TIDMCFX
RNS Number : 9497L
Colefax Group PLC
25 July 2017
AIM: CFX
25 July 2017
COLEFAX GROUP PLC
("Colefax" or the "Group")
Preliminary Results for the year ended 30 April 2017
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
-- Results in line with market expectations
o underlying trading conditions in core US market were difficult
but H2 improved over H1
-- Sales of GBP80.48m (2016: GBP76.88m), up 4.7%
-- Pre-tax profit of GBP2.94m (2016: GBP5.02m) impacted mainly
by hedging loss of GBP2.0m following decline in Sterling
-- Earnings per share of 18.6p (2016: 32.2p)
-- Net cash at year end of GBP6.7m (2016: GBP10.1m)
-- Proposed increased final dividend of 2.50p per share (2016:
2.40p), taking total for the year to 4.80p (2016: 4.60p)
-- Fabric Division (87% of Group sales) - generated sales of
GBP70.05m, up 5.5% but down by 6.0% on constant currency basis,
reflecting adverse trading conditions in US
-- New showrooms opened in Boston and Atlanta
-- Decorating Division relocated showroom to Pimlico Road, Belgravia
-- Board is cautiously optimistic about prospects for the year ahead
David Green, Chief Executive, said:
"Underlying trading was difficult in our core US market but
improved in the second half, with economic confidence strengthening
after the US election result. While the weakness of Sterling is
extremely positive for our business, the decision to hedge our US
Dollar exposure at our budgeted rate weighed on results this year
and will do so to a more limited extent in the new financial
year.
"We successfully completed a large capital investment programme,
opening two new showrooms in Boston and Atlanta, important US
territories, as well as relocating our flagship Mayfair showroom to
Belgravia. Looking ahead, we are cautiously optimistic about the
Group's prospects for the year and will continue to invest with
confidence in our portfolio of brands."
Enquiries:
Colefax Group David Green, Chief Tel: 020 7318
plc Executive 6021
Rob Barker, Finance
Director
KTZ Communications Katie Tzouliadis, Tel: 020 3178
Emma Pearson 6378
Peel Hunt LLP Adrian Trimmings, Tel: 020 7418
(Nominated Advisor George Sellar 8900
And Broker)
The information contained within this announcement is deemed by
the Company to constitute inside information as stipulated under
the Market Abuse Regulation.
COLEFAX GROUP PLC
CHAIRMAN'S STATEMENT
Financial Results
Group sales for the year to 30 April 2017 increased by 4.7% to
GBP80.48 million (2016: GBP76.88 million but decreased by 5.3% on a
constant currency basis. Pre-tax profits decreased to GBP2.94
million (2016: GBP5.02 million) and earnings per share decreased to
18.6p (2016: 32.2p). The Group ended the year with net cash of
GBP6.7 million (2016: GBP10.1 million).
The Board is proposing to increase the final dividend by 4% to
2.50p per share (2016: 2.40p) making a total for the year of 4.80p
(2016: 4.60p), an increase of 4%. The final dividend, which is
subject to shareholder approval, will be paid on 10 October 2017 to
shareholders on the register at the close of business on 8
September 2017.
During the year the Group returned GBP2.58 million (2016
GBP324,000) to shareholders through the purchase of 537,000 shares
at an average price of GBP4.79 and representing 5.0% of the issued
share capital of the Company.
The decline in our profit was mainly due to difficult trading
conditions in our core US market where sales were down by 7.7% on a
constant currency basis. Our decision to hedge our US Dollar
exposure at our budgeted rate meant that we incurred hedging losses
of GBP2.0 million (2016: GBP144,000) reflecting the collapse in
Sterling following the Brexit Referendum. Excluding hedging losses
the Group profit before tax would have been GBP4.91 million or down
2% on last year.
A significant proportion of the Group's sales are in overseas
markets with 68% of sales invoiced in currencies other than
Sterling. In addition 47% of Group net assets are denominated in
currencies other than Sterling. As a result exchange rate movements
have exacerbated the changes in revenues, costs, assets and
liabilities in our reported results.
Despite difficult trading conditions, the Group made significant
progress during the year with a major programme of capital
investment in new showrooms. In the UK our Decorating Division
successfully moved from 39 Brook Street to new premises at 89-91
Pimlico Road in Belgravia and we are pleased with the positive
customer response to the new showroom. In the US we opened two new
showrooms in Boston and Atlanta which are both major sales
territories. Inevitably these showroom openings involved some
disruption to our existing business and we can now focus fully on
building sales in these markets.
Product Division
-- Fabric Division - Portfolio of Five Brands:
o Colefax and Fowler
o Cowtan and Tout
o Jane Churchill
o Manuel Canovas
o Larsen
Sales in the Fabric Division, which represent 87% of Group
turnover were up by 5.5% to GBP70.05 million (2016: GBP66.40
million) but down by 6.0% on a constant currency basis. Operating
profit reduced to GBP2.80 million (2016: GBP4.53 million) but
excluding hedging losses of GBP2.0m was up by 6.0% highlighting the
importance of the US Dollar exchange rate to Fabric Division
performance.
The main reason for the decline in Fabric Division sales on a
constant currency basis was adverse trading conditions in our core
US market. Sales in the US, which represent 59% of the Fabric
Division's turnover, decreased by 7.7%. The rate of decline slowed
during the year with the first half down by 10% and the second half
down by 6%. In the run up to the US election there was considerable
political uncertainty which we believe impacted spending at the
luxury end of the market and although the election result was
unexpected there has been greater certainty and economic confidence
since the election. We opened a new showroom in Boston in October
and a new showroom in Atlanta in February. Previously we sold
through agent showrooms in these territories and we now have direct
control over sales in these important markets.
Sales in the UK which represent 18% of the Fabric Division's
turnover were down by 1% during the year reflecting fairly
challenging conditions at the top end of the market. Trading
conditions are closely linked to the health of the high end housing
market and there has been a significant decline in high end housing
transactions over the last year which we attribute to the very high
rate of stamp duty on these properties. We would like to see stamp
duty rates reduced but there seems to be little prospect of this in
the current political climate. It is too early to say how our UK
market will be affected by Brexit. Currently, the majority of our
fabrics are sourced duty free from high quality manufacturers in
Europe.
Sales in Continental Europe, which represent 20% of the Fabric
Division's turnover, increased by 7% in reported terms but
decreased by 6% on a constant currency basis. France, Germany and
Italy account for 55% of sales in Europe and all of these markets
were relatively difficult. On a constant currency basis France was
down by 5%, Germany by 9% and Italy by 4%. Sales in most other
European countries were slightly down compared to last year but
there are tentative signs of a pick-up in the overall economy.
Europe encompasses a wide range of design tastes and the Group's
portfolio of brands means that we will look to exploit specific
growth opportunities in specific markets.
Sales in the Rest of the World which represent just 3% of the
Fabric Division's turnover, decreased by 2% during the year. The
main markets are the Middle East, Australia, Russia and China and
current market conditions mean that they are likely to remain a
relatively small part of overall sales.
-- Furniture - Kingcome Sofas
Sales of Kingcome furniture, which represent 3% of Product
Division sales decreased by 10% to GBP2.35 million (2016 GBP2.62
million). This business activity is highly operationally geared
and, as a result of the sales decrease, operating profit reduced to
GBP23,000 compared to a profit of GBP263,000 last year.
Approximately 90% of sales are in the UK, predominantly London, and
we believe the luxury furniture market has been adversely impacted
by the slowdown in the high end housing market. Customer deposits
ended the year up by 21% compared to the prior year but we expect
trading conditions to remain challenging. Export sales represent an
opportunity for growth especially given the decline in the value of
Sterling since the Brexit referendum.
Interior Decorating Division
Decorating sales, which account for 10% of Group turnover,
increased by 3% to GBP8.06 million (2016: GBP7.86 million) but
profits were GBP108,000 compared to a profit of GBP221,000 for the
prior year. It has been a transitional year for the Decorating
Division due to the move from 39 Brook Street in Mayfair where the
company was based for over 80 years. The new showroom at 89-91
Pimlico Road in Belgravia opened in February 2017 and the initial
market reaction has exceeded our expectations. The new location is
better suited to the needs of the business and whilst we have
significantly reduced our investment in antique stock, antique
sales have been encouraging. Despite the distraction of the move,
customer deposits are well ahead of last year. The decline in
Sterling is a growth opportunity for the company and we have seen
an increase in the proportion of overseas clients.
Prospects
The last year has been challenging for the Group and underlying
trading conditions were affected both by uncertainty before the US
election and after the Brexit Referendum. We are pleased to have
successfully completed a significant capital investment programme
with two major new US showrooms and a new Decorating Division
showroom in the UK and we expect to see a good return on these
investments in the current year.
In the US, our most important market, we have seen a steady
improvement in confidence since the Presidential election and sales
for the first two months of the new financial year are ahead of
last year and budget. Sales in the UK and Europe are also ahead of
last year although we remain cautious about growth prospects in
these markets.
The weakness of Sterling against the US Dollar is extremely
positive for our business due to the fact that approximately 60% of
Fabric Division sales are in the US and invoiced in US Dollars.
However, we will not benefit fully this year due to ongoing
hedging, put in place prior to the Brexit Referendum, which is
likely to give rise to a pre-tax charge of just over GBP1.2
million.
Overall we are cautiously optimistic about the Group's prospects
for the year ahead and will continue to invest with confidence in
our portfolio of brands.
David Green
Chairman
25 July 2017
COLEFAX GROUP PLC
GROUP INCOME STATEMENT
For the year ended 30 April 2017
2017 2016
GBP'000 GBP'000
Revenue 80,475 76,879
Cost of sales 36,119 33,587
Gross profit 44,356 43,292
Operating expenses 41,419 38,279
Profit from operations 2,937 5,013
Finance income 1 3
Finance expense (1) -
- 3
Profit before taxation 2,937 5,016
Tax expense
-UK 39 (502)
-Overseas (1,081) (1,053)
(1,042) (1,555)
Profit for the year attributable
to equity holders of the parent 1,895 3,461
Basic earnings per share 18.6 p 32.2 p
Diluted earnings per share 18.6 p 32.2 p
GROUP STATEMENT OF COMPREHENSIVE INCOME
For the year ended 30 April 2017
2017 2016
GBP'000 GBP'000
Profit for the year 1,895 3,461
Other comprehensive income / (expense):
Items that will not be reclassified
to profit and loss:
Exchange differences on translation
of foreign operations 1,628 642
Remeasurement of defined benefit
pension scheme 101 (100)
Tax relating to items that will
not be reclassified to profit and
loss (449) (106)
------------ ------------
1,280 436
Items that will or may be reclassified
to profit and loss:
Cash flow hedges:
Losses recognised directly in equity (2,611) (805)
Transferred to profit and loss for
the year 2,006 144
Tax relating to items that will
or may be reclassified to profit
and loss 109 132
------------ ------------
(496) (529)
Total other comprehensive income
/ (expense) 784 (93)
Total comprehensive income for the
year attributable to equity holders
of the parent 2,679 3,368
COLEFAX GROUP PLC
GROUP STATEMENT OF FINANCIAL POSITION
At 30 April 2017
2017 2016
GBP'000 GBP'000
Non-current assets:
Property, plant and equipment 9,669 7,551
Deferred tax asset 386 35
10,055 7,586
Current assets:
Inventories and work in progress 13,938 12,518
Trade and other receivables 11,805 9,179
Current corporation tax 170 -
Cash and cash equivalents 6,710 10,085
32,623 31,782
--------------------------------------- -------------- -----------------
Current liabilities:
Trade and other payables 13,961 11,258
Current corporation tax - 163
13,961 11,421
-------------- -----------------
Net current assets 18,662 20,361
-------------- -----------------
Total assets less current liabilities 28,717 27,947
--------------------------------------- -------------- -----------------
Non-current liabilities:
Deferred rent 1,992 1,459
Deferred tax 734 -
Pension liability 55 170
Net assets 25,936 26,318
======================================= ============== =================
Capital and reserves attributable
to equity holders of the Company:
Called up share capital 1,022 1,076
Share premium account 11,148 11,148
Capital redemption reserve 1,852 1,798
ESOP share reserve (113) (113)
Foreign exchange reserve 2,779 1,559
Cash flow hedge reserve (979) (483)
Retained earnings 10,227 11,333
Total equity 25,936 26,318
======================================= ============== =================
COLEFAX GROUP PLC
GROUP STATEMENT OF CASH FLOWS
For the year ended 30 April 2017
2017 2016
GBP'000 GBP'000
Operating activities
Profit before taxation 2,937 5,016
Finance income (1) (3)
Finance expense 1 -
Depreciation 2,720 2,187
Cash flows from operations before
changes in working capital 5,657 7,200
(Increase) / decrease in inventories
and work in progress (1,140) (127)
(Increase) / decrease in trade and
other receivables (2,172) 704
Increase / (decrease) in trade and
other payables 1,835 (582)
Cash generated from operations 4,180 7,195
---------------- ---------------
Taxation paid
UK corporation tax paid (224) (556)
Overseas tax paid (1,141) (781)
(1,365) (1,337)
---------------- ---------------
Net cash inflow from operating activities 2,815 5,858
---------------- ---------------
Investing activities
Payments to acquire property, plant
and equipment (4,126) (2,278)
Receipts from sales of property,
plant and equipment 40 24
Interest received 1 2
Net cash outflow from investing (4,085) (2,252)
---------------- ---------------
Financing activities
Purchase of own shares (2,583) (324)
Interest paid (1) (1)
Equity dividends paid (478) (483)
Net cash outflow from financing (3,062) (808)
---------------- ---------------
Net decrease in cash and cash equivalents (4,332) 2,798
Cash and cash equivalents at beginning
of year 10,085 6,861
Exchange gains on cash and cash equivalents 957 426
Cash and cash equivalents at end
of year 6,710 10,085
============================================= ================ ===============
COLEFAX GROUP PLC
GROUP STATEMENT OF CHANGES IN EQUITY
For the year ended 30 April 2017
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
2016 1,076 11,148 1,798 (113) 1,559 (483) 11,333 26,318
Profit
for the
year - - - - - - 1,895 1,895
Foreign
exchange - - - - 1,628 - - 1,628
Remeasurement
of defined
benefit
pension
scheme - - - - - - 101 101
Cash flow
hedges:
Losses - - - - - (2,611) - (2,611)
Transfers - - - - - 2,006 - 2,006
Tax on
other
comprehensive
income - - - - (408) 109 (41) (340)
---------------- ------------ ------------ --------------- ------------ --------------- -------------- --------- --------
Total
comprehensive
income
for the
year - - - - 1,220 (496) 1,955 2,679
Share buybacks (54) - 54 - - - (2,583) (2,583)
Dividends
paid - - - - - - (478) (478)
At 30 April
2017 1,022 11,148 1,852 (113) 2,779 (979) 10,227 25,936
At 1 May
2015 1,083 11,148 1,791 (113) 1,062 46 8,740 23,757
Profit
for the
year - - - - - - 3,461 3,461
Foreign
exchange - - - - 642 - - 642
Remeasurement
of defined
benefit
pension
scheme - - - - - - (100) (100)
Cash flow
hedges:
Losses - - - - - (805) - (805)
Transfers - - - - - 144 - 144
Tax on
other
comprehensive
income - - - - (145) 132 39 26
---------------- ------------ ------------ --------------- ------------ --------------- -------------- --------- --------
Total
comprehensive
income
for the
year - - - - 497 (529) 3,400 3,368
Share buybacks (7) - 7 - - - (324) (324)
Dividends
paid - - - - - - (483) (483)
At 30 April
2016 1,076 11,148 1,798 (113) 1,559 (483) 11,333 26,318
COLEFAX GROUP PLC
NOTES TO THE FINANCIAL INFORMATION
At 30 April 2017
1. Earnings per share
Basic earnings per share have been calculated
on the basis of profit on ordinary activities
after tax of GBP1,895,000 (2016: GBP3,461,000)
and on 10,185,206 (2016: 10,750,549) 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 GBP1,895,000 (2016: GBP3,461,000)
and on 10,185,206 (2016: 10,750,549) 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:
2017 2016
GBP'000 GBP'000
Cash at bank and in hand 6,710 10,085
Bank overdrafts - -
6,710 10,085
-------- --------
The fair value of cash and cash equivalents are considered to be
their book value.
3. 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 2017 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 2016
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.
4. Annual general meeting
The Annual General Meeting of Colefax Group plc will be held at
19-23 Grosvenor Hill, London W1K 3QD on 14 September 2017 at 11.00
a.m.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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