Last checked at 1 Dec 2022 07:00
James Latham plc
("James Latham" or the "Company")
HALF YEARLY RESULTS FOR THE PERIOD ENDED 30 SEPTEMBER 2022
Chairman's statement
Unaudited results for the six months trading to 30 September 2022
Revenue for the six months ended 30 September 2022 was £212.8m, up 9.7% on £193.9m for the same period last year. Cost prices on both timber and panels have risen at a much slower rate than in the previous financial year but they are remaining stable and there are currently little signs of price weakness. I am pleased that volumes have remained at similar levels to the same period last year, despite the economy being weaker.
Gross profit percentage, which includes warehouse costs, for the six month period ended 30 September 2022 was 19.4% compared with 26.4% in the comparative six months. We anticipated that the gross profit percentage would return to more normal levels, and the percentage achieved is still higher than the ten year average.
Overheads have been well controlled during the six months, although the increases in inflation especially around energy and transport costs have inevitably led to an increase in overheads.
Operating profit was £23.5m, down £10.6m compared with £34.1m profit for the same period last year. This reduction is a result of the margins returning to expected levels, but still represents a significant improvement on historical levels of operating profit as the exceptional trading conditions start to normalise. Profit before tax was £23.7m compared with £34.0m for the same period last year. The tax charge of £4.6m represents an effective rate of 19.5%. Earnings per ordinary share were 95.6p compared with 133.5 p for the same period last year.
As at 30 September 2022 net assets are £180.5m (2021: £146.4m). Inventory levels of £74.6m have stabilised with supply issues still requiring us to hold a higher volume of inventory. Trade and other receivables are also similar to the start of the financial year with bad debts remaining at a low figure. Cash and cash equivalents of £36.9m (2021: £24.5m) have been important to allow us to maintain our investment in working capital especially the inventory levels. We continue to take advantage of additional early settlement discount opportunities with our suppliers.
The calculation of the pension deficit remains sensitive to changes in assumptions, and the increase in corporate bond yields has resulted in a surplus at 30 September 2022 of £7.3m compared with a deficit of £12,000 in the same period last year. This is allowing us to undertake a de-risking exercise to reduce the volatility of this calculation.
Interim dividend
The Board has declared an increased interim dividend of 7.25p per Ordinary Share (2021: 6.5p). The dividend is payable on 27 January 2023 to ordinary shareholders on the Company's Register at close of business on 30 December 2022. The ex-dividend date will be 29 December 2022.
Current and future trading
The second half of 2022/23 has started with slightly weaker volumes than the previous six months to 30 September 2022, with margins also slightly lower than in the same period. The supply chain has become easier over the past six months, with fewer extended lead times on our products. Cost prices of the majority of our products are stable at the moment, but there are still uncertainties as to the effect of energy costs and other inflationary pressures on the overheads for our key manufacturers. Recent drops in container rates have affected the cost prices for products that have been shipped via container, but these have been artificially high since COVID-19 and we expected them to come down to more normal rates.
There are a few market sectors, such as the merchant sector, that are quieter at the moment, but many of our other customers have steady order books and remain busy, but are clearly nervous looking at the macro economic conditions next year.
I am pleased to report that the Yate extension is now completed, and this extra capacity will allow us to grow our market share in the South West of the UK. The board has recently approved a racking investment at IJK in Northern Ireland, which will enable them to extend their product range and develop sales. We are continuing to increase the working hours at our depots with Purfleet becoming the latest site to be working 24/5 from the beginning of October.
Nick Latham
Chairman
1 December 2022
This announcement contains inside information for the purposes of Article 7 of the UK version of Regulation (EU) No 596/2014 which is part of UK law by virtue of the European Union (Withdrawal) Act 2018, as amended.
For further information please visit www.lathamtimber.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 STATEMENT | |||
For the six months to 30 September 2022 | |||
| |||
Six months to 30 Sept. 2022 unaudited | Six months to 30 Sept. 2021 unaudited | Year to 31 March 2022 audited | |
| |||
£000 | £000 | £000 | |
| |||
Revenue | 212,797 | 193,937 | 385,368 |
Cost of sales (including warehouse costs) | (171,443) | (142,822) | (293,839) |
Gross profit | 41,354 | 51,115 | 91,529 |
Selling and distribution costs | (12,147) | (11,058) | (22,151) |
Administrative expenses | (5,680) | (5,924) | (11,213) |
Operating profit | 23,527 | 34,133 | 58,165 |
Finance income | 231 | 10 | 29 |
Finance costs | (98) | (112) | (242) |
Profit before tax | 23,660 | 34,031 | 57,952 |
Tax expense | (4,606) | (7,463) | (12,310) |
Profit after tax attributable to owners of the parent company | 19,054 | 26,568 | 45,642 |
Earnings per ordinary share (basic) | 95.6p | 133.5p | 229.3p |
Earnings per ordinary share (diluted) | 95.2p | 133.0p | 228.3p |
All results relate to continuing operations. |
JAMES LATHAM PLC | |||
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CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME | |||
For the six months to 30 September 2022 | |||
| |||
Six months to 30 Sept. 2022 unaudited | Six months to 30 Sept. 2021 unaudited | Year to 31 March 2022 audited | |
| |||
£000 | £000 | £000 | |
Profit after tax | 19,054 | 26,568 | 45,642 |
Other Comprehensive income | |||
Actuarial gains on defined benefit pension scheme | 3,242 | 1,047 | 3,625 |
Deferred tax relating to components of other comprehensive income | (1,080) | (199) | (424) |
Foreign translation credit/(charge) | 492 | 8 | (29) |
Other comprehensive income for the period, net of tax | 2,654 | 856 | 3,172 |
Total comprehensive income, attributable to owners of the parent company | 21,708 | 27,424 | 48,814 |
JAMES LATHAM PLC | |||
CONSOLIDATED BALANCE SHEET | |||
At 30 September 2022 | |||
| |||
As at 30 Sept. 2022 unaudited | As at 30 Sept. 2021 unaudited | As at 31 March 2022 audited | |
| |||
£000 | £000 | £000 | |
ASSETS | |||
Non-current assets | |||
Goodwill | 1,363 | 872 | 1,372 |
Intangible assets | 1,403 | 1,570 | 1,487 |
Property, plant and equipment | 37,278 | 36,153 | 36,935 |
Right-of-use-asset | 3,995 | 3,789 | 4,154 |
Retirement benefit surplus | 7,318 | - | 1,119 |
Deferred tax asset | 134 | 87 | 154 |
Total non-current assets | 51,491 | 42,471 | 45,221 |
Current assets | |||
Inventories | 74,588 | 69,117 | 74,230 |
Trade and other receivables | 69,380 | 68,414 | 68,332 |
Cash and cash equivalents | 36,939 | 24,476 | 37,030 |
Total current assets | 180,907 | 162,007 | 179,592 |
Total assets | 232,398 | 204,478 | 224,813 |
Current liabilities | |||
Lease liabilities | 1,429 | 1,243 | 1,275 |
Trade and other payables | 40,471 | 45,972 | 50,876 |
Current tax payable | 268 | 3,220 | 400 |
Total current liabilities | 42,168 | 50,435 | 52,551 |
Non-current liabilities | |||
Interest bearing loans and borrowings | 592 | 592 | 592 |
Lease liabilities | 2,753 | 2,764 | 3,133 |
Retirement and other benefit obligation | - | 12 | - |
Deferred tax liabilities | 6,369 | 4,273 | 4,566 |
Total non-current liabilities | 9,714 | 7,641 | 8,291 |
Total liabilities | 51,882 | 58,076 | 60,842 |
| |||
| |||
Net assets | 180,516 | 146,402 | 163,971 |
Capital and reserves | |||
Issued capital | 5,040 | 5,040 | 5,040 |
Share-based payment reserve | 438 | 268 | 387 |
Own shares | (708) | (326) | (873) |
Capital reserve | 398 | 398 | 398 |
Retained earnings | 175,348 | 141,022 | 159,019 |
Total equity attributable to shareholders of the parent company | 180,516 | 146,402 | 163,971 |
JAMES LATHAM PLC | |||
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CONSOLIDATED CASH FLOW STATEMENT | |||
For the six months to 30 September 2022 | |||
Six months to 30 Sept 2022 unaudited | Six months to 30 Sept 2021 unaudited | Year to 31 March 2022 audited | |
| |||
£000 | £000 | £000 | |
Net cash flow from operating activities | |||
Cash generated from operations | 11,744 | 4,620 | 30,983 |
Interest paid | (26) | (27) | (59) |
Income tax paid | (4,043) | (2,850) | (10,259) |
Net cash inflow from operating activities | 7,675 | 1,743 | 20,665 |
Cash flows from investing activities | |||
Interest received and similar income | 127 | 10 | 29 |
Acquisition of businesses net of cash and cash equivalents acquired | - | - | (2,238) |
Purchase of property, plant and equipment | (1,782) | (2,231) | (4,319) |
Proceeds from sale of property, plant and equipment | 56 | 42 | 62 |
Net cash outflow from investing activities | (1,599) | (2,179) | (6,466) |
Cash flows before financing activities | |||
Lease liability payments | (787) | (622) | (1,408) |
Equity dividends paid | (5,380) | (3,084) | (4,379) |
Cash outflow from financing activities | (6,167) | (3,706) | (5,787) |
(Decrease)/increase in cash and cash equivalents for the period | (91) | (4,142) | 8,412 |
Cash and cash equivalents at beginning of the period | 37,030 | 28,618 | 28,618 |
Cash and cash equivalents at end of the period | 36,939 | 24,476 | 37,030 |
JAMES LATHAM PLC
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CONSOLIDATED STATEMENT OF CHANGES IN EQUITY | ||||||
Attributable to owners of the parent company | ||||||
Issued capital £000 | Share-based payment reserve £000 | Own shares £000 | Capital reserve £000 | Retained earnings £000 | Total equity £000 | |
As at 1 April 2021 (audited) | 5,040 | 167 | (471) | 398 | 113,950 | 119,084 |
Profit for the period | - | - | - | - | 26,568 | 26,568 |
Other comprehensive income: | ||||||
Actuarial gain on defined benefit pension scheme | - | - | - | - | 1,047 | 1,047 |
Deferred tax relating to components of other comprehensive income | - | - | - | - | (199) | (199) |
Foreign translation credit | - | - | - | - | 8 | 8 |
Total comprehensive income for the period | - | - | - | - | 27,424 | 27,424 |
Transaction with owners: | ||||||
Dividends | - | - | - | - | (3,084) | (3,084) |
Exercise of options | - | - | (3) | - | - | (3) |
Deferred tax on share options | - | 25 | - | - | - | 25 |
Change in investment in ESOP shares | - | - | 148 | - | - | 148 |
Share-based payment expense | - | 76 | - | - | - | 76 |
Total transactions with owners | - | 101 | 145 | - | (3,084) | (2,838) |
Balance at 30 September 2021 (unaudited) | 5,040 | 268 | (326) | 398 | 138,290 | 143,670 |
Profit for the period | - | - | - | - | 19,074 | 19,074 |
Other comprehensive income: | ||||||
Actuarial gain on defined benefit pension scheme | - | - | - | - | 2,578 | 2,578 |
Deferred tax relating to components of other comprehensive income | - | - | - | - | (225) | (225) |
Foreign translation charge | - | - | - | - | (37) | (37) |
Total comprehensive income for the period | - | - | - | - | 21,390 | 21,390 |
Transactions with owners: | ||||||
Dividends | - | - | - | - | (1,295) | (1,295) |
Exercise of options | - | (24) | 231 | - | 4 | 211 |
Deferred tax on share options | - | 50 | - | - | - | 50 |
Change in investment in ESOP shares | - | - | (778) | - | 630 | (148) |
Share-based payment expense | - | 93 | - | - | - | 93 |
Total transactions with owners | - | 119 | (547) | - | (661) | (1,089) |
Balance at 31 March 2022 (audited) | 5,040 | 387 | (873) | 398 | 159,019 | 163,971 |
Profit for the period | - | - | - | - | 19,054 | 19,054 |
Other comprehensive income: | ||||||
Actuarial gain on defined benefit pension scheme | - | - | - | - | 3,242 | 3,242 |
Deferred tax relating to components of other comprehensive income | - | - | - | - | (1,080) | (1,080) |
Foreign translation credit | - | - | - | - | 492 | 492 |
Total comprehensive income for the period | - | - | - | - | 21,708 | 21,708 |
Transactions with owners: | ||||||
Dividends | - | - | - | - | (5,380) | (5,380) |
Deferred tax on share options | - | (37) | - | - | - | (37) |
Change in investment in ESOP shares | - | - | 166 | - | - | 166 |
Share-based payment expense | - | 88 | - | - | - | 88 |
Total transactions with owners | - | 51 | 166 | - | (5,380) | (5,163) |
Balance at 30 September 2022 (unaudited) | 5,040 | 438 | (707) | 398 | 175,347 | 180,516 |
JAMES LATHAM PLC | |||
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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 principles of International Accounting Standards in conformity with the requirements of the Companies Act 2006 and on the basis of the accounting policies expected to be used in the financial statements for the year ending 31 March 2023. The half yearly report does not include all the disclosures that would be required for full compliance with IFRS. The figures for the year ended 31 March 2022 are extracted from the statutory accounts of the group for that period. | |||
2. The directors propose an interim dividend of 7.25p per ordinary share which will absorb £1,445,000 (2021: 6.5p absorbing £1,293,000), payable on 27 January 2023 to shareholders on the Company's Register at the close of business on 30 December 2022. The ex-dividend date is 29 December 2022. | |||
3. This half yearly report does not constitute statutory financial accounts within the meaning of section 434 of the Companies Act 2006. The statutory accounts for the year ended 31 March 2022 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 to 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 period attributable to ordinary shareholders by the weighted average number of ordinary shares outstanding during the period. | |||
Six months to 30 Sept 2022 unaudited | Six months to 30 Sept 2021 unaudited | Year to 31 March 2022 audited | |
£000 | £000 | £000 | |
Net profit attributable to ordinary shareholders | 19,054 | 26,568 | 45,642 |
Number '000 | Number '000 | Number '000 | |
Weighted average share capital | 19,926 | 19,896 | 19,905 |
Add: diluted effect of share capital options issued | 95 | 79 | 85 |
Weighted average share capital for diluted earnings per ordinary share calculation | 20,021 | 19,975 | 19,990 |
5. Net cash flow from operating activities | |||
Six months to 30 Sept 2022 unaudited | Six months to 30 Sept 2021 unaudited | Year to 31 March 2022 audited | |
£000 | £000 | £000 | |
Profit before tax | 23,660 | 34,031 | 57,952 |
Adjustment for finance income and expenditure | (133) | 102 | 213 |
Depreciation and amortisation | 2,091 | 2,002 | 4,128 |
(Profit)/loss on disposal of property, plant and equipment | (51) | 105 | 50 |
Increase in inventories | (358) | (20,855) | (23,990) |
Increase in receivables | (1,048) | (20,585) | (18,034) |
(Decrease)/increase in payables | (9,652) | 11,264 | 13,940 |
Retirement benefits non cash amounts | (2,853) | (1,520) | (3,445) |
Share-based payments non cash amounts | 88 | 76 | 169 |
Cash generated from operations | 11,744 | 4,620 | 30,983 |
6. Copies of this statement will be posted on our website, www.lathamtimber.co.uk/investors A copy can be emailed or posted upon application to the Company Secretary, James Latham plc, Unit C2, Breakspear Park, Breakspear Way, Hempstead, Herts, HP2 4TZ, or by email to plc@lathams.co.uk | |||