Key Figures

CHAIRMAN'S STATEMENT

Results

I am pleased to report in my first year as Chairman that we have, again, achieved record turnover with sales of £249.5 million (2017: £240.8 million). In addition, we have also achieved a record profit before tax of £46.7 million (2017: £46.6 million).

The growth in profit is modest but we have made some significant investment in new product during the year and this is reflected in the profit before tax figure. The breadth of projects that we have been associated with is impressive and includes the Aston Martin DBX factory in Llandough, Amazon's sales office in Cape Town and the Guizhou Provincial Cancer Hospital in China.

As the “Brexit” deadline grows ever nearer I, and the Board, remain vigilant for issues that may arise though obviously the detail remains somewhat hazy. Notwithstanding this lack of clarity, I believe we are well placed in that we export to far more countries outside the EU than are members of the EU. In addition, we have attained full Authorised Economic Operator (AEO) status with HMRC. AEO status is an internationally recognised quality mark indicating that our role in the international supply chain is secure, and that our customs controls and procedures are efficient and compliant. It is considered, depending on the exact details of Brexit, that this will minimise the risk of any post Brexit border delays.

With projects as diverse as The Irish Whiskey Museum on Grafton Street in Dublin and the Universal Church, Sao Paolo our portfolio continues to reach far across the globe.

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 is listed on the AIM market of the London Stock Exchange and celebrates 70 years as a listed company this year.

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.

It also sources other flooring products, in particular luxury vinyl tiles and rubber flooring from key partners manufacturing on the group's behalf, predominantly under Halstead brand names.

The key brands the group operates under are Polyflor, Objectflor and Expona. There are other brands that the group operates under that are more regionally based or territory specific.

James Halstead utilises a global distribution chain for export. Parts of this network are controlled by the group, in particular, Western Europe, Australia, New Zealand, Canada and India. The group employs around 830 people worldwide, the majority of whom are in the UK.

The company's strategy is designed to enhance the brand identity thereby generating and enhancing goodwill and customer satisfaction with the aim of continued repeat business. This approach is designed to increase revenue and consequently profitability and cash flow to enable the continuation of dividends thereby creating shareholder wealth. As a manufacturer our supply is in bulk to distributors responsible for regional / local delivery. Key to the company ethos is to have dedicated sales personnel to present our product to end users and specifiers rather than to delegate the representation of product to stockists. Our businesses are totally flooring focused and predominantly commercial flooring.

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.

Sustainability is a key area of focus and from our award winning recycling initiatives through to our environmental policies, we are recognised as leaders within our industry.

I think it is worthy to note that our credentials for responsible sourcing have been recognised with our UK businesses awarded an “excellent “rating under the BES6001 certification process. We were awarded 51 points out of a maximum 52 which I believe is the highest rating given by the British Research Establishment (the BRE). In addition, we have published our latest “Sustainability Report” which communicates our performance to all stakeholders

Dividend

Profits and earnings per share have increased and we continue un-geared.  With our cash balances standing at £50.7 million, even after dividends paid in the last year that amounted to £27.2 million. Our cash reserves continue as the bedrock of a strong balance sheet.

It is pleasing to report that the board proposes, yet again, an increased final dividend. The final dividend will be 9.65p (2017: 9.25p) representing a 4.3% increase which combined with the interim dividend paid in June 2018 of 3.85p (2017: 3.75p), makes a total of 13.5p (2017: 13.0p) for the year, an increase of 3.85%. Once again a record dividend.

Outlook

Trading since our year-end continues to be solid, particularly in the UK. Given the adverse raw material cost increases over the last twelve months or so we have increased our prices which our trade partners have accepted.

In addition, we have updated our product portfolio – not least in the homogenous sheet vinyl with Palettone – and to date the new products have received a very good reaction from customers. Shortly this will be augmented by Polysafe Verona, offering enhanced slip resistance and with decoration optimised for dementia friendly environments. As is our way, we have sought third-party certification for this innovative product and the range has been described as “excellent” by the Dementia Services Development Centre (DSDC) at The University of Stirling.

I can only be confident of continued progress in the coming year.

Anthony Wild

Chairman