Interim Results

RNS Number : 5156D
James Halstead PLC
31 March 2014
 



 

 

 

 

31 March 2014

 

 

JAMES HALSTEAD PLC

 

INTERIM RESULTS FOR THE HALF-YEAR ENDED 31 DECEMBER 2013

 

 

Key Figures

 

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



·     Operating profit slightly lower at £20.6 million - a decrease of 3.1%

 

·     Pre-tax profit slightly lower at £20.4 million - a decrease of 4.0%

 

·     Basic earnings per ordinary share 7.4p - a decrease of 1.3%

 

·     Interim dividend increased to a record 3.0p - an increase of 9.1%

 

·     Net cash at £38.6 million

·     Improved current trading

 

 

 

The Chief Executive, Mr. Mark Halstead, commented:

 

"It is clear market conditions are not easy but our strong market position remains and our increased dividend reflect our continued confidence."

 

Enquiries:

 


Mark Halstead, Chief Executive


Gordon Oliver, Finance Director

Telephone: 0161 767 2500



Nick Lyon - Hudson Sandler

Telephone: 020 7796 4133



Ben Thorne - Altium Capital

Telephone: 020 7484 4076

 

Chris Hardie - Arden Partners      

Telephone: 020 7614 5900    

                 

CHAIRMAN'S STATEMENT

 

I am able to report a small increase in turnover to £110.9 million (2012: £109.0 million), growth of 1.7%.  Pre-tax profit has fallen slightly to £20.4 million (2012:  £21.2 million), a decline of 4.0%. Although disappointing to report a fall in profit I am nevertheless encouraged by the progress we have made against the backdrop of a very competitive marketplace, especially in Europe.

 

 

Trading

 

Our market position remains solid in the core territories of the UK, Central Europe and Australasia but it is clear that there is a lower level of new business tenders.  In the UK we have increased sales by just over 5% and in Central Europe by just over 4%.  Australia is on a par in local currency terms though lower by 8% when translated into sterling. Having said this, the net effects of currency translation are, overall, negligible.

 

There is noticeably less activity in the mining sector in Australia but underscoring the global nature of business in the 21st century we have seen an increase in flooring related sales to the mining sector in South America. The continued breadth of flooring installations such as the Mississippi Crime Laboratory in Jackson, the Sberbank in Moscow and Boryspil Airport in Kiev are a few examples of the diversity of our end users.

 

Growth markets include France (up 9%), South America (up 5%), Spain (up 18%) and Canada (up 10%).

 

Gross margin in the period is around 1% lower than the prior comparative which is mainly a result of product mix combined with a degree of price erosion. The product mix is a result of heterogeneous sales growth i.e. the product manufactured by Riverside Flooring in Teesside. This plant has increased output but is not yet operating on a 24 hour basis and therefore it is comparatively less productive than our Radcliffe plant. This will improve over the medium term. Price erosion has been a factor in Germany where it is clear that all manufacturers have excess capacity and are chasing sales vigorously on price.

 

Overheads have increased by 1%, which is creditable.

 

In terms of the balance sheet, working capital remains in good balance, although the level of stock is on a par with the end of the financial year it is ahead of the comparative by 19%. The reasons for this are threefold. Firstly, it is clear that several customers with 31 December year ends chose to minimise stock-holding over the year end which led to lower December 2013 sales (as we commented upon in our pre-close statement) - but with the sales returning in January 2014. Secondly, the prior comparative was low and thirdly, we have wider product ranges and several product launches that took place in February.

 

In January / February we exhibited at Domotex Germany, Euroshop and Domotex Shanghai and our portfolio was well received which bodes well for the coming months.

 

Cash balances remain healthy.

 

 

 

 

Earnings per Share

 

Our basic earnings per share at 7.4p are slightly down on the comparative 7.5p and notwithstanding the small fall in earnings the Board is pleased to yet again propose an increased interim dividend.

 

A dividend of 3.0p (2012: 2.75p) will be paid, representing a 9.1% increase and this reflects both the strength of earnings and the cash reserves of the Company. This will be payable on 6 June 2014 to those shareholders on the register at the close of business on 9 May 2014.

 

 

Outlook

 

The first six months of our financial year have been challenging but I am pleased to report that trading in the period January - March is showing growth of 7-8%.  Offsetting this is the adverse margin effects of a strong sterling and, in addition, it is clear that in Europe there is fierce price competition as manufacturers battle for volume in an overall market that is, at best, flat. Nevertheless, there are a number of factors that encourage future confidence: we have established a firm base in Canada, Polyflor India has now been created (with the ESIC Hospital in Mandi an early customer) and continued success with our long established homogenous floors (the new Cecilia Makiwane Hospital in South Africa being a good example). We have introduced new products over recent years but our classic ranges remain the bedrock for our business across the globe.

 

Looking forward, this is a year where we are increasing further the exports under our own control with our own sales team which will involve additional set up costs. The focus will initially be on India, North America and South America, markets where we have had sales for many years but which offer greater volume potential.

 

In terms of the bottom line it will be difficult to exceed last year's profit but I remain cautiously optimistic that we will not fall below that mark.

 

 

 

 

Geoffrey Halstead

Chairman

31 March 2014



Consolidated Income Statement

for the half-year ended 31 December 2013

 


 

Half-year 

ended 

31.12.13 

£'000 

Restated 

half-year 

ended 

31.12.12 

£'000 

Restated

year 

ended 

30.06.13 

£'000 





Revenue

110,881 

109,026 

217,082 





Operating profit

20,592 

21,252 

40,691 

Net finance cost

(237)

(54)

(196)





Profit before income tax

20,355 

21,198 

40,495 





Income tax expense

(5,132)

(5,653)

(10,446)





Profit for the period

15,223 

15,545 

30,049 









Earnings per ordinary share of 5p:




-basic

7.4p

7.5p

14.5p

-diluted

7.3p

7.5p

14.5p





 

 

 

All the above figures relate to continuing operations.

 

Details of dividends paid and proposed are given in note 3.

 

The prior periods have been restated as explained in note 5.

 



Consolidated Balance Sheet

as at 31 December 2013

 


Half-year

ended

31.12.13

£'000

Half-year

ended

31.12.12

£'000

Year

ended

30.06.13

£'000

Non-current assets




Property, plant and equipment

31,093

33,212

33,391

Intangible assets

3,232

3,232

3,232

Deferred tax assets

5,339

4,656

5,545


39,664

41,100

42,168

Current assets




Inventories

56,567

47,439

56,761

Trade and other receivables

27,653

26,581

33,158

Derivative financial instruments

989

184

827

Cash and cash equivalents

38,557

51,927

34,866


123,766

126,131

125,612

Current liabilities




Trade and other payables

49,769

49,192

55,903

Derivative financial instruments

694

686

63

Current income tax liabilities

5,350

7,491

5,647


55,813

57,369

61,613





Net current assets

67,953

68,762

63,999





Non-current liabilities




Retirement benefit obligations

14,805

9,430

13,902

Deferred tax liabilities

815

850

815

Borrowings

200

200

200

Other payables

432

430

454


16,252

10,910

15,371





Net assets

91,365

98,952

90,796





Equity




Equity share capital

10,356

5,166

10,335

Equity share capital (B shares)

160

160

160


10,516

5,326

10,495

Share premium account

2,659

2,056

2,101

Retained earnings

73,082

80,132

70,977

Other reserves

5,108

11,438

7,223





Total equity attributable to shareholders of the parent

91,365

98,952

90,796





 



Consolidated Cash Flow Statement

for the half-year ended 31 December 2013

 


Half-year 

ended 

31.12.13 

£'000 

Half-year 

ended 

31.12.12 

£'000 

Year 

ended 

30.06.13 

£'000 





Cash inflow from operations

20,178 

31,613 

42,147 

Net interest received

99 

194 

327 

Taxation paid

(5,045)

(4,637)

(11,353)





Cash inflow from operating activities

15,232 

27,170 

31,121 





Purchase of property, plant and equipment

(1,088)

(2,804)

(3,731)

Proceeds from disposal of property, plant and equipment

1,581 

143 

242 

Cash inflow / (outflow) from investing activities

493 

(2,661)

(3,489)





Equity dividends paid

(12,428)

(11,366)

(31,518)

Shares issued

579 

84 

131 





Cash outflow from financing activities

(11,849)

(11,282)

(31,387)









Net increase / (decrease) in cash and cash equivalents

3,876 

13,227 

(3,755)

Effect of exchange differences

(185)

(4)

(83)

Cash and cash equivalents at start of period

34,866 

38,704 

38,704 





Cash and cash equivalents at end of period

38,557 

51,927 

34,866 

 



Consolidated Statement of Comprehensive Income

for the half-year ended 31 December 2013

 







      Restated 

       Restated


Half-year 

ended 

31.12.13 

£'000 

 

half-year 

ended 

31.12.12 

£'000 

year 

ended 

30.06.13 

£'000 

 

Profit for the period

15,223 

15,545 

30,049 

 

Other comprehensive income net of tax:




Actuarial (loss) / gain on the defined benefit scheme

 (690)

 629 

(2,913)

Deferred taxation - change of rate

- 

- 

35 

Foreign currency translation differences

(1,637)

(426)

(93)

Fair value movements on hedging instruments

(478)

148 

767 





Other comprehensive income for the period net of tax

 

(2,805)

351 

(2,204)





Total comprehensive income for the period

12,418 

15,896 

27,845 





Attributable to equity holders of the




parent company

12,418 

15,896 

27,845 

 

 

 

 

 

The prior periods have been restated as explained in note 5.



Notes to the Interim Results

for the half-year ended 31 December 2013

 

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 2013.

 

The figures for the year ended 30 June 2013 are an abridged statement of the group audited accounts for that year, as amended by the restatement explained in note 5 below. The financial statements for the year ended 30 June 2013 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 25.2% (2012: 26.7%).

 

3.

Dividends






Half-year

ended

31.12.13

£'000

Half-year

ended

31.12.12

£'000

Year

ended

30.06.13

£'000


Equity dividends paid:

 





Final dividend for the year ended 30 June 2012

-

11,366

11,366


Special dividend for the year ended 30 June 2013

-

-

14,468


Interim dividend for the year ended 30 June 2013

-

-

5,684


Final dividend for the year ended 30 June 2013

12,428

-

-



12,248

11,366

31,518







Equity dividends proposed at the end of the period





Interim dividend

6,210

5,684

-


Final dividend

-

-

12,428

 

 

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

 


5.5p final dividend for the year ended 30 June 2012, paid on 7 December 2012


7.0p special dividend for the year ended 30 June 2013, paid on 10 May 2013

2.75p interim dividend for the year ended 30 June 2013, paid on 7 June 2013

6.0p final dividend for the year ended 30 June 2013, paid on 6 December 2013

3.0p interim dividend for the year ended 30 June 2013, payable on 6 June 2014, to those shareholders on the register at the close of business on 9 May 2014

 

 

 







Notes to the Interim Results continued

for the half-year ended 31 December 2013

 

 

 

4.

Earnings per share






 

Half-year

ended

31.12.13

£'000

Restated

half-year

ended

31.12.12

£'000

Restated

year

ended

30.06.13

£'000







Profit for the period

15,223

15,545

30,049







Weighted average number of shares in issue

206,878,570

206,624,017

206,643,767


Dilution effect of outstanding share options

699,831

1,000,095

954,657


Diluted weighted average number shares

207,578,401

207,624,112

207,598,424







Basic earnings per 5p ordinary share

7.4p

7.5p

14.5p


Diluted earnings per 5p ordinary share

7.3p

7.5p

14.5p







The prior periods have been restated as explained in note 5.

 

 

 

5.

 

 

 

 

Prior periods restatement

 

IAS19 "employee benefits" was amended in June 2011. The amendment has been implemented in these results, including restating the results for the comparative periods.

 

The effects of the prior periods restatement were as follows :


 

 



Half-year 

ended 

31.12.12 

£'000 

Year 

ended 

30.06.13 

£'000 

 





 

Profit for the period as previously reported


15,822 

30,599 

 

Increase in net pension finance cost


(365)

(714)

 

Deferred tax credit


88 

164 

 





 

Profit for the period as restated


15,545 

30,049 

 





 





 

Other comprehensive income for the period       net of tax as previously reported


74 

(2,754)

 

Adjustment to actuarial (loss) / gain on the defined benefit scheme


365 

714 

 

Deferred tax on the adjustment


(88)

(164)

 





 

Other comprehensive income for the period net of tax as restated


351 

(2,204)

 

 

 

 

 

 

 

6.

 

The total comprehensive income for the period is unchanged by the restatement.

The Consolidated Balance Sheet and the Cash Flow Statement are not affected by the restatement.

 

 

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.

 


This information is provided by RNS
The company news service from the London Stock Exchange
 
END
 
 
IR SEEFWAFLSEDD
UK 100

Latest directors dealings