Last checked at 31 Mar 2014 07:00
31 March 2014
JAMES HALSTEAD PLC
INTERIM RESULTS FOR THE HALF-YEAR ENDED 31 DECEMBER 2013
Key Figures
James Halstead plc, the AIM listed manufacturer and international distributor of commercial floor coverings, reports:
· Operating profit slightly lower at £20.6 million - a decrease of 3.1% |
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· Pre-tax profit slightly lower at £20.4 million - a decrease of 4.0% |
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· Basic earnings per ordinary share 7.4p - a decrease of 1.3% |
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· Interim dividend increased to a record 3.0p - an increase of 9.1% |
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· Net cash at £38.6 million · Improved current trading
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The Chief Executive, Mr. Mark Halstead, commented:
"It is clear market conditions are not easy but our strong market position remains and our increased dividend reflect our continued confidence."
Enquiries:
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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
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Chris Hardie - Arden Partners | Telephone: 020 7614 5900 |
CHAIRMAN'S STATEMENT
I am able to report a small increase in turnover to £110.9 million (2012: £109.0 million), growth of 1.7%. Pre-tax profit has fallen slightly to £20.4 million (2012: £21.2 million), a decline of 4.0%. Although disappointing to report a fall in profit I am nevertheless encouraged by the progress we have made against the backdrop of a very competitive marketplace, especially in Europe.
Trading
Our market position remains solid in the core territories of the UK, Central Europe and Australasia but it is clear that there is a lower level of new business tenders. In the UK we have increased sales by just over 5% and in Central Europe by just over 4%. Australia is on a par in local currency terms though lower by 8% when translated into sterling. Having said this, the net effects of currency translation are, overall, negligible.
There is noticeably less activity in the mining sector in Australia but underscoring the global nature of business in the 21st century we have seen an increase in flooring related sales to the mining sector in South America. The continued breadth of flooring installations such as the Mississippi Crime Laboratory in Jackson, the Sberbank in Moscow and Boryspil Airport in Kiev are a few examples of the diversity of our end users.
Growth markets include France (up 9%), South America (up 5%), Spain (up 18%) and Canada (up 10%).
Gross margin in the period is around 1% lower than the prior comparative which is mainly a result of product mix combined with a degree of price erosion. The product mix is a result of heterogeneous sales growth i.e. the product manufactured by Riverside Flooring in Teesside. This plant has increased output but is not yet operating on a 24 hour basis and therefore it is comparatively less productive than our Radcliffe plant. This will improve over the medium term. Price erosion has been a factor in Germany where it is clear that all manufacturers have excess capacity and are chasing sales vigorously on price.
Overheads have increased by 1%, which is creditable.
In terms of the balance sheet, working capital remains in good balance, although the level of stock is on a par with the end of the financial year it is ahead of the comparative by 19%. The reasons for this are threefold. Firstly, it is clear that several customers with 31 December year ends chose to minimise stock-holding over the year end which led to lower December 2013 sales (as we commented upon in our pre-close statement) - but with the sales returning in January 2014. Secondly, the prior comparative was low and thirdly, we have wider product ranges and several product launches that took place in February.
In January / February we exhibited at Domotex Germany, Euroshop and Domotex Shanghai and our portfolio was well received which bodes well for the coming months.
Cash balances remain healthy.
Earnings per Share
Our basic earnings per share at 7.4p are slightly down on the comparative 7.5p and notwithstanding the small fall in earnings the Board is pleased to yet again propose an increased interim dividend.
A dividend of 3.0p (2012: 2.75p) will be paid, representing a 9.1% increase and this reflects both the strength of earnings and the cash reserves of the Company. This will be payable on 6 June 2014 to those shareholders on the register at the close of business on 9 May 2014.
Outlook
The first six months of our financial year have been challenging but I am pleased to report that trading in the period January - March is showing growth of 7-8%. Offsetting this is the adverse margin effects of a strong sterling and, in addition, it is clear that in Europe there is fierce price competition as manufacturers battle for volume in an overall market that is, at best, flat. Nevertheless, there are a number of factors that encourage future confidence: we have established a firm base in Canada, Polyflor India has now been created (with the ESIC Hospital in Mandi an early customer) and continued success with our long established homogenous floors (the new Cecilia Makiwane Hospital in South Africa being a good example). We have introduced new products over recent years but our classic ranges remain the bedrock for our business across the globe.
Looking forward, this is a year where we are increasing further the exports under our own control with our own sales team which will involve additional set up costs. The focus will initially be on India, North America and South America, markets where we have had sales for many years but which offer greater volume potential.
In terms of the bottom line it will be difficult to exceed last year's profit but I remain cautiously optimistic that we will not fall below that mark.
Geoffrey Halstead
Chairman
31 March 2014
Consolidated Income Statement
for the half-year ended 31 December 2013
Half-year ended 31.12.13 £'000 | Restated half-year ended 31.12.12 £'000 | Restated year ended 30.06.13 £'000 | |
Revenue | 110,881 | 109,026 | 217,082 |
Operating profit | 20,592 | 21,252 | 40,691 |
Net finance cost | (237) | (54) | (196) |
Profit before income tax | 20,355 | 21,198 | 40,495 |
Income tax expense | (5,132) | (5,653) | (10,446) |
Profit for the period | 15,223 | 15,545 | 30,049 |
Earnings per ordinary share of 5p: | |||
-basic | 7.4p | 7.5p | 14.5p |
-diluted | 7.3p | 7.5p | 14.5p |
All the above figures relate to continuing operations.
Details of dividends paid and proposed are given in note 3.
The prior periods have been restated as explained in note 5.
Consolidated Balance Sheet
as at 31 December 2013
Half-year ended 31.12.13 £'000 | Half-year ended 31.12.12 £'000 | Year ended 30.06.13 £'000 | |
Non-current assets | |||
Property, plant and equipment | 31,093 | 33,212 | 33,391 |
Intangible assets | 3,232 | 3,232 | 3,232 |
Deferred tax assets | 5,339 | 4,656 | 5,545 |
39,664 | 41,100 | 42,168 | |
Current assets | |||
Inventories | 56,567 | 47,439 | 56,761 |
Trade and other receivables | 27,653 | 26,581 | 33,158 |
Derivative financial instruments | 989 | 184 | 827 |
Cash and cash equivalents | 38,557 | 51,927 | 34,866 |
123,766 | 126,131 | 125,612 | |
Current liabilities | |||
Trade and other payables | 49,769 | 49,192 | 55,903 |
Derivative financial instruments | 694 | 686 | 63 |
Current income tax liabilities | 5,350 | 7,491 | 5,647 |
55,813 | 57,369 | 61,613 | |
Net current assets | 67,953 | 68,762 | 63,999 |
Non-current liabilities | |||
Retirement benefit obligations | 14,805 | 9,430 | 13,902 |
Deferred tax liabilities | 815 | 850 | 815 |
Borrowings | 200 | 200 | 200 |
Other payables | 432 | 430 | 454 |
16,252 | 10,910 | 15,371 | |
Net assets | 91,365 | 98,952 | 90,796 |
Equity | |||
Equity share capital | 10,356 | 5,166 | 10,335 |
Equity share capital (B shares) | 160 | 160 | 160 |
10,516 | 5,326 | 10,495 | |
Share premium account | 2,659 | 2,056 | 2,101 |
Retained earnings | 73,082 | 80,132 | 70,977 |
Other reserves | 5,108 | 11,438 | 7,223 |
Total equity attributable to shareholders of the parent | 91,365 | 98,952 | 90,796 |
Consolidated Cash Flow Statement
for the half-year ended 31 December 2013
Half-year ended 31.12.13 £'000 | Half-year ended 31.12.12 £'000 | Year ended 30.06.13 £'000 | |
Cash inflow from operations | 20,178 | 31,613 | 42,147 |
Net interest received | 99 | 194 | 327 |
Taxation paid | (5,045) | (4,637) | (11,353) |
Cash inflow from operating activities | 15,232 | 27,170 | 31,121 |
Purchase of property, plant and equipment | (1,088) | (2,804) | (3,731) |
Proceeds from disposal of property, plant and equipment | 1,581 | 143 | 242 |
Cash inflow / (outflow) from investing activities | 493 | (2,661) | (3,489) |
Equity dividends paid | (12,428) | (11,366) | (31,518) |
Shares issued | 579 | 84 | 131 |
Cash outflow from financing activities | (11,849) | (11,282) | (31,387) |
Net increase / (decrease) in cash and cash equivalents | 3,876 | 13,227 | (3,755) |
Effect of exchange differences | (185) | (4) | (83) |
Cash and cash equivalents at start of period | 34,866 | 38,704 | 38,704 |
Cash and cash equivalents at end of period | 38,557 | 51,927 | 34,866 |
Consolidated Statement of Comprehensive Income
for the half-year ended 31 December 2013
Restated | Restated | ||
Half-year ended 31.12.13 £'000
| half-year ended 31.12.12 £'000 | year ended 30.06.13 £'000
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Profit for the period | 15,223 | 15,545 | 30,049 |
Other comprehensive income net of tax: | |||
Actuarial (loss) / gain on the defined benefit scheme | (690) | 629 | (2,913) |
Deferred taxation - change of rate | - | - | 35 |
Foreign currency translation differences | (1,637) | (426) | (93) |
Fair value movements on hedging instruments | (478) | 148 | 767 |
Other comprehensive income for the period net of tax |
(2,805) | 351 | (2,204) |
Total comprehensive income for the period | 12,418 | 15,896 | 27,845 |
Attributable to equity holders of the | |||
parent company | 12,418 | 15,896 | 27,845 |
The prior periods have been restated as explained in note 5.
Notes to the Interim Results
for the half-year ended 31 December 2013
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 2013.
The figures for the year ended 30 June 2013 are an abridged statement of the group audited accounts for that year, as amended by the restatement explained in note 5 below. The financial statements for the year ended 30 June 2013 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. | Taxation
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Income tax has been provided at the rate of 25.2% (2012: 26.7%).
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3. | Dividends | |||
Half-year ended 31.12.13 £'000 | Half-year ended 31.12.12 £'000 | Year ended 30.06.13 £'000 | ||
Equity dividends paid:
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Final dividend for the year ended 30 June 2012 | - | 11,366 | 11,366 | |
Special dividend for the year ended 30 June 2013 | - | - | 14,468 | |
Interim dividend for the year ended 30 June 2013 | - | - | 5,684 | |
Final dividend for the year ended 30 June 2013 | 12,428 | - | - | |
12,248 | 11,366 | 31,518 | ||
Equity dividends proposed at the end of the period | ||||
Interim dividend | 6,210 | 5,684 | - | |
Final dividend | - | - | 12,428 | |
Equity dividends per share, paid and proposed are as follows:
5.5p final dividend for the year ended 30 June 2012, paid on 7 December 2012 | |
7.0p special dividend for the year ended 30 June 2013, paid on 10 May 2013 2.75p interim dividend for the year ended 30 June 2013, paid on 7 June 2013 6.0p final dividend for the year ended 30 June 2013, paid on 6 December 2013 3.0p interim dividend for the year ended 30 June 2013, payable on 6 June 2014, to those shareholders on the register at the close of business on 9 May 2014
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Notes to the Interim Results continued
for the half-year ended 31 December 2013
4. | Earnings per share | |||||||
Half-year ended 31.12.13 £'000 | Restated half-year ended 31.12.12 £'000 | Restated year ended 30.06.13 £'000 | ||||||
Profit for the period | 15,223 | 15,545 | 30,049 | |||||
Weighted average number of shares in issue | 206,878,570 | 206,624,017 | 206,643,767 | |||||
Dilution effect of outstanding share options | 699,831 | 1,000,095 | 954,657 | |||||
Diluted weighted average number shares | 207,578,401 | 207,624,112 | 207,598,424 | |||||
Basic earnings per 5p ordinary share | 7.4p | 7.5p | 14.5p | |||||
Diluted earnings per 5p ordinary share | 7.3p | 7.5p | 14.5p | |||||
The prior periods have been restated as explained in note 5. | ||||||||
5.
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Prior periods restatement
IAS19 "employee benefits" was amended in June 2011. The amendment has been implemented in these results, including restating the results for the comparative periods.
The effects of the prior periods restatement were as follows : | |||||||
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Half-year ended 31.12.12 £'000 | Year ended 30.06.13 £'000 |
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Profit for the period as previously reported | 15,822 | 30,599 |
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Increase in net pension finance cost | (365) | (714) |
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Deferred tax credit | 88 | 164 |
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Profit for the period as restated | 15,545 | 30,049 |
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Other comprehensive income for the period net of tax as previously reported | 74 | (2,754) |
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Adjustment to actuarial (loss) / gain on the defined benefit scheme | 365 | 714 |
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Deferred tax on the adjustment | (88) | (164) |
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Other comprehensive income for the period net of tax as restated | 351 | (2,204) |
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6.
| The total comprehensive income for the period is unchanged by the restatement. The Consolidated Balance Sheet and the Cash Flow Statement are not affected by the restatement.
Copies of the interim results
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Copies of the interim results have been sent to shareholders who requested them. Further copies can be obtained from the Company's registered office, Beechfield, Hollinhurst Road, Radcliffe, Manchester, M26 1JN. |