Earnings Release • Jun 27, 2019
Earnings Release
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RNS Number : 5613D
Latham(James) PLC
27 June 2019
James Latham PLC
("James Latham" or the "Group")
Final Results
Chairman's statement
I am pleased to report good trading results for the financial year to 31 March 2019
Revenue for the financial year to 31 March 2019 was £235.1m, up 9.4% on last year's £214.9m. Volumes increased by 0.9%, with the majority of the growth being on direct business. The cost price of our products increased against the comparative 12 months and fluctuated more than in previous years. However cost prices on some imported plywood have shown price weakness in the last quarter of the year.
Gross profit for the financial year to 31 March 2019 was 17.2% compared with 17.6% in the previous financial year. This figure includes warehouse costs, which have increased due to planned extended working hours, further investment in our racking systems and some increased rents at our leased sites.
Profit before tax is £15.3m, up £0.1m on last year's £15.2m. As reported at the half year, the High Court made a judgment confirming that pension schemes are required to equalise male and female Guaranteed Minimum Pensions ("GMP"). The trustees have assessed this one-off cost and £0.7m has been provided to cover this. In addition profit before tax this year includes a profit of £1.1m on the sale of our old Yate site, and last year included a profit of £1.3m on the sale of our old site in Wigston.
Profit after tax for the year is £12.4m, down from last year's £12.6 m
Earnings per ordinary share, adjusted for the effect of the property profit and the one off cost relating to GMP were 61.6p (2018: 57.9p) an increase of 6.4%.
As at 31 March 2019 net assets have increased to £98.0m (2018: £89.8m). Non current assets have increased by £2.7m from 31 March 2018, in part due to the continuing investment in our vehicle fleet and warehouse forklifts, plus also the acquisition of Abbey Wood Agencies Limited. Inventory levels have increased to £42.3m, partly due to the increase in unit cost of the stock as well as our planned Brexit stock. Trade receivables have continued to show good debtors day figures with there being another low bad debt charge of 0.23% of revenue. Cash and cash equivalents of £15.5m (2018: £14.0m), remain strong with good cash flows from operating activities.
At 31 March 2019 the deficit of the defined benefit scheme under IAS19 (revised) was £8.7m, up £0.3m compared with £8.4m last year. The calculation of the pension deficit remains very sensitive to changes in assumptions.
Final dividend
The Board has declared a final dividend of 12.9p per Ordinary Share (2018: 12.1p). The dividend is payable on 23 August 2019 to ordinary shareholders on the company's register at close of business on 2 August 2019. The ex-dividend date will be 1 August 2019. The total dividend per ordinary share of 17.9p for the year (2018: 16.6p) is covered 3.5 times by earnings (2018: 3.9 times).
Current and future trading
We have had a positive start to the year with sales per working day 4.5 % higher for April and May than the corresponding period last year, excluding Abbey Woods. Margins have also improved compared to the second half of 2018/19. The acquisition and integration of Abbey Woods has gone very well, and we now have a great platform to develop sales in Ireland. We continue to see growth in sales of added value timber and panel products, although volume growth in our core products is proving more challenging. Prices on some of our commodity panels are showing signs of weakness, partly due to over stocking within our industry. I am pleased to report that there is a good level of activity for the majority of both our timber and panel customers. Despite the strong start to the year, there is still uncertainty surrounding the economic outlook, but we remain confident that we are in a strong position to continue to grow the business.
Development Strategy
The directors will continue to develop the business, and look for opportunities to grow the business through any suitable acquisitions to support market sectors we are looking to grow and also identify new products in market sectors where we are focussing our efforts. We will continue to invest in our warehouses and extend the working day at our depots to ensure that we meet the delivery needs of our existing and new customers. The focus will be major racking investment in Purfleet and Thurrock, and Gateshead where we have now gained planning permission to develop the site to improve the yard layout and provide new offices. Our Fareham depot will join Yate and Leeds in working a 24 hour shift system. I am pleased to report that our focus on the A&D specification sector is leading to a growing number of specifications for our products, and this is an area we will continue to develop as we build our future order book.
Nick Latham
Chairman
26 June 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 Nominated Adviser and Broker |
Tel: 0203 470 0470 |
| Matthew Johnson / Charlie Bouverat Abigail Wayne |
JAMES LATHAM PLC
| Audited | Audited | |
| Year to 31 March 2019 |
Year to 31 March 2018 | |
| £000 | £000 | |
| ### Revenue | 235,132 | 214,919 |
| ### Cost of sales (including warehouse costs) | (194,686) | (177,145) |
| ###### Gross profit | 40,446 | 37,774 |
| ### Selling and distribution costs | (18,082) | (16,277) |
| #### Administrative expenses | (7,896) | (7,106) |
| ###### Operating Profit | 14,468 | 14,391 |
| Profit on disposal of property | 1,052 | 1,276 |
| Finance income | 71 | 37 |
| ### Finance costs | ### (256) | ### (488) |
| ### Profit before tax | ### 15,335 | ### 15,216 |
| ### Tax expense | ### (2,913) | ### (2,570) |
| ### Profit after tax attributable to owners of the parent company | ### 12,422 | ### 12,646 |
| ### Earnings per ordinary share (basic) | ### 63.1p | ### 64.4p |
| ### Earnings per ordinary share (diluted) | ### 63.0p | ### 64.1p |
| ### Earnings per ordinary share (basic, excluding GMP equalisation and profit on disposal of property) | ### 61.6p | 57.9p |
| ### Earnings per ordinary share (diluted, excluding GMP equalisation and profit on disposal of property) | 61.5p | 57.6p |
All results relate to continuing operations.
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
| Audited | Audited | |
| ##### 2019 | ##### 2018 | |
| £000 | £000 | |
| Profit after tax attributable to owners of the parent company | 12,422 | 12,646 |
| Other comprehensive income | ||
| Actuarial (loss)/gain on defined benefit pension scheme | (1,360) | 7,948 |
| Deferred tax relating to components of other comprehensive income | 314 | (1,262) |
| Foreign translation charge | (31) | - |
| Other comprehensive income for the year, net of tax | (1,077) | 6,686 |
| Total comprehensive income attributable to owners of the parent company | 11,345 | 19,332 |
CONSOLIDATED BALANCE SHEET
| Audited | Audited | |
| 2019 | 2018 | |
| £000 | £000 | |
| ## Assets | ||
| ## Non-current assets | ||
| Goodwill | 523 | 237 |
| Other intangible assets | 1,989 | 1 |
| Property, plant and equipment | 34,159 | 33,831 |
| Deferred tax asset | 1,577 | 1,491 |
| ###### Total non-current assets | 38,248 | 35,560 |
| ## Current assets | ||
| Inventories | 42,350 | 40,068 |
| Trade and other receivables | 42,613 | 41,508 |
| Cash and cash equivalents | 15,541 | 13,989 |
| Assets held for sale | - | 638 |
| ###### Total current assets | 100,504 | 96,203 |
| Total assets | 138,752 | 131,763 |
| Current liabilities | ||
| Trade and other payables | 27,113 | 28,648 |
| Tax payable | 1,193 | 1,292 |
| Total current liabilities | 28,306 | 29,940 |
| Non-current liabilities | ||
| Interest bearing loans and borrowings | 597 | 987 |
| Retirement and other benefit obligation | 8,714 | 8,382 |
| Other payables | 413 | 291 |
| Deferred tax liabilities | 2,762 | 2,374 |
| ### Total non-current liabilities | 12,486 | 12,034 |
| Total liabilities | 40,792 | 41,974 |
| #### Net assets | 97,960 | 89,789 |
| Capital and reserves | ||
| Issued capital | 5,430 | 5,040 |
| #### Share-based payment reserve | 259 | 184 |
| Own shares | (923) | (529) |
| ###### Capital reserve | 3 | 3 |
| Retained earnings | 93,191 | 85,091 |
| #### Total equity attributable to equity shareholders of the parent company | 97,960 | 89,789 |
The Company's profit for the year was £679,000 (2018: £1,481,000).
Attributable to the owners of the parent company
| Issued capital | Share-based payment reserve | Own shares | Capital reserve | Retained earnings |
Total Equity |
|
| £'000 | £'000 | £'000 | £'000 | £'000 | £'000 | |
| Balance at 1 April 2017 - audited | 5,040 | 108 | (291) | 3 | 68,398 | 73,258 |
| Profit for the year | - | - | - | - | 12,646 | 12,646 |
| ###### Other comprehensive income: | ||||||
| Actuarial gain on defined benefit pension scheme | - | - | - | - | 7,948 | 7,948 |
| Deferred tax relating to components of other comprehensive income | - | - | - | - | (1,262) | (1,262) |
| Total comprehensive income for the year | - | - | - | - | 19,332 | 19,332 |
| ###### Transactions with owners: | ||||||
| Dividends | - | - | - | - | (3,014) | (3,014) |
| Write down on conversion of ESOP shares | - | - | 15 | - | (15) | - |
| Exercise of options | - | (19) | - | - | 19 | - |
| Transfer of treasury shares | - | - | (414) | - | 414 | - |
| Deferred tax on share options | - | - | - | - | (43) | (43) |
| Change in investment in ESOP shares | - | - | 161 | - | - | 161 |
| Share-based payment expense | - | 95 | - | - | - | 95 |
| Total transactions with owners | - | 76 | (238) | - | (2,639) | (2,801) |
| ###### Balance at 31 March 2018 - audited | 5,040 | 184 | (529) | 3 | 85,091 | 89,789 |
| Profit for the year | - | - | - | - | 12,422 | 12,422 |
| ###### Other comprehensive income: | ||||||
| Actuarial loss on defined benefit pension scheme | - | - | - | - | (1,360) | (1,360) |
| Deferred tax relating to components of other comprehensive income | - | - | - | - | 314 | 314 |
| Foreign translation charge | - | - | - | - | (31) | (31) |
| Total comprehensive income for the year | - | - | - | - | 11,345 | 11,345 |
| ###### Transactions with owners: | ||||||
| Dividends | - | - | - | - | (3,363) | (3,363) |
| Exercise of options | - | (19) | - | - | 19 | - |
| Transfer of treasury shares | - | - | (82) | - | 82 | - |
| Deferred tax on share options | - | - | - | - | 31 | 31 |
| Purchase of preference shares | 390 | - | (478) | - | - | (88) |
| Write down on conversion of ESOP shares | - | - | 14 | - | (14) | - |
| Change in investment in ESOP shares | - | - | 152 | - | - | 152 |
| Share-based payment expense | - | 94 | - | - | - | 94 |
| Total transactions with owners | 390 | 75 | (394) | - | (3,245) | (3,174) |
| Balance at 31 March 2019 - audited | 5,430 | 259 | (923) | 3 | 93,191 | 97,960 |
JAMES LATHAM PLC
| Audited | Audited | |
| 2019 | 2018 | |
| £000 | £000 | |
| ### Net cash flow from operating activities | ||
| ### Cash generated from operations | 10,267 | 11,251 |
| ### Interest paid | (8) | (1) |
| ### Income tax paid | (2,651) | (2,797) |
| ### Net cash inflow from operating activities | 7,608 | 8,453 |
| Cash flows from investing activities | ||
| Interest received and similar income | 71 | 37 |
| Acquisition of businesses | (1,604) | - |
| Purchase of property, plant and equipment | (2,362) | (10,840) |
| Proceeds from sale of property, plant and equipment | 1,743 | 2,186 |
| ### Net cash outflow from investing activities | (2,152) | (8,617) |
| Cash flows from financing activities | ||
| ### Purchase of treasury shares | ### (478) | ### - |
| ### Equity dividends paid | ### (3,363) | ### (3,014) |
| ### Preference dividend paid | ### (63) | ### (79) |
| ### Net cash outflow from financing activities | ### (3,904) | ### (3,093) |
| ### (Decrease)/increase in cash and cash equivalents for the year | ### 1,552 | ### (3,257) |
| ### Cash and cash equivalents at beginning of the year | ### 13,989 | ### 17,246 |
| ### Cash and cash equivalents at end of the year | ### 15,541 | ### 13,989 |
1. The preliminary financial information presented in this report is audited and has been prepared in accordance with the recognition and measurement principles of International Financial Reporting Standards ('IFRS') as adopted by the EU set out in the Group accounts for the years ended 31 March 2018 and 31 March 2019, and does not contain all the information to be disclosed in financial statements prepared in accordance with IFRS.
2. The directors propose a final dividend of 12.9p per ordinary share, which will absorb £2,537,000 (2018: 12.1p absorbing £2,379,000), payable on 23 August 2019 to shareholders on the Register at the close of business on 2 August 2019. The ex-dividend date is 1 August 2019.
The figures for the year ended 31 March 2018 and as at 31 March 2019 have been extracted from the audited statutory accounts for that year, which have yet to be delivered to the Registrar of Companies and which have been prepared in accordance with IFRS as adopted by the EU and those parts of the Companies Act 2006 that remain applicable to companies reporting under IFRS. The preliminary financial information does not constitute statutory accounts within the meaning of Section 434 of the Companies Act 2006, and does not contain all the information required to be disclosed in a full set of IFRS financial statements.
Statutory accounts for the year ended 31 March 2019 will be delivered to the Registrar of Companies and sent to Shareholders shortly. The Annual Report and Accounts may also be viewed in due course on James Latham plc's website at www.lathams.co.uk
The audit report on the statutory financial statements for the year ended 31 March 2019 is unqualified and does not include reference to any matters to which the auditor drew attention by way of emphasis without qualifying the report and does not contain any statement under Section 498(2) or (3) of the Companies Act 2006.
Statutory accounts for the year ended 31 March 2018 have been filed with the Registrar of Companies. The auditor's report on those accounts was unqualified and did not include 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) and (3) of the Companies Act 2006.
3. This announcement was approved and authorised for issue by the Board of Directors on 26 June 2019.
4. Net cash flow from operating activities
| Year to 31 March 2019 audited | Year to 31 March 2018 audited | ||
| £000 | £000 | ||
| Profit before tax | 15,335 | 15,216 | |
| Adjustment for finance income and cost | 185 | 451 | |
| Depreciation, amortisation and impairment | 2,036 | 1,941 | |
| Profit on disposal of property, plant and equipment | (1,079) | (1,444) | |
| Increase in inventories | (2,282) | (4,560) | |
| Increase in receivables | (1,105) | (1,432) | |
| (Decrease)/increase in payables | (1,825) | 1,526 | |
| Retirement benefits non cash amounts | (1,213) | (703) | |
| Translation non cash amounts | (31) | - | |
| Share-based payments non cash amounts | 94 | 95 | |
| Own shares non cash amounts | 152 | 161 | |
| Cash generated from operations | 10,267 | 11,251 | |
5. The Annual General Meeting of James Latham plc will be held at Unit 1 Swallow Park, Finway Road, Hemel Hempstead, Herts, HP2 7QU on 21 August 2019 at 12.30pm.
This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact [email protected] or visit www.rns.com.
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