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Latham(James) PLC   -  LTHM   

Half-year Report

Released 07:00 28-Nov-2019

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)

 

 

 

 

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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Half-year Report - RNS