REG - Colefax Group PLC - Interim Results
30/01/2024 07:15
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RNS Number : 2873B Colefax Group PLC 30 January 2024
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 Six months to Year
31 Oct 2023 31 Oct 2022 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 Six months to Year
31 Oct 2023 31 Oct 2022 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 3,102 4,718 6,594
the parent
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
(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
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.
Inventories and work in progress As at 31 Oct 2023 As at 31 Oct 2022 As at 30 Apr 2023
5. £'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.
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.
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