Coronavirus Update

Latham (James) Final Results 2021

This content has been sourced from: https://www.investegate.co.uk/latham-james--plc--l...

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: 01442 849 100

Nick Latham, Chairman

 

David Dunmow, Finance Director

 

 

 

 

 

SP Angel Corporate Finance LLP

 

Matthew Johnson / Charlie Bouverat (Corporate Finance)

Tel: 0203 470 0470

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

 

 

(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

(453)

(417)

 

 

Profit before tax

18,598

15,662

 

 

(3,616)

(3,181)

 

 

 

Profit after tax attributable to owners of the parent company

14,982

12,481

 

 

75.4p

63.1p

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

 

 

21,374

13,528

(51)

(51)

(3,191)

(3,851)

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

(1,949)

(4,230)

 

 

Cash flows from financing activities

 

 

-

1,036

(1,394)

(1,390)

(3,121)

(3,633)

(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.