Last checked at 30 Mar 2009 07:00
30 March 2009
JAMES HALSTEAD PLC
INTERIM RESULTS FOR THE HALF-YEAR ENDED 31 DECEMBER 2008
Key Figures
James Halstead plc, manufacturer and international distributor of commercial floor coverings reports:
| Turnover increased to a record £86.7 million - an increase of 10.4% | |
| Operating profit increased to a record £15.1 million - an increase of 19.7% | |
| Pre-tax profit increased to a record £15.4 million - an increase of 17.5% | |
| Basic earnings per ordinary 5p share increased to a record 20.8p - an increase of 19.5% | |
| Proposed interim dividend increased to a record 7.25 p - an increase of 16% | |
| Nil net gearing |
Chairman, Mr Geoffrey Halstead, commenting said:
"We have yet again achieved record results in very challenging market conditions. Our cash generation, market penetration and productivity have all moved forward. Many economies at the moment are in a difficult position but our conservative strategy of building our businesses solidly should allow us to weather these storms and this gives us the confidence to raise the interim dividend 16%".
| Enquiries: | |
| Mark Halstead, Chief Executive | |
| Gordon Oliver, Finance Director | Telephone: 0161 767 2500 |
| Nick Lyon - Hudson Sandler | Telephone : 020 7796 4133 |
CHAIRMAN'S STATEMENT
I am pleased to report, once again, a record set of interim results. Whilst the economic backdrop has been challenging we have charted a successful course in the first six months of the trading year.
Trading
The first half year trading was very solid with record turnover of £86.65 million (2007: £78.45 million) representing an increase of 10.4% . 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 4% in difficult retail conditions.
Turnover growth was consistent in both UK and overseas markets, both achieving double digit growth with our international sales continuing to be in excess of UK sales.
Projects as diverse as Bombadier's Regina Trains in Sweden; the Cooking School in Halifax and the Mozzart Betting Hall in Serbia have continued to broaden our customer base for products traditionally sold into our core hospital and education markets. We are seeing increasing interest from specifiers and architects as a result of the high quality of our designs in high profile installations such as these.
Gross margins improved as raw material and energy costs softened in the second quarter. However, this was offset to an extent by the increased cost of factored products and some raw materials and consumables caused by adverse exchange rates. Overall the effect was marginally positive.
The profit before tax at £15.37 million (2007: £13.08 million) is another record performance and is a 17.5% increase on the comparative period. Finance income has fallen as a result of declines in interest rates. Cash inflow from operations was very positive increasing by 18.8% to £16.82 million (2007: £14.15 million).
Earnings per Share and Interim Dividend
Our basic earnings per share have increased to a record 20.8p (2007 : 17.4p) an uplift of 19.5% and having regard to these results and our strong cash balances the Board propose to pay an interim dividend of 7.25p (2007 : 6.25p) representing a 16% increase on last year and yet another record.
Outlook
The half year result is encouraging. Looking forward, we have range changes and updates taking place in the second half and we continue to focus on productivity. Sterling weakness will, on balance, be a positive with our export performance more than compensating for higher cost of imported items. In addition, we are seeing reduced energy prices and this cost area is being targeted for efficiency improvement. These factors give us confidence for the coming months. However what cannot be ignored, is the general decline in global trade and widespread recessionary worries, which to date we have not experienced in terms of trading in our market sector, except for some smaller territories.
With talk of an economic "Pearl Harbour" we must remain alert to potential problems, whether they are deferred spending or credit risks. I am confident we have the management skills, products and reputation to strengthen market share in these difficult times in key territories.
Whilst projects such as the Nevis Alexandra Hospital in Barbados, the Dubai Rugby Seven Stadium and VDL buses for Israel augment our breadth of expansion, there are significant projects such as Manchester and Birmingham schools closer to home that are targeted to underpin our second half budgets. Indeed, in the area of healthcare we have even managed to supply flooring to the BBC's "Casualty 1909", a new drama series.
The second half will be a hard challenge but we face it from a position of strength.
Geoffrey Halstead
Chairman
30 March 2009
Consolidated Income Statement
for the half-year ended 31 December 2008
| Half-year ended 31.12.08 £'000 | Half-year ended 31.12.07 £'000 | Year ended 30.06.08 £'000 | |
| Revenue | 86,650 | 78,453 | 158,740 |
| Operating profit | 15,052 | 12,579 | 29,088 |
| Finance income | 316 | 500 | 769 |
| Profit before income tax | 15,368 | 13,079 | 29,857 |
| Income tax expense | (4,668) | (4,208) | (9,502) |
| Profit for the period | 10,700 | 8,871 | 20,355 |
| Earnings per ordinary share of 5p : | |||
| -basic | 20.8p | 17.4p | 39.7p |
| -diluted | 20.7p | 17.2p | 39.5p |
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 2008
| Half-year ended 31.12.08 £'000 | Half-year ended 31.12.07 £'000 | Year ended 30.06.08 £'000 | |
| Non current assets | |||
| Property, plant and equipment | 22,804 | 19,905 | 19,671 |
| Intangible assets | 3,232 | 3,232 | 3,232 |
| Deferred tax assets | 5,832 | 3,850 | 5,737 |
| 31,868 | 26,987 | 28,640 | |
| Current assets | |||
| Inventories | 33,121 | 24,884 | 30,641 |
| Trade and other receivables | 25,835 | 24,045 | 23,034 |
| Derivative financial instruments | 741 | 59 | 149 |
| Cash and cash equivalents | 31,764 | 25,922 | 29,521 |
| 91,461 | 74,910 | 83,345 | |
| Current liabilities | 53,722 | 50,104 | 48,631 |
| Net current assets | 37,739 | 24,806 | 34,714 |
| Non-current liabilities | |||
| Retirement benefit obligations | 12,227 | 7,158 | 12,505 |
| Deferred tax liabilities | 992 | 1,063 | 992 |
| Other payables | 594 | 662 | 550 |
| 13,813 | 8,883 | 14,047 | |
| Net Assets | 55,794 | 42,910 | 49,307 |
| Equity | |||
| Equity share capital | 2,574 | 2,556 | 2,574 |
| Equity share capital (B shares) | 160 | 160 | 160 |
| 2,734 | 2,716 | 2,734 | |
| Share premium account | 1,738 | 824 | 1,708 |
| Retained earnings | 39,941 | 34,883 | 36,455 |
| Other reserves | 11,381 | 4,487 | 8,410 |
| Total equity attributable to shareholders of the parent | 55,794 | 42,910 | 49,307 |
Consolidated Cash Flow Statement
for the half-year ended 31 December 2008
| Half-year ended 31.12.08 £'000 | Half-year ended 31.12.07 £'000 | Year ended 30.06.08 £'000 | |
| Cash inflow from operations | 16,818 | 14,151 | 27,298 |
| Interest received | 606 | 624 | 1,261 |
| Interest paid | (94) | (120) | (243) |
| Taxation paid | (5,410) | (3,428) | (8,081) |
| Cash inflow from operating activities | 11,920 | 11,227 | 20,235 |
| Purchase of property, plant and equipment | (3,015) | (2,702) | (3,370) |
| Proceeds from disposal of property, plant and equipment | 73 | 117 | 205 |
| Cash outflow from investing activities | (2,942) | (2,585) | (3,165) |
| Equity dividends paid | (7,465) | (5,751) | (8,946) |
| Shares issued | 30 | 22 | 924 |
| Interest paid | (6) | (6) | (117) |
| Repayment of debt | - | - | (2,653) |
| Cash outflow from financing activities | (7,441) | (5,735) | (10,792) |
| Net increase in cash and cash equivalents | 1,537 | 2,907 | 6,278 |
| Effect of exchange differences | 706 | 259 | 487 |
| Cash and cash equivalents at start of period | 29,521 | 22,756 | 22,756 |
| Cash and cash equivalents at end of period | 31,764 | 25,922 | 29,521 |
Consolidated Statement of Recognised Income and Expense
for the half-year ended 31 December 2008
| Half-year ended 31.12.08 £'000 | Half-year ended 31.12.07 £'000 | Year ended 30.06.08 £'000 | |
| Foreign currency translation differences | 3,286 | 827 | 2,053 |
| Actuarial gain/(loss) on the pension scheme | 251 | (537) | (4,683) |
| Fair value movements on hedged items | (315) | (213) | (169) |
| Net income/(expense) recognised directly in equity | 3,222 | 77 | (2,799) |
| Profit for the year | 10,700 | 8,871 | 20,355 |
| Total recognised income for the period | 13,922 | 8,948 | 17,556 |
| Attributable to : | |||
| Equity holders of the company | 13,922 | 8,948 | 17,556 |
Notes to the Interim Results
for the half-year ended 31 December 2008
| 1. | Basis of preparation |
| The interim financial statements are unaudited and do not constitute statutory accounts as defined within the Companies Act 1985. 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 2008. The figures for the year ended 30 June 2008 are an abridged statement of the Group audited accounts for that year. The financial statements for the year ended 30 June 2008 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 30.4% (2007 : 32.2%). |
| 3. | Dividends | |||
| Half-year ended 31.12.08 £'000 | Half-year ended 31.12.07 £'000 | Year ended 30.06.08 £'000 | ||
| Equity dividends paid : | ||||
| Final dividend for the year ended 30 June 2007 | - | 5,751 | 5,751 | |
| Interim dividend for the year ended 30 June 2008 | - | - | 3,195 | |
| Final dividend for the year ended 30 June 2008 | 7,465 | - | - | |
| 7,465 | 5,751 | 8,946 | ||
| Equity dividends proposed at the end of the period | ||||
| Interim dividend | 3,732 | 3,195 | - | |
| Final dividend | - | - | 7,465 |
Equity dividends per share, paid and proposed, are as follows :
| | 11.25p final dividend for the year ended 30 June 2007, paid on 7 December 2007 |
| 6.25p interim dividend for the year ended 30 June 2008, paid on 23 May 2008 | |
| 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, payable on 22 May 2009 to those shareholders on the register at the close of business on 22 April 2009. |
| 4. | Calculation of earnings per ordinary share | |||
| Half-year ended 31.12.08 £'000 | Half-year ended 31.12.07 £'000 | Year ended 30.06.08 £'000 | ||
| Basic earnings | 10,700 | 8,871 | 20,355 | |
| Weighted average number of ordinary shares in issue | 51,480,630 | 51,113,192 | 51,305,038 | |
| Weighted average number of ordinary shares in issue (diluted for the effect of outstanding share options) | 51,624,129 | 51,558,120 | 51,519,840 | |
| Basic earnings per 5p ordinary share | 20.8p | 17.4p | 39.7p | |
| Diluted earnings per 5p ordinary share | 20.7p | 17.2p | 39.5p | |
| 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. | ||||