REG - Latham(James) PLC - Preliminary Results
27/06/2024 07:00
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RNS Number : 0432U Latham(James) PLC 27 June 2024
James Latham plc
("James Latham" or "the Company")
Preliminary Results
Chairman's statement
I am very pleased to report good trading results for the financial year to 31
March 2024.
The financial year to 31st March 2024 was a year where normal market
conditions returned following three years of unprecedented challenges and
opportunities, which had provided the group with exceptional profits. Product
values reduced at a faster rate and earlier in the financial year than we had
predicted. The lack of demand for our type of products in Continental Europe
led to UK manufacturers having to react to price weakness from European
manufacturers, who were looking to sell more product in the UK.
Global supply chains have been much easier this year, but we have seen how the
position can quickly change with the impact that the shipping attacks in the
Red Sea have had on container rates. The impact of inflation and higher
interest rates has continued to be challenging with negative consumer
confidence levels for much of the year affecting outputs in some of our key
sectors. Construction has had a challenging year, and although this does not
directly affect us, many of our larger manufacturing customers supply product
into this sector. The strength of our results are testament to the depth and
breadth of our customer base and the diverse market sectors within which we
operate.
Revenue for the financial year to 31 March 2024 was £366.5m, down 10.2% on
last year's £408.4m. Like for like volumes taking into account working days
and acquisitions, decreased by just 0.2%, with growth of 2.7% on delivered
business from our own warehouses. The cost price of our products is on average
3.4% lower (2023: 6.5% higher) than at the start of the financial year. This
year has seen a change in our product mix, with customers moving to cheaper
cost-effective products. Whilst we have gained market share in these products,
the lower price per tonne has resulted in reduced revenues.
Gross profit percentage for the financial year to 31 March 2024 was 16.9%
compared with 19.6% in the previous financial year, with product mix and a
more competitive environment resulting in margins reducing slightly below our
long term average. Despite inflation remaining high, overheads have been well
controlled and are little changed from the previous year.
Profit before tax is £30.3m, compared with last year's £44.5m. Profit after
tax for the year is £22.7m compared with last year's £35.9m. Earnings per
ordinary share is 112.7p compared with last year's 179.5p. These figures
should be viewed in the context of the exceptional profits achieved over the
previous two financial years.
As at 31 March 2024 net assets have increased to £215.2m (2023: £195.6m).
Inventory levels have reduced to £61.7m from £67.5m last year due to the
normalisation of supply chains and the product mix resulting in more lower
value products. Current trade and other receivables at the year end were
£2.0m lower than the previous year with our measure of debtors days down
slightly on the previous year. Despite the challenges of the economic
environment, bad debts have remained low at 0.11% (2023: 0.06%) of revenues.
Cash and cash equivalents of £75.9m (2023: £62.6m) remain strong with good
cash flows from operating activities.
Final dividend
The Board has declared a final dividend of 26.0p per Ordinary Share (2023:
20.8p). The total dividend per ordinary share of 33.75p for the year (2023:
28.05p) is covered 3.3 times by earnings (2023: 6.4 times).
The previous two financial years have provided the group with exceptional
profits and have allowed our cash balances to increase. The Board has declared
two special dividends of 8.0p in each of the previous two financial years to
reflect these profit levels. Following a return to more normal market
conditions, the Board has reviewed our current cash position, considering
future investment plans and maintaining our flexibility to react to
opportunities as they arise, and has decided to declare a further special
dividend of 45p per share.
Both the final and special dividend are payable on 23 August 2024 to ordinary
shareholders on the Company's register at close of business on 2 August
2024. The ex-dividend date will be 1 August 2024.
Current and future trading
Current trading is consistent with the second half of the financial year to 31
March 2024, with very similar volumes and margins. The majority of
our customers have improved order books and are feeling more positive than
this time last year. However certain sectors, such as the merchant sector, are
still finding the market place challenging.
We are seeing significant container freight rate increases at the moment which
will increase our cost prices. This affects about 25 % of our products and we
expect that the market price of these products will increase to compensate for
this.
The cost prices from the majority of our manufacturers, excluding freight, are
relatively stable, and we do not expect any changes in the short term. Demand
for panel products is slowly increasing. Demand for timber however has been
more challenging, but we are expecting volumes to increase as the year
progresses.
We continue to see increased volumes in lower value products, but as overall
demand and confidence picks up, combined with the work that we are doing in
the specification sector then we expect our product mix will improve.
We are very mindful of the uncertainties created by the current geopolitical
instability and the upcoming UK general election, but the macro-economic
climate seems to be gradually improving, and the market place within which we
operate is feeling more confident.
The group continues to demonstrate its ability to deliver strong results
despite all the challenges that we face, and we believe that this will
continue.
Development Strategy
The directors remain focused on developing the business and believe that the
recent strong results demonstrate that the strategy is working well.
We will continue to invest in our current warehouse facilities including
building a new storage shed at our Thurrock facility to enable them to stock
more commodity products, and adding new racking to both our Scotland and Hemel
Hempstead warehouses to allow them to further develop their product range.
We are committed to relocating the Belfast site (formerly branded as IJK
Timber) to a modern style facility enabling them to stock our full range of
products, but it is taking longer than expected to find a suitable site for
development.
We have now purchased our Dublin site (formerly branded Abbey Woods), and with
some investment will give us approximately 15% more space to allow us to
increase the range and depth of our stock to support our customers
requirements.
The Board continues to look for acquisitions that either help develop sales
in specific market sectors, enable the business to sell a wider product range,
or any geographical opportunities that arise.
The Board has been conducting a full review of the storage and routes that our
products take before reaching our customers with a view to increasing both the
efficiency of our operations and the range of products that we can hold. This
project has identified a number of options that need to be further
investigated over the coming months, including introducing warehouse
management IT systems. The Board will ensure that sufficient resources are
allocated to these projects to invest in our business for the long term
benefit of the group.
Nick Latham
Chairman
26 June 2024
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 2024
unaudited audited
Year to 31 March Year to 31 March 2023
2024
£000 £000
Revenue 366,514 408,370
Cost of sales (including warehouse costs) (304,415) (328,361)
Gross profit 62,099 80,009
Selling and distribution costs (24,225) (24,214)
Administrative expenses (11,731) (12,097)
Operating Profit 26,143 43,698
Finance income 4,313 1,071
Finance costs (194) (258)
Profit before tax 30,262 44,511
Tax expense (7,601) (8,593)
Profit after tax attributable to owners of the parent company 22,661 35,918
Earnings per ordinary share (basic) 112.7p 179.5p
Earnings per ordinary share (diluted) 112.6p 179.2p
All results relate to continuing operations.
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
For the year to 31 March 2024
unaudited audited
2024 2023
£000 £000
Profit after tax 22,661 35,918
Other comprehensive income that will not be classified subsequently to profit
and loss:
Actuarial gain on defined benefit pension scheme 5,770 1,407
Deferred tax relating to components of other comprehensive income
(1,442) (632)
Other comprehensive income that may be classified subsequently to profit and
loss:
Foreign translation charge (252) 233
Other comprehensive income for the year, net of tax 4,076 1,008
Total comprehensive income attributable to owners of the parent company
26,737 36,926
JAMES LATHAM PLC COMPANY REGISTRATION NUMBER 65619
CONSOLIDATED BALANCE SHEET
For the year to 31 March 2024
unaudited audited
2024 2023
£000 £000
Assets
Non-current assets
Goodwill 1,193 1,193
Other intangible assets 1,152 1,319
Property, plant and equipment 39,989 37,440
Right-of-use-assets 8,363 5,817
Trade and other receivables 789 -
Retirement and other benefit obligation 15,864 7,221
Total non-current assets 67,350 52,990
Current assets
Inventories 61,709 67,489
Trade and other receivables 64,757 66,782
Cash and cash equivalents 75,881 62,609
Tax receivable - 490
Total current assets 202,347 197,370
Total assets 269,697 250,360
Current liabilities
Lease liabilities 1,373 879
Trade and other payables 35,456 41,066
Tax payable 408 -
Total current liabilities 37,237 41,945
Non-current liabilities
Interest bearing loans and borrowings 592 592
Lease liabilities 7,298 5,130
Deferred tax liabilities 9,340 7,118
Total non-current liabilities 17,230 12,840
Total liabilities 54,467 54,785
Net assets 215,230 195,575
Capital and reserves
Issued capital 5,040 5,040
Share-based payment reserve 152 124
Capital reserve 398 398
Retained earnings 209,640 190,013
Total equity attributable to shareholders of the
parent company
215,230 195,575
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 2022 - audited 5,040 387 (873) 398 159,019 163,971
Profit for the year - - - - 35,918 35,918
Other comprehensive income:
Actuarial gain 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 of 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 - audited 5,040 124 - 398 190,013 195,575
Profit for the year - - - - 22,661 22,661
Other comprehensive income:
Actuarial gain on defined benefit pension scheme - - - - 5,770 5,770
Deferred tax relating to components of other comprehensive income - - - - (1,442) (1,442)
Foreign translation charge - - - - (252) (252)
Total comprehensive income for the year - - - - 26,737 26,737
Transactions with owners:
Dividends - - - - (7,348) (7,348)
Exercise of options - (32) - - 32 -
Deferred tax on share options - (20) - - - (20)
Own shares movement - - - - 206 206
Share-based payment expense - 80 - - - 80
Total transactions with owners - 28 - - (7,110) (7,082)
Balance at 31 March 2024 - unaudited 5,040 152 - 398 209,640 215,230
JAMES LATHAM PLC
CONSOLIDATED CASH FLOW STATEMENT
For the year to 31 March 2024
unaudited audited
Restated
2024 2023
£000 £000
Net cash flow from operating activities
Cash generated from operations 29,563 42,484
Interest paid (48) (53)
Income tax paid (5,943) (7,498)
Net cash inflow from operating activities 23,572 34,933
Cash flows from investing activities
Interest received and similar income 3,560 822
Purchase of property, plant and equipment (5,595) (3,304)
Proceeds from sale of property, plant and equipment 67 72
Net cash outflow from investing activities (1,968) (2,410)
Cash flows from financing activities
Purchase of treasury shares (6) -
Exercise of share options 212 1,380
Lease liability payments (1,190) (1,499)
Equity dividends paid (7,348) (6,825)
Net cash outflow from financing activities (8,332) (6,944)
Increase in cash and cash equivalents for the year
13,272 25,579
Cash and cash equivalents at beginning of the year
62,609 37,030
Cash and cash equivalents at end of the year 75,881 62,609
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 2023 and 31 March 2024, 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 26.0p plus a special dividend
of 45.0p per ordinary share, which will absorb £14,314,000 (2023: 20.8p plus
a special dividend of 8.0p absorbing £5,789,000), payable on 23 August 2024
to shareholders on the Register at the close of business on 2 August 2024. The
ex-dividend date is 1 August 2024.
3. The figures for the year ended 31 March 2024 are unaudited. The figures
relating to 31 March 2023 have been extracted from the statutory accounts for
that year. The statutory accounts for the year ended 31 March 2024 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 2024 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 2023 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 26 June 2024.
5. Net cash flow from operating activities
Year to 31 March 2024 Year to 31 March 2023
Restated
unaudited audited
£000 £000
Profit before tax 30,262 44,511
Adjustment for finance income and cost (4,119) (813)
Depreciation and amortisation 4,271 4,173
Impairment - 179
Loss/(profit) on disposal of property, plant and equipment 35 (46)
Decrease/(increase) in inventories 5,780 6,741
Decrease/(increase) in receivables 1,236 1,550
(Decrease)/increase in payables (5,862) (9,547)
Retirement benefits (2,120) (4,446)
Share-based payments non cash amounts 80 182
Cash generated from operations 29,563 42,484
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 2024 unaudited Year to 31 March 2023 audited
£000 £000
Net profit attributable to ordinary shareholders 22,661 35,918
Number '000 Number '000
Weighted average share capital 20,112 20,009
Add: diluted effect of share capital options issued 14 31
Weighted average share capital for diluted earnings per ordinary share 20,126 20,040
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 21 August 2024 at 12.30pm.
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