AIMprospector back shares in 2016, following £1.5m the year before. In May of this year another 500k shares were brought in, equating to just short of 5% of the share capital at that time. Dividends at the company have been increasing since 2009 and are now ahead of the level the last time that the payout was cut in 2008. The 2016 full year saw sales broadly unchanged at £76.88m. This resulted in pre-tax profit and earnings per share similarly flat at £5.02m and 32.2p respectively. Colefax is a conservatively run business and as of the last balance sheet date, net cash was reported ahead at £10.1m. However, tougher trading since the
TOPpick year end has led to a significant cut to 2017 earnings forecasts. The US (which the company describes as its major market) has seen softer trading, which Colefax attributes to the forthcoming election. Higher stamp duty in the UK has dampened high end property transactions at home.
four largest shareholders together account for 75% While the group earns around three quarters of its revenues overseas, exchange rates were recently hedged. A material currency windfall is expected in around two years’ time. Significant expenditure is slated for the current year, with new US
showrooms opening in Boston and Atlanta costing $850,000. Colefax is also relocating its decorating division to new premises on Pimlico Road, London. The new showrooms are expected to play an important role in sales at the company. Colefax’ luxury credentials place the company in the same bracket as Mulberry and Burberry. Brand strength and cache are a long lasting customer draw. The earnings forecasts for 2017 and 2018 suggest that the shares, like the product, are not cheap. However, Colefax is a longstanding success that continues to accumulate heritage, reputation and cash. The controlling Chief Executive and Chairman, David Green, is among the most senior at a quoted plc, at 71 years. Today he owns nearly 31% of the stock. The four largest shareholders together account for 75% of shares in issue. Any takeover would require the assent of a small number of individuals. The recent depreciation of the pound has made Colefax shares more affordable to a foreign buyer but the structure of the share register means that we will likely never hear of any such approach unless a price is agreed. Colefax Group (LON:CFX) FOR Recovering markets Coming currency tailwind AGAINST Hard to trade Single person control Market cap Bid:offer P/E (forecast) Yield (forecast)
Colefax acts as an interior decorator to the well-heeled www.aimprospector.co.uk
£49m 470p:490p 17.8 1.0% 443p:510p
Published on Nov 15, 2016
Published on Nov 15, 2016
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