CHAIRMAN'S STATEMENT
Results
It is gratifying to report turnover of £240.8 million (2016: £226.1 million) – a record. Just as satisfying to report as the sales is the record profit before tax at £46.6 million (2016: £45.5 million). There was clearly a boost to our export activities given the general weakness of Sterling aiding competitiveness and margins. This was tempered by a 5.2% fall in UK sales and turmoil in the supply chain of raw materials. The drop in UK sales is entirely accounted for by de-stocking at two of the larger distributor chains. We are satisfied that the actual purchases of Polyflor ranges by end users increased and we are encouraged that other independent distributors increased sales.
Strategy
Our businesses are totally flooring focused and our strategy is designed to enhance our brand identity thereby generating goodwill and customer satisfaction with the aim of continued repeat business. This approach is designed to increase revenue, and consequently profitability, which then creates wealth for our shareholders in the form of dividend as reward for their investment in our company. It also underpins job security for our employees and benefits all stakeholders in the business.
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.
The strategy evolves over time, but our focus on sustainable growth is undiminished. Indeed sustainability in general is a key strategy and, from our award winning recycling initiatives through to our environmental policies, we are recognised as leaders in this area.
Dividend
Profit and earnings per share have increased and our cash reserves continue to be healthy. Cash flows from operating activities were £47.5 million and our cash balances stand 19.1% ahead of last year, even after our dividends paid in the last year which amounted to £25.4 million.
It is pleasing to report that the Board proposes, once again, an increased final dividend. The final dividend will be 9.25p (2016: 8.5p) representing an 8.8% increase which combined with the interim dividend, paid in June 2017, of 3.75p (2016: 3.5p) makes a total of 13.0p (2016: 12.0p) for the year, an increase of 8.3%. It is pleasing to have reported a record dividend as I have done now each year for over 40 years.
Outlook
I have been Chairman for 17 years and a director of James Halstead plc for 55 years and it is time for me to step down from the Board at the AGM. In doing so I leave a strong team and a business solidly built and not only capable of continued growth, but achieving this growth. I refer you to the announcement on proposed Board changes, released today and to be effected at the AGM, which includes details of our proposed new Chairman and proposed new appointments to the Board.
Trading since our year-end has been strong, particularly in the UK. In addition, both our antipodean and French colleagues reported record sales in the first two months. Taking current trading into account I can only be confident of progress in the coming year.
Geoffrey Halstead
Chairman