REG - Latham(James) PLC - Half-year Report
25/11/2021 07:00
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RNS Number : 4939T Latham(James) PLC 25 November 2021
James Latham plc
("James Latham" or the "Company")
HALF YEARLY RESULTS FOR THE PERIOD ENDED 30 SEPTEMBER 2021
Chairman's statement
Unaudited results for the six months trading to 30 September 2021
Revenue for the six months ended 30 September 2021 was £193.9m, up 81.2% on
£107.0m for the same period last year. Revenue in the six months to 30
September 2020 was significantly impacted by the first lockdown. Cost prices
on both timber and panels have risen significantly since the start of the
financial year, with average cost prices up over 25%. We have had strong
volume growth in the first quarter of the financial year, although these
volumes returned to normal levels in the second quarter, and overall volumes
are 4.9% higher than in the six months to 31 March 2021. All sites are still
operating with some COVID restrictions and I am very pleased with the way that
we have grown revenues and maintained a safe environment for our staff to work
in.
Gross profit percentage, which includes warehouse costs, for the six month
period ended 30 September 2021 was 26.4% compared with 16.9% in the
comparative six months. This six month period has been very turbulent with
significant increases in the market prices for our products and well
documented problems in the global supply chain leading to difficulties in
obtaining regular supplies of inventory. We anticipated this issue and made
sure that sufficient contracts were placed to ensure that our customers were
not left short of stock. These significant increases in market prices did lead
to a short-term improvement in margins as we worked through inventory
purchased at competitive prices.
Overheads have been well controlled during the six months, although they are
starting to increase with pressure on transport costs in particular.
Operating profit was £34.1m, up £27.6m on the £6.5m profit for the same
period last year. Profit before tax was £34.0m compared with £6.3m for the
same period last year. The tax charge of £7.5m represents an effective rate
of 21.9%, which includes an increased charge for deferred taxation following
the announcement of a future increase in corporation tax to 25%. Earnings per
ordinary share were 133.5p compared with 25.6 p for the same period last year.
As at 30 September 2021 net assets are £146.4m (2020: £109.1m). Inventory
has increased significantly, up to £69.1m from £41.3m. Apart from the
increases due to the higher cost of our products, the supply chain has become
extended leading to increased stocks on water from £7m to nearly £20m, as
vessels are delayed both at the port of origin and the destination port. Trade
and other receivables have increased by £23.65m to £68.4m due directly to
the increases in revenues, but continue to show good debtor day figures, with
bad debts remaining at a low figure. Cash and cash equivalents of £24.5m
(2020: £26.1m) have been important to allow us to increase our investment in
working capital especially the inventory levels. We continue to take advantage
of additional early settlement discount opportunities with our suppliers.
This six months has tested the strength of our business model and our
impressive results reflect the hard work of all parts of the Company, but also
are a reflection of the unprecedented market conditions of the first six
months which are unlikely to be repeated.
The calculation of the pension deficit remains very sensitive to changes in
assumptions, and the pension deficit under IAS19 is calculated as decreasing
from £2.5m at 31 March 2021 to just £12,000 at 30 September 2021. This is
largely due to a recovery in the plan asset valuations although the discount
rate has slightly reduced.
Interim dividend
The Board has declared an increased interim dividend of 6.5p per Ordinary
Share (2020: 5.7p). The dividend is payable on 21 January 2022 to ordinary
shareholders on the Company's Register at close of business on 17 December
2021. The ex-dividend date will be 16 December 2021.
Current and future trading
The second half of 2021/22 has started with slightly weaker volumes compared
with the exceptional six months to 30 September 2021, and margins are
returning to more normal levels. We have seen a reduction in prices of some
commodity products but most products are seeing prices remaining firm. The
challenges persist in our supply chain, with shipment delays, congestion at
the ports and container prices at all time high levels. Inventory levels have
remained high to ensure we can meet our customers' expectations. The issues
with the supply chain could persist throughout 2022. It is difficult to
predict when this may return to normal but when it does, this will
significantly reduce the cost price of imported commodity products. There will
be continued inflationary pressure on our overheads for the foreseeable
future.
Some of our customers are a bit quieter, which is in part due to projects
being delayed due to supply issues with non-timber products but overall we
remain confident that we will have a good end to our financial year despite
the challenges ahead of us.
We are pleased that our acquisition of IJK Timber Group in Northern Ireland
has completed successfully post period end and the integration into the Latham
Group is proceeding according to plan. The investment in the large racking
project at our Thurrock facility is now complete, and we have invested in
state of the art machinery at Dresser Mouldings to improve the efficiency of
the production process.
Nick Latham
Chairman
24 November 2021
This announcement contains inside information for the purposes of Article 7 of
the UK version of Regulation (EU) No 596/2014 which is part of UK law by
virtue of the European Union (Withdrawal) Act 2018, as amended ("MAR"). Upon
the publication of this announcement via a Regulatory Information Service,
this inside information is now considered to be in the public domain.
For further information please visit www.lathams.co.uk
(http://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
Rob Rees (Corporate Broking)
JAMES LATHAM PLC
CONSOLIDATED INCOME STATEMENT
For the six months to 30 September 2021
Six months to 30 Sept. 2021 unaudited Six months to 30 Sept. 2020 unaudited Year to 31 March 2021 audited
£000 £000 £000
Revenue 193,937 107,034 250,162
Cost of sales (including warehouse costs) (142,822) (88,985) (205,060)
Gross profit 51,115 18,049 45,102
Selling and distribution costs (11,058) (7,449) (17,464)
Administrative expenses (5,924) (4,056) (8,598)
Operating profit 34,133 6,544 19,040
Finance income 10 5 11
Finance costs (112) (236) (453)
Profit before tax 34,031 6,313 18,598
Tax expense (7,463) (1,215) (3,616)
Profit after tax attributable to owners of the parent company 26,568 5,098 14,982
Earnings per ordinary share (basic) 133.5p 25.6p 75.4p
Earnings per ordinary share (diluted) 133.0p 25.6p 75.2p
All results relate to continuing operations.
JAMES LATHAM PLC
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
For the six months to 30 September 2021
Six months to 30 Sept. 2021 unaudited Six months to 30 Sept. 2020 unaudited Year to 31 March 2021 audited
£000 £000 £000
Profit after tax 26,568 5,098 14,982
Other Comprehensive income
Actuarial gains on defined benefit pension scheme 1,047 1,923 6,717
Deferred tax relating to components of other comprehensive income (199) (365) (1,276)
Foreign translation credit/(charge) 8 23 (58)
Other comprehensive income for the period, net of tax 856 1,581 5,383
Total comprehensive income, attributable to owners of the parent company 27,424 6,679 20,365
JAMES LATHAM PLC
CONSOLIDATED BALANCE SHEET
At 30 September 2021
As at 30 Sept. 2021 unaudited As at 30 Sept. 2020 unaudited As at 31 March 2021 audited
£000 £000 £000
ASSETS
Non-current assets
Goodwill 872 872 872
Intangible assets 1,570 1,738 1,655
Property, plant and equipment 36,153 35,477 35,342
Right-of-use-asset 3,789 4,629 4,064
Deferred tax asset 87 1,694 534
Total non-current assets 42,471 44,410 42,467
Current assets
Inventories 69,117 41,360 48,262
Trade and other receivables 68,414 44,764 48,003
Cash and cash equivalents 24,476 26,159 28,618
Total current assets 162,007 112,283 124,883
Total assets 204,478 156,693 167,350
Current liabilities
Lease liabilities 1,243 1,242 1,123
Trade and other payables 45,972 30,122 34,761
Current tax payable 3,220 - -
Total current liabilities 50,435 31,364 35,884
Non-current liabilities
Interest bearing loans and borrowings 592 592 592
Lease liabilities 2,764 3,579 3,137
Retirement and other benefit obligation 12 8,774 2,561
Other payables - - 21
Deferred tax liabilities 4,273 3,264 3,339
Total non-current liabilities 7,641 16,209 9,650
Total liabilities 58,076 47,573 45,534
Net assets 146,402 109,120 121,816
Capital and reserves
Issued capital 5,040 5,040 5,040
Share-based payment reserve 268 96 167
Own shares (326) (542) (471)
Capital reserve 398 398 398
Retained earnings 141,022 104,128 116,682
Total equity attributable to shareholders of the parent company 146,402 109,120 121,816
JAMES LATHAM PLC
CONSOLIDATED CASH FLOW STATEMENT
For the six months to 30 September 2021
Six months to 30 Sept 2021 unaudited Six months to 30 Sept 2020 unaudited Year to 31 March 2021 audited
£000 £000 £000
Net cash flow from operating activities
Cash generated from operations 4,620 13,565 21,374
Interest paid (27) (24) (51)
Income tax paid (2,850) (950) (3,191)
Net cash inflow from operating activities 1,743 12,591 18,132
Cash flows from investing activities
Interest received and similar income 10 5 11
Purchase of property, plant and equipment (2,231) (785) (1,968)
Proceeds from sale of property, plant and equipment 42 6 8
Net cash outflow from investing activities (2,179) (774) (1,949)
Cash flows before financing activities
Lease liability payments (622) (621) (1,394)
Equity dividends paid (3,084) (1,987) (3,121)
Cash outflow from financing activities (3,706) (2,608) (4,515)
(Decrease)/increase in cash and cash equivalents for the period (4,142) 9,209 11,668
Cash and cash equivalents at beginning of the period 28,618 16,950 16,950
Cash and cash equivalents at end of the period 24,476 26,159 28,618
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 2020 (audited) 5,040 25 (619) 398 99,433 104,277
Profit for the period - - - - 5,098 5,098
Other comprehensive income:
Actuarial gain on defined benefit pension scheme - - - - 1,923 1,923
Deferred tax relating to components of other comprehensive income - - - - (365) (365)
Foreign translation charge - - - - 23 23
Total comprehensive income for the period - - - - 6,679 6,679
Transaction with owners:
Dividends - - - - (1,987) (1,987)
Exercise of options - (8) - - 3 (5)
Change in investment in ESOP shares - - 77 - - 77
Share-based payment expense - 79 - - - 79
Total transactions with owners - 71 77 - (1,984) (1,836)
Balance at 30 September 2020 (unaudited) 5,040 96 (542) 398 104,128 109,120
Profit for the period - - - - 9,884 9,884
Other comprehensive income:
Actuarial gain on defined benefit pension scheme - - - - 4,794 4,794
Deferred tax relating to components of other comprehensive income - - - - (911) (911)
Foreign translation charge - - - - (81) (81)
Total comprehensive income for the period - - - - 13,686 13,686
Transactions with owners:
Dividends - - - - (1,134) (1,134)
Exercise of options - (12) 148 - 2 138
Deferred tax on share options - 6 - - - 6
Change in investment in ESOP shares - - (77) - - (77)
Share-based payment expense - 77 - - - 77
Total transactions with owners - 71 71 - (1,132) (990)
Balance at 31 March 2021 (audited) 5,040 167 (471) 398 116,682 121,816
Profit for the period - - - - 26,568 26,568
Other comprehensive income:
Actuarial gain on defined benefit pension scheme - - - - 1,047 1,047
Deferred tax relating to components of other comprehensive income - - - - (199) (199)
Foreign translation charge - - - - 8 8
Total comprehensive income for the period - - - - 27,424 27,424
Transactions with owners:
Dividends - - - - (3,084) (3,084)
Exercise of options - - (3) - - (3)
Deferred tax on share options - 25 - - - 25
Change in investment in ESOP shares - - 148 - - 148
Share-based payment expense - 76 - - - 76
Total transactions with owners - 101 145 - (3,084) (2,838)
Balance at 30 September 2021 (unaudited) 5,040 268 (326) 398 141,022 146,402
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 Accounting Standards in conformity with the requirements of the
Companies Act 2006 and on the basis of the accounting policies expected to be
used in the financial statements for the year ending 31 March 2022. The half
yearly report does not include all the disclosures that would be required for
full compliance with IFRS. The figures for the year ended 31 March 2021 are
extracted from the statutory accounts of the group for that period.
2. The directors propose an interim dividend of 6.5p per ordinary share which
will absorb £1,293,000 (2020: 5.7p absorbing £1,133,000), payable on 21
January 2022 to shareholders on the Company's Register at the close of
business on 17 December 2021. The ex-dividend date is 16 December 2021.
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 2021 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 2021 unaudited Six months to 30 Sept 2020 unaudited Year to 31 March 2021 audited
£000 £000 £000
Net profit attributable to ordinary shareholders 26,568 5,098 14,982
Number '000 Number '000 Number '000
Weighted average share capital 19,896 19,876 19,882
Add: diluted effect of share capital options issued 79 26 31
Weighted average share capital for diluted earnings per ordinary share 19,975 19,902 19,913
calculation
5. Net cash flow from operating activities
Six months to 30 Sept 2021 unaudited Six months to 30 Sept 2020 unaudited Year to 31 March 2021 audited
£000 £000 £000
Profit before tax 34,031 6,313 18,598
Adjustment for finance income and expenditure 102 231 442
Depreciation and amortisation 2,002 2,017 4,033
Loss/(profit) on disposal of property, plant and equipment 105 (6) (6)
(Increase)/decrease in inventories (20,855) 2,928 (3,974)
(Increase)/decrease in receivables (20,585) 2,193 (878)
Increase in payables 11,264 1,062 5,779
Retirement benefits non cash amounts (1,520) (1,247) (2,776)
Share-based payments non cash amounts 76 74 156
Cash generated from operations 4,620 13,565 21,374
6. Copies of this statement will be posted on our website,
www.lathamtimber.co.uk/investors 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
(mailto:plc@lathams.co.uk)
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