Last checked at 29 Nov 2018 07:00
James Latham plc
("James Latham" or the "Company")
HALF YEARLY RESULTS FOR THE PERIOD ENDED 30 SEPTEMBER 2018
Chairman's statement
Unaudited results for the six months trading to 30 September 2018
Revenue for the six months ended 30 September 2018 was £118.2m, up 10.2% on £107.3m for the same period last year. Volumes increased by 1.5%, mainly through an increase in direct business, and product prices increased by 7.8%, against the comparative six months. The remaining increase in revenue arose due to changing product mix, with increased sales of lower volume, higher priced products.
Gross margin for the six month period ended 30 September 2018 was 17.1% compared with 17.3% in the comparative six months, which is partly explained by the increase in direct business which is at a lower margin. This figure includes warehouse costs, which have increased by 4.9% due to the increased cost of operating from the two new depots at Yate and Leicester. Both relocated sites are performing well.
Selling and distribution costs were 3.4% higher than the comparative period last year. Transport costs per tonne have increased by 3.0%, where increased fuel costs have been partially offset by reduced external haulier costs.
Administrative expenses are higher than last year, mainly due to an increase in bad debts compared with a low charge in the comparative six months. Despite this increase in bad debts, total bad debts are still on budget.
Operating profit was £7.7m, up 10.0% on the comparative period's operating profit of £7.0m. Profit before tax of £8.7m (2017: £6.7m) includes a profit of £1.1m on the sale of our old Yate site. Earnings per ordinary share were 36.9p (2017: 27.8p) an increase of 32.7%.
As at 30 September 2018 net assets have increased to £98.6m (2017: £83.8m). Stock volume levels have remained stable throughout the six months. Trade Receivables have continued to show good debtors day figures. Cash and cash equivalents of £12.9m (2017: £12.6m), remain strong and we continue to take advantage of additional early settlement discount opportunities with our suppliers.
The calculation of the pension deficit remains very sensitive to changes in assumptions, and the pension deficit under IAS19 is now calculated as decreasing from £8.4m at 31 March 2018 to £3.1m at 30 September 2018. This is largely due to positive asset performance and an increase in the discount rate. Following the finalisation of the triennial actuarial valuation as at 31 March 2017, the Company has agreed a recovery plan with the trustees of £2.0m per annum until 31 March 2024. Since the end of the half year, the High Court made a judgement confirming that pension schemes are required to equalise male and female Guaranteed Minimum Pensions. The effect of this decision is still being assessed by the Trustees, but is likely to increase the pension scheme liabilities by approximately £1m.
Interim dividend
The Board has declared an increased interim dividend of 5.0p per Ordinary Share (2017: 4.5p), which is covered 7.4 times (2017: 6.2 times). The dividend is payable on 25 January 2019 to ordinary shareholders on the Company's Register at close of business on 4 January 2019. The ex-dividend date will be 3 January 2019.
Current and future trading
The second half of 2018/19 has started well with revenues continuing to grow. Margins however are slightly down, with price rises being more difficult to absorb by the market. Our customers remain busy and are reporting good order books. The economic outlook though is affected by the uncertainty caused by the Brexit negotiations and we will not be immune to any slowdown in the UK economy. We have reviewed our key European suppliers and have put plans in place to hold more stocks for a period of time in the first half of 2019 in order to mitigate any supply issues over that period. We are continuing to invest in the business, with extensive racking projects started at our Purfleet and Thurrock depots, and the planned redevelopment of our Gateshead site in order to make the most efficient use of the space.
Nick Latham
Chairman
29 November 2018
This announcement contains inside information for the purposes of Article 7 of the Market Abuse Regulation (EU) No 596/2014.
Enquiries
James Latham plc | Tel: 01442 849 100 |
Nick Latham, Chairman | |
David Dunmow, Finance Director | |
Northland Capital Partners Limited Nominated Adviser and Broker | Tel: 020 3861 6625 |
Matthew Johnson / Edward Hutton (Corporate Finance) Abigail Wayne / Rob Rees (Corporate Broking) |
JAMES LATHAM PLC | |||
CONSOLIDATED INCOME STATEMENT | |||
For the six months to 30 September 2018 | |||
Six months to 30 Sept. 2018 unaudited | Six months to 30 Sept. 2017 unaudited | Year to 31 March 2018 audited | |
£000 | £000 | £000 | |
Revenue | 118,160 | 107,335 | 214,919 |
Cost of sales (including warehouse costs) | (97,974) | (88,810) | (177,145) |
Gross profit | 20,186 | 18,525 | 37,774 |
Selling and distribution costs | (8,679) | (8,391) | (16,277) |
Administrative expenses | (3,782) | (3,178) | (7,106) |
Operating profit | 7,725 | 6,956 | 14,391 |
Profit on disposal of property | 1,052 | - | 1,276 |
Finance income | 32 | 15 | 37 |
Finance costs | (141) | (248) | (488) |
Profit before tax | 8,668 | 6,723 | 15,216 |
Tax expense | (1,418) | (1,262) | (2,570) |
Profit after tax attributable to owners of the parent company | 7,250 | 5,461 | 12,646 |
Earnings per ordinary share (basic) | 36.9p | 27.8p | 64.4p |
Earnings per ordinary share (diluted) | 36.8p | 27.7p | 64.1p |
All results relate to continuing operations. |
JAMES LATHAM PLC | |||
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME | |||
For the six months to 30 September 2018 | |||
Six months to 30 Sept. 2018 unaudited | Six months to 30 Sept. 2017 unaudited | Year to 31 March 2018 audited | |
£000 | £000 | £000 | |
Profit after tax | 7,250 | 5,461 | 12,646 |
Other Comprehensive income | |||
Actuarial gains on defined benefit pension scheme | 4,444 | 8,515 | 7,948 |
Deferred tax relating to components of other comprehensive income | (673) | (1,430) | (1,262) |
Other comprehensive income for the period, net of tax | 3,771 | 7,085 | 6,686 |
Total comprehensive income, attributable to owners of the parent company | 11,021 | 12,546 | 19,332 |
JAMES LATHAM PLC | |||
CONSOLIDATED BALANCE SHEET | |||
At 30 September 2018 | |||
As at 30 Sept. 2018 unaudited | As at 30 Sept. 2017 unaudited | As at 31 March 2018 audited | |
£000 | £000 | £000 | |
ASSETS | |||
Non-current assets | |||
Goodwill | 237 | 237 | 237 |
Intangible assets | 1 | 1 | 1 |
Property, plant and equipment | 33,979 | 31,939 | 33,831 |
Deferred tax asset | 582 | 1,546 | 1,491 |
Total non-current assets | 34,799 | 33,723 | 35,560 |
Current assets | |||
Inventories | 41,462 | 35,915 | 40,068 |
Trade and other receivables | 43,082 | 43,523 | 41,508 |
Cash and cash equivalents | 12,864 | 12,585 | 13,989 |
Non-current assets held for sale | - | 641 | 638 |
Total current assets | 97,408 | 92,664 | 96,203 |
Total assets | 132,207 | 126,387 | 131,763 |
Current liabilities | |||
Trade and other payables | 25,743 | 28,961 | 28,648 |
Current tax payable | 1,272 | 1,332 | 1,292 |
Total current liabilities | 27,015 | 30,293 | 29,940 |
Non-current liabilities | |||
Interest bearing loans and borrowings | 987 | 987 | 987 |
Retirement and other benefit obligation | 3,072 | 8,470 | 8,382 |
Other payables | 262 | 320 | 291 |
Deferred tax liabilities | 2,283 | 2,485 | 2,374 |
Total non-current liabilities | 6,604 | 12,262 | 12,034 |
Total liabilities | 33,619 | 42,555 | 41,974 |
Net assets | 98,588 | 83,832 | 89,789 |
Capital and reserves | |||
Issued capital | 5,040 | 5,040 | 5,040 |
Share-based payment reserve | 235 | 153 | 184 |
Own shares | (423) | (180) | (529) |
Capital reserve | 3 | 3 | 3 |
Retained earnings | 93,733 | 78,816 | 85,091 |
Total equity attributable to shareholders of the parent company | 98,588 | 83,832 | 89,789 |
JAMES LATHAM PLC | |||
CONSOLIDATED CASH FLOW STATEMENT | |||
For the six months to 30 September 2018 | |||
Six months to 30 Sept 2018 unaudited | Six months to 30 Sept 2017 unaudited | Year to 31 March 2018 audited | |
£000 | £000 | £000 | |
Net cash flow from operating activities | |||
Cash generated from operations | 1,972 | 6,155 | 11,251 |
Interest paid | (1) | (2) | (1) |
Income tax paid | (1,292) | (1,517) | (2,797) |
Net cash inflow from operating activities | 679 | 4,636 | 8,453 |
Cash flows from investing activities | |||
Interest received and similar income | 32 | 15 | 37 |
Purchase of property, plant and equipment | (1,136) | (7,163) | (10,840) |
Proceeds from sale of property, plant and equipment | 1,718 | 19 | 2,186 |
Net cash inflow/(outflow) from investing activities | 614 | (7,129) | (8,617) |
Cash flows before financing activities | |||
Equity dividends paid | (2,379) | (2,129) | (3,014) |
Preference dividend paid | (39) | (39) | (79) |
Net cash outflow from financing activities | (2,418) | (2,168) | (3,093) |
Decrease in cash and cash equivalents for the period | (1,125) | (4,661) | (3,257) |
Cash and cash equivalents at beginning of the period | 13,989 | 17,246 | 17,246 |
Cash and cash equivalents at end of the period | 12,864 | 12,585 | 13,989 |
JAMES LATHAM PLC
| ||||||
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 2017 (audited) | 5,040 | 108 | (291) | 3 | 68,398 | 73,258 |
Profit for the period | - | - | - | - | 5,461 | 5,461 |
Other comprehensive income: | ||||||
Actuarial gain on defined benefit pension scheme | - | - | - | - | 8,515 | 8,515 |
Deferred tax relating to components of other comprehensive income | - | - | - | - | (1,430) | (1,430) |
Total comprehensive income for the period | - | - | - | - | 12,546 | 12,546 |
Transaction with owners: | ||||||
Dividends | - | - | - | - | (2,129) | (2,129) |
Write down on conversion of ESOP shares | - | - | 2 | - | (2) | - |
Exercise of options | - | (3) | - | - | 3 | - |
Change in investment in ESOP shares | - | - | 109 | - | - | 109 |
Share-based payment expense | - | 48 | - | - | - | 48 |
Total transactions with owners | - | 45 | 111 | - | (2,128) | (1,972) |
Balance at 30 September 2017 (unaudited) | 5,040 | 153 | (180) | 3 | 78,816 | 83,832 |
Profit for the period | - | - | - | - | 7,185 | 7,185 |
Other comprehensive income: | ||||||
Actuarial loss on defined benefit pension scheme | - | - | - | - | (567) | (567) |
Deferred tax relating to components of other comprehensive income | - | - | - | - | 168 | 168 |
Total comprehensive income for the period | - | - | - | - | 6,786 | 6,786 |
Transactions with owners: | ||||||
Dividends | - | - | - | - | (885) | (885) |
Transfer of treasury shares | - | - | (414) | - | 414 | - |
Exercise of options | - | (16) | - | - | 16 | - |
Deferred tax on share options | - | - | - | - | (43) | (43) |
Write down on conversions of ESOP shares | - | - | 13 | - | (13) | - |
Change in investment in ESOP shares | - | - | 52 | - | - | 52 |
Share-based payment expense | - | 47 | - | - | - | 47 |
Total transactions with owners | - | 31 | (349) | - | (511) | (829) |
Balance at 31 March 2018 (audited) | 5,040 | 184 | (529) | 3 | 85,091 | 89,789 |
Profit for the period | - | - | - | - | 7,250 | 7,250 |
Other comprehensive income: | ||||||
Actuarial gain on defined benefit pension scheme | - | - | - | - | 4,444 | 4,444 |
Deferred tax relating to components of other comprehensive income | - | - | - | - | (673) | (673) |
Total comprehensive income for the period | - | - | - | - | 11,021 | 11,021 |
Transactions with owners: | ||||||
Dividends | - | - | - | - | (2,379) | (2,379) |
Change in investment in ESOP shares | - | - | 106 | - | - | 106 |
Share-based payment expense | - | 51 | - | - | - | 51 |
Total transactions with owners | - | 51 | 106 | - | (2,379) | (2,222) |
Balance at 30 September 2018 (unaudited) | 5,040 | 235 | (423) | 3 | 93,733 | 98,588 |
JAMES LATHAM PLC |
NOTES TO THE HALF YEARLY REPORT |
1. The results presented in this report are unaudited and have been prepared in accordance with the recognition and measurement requirements 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 2019 and on the basis of the accounting policies to be used in those financial statements. The half yearly report does not include all the information and disclosures required in financial statements prepared in accordance with IFRS and should be read in conjunction with the accounts for the year ended 31 March 2018. The figures for the year ended 31 March 2018 are extracted from the statutory accounts of the group for that period.
The Group has adopted IFRS 15 - Revenue from Contracts with Customers and IFRS 9 - Financial Instruments in the half yearly report, the impact of which is set out below:
(i) IFRS 15 'Revenue from Contracts with Customers' IFRS 15 - Revenue from Contracts with Customers establishes a comprehensive framework for determining whether, how much and when revenue is recognised. It has replaced existing revenue recognition guidance, including IAS 18 Revenue. IFRS 15 sets out the requirements for recognising revenue from contracts with customers. The standard requires entities to apportion revenue earned from contracts to individual promises, or performance obligations, on a stand-alone selling price basis, based on a five-step model (identification of contracts; performance obligations; transaction prices; allocation of price to performance obligations; and recognition of revenue). Revenue is recognised at an amount that reflects the consideration to which an entity expects to be entitled in exchange for transferring goods or services to a customer. It has replaced existing revenue recognition guidance, including IAS 18 Revenue. IFRS 15 is effective for annual periods beginning on or after 1 January 2018.
(ii) IFRS 9 'Financial Instruments' IFRS 9 'Financial Instruments' determines the basis of the financial instrument and how a financial asset should be classified and measured. It also provides a forward-looking expected losses impairment model for financial assets, including trading receivables, and includes amendments to classification and measurement of financial instruments. It has replaced existing standard IAS 39 'Financial Instruments: Recognition and Measurement'. IFRS 9 is effective for annual periods beginning on or after 1 January 2018.
The directors have assessed the impact of the adoption IFRS 15 and IFRS 9 and there has been no material impact on the financial statements of the Group as a result of these standards coming into effect.
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2. The directors propose an interim dividend of 5.0p per ordinary share which will absorb £980,000 (2017: 4.5p absorbing £880,000), payable on 25 January 2019 to shareholders on the Company's Register at the close of business on 4 January 2019. The ex-dividend date is 3 January 2019. |
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 2018 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 2018 unaudited | Six months to 30 Sept 2017 unaudited | Year to 31 March 2018 audited | |
£000 | £000 | £000 | |
Net profit attributable to ordinary shareholders | 7,250 | 5,461 | 12,646 |
Number '000 | Number '000 | Number '000 | |
Weighted average share capital | 19,661 | 19,629 | 19,640 |
Add: diluted effect of share capital options issued | 41 | 108 | 85 |
Weighted average share capital for diluted earnings per ordinary share calculation | 19,702 | 19,737 | 19,725 |
5. Net cash flow from operating activities | |||
Six months to 30 Sept 2018 unaudited | Six months to 30 Sept 2017 unaudited | Year to 31 March 2018 audited | |
£000 | £000 | £000 | |
Profit before tax | 8,668 | 6,723 | 15,216 |
Adjustment for finance income and expenditure | 109 | 233 | 451 |
Depreciation and amortisation | 970 | 885 | 1,941 |
Profit on disposal of property, plant and equipment | (1,062) | (9) | (1,444) |
Increase in inventories | (1,394) | (407) | (4,560) |
Increase in receivables | (1,574) | (3,447) | (1,432) |
(Decrease)/increase in payables | (2,935) | 1,867 | 1,526 |
Own shares non cash amounts | 106 | 109 | 161 |
Retirement benefits non cash amounts | (967) | 153 | (703) |
Share-based payments non cash amounts | 51 | 48 | 95 |
Cash generated from operations | 1,972 | 6,155 | 11,251 |
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 | |||