Interim Results
Latham(James) PLC
05 December 2007
JAMES LATHAM PLC
INTERIM RESULTS FOR THE SIX MONTHS ENDED 30 SEPTEMBER 2007
Chairman's statement
I am very pleased to report an increase in pre-tax profit of 56% for the first
half year compared with the same period last year. The interim dividend has been
increased by 25%. In November the leased head office and warehouse at Hemel
Hempstead was purchased for £5.25m - the balance sheet remains strong.
Results
These results are the first to be presented under International Financial
Reporting Standards and previously reported figures have been restated. A full
reconciliation is shown in the notes accompanying this statement.
Sales for the 6 months to 30 September 2007 were £59,326,000 compared with
£49,072,000 for the same period last year, a 21% increase. The operating profit
rose by 56% to £4,209,000 compared with £2,690,000 last year. Pre-tax profit at
£4,578,000 was up 56% on last year's £2,936,000. Earnings per Ordinary Share are
16.0p (2006 9.8p).
Interim Dividend
The Board has declared an interim dividend of 2.5p per Ordinary Share (2006
2.0p), which is covered 6.4 times (2006 4.9 times). The dividend is payable on
24 January 2008 to Ordinary shareholders on the Company's Register at the close
of business on 4 January 2008. The ex-dividend date is 2 January 2008.
Six Months Trading to 30 September 2007.
After the strong trading performance last year, Lathams Ltd has performed well
in the six months to 30 September 2007. The Company, which distributes panel
products, hardwoods and softwoods, benefited from steady demand and higher
prices which helped increase both the volume of sales and margins. Volumes were
higher in the period July to September.
Current & Future Trading
The management accounts show good levels of trading in October and November -
however prices have dropped slightly on products that are not in short supply
and as a result margins have returned to their more usual levels. While demand
from our merchant customers has slowed, other customer groups continue to show
high demand levels. Trading conditions in terms of supply, demand and pricing
can change rapidly in this industry; we are monitoring the markets to be in a
good position to respond early to any adverse trends. The Company's strategy of
becoming less dependent on commodity products, where prices and margins are
prone to wide fluctuations, will be beneficial in what are becoming tougher
trading conditions.
The strong growth in the existing business has absorbed working capital. In
addition to this, plans to relocate two depots to larger premises are
progressing and we expect to announce the opening of a new site before the year
end.
Peter Latham
Chairman
5 December 2007
For Further Enquiries:
James Latham Plc
Peter Latham, Chairman Tel: 01442 849 100
David Dunmow, Finance Director Tel: 01442 849 100
Blue Oar Securities Plc
Mike Coe, Director, Corporate Finance Tel: 0117 933 0020
JAMES LATHAM PLC
CONSOLIDATED BALANCE SHEET
As at 30 September 2007
As at 30 Sept As at 30 Sept As at 31 March
2007 unaudited 2006 unaudited 2007 unaudited
Assets £000 £000 £000
Non-current assets
Property, plant and equipment 11,323 11,296 11,226
Goodwill 237 395 237
Other receivables 500 4,419 500
Deferred tax assets - 866 155
Total non-current assets 12,060 16,976 12,118
Current assets
Inventories 18,178 16,956 16,405
Trade receivables 23,690 19,887 20,707
Other current assets 7,320 7,729 6,733
Cash and cash equivalents 7,906 1,251 8,872
Total current assets 57,094 45,823 52,717
Total assets 69,154 62,799 64,835
Current liabilities
Trade and other payables 19,563 15,957 17,407
Current portion of interest bearing loans and borrowings 735 723 737
Current tax payable 1,199 144 205
Total current liabilities 21,497 16,824 18,349
Non-current liabilities
Interest bearing loans and borrowings 1,052 1,701 1,419
Retirement benefit obligation 240 4,866 3,033
Other payables 227 140 245
Long term provisions - 249 108
Deferred tax liabilities 683 - -
Total non-current liabilities 2,202 6,956 4,805
Total liabilities 23,699 23,780 23,154
Net assets 45,455 39,019 41,681
Capital and reserves
Issued capital 5,040 5,040 5,040
Share-based payment reserve 75 43 56
Capital reserve 3 3 3
Own shares (349) (385) (170)
Accumulated profits 40,686 34,318 36,752
Total equity 45,455 39,019 41,681
The 30 September 2006 and 31 March 2007 results have been restated following the
adoption of International Financial Reporting Standards ('IFRS') - see note 1.
JAMES LATHAM PLC
CONSOLIDATED INCOME STATEMENT
For the six months to 30 September 2007
Six months to Six months to Year to
30 Sept 2007 30 Sept 2006 31 March 2007
unaudited unaudited unaudited
£000 £000 £000
Revenue 59,326 49,072 99,662
Cost of sales (including warehouse costs) (48,323) (40,281) (82,031)
Gross profit 11,003 8,791 17,631
Selling and distribution costs (4,423) (4,049) (8,231)
Administration expenses (2,390) (2,149) (4,614)
Other operating income 19 97 208
(6,794) (6,101) (12,637)
Operating Profit 4,209 2,690 4,994
Finance income 424 389 861
Finance costs (55) (143) (227)
Profit before tax 4,578 2,936 5,628
Income tax expense (1,388) (985) (1,533)
Profit after tax 3,190 1,951 4,095
Earnings per ordinary share (basic) 16.0p 9.8p 20.6p
Earnings per ordinary share (diluted) 15.9p 9.8p 20.6p
The 30 September 2006 and 31 March 2007 results have been restated following the
adoption of International Financial Reporting Standards ('IFRS') - see note 1.
JAMES LATHAM PLC
CONSOLIDATED CASH FLOW STATEMENT
For the six months to 30 September 2007
Six months to Six months to Year to
30 Sept 2007 30 Sept 2006 31 March 2007
unaudited unaudited unaudited
£000 £000 £000
Net cash flow from operating activities
Cash inflow/(outflow) from operating activities 64 (1,341) 3,240
Special contribution to pension fund - (4,500) (5,000)
Interest paid (19) (135) (163)
Income tax paid (336) (598) (757)
Preference dividend paid (39) (39) (79)
Net cash outflow from operating activities (330) (6,613) (2,759)
Cash flows from investing activities
Interest received and similar income 276 142 889
Purchase of property, plant and equipment (313) (76) (186)
Proceeds from sale of property, plant and equipment 7 - 3,946
Proceeds from sale of investment in subsidiary undertaking 1,019 9,281 9,228
Net cash from investing activities 989 9,347 13,877
Cash flows before financing activities
Bank loans repaid during the period (357) (1,857) (2,214)
Finance leases repaid during the period (13) (6) (23)
Equity dividend paid (1,076) (880) (1,278)
Purchase of own shares (188) (168) (130)
Proceeds of sale of own shares 9 29 -
Net cash outflow from financing activities (1,625) (2,882) (3,645)
(Decrease) increase in cash and cash equivalents for the
period (966) (148) 7,473
Cash and cash equivalents at the beginning of the period 8,872 1,399 1,399
Cash and cash equivalents at the end of the period 7,906 1,251 8,872
The 30 September 2006 and 31 March 2007 results have been restated following the
adoption of International Financial Reporting Standards ('IFRS') - see note 1.
JAMES LATHAM PLC
CONSOLIDATED STATEMENT OF TOTAL RECOGNISED INCOME AND EXPENSE
For the six months to 30 September 2007
Six months to Six months to Year to
30 Sept 2007 30 Sept 2006 31 March 2007
unaudited unaudited unaudited
£000 £000 £000
Profit after tax 3,190 1,951 4,095
Actual return less expected return on pension scheme assets (481) (1,029) (114)
Experience gains and losses arising from pension scheme
liabilities - - (1)
Changes in assumptions underlying the present value of
pension scheme liabilities 3,111 313 673
Movement in deferred tax relating to actuarial (gain) loss on
pension scheme (811) 215 (167)
Total recognised income and expense for the period 5,009 1,450 4,486
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
For the six months to 30 September 2007
Six months to Six months to Year to
30 Sept 2007 30 Sept 2006 31 March 2007
unaudited unaudited unaudited
£000 £000 £000
Profit attributable to shareholders 3,190 1,951 4,095
Dividends (1,076) (880) (1,278)
2,114 1,071 2,817
Other recognised gains and losses relating to the period 1,820 (501) 391
Change in investment in own shares (179) (134) (123)
Change in Share-based payment reserve 19 20 33
Movement in the period 3,774 456 3,118
Opening shareholders' funds 41,681 38,563 38,563
Closing shareholders' funds 45,455 39,019 41,681
JAMES LATHAM PLC
Notes to the Half Yearly Report
1. The results presented in this report are unaudited. James Latham Plc
has adopted International Financial Reporting Standards ('IFRS') this year,
having previously applied UK accounting standards. This half yearly report is
the first that the company has prepared under IFRS and they have been prepared
in accordance with the IFRS accounting policies that management expect to apply
in the 31 March 2008 IFRS-compliant full financial statements. The comparative
results for the six months ended 30 September 2006 and the year ended 31 March
2007 have been restated accordingly. Reconciliations from the previously stated
UK GAAP financial information together with explanations and the revised
accounting policies are set out in note 5.
2. The directors propose an interim dividend of 2.5p per ordinary share
which will absorb £504,000 (2006: 2.0p absorbing £403,000), payable on 24
January 2008 to shareholders on the Register at the close of business on 4
January 2008. The ex-dividend date is 2 January 2008.
3. This half yearly report does not constitute financial statutory
accounts within the meaning of section 240 of the Companies Act 1985. Statutory
accounts for the year ended 31 March 2007 (prepared in accordance with UK GAAP)
were prepared and filed with the Registrar of Companies and received an
unqualified audit report and did not contain a statement under section 237 (2)
or (3) of the Companies Act 1985.
4. As explained in note 1, the group will be presenting its financial
statements in accordance with IFRS for the first time in the 31 March 2008 full
year financial statements. Set out below are the accounting policies that differ
from the full financial statements prepared at 31 March 2007 that management
expect to apply in the 31 March 2008 IFRS-compliant full year financial
statements.
Intangible assets - goodwill
Following initial recognition, goodwill is measured at cost less any accumulated
impairment losses. For the purposes of impairment testing, goodwill is allocated
to the group's cash-generating units that are expected to benefit from the
synergies of the combination, irrespective of whether other assets or
liabilities of the group are assigned to those units.
Goodwill is reviewed for impairment annually or more frequently if there is an
indication of impairment. Impairment for goodwill is determined by assessing the
recoverable amount of the cash-generating unit to which the goodwill relates.
Where the recoverable amount of the cash-generating unit is less than the
carrying value of the cash-generating unit to which the goodwill has been
allocated, an impairment loss is recognised. Impairment losses to goodwill
cannot be reversed in future periods.
Cash and cash equivalents
Cash and cash equivalents comprise cash at banks and in hand and short term
deposits with an original maturity of 3 months or less.
For the purpose of the consolidated cash flow statement, cash and cash
equivalents consist of cash and cash equivalents as defined above, net of
outstanding bank overdrafts.
Leases
Leases are classified as finance leases whenever the terms of the lease transfer
significantly all the risks and rewards of ownership of the lessee. All other
leases are classified as operating leases.
Finance leases are capitalised on commencement of the lease at the lower of the
fair value of the asset and the present value of the minimum lease payments.
Each payment is allocated between the liability and the finance charges so as to
achieve a constant rate of interest on the finance balance outstanding. The
rental obligations, net of finance charges, are included in trade and other
payables.
The finance charges are charges to the income statement over the lease period so
as to produce a constant periodic rate of interest on the remaining balance of
the liability for each period.
Payments under operating leases are charged to the income statement on a
straight-line basis of the term of the lease.
Taxation
The tax expense in the income statement represents the sum of tax currently
payable and deferred tax.
Deferred tax is the tax expected to be payable or recoverable on differences
between the carrying amounts of the assets and liabilities in the financial
statements and the corresponding tax bases used in the computation of taxable
profit, and is accounted for using the balance sheet liability method. Deferred
tax liabilities are generally recognised for all taxable temporary differences
and deferred tax assets are recognised to the extent that it is likely that
taxable profits will be available, against which deductible temporary
differences can be utilised. Such assets and liabilities are not recognised if
the temporary difference arises from goodwill or from the initial recognition
(other than in a business combination) of other assets and liabilities in a
transaction that affects neither the tax profit nor the accounting profit.
The carrying value of deferred tax assets is reviewed at each balance sheet date
and reduced to the extent that it is no longer probable that sufficient taxable
profits will be available to allow all or part of the asset to be recovered.
Deferred tax is calculated at the tax rate that is expected to apply in the
period when the liability is settled or an asset is realised. Deferred tax is
charged or credited to the income statement, except when it relates to items
charged or credited directly to equity, in which case the deferred tax is also
dealt with in equity.
5. Explanation of transition to IFRS
The reconciliations of equity at 1 April 2006 (date of transition to IFRS), at
31 March 2007 (date of last UK GAAP financial statements) and at 30 September
2006 have been included below to enable a comparison of the 2007 half yearly
figures with those published in the corresponding period of the previous year.
In addition there is also a reconciliation of the UK GAAP profit for the year
ended 31 March 2007 and the six months ended 30 September 2006 to the profit
restated under IFRS.
The significant changes as a result of the transition to IFRS and of adopting
the IFRS group accounting policies are described below.
a. FRS 3 Business combinations
IFRS 3 prohibits the amortisation of goodwill. The standard requires
goodwill to be carried at cost less impairment. Goodwill has been restated at
the original value of the business combination at 1 April 2006 and any
amortisation previously charged has been reversed. As permitted by IFRS1,
business combinations prior to 1 April 2006 have not been restated.
b. IAS 12 Income taxes
IAS 12 requires entities to calculate deferred taxation based on temporary
differences, which are defined as the difference between the carrying amount of
assets/liabilities and their tax base. The increase in deferred tax liabilities
as a result of the transition to IFRS is from the potential gain on the
revaluation of fixed assets, the potential gain on the roll-over relief claimed
on certain fixed assets and the removal of the discount applied to the deferred
tax liability under UK GAAP
c. IAS 16 Property, plant and equipment
In accordance with IFRS 1, the group has elected, where appropriate, to
take the revalued carrying amount of certain properties as the 'deemed cost' on
transition to IFRS.
d. IAS 19 Employee benefits
As the group has an obligation to its employees to pay accrued holiday
entitlement, IAS 19 requires it to accrue for holidays earned by its employees,
but not taken, by the balance sheet date.
Under UK GAPP, the defined benefit pension scheme was presented in the
balance sheet net of deferred tax. IAS 19 also requires the defined pension
scheme to be shown gross with the deferred tax asset relating to the pension
scheme liability being presented as part of the deferred tax asset or liability.
e. IAS 39 Financial instruments: recognition and measurement
IAS 39 requires the group to provide for currency hedges that mature after
the period end.
Reconciliations
The following tables reconcile the previously reported UK GAAP numbers
with those now presented under IFRS.
6. Copies of this statement will be sent to all shareholders and will also be
available on written applications to the Company Secretary, James Latham plc,
Unit 3 Swallow Park, Finway Road, Hemel Hempstead, Herts, HP2 7QU.
Reconciliation of UK GAAP profit to IFRS profit for the period ended 30
September 2006
IAS 19 IFRS 3
Employee Business
As at benefits - combinations -
30 Sept. holiday pay goodwill
2006 IFRS
£000 £000 £000 £000
Revenue 49,072 49,072
Cost of sales (including warehouse (40,281) (40,281)
costs)
Gross profit 8,791 8,791
Selling and distribution costs (4,049) (4,049)
Administration expenses (2,180) 21 10 (2,149)
Other operating income 97 97
(6,132) 21 10 (6,101)
Operating Profit 2,659 21 10 2,690
Finance income 389 389
Finance costs (143) (143)
Profit before tax 2,905 21 10 2,936
Income tax expense (985) (985)
Profit after tax 1,920 21 10 1,951
Earnings per ordinary share (basic) 9.5p 9.8p
Earnings per ordinary share 9.5p 9.8p
(diluted)
Reconciliation of UK GAAP profit to IFRS profit for the six months ended 31
March 2007
IAS 19 IFRS 3 IAS 39 IAS 12
Employee Business Financial Income
benefits - combinations - instruments taxes -
holiday pay goodwill - currency deferred
As at hedging tax
31 March IFRS
2007
£000 £000 £000 £000 £000 £000
Revenue 99,662 99,662
Cost of sales (including warehouse (82,031) (82,031)
costs)
Gross profit 17,631 17,631
Selling and distribution costs (8,231) (8,231)
Administration expenses (4,536) (3) (33) (42) (4,614)
Other operating income 208 208
(12,559) (3) (33) (42) (12,637)
Operating Profit 5,072 (3) (33) (42) 4,994
Finance income 861 861
Finance costs (227) (227)
Profit before tax 5,706 (3) (33) (42) 5,628
Income tax expense (1,635) 102 (1,533)
Profit after tax 4,071 (3) (33) (42) 102 4,095
Earnings per ordinary share 20.5p 20.6p
(basic)
Earnings per ordinary share 20.4p 20.6p
(diluted)
Reconciliation of UK GAAP equity shareholders' funds to IFRS equity
shareholders' funds at 1 April 2006
IAS 12 IAS19
Income Employee
IAS 19 IFRS 3 taxes - benefits - IAS 16
Employee Business deferred pension Property,
benefits - combinations - tax scheme plant and
UK GAAP holiday pay goodwill equipment IFRS
£000 £000 £000 £000 £000 £000 £000
Assets
Non-current assets
Property, plant and equipment 11,438 11,438
Goodwill 362 33 395
Other receivables 5,919 5,919
Deferred tax assets 693 (1,287) 2,111 1,517
Total non-current assets 18,412 33 (1,287) 2,111 19,269
Current assets
Inventories 13,746 13,746
Trade receivables 18,025 18,025
Other current assets 13,355 13,355
Cash and cash equivalents 1,399 1,399
Total current assets 46,525 46,525
Total assets 64,937 33 (1,287) 2,111 65,794
Current liabilities
Trade and other payables 14,773 85 14,858
Current portion of interest
bearing loans and borrowings
2,227 2,227
Current tax payable 623 623
Total current liabilities 17,623 85 17,708
Non-current liabilities
Interest bearing loans and 2,060 2,060
borrowings
Retirement benefit obligation 4,927 2,111 7,038
Other payables 268 268
Long term provisions 157 157
Total non-current liabilities 7,412 2,111 9,523
Total liabilities 25,035 85 2,111 27,231
Net assets 39,902 (85) 33 (1,287) - 38,563
Capital and reserves
Issued capital 5,040 5,040
Share-based payment reserve 16 16
Capital reserve 3 3
Revaluation reserve 758 (227) (531) -
Own shares (40) (40)
Accumulated profits 34,125 (85) 33 (1,060) 531 33,544
Total equity 39,902 (85) 33 (1,287) - 38,563
Reconciliation of UK GAAP equity shareholders' funds to IFRS equity
shareholders' funds at 30 September 2006
IAS 12 IAS19
Income Employee
IAS 19 IFRS 3 taxes - benefits - IAS 16
Employee Business deferred pension Property,
benefits - combinations - tax scheme plant and
UK GAAP holiday pay goodwill equipment IFRS
£000 £000 £000 £000 £000 £000 £000
Assets
Non-current assets
Property, plant and equipment 11,296 11,296
Goodwill 352 43 395
Other receivables 4,419 4,419
Deferred tax assets 693 (1,287) 1,460 866
Total non-current assets 16,760 43 (1,287) 1,460 16,976
Current assets
Inventories 16,956 16,956
Trade receivables 19,887 19,887
Other current assets 7,729 7,729
Cash and cash equivalents 1,251 1,251
Total current assets 45,823 45,823
Total assets 62,583 43 (1,287) 1,460 62,799
Current liabilities
Trade and other payables 15,893 64 15,957
Current portion of interest
bearing loans and borrowings
723 723
Current tax payable 144 144
Total current liabilities 16,760 64 16,824
Non-current liabilities
Interest bearing loans and 1,701 1,701
borrowings
Retirement benefit obligation 3,406 1,460 4,866
Other payables 140 140
Long term provisions 249 249
Total non-current liabilities 5,496 1,460 6,956
Total liabilities 22,256 64 1,460 23,780
Net assets 40,327 (64) 43 (1,287) - 39,019
Capital and reserves
Issued capital 5,040 5,040
Share-based payment reserve 43 43
Capital reserve 3 3
Revaluation reserve 758 (227) (531) -
Own shares (385) (385)
Accumulated profits 34,868 (64) 43 (1,060) 531 34,318
Total equity 40,327 (64) 43 (1,287) - 39,019
Reconciliation of UK GAAP equity shareholders' funds to IFRS equity
shareholders' funds at 31 March 2007
IAS 39 IAS 12 IAS19
Financial Income Employee
IAS 19 instruments - taxes - benefits - IAS 16
Employee currency deferred pension Property,
benefits - hedging tax scheme plant and
UK GAAP holiday pay equipment IFRS
£000 £000 £000 £000 £000 £000 £000
Assets
Non-current assets
Property, plant and equipment 11,226 11,226
Goodwill 237 237
Other receivables 500 500
Deferred tax assets 430 (1,185) 910 155
Total non-current assets 12,393 (1,815) 910 12,118
Current assets
Inventories 16,405 16,405
Trade receivables 20,707 20,707
Other current assets 6,733 6,733
Cash and cash equivalents 8,872 8,872
Total current assets 52,717 52,717
Total assets 65,110 (1,185) 910 64,835
Current liabilities
Trade and other payables 17,277 88 42 17,407
Current portion of interest
bearing loans and borrowings
737 737
Current tax payable 205 205
Total current liabilities 18,219 88 42 18,349
Non-current liabilities
Interest bearing loans and 1,419 1,419
borrowings
Retirement benefit obligation 2,123 910 3,033
Other payables 245 245
Long term provisions 108 108
Total non-current liabilities 3,895 910 4,805
Total liabilities 22,114 88 42 910 23,154
Net assets 42,996 (88) (42) (1,185) - 41,681
Capital and reserves
Issued capital 5,040 5,040
Share-based payment reserve 56 56
Capital reserve 3 3
Revaluation reserve 758 (227) (531) -
Own shares (170) (170)
Accumulated profits 37,309 (88) (42) (958) 531 36,752
Total equity 42,996 (88) (42) (1,185) - 41,681
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Friday, 17th May 2024
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