TIDMJHD
RNS Number : 0377U
James Halstead PLC
31 March 2021
31 March 2021
JAMES HALSTEAD PLC
INTERIM RESULTS FOR THE HALF-YEARED 31 DECEMBER 2020
Key Figures
James Halstead plc, the AIM listed manufacturer and
international distributor of commercial floor coverings,
reports:
* Revenue at GBP130.45 million (2019: GBP130.39
million) - level
* Operating profit at GBP26.2 million (2019: GBP25.3
million) - up 3.9%
* Pre-tax profit at GBP26.0 million (2019: GBP25.2
million) - up 3.3%
* Basic earnings per ordinary share 9.8p (2019: 9.5p) -
up 3.2%
* Interim dividend declared of 4.25p
* Cash at 31 December 2020 of GBP74.4 million
The Chief Executive, Mr. Mark Halstead, commented:
"I am very pleased to report these improved figures and all
credit to our workforce for their efforts in the face of great
uncertainty and major challenge. Trading continues to be
solid".
Enquiries:
James Halstead:
Mark Halstead, Chief Executive Telephone: 0161 767 2500
Gordon Oliver, Finance Director
Hudson Sandler:
Nick Lyon Telephone: 020 7796 4133
Nick Moore
Panmure Gordon (NOMAD & Joint Broker):
Dominic Morley Telephone: 020 7886 2500
WH Ireland (Joint Broker):
Ben Thorne / Chris Hardie Telephone: 0207 220 1666
CHAIRMAN'S STATEMENT
Trading for the six months ended 31 December 2020
Our turnover of GBP130.45 million (2019: GBP130.39 million)
shows a slight increase on the comparative six months. This is a
record level for sales and, against a difficult global trading
environment, a significant achievement. The variety of projects
completed was, as ever, diverse from the Enigma Museum in Poznan,
which has been built to commemorate the great success of three
brilliant mathematicians - Marian Rejewski, Jerzy Ró ycki and
Henryk Zygalski, to the Umm Al-Qura University in Mecca and the
well known Canadian coffee retailer Second Cup in its Hemisphere
Cannabis outlets.
Profit before tax of GBP26.0 million (2019: GBP25.2 million) is
3.3% ahead of the comparative period and is another record. Our
cash inflows from operations in the period are GBP39.8 million. The
business has performed well given the breadth of interruptions to
many of our markets over the course of the six months.
In the UK our sales are 2.2% ahead of the prior comparative six
months and are testament to the efforts of our sales and
distribution teams in servicing the market. Sales across Europe
were down 1% compared to the comparative period, Australasia showed
positive growth of 2% and the rest of the world decreased 8%, the
latter being principally adversely impacted by North America and
the Middle East. Though commendable overall, it is evident that in
many markets normal business has been significantly interrupted by
the ongoing pandemic.
Gross margins were resilient but were reduced and the factories
were all affected by the operational difficulties of operating
large-scale capital equipment with significant numbers of employees
self-isolating and the associated employee safeguarding.
Overheads continue to be managed tightly and during the period
there was little activity on new product launches due to the
ongoing situation with Covid-19 and, in particular, the constraints
on site visits and meeting customers. Historically there are major
exhibitions to attend in the early part of the calendar year which
have been cancelled with resulting cost savings relating to the
usual expenditure on these events.
It is very encouraging that overall demand has been consistent
through our first half year and in many markets was significantly
higher than anticipated. Clearly normal business has been affected
in areas such as retail and hospitality but others such as
healthcare continue to be robust. We have continued our long
history of supplying flooring to healthcare projects globally from
the Mahala Hospital in Gharbia Egypt, the Kopanong Regional
Hospital in South Africa, St. Michael's Hospital in Toronto and the
Haugesund hospital in Rogaland Norway.
Earnings per Share and Dividend
Our basic earnings per share at 9.8p is above the comparative
period of 9.5p by 3.2%.
Our cash, which stands at GBP74.4 million compared with GBP64.3
million at 31 December 2019, continues to be a key strength. The
cash flow is helped by stock reduction in the period of some GBP6.5
million and whilst buoyant sales are to be welcomed, the reduction
in stock levels has been due to the difficulty of operating our
usual shift patterns as employees self-isolated. Ideally we would
have looked to have about 7-8% higher stock at the end of the
calendar year.
With regard to our cash and profitability we have decided to
declare an interim dividend of 4.25p per share payable on 4 June
2021 to those shareholders on the register at the close of business
on 7 May 2021. Last year as the first lockdown commenced we
declared a first interim dividend of 2.125p paid on 5 June 2020
followed by a second interim, also of 2.125p, paid on 10 September
2020.
Having regard to our defined benefit pension scheme which is
undergoing its triennial valuation the Company paid additional
contributions of GBP2.0 million in August 2020. The reduction in
retirement benefit obligations partly reflects these increased
company contributions but also improved return on scheme assets and
changes in demographic assumptions (including the effects of
covid-19).
Environmental, sustainability, social responsibility and
governance
Every two years we publish a full report on these topics to
document and underline the Group's commitment to ESSG. As a
manufacturer we see this as a key way of communicating our place in
and contribution to society, and the many and varied actions that
are ongoing inside the business. Whether it is the independent
review of our supply chain or the verification of our products to
the standards of indoor air quality or energy consumption we look
always for credible, independent verification rather than "green
marketing" labels. The latest report is published on our website
and will be updated later this calendar year.
Environmental and sustainable business targets continue to be a
key focus and in January 2021 our flooring ranges were re-certified
to BES6001 (responsible sourcing) once again achieving the highest
rating of "excellent". Just one example of our innovation: Even
though our PVC flooring is incredibly durable and recyclable we
have commenced the use of fossil free PVC polymers that are sourced
from renewable biomass. This bio-vinyl does not take materials from
the food chain and its manufacture has a 90% reduction in
greenhouse gases when compared to traditional fossil fuel derived
feedstock.
In terms of governance we, as a board, continue to believe in a
straight forward approach to accounting and that a prudent and
conservative attitude serves the Company and shareholders alike.
Each year has its challenges and its successes and adjusting profit
for the trials and tribulations of that year has not seemed
appropriate to this board and for a capital intensive business
adding back costs such as depreciation (by use of, for example,
EBITDA as a performance measure) is, we believe, to ignore an
important charge on profit. Our key performance measures are
turnover, profit before tax and cash generation.
Outlook
Post-Brexit trading began in January and though our exports are
duty free into Europe there was considerable early disruption.
There was confusion among freight forwarders, border control and
customers alike and there were inescapable delays. Customers, in
particular, were unprepared and confused by VAT procedures in their
jurisdictions. The situation has improved considerably but there
remain some issues such as EU sourced goods that are re-exported
and attract import duty. The tumult in international sea freight
noted in our Trading Update on 1 February 2021 has reduced but
remains challenging.
We have recently supplied flooring to the Serum Institute of
India in Pune for expansion of production of the Astra Zeneca
AZD1222 vaccine and the ongoing roll out of the UK vaccination
program offers the prospect of a high degree of normality returning
to our home market and our production process. However, we operate
in a global economy and the challenges of disruption continue in
many regions. The situation in our biggest export market, Europe,
remains under review as the Covid-19 virus continues to affect many
countries with restrictions on movement of various degrees and
duration. It remains the case that business is very far from
normal. Another example is the "lightning" lockdown in Victoria,
Australia during the Melbourne Open tournament which closed our
facility in that state.
In recent months there have been shortages of basic raw
materials that, in conjunction with employee absenteeism, have
disrupted our production. There have been increases in the cost of
materials which in themselves present challenges but availability
is more problematical. These shortages, bordering on supplier
rationing, continue but it is encouraging that production has been
and continues to be able to fulfill all confirmed orders.
Having noted these adversities, demand remains consistently
solid. Projects such as the new Macau Wholesale Market and the Van
der Valk hotels in the Netherlands are just two examples of recent
projects. We have continued confidence in the performance of our
businesses in the second half of our financial year.
Anthony Wild
Chairman
31 March 2021
Consolidated Income Statement
for the half-year ended 31 December 2020
Half-year Half-year Year
ended ended ended
31.12.20 31.12.19 30.06.20
GBP'000 GBP'000 GBP'000
Revenue 130,447 130,391 238,630
============ ============ ===========
Operating profit 26,232 25,258 44,135
Finance income 33 243 382
Finance cost (277) (351) (660)
Profit before income tax 25,988 25,150 43,857
Income tax expense (5,639) (5,389) (9,502)
Profit for the period 20,349 19,761 34,355
============ ============ ===========
Earnings per ordinary share of 5p:
-basic 9.8p 9.5p 16.5p
-diluted 9.8p 9.5p 16.5p
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 2020
Half-year Half-year Year
ended ended ended
31.12.20 31.12.19 30.06.20
GBP'000 GBP'000 GBP'000
Non-current assets
Property, plant and equipment 38,302 37,759 38,520
Right of use assets 7,799 7,103 5,872
Intangible assets 3,232 3,232 3,232
Deferred tax assets 2,568 3,179 4,334
-------------- ---------- ----------
51,901 51,273 51,958
-------------- ---------- ----------
Current assets
Inventories 61,861 67,180 68,542
Trade and other receivables 28,257 25,962 28,361
Derivative financial instruments 1,097 1,218 73
Cash and cash equivalents 74,445 64,332 67,445
-------------- ---------- ----------
165,660 158,692 164,421
-------------- ---------- ----------
Total assets 217,561 209,965 216,379
Current liabilities
Trade and other payables 54,006 50,643 47,444
Derivative financial instruments 1,791 290 883
Current income tax liabilities 1,461 740 773
Lease liabilities 3,496 2,774 2,568
-------------- ---------- ----------
60,754 54,447 51,668
-------------- ---------- ----------
Non-current liabilities
Retirement benefit obligations 13,446 19,354 23,216
Other payables 455 400 449
Lease liabilities 4,428 4,480 3,371
Preference shares 200 200 200
-------------- ---------- ----------
18,529 24,434 27,236
-------------- ---------- ----------
Total liabilities 79,283 78,881 78,904
-------------- ---------- ----------
Net assets 138,278 131,084 137,475
============== ========== ==========
Equity
Equity share capital 10,407 10,407 10,407
Equity share capital (B shares) 160 160 160
-------------- ---------- ----------
10,567 10,567 10,567
Share premium account 4,072 4,044 4,072
Capital redemption reserve 1,174 1,174 1,174
Currency translation reserve 5,688 4,338 5,601
Hedging reserve (200) 225 (37)
Retained earnings 116,977 110,736 116,098
Total equity attributable to shareholders of the parent 138,278 131,084 137,475
============== ========== ==========
Consolidated Cash Flow Statement
for the half-year ended 31 December 2020
Half-year Half-year Year
ended ended ended
31.12.20 31.12.19 30.06.20
GBP'000 GBP'000 GBP'000
Profit for the period 20,349 19,761 34,355
Income tax expense 5,639 5,389 9,502
---------- ---------- ----------------
Profit before income tax 25,988 25,150 43,857
Finance cost 277 351 660
Finance income (33) (243) (382)
Operating profit 26,232 25,258 44,135
Depreciation of property, plant & equipment 1,738 1,650 3,185
Depreciation of right of use assets 1,485 1,487 2,937
Profit on sale of plant and equipment (34) (6) (43)
Defined benefit pension scheme service cost 245 318 611
Defined benefit pension scheme employer contributions paid (3,080) (1,074) (4,138)
Change in fair value of financial instruments (654) (344) 14
Share based payments 4 7 13
Decrease in inventories 6,488 1,044 1,717
(Increase)/decrease in trade and other receivables (865) 5,685 4,388
Increase/(decrease) in trade and other payables 8,286 (5,657) (10,450)
Cash inflow from operations 39,845 28,368 42,369
Taxation paid (4,520) (7,973) (11,566)
Cash inflow from operating activities 35,325 20,395 30,803
---------- ---------- ----------------
Purchase of property, plant and equipment (1,649) (2,479) (4,215)
Proceeds from disposal of property, plant and equipment 52 32 110
---------- ---------- ----------------
Cash outflow from investing activities (1,597) (2,447) (4,105)
---------- ---------- ----------------
Interest received 33 243 382
Interest paid (15) (11) (30)
Lease interest paid (82) (110) (202)
Lease capital paid (1,424) (1,335) (2,873)
Equity dividends paid (25,237) (20,813) (25,236)
Shares issued - - 28
---------- ---------- ----------------
Cash outflow from financing activities (26,725) (22,026) (27,931)
---------- ---------- ----------------
Net increase/(decrease) in cash and cash equivalents 7,003 (4,078) (1,233)
---------- ---------- ----------------
Effect of exchange differences (3) (254) 14
Cash and cash equivalents at start of period 67,445 68,664 68,664
Cash and cash equivalents at end of period 74,445 64,332 67,445
========== ========== ================
Consolidated Statement of Comprehensive Income
for the half-year ended 31 December 2020
Half-year Half-year Year
ended ended ended
31.12.20 31.12.19 30.06.20
GBP'000 GBP'000 GBP'000
Profit for the period 20,349 19,761 34,355
---------- ---------- ----------
Other comprehensive income net of tax:
Remeasurement of the net defined benefit liability 5,763 (247) (5,062)
Foreign currency translation differences 87 (927) 336
Fair value movements on hedging instruments (163) 246 (16)
Other comprehensive income for the period net of tax 5,687 (928) (4,742)
Total comprehensive income for the period 26,036 18,833 29,613
========== ========== ==========
Attributable to equity holders of the parent 26,036 18,833 29,613
------- ------- -------
Notes to the Interim Results
for the half-year ended 31 December 2020
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 2020.
The figures for the year ended 30 June 2020 are an abridged statement of the group audited
accounts for that year. The financial statements for the year ended 30 June 2020 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 21.7% (2019: 21.4%).
3. Earnings per share
Half-year Half-year Year
ended ended ended
31.12.20 31.12.19 30.06.20
GBP'000 GBP'000 GBP'000
Profit for the period 20,349 19,761 34,355
--------------- --------------- --------------
Weighted average number of shares in issue 208,141,108 208,131,108 208,135,698
Dilution effect of outstanding share options 125,225 152,678 148,358
Diluted weighted average number shares 208,266,333 208,283,786 208,284,056
Basic earnings per 5p ordinary share 9.8p 9.5p 16.5p
Diluted earnings per 5p ordinary share 9.8p 9.5p 16.5p
4. Dividends
Half-year Half-year Year
ended ended ended
31.12.20 31.12.19 30.06.20
GBP'000 GBP'000 GBP'000
Equity dividends paid:
Final dividend for the year ended 30 June 2019 - 20,813 20,813
Interim dividend for the year ended 30 June 2020 4,423 - 4,423
Final dividend for the year ended 30 June 2020 20,814 - -
25,237 20,813 25,236
---------- ---------- ----------
Equity dividends declared/proposed after the end of the period
Interim dividend 8,846 4,423 4,423
Final dividend - - 20,814
Equity dividends per share, paid and declared/proposed are as
follows:
10.00p final dividend for the year ended 30 June 2019, paid on 6 December 2019
2.125p first interim dividend for the year ended 30 June 2020, paid on 5 June 2020
2.125p second interim dividend for the year ended 30 June 2020, paid 10 September 2020
10.00p final dividend for the year ended 30 June 2020, paid on 11 December 2020
4.25p interim dividend for the year ended 30 June 2021, payable on 4 June 2021, to those shareholders
on the register at the close of business on 7 May 2021.
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.
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END
IR SDSEFSEFSEED
(END) Dow Jones Newswires
March 31, 2021 02:00 ET (06:00 GMT)
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