James Latham plc

Announcement of Preliminary Results for the year ended 31 March 2006 and Chairman’s Statement

 
Results

Group turnover for the financial year to 31 March 2006 at £114,867,000 is 6.1% ahead of last year’s £108,240,000.

Operating profit increased by 20.2% to £4,984,000 from £4,148,000 last year.

Net interest receivable was £439,000 against Net interest payable of £360,000 last year.

Including disposals, pre-tax profit is £11,644,000 against £21,594,000 last year. Excluding this year’s profit on the disposal of a subsidiary and last year’s profit on the disposal of fixed assets, the pre-tax profit is £5,423,000 against £3,788,000, an increase of 43.2%.

Profit after tax is £9,728,000 compared with £17,312,000 previously.

Total net assets after the FRS17 pension liability (shareholders’ funds) have risen to £39,902,000 from £32,752,000.

Cash flow from operating activities at £1,545,000 was after the initial payment of £4 million of the £9 million to be paid into the pension scheme as announced at the Interim.

The presentation of the figures reflects the introduction of new Accounting Standards FRS17, FRS21 and FRS25 and the previous figures have been restated.

Final dividend

The directors recommend a final dividend of 4.4p per ordinary share (2005 3.7p). The final dividend will be paid on 21 August 2006 to shareholders on the register at the close of business on 21 July 2006. The shares will become ex-dividend on 19 July 2006.

The total dividend per ordinary share (including the special dividend of 7.0p paid in January 2006) of 13p for the year is covered 3.7 times by earnings. Excluding the special dividend and the profit on the sale of Nevill Long Ltd, the total of 6p for the year is covered 2.8 times by earnings of 17.1p. This compares with a total dividend last year of 5.2p which was covered 2.8 times.

Financial year 2005/06

The overall trading result for the Group shows an improvement on last year.

Lathams Ltd, the panel products and timber distributor achieved a 3% increase in turnover but after a small decline in gross margin percentage the net profit was lower than last year. Globally the availability of timber products was more than enough to satisfy demand with the resultant pressure on prices and margins. The third quarter at Lathams Ltd was poor but trading picked up again in the fourth quarter.

Nevill Long Ltd, the ceiling, drylining and partitioning distributor, had an excellent year. Prices of a number of the company’s main product lines increased substantially and remained at the higher level. Sales were 20% higher than the previous year and, combined with an improved gross margin, resulted in a record profit of £1,990,000.

Nevill Long’s profits had been volatile in the past relying on a narrow customer range and synergy with the rest of the James Latham Group was negligible. The opportunity was taken to sell the company on 31 March 2006 realising a profit of £6,229,000.

During the year and since the year end substantial additional contributions have been paid into the pension scheme and by this time next year the funding situation should be much more healthy.

After the sales of the Clapton site and Nevill Long Ltd and with the pension scheme better funded, James Latham plc is in a strong financial position. The directors intend to develop Lathams Ltd’s core business of timber products distribution as and when opportunities arise.

Current financial year 2006/07

April and May taken together have achieved a satisfactory level of trading. The indications are that June will follow suit.

Availability and replacement prices are hardening for a number of the products we sell. This normally has a beneficial affect on sales and margins.

 
 
Roger Latham
Chairman
28.06.06