Earnings Release • Jun 28, 2018
Earnings Release
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RNS Number : 8187S
Latham(James) PLC
28 June 2018
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 2018.
Revenue for the financial year to 31 March 2018 was £214.9m, up 8.1% on last year's £198.8m. We have seen volumes continue to grow, especially through our own warehouses where they are up 4.5%. The cost price of our products have increased in comparison to the previous twelve months. This is in part down to the weakening of sterling against the Euro, but also we have seen manufacturers continuing to increase their prices.
Gross margin for the financial year to 31 March 2018 was 17.6% compared with 18.2% in the previous financial year. It was particularly pleasing to see an improvement in the gross margin in the second half of the year, which was 17.9% compared with 17.3% in the first half of the year.
Selling and distribution costs were 5.3% higher than last year. Distribution costs rise in line with volumes, and we monitor costs per delivered tonne which are up by 2.3%.
Overheads have been well controlled when we consider that we have relocated both Yate and Leicester (Wigston) sites during the year. We have successfully minimised the relocation costs and double costs of owning two empty sites, which have cost us less than £150,000. Both sites are performing extremely well since their relocation, particularly in added value products where the new racking systems have allowed us to increase our stock range.
Profit before tax is £15.2m, up £1.4m on last year's £13.8m. This includes a profit of £1.3m on the sale of our Wigston site.
Post tax profit for the year is £12.6m, up from last year's £11.0m.
Earnings per ordinary share were 64.4p (2017: 56.0p) an increase of 15.0%.
As at 31 March 2018 net assets have increased to £89.8m (2017: £73.3m). Non-current assets have increased by £6.1m from 31 March 2017, with the investment in the two new sites as well as continuing investment in our vehicle fleet and warehouse forklifts. Inventory levels have increased to £40.1m, partly due to the increase in unit cost of the stock as well as an increase in volumes. Trade Receivables have continued to show good debtors day figures with there being another low bad debt charge of under 0.15% of revenue. Cash and cash equivalents of £14.0m (2017: £17.2m), remain strong with good cash flows from operating activities.
Pension Scheme
The company and the Trustees of the James Latham plc Pension and Assurance Scheme have approved the triennial valuation dated 31 March 2017 with the scheme actuary. This valuation shows a shortfall of assets of £12.1m compared to a shortfall of £1.5m in the previous valuation dated 31 March 2014. The company has agreed a recovery plan with the trustees of £2.0m per annum until 31 March 2024.
At 31 March 2018 the deficit of the defined benefit scheme under IAS19 (revised) was £8.4m, down £8.2m compared with £16.6m 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 12.1p per Ordinary Share (2017: 10.85p). The dividend is payable on 24 August 2018 to ordinary shareholders on the company's register at close of business on 3 August 2018. The ex-dividend date will be 2 August 2018.
The total dividend per ordinary share of 16.6p for the year (2017: 15.35p) is covered 3.9 times by earnings (2017: 3.6 times).
Current and future trading
This year has started well with sales per working day 9.8% higher for April and May than the corresponding period last year. Margins are very slightly lower than the second half of 2017/8. We are seeing growth in sales of added value timber and panel products from our decision to invest in specialist sales staff last year, although volume growth in our core products is proving more challenging. Despite the strong start to the year, there is increasing 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. This will be done by a combination of investing in our current warehouse facilities, with the emphasis this year on Purfleet, Thurrock and Gateshead, and further extending our hours of operation. We are also looking at geographical growth, and focusing on developing sales of our key product areas. In addition to our showroom at the Business Design Centre in Islington, we are in the process of opening a design centre in Manchester as we continue to focus our efforts in the A&D specification sector.
Nick Latham
Chairman
27 June 2018
Enquiries
| James Latham plc | Tel: 01442 849 100 |
| Nick Latham, Chairman David Dunmow, Finance Director |
|
| Northland Capital Partners Limited Nominated Adviser and Broker |
Tel: 0203 861 6625 |
| Matthew Johnson / Edward Hutton John Howes |
JAMES LATHAM PLC
| Audited | Audited | |
| Year to 31 March 2018 |
Year to 31 March 2017 | |
| £000 | £000 | |
| ### Revenue | 214,919 | 198,808 |
| ### Cost of sales (including warehouse costs) | (177,145) | (162,709) |
| ###### Gross profit | 37,774 | 36,099 |
| ### Selling and distribution costs | (16,277) | (15,457) |
| #### Administrative expenses | (7,106) | (6,463) |
| ###### Operating Profit | 14,391 | 14,179 |
| Profit on disposal of property | 1,276 | - |
| Finance income | 37 | 56 |
| ### Finance costs | ### (488) | ### (408) |
| ### Profit before tax | ### 15,216 | ### 13,827 |
| ### Tax expense | ### (2,570) | ### (2,846) |
| ### Profit after tax attributable to owners of the parent company | ### 12,646 | ### 10,981 |
| ### Earnings per ordinary share (basic) | ### 64.4p | ### 56.0p |
| ### Earnings per ordinary share (diluted) | ### 64.1p | ### 55.8p |
All results relate to continuing operations.
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
| Audited | Audited | |
| ##### 2018 | ##### 2017 | |
| £000 | £000 | |
| Profit after tax attributable to owners of the parent company | 12,646 | 10,981 |
| Other comprehensive income | ||
| Actuarial gain/(loss) on defined benefit pension scheme | 7,948 | (7,543) |
| Deferred tax relating to components of other comprehensive income | (1,262) | 1,358 |
| Other comprehensive income for the year, net of tax | 6,686 | (6,185) |
| Total comprehensive income attributable to owners of the parent company | 19,332 | 4,796 |
CONSOLIDATED BALANCE SHEET
| Audited | Audited | |
| 2018 | 2017 | |
| £000 | £000 | |
| ## Assets | ||
| ## Non-current assets | ||
| Goodwill | 237 | 237 |
| Other intangible assets | 1 | 1 |
| Property, plant and equipment | 33,831 | 26,312 |
| Deferred tax asset | 1,491 | 2,904 |
| ###### Total non-current assets | 35,560 | 29,454 |
| ## Current assets | ||
| Inventories | 40,068 | 35,508 |
| Trade and other receivables | 41,508 | 40,076 |
| Cash and cash equivalents | 13,989 | 17,246 |
| Assets held for sale | 638 | - |
| ###### Total current assets | 96,203 | 92,830 |
| Total assets | 131,763 | 122,284 |
| Current liabilities | ||
| Trade and other payables | 28,648 | 27,063 |
| Tax payable | 1,292 | 1,517 |
| Total current liabilities | 29,940 | 28,580 |
| Non-current liabilities | ||
| Interest bearing loans and borrowings | 987 | 987 |
| Retirement and other benefit obligation | 8,382 | 16,625 |
| Other payables | 291 | 349 |
| Deferred tax liabilities | 2,374 | 2,485 |
| ### Total non-current liabilities | 12,034 | 20,446 |
| Total liabilities | 41,974 | 49,026 |
| #### Net assets | 89,789 | 73,258 |
| Capital and reserves | ||
| Issued capital | 5,040 | 5,040 |
| #### Share-based payment reserve | 184 | 108 |
| Own shares | (529) | (291) |
| ###### Capital reserve | 3 | 3 |
| Retained earnings | 85,091 | 68,398 |
| #### Total equity attributable to equity shareholders of the parent company | 89,789 | 73,258 |
The Company's profit for the year and total comprehensive income for the year were £1,481,000 (2017: £1,266,000) and £1,481,000 (2017: £1,266,000) respectively.
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 2016 - audited | 5,040 | 56 | (441) | 3 | 66,525 | 71,183 |
| Profit for the year | - | - | - | - | 10,981 | 10,981 |
| ###### Other comprehensive income: | ||||||
| Actuarial loss on defined benefit pension scheme | - | - | - | - | (7,543) | (7,543) |
| Deferred tax relating to components of other comprehensive income | - | - | - | - | 1,358 | 1,358 |
| Total comprehensive income for the year | - | - | - | - | 4,796 | 4,796 |
| ###### Transactions with owners: | ||||||
| Dividends | - | - | - | - | (2,894) | (2,894) |
| Write down on conversion of ESOP shares | - | - | 52 | - | (52) | - |
| Exercise of options | - | (19) | - | - | 19 | - |
| Deferred tax on share options | - | - | - | - | 4 | 4 |
| Change in investment in ESOP shares | - | - | 98 | - | - | 98 |
| Share-based payment expense | - | 71 | - | - | - | 71 |
| Total transactions with owners | - | 52 | 150 | - | (2,923) | (2,721) |
| ###### Balance at 31 March 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) |
| Exercise of options | - | (19) | - | - | 19 | - |
| Transfer of treasury shares | - | - | (414) | - | 414 | - |
| Deferred tax on share options | - | - | - | - | (43) | (43) |
| Write down on conversion of ESOP shares | - | - | 15 | - | (15) | - |
| 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 |
JAMES LATHAM PLC
| Audited | Audited | |
| 2018 | 2017 | |
| £000 | £000 | |
| ### Net cash flow from operating activities | ||
| ### Cash generated from operations | 11,251 | 11,902 |
| ### Interest paid | (1) | (2) |
| ### Income tax paid | (2,797) | (2,646) |
| ### Net cash inflow from operating activities | 8,453 | 9,254 |
| Cash flows from investing activities | ||
| Interest received and similar income | 37 | 56 |
| Purchase of property, plant and equipment | (10,840) | (6,045) |
| Proceeds from sale of property, plant and equipment | 2,186 | 122 |
| ### Net cash outflow from investing activities | (8,617) | (5,867) |
| Cash flows from financing activities | ||
| ### Equity dividends paid | ### (3,014) | ### (2,894) |
| ### Preference dividend paid | ### (79) | ### (79) |
| ### Net cash outflow from financing activities | ### (3,093) | ### (2,973) |
| ### (Decrease)/increase in cash and cash equivalents for the year | ### (3,257) | ### 414 |
| ### Cash and cash equivalents at beginning of the year | ### 17,246 | ### 16,832 |
| ### Cash and cash equivalents at end of the year | ### 13,989 | ### 17,246 |
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 2017 and 31 March 2018, 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 12.1p per ordinary share, which will absorb £2,379,000 (2017: 10.85p absorbing £2,127,000), payable on 24 August 2018 to shareholders on the Register at the close of business on 3 August 2018. The ex-dividend date is 2 August 2018.
The figures for the year ended 31 March 2018 and as at 31 March 2018 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 2018 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 2018 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 2017 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 27 June 2018.
4. Net cash flow from operating activities
| Year to 31 March 2018 audited | Year to 31 March 2017 audited | ||
| £000 | £000 | ||
| Profit before tax | 15,216 | 13,827 | |
| Adjustment for finance income and cost | 451 | 352 | |
| Depreciation, amortisation and impairment | 1,941 | 1,822 | |
| Profit on disposal of property, plant and equipment | (1,444) | (95) | |
| Write down of intangible asset | - | 86 | |
| Increase in inventories | (4,560) | (2,105) | |
| Increase in receivables | (1,432) | (4,788) | |
| Increase in payables | 1,526 | 3,536 | |
| Retirement benefits non cash amounts | (703) | (902) | |
| Share-based payments non cash amounts | 95 | 71 | |
| Own shares non cash amounts | 161 | 98 | |
| Cash generated from operations | 11,251 | 11,902 | |
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 22 August 2018 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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