TIDMCFX
RNS Number : 2222W
Colefax Group PLC
17 August 2022
AIM: CFX
17 August 2022
COLEFAX GROUP PLC
("Colefax" or the "Group")
Preliminary Results for the year ended 30 April 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.
Key Points
-- Record sales and profits for the year reflecting favourable
market conditions especially in the US and the UK
-- Sales increased by 31% to GBP101.80m (2021 - GBP77.91m) and
by 33% on a constant currency basis
-- Pre-tax profit increased by 100% to GBP10.82m (2021 -
GBP5.42m) - reflecting operational gearing in the Fabric Division
sales and an exceptional performance by the Decorating Division
-- Earnings per share increased by 127% to 102.5p (2021 - 45.1p)
-- Tender Offer and share buyback returned GBP6.7 million of
surplus capital to shareholders in September 2021
-- Cash at 30 April 2022 increased to GBP21.8m (2021 - GBP19.3m)
-- Fabric Division sales increased by 21.5% to GBP84.51m (2021 -
GBP69.58m) and by 23.7% on a constant currency basis
- US sales up by 25%, UK sales up by 33% and Europe sales up by
14% (on a constant currency basis)
-- Decorating Division sales increased by 152% to GBP14.63m
(2021 - GBP5.79m) partly due to the completion of projects delayed
from the prior year. Pre-tax profit of GBP1.48 million (2021 -
GBP680,000 loss)
-- Board is proposing a final dividend of 2.7p (2021 Nil) making
a total for the year of 5.2p (2021- Nil)
David Green, Chief Executive of Colefax Group plc, said:
" Over the past year we have benefitted from the very strong
housing market conditions which emerged after the first lockdowns
in 2020 and this is the main reason for the Group's record results
for the year ended April 30 2022.
"Rising interest rates and high levels of inflation have already
started to slow housing market activity and we are therefore
cautious about prospects for the coming year especially as we tend
to lag changes in the housing market. We are also experiencing high
levels of cost inflation especially from our fabric suppliers whose
manufacturing operations are being impacted by large increases in
energy and raw materials costs. Against this backdrop we believe it
is unrealistic to expect continued sales growth in the current year
especially against such strong prior year comparatives. The fact
that the Group operates at the premium end of the market should
provide some protection from high levels of inflation. In addition
we are benefitting from the recent strengthening of the US Dollar
as over 60% of our Fabric Division revenues are in the US. The
Group has a very strong balance sheet including cash in excess of
GBP21 million and is well placed to deal with more challenging
trading conditions"
Enquiries:
Colefax Group plc David Green, Chief Tel: 020 7318
Executive 6021
Rob Barker, Finance
Director
KTZ Communications Katie Tzouliadis, Dan Tel: 020 3178
Mahoney 6378
Peel Hunt LLP Adrian Trimmings, Andrew Tel: 020 7418
(Nominated Advisor Clark 8900
and Broker)
COLEFAX GROUP PLC
CHAIRMAN'S STATEMENT
Financial Results
I am pleased to report record sales and profits for the year
ended 30 April 2022. Group sales increased by 30.8% to GBP101.80
million (2021 - GBP77.91 million) and by 32.8% on a constant
currency basis. Pre-tax profits increased by 100% to GBP10.82
million (2021 - GBP5.42 million). Earnings per share increased by
127% to 102.5p (2021 - 45.1p). The Group ended the year with net
cash of GBP21.8 million (2021 - GBP19.3 million).
The Group's performance over the last year has been exceptional
and reflects extremely favourable market conditions in the US and
the UK. One of the consequences of the pandemic was a surge in
housing transactions and home related spending and this has been
the main driver of our business over the last financial year. The
100% increase in Group profit relative to a 30.8% increase in Group
sales is a reflection of the high level of operational gearing in
our core Fabric Division. In addition our Decorating Division
delivered an exceptional performance as projects delayed by the
pandemic were completed during the year.
In September 2021 the Group returned GBP6.7 million of surplus
cash 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.
The Board is proposing to pay a final dividend of 2.7p
(2021-nil) making a total for the year of 5.2p (2021 - nil). This
will be paid on 13 October 2022 to shareholders on the register at
the close of business on 16 September 2022
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 83% of Group
turnover, increased by 21.5% to GBP84.51 million (2021 - GBP69.58
million) and by 23.7% on a constant currency basis. Pre-tax profit
increased by 60% to GBP9.29 million (2021 - GBP5.81 million). In
the first half of the prior year, sales were adversely impacted by
the pandemic but recovered strongly in the second half and this
sales momentum continued throughout the current year. Compared to
2018-19, which was the last normal year of sales prior to the
pandemic, sales in 2021-22 were up by 22.2% on a constant currency
basis clearly demonstrating the strength of home spending during
the year. Fabric Division profits are highly operationally geared
and therefore sensitive to relatively small changes in sales. This
is the main reason for the record profits achieved during the
year.
Sales in the US, which represent 62% of the Fabric Division's
turnover, increased by 23% and by 25% on a constant currency basis.
The strong sales performance was broad based with all major
territories performing well and reflects the most favourable US
housing market conditions since 2006. Last year we simplified our
US business by moving the majority of our warehouse operations to
the UK and this has increased our sales focus and improved
efficiency. Our US business is responsible for sales in Canada and
we have recently signed a lease for a showroom in Toronto to
capitalise on sales opportunities in this market.
Sales in the UK, which represent 18% of the Fabric Division's
turnover, increased by 33%. As with the US market we attribute this
exceptional increase to very strong housing market conditions
throughout 2021 and increased spending on existing homes at a time
when alternative spending opportunities such as travel were
significantly curtailed by pandemic restrictions. Trading in the
first half of the prior year was adversely affected by the initial
pandemic lockdowns and part of the sales increase in the current
financial year is likely to be catch-up expenditure deferred from
that time.
Sales in Continental Europe, which represent 18% of the Fabric
Division's turnover, increased by 10% and by 14% on a constant
currency basis. This is the first full year of sales since Brexit
in January 2021 and whilst we do not believe it has had an adverse
impact on sales it has significantly increased the cost and
complexity of doing business in Europe. The European economy is
less focussed on the residential housing market than the US and the
UK, and we believe this is the main reason for the slower growth
rate. Our three largest markets in Europe are France, Germany and
Italy and together these account for approximately 45% of total
sales. From June 2022 we have started selling direct to trade
customers in Spain rather than via a distributor and we expect this
change to have a beneficial impact on sales in this market.
Sales in the Rest of the World, which represent just 2% of the
Fabric Division's turnover, increased by 3% during the year
reflecting relatively challenging market conditions caused by the
pandemic. Our major markets in the Rest of the World are the Middle
East, China and Australia and whilst there are growth opportunities
in specific countries, the Rest of the World is expected to remain
a small proportion of total Fabric Division sales.
-- Furniture - Kingcome Sofas
Sales of Kingcome furniture, which represent 3% of Product
Division sales, increased by 5% to GBP2.66 million (2021 - GBP2.54
million). Pre-tax profit decreased by 72% to GBP80,000 (2021 -
GBP288,000) reflecting significant increases in the cost of raw
materials and energy and some one-off marketing and website costs
during the year. The order book ended the year close to record
levels and up by 116% compared to the start of the year when the
showroom had only just reopened from lockdown. Factory production
remains challenging due to labour and materials shortages and lead
times have increased. We have just started a major investment in
our freehold factory in Devon which will increase capacity and
improve productivity and energy efficiency.
Interior Decorating Division
Decorating sales, which represent 14% of Group turnover,
increased by 152% to GBP14.63 million (2021 - GBP5.79 million)
resulting in a pre-tax profit for the year of GBP1.47 million (2021
- GBP680,000 loss). The profit on decorating projects is recognised
on invoicing and can fluctuate significantly depending on the
timing of completion of projects. During the first year of the
pandemic progress on projects was severely curtailed by lockdowns
and travel restrictions and the exceptional performance for the
year partly reflects the completion of projects delayed by the
pandemic, This included one very large UK project and as result the
Decorating Division is expected to return to more normal levels of
activity.
Prospects
The performance of the Group is closely linked to the high-end
housing market especially in the US and the UK. Over the past year
we have benefitted from the very strong housing market conditions
that emerged after the first lockdowns in 2020 and this is the main
reason for the Group's record results for the year ended April 30
2022. Rising interest rates and high levels of inflation have
already started to slow housing market activity and we are
therefore cautious about prospects for the coming year especially
as we tend to lag changes in the housing market. We are also
experiencing high levels of cost inflation especially from our
fabric suppliers whose manufacturing operations are being impacted
by exceptional increases in energy and raw materials costs. Against
this backdrop we believe it is unrealistic to expect sales growth
in the current year, especially against such strong prior year
comparatives. The fact that the Group operates at the premium end
of the market should provide some protection from high levels of
inflation. In addition we are benefitting from the recent
strengthening of the US Dollar as over 60% of our Fabric Division
revenues are in the US. The Group has a very strong balance sheet
including cash in excess of GBP21 million and is well placed to
deal with more challenging trading conditions.
The Group's record performance over the last year is a
reflection of exceptionally favourable market conditions but also
the talent and dedication of our loyal and extremely hard working
staff. I would like to thank them for their contribution to our
performance and for their resilience in a challenging operational
environment.
David Green
Chairman
17 August 2022
GROUP INCOME STATEMENT
For the year ended 30 April 2022
2022 2021
GBP'000 GBP'000
Revenue 101,796 77,908
Cost of sales (47,237) (33,971)
Gross profit 54,559 43,937
Operating expenses (42,665) (38,910)
Other income - 1,462
------------------------------------------------------------------ ------------------ -----------------
Profit from operations 11,894 6,489
Finance expense (1,071) (1,067)
Profit before taxation 10,823 5,422
Tax expense (2,330) (1,376)
Profit for the year attributable to equity holders of the parent 8,493 4,046
Basic and diluted earnings per share 102.5p 45.1p
GROUP STATEMENT OF COMPREHENSIVE INCOME
For the year ended 30 April 2022
2022 2021
GBP'000 GBP'000
Profit for the year 8,493 4,046
Other comprehensive income / (expense):
Items that will or may be reclassified to profit and loss:
Exchange differences on translation of foreign operations 522 (1,251)
Tax relating to items that will or may be reclassified to profit and loss - 103
--------------------------------------------------------------------------- ----------------- ------------------
Total other comprehensive income / (expense) 522 (1,148)
Total comprehensive income for the year attributable to 9,015 2,898
equity holders of the parent
--------------------------------------------------------------------------- ----------------- ------------------
GROUP STATEMENT OF FINANCIAL POSITION
At 30 April 2022
Notes 2022 2021
GBP'000 GBP'000
Non-current assets:
Property, plant and equipment 7,423 7,029
Right of use asset 25,621 28,506
Deferred tax asset 22 35
33,066 35,570
Current assets:
Inventories and work in progress 2 17,031 16,025
Trade and other receivables 3 6,976 8,631
Cash and cash equivalents 4 21,785 19,344
Current corporation tax 115 513
45,907 44,513
------------------------------------------------------------ ------ ------------------ ------------------
Current liabilities:
Trade and other payables 5 17,582 18,343
Lease liabilities 4,176 3,992
21,758 22,335
------------------ ------------------
Net current assets 24,149 22,178
------------------ ------------------
Total assets less current liabilities 57,215 57,748
------------------------------------------------------------ ------ ------------------ ------------------
Non-current liabilities:
Lease liabilities 23,807 26,323
Deferred tax liability 261 317
Net assets 33,147 31,108
------------------------------------------------------------ ------ ------------------ ------------------
Capital and reserves attributable to equity holders of the
Company:
Called up share capital 794 902
Share premium account 11,148 11,148
Capital redemption reserve 2,080 1,972
ESOP share reserve (113) (113)
Foreign exchange reserve 1,712 1,190
Retained earnings 17,526 16,009
Total equity 33,147 31,108
------------------------------------------------------------ ------ ------------------ ------------------
GROUP STATEMENT OF CASH FLOWS
For the year ended 30 April 2022
2022 2021
GBP'000 GBP'000
Operating activities
Profit before taxation 10,823 5,422
Finance expense 1,071 1,067
Profit on disposal of property, plant and
equipment (9) (30)
Non-cash movement arising from loan waiver - (922)
Depreciation 2,274 2,912
Rent concessions - (77)
Impairment of right of use asset - 312
Depreciation on right of use assets 4,609 4,329
--------------------------- ---------------------
Cash flows from operations before changes
in working capital 18,768 13,013
---------------------------------------------- --------------------------- ---------------------
Increase in inventories and work in progress (898) (678)
(Increase) / decrease in trade and other
receivables 1,789 (2,366)
Increase / (decrease) in trade and other
payables (1,736) 7,378
Cash generated from operations 17,923 17,347
---------------------------------------------- --------------------------- ---------------------
Taxation paid
UK corporation tax paid (1,595) (224)
Overseas tax paid (488) (877)
(2,083) (1,101)
--------------------------- ---------------------
Net cash inflow from operating activities 15,840 16,246
---------------------------------------------- --------------------------- ---------------------
Investing activities
Payments to acquire property, plant and
equipment (2,255) (1,888)
Receipts from sales of property, plant and
equipment 13 34
Interest received - -
Net cash outflow from investing (2,242) (1,854)
---------------------------------------------- --------------------------- ---------------------
Financing activities
Purchase of own shares (6,779) -
Principal paid on lease liabilities (4,061) (4,853)
Interest paid on lease liabilities (1,073) (1,061)
Interest paid 3 (6)
Equity dividends paid (197) -
--------------------------- ---------------------
Net cash outflow from financing (12,107) (5,920)
---------------------------------------------- --------------------------- ---------------------
Net increase in cash and cash equivalents 1,491 8,472
Cash and cash equivalents at beginning of
year 19,344 11,538
Exchange gains/(losses) on cash and cash
equivalents 950 (666)
---------------------------------------------- --------------------------- ---------------------
Cash and cash equivalents at end of year 21,785 19,344
---------------------------------------------- --------------------------- ---------------------
GROUP STATEMENT OF CHANGES IN EQUITY
For the year ended 30
April
2022
Share Capital ESOP Foreign
Share premium redemption share exchange Retained Total
capital account reserve reserve reserve earnings equity
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
--------------- -------- -------- ----------- -------- --------- --------- --------
At 30 April
2021 902 11,148 1,972 (113) 1,190 16,009 31,108
Profit for the
year - - - - - 8,493 8,493
Foreign
exchange - - - - 522 - 522
Tax on other
comprehensive
income - - - - - -
Total
comprehensive
income for
the year - - - - 522 8,493 9,015
Share buybacks (108) - - 108 - - (6,779) (6,779)
Dividends paid - - - - - (197) (197)
At 30 April
2022 794 11,148 2,080 (113) 1,712 17,526 33,147
At 30 April
2020 902 11,148 1,972 (113) 2,338 11,963 28,210
Profit for the
year - - - - - 4,046 4,046
Foreign
exchange - - - - (1,251) - (1,251)
Tax on other
comprehensive
income - - - - 103 - 103
Total
comprehensive
income for
the year - - - - (1,148) 4,046 2,898
--------------- -------- -------- ----------- -------- --------- --------- --------
At 30 April
2021 902 11,148 1,972 (113) 1,190 16,009 31,108
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 GBP8,493,000 (2021 -
GBP4,046,000) and on 8,284,746 (2021 - 8,962,440) 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 2022.
2. Inventories and work in progress
2022 2021
GBP'000 GBP'000
--------- ---------
Finished goods for resale 14,961 12,982
Work in progress 2,070 3,043
--------- ---------
17,031 16,025
--------- ---------
3. Trade and other receivables
2022 2021
GBP'000 GBP'000
--------- ---------
Trade receivables 5,096 5,216
Less: provision for impairment of
trade receivables (374) (348)
Other receivables 607 2,558
Prepayments and accrued income 1,647 1,205
--------- ---------
6,976 8,631
--------- ---------
4. Cash and cash equivalents
2022 2021
GBP'000 GBP'000
--------- ---------
Cash at bank and in hand 21,785 19,344
--------- ---------
The fair value of cash and cash equivalents are considered to be
their book value.
5. Trade and other payables
2022 2021
GBP'000 GBP'000
--------- ---------
Trade payables 5,933 4,718
Accruals 6,402 5,890
Payments received on account 3,360 6,004
Other taxes and social security
costs 704 559
Other payables 1,183 1,172
--------- ---------
17,582 18,343
--------- ---------
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 2022 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 2021
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 posted to shareholders during the week commencing 22 August
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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END
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