22nd Sep 2006 07:00
James Halstead PLC22 September 2006 22 September 2006 JAMES HALSTEAD PLC PRELIMINARY ANNOUNCEMENT OF AUDITED RESULTS FOR THE YEAR ENDED 30 JUNE 2006 Key Figures • Turnover increased to £126 million (2005: £112.4 million) - up 12% • Pre tax profit increased to £17.48 million (2005: £13.76 million) - up 27% • Total dividend per ordinary share for the year at 12.25p (2005: 9.875p) - up 24% • Final dividend per ordinary share proposed of 8p ( 2005 : 6.375p) - up 25% • Underlying earnings per 5p ordinary share 23.8p (2005: 19.2p) - up 24% • Net cash inflow from operating activities £25.13 million (2005 : £19.87 million) - up 26% The Chairman, Geoffrey Halstead, said: "This is an excellent performance particularly against a climate of adverse rawmaterial prices, and energy costs. In recent weeks, we have committed funds forfurther expansion of both distribution facilities and manufacturing capacity andI look forward to the next year with optimism". Enquiries: Mark Halstead, Chief Executive Gordon Oliver, Finance Director Telephone: 0161 767 2500 Nick Lyon - Hudson Sandler Telephone: 020 7796 4133 CHAIRMAN'S STATEMENT I am very pleased to report, once again, a record set of results. Our profitbefore taxation is £17.5 million which is some 27% ahead of the £13.8 million oflast year. The driving factor behind this result is increased turnover and theGroup reports sales of £126 million (2005 : £112.4 million) which is an increaseof 12%. The year has seen the company face significant raw material and energycost increases. However, this excellent set of results, I feel, vindicates theconfidence I expressed last year. Dividend The Board proposes to increase the final dividend to 8p (2005 : 6.375p), anincrease of 25.5%. The total dividend for the year will therefore be 12.25p(2005 : 9.875p) an increase of 24%. Acknowledgements Once again our team succeeded in facing the challenge of tough markets to expandour operations and on behalf of the Board I extend our thanks for their efforts. In April 2006 the Group gained recognition by receiving the Queen's Award forEnterprise in the category of International Trade. Any successful exporterrelies on a sound base in their home market and this award is the result ofsolid focus by our sales teams in both the UK and overseas. Outlook In recent weeks we have committed funds for further expansion of both ourdistribution facilities and our manufacturing capacity and given a continuationof current demand, notwithstanding continued upward pressure on raw materialcosts, I look forward to the next year with continued confidence for anotheryear of progress. Geoffrey Halstead, Chairman CHIEF EXECUTIVE'S REPORT The year was not easy. There was a very challenging environment with adverseraw material prices and energy costs. However, a very strong sales performanceand increased productivity mitigated these cost increases. With turnoverincreased to £126 million (an uplift of 12%) the additional volume offsetsignificant increases in electricity costs and in polymer prices. Gross marginsslightly improved. Profit before tax of £17.5 million (2005 : £13.8 million) was 27% ahead of lastyear. Once again our subsidiaries effectively managed working capital, particularlystock. Consequently, net cash inflow from operations was 26% ahead of last yearand the year-end net funds are £25.6 million (2005 : £25.5 million). Given thespecial dividend of £12.7 million paid in the year this was a satisfyingachievement. During the year the Group was presented with the Queen's Award for Enterprise.This was welcome recognition of our efforts in overseas markets and it ispleasing to report further growth in this area. Our international turnover hasreached £69.7 million, some 14% ahead of the corresponding £61.2 million for2005. The projects undertaken are numerous but include Cross River StateHospital in Calabar, Nigeria; Costa Coffee shops in India; the Siemens Arena inVilnius, Lithuania and Bagram Airbase Hospital in Afghanistan. Our product isactively and regularly sold in over 60 countries. Even though the sales activity has been very good in the year, export marketshave further potential and we continue to invest in our distribution chainoverseas. The UK market has also been strong. Total UK sales growth of 10% (2006 : £56.3million; 2005 : £51.1 million) does not fully reflect our growth in flooring asturnover at Phoenix (which has now fully exited motorcycle clothing and the lowend of the crash helmet market) fell. Focusing solely on flooring, the UKimprovement is 16%. Given the inability to increase prices in this market, dueto competitive conditions, this is a laudable achievement. The sales growth in volume terms was not linked to any one product range: acrossour main product ranges, marbleised, non-directional, safety and luxury vinyltile we achieved an average 15% growth in volume. Our flooring product has been installed in Arsenal's new Emirates Stadium, inthe redeveloped Ascot racecourse and in the new Derby Hospital. Looking at our subsidiaries : Polyflor, (our UK manufacturing base and a major exporter), had a good year ofgrowth despite the previously mentioned cost increases. Turnover was 16% aheadof last year with strong sales both in the UK and overseas and the company wasfocused on maximising previous capital investments thus creating improvements inoutput and productivity. The UK market has undoubtedly grown but indicationssuggest Polyflor also increased its market share in resilient floor coverings. Objectflor, (based in Cologne, Germany). This company acts not just as ourstocking point but as our European face. The company markets its flooringranges (supplied in part by Polyflor) and offers technical back-up, localmarketing and sales support through its sales force and its sub-distributorsacross Western Europe. Turnover increased 20% and projects completed in theyear included Ikea's head office in Wallau, Germany and all the restaurants onthe Velaro high speed trains in Spain. Karndean International GmbH, (based in Germany). The company specialises inluxury vinyl tiles and traded very well with turnover 27% ahead of last year. Polyflor Australia. With warehousing facilities across the country this companyis a significant player in the Australian commercial flooring market. Thecompany supports day to day flooring sales from its premises in each state and adedicated contract sales force is aimed at winning contracts in projectsnationwide. During the year our central warehouse, based in Melbourne, wasrelocated to much larger premises. Turnover increased by 12%. During the year the company supplied flooring to the Melbourne Cricket Ground,one of the most prestigious contracts available this year. Halstead Flooring Concepts, (based in New Zealand), operates from threelocations. This long established distributor continues to be a solid part of theinternational team. The company, like others, faced competition in its carpetranges and was not alone in facing difficult trading in that sector. Contractvinyl collections performed more robustly. Polyflor Nordic. Incorporating Polyflor Norway and Falck Design (Sweden), thisdivision continues to perform well. Turnover growth in this division has been19% in the year. The luxury vinyl tile range, Megastrong, has been fullyre-vamped and whilst this happened towards the end of the year, salesindications are good. Phoenix Distribution, (based in Stoke-on-Trent), is a distributor of motorcyclerelated accessories. The company is much reduced in size following prior yeardecisions to focus on the premium brand Arai. Last year, our motorcycleclothing sales (Belstaff) ceased and this year saw the final exit from thesecondary brand of 'low end' crash helmets. Reduced turnover was inevitable andplanned as the brand portfolio shrank, but gross margin and underlying profit(before exceptionals) were improved. Core Arai sales were improved by 4%. Themarket place remains fragile but Phoenix is firmly focused on one of the fewtrue performance brands and we look forward to building on this base. Outlook This year was the most successful in our history and our subsidiaries andtrading partners are well placed to continue this success. There are areaswhere improved performance can be expected and whilst next year will seeinvestment in new production facilities, the benefits accruing will be late inthe year and more likely in 2007/08. Overall the new financial year should seea continuation of growth in turnover and profitability and I expect continuedprogress. Mark Halstead, Chief Executive Accounting Standards and Prior Year Adjustments There are new Financial Reporting Standards which have an effect on theseaccounts. • FRS 17 - Retirement Benefits requires the inclusion of a value for the defined benefit scheme deficit in the Balance Sheet as a liability. • FRS 21 - Events after the Balance Sheet Date which means that there is no longer an accrual for dividends proposed after the year end date nor are dividends paid required to be shown on the face of the Profit & Loss Account. • FRS25 - Financial Instruments which requires reclassification of preference shares and C preference shares as debt rather than non-equity share capital. There is a consequent reclassification of preference dividend to the interest line. In summary the 2005 Accounts are restated as follows : • Profit after taxation has been reduced by £41,000 being FRS 17 adjustments of £30,000 ( the net of tax effect of current service cost and other finance income and contributions) and preference dividend of £11,000. • The Balance Sheet has been altered from £57,475,000 to £47,375,000 by the reclassification of £3,537,000 of preference shares to debt; by the add back of £3,227,000 of dividend proposed and by the inclusion of the FRS 17 deficit of £9,790,000. A final adjustment to the comparatives was made in respect of the sharesub-division, on 27 February 2006. The company's 10p ordinary shares weresub-divided into two new ordinary shares of 5p each. Audited Consolidated Profit and Loss Account for the year ended 30 June 2006 2006 2005 As restated £'000 £'000 Turnover 126,024 112,353 Operating profit 16,567 12,733 _____________ _____________ Interest and other finance costs 914 1,027 _____________ _____________ Profit on ordinary activities before taxation 17,481 13,760 Taxation on ordinary activities (5,647) (4,276) _____________ _____________ Profit on ordinary activities after taxation 11,834 9,484 _____________ _____________ Earnings per ordinary share (as defined in Note 4)-basic earnings / (loss) per ordinary share 23.3p (0.3)p-underlying earnings per ordinary share 23.8p 19.2p-diluted earnings / (loss) per ordinary share 23.2p (0.3)p All the above results derive from continuing operations. Audited Consolidated Balance Sheet as at 30 June 2006 2006 2005 As restated £'000 £'000 Fixed assetsIntangible assets 3,232 3,460Tangible assets 18,687 20,741 _____________ _____________ 21,919 24,201 _____________ _____________ Current assetsStocks 19,770 20,029Debtors 21,093 18,887Cash at bank, in hand and on short-term deposit 30,050 31,675 _____________ _____________ 70,913 70,591 _____________ _____________ Creditors - amounts falling due within one year (37,685) (31,140) _____________ _____________Net current assets 33,228 39,451 _____________ _____________Total assets less current liabilities 55,147 63,652 _____________ _____________ Creditors - amounts falling due after more than one year (4,441) (6,134)Provisions for liabilities and charges - (353) _____________ _____________Net assets excluding pension scheme deficit 50,706 57,165 Pension scheme deficit (8,681) (9,790) _____________ _____________ 42,025 47,375 _____________ _____________ Capital and reservesEquity share capital 2,543 2,531Equity share capital (B shares) 160 160 _____________ _____________Called up share capital 2,703 2,691 Share premium account 321 48Revaluation reserve 3,544 3,544Capital redemption reserve 3,449 2,942Profit and loss account 32,008 38,150 _____________ _____________ 42,025 47,375 _____________ _____________ Audited Consolidated Cash Flow Statement for the year ended 30 June 2006 2006 2005 As restated £'000 £'000 Net cash inflow from operating activities 25,130 19,866 Returns on investments and servicing of finance 856 1,274 Return of capital - B share dividend - (9,626) Taxation paid (6,866) (5,860) Capital expenditure (1,035) (5,827) Acquisitions and disposals - (1,390) Equity dividends paid (18,113) (4,743) _____________ _____________Cash outflow before financing (28) (6,306) Financing:Shares issued 285 406(Decrease) / increase in debt (1,794) 401 _____________ _____________Decrease in cash (1,537) (5,499) _____________ _____________ Reconciliation of net cash flow to movement in net fundsDecrease in cash (1,537) (5,499)Movement in debt 1,794 (401) _____________ _____________ Change in net funds resulting from cash flows 257 (5,900)Effect of exchange differences (151) 129Creation of C Shares - (5,559) _____________ _____________Movement in net funds for the period 106 (11,330) Net funds at start of year 25,515 36,845 _____________ _____________Net funds at end of year 25,621 25,515 _____________ _____________ Statement of Total Recognised Gains and Losses for the year ended 30 June 2006 2006 2005 As restated £'000 £'000 Profit for the financial year 11,834 9,484Currency translation differences on foreign currency net investments (438) 597Actuarial gain / (loss) on the pension scheme 1,546 (1,748)Movement on deferred tax asset relating to the pension scheme (464) 524 _____________ _____________Total recognised gains relating to the year 12,478 8,857 _____________Prior year adjustment (implementation of FRS 17) (9,790) _____________Total recognised gains since the last report 2,688 _____________ Reconciliation of Movements in Shareholders' Funds for the year ended 30 June 2006 2006 2005 As restated £'000 £'000 Profit for the financial year 11,834 9,484Equity dividends paid (18,113) (14,369) _____________ _____________ (6,279) (4,885)Other recognised gains and losses relating to the year 644 (627)Creation of C shares - (5,559) New share capital subscribed 285 406 _____________ _____________Net decrease in shareholders' funds for the year (5,350) (10,665) Opening equity shareholders' funds 47,375 58,040(originally £57,475,000 before prior year adjustments of £10,100,000) _____________ _____________Closing equity shareholders' funds 42,025 47,375 _____________ _____________ NOTES 1. The final dividend of 8p per ordinary share will be paid on 1 December 2006 to shareholders on the register as at 3 November 2006. The full report and accounts will be posted to shareholders on 20 October 2006. 2. The financial information on pages 7 to 11 does not represent the statutory accounts of the Group. Statutory accounts for the year ended 30 June 2005 have been delivered to the Registrar of Companies, carrying an unqualified audit report and no statement under section 237 (2) or (3) of the Companies Act 1985. 3. Statutory accounts for the year ended 30 June 2006 have not yet been delivered to the Registrar of Companies. They will carry an unqualified audit report and no statement under section 237 (2) or (3) of the Companies Act 1985. 4. Calculation of earnings per ordinary share The company's 10p ordinary shares were sub-divided into two new ordinary sharesof 5p each on 27 February 2006. 2006 2005 As restated £'000 £'000 Profit on ordinary activities after taxation 11,834 9,484 B share dividend - (9,626) _____________ _____________Basic earnings 11,834 (142) Add back B share dividend - 9,626Goodwill amortisation charge 228 213 _____________ _____________Underlying earnings 12,062 9,697 _____________ _____________ Weighted average number of ordinary shares in issue 50,764,031 50,487,932 Weighted average number of ordinary shares in issue 51,008,831 50,732,214(diluted for the effect of outstanding share options) Basic earnings / (loss) per ordinary share 23.3p (0.3)pUnderlying earnings per ordinary share 23.8p 19.2pDiluted earnings / (loss) per ordinary share 23.2p (0.3)p This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
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