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RNS Number : 4734Y Colefax Group PLC 31 July 2024
AIM: CFX
COLEFAX GROUP PLC
("Colefax" or the "Group")
Preliminary Results for the year ended 30 April 2024
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 2% to £107.16m (2023 - £104.82m) and by 4.8%
on a constant currency basis
· Pre-tax profit decreased by 10% to £7.73m (2023 - £8.54m) -
mainly due to higher Fabric Division operating costs and a weaker US Dollar
exchange rate
· Earnings per share decreased by 1.6% to 88.3p (2023 - 89.7p)
· Share buyback returned £7.2m of surplus capital to shareholders
in September 2023
· Cash at 30 April 2024 of £17.8m (2023 - £19.8m)
· Fabric Division sales decreased by 2.1% to £90.54m (2023 -
£92.51m) but increased by 0.6% on a constant currency basis
- US sales down by 3%, UK sales up by 3% and Europe sales up by 8% (on
a constant currency basis)
· Decorating Division delivered a strong performance with sales up
by 42% to £13.51m (2023 - £9.52m) and pre-tax profit of £847,000 (2023 -
£96,000 loss)
· Board is proposing a final dividend of 2.9p (2023 2.8p) making a
total for the year of 5.6p (2023 - 5.4p)
David Green, Chief Executive of Colefax Group plc, said:
"The Group has delivered a good performance in relatively challenging market
conditions and with a weaker US Dollar exchange rate. Over the last year
higher interest rates have reduced housing market activity and we are
expecting difficult market conditions in the year ahead and this is reflected
in our existing market forecast. The Group is well placed to benefit from
falling interest rates as this should boost housing market activity but it
will take time for this benefit to feed through to home spending."
Enquiries:
Colefax Group plc David Green, Chief Executive Tel: 020 7318 6021
Rob Barker, Finance Director
KTZ Communications Katie Tzouliadis, Robert Morton Tel: 020 3178 6378
Peel Hunt LLP Dan Webster, Andrew Clark Tel: 020 7418 8900
(Nominated Advisor and Broker)
COLEFAX GROUP PLC
CHAIRMAN'S STATEMENT
Financial Results
Group sales increased by 2% to £107.16 million (2023 - £104.82 million) and
by 4.8% on a constant currency basis. Pre-tax profits decreased by 10% to
£7.73 million (2023 - £8.54 million). Earnings per share decreased by 1.6%
to 88.3p (2023 - 89.7p) reflecting the benefit of share buybacks during the
year. The Group ended the year with net cash of £17.8 million (2023 - £19.8
million).
Sales in the Group's core Fabric Division increased by 0.6% on a constant
currency basis reflecting relatively challenging trading conditions in the
Group's major markets. The sales increase was not sufficient to offset the
impact of higher operating costs during the year and as a result Fabric
Division profit declined by 23% to £6.47 million (2023 - £8.40 million).
This decline was partly offset by a strong performance by the Decorating
Division which made a profit of £848,000 compared to a loss of £96,000 last
year.
In September 2023 the Group returned £7.2 million of surplus cash to
shareholders by way of a share buyback in the form of a tender offer. The
Group purchased and cancelled 1,013,254 shares representing 14.0% of the
issued ordinary share capital at a price of £7.00 per share.
The Board is proposing to pay a final dividend of 2.9p (2023 - 2.8p) making a
total for the year of 5.6p (2023 - 5.4p). This will be paid on 11 October 2024
to shareholders on the register at the close of business on 13 September 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 84% of Group turnover, decreased
by 2.1% to £90.54 million (2023 - £92.51 million) but increased by 0.6% on a
constant currency basis. Pre-tax profit decreased by 23% to £6.47 million
(2023 - £8.40 million) due to higher operating costs and a weaker US Dollar
which averaged $1.26 compared to $1.20 for the prior year. The US Dollar
exchange rate has a significant impact on profitability.
The Fabric Division's performance has been impacted by high interest rates and
a slowdown in high end housing transactions. The fact that constant currency
sales increased by 0.6% in these market conditions is considered a good
performance.
Sales in the US, which represent 60% of the Fabric Division's turnover,
decreased by 7% and by 3% on a constant currency basis. US sales have held up
well and are only 3.8% below the record sales achieved at the height of the
Covid related boom in 2021-22. During the year we continued to expand our
showroom network in North America by opening new showrooms in Dallas and
Toronto. Both showrooms opened in November 2023 and we believe there are good
growth opportunities in these territories.
Sales in the UK, which represent 17% of the Fabric Division's turnover,
increased by 3% against a record prior year comparative. This performance was
above expectations at the start of the year and we believe it partly reflects
a backlog of work arising from the high level of housing transactions during
the Covid pandemic. Sales held up well throughout the year although first half
sales were up by 4% and second half sales up by 2% pointing to a slowdown in
activity.
Sales in Continental Europe, which represent 20% of the Fabric Division's
turnover, increased by 7% and by 8% on a constant currency basis making Europe
our best performing market during the year. The increase in sales was mainly
due to an above average level of contract sales to luxury hotels which have
experienced strong demand since the end of the pandemic. Our largest market in
Europe is France followed by Germany and Italy and together these three
countries account for just over 50% of European sales. Whilst the sales growth
in Europe is encouraging, profitability continued to be adversely affected by
the high level of import duty payable post Brexit. This amounted to £1.07
million during the year.
Sales in the Rest of the World, which represent just 3% of the Fabric
Division's turnover, increased by 25% during the year. The increase was mainly
due to a strong performance by the Middle East which is the largest region
followed by Australia, China and Japan. For cost and efficiency reasons we
mainly sell via distributors in the Rest of the World and as a result we
expect the Rest of the World to remain a small proportion of overall Fabric
Division sales.
• Furniture - Kingcome
Sofas
Sales of Kingcome furniture, which represent 3% of Product Division sales,
increased by 12% to £3.11 million (2023 - £2.78 million). Pre-tax profit
increased by 75% to a record £419,000 (2023 - £240,000) demonstrating the
high level of operational gearing in the business. Factory labour costs are
relatively fixed meaning that even small fluctuations in sales can have a
major impact on profitability. The performance during the year was exceptional
and primarily due to a significant reduction in the outstanding order book
between the start and end of the year. The actual order intake during the year
was down by 14% reflecting challenging market conditions for furniture.
Interior Decorating Division
Decorating sales, which represent 13% of Group turnover, increased by 42% to
£13.51 million (2023 - £9.52 million) resulting in a pre-tax profit of
£847,000 (2023 - £96,000 loss). This was a strong performance boosted by an
increase in overseas projects which reduced to almost zero during the Covid
pandemic. Decorating Division profitability partly reflects the timing of
project completions because profit on individual projects is recognised on
invoicing and this can sometimes cause material fluctuations in Group profits.
The Decorating Division has started the new financial year with a healthy
level of deposits although they are down by 18% compared to a strong prior
year comparative.
Prospects
The Group has delivered a good performance in relatively challenging market
conditions and with a weaker US Dollar exchange rate. Over the last year
higher interest rates have reduced housing market activity and we are
expecting difficult market conditions in the year ahead and this is reflected
in our existing market forecast. The Group is well placed to benefit from
falling interest rates as this should boost housing market activity but it
will take time for this benefit to feed through to home spending. The Group
has a strong balance sheet with cash of £17.8 million and we will continue to
invest with confidence in our brand portfolio and distribution network.
The Group's performance over the last year is due to the loyalty, talent and
commitment of all our staff and I would like to thank them for their hard work
and support.
David Green
Chairman
30 July 2024
GROUP INCOME STATEMENT
For the year ended 30 April 2024
2024 2023
£'000 £'000
Revenue 107,162 104,818
Cost of sales (47,134) (45,085)
Gross profit 60,028 59,733
Operating expenses (51,552) (50,214)
Profit from operations 8,476 9,519
Finance income 173 26
Finance expense (917) (1,001)
Profit before taxation 7,732 8,544
Tax expense (1,938) (1,857)
Profit for the year attributable to equity holders of the parent 5,794 6,687
Basic and diluted earnings per share 88.3p 89.7p
GROUP STATEMENT OF COMPREHENSIVE INCOME
For the year ended 30 April 2024
2024 2023
£'000 £'000
Profit for the year 5,794 6,687
Other comprehensive (expense):
Items that will or may be reclassified to profit and loss:
Exchange differences on translation of foreign operations (429) (93)
Total other comprehensive (expense) (429) (93)
Total comprehensive income for the year attributable to 5,365 6,594
equity holders of the parent
GROUP STATEMENT OF FINANCIAL POSITION
At 30 April 2024
Notes 2024 2023
£'000 £'000
Non-current assets:
Property, plant and equipment 8,557 8,231
Right of use asset 20,612 23,464
Deferred tax asset 24 23
29,193 31,718
Current assets:
Inventories and work in progress 2 18,241 19,487
Trade and other receivables 3 8,774 9,153
Cash and cash equivalents 4 17,763 19,746
Current corporation tax - 144
44,778 48,530
Current liabilities:
Trade and other payables 18,623 20,003
5
Lease liabilities 4,038 3,085
Current corporation tax 31 -
22,692 23,088
Net current assets 22,086 25,442
Total assets less current liabilities 51,279 57,160
Non-current liabilities:
Lease liabilities 19,380 22,977
Deferred tax liability 154 223
Net assets 31,745 33,960
Capital and reserves attributable to equity holders of the
Company:
Called up share capital 623 724
Share premium account 11,148 11,148
Capital redemption reserve 2,251 2,150
ESOP share reserve (113) (113)
Foreign exchange reserve 1,190 1,619
Retained earnings 16,646 18,432
Total equity 31,745 33,960
GROUP STATEMENT OF CASH FLOWS
For the year ended 30 April 2024
2024 2023
£'000 £'000
Operating activities
Profit before taxation 7,732 8,544
Finance income (173) (26)
Finance expense 917 1,001
Loss/(Profit) on disposal of property, plant and equipment 38 47
Depreciation on right of use assets 4,350 4,952
Depreciation 2,625 2,748
Cash flows from operations before changes in working capital 15,489 17,266
Decrease / (Increase) in inventories and work in progress 1,244 (2,462)
Decrease / (Increase) in trade and other receivables 322 (2,099)
(Decrease)/ Increase in trade and other payables (1,837) 2,239
Cash generated from operations 15,218 14,944
Taxation paid
UK corporation tax paid (1,021) (699)
Overseas tax paid (730) (1,103)
(1,751) (1,802)
Net cash inflow from operating activities 13,467 13,142
Investing activities
Payments to acquire property, plant and equipment (2,991) (3,580)
Interest received 173 -
Net cash outflow from investing (2,818) (3,580)
Financing activities
Purchase of own shares (7,227) (5,382)
Principal paid on lease liabilities (4,151) (4,846)
Interest paid on lease liabilities (916) (999)
Interest paid (1) -
Equity dividends paid (353) (399)
Net cash outflow from financing (12,648) (11,626)
Net (decrease)/increase in cash and cash equivalents (1,999) (2,064)
Cash and cash equivalents at beginning of year 19,746 21,785
Exchange gains/(losses) on cash and cash equivalents 16 25
Cash and cash equivalents at end of year 17,763 19,746
GROUP STATEMENT OF CHANGES IN EQUITY
For the year ended 30 April 2024
Share capital Share premium account Capital redemption reserve ESOP share reserve Foreign exchange reserve Retained earnings Total equity
£'000 £'000 £'000 £'000 £'000 £'000 £'000
At 30 April 2023 724 11,148 2,150 (113) 1,619 18,432 33,960
Profit for the year - - - - - 5,794 5,794
Foreign exchange - - - - (429) - (429)
- - - - (429) 5,794 5,365
Total comprehensive income for the year
Share buybacks (101) - 101 - - (7,227) (7,227)
Dividends paid - - - - - (353) (353)
At 30 April 2024 623 11,148 2,251 (113) 1,190 16,646 31,745
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)
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
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 £5,794,000 (2023 - £6,687,000) and on
6,564,031 (2023 - 7,457,535) 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 2024.
2. Inventories and work in progress
2024 2023
£'000 £'000
Finished goods for resale 15,487 16,508
Work in progress 2,754 2,979
18,241 19,487
3. Trade and other receivables
2024 2023
£'000 £'000
Trade receivables 4,857 6.129
Less: provision for impairment of trade receivables (592) (516)
Other receivables 2,802 1,403
Prepayments and accrued income 1,707 2,137
8,774 9,153
4. Cash and cash equivalents
2024 2023
£'000 £'000
Cash at bank and in hand 17,763 19,746
The fair value of cash and cash equivalents are
considered to be their book value.
5. Trade and other payables
2024 2023
£'000 £'000
Trade payables 4,648 5,525
Accruals 8,146 7,167
Payments received on account 4,031 5,272
Other taxes and social security costs 643 609
Other payables 1,155 1,430
18,623 20,003
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 2024 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 2023 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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