James Latham plc

 ("James Latham" or the "Company")

HALF YEARLY RESULTS FOR THE PERIOD ENDED 30 SEPTEMBER 2022

Chairman's statement

Unaudited results for the six months trading to 30 September 2022

Revenue for the six months ended 30 September 2022 was £212.8m, up 9.7% on £193.9m for the same period last year.  Cost prices on both timber and panels have risen at a much slower rate than in the previous financial year but they are remaining stable and there are currently little signs of price weakness.  I am pleased that volumes have remained at similar levels to the same period last year, despite the economy being weaker.

Gross profit percentage, which includes warehouse costs, for the six month period ended 30 September 2022 was 19.4% compared with 26.4% in the comparative six months.  We anticipated that the gross profit percentage would return to more normal levels, and the percentage achieved is still higher than the ten year average.

Overheads have been well controlled during the six months, although the increases in inflation especially around energy and transport costs have inevitably led to an increase in overheads.

Operating profit was £23.5m, down £10.6m compared with £34.1m profit for the same period last year.  This reduction is a result of the margins returning to expected levels, but still represents a significant improvement on historical levels of operating profit as the exceptional trading conditions start to normalise.  Profit before tax was £23.7m compared with £34.0m for the same period last year.  The tax charge of £4.6m represents an effective rate of 19.5%.  Earnings per ordinary share were 95.6p compared with 133.5 p for the same period last year.

As at 30 September 2022 net assets are £180.5m (2021: £146.4m).  Inventory levels of £74.6m have stabilised with supply issues still requiring us to hold a higher volume of inventory.  Trade and other receivables are also similar to the start of the financial year with bad debts remaining at a low figure.  Cash and cash equivalents of £36.9m (2021: £24.5m) have been important to allow us to maintain our investment in working capital especially the inventory levels.  We continue to take advantage of additional early settlement discount opportunities with our suppliers.

The calculation of the pension deficit remains sensitive to changes in assumptions, and the increase in corporate bond yields has resulted in a surplus at 30 September 2022 of £7.3m compared with a deficit of £12,000 in the same period last year.  This is allowing us to undertake a de-risking exercise to reduce the volatility of this calculation.

Interim dividend

The Board has declared an increased interim dividend of 7.25p per Ordinary Share (2021: 6.5p).  The dividend is payable on 27 January 2023 to ordinary shareholders on the Company's Register at close of business on 30 December 2022.  The ex-dividend date will be 29 December 2022.

Current and future trading

The second half of 2022/23 has started with slightly weaker volumes than the previous six months to 30 September 2022, with margins also slightly lower than in the same period.  The supply chain has become easier over the past six months, with fewer extended lead times on our products.  Cost prices of the majority of our products are stable at the moment, but there are still uncertainties as to the effect of energy costs and other inflationary pressures on the overheads for our key manufacturers.  Recent drops in container rates have affected the cost prices for products that have been shipped via container, but these have been artificially high since COVID-19 and we expected them to come down to more normal rates.

There are a few market sectors, such as the merchant sector, that are quieter at the moment, but many of our other customers have steady order books and remain busy, but are clearly nervous looking at the macro economic conditions next year.

I am pleased to report that the Yate extension is now completed, and this extra capacity will allow us to grow our market share in the South West of the UK.  The board has recently approved a racking investment at IJK in Northern Ireland, which will enable them to extend their product range and develop sales.  We are continuing to increase the working hours at our depots with Purfleet becoming the latest site to be working 24/5 from the beginning of October.

Nick Latham

Chairman

1 December 2022

This announcement contains inside information for the purposes of Article 7 of the UK version of Regulation (EU) No 596/2014 which is part of UK law by virtue of the European Union (Withdrawal) Act 2018, as amended.

For further information please visit www.lathamtimber.co.uk or contact: