Last checked at 25 Nov 2021 07:00
James Latham plc
("James Latham" or the "Company")
HALF YEARLY RESULTS FOR THE PERIOD ENDED 30 SEPTEMBER 2021
Chairman's statement
Unaudited results for the six months trading to 30 September 2021
Revenue for the six months ended 30 September 2021 was £193.9m, up 81.2% on £107.0m for the same period last year. Revenue in the six months to 30 September 2020 was significantly impacted by the first lockdown. Cost prices on both timber and panels have risen significantly since the start of the financial year, with average cost prices up over 25%. We have had strong volume growth in the first quarter of the financial year, although these volumes returned to normal levels in the second quarter, and overall volumes are 4.9% higher than in the six months to 31 March 2021. All sites are still operating with some COVID restrictions and I am very pleased with the way that we have grown revenues and maintained a safe environment for our staff to work in.
Gross profit percentage, which includes warehouse costs, for the six month period ended 30 September 2021 was 26.4% compared with 16.9% in the comparative six months. This six month period has been very turbulent with significant increases in the market prices for our products and well documented problems in the global supply chain leading to difficulties in obtaining regular supplies of inventory. We anticipated this issue and made sure that sufficient contracts were placed to ensure that our customers were not left short of stock. These significant increases in market prices did lead to a short-term improvement in margins as we worked through inventory purchased at competitive prices.
Overheads have been well controlled during the six months, although they are starting to increase with pressure on transport costs in particular.
Operating profit was £34.1m, up £27.6m on the £6.5m profit for the same period last year. Profit before tax was £34.0m compared with £6.3m for the same period last year. The tax charge of £7.5m represents an effective rate of 21.9%, which includes an increased charge for deferred taxation following the announcement of a future increase in corporation tax to 25%. Earnings per ordinary share were 133.5p compared with 25.6 p for the same period last year.
As at 30 September 2021 net assets are £146.4m (2020: £109.1m). Inventory has increased significantly, up to £69.1m from £41.3m. Apart from the increases due to the higher cost of our products, the supply chain has become extended leading to increased stocks on water from £7m to nearly £20m, as vessels are delayed both at the port of origin and the destination port. Trade and other receivables have increased by £23.65m to £68.4m due directly to the increases in revenues, but continue to show good debtor day figures, with bad debts remaining at a low figure. Cash and cash equivalents of £24.5m (2020: £26.1m) have been important to allow us to increase our investment in working capital especially the inventory levels. We continue to take advantage of additional early settlement discount opportunities with our suppliers.
This six months has tested the strength of our business model and our impressive results reflect the hard work of all parts of the Company, but also are a reflection of the unprecedented market conditions of the first six months which are unlikely to be repeated.
The calculation of the pension deficit remains very sensitive to changes in assumptions, and the pension deficit under IAS19 is calculated as decreasing from £2.5m at 31 March 2021 to just £12,000 at 30 September 2021. This is largely due to a recovery in the plan asset valuations although the discount rate has slightly reduced.
Interim dividend
The Board has declared an increased interim dividend of 6.5p per Ordinary Share (2020: 5.7p). The dividend is payable on 21 January 2022 to ordinary shareholders on the Company's Register at close of business on 17 December 2021. The ex-dividend date will be 16 December 2021.
Current and future trading
The second half of 2021/22 has started with slightly weaker volumes compared with the exceptional six months to 30 September 2021, and margins are returning to more normal levels. We have seen a reduction in prices of some commodity products but most products are seeing prices remaining firm. The challenges persist in our supply chain, with shipment delays, congestion at the ports and container prices at all time high levels. Inventory levels have remained high to ensure we can meet our customers' expectations. The issues with the supply chain could persist throughout 2022. It is difficult to predict when this may return to normal but when it does, this will significantly reduce the cost price of imported commodity products. There will be continued inflationary pressure on our overheads for the foreseeable future.
Some of our customers are a bit quieter, which is in part due to projects being delayed due to supply issues with non-timber products but overall we remain confident that we will have a good end to our financial year despite the challenges ahead of us.
We are pleased that our acquisition of IJK Timber Group in Northern Ireland has completed successfully post period end and the integration into the Latham Group is proceeding according to plan. The investment in the large racking project at our Thurrock facility is now complete, and we have invested in state of the art machinery at Dresser Mouldings to improve the efficiency of the production process.
Nick Latham
Chairman
24 November 2021
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 ("MAR"). Upon the publication of this announcement via a Regulatory Information Service, this inside information is now considered to be in the public domain.
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 |
Rob Rees (Corporate Broking) |
JAMES LATHAM PLC | |||
CONSOLIDATED INCOME STATEMENT | |||
For the six months to 30 September 2021 | |||
Six months to 30 Sept. 2021 unaudited | Six months to 30 Sept. 2020 unaudited | Year to 31 March 2021 audited | |
£000 | £000 | £000 | |
Revenue | 193,937 | 107,034 | 250,162 |
Cost of sales (including warehouse costs) | (142,822) | (88,985) | (205,060) |
Gross profit | 51,115 | 18,049 | 45,102 |
Selling and distribution costs | (11,058) | (7,449) | (17,464) |
Administrative expenses | (5,924) | (4,056) | (8,598) |
Operating profit | 34,133 | 6,544 | 19,040 |
Finance income | 10 | 5 | 11 |
Finance costs | (112) | (236) | (453) |
Profit before tax | 34,031 | 6,313 | 18,598 |
Tax expense | (7,463) | (1,215) | (3,616) |
Profit after tax attributable to owners of the parent company | 26,568 | 5,098 | 14,982 |
Earnings per ordinary share (basic) | 133.5p | 25.6p | 75.4p |
Earnings per ordinary share (diluted) | 133.0p | 25.6p | 75.2p |
All results relate to continuing operations. |
JAMES LATHAM PLC | |||
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME | |||
For the six months to 30 September 2021 | |||
Six months to 30 Sept. 2021 unaudited | Six months to 30 Sept. 2020 unaudited | Year to 31 March 2021 audited | |
£000 | £000 | £000 | |
Profit after tax | 26,568 | 5,098 | 14,982 |
Other Comprehensive income | |||
Actuarial gains on defined benefit pension scheme | 1,047 | 1,923 | 6,717 |
Deferred tax relating to components of other comprehensive income | (199) | (365) | (1,276) |
Foreign translation credit/(charge) | 8 | 23 | (58) |
Other comprehensive income for the period, net of tax | 856 | 1,581 | 5,383 |
Total comprehensive income, attributable to owners of the parent company | 27,424 | 6,679 | 20,365 |
JAMES LATHAM PLC | |||
CONSOLIDATED BALANCE SHEET | |||
At 30 September 2021 | |||
As at 30 Sept. 2021 unaudited | As at 30 Sept. 2020 unaudited | As at 31 March 2021 audited | |
£000 | £000 | £000 | |
ASSETS | |||
Non-current assets | |||
Goodwill | 872 | 872 | 872 |
Intangible assets | 1,570 | 1,738 | 1,655 |
Property, plant and equipment | 36,153 | 35,477 | 35,342 |
Right-of-use-asset | 3,789 | 4,629 | 4,064 |
Deferred tax asset | 87 | 1,694 | 534 |
Total non-current assets | 42,471 | 44,410 | 42,467 |
Current assets | |||
Inventories | 69,117 | 41,360 | 48,262 |
Trade and other receivables | 68,414 | 44,764 | 48,003 |
Cash and cash equivalents | 24,476 | 26,159 | 28,618 |
Total current assets | 162,007 | 112,283 | 124,883 |
Total assets | 204,478 | 156,693 | 167,350 |
Current liabilities | |||
Lease liabilities | 1,243 | 1,242 | 1,123 |
Trade and other payables | 45,972 | 30,122 | 34,761 |
Current tax payable | 3,220 | - | - |
Total current liabilities | 50,435 | 31,364 | 35,884 |
Non-current liabilities | |||
Interest bearing loans and borrowings | 592 | 592 | 592 |
Lease liabilities | 2,764 | 3,579 | 3,137 |
Retirement and other benefit obligation | 12 | 8,774 | 2,561 |
Other payables | - | - | 21 |
Deferred tax liabilities | 4,273 | 3,264 | 3,339 |
Total non-current liabilities | 7,641 | 16,209 | 9,650 |
Total liabilities | 58,076 | 47,573 | 45,534 |
Net assets | 146,402 | 109,120 | 121,816 |
Capital and reserves | |||
Issued capital | 5,040 | 5,040 | 5,040 |
Share-based payment reserve | 268 | 96 | 167 |
Own shares | (326) | (542) | (471) |
Capital reserve | 398 | 398 | 398 |
Retained earnings | 141,022 | 104,128 | 116,682 |
Total equity attributable to shareholders of the parent company | 146,402 | 109,120 | 121,816 |
JAMES LATHAM PLC | |||
CONSOLIDATED CASH FLOW STATEMENT | |||
For the six months to 30 September 2021 | |||
Six months to 30 Sept 2021 unaudited | Six months to 30 Sept 2020 unaudited | Year to 31 March 2021 audited | |
£000 | £000 | £000 | |
Net cash flow from operating activities | |||
Cash generated from operations | 4,620 | 13,565 | 21,374 |
Interest paid | (27) | (24) | (51) |
Income tax paid | (2,850) | (950) | (3,191) |
Net cash inflow from operating activities | 1,743 | 12,591 | 18,132 |
Cash flows from investing activities | |||
Interest received and similar income | 10 | 5 | 11 |
Purchase of property, plant and equipment | (2,231) | (785) | (1,968) |
Proceeds from sale of property, plant and equipment | 42 | 6 | 8 |
Net cash outflow from investing activities | (2,179) | (774) | (1,949) |
Cash flows before financing activities | |||
Lease liability payments | (622) | (621) | (1,394) |
Equity dividends paid | (3,084) | (1,987) | (3,121) |
Cash outflow from financing activities | (3,706) | (2,608) | (4,515) |
(Decrease)/increase in cash and cash equivalents for the period | (4,142) | 9,209 | 11,668 |
Cash and cash equivalents at beginning of the period | 28,618 | 16,950 | 16,950 |
Cash and cash equivalents at end of the period | 24,476 | 26,159 | 28,618 |
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 2020 (audited) | 5,040 | 25 | (619) | 398 | 99,433 | 104,277 |
Profit for the period | - | - | - | - | 5,098 | 5,098 |
Other comprehensive income: | ||||||
Actuarial gain on defined benefit pension scheme | - | - | - | - | 1,923 | 1,923 |
Deferred tax relating to components of other comprehensive income | - | - | - | - | (365) | (365) |
Foreign translation charge | - | - | - | - | 23 | 23 |
Total comprehensive income for the period | - | - | - | - | 6,679 | 6,679 |
Transaction with owners: | ||||||
Dividends | - | - | - | - | (1,987) | (1,987) |
Exercise of options | - | (8) | - | - | 3 | (5) |
Change in investment in ESOP shares | - | - | 77 | - | - | 77 |
Share-based payment expense | - | 79 | - | - | - | 79 |
Total transactions with owners | - | 71 | 77 | - | (1,984) | (1,836) |
Balance at 30 September 2020 (unaudited) | 5,040 | 96 | (542) | 398 | 104,128 | 109,120 |
Profit for the period | - | - | - | - | 9,884 | 9,884 |
Other comprehensive income: | ||||||
Actuarial gain on defined benefit pension scheme | - | - | - | - | 4,794 | 4,794 |
Deferred tax relating to components of other comprehensive income | - | - | - | - | (911) | (911) |
Foreign translation charge | - | - | - | - | (81) | (81) |
Total comprehensive income for the period | - | - | - | - | 13,686 | 13,686 |
Transactions with owners: | ||||||
Dividends | - | - | - | - | (1,134) | (1,134) |
Exercise of options | - | (12) | 148 | - | 2 | 138 |
Deferred tax on share options | - | 6 | - | - | - | 6 |
Change in investment in ESOP shares | - | - | (77) | - | - | (77) |
Share-based payment expense | - | 77 | - | - | - | 77 |
Total transactions with owners | - | 71 | 71 | - | (1,132) | (990) |
Balance at 31 March 2021 (audited) | 5,040 | 167 | (471) | 398 | 116,682 | 121,816 |
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 charge | - | - | - | - | 8 | 8 |
Total comprehensive income for the period | - | - | - | - | 27,424 | 27,424 |
Transactions 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 | 141,022 | 146,402 |
JAMES LATHAM PLC | |||
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 2022. 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 2021 are extracted from the statutory accounts of the group for that period. | |||
2. The directors propose an interim dividend of 6.5p per ordinary share which will absorb £1,293,000 (2020: 5.7p absorbing £1,133,000), payable on 21 January 2022 to shareholders on the Company's Register at the close of business on 17 December 2021. The ex-dividend date is 16 December 2021. | |||
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 2021 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 2021 unaudited | Six months to 30 Sept 2020 unaudited | Year to 31 March 2021 audited | |
£000 | £000 | £000 | |
Net profit attributable to ordinary shareholders | 26,568 | 5,098 | 14,982 |
Number '000 | Number '000 | Number '000 | |
Weighted average share capital | 19,896 | 19,876 | 19,882 |
Add: diluted effect of share capital options issued | 79 | 26 | 31 |
Weighted average share capital for diluted earnings per ordinary share calculation | 19,975 | 19,902 | 19,913 |
5. Net cash flow from operating activities | |||
Six months to 30 Sept 2021 unaudited | Six months to 30 Sept 2020 unaudited | Year to 31 March 2021 audited | |
£000 | £000 | £000 | |
Profit before tax | 34,031 | 6,313 | 18,598 |
Adjustment for finance income and expenditure | 102 | 231 | 442 |
Depreciation and amortisation | 2,002 | 2,017 | 4,033 |
Loss/(profit) on disposal of property, plant and equipment | 105 | (6) | (6) |
(Increase)/decrease in inventories | (20,855) | 2,928 | (3,974) |
(Increase)/decrease in receivables | (20,585) | 2,193 | (878) |
Increase in payables | 11,264 | 1,062 | 5,779 |
Retirement benefits non cash amounts | (1,520) | (1,247) | (2,776) |
Share-based payments non cash amounts | 76 | 74 | 156 |
Cash generated from operations | 4,620 | 13,565 | 21,374 |
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 3 Swallow Park, Finway Road Hemel Hempstead, Herts, HP2 7QU, or by email to plc@lathams.co.uk | |||