Preliminary Results

Source: RNS
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 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

 2024

Year to 31 March 2023

 

£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





5,770

1,407

 

(1,442)

 

(632)



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

 


 

Issued capital

Share-based payment reserve

 

Own shares

 

Capital reserve

 

Retained

earnings

 

Total

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

 

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

 

 unaudited

Year to 31 March 2023

Restated

 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 calculation

20,126

20,040





 

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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