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James Halstead PLC   -  JHD   

Interim Results

Released 07:00 29-Mar-2019

RNS Number : 3689U
James Halstead PLC
29 March 2019
 

                    

 

      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:

 

 

·     Revenue at £126 million (2018: £126 million) - unchanged

 

·     Operating profit at £24.5 million (2018: £23.9 million) - up 2.6%

 

·     Pre-tax profit at £24.5 million (2018: £23.7 million) - up 3.3%

 

·     Basic earnings per ordinary share 9.1p (2018: 8.8p) - up 3.4%

 

·     Interim dividend increased to a record 4.0p (2018: 3.85p) - up 3.9%

 

·     Net cash at £62.8 million

 

 

     

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

 

Gordon Oliver, Finance Director

 

 

 

Hudson Sandler

020 7796 4133

Nick Lyon

 

Nick Moore

 

 

 

Panmure Gordon (Nomad and Joint Broker)

020 7886 2500

Ben Thorne

 

Dominic Morley

 

 

 

Arden Partners (Joint Broker)

020 7614 5900

Paul Shackleton

 

Benjamin Cryer

 

 

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

 

 

 

Half-year 

ended 

31.12.18 

£'000 

 

Half-year 

ended 

31.12.17 

£'000 

 

Year 

ended 

30.06.18 

£'000 

 

 

 

 

Revenue

125,786 

126,024 

249,510 

 

 

 

 

Operating profit

24,528 

23,914 

47,148 

Net finance cost

(52)

(229)

(446)

 

 

 

 

Profit before income tax

24,476 

23,685 

46,702 

 

 

 

 

Income tax expense

(5,474)

(5,292)

(9,994)

 

 

 

 

Profit for the period

19,002 

18,393 

36,708 

 

 

 

 

 

 

 

 

Earnings per ordinary share of 5p:

 

 

 

-basic

9.1p

8.8p

17.7p

-diluted

9.1p

8.8p

17.6p

 

 

 

 

 

 

 

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

 

 

 

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

 

 

 

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 

 

 

 

 

Total assets

197,359 

191,493 

197,016 

 

 

 

 

Current liabilities

 

 

 

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 

 

 

 

 

Non-current liabilities

 

 

 

Retirement benefit obligations

18,491 

16,532 

14,899 

Borrowings

200 

200 

200 

Other payables

475 

479 

491 

 

19,166 

17,211 

15,590 

 

 

 

 

Total liabilities

73,148 

74,832 

68,199 

 

 

 

 

Net assets

124,211 

116,661 

128,817 

 

 

 

 

Equity

 

 

 

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 

 

 

 

 

 

 

  

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 

 

 

 

 

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 

Cash inflow from operations

38,432 

20,211 

38,175 

Net interest received

158 

51 

114 

Taxation paid

(4,581)

(4,337)

(9,642)

 

 

 

 

Cash inflow from operating activities

34,009 

15,925 

28,647 

 

 

 

 

 

 

 

 

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)

 

 

 

 

 

 

 

 

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)

 

 

 

 

 

 

 

 

Net increase/(decrease) in cash and cash equivalents

12,047 

(5,032)

(1,737)

 

 

 

 

Effect of exchange differences

69 

(17)

(116)

Cash and cash equivalents at start of period

50,679 

52,532 

52,532 

 

 

 

 

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

 

 

 

 

 

 

 

     

 

 

Half-year 

ended 

31.12.18 

£'000 

 

Half-year 

ended 

31.12.17 

£'000 

 

Year 

ended 

30.06.18 

£'000 

 

Profit for the period

19,002 

18,393 

36,708 

 

Other comprehensive income net of tax:

 

 

 

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 

 

 

 

 

Other comprehensive income for the period net of tax

 

(3,655)

 

3,247 

5,093 

 

 

 

 

Total comprehensive income for the period

15,347 

21,640 

41,801 

 

 

 

 

Attributable to equity holders of the parent

 

 

 

 

15,347 

21,640 

41,801 

 

 

Notes to the Interim Results

for the half-year ended 31 December 2018

 

1.

Basis of preparation

 

 

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.

 

 

2.

Taxation

 

 

Income tax has been provided at the rate of 22.4% (2017: 22.3%).

 

 

3.

Earnings per share

 

 

 

 

 

 

 

Half-year

ended

31.12.18

£'000

 

Half-year

ended

31.12.17

£'000

 

Year

ended

30.06.18

£'000

 

 

 

 

 

 

 

 

Profit for the period

19,002

18,393

36,708

 

 

 

 

 

 

 

 

Weighted average number of shares in issue

208,031,705

207,957,907

207,965,693

 

 

Dilution effect of outstanding share options

45,378

124,938

121,068

 

 

Diluted weighted average number shares

208,077,083

208,082,845

208,086,791

 

 

 

 

 

 

 

 

Basic earnings per 5p ordinary share

9.1p

8.8p

17.7p

 

 

Diluted earnings per 5p ordinary share

9.1p

8.8p

17.6p

 

  

4.

Dividends

 

 

 

 

 

Half-year

ended

31.12.18

£'000

Half-year

ended

31.12.17

£'000

Year

ended

30.06.18

£'000

 

Equity dividends paid:

 

 

 

 

 

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

-

-

 

 

 

 

 

 

 

20,080

19,238

27,245

 

 

 

 

 

 

Equity dividends declared/proposed at the end of the period

 

 

 

 

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

 

 

 

5.

 

 

Copies of the interim results

 

 

 

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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Interim Results - RNS