TIDMJHD
RNS Number : 1112I
James Halstead PLC
31 March 2020
31 March 2020
JAMES HALSTEAD PLC
INTERIM RESULTS FOR THE HALF-YEARED 31 DECEMBER 2019
Key Figures
James Halstead plc, the AIM listed manufacturer and
international distributor of commercial floor coverings,
reports:
* Revenue at GBP130.4 million (2018: GBP125.8 million)
- up 3.7%
* Operating profit at GBP25.3 million (2018: GBP24.5
million) - up 3.0%
* Pre-tax profit at GBP25.2 million (2018: GBP24.5
million) - up 2.8%
* Basic earnings per ordinary share 9.5p (2018: 9.1p) -
up 4.4%
* 1(st) Interim dividend proposed of 2.125p
* Cash at GBP64.3 million
The Chief Executive, Mr. Mark Halstead, commented:
"In the first half, we have supplied flooring to installations
as diverse as the Folies Bergère in Paris and to the Pooch Perfect
TV set for Network Seven in Australia and, with profits growth and
robust cash balances, it was a satisfying performance.
However, the world has changed since the turn of the year and we
are focused on the security of our businesses and the immediate
challenges of the Coronavirus (COVID- 19). The focus of our
business has moved to our expertise in healthcare as the immediate
need in many of our markets for flooring is in this sector."
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
Dominic Morley
Arden Partners (Joint Broker)
Richard Johnson 020 7614 5900
CHAIRMAN'S STATEMENT
Trading for the six months ended 31 December 2019
Our turnover of GBP130.4 million (2018: GBP125.8 million) shows
growth of 3.7% and is a record level for the first half. Profit
before tax of GBP25.2 million (2018: GBP24.5 million) is 2.8% ahead
of the comparative period and is another record. Our cash inflows
from operations in the period are GBP28.4 million. The business has
performed well given the fragile state of many markets.
In the UK our sales are 7% ahead of the prior year comparative
and are testament to the efforts of our sales and distribution
teams in servicing the market.
James Halstead France continues to grow, by some 6% in the first
six months. The greater Paris region was affected by strikes but
our investment in additional sales staff across the country is
showing success. One project of note was the new intensive care
facility at the Centre Hospitalier Intercommunal de Poissy.
Objectflor, based in Germany and serving Central Europe,
reported sales growth of some 2.3% though encountered margin
erosion as a result of exchange rates. The Netherlands has had a
difficult few months with the restrictions on construction as a
result of their government's actions to tackle nitrogen emissions.
In October, Objectflor launched "Expona Simplay" carpet tiles which
complement our ranges of loose lay vinyl and are selling very well.
Our new in-house showroom / exhibition centre - "Campus" had 2,500
visitors up until the end of December. The Campus is also a
training facility and in December we introduced a new event, a
trade fair, named "Weilhnacht Campus" where around twenty flooring
related companies shared the costs and presented our flooring
comprehensively with industry leading accessories, adhesives and
design ideas. Projects supplied by Objectflor in the period include
three hospitals - Klinikum Darmstadt, Kilnikum Eisenberg and
Charité Berlin.
In looking at the regions of Polyflor Pacific, sales are
generally positive though mainland China was down by around 8%
which we ascribe to project delays. New Zealand has seen sales
growth of 12% and Australia, mainly affected by the various widely
reported climate issues, reported a 6% decline.
North America has been very positive with over 22% growth in the
six months in comparison to the prior year. Within this, Canada
continues to grow and our team there have supported US growth with
attendance at major exhibitions.
As mentioned at the time of our preliminary results last
October, throughout July and August one of our three main
production lines in Whitefield was idle following the failure of
part of the plant and the consequent damage to the line. Inevitably
this led to unrecovered overhead costs as we were unable to produce
for ten weeks as well as the increased cost of working once the
plant re-started in September and a required running of additional
hours in overtime to rebuild stock levels. This had a knock-on
effect on our ability to fulfil orders particularly in export
markets and, indeed, part of the decline in our Australian sales is
attributable to this break-down. These problems are now behind us
and it is testimony to our robustness that record turnover and
record profits have still been attained.
Earnings per Share and Dividend
Our basic earnings per share at 9.5p are above the comparative
period of 9.1p by 4.4%.
Our cash, which stands at GBP64.3 million, is a key strength and
in these difficult times with the world focused on the global
situation and COVID-19 we are conscious of this asset and the
importance of retaining it. As a Board, we are prudent and cautious
and have looked at our forecasts and discussed at length various
ongoing scenarios regarding the dividend.
We undoubtedly have the cash resource to declare an increased
interim dividend, and based on the position three weeks ago, with a
record first half and a robust balance sheet, with nil net gearing,
this would have been our position. As a Board we are proud of our
long history of increases in dividend. However, as a Board, we feel
given the level of uncertainty in the short-term this would signal
that we are not focused on the current and ongoing situation.
Equally, to forgo a dividend, given the interim payment would have
cost around 14% of the cash resources herein reported, might be
regarded as an overreaction. Our shareholder base includes several
income funds and many private individuals looking for both security
and the income. Approximately half our UK workforce and around 60%
of our former employees (who are now pensioners) are
shareholders.
Accordingly, and in consultation with advisors, we have decided
to declare a first interim dividend of 2.125p per share
representing half of the interim dividend we would otherwise have
declared and to review a payment of a second interim dividend in
August when visibility of the global economy may be clearer. As we
stand, the intention is that this first interim dividend will be
payable on 5 June 2020 to those shareholders on the register at the
close of business on 11 May 2020.
The Board in arriving at this decision has also, recently, paid
an amount broadly equivalent to 50% of this interim dividend into
the Group's defined benefit pension scheme and has contacted the
trustees to confirm that at this time the scheme should not be
liquidating scheme assets to fund benefits and that for the period
to 30 June 2020 the company will underpin any shortfall with
additional funds. In terms of cash this is unlikely to exceed the
level of 25% of this interim dividend and the underpin is capped at
that level.
As a Board we believe this is a measured response and would note
that the first two months trading of the second half have continued
positively in terms of cash flow.
COVID-19 and our current status
The Group as a whole is closely monitoring developments in
respect to the ongoing COVID-19 pandemic. Up until the 20(th) March
we had not experienced any meaningful disruption to our operations
although regionally there were restrictions on travel.
Since that time the UK, and other countries have instigated
various restrictions on travel and the closure of many businesses.
Inevitably office refurbishment, retailer business and leisure will
slow drastically in the coming weeks. None of our markets are
unaffected in terms of the general economic environment. However, a
major part of our business is in healthcare and over 70% of our
turnover is exported and we are receiving a large number of
enquiries from many of our markets.
Our Group has plans in place to mitigate adverse challenges we
face, and resources have been put in place to allow for remote
working for many office-based personnel. More importantly we have
rigorous procedures in our factories to protect our colleagues
including social distancing measures and use of sanitizers. In
addition we stopped all external visitors to site and segregated
delivery drivers from warehouse operatives. We have also insisted
on any employee with symptoms remaining at home, sent home any
worker with underlying conditions, closed vending machines,
conducted all meetings by conference call and limited staff to no
more than two people in any room at the same time.
Government measures to slow the growth of the virus disrupts a
significant part of our business, most noticeably in the UK but, as
noted earlier, around 70% of our sales are exported and other
markets are also affected. It is highly likely that our sales of
luxury vinyl tiles ("LVT") will slow rapidly to the extent that LVT
is installed in the retail and hospitality sectors. Refurbishment
is less affected, and it is clear than contractors are active in
this early phase but are winding-down. Equally, for a period of
time the sheet vinyl part of the business will grow given the
immediate need for expansion of temporary hospitals, assessment
centres, sterile changing areas and isolation wards. Our UK
production lines can fulfil some of this need and are producing
this flooring.
In several markets we have "key supplier" status and are a
preferred supplier to the UK's National Health Service, whilst
there are two other preferred suppliers who are based in France
where all manufacturing is currently closed. Despite being
competitors, we work closely with these two companies on trade
bodies and international standards and have sent our wishes for a
safe outcome. Given the "stay at home" message our employees and
their families have understandable concerns, and the stress and
worry associated with the current situation is an issue for
everyone. Having regard to this, and given the nearness of our
normal Easter shutdown, we will close the Radcliffe factory one
week earlier and extend the break to three weeks.
Our suppliers are in contact and raw material supplies continue,
with 60% of raw materials sourced in Europe and, to date, supply
and delivery are largely unaffected. The 3 week break will give us
more clarity on supply chains as government policy evolves.
I would like to thank those senior members of the various heath
bodies that have written to us with thanks for our ability to
supply rapidly for needed facilities, our local Members of
Parliament for taking time to understand our concerns about the
lack of clarity of going to work, to our workforce whose efforts
are appreciated and to our senior management team who are having to
react to unprecedented events.
Our cash resources are robust and stock levels remain solid
which should help to underpin the coming months and immediate
demand.
Outlook
The second half of the financial year started well with full
production in the UK, with sales and profit in the first three
months of the second half in line with expectations.
Looking at the coming months, it can be envisaged that sales to
retailer refurbishment will slow down, but our core business in
healthcare and institutional refurbishment is more robust. Indeed,
as I have noted, in the preceding section, there are increased
enquiries for flooring for medical facilities in several parts of
the globe and our stocks of sheet resilient flooring allow us to
respond quickly.
The balance of our business will likely continue to shift to
healthcare and given the fast pace of events we cannot be sure how
the market will react to the next few months. In the immediate
two-six weeks the focus in many markets will be on healthcare and,
with the extended Easter factory closure, we will focus on
distribution. Transportation of goods remains relatively normal. In
the UK even large distributors that have closed depots are making
arrangements to continue the supply of commercial flooring to
contractors, but there are localised issues of vehicles being
stopped as part of government monitoring of essential travel.
Overseas international freight rates are rising and the drastic
changes to lock-down in the world means there may be challenges in
delivery.
The immediate few weeks would seem to be busy in terms of demand
but daily changes must be faced. Looking further ahead, our balance
sheet strength, our depth of experience and focus on detail
encourage me to have confidence that we are well placed to
withstand prevailing pressures.
Anthony Wild
Chairman
31 March 2020
Consolidated Income Statement
for the half-year ended 31 December 2019
Half-year Half-year Year
ended ended ended
31.12.19 31.12.18 30.06.19
GBP'000 GBP'000 GBP'000
Revenue 130,391 125,786 253,038
============ ============ ===========
Operating profit 25,258 24,528 48,374
Finance income 243 171 357
Finance cost (351) (223) (455)
Profit before income tax 25,150 24,476 48,276
Income tax expense (5,389) (5,474) (10,484)
Profit for the period 19,761 19,002 37,792
============ ============ ===========
Earnings per ordinary share of 5p:
-basic 9.5p 9.1p 18.2p
-diluted 9.5p 9.1p 18.2p
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 2019
Half-year Half-year Year
ended ended ended
31.12.19 31.12.18 30.06.19
GBP'000 GBP'000 GBP'000
Non-current assets
Property, plant and equipment 37,759 36,870 37,449
Right of use assets 7,103 - -
Intangible assets 3,232 3,232 3,232
Deferred tax assets 3,179 3,267 3,261
---------- ---------- ----------
51,273 43,369 43,942
---------- ---------- ----------
Current assets
Inventories 67,180 63,664 69,921
Trade and other receivables 25,962 26,911 32,816
Derivative financial instruments 1,218 620 372
Cash and cash equivalents 64,332 62,795 68,664
---------- ---------- ----------
158,692 153,990 171,773
---------- ---------- ----------
Total assets 209,965 197,359 215,715
Current liabilities
Trade and other payables 50,643 48,930 58,354
Derivative financial instruments 290 428 684
Current income tax liabilities 740 4,624 3,419
Lease liabilities 2,774 - -
---------- ---------- ----------
54,447 53,982 62,457
---------- ---------- ----------
Non-current liabilities
Retirement benefit obligations 19,354 18,491 19,582
Other payables 400 475 419
Lease liabilities 4,480 - -
Preference shares 200 200 200
---------- ---------- ----------
24,434 19,166 20,201
---------- ---------- ----------
Total liabilities 78,881 73,148 82,658
---------- ---------- ----------
Net assets 131,084 124,211 133,057
========== ========== ==========
Equity
Equity share capital 10,407 10,404 10,407
Equity share capital (B shares) 160 160 160
---------- ---------- ----------
10,567 10,564 10,567
Share premium account 4,044 3,922 4,044
Capital redemption reserve 1,174 1,174 1,174
Currency translation reserve 4,338 5,680 5,265
Hedging reserve 225 (130) (21)
Retained earnings 110,736 103,001 112,028
Total equity attributable to shareholders of the parent 131,084 124,211 133,057
========== ========== ==========
Consolidated Cash Flow Statement
for the half-year ended 31 December 2019
Half-year Half-year Year
ended ended ended
31.12.19 31.12.18 30.06.19
GBP'000 GBP'000 GBP'000
Profit for the period 19,761 19,002 37,792
Income tax expense 5,389 5,474 10,484
---------- ------------------ ----------
Profit before income tax 25,150 24,476 48,276
Finance cost 351 223 455
Finance income (243) (171) (357)
Operating profit 25,258 24,528 48,374
Depreciation of property, plant & equipment 1,650 1,558 3,105
Depreciation of right of use assets 1,487 - -
(Profit)/loss on sale of plant and equipment (6) 24 16
Decrease in inventories 1,044 7,713 1,449
Decrease/(increase)in trade and other receivables 5,685 5,469 (621)
(Decrease)/increase in trade and other payables (5,657) (598) 9,033
Defined benefit pension scheme service cost 318 287 564
Defined benefit pension scheme employer contributions paid (1,074) (643) (1,780)
Change in fair value of financial instruments (344) 89 281
Share based payments 7 5 11
Cash inflow from operations 28,368 38,432 60,432
Interest received 243 171 357
Interest paid (121) (13) (33)
Taxation paid (7,973) (4,581) (10,487)
Cash inflow from operating activities 20,517 34,009 50,269
---------- ------------------ ----------
Purchase of property, plant and equipment (2,479) (2,038) (4,263)
Proceeds from disposal of property, plant and equipment 32 34 107
---------- ------------------ ----------
Cash outflow from investing activities (2,447) (2,004) (4,156)
---------- ------------------ ----------
Lease payments (1,335) - -
Equity dividends paid (20,813) (20,080) (28,405)
Shares issued - 122 247
---------- ------------------ ----------
Cash outflow from financing activities (22,148) (19,958) (28,158)
---------- ------------------ ----------
Net (decrease)/increase in cash and cash equivalents (4,078) 12,047 17,955
---------- ------------------ ----------
Effect of exchange differences (254) 69 30
Cash and cash equivalents at start of period 68,664 50,679 50,679
Cash and cash equivalents at end of period 64,332 62,795 68,664
========== ================== ==========
Consolidated Statement of Comprehensive Income
for the half-year ended 31 December 2019
Half-year Half-year Year
ended ended ended
31.12.19 31.12.18 30.06.19
GBP'000 GBP'000 GBP'000
Profit for the period 19,761 19,002 37,792
---------- ---------- ----------
Other comprehensive income net of tax:
Remeasurement of the net defined benefit liability (247) (3,102) (4,546)
Foreign currency translation differences (927) 245 (170)
Fair value movements on hedging instruments 246 (798) (689)
Other comprehensive income for the period net of tax (928) (3,655) (5,405)
Total comprehensive income for the period 18,833 15,347 32,387
========== ========== ==========
Attributable to equity holders of the parent
18,833 15,347 32,387
========== ========== ==========
Notes to the Interim Results
for the half-year ended 31 December 2019
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 2019, except
for the adoption of IFRS16 Leases as explained in note 5.
The figures for the year ended 30 June 2019 are an abridged statement of the group audited
accounts for that year. The financial statements for the year ended 30 June 2019 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 21.4% (2018: 22.4%).
3. Earnings per share
Half-year Half-year Year
ended ended ended
31.12.19 31.12.18 30.06.19
GBP'000 GBP'000 GBP'000
Profit for the period 19,761 19,002 37,792
--------------- --------------- --------------
Weighted average number of shares in issue 208,131,108 208,031,705 208,071,633
Dilution effect of outstanding share options 152,678 45,378 70,667
Diluted weighted average number shares 208,283,786 208,077,083 208,142,300
Basic earnings per 5p ordinary share 9.5p 9.1p 18.2p
Diluted earnings per 5p ordinary share 9.5p 9.1p 18.2p
4. Dividends
Half-year Half-year Year
ended ended ended
31.12.19 31.12.18 30.06.19
GBP'000 GBP'000 GBP'000
Equity dividends paid:
Final dividend for the year ended 30 June 2018 - 20,080 20,080
Interim dividend for the year ended 30 June 2019 - - 8,325
Final dividend for the year ended 30 June 2019 20,813 - -
20,813 20,080 28,405
---------- ---------- ----------
Equity dividends declared/proposed at the end of the period
Interim dividend 4,423 8,325 -
Final dividend - - 20,813
Equity dividends per share, paid and declared/proposed are as
follows:
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, paid on 6 June 2019
10.00p final dividend for the year ended 30 June 2019, paid on 6 December 2019
2.125p 1st interim dividend for the year ended 30 June 2020, payable on 5 June 2020, to those
shareholders on the register at the close of business on 11 May 2020
5. New accounting standard IFRS16 Leases
IFRS16 Leases has replaced IAS17 Leases. The new standard eliminates the distinction between
operating and finance leases. All leases are now accounted for on the balance sheet, except
for low value leases and short term leases of one year or less. The leases are accounted for
by recognising a right of use asset and a lease liability.
On recognition, the right of use asset and lease liability are measured at the present value
of the lease payments discounted over the lease term. The discount rate used is the rate inherent
in the lease if this can be determined, or the incremental borrowing rate.
Subsequent to initial recognition, the right of use assets are depreciated on a straight line
basis over the lease term. The lease liabilities are increased by the interest cost and reduced
by the lease payments made. A depreciation charge and an interest cost are recognised in the
income statement.
IFRS16 has been adopted with effect from 1 July 2019. On adoption the modified retrospective
approach has been applied, such that the right of use assets and lease liabilities are equal
to each other, with no adjustment to opening reserves. There is no restatement of the comparative
periods. The right of use assets and lease liabilities recognised on adoption at 1 July 2019
were GBP8,869,000.
For the half year ended 31 December 2019 the right of use assets depreciation charge was GBP1,487,000
and the lease interest cost was GBP110,000. The adoption of IFRS16 had no significant effect
on the profit before income tax for the half year ended 31 December 2019.
6. 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.
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
END
IR SDWFISESSEDD
(END) Dow Jones Newswires
March 31, 2020 02:00 ET (06:00 GMT)
James Halstead (AQSE:JHD.GB)
Historical Stock Chart
From Nov 2024 to Dec 2024
James Halstead (AQSE:JHD.GB)
Historical Stock Chart
From Dec 2023 to Dec 2024
