Annual Report • Jun 26, 2014
Annual Report
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RNS Number : 5643K
Latham(James) PLC
26 June 2014
James Latham Plc
("James Latham" or the "Group")
I am pleased to report good results for the financial year to 31 March 2014. After a slow start, trading conditions gradually improved throughout the year for all areas of the business.
Group revenue for the financial year to 31 March 2014 was £163.1m, 14.0% up on last year's £143.1m. The operating profit was £11.3m, up £3.9m from £7.4m last year. Included in the operating profit this year is £1.8m of exceptional gains relating to the pension scheme, explained in more detail below. The increase in volumes traded this year has been achieved without greatly affecting costs.
Finance income was £27,000 against £26,000 last year. Financial costs, which are principally interest on the pension scheme deficit as calculated under IAS19 (revised) were £823,000 against £683,000 last year. Last year's results included a profit of £257,000 on the sale of the Ossett site.
Pre-tax profit was £10.5m up from last year's figure of £7.0m. The tax charge represents a rate of 18% and has benefited from a credit due to a reduction in rates of tax used in deferred tax calculations. Post- tax profit for the year is £8.6m, up from last year's figure of £5.5m.
Earnings per share, adjusted for the exceptional pension credit of £1.8m, were 36.9p compared to last year's 28.7p. The unadjusted earnings per share were 44.3p (2013: 28.7p).
Net assets (total equity) were £58.1m compared to £47.5m last year, helped by a reduction of £7.5m in the pension liability.
At the year end the Group's cash reserves stood at £11.2m compared to £8.1m last year.
The directors recommend a final dividend of 8.0p per ordinary share (2013: 7.1p). The final dividend will be paid on 22 August 2014 to shareholders on the register at the close of business on 1 August 2014. The shares will become ex-dividend on 30 July 2014.
The total dividend per ordinary share of 11.4p for the year is covered 3.2 times by earnings (2013: 2.8 times).
The Group's results are based on the trading of Lathams Limited, a specialist panel and timber distributor. Revenue continued to grow during the year, due to increased volumes both in ex-warehouse and direct business. Timber, which had a difficult March 2013 quarter grew revenues throughout the year and ended up 12% higher than the previous year. The gross margin per cent, before warehouse costs, reduced by 0.5 percentage points, due to a higher proportion of direct business, which attract lower margins, and increased competition.
Timber and panel prices remained steady throughout the year. Focus panel product sales increased by 11% over the previous year, and commodity plywood sales grew significantly, closely linked to our environmental purchasing policy. Accoya modified wood and WoodEx, our brand of engineered timber for the joinery sector, were particularly successful this year.
Overheads have been well controlled, and the extra volumes have largely been dealt with by improved operational efficiencies. Staff numbers have remained stable during the year, with the sales staff recruited last year, in areas of the business where we saw opportunities, proving successful. Bad debts were low during the year.
At 31 March 2014 the deficit of the defined benefit scheme under IAS19 (revised) was £9.3m down £7.5m compared with £16.8m last year. During the year, it was agreed that pension scheme pay rises would be based upon CPI rather than RPI for all pay rises after 1 January 2014. The result of this is an exceptional past service credit of £1.8m which is shown separately in the income statement. This change, along with small changes in other financial assumptions, have lead to the large reduction in the deficit this year, illustrating the volatility of the accounting for this scheme. We have commenced work on the 1 April 2014 triennial actuarial valuation and expect to report progress on this in next year's annual report.
This year so far, revenues are 6% higher for April and May than the corresponding period last year, both in panels and timber. It is a steady start to the year and customers are reporting that their order books are improved and that they have more confidence. Whilst there is still some uncertainty about future economic market conditions, the signs support cautious optimism.
It is pleasing to note increased demand from the joinery and shopfitting sectors for our core timber products, with the mild weather assisting our sales of decking and cladding products. The panels market remains competitive with MDF supply outweighing demand. Continued customer awareness and more specifications for legal and sustainable products have increased our sales of third party certified timber and panels.
The directors continue to identify opportunities for growth and to introduce and promote new products. Investment in the business continues and plans are being drawn up to upgrade our two older sites over the coming years.
The Group is in a strong financial position to take advantage of opportunities for further business growth.
Directors and staff
On 7th May 2014, we announced to the Stock Exchange that our Chairman, Peter Latham was in hospital following a serious accident. I am delighted to report that Peter is making excellent progress and we are looking forward to him returning to the business. During the year Piers Latham was appointed as a main board director and I welcome the contribution that he makes to board discussions.
Meryl Bushell
Acting Chairman
25 June 2014
For further information please visit www.lathams.co.uk or contact:
| James Latham plc | Tel: 01442 849 100 |
| David Dunmow, Finance Director | |
| Northland Capital Partners Limited - Nomad and Broker | Tel: 0207 382 1100 |
| Louis Castro / Matthew Johnson |
| Audited | Audited | |
| Year to 31 March 2014 | Year to 31 March 2013 (restated) | |
| £000 | £000 | |
| ### Revenue | 163,117 | 143,069 |
| ### Cost of sales (including warehouse costs) | (134,688) | (117,847) |
| ###### Gross profit | 28,429 | 25,222 |
| ### Selling and distribution costs | (12,941) | (12,093) |
| #### Administrative expenses | (6,016) | (5,766) |
| #### Exceptional adjustment to defined benefit pension cost | 1,797 | - |
| Other operating income | 6 | 6 |
| (17,154) | (17,853) | |
| ###### Operating Profit | 11,275 | 7,369 |
| Profit on disposal of property | - | 257 |
| Finance income | 27 | 26 |
| ### Finance costs | ### (823) | ### (683) |
| ### Profit before tax | ### 10,479 | ### 6,969 |
| ### Tax expense | ### (1,888) | ### (1,448) |
| ### Profit after tax attributable to owners of the parent company | ### 8,591 | ### 5,521 |
| ### Earnings per ordinary share (basic) | ### 44.3p | ### 28.7p |
| ### Earnings per ordinary share (diluted) | ### 43.9p | ### 28.5p |
| ### Earnings per ordinary share (basic, excluding exceptional adjustment net of tax) | ### 36.9p | ### 28.7p |
| ### Earnings per ordinary share (diluted, excluding exceptional adjustment net of tax) | ### 36.6p | ### 28.5p |
All results relate to continuing operations
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
| Audited | Audited | ||
| ##### Year to 31 March 2014 | ##### Year to 31 March 2013 (restated) | ||
| £000 | £000 | ||
| Profit after tax | 8,591 | 5,521 | |
| Other comprehensive income | |||
| Actuarial gain/( loss) on defined benefit pension scheme | 5,543 | (4,919) | |
| Deferred tax relating to components of other comprehensive income | (1,508) | 1,350 | |
| Other comprehensive income for the year, net of tax | 4,035 | (3,569) | |
| Total comprehensive income attributable to owners of the parent company | 12,626 | 1,952 | |
CONSOLIDATED BALANCE SHEET
| Audited | Audited | ||
| As at 31 March 2014 | As at 31 March 2013 | ||
| £000 | £000 | ||
| ## Assets | |||
| ## Non-current assets | |||
| Goodwill | 237 | 237 | |
| Other intangible assets | 108 | 115 | |
| Property, plant and equipment | 22,647 | 22,965 | |
| Deferred tax asset | - | 803 | |
| ###### Total non-current assets | 22,992 | 24,120 | |
| ## Current assets | |||
| Inventories | 27,937 | 26,222 | |
| Trade and other receivables | 32,842 | 28,877 | |
| Cash and cash equivalents | 11,234 | 8,075 | |
| ###### Total current assets | 72,013 | 63,174 | |
| Total assets | 95,005 | 87,294 | |
| Current liabilities | |||
| Trade and other payables | 23,191 | 19,561 | |
| Interest bearing loans and borrowings | 238 | 229 | |
| Tax payable | 1,017 | 537 | |
| Total current liabilities | 24,446 | 20,327 | |
| Non-current liabilities | |||
| Interest bearing loans and borrowings | 1,890 | 2,128 | |
| Retirement and other benefit obligation | 9,267 | 16,793 | |
| Other payables | 520 | 579 | |
| Deferred tax liabilities | 774 | - | |
| ### Total non-current liabilities | 12,451 | 19,500 | |
| Total liabilities | 36,897 | 39,827 | |
| #### Net assets | 58,108 | 47,467 | |
| Capital and reserves | |||
| Issued capital | 5,040 | 5,040 | |
| #### Share-based payment reserve | 123 | 91 | |
| Own shares | (175) | (218) | |
| ###### Capital reserve | 3 | 3 | |
| Retained earnings | 53,117 | 42,551 | |
| #### Total equity attributable to equity shareholders of the parent company | 58,108 | 47,467 | |
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 2012 - audited | 5,040 | 144 | (356) | 3 | 42,093 | 46,924 |
| Profit for the year (restated) | - | - | - | - | 5,521 | 5,521 |
| ###### Other comprehensive income: | ||||||
| Actuarial loss on defined benefit pension scheme (restated) | - | - | - | - | (4,919) | (4,919) |
| Deferred tax relating to components of other comprehensive income (restated) | - | - | - | - | 1,350 | 1,350 |
| Total comprehensive income for the year | - | - | - | - | 1,952 | 1,952 |
| ###### Transactions with owners: | ||||||
| Dividends | - | - | - | - | (1,883) | (1,883) |
| Transfer of treasury shares | - | - | (562) | - | 562 | - |
| Write down on conversion of ESOP shares | - | - | 293 | - | (293) | - |
| Sale of own shares | - | - | 365 | - | 365 | |
| Exercise of options | - | (120) | - | - | 120 | - |
| Change in investment in ESOP shares | - | - | 42 | - | - | 42 |
| Share-based payment expense | - | 67 | - | - | - | 67 |
| Total transactions with owners | - | (53) | 138 | - | (1,494) | (1,409) |
| ###### Balance at 31 March 2013 - audited | 5,040 | 91 | (218) | 3 | 42,551 | 47,467 |
| Profit for the year | - | - | - | - | 8,591 | 8,591 |
| ###### Other comprehensive income: | ||||||
| Actuarial gain on defined benefit pension scheme | - | - | - | - | 5,543 | 5,543 |
| Deferred tax relating to components of other comprehensive income | - | - | - | - | (1,508) | (1,508) |
| Total comprehensive income for the year | - | - | - | - | 12,626 | 12,626 |
| ###### Transactions with owners: | ||||||
| Dividends | - | - | - | - | (2,031) | (2,031) |
| Exercise of options | - | (48) | - | - | 48 | - |
| Write down on conversion of ESOP shares | - | - | 77 | - | (77) | - |
| Change in investment in ESOP shares | - | - | (34) | - | - | (34) |
| Share-based payment expense | - | 80 | - | - | - | 80 |
| Total transactions with owners | - | 32 | 43 | - | (2,060) | (1,985) |
| Balance at 31 March 2014 - audited | 5,040 | 123 | (175) | 3 | 53,117 | 58,108 |
JAMES LATHAM PLC
| Audited | Audited | |
| Year to 31 March 2014 | Year to 31 March 2013 | |
| £000 | £000 | |
| ### Net cash flow from operating activities | ||
| ### Cash generated from operations | 8,036 | 5,829 |
| ### Interest paid | (45) | (64) |
| ### Income tax paid | (1,339) | (1,469) |
| ### Net cash inflow from operating activities | 6,652 | 4,296 |
| Cash flows from investing activities | ||
| Interest received and similar income | 27 | 26 |
| Purchase of property, plant and equipment | (1,181) | (1,517) |
| Proceeds from sale of property, plant and equipment | - | 1,070 |
| ### Net cash outflow from investing activities | (1,154) | (421) |
| Cash flows from financing activities | ||
| ### Borrowings repaid during the year | ### (229) | ### (1,207) |
| ### Equity dividends paid | ### (2,031) | ### (1,883) |
| ### Preference dividend paid | ### (79) | ### (79) |
| ### Sale of Own Shares | ### - | ### 365 |
| ### Net cash outflow from financing activities | ### (2,339) | ### (2,804) |
| ### Increase in cash and cash equivalents for the year | ### 3,159 | ### 1,071 |
| ### Cash and cash equivalents at beginning of the year | ### 8,075 | ### 7,004 |
| ### Cash and cash equivalents at end of the year | ### 11,234 | ### 8,075 |
1. The results presented in this report are audited and they have 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 2013 and 31 March 2014.
2. The directors propose a final dividend of 8.0p per ordinary share, which will absorb £1,555,000 (2013: 7.1p absorbing £1,372,000), payable on 22 August 2014 to shareholders on the Register at the close of business on 1 August 2014. The ex-dividend date is 30 July 2014.
3. The figures for the year ended 31 March 2014 have been extracted from the audited statutory accounts for that year, which have yet to be delivered to the Registrar of Companies. The financial information set out has been prepared in accordance with International Financial Reporting Standards (IFRS) as adopted by the EU and those parts of the Companies Act 2006 that remain applicable to companies reporting under IFRS and 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 2014 will be delivered to the Registrar of Companies and sent to Shareholders shortly.
The audit report on these financial statements is unqualified and does not contain any statement under Section 498(2) or (3) of the Companies Act 2006, on the statutory financial statements for the year ended 31 March 2014.
Statutory accounts for the year ended 31 March 2013 have been filed with the Registrar of Companies. The auditor's report on those accounts was unqualified and did not contain a statement under section 498(2) and (3) of the Companies Act 2006.
4. This announcement was approved and authorised for issue by the Board of Directors on 25 June 2014.
5. Net cash flow from operating activities
| Year to 31 March 2014 audited | Year to 31 March 2013 audited (restated) | ||
| Profit before tax | 10,479 | 6,969 | |
| Adjustment for finance income and expense | 796 | 657 | |
| Depreciation and impairment | 1,503 | 1,208 | |
| Loss/(profit) on disposal of property, plant and equipment | 3 | (287) | |
| Increase in inventories | (1,715) | (1,393) | |
| (Increase)/decrease in receivables | (3,965) | 256 | |
| Increase/(decrease) in payables | 3,571 | (663) | |
| Retirement benefits non cash amounts | (2,682) | (1,027) | |
| Share-based payments non cash amounts | 80 | 67 | |
| Own shares non cash amounts | (34) | 42 | |
| Cash generated from operations | 8,036 | 5,829 | |
6. The Annual General Meeting of James Latham plc will be held at Unit 3 Swallow Park, Finway Road, Hemel Hempstead, Herts, HP2 7QU on 20 August 2014 at 12.30pm.
The Annual Report and Accounts for the year ended 31 March 2014 will be sent to all shareholders in due course. The Annual Report and Accounts may also be viewed in due course on James Latham plc's website at www.lathams.co.uk
This information is provided by RNS
The company news service from the London Stock Exchange
END
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