J A M E S L A T H A M P L C
ANNUAL REPORT & ACCOUNTS 2020
Contents
Summary and Highlights
1 Financial Highlights and Calendar
2 Chairman’s Statement
Strategic Report
James Latham plc and Our Objectives and Strategy
4 Outline of the Strategic Report
4 Section 172 Statement
5
8 Corporate Responsibility
13 Principal Risks and Uncertainties
16 Key Performance Indicators
17 Operating Review
20 Financial Review
Corporate Governance
24 Corporate Governance Report
27 Directors and Advisors
28 Directors’ Remuneration Report
32 Directors’ Report
35 Statement of Directors’ Responsibilities
36
Independent Auditor’s Report
Financial Statements
40 Consolidated Income Statement
41 Consolidated Statement of Comprehensive Income
42 Consolidated and Company Balance Sheet
43 Consolidated Statement of Changes in Equity
44 Company Statement of Changes in Equity
45 Consolidated and Company Cash Flow Statement
46 Notes forming part of the Group Accounts
75 Notice of the Annual General Meeting
77 The Latham Group
Financial Highlights and Calendar
for the year ended 31 March 2020
Financial Highlights
Revenue
£247.1m
Adjusted earnings per
share (see Note 9)
64.0p
2020 up 5.1%
2019 up 9.4%
2018 up 8.1%
2017 up 6.9%
2016 up 6.3%
2020 up 3.9%
2019 up 6.4%
2018 up 3.4%
2017 up 4.3%
2016 up 33.3%
247.1
235.1
214.9
198.8
185.9
150
175
200
225
250
275
64.0
61.6
57.9
56.0
53.7
35
45
55
65
75
Total Dividend
per share
15.5p
2020 down 13.4%
2019 up 7.8%
2018 up 8.1%
2017 up 7.3%
2016 up 14.4%
15.5
17.9
16.6
15.35
14.3
10
12
14
16
18
20
Adjusted net profit (see Note 9)
Equity Shareholders Funds
Cash and Cash Equivalents
£12.7m
Up 4.5%
£104.3m
Up 6.4%
£17.0m
Up 9.1%
Financial Calendar
Record date for final dividend 2020
Annual General Meeting 2020
Payment of final dividend
Interim 2020/21 results announcement
Interim dividend expected payment date
Preliminary announcement of 2020/21 results
Annual General Meeting 2021
7 August 2020
2 September 2020
4 September 2020
25 November 2020
22 January 2021
23 June 2021
25 August 2021
JAMES LATHAM PLC ANNUAL REPORT 2020
1
Chairman’s Statement
I am pleased to report good trading results for the financial year to
31 March 2020.
Revenue for the financial year to 31 March 2020 was £247.1m, up 5.1% on
last year’s £235.1m. Like for like volumes increased by 1.8%, with the growth
mainly on delivered business from our own warehouses, with a reduction
in direct volumes shipped from the ports or from the manufacturers. The
cost price of our products steadily fell throughout the year, ending the year
3.3% lower than the comparative twelve months. Abbey Wood in Ireland has
been successfully integrated into the Lathams business and is now starting
to provide a useful contribution to the Group’s results.
Gross profit for the financial year to 31 March 2020 was 17.6% compared with
17.2% in the previous financial year. This figure includes warehouse costs,
which have increased due to extended working hours with four of our depots
now working 24 hours a day and further investment in our racking systems.
Profit before tax is £15.7m, up £0.4m on last year’s £15.3m. Profit after tax
for the year is £12.5m, up from last year’s £12.4m.
Earnings per share is 63.1p (2019: 63.1p). Adjusted earnings per ordinary
share, adjusted for the effect on the introduction of IFRS 16 on Leasing this
year and the previous years results of the property profit and the one off
cost relating to Guaranteed Minimum Pensions were 64.0p (2019: 61.6p) an
increase of 3.9% (see note 9).
As at 31 March 2020 net assets have increased to £104.3m (2019: £98.0m).
We have adopted IFRS 16 on Leasing in these results, which has had an
insignificant effect on profit before tax and these changes are explained
in note 14 to the accounts. Non current assets have increased by £7.5m
from 31 March 2019. £4.9m of this increase relates to the creation of a new
asset class of Right of Use Assets relating to the introduction of IFRS 16 on
Leasing. In addition we acquired Dresser Mouldings (Rochdale) Ltd for cash
consideration of £1.0m, and have also invested £1.0m in redeveloping the
Gateshead warehouse. Inventories have increased to £44.3m from £42.4m
last year. Trade receivables at the year end were £4.4m higher than the
previous year as we saw a reduction in cash received at the end of
March due to the COVID-19 pandemic. However Trade Receivables have
now returned close to normal levels. There was another low bad debt charge
of 0.20% of turnover for the year. Cash and cash equivalents of £17.0m
(2019: £15.5m), remain strong with good cash flows from operating activities.
At 31 March 2020 the deficit of the defined benefit scheme under
IAS19 (revised) was £11.8m, up £3.1m compared with £8.7m last year.
The calculation of the pension deficit remains very sensitive to changes
in assumptions, and was affected by the reduction in market values of
investments at the end of March.
Nick Latham
Chairman, James Latham plc
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JAMES LATHAM PLC ANNUAL REPORT 2020
Chairman’s Statement
Final dividend
The Board has declared a final dividend of 10.0p per
Ordinary Share (2019: 12.9p). The dividend is payable on
4 September 2020 to ordinary shareholders on the
Company’s register at close of business on 7 August 2020.
The ex-dividend date will be 6 August 2020. The total
dividend per ordinary share of 15.5p for the year (2019:
17.9p) is covered 4.1 times by earnings (2019: 3.5 times).
The board considers this level of dividend to be prudent
given the balance between the good results achieved in the
year to 31 March 2020 and the difficult market conditions
experienced during the first quarter of the current financial
year caused by the COVID-19 pandemic.
Current and future trading
The board responded quickly and decisively to protect the
business and the employees from COVID-19, with quick
action to reduce costs where possible, manage the stock
and preserve cash. COVID-19 has had a considerable affect
on the start of our trading year. We remained open at
most of our distribution sites to support NHS projects and
other essential services, as well as servicing our customers
that managed to remain open. April was a particularly
challenging month with sales at 40% of April 2019 sales.
We have seen more customers coming back to work
throughout May, with positive trends on numbers of
orders taken and total number of trading customers,
with sales at 60% of May 2019 sales. This positive trend
is continuing in June, and sales are expected to be 80%
of June 2019 sales. I have been incredibly pleased at how
our staff have managed to work through this challenging
period, and the resilience of the business. The skill of our
senior staff with the support of the board has undoubtedly
limited the negative impact of COVID-19 on the business.
The full impact of the virus and the effect on the wider
economy are impossible to predict at this stage.
Development strategy
The board believes that there are plenty of opportunities
to develop and grow our business. The strength of the
business will allow us to avoid the worst of any potential
downturn in the economy and seize on any opportunities
to further develop the business. We will continue to look
to grow the business through any suitable acquisitions
to support key market sectors and also identify new
products in market sectors where we are focussing our
efforts. We will continue to invest in our warehouses and
extend the working day at our depots to ensure that we
meet the future delivery needs of our existing and new
customers. Our focus will be on completing the Gateshead
site development, and a significant racking project at our
Thurrock facility. We have also fast tracked our on line
presence project, and the use of technology as we look to
drive more efficiencies into our business, to ensure we are
in the best place possible to deal with the future. There are
clearly challenges as we enter a post Brexit and COVID-19
world, but the board remains confident that the Company
is in a position of strength which will allow us to plan for a
positive future.
Directors and staff
Andrew Wright became managing director in April 2019
and using his wealth of experience, he has continued to
develop the business and set the agenda for progress over
the coming years, and I am extremely grateful for his hard
work in transitioning to this role.
I would also like to recognise the great work that our
environmental and compliance manager, Ewa Bazydlo
does in ensuring that we maintain our industry leading
environmental position. In 2019 we were awarded the
Environmental Achievement Award by the TTJ for our
Energy Saving Programme, which was recognition of
just some of the behind the scenes work that we are
continually doing to reduce our carbon footprint.
In terms of corporate structure, there is a clear division
of responsibilities between the main board, which
determines strategy and exercises corporate governance
and the trading board of Lathams Limited, chaired by
Andrew Wright, which sets and monitors trading and
operations policy. Both boards are well balanced in terms
of both experience and skills, and each member of the
board has a clearly defined responsibility.
The business is organised to give as much local autonomy
to our site directors to implement our sales and purchasing
strategy, with our senior timber and panel staff meeting
regularly to review and evaluate our key products groups.
I am incredibly grateful for all the hard work shown by not
only the directors and local management teams, but also
all the other staff in our organisation who help us maintain
our position as an industry leading business. These results
could not have been delivered without the commitment
and determination of everyone.
Nick Latham
Chairman, James Latham plc
30 June 2020
JAMES LATHAM PLC ANNUAL REPORT 2020
3
Strategic Report
Introduction
Outline of the Strategic Report
The directors present their Strategic Report for the
year ended 31 March 2020. Included within these
sections are the four Principles for delivering growth
as contained within the Quoted Companies Alliance
Corporate Governance Code 2018, demonstrating how
we comply with these principles.
James Latham plc and Our Objectives and Strategy
Corporate Responsibility
Principal Risks and Uncertainties
Page
5
8
13
16 Key Performance Indicators
17 Operating Review
20
Financial Review
The Strategic Report was approved by the board of
directors on 30 June 2020 and signed on its behalf by:
Nick Latham
David Dunmow
Section 172 Statement
The Strategic Report contains information on how the
directors have had regard to the matters set out in
Section 172 (1) (a) to (f) of the Companies Act 2006 when
performing their duties under section 172. The long
term success of our business has always depended on
maintaining mutually beneficial arrangements with all
our key stakeholders, and having shared goals. The
group ensures that these shared goals are communicated
throughout the business, both at group and local board
level, as well as with the stakeholders themselves. Details
of how we interact with our key stakeholders are discussed
further in the Strategic Report. Our key stakeholders are:-
• Shareholders. As owners of the Group, we rely on
the support and views of our shareholders. Further
information is shown on page 7 and 26.
• Employees. All of our employees throughout the
business are key to our success, and we need to reward,
protect and listen at all levels. We have a Think Tank
which meets regularly with an independently set agenda
to present ideas to the board, representing the views of
all our staff. Further information is shown on page 12.
4
JAMES LATHAM PLC ANNUAL REPORT 2020
• Customers and Suppliers. Building long term
relationships with our customers and suppliers is
mutually beneficial for our shared success. Key to this
is availability of stocks, service levels and expertise
of our staff, to be able to provide the best products
and best solutions to our customers, which cannot be
done without the support of our suppliers. Further
information is found on page 6.
• Environment and Local Communities. As a provider
of natural materials, our impact and interaction with
the environment and our local communities is key to
our long term success. Further information is found on
pages 8 to 11.
The key decisions taken by the board in the year to
31 March 2020 include:
a. Acquisition of Dresser Mouldings (Rochdale) Limited.
This decision was made to increase our offering in
processed timber in line with our strategy of developing
the timber cladding business. Consideration was given
to the cash flow of the acquisition and expected capital
expenditure over the next five years, which are to be
satisfied out of our cash reserves. Extensive due diligence
has shown that their values, health and safety and
environmental policies are a close match to our own.
b. Approval of capital expenditure at our Gateshead
branch. This decision was made to extend the working
area in the yard to improve health and safety as well
as make the operation more efficient. In addition
the building of a new office improved the working
environment for our employees.
c. Approval of annual budget and three year plans.
This year’s budget and rolling three year plan were
approved following a review of the budgets produced
by the individual profit centres to ensure that this
met our strategic priorities and considered the risks.
We considered whether these plans adequately met
the demands of our customers both in terms of service
and in environmental concerns. We also considered
the health and safety implications of these plans, as
well as take on board ideas put forward by employees
through the group’s ‘Think Tank’.
d. Approval of the final dividend. We considered all the
stakeholders in setting the dividend levels, including
meeting shareholder expectations, maintaining a
sufficient cash reserve for future investment and
ensuring that there are sufficient reserves to meet our
obligations to our pensioners.
Strategic Report
James Latham plc and Our Objectives and Strategy
DELIVER GROWTH
Principle 1 – Establish a strategy and business model which promote long term value
for shareholders.
The company’s objectives are:
• To maximise shareholder value over the
medium term;
• To be the supplier of choice for our
customers by understanding and meeting
their needs and providing them with the
right material at the right time;
• To maintain its presence in timber based
products but to expand the product range
to the existing customer base from an
extended distribution network;
• To increase sales of third party certified
legal and sustainable timber products and
drive Corporate Social Responsibilities
within our company and industry;
• To provide a safe working environment for
our staff;
• To improve service levels by improving
warehouse facilities to speed order picking
over an extended product range; and
• To employ and develop well-trained,
knowledgeable and helpful staff.
Objectives
James Latham plc sets out to be the supplier of choice
throughout the UK and Ireland for joinery, door and kitchen
manufacturers, shopfitters and other market sectors, offering
a wide range of wood based panel products, natural acrylic
stone, door blanks, hardwoods, high grade softwoods,
cladding, decking, mouldings and plastics. We also supply
commodity and specialist products to timber and builders’
merchants. Environmental concerns about the growth and
harvest of timber are key drivers of company policy, with the
company aiming to increase each year, the amount of legal
and sustainable product supplied into its marketplace.
The company believes that to provide the service demanded,
we need to be close to our customers. We offer national
coverage from eleven locations in the UK and two locations
in the Republic of Ireland, as shown in The Latham Group
map on page 77, as well as from various port and storage
locations around the UK. Our processing facility at Dresser
Mouldings supplies both the depots and customers directly.
Having stock of product in the right place at the right time
is important to provide this service. Commodity imports are
held in ports including Tilbury, Liverpool and Grangemouth.
This stock can be delivered directly to customers for multi-
pack orders, or transferred to the depots for onward delivery.
Around London we stock Panel Products and Timber Products
in separate warehouses whereas a full range of products are
held in our other locations around Great Britain. We also hold
a range of specialist products in Leeds for national distribution
and Leeds also offers an efficient delivery service to Ireland to
complement the business supplied directly from our timber
depots in the Republic of Ireland.
The company is well respected in its industry and
amongst its customers and suppliers for its principled trading
policies and its integrity.
JAMES LATHAM PLC ANNUAL REPORT 2020
5
Strategic Report
James Latham plc and Our Objectives and Strategy
Strategy for developing the business
The directors recognise that the strength of the group
is as a distributor of high quality timber and associated
products, purchased using the Timber Trade Federation
Responsible Purchasing Policy from legal and sustainable
sources of supply, to meet existing and new customer
demands on product and service.
We continue to invest in our stock ranges and logistics
infrastructure to develop and increase our market share
in Laminates. We are committed to reaching our aim of
providing our customer base with a 24-48 hour service
on our complete Laminates collection of new, innovative,
exclusive products, supplying some of the biggest
Laminate brands in the market.
Working with existing and potentially new suppliers,
we identify products to add to our extensive range.
This can include non timber products where they fit into
the requirements of our customer base. Our aim is to
provide a true one stop shop to our key target markets.
Our strategy for developing the business is two fold.
Firstly to ensure that we maintain and improve our volumes
of commodity products, including MDF, OSB, Plywood,
North American Hardwoods, European Hardwoods and
African Hardwoods. Secondly, alongside the commodity
products we sell an increasing amount of speciality
products, including Door Blanks, Melamines, Laminates and
other decorative panels, Accoya, Woodex®, Decking and
Cladding. The Dresser Moulding facility allows us to further
develop our offering of processed timbers. Full ranges of the
of the specialist products are stocked and key to our success
is having the right stock in the right place at the right time.
All Latham depots will continue to offer an enhanced
range of melamine products ex-stock, including decors
from Egger, Kronospan and CLEAF.
Sales of technical timber are a key part of our strategic
sales development for timber. An enhanced range of
products are stocked, including Accoya, WoodEx®,
Decking and Cladding.
Our Leeds depot acts as the central distribution point
for ATP, HI-Macs®, Avonite, Composite Decking, Kydex®,
Laminates and Valchromat. These are all available on a
national basis for prompt delivery to our customer base.
We have and will continue to enhance our delivery service
and will continue to develop and enhance our centrally
held stocks.
Vodafone offices using Birch faced Plywood.
6
JAMES LATHAM PLC ANNUAL REPORT 2020
Strategic Report
James Latham plc and Our Objectives and Strategy
clearly with our existing and potential customers,
fully complying with our responsibilities under the
Data Protection Act.
Our Architect and Design showrooms at the Business
Design Centre in Islington and our showroom in the
Northern Quarter of Manchester has opened up our
product offering to a large number of professional
specifiers. This has proved to be beneficial, gaining
orders and specifications for a wide range of products
on display from our key strategic suppliers. We also put
in place a programme of presentations to architects for
their Continual Professional Development.
We value the personal relationships developed with
our suppliers, staff and customers. Working with our
staff and suppliers we aim to offer our existing and
potential customer base a first class service of fit for
purpose, legal and sustainable products, delivered in
a timely manner.
Black and red Valchromat used on the bar at Catford Mews Cinema.
Machinery at Dresser Mouldings.
All depots have a three year rolling business plan to ensure
that they monitor opportunities and threats throughout
the year, and review their practices to continually improve
service levels to our customers. Investment in our facilities
are ongoing as we adapt our product ranges and service
levels to meet customer demands.
We will continue to look to develop new markets,
both organically through our depot network, or by
acquisition where the opportunity arises. This year
we completed the acquisition of Dresser Mouldings
(Rochdale) Ltd, a timber processor based in Rochdale
but offering UK coverage.
Our staff are a major asset for the company, and we
continue to invest in training to ensure that we have the
best operations, sales and technical teams in the industry.
Marketing of our products is done through brochures,
direct advertising, public relations, social media and
exhibitions and we use multiple channels to communicate
Principle 2 – Seek to understand and meet shareholder needs and expectations.
Nick Latham and David Dunmow are responsible for
maintaining good communications with shareholders.
This includes our published financial statements and
Stock Exchange announcements, which are also posted
on to our Investors website, www.lathams.co.uk.
We allocate at least three days a year for Investor
Roadshows organised by our broker, SP Angel, where
investors have the opportunity to discuss our strategy
and their own expectations. In addition we occasionally
host shareholder visits to our depots with a guided
tour of the facilities to increase their understanding of our
business. Shareholder feedback and significant movements
in our shareholder base are regularly discussed at board
level and their views are considered as part of our decision
making process.
JAMES LATHAM PLC ANNUAL REPORT 2020
7
Strategic Report
Corporate Responsibility
Principle 3 – Take into account wider stakeholder and social responsibilities and their
implication for long-term success.
At James Latham plc, we are conscious of our corporate
responsibilities to all our stakeholders and to society as
a whole. Environmental matters, health and safety, staff
training and equal opportunities are key areas relevant
to the group’s business. We also maintain contact with
and support both the local and the wider community.
A substantial amount of management time is devoted to
Corporate Social Responsibility issues, as we believe that
these enhance our standing with customers and suppliers
to the benefit of all stakeholders.
Environmental
The directors of James Latham plc recognise that the
company has a responsibility to the environment,
customers, suppliers, shareholders and staff to base its
commercial activities on well-managed forests and to
reduce any negative environmental or social impact of
its trading as far as is reasonably practical.
With best practices observed, timber products are the
ultimate sustainable and recyclable materials, requiring
low energy to process and being thermally efficient in use.
Timber from well-managed forests absorbs carbon in
growing and locks in carbon in use. It is sustainable,
producing a regular crop and puts value into growing
forests so helping to reduce land clearance for other uses.
Timber from poorly managed forests destroys biodiversity,
leads to soil erosion and damages watercourses. It ruins
the lifestyle of traditional forest dwellers. Forest burning
adds to carbon emission and harms air quality in the
region. Purchasing from those involved in corrupt practices
undermines national governance.
It is therefore essential that we ensure our timber is
legally harvested and comes from well managed forests.
The group recognises that the independent certification
of forests and of the supply chain is the best means of
providing assurances of this. Where possible it purchases
material certified by the Programme for the Endorsement
of Forest Certification schemes (PEFC) or the Forest
Stewardship Council (FSC). As well as providing
assurances on the timber itself, these schemes also
provide checks on the welfare of the forest workers and
indigenous population.
8
JAMES LATHAM PLC ANNUAL REPORT 2020
The group has third party audited chain of custody for
timber supplied as certified by PEFC, FSC and other
schemes. This is to ensure that claims made about
certification can be proved.
The group signed up to the WWF
UK ‘Forest Campaign’ committing
to purchasing only certified legal and sustainable timber
products by 2020 and to publically show progress towards
this target. WWF awarded us the top score of three “trees”.
Whilst the Forest Campaign has reached an end, we stay
committed to responsible forest trade.
In some parts of the world, timber certified by one of
the internationally recognised schemes is not available.
The group is committed to purchasing all timber from
legal sources and to seek confirmation that suppliers are
operating in accordance with the laws of their country.
Where the risk of corruption or illegal logging is high, we
seek third party audited proof of legality.
The figures for the relevant calendar years are given below.
FSC
PEFC
Verified Legal
Uncertified
FSC
PEFC
Verified Legal
Uncertified
14
17
3
10
2019
73
3
10
2018
70
Strategic Report
Corporate Responsibility
The European Union Timber Regulation (EUTR), which
came into force in March 2013, places an obligation on the
first placer of timber on the European market to ensure
that the timber has been legally sourced and traded, to
operate a risk assessment process and to take mitigating
measures to minimise the risk of illegality. We have a
rigorous system for assessing our supply chains and are
committed to only purchasing product with negligible risk
status. We will not trade in timber species prohibited under
Appendix I of CITES (the Convention on International Trade
in Endangered Species of Wild Fauna and Flora) legislation
and obtain the appropriate documents for the very limited
trade we do in all other CITES listed timber species.
Part of the EUTR process to ensure that only legal timber
enters the EU is the signing of bilateral agreements with
producer countries. This involves the issuing of FLEGT
(Forest Law Enforcement, Governance and Trade) licences
for all timber traded for that source. The department for
business, energy and industrial strategy BEIS carried out an
audit of our due diligence system by their office for product
safety and standards in December 2018. Having completed
their full review their findings were that our system
was fully compliant with the European Union Timber
Regulation No 995/2010.
When the UK withdraws from the European Union, then
the UK is expected to adopt the EUTR as UKTR. In any
case, our systems of monitoring supplies of our timber for
environmental reasons will be unchanged and extended to
cover EU suppliers under the new definition of operator.
For a number of years the company has
had risk assessment tools in place to
monitor suppliers through the Timber
Trade Federation Responsible Purchasing
Policy and Code of Conduct. The risk
assessment seeks to provide the clearest practicable
information regarding the sources of raw material used in
the manufacture of wood products.
We publish our commitment to the environment
regularly in our product guide, specific literature and on
our website, www.lathamtimber.co.uk. We give clear
guidance to our customers about the importance of buying
timber that can be demonstrated to be legal and from
well-managed forests. This is a condition of contract to
supply the UK Government and many environmentally
aware customers. Company staff give presentations to
customer trade associations and at customer premises.
Informing suppliers and supporting certification
Our senior staff have spoken about the importance of
independent certification of forests and supply chains.
Company buyers have visited individual suppliers in
Europe, Congo Brazzaville, China, Indonesia, Malaysia,
the United States, Uruguay, Chile, Brazil, Bolivia and
Vietnam giving the same message. Group buyers have
visited individual suppliers auditing the source of logs.
Supply chain transparency – Modern Slavery
Act 2015
We are dedicated to promoting ethical values and
integrity in our business behaviour by implementing
controls through ISO management and due diligence
systems. We are committed to taking all reasonable efforts
to prevent human trafficking and slavery within our trading
and operational purchase supply chains. Our Modern
Slavery Statement is updated annually and is available on
our website www.lathamtimber.co.uk.
Energy and our Carbon Footprint
We recognise that alongside our timber environmental
policy, we have a responsibility to minimise our local
environmental footprint. We have developed an
environmental management system which is accredited
under ISO14001. This commits us to considering energy
efficient options for lighting, heating and ventilation and
transport, before making purchasing decisions.
Our Carbon data is shown in the following table:-
Carbon Dioxide Equivalent (CO2e) tonnes
Scope 1
Direct emissions from burning gas
and solid fuel for heating and from
road use for sales and distribution
Scope 2
Indirect emissions from use of
electricity
Global Intensity Ratio
Tonnes of CO2 from scope 1 and 2
per £m of turnover
Tonnes of CO2 from scope 1 and 2
per thousand m3
Data shown is for the calendar year 2019.
2019
4,114
264
17.62
11.20
JAMES LATHAM PLC ANNUAL REPORT 2020
9
Strategic Report
Corporate Responsibility
Scope 1 and 2 emissions are calculated from billing data
received from our power and fuel suppliers, and converted
using conversion factors published by the UK Government.
This includes data from our Irish operations.
As a distribution company, the majority of our emissions
are from our vehicles, as shown in the pie chart below:
6%
2%
19%
6%
0%
67%
Electricity - 1,035 mWh
Cars Diesel - 1,081 mWh
Natural gas - 426 mWh
Cars Petrol - 35 mWh
LPG - 3,510 mWh
HGV’s diesel - 12,306 mWh
Our actions on reducing carbon are currently focused on
reducing usage by utilising available technologies. We will
gradually increase the emphasis on to behavioural changes.
When purchasing new HGV vehicles we are sourcing the
cleanest available vehicles for multi-drop deliveries, and
currently 70% of our fleet is equipped with Euro 6 engines.
All of our HGV’s are fitted with vehicle trackers, monitoring
efficiency of route planning and on driver behaviour
patterns. We regularly review the availability of electric
HGV’s, and as these become available and suitable for our
multi-drop style of delivery we will look to adding these
to the fleet. On our company cars we are increasing the
numbers of plug-in hybrid cars being used and will look
to actively increase the percentage of energy efficient cars,
including electric cars where appropriate, on our fleet.
We invested in electric combi trucks last year to assess
their performance and carbon saving, and are now
adding them as an approved vehicle to purchase where
circumstances allow.
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JAMES LATHAM PLC ANNUAL REPORT 2020
We have signed up to use BioLPG fuels, guaranteeing
40% of our supply with a ‘Green Gas Certification Scheme’,
which is fully traceable and third party verified. We also
purchase 100% biomass renewable electricity which
produces 86% less carbon than coal-generated power.
We have continued our investment in LED lighting,
with four more depots having their lighting upgraded.
With more of our depots working over night, efficiency
of the lighting is important. Since 2015, the introduction
of this LED lighting has lead to a 26% reduction in direct
consumption and a 54% drop in CO2 emissions.
Waste Disposal
The company seeks to minimise the use of packaging
material and to recycle discarded packaging material
and paper where it is practicable to do so, to avoid
these materials entering landfill. We have seen a good
improvement in reducing the amount of waste reaching
landfill, as set out in the table below.
Waste to landfill and diverted from landfill
2015
2016
2017
2018
2019
Landfill (tonne)
336
363
390
371
156
Diverted from
landfill (tonne)
347
350
562
479
681
Total waste
683
713
952
850
837
Diverted from
landfill
51%
49%
59%
56%
81%
Whilst every effort has been made to ensure data is consistent
across the years, there are some differences in collection methods
across this period.
In addition, in conjunction with our registrar
Computershare, we have this year introduced a Deemed
Consent system whereby shareholders need to opt in to
receive paper copies of the Annual Report. We hope that
by shareholders accessing the Annual Report on line, we
can dramatically reduce the amount of carbon involved in
it’s production and distribution.
Support of our communities
We give support, both in staff time and financially,
to community projects local to our depots through
schools, sports teams and charities. This year for example,
we donated material for the construction of 18 Cold
Weather Sleeping Pods within a Salvation Army hall in
Redbridge, Ilford. The pods are designed to provide
privacy and security for those unfortunate enough to
be homeless in the region. The project attracted huge
awareness for the cause and was extremely well received
by the press, both locally and nationally.
Material is also provided to the Goldfinger factory, a
not for profit organisation in Kensington, London,
who provide training and coaching to people trying
to reform their lives after issues with drugs, alcohol,
homelessness, crime etc. Members of the programme
learn woodworking skills, from joinery and furniture
making, through to coating, lacquering etc. All products
manufactured are then sold in the on-site shop, to raise
funds for the project.
We support the National Forest project in Central England,
which started with the planting of 250 trees to celebrate
the company’s 250 year anniversary in 2007 and continues
with further plantings and woodland management activities
for customers, suppliers and staff.
Strategic Report
Corporate Responsibility
Health and Safety - Providing a safe working
environment
The handling of timber and panel products, both manually
and mechanically, and the stacking and storage of these
products at height, can be dangerous activities. We are
very active in assessing and minimising the risks in all
areas of the business and educating the workforce to
provide as safe a working environment as possible for all
people that come into contact with James Latham plc.
We employ a full-time Health and Safety Manager who
reports to the board regularly, attends board meetings
twice a year and chairs health and safety meetings at
all depots. We have a 3-year action plan and all sites
are subject to audit, with their audit scores and trends
being monitored at quarterly management meetings.
Management and employees are actively involved in
improving our safety record, which is high on everyone’s
agenda. All employees take a personal responsibility for
making sure their actions and behaviour maintain safety
for all and we encourage reporting of “near misses” to
enable us to constantly improve our safety systems.
In addition, we recognise that safety extends beyond our
warehouses. We regularly monitor vehicle accidents in
our lorries and company cars to assess whether further
training is required. We operate a programme of lorry
driver mentoring and have joined the Road Haulage
Association who carry out yearly audits to make sure we
are operating safely and efficiently. Our lorries all have
tracking devices fitted which provide alerts and information
on speed and the route taken, as well as cameras and side
scanners to not only provide live footage for training and
insurance purposes, but also to provide improved rear
and side visibility to our drivers, minimising blind spots.
We undertake driving licence verification checks on a
regular basis for all our drivers.
The company is proud to have been
awarded the RoSPA Silver Award of
Achievement. The RoSPA Health
and Safety Awards are the longest-
running awards scheme in the UK.
The scheme, which examines the
systems and processes of organisations
from around the world, recognises achievement in
health and safety management systems, including practices
such as leadership and workforce involvement.
JAMES LATHAM PLC ANNUAL REPORT 2020
11
Strategic Report
Corporate Responsibility
James Latham sponsored the Timber Festival at the National Forest.
Our employees
The group’s ability to achieve its commercial objectives
and to serve the needs of its customers in a profitable
and competitive manner depends on the contribution
of its employees. Employees are encouraged to develop
their contribution to the business wherever they happen
to work. The group regularly keeps employees up to date
with financial and other information. Quarterly meetings
are held in each location, chaired by a board member,
where employees’ views concerning the performance
of their profit centre are considered. To encourage the
involvement of employees in the group’s performance,
share option schemes are operated together with
bonuses linked to performance.
The group’s employment policies do not discriminate
between employees, or potential employees, on the
grounds of age, gender, disability, sexual orientation,
colour, ethnic origin or religious belief. We would make
every effort to enable employment to continue for any
employees that become disabled. The sole criterion for
selection or promotion is the suitability of any applicant
for the job. The group’s pay policy is to ensure that
every employee, other than trainees, are at or above the
Living Wage.
It is the policy of the group to train and develop
employees to ensure that they are equipped to undertake
the tasks for which they are employed, and to provide the
opportunity for career development equally and without
discrimination. Training and development is provided and
is available to all levels and categories of staff. Internal
courses are run on the technical aspects of our products,
along side general management, appraisals, sales and
presentation skills courses.
We have a successful program of introducing trainees
from school or college. Trainees are put through external
courses obtaining qualifications, including NVQs in Sales
and Warehousing and the Wood Science exams covering
the properties and uses of timber and panel products.
Our Timber Academy is currently training 8 of our
timber trainees, who have had work placements with
our key suppliers around the globe in order to expand
their knowledge of timber. Knowledge gained from the
previous years training has already helped our sales and
product development.
Details of the number of employees and their related costs
can be found in note 4 to the accounts.
12
JAMES LATHAM PLC ANNUAL REPORT 2020
Strategic Report
Principal Risks and Uncertainties
Principle 4 – Embed effective risk management, considering both opportunities and
threats, throughout the organisation.
All business involves taking risks, both general risks of
trading and risks specific to our industry and the market
in which we operate. We are able to mitigate these risks
by adopting appropriate strategies and maintaining strong
systems of internal control. These strategies however do
not attempt to eliminate risk, but control the risks that
we believe are appropriate to take to generate acceptable
shareholder returns, without affecting our ethos on
environmental and health and safety.
We have considered below the current risk factors that
are considered by the board to be material. However in
a changing world, new risks may appear or immaterial
risks may become more important, and the directors
will develop appropriate strategies as these risks appear.
In the year to 31 March 2020 we have concentrated on
mitigating risks concerned with the COVID-19 pandemic,
Brexit, Cyber Security and Key Man risks and have taken
actions to further mitigate these risks.
The risk reporting framework is designed so that
information is passed in both directions, up and down the
company’s structure. A central risk register is maintained
by the board and reviewed at least once a year by the Audit
Committee. These risks are fed down to the depots, who
add their own risks specific to their sites. Risk mitigation is
discussed in every board meeting at depot and group level
and reported back to the board. Any new or increased risks
identified through this process are communicated to all
depots for monitoring and action.
Towards the end of March 2020, the COVID-19 pandemic
took hold in the UK and Ireland with unprecedented
restrictions being imposed on society and our business
in order to combat the disease. Whilst the scale of this
pandemic is enormous, the risks that it poses still do fall
into the categories of risk that had already been identified
and mitigation processes agreed. We immediately set up
an executive committee to manage the challenges relating
to this. In the table below and overleaf, we have discussed
our response to the pandemic under each heading.
Inherent risk
Risk Description
Risk Mitigation
Market
Conditions
The group’s sales are predominantly UK based so
it is exposed to any slowdown in the UK economy.
Negative or uncertain economic conditions could
affect our customers’ business resulting in them
reducing purchases from our group.
The distribution of our customers across the UK economic sectors
helps reduce the impact of slowdown in any one sector. Regular
financial information helps the board assess current trends.
COVID-19
Inability to
trade from a
depot
Inability to trade from a depot due to an
incident, internally or externally, could cause
loss of revenue and profits.
COVID-19
The effect of the closure of many non-essential businesses and
social distancing measures has resulted in a significant drop in
revenues since the end of March 2020. With our network of depots,
we have been able to close some operations whilst retaining the
ability to service essential businesses, and immediately introduced
cost saving measures including use of the UK Government’s Job
Retention Scheme. We were later able to adjust our operations to
adapt to the improving business conditions.
Disaster recovery plans are in place at group and depot levels.
These are reviewed by the Audit Committee and the board, as well
as discussed at depot level. Insurance policies are in place to cover
increased cost of working. Our distribution network, as well as our
inventories held at various ports, allow us to manage customers
requirements from a different location.
Our distribution network meant we could react quickly to this,
and consolidate sales and warehouse activity at a reduced number
of locations without affecting our ability to service our essential
customers.
Continued overleaf
JAMES LATHAM PLC ANNUAL REPORT 2020
13
Strategic Report
Principal Risks and Uncertainties
Inherent risk
Risk Description
Risk Mitigation
Inventory levels
move out of
line with sales
requirements and
market prices.
Product shortages can lead to high prices
and over purchasing throughout the trade,
resulting in excessive stock holding. Weaker
prices lead to stock reduction throughout
the supply chain, which magnifies the
reduction in demand and then leads to even
sharper falls in price. Erratic shipments can
result in stock excess and shortages in specific
special products.
The market for certain product lines changes,
resulting in them becoming overvalued and
slow moving.
COVID-19
Supplier
political risks
or failure
could result
in shortages
of product
Although far more of the group’s purchases
now come from Europe and North America, it
has significant dealings with countries where
the political climate is less stable, resulting in
a strategic threat to the supply of product to
the group.
The group is reliant on certain suppliers for
certain product ranges and their inability to
meet our demand due to financial or production
difficulties could result in stock shortages.
The uncertainty over Brexit is adding risk over
supplies from mainland Europe.
COVID-19
To mitigate this risk, the group has a strict policy of stock level targets
by product group and depot. These are monitored monthly by the
board which centrally controls the purchase of stocks and takes a group
view on the action to be taken to limit the group’s exposure to rapidly
changing price levels. Live stock level reports and predictive tools are
available for our managers to monitor current and future levels.
The group’s reduced reliance on commodity items has reduced this
risk of over exposure to low value, high volume and price sensitive
items, although as an important area for us, this risk cannot be
completely removed.
The board has set strict guidelines relating to purchases where the
specification is unique to a particular customer, and has policies
in place to ensure that no individual can commit the group to a
purchase greater than his/her authorised limit.
Slow moving stocks are monitored regularly and action taken to
mitigate the risk.
With the sudden reduction in turnover from the end of March 2020,
we used our good supplier relationships to delay as many shipments
as possible. Policies were immediately changed on purchase
authorisations so that any new stock needed to be approved by a
director. Our predictive programs were put into good use to identify
areas of stock which could quickly get overstocked.
To mitigate the risk from these pressures, the groups dealings are
spread across a large number of countries of supply. The group
keeps informed of developments in higher risk producer countries.
We maintain close relationships with our suppliers to ensure that we
are pre-warned of difficulties of supply. We maintain relationships
with suppliers of alternative products.
We have plans in place with our European suppliers and have
warehouse space allocated in the UK to increase stock levels over
any transitional period should supplies be disrupted. We have
also established a physical presence within the EU through the
acquisition of Abbey Woods Agencies Ltd in Ireland.
With several of our suppliers based in countries under strict
lockdown, we obtained some additional stock from key suppliers
that were about to shut. We also worked with our ports and external
warehouse suppliers to ensure that additional space was available
should it be necessary.
Reputational
Risk
Over many years the group has built up
a reputation for integrity and responsible
trading and is aware that this can be easily
damaged with the consequential cost to the
Latham brand.
Policies are in place which cover standards of behaviour and good
governance. On the purchasing side the group has a strong
responsible purchasing policy managed by our Environmental
Manager to minimise possible damage to its reputation and legal
risk from dealing in illegal products.
COVID-19
At all times during the pandemic, our main focus has been on the
health and wellbeing of our staff. Our health and safety procedures
were quickly updated to ensure that depots both understood and
acted on the social distancing measures. We also recognised that the
drop in income under the Job Retention Scheme will affect some
employees more than others, and so we introduced a temporary
scheme whereby furloughed employees earning under £25,000 were
still paid in full, all employees earning above £25,000 were paid
more than under the Government scheme, and those still working
got rewarded for working. We made good use of our Intranet to
communicate with our employees, and our website and social media
to communicate with our customers and suppliers.
14
JAMES LATHAM PLC ANNUAL REPORT 2020
Strategic Report
Principal Risks and Uncertainties
Inherent risk
Risk Description
Risk Mitigation
Competitive pressures from existing
businesses and new entrants to the market
could reduce prices, margins and profitability.
Changes in customer purchasing habits may
lead to more on-line purchases.
An assessment of the market and competitor activity is discussed at
each depot’s quarterly board meeting. This includes an assessment
of our routes to market as challenges to our depot structure and
operations emerge and assessment of our pricing strategies.
Investment planned in improving on-line trading platforms.
Competition
from new
and existing
businesses
Defined Benefit
pension scheme
funding could
increase
The group is required by law to maintain a
minimum funding level in relation to its obligations
to provide pensions to members of the pension
scheme. This level of funding is dependent on
a series of external factors, such as investment
performance, life expectancy and gilt yields.
Significant changes in these areas can also have
a significant effect on the funding levels. The
sensitivity of the funding level to these factors is
disclosed in note 20.2 in the notes to the accounts.
COVID-19
Information
technology
failures impact
our ability to
trade
The operations of the group depend to a large
extent on the availability and reliability of our
information technology systems. A failure
of systems, either of hardware, software or
communications, for an extended period of
time could impact our ability to trade.
COVID-19
Cyber Security
and Data
Protection
The risks of Cyber attack, including
Ransomware demands are increasing, and may
lead to disruption to business and loss of data.
Theft of data relating to employees, customers
and suppliers could result in a regulatory
breach under GDPR.
COVID-19
The scheme has been closed to new entrants for many years.
The board regularly reviews the investment strategy and performance
of the pension scheme investments, and has set a cap on pensionable
salaries of 1% above CPI.
Long term investment strategy is to reduce allocations to growth
assets and increase allocations to defensive assets to reduce risk
and volatility.
The markets fell considerably as well as gilt yields decreasing,
which have had an effect on the scheme deficit. The Trustees and
the Company are in regular contact with the Scheme Actuary and
considering the imminent cashflows to minimise the short term effects.
Our main computer servers are located in a secure site away from the
trading operations, hosted in an external data centre. The systems are
monitored 24 hours a day and maintenance work carried out on an
ongoing basis.
Back ups are held offsite in a separate data centre to provide extra
resilience. Should there be any failure in the systems in the main
datacentre, then the back ups held in the secondary data centre can be
made operational. Regular disaster recovery tests are carried out.
Software maintenance contracts ensure that our business critical software
is up to date, allowing software problems to be resolved quickly.
Our IT infrastructure allowed us to quickly move our employees
to working at home where possible. Hosting of our systems in a
datacentre has meant that our systems are continually monitored and
backed up, regardless of any depot closures or staff absences.
Cyber training is carried out on a regular basis and for each new
employee as part of their induction process. We have also improved
and updated our Cyber security systems and had them independently
reviewed. Our IT disaster recovery plans include provisions for
Cyber Attack.
A review of systems was undertaken prior to the implementation of
GDPR in 2018 and appropriate policies put in place.
We recognised that with more remote working, there is an increased
risk of Cyber threats. This was communicated to all employees with
reminders of the key elements of the Cyber Training.
Inability to
fill key roles
within the
organisation
Our staff are key to the success of our
business, and our inability to fill key roles
could affect our profitability.
The group, through the Remuneration Committee, is committed to
be having remuneration, training and development policies to make
James Latham the employer of choice.
COVID-19
Significant time is spent on identifying and training the leaders of the
future, with our Trainee and Talent Pool programmes. The group also
makes sure that continuity planning is considered by each senior employee.
Through well thought out plans, we made sure that every person
operating in a key role has a designated deputy in order to provide
cover in the event of illness.
JAMES LATHAM PLC ANNUAL REPORT 2020
15
Strategic Report
Key Performance Indicators
The group monitors its performance against the following Key Performance Indicators that we believe best reflect our
performance and progress in achieving the company objectives outlined on page 5.
To maximise shareholder value over the medium term
2020
2019
2018
64.0
2020
1.0%
61.6
57.9
2019
2018
8.0%
10.2%
40
50
60
70
%
0
5
10
15
Adjusted earnings per share (see Note 9)
increased 3.9%.
Like for like revenue, adjusted for the effects of
acquisitions and working days, increased 1.0%.
To increase sales of third party certified legal
and sustainable timber products
To provide a safe working environment for
our staff
2020
2019
2018
97.47%
97.19%
97.18%
2020
2019
2018
7.77
8.16
0.73
0.37
10.37
0.50
Accident
Reportable
%
96
97
98
0
2
4
6
8
10
12
14
The percentage of product purchased as
certified legal and sustainable showed incremental
improvements year on year.
Total number of injuries, no matter how minor, and
total number of reportable injuries reported per
100,000 hours worked, show a reduction as a result
of our continued focus on health and safety.
To improve service levels by improving warehouse facilities to speed order picking over
an extended product range
Tonnes
Times
2020
2019
2018
1,018
1,015
1,006
2020
2019
2018
6.2
6.1
6.2
980
990
1,000
1,010
1,020
1,030
4
5
6
7
Weight of product sold per working day continues
to increase in a difficult environment.
Stock turn is slightly below our budget of 6.5 times
due to some extra stock being held in case of supply
difficulties caused by COVID-19.
16
JAMES LATHAM PLC ANNUAL REPORT 2020
Strategic Report
Operating Review
Results for the year to 31 March 2020
Revenue for the year ended 31 March 2020 was £247.1m,
£12.0m higher than the previous year.
The first nine months trading was dominated by
uncertainty around Brexit which in turn has impacted
on investment, delayed infrastructure projects,
undermining customer confidence and activity. Despite
this underlying threat the business has remained focused
on our long term strategy, maintaining the momentum
and direction of travel and seizing new opportunities
that have been created.
Throughout the year we have witnessed a small but steady
improvement in the volumes for both Panel Products and
Hardwoods. Melamine, Doors and commodity panels have
all contributed to this increase. Suppliers’ prices during
this period have fluctuated around demand combined with
some localised supply issues and currency, overall prices
have generally weakened.
Our strategy of developing specific product groups and
market leading brands through marketing and specification
is yielding results for new business, with our focus on
products including; laminates, solid surface, veneered
Moralt Door.
board, modified timber Accoya® and our WoodEx®
engineered wood all showing good progress. These
outcomes are reflected in the target markets and customer
sectors where we have seen growth including, Joinery,
construction, laminators, KBB and the merchant sector.
Our ATP specialty division has been able to supplement
some of the cyclical vehicle construction business by
developing new business and sectors with composite
materials. Our cash business has continued to increase.
European Oak staircase.
JAMES LATHAM PLC ANNUAL REPORT 2020
17
Strategic Report
Operating Review
Fast food restaurant in Avonite Studio Collection White Frosted Glass.
The final quarter trading showed real increase in both
business confidence and customer activity, until the
lockdown caused by COVID-19 was put into effect.
Depots performance during this period was encouraging
and a reflection of the earlier long term investments
made into both infrastructure and staff.
The gross margin, the difference between the sales
values and the cost prices excluding warehouse costs,
was 0.8 percentage points higher than the previous
year (2019: 0.3 percentage points down).
We continue to trade in a competitive market driven
by a number of important commodity products
resulting in margin pressure in individual product
groups and market sectors at varying times. Developing
business for specification and a wide range of market
leading branded products has supported this increase
in trading margin.
Stock procurement and inventory management has been
particularly important during this trading period around
Brexit creating its own challenges. Our Supply Chain
Team is now established, working closely with all our key
suppliers focused on creating efficiencies in the chain.
Service levels in this sector are a vital part of the James
Latham business model. Well trained and experienced staff
in all areas of the business are an essential element in our
success and to support our customers. Extended working
hours, with a number of sites operating 24/5 along with
major investments in storage and handling equipment along
with staff training have all contributed to the results. Our
investments in this area are focused on customer retention
and growing the active customer base in target markets.
The redevelopment and modernisation of the Gateshead
site will provide a vastly improved facility for all
stakeholders and create an opportunity to develop a wider
range of business from the site.
Overhead control remains a vital part of the active
management measures which are well established and
proven across all areas of the business.
During this period we have been working to incorporate
the Abbey Woods trading business and dealing with the
Dresser Mouldings (Rochdale) Ltd
acquisition, which is being integrated
into the business and will continue to
trade as Dresser Mouldings.
18
JAMES LATHAM PLC ANNUAL REPORT 2020
Strategic Report
Operating Review
Staff numbers have increased as planned this year, mainly
warehouse staff operating 24/5 and staff from the strategic
acquisition of Dresser Mouldings in November.
Market place
The group’s business is widely spread throughout many
sectors of the UK economy.
For management purposes, the group is organised into
one trading entity, importing and distribution of wood
based and related materials, carried out in each of the
thirteen locations trading in the United Kingdom and the
Republic of Ireland. Within this one segment performance
in terms of revenue and trading margin of the main
product types are considered below. The separate segment
of timber processing, through Dresser Mouldings, is
considered immaterial and not separately disclosed.
The group’s strategy continues to be to target specific
market sectors on both added value, core and premium
grade product and to provide product solutions for our
customers.
We continue to develop our range of certified Forest
Stewardship Council (FSC) and Programme for the
Endorsement of Forest Certification (PEFC) products.
Product of Verified Legal Origin (VLO) is also purchased.
Our supplier procurement strategy is largely based on the
Timber Trade Federation (TTF) Responsible Purchasing
Policy (RPP). Any supplier who does not meet this criteria
will not be considered.
Market sector
Customer group Lathams
sales value %
Construction/
housing
Merchants
Joiners
Builders
Kitchen manufacturers
Door manufacturers
Retail
Shopfitters
Laminators/Veneerers
Furniture manufacturers
Transport
Vehicle builders/Van liners
Exhibitions
Exhibition fitters
Cash sales
Other importers
Other sectors
2020
2019
14
27
15
25
5
5
4
4
5
6
2
2
8
7
5
6
4
5
5
6
3
2
7
7
TOTAL
11
100
10
100
End products are used in both the public and private sectors.
Our top ten customers account for 9% (2019: 10%) of sales
and our top 25 customers represent 14% (2019: 15%) of sales.
Accoya Decking and Cladding.
JAMES LATHAM PLC ANNUAL REPORT 2020
19
Strategic Report
Financial Review
Introduction
This report provides a commentary on how the group has
performed against the financial objectives during this year,
together with a review of its financial risks.
Financial objectives
The board of directors remain committed to the long term
improvement in shareholder value and have set ourselves
these financial objectives to help achieve this.
• Improving profitability by maximising gross margins,
whilst remaining competitive;
After three years of rising costs of our products, this year
has seen cost prices fall by 3.3% steadily throughout the
year. The balance between maximising margins and
remaining competitive remains difficult, especially with
the increasing cost of delivery, but by maintaining service
levels and having specialist product managers in both
commodity and niche products helps us maintain
competitive margins. Both revenue and margins showed
growth and so I believe we have achieved this objective.
• Identifying expansion and acquisition opportunities,
where the return on capital is at least equal to that of
the existing group.
In November 2019, we completed the acquisition of
Dresser Mouldings (Rochdale) Limited, giving us our first
manufacturing facility, enabling us to increase our offering
in processed timber.
• Controlling cashflows to maximise cash available for
the business and shareholders.
This year the focus was on stock control and debtors
days whilst continuing to invest in the business. This
focus changed at the end of March 2020 to taking quick
action to preserve our healthy cash reserves in light of
the issues caused by COVID-19.
• Identifying and managing risks, with particular
emphasis on the pension scheme liability.
Risks are considered at the Audit Committee meeting
and at board meetings at all levels throughout the group.
The risk register is a dynamic document where we
monitor new risks and changes in risk. Discussions this
year have concentrated on potential supply issues caused
by Brexit, Cyber security and towards the end of the
financial year the issues affecting us caused by COVID-19.
• Maintaining dividend cover at between 2.5 times and
4 times earnings.
Dividend cover this year is 4.1 times (2019: 3.5 times).
This is slightly outside the dividend cover range due to the
prudent view taken by the board given the difficult market
conditions experienced during the first quarter of the
current financial year caused by the COVID-19 pandemic.
20
JAMES LATHAM PLC ANNUAL REPORT 2020
David Dunmow
Finance Director and Company Secretary
Financial review
A commentary on the group’s trading results is set out
in the Operating Review on pages 17 to 19, and the key
figures are considered below, with emphasis on the
financial results.
Operating profit
Revenues increased by 5.1% to £247.1m. Like for like
volumes have increased by 1.8% but prices have fallen
by 3.3%. The balance of the increase in turnover is due
to product mix and additional turnover provided to the
group through the recent acquisitions of Abbey Wood
Agencies Limited and Dresser Mouldings (Rochdale)
Limited. The board remained focussed on managing
margins to enable us to remain competitive in commodity
products but grow margins in our focus products in
which we can provide a value added service, whilst still
maintaining our service levels. Warehouse costs, which are
included in the calculation of gross profit, have received
continued investment in racking systems and manpower
to extend the working day to meet customer demands.
Most depots have two or more shifts in their working day,
with four depots operating a 24 hour system in order to
provide the service that our customers demand.
Costs in each location are monitored closely by the
board through the quarterly meetings at each depot, with
detailed variance analyses being provided.
Operating profit increased 10.6% to £16.0m from £14.5m
last year. Group net profit before taxation increased to
£15.7m from £15.3m last year.
Strategic Report
Financial Review
Taxation
Our strategy in managing and controlling our tax affairs is
to ensure compliance with all applicable rules, legislation
and regulations under which we operate. We maintain
an open and co-operative relationship with the UK Tax
Authorities, and pay the correct amount of tax as it falls
due. Our tax strategy document is available on the James
Latham plc Investor page under Corporate Governance.
The taxation charge of £3.2m represents an effective rate
of 20.3%, compared with 19.0% last year. The group’s
profits arise mainly in the UK and the group’s tax charge
will reflect the UK corporation tax rate, currently 19.0%.
The higher charge this year is due to an increase in deferred
taxation rates following the government decision not to
reduce corporation taxation rates as originally intended.
Pension scheme
At 31 March 2020 the deficit of the defined benefit scheme
under International Financial Reporting Standards was
£11.8m compared with £8.7m last year. Discount rates,
represented by yields on corporate bonds remained at 2.4%.
Assets under management were affected by the large
market movements caused by the COVID-19 pandemic
and produced £4.5m less returns than expected, showing
a return of -5.0% over the year. Since the year end
markets have regained some of these losses. In note 20.2
to the accounts, we have provided some sensitivity
analysis around the various assumptions used to illustrate
this volatility.
The group is constantly assessing the risks in the pension
scheme, and this year has maintained a cap on pensionable
salary increases to a maximum of 1% over CPI.
Gross IAS19 deficit £000’s
2020
2019
2018
2017
2016
11,812
8,714
8,382
9,657
16,625
JAMES LATHAM PLC ANNUAL REPORT 2020
21
Strategic Report
Financial Review
Cash flow and working capital
At the end of the year cash balances of £17.0m were held,
up from £15.5m last year. The cash is being held as short
term deposits providing funds for short term working capital
fluctuations and allowing us to make capital investments
when opportunities arise. This cash has been particularly
helpful since the year end to enable us to manage our way
through the difficulties caused by the COVID-19 pandemic,
and short term we have seen cash balances rise further.
Interest rates have remained low throughout the year so we
have continued to use our cash to obtain cash settlement
terms with most of our major suppliers allowing us to earn
£1,599,000 of discounts received compared with £1,393,000
last year. I am particularly grateful to my bought ledger team
for their hard and efficient work in processing suppliers
invoices so that these discounts are not missed.
Control of cash flow from customers is closely monitored.
The key performance indicator of debtors days, taking into
account our credit terms, has increased from 50.6 days
to 51.4 days. Bad debts this year ended up at 0.20% of
turnover against a budget of 0.4%, and last year of 0.23%.
At the end of the year the provisions were higher than
normal due to the impact on our customers cash flows
due to the COVID-19 pandemic, and so this shows the
good figures achieved for the rest of the year. My credit
control team have done exceptionally well in getting right
the difficult balance of dealing with our customers, dealing
with our depots and collecting our debts. They work very
closely with our credit insurers to ensure that as many of
our major accounts as possible are covered. At the year
end we had 7.7% of accounts owing over £40,000 covered
by credit insurance, showing increasing difficulties in
obtaining credit insurance cover.
Since the year end, the effect of COVID-19 has been to
have a significant effect on our customers cash flows, and
the strong relationships my credit control team have with
the customers is proving invaluable as we work with our
customers to manage cash flows for our mutual benefit.
Stock turnover targets are set and monitored on a monthly
basis. Senior management and all staff responsible for
product areas have access to real time stock levels and
targets. We have improved our Supply Chain Team to
improve stock turn and provide more efficient routes of
supply. At 31 March 2020 stock turn is 6.2 times compared
with our target of 6.5 times. During the year we obtained
additional warehousing and invested £1m in additional
European stocks that we felt may have been affected by a
disorderly withdrawal from the European Union. This stock
was pushed through the system once the threat receded.
In March we increased our stock levels in products being
imported from countries where lock down measures where
causing some supply concerns. There were no significant
overstocked areas giving any concern to us at the year end.
Good stock and debtor control has allowed 86%
(2019: 69%) of profit before tax to be available as free
cash for investment and distribution.
Cash and Cash Equivalents
2020
2019
2018
2017
2016
16,950
15,541
13,989
17,246
16,832
Capital investment
During the year we completed the acquisition of
Dresser Mouldings (Rochdale) Limited for £1.0m cash.
They specialise in processing and vacuum coating of
bespoke timber products, the production of timber
mouldings and other specialist timber machining for
use in a variety of market segments.
In addition we spent £1.0m on relocating the office and
improving the warehouse facility in Gateshead, with £0.5m
to be spent during the year to 31 March 2021. This will
allow for more volumes to be processed through the site
and improving the health and safety for our employees.
This year we adopted IFRS 16 on Leases causing operating
lease arrangements to be brought onto the balance sheet.
This has principally involved some leased property and our
company car fleet. The effect of this has been to create a
Right of Use Asset of £4.9m and a lease liability of £5.0m.
There has been an immaterial effect on the Income Statement
with an extra cost of £139,000 reducing profit before tax.
Net assets at the year end were £104.3m (2019: £98.0m).
The group’s pre-tax return on capital for the year was
15.9% (2019: 16.2%), which continues to be above our
weighted average cost of capital.
22
JAMES LATHAM PLC ANNUAL REPORT 2020
Strategic Report
Financial Review
Financial risk management
In the course of our business, the group is exposed to
currency risk, interest rate risk, liquidity risk and credit risk.
The overall aim of the group’s financial risk management
strategy is to mitigate any potential negative effects on the
group’s assets and profitability. The group manages these
risks in accordance with group policies.
As the group trades predominantly in the UK, the market
price of our products tends to fluctuate in line with
currency spot prices. Speculative positions on currencies
are not entered into. Our LDT division can have stock
tied up in kilns for six to nine months, and we enter into
currency swaps to ensure that this stock is costed at spot
price when it becomes available for sale. We will also
enter into forward currency agreements to cover where
customers are quoted a particular exchange rate.
The cash deposits and available bank facilities reduce
our liquidity risk. Cash flow forecasts are monitored
against actual cash flows to ensure that adequate facilities
are maintained to meet the future needs of the business.
The board reviews re-forecasted profits and cash flows on
a quarterly basis.
Insurance products and external credit reference agencies
help reduce our credit risk.
The Audit Committee reviews the group’s risk register as
part of its regular monitoring process.
David Dunmow
Finance Director
Construction of the improved Gateshead warehouse facilities and new offices.
JAMES LATHAM PLC ANNUAL REPORT 2020
23
Corporate Governance
Corporate Governance Report
I believe that good corporate governance, involving risk
appraisal and management, prudent decision making,
communication with shareholders and other stakeholders
and business efficiency, is important for the long term
benefit of the stakeholders in our group. As a board we
have considered the 10 Principles of Corporate Governance
contained within the Quoted Companies Alliance
Corporate Governance Code 2018, and show below how
we have applied these principles. I am responsible for
ensuring that the group conducts its business paying due
regard to each of the 10 principles. These principles have
been communicated to the rest of the board through
training and discussion at board meetings, and each board
member is responsible for ensuring that the message
passes down to all our employees.
The 10 Principles are split into three areas, Deliver
Growth, Maintain a Dynamic Management Framework
and Build Trust. I can confirm that we have complied with
all the Principles throughout the year.
The four Principles on Delivering Growth are considered
within the Strategic Report starting on page 4.
MAINTAIN A DYNAMIC MANAGEMENT FRAMEWORK
Principle 5 – Maintain the board as a well-
functioning, balanced team led by the chair.
The Board of Directors
The company is currently governed by a board of directors
consisting of myself as Chairman, three executive directors
and two non-executive directors. Each director has a vote
and no individual or small group of individuals dominates
the board’s decision making.
In the year to 31 March 2020, the board met 6 times, with
all directors attending each meeting. In addition conference
calls are held where matters which cannot wait for the next
board meeting can be discussed.
The non-executive directors are Fabian French and
Paula Kerrigan. I consider that all non-executives are
independent. In addition to the scheduled meetings, the
non-executives attended the group annual operational
budget and strategy meeting, as well as making individual
visits to operational sites.
24
JAMES LATHAM PLC ANNUAL REPORT 2020
Principle 6 – Ensure that between them the
directors have the necessary up-to-date experience,
skills and capabilities.
The directors’ biographies are shown on page 27.
Each executive director has many years experience
within the Latham organisation at all levels. Each director
has agreed responsibilities on the board, covering all
aspects of the business including sales, procurement,
operations, finance, HR and IT. As well as responsibilities
to the plc board, each director is actively involved in
the running of the Lathams Limited business, the
company’s trading subsidiary, and keep their skill sets
up to date by training, discussions on market trends with
customers and suppliers and involvement with trade and
environmental organisations. I believe the board works
well together, challenging each other to constantly
improve and move forward.
Principle 7 – Evaluate board performance
based on clear and relevant objectives, seeking
continuous improvement.
Each director has a detailed job description showing
their responsibilities on the board. I have regular
meetings with each director to discuss the progress in
the areas they are responsible for, and consider whether
any further development or mentoring needs are
necessary. Each director is subject to the formal appraisal
process used throughout the group.
As a board we periodically review the running of the
board, led by the non-executive directors, to consider the
effectiveness of the board and whether there are any gaps
in skills on the board. This is mainly on an ad-hoc basis
where major decisions are being made to ensure that
the board has the skills to make informed judgements.
Succession planning is key so that no member of the board
becomes indispensable, and has been a major focus of the
board this year.
Principle 8 – Promote a corporate culture that
is based on ethical values and behaviours.
Our core values are Integrity, Shareholder Value,
Empowerment, Sustainability and Customer Focus.
The company and the Latham brand is well respected
in its industry and amongst its customers and suppliers
for its principled trading policies and its integrity.
As such it is important for us to
have a corporate culture based on
these ethical values and behaviours.
The annual report contains reports
on corporate responsibility including
environmental, health and safety, audit
and remuneration committee reports
and reports on our attitudes to risk.
Principle 9 – Maintain governance structures
and processes that are fit for purpose and support
good decision-making by the board.
The board has a formal schedule of matters referred to
it for decision, with at least one specific strategy meeting
being held each year. Agendas and board packs are
discussed and circulated in advance of the meetings to
ensure that all directors have adequate time to research
and take part in discussions on the key issues, as well as
giving the non-executive directors time to add matters of
their particular interest to the agenda.
The board is responsible for group strategy, corporate
responsibility including health and safety and
environmental issues, acquisition policy, bribery policy,
approval of major capital expenditure and monitoring
the key operational and financial risks. It also reviews
the strategy and budgets for the trading subsidiaries and
monitors the progress towards their long term objectives.
All directors have access to the company secretary or
to independent professional advice, if required, at the
company’s expense.
New directors receive training from the company
NOMAD on their responsibilities under the AIM rules.
Key financial information is circulated to directors on a
monthly basis outside of the board meetings.
The board has decided that the directors will retire by
rotation and the executive directors will be re-elected at
least every three years.
Corporate Governance
Corporate Governance Report
The Audit Committee
The Audit Committee is chaired by Fabian French,
and includes Paula Kerrigan and Andrew Wright.
David Dunmow also attends the meetings of the
committee. The committee meets at least three times
a year to review internal controls within the group, and
receive reports from the external auditors and reports of
internal audit tests carried out during the year. The duties
of the audit committee include, on behalf of the board, a
review of effectiveness of the group’s financial reporting
and internal control policies, and procedures for the
identification, assessment and reporting of risk.
It also keeps under review the scope and results of
the external audit, its cost effectiveness and the
independence and objectivity of the external auditor,
including recommending their re-appointment to the
board. This includes a review of the non-audit work
performed to ensure that such work would not impair
their independence or objectivity in carrying out the audit.
Once a year the auditor meets with the non-executive
directors only. The group has established procedures
whereby employees of the group may, in confidence,
raise concerns relating to matters of potential fraud or
other improprieties. These procedures also cover other
issues affecting employees including health and safety
issues. The audit committee is confident that these
‘whistleblowing’ arrangements are satisfactory and will
enable the proportionate and independent investigation of
such matters and appropriate follow-up action to be taken.
Remuneration and Nominations Committee
The Remuneration and Nominations Committee comprises
Paula Kerrigan as Chairman and Fabian French. The meetings
were attended by Nick Latham and David Dunmow who
provide information to the Committee when required.
The main function of the Committee is to make
recommendations to the board regarding the group’s
policy on the remuneration and conditions of employment
of the executive directors of the group, and, where
appropriate, senior management, and includes considering
nominations to the board. Over the course of the year the
committee also considered group diversity including the
gender pay gap and succession planning.
The Committee has access to professional remuneration
advice from outside of the company.
The Remuneration and Nominations Committee report is
contained on page 28.
JAMES LATHAM PLC ANNUAL REPORT 2020
25
Corporate Governance
Corporate Governance Report
Fit out of Sir Isaac Newton pub in Newark, with panelling, skirtings, stairs and bar columns supplied by Dresser Mouldings.
BUILD TRUST
Principle 10 – Communicate how the company
is governed and is performing by maintaining a
dialogue with shareholders and other relevant
stakeholders.
The directors have a commitment to best practice in the
group’s external financial reporting in order to present a
balanced and comprehensive assessment of the group’s
financial position and prospects to its shareholders,
employees, customers, suppliers and other third parties.
This commitment encompasses all published information
including but not limited to the year end and half yearly
accounts, regulatory news announcements and other
public information.
The published annual report contain reports of the Audit
and Remuneration and Nomination Committees.
The published information is held on our investor website
at www.lathams.co.uk as well as historical financial and
meeting information.
for identifying and managing the key risks to the business
are communicated regularly to all staff, who are made
aware of the areas for which they are responsible. Such
processes include strategic planning, maintenance and
review of a risk register, the appointment of appropriately
qualified staff, regular reporting and monitoring of
performance against budgets and other performance
targets, and effective control over capital expenditure.
The board has established systems of internal control
as appropriate for the size of the group. The day to day
operation of the system of internal control is under the
control of executive directors and senior management.
The system is designed to manage rather than eliminate
risk. Any system of internal control can however only
provide reasonable, but not absolute, assurance against
material misstatement and loss. No material breaches of
internal controls were reported during the year.
The directors confirm that they have reviewed the
effectiveness of the system of internal control for the year
under review and to the date of approval of the Annual
Report and Accounts through the monitoring process
described above.
Procedures for identifying, quantifying and managing the
risks, financial or otherwise, faced by the group have been
in place throughout the year under review. The processes
Nick Latham
Chairman
30 June 2020
26
JAMES LATHAM PLC ANNUAL REPORT 2020
Corporate Governance
Directors and Advisors
Directors’ biographies
Nick Latham BSc Chairman
Nick Latham, age 52 has worked in the
company for 28 years and was appointed to
the board in 2007. He is a director of Lathams
Limited and Dresser Mouldings (Rochdale)
Limited and provides advice to the Remuneration
Committee. He sits on the main board of the
Timber Research and Development Association.
David Dunmow BSc FCA
Finance Director and Company Secretary
David Dunmow, age 56, has worked in the
company for 26 years and was appointed to the
board as Finance Director in 2000. He is a Fellow
of the Institute of Chartered Accountants in
England and Wales. He is a director of Lathams
Limited, Abbey Wood Agencies Limited and
Dresser Mouldings (Rochdale) Limited, and
provides advice to the Audit and Remuneration
Committees. He is a former treasurer of the
Timber Trade Federation. He is a Trustee of the
James Latham plc Pension and Assurance Scheme.
Andrew Wright Managing Director
Andrew Wright, age 55, has worked in the
company for 19 years and was appointed to the
board in 2015 and was made Managing Director
on 1 April 2019. He is a director of Lathams
Limited and sits on the Audit Committee.
Piers Latham BSc Executive Director
Piers Latham, age 49 has worked in the company
for 27 years and was appointed to the board in
2014. He is a director of Lathams Limited, and
Chairman of the Trustees of the James Latham plc
Pension and Assurance Scheme.
Fabian French MA Non-Executive Director
Fabian French, age 61, was appointed a non-
executive director in 2015. He chairs the Audit
Committee and sits on the Remuneration
and Nominations committee. He is a qualified
solicitor and worked in corporate finance for
major investment banks. He is currently Chief
Executive of UK Community Foundations and
is a director of Greater Manchester Community
Foundation Limited and Trebartha Hydro Ltd,
and is a previous director of Inspiration in Sport
and Mithras Investment Trust Plc.
Paula Kerrigan Non-Executive Director
Paula Kerrigan, age 48, was appointed a non-
executive director in 2017. She has a wide variety
of public company experience and is currently
Group Strategy and Transformation Director at
Greene King. She sits on the Audit Committee
and the Remuneration and Nominations
Committee. She has previously held senior
strategy and transformation roles at SuperGroup
plc and the Co-operative Group. Prior to that she
spent 15 years at Kingfisher plc where she held
a variety of roles including Finance and Strategy
Director for B&Q in Asia and Delivering Value
Director for B&Q in the UK.
Registrars
Computershare Investor
Services plc
The Pavilions
Bridgwater Road
Bristol BS13 8FB
Bankers
Royal Bank of Scotland
Major Corporate Banking
280 Bishopsgate
London EC2M 4RB
Clydesdale Bank Corporate
and Structured Finance
15th Floor
The Leadenhall Building
122 Leadenhall Street
London EC3V 4AB
Stockbrokers and
Nominated Adviser
SP Angel Corporate
Finance LLP
Prince Frederick House
35-39 Maddox Street
London W1S 2PP
Pension Advisor
Mercer
Tower Place West
London EC3R 5BU
Independent Auditor
RSM UK Audit LLP
25 Farringdon Street
London EC4A 4AB
Registered Office
James Latham plc
Unit 3
Swallow Park
Finway Road
Hemel Hempstead
Herts HP2 7QU
Registered Number 65619
Registered in England
and Wales
Nick Latham
David Dunmow
Andrew Wright
Piers Latham
Fabian French
Paula Kerrigan
JAMES LATHAM PLC ANNUAL REPORT 2020
27
Corporate Governance
Directors’ Remuneration Report
This report has been compiled by the company’s
Remuneration and Nominations Committee and sets out
the company’s remuneration policies for its key directors.
Remuneration Policy
The remuneration policy aims to ensure that executive
directors are fairly rewarded for their individual
contributions to the performance of the group, with due
regard for the interests of shareholders in achieving long
term growth for the company.
Service Contracts
Following a review by the board of directors in 1996,
the service contracts of executive directors were
amended to incorporate a rolling 2 year notice period.
This was considered by the board of directors to be a
significant but reasonable reduction in their original
5 year contracts. In 2004, the board of directors agreed
that any new service contracts issued to new directors
would incorporate a fixed 2 year period, subject to a
minimum 6 month notice period.
Executive director’s contracts have no provisions for
pre-determined compensation on termination that
exceeds two years salary and benefits in kind.
Remuneration of the non-executive directors
The remuneration of the non-executive directors is
determined by the board. The non-executive directors do
not receive a pension or other benefits from the group.
COVID-19 effect on the policy
Due to the impact of the COVID-19 pandemic on the
short term results of the business, the executive and
non-executive directors voluntarily took a 20% pay cut
from 1 April 2020 for as long as business is seriously
affected. All bonuses earned are delayed until the end
of September, when we will have a clearer view of the
extent of the recovery after lockdown measures ease.
75% of bonuses earned are expected be paid at the end
of September with the remaining 25% carried forward
to be paid at the normal dates in 2021. In addition the
targets for 2021 will be for the period from 1 July 2020 to
31 March 2021, with no bonuses earned for the period
from 1 April 2020 to 30 June 2020.
The remuneration package consists of basic salary,
benefits (comprising car and private medical provision),
pensions, annual bonus schemes, share option schemes
and life assurance cover of 4 times gross salary.
Pay rises for group employees are considered once a
year, to apply from 1 December. The Remuneration
Committee sets an overall maximum percentage pay
rise, based on cost of living increases plus awards for
promotion where relevant. The executive directors
have their pay rises based on the same criteria as all
other employees.
Performance related bonuses
Annual bonuses can be earned by executive directors for
the achievement of specific financial performance targets
set by the group’s board of directors and agreed by the
remuneration committee. The criterion on which the
executive directors’ bonuses were based in 2020 was the
achievement of £14,875,000 operating profit, as measured
in the depots management accounts, an increase of 5.1%
over the previous year’s targets. Maximum bonuses of
19.5% of basic salary are paid on achieving 120% of the
target operating profit. The minimum bonus level is 1.3%
paid on achieving 90% of target operating profit, below
which nothing is earned. This year 117.2% of the target
operating profit was achieved earning 16.9% of basic
salary. The criterion for the year ended 31 March 2021
will be based on a similar formula applying to target
profits. In addition a Group Bonus scheme pays out a
bonus to all eligible members of staff, subject to achieving
a minimum level of group profits. This year the scheme is
paying 4.5% of basic salary to 422 eligible employees.
None of the bonus schemes applicable to directors are
affected by share price appreciation or depreciation.
The directors participate in the company share option
schemes, and details of any gains made on options
exercised during the year are shown on pages 30 and 31.
28
JAMES LATHAM PLC ANNUAL REPORT 2020
Corporate Governance
Directors’ Remuneration Report
Review of past performance
The graph below shows the company’s total shareholder return performance against the total shareholder return
performance of the AIM All Share Index for the five years ended 31 March 2020.
James Latham plc total shareholder return
60
50
40
30
20
10
0
-10
2015
2016
2017
2018
2019
2020
Directors’ emoluments
Details of the individual directors’ emoluments for the year were as follows:
James Latham Plc
FTSE AIM All
Share Index
The Remuneration
Committee consider this
to be the most appropriate
graph against which to
compare the company’s
performance.
Salary
and fees
Benefits
Bonus
Total
emoluments
excluding
pensions
Share
based
payments
Pension
contributions
£000
£000
£000
£000
£000
£000
Executive
N.C. Latham
D.A. Dunmow
P.F. Latham
A.G. Wright
C.D. Sutton
(retired 31 March 2019)
Non-executive
P.L.F. French
P. Kerrigan
M.A. Bushell
(retired 31 August 2018)
Total
2019
2020
2019
2020
2019
2020
2019
2020
2019
2020
2019
2020
2019
2020
2019
2020
2019
195
186
181
174
146
130
160
141
-
172
35
34
35
31
-
14
752
882
1
1
15
13
15
14
17
15
-
14
-
-
-
-
-
-
48
57
42
41
40
38
34
31
37
32
-
28
-
-
-
-
-
-
238
228
236
225
195
175
214
188
-
214
35
34
35
31
-
14
153
170
953
1,109
2
2
2
2
2
2
2
1
-
2
-
-
-
-
-
-
8
9
TOTAL
£000
265
254
271
260
218
198
240
212
-
247
35
34
35
31
-
14
25
24
33
33
21
21
24
23
-
31
-
-
-
-
-
-
103
132
1,064
1,250
JAMES LATHAM PLC ANNUAL REPORT 2020
29
Corporate Governance
Directors’ Remuneration Report
Directors’ shareholdings
There were no contracts with the company or its subsidiaries during the year in which any of the directors had a
material interest, other than their service contracts. The directors’ holdings of the share capital at the end of the financial
year were as follows:
Directors
N.C. Latham
D.A. Dunmow
P.F. Latham
A.G. Wright
P.L.F. French
P. Kerrigan
31 March 2020
31 March 2019
Ordinary shares
Preference shares
Ordinary shares
Preference shares
Beneficial owner
Beneficial owner
Beneficial owner
Beneficial owner
Beneficial owner
Beneficial owner
638,237
136,458
635,312
29,983
370,052
-
-
-
567
-
-
-
633,120
131,401
630,351
26,264
370,052
-
-
-
567
-
-
-
Directors’ share option schemes
Save as You Earn Scheme
Participation by the directors in the James Latham plc Save as You Earn Scheme is as follows:
N.C. Latham
D.A. Dunmow
P.F. Latham
A.G. Wright
31 March 2020
31 March 2019
2,475
2,475
2,475
1,237
3,185
3,185
3,185
1,592
Options were granted on 2 January 2020 at 727p per share, and the options are exercisable on 1 March 2023.
Mr N.C. Latham, Mr D.A. Dunmow and Mr P.F. Latham each made a gain of £10,988, and Mr A.G. Wright made
a gain of £6,209 on options exercised during the year.
30
JAMES LATHAM PLC ANNUAL REPORT 2020
Corporate Governance
Directors’ Remuneration Report
Company Share Option Scheme
Participation by the directors in the James Latham plc Approved Company Share Option Scheme 2008 is as follows:
Outstanding
1 April 2019
Granted during
the year
Exercised
Outstanding
31 March 2020
Exercise
price
N.C. Latham
D.A. Dunmow
P.F. Latham
A.G. Wright
707
586
636
560
718
-
707
586
636
560
718
-
707
586
636
560
718
-
1,262
707
586
636
560
718
-
-
-
-
-
-
466
-
-
-
-
-
466
-
-
-
-
-
466
-
-
-
-
-
-
466
(707)
-
-
-
-
-
(707)
-
-
-
-
-
(707)
-
-
-
-
-
(1,262)
-
-
-
-
-
-
-
586
636
560
718
466
-
586
636
560
718
466
-
586
636
560
718
466
-
707
586
636
560
718
466
£5.65
£6.825
£7.075
£8.025
£6.26
£9.65
£5.65
£6.825
£7.075
£8.025
£6.26
£9.65
£5.65
£6.825
£7.075
£8.025
£6.26
£9.65
£3.96
£5.65
£6.825
£7.075
£8.025
£6.26
£9.65
Exercise period
05.01.20 to 04.01.25
18.12.20 to 17.12.25
06.12.21 to 05.12.26
14.12.22 to 13.12.27
03.01.24 to 02.01.29
23.12.24 to 22.12.29
05.01.20 to 04.01.25
18.12.20 to 17.12.25
06.12.21 to 05.12.26
14.12.22 to 13.12.27
03.01.24 to 02.01.29
23.12.24 to 22.12.29
05.01.20 to 04.01.25
18.12.20 to 17.12.25
06.12.21 to 05.12.26
14.12.22 to 13.12.27
03.01.24 to 02.01.29
23.12.24 to 22.12.29
16.12.18 to 15.12.23
05.01.20 to 04.01.25
18.12.20 to 17.12.25
06.12.21 to 05.12.26
14.12.22 to 13.12.27
03.01.24 to 02.01.29
23.12.24 to 22.12.29
No performance conditions attach to these options. Mr N.C. Latham, Mr D.A. Dunmow and Mr P.F. Latham made a gain of
£2,740 and Mr A.G. Wright made a gain of £7,054 on options exercised during the year.
Paula Kerrigan,
Chairman of the Remuneration Committee
30 June 2020
JAMES LATHAM PLC ANNUAL REPORT 2020
31
Corporate Governance
Directors’ Report
The directors have pleasure in presenting their annual
report and the audited accounts for the year ended
31 March 2020. In accordance with section 414c(11)
of the Companies Act 2006, included in the Strategic
Review is the review of financial risk management,
carbon emission disclosures and employee policies.
This information would have been required by section
7 of the Large and Medium sized Companies and
Groups (Accounts and Reports) Regulations 2008 to be
contained in the Directors Report.
Results and dividends
Group results for the year ended 31 March 2020 are
set out on page 40. The directors recommend the
following dividends:-
Ordinary dividends
Interim dividend paid, 5.5 pence per
ordinary share
Final dividend proposed, 10.0 pence per
ordinary share
Total ordinary dividends, 15.5 pence per
ordinary share
£000
1,092
1,990
3,082
The directors recommend payment of the final dividend
on 4 September 2020 to shareholders on the register of
members at the close of business on 7 August 2020.
Balance sheet and post balance sheet events
The balance sheet on page 42 shows the group’s financial
position. Since the year end, the government imposed
lock down caused by COVID-19 seriously affected trade
during April and most of May as many of our customers
were closed. Business is slowly returning as the lock
down measures ease. The company has significant cash
reserves and strong relationships with customers and
suppliers to enable us to navigate this sudden event.
There were no other significant events occurring since
the balance sheet date.
Directors
Chris Sutton retired as Managing Director on 31 March
2019 and was succeeded as Managing Director by
Andrew Wright. The remaining directors of the company
were directors throughout the year. Each director’s
biographical details are shown on page 27.
In compliance with the Articles of Association,
Fabian French, Paula Kerrigan and Piers Latham will
retire by rotation and, being eligible, offer themselves
for re-election.
Other than their service contracts, no director has a
material interest in any contract with the company.
Fabian French and Paula Kerrigan, as non-executive
directors, do not have a service contract with the
company, but each has received a letter of appointment
for a two year period. Details of directors’ emoluments,
pension rights, service contracts and the directors’
interests in the ordinary shares of the company are
included in the Directors’ Remuneration Report on
pages 28 to 31.
Article 168 of the company’s Articles of Association gives
the directors and officers of the company a right to be
indemnified out of the assets of the company in respect of
any liability incurred in relation to the affairs of the group
to the extent the law allows.
The company has undertaken to comply with best
practice on approval of directors’ conflicts of interest.
Under the Companies Act 2006 a director must avoid
a situation where there is, or can be, an interest that
may conflict with the company’s interests. None of the
directors had an interest in any contract to which the
group was a party during the year.
The company maintained directors’ and officers’ liability
insurance cover throughout the year.
32
JAMES LATHAM PLC ANNUAL REPORT 2020
Share capital
Resolutions concerning the ability of the board to
purchase the company’s own shares and to allot shares
and to dis-apply pre-emption rights are again being
proposed at the Annual General Meeting.
The investment in own shares is detailed in note 24 on
page 69. During the year, 200,000 shares were transferred
to James Latham Trustee Limited to be made available
for expiring employee share schemes. The company
holds 259,200 ordinary shares as treasury shares, with a
view to being used for future employee share schemes.
The company also purchased 75 preference shares
during the year and placed them in treasury. In addition
the Trustees of the James Latham Employee Benefits
Trust holds 38,772 shares with a view to being used for
employee share schemes.
Share option schemes
On 23 August 2017, the shareholders approved by
ordinary resolution the extension of the Save as You
Earn scheme for a further 10 years. A 3 year scheme
commenced on 1 February 2020 with 192,720 options
being issued at an option price of £7.27.
On 21 August 2008, the shareholders approved by
special resolution the establishment of the Company
Share Option Scheme. During the year 13,408 options
were issued at an option price of £9.65. In addition
15,705 options were exercised after being held for five
years, 606 at an option price of £1.65, 435 at an option
price of £2.295, 1,100 at an option price of £2.725,
4,443 at an option price of £3.96 and 9,121 at an option
price of £5.65.
Corporate Governance
Directors’ Report
Employees
The strategic report on page 4 sets out the group’s
communication policies with our employees and our
policy towards disability. This report shows how the
directors engage with the group’s employees, have regard
to their interests and encourage them to contribute to the
development of the group’s trading and other policies.
Substantial shareholdings
At 1 July 2020, the company had received notification
under the Disclosure Transparency Rules that the holdings
and voting rights exceeding the 3% notification threshold
were as follows:
Peter Latham
Close Asset Management Ltd
Robert Latham
Nick Latham
Piers Latham
Number
1,216,289
1,015,112
684,121
638,237
635,312
%
6.11
5.10
3.44
3.21
3.19
Suppliers
The group recognises the important part our suppliers
play in our trading success, including the development
of new products, new markets and meeting our
environmental targets. Regular meetings are held at the
highest level with our key suppliers to ensure our trading
and environmental requirements are understood and
forming strategic partnerships to develop the markets.
Operating businesses are responsible for agreeing the
terms and conditions under which business transactions
with their suppliers are conducted. The group’s
policy is to pay suppliers in accordance with these
terms. The group’s creditor days at 31 March 2020
were 29 days (2019: 26 days). Payment practices and
performance data for Lathams Limited is published at
https://check-payment-practices.service.gov.uk/
company/00967247/reports.
JAMES LATHAM PLC ANNUAL REPORT 2020
33
Corporate Governance
Directors’ Report
Going concern
After making appropriate enquiries, the directors have
a reasonable expectation that the company and the
group have adequate resources to continue in operational
existence for the foreseeable future. The directors
confirm that the business is a going concern and that
their assessment of the going concern position has been
prepared in accordance with the Guidance on the Going
Concern Basis of Accounting and Reporting On Solvency
and Liquidity Risks published by the Financial Reporting
Council in April 2016.
In arriving at their opinion, the directors considered:-
• The group’s cash flow forecasts and revenue projections
for the period to 30 June 2021, especially in the light of
COVID-19 pandemic
• Cash and borrowing facilities available to the group
• Consideration of the principal risks and uncertainties
outlined on pages 14 to 15.
Political and charitable donations
During the year the group made no political contributions
but made direct donations to various charitable
organisations amounting to £15,780 (2019: £10,836).
The group also made small donations of our products to
a number of good causes and was involved in fund raising
activities for the Timber Trades Benevolent Society.
Financial instruments
A summary of the group financial instruments and related
disclosures are set out in note 28 to the group accounts
and in the Financial Review on pages 20 to 23.
Provision of information to the auditor
In the case of each of the directors who are directors of
the company at the date when this report was approved:
• So far as each of the directors is aware, there is no
relevant audit information of which the company’s
auditor is unaware; and
• Each of the directors has taken all the steps that he
ought to have taken as a director to make himself
or herself aware of any relevant audit information and
to establish that the company’s auditor is aware of
that information.
34
JAMES LATHAM PLC ANNUAL REPORT 2020
Auditor
A resolution to reappoint RSM UK Audit LLP as the
company’s auditor and to authorise the directors to fix
their remuneration will be proposed at the Annual
General Meeting. RSM UK Audit LLP has indicated its
willingness to continue in office.
Annual General Meeting
Due to the current restrictions caused by the COVID-19
pandemic, the Annual General Meeting this year will not
be open for shareholders to attend in person. To ensure
that your vote counts, please submit your proxy form
appointing the Chairman as your proxy. Questions can
be submitted in advance to plc@lathams.co.uk and
these will be answered during the meeting. Full voting
details and answers to questions will be posted on the
Investor Page at www.lathams.co.uk/investors.
Shareholders receive more than 20 working days notice
of the Annual General Meeting, where directors will be
available for questions submitted in advance and a trading
update. Last year all resolutions were passed unanimously
at the meeting.
This year the following items are to be proposed as special
business, and the board recommends that the shareholders
vote in favour of all resolutions put before the meeting.
Resolution 7. Directors authority to allot shares.
This gives the board the power to allot ordinary shares or
other securities, up to an aggregate nominal amount of
£1,680,000 (or one third of the current ordinary shares).
Resolution 8. Dis-application of pre-emption rights.
The Companies Act 2006 provides that when ordinary
shares are being issued for cash, these shares must first
be offered to existing shareholders on a pro rata basis.
This resolution empowers the board to allot shares
not exceeding 5% of the issued share capital, without
offering to existing shareholders. The board only
anticipates using this power in conjunction with the
employee share schemes.
Resolution 9. Authority for the company to purchase its
own shares. This gives the board the power to purchase
up to 10% of the company’s shares at a price not more
than 105% of the average of the mid market price for the
ten business days preceding the date of the purchase.
On behalf of the Board of Directors
Nick Latham
Chairman
30 June 2020
Corporate Governance
Statement of Directors’ Responsibilities
The directors are responsible for keeping adequate
accounting records that are sufficient to show and explain
the group’s and company’s transactions and disclose with
reasonable accuracy at any time the financial position
of the group and the company and to enable them to
ensure that the financial statements comply with the
requirements of the Companies Act 2006. They are also
responsible for safeguarding the assets of the group and
the company and hence for taking reasonable steps for the
prevention and detection of fraud and other irregularities.
The directors are responsible for the maintenance and
integrity of the corporate and financial information
included on the James Latham plc Investors website,
www.lathams.co.uk.
Legislation in the United Kingdom governing the
preparation and dissemination of financial statements
may differ from legislation in other jurisdictions.
We consider that the Annual Report and Accounts, when
taken as a whole, is fair, balanced and understandable and
provides the information necessary for shareholders to
assess the group’s position, performance, business model
and strategy.
On behalf of the Board of Directors
Nick Latham
Chairman
30 June 2020
The directors are responsible for preparing the Strategic
Report, Directors Report and the financial statements in
accordance with applicable law and regulations.
Company law requires the directors to prepare group
and company financial statements for each financial year.
The directors are required by the AIM Rules of the
London Stock Exchange to prepare group financial
statements in accordance with International Financial
Reporting Standards (“IFRS”) as adopted by the European
Union “EU”’ and have elected under company law to
prepare the company financial statements in accordance
with IFRS as adopted by the EU.
The group and company financial statements are
required by law and IFRS adopted by the EU to present
fairly the financial position and performance of the group;
the Companies Act 2006 provides in relation to such
financial statements that references in the relevant part of
that Act to financial statements giving a true and fair view
are references to their achieving a fair presentation.
Under company law the directors must not approve
the financial statements unless they are satisfied that
they give a true and fair view of the state of affairs of the
group and the company and of the profit or loss of the
group for that period.
In preparing each of the group and company financial
statements, the directors are required to:
a. select suitable accounting policies and then apply
them consistently;
b. make judgements and accounting estimates that are
reasonable and prudent;
c. state whether they have been prepared in accordance
with IFRS’s adopted by the EU, subject to any material
departures disclosed and explained in the company
financial statements;
d. assess the group and company’s ability to continue
as a going concern, disclosing, as applicable, matters
relating to going concern;
e. prepare the financial statements on the going concern
basis unless it is inappropriate to presume that the
group and the company will continue in business.
JAMES LATHAM PLC ANNUAL REPORT 2020
35
Corporate Governance
Independent Auditor’s Report
Opinion
We have audited the financial statements of James Latham
plc (the ‘parent company’) and its subsidiaries (the
‘group’) for the year ended 31 March 2020 which comprise
the consolidated income statement, consolidated
statement of comprehensive income, consolidated and
company balance sheets, consolidated and company
statements of changes in equity, consolidated and
company cash flow statements and notes to the financial
statements, including a summary of significant accounting
policies. The financial reporting framework that has
been applied in their preparation is applicable law and
International Financial Reporting Standards (IFRSs) as
adopted by the European Union and, as regards the parent
company financial statements, as applied in accordance
with the provisions of the Companies Act 2006.
Conclusions relating to going concern
We have nothing to report in respect of the following
matters in relation to which the ISAs (UK) require us to
report to you where:
• the directors’ use of the going concern basis of
accounting in the preparation of the financial statements
is not appropriate; or
• the directors have not disclosed in the financial
statements any identified material uncertainties that
may cast significant doubt about the group’s or the
parent company’s ability to continue to adopt the
going concern basis of accounting for a period of at
least twelve months from the date when the financial
statements are authorised for issue.
In our opinion:
Summary of our audit approach
• the financial statements give a true and fair view of
the state of the group’s and of the parent company’s
affairs as at 31 March 2020 and of the group’s profit
for the year then ended;
• the group financial statements have been properly
prepared in accordance with IFRSs as adopted by the
European Union;
• the parent company financial statements have been
properly prepared in accordance with IFRSs as adopted
by the European Union and as applied in accordance
with the Companies Act 2006; and
• the financial statements have been prepared in
accordance with the requirements of the Companies
Act 2006.
Key audit matters
Group
• Inventories – stock level
and valuation
Materiality
Scope
Group
• Overall materiality: £766,000
• Performance materiality:
£575,000
Parent Company
• Overall materiality: £384,000
• Performance materiality:
£288,000
Our audit procedures covered
100% of revenue, total assets
and profit before tax.
Basis for opinion
We conducted our audit in accordance with International
Standards on Auditing (UK) (ISAs (UK)) and applicable
law. Our responsibilities under those standards are
further described in the Auditor’s responsibilities for the
audit of the financial statements section of our report.
We are independent of the group and parent company in
accordance with the ethical requirements that are relevant
to our audit of the financial statements in the UK, including
the FRC’s Ethical Standard as applied to listed entities
and we have fulfilled our other ethical responsibilities
in accordance with these requirements. We believe that
the audit evidence we have obtained is sufficient and
appropriate to provide a basis for our opinion.
Key audit matters
Key audit matters are those matters that, in our
professional judgment, were of most significance in
our audit of the group and parent company financial
statements of the current period and include the most
significant assessed risks of material misstatement
(whether or not due to fraud) we identified, including
those which had the greatest effect on the overall audit
strategy, the allocation of resources in the audit and
directing the efforts of the engagement team. These
matters were addressed in the context of our audit of
the group and parent company financial statements as a
whole, and in forming our opinion thereon, and we do
not provide a separate opinion on these matters.
36
JAMES LATHAM PLC ANNUAL REPORT 2020
Corporate Governance
Independent Auditor’s Report
We have determined the matter described below to be the key audit matter to be communicated in our report.
Inventory – stock level and valuation
Key audit matters
description
How the matter
was addressed in
the audit
The group carried inventory amounting to £44.3m at 31 March 2020. As disclosed in the accounting
policies, inventories are held at the lower of cost and net realisable value. The determination
of whether inventory will be realised for value less than cost requires management to exercise
judgement and apply assumptions. A change in the valuation of inventory could have a material
impact on the financial statements. In addition the risk exists that inventory quantities may not be
supported by the amount of inventory physically held by the Group.
Due to COVID-19 restrictions imposed by the government in March 2020, we were unable to attend
stock takes held at the year end as originally planned. Instead, stock takes were attended in
June 2020 and detailed testing procedures were applied to reconciliations provided by management
to ‘roll back’ the results in order to assess the stock physically held at 31 March 2020. In addition
for stock held at third party locations we tested a sample of items substantively to the underlying
stock records held by the Group and performed testing on the reconciliation of these quantities
back to 31 March 2020.
We have also reviewed a sample of post year-end sales to test whether net realisable value
was greater than cost. To audit the adequacy of the provision against inventory, we reviewed the
ageing of inventory at 31 March 2020 and challenged management’s assessment of the
provision required using information about the sales made in the year and post year end and
our previous experience of sales of slow-moving inventory.
We also tested cut off of inventory by checking a sample of purchase invoices around the year end to
goods received records and a sample of sales invoices around the year end to goods despatched records,
and vice versa to determine whether items have been correctly recognised in the appropriate period.
Our application of materiality
When establishing our overall audit strategy, we set certain thresholds which help us to determine the nature, timing and
extent of our audit procedures. When evaluating whether the effects of misstatements, both individually and on the financial
statements as a whole, could reasonably influence the economic decisions of the users we take into account the qualitative
nature and the size of the misstatements. Based on our professional judgement, we determined materiality as follows:
Group
Parent company
Overall materiality
£766,000
£384,000
Basis for determining
overall materiality
5% of profit before tax
3% of net assets
Rationale for
benchmark applied
Profit measure used for the trading
activities of the Group.
Asset based measure used for the parent
company as it holds the investment in
subsidiaries has and no trading activities.
Performance materiality
£575,000
£288,000
Basis for determining
performance materiality
Reporting of
misstatements to the
Audit Committee
75% of overall materiality
75% of overall materiality
Misstatements in excess of £38,000 and
misstatements below that threshold that,
in our view, warranted reporting on
qualitative grounds.
Misstatements in excess of £19,000 and
misstatements below that threshold that,
in our view, warranted reporting on
qualitative grounds.
JAMES LATHAM PLC ANNUAL REPORT 2020
37
Corporate Governance
Independent Auditor’s Report
An overview of the scope of our audit
The group consists of four components, located in the following countries:
• United Kingdom (three)
• Republic of Ireland (one)
The coverage achieved by our audit procedures was:
Number of components
Revenue
Total assets
Profit before tax
Full scope audit
Analytical procedures
Total
3
1
4
99.7%
99.1%
0.3%
100%
0.9%
100%
99.6%
0.4%
100%
Other information
The directors are responsible for the other information.
The other information comprises the information included
in the annual report, other than the financial statements
and our auditor’s report thereon. Our opinion on the
financial statements does not cover the other information
and, except to the extent otherwise explicitly stated in
our report, we do not express any form of assurance
conclusion thereon.
In connection with our audit of the financial statements,
our responsibility is to read the other information and,
in doing so, consider whether the other information is
materially inconsistent with the financial statements or
our knowledge obtained in the audit or otherwise appears
to be materially misstated. If we identify such material
inconsistencies or apparent material misstatements, we
are required to determine whether there is a material
misstatement in the financial statements or a material
misstatement of the other information. If, based on the
work we have performed, we conclude that there is a
material misstatement of this other information, we are
required to report that fact.
We have nothing to report in this regard.
Opinions on other matters prescribed by the
Companies Act 2006
In our opinion, based on the work undertaken in the
course of the audit:
• the information given in the Strategic Report and the
Directors’ Report for the financial year for which the
financial statements are prepared is consistent with the
financial statements; and
• the Strategic Report and the Directors’ Report have
been prepared in accordance with applicable legal
requirements.
Matters on which we are required to report by
exception
In the light of the knowledge and understanding of the
group and the parent company and their environment
obtained in the course of the audit, we have not identified
material misstatements in the Strategic Report or the
Directors’ Report.
We have nothing to report in respect of the following
matters in relation to which the Companies Act 2006
requires us to report to you if, in our opinion:
• adequate accounting records have not been kept by the
parent company, or returns adequate for our audit have
not been received from branches not visited by us; or
• the parent company financial statements are not in
agreement with the accounting records and returns; or
• certain disclosures of directors’ remuneration specified
by law are not made; or
• we have not received all the information and
explanations we require for our audit.
38
JAMES LATHAM PLC ANNUAL REPORT 2020
Corporate Governance
Independent Auditor’s Report
Use of our report
This report is made solely to the company’s members,
as a body, in accordance with Chapter 3 of Part 16 of the
Companies Act 2006. Our audit work has been undertaken
so that we might state to the company’s members those
matters we are required to state to them in an auditor’s
report and for no other purpose. To the fullest extent
permitted by law, we do not accept or assume responsibility
to anyone other than the company and the company’s
members as a body, for our audit work, for this report, or
for the opinions we have formed.
David Clark
Senior Statutory Auditor
For and on behalf of
RSM UK Audit LLP
Statutory Auditor, Chartered Accountants
25 Farringdon Street
London EC4A 4AB
30 June 2020
Responsibilities of directors
As explained more fully in the directors’ responsibilities
statement set out on page 35, the directors are responsible
for the preparation of the financial statements and for
being satisfied that they give a true and fair view, and
for such internal control as the directors determine is
necessary to enable the preparation of financial statements
that are free from material misstatement, whether due to
fraud or error.
In preparing the financial statements, the directors are
responsible for assessing the group’s and the parent
company’s ability to continue as a going concern,
disclosing, as applicable, matters related to going concern
and using the going concern basis of accounting unless
the directors either intend to liquidate the group or
the parent company or to cease operations, or have no
realistic alternative but to do so.
Auditor’s responsibilities for the audit of the
financial statements
Our objectives are to obtain reasonable assurance about
whether the financial statements as a whole are free from
material misstatement, whether due to fraud or error,
and to issue an auditor’s report that includes our opinion.
Reasonable assurance is a high level of assurance, but is
not a guarantee that an audit conducted in accordance
with ISAs (UK) will always detect a material misstatement
when it exists. Misstatements can arise from fraud or
error and are considered material if, individually or in the
aggregate, they could reasonably be expected to influence
the economic decisions of users taken on the basis of
these financial statements.
A further description of our responsibilities for the audit
of the financial statements is located on the Financial
Reporting Council’s website at: www.frc.org.uk/
auditorsresponsibilities. This description forms part of
our auditor’s report.
JAMES LATHAM PLC ANNUAL REPORT 2020
39
Financial Statements
Consolidated Income Statement
For the year ended 31 March 2020
£’000s
Notes
2020
2019
235,132
Revenue
Cost of sales (including warehouse costs) 3 (203,656) (194,686)
247,100
2
40,446
Gross profit
Selling and distribution costs 3 (19,251) (18,082)
Administrative expenses 3 (8,196) (7,896)
43,444
Operating profit
Profit on disposal of property
Finance income
Finance costs
Profit before tax
Tax expense
15,997
-
82
14,468
1,052
71
5
6 (417) (256)
15,335
3
7 (3,181) (2,913)
15,662
Profit after tax attributable to owners
of the parent company
Earnings per ordinary share (basic)
Earnings per ordinary share (diluted)
9
9
12,481
63.1p
63.0p
12,422
63.1p
63.0p
40
JAMES LATHAM PLC ANNUAL REPORT 2020
Financial Statements
Consolidated Statement of Comprehensive Income
For the year ended 31 March 2020
£’000s
Notes
2020
2019
12,422
12,481
(4,823)
(1,360)
916
80
314
(31)
Profit after tax
Other comprehensive income:
Actuarial loss on defined benefit
pension scheme
Deferred tax relating to components of
other comprehensive income
Foreign translation gain/(charge)
Other comprehensive income for the year,
net of tax
Total comprehensive income attributable to
the owners of the parent company
(3,827)
(1,077)
8,654
11,345
JAMES LATHAM PLC ANNUAL REPORT 2020
41
Financial Statements
Consolidated and Company Balance Sheet
As at 31 March 2020
£’000s
Assets
Non-current assets
Investments
Goodwill
Other intangible assets
Property, plant and equipment
Right-of-use-assets
Deferred tax asset
Total non-current assets
Current assets
Inventories
Trade and other receivables
Cash and cash equivalents
Total current assets
Total assets
Current liabilities
Lease liabilities
Trade and other payables
Interest bearing loans and borrowings
Tax payable
Total current liabilities
Non-current liabilities
Interest bearing loans and borrowings
Lease liabilities
Retirement and other benefit obligation
Other payables
Deferred tax liabilities
Total non-current liabilities
Total liabilities
Net assets
Capital and reserves
Issued capital
Share-based payment reserve
Own shares
Capital reserve
Retained earnings
Company Registration Number 65619
Group
Company
Notes
2020
2019
2020
2019
10
11
12
13
14
15
16
17
14
18
19
19
14
20
21
15
-
872
1,822
35,952
4,895
2,258
45,799
44,288
47,046
16,950
-
523
1,989
34,159
-
1,577
38,248
9,613
-
-
9,613
-
-
21 13
-
- 96
812
10,446
9,722
42,350
-
42,613 3,221
929
15,541
-
4,634
94
4,728
108,284
100,504
4,150
154,083
138,752
14,596
14,450
1,178
28,686
-
-
-
27,113
-
1,193
29,864
28,306
592
3,857
11,812
597
-
8,714
392 413
2,762
3,289
19,942
49,806
104,277
12,486
40,792
97,960
13
1,131
-
-
1,144
-
1,123
1,120
-
2,243
592
808
-
597
-
-
59 157
-
15
1,474
2,618
754
2,997
11,978
11,453
5,430
259
5,040
25
5,430
22
25 259
23
24 (619) (923) (619) (923)
-
6,687
398
99,433
3
93,191
395
7,137
5,040
Total equity attributable to
shareholders of the parent company
104,277
97,960
11,978
11,453
The Company’s profit for the year was £2,971,000 (2019: £679,000).
These accounts were approved and authorised for issue by the Board of Directors on 30 June 2020 and signed on its behalf by:
N.C. Latham and D.A. Dunmow (Directors)
The consolidated notes on pages 46 to 74 form part of these accounts.
42
JAMES LATHAM PLC ANNUAL REPORT 2020
Financial Statements
Consolidated Statement of Changes in Equity
Attributable to owners of the parent company
Issued
capital
£’000
5,040
-
Share-based
payment
reserve
£’000
Own
shares
£’000
184 (529)
-
-
Capital
reserve
£’000
3
-
Retained
earnings
£’000
85,091
12,422
Total
equity
£’000
89,789
12,422
- - (1,360) (1,360)
Balance at 1 April 2018
Profit for the year
Other comprehensive income:
Actuarial loss on defined benefit
pension scheme
Deferred tax relating to components
of other comprehensive income
Foreign translation charge
Total comprehensive income for the year
Transactions with owners:
Dividends
Exercise of options
Deferred tax on share options
Transfer of treasury shares
Write down on conversion of ESOP shares
Purchase of preference shares
Change in investment in ESOP shares
Share-based payment expense
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
- (19)
-
-
-
- (82)
-
14
-
-
- (478)
390
- 152
-
-
-
94
- 314 314
- (31) (31)
-
11,345
11,345
- (3,363) (3,363)
-
19
-
- 31
31
-
-
82
-
- (14)
- (88)
-
- 152
-
94
-
-
Total transactions with owners
390 75 (394)
- (3,245) (3,174)
Balance at 31 March 2019
5,430
259 (923)
3
93,191
97,960
Change in accounting policy (IFRS 16)
Deferred tax on IFRS 16
-
-
-
-
-
-
-
291
291
- (55) (55)
As at 1 April 2019 (as restated)
5,430
259 (923)
Profit for the year
Other comprehensive income:
Actuarial loss on defined benefit
pension scheme
Deferred tax relating to components
of other comprehensive income
Foreign translation gain
Total comprehensive income for the year
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Transactions with owners:
Dividends
Exercise of options
Deferred tax on share options
Purchase of preference shares
Cancellation of preference shares (395)
-
Change in investment in ESOP shares
-
Share-based payment expense
-
-
-
- (253) (261)
-
- (45)
-
5 -
478
-
87
-
-
64
3
-
93,427
98,196
12,481
12,481
- (4,823) (4,823)
- 916
80
-
916
80
-
8,654
8,654
- (3,633) (3,633)
- 1,463
949
- (45)
-
5
-
-
87
64
-
395 (478)
-
-
-
-
Total transactions with owners (390) (234)
304
395 (2,648) (2,573)
Balance at 31 March 2020
5,040
25 (619)
398
99,433
104,277
JAMES LATHAM PLC ANNUAL REPORT 2020
43
Financial Statements
Company Statement of Changes in Equity
Attributable to owners of the parent company
Share-based
payment
reserve
£’000
Own
shares
£’000
Capital
reserve
£’000
Retained
earnings
£’000
Total
equity
£’000
184 (529)
-
9,253
13,948
-
-
-
-
- 679 679
-
679
679
Issued
capital
£’000
5,040
-
-
-
-
-
-
- (19)
- -
-
- - (82)
- (3,363) (3,363)
-
-
19
- 31 31
82 -
-
- -
14
- (478)
152
-
-
94
- (14)
-
-
-
-
- (88)
- 152
94
-
75 (394)
- (3,245) (3,174)
390
-
-
390
Balance at 1 April 2018
Profit for the year
Total comprehensive income
for the year
Transactions with owners:
Dividends
Exercise of options
Deferred tax on share options
Transfer of treasury shares
Write down on conversion of
ESOP shares
Purchase of preference shares
Change in investment in ESOP shares
Share-based payment expense
Total transactions with owners
Balance at 31 March 2019
5,430
259 (923)
- 6,687
11,453
Change in accounting policy (IFRS 16)
Deferred tax on IFRS 16
-
-
-
-
-
-
-
157
157
- (30) (30)
As at 1 April 2019 (as restated)
5,430
259 (923)
- 6,814
11,580
Profit for the year
Total comprehensive income for the year
-
-
-
-
-
-
-
-
2,971
2,971
2,971 2,971
Transactions with owners:
-
-
Dividends
- (253) (261)
Exercise of options
-
- (45)
Deferred tax on share options
-
Purchase of preference shares
-
5
- 478
Cancellation of preference shares (395)
- 87
-
Change in investment in ESOP shares
-
-
Share-based payment expense
64
-
- (3,633) (3,633)
949
- 1,463
- (45)
-
5
-
-
395 (478)
-
87
-
64
-
-
-
Total transactions with owners (390) (234) 304
395 (2,648) (2,573)
Balance at 31 March 2020
5,040
25 (619)
395
7,137
11,978
The share-based payment reserve represents the movements associated with current employee share option schemes.
The own shares reserve represents the cost of shares purchased in the market and held by the James Latham plc
Employee Benefits Trust to satisfy options under the Groups share option schemes.
The capital reserve represents the cancellation of the preference shares.
44
JAMES LATHAM PLC ANNUAL REPORT 2020
Financial Statements
Consolidated and Company Cash Flow Statement
For the year ended 31 March 2020
Group
Company
£’000s
Notes
2020
2019
2020
2019
Net cash flow from operating activities
Cash generated from operations
Interest paid
Income tax paid
25
13,528
10,115
751 (5,251)
(3) (8)
- (6)
(3,851) (2,651) (943) (80)
Net cash inflow/(outflow) from operating activities
9,674
7,456 (192) (5,337)
Cash flows from investing activities
Interest received and similar income
Acquisition of businesses
Purchase of property, plant and equipment
Proceeds from sale of property, plant
and equipment
11
82
(578) (1,604) - -
(3,886) (2,362) (11) (2)
15
71
152 1,743 - -
Net cash (outflow)/inflow from investing activities
(4,230) (2,152)
4
9
Cash flows from financing activities
Dividend received
2,523
Purchase of treasury shares
- (478)
Sale of treasury shares
152
1,036
Lease liability payments (1,390)
-
Equity dividends paid (3,633) (3,363) (3,633) (3,363)
(48) (63) (48) (63)
Preference dividend paid
-
-
- (478)
152
1,036
- (18)
4,806
Net cash outflow from financing activities
(4,035) (3,752)
2,143 (1,229)
Increase/(decrease) in cash and cash
equivalents for the year
Cash and cash equivalents at
beginning of year
1,409 1,552
1,955 (6,557)
15,541
13,989 (1,026)
5,531
Cash and cash equivalents at end of year
16,950
15,541
929 (1,026)
Balance sheet cash and cash equivalents
Bank overdraft in current liabilities (note 17)
16,950
-
15,541
-
929
94
- (1,120)
Cash and cash equivalents at end of year
16,950
15,541
929 (1,026)
JAMES LATHAM PLC ANNUAL REPORT 2020
45
Financial Statements
Notes forming part of the Group Accounts
General information
James Latham plc is a public limited company
incorporated and domiciled in the United Kingdom under
the Companies Act 2006 and is listed on the AIM market.
The nature of the group’s operations and its principal
activities are set out in the Strategic Review. The address of
the registered office is Unit 3 Swallow Park, Finway Road,
Hemel Hempstead, Herts HP2 7QU
- Amendments to IAS 19 Employee Benefits clarify that
if a plan amendment, curtailment or settlement occurs,
it is now mandatory that the current service cost and
net interest for the period after the remeasurement
are determined using the assumptions used for the
remeasurement. The amendments also include changes
to the recognition of a reduction in a surplus (effective
for periods commencing on or after 1 January 2019).
1. Summary of significant accounting policies
The principal accounting policies applied in the
preparation of these consolidated accounts are set out
below. These policies have been consistently applied to
all the years presented, unless otherwise stated.
(a) Basis of preparation
These consolidated and company accounts have been
prepared in accordance with International Financial
Reporting Standards (IFRS) and IFRIC interpretations
endorsed by the European Union (EU) and with those
parts of the Companies Act 2006 applicable to companies
reporting under IFRS.
The accounts have been prepared under the historic
cost convention except for forward contract financial
instruments measured at fair value. The directors have
prepared the financial statements on the going concern
basis for the reasons set out on page 34. A summary of
the more important group accounting policies, which
have been applied consistently across the group, is set
out below.
New and amended IFRS standards that are
effective for the current year
With the exception of IFRS 16 “Leases” (outlined below),
the following standards have been adopted in the year
with no material impact on the financial statements of
the Group or Company.
- Annual improvements 2015-2017 cycle includes
amendments to IFRS 3 ‘Business Combinations’, IFRS 11
‘Joint Arrangements’ IAS 12 ‘Income Taxes’ and IAS 23
‘Borrowing Costs (effective for periods commencing on
or after 1 January 2019).
- Amendments to IFRS 9: Prepayment features with
Negative Compensation permits companies to
measure certain prepaid financial assets with negative
compensation at amortised cost (effective for periods
commencing on or after 1 January 2019).
- IFRS 16 ‘Leases’ establishes principles for the recognition,
measurement, presentation and disclosure of leases –
IFRS 16 is applicable for periods beginning on or after
1 January 2019.
Initial application of IFRS 16 “Leases”
The adoption of this new standard has resulted in the
group recognising a right-of-use asset and related lease
liability in connection with all former operating leases
except for those identified as low-value or having a
remaining lease term of less than 12 months from the
date of initial application.
The standard has been applied using the modified
retrospective approach, with the cumulative effect
of adopting IFRS 16 being recognised in equity as an
adjustment to the opening balance of retained earnings for
the current period. Prior periods have not been restated.
For those leases previously classified as finance leases,
the right-of-use asset and lease liability are measured at
the date of initial application at the same amounts as
under IAS 17 immediately before the initial application.
On transition to IFRS 16 the weighted average incremental
borrowing rate applied to lease liabilities recognised under
IFRS 16 was 3%.
The adoption of the standard has resulted in the Group
bringing many of its leases onto the balance sheet
reflecting ‘right-of-use’ assets which, are depreciated,
and corresponding liabilities on which interest accrues.
The impact of the standard in the period to 31 March
2020, compared to the results if the standard had not
been recognised, is that operating profit has increased
by £48,000 due to the elimination of rent costs and
recognition of depreciation. However, profit before and
after tax has reduced by £140,000 due to interest charges.
At 31 March 2020 non-current assets have increased by
£4,895,000 as a result of the additional right-of-use assets.
Total liabilities have increased by £5,035,000 due to the
addition of finance lease liabilities. Total net asset effect is
a decrease of £140,000.
46
JAMES LATHAM PLC ANNUAL REPORT 2020
Financial Statements
Notes forming part of the Group Accounts
The rent-free period accruals previously recognised under
liabilities to the value of £291,000 have been transferred
to retained earnings. An initial deferred tax provision of
£55,000 has been recognised on the impact of IFRS 16.
New standards, interpretations and amendments
not yet effective
At the date of authorisation of these financial statements,
the following standards and interpretations which are
issued but not yet effective or endorsed (unless otherwise
stated), have not been applied:
- Amendments to IFRS 9, IAS 39 and IFRS 7: Interest Rate
Benchmark Reform (effective for periods commencing on
or after 1 January 2020).
- Amendments to References to the Conceptual Framework
in IFRS Standards (effective for periods commencing on
or after 1 January 2020).
Certain other new accounting standards, amendments to
existing accounting standards and interpretations which
are in issue but not yet effective, either do not apply to the
Group or are not expected to have any material impact on
the Group’s net results or net assets.
(b) Basis of consolidation
The consolidated accounts include the company and all its
subsidiary undertakings (from the date of acquisition or to
the date of disposal where applicable). Intra group sales
and profits are eliminated on consolidation. The accounts
of all subsidiary undertakings are made up to 31 March.
A subsidiary is an entity controlled, either directly or
indirectly, by the company, where control is the power to
govern the financial and operating policies of the entity
so as to obtain benefit from its activities. The acquisition
method of accounting is used to account for the acquisition
of subsidiaries by the group. The cost of an acquisition
is measured as the fair value of the assets given, equity
instruments issued and liabilities incurred or assumed at
the date of exchange. Acquisition costs are expensed in the
period in which they are incurred.
1.1 Revenue recognition
Revenue comprises net sales to external customers
exclusive of Value Added Tax. Revenue is recognised upon
delivery to, or collection by, the customer. Revenue is
shown net of returns and rebates and after eliminating
sales within the group.
1.2 Segmental reporting
IFRS 8 “Operating Segments” requires operating segments
to be identified on the basis of internal reporting of
components of the group that are regularly reviewed
by the chief operating decision maker, which the group
considers to be the Chairman, to allocate resources to
the segments and to assess their performance. Further
information is available in note 2.
1.3 Operating profit
Operating profit consists of revenues and other operating
income less operating expenses. Operating profit excludes
net finance costs.
1.4 Exceptional items
Exceptional items are those items of income and expenditure
that by reference to the group are material in size and nature
or incidence, that in the judgement of the directors, should
be disclosed separately on the face of the financial statements
to ensure both that the reader has a proper understanding
of the group’s financial performance and that there is
comparability of financial performance between periods.
1.5 Foreign currency translation
Transactions denominated in foreign currencies are recorded
at the rates ruling on the date of the transaction. At each
balance sheet date, monetary assets and liabilities denominated
in foreign currencies are translated at the rate of exchange
ruling at the balance sheet date. Any gains or losses arising
from the transactions are taken to the income statement.
In order to help manage its exposure to certain foreign
exchange risks, the group enters into forward contracts.
Gains and losses on forward contracts are recognised at
fair value through the income statement.
1.6 Property, plant and equipment
Property, plant and equipment is stated at cost less
depreciation. Depreciation on property, plant and
equipment is provided at rates calculated to write off the
cost less estimated residual value of each asset over its
expected life. It is calculated at the following rates.
It is calculated at the following rates:
Freehold buildings
Leasehold improvements
Fixtures and fittings
Plant, equipment and vehicles
- over 50 years
- over 5 to 15 years
- over 4 to 10 years
- over 5 to 20 years
Freehold land is not depreciated.
For our credit customers, the payment falling will be due
under our standard payment terms and any outstanding
balance shown in trade receivables.
Estimated residual values and useful lives are reviewed
annually and adjusted where necessary.
JAMES LATHAM PLC ANNUAL REPORT 2020
47
Financial Statements
Notes forming part of the Group Accounts
1.7 Impairment of non-current assets
Goodwill is reviewed annually for impairment.
The carrying amounts of the group’s other intangible
assets and property, plant and equipment are reviewed
at each balance sheet date to determine whether there
is any indication of impairment. If such an indication
exists, the asset’s recoverable amount is estimated and
compared to its carrying value. Where the asset does not
generate cash flows that are independent from other
assets, the group estimates the recoverable amount of
the cash-generating unit to which the asset belongs.
Where the carrying value exceeds the recoverable amount,
a provision for the impairment loss is established with a
charge being made to the income statement.
1.8 Goodwill
Goodwill on consolidation, being the excess of the
purchase price over the fair value of the net assets of
subsidiary undertakings at the date of acquisition is
capitalised in accordance with IFRS 3 (revised) “Business
combinations”. Goodwill is tested annually for impairment,
or more frequently when there is an indication that
goodwill may be impaired. Goodwill is carried at cost less
accumulated impairment losses. Impairment losses on
goodwill are not reversed in a subsequent period.
1.9.1 Intangible assets – Trademark
Acquired trademarks are shown at historical cost.
Trademarks are considered to have a finite life and
are carried at cost less accumulated amortisation.
Amortisation is calculated using the straight-line method
over the estimated useful life of 20 years.
1.9.2 Intangible assets – Customer lists
Acquired customer lists are shown at historical cost.
Customer lists are considered to have a finite life and
are carried at cost less accumulated amortisation.
Amortisation is calculated using the straight-line method
over the estimated useful life of 10 years.
1.10 Inventories
Inventories are stated at the lower of cost (including an
appropriate proportion of attributable supplier rebates
and discounts) and net realisable value.
Net realisable value is the estimated selling price in the
ordinary course of business, less applicable variable selling
expenses. Provision is made for obsolete or slow moving
inventories where appropriate.
The cost of inventories is based on the weighted average
principle.
1.11 Financial instruments
Financial assets and financial liabilities are recognised on
the group’s balance sheet when the group has become
party to the contractual provisions of the instrument.
Subsequent measurement of all recognised financial assets
within the scope of IFRS 9 are required to be measured
at amortised cost or fair value on the basis of the group’s
business model for managing financial assets and their
contractual cash flows. Where assets are measured at fair
value, gains and losses are recognised through profit or
loss (fair value through profit or loss, “FVTPL”).
1.11.1 Trade and other receivables
Trade receivables are classified as financial assets at
amortised cost and are initially recognised at fair value.
They are subsequently measured at their amortised cost
using the effective interest method less any provision
for impairment.
The Company’s group receivables represent trading
balances and interest free amounts advanced to other
group companies with no fixed repayment terms.
The measurement of impairment losses depends
on whether the financial asset is ‘performing’,
‘underperforming’, or ‘non-performing’ based on the
company’s assessment of increases in the credit risk of
the financial asset since its initial recognition and any
events that have occurred before the year end which
have a detrimental impact on cash flows. In assessing
whether credit risk has increased significantly, the
company compares the risk of default at the year-end
with the risk of default when the receivable was
originally recognised using reasonable and supportable
past and forward-looking information that is available.
No impairment has been recognised against amounts
due from fellow subsidiaries at 31 March 2020 as any
expected credit losses are not material.
1.11.2 Cash and cash equivalents
Cash and cash equivalents comprise cash in hand and at
bank and other short-term, highly liquid investments that
are readily convertible to known amounts of cash and
which are subject to an insignificant risk of changes in
value. The carrying amount of these assets approximates
their fair value.
1.11.3 Financial liabilities and equity
Financial liabilities and equity instruments are
classified according to the substance of the contractual
arrangements entered into. An equity instrument is any
contract that evidences a residual interest in the assets of
the group after deducting all of its liabilities.
48
JAMES LATHAM PLC ANNUAL REPORT 2020
Financial Statements
Notes forming part of the Group Accounts
1.13 Leased assets
The Group as a Lessee
For any new contracts entered into after 1 April 2019,
the Group considers whether a contracts is, or contains
a lease. A lease is defined as ‘a contract, or part of a
contract, that conveys the right to use an asset for a period
of time in exchange for consideration’.
Measurement and recognition of leases as a lessee
At lease commencement date, the Group recognises a
right-of-use asset and lease liability on the balance sheet.
A right-of-use asset is recognised at commencement of
the lease and initially measured at the amount of the lease
liability, plus any incremental costs of obtaining the lease
and any lease payments made at or before the leased
asset is available for use by the Group. The right-of-use
asset is subsequently measured at cost less accumulated
depreciation and any accumulated impairment losses.
The Group depreciates the right-of-use asset on a straight-
line basis from the lease commencement date to the earlier
of the end of the useful life of the right-of-use asset or the
end of the lease term. The Group also assesses the right-
of-use asset for impairment when such indicators exist.
At the commencement date, the Group measures the
lease liability at the present value of the lease payments
unpaid at that date, discounted using the interest rate
implicit in the lease if that rate is readily available or the
Group’s incremental borrowing rate.
Subsequent to initial measurement, the liability will be
reduced for payments made and increased for interest.
The Group has elected to account for short-term
leases and leases of low-value assets using the practical
expedients. Instead of recognising a right-of-use asset
and lease liability, the payments in relation to these are
recognised as an expense in profit or loss on a straight-line
basis over the lease term.
1.14 Dividend distribution
Dividend distribution to the company’s shareholders is
recognised as a liability in the group’s financial statements
in the period in which the dividends are approved by the
company’s shareholders.
1.11.4 Bank borrowings
Interest-bearing bank loans are recorded initially at
their fair value, net of direct transaction costs. Such
instruments are subsequently carried at their amortised
cost and finance charges, including premiums payable on
settlement or redemption, are recognised in the income
statement over the term of the instrument using an
effective rate of interest.
1.11.5 Trade payables
Trade payables are initially recognised at fair value and
subsequently at amortised cost using the effective interest
method.
1.11.6 Equity instruments
Equity instruments issued by the group are recorded at
the proceeds received, net of direct issue costs.
1.11.7 Derivative financial instruments
The group’s activities expose the entity primarily to foreign
currency and interest rate risk. The group uses foreign
exchange forward contracts and fixed rate bank loans to
help manage these exposures. The group does not use
derivative financial instruments for speculative purposes.
Derivative financial instruments are initially recognised at
fair value on the date a derivative contract is entered into
and are subsequently remeasured at their fair value.
Foreign currency forward contracts and fixed rate bank
loans are not designated effective hedges and so are
marked to market at the balance sheet date, with any gains
or losses being taken through the income statement.
1.12 Current and deferred income tax
Current tax is the expected tax payable on taxable income
for the year, using tax rates enacted or substantively
enacted at the balance sheet date, and any adjustments
to tax payable in respect of previous years.
Deferred tax expected to be payable or recoverable on
differences at the balance sheet date between the tax
bases and liabilities and their carrying amounts for
financial reporting purposes is accounted for using the
liability method. Deferred tax liabilities are generally
recognised for all taxable temporary differences, and
deferred tax assets are recognised to the extent that it
is probable that taxable profits will be available against
which deductible differences can be utilised.
Deferred tax is calculated at the rates of taxation which are
expected to apply when the deferred tax asset or liability is
realised or settled, based on the rates of taxation enacted
or substantively enacted at the balance sheet date.
JAMES LATHAM PLC ANNUAL REPORT 2020
49
Financial Statements
Notes forming part of the Group Accounts
1.15 Retirement benefit costs
Retirement benefit costs are accounted for in accordance
with IAS 19 (revised)”Employee benefits”. Full details
of the basis of calculation of the net pension liability
disclosed in the balance sheet at 31 March 2020, and of the
amounts charged/credited to the income statement and
equity, are set out in note 18 to the accounts.
The cost of the defined benefit scheme is determined
using the projected unit credit method with actuarial
valuations being carried out at the end of each reporting
period. The current service cost represents the increase in
the present value of the plan liabilities expected to arise
from employee service in the current period. Past service
costs resulting from enhanced benefits are recognised in
the income statement on a straight-line basis over the
vesting period, or immediately if the benefits have vested.
Interest cost represents a net interest cost on the net
defined benefit liability. Gains and losses on curtailments
or settlements are recognised in the income statement in
the period in which the curtailment or settlement occurs.
Actuarial gains and losses, which represent differences
between the expected and actuarial returns on the plan
assets and the effect of changes in actuarial assumptions,
are recognised in the statement of recognised income and
expense in the period in which they occur.
The defined benefit liability recognised in the balance
sheet comprises the present value of the benefit obligation,
minus any past service costs not yet recognised minus the
fair value of the plan assets, if any, at the balance sheet
date. The deficit is classified as a non-current liability.
Pension payments to the group’s defined contributions
schemes are charged to the income statement as they arise.
1.16 Share-based payment
The group has applied the requirements of IFRS 2
“Share-based payment” which requires the fair value of
share-based payments to be recognised as an expense.
Certain employees receive remuneration in the form of
share options. The fair value of the equity instruments
granted is measured on the date at which they are granted
by using the Black-Scholes model, and is based on the
group’s estimate of the number of options that will
eventually vest. The fair value is expensed in the income
statement over the vesting period.
1.17 Treasury shares
Treasury shares are shown at historical cost, and deducted
from retained earnings directly in equity.
1.18 Employee Share Ownership Plan (ESOP)
Own shares represent the company’s own shares that are
held by the group sponsored ESOP trust in relation to
the group’s employees share schemes. Own shares are
deducted at cost in arriving at shareholders’ equity and
gains and losses on their sale or transfer are recognised
directly in equity. ESOP is treated separately and
consolidated in the group and company accounts.
1.19 Accounting estimates and judgements
The directors consider the critical accounting estimates
and judgements used in the financial statements and
concluded that the main areas of judgements are:
i. Post-employment benefits
ii. Stock obsolescence provision
iii. Acquisition accounting and business combinations
iv. Leased assets
These estimates are based on historical experience and
various other assumptions that management and the
board of directors believe are reasonable under the
circumstances and are discussed in more detail under
their respective notes. For post-employment benefits, the
directors take advice from a qualified actuary as shown
in note 20. Due to the inherent uncertainty involved in
making assumptions and estimates, actual outcomes could
differ from those assumptions and estimates.
In determining the recoverable amount of inventories the
Directors have to make estimates to arrive at cost and net
realisable value. Note 16 shows the estimate for obsolete
and slow moving stock which has been made using a
consistent approach to all stock lines.
The key estimates regarding the acquisition is in respect
of the valuation of the customer lists, as shown in note 12.
When valuing the intangibles acquired in a business
combination, management estimate the expected future
cashflows from the asset and select a suitable discount rate
in order to calculate the present value of those cashflows.
IFRS 16 requires entities to make certain judgements and
estimations as to the nature and length of a lease and the
appropriate incremental borrowing rate to be applied.
Details of leases can be found in note 14.
50
JAMES LATHAM PLC ANNUAL REPORT 2020
Financial Statements
Notes forming part of the Group Accounts
2. Business and geographical segments
For management purposes, the group is organised into one trading division, that of timber importing and distribution,
carried out in each of the twelve locations trading predominantly in the United Kingdom and the Republic or Ireland.
The geographical turnover is as follows:
Republic of Ireland
Rest of Europe
Rest of the World
United Kingdom
2020
£’000
2019
£’000
8,702
3,447
80 250
623
230,812
276
238,042
247,100
235,132
In each location, turnover and gross margin is reviewed separately for Panel Products (including ATP) and Timber
(including Flooring and LDT). Most locations sell both products groups, except in the London region where for
operational efficiency Panel Products and Timber are sold from separate locations. Resources are allocated and
employees incentivised on the basis of the results of their individual location and not on the basis of a product group.
Whilst there are regional differences in the relative importance of product groups and classes of customer, each location
is considered to have similar economic characteristics and so can be aggregated into one segment. We therefore consider
there is one business segment and one geographic segment.
3. Profit before tax
2020 2019
Profit for the year has been arrived at after taking
account the following charges/(credits):
Employee remuneration (note 4)
Net foreign exchange losses/(gains)
Cost of inventories recognised as an expense and included
in ‘cost of sales’ in the consolidated income statement
Depreciation of property, plant and equipment (note 13)
Depreciation of right-of-use assets (note 14)
Profit on disposal of property, plant and equipment
Amortisation (note 12)
Operating lease rentals - vehicles and plant
- property
Fees payable to the company’s auditors for the audit
of the consolidated and parent company accounts
Fees payable to the company’s auditors and its
associates for other services:
The audit of the company’s subsidiary pursuant to legislation
Tax services
Other
Fees in relation to the audit of the James Latham plc
Pension and Assurance Scheme
Other expenses
Total cost of sales, Distribution costs and
Administrative expenses
£’000
£’000
£’000
£’000
19,126
30
18,102
(110)
192,524
2,280
1,343
185,015
2,008
-
(121) (27)
28
167
-
-
601
655
-
1,256
10 10
83
68
- 11
6
12
11
15,644
231,103
8
14,283
220,664
JAMES LATHAM PLC ANNUAL REPORT 2020
51
Financial Statements
Notes forming part of the Group Accounts
4. Information regarding employees
The monthly average number of persons, including directors, employed by the group during the year was as follows:
Management and administration
Warehousing
Selling
Distribution
The aggregate payroll costs of these
employees were as follows:
Wages and salaries
Social security costs
Apprenticeship levy
Pension costs
Share-based payment
Group
Company
2020
Number
2019
Number
2020
Number
2019
Number
65
146
146
75
432
£’000
15,511
1,631
59
1,861
64
19,126
60
125
138
72
395
£’000
14,164
1,462
55
2,327
94
18,102
26
-
-
-
26
£’000
1,419
181
5
2,255
64
3,924
25
-
-
-
25
£’000
1,352
154
6
1,970
94
3,576
Of the above payroll costs, £4,803,000 (2019: £4,109,000) is included in cost of sales, £9,859,000 (2019: £9,612,000) is
included in selling and distribution costs, and £4,464,000 (2019: £4,381,000) is included in administrative expenses in
the income statement.
5. Finance income
Interest receivable
The interest received is on bank deposits.
6. Finance costs
On bank loans and overdrafts
On pension liability
Interest on lease liabilities
On 8% Cumulative Preference shares
2020
£’000
82
2020
£’000
2019
£’000
71
2019
£’000
3
8
179 185
-
187
63
48
417
256
The interest payable on bank loans and overdrafts is payable on balances with a maturity analysis of less than
6 months at the balance sheet date and interest on all other interest payments are based on balances with a maturity
analysis of over five years at the balance sheet date.
52
JAMES LATHAM PLC ANNUAL REPORT 2020
Financial Statements
Notes forming part of the Group Accounts
7. Tax expense
The charge for taxation on profit comprises:
2020
£’000
2019
£’000
Current year:
UK corporation tax at 19% (2019: 19%)
2,552
Deferred taxation - pension
328 190
- IBAs derecognised in current year (16) (14)
- change in tax rates 117
-
197 185
- other
2,555
Profit before taxation
Tax at 19% (2019: 19%)
3,181
15,662
2,976
2,913
15,335
2,914
Tax effect of expenses/credits that are not deductible/
taxable in determining taxable profit (93) (172)
IBAs derecognised in current year (16) (14)
Change in tax rates
-
Other 197 185
117
Total tax charge
3,181
2,913
The change in tax rates is based on the future corporation tax rate increasing from 17% to 19%.
8. Dividends
2020 2019
Ordinary dividends:
Final 12.9p per share paid 23 August 2019 (2018: 12.1p)
Interim 5.5p per share paid 24 January 2020 (2019: 5.0p)
2,541
1,092
2,379
984
£’000
£’000 £’000 £’000
3,633 3,363
The Directors propose a final dividend for 2020 of 10.0p per share, that, subject to approval by the shareholders,
will be paid on 4 September 2020 to shareholders on the register on 7 August 2020.
Based on the number of shares currently in issue, the final dividend for 2020 is expected to absorb £1,990,000.
JAMES LATHAM PLC ANNUAL REPORT 2020
53
Financial Statements
Notes forming part of the Group Accounts
9. Earnings per ordinary share
Earnings per ordinary share is calculated by dividing the net profit for the year attributable to ordinary shareholders by
the weighted average number of ordinary shares outstanding during the year.
Net profit attributable to ordinary shareholders
GMP equalisation
Profit on disposal of property
IFRS 16 Leases
Net profit attributable to ordinary shareholders adjusted for GMP
equalisation cost, profit on disposal of property and IFRS 16 Leases
2020
£’000
12,481
2019
£’000
12,422
746
-
- (1,052)
-
186
12,667
12,116
Number
’000
Number
’000
Issued ordinary share capital
20,160
Less: weighted average number of own shares held in treasury (359) (464)
Less: weighted average number of own shares held in ESOP Trust (20) (22)
20,160
Weighted average share capital
Add: dilutive effects of share options issued
Weighted average share capital for diluted earnings per ordinary
share calculation
19,781
23
19,674
28
19,804
19,702
The earnings per share figure is shown on the Income statement. In the previous year, the earnings were stated after
the profit on a disposal of property and GMP equalisation and in the current year, we have the effect of IFR 16 Leases.
The figures below show the earnings per share if these 3 items were excluded to show a comparable figure:
Earnings per ordinary share (basic, excluding GMP equalisation,
profit on disposal of property and IFR 16 Leases)
Earnings per ordinary share (diluted, excluding GMP equalisation,
profit on disposal of property and IFRS 16 Leases)
64.0p
64.0p
61.6p
61.5p
54
JAMES LATHAM PLC ANNUAL REPORT 2020
Financial Statements
Notes forming part of the Group Accounts
10. Fixed asset investments – Company
Shares:
At 1 April 2018, 2019 and 31 March 2020
Details of subsidiary companies are given below:
Subsidiary undertakings
£’000
9,613
Name
Country of
incorporation
Class of shares Percentage
Principal activity
of ownership
Lathams Limited
England and Wales
£1 Ordinary
100%
Abbey Wood Agencies Limited *
Repubic of Ireland €1.27 Ordinary 100%
Abbey Lumber Limited *
James Latham Trustee Limited
Northern Ireland
England and Wales
£1 Ordinary
£1 Ordinary
England and Wales
LDT Westerham Limited
Baüsen Limited
England and Wales
James Latham (Midland and Western) Limited* England and Wales
Advanced Technical Panels Limited*
England and Wales
Latham Timber Centres (Bridgwater) Limited England and Wales
England and Wales
James Latham (Warehousing) Limited
£1 Ordinary
£1 Ordinary
£1 Ordinary
£1 Ordinary
£1 Ordinary
£1 Ordinary
Dresser Mouldings (Rochdale) Limited*
England and Wales
£1 Ordinary
100%
100%
100%
100%
100%
100%
100%
100%
100%
Importing and
distribution of timber
and panel products
Importing and
distribution of timber
and panel products
Dormant
Corporate Trustee
Company
Dormant
Dormant
Dormant
Dormant
Dormant
Dormant
Further processing
of timber and panel
products
* Indirectly held.
All companies operate within the United Kingdom and the Republic of Ireland and their registered office is at
Unit 3, Swallow Park, Finway Road, Hemel Hempstead, Herts, HP2 7QU.
11. Goodwill
Cost:
At 1 April 2018
Additions
At 1 April 2019
Additions
At 31 March 2020
Impairment
At 1 April 2018 and 31 March 2020
Net book value
At 31 March 2020
At 31 March 2019
At 31 March 2018
Goodwill
£’000
362
286
648
349
997
125
872
523
237
JAMES LATHAM PLC ANNUAL REPORT 2020
55
Financial Statements
Notes forming part of the Group Accounts
11. Goodwill (continued)
Goodwill of £286,000 arose upon the acquisition of the shares and assets of Abbey Wood Agencies Limited which is
now a trading subsidiary of Lathams Limited. The date of acquisition was 1 February 2019.
Goodwill of £349,000 arose upon the acquisition of the shares and assets of Dresser Mouldings (Rochdale) Limited
which is now a trading subsidiary of Lathams Limited. The date of acquisition was 31 October 2019.
In accordance with the group’s accounting policy the carrying value of goodwill is reviewed annually for impairment.
The review entails an assessment of the present value of projected return from an asset over a period of 5 years.
The discount rate used in the group’s estimated weighted average cost of capital is currently 6%. The key assumptions
in the impairment review used a growth rate of 5.5%.
The review performed at the year end did not result in the impairment of goodwill as the estimated recoverable
amount exceeded the carrying value. No reasonable change in the assumed growth rates would cause an impairment
to the assets. The recoverable amount of the cash generating unit to which the goodwill has been allocated is
determined based on value-in-use calculations.
12. Intangible assets – Group
Cost:
At 1 April 2018
Additions on acquisition
At 1 April 2019 and 31 March 2020
Amortisation
At 1 April 2018
Charge for the year
At 1 April 2019
Charge for the year
At 31 March 2020
Net book value
At 31 March 2020
At 31 March 2019
At 31 March 2018
Trademark
£’000
Customer
Lists
£’000
1
-
1
-
-
-
-
-
1
1
1
-
2,016
2,016
-
28
28
167
195
1,821
1,988
-
Total
£’000
1
2,016
2,017
-
28
28
167
195
1,822
1,989
1
The amortisation charge is included in the income statement under administrative expenses.
The registered trademarks of the company are Woodex®, Buffalo® Board and Bausen® Flooring.
The Customer lists relates to the purchase of Abbey Wood Agencies Limited during the prior year. The cost of the
customer lists represents the fair value of the assets at the time of the purchase.
56
JAMES LATHAM PLC ANNUAL REPORT 2020
Financial Statements
Notes forming part of the Group Accounts
13. Property, plant and equipment
13.1 Group
Group
Short
leasehold
property
improvements
£’000
Plant,
equipment
and
vehicles
£’000
Freehold
property
£’000
Total
£’000
Cost:
At 1 April 2018
Additions
Acquisition
Disposals
At 1 April 2019
Additions
Acquisition
Disposals
At 31 March 2020
Depreciation:
At 1 April 2018
Acquisition
Disposals
Charge for the year
At 1 April 2019
Acquisition
Disposals
Charge for the year
At 31 March 2020
Net book value
At 31 March 2020
At 31 March 2019
At 31 March 2018
28,704
55
-
(5)
44,658
2,362
34
- (576) (581)
15,339
2,307
34
615
-
-
615
28,754
944
-
- -
17,104
2,942
549
46,473
3,886
549
- (1,421) (1,421)
-
29,698
615
19,174
49,487
2,991
-
10,827
34
(1) - (554) (555)
2,008
7,474
34
362
-
1,569
402
37
3,392
399
- -
8,523
333
12,314
333
- (1,392) (1,392)
38 1,834 2,280
-
408
3,800
437
9,298
13,535
25,898
25,362
25,713
178
216
253
9,876
8,581
7,865
35,952
34,159
33,831
Included in freehold property is land with a book value of £8,519,000 (2019: £8,519,000) which is not depreciated.
The depreciation charge is included in the income statement as follows:
Cost of sales
Selling and distribution costs
Administrative expenses
2020
£’000
1,427
750
103
2,280
2019
£’000
1,302
599
107
2,008
JAMES LATHAM PLC ANNUAL REPORT 2020
57
Financial Statements
Notes forming part of the Group Accounts
13.2 Company
Cost:
At 1 April 2018
Additions
At 1 April 2019
Additions
At 31 March 2020
Depreciation:
At 1 April 2018
Charge for the year
At 1 April 2019
Charge for the year
At 31 March 2020
Net book value
At 31 March 2020
At 31 March 2019
At 31 March 2018
Plant, equipment and vehicles
£’000
361
2
363
11
374
346
4
350
3
353
21
13
15
14. Right of use assets and lease liabilities
The Group has leases for some of its building which are made up of some of our depot locations and showrooms.
The vehicles are all car leases.
a) Right of use assets
The table below describes the nature of the Group’s leasing activities by type of right-of-use asset recognised in the
balance sheet.
Right-of-use assets
Building
Vehicles
No of right-of use
assets leased
10
110
Range of
remaining lease
1-55 years
1-4 years
Average
remaining lease
9 years
2 years
At the balance sheet date, there were no leases with extension options or options to purchase the asset at the end of
the lease. The review performed at the year end did not result in the impairment of the right-of-use assets.
58
JAMES LATHAM PLC ANNUAL REPORT 2020
Financial Statements
Notes forming part of the Group Accounts
14. Leases (continued)
Additional information on right-of-use asset by class of assets
is as follows:
Cost:
At 1 April 2019 – initial adoption of IFRS 16
Additions
Acquisitions
At 31 March 2020
Depreciation:
At 1 April 2019
Charge for the year
At 31 March 2020
Balance sheet value
At 31 March 2020
At 31 March 2019
The depreciation charge is included in the income statement
as follows:
Cost of sales
Selling and distribution costs
Administrative expenses
b) Lease liabilities
Lease liabilities are presented in the balance sheet as follows:
Current
Non-current
Non-current
Property
£’000
4,141
-
1,020
5,161
-
896
896
4,265
-
Vehicles
£’000
831
246
-
1,077
-
447
447
630
-
2020
£’000
896
380
67
1,343
Total
£’000
4,972
246
1,020
6,238
-
1,343
1,343
4,895
-
2019
£’000
-
-
-
-
£’000
1,178
3,857
5,035
The lease liabilities are secured by the related underlying assets. The undiscounted maturity analysis of lease
liabilities at 31 March 2020 is as follows:
Within 1 year
£’000
1-2 years
£’000
2-5 years
£’000
5-10 years
£’000
over 10 years
£’000
Total
£’000
Lease payments
6,273
Finance values (151) (116) (183) (163) (625) (1,238)
1,329
1,165
1,678
1,367
734
Net present values
1,178
1,049
1,495
571
742
5,035
At 31 March 2020 the Group had committed to leases which had not yet commenced. The total future cash outflows
for leases that had not yet commenced were as follows:
Vehicles
£’000
245
A total of £1,203,000 was paid during the year in respect of lease principal and this is reflected in the statement of
cash flows within financing activities.
JAMES LATHAM PLC ANNUAL REPORT 2020
59
Financial Statements
Notes forming part of the Group Accounts
15. Deferred tax
15.1 Group
The net deferred tax asset/(liability) is made up of the following elements:
Post-
employment
benefits
£’000
Revalued
properties
£’000
Roll over
gains on
assets
£’000
Other (*)
£’000
Intangible
assets
£’000
Total
£’000
As at 1 April 2018 asset
As at 1 April 2018 liability
Charge to the income statement (176)
Credit to other comprehensive
income and equity
Acquisitions
262
-
1,491
At 31 March 2019 asset
At 31 March 2019 liability
1,577
-
(Charge)/credit to the income statement (366)
174
Change in tax rates in income statement
Credit to other comprehensive
income and equity
Acquisitions
873
-
At 31 March 2020 asset
2,258
-
-
- (57) (1,577) (740)
- (185)
-
-
-
1,491
- (2,374)
- (361)
57
-
-
-
83
402
-
- (343) (343)
1,577
-
- (1,577) (842) (343) (2,762)
- -
-
-
-
-
-
-
- (183)
(185 ) (106)
40 (509)
- (117)
- (55)
- (38)
-
818
- (38)
-
-
-
2,258
At 31 March 2020 liability
-
- (1,762) (1,224) (303) (3,289)
* Includes accelerated capital allowances, industrial buildings allowances and trading losses.
15.2 Company
The deferred tax liability is made up as follows:
As at 1 April 2018
Charge for the year
At 31 March 2019
Charge to the income statement
Credit to other comprehensive income and equity
At 31 March 2020
Post-
employment
benefits
£’000
Accelerated
capital
allowances
£’000
Total
£’000
49
45
2
51
- 45
2
94
(36)
- (36)
(46) (29) (75)
96
12 (27) (15)
Deferred tax has been calculated using rates that are expected to apply when the asset or liability is expected to be
realised or settled, based on rates that were substantively enacted at the balance sheet date.
60
JAMES LATHAM PLC ANNUAL REPORT 2020
Financial Statements
Notes forming part of the Group Accounts
16. Inventories
2020
£’000
2019
£’000
Finished goods and goods for resale
43,006
Less: provisions for slow moving and obsolete stock (813) (656)
45,101
44,288
42,350
The inventories impairment charge for the year ended 31 March 2020 was £672,000 (2019: £582,000).
Impairment charges reversed during the year were £516,000 (2019: £493,000). The reversal of inventories arises
from sales in the year of the slow moving and obsolete stock previously provided for.
Inventories are pledged as securities against bank overdrafts (see note 19).
17. Trade and other receivables
Group
Company
Trade receivables
Other receivables:
Other receivables
Amounts owed by subsidiaries
Tax receivable
Prepayments
2020
£’000
43,545
1,438
-
103
1,960
3,501
2019
£’000
39,592
1,011
-
-
2,010
3,021
47,046
42,613
2020
£’000
3
2
439
2,720
57
3,218
3,221
2019
£’000
54
10
3,189
1,360
21
4,580
4,634
The directors consider that the carrying amount of trade and other receivables approximates their fair value.
The group has recognised an impairment against specifically identified expected credit losses (“ECLs”) at year end of
£383,000 (2019: £367,000). In line with the Group’s historical experience, and after consideration of current credit
exposures, the Group does not expect to incur any material ECL’s above those specifically identified and so has not
recognised any non-specific ECL’s in the current year (2019: nil).
At 31 March 2020, £42,353,000 (2019: £38,484,000) of trade and other receivables were denominated in sterling,
£2,386,000 (2019: £1,973,000) were denominated in Euros and £244,000 (2019: £144,000) were denominated in US
dollars and £nil (2019: £2,000) were denominated in Canadian dollars. The Company balances are all denominated
in sterling.
JAMES LATHAM PLC ANNUAL REPORT 2020
61
Financial Statements
Notes forming part of the Group Accounts
18. Trade and other payables
Trade payables
Other taxation and social security
Amounts owed to subsidiaries
Other payables
Accruals and deferred income
Group
Company
2020
£’000
20,126
5,161
-
1,107
2,292
28,686
2019
£’000
18,808
4,788
-
1,512
2,005
27,113
2020
£’000
53
685
7
268
118
2019
£’000
41
679
-
270
133
1,131
1,123
Trade and other payables principally comprise amounts outstanding for trade purchases and ongoing costs.
The average credit period taken for trade purchases is 29 days (2019: 26 days). The directors consider that the
carrying amount of trade payables approximates to their fair value.
At 31 March 2020, £17,887,000 (2019: £16,708,000) of trade and other payables were denominated in sterling,
£2,041,000 (2019: £1,288,000) in US dollars, £1,627,000 (2019: £2,324,000) in Euros and £23,000 (2019: £nil) in
Canadian dollars. The company balances are all denominated in sterling.
Based on the balance sheet value of trade and other payables, as shown above, a 10% change in the currency
exchange rate would lead to an increase or decrease in income and equity of £369,000 (2019: £361,000).
19. Interest bearing loans and borrowings
Current liabilities
Bank overdraft
Non-current liabilities
Cumulative preference shares
of £1 each (note 21)
Total
Group
Company
2020
£’000
2019
£’000
2020
£’000
-
-
592
592
-
-
597
597
-
-
592
592
2019
£’000
1,120
1,120
597
1,717
The loans and borrowings were all denominated in sterling.
The group would normally expect that sufficient cash is generated in the operating cycle to meet the contractual
cash flows.
The cumulative preference shares are held on an ongoing basis and pay dividends at 8% per annum.
62
JAMES LATHAM PLC ANNUAL REPORT 2020
Financial Statements
Notes forming part of the Group Accounts
20. Retirement and other benefit obligation
Group
Retirement benefit obligations (note 20.2)
20.1. Group pension schemes
2020
£’000
11,812
2019
£’000
8,714
James Latham plc operates a group contributory defined benefit pension scheme. The scheme is a funded scheme.
Benefits are provided based on earnings in the last twelve months before retirement, plus average bonuses received
over the last three years. The assets of the scheme are held separately from those of the company. 48% of the assets
are invested in equities, with 34% under passive management by Blackrock, 5% in a Fund of Hedge funds managed
by Mesirow/Lighthouse and 9% in a Multi-Asset Credit fund managed by Wellington. 41% are held in bonds and gilts,
with 22% in a Buy and Maintain Fund managed by Mercers, 9% in an Absolute Return Fund managed by Wellington
and 10% in an Index Linked fund managed by Blackrock, with the remaining 10% in a HLV Property Fund managed
by Aviva and 1% in cash.
The group contributory defined benefit pension scheme is closed to new entrants, and a defined contribution group
scheme has been established for the pension provision of all other employees, including those contributing through
auto enrolment.
The pension charge for the year for all schemes was £1,861,000 (2019: £2,327,000). Of the charge, £316,000
(2019: £396,000) is included in cost of sales, £946,000 (2019: £1,320,000) is included in selling and distribution costs,
and £599,000 (2019: £611,000) is included in administrative expenses in the income statement.
Contributions are determined by a qualified actuary on a basis of triennial valuations using the projected unit funding
method. The most recent available valuation was at 31 March 2017. The assumptions which have the most significant
effect on the results of the valuation are those relating to the rate of return on investments and the rates of increase
in salaries and pensions.
It was assumed in the 31 March 2017 valuation that the investment return would be 4.1% per annum pre-retirement
and 2.5% per annum post-retirement, that the salary increases would average 3.4% per annum and that the present
and future pensions would increase at the rate of 3% per annum in respect of service to 1 January 1991. Pensions
accruing between 1 January 1991 and 28 February 1999 are required to increase at the greater of: (a) 4%, and (b)
3% on the GMP and 5% on the excess over the GMP. Pensions accruing after 1 March 1999 increase at Limited Price
Indexation which has been assumed to average 2.4% in the future. Limited Price Indexation was replaced by the
Consumer Price Index (CPI) for payrises occurring after 1 January 2014.
JAMES LATHAM PLC ANNUAL REPORT 2020
63
Financial Statements
Notes forming part of the Group Accounts
20.2. Group defined benefit pension scheme
The group operates a defined benefit scheme. The current practice of increasing pensions in line with inflation is
included in the measurement of the defined benefit obligation.
The retirement benefit liability recognised in the balance sheet is the present value of the defined benefit obligations,
less the fair value of the scheme assets, adjusted for past service costs. Actuarial gains and losses are immediately
recognised in the statement of other comprehensive income.
2020
£’000
2019
£’000
Change in benefit obligation
66,439
Benefit obligation at beginning of year
Service cost
623
746
Past service cost
1,700
Interest cost
Actuarial loss
279 2,441
Benefits paid (2,361) (2,119)
Premiums paid (25) (11)
69,819
636
-
1,647
Benefit obligation at end of year
Analysis of defined benefit obligation
Schemes that are wholly or partly funded
69,995
69,995
69,819
69,819
Change in scheme assets
58,057
Fair value of scheme assets at beginning of year
Interest income
1,515
Return on plan assets (excluding interest income) (4,544) 1,081
Employers contributions (incl. employer direct benefit payments)
2,582
Benefits paid from plan (2,361) (2,119)
Expenses paid (25) (11)
61,105
1,468
2,540
Fair value of scheme assets at end of year
Amounts recognised in the balance sheet
Present value of funded obligations
Fair value of scheme assets
Net liability
58,183
69,995
58,183
11,812
61,105
69,819
61,105
8,714
64
JAMES LATHAM PLC ANNUAL REPORT 2020
Financial Statements
Notes forming part of the Group Accounts
20.2. Group defined benefit pension scheme (continued)
2020
£’000
2019
£’000
Components of pension expense
623
Current service cost
Past service cost
746
Interest cost
1,700
Income on plan assets (1,468) (1,515)
636
-
1,647
Total pension expense recognised in the income statement
815 1,554
Actuarial loss immediately recognised
4,823 1,360
Total recognised in the statement of other Comprehensive income 4,823 1,360
Cumulative amount of actuarial loss immediately recognised
16,367
11,544
Plan assets
The asset allocations at the year end were as follows:
Equities
Bonds
Property
Other
Amounts included in the fair value of assets for
Equity instruments
Bond instruments
Property occupied
Other assets used
2020
2019
47.5%
41.8%
9.5%
1.2%
100.0%
2020
£’000
27,640
24,332
5,545
666
58,183
53.3%
36.2%
8.9%
1.6%
100.0%
2019
£’000
32,575
22,109
5,417
1,004
61,105
JAMES LATHAM PLC ANNUAL REPORT 2020
65
Financial Statements
Notes forming part of the Group Accounts
20.2. Group defined benefit pension scheme (continued)
Weighted average assumptions used to determine benefit obligations:
Discount rate
Rate of compensation increase
Inflation (RPI)
Inflation (CPI)
Rate of pension increases (CPI capped at 5%)
Weighted average life expectancy for mortality tables used to
determine benefit obligations:
Male member age 65 (current life expectancy)
Female member age 65 (current life expectancy)
Male member age 45 (life expectancy at age 65)
Female member age 45 (life expectancy at age 65)
Weighted average assumptions used to determine pension expense:
Discount rate
Rate of compensation increase
2020
2.40%
3.10%
2.60%
2.10%
2.15%
23.5
25.5
24.9
27.0
2.40%
3.20%
2019
2.40%
3.20%
3.20%
2.20%
2.20%
23.5
25.4
24.9
27.0
2.60%
3.05%
Sensitivity analysis of the key assumptions
The valuation of the scheme’s liabilities is dependant on the assumptions used. The sensitivity of the valuation of the
liability to changes in the assumptions is shown in the table below:
Impact on deficit
(Decrease)/increase
£’000
(2,823)
Discount rate increases by 0.25%
Inflation rate increases by 0.25%
2,020
Life expectancy increases by one year 2,889
History of plan assets and defined benefit obligation
Present value of defined benefit obligation
Fair value of plan assets
Net liability
2020
£’000
69,995
58,183
11,812
2019
£’000
69,819
61,105
8,714
2018
£’000
66,439
58,057
2017
£’000
72,992
56,367
2016
£’000
60,164
50,507
8,382
16,625
9,657
Contributions
The group expects to contribute £2,540,000 to the pension scheme for the year ending 31 March 2021.
20.3. Defined contribution pension payments
The group operates a defined contribution scheme managed by Aviva. The group has agreed to match contributions
by eligible employees up to a maximum of 7.5%.
Pension contributions paid to the defined contribution scheme for the year totalled £1,248,000 (2019: £940,000).
66
JAMES LATHAM PLC ANNUAL REPORT 2020
Financial Statements
Notes forming part of the Group Accounts
21. Other payables (non-current liabilities)
Other taxation and social security
Other payables
Accruals and deferred income
Group
Company
2020
£’000
47
345
-
392
2019
£’000
-
-
413
413
2020
£’000
7
52
-
59
2019
£’000
-
-
157
157
22. Share capital
Ordinary shares
Authorised Issued
Ordinary shares of 25 pence each
Number
28,000,000
£’000
7,000
Number
20,160,000
£’000
5,040
2020, 2019 and 2018
Preference shares
Authorised Issued
8% Cumulative Preference Shares of £1 each
Number
£’000
Number
£’000
At 1 April 2018 and 1 April 2019
Cancelled during the year
At 31 March 2020
1,500,000
-
1,500
987
- (395,000) (395)
987,000
1,500,000
1,500
592,000
592
In the year ended 31 March 2019, 390,382 Cumulative Preference Shares were purchased by the Company for
consideration of £478,218. At 31 March 2019 these shares were held by the Company, the Company waived the
right to receive the 8% dividend during the year. During the year, the Company has cancelled 395,115 Cumulative
preference shares, leaving a balance of 591,811 shares.
Share Capital
Ordinary share capital
Preference shares
2020
£’000
5,040
-
5,040
2019
£’000
5,040
390
5,430
The balance of the Preference shares are included in non-current liabilities (as interest bearing loans and
borrowings). See note 19.
The Cumulative Preference shares carry the right to receive the 8% dividend in priority to all other shares and
the right of a return on assets in priority to all other shares. They do not carry the right to further participate in
profits or assets, nor to vote at a General Meeting unless the resolution directly or adversely varies any of their
rights or privileges.
There were no movements in the Ordinary share capital of the company in either the year ended 31 March
2020 or 2019.
JAMES LATHAM PLC ANNUAL REPORT 2020
67
Financial Statements
Notes forming part of the Group Accounts
23. Share-based payment
Equity-settled share option schemes
Details of the share options outstanding during
the year are as follows:
2020
2019
Number
of share
options
Weighted
average
exercise
price (£)
Number
of share
options
Weighted
average
exercise
price (£)
Outstanding at beginning of year
Granted during the year
Forfeited during the year
Exercised during the year
255,135
17,960
(3,509) 6.92 (8,458)
(174,963) 5.57 (18,979)
245,658
206,128
5.83
7.42
Outstanding at the end of the year
273,314
7.18
245,658
5.64
6.26
5.93
3.70
5.83
The weighted average share price for options exercised during the year was £8.47 (2019: £6.86).
Details of the options outstanding at 31 March 2020 are shown below. 13,000 (2019: 14,000) of these options were
exercisable at the year end.
Range of exercise prices
Number of shares
Weighted average expected
remaining life (years)
2020
2019
CSOP
£1.65-£9.65
80,080
SAYE
£7.27
193,234
CSOP
SAYE
£1.65-£8.03
84,401
£5.65
161,257
3.0
2.9
3.0
0.4
The Black-Scholes option model is used to calculate the fair value of the options and the amount to be expensed.
No performance conditions apply to any of the share option schemes.
The inputs into the Black-Scholes model, expressed as weighted averages for options granted during the year are
as follows:
2020
Share price at grant date
Option exercise price
Expected volatility
Option life
Risk free interest rate
Fair value
CSOP
£9.65
£9.65
20.0%
5 years
0.78%
£1.87
SAYE
£9.08
£7.27
19.3%
3 years
0.52%
£2.30
CSOP
£6.26
£6.26
23.0%
5 years
1.2%
£1.44
2019
SAYE
-
-
-
-
-
-
Expected volatility was determined by calculating the historical volatility of the group’s share price over the previous
3 years. The option life is based on options being exercised in accordance with usual patterns. Options are forfeited if
the employee leaves the group before options vest. For the CSOP scheme, the options can be exercised up to 5 years
after the vesting date, and with the SAYE scheme, this period is 6 months. The risk free interest rate is based on 10 year
UK Government Bonds. For the nil price share options, dividends will be reinvested into additional shares in the plan.
The group recognised total expenses of £64,000 (2019: £94,000) related to equity settled share-based payment
transactions in the year.
Share Incentive Plan
The Company also runs an approved Share Incentive Plan in which eligible employees can buy Partnership Shares
at mid-market price on the date of the grant. The shares are held in the employee benefits trust for a 5-year period.
The number of shares held in trust of this plan at 31 March 2020 was 161,168 (2019: 163,299).
68
JAMES LATHAM PLC ANNUAL REPORT 2020
Financial Statements
Notes forming part of the Group Accounts
24. Own shares
Ordinary shares
£’000
At 1 April 2018
529
Cost
82
Transfer of treasury shares
Purchase of treasury shares
-
Transfer to employees (166)
Preference shares
£’000
Total
£’000
-
-
478
529
82
478
- (166)
At 31 March 2019
445
478
923
Cancellation of treasury shares
Transfer to employees
174
- (478) (478)
174
-
At 31 March 2020
619
-
619
The investment in own shares represents 28,246 25p Ordinary shares (2019: 10,693 25p Ordinary shares) held on
behalf of the James Latham plc Employee Benefits Trust, a discretionary trust. This represents 0.1% (2019: 0.05%) of
the issued share capital. The maximum number of shares held during the year was 209,277 (0.16%). Dividends have
been waived and all income and expenditure of the trust has been dealt with through the group’s income statement.
None of these shares have been allocated to employees.
At 31 March 2020 259,200 (2019: 459,200) 25p Ordinary shares were held by the company as Treasury Shares. These
shares are held with a view to being used for employee share schemes. During the year 200,000 shares were issued to
the James Latham Employee Benefits Trust.
25. Cash generated from operations
Profit before tax
15,662
15,335 (2,160) (2,195)
Group
Company
2020
£’000
2019
£’000
2020
£’000
2019
£’000
Adjustment for finance income and expense
2,036
Depreciation and amortisation
Profit on disposal of property, plant and equipment (121) (1,079)
Increase in inventories (1,659) (2,282)
(Increase)/decrease in receivables (3,963) (1,105)
Increase/(decrease) in payables
1,244 (1,825)
Retirement benefits non cash amounts (1,904) (1,213)
Translation non cash amounts 80 (31)
94
Share-based payments non cash amounts
185 (15) (5)
4
22
-
-
-
-
2,773 (2,802)
67 (347)
-
-
94
335
3,790
-
-
64
64
Cash generated from operations
13,528
10,115
751 (5,251)
JAMES LATHAM PLC ANNUAL REPORT 2020
69
Financial Statements
Notes forming part of the Group Accounts
25. Cash generated from operations (continued)
Movement in net funds/(debt)
Cash and cash
equivalents
£’000
Leases
£’000
Preference
shares
£’000
Total
£’000
At 1 April 2018
Cash flow
Non cash movement on preference shares
13,989
1,552
-
-
- (987) 13,002
2,030
478
- (88) (88)
At 1 April 2019
Recognition of lease liability
Cash flow
Discount unwind on lease liabilities
15,541
1,409
- (6,238)
1,390
- (187)
- (597) 14,944
- (6,238)
5
2,804
- (187)
At 31 March 2020
16,950 (5,035) (592)
11,323
26. Related party transactions
26.1 Group
The group has a related party relationship with its subsidiaries and with its directors. Transactions between group
companies, which are related parties, have been eliminated on consolidation and are not disclosed in this note.
The remuneration of the key management of the group, who are the Company’s directors, is set out below.
Salaries and other short-term employee benefits
Social security costs
Pension costs
Share-based payments
2020
£’000
953
119
103
8
1,183
2019
£’000
1,109
146
132
9
1,396
There are 4 (2019: 4) directors to whom retirement benefits are accruing under defined benefit schemes, and 4
(2019: 4) directors that exercised share options during the year.
Emoluments for the highest paid director totalled £238,000 (2019: £228,000). The highest paid director exercised
3,185 shares at a gain of £10,988 and also exercised 707 CSOP share options during the year at a gain of £2,740.
The highest paid director had an accrued defined benefit pension of £63,000 (2019: £59,000) at the balance sheet date.
The remuneration of the key management of the group, who are the company’s directors is set out above and shown
in the Directors’ Remuneration Report on pages 28 to 31.
The company undertakes the following transactions with the active subsidiary companies:
• Paying interest totalling £nil (2019: £6,000).
• Receiving an annual management charge to cover services provided of £2,492,000 (2019: £2,121,000).
• Corporation tax for the Parent and Subsidiary is paid through the parent company and recharged to the subsidiary.
The timing of the repayment will affect the balances outstanding.
Details of balances outstanding with subsidiary companies are shown in Notes 17 and 18.
Other than the payment of remuneration, there have been no related party transactions with the directors.
70
JAMES LATHAM PLC ANNUAL REPORT 2020
Financial Statements
Notes forming part of the Group Accounts
27. Capital commitments
At 31 March 2020, there were capital commitments contracted for but not provided in the accounts of £876,000
(2019: £1,266,000).
28. Financial instruments
The group and company’s activities expose the group to a number of risks including market risk (foreign currency
risk and interest rate risk), credit risk and liquidity risk. These risks are managed through an effective risk management
programme. Further details are set out in the Financial Review on page 20 to 23.
Maturity analysis
The table below analyses the financial liabilities on a contractual gross undiscounted cash flow basis into maturity
groupings based on period outstanding at the balance sheet date up to the contractual maturity date.
GROUP
2020
Trade payables
Accruals
Other payables
Cumulative preference shares of £1 each
Total
2019
Trade payables
Accruals
Other payables
Cumulative preference shares of £1 each
Total
COMPANY
2020
Trade payables
Accruals
Amounts owed to Subsidiaries
Other payables
Cumulative preference shares of £1 each
Total
2019
Trade payables
Accruals
Other payables
Cumulative preference shares of £1 each
Total
Less than
6 months
£’000
Between
6 months
and 1 year
£’000
Between
1 and
5 years
£’000
More than
5 years
£’000
20,126
2,292
1,107
-
23,525
18,808
1,830
1,512
-
22,150
-
-
-
-
-
-
175
-
-
175
-
-
345
-
345
-
180
-
-
180
Less than
6 months
£’000
Between
6 months
and 1 year
£’000
Between
1 and
5 years
£’000
More than
5 years
£’000
53
118
7
268
-
446
41
133
270
-
444
-
-
-
-
-
-
-
-
-
-
-
-
-
-
52
-
52
-
-
-
-
-
Total
£’000
20,126
2,292
1,452
592
-
-
-
592
592
24,462
-
-
-
597
18,808
2,185
1,512
597
597
23,102
Total
£’000
53
118
7
320
592
-
-
-
-
592
592
1,090
-
-
-
597
597
41
133
270
597
1,041
JAMES LATHAM PLC ANNUAL REPORT 2020
71
Financial Statements
Notes forming part of the Group Accounts
28. Financial instruments (continued)
Foreign currency risk
Approximately 44% of the group’s purchases are denominated in foreign currencies, principally the US dollar and the
Euro. Forward contracts are used where we have agreed exchange rates with our customers and we also use other
currency derivatives to help manage our short term exposure on a weakening sterling from time to time. However, no
more than 30 percent of the currency requirements will be covered by forward contracts or other currency derivatives.
Whilst purchases in foreign currencies are a significant figure, fluctuations in currency exchange rates do not have a
major impact on the results. As the group trades mainly in the UK, the market price of our products tends to fluctuate
in line with spot prices.
Included in group cash and cash equivalents at 31 March 2020 was £86,000 in US Dollars (2019: £195,000), £316,000 in
Euros (2019: £525,000) and £258 in Canadian dollars (2019: £56,000), at variable interest rates.
Based on the balance sheet value of cash and cash equivalents, as shown above, a 10% change in the currency
exchange rate would lead to an increase or decrease in income and equity of £40,000 (2019: £78,000).
There is no foreign currency held in the company accounts.
Interest rate risk
The interest rate exposure arises mainly from its interest bearing deposits. Deposits held at floating rates expose the
entity to cash flow risk whilst deposits held at fixed rate expose the entity to fair value risk.
At the reporting date, the interest rate profile of the group’s interest-bearing financial instruments was:
Group Company
2020
£’000
2019
£’000
2020
£’000
2019
£’000
Fixed rate instruments
Cumulative preference shares of £1 each (592) (597) (592) (597)
Variable rate instruments
Cash and cash equivalents
Bank overdraft
16,950
-
15,541
-
929
-
94
1,120
Interest rate risk is limited to the cash and cash equivalents, bank overdraft and bank loans.
Based on the balance sheet value of cash and cash equivalents, bank overdraft and bank loans, as shown above, a 1%
change in interest base rates would lead to an increase or decrease in income and equity of £170,000 (2019: £155,000)
in the group and £9,000 (2019: £10,000) in the company.
72
JAMES LATHAM PLC ANNUAL REPORT 2020
Financial Statements
Notes forming part of the Group Accounts
28. Financial instruments (continued)
Credit risk exposure
Credit risk arises on our financial asset investments, trade receivables and cash and cash equivalents. Credit exposure is
managed on a group basis taking into account economic conditions and availability of credit insurance, and Appropriate
credit limits are set for each customer taking into account credit reports received from outside agencies, and previous
credit history. Credit insurance is taken out to cover approved individual debtors with balances over £40,000. Where
limits are required above £40,000 that cannot be backed by insurance, a sub-committee of the board will review reports
on the customer, and agree additional limits if appropriate. Bad debts are 0.20% of sales this year, compared with our
target of 0.4%. In adopting IFRS 9, the Group now reviews the amount of credit loss associated with its trade receivables
based on forward looking estimates that take into account current and forecast credit conditions as opposed to relying
on past historical default rates. In adopting IFRS 9 the Group has applied the Simplified Approach applying a provision
matrix based on number of days past due to measure lifetime expected credit losses and after taking into account
customer sectors with different credit risk profiles and current and forecast trading conditions Bad debts are provided
for debts overdue by more than 120 days, or if we have received official paperwork. Debtors are written off when we
have either received official paperwork that the customer is no longer trading or have exhausted all avenues of recovery.
The carrying amount of financial assets recorded in the accounts, which is net of impairment losses, represents the
maximum exposure to credit risk. The maximum exposure to credit risk at the reporting date was:
Financial assets measured
at amortised cost
Trade receivables
Other receivables
Amounts owed by subsidiaries
Cash and cash equivalents
Total
Group Company
2020
£’000
43,545
1,438
-
16,950
61,933
2019
£’000
39,592
1,011
-
15,541
56,144
2020
£’000
3
2
439
929
1,373
2019
£’000
54
10
3,189
94
3,347
Liquidity risk
The group closely monitors its cash position to ensure that it has sufficient funds to meet the obligations of the
group as they fall due. Short term bank deposits are executed only with organisations with a long term rating of at
least A- from the major rating agencies.
The following table shows the financial liabilities
measured at amortised cost:
Group Company
Trade payables
Other payables
Amounts owed to subsidiaries
Accruals
Bank overdraft
Total
2020
£’000
20,126
1,452
-
2,292
-
23,870
2019
£’000
18,808
1,512
-
2,185
-
22,505
2020
£’000
53
320
7
118
-
498
2019
£’000
41
270
-
133
1,120
1,564
Capital management
The group manages its capital risk by ensuring that its capital, which represents share capital, retained earnings,
investments in own shares and cash, is sufficient to support the ongoing needs of the business, and is organised
to try and minimise the cost of capital over the medium term. The group’s current strategy is to maintain sufficient
cash balances to satisfy ongoing needs.
Finance income
An analysis of finance income is set out in note 5 to the consolidated accounts.
Finance costs
An analysis of finance costs is set out in note 6 to the consolidated accounts.
JAMES LATHAM PLC ANNUAL REPORT 2020
73
Financial Statements
Notes forming part of the Group Accounts
29. Business Combinations
On 31 October 2019 the Group acquired 100% of the issued share capital of Dresser Mouldings (Rochdale) Limited,
a company incorporated in England and Wales whose principle activity is the further processing of timber and panel
products. The acquisition will allow the company to increase its offering in processed timber.
The fair values are as follows:
Property, plant and equipment
Inventories
Trade and other receivables
Cash
Trade and other payables
Deferred tax liability
Net assets acquired
Goodwill
Consideration
2020
£’000
218
279
367
422
(597)
(38)
651
349
1,000
The consideration was satisfied by a cash payment of £1,000,000 during the year. It is expected that the gross
contractual amounts receivable above are expected to be received in full.
Since the acquisition date, Dresser Mouldings (Rochdale) Limited has contributed £737,000 to group revenues
and £35,000 to group profit. If the acquisition had occurred on 1 April 2019, group revenue would have been
£248,425,000 and group profit would have been £12,591,000.
30. Reconciliation of opening lease liabilities
The 2019 future aggregate minimum payments under various operating lease contracts for vehicles, plant and
property payable, prior to IFRS 16: Leases, by the group are as follows:
Group Company
Vehicles and Plant:
No later than one year
Later than one year but no later than five years
Property:
No later than one year
Later than one year but no later than five years
Later than five years
2020
£’000
-
-
-
-
-
-
-
2019
£’000
654
523
1,177
796
2,945
243
3,984
2020
£’000
-
-
-
-
-
-
-
The changes in the Group’s lease liabilities can be classified as follows:
Total operating lease commitments disclosed at 31 March 2019
Adjustments to opening lease liabilities
2019
£’000
17
23
40
243
974
243
1,460
5,161
291
Operating lease liabilities before discounting
Discounted using incremental borrowing rate
5,452
(480)
Total lease liabilities recognised under IFRS 16 at 1 April 2019
4,972
74
JAMES LATHAM PLC ANNUAL REPORT 2020
Notice of Annual General Meeting
Notice is hereby given that the one hundred and
twenty first Annual General Meeting of the Company
will be held at Unit 1, Swallow Park, Finway Road,
Hemel Hempstead, Herts, HP2 7QU on Wednesday
2 September 2020 at 12.30pm. Resolutions 1 to 7 inclusive
will be proposed as ordinary resolutions, and resolutions 8
and 9 will be proposed as special resolutions.
Impact of COVID-19
Due to the current restrictions imposed due to the
COVID-19 pandemic, the Annual General Meeting this
year will not be open for shareholders to attend in person.
To ensure that your vote counts, please submit your proxy
form appointing the Chairman as your proxy. Questions
can be submitted in advance to plc@lathams.co.uk and
these will be answered during the meeting. Full voting
details and answers to questions will be posted on the
Investor page at www.lathams.co.uk/investors.
Ordinary business
1. To receive and adopt the Directors’ Report and
Accounts for the year ended 31 March 2020 together
with the Independent Auditor’s report thereon.
2. To declare the final dividend recommended by the
directors on the ordinary shares of the Company.
3. To re-elect Fabian French as a director, who retires
by rotation.
4. To re-elect Paula Kerrigan as a director, who retires
by rotation.
5. To re-elect Piers Latham as a director, who retires
by rotation.
6. To re-appoint RSM UK Audit LLP, Chartered
Accountants, as auditors to hold office from the
conclusion of the meeting to the conclusion of the next
meeting at which accounts are laid before the Company,
at a remuneration to be determined by the directors.
Special business
7. Directors authority to allot shares: To consider, and
if thought fit, pass the following resolution: “THAT in
substitution for all existing authorities, to the extent
unused, the directors be and they are generally and
unconditionally authorised for the purposes of section
551 of the Companies Act 2006 to exercise all the
powers of the Company to allot equity securities up to
an aggregate nominal amount of £1,680,000 provided
that this authority shall expire at the earlier of the
conclusion of the Company’s next Annual General
Meeting or 15 months from the date of the passing of
this resolution and that the Company may before such
expiry make offers or agreements which would or might
require relevant securities to be allotted after such
expiry and the Directors may allot relevant securities in
pursuance of such offers or agreements notwithstanding
that the authority conferred has expired. The expression
‘equity securities’ and ‘allotment’ shall bear the same
meanings respectively given to the same in section
560 Companies Act 2006.”
8. Disapplication of pre-emption rights: To consider, and
if thought fit, pass the following resolution: “THAT
subject to the passing of the previous Resolution 7,
pursuant to section 571 of the Companies Act 2006,
section 561 of the Companies Act 2006 shall not apply
to any allotment or agreement to allot equity securities
pursuant to the authority conferred by Resolution 7:
(a) this power shall be limited to:
(i) the allotment of equity securities in connection
with or subject to an offer or invitation, open for
acceptance for a period fixed by the Directors,
to the holders of Ordinary Shares on the register
on a fixed record date in proportion (as nearly
as maybe) to their respective holdings or in
accordance with the rights attached thereto
(including equity securities which, in connection
with such offer or invitation, are the subject of such
exclusions or other arrangements as the Directors
may deem necessary or expedient to deal with
the fractional entitlements which would otherwise
arise or with legal or practical problems under the
laws of, or the requirements of any recognised
regulatory body or any stock exchange in any
territory or otherwise how so ever); and
(ii) other than pursuant to paragraph (a)(i) of this
Resolution, the allotments of equity securities
for cash up to an aggregate nominal amount of
£252,000; and
(b) this power shall expire at the earlier of the conclusion
of the next Annual General Meeting of the Company
or 15 months from the date after passing of this
Resolution except that the Directors may allot equity
securities under this power after that date to satisfy an
offer or agreement made before this power expired.”
JAMES LATHAM PLC ANNUAL REPORT 2020
75
Notice of Annual General Meeting
9. Authority of the Company to purchase its own shares:
To consider and, if thought fit, pass the following
resolution: “THAT the Company be and is generally and
unconditionally authorised to make one or more market
purchases (within the meaning of section 693 (4) of the
Companies Act 2006) of its Ordinary Shares of 25p each
provided that:
(a) the maximum aggregate number of Ordinary Shares
which may be purchased is 2,016,000 (representing
10% of the issued share capital of the Company);
(b) the price at which Ordinary Shares may be purchased
shall not be more than 105% of the average of the
closing middle market price for the Ordinary Shares
as derived from the AIM section of the London Stock
Exchange Daily Official List for the five business days
preceding the date of purchase and shall not be less
than 25p per Ordinary Share (in both cases exclusive
of expenses); and
(c) this power shall expire at the earlier of the
conclusion of the next Annual General Meeting of
the Company or 15 months from the date of the
passing of this resolution.”
By Order of the Board
D.A. Dunmow
Company Secretary
Registered Office: Unit 3, Swallow Park, Finway Road,
Hemel Hempstead, Hertfordshire HP2 7QU
30 June 2020
Notes:
The Report and Accounts are sent to all members of
the Company.
A proxy form is enclosed. To be valid, it must be lodged
with the Company’s Registrars at Computershare
Investor Services PLC, The Pavilions, Bridgwater Road,
Bristol BS99 6ZY, not later than 48 hours before the fixed
time for the Meeting.
In accordance with Regulation 41 of the Uncertified
Securities Regulations 2001, only those members eligible
to vote and entered on the Company’s register of
members as at 12.30pm on Friday 28 August 2020 are
entitled to vote at the meeting; or, if the meeting is
adjourned, shareholders entered on the Company’s
register of members not later than 48 hours before the
time fixed for the adjourned meeting shall be entitled to
vote at the adjourned meeting.
At 24 June 2020, the Company’s issued share capital
consisted of 20,160,000 shares of which 259,200 shares
are held in Treasury. Each share not held in Treasury
carries one vote. The total number of voting rights are
therefore 19,900,800.
Share dealing service for shareholders
We continue to operate a telephone share dealing service
with our registrar, Computershare Investor Services PLC,
which provides shareholders with a simple way of buying
or selling James Latham plc ordinary shares on the
London Stock Exchange. The commission is 1% plus £50.
There are no forms to complete and the share price at
which you deal will generally be confirmed to you whilst
you are still on the telephone. The service is available
from 8am to 4.30pm Monday to Friday excluding bank
holidays on telephone number 0370 703 0084. Please
ensure you have your Shareholder Reference Number
(SRN) ready when making the call. The SRN appears on
your share certificate. In addition an internet share
dealing service is available by logging into your account
on www-uk.computershare.com/investor. The fee for this
service will be 1% of the value of each sale or purchase
of shares, subject to a minimum of £30. There are no
additional charges for limit orders (available for sales only).
No stamp duty is currently payable on share transfers.
Detailed terms and conditions are available on request,
please phone 0370 707 1093.
This is not a recommendation to buy, sell or hold shares
in James Latham plc. If you are unsure of what action
to take contact a financial adviser authorised under the
Financial Conduct and Markets Act 2000. Please note that
share values may go down as well as up, which may result
in you receiving less than you originally invested.
In so far as this statement constitutes a financial promotion
for the share dealing service provided by Computershare
Investor Services it has been approved by Computershare
Investor Services PLC for the purpose of Section 21(2)
(b) of the Financial Conduct and Markets Act 2000 only.
Computershare Investor Services PLC is regulated by the
Financial Conduct Authority.
Where this has been received in a country where the
provision of such a service would be contrary to local laws
or regulations, this should be treated as information only.
76
JAMES LATHAM PLC ANNUAL REPORT 2020
James Latham Locations
James Latham Dudley
T: 01384 234444
F: 01384 233121
E: panels.dudley@lathams.co.uk
timber.dudley@lathams.co.uk
James Latham Fareham
T: 01329 854800
E: panels.fareham@lathams.co.uk
timber.fareham@lathams.co.uk
James Latham Gateshead
T: 0191 469 4211
F: 0191 469 2615
E: panels.gateshead@lathams.co.uk
timber.gateshead@lathams.co.uk
James Latham Leeds
T: 0113 387 0830
F: 0113 387 0855
E: leeds@lathams.co.uk
ATP (Advanced Technical Panels)
T: 0113 387 0850
F: 0113 387 0855
E: atp@lathams.co.uk
James Latham Scotland
T: 01698 838777
F: 01698 831452
E: scotland@lathams.co.uk
James Latham Leicester
T: 0116 288 9161
F: 0116 281 3806
E: panels.wigston@lathams.co.uk
timber.wigston@lathams.co.uk
James Latham Yate
T: 01454 315421
F: 01454 323488
E: panels.yate@lathams.co.uk
timber.yate@lathams.co.uk
James Latham Hemel Hempstead
T: 01442 849000
F: 01442 239287
E: panels.hemel@lathams.co.uk
James Latham Thurrock
T: 01708 869800
F: 01708 860900
E: panels.thurrock@lathams.co.uk
James Latham Purfleet
T: 01708 864477
F: 01708 862727
E: timber.purfleet@lathams.co.uk
James Latham – Product Specification
Showroom – London
Suite 301, Business Design Centre,
52 Upper Street, Islington, N1 0QH
T: 020 7288 6417
E: BDC@lathams.co.uk
James Latham – Product Specification
Showroom – Manchester
31a Tib Street, Manchester, M4 1LX
T: 0161 537 1185
E: pssm@lathams.co.uk
PEFC/16-37-046
Purfleet serves timber
customers across the Thurrock,
Hemel Hempstead and part of
the Fareham panels sales areas.
Distribution Facilities
Abbey Woods – Ireland, Dublin
T: +353 01 839 3435
F: +345 01 832 5968
E: sales@abbeywoods.ie
www.abbeywoods.ie
Abbey Woods – Ireland, Co. Cork
T: +353 021 421 1788
F: +345 021 421 1786
E: sales@abbeywoods.ie
www.abbeywoods.ie
Dresser Mouldings
T: 01706 658900
E: sales@dressermouldings.com
www.dressermouldings.com
LDT
T: 01959 561777
E: LDTsales@directtimber.co.uk
www.directtimber.co.uk
Call 0116 257 3415
Email marketing@lathams.co.uk
Or visit www.lathamtimber.co.uk
Designed by: www.gdadesign.biz
Printed on: Arcoprint EW
Cover: 300gsm Text: 140gsm
Containing and supporting:
JAMES LATHAM PLC
Unit 3 Swallow Park Finway Road Hemel Hempstead Herts HP2 7QU
Telephone 01442 849100 Fax 01442 267241 Email: plc@lathams.co.uk
www.lathams.co.uk