REG - Colefax Group PLC - Half-year Results
22/01/2025 07:00
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RNS Number : 1901U Colefax Group PLC 22 January 2025
AIM: CFX
COLEFAX GROUP PLC
("Colefax" or the "Group")
Half Year Results
for the six months ended 31 October 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.
Highlights
● Group sales up 1.8% to £52.79 million (2023: £51.84 million) and up 4.1% on
a constant currency basis
● Group profit before tax down 0.5% to £4.36 million (2023: £4.38 million)
● Earnings per share up 12.5% to 53.2p (2023: 47.3p)
● Share Buyback returned £2.4 million of surplus capital to shareholders in
October 2024
● Fabric Division sales up 2.0% to £46.70 million (2023: £45.80 million) and
up 4.5% on a constant currency basis
- US up by 7%, UK down by 8%, Europe up by 12%
● Decorating Division sales of £4.65 million (2023: £4.55 million) with
project completions weighted to the second half of the financial year
- loss of £63,000 (2023: loss of £221,000)
● Cash generation of £3.6 million excluding share buybacks and dividend
payments (2023: £4.2 million)
● Interim dividend of 2.8p (2023: 2.7p) 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 due to a
strong Fabric Division performance in the US. Market conditions in the UK and
Europe are currently challenging and we expect these conditions to continue
through the second half of the year. Following the US election in November the
US Dollar exchange rate has strengthened significantly and if sustained this
will be beneficial for Fabric Division profits going forward. Although trading
prospects in the US look favourable there is currently significant uncertainty
around the possibility of higher US import tariffs and how they might impact
our US business
"The Group has a strong balance sheet with cash of £18.6 million. We will
continue to focus on investing in our US distribution network and our
portfolio of Fabric Division brands and we are well placed to benefit from any
improvement in market conditions"
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 Clarke Tel 020 7418 8900
CHAIRMAN'S STATEMENT
Financial Results
Group sales for the six months to 31 October 2024 increased by 1.8% to £52.79
million (2023: £51.84 million) and by 4.1% on a constant currency basis.
Pre-tax profits decreased by 0.5% to £4.36 million (2023: £4.38 million).
Earnings per share increased by 12.5% to 53.2p (2023: 47.3p). The Group
ended the half year with cash of £18.60 million (30 April 2024: £17.76
million).
In October 2024 the Group returned £2.4 million of surplus capital to
shareholders by way of a share buyback. The Group purchased and cancelled
307,043 shares at a price of £7.80 per share and representing just under 5.0%
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 4.5% on a constant currency
basis compared to a 0.3% constant currency increase in the first half of the
prior year. This increase was ahead of expectations at the start of the year
and was mainly due to a strong performance in the US where sales increased by
7% on a constant currency basis. In contrast market conditions in the UK
remained challenging and were down by 8%. First half profits were adversely
impacted by a weaker US Dollar average exchange rate of $1.29 compared to
$1.25 for the prior year but this was largely offset by higher interest income
of £232,000 compared to £40,000 last year and reduced first half Decorating
Division losses of £63,000 compared to losses of £221,000 in the prior
year.
The Group's performance is linked to high end housing market activity and this
has been on an upward trend in the US resulting in a better than expected
sales performance in the first half of the year. In contrast market conditions
remain subdued in the UK and Europe. Profitability in the Fabric Division is
weighted to the first half of the year due to the timing of costs associated
with new product launches which are mainly in the second half of the year.
In line with the Group's progressive dividend policy the Board has decided to
declare a 4% increase in the interim dividend to 2.8p (2023: 2.7p). This will
be paid on 10 April 2025 to shareholders on the register at 7 March 2025.
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,
increased by 2% to £46.70 million (2023: £45.8 million) and increased by
4.5% on a constant currency basis. Profits decreased by 6% to £4.21 million
(2023: £4.48 million). The decrease in profit reflects a weaker US dollar
exchange rate and higher operating costs. In particular our UK warehouse
premises costs have increased at well above the average rate of inflation.
Following the conclusion of rent reviews and lease renewals during the period,
UK warehouse premises costs have increased by approximately £600,000 per
annum from August 2024.
Sales in the US, which represent 62% of the Fabric Division's turnover,
increased by 3% in reported terms and 7% on a constant currency basis. This
increase was ahead of expectations at the start of the year and compares to a
constant currency decrease of 2% in the first half of the prior year. Market
conditions strengthened throughout the period reflecting ongoing improvements
in high end housing market activity and the positive impact of a very strong
stock market performance. In November 2023 we opened new showrooms in Dallas
and Toronto and these have both performed well during their first full year of
operation.
Sales in the UK, which represent 16% of the Fabric Division's turnover,
decreased by 8% during the period compared to an increase of 4% in the first
half of the prior year. Market conditions in the UK were challenging and
reflect the impact of high interest rates on housing market activity and
consumer spending. We believe that sales were also impacted by uncertainty in
the run up to the General Election on 4 July 2024 and then the first post
election budget on 30 October 2024. The proposed increase in UK employers
national insurance will add approximately £270,000 to the Group's UK
employment costs from April 2025.
Sales in Continental Europe, which represent 20% of the Fabric Division's
turnover, increased by 9% on a reported basis and 12% on a constant currency
basis. This follows a 3% increase in sales in the first half of the prior
year. The strong performance in Europe was mainly due to a number of
significant one-off contract orders during the period and underlying market
conditions in Europe were challenging, especially in Germany. Interest rate
cuts during the period should help housing market activity but it will take
time for the benefits to be reflected in home spending. Our three largest
markets in Europe are France, Germany and Italy and together these account for
just under half of total European sales.
Sales in the Rest of the World, which represent just 2% of the Fabric
Division's turnover, decreased by 15% on a constant currency basis. The
decrease in sales was mainly due to a reduction in contract orders which can
vary significantly between reporting periods. Our largest market in the Rest
of the World is the Middle East but it is expected to remain a small part of
overall Fabric Division sales.
Furniture - Kingcome Sofas
Sales for the six months to October 2024 decreased by 1% to £1.48 million
(2023: £1.50 million) and the Company made an operating profit of £216,000
(2023: £126,000). The improvement in profit reflects on-going efficiency
improvements at our factory in Devon following a significant investment in
2023. Over 90% of furniture sales are to UK customers and market conditions
have remained difficult. The order book at the end of October 2024 was down by
10% compared to October 2023. The business has a relatively high fixed cost
base due to its skilled labour force. This means that profitability is highly
operationally geared and the business is well placed to benefit from any pick
up in sales.
Interior Decorating Division
Decorating sales, which account for just under 9% of Group turnover, increased
by 2% in the period to £4.65 million (2023: £4.55 million) and the business
made a reduced first half loss of £63,000 compared to a loss of £221,000 for
the same period last year. The profit on decorating projects is recognised on
completion and as with the previous two years, expected completions are
weighted to the second half of the year. Decorating work in progress at the
end of October was down by 20% compared to the prior year but still at a
healthy level. The Decorating Division includes an antiques business which
accounts for approximately 8% of sales. This activity will be significantly
scaled back in the second half of the year following a decline in
profitability in recent years.
Prospects
The Group has delivered a good performance in the first six months due to a
strong Fabric Division performance in the US. Market conditions in the UK and
Europe are currently challenging and we expect these conditions to continue
through the second half of the year. Following the US election in November the
US Dollar exchange rate has strengthened significantly and if sustained this
will be beneficial for Fabric Division profits going forward. Although trading
prospects in the US look favourable there is currently significant uncertainty
around the possibility of higher US import tariffs and how they might impact
our US business. The majority of the fabrics and wallpapers that we sell are
manufactured outside of the US. In our Decorating Division we expect an
improved performance in the second half of the year but the overall result
will be below the exceptional level of the prior year.
The Group has a strong balance sheet with cash of £18.6 million. We will
continue to focus on investing in our US distribution network and our
portfolio of Fabric Division brands and we are well placed to benefit from any
improvement in market conditions.
David Green
Chairman
22 January 2025
COLEFAX GROUP PLC
INTERIM GROUP INCOME STATEMENT
Unaudited Unaudited Audited
Six months to Six months to Year
31 Oct 2024 31 Oct 2023 to
30 April 2024
£'000 £'000 £'000
Revenue 52,789 51,842 107,162
Cost of sales (22,640) (22,450) (47,134)
Gross profit 30,149 29,392 60,028
Operating expenses (25,498) (24,557) (51,552)
Profit from operations 4,651 4,835 8,476
Finance income 232 40 173
Finance expense (521) (492) (917)
Profit before taxation 4,362 4,383 7,732
Tax expense (1,090) (1,095) (1,938)
Profit for the period attributable to equity holders of the parent 3,272 3,288 5,794
Basic earnings per share 53.2p 47.3p 88.3p
Diluted earnings per share 53.2p 47.3p 88.3p
INTERIM GROUP STATEMENT OF COMPREHENSIVE INCOME
Unaudited Unaudited Audited
Six months to Six months to Year
31 Oct 2024 31 Oct 2023 to
30 April 2024
£'000 £'000 £'000
Profit for the period 3,272 3,288 5,794
Other comprehensive (expense):
Items that will or may be reclassified to profit and loss:
Exchange differences on translation of foreign operations (213) (174) (429)
Tax relating to items that will or may be reclassified to profit and loss - (12) -
Total other comprehensive (expense): (213) (186) (429)
Total comprehensive income for the period attributable to equity holders of 3,059 3,102 5,365
the parent
COLEFAX GROUP PLC
INTERIM GROUP STATEMENT OF FINANCIAL POSITION
Unaudited Unaudited Audited
As at 31 Oct 2024 As at 31 Oct 2023 As at 30 April 2024
Notes £'000 £'000 £'000
Non-current assets:
Right of use assets 25,370 21,596 20,612
Property, plant and equipment 7,930 8,029 8,557
Deferred tax asset 24 23 24
33,324 29,648 29,193
Current assets:
Inventories and work in progress 5 18,513 19,557 18,241
Trade and other receivables 6 8,852 8,119 8,774
Cash and cash equivalents 18,595 17,055 17,763
45,960 44,731 44,778
Current liabilities:
Trade and other payables 7 18,672 20,035 18,623
Lease liabilities 3,727 2,891 4,038
Current corporation tax 133 37 31
22,532 22,963 22,692
Net current assets 23,428 21,768 22,086
Total assets less current liabilities 56,752 51,416 51,279
Non-current liabilities:
Lease liabilities 24,369 21,557 19,380
Deferred tax liability 153 226 154
Net assets 32,230 29,633 31,745
Capital and reserves attributable to equity holders of the Company:
Called up share capital 592 622 623
Share premium account 11,148 11,148 11,148
Capital redemption reserve 2,283 2,252 2,251
ESOP share reserve (113) (113) (113)
Foreign exchange reserve 977 1,433 1,190
Retained earnings 17,343 14,291 16,646
Total equity 32,230 29,633 31,745
COLEFAX GROUP PLC
INTERIM GROUP STATEMENT OF CASH FLOWS
Unaudited Unaudited Audited
Six months to 31 Oct 2024 Six months to 31 Oct 2023 Year
to 30 April
2024
£'000 £'000 £'000
Operating activities
Profit before taxation 4,362 4,383 7,732
Finance income (232) (40) (173)
Finance expense 521 492 917
Loss on disposal of property, plant and equipment 60 1 38
Depreciation on right of use assets 2,189 2,334 4,350
Depreciation 1,347 1,307 2,625
Cash flows from operations before changes in working capital 8,247 8,477 15,489
(Increase) / decrease in inventories and work in progress (305) (24) 1,244
(Increase) / decrease in trade and other receivables (156) 1,193 322
(Decrease) in trade and other payables (449) (721) (1,837)
Cash generated from operations 7,337 8,925 15,218
Taxation paid
UK corporation tax paid (261) (433) (1,021)
Overseas tax paid (107) (510) (730)
(368) (943) (1,751)
Net cash inflow from operating activities 6,969 7,982 13,467
Investing activities
Interest received 232 40 173
Payments to acquire property, plant and equipment (921) (969) (2,991)
Net cash outflow from investing (689) (929) (2,818)
Financing activities
Purchase of own shares (2,395) (7,227) (7,227)
Principal paid on lease liabilities (2,097) (2,183) (4,151)
Interest paid on lease liabilities (547) (458) (916)
Interest paid - - (1)
Equity dividends paid (179) (201) (353)
Net cash outflow from financing (5,218) (10,069) (12,648)
Net increase / (decrease) in cash and cash equivalents 1,062 (3,016) (1,999)
Cash and cash equivalents at beginning of period 17,763 19,746 19,746
Exchange gains on cash and cash equivalents (230) 325 16
Cash and cash equivalents at end of period 18,595 17,055 17,763
COLEFAX GROUP PLC
NOTES
1. Basis of Preparation
The condensed group financial statements for the 6 months ended 31 October
2024 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 2024.
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 2024 Annual Report and Financial Statements, a
copy of which is available on the Company's website: www.colefaxgroupplc.com
(http://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
2024 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 2025.
3. Basic earnings per share have been calculated on the basis of earnings of
£3,272,000 (2023: £3,288,000) and on 6,152,600 (2023: 6,957,000) 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
£3,272,000 (2023: £3,288,000) and on 6,152,600 (2023: 6,957,000) ordinary
shares being the weighted average number of ordinary shares in the period.
Inventories and work in progress As at 31 Oct 2024 As at 31 Oct 2023 As at 30 Apr 2024
5. £'000 £'000 £'000
Finished goods for resale 14,903 15,431 15,487
Work in progress 3,610 4,126 2,754
18,513 19,557 18,241
6. Trade and other receivables As at 31 Oct 2024 As at 31 Oct 2023 As at 30 Apr 2024
£'000 £'000 £'000
Trade debtors 4,445 3,238 4,265
Other debtors 2,560 2,982 2,802
Prepayments and accrued income 1,847 1,899 1,707
8,852 8,119 8,774
7. Trade and other payables As at 31 Oct 2024 As at 31 Oct 2023 As at 30 Apr 2024
£'000 £'000 £'000
Trade payables 5,359 6,288 4,648
Payments received on account 4,758 6,271 4,031
Other taxes and social security costs 548 534 643
Other payables 1,065 1,278 1,155
Accruals 6,942 5,664 8,146
18,672 20,035 18,623
8. The financial information for the year ended 30 April 2024 does not constitute
the full statutory accounts for that period. The Annual Report and Financial
Statements for the year ended 30 April 2024 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 2024 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 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 21 January
2025.
6.
Trade and other receivables As at 31 Oct 2024 As at 31 Oct 2023 As at 30 Apr 2024
£'000 £'000 £'000
Trade debtors 4,445 3,238 4,265
Other debtors 2,560 2,982 2,802
Prepayments and accrued income 1,847 1,899 1,707
8,852 8,119 8,774
7.
Trade and other payables As at 31 Oct 2024 As at 31 Oct 2023 As at 30 Apr 2024
£'000 £'000 £'000
Trade payables 5,359 6,288 4,648
Payments received on account 4,758 6,271 4,031
Other taxes and social security costs 548 534 643
Other payables 1,065 1,278 1,155
Accruals 6,942 5,664 8,146
18,672 20,035 18,623
8.
The financial information for the year ended 30 April 2024 does not constitute
the full statutory accounts for that period. The Annual Report and Financial
Statements for the year ended 30 April 2024 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 2024 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 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 21 January
2025.
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