LATHAM (JAMES) PLC

Earnings Release • Nov 28, 2013

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RNS Number : 1199U

Latham(James) PLC

28 November 2013

HALF YEARLY RESULTS FOR THE PERIOD ENDED 30 SEPTEMBER 2013 

Chairman's statement

I am pleased to report good results for the six months to 30 September 2013, in trading conditions which after a low point in the March 2013 quarter, have shown a steady improvement.

Results

Overall the results are better than the same period last year. Revenue for the six months to 30 September 2013 was £82.2m up almost 10 per cent on £74.9m for the same period last year. The operating profit was £4.6m, 8.7 per cent up on £4.2m last year. Finance Income was £14,000 (2012: £13,000) and Finance Costs were £423,000 (2012: £376,000), reflecting higher assumed interest on the pension scheme deficit. Profit before tax was £4.15m, up on last year's £4.09m. Last years results included a profit of £257,000 on the sale of the Ossett site. Earnings per ordinary share were 16.9p (2012: 16.6p).

As at 30 September 2013 shareholder funds had increased to £51.5m (30.9.2012: £47.2m) with cash and cash equivalents of £5.7m (2012: £5.2m)

Interim dividend

The Board has declared an interim dividend of 3.4p per Ordinary Share (2012: 3.1p), which is covered 5.0 times (2012: 5.3 times). The dividend is payable on 31 January 2014 to ordinary shareholders on the Company's Register at close of business on10 January 2014.  The ex-dividend date will be 8 January 2014.

Six months trading to 30 September 2013.

In improving trading conditions, group revenue has grown by £7.4m, as a result of higher sales volumes. This growth was mainly in panel products, although timber saw good improvement from the dip experienced in the March 2013 quarter.

Trading margins for the six months to 30 September 2013 have remained under competitive pressure and are slightly down on the previous year. Overheads have been well controlled, although higher selling and distribution costs reflect higher volumes handled and more sales people directed at target markets. Cash balances at the end of September 2013 were £5.7m (2012: £5.2m). We continue to take advantage of cash settlement discounts from suppliers where this represents a good return.

Pension scheme

The IAS19R valuation shows that the scheme deficit has decreased to £13.7m from £16.8m in March. Although scheme assets have seen a good increase, AA grade bond yields which are used to calculate the present value of pension scheme liabilities remain historically low. This measure is very volatile. The trustees and the company have an agreed  recovery plan to pay off the actuarial deficit over ten years.

Current and future trading

The management accounts and information show growing revenue for October and the first half of November, at slightly improved margins. Bad debts have been below our expectations but will remain a concern over the next few months. We have a wide range of customers who are generally busier and more confident about future prospects than this time last year. The company is in a strong position to meet increasing demand.

Peter Latham

Chairman

28 November 2013

James Latham Plc	Tel:  01442 849 100
Peter Latham, Chairman
David Dunmow, Finance Director
Northland Capital Partners - Nomad & Broker	Tel:  020 7796 8800
Louis Castro / Matthew Johnson

JAMES LATHAM PLC
CONSOLIDATED BALANCE SHEET
At 30 September 2013
	As at 30 Sept. 2013 unaudited	As at 30 Sept. 2012 unaudited	As at 31 March 2013 audited
	£000	£000	£000
ASSETS
Non-current assets
Goodwill	237	237	237
Intangible assets	112	120	115
Property, plant and equipment	23,238	22,662	22,965
Deferred tax asset	-	420	803
Total non-current assets	23,587	23,439	24,120
Current assets
Inventories	27,984	25,160	26,222
Trade and other receivables	34,091	31,290	28,877
Cash and cash equivalents	5,672	5,171	8,075
Total current assets	67,747	61,621	63,174
Total assets	91,334	85,060	87,294
Current liabilities
Trade and other payables	22,346	18,851	19,561
Current portion of interest bearing loans and borrowings	234	207	229
Current tax payable	846	911	537
Total current liabilities	23,426	19,969	20,327
Non-current liabilities
Interest bearing loans and borrowings	2,010	2,308	2,128
Retirement and other benefit obligation	13,695	14,924	16,793
Other payables	550	613	579
Deferred tax liabilities	125	-	-
Total non-current liabilities	16,380	17,845	19,500
Total liabilities	39,806	37,814	39,827
Net assets	51,528	47,246	47,467
Capital and reserves
Issued capital	5,040	5,040	5,040
Share-based payment reserve	135	84	91
Own shares	(208)	(256)	(218)
Capital reserve	3	3	3
Retained earnings	46,558	42,375	42,551
Total equity attributable to owners of the parent company	51,528	47,246	47,467

JAMES LATHAM PLC
CONSOLIDATED INCOME STATEMENT
For the six months to 30 September 2013
	Six months to 30 Sept. 2013 unaudited	Six months to 30 Sept. 2012 unaudited	Year to 31 March 2013 audited
		(restated)	(restated)
	£000	£000	£000
Revenue	82,210	74,789	143,069
Cost of sales (including warehouse costs)	(68,273)	(61,697)	(117,847)
Gross profit	13,937	13,092	25,222
Selling and distribution costs	(6,449)	(6.102)	(12,093)
Administrative expenses	(2,931)	(2,801)	(5,766)
Other operating income	3	5	6
	(9,377)	(8,898)	(17,853)
Operating profit	4,560	4,194	7,369
Profit on disposal of property	-	257	257
Finance income	14	13	26
Finance costs	(423)	(376)	(683)
Profit before tax	4,151	4,088	6,969
Tax expense	(886)	(901)	(1,448)
Profit after tax attributable to owners of the parent company	3,265	3,187	5,521
Earnings  per ordinary share (basic)	16.9p	16.6p	28.9p
Earnings  per ordinary share (diluted)	16.7p	16.5p	28.7p
All results relate to continuing operations.

JAMES LATHAM PLC
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
For the six months to 30 September 2013
	Six months to 30 Sept. 2013 unaudited	Six months to 30 Sept. 2012 unaudited	Year to 31 March 2013 audited
		(restated)	(restated)
	£000	£000	£000
Profit after tax	3,265	3,187	5,521
Other Comprehensive income
Actuarial gains/(losses) on defined benefit pension scheme	3.004	(2,781)	(4,919)
Deferred tax relating to components of other comprehensive income	(890)	775	1,350
Other comprehensive income for the period, net of tax	2,114	(2,006)	(3,569)
Total comprehensive income, attributable to owners of the parent company	5,379	1,181	1,952

JAMES LATHAM PLC
CONSOLIDATED CASH FLOW STATEMENT
For the six months to 30 September 2013
	Six months to 30 Sept 2013 unaudited	Six months to 30 Sept 2012 unaudited	Year to 31 March 2013 audited
	£000	£000	£000
Net cash flow from operating activities
Cash generated from operations	712	821	5,829
Interest paid	(25)	(41)	(64)
Income tax paid	(539)	(740)	(1,469)
Net cash inflow from operating activities	148	40	4,296
Cash flows from investing activities
Interest received and similar income	14	13	26
Purchase of property, plant and equipment	(1,041)	(564)	(1,517)
Proceeds from sale of property, plant and equipment	-	1,050	1,070
Net cash (outflow)/inflow from investing activities	(1,027)	499	(421)
Cash flows before financing activities
Borrowings repaid during the period	(113)	(1,049)	(1,207)
Equity dividends paid	(1,372)	(1,284)	(1,883)
Preference dividend paid	(39)	(39)	(79)
Sale of own shares	-	-	365
Net cash outflow from financing activities	(1,524)	(2,372)	(2,804)
Decrease in cash and cash equivalents for the period	(2,403)	(1,833)	1,071
Cash and cash equivalents at beginning of the period	8,075	7,004	7,004
Cash and cash equivalents at end of the period	5,672	5,171	8,075

JAMES LATHAM PLC
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
	Issued capital £000	Share-based payment reserve £000	Own shares £000	Capital reserve £000	Retained earnings £000	Total equity £000
As at 1 April 2012 (audited)	5040	144	(356)	3	42,093	46,924
Profit for the period (restated)	-	-	-	-	3,187	3,187
Other comprehensive income:
Actuarial loss on defined pension scheme (restated)	-	-	-	-	(2,781)	(2,781)
Deferred tax relating to components of other comprehensive income (restated)	-	-	-	-	775	775
Total comprehensive income for the year	-	-	-	-	1,181	1,181
Transaction with owners:
Dividends	-	-	-	-	(1,284)	(1,284)
Transfer of treasury shares	-	-	(562)	-	562	-
Conversion of ESOP shares	-	-	259	-	(259)	-
Sale of own shares	-	-	365	-	-	365
Exercise of options	-	(82)	-	-	82	-
Change in investment in ESOP shares	-	-	38	-	-	38
Share-based payment expense	-	22	-	-	-	22
Total transactions with owners	-	(60)	100	-	(899)	(859)
Balance at 30 September 2012 (unaudited)	5,040	84	(256)	3	42,375	47,246
Profit for the period (restated)	-	-	-	-	2,334	2,334
Other comprehensive income:
Actuarial loss on defined pension scheme (restated)	-	-	-	-	(2,138)	(2,138)
Deferred tax relating to components of other comprehensive income (restated)	-	-	-	-	575	575
Total comprehensive income for the period	-	-	-	-	771	771
Transactions with owners:
Dividends	-	-	-	-	(599)	(599)
Conversions of ESOP shares	-	-	34	-	(34)	-
Exercise of options	-	(38)	-	-	38	-
Change in investment in ESOP shares	-	-	4	-	-	4
Share-based payment expense	-	45	-	-	-	45
Total transactions with owners	-	7	38	-	(595)	(550)
Balance at 31 March 2013 (audited)	5,040	91	(218)	3	42,551	47,467
Profit for the period	-	-	-	-	3,265	3,265
Other comprehensive income:
Actuarial gain on defined benefit pension scheme	-	-	-	-	3,004	3,004
Deferred tax relating to components of other comprehensive income	-	-	-	-	(890)	(890)
Total comprehensive income for the period	-	-	-	-	5,379	5,379
Transactions with owners:
Dividends	-	-	-	-	(1,372)	(1,372)
Change in investment in ESOP shares	-	-	10	-	-	10
Share-based payment expense	-	44	-	-	-	44
Total transactions with owners	-	44	10	-	(1,372)	(1,318)
Balance at 30 September 2013 (unaudited)	5,040	135	(208)	3	46,558	51,528

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 of International Financial Reporting Standards ('IFRS') as adopted by the EU that are expected to be applicable to the financial statements for the year ending 31 March 2014 and on the basis of the accounting policies to be used in those financial statements.  The figures for the year ended 31 March 2013 are extracted from the statutory accounts of the group for that period.
For the financial statements for the year ended 31 March 2014 the group had adopted IAS 19 (revised) "Employee Benefits" where past service costs will be recognised as an expense at the earlier of the date when the plan amendment or curtailment occurs and the entity recognises related restructuring costs or termination benefits and where only interest income on plan assets will recognised in the profit and loss account with other changes in the fair value of plan assets being recognised in other comprehensive income.  While this has not impacted the Retirement and other benefit obligation or net assets of the group as at 31 March 2013, the impact to the Consolidated Income Statement and the Consolidated Statement of Comprehensive income for the year then ended are as follows:
Cost of Sales increasing by £16,000; Selling and Distribution increasing by £42,000; Administration increasing by £119,000; Finance costs decreasing by £264,000; Tax expense increasing by £20,000; Profit after tax increasing by £67,000; Actuarial losses on defined pension scheme increasing by £87,000 and deferred taxation on the actuarial loss increasing by £20,000.  Appropriate corresponding adjustments have also been made to the results for the 6 month period ended 30 September 2012.
2.  The directors propose an interim dividend of 3.4p per ordinary share which will absorb £660,000 (2013: 3.1p absorbing £571,000), payable on 31 January 2014 to shareholders on the Register at the close of business on 10 January 2014. The ex-dividend date is 8 January 2014.
3. This half yearly report does not constitute financial statutory accounts within the meaning of section 434 of the Companies Act 2006. The statutory accounts for the year ended 31 March 2013 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 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 year attributable to ordinary shareholders by the weighted average number of ordinary shares outstanding during the year.
	Six months to 30 Sept 2013 unaudited	Six months to 30 Sept 2012 unaudited	Year to 31 March 2013 audited
	£000	£000	£000
		(restated)	(restated)
Net profit attributable to ordinary shareholders	3,265	3,187	5,521
	Number '000	Number '000 (restated)	Number '000 (restated)
Weighted average share capital	19,376	19,207	19,217
Add: diluted effect of share capital options issued	179	111	141
Weighted average share capital for diluted earnings per ordinary share calculation	19,555	19,318	19,358

5.  Net cash flow from operating activities
	Six months to 30 Sept 2013 unaudited	Six months to 30 Sept 2012 unaudited (restated)	Year to 31 March 2013 audited (restated)
Profit before tax	4,151	4,088	6,969
Adjustment for finance income and expenditure	409	363	657
Depreciation and impairment	768	575	1,208
Loss/(profit) on disposal of property, plant and equipment	3	(289)	(287)
Increase in inventories	(1,562)	(331)	(1,393)
(Increase)/decrease in receivables	(5,414)	(2,157)	256
Increase/(decrease) in payables	2,756	(1,384)	(663)
Own shares non cash amounts	10	403	42
Retirement benefits non cash amounts	(453)	(469)	(1,027)
Share-based payments non cash amounts	44	22	67
Cash generated from operations	712	821	5,829
6.  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.

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