REG - Colefax Group PLC - Interim Results
27/01/2022 07:00
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RNS Number : 7675Z Colefax Group PLC 27 January 2022
AIM: CFX
COLEFAX GROUP PLC
("Colefax" or the "Group")
Half Year Results
for the six months ended 31 October 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.
Highlights
· Group sales up 24.8% to £46.12 million (2020: £37.0 million)
and by 30.9% on a constant currency basis reflecting favourable market
conditions in the US and the UK
· Group profit before tax up 33% to £4.49 million (2020: £3.37
million)
· Earnings per share increased by 40% to 39.6p (2020: 28.2p)
· Tender Offer and share buyback returned £6.7 million of surplus
capital to shareholders in September 2021
· Fabric Division sales up 23% to £41.25 million (2020: £33.60
million) and by 29% on a constant currency basis
o US up by 33%, UK up by 39%, Europe up by 11%
· Decorating Division sales of £3.57 million (2020: £2.1 million)
still affected by project delays and travel restrictions but significant
billing expected in second half of year.
o loss of £378,000 (2020: loss of £687,000)
· Cash at half year end of £17.5 million (30 April 2021: £19.3
million) with cash generation of £4.9 million excluding the Tender Offer
· Interim dividend of 2.5p (2020: nil) and return to progressive
dividend policy
David Green, Chairman, said:
"Our performance over the last six months reflects very favourable trading
conditions in the US and the UK which together account for 80% of Fabric
Division sales. These conditions have continued into the second half of the
year and as a result we remain optimistic about prospects although we expect
the rate of growth to slow as the economy gradually returns to normal. Our
Decorating Division is expected to deliver an exceptional performance this
year due to a major project completing in the second half of the year.
"We have made good progress over the last six months and our strong balance
sheet means we can invest with confidence in our portfolio of luxury brands
and our worldwide distribution network."
Enquiries:
Colefax Group plc David Green, Chief Executive Tel: 020 7318 6021
Rob Barker, Finance Director
KTZ Communications Katie Tzouliadis, Dan Mahoney Tel: 020 3178 6378
Peel Hunt LLP Adrian Trimmings, Andrew Clark Tel: 020 7418 8900
This announcement contains inside information for the purposes of Article 7 of
the Market Abuse Regulation (EU) 596/2014 as it forms part of UK domestic law
by virtue of the European Union (Withdrawal) Act 2018 ("MAR"), and is
disclosed in accordance with the Company's obligations under Article 17 of
MAR.
CHAIRMAN'S STATEMENT
Financial Results
Group sales for the six months to 31 October 2021 increased by 24.8% to
£46.12 million (2020: £37.0 million) and increased by 30.9% on a constant
currency basis. Pre-tax profits increased by 33% to £4.49 million (2020:
£3.37 million). Earnings per share increased by 40% to 39.6p (2020: 28.2p).
The Group ended the half year with cash of £17.5 million (2021: £19.9
million).
In September 2021 the Group returned £6.7 million of surplus capital to
shareholders by way of a Tender Offer and share buyback. The Group purchased
and cancelled 1,084,905 shares, representing 12% of the issued ordinary share
capital at a price of 615p per share.
Trading conditions during the first half of the year remained favourable in
most of our major markets and continued the positive trend seen in the second
half of last year. We attribute these favourable conditions to a strong
housing market and significant pent up demand for home related products. The
increase in constant currency sales of 30.9% is partly explained by the
adverse impact of the initial lockdowns on the prior year when first half
sales were down by 14%. Our strongest markets have been the US and the UK both
of which started to recover from the initial impact of the pandemic in
September 2020 and have been relatively unaffected by subsequent lockdowns.
Given the recovery in sales and reduced uncertainty about future trading
conditions the Board has decided to restart dividend payments and propose an
interim dividend of 2.5p. This will be paid on 14 April 2022 to shareholders
on the register at 18 March 2022. In line with the Group's policy prior to the
start of the pandemic the Board intends to follow a progressive dividend
policy.
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 the Group's sales,
increased by 23% to £41.25 million (2020: £33.60 million) and by 29% on a
constant currency basis. Profits increased by 25% to £4.88 million (2020:
£3.89 million). Prior year operating expenses were significantly reduced
during the initial phase of the pandemic and the current half year reflects a
return to more normal levels of expenditure. In addition the current year
results include approximately £0.5 million of additional duty and transport
costs resulting from Brexit.
Sales in the US, which represent 62% of the Fabric Division's turnover,
increased by 24% in reported terms and by 33% on a constant currency basis.
This compares to a constant currency decline of 5.9% in the prior half year.
The US has been our strongest market throughout the pandemic. Compared to the
UK and Europe the US experienced a much lower decline in sales at the start of
the pandemic in 2020 and a faster and stronger recovery which has continued
throughout the current year. Towards the end of our last financial year we
consolidated the majority of our US warehouse operations into our much larger
UK facilities and moved from Manhattan to smaller premises in Brooklyn. This
has simplified the US business, reduced costs and improved efficiency and this
year we are starting to see the benefits of this reorganisation.
Sales in the UK, which represent 18% of the Fabric Division's turnover,
increased by 39% during the period. The increase partly reflects the
significant impact of the pandemic on prior year sales. The UK market
recovered quickly after the first lockdown in 2020 and demand has remained
strong throughout the second half of last year and the first half of this
year. The main driver has been high levels of housing market transactions
which we consider to be the key external driver of our business. Historically
we tend to lag changes in housing market activity. Unlike trading in Europe we
have not suffered any additional costs in the UK as a result of Brexit and
operationally the main challenges have been due to the impact of the pandemic
on supplier lead times.
Sales in Continental Europe, which represent 18% of the Fabric Division's
turnover, increased by 7% on a reported basis and by 11% on a constant
currency basis. Overall the recovery in Europe has been much weaker than in
the US and the UK although we do not believe this is a direct consequence of
Brexit. Despite unwelcome extra costs and complexity we have largely
maintained our service levels in Europe and attribute the slower recovery to
tighter lockdowns and a weaker housing market. Compared to last year Brexit
added approximately £0.5 million to our first half operating costs primarily
in the form of EU import duty on the sale of goods of non-UK origin. Our
largest markets in Europe are France, Germany and Italy and together these
three countries account for 53% of EU sales.
Sales in the Rest of the World, which represent just 2% of the Fabric
Division's turnover, increased by 14% on a constant currency basis. Our major
markets comprise the Middle East, China and Australia and whilst trading in
these markets is starting to recover from the pandemic we expect them to
remain a small part of overall sales.
· Furniture - Kingcome Sofas
Sales for the six months to October 2021 increased by 4% to £1.30 million
(2020: £1.25 million) and the Company made an operating loss of £11,000
compared to an operating profit of £166,000 in 2020. The majority of Kingcome
sales are made in the UK and trading during the period remained strong
reflecting the favourable UK market conditions that we have seen in the Fabric
Division. Last year's profit performance was exceptional mainly due to very
low factory costs during the first UK lockdown and the timing of sales
invoicing where the pandemic delayed deliveries due in the prior period. In
addition the current year performance has been affected by significant
increases in raw materials and energy costs. At the start of the current
financial year the Kingcome showroom had only just reopened after the
post-Christmas lockdown and the order book was down by 25%. This situation
quickly recovered and at the half year end the order book was up by 9%.
Interior Decorating Division
Decorating sales, which account for just under 8% of Group turnover, increased
by 72% in the period to £3.57 million (2020: £2.08 million) resulting in a
reduced first half loss of £378,000 compared to a loss of £687,000 for the
same period last year. The profit on decorating projects is recognised on
invoicing and the losses incurred mainly reflect delays in the completion of
projects caused by the pandemic. Overseas projects have been particularly
affected by travel restrictions and typically these account for around 40% of
total sales. Although billings have been relatively low customer deposits and
related work in progress both increased significantly during the period and
one particularly large UK project is expected to be invoiced in the second
half of the year.
Prospects
Our performance over the last six months reflects very favourable trading
conditions in the US and the UK which together account for 80% of Fabric
Division sales. These conditions have continued into the second half of the
year and as a result we remain optimistic about prospects although we expect
the rate of growth to slow as the economy gradually returns to normal. Our
Decorating Division is expected to deliver an exceptional performance this
year due to a major project completing in the second half of the year.
Housing market conditions have been very strong and are the main external
driver of Group sales. Over the last six months we have started to experience
significant cost inflation in many areas of the business and this will offset
some of the sales progress we have made. As far as possible we are trying to
mitigate the impact of these above average cost increases although in Europe
Brexit has added some unavoidable customs duty and transport costs.
We have made good progress over the last six months and our strong balance
sheet means we can invest with confidence in our portfolio of luxury brands
and our worldwide distribution network. The last six months have been
extremely operationally challenging for all our staff, customers and suppliers
and I would like to thank them for their hard work, loyalty and support.
David Green
Chairman
COLEFAX GROUP PLC
INTERIM GROUP INCOME STATEMENT
Unaudited Unaudited Audited
Six months to Six months to Year
31 Oct 2021 31 Oct 2020 to
30 April 2021
£'000 £'000 £'000
Revenue 46,122 36,968 77,908
Cost of sales (21,302) (15,777) (33,971)
Gross profit 24,820 21,191 43,937
Operating expenses (19,784) (17,816) (38,910)
Other income - 539 1,462
Profit from operations 5,036 3,914 6,489
Finance expense (545) (544) (1,067)
(545) (544) (1,067)
Profit before taxation 4,491 3,370 5,422
Tax expense (1,056) (842) (1,376)
Profit for the period attributable to equity holders of the parent 3,435 2,528 4,046
Basic earnings per share 39.6p 28.2p 45.1p
Diluted earnings per share 39.6p 28.2p 45.1p
INTERIM GROUP STATEMENT OF COMPREHENSIVE INCOME
Unaudited Unaudited Audited
Six months to Six months to Year
31 Oct 2021 31 Oct 2020 to
30 April 2021
£'000 £'000 £'000
Profit for the period 3,435 2,528 4,046
Other comprehensive income / (expense):
Items that will or may be reclassified to profit and loss:
Exchange differences on translation of foreign operations (167) (535) (1,251)
Tax relating to items that will or may be reclassified to profit and loss (12) 38 103
Total other comprehensive income / (expense) (179) (497) (1,148)
Total comprehensive income for the period attributable to equity holders of 3,256 2,031 2,898
the parent
INTERIM GROUP STATEMENT OF FINANCIAL POSITION
Unaudited Unaudited Audited
As at 31 Oct 2021 As at 31 Oct 2020 As at 30 April 2021
Notes £'000 £'000 £'000
Non-current assets:
Right of use assets 26,276 24,170 28,506
Property, plant and equipment 6,762 7,334 7,029
Deferred tax asset 34 165 35
33,072 31,669 35,570
Current assets:
Inventories and work in progress 17,766 12,527 16,025
Trade and other receivables 4 8,123 7,560 8,631
Current corporation tax 427 - 513
Cash and cash equivalents 17,539 19,940 19,344
43,855 40,027 44,513
Current liabilities:
Trade and other payables 5 20,568 14,309 18,343
Lease liabilities 4,760 3,896 3,992
Other loans - 947 -
Current corporation tax - 459 -
25,328 19,611 22,335
Net current assets 18,527 20,416 22,178
Total assets less current liabilities 51,599 52,085 57,748
Non-current liabilities:
Lease liabilities 23,681 21,834 26,323
Deferred tax liability 333 11 317
Net assets 27,585 30,240 31,108
Capital and reserves attributable to equity holders of the Company:
Called up share capital 794 902 902
Share premium account 11,148 11,148 11,148
Capital redemption reserve 2,081 1,972 1,972
ESOP share reserve (113) (114) (113)
Foreign exchange reserve 1,010 1,841 1,190
Retained earnings 12,665 14,491 16,009
Total equity 27,585 30,240 31,108
INTERIM GROUP STATEMENT OF CASH FLOWS
Unaudited Unaudited Audited
Six months to 31 Oct 2021 Six months to 31 Oct 2020 Year
to 30 April
2021
£'000 £'000 £'000
Operating activities
Profit before taxation 4,491 3,370 5,422
Finance expense 545 544 1,067
(Profit) / loss on disposal of property, plant and equipment (12) (13) (30)
Non-cash movement arising from loan waiver - - (922)
Depreciation on right of use assets 2,293 2,153 2,912
Rent concessions - - (77)
Impairment of right of use asset - - 312
Depreciation 1,121 1,557 4,329
Cash flows from operations before changes in working capital 8,438 7,611 13,013
Decrease / (increase) in inventories and work in progress (1,654) 2,927 (678)
(Increase) / decrease in trade and other receivables 475 (1,105) (2,366)
Increase / (decrease) in trade and other payables 1,790 2,998 7,378
Cash generated from operations 9,049 12,431 17,347
Taxation paid
UK corporation tax paid (902) 24 (224)
Overseas tax paid (60) (83) (877)
(962) (59) (1,101)
Net cash inflow from operating activities 8,087 12,372 16,246
Investing activities
Payments to acquire property, plant and equipment (812) (514) (1,888)
Receipts from sales of property, plant and equipment 13 13 34
Net cash outflow from investing (799) (501) (1,854)
Financing activities
Purchase of own shares (6,779) - -
Principal paid on lease liabilities (1,873) (2,749) (4,853)
Interest paid on lease liabilities (545) (538) (1,061)
Other interest paid (1) (6) (6)
Net cash outflow from financing (9,198) (3,293) (5,920)
Net increase in cash and cash equivalents (1,910) 8,578 8,472
Cash and cash equivalents at beginning of period 19,344 11,538 11,538
Exchange (losses) / gains on cash and cash equivalents 105 (176) (666)
Cash and cash equivalents at end of period 17,539 19,940 19,344
COLEFAX GROUP PLC
NOTES
1. The Group prepares its annual financial statements in accordance with
International Accounting Standards (IFRS) in conformity with the requirements
of the Companies Act 2006. 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 2022.
2. Basic earnings per share have been calculated on the basis of earnings of
£3,435,000 (2020: £2,528,000) and on 8,685,000 (2020: 8,962,000) ordinary
shares being the weighted average number of ordinary shares in issue during
the period.
3. Diluted earnings per share have been calculated on the basis of earnings of
£3,435,000 (2020: £2,528,000) and on 8,685,000 (2020: 8,962,000) ordinary
shares being the weighted average number of ordinary shares in the period
adjusted to assume conversion of all dilutive potential ordinary shares of nil
(2020: nil).
4 Trade and other receivables As at 31 Oct 2021 As at 31 Oct 2020 As at 30 Apr 2021
£'000 £'000 £'000
Trade debtors 5,198 5,144 4,868
Other debtors 1,559 994 2,558
Prepayments and accrued income 1,366 1,422 1,205
8,123 7,560 8,631
5 Trade and other payables As at 31 Oct 2021 As at 31 Oct 2020 As at 30 Apr 2021
£'000 £'000 £'000
Trade creditors 5,773 4,102 4,718
Payments received on account 8,604 4,263 6,004
Other taxes and social security costs 322 720 559
Other creditors 1,266 1,207 1,172
Accruals 4,603 4,017 5,890
20,568 14,309 18,343
6. The financial information for the year ended 30 April 2021 does not constitute
the full statutory accounts for that period. The Annual Report and Financial
Statements for the year ended 30 April 2021 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 2021 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.
7. 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.
5
Trade and other payables As at 31 Oct 2021 As at 31 Oct 2020 As at 30 Apr 2021
£'000 £'000 £'000
Trade creditors 5,773 4,102 4,718
Payments received on account 8,604 4,263 6,004
Other taxes and social security costs 322 720 559
Other creditors 1,266 1,207 1,172
Accruals 4,603 4,017 5,890
20,568 14,309 18,343
6.
The financial information for the year ended 30 April 2021 does not constitute
the full statutory accounts for that period. The Annual Report and Financial
Statements for the year ended 30 April 2021 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 2021 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.
7.
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.
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