31 March 2015

INTERIM RESULTS FOR THE HALF-YEAR ENDED 31 DECEMBER 2014

Key Figures

James Halstead plc, the AIM listed manufacturer and international distributor of commercial floor coverings, reports:

The Chief Executive, Mr. Mark Halstead, commented:

"After 100 years of manufacturing, 67 years as a quoted company and in our 40^th year of increased dividend I am reminded of the famous Kipling quote "gardens are not made by sitting in the shade". We have grown and prospered and I have confidence in the full year result".

                 

CHAIRMAN'S STATEMENT

This company was founded on 10 May 1915 and based at Crow Oak Works Radcliffe. Our humble beginnings were as a business based on the waxing and shower-proofing of cloth for the raincoat market. Today we continue to manufacture on the same site, albeit in a totally different marketplace and I believe few manufacturing companies can claim continuous activity on the same site for 100 years.

By way of celebration, I am most pleased to report an increase in turnover to £117.2 million (2013: £110.9 million), representing growth of 5.7%. The strength of Sterling has impacted upon the figures and the like for like turnover is some 10.3% ahead of last year.

It is also pleasing to report improved pre-tax profit at £21.4 million (2013: £20.4 million), an increase of 5.3%.

Given the strength of our currency here in the UK, the effects on the translation of our results are inevitable but it is gratifying to report continuing steps forward.

Trading

UK trading continues to be solid despite competitor activity and the figures reported for this half year are 9% ahead of the comparative. The UK accounts for just over a third of our total turnover and our position as market leader continues. Our European business has grown by some 6.7% (at constant exchange rates) and our Australasian businesses by just over 11% (again at constant exchange rates). Combined these markets represent some 85% of turnover. I note that our flooring continues to be installed across the world and has reached the Sjøskrenten student hostel in Longyearbyen on the Svalbard archipelago, probably our most northern contract yet and an area where polar bears outnumber people.

Gross margin is marginally ahead of the prior year. There are downward pressures on raw materials which are helpful but it must be noted our competitors also have the advantages of this easing. 

The day to day business is as much about refurbishment as it is new buildings and our sales team have ensured that refurbishment projects as far afield as the Cardiff International Swimming Pool; the Calgary Stampede showground and the extensive Daenisches Bettenlager retail outlets in Germany are part of our extensive list of fitted contracts.

Overheads have grown faster than inflation, which though disappointing is the reality of the nature of these costs and the largest are the infrastructure costs associated with representing our ranges in global markets. The costs are very much in line with planned expenditure and our deeper expansion into new territories, notably the Middle East, India and Canada.

The balance sheet is, as usual, robust with the component showing the largest change being cash which at £46.7 million is 21.2% ahead of the comparative (2013: £38.6 million). This is the result of healthy cash flow from operations of £28.3 million (2013: £20.2 million) and after dividends paid out of £14.5 million (2013: £ 12.4 million).

Earnings per Share

Our basic earnings per share at 7.8p are 5.4% ahead of the comparative of 7.4p and the Board is pleased to yet again propose an increased interim dividend.

Having regard to cash I am pleased to say that a dividend of 3.142p can be paid (2013: 3.0p), representing a 4.7% increase and this reflects both the strength of earnings and the cash reserves of the Company. This will be payable on 5 June 2015 to those shareholders on the register at the close of business on 8 May 2015.

Outlook

Our portfolio continues to be updated and re-launched with new designs and features: Simplay (a loose lay tile) was awarded the accolade of Best Flooring Innovation by the influential EuroDecor magazine and Expona Flow (our design sheet, manufactured in Teesside) was launched to some acclaim at the BAU exhibition in Munich this January. Just one of the refurbishments that continue to be supplied is the factory shop at Cadbury World in Bourneville.

Recofloor, our award winning recycling scheme, has collected record amounts of waste destined for landfill and returned it to the manufacturing loop and we are the first flooring manufacturer to achieve BES 6001 (Responsible Sourcing) underlining our approach of sound and demonstrable environmental responsibility.

There are many positives to our outlook and in the difficult times of recent years we have delivered the gains we had targeted. Once again we have increased our market share but the current strength of Sterling to near record levels presents more challenges and headwinds in the coming months. That said, the quote of Churchill that "kites rise highest against the wind, not with it" will be our mantra.

I remain confident of further progress during the rest of the year.

Geoffrey Halstead

Chairman

31 March 2015

Consolidated Income Statement

for the half-year ended 31 December 2014

All amounts relate to continuing operations.

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

Consolidated Balance Sheet

as at 31 December 2014

Consolidated Cash Flow Statement

for the half-year ended 31 December 2014

Consolidated Statement of Comprehensive Income

for the half-year ended 31 December 2014

Notes to the Interim Results

for the half-year ended 31 December 2014

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