TIDMCFX
RNS Number : 7106I
Colefax Group PLC
09 August 2023
AIM: CFX
COLEFAX GROUP PLC
("Colefax" or the "Group")
Preliminary Results for the year ended 30 April 2023
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.
Key Points
-- Sales increased by 3% to GBP104.80m (2022 - GBP101.8m) but
down by 3% on a constant currency basis due to lower Decorating
Division sales
-- Pre-tax profit decreased by 21% to GBP8.54m (2022 -
GBP10.82m) - mainly due to lower Decorating Division profits
following an exceptional performance in the prior year
-- Earnings per share decreased by 13% to 89.7p (2022 - 102.5p)
-- Share buyback returned GBP5.4m of surplus capital to shareholders in September 2022.
-- Cash at 30 April 2023 of GBP19.8m (2022 - GBP21.8m)
-- Fabric Division sales increased by 9.5% to GBP92.51m (2022 -
GBP84.51m) and by 1.5% on a constant currency basis
- US sales down by 1%, UK sales up by 1% and Europe sales up by
7% (on a constant currency basis)
-- Decorating Division sales decreased by 35% to GBP9.52m (2022
- GBP14.63m) following an exceptional prior year performance.
Pre-tax loss of GBP96,000 (2022 - GBP1.47m profit)
-- Board is proposing a final dividend of 2.8p (2022 - 2.7p)
making a total for the year of 5.4p (2022 - 5.2p)
David Green, Chief Executive of Colefax Group plc, said:
" The Group has delivered another strong performance achieving
record Fabric Division sales against a record prior year. We
benefitted from a strong US Dollar and a continuation of the home
decorating boom triggered by the pandemic but have also had to deal
with high levels of cost inflation in all areas of the
business.
"The performance of the Group lags activity in the high-end
housing market and we do expect trading conditions to become
progressively more challenging as steep interest rate increases
start to have an impact in the US and the UK. These expectations
are factored into our current year market forecast ."
Enquiries:
Colefax Group plc David Green, Chief Tel: 020 7318
Executive 6021
Rob Barker, Finance
Director
KTZ Communications Katie Tzouliadis, Robert Tel: 020 3178
Morton 6378
Peel Hunt LLP Adrian Trimmings, Andrew Tel: 020 7418
(Nominated Advisor Clark 8900
and Broker)
COLEFAX GROUP PLC
CHAIRMAN'S STATEMENT
Financial Results
Group sales increased by 3% to GBP104.82 million (2022 -
GBP101.80 million) but decreased by 3% on a constant currency
basis. Pre-tax profits decreased by 21% to GBP8.54 million (2022 -
GBP10.82 million). Earnings per share decreased by 13% to 89.7p
(2022 - 102.5p). The Group ended the year with net cash of GBP19.8
million (2022 - GBP21.8 million).
Trading conditions in the Group's core Fabric Division remained
mostly favourable throughout the year despite rising interest rates
and a slowdown in housing market activity. Sales increased by 2% on
a constant currency basis against record prior year sales but
pre-tax profits declined by 9% due to cost increases caused by high
levels of inflation. The Group benefitted from a very strong US
Dollar average rate of $1.20 compared to $1.35 for the prior year
but the resulting margin boost was largely offset by above average
increases in operating expenses. Although Fabric Division profits
decreased by 9% the main reason for the 21% decrease in Group
profit was a 35% reduction in Decorating Division sales which
resulted in a loss of GBP96,000 for the year compared to a profit
of GBP1.47 million in the prior year. Fluctuations in Decorating
Division sales are a feature of the business and depend on the
timing of project completions.
In September 2022 the Group returned GBP5.4 million of surplus
cash to shareholders by way of a share buyback. The Group purchased
and cancelled 700,000 shares representing 8.8% of the issued
ordinary share capital at a price of 765p per share.
The Board is proposing to pay a final dividend of 2.8p (2022 -
2.7p) making a total for the year of 5.4p (2022 - 5.2p). This will
be paid on 12 October 2023 to shareholders on the register at the
close of business on 15 September 2023.
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 88% of Group
turnover, increased by 10% to GBP92.51 million (2022 - GBP84.51
million) and by 1.5% on a constant currency basis. Pre-tax profit
decreased by 9% to GBP8.40 million (2022 - GBP9.29 million). All
our major markets performed well against strong prior year
comparatives. Sales in the Fabric Division are linked to the level
of housing market activity but there is a time lag of up to a year
or more between customers moving house and spending on home
improvement. Housing transactions in the US and the UK peaked
during the Covid pandemic and we believe this has been the main
driver of sales over the last two years.
During the first eight months of the year we experienced
significant increases in the cost of goods mainly driven by
unprecedented increases in energy prices. Managing cost inflation
was the biggest challenge for the business during the year but in
recent months energy prices have fallen and the inflation outlook
has improved.
Sales in the US, which represent 63% of the Fabric Division's
turnover, increased by 11% but decreased by 1% on a constant
currency basis. Sales in the US are around 28% higher than they
were prior to the start of the Covid pandemic demonstrating the
strength of the home decorating boom that has taken place as a
result. Rising interest rates in the US have inevitably led to a
sharp decline in housing transactions and as expected trading
conditions started to get more challenging towards the end of the
year. We continue to look for opportunities to strengthen our US
distribution network and in the autumn we will be opening a new
showroom in Dallas to take advantage of growth opportunities in
this territory.
Sales in the UK, which represent 16% of the Fabric Division's
turnover, increased by 1% against record prior year sales. The UK
market at the high end has been reasonably resilient although as in
the US rising interest rates are starting to have an adverse impact
on housing transactions which are a key driver of sales. Sales in
the second half of the year were flat following a 4% increase in
the first half of the year.
Sales in Continental Europe, which represent 19% of the Fabric
Division's turnover, increased by 9% and by 7% on a constant
currency basis. In terms of sales growth Europe was the best
performing market during the year. This is partly due to an
increase in contract orders linked to a strong post covid recovery
in the high-end hotels sector. Although Brexit does not appear to
have adversely impacted sales in Europe it has resulted in
increased bureaucracy and costs which have reduced the
profitability of sales in Europe. In particular, fabrics purchased
from EU manufacturers are now subject to import duty when shipped
from our UK warehouse to EU customers. France remains our largest
market in Europe and together with Germany and Italy these three
countries accounted for 52% of European sales.
Sales in the Rest of the World, which represent just 2% of the
Fabric Division's turnover, increased by 31% during the year mainly
due to a significant recovery in Middle East sales. Our major
markets in the Rest of the World are the Middle East, China and
Australia and whilst we will continue to pursue growth
opportunities in specific countries, the Rest of the World will
remain a small proportion of total Fabric Division sales.
-- Furniture - Kingcome Sofas
Sales of Kingcome furniture, which represent 3% of Product
Division sales, increased by 5% to GBP2.78 million (2022 - GBP2.66
million). Pre-tax profit increased by GBP160,000 to GBP240,000
(2022 - GBP80,000) The improved profit partly reflects the absence
of one-off marketing costs in the prior year but also demonstrates
the high level of operational gearing in this business where
relatively small changes in sales can have a significant impact on
profits. During the year we completed a major investment in our
freehold factory in Devon which has increased operational and
energy efficiency. In September we opened a new trade showroom
adjoining our Colefax showroom in Chelsea Harbour and are starting
to see the benefits of this investment.
Interior Decorating Division
Decorating sales, which represent 9% of Group turnover,
decreased by 35% to GBP9.52 million (2022 - GBP14.63 million)
resulting in a pre-tax loss for the year of GBP96,000 (2022 -
GBP1.47 million profit). The reduction in sales was in line with
expectations and follows an exceptional performance in the prior
year. The profit on decorating projects is recognised on invoicing
and as a result sales and profits can fluctuate significantly
depending on the timing of completion of projects. Lead times
increased markedly during the pandemic and labour shortages
continue to impact the duration and timing of projects. The
Decorating Division is starting the new year with a high level of
deposits which are up by 90% compared to the prior year.
Prospects
The Group has delivered another strong performance achieving
record Fabric Division sales against a record prior year
comparative. We benefitted from a strong US Dollar and a
continuation of the home decorating boom triggered by the pandemic
but have also had to deal with high levels of cost inflation in all
areas of the business. The performance of our core Fabric Division
lags activity in the high-end housing market and we do expect
trading conditions to become progressively more challenging as
steep interest rate increases start to have an impact in the US and
the UK. These expectations are factored into our current year
market forecast. The Group has a very strong balance sheet with
cash of GBP19.8 million and we will continue to invest with
confidence in our portfolio of brands.
The Group's performance over the last year reflects the talent
and hard work of all our staff and I would like to thank them for
their loyalty and support.
David Green
Chairman
8 August 2023
GROUP INCOME STATEMENT
For the year ended 30 April 2023
2023 2022
GBP'000 GBP'000
Revenue 104,818 101,796
Cost of sales (45,085) (47,237)
Gross profit 59,733 54,559
Operating expenses (50,214) (42,665)
Other income - -
------------------------------------------------------------------ ----------------- ------------------
Profit from operations 9,519 11,894
Finance income 26 -
Finance expense (1,001) (1,071)
Profit before taxation 8,544 10,823
Tax expense (1,857) (2,330)
Profit for the year attributable to equity holders of the parent 6,687 8,493
Basic and diluted earnings per share 89.7p 102.5p
GROUP STATEMENT OF COMPREHENSIVE INCOME
For the year ended 30 April 2023
2023 2022
GBP'000 GBP'000
Profit for the year 6,687 8,493
Other comprehensive (expense) / income:
Items that will or may be reclassified to profit and loss:
Exchange differences on translation of foreign operations (93) 522
Tax relating to items that will or may be reclassified to profit and loss - -
--------------------------------------------------------------------------- ----------------- -----------------
Total other comprehensive (expense) / income (93) 522
Total comprehensive income for the year attributable to 6,594 9,015
equity holders of the parent
--------------------------------------------------------------------------- ----------------- -----------------
GROUP STATEMENT OF FINANCIAL POSITION
At 30 April 2023
Notes 2023 2022
GBP'000 GBP'000
Non-current assets:
Property, plant and equipment 8,231 7,423
Right of use asset 23,464 25,621
Deferred tax asset 23 22
31,718 33,066
Current assets:
Inventories and work in progress 2 19,487 17,031
Trade and other receivables 3 9,153 6,976
Cash and cash equivalents 4 19,746 21,785
Current corporation tax 144 115
48,530 45,907
------------------------------------------------------------ ------ ------------------ ------------------
Current liabilities:
Trade and other payables 5 20,003 17,582
Lease liabilities 3,085 4,176
23,088 21,758
------------------ ------------------
Net current assets 25,442 24,149
------------------ ------------------
Total assets less current liabilities 57,160 57,215
------------------------------------------------------------ ------ ------------------ ------------------
Non-current liabilities:
Lease liabilities 22,977 23,807
Deferred tax liability 223 261
Net assets 33,960 33,147
------------------------------------------------------------ ------ ------------------ ------------------
Capital and reserves attributable to equity holders of the
Company:
Called up share capital 724 794
Share premium account 11,148 11,148
Capital redemption reserve 2,150 2,080
ESOP share reserve (113) (113)
Foreign exchange reserve 1,619 1,712
Retained earnings 18,432 17,526
Total equity 33,960 33,147
------------------------------------------------------------ ------ ------------------ ------------------
GROUP STATEMENT OF CASH FLOWS
For the year ended 30 April 2023
2023 2022
GBP'000 GBP'000
Operating activities
Profit before taxation 8,544 10,823
Finance income (26) -
Finance expense 1,001 1,071
Loss/(Profit) on disposal of property, plant
and equipment 47 (9)
Depreciation 2,748 2,274
Depreciation on right of use assets 4,952 4,609
--------------------------- ---------------------------
Cash flows from operations before changes
in working capital 17,266 18,768
---------------------------------------------- --------------------------- ---------------------------
Increase in inventories and work in progress (2,462) (898)
(Increase) / decrease in trade and other
receivables (2,099) 1,789
Increase / (decrease) in trade and other
payables 2,239 (1,736)
Cash generated from operations 14,944 17,923
---------------------------------------------- --------------------------- ---------------------------
Taxation paid
UK corporation tax paid (699) (1,595)
Overseas tax paid (1,103) (488)
(1,802) (2,083)
--------------------------- ---------------------------
Net cash inflow from operating activities 13,142 15,840
---------------------------------------------- --------------------------- ---------------------------
Investing activities
Payments to acquire property, plant and
equipment (3,580) (2,255)
Receipts from sales of property, plant and
equipment - 13
Net cash outflow from investing (3,580) (2,242)
---------------------------------------------- --------------------------- ---------------------------
Financing activities
Purchase of own shares (5,382) (6,779)
Principal paid on lease liabilities (4,846) (4,061)
Interest paid on lease liabilities (999) (1,073)
Interest paid - 3
Equity dividends paid (399) (197)
--------------------------- ---------------------------
Net cash outflow from financing (11,626) (12,107)
---------------------------------------------- --------------------------- ---------------------------
Net (decrease)/increase in cash and cash
equivalents (2,064) 1,491
Cash and cash equivalents at beginning of
year 21,785 19,344
Exchange gains/(losses) on cash and cash
equivalents 25 950
---------------------------------------------- --------------------------- ---------------------------
Cash and cash equivalents at end of year 19,746 21,785
---------------------------------------------- --------------------------- ---------------------------
GROUP STATEMENT OF CHANGES IN EQUITY
For the year ended 30
April 2023
Share Capital ESOP Foreign
Share premium redemption share exchange Retained Total
capital account reserve reserve reserve earnings equity
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
--------------- -------- -------- ----------- -------- --------- --------- --------
At 30 April
2022 794 11,148 2,080 (113) 1,712 17,526 33,147
Profit for the
year - - - - - 6,687 6,687
Foreign
exchange - - - - (93) - (93)
Tax on other
comprehensive
income - - - - - -
Total
comprehensive
income for
the year - - - - (93) 6,687 6,594
Share buybacks (70) - 70 - - (5,382) (5,382)
Dividends paid - - - - - (399) (399)
At 30 April
2023 724 11,148 2,150 (113) 1,619 18,432 33,960
At 30 April
2021 902 11,148 1,972 (113) 1,190 16,009 31,108
Profit for the
year - - - - - 8,493 8,493
Foreign
exchange - - - - 522 - 522
Tax on other
comprehensive
income - - - - - - -
Total
comprehensive
income for
the year - - - - 522 8,493 9,015
--------------- -------- -------- ----------- -------- --------- --------- --------
Share buybacks (108) - 108 - - (6,779) (6,779)
Dividends paid - - - - - (197) (197)
At 30 April
2022 794 11,148 2,080 (113) 1,712 17,526 33,147
COLEFAX GROUP PLC
NOTES TO THE FINANCIAL INFORMATION
1. Earnings per share
Basic earnings per share have been calculated on the basis of
profit on ordinary activities after tax of GBP6,687,000 (2022 -
GBP8,493,000) and on 7,457,535 (2022 - 8,284,746) 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 are the same as basic earnings per
share as there are no outstanding share options in force at 30
April 2023.
2. Inventories and work in progress
2023 2022
GBP'000 GBP'000
--------- ---------
Finished goods for resale 16,508 14,961
Work in progress 2,979 2,070
--------- ---------
19,487 17,031
--------- ---------
3. Trade and other receivables
2023 2022
GBP'000 GBP'000
--------- ---------
Trade receivables 6,129 5,096
Less: provision for impairment of
trade receivables (516) (374)
Other receivables 1,403 607
Prepayments and accrued income 2,137 1,647
--------- ---------
9,153 6,976
--------- ---------
4. Cash and cash equivalents
2023 2022
GBP'000 GBP'000
--------- ---------
Cash at bank and in hand 19,746 21,785
--------- ---------
The fair value of cash and cash equivalents are considered to be
their book value.
5. Trade and other payables
2023 2022
GBP'000 GBP'000
--------- ---------
Trade payables 5,525 5,933
Accruals 7,167 6,402
Payments received on account 5,272 3,360
Other taxes and social security
costs 609 704
Other payables 1,430 1,183
--------- ---------
20,003 17,582
--------- ---------
6. Financial Information
The above financial information, which has been prepared in
accordance with international accounting standards in conformity
with the Companies Act 2006, does not constitute statutory accounts
as defined in Section 435 of the Companies Act 2006.
The financial information for the year ended 30 April 2023 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 2022
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.
7. Copies of the Annual Report and full Financial Statements
will be available from the Group'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.
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END
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(END) Dow Jones Newswires
August 09, 2023 02:00 ET (06:00 GMT)
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