REG - James Halstead PLC - Interim Results
27/03/2025 07:15
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RNS Number : 3995C James Halstead PLC 27 March 2025
27 March 2025
JAMES HALSTEAD PLC
INTERIM RESULTS FOR THE HALF-YEAR ENDED 31 DECEMBER 2024
"Strong H1 profitability and record interim dividend, solid margins and profit
performance against challenging markets"
Key Figures
James Halstead plc, the AIM listed manufacturer and international distributor
of floor coverings, announces its results for the six months ended 31 December
2024:
Financial highlights
· Revenue at £130.1 million (2023: £136.5 million)
· Operating profit at £27.1 million (2023: £26.2 million)
· Pre-tax profit at £28.5 million (2023: £27.4 million)
· Basic earnings per ordinary share 5.0p (2023: 4.8p)
· Interim dividend declared of 2.75p (2023: 2.50p)
· Cash of £63.7 million (2023: £62.4 million)
Operational highlights
· Completed previously announced capital expenditure programmes across
our Teesside and Radcliffe sites to upgrade production capabilities
· Attended several South America trade exhibitions, underlining our
continued growth in the region and cementing our global reputation as a key
flooring provider
· Recofloor won a Gold Award in 'The Green Apple Environment Awards'
The Executive Chairman, Mark Halstead, commented:
"Against the backdrop of difficult markets, we are pleased to have raised
profits underpinned by improved margins and reductions in overheads. We remain
confident of the Group's medium-term prospects, despite short-term confidence
weakness in Europe, and anticipate another year of progress.''
Enquiries:
James Halstead:
Mark Halstead, Executive Chairman Telephone: 0161 767 2500
Gordon Oliver, Chief Executive
David Drillingcourt, Finance Director
Hudson Sandler:
Nick Lyon Telephone: 020 7796 4133
Nick Moore
Panmure Liberum (NOMAD & Joint Broker):
Edward Mansfield / Tom Scrivens Telephone: 020 7886 2500
Zeus (Joint Broker):
Ben Thorne / Fraser Marshall Telephone: 0207 220 1666
NOTES TO EDITORS
James Halstead (LSE: JHD) is a UK manufacturer and global supplier of flooring
for commercial and domestic purposes. It distributes their manufactured and
sourced products from operations across the United Kingdom, Europe,
Scandinavia, Australasia, North America and Asia, and exports directly to
almost every country around the world.
The Company's brands include Polyflor, Palettone, Camaro, Karndean (Europe),
Polysafe, Recofloor and Expona. James Halstead's strategy is to constantly
develop its brand identity and its reputation for quality, product innovation,
durability and availability, thereby enhancing and maintaining goodwill with
the aim of achieving repeat business.
Over many years, the Company has adopted a policy of continual investment in
both process improvement and product development to improve output efficiency
and its product offering.
The Company was founded in 1915 and is headquartered in Bury, UK. It listed on
the London Stock Exchange in 1948.
CHIEF EXECUTIVE'S STATEMENT
Trading for the six months ended 31 December 2024
Sales revenue of £130.1 million (2023: £136.5 million) was 4.7% lower than
the prior year, primarily due to restrictions on government spending in
several key markets and end customer confidence. Notwithstanding these adverse
conditions, there were margin improvements and overhead reductions.
Consequently, profit before tax of £28.5 million (2023: £27.4 million) is
3.9% ahead of the comparative period driven by a 3.2% increase in operating
profit.
The UK represents our largest market and some 43% of total turnover. Sales
were at the same level as the comparative period despite there being a notable
slowdown in activity regarding our UK commercial flooring activity from July
to October following the change of government and concerns in the lead up to
the UK autumn budget. Despite this, the backlog of refurbishment and increased
capacity of hospitals, schools, prisons and other government buildings is well
reported and it can only be delayed not cancelled. Demand for aged care (a
core sector for our flooring) is expanding with demand for places outstripping
supply with new capacity likely to follow. Our ongoing expectations are for
increased sales in the UK.
The principal areas of sales shortfall against the comparative period were:
Central Europe -8% and Australia -12% which can be ascribed to a lack of
government-led spending in building and building refurbishment and lower
consumer confidence affecting decision making around shop refurbishment and
new store roll outs. The European difficulties were broadly in line with our
expectations and budgets for the first half of the year.
On the positive side North American sales were ahead of the comparative period
by 7%.
Gross profit margins improved to 44.8% (2023: 43.8%) which is due to the
stabilisation of raw material inputs, a degree of energy cost reduction and
more efficient throughput of manufacturing in our UK production facilities.
Raw material costs are still stubbornly ahead of pre-Covid levels.
Overheads were reduced by 7%, principally a result of cost controls and lower
selling and distribution costs associated with lower turnover.
Taxation at 26.3% (2023: 26.7%) is broadly unchanged from the previous year.
Our businesses and international markets
Our UK businesses Polyflor and Riverside were successful in expanding sales
volumes of our manufactured products i.e. our ranges of sheet vinyl, despite
muted demand in the early months of the period in part due to economic
uncertainty and concerns over the Autumn budget which was exacerbated by some
destocking within the UK distribution trade. Sales of luxury vinyl tiles were
slightly weaker as they included products aimed at the consumer market which
faced the negatives of consumer spending constraints and a subdued UK housing
sector. Polyflor supplied flooring to the Svalbard Folkehøgskole project
which was a Regional Winner in the Society of British & International
Interior Design Awards (SBID) and of the many projects supplied during the
year were Bentley Motors, Crewe; The Heinz "57" factory at Kitt Green, Wigan;
the Co-Op Live Arena in Manchester and the Football Association HQ at St
George's Park in Burton-on-Trent.
During the period we undertook significant capital work on our production
lines at both Teesside and Radcliffe. At Teesside the work was on our
ultraviolet curing plant and upgrades to the mixing area whilst in Radcliffe
we installed new edge trim granulators and renewed the calender bowls on one
of the main production lines. Both necessitated plant shutdowns that adversely
affected output. UK sales are the bedrock of the Group and the result that we
achieved in the UK was of great benefit to our overall performance.
Our German and Central European businesses are operating in an economic
climate characterised by material uncertainty. Despite ongoing demand, low
consumer confidence related to energy concerns and the ongoing Ukraine war
have impacted house building. Notwithstanding these headwinds, we are pleased
to report that our business has had some success. In Germany, Objectflor
continues to supply into refurbishment and new store openings across a wide
range of retail store chains including Kodi Stores, Höffner stores, Jeans
Fritz, BoFrost, True Bride and Hit supermarkets. In France, some of our key
projects include the Institute for Magnetic Fusion Research at Cadarache and
the Golf de La Prée Club at La Rochelle.
Objectflor has a core market presence, and this was endorsed through the
company being ranked as No 1 against its flooring competitors by BTH Heimtex,
the trade magazine for floor coverings. Readers of BTH Heimtex are managers,
opinion leaders and decision makers in specialist shops, interior decorators,
wholesale companies and the construction industry.
We reported a solid performance in Canada, despite a slight fall back from
last year's record first half turnover. It is encouraging that despite severe
uncertainties in the Canadian economy the local management report a good
pipeline of secured and probable projects which gives us confidence for the
second half year and beyond. This will be supported by a strengthening of our
sales representation in the region.
Sales in the APAC region were mixed with Australia and New Zealand reporting
double digit declines in turnover. Australia faced some of the longest covid
lockdowns, and government initiatives to stimulate the economy have been
focused on road building rather than infrastructure with flooring. GDP in the
year to December 2024 rose 1.3% and, whilst this is very low against the long
term averages, it should point to the beginning of a return of confidence.
New Zealand also has faced one of the longest periods of recession in 30 years
but this seems to have ended, albeit with the slimmest of margins. Overhead
control is the primary focus for the moment, most notably with the closure of
one of our warehouses in New Zealand, a general business reorganisation and a
recruitment freeze.
We are however pleased to report continued progress in Malaysia and South
Asia. In Southeast Asia, we grew sales across each country as we increased the
number of distributors in the region (in Vietnam and Thailand) feeding from
our Malaysian warehouse. The beneficial effects from the new free trade
agreement with the UK (from December 2024) will almost certainly add stimulus
to our business. The reductions in "red tape" arising from the trade agreement
are particularly beneficial to trade in the region.
North Asia, notably China, Hong Kong and South Korea, is a region that is
managed from Shanghai. We have incorporated the business in Hong Kong SAR to
the similar structures that we have elsewhere offering local invoicing, local
representation and technical team support for installers and contractors.
There is a degree of upturn in our sales though it remains well below
pre-covid levels and was affected by the period when we could not manufacture
sufficient product nor find shipping routes to China for some considerable
time. Those obstacles no longer remain and projects such as Sun Yat-sen
University Cancer Center in Guangzhou, China reflect our progress.
In the rest of the world, revenue performance has been generally more positive
with double digit growth in the USA and the Mediterranean region and
particularly Spain. There were slight declines against the comparatives in the
Middle East and South America, but both are comfortably ahead of the 2022
comparatives. Each of these markets are largely led by new-build projects and
we remain confident of ongoing success. In South America we attended several
trade exhibitions: Hospitalar Sao Paulo, Brazil, The Colombian Association of
Hospital Architects and The Engineers (ACAIH) International Congress, Bogota,
Colombia, and The Chilean Association of Hospital Architecture (AARQHOS)
Congress for Healthcare infrastructure, Santiago, Chile. These underline our
continued growth in the region and help cement the reputation we have globally
as key providers of healthcare flooring. Once again, the range of projects
supplied is diverse with MM Hospital in Ambala, Punjab, Emmanuel College in
Point Cook, Australia and Trondenes Fort, near Harstad, Norway.
Working capital, cash flow earnings per share and dividend
Since the start of the financial year, we have distributed £25.0 million in
dividends and paid corporation taxes of £8.2 million. In addition, capital
expenditure over the same period was £2.6 million. The ongoing focus on
manufacturing excellence greatly assists our success in global flooring
projects such as the SiNIX Group Abi Gothenburg which has been nominated for
best designed office 2024 in Sweden.
The cash inflow from operations at £25.3 million (2023: £33.6 million) is
lower than last year largely due to increased inventories. Inventories
increased for two principal reasons. Firstly, the comparative was lower and
inventories were affected by the late shipments because of shipping delays
caused by the Red Sea crisis. And secondly, there were launch stocks for new
ranges being launched post year end at trade shows in January and February
2025.
Our cash position stands at £63.7 million as of 31 December 2024 (2023:
£62.4 million). Our robust balance sheet continues to be a key strength.
Having regard to our cash and profitability, we have decided to declare an
interim dividend of 2.75p per share (2023: 2.50p), an increase of 10%. This
dividend will be payable on 6 June 2025 to those shareholders on the register
as of 9 May 2025.
Sustainability and the environment
Recofloor, our recycling initiative (principally in the UK) continues to be
looked upon as a model example of manufacturer led initiatives and Recofloor
won a Gold Award in 'The Green Apple Environment Awards' which annually
recognise, reward and promote environmental best practice worldwide, presented
at a ceremony at Kensington Palace in November 2024.
Current trading and outlook
In this trading period we have seen evidence of restricted government spending
in many economies. For example, the UK, Central Europe (Germany and France in
particular) and within the APAC region Australia and New Zealand. In the UK
hospitals, schools, prisons and other government buildings all are in need of
significant rebuilding or major refurbishment and investment which, to date,
seems to have not flowed into the appropriate budgets. This will change, we
believe, over the course of 2025 and we would expect to see a stimulation to
sales. Additionally, the UK housing sector has continued to be subdued but the
reform of planning and mandatory targets should pave the way to push through
the acute housing crisis again giving us confidence in improved demand.
We are pleased to see that H2 has started well and in January 2025 UK sales,
which are the bedrock of the Group, were 9% ahead of the comparative.
The worldwide breadth of projects such as The Palace Balneo & Spa Hotel in
Bulgaria
and the Wiloo Salud Dental Infantil in Barcelona are just two examples of the
scope of ongoing goodwill that three generations of exporting flooring has
provided James Halstead.
The fundamentals of our product ranges and routes to market are well
established and the markets in which we operate continue to provide the demand
that, despite short term impediments, gives us confidence in the future and
another year of progress.
Gordon Oliver
Chief Executive
27 March 2025
Consolidated Income Statement
for the half-year ended 31 December 2024
Half-year Half-year Year
ended ended ended
31.12.24 31.12.23 30.06.24
£'000 £'000 £'000
Revenue 130,090 136,451 274,881
Operating profit 27,065 26,213 53,907
Finance income 1,532 1,339 2,642
Finance cost (134) (156) (325)
Profit before income tax 28,463 27,396 56,224
Income tax expense (7,492) (7,317) (14,704)
Profit for the period 20,971 20,079 41,520
Earnings per ordinary share of 5p:
- basic 5.0p 4.8p 10.0p
- diluted 5.0p 4.8p 10.0p
All amounts relate to continuing operations.
Details of dividends paid and declared/proposed are given in note 4.
Consolidated Statement of Comprehensive Income
for the half-year ended 31 December 2024
Half-year Half-year Year
ended ended ended
31.12.24 31.12.23 30.06.24
£'000 £'000 £'000
Profit for the period 20,971 20,079 41,520
Other comprehensive income net of tax:
Remeasurement of the net defined benefit liability (622) (959) 564
Foreign currency translation differences (2,032) 439 (248)
Fair value movements on hedging instruments 1,055 (1,086) (472)
Other comprehensive income for the period net of tax (156)
(1,599) (1,606)
Total comprehensive income for the period 19,372 18,473 41,364
Attributable to equity holders of the parent 19,372 18,473 41,364
Consolidated Balance Sheet
as at 31 December 2024
Half-year Half-year Year
ended ended ended
31.12.24 31.12.23 30.06.24
£'000 £'000 £'000
Non-current assets
Intangible assets 3,232 3,232 3,232
Property, plant and equipment 35,370 36,116 34,965
Right of use assets 5,674 6,804 6,209
Retirement benefit obligations - - 14
Deferred tax 221 118 214
44,497 46,270 44,634
Current assets
Inventories 87,374 83,118 82,268
Trade and other receivables 33,995 35,623 44,042
Derivative financial instruments 2,117 60 482
Current tax 2,124 1,012 1,287
Cash and cash equivalents 63,683 62,420 74,282
189,293 182,233 202,361
Total assets 233,790 228,503 246,995
Current liabilities
Trade and other payables 49,967 49,173 57,487
Derivative financial instruments 83 735 106
Current tax - - 273
Lease liabilities 2,704 2,586 2,707
52,754 52,494 60,573
Non-current liabilities
Retirement benefit obligations 561 2,240 -
Other payables 339 408 410
Lease liabilities 3,115 4,359 3,680
Preference shares 200 200 200
Deferred tax 1,155 62 855
5,370 7,269 5,145
Total liabilities 58,124 59,763 65,718
Net assets 175,666 168,740 181,277
Equity
Equity share capital 20,839 20,838 20,839
Equity share capital (B shares) 160 160 160
20,999 20,998 20,999
Share premium account 55 13 55
Currency translation reserve 1,814 4,533 3,846
Hedging reserve 1,389 (280) 334
Retained earnings 151,409 143,476 156,043
Total equity attributable to shareholders of the parent 175,666 168,740 181,277
Consolidated Cash Flow Statement
for the half-year ended 31 December 2024
Half-year Half-year Year
ended ended ended
31.12.24 31.12.23 30.06.24
£'000 £'000 £'000
Profit for the period 20,971 20,079 41,520
Income tax expense 7,492 7,317 14,704
Profit before income tax 28,463 27,396 56,224
Finance cost 134 156 325
Finance income (1,532) (1,339) (2,642)
Operating profit 27,065 26,213 53,907
Depreciation of property, plant & equipment 1,883 1,859 4,093
Depreciation of right of use assets 1,406 1,496 3,046
Profit on sale of property, plant and equipment (79) (20) (75)
Defined benefit pension scheme employer contributions paid (781)
(250) (531)
Change in fair value of financial instruments (65) - 27
Share based payments 24 16 39
(Increase) /decrease in inventories (6,889) 4,832 4,884
Decrease in trade and other receivables 9,699 11,669 2,901
(Decrease) in trade and other payables (7,491) (11,961) (3,263)
Cash inflow from operations 25,303 33,573 64,778
Taxation paid (8,162) (8,234) (15,450)
Cash inflow from operating activities 17,141 25,339 49,328
Interest received 1,528 1,339 2,642
Purchase of property, plant and equipment (2,596) (2,058) (3,313)
Proceeds from disposal of property, plant and equipment 132 38 108
Cash outflow from investing activities (936) (681) (563)
Interest paid (7) (10) (24)
Lease interest paid (127) (114) (242)
Lease capital paid (1,422) (1,474) (2,981)
Equity dividends paid (25,007) (23,963) (34,383)
Shares issued - - 43
Cash outflow from financing activities (26,563) (25,561) (37,587)
Net (decrease) / increase in cash and cash equivalents (10,358) (903) 11,178
Effect of exchange differences on cash and cash equivalents
(241) 101 (118)
Cash and cash equivalents at start of period 74,282 63,222 63,222
Cash and cash equivalents at end of period 63,683 62,420 74,282
(781)
Change in fair value of financial instruments
(65)
-
27
Share based payments
24
16
39
(Increase) /decrease in inventories
(6,889)
4,832
4,884
Decrease in trade and other receivables
9,699
11,669
2,901
(Decrease) in trade and other payables
(7,491)
(11,961)
(3,263)
Cash inflow from operations
25,303
33,573
64,778
Taxation paid
(8,162)
(8,234)
(15,450)
Cash inflow from operating activities
17,141
25,339
49,328
Interest received
1,528
1,339
2,642
Purchase of property, plant and equipment
(2,596)
(2,058)
(3,313)
Proceeds from disposal of property, plant and equipment
132
38
108
Cash outflow from investing activities
(936)
(681)
(563)
Interest paid
(7)
(10)
(24)
Lease interest paid
(127)
(114)
(242)
Lease capital paid
(1,422)
(1,474)
(2,981)
Equity dividends paid
(25,007)
(23,963)
(34,383)
Shares issued
-
-
43
Cash outflow from financing activities
(26,563)
(25,561)
(37,587)
Net (decrease) / increase in cash and cash equivalents
(10,358)
(903)
11,178
Effect of exchange differences on cash and cash equivalents
(241)
101
(118)
Cash and cash equivalents at start of period
74,282
63,222
63,222
Cash and cash equivalents at end of period
63,683
62,420
74,282
Notes to the Interim Results
for the half-year ended 31 December 2024
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 2024.
The figures for the year ended 30 June 2024 are an abridged statement of the
group audited accounts for that year. The financial statements for the year
ended 30 June 2024 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 IAS 34 '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 26.3% (2023: 26.7%).
3. Earnings per share
Half-year Half-year Year
ended ended ended
31.12.24 31.12.23 30.06.24
£'000 £'000 £'000
Profit for the period 20,971 20,079 41,520
Weighted average number of shares in issue 416,786,436 416,754,052 416,761,396
Dilution effect of outstanding share options - 33,687 32,457
Diluted weighted average number shares 416,786,436 416,787,739 416,793,853
Basic earnings per 5p ordinary share 5.0p 4.8p 10.0p
Diluted earnings per 5p ordinary share 5.0p 4.8p 10.0p
4. Dividends
Half-year Half-year Year
ended ended ended
31.12.24 31.12.23 30.06.24
£'000 £'000 £'000
Equity dividends paid:
Final dividend for the year ended 30 June 2023 - 23,963 23,963
Interim dividend for the year ended 30 June 2024 - - 10,420
Final dividend for the year ended 30 June 2024 25,007 - -
25,007 23,963 34,383
Equity dividends declared/proposed after the end of the period
Interim dividend 11,462 10,420 -
Final dividend - - 25,007
Equity dividends per share, paid and declared/proposed are
as follows:
5.75p final dividend for the year ended 30 June 2023, paid on 15 December 2023
2.50p interim dividend for the year ended 30 June 2024, paid on 14 June 2024
6.00p final dividend for the year ended 30 June 2024, paid on 13 December 2024
2.75p interim dividend for the year ended 30 June 2025, payable on 6 June
2025, to those shareholders on the register at 9 May 2025
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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