Last checked at 26 Jun 2008 07:00
James Latham plc
Announcement of Preliminary Results for the year ended 31 March 2008
and Chairman's Statement
Results
Group revenue in the financial year to 31 March 2008 was £117,188,000, 18 % ahead of last year's £99,662,000.
These results are the first annual results prepared in accordance with International Financial Reporting Standards and previously reported figures have been restated. A full reconciliation is shown in the notes accompanying this statement.
Operating profit increased by 29% to £6,612,000 from £5,136,000 last year.
Finance income was £642,000 against £752,000 last year and financial costs were £130,000 against £227,000.
Pre-tax profit is £7,124,000 and has increased 26% from last year's figure of £5,661,000.
Profit after tax is £5,056,000 compared with £3,541,000 last year.
Earnings per share is 25.7p, up 44% on last year's 17.8p.
Net assets (total equity) have risen to £42,121,000 from £41,094,000.
There was a net cash outflow of £247,000 after the purchase of the Hemel Hempstead site for £5,250,000. Cash was £8,625,000 at 31 March 2008.
Final dividend
The directors recommend a final dividend of 6.1p per ordinary share (2007 5.4p). The final dividend will be paid on 29 August 2008 to shareholders on the register at the close of business on 1 August 2008. The shares will become ex-dividend on 30 July 2008.
The total dividend per ordinary share of 8.6p for the year is covered 3 times by earnings.
Financial year 2007/08
The Group's results are based on the trading of Lathams Limited, a specialist panel and timber distributor and show a good improvement on last year.
Revenue was almost 18% higher and the gross profit percentage was the similar to the previous year. As a result there has been a strong increase in the operating profit.
International demand for timber products remained strong for the first half of the year and with temporary shortages in some areas, prices increased. However, as predicted in the interim statement, gross margins weakened for the balance of the year, returning to more normal levels. Volume handled per working day peaked in the September quarter, and although the March quarter was lower, it was still ahead of March 2007.
At 31 March 2008 the pension deficit stood at £4,949,000. Changes to the mortality assumptions used to reflect increased longevity increased liabilities by about £2,600,000. The triennial actuarial valuation based on 31 March 2008 is under way and this will determine the level of future funding required. The scheme was closed to new entrants in 2003.
Current financial year 2008/09 - April and May trading
Trading conditions in April and May have been challenging. While revenue is ahead of last year, there is evidence of reduced demand from customers and increased competition for available business, resulting in margins coming under further pressure. While international demand for some products is keeping price levels stable, or rising, conditions in the UK market are resulting in weaker prices in a number of areas.
Development strategy
The Company started trading from a new depot in Motherwell in April, its first branch in Scotland, Sales from the new region for April and May have been encouraging. The Eastleigh depot was relocated to larger premises in Fareham in March and will handle hardwood, as well as panels, from July. Plans are on schedule to relocate the Dudley depot to larger premises in August. Costs of nearly £400,000 associated with these expansions and relocations have been included in these accounts. The Company will continue to focus on growing business in value added products such as veneered boards and acrylic stone products where unit value and margins are higher.
Peter Latham
Chairman
25 June 2008
For Further Enquiries:
| James Latham Plc | |
| Peter Latham, Chairman | Tel: 01442 849 100 |
| David Dunmow, Finance Director | Tel: 01442 849 100 |
| Blue Oar Securities Plc | |
| Jerry Keen, Corporate Broking | Tel: 0207 448 4492 |
| Mike Coe, Corporate Finance | Tel: 0117 933 0020 |
JAMES LATHAM PLC
CONSOLIDATED BALANCE SHEET
As at 31 March 2008
| As at 31 March 2008 | As at 31 March 2007 | ||
| Assets | £000 | £000 | |
| Non-current assets | |||
| Goodwill | 237 | 237 | |
| Intangible assets | 149 | - | |
| Property, plant and equipment | 17,515 | 11,226 | |
| Other receivables | 333 | 500 | |
| Total non-current assets | 18,234 | 11,963 | |
| Current assets | |||
| Inventories | 18,181 | 16,405 | |
| Trade and other receivables | 24,826 | 27,440 | |
| Cash and cash equivalents | 8,625 | 8,872 | |
| Total current assets | 51,632 | 52,717 | |
| Total assets | 69,866 | 64,680 | |
| Current liabilities | |||
| Trade and other payables | 18,681 | 17,407 | |
| Current portion of interest bearing loans and borrowings | 378 | 737 | |
| Current tax payable | - | 205 | |
| Total current liabilities | 19,059 | 18,349 | |
| Non-current liabilities | |||
| Interest bearing loans and borrowings | 1,041 | 1,419 | |
| Retirement benefit obligation | 5,108 | 3,033 | |
| Other payables | 644 | 245 | |
| Provisions | - | 108 | |
| Deferred tax liabilities | 1,893 | 432 | |
| Total non-current liabilities | 8,686 | 5,237 | |
| Total liabilities | 27,745 | 23,586 | |
| Net assets | 42,121 | 41,094 | |
| Capital and reserves | |||
| Issued capital | 5,040 | 5,040 | |
| Share-based payment reserve | 95 | 56 | |
| Capital reserve | 3 | 3 | |
| Own shares | (429) | (170) | |
| Retained earnings | 37,412 | 36,165 | |
| Total equity attributable to equity shareholders of the parent company | 42,121 | 41,094 |
JAMES LATHAM PLC
CONSOLIDATED INCOME STATEMENT
For the year to 31 March 2008
| Year to 31 March 2008 | Year to 31 March 2007 | ||
| £000 | £000 | ||
| Revenue | 117,188 | 99,662 | |
| Cost of sales (including warehouse costs) | (96,635) | (81,922) | |
| Gross profit | 20,553 | 17,740 | |
| Selling and distribution costs | (9,160) | (8,231) | |
| Administration expenses | (5,013) | (4,581) | |
| Other operating income | 232 | 208 | |
| (13,941) | (12,604) | ||
| Operating Profit | 6,612 | 5,136 | |
| Finance income | 642 | 752 | |
| Finance costs | (130) | (227) | |
| Profit before tax | 7,124 | 5,661 | |
| Tax expense | (2,068) | (2,120) | |
| Profit after tax | 5,056 | 3,541 | |
| Earnings per ordinary share (basic) | 25.7p | 17.8p | |
| Earnings per ordinary share (diluted) | 25.6p | 17.7p |
CONSOLIDATED STATEMENT OF TOTAL RECOGNISED
INCOME AND EXPENSE
For the year to 31 March 2008
| Year to 31 March 2008 | Year to 31 March 2007 | |||
| £000 | £000 | £000 | £000 | |
| Profit after tax | 5,056 | 3,541 | ||
| Actuarial (losses)/gains on pension scheme | (2,024) | 558 | ||
| Deferred tax effect of actuarial (losses)/gains on pension scheme | 567 | (167) | ||
| Deferred tax on share-based payment | 12 | - | ||
| Net income and expense recognised directly in equity | (1,445) | 391 | ||
| Total income and expense, attributable to equity shareholders of the parent company | 3,611 | 3,932 | ||
JAMES LATHAM PLC
CONSOLIDATED CASH FLOW STATEMENT
For the year to 31 March 2008
| Year to 31 March 2008 | Year to 31 March 2007 | ||
| £000 | £000 | ||
| Net cash flow from operating activities | |||
| Cash generated from operations | 5,163 | 3,349 | |
| Special contribution to pension fund | - | (5,000) | |
| Interest paid | (70) | (163) | |
| Income tax paid | (1,237) | (757) | |
| Net cash inflow/(outflow) from operating activities | 3,856 | (2,571) | |
| Cash flows from investing activities | |||
| Interest received and similar income | 792 | 780 | |
| Purchase of property, plant and equipment | (6,792) | (186) | |
| Purchase of intangible asset | (150) | - | |
| Proceeds from sale of property, plant and equipment | 48 | 3,946 | |
| Proceeds from prior year sale of property and investment in subsidiary undertaking | 5,438 | 9,228 | |
| Net cash from investing activities | (664) | 13,768 | |
| Cash flows before financing activities | |||
| Bank loans repaid during the period | (714) | (2,214) | |
| Finance leases repaid during the period | (23) | (23) | |
| Equity dividends paid | (1,572) | (1,278) | |
| Preference dividend paid | (79) | (79) | |
| Purchase of own shares | (260) | (130) | |
| Purchase of treasury shares | (792) | - | |
| Proceeds of sale of own shares | 1 | - | |
| Net cash outflow from financing activities | (3,439) | (3,724) | |
| (Decrease)/increase in cash and cash equivalents for the year | (247) | 7,473 | |
| Cash and cash equivalents at the beginning of the year | 8,872 | 1,399 | |
| Cash and cash equivalents at the end of the year | 8,625 | 8,872 |
Notes to the preliminary financial information
1) The financial information presented in this report is unaudited. James Latham Plc has adopted International Financial Reporting Standards for use in the European Union ("IFRS") this year, having previously applied UK accounting standards (UK GAAP). This information has been prepared using accounting principles consistent with IFRS. The comparative information for the year ended 31 March 2007 has been re-presented accordingly. Reconciliations from the previously stated UK GAAP financial information together with explanations and the revised accounting policies are set out in note 5.
2) The directors propose a final dividend of 6.1p per ordinary share which will absorb £1,197,186 (2007: 5.4p absorbing £1,081,080), payable on 29 August 2008 to shareholders on the Register at the close of business on 1 August 2008. The ex-dividend date is 30 July 2008.
3) The financial information in this announcement does not constitute statutory accounts as defined in section 240 of the Companies Act 1985. Statutory accounts for the previous financial year ended 31 March 2007 (prepared in accordance with UK GAAP) have been delivered to the Registrar of Companies. The auditors' report on those accounts was unqualified and did not contain any statement under section 237(2) or (3) of the Companies Act 1985. The auditors have indicated that they intend to give an unqualified report, which will not contain any statement under section 237(2) or (3) of the Companies Act 1985, on the statutory accounts for the year ended 31 March 2008. Copies of the Company's Report and Accounts will be sent to shareholders shortly and will be available at the registered office of the company: Unit 3, Swallow Park, Finway Road, Hemel Hempstead, Herts HP2 7QU.
4) Equity
| Issued capital | Share-based payment reserve | Own shares | Capital reserve | Accumulated profits | Total equity | |
| £000 | £000 | £000 | £000 | £000 | £000 | |
| At 1 April 2006 | 5,040 | 16 | (40) | 3 | 33,511 | 38,530 |
| Total recognised income and expense | - | - | - | - | 3,932 | 3,932 |
| Dividends | - | - | - | - | (1,278) | (1,278) |
| Own shares purchased | - | - | (130) | - | - | (130) |
| Share-based payment expense | - | 40 | - | - | - | 40 |
| At 31 March 2007 | 5,040 | 56 | (170) | 3 | 36,165 | 41,094 |
| Total recognised income and expense | - | - | - | - | 3,611 | 3,611 |
| Dividends | - | - | - | - | (1,572) | (1,572) |
| Purchase of treasury shares | - | - | - | - | (792) | (792) |
| Own shares purchased | - | - | (259) | - | - | (259) |
| Share-based payment expense | - | 39 | - | - | - | 39 |
| At 31 March 2008 | 5,040 | 95 | (429) | 3 | 37,412 | 42,121 |
5) As explained in note 1, this financial information has been prepared using accounting principles consistent with IFRS for the first time. Set out below is a summary of the accounting policies that differ from the full (UK GAAP) financial statements prepared at 31 March 2007 that management have applied in the 31 March 2008 IFRS-compliant full year financial statements.
Intangible assets - goodwill
Goodwill on consolidation, being the excess of the purchase price over the fair value of the net assets of subsidiary undertakings at the date of acquisition, is capitalised in accordance with IFRS3 Business combinations. Goodwill is tested annually for impairment, or more frequently when there is an indication that goodwill may be impaired. Goodwill is carried at cost less accumulated impairment losses. Impairment losses on goodwill are not reversed in a subsequent period.
Cash and cash equivalents
Cash and cash equivalents comprise cash in hand and at bank and other short-term deposits held by the group with maturities of less than six months. The carrying amount of these assets approximates their fair value.
Leases
Assets acquired under finance leases are recorded in the balance sheet as tangible fixed assets at their equivalent capital value and are depreciated over the useful lives of the assets concerned or the anticipated lease term if shorter. The corresponding liability has been recorded as a payable. The interest element is charged to the income statement at a constant rate over the term of the agreement.
Leases in which a significant portion of the risks and rewards of ownership are retained by the lessor are classified as operating leases. Payments made under operating leases are charged to the income statement on a straight-line basis over the period of the lease. Provision has been made for future rent on unoccupied properties, at an appropriate discount rate.
Taxation
Current tax is the expected tax payable on taxable income for the year, using tax rates enacted or substantively enacted at the balance sheet date, and any adjustments to tax payable in respect of previous years.
Deferred tax expected to be payable or recoverable on differences at the balance sheets date between the tax bases and liabilities and their carrying amounts for financial reporting purposes is accounted for using the liability method. Deferred tax liabilities are generally recognised for all taxable temporary differences, and deferred tax assets are recognised to the extent that it is probable that taxable profits will be available against which deductible differences can be utilised.
Deferred tax is calculated at the rates of taxation which are expected to apply when the deferred tax asset or liability is realised or settled, based on rates of taxation enacted or substantively enacted at the balance sheet date.
6) Explanation of transition to IFRS
Reconciliations of equity at 1 April 2006 (date of transition to IFRS), and at 31 March 2007 (date of last UK GAAP financial statements) have been included below to enable a comparison of these figures with those published in the previous year. In addition there is also a reconciliation of the UK GAAP profit for the year ended 31 March 2007 to the profit restated under IFRS.
The significant changes as a result of the transition to IFRS are described below.
a. IFRS 3 Business combinations
IFRS 3 prohibits the amortisation of goodwill. The standard requires goodwill to be carried at cost less impairment. Goodwill has been restated at the UK GAAP carrying value at 1 April 2006. As permitted by IFRS1, business combinations prior to 1 April 2006 have not been restated.
b. IAS 12 Income taxes
IAS 12 requires entities to calculate deferred taxation based on temporary differences, which are defined as the difference between the carrying amount of assets/liabilities and their tax base. The increase in the deferred tax liability as a result of the transition to IFRS is from the potential gain on the revaluation of fixed assets, the potential gain on the roll-over relief claimed on certain fixed assets, the removal of the discount applied to the deferred tax liability under UK GAAP and applying IAS12 accounting principles to the proposed phasing out of Industrial Buildings Allowances.
c. IAS 16 Property, plant and equipment
In accordance with IFRS 1, the group has elected, where appropriate, to take the UK GAAP revalued carrying amount of certain properties as the "deemed cost" on transition to IFRS.
d. IAS 19 Employee benefits
As the group has an obligation to its employees to pay accrued holiday entitlement, IAS 19 requires it to accrue for holidays earned by its employees, but not taken, by the balance sheet date.
Under UK GAAP, the defined benefit pension scheme was presented in the balance sheet net of deferred tax. IAS 19 requires the defined pension scheme to be shown gross with the deferred tax asset relating to the pension scheme liability being presented as part of the deferred tax asset or liability.
e. IAS 39 Financial instruments: recognition and measurement
IAS 39 requires the group to fair value account for forward currency contracts that mature after the year end.
Reconciliations
The following tables reconcile the previously reported UK GAAP financial information with that now presented under IFRS.
Reconciliation of UK GAAP profit to IFRS profit for the year ended 31 March 2007
| As at 31 March 2007 | IAS 19 Employee benefits - holiday pay | IAS 39 Financial instruments - forward currency contracts | IAS 12 Income taxes - deferred tax | IFRS | ||
| £000 | £000 | £000 | £000 | £000 | ||
| Revenue | 99,662 | 99,662 | ||||
| Cost of sales (including warehouse costs) | (81,922) | (81,922) | ||||
| Gross profit | 17,740 | 17,740 | ||||
| Selling and distribution costs | (8,231) | (8,231) | ||||
| Administration expenses | (4,536) | (3) | (42) | (4,581) | ||
| Other operating income | 208 | 208 | ||||
| (12,559) | (3) | (42) | (12,604) | |||
| Operating Profit | 5,181 | (3) | (42) | 5,136 | ||
| Finance income | 752 | 752 | ||||
| Finance costs | (227) | (227) | ||||
| Profit before tax | 5,706 | (3) | (42) | 5,661 | ||
| Tax expense | (1,635) | (485) | (2,120) | |||
| Profit after tax | 4,071 | (3) | (42) | (485) | 3,541 | |
| Earnings per ordinary share (basic) | 20.5p | 17.8p | ||||
| Earnings per ordinary share (diluted) | 20.4p | 17.7p |
Reconciliation of UK GAAP equity shareholders' funds to IFRS equity at 1 April 2006
| UK GAAP | IAS 19 Employee benefits - holiday pay | IAS 12 Income taxes - deferred tax | IAS19 Employee benefits - pension scheme | IAS 16 Property, plant and equipment | IFRS | |
| £000 | £000 | £000 | £000 | £000 | £000 | |
| Assets | ||||||
| Non-current assets | ||||||
| Goodwill | 362 | 362 | ||||
| Property, plant and equipment | 11,438 | 11,438 | ||||
| Other receivables | 5,919 | 5,919 | ||||
| Deferred tax assets | 693 | (1,287) | 2,111 | 1,517 | ||
| Total non-current assets | 18,412 | (1,287) | 2,111 | 19,236 | ||
| Current assets | ||||||
| Inventories | 13,746 | 13,746 | ||||
| Trade and other receivables | 31,380 | 31,380 | ||||
| Cash and cash equivalents | 1,399 | 1,399 | ||||
| Total current assets | 46,525 | 46,525 | ||||
| Total assets | 64,937 | (1,287) | 2,111 | 65,761 | ||
| Current liabilities | ||||||
| Trade and other payables | 14,773 | 85 | 14,858 | |||
| Current portion of interest bearing loans and borrowings | 2,227 | 2,227 | ||||
| Current tax payable | 623 | 623 | ||||
| Total current liabilities | 17,623 | 85 | 17,708 | |||
| Non-current liabilities | ||||||
| Interest bearing loans and borrowings | 2,060 | 2,060 | ||||
| Retirement benefit obligation | 4,927 | 2,111 | 7,038 | |||
| Other payables | 268 | 268 | ||||
| Provisions | 157 | 157 | ||||
| Total non-current liabilities | 7,412 | 2,111 | 9,523 | |||
| Total liabilities | 25,035 | 85 | 2,111 | 27,231 | ||
| Net assets | 39,902 | (85) | (1,287) | - | 38,530 | |
| Capital and reserves | ||||||
| Issued capital | 5,040 | 5,040 | ||||
| Share-based payment reserve | 16 | 16 | ||||
| Capital reserve | 3 | 3 | ||||
| Revaluation reserve | 758 | (227) | (531) | - | ||
| Own shares | (40) | (40) | ||||
| Retained earnings | 34,125 | (85) | (1,060) | 531 | 33,511 | |
| Total equity | 39,902 | (85) | (1,287) | - | 38,530 |
Reconciliation of UK GAAP equity shareholders' funds to IFRS equity at 31 March 2007
| UK GAAP | IAS 19 Employee benefits - holiday pay | IAS 39 Financial instruments -forward currency contracts | IAS 12 Income taxes - deferred tax | IAS19 Employee benefits - pension scheme | IAS 16 Property, plant and equipment | IFRS | |
| £000 | £000 | £000 | £000 | £000 | £000 | £000 | |
| Assets | |||||||
| Non-current assets | |||||||
| Goodwill | 237 | 237 | |||||
| Property, plant and equipment | 11,226 | 11,226 | |||||
| Other receivables | 500 | 500 | |||||
| Total non-current assets | 11,963 | 11,963 | |||||
| Current assets | |||||||
| Inventories | 16,405 | 16,405 | |||||
| Trade and other receivables | 27,440 | 27,440 | |||||
| Cash and cash equivalents | 8,872 | 8,872 | |||||
| Total current assets | 52,717 | 52,717 | |||||
| Total assets | 64,680 | 64,680 | |||||
| Current liabilities | |||||||
| Trade and other payables | 17,277 | 88 | 42 | 17,407 | |||
| Current portion of interest bearing loans and borrowings | 737 | 737 | |||||
| Current tax payable | 205 | 205 | |||||
| Total current liabilities | 18,219 | 88 | 42 | 18,349 | |||
| Non-current liabilities | |||||||
| Interest bearing loans and borrowings | 1,419 | 1,419 | |||||
| Retirement benefit obligation | 2,123 | 910 | 3,033 | ||||
| Other payables | 245 | 245 | |||||
| Provisions | 108 | 108 | |||||
| Deferred tax liabilities | (430) | 1,772 | (910) | 432 | |||
| Total non-current liabilities | 3,465 | 1,772 | - | 5,237 | |||
| Total liabilities | 21,684 | 88 | 42 | 1,772 | - | 23,586 | |
| Net assets | 42,996 | (88) | (42) | (1,772) | - | 41,094 | |
| Capital and reserves | |||||||
| Issued capital | 5,040 | 5,040 | |||||
| Share-based payment reserve | 56 | 56 | |||||
| Capital reserve | 3 | 3 | |||||
| Revaluation reserve | 758 | (227) | (531) | - | |||
| Own shares | (170) | (170) | |||||
| Retained earnings | 37,309 | (88) | (42) | (1,545) | 531 | 36,165 | |
| Total equity | 42,996 | (88) | (42) | (1,772) | - | 41,094 |
7. Annual General Meeting
The Annual General Meeting of James Latham plc will be held at Unit 3 Swallow Park, Finway Road, Hemel Hempstead, Herts, HP2 7QU on 21 August 2008 at 12.30pm.
The Annual Report and Accounts for the year ended 31 March 2008 will be sent by post 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