James Latham plc
Announcement of Preliminary Results for the year ended 31 March 2007

Chairman’s Statement

Results

Group turnover for continuing operations in the financial year to 31 March 2007 at £99,662,000 is 9.9% ahead of last year’s £90,650,000. Last year’s group total turnover was £114,867,000 and included £24,217,000 for Nevill Long Limited, which was sold on 31 March 2006.

Operating profit for continuing operations increased by 46% to £4,989,000 from £3,419,000 last year.

Net interest receivable was £634,000 against £439,000 last year.

Pre-tax profit is £5,706,000 against £11,628,000 last year which included £6,221,000 of exceptional profit on the sale of Nevill Long Limited.

Profit after tax is £4,071,000 compared with £9,712,000 in the previous year. Earnings per share is 20.5p.

Total net assets (shareholders’ funds) after the FRS17 pension liability have risen to £42,996,000 from £39,902,000.

Cash flow from operating activities is £3,240,000 before the final payment of £5 million ofthe £9 million to be paid into the pension scheme as previously announced.

Final dividend

The directors recommend a final dividend of 5.4p per ordinary share (2006 4.4p). The final dividend will be paid on 31 August 2007 to shareholders on the register at the close of business on 3 August 2007. The shares will become ex-dividend on 1 August 2007.

The total dividend per ordinary share of 7.4p for the year is covered 2.8 times by earnings.

Financial year 2006/07

Following the sale of Nevill Long Limited last year, the Group’s results are based on the trading of Lathams Limited, a specialist panel and timber distributor, where the performance shows a marked improvement on last year. Turnover was almost 10% higher and a useful improvement in gross margin percentage resulted in a marked increase in the operating profit. This more than compensated for the loss of Nevill Long Limited profit.

International demand for timber products remained strong throughout the year and with temporary shortages in some areas, prices increased. This was noted in the interim statement and this continued into the rest of the year. However, timber prices are cyclical and will come down.

Volumes handled are lower than the previous year reflecting the Company’s move to higher value products and away from the more cyclical commodity type items.

Following the Company’s substantial contribution to the pension scheme the FRS17 deficit has been reduced to £2,123,000. However the value of pension liabilities is very sensitive to changes in interest rates.

Current financial year 2007/08 - April and May trading

Last year’s trading climate had continued into this year and figures for April and May are encouraging.

Development strategy

Following the disposal of the Clapton site and the Nevill Long Limited business, the Company has cash of £9m at the year end. The Directors have a programme for upgrading the warehouses at the older sites by introducing high racking and narrow aisles so that the changing product range can be handled more efficiently using state of the art handling equipment. This has been started at Yate and Wigston and will be carried out at Ossett during the current financial year. There are plans to move the Dudley and Eastleigh depots which have outgrown their existing sites. Opportunities to extend the geographic coverage are being pursued, as are other opportunities to grow the business through acquisition.

Past Chairman

Roger Latham retired as Chairman and Chief Executive in December 2006 after working in the business for more than forty years, six as Chairman. The Board records its thanks to Roger for his skill in managing the Company through a period of great change.

Peter Latham
Chairman
28 June 2007

 
Further enquiries:

Peter Latham, Chairman	Tel: 01442 849 100
David Dunmow, Finance Director	Tel: 01442 849 100
Blue Oar Securities Plc
Mike Coe, Director	Tel: 0117 933 0020

 
CONSOLIDATED BALANCE SHEET
As at 31 March 2007

	As at 31 March 2007		As at 31 March 2006 (as restated)
	£000		£000
Fixed assets
Intangible fixed assets		237		362
Tangible fixed assets		11,226		11,438
		11,463		11,800
Current assets
Stocks – goods for resale		16,405		13,746
Debtors: amounts falling due within one year		27,870		32,073
Debtors: amounts falling due after more than one year		500		5,919
Cash at bank and in hand		8,872		1,399
		53,647		53,137
Creditors : amounts falling due within one year		(18,219)		(17,623)
Net current assets		35,428		35,514
Total assets less current liabilities		46,891		47,314
Creditors : amounts falling due after more than one year		(1,664)		(2,328)
Provisions for liabilities		(108)		(157)
Net assets excluding pension liability		45,119		44,829
Net pension liability		(2,123)		(4,927)
Total net assets		42,996		39,902
Represented by:
Capital and reserves
Called up share capital		5,040		5,040
Investment in own shares		(170)		(47)
Share-based payment reserve		56		23
Capital reserve		3		3
Revaluation reserve		758		758
Profit and loss account		37,309		34,125
Equity shareholders’ funds		42,996		39,902

 
 
CONSOLIDATED PROFIT AND LOSS ACCOUNT
For the year ended 31 March 2007

	Year to 31 March 2007		Year to 31 March 2006 (as restated)
	£000		£000
Turnover
Continuing operations		99,662		90,650
Discontinued operations		-		24,217
		99,662		114,867
Cost of sales (including warehouse costs)		(82,031)		(94,937)
Gross profit		17,631		19,930
Selling and distribution costs		(8,231)		(9,272)
Administrative expenses		(4,619)		(5,892)
Other operating income		208		202
		(12,642)		(14,962)
Operating profit
Continuing operations		4,989		3,419
Discontinued operations		-		1,549
		4,989		4,968
Profit on disposal of subsidiary		83		6,229
Loss on disposal of fixed assets		-		(8)
Net interest receivable		634		439
Profit on ordinary activities before taxation		5,706		11,628
Tax on profit on ordinary activities		(1,635)		(1,916)
Profit on ordinary activities after taxation		4,071		9,712
Earnings per ordinary share (basic)		20.5p		48.3p
Earnings per ordinary share (diluted)		20.4p		48.2p

 
 
CONSOLIDATED CASH FLOW STATEMENT
For the year ended 31 March 2007

	Year to 31 March 2007			Year to 31 March 2006
	£000			£000
Cash flow from operating activities before special contribution to pension fund			3,240		5,489
Special contribution to pension fund			(5,000)		(4,000)
Net cash flow from operating activities			(1,760)		1,489
Returns on investments and servicing of finance
Interest received and similar income			889		1,488
Interest paid			(163)		(380)
Preference dividend paid			(79)		(79)
Net cash flow from returns on investments and servicing of finance			647		1,029
Taxation			(757)		(2,345)
Capital expenditure
Purchase of tangible fixed assets			(186)		(417)
Proceeds of sale of tangible fixed assets including property			3,946		4,809
Net cash flow from capital expenditure			3,760		4,392
Acquisitions and disposals
Proceeds of sale of investment in subsidiary undertaking			9,228		-
Equity dividends paid			(1,278)		(2,449)
Cash flow before financing			9,840		2,116
Financing
Bank loans repaid during the period			(2,214)		(714)
Finance leases repaid during the period			(23)		(25)
Purchase of own shares			(130)		(36)
Proceeds of sale of own shares			-		92
Net cash outflow from financing			(2,367)		(683)
Increase in cash for the year			7,473		1,433

	Year to 31 March 2007		Year to 31 March 2006
	£000		£000
Increase in cash for the year		7,473		1,433
New finance lease		(106)		-
Cash inflow from decrease in debt and lease financing		2,237		739
Movement in net funds (debt) for the year		9,604		2,172
Net debt at 1 April 2006		(2,887)		(5,059)
Net funds (debt) at 31 March 2007		6,717		(2,887)

 
 
CONSOLIDATED STATEMENT OF TOTAL RECOGNISED GAINS AND LOSSES
For the year ended 31 March 2007

	Year to 31 March 2007		Year to 31 March 2006 (as restated)
	£000		£000
Profit for the year		4,071		9,712
Actual return less expected return on pension scheme assets		(114)		3,950
Experience gains and losses from pension scheme liabilities		(1)		1,028
Changes in assumptions underlying the present value of pension scheme liabilities		673		(5,242)
Movement in deferred tax relating to actuarial loss on pension scheme		(167)		79
Total recognised gains and losses relating to the year		4,462		9,527

 
RECONCILIATION OF MOVEMENT IN SHAREHOLDERS’ FUNDS
For the year ended 31 March 2007

	Year to 31 March 2007		Year to 31 March 2006 (as restated)
	£000		£000
Profit attributable to shareholders		4,071		9,712
Dividends		(1,278)		(2,449)
		2,793		7,263
Other recognised gains and losses relating to the year		391		(185)
Change in investment in own shares		(123)		49
Movement in share based payment reserve		33		23
Movement in the year		3,094		7,150
Opening shareholders’ funds		39,902		32,752
Closing shareholders’ funds		42,996		39,902

 
 
NOTES TO THE ACCOUNTS

1. The financial information in this announcement does not constitute statutory accounts as defined in section 240 of the Companies Act 1985. Statutory accounts for the previous financial year ended 31 March 2006 have been delivered to the Registrar of Companies. The auditors’ report on those accounts was unqualified and did not contain any statement under section 237(2) or (3) of the Companies Act 1985. The auditors have indicated that they intend to give an unqualified report, which will not contain any statement under section 237(2) or (3) of the Companies Act 1985, on the statutory accounts for the year ended 31 March 2007. Copies of the Company’s Report and Accounts will be sent to shareholders shortly and will be available at the registered office of the company: Unit 3, Swallow Park, Finway Road, Hemel Hempstead, Herts HP2 7QU.
   
   
   
2. The consolidated accounts include the accounts of the Company and its subsidiary undertakings and have been prepared using acquisition accounting principles.
   
   
   
3. Basic earnings per share are calculated on the weighted average number of shares in issue during the year of 19,866,000 (2006: 19,963,000). The fully diluted earnings per share takes account of the outstanding options which results in a weighted average number of shares in issue during the year of 19,924,000 (2006: 19,993,000).
   
   
   
4. The directors recommend payment of a final dividend of 5.4p per ordinary share (2006: 4.4p).
   
   
   
5. The taxation charge for the year ended 31 March 2006 as a percentage of pre-tax profit was 16.5%. This is because the company took advantage of the substantial shareholder exemption on the disposal of a subsidiary company, and no taxation will arose on the sale. Proceeds of sale of tangible fixed assets and property largely comprise continuing receipts from the sale of the Clapton depot.
   
   
   
6. The accounts have been prepared on the basis of the accounting policies set out in the audited accounts for the year ended 31 March 2007 except for the implementation of FRS 20 Share-based payment, which has been applied to all grants of equity instruments after 7 November 2002 that were unvested at 1 April 2006. Equity settled share based payments (share options) are measured at fair value at the date of grant. The fair value determined at the grant date is expensed on a straight-line basis over the vesting period based on the directors’ estimate of shares that will eventually vest. Fair value is measured by use of the Black-Scholes model.