Half-year Results
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Chairman's statement
Unaudited results for the six months trading to 30 September 2024
Revenue for the six months ended 30 September 2024 was £186.6m, down 2.3% on £190.9m for the same period last year. Cost prices on both timber and panels have remained stable throughout the first half of the year but there are signs of price weakness in some of our commodity products. Sales volumes are up 4.1% compared with the same period last year. We are still seeing a move in the product mix of our sales towards cheaper alternative products.
Gross profit percentage, which includes warehouse costs, for the six-month period ended 30 September 2024 was 16.3% compared with 16.8% in the comparative six months. Whilst our panel product side of the business has continued to perform well, the anticipated improvement in our timber business did not occur. The enforcement of EU Deforestation Regulations in Europe has led to cheap uncertified hardwoods, especially in our African sapele markets, being diverted to the UK market. This has resulted in a significant negative effect on our margins on those products.
Operating profit was £11.3m, down £3.2m compared with £14.5m operating profit for the same period last year. Profit before tax was £13.6m compared with £16.4m for the same period last year. The tax charge of £3.4m represents an effective rate of 25.3%, reflecting the UK basic rate of corporation tax. Earnings per ordinary share were 50.5p compared with 61.5 p for the same period last year.
As at 30 September 2024 net assets are £210.4m (2023: £203.8m). Inventory levels of £66.9m, and trade and other receivables of £64.4m have remained stable throughout the period. Bad debts for this period are lower than the same period last year. Cash and cash equivalents have increased to £67.5m (2023: £66.0m) which is very positive considering the one-off special dividend that was paid in August 2024. 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 2024 of £15.1m (2023: £11.2m). The trustees completed their derisking exercise during this period with the aim of reducing the volatility of the IAS19 valuation.
Interim dividend
The Board has declared an increased interim dividend of 7.95p per Ordinary Share (2023: 7.75p). The dividend is payable on 24 January 2025 to ordinary shareholders on the Company's Register at close of business on 3 January 2025. The ex-dividend date will be 2 January 2025.
Current and future trading
The second half of 2024/25 has started with similar volumes to the previous six-month period to 30 September 2024, with similar margins. We were expecting the market to show signs of improvement in the second half of this year but so far this has not materialised. We have seen considerable challenges in our marketplace, including a significant competitor going into administration and others looking to quickly turn inventories into cash, which has affected short-term margins in some product groups. This has created opportunities to increase our market share and enabled us to take on three new brands of melamine and laminate panel products as well as some key specialist salespeople to help promote these new products.
Our customers still have reasonable order books but are finding the marketplace more challenging. Whilst we are not seeing an increase in debtors days, we are seeing an increase in unexpected bad debts, although our level of credit insurance cover remains strong. The strength of our customer base and the diverse market sectors within which we operate will help us during the more challenging macroeconomic climate that we are all facing.
The board has completed the end-to-end supply chain review as part of our long-term planning for the business. This review considered both current supply chain conditions and our expectations of what this will look like over the longer term. In order to future proof our supply chain and routes to market, we have decided to invest in a National Distribution Centre to support the depot network. This centre will allow the business to manage its stock more efficiently, increase the range of products that we can offer our customers, whilst at the same time freeing up space in our existing warehouses to increase stock throughput and reduce the need for further investment in our sites. We anticipate that a National Distribution Centre will be fully operational within three years, once the appropriate location has been identified.
The board is pleased with these interim results considering the challenging market conditions. However, we anticipate that the results for the year ended 31 March 2025 will fall slightly below last year's results, with the anticipated improvement in market conditions now not expected until the middle of 2025. The results for the year ended 31 March 2025 will be announced on 26 June 2025.
Nick Latham
Chairman
All results relate to continuing operations.
JAMES LATHAM PLC
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
For the six months to 30 September 2024
| Six months to 30 Sept. 2024 unaudited | Six months to 30 Sept. 2023 unaudited | Year to 31 March 2024 audited | |||
|---|---|---|---|---|---|
| £000 | £000 | £000 | |||
| Profit after tax | 10,158 | 12,366 | 22,661 | ||
| Other Comprehensive income | |||||
| Actuarial (loss)/gains on defined benefit pension scheme | (1,167) | 1,982 | 5,770 | ||
| Deferred tax relating to components of other comprehensive income | 292 | (495) | (1,442) | ||
| Foreign translation charge | (35) | (64) | (252) | ||
| Other comprehensive income for the period, net of tax | (910) | 1,423 | 4,076 | ||
| Total comprehensive income, attributable to owners of the parent company | 9,248 | 13,789 | 26,737 | ||
| JAMES LATHAM PLC | |||||
| CONSOLIDATED BALANCE SHEET | |||||
| At 30 September 2024 | |||||
| As at 30 Sept. 2024 unaudited | As at 30 Sept. 2023 unaudited | As at 31 March 2024 audited | |||
| £000 | £000 | £000 | |||
| ASSETS | |||||
| Non-current assets | |||||
| Goodwill | 1,193 | 1,181 | 1,193 | ||
| Other intangible assets | 1,069 | 1,236 | 1,152 | ||
| Property, plant and equipment | 41,462 | 37,841 | 39,989 | ||
| Right-of-use-asset | 10,492 | 5,438 | 8,363 | ||
| Trade and other receivables | 863 | - | 789 | ||
| Retirement benefit surplus | 15,066 | 11,212 | 15,864 | ||
| Deferred tax asset | - | 53 | - | ||
| Total non-current assets | 70,145 | 56,961 | 67,350 | ||
| Current assets | |||||
| Inventories | 66,882 | 66,052 | 61,709 | ||
| Trade and other receivables | 64,399 | 64,220 | 64,757 | ||
| Cash and cash equivalents | 67,457 | 65,958 | 75,881 | ||
| Tax receivable | - | 13 | - | ||
| Total current assets | 198,738 | 196,243 | 202,347 | ||
| Total assets | 268,883 | 253,204 | 269,697 | ||
| Current liabilities | |||||
| Lease liabilities | 1,372 | 879 | 1,373 | ||
| Trade and other payables | 37,856 | 35,013 | 35,456 | ||
| Current tax payable | 18 | - | 408 | ||
| Total current liabilities | 39,246 | 35,892 | 37,237 | ||
| Non-current liabilities | |||||
| Interest bearing loans and borrowings | 592 | 587 | 592 | ||
| Lease liabilities | 9,493 | 4,806 | 7,298 | ||
| Deferred tax liabilities | 9,147 | 8,124 | 9,340 | ||
| Total non-current liabilities | 19,232 | 13,517 | 17,230 | ||
| Total liabilities | 58,478 | 49,409 | 54,467 | ||
| Net assets | 210,405 | 203,795 | 215,230 | ||
| Capital and reserves | |||||
| Issued capital | 5,040 | 5,040 | 5,040 | ||
| Share-based payment reserve | 197 | 152 | 152 | ||
| Capital reserve | 398 | 398 | 398 | ||
| Retained earnings | 204,770 | 198,205 | 209,640 | ||
| Total equity attributable to shareholders of the parent company | 210,405 | 203,795 | 215,230 | ||
| JAMES LATHAM PLC | |||||
| CONSOLIDATED CASH FLOW STATEMENT | |||||
| For the six months to 30 September 2023 | |||||
| Six months to 30 Sept 2024 unaudited | Six months to 30 Sept 2023 unaudited | Year to 31 March 2024 audited | |||
| £000 | £000 | £000 | |||
| Net cash flow from operating activities | |||||
| Cash generated from operations | 11,523 | 13,197 | 29,563 | ||
| Interest paid | (36) | (25) | (48) | ||
| Income tax paid | (3,722) | (3,094) | (5,943) | ||
| Net cash inflow from operating activities | 7,765 | 10,078 | 23,572 | ||
| Cash flows from investing activities | |||||
| Interest received and similar income | 1,976 | 1,697 | 3,560 | ||
| Purchase of property, plant and equipment | (3,166) | (2,233) | (5,595) | ||
| Proceeds from sale of property, plant and equipment | 57 | 27 | 67 | ||
| Net cash outflow from investing activities | (1,133) | (509) | (1,968) | ||
| Cash flows before financing activities | |||||
| Purchase of treasury shares | - | - | (6) | ||
| Exercise of share options | 137 | - | 212 | ||
| Lease liability payments | (902) | (425) | (1,190) | ||
| Equity dividends paid | (14,291) | (5,789) | (7,348) | ||
| Purchase of own shares | - | (6) | - | ||
| Cash outflow from financing activities | (15,056) | (6,220) | (8,332) | ||
| (Decrease)/increase in cash and cash equivalents for the period | (8,424) | 3,349 | 13,272 | ||
| Cash and cash equivalents at beginning of the period | 75,881 | 62,609 | 62,609 | ||
| Cash and cash equivalents at end of the period | 67,457 | 65,958 | 75,881 | ||
| JAMES LATHAM PLC | |||||
| CONSOLIDATED STATEMENT OF CHANGES IN EQUITY | |||||
| Attributable to owners of the parent company | |||||
| Issued capital £000 | Share-based payment reserve £000 | Capital reserve £000 | Retained earnings £000 | Total equity £000 | |
| As at 1 April 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) |
| Own shares movement | - | - | - | 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 |
| Profit for the period | - | - | - | 10,295 | 10,295 |
| Other comprehensive income: | |||||
| Actuarial gain on defined benefit pension scheme | - | - | - | 3,788 | 3,788 |
| Deferred tax relating to components of other comprehensive income | - | - | - | (947) | (947) |
| Foreign translation charge | - | - | - | (188) | (188) |
| Total comprehensive income for the period | - | - | - | 12,948 | 12,948 |
| Transactions with owners: | |||||
| Dividends | - | - | - | (1,559) | (1,559) |
| Exercise of options | - | (24) | - | 24 | - |
| Deferred tax on share options | - | (19) | - | - | (19) |
| Own shares movement | - | - | - | 22 | 22 |
| Share-based payment expense | - | 43 | - | - | 43 |
| Total transactions with owners | - | - | - | (1,513) | (1,513) |
| Balance at 31 March 2024 (audited) | 5,040 | 152 | 398 | 209,640 | 215,230 |
| Profit for the period | - | - | - | 10,158 | 10,158 |
| Other comprehensive income: | |||||
| Actuarial loss on defined benefit pension scheme | - | - | - | (1,167) | (1,167) |
| Deferred tax relating to components of other comprehensive income | - | - | - | 292 | 292 |
| Foreign translation charge | - | - | - | (35) | (35) |
| Total comprehensive income for the period | - | - | - | 9,248 | 9,248 |
| Transactions with owners: | |||||
| Dividends | - | - | - | (14,291) | (14,291) |
| Exercise of options | - | (36) | - | 36 | - |
| Deferred tax on share options | - | 2 | - | - | 2 |
| Own shares movement | - | - | - | 137 | 137 |
| Share-based payment expense | - | 79 | - | - | 79 |
| Total transactions with owners | - | 45 | - | (14,118) | (14,073) |
| Balance at 30 September 2024 (unaudited) | 5,040 | 197 | 398 | 204,770 | 210,405 |
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 2025. 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 2024 are extracted from the statutory accounts of the group for that period.
- The directors propose an interim dividend of 7.95p per ordinary share which will absorb £1,605,000 (2023: 7.75p absorbing £1,560,000), payable on 24 January 2025 to shareholders on the Company's Register at the close of business on 3 January 2025. The ex-dividend date is 2 January 2025.
- 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 2024 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.
| Six months to 30 Sept 2024 unaudited | Six months to 30 Sept 2023 unaudited | Year to 31 March 2024 audited | |
|---|---|---|---|
| £000 | £000 | £000 | |
| Net profit attributable to ordinary shareholders | 10,158 | 12,366 | 22,661 |
| Number '000 | Number '000 | Number '000 | |
| Weighted average share capital | 20,131 | 20,123 | 20,112 |
| Add: diluted effect of share capital options issued | 63 | 24 | 14 |
| Weighted average share capital for diluted earnings per ordinary share calculation | 20,194 | 20,147 | 20,126 |
| 5. Net cash flow from operating activities | |||
| Six months to 30 Sept 2024 unaudited | Six months to 30 Sept 2023 unaudited | Year to 31 March 2024 audited | |
| £000 | £000 | £000 | |
| Profit before tax | 13,591 | 16,396 | 30,262 |
| Adjustment for finance income and cost | (2,258) | (1,937) | (4,119) |
| Depreciation and amortisation | 2,475 | 2,272 | 4,271 |
| (Profit)/loss on disposal of property, plant and equipment | (24) | 7 | 35 |
| (Increase)/decrease in inventories | (5,173) | 1,437 | 5,780 |
| Decrease in receivables | 283 | 2,562 | 1,236 |
| Increase/(decrease) in payables | 2,427 | (5,934) | (5,862) |
| Retirement benefits non cash amounts | 123 | (1,643) | (2,120) |
| Share-based payments non cash amounts | 79 | 37 | 80 |
| Cash generated from operations | 11,523 | 13,197 | 29,563 |
- 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, Hemel Hempstead, Herts, HP2 4TZ, or by email to plc@lathams.co.uk
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