TIDMCFX
RNS Number : 1726F
Colefax Group PLC
26 July 2016
AIM: CFX
26 July 2016
COLEFAX GROUP PLC
("Colefax" or the "Group")
Preliminary Results for the year ended 30 April 2016
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 broadly unchanged at GBP76.88m (2015: GBP76.80m)
-- Pre-tax profit of GBP5.02m (2015: GBP5.03m)
-- Earnings per share of 32.2p (2015: 32.2p)
-- Strong operating cash flow of GBP7.20m (2015: GBP8.74m)
-- GBP0.3m of cash returned to shareholders via share buybacks (2015: GBP1.6m)
-- Net cash increased to GBP10.09m (2015: GBP6.86m)
-- Proposed increased final dividend of 2.40p per share, taking
total for the year to 4.60p, a rise of 5% (2015: 4.40p)
-- Fabric Division - sales flat but reduced by 3% on a constant currency basis
-- Prospects being affected by uncertainty over Brexit and the forthcoming US election
David Green, Chairman of Colefax, commented:
"Sales, broadly unchanged at GBP76.88m and pre-tax profit of
GBP5.02m, reflect a year which became progressively more
challenging in all of our major markets. Different factors have
affected different markets notably the forthcoming election in the
US, higher stamp duty in the UK and weak consumer confidence in
Europe. Nonetheless, cash generation remained strong and the
Decorating Division delivered an improved performance which largely
offset the profit decline in the Fabric Division.
Since the year end, the Referendum vote has created a great deal
of uncertainty in both the UK and Europe. At this stage, it is too
early to judge the extent to which our business will be affected.
In our major market, the US, we are experiencing more difficult
trading conditions which we attribute to concern about the November
Presidential election. Despite the ongoing uncertainty we will
continue to invest in our business with confidence and have a
significant capital expenditure programme planned, with new US
showrooms and a new Decorating Division showroom in the UK."
Enquiries:
Colefax Group David Green, Chairman Tel: 020 3178
plc 6378 (today)
Robert Barker, Finance
Director
KTZ Communications Katie Tzouliadis Tel: 020 3178
6378
Viktoria Langley
Emma Pearson
Peel Hunt Adrian Trimmings Tel: 020 7418
LLP 8900
(NOMAD & Broker) George Sellar
The information contained within this announcement is deemed by
the Company to constitute inside information as stipulated under
the Market Abuse Regulation.
COLEFAX GROUP PLC
CHAIRMAN'S STATEMENT
Financial Results
The Group's pre-tax profit for the year to 30 April 2016 was in
line with last year at GBP5.02 million (2015: GBP5.03 million) on
flat sales of GBP76.88 million (2015: GBP76.80 million). Earnings
per share were unchanged at 32.2p (2015: 32.2p). The Group ended
the year with increased net cash of GBP10.1 million (2015: GBP6.9
million).
The Board has decided to propose an increased final dividend of
2.40p per share, a rise of 4% (2015: 2.30p) making a total for the
year of 4.60p (2015: 4.40p), an increase of 5%. The final dividend
will be paid on 10 October 2016 to shareholders on the register at
the close of business on 9 September 2016.
This year's results reflect a year which became progressively
more challenging in all of our major markets. Group profits for the
first six months were up 13% at GBP3.27 million but for the second
six months profits were down by 19% at GBP1.75 million. Different
factors have affected different markets notably the forthcoming
election in the US, higher stamp duty in the UK and weak consumer
confidence in Europe. In our core Fabric Division sales were flat
in reported terms but decreased by 3% on a constant currency basis
and as a result profits reduced from GBP5.01 million to GBP4.53
million. The Decorating Division delivered an improved performance
with operating profits of GBP221,000 compared to an operating loss
of GBP139,000 last year and this largely offset the profit decline
in the Fabric Division.
Despite flat sales the Group continued to generate strong cash
flows reflecting tight control of working capital. Cash increased
by GBP3.2 million to GBP10.1 million after dividend payments of
GBP0.48 million and share buybacks of GBP0.32 million
Product Division
-- Fabric Division - Portfolio of Five Brands: "Colefax and
Fowler", "Cowtan and Tout", "Jane Churchill", "Manuel Canovas" and
"Larsen"
Sales in the Fabric Division, which represent 87% of Group
turnover were flat at GBP66.40 million (2015: GBP66.30 million) but
reduced by 3% on a constant currency basis. Operating profit
declined by 9.5% to GBP4.53 million (2015: GBP5.01 million)
reflecting a generally challenging sales environment.
Sales in the US, which represent 58% of the Fabric Division's
turnover increased by 3% in reported terms but decreased by 3% on a
constant currency basis. There was a marked difference between the
first and second half of the year with first half sales down by 1%
and second half sales down by 5%. We attribute this slowdown to
concern about the forthcoming Presidential election in November
which has made consumers cautious at the luxury end of the market.
In the current financial year we are planning to open our own
showrooms in Boston and Atlanta. Previously we sold through agents
and this will give us direct control over sales in these
territories.
Sales in the UK, which represent 19% of the Fabric Division's
turnover were flat during the year. We attribute this to the
ongoing impact of the significant increase in stamp duty on the
high end housing market. Our sales typically lag activity in the
high end housing market. We believe that the impact of a slowdown
in high end housing transactions has been partly offset by an
increase in refurbishment activity on existing homes but our
customers tend to spend more when they move house.
Sales in Continental Europe, which represent 20% of the Fabric
Division's turnover, decreased by 8% in Sterling terms but by 4% in
constant currency. As usual the performance by country was very
mixed and there was no overall sign of a strong recovery despite
significant monetary easing by the European Central Bank. In France
which is our largest market the economy remained difficult and
sales were down by 8% in constant currency. Sales in Germany, our
second largest market, were down by 10% in constant currency but in
Italy, our third largest market, sales increased by 9%. In our
smaller markets the picture was more encouraging but overall
trading conditions were challenging.
Sales in the Rest of the World increased by 4% to GBP2.03
million (2015 GBP1.95 million). The Middle East, Australia, Russia
and China are our largest markets but are still a relatively small
part of overall sales and represent an opportunity if current
market conditions improve.
-- Furniture - Kingcome Sofas
Sales of Kingcome furniture which are included within the
Product Division and account for 3% of Group turnover increased by
7% to GBP2.62 million (2015: GBP2.45 million). Operating profit was
GBP263,000 compared to GBP171,000 helped by a contract order at the
start of the year. This business has relatively fixed labour costs
and is therefore sensitive to small fluctuations in sales. The
majority of sales are in the UK centred on London and as with the
Fabric Division market conditions were relatively difficult during
the year. Only 13% of Kingcome sales are currently generated
overseas and export sales represent a growth opportunity.
Interior Decorating Division
Decorating sales, which account for 10% of Group turnover,
decreased by 2% to GBP7.86 million (2015: GBP8.03 million) but
operating profits were GBP221,000 compared to an operating loss of
GBP139,000 for the prior year. The improvement reflects a change in
mix between decorating work and low margin antique sales where
trading conditions have been very challenging. As previously
reported, this autumn, after over 80 years based at 39 Brook Street
in Mayfair, the Decorating Division will be moving to new premises
at 89-91 Pimlico Road. The move represents a significant change for
the Decorating Division to an area which is synonymous with high
end decorating in London and we are optimistic about the benefits
of the new location. As part of the move we will significantly
reduce the scale of our antiques operation which has experienced
increasingly tough trading conditions in recent years. The
decorating business serves a diverse international client base and
had a healthy level of deposits at the end of the year.
Prospects
Since the year end the Referendum vote has created a great deal
of uncertainty in both the UK and Europe, which is clearly not good
for trading prospects. At this stage it is too early to judge the
extent to which our business will be affected. In our major market,
the US, we are experiencing more difficult trading conditions which
we attribute to concern about the November Presidential
election.
With almost 75% of Group sales made in overseas markets the
devaluation in Sterling represents a growth opportunity. However,
for the current year and a portion of next year we hedged our US
Dollar exposure and therefore will not benefit from the post Brexit
weakness of Sterling. Despite the ongoing uncertainty we will
continue to invest in our business with confidence and have a
significant year of capital expenditure with new US showrooms in
Atlanta and Boston and our new Decorating Division showroom and
offices in London.
David Green
Chairman
26 July 2016
COLEFAX GROUP PLC
GROUP INCOME STATEMENT
For the year ended 30 April 2016
2016 2015
GBP'000 GBP'000
Revenue 76,879 76,796
Cost of sales 33,587 34,760
Gross profit 43,292 42,036
Operating expenses 38,279 36,999
Profit from operations 5,013 5,037
Finance income 3 4
Finance expense - (12)
3 (8)
Profit before taxation 5,016 5,029
Tax expense
-UK (502) (651)
-Overseas (1,053) (836)
(1,555) (1,487)
Profit for the year attributable
to equity holders of the parent 3,461 3,542
Basic earnings per share 32.2 p 32.2 p
Diluted earnings per share 32.2 p 32.2 p
GROUP STATEMENT OF COMPREHENSIVE INCOME
For the year ended 30 April 2016
2016 2015
GBP'000 GBP'000
Profit for the year 3,461 3,542
Other comprehensive (expense) /
income:
Items that will not be reclassified
to profit and loss:
Exchange differences on translation
of foreign operations 642 299
Remeasurement of defined benefit
pension scheme (100) -
Tax relating to items that will
not be reclassified to profit and
loss (106) (302)
------------ ------------
436 (3)
Items that will or may be reclassified
to profit and loss:
Cash flow hedges:
Losses recognised directly in equity (805) (103)
Transferred to profit and loss for
the year 144 160
Tax relating to items that will
or may be reclassified to profit
and loss 132 (11)
------------ ------------
(529) 46
Total other comprehensive (expense)
/ income (93) 43
Total comprehensive income for the
year attributable to equity holders
of the parent 3,368 3,585
COLEFAX GROUP PLC
GROUP STATEMENT OF FINANCIAL POSITION
At 30 April 2016
2016 2015
GBP'000 GBP'000
Non-current assets:
Property, plant and equipment 7,551 7,257
Deferred tax asset 35 285
7,586 7,542
Current assets:
Inventories and work in progress 12,518 12,296
Trade and other receivables 9,179 9,681
Cash and cash equivalents 10,085 6,861
31,782 28,838
--------------------------------------- -------------- ---------------
Current liabilities:
Trade and other payables 11,258 10,812
Current corporation tax 163 230
11,421 11,042
-------------- ---------------
Net current assets 20,361 17,796
-------------- ---------------
Total assets less current liabilities 27,947 25,338
--------------------------------------- -------------- ---------------
Non-current liabilities:
Deferred rent 1,459 1,433
Pension liability 170 148
Net assets 26,318 23,757
======================================= ============== ===============
Capital and reserves attributable
to equity holders of the Company:
Called up share capital 1,076 1,083
Share premium account 11,148 11,148
Capital redemption reserve 1,798 1,791
ESOP share reserve (113) (113)
Foreign exchange reserve 1,559 1,062
Cash flow hedge reserve (483) 46
Retained earnings 11,333 8,740
Total equity 26,318 23,757
======================================= ============== ===============
The financial statements were approved by the Board of Directors
and authorised for issue on 25 July 2016.
D. B. Green Director
R. M. Barker Director
COLEFAX GROUP PLC
GROUP STATEMENT OF CASH FLOWS
For the year ended 30 April 2016
2016 2015
GBP'000 GBP'000
Operating activities
Profit before taxation 5,016 5,029
Finance income (3) (4)
Finance expense - 12
Depreciation 2,187 2,028
Cash flows from operations before
changes in working capital 7,200 7,065
(Increase) / Decrease in inventories
and work in progress (127) 1,409
Decrease in trade and other receivables 704 655
Decrease in trade and other payables (582) (388)
Cash generated from operations 7,195 8,741
--------------- ----------------
Taxation paid
UK corporation tax paid (556) (765)
Overseas tax paid (781) (894)
(1,337) (1,659)
--------------- ----------------
Net cash inflow from operating activities 5,858 7,082
--------------- ----------------
Investing activities
Payments to acquire property, plant
and equipment (2,278) (2,213)
Receipts from sales of property,
plant and equipment 24 32
Interest received 2 4
Net cash outflow from investing (2,252) (2,177)
--------------- ----------------
Financing activities
Purchase of own shares (324) (1,567)
Interest paid (1) (10)
Equity dividends paid (483) (472)
Net cash outflow from financing (808) (2,049)
--------------- ----------------
Net increase in cash and cash equivalents 2,798 2,856
Cash and cash equivalents at beginning
of year 6,861 4,057
Exchange gains / (losses) on cash
and cash equivalents 426 (52)
Cash and cash equivalents at end
of year 10,085 6,861
=========================================== =============== ================
COLEFAX GROUP PLC
GROUP STATEMENT OF CHANGES IN EQUITY
For the year ended 30 April 2016
Cash
Share Capital ESOP Foreign flow
Share premium redemption share exchange hedge Retained Total
capital account reserve reserve reserve reserve earnings equity
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
At 1 May
2015 1,083 11,148 1,791 (113) 1,062 46 8,740 23,757
Profit
for the
year - - - - - - 3,461 3,461
Foreign
exchange - - - - 642 - - 642
Remeasurement
of defined
benefit
pension
scheme - - - - - - (100) (100)
Cash flow
hedges:
Losses - - - - - (805) - (805)
Transfers - - - - - 144 - 144
Tax on
other
comprehensive
income - - - - (145) 132 39 26
---------------- ----------- ----------- -------------- ---------- --------------- -------------- --------- --------
Total
comprehensive
income
for the
year - - - - 497 (529) 3,400 3,368
Share buybacks (7) - 7 - - - (324) (324)
Dividends
paid - - - - - - (483) (483)
At 30 April
2016 1,076 11,148 1,798 (113) 1,559 (483) 11,333 26,318
At 1 May
2014 1,125 11,148 1,749 (113) 1,065 - 7,237 22,211
Profit
for the
year - - - - - - 3,542 3,542
Foreign
exchange - - - - 299 - - 299
Cash flow
hedges:
Losses - - - - - (103) - (103)
Transfers - - - - - 160 - 160
Tax on
other
comprehensive
income - - - - (302) (11) - (313)
---------------- ----------- ----------- -------------- ---------- --------------- -------------- --------- --------
Total
comprehensive
income
for the
year - - - - (3) 46 3,542 3,585
Share buybacks (42) - 42 - - - (1,567) (1,567)
Dividends
paid - - - - - - (472) (472)
At 30 April
2015 1,083 11,148 1,791 (113) 1,062 46 8,740 23,757
COLEFAX GROUP PLC
NOTES TO THE FINANCIAL INFORMATION
At 30 April 2016
1. Earnings per share
Basic earnings per share have been calculated
on the basis of profit on ordinary activities
after tax of GBP3,461,000 (2015: GBP3,542,000)
and on 10,750,549 (2015: 10,984,807) 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 GBP3,461,000 (2015: GBP3,542,000)
and on 10,750,549 (2015: 10,984,807) 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:
2016 2015
GBP'000 GBP'000
Cash at bank and in hand 10,085 6,861
Bank overdrafts - -
10,085 6,861
-------- --------
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 30 April 2016 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 30 April 2015
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 15 September 2016 at 11.00
a.m.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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