Latham(James) PLC – LTHM – Final Results

Latham(James) PLC – LTHM – Final Results

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


23 June 2021

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