Half-year Report

RNS Number : 9170X

Latham(James) PLC

30 November 2017

 

James Latham plc

("James Latham" or the "Company")

HALF YEARLY RESULTS FOR THE PERIOD ENDED 30 SEPTEMBER 2017 

Chairman's statement

Unaudited results for the six months trading to 30 September 2017

Revenue for the six months ended 30 September 2017 was £107.3m, up 7% on £100.3m for the same period last year.  We have seen volumes continue to grow especially through our own warehouses where they are up nearly 8%. The cost price of our products overall continues to increase in comparison to the comparative six months. This is in part down to the weakening of sterling following the European Union Referendum, but also in this six months we have seen manufacturers increasing prices, and we have not been able to pass all these increases onto our customers.

Gross margin for the six month period ended 30 September 2017 was 17.3% compared with 18.7% in the comparative six months. This gross margin is similar to the 17.6% achieved in the second half of 2016/7, and we believe margins are starting to stabilise. We were also affected in this half year by some disruption to supplies from some of our key suppliers' manufacturing facilities, which are now getting back to normal.  

Selling and distribution costs were 6.4% higher than last year. Distribution costs rise in line with volumes, and we monitor costs per tonne which are up by less than 2%. We have also invested in new specialist sales staff to develop the markets where we see potential for good future growth.

In July we successfully completed the move of our Yate depot to a new modern facility. I am very grateful to all of the staff involved in the move, who were very effective at minimising the disruption to the business and I am pleased to report the new facility is already performing ahead of our expectations. In this half year we incurred approximately £100,000 of one off costs relating to the move.

Profit before tax was £6.7m, down 12.2% on the comparative period's profit of £7.7m.  Earnings per ordinary share were 27.8p (2016: 31.2p) a decrease of 10.9%.

As at 30 September 2017 net assets have increased to £83.8m (30.9.16: £64.5m). Fixed assets have increased by £5.6m from 31 March 2017, the majority of this being the remaining cost of the new warehouse at Yate and the start of the investment in the new warehouse at Leicester. Stock levels have remained stable throughout the period. Trade Receivables have continued to show good debtors day figures with there being another low bad debt charge of under 0.15% of turnover in the first six months. Cash and cash equivalents of £12.6m (30.9.16: £16.1m), remain strong with strong cash flows from operating activities.

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 £16.6m at 31 March 2017 to £8.5m.  This is largely due to updated membership data and an increase in the discount rate. Positive asset performance and changes to the mortality base tables also reduced the net liability. The triennial actuarial valuation as at 31 March 2017 is currently being calculated.

Interim dividend

The Board has declared an interim dividend of 4.5p per Ordinary Share (2016: 4.5p), which is covered 6.2 times (2016: 6.9 times).  The dividend is payable on 26 January 2018 to ordinary shareholders on the Company's Register at close of business on 5 January 2018.  The ex-dividend date will be 4 January 2018.

Current and future trading

The second half of 2017/18 has started well with growing revenues at slightly higher margins.  Trading conditions continue to be mixed, but despite the uncertainties in the economy, we and our customers remain busy. We are confident in the long term prospects of our key product drivers, and this underpins our plan to continue to invest in our business to further improve the offering to our customers.  Following the successful relocation of our Yate depot, we are looking forward to a relocation of our Wigston depot to a site closer to the motorway network in Leicester ahead of schedule in January 2018.

Nick Latham

Chairman

30 November 2017

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:  [phone]
Nick Latham, Chairman
David Dunmow, Finance Director
Northland Capital Partners Limited  Nominated Adviser and Broker	Tel:  [phone]
Matthew Johnson / Edward Hutton (Corporate Finance) Bob Pountney / John Howes (Corporate Broking)

JAMES LATHAM PLC
CONSOLIDATED INCOME STATEMENT
For the six months to 30 September 2017
	Six months to 30 Sept. 2017 unaudited	Six months to 30 Sept. 2016 unaudited	Year to                31 March 2017 audited
	£000	£000	£000
Revenue	107,335	100,334	198,808
Cost of sales (including warehouse costs)	(88,810)	(81,582)	(162,709)
Gross profit	18,525	18,752	36,099
Selling and distribution costs	(8,391)	(7,889)	(15,457)
Administrative expenses	(3,178)	(3,027)	(6,463)
Operating profit	6,956	7,836	14,179
Finance income	15	33	56
Finance costs	(248)	(209)	(408)
Profit before tax	6,723	7,660	13,827
Tax expense	(1,262)	(1,545)	(2,846)
Profit after tax attributable to owners of the parent company	5,461	6,115	10,981
Earnings  per ordinary share (basic)	27.8p	31.2p	56.0p
Earnings  per ordinary share (diluted)	27.7p	31.1p	55.8p
All results relate to continuing operations.

JAMES LATHAM PLC
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
For the six months to 30 September 2017
	Six months to 30 Sept. 2017 unaudited	Six months to 30 Sept. 2016 unaudited	Year to                31 March 2017 audited
	£000	£000	£000
Profit after tax	5,461	6,115	10,981
Other Comprehensive income
Actuarial gains/(losses) on defined benefit pension scheme	8,515	(13,313)	(7,543)
Deferred tax relating to components of other comprehensive income	(1,430)	2,396	1,362
Other comprehensive income for the period, net of tax	7,085	(10,917)	(6,181)
Total comprehensive income, attributable to owners of the parent company	12,546	(4,802)	4,800

JAMES LATHAM PLC
CONSOLIDATED BALANCE SHEET
At 30 September 2017
	As at 30 Sept. 2017 unaudited	As at 30 Sept. 2016 unaudited	As at 31 March 2017 audited
	£000	£000	£000
ASSETS
Non-current assets
Goodwill	237	237	237
Intangible assets	1	89	1
Property, plant and equipment	31,939	25,315	26,312
Deferred tax asset	1,546	4,245	2,904
Total non-current assets	33,723	29,886	29,454
Current assets
Inventories	35,915	35,065	35,508
Trade and other receivables	43,523	38,003	40,076
Cash and cash equivalents	12,585	16,102	17,246
Non-current assets held for sale	641	-	-
Total current assets	92,664	89,170	92,830
Total assets	126,387	119,056	122,284
Current liabilities
Trade and other payables	28,961	25,730	27,063
Current tax payable	1,332	1,590	1,517
Total current liabilities	30,293	27,320	28,580
Non-current liabilities
Interest bearing loans and borrowings	987	987	987
Retirement and other benefit obligation	8,470	23,208	16,625
Other payables	320	377	349
Deferred tax liabilities	2,485	2,686	2,485
Total non-current liabilities	12,262	27,258	20,446
Total liabilities	42,555	54,578	49,026
Net assets	83,832	64,478	73,258
Capital and reserves
Issued capital	5,040	5,040	5,040
Share-based payment reserve	153	70	108
Own shares	(180)	(344)	(291)
Capital reserve	3	3	3
Retained earnings	78,816	59,709	68,398
Total equity attributable to shareholders of the parent company	83,832	64,478	73,258

JAMES LATHAM PLC
CONSOLIDATED CASH FLOW STATEMENT
For the six months to 30 September 2017
	Six months to 30 Sept 2017 unaudited	Six months to 30 Sept 2016 unaudited	Year to                31 March 2017 audited
	£000	£000	£000
Net cash flow from operating activities
Cash generated from operations	6,155	6,665	11,902
Interest paid	(2)	(2)	(2)
Income tax paid	(1,517)	(1,376)	(2,646)
Net cash inflow from operating activities	4,636	5,287	9,254
Cash flows from investing activities
Interest received and similar income	15	33	56
Purchase of property, plant and equipment	(7,163)	(4,035)	(6,045)
Proceeds from sale of property, plant and equipment	19	41	122
Net cash outflow from investing activities	(7,129)	(3,961)	(5,867)
Cash flows before financing activities
Equity dividends paid	(2,129)	(2,017)	(2,894)
Preference dividend paid	(39)	(39)	(79)
Net cash outflow from financing activities	(2,168)	(2,056)	(2,973)
(Decrease)/increase in cash and cash equivalents for the period	(4,661)	(730)	414
Cash and cash equivalents at beginning of the period	17,246	16,832	16,832
Cash and cash equivalents at end of the period	12,585	16,102	17,246

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 2016 (audited)	5,040	56	(441)	3	66,525	71,183
Profit for the period	-	-	-	-	6,115	6,115
Other comprehensive income:
Actuarial loss on defined benefit pension scheme	-	-	-	-	(13,313)	(13,313)
Deferred tax relating to components of other comprehensive income	-	-	-	-	2,396	2,396
Total comprehensive income for the period	-	-	-	-	(4,802)	(4,802)
Transaction with owners:
Dividends	-	-	-	-	(2,017)	(2,017)
Exercise of options	-	(3)	-	-	3	-
Change in investment in ESOP shares	-	-	97	-	-	97
Share-based payment expense	-	17	-	-	-	17
Total transactions with owners	-	14	97	-	(2,014)	(1,903)
Balance at 30 September 2016 (unaudited)	5,040	70	(344)	3	59,709	64,478
Profit for the period	-	-	-	-	4,866	4,866
Other comprehensive income:
Actuarial gain on defined benefit pension scheme	-	-	-	-	5,770	5,770
Deferred tax relating to components of other comprehensive income	-	-	-	-	(1,034)	(1,034)
Total comprehensive income for the period	-	-	-	-	9,602	9,602
Transactions with owners:
Dividends	-	-	-	-	(877)	(877)
Exercise of options	-	(16)	-	-	16	-
Write down on conversions of ESOP shares	-	-	52	-	(52)	-
Change in investment in ESOP shares	-	-	1	-	-	1
Share-based payment expense	-	54	-	-	-	54
Total transactions with owners	-	38	53	-	(913)	(822)
Balance at 31 March 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
Transactions with owners:
Dividends	-	-	-	-	(2,129)	(2,129)
Exercise of options	-	(3)	-	-	3	-
Write down on conversions of ESOP shares	-	-	2	-	(2)	-
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

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 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 2018 and on the basis of the accounting policies to be used in those financial statements.  The figures for the year ended 31 March 2017 are extracted from the statutory accounts of the group for that period.
2.  The directors propose an interim dividend of 4.5p per ordinary share which will absorb £880,000 (2017: 4.5p absorbing £880,000), payable on 26 January 2018 to shareholders on the Register at the close of business on 5 January 2018. The ex-dividend date is 4 January 2018.
3. This half yearly report does not constitute financial statutory accounts within the meaning of section 434 of the Companies Act 2006. The statutory accounts for the year ended 31 March 2017 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 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 year attributable to ordinary shareholders by the weighted average number of ordinary shares outstanding during the year.
	Six months to 30 Sept 2017 unaudited	Six months to 30 Sept 2016 unaudited	Year to 31 March 2017 audited
	£000	£000	£000
Net profit attributable to ordinary shareholders	5,461	6,115	10,981
	Number '000	Number '000	Number '000
Weighted average share capital	19,629	19,590	19,601
Add: diluted effect of share capital options issued	108	85	82
Weighted average share capital for diluted earnings per ordinary share calculation	19,737	19,675	19,683

5.  Net cash flow from operating activities
	Six months to 30 Sept 2017 unaudited	Six months to 30 Sept 2016 unaudited	Year to 31 March 2017 audited
Profit before tax	6,723	7,660	13,827
Adjustment for finance income and expenditure	233	176	352
Depreciation and amortisation	885	829	1,822
Profit on disposal of property, plant and equipment	(9)	(35)	(95)
Write down of intangible asset	-	-	86
Increase in inventories	(407)	(1,662)	(2,105)
Increase in receivables	(3,447)	(2,715)	(4,788)
Increase in payables	1,867	2,228	3,536
Own shares non cash amounts	109	97	98
Retirement benefits non cash amounts	153	70	(902)
Share-based payments non cash amounts	48	17	71
Cash generated from operations	6,155	6,665	11,902
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 [e-mail]

 

END

 

 

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