Interim Results

RNS Number : 9594D

James Halstead PLC

31 March 2011

 



31 March 2011

JAMES HALSTEAD PLC

INTERIM RESULTS FOR THE HALF-YEAR ENDED 31 DECEMBER 2010

Key Figures

James Halstead plc, the AIM listed manufacturer and international distributor of commercial floor coverings reports:

·	Revenue increased to a record £106.1 million - an increase of 15.2%
·	Operating profit increased to a record £18.4 million - an increase of 11.0%
·	Pre-tax profit increased to a record £18.5 million - an increase of 9.1%
·	Basic earnings per ordinary 5p share increased to a record 24.8p - an increase of 8.8%
·	Interim dividend increased to a record 4.5p - an increase of 12.5%
·	Nil net gearing

Chairman, Mr Geoffrey Halstead, commenting said:

"Our success continues with export performance surpassing even prior achievements".

Enquiries:
Mark Halstead, Chief Executive
Gordon Oliver, Finance Director	Telephone: [phone]
Nick Lyon - Hudson Sandler	Telephone: [phone]
Ben Thorne - Altium Capital	Telephone: [phone]

CHAIRMAN'S STATEMENT

It gives me pleasure, once again, to present a record set of interim results. Though the weakness of sterling has helped and raw material prices hindered, I believe our solid reputation and determined approach around the globe have enabled us to continue growing our sales. This achievement is built upon steady year on year progress around the world.

Trading

The first half year trading was very solid with record revenue of £106.13 million (2009: £92.11 million) representing an increase of 15.2% and taking us through the £100 million barrier for the first time at the interim stage. The majority of the Group's activities are commercial flooring and the growth in many of our markets has been very encouraging.

As ever, the breadth of our sales in the six months to December 2010 is widespread from the Al Agalat Hospital in Libya, the Rush Hospital in Chicago, South African railways to the Inegem Laboratories in Mexico. In the UK, East Midlands Airport has installed Polyflor in its baggage reclaim area which is testimony to the durability of our flooring.

Our revenue in the UK has held up very well in the prevailing climate with sales 3.5% ahead of last year; but within this flooring turnover was 6.7% ahead of last year. Overseas revenue increased 22.8% against the corresponding period. Looking at our principal markets there has been good growth: Germany up 26%, Australia (where the government has targeted expenditure on education build and refurbishment) up 45%, and North America up 39%. In other territories there are some very good growth trends, for example in France we are ahead 16% (assisted by increased sales into the transport sector), and in Asia and Hong Kong we are ahead of even last year's exceptional level. It is worth noting that markets that are regarded as difficult are offering growth; in Ireland we have seen positive growth over the last year with refurbishment work in prisons and hospitals progressing well as spending cuts have put new builds on hold. Likewise, Spain is 20% ahead of the corresponding period.

Gross margins were affected by raw material price increases, which have continued to impinge on industry.  In mitigation to the cost pressure, we have had the benefits of favourable product sales mix and savings from the increased use of recycled material.

Our vinyl flooring "take-back" scheme continues to be market leading in Europe and at the annual CIWM (Chartered Institution of Wastes Management) Awards for Environmental Excellence held in November we were delighted that Recofloor won the award for Innovative Practice in Waste Management and Resource Recovery. Recognition for our environmental achievements is most welcome but at a time of raw material price inflation it is also an important offset to cost increases.

It was pleasing to receive our 5^th successive award from the Independent Flooring Distributors Association as the "Manufacturer of the Year". The UK has faced a tough year and whilst refurbishment work has held up as new builds slow down it has been a challenging marketplace. Declining government spend has been the major news story and the demise of Connaught and Rok are examples of the difficulties that even the more robust refurbishment sector faced. We grew sales in this market place, an achievement that our sales force is rightly proud of.

In November 2010, we launched the updated Camaro collection in the UK. The comprehensive marketing package around this range has contributed to the most successful re-launch we have undertaken and this commercial quality luxury vinyl tile is well-suited to being sold in the domestic marketplace.

Riverside Flooring Ltd, located in Teesside, is the latest addition to our Group. In November 2010 we acquired a 40 acre site including warehousing facilities and the machinery and equipment of a cushion vinyl plant that had recently been closed. Our immediate plans are to expand our warehousing to support growth in Europe and the site has further potential for expansion. The plant is fully capable of manufacturing each year 15 - 20 million square metres of domestic cushion vinyl. With development of our manufacturing base in Manchester increasingly impractical due to its physical boundaries this is a key step that not only enhances our capabilities but also widens the options for growth.

The profit before tax at £18.49 million (2009: £16.94 million) is another record performance and is 9.1% ahead of the comparative period.  Cash inflow from operations was very positive at £19.27 million (2009: £24.52 million), with a resulting £30.05 million of cash on the balance sheet (2009: £41.27 million). The cash at the end of the period is after significant outlays over the last 12 months notably on capital expenditure of £12.21 million, dividends of £21.65 million and taxation of £9.62 million.

The balance sheet remains solid.

Earnings per Share and Interim Dividend

Our basic earnings per share have increased to a record 24.8p (2009: 22.8p) an uplift of 8.8% and having regard to these results and our strong cash balances the Board has the pleasant task of announcing, once again, an increased interim dividend.

On 14 January 2011 we made a bonus issue of 1 new share for every share held which has the effect of restating the earnings per share to 12.4p (2009: 11.4p) and we are proposing a dividend of 4.5p (2009: 4.0p) which represents a 12.5% increase on last year and is yet another record.

Outlook

The half year result is most encouraging. Localised issues have given us problems but overall the global marketplace is solid and we continue at the forefront of commercial flooring specifications on new builds and in refurbishments. Our solid foundation in healthcare and education is renowned but our products are far more widely installed and our success in the sports sector continues. The Bayern Munich Allianz Arena and the FC Köln Stadium are just two examples of recent refurbishments. I think it worthy of note that we have added a new country to our list of customers with deliveries to Belize for the first time and there are few nations that we have not at some time delivered to.

At the BAU exhibition, held at Munich in January, and at Euroshop, held in Düsseldorf in February we exhibited our ranges and  customer interest was very encouraging, and following being voted by "Eurodecor" readers as best for customer service we expect to capitalise on this interest over the coming months.

In summary, we are continuing our success of the last two decades both in our home market and overseas with continually improved product offering and an ongoing focus on customer service. I have every confidence that we will continue to forge ahead through our second half.

Geoffrey Halstead

Chairman

31 March 2011

Consolidated Income Statement

for the half-year ended 31 December 2010

	Half-year  ended  31.12.10  £'000	Half-year  ended  31.12.09  £'000	Year  ended  30.06.10  £'000
Revenue	106,131	92,114	186,424
Operating profit	18,387	16,567	35,853
Finance income/(expense)	98	371	(102)
Profit before income tax	18,485	16,938	35,751
Income tax expense	(5,641)	(5,206)	(10,072)
Profit for the period	12,844	11,732	25,679
Earnings per ordinary share of 5p:
-basic	24.8p	22.8p	49.7p
-diluted	24.7p	22.7p	49.6p

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 2010

	Half-year ended 31.12.10 £'000	Half-year ended 31.12.09 £'000	Year ended 30.06.10 £'000
Non current assets
Property, plant and equipment	35,063	26,466	26,120
Intangible assets	3,232	3,232	3,232
Deferred tax assets	7,144	7,296	7,837
	45,439	36,994	37,189
Current assets
Inventories	40,792	34,036	35,926
Trade and other receivables	28,284	22,966	28,561
Derivative financial instruments	184	386	1,230
Cash and cash equivalents	30,054	41,268	33,364
	99,314	98,656	99,081
Current liabilities	55,962	49,866	50,700
Net current assets	43,352	48,790	48,381
Non current liabilities
Retirement benefit obligations	13,896	16,096	17,170
Deferred tax liabilities	957	992	992
Other payables	606	807	566
	15,459	17,895	18,728
Net Assets	73,332	67,889	66,842
Equity
Equity share capital	2,597	2,592	2,594
Equity share capital (B shares)	160	160	160
	2,757	2,752	2,754
Share premium account	3,343	2,883	3,031
Retained earnings	55,307	49,922	49,997
Other reserves	11,925	12,332	11,060
Total equity attributable to shareholders of the parent	73,332	67,889	66,842

Consolidated Cash Flow Statement

for the half-year ended 31 December 2010

	Half-year  ended  31.12.10  £'000	Half-year  ended  31.12.09  £'000	Year  ended  30.06.10  £'000
Cash inflow from operations	19,270	24,521	36,472
Interest received	130	438	537
Interest paid	(35)	(38)	(111)
Taxation paid	(3,853)	(2,275)	(8,038)
Cash inflow from operating activities	15,512	22,646	28,860
Purchase of property, plant and equipment	(9,934)	(1,741)	(4,014)
Proceeds from disposal of property, plant and equipment	140	124	289
Cash outflow from investing activities	(9,794)	(1,617)	(3,725)
Equity dividends paid	(9,732)	(8,752)	(20,674)
Shares issued	315	1,163	1,313
Cash outflow from financing activities	(9,417)	(7,589)	(19,361)
Net (decrease)/increase in cash and cash equivalents	(3,699)	13,440	5,774
Effect of exchange differences	389	267	29
Cash and cash equivalents at start of period	33,364	27,561	27,561
Cash and cash equivalents at end of period	30,054	41,268	33,364

Consolidated Statement of Comprehensive Income

for the half-year ended 31 December 2010

	Half-year  ended  31.12.10  £'000	Half-year  ended  31.12.09  £'000	Year  ended  30.06.10  £'000
Profit for the period	12,844	11,732	25,679
Other comprehensive income (net of tax):
Effect of change in UK corporation tax rate on deferred tax liability Foreign currency translation differences	35  2,242	-  1,784	-  530
Actuarial gain/(loss) on the defined benefit pension scheme	2,163	(356)	(2,314)
Fair value movements on hedging instruments	(1,377)	18	-
Other comprehensive income for the period (net of tax)	3,063	1,446	(1,784)
Total comprehensive income for the period	15,907	13,178	23,895
Attributable to equity holders of the
parent company	15,907	13,178	23,895

Notes to the Interim Results

for the half-year ended 31 December 2010

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 2010. The figures for the year ended 30 June 2010 are an abridged statement of the group audited accounts for that year. The financial statements for the year ended 30 June 2010 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 30.5% (2009: 30.7%).
3.	Dividends
		Half-year ended 31.12.10 £'000	Half-year ended 31.12.09 £'000	Year ended 30.06.10 £'000
	Equity dividends paid:
	Final dividend for the year ended 30 June 2009	-	8,752	8,752
	Special dividend	-	-	7,774
	Interim dividend for the year ended 30 June 2010	-	-	4,148
	Final dividend for the year ended 30 June 2010	9,732	-	-
		9,732	8,752	20,674
	Equity dividends proposed at the end of the period
	Interim dividend	4,675	4,146	-
	Special dividend	-	7,774	-
	Final dividend	-	-	9,732

Equity dividends per share, paid and proposed, are as follows:

These figures reflect the one for one bonus issue on 14 January 2011

·	8.5p final dividend for the year ended 30 June 2009, paid on 4 December 2009
·	4.0p interim dividend for the year ended 30 June 2010, paid on 31 March 2010
·	9.375p final dividend for the year ended 30 June 2010, paid on 3 December 2010
·	7.5p special dividend paid on 25 January 2010
·	4.5p interim dividend for the year ended 30 June 2011, payable on 20 May 2011 to those shareholders on the register at the close of business on 26 April 2011

Notes to the Interim Results continued

for the half-year ended 31 December 2010

4.	Calculation of earnings per ordinary share
		Half-year ended 31.12.10 £'000	Half-year ended 31.12.09 £'000	Year ended 30.06.10 £'000
	Basic earnings	12,844	11,732	25,679
	Weighted average number of ordinary shares in issue	51,887,183	51,536,516	51,695,718
	Weighted average number of ordinary shares in issue (diluted for the effect of outstanding share options)	52,091,558	51,624,036	51,803,285
	Basic earnings per 5p ordinary share	24.8p	22.8p	49.7p
	Diluted earnings per 5p ordinary share	24.7p	22.7p	49.6p
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.

 

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