REG - Latham(James) PLC - Preliminary Results
29/06/2023 07:00
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RNS Number : 2949E Latham(James) PLC 29 June 2023
James Latham plc
("James Latham" or "the Company")
Preliminary Results
Chairman's statement
I am very pleased to report excellent trading results for the financial year
to 31 March 2023. These results follow the unprecedented trading results for
the year to 31 March 2022 where we benefitted from our strong relationships
with our suppliers and our balance sheet strength, in navigating the global
supply chain issues and significant increases in the market prices for our
products.
The financial year to 31 March 2023 saw a gradual return to more normal market
conditions, with supply chains becoming easier and cost prices of our products
stabilising. New challenges arose with inflation increasing rapidly throughout
much of the year, with increased energy costs, due in part to the conflict in
Ukraine. The impact of inflation has been felt throughout the economy with a
reduction in both confidence levels and macroeconomic growth forecasts. Our
markets though remained resilient to these challenges.
Revenue for the financial year to 31 March 2023 was £408.4m, up 6.0% on last
year's £385.4m. Like for like volumes taking into account working days and
acquisitions, increased by 5.3%, with the growth mainly on delivered business
from our own warehouses. The cost price of our products is on average 6.5%
higher (2022: 36.2% higher) than at the start of the financial year.
Gross profit percentage for the financial year to 31 March 2023 was 19.6%
compared with 23.8% in the previous financial year, as the margins return to
more normal levels. This figure includes warehouse costs and seven depots now
run extended shift systems to improve our service levels.
Profit before tax is £44.5m, compared with last year's £57.9m. Profit after
tax for the year is £35.9m compared with last year's £45.6m. Earnings per
ordinary share is 179.5p compared with last year's 229.3p.
As at 31 March 2023 net assets have increased to £195.9m (2022: £164.0m).
Inventory levels have reduced to £67.5m from £74.2m last year as the easing
of supply chain conditions meant we could reduce the investment we made last
year in additional inventories. Trade and other receivables at the year end
were £1.5m lower than the previous year with debtor days remaining the same
as the previous year. Despite the challenges of the economic environment, bad
debts have remained small at 0.1% of revenues. Cash and cash equivalents of
£62.6m (2022: £37.0m) remain strong with good cash flows from operating
activities.
Final dividend
The Board has declared a final dividend of 20.8p per Ordinary Share (2022:
19.0p) plus a special dividend of 8.0p (2022: 8.0p) to reflect the exceptional
performances both this year and the previous year. The dividend is payable
on 25 August 2023 to ordinary shareholders on the Company's register at close
of business on 4 August 2023. The ex-dividend date will be 3 August 2023.
The total dividend per ordinary share of 36.05p for the year (2022: 33.5p) is
covered 5.0 times by earnings (2022: 6.8 times).
Current and future trading
The gradual trend of a more competitive market place has continued into the
new financial year, with margins having returned to the longer term average.
We have seen price weakness in a few of our key product areas, as the supply
issues have become much easier, but our product values are still considerably
higher than they were before the COVID-19 pandemic.
Although we have seen some weakness in prices, our manufacturers still have
significant cost pressures on raw materials, energy and wages which should
temper any price weakness. Our overall volumes have continued to increase
compared with the previous financial year, but there has been a shift in
product mix to some lower value products, in part due to product replacement
and value engineering by our customers.
We are mindful that this year will continue to be affected by macroeconomic
concerns as the year progresses, with inflation remaining high, and the
geopolitical back drop causing uncertainty, but the fundamentals within the
majority of the market sectors in which we operate are stable at this stage.
We have a concern that the market in Europe is quiet, and this could cause
manufacturers to export cheaper product to the UK market, and negatively
affect product values.
The group has demonstrated its ability to deliver great results in challenging
circumstances due to the ability of the team to work together to manage the
challenges, and seize opportunities as they present themselves, and this will
continue. The board is therefore very aware that the results for the last two
years have been exceptional, and far beyond the profits earned before the
start of the COVID-19 pandemic. The board's challenge is to navigate the
business towards what is a more normal and realistic profit achievement which
takes into account the market conditions we are operating in and the
inflationary overhead pressures that all companies are facing.
Development Strategy
Our business, like many others, have faced numerous challenges over the past
two years, and these challenges have helped the board identify opportunities
to develop the business. The service levels and product mix that we offer our
customers are becoming ever more critical, so we are currently focusing on a
comprehensive end to end review of our supply chain in order to future proof
our business and ensure that we can meet and exceed our future customer
expectations.
We have invested in some melamine racking at IJK Timber, our recent
acquisition in Belfast, to allow them to increase their product offering. The
longer term objective is to relocate this business to a modern facility to
allow them to stock the full range of our products and grow their market
share. The Yate site development was completed in mid August 2022, which
resulted in a 25% increase in capacity that will allow the depot to further
develop the business and grow market share. Our largest timber site in
Purfleet is now operating a 24/5 warehouse which will enable increased volumes
through the business, and now seven sites are operating 24 hours a day, 5 days
a week.
During the year we will be upgrading our ERP computer system which will create
efficiencies for the business, enable us to integrate a modern warehouse
management system, and provide further opportunities to introduce best in
class computer software.
We are planning to purchase our site at Abbey Woods in Dublin in the autumn of
2023, with the plan to modernise the site and allow us to use part of the
warehouse that was used by the previous landlord, which will give us about 15%
more capacity.
Environmental, Social and Governance (ESG) issues have always been important
to the board, and we plan to integrate our ESG values into all of our
strategic decisions and incorporate performance measures to monitor our
success. We are planning to increase use of electric vehicles and will start
adding solar panels to our depots in order to accelerate the move to a net
zero carbon position.
The board remains focused on identifying acquisitions that either help develop
sales in specific market sectors, enable the business to sell a wider product
range to our existing customers, or any geographical opportunities that arise.
Nick Latham
Chairman
28 June 2023
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 www.lathamtimber.co.uk
(http://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
Abigail Wayne / Rob Rees (Corporate Broking)
JAMES LATHAM PLC
CONSOLIDATED INCOME STATEMENT
For the year to 31 March 2023
unaudited audited
Year to 31 March Year to 31 March 2022
2023
£000 £000
Revenue 408,370 385,368
Cost of sales (including warehouse costs) (328,361) (293,839)
Gross profit 80,009 91,529
Selling and distribution costs (24,214) (22,151)
Administrative expenses (12,097) (11,213)
Operating Profit 43,698 58,165
Finance income 1,071 29
Finance costs (258) (242)
Profit before tax 44,511 57,952
Tax expense (8,593) (12,310)
Profit after tax attributable to owners of the parent company 35,918 45,642
Earnings per ordinary share (basic) 179.5p 229.3p
Earnings per ordinary share (diluted) 179.2p 228.3p
All results relate to continuing operations.
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
For the year to 31 March 2023
unaudited audited
2023 2022
£000 £000
Profit after tax attributable to owners of the parent company 35,918 45,642
Other comprehensive income
Actuarial gain on defined benefit pension scheme 1,407 3,625
Deferred tax relating to components of other comprehensive income
(632) (424)
Foreign translation charge 233 (29)
Other comprehensive income for the year, net of tax 1,008 3,172
Total comprehensive income attributable to owners of the parent company
36,926 48,814
JAMES LATHAM PLC COMPANY REGISTRATION NUMBER 65619
CONSOLIDATED BALANCE SHEET
For the year to 31 March 2023
unaudited audited
2023 2022
£000 £000
Assets
Non-current assets
Goodwill 1,193 1,372
Other intangible assets 1,319 1,487
Property, plant and equipment 37,440 36,935
Right-of-use-assets 5,817 4,154
Retirement and other benefit obligation 7,221 1,119
Deferred tax asset - 154
Total non-current assets 52,990 45,221
Current assets
Inventories 67,489 74,230
Trade and other receivables 66,782 68,332
Cash and cash equivalents 62,609 37,030
Tax receivable 490 -
Total current assets 197,370 179,592
Total assets 250,360 224,813
Current liabilities
Lease liabilities 879 1,275
Trade and other payables 41,066 50,876
Tax payable - 400
Total current liabilities 41,945 52,551
Non-current liabilities
Interest bearing loans and borrowings 592 592
Lease liabilities 5,130 3,133
Deferred tax liabilities 7,118 4,566
Total non-current liabilities 12,840 8,291
Total liabilities 54,785 60,842
Net assets 195,575 163,971
Capital and reserves
Issued capital 5,040 5,040
Share-based payment reserve 124 387
Own shares - (873)
Capital reserve 398 398
Retained earnings 190,013 159,019
Total equity attributable to equity shareholders of the parent company 195,575 163,971
163,971 163,971
JAMES LATHAM PLC
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
Attributable to the owners of the parent company
Share-based payment reserve
Issued capital Own shares Capital reserve Retained Total
earnings Equity
£'000 £'000 £'000 £'000 £'000 £'000
Balance at 1 April 2021 - audited 5,040 167 (471) 398 113,950 119,084
Profit for the year - - - - 45,642 45,642
Other comprehensive income:
Actuarial gain/(loss) on defined benefit pension scheme - - - - 3,625 3,625
Deferred tax relating to components of other comprehensive income - - - - (424) (424)
Foreign translation charge - - - - (29) (29)
Total comprehensive income for the year - - - - 48,814 48,814
Transactions with owners:
Dividends - - - - (4,379) (4,379)
Exercise of options - (24) 228 - 4 208
Deferred tax on share options - 75 - - - 75
Transfer of treasury shares - - (630) - 630 -
Share-based payment expense - 169 - - - 169
Total transactions with owners - 220 (402) - (3,745) (3,927)
Balance at 31 March 2022 - audited 5,040 387 (873) 398 159,019 163,971
Profit for the year - - - - 35,918 35,918
Other comprehensive income:
Actuarial gain/(loss) on defined benefit pension scheme - - - - 1,407 1,407
Deferred tax relating to components of other comprehensive income - - - - (632) (632)
Foreign translation charge - - - - 233 233
Total comprehensive income for the year - - - - 36,926 36,926
Transactions with owners:
Dividends - - - - (6,825) (6,825)
Exercise of options - (386) 1,397 - 369 1,380
Deferred tax on share options - (59) - - - (59)
Transfer to retained earnings - - (524) - 524 -
Share-based payment expense - 182 - - - 182
Total transactions with owners - (263) 873 - (5,932) (5,322)
Balance at 31 March 2023 - unaudited 5,040 124 - 398 190,013 195,575
JAMES LATHAM PLC
CONSOLIDATED CASH FLOW STATEMENT
For the year to 31 March 2023
unaudited audited
2023 2022
£000 £000
Net cash flow from operating activities
Cash generated from operations 43,864 30,983
Interest paid (53) (59)
Income tax paid (7,498) (10,259)
Net cash inflow from operating activities 36,313 20,665
Cash flows from investing activities
Interest received and similar income 822 29
Acquisition of businesses net of cash and cash equivalents acquired - (2,238)
Purchase of property, plant and equipment (3,304) (4,319)
Proceeds from sale of property, plant and equipment 72 62
Net cash outflow from investing activities (2,410) (6,466)
Cash flows from financing activities
Lease liability payments (1,499) (1,408)
Equity dividends paid (6,825) (4,379)
Net cash outflow from financing activities (8,324) (5,787)
Increase in cash and cash equivalents for the year
25,579 8,412
Cash and cash equivalents at beginning of the year
37,030 28,618
Cash and cash equivalents at end of the year 62,609 37,030
JAMES LATHAM PLC
Notes to the unaudited preliminary financial information
1. The preliminary financial information presented in this report is
unaudited and has been prepared in accordance with the recognition and
measurement principles of UK adopted 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 2022 and 31 March 2023, 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 28.8p per ordinary share,
which will absorb £5,789,000 (2022: 27.0p absorbing £5,379,000), payable on
25 August 2023 to shareholders on the Register at the close of business on 4
August 2023. The ex-dividend date is 3 August 2023.
3. The figures for the year ended 31 March 2023 are unaudited. The figures
relating to 31 March 2022 have been extracted from the statutory accounts for
that year. The statutory accounts for the year ended 31 March 2023 have yet to
be delivered to the Registrar of Companies and have been prepared in
accordance with UK-adopted International Accounting Standards. 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 2023 will be delivered to the
Registrar of Companies and sent to Shareholders in due course. The Annual
Report and Accounts may also be viewed in due course on James Latham plc's
website at www.lathamtimber.co.uk (http://www.lathamtimber.co.uk)
Statutory accounts for the year ended 31 March 2022 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.
4. This announcement was approved and authorised for issue by the Board of
Directors on 28 June 2023.
5. Net cash flow from operating activities
Year to 31 March 2023 unaudited Year to 31 March 2022 audited
£000 £000
Profit before tax 44,511 57,952
Adjustment for finance income and cost (813) 213
Depreciation and amortisation 4,173 4,128
Impairment 179 -
(Profit)/loss on disposal of property, plant and equipment (46) 50
Decrease/(increase) in inventories 6,741 (23,990)
Decrease/(increase) in receivables 1,550 (18,034)
(Decrease)/increase in payables (8,167) 13,940
Retirement benefits (4,446) (3,445)
Share-based payments non cash amounts 182 169
Cash generated from operations 43,864 30,983
6. 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 2023 unaudited Year to 31 March 2022 audited
£000 £000
Net profit attributable to ordinary shareholders 35,918 45,642
Number '000 Number '000
Weighted average share capital 20,009 19,905
Add: diluted effect of share capital options issued 31 85
Weighted average share capital for diluted earnings per ordinary share 20,040 19,990
calculation
7. The Annual General Meeting of James Latham plc will be held at the
Leverstock Suite, Holiday Inn, Breakspear Way, Hemel Hempstead, Hertfordshire,
HP2 4UA on Wednesday 23 August 2023 at 12.30pm.
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