Half-year Report

RNS Number : 1626I

Latham(James) PLC

01 December 2022

 

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: [phone]
Nick Latham, Chairman
David Dunmow, Finance Director
SP Angel Corporate Finance LLP
Matthew Johnson / Charlie Bouverat (Corporate Finance)	Tel: [phone]
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
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
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
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
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 [e-mail]

 

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