James Latham plc
(“James Latham” or the “Company”)
HALF YEARLY RESULTS FOR THE PERIOD ENDED 30 SEPTEMBER 2020
Chairman's statement
Unaudited results for the six months trading to 30 September 2020
Revenue for the six months ended 30 September 2020 was £107.0m, down 14.8% on £125.6m for the same period last year. Revenue in Q2 was 5.3% up on the same period last year highlighting the strong recovery from Q1 which as previously reported was significantly impacted by the first lockdown. Month on month trends continue to improve with September being ahead of the same month last year. We have had strong volume growth in both delivered and direct commodity panel products. Cost prices on both timber and panels have been slowly rising during the period. All sites have coped very well with the local lockdowns and all the other challenges that they have faced during this unprecedented period.
Gross profit, which includes warehouse costs, for the six month period ended 30 September 2020 was 16.9% compared with 17.4% in the comparative six months. Overheads have been very well controlled during the 6 months.
Operating profit was £6.5m, down 22.7% on the £8.5m profit for the same period last year. Profit before tax was £6.3m compared with £8.3m for the same period last year. Earnings per ordinary share were 25.6p (2019: 33.8 p) a decrease of 24.3%.
As at 30 September 2020 net assets are £109.1m (2019: £97.6m). Stock volume levels have remained stable throughout the six months, although the strong sales at the end of Q2 resulted in a temporary reduction in our inventory values. Trade receivables have continued to show good debtor day figures, with bad debts at a very low figure. Cash and cash equivalents of £26.1m (2019: £16.5m) remain strong due to the reduced inventory figures and also good collections of our trade receivables. We continue to take advantage of additional early settlement discount opportunities with our suppliers.
These positive results are a good indication of the strength of our business model, and the importance of having a diversified customer base.
The calculation of the pension deficit remains very sensitive to changes in assumptions, and the pension deficit under IAS19 is calculated as decreasing from £11.8m at 31 March 2020 to £8.8m at 30 September 2020. This is largely due to a recovery in the plan asset valuations, although discount rates continue to fall which add to the deficit.
Interim dividend
The board has declared an increased interim dividend of 5.7p per Ordinary Share (2019: 5.5p), which is covered 4.5 times (2019: 6.1 times). The dividend is payable on 29 January 2021 to ordinary shareholders on the Company's Register at close of business on 4 January 2021. The ex-dividend date will be 31 December 2020.
Current and future trading
The second half of 2020/21 has started strongly with margins slightly ahead of the previous period. We are seeing significant increased volumes of commodity products, but reduced volumes of some of our added value panel products which predominantly go into market sectors that have been adversely affected by the COVID-19 pandemic, such as hospitality, exhibitions and shopfitting. Purchase prices of many of our commodity panel products continue to rise with some extended lead times. The majority of our customers are busy, and we remain confident that we will have a strong end to our financial year. The investment in our Gateshead facility is now complete, and we are mid-way through a large racking project at our Thurrock facility which will improve the stock holding and efficiency of the warehouse. This project will be completed by end March 2021.
We have been working for some time in preparation for Brexit and have acted on the risks to our business. Our supply chain team have been working closely with suppliers and intermediaries and have identified the best routes to market, and we have increased stock levels of those products most at risk of disruption.
We remain committed to continued investment in the business, both in our existing depots and in looking for other opportunities to grow our market position.