TIDMCFX
RNS Number : 3414G
Colefax Group PLC
23 July 2019
AIM: CFX
COLEFAX GROUP PLC
("Colefax" or the "Group")
Preliminary Results for the year ended 30 April 2019
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
-- Sales increased by 0.4% to GBP86.36m (2018: GBP86.05m)
in a challenging trading environment
-- Pre-tax profit increased by 8.0% to GBP5.10m (2018: GBP4.72m)
with another strong performance by the Decorating Division
-- Earnings per share up by 3.2% to 39.3p (2018: 38.1p)
-- Strong cash generation of GBP4.92m (2018: GBP5.54m) before
dividends and share buybacks
-- GBP4.32m returned to shareholders via share buybacks (2018:
GBP2.17m)
-- Net cash at year end increased to GBP9.5m (2018: GBP9.2m)
-- Proposed increased final dividend of 2.70p per share (2018:
2.60p), taking total for the year to 5.20p (2018: 5.00p),
a rise of 4%
-- Fabric Division sales flat at GBP71.15m (2018: GBP71.11m),
and down by 1.7% on constant currency basis. US sales down
2.1%, UK sales down 1.9% and European sales down 0.9%
-- Decorating Division sales increased by 1.4% to GBP12.50m
(2018: GBP12.33m), due to a number of major projects completing
during the year
David Green, Chief Executive, said:
"During the last year we experienced increasingly challenging
trading conditions in most of our major markets. This trend has
continued in the first twelve weeks of the current year and we
expect trading to remain difficult.
"Our Decorating Division delivered an exceptional performance
due to the completion of several significant contracts and we
expect activity to return to more normal levels this year.
"The Group has a strong balance sheet with net cash of GBP9.5
million and we believe we are well placed to take advantage of any
improvement in trading conditions in our major markets."
Enquiries:
Colefax Group plc David Green, Chief Tel: 020 7318 6021
Executive
Rob Barker, Finance
Director
KTZ Communications Katie Tzouliadis, Dan Tel: 020 3178 6378
Mahoney
Peel Hunt LLP Adrian Trimmings, George Tel: 020 7418 8900
(Nominated Advisor Sellar
And Broker)
COLEFAX GROUP PLC
CHAIRMAN'S STATEMENT
Financial Results
Group sales for the year to 30 April 2019 increased by 0.4% to
GBP86.36 million (2018: GBP86.05 million) but decreased by 1.1% on
a constant currency basis. Pre-tax profits increased by 8.0% to
GBP5.10 million (2018: GBP4.72 million) and earnings per share
increased by 3.2% to 39.3p (2018: 38.1p). The Group ended the year
with net cash of GBP9.5 million (2018: GBP9.2 million).
The Board is proposing to increase the final dividend by 4% to
2.70p per share (2018: 2.60p) making a total for the year of 5.20p
(2018: 5.00p), an increase of 4%. This increase is in line with the
Group's progressive dividend policy and preferred strategy of
returning surplus cash to shareholders via share buybacks. The
final dividend, which is subject to shareholder approval at the
Group's AGM, will be paid on 10 October 2019 to shareholders on the
register at the close of business on 13 September 2019.
In April 2019 the Group returned GBP4.32 million (2018: GBP2.17
million) to shareholders by way of a Tender Offer to purchase
784,560 shares at an average price of GBP5.50 per share and
representing 8% of the issued share capital of the Group.
The 8.0% increase in pre-tax profit was achieved in a
challenging trading environment particularly in the second half of
the year. Sales in our core Fabric Division declined by 1.7% on a
constant currency basis but the Group benefitted from a stronger US
Dollar exchange rate and a reduction of GBP782,000 in hedging
losses compared to the prior year. In addition our Decorating and
Furniture Divisions both delivered an improved profit
performance.
The Group had another strong year for cash generation with a
cash inflow of GBP4.92 million before share buybacks and dividend
payments (2018: GBP5.54 million). This reflects tight control of
working capital and a below average year for capital
expenditure.
The 3% increase in earnings per share was achieved despite a
more normal tax charge of 24.8% compared to 18.8% last year when
the Group benefitted from a one-off deferred tax adjustment of
GBP350,000.
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 82% of Group
turnover, were unchanged at GBP71.15 million (2018: GBP71.11
million) but decreased by 1.7% on a constant currency basis.
Operating profit increased by 0.6% to GBP3.71 million (2018:
GBP3.69 million) but excluding hedging losses was down by 16.3% to
GBP3.89 million (2018: GBP4.65 million) reflecting challenging
trading conditions in most of our major markets.
Sales in the US, which represent 59% of the Fabric Division's
turnover, increased by 1.1% and decreased by 2.1% on a constant
currency basis. This follows a 6.2% increase in sales last year on
a constant currency basis. Despite a strong general economy we
believe that our sector has been affected by a reduction in
mortgage interest relief and other property tax deductions which
accompanied the US corporate tax rate reduction in January 2018.
The US remains our most important market and the focus of future
investment. During the current year we will complete the
refurbishment of our Los Angeles showroom and continue to invest in
our showroom network.
Sales in the UK, which represent 18% of the Fabric Division's
turnover, decreased by 1.9% during the year reflecting difficult
trading conditions at the top end of the market. The luxury soft
furnishing industry is suffering from a decline in the number of
high end housing transactions mainly caused by high rates of stamp
duty. We believe that Brexit uncertainty is also negatively
impacting housing transactions and major investment decisions.
Despite weak trading conditions in the UK we have continued to
invest in this market and in August we completed the refurbishment
of our Chelsea Harbour showroom which has been well received by
customers.
Sales in Continental Europe, which represent 20% of the Fabric
Division's turnover, decreased by 1.5% and by 0.9% on a constant
currency basis. Trading conditions in Europe were challenging
despite the benefit of significant quantitative easing by the
European Central Bank and a zero per cent bank base rate. There is
no reason to believe that market conditions will improve in the
short term. Europe encompasses a wide range of differing tastes and
we will continue to focus our efforts on opportunities to grow
sales in the markets best suited to each of our brands.
Sales in the Rest of the World, which represent just 3% of the
Fabric Division's turnover, increased by 0.5% during the year. The
majority of sales are made through distributors as opposed to
through direct sales or agents and as a result sales in the Rest of
the World are likely to remain a relatively small proportion of
total sales.
Historically the Group has had Fabric Division operations in
both the US and the UK which have served our needs well. However,
rising premises costs in London and New York mean that we are
planning to move some of our UK and US operations into new office
and warehouse premises in Wandsworth, South West London. This will
give rise to some exceptional integration costs and capital
expenditure over the next two years but will deliver synergies and
cost efficiencies that will benefit the business in the longer
term.
-- Furniture - Kingcome Sofas
Sales of Kingcome furniture, which represent 4% of Product
Division sales, increased by 3% to GBP2.70 million (2018: GBP2.62
million). Operating profit was GBP262,000 compared to GBP130,000
last year. The majority of furniture sales are made in the UK and
the improvement in profit was achieved in generally difficult
market conditions. This business is the Group's only manufacturing
activity. It has a relatively fixed cost base which means that
profit is sensitive to small fluctuations in sales. At the year end
the forward order book was 6% ahead of last year.
Interior Decorating Division
Decorating sales, which account for 14% of Group turnover,
increased by 1.4% to GBP12.50 million (2018: GBP12.33 million) and
profits increased by 21.5% to GBP1.1 million (2018: GBP901,000).
This represents another strong performance by the Decorating
Division which is now well established at its new showroom and
offices in Belgravia. The business has a broad range of
international clients and the proportion of overseas work increased
to 47% compared to 43% last year. The Decorating Division includes
a successful antiques operation which is important to the business
model although it only accounts for 7% of total sales. Customer
deposits at the year end were down 17% on the exceptional level at
the start of the year but remain at a historically high level.
Prospects
During the last year we experienced increasingly challenging
trading conditions in most of our major markets. This trend has
continued in the first twelve weeks of the current year and we
expect trading to remain difficult. Our Decorating Division
delivered an exceptional performance due to the completion of
several significant contracts and we expect activity to return to
more normal levels this year. Over the next two years we will focus
on delivering cost savings and synergies through the relocation of
certain Fabric Division operations into one site in Wandsworth,
South West London. At the same time we will continue to invest in
our brand portfolio and the expansion of our worldwide sales
network. We are in a period of considerable uncertainty over
Brexit. The Group has significant European imports and exports so
we will be adversely affected by tariffs arising from a hard
Brexit. If this eventuality does arise then we will do everything
possible to mitigate its impact on our customers. The Group has a
strong balance sheet with net cash of GBP9.5 million and we believe
we are well placed to take advantage of any improvement in trading
conditions in our major markets.
David Green
Chairman
23 July 2019
COLEFAX GROUP PLC
GROUP INCOME STATEMENT
For the year ended 30 April 2019
2019 2018
GBP'000 GBP'000
Revenue 86,355 86,052
Cost of sales (39,496) (39,811)
Gross profit 46,859 46,241
Operating expenses (41,789) (41,520)
Profit from operations 5,070 4,721
Finance income 25 1
Finance expense - (3)
25 (2)
Profit before taxation 5,095 4,719
Tax expense
- UK (733) (508)
- Overseas (532) (379)
(1,265) (887)
Profit for the year attributable to equity
holders of the parent 3,830 3,832
Basic earnings per share 39.3 p 38.1 p
Diluted earnings per share 39.3 p 38.1 p
GROUP STATEMENT OF COMPREHENSIVE INCOME
For the year ended 30 April 2019
2019 2018
GBP'000 GBP'000
Profit for the year 3,830 3,832
Other comprehensive income / (expense):
Items that will not be reclassified to profit
and loss:
Exchange differences on translation of foreign
operations 209 (743)
Remeasurement of defined benefit pension scheme (28) 31
Tax relating to items that will not be reclassified
to profit and loss (89) 76
92 (636)
Items that will or may be reclassified to profit
and loss:
Cash flow hedges:
(Losses)/gains recognised directly in equity (157) 210
Transferred to profit and loss for the year 177 959
Tax relating to items that will or may be reclassified
to profit and loss (4) (222)
------------ ------------
16 947
Total other comprehensive income 108 311
Total comprehensive income for the year attributable
to equity holders of the parent 3,938 4,143
COLEFAX GROUP PLC
GROUP STATEMENT OF FINANCIAL POSITION
At 30 April 2019
2019 2018
GBP'000 GBP'000
Non-current assets:
Property, plant and equipment 8,215 8,692
Deferred tax asset 113 173
Pension asset - 34
-------------- ----------------
8,328 8,899
Current assets:
Inventories and work in progress 13,740 14,086
Trade and other receivables 11,265 11,130
Cash and cash equivalents 9,458 9,177
34,463 34,393
--------------------------------------------- -------------- ----------------
Current liabilities:
Trade and other payables 13,664 13,678
Current corporation tax 669 306
14,333 13,984
-------------- ----------------
Net current assets 20,130 20,409
-------------- ----------------
Total assets less current liabilities 28,458 29,308
--------------------------------------------- -------------- ----------------
Non-current liabilities:
Deferred rent 1,992 1,878
Deferred tax 26 11
Pension liability 1 -
Net assets 26,439 27,419
============================================= ============== ================
Capital and reserves attributable to equity
holders of the Company:
Called up share capital 902 981
Share premium account 11,148 11,148
Capital redemption reserve 1,972 1,893
ESOP share reserve (113) (113)
Foreign exchange reserve 2,267 2,158
Cash flow hedge reserve (16) (32)
Retained earnings 10,279 11,384
Total equity 26,439 27,419
============================================= ============== ================
COLEFAX GROUP PLC
GROUP STATEMENT OF CASH FLOWS
For the year ended 30 April 2019
2019 2018
GBP'000 GBP'000
Operating activities
Profit before taxation 5,095 4,719
Finance income (25) (1)
Finance expense - 3
Loss on disposal of property, plant and equipment 8 235
Depreciation 2,800 2,735
Cash flows from operations before changes in
working capital 7,878 7,691
Decrease / increase in inventories and work
in progress 482 (301)
Decrease in trade and other receivables 47 463
(Decrease) / increase in trade and other payables (500) 1,056
Cash generated from operations 7,907 8,909
---------------- ---------------
Taxation paid
UK corporation tax paid (374) (350)
Overseas tax paid (606) (679)
(980) (1,029)
---------------- ---------------
Net cash inflow from operating activities 6,927 7,880
---------------- ---------------
Investing activities
Payments to acquire property, plant and equipment (2,046) (2,382)
Receipts from sales of property, plant and equipment 14 49
Interest received 25 -
Net cash outflow from investing (2,007) (2,333)
---------------- ---------------
Financing activities
Purchase of own shares including related costs (4,421) (2,172)
Interest paid - (3)
Equity dividends paid (497) (488)
Net cash outflow from financing (4,918) (2,663)
---------------- ---------------
Net increase in cash and cash equivalents 2 2,884
Cash and cash equivalents at beginning of year 9,177 6,710
Exchange gains / (losses) on cash and cash equivalents 279 (417)
Cash and cash equivalents at end of year 9,458 9,177
======================================================== ================ ===============
COLEFAX GROUP PLC
GROUP STATEMENT OF CHANGES IN EQUITY
For the year ended 30 April 2019
Cash
Share Capital ESOP Foreign flow
Share premium redemption share exchange hedge Retained Total
capital account reserve reserve reserve reserve earnings equity
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
At 1 May 2018 981 11,148 1,893 (113) 2,158 (32) 11,384 27,419
Profit for
the year - - - - - - 3,830 3,830
Foreign exchange - - - - 209 - - 209
Re-measurement
of defined
benefit
pension
scheme - - - - - - 28 28
Cash flow
hedges:
Losses - - - - - (157) - (157)
Transfers - - - - - 177 - 177
Tax on other
comprehensive
income - - - - (100) (4) 11 (93)
Total
comprehensive
income for
the year - - - - 109 16 3,813 3,938
Share buybacks (79) - 79 - - - (4,421) (4,421)
Dividends
paid - - - - - - (497) (497)
At 30 April
2019 902 11,148 1,972 (113) 2,267 (16) 10,279 26,439
At 1 May 2017 1,022 11,148 1,852 (113) 2,779 (979) 10,227 25,936
Profit for
the year - - - - - - 3,832 3,832
Foreign exchange - - - - (743) - - (743)
Re-measurement
of defined
benefit
pension
scheme - - - - - - 31 31
Cash flow
hedges:
Gains - - - - - 210 - 210
Transfers - - - - - 959 - 959
Tax on other
comprehensive
income - - - - 122 (222) (46) (146)
----------------- ------------ ------------ --------------- ------------ --------------- -------------- --------- ----------
Total
comprehensive
income for
the year - - - - (621) 947 3,817 4,143
Share buybacks (41) - 41 - - - (2,172) (2,172)
Dividends
paid - - - - - - (488) (488)
At 30 April
2018 981 11,148 1,893 (113) 2,158 (32) 11,384 27,419
COLEFAX GROUP PLC
NOTES TO THE FINANCIAL INFORMATION
At 30 April 2019
1. Earnings per share
Basic earnings per share have been calculated on the basis of
profit on ordinary activities after tax of GBP3,830,000 (2018:
GBP3,832,000) and on 9,738,402 (2018: 10,067,216) 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 have been calculated on the basis of
profit on ordinary activities after tax of GBP3,830,000 (2018:
GBP3,832,000) and on 9,738,402 (2018: 10,067,216) ordinary shares,
being the weighted average number of ordinary shares in issue
during the year.
2. Cash and cash equivalents
For the purposes of the consolidated statement of cash flows,
cash and cash equivalents comprise the following:
2019 2018
GBP'000 GBP'000
Cash at bank and in hand 9,458 9,177
The fair value of cash and cash equivalents are considered to be
their book value.
3. Financial Information
The above financial information, which has been prepared in
accordance with International Financial Reporting Standards as
endorsed by the European Union, does not constitute statutory
accounts as defined in Section 435 of the Companies Act 2006.
The financial information for the year ended 30 April 2019 has
been extracted from the statutory accounts which will be delivered
to the Registrar of Companies following the Company's Annual
General Meeting. We expect the Independent Auditors Report on the
2019 financial statements will be unqualified. The comparative
financial information is based on the statutory accounts for the
financial year ended 30 April 2018 which have been delivered to the
Registrar of Companies. The Independent Auditors' Report on the
2018 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.
Copies of the Annual Report and full Financial Statements will
be posted to shareholders during the week commencing 29 July 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.
4. Annual General Meeting
The Annual General Meeting of Colefax Group plc will be held at
19-23 Grosvenor Hill, London W1K 3QD on 18 September 2019 at 11.00
a.m.
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
END
FR BCGDRDXDBGCD
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