TIDMJHD
RNS Number : 8392U
James Halstead PLC
31 March 2023
31 March 2023
JAMES HALSTEAD PLC
INTERIM RESULTS FOR THE HALF-YEARED 31 DECEMBER 2022
Record turnover; confident in long-term progress
James Halstead plc, the AIM listed manufacturer and
international distributor of commercial floor coverings, announces
its results for the six months ended 31 December 2022:
Financial highlights
* Revenue at GBP149.6 million (2021: GBP136.7 million)
* Operating profit at GBP23.1 million (2021: GBP25.5
million)
* Pre-tax profit at GBP23.2 million (2021: GBP25.4
million)
* Basic earnings per ordinary share 4.3p (2021: 4.7p)
* Interim dividend declared of 2.25p (2021: 2.25p)
* Cash of GBP44.3 million (2021: GBP69.4 million)
The Chief Executive, Mr. Mark Halstead, commented:
"These last three years have seen our businesses challenged by
numerous unexpected factors that have added to costs significantly
and to the complexity of the simple business of designing,
manufacturing and selling commercial flooring. The bottom line
results show a small dip in profits at the half year but this, in
the view of the board, is a creditable performance."
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 2022
Sales revenue of GBP149.6 million (2021: GBP136.7 million) is a
record level of turnover which, considering the economic backdrop
in the many markets, is a satisfactory achievement. However, the
effects of transportation costs, energy price increases and raw
materials costs have meant that profit is lower than last year. The
profit before tax is GBP23.2 million (2021: GBP25.4 million), a
drop of 8.6%.
Turnover for the first half is 9.5% ahead of the comparative
with UK sales 10% ahead of 2021, Europe 4% up, Australasia 16%
ahead and the rest of the world up by 26%. The rest of the world
turnover was driven mainly by further increases in sales across the
Middle East and North America. Certain markets, most notably South
America, were affected by delayed shipments due to reduced shipping
route availability and consequent significant delays. There is a
plethora of projects that illustrate the breadth and depth of our
flooring sales: Churchill Downs Racecourse in Kentucky, the
Toulouse Rugby Stadium in France, the FIFA Museum in Qatar and the
Palace Hotel in Konary (Poland). Most of our export markets
experienced shipping delays as global shipping routes continued to
be in turmoil following the significant changes to demand patterns
resulting from events of the last two years.
Distribution costs, in terms of export shipping, remained at
very high levels throughout the period. Given our shipments of
flooring were as diverse as the St Helene hospital in Mauritius,
the student accommodation at Iceland University, the WKI Lab in
East Java, the Biscotti Headquarters in Lviv or the Penfolds Wine
Exhibition at Raffles City in Singapore we thank our logistics
teams.
Within the Australasian markets both Australia and New Zealand
reported double digit sales increases. Our business in Malaysia is
growing steadily with increases in sales volumes over each quarter
since its inception in 2020. As we add more sales staff to the
surrounding South Asia countries, we expect further growth.
However, Asia sales as a whole have been impacted by the Chinese
market where the continued Covid restrictions throughout the period
has seen demand and projects at very low levels.
Margins have remained under pressure throughout the period, even
though in many markets we have undertaken price increases, with
energy costs increasing steadily in our manufacturing sites in the
UK. To an extent the growth in stock earlier in the year had a
degree of hedge against energy price increases - but not
significantly so. As I noted in the final results for the year
ended 30 June 2022 we have, in our manufacturing businesses,
adopted a lag between absorbing costs and increases in sales
prices. The lag is partly the holding of prices quoted on projects
in advance, partly to allow stockists to look at their price lists
and in part our reticence to risk the unknown consequences of price
increases on future demand. Given that many industries have passed
on costs with little or no notice to the customer we have, to a
degree, taken a more protective stance towards long term
relationships.
Our German and Central European businesses have seen flat growth
and margin erosion and have been the least effective of our
businesses in achieving price increases. Overall, the adverse
effects noted had an average 3% impact on margins in the period,
and a price increase in most regions and all our major markets was
implemented from the start of January 2023.
Overhead costs in the six months to 31 December 2022 were 4.9%
higher than the prior year with the most significant increase being
export shipping costs.
We noted in our full year results for the year to 30 June 2022
that at the year end our stock holding had significantly increased,
partly through higher costs, but in general as a result of a key
decision to hold higher volumes to defend against the uncertainties
in the market (notably the risk of restrictions in energy and raw
material availability). In the main, this was achieved, and as some
of those uncertainties and pressures have eased, we have looked to
reduce our stock levels. At the end of December, although GBP10
million higher than at the same time last year, stock levels had
fallen just over 16% since June 2022 and have continued to fall
after the half year end. It was obviously helpful to raw material
supplies that the European winter was relatively mild.
Though profit for the first half of our year is lower we, as a
board, are satisfied overall with the outcome relative to the
challenges. Most of our businesses are progressing, though in
Germany where we are more exposed to the retail and domestic
markets we saw both lower volumes and lower margins. Cost control
continues to be the focus of our attention.
The UK group has a final salary pension scheme (also known as a
defined benefit scheme) and though this scheme was closed to new
entrants in 2002 it has now been closed to future accrual. Since
the number of employees in the scheme was less than 70 it was
inevitable that this would happen at some point.
Earnings per Share and Dividend
Our cash, which stands at GBP44.3 million as of 31 December 2022
compared with GBP69.4 million at 31 December 2021, continues to be
a key strength. Since 31 December 2021 we have distributed GBP32.3
million in dividends and increased our stock levels in the six
months to 30 June 2022 as a defensive precaution against energy and
raw material shortages.
With regard to our cash and profitability, we have decided to
declare an unchanged interim dividend of 2.25p per share, payable
on 9 June 2023 to those shareholders on the register at 12 May
2023.
Environmental, sustainability, social responsibility and
governance
The detailed Sustainability Report that we issue annually is now
in its 18(th) edition and continues to underline the Group's
commitment to ESG and sustainability. Our commitment as a business
to these matters is not new. In addition, we have identified the
members of our committee in respect of addressing the TCFD
(Taskforce on Climate-related Financial Disclosures) and whilst
these disclosures seem in some ways to be a degree pretensive, we
will continue our many sustainability and environmental initiatives
undertaken not only at the company level but also at our industry
level alongside our competitors. In addition, we are participants
within European and international organisations regarding
recycling, environmental, sustainability and product standards.
Examples include EPDs (environmental product declarations which
document environmental impact from life cycle analysis) and ESOS
(the energy savings opportunity scheme) which differentiate UK and
European manufacturers from suppliers importing products from often
less environmentally-conscious regions.
As a manufacturer we see this as a key way of communicating our
place in, and contribution to, society, and the many and varied
actions that are ongoing inside the business and relevant to our
place in the global community. It is of advantage that we are
manufacturers that can and do actively recycle waste material, and
our UK produced goods have up to 40% recyclate and up to 85%
natural material content by physical weight.
Achieving our environmental and sustainable business targets
continues to be a key focus.
Outlook
The past three years have seen numerous extraordinary factors
impact on the business (Covid-19, raw material shortages and price
increases, freight price increases and availability, the energy
crisis) and to come through all of these, in the view of the board,
is a creditable performance. However, the profits of the business
reported in the first six months of the trading year are lower.
Nevertheless, the demand for flooring for refurbishment projects
across healthcare, social housing and education is significant with
projects such as Terminal 1 at the Paris Charles de Gaulle airport,
the Sema Park urban regeneration project in Romania and the K inga
Ora state housing projects in New Zealand.
As we move into the second half of the year, energy costs appear
to be holding stable, with the mild winter in Europe helping the
wholesale gas prices fall from their peak in August 2022. Whilst
energy costs are still in excess of prior comparatives there are
positives. Availability and cost of shipping to our global markets
is vastly improved. Raw material availability and the costs of
those materials are more favourable. Production from our UK
factories is higher, and with that we should see improved
productivity. Most importantly, sales in recent weeks in the UK and
many export markets have been very encouraging with our core
commercial vinyl ranges experiencing especially robust demand.
I, and the board, are confident of our progress.
Anthony Wild
Chairman
31 March 2023
Consolidated Income Statement
for the half-year ended 31 December 2022
Half-year Half-year Year
ended ended ended
31.12.22 31.12.21 30.06.22
GBP'000 GBP'000 GBP'000
Revenue 149,638 136,654 291,860
============ ============ ===========
Operating profit 23,085 25,507 52,258
Finance income 230 18 42
Finance cost (95) (120) (237)
Profit before income tax 23,220 25,405 52,063
Income tax expense (5,176) (5,692) (11,735)
Profit for the period 18,044 19,713 40,328
============ ============ ===========
Earnings per ordinary share of 5p:
-basic 4.3p 4.7p 9.7p
-diluted 4.3p 4.7p 9.7p
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 2022
Half-year Half-year Year
ended ended ended
31.12.22 31.12.21 30.06.22
GBP'000 GBP'000 GBP'000
Profit for the period 18,044 19,713 40,328
---------- ---------- ----------
Other comprehensive income net of tax:
Remeasurement of the net defined benefit liability (4,948) 1,963 7,090
Foreign currency translation differences 63 (310) 926
Fair value movements on hedging instruments (1,297) (218) (111)
Other comprehensive income for the period net of tax (6,182) 1,435 7,905
Total comprehensive income for the period 11,862 21,148 48,233
========== ========== ==========
Attributable to equity holders of the parent 11,862 21,148 48,233
------- ------- -------
Consolidated Balance Sheet
as at 31 December 2022
Half-year Half-year Year
ended ended ended
31.12.22 31.12.21 30.06.22
GBP'000 GBP'000 GBP'000
Non-current assets
Property, plant and equipment 36,265 36,599 36,671
Right of use assets 8,914 5,565 5,634
Intangible assets 3,232 3,232 3,232
Retirement benefit obligations 499 - 6,144
Deferred tax assets 236 356 234
---------- ---------- ----------
49,146 45,752 51,915
---------- ---------- ----------
Current assets
Inventories 93,863 83,191 112,279
Trade and other receivables 39,053 37,539 51,171
Derivative financial instruments 286 1,700 2,166
Cash and cash equivalents 44,325 69,381 52,144
---------- ---------- ----------
177,527 191,811 217,760
---------- ---------- ----------
Total assets 226,673 237,563 269,675
Current liabilities
Trade and other payables 49,788 72,705 84,507
Derivative financial instruments 1,406 71 517
Current income tax liabilities 2,198 865 2,097
Lease liabilities 2,906 2,846 2,166
---------- ---------- ----------
56,298 76,487 89,287
---------- ---------- ----------
Non-current liabilities
Retirement benefit obligations - 1,390 -
Other payables 432 448 453
Deferred tax liabilities 1,425 648 2,929
Lease liabilities 6,093 2,843 3,548
Preference shares 200 200 200
---------- ---------- ----------
8,150 5,529 7,130
---------- ---------- ----------
Total liabilities 64,448 82,016 96,417
---------- ---------- ----------
Net assets 162,225 155,547 173,258
========== ========== ==========
Equity
Equity share capital 20,838 10,419 20,837
Equity share capital (B shares) 160 160 160
---------- ---------- ----------
20,998 10,579 20,997
Share premium account 13 4,934 -
Capital redemption reserve - 1,174 -
Currency translation reserve 5,975 4,676 5,912
Hedging reserve (356) 834 941
Retained earnings 135,595 133,350 145,408
Total equity attributable to shareholders of the parent 162,225 155,547 173,258
========== ========== ==========
Consolidated Cash Flow Statement
for the half-year ended 31 December 2022
Half-year Half-year Year
ended ended ended
31.12.22 31.12.21 30.06.22
GBP'000 GBP'000 GBP'000
Profit for the period 18,044 19,713 40,328
Income tax expense 5,176 5,692 11,735
---------- ---------- -----------
Profit before income tax 23,220 25,405 52,063
Finance cost 95 120 237
Finance income (230) (18) (42)
Operating profit 23,085 25,507 52,258
Depreciation of property, plant & equipment 1,712 1,879 3,794
Depreciation of right of use assets 1,578 1,590 3,139
Profit on sale of property, plant and equipment (26) (73) (198)
Defined benefit pension scheme service cost 154 253 500
Defined benefit pension scheme employer contributions paid (975) (991) (1,970)
Change in fair value of financial instruments (564) (14) 703
Share based payments 12 3 6
Decrease/(increase) in inventories 19,008 (23,198) (50,272)
Decrease/(increase) in trade and other receivables 11,975 5,165 (7,451)
(Decrease)/increase in trade and other payables (33,225) 6,986 15,905
Cash inflow from operations 22,734 17,107 16,414
Taxation paid (4,957) (5,730) (9,879)
Cash inflow from operating activities 17,777 11,377 6,535
---------- ---------- -----------
Purchase of property, plant and equipment (1,143) (1,466) (3,248)
Proceeds from disposal of property, plant and equipment 47 129 280
---------- ---------- -----------
Cash outflow from investing activities (1,096) (1,337) (2,968)
---------- ---------- -----------
Interest received 99 18 42
Interest paid (7) (7) (20)
Lease interest paid (88) (73) (143)
Lease capital paid (1,573) (1,634) (3,233)
Equity dividends paid (22,921) (22,921) (32,298)
Shares issued 14 823 823
---------- ---------- -----------
Cash outflow from financing activities (24,476) (23,794) (34,829)
---------- ---------- -----------
Net decrease in cash and cash equivalents (7,795) (13,754) (31,262)
---------- ---------- -----------
Effect of exchange differences (24) (126) 145
Cash and cash equivalents at start of period 52,144 83,261 83,261
Cash and cash equivalents at end of period 44,325 69,381 52,144
========== ========== ===========
Notes to the Interim Results
for the half-year ended 31 December 2022
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 2022.
The figures for the year ended 30 June 2022 are an abridged statement of the group audited
accounts for that year. The financial statements for the year ended 30 June 2022 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 22.3% (2021: 22.4%).
3. Earnings per share
Half-year Half-year Year
ended ended ended
31.12.22 31.12.21 30.06.22
GBP'000 GBP'000 GBP'000
Profit for the period 18,044 19,713 40,328
--------------- --------------- --------------
Weighted average number of shares in issue 416,751,498 416,431,865 416,586,675
Dilution effect of outstanding share options 23,830 276,142 201,425
Diluted weighted average number shares 416,775,328 416,708,007 416,788,100
Basic earnings per 5p ordinary share 4.3p 4.7p 9.7p
Diluted earnings per 5p ordinary share 4.3p 4.7p 9.7p
4. Dividends
Half-year Half-year Year
ended ended ended
31.12.22 31.12.21 30.06.22
GBP'000 GBP'000 GBP'000
Equity dividends paid:
Final dividend for the year ended 30 June 2021 - 22,921 22,921
Interim dividend for the year ended 30 June 2022 - - 9,377
Final dividend for the year ended 30 June 2022 22,921 - -
22,921 22,921 32,298
---------- ---------- ----------
Equity dividends declared/proposed after the end of the period
Interim dividend 9,377 9,377 -
Final dividend - - 22,921
Equity dividends per share, paid and declared/proposed are as
follows:
11.00p final dividend for the year ended 30 June 2021, paid on 17 December 2021
2.25p interim dividend for the year ended 30 June 2022, paid on 10 June 2022
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, payable on 9 June 2023, to those shareholders
on the register at the close of business at 12 May 2023.
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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END
IR SDFFMSEDSEFD
(END) Dow Jones Newswires
March 31, 2023 02:00 ET (06:00 GMT)
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