Companies: JHD   

Aim-listed vinyl flooring manufacturer James Halstead shrugged off a slight reduction in turnover, caused by last year's disposal of its Conway Products division, to report a record £11.3 million profit (£10.7 million) for the year to June. Elliott Davis reports.

Finance director Gordon Oliver explains: 'Basically, we had a business in Conway that went up in smoke, so this year's figures are not a true like-for-like comparison.'

In 2001 Conway, a manufacturer of folding campers and trailers, contributed around £2 million in revenue and a small profit to the group coffers. This more than accounts for the £500,000 reduction (to £93 million) in revenue reported today.

Another factor in Halstead's success is the improvement it has made in terms of sourcing. Traditionally the company manufactured all of its products in the UK. It is now increasingly buying in materials and products from overseas, enabling it to integrate new lines into its product offering and decrease its exposure to the UK manufacturing sector.

Despite the impressive profits growth, however, all has not run smoothly for the group. Halstead's US distributor, fully-listed Low & Bonar, had to be replaced recently, having 'significantly underperformed against the previous year'. And, as chairman Geoffrey Halstead points out, the German market in particular has endured a difficult 12 months.

Nevertheless, Halstead's record figures mean the management now presides over an improved £13.8 million (£10.1 million) cash-pile with which to grow the business.

Investors, meanwhile, will welcome news of the 7.8 per cent dividend hike to 13.75p, which affords the company a strong yield of 5.3 per cent.

The shares rose 7p to 261.5p on the day, valuing the business at £74 million.