Last checked at 29 Mar 2019 07:00
29 March 2019
JAMES HALSTEAD PLC
INTERIM RESULTS FOR THE HALF-YEAR ENDED 31 DECEMBER 2018
Key Figures
James Halstead plc, the AIM listed manufacturer and international distributor of commercial floor coverings, reports:
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· Revenue at £126 million (2018: £126 million) - unchanged |
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· Operating profit at £24.5 million (2018: £23.9 million) - up 2.6% |
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· Pre-tax profit at £24.5 million (2018: £23.7 million) - up 3.3% |
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· Basic earnings per ordinary share 9.1p (2018: 8.8p) - up 3.4% |
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· Interim dividend increased to a record 4.0p (2018: 3.85p) - up 3.9% |
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· Net cash at £62.8 million
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The Chief Executive, Mr. Mark Halstead, commented:
"We have supplied flooring to installations as diverse as the Spence Copper Mines in the Atacama Desert in Chile to the Hard Rock Café in Guyana and with profits growth, increased cash and new ranges developing well - a satisfying first half, cemented with a record interim dividend."
Enquiries:
James Halstead | 0161 767 2500 |
Mark Halstead, Chief Executive |
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Gordon Oliver, Finance Director |
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Hudson Sandler | 020 7796 4133 |
Nick Lyon |
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Nick Moore |
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Panmure Gordon (Nomad and Joint Broker) | 020 7886 2500 |
Ben Thorne |
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Dominic Morley |
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Arden Partners (Joint Broker) | 020 7614 5900 |
Paul Shackleton |
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Benjamin Cryer |
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CHAIRMAN'S STATEMENT
Trading
Once again it is pleasing to report a record profit at the interim stage. We are also announcing, once again, a record interim dividend. In terms of sales, every month showed an increase on the comparative with the only exception being December. It is clear that, in December, larger customers were exercising stock control - not least evidenced by the fact that whilst order volume in the UK was lower, the number of orders was up 4.8% in the month. Despite this single poor month, sales in the UK for the six months as a whole were 3.9% ahead of the comparative period. Export markets were in the majority of cases strong but with Central Europe showing a decline of some 1.7% (largely in line with figures published by our competitors). The start to the second half has shown a return of solid growth.
Whilst overall turnover was flat in comparison to the prior year, our gross margin improved as the result of an advantageous product mix (ie higher added value products) and favourable plant performance, though impacted to a degree by raw material price increases. Raw material inflation has been around 3% whereas in the prior year it was around 18%.
As noted in my last report, we made a significant investment in new sheet vinyl ranges and it is pleasing to see that in the important German market we are taking market share, with 15% growth in homogenous sheet vinyl. Palletone, launched in May 2018, continues to gain traction.
Our global reach continues and whether it is the Kenitra Agadir Hospital in Morocco, Tallinn Airport in Estonia or Scania buses in Poland, our products travel far. Closer to home our Voyager maritime flooring has been installed onboard Cunard's MS Queen Elizabeth, in the duty free area of Knock Airport in County Mayo and, underlining our environmental and sustainability credentials, Polyflor will feature in the "Active Office" - the UK's first energy positive building based at Swansea University.
Investment continues with a new showroom / training facility having been opened in Cologne to provide greater market support to customers.
Earnings per Share
Our basic earnings per share at 9.1p are above the comparative period of 8.8p by 3.4%.
Having regard to cash, which stands at a record £62.8 million, I am pleased to say that an interim dividend of 4.0p has been declared (2018: 3.85p), representing a 3.9% increase and this reflects both the strength of earnings and the cash reserves of the Company. This will be payable on 6 June 2019 to those shareholders on the register at the close of business on 10 May 2019.
Outlook
From projects as diverse as Zora Electronics in Bulgaria to the Waterport School in Gibraltar we continue to cover the world. The refurbishment of the Villa Deportiva National in Lima, Peru is a particularly impressive project that will host the Pan American Games later this year. This latter project involved significant volumes of our sheet vinyl and is an example of our focus on repair and renewal work.
At the time of publishing these results Brexit is still in the news and while there continues to be much speculation on the eventual outcome we have undertaken our own review and are confident that opportunities continue to present themselves and that our business model is "fit for purpose". We regularly export to far more countries than are members of the European Union and are confident of our credentials as leading flooring manufacturers. That said, there are many complications beyond the practicalities of port of entry delays - for example duty rates (both cross EU borders and external) and certification of standards. Our management has spent extensive time considering the possible implications and we have made appropriate stock adjustments as a contingency.
On a far more positive note the start of the second half has seen a good increase in sales and our newer ranges continue to increase their market penetration. In January we introduced further ranges to the market including our first "loose lay" safety flooring - "QuickLay" and our first fully rigid flooring range - "EnCore Loc". Both have been well received. Against this background I have confidence in our continued progress through 2019.
Anthony Wild
Chairman
29 March 2019
Consolidated Income Statement
for the half-year ended 31 December 2018
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Half-year ended 31.12.18 £'000 |
Half-year ended 31.12.17 £'000 |
Year ended 30.06.18 £'000 |
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Revenue | 125,786 | 126,024 | 249,510 |
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Operating profit | 24,528 | 23,914 | 47,148 |
Net finance cost | (52) | (229) | (446) |
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Profit before income tax | 24,476 | 23,685 | 46,702 |
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Income tax expense | (5,474) | (5,292) | (9,994) |
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Profit for the period | 19,002 | 18,393 | 36,708 |
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Earnings per ordinary share of 5p: |
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-basic | 9.1p | 8.8p | 17.7p |
-diluted | 9.1p | 8.8p | 17.6p |
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All amounts relate to continuing operations.
Details of dividends paid and declared/proposed are given in note 4.
Consolidated Balance Sheet
as at 31 December 2018
| Half-year ended 31.12.18 £'000 | Half-year ended 31.12.17 £'000 | Year ended 30.06.18 £'000 |
Non-current assets |
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Property, plant and equipment | 36,870 | 36,539 | 36,324 |
Intangible assets | 3,232 | 3,232 | 3,232 |
Deferred tax assets | 3,267 | 3,394 | 2,674 |
| 43,369 | 43,165 | 42,230 |
Current assets |
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Inventories | 63,664 | 73,831 | 71,096 |
Trade and other receivables | 26,911 | 26,630 | 32,040 |
Derivative financial instruments | 620 | 384 | 971 |
Cash and cash equivalents | 62,795 | 47,483 | 50,679 |
| 153,990 | 148,328 | 154,786 |
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Total assets | 197,359 | 191,493 | 197,016 |
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Current liabilities |
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Trade and other payables | 48,930 | 51,412 | 48,721 |
Derivative financial instruments | 428 | 1,434 | 119 |
Current income tax liabilities | 4,624 | 4,775 | 3,769 |
| 53,982 | 57,621 | 52,609 |
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Non-current liabilities |
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Retirement benefit obligations | 18,491 | 16,532 | 14,899 |
Borrowings | 200 | 200 | 200 |
Other payables | 475 | 479 | 491 |
| 19,166 | 17,211 | 15,590 |
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Total liabilities | 73,148 | 74,832 | 68,199 |
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Net assets | 124,211 | 116,661 | 128,817 |
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Equity |
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Equity share capital | 10,404 | 10,399 | 10,399 |
Equity share capital (B shares) | 160 | 160 | 160 |
| 10,564 | 10,559 | 10,559 |
Share premium account | 3,922 | 3,805 | 3,805 |
Capital redemption reserve | 1,174 | 1,174 | 1,174 |
Currency translation reserve | 5,680 | 6,021 | 5,435 |
Hedging reserve | (130) | (186) | 668 |
Retained earnings | 103,001 | 95,288 | 107,176 |
Total equity attributable to shareholders of the parent | 124,211 | 116,661 | 128,817 |
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Consolidated Cash Flow Statement
for the half-year ended 31 December 2018
| Half-year ended 31.12.18 £'000 | Half-year ended 31.12.17 £'000 | Year ended 30.06.18 £'000 |
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Profit for the period | 19,002 | 18,393 | 36,708 |
Income tax expense | 5,474 | 5,292 | 9,994 |
Profit before income tax | 24,476 | 23,685 | 46,702 |
Net finance cost | 52 | 229 | 446 |
Operating profit | 24,528 | 23,914 | 47,148 |
Depreciation | 1,558 | 1,548 | 3,055 |
Loss/(profit) on sale of plant and equipment | 24 | (16) | 31 |
Decrease/(increase) in inventories | 7,713 | (988) | 1,247 |
Decrease/(increase)in trade and other receivables |
5,469 |
4,340 |
(1,093) |
(Decrease)/increase in trade and other payables | (598) | (7,540) | (11,448) |
Defined benefit pension scheme service cost | 287 | 290 | 497 |
Defined benefit pension scheme employer contributions paid |
(643) |
(1,299) |
(1,517) |
Change in fair value of financial instruments | 89 | (41) | 250 |
Share based payments | 5 | 3 | 5 |
Cash inflow from operations | 38,432 | 20,211 | 38,175 |
Net interest received | 158 | 51 | 114 |
Taxation paid | (4,581) | (4,337) | (9,642) |
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Cash inflow from operating activities | 34,009 | 15,925 | 28,647 |
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Purchase of property, plant and equipment | (2,038) | (2,026) | (3,567) |
Proceeds from disposal of property, plant and equipment | 34 | 111 | 232 |
Cash outflow from investing activities | (2,004) | (1,915) | (3,335) |
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Equity dividends paid | (20,080) | (19,238) | (27,245) |
Shares issued | 122 | 196 | 196 |
Cash outflow from financing activities | (19,958) | (19,042) | (27,049) |
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Net increase/(decrease) in cash and cash equivalents | 12,047 | (5,032) | (1,737) |
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Effect of exchange differences | 69 | (17) | (116) |
Cash and cash equivalents at start of period | 50,679 | 52,532 | 52,532 |
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Cash and cash equivalents at end of period | 62,795 | 47,483 | 50,679 |
Consolidated Statement of Comprehensive Income
for the half-year ended 31 December 2018
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| Half-year ended 31.12.18 £'000
| Half-year ended 31.12.17 £'000
| Year ended 30.06.18 £'000
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Profit for the period | 19,002 | 18,393 | 36,708 |
Other comprehensive income net of tax: |
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Re-measurement of the net defined benefit liability | (3,102) | 3,317 |
4,895 |
Foreign currency translation differences | 245 | (173) | (759) |
Fair value movements on hedging instruments | (798) | 103 | 957 |
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Other comprehensive income for the period net of tax |
(3,655) |
3,247 | 5,093 |
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Total comprehensive income for the period | 15,347 | 21,640 | 41,801 |
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Attributable to equity holders of the parent |
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| 15,347 | 21,640 | 41,801 |
Notes to the Interim Results
for the half-year ended 31 December 2018
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 2018.
The figures for the year ended 30 June 2018 are an abridged statement of the group audited accounts for that year. The financial statements for the year ended 30 June 2018 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. | Taxation
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| Income tax has been provided at the rate of 22.4% (2017: 22.3%).
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3. | Earnings per share |
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Half-year ended 31.12.18 £'000 |
Half-year ended 31.12.17 £'000 |
Year ended 30.06.18 £'000 |
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| Profit for the period | 19,002 | 18,393 | 36,708 |
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| Weighted average number of shares in issue | 208,031,705 | 207,957,907 | 207,965,693 |
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| Dilution effect of outstanding share options | 45,378 | 124,938 | 121,068 |
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| Diluted weighted average number shares | 208,077,083 | 208,082,845 | 208,086,791 |
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| Basic earnings per 5p ordinary share | 9.1p | 8.8p | 17.7p |
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| Diluted earnings per 5p ordinary share | 9.1p | 8.8p | 17.6p |
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4. | Dividends |
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| Half-year ended 31.12.18 £'000 | Half-year ended 31.12.17 £'000 | Year ended 30.06.18 £'000 |
| Equity dividends paid:
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| Final dividend for the year ended 30 June 2017 | - | 19,238 | 19,238 |
| Interim dividend for the year ended 30 June 2018 | - | - | 8,007 |
| Final dividend for the year ended 30 June 2018 | 20,080 | - | - |
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| 20,080 | 19,238 | 27,245 |
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| Equity dividends declared/proposed at the end of the period |
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| Interim dividend | 8,324 | 8,007 | - |
| Final dividend | - | - | 20,080 |
Equity dividends per share, paid and declared/proposed are as follows:
| 9.25p final dividend for the year ended 30 June 2017, paid on 1 December 2017 3.85p interim dividend for the year ended 30 June 2018, paid on 6 June 2018 9.65p final dividend for the year ended 30 June 2018, paid on 7 December 2018 4.00p interim dividend for the year ended 30 June 2019, payable on 6 June 2019, to those shareholders on the register at the close of business on 10 May 2019
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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 and on the Company's website at www.jameshalstead.com |
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