TIDMCFX
RNS Number : 4504N
Colefax Group PLC
23 January 2023
AIM: CFX
23 January 2023
COLEFAX GROUP PLC
("Colefax" or the "Group")
Half Year Results
for the six months ended 31 October 2022
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 12% to GBP51.66 million (2021: GBP46.12
million) and up 2.5% on a constant currency basis reflecting
generally favourable market conditions in all the Group's major
markets and a favourable US dollar exchange rate
-- Group profit before tax up 16% to GBP5.2 million (2021: GBP4.49 million)
-- Earnings per share increased by 30% to 51.3p (2021: 39.6p)
helped by share buybacks in the prior year
-- Share Buyback Programme returned GBP5.4 million of surplus
capital to shareholders in September 2022
-- Fabric Division sales up 14% to GBP47.17 million (2021:
GBP41.25 million) and by 3.5% on a constant currency basis
o US up by 1%, UK up by 4%, Europe up by 11%
-- Decorating Division sales of GBP3.13 million (2021: GBP3.57
million) with project completions weighted to the second half of
the financial year
o loss of GBP596,000 (2021: loss of GBP378,000)
-- Cash generation of GBP2.9 million excluding share buybacks and dividend payments
-- Interim dividend of 2.6p (2021: 2.5p) up 4% in line with a progressive dividend policy
David Green, Chairman, said:
"Our performance over the last six months reflects generally
favourable trading conditions in all our major markets, in line
with our expectations at the start of the year. In addition we
benefitted from a very strong US Dollar exchange rate and as a
result, we now expect our full year performance to 30 April 2023 to
be ahead of previous expectations.
"Over the last six months we are aware that housing transactions
have slowed significantly in the US and the UK and we therefore
expect trading in these markets to become progressively more
challenging in the year ahead. We have experienced significant cost
inflation over the last year, mainly driven by increased energy
costs in our supply chain but there are tentative signs that the
worst might be over.
"The Group has a strong balance sheet and we will continue to
invest in our distribution network and our portfolio of brands
."
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.
Enquiries:
Colefax Group plc David Green, Chief Executive Tel 020 7318 6021
KTZ Communications Katie Tzouliadis, Dan Mahoney 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 2022 increased by
12% to GBP51.66 million (2021: GBP46.12 million) and by 2.5% on a
constant currency basis. Pre-tax profits increased by 16% to
GBP5.20 million (2021: GBP4.49 million). Earnings per share
increased by 30% to 51.3p (2021: 39.6p) with the increase partly
reflecting the benefit of share buybacks in the prior year. The
Group ended the half year with cash of GBP19.95 million (April 30
2022: GBP21.79 million).
In September 2022 the Group returned GBP5.4 million of surplus
capital to shareholders by way of a Share Buyback Programme. The
Group purchased and cancelled 700,000 shares, representing 8.8% of
the issued ordinary share capital. This will enhance earnings per
share in future periods.
Trading conditions during the first half of the year have been
generally favourable in all our major markets. This is reflected in
our interim results and is in line with our expectations when we
announced our full year results in August 2022. Although rising
interest rates have inevitably resulted in a slowdown in housing
transactions our sales tend to lag these changes by up to twelve
months and as a result we do not believe they had a significant
impact on trading in the period. During the first half of the
financial year the Group benefitted from the strength of the US
Dollar against Sterling. Over 60% of core Fabric Division sales are
in the US and invoiced in US Dollars. The average US exchange rate
for the first six months was $1.18 compared to $1.38 for the prior
year and the closing rate was $1.15 compared to $1.37 last year.
The Group's first half results include a loss of GBP596,000 (2021:
- loss of GBP378,000) by our Decorating Division. This was due to
the timing of project completions which are weighted to the second
half of the year.
In line with the Group's progressive dividend policy the Board
has decided to propose a 4% increase in the interim dividend to
2.6p (2021: 2.5p). This will be paid on 12 April 2023 to
shareholders on the register at 10 March 2023.
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 91% of the Group's
sales, increased by 14% to GBP47.17 million (2021: GBP41.25
million) and by 3.5% on a constant currency basis. Profits
increased by 16% to GBP5.65 (2021: GBP4.88 million). During the
period we continued to experience significant cost inflation from
our suppliers mainly driven by substantial increases in factory
energy costs. These cost increases are initially reflected in
inventory and do not immediately impact our gross profit
margins.
Sales in the US, which represent 64% of the Fabric Division's
turnover, increased by 18% in reported terms and by 1% on a
constant currency basis against very strong prior year
comparatives. Last year our first half sales increased by 33% on a
constant currency basis and the flattening in sales this year was
not unexpected in a period of sharply rising interest rates. US
sales remain significantly ahead of pre-pandemic levels. There have
been some significant variations in sales by territory in the US
reflecting regional variations in housing activity. Our focus in
the US is to continue to develop our showroom network to maximise
sales opportunities. In April 2023 we will be opening new showrooms
in Dallas and Toronto which we expect to have a positive impact on
our sales in those markets.
Sales in the UK, which represent 17% of the Fabric Division's
turnover, increased by 4% during the period. Sales during the
period were 29% higher than the equivalent period prior to the
pandemic and reflect a continuation of the post pandemic boom in
home decoration driven by changes in lifestyles. As with the US
market we have not yet seen a significant slowdown in sales
activity as a result of rising interest rates and attribute this to
the lag between home spending and housing market activity.
Sales in Continental Europe, which represent 17% of the Fabric
Division's turnover, increased by 11% on both a reported basis and
a constant currency basis. Despite significantly increased costs
and complexity as a result of Brexit our sales in Europe have
continued the recovery which started after the first lockdowns.
There are significant variations in sales performance between
countries. Our three largest markets in Europe are France, Germany
and Italy and together these account for just over 50% of European
sales. France has been the best performing of these three markets
mainly due an increase in contract orders and we expect this to
continue in the run up to the Olympics in 2024. In June we switched
from a distributor to a direct selling approach in Spain and so far
the results have been extremely positive with sales in this market
up by 34% on a constant currency basis.
Sales in the Rest of the World, which represent just 2% of the
Fabric Division's turnover, increased by 24% on a constant currency
basis. Our major markets comprise the Middle East, China and
Australia. Sales in the Middle East are mainly focussed on contract
orders and continue to offer good opportunities for growth. In
contrast trading in China and Australia remained challenging during
the first half of the year reflecting the long duration of pandemic
lockdowns in these markets.
-- Furniture - Kingcome Sofas
Sales for the six months to October 2022 increased by 5% to
GBP1.36 million (2021: GBP1.30 million) and the Company made an
operating profit of GBP130,000 compared to an operating loss of
GBP11,000 in 2021. Almost 90% of Kingcome sales are made in the UK
and trading conditions became progressively more challenging during
the period especially during October. Despite this the order book
at the end of October was just below record levels and up by 37%
compared to the prior year although this was partly due to longer
factory lead times caused by labour and raw material shortages.
During the period we completed a major investment in our freehold
factory in Devon which will significantly improve operational and
energy efficiency. In October we opened a new showroom in the
Chelsea Harbour Design Centre and we expect this to have a positive
impact on sales in the medium term.
Interior Decorating Division
Decorating sales, which account for just over 6% of Group
turnover, decreased by 12% in the period to GBP3.13 million (2021:
GBP3.57 million) resulting in a first half loss of GBP596,000
compared to a loss of GBP378,000 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. Most major decorating projects are
preceded by significant building work which is outside of our
control and since the pandemic many building projects have suffered
from delays caused by labour and materials shortages. During the
first half we have seen an increase in overseas projects especially
in the US and the Middle East. Overseas projects typically account
for around 40% of total sales.
Prospects
Our performance over the last six months reflects generally
favourable trading conditions in all our major markets, in line
with our expectations at the start of the year. In addition we
benefitted from a very strong US Dollar exchange rate and as a
result, we now expect our full year performance to 30 April 2023 to
be ahead of previous expectations.
Our business is closely tied to high end housing market activity
but with a time lag of six to twelve months. Over the last six
months we are aware that housing transactions have slowed
significantly in the US and the UK and we therefore expect trading
in these markets to become progressively more challenging in the
year ahead. We have experienced significant cost inflation over the
last year, mainly driven by increased energy costs in our supply
chain but there are tentative signs that the worst might be
over.
The Group has a strong balance sheet and we will continue to
invest in our distribution network and our portfolio of brands. Our
performance over the last six months has involved a tremendous
amount of hard work by all our staff and I would like to thank them
for their loyalty and support.
David Green
Chairman
COLEFAX GROUP PLC
INTERIM GROUP INCOME STATEMENT
Unaudited Unaudited Audited
Six months Six months Year
to to to
31 Oct 31 Oct 30 April
2022 2021 2022
GBP'000 GBP'000 GBP'000
----------------------------------- ---------- ---------- ---------
Revenue 51,657 46,122 101,796
Cost of sales (22,229) (21,302) (47,237)
----------------------------------- ---------- ---------- ---------
Gross profit 29,428 24,820 54,559
Operating expenses (23,733) (19,784) (42,665)
----------------------------------- ---------- ---------- ---------
Profit from operations 5,695 5,036 11,894
Finance expense (506) (545) (1,071)
----------------------------------- ---------- ---------- ---------
Profit before taxation 5,189 4,491 10,823
Tax expense (1,219) (1,056) (2,330)
----------------------------------- ---------- ---------- ---------
Profit for the period attributable
to equity holders of the parent 3,970 3,435 8,493
----------------------------------- ---------- ---------- ---------
Basic earnings per share 51.3p 39.6p 102.5p
Diluted earnings per share 51.3p 39.6p 102.5p
----------------------------------- ---------- ---------- ---------
INTERIM GROUP STATEMENT OF COMPREHENSIVE INCOME
Unaudited Unaudited Audited
Six months Six months Year
to to to
31 Oct 31 Oct 30 April
2022 2021 2022
GBP'000 GBP'000 GBP'000
----------------------------------------- ----------- ------------------ ----------
Profit for the period 3,970 3,435 8,493
----------------------------------------- ----------- ------------------ ----------
Other comprehensive income / (expense):
Items that will or may be reclassified
to profit and loss:
Exchange differences on translation
of foreign operations 760 (167) 522
Tax relating to items that will or
may be reclassified to profit and
loss (12) (12) -
----------------------------------------- ----------- ------------------ ----------
Total other comprehensive income
/ (expense) 748 (179) 522
----------------------------------------- ----------- ------------------ ----------
Total comprehensive income for the
period attributable to equity holders
of the parent 4,718 3,256 9,015
----------------------------------------- ----------- ------------------ ----------
COLEFAX GROUP PLC
INTERIM GROUP STATEMENT OF FINANCIAL POSITION
Unaudited Unaudited Audited
As at As at As at
31 Oct 31 Oct 30 April
2022 2021 2022
Notes GBP'000 GBP'000 GBP'000
--------------------------------------- ------ --------------- ---------- ----------
Non-current assets:
Right of use assets 25,881 26,276 25,621
Property, plant and equipment 8,447 6,762 7,423
Deferred tax asset 23 34 22
--------------------------------------- ------ --------------- ---------- ----------
34,351 33,072 33,066
--------------------------------------- ------ --------------- ---------- ----------
Current assets:
Inventories and work in progress 6 16,993 17,766 17,031
Trade and other receivables 4 7,992 8,123 6,976
Current corporation tax - 427 115
Cash and cash equivalents 19,950 17,539 21,785
--------------------------------------- ------
44,935 43,855 45,907
--------------------------------------- ------ --------------- ---------- ----------
Current liabilities:
Trade and other payables 5 17,923 20,568 17,582
Lease liabilities 3,332 4,760 4,176
Current corporation tax 304 - -
--------------------------------------- ------ --------------- ---------- ----------
21,559 25,328 21,758
--------------------------------------- ------ --------------- ---------- ----------
Net current assets 23,376 18,527 24,149
--------------------------------------- ------ --------------- ---------- ----------
Total assets less current liabilities 57,727 51,599 57,215
--------------------------------------- ------ --------------- ---------- ----------
Non-current liabilities:
Lease liabilities 25,174 23,681 23,807
Deferred tax liability 282 333 261
Net assets 32,271 27,585 33,147
======================================= ====== =============== ========== ==========
Capital and reserves attributable
to equity holders of the Company:
Called up share capital 724 794 794
Share premium account 11,148 11,148 11,148
Capital redemption reserve 2,151 2,081 2,080
ESOP share reserve (113) (113) (113)
Foreign exchange reserve 2,460 1,010 1,712
Retained earnings 15,901 12,665 17,526
Total equity 32,271 27,585 33,147
======================================= ====== =============== ========== ==========
COLEFAX GROUP PLC
INTERIM GROUP STATEMENT OF CASH FLOWS
Unaudited Unaudited Audited
Six months Six months Year
to 31 Oct to 31 Oct to 30
2022 2021 April
2022
GBP'000 GBP'000 GBP'000
--------------------------------------------- ----------- ----------- ---------
Operating activities
Profit before taxation 5,189 4,491 10,823
Finance expense 506 545 1,071
Loss /(profit) on disposal of property,
plant and equipment 37 (12) (9)
Depreciation on right of use assets 2,426 2,293 4,609
Depreciation 1,259 1,121 2,274
--------------------------------------------- ----------- ----------- ---------
Cash flows from operations before
changes in working capital 9,417 8,438 18,768
Decrease / (increase) in inventories
and work in progress 273 (1,654) (898)
(Increase) / decrease in trade and
other receivables (762) 475 1,789
(Decrease) / increase in trade and
other payables (418) 1,790 (1,736)
---------------------------------------------
Cash generated from operations 8,510 9,049 17,923
--------------------------------------------- ----------- ----------- ---------
Taxation paid
UK corporation tax paid (431) (902) (1,595)
Overseas tax paid (387) (60) (488)
--------------------------------------------- ----------- -----------
(818) (962) (2,083)
--------------------------------------------- ----------- ----------- ---------
Net cash inflow from operating activities 7,692 8,087 15,840
--------------------------------------------- ----------- ----------- ---------
Investing activities
Payments to acquire property, plant
and equipment (1,914) (812) (2,255)
Receipts from sales of property, plant
and equipment - 13 13
Net cash outflow from investing (1,914) (799) (2,242)
--------------------------------------------- ----------- ----------- ---------
Financing activities
Purchase of own shares (5,382) (6,779) (6,779)
Payment of lease liabilities (2,896) (2,418) (5,134)
Other interest paid (0) (1) 3
Equity dividends paid (213) - (197)
--------------------------------------------- ----------- ----------- ---------
Net cash outflow from financing (8,491) (9,198) (12,107)
--------------------------------------------- ----------- ----------- ---------
Net increase in cash and cash equivalents (2,713) (1,910) 1,491
Cash and cash equivalents at beginning
of period 21,785 19,344 19,344
Exchange gains on cash and cash equivalents 878 105 950
Cash and cash equivalents at end
of period 19,950 17,539 21,785
--------------------------------------------- ----------- ----------- ---------
COLEFAX GROUP PLC
NOTES
1. Basis of Preparation
The condensed group financial statements for the 6 months ended
31 October 2022 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 2022.
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 2022 Annual Report and Financial Statements, a copy of
which is available on the Company's website: 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 2022 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 2023.
3. Basic earnings per share have been calculated on the basis of
earnings of GBP3,970,000 (2021: GBP3,435,000) and on 7,732,000
(2021: 8,685,000) 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 GBP3,970,000 (2021: GBP3,435,000) and on 7,732,000
(2021: 8,685,000) ordinary shares being the weighted average
number of ordinary shares in the period.
5. Trade and other receivables As at As at As at
31 Oct 31 Oct 30 Apr
2022 2021 2022
GBP'000 GBP'000 GBP'000
Trade debtors 3,368 5,198 4,722
Other debtors 2,921 1,559 607
Prepayments and accrued income 1,703 1,366 1,647
7,992 8,123 6,976
================================ ======== ======== ========
NOTES (CONTINUED)
6. Trade and other payables As at As at As at
31 Oct 31 Oct 30 Apr
2022 2021 2022
GBP'000 GBP'000 GBP'000
Trade creditors 6,034 5,773 5,933
Payments received on account 5,119 8,604 3,360
Other taxes and social security
costs 480 322 704
Other creditors 1,213 1,266 1,183
Accruals 5,077 4,603 6,402
17,923 20,568 17,582
================================= ======== ======== ========
Inventories and work in progress As at As at As at
7. 31 Oct 31 Oct 30 Apr
2022 2021 2022
GBP'000 GBP'000 GBP'000
Finished goods for resale 14,482 12,033 14,961
Work in progress 2,511 5,733 2,070
16,993 17,766 17,031
================================== ======== ======== ========
8. The financial information for the year ended 30 April 2022 does
not constitute the full statutory accounts for that period. The
Annual Report and Financial Statements for the year ended 30
April 2022 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 2022 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
20 January 2023.
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