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James Latham Plc - Half-year Report 2019


James Latham plc

("James Latham" or the "Company" 


Chairman's statement

Unaudited results for the six months trading to 30 September 2019

Revenue for the six months ended 30 September 2019 was £125.6m, up 6.3% on £118.2m for the same period last year. This turnover increase is down to our long term strategic changes in product mix, as overall volumes have been static.  The panel product business has seen an increase in delivered volumes through our warehouses, but a reduction in our direct volumes. Our timber business has also seen an increase in delivered volumes especially on added value products. Prices have decreased on most of our commodity panel products throughout this six month period although timber prices have remained stable.

Gross margin for the six month period ended 30 September 2019 was 17.4% compared with 17.1% in the comparative six months. This figure includes warehouse costs which are higher due to the increased volumes through our warehouses, and also part of our strategy to increase the working hours in order to better meet our customer needs. Three of our depots are now working 24 hours/5 days a week. The increased delivered volumes have also resulted in an increase in distribution costs. Administrative expenses though are lower than last year, with a reduction in the bad debt charge.

Operating profit was £8.5m, up 9.6% on last year's profit of £7.7m. Profit before tax was £8.3m compared with £8.7m in the comparative six months which included a profit of £1.1m on the sale of our old Yate site. Earnings per ordinary share, excluding the profit on the sale of Yate were 33.8p (2018: 31.5p) an increase of 7.3%.

As at 30 September 2019 net assets are £97.6m (2018: £98.6m). We have adopted IFRS 16 on leasing in these results, which has had an insignificant effect on profit before tax and these changes are explained in note 6 to this statement. Stock volume levels have remained stable throughout the six months. Trade Receivables have continued to show good debtor days figures. Cash and cash equivalents of £16.5m (2018: £12.9m) remain strong and we continue to take advantage of additional early settlement discount opportunities with our suppliers.

The calculation of the pension deficit remains very sensitive to changes in assumptions, and the pension deficit under IAS19 is calculated as increasing from £8.7m at 31 March 2019 to £14.6m at 30 September 2019.  This is largely due to a reduction in the discount rate.

Interim dividend

The Board has declared an increased interim dividend of 5.5p per Ordinary Share (2018: 5.0p), which is covered 6.1 times (2018: 7.4 times).  The dividend is payable on 24 January 2020 to ordinary shareholders on the Company's Register at close of business on 3 January 2020.  The ex-dividend date will be 2 January 2020.

Current and future trading

The second half of 2019/20 has started well with margins slightly ahead of the previous period. We are seeing increased sales at Abbey Woods, the Irish timber distributor purchased in February 2019, and also an improvement in our panel product volumes. Purchase prices of our commodity panel products remain weak. The investment in our Gateshead facility, to improve the site efficiency, is going well, and should be completed in June 2020. The racking investment at Purfleet will be completed by the end of December 2019. The majority of our customers are busy, and we remain confident that we can continue to grow our business, but remain mindful of the uncertainties caused by the forthcoming General Election and a weakening global economy.

I am also very pleased to have reported this week the strategic purchase of Dresser Mouldings for £1 million, which will allow us to continue to grow our sales of added value timber.