REG - James Halstead PLC - Interim Results
RNS Number : 3689UJames Halstead PLC29 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
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)
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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