Last checked at 28 Nov 2019 07:00
James Latham plc
("James Latham" or the "Company")
HALF YEARLY RESULTS FOR THE PERIOD ENDED 30 SEPTEMBER 2019
Chairman's statement
Unaudited results for the six months trading to 30 September 2019
Revenue for the six months ended 30 September 2019 was £125.6m, up 6.3% on £118.2m for the same period last year. This turnover increase is down to our long term strategic changes in product mix, as overall volumes have been static. The panel product business has seen an increase in delivered volumes through our warehouses, but a reduction in our direct volumes. Our timber business has also seen an increase in delivered volumes especially on added value products. Prices have decreased on most of our commodity panel products throughout this six month period although timber prices have remained stable.
Gross margin for the six month period ended 30 September 2019 was 17.4% compared with 17.1% in the comparative six months. This figure includes warehouse costs which are higher due to the increased volumes through our warehouses, and also part of our strategy to increase the working hours in order to better meet our customer needs. Three of our depots are now working 24 hours/5 days a week. The increased delivered volumes have also resulted in an increase in distribution costs. Administrative expenses though are lower than last year, with a reduction in the bad debt charge.
Operating profit was £8.5m, up 9.6% on last year's profit of £7.7m. Profit before tax was £8.3m compared with £8.7m in the comparative six months which included a profit of £1.1m on the sale of our old Yate site. Earnings per ordinary share, excluding the profit on the sale of Yate were 33.8p (2018: 31.5p) an increase of 7.3%.
As at 30 September 2019 net assets are £97.6m (2018: £98.6m). We have adopted IFRS 16 on leasing in these results, which has had an insignificant effect on profit before tax and these changes are explained in note 6 to this statement. Stock volume levels have remained stable throughout the six months. Trade Receivables have continued to show good debtor days figures. Cash and cash equivalents of £16.5m (2018: £12.9m) 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 calculated as increasing from £8.7m at 31 March 2019 to £14.6m at 30 September 2019. This is largely due to a reduction in the discount rate.
Interim dividend
The Board has declared an increased interim dividend of 5.5p per Ordinary Share (2018: 5.0p), which is covered 6.1 times (2018: 7.4 times). The dividend is payable on 24 January 2020 to ordinary shareholders on the Company's Register at close of business on 3 January 2020. The ex-dividend date will be 2 January 2020.
Current and future trading
The second half of 2019/20 has started well with margins slightly ahead of the previous period. We are seeing increased sales at Abbey Woods, the Irish timber distributor purchased in February 2019, and also an improvement in our panel product volumes. Purchase prices of our commodity panel products remain weak. The investment in our Gateshead facility, to improve the site efficiency, is going well, and should be completed in June 2020. The racking investment at Purfleet will be completed by the end of December 2019. The majority of our customers are busy, and we remain confident that we can continue to grow our business, but remain mindful of the uncertainties caused by the forthcoming General Election and a weakening global economy.
I am also very pleased to have reported this week the strategic purchase of Dresser Mouldings for £1 million, which will allow us to continue to grow our sales of added value timber.
Nick Latham
Chairman
28 November 2019
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
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Nick Latham, Chairman |
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David Dunmow, Finance Director |
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SP Angel Corporate Finance LLP |
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Matthew Johnson / Charlie Bouverat (Corporate Finance)
| Tel: 0203 470 0470 |
Abigail Wayne (Corporate Broking) |
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JAMES LATHAM PLC |
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CONSOLIDATED INCOME STATEMENT |
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For the six months to 30 September 2019 |
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| Six months to 30 Sept. 2019 unaudited | Six months to 30 Sept. 2018 unaudited | Year to 31 March 2019 audited |
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| £000 | £000 | £000 |
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Revenue | 125,609 | 118,160 | 235,132 |
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Cost of sales (including warehouse costs) | (103,726) | (97,974) | (194,686) |
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Gross profit | 21,883 | 20,186 | 40,446 |
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Selling and distribution costs | (9,703) | (8,679) | (18,082) |
Administrative expenses | (3,712) | (3,782) | (7,896) |
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Operating profit | 8,468 | 7,725 | 14,468 |
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Profit on disposal of property | - | 1,052 | 1,052 |
Finance income | 46 | 32 | 71 |
Finance costs | (198) | (141) | (256) |
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Profit before tax | 8,316 | 8,668 | 15,335 |
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Tax expense | (1,630) | (1,418) | (2,913) |
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Profit after tax attributable to owners of the parent company | 6,686 | 7,250 | 12,422 |
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Earnings per ordinary share (basic) | 33.8p | 36.9p | 63.1p |
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Earnings per ordinary share (diluted) | 33.8p | 36.8p | 63.0p |
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Earnings per ordinary share (basic, excluding profit on disposal of property) | 33.8p | 31.5p | 61.6p |
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Earnings per ordinary share (diluted, excluding profit on disposal of property) | 33.8p | 31.5p | 61.5p |
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All results relate to continuing operations. |
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JAMES LATHAM PLC |
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CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME |
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For the six months to 30 September 2019 |
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| Six months to 30 Sept. 2019 unaudited | Six months to 30 Sept. 2018 unaudited | Year to 31 March 2019 audited |
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| £000 | £000 | £000 |
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Profit after tax | 6,686 | 7,250 | 12,422 |
Other Comprehensive income |
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Actuarial (loss)/gains on defined benefit pension scheme | (6,767) | 4,444 | (1,360) |
Deferred tax relating to components of other comprehensive income | 1,150 | (673) | 314 |
Foreign translation credit/(charge) | 12 | - | (31) |
Other comprehensive income for the period, net of tax | (5,605) | 3,771 | (1,077) |
Total comprehensive income, attributable to owners of the parent company | 1,081 | 11,021 | 11,345 |
JAMES LATHAM PLC |
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CONSOLIDATED BALANCE SHEET |
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At 30 September 2019 |
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| As at 30 Sept. 2019 unaudited | As at 30 Sept. 2018 unaudited | As at 31 March 2019 audited |
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| £000 | £000 | £000 |
ASSETS |
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Non-current assets |
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Goodwill | 523 | 237 | 523 |
Intangible assets | 1,905 | 1 | 1,989 |
Property, plant and equipment | 34,581 | 33,979 | 34,159 |
Right-of-use-asset | 4,344 | - | - |
Deferred tax asset | 2,560 | 582 | 1,577 |
Total non-current assets | 43,913 | 34,799 | 38,248 |
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Current assets |
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Inventories | 42,501 | 41,462 | 42,350 |
Trade and other receivables | 45,697 | 43,082 | 42,613 |
Cash and cash equivalents | 16,538 | 12,864 | 15,541 |
Total current assets | 104,736 | 97,408 | 100,504 |
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Total assets | 148,649 | 132,207 | 138,752 |
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Current liabilities |
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Lease liabilities | 1,143 | - | - |
Trade and other payables | 28,321 | 25,743 | 27,113 |
Current tax payable | 86 | 1,272 | 1,193 |
Total current liabilities | 29,550 | 27,015 | 28,306 |
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Non-current liabilities |
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Interest bearing loans and borrowings | 592 | 987 | 597 |
Lease liabilities | 3,252 | - | - |
Retirement and other benefit obligation | 14,637 | 3,072 | 8,714 |
Other payables | 180 | 262 | 413 |
Deferred tax liabilities | 2,856 | 2,283 | 2,762 |
Total non-current liabilities | 21,517 | 6,604 | 12,486 |
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Total liabilities | 51,067 | 33,619 | 40,792 |
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Net assets | 97,582 | 98,588 | 97,960 |
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Capital and reserves |
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Issued capital | 5,040 | 5,040 | 5,430 |
Share-based payment reserve | 89 | 235 | 259 |
Own shares | (891) | (423) | (923) |
Capital reserve | 398 | 3 | 3 |
Retained earnings | 92,946 | 93,733 | 93,191 |
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Total equity attributable to shareholders of the parent company | 97,582 | 98,588 | 97,960 |
JAMES LATHAM PLC |
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CONSOLIDATED CASH FLOW STATEMENT |
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For the six months to 30 September 2019 |
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| Six months to 30 Sept 2019 unaudited | Six months to 30 Sept 2018 unaudited | Year to 31 March 2019 audited |
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| £000 | £000 | £000 |
Net cash flow from operating activities |
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Cash generated from operations | 7,468 | 1,972 | 10,267 |
Interest paid | (3) | (1) | (8) |
Income tax paid | (2,552) | (1,292) | (2,651) |
Net cash inflow from operating activities | 4,913 | 679 | 7,608 |
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Cash flows from investing activities |
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Interest received and similar income | 46 | 32 | 71 |
Acquisition of businesses net of cash acquired | - | - | (1,604) |
Purchase of property, plant and equipment | (1,512) | (1,136) | (2,362) |
Proceeds from sale of property, plant and equipment | 119 | 1,718 | 1,743 |
Net cash (outflow)/inflow from investing activities | (1,347) | 614 | (2,152) |
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Cash flows before financing activities |
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Purchase of treasury shares | (5) | - | (478) |
Equity dividends paid | (2,540) | (2,379) | (3,363) |
Preference dividend paid | (24) | (39) | (63) |
Cash outflow from financing activities | (2,569) | (2,418) | (3,904) |
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Increase/(decrease) in cash and cash equivalents for the period | 997 | (1,125) | 1,552 |
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Cash and cash equivalents at beginning of the period | 15,541 | 13,989 | 13,989 |
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Cash and cash equivalents at end of the period | 16,538 | 12,864 | 15,541 |
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 |
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As at 1 April 2018 (audited) | 5,040 | 184 | (529) | 3 | 85,091 | 89,789 |
Profit for the period | - | - | - | - | 7,250 | 7,250 |
Other comprehensive income: |
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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 |
Transaction with owners: |
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Dividends | - | - | - | - | (2,379) | (2,379) |
Exercise of options | - | - | - | - | - | - |
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 |
Profit for the period | - | - | - | - | 5,172 | 5,172 |
Other comprehensive income: |
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Actuarial loss on defined benefit pension scheme | - | - | - | - | (5,804) | (5,804) |
Deferred tax relating to components of other comprehensive income | - | - | - | - | 987 | 987 |
Foreign translation charge | - | - | - | - | (31) | (31) |
Total comprehensive income for the period | - | - | - | - | 324 | 324 |
Transactions with owners: |
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Dividends | - | - | - | - | (984) | (984) |
Transfer of treasury shares | - | - | (82) | - | 82 | - |
Exercise of options | - | (19) | 54 | - | 19 | 54 |
Deferred tax on share options | - | - | - | - | 31 | 31 |
Write down on conversions of ESOP shares | - | - | 14 | - | (14) | - |
Purchase of preference shares | 390 | - | (478) | - | - | (88) |
Change in investment in ESOP shares | - | - | (8) | - | - | (8) |
Share-based payment expense | - | 43 | - | - | - | 43 |
Total transactions with owners | - | 24 | (500) | - | (866) | (952) |
Balance at 31 March 2019 (audited) | 5,430 | 259 | (923) | 3 | 93,191 | 97,960 |
Change in accounting policy (IFRS16) | - | - | - | - | 262 | 262 |
Deferred tax on IFRS 16 | - | - | - | - | (45) | (45) |
As at 1 April 2019 (as restated) | 5,430 | 259 | (923) | 3 | 93,408 | 98,177 |
Profit for the period | - | - | - | - | 6,686 | 6,686 |
Other comprehensive income: |
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Actuarial gain on defined benefit pension scheme | - | - | - | - | (6,767) | (6,767) |
Deferred tax relating to components of other comprehensive income | - | - | - | - | 1,150 | 1,150 |
Foreign translation charge | - | - | - | - | 12 | 12 |
Total comprehensive income for the period | - | - | - | - | 1,081 | 1,081 |
Transactions with owners: |
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Dividends | - | - | - | - | (2,540) | (2,540) |
Transfer of treasury shares | - | - | (1,668) | - | 1,668 | - |
Exercise of options | - | (213) | 779 | - | 213 | 779 |
Deferred tax on share options | - | - | - | - | (32) | (32) |
Write down on conversions of ESOP shares | - | - | 369 | - | (369) | - |
Purchase of preference shares | 5 | - | - | - | (5) | - |
Cancellation of preference shares | (395) | - | 478 | 395 | (478) | - |
Change in investment in ESOP shares | - | - | 74 | - | - | 74 |
Share-based payment expense | - | 43 | - | - | - | 43 |
Total transactions with owners | (390) | (170) | 32 | 395 | (1,543) | (1,676) |
Balance at 30 September 2019 (unaudited) | 5,040 | 89 | (891) | 398 | 92,946 | 97,582 |
JAMES LATHAM PLC | |||
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NOTES TO THE HALF YEARLY REPORT | |||
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1. The results presented in this report are unaudited and they have been prepared in accordance with the recognition and measurement principles of International Financial Reporting Standards ('IFRS') as adopted by the EU and on the basis of the accounting policies expected to be used in the financial statements for the year ending 31 March 2020. The figures for the year ended 31 March 2019 are extracted from the statutory accounts of the group for that period. | |||
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2. The directors propose an interim dividend of 5.5p per ordinary share which will absorb £1,085,000 (2018: 5.0p absorbing £980,000), payable on 24 January 2020 to shareholders on the Company's Register at the close of business on 3 January 2020. The ex-dividend date is 2 January 2020. | |||
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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 2019 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. | |||
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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. | |||
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| Six months to 30 Sept 2019 unaudited | Six months to 30 Sept 2018 unaudited | Year to 31 March 2019 audited |
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Net profit attributable to ordinary shareholders | 6,686 | 7,250 | 12,422 |
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| Number '000 | Number '000 | Number '000 |
Weighted average share capital | 19,759 | 19,661 | 19,674 |
Add: diluted effect of share capital options issued | 33 | 41 | 28 |
Weighted average share capital for diluted earnings per ordinary share calculation | 19,792 | 19,702 | 19,702 |
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5. Net cash flow from operating activities | |||
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| Six months to 30 Sept 2019 unaudited | Six months to 30 Sept 2018 unaudited | Year to 31 March 2019 audited |
| £000 | £000 | £000 |
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Profit before tax | 8,316 | 8,668 | 15,335 |
Adjustment for finance income and expenditure | 152 | 109 | 185 |
Depreciation and amortisation | 1,174 | 970 | 2,036 |
Profit on disposal of property, plant and equipment | (119) | (1,062) | (1,079) |
Increase in inventories | (151) | (1,394) | (2,282) |
Increase in receivables | (3,084) | (1,574) | (1,105) |
Increase/(decrease) in payables | 1,236 | (2,935) | (1,825) |
Own shares non cash amounts | 853 | 106 | 152 |
Retirement benefits non cash amounts | (941) | (967) | (1,213) |
Translation non cash amounts | 12 | - | (31) |
Share-based payments non cash amounts | 43 | 51 | 94 |
IFRS16 Lease non cash items | (23) | - | - |
Cash generated from operations | 7,468 | 1,972 | 10,267 |
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6. The Group has adopted IFRS 16 "leases" which is effective for annual periods beginning on or after 1 January 2019. The Company has chosen to apply the modified retrospective transition method and so the prior year figures have not been adjusted. The Company has elected to apply the practical expedient for short-term leases to leases for which the lease term ends within 12 months of the date of initial application, and the practical expedient for low value leases. | |||
The adoption of the standard has resulted in the Group bringing many of its leases onto the balance sheet reflecting 'right-of-use' assets which, are depreciated, and corresponding liabilities on which interest accrues. The impact of the standard in the period to 30 September 2019, compared to the results if the standard had not been recognised, is that operating profit has increased by £23,000 due to the elimination of rent costs and recognition of depreciation. However, profit before and after tax has reduced by £51,000 due to interest charges. | |||
At 30 September 2019 non-current assets have increased by £4,344,000 as a result of the additional right-of-use assets. Total liabilities have increased by £4,395,000 due to the addition of finance lease liabilities. Total net asset effect is a decrease of £51,000. | |||
The rent-free period accruals previously recognised under liabilities to the value of £262,000 have been transferred to retained earnings. A deferred tax provision of £45,000 has been recognised on the impact of IFRS 16. | |||
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7. 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 | |||