Half-year Report

Latham(James) PLC
30 November 2023
 

James Latham plc

 ("James Latham" or the "Company")

 

HALF YEARLY RESULTS FOR THE PERIOD ENDED 30 SEPTEMBER 2023

 

Chairman's statement

 

Unaudited results for the six months trading to 30 September 2023

 

Revenue for the six months ended 30 September 2023 was £190.9m, down 10.3% on £212.8m for the same period last year.  Cost prices on both timber and panels have slowly fallen throughout the first half of the year but they are now relatively stable and there are currently few signs of price weakness.  Sales volumes have also remained at similar levels to the same period last year. We have seen a change in the product mix of our sales, with some of our customers moving to cheaper alternative products to counter the effect of high inflation, which is the main reason for the reduction in revenues. 

 

Gross profit percentage, which includes warehouse costs, for the six month period ended 30 September 2023 was 16.8% compared with 19.4% in the comparative six months.  Increased competition in weaker market conditions has led to the gross profit percentage dipping slightly below the long term average of 17.5%.

 

Overheads have been well controlled during the six months, and despite the stubbornly high inflation rates, the overheads are slightly lower than the same period last year.

 

Operating profit was £14.5m, down £9m compared with £23.5m profit for the same period last year.  This reduction was anticipated as we return to normal trading conditions after the exceptional results of the last two years. Profit before tax was £16.4m compared with £23.7m for the same period last year.  The tax charge of £4.0m represents an effective rate of 24.6%, and reflects the increase in the UK basic rate of corporation tax.  Earnings per ordinary share were 61.5p compared with 95.6 p for the same period last year.

 

As at 30 September 2023 net assets are £203.8m (2022: £180.5m).  Inventory levels of £66.1m have reduced from £74.6m at the same period last year as supply chains have stabilised.  Trade and other receivables are also slightly down with bad debts remaining at a low figure.  Cash and cash equivalents have increased to £66.0m (2022: £36.9m) and we continue to take advantage of additional early settlement discount opportunities with our suppliers as well as generating improved interest receipts.

 

There is a surplus in the IAS19 valuation of the pension scheme at 30 September 2023 of £11.2m compared with £7.2m in the same period last year.  The triennial valuation at 31 March 2023 has been completed, and is showing a surplus of £10.0m and a funding level of 118%. This strong position has enabled the trustees to derisk their investments to reduce the volatility of the IAS19 valuation. In addition the deficit recovery funding payment of £3m a year will cease from 1 December 2023.

 

Interim dividend

 

The Board has declared an increased interim dividend of 7.75p per Ordinary Share (2022: 7.25p).  The dividend is payable on 26 January 2024 to ordinary shareholders on the Company's Register at close of business on 5 January 2024.  The ex-dividend date will be 4 January 2024.

 

Current and future trading

 

The second half of 2023/24 has started with similar volumes to the previous six month period to 30 September 2023, with similar margins. Cost prices of the majority of our products are stable at the moment, but we are mindful that the market in continental Europe is quiet at the moment, with European Panel manufacturers exporting more product to the UK, where the market is currently more robust. There remain significant cost pressures on all our manufacturers, so we expect any further price weakness to be limited.

 

Our customers still have reasonable order books, but there are still indications that some contracts are being postponed rather than cancelled. We are seeing a continued shift in our market sectors to more lower value products, where we have gained market share, and we expect this trend to continue as customers look for more cost effective solutions.

 

The strength of our customer base and the diverse markets in which we operate will help us during the more challenging macroeconomic climate that we are all facing.



 

 

The board anticipates that the results for the year ended 31 March 2024 will be in line with market expectations.

 

 

Nick Latham

Chairman

30 November 2023

 

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: 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

Abigail Wayne (Corporate Broking)


 

 



 

 

 

 

 

 

 

JAMES LATHAM PLC




CONSOLIDATED INCOME STATEMENT








For the six months to 30 September 2023




 





Six months to 30 Sept. 2023 unaudited

Six months to 30 Sept. 2022 unaudited

Year to       31 March 2023  audited


 




£000

£000

£000


 



Revenue

190,882

212,797

408,370





Cost of sales (including warehouse costs)

(158,832)

(171,443)

(328,361)





Gross profit

32,050

41,354

80,009





Selling and distribution costs

(12,033)

(12,147)

(24,214)

Administrative expenses

(5,558)

(5,680)

(12,097)





Operating profit

14,459

23,527

43,698





Finance income

2,063

231

1,071

Finance costs

(126)

(98)

(258)





Profit before tax

16,396

23,660

44,511





Tax expense

(4,030)

(4,606)

(8,593)





Profit after tax attributable to owners of the parent company

12,366

19,054

35,918





Earnings per ordinary share (basic)

61.5p

95.6p

179.5p





Earnings per ordinary share (diluted)

61.4p

95.2p

179.2p









All results relate to continuing operations.




 



 

 

 

 

 

 

 

JAMES LATHAM PLC




 




CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME








For the six months to 30 September 2023




 





Six months to 30 Sept. 2023 unaudited

Six months to 30 Sept. 2022 unaudited

Year to    31 March 2023  audited


 




£000

£000

£000





Profit after tax

12,366

19,054

35,918

Other Comprehensive income




Actuarial gains on defined benefit pension scheme

1,982

3,242

1,407

Deferred tax relating to components of other comprehensive income

(495)

(1,080)

(632)

Foreign translation (charge)/credit

(64)

492

233

Other comprehensive income for the period, net of tax

1,423

2,654

1,008

Total comprehensive income, attributable to owners of the parent company

13,789

21,708

36,926

 



 

 

 

JAMES LATHAM PLC




CONSOLIDATED BALANCE SHEET








At 30 September 2023




 





As at 30 Sept. 2023 unaudited

As at 30 Sept. 2022 unaudited

As at 31 March 2023 audited


 




£000

£000

£000

ASSETS




Non-current assets




Goodwill

1,181

1,363

1,193

Intangible assets

1,236

1,403

1,319

Property, plant and equipment

37,841

37,278

37,440

Right-of-use-asset

5,438

3,995

5,817

Retirement benefit surplus

11,212

7,318

7,221

Deferred tax asset

53

134

-

Total non-current assets

56,961

51,491

52,990





Current assets




Inventories

66,052

74,588

67,489

Trade and other receivables

64,220

69,380

66,782

Cash and cash equivalents

65,958

36,939

62,609

Tax receivable

13

-

490

Total current assets

196,243

180,907

197,370









Total assets

253,204

232,398

250,360





Current liabilities




Lease liabilities

879

1,429

879

Trade and other payables

35,013

40,471

41,066

Current tax payable

-

268

-

Total current liabilities

35,892

42,168

41,945





Non-current liabilities




Interest bearing loans and borrowings

587

592

592

Lease liabilities

4,806

2,753

5,130

Deferred tax liabilities

8,124

6,369

7,118

Total non-current liabilities

13,517

9,714

12,840









Total liabilities

49,409

51,882

54,785

 




 




Net assets

203,795

180,516

195,575





Capital and reserves




Issued capital

5,040

5,040

5,040

Share-based payment reserve

152

438

124

Own shares

-

(708)

-

Capital reserve

398

398

398

Retained earnings

198,205

175,348

190,013





Total equity attributable to shareholders of the parent company

203,795

180,516

195,575



 

 

 

 

 

 

 

JAMES LATHAM PLC




 




CONSOLIDATED CASH FLOW STATEMENT








For the six months to 30 September 2023









Six months to 30 Sept 2023 unaudited

Six months to 30 Sept 2022 unaudited

Year to       31 March 2023  audited


 




£000

£000

£000

Net cash flow from operating activities




Cash generated from operations

13,197

11,744

43,864

Interest paid

(25)

(26)

(53)

Income tax paid

(3,094)

(4,043)

(7,498)

Net cash inflow from operating activities

10,078

7,675

36,313





Cash flows from investing activities




Interest received and similar income

1,697

127

822

Purchase of property, plant and equipment

(2,233)

(1,782)

(3,304)

Proceeds from sale of property, plant and equipment

27

56

72

Net cash outflow from investing activities

(509)

(1,599)

(2,410)





Cash flows before financing activities




Lease liability payments

(425)

(787)

(1,499)

Equity dividends paid

(5,789)

(5,380)

(6,825)

Purchase of own shares

(6)

-

-

Cash outflow from financing activities

(6,220)

(6,167)

(8,324)




Increase/(decrease) in cash and cash equivalents for the period

3,349

(91)

25,579





Cash and cash equivalents at beginning of the period

62,609

37,030

37,030





Cash and cash equivalents at end of the period

65,958

36,939

62,609

 

 



 

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 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

Transaction with owners:







Dividends

-

-

-

-

(5,379)

(5,379)

Deferred tax on share options

-

(37)

-

-

-

(37)

Change in investment in ESOP shares

-

-

165

-

-

165

Share-based payment expense

-

88

-

-

-

88

Total transactions with owners

-

51

165

-

(5,379)

(5,163)

Balance at 30 September 2022 (unaudited)

5,040

438

(708)

398

175,348

180,516

Profit for the period

-

-

-

-

16,864

16,864

Other comprehensive income:







Actuarial loss on defined benefit pension scheme

-

-

-

-

(1,835)

(1,835)

Deferred tax relating to components of other comprehensive income

-

-

-

-

448

448

Foreign translation charge

-

-

-

-

(259)

(259)

Total comprehensive income for the period

-

-

-

-

15,218

15,218

Transactions with owners:







Dividends

-

-

-

-

(1,446)

(1,446)

Exercise of options

-

(386)

1,397

-

369

1,380

Deferred tax on share options

-

(22)

-

-

-

(22)

Transfer to retained earnings

-

-

(524)

-

524

-

Change in investment in ESOP shares

-

-

(165)

-

-

(165)

Share-based payment expense

-

94

-

-

-

94

Total transactions with owners

-

(314)

708

-

(553)

(159)

Balance at 31 March 2023 (audited)

5,040

124

-

398

190,013

195,575

Profit for the period

-

-

-

-

12,366

12,366

Other comprehensive income:







Actuarial gain on defined benefit pension scheme

-

-

-

-

1,982

1,982

Deferred tax relating to components of other comprehensive income

-

-

-

-

(495)

(495)

Foreign translation charge

-

-

-

-

(64)

(64)

Total comprehensive income for the period

-

-

-

-

13,789

13,789

Transactions with owners:







Dividends

-

-

-

-

(5,789)

(5,789)

Exercise of options

-

(8)

-

-

8

-

Deferred tax on share options

-

(1)

-

-

-

(1)

Change in investment in ESOP shares

-

-


-

184

184

Share-based payment expense

-

37

-

-

-

37

Total transactions with owners

-

28

-

-

(5,597)

(5,569)

Balance at 30 September 2023 (unaudited)

5,040

152

-

398

198,205

203,795

 

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 2024. 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 2023 are extracted from the statutory accounts of the group for that period.


2. The directors propose an interim dividend of 7.75p per ordinary share which will absorb £1,560,000 (2022: 7.25p absorbing £1,445,000), payable on 26 January 2024 to shareholders on the Company's Register at the close of business on 5 January 2024. The ex-dividend date is 4 January 2024.


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 2023 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 2023 unaudited

Six months to 30 Sept 2022 unaudited

Year to 31 March 2023 audited


£000

£000

£000





Net profit attributable to ordinary shareholders

12,366

19,054

35,918






Number '000

Number '000

Number '000

Weighted average share capital

20,123

19,926

20,009

Add: diluted effect of share capital options issued

24

95

31

Weighted average share capital for diluted earnings per ordinary share calculation

20,147

20,021

20,040





5. Net cash flow from operating activities



Six months to 30 Sept 2023 unaudited

Six months to 30 Sept 2022 unaudited

Year to 31 March 2023 audited


£000

£000

£000





Profit before tax

16,396

23,660

44,511

Adjustment for finance income and expenditure

(1,937)

(133)

(813)

Depreciation and amortisation

2,272

2,091

4,173

Impairment

-

-

179

Loss/(profit) on disposal of property, plant and equipment

7

(51)

(46)

Decrease/(increase) in inventories

1,437

(358)

6,741

Decrease/(increase) in receivables

2,562

(1,048)

1,550

Decrease in payables

(5,934)

(9,652)

(8,167)

Retirement benefits non cash amounts

(1,643)

(2,853)

(4,446)

Share-based payments non cash amounts

37

88

182

Cash generated from operations

13,197

11,744

43,864


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 plc@lathams.co.uk

 

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