TIDMCFX
RNS Number : 1254D
Colefax Group PLC
29 January 2018
AIM: CFX
29 January 2018
COLEFAX GROUP PLC
("Colefax" or the "Group")
Half Year Results
for the six months ended 31 October 2017
Colefax is an international designer and distributor of
furnishing fabrics & wallpapers and owns a leading interior
decorating business. The Group trades under five brand names,
serving different segments of the soft furnishings marketplace;
these are Colefax and Fowler, Cowtan & Tout, Jane Churchill,
Manuel Canovas and Larsen.
Highlights
-- Group sales up 6.5% to GBP42.08m (2016: GBP39.53m); up by 5.1%
on a constant currency basis
-- Group pre-tax profit up 35% to GBP2.56m (2016: GBP1.90m)
-- improving conditions in core US market
-- better performance from Decorating Division
-- Earnings per share increased by 44% to 18.0p (2015: 12.5p)
-- Net cash increased to GBP9.5m (2016: GBP8.0m)
-- Interim dividend up by 4% to 2.40p per share (2016: 2.30p)
-- Core Fabric Division sales up 4.6% to GBP36.47m
-- up by 3.1% on constant currency basis, reflecting improved
trading in the US
-- Decorating Division performing well in new premises with first
half profits up by GBP297,000 and a strong order book for the
second half of the year
David Green, Chairman, said:
"The Group has made good progress over the last six months
helped by improving trading conditions in our core US market and an
encouraging performance by our Decorating Division. With a strong
order book for the second half, we now expect the Decorating
Division to exceed our original expectations for the full year.
"The Group has a strong balance sheet with cash of GBP9.5
million and we will continue to invest with confidence in our
portfolio of brands and worldwide distribution network."
Enquiries:
Colefax Group plc David Green, Chief Tel: 020 7318 6021
Executive
Rob Barker, Finance
Director
KTZ Communications Katie Tzouliadis, Emma Tel: 020 3178 6378
Pearson, Irene Bermont-Penn
Peel Hunt LLP Adrian Trimmings, George Tel: 020 7418 8900
Sellar
The information contained in this announcement is inside
information for the purposes of article 7 of Regulation
596/2014.
CHAIRMAN'S STATEMENT
Financial Results
Group sales for the six months to 31 October 2017 increased by
6.5% to GBP42.08 million (2016: GBP39.53 million) and increased by
5.1% on a constant currency basis. Pre-tax profits increased by 35%
to GBP2.56 million (2016: GBP1.90 million). Earnings per share
increased to 18.0p (2016: 12.5p). The Group ended the first half of
the year with net cash of GBP9.5 million (2016: GBP8.0
million).
The main reason for the increase in profits in the first six
months was an improvement in trading conditions in our core US
market where Fabric Division sales increased by 4.5.% on a constant
currency basis. In contrast trading conditions in the UK and Europe
remained challenging. Sales in the UK were flat during the period
and sales in Europe increased by 6.5% but by 1.5% on a constant
currency basis. The increase in profit was also due to an improved
contribution from the Decorating Division which made a first half
profit of GBP213,000 compared to a loss of GBP84,000 last year.
Hedging losses arising from US Dollar cover put in place prior
to the Brexit vote were GBP595,000 (2016 GBP755,000) and, excluding
these, the Group's pre-tax profit increased by 18.5% to GBP3.15
million (2016: GBP2.66 million).
In line with our progressive dividend policy the Board has
decided to increase the interim dividend by 4% to 2.40p per share
(2016: 2.30p). The interim dividend will be paid on 9 April 2018 to
shareholders on the register at the close of business on 2 March
2018.
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 the Group's
sales, increased by 4.6% to GBP36.47 million (2016: GBP34.87
million) and by 3.1% on a constant currency basis. Excluding
hedging losses of GBP595,000 (2016: GBP755,000) operating profits
increased by 7% to GBP2.92 million (2016: GBP2.73 million)
reflecting improved trading conditions in our core US market.
Sales in the US, which represent 60% of the Fabric Division's
turnover, increased by 5.4% in reported terms and by 4.5% on a
constant currency basis. The improvement was broadly based with
sales in most territories ahead of last year, reflecting favourable
market conditions. In recent years we have invested heavily in our
US distribution network and our own showrooms now account for over
75% of US sales.
Sales in the UK, which represent just under 18% of the Fabric
Division's turnover, were flat during the period reflecting
challenging market conditions. We attribute this to the very weak
high end housing market which continues to be adversely affected by
high rates of stamp duty as well as economic uncertainty over the
outcome of Brexit negotiations. Our business tends to lag changes
in the high end housing market and as a result we believe market
conditions could become more difficult over the next twelve
months.
Sales in Continental Europe, which represent 20% of the Fabric
Division's turnover, increased by 6.5% on a reported basis but were
up by 1.5% on a constant currency basis. There is more optimism in
Europe than we have seen for some years although the performance by
country remains mixed. Sales in France, which is our largest
market, were down by 9% in the period but this was mainly due to a
significant contract order in the prior year. In Germany, sales
increased by 1% on a constant currency basis and, in Italy, sales
increased by 3%. Together these three markets account for 56% of
our sales in Europe.
Sales in the rest of the world, which represent less than 3% of
the Fabric Division's turnover, increased by 7% on a constant
currency basis. The focus of our sales efforts in the rest of the
world remain on our major territories, namely the Middle East,
China and Russia. .
-- Furniture - Kingcome Sofas
Sales for the six months to October 2017 increased by 4% to
GBP1.19 million (2016: GBP1.15 million) and the Company made a
small operating profit of GBP22,000 compared to GBP9,000 in 2016.
At the half year end the order book was up by 18% compared to last
year and ahead of our expectations based on market conditions. The
majority of furniture sales are in the UK, centred on London and we
expect future trading to be challenging due to the slowdown in the
high end housing market.
Interior Decorating Division
Decorating sales, which account for just over 10% of Group
turnover, increased by 26% in the period to GBP4.4 million (2016:
GBP3.5 million) and the Division made a first half profit of
GBP213,000 compared to a loss of GBP84,000 for the same period last
year.
In December 2016 the Decorating business moved to new office and
showroom premises at 89-91 Pimlico Road in Belgravia. The new
location is well suited to the needs of the business and trading
has been encouraging since the move. Sales and profits in the
Decorating Division can vary significantly from year to year
depending on the timing of contract completions. We have a number
of major projects scheduled for completion in the second half of
the year and therefore anticipate a stronger than expected overall
performance for the year. Although the high end market in London
has been challenging the weakness of Sterling is favourable for the
business and we have seen an increase in the proportion of overseas
contracts.
Prospects
The Group has made good progress over the last six months helped
by improving trading conditions in our core US market. Trading
conditions in the UK look challenging due to a weak high end
housing market caused by high rates of stamp duty and continuing
uncertainty over Brexit. However, our exposure to the UK is limited
by the fact that over 82% of Fabric Division sales are made
overseas. There is also increased optimism in Europe but this
follows two years of sales decline and it is too early to assess
the extent of any recovery.
Our Decorating Division delivered an encouraging first half
contribution and we expect it to exceed our original expectations
for the full year.
The Group has a strong balance sheet with net cash of GBP9.5
million and we will continue to invest with confidence in our
portfolio of brands and worldwide distribution network.
David Green, Chairman
COLEFAX GROUP PLC
INTERIM GROUP INCOME STATEMENT
Unaudited Unaudited Audited
Six months Six months Year to
to 31 to 31 30 April
Oct 2017 Oct 2016 2017
GBP'000 GBP'000 GBP'000
Revenue 42,083 39,529 80,475
Profit from operations 2,559 1,903 2,937
Finance income - - 1
Finance expense (2) - (1)
(2) - -
Profit before taxation 2,557 1,903 2,937
Tax expense (729) (628) (1,042)
Profit for the period attributable to
equity holders of the parent 1,828 1,275 1,895
Basic earnings per share 18.0p 12.5p 18.6p
Diluted earnings per share 18.0p 12.5p 18.6p
COLEFAX GROUP PLC
INTERIM GROUP STATEMENT OF COMPREHENSIVE
INCOME
Unaudited Unaudited Audited
Six months Six months Year to
to 31 to 31 30 April
Oct 2017 Oct 2016 2017
GBP'000 GBP'000 GBP'000
Profit for the year 1,828 1,275 1,895
Other comprehensive income / (expense):
Items that will not be reclassified to
profit and loss:
Exchange differences on translation of
foreign operations 335 2,543 1,628
Remeasurement of defined benefit pension
scheme - - 101
Tax relating to items that will not be
reclassified to profit and loss (411) (617) (449)
----------- ----------- ----------
(76) 1,926 1,280
Items that will or may be reclassified
to profit and loss:
Cash flow hedges:
Gains / (losses) recognised directly in
equity 108 (3,309) (2,611)
Transferred to profit and loss for the
year 595 755 2,006
Tax relating to items that will or may
be reclassified to profit and loss (133) 511 109
----------- ----------- ----------
570 (2,043) (496)
Total other comprehensive income / (expense) 494 (117) 784
Total comprehensive income for the period
attributable to equity holders of the
parent 2,322 1,158 2,679
---------------------------------------------- ----------- ----------- ----------
COLEFAX GROUP PLC
INTERIM GROUP STATEMENT OF FINANCIAL POSITION
Unaudited Unaudited Audited
At 31 Oct At 31 At 30 April
2017 Oct 2016 2017
GBP'000 GBP'000 GBP'000
Non-current assets:
Property, plant and equipment 9,771 9,135 9,669
Deferred tax asset 257 839 386
10,028 9,974 10,055
Current assets:
Inventories and work in progress 14,203 13,825 13,938
Trade and other receivables 12,056 12,604 11,805
Current corporation tax - - 170
Cash and cash equivalents 9,499 8,024 6,710
35,758 34,453 32,623
--------------------------------------- ---------- ---------- ------------
Current liabilities:
Trade and other payables 15,054 16,617 13,961
Current corporation tax 184 27 -
15,238 16,644 13,961
---------- ---------- ------------
Net current assets 20,520 17,809 18,662
---------- ---------- ------------
Total assets less current liabilities 30,548 27,783 28,717
--------------------------------------- ---------- ---------- ------------
Non-current liabilities:
Deferred rent 1,905 2,003 1,992
Pension liability 3 177 55
Deferred tax liability 636 954 734
---------- ---------- ------------
Net assets 28,004 24,649 25,936
======================================= ========== ========== ============
Capital and reserves attributable to
equity holders of the Company:
Called up share capital 1,022 1,022 1,022
Share premium account 11,148 11,148 11,148
Capital redemption reserve 1,852 1,852 1,852
ESOP share reserve (113) (113) (113)
Foreign exchange reserve 2,703 3,485 2,779
Cash flow hedge reserve (409) (2,526) (979)
Retained earnings 11,801 9,781 10,227
Total equity 28,004 24,649 25,936
======================================= ========== ========== ============
COLEFAX GROUP PLC
INTERIM GROUP STATEMENT OF CASH FLOWS
Unaudited Unaudited Audited
Six months Six months Year to
to 31 Oct to 31 Oct 30 April
2017 2016 2017
GBP'000 GBP'000 GBP'000
Operating activities
Profit before taxation 2,557 1,903 2,937
Finance income - - (1)
Finance expense 2 - 1
Depreciation 1,382 1,279 2,720
----------- ----------- ----------
Cash flows from operations before changes
in working capital 3,941 3,182 5,657
Increase in inventories and work in
progress (330) (862) (1,140)
Increase in trade and other receivables (322) (2,672) (2,172)
Increase in trade and other payables 1,880 2,547 1,835
Cash generated from operations 5,169 2,195 4,180
----------- ----------- ----------
Taxation paid
UK corporation tax paid (14) (132) (224)
Overseas tax paid (358) (623) (1,141)
-----------
(372) (755) (1,365)
----------- ----------- ----------
Net cash inflow from operating activities 4,797 1,440 2,815
----------- ----------- ----------
Investing activities
Payments to acquire property, plant
and equipment (1,614) (1,705) (4,126)
Receipts from sales of property, plant
and equipment - 27 40
Interest received - - 1
Net cash outflow from investing (1,614) (1,678) (4,085)
----------- ----------- ----------
Financing activities
Purchase of own shares - (2,583) (2,583)
Interest paid (2) - (1)
Equity dividends paid (254) (244) (478)
Net cash outflow from financing (256) (2,827) (3,062)
----------- ----------- ----------
Net increase / (decrease) in cash and
cash equivalents 2,927 (3,065) (4,332)
Cash and cash equivalents at beginning
of period 6,710 10,085 10,085
Exchange (losses) / gains on cash and
cash equivalents (138) 1,004 957
Cash and cash equivalents at end of
period 9,499 8,024 6,710
------------------------------------------- ----------- ----------- ----------
COLEFAX GROUP PLC
NOTES
1. The Group prepares its annual financial statements in accordance
with International Financial Reporting Standards (IFRS). These
interim results have been prepared in accordance with the accounting
policies expected to be applied in the next annual financial
statements for the year ending 30 April 2018.
These standards and interpretations are subject to ongoing review
and endorsement by the EU or possible amendment by interpretive
guidance from the International Financial Reporting Interpretations
Committee ('IFRIC') and are therefore still subject to change.
2. During the financial period ended 31 October 2017, the Company
paid a final dividend for the year ended 30 April 2017 of 2.50p
per ordinary share amounting to GBP254,000.
The proposed interim dividend of 2.40p (2016: 2.30p) per share
is payable on 9 April 2018 to qualifying shareholders on the
register at the close of business on 2 March 2018.
3. Basic earnings per share have been calculated on the basis of
earnings of GBP1,828,000 (2016: GBP1,275,000) and on 10,160,000
(2016: 10,207,315) ordinary shares being the weighted average
number of ordinary shares in issue during the period.
4. Diluted earnings per share have been calculated on the basis
of earnings of GBP1,828,000 (2016: GBP1,275,000) and on 10,160,000
(2016: 10,207,315) ordinary shares being the weighted average
number of ordinary shares in the period adjusted to assume conversion
of all dilutive potential ordinary shares of nil (2016: nil).
5. The financial information for the year ended 30 April 2017 does
not constitute the full statutory accounts for that period. The
Annual Report and Financial Statements for the year ended 30
April 2017 have been filed with the Registrar of Companies. The
Independent Auditors' Report on the Annual Report and Financial
Statements for the year ended 30 April 2017 was unqualified,
did not draw attention to any matters by way of emphasis, and
did not contain a statement under 498(2) or 498(3) of the Companies
Act 2006.
6. Copies of the interim report are being sent to shareholders and
will be available from the Company's website on www.colefaxgroupplc.com.
Copies will also be made available on request to members of the
public at the Company's registered office at 19-23 Grosvenor
Hill, London W1K 3QD.
This information is provided by RNS
The company news service from the London Stock Exchange
END
IR LLFEELAITFIT
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