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JHD James Halstead Plc

183.50
-3.50 (-1.87%)
21 Jun 2024 - Closed
Delayed by 15 minutes
Share Name Share Symbol Market Type Share ISIN Share Description
James Halstead Plc LSE:JHD London Ordinary Share GB00B0LS8535 ORD 5P
  Price Change % Change Share Price Bid Price Offer Price High Price Low Price Open Price Shares Traded Last Trade
  -3.50 -1.87% 183.50 186.00 189.00 189.00 187.00 187.00 148,698 16:35:26
Industry Sector Turnover Profit EPS - Basic PE Ratio Market Cap
Hard Surface Floor Cover,nec 303.56M 42.4M 0.1017 18.58 787.67M

James Halstead PLC Interim Results

27/03/2024 7:00am

RNS Regulatory News


RNS Number : 4013I
James Halstead PLC
27 March 2024
 

27 March 2024

JAMES HALSTEAD PLC

 

INTERIM RESULTS FOR THE HALF-YEAR ENDED 31 DECEMBER 2023

 

Strong H1 profitability and record interim dividend; solid margins and profit performance continue into H2

 

Key Figures

 

James Halstead plc, the AIM listed manufacturer and international distributor of floor coverings, announces its results for the six months ended 31 December 2023:

 

Financial highlights

·    Revenue at £136.5 million (2022: £149.6 million)

·    Operating profit at £26.2 million (2022: £23.1 million)

·    Pre-tax profit at £27.4 million (2022: £23.2 million)

·    Basic earnings per ordinary share 4.8p (2022: 4.3p)

·    Interim dividend declared of 2.50p (2022: 2.25p)

·    Cash of £62.4 million (2022: £44.3 million)

 

The Chief Executive, Mr. Mark Halstead, commented:

"Against difficult markets we have raised profits and are confidently growing our export of UK manufactured goods across the globe. Once again, we have declared a record interim dividend to shareholders to reward their continued investment".

 

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: 0207 220 1666

 

 

 

 

 

CHAIRMAN'S STATEMENT

 

Trading for the six months ended 31 December 2023

 

Sales revenue of £136.5 million (2022: £149.6 million) was 8.8% lower than the prior year, primarily due to recessionary pressures in several major markets and delays in the rebuilding of our UK manufactured flooring export markets.

 

Profit before tax of £27.4 million (2022: £23.2 million) is 18% ahead of the comparative period, driven partly by  higher rates of interest received on cash deposits and more importantly by increased operating profit which was 13.6% ahead of the prior year.

 

The turnover shortfalls relative to the comparative period were: Europe -15%, Australasia -13% and the UK -5%. The rest of the world showed 4% growth.  The key growth areas were South America (+36%), the Middle East (+26%) and the Mediterranean (+22%).

 

Lack of availability of raw materials, lack of timely shipping and labour restrictions hampered export of manufactured goods significantly in calendar year 2021 and 2022. However, it is pleasing to see that the various bottlenecks that affected our exports in prior years are now largely cleared and we have been focused on restoring the project pipeline in order to facilitate sales growth in certain markets.

 

Margins have improved as manufacturing output increased significantly compared to the comparative period, up 62%. Gross margins in all major markets improved as productivity improvements in manufacturing output were realised and with a product shift to higher added value ranges. Exceptions to this general improvement were New Zealand, Malaysia and India where we were not able to fully recoup the added cost of transport of goods to these markets in late 2022 and early 2023 through price increases. However, the transportation cost fell steadily from March 2023 onwards to near normal levels by December 2023.

 

Our UK businesses (Polyflor and Riverside) fared well with manufacturing efficiencies through increased output more than offsetting the slightly lower sales in the UK. Exports from the UK to our own subsidiaries were much higher than the comparatives (principally Australia, New Zealand and Canada) and will translate into external sales as the stock arrives locally.

 

The principal area of sales shortfall against the prior year was in the product group of luxury vinyl tiles which was unsurprising given these ranges cross into the domestic consumer market. In the UK our sales model is to supply product in breadth and depth via the distribution trade whilst maintaining sales communication with the end customer and the flooring contractors. Our distribution customers often also supply domestic flooring of which the largest component is historically carpet, where consumer confidence and spending has suffered in recent years. Notwithstanding these difficulties, there is growth in the distribution trade and we continue to focus on this route to our end customers. The polyvinyl solution for flooring continues to increase its share of the market. The durability, cleanability and recyclability of vinyl combined with the cost, design choice and availability are key to the success of our flooring ranges.  

 

Our German and Central European businesses are operating in an economic climate characterised by great uncertainty. Despite the difficulty in achieving sales, the underlying profit mix is favourable and profit has held up very well. The retail-shop refurbishment market, which has been a core strength, has suffered as many retail chains are facing challenging consumer demand and consequently renovation and new store opening plans are in many cases on hold. Notwithstanding this, we have delivered  several key projects such as the "New Yorker", "Tom Tailor" and "Smyths Toy" store chains across the DACH region alongside projects such as the Papenburg Meyer shipyard, Marseille Airport duty free area and the new Lidl HQ in France. Despite softening demand in the European market, price increases were implemented in early 2023 and the product mix generally improved with higher value commercial ranges generally selling better than the "semi-commercial" / heavy domestic products. Objectflor were the recipients of the German flooring contractors association' (Netzwerk Boden) flooring project of the year for POHA House in Aachen, a listed building converted to living / work accommodation.

 

Canada faced a difficult trading climate with delayed construction projects and constrained budgets due to inflationary pressures. Nevertheless, like-for-like sales, in local currency, increased by 9%. Key projects such as the renovation of Rexell Pharmacy's stores and the Terra Hill Medical Centre are just two examples of installations in this market. As with other regions, margins improved and the net profit in Canada was over 50% higher (a record level).

 

Sales in the APAC region were mixed with New Zealand showing a modest growth (4%) in same currency, Malaysia was on a par with the comparative, Australia saw a 9% reduction and China down around 10%. Market conditions in New Zealand were difficult with the housing market facing an almost 40% decline in new builds. Despite this, our business was successful in driving sales into social housing initiatives. Range consolidation to ensure greater stocks in narrower colour/design options is helping to focus the commercial sales team on projects. Australia also faced challenges, most notably in the effects of interest rate rises on consumer confidence and a much decreased level of retail footfall, the latter having an effect on the rate of retail store refurbishment and expansion. In addition, there were delays / deferment of government social housing initiatives. Stock shortages in the early part of the period were also an issue due to the shipping delays of the prior year. Nevertheless Australia and New Zealand continued to supply projects such as the Footscray Hospital in Victoria and the Takanaki Base Hospital in New Plymouth.

 

We continue to make progress in Malaysia and South Asia. Fresh stock from Polyflor in the UK is starting to bolster margins and orders have been secured from projects not only in Malaysia but also Singapore, Indonesia and Vietnam.

 

North Asia, notably China, Hong Kong and South Korea continue to fall short of pre pandemic levels of sales as these markets suffered the worst of the supply chain issues from UK manufacturing sites throughout 2021-2022. Our North Asian team are rebuilding customer confidence with several key projects targeted.

 

Projects such as Nhan Le Kindergarten Hospital and the National Childrens Hospital (both in Vietnam), Sunway Hospital in Selangor, Malaysia and Skol4kds Childcare Centres in Singapore all continue our long association with the region. This can only deepen as The Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) free trade agreement progresses to full ratification during 2024. UK manufactured products have always been welcomed in these markets and any trade agreement can only accentuate ongoing trade.

 

In the rest of the world, we delivered a myriad of projects from the Vox Cinemas in Kuwait to Coomeva Medicina Prepagada in Colombia.

  

Earnings per share and dividend

 

Since the start of the financial year we have distributed £24.0 million in dividends and paid corporation taxes of £8.2 million. In addition, capital expenditure over the same period was £2.1 million. The cash inflow from operations at £33.6 million significantly exceeds last year (2022: £22.7 million). Our cash, which stands at £62.4 million as of 31 December 2023 compared with £44.3 million at 31 December 2022, continues to be a key strength.

 

Having regard to our cash and profitability, we have decided to declare an interim dividend of 2.50p per share (2022: 2.25p), an increase of 11.1%. This dividend will be payable on 14 June 2024 to those shareholders on the register as at 17 May 2024.

 

Current trading and outlook

 

The breadth and depth of our projects across the globe continue to drive a diverse sales mix, from the renovation of the Novopecherska Primary school, in Kyiv, Hospital El Salvador, the major hospital in Chile, the UN Offices in Nairobi, Kenya to the Unimed Hospitals in Brazil. The recent disruption to shipping in the Red Sea has, to a degree, lengthened delivery times and increased costs which is complicating exports to our APAC markets and frustrating (to a small degree) the return to pre-pandemic norms for freight in respect of availability and cost.

 

The shortfall in sales against the comparative in the first six months to 31 December 2023 was largely attributed to lower consumer confidence in major markets and delays in rebuilding supply to export markets. In January and February, sales of manufactured goods are in line with last year's record comparatives and overall, UK activity is showing improved confidence against the last six months. In Europe there is a similar zeitgeist of positive sentiment. Similarly, export markets continue to show positive prospects for growth as our sales teams continue quoting on projects, with our highly regarded ranges of flooring, for timely delivery, around the world.

 

Margins remain solid and overheads are contained within inflationary parameters. Consequently, the improved first half profitability continues into the early months of the second half of the year. I, and the board, remain confident of making further progress.

 

 

 

Anthony Wild

Chairman

27 March 2024

 


 

Consolidated Income Statement

for the half-year ended 31 December 2023

 


 

Half-year 

ended 

31.12.23 

£'000 

 

Half-year 

ended 

31.12.22 

£'000 

 

Year 

ended 

30.06.23 

£'000 


 



Revenue

136,451 

149,638 

303,562 


 



Operating profit

26,213 

23,085 

51,611 

Finance income

1,339 

230 

748 

Finance cost

(156)

(95)

(260)


 



Profit before income tax

27,396 

23,220 

52,099 


 



Income tax expense

(7,317)

(5,176)

(9,695)


 



Profit for the period

20,079 

18,044 

42,404 


 




 



Earnings per ordinary share of 5p:

 



- basic

4.8p

4.3p

10.2p

- diluted

4.8p

4.3p

10.2p


 



 


All amounts relate to continuing operations.

 

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

 


 

Consolidated Statement of Comprehensive Income

for the half-year ended 31 December 2023

 


 




 

     



Half-year 

ended 

31.12.23 

£'000 

 

Half-year 

ended 

31.12.22 

£'000 

 

Year 

ended 

30.06.23 

£'000 

 

Profit for the period

20,079 

18,044 

42,404 

 

Other comprehensive income net of tax:

 



Remeasurement of the net defined benefit liability

(959)

(4,948)

(7,237)

Foreign currency translation differences

439 

63 

(1,818)

Fair value movements on hedging instruments

(1,086)

(1,297)

(135)


 



Other comprehensive income for the period net of tax

 

(1,606)

 

(6,182)

(9,190)


 



Total comprehensive income for the period

18,473 

11,862 

33,214 


 



 

Attributable to equity holders of the parent

18,473 

11,862 

33,214 

 

 

 


 

Consolidated Balance Sheet

as at 31 December 2023

 


Half-year 

ended 

31.12.23 

£'000 

Half-year 

ended 

31.12.22 

£'000 

Year 

ended 

30.06.23 

£'000 

Non-current assets

 



Intangible assets

3,232 

3,232 

3,232 

Property, plant and equipment

36,116 

36,265 

35,887 

Right of use assets

6,804 

8,914 

7,164 

Retirement benefit obligations

499 

- 

Deferred tax

118 

236 

114 


46,270 

49,146 

46,397 

Current assets

 



Inventories

83,118 

93,863 

87,440 

Trade and other receivables

35,623 

39,053 

46,979 

Derivative financial instruments

60 

286 

773 

Current tax

Cash and cash equivalents

1,012 

62,420 

- 

44,325 

699 

63,222 


182,233 

177,527 

199,113 

 

 



Total assets

228,503 

226,673 

245,510 

 

 


 

Current liabilities

 


 

Trade and other payables

49,173 

49,788 

60,738 

Derivative financial instruments

735 

1,406 

213 

Current tax

2,198 

422 

Lease liabilities

2,586 

2,906 

2,696 

 

52,494 

56,298 

64,069 

 

 



Non-current liabilities

 



Retirement benefit obligations

2,240 

1,460 

Other payables

408 

432 

400 

Lease liabilities

4,359 

6,093 

4,582 

Preference shares

200 

200 

200 

Deferred tax

 

62 

1,425 

585 

 

7,269 

8,150 

7,227 

 

 



Total liabilities

59,763 

64,448 

71,296 

 

 



Net assets

168,740 

162,225 

174,214 


 



Equity

 



Equity share capital

20,838 

20,838 

20,838 

Equity share capital (B shares)

160 

160 

160 


20,998 

20,998 

20,998 

Share premium account

13 

13 

13 

Currency translation reserve

4,533 

5,975 

4,094 

Hedging reserve

(280)

(356)

806 

Retained earnings

143,476 

135,595 

148,303 

Total equity attributable to shareholders of the parent

168,740 

162,225 

174,214 

 

 



 



Consolidated Cash Flow Statement

for the half-year ended 31 December 2023

 


Half-year 

ended 

31.12.23 

£'000 

Half-year 

ended 

31.12.22 

£'000 

Year 

ended 

30.06.23 

£'000 


 



Profit for the period

20,079 

18,044 

42,404 

Income tax expense

7,317 

5,176 

9,695 

Profit before income tax

27,396 

23,220 

52,099 

Finance cost

156 

95 

260 

Finance income

(1,339)

(230)

(748)

Operating profit

26,213 

23,085 

51,611 

Depreciation of property, plant & equipment

1,859 

1,712 

3,461 

Depreciation of right of use assets

1,496 

1,578 

3,060 

Profit on sale of property, plant and equipment

(20)

(26)

(84)

Defined benefit pension scheme service cost

154 

178 

Defined benefit pension scheme employer contributions paid

 

(531)

 

(975)

 

(1,942)

Change in fair value of financial instruments

(564)

(776)

Share based payments

16 

12 

26 

Decrease in inventories

4,832 

19,008 

22,966 

Decrease in trade and other receivables

11,669 

11,975 

3,031 

(Decrease) in trade and other payables

(11,961)

(33,225)

(20,365)

Cash inflow from operations

33,573 

22,734 

61,166 

Taxation paid

(8,234)

(4,957)

(11,900)

Cash inflow from operating activities

25,339 

17,777 

49,266 


 



Interest received

1,339 

99 

467 

Purchase of property, plant and equipment

(2,058)

(1,143)

(2,854)

Proceeds from disposal of property, plant and equipment

38 

47 

134 

Cash outflow from investing activities

(681)

(997)

(2,253)


 




 



Interest paid

(10)

(7)

(36)

Lease interest paid

(114)

(88)

(224)

Lease capital paid

(1,474)

(1,573)

(3,015)

Equity dividends paid

(23,963)

(22,921)

(32,298)

Shares issued

14 

14 

Cash outflow from financing activities

(25,561)

(24,575)

(35,559)


 




 



Net (decrease) / increase in cash and cash equivalents

(903)

(7,795)

11,454 


 



Effect of exchange differences on cash and cash equivalents

 

101 

 

(24)

 

(376)

Cash and cash equivalents at start of period

63,222 

52,144 

52,144 


 



Cash and cash equivalents at end of period

62,420 

44,325 

 

63,222 

 


 

Notes to the Interim Results

for the half-year ended 31 December 2023

 

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 2023.

 

The figures for the year ended 30 June 2023 are an abridged statement of the group audited accounts for that year. The financial statements for the year ended 30 June 2023 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 26.7% (2022: 22.3%).

 

 

 

 

 

3.

Earnings per share






 

Half-year

ended

31.12.23

£'000

 

Half-year

ended

31.12.22

£'000

 

Year

ended

30.06.23

£'000







Profit for the period

20,079

18,044

42,404



 




Weighted average number of shares in issue

416,754,052

416,751,498

416,752,764


Dilution effect of outstanding share options

33,687

23,830

21,390


Diluted weighted average number shares

416,787,739

416,775,328

416,774,154



 




Basic earnings per 5p ordinary share

4.8p

4.3p

10.2p


Diluted earnings per 5p ordinary share

4.8p

4.3p

10.2p

 

 


 

4.

Dividends






Half-year

ended

31.12.23

£'000

Half-year

ended

31.12.22

£'000

Year

ended

30.06.23

£'000


Equity dividends paid:

 

 





 




Final dividend for the year ended 30 June 2022

-

22,921

22,921


Interim dividend for the year ended 30 June 2023

-

-

9,377


Final dividend for the year ended 30 June 2023

23,963

-

-



 





23,963

22,921

32,298



 




Equity dividends declared/proposed after the end of the period

 

 




Interim dividend

10,419

9,377

-


Final dividend

-

-

23,963

 

 

          Equity dividends per share, paid and declared/proposed are as follows:

 


 

5.50p final dividend for the year ended 30 June 2022, paid on 16 December 2022

2.25p interim dividend for the year ended 30 June 2023, paid on 9 June 2023

5.75p final dividend for the year ended 30 June 2023, paid on 15 December 2023

 

2.50p interim dividend for the year ended 30 June 2024, payable on 14 June 2024, to those shareholders on the register at  17 May 2024

 

 

 

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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