Half-year Results _ Webfg.com council tax and housing benefit

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.

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.

Group sales for the six months to 31 october 2017 increased by 6.5% to £42.08 million (2016: £39.53 million) and increased by 5.1% on a constant currency basis.

Pre-tax profits increased by 35% to £2.56 million (2016: £1.90 million).Council tax and housing benefit earnings per share increased to 18.0p (2016: 12.5p). The group ended the first half of the year with net cash of £9.5 million (2016: £8.0 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 £213,000 compared to a loss of £84,000 last year.

Hedging losses arising from US dollar cover put in place prior to the brexit vote were £595,000 (2016 £755,000) and, excluding these, the group’s pre-tax profit increased by 18.5% to £3.15 million (2016: £2.66 million).Council tax and housing benefit

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.

Sales in the fabric division, which represent 87% of the group’s sales, increased by 4.6% to £36.47 million (2016: £34.87 million) and by 3.1% on a constant currency basis. Excluding hedging losses of £595,000 (2016: £755,000) operating profits increased by 7% to £2.92 million (2016: £2.73 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.Council tax and housing benefit 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.Council tax and housing benefit 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. .

Sales for the six months to october 2017 increased by 4% to £1.19 million (2016: £1.15 million) and the company made a small operating profit of £22,000 compared to £9,000 in 2016.Council tax and housing benefit 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.

Decorating sales, which account for just over 10% of group turnover, increased by 26% in the period to £4.4 million (2016: £3.5 million) and the division made a first half profit of £213,000 compared to a loss of £84,000 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.Council tax and housing benefit 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.

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.Council tax and housing benefit

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.

Basic earnings per share have been calculated on the basis of earnings of £1,828,000 (2016: £1,275,000) and on 10,160,000 (2016: 10,207,315) ordinary shares being the weighted average number of ordinary shares in issue during the period.

Diluted earnings per share have been calculated on the basis of earnings of £1,828,000 (2016: £1,275,000) 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).Council tax and housing benefit

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.

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.