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Interim Results

27th Mar 2025 07:00

RNS Number : 3995C
James Halstead PLC
27 March 2025
 

27 March 2025

JAMES HALSTEAD PLC

 

INTERIM RESULTS FOR THE HALF-YEAR ENDED 31 DECEMBER 2024

 

"Strong H1 profitability and record interim dividend, solid margins and profit performance against challenging markets"

 

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 2024:

 

Financial highlights

· Revenue at £130.1 million (2023: £136.5 million)

· Operating profit at £27.1 million (2023: £26.2 million)

· Pre-tax profit at £28.5 million (2023: £27.4 million)

· Basic earnings per ordinary share 5.0p (2023: 4.8p)

· Interim dividend declared of 2.75p (2023: 2.50p)

· Cash of £63.7 million (2023: £62.4 million)

 

Operational highlights

· Completed previously announced capital expenditure programmes across our Teesside and Radcliffe sites to upgrade production capabilities

· Attended several South America trade exhibitions, underlining our continued growth in the region and cementing our global reputation as a key flooring provider

· Recofloor won a Gold Award in 'The Green Apple Environment Awards'

 

The Executive Chairman, Mark Halstead, commented:

"Against the backdrop of difficult markets, we are pleased to have raised profits underpinned by improved margins and reductions in overheads. We remain confident of the Group's medium-term prospects, despite short-term confidence weakness in Europe, and anticipate another year of progress.''

 

Enquiries:

James Halstead:

 

Mark Halstead, Executive Chairman

Telephone: 0161 767 2500

Gordon Oliver, Chief Executive

 

David Drillingcourt, Finance Director

 

 

Hudson Sandler:

 

Nick Lyon

Telephone: 020 7796 4133

Nick Moore

 

 

Panmure Liberum (NOMAD & Joint Broker):

 

Edward Mansfield / Tom Scrivens

 

Telephone: 020 7886 2500

 

Zeus (Joint Broker):

 

Ben Thorne / Fraser Marshall

Telephone: 0207 220 1666

 

 

NOTES TO EDITORS

 

James Halstead (LSE: JHD) is a UK manufacturer and global supplier of flooring for commercial and domestic purposes. It distributes their manufactured and sourced products from operations across the United Kingdom, Europe, Scandinavia, Australasia, North America and Asia, and exports directly to almost every country around the world.

 

The Company's brands include Polyflor, Palettone, Camaro, Karndean (Europe), Polysafe, Recofloor and Expona. James Halstead's strategy is to constantly develop its brand identity and its reputation for quality, product innovation, durability and availability, thereby enhancing and maintaining goodwill with the aim of achieving repeat business.

 

Over many years, the Company has adopted a policy of continual investment in both process improvement and product development to improve output efficiency and its product offering.

 

The Company was founded in 1915 and is headquartered in Bury, UK. It listed on the London Stock Exchange in 1948.

 

 

 

CHIEF EXECUTIVE'S STATEMENT

 

Trading for the six months ended 31 December 2024

 

Sales revenue of £130.1 million (2023: £136.5 million) was 4.7% lower than the prior year, primarily due to restrictions on government spending in several key markets and end customer confidence. Notwithstanding these adverse conditions, there were margin improvements and overhead reductions. Consequently, profit before tax of £28.5 million (2023: £27.4 million) is 3.9% ahead of the comparative period driven by a 3.2% increase in operating profit.

 

The UK represents our largest market and some 43% of total turnover. Sales were at the same level as the comparative period despite there being a notable slowdown in activity regarding our UK commercial flooring activity from July to October following the change of government and concerns in the lead up to the UK autumn budget. Despite this, the backlog of refurbishment and increased capacity of hospitals, schools, prisons and other government buildings is well reported and it can only be delayed not cancelled. Demand for aged care (a core sector for our flooring) is expanding with demand for places outstripping supply with new capacity likely to follow. Our ongoing expectations are for increased sales in the UK.

 

The principal areas of sales shortfall against the comparative period were: Central Europe -8% and Australia -12% which can be ascribed to a lack of government-led spending in building and building refurbishment and lower consumer confidence affecting decision making around shop refurbishment and new store roll outs. The European difficulties were broadly in line with our expectations and budgets for the first half of the year.

 

On the positive side North American sales were ahead of the comparative period by 7%.

 

Gross profit margins improved to 44.8% (2023: 43.8%) which is due to the stabilisation of raw material inputs, a degree of energy cost reduction and more efficient throughput of manufacturing in our UK production facilities. Raw material costs are still stubbornly ahead of pre-Covid levels.

 

Overheads were reduced by 7%, principally a result of cost controls and lower selling and distribution costs associated with lower turnover.

 

Taxation at 26.3% (2023: 26.7%) is broadly unchanged from the previous year.

 

Our businesses and international markets

 

Our UK businesses Polyflor and Riverside were successful in expanding sales volumes of our manufactured products i.e. our ranges of sheet vinyl, despite muted demand in the early months of the period in part due to economic uncertainty and concerns over the Autumn budget which was exacerbated by some destocking within the UK distribution trade. Sales of luxury vinyl tiles were slightly weaker as they included products aimed at the consumer market which faced the negatives of consumer spending constraints and a subdued UK housing sector. Polyflor supplied flooring to the Svalbard Folkehøgskole project which was a Regional Winner in the Society of British & International Interior Design Awards (SBID) and of the many projects supplied during the year were Bentley Motors, Crewe; The Heinz "57" factory at Kitt Green, Wigan; the Co-Op Live Arena in Manchester and the Football Association HQ at St George's Park in Burton-on-Trent.

 

During the period we undertook significant capital work on our production lines at both Teesside and Radcliffe. At Teesside the work was on our ultraviolet curing plant and upgrades to the mixing area whilst in Radcliffe we installed new edge trim granulators and renewed the calender bowls on one of the main production lines. Both necessitated plant shutdowns that adversely affected output. UK sales are the bedrock of the Group and the result that we achieved in the UK was of great benefit to our overall performance.

 

Our German and Central European businesses are operating in an economic climate characterised by material uncertainty. Despite ongoing demand, low consumer confidence related to energy concerns and the ongoing Ukraine war have impacted house building. Notwithstanding these headwinds, we are pleased to report that our business has had some success. In Germany, Objectflor continues to supply into refurbishment and new store openings across a wide range of retail store chains including Kodi Stores, Höffner stores, Jeans Fritz, BoFrost, True Bride and Hit supermarkets. In France, some of our key projects include the Institute for Magnetic Fusion Research at Cadarache and the Golf de La Prée  Club at La Rochelle.

 

Objectflor has a core market presence, and this was endorsed through the company being ranked as No 1 against its flooring competitors by BTH Heimtex, the trade magazine for floor coverings. Readers of BTH Heimtex are managers, opinion leaders and decision makers in specialist shops, interior decorators, wholesale companies and the construction industry.

 

We reported a solid performance in Canada, despite a slight fall back from last year's record first half turnover. It is encouraging that despite severe uncertainties in the Canadian economy the local management report a good pipeline of secured and probable projects which gives us confidence for the second half year and beyond. This will be supported by a strengthening of our sales representation in the region.

 

Sales in the APAC region were mixed with Australia and New Zealand reporting double digit declines in turnover. Australia faced some of the longest covid lockdowns, and government initiatives to stimulate the economy have been focused on road building rather than infrastructure with flooring. GDP in the year to December 2024 rose 1.3% and, whilst this is very low against the long term averages, it should point to the beginning of a return of confidence.

 

New Zealand also has faced one of the longest periods of recession in 30 years but this seems to have ended, albeit with the slimmest of margins. Overhead control is the primary focus for the moment, most notably with the closure of one of our warehouses in New Zealand, a general business reorganisation and a recruitment freeze.

 

We are however pleased to report continued progress in Malaysia and South Asia. In Southeast Asia, we grew sales across each country as we increased the number of distributors in the region (in Vietnam and Thailand) feeding from our Malaysian warehouse. The beneficial effects from the new free trade agreement with the UK (from December 2024) will almost certainly add stimulus to our business. The reductions in "red tape" arising from the trade agreement are particularly beneficial to trade in the region.

 

North Asia, notably China, Hong Kong and South Korea, is a region that is managed from Shanghai. We have incorporated the business in Hong Kong SAR to the similar structures that we have elsewhere offering local invoicing, local representation and technical team support for installers and contractors. There is a degree of upturn in our sales though it remains well below pre-covid levels and was affected by the period when we could not manufacture sufficient product nor find shipping routes to China for some considerable time. Those obstacles no longer remain and projects such as Sun Yat-sen University Cancer Center in Guangzhou, China reflect our progress.

 

In the rest of the world, revenue performance has been generally more positive with double digit growth in the USA and the Mediterranean region and particularly Spain. There were slight declines against the comparatives in the Middle East and South America, but both are comfortably ahead of the 2022 comparatives. Each of these markets are largely led by new-build projects and we remain confident of ongoing success. In South America we attended several trade exhibitions: Hospitalar Sao Paulo, Brazil, The Colombian Association of Hospital Architects and The Engineers (ACAIH) International Congress, Bogota, Colombia, and The Chilean Association of Hospital Architecture (AARQHOS) Congress for Healthcare infrastructure, Santiago, Chile. These underline our continued growth in the region and help cement the reputation we have globally as key providers of healthcare flooring. Once again, the range of projects supplied is diverse with MM Hospital in Ambala, Punjab, Emmanuel College in Point Cook, Australia and Trondenes Fort, near Harstad, Norway.

 

Working capital, cash flow earnings per share and dividend

 

Since the start of the financial year, we have distributed £25.0 million in dividends and paid corporation taxes of £8.2 million. In addition, capital expenditure over the same period was £2.6 million. The ongoing focus on manufacturing excellence greatly assists our success in global flooring projects such as the SiNIX Group Abi Gothenburg which has been nominated for best designed office 2024 in Sweden.

 

The cash inflow from operations at £25.3 million (2023: £33.6 million) is lower than last year largely due to increased inventories. Inventories increased for two principal reasons. Firstly, the comparative was lower and inventories were affected by the late shipments because of shipping delays caused by the Red Sea crisis. And secondly, there were launch stocks for new ranges being launched post year end at trade shows in January and February 2025.

 

Our cash position stands at £63.7 million as of 31 December 2024 (2023: £62.4 million). Our robust balance sheet continues to be a key strength.

 

Having regard to our cash and profitability, we have decided to declare an interim dividend of 2.75p per share (2023: 2.50p), an increase of 10%. This dividend will be payable on 6 June 2025 to those shareholders on the register as of 9 May 2025.

 

Sustainability and the environment

 

Recofloor, our recycling initiative (principally in the UK) continues to be looked upon as a model example of manufacturer led initiatives and Recofloor won a Gold Award in 'The Green Apple Environment Awards' which annually recognise, reward and promote environmental best practice worldwide, presented at a ceremony at Kensington Palace in November 2024.

 

Current trading and outlook

 

In this trading period we have seen evidence of restricted government spending in many economies. For example, the UK, Central Europe (Germany and France in particular) and within the APAC region Australia and New Zealand. In the UK hospitals, schools, prisons and other government buildings all are in need of significant rebuilding or major refurbishment and investment which, to date, seems to have not flowed into the appropriate budgets. This will change, we believe, over the course of 2025 and we would expect to see a stimulation to sales. Additionally, the UK housing sector has continued to be subdued but the reform of planning and mandatory targets should pave the way to push through the acute housing crisis again giving us confidence in improved demand.

 

We are pleased to see that H2 has started well and in January 2025 UK sales, which are the bedrock of the Group, were 9% ahead of the comparative.

 

The worldwide breadth of projects such as The Palace Balneo & Spa Hotel in Bulgaria

and the Wiloo Salud Dental Infantil in Barcelona are just two examples of the scope of ongoing goodwill that three generations of exporting flooring has provided James Halstead.

 

The fundamentals of our product ranges and routes to market are well established and the markets in which we operate continue to provide the demand that, despite short term impediments, gives us confidence in the future and another year of progress.

 

 

 

 

Gordon Oliver

Chief Executive

27 March 2025

 

 

 

 

 

Consolidated Income Statement

for the half-year ended 31 December 2024

 

 

Half-year 

ended 

31.12.24 

£'000 

 

Half-year 

ended 

31.12.23 

£'000 

 

Year 

ended 

30.06.24 

£'000 

 

Revenue

130,090 

136,451 

274,881 

 

Operating profit

27,065 

26,213 

53,907 

Finance income

1,532 

1,339 

2,642 

Finance cost

(134)

(156)

(325)

 

Profit before income tax

28,463 

27,396 

56,224 

 

Income tax expense

(7,492)

(7,317)

(14,704)

 

Profit for the period

20,971 

20,079 

41,520 

 

 

Earnings per ordinary share of 5p:

 

- basic

5.0p

4.8p

10.0p

- diluted

5.0p

4.8p

10.0p

 

 

 

 

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 2024

 

 

 

Half-year 

ended 

31.12.24 

£'000 

 

Half-year 

ended 

31.12.23 

£'000 

 

Year 

ended 

30.06.24 

£'000 

 

Profit for the period

20,971 

20,079 

41,520 

 

Other comprehensive income net of tax:

 

Remeasurement of the net defined benefit liability

(622)

(959)

564 

Foreign currency translation differences

(2,032)

439 

(248)

Fair value movements on hedging instruments

1,055 

(1,086)

(472)

 

Other comprehensive income for the period net of tax

 

(1,599)

 

(1,606)

(156)

 

Total comprehensive income for the period

19,372 

18,473 

41,364 

 

 

Attributable to equity holders of the parent

19,372 

18,473 

41,364 

 

 

 

Consolidated Balance Sheet

as at 31 December 2024

 

Half-year 

ended 

31.12.24 

£'000 

Half-year 

ended 

31.12.23 

£'000 

Year 

ended 

30.06.24 

£'000 

Non-current assets

 

Intangible assets

3,232 

3,232 

3,232 

Property, plant and equipment

35,370 

36,116 

34,965 

Right of use assets

5,674 

6,804 

6,209 

Retirement benefit obligations

14 

Deferred tax

221 

118 

214 

44,497 

46,270 

44,634 

Current assets

 

Inventories

87,374 

83,118 

82,268 

Trade and other receivables

33,995 

35,623 

44,042 

Derivative financial instruments

2,117 

60 

482 

Current tax

Cash and cash equivalents

2,124 

63,683 

1,012 

62,420 

1,287 

74,282 

189,293 

182,233 

202,361 

 

 

Total assets

233,790 

228,503 

246,995 

 

 

 

Current liabilities

 

 

Trade and other payables

49,967 

49,173 

57,487 

Derivative financial instruments

83 

735 

106 

Current tax

273 

Lease liabilities

2,704 

2,586 

2,707 

 

52,754 

52,494 

60,573 

 

 

Non-current liabilities

 

Retirement benefit obligations

561 

2,240 

Other payables

339 

408 

410 

Lease liabilities

3,115 

4,359 

3,680 

Preference shares

200 

200 

200 

Deferred tax

 

1,155 

62 

855 

 

5,370 

7,269 

5,145 

 

 

Total liabilities

58,124 

59,763 

65,718 

 

 

Net assets

175,666 

168,740 

181,277 

 

Equity

 

Equity share capital

20,839 

20,838 

20,839 

Equity share capital (B shares)

160 

160 

160 

20,999 

20,998 

20,999 

Share premium account

55 

13 

55 

Currency translation reserve

1,814 

4,533 

3,846 

Hedging reserve

1,389 

(280)

334 

Retained earnings

151,409 

143,476 

156,043 

Total equity attributable to shareholders of the parent

175,666 

168,740 

181,277 

 

 

 

 

 

Consolidated Cash Flow Statement

for the half-year ended 31 December 2024

 

Half-year 

ended 

31.12.24 

£'000 

Half-year 

ended 

31.12.23 

£'000 

Year 

ended 

30.06.24 

£'000 

 

Profit for the period

20,971 

20,079 

41,520 

Income tax expense

7,492 

7,317 

14,704 

Profit before income tax

28,463 

27,396 

56,224 

Finance cost

134 

156 

325 

Finance income

(1,532)

(1,339)

(2,642)

Operating profit

27,065 

26,213 

53,907 

Depreciation of property, plant & equipment

1,883 

1,859 

4,093 

Depreciation of right of use assets

1,406 

1,496 

3,046 

Profit on sale of property, plant and equipment

(79)

(20)

(75)

Defined benefit pension scheme employer contributions paid

 

(250)

 

(531)

 (781)

Change in fair value of financial instruments

(65)

27 

Share based payments

24 

16 

39 

(Increase) /decrease in inventories

(6,889)

4,832 

4,884 

Decrease in trade and other receivables

9,699 

11,669 

2,901 

(Decrease) in trade and other payables

(7,491)

(11,961)

(3,263)

Cash inflow from operations

25,303 

33,573 

64,778 

Taxation paid

(8,162)

(8,234)

(15,450)

Cash inflow from operating activities

17,141 

25,339 

49,328 

 

Interest received

1,528 

1,339 

2,642 

Purchase of property, plant and equipment

(2,596)

(2,058)

(3,313)

Proceeds from disposal of property, plant and equipment

132 

38 

108 

Cash outflow from investing activities

(936)

(681)

(563)

 

 

Interest paid

(7)

(10)

(24)

Lease interest paid

(127)

(114)

(242)

Lease capital paid

(1,422)

(1,474)

(2,981)

Equity dividends paid

(25,007)

(23,963)

(34,383)

Shares issued

43 

Cash outflow from financing activities

(26,563)

(25,561)

(37,587)

 

 

Net (decrease) / increase in cash and cash equivalents

(10,358)

(903)

11,178 

 

Effect of exchange differences on cash and cash equivalents

 

(241)

 

101 

 

(118)

Cash and cash equivalents at start of period

74,282 

63,222 

63,222 

 

Cash and cash equivalents at end of period

63,683 

62,420 

74,282 

 

 

Notes to the Interim Results

for the half-year ended 31 December 2024

 

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 2024.

 

The figures for the year ended 30 June 2024 are an abridged statement of the group audited accounts for that year. The financial statements for the year ended 30 June 2024 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 26.3% (2023: 26.7%).

3.

Earnings per share

 

Half-year 

ended 

31.12.24 

£'000  

 

Half-year 

ended 

31.12.23 

£'000  

 

Year 

ended 

30.06.24 

£'000 

Profit for the period

20,971 

20,079 

41,520 

 

Weighted average number of shares in issue

416,786,436 

416,754,052 

416,761,396 

Dilution effect of outstanding share options

- 

33,687 

32,457 

Diluted weighted average number shares

416,786,436 

416,787,739 

416,793,853 

 

Basic earnings per 5p ordinary share

5.0p

4.8p

10.0p

Diluted earnings per 5p ordinary share

5.0p

4.8p

10.0p

 

 

 

4.

Dividends

Half-year 

ended 

31.12.24 

£'000  

Half-year 

ended 

31.12.23 

£'000  

Year 

ended 

30.06.24 

£'000

Equity dividends paid:

 

 

 

Final dividend for the year ended 30 June 2023

- 

23,963 

23,963 

Interim dividend for the year ended 30 June 2024

- 

- 

10,420 

Final dividend for the year ended 30 June 2024

25,007 

- 

 

25,007 

23,963 

34,383 

 

Equity dividends declared/proposed after the end of the period

 

 

Interim dividend

11,462 

10,420 

Final dividend

- 

25,007 

 

 

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

 

 

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, paid on 14 June 2024

6.00p final dividend for the year ended 30 June 2024, paid on 13 December 2024

 

2.75p interim dividend for the year ended 30 June 2025, payable on 6 June 2025, to those shareholders on the register at 9 May 2025

 

5.

 

 

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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