James Latham plc
(“James Latham” or the “Company”)
Half Yearly Results For The Period Ended 30 September 2024
Consolidated Income Statement
| 6 months to 30th Sept. 2024 unaudited | 6 months to 30th Sept. 2023 unaudited | Year to 31st March 2024 unaudited | |
| £000 | £000 | £000 | |
| Revenue | 186,591 | 190,882 | 366,514 |
| Cost of Sales (including warehouse costs) | (156,251) | (158,832) | (304,415) |
| Gross profit | 30,340 | 32,050 | 62,099 |
| Selling and distribution costs | (12,933) | (12,033) | (24,225) |
| Administrative expenses | (6,074) | (5,558) | (11,731) |
| Operating profit | 11,333 | 14,459 | 26,143 |
| Finance income | 2,468 | 2,063 | 4,313 |
| Finance costs | (210) | (126) | (194) |
| Profit before tax | 13,591 | 16,396 | 30,262 |
| Tax expense | (3,433) | (4,030) | (7,601) |
| Profit after tax attributable to owners of the parent company | 10,158 | 12,366 | 22,661 |
| Earnings per ordinary share (basic) | 50.5p | 61.5p | 112.7p |
| Earnings per ordinary share (diluted) | 50.3p | 61.4p | 112.6p |
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
28 November 2024