REG - Latham(James) PLC - Half-year Report

James LathamAnnouncement

28/11/2019 07:07

RNS Number : 9021U
Latham(James) PLC
28 November 2019
 


James Latham plc
 ("James Latham" or the "Company")
 
 
HALF YEARLY RESULTS FOR THE PERIOD ENDED 30 SEPTEMBER 2019
 
Chairman's statement
 
Unaudited results for the six months trading to 30 September 2019
 
Revenue for the six months ended 30 September 2019 was £125.6m, up 6.3% on £118.2m for the same period last year. This turnover increase is down to our long term strategic changes in product mix, as overall volumes have been static.  The panel product business has seen an increase in delivered volumes through our warehouses, but a reduction in our direct volumes. Our timber business has also seen an increase in delivered volumes especially on added value products. Prices have decreased on most of our commodity panel products throughout this six month period although timber prices have remained stable.
 
Gross margin for the six month period ended 30 September 2019 was 17.4% compared with 17.1% in the comparative six months. This figure includes warehouse costs which are higher due to the increased volumes through our warehouses, and also part of our strategy to increase the working hours in order to better meet our customer needs. Three of our depots are now working 24 hours/5 days a week. The increased delivered volumes have also resulted in an increase in distribution costs. Administrative expenses though are lower than last year, with a reduction in the bad debt charge.
 
Operating profit was £8.5m, up 9.6% on last year's profit of £7.7m. Profit before tax was £8.3m compared with £8.7m in the comparative six months which included a profit of £1.1m on the sale of our old Yate site. Earnings per ordinary share, excluding the profit on the sale of Yate were 33.8p (2018: 31.5p) an increase of 7.3%.
 
As at 30 September 2019 net assets are £97.6m (2018: £98.6m). We have adopted IFRS 16 on leasing in these results, which has had an insignificant effect on profit before tax and these changes are explained in note 6 to this statement. Stock volume levels have remained stable throughout the six months. Trade Receivables have continued to show good debtor days figures. Cash and cash equivalents of £16.5m (2018: £12.9m) remain strong and we continue to take advantage of additional early settlement discount opportunities with our suppliers.
 
The calculation of the pension deficit remains very sensitive to changes in assumptions, and the pension deficit under IAS19 is calculated as increasing from £8.7m at 31 March 2019 to £14.6m at 30 September 2019.  This is largely due to a reduction in the discount rate.
 
Interim dividend
 
The Board has declared an increased interim dividend of 5.5p per Ordinary Share (2018: 5.0p), which is covered 6.1 times (2018: 7.4 times).  The dividend is payable on 24 January 2020 to ordinary shareholders on the Company's Register at close of business on 3 January 2020.  The ex-dividend date will be 2 January 2020.
 
 
Current and future trading
 
The second half of 2019/20 has started well with margins slightly ahead of the previous period. We are seeing increased sales at Abbey Woods, the Irish timber distributor purchased in February 2019, and also an improvement in our panel product volumes. Purchase prices of our commodity panel products remain weak. The investment in our Gateshead facility, to improve the site efficiency, is going well, and should be completed in June 2020. The racking investment at Purfleet will be completed by the end of December 2019. The majority of our customers are busy, and we remain confident that we can continue to grow our business, but remain mindful of the uncertainties caused by the forthcoming General Election and a weakening global economy.
 
I am also very pleased to have reported this week the strategic purchase of Dresser Mouldings for £1 million, which will allow us to continue to grow our sales of added value timber.
 
 
Nick Latham
Chairman
28 November 2019
 
 
 
 
 
This announcement contains inside information for the purposes of Article 7 of the Market Abuse Regulation (EU) No 596/2014.
 
For further information please visit www.lathams.co.uk or contact:
 




James Latham plc


Tel: 01442 849 100
 




Nick Latham, Chairman


 
 




David Dunmow, Finance Director


 
 




 


 




 


 




SP Angel Corporate Finance LLP


 
 




Matthew Johnson / Charlie Bouverat (Corporate Finance)
 


Tel: 0203 470 0470




Abigail Wayne (Corporate Broking)


 




 
 
 

 
 




JAMES LATHAM PLC


 


 


 




CONSOLIDATED INCOME STATEMENT


 


 


 




 


 


 


 




For the six months to 30 September 2019


 


 


 




 


 


 


 




 


Six months to 30 Sept. 2019 unaudited


Six months to 30 Sept. 2018 unaudited


Year to
31 March 2019 audited




 


 


 


 




 


£000


£000


£000




 


 


 


 




Revenue


125,609


118,160


235,132




 


 


 


 




Cost of sales (including warehouse costs)


(103,726)


(97,974)


(194,686)




 


 


 


 




Gross profit


21,883


20,186


40,446




 


 


 


 




Selling and distribution costs


(9,703)


(8,679)


(18,082)




Administrative expenses


(3,712)


(3,782)


(7,896)




 


 


 


 




Operating profit


8,468


7,725


14,468




 


 


 


 




Profit on disposal of property


-


1,052


1,052




Finance income


46


32


71




Finance costs


(198)


(141)


(256)




 


 


 


 




Profit before tax


8,316


8,668


15,335




 


 


 


 




Tax expense


(1,630)


(1,418)


(2,913)




 


 


 


 




Profit after tax attributable to owners of the parent company


6,686


7,250


12,422




 


 


 


 




Earnings per ordinary share (basic)


33.8p


36.9p


63.1p




 


 


 


 




Earnings per ordinary share (diluted)


33.8p


36.8p


63.0p




 


 


 


 




Earnings per ordinary share (basic, excluding profit on disposal of property)


33.8p


31.5p


61.6p




 


 


 


 




Earnings per ordinary share (diluted, excluding profit on disposal of property)


33.8p


31.5p


61.5p




 


 


 


 




All results relate to continuing operations.


 


 


 




 
 
 




JAMES LATHAM PLC


 


 


 




 


 


 


 




CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME


 


 


 




 


 


 


 




For the six months to 30 September 2019


 


 


 




 


 


 


 




 


Six months to 30 Sept. 2019 unaudited


Six months to 30 Sept. 2018 unaudited


Year to
31 March 2019 audited




 


 


 


 




 


£000


£000


£000




 


 


 


 




Profit after tax


6,686


7,250


12,422




Other Comprehensive income


 


 


 




Actuarial (loss)/gains on defined benefit pension scheme


(6,767)


4,444


(1,360)




Deferred tax relating to components of other comprehensive income


1,150


(673)


314




Foreign translation credit/(charge)


12


-


(31)




Other comprehensive income for the period, net of tax


(5,605)


3,771


(1,077)




Total comprehensive income, attributable to owners of the parent company


1,081


11,021


11,345




 
 
 




JAMES LATHAM PLC


 


 


 




CONSOLIDATED BALANCE SHEET


 


 


 




 


 


 


 




At 30 September 2019


 


 


 




 


 


 


 




 


As at 30 Sept. 2019 unaudited


As at 30 Sept. 2018 unaudited


As at 31 March 2019 audited




 


 


 


 




 


£000


£000


£000




ASSETS


 


 


 




Non-current assets


 


 


 




Goodwill


523


237


523




Intangible assets


1,905


1


1,989




Property, plant and equipment


34,581


33,979


34,159




Right-of-use-asset


4,344


-


-




Deferred tax asset


2,560


582


1,577




Total non-current assets


43,913


34,799


38,248




 


 


 


 




Current assets


 


 


 




Inventories


42,501


41,462


42,350




Trade and other receivables


45,697


43,082


42,613




Cash and cash equivalents


16,538


12,864


15,541




Total current assets


104,736


97,408


100,504




 


 


 


 




 


 


 


 




Total assets


148,649


132,207


138,752




 


 


 


 




Current liabilities


 


 


 




Lease liabilities


1,143


-


-




Trade and other payables


28,321


25,743


27,113




Current tax payable


86


1,272


1,193




Total current liabilities


29,550


27,015


28,306




 


 


 


 




Non-current liabilities


 


 


 




Interest bearing loans and borrowings


592


987


597




Lease liabilities


3,252


-


-




Retirement and other benefit obligation


14,637


3,072


8,714




Other payables


180


262


413




Deferred tax liabilities


2,856


2,283


2,762




Total non-current liabilities


21,517


6,604


12,486




 


 


 


 




 


 


 


 




Total liabilities


51,067


33,619


40,792




 


 


 


 




 


 


 


 




Net assets


97,582


98,588


97,960




 


 


 


 




Capital and reserves


 


 


 




Issued capital


5,040


5,040


5,430




Share-based payment reserve


89


235


259




Own shares


(891)


(423)


(923)




Capital reserve


398


3


3




Retained earnings


92,946


93,733


93,191




 


 


 


 




Total equity attributable to shareholders of the parent company


97,582


98,588


97,960




 
 




JAMES LATHAM PLC


 


 


 




 


 


 


 




CONSOLIDATED CASH FLOW STATEMENT


 


 


 




 


 


 


 




For the six months to 30 September 2019


 


 


 




 


 


 


 




 


Six months to 30 Sept 2019 unaudited


Six months to 30 Sept 2018 unaudited


Year to
31 March 2019 audited




 


 


 


 




 


£000


£000


£000




Net cash flow from operating activities


 


 


 




Cash generated from operations


7,468


1,972


10,267




Interest paid


(3)


(1)


(8)




Income tax paid


(2,552)


(1,292)


(2,651)




Net cash inflow from operating activities


4,913


679


7,608




 


 


 


 




Cash flows from investing activities


 


 


 




Interest received and similar income


46


32


71




Acquisition of businesses net of cash acquired


-


-


(1,604)




Purchase of property, plant and equipment


(1,512)


(1,136)


(2,362)




Proceeds from sale of property, plant and equipment


119


1,718


1,743




Net cash (outflow)/inflow from investing activities


(1,347)


614


(2,152)




 


 


 


 




Cash flows before financing activities


 


 


 




Purchase of treasury shares


(5)


-


(478)




Equity dividends paid


(2,540)


(2,379)


(3,363)




Preference dividend paid


(24)


(39)


(63)




Cash outflow from financing activities


(2,569)


(2,418)


(3,904)




 


 


 


 




Increase/(decrease) in cash and cash equivalents for the period


997


(1,125)


1,552




 


 


 


 




Cash and cash equivalents at beginning of the period


15,541


13,989


13,989




 


 


 


 




Cash and cash equivalents at end of the period


16,538


12,864


15,541




 
 
 
 




JAMES LATHAM PLC
 




CONSOLIDATED STATEMENT OF CHANGES IN EQUITY




                                                                                      Attributable to owners of the parent company




 


Issued capital £000


Share-based payment reserve £000


Own shares £000


Capital reserve £000


Retained earnings £000


Total equity £000




 


 


 


 


 


 


 




As at 1 April 2018 (audited)


5,040


184


(529)


3


85,091


89,789




Profit for the period


-


-


-


-


7,250


7,250




Other comprehensive income:


 


 


 


 


 


 




Actuarial gain on defined benefit pension scheme


-


-


-


-


4,444


4,444




Deferred tax relating to components of other comprehensive income


-


-


-


-


(673)


(673)




Total comprehensive income for the period


-


-


-


-


11,021


11,021




Transaction with owners:


 


 


 


 


 


 




Dividends


-


-


-


-


(2,379)


(2,379)




Exercise of options


-


-


-


-


-


-




Change in investment in ESOP shares


-


-


106


-


-


106




Share-based payment expense


-


51


-


-


-


51




Total transactions with owners


-


51


106


-


(2,379)


(2,222)




Balance at 30 September 2018 (unaudited)


5,040


235


(423)


3


93,733


98,588




Profit for the period


-


-


-


-


5,172


5,172




Other comprehensive income:


 


 


 


 


 


 




Actuarial loss on defined benefit pension scheme


-


-


-


-


(5,804)


(5,804)




Deferred tax relating to components of other comprehensive income


-


-


-


-


987


987




Foreign translation charge


-


-


-


-


(31)


(31)




Total comprehensive income for the period


-


-


-


-


324


324




Transactions with owners:


 


 


 


 


 


 




Dividends


-


-


-


-


(984)


(984)




Transfer of treasury shares


-


-


(82)


-


82


-




Exercise of options


-


(19)


54


-


19


54




Deferred tax on share options


-


-


-


-


31


31




Write down on conversions of ESOP shares


-


-


14


-


(14)


-




Purchase of preference shares


390


-


(478)


-


-


(88)




Change in investment in ESOP shares


-


-


(8)


-


-


(8)




Share-based payment expense


-


43


-


-


-


43




Total transactions with owners


-


24


(500)


-


(866)


(952)




Balance at 31 March 2019 (audited)


5,430


259


(923)


3


93,191


97,960




Change in accounting policy (IFRS16)


-


-


-


-


262


262




Deferred tax on IFRS 16


-


-


-


-


(45)


(45)




As at 1 April 2019 (as restated)


5,430


259


(923)


3


93,408


98,177




Profit for the period


-


-


-


-


6,686


6,686




Other comprehensive income:


 


 


 


 


 


 




Actuarial gain on defined benefit pension scheme


-


-


-


-


(6,767)


(6,767)




Deferred tax relating to components of other comprehensive income


-


-


-


-


1,150


1,150




Foreign translation charge


-


-


-


-


12


12




Total comprehensive income for the period


-


-


-


-


1,081


1,081




Transactions with owners:


 


 


 


 


 


 




Dividends


-


-


-


-


(2,540)


(2,540)




Transfer of treasury shares


-


-


(1,668)


-


1,668


-




Exercise of options


-


(213)


779


-


213


779




Deferred tax on share options


-


-


-


-


(32)


(32)




Write down on conversions of ESOP shares


-


-


369


-


(369)


-




Purchase of preference shares


5


-


-


-


(5)


-




Cancellation of preference shares


(395)


-


478


395


(478)


-




Change in investment in ESOP shares


-


-


74


-


-


74




Share-based payment expense


-


43


-


-


-


43




Total transactions with owners


(390)


(170)


32


395


(1,543)


(1,676)




Balance at 30 September 2019 (unaudited)


5,040


89


(891)


398


92,946


97,582




 
 
 




JAMES LATHAM PLC




 




NOTES TO THE HALF YEARLY REPORT




 




 




1. The results presented in this report are unaudited and they have been prepared in accordance with the recognition and measurement principles of International Financial Reporting Standards ('IFRS') as adopted by the EU and on the basis of the accounting policies expected to be used in the financial statements for the year ending 31 March 2020. The figures for the year ended 31 March 2019 are extracted from the statutory accounts of the group for that period.




 




2.  The directors propose an interim dividend of 5.5p per ordinary share which will absorb £1,085,000 (2018: 5.0p absorbing £980,000), payable on 24 January 2020 to shareholders on the Company's Register at the close of business on 3 January 2020. The ex-dividend date is 2 January 2020.




 




3. This half yearly report does not constitute statutory financial accounts within the meaning of section 434 of the Companies Act 2006. The statutory accounts for the year ended 31 March 2019 were filed with the Registrar of Companies.  The audit report on those financial statements was not qualified and did not contain a reference to any matters to which the auditor drew attention by way of emphasis without qualifying the report and did not contain a statement under section 498 (2) or (3) of the Companies Act 2006.  The half yearly report has not been audited by the Company's auditor.




 




4.  Earnings per ordinary share is calculated by dividing the net profit for the period attributable to ordinary shareholders by the weighted average number of ordinary shares outstanding during the period.




 




 


Six months to 30 Sept 2019 unaudited


Six months to 30 Sept 2018 unaudited


Year to 31 March 2019 audited




 


£000


£000


£000




 


 


 


 




Net profit attributable to ordinary shareholders


6,686


7,250


12,422




 


 


 


 




 


Number '000


Number '000


Number '000




Weighted average share capital


19,759


19,661


19,674




Add: diluted effect of share capital options issued


33


41


28




Weighted average share capital for diluted earnings per ordinary share calculation


19,792


19,702


19,702




 


 


 


 




5.  Net cash flow from operating activities




 




 


Six months to 30 Sept 2019 unaudited


Six months to 30 Sept 2018 unaudited


Year to 31 March 2019 audited




 


£000


£000


£000




 


 


 


 




Profit before tax


8,316


8,668


15,335




Adjustment for finance income and expenditure


152


109


185




Depreciation and amortisation


1,174


970


2,036




Profit on disposal of property, plant and equipment


(119)


(1,062)


(1,079)




Increase in inventories


(151)


(1,394)


(2,282)




Increase in receivables


(3,084)


(1,574)


(1,105)




Increase/(decrease) in payables


1,236


(2,935)


(1,825)




Own shares non cash amounts


853


106


152




Retirement benefits non cash amounts


(941)


(967)


(1,213)




Translation non cash amounts


12


-


(31)




Share-based payments non cash amounts


43


51


94




IFRS16 Lease non cash items


(23)


-


-




Cash generated from operations


7,468


1,972


10,267




 




 




6.   The Group has adopted IFRS 16 "leases" which is effective for annual periods beginning on or after 1 January 2019. The Company has chosen to apply the modified retrospective transition method and so the prior year figures have not been adjusted. The Company has elected to apply the practical expedient for short-term leases to leases for which the lease term ends within 12 months of the date of initial application, and the practical expedient for low value leases.




 
The adoption of the standard has resulted in the Group bringing many of its leases onto the balance sheet reflecting 'right-of-use' assets which, are depreciated, and corresponding liabilities on which interest accrues. The impact of the standard in the period to 30 September 2019, compared to the results if the standard had not been recognised, is that operating profit has increased by £23,000 due to the elimination of rent costs and recognition of depreciation. However, profit before and after tax has reduced by £51,000 due to interest charges.




 
At 30 September 2019 non-current assets have increased by £4,344,000 as a result of the additional right-of-use assets. Total liabilities have increased by £4,395,000 due to the addition of finance lease liabilities. Total net asset effect is a decrease of £51,000.




 
The rent-free period accruals previously recognised under liabilities to the value of £262,000 have been transferred to retained earnings. A deferred tax provision of £45,000 has been recognised on the impact of IFRS 16.




 




7.  Copies of this statement will be posted on our website, www.lathams.co.uk.  A copy can be emailed or posted upon application to the Company Secretary, James Latham plc, Unit 3 Swallow Park, Finway Road Hemel Hempstead, Herts, HP2 7QU, or by email to plc@lathams.co.uk




 
 




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END
 
 
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