AIM: CFX
COLEFAX GROUP
PLC
("Colefax" or the "Group")
Half Year
Results
for the six months ended 31
October 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.
Highlights
·
Group sales up 0.4% to £51.84 million (2022:
£51.66 million) and up 3.4% on a constant currency basis
·
Group profit before tax down 16% to £4.38 million
(2022: £5.20 million)
·
Earnings per share down 8% to 47.3p (2022:
51.3p)
·
Share Buyback Programme returned £7.2 million of
surplus capital to shareholders in September 2023
· Fabric Division sales down 3% to £45.80 million (2022: £47.17
million) and up 0.3% on a constant currency basis
o US
down by 2.4%, UK up by 4%, Europe up by 2.8%
· Decorating Division sales of £4.55 million (2022: £3.13
million) with project completions weighted to the second half of
the financial year
o loss
of £221,000 (2022: loss of £596,000)
·
Cash generation of £4.2 million excluding share
buybacks and dividend payments (2022: £2.9 million)
·
Interim dividend of 2.7p (2022: 2.6p) up 4% in
line with a progressive dividend policy
David Green, Chairman, said:
"The Group has delivered a good performance in the first six
months which is broadly in line with expectations and follows
record interim profits in the prior year. Trading in all our
major markets is starting to reflect the impact of high interest
rates and lower levels of housing market activity. We are therefore
expecting conditions to become more difficult especially as
customer spending on our products tends to lag changes in housing
market activity and we believe trading conditions are likely to
remain challenging for much of the next financial year. Our
Decorating Division is expected to deliver an exceptional
performance this year due to the timing of projects but as a result
decorating turnover will be significantly lower next
year.
"The Group has a strong balance sheet and we will continue to
focus on investing in our distribution network and our portfolio of
brands. This will ensure that we are well placed to benefit from
any improvement in market conditions."
Enquiries:
Colefax Group plc
David
Green, Chief Executive
Tel 020 7318 6021
KTZ Communications
Katie Tzouliadis, Robert
Morton Tel 020 3178
6378
Peel Hunt LLP
Adrian Trimmings, Andrew Clarke
Tel 020 7418 8900
CHAIRMAN'S STATEMENT
Financial Results
Group sales for the six months to 31
October 2023 increased by 0.4% to £51.84 million (2022: £51.66
million) and by 3.4% on a constant currency basis. Pre-tax profits
decreased by 16% to £4.38 million (2022: £5.20 million).
Earnings per share decreased by 8% to 47.3p (2022: 51.3p).
The Group ended the half year with cash of £17.06 million (30 April
2023: £19.75 million).
In September 2023 the Group returned
£7.2 million of surplus capital to shareholders by way of a Tender
Offer and share buyback. The Group purchased and cancelled
1,013,254 shares at a price of £7.00 and representing 14.0% of the
issued ordinary share capital. The share buyback will benefit
earnings per share in the current and future financial
years.
Sales in our core Fabric Division
increased by 0.3% on a constant currency basis against a strong
prior year comparative. This was not sufficient to offset the
impact of high levels of cost inflation arising in the prior year
and is the main reason for the 16% decline in profit before tax in
the first half against record prior year profits. Fortunately, we
are experiencing lower levels of cost inflation in the current
financial year and we expect this trend to continue. First
half profits were also adversely impacted by a weaker US Dollar
exchange rate of $1.25 compared to $1.18 for the prior year but
this was partly offset by a reduced loss of £221,000 by our
Decorating Division (2022: loss of £596,000).
Trading in the first half of the year
was broadly in line with our expectations. Fabric Division
sales are closely linked to high end housing market activity and
steep increases in interest rates have significantly reduced the
number of housing transactions in all our major markets. Our
business lags changes in housing market activity by up to twelve
months and so the full impact of higher interest rates has only
just started to take effect.
In line with the Group's progressive
dividend policy the Board has decided to propose a 4% increase in
the interim dividend to 2.7p (2022: 2.6p). This will be paid on 11
April 2024 to shareholders on the register at 8 March
2024.
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 the Group's sales, decreased by 3% to £45.80
million (2022: £47.17 million) but increased by 0.3% on a constant
currency basis. Profits decreased by 21% to £4.48 million (2022:
£5.65 million). High levels of cost inflation in the prior
year have not been repeated in the current year but a more
challenging sales environment means that sales growth was not
sufficient to fully offset a higher cost base.
Sales in the US, which represent 61%
of the Fabric Division's turnover, decreased by 7% in reported
terms and by 2% on a constant currency basis. This compares
to a constant currency increase of 1% in the first half of last
year. Sales in the US have held up well, despite rising
interest rates and we have continued to invest in our showroom
network to take advantage of sales opportunities in specific
territories. In November, we opened new showrooms in Dallas
and Toronto and started selling direct to customers rather than via
agents. We are confident that these new showrooms will
deliver increased sales in these territories.
Sales in the UK, which represent 18%
of the Fabric Division's turnover, increased by 4% during the
period and compare to an increase of 4% in the first half of the
prior year. This performance was slightly ahead of our
expectations at the start of the year and partly reflects the
success of recent new product launches. We are also
benefitting from the expansion of our trade showroom in the Chelsea
Harbour Design Centre which took place in October 2022.
Sales in Continental Europe, which
represent 18% of the Fabric Division's turnover, increased by 3% on
both a reported basis and a constant currency basis. This follows
an 11% increase in sales in the first half of the prior year.
Trading in Europe has remained fairly robust in most markets
although it remains less profitable post Brexit due to increased
operating costs, notably customs duty on EU exports. France,
Germany and Italy collectively accounted for 48% of sales in
Europe.
Sales in the Rest of the World, which
represent just 3% of the Fabric Division's turnover, increased by
32% on a constant currency basis. The increase was mainly due to an
increase in contract orders to the Middle East which can vary
significantly between reporting periods. Our other main
markets in the Rest of the World are China and Australia, but they
remain a small part of overall sales and are not a focus for
growth.
Furniture - Kingcome
Sofas
Sales for the six months to October
2023 increased by 10% to £1.50 million (2022: £1.36 million) and
the Company made an operating profit of £126,000 (2022: £130,000).
Furniture sales are recognised on delivery of orders and the
10% increase in sales during the period was due to improvements in
factory productivity which reduced the existing order book and
hence the lead time for new orders, to a more acceptable level.
The improvement in productivity follows a significant
investment in the factory in the prior year. Most furniture
sales are made to order and relate to UK customers. Trading
conditions during the period were challenging and the order intake
was down by 22% compared to a strong prior year comparative.
The reduced level of orders reflects high UK interest rates
and a subdued housing market and trading is expected to remain
challenging for at least the remainder of the year.
Interior Decorating Division
Decorating sales, which account for
just under 9% of Group turnover, increased by 45% in the period to
£4.55 million (2022: £3.13 million) resulting in a reduced first
half loss of £221,000 compared to a loss of £596,000 for the same
period last year. The profit on decorating projects is
recognised on invoicing and the losses incurred in the first half
are mainly due to the timing of project completion dates.
Decorating Division work in progress increased by 39% during
the period and with a high level of project completions expected in
the second half of the year an exceptional overall performance is
now expected for the full year. This timing does mean that
Decorating Division sales will be significantly lower next
year.
Prospects
The Group has delivered a good
performance in the first six months which is broadly in line with
expectations and follows record interim profits in the prior year.
Trading in all our major markets is starting to reflect the
impact of high interest rates and lower levels of housing market
activity. We are therefore expecting conditions to become more
difficult especially as customer spending on our products tends to
lag changes in housing market activity and we believe trading
conditions are likely to remain challenging for much of the next
financial year. Our Decorating Division is expected to deliver an
exceptional performance this year due to the timing of projects but
as a result decorating turnover will be significantly lower next
year.
The Group has a strong balance sheet
and we will continue to focus on investing in our distribution
network and our portfolio of brands. This will ensure that we are
well placed to benefit from any improvement in market
conditions.
David Green
Chairman
COLEFAX GROUP PLC
INTERIM GROUP INCOME STATEMENT
|
|
Unaudited
|
Unaudited
|
Audited
|
|
|
Six months
to
31 Oct 2023
|
Six months
to
31 Oct 2022
|
Year
to
30 April
2023
|
|
|
£'000
|
£'000
|
£'000
|
|
Revenue
|
51,842
|
51,657
|
104,818
|
|
Cost of sales
|
(22,450)
|
(22,229)
|
(45,085)
|
|
Gross profit
|
29,392
|
29,428
|
59,733
|
|
Operating expenses
|
(24,557)
|
(23,733)
|
(50,214)
|
|
Profit from operations
|
4,835
|
5,695
|
9,519
|
|
Finance income
|
40
|
-
|
26
|
|
Finance expense
|
(492)
|
(506)
|
(1,001)
|
|
Profit before taxation
|
4,383
|
5,189
|
8,544
|
|
Tax expense
|
(1,095)
|
(1,219)
|
(1,857)
|
|
Profit for the period attributable to equity holders of the
parent
|
3,288
|
3,970
|
6,687
|
|
Basic earnings per share
|
47.3p
|
51.3p
|
89.7p
|
|
Diluted earnings per
share
|
47.3p
|
51.3p
|
89.7p
|
INTERIM GROUP STATEMENT OF COMPREHENSIVE
INCOME
|
|
Unaudited
|
Unaudited
|
Audited
|
|
|
Six months
to
31 Oct 2023
|
Six months
to
31 Oct 2022
|
Year
to
30 April
2023
|
|
|
£'000
|
£'000
|
£'000
|
|
Profit for the period
|
3,288
|
3,970
|
6,687
|
|
Other comprehensive (expense) / income:
|
|
|
|
|
Items that will or may be reclassified to profit and
loss:
|
|
|
|
|
Exchange differences on translation
of foreign operations
|
(174)
|
760
|
(93)
|
|
Tax relating to items that will or
may be reclassified to profit and loss
|
(12)
|
(12)
|
-
|
|
Total other comprehensive (expense) / income
|
(186)
|
748
|
(93)
|
|
Total comprehensive income for the period attributable to
equity holders of the parent
|
3,102
|
4,718
|
6,594
|
COLEFAX GROUP PLC
INTERIM GROUP STATEMENT OF FINANCIAL
POSITION
|
|
|
Unaudited
|
Unaudited
|
Audited
|
|
|
|
As at 31 Oct
2023
|
As at 31 Oct
2022
|
As at 30
April 2023
|
|
|
Notes
|
£'000
|
£'000
|
£'000
|
|
Non-current assets:
|
|
|
|
|
|
Right of use assets
|
|
21,596
|
25,881
|
23,464
|
|
Property, plant and
equipment
|
|
8,029
|
8,447
|
8,231
|
|
Deferred tax asset
|
|
23
|
23
|
23
|
|
|
|
|
|
|
|
|
|
29,648
|
34,351
|
31,718
|
|
Current assets:
|
|
|
|
|
|
Inventories and work in
progress
|
5
|
19,557
|
16,993
|
19,487
|
|
Trade and other
receivables
|
6
|
8,119
|
7,992
|
9,153
|
|
Current corporation tax
|
|
-
|
-
|
144
|
|
Cash and cash equivalents
|
|
17,055
|
19,950
|
19,746
|
|
|
|
44,731
|
44,935
|
48,530
|
|
Current liabilities:
|
|
|
|
|
|
Trade and other payables
|
7
|
20,035
|
17,923
|
20,003
|
|
Lease liabilities
|
|
2,891
|
3,332
|
3,085
|
|
Current corporation tax
|
|
37
|
304
|
-
|
|
|
|
22,963
|
21,559
|
23,088
|
|
Net
current assets
|
|
21,768
|
23,376
|
25,442
|
|
Total assets less current liabilities
|
|
51,416
|
57,727
|
57,160
|
|
Non-current liabilities:
|
|
|
|
|
|
Lease liabilities
|
|
21,557
|
25,174
|
22,977
|
|
Deferred tax liability
|
|
226
|
282
|
223
|
|
Net
assets
|
|
29,633
|
32,271
|
33,960
|
|
Capital and reserves attributable to equity holders of the
Company:
|
|
|
|
|
|
Called up share capital
|
|
622
|
724
|
724
|
|
Share premium account
|
|
11,148
|
11,148
|
11,148
|
|
Capital redemption reserve
|
|
2,252
|
2,151
|
2,150
|
|
ESOP share reserve
|
|
(113)
|
(113)
|
(113)
|
|
Foreign exchange reserve
|
|
1,433
|
2,460
|
1,619
|
|
Retained earnings
|
|
14,291
|
15,901
|
18,432
|
|
Total equity
|
|
29,633
|
32,271
|
33,960
|
COLEFAX GROUP PLC
INTERIM GROUP STATEMENT OF CASH FLOWS
|
|
Unaudited
|
Unaudited
|
Audited
|
|
|
Six months to 31 Oct
2023
|
Six months to 31 Oct
2022
|
Year
to 30
April
2023
|
|
|
£'000
|
£'000
|
£'000
|
|
Operating activities
|
|
|
|
|
Profit before taxation
|
4,383
|
5,189
|
8,544
|
|
Finance income
|
(40)
|
-
|
(26)
|
|
Finance expense
|
492
|
506
|
1,001
|
|
Loss on disposal of property, plant
and equipment
|
1
|
37
|
47
|
|
Depreciation on right of use
assets
|
2,334
|
2,426
|
4,952
|
|
Depreciation
|
1,307
|
1,259
|
2,748
|
|
Cash flows from operations before changes in working
capital
|
8,477
|
9,417
|
17,266
|
|
(Increase) / decrease in inventories
and work in progress
|
(24)
|
273
|
(2,462)
|
|
Decrease / (increase) in trade and
other receivables
|
1,193
|
(762)
|
(2,099)
|
|
(Decrease) / increase in trade and
other payables
|
(721)
|
(418)
|
2,239
|
|
Cash generated from operations
|
8,925
|
8,510
|
14,944
|
|
Taxation paid
|
|
|
|
|
UK corporation tax paid
|
(433)
|
(431)
|
(699)
|
|
Overseas tax paid
|
(510)
|
(387)
|
(1,103)
|
|
|
(943)
|
(818)
|
(1,802)
|
|
Net
cash inflow from operating activities
|
7,982
|
7,692
|
13,142
|
|
Investing activities
|
|
|
|
|
Interest received
|
40
|
-
|
-
|
|
Payments to acquire property, plant
and equipment
|
(969)
|
(1,914)
|
(3,580)
|
|
Net
cash outflow from investing
|
(929)
|
(1,914)
|
(3,580)
|
|
Financing activities
|
|
|
|
|
Purchase of own shares
|
(7,227)
|
(5,382)
|
(5,382)
|
|
Principal paid on lease
liabilities
|
(2,183)
|
(2,389)
|
(4,846)
|
|
Interest paid on lease
liabilities
|
(458)
|
(507)
|
(999)
|
|
Equity dividends paid
|
(201)
|
(213)
|
(399)
|
|
Net
cash outflow from financing
|
(10,069)
|
(8,491)
|
(11,626)
|
|
Net
decrease in cash and cash equivalents
|
(3,016)
|
(2,713)
|
(2,064)
|
|
Cash and cash equivalents at
beginning of period
|
19,746
|
21,785
|
21,785
|
|
Exchange gains on cash and cash
equivalents
|
325
|
878
|
25
|
|
Cash and cash equivalents at end of period
|
17,055
|
19,950
|
19,746
|
COLEFAX GROUP PLC
|
NOTES
|
|
|
|
|
1.
|
Basis of Preparation
The condensed group financial
statements for the 6 months ended 31 October 2023 have been
prepared in accordance with UK-adopted international accounting
standards in accordance with the requirements of the Companies Act
2006.
These unaudited group interim
financial statements have been prepared in accordance with AIM
Rules. In preparing this report, the group has adopted the guidance
in the AIM Rules for interim accounts which do not require that the
interim condensed group financial statements are prepared in
accordance with IAS 34 "Interim financial reporting".
Going concern
The interim Financial Statements
have been prepared on a going concern basis.
The Directors, having made
appropriate enquiries, consider that adequate resources exist for
the Group to continue in operational existence for the foreseeable
future and that, therefore, it is appropriate to adopt the going
concern basis in preparing the condensed group interim financial
statements for the period ended 31 October 2023.
Risks and uncertainties
The Board continuously assesses and
monitors the key risks of the business. The key risks that could
affect the Company's medium term performance and the factors that
mitigate those risks have not substantially changed from those set
out in the Group's 30 April 2023 Annual Report and Financial
Statements, a copy of which is available on the Company's
website: www.colefaxgroupplc.com.
Critical accounting estimates
The preparation of condensed group
interim financial statements requires management to make estimates
and assumptions that affect the reported amounts of assets and
liabilities at the end of the reporting period. Significant items
subject to such estimates are set out in Note 2 of the Group's 30
April 2023 Annual Report and Financial Statements. The nature and
amounts of such estimates have not changed significantly during the
interim period.
|
|
|
|
|
2.
|
Accounting Policies
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 2024.
|
|
|
|
|
3.
|
Basic earnings per share have been
calculated on the basis of earnings of £3,288,000 (2022:
£3,970,000) and on 6,957,000 (2022: 7,732,000) 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 £3,288,000 (2022:
£3,970,000) and on 6,957,000 (2022: 7,732,000) ordinary shares
being the weighted average number of ordinary shares in the
period.
|
|
5.
|
|
Inventories and work in progress
|
|
As at 31 Oct
2023
|
As at 31 Oct
2022
|
As at 30
Apr 2023
|
|
|
|
£'000
|
£'000
|
£'000
|
|
|
|
|
|
|
|
Finished goods for resale
|
|
15,431
|
14,482
|
16,508
|
|
Work in progress
|
|
4,126
|
2,511
|
2,979
|
|
|
|
19,557
|
16,993
|
19,487
|
|
|
|
|
|
|
|
6.
|
|
Trade and other receivables
|
|
As at 31 Oct
2023
|
As at 31 Oct
2022
|
As at 30
Apr 2023
|
|
|
|
£'000
|
£'000
|
£'000
|
|
|
|
|
|
|
|
Trade debtors
|
|
3,238
|
3,368
|
5,613
|
|
Other debtors
|
|
2,982
|
2,921
|
1,403
|
|
Prepayments and accrued
income
|
|
1,899
|
1,703
|
2,137
|
|
|
|
8,119
|
7,992
|
9,153
|
|
|
|
|
|
|
|
|
7.
|
|
Trade and other payables
|
|
As at 31 Oct
2023
|
As at 31 Oct
2022
|
As at 30
Apr 2023
|
|
|
|
£'000
|
£'000
|
£'000
|
|
|
|
|
|
|
|
Trade payables
|
|
6,288
|
6,034
|
5,525
|
|
Payments received on
account
|
|
6,271
|
5,119
|
5,272
|
|
Other taxes and social security
costs
|
|
534
|
480
|
609
|
|
Other payables
|
|
1,278
|
1,213
|
1,430
|
|
Accruals
|
|
5,664
|
5,077
|
7,167
|
|
|
|
20,035
|
17,923
|
20,003
|
|
|
|
|
|
8.
|
The financial information for the
year ended 30 April 2023 does not constitute the full statutory
accounts for that period. The Annual Report and Financial
Statements for the year ended 30 April 2023 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
2023 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.
|
|
|
|
|
9.
|
Copies of the interim report are
being sent to shareholders and 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.
|
|
|
|
|
10.
|
Approval of interim financial
statements
The interim financial statements were
approved by the Board on 29 January 2024.
|
|
|
|