Last checked at 1 Jul 2020 07:00
James Latham PLC
("James Latham" or the "Company")
Final Results
Chairman's statement
I am pleased to report good trading results for the financial year to 31 March 2020
Revenue for the financial year to 31 March 2020 was £247.1m, up 5.1% on last year's £235.1m. Like for like volumes increased by 1.8%, with the growth mainly on delivered business from our own warehouses, with a reduction in direct volumes shipped from the ports or from the manufacturers. The cost price of our products steadily fell throughout the year, ending the year 3.3% lower than the comparative twelve months. Abbey Wood in Ireland has been successfully integrated into the Lathams business and is now starting to provide a useful contribution to the Group's results.
Gross profit for the financial year to 31 March 2020 was 17.6% compared with 17.2% in the previous financial year. This figure includes warehouse costs, which have increased due to extended working hours with four of our depots now working 24 hours a day and further investment in our racking systems.
Profit before tax is £15.7m, up £0.4m on last year's £15.3m. Profit after tax for the year is £12.5m, up from last year's £12.4 m
Earnings per share is 63.1p (2019: 63.1p). Adjusted earnings per ordinary share (see Note 5), adjusted for the effect on the introduction of IFRS 16 on Leasing this year and the previous year's results of the property profit and the one off cost relating to Guaranteed Minimum Pensions were 64.0p (2019: 61.6p) an increase of 3.9%.
As at 31 March 2020 net assets have increased to £104.3m (2019: £98.0m). We have adopted IFRS 16 on Leasing in these results, which has had an insignificant effect on profit before. Non current assets have increased by £7.5m from 31 March 2019. £4.9m of this increase relates to the creation of a new asset class of Right of Use Assets relating to the introduction of IFRS 16 on Leasing. In addition we acquired Dresser Mouldings (Rochdale) Ltd for cash consideration of £1.0m, and have also invested £1.0m in redeveloping the Gateshead warehouse. Inventory levels have increased to £44.3m from £42.4m last year. Trade receivables at the year end were £4.4m higher than the previous year as we saw a reduction in cash received at the end of March due to the COVID-19 pandemic. However trade receivables have now returned close to normal levels. There was another low bad debt charge of 0.20% of turnover for the year. Cash and cash equivalents of £17.0m (2019: £15.5m), remain strong with good cash flows from operating activities.
At 31 March 2020 the deficit of the defined benefit scheme under IAS19 (revised) was £11.8m, up £3.1m compared with £8.7m last year. The calculation of the pension deficit remains very sensitive to changes in assumptions, and was affected by the reduction in market values of investments at the end of March.
Final dividend
The Board has declared a final dividend of 10.0p per Ordinary Share (2019: 12.9p). The dividend is payable on 4 September 2020 to ordinary shareholders on the Company's register at close of business on 7 August 2020. The ex-dividend date will be 6 August 2020. The total dividend per ordinary share of 15.5p for the year (2019: 17.9p) is covered 4.1 times by earnings (2019: 3.5 times). The board considers this level of dividend to be prudent given the balance between the good results achieved in the year to 31 March 2020 and the difficult market conditions experienced during the first quarter of the current financial year caused by the COVID-19 pandemic.
Current and future trading
The board responded quickly and decisively to protect the business and the employees from COVID-19, with quick action to reduce costs where possible, manage the stock and preserve cash. COVID-19 has had a considerable affect on the start of our trading year. We remained open at most of our distribution sites to support NHS projects and other essential services, as well as servicing our customers that managed to remain open. April was a particularly challenging month with sales at 40% of April 2019 sales. We have seen more customers coming back to work throughout May, with positive trends on numbers of orders taken and total number of trading customers, with sales at 60% of May 2019 sales. This positive trend is continuing in June, and sales are expected to be 80% of June 2019 sales. I have been incredibly pleased at how our staff have managed to work through this challenging period, and the resilience of the business. The skill of our senior staff with the support of the board has undoubtedly limited the negative impact of COVID-19 on the business. The full impact of the virus and the effect on the wider economy are impossible to predict at this stage.
Development Strategy
The board believes that there are plenty of opportunities to develop and grow our business. The strength of the business will allow us to avoid the worst of any potential downturn in the economy and seize on any opportunities to further develop the business. We will continue to look to grow the business through any suitable acquisitions to support key market sectors and also identify new products in market sectors where we are focussing our efforts. We will continue to invest in our warehouses and extend the working day at our depots to ensure that we meet the future delivery needs of our existing and new customers. Our focus will be on completing the Gateshead site development, and a significant racking project at our Thurrock facility. We have also fast tracked our on line presence project, and the use of technology as we look to drive more efficiencies into our business, to ensure we are in the best place possible to deal with the future. There are clearly challenges as we enter a post Brexit and COVID-19 world, but the board remains confident that the Company is in a position of strength which will allow us to plan for a positive future.
Nick Latham
Chairman
30 June 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 STATEMENTFor the year to 31 March 2020
Audited | Audited | |
Year to 31 March 2020 | Year to 31 March 2019 | |
£000 | £000 | |
Revenue | 247,100 | 235,132 |
Cost of sales (including warehouse costs) | (203,656) | (194,686) |
| Gross profit | 43,444 | 40,446 |
Selling and distribution costs | (19,251) | (18,082) |
| Administrative expenses | (8,196) | (7,896) |
| Operating Profit | 15,997 | 14,468 |
Profit on disposal of property | - | 1,052 |
Finance income | 82 | 71 |
Finance costs | (417) | (256) |
Profit before tax | 15,662 | 15,335 |
Tax expense | (3,181) | (2,913) |
Profit after tax attributable to owners of the parent company | 12,481 | 12,422 |
Earnings per ordinary share (basic) | 63.1p | 63.1p |
Earnings per ordinary share (diluted) | 63.0p | 63.0p |
All results relate to continuing operations.
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
For the year to 31 March 2020Audited | Audited | |
| 2020 | 2019 | |
£000 | £000 | |
Profit after tax attributable to owners of the parent company | 12,481 | 12,422 |
Other comprehensive income | ||
Actuarial loss on defined benefit pension scheme | (4,823) | (1,360) |
Deferred tax relating to components of other comprehensive income |
916 |
314 |
Foreign translation gain/(charge) | 80 | (31) |
Other comprehensive income for the year, net of tax | (3,827) | (1,077) |
Total comprehensive income attributable to owners of the parent company |
8,654 |
11,345 |
CONSOLIDATED BALANCE SHEET
At 31 March 2020
Audited | Audited | |
2020 | 2019 | |
| £000 | £000 |
Assets | ||
Non-current assets | ||
Goodwill | 872 | 523 |
Other intangible assets | 1,822 | 1,989 |
Property, plant and equipment | 35,952 | 34,159 |
Right-of-use-assets | 4,895 | - |
Deferred tax asset | 2,258 | 1,577 |
| Total non-current assets | 45,799 | 38,248 |
| ||
Current assets | ||
Inventories | 44,288 | 42,350 |
Trade and other receivables | 47,046 | 42,613 |
Cash and cash equivalents | 16,950 | 15,541 |
| Total current assets | 108,284 | 100,504 |
Total assets | 154,083 | 138,752 |
|
|
|
Current liabilities | ||
Lease liabilities | 1,178 | - |
Trade and other payables | 28,686 | 27,113 |
Tax payable | - | 1,193 |
Total current liabilities | 29,864 | 28,306 |
Non-current liabilities | ||
Interest bearing loans and borrowings | 592 | 597 |
Lease liabilities | 3,857 | - |
Retirement and other benefit obligation | 11,812 | 8,714 |
Other payables | 392 | 413 |
Deferred tax liabilities | 3,289 | 2,762 |
Total non-current liabilities | 19,942 | 12,486 |
Total liabilities | 49,806 | 40,792 |
| Net assets | 104,277 | 97,960 |
Capital and reserves | ||
Issued capital | 5,040 | 5,430 |
| Share-based payment reserve | 25 | 259 |
Own shares | (619) | (923) |
| Capital reserve | 398 | 3 |
Retained earnings | 99,433 | 93,191 |
| Total equity attributable to equity shareholders of the parent company |
104,277 |
97,960 |
The Company's profit for the year was £2,971,000 (2019: £679,000).
JAMES LATHAM PLCCONSOLIDATED STATEMENT OF CHANGES IN EQUITYAttributable 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 2018 - audited | 5,040 | 184 | (529) | 3 | 85,091 | 89,789 |
Profit for the year | - | - | - | - | 12,422 | 12,422 |
| Other comprehensive income: | ||||||
Actuarial loss on defined benefit pension scheme | - | - | - | - | (1,360) | (1,360) |
Deferred tax relating to components of other comprehensive income | - | - | - | - | 314 | 314 |
Foreign translation charge | - | - | - | - | (31) | (31) |
Total comprehensive income for the year | - | - | - | - | 11,345 | 11,345 |
| Transactions with owners: | ||||||
Dividends | - | - | - | - | (3,363) | (3,363) |
Exercise of options | - | (19) | - | - | 19 | - |
Deferred tax on share options | - | - | - | - | 31 | 31 |
Transfer of treasury shares | - | - | (82) | - | 82 | - |
Write down on conversion of ESOP shares | - | - | 14 | - | (14) | - |
Purchase of preference shares | 390 | - | (478) | - | - | (88) |
Change in investment in ESOP shares | - | - | 152 | - | - | 152 |
Share-based payment expense | - | 94 | - | - | - | 94 |
Total transactions with owners | 390 | 75 | (394) | - | (3,245) | (3,174) |
| Balance at 31 March 2019 - audited | 5,430 | 259 | (923) | 3 | 93,191 | 97,960 |
Change in accounting policy (IFRS16) | - | - | - | - | 291 | 291 |
Deferred tax on IFRS 16 | - | - | - | - | (55) | (55) |
| As at 1 April 2019 (as restated) | 5,430 | 259 | (923) | 3 | 93,427 | 98,196 |
Profit for the year | - | - | - | - | 12,481 | 12,481 |
| Other comprehensive income: | ||||||
Actuarial loss on defined benefit pension scheme | - | - | - | - | (4,823) | (4,823) |
Deferred tax relating to components of other comprehensive income | - | - | - | - | 916 | 916 |
Foreign translation charge | - | - | - | - | 80 | 80 |
Total comprehensive income for the year | - | - | - | - | 8,654 | 8,654 |
| Transactions with owners: | ||||||
Dividends | - | - | - | - | (3,633) | (3,633) |
Exercise of options | - | (253) | (261) | - | 1,463 | 949 |
Deferred tax on share options | - | (45) | - | - | - | (45) |
Purchase of preference shares | 5 | - | - | - | - | 5 |
Cancellation of preference share | (395) | - | 478 | 395 | (478) | - |
Change in investment in ESOP shares | - | - | 87 | - | - | 87 |
Share-based payment expense | - | 64 | - | - | - | 64 |
Total transactions with owners | (390) | (234) | 304 | 395 | (2,648) | (2,573) |
Balance at 31 March 2020 - audited | 5,040 | 25 | (619) | 398 | 99,433 | 104,277 |
JAMES LATHAM PLC
CONSOLIDATED CASH FLOW STATEMENTFor the year to 31 March 2020Audited | Audited | |
2020 | 2019 | |
£000 | £000 | |
Net cash flow from operating activities | ||
Cash generated from operations | 13,528 | 10,115 |
Interest paid | (3) | (8) |
Income tax paid | (3,851) | (2,651) |
Net cash inflow from operating activities | 9,674 | 7,456 |
Cash flows from investing activities | ||
Interest received and similar income | 82 | 71 |
Acquisition of businesses net of cash and cash equivalents acquired | (578) | (1,604) |
Purchase of property, plant and equipment | (3,886) | (2,362) |
Proceeds from sale of property, plant and equipment |
152 |
1,743 |
Net cash outflow from investing activities | (4,230) | (2,152) |
Cash flows from financing activities | ||
Sale of treasury shares | 1,036 | 152 |
Purchase of treasury shares | - | (478) |
Lease liability payments | (1,390) | - |
Equity dividends paid | (3,633) | (3,363) |
Preference dividend paid | (48) | (63) |
Net cash outflow from financing activities | (4,035) | (3,752) |
Increase in cash and cash equivalents for the year | 1,409 | 1,552 |
Cash and cash equivalents at beginning of the year | 15,541 | 13,989 |
Cash and cash equivalents at end of the year | 16,950 | 15,541 |
JAMES LATHAM PLC Notes to the audited preliminary financial information
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 2019 and 31 March 2020, except for IFRS 16 'Leases" in respect of 31 March 2019, 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 10.0p per ordinary share, which will absorb £1,990,000 (2019: 12.9p absorbing £2,537,000), payable on 4 September 2020 to shareholders on the Register at the close of business on 7 August 2020. The ex-dividend date is 6 August 2020.
The figures for the year ended 31 March 2019 and as at 31 March 2020 have been extracted from the audited statutory accounts for that year. The statutory accounts for the year ended 31 March 2020 have yet to be delivered to the Registrar of Companies and 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 2020 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 2020 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 2019 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 30 June 2020.
4. Net cash flow from operating activities
|
5. 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.
Year to 31 March 2020 audited | Year to 31 March 2019 audited | ||
£000 | £000 | ||
Net profit attributable to ordinary shareholders | 12,481 | 12,422 | |
GMP equalisation | - | 746 | |
Profit on disposal of property | - | (1,052) | |
IFRS16 Leases | 186 | - | |
Net profit attributable to ordinary shareholders adjusted for GMP equalisation cost, profit on disposal of property and IFRS16 Leases |
12,667 | 12,116 | |
Number '000 | Number '000 | ||
Weighted average share capital | 19,781 | 19,674 | |
Add: diluted effect of share capital options issued | 23 | 28 | |
Weighted average share capital for diluted earnings per ordinary share calculation | 19,804 | 19,702 | |
The earnings per share figure is shown on the Income statement. In the previous year, the earnings were stated after the profit on a disposal of property and GMP equalisation and in the current year, we have the effect of IFR16 leases. The figures below show the earnings per share if these 3 items were excluded to show a comparable figure:
Earnings per ordinary share (basic, excluding GMP equalisation, profit on disposal of property and IFR16 Leases) | 64.0p | 61.6p |
Earnings per ordinary share (diluted, excluding GMP equalisation, profit on disposal of property and IFRS 16 Leases) | 64.0p | 61.5p |
6. The Annual General Meeting of James Latham plc will be held at Unit 1 Swallow Park, Finway Road, Hemel Hempstead, Herts, HP2 7QU on 2 September 2020 at 12.30pm.
Impact of COVID-19
Due to the current restrictions imposed due to the COVID-19 pandemic, the Annual General Meeting this year will not be open for shareholders to attend in person. To ensure that your vote counts, please submit your proxy form appointing the Chairman as your proxy. Questions can be submitted in advance to plc@lathams.co.uk and these will be answered during the meeting. Full voting details and answers to questions will be posted on the Investor Page at www.lathams.co.uk/investors.