Last checked at 28 Mar 2013 07:00
28 March 2013
JAMES HALSTEAD PLC
INTERIM RESULTS FOR THE HALF-YEAR ENDED 31 DECEMBER 2012
Key Figures
James Halstead plc, the AIM listed manufacturer and international distributor of commercial floor coverings, reports:
·; Operating profit increased to a record £21.3 million - an increase of 2.1% |
| |
·; Pre-tax profit increased to a record £21.6 million - an increase of 2.2% |
| |
·; Basic earnings per ordinary share increased to a record 7.7p - an increase of 6.9% |
| |
·; Interim dividend increased to a record 2.75p - an increase of 10% |
| |
·; Net cash at £51.9 million ·; Proposed special dividend of 7.0p |
| |
The Chief Executive, Mr. Mark Halstead, commented:
"Having, once again, achieved record profits and with a bulwark of a strong balance sheet it is pleasing to announce another special dividend. But it is clear market conditions are not easy, it has been difficult for many companies since the financial crisis of 2008 affected us all. We have since that time raised turnover by 54% and profit by 193% which is clearly testimony to our strength."
Enquiries:
| |
Mark Halstead, Chief Executive | |
Gordon Oliver, Finance Director | Telephone: 0161 767 2500 |
Nick Lyon - Hudson Sandler | Telephone: 020 7796 4133 |
Ben Thorne - Altium Capital | Telephone: 020 7484 4076
|
Chris Hardie - Arden Partners | Telephone: 020 7614 5900 |
CHAIRMAN'S STATEMENT
I am pleased to report another record level of profit. The operating profit before tax is £21.3 million (2011: £20.8 million) an increase of 2.1%. This growth is modest in comparison to many recent years but, in the prevailing global markets, still represents progress. Overseas turnover remains globally spread with projects ranging from the European Space Agency facility in French Guyana to the Plevin Library in Bulgaria.
Trading
Trading in the first half was solid but at a lower level than the comparative period. Turnover of £109.0 million (2011: £117.7 million) was lower owing to three, broadly, comparable factors. Firstly, the first half year period had no sales from Phoenix Distribution, the non-core motorcycle accessories business, which was closed in the previous financial year. Secondly, changes in exchange rates have altered the translation of our overseas turnover (largely the euro). The third and final factor is the decline in flooring turnover of around 3%.
Our UK flooring turnover increased by 3% which is a significant achievement in the prevailing conditions and is at record levels but overseas revenue has declined.
In like-for-like currency terms, our largest market (Central Europe) was just 1% short of the prior year comparative although that itself was a record (some 17% ahead).
The principal adverse market conditions were in Australia with a 15% fall in sales revenue (excluding translation effects) which was largely to be expected, as infrastructure spending slowed. The slowdown in overseas sales extended further with the Middle East also lower, due, in a large part, to the widely reported unrest and disruption in that region.
Having noted these declines, I would stress that there are many positives with France, Scandinavia, Canada and South America all reporting increases in turnover.
A further positive is that gross margins have held firm and are comparable with the prior period. We have focused on tight overhead control, with reduction in spending to reflect sales conditions. Raw materials and energy costs have remained relatively unchanged.
Turning to the balance sheet, our financial condition has strengthened somewhat with cash balances standing at £51.9 million (2011: £36.9 million); given the fact that this is after outflows of £16.5 million on dividends and £10.8 million on taxation this is commendable. The cash flow from operations of £31.6 million (2011: £23.1 million) was 36.9% ahead of the comparative period bolstered by lower inventory and trade debtors.
Overall, a satisfactory six months trading.
Earnings per Share
Our basic earnings per share increased to 7.7p (2011: 7.2p) an increase of 6.9%. The figures are re-stated to reflect the current shares in issue (i.e. after the one-for-one bonus issue of 11 January 2013).
Having regard for the earnings growth the Board is pleased to announce they are proposing a dividend of 2.75p (2011: 2.5p) representing a 10% increase. Again, this is based on the number of shares in issue following the 11 January 2013 bonus issue.
Having considered the significant level of cash, the low rates of interest prevailing and our ongoing cash generation, the Board are also proposing a special dividend of 7.0p. The special dividend will be payable on 10 May 2013 to those shareholders on the register at the close of business on 12 April 2013.
Outlook
Although we have reported record interim profits, it is clear certain areas have slowed. UK construction output is forecast to fall by over 2% in 2013 (following a 9% decline in 2012) with public sector work continuing to bear the brunt. Any recovery will be in 2014 at the earliest and against this backdrop the 3% growth in our UK sales in the year to date, leading to record flooring sales in the UK, is a creditable achievement.
Looking to the global market in which we operate, many developed countries have been slowing infrastructure spend for the last few years and this affects the pipeline of current and future opportunities. Indeed, the problems of the developed world affect the rest of the world as their export markets are hampered by lower spend. With flooring one of the last items in the build this is likely to have an effect on sales.
Our exports are global, we have shipped flooring to 96% of the populated world and whilst our developed markets have a high proportion of repair and renewal business a significant portion of turnover is related to new build projects and any slowdown will, to some degree, affect us.
Our first six months' trading has reflected this slow down and the period from the half year end until now continues this trend. Prices are keen as all manufacturers seek to gain market share but the weakness of sterling has insulated us from margin erosion.
I am confident that we continue to win business against our peers. We have a network of businesses partnerships that is robust but the reduction in the amount of business available will preclude top line growth. In the current environment it will be difficult to expect profits to rise and it may well be difficult to maintain profits at last year's level. However, we have no reason or evidence of any major decline and are confident in the prospects of our business going forward.
Geoffrey Halstead
Chairman
28 March 2013
Consolidated Income Statement
for the half-year ended 31 December 2012
Half-year ended 31.12.12 £'000 | Half-year ended 31.12.11 £'000 | Year ended 30.06.12 £'000 | |
Revenue | 109,026 | 117,725 | 226,335 |
Operating profit | 21,252 | 20,819 | 42,213 |
Net finance income | 311 | 280 | 494 |
Profit before income tax | 21,563 | 21,099 | 42,707 |
Income tax expense | (5,741) | (6,109) | (12,176) |
Profit for the period | 15,822 | 14,990 | 30,531 |
Earnings per ordinary share of 5p*: | |||
-basic | 7.7p | 7.2p | 14.7p |
-diluted | 7.6p | 7.2p | 14.7p |
All the above figures relate to continuing operations.
Details of dividends paid and proposed are given in note 3
\* These have been restated to reflect the effect of the one-for-one bonus share issue on 11 January 2013.
Consolidated Balance Sheet
as at 31 December 2012
Half-year ended 31.12.12 £'000 | Half-year ended 31.12.11 £'000 | Year ended 30.06.12 £'000 | |
Non-current assets | |||
Property, plant and equipment | 33,212 | 32,511 | 31,693 |
Intangible assets | 3,232 | 3,232 | 3,232 |
Deferred tax assets | 4,656 | 7,294 | 5,362 |
41,100 | 43,037 | 40,287 | |
Current assets | |||
Inventories | 47,439 | 52,201 | 52,452 |
Trade and other receivables | 26,581 | 29,416 | 30,962 |
Derivative financial instruments | 184 | 1,506 | 1,067 |
Cash and cash equivalents | 51,927 | 36,928 | 38,704 |
126,131 | 120,051 | 123,185 | |
Current liabilities | |||
Trade and other payables | 49,192 | 54,906 | 49,645 |
Derivative financial instruments | 686 | 399 | 654 |
Current income tax liabilities | 7,491 | 7,889 | 6,962 |
57,369 | 63,194 | 57,261 | |
Net current assets | 68,762 | 56,857 | 65,924 |
Non-current liabilities | |||
Retirement benefit obligations | 9,430 | 15,738 | 10,367 |
Deferred tax liabilities | 850 | 922 | 850 |
Borrowings | 200 | 200 | 200 |
Other payables | 430 | 464 | 456 |
10,910 | 17,324 | 11,873 | |
Net assets | 98,952 | 82,570 | 94,338 |
Equity | |||
Equity share capital | 5,166 | 5,159 | 5,164 |
Equity share capital (B shares) | 160 | 160 | 160 |
5,326 | 5,319 | 5,324 | |
Share premium account | 2,056 | 1,711 | 1,974 |
Retained earnings | 80,132 | 62,592 | 75,324 |
Other reserves | 11,438 | 12,948 | 11,716 |
Total equity attributable to shareholders of the parent | 98,952 | 82,570 | 94,338 |
Consolidated Cash Flow Statement
for the half-year ended 31 December 2012
Half-year ended 31.12.12 £'000 | Half-year ended 31.12.11 £'000 | Year ended 30.06.12 £'000 | |
Cash inflow from operations | 31,613 | 23,095 | 37,251 |
Net interest received | 194 | 124 | 177 |
Taxation paid | (4,637) | (4,043) | (10,212) |
Cash inflow from operating activities | 27,170 | 19,176 | 27,216 |
Purchase of property, plant and equipment | (2,804) | (1,371) | (2,885) |
Proceeds from disposal of property, plant and equipment | 143 | 240 | 368 |
Cash outflow from investing activities | (2,661) | (1,131) | (2,517) |
Equity dividends paid | (11,366) | (10,218) | (15,381) |
Purchase of own shares | - | (5,156) | (5,156) |
Shares issued | 84 | 640 | 909 |
Cash outflow from financing activities | (11,282) | (14,734) | (19,628) |
Net increase in cash and cash equivalents | 13,227 | 3,311 | 5,071 |
Effect of exchange differences | (4) | (414) | (398) |
Cash and cash equivalents at start of period | 38,704 | 34,031 | 34,031 |
Cash and cash equivalents at end of period | 51,927 | 36,928 | 38,704 |
Consolidated Statement of Comprehensive Income
for the half-year ended 31 December 2012
Half-year ended 31.12.12 £'000 | Half-year ended 31.12.11 £'000 | Year ended 30.06.12 £'000
| |
Profit for the period | 15,822 | 14,990 | 30,531 |
Other comprehensive income net of tax: | |||
Foreign currency translation differences | (426) | (1,270) | (1,851) |
Actuarial gain/(loss) on the defined benefit pension scheme |
352 |
(2,863) |
(580) |
Deferred taxation - change of rate | - | - | 71 |
Fair value movements on hedging instruments | 148 | 796 | 144 |
Other comprehensive income for the period net of tax |
74 | (3,337) | (2,216) |
Total comprehensive income for the period | 15,896 | 11,653 | 28,315 |
Attributable to equity holders of the | |||
parent company | 15,896 | 11,653 | 28,315 |
Notes to the Interim Results
for the half-year ended 31 December 2012
1. | Basis of preparation
| |||
The interim financial statements are unaudited and do not constitute statutory accounts as defined within the Companies Act 2006.
The principal accounting policies applied in the preparation of the consolidated interim statements are those set out in the annual report and accounts for the year ended 30 June 2012.
The figures for the year ended 30 June 2012 are an abridged statement of the group audited accounts for that year. The financial statements for the year ended 30 June 2012 were audited and have been delivered to the Registrar of Companies.
As is permitted by the AIM rules, the directors have not adopted the requirements of IAS34 'Interim Financial Reporting' in preparing the interim financial statements. Accordingly the interim financial statements are not in full compliance with IFRS. | ||||
2. | Income tax has been provided at the rate of 26.6% (2011: 29.0%).
| |||
3. | Dividends | |||
Half-year ended 31.12.12 £'000 | Half-year ended 31.12.11 £'000 | Year ended 30.06.12 £'000 | ||
Equity dividends paid:
| ||||
Final dividend for the year ended 30 June 2011 | - | 10,218 | 10,218 | |
Interim dividend for the year ended 30 June 2012 | - | - | 5,163 | |
Final dividend for the year ended 30 June 2012 | 11,366 | - | - | |
11,366 | 10,218 | 15,381 | ||
Equity dividends proposed at the end of the period | ||||
Interim dividend | 5,683 | 5,163 | - | |
Final dividend | - | - | 11,366 | |
Equity dividends per share, paid and proposed (as re-stated to reflect the one for one bonus
issue on 11 January 2013), are as follows:
·; | 4.9p final dividend for the year ended 30 June 2011, paid on 2 December 2011 |
·; | 2.5p interim dividend for the year ended 30 June 2012, paid on 18 May 2012 |
·; | 5.5p final dividend for the year ended 30 June 2012, paid on 7 December 2012 |
·; | 2.75p interim dividend for the year ended 30 June 2013, payable on 7 June 2013 to those shareholders on the register at the close of business on 10 May 2013 |
4. | Calculation of earnings per ordinary share | |||
Half-year ended 31.12.12 £'000 | Half-year ended 31.12.11 £'000 | Year ended 30.06.12 £'000 | ||
Basic earnings | 15,822 | 14,990 | 30,531 | |
Weighted average number of ordinary shares in issue | 206,624,017 | 208,158,164 | 207,325,750 | |
Weighted average number of ordinary shares in issue (diluted for the effect of outstanding share options) | 207,624,112 | 209,095,668 | 208,186,160 | |
Basic earnings per 5p ordinary share | 7.7p | 7.2p | 14.7p | |
Diluted earnings per 5p ordinary share | 7.6p | 7.2p | 14.7p | |
The earnings per share and weighted average number of shares in issue have been restated to reflect the effect of the one-for-one bonus issue on 11 January 2013.
| ||||
5.
|
Copies of the interim results
| |||
Copies of the interim results have been sent to shareholders. Further copies can be obtained from the Company's registered office, Beechfield, Hollinhurst Road, Radcliffe, Manchester, M26 1JN. | ||||