TIDMCFX
RNS Number : 3625I
Colefax Group PLC
12 August 2021
AIM: CFX
COLEFAX GROUP PLC
("Colefax" or the "Group")
Preliminary Results for the year ended 30 April 2021
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 decreased by 1% to GBP77.91m (2020 - GBP78.36m) but on
a constant currency basis, sales increased by 2%
-- Pre-tax profit increased by 149% to GBP5.42m (2020 - GBP2.18m)
- mainly driven by a strong recovery in core Fabric Division
sales, and also lower new product investment
- profit included a prior year US CARES loan of GBP922,000
approved as a grant in the financial year under review
-- Earnings per share increased by 111% to 45.1p (2020 - 21.4p)
-- Cash at 30 April 2021 increased to GBP19.3m (2020 - GBP11.5m)
-- Fabric Division sales increased by 3.8% to GBP69.58m (2020
- GBP67.03m) and by 6.7% on a constant currency basis
- US sales up by 8%, UK sales up by 1% and Europe sales up
by 9% (on a constant currency basis)
-- Decorating Division sales decreased by 35% to GBP5.79m (2020
- GBP8.96m) resulting in a pre-tax loss of GBP680,000 (2020
- GBP121,000 profit)
- project delays and travel restrictions caused by the pandemic
impacted activity
-- Board is not proposing a final dividend but intends to restart
dividends in the new financial year
David Green, Chief Executive of Colefax Group plc, said:
"Results for this financial year and the prior year were
significantly impacted by emergency lockdowns across the world.
However, with the easing of restrictions, sales in the Fabric
Division, our core operation, recovered strongly. This was fuelled
by a buoyant housing market and surge in home-related spending.
" Demand is currently strong across all areas of the business,
and we are therefore optimistic about sales prospects. However, it
is not yet clear how long these favourable conditions will last,
and two factors will weigh on profits. First, the strength of
Sterling against the US Dollar, the US being our dominant
marketplace, and secondly the additional costs of selling in EU
markets following Brexit. In our Decorating Division, we are
expecting an exceptional year, but this is partly due to the delay
of projects from the prior year."
Enquiries:
Colefax Group plc David Green, Chief Tel: 020 7318
Executive 6021
Rob Barker, Finance
Director
KTZ Communications Katie Tzouliadis, Dan Tel: 020 3178
Mahoney 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 for the year to 30 April 2021 decreased by 1% to
GBP77.91 million (2020 - GBP78.36 million) but increased by 2% on a
constant currency basis. Pre-tax profits increased by 149% to
GBP5.42 million (2020 - GBP2.18 million) and earnings per share
increased by 111% to 45.1p (2020 - 21.4p). The Group ended the year
with cash of GBP19.3 million (2020 - GBP11.5 million).
The Board is not proposing the payment of a final dividend for
the year ended 30 April 2021 but intends to restart dividend
payments in respect of the year ended 30 April 2022. Going forward
it is the Board's intention to return to a progressive dividend
policy. The Board will continue to review options for returning
surplus cash to shareholders in line with the Group's long running
share buyback strategy.
The financial year started in the middle of the first worldwide
lockdowns and the timing of our year end on 30 April means that our
results for both the current and prior year have been significantly
impacted. The principal reason for the increase in profit was a
strong recovery in Fabric Division sales which ended the year up by
6.7% on a constant currency basis. This recovery started after the
first lockdowns ended and continued through the remainder of the
year. In contrast our Decorating Division made a pre-tax loss of
GBP680,000 due to project delays and travel restrictions caused by
the pandemic. Group profit includes furlough income of GBP540,000
(2020 - GBP280,000) and GBP922,000 from a prior year coronavirus
related US CARES loan which was approved as a grant and recognised
as income in April 2021.
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 89% of Group
turnover, increased by 3.8% to GBP69.58 million (2020 - GBP67.03
million) and by 6.7% on a constant currency basis. Pre-tax profit
increased by 197% to GBP5.81 million (2020 - GBP2.0 million). Prior
year profit included exceptional costs of GBP714,000 relating to
the move of our US Fabric Division operations to the UK.
The improvement in Fabric Division profit was partly due to cost
reductions resulting from lower levels of new product investment
during the year. Furlough income amounted to GBP427,000 with the
majority of this amount claimed in the peak lockdown months of May,
June and July 2020. In addition a prior year US CARES loan of
GBP922,000 was only approved as a grant and recognised as income in
April 2021, hence distorting profits between the current and prior
year.
The financial year began with the majority of our customers and
suppliers closed or partially closed due to the first lockdowns.
Sales were significantly down in the first quarter but started to
recover as soon as the lockdowns ended and continued to recover for
the remainder of the financial year despite subsequent lockdowns.
We attribute this recovery to a significant increase in housing
market activity and home related spending.
Sales in the US, which represent 61% of the Fabric Division's
turnover, increased by 3% and by 8% on a constant currency basis.
The US has been our strongest market throughout the pandemic with a
lower decline in sales during the initial lockdown and a stronger
recovery post lockdown.
During the year we completed the transfer of the majority of our
US warehouse operations to the UK and moved our US headquarters out
of New York City to smaller office and warehouse premises in
Brooklyn. Going forward this will reduce costs and improve
efficiency. In March we moved to a new showroom in the Chicago
Design Center and we are pleased with the positive reaction from
customers.
Sales in the UK, which represent 16% of the Fabric Division's
turnover, increased by 1%. The UK market recovered quickly after
the first national lockdown ended in June 2020 and the impact of
subsequent lockdowns in the second half of the year was much less
significant than the first lockdown due to more customers managing
to continue trading and strong demand for home related
products.
Sales in Continental Europe, which represent 21% of the Fabric
Division's turnover, increased by 11% and by 9% on a constant
currency basis. The increase is due to the fact that the first
European lockdowns started earlier and had a bigger impact in the
prior year than they did in the UK and the US.
Brexit appears to have had a relatively modest impact on our
European sales but it has had a significant impact on costs and
complexity. An unexpected twist in the free trade agreement means
that fabrics sourced from EU manufacturers are subject to import
duty when re-exported from the UK to EU customers. Together with
higher freight and administration charges the result is that costs
have increased by approximately GBP900,000 per year as a result of
Brexit.
Sales in the Rest of the World, which represent just 2% of the
Fabric Division's turnover, decreased by 4% during the year. Our
major markets in the Rest of the World are the Middle East, China
and Australia and these are likely to remain a small proportion of
total Fabric Division sales.
-- Furniture - Kingcome Sofas
Sales of Kingcome furniture, which represent 4% of Product
Division sales, increased by 7% to GBP2.53 million (2020 - GBP2.37
million) but were 6% lower than pre-pandemic sales for the year
ended 30 April 2019. Pre-tax profit increased by 188% to GBP288,000
(2020 - GBP100,000). The increase in sales and profit was partly
due to the fact that relatively few deliveries were possible in
April of the prior year during the first national lockdown and took
place in the current year. Furniture sales recovered very quickly
when our Fulham Road showroom re-opened after the first lockdown.
However, subsequent lockdowns and showroom closures starting in
November and December did have an adverse impact on orders because
most customers like to visit the showroom before making a buying
decision. The order book at the year end was down 25% on the prior
year but has subsequently increased to above prior year levels
reflecting strong pent up demand for furniture.
Interior Decorating Division
Decorating sales, which account for 7% of Group turnover,
decreased by 35% to GBP5.79 million (2020 - GBP8.96 million)
resulting in a pre-tax loss for the year of GBP680,000 (2020 -
GBP121,000 profit). In a normal year around 40% of sales would come
from overseas projects but for much of the year it was not possible
to travel overseas to visit new and existing customer's premises.
The UK lockdowns also adversely impacted sales and profit by
slowing the rate of progress on domestic projects. Despite these
challenges, demand for decorating work has remained strong and
partly due to delays to existing projects, customer deposits ended
the year at a record level of GBP5.8 million.
Prospects
We are currently experiencing strong demand in all areas of the
business and believe this is a direct consequence of the lockdowns
with end customers either moving house or re-decorating their
existing home. Although we are optimistic about sales prospects, it
is not yet clear how long these favourable conditions will last. In
addition, two factors will weigh on profits in the current year.
Firstly, Sterling has strengthened significantly against the US
Dollar since a Brexit trade deal was announced in January and Group
profits are very sensitive to the US Dollar exchange rate.
Secondly, Brexit has resulted in a significant increase in the cost
of selling in EU markets. In our Decorating Division we are
expecting an exceptional year but this is partly due to the
completion of projects delayed from the prior year.
The last year has been unprecedented and uniquely challenging
for all our customers, suppliers and staff. I am extremely grateful
to our staff who have worked tirelessly to respond to new
situations and new ways of working which prioritise health and
safety. They have kept the business running smoothly in constantly
changing circumstances and I would like to thank them for their
hard work, loyalty and support.
David Green
Chairman
12 August 2021
GROUP INCOME STATEMENT
For the year ended 30 April 2021
2021 2020
GBP'000 GBP'000
Revenue 77,908 78,364
Cost of sales (33,971) (34,602)
Gross profit 43,937 43,762
Operating expenses (38,910) (40,655)
Other income 1,462 280
------------------------------------------------------------------ --------- ---------
Profit from operations 6,489 3,387
Finance income - 20
Finance expense (1,067) (1,231)
Profit before taxation 5,422 2,176
Tax expense (1,376) (256)
Profit for the year attributable to equity holders of the parent 4,046 1,920
Basic earnings per share 45.1p 21.4p
Diluted earnings per share 45.1p 21.4p
GROUP STATEMENT OF COMPREHENSIVE INCOME
For the year ended 30 April 2021
2021 2020
GBP'000 GBP'000
Profit for the year 4,046 1,920
Other comprehensive income / (expense):
Items that will or may be reclassified to profit and loss:
Exchange differences on translation of foreign operations (1,251) 121
Cash flow hedges:
Gains/(losses) recognised directly in equity - (84)
Transferred to profit and loss for the year - 104
Tax relating to items that will or may be reclassified to profit and loss 103 (54)
--------------------------------------------------------------------------- --------
(1,148) 87
Total other comprehensive income / (expense) (1,148) 87
Total comprehensive income for the year attributable to 2,898 2,007
equity holders of the parent
--------------------------------------------------------------------------- -------- --------
GROUP STATEMENT OF FINANCIAL POSITION
At 30 April 2021
2021 2020
GBP'000 GBP'000
Non-current assets:
Property, plant and equipment 7,029 8,524
Right of use asset 28,506 26,057
Deferred tax asset 35 118
35,570 34,699
Current assets:
Inventories and work in progress 16,025 15,518
Trade and other receivables 8,631 6,499
Cash and cash equivalents 19,344 11,538
Current corporation tax 513 332
44,513 33,887
--------------------------------------------- -------- --------
Current liabilities:
Trade and other payables 18,343 11,007
Lease liabilities 3,992 4,612
Other loans - 977
22,335 16,596
-------- --------
Net current assets 22,178 17,291
-------- --------
Total assets less current liabilities 57,748 51,990
--------------------------------------------- -------- --------
Non-current liabilities:
Lease liabilities 26,323 23,780
Deferred tax liability 317 -
Net assets 31,108 28,210
--------------------------------------------- -------- --------
Capital and reserves attributable to equity
holders of the
Company:
Called up share capital 902 902
Share premium account 11,148 11,148
Capital redemption reserve 1,972 1,972
ESOP share reserve (113) (113)
Foreign exchange reserve 1,190 2,338
Cash flow hedge reserve 0 0
Retained earnings 16,009 11,963
Total equity 31,108 28,210
--------------------------------------------- -------- --------
GROUP STATEMENT OF CASH FLOWS
For the year ended 30 April 2021
2021 2020
GBP'000 GBP'000
Operating activities
Profit before taxation 5,422 2,176
Finance income - (20)
Finance expense 1,067 1,231
Profit on disposal of property, plant and
equipment (30) (28)
Non-cash profit arising from loan waiver (922) -
Depreciation 2,912 3,071
Rent concessions (77) -
Impairment of right of use asset 312 -
Depreciation on right of use assets 4,329 4,193
-------- --------
Cash flows from operations before changes
in working capital 13,013 10,623
---------------------------------------------- -------- --------
Increase in inventories and work in progress (678) (497)
(Increase) / decrease in trade and other
receivables (2,366) 4,914
Increase / (decrease) in trade and other
payables 7,378 (4,461)
Cash generated from operations 17,347 10,579
---------------------------------------------- -------- --------
Taxation paid
UK corporation tax paid (224) (602)
Overseas tax paid (877) (748)
(1,101) (1,350)
-------- --------
Net cash inflow from operating activities 16,246 9,229
---------------------------------------------- -------- --------
Investing activities
Payments to acquire property, plant and
equipment (1,888) (3,183)
Receipts from sales of property, plant and
equipment 34 39
Interest received - 20
Net cash outflow from investing (1,854) (3,124)
---------------------------------------------- -------- --------
Financing activities
Proceeds from loans and borrowings - 968
Principal paid on lease liabilities (4,853) (3,646)
Interest paid on lease liabilities (1,061) (1,231)
Interest paid (6) -
Equity dividends paid - (242)
-------- --------
Net cash outflow from financing (5,920) (4,151)
---------------------------------------------- -------- --------
Net increase in cash and cash equivalents 8,472 1,954
Cash and cash equivalents at beginning of
year 11,538 9,458
Exchange (losses)/gains on cash and cash
equivalents (666) 126
---------------------------------------------- --------
Cash and cash equivalents at end of year 19,344 11,538
---------------------------------------------- -------- --------
GROUP STATEMENT OF CHANGES IN EQUITY
For the year ended 30 April
2021
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 2020 902 11,148 1,972 (113) 2,338 0 11,963 28,210
Profit for the year - - - - - - 4,046 4,046
Foreign exchange - - - - (1,251) - - (1,251)
Tax on other
comprehensive
income - - - - 103 - - 103
Total comprehensive
income for the year - - - - (1,148) - 4,046 2,898
At 30 April 2021 902 11,148 1,972 (113) 1,190 0 16,009 31,108
At 1 May 2019 902 11,148 1,972 (113) 2,267 (16) 10,279 26,439
Profit for the year - - - - - - 1,920 1,920
Foreign exchange - - - - 121 - - 121
Cash flow hedges:
Losses - - - - - (84) - (84)
Transfers - - - - - 104 - 104
Tax on other
comprehensive
income - - - - (50) (4) - (54)
Total comprehensive
income for the year - - - - 71 16 1,920 2,007
Share buybacks - - - - - - 6 6
Dividends paid - - - - - - (242) (242)
At 30 April 2020 902 11,148 1,972 (113) 2,338 0 11,963 28,210
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 GBP4,046,000 (2019
- GBP1,920,000) and on 8,962,440 (2020 - 8,962.440) 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 2021.
2. Cash and cash equivalents
For the purposes of the consolidated statement of cash flows,
cash and cash equivalents comprise the following: 2021 2020
GBP'000 GBP'000
-------- --------
Cash at bank and in hand 19,344 11,538
-------- --------
The fair value of cash and cash equivalents are considered to
be their book value.
3. Trade and other receivables
2021 2020
GBP'000 GBP'000
-------- --------
Trade receivables 5,216 4,892
Less: provision for impairment of trade receivables (348) (454)
Other receivables 2,558 701
Prepayments and accrued income 1,205 1,360
8,631 6,499
-------- --------
4. Trade and other payables
2021 2020
GBP'000 GBP'000
-------- --------
Trade payables 4,718 4,411
Accruals 5,890 2,759
Payments received on account 6,004 2,105
Other taxes and social security
costs 559 515
Other payables 1,172 1,217
18,343 11,007
-------- --------
5. 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 2021 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
2020 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.
Copies of the Annual Report and full Financial Statements will
be posted to shareholders during the week commencing 16 August
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.
6. Annual General Meeting
The Annual General Meeting of Colefax Group Plc will be held
at 19-23 Grosvenor Hill London W1K 3QD on 23 September 2021 at
11.00am.
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