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 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) |