Final Results

James Halstead plc, the AIM listed manufacturer and international distributor of commercial flooring, announces its results for the year ended 30 June 2026:

Financial highlights

Our 50th year of increased dividend with a final dividend per ordinary share proposed of 6.10p (2025: 6.05p) bringing the total dividend for the year to 8.95p (2025: 8.80p)

Revenue at £259.9 million (2025: £262.0 million)

Profit before tax of £48.2 million (2025: £55.1 million)

Profit after tax of £35.4 million (2025: £40.6 million)

Cash generated from operating activities £49.1 million (2025: £35.7m)

Cash of £75.7 million (2025: £68.4 million)

Earnings per ordinary share of 8.5p (2025: 9.7p)

Operational highlights

Gross margins maintained at 44.6% (2025: 44.5%)

Continued investment in our operations with previous year capital spend now delivering operational improvements

New product development efforts continued to deliver with the launch of Finesse EC, our latest electrostatic conductive product and Geotone QuickLay, an adhesive-free installation system that saves considerable time Several key projects completed during the year. Selected projects include: Universal Rubber Belt Manufacturing in DIC Bennet Pharmaceutical head office in Greece EDU Camp School in Cyprus Bassadone Motors in Gibraltar

Outlook

Short term ongoing headwinds in Europe (particularly the UK) are affecting repair, renewal and roll-out budgets that have been constrained by additional employment costs in education, healthcare and hospitality sectors

The Group expects continued growth in core UK manufactured ranges as spending on education, prisons, healthcare and aged care increases

Direct export markets remain positive

The Board remains confident in the Group’s prospects for the year ahead, supported by a strong balance sheet, prudent cost and stock control and a leading market presence

Mr Mark Halstead, Executive Chairman, commenting on the results, said:

“This is our 50th year of increased dividend but it has been a difficult year. The Gulf situation created clear pressure on material and energy costs while weaker demand and structural changes in the UK distribution market also affected sales and profit in the short term.

Notwithstanding these challenges, I am pleased to report, that against, this backdrop cash inflows from operations were 37.4% ahead of the comparative with cash balances at the year-end of £75.7 million. The strength of our balance sheet and business model also allows me to report an uplift in final dividend”.

CHAIRMAN’S STATEMENT

Results

Revenue for the year at £259.9 million (2025: £262.0 million) was 0.8% behind the comparative year largely driven by headwinds in Europe. The UK represents 43.1% of our total turnover (2025: 42.6%) and much focus has been given to this market in the last couple of years and especially the financial year. As a manufacturer the output of our plant is a bedrock of profitability and there have been key pressures on the core demand in our home market.

The background is simple to describe: our core markets have seen a fall in new build activity and more importantly reductions in the quantum and regularity of repair and renewal activity. For the UK, education, healthcare and prison sector budgets for flooring have been much reduced due to increased spending elsewhere. Allied with this, hospitality has come under pressure, both new outlets and repair and renewal work, in part because of the degree of uncertainty/confidence across the sector but more immediately due to increased costs particularly on wages but compounded by energy and other material costs.

Against this background of demand pressure, we faced concerns and challenges as our route to the UK market via distribution was problematic. Many shareholders will be aware that Headlam plc has been an important customer for many years, but the company has increasingly faced key challenges related to their liquidity and profitability. The decline in the turnover of Headlam and their heavy financial losses are a matter of record. Significant focus and attention, of our team, had been spent in supporting Headlam’s sales activity whilst, at the same time, managing the mitigation of risk to our business.

For these reasons the UK dominated management attention. Nevertheless, a key part of our strategy was to mitigate downward pressures on sales in the UK by prioritising the increase in direct exports of UK manufactured product with production output being critical to business performance.

I think we can be pleased that despite these pressures our UK turnover increased (albeit by 0.3%), in what was a falling market with key customer concerns. It is, however, important to note that within that modest number the volume of core manufactured products in the UK increased sales by 8% with an offset of reduced LVT sales volumes.

To underline the positives of a focus on UK manufactured product our global sales output of Radcliffe-made homogeneous flooring ranges were 4.6% up year on year and our Teesside-made heterogenous flooring ranges were 12.4% up year on year. It is our firm belief that this is a clear indicator of increased market share.

A key pillar of our home and export strategy is differentiation from our competitors through the Company’s commitment to technical support, sustainability and availability of focused product ranges, whether a simple corridor floor in a high use facility or a highly specialised conductive floor for server rooms. This is a key reason for the geographic spread and diverse sectors to which we supply flooring and why our sales in the year were to more than 60 countries.

The reported profit before tax for the year of £48.2 million (2025: £55.1 million) was 12.7% behind the prior year comparative, an inevitable result against a challenging array of market conditions.

Gross margins held up well in all our major markets. Overall, the gross margins improved from 44.5% to 44.6%. Principally this increase was driven by our manufacturing efficiencies and volume output. Key drags to the margin increase are, most particularly, energy costs which over the year averaged 100% higher as a cost per square metre of production than five years ago; along with raw materials which, again, saw significant increases during the last quarter.

Selling, distribution and administration costs, at £69.5 million (2025: £63.8 million) were 9% ahead of last year. In the latter months of the year, we held sales prices to support sales demand but there were sharp increases in costs most notably distribution costs of deliveries and increased lease costs on our overseas warehouse facilities (notably Germany and Canada). In the UK business rates charges from the local council increased on our stock warehousing facilities, without attracting any manufacturers’ relief. Additionally, overheads include a full year effect of increases in employers’ national insurance – amounting to c£0.6 million. There were also higher marketing costs of new and updated ranges in the UK and Europe which underline our confidence in the coming months and underpin sales.

Investment

Over many years our strategy has included a policy of continual investment in both process improvement and product development to improve output efficiency and our product offering. This year saw the implementation of key spends reported in the prior financial year. Furthermore, significant groundwork has been undertaken on the Radcliffe site to improve operational workflow and to facilitate expansion in 2027 onwards. This work has unlocked 2-3 acres of land.

Sustainability, social responsibility and the environment

We will shortly publish our 21st sustainability report that details our actions and ambitions in the areas of the environment, sustainability and social responsibility. This report is released under the core trading and manufacturing business – Polyflor. These initiatives are not only important to our ongoing climate change objectives but often contribute to profitability.

Our 2025/26 sustainability achievements demonstrate significant progress in carbon reduction, waste minimisation, circular economy, responsible sourcing, and social responsibility, all independently verified and recognised by industry standards and awards. These efforts position us as a leader in sustainable manufacturing within the flooring sector.

Some of the details from this (independently verified) report – a 50% reduction in CO2e emissions from UK production since 2018, 98% of total site waste was recycled or repurposed, 96% of water used in production was sourced from recycled rainwater collected on site meaning only 4% came from mains water supply. Notably, 18% of our product ranges are adhesive-free which not only offers quicker installation but also supports easier future recycling and lower carbon footprint to project installations.

Training for the future remains a core focus of the Group and is a key part of our social responsibility commitment. The Objectflor training campus, for example continues to host events offering training, professional development conferences and seminars with each having between 10 – 120 participants. These courses not only offer flooring contractors advanced skills and techniques but offer training on sales and marketing to small businesses.

Cash position

Cash balances increased 10.7% and are a cornerstone of our balance sheet at £75.7 million (2025: £68.4 million). The inventory at the year end is £75.9 million (2025: £80.4 million) which is 5.6% lower than the prior year comparative.

During the year taxation paid was £13.0 million (2025: £14.3 million), with fixed asset additions of £2.9 million (2025: £3.9 million) and equity dividends paid of £37.1 million (2025: £36.5 million).

Dividend

The interim dividend of 2.85p (2025: 2.75p) was paid in June 2026. The Board is proposing a final dividend of 6.10p (2025: 6.05p) which will mean a total dividend for the year of 8.95p (2025: 8.80p) an increase of 1.7%. This is a record level of dividend and marks our 50th consecutive year of increased dividend. The final dividend, subject to approval at the AGM, will be paid on 11 December 2026.

Our dividend cover in this year fell below 1 for the first time. However, the year saw several headwinds that took profit lower than the prior year. Notwithstanding dividend cover being reduced our cash inflows were very good and the final dividend payout is well within our cash resources.

Outlook

The ongoing concerns over energy costs and the upward cost pressure on other materials locally and in relation to global supply chains are key short term matters to contend with. Every year has its issues that need focus, experience and solutions but as in years past we formulate resolutions to the best of our abilities.

Once again, I would like to thank all our colleagues across the globe for their continued efforts in achieving this year’s result. The Chief Executive’s report adds greater detail of the year.

I remain confident, as do my Board, that our portfolio of products is appropriate to the marketplace and of continued overseas growth backed by a robust market share in our home territory.

Mark Halstead

Executive Chairman

CHIEF EXECUTIVE’S REVIEW

It is important to, once again, note that our business is, in essence, simple. Our model is to manufacture in volume, high quality flooring that we sell to distributors, contractors and stockists to satisfy local demand whether this is via third parties (as in the UK), via our own businesses across the globe or into direct export markets. We can complement these ranges with related goods to extend our portfolio and increase profitability whilst remaining focused on the core products.

It does, however, need mentioning that this was a difficult trading year and while I have often talked about “record” results, this year, more than usual, did require significant effort, experience and team performance that was commendable notwithstanding the financial results.

Our various sales teams have secured many prestigious projects during the year as in previous years, but the true driver of the business are the multiple day-to-day installations each much smaller in quantity but supplied from stockists, both third party and those owned by the group and largely available for delivery next day.

Looking at our businesses:

Polyflor and Riverside Flooring, based in UK

Turnover at Polyflor increased by 1.3% over the comparative year and Riverside increased by 7.2%. A commendable performance, especially considering the market backdrop and UK distribution challenges noted above by the Chairman.

Our UK manufacturing plants continue to produce the flooring that is distributed across the world, in part by our own subsidiaries but in the main via third party distribution. Our UK sales are via third party distribution with our wholesaler customers taking in the bulk deliveries that are regionally distributed.

The three largest components of sales in the UK businesses are sales within the UK, direct export sales and sales to overseas subsidiaries of the Group. The UK sales increased year on year by just under 1%, whilst sales to export direct export customers increased 9.2% and sales to overseas subsidiaries reduced 5.1%.

The profits of the UK businesses fell during the year.

In respect to the UK sales (the largest part of the business – and the wider group), the turnover was, overall, marginally increased. There were differences in the major sales categories ie UK manufactured goods and sourced products (largely LVT). UK manufactured goods turnover in the UK increased by 5.5% which helped mitigate profit erosion as manufacturing output was larger and this meant our significant fixed overheads didn’t flex upward to the same degree as sales.

Notwithstanding these facts it was a busy year of progress on product development and range renewal. Looking at just two examples:

Firstly, our latest electrostatic conductive (EC) product – Finesse EC. This is part of our specialist portfolio of products used in environments that need critical static control in, for example, laboratories, clean room, anaesthetising areas, and data rooms / server rooms. This product is the latest in a range of EC floorcoverings that we have produced for two generations and are ever more relevant today.

Secondly, Geotone QuickLay which launched in September 2025 and building upon the success of our safety floor loose-lay products, Geotone is an adhesive-free installation system that saves considerable time by reducing the need to uplift existing floor coverings and minimises disruption. In addition, end-of-life recycling is vastly easier although this will likely be after 25 years, (which is the service life that is noted within our environmental product declaration (EPD)) or more. Polyflor offers a 10 year guarantee.

Our production and technical teams continued their long history of improvement and on the Radcliffe site there were complex replacements of key parts that took place without extensive shutdowns and addressed long term reliability needs. Additional to calendar roll replacement, in-house repairs and refurbishment to the fume burner and line control communications, reducing reliance on outside contractors and improving productivity and enhanced preventative maintenance / critical spare management systems.

Sales demand was below our budgeted expectations but for the reasons noted above was managed carefully.

Objectflor / Karndean and James Halstead France, our European operations

The economic climate in Central Europe has continued to be subdued and this difficult environment resulted in a 5% decline in sales across Germany and France our two principal markets. The market downturn is attributable to a combination of poor economic sentiment in the light of geopolitical crises leading to higher energy prices across much of Europe, high inflation, rising interest rates and falling domestic demand. The property sector, in particular, experienced a sharp decline in new-build projects and investment. Political uncertainty arising from the forthcoming Presidential election in France is further subduing demand there. A difficult market overall has also resulted in increased competition, some of which has been focused on very aggressive price levels and has impacted on our entry level products across Europe. In addition, a move to cheaper click products was experienced, our businesses have launched new products into these markets in the first quarter of the current year to better compete in this arena.

The distribution market in Europe continues to change with consolidation, closures and restructuring in all the main markets we operate in. This requires us to continue to be vigilant in terms of credit risk but also to be mindful of changes in the markets we are operating in.

Margins have remained in line with last year, but we have seen increased costs of distribution in the last quarter as fuel costs immediately rose off the back of the Gulf crisis, and this was compounded through the summer as the level of the Rhine lowered and we incurred surcharges for moving our product from the port to the warehouse.

We continue to focus and remain vigilant on cost control; headcount has been reduced and overheads and marketing costs reviewed and reduced where possible with a view to not negatively impacting turnover. We did still attend, with a significant presence, EuroShop 2026, a triennial event held in Germany attracting flooring manufacturers and distributors from around the globe. This gave exposure to our brands, not just for Germany, but across the rest of Europe, UK and Scandinavia.

During the year our central warehouse lease, in Germany, fell due for renewal and we have extended our existing lease by three years to allow for a strategic review of the European warehouse requirements in terms of scale and location to ensure best value for the medium term.

Polyflor APAC

The APAC region includes our businesses in Australia, New Zealand, South and North Asia. Following the departure of the managing director responsible for the APAC region it has been restructured, with Asia coming back under the operational control of Polyflor UK. A new director was appointed for just Australia and New Zealand and commenced employment in March 2026. As an ex Polyflor Australia employee, he joins with wide experience of our products and markets.

In Australia, the year was challenging and fell below expectations with sales in local currency down 6.8%. The year was shaped by significant internal change, staff turnover, and a prolonged gap in senior leadership. These factors affected momentum, consistency, customer engagement, and the ability to pursue growth opportunities effectively. At the same time, difficult market conditions across construction and flooring along with cautious investment sentiment, high costs, project delays contributed to softer demand and pressure on sales volumes and margins with strong competition from the other main players (largely European) all operating in a smaller market.

Despite these pressures, the business continued to support customers and maintain service levels, with stock availability, technical expertise, and responsive customer support remaining key strengths. There were also areas of positive performance, particularly growth in UK manufactured products. Declines were, however, experienced in LVT and floor preparation goods, highlighting areas requiring renewed focus.

A consequence of these difficulties was that Australia made a loss in the year. Looking ahead, the focus is on returning the Australian business to profitability in 2026–27 through stronger sales execution, closer customer engagement, improved competitiveness, and disciplined cost control. Continuation of planned expenditure reductions across marketing, travel, IT services, recruitment, administration, and warehouse costs will support profitability, while continued investment in people, training, and key market sectors is expected to help rebuild momentum and deliver sustainable growth.

The market difficulties in Australia were also felt in New Zealand and the 2026 financial year was challenging. Difficult market conditions, construction-sector weakness, increased competitor pricing pressure, and reduced sales in key categories have affected the business significantly.

The business has maintained tight cost discipline through initiatives including subleasing premises, bringing sampling production in-house, managing stock purchasing carefully and examining warehouse costs to offset the issues arising from the market conditions.

While market sentiment is expected to remain soft through the 2026 calendar year, early signs of improvement are expected in 2027, and Polyflor NZ is positioned to rebuild volume, protect margins and regain market share as conditions recover.

The South Asia sales retrenched by 4.6% following last year’s significant 38% growth, which although disappointing reflects a business in its infancy in what are competitive markets. Our largest market in this area remains Malaysia, but encouragingly all the surrounding countries saw growth reducing our dependency on the one market. There was a small drop in margin performance during the year due to product sales mix (as opposed to margin erosion), but we expect improvement in the forthcoming year as the goods brought in with less duty replace older stock imported under the old duty regime.

North Asia continued to underperform and the business model of local stocks across much of the range has been reviewed as it is ineffective given the project nature of most of the sales which are often large volumes. Restructuring of this business to reduce costs and working capital is under way and the targeting of larger volume specifications for direct delivery as we previously operated will be the strategy for the near term.

Nordics

Polyflor Nordic comprises Polyflor Norway based in Oslo and Polyflor Sweden based in Gothenburg. Following a disappointing year last year Norwegian turnover recovered somewhat with sales increasing by 6.1% on the prior year. Sweden consolidated the growth from the prior year, albeit with a 5.5% retrenchment.

The region continues to be challenging, particularly in Norway which is reflected in continued low construction activity and strong price competition. During the year we have therefore increased our focus on sales activity, margin discipline and developing larger opportunities capable of delivering meaningful additional volume. As a positive note, volumes of UK manufactured products, a key metric, increased in both markets by over 10%. The business has developed new opportunities with several larger customers and distributors, including direct full-load business, which we believe provides a good platform for further growth and profitability.

Cost control remains a feature here to maintain a sound base for the business in less turbulent times.

Polyflor Canada, based in Toronto

Polyflor Canada delivered a strong full-year performance, with net sales 24.8%, higher than the previous year. The result reflects significant progress by the Canadian business and establishes a much larger revenue base for the future. These increases in sales were across all the major product groups and volumes of UK manufactured products increased by 35% overall, with the largest increases being Riverside heterogeneous product.

Profitability also improved as much of this growth has been obtained on the infrastructure put in place in the prior year.

During the year the Company has for the first time begun to hold stocks in British Columbia which is a key growth province for the business in which we supply direct. This has allowed greater flexibility and responsiveness to the market and reduced, somewhat, the significant freight costs from Ontario, our main warehouse facility. Increased presence in this state will facilitate further growth in future years.

We remain something of an insurgent in the Canadian market, almost entirely a specification business for us. There remains large market share to attack across the country, notwithstanding political uncertainties in the region.

Direct exports markets

The geographic reach and sector coverage of our direct-export team are extensive. This team is based in Radcliffe and is part of the Polyflor business.

Much of Europe is discussed above within the Objectflor and Polyflor Nordic sections and the regions represents the largest concentration of projects, spanning education, healthcare, hospitality, retail, culture, residential care and specialist commercial environments. A significant number of countries are dealt with as direct exports and these markets have grown by 3.4% over the comparative. These cover the Mediterranean (including Spain and Portugal) along with Eastern Europe and Scandinavia (excluding Polyflor Nordic).

Key projects include the renovation of Klaipedos Licejus schools in Lithuania, nightclub installations in Bulgaria, multiple care and disability-support facilities in Portugal, Bennett Pharmaceutical’s head office in Greece, EDU Camp School in Cyprus, Bassadone Motors in Gibraltar, and a broad portfolio across Poland and Ukraine including museums, medical hubs, air bases, restaurants, care homes and duty-free retail stores.

In North America our portfolio is represented by major work in Mexico, including the ISSSTE Regional Hospital in Oaxaca, where Classic Mystique was supplied for a public healthcare facility, and nationwide, where Finesse SD was supplied across ten locations to support static dissipative flooring requirements in data centre environments. The direct exports into this region have fallen modestly by 1.7%, however the regional sales are augmented by the sales of Polyflor Canada and their 24.8% increase in turnover. A year of good progress.

In South America, specifically, in Chile, we supplied projects focused on healthcare and early years education. Notable schemes include the renovation of the Emergency Department at Clínica UC Christus San Carlos de Apoquindo in Santiago, plus the Tralcalcito and Los Cisnecitos kindergartens in southern Chile.

In Western and South Asia (the Middle East) we have seen significant growth over the past year, some 45.1%. In the UAE, projects were completed including industrial, residential, healthcare, education, automotive and commercial end users. Standout projects include Universal Rubber Belt Manufacturing in DIC, Burj Al Shams Residential Tower in Abu Dhabi, Sharifa Yateem Center, American Academy of Cosmetic Surgery Hospital, British Orchard Nursery, SABIS International School – Al Bateen, HPSA Abu Dhabi, and the American and International Schools of Creative Sciences.

In Africa, the largest market is South Africa and sales have increased 23.3% year on year. We were involved in a substantial South African project portfolio across healthcare, higher education, retail, leisure, hospitality, transport and entertainment. Notable projects include Nelson Mandela Central Academic Hospital’s Oncology Unit, Mediclinic George, Stellenbosch University Admin A, ADvTECH Rosebank College Phase 2, NWU Vanderbijlpark facilities, Museum of Illusions Durban, Woolworths Dainfern, Table Bay Hotel, Amazon South Africa, The Fun Company Silverstar, Total Ninja Somerset West, Mini Ninja Winelands Square Cape Town, Ivy Pops Candy Shop and Lanseria Airport.

Summary and outlook

Sales prices were increased at the start of the 2027 financial year.

The Company sells, for the most part, commercial flooring across the world and has seen continued confidence in the segment of resilient sheet flooring but has experienced headwinds against sales of LVT, principally in Europe and Australia. Within the UK, LVT is a major domestic flooring product and our commercial grade products sell into domestic markets, whilst sales volumes have declined, we believe that our ranges have performed well compared to other major domestic brands due to affordability and availability. The Company has, however, successfully managed to grow its market share in the UK in manufactured resilient sheet.

We noted, in our trading update of 22 July 2026, that the impact of the Iran conflict on input costs was sudden and led to many suppliers immediately initiating surcharges. We did not increase prices in the financial year. As a manufacturer with many end contractors committed to projects, we felt this was a situation to absorb some of this cost and to buffer the effects to the end contractors, at least for the short term. Although much of our business is via distribution our connections to end projects are strong, especially overseas, and in markets that already have fragile demand for refurbishment we felt this was the responsible course of action. Furthermore, James Halstead carries significant stock and with many competitors not as well placed, we saw it as an opportunity to take some extra volume as those competitors raised prices and this was successful. A comparison of second half sales performance in the Middle East is a good example – this market increased 45.1% year on year but comparing the second half year sales to the comparative the increase was 80%.

Our overall slowdown was almost entirely in the latter 2-3 months of the trading period in the UK, in part, owing to cost increases in respect of the Iran conflict but also a significant drop in sales to Headlam plc driven by their cash flow difficulties. The Board’s prudent approach to credit with customers also contributed to this reduction in sales. After the financial year end, Headlam plc entered administration in September 2026 with no material effect on debt exposure. Polyflor continued their efforts to support this customer and in recent days the business has been broken up with some core assets sold to Likewise plc. Likewise have been and continue to be a customer.

Our ongoing expectations are for increased sales in the UK as spending on education, prisons, health care and aged care, particularly refurbishment, picks up. Additionally, we continue to increase our direct export sales and are confident that our overseas business can increase profitability.

Gordon Oliver

Chief Executive

Audited Consolidated Income Statement

for the year ended 30 June 2026

All amounts relate to continuing operations.

Audited Consolidated Statement of Comprehensive Income

for the year ended 30 June 2026

Other comprehensive income net of tax: Items that will not be reclassified subsequently to the income statement:

Items that could be reclassified subsequently to the income statement if specific conditions are met

Items in the statement above are disclosed net of tax.

Audited Consolidated Balance Sheet

as at 30 June 2026

The earnings per 5p ordinary share are attributable to equity shareholders.