Final Results

RNS Number : 9147C

Latham(James) PLC

24 June 2021

 

James Latham plc

("James Latham" or "the Company")

Final Results

Chairman's statement

The financial year to 31 March 2021 was a year in which we saw considerable disruption to our business. In the first quarter of the year the COVID19 pandemic and lockdown caused a significant reduction in business, we then had to adapt to new ways of operating with working at home and social distancing, and then global supply issues and price rises affected the final quarter of the year. I am therefore very pleased to report good trading results for the financial year to 31 March 2021.

Revenue for the financial year to 31 March 2021 was £250.2m, up 1.3% on last year's £247.1m. Like for like volumes increased by 6.6%, with the growth mainly on delivered business from our own warehouses but with some growth on direct volumes shipped from the ports or from the manufacturers. Unsurprisingly due to COVID19 related operating restrictions, business collected by our customers from the depots has fallen significantly. The cost price of our products has started to rise significantly in the second half of the year and are on average 7.3% higher than at the start of the financial year.

Gross profit percentage for the financial year to 31 March 2021 was 18.0% compared with 17.6% in the previous financial year, which shows a good recovery in margin from the 16.9% reported in the half year accounts. This figure includes warehouse costs and we are continuing to extend the shift systems to improve our service levels with five of our depots now working 24 hours a day.

Profit before tax is £18.6m, up £2.9m on last year's £15.7m. Profit after tax for the year is £15.0m, up from last year's £12.5m. Earnings per ordinary share is 75.4p (2020: 63.1p) an increase of 19.5%.

As at 31 March 2021 net assets have increased to £121.8m (2020: £104.3m). Inventory levels have increased to £48.3m from £44.3m last year. This is partly to do with increased inventory in our new timber pack business, LDT Ireland, based in Dublin, but mainly due to increases in prices for our products. Trade receivables at the year end were £1.1m higher than the previous year showing improvements in debtor days. Despite the challenges of the pandemic, bad debts have been minimal. Cash and cash equivalents of £28.6m (2020: £17.0m) remain strong with good cash flows from operating activities.

At 31 March 2021 the deficit of the defined benefit scheme under IAS19 (revised) has reduced to £2.6m from £11.8m last year. This reduction is largely due to improvements in asset valuations and revision of mortality assumptions following the actuarial triennial valuation. The calculation of the pension deficit remains very sensitive to changes in assumptions.

Final dividend

The Board has declared a final dividend of 15.5p per Ordinary Share (2020: 10.0p).  The dividend is payable on 27 August 2021 to ordinary shareholders on the Company's register at close of business on 6 August 2021.  The ex-dividend date will be 5 August 2021. The total dividend per ordinary share of 21.2p for the year (2020: 15.5p) is covered 3.6 times by earnings (2020: 4.1 times).  

Current and future trading

The strong demand seen towards the end of this financial year, has continued into the new financial year, with margins also improving. Global demand for timber products is very strong, being driven primarily by North America, but also from the construction sector worldwide. Many manufacturers have introduced an allocation system limiting the ability for us to grow our volumes. These manufacturers are unable to significantly increase capacity as they struggle with COVID19 (especially in South America), labour shortages, rising costs and a shortage of raw materials. We have seen significant price rises on many commodity products. This is an area where our volumes have grown as we have been able to use our supplier relationships to secure supply of product for our customers in these exceptional market conditions. There have also been worldwide issues on shortages of shipping containers, in part due to the COVID19 pandemic, with increased container rates which has further increased the costs of many of our imported products, as well as creating severe delays to shipments.

The majority of the market sectors that we supply are busy, but there are still a few sectors, such as hospitality, aerospace and shopfitting that are still trading at pre-COVID19 levels.  The outlook is difficult to predict, but the current challenging supply situation looks set to continue through 2021, but visibility beyond that is much more uncertain, but we know that the market will change at some point.

Whilst the supply side remains challenging we would expect our margins to be better than normal for the next few months, but returning to normal after that, and as we know from experience in our industry, the balance between supply and demand will change.

Development Strategy

The board has identified that there are plenty of opportunities to develop our business. We have demonstrated the robustness and flexibility of our business model during the recent pandemic, and that we are very well placed to make the most of the opportunities as they arise. We will continue with our strategy to look for suitable acquisitions that support market sectors and geographical areas that we are looking to further develop. We will continue to invest in our warehouses as we look to further improve the service to our customers, which is critical for our future success. During the year our Fareham, Hemel and Leicester depots have increased their working hours and are now operating 24/5 and this trend with other depots will continue, with Thurrock and Purfleet planning to join them towards the end of the next financial year.  Our other focus in this financial year will be on increasing the warehouse capacity at both Yate and Hemel, where the board has approved plans to increase their warehouses by approximately 25 %, as well as investing in new machinery at Dresser Mouldings, and completing the significant racking project at Thurrock.

As ever I would like to personally thank all the directors and everyone in the group who have worked so incredibly hard during what has been a very difficult period for everyone. These results are a real testament to the teamwork and commitment of everybody for which I am very grateful. In recognition of this, the board has decided to award all staff an additional day's holiday this year, and to extend the Christmas shut down by one day. I am looking forward to visiting the depots to thank everyone in person.

Nick Latham

Chairman

23 June 2021

The information contained within this announcement is deemed by the Company to constitute inside information as stipulated under the Market Abuse Regulation (EU) No. 596/2014 as it forms part of United Kingdom domestic law by virtue of the European (Withdrawal) Act 2018

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

James Latham plc	Tel: [phone]
Nick Latham, Chairman
David Dunmow, Finance Director
SP Angel Corporate Finance LLP
Matthew Johnson / Charlie Bouverat (Corporate Finance)	Tel: [phone]
Rob Rees  (Corporate Broking)

 

JAMES LATHAM PLC

CONSOLIDATED INCOME STATEMENT

For the year to 31 March 2021

	Audited	Audited
	Year to 31 March  2021	Year to 31 March 2020
	£000	£000
Revenue	250,162	247,100
Cost of sales (including warehouse costs)	(205,060)	(203,656)
Gross profit	45,102	43,444
Selling and distribution costs	(17,464)	(19,251)
Administrative expenses	(8,598)	(8,196)
Operating Profit	19,040	15,997
Finance income	11	82
Finance costs	(453)	(417)
Profit before tax	18,598	15,662
Tax expense	(3,616)	(3,181)
Profit after tax attributable to owners of the parent company	14,982	12,481
Earnings per ordinary share (basic)	75.4p	63.1p
Earnings per ordinary share (diluted)	75.2p	63.0p

All results relate to continuing operations.

 

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

For the year to 31 March 2021

	Audited	Audited
	2021	2020
	£000	£000
Profit after tax attributable to owners of the parent company	14,982	12,481
Other comprehensive income
Actuarial gain/(loss) on defined benefit pension scheme	6,717	(4,823)
Deferred tax relating to components of other comprehensive income	(1,276)	916
Foreign translation (charge)/gain	(58)	80
Other comprehensive income for the year, net of tax	5,383	(3,827)
Total comprehensive income attributable to owners of the parent company	20,365	8,654

 

JAMES LATHAM PLC    COMPANY REGISTRATION NUMBER 65619

CONSOLIDATED BALANCE SHEET

At 31 March 2021

	Audited	Audited
	2021	2020
	£000	£000
Assets
Non-current assets
Goodwill	872	872
Other intangible assets	1,655	1,822
Property, plant and equipment	35,342	35,952
Right-of-use-assets	4,064	4,895
Deferred tax asset	534	2,258
Total non-current assets	42,467	45,799
Current assets
Inventories	48,262	44,288
Trade and other receivables	48,003	47,046
Cash and cash equivalents	28,618	16,950
Total current assets	124,883	108,284
Total assets	167,350	154,083
Current liabilities
Lease liabilities	1,123	1,178
Trade and other payables	34,761	28,686
Total current liabilities	35,884	29,864
Non-current liabilities
Interest bearing loans and borrowings	592	592
Lease liabilities	3,137	3,857
Retirement and other benefit obligation	2,561	11,812
Other payables	21	392
Deferred tax liabilities	3,339	3,289
Total non-current liabilities	9,650	19,942
Total liabilities	45,534	49,806
Net assets	121,816	104,277
Capital and reserves
Issued capital	5,040	5,040
Share-based payment reserve	167	25
Own shares	(471)	(619)
Capital reserve	398	398
Retained earnings	116,682	99,433
Total equity attributable to equity shareholders of the parent company	121,816	104,277

 

JAMES LATHAM PLC

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

Attributable to the owners of the parent company

	Issued capital	Share-based payment reserve	Own shares	Capital reserve	Retained earnings	Total Equity
	£'000	£'000	£'000	£'000	£'000	£'000
Balance at 1 April 2019 - audited	5,430	259	(923)	3	93,427	98,196
Profit for the year	-	-	-	-	12,481	12,481
Other comprehensive income:
Actuarial loss on defined benefit pension scheme	-	-	-	-	(4,823)	(4,823)
Deferred tax relating to components of other comprehensive income	-	-	-	-	916	916
Foreign translation credit	-	-	-	-	80	80
Total comprehensive income for the year	-	-	-	-	8,654	8,654
Transactions with owners:
Dividends	-	-	-	-	(3,633)	(3,633)
Exercise of options	-	(253)	(261)	-	1,463	949
Deferred tax on share options	-	(45)	-	-	-	(45)
Purchase of preference shares	5	-	-	-	-	5
Cancellation of preference shares	(395)	-	478	395	(478)	-
Change in investment in ESOP shares	-	-	87	-	-	87
Share-based payment expense	-	64	-	-	-	64
Total transactions with owners	(390)	(234)	304	395	(2,648)	(2,573)
Balance at 31 March 2020 - audited	5,040	25	(619)	398	99,433	104,277
Profit for the year	-	-	-	-	14,982	14,982
Other comprehensive income:
Actuarial gain on defined benefit pension scheme	-	-	-	-	6,717	6,717
Deferred tax relating to components of other comprehensive income	-	-	-	-	(1,276)	(1,276)
Foreign translation loss	-	-	-	-	(58)	(58)
Total comprehensive income for the year	-	-	-	-	20,365	20,365
Transactions with owners:
Dividends	-	-	-	-	(3,121)	(3,121)
Exercise of options	-	(20)	148	-	5	133
Deferred tax on share options	-	6	-	-	-	6
Share-based payment expense	-	156	-	-	-	156
Total transactions with owners	-	142	148	-	(3,116)	(2,826)
Balance at 31 March 2021 - audited	5,040	167	(471)	398	116,682	121,816

 

JAMES LATHAM PLC

CONSOLIDATED CASH FLOW STATEMENT

For the year to 31 March 2021

	Audited	Audited
	2020	2019
	£000	£000
Net cash flow from operating activities
Cash generated from operations	21,374	13,528
Interest paid	(51)	(51)
Income tax paid	(3,191)	(3,851)
Net cash inflow from operating activities	18,132	9,626
Cash flows from investing activities
Interest received and similar income	11	82
Acquisition of businesses net of cash and cash equivalents acquired	-	(578)
Purchase of property, plant and equipment	(1,968)	(3,886)
Proceeds from sale of property, plant and equipment	8	152
Net cash outflow from investing activities	(1,949)	(4,230)
Cash flows from financing activities
Sale of treasury shares	-	1,036
Lease liability payments	(1,394)	(1,390)
Equity dividends paid	(3,121)	(3,633)
Net cash outflow from financing activities	(4,515)	(3,987)
Increase in cash and cash equivalents for the year	11,668	1,409
Cash and cash equivalents at beginning of the year	16,950	15,541
Cash and cash equivalents at end of the year	28,618	16,950

 

 

JAMES LATHAM PLC

 

Notes to the audited preliminary financial information

1.  The preliminary financial information presented in this report is audited and has been prepared in accordance with the recognition and measurement principles of International Accounting Standards in conformity with the requirements of the Companies Act 2006 set out in the Group accounts for the years ended 31 March 2020 and 31 March 2021, and does not contain all the information to be disclosed in financial statements prepared in accordance with IFRS.

2.  The directors propose a final dividend of 15.5p per ordinary share, which will absorb £3,082,000 (2020: 10.0p absorbing £1,990,000), payable on 27 August 2021 to shareholders on the Register at the close of business on 6 August 2021.  The ex-dividend date is 5 August 2021.

The figures for the year ended 31 March 2020 and as at 31 March 2021 have been extracted from the audited statutory accounts for that year. The statutory accounts for the year ended 31 March 2021 have yet to be delivered to the Registrar of Companies and have been prepared in accordance with IFRS as adopted by the EU and those parts of the Companies Act 2006 that remain applicable to companies reporting under IFRS.  The preliminary financial information does not constitute statutory accounts within the meaning of Section 434 of the Companies Act 2006, and does not contain all the information required to be disclosed in a full set of IFRS financial statements.

Statutory accounts for the year ended 31 March 2021 will be delivered to the Registrar of Companies and sent to Shareholders shortly.  The Annual Report and Accounts may also be viewed in due course on James Latham plc's website at www.lathams.co.uk

The audit report on the statutory financial statements for the year ended 31 March 2021 is unqualified and does not include reference to any matters to which the auditor drew attention by way of emphasis without qualifying the report  and does not contain any statement under Section 498(2) or (3) of the Companies Act 2006.

Statutory accounts for the year ended 31 March 2020 have been filed with the Registrar of Companies.  The auditor's report on those accounts was unqualified and did not include reference to any matters to which the auditor drew attention by way of emphasis without qualifying the report  and did not contain a statement under section 498(2) and (3) of the Companies Act 2006.

3.  This announcement was approved and authorised for issue by the Board of Directors on 23 June 2021.

4.  Net cash flow from operating activities

Year to 31 March 2021 audited Year to 31 March 2020 audited £000 £000 Profit before tax 18,598 15,662 Adjustment for finance income and cost 442 335 Depreciation, amortisation and impairment 4,033 3,790 Profit on disposal of property, plant and equipment (6) (121) Increase in inventories (3,974) (1,659) Increase in receivables (878) (3,963) Increase in payables 5,779 1,324 Retirement benefits (2,776) (1,904) Share-based payments non cash amounts 156 64 Cash generated from operations 21,374 13,528

 

5.  Earnings per ordinary share is calculated by dividing the net profit for the period attributable to ordinary  shareholders by the weighted average number of ordinary shares outstanding during the period.

	Year to 31 March 2021 audited	Year to 31 March 2020 audited
	£000	£000
Net profit attributable to ordinary shareholders	14,982	12,481
	Number '000	Number '000
Weighted average share capital	19,882	19,781
Add: diluted effect of share capital options issued	31	23
Weighted average share capital for diluted earnings per ordinary share calculation	19,913	19,804

6.  The Annual General Meeting of James Latham plc will be held at Unit 1 Swallow Park, Finway Road, Hemel Hempstead, Herts, HP2 7QU on 25 August 2021 at 12.00pm.

Impact of COVID-19

The board continues to monitor the restrictions caused by the COVID-19 pandemic. Our preference is to welcome shareholders to this years AGM, especially given that shareholders were prevented from attending last year. Subject to Public Health England guidance the Annual General Meeting will be held in person, but an announcement will be made to the Stock Exchange should guidance change which places restrictions over holding the AGM.

 

END

 

 

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