash
equivalents comprise the following:
2014 2013
£'000 £'000
Cash at bank and in hand 4,298 7,630
Bank overdrafts (241) -
4,057 7,630
The fair value of cash and cash equivalents are considered to be their book
value.
3. 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 2014 has been
extracted from the statutory accounts which will be delivered to the Registrar
of Companies following the company's annual general meeting. The comparative
financial information is based on the statutory accounts for the financial
year ended 30th April 2013 which have been delivered to the Registrar of
Companies. The Independent Auditors' Report on both of those financial
statements was unqualified, did not draw attention to any matters by way of
emphasis and did not contain a statement under Section 498(2) and Section
498(3) of the Companies Act 2006.
4. Annual general meeting
The Annual General Meeting of Colefax Group plc will be held at 19-23
Grosvenor Hill, London W1K 3QD on 17th September 2014 at 11.00 a.m.
This information is provided by RNS
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