LATHAM (JAMES) PLC

Interim / Quarterly Report • Nov 25, 2020

National Storage Mechanism | Additional information

RNS Number : 3954G

Latham(James) PLC

25 November 2020

James Latham plc

("James Latham" or the "Company")

HALF YEARLY RESULTS FOR THE PERIOD ENDED 30 SEPTEMBER 2020

Chairman's statement

Unaudited results for the six months trading to 30 September 2020

Revenue for the six months ended 30 September 2020 was £107.0m, down 14.8% on £125.6m for the same period last year.  Revenue in Q2 was 5.3% up on the same period last year highlighting the strong recovery from Q1 which as previously reported was significantly impacted by the first lockdown. Month on month trends continue to improve with September being ahead of the same month last year.  We have had strong volume growth in both delivered and direct commodity panel products. Cost prices on both timber and panels have been slowly rising during the period.  All sites have coped very well with the local lockdowns and all the other challenges that they have faced during this unprecedented period.

Gross profit, which includes warehouse costs, for the six month period ended 30 September 2020 was 16.9% compared with 17.4% in the comparative six months.  Overheads have been very well controlled during the 6 months.

Operating profit was £6.5m, down 22.7% on the £8.5m profit for the same period last year.  Profit before tax was £6.3m compared with £8.3m for the same period last year.  Earnings per ordinary share were 25.6p (2019: 33.8 p) a decrease of 24.3%.

As at 30 September 2020 net assets are £109.1m (2019: £97.6m).  Stock volume levels have remained stable throughout the six months, although the strong sales at the end of Q2 resulted in a temporary reduction in our inventory values.  Trade receivables have continued to show good debtor day figures, with bad debts at a very low figure.  Cash and cash equivalents of £26.1m (2019: £16.5m) remain strong due to the reduced inventory figures and also good collections of our trade receivables.  We continue to take advantage of additional early settlement discount opportunities with our suppliers.

These positive results are a good indication of the strength of our business model, and the importance of having a diversified customer base.

The calculation of the pension deficit remains very sensitive to changes in assumptions, and the pension deficit under IAS19 is calculated as decreasing from £11.8m at 31 March 2020 to £8.8m at 30 September 2020.  This is largely due to a recovery in the plan asset valuations, although discount rates continue to fall which add to the deficit.

Interim dividend

The Board has declared an increased interim dividend of 5.7p per Ordinary Share (2019: 5.5p), which is covered 4.5 times (2019: 6.1 times).  The dividend is payable on 29 January 2021 to ordinary shareholders on the Company's Register at close of business on 4 January 2021.  The ex-dividend date will be 31 December 2020.

Current and future trading

The second half of 2020/21 has started strongly with margins slightly ahead of the previous period.  We are seeing significant increased volumes of commodity products, but reduced volumes of some of our added value panel products which predominantly go into market sectors that have been adversely affected by the COVID-19 pandemic, such as hospitality, exhibitions and shopfitting.  Purchase prices of many of our commodity panel products continue to rise with some extended lead times.  The majority of our customers are busy, and we remain confident that we will have a strong end to our financial year.  The investment in our Gateshead facility is now complete, and we are mid-way through a large racking project at our Thurrock facility which will improve the stock holding and efficiency of the warehouse.  This project will be completed by end March 2021.

We have been working for some time in preparation for Brexit and have acted on the risks to our business.  Our supply chain team have been working closely with suppliers and intermediaries and have identified the best routes to market, and we have increased stock levels of those products most at risk of disruption.

We remain committed to continued investment in the business, both in our existing depots and in looking for other opportunities to grow our market position.

Nick Latham

Chairman

25 November 2020

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 2020
	Six months to 30 Sept. 2020 unaudited	Six months to 30 Sept. 2019 unaudited	Year to                31 March 2020 audited
	£000	£000	£000
Revenue	107,034	125,609	247,100
Cost of sales (including warehouse costs)	(88,985)	(103,726)	(203,656)
Gross profit	18,049	21,883	43,444
Selling and distribution costs	(7,449)	(9,703)	(19,251)
Administrative expenses	(4,056)	(3,712)	(8,196)
Operating profit	6,544	8,468	15,997
Finance income	5	46	82
Finance costs	(236)	(198)	(417)
Profit before tax	6,313	8,316	15,662
Tax expense	(1,215)	(1,630)	(3,181)
Profit after tax attributable to owners of the parent company	5,098	6,686	12,481
Earnings per ordinary share (basic)	25.6p	33.8p	63.1p
Earnings per ordinary share (diluted)	25.6p	33.8p	63.0p
All results relate to continuing operations.

JAMES LATHAM PLC
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
For the six months to 30 September 2020
	Six months to 30 Sept. 2020 unaudited	Six months to 30 Sept. 2019 unaudited	Year to                31 March 2020 audited
	£000	£000	£000
Profit after tax	5,098	6,686	12,481
Other Comprehensive income
Actuarial gains/(loss) on defined benefit pension scheme	1,923	(6,767)	(4,823)
Deferred tax relating to components of other comprehensive income	(365)	1,150	916
Foreign translation credit	23	12	80
Other comprehensive income for the period, net of tax	1,581	(5,605)	(3,827)
Total comprehensive income, attributable to owners of the parent company	6,679	1,081	8,654

JAMES LATHAM PLC
CONSOLIDATED BALANCE SHEET
At 30 September 2020
	As at 30 Sept. 2020 unaudited	As at 30 Sept. 2019 unaudited	As at 31 March 2020 audited
	£000	£000	£000
ASSETS
Non-current assets
Goodwill	872	523	872
Intangible assets	1,738	1,905	1,822
Property, plant and equipment	35,477	34,581	35,952
Right-of-use-asset	4,629	4,344	4,895
Deferred tax asset	1,694	2,560	2,258
Total non-current assets	44,410	43,913	45,799
Current assets
Inventories	41,360	42,501	44,288
Trade and other receivables	44,764	45,697	47,046
Cash and cash equivalents	26,159	16,538	16,950
Total current assets	112,283	104,736	108,284
Total assets	156,693	148,649	154,083
Current liabilities
Lease liabilities	1,242	1,143	1,178
Trade and other payables	30,122	28,321	28,686
Current tax payable	-	86	-
Total current liabilities	31,364	29,550	29,864
Non-current liabilities
Interest bearing loans and borrowings	592	592	592
Lease liabilities	3,579	3,252	3,857
Retirement and other benefit obligation	8,774	14,637	11,812
Other payables	-	180	392
Deferred tax liabilities	3,264	2,856	3,289
Total non-current liabilities	16,209	21,517	19,942
Total liabilities	47,573	51,067	49,806
Net assets	109,120	97,582	104,277
Capital and reserves
Issued capital	5,040	5,040	5,040
Share-based payment reserve	96	89	25
Own shares	(542)	(891)	(619)
Capital reserve	398	398	398
Retained earnings	104,128	92,946	99,433
Total equity attributable to shareholders of the parent company	109,120	97,582	104,277

JAMES LATHAM PLC
CONSOLIDATED CASH FLOW STATEMENT
For the six months to 30 September 2020
	Six months to 30 Sept 2020 unaudited	Six months to 30 Sept 2019 unaudited	Year to                31 March 2020 audited
	£000	£000	£000
Net cash flow from operating activities
Cash generated from operations	13,565	8,040	13,528
Interest paid	-	(3)	(3)
Income tax paid	(950)	(2,552)	(3,851)
Net cash inflow from operating activities	12,615	5,485	9,674
Cash flows from investing activities
Interest received and similar income	5	46	82
Acquisition of businesses net of cash acquired	-	-	(578)
Purchase of property, plant and equipment	(785)	(1,512)	(3,886)
Proceeds from sale of property, plant and equipment	6	119	152
Net cash outflow from investing activities	(774)	(1,347)	(4,230)
Cash flows before financing activities
Sale of treasury shares	-	-	1,036
Purchase of treasury shares	-	(5)	-
Lease liability payments	(621)	(572)	(1,390)
Equity dividends paid	(1,987)	(2,540)	(3,633)
Preference dividend paid	(24)	(24)	(48)
Cash outflow from financing activities	(2,632)	(3,141)	(4,035)
Increase in cash and cash equivalents for the period	9,209	997	1,409
Cash and cash equivalents at beginning of the period	16,950	15,541	15,541
Cash and cash equivalents at end of the period	26,159	16,538	16,950

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 2019 (audited)	5,040	259	(923)	3	93,427	98,177
Profit for the period	-	-	-	-	6,686	6,686
Other comprehensive income:
Actuarial loss 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
Transaction with owners:
Dividends	-	-	-	-	(2,540)	(2,540)
Exercise of options	-	(181)	(520)	-	1,488	787
Deferred tax on share options	-	(32)	-	-	(32)	(64)
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	(1,562)	(1,676)
Balance at 30 September 2019 (unaudited)	5,040	89	(891)	398	92,946	97,582
Profit for the period	-	-	-	-	5,795	5,795
Other comprehensive income:
Actuarial gain on defined benefit pension scheme	-	-	-	-	1,944	1,944
Deferred tax relating to components of other comprehensive income	-	-	-	-	(234)	(234)
Foreign translation charge	-	-	-	-	68	68
Total comprehensive income for the period	-	-	-	-	7,573	7,573
Transactions with owners:
Dividends	-	-	-	-	(1,093)	(1,093)
Exercise of options	-	(72)	259	-	(25)	162
Deferred tax on share options	-	(13)	-	-	32	19
Change in investment in ESOP shares	-	-	13	-	-	13
Share-based payment expense	-	21	-	-	-	21
Total transactions with owners	-	(64)	272	-	(1,086)	(878)
Balance at 31 March 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
Transactions 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

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 2021. 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 2020 are extracted from the statutory accounts of the group for that period.
2.  The directors propose an interim dividend of 5.7p per ordinary share which will absorb £1,133,000 (2019: 5.5p absorbing £1,085,000), payable on 29 January 2021 to shareholders on the Company's Register at the close of business on 4 January 202. The ex-dividend date is 31 December 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 2020 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 2020 unaudited	Six months to 30 Sept 2019 unaudited	Year to 31 March 2020 audited
	£000	£000	£000
Net profit attributable to ordinary shareholders	5,098	6,686	12,481
	Number '000	Number '000	Number '000
Weighted average share capital	19,876	19,759	19,781
Add: diluted effect of share capital options issued	26	33	23
Weighted average share capital for diluted earnings per ordinary share calculation	19,902	19,792	19,804
5.  Net cash flow from operating activities
	Six months to 30 Sept 2020 unaudited	Six months to 30 Sept 2019 unaudited	Year to 31 March 2020 audited
	£000	£000	£000
Profit before tax	6,313	8,316	15,662
Adjustment for finance income and expenditure	231	152	335
Depreciation and amortisation	2,017	1,797	3,790
Profit on disposal of property, plant and equipment	(6)	(119)	(121)
Increase in inventories	2,928	(151)	(1,659)
Increase in receivables	2,193	(3,084)	(3,963)
Increase/(decrease) in payables	962	1,162	1,244
Own shares non cash amounts	77	853	-
Retirement benefits non cash amounts	(1,247)	(941)	(1,904)
Translation non cash amounts	23	12	80
Share-based payments non cash amounts	74	43	64
Cash generated from operations	13,565	8,040	13,528
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, or by email to plc@lathams.co.uk

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