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31 Mar 2015 07:00
31 March 2015
JAMES HALSTEAD PLC
INTERIM RESULTS FOR THE HALF-YEAR ENDED 31 DECEMBER 2014
Key Figures
James Halstead plc, the AIM listed manufacturer and international distributor of commercial floor coverings, reports:
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· Revenue higher at £117.2 million - an increase of 5.7% |
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· Operating profit higher at £21.6 million - an increase of 5.1% |
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· Pre-tax profit higher at £21.4 million - an increase of 5.3% |
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· Basic earnings per ordinary share 7.8p - an increase of 5.4% |
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· Interim dividend increased to a record 3.142p - an increase of 4.7% |
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· Net cash at £46.7 million
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The Chief Executive, Mr. Mark Halstead, commented:
"After 100 years of manufacturing, 67 years as a quoted company and in our 40th year of increased dividend I am reminded of the famous Kipling quote "gardens are not made by sitting in the shade". We have grown and prospered and I have confidence in the full year result".
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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Phil Adams/Paul Lines - Altium | Telephone: 020 7484 4040
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Chris Hardie - Arden Partners | Telephone: 020 7614 5900 |
CHAIRMAN'S STATEMENT
This company was founded on 10 May 1915 and based at Crow Oak Works Radcliffe. Our humble beginnings were as a business based on the waxing and shower-proofing of cloth for the raincoat market. Today we continue to manufacture on the same site, albeit in a totally different marketplace and I believe few manufacturing companies can claim continuous activity on the same site for 100 years.
By way of celebration, I am most pleased to report an increase in turnover to £117.2 million (2013: £110.9 million), representing growth of 5.7%. The strength of Sterling has impacted upon the figures and the like for like turnover is some 10.3% ahead of last year.
It is also pleasing to report improved pre-tax profit at £21.4 million (2013: £20.4 million), an increase of 5.3%.
Given the strength of our currency here in the UK, the effects on the translation of our results are inevitable but it is gratifying to report continuing steps forward.
Trading
UK trading continues to be solid despite competitor activity and the figures reported for this half year are 9% ahead of the comparative. The UK accounts for just over a third of our total turnover and our position as market leader continues. Our European business has grown by some 6.7% (at constant exchange rates) and our Australasian businesses by just over 11% (again at constant exchange rates). Combined these markets represent some 85% of turnover. I note that our flooring continues to be installed across the world and has reached the Sjøskrenten student hostel in Longyearbyen on the Svalbard archipelago, probably our most northern contract yet and an area where polar bears outnumber people.
Gross margin is marginally ahead of the prior year. There are downward pressures on raw materials which are helpful but it must be noted our competitors also have the advantages of this easing.
The day to day business is as much about refurbishment as it is new buildings and our sales team have ensured that refurbishment projects as far afield as the Cardiff International Swimming Pool; the Calgary Stampede showground and the extensive Daenisches Bettenlager retail outlets in Germany are part of our extensive list of fitted contracts.
Overheads have grown faster than inflation, which though disappointing is the reality of the nature of these costs and the largest are the infrastructure costs associated with representing our ranges in global markets. The costs are very much in line with planned expenditure and our deeper expansion into new territories, notably the Middle East, India and Canada.
The balance sheet is, as usual, robust with the component showing the largest change being cash which at £46.7 million is 21.2% ahead of the comparative (2013: £38.6 million). This is the result of healthy cash flow from operations of £28.3 million (2013: £20.2 million) and after dividends paid out of £14.5 million (2013: £ 12.4 million).
Earnings per Share
Our basic earnings per share at 7.8p are 5.4% ahead of the comparative of 7.4p and the Board is pleased to yet again propose an increased interim dividend.
Having regard to cash I am pleased to say that a dividend of 3.142p can be paid (2013: 3.0p), representing a 4.7% increase and this reflects both the strength of earnings and the cash reserves of the Company. This will be payable on 5 June 2015 to those shareholders on the register at the close of business on 8 May 2015.
Outlook
Our portfolio continues to be updated and re-launched with new designs and features: Simplay (a loose lay tile) was awarded the accolade of Best Flooring Innovation by the influential EuroDecor magazine and Expona Flow (our design sheet, manufactured in Teesside) was launched to some acclaim at the BAU exhibition in Munich this January. Just one of the refurbishments that continue to be supplied is the factory shop at Cadbury World in Bourneville.
Recofloor, our award winning recycling scheme, has collected record amounts of waste destined for landfill and returned it to the manufacturing loop and we are the first flooring manufacturer to achieve BES 6001 (Responsible Sourcing) underlining our approach of sound and demonstrable environmental responsibility.
There are many positives to our outlook and in the difficult times of recent years we have delivered the gains we had targeted. Once again we have increased our market share but the current strength of Sterling to near record levels presents more challenges and headwinds in the coming months. That said, the quote of Churchill that "kites rise highest against the wind, not with it" will be our mantra.
I remain confident of further progress during the rest of the year.
Geoffrey Halstead
Chairman
31 March 2015
Consolidated Income Statement
for the half-year ended 31 December 2014
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Half-year ended 31.12.14 £'000 |
Half-year ended 31.12.13 £'000 |
Year ended 30.06.14 £'000 |
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Revenue | 117,168 | 110,881 | 223,488 |
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Operating profit | 21,640 | 20,592 | 42,236 |
Net finance cost | (215) | (237) | (483) |
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Profit before income tax | 21,425 | 20,355 | 41,753 |
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Income tax expense | (5,222) | (5,132) | (10,301) |
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Profit for the period | 16,203 | 15,223 | 31,452 |
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Earnings per ordinary share of 5p: |
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-basic | 7.8p | 7.4p | 15.2p |
-diluted | 7.8p | 7.3p | 15.1p |
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All amounts relate to continuing operations.
Details of dividends paid and proposed are given in note 4.
Consolidated Balance Sheet
as at 31 December 2014
| Half-year ended 31.12.14 £'000 | Half-year ended 31.12.13 £'000 | Year ended 30.06.14 £'000 |
Non-current assets |
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Property, plant and equipment | 31,954 | 31,093 | 31,358 |
Intangible assets | 3,232 | 3,232 | 3,232 |
Deferred tax assets | 5,641 | 5,339 | 4,755 |
| 40,827 | 39,664 | 39,345 |
Current assets |
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Inventories | 58,025 | 56,567 | 57,423 |
Trade and other receivables | 29,438 | 27,653 | 36,621 |
Derivative financial instruments | 2,427 | 989 | 342 |
Cash and cash equivalents | 46,716 | 38,557 | 38,677 |
| 136,606 | 123,766 | 133,063 |
Current liabilities |
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Trade and other payables | 54,235 | 49,769 | 53,334 |
Derivative financial instruments | 286 | 694 | 211 |
Current income tax liabilities | 4,902 | 5,350 | 3,350 |
| 59,423 | 55,813 | 56,895 |
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Net current assets | 77,183 | 67,953 | 76,168 |
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Non-current liabilities |
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Retirement benefit obligations | 20,115 | 14,805 | 15,554 |
Deferred tax liabilities | 744 | 815 | 744 |
Borrowings | 200 | 200 | 200 |
Other payables | 389 | 432 | 428 |
| 21,448 | 16,252 | 16,926 |
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Net assets | 96,562 | 91,365 | 98,587 |
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Equity |
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Equity share capital | 10,363 | 10,356 | 10,353 |
Equity share capital (B shares) | 160 | 160 | 160 |
| 10,523 | 10,516 | 10,513 |
Share premium account | 2,899 | 2,659 | 2,740 |
Capital Redemption reserve | 1,174 | 1,167 | 1,174 |
Currency translation reserve | 1,455 | 3,709 | 3,086 |
Hedging reserve | 1,237 | 232 | 104 |
Retained earnings | 79,274 | 73,082 | 80,970 |
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Total equity attributable to shareholders of the parent | 96,562 | 91,365 | 98,587 |
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Consolidated Cash Flow Statement
for the half-year ended 31 December 2014
| Half-year ended 31.12.14 £'000 | Half-year ended 31.12.13 £'000 | Year ended 30.06.14 £'000 |
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Cash inflow from operations | 28,315 | 20,178 | 35,034 |
Net interest received | 138 | 99 | 156 |
Taxation paid | (3,671) | (5,045) | (11,500) |
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Cash inflow from operating activities | 24,782 | 15,232 | 23,690 |
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Purchase of property, plant and equipment | (2,297) | (1,088) | (2,941) |
Proceeds from disposal of property, plant and equipment | 91 | 1,581 | 1,719 |
Cash (outflow) / inflow from investing activities | (2,206) | 493 | (1,222) |
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Equity dividends paid | (14,507) | (12,428) | (18,638) |
Shares issued | 169 | 579 | 664 |
Purchase of own shares | -
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Cash outflow from financing activities | (14,338) | (11,849) | (18,407) |
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Net increase in cash and cash equivalents | 8,238 | 3,876 | 4,061 |
Effect of exchange differences | (199) | (185) | (250) |
Cash and cash equivalents at start of period | 38,677 | 34,866 | 34,866 |
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Cash and cash equivalents at end of period | 46,716 | 38,557 | 38,677 |
Consolidated Statement of Comprehensive Income
for the half-year ended 31 December 2014
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| Half-year ended 31.12.14 £'000
| Half-year ended 31.12.13 £'000
| Year ended 30.06.14 £'000
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Profit for the period | 16,203 | 15,223 | 31,452 |
Other comprehensive income net of tax: |
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Actuarial loss on the defined benefit scheme | (3,392) | (690) | (2,459) |
Deferred taxation - change of rate | - | - | 71 |
Foreign currency translation differences | (1,631) | (1,637) | (2,260) |
Fair value movements on hedging instruments | 1,133 | (478) | (606) |
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Other comprehensive income for the period net of tax |
(3,890) |
(2,805) | (5,254) |
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Total comprehensive income for the period | 12,313 | 12,418 | 26,198 |
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Attributable to equity holders of the |
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parent company | 12,313 | 12,418 | 26,198 |
Notes to the Interim Results
for the half-year ended 31 December 2014
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 2014.
The figures for the year ended 30 June 2014 are an abridged statement of the group audited accounts for that year. The financial statements for the year ended 30 June 2014 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 24.4% (2013: 25.2%).
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3. | Earnings per share |
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Half-year ended 31.12.14 £'000 |
Half-year ended 31.12.13 £'000 |
Year ended 30.06.14 £'000 |
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| Profit for the period | 16,203 | 15,223 | 31,452 |
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| Weighted average number of shares in issue | 207,200,361 | 206,878,570 | 206,955,099 |
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| Dilution effect of outstanding share options | 530,901 | 699,831 | 669,102 |
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| Diluted weighted average number shares | 207,731,262 | 207,578,401 | 207,624,201 |
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| Basic earnings per 5p ordinary share | 7.8p | 7.4p | 15.2p |
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| Diluted earnings per 5p ordinary share | 7.8p | 7.3p | 15.2p |
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4. | Dividends |
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| Half-year ended 31.12.14 £'000 | Half-year ended 31.12.13 £'000 | Year ended 30.06.14 £'000 |
| Equity dividends paid:
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| Final dividend for the year ended 30 June 2013 | - | 12,428 | 12,428 |
| Interim dividend for the year ended 30 June 2014 | - | - | 6,210 |
| Final dividend for the year ended 30 June 2014 | 14,507 | - | - |
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| 14,507 | 12,248 | 18,638 |
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| Equity dividends proposed at the end of the period |
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| Interim dividend | 6,513 | 6,210 | - |
| Final dividend | - | - | 14,507 |
Equity dividends per share, paid and proposed are as follows:
| 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 2014, paid on 6 June 2014 7.0p final dividend for the year ended 30 June 2014, paid on 5 December 2014 3.142p interim dividend for the year ended 30 June 2015, payable on 5 June 2015, to those shareholders on the register at the close of business on 8 May 2015
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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. |
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