Report & Accounts 2024
Expona Commercial PUR
House of Books & Friends, Manchester, UK
Expona Commercial PUR
Booth's Supermarket, Clitheroe, Lancashire
Directors and Advisers
Directors
J A Wild
M Halstead
G R Oliver FCA MCT
D W Drillingcourt FCA
R P Whiting
M J Halstead
D A Harrison ACA
Secretary
D N Fletcher ACMA ACG
Registered office
Beechfield
Hollinhurst Road
Radcliffe
Manchester
M26 1JN
Company registration No.
140269
Website
www.jameshalstead.com
Bankers
National Westminster Bank plc
1 Hardman Boulevard
Manchester
M3 3AQ
Registrars
Link Group
Central Square
29 Wellington Street
Leeds
LS1 4DL
Nominated adviser and stockbrokers
Panmure Liberum Limited
Ropemaker Place
25 Ropemaker Street
London
EC2Y 9LY
Stockbrokers
Zeus Capital Limited
24 Martin Lane
London
EC4R 0DR
Independent auditor
BDO LLP
3 Hardman Street
Spinningfields
Manchester
M3 3AT
Geoffery Halstead, Life President of James Halstead plc
Geoffrey was born on the 3 February 1930 in a hospital in Radcliffe to John Halstead and Elizabeth (née Valentine), who resided
at the time in a two up two down terraced house on Suthers Street, Radcliffe, close to the factory entrance.
Geoffrey’s grandfather (James) had founded the textile business that bears his name, some 15 years prior to Geoffrey’s birth
and in 1922 he bought a parcel of land, from Lord Derby, surrounding his textile business. The stables from that land were
converted to a family home and this, together with the adjoining property, still remain the family residence. The foresight of
James Halstead was such that the Company’s Head Office and main factory still occupy this 20-acre site in Radcliffe.
Geoffrey joined the firm in 1947 as the business moved away from textiles into new ventures, one of which was Poly-Flor
resilient sheet, claimed to be the first unsupported vinyl sheet flooring. This was a significant move away from textiles and
coatings, which was his grandfather’s original business. He was the first Sales Manager of the embryonic business which later
became the highly successful Contract Flooring Division. By the late 1950s the core of the Group was Poly-Flor and Belstaff,
the latter having been a major customer of James Halstead since 1924 and was acquired in 1948 when the Company was
listed on the London Stock Exchange.
He led the expansion of vinyl sheet flooring from the beginnings of the Polyflor brand. By the early 1960s, Poly-Flor had
become the significant part of the Group and received a glowing review in the August 1961 issue of the Consumer Association
magazine (“Which”), confirming the product’s status in the UK. Geoffrey was heavily involved in the export of the flooring and
travelled extensively across South Africa, Australia and the Middle East, promoting the product and expanding sales.
By the early 1970s bold decisions were needed. Geoffrey recognised the need to expand the limited product range and the
decision to purchase a calender capable of manufacturing a 2-metre-wide flooring gave it impetus to go forward and establish
a real advantage over the competition. Similarly, during the “oil crisis” of 1974, the Company was heavily indebted and
Geoffrey, with the support of shareholders took the helm as Chief Executive and returned the Group to a sound footing and
cleared the debt. It is from this date that the Company can trace its unbroken chain of increased dividends (49 years and
counting).
Exports and travel were both passions of Geoffrey, from the early days of vinyl sheet flooring. This was illustrated when at The
Frankfurt Flooring Exhibition, he took the Company’s display kit in the works van to Germany to personally man a small stand.
There was also progress in Asia where Geoffrey was happy to stop over, enjoying Chinese food, and where he was highly
regarded by customers in Singapore, Malaysia, and Hong Kong. Customers were impressed at seeing the imposing figure of our
Chief Executive on the exhibition stand in Hong Kong. He also visited South Africa, North America, Australia and New Zealand,
and in India, mindful of the subcontinents perhaps unjustified reputation, he ate cold baked beans in the bedroom of a 5 Star
hotel.
Establishing a portfolio of safety flooring, specialist conductive flooring, luxury vinyl tiles and commercial sheet flooring was
a fantastic achievement, which Geoffrey realised over his lifetime. Under Geoffrey’s stewardship, a small relatively unknown
business in North Manchester become a brand leader in its field and the Company achieved a reputation unsurpassed in the
flooring industry.
Always generous in his praise of Management and the Workforce during his tenure as CEO and Chairman, he watched the
business expand as it concentrated on its core business of flooring. James Halstead plc has been a multiple recipient of the
Queen’s Awards (twice for export and once for innovation).
Geoffrey joined the company shortly prior to its flotation and was employed by the Company for 70 years, 55 years of which,
he served as a director and for 17 years, until 1 December 2017, as Group Chairman. Since then, until his passing, Geoffrey
Halstead had been the Honorary Life President of the Group.
Geoffrey Halstead, businessman and manufacturer, was born on the 3 February 1930 and died at home on the 22 August 2024,
aged 94. He is survived by his wife Evelyn (née Lawrence), whom he married in 1954, his children Mark and Gayle, his
grandchildren and great grandchildren.
Contents
Strategic Report
Chairman’s Statement 2
Chief Executive’s Review 4
Financial Director’s Review 8
Section 172 Statement 12
Climate-related Financial Disclosures 14
Sustainability and the environment 19
Governance
Report of the Directors 20
Board Report on Remuneration 24
Corporate Governance 25
Financial Statements
Independent Auditor’s Report to the Members
of James Halstead plc 31
Consolidated Income Statement 37
Consolidated Statement of Comprehensive Income 38
Consolidated Balance Sheet 39
Consolidated Statement of Changes in Equity 40
Consolidated Cash Flow Statement 41
Notes to the Consolidated Financial Statements 42
Company Balance Sheet 67
Company Statement of Changes in Equity 68
Notes to the Company Financial Statements 69
Supplementary Information
Ten Year Summary 76
Shareholder Information 77
Notice of Annual General Meeting 78
1
2
Chairman’s Statement
continued
Results
Revenue for the year at £274.9m (2023: £303.6m) was
9.4% behind the comparative year largely driven by
headwinds in the UK and Europe. The year was largely
positive and the challenges that the Group faced in its
major markets were not unexpected and appropriate
mitigating actions were already in place. There was further
disruption to world trade routes as a result of the ongoing
situation in the Red Sea. This has extended delivery times
to many export markets, in some cases impacting sales and
increasing freight transportation costs.
The geographic spread and diverse sectors to which we
supply flooring can be illustrated this year by installations
such as the Venetis Chain Stores (Bakeries) in Greece,
founded in 1948, Vox Cinemas in Kuwait and the incredible
Star of the Seas, which is the second ship from the Icon
class mega cruisers, that will be built in Finland.
The reported profit before tax for the year of £56.2m
(2023: £52.1m) was 7.9% ahead of the prior year
comparative, a good result against a challenging array of
market conditions.
Gross margins improved in most of our major markets.
Overall, the margins moved from 38% to 44%. Principally
this increase was driven by our manufacturing plants which
ran longer hours thus improving plant utilisation, and
output volumes.
Selling and distribution costs at £53.0m (2023: £53.3m)
were slightly below last year and reflect the lower volume
of sales (particularly in UK and Europe). Expenses were also
mitigated by reduced freight costs and restricted
marketing and sampling costs.
Administration overheads at £14.3m (2023: £10.5m) are
some 35.7% higher than last year. However, the
comparative included a receipt of £1.6m regarding an
insurance claim receipt (a one off relating to a major
breakdown at the Radcliffe site dating back to 2020)
together with an increase in IT expenditure (Australia and
New Zealand with new IT systems and major upgrades to
our systems security in the UK) representing about 5% of
the increase in overheads.
The standard rate of tax in the UK for the year increased to
25% (2023: 20.5%) which in effect added £2.6m to tax
charges. As a consequence, profit after tax was £41.5m
(2023: £42.4m), a decrease of 2.1%.
Consequent to the rise in the effective rate of tax, earnings
per share are at 10.0p (2023: 10.2p) which is a decrease of
2%.
Re-investment
Over many years our strategy has also included a policy of
continual investment in both process improvement and in
product development to improve output efficiency and our
product offering. To maintain our competitiveness as
manufacturers supplying global markets, we continue to
commit to capital investment in the upgrading of plant for
efficiency, flexibility, durability and to reduce energy usage.
During the Covid pandemic, and for a period afterward, we
had to severely curtail some investment and production
improvements. In part this was because of the
unavailability of labour due to the covid self-certification of
workers and to far greater degree the severe shortage of
spares and parts due to the disruption of global supply
chains. Consequently, this year has been significant for
investment in our various production lines which will
continue to underpin growth.
At Riverside two major capital items were approved and
work initiated which represented a £350,000 investment.
Firstly, a new drive system for the press and registration
control systems has been updated and improved. The new
equipment will also use less energy.
In addition, preparations were made for replacing the
Teesside plant’s fume abatement systems. This will increase
line efficiency, increase the level of fume extraction and
removal thereby improving air quality, line performance
and using less energy. This is a £1.6 million investment.
Royton (our UK main warehouse) is undertaking a full
upgrade to modern LED lighting at the cost of £200,000
and our Radcliffe plant is undertaking preparatory work for
a £400,000 investment in solar panels where 100% of the
energy will be used on site.
The breadth of change has been significant and has already
led to improved productivity and margin improvement.
Sustainability, social responsibility
and the environment
We have recently published our 19th sustainability report
that details our actions and ambitions in the areas of the
environment, sustainability and social responsibility
(available for download from our website).
Climate change has led to a greater focus on carbon
dioxide levels but dealing with climate change is not, in our
view, just a matter of trying to highlight any one single
measure such as carbon emissions or setting net zero
3
targets. As a manufacturer in the UK there are basic levels
of environmental legislation that far exceed the standards
of many countries and as users of energy we rely on
government policies to achieve the greater use of greener
energy. In addition, we look to go far beyond that in our
ethical sourcing and we strive to have our claims
independently audited to credible standards – none of
which is required of ‘importers’. Further information on
some of the actions that we have taken are referred to in
the Chief Executive’s Review.
Dividend
Cash balances increased to £74.3 million (2023: £63.2
million) helped by a further reduction in our stock-
holdings. The inventory at the year-end is £82.3 million
(2023: £87.4 million) which is about 6% lower than the
prior year comparative.
During the year taxation paid was £15.5 million (2023:
£11.9 million), fixed asset additions of £3.3 million (2023:
£2.9 million) and equity dividends paid of £34.4 million
(2023: £32.3 million).
The interim dividend of 2.5p (2023: 2.25p) was paid in June
2024. The board, having regard to the cash balances and
profitability, is proposing a final dividend of 6.0p (2023:
5.75p) which will mean a total dividend for the year of 8.5p
(2023: 8.0p) an increase of 6.25%. This is a record level of
dividend and marks our 49th year of increased dividend.
This final dividend will be paid on 13 December 2024.
Acknowledgements
Once again, I would like to thank all our colleagues across
the globe for their continued efforts in achieving this year’s
result.
In memoriam
Special acknowledgement must be made to the Life
President, Geoffrey Halstead, who died on 22 August at the
age of 94. Geoffrey was a director of the company for 60
years and guided the first steps that were taken to
manufacture resilient sheet vinyl flooring and to moving
the business from textiles to the focus on Polyflor. He will
be sadly missed by staff, past and present and customers,
suppliers and the many friends who knew him. Our
condolences to the family are heart felt.
Outlook
The results, cash generation and proposed dividend stand
testament to the resilience of the products, the business
and the management of the Company. After 23 years as a
non-executive director with currency crises, the great
financial recession, Brexit and more recently the Covid
recession and the Ukraine/energy inflation recession one
thing has been constant – the Company’s ability to
progress even in the face of adversity.
As announced separately, I am stepping down as Chairman
at the forthcoming AGM. I have been proud to serve as
Chairman since 2017 after many years as a non-executive
director. The Company has a strong team both on the board
and in the subsidiary companies with solid foundations for
continued growth.
Since I joined the board in 2001, turnover is near 300%
higher and profit 525% higher. Quoting the late Sir John
Harvey-Jones, back in 1993, ‘James Halstead has a
consistency of aim and performance, with the results
obtained highlighting sound management principles and
spectacular growth’.
As I step down, the Company’s prospects continue to look
positive into the new financial year and beyond. Projects
such as the International Airport JSM in San Jose, capital of
Costa Rica underline the reach and deep history of our
global sales.
The malaise of the UK and European markets will end, the
deferral of spending due to high inflation and the energy
crisis will ease and our global markets offer continued
opportunity.
James Halstead has operated for more than 100 years,
withstanding and resilient to the numerous market
challenges that it has faced. The Company is pleased to
report a year of profitable growth in FY24 and looks ahead
with confidence in the long term growth strategy.
Anthony Wild
Chairman
30 September 2024
4
Chief Executive’s Review
Our business is, in essence, simple. Our business model is to
manufacture in volume, quality flooring that we sell to
distributors and stockists to satisfy local demand whether
this is via third parties (as in the UK) or via our own
businesses across the globe. Crucial to the success of this
model is to understand, motivate and cajole these stockists
to service the true customer – end users and contractors
within a wide range of sectors.
Each market is given a focus and local management tasked
with achieving targets.
Our various sales teams have secured many prestigious
projects along with scores of thousands of corridors,
stairwells and toilet areas that are the ubiquitous backbone
of our day to day business. Products such as the corporate
headquarters of Lidl Danone and Mitsibushi (in France);
African Medical Centre Of Excellence located in Abuja,
Nigeria; the Katima Mulilo campus of University of Namibia;
St. Jacob’s Medical Center in the city of Stryi, Ukraine and
Hotel Croatia Cavtat a five-star resort and conference
centre in the South Adriatic just 5km from Dubrovnik
airport.
Looking at our businesses:
Objectflor/Karndean and James
Halstead France, our European
operations
The climate for our German and Central European business
remains highly competitive and subdued. Volumes have
been impacted and our turnover in most markets in the
region was below last year with Germany 17% lower.
Official figures suggest building permits issued for new
builds in Germany for the first quarter of 2024 were 21%
down on the previous year.
Though the year started well with more normal rates for
shipping, the issues in the Red Sea have caused disruption
once again in the container shipping industry with vessels
avoiding the Suez Canal and travelling around the Cape. This
added 2/4 weeks in transit times for the supply of LVT, but
also had the knock on effect of tying up containers causing
a shortage and ultimately leading to price increases in
shipping. Whilst costs have not risen to the peaks of the
immediate post Covid period, we have nonetheless
encountered increased costs and our sales were impacted
by our stock availability at the start of 2024 with product
unable to be shipped.
Despite these factors, margins have held up following prices
increases in early 2023 and for much of the year a more
stable freight cost for imports from the Far East.
In addition, overheads were reduced with tight spending
control and profits were above the prior year comparative.
Notable projects included the HARIBO corporate office in
Bonn, Germany, Polo Motorcycle stores in Germany and
XXXLutz furniture stores in Austria.
The lease on the largest of our current warehouses in
continental Europe has been extended and a review of our
warehouse requirements in Germany is under way.
Our business in France was similarly hit by customer
confidence, reduced demand and the stock shortages noted
above which contributed to a disappointing drop in sales
from last year’s highs (-18%). The election turmoil has not
helped, causing uncertainty in the market and the effects of
inflation on budgets and discretionary spend have also
contributed to a decrease in consumer confidence.We have,
however, added to our sales team to give greater coverage
across the whole of France and allow a more dedicated
approach to larger projects. The belief is that this will pull
back volume next year.
As with Germany, the improved margin throughout the 12
months ensured net profit did not suffer.
Polyflor APAC – encompassing
Australia, New Zealand and Asia
Our APAC region is made up of four distinct areas -
Australia, New Zealand, North Asia and South East Asia. To
give a better strategic focus in the region a new reporting
structure has been established to oversee the region as a
whole. These changes are aimed at enhancing collaboration,
aligning strategies and ensuring efficient decision making
across the region creating a stronger network, promoting
regional initiatives and leveraging resources effectively.
In Australia, sales were 15% below the comparative. As
production returned to normal, and stock availability
improved, we were then hit by increased transit times
caused by the Red Sea issues, further delaying stock
reaching our overseas warehouses. Our stockholdings in the
region do, to an extent, act as a buffer to this, and where
possible stock was transferred between countries and states,
but inevitably sales were lost.
This impact of shortages was experienced across all five
warehouses in Australia. If available, stock would be moved
across states, but with high transit costs, margins were
impacted.The stock situation started to correct itself during
the second half of the financial year as stock arrived and we
entered the new financial year better placed to push for
greater volume of sales.
5
Australia did start to benefit from the recent trade
agreement with the UK, (CPTPP), with no duty charged on
purchases from the UK, allowing Polyflor Australia to be
more competitive in the market relative to our European
sourced competition.
New Zealand sales were down 7.6% in the year. The year
started with a slowdown in activity as projects stalled ahead
of the general election in October 2023. As in Australia,
domestic builds in New Zealand have slowed significantly
brought about by high inflation and mortgage rate hikes
which have impacted on consumer spend. Inflation has
started to ease but the government have pulled back on
spending across public facilities, though it is hoped this will
drive more maintenance activities.
With an eye on costs, the decision was taken to close our
smaller warehouse in Christchurch at the end of the year
and move the stock back to the main warehouse facility
Auckland. There has also been a consolidation of some roles
within the wider APAC management team, allowing for
future cost savings.
Our South East Asia business (centred in Malaysia) ended
the year strongly with sales marginally ahead of last year
despite trailing for the majority of the financial year. It was
pleasing to see growth across Singapore, Vietnam, Thailand
and Indonesia. Malaysia itself saw a small fall in sales
compared to last year, affected by reduced purchases by one
major customer. Looking forward, there is positive news
with a significant investment in a ‘Tech Free’ zone in
southern Malaysia.
A change of the senior manager was made in North Asia at
the start of the financial year and the role is now based in
Shanghai rather than Hong Kong which is operationally
beneficial. We have a renewed focus on increasing
distribution within China along with the other countries
serviced by our North Asia business. One prestigious project
among many was Gansu Provincial Maternity and Child-
care Hospital Lanzhou, China.
We have yet to see the full benefit of the UK joining the
CPTPP which will reduce duty rates across the region. The
required number of countries have now ratified the UK to
join the bloc and the agreement will now officially enter
into force on 15 December 2024. The UK Department for
Business and Trade are pushing for remaining members to
ratify the deal in their own countries. As a result, we should
start to see benefits from the start of 2025.
From 1 July 2024, North Asia, which had operated as a
branch of Polyflor Limited, will now operate independently,
under the guidance of our APAC management and on the
same ERP systems. Stock is being rationalised so there are
common ranges across the APAC countries which will help
with stock availability and quicker movement across the
region if needed. Faster moving lines will still be held in local
warehouses, whilst for some slower moving items, these can
be held in a free zone warehouse in China and moved to
whichever market as required. As a result, overall
stockholding will be reduced with little impact on service to
the customers.
The APAC region bore the brunt of production and delivery
problems associated with labour restriction in the UK
(Covid), raw material shortages and global shipping
restrictions. These are largely resolved and the teams are
focussed on rebuilding the Polyflor market share.
Polyflor & Riverside Flooring, based in
UK
The core of the group is our manufacturing base in the UK
producing the flooring that is distributed across the world.
The Polyflor business, that manufactures and sells product
globally, reported a 4.4% reduction in turnover. UK sales
were £110.7m (2023: £117.5m) a 5.8% reduction. However,
sales of Polyflor sheet vinyl manufacture in Radcliffe for
overseas markets rose 8% as our output increased to satisfy
global markets.
In the UK, many distributors were significantly affected by
the decline in domestic carpet sales which is not a product in
our portfolio. Many looked to cut back on costs to offset
sales shortfalls and increased debt costs. Inevitably, some
distributors reduced their stock holdings of our products and
it is clear this affected our sales into the distribution channel.
Whilst it is difficult to identify the exact impact we believe
this represented at least 50% of our reduction in UK sales.
However, end customer service levels were unaffected and
there were positive signs of investment by some of our
distribution partners as the decline did not apply to every
customer.
Notwithstanding the negative consumer confidence, in our
experience, the effect of lower customer confidence and
demand has always led distributors to rationalise ranges and
as a manufacturer of branded flooring this has tended to be
positive for us. In buoyant times there are a plethora of
flooring options sourced from Europe and Asia but these are
dropped when times are harder. This year has been no
different.
We have updated and relaunched our Colonia luxury vinyl
tile collection. Colonia is a commercial grade flooring but
does sell significant quantities into the residential market.
6
Chief Executive’s Review
continued
This relaunch took place in April and May of this year. There
are now 100 new sales presentation stand locations, adding
to the existing 400 locations. Each of these locations is
nominated by our distributor partners. The delivery and
installation of these stands were completed by our own sales
force, and customer reaction and sales out via our
distribution partners went well and continues to progress. In
addition, we have successfully introduced ‘cashback’
promotions. This type of promotion is for end users
(principally flooring contactors) to encourage them to buy
from our stockists and will offer incentive to divert sales
from competitors to our ranges and in some cases from
distributors’ ‘me too’ products. Feedback has been positive
on these initiatives.
Regarding the 5.8% reduction in UK turnover, of this
manufactured sheet vinyl sales were c4% down with the
luxury vinyl tiles nearer to 9% lower reflecting the greater
exposure of LVT to the residential flooring sector.
Raw material costs reduced during the year to c5% below
the prior year comparative but these costs are still over 50%
higher than the pre-2022 levels. Energy costs remain high
with the falls in warehouse prices of electricity being almost
totally offset by increases in add-ons to the bare energy cost.
Whilst we mainly source from UK and European sources, we
maintain key relationships with suppliers much further afield
(Korea, North America and South America). This maintains
supply and protects against sudden increases in costs and
quality. In the latter months of the year a PVC supplier in
Mexico closed as a result of the ongoing drought in the
region which caused a ripple in the global supply chain. On
the counter side, certain eastern European suppliers had cash
flow problems and increased output volumes to sell at low
prices. The global nature of business is not just on the sales
side and, as ever, offers opportunity to those up to the task
of managing supply.
Increased output with greater plant utilisation improved the
gross margin within the UK businesses. As noted earlier,
throughout the year there have been plant investments and
improvements to continue the growth in output. New
granulators on the non-directional production line will
increase the speed of recycling edge trims, a £200,000
investment, with a further £700,000 on the calendar mixers
on this line. The raw material tank farm has been updated
and extended to offer smoother flow of raw materials into
production and to give greater onsite storage for raw
materials (£250,000).Other investment included the
replacement of the UV curing lamp systems at Teesside
(£950,000) and gel drum upgrades on the safety flooring
production line (£120,000).
We have invested in IT infrastructure including the
replacement and upgrade of computer servers and storage
(£170,000), as well as a refresh of our whole firewall and data
security protocols (£187,000). In addition, in January 2024,
we went fully live with our own self-filing of customs entries
for all our free carrier arrangement (FCA) customers. We
extended this to include Middle Eastern and South American
customers, and to many ex works (EXW) customers who are
unfamiliar
with
accurate
processing
of
export
documentation.
Energy efficiency receives attention at subsidiary level and
nowhere more so than at Polyflor, the manufacturing hub
and the main user of energy in our business. Reducing energy
usage drives down costs and reduces our carbon emissions.
We implemented a number of initiatives during the year, as
we continue to focus on building our sustainability
credentials and operating as a greener business.
In the UK, we enjoyed a record year for profits – testimony
to the team and the foundations of our prior year work.
Polyflor Nordic comprising Polyflor
Norway based in Oslo and Polyflor
Sweden based in Gothenburg
A solid performance with both Norway and Sweden seeing
a 6.3% increase in sales over comparatives. Profitability has
been supported by adding delivery charges for transport of
goods, particularly to remoter areas.
Both the businesses improved profits.
A review of warehouse operations has resulted in the
decision to move our stockholding from Stockholm to
Gothenburg which will lower overall costs, reduce transit
times from the UK and have the potential to hold further
stocks for the Scandinavian market. This will take place Q1
of the new financial year.
Stocks have been reduced during the year, to both improve
working capital and to ensure a tighter focus in these two
large geographic but relatively lower populated regions.
Norway is currently in the process of upgrading its ERP
system with a go live date planned for November 2024.The
system will be the same as that introduced to the APAC
region last year.
Our flooring has been selected for use in ‘Polestar’ car
showrooms and in the Silja – Tallink Ferry terminal the
Sweden – Finland connection.
7
Polyflor Canada, based in Toronto
After last year’s record sales, there was a small drop in
revenue this year (-5%), although this still represents a 29%
increase from 2 years ago. Despite the lower sales, the
margin improved with lower freight costs incurred and a
favourable mix of products with the result of a further
increase in net profit.
The decision to purchase more LVT direct from the Asian
suppliers rather than to be supplied from the Europe based
stock holdings helped the improvement in margins on those
ranges and whilst this has led to higher stock levels, we have
improved our service to the market.
A proposal for expanding our footprint across Canada is
being developed and the pipeline of projects remains strong
across all categories of product. The local management
remain positive for the year ahead.
Rest of the World
Polyflor continues to expand across the globe selling direct
to over 50 countries during the year other than those
mentioned above.
Our sales have performed strongly again in the Middle East
(+26%) and South America (+12%) where we continue to
see good specification across various projects in health,
education and housing. Both these regions achieved record
sales. We will continue to seek to employ regional
representation to augment our direct exports in growing
markets – a policy that for over a generation has
underpinned export growth.
Significant business in the year has taken place in territories
such as UAE, Colombia, Italy, Mexico, Poland, Greece and
South Africa to list a few.
It was a record year for sales in Saudi Arabia, Bulgaria,
Georgia, Lithuania, Costa Rica, Brazil, Egypt and Belgium.
As with Canada, our USA sales were below the prior year
record sales but remain ahead of 2022 revenues. The B2B
arrangement remains positive with further products added
to the portfolio for next year. Our small presence in India
remains, but sales have once again gone backwards, and we
are reviewing how to reverse this trend.We are impacted by
higher duty costs than our competitors and have not been
able to increase sales from our local stockholding. The
significant portion of sales remain direct shipments from
the UK to the healthcare sector, where Polyflor product is
held in high regard.
It is encouraging that our representatives in Latin America
are converting interest into sales and new markets that are
currently being developed such as El Salvador, Guatemala,
Nicaragua, Bolivia and Honduras should start generating
some sales soon.
Sustainability, social responsibility
and the environment
As highlighted in the Chairman’s Statement, we recently
published our 19th sustainability report for the Company. In
this we detail the actions and ambitions that we have taken
to addressing environment impact, sustainability and social
responsibility.
For many years we have operated a vinyl take back scheme
in the UK, Recofloor but there are regulatory difficulties in
re-patriating recyclate from overseas markets and so during
the year we have entered into a new recycling initiative in
Australia, Resiloop. Together with the Australian Resilient
Flooring Association (ARFA) our Australian business (Polyflor
Australia Pty Ltd) has formed a product stewardship scheme
aimed at reducing PVC going into landfill. A national scheme
has been established with the funding to commence the
recovery and recycling of resilient floor coverings with
onshore recycling capacity. ARFA’s members represent 60%
of the market sales of resilient flooring and the take-back
and recycle model is based on our own UK experience albeit
that we are not manufacturing in Australia so the aim is to
prepare recycled material for alternative uses locally.
In conclusion
Given the circumstances we can only be pleased with the
results for the year. The levels of confidence in key markets
(the UK and Europe) with reduced budgets for projects have
been challenging. Different issues such as the challenges of
transportation affected our APAC region but nevertheless
there has been progress and increased profitability.
It has been another year of profitable growth in FY24 and
the Group looks ahead with confidence.
Mark Halstead
Chief Executive
30 September 2024
8
Financial Director’s Review
As is usual, we have prepared these accounts by the
consistent application of accounting standards with due
appraisal and judicious accrual for known probable liabilities
with as yet uncertain outcome at the year end. As in
previous years we, as a board, look to be prudent.
The group operates through separate legal entities in certain
areas of the world and though these are discussed in the
Chief Executive’s Review we, as a board, have concluded
that these operations are one segment for the purposes of
IFRS 8.
Some key statistics:
Group turnover at £274.9 million (2023: £303.6
million) was 9.4% lower than last year.
Profit before tax was £56.2 million (2023: £52.1
million) an increase of 7.9%
Selling and distribution costs were 1% lower than last
year. Administration expenses were 36% higher than
last year. This is largely due to a receipt of £1.6m
regarding an insurance claim in the prior year, not
repeated.
Trade receivables decreased to £40.0 million (2023:
£42.9 million). Trade payables decreased to £36.5
million (2023: £40.3million).
Inventory levels stand at £82.3 million (2023:
£87.4million).
Cash stands at £74.3 million (2023: £63.2 million)
even after the payment of £34.4 million in dividends,
£15.5 million in tax and £3.3 million of capital
expenditure.
Key performance indicators
The board continues to consider growth in profit before tax
and growth in dividend key targets in line with the task of
delivering shareholder value. Control of working capital
continues to be important and the level of cash is
monitored. Cash flow has been a key performance measure.
Rather than focus on individual working capital targets or
ratios, the board are informed of all significant issues
directly by subsidiary management by means of monthly
reports on the key decisions and influences on working
capital. The group comprises two major manufacturing
plants and a number of overseas importer and distribution
businesses but no overall KPI seems appropriate. Obviously
sales, profit and cash generation are monitored against
budgets and more so against prior year comparatives. To
look at group level ratios would be misleading as the
disparate types of business require review in isolation.
Our focus at subsidiary level is on stock availability and
appropriate credit given to and received from customers
and suppliers respectively. Obviously sales, margin and
profitability are monitored as well as cash, which is the final
result of our economic activities. Appropriate summaries of
these statistics are collated into monthly group reports.
These accounts contain analysis and more importantly we
require each director to undertake a written report on their
area and often these include key indicators (obvious
examples are level of absenteeism in the factories, debtor
days and margin by product line but these are backed up
with detail of the key drivers of these ratios). Functional
directors of the subsidiaries report on the KPIs appropriate
to their area of control – for example manufacturing will
report on the key drivers such as utilisation of plant,
conversion efficiencies of raw materials into finished goods
and volume output.
No individual key performance indicator, or group or
summary thereof, is regarded as more important than
informed, in-depth knowledge of the underlying businesses.
Subsidiaries present their key performance indicators on
debtor days, stock turn and creditor days but the
consolidation of these for the whole group offers no extra
benefit as the component of mix can mask underlying
effects.
In terms of non-financial KPIs brand awareness, reputation,
customer satisfaction and market share are all important
but difficult to assess. We do not instigate surveys and
market share data but, to the extent that they are collated
by various trade bodies these are important independent
evidence for the group executive team. We subscribe to
various third party reports on the flooring industry which to
an extent match and compare us to our competitors and
whilst valid snap-shots of the sector they are inadequate to
give a complete view of progress. Customer satisfaction
awards are always welcome and we often we refer to these
in our strategic report. At subsidiary level there are non-
financial KPIs. Examples being, customer call response time,
non-conforming
product
complaints,
staff
turnover/retention each of these are company or
department specific and reported by directors in their
monthly reports to the group executive directors. The
executive directors comment on these on case specific
bases and the non-executives have sight of the major
reports.
Principal decisions
The strategic report notes our approach to Section 172 of
the Companies Act 2006 and we have faced many decisions
in the year. We define principal decisions as those that have
a significant impact on the company and/or group and/or
our stakeholders. Principal decisions that are currently
confidential to the group are not included in the list below.
Any such decision would be included in future report and
accounts if and when confidentiality is no longer a factor.
The potential impact of principal decisions on stakeholders
is assessed in detail by the board. The executive directors
9
kept the board appraised of their actions and these are
described in the strategic review and in our interim
reporting. To the extent that these decisions affect
employees there is a bi-annual update on group
performance. Each of the principal decisions has a potential
effect on employment and hence employees as a whole so
this high level update is important to provide context for
the individuals.
During the year the following were considered by the board.
Payment of dividends
The board considered shareholder expectations in setting
these dividends, along with the cash position of the
company. Cash flow projections are an important part of
this, particularly in the current economic environment - the
executive directors were tasked with keeping the board
appraised of the working capital position.
Approval of group budget
A key process is to each year agree budgets with our trading
subsidiaries and this is presented to the board towards the
end of each trading year. Having regard to the ongoing
disruption to energy across our markets the budgetary
process this year was deemed to still be fraught with
uncertainties. Nevertheless, a full budgetary process has
been undertaken to assess our manufacturing capacity and
manage shift patterns and associated expenditure.
Board changes
In January 2024, Mr David Drillingcourt was appointed to
the board. David has held several roles with the group over
the last 25 years. As Corporate Development Director he is
supporting the company’s strategic aim of growing the
global footprint of the international businesses within the
group.
Review of long term incentive-plan (LTIP)
A part of our management teams incentive has long been
the issue of share options in the holding company as
ongoing participation in the company’s success. To date
these options have always been issued at market price.
Net zero, sustainability and climate change
Apart from the details noted in respect of our SECR
reporting and climate related financial disclosures the
bought has approved several initiatives.
–
Approval of significant investment in solar panels
capable of supplying 25-30% of our electric
requirements.
–
A change in our Recofloor partnership with Altro
Group plc to take our award winning vinyl recycling
initiative to further success.
–
Changes to the representatives’ company cars to
cleaner technology.
–
A commitment to reducing in gas consumption at
our Teesside facility by investment in improved
production equipment and incinerator equipment.
Subsidiary issues
The board discusses and ratifies subsidiaries investments of
which the key items this year include
–
Lease extensions of warehousing in Germany.
–
Investment in ERP in Norway.
–
Updating our business in Hong Kong to
incorporation.
–
Closure of our New Zealand warehouse in
Christchurch to focus on improved service from our
other warehousing.
Principal business risks and
uncertainties
The board resolved (in February 2022) that we should cease
to undertake sales of flooring to Russia and given the close
involvement of Belarus to only supply the latter with
healthcare related products (after a review by the board of
individual projects). This cessation continues, though there is
no legal requirement. The effects of this conflict on global
trade and costs continues to be an uncertainty.
The effects on UK energy costs have been widely reported
but the implications for UK manufacturing go much deeper.
Certainly the increased cost of our UK energy of both gas
and electricity has been significant but the effects on raw
material supplies have also been significant. The
dependency of many industries in Europe on the large
refinery and chemical plants being fed oil and gas from
Russia made it immediately apparent that the conflict
would lead to major disruptions in supply beyond the cost
of energy. The situation as of the end of the current financial
year is much improved from the scenario a year ago but
remains a business risk.
The board constantly assesses risks and discusses business
issues regularly. To the extent risk is insurable the board is
risk averse and the group is widely insured.A comprehensive
insurance appraisal takes place annually to mitigate
exposure to risks, such as business interruption and fire but
obviously key risks such as escalating raw material prices
and energy costs fall outside any insurable event. Inevitably
the unexpected cannot be anticipated but given the depth
of understanding of our principal business by the senior
management, and the board, risk is ameliorated but not
eliminated.
10
Financial Director’s Review
continued
Our goals are simple and we avoid over-stretching our
capabilities. During the year the unknowns associated with
the pandemic were a key unknown and consequently a key
risk. Our plans are not limited to a twelve month set of
figures, though budgets are prepared and monitored, and we
look to benefit from decisions over a longer time frame. A
major mitigation of risk is a close understanding of our
people, their motivations, experience and limitations. In
general it is in the nature of the board to talk about and
focus on the problems of our business. This is the major way
in which risk is not merely identified but mitigated. Excess
capacity exists in our businesses and across Europe.
The risks identified beyond insured events include foreign
exchange risk, credit risk, liquidity risk and key management.
There are, additionally, key customers and key suppliers
which create dependencies. Sales and purchasing policies
are under regular review to assess these dependencies. In
the main, risk and control are measured and assessed from
a financial perspective, but this is not to the exclusion of
non-financial risks and uncertainties. It is clear that
scenarios can be envisaged where the group’s activities may
be disrupted and little could be done to mitigate the
negative effects. Cyber security is another identifiable risk,
there are many media reports an increase in blanket attacks
by cyber criminals often backed by hostile nation states
targeting civilian and commercial organisations, owing to
the value of the personal and sensitive data held. Ransom-
ware remains the single biggest threat to organisations and
the use of sophisticated phishing and social engineering
techniques by cyber criminals persists as the main method
of entry and compromise. The board regularly tasks its
subsidiaries with assessment of cyber risk and most
particularly in the area of bank scams. In addition servers
and emails are protected with various firewall safeguards. In
addition, the group avails itself of various insurances which
may offer some help in the event of a cyber-ware event.
In terms of credit risk certain companies have insurance in
place and where there is no insurance we often require
letters of credit or bills of exchange but fundamentally
credit control and market awareness are important. Our
cash balances, and bank facilities combined with a robust
balance sheet are buffers against liquidity risk.
In respect of exchange risk, the group operates
internationally and is exposed to foreign exchange risk on
both sales and purchases that are denominated in
currencies other than sterling. Those giving rise to the most
significant risk are US dollar, euro and Australian dollar. To
mitigate risk associated with exchange rate fluctuations the
group’s policy is to hedge known and forecast transactions.
This hedging is at least 25% and on occasion, albeit rarely,
more than 100% of the next year’s anticipated exposure.
IFRS 7 dictates several disclosures on risk and we have
undertaken a market risk sensitivity analysis on fluctuations
in our major currency exposure and the effects on the
financial assets and liabilities in the balance sheet (which is
included in the notes to the accounts).
Several external factors can be envisaged that would affect
operating activities. These include technical failures, labour
disputes outside our businesses, availability of raw
materials, and import or customs delays. Given the spread
of our operating activities there is a reduced risk of any
single event being catastrophic, but external factors are an
area of risk that continues to be monitored. Certain
suppliers would be difficult to replace or their products to
substitute and delays could be of several weeks duration,
which wouldn’t be covered by our current levels of stock
holding. Given the length of service of many senior
managers, succession planning becomes a risk and/or an
uncertainty but again the open style of decision making and
collaboration mitigate the risk.
The activity and progress of our competitors is a significant
risk. Whether there is a new innovation or a gain in
competitive advantage by a new process, or the loss of
market share by any means, any effect on our volume
throughput will have an effect on profitability. The board
looks for market intelligence, and devotes significant time to
understanding the strategy of our competitors.
I would note that we have overseas subsidiaries with
significant profit and assets which are translated at average
exchange rates (in the case of profit and loss items) and at
year end rates (in the case of balance sheet items). The
effect of this is shown annually in the Consolidated
Statement of Comprehensive Income. Inevitably there is a
translational exposure on these items and since they are not
necessarily cash flows (excepting dividend payments) the
consolidated net worth of the group varies over time.We do
not hedge this translational exposure though we have in the
past hedged overseas assets with matching debt. At present
the cost and complexity in terms of arranging facilities and
complying with local taxation rules would seem to
outweigh the benefits.
The last five years of these exposures in terms of (decrease)
/increase in the value of our overseas assets are as follows::
£’000
2024
(248)
2023
(1,818)
2022
926
2021
(615)
2020
336
Aside from the strategic, operational and financial risks
described there are also compliance risks relating to the
legal and regulatory requirements of the various markets in
which we operate. Directors and senior management are
involved in health and safety, duty and customs clearance,
waste management and other such issues. Risks associated
with climate change, which are not, currently, deemed to be
principal risks and uncertainties to our businesses are noted
elsewhere under our Climate-related Financial Disclosures
(CFD).
11
Defined benefit pension scheme
In common with other long established businesses we have the
complications and uncertainty associated with having a “final
salary” pension scheme. The scheme was closed to active
members on 31 January 2023, with no added service to the
defined benefit scheme from that date.
Accounting for this defined benefit scheme is prescribed by IAS
19 and the quantum of the deficit or surplus is ever volatile due
to the nature of using gilt yields, at a point in time, and to a
lesser extent a myriad of assumptions determined by the
actuarial profession.
The scheme comprises deferred members (present and past
employees not yet in retirement) and pensioners.
Gordon Oliver
Finance Director
30 September 2024
12
Section 172 Statement
Stakeholder group
Shareholders
The directors and the board as a collective consider that they acted in a way that would be most likely to promote the success
of the company for the benefit of its members as a whole (having regard to the stakeholders and matters set out in S172(1)
(a) to (f) of the Act) in the decisions taken during the year ended 30 June 2024.
The group comprises business units in various locations worldwide, all of which have engagement with their local stakeholders
and other companies within the group structure. The group’s governance delegation of authority allows decisions to be made
at business unit level up to defined limits, which allows them to take account of the needs of their local stakeholders through
their decisions implemented locally. The board routinely monitors these decisions and ultimately takes responsibility for the
interaction with all stakeholders.
In consideration of major matters discussed at board level, the likely impact on all stakeholders is carefully considered and
where possible, decisions are carefully explained and discussed with affected stakeholders before actions are implemented to
ensure they understand and have any necessary support.
The group’s key stakeholders and how we engage with them are set out below.
How do we engage with them?
Members of the board have regular dialogue
with institutional Investors and individual
shareholders in order to develop an
understanding of their views.
The AGM is an important forum for
shareholders to meet the board and ask any
questions they may have, directly.
The company’s website has an investors
section which gives investors direct access to
reports, press releases and business
information. There is also a contact mailbox
facility.
How has the board considered their interests?
The board understands that shareholders
require sustainable growth and value
creation. In recognising this, it has
implemented a policy which has resulted in
increasing dividend returns and incremental
shareholder returns over a sustained period.
Shareholder views, together with movements
in the shareholder base, are regularly
reported to and discussed by the board and
their views are considered.
Our NOMAD’s views on market sentiment
are fed back on a regular basis, and are
considered by the board where it impacts
strategy.
Customers
We interact with our customers through:
Regular visits and meetings
Industry exhibitions
Customer site tours and presentations
Business unit websites
Supplying extensive samples and
supporting literature
Delivering a high standard of technical
support
Providing enhanced digital design
services and support
Our strategy of attaining sustainable growth
in profit and building goodwill in our brands
will only be achieved through an
understanding of the needs of our customers
and the markets we serve.
The board regularly considers the impact on
customers when considering strategic
decisions, for instance the major investment
in a new warehousing facility has been driven
by the need to improve customer service.
13
Suppliers
Engagement with suppliers and business
partners is achieved by holding regular
meetings, regular evaluation reviews and
through audits of the supplier base.
The board recognises that relationships with
the supplier base is important to the
reputation and long term success of the
group. There is regular dialogue between our
management team and our suppliers, where
quality, price, sustainability and health and
safety are key to the discussions. Any matters
which the board needs to be aware of are
reported back as appropriate.
Employees
We engage with our employees through site
communications, briefings, performance
reviews, newsletters and notice boards.
Employees are also written to individually on
matters which are deemed important.
The board is aware that our employees are
critical to the successful achievement of the
strategic aims. The group prides itself on
providing a friendly and safe working
environment for all employees, and given the
nature of our manufacturing process, health
and safety is taken extremely seriously. There
are a number of employees who have
achieved thirty, forty and even fifty years’
service. The group has operated a share
scheme which enabled employees to build up
personal shareholding in James Halstead plc
and participate in its expansion and success.
Communities
We operate from multiple sites and seek to
be a good neighbour with the local
communities. Where possible we create
opportunities to recruit and develop local
people, which helps support the local
economy and look after the environment. We
also support local charities through
fundraising and donations.
The board has a full understanding of the
importance of good community relations
with both internal and external stakeholders.
The impact of our operations from an
environmental perspective is recognised on a
local and global level. Capital expenditure
projects, for example, focus on improving
energy efficiency and reducing environmental
emissions.
The corporate social responsibility section of the latest Polyflor Sustainability Report outlines in further detail, the group’s
commitment to its stakeholders, including the supply chain, employees and the communities.
The principal decisions in the year are included in the Financial Director’s Review.
14
Climate-related Financial Disclosures
Non-Financial and Sustainability
Information
In 2022 the UK Government introduced the Climate-related
Financial Disclosure Regulations. These regulations have
been introduced to support informed decisions by investors
and to encourage companies to embed climate-change
considerations into the management of businesses. These
disclosures were largely based on the recommendations of
the Task Force on Climate-Related Financial Disclosures
(TCFD) and are a requirement for accounting periods
starting on or after 6 April 2022.
Separately within the Report of the Directors we have
disclosed our streamlined energy and carbon reporting
(SECR) and in addition the Chairman’s Statement, the Chief
Executive’s Review and the Report of the Directors refer to
environmental, social responsibility and sustainability
considerations and initiatives. It should be noted that our
SECR is reported on a location-based approach; however,
the business does purchase 100% renewable electricity for
its operations, further reducing the operational carbon
footprint when taking a market-based reporting approach.
Sustainability and environmental considerations have been
key considerations for our businesses for over a generation
and we see these as a differentiation against competitors. A
key consideration is to dispel the myth of PVC as being a
‘bad’ choice because of its derivation from fossil fuels. PVC
is widely used in products and applications and brings
sustainability benefits whether they are cars (to make them
lighter and thus more economic) or in buildings (windows,
floors, piping and cabling) to perform effectively for much
longer than alternative materials. Life spans of 30 to 100
years with minimal maintenance (hence limited additional
consumption of energy and raw materials). At end-of-life
PVC can be recycled and has the longest history of recycling
amongst plastic with the most advanced level of material
recycling (i.e. lower energy input). The volume of PVC that
we process each year is less than one tenth of one percent
of global annual production. In terms of safety PVC has a
very good long term record and is one of only a few
materials trusted and approved for use for the storage of live
human blood cells.
Our annual ESG reports are part of our manufacturing
ethos.
There is an assumption that investors and regulators have
an appreciation of climate reporting, but in reality there is a
myriad of ‘green claims’ and much of it inconsistent with a
consumer society. For our part, we focus on durability and
life span of products since an extended life span reflects
lower energy usage.
Within the context of the regulations we, and others, have
responsibilities to assess and manage climate-related risks
and opportunities. Whilst our business has always assessed
risks these regulations seek to add separate focus to
climate-related issues. Noted below are specific risks that
we have assessed together with a degree of background and
the related mitigation.
Governance and time
In terms of collating and undertaking these responsibilities,
the board has delegated the role to the finance director to
assess and enquire. This in no way negates the board’s
primary focus and involvement in climate-related risks and
the FD will, as a matter of course, update the board on
climate-related risks. Indeed, this is not different to
assessing risk management. It is a matter for the board as a
whole to determine further actions.The initial assessment in
the short term is that climate change related risk to our
business is low and not material. Nevertheless, the board
wishes this to be an open item on the agenda for subsidiary
boards to have further meetings and risk assessment.
Subsidiary board meetings are held 6-8 times a year and
Group board meetings 5-6 times. Risks identified, usually by
discussion and enquiry are reported to the main board and
mitigating actions assessed.
The subject of climate change and associated risks in the
medium term will require greater time and involvement
with 3rd parties including suppliers, trade bodies and
potentially consultants. The risks surrounding climate
change often do not fit with other risk management areas
as they are, in the medium to long term, largely imprecise
and mitigation tends, therefore, to be hypothetical in the
short term. The subject matter and risk perception may well
change over time and hence to board’s decision to seek
input, and to make the subject an ongoing agenda subject.
It is to be envisioned that larger risks may be recognised in
future years and that more resource may be needed to
assess the, as yet, indeterminate effects on our small
business as a result of climate change.
There follows a number of areas where risks have been
assessed and whilst the reporting is not tabled and boxed
the board believe the context of these areas warrants a
degree of background.
These are the current risks associated with climate related
changes but these may potentially have increased severity
in the medium term (4-8 years). The risks identified
currently are, to the belief of the board, sufficient to gain an
understanding of our business. Currently, the board believe,
the following points outline the perceived risks but will
consider the impact of these risks to our business model and
may undertake resilience modelling in the fullness of time.
15
In referencing the past, the board is no way distancing the
need to look at the future, and the long term and past
events can and do have relevance to preparedness. At the
moment our current targets in relation to managing climate
related risks are to increase awareness of the risks, to engage
with stakeholders and to continue to assess both risks and
opportunities. If it is to be envisaged that, in due course over
the next 2-5 years performance indicators / key metrics
may be identified. However, data sets on the effects of
climate change and the geographic location of potential
effects are incomplete and speculative.
Risk Management
The main board has made climate-related risks an agenda
item at subsidiary level and in the initial phase asked
subsidiary directors to consider a wide range of issues to
assess risks. Quarterly these will be discussed in detail for
board presentation. The process is aimed at allowing the
board to identify and determine relative significance to the
business of the risks (and opportunities).
The board believes it important to note that environmental
considerations and sustainability are key considerations and
nothing in the statutory climate related disclosure
statements alters that view. As manufacturers this has been
both good practice and good stewardship, as well as
progress to a low carbon footprint. In reality this means
using less energy, fewer resources, greater recycling and
preserving air quality, all of which are reported in our annual
sustainability report, with constant focus and to strive to
improve. Our 19th annual sustainability report (issued
September 2024) is available on our website or as a printed
copy and this offers a far more detailed review of the
group’s activities, albeit with a heavy focus on our
manufacturing activities.
Given that our manufacturing is based within the UK, it
perhaps does not go without saying that legislation is
significant with regard to environmental issues, air quality,
and water use and that the vast majority of raw materials
and all energy used are subject to the same standards. These
are not insignificant and it is to be hoped that greater focus
on climate change might add to greater scrutiny of
sustainability and environmental good practice that
compares favourably against imported products from less
highly controlled regions.
Our manufacturing bases are Radcliffe in Manchester and
Thornaby on Teesside. Neither of these locations are at high
risk for flooding and both are near to, or part of, significant
main roads and infrastructure. At this time and in the
medium term we see low risk of anything other than short
term disruption from climate related weather events. This
average increase may lead to increased severity in weather
events and more extremes (hotter, colder, rainier, and longer
drought). We have already experienced some of these
extremes over the last two years and arguably some actions
that we took during the pandemic also assist with our
preparedness (in regard to delays in raw material input
deliveries).
The risks of climate change are by their nature as yet
unknown. The board recognise the need for ongoing
assessment and asks all management to input into the
process. In looking for a key performance indicator or
indicators the nature of the subject makes this, as yet,
difficult and nebulous. However, the structure we have
adopted is for the senior finance team to consider the
financial effects in line with other risk assessments. The
review relates to all the group’s subsidiary activities but
outside the UK our activities are sales and distribution with
relevant warehouse facilities. Outside the UK no significant
risks were noted other than potential disruption by an
extreme weather event within a territory, or affecting a
particular warehouse and this would be assessed as
temporary and insured. Examples of extreme events that
our businesses have faced in recent years (which may or
may not be climate-change related):
– extreme flooding in Queensland, Australia;
– extended drought and wildfires in Australia;
– earthquake damage in Christchurch, New Zealand.
In considering various scenarios, it is almost impossible to
assess
risk
without
attaching
probabilities
but
notwithstanding our teams will meet and review perceived
risks. However, even though risk mitigation plans may be
difficult that does not mean that the risk of complacency is
high merely that retaining speed of reaction and flexibility is
important and no amount of “speculation” or boilerplate
can obviate this.
Strategy
Looking at the risks across several areas where we have
identified risks associated with climate change with
background detail and / or mitigation actions (where relevant).
It should be noted that there can be envisaged opportunities as
and when competitors face the adverse effects of climate and
offer opportunities for market share gain by our own UK based
production facilities (either by the availability of cheaper raw
materials due to excess supply and/or lack of finished goods
often at short notice) and which we are capable of supplying
(whether by use of our large stock holdings or easily flexed
production). The time frame for this could be short term and
immediate with the incidence of climate related changes that
may be infrequent or recurring.
Raw materials
Around 50% of our raw materials (by mass) are sourced from
the UK, from less 40 miles away and up to about 95% from
Europe. Delays in these shipments would seem not to be
affected by most weather events other than heavy snow
16
Climate-related Financial Disclosures
continued
which can close local and main roads (dependent on severity)
but over a relatively short time period. As a site we carry over
500 tonnes in reserve at any one time so are well placed to
last circa a week without any deliveries. We also hold around
40-50 tonnes of bag stock which can be added into the
production lines manually for an extra day’s production.
Most polymers and plasticisers are sourced from outside the
UK. Polymers are sourced from the large European
petrochemical producers (as do our European flooring
competitors) and the biggest negative impact we have seen
in recent years is when there are low water levels in the main
French / German rivers that are used heavily to transport
goods and materials. Chemicals and raw materials are often
transported between sites by barge and these barges are
unable to operate if the river is too low (or too high) and/or
loading limits are lowered when the rivers run low. In addition,
various parts of the Rhine have in the last year become
impassable (due to droughts / prolonged periods without
rain) which has resulted in delays and inefficiencies from
these suppliers. The same can be said during prolonged rainfall
(extreme events) that the rivers become too high to be
navigated. Climate change could exacerbate the situation,
however, mitigating any adverse impact there are alternate
supplies from the USA, and Asia and there are several global
buying agents that facilitate such alternatives.
Further to local delays as a result of extreme events we do
also see shipping delays due to rough seas (high winds /
extreme events) that can also lead to delays and ships being
unable to dock and/or miss ports / unloading.
Since the pandemic our manufacturing sites now hold higher
reserves of raw materials than before and have increased
storage capacity by 100 tonnes of bulk liquids. We have also
sought to increase the number of approved suppliers from
further afield and in 2022 purchased over 600 tonnes of US
or Asian sourced PVC which assists during any delays in
Europe. Of course, these extreme weather events can also
affect US or Asian suppliers and we have witnessed the
impact of the extreme weather event ice storm in Texas,
which impacted at least one chemical producer for which we
were reliant for a speciality chemical. In this case alternative
sources were found, and there was no material effect on
supply.
Diversifying and increasing sources of approved materials can
reduce the direct impact to the site and on-going production.
For all other (non-major) ingredients, on balance, many of
these are either sourced locally and/or we carry large
inventories to provide protection. We also, as one of the
largest accounts in the UK, enjoy excellent relationships with
our long-standing key material suppliers and interact with
other organisations operating in similar fields / ingredients. A
reflection of this being the problems we have endured during
the global pandemic when despite all the issues raw materials
sourcing was disrupted but supply maintained.
Production facilities - extreme weather events
In prior years extremes in weather have been experienced in
the UK , albeit of short duration. In the summer of 2022 UK
air temperatures increased to over 42ºC. The UK Met Office
issued an Amber and Red warning for extreme heat. This
affected those that are most vulnerable to extreme heat and
needed some changes to working practices and daily
routines. The extreme heat event also led to a higher risk of
failure of heat sensitive systems and equipment. This is a
known issue and summer time heat waves are not
uncommon in the UK. During this event there were
increased electrical component failures and losses in
efficiency. Given our history as a manufacturer we have well
established spares policies to react to these types of
problem. In higher ambient temperatures the line speeds of
some of our production are lessened. Provisions for all
employees to mitigate the impact from these events
needed to be considered and actions implemented.
Another prior year example was the winter of 2022 the site
also observed the opposite extreme temperatures with
minus 12ºC being recorded overnight. These extremes
potentially lead to pipes freezing, valves failing and issues
with other engineering equipment. In addition, it involves
also keeping the site operating safely with gritting and snow
clearing and providing employees with winter work wear. An
increase in such events may well affect output but are not
expected to preclude ongoing UK based manufacturing.
The sites can at times also suffer from heavy sustained
periods of extreme high rainfall and with climate change
these kind of events may increase in frequency. This can lead
to localised flooding on local roads, flooding of production
halls from back-up from the drains or off the roofing areas.
We have the necessary equipment on site to remediate
these short term travails. During the course of this year
(2023/24) our factories (Radcliffe and Teesside) faced a year
of far greater rainfall than usual and overall milder weather
(less lows and less highs). Though as a whole the mean
temperature was higher it was, on balance, beneficial to the
production facilities (less power needed in winter and
greater line speed in summer as the ambient temperature
didn’t reach higher levels).
Stock shortage
Ultimately, to protect the on-going business and any such
impacts from extreme weather events, as a business, on the
whole, we carry large inventories of finished product stocks
at separate locations. So, in the unlikely event of impact
from a severe weather event on the manufacturing
capabilities these stock reserves enable the business to
17
continue to supply the market with goods. This was tested
in 2019 when one production line endured a mechanical
failure and was shut for 12 weeks. Obviously this is only a
mitigation to short term climate related events which we
consider appropriate.
PVC use and regulation
There is increasing activity by activists who protest against
anything plastic or derived from oil. As users of PVC, we are
of course arguably on that list but it is generally accepted as
an essential polymer in the building sector. PVC is a low
energy polymer and has many advantages.
We strive to underline the benefits of vinyl as a building
product and most especially as flooring. We have many
environmental accreditations, and present the benefits of
thermoplastic materials, recycling, and our stewardship
through the Recofloor take-back scheme. We have been
recycling PVC for over 60 years and it is a fact that vinyl
flooring is less energy intensive and more efficient to make
than many alternatives.
PVC brings important benefits to products and applications
in areas as diverse as construction, automobile
manufacturing, medical devices, electronics and electrical
equipment, packaging and fashion. Whether it is rigid or
flexible, PVC helps to make cars lighter and resistant against
corrosion, it enables windows to last longer, allows fresh
water delivery through the use of durable piping, and stores
blood to save and improve people’s lives.
Vinyl applications can perform effectively for much longer
than alternative materials. Their life-span can range from 30
to 100 years in the case of cables, pipes and window
profiles. In addition, PVC products need minimal
maintenance,
and
hence
very
limited
additional
consumption of energy, raw materials and chemicals is
necessary to ensure their continued functionality. As a
result, PVC has the advantage of remaining in use for a long
period before it enters into the waste chain and we continue
to work with various agencies to divert such waste back into
the manufacturing process.
When it reaches its end of life, PVC can be recycled. In fact,
PVC has the longest history of recycling amongst plastics
and the most advanced level of mechanical recycling. We
have been using recycled PVC for over 50 years.
One major mitigation of these risks has been the focus on
healthcare around the world during and since the pandemic.
Vinyl flooring produced in long wide rolls and used as an
impervious layer in extremely long lasting and extremely
easy to disinfect. Demand may well increase but the use of
textile flooring in healthcare appears to be diminishing.
One risk that remains is that as legislators increase the
demands on business so that manufacturing within the UK
(and indeed Europe) becomes difficult or uneconomic. It
cannot be correct that all manufacturing moves out of the
UK as costs of energy and targeting of specific initiatives
makes importers more competitive. To mitigate this we sit
on trade bodies and work with industry initiatives to explain
our processes and present a fairer presentation of facts.
Reputational risk
As the general public and the customers become more
environmentally aware there are risks and opportunities. As
already noted, the majority of our flooring products have
some oil derived content (PVC polymers). This can and has
been replaced by alternative polymer sources though there
is an added energy cost to such polymers that offset the
perceived benefit of non-fossil fuel sources. On a more basic
level the fossil-fuel source is derived as a by-product of the
oil cracking process so it will continue to be made as long as
petrol is produced.
Durability and reason for use are huge benefits. As an
impervious layer on a hospital floor that can be easily
cleaned / disinfected a vinyl floor is not easily replaced.
Already up to 85% of that vinyl flooring is from sustainable
and/or recycled product.
Our ongoing challenge to mitigate objections to vinyl
flooring is to present facts. Our sustainability credentials are
literally an open book with an annual sustainability report it
is not “green-washing” and is independently audited with
independently verified facts.
It should be noted that many climate related disasters lead
to an increase in demand for vinyl flooring. The use of
temporary buildings for the homeless and the rescue efforts
associated with weather based events has a long association
with the use of vinyl flooring.
Metrics and Targets
We have not as an entity set targets or key performance
indicators. Within our industry we are working with many
trade bodies and authorities to increase the take up of
recycled material. Our sustainability and environmental
considerations are wider than simple numbers such as
carbon neutrality. As a factory making flooring, we
inevitably have a carbon footprint and as we grow this may
increase but unlike competitors outside Europe we are in a
community that looks to recycle waste, improve air quality
and reduce the impact of our actions. We strive to source all
our electricity from 100% renewables and this costs more.
Our most recent CP21 shows 100% all our UK electricity
usage in the year to March 2024 was from renewable and
was either wind or photovoltaic (not biomass). The decision
18
Climate-related Financial Disclosures
continued
was taken to exclude biomass from our renewable
purchases. Our renewable energy being fully supported by
REGO certification (renewable energy of guaranteed origin).
The one tangible metric in place is our targets under our
climate change agreement with the Environment Agency
(an agreement as defined in paragraph 46 of Schedule 6 to
the Finance Act 2000). The UK factories are set a specific
energy consumption target which in expressed and tonnes
of CO2 equivalent. The agreement requires improvement in
energy used over each target period for use to achieve
maximum reductions is the government climate change
levy. Our current agreement was renewed 1 January 2024
with our targets met.
In addition, we have instigated several initiatives to further
improve our energy efficiency, lower our energy
consumption and reduce our CO2 emissions.
For example :
We have conducted thermographic surveys of
electrical equipment to identify abnormally high
temperatures within our electrical distribution
systems, leading to investigating equipment that may
be operating incorrectly and consuming high
amounts of energy so that they may be
replaced/optimised.
We have carried out surveys to build a profile of the
energy wasted through air leakage within compressed
air systems. Identifying leaks has allowed for the
prioritisation of remedial works which will reduce
energy consumption.
We have installed thermal insulation for heated
mixing equipment to minimise wasted heat and
ensure equipment is operating within its optimum
performance range.
We are currently undertaking ESOS Phase 3 to
identify further energy savings opportunities across
the estate and better understand patterns of energy
consumption. Polyflor will look to implement the
findings of the ESOS surveys in subsequent reporting
years to increase overall energy efficiency and
decrease Scopes 1 & 2 emissions.
We have implemented a system that monitors
energy consumption and identifies hotspots of
abnormal consumption across our estate. This allows
for the optimisation of energy consumption and
reduction of Scope 1 & 2 emissions associated with
unwarranted energy usage.
We have, too date not considered climate change projection
scenario projections. Our production sites are UK based and
in a temperate climate where production can continue to
take place after a wide range of temperatures and weather
conditions. The facilities are not flood risk areas. To the
extent that some products are sourced from third parties
there are many alternative suppliers globally and though a
change might cause short term (6-8 months) disruption the
risk is manageable.
Over and above our energy costs we have multiple add on
costs levied by government for many varied projects (feed-
in tariff, renewable obligations, climate change levy or
Elexon).
Polyflor (our manufacturing facility), is member of VinylPlus
which was founded in 2011 by the European Council of
Vinyl Manufacturers (ECVM), the European Stabiliser
Producers Association (ESPA), European Plasticisers and the
European Plastics Converters (EuPC) when the PVC industry
renewed a previous initiative called Vinyl 2010. It currently
recycles c 800,000 tonnes of PVC annually.
In addition, as detailed within the SECR in the Report of the
Directors, we use the Greenhouse Gas (GHG) Protocol to
calculate our emissions and measure performance against
these. The UK has purchased 100% renewable electricity,
however, our carbon emission reporting is not based on our
purchases of electricity but rather the actual electricity that
we extract from the national grid. This is a location based
methodology rather than market related and underlines
that whilst we are using renewable the provision of
electricity is far from renewable. Furthermore, we do use
natural gas as energy supply, principally to our Teesside
facility, but are unable to move this to electricity because
the national grid infrastructure can supply no more
electricity to the industrial estate where our business is
based without upgrades to underground connections.
The group is committed to improvements in operational
energy efficiency with the efficiency measures that were
undertaken during the year explained within our SECR. The
group are undertaking the Energy Savings Opportunity
Scheme Phase 3 to identify further energy savings
opportunities, and better understand patterns of energy
consumption. The implementation of the findings of these
surveys should enable further energy savings to be made in
the future.
19
Sustainability and the environment
James Halstead plc is the parent company that trades and
manufactures under the Polyflor brand. Recently Polyflor
has published its 19th annual sustainability report, covering
the company’s environmental, social and governance (ESG)
performance for 2023. The data for this report has been
independently verified for BES 6001 v3.1 to provide our
stakeholders with complete transparency.
As a responsible manufacturer, Polyflor endeavours to
reduce and minimise the environmental impact across all
operations. Whilst reporting this and highlighting our
focused objectives and guiding policies, integrity is
important: Reporting remains impartial, and indications are
made regarding future improvements.
Sustainability at Polyflor is not the responsibility of just one
person: It is very much a team effort throughout the entire
company and involves listening to our customers and other
external driving forces. Sustainability is driven by our board
of directors across all areas of the business and includes our
environmental objectives and processes or quite simply,
encouraging employees to ‘do their bit’ at home, in the
community and in the workplace.
Polyflor has always been industry leading with regards to its
products and sustainability. We have used harvested
rainwater for production since 1915 and have been
recycling vinyl since we pioneered it in 1950. Polyflor was an
early adopter of BRE with products first assessed on a Life
Cycle Analysis in 2005 and we were the first commercial
flooring manufacturer to achieve the BRE’s standard for
Responsible Sourcing, BES 6001, for many of our products.
Other firsts as a flooring manufacturer included achieving
GreenTag’s LCARate certification and rolling out a recycling
initiative inclusive of site collections and distributor drop-off
sites to suit all customer and waste volume requirements.
Undoubtedly, recent years have presented significant
challenges to our businesses, however, Polyflor has
continued to perform well and has maintained a full focus
on its sustainability objectives. Our investment in
sustainability initiatives has continued throughout,
including our Recofloor recycling scheme which is widely
regarded as one of the best examples of its type. Co-
founded by Polyflor in 2009, Recofloor continues to
significantly reduce the environmental impact of Polyflor
and its customers and is a scheme we are very proud of.
In 2023, Polyflor made further progress across a broad range
of its objectives and was able to reduce carbon footprint
across a number of key areas of the business, not least
production and logistics. Of course, the business remains
committed to continual improvement with sustainability at
the heart of our operations and we look forward to
reporting further significant progress next year.
The strategic report was approved by the board of directors
and signed on behalf of the board.
D N Fletcher
Secretary
30 September 2024
20
Report of the Directors
The directors are pleased to present their report, together
with the audited accounts for the year ended 30 June 2024.
Results and dividends
The group results for the year and the financial position at
30 June 2024 are shown in the consolidated income
statement on page 37 and the consolidated balance sheet
on page 39.
The directors are recommending a final dividend of 6.00p
(2023: 5.75p) per share on the ordinary share capital for
payment on 13 December 2024 to those shareholders on the
register at 15 November 2024. This final dividend together
with the interim dividend of 2.50p (2023: 2.25p) per share
paid on 14 June 2024 makes a total dividend of 8.50p
(2023: 8.00p) per share for the year.
Directors
The directors who held office during the year, and up to the
date of signing this report, were as follows:
J A Wild
M Halstead
G R Oliver
D W Drillingcourt (appointed 8 January 2024)
S D Hall (resigned 1 March 2024)
R P Whiting
M J Halstead
D A Harrison (appointed 8 January 2024)
Mr J A Wild and Mr M Halstead are the directors retiring by
rotation. Mr J A Wild has decided not to seek re-election and
will stand down as a director at the annual general
meeting. Mr D W Drillingcourt and Mrs D A Harrison were
appointed by the board on 8 January 2024. Mr M Halstead,
Mr D W Drillingcourt and Mrs D A Harrison offer themselves
for re-election at the annual general meeting.
The interests of the directors and their families in the share
capital of the company were as follows:
30 June 2024 30 June 2023
Beneficial As Trustee Beneficial As Trustee
J A Wild 300,600 23,950,720 300,600 23,950,720
M Halstead 26,523,406 22,244,704 26,505,604 22,246,584
G R Oliver 455,570 252,548 440,988 254,428
D W Drillingcourt 7,170 252,548 7,170 254,428
R P Whiting – – – –
M J Halstead 1,376,234 – 1,376,234 –
D A Harrison – – – –
The directors consider that the board of directors include
key management for all areas of the business and that there
are no other key management which require disclosure.
Details of the directors’ options under the terms of the
executive share option scheme are set out in note 27.
Substantial interests
As at 16 September 2024 the company had been notified of
the following interests which represent 3% or more of the
existing issued share capital:
Number %
John Halstead Settlement 70,894,436 17.0
Rulegale Nominees 51,143,068 12.3
St Annes Square Nominees 31,899,953 7.7
Octopus Investment Nominees 27,089,141 6.5
HSBC Global Custody Nominee (UK) 15,637,789 3.8
Share capital
Full details of the company’s share capital and movements
during the year are set out in note 11 to the company’s
financial statements.
Special business at the annual general
meeting
Resolution 7 renews the directors’ authority to offer
ordinary shareholders the opportunity to take ordinary
shares in lieu of any cash dividends which may be payable
prior to the Annual General Meeting in 2025.
Resolution 8 authorises the directors to allot relevant
securities pursuant to section 551 of the Companies Act
2006 up to a maximum nominal amount of £6,946,440
representing approximately 33.33% of the total ordinary
share capital. The authority will expire at the next Annual
General Meeting of the company to be held in 2025 or six
months after the next accounting reference date of the
company (whichever is the earlier).
Except for the issue of shares to satisfy the exercise of share
options granted under the share schemes, the board has no
present intention of issuing any ordinary share capital of the
company. As at the date of this document, the company
holds no treasury shares.
Resolution 9 invites shareholders to renew the board’s
authority to issue shares for cash without first being
required to offer them pro rata to existing shareholders.
The proposed authority will terminate at the next Annual
General Meeting of the company to be held in 2025 or six
months after the next accounting reference date of the
company (whichever is earlier). The authority is limited to
equity securities up to an aggregate nominal amount of
5.0% of the company’s issued ordinary share capital. The
resolution also contains provisions to enable the directors to
deal with fractional entitlements and other practical
difficulties which could arise in the event of a rights issue or
similar pre-emptive offer.
21
Resolution 10 seeks to renew the authority of shareholders
to allow the company to purchase its own shares in respect
of up to 10% of the issued capital at prices not exceeding
5% above the average of the middle market quotations for
the five business days preceding the purchase. The directors
undertake that the authority would only be exercised if the
directors were satisfied that a purchase would result in an
increase in expected earnings per share and was in the best
interests of the company at that time. The directors may
choose to hold shares purchased under such authority in the
form of treasury shares (subject to a maximum of 10% of
the issued ordinary share capital at any one time).
Resolution 11 seeks shareholder approval for the new James
Halstead plc Long-term Incentive Plan (“LTIP”) 2024 which
will be used to grant options over shares which would have
previously been granted under part B of the Company Share
Option Plan (“CSOP”), which was approved by shareholders
in 2020. The new scheme will follow best market practice
with vesting of awards being conditional on achievement of
performance criteria and the subsequent exercising of
awards being subject to malus and clawback provisions. The
total number shares subject to employee incentive
arrangements (including both CSOP & LTIP) will not exceed
10% of the company’s issued share capital.
Going concern
The directors have reviewed current performance and forecasts,
combined with capital investment and expenditure
commitments, and a range of trading scenarios. The forecasts
cover the next two financial years. The group has no net
borrowings and owns the freeholds on many of its premises
(the most significant being four UK operating sites and two
sites in Germany).
After considering current trading, forward forecasts and
scenario planning the directors have formed a judgement, at
the time of approving the financial statements, that there is a
reasonable expectation that the group has adequate resources
to continue in operational existence and meet its liabilities as
they fall due for the foreseeable future. The directors have not
identified any material uncertainties relating to events or
conditions that, individually or collectively, may cast significant
doubt on the entity’s ability to continue as a going concern for
a period of at least one year from when the financial
statements are authorised and approved for issue. For this
reason, the directors continue to adopt the going concern basis
in preparing the financial statements.
Employee involvement
Within the UK we have both 25 year clubs and 40 year clubs
for all employees. Many employees have worked their entire
career for the group, and retaining an experienced workforce is
important to our long term success. Our workforce retention
rate is very high. Recruitment is biased to the local area, and
we have a number of graduate recruits and offer internships to
support younger people looking to develop their employment
skills. We look to pass on knowledge and we are involved in
skills training to the flooring industry, technical knowledge to
the industry in general and involvement in the Chartered
Institute of Human Resource Management’s “Skills Ahead
Mentoring Project”. We have a floor fitting school for the
industry and this is accessible to employees allowing them to
gain skills for use in their own homes.
Promotion or opportunities in different departments are
often recruited from within the business and is preferred to
external candidates. The senior management and the
directors having, in the main, come from lower positions
within the business, including the executive directors of the
main company. Our recycling partnership presents to senior
management and staff on a regular basis to promote a better
understanding of achievements and goals to involve more of
our staff in sustainability.
We have a firm belief in equality and our main subsidiaries are
SA8000 accredited (an independent standard for decent
working environments). Also BS OHAS 18001 accredits our
occupational and safety management protocols.
All our UK employees are offered pension scheme benefits
with company contribution and many UK employees are
shareholders in the company by virtue of a long standing
employee participation scheme. This is currently being
reviewed to make it even more relevant to the group today.
On the more personal level we operate a company supported
social club for employees, we have outdoor seating, we offer
bike sheds and there are shower facilities at most sites. Also
there are break out zones and facilities to either buy or
prepare food at all our sites. The company looks favourably on
providing time for employees to undertake voluntary work.
Across our sites there are regular consultation meetings with
employee representatives (some with trade union
representatives). Our employees are an important asset and
are kept abreast of group performance at least twice a year.
In terms of decisions directly affecting employees,
communication is by line managers in the first instance, but
the directors will discuss overall matters with designated
representatives. In regard to the principal decisions of the
business the board has considered the employees as a group
and their wellbeing as a whole.
Health and safety
The health and safety of the group’s employees, customers and
members of the general public who may be affected by the
group’s activities continue to be matters of primary concern. It
is therefore the group’s policy to manage its activities so far as
to avoid causing any unnecessary or unacceptable risk to the
22
Report of the Directors
continued
health and safety of all those affected by its activities. In order
to ensure that the group’s high standards in this area are
maintained, a substantial programme of training and retraining
of employees took place throughout the year.
Research and development
We remain totally committed to the continuing
development of our processes and our products to both
satisfy the needs of our customers and ensure that we
remain at the forefront of our industry.
Environmental policy
A policy has been issued and implemented on safeguarding
against air, water, noise and land pollution. The management
team constantly reviews and implements at every
opportunity the most effective use of materials and energy.
A number of control measures have been introduced and
these, combined with materials storage and handling
methods, together with training, form the basis of the
environmental programme. The policy is fully endorsed by
the directors and is under constant review to ensure full
compliance with the UK Environmental Protection Act 1990.
All employees, suppliers and contractors are made aware of
the environmental policy which is also freely available to
the general public and regulatory authorities.
Emissions and energy consumption
Scope 1 and 2 consumption and carbon dioxide emission
data has been calculated in line with the 2019 UK
Government environmental reporting guidance. Emissions
Factor Database 2021 version 1 has been used, utilising the
published kWh gross calorific volume and kgCO2e
emissions factors relevant for the reporting period.
Year ended 30 June
2024
2023
Tonnes
Tonnes
of CO2e
of CO2e
Scope 1 - direct emissions
(UK facilities and vehicles)
9,180
9,120
Scope 2 - indirect emissions
(UK purchased electricity)
5,594
4,035
Total Scope 1 and Scope 2 emissions
14,774
13,155
Intensity metric – total scope
1 & 2 emissions per metric tonne
produced
0.25
0.27
Total UK energy consumption
(kWh)
75,299,464 68,576,711
The group is committed to improvements in operational
energy efficiency. The energy efficiency measures that were
undertaken during the year were:
The ongoing installation of LED lighting to replace old
inefficient lighting.
Thermographic surveys of electrical equipment to
identify abnormally high temperatures within our
electrical distribution systems. This equipment may be
operating incorrectly and consuming high amounts of
energy. The equipment may be replaced or
performance optimised.
A database system that monitors energy consumption
and identifies areas of abnormal consumption for
measures to reduce consumption.
Surveys of compressed air systems to identify and
repair leakages to reduce wasted energy.
Replacement of an old transformer with a new
amorphous
core
transformer. This
advanced
technology will enhance energy efficiency and reduce
operating costs.
Replacement of the entire high pressure hot water
system. This comprehensive upgrade will improve
efficiency and performance.
Replacement of various motors with variable speed
drives. This will improve energy efficiency and
optimise performance.
Quarterly energy performance review meetings to
consider and initiate improvements.
The group are in the process of completing the Energy
Savings Opportunity Scheme Phase 3 compliance. The group
is taking necessary measures to ensure all requirements are
met efficiently. This compliance effort demonstrates the
group’s commitment to sustainability and regulatory
adherence. Following Phase 3 compliance, all energy saving
opportunities identified will be analysed and if feasible
implemented.
Risk management
Information in relation to risk management and future
developments can be found in the financial director’s review
in the strategic report.
Directors’ responsibilities statement
The directors are responsible for preparing the annual report
and the financial statements in accordance with applicable
law and regulations.
Company law requires the directors to prepare financial
statements for each financial year. Under that law the
directors have, as required by the AIM Rules of the London
Stock Exchange, elected to prepare the group financial
23
statements in accordance with UK adopted international
accounting standards. The directors have elected to prepare
the parent company financial statements in accordance
with United Kingdom Generally Accepted Accounting
Practice (United Kingdom Accounting Standards and
applicable law) including Financial Reporting Standard 101
Reduced Disclosure Framework. Under company law the
directors must not approve the financial statements unless
they are satisfied that they give a true and fair view of the
state of affairs of the group and the company and of the
profit or loss of the group for that period.
The directors are also required to prepare financial
statements in accordance with the rules of the London
Stock Exchange for companies trading securities on the
Alternative Investment Market.
In preparing these financial statements the directors are
required to:
select suitable accounting policies and then apply
them consistently;
make judgements and accounting estimates that are
reasonable and prudent;
state whether the group financial statements have
been prepared in accordance with UK adopted
international accounting standards subject to any
material departures disclosed and explained in the
financial statements; and
prepare the financial statements on the going concern
basis unless it is inappropriate to presume that the
group and company will continue in business.
The directors are responsible for keeping adequate
accounting records that are sufficient to show and explain
the company’s transactions, to disclose with reasonable
accuracy at any time the financial position of the company
and enable them to ensure that the financial statements
comply with the Companies Act 2006. They are also
responsible for safeguarding the assets of the company and
the group and hence for taking reasonable steps for the
prevention and detection of fraud and other irregularities.
The directors are responsible for ensuring the annual report
and financial statements are made available on a website.
Financial statements are published on the company’s
website in accordance with legislation in the United
Kingdom governing the preparation and dissemination of
financial statements which may vary from legislation in
other jurisdictions.
The directors are responsible for the maintenance and
integrity of the corporate and financial information included
on the company's website. The directors’ responsibilities
also extend to the ongoing integrity of the financial
statements contained therein.
Auditor
A resolution to re-appoint BDO LLP as auditor will be
proposed at the forthcoming annual general meeting.
Directors’ statement as to the disclosure
of information to the auditor
All of the current directors have taken all the steps that they
ought to have taken to make themselves aware of any
information needed by the company’s auditor for the
purposes of their audit and to establish that the auditor is
aware of that information. The directors are not aware of any
relevant audit information of which the auditor is unaware.
Approved by the board of directors and signed on behalf of
the board.
D N Fletcher
Secretary
30 September 2024
24
Remuneration committee
The remuneration committee comprises the non-executive
directors, with Mr M J Halstead, as chairman. The committee
meets at least once a year, although usually more
frequently, to determine the remuneration packages of the
executive directors of the group.
The remuneration policy for the non-executive directors is
determined by the board as a whole by reference to market
rates. They do not participate in the group bonus scheme,
pension scheme or share option scheme. No director can
vote in regard to his own remuneration.
Remuneration policy
The remuneration policy is to provide terms of employment
such that the recruitment, motivation and retention of high
calibre personnel is achieved and maintained to the mutual
benefit of shareholders and employees. The committee is
assisted from time to time by data supplied by independent
professional remuneration consultants as to comparable
companies, although identical circumstances are rarely
found.
Basic salary and bonus payments
The directors’ salaries and fees for the year are disclosed in
note 14. Annual bonus schemes are in place which reward
the executive directors on achieving performance
objectives. Performance is determined by index-linked profit
improvements through a trend of earnings per share growth.
UK based executives are eligible members of the employee
share scheme. Performance bonuses of £550,000 to each of
the chief executive and finance director were paid during
the year. These related to the 2023 financial year.
Share option schemes
The remuneration committee believes that share option
plans are an important long term incentive to executive
directors and other senior employees. They are intended to
link the exercise of the option to a sustained and significant
improvement in the underlying financial performance of the
group.
The committee undertook a review of long-term incentives
which focused on market practice, alternative long-term
incentive approaches and the structure of the current
company share option plan (“CSOP”) which was approved
by shareholders in 2020. Following careful consideration, the
committee approved the introduction of a new long-term
incentive plan (the “LTIP”) which will replace share option
awards that would have previously been granted under Part
B of the current CSOP.
The rules of the scheme will follow market practice and
include an individual grant limit based on a percentage of
annual salary, performance conditions, malus and clawback
provisions and the total number of shares subject to
employee incentive arrangements (which would include the
Company’s existing CSOP and any other equity incentive
arrangements) will not exceed 10% of the company’s issued
share capital.
While there is no requirement for shareholder approval for
the Plan, we consider it prudent to obtain such approval at
the forthcoming AGM. The grant of the first award under the
LTIP will take place once shareholder approval has been
obtained and details of any grants subsequently awarded
will be included in the company’s report and accounts.
Pensions
The company operates a defined contribution pension
scheme for employees. The corporate development director
is the only director who is a member of the defined
contribution pension scheme. His employer pension
contributions were £15,000. There is also a defined benefit
pension scheme which was closed to new members in 2002
and to future accrual in 2023. The chief executive, finance
director, and corporate development director are deferred
members of the defined benefit pension scheme. Death in
service life assurance and permanent health insurance are
also provided.
Service agreements
The chairman and the chief executive do not have service
agreements. The finance director and the corporate
development director each has a service agreement which
terminates within or is terminable by the company and the
executive on not more than one year’s notice. The
remuneration committee has taken the view that notice
periods of one year are reasonable and in the interests of
both the company and its executive directors having regard
to prevailing market conditions and current practice. Mr R P
Whiting, Mr M J Halstead and Mrs D A Harrison each has a
service contract for an initial term of two years from the
date of appointment, which can be terminated by either
party by one month’s written notice.
M J Halstead
Chairman of the Remuneration Committee
30 September 2024
Board Report on Remuneration
25
Corporate Governance
Chairman’s introduction to
governance
The board has over many years recognised its responsibility
towards good corporate governance. It is part of our
character and, I believe, contributes to our ability to deliver
long-term shareholder value. The Financial Reporting
Council and the Quoted Company Alliance have both issued
guidance on governance and having assessed these codes
we have aligned our approach to the latter. In many ways
this is a continuing process but in the following paragraphs
we outline how we effect this code and I trust our
shareholders will take the time to review our comments.
It is my belief that good governance is accountability to
shareholders as a whole over time rather than being swayed
by current short term objectives of individual holders. For
many companies some shareholders are transient and focus
short term, looking for ambitious acquisitions or risky
strategies and yet quick to exit at the first sign of problems.
Management need to be focused on the medium to long
term goal as much as current issues.
Anthony Wild
Chairman
30 September 2024
Directors and committees
The company is controlled by the board of directors. The
board consists of a non-executive chairman, three executive
directors, a senior independent director and two non-
executive directors.
The board has two sub committees: a remuneration
committee and an audit committee.
The directors are named below along with their membership
of board committees.
Remuneration
Audit
Director
Role
Committee
Committee
Mr Anthony Wild
Non-executive
Chairman
X
X
Mr Mark Halstead
Chief
Executive
Mr Gordon Oliver
Finance
Director
Mr David Drillingcourt Corporate
Development
Director
Mr Russell Whiting
Non-executive
Director
X
X
Mr Michael Halstead
Non-executive
Director
X
X
Mrs Deborah Harrison Non-executive
Director
X
X
The board
The role of the board is summarised as follows:
To establish and maintain the group’s vision, mission
and values
Decide on the current and future strategy to ensure
the group’s longevity
To delegate to management the implementation of
policies, strategies and business plans while ensuring
the framework of internal controls is effective
Account to shareholders and stakeholders to promote
their interests and the goodwill to the group
The board comprises three executive directors and four non-
executive directors. The roles of chairman and chief
executive are separated.
Directors
Mr Anthony Wild – non-executive Chairman
Mr Wild was appointed to the board as senior independent
director in 2001 and chairman in 2017. He was a Chartered
Accountant and was senior partner in a local firm for many
years offering management consultancy services. He brings a
long and in depth knowledge of James Halstead plc, its
heritage and strategy over many years along with business
and commercial knowledge obtained in a career of business
advice. A key responsibility of the chairman is to lead the
board effectively and to oversee the adoption, delivery and
communication of the company’s corporate governance
model. The chairman as a non-executive director has
adequate separation from the day-to-day business to be able
to have an independent view. The chairman ensures that the
board receives accurate, timely and clear information and
there should be good information flows within the board and
its committees as well as between the NEDs and senior
management.
Mr Mark Halstead – Chief Executive
Mr Halstead has over 30 years’ experience in the group
holding senior management positions within Polyflor prior
to his appointment as group chief executive in 2002. Having
gained his grounding in many aspects of the group’s flooring
activities Mr Halstead focused on exports and founded our
operations in Europe. He brings unparalleled knowledge of
the group’s activities, the products and positioning in
markets and experience to allow for the assessment of
future opportunities for the group both in commercial terms
and product related. Mr Halstead is tasked with the delivery
of the business model agreed within the strategy set by the
board.
26
Corporate Governance
continued
Mr Gordon Oliver – Finance Director
Mr Oliver is a Chartered Accountant. He trained with KPMG
and held a number of financial positions in industry prior to
joining James Halstead in 1987 as group financial controller.
He was instrumental in the disposal of non-core businesses
in the UK and overseas and became finance director of the
group in 1999. He brings knowledge of financial
management and control, corporate governance and
business acumen to the business as well as development of
future strategy arising from a long period as a member of
the board. During his time with the company Mr Oliver’s
standing has been recognised by several awards from his
peers and the financial press. Mr Oliver is tasked with
working closely with the chief executive to progress the
business and to have regard to mitigation of risk. In addition
a key role is integrity of the financial information and
communicating to the board the financial implications of
areas of subjective judgement.
Mr David Drillingcourt – Corporate development director
Mr Drillingcourt is a Chartered Accountant and trained with
KPMG before joining the company in 1996 as group
accountant. He served as finance director at two of the
company’s subsidiaries, Phoenix Distribution (NW) Limited
(1999-2005) and Polyflor Limited (2005 – 2013). He served
as company secretary (2013 – 2021). He was appointed
corporate development director in 2019. Working closely
with the subsidiary directors, the role is designed to help
support the future growth of the business across the globe.
Mr Drillingcourt was appointed to the board in 2024.
Mr Russell Whiting – senior independent director
Mr Whiting was appointed to the board in 2017. He was
appointed senior independent director in 2024. He is a local
businessman and is director of a company involved in
leasing of assets, Associated Credits Holdings Ltd. As well as
general business acumen he brings specific understanding of
business and asset financing to a broad range of commercial
enterprises. He has known the group for a number of years
through his business. Mr Whiting possesses the critical skills
that are relevant to modern companies, which includes both
technical experience and the ability to positively challenge
and to listen in equal measure.
Mr Michael Halstead – non-executive director
Mr Halstead was appointed to the board in 2017. He has
many years’ experience in the advertising industry having
been an account director for Saatchi and Saatchi and more
recently running his own company HH&S Group Limited.
He brings general business acumen to the board along with
specifics relating to marketing and public relations arising
from his background. Mr Halstead provides oversight and
scrutiny of the performance of the executive directors,
whilst both constructively challenging and inspiring them,
thereby ensuring the business develops, communicates and
executes the agreed strategy and operates with reference to
the risk management framework. Mr Halstead is in the 4th
generation after the founder and has never worked within
the business but is passionate to preserve the principles of
the company and to contribute to its continued success. Mr
Halstead is chairman of the remuneration committee.
Mrs Deborah Harrison – non-executive director
Mrs Harrison was appointed to the board in 2024. She is a
Chartered Accountant. She has over thirty years of
experience, with PKF and BDO, providing auditing and
accounting services to both public and private companies.
She has significant experience of dealing with international
groups of companies. Her knowledge of both UK and
International Financial Reporting Standards and corporate
reporting requirements will further enhance the board’s
financial expertise. Mrs Harrison is chairman of the audit
committee.
Attendance at the six board meetings during the year was as
follows:
Possible Actual
J A Wild 6 6
M Halstead 6 6
G R Oliver 6 6
D W Drillingcourt 3 3
S D Hall 4 4
R P Whiting 6 6
M J Halstead 6 6
D A Harrison 3 3
Internal control
The board has ultimate responsibility for the system of
internal control operating throughout the group and for
reviewing its effectiveness. Internal control systems in any
group are designed to meet the particular needs of that
group and the risks to which it is exposed. No system of
internal control can provide absolute assurance against
material misstatement or loss. The group’s system is
designed to manage rather than eliminate the risk of failure
in order to achieve business objectives and to provide the
board with reasonable assurance that potential problems
will normally be prevented or will be detected in a manner
which will enable appropriate action to be taken.
27
The key procedures which the directors have established
with a view to providing effective internal control are as
follows:
the group directors are responsible for establishing,
maintaining and reviewing the group’s system of
internal control and meet regularly to consider group
financial performance, business development and
management issues, and to review these against
predetermined objectives;
the group board establishes corporate strategy and
business objectives. Management of subsidiary
companies integrate these objectives into their
business strategies for presentation to the group
board with supporting financial objectives;
subsidiary company budgets, containing financial and
operating targets, capital expenditure proposals and
performance/profitability indicators, are presented to
and reviewed by the group executive directors. The
consolidated group budget is approved by the group
board;
there is an ongoing process for identifying, evaluating
and managing the significant risks faced by the group.
These risks are appraised and evaluated by
responsible executives and endorsed by subsidiary
and group management. This process has been in
place throughout the year and up to the date of
approval of the annual accounts;
as part of the regular monitoring and review, the
group executive directors hold regular meetings with
the management of the subsidiary companies at
which reports covering such areas as forecasts,
business development, strategic planning, risk
exposure and performance against budget, are
presented and discussed. These are then reported to
the group board, on a quarterly basis;
the group board reviews and considers any major
problem which may have occurred and assesses how
the risks have changed in the period under review;
there is a group-wide policy governing appraisal and
approval of capital expenditure and asset disposals;
to underpin the effectiveness of controls, it is the
group’s policy to recruit management and staff of
high calibre, integrity and appropriate disciplines.
High standards of integrity, business ethics and
compliance with laws, regulations and internal
policies are demanded from staff at all levels;
the audit committee keeps under review the
effectiveness of the system of internal control and
reports its conclusions to the full board;
the board also conducts an assessment of the
effectiveness of the internal control system.
This assessment consists of a review of all the
significant areas of internal control, including risk
assessment, the control environment, control
activities, information and communication, and
monitoring.
The Quoted Company Alliance Code
(“QCA code”)
The directors recognise the importance of good corporate
governance and have chosen to apply the QCA code as their
framework to do so. The QCA code was developed by the
Quoted Company Alliance in consultation with a number of
institutional small company investors as an alternative code
applicable to AIM companies. The QCA code was published
in April 2018.
The QCA code sets out ten principles which seek to ensure
that the overall framework for corporate governance is
robust. The directors believe that this framework is
appropriate to the size and operations of the business and
each of the principles is commented on below. Many of the
disclosures relevant to the code are already made in our
annual report and accounts.
The chairman has the responsibility for corporate
governance and has taken a lead on this matter. The
executive team are directed with day to day management
and are accountable to the rest of the board. The chairman
expects and demands open discussion of issues facing the
business and in the application of this code has sought input
from the auditors, the company’s advisors and a review by
the company lawyer. The board is tasked with continuing
the success of the business over time and through
successive generations of management and the importance
of corporate governance is to oversee the division of
ownership and stewardship. The executive directors have the
day to day responsibility of stewardship and the chairman
and non-executives monitor and evaluate this on behalf of
the owners.
James Halstead plc has been listed on the London stock
exchange for over 70 years and continues to look for growth
in sales and profit to continue its strong record of reward to
shareholders in the form of dividend. Whilst this is a primary
role, the board is proud of its reputation within its industry
and the financial markets and corporate control is central to
the ethos.
28
Corporate Governance
continued
The disclosures below were last reviewed and approved by
the board on 30 September 2024.
QCA Principles and James Halstead
plc’s approach
1.
Establish a strategy and business model which promote
long-term value for shareholders
James Halstead plc’s strategy is explained fully within our
Strategic Report section in our Report and Accounts each
financial year.
Our strategy is focussed on stable profitable growth from
building the goodwill in our brands and products leading to
increasing dividends over time.
Key risks and mitigating factors to our business are also
detailed annually in our Report and Accounts.
2.
Seek to understand and meet shareholder needs and
expectations
The board has a track record of increasing dividends over
many years. Where the business has generated funds in
excess of its medium-term requirements and no specific
investment requirements exist the board has also
encouraged the payment of special dividends over the years.
Members of the board talk regularly to both institutional
and private investors and the financial press to ensure that
company’s strategy and objectives are communicated. The
group has a large number of shareholders and regular broker
updates are published.
The company regularly hosts institution and broker site
visits to update on progress and the executive directors are
in ongoing contact with the nominated advisor who
communicates more closely with the market.
Shareholders can contact the company secretary with
questions and may be referred to the directors.
In addition, the AGM acts as a forum for all shareholders to
meet with the board and raise any questions they may have.
3.
Take into account wider stakeholder and social
responsibilities and their implications for long-term
success.
The board recognises that the group has responsibilities to
many stakeholders other than its shareholders. This includes
employees, customers, suppliers and the wider societies in
which we operate.
In terms of communications with stakeholders this is done
in ways appropriate to the stakeholder and may take the
form of formal announcements, individual meetings (for
example appraisals with employees) and negotiations with
other stakeholders.
The environmental impact of our manufacturing and our
output is of significant importance to our medium term
prospects not only to demonstrate our commitment to the
community at large but also to customers who increasingly,
and rightly, look for suppliers with strong ethical values.
As a member of the communities in which we operate the
board takes seriously the impact the business has, positively
in terms of being an employer and seeking continuous
improvement with respect to the impact on the
environment and communities. This is illustrated by our
annual “Sustainability Report” copies of which are available
on www.polyflor.com which outlines the impact of our
manufacturing operations on the wider environment and
improvements over time. Feedback from the local
community is received directly to the head office. This
report has been published for nearly two decades and is now
an annual report.
We understand continuous development of our products
also contributes to our responsibilities as well as the success
of the business. This is illustrated, for example, by
development of “dementia friendly” flooring in recent years.
The operating businesses encourage feedback from
customers through their relationship managers in the
business and customer service teams.
4.
Embed effective risk management, considering both
opportunities and threats, throughout the organisation.
Risk management is reported annually in our Report and
Accounts along with how those risks are mitigated and how
they change over time.
The board meets six times a year during which business and
other risks are assessed. Key subsidiaries have their own
management boards which meet regularly and assess the
risks relevant to that specific business and relevant
responses. These are communicated to the main board
either by direct representation or via group management
structures that are in place. There are also formal and
informal communication routes that allow for risks to be
communicated to board members in a timely manner from
all operational entities.
5.
Maintain the board as a well-functioning, balanced
team led by the chair.
Anthony Wild, the non-executive chairman is responsible for
the running of the board and Mark Halstead as chief
executive has responsibility for implementation of the
board’s direction.
29
A monthly report is provided to the board of the financial and
operational performance of the group. Information is
provided in advance of meetings.
The board is responsible for all strategic decisions and the
overall governance and culture of the group.
All the directors have access to the services and advice of the
company secretary and are able to take independent
professional advice to enable them to do so. This may be done
at the group’s expense.
The board has a majority of non-executive directors and
consider that they bring independent thought and judgement
to bear as well as business experience out-with the group.
The board has sub committees with specific remits,
specifically remuneration and audit committees and detail of
the number of meetings and attendance by directors is noted
in the Annual Report.
6.
Ensure that between them the directors have the
necessary up-to-date experience, skills and capabilities
The board evaluates consistently those skills that are
required and whether they are adequately provided for. In
doing so and where relevant it will consider guidance available
on appointment and training of board members. The Company
Secretary has the responsibility to make the board aware of
legal changes and will advise on the company’s approach. For
example the recent GDPR requirements and previously the
Market Abuse Regulations (MAR).
The company secretary supports the chairman in addressing
the training and development needs of the directors. In the
case of new directors there is an induction process to ensure
they become aware of the operations of the group.
The directors are aware of their individual responsibility to
undertake appropriate continuing development.
7.
Evaluate board performance based on clear and relevant
objectives seeing continuous improvement.
The board will take account of the Financial Reporting
Council’s Guidance on Board Effectiveness as it evaluates on
a regular basis its performance. The remuneration committee
meets formally and is tasked with not only the remuneration
of the executive directors but also evaluation of performance.
To this end the board is circulated with press comment and
market feedback on the business. Market share data and peer
group analysis is available.
In terms of the financial performance the auditors meet the
audit committee (comprising the non-executives) bi-
annually and beyond the audit report do comment on the
systems, procedures and efficacy of the management. The
nominated advisor has access to the Chairman and meets
the non-executives annually.
A rigorous recruitment process is undertaken for new
directors prior to their proposal and election. In terms of re-
election their performance is reconsidered prior to them
being proposed to ensure they remain effective in their role
and that they retain their independence.
Re-election is considered by the shareholders at the AGM at
which shareholders have the opportunity as a body to
approve or otherwise board membership. Succession
planning for the board and as importantly the key
executives around the world who manage our businesses is
an ongoing topic of discussion.
8.
Promote a corporate culture that is based on ethical
values and behaviours.
The board expects the highest ethical standards of its
members and management across the group.
The group has documented procedures with respect to its
responsibilities regarding ethical behaviour, specifically
bribery and corrupt practices and modern slavery and these
are applicable across its operations including supply and
customer chains.
The board also takes seriously its responsibilities towards
sustainability of its operations and the impact of our
operations on the environment. This is documented and
reported on annually in Polyflor’s Sustainability Report.
As an employer and member of many communities
throughout the world, the board consider that strong ethical
values to be a good member of these communities is a mind-
set not one underpinned by rules and procedures. Ensuring,
via recruitment processes and cultural values that this
cascades through the business is critical to ensuring the
group is a “good member of the community”. All directors of
the group’s companies are expected to comply and are given
a manual on procedures and expectations. This covers
authority levels and gives guidance on appropriate behaviour.
Ultimately service contracts underpin this by indicating
behaviour that can be deemed a breach of contract and the
directors are clear about their statutory duties as formally
set out in sections 171 – 177 of the Companies Act 2006.
30
Corporate Governance
continued
9.
Maintain governance structures and processes that are
fit for purpose and support good decision making by the
board
Corporate governance disclosures are assessed at least
annually, including whether the structures and processes are
fit for purpose.
The board retains ultimate accountability for maintaining
good governance. The executive directors are responsible for
the day-to-day operational management of the group and
the non-executive directors are responsible for bringing
their independent and objective judgement to board
discussions and decisions. The roles of chairman and chief
executive are split in accordance with best practice. The
board are responsible for the implementation of strategy,
the achievement of performance and ensuring the
framework of internal controls is effective. The board has
delegated specific responsibilities to the audit and
remuneration committees.
The audit committee assists the board by ensuring that the
financial performance of the group is properly reported. It
oversees and reviews the internal control processes, its
relationship with external auditors and the process for
ensuring compliance with laws, regulations and corporate
governance.
The remuneration committee is responsible for establishing
a formal and transparent procedure for developing policy on
remuneration and to set the remuneration packages of
individual directors, including, where appropriate, bonuses,
incentive payments and share options.
Due the nature and size of the company, the directors have
determined that a nomination committee is not necessary
and that issues concerning the nomination of directors will
be dealt with by the board directly.
10. Communicate how the company is governed and is
performing by maintaining a dialogue with shareholders
and other relevant stakeholders
The AGM is a key forum for communications with any
shareholders who wish to attend, and the directors are
available here to listen to views expressed both formally and
informally. This combined with the normal cycle of
announcements is the key method of communication. The
outcome of resolutions put to the AGM are published and
are available on the company website.
In terms of publication of results, the company uses the
Stock Exchange regulatory news service (RNS) to advise the
market (i.e. shareholders and others) of performance and
significant matters. As a group we do not find social media
(Facebook, twitter etc.) an appropriate medium for
dissemination of news due to the “sound-bite” nature of the
medium. Brokers are updated and circulate notes regularly.
The group has, where appropriate, communications with
major institutional and private shareholders and encourages
dialogue.
31
Independent Auditor’s Report to the Members of
James Halstead plc
Opinion on the financial statements
In our opinion:
the financial statements give a true and fair view of
the state of the Group’s and of the Parent Company’s
affairs as at 30 June 2024 and of the Group’s profit
for the year then ended;
the Group financial statements have been properly
prepared
in
accordance
with
UK
adopted
international accounting standards;
the Parent Company financial statements have been
properly prepared in accordance with United
Kingdom Generally Accepted Accounting Practice; and
the financial statements have been prepared in
accordance with the requirements of the Companies
Act 2006.
We have audited the financial statements of James
Halstead plc (the ‘Parent Company’) and its subsidiaries (the
‘Group’) for the year ended 30 June 2024 which comprise
the Consolidated Income Statement, the Consolidated
Statement of Comprehensive Income, the Consolidated and
Company Balance Sheets, the Consolidated and Company
Statement of Changes in Equity, the Consolidated Cash
Flow Statement and notes to the consolidated and Parent
Company financial statements, including material
accounting policy information.
The financial reporting framework that has been applied in
the preparation of the Group financial statements is
applicable law and UK adopted international accounting
standards. The financial reporting framework that has been
applied in the preparation of the Parent Company financial
statements is applicable law and United Kingdom
Accounting Standards, including Financial Reporting
Standard 101 Reduced Disclosure Framework (United
Kingdom Generally Accepted Accounting Practice).
Basis for opinion
We conducted our audit in accordance with International
Standards on Auditing (UK) (ISAs (UK)) and applicable law.
Our responsibilities under those standards are further
described in the Auditor’s responsibilities for the audit of the
financial statements section of our report. We believe that
the audit evidence we have obtained is sufficient and
appropriate to provide a basis for our opinion.
Independence
We remain independent of the Group and the Parent
Company in accordance with the ethical requirements that
are relevant to our audit of the financial statements in the
UK, including the FRC’s Ethical Standard as applied to listed
entities, and we have fulfilled our other ethical
responsibilities in accordance with these requirements.
Conclusions relating to going concern
In auditing the financial statements, we have concluded that
the Directors’ use of the going concern basis of accounting
in the preparation of the financial statements is appropriate.
Our evaluation of the Directors’ assessment of the Group
and the Parent Company’s ability to continue to adopt the
going concern basis of accounting included:
Examining the Directors’ business plan covering the
period through to October 2025. We examined the
forecasts for key judgements, verifying to source data
as appropriate, as well as considering downside
sensitivities to these;
Testing their mechanical accuracy and assessing
historical forecast accuracy;
We
considered
the
reasonableness
of
key
assumptions and mitigating actions used by the
Directors in their assessment of adverse scenarios
based on our knowledge of the business; and
Assessing the adequacy against the accounting
standards of the disclosures within the financial
statements relating to the Directors’ assessment of
the going concern basis of preparation.
Based on the work we have performed, we have not
identified any material uncertainties relating to events or
conditions that, individually or collectively, may cast
significant doubt on the Group and the Parent Company’s
ability to continue as a going concern for a period of at least
twelve months from when the financial statements are
authorised for issue.
Our responsibilities and the responsibilities of the Directors
with respect to going concern are described in the relevant
sections of this report.
32
Independent Auditor’s Report to the Members of
James Halstead plc continued
Overview
Coverage
93% (2023: 88%) of Group profit before tax
88% (2023: 79%) of Group revenue
87% (2023: 81%) of Group total assets
Key audit matters
2024
2023
Inventory provisioning
Pension scheme assumptions
Materiality
Group financial statements as a whole: £2.8m (2023:
£2.6m) based on 5% of profit before tax (2023: 5% of profit
before tax).
An overview of the scope of our audit
Our Group audit was scoped by obtaining an understanding
of the Group and its environment, including the Group’s
system of internal control, and assessing the risks of
material misstatement in the financial statements. We also
addressed the risk of management override of internal
controls, including assessing whether there was evidence of
bias by the Directors that may have represented a risk of
material misstatement.
Our Group audit scope focused on the Group's principal
operating locations being the United Kingdom and Germany.
The operations in the United Kingdom, which were deemed
to be significant components, were subject to a full scope
audit given the statutory audit requirements whilst the
significant component in Germany was also subject to a full
scope audit to component materiality. The German
component was audited by a non-BDO member firm. The
remaining components of the Group were considered non-
significant and these components were principally subject to
analytical review procedures by the Group engagement
team.
Our involvement with component auditors
For the work performed by component auditors, we
determined the level of involvement needed in order to be
able to conclude whether sufficient appropriate audit
evidence has been obtained as a basis for our opinion on the
Group financial statements as a whole.
The German operations form a significant part of Group
turnover and profitability. As part of our audit strategy, the
Responsible Individual and senior members of the Group
audit team were involved during the planning and risk
assessment process of the German component in addition
to during the completion of detailed audit procedures. We
attended key meetings with component management and
auditors, and reviewed component auditor work papers.
Key audit matters
Key audit matters are those matters that, in our professional
judgement, were of most significance in our audit of the
financial statements of the current year and include the
most significant assessed risks of material misstatement
(whether or not due to fraud) that we identified, including
those which had the greatest effect on: the overall audit
strategy, the allocation of resources in the audit, and
directing the efforts of the engagement team. These matters
were addressed in the context of our audit of the financial
statements as a whole, and in forming our opinion thereon,
and we do not provide a separate opinion on these matters.
Key audit matter – Inventory provisioning
As described in Note 2 (accounting policies) and Note 19
(inventories), the Group carries inventory at the lower of
cost and net realisable value.
Provision is made against slow moving, obsolete and
damaged inventories.
This area represented a key audit matter as significant
management judgement is required to assess the
appropriate level of provisioning for items which may be
sold below cost or written off as a result of a reduction in
consumer demand, particularly in light of changing
consumer tastes and new products being developed. Such
judgements include management's expectations for future
sales.
How the scope of our audit addressed the key
audit matter
We
obtained
evidence
concerning
management's
assumptions applied in calculating the value of inventory
provisions by:
Challenging the Group's inventory provisioning policy
with specific consideration given to slow moving or
obsolete stock lines. This involved using a weighted
average of sales records for the current and prior
period to develop an alternative estimate of the
provision, which was compared to management’s
calculation to confirm whether inventory had been
appropriately provided for;
33
Assessing the appropriateness of the percentages
applied within the provision calculated by
management with reference to post year end selling
data; and
Testing of a sample of inventory to check it is held at
the lower of cost and net realisable value, through
comparison to invoices for cost and sales prices.
We also reviewed the basis of stock provisioning applied by
significant components and considered whether these were
being applied consistently and reflected the nature of the
stock held in the respective location.
Key observation: Our work did not highlight evidence that
the method of inventory provision was inappropriate.
Key audit matter – Pension scheme
assumptions
As described in Note 2 (accounting policies) and Note 26
(retirement benefit obligations), the Group has a defined
benefit pension plan in the UK.
At 30 June 2024, the Group recorded a net retirement
benefit of £14k (2023: £1.4m obligation), comprising
scheme assets of £57.4m (2023: £56.1m) and scheme
liabilities of £57.4m (2023: £57.6m).
The pension valuation is dependent on market conditions
and key assumptions made by management, in particular
relating to investment markets, discount rate, inflation
expectations and life expectancy assumptions.
This area and the related disclosures represented a key audit
matter given that the setting of these assumptions is
complex and requires the exercise of significant
management judgement with the support of third party
actuaries.
How the scope of our audit addressed the key
audit matter
In testing the pension valuation, with the help of external
pension actuarial experts, we reviewed the key actuarial
assumptions used, both financial and demographic, and
considered the appropriateness of the methodology utilised
to derive these assumptions.
We benchmarked the scheme assumptions against other
schemes of a similar size and profile. Specifically, we
challenged the discount rate, inflation and mortality
assumptions applied in the calculation by using pension
experts to benchmark the assumptions applied against
comparable
third
party
data
and
assessed
the
appropriateness of the assumptions in the context of the
Group’s own position. We have also performed sensitivity
analysis on the assumptions determined by the Directors.
Furthermore, we have assessed the disclosure of the pension
scheme and the related assumptions and sensitivities in the
financial statements against the relevant accounting
framework.
Key observation: We have not identified any evidence to
suggest that the methodology and assumptions applied in
relation to determining the pension valuation are not within
an acceptable range. Furthermore, the disclosures made are
in accordance with the relevant accounting framework.
Our application of materiality
We apply the concept of materiality both in planning and
performing our audit, and in evaluating the effect of
misstatements. We consider materiality to be the
magnitude by which misstatements, including omissions,
could influence the economic decisions of reasonable users
that are taken on the basis of the financial statements.
In order to reduce to an appropriately low level the
probability that any misstatements exceed materiality, we
use a lower materiality level, performance materiality, to
determine the extent of testing needed. Importantly,
misstatements below these levels will not necessarily be
evaluated as immaterial as we also take account of the
nature of identified misstatements, and the particular
circumstances of their occurrence, when evaluating their
effect on the financial statements as a whole.
Based on our professional judgement, we determined
materiality for the financial statements as a whole and
performance materiality as follows:
Group financial statements
2024
2023
Materiality
£2.81m
£2.60m
Basis for determining
materiality
5% of profit before tax
5% of profit before tax
Performance materiality £1.83m
£1.69m
Parent company financial statements
2024
2023
Materiality
£1.84m
£1.82m
Basis for determining
materiality
5% of profit before tax
5% of.profit before tax
(capped at 70% of
group materiality)
Performance materiality £1.18m
£1.18m
Rationale for the benchmark applied – Pre-tax profit is
determined to be a stable basis of assessing business
performance and is considered to be the most significant
determinant of performance used by shareholders.
34
Independent Auditor’s Report to the Members of
James Halstead plc continued
Rationale for the percentage applied for performance
materiality – 65% of the above materiality level. This is
considered the appropriate basis given there are significant
components across two geographic regions (United
Kingdom and Germany), the level of misstatements in the
past and our overall risk assessment.
Component materiality
For the purposes of our Group audit opinion, we set
materiality for each significant component of the Group,
apart from the Parent Company whose materiality is set out
above, based on a percentage of between 50% and 75%
(2023: 50% and 75%) of Group materiality dependent on
the size and our assessment of the risk of material
misstatement of that component. Component materiality
ranged from £1.48m to £2.07m (2023: £1.30m to £1.95m).
In the audit of each component, we further applied
performance materiality levels of 65% (2023: 65%) of the
component materiality to our testing to ensure that the risk
of
errors
exceeding
component
materiality
was
appropriately mitigated.
Reporting threshold
We agreed with the Audit Committee that we would report
to them all individual audit differences in excess of £59,000
(2023: £52,000). We also agreed to report differences below
this threshold that, in our view, warranted reporting on
qualitative grounds.
Other information
The Directors are responsible for the other information. The
other information comprises the information included in
the Report and Accounts 2024 other than the financial
statements and our auditor’s report thereon. Our opinion
on the financial statements does not cover the other
information and, except to the extent otherwise explicitly
stated in our report, we do not express any form of
assurance conclusion thereon. Our responsibility is to read
the other information and, in doing so, consider whether the
other information is materially inconsistent with the
financial statements or our knowledge obtained in the
course of the audit, or otherwise appears to be materially
misstated. If we identify such material inconsistencies or
apparent material misstatements, we are required to
determine whether this gives rise to a material
misstatement in the financial statements themselves. If,
based on the work we have performed, we conclude that
there is a material misstatement of this other information,
we are required to report that fact.
We have nothing to report in this regard.
Other Companies Act 2006 reporting
Based on the responsibilities described below and our work
performed during the course of the audit, we are required by
the Companies Act 2006 and ISAs (UK) to report on certain
opinions and matters as described below.
Strategic report and Director’s report
In our opinion, based on the work undertaken in the course
of the audit:
the information given in the Strategic report and the
Directors’ report for the financial year for which the
financial statements are prepared is consistent with
the financial statements; and
the Strategic report and the Directors’ report have
been prepared in accordance with applicable legal
requirements.
In the light of the knowledge and understanding of the
Group and Parent Company and its environment obtained
in the course of the audit, we have not identified material
misstatements in the Strategic report or the Directors’
report.
Matters on which we are required to report by
exception
We have nothing to report in respect of the following
matters in relation to which the Companies Act 2006
requires us to report to you if, in our opinion:
adequate accounting records have not been kept by
the Parent Company, or returns adequate for our
audit have not been received from branches not
visited by us; or
the Parent Company financial statements are not in
agreement with the accounting records and returns;
or
certain
disclosures of Directors’ remuneration
specified by law are not made; or
we have not received all the information and
explanations we require for our audit.
35
Responsibilities of directors
As explained more fully in the Directors’ responsibilities
statement, the Directors are responsible for the preparation
of the financial statements and for being satisfied that they
give a true and fair view, and for such internal control as the
Directors determine is necessary to enable the preparation
of financial statements that are free from material
misstatement, whether due to fraud or error.
In preparing the financial statements, the Directors are
responsible for assessing the Group’s and the Parent
Company’s ability to continue as a going concern,
disclosing, as applicable, matters related to going concern
and using the going concern basis of accounting unless the
Directors either intend to liquidate the Group or the Parent
Company or to cease operations, or have no realistic
alternative but to do so.
Auditor’s responsibilities for the audit
of the financial statements
Our objectives are to obtain reasonable assurance about
whether the financial statements as a whole are free from
material misstatement, whether due to fraud or error, and
to issue an auditor’s report that includes our opinion.
Reasonable assurance is a high level of assurance, but is not
a guarantee that an audit conducted in accordance with
ISAs (UK) will always detect a material misstatement when
it exists. Misstatements can arise from fraud or error and are
considered material if, individually or in the aggregate, they
could reasonably be expected to influence the economic
decisions of users taken on the basis of these financial
statements.
Extent to which the audit was capable of detecting
irregularities, including fraud
Irregularities, including fraud, are instances of non-
compliance with laws and regulations. We design
procedures in line with our responsibilities, outlined above,
to detect material misstatements in respect of irregularities,
including fraud. The extent to which our procedures are
capable of detecting irregularities, including fraud is detailed
below:
Non-compliance with laws and regulations
Based on:
Our understanding of the Group and the industry in
which it operates;
Discussion with management and those charged with
governance;
Obtaining an understanding of the Group’s policies
and procedures regarding compliance with laws and
regulations;
we considered the significant laws and regulations to be the
international accounting standards, the UK Companies Act
2006, the QCA Code and Group-wide taxation laws.
The Group is also subject to laws and regulations where the
consequence of non-compliance could have a material
effect on the amount or disclosures in the financial
statements, for example through the imposition of fines or
litigations. We identified such laws and regulations to be
those that relate to the payment of employees; and industry
related such as compliance with health and safety
requirements.
Our procedures in respect of the above included:
Review of minutes of meeting of those charged with
governance for any instances of non-compliance with
laws and regulations;
Review of correspondence with regulatory and tax
authorities for any instances of non-compliance with
laws and regulations;
Review of financial statement disclosures and
agreeing to supporting documentation;
Involvement of tax specialists in the audit; and
Review of legal expenditure accounts to understand
the nature of expenditure incurred.
Fraud
We assessed the susceptibility of the financial statements
to material misstatement, including fraud. Our risk
assessment procedures included:
Enquiry with management and those charged with
governance regarding any known or suspected
instances of fraud;
Obtaining an understanding of the Group’s policies
and procedures relating to:
G
Detecting and responding to the risks of fraud;
and
G
Internal controls established to mitigate risks
related to fraud.
Review of minutes of meeting of those charged with
governance for any known or suspected instances of
fraud;
Discussion amongst the engagement team as to how
and where fraud might occur in the financial
statements;
36
Enquiring of management concerning potential
litigations and claims;
Performing analytical procedures to identify any
unusual or unexpected relationships that may indicate
risks of material misstatement due to fraud; and
Considering remuneration incentive schemes and
performance targets and the related financial
statement areas impacted by these.
Based on our risk assessment, we considered the areas most
susceptible to fraud to be inappropriate journal entries,
revenue recognition and management bias in accounting
estimates.
Our procedures in respect of the above included:
Testing a sample of journal entries throughout the
year, which met a defined risk criteria, by agreeing to
supporting documentation;
Involvement of forensic specialists in the audit to
assess the fraud risks that have been identified above
and discussed by the audit team and to challenge the
audit team as to whether all aspects were
appropriately considered;
Challenging assumptions and judgements made by
management in their significant accounting estimates,
in particular in relation to the Group’s defined benefit
pension scheme liabilities, stock provisions (as set out
in the key audit matters section above) and accruals;
Testing a sample of revenue transactions around the
year end to supporting documentation (including
invoice and proof of delivery) for all significant
components to assess if the revenue had been
recorded in the correct period;
A critical assessment of the consolidation to check
this
had
been
prepared
appropriately
and
consideration of manual or late journals posted at
consolidation level to verify the accuracy and
appropriateness of these; and
Agreement of the financial statement disclosures to
underlying supporting documentation.
We also communicated relevant identified laws and
regulations and potential fraud risks to all engagement team
members, including component engagement teams, who
were all deemed to have appropriate competence and
capabilities and remained alert to any indications of fraud or
non-compliance with laws and regulations throughout the
audit. For component engagement teams, we also reviewed
the result of their work performed in this regard.
Our audit procedures were designed to respond to risks of
material misstatement in the financial statements,
recognising that the risk of not detecting a material
misstatement due to fraud is higher than the risk of not
detecting one resulting from error, as fraud may involve
deliberate concealment by, for example, forgery,
misrepresentations or through collusion. There are inherent
limitations in the audit procedures performed and the
further removed non-compliance with laws and regulations
is from the events and transactions reflected in the financial
statements, the less likely we are to become aware of it.
A further description of our responsibilities is available on
the
Financial
Reporting
Council’s
website
at:
www.frc.org.uk/auditorsresponsibilities. This description
forms part of our auditor’s report.
Use of our report
This report is made solely to the Parent Company’s
members, as a body, in accordance with Chapter 3 of Part 16
of the Companies Act 2006. Our audit work has been
undertaken so that we might state to the Parent Company’s
members those matters we are required to state to them in
an auditor’s report and for no other purpose. To the fullest
extent permitted by law, we do not accept or assume
responsibility to anyone other than the Parent Company
and the Parent Company’s members as a body, for our audit
work, for this report, or for the opinions we have formed.
Stuart Wood (Senior Statutory Auditor)
For and on behalf of BDO LLP, Statutory Auditor
Manchester, United Kingdom
30 September 2024
BDO LLP is a limited liability partnership registered in
England and Wales (with registered number OC305127).
Independent Auditor’s Report to the Members of
James Halstead plc continued
37
Consolidated Income Statement
for the year ended 30 June 2024
Note 2024 2023
£’000 £’000
Revenue 5 274,881 303,562
Cost of sales (153,760) (188,099)
Gross profit 121,121 115,463
Selling and distribution costs (52,945) (53,338)
Administration expenses (14,269) (10,514)
Operating profit 53,907 51,611
Finance income 9 2,642 748
Finance cost 10 (325) (260)
Profit before income tax 7 56,224 52,099
Income tax expense 11 (14,704) (9,695)
Profit for the year attributable to equity shareholders 41,520 42,404
Earnings per ordinary share of 5p
– basic 12 10.0p 10.2p
– diluted 12 10.0p 10.2p
All amounts relate to continuing operations.
Details of dividends paid and proposed are given in note 13.
38
Consolidated Statement of Comprehensive Income
for the year ended 30 June 2024
Note 2024 2023
£’000 £’000
Profit for the year 41,520 42,404
Other comprehensive income net of tax:
Items that will not be reclassified subsequently
to the income statement:
Remeasurement of the net defined benefit asset/(liability) 26 564 (7,237)
564 (7,237)
Items that could be reclassified subsequently
to the income statement if specific conditions are met:
Foreign currency translation differences (248) (1,818)
Fair value movements on hedging instruments (472) (135)
(720) (1,953)
Other comprehensive income for the year net of tax (156) (9,190)
Total comprehensive income for the year 41,364 33,214
Attributable to:
Equity holders of the company 41,364 33,214
Items in the statement above are disclosed net of tax. The income tax relating to each component of other comprehensive income
is disclosed in note 11.
39
Consolidated Balance Sheet
as at 30 June 2024
Note 2024 2023
£’000 £’000
Non-current assets
Intangible assets 15 3,232 3,232
Property, plant and equipment 16 34,965 35,887
Right of use assets 17 6,209 7,164
Retirement benefit obligations 26 14 –
Deferred tax 18 214 114
44,634 46,397
Current assets
Inventories 19 82,268 87,440
Trade and other receivables 20 44,042 46,979
Derivative financial instruments 29 482 773
Current tax 1,287 699
Cash and cash equivalents 21 74,282 63,222
202,361 199,113
Total assets 246,995 245,510
Current liabilities
Trade and other payables 22 57,487 60,738
Derivative financial instruments 29 106 213
Current tax 273 422
Lease liabilities 23 2,707 2,696
60,573 64,069
Non-current liabilities
Retirement benefit obligations 26 – 1,460
Other payables 22 410 400
Lease liabilities 23 3,680 4,582
Preference shares 24 200 200
Deferred tax 18 855 585
5,145 7,227
Total liabilities 65,718 71,296
Net assets 181,277 174,214
Equity
Equity share capital 27 20,839 20,838
Equity share capital (B shares) 27 160 160
20,999 20,998
Share premium account 55 13
Currency translation reserve 3,846 4,094
Hedging reserve 334 806
Retained earnings 156,043 148,303
Total equity attributable to shareholders of the parent 181,277 174,214
The financial statements were approved and authorised for issue by the board and were signed on its behalf on 30 September 2024.
M Halstead G R Oliver
Director Director
James Halstead plc Registration Number 140269
40
Consolidated Statement of Changes in Equity
for the year ended 30 June 2024
Currency
Share Share translation Hedging Retained Total
capital premium reserve reserve earnings equity
£'000 £'000 £'000 £’000 £’000 £'000
Balance at 30 June 2022 20,997 – 5,912 941 145,408 173,258
Profit for the year – – – – 42,404 42,404
Remeasurement of the net defined
benefit liability – – – – (7,237) (7,237)
Foreign currency translation
differences – – (1,818) – – (1,818)
Fair value movements on
hedging instruments – – – (135) – (135)
Total comprehensive income for
the year – – (1,818) (135) 35,167 33,214
Transactions with equity shareholders
Dividends – – – – (32,298) (32,298)
Issue of share capital 1 13 – – – 14
Share based payments – – – – 26 26
Balance at 30 June 2023 20,998 13 4,094 806 148,303 174,214
Profit for the year – – – – 41,520 41,520
Remeasurement of the net defined
benefit asset/(liability) – – – – 564 564
Foreign currency translation
differences – – (248) – – (248)
Fair value movements on
hedging instruments – – – (472) – (472)
Total comprehensive income for
the year – – (248) (472) 42,084 41,364
Transactions with equity shareholders
Dividends – – – – (34,383) (34,383)
Issue of share capital 1 42 – – – 43
Share based payments – – – – 39 39
Balance at 30 June 2024 20,999 55 3,846 334 156,043 181,277
41
2024 2023
£’000 £’000
Profit for the year attributable to equity shareholders 41,520 42,404
Income tax expense 14,704 9,695
Profit before income tax 56,224 52,099
Finance cost 325 260
Finance income (2,642) (748)
Operating profit 53,907 51,611
Depreciation of property, plant and equipment 4,093 3,461
Depreciation of right of use assets 3,046 3,060
Profit on sale of property, plant and equipment (75) (84)
Defined benefit pension scheme service cost – 178
Defined benefit pension scheme employer contributions paid (781) (1,942)
Changes in fair value of financial instruments 27 (776)
Share based payments expense 39 26
Decrease in inventories 4,884 22,966
Decrease in trade and other receivables 2,901 3,031
(Decrease) in trade and other payables (3,263) (20,365)
Cash inflow from operations 64,778 61,166
Taxation paid (15,450) (11,900)
Cash inflow from operating activities 49,328 49,266
Interest received 2,642 467
Purchase of property, plant and equipment (3,313) (2,854)
Proceeds from disposal of property, plant and equipment 108 134
Cash outflow from investing activities (563) (2,253)
Interest paid (24) (36)
Lease interest paid (242) (224)
Lease capital paid (2,981) (3,015)
Equity dividends paid (34,383) (32,298)
Shares issued 43 14
Cash outflow from financing activities (37,587) (35,559)
Net increase in cash and cash equivalents 11,178 11,454
Effect of exchange differences on cash and cash equivalents (118) (376)
Cash and cash equivalents at start of year 63,222 52,144
Cash and cash equivalents at end of year 74,282 63,222
Consolidated Cash Flow Statement
for the year ended 30 June 2024
42
Notes to the Consolidated Financial Statements
1.
General information
James Halstead plc (“the company” or “the parent company”) is a limited liability company, registered in England and Wales,
domiciled in the United Kingdom and listed on AIM on the London Stock Exchange. The address of its registered office is Beechfield,
Hollinhurst Road, Radcliffe, Manchester, M26 1JN.
2.
Accounting policies
Basis of preparation
The group financial statements have been prepared in accordance with UK adopted international accounting standards. The
company financial statements have been prepared in accordance with Financial Reporting Standard 101 Reduced Disclosure
Framework, and are presented separately following the group financial statements.
The group and company financial statements have been prepared on a going concern basis and on the historical cost basis as
modified by the valuation of certain financial assets and financial liabilities (being derivative instruments) at fair value.
Going concern
The directors have reviewed current performance and forecasts, combined with capital investment and expenditure commitments,
and a range of trading scenarios. The forecasts cover the next two financial years. The group has no net borrowings and owns the
freeholds on many of its premises (the most significant being four UK operating sites and two sites in Germany).
After considering current trading, forward forecasts and scenario planning the directors have formed a judgement, at the time of
approving the financial statements, that there is a reasonable expectation that the group has adequate resources to continue in
operational existence and meet its liabilities as they fall due for the foreseeable future. The directors have not identified any material
uncertainties relating to events or conditions that, individually or collectively, may cast significant doubt on the entity’s ability to
continue as a going concern for a period of at least one year from when the financial statements are authorised and approved for
issue. For this reason, the directors continue to adopt the going concern basis in preparing the financial statements.
Recent accounting developments
The financial statements are prepared in accordance with UK adopted international accounting standards and interpretations in force
at the reporting date. The group has not adopted any standards or interpretations in advance of the required implementation dates.
The following standards were adopted in the period.
IFRS 17 Insurance contracts
Amendments to IAS 8 – Definition of Accounting Estimates, IAS 1 and IFRS Practice Statement 2 – Disclosure of Accounting
policies, IAS 12 – Deferred Tax related to Assets and Liabilities arising from a Single Transaction, IFRS 17 – Initial Application of
IFRS 17 and IFRS 9 – Comparative Information, IAS 12 – International Tax Reform – Pillar Two Model Rules
These had no effect on the financial statements.
There were no new standards, interpretations and amendments, which are not yet effective and have not been adopted early in
these financial statements, which will or may have an effect on the group’s future financial statements. The directors continue to
assess any accounting developments which could have a material effect on the financial statements.
Basis of consolidation
The group financial statements consolidate the financial statements of the parent company and all its subsidiaries, as if they formed
a single entity. Subsidiaries are entities controlled by the group. Control exists if all three of the following elements are present:
power over the entity, exposure to variable returns from the entity, and the ability to affect those variable returns. Control is
reassessed whenever facts and circumstances indicate that there may be a change in any of these elements of control. Control is
normally achieved by a majority shareholding. The company, directly or through an intermediate subsidiary owned 100% of the
share capital of all of its subsidiaries. The results of subsidiaries acquired are consolidated from the date on which control passes to
the group. The results of disposed subsidiaries are consolidated up to the date on which control passes from the group. All intra-
group transactions and balances are eliminated on consolidation. The financial statements of subsidiaries are adjusted to bring them
into line with the group’s accounting policies as required.
43
2.
Accounting policies (continued)
Segment reporting
Operating segments are those segments for which results are reviewed by the group’s chief operating decision maker (CODM) to
assess performance and make decisions about resources to be allocated. The CODM is the group board which meets regularly
throughout the year to discuss the performance and results of the group as a whole. The business of the group is the manufacture
and distribution of flooring products. The group operates through separate legal entities in certain areas of the world and in order
to provide information in a structured manner to readers of the accounts who are unfamiliar with the internal management
reporting of the group, these operations are discussed by the chief executive in his report. However, the directors consider that
under the definitions contained within IFRS 8 there is only one reportable segment, which is the group as a whole. This is consistent
with the core principle of IFRS 8, which is to disclose information to enable users of the financial statements to evaluate the nature
and financial effects of the business activities in which the group engages and the economic activities in which it operates.
Foreign currencies
Functional and presentation currency – the group’s consolidated financial statements are presented in pounds sterling, the
functional currency of the parent company, being the currency of the primary economic environment in which the parent company
operates.
Transactions and balances – transactions in foreign currencies are recorded at the rate ruling at the date of the transaction.
Monetary assets and liabilities denominated in foreign currencies are reported at the rates of exchange prevailing at the balance
sheet date. Exchange differences on retranslating monetary assets and liabilities are recognised in the income statement except
where they relate to qualifying cash flow hedges, in which case the exchange differences are deferred in equity. Non-monetary
items carried at historical cost are stated at the rate of exchange ruling at the date of the transaction. Non-monetary items carried
at fair value are stated at the rate of exchange ruling when the fair value was determined.
Foreign subsidiaries – the results of foreign subsidiaries (none of which has the currency of a hyperinflationary economy), that have
a functional currency different from the group’s presentation currency, are translated at the average rates of exchange for the year.
Assets and liabilities of foreign subsidiaries, that have a functional currency different from the group’s presentation currency, are
translated at the exchange rates prevailing at the balance sheet date. Exchange differences arising from the translation of the results
of foreign subsidiaries and their opening net assets are recognised as a separate component of equity.
When a foreign subsidiary is sold the cumulative exchange differences relating to the retranslation of the net investment in that
foreign subsidiary are recognised in the income statement as part of the gain or loss on disposal. This applies only to exchange
differences recorded in equity after 1 July 2006. Exchange differences arising prior to 1 July 2006 remain in equity on disposal as
permitted by IFRS 1.
Intangible assets
Goodwill – goodwill arising on the acquisition of a subsidiary undertaking is the excess of the aggregate of the fair value of the
consideration transferred, the fair value of any previously held interests, and the recognised value of the non-controlling interest in the
acquiree over the net of the acquisition date amounts of the identifiable assets acquired and liabilities assumed. Goodwill is reviewed
for impairment at least annually and when there are indications that the carrying amount may not be recoverable. For the purpose of
impairment review, goodwill is allocated to the relevant cash generating unit (CGU) within the group. An impairment loss is recognised
if the carrying value of the CGU, including its goodwill, exceeds its recoverable amount. Any impairment loss is recognised immediately
in the income statement and is not subsequently reversed. On disposal of a subsidiary, the attributable amount of goodwill is included
in the calculation of the profit or loss on disposal. Goodwill arising on acquisitions before the date of transition to IFRS has been
retained at the UK GAAP value as at that date having been reviewed for impairment at that date and subsequently at least annually.
Notes to the Consolidated Financial Statements
continued
2.
Accounting policies (continued)
Taxation
Income tax on the profit for the year comprises current and deferred tax. Income tax is recognised in the income statement except
to the extent that it relates to items recognised in other comprehensive income.
Current tax assets and liabilities are measured at the amount expected to be recovered from or paid to taxation authorities based
on tax rates and laws that are enacted at the balance sheet date. Deferred income tax is provided in full, using the liability method,
on temporary differences arising between the tax bases of assets and liabilities and their corresponding book values as recorded in
the group’s financial statements with the following exceptions:
where the temporary difference arises from the initial recognition of goodwill or of an asset or liability in a transaction that
is not a business combination that at the time of the transaction affects neither accounting nor taxable profit or loss;
deferred income tax assets are recognised only to the extent that it is probable that taxable profit will be available against
which the deductible temporary differences can be utilised;
deferred income tax is not provided on unremitted earnings of foreign subsidiaries where there is no likelihood to remit the
earnings.
Deferred income tax assets and liabilities are based on tax rates and laws that are substantively enacted at the balance sheet date.
Deferred income tax assets and liabilities are undiscounted.
Share-based payments
The group grants equity settled share options to certain of its employees.An expense in relation to such options based on their fair
value at the date of grant, is recognised over the vesting period. The group uses the Black Scholes model for the purpose of
computing fair value.
Inventories
Inventories are measured at the lower of cost and net realisable value on a weighted average cost basis. Cost includes expenditure
incurred in acquiring the inventories and bringing them to their existing location and condition. In the case of finished and partly
finished goods, cost represents the cost of raw materials, direct labour, other direct costs and related production overheads on bases
consistently applied from year to year. In all cases provision is made for obsolete, slow-moving or defective items where appropriate.
Financial assets and liabilities
Financial assets comprise trade and other receivables and cash and cash equivalents. Financial liabilities comprise trade and other
payables.
Trade and other receivables
Trade and other receivables are non-interest bearing and are initially stated at fair value and then subsequently at amortised cost
less provision for lifetime expected credit losses using the simplified approach in IFRS 9. Estimated irrecoverable amounts are based
on historical experience and forward looking information, together with specific amounts that are not expected to be collectable.
Individual amounts are written off when management deems them not to be collectible.
Cash and cash equivalents
Cash and cash equivalents include cash in hand, deposits held at call with banks, short-term (with an original maturity of three
months or less) deposits and bank overdrafts. Bank overdrafts are disclosed as current liabilities except where the group participates
in offset arrangements with certain banks whereby cash and overdraft amounts are offset against each other. Cash and cash
equivalents are held at amortised cost.
44
45
2.
Accounting policies (continued)
Trade and other payables
Trade and other payables are non-interest bearing and are initially stated at fair value and then subsequently at amortised cost.
Pension scheme arrangements
The group operates defined contribution pension schemes and a defined benefit pension scheme for certain of its United Kingdom
employees.
A defined contribution scheme is a scheme in which the group pays contributions into publicly or privately administered schemes
on a voluntary, statutory or contractual basis. The group has no further payment obligations once the contributions have been
made. The amount charged to the income statement is the contribution payable in the year. Differences between contributions
payable in the year and contributions actually paid are shown as receivables or payables in the balance sheet.
A defined benefit scheme is a scheme in which the amount of pension benefit that an employee will receive on retirement is
defined. For the defined benefit scheme, pension costs and the costs of providing other post retirement benefits are charged to the
income statement in accordance with the advice of qualified independent actuaries. Past service costs are recognised in the income
statement at the earlier of when the plan amendment or curtailment occurs or when the group recognises related restructuring
costs or termination benefits. The service cost is charged against operating profit and the net interest cost is charged as a finance
cost. The net interest cost is calculated using the discount rate at the beginning of the period. The retirement benefit obligations
recognised on the balance sheet represent the difference between the fair value of the scheme’s assets and the present value of
the scheme’s defined benefit obligations measured at the balance sheet date. The defined benefit obligation is calculated annually
by independent actuaries using the projected unit method. Remeasurements of the net defined benefit obligations are recognised
in the period in which they arise in other comprehensive income. A net defined benefit obligations asset is recognised to the extent
that the group can realise an economic benefit from that asset.
Property, plant and equipment
Property, plant and equipment is stated at cost less accumulated depreciation and accumulated impairment except for land which
is stated at cost less any impairment. Cost includes expenditure that is directly attributable to the acquisition of the asset.
Depreciation is calculated on the depreciable amount (being cost less the estimated residual value) on a straight line basis over the
estimated useful lives of the assets as follows:
Freehold land: Not depreciated
Freehold buildings: 10 to 50 years
Plant and equipment: 2 to 20 years
Residual values and useful lives are reviewed at each group balance sheet date for continued appropriateness and indications of
impairment and adjusted if appropriate.
Right of use assets and lease liabilities
A right of use asset and a lease liability are recognised for all leased asset contracts on their commencement, except for low value
leases and short term leases of one year or less.
On recognition, the right of use asset and lease liability are measured at the present value of the lease payments discounted over
the lease term. The discount rate used is the rate inherent in the lease if this can be determined, or the incremental borrowing rate.
The right of use asset is stated at cost being lease payments, reduced for any lease incentives received, and increased for any lease
payments made at or before commencement of the lease, initial direct costs incurred and the amount of any provision recognised
where the group is contractually required to dismantle, remove or restore the leased asset.
Subsequent to initial recognition, the right of use assets are depreciated on a straight line basis over the shorter of the lease term
or the useful life of the asset. The lease liabilities are increased by the interest cost and reduced by the lease payments made. A
depreciation charge and an interest cost are recognised in the income statement.
The lease payments for low value and short term leases are expensed in the income statement on a straight line basis over the
lease term.
Notes to the Consolidated Financial Statements
continued
2.
Accounting policies (continued)
Revenue recognition
Revenue is from the sales of flooring products and is recognised at the point in time when control of the products has been
transferred to the customer. Control passes to the customer at the point terms of despatch are met, which is generally when the
goods are delivered to the customer. There is limited judgement needed in identifying the point control passes: once physical
delivery of the products to the agreed location has occurred, the group no longer has physical possession, usually will have a present
right to payment (as a single payment on delivery) and retains none of the significant risks and rewards of the goods. Sales are
invoiced at the time of despatch and payment terms are based on the invoice date. Payment terms vary by customer, but do not
exceed six months. Revenue is stated after provision for trade discounts and rebates due on the sales. Revenue excludes VAT and
sales taxes.
Research and development
Expenditure on research activities, undertaken with the prospect of gaining new scientific or technical knowledge and
understanding, is recognised in the income statement as an expense as incurred.
Development expenditure not meeting all the criteria for capitalisation contained in IAS 38 – Intangible Assets, is recognised in the
income statement as an expense as incurred.
Dividends
Interim dividends are recognised when they are paid. Final dividends are recognised when they are approved by the shareholders.
Derivative financial instruments and hedging
The group uses derivative financial instruments to hedge its exposure to foreign currency transactional risk. In accordance with its
treasury policy the group does not hold or issue derivative financial instruments for trading purposes.
Derivative financial instruments are recorded at fair value on the date the derivative contract is entered into and are subsequently
remeasured at fair value at each group balance sheet date.
The method by which any gain or loss arising from remeasurement is recognised depends on whether the instrument is designated
as a hedging instrument and, if so, the nature of the item being hedged. The group recognises an instrument as a hedging
instrument by documenting at the inception of the transaction the relationship between the instrument and the hedged items and
the objectives and strategy for undertaking the hedging transaction. To be designated as a hedging instrument, an instrument must
also be assessed, at inception and on an ongoing basis, to be highly effective in offsetting changes in cash flows of hedged items.
For derivatives not used in hedging transactions, the gain or loss on remeasurement of fair value is recognised immediately in the
income statement.
Where a derivative financial instrument is designated as a hedge of the variability in cash flows of a recognised asset or liability, or
of a highly probable forecast future transaction, the gain or loss on remeasurement which relates to the portion of the hedge which
is deemed effective is recognised in equity through other comprehensive income, with the balance of the gain or loss, relating to
the ineffective portion, being recognised immediately in the income statement.
Amounts accumulated in equity are recycled in the income statement in the periods when the hedged item affects profit or loss.
The fair value of forward foreign exchange contracts is determined using forward exchange market rates at the balance sheet date.
46
47
3.
Financial risk management
Financial risk and treasury policies
A full description of the James Halstead plc group’s treasury policy is contained in the financial director’s review.
The group’s activities expose it to a number of financial risks as detailed below. These risks are managed, with the objective of
limiting adverse effects, from the group’s head office in accordance with policies determined by and decisions made by the group
board.
There have been no changes in financial risks from the previous year.
Market risks
Market risk is the risk that changes in market prices, such as currency exchange rates and interest rates will affect the group’s results.
The objective of market risk management is to control it within suitable parameters.
(a) Foreign exchange risk
The group operates internationally and is exposed to foreign currency risk on sales and purchases that are denominated in a
currency other than the functional currency of the entity making the sale or purchase. There are a range of currencies giving rise to
this risk, but most significant is the euro. To mitigate risks associated with future exchange rate fluctuations, the group’s policy is
to use forward exchange contracts to hedge its known and certain forecast transaction exposures based on historical experience
and projections. The group hedges at least 25% but rarely more than 100% of the next twelve months’ anticipated exposure.
(b) Interest rate risk
The group does not use derivative financial instruments to mitigate its exposure to interest rate risk. The main element of interest
rate risk concerns sterling deposits which are made on floating market based rates and short-term overdrafts in foreign currencies
which are also on floating rates.
Credit risk
Credit risk is the risk of financial loss to the group if a customer or counterparty to a financial instrument fails to meet its
contractual obligations and arises principally from the group’s trade receivables from customers and monies on deposit with
financial institutions.
With regard to trade receivables, the group is not subject to significant concentration of credit risk. Exposure is spread across a large
number of companies and the underlying local economic and sovereign risks vary across the world. Trade receivable exposures are
managed locally in the individual operating units where they arise and credit limits are set as deemed appropriate. Where
practicable and deemed necessary the group endeavours to minimise credit risks by the use of trade finance instruments such as
letters of credit and insurance.
The group controls credit risk in relation to counterparties to other financial instruments by dealing only with highly rated financial
institutions.
The group’s maximum credit exposure on financial assets is represented by their book value.
Liquidity risk
Liquidity risk is the risk that the group will not be able to meet its financial obligations as they fall due. The group’s approach to
managing liquidity is to ensure, as far as possible, that it will always have sufficient liquidity to meet its liabilities when due.
Capital risk
The group’s objectives in managing capital are to safeguard the ability of all entities within the group to continue as going concerns,
whilst maximising the overall return to shareholders over time. The capital structure of the group consists of equity attributable
to equity holders of the parent company less cash and cash equivalents.
The group will only usually take on borrowings where those borrowings would be financed by the cash expected to be generated
by the related investment opportunity and where the borrowing would not significantly increase the group’s exposure to risk.
Notes to the Consolidated Financial Statements
continued
48
4.
Critical accounting estimates and judgements
The preparation of financial statements in conformity with generally accepted accounting principles requires the use of certain
estimates and associated assumptions that affect the application of policies, the reported amounts of assets and liabilities at the
date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Although these
estimates are based on management’s best assessments of amounts, events or actions, actual results may ultimately differ from
those estimates. The estimates and underlying assumptions are reviewed on a regular and ongoing basis. There are no significant
judgements.
The estimates that have had the most significant effect on the amounts included in these consolidated financial statements are as
follows:
Inventories
For financial reporting purposes the group evaluates its inventory to ensure it is carried at the lower of cost or net realisable value.
Provision is made against slow moving, obsolete and damaged inventories. Damaged inventories are identified and written down
through the inventory counting procedures conducted within each business. Provision for slow moving and obsolete inventories is
assessed by each business as part of their ongoing financial reporting. Obsolescence is assessed based on comparison of the level
of inventory holding to the projected likely future sales. Future sales are assessed based on historical experience, and adjusted where
the market conditions are known to have changed. To the extent that future events impact the saleability of inventory these
provisions could vary significantly. For example, changes in specifications or regulations may render inventory, previously considered
to have a realisable value in excess of cost, obsolete and require such inventory to be fully written off. The effect on the income
statement of the movements in inventory write-downs is provided in note 19.
Retirement benefit obligations
The liability recognised in respect of retirement benefit obligations is dependent on a number of estimates including those relating
to mortality, inflation, and the rate at which liabilities are discounted. Any change in these assumptions would impact the
retirement benefit obligations recognised. Further details on these estimates are provided in note 26.
49
5.
Segmental information
Operating segments are those segments for which results are reviewed by the group’s chief operating decision maker (CODM) to
assess performance and make decisions about resources to be allocated. The CODM is the group board which meets regularly
throughout the year to discuss the performance and results of the group as a whole. The business of the group is focussed almost
entirely on the manufacture and distribution of flooring products. The directors consider that under the definitions contained within
IFRS 8 there is only one reportable segment, which is the group as a whole. This is consistent with the core principle of IFRS 8, which
is to disclose information to enable users of the financial statements to evaluate the nature and financial effects of the business
activities in which the group engages and the economic activities in which it operates. Therefore the majority of the disclosures
required under IFRS 8 have already been given in these financial statements.
Segment assets comprise property, plant and equipment, right of use and intangible assets. Geographical disclosures in respect of
revenues and segment assets are provided below and include revenue for Germany of £47,241,000 (2023: £56,887,000) and assets
in Germany of £8,632,000 (2023: £9,426,000).
2024
2023
Revenue
£’000
£’000
United Kingdom
110,658
117,447
Europe and Scandinavia
100,909
116,261
Australasia and Asia
35,059
40,915
Rest of the World
28,255
28,939
274,881
303,562
2024
2023
Non-current assets
£’000
£’000
United Kingdom
28,861
29,689
Europe and Scandinavia
10,120
10,961
Australasia and Asia
5,410
5,619
Rest of the World
15
14
Total segment assets
44,406
46,283
Retirement benefit obligations
14
–
Deferred tax assets
214
114
Total non-current assets
44,634
46,397
Revenue is by location of customer. Assets are by location of asset.
6.
Employee profit share
Profit for the year is after charging the cost of the James Halstead plc share ownership plan. Since 1980 the group has operated an
employee share scheme, approved under the Finance Act 1978. In December 2001 the shareholders approved a new share ownership
plan in line with the requirements of legislative changes. The aim of this scheme is to enable employees to build up a personal
shareholding in James Halstead plc and to participate in its continued expansion and success as shareholders as well as employees.
Notes to the Consolidated Financial Statements
continued
50
7.
Profit before income tax
Profit before tax is stated after charging/(crediting) the following:
2024
2023
£’000
£’000
Depreciation of property, plant and equipment
4,093
3,461
Depreciation of right of use assets
3,046
3,060
Profit on disposal of property, plant and equipment
(75)
(84)
Research and development
1,485
1,533
Fees payable to the group’s auditor for the audit of the parent company and
consolidated financial statements
104
100
Fees payable to the group’s auditor and its associates for other services:
The audit of the group’s subsidiaries pursuant to legislation
260
247
8.
Staff costs and numbers
2024
2023
£’000
£’000
Staff costs comprised:
Wages and salaries
40,159
39,036
Social security costs
5,166
4,990
Pension costs – defined benefit scheme
–
178
– defined contribution schemes
1,452
1,096
Share based payments expense
39
26
46,816
45,326
The average monthly number of employees during the year was:
2024
2023
Number
Number
Manufacturing, selling and distribution
704
692
Administration
147
168
851
860
The directors’ remuneration was:
2024
2023
£’000
£’000
Salary or fees
1,225
1,047
Bonuses
1,100
1,000
Benefits
16
20
Total remuneration excluding pension contributions
2,341
2,067
Pension contributions
15
–
2,356
2,067
Social security costs related to this remuneration
315
287
There was one (2023: none) director in the defined contribution pension scheme.
51
9.
Finance income
2024
2023
£’000
£’000
Bank deposit interest
2,634
455
Other interest
8
12
2,642
467
Net pension interest income
–
281
Finance income
2,642
748
10. Finance cost
2024
2023
£’000
£’000
Other interest
13
25
Preference share dividend
11
11
24
36
Lease interest
242
224
Net pension interest cost
59
–
Finance cost
325
260
11. Income tax expense
2024
2023
£’000
£’000
Current tax
UK current year
12,600
8,522
UK adjustments in respect of prior years
(175)
(1,540)
UK total
12,425
6,982
Overseas
2,296
2,534
14,721
9,516
Deferred tax
Current year temporary differences
(6)
746
Current year tax rate difference
–
139
Adjustments in respect of prior years
(11)
(706)
(17)
179
Total taxation
14,704
9,695
The effective tax rate for the year is different to the standard rate of corporation tax in the UK. The differences are explained below:
2024
2023
£’000
£’000
Profit before tax
56,224
52,099
Profit before tax multiplied by the standard rate of corporation tax in
the UK of 25% (2023: 20.5%)
14,056
10,680
Adjustments to tax in respect of prior periods
(186)
(2,246)
Overseas tax rates
566
1,039
Disallowable items
268
83
Deferred tax rate difference
–
139
Total taxation
14,704
9,695
In addition to the amounts above £188,000 has been charged (2023: £2,412,000 credited) as other comprehensive income in
respect of the remeasurement of the net defined benefit asset/(liability), and has been netted off the amounts shown in the
Consolidated Statement of Comprehensive Income.
Notes to the Consolidated Financial Statements
continued
52
12. Earnings per share
2024
2023
£’000
£’000
Profit for the year attributable to equity shareholders
41,520
42,404
Weighted average number of shares in issue
416,761,396
416,752,764
Dilution effect of outstanding share options
32,457
21,390
Diluted weighted average number of shares
416,793,853
416,774,154
Basic earnings per 5p ordinary share
10.0p
10.2p
Diluted earnings per 5p ordinary share
10.0p
10.2p
The earnings per 5p ordinary share are attributable to equity shareholders.
13. Dividends
2024
2023
£’000
£’000
Equity dividends
Final dividend for previous year of 5.75p (2023: 5.50p)
23,963
22,921
Interim dividend for current year of 2.50p (2023: 2.25p)
10,420
9,377
Amounts recognised as distributions to equity shareholders in the year
34,383
32,298
A final dividend of 6.00p per share for the year ended 30 June 2024, amounting to £25,007,000 will be proposed at the Annual
General Meeting.
14. Profit of the parent company
The company has taken advantage of the provisions of Section 408 of the Companies Act 2006 and elected not to present its own
profit and loss account. The profit after taxation for the financial year dealt with in the financial statements of the company was
£36,106,000 (2023: £36,226,000). The aggregate amount of directors’ emoluments excluding pension contributions was
£2,341,000 (2023: £2,067,000) of which the highest paid director’s emoluments were £1,087,000 (2023: £994,000). The directors’
salaries or fees for the year ended 30 June 2024 were Mr J A Wild £40,000 (2023: £40,000), Mr M Halstead £532,000
(2023: £485,000), Mr G R Oliver £502,000 (2023: £457,000), Mr D W Drillingcourt £82,000 (2023: £nil), Mr S D Hall £17,000
(2023: £25,000), Mr R P Whiting £22,000 (2023: £20,000), Mr M J Halstead £20,000 (2023: £20,000) and Mrs D A Harrison £10,000
(2023: £nil).
53
15. Intangible assets
Goodwill
£’000
Cost and net book value at 30 June 2022, 2023 and 2024
3,232
An impairment review of goodwill was done by reference to value in use. Value in use was determined using conservative five year
plus terminal value cash flow projections, based on current levels of profitability and assumed conservative growth rates of 5%
(2023: 5%) and discount rates of 7% (2023: 7%). The result of the review indicated that no impairment was required with no
reasonable sensitivities indicating an impairment.
16. Property, plant and equipment
Freehold
land and
Plant and
buildings
equipment
Total
£’000
£’000
£’000
Cost
At 30 June 2022
28,380
78,003
106,383
Additions
–
2,854
2,854
Disposals
–
(713)
(713)
Transfer
(133)
133
–
Exchange differences
(31)
(286)
(317)
At 30 June 2023
28,216
79,991
108,207
Additions
–
3,313
3,313
Disposals
–
(6,267)
(6,267)
Exchange differences
(118)
(105)
(223)
At 30 June 2024
28,098
76,932
105,030
Depreciation
At 30 June 2022
11,743
57,969
69,712
Charge for the year
686
2,775
3,461
Disposals
–
(663)
(663)
Exchange differences
(15)
(175)
(190)
At 30 June 2023
12,414
59,906
72,320
Charge for the year
672
3,421
4,093
Disposals
–
(6,234)
(6,234)
Exchange differences
(51)
(63)
(114)
At 30 June 2024
13,035
57,030
70,065
Net book value
At 30 June 2022
16,637
20,034
36,671
At 30 June 2023
15,802
20,085
35,887
At 30 June 2024
15,063
19,902
34,965
Notes to the Consolidated Financial Statements
continued
54
17. Right of use assets
Land and
Motor
buildings
vehicles
Total
£’000
£’000
£’000
Cost
At 30 June 2022
10,821
2,121
12,942
Additions
4,322
973
5,295
Disposals
(5,115)
(1,212)
(6,327)
Exchange differences
(451)
–
(451)
At 30 June 2023
9,577
1,882
11,459
Additions
754
1,397
2,151
Disposals
(482)
(872)
(1,354)
Exchange differences
(96)
(9)
(105)
At 30 June 2024
9,753
2,398
12,151
Depreciation
At 30 June 2022
5,940
1,368
7,308
Charge for the year
2,465
595
3,060
Disposals
(5,040)
(892)
(5,932)
Exchange differences
(140)
(1)
(141)
At 30 June 2023
3,225
1,070
4,295
Charge for the year
2,356
690
3,046
Disposals
(482)
(867)
(1,349)
Exchange differences
(48)
(2)
(50)
At 30 June 2024
5,051
891
5,942
Net book value
At 30 June 2022
4,881
753
5,634
At 30 June 2023
6,352
812
7,164
At 30 June 2024
4,702
1,507
6,209
55
18. Deferred tax assets and liabilities
2024
2023
£’000
£’000
Deferred tax assets
214
114
Deferred tax liabilities
(855)
(585)
(641)
(471)
Retirement
Accelerated
Other
benefit
tax
timing
obligations
depreciation
differences
Total
£’000
£’000
£’000
£’000
At 30 June 2022
(1,536)
(1,796)
637
(2,695)
Credited/(charged) to income statement
(511)
(529)
861
(179)
Credited to other comprehensive income
2,412
–
–
2,412
Exchange differences
–
–
(9)
(9)
At 30 June 2023
365
(2,325)
1,489
(471)
Credited/(charged) to income statement
(181)
(151)
349
17
(Charged) to other comprehensive income
(188)
–
–
(188)
Exchange differences
–
–
1
1
At 30 June 2024
(4)
(2,476)
1,839
(641)
Deferred tax assets and liabilities are offset where there is a legally enforceable right to offset current tax assets against current tax
liabilities and the deferred income taxes relate to the same tax authority.All deferred tax assets and liabilities are analysed as non-
current.
19. Inventories
2024
2023
£’000
£’000
Raw materials and consumables
6,310
7,437
Work in progress
2,299
2,883
Finished goods
73,659
77,120
82,268
87,440
Opening balance
87,440
112,279
(Decrease) in inventories
(4,884)
(22,966)
Exchange differences
(288)
(1,873)
Closing balance
82,268
87,440
An amount of £198,000 has been charged (2023: £454,000 credited) to the income statement in respect of movements in
inventory write-downs. The cost of inventory recognised as an expense was £153,760,000 (2023: £188,099,000).
Notes to the Consolidated Financial Statements
continued
56
20. Trade and other receivables
2024
2023
£’000
£’000
Trade receivables
39,986
42,941
Other receivables
1,630
1,373
Prepayments
2,426
2,665
44,042
46,979
Opening balance
46,979
51,171
(Decrease) in trade and other receivables
(2,901)
(3,031)
Exchange differences
(36)
(1,161)
Closing balance
44,042
46,979
All amounts within trade and other receivables are due within one year. The fair value of amounts included in trade and other
receivables approximates to book value. The maximum exposure to credit risk at the reporting date is the fair value of each class
of receivable. The group does not hold any collateral as security.
The group’s trade receivables are stated after a provision for expected credit losses of £1,904,000 (2023: £1,911,000).The provision
against trade receivables for expected credit losses is based on specific risk assessments taking into account past default experience
and appropriate forward looking information. The provision is analysed as follows:
2024
2023
£’000
£’000
Opening balance
1,911
1,820
Debts written off
(45)
(28)
Charged to income statement
44
138
Exchange differences
(6)
(19)
Closing balance
1,904
1,911
Loss rate
Gross
Provision
Loss rate
Gross
Provision
2024
2024
2024
2023
2023
2023
%
£’000
£’000
%
£’000
£’000
Not past due
3
29,255
796
1
28,189
374
Up to three months past due
5
12,083
626
5
15,822
777
Over three months past due
87
552
482
90
841
760
41,890
1,904
44,852
1,911
The maximum exposure to credit risk for trade and other receivables by currency was:
2024
2023
£’000
£’000
Sterling
18,853
21,512
Euro
11,398
10,803
Australian Dollar
3,246
3,376
New Zealand Dollar
750
1,335
Canadian Dollar
857
993
Norwegian Krone
881
1,195
US Dollar
3,990
3,750
Other currencies
1,641
1,350
Total
41,616
44,314
57
21. Cash and cash equivalents
The fair values of cash and cash equivalents approximate to book value due to their short maturities.
The currency analysis of cash and cash equivalents is as follows:
2024
2023
£’000
£’000
Sterling
56,998
46,500
Euro
7,593
7,000
Australian Dollar
1,533
866
New Zealand Dollar
381
441
Canadian Dollar
1,457
1,159
Norwegian Krone
633
584
US Dollar
4,607
4,667
Other currencies
1,080
2,005
Total
74,282
63,222
22. Trade and other payables
2024
2023
£’000
£’000
Amounts falling due within one year
Trade payables
36,508
40,267
Value added, payroll and other taxes
4,412
4,974
Other payables
2,612
2,314
Accruals
13,955
13,183
57,487
60,738
Amounts falling due after more than one year
Other payables
410
400
57,897
61,138
Opening balance
61,138
84,960
(Decrease) in trade and other payables
(3,263)
(20,365)
Exchange differences
22
(3,457)
Closing balance
57,897
61,138
The fair value of amounts included in trade and other payables approximates to book value.
23. Lease liabilities
2024
2023
£’000
£’000
Opening balance
7,278
5,714
Leases started
2,151
5,295
Leases cancelled
(5)
(395)
Lease interest
242
224
Lease payments
(3,223)
(3,239)
Exchange differences
(56)
(321)
Closing balance
6,387
7,278
Amounts payable in less than one year
2,707
2,696
Amounts payable in more than one year
3,680
4,582
6,387
7,278
All amounts are payable within five years.
Notes to the Consolidated Financial Statements
continued
58
24. Preference shares
2024
2023
£’000
£’000
Preference shares
200
200
The cumulative preference shares have no fixed repayment date. They are not listed and therefore no market price is available.The
fair value of the preference shares was not materially different from their book value.
25. Net funds analysis
Cash
and cash
Lease
Preference
Net
equivalents
liabilities
shares
funds
£’000
£’000
£’000
£’000
At 30 June 2022
52,144
(5,714)
(200)
46,230
Cash flow
11,454
3,239
–
14.693
Other changes
–
(5,124)
–
(5,124)
Exchange differences
(376)
321
–
(55)
At 30 June 2023
63,222
(7,278)
(200)
55,744
Cash flow
11,178
3,223
–
14,401
Other changes
–
(2,388)
–
(2,388)
Exchange differences
(118)
56
–
(62)
At 30 June 2024
74,282
(6,387)
(200)
67,695
26. Retirement benefit obligations
In the UK the group has a defined benefit pension scheme which was closed to new members in 2002 and to future accrual in
2023.
The company sponsors the Halstead Group Pension Scheme, a funded defined benefit pension scheme in the UK. The scheme is
administered within a trust which is legally separate from the company. Trustees are appointed by both the company and the
scheme’s membership and act in the interest of the scheme and all relevant stakeholders, including the members and the company.
The trustees are also responsible for the investment of the scheme’s assets.
The scheme closed to future accrual with effect from 31 January 2023. At this point former active members of the scheme stopped
paying contributions. Before 31 January 2023 active members of the scheme paid contributions at the rate of either 7.5% or 6%
of salary depending on category. The company pays the balance of the cost as determined by regular actuarial valuations.
The scheme poses a number of risks to the company, for example, longevity risk, investment risk, interest rate risk, inflation risk and
salary risk. The trustees are aware of these risks and use various techniques to control them. The trustees have a number of internal
control policies including a risk register, which are in place to manage and monitor the various risks they face. Furthermore, the
scheme’s investments are designed to hedge against some to these risks.
All of the scheme’s assets are held in quoted funds with the exception of the cash balance in the trustees’ bank account.
The scheme’s investment strategy is to invest broadly 80% in return seeking assets and 20% in matching assets. This strategy
reflects the scheme’s liability profile and the trustees’ attitude to risk.
The trustees’ investment strategy includes investing in liability driven investment, the value of which will increase with decreases
in interest rates and/or increases in future inflation expectations. The scheme’s assets are hedged to around 90% of interest rate
and inflation risk as at the year end. The investment strategy is reviewed regularly by the trustees in consultation with the company.
59
26. Retirement benefit obligations (continued)
The scheme’s growth assets are also expected to provide protection from inflation over the long term. Note that the scheme hedges
interest rate risk on a gilts basis, whereas AA corporate bonds are used to set the IAS19 discount rate and so there is potential for
the IAS19 position to diverge from the trustees’ strategic target should yields on gilts and corporate bonds diverge.
The scheme does not directly hold any financial derivatives but invests in funds which hold the derivatives required to hedge the
scheme’s interest rate, inflation and currency risks. The main risks associated with financial derivatives include: losses may exceed
the initial margin, counterparty risk, and liquidity risk. These risks are managed by the monitoring of investment managers to ensure
they have reasonable levels of market exposure relative to initial margin and positions are fully collateralised on a regular basis.
The scheme is subject to regular actuarial valuations, which must be carried out at least every three years. These actuarial valuations
are carried out in accordance with the requirements of the Pensions Act 2004 and so include margins for prudence. This contrasts
with these accounting disclosures, which are determined using best estimate assumptions.
An actuarial valuation was carried out as at 31 August 2022. The results of that valuation have been projected forward to 30 June
2024 by a qualified independent actuary. The figures in the following disclosure were measured using the Projected Unit Method.
On 26 October 2018, the High Court reached a judgement in relation to Lloyds Banking Group’s defined benefit pension schemes
which concluded that schemes should equalise pension benefits for men and women as regards guaranteed minimum pension
benefits. The impact of this judgement on the scheme has been estimated and included in the pension liability.
At 30 June 2024 the scheme was in surplus as measured under the principles of IAS19. Under the accounting standard an entity is allowed
to recognise a pension scheme surplus on its balance sheet to the extent that it is able to realise an economic benefit from that surplus.
The directors have reviewed the rules of the scheme and have concluded that the company can gain full economic benefit from the
scheme on the basis that the rules provide it access to any surplus after the last member has no further benefits in the scheme (referred
to in the standard as gradual settlement). Furthermore, the rules are such that the trustees are not able to take any actions that would
reduce the accounting surplus, such as benefit augmentations or triggering a scheme wind-up, without the company’s action or consent.
2024
2023
Principal actuarial assumptions at the balance sheet date
Discount rate at end of year
5.30%
5.50%
Future salary increases
2.60%
2.65%
Future pension increases
3.10%
3.10%
Rate of inflation – RPI
3.25%
3.25%
– CPI
2.60%
2.65%
Future expected lifetime of current pensioner at age 65:
Male born in 1959
20.6 years
21.0 years
Female born in 1959
23.1 years
23.4 years
Future expected lifetime of future pensioner at age 65:
Male born in 1979
21.9 years
22.4 years
Female born in 1979
24.5 years
24.9 years
The sensitivities of the principal assumptions used to measure the scheme liabilities are as follows:
Assumption
Change in assumption
Impact on scheme liabilities
Discount rate
Decrease by 0.1%
Increase by £0.6m
Rate of inflation
Increase by 0.1%
Increase by £0.4m
Expected lifetime
Increase by 1 year
Increase by £2.2m
The sensitivities may not be representative of the actual change in the present value of the scheme obligations, as it is unlikely that
the change in assumptions would occur in isolation of each other, as the assumptions may be linked.
Notes to the Consolidated Financial Statements
continued
60
26. Retirement benefit obligations (continued)
2024
2023
Amounts recognised in the balance sheet
£’000
£’000
Present value of funded obligations
(57,358)
(57,609)
Fair value of scheme assets
57,372
56,149
Net asset/(liability) before deferred taxation
14
(1,460)
Related deferred tax (liability)/asset
(4)
365
Net asset/(liability) after deferred taxation
10
(1,095)
2024
2023
Amounts recognised in the income statement
£’000
£’000
Current service cost
–
(178)
Net interest (cost)/income
(59)
281
(59)
103
2024
2023
£’000
£’000
Amounts recognised in other comprehensive income
Return on assets excluding amount included in net interest cost
643
(14,236)
(Loss)/gain arising from changes in financial assumptions
(1,166)
5,207
Gain/(loss) arising from changes in demographic assumptions
1,068
(230)
Experience gain/(loss)
207
(390)
752
(9,649)
Deferred tax
(188)
2,412
Remeasurement of the net defined benefit asset/(liability)
564
(7,237)
The actual return on the scheme assets in the year was a £3,664,000 gain (2023: £11,498,000 loss).
2024
2023
£’000
£’000
Changes in the present value of the scheme assets
Opening fair value of scheme assets
56,149
69,236
Interest income
3,021
2,738
Return on assets excluding interest income
643
(14,236)
Employer contributions
781
1,942
Employee contributions
–
88
Benefits paid
(3,222)
(3,619)
Closing fair value of scheme assets
57,372
56,149
2024
2023
£’000
£’000
Changes in the present value of the scheme obligations
Opening defined benefit obligations
(57,609)
(63,092)
Service cost
–
(178)
Interest cost
(3,080)
(2,457)
Employee contributions
–
(88)
(Loss)/gain arising from changes in financial assumptions
(1,166)
5,207
Gain/(loss) arising from changes in demographic assumptions
1,068
(230)
Experience gain/(loss)
207
(390)
Benefits paid
3,222
3,619
Closing defined benefit obligations
(57,358)
(57,609)
61
26. Retirement benefit obligations (continued)
2024
2023
£’000
£’000
Changes in the net defined benefit asset/((liability)
Opening net defined benefit (liability)/asset
(1,460)
6,144
Service cost
–
(178)
Net interest (cost)/income
(59)
281
Return on assets excluding interest income
643
(14,236)
(Loss)/gain arising from changes in financial assumptions
(1,166)
5,207
Gain/(loss) arising from changes in demographic assumptions
1,068
(230)
Experience gain/(loss)
207
(390)
Employer contributions
781
1,942
Closing net defined benefit asset/(liability)
14
(1,460)
Major categories of scheme assets
2024
2023
£’000
£’000
Diversified growth fund
41,035
42,244
Liability driven assets
15,909
13,485
Cash
428
420
Total market value of assets
57,372
56,149
The scheme has no investments in the company or in property occupied by the company.
Scheme liabilities by category of membership
2024
2023
£’000
£’000
Active members
12,315
11,700
Deferred pensioners
15,156
14,523
Pensions in payment
29,887
31,386
57,358
57,609
Average duration of scheme liabilities
2024
2023
years
years
Active members
15
15
Deferred pensioners
12
12
Pensions in payment
8
9
All scheme liabilities
10
11
Company contributions of £500,000 are expected to be paid into the scheme during the year ended 30 June 2025.
Notes to the Consolidated Financial Statements
continued
62
27. Share capital
Ordinary shares – allotted, issued and fully paid
2024
2023
2024
2023
Number
Number
£’000
£’000
Opening ordinary shares of 5p each
416,754,052
416,744,052
20,838
20,837
Ordinary shares of 5p each issued
32,384
10,000
1
1
Closing ordinary shares of 5p each
416,786,436
416,754,052
20,839
20,838
Ordinary B shares of 1p each
16,042,530
16,042,530
160
160
Total allotted, issued and fully paid
20,999
20,998
The ordinary shares of 5p each were issued during the year for a consideration of £43,000 (2023: £14,000).
The preference shares detailed below are included as financial instruments within creditors. Full details of these are given in note
11 of the financial statements of the company.
2024
2023
£’000
£’000
Allotted, issued and fully paid
200,000 5.5% preference shares of £1 each
200
200
Ordinary shares under option
Under the terms of the executive share option scheme approved on 3 December 1998, share options were granted and exercised
during the year.The share options outstanding are as follows:
Exercise
Granted
Date of
Date
Date of
price
Number
Exercised
(lapsed)
Number
Director
grant
exercisable
expiry
(pence)
30.06.23
in the year
in the year
30.06.24
M Halstead
21 Jul 14
21 Jul 17
20 Jul 24
135.145
17,802
(17,802)
–
–
12 Jun 17
12 Jun 20
11 Jun 27
238.250
100,000
–
–
100,000
18 Oct 18
18 Oct 21
17 Oct 28
195.415
120,000
–
–
120,000
10 Aug 22
10 Aug 25
9 Aug 32
206.000
100,000
–
–
100,000
17 Nov 23
17 Nov 26
16 Nov 33
203.000
–
–
30,000
30,000
27 Mar 24
27 Mar 27
26 Mar 34
192.750
–
–
30,000
30,000
G R Oliver
21 Jul 14
21 Jul 17
20 Jul 24
135.145
14,582
(14,582)
–
–
12 Jun 17
12 Jun 20
11 Jun 27
238.250
100,000
–
–
100,000
18 Oct 18
18 Oct 21
17 Oct 28
195.415
120,000
–
–
120,000
10 Aug 22
10 Aug 25
9 Aug 32
206.000
100,000
–
–
100,000
17 Nov 23
17 Nov 26
16 Nov 33
203.000
–
–
30,000
30,000
27 Mar 24
27 Mar 27
26 Mar 34
192.750
–
–
30,000
30,000
D W Drillingcourt
12 Jun 17
12 Jun 20
11 Jun 27
238.250
80,000
–
–
80,000
4 Oct 21
4 Oct 24
3 Oct 31
262.665
60,000
–
–
60,000
10 Aug 22
10 Aug 25
9 Aug 32
206.000
70,000
–
–
70,000
17 Nov 23
17 Nov 26
16 Nov 33
203.000
–
–
30,000
30,000
27 Mar 24
27 Mar 27
26 Mar 34
192.750
–
–
30,000
30,000
Total – directors
882,384
(32,384)
180,000
1,030,000
Employees
12 Jun 17
12 Jun 20
11 Jun 27
238.250
260,000
–
(80,000)
180,000
22 Dec 17
22 Dec 20
21 Dec 27
218.040
40,000
–
–
40,000
18 Oct 18
18 Oct 21
17 Oct 28
195.415
234,950
–
–
234,950
4 Oct 21
4 Oct 24
3 Oct 31
262.665
550,000
–
(45,000)
505,000
27 Jun 22
27 Jun 25
26 Jun 31
205.330
20,000
–
–
20,000
10 Aug 22
10 Aug 25
9 Aug 32
206.000
760,000
–
(45,000)
715,000
17 Nov 23
17 Nov 26
16 Nov 33
203.000
–
–
475,000
475,000
27 Mar 24
27 Mar 27
26 Mar 34
192.750
–
–
505,000
505,000
Total – employees
1,864,950
–
810,000
2,674,950
Grand total
2,747,334
(32,384)
990,000
3,704,950
63
27. Share capital (continued)
The market price of the shares at 30 June 2024 was 182p (2023: 211p).The share price during the year ranged from 180p to 225p.
Directors exercised 32,384 (2023: 10,000) share options during the year. Aggregate gains on exercising the share options by
directors in the year amounted to £20,000 (2023: £7,000) of which £11,000 (2023: £nil) related to the highest paid director.
A summary of movements in numbers of share options is as follows:
Weighted
average
Number of
exercise
options
price
At 30 June 2022
1,808,164
231p
Exercised in the year
(10,000)
135p
Lapsed in the year
(80,830)
262p
Granted in the year
1,030,000
206p
At 30 June 2023
2,747,334
222p
Exercised in the year
(32,384)
135p
Lapsed in the year
(170,000)
236p
Granted in the year
1,160,000
198p
At 30 June 2024
3,704,950
215p
At 30 June 2024 there were 974,950 (2023: 1,087,334) share options exercisable at a weighted average exercise price of 217p
(2023: 216p).
The weighted average remaining contractual life of share options outstanding at 30 June 2024 was 7.3 years (2023: 7.1 years).
Share based payments
The group’s equity settled share based payments comprise the grant of share options to certain employees under the group’s
executive share option scheme. Details of such options are given above. The group calculated the fair value of the options at the
date of grant using the Black Scholes model.
An expense based on the fair value calculated at the date of grant was recognised in the income statement over the vesting period
of the options. The share based payment expense for the year ended 30 June 2024 was £39,000 (2023: £26,000).
The inputs into the Black Scholes model for the share options granted in the year were as follows:
Exercise price
192.75p
203.00p
Expected life of option
3.5 years
3.5 years
Expected share price volatility
14.00%
14.00%
Expected dividend yield
5.25%
5.25%
Risk free interest rate
4.00%
4.00%
Notes to the Consolidated Financial Statements
continued
64
28. Reserves
The nature and purpose of each reserve within equity is as follows.
Reserve
Description and purpose
Equity share capital
Nominal value of equity share capital issued.
Share premium account
Amount subscribed for equity share capital in excess of nominal value.
Currency translation reserve
Cumulative currency translation gains and losses arising on the
retranslation of the net assets of the group’s foreign operations.
Hedging reserve
Gains and losses arising on the fair value of financial instruments in an
effective designated cash flow hedging relationship.
Retained earnings
All other gains and losses and transactions with owners, such as
dividends, not recognised in other reserves.
29. Derivative financial instruments
The group is exposed to foreign currency risk on sales and purchases that are denominated in a currency other than the functional
currency of the entity concerned. The currencies giving rise to this risk are various, but the most significant are the US Dollar and
the Euro. Forward exchange contracts are used to manage this exposure to fluctuations in foreign exchange rates. The group buys
or sells foreign currency at spot where necessary to address any short-term imbalances.
The group hedges, using forward exchange contracts, transactions denominated in a foreign currency which are not matched
against other transactions in the same currency within the group.The forward exchange contracts have maturities of less than one
year after the balance sheet date.
The group classifies its forward exchange contracts hedging forecasted transactions as cash flow hedges and states them at fair
value. The hedged cash flows are expected to occur within one year after the balance sheet date.
The fair values have been calculated by applying (where relevant), for equivalent maturity profiles, the rate at which forward
currency contracts with the same principal amounts could be acquired at the balance sheet date.
Changes in the fair value of forward exchange contracts for which no hedge accounting is applied or where the hedge is considered
ineffective are recognised in the income statement.
Other than the use of forward exchange contracts as detailed above, the group does not make use of derivative financial
instruments.
65
30. Financial instruments
For cash and cash equivalents and trade and other payables and receivables the fair value approximates to their book value due to the
short maturity profile of these financial instruments. On receivables, allowances are made within the book value for credit risk. The fair
value of forward exchange contracts is determined by reference to spot rates adjusted for the forward points to the contract value date.
The book values and fair values of financial instruments are set out below:
2024
2024
2023
2023
Book value
Fair value
Book value
Fair value
£’000
£’000
£’000
£’000
Current:
Trade and other receivables
41,616
41,616
44,314
44,314
Forward exchange contracts
482
482
773
773
Cash and cash equivalents
74,282
74,282
63,222
63,222
Trade and other payables
(53,075)
(53,075)
(55,764)
(55,764)
Forward exchange contracts
(106)
(106)
(213)
(213)
Lease liabilities
(2,707)
(2,707)
(2,696)
(2,696)
Total
60,492
60,492
49,636
49,636
Non-current:
Other payables
(410)
(410)
(400)
(400)
Lease liabilities
(3,680)
(3,680)
(4,582)
(4,582)
Preference shares
(200)
(200)
(200)
(200)
Total
(4,290)
(4,290)
(5,182)
(5,182)
The lease liabilities are all payable within five years.
Other than forward exchange contracts which are categorised as derivative instruments, all financial assets are categorised as financial
assets measured at amortised cost and all financial liabilities are categorised as financial liabilities measured at amortised cost.
The following table provides an analysis of financial instruments that are measured subsequent to initial recognition at fair value.
IFRS 7 requires that these be grouped into Levels 1 to 3 based on the degree to which the fair value is observable. All items in the
table below are categorised as Level 2 which, as defined by IFRS 7, refers to those items whose fair value measurement is derived
from inputs other than that are observable for the asset or liability either directly or indirectly.
2024
2023
£’000
£’000
Forward exchange contracts at fair value through profit and loss account
(16)
2
Forward exchange contracts at fair value through hedging reserve
392
558
376
560
Sensitivity analysis
The group’s principal exposures in relation to market risks are to changes in the euro exchange rate against sterling and to changes
in UK interest rates. The group does not fix the interest rate receivable on its sterling balances, and based on balances held at the
year end, a 1% increase or decrease in sterling interest rates would lead to an increase or decrease in post-tax earnings of
£427,000 (2023: £370,000). The table below details the notional impact of changes in the euro exchange rate against sterling on
the group’s post-tax profit and equity. The gains and losses arise from the translation of receivables, payables, cash and forward
exchange contracts which are denominated in currencies other than each subsidiary’s reporting currency.
2024
2024
2023
2023
Post-tax profits
Equity Post-tax profits
Equity
£’000
£’000
£’000
£’000
Euro 5% stronger against sterling
27
27
16
16
Euro 5% weaker against sterling
(24)
(24)
(15)
(15)
Notes to the Consolidated Financial Statements
continued
66
31. Group companies
At 30 June 2024, the trading subsidiaries of the group and the proportion of ordinary share capital owned were:
Proportion
Country of
owned
Name of subsidiary
Activity
incorporation
(%)
Polyflor Limited
Flooring manufacturing and distribution
England
100
Riverside Flooring Limited
Flooring manufacturing
England
100
Polyflor Australia Pty Limited
Flooring distribution
Australia
100
Polyflor New Zealand Limited
Flooring distribution
New Zealand
100
Polyflor Canada Inc
Flooring distribution
Canada
100
Polyflor India Pvt Limited
Flooring distribution
India
100
Polyflor (M) SDN BHD
Flooring distribution
Malaysia
100
Objectflor Art und Design Belags GmbH
Flooring distribution
Germany
100
Karndean International GmbH
Flooring distribution
Germany
100
James Halstead France SAS
Flooring distribution
France
100
Polyflor Nordic Sweden AB
Flooring distribution
Sweden
100
A complete list of the group’s subsidiaries is provided in note 4 of the financial statements of the company.
32. Exchange rates
The currency exchange rates used to translate the results, assets and liabilities of foreign subsidiaries were:
2024
2024
2023
2023
Closing
Average
Closing
Average
Euro
1.18
1.16
1.17
1.15
Australian dollar
1.89
1.92
1.91
1.79
New Zealand dollar
2.07
2.08
2.08
1.95
Canadian dollar
1.73
1.71
1.68
1.61
Swedish krona
13.39
13.39
13.73
12.70
Indian rupee
105.41
104.63
104.30
98.17
Malaysian ringgit
5.96
5.91
5.93
5.40
33. Related parties
Transactions between the company and its subsidiaries have been eliminated on consolidation and are not disclosed in this note.
The group’s contributions to the defined benefit pension scheme are disclosed in note 26.
Details of other related party transactions for the group are shown in the directors' report, board report on remuneration and in
the notes to the financial statements. The key management personnel are the directors.
Polyflor Limited, a subsidiary of the company, leases cars from a company of which Mr Russell Whiting is a director. The lease
payments during the year were £213,000 (2023 £265,000) and the outstanding lease commitments at 30 June 2024 were
£78,000 (2023: £126,000).
67
Company Balance Sheet
as at 30 June 2024
Note
2024
2023
£’000
£’000
Fixed assets
Tangible fixed assets
3
3,892
4,077
Investments
4
40,982
40,982
44,874
45,059
Current assets
Debtors due within one year
5
45,509
53,244
Debtors due after one year
5
–
132
Retirement benefit obligations
10
14
–
Total debtors
45,523
53,376
Derivative financial instruments
7
482
773
Cash at bank and in hand
61,342
51,389
Total current assets
107,347
105,538
Creditors due within one year
8
(10,389)
(9,639)
Derivative financial instruments
7
(106)
(213)
Net current assets
96,852
95,686
Total assets less current liabilities
141,726
140,745
Creditors due after more than one year
9
(200)
(200)
Provision for liabilities
6
(238)
–
Retirement benefit obligations
10
–
(1,460)
Net assets
141,288
139,085
Capital and reserves
Equity share capital
20,839
20,838
Equity share capital (B shares)
160
160
Called up share capital
11
20,999
20,998
Share premium account
55
13
Hedging reserve
392
558
Profit and loss account
119,842
117,516
Total shareholders’ funds
141,288
139,085
The company has taken advantage of the provisions of Section 408 of the Companies Act 2006 and has elected not to present its
own profit and loss account. The profit after taxation for the financial year dealt with in the financial statements of the company
was £36,106,000 (2023: £36,226,000).
The financial statements were approved and authorised for issue by the board and were signed on its behalf on 30 September 2024.
M Halstead
G R Oliver
Director
Director
James Halstead plc Registration Number 140269
68
Profit
Total
Share
Share
Hedging
and loss
shareholders’
capital
premium
reserve
account
funds
£'000
£'000
£’000
£’000
£'000
Balance at 30 June 2022
20,997
–
1,625
120,799
143,421
Profit for the year
–
–
–
36,226
36,226
Remeasurement of the net defined
benefit liability
–
–
–
(7,237)
(7,237)
Fair value movements on
hedging instruments
–
–
(1,067)
–
(1,067)
Total comprehensive income for
the year
–
–
(1,067)
28,989
27,922
Transactions with equity shareholders
Dividends
–
–
–
(32,298)
(32,298)
Issue of share capital
1
13
–
–
14
Share based payments
–
–
–
26
26
Balance at 30 June 2023
20,998
13
558
117,516
139,085
Profit for the year
–
–
–
36,106
36,106
Remeasurement of the net defined
benefit liability
–
–
–
564
564
Fair value movements on
hedging instruments
–
–
(166)
–
(166)
Total comprehensive income for
the year
–
–
(166)
36,670
36,504
Transactions with equity shareholders
Dividends
–
–
–
(34,383)
(34,383)
Issue of share capital
1
42
–
–
43
Share based payments
–
–
–
39
39
Balance at 30 June 2024
20,999
55
392
119,842
141,288
Company Statement of Changes in Equity
for the year ended 30 June 2024
69
Notes to the Company Financial Statements
1.
Accounting policies
Basis of preparation
The separate financial statements of the company are presented as required by the Companies Act 2006. The company meets the
definition of a qualifying entity under FRS 100 Application of Financial Reporting Requirements issued by the Financial Reporting
Council. Accordingly, the financial statements have been prepared in accordance with FRS 101 Reduced Disclosure Framework as
issued by the Financial Reporting Council.
The company has used the disclosure exemptions available under FRS 101 in relation to presentation of a cash flow statement,
comparative information for certain assets, capital management, transactions with other group companies, compensation of key
management personnel and the effects of new but not yet effective UK adopted international accounting standards.
As the consolidated financial statements include the equivalent disclosures, the company has used the disclosure exemptions
available under FRS 101 in relation to share based payments, and financial instruments. The disclosures for the defined benefit
retirement obligations are included in the consolidated financial statements.
The financial statements are prepared on a going concern basis and in accordance with the historical cost convention, except for
certain financial instruments that have been measured at fair value.
The statement on going concern in the consolidated financial statements also justifies the going concern basis used for the
company financial statements.
The accounting policies of the company are the same as those set out in the consolidated financial statements. The critical
accounting estimates and judgements are income taxes and retirement benefit obligations as set out in the consolidated financial
statements.
The following additional accounting policies are specific to the company’s financial statements.
Investments
Investments in subsidiaries are stated at cost less provision for impairment in value.
Investment land and buildings
Investment land and buildings are stated at cost less depreciation and any provision for impairment. Depreciation is calculated to
write off the buildings on a straight line basis over their estimated economic life of fifty years. No depreciation is charged in respect
of land.
Group debtors
Amounts owed by group undertakings are stated after any provision for expected credit loss in line with the three stage model in
IFRS 9.
70
2.
Staff costs and numbers
2024
2023
£’000
£’000
Staff costs comprised:
Wages and salaries
3,570
3,433
Social security costs
466
458
Pension costs
188
94
Share based payments expense
39
26
4,263
4,011
The average monthly number of employees during the year was 21 (2023: 23).
3.
Tangible fixed assets
Investment
Freehold
land and
land and
Plant and
buildings
buildings
equipment
Total
£’000
£’000
£’000
£’000
Cost
At 30 June 2023
8,091
1,326
578
9,995
Additions
–
–
33
33
At 30 June 2024
8,091
1,326
611
10,028
Depreciation
At 30 June 2023
5,114
374
430
5,918
Charge for the year
155
25
38
218
At 30 June 2024
5,269
399
468
6,136
Net book value
At 30 June 2024
2,822
927
143
3,892
At 30 June 2023
2,977
952
148
4,077
The investment land and buildings relates to a freehold property that is occupied by a subsidiary company. The rental income was
£600,000 (2023: £600,000).
Notes to the Company Financial Statements
continued
71
4.
Investments
Shares in
subsidiary
undertakings
£’000
Cost
At 30 June 2023
49,552
At 30 June 2024
49,552
Provision for impairment
At 30 June 2023
8,570
At 30 June 2024
8,570
Net book value
At 30 June 2024
40,982
At 30 June 2023
40,982
At 30 June 2024, the company held directly and indirectly 100% of the equity and voting rights of the following undertakings:
Proportion
Country of
owned
Subsidiary
Activity
incorporation
(%)
Owned by the company
Polyflor Limited
Flooring manufacturing and distribution
England
100
Riverside Flooring Limited
Flooring manufacturing
England
100
Titan Leisure Group Limited
Dormant company
England
100
Halstead Flooring International Limited
Dormant company
England
100
Expona Limited
Dormant company
England
100
JHL Limited
Dormant company
England
100
Halstead Floorings Limited
Dormant company
Ireland
100
Halstead Flooring Concepts Pty Limited
Holding company
Australia
100
Polyflor Canada Inc
Flooring distribution
Canada
100
Polyflor India Pvt Limited
Flooring distribution
India
100
Polyflor (M) SDN BHD
Flooring distribution
Malaysia
100
Polyflor North Asia Limited
Dormant company
Hong Kong
100
Objectflor Art und Design Belags GmbH
Flooring distribution
Germany
100
James Halstead France SAS
Flooring distribution
France
100
Polyflor Nordic Sweden AB
Flooring distribution
Sweden
100
Owned by subsidiaries
Polyflor Australia Pty Limited
Flooring distribution
Australia
100
Colonia Flooring Pty Limited
Dormant company
Australia
100
Polyflor New Zealand Limited
Flooring distribution
New Zealand
100
Karndean International GmbH
Flooring distribution
Germany
100
72
Notes to the Company Financial Statements
continued
4.
Investments continued
Subsidiary
Registered office
Polyflor Limited
Beechfield
Riverside Flooring Limited
Hollinhurst Road
Titan Leisure Group Limited
Radcliffe
Halstead Flooring International Limited
Manchester
Expona Limited
M26 1JN
JHL Limited
England
Halstead Floorings Limited
24/26 City Quay
Dublin 2
D02NY19
Ireland
Halstead Flooring Concepts Pty Limited
101 Prosperity Way
Polyflor Australia Pty Limited
Dandenong
Colonia Flooring Pty Limited
VIC 3175
Australia
Polyflor Canada Inc
3209 Orlando Drive
Mississauga
Ontario L4V IC5
Canada
Polyflor India Pty Limited
B-408 Knox Plaza
Mindspace, Malad West
Mumbai 400 064
India
Polyflor (M) SDN BHD
802, 8th Floor, Block C
Kelana Square
17 Jalan 557/26
Petaling Jaya
Salangor 47301
Malaysia
Polyflor North Asia Limited
Units 1607-8
16th floor
Citicorp Centre
18 Whitfield Road
Causeway Bay
Hong Kong
Objectflor Art und Design Belags GmbH
Wankelstrasse 50
Karndean International GmbH
D 50996 Koln
Germany
James Halstead France SAS
Parc Saint Christophe
10 Avenue de l’Enterprise
95861 Cergy Pontoise
France
Polyflor Nordic Sweden AB
Box 102 51
434 23 Kungsbacka
Besoksadress
Energigatan 9
Sweden
Polyflor New Zealand Limited
2 Narek Place
Manukau City
Auckland 2104
New Zealand
73
5.
Debtors
2024
2023
£’000
£’000
Amounts owed by group undertakings
44,547
53,081
Corporation tax
655
–
Other debtors
78
72
Prepayments
229
91
Debtors due within one year
45,509
53,244
Deferred tax assets (note 6)
–
132
Debtors due after one year
–
132
6.
Deferred tax assets/(liabilities)
Retirement
Accelerated
benefit
tax
obligations
depreciation
Total
£’000
£’000
£’000
At 30 June 2023
365
(233)
132
Charged to income statement
(181)
(1)
(182)
Charged to other comprehensive income
(188)
–
(188)
At 30 June 2024
(4)
(234)
(238)
7.
Derivative financial instruments
Derivative financial instruments are forward foreign exchange contracts recognised in the balance sheet at fair value.
8.
Creditors due within one year
2024
2023
£’000
£’000
Trade creditors
216
136
Amounts due to group undertakings
6,631
6,631
Other taxation and social security
130
125
Other creditors
768
414
Accruals
2,644
2,333
10,389
9,639
Notes to the Company Financial Statements
continued
74
9.
Creditors due after more than one year
2024
2023
£’000
£’000
Preference shares (note 11)
200
200
10. Retirement benefit obligations
2024
2023
£’000
£’000
Present value of funded obligations
(57,358)
(57,609)
Fair value of scheme assets
57,372
56,149
Net asset/(liability)
14
(1,460)
The company sponsors the Halstead Group Pension Scheme. Disclosure information is provided in note 26 to the consolidated
financial statements.
11. Share capital
Ordinary shares – allotted, issued and fully paid
2024
2023
2024
2023
Number
Number
£’000
£’000
Opening ordinary shares of 5p each
416,754,052
416,744,052
20,838
20,837
Ordinary shares of 5p each issued
32,384
10,000
1
1
Closing ordinary shares of 5p each
416,786,436
416,754,052
20,839
20,838
Ordinary B shares of 1p each
16,042,530
16,042,530
160
160
Total allotted, issued and fully paid
20,999
20,998
The ordinary shares of 5p each were issued during the year for a consideration of £43,000 (2023: £14,000).
Shareholders approved a proposal for the return of capital (“return of capital”) at an extraordinary general meeting on 6 December
2004. This resulted in the creation of the 1 pence B ordinary shares (“B shares”), which were issued on 14 January 2005. Following
the issue of the B shares, holders received a single dividend of 60 pence per B share. The B shares are not listed, have extremely
limited rights and are of negligible value.
The preference shares detailed below are included as financial instruments within creditors.
2024
2023
£’000
£’000
Allotted, issued and fully paid
200,000 5.5% preference shares of £1 each
200
200
75
11. Share capital (continued)
The 5.5% cumulative preference shares of £1 shall confer on the holders thereof the right to receive in priority to all other shares
in the capital of the company out of the profits of the company which it shall be determined to distribute, a fixed cumulative
preferential dividend at the rate of 5.5% per annum on the capital for the time being paid up thereon and the right in the event of
a winding up, in priority to all other shares in the capital of the company, to repayment of the capital paid up thereon together
with a premium of 5p per share and a sum equivalent to any arrears and accruals of the said fixed cumulative preferential dividend
thereon (whether earned or declared or not) calculated up to the date of such repayment of capital but shall not confer any further
right to participate in profits or assets of James Halstead plc.
The company shall not be at liberty to create or issue any further shares ranking in priority to or pari passu with the preference
shares without the consent in writing of the holders of three-fourths of the issued preference shares or the sanction of an
extraordinary resolution of the holders of such preference shares passed at a separate general meeting of such holders. The
preference shares shall not confer upon the holders thereof the right to attend or vote at any general meeting of the company or
to receive notice thereof, unless either:
(i) At the date of the notice convening the meeting the fixed cumulative preferential dividend on the preference shares is six
months in arrears and then so long only as such dividend shall remain unpaid, and so that for this purpose the dividend on the
preference shares shall be deemed to accrue due and be payable by equal half-yearly instalments on 30 June and 31 December in
every year, or
(ii) The business of the meeting includes the consideration of a resolution for reducing the capital or winding up the company or
for the sale of its undertaking or of any resolution directly abrogating or varying any of the special rights or privileges attached to
the preference shares.
The preference shares shall nevertheless entitle the holders thereof to receive notice of every general meeting. At a general
meeting at which the holders of preference shares are entitled to attend and vote, the preference shares shall entitle a holder
thereof, or his proxy, to vote only for every preference share held by him.
12. Related party transactions
The company has taken advantage of the exemption granted by FRS 101 not to disclose transactions and balances with other group
companies.
76
Ten Year Summary (Unaudited)
2015
2016
2017
2018
2019
2020
2021
2022
2023
2024
£’000
£’000
£’000
£’000
£’000
£’000
£’000
£’000
£’000
£’000
Revenue
227,261 226,141 240,784 249,510 253,038 238,630 266,362 291,860 303,562 274,881
Profit before income tax
44,184
45,499
46,616
46,702
48,276
43,857
51,268
52,063
52,099
56,244
Income tax
(10,250) (10,243) (10,106)
(9,994) (10,484)
(9,502) (11,407) (11,735)
(9,695) (14,704)
Profit after income tax
33,934
35,256
36,510
36,708
37,792
34,355
39,861
40,328
42,404
41,520
2015
2016
2017
2018
2019
2020
2021
2022
2023
2024
Basic earnings per 5p share
8.2p
8.5p
8.8p
8.8p
9.1p
8.3p
9.6p
9.7p
10.2p
10.0p
Dividends per 5p share
5.5p
6.0p
6.5p
6.8p
7.0p
7.1p
7.6p
7.8p
8.0p
8.5p
Figures for the previous years have been restated to take account of the one-for-one bonus share issue in the year ended 30 June
2022.
Special dividends are not included.
77
Shareholder Information
Financial calendar
Annual general meeting
6 December 2024
Announcement of results
For the half year
March
For the full year
September
Dividend payments
Ordinary shares – interim
June
– final
December
Preference shares
June and December
Share dealing information
The ordinary shares of the company are traded on the Alternative Investment Market of the London Stock Exchange.
Information concerning the day-to-day movement of the share price can be found on the London Stock Exchange website.
Shareholder analysis
as at 16 September 2024
Number of
Number of
holders
shares
%
By size of holding
1-20,000
1,296
7,806,094
1.9
20,001-100,000
371
16,601,576
4.0
100,001-200,000
63
8,648,956
2.1
200,001-1,000,000
76
33,947,208
8.1
1,000,001 and over
57
349,782,602
83.9
1,863
416,786,436
100.0
Number of
Number of
holders
shares
%
By category
Private individuals
1,560
198,204,744
47.5
Banks and nominee companies
264
217,549,845
52.2
Other limited companies/corporate bodies
27
719,472
0.2
Miscellaneous bodies/pension funds
9
214,359
0.1
Investment trusts and funds
3
98,016
0.0
1,863
416,786,436
100.0
78
Notice of Annual General Meeting
NOTICE IS HEREBY GIVEN that the ONE HUNDREDTH and NINTH ANNUAL GENERAL MEETING of the company will be held
at Platinum Suite, Toughsheet Community Stadium, Burnden Way, Bolton, BL6 6JW, on 6 December 2024 at 12pm.
Ordinary business
1
To receive and adopt the report of the directors and the statement of accounts for the year ended 30 June 2024
together with the report of the auditors.
2
To declare a final dividend on the ordinary shares in the capital of the company for the year ended 30 June 2024.
3
To re-elect Mr M Halstead who is retiring by rotation under the articles of association as a director.
4
To re-elect Mr D W Drillingcourt, who, having been appointed by the board on 8 January 2024, is retiring under the
articles of association as a director.
5
To re-elect Mrs D A Harrison, who, having been appointed by the board on 8 January 2024, is retiring under the articles
of association as a director.
6
To re-appoint BDO LLP as auditors of the company and authorise the directors to fix their remuneration for the
ensuing year.
Special business
To consider and, if thought fit, pass the following resolutions of which resolutions 7, 8 and 11 shall be proposed as ordinary
resolutions and resolutions 9 and 10 will be proposed as special resolutions:
7
That, subject to the passing of the ordinary and special resolutions numbered 9 and 10 below, the directors be and
they are hereby authorised, pursuant to article 35.14 of the company’s articles of association:
(i)
to exercise the power contained in article 35.14 so that, to the extent determined by the directors, the holders of
ordinary shares be permitted to elect to receive new ordinary shares of 5.0p each in the capital of the company,
credited as fully paid, instead of all or part of any interim or final dividends which shall be declared before the
conclusion of the next annual general meeting of the company after the passing of this resolution; and
(ii)
to capitalise the appropriate amount of new ordinary shares falling to be allotted pursuant to any elections made
as aforesaid out of profits, or sums standing to the credit of any share premium account or capital reserves of
the company, to apply such sums in paying up such new ordinary shares and to allot such new ordinary shares
to the members of the company making such elections in accordance with their respective entitlements.
8
That in substitution for all existing and unexercised authorities and powers, the directors of the company be and they
are hereby generally and unconditionally authorised for the purpose of section 551 Companies Act 2006 (the “Act”)
to exercise all or any of the powers of the company to allot shares of the company or to grant rights to subscribe for,
or to convert any security into, shares of the company (such shares and rights being together referred to as “Relevant
Securities”) up to an aggregate nominal value of £6,946,440 to such persons at such times and generally on such
terms and conditions as the directors may determine (subject always to the articles of association of the company)
PROVIDED THAT this authority shall, unless previously renewed, varied or revoked by the company in general meeting,
expire at the conclusion of the next annual general meeting or on the date which is six months after the next
accounting reference date of the company (if earlier) save that the directors of the company may, before the expiry
of such period, make an offer or agreement which would or might require relevant securities or equity securities (as
the case may be) to be allotted after the expiry of such period and the directors of the company may allot relevant
securities or equity securities (as the case may be) in pursuance of such offer or agreement as if the authority
conferred hereby had not expired.
9
That subject to the passing of the ordinary resolution numbered 8 above the directors be and they are hereby
empowered pursuant to Section 570 of the Companies Act 2006 to allot equity securities (within the meaning of
Section 560 subsection (1) of the said Act) for cash pursuant to the authority conferred by resolution numbered 6
above as if Section 561 of the said Act did not apply to any such allotment provided that this power shall be limited
to:
(i)
the allotment of equity securities in connection with an offer of such securities by way of rights to holders of
ordinary shares in proportion (as nearly as may be practical) to their respective holdings of such shares, but
subject to such exclusions or other arrangements as the directors may deem necessary or expedient in relation
to fractional entitlements or any legal or practical problems under the laws of any territory, or the
requirements of any regulatory body or stock exchange; and
79
(ii)
the allotment (otherwise than pursuant to sub-paragraph (i) above) of equity securities up to an aggregate
nominal amount of 5% of the ordinary share capital of the company in issue at the date of the passing of this
resolution
and shall expire at the conclusion of the next annual general meeting or on the date which is six months after the next
accounting reference date of the company (if earlier) save that the company may before such expiry make an offer or
agreement which would or might require equity securities to be allotted after such expiry and the directors may allot
equity securities in pursuance of such an offer or agreement as if the power conferred hereby had not expired.
10
That the company is hereby generally and unconditionally authorised for the purposes of section 693 and 701 of the
Companies Act 2006 to make one or more market purchases (within the meaning of section 693(4) of the said Act)
of fully paid ordinary shares of 5 pence each in the capital of the company (“ordinary shares”) provided that:
(i)
the maximum aggregate number of ordinary shares hereby authorised to be purchased is 10% of the ordinary
shares in issue at the date of passing of this resolution;
(ii)
the maximum price (exclusive of any expenses) which may be paid for an ordinary share shall not be more
than 5% above the average of the middle market quotations for an ordinary share as derived from the Daily
Official List of The London Stock Exchange plc for the five business days immediately preceding the day on
which the ordinary share is purchased;
(iii)
the minimum price which may be paid for each ordinary share is 5 pence (exclusive of any expenses);
(iv)
unless previously revoked or varied, the authority hereby conferred shall expire at the conclusion of the next
annual general meeting of the company or twelve months from the date, if earlier, of passing this resolution;
(v)
the company may make a contract or contracts to purchase its ordinary shares under the authority hereby
conferred prior to the expiry of such authority which will or may be executed wholly or partly after the expiry
of such authority and the company may make a purchase of its ordinary shares in pursuance of such contract
as if the authority hereby conferred had not expired; and
(vi)
the directors may elect to hold shares purchased under this authority in the form of treasury shares (subject
to a maximum of 10% of the issued ordinary share capital of the company at any one time).
11
That the rules of the James Halstead plc Long-term Incentive Plan 2024 (the “LTIP”), be approved and the
Directors and Company Secretary be authorised to adopt the LTIP and do all things appropriate to operate the LTIP.
A summarised schedule of the principal features can be found on the company’s website at
www.jameshalstead.plc.uk/investors
By order of the board
Beechfield
D N Fletcher
Hollinhurst Road
Secretary
Radcliffe
Manchester
18 October 2024
M26 1JN
80
Notes
1
Preference shareholders are advised that they are not entitled to attend or vote at the annual general meeting.
2
You can vote either:
i.
By logging on to www.signalshares.com and following the instructions. If you experience difficulties in logging in or require
assistance, please contact Link Group directly on Tel: 0371 664 0300 (Calls are charged at the standard geographic rate and will
vary by provider. Calls outside the United Kingdom will be charged at the applicable international rate. Lines are open between
09:00 – 17:30, Monday to Friday excluding public holidays in England and Wales).
ii
By appointing a proxy to exercise all or any of their rights to attend and to speak and vote on their behalf at the meeting. A
shareholder may appoint more than one proxy in relation to the meeting provided that each proxy is appointed to exercise the
rights attached to a different share or shares held by that shareholder. A proxy need not be a shareholder of the company. Please
consider appointing the Chairman of the AGM as your proxy, with voting instructions, to ensure your vote is counted. You may
request a form of proxy directly from the registrars, Link Group using the telephone number above (same call terms and
conditions apply). In order for a proxy appointment to be valid a form of proxy must be completed. In each case the form of proxy
must be received by Link Group, Central Square, 29 Wellington Street, Leeds, LS1 4DL by 12pm on 4 December 2024.
iii
By attending the meeting in person at the address and time set out at the beginning of this notice, bringing either your
attendance card or other appropriate form of identification so that you can be identified by the company’s registrars. It is
recommended that you arrive at least 15 minutes before the time appointed for the meeting to begin. To be entitled to attend
and vote at the meeting (and for the purpose of the determination by the company of the votes they may cast), shareholders
must be entered in the register of members of the company at close of business on 4 December 2024.
iv.
In the case of CREST members, by utilising the CREST electronic proxy appointment service in accordance with the procedures
set out below.
3
If you return more than one proxy appointment, either by paper or electronic communication, the appointment received last by the
Registrar before the latest time for the receipt of proxies will take precedence. You are advised to read the terms and conditions of use
carefully. Electronic communication facilities are open to all shareholders and those who use them will not be disadvantaged
4
CREST members who wish to appoint a proxy or proxies through the CREST electronic proxy appointment service may do so for the
Meeting (and any adjournment of the Meeting) by using the procedures described in the CREST Manual (available from
www.euroclear.com/site/public/EUI). CREST Personal Members or other CREST sponsored members, and those CREST members who
have appointed a service provider(s), should refer to their CREST sponsor or voting service provider(s), who will be able to take the
appropriate action on their behalf. In order for a proxy appointment or instruction made by means of CREST to be valid, the appropriate
CREST message (a ‘CREST Proxy Instruction’) must be properly authenticated in accordance with Euroclear UK & Ireland Limited’s
specifications and must contain the information required for such instructions, as described in the CREST Manual. The message must
be transmitted so as to be received by the issuer’s agent (ID RA10) by 12pm on 4 December 2024. For this purpose, the time of receipt
will be taken to mean the time (as determined by the timestamp applied to the message by the CREST application host) from which
the issuer’s agent is able to retrieve the message by enquiry to CREST in the manner prescribed by CREST. After this time, any change
of instructions to proxies appointed through CREST should be communicated to the appointee through other means.
5
CREST members and, where applicable, their CREST sponsors or voting service providers should note that Euroclear UK & Ireland Limited
does not make available special procedures in CREST for any particular message. Normal system timings and limitations will, therefore,
apply in relation to the input of CREST Proxy Instructions. It is the responsibility of the CREST member concerned to take (or, if the
CREST member is a CREST personal member, or sponsored member, or has appointed a voting service provider(s), to procure that their
CREST sponsor or voting service provider(s) take(s)) such action as shall be necessary to ensure that a message is transmitted by means
of the CREST system by any particular time. In this connection, CREST members and, where applicable, their CREST sponsors or voting
system providers are referred, in particular, to those sections of the CREST Manual concerning practical limitations of the CREST system
and timings. The Company may treat as invalid a CREST Proxy Instruction in the circumstances set out in Regulation 35(5)(a) of the
Uncertificated Securities Regulations 2001.
6
Any corporation which is a shareholder can appoint one or more corporate representatives who may exercise on its behalf all of its
powers as a shareholder provided that no more than one corporate representative exercises powers in relation to the same shares.
7
As at 27 September 2024 (being the latest practicable business day prior to the publication of this Notice), the company’s ordinary
issued share capital consisted of 416,786,436 ordinary shares, carrying one vote each. Therefore, the total voting rights in the company
as at 27 September 2024 were 416,786,436.
8
You may not use any electronic address (within the meaning of Section 333(4) of the Companies Act 2006) provided in either this
Notice or any related documents (including the form of proxy) to communicate with the company for any purposes other than those
expressly stated.
9
A copy of this Notice, and other information required by Section 311A of the Companies Act 2006, can be found on the company’s
website at www.jameshalstead.com.
10
The documents listed below will be available for inspection at an agreed time at the registered office of the company during the usual
business hours on any weekday except bank holidays. Please e-mail secretary@jameshalstead.plc.uk (Label your e-mail “AGM
documents”) to book an appointment to view the following documents:
i.
The register of interests of the directors in the share capital of the company: and
ii.
Copies of the service contracts of Mr G R Oliver and Mr D W Drillingcourt.
11
The final dividend, if approved, will be paid on 13 December 2024 to shareholders on the register as at 15 November 2024.
Notice of Annual General Meeting
continued
81
82
Beechfield
Hollinhurst Road
Radcliffe
Manchester
M26 1JN
Tel +44 (0)161 767 2500
www.jameshalstead.com
Classic Mystique PUR
Imperial War Museum, Cambridgeshire, UK
Classic Mystique PUR
Havering College STEM Centre, Havering, Essex