LATHAM (JAMES) PLC

Earnings Release • Nov 27, 2014

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RNS Number : 1239Y

Latham(James) PLC

27 November 2014

James Latham plc

("James Latham" or the "Company")

HALF YEARLY RESULTS FOR THE PERIOD ENDED 30 SEPTEMBER 2014 

Chairman's statement

I am pleased to report good results for the six months to 30 September 2014, in trading conditions which have continued to improve.

Results

The results are better than the same period last year.  Revenue for the six months to 30 September 2014 was £89.1m, up 8.4 per cent on £82.2m for the same period last year.  The operating profit was £5.4m, 18.8 per cent up on £4.6m last year.  Finance Income was £21,000 (2013: £14,000) and Finance Costs were £263,000 (2013: £423,000), reflecting interest on the lower pension scheme deficit.  Profit before tax was £5.2m, up 24.7 per cent on last year's £4.2m.  Earnings per ordinary share were 20.5p (2013: 16.9p) an increase of 21.3 per cent.

As at 30 September 2014 shareholder funds had increased to £63.3m (2013: £51.5m) with cash and cash equivalents of £12.6m (2013: £5.7m).

Interim dividend

The Board has declared an interim dividend of 3.7p per Ordinary Share (2013: 3.4p), which is covered 5.5 times (2013: 5.0 times).  The dividend is payable on 30 January 2015 to ordinary shareholders on the Company's Register at close of business on 9 January 2015.  The ex-dividend date will be 8 January 2015.

Six months trading to 30 September 2014

In improving trading conditions, group revenue has grown by £6.9m, as a result of higher sales volumes.  This growth was mainly in panel products, although timber also saw good improvement, with increased sales in Accoya® and WoodEx, our engineered wood sections.

Trading margins for the six months to 30 September 2014 have improved on the previous year.  Overheads have been controlled, although higher selling and distribution costs reflect higher volumes handled and more sales people directed at target markets.  Despite our collection of debts having improved, we saw in the first quarter of the year several unexpected bad debts which have contributed to the increase in administrative expenses.  This experience was not repeated in the second quarter of the year.  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 £5.47m from £9.28m in March.  The triennial actuarial valuation at 30 September 2014 is substantially complete and indications are that the deficit is reduced.  This will result in lower deficit recovery payments from 1 April 2015.  Both the IAS19R and triennial valuations are very sensitive to small changes in gilt and corporate bond yields.

Current and future trading

The management accounts and information show growing revenue for October and the first half of November, at continually improving margins.  We are trading comfortably in line with market expectations.  We are progressing with our plans to relocate our two oldest depots.  Our wide range of customers is generally busier than this time last year and the Company is in a strong position to meet increasing demand.

Peter Latham

Chairman

27 November 2014.

James Latham plc	Tel:  01442 849 100
Peter Latham, Chairman
David Dunmow, Finance Director
Northland Capital Partners Ltd Nomad and Broker	Tel:  020 7382 1100
Matthew Johnson / Edward Hutton

JAMES LATHAM PLC
CONSOLIDATED BALANCE SHEET
At 30 September 2014
	As at 30 Sept. 2014 unaudited	As at 30 Sept. 2013 unaudited	As at 31 March 2014 audited
	£000	£000	£000
ASSETS
Non-current assets
Goodwill	237	237	237
Intangible assets	104	112	108
Property, plant and equipment	22,056	23,238	22,647
Total non-current assets	22,397	23,587	22,992
Current assets
Inventories	28,639	27,984	27,937
Trade and other receivables	35,617	34,091	32,842
Cash and cash equivalents	12,592	5,672	11,234
Total current assets	76,848	67,747	72,013
Total assets	99,245	91,334	95,005
Current liabilities
Trade and other payables	25,278	22,346	23,191
Current portion of interest bearing loans and borrowings	242	234	238
Current tax payable	1,005	846	1,017
Total current liabilities	26,525	23,426	24,446
Non-current liabilities
Interest bearing loans and borrowings	1,768	2,010	1,890
Retirement and other benefit obligation	5,473	13,695	9,267
Other payables	492	550	520
Deferred tax liabilities	1,649	125	774
Total non-current liabilities	9,382	16,380	12,451
Total liabilities	35,907	39,806	36,897
Net assets	63,338	51,528	58,108
Capital and reserves
Issued capital	5,040	5,040	5,040
Share-based payment reserve	152	135	123
Own shares	(226)	(208)	(175)
Capital reserve	3	3	3
Retained earnings	58,369	46,558	53,117
Total equity attributable to owners of the parent company	63,338	51,528	58,108

JAMES LATHAM PLC
CONSOLIDATED INCOME STATEMENT
For the six months to 30 September 2014
	Six months to 30 Sept. 2014 unaudited	Six months to 30 Sept. 2013 unaudited	Year to      31 March 2014 audited
	£000	£000	£000
Revenue	89,120	82,210	163,117
Cost of sales (including warehouse costs)	(73,281)	(68,273)	(134,688)
Gross profit	15,839	13,937	28,429
Selling and distribution costs	(7,031)	(6,449)	(12,941)
Administrative expenses	(3,392)	(2,931)	(6,016)
Exceptional adjustment to defined benefit pension cost	-	-	1,797
Other operating income	3	3	6
	(10,420)	(9,377)	(17,154)
Operating profit	5,419	4,560	11,275
Finance income	21	14	27
Finance costs	(263)	(423)	(823)
Profit before tax	5,177	4,151	10,479
Tax expense	(1,209)	(886)	(1,888)
Profit after tax attributable to owners of the parent company	3,968	3,265	8,591
Earnings  per ordinary share (basic)	20.5p	16.9p	44.3p
Earnings  per ordinary share (diluted)	20.3p	16.7p	43.9p
All results relate to continuing operations.

JAMES LATHAM PLC
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
For the six months to 30 September 2014
	Six months to 30 Sept. 2014 unaudited	Six months to 30 Sept. 2013 unaudited	Year to  31 March 2014 audited
	£000	£000	£000
Profit after tax	3,968	3,265	8,591
Other Comprehensive income
Actuarial gains on defined benefit pension scheme	3,492	3,004	5,543
Deferred tax relating to components of other comprehensive income	(661)	(890)	(1,508)
Other comprehensive income for the period, net of tax	2,831	2,114	4,035
Total comprehensive income, attributable to owners of the parent company	6,799	5,379	12,626

JAMES LATHAM PLC
CONSOLIDATED CASH FLOW STATEMENT
For the six months to 30 September 2014
	Six months to 30 Sept 2014 unaudited	Six months to 30 Sept 2013 unaudited	Year to 31 March 2014 audited
	£000	£000	£000
Net cash flow from operating activities
Cash generated from operations	4,211	712	8,036
Interest paid	(24)	(25)	(45)
Income tax paid	(1,007)	(539)	(1,339)
Net cash inflow from operating activities	3,180	148	6,652
Cash flows from investing activities
Interest received and similar income	21	14	27
Purchase of property, plant and equipment	(137)	(1,041)	(1,181)
Net cash outflow from investing activities	(116)	(1,027)	(1,154)
Cash flows before financing activities
Borrowings repaid during the period	(118)	(113)	(229)
Equity dividends paid	(1,549)	(1,372)	(2,031)
Preference dividend paid	(39)	(39)	(79)
Net cash outflow from financing activities	(1,706)	(1,524)	(2,339)
Increase/(decrease) in cash and cash equivalents for the period	1,358	(2,403)	3,159
Cash and cash equivalents at beginning of the period	11,234	8,075	8,075
Cash and cash equivalents at end of the period	12,592	5,672	11,234

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 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 pension scheme	-	-	-	-	3,004	3,004
Deferred tax relating to components of other comprehensive income	-	-	-	-	(890)	(890)
Total comprehensive income for the year	-	-	-	-	5,379	5,379
Transaction 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
Profit for the period	-	-	-	-	5,326	5,326
Other comprehensive income:
Actuarial gain on defined pension scheme	-	-	-	-	2,539	2,539
Deferred tax relating to components of other comprehensive income	-	-	-	-	(618)	(618)
Total comprehensive income for the period	-	-	-	-	7,247	7,247
Transactions with owners:
Dividends	-	-	-	-	(659)	(659)
Write down on conversions of ESOP shares	-	-	77	-	(77)	-
Exercise of options	-	(48)	-	-	48	-
Change in investment in ESOP shares	-	-	(44)	-	-	(44)
Share-based payment expense	-	36	-	-	-	36
Total transactions with owners	-	(12)	33	-	(688)	(667)
Balance at 31 March 2014 (audited)	5,040	123	(175)	3	53,117	58,108
Profit for the period	-	-	-	-	3,968	3,968
Other comprehensive income:
Actuarial gain on defined benefit pension scheme	-	-	-	-	3,492	3,492
Deferred tax relating to components of other comprehensive income	-	-	-	-	(661)	(661)
Total comprehensive income for the period	-	-	-	-	6,799	6,799
Transactions with owners:
Dividends	-	-	-	-	(1,549)	(1,549)
Write down on conversions of ESOP shares	-	-	2	-	(2)	-
Exercise of options	-	(4)	-	-	4	-
Change in investment in ESOP shares	-	-	(53)	-	-	(53)
Share-based payment expense	-	33	-	-	-	33
Total transactions with owners	-	29	(51)	-	(1,547)	(1,569)
Balance at 30 September 2014 (unaudited)	5,040	152	(226)	3	58,369	63,338

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 2015 and on the basis of the accounting policies to be used in those financial statements.  The figures for the year ended 31 March 2014 are extracted from the statutory accounts of the group for that period.
2. The directors propose an interim dividend of 3.7p per ordinary share which will absorb £770,000 (2014: 3.4p absorbing £660,000), payable on 30 January 2015 to shareholders on the Register at the close of business on 9 January 2015. The ex-dividend date is 8 January 2015.
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 2014 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 2014 unaudited	Six months to 30 Sept 2013 unaudited	Year to 31 March 2014 audited
	£000	£000	£000
Net profit attributable to ordinary shareholders	3,968	3,265	8,591
	Number '000	Number '000	Number '000
Weighted average share capital	19,393	19,376	19,385
Add: diluted effect of share capital options issued	196	179	182
Weighted average share capital for diluted earnings per ordinary share calculation	19,589	19,555	19,567

5. Net cash flow from operating activities
	Six months to 30 Sept 2014 unaudited	Six months to 30 Sept 2013 unaudited	Year to 31 March 2014 audited
Profit before tax	5,177	4,151	10,479
Adjustment for finance income and expenditure	242	409	796
Depreciation and impairment	729	768	1,503
Loss on disposal of property, plant and equipment	3	3	3
Increase in inventories	(702)	(1,562)	(1,715)
Increase in receivables	(2,775)	(5,414)	(3,965)
Increase in payables	2,059	2,756	3,571
Own shares non cash amounts	33	10	(34)
Retirement benefits non cash amounts	(502)	(453)	(2,682)
Share-based payments non cash amounts	(53)	44	80
Cash generated from operations	4,211	712	8,036
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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