Final Results

RNS Number : 5989R
Latham(James) PLC
01 July 2020
 

James Latham PLC

 

("James Latham" or the "Company")

 

Final Results

 

Chairman's statement

 

I am pleased to report good trading results for the financial year to 31 March 2020

 

Revenue for the financial year to 31 March 2020 was £247.1m, up 5.1% on last year's £235.1m. Like for like volumes increased by 1.8%, with the growth mainly on delivered business from our own warehouses, with a reduction in direct volumes shipped from the ports or from the manufacturers. The cost price of our products steadily fell throughout the year, ending the year 3.3% lower than the comparative twelve months. Abbey Wood in Ireland has been successfully integrated into the Lathams business and is now starting to provide a useful contribution to the Group's results.

 

Gross profit for the financial year to 31 March 2020 was 17.6% compared with 17.2% in the previous financial year. This figure includes warehouse costs, which have increased due to extended working hours with four of our depots now working 24 hours a day and further investment in our racking systems.

 

Profit before tax is £15.7m, up £0.4m on last year's £15.3m. Profit after tax for the year is £12.5m, up from last year's £12.4 m

 

Earnings per share is 63.1p (2019: 63.1p). Adjusted earnings per ordinary share (see Note 5), adjusted for the effect on the introduction of IFRS 16 on Leasing this year and the previous year's results of the property profit and the one off cost relating to Guaranteed Minimum Pensions were 64.0p (2019: 61.6p) an increase of 3.9%.

 

As at 31 March 2020 net assets have increased to £104.3m (2019: £98.0m). We have adopted IFRS 16 on Leasing in these results, which has had an insignificant effect on profit before. Non current assets have increased by £7.5m from 31 March 2019. £4.9m of this increase relates to the creation of a new asset class of Right of Use Assets relating to the introduction of IFRS 16 on Leasing. In addition we acquired Dresser Mouldings (Rochdale) Ltd for cash consideration of £1.0m, and have also invested £1.0m in redeveloping the Gateshead warehouse. Inventory levels have increased to £44.3m from £42.4m last year. Trade receivables at the year end were £4.4m higher than the previous year as we saw a reduction in cash received at the end of March due to the COVID-19 pandemic. However trade receivables have now returned close to normal levels. There was another low bad debt charge of 0.20% of turnover for the year. Cash and cash equivalents of £17.0m (2019: £15.5m), remain strong with good cash flows from operating activities.

 

At 31 March 2020 the deficit of the defined benefit scheme under IAS19 (revised) was £11.8m, up £3.1m compared with £8.7m last year. The calculation of the pension deficit remains very sensitive to changes in assumptions, and was affected by the reduction in market values of investments at the end of March.

 

Final dividend

 

The Board has declared a final dividend of 10.0p per Ordinary Share (2019: 12.9p). The dividend is payable on 4 September 2020 to ordinary shareholders on the Company's register at close of business on 7 August 2020. The ex-dividend date will be 6 August 2020. The total dividend per ordinary share of 15.5p for the year (2019: 17.9p) is covered 4.1 times by earnings (2019: 3.5 times). The board considers this level of dividend to be prudent given the balance between the good results achieved in the year to 31 March 2020 and the difficult market conditions experienced during the first quarter of the current financial year caused by the COVID-19 pandemic.

 

Current and future trading

 

The board responded quickly and decisively to protect the business and the employees from COVID-19, with quick action to reduce costs where possible, manage the stock and preserve cash. COVID-19 has had a considerable affect on the start of our trading year. We remained open at most of our distribution sites to support NHS projects and other essential services, as well as servicing our customers that managed to remain open. April was a particularly challenging month with sales at 40% of April 2019 sales. We have seen more customers coming back to work throughout May, with positive trends on numbers of orders taken and total number of trading customers, with sales at 60% of May 2019 sales. This positive trend is continuing in June, and sales are expected to be 80% of June 2019 sales. I have been incredibly pleased at how our staff have managed to work through this challenging period, and the resilience of the business. The skill of our senior staff with the support of the board has undoubtedly limited the negative impact of COVID-19 on the business. The full impact of the virus and the effect on the wider economy are impossible to predict at this stage.

 

Development Strategy

 

The board believes that there are plenty of opportunities to develop and grow our business. The strength of the business will allow us to avoid the worst of any potential downturn in the economy and seize on any opportunities to further develop the business. We will continue to look to grow the business through any suitable acquisitions to support key market sectors and also identify new products in market sectors where we are focussing our efforts. We will continue to invest in our warehouses and extend the working day at our depots to ensure that we meet the future delivery needs of our existing and new customers. Our focus will be on completing the Gateshead site development, and a significant racking project at our Thurrock facility. We have also fast tracked our on line presence project, and the use of technology as we look to drive more efficiencies into our business, to ensure we are in the best place possible to deal with the future. There are clearly challenges as we enter a post Brexit and COVID-19 world, but the board remains confident that the Company is in a position of strength which will allow us to plan for a positive future.

 

 

 

 

Nick Latham

Chairman

30 June 2020

 

 

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

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 year to 31 March 2020


Audited

Audited

 

Year to 31 March

 2020

Year to 31 March 2019


£000

£000

 



Revenue

247,100

235,132

 



Cost of sales (including warehouse costs)

(203,656)

(194,686)




Gross profit

43,444

40,446




Selling and distribution costs

(19,251)

(18,082)

Administrative expenses

(8,196)

(7,896)

Operating Profit

15,997

 



Profit on disposal of property

-

1,052

Finance income

82

71

Finance costs

(417)

(256)

 

 

 

Profit before tax

15,662

15,335

 

 

 

Tax expense

(3,181)

(2,913)

 

 

 

Profit after tax attributable to owners of the parent company

12,481

12,422

 

 

 

Earnings per ordinary share (basic)

63.1p

63.1p

Earnings per ordinary share (diluted)

63.0p

63.0p

 

All results relate to continuing operations.



 

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

For the year to 31 March 2020


Audited

Audited


2020
2019


£000

£000

Profit after tax attributable to owners of the parent company

12,481

12,422




Other comprehensive income



Actuarial loss on defined benefit pension scheme

(4,823)

(1,360)

Deferred tax relating to components of other comprehensive income

 

916

 

314

Foreign translation gain/(charge)

80

(31)

Other comprehensive income for the year, net of tax

(3,827)

(1,077)

Total comprehensive income attributable to owners of the parent company

 

8,654

 

11,345



JAMES LATHAM PLC    COMPANY REGISTRATION NUMBER 65619

CONSOLIDATED BALANCE SHEET

At 31 March 2020


Audited

Audited


2020

2019

 

£000

£000

Assets



Non-current assets



Goodwill

872

523

Other intangible assets

1,822

1,989

Property, plant and equipment

35,952

34,159

Right-of-use-assets

4,895

-

Deferred tax asset

2,258

1,577

Total non-current assets

45,799

38,248

 



Current assets



Inventories

44,288

42,350

Trade and other receivables

47,046

42,613

Cash and cash equivalents

16,950

15,541

Total current assets

108,284

100,504

Total assets

154,083

138,752

 

 

 

Current liabilities



Lease liabilities

1,178

-

Trade and other payables

28,686

27,113

Tax payable

-

1,193

Total current liabilities

29,864

28,306




Non-current liabilities



Interest bearing loans and borrowings

592

597

Lease liabilities

3,857

-

Retirement and other benefit obligation

11,812

8,714

Other payables

392

413

Deferred tax liabilities

3,289

2,762

Total non-current liabilities

19,942

12,486

Total liabilities

49,806

40,792




Net assets

104,277

97,960




Capital and reserves



Issued capital

5,040

5,430

Share-based payment reserve

25

259

Own shares

(619)

(923)

Capital reserve

398

3

Retained earnings

99,433

93,191

Total equity attributable to equity shareholders of the parent company

 

104,277

 

97,960

 

The Company's profit for the year was £2,971,000 (2019: £679,000).

JAMES LATHAM PLC
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

Attributable to the owners of the parent company

 


 

Issued capital

Share-based payment reserve

 

Own shares

 

Capital reserve

 

Retained

earnings

 

Total

Equity


£'000

£'000

£'000

£'000

£'000

£'000

Balance at 1 April 2018 - audited

5,040

184

(529)

3

85,091

89,789

Profit for the year

-

-

-

-

12,422

12,422

Other comprehensive income:







Actuarial loss on defined benefit pension scheme

-

-

-

-

(1,360)

(1,360)

Deferred tax relating to components of other comprehensive income

-

-

-

-

314

314

Foreign translation charge

-

-

-

-

(31)

(31)

Total comprehensive income for the year

-

-

-

-

11,345

11,345

Transactions with owners:







Dividends

-

-

-

-

(3,363)

(3,363)

Exercise of options

-

(19)

-

-

19

-

Deferred tax on share options

-

-

-

-

31

31

Transfer of treasury shares

-

-

(82)

-

82

-

Write down on conversion of ESOP shares

-

-

14

-

(14)

-

Purchase of preference shares

390

-

(478)

-

-

(88)

Change in investment in ESOP shares

-

-

152

-

-

152

Share-based payment expense

-

94

-

-

-

94

Total transactions with owners

390

75

(394)

-

(3,245)

(3,174)

Balance at 31 March 2019 - audited

5,430

259

(923)

3

93,191

97,960

Change in accounting policy (IFRS16)

-

-

-

-

291

291

Deferred tax on IFRS 16

-

-

-

-

(55)

(55)

As at 1 April 2019 (as restated)

5,430

259

(923)

3

93,427

98,196

Profit for the year

-

-

-

-

12,481

12,481

Other comprehensive income:







Actuarial loss on defined benefit pension scheme

-

-

-

-

(4,823)

(4,823)

Deferred tax relating to components of other comprehensive income

-

-

-

-

916

916

Foreign translation charge

-

-

-

-

80

80

Total comprehensive income for the year

-

-

-

-

8,654

8,654

Transactions with owners:







Dividends

-

-

-

-

(3,633)

(3,633)

Exercise of options

-

(253)

(261)

-

1,463

949

Deferred tax on share options

-

(45)

-

-

-

(45)

Purchase of preference shares

5

-

-

-

-

5

Cancellation of preference share

(395)

-

478

395

(478)

-

Change in investment in ESOP shares

-

-

87

-

-

87

Share-based payment expense

-

64

-

-

-

64

Total transactions with owners

(390)

(234)

304

395

(2,648)

(2,573)

Balance at 31 March 2020 - audited

5,040

25

(619)

398

99,433

104,277



JAMES LATHAM PLC

CONSOLIDATED CASH FLOW STATEMENT
For the year to 31 March 2020


Audited

Audited


2020

2019


£000

£000

Net cash flow from operating activities



Cash generated from operations

13,528

10,115

Interest paid

(3)

(8)

Income tax paid

(3,851)

(2,651)

Net cash inflow from operating activities

9,674

7,456

 



Cash flows from investing activities



Interest received and similar income

82

71

Acquisition of businesses net of cash and cash equivalents acquired

(578)

(1,604)

Purchase of property, plant and equipment

(3,886)

(2,362)

Proceeds from sale of property, plant and equipment

 

152

 

1,743

Net cash outflow from investing activities

(4,230)

(2,152)

 



Cash flows from financing activities



Sale of treasury shares

1,036

152

Purchase of treasury shares

-

(478)

Lease liability payments

(1,390)

-

Equity dividends paid

(3,633)

(3,363)

Preference dividend paid

(48)

(63)

Net cash outflow from financing activities

(4,035)

(3,752)

Increase in cash and cash equivalents for the year

 

1,409

 

1,552

Cash and cash equivalents at beginning of the year

 

15,541

 

13,989

Cash and cash equivalents at end of the year

16,950

15,541

 

 

 

 

 

 

 



JAMES LATHAM PLC

 

Notes to the audited preliminary financial information

 

1.  The preliminary financial information presented in this report is audited and has been prepared in accordance with the recognition and measurement principles of International Financial Reporting Standards ('IFRS') as adopted by the EU   set out in the Group accounts for the years ended 31 March 2019 and 31 March 2020, except for IFRS 16 'Leases" in respect of 31 March 2019, and does not contain all the information to be disclosed in financial statements prepared in accordance with IFRS.

 

2.  The directors propose a final dividend of 10.0p per ordinary share, which will absorb £1,990,000 (2019: 12.9p absorbing £2,537,000), payable on 4 September 2020 to shareholders on the Register at the close of business on 7 August 2020.  The ex-dividend date is 6 August 2020.

 

The figures for the year ended 31 March 2019 and as at 31 March 2020 have been extracted from the audited statutory accounts for that year. The statutory accounts for the year ended 31 March 2020 have yet to be delivered to the Registrar of Companies and have been prepared in accordance with IFRS as adopted by the EU and those parts of the Companies Act 2006 that remain applicable to companies reporting under IFRS.  The preliminary financial information does not constitute statutory accounts within the meaning of Section 434 of the Companies Act 2006, and does not contain all the information required to be disclosed in a full set of IFRS financial statements.

 

Statutory accounts for the year ended 31 March 2020 will be delivered to the Registrar of Companies and sent to Shareholders shortly.  The Annual Report and Accounts may also be viewed in due course on James Latham plc's website at www.lathams.co.uk

 

The audit report on the statutory financial statements for the year ended 31 March 2020 is unqualified and does not include reference to any matters to which the auditor drew attention by way of emphasis without qualifying the report  and does not contain any statement under Section 498(2) or (3) of the Companies Act 2006.

 

Statutory accounts for the year ended 31 March 2019 have been filed with the Registrar of Companies.  The auditor's report on those accounts was unqualified and did not include 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) and (3) of the Companies Act 2006.

 

3.  This announcement was approved and authorised for issue by the Board of Directors on 30 June 2020.

 

4.  Net cash flow from operating activities



Year to 31 March 2020 audited

Year to 31 March 2019 audited



£000

£000





Profit before tax


15,662

15,335

Adjustment for finance income and cost


335

185

Depreciation, amortisation and impairment


3,790

2,036

Profit on disposal of property, plant and equipment


(121)

(1,079)

Increase in inventories


(1,659)

(2,282)

Increase in receivables


(3,963)

(1,105)

Increase)/(decrease) in payables


1,244

(1,825)

Retirement benefits non cash amounts


(1,904)

(1,213)

Translation non cash amounts


80

(31)

Share-based payments non cash amounts


64

94

Cash generated from operations


13,528

10,115





 



 

 

5.  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.

 


Year to 31 March 2020 audited

Year to 31 March 2019 audited


£000

£000




Net profit attributable to ordinary shareholders

12,481

12,422




GMP equalisation

746

Profit on disposal of property

(1,052)

IFRS16 Leases

186




Net profit attributable to ordinary shareholders adjusted for GMP equalisation cost, profit on disposal of property and IFRS16 Leases

 

12,667

12,116





Number '000

Number '000

Weighted average share capital

19,781

19,674

Add: diluted effect of share capital options issued

23

28

Weighted average share capital for diluted earnings per ordinary share calculation

19,804

19,702





 

  The earnings per share figure is shown on the Income statement. In the previous year, the earnings were stated after the profit on a disposal of property and GMP equalisation and in the current year, we have the effect of IFR16 leases. The figures below show the earnings per share if these 3 items were excluded to show a comparable figure:

 

Earnings  per ordinary share (basic, excluding GMP equalisation, profit on disposal of property and IFR16 Leases)

64.0p

61.6p




Earnings  per ordinary share (diluted, excluding GMP equalisation, profit on disposal of property and IFRS 16 Leases)

64.0p

61.5p

 

 

6.  The Annual General Meeting of James Latham plc will be held at Unit 1 Swallow Park, Finway Road, Hemel Hempstead, Herts, HP2 7QU on 2 September 2020 at 12.30pm.

 

Impact of COVID-19

Due to the current restrictions imposed due to the COVID-19 pandemic, the Annual General Meeting this year will not be open for shareholders to attend in person. To ensure that your vote counts, please submit your proxy form appointing the Chairman as your proxy. Questions can be submitted in advance to plc@lathams.co.uk and these will be answered during the meeting. Full voting details and answers to questions will be posted on the Investor Page at www.lathams.co.uk/investors .


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