James Halstead Plc - Interim Results

Key Figures

 

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

 

 

·     Revenue at £126 million (2018: £126 million) - unchanged

 

·     Operating profit at £24.5 million (2018: £23.9 million) - up 2.6%

 

·     Pre-tax profit at £24.5 million (2018: £23.7 million) - up 3.3%

 

·     Basic earnings per ordinary share 9.1p (2018: 8.8p) - up 3.4%

 

·     Interim dividend increased to a record 4.0p (2018: 3.85p) - up 3.9%

 

·     Net cash at £62.8 million

 

 

     

The Chief Executive, Mr. Mark Halstead, commented:

 

"We have supplied flooring to installations as diverse as the Spence Copper Mines in the Atacama Desert in Chile to the Hard Rock Café in Guyana and with profits growth, increased cash and new ranges developing well - a satisfying first half, cemented with a record interim dividend."

 

CHAIRMAN'S STATEMENT

Trading

 

Once again it is pleasing to report a record profit at the interim stage. We are also announcing, once again, a record interim dividend. In terms of sales, every month showed an increase on the comparative with the only exception being December. It is clear that, in December, larger customers were exercising stock control - not least evidenced by the fact that whilst order volume in the UK was lower, the number of orders was up 4.8% in the month. Despite this single poor month, sales in the UK for the six months as a whole were 3.9% ahead of the comparative period. Export markets were in the majority of cases strong but with Central Europe showing a decline of some 1.7% (largely in line with figures published by our competitors). The start to the second half has shown a return of solid growth.

 

Whilst overall turnover was flat in comparison to the prior year, our gross margin improved as the result of an advantageous product mix (ie higher added value products) and favourable plant performance, though impacted to a degree by raw material price increases. Raw material inflation has been around 3% whereas in the prior year it was around 18%.

 

As noted in my last report, we made a significant investment in new sheet vinyl ranges and it is pleasing to see that in the important German market we are taking market share, with 15% growth in homogenous sheet vinyl. Palletone, launched in May 2018, continues to gain traction.

 

Our global reach continues and whether it is the Kenitra Agadir Hospital in Morocco, Tallinn Airport in Estonia or Scania buses in Poland, our products travel far. Closer to home our Voyager maritime flooring has been installed onboard Cunard's MS Queen Elizabeth, in the duty free area of Knock Airport in County Mayo and, underlining our environmental and sustainability credentials, Polyflor will feature in the "Active Office" - the UK's first energy positive building based at Swansea University.

 

Investment continues with a new showroom / training facility having been opened in Cologne to provide greater market support to customers.

 

Earnings per Share

 

Our basic earnings per share at 9.1p are above the comparative period of 8.8p by 3.4%.

 

Having regard to cash, which stands at a record £62.8 million, I am pleased to say that an interim dividend of 4.0p has been declared (2018: 3.85p), representing a 3.9% increase and this reflects both the strength of earnings and the cash reserves of the Company. This will be payable on 6 June 2019 to those shareholders on the register at the close of business on 10 May 2019.

 

Outlook

 

From projects as diverse as Zora Electronics in Bulgaria to the Waterport School in Gibraltar we continue to cover the world. The refurbishment of the Villa Deportiva National in Lima, Peru is a particularly impressive project that will host the Pan American Games later this year. This latter project involved significant volumes of our sheet vinyl and is an example of our focus on repair and renewal work.

 

At the time of publishing these results Brexit is still in the news and while there continues to be much speculation on the eventual outcome we have undertaken our own review and are confident that opportunities continue to present themselves and that our business model is "fit for purpose". We regularly export to far more countries than are members of the European Union and are confident of our credentials as leading flooring manufacturers. That said, there are many complications beyond the practicalities of port of entry delays - for example duty rates (both cross EU borders and external) and certification of standards. Our management has spent extensive time considering the possible implications and we have made appropriate stock adjustments as a contingency.

 

On a far more positive note the start of the second half has seen a good increase in sales and our newer ranges continue to increase their market penetration. In January we introduced further ranges to the market including our first "loose lay" safety flooring - "QuickLay" and our first fully rigid flooring range - "EnCore Loc". Both have been well received. Against this background I have confidence in our continued progress through 2019.

 

 

Anthony Wild

Chairman

29 March 2019

 

Consolidated Income Statement

for the half-year ended 31 December 2018

 

 

 

Half-year 

ended 

31.12.18 

£'000 

 

Half-year 

ended 

31.12.17 

£'000 

 

Year 

ended 

30.06.18 

£'000 

 

 

 

 

Revenue

125,786 

126,024 

249,510 

 

 

 

 

Operating profit

24,528 

23,914 

47,148 

Net finance cost

(52)

(229)

(446)

 

 

 

 

Profit before income tax

24,476 

23,685 

46,702 

 

 

 

 

Income tax expense

(5,474)

(5,292)

(9,994)

 

 

 

 

Profit for the period

19,002 

18,393 

36,708 

 

 

 

 

 

 

 

 

Earnings per ordinary share of 5p:

 

 

 

-basic

9.1p

8.8p

17.7p

-diluted

9.1p

8.8p

17.6p

 

 

 

 

 

 

 

All amounts relate to continuing operations.

 

Details of dividends paid and declared/proposed are given in note 4.