Last checked at 31 Mar 2010 07:00
31 March 2010
JAMES HALSTEAD PLC
INTERIM RESULTS FOR THE HALF-YEAR ENDED 31 DECEMBER 2009
Key Figures
James Halstead plc, manufacturer and international distributor of commercial floor coverings reports:
| ·; | Revenue increased to a record £92.1 million - an increase of 6.3% |
| ·; | Operating profit increased to a record £16.6 million - an increase of 10.1% |
| ·; | Pre-tax profit increased to a record £16.9 million - an increase of 10.2% |
| ·; | Basic earnings per ordinary 5p share increased to a record 22.8p - an increase of 9.6% |
| ·; | Interim dividend increased to a record 8.0p - an increase of 10.3% |
| ·; | Nil net gearing |
Chairman, Mr Geoffrey Halstead, commenting said:
"Steady progress, in heavy seas, best describes the first six months trading and whilst we can't change the wind we have very deftly adjusted our sails".
| Enquiries:
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| Mark Halstead, Chief Executive |
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| Gordon Oliver, Finance Director | Telephone: 0161 767 2500 |
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| Nick Lyon - Hudson Sandler | Telephone: 020 7796 4133 |
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| Ben Thorne - Altium Capital | Telephone: 020 7484 4076 |
CHAIRMAN'S STATEMENT
I am pleased to report, once again, a record set of interim results. Though this opening sentence has been very familiar to shareholders over the years there is no doubt that we have charted a successful route in the most difficult of times. As we near the end of the decade, it is worth noting that our market capitalisation has passed the £300 million level having been below £45 million when the decade started.
Trading
The first half year trading was very solid with record revenue of £92.11 million (2008: £86.65 million) representing an increase of 6.3%. The majority of the sales growth was derived from our flooring activities though I would note Phoenix Distribution (our motorcycle accessories subsidiary) increased sales by 5.3% in difficult retail conditions.
Our flooring products continue to be installed across the globe with notable installations in recent months such as the "Oasis of the Seas" the world's largest cruise liner (five times the size of the Titanic), the prestigious Emirates Marquee at the Melbourne Spring Racing carnival and several large hospitals such as St Vincent's in Queensland, the Abha Hospital in Saudi Arabia, Derby Hospital in the UK, the ESI Hospital in Bangalore, India and the St Nersess Hospital in Yerevan, Armenia.
There has been a 3.2% decline in our revenue in the UK, and a corresponding 13.5% increase in overseas revenue. Looking at our principal markets there has been good growth: Germany up 9.5%, Australia up 6.7%, and New Zealand up 2%. In other territories there are some very good growth trends, for example in France we are ahead 37%, and in Asia & Hong Kong we are up 80%. The latter included a very large social housing project in Tianjin, China's sixth largest city. With the global recession as a backdrop there have been areas of doldrums, where we have seen lower demand. The widely talked about "PIIGS" territories, in terms of our revenue, are 25% down but represent only 3.5% of total sales.
Following the launch of the new Expona Design collection at Euroshop last year this, our flagship luxury vinyl tile, has built on the very positive reaction from architects and designers and is winning us business across the world but with notable success in Germany and the UK. The largest ever promotion by Polyflor of safety flooring in the UK, under the Polysafe brand, has been very successful, translating into increased levels of sales of this range. In our home market, Polysafe was announced "Product of the Year" by the Contract Flooring Association, and Polyflor their "Website of the Year". Also, Polyflor was voted "Supplier of the Year" for the fourth consecutive year by the Independent Flooring Distributors Association following a nationwide poll.
Gross margins were very similar to last year with gains on sales denominated in foreign currency balancing raw material and other cost increases.
The Recofloor vinyl take-back scheme, launched in the autumn has been well received and is not only reducing landfill but is providing a source of material to increase our use of recycled material.
We have largely completed the refurbishment of the premises acquired in Oldham and transfer of staff is well underway. During the next few months we will start to re-shape our UK businesses into separate organisations for sales, technical and manufacturing to underline both the international nature of sales and also a much lesser reliance on UK manufacturing.
The profit before tax at £16.94 million (2008: £15.37 million) is another record performance and is up 10.2% on the comparative period. Finance income has risen despite declines in interest rates due to a receipt of interest on overpaid tax. Cash inflow from operations was very positive increasing by 45.8% to £24.52 million (2008: £16.82 million), with a resulting record £41.27 million of cash on the balance sheet (2008: £31.76 million). This alone gave us the confidence to increase dividends and to pay a special dividend. The inflow from operations was strong despite an increase in stock of £4.35 million (2008: £0.8 million) as this was more than offset by reduced trade debtors and increased trade creditors. The stock growth was in preparation for the major launches of the Expona Domestic collection, and other ranges. The balance sheet remains a bulwark.
Earnings per Share and Interim Dividend
Our basic earnings per share have increased to a record 22.8p (2008: 20.8p) an uplift of 9.6% and having regard to these results and our strong cash balances the Board has announced an interim dividend of 8.0p (2008: 7.25p) representing a 10.3% increase on last year and yet another record. An additional special dividend of 15.0p per share was paid on 25 January 2010.
Outlook
The half year result is encouraging. At the Domotex exhibition, held at Hannover in January we released the new Expona Domestic collection which has been very well received and should match the success of its sister range, Expona Design, launched last year. In addition, we have augmented our safety floor collections with the decorative Mosaic PUR, re-launched "Classic Mystique" a non-directional sheet product aimed at project work, and introduced "MarineSafe" for utilitarian use on ships and offshore structures. Added to this we have upgraded the clean-ability coatings on some of our safety floor ranges and at present we are further upgrading our safety flooring manufacturing capability which will be fully commissioned later in the year. All these things should build upon the solid keel established over the last decade.
In summary, we have an increasing presence in global markets, an improved product offering and continued focus on customer service. Notwithstanding that it is clear that our UK market is still fragile, I have no doubt that we will continue to forge ahead through our second half.
Geoffrey Halstead
Chairman
31 March 2010
Consolidated Income Statement
for the half-year ended 31 December 2009
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| Half-year ended 31.12.09 £'000 | Half-year ended 31.12.08 £'000 | Year ended 30.06.09 £'000 |
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| Revenue | 92,114 | 86,650 | 169,263 |
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| Operating profit | 16,567 | 15,052 | 32,786 |
| Finance income | 371 | 316 | 211 |
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| Profit before income tax | 16,938 | 15,368 | 32,997 |
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| Income tax expense | (5,206) | (4,668) | (8,146) |
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| Profit for the period | 11,732 | 10,700 | 24,851 |
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| Earnings per ordinary share of 5p: |
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| -basic | 22.8p | 20.8p | 48.3p |
| -diluted | 22.7p | 20.7p | 48.2p |
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All the above figures relate to continuing operations.
Details of dividends paid and proposed are given in note 3.
Consolidated Balance Sheet
as at 31 December 2009
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| Half-year ended 31.12.09 £'000 | Half-year ended 31.12.08 £'000 | Year ended 30.06.09 £'000 |
| Non current assets |
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| Property, plant and equipment | 26,466 | 22,804 | 26,091 |
| Intangible assets | 3,232 | 3,232 | 3,232 |
| Deferred tax assets | 7,296 | 5,832 | 6,772 |
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| 36,994 | 31,868 | 36,095 |
| Current assets |
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| Inventories | 34,036 | 33,121 | 28,424 |
| Trade and other receivables | 22,966 | 25,835 | 24,485 |
| Derivative financial instruments | 386 | 741 | 989 |
| Cash and cash equivalents | 41,268 | 31,764 | 27,561 |
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| 98,656 | 91,461 | 81,459 |
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| Current liabilities | 49,866 | 53,722 | 37,922 |
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| Net current assets | 48,790 | 37,739 | 43,537 |
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| Non current liabilities |
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| Retirement benefit obligations | 16,096 | 12,227 | 15,602 |
| Deferred tax liabilities | 992 | 992 | 992 |
| Other payables | 807 | 594 | 747 |
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| 17,895 | 13,813 | 17,341 |
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| Net Assets | 67,889 | 55,794 | 62,291 |
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| Equity |
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| Equity share capital | 2,592 | 2,574 | 2,574 |
| Equity share capital (B shares) | 160 | 160 | 160 |
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| 2,752 | 2,734 | 2,734 |
| Share premium account | 2,883 | 1,738 | 1,738 |
| Retained earnings | 49,922 | 39,941 | 47,289 |
| Other reserves | 12,332 | 11,381 | 10,530 |
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| Total equity attributable to shareholders of the parent | 67,889 | 55,794 | 62,291 |
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Consolidated Cash Flow Statement
for the half-year ended 31 December 2009
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| Half-year ended 31.12.09 £'000 | Half-year ended 31.12.08 £'000 | Year ended 30.06.09 £'000 |
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| Cash inflow from operations | 24,521 | 16,818 | 29,130 |
| Interest received | 438 | 606 | 918 |
| Interest paid | (38) | (94) | (185) |
| Taxation paid | (2,275) | (5,410) | (12,820) |
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| Cash inflow from operating activities | 22,646 | 11,920 | 17,043 |
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| Purchase of property, plant and equipment | (1,741) | (3,015) | (9,421) |
| Proceeds from disposal of property, plant and equipment | 124 | 73 | 1,433 |
| Cash outflow from investing activities | (1,617) | (2,942) | (7,988) |
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| Equity dividends paid | (8,752) | (7,465) | (11,197) |
| Shares issued | 1,163 | 30 | 30 |
| Interest paid | - | (6) | - |
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| Cash outflow from financing activities | (7,589) | (7,441) | (11,167) |
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| Net increase/(decrease) in cash and cash equivalents | 13,440 | 1,537 | (2,112) |
| Effect of exchange differences | 267 | 706 | 152 |
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| Cash and cash equivalents at start of period | 27,561 | 29,521 | 29,521 |
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| Cash and cash equivalents at end of period | 41,268 | 31,764 | 27,561 |
Consolidated Statement of Comprehensive Income
for the half-year ended 31 December 2009
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| Half-year ended 31.12.09 £'000 | Half-year ended 31.12.08 £'000 | Year ended 30.06.09 £'000
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| Profit for the period | 11,732 | 10,700 | 24,851 |
| Other comprehensive income (net of tax): |
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| Exchange differences on translating foreign operations |
1,784 |
3,286 |
1,204 |
| Actuarial (loss)/gain on the defined benefit pension scheme |
(356) |
251 |
(2,842) |
| Fair value movements on hedged items | 18 | (315) | 916 |
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| Other comprehensive income for the period (net of tax) | 1,446 | 3,222 | (722) |
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| Total comprehensive income for the period | 13,178 | 13,922 | 24,129 |
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| Attributable to equity holders of the |
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| parent company | 13,178 | 13,922 | 24,129 |
Notes to the Interim Results
for the half-year ended 31 December 2009
| 1. | Basis of preparation | |||
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| 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 2009. The figures for the year ended 30 June 2009 are an abridged statement of the group audited accounts for that year. The financial statements for the year ended 30 June 2009 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. | |||
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| 2. | Income tax has been provided at the rate of 30.7% (2008: 30.4%).
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| 3. | Dividends |
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| Half-year ended 31.12.09 £'000 | Half-year ended 31.12.08 £'000 | Year ended 30.06.09 £'000 |
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| Equity dividends paid |
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| Final dividend for the year ended 30 June 2008 | - | 7,465 | 7,465 |
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| Interim dividend for the year ended 30 June 2009 | - | - | 3,732 |
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| Final dividend for the year ended 30 June 2009 | 8,752 | - | - |
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| 8,752 | 7,465 | 11,197 |
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| Equity dividends proposed at the end of the period |
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| Interim dividend | 4,146 | 3,732 | - |
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| Special dividend | 7,774 | - | - |
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| Final dividend | - | - | 8,752 |
Equity dividends per share, paid and proposed, are as follows:
| ·; | 14.5p final dividend for the year ended 30 June 2008, paid on 12 December 2008 |
| ·; | 7.25p interim dividend for the year ended 30 June 2009, paid on 22 May 2009 |
| ·; | 17.0p final dividend for the year ended 30 June 2009, paid on 4 December 2009 |
| ·; | 15.0p special dividend paid on 25 January 2010 |
| ·; | 8.0p interim dividend for the year ended 30 June 2010, payable on 31 March 2010 |
| 4. | Calculation of earnings per ordinary share |
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| Half-year ended 31.12.09 £'000 | Half-year ended 31.12.08 £'000 | Year ended 30.06.09 £'000 |
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| Basic earnings | 11,732 | 10,700 | 24,851 |
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| Weighted average number of ordinary shares in issue | 51,536,516 | 51,480,630 | 51,481,246 |
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| Weighted average number of ordinary shares in issue (diluted for the effect of outstanding share options) | 51,624,036 | 51,624,129 | 51,601,783 |
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| Basic earnings per 5p ordinary share | 22.8p | 20.8p | 48.3p |
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| Diluted earnings per 5p ordinary share | 22.7p | 20.7p | 48.2p |
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| 5. | Copies of the interim results | |||
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| 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. | |||