TIDMCFX
RNS Number : 8146Y
Colefax Group PLC
14 September 2020
AIM: CFX
14 September 2020
COLEFAX GROUP PLC
("Colefax" or the "Group")
Preliminary Results for the year ended 30 April 2020
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
-- Worldwide Covid-19 'lockdowns' significantly impacted sales,
with the majority of showrooms, customers and suppliers closed for
varying periods
-- Sales decreased by 9.3% to GBP78.36m (2019 - GBP86.36m)
-- Pre-tax profit decreased by 57.3% to GBP2.18m (2019 - GBP5.10m), including:
- one-off charge of GBP0.71m relating to operational integration and
- non-cash charge of GBP0.71m relating to adoption of IFRS 16 Leases
- excluding these two items, pre-tax profit reduced by 29% to GBP3.59 million
-- Earnings per share decreased by 46% to 21.4p (2019 - 39.3p)
-- Cash at 30 April 2020 increased to GBP11.5m (2019 - GBP9.5m).
-- Board is not proposing a final dividend
-- Fabric Division sales decreased by 5.8% to GBP67.03m (2019 -
GBP71.15m) and by 7.3% on constant currency basis
- US sales down by 2.0%, UK sales down by 10.6% and Europe sales down by 11.1%
- in the last six weeks of FY 2020, Fabric Division sales
reduced by 45% against the same period last year
-- Decorating Division sales decreased as expected to GBP8.96m
(2019 - GBP12.50m) against an outperformance in the prior year
-- Group utilised government support programmes where appropriate
David Green, Chief Executive of Colefax, said:
" The Covid-19 pandemic started to have a major impact on the
Group in the last six weeks of the financial year ended 30 April
2020 and continued into the current year.
"The most significant impact on sales was during the total
lockdown period and as restrictions have been eased we have seen a
good recovery in core Fabric Division sales. Current sales trends
are ahead of our initial expectations at the start of the pandemic.
Sales in July and August were ahead of the prior year and we
believe that this is not simply due to deferred sales but also
reflects new business arising as a result of the lockdowns .
"The Group has a strong balance sheet with significant liquidity
and is well placed to navigate even a severe recession and take
advantage of any opportunities that may arise.
"Throughout the pandemic our priority has been the health and
safety of our staff, customers and suppliers. Our staff in
particular have made an extraordinary effort to respond to the
challenges we have faced and I am extremely grateful to every one
of them for the sacrifices they have made and for their hard work
and loyalty to the Group."
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, Andrew Tel: 020 7418 8900
(Nominated Advisor Clark
And Broker)
COLEFAX GROUP PLC
CHAIRMAN'S STATEMENT
Financial Results
Group sales for the year to 30 April 2020 decreased by 9.3% to
GBP78.36 million (2019 - GBP86.36 million) and decreased by 10.5%
on a constant currency basis. Pre-tax profits decreased by 57.3% to
GBP2.18 million (2019 - GBP5.10 million) and earnings per share
decreased by 46% to 21.4p (2019 - 39.3p). The pre-tax profit for
the year includes one-off charges of GBP714,000 relating to the
integration of our UK and US Fabric Division operations of which
GBP645,000 was non-cash. In addition the adoption of IFRS 16 Leases
resulted in extra non-cash charges of GBP705,000. Excluding these
two items pre-tax profit reduced by 29% to GBP3.59 million.
Our financial year-end on 30 April 2020 was in the middle of
worldwide lockdowns to control the Covid-19 pandemic. As far as
possible the Group has remained operational throughout the crisis
but with the majority of our showrooms, customers and suppliers
closed for varying periods of time the lockdowns inevitably had a
significant impact on sales. In the last six weeks of our financial
year sales in our core Fabric Division were down by GBP4.2 million
or 45% on a like-for-like basis. The Group utilised government
support where appropriate and GBP280,000 of furlough income is
included in the income statement under other operating income. This
helped to offset some of the losses arising from the restrictions
put in place to control the virus.
Part of the reduction in Group sales and profit before tax was
due to our Decorating Division which made a profit of GBP121,000
(2019 - GBP1.1 million) on sales of GBP8.96 million (2019 - GBP12.5
million). The prior year's performance was exceptional and the
GBP974,000 reduction in Decorating Division profit was not due to
the impact of Covid-19.
When the likely sales impact of the lockdown measures first
became apparent the Board took action to conserve cash including
cancelling the interim dividend of 2.6p payable on 9 April 2020.
Given the adverse impact of Covid-19 on profitability and ongoing
uncertainty over the extent of the post lockdown recovery, the
Board have decided not to propose a final dividend for the year
ended 30 April 2020.
The Group ended the year with net cash of GBP11.5 million (2019
- GBP9.5 million). This balance includes a US loan receipt of
GBP968,000 under the coronavirus related CARES Act. Allowing for
this loan the Group started the current year with net cash of
GBP10.6 million and is in a strong position to manage the adverse
consequences of the coronavirus pandemic.
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 86% of Group
turnover, decreased by 5.8% to GBP67.03 million (2019 - GBP71.16
million) but decreased by 7.3% on a constant currency basis. Most
of the sales decline took place in the last six weeks of the
financial year during worldwide lockdowns to control Covid-19. For
the ten months to February 2019 Fabric Division sales were down by
2.2% on a constant currency basis. Trading was in line with
expectations in the first two weeks of March but in the last six
weeks of the financial year sales declined by GBP4.2 million or 45%
on a constant currency basis.
Pre-tax profit decreased by 46.1% to GBP2.0 million (2019 -
GBP3.71 million). Excluding one-off UK-US operational integration
costs of GBP714,000 and a non cash cost of GBP679,000 from adopting
IFRS 16 Leases, pre-tax profits decreased by 9% to GBP3.4 million.
The profit impact of the decline in sales was partly offset by a
stronger US Dollar exchange rate which averaged $1.26 during the
year and improved gross profit margins in the US by GBP427,000.
As a result of the Covid-19 pandemic sales trends prior to the
virus are no longer a helpful guide to the future. It is more
meaningful to look at the rate at which sales are recovering as
lockdown measures are eased. Not surprisingly this varies
significantly by market and reflects differences in the timing of
the lockdowns and their subsequent easing.
Sales in the US, which represent 62% of the Fabric Division's
turnover, decreased by 2.0% and by 4.8% on a constant currency
basis. For the ten months to the end of February sales were down by
0.5%. Like-for-like sales in March were down by 7% and April sales
were down by 47%. Since the year end like for like sales were down
by 36% in May, 20% in June but up by 3% in July and 4% in
August.
In February 2020 we completed the refurbishment of our Los
Angeles showroom and although we will not now see an immediate
benefit we believe it will help to grow sales in the future.
Operationally we have started to run-down fabric stocks at our US
warehouse as part of the transfer of the majority of our warehouse
operations to the UK. This project will be completed in the second
half of the current year.
Sales in the UK, which represent 17% of the Fabric Division's
turnover, decreased by 10.6%. For the ten months to the end of
February sales were down by 4% reflecting fairly difficult trading
conditions linked to a weak high-end housing market. In March when
the UK lockdown started sales were down by 19% and in April sales
were down by 73%. Since the year end like for like sales were down
by 67% in May, 34% in June but encouragingly were up by 8% in July
and 3% in August.
Sales in Continental Europe, which represent 19% of the Fabric
Division's turnover, decreased by 11.1% and by 10.7% on a constant
currency basis. For the ten months to the end of February sales in
Europe were down by 3.6% reflecting weak economic conditions in
most countries. The lockdowns in much of Europe started slightly
earlier than the UK and sales in March were down by 24% and in
April by 67%. Since the year end like-for-like sales were down by
35% in May and by 20% in June but were up by 14% in July and 8% in
August. This is ahead of the US and UK and we attribute this to the
earlier lockdowns that took place in Europe.
Sales in the Rest of the World, which represent just 2% of the
Fabric Division's turnover, decreased by 11.6% during the year. Our
major markets in the Rest of the World are the Middle East, China
and Australia and we expect these territories to remain a small
proportion of total Fabric Division sales
-- Furniture - Kingcome Sofas
Sales of Kingcome furniture, which represent 3% of Product
Division sales, decreased by 12.1% to GBP2.37 million (2019 -
GBP2.70 million). Operating profit reduced by 62% to GBP100,000
(2019 - GBP262,000). At the end of February Kingcome was on course
for another good year with sales up by 4% for the first ten months.
When the lockdown started our London showroom closed and the
majority of staff at our Devon factory were furloughed for three
weeks after which production was restarted with a skeleton team.
Sales are recognised when orders are delivered to the customer and
very little furniture could be delivered during the April lockdown
reducing sales by 69% compared to the prior year. The order book at
the end of the year was only down by 1% but this was mainly due to
the factory shutdown in April. The Kingcome Sofas showroom reopened
in mid-June. Orders were down by 62% in May and 38% in June but up
by 8% in July and 2% in August in line with the pattern seen in the
UK Fabric Division.
Interior Decorating Division
Decorating sales, which account for 11% of Group turnover,
decreased by 28.3% to GBP8.96 million (2019 - GBP12.50 million) and
profits decreased to GBP121,000 (2019 - GBP1.1 million). This
result follows two years of exceptional performance by the
Decorating Division and although activity levels were significantly
restricted in the last six weeks of the year the lockdowns were not
the main reason for the reduction in sales and profit. The
Decorating Division has a relatively fixed cost base and
significant fluctuations in sales and profits are a feature of the
business and occur due to variations in the timing of major
projects. During the lockdowns it was not possible to travel
overseas or visit new and existing clients. This will inevitably
have some knock-on impact on the timing of projects and the volume
of work that can be carried out in the current year. Restrictions
on overseas travel are a particular concern because typically
around 40% of Decorating Division sales relate to overseas
projects.
Prospects
The Covid-19 pandemic started to have a major impact on the
Group in the last six weeks of the financial year ended 30 April
2020 and continued into the current year. The timing of our year
end means that two financial years will be significantly affected
by the worldwide actions taken to contain the virus. The most
significant impact on sales was during the total lockdown period
and as restrictions have been eased we have seen a good recovery in
core Fabric Division sales. Current sales trends are ahead of our
initial expectations at the start of the pandemic. Sales in July
and August were ahead of the prior year and we believe that this is
not simply due to deferred sales but also reflects new business
arising as a result of the lockdowns.
We have taken action to reduce costs wherever possible including
salary cuts. The Group has a strong balance sheet with net cash at
the start of the year of GBP10.6 million and is well placed to
navigate even a severe recession and take advantage of any
opportunities that may arise.
Throughout the pandemic our priority has been the health and
safety of our staff, customers and suppliers. Our staff in
particular have made an extraordinary effort to respond to the
challenges we have faced and I am extremely grateful to every one
of them for the sacrifices they have made and for their hard work
and loyalty to the Group
David Green
Chairman
14 September 2020
GROUP INCOME STATEMENT
For the year ended 30 April 2020
2020 2019
GBP'000 GBP'000
Revenue 78,364 86,355
Cost of sales (34,602) (39,496)
Gross profit 43,762 46,859
Operating expenses (40,655) (41,789)
Other income 280 -
-------------------------------------------- ------------------ --------------------
Profit from operations 3,387 5,070
Finance income 20 25
Finance expense (1,231) -
Profit before taxation 2,176 5,095
Tax expense
-UK (269) (733)
-Overseas 13 (532)
(256) (1,265)
Profit for the year attributable to equity
holders of the parent 1,920 3,830
Basic earnings per share 21.4p 39.3p
Diluted earnings per share 21.4p 39.3p
GROUP STATEMENT OF COMPREHENSIVE INCOME
For the year ended 30 April 2020
2020 2019
GBP'000 GBP'000
Profit for the year 1,920 3,830
Other comprehensive income / (expense):
Items that will not be reclassified to
profit and loss:
Remeasurement of defined benefit pension
scheme - (28)
Other movements (1) -
Tax relating to items that will not be
reclassified to profit and loss - 11
---------------------------------------------------
(1) (17)
Items that will or may be reclassified
to profit and loss:
Exchange differences on translation of
foreign operations 122 209
Cash flow hedges:
Gains/(losses) recognised directly in
equity (84) (157)
Transferred to profit and loss for the
year 104 177
Tax relating to items that will or may
be reclassified to profit and loss (54) (104)
--------------------------------------------------- --------------------
88 125
Total other comprehensive income 87 108
Total comprehensive income for the year
attributable to 2,007 3,938
equity holders of the parent
--------------------------------------------- ---- -------------------- --------------------
COLEFAX GROUP PLC
GROUP STATEMENT OF FINANCIAL POSITION
At 30 April 2020
2020 2019
GBP'000 GBP'000
Non-current assets:
Property, plant and equipment 8,524 8,215
Right of use asset 26,057 -
Deferred tax asset 118 113
Pension asset - -
34,699 8,328
Current assets:
Inventories and work in progress 15,518 14,923
Trade and other receivables 6,499 11,265
Cash and cash equivalents 11,538 9,458
Current corporation tax 332 -
33,887 35,646
---- -------------------- --------------------
Current liabilities:
Trade and other payables 11,007 14,847
Lease liabilities 4,612 -
Other loans 977 -
Current corporation tax - 669
16,596 15,516
-------------------- --------------------
Net current assets 17,291 20,130
-------------------- --------------------
Total assets less current liabilities 51,990 28,458
--------------------------------------------------- -------------------- --------------------
Non-current liabilities:
Lease liabilities 23,780 -
Deferred rent - 1,992
Deferred tax liability - 26
Pension liability - 1
Net assets 28,210 26,439
--------------------------------------------------- -------------------- --------------------
Capital and reserves attributable to equity
holders of the Company:
Called up share capital 902 902
Share premium account 11,148 11,148
Capital redemption reserve 1,972 1,972
ESOP share reserve (114) (113)
Foreign exchange reserve 2,339 2,267
Cash flow hedge reserve 0 (16)
Retained earnings 11,963 10,279
Total equity 28,210 26,439
--------------------------------------------------- -------------------- --------------------
COLEFAX GROUP PLC
GROUP STATEMENT OF CASH FLOWS
For the year ended 30 April 2020
2020 2019
GBP'000 GBP'000
Operating activities
Profit before taxation 2,176 5,095
Finance income (20) (25)
Finance expense 1,231 -
Loss on disposal of property, plant and
equipment (28) 8
Depreciation 3,071 2,800
Depreciation on right of use assets 4,193 -
Cash flows from operations before changes
in working capital 10,623 7,878
(Increase) / decrease in inventories and
work in progress (497) 1,765
Decrease in trade and other receivables 4,914 47
Decrease in trade and other payables (4,461) (1,783)
Cash generated from operations 10,579 7,907
-------------------- --------------------
Taxation paid
UK corporation tax paid (602) (374)
Overseas tax paid (748) (606)
(1,350) (980)
-------------------- --------------------
Net cash inflow from operating activities 9,229 6,927
-------------------- --------------------
Investing activities
Payments to acquire property, plant and
equipment (3,183) (2,046)
Receipts from sales of property, plant
and equipment 39 14
Interest received 20 25
Net cash outflow from investing (3,124) (2,007)
-------------------- --------------------
Financing activities
Proceeds from loans and borrowings 968 -
Purchase of own shares including related
costs - (4,421)
Principal paid on lease liabilities (3,646) -
Interest paid on lease liabilities (1,231) -
Equity dividends paid (242) (497)
Net cash outflow from financing (4,151) (4,918)
-------------------- --------------------
Net increase in cash and cash equivalents 1,954 2
Cash and cash equivalents at beginning
of year 9,458 9,177
Exchange gains/(losses) on cash and cash
equivalents 126 279
Cash and cash equivalents at end of year 11,538 9,458
---------------------------------------------- --- -------------------- --------------------
COLEFAX GROUP PLC
GROUP STATEMENT OF CHANGES IN
EQUITY
For the year
ended
30 April 2020
Share Share Capital ESOP Foreign Cash Retained Total
capital premium redemption share exchange flow earnings equity
account reserve reserve reserve hedge
reserve
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
At 1 May 2019 902 11,148 1,972 (113) 2,267 (16) 10,279 26,439
Profit for the
year - - - - - - 1,920 1,920
Foreign
exchange - - - - 122 - - 122
Other movements - - - (1) - - - (1)
Cash flow
hedges:
Losses - - - - - (84) - (84)
Transfers - - - - - 104 - 104
Tax on other
comprehensive
income - - - - (50) (4) - (54)
Total
comprehensive
income for
the year - - - (1) 72 16 1,920 2,007
Share buybacks - - - - - - 6 6
Dividends paid - - - - - - (242) (242)
At 30 April
2020 902 11,148 1,972 (114) 2,339 0 11,963 28,210
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
Remeasurement
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
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 GBP1,920,000 (2019:
GBP3,830,000) and on 8,962,440 (2019 - 9,738,402) 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 2020.
2. Cash and Cash equivalents
For the purposes of the consolidated statement of cash flows,
cash and cash equivalents comprise the following:
2020 2019
GBP'000 GBP'000
Cash at bank and in hand 11,538 9,458
The fair value of cash and cash equivalents are considered to
be their book value.
3. Going Concern
In response to the Covid-19 risk the directors have prepared
detailed profit and cash flow forecasts for each subsidiary covering
a period of at least twelve months from the date of approving
the financial statements and taking into account all of the principal
risks and uncertainties facing the business. The forecasts have
been stress tested by considering the profit and cash flow impact
of a range of sales scenarios up to a maximum decline of 50%
compared to the year ended 30 April 2020. Even under the worst
case scenario the Group has significant headroom in terms of
cash resources and has no need for any bank borrowing. As a result
the directors are satisfied that the Group has adequate resources
and that there is no material uncertainty that would prevent
the Group from continuing in operational existence for the foreseeable
future and have adopted the going concern basis in preparing
the consolidated financial statements for the year ended 30 April
2020.
4. 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 2020 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
2019 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.
Copies of the Annual Report and full Financial Statements will
be posted to shareholders during the week commencing 21 September
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
5. Annual General Meeting
This year's Annual General Meeting is due to take place on 19
October 2020 at 11.00am. However, the continuing Covid-19 pandemic
has led to the imposition of severe restrictions on the way in
which we all conduct business and in particular on public gatherings.
This means that, in accordance with the Government's social distancing
guidelines, the Directors have decided to facilitate holding
the Annual General Meeting with minimal face to face contact,
while still endeavouring to create a forum for the conduct of
the formal business set out in the notice of the Annual General
Meeting.
We therefore have to notify you that unfortunately it will not
be possible for members to attend the Annual General Meeting
in person. Two Directors will be present so as to constitute
the quorum of two members required for the Annual General Meeting
proceedings to be valid. Members may submit questions ahead of
the Annual General Meeting by emailing rob.barker@colefax.com.
The Board encourages members to submit proxy forms and to appoint
the Chairman of the meeting as their proxy with their voting
instructions.
Further details and guidance can be found at note 1 to the notice
of Annual General Meeting set out in the 2020 Annual Report.
If these arrangements should change for any reason prior to the
Annual General Meeting we will notify members of such change
and make appropriate announcement(s) via the regulated news service
and the company's website.
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.
RNS may use your IP address to confirm compliance with the terms
and conditions, to analyse how you engage with the information
contained in this communication, and to share such analysis on an
anonymised basis with others as part of our commercial services.
For further information about how RNS and the London Stock Exchange
use the personal data you provide us, please see our Privacy
Policy.
END
FR LBMPTMTBBBJM
(END) Dow Jones Newswires
September 14, 2020 02:00 ET (06:00 GMT)
Colefax (LSE:CFX)
Historical Stock Chart
From Feb 2024 to Mar 2024
Colefax (LSE:CFX)
Historical Stock Chart
From Mar 2023 to Mar 2024