TIDMJHD
RNS Number : 7855N
James Halstead PLC
04 October 2021
4 October 2021
JAMES HALSTEAD PLC
PRELIMINARY ANNOUNCEMENT OF AUDITED RESULTS
FOR THE YEARED 30 JUNE 2021
"Very much a year of dealing with successive situations rather
than tracking our budget forecast. Credit is due to our management
teams for what is an excellent performance."
Key Figures
-- Revenue at GBP266.4 million (2020: GBP238.6 million)
- up 11.6%
-- Profit before tax GBP51.3 million (2020: GBP43.9 million)
- up 16.9%
-- Earnings per 5p ordinary share of 19.2p (2020: 16.5p)
- up 16.4%
-- Final dividend per ordinary share proposed of 11.0p (2020:
10.0p) - an increase of 10% and once again a record dividend
-- Cash GBP83.3 million (2020: GBP67.4 million)
Mr Mark Halstead, Chief Executive, commenting on the results,
said :
"This was a complicated year. It was a year in which our top
management had to balance risks to the business whilst maintaining
key supplies to our core healthcare markets without compromising
employee safety. I applaud the efforts of our management team who
have faced difficulties from every direction.
In addition I am pleased to report that our flooring received
recognition in the year from the Contract Flooring Association
(CFA) in conjunction with the Contract Flooring Journal (CFJ) -
winning the "contract of the year" accolade in respect of the
Polyflor Quicksafe that was installed at the NHS Louisa Jordan at
the SEC in Glasgow, one of many "Nightingale" projects with which
we were connected".
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 Telephone: 020 7220 1666
CHAIRMAN'S STATEMENT
Results
I am pleased to report turnover in the year was GBP266.4 million
(2020: GBP238.6 million), 11.6% ahead of last year. Profit before
tax at GBP51.3 million (2020: GBP43.9 million), was up 16.9%. Both
sales and profits are at record levels. The projects we have been
associated with in the year are as diverse as ever from
Knattspyrnufélagið Fram - perhaps the largest football stadium in
Iceland - to the Optimed Eye-Clinic in Belarus.
Our business, as have many, suffered disruptions in the year
with production at our factories affected by labour shortages and
raw material scarcity. However, healthy stock holdings supported
sales. I am pleased to report these efforts were greatly
appreciated by the trade and indeed we were recognised for those
efforts by, for example, ProCure22 (the Construction Procurement
Framework administrated by NHS England ) with an award for
outstanding support to the NHS during the pandemic.
The board, and I, are pleased to report we were able to continue
to supply the many independent flooring contractors who worked on
through the lock-downs. Our network of stockists were key to
supplying these contractors and I would note that our business was
also awarded the title "Flooring Manufacturer of the Year", which
was particularly gratifying as the voting for this award was by the
floor laying contractors (the Contract Flooring Association) that
install our products.
These results are more than satisfying against the backdrop that
all our major markets were faced with lockdowns of various
durations and severity affecting many of our end users' needs for
flooring. There were numerous delays and deferrals of maintenance
and refurbishment work as well as new build projects as priorities
and funding were diverted.
That said, the many global projects that we undertook involved
healthcare and Covid-19 related installations (whether in temporary
hospital wards, vaccination centres, test facilities or vaccine
manufacturing) but it did not fully replace our normal level of
healthcare directed flooring. One example was the flooring for a
significant number of "campaign" hospitals for Covid patients next
to main hospitals in eight different towns/cities in Portugal.
Another example was a series of mobile hospitals within the seven
emirates (Abu Dhabi, Dubai, Sharjah, Umm al-Qaiwain, Fujairah,
Ajman, and Ra's al-Khaimah), where each field hospital contained
150 to 259 beds. Our ability to respond to these demands from stock
was key to our strong performance.
The supply chain was under constant pressure over the year. Raw
material costs rose and availability was challenging particularly
on the supply of basic polymers as the global petrochemical
companies struggled to maintain production. The reasons for this
were varied but the most significant factors were:
-- the ravaging of one of the world's largest production plants
in Louisiana, USA, which was put out of action by Hurricane Ida.
This one plant serviced 40% of US demand for PVC and its closure
meant that these materials across the globe were in shorter
supply;
-- many of our basic materials are derived from the cracking
process that produces aviation fuel and the decimation of that
industry by the pandemic led to several refineries being
temporarily closed;
-- the Covid-19 virus and the related self-isolation protocols
led to severe shortages of labour and consequent output
reduction.
It was due to the dedication of our sourcing team and our long
and close relationships with suppliers that we kept our production
lines fed. It was not an easy task and this was at a time when we
also had severe production pressure owing to the non-availability
of labour.
The company and our strategy
James Halstead plc is a group of companies involved in the
manufacture and supply of flooring for commercial and domestic
purposes, based in Bury UK. James Halstead plc has been listed on
the London Stock Exchange for more than 70 years.
The group was established in 1914 and continues to operate out
of the original premises in Bury. In its factories in Bury and
Teesside it manufactures resilient flooring for distribution in the
UK and worldwide.
The company's strategy is to constantly develop its brand
identity and its reputation for quality, durability and
availability thereby enhancing and maintaining goodwill with the
aim of achieving repeat business. Our focus is to work with
stockists who in turn distribute those bulk deliveries whilst
promoting and representing the products to the end users and
specifiers who will purchase the stock from those stockists.
This approach is designed to increase and secure revenue streams
and drive profitability and cash flow which enables the
continuation of dividends thereby creating shareholder wealth. In
the normal course of business one key element of the company ethos
is having dedicated sales personnel to present our product to our
customers' clientele. In this last year face to face relationships
were not possible but I am pleased to say that our customer service
and reputation for delivery were enhanced despite the trials and
tribulations of the last year.
Over many years our strategy has also included a policy of
continual investment in both process improvement and in product
development to improve output efficiency and product offering. I
can be confident in saying that the loose lay flooring (both in
sheet and tile) that we have launched into the market some two
years ago was very well regarded over the last difficult year.
Corporate governance and corporate social responsibility and the
environment
The board has over many years recognised its responsibility
towards good corporate governance. It is part of our character and,
I believe, contributes to our ability to deliver long-term
shareholder value. Increasingly companies are, quite rightly,
tasked with demonstrating that their environmental credentials and
supply chain management are supported by social and economic
dimensions and stewardship.
We can now say that almost 100% of our electric usage is now
derived from renewables. Our bi-annual Sustainability Report is
about to be published and we have this report independently audited
to further underline our credentials.
PVC polymer is one of our main raw materials and we began
recycling waste into our processes in the 1950s and have continued
to use waste PVC as part of the process of manufacturing in ever
increasing volumes. For many years we have funded waste collection
with Recofloor - our UK joint venture that collects post
installation waste PVC within our industry. We are also founder
members of the European PVC recycling venture, the AgPr, which
funds the recycling of post-consumer PVC waste and diverts waste
from landfill back into the manufacturing process.
An important point to note about PVC is that it has evolved and
it is no longer just derived from petrochemicals. It is
increasingly produced from bio-mass. Indeed, the by-products of PVC
manufacturing, chlorine and caustic soda, are indispensable to the
medical and food industries. Often a maligned material, PVC
manufacture has the lowest consumption of primary energy of any of
the major commodity plastics and our PVC flooring is made with over
80% renewable materials (excluding recyclates which further lessen
the use of non-renewables).
As part of our focus on the future and the footprint of our
industry we are major partners in industry wide bodies. One example
is that our Technical Director is Chairman of the ERFMI (the
European Resilient Flooring Manufacturing Institute). ERFMI
activities range from involvement in the EU carbon neutral strategy
through to funding new recycling initiatives to extend the ability
of PVC to be recovered and recycled. In the past year initiatives
include:
The Circular Plastics Alliance, a plastics industry association,
to which ERFMI are a signatory has a target to achieve ten million
tonnes of recycled plastic in new products in Europe by 2025.
In addition ERFMI has engaged consultants, based in Belgium, to
undertake the following research:
-- Recycling technologies that can be used for the recycling of
PVC floor coverings, with particular focus on extraction of legacy
additives.
-- Identification and sorting technologies that can identify
flooring containing legacy additives and the ability to sort it
from flooring that does not contain legacy additives.
The scope of this engagement is to review technologies that have
been tried in the past, that are emerging or used for other
applications. This is just one example of working together for the
future and we feel it is part of our duty as a responsible
manufacturer (as opposed to importers) to be involved in a
sustainable future.
The UK may have left the EU but our work on standards, the
circular economy, sustainability and meaningful recycling is both
Europe wide and globally focused and is progressing at pace. In no
way has "Brexit" lessened our involvement as Europeans in the
flooring industry.
Dividend
Profits and earnings per share have increased and we continue
un-geared. Our cash balances stand at GBP83.3 million (2020:
GBP67.4 million), even after dividends paid in the last year that
amounted to GBP34.1 million, and taxation of GBP9.9 million. Our
cash reserves continue to provide the foundation of our strong
balance sheet.
It is pleasing to report that the Board proposes, subject to the
approval of the shareholders at the upcoming AGM, to pay a record
final dividend. The final dividend will be 11.0p (2020: 10.0p).
This, combined with the interim dividends paid in June of 4.25p
(2020: 4.25p), makes a total of 15.25p (2020: 14.25p) for the year,
an increase of 7.0%.
Bonus Issue
The board considered the merits and will be proposing a bonus
issue of one ordinary share for every share held at the upcoming
AGM.
James Halstead plc has a long history of such issues and these
have always been in addition to dividends not in substitution. The
board believes that bonus issues are welcomed by the smaller
holders of shares and promote liquidity amongst retail investors. A
bonus issue such as this is not an economic event in that no wealth
changes hands but nevertheless these issues have been popular with
shareholders and it emphasises the history of our share price
growth.
We would anticipate that, as in the past, the bonus will
increase liquidity of the shares.
Acknowledgements
I would like to thank our staff for outstanding diligence in the
face of significant turmoil during the course of the year. Many
employees faced confusion and concern as we entered the pandemic
tunnel and in many respects this was not helped by the headlines
and media reporting. Whilst as a Board we knew that our flooring
would be needed by healthcare authorities quickly and in volume,
the authorities did not, initially, identify key industries or
manufacturing as something to be encouraged to continue. We were
able to source PPE, sanitising equipment and supplies from our
global contacts to protect our workforce. Our health and safety
teams and management rose well to these challenges.
My thanks go to our staff in the UK and around the world whose
hard work continues to allow us to continue to grow the business.
This year was particularly challenging as we all faced
uncertainties and I would make particular mention of those who have
worked hard, not to just put the safeguards in place, but to move
the business forward in a positive way despite the prevailing
challenges. Our senior management across the globe have faced
dynamic challenges and have worked hard - thank you from myself and
the board.
Outlook
Currently, some three months into the new trading year, our
sales are on a par with the record trading of the comparative
period. Business has bounced back beyond our prior expectations
with refurbishment in some sectors buoyant, it is to be expected
that our markets around the globe will further recover as more
countries vaccination rollouts extend and they follow the European
model of a return to "normality".
Supply shortages continue to frustrate whether they be due to
the lack of availability of raw materials or to the widely
publicised shortages of drivers and ongoing concerns with
international freight. The cost of moving goods, the availability
of shipping space and extended delivery times are both ongoing
challenges. Our UK factories are in production and are tasked with
raising stock levels and we have taken on extra shop-floor labour
to assist in this task.
It is clear that ongoing issues with the global pandemic are not
at an end and the cost pressures continue to persist but we do see
signs of certain materials becoming more available and at a lower,
albeit still high, cost.
Notwithstanding these concerns, I, and the board, can only be
confident of another solid year of progress.
Anthony Wild
Chairman
CHIEF EXECUTIVE'S REVIEW
Turnover of GBP266.4 million (2020: GBP238.6 million) is a
record level for the group and an increase against last year of
11.6%. Since the comparative year was affected by the first UK
lockdown a more relevant comparison is against the year ended 30
June 2019 and turnover is some 5.3% ahead of that year.
Profit before tax at GBP51.3 million (2020: GBP43.9 million) is
16.9% ahead of the last year and against the 2019 comparative some
6.2% ahead.
As we entered this year our goal was to get back on track with
the 2019 levels and to surpass this was a major achievement.
Regarding sales turnover the split across areas was Europe 42%, UK
37%, Australasia 14% and the rest of the world 7% which is in line
with the spilt over recent years. The largest sales growth year on
year was in the sales within the UK with an increase of 24.0%
compared to last year though, of course last year was impacted by
the first national lockdown which had seen sales fall from 2019
levels. That being said, UK turnover was 10.9% ahead of 2019
levels.
Our contracts across the globe continue to expand and, for
example, we have been involved with many installations in the
Lebanon where we have supplied product used in the repair and
refurbishment of the ruined hospitals and buildings that were
devastated following the Beirut Port explosion in August 2020.
Overall there was a modest diminution in the gross margin
percentage which was due to the adverse effects of raw material
price increases, freight and other costs rising and adverse
manufacturing efficiencies due to lower volume throughput and
labour shortages. The labour shortages were principally due to
absenteeism and "self-isolation" protocols. These adverse gross
margin effects were offset to a large degree by a change in the
sales product mix (i.e. the sales were more biased to higher value
products) and the focus away from keenly priced volume
projects.
Our business has always been able to respond quickly to large
projects across the globe which are efficient to produce but almost
always very keenly priced. Given material and labour shortages we
placed less emphasis on this area of business during the year.
Overheads in the year rose as the administrative cost returned
to a normalised level of about 5% of turnover.
The balance sheet shows its normal level of robustness but some
key numbers do stand out. Stock has reduced and whilst this in
isolation is positive for cash flow and bank balances it is below
optimal levels and a key management focus is to increase stock
levels. Trade debtors and other receivables are much higher than
last year (GBP42.9 million this year and GBP28.4 million in the
prior year) but last year we had seen the UK closed in the three
months prior to the year end. The comparison of these two balance
sheet dates is mainly a contrast of two different situations and is
best summarised as healthy.
It continues to be the case that our worldwide manufacturing is
certified to Quality Management System ISO9001 and ISO14001 to
underline our robust environmental procedures. We are certified to
BES9001, the standard for responsible sourcing which takes our
credentials beyond our own factories to our suppliers. Added to
this is our SA8000 accreditation based on the UN declaration of
human rights that audits supplier provision of sound workplace
conditions and standards. Our quality of product, availability of
stock and adherence to strict standards set us apart from many
other manufacturers as we continue to cover the world.
Reviewing the businesses in more detail:
Objectflor / Karndean and James Halstead France, our European
operations
The level of turnover in our Central European business was
higher than last year by around 6%. This market encompasses
Germany, France, Austria, Benelux and several Eastern European
countries. Turnover increased in all these countries and we can
only describe this as a satisfactory situation. Our gross margins
in the region held up and consequently we have seen the increased
sales translate into an increased level of profit.
This was not an easily achieved result and the control of costs
has been an ongoing challenge. Freight costs into the region and
within the markets have seen upward pressure and our businesses
have, in common with many businesses in Europe, introduced freight
surcharges.
James Halstead France remained open but the staff faced
restrictions on movement and curfews. Stock movement was an ongoing
issue with inflationary pressure on the cost of transport. France
in particular faced difficulties in the weeks after "Brexit" and
whilst this is working better now, the situation is far from ideal.
The near 9% increase in sales was, I believe, commendable in the
circumstances. The sales force worked throughout the year although
face to face meetings could not take place. Our major competitors
manufacture in France and they were faced with raw material
shortages and consequent lack of product, factors which no doubt
helped in achieving this result.
Objectflor traded well but stock levels have been reducing as
suppliers have struggled with international freight. However, it
would seem clear that our competitors were worse hit and I believe
Objectflor took market share. There were shortages in the wood
laminate sector which is a competing product to our luxury vinyl
tile and this pushed demand up for our businesses. Whilst our
warehouses remained open throughout the year there were additional
procedures regarding personal protection that did affect
efficiency. There were no exhibitions during the year and much less
travel which reduced costs but Objectflor did re-open their in
house "campus" marketing facility and hosted many customer visits.
Throughout the year the cost and availability of shipping to
Germany became more problematic and Objectflor stock levels have
been under pressure due to increased demand. The company introduced
freight surcharges on sales which seems to have been generally
accepted in this marketplace.
Polyflor Pacific - encompassing Australia, New Zealand and
Asia
The region has been one the hardest hit by successive lockdowns
with Australia in particular lurching in and out of various
restrictions on a state by state basis. The confusion has affected
staff morale and made it difficult to forward plan. Having said
this, the turnover in Australia was some 8.2% ahead of the
comparative year and we have sought to hold stock at higher levels
to mitigate the uncertainty. We are confident that this has
differentiated us from our competitors and allowed us to take
market share. In addition, our regional warehousing in each of the
federal states has helped us to progress as individual state
lockdowns hampered interstate deliveries. As noted, in many markets
domestic demand was bolstered by spend being redirected from
holidays, car purchases etc to home improvement as a greater number
of people worked from home.
The almost weekly "knee-jerk" restrictions saw disruption to
logistics with customers premises sometimes closed as well as
several periods of congestion at the main import point in Sydney
Harbour.
In New Zealand we achieved record turnover with sales some 28%
above the prior year (albeit that the comparative was affected by a
closure of the economy in the spring of 2020). Having said this
turnover was still some 23% ahead of the 2019 comparative. As with
Australia the plan to bolster our stock levels in the market was
correct and the lack of availability of competitors stock (largely
supplied from Europe) increased sales and was very much appreciated
by our customers - the flooring contractors. In New Zealand we
continued to supply flooring to the national social housing
upgrades and new product launches of loose lay flooring projects
were very successful.
As noted in previous years the Asian markets have been brought
under the management of our Australian business and despite the
effects of the pandemic, we continue to progress.
In Malaysia we incorporated a new company and took on the trade
of our former long-term distributor in November 2020. This will now
act as our base for the South Asia markets of Malaysia, Singapore,
Indonesia, Thailand, the Philippines and Vietnam. This gives us a
local stockholding in Malaysia to continue and growing the sales of
our previous distributor, as well as holding stock in a free trade
zone that will be used to service the other countries listed above
on a timelier basis rather than shipping from the UK.
Unfortunately, activity since we began trading in Malaysia has
been hampered by movement controls and full lockdowns, but despite
this, sales across the region of Southern Asia for the period
increased by 23% over last year.
Our North Asian markets (China, Hong Kong, South Korea, Taiwan
and Japan) were similarly hampered by the pandemic with travel
restrictions, lockdowns and a slowdown and delay in projects and
renovation work. The effect was to reduce the sales in the region
from the previous year by 21%. In last year's annual report, we
noted plans to have a stock presence in mainland China and this is
now operational. This has helped service smaller ad hoc projects in
the region as well as helping supply some smaller orders to Hong
Kong and Macau. China sales have remained in line with last year,
helped by securing the prestigious Gansu Province Women &
Children's Medical Complex.
We expect further growth for the Pacific / Asia region as we
start to see the effects of easing lockdowns and travel
restrictions, vaccination rollouts and government stimulus
packages.
Polyflor & Riverside Flooring, based in UK
Sales at Polyflor were 11.4% ahead of last year. There was
strong sales growth in sales in the UK (increased by 24%) and a
continuation of good sales through our international businesses
though there was a decline in exports. The export business suffered
as a result of delays in government funded healthcare projects in
many parts of the globe as attention was focused on the immediate
issue of the pandemic and vaccine rollout. In addition, with raw
materials in short supply and manufacturing hampered by employee
absenteeism, the smooth flow of production was hampered throughout
the year. Raw material prices did start the financial year at lower
prices than we had seen in the period from March 2020 through to
June 2020 but very quickly rose to levels that were 70-80%
higher.
Riverside, which sells only to Polyflor had around an 8%
increase in turnover.
During the year for both our UK based companies were dogged by
manufacturing problems due to the shortage of basic raw materials.
Polymers, plasticisers, packaging and pallets were in short supply.
Each of our competitors faced the same problems and prices were
consequently higher and largely non-negotiable. As manufacturers we
have commitments to stockists in terms of price commitments that we
ourselves are not able to get. That said we put into the market
price increases. The increased volume of sales, most notably in the
UK, meant that we were able to increase profitability though it was
greatly assisted by stock levels. For many years as a manufacturer
we have committed to stock in the warehouse to smooth production
pressures and to be able to supply large projects "off the shelf"
rather than make to order. It is a key differentiator of our
business and it can have its challenges but in this year it was a
key strength. Despite the difficulties in maintaining output the
manufactured output was higher than the previous year but the prior
year included a ten week shutdown during the first lockdown and the
start of that year was affected by a significant breakdown that
affected one of the main production lines. In short output was
below our potential and indeed the demand requirements but better
than the year that preceded.
In our home market we have an extensive network of stockists and
this helped us to capitalise on a return to more normal levels of
demand for flooring as the year progressed. Our stock holding was
key to this. In addition there were new distributors added to the
UK market and there was a cross-over of our commercial product into
the domestic segment as the demand driven by household
refurbishment sought credible flooring solutions. In the year we
saw a significant growth in internet supply of our flooring by a
number of our existing customers and indeed some contractors have
extended their business model to online supply.
New product launches were deferred. This was not a cap on the
year's growth as there was simply not the need to compound the
complications of supply and delivery. It would seem to be clear
that Polyflor took market share in the UK during the year. In part
this gain was from overseas competitors that faced difficulties in
their own markets. It was perhaps also in part due to the "Brexit"
changes in January 2021 but more significantly due to the import
sector that sources Far Eastern product and re-brands for UK
consumers. I have no reason to doubt that the extension of Polyflor
into a wider consumer market (ie that of high end domestic) will
lessen; the very high demand levels of household spending may be
less pronounced but the product has performed and gained consumer
credibility. The lockdown shortages have brought Polyflor ranges to
a wider consumer base and contractor recommendation has become a
key driver of consumer choice.
Polyflor Nordic comprising Polyflor Norway based in Oslo and
Falck Design based in Sweden
Sales across this region are broadly comparable with those of
the prior year though the situation in Norway and Sweden contrasted
sharply. In Norway sales were 11% ahead of the prior year but in
Sweden down by a similar percentage. In Sweden the pandemic started
with the lightest of touches but has been the most affected over
the course of the year with staff on short time for a long time and
commercial flooring projects at a much lower level. Norway in
contrast remained open and adopted new working practices and
procedures.
Although there were restrictions arising out of the national
response to the pandemic in Norway the business remained open
throughout. To keep their economy more active, restrictions in
Sweden were less severe however some negative commercial impacts
came later in the year as the economy and refurbishment slowed.
There were many education projects in Sweden with examples being
Orkerstern School, and the Svärtingeschool . Across the
Scandinavian region, competitors had problems supplying some
specifications to the advantage of our businesses where we were
able to supply from stocks locally or from the UK. This is a trend
that has continued into the 2021/22 financial year.
Polyflor Canada, based in Toronto
Turnover in Canada was modestly ahead of last year and profit
increased. Canada as a market faced severe disruption with long
periods of business restrictions particularly in Ontario (where our
warehousing is based). In recent years Polyflor Canada has
undertaken a lot of business in hospitality and retail and these
sectors were hardest hit by the successive lockdowns. Our strategy
in Canada has been defensive - controlling costs and deferring
expenditure on expansion.
With broadly the same turnover and profit as the prior year we
are satisfied with the outcome but this was not easy to achieve.
Travel across the various regions has been subject to restrictions
for much of the year and day to day refurbishment was restricted by
the governments Covid-19 regulations.
Polyflor India, based in Mumbai
During the year we scaled back our business in India. It was
difficult to undertake local sales due to the scale of the pandemic
and we reluctantly reduced our sales representation. The business
remained operational throughout the year and it was noticeable that
projects were delayed or protracted due to working
restrictions.
Despite this, our turnover in India increased as did profits. In
part this was the result of product being sold to the Serum
Institute for vaccine manufacturing. Our business is largely
focused on healthcare, education and pharma and there is every
expectation of growth in the coming year. There are significant
challenges in terms of cost and availability of shipping to the
Indian continent which will resolve over time.
Rest of the World
During the year some of our markets did reduce their level of
sales and the common theme in these markets is that there were
delays in infrastructure projects that are government funded. The
Middle East, Hong Kong, Africa and North America were the markets
most affected. Projects such as Hamad International Airport and the
extension of the Aspire Museum both in Qatar and Extra Foods
Supermarkets in Trinidad and Tobago are examples of breadth of our
exports. In Argentina we have supplied the flooring for twelve
modular hospitals built for dealing with Covid-19.
Conclusion and outlook
Given the circumstances we can only be pleased with the results
for the year. The hard work, dedication and experience of our
subsidiary directors and management has been a key factor in this
achievement.
However, the challenges have not lessened. Though in many
markets the task of living with the Covid-19 virus is underway
there are issues in manufacturing manning levels at our UK
factories and logistical and transportation issues. At this point
in time it is frustrating that even where we have orders and stock
it is difficult to move goods internationally. The difficulties of
the Suez blockage and disruption of the Yantian port in China
continue to ripple into the present but should ameliorate.
In the UK our stockists handle distribution to end users and
there has been many issues within our sector relating to customer
delivery. Internationally it is difficult to compare the current
situation with any other time that has been as difficult.
To date we have continued to fulfil customer orders and demand
levels continue to be positive. Raw material prices continue to be
under pressure and we have in many cases had to pass on cost
increases to customers. Despite these pressures we are starting to
see some positives in raw material availability and though these
adversities may persist for several months I am confident we can
continue to grow our global activities.
Mark Halstead
Chief Executive
Audited Consolidated Income Statement
for the year ended 30 June 2021
Year Year
ended ended
30.06.21 30.06.20
GBP'000 GBP'000
Revenue 266,362 238,630
Cost of sales (154,722) (138,262)
----------------- -----------------
Gross profit 111,640 100,368
Selling and distribution costs (46,335) (45,297)
Administration expenses (13,532) (10,936)
Operating profit 51,773 44,135
Finance income 48 382
Finance cost (553) (660)
Profit before income tax 51,268 43,857
Income tax expense (11,407) (9,502)
Profit for the year attributable to equity shareholders 39,861 34,355
----------------- -----------------
Earnings per ordinary share of 5p:
-basic 19.2p 16.5p
-diluted 19.1p 16.5p
All amounts relate to continuing operations.
Audited Consolidated Statement of Comprehensive Income
for the year ended 30 June 2021
Year Year
ended ended
30.06.21 30.06.20
GBP'000 GBP'000
Profit for the year 39,861 34,355
------------ -----------
Other comprehensive income net of tax:
Items that will not be reclassified subsequently to the income statement:
Remeasurement of the net defined benefit liability 12,708 (5,062)
------------ -----------
12,708 (5,062)
------------ -----------
Items that could be reclassified subsequently to the income statement if specific
conditions
are met
Foreign currency translation differences (615) 336
Fair value movements on hedging instruments 1,089 (16)
474 320
------------ -----------
Other comprehensive income for the year 13,182 (4,742)
Total comprehensive income for the year 53,043 29,613
============ ===========
Attributable to equity holders of the
company 53,043 29,613
============ ===========
Items in the statement above are disclosed net of tax.
Audited Consolidated Balance Sheet
as at 30 June 2021
As at As at
30.06.21 30.06.20
GBP'000 GBP'000
Non-current assets
Property, plant and equipment 37,242 38,520
Right of use assets 6,015 5,872
Intangible assets 3,232 3,232
Deferred tax assets 254 4,334
----------------- ------------------
46,743 51,958
----------------- ------------------
Current assets
Inventories 60,684 68,542
Trade and other receivables 42,949 28,361
Derivative financial instruments 848 73
Cash and cash equivalents 83,261 67,445
----------------- ------------------
187,742 164,421
----------------- ------------------
Total assets 234,485 216,379
----------------- ------------------
Current liabilities
Trade and other payables 65,551 47,444
Derivative financial instruments 92 883
Current income tax liabilities 1,160 773
Lease liabilities 2,948 2,568
69,751 51,668
----------------- ------------------
Non-current liabilities
Retirement benefit obligations 4,357 23,216
Other payables 447 449
Lease liabilities 3,236 3,371
Preference shares 200 200
----------------- ------------------
8,240 27,236
----------------- ------------------
Total liabilities 77,991 78,904
----------------- ------------------
Net assets 156,494 137,475
----------------- ------------------
Equity
Equity share capital 10,408 10,407
Equity share capital (B shares) 160 160
----------------- ------------------
10,568 10,567
Share premium account 4,122 4,072
Capital redemption reserve 1,174 1,174
Currency translation reserve 4,986 5,601
Hedging reserve 1,052 (37)
Retained earnings 134,592 116,098
Total equity attributable to shareholders of the parent 156,494 137,475
----------------- ------------------
Audited Consolidated Cash Flow Statement
for the year ended 30 June 2021
Year Year
ended ended
30.06.21 30.06.20
GBP'000 GBP'000
Profit for the year attributable to equity shareholders 39,861 34,355
Income tax expense 11,407 9,502
--------------- ----------------
Profit before income tax 51,268 43,857
Finance cost 553 660
Finance income (48) (382)
--------------- ----------------
Operating profit 51,773 44,135
Depreciation of property, plant and equipment 3,541 3,185
Depreciation of right of use assets 3,115 2,937
Profit on sale of plant and equipment (64) (43)
Defined benefit pension scheme service cost 620 611
Defined benefit pension scheme employer contributions paid (4,144) (4,138)
Change in fair value of financial instruments (90) 14
Share based payments 8 13
Decrease in inventories 6,346 1,717
(Increase)/decrease in trade and other receivables (15,573) 4,388
Increase /(decrease) in trade and other payables 20,248 (10,450)
Cash inflow from operations 65,780 42,369
Taxation paid (9,895) (11,566)
Cash inflow from operating activities 55,885 30,803
--------------- ----------------
Purchase of property, plant and equipment (2,811) (4,215)
Proceeds from disposal of property, plant and equipment 131 110
--------------- ----------------
Cash outflow from investing activities (2,680) (4,105)
--------------- ----------------
Interest received 48 382
Interest paid (26) (30)
Lease interest paid (173) (202)
Lease capital paid (3,010) (2,873)
Equity dividends paid (34,083) (25,236)
Shares issued 51 28
--------------- ----------------
Cash outflow from financing activities (37,193) (27,931)
--------------- ----------------
Net increase /(decrease) in cash and cash equivalents 16,012 (1,233)
--------------- ----------------
Effect of exchange differences (196) 14
Cash and cash equivalents at start of year 67,445 68,664
Cash and cash equivalents at end of year 83,261 67,445
=============== ================
NOTES
1. The final dividend of 11p per ordinary share will be paid, subject to the approval of the
shareholders, on 17 December 2021 to shareholders on the register as at 26 November 2021.
The annual report and accounts will be posted to shareholders on 15 October 2021.
2. The financial information in this statement does not represent the statutory accounts of the
Group. Statutory accounts for the year ended 30 June 2020 have been delivered to the Registrar
of Companies, carrying an unqualified audit report and no statement under section 498 (2)
or (3) of the Companies Act 2006.
3. Statutory accounts for the year ended 30 June 2021 have not yet been delivered to the Registrar
of Companies. They will carry an unqualified audit report and no statement under section 498
(2) or (3) of the Companies Act 2006.
4. Earnings per ordinary share
2021 2020
GBP'000 GBP'000
Profit for the year attributable to equity shareholders 39,861 34,355
-------------- --------------
Weighted average number of shares in issue 208,141,520 208,135,698
-------------- --------------
Dilution effect of outstanding share options 123,165 148,358
Diluted weighted average number of shares 208,264,685 208,284,056
-------------- --------------
Basic earnings per ordinary share 19.2p 16.5p
Diluted earnings per ordinary share 19.1p 16.5p
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