J A M E S L A T H A M P L C
ANNUAL REPORT & ACCOUNTS 2021
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
6
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
41 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 2021
Financial Highlights
Revenue
£250.2m
2021 up 1.3%
2020 up 5.1%
2019 up 9.4%
2018 up 8.1%
2017 up 6.9%
250.2
247.1
235.1
214.9
198.8
150
175
200
225
250
275
Earnings per share
(see Note 9)
75.4p
Total Dividend
per share
21.2p
2021 up 19.5%
2020 no change
2019 down 2.0%
2018 up 15%
2017 up 4.3%
2021 up 36.8%
2020 down 13.4%
2019 up 7.8%
2018 up 8.1%
2017 up 7.3%
75.4
63.1
63.1
64.4
56.0
35
45
55
65
75
85
21.2
17.9
15.5
16.6
15.35
10
12
14
16
18
20
22
Net profit attributable to
shareholders
£15.0m
Up 20.0%
Equity Shareholders Funds
Cash and Cash Equivalents
£121.8m
Up 16.8%
£28.6m
Up 68.8%
Financial Calendar
Record date for final dividend 2021
Annual General Meeting 2021
Payment of final dividend
Interim 2021/22 results announcement
Interim dividend expected payment date
Preliminary announcement of 2021/22 results
Annual General Meeting 2022
6 August 2021
25 August 2021
27 August 2021
25 November 2021
21 January 2022
23 June 2022
31 August 2022
JAMES LATHAM PLC ANNUAL REPORT 2021
1
Chairman’s Statement
The financial year to 31 March 2021 was a year in which we saw
considerable disruption to our business. In the first quarter of the year
the COVID-19 pandemic and lockdown caused a significant reduction in
business, we then had to adapt to new ways of operating with working
at home and social distancing, and then global supply issues and price
rises affected the final quarter of the year. I am therefore very pleased to
report good trading results for the financial year to 31 March 2021.
Revenue for the financial year to 31 March 2021 was
£250.2m, up 1.3% on last year’s £247.1m. Like for like
volumes increased by 6.6%, with the growth mainly on
delivered business from our own warehouses but with
some growth on direct volumes shipped from the ports or
from the manufacturers. Unsurprisingly due to COVID-19
related operating restrictions, business collected by our
customers from the depots has fallen significantly. The cost
price of our products has started to rise significantly in the
second half of the year, and are on average 7.3% higher
than at the start of the financial year.
Gross profit percentage for the financial year to 31 March
2021 was 18.0% compared with 17.6% in the previous
financial year, which shows a good recovery in margin from
the 16.9% reported in the half year accounts. This figure
includes warehouse costs and we are continuing to extend
the shift systems to improve our service levels with five of
our depots now working 24 hours a day.
Profit before tax is £18.6m, up £2.9m on last year’s £15.7m.
Profit after tax for the year is £15.0m, up from last year’s
£12.5m. Earnings per ordinary share is 75.4p (2020: 63.1p)
an increase of 19.5%.
As at 31 March 2021 net assets have increased to £121.8m
(2020: £104.3m). Inventory levels have increased to £48.3m
from £44.3m last year. This is partly to do with increased
inventory in our new timber pack business, LDT Ireland,
based in Dublin, but mainly due to increases in prices for
our products. Trade receivables at the year end were £1.1m
higher than the previous year showing improvements in
debtor days. Despite the challenges of the pandemic, bad
debts have been minimal. Cash and cash equivalents of
£28.6m (2020: £17.0m) remain strong with good cash flows
from operating activities.
At 31 March 2021 the deficit of the defined benefit
scheme under IAS19 (revised) has reduced to £2.6m
from £11.8m last year. This reduction is largely due to
improvements in asset valuations and revision of mortality
assumptions following the actuarial triennial valuation.
The calculation of the pension deficit remains very
sensitive to changes in assumptions.
Final dividend
The Board has declared a final dividend of 15.5p per
Ordinary Share (2020: 10.0p). The dividend is payable
on 27 August 2021 to ordinary shareholders on the
Company’s register at close of business on 6 August 2021.
The ex-dividend date will be 5 August 2021. The total
dividend per ordinary share of 21.2p for the year (2020:
15.5p) is covered 3.6 times by earnings (2020: 4.1 times).
Current and future trading
The strong demand seen towards the end of this
financial year, has continued into the new financial year,
with margins also improving. Global demand for timber
products is very strong, being driven primarily by North
America, but also from the construction sector worldwide.
Many manufacturers have introduced an allocation system
limiting the ability for us to grow our volumes. These
manufacturers are unable to significantly increase capacity
as they struggle with COVID-19 (especially in South
America), labour shortages, rising costs and a shortage
of raw materials. We have seen significant price rises on
many commodity products. This is an area where our
volumes have grown as we have been able to use our
supplier relationships to secure supply of product for
our customers in these exceptional market conditions.
There have also been worldwide issues on shortages of
shipping containers, in part due to the COVID-19 pandemic,
with increased container rates which has further increased
the costs of many of our imported products, as well as
creating severe delays to shipments.
2
JAMES LATHAM PLC ANNUAL REPORT 2021
Chairman’s Statement
The majority of the market sectors that we supply are busy,
but there are still a few sectors, such as hospitality, aerospace
and shopfitting that are still trading at pre-COVID-19
levels. The outlook is difficult to predict, but the current
challenging supply situation looks set to continue through
2021, but visibility beyond that is much more uncertain,
but we know that the market will change at some point.
Whilst the supply side remains challenging we would
expect our margins to be better than normal for the next
few months, but returning to normal after that, and as
we know from experience in our industry, the balance
between supply and demand will change.
Development strategy
The board have identified that there are plenty of
opportunities to develop our business. We have
demonstrated the robustness and flexibility of our business
model during the recent pandemic, and that we are very
well placed to make the most of the opportunities as they
arise. We will continue with our strategy to look for suitable
acquisitions that support market sectors and geographical
areas that we are looking to further develop. We will
continue to invest in our warehouses as we look to further
improve the service to our customers, which is critical
for our future success. During the year our Fareham, Hemel
and Leicester depots have increased their working hours
and are now operating 24/5 and this trend with other
depots will continue, with Thurrock and Purfleet planning
to join them towards the end of the next financial year.
Our other focus in this financial year will be on increasing
the warehouse capacity at both Yate and Hemel, where the
board have approved plans to increase their warehouses
by approximately 25%, as well as investing in new
machinery at Dresser Mouldings, and completing the
significant racking project at Thurrock.
Directors and staff
I am very sad to report the passing of Michael Latham on
5 January 2021. Michael enjoyed a long and distinguished
career in the Timber Industry. He was chairman of James
Latham plc from 1974 to 1990, and also took on many
roles in the timber industry including President of the
Timber Trade Federation, President of the European
Tropical Timber Association and President of the London
Sawmillers Association.
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 experience and skills.
As ever I would like to personally thank all the directors
and everyone in the group who have worked so incredibly
hard during what has been a very difficult period for
everyone. These results are a real testament to the
teamwork and commitment of everybody for which I am
very grateful. Due to the pandemic I have not been able
to visit our depots to thank everyone in person, but this
is something I am really looking forward to, as thanking
people over video conferencing is not quite the same.
Nick Latham, Chairman, James Latham plc
23 June 2021
Michael Latham (centre) and
from left to right, James Latham,
Nick Latham, Peter Latham,
Roger Latham, Pippa Latham,
James Latham, Paul Latham,
David Latham and Piers Latham.
JAMES LATHAM PLC ANNUAL REPORT 2021
3
Strategic Report
Introduction
Outline of the Strategic Report
The directors present their Strategic Report for the
year ended 31 March 2021. 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
6
8
13
16 Key Performance Indicators
17 Operating Review
Financial Review
20
The Strategic Report was approved by the board of
directors on 23 June 2021 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. Members
of the board have regular dialogue with shareholders
in order to develop an understanding of their views.
Shareholder feedback is regularly reported on and
discussed by the board and their views are considered
as part of the decision making process. The AGM is
an important forum for shareholders to meet the
board and ask any questions they may have. Further
information is shown on pages 7 and 26.
4
JAMES LATHAM PLC ANNUAL REPORT 2021
• 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 engage with
our employees through the Company Intranet, local
board meetings, performance reviews and briefings
from various parts of the business. We have a Think
Tank which meets regularly with an independently
set agenda, and undertake employee surveys, to
present ideas to the board, representing the views of
all our staff. We provide share schemes to encourage
employees to share in the success of the Company.
Further information is shown on page 12.
• 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. We support local charities with
donations and encourage employees to undertake
fundraising activities. Further information is found on
pages 8 to 12.
Egger edgings.
Decisions are made with a long term view in mind and
having regard to all our stakeholders. These decisions are
made in line with group policies, but local management
are empowered to make decisions up to set levels of
cost to ensure that stakeholders for their business units
are properly considered. Where possible, decisions are
explained and discussed with affected stakeholders before
any actions are implemented.
The key decisions taken by the board in the year to
31 March 2021 include:
a. Decisions around the COVID-19 pandemic at the
start of the financial year involved making quick
decisions in order to protect all our stakeholders.
Daily meetings were being held by the executive
management teams to develop policies to protect
employees, customers, suppliers and shareholders.
These decisions included:-
a. Providing the IT resource for staff to work at home
if they could;
b. Develop Health and Safety policies to protect staff
which need to be in the work environment;
c. Develop pay policies so that lower paid furloughed
staff were paid in full and their peers were paid a
premium for working;
d. Temporarily close some depots and transfer business
to their fellow depots;
e. Help our customers which needed to delay account
payments to assist their cash flows;
f. Work closely with our suppliers to control shipments
of stock.
b. Due to the COVID-19 pandemic, the AGM could not
be held in person. Instead we decided to allow any
questions to be asked in advance of the meeting, with
the board’s responses published on the Company’s
Investors website.
c. Approval of capital expenditure at our Thurrock and
Dresser Mouldings branches. Whilst the majority of
capital expenditure was put on hold at the start of
the year, the board decided to continue with the new
racking at Thurrock and the dust extraction system at
Dresser Mouldings as these were long term projects
necessary for the future profits from these sites.
Strategic Report
Introduction
Kydex® samples.
d. 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’.
e. We decided to undertake a Staff Engagement Survey,
which allowed the board to obtain the views of all our
staff and help us with long term group policy decisions.
With a participation rate of 86%, this survey successfully
reached all areas of our business and we plan to
continue with these on a regular basis.
f. 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. The final dividend in
2020 was reduced due to the unknown impact of
COVID-19 at the time, but the board still wish to
maintain their long term progressive dividend policy.
JAMES LATHAM PLC ANNUAL REPORT 2021
5
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.
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, modified and engineered timbers,
cladding, decking and mouldings. We also supply
commodity and specialist panel 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 UK is committed to becoming net-zero carbon by
2050 and the company is aiming to provide embodied
carbon information to our customers to demonstrate the
carbon story of our products.
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
three 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.
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.
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.
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
6
JAMES LATHAM PLC ANNUAL REPORT 2021
Strategic Report
James Latham plc and Our Objectives and Strategy
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 specialist products are stocked and key to our success
is having the right stock in the right place at the right time.
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.
Melamine products are an important product group
and all Latham depots 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 our centrally held stocks.
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, which includes
operating 24 hours a day, 5 days a week.
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 set up a new
warehouse in the Republic of Ireland to trade in timber
pack products under the LDT banner.
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 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 have centralised our sampling service in
Leicester to provide a more efficient service with greater
visibility to follow up the sales leads that this produces.
COVID-19 has brought about a new way of working, with
less face to face visits and an increased use of technology
to engage with our customers and suppliers, from video
conferencing tools to the development of digital media to
promote and explain our products. We have invested in
improving our on line presence and a new online trading
platform for our customers will shortly be launched.
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.
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 processes.
JAMES LATHAM PLC ANNUAL REPORT 2021
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.
The UK Government is committed to becoming net-zero
carbon by 2050. The legislation intends to dramatically
reduce Greenhouse Gas Emissions and any remaining
emissions are offset, neutralising environmental impact
and slowing climate change. One of the routes to achieving
this, is by reducing carbon emissions from construction.
Construction is responsible for 40% of the UK’s total
carbon footprint, and so construction companies need to
look at the choice of materials and construction methods
used, as well as the energy efficiency of the buildings.
This has led to architects and specifiers increasingly
paying attention to the embodied carbon in the building.
Using timber as a building material helps offset carbon
emissions as timber is carbon negative.
Sourcing wood from sustainably managed forests
maximises CO2 absorption and stores more carbon.
In addition, sustainably managed forests increase
biodiversity and increases forestation. Forest stewards
manage the landscape to prevent damage to the eco-
systems, water courses, wildlife and the trees themselves.
This system takes a long term view of the forest resource
to ensure that they will last for generations to come.
To support this, we ensure our timber is legally harvested
and comes from well managed forests. We recognise that
the independent certification of forests and supply chains
is the best means of providing assurances of this.
8
JAMES LATHAM PLC ANNUAL REPORT 2021
Where possible we purchase 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.
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.
In some parts of the world, timber certified by one of
the internationally recognised schemes is not available.
In situations such as these, we are committed to
purchasing all timber from legal sources and to seek
confirmation that suppliers are operating in accordance
with the laws of their country.
Timber Procurement figures for the relevant calendar
years are given below.
FSC
PEFC
Verified Legal
Uncertified
FSC
PEFC
Verified Legal
Uncertified
12
14
2
9
2020
77
3
10
2019
73
Strategic Report
Corporate Responsibility
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
2019
2020
4,114
3,466
Scope 2
Indirect emissions from use of
electricity
264
202
Global Intensity Ratio
Tonnes of CO2 from scope
1 and 2 per £m of turnover
17.62
14.86
Tonnes of CO2 from scope
1 and 2 per thousand m3
11.20
8.80
Data shown is for the calendar years 2019 and 2020.
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.
Total annual energy use is 15,290 mWh (2019 calendar
year: 18,393 mWh). This is analysed further in the graphs
on page 10.
JAMES LATHAM PLC ANNUAL REPORT 2021
9
Valchromat in warehouse.
From January 1st 2021, the European Union Timber
Regulation (“EUTR”) has been replaced in Great Britain
by The Timber and Timber Products (Placing on the
Market) Regulations (“UKTR”). The requirements remain
the same as under EUTR, placing an obligation on the
first placer of timber on the British market to ensure
that the timber has been legally sourced and traded.
Compliance requires operation of a due diligence system,
assessing risks and implanting mitigation measures to
ensure that only negligible status product can enter the
supply chain. In 2020, an Office of Product and Safety
Standards audit of our due diligence systems found that
we were fully compliant with the European Union Timber
Regulation No 995/2021.
For a number of years we have 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 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 regularly
give presentations on these topics to trade associations and
to customers.
Strategic Report
Corporate Responsibility
As a distribution company, the majority of our emissions
are from our vehicles. These are reduced in this calendar
year due to the reductions in journeys taken during the
COVID-19 pandemic. We have seen an increase in natural
gas consumption as it is used in the production processes
at Dresser Mouldings, which was acquired in October 2019.
5.5%
4.4%
2020
66.4%
22%
1.6%
0.1%
Electricity - 841 mWh
Natural gas - 673 mWh
Cars Diesel - 245 mWh
Cars Petrol - 15 mWh
LPG - 3,364 mWh
HGV’s diesel - 10,152 mWh
6%
2%
2019
67%
19%
6%
0%
Electricity - 1,035 mWh
Cars Diesel - 1,081 mWh
Natural gas - 426 mWh
LPG - 3,510 mWh
Cars Petrol - 35 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.
In our company car policy we are looking to increase 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. We are now adding
them as the preferred Combi model to purchase where
circumstances allow.
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 led to a 26% reduction in direct
consumption and a 54% drop in CO2 emissions.
Waste Disposal
We seek 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
2016
2017
2018
2019
2020
Landfill (tonne)
363
390
371
156
87
Diverted from
landfill (tonne)
350
562
479
681
707
Total waste
713
952
850
837
795
Diverted from
landfill
49%
59%
56%
81%
89%
Whilst every effort has been made to ensure data is consistent
across the years, there are some differences in collection methods
across this period.
10
JAMES LATHAM PLC ANNUAL REPORT 2021
Strategic Report
Corporate Responsibility
We donated plywood to one of our customers, Falkus Joinery, in support of the London Futures project, where young people with learning
and physical disabilities obtain employment skills.
Support of our communities
We are committed to supporting community projects
and charities local to our depots both in staff time and
financially. This year, in recognition of the difficulties that
the COVID-19 pandemic was having for more vulnerable
members of society, we gave donations to the Salvation
Army and Crisis in the UK, and Pieta, a suicide and self
harm charity in Ireland.
Once again we provided material 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 continue to 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.
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.
In March 2020, the onset of the COVID-19 pandemic
brought with it new challenges for all our staff to work in
a safe environment. Our disaster recovery plans kicked
in with all sales and administration staff being able to
work from home with computer and telephone access
throughout the group. For those operations staff who
could not work from home we introduced new COVID-safe
working procedures and social distancing rules that are
continually updated following government guidelines.
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 introduced COVID audits to make sure
that all depots are following the guidelines to keep our
staff and customers safe. 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.
JAMES LATHAM PLC ANNUAL REPORT 2021
11
Strategic Report
Corporate Responsibility
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 latest technology
allows us to monitor driver behaviour not only from a
safety aspect but also from an environmental aspect,
minimising fuel use by efficient routing.
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.
In December 2020 we carried out our first employee
engagement survey. This survey was open to all employees
and we achieved an 86% participation rate. The survey
uses a statistical algorithm to identify areas with the most
potential for positive change. We will work on the key
areas, to improve our strategies on issues including staff
retention, communication, succession planning, training
and development for all employees. We plan to continue
to use this tool on an ongoing basis to continue to improve
the working environment for all staff as well as improve
the quality of service that they offer to our customers.
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.
12
JAMES LATHAM PLC ANNUAL REPORT 2021
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 apprentices, are at or above the
Real Living Wage.
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.
Details of the number of employees and their related
costs can be found in note 4 to the accounts.
Furniture of distinction
We’ve appointed emerging young furniture
designer and maker Sean Evelegh as a James
Latham Ambassador to demonstrate the broad
range of products we sell into the furniture
sector. In addition to creating beautiful, crafted
pieces, Sean appears in a number of TV shows
and also has a large media presence, regularly
releasing tutorial videos on woodworking
techniques to his followers on YouTube and
Instagram. Sean is currently working his way
through a basket of Latham products, bringing
fresh new thinking to traditional furniture
applications and is the first in a number of
ambassadors we will appoint to promote
product into various market sectors.
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.
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.
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 2021 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.
We have considered below the key inherent risks and the
risk mitigation, but specifically have discussed below how
the COVID-19 pandemic and Brexit have impacted the risks.
Inherent risk
Risk Description
Risk Mitigation
Market
Conditions
The group’s sales are predominantly UK based,
but with an increasing presence in the Republic
of Ireland. It is exposed to any slowdown in the
UK or Irish 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 and Irish economic
sectors helps reduce the impact of slowdown in any one sector.
Regular financial information helps the board assess current trends.
COVID-19
Brexit
The effect of the closure of many non-essential businesses and social
distancing measures resulted in a significant drop in revenues for
the first quarter of the financial year. We were 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 kept in close contact with
our customers to assess the effects of the pandemic on their business.
We conducted risk assessments on the likely impact on supply and
costs from Brexit, and discussed this with our customers to ensure as
smooth a transition as possible.
Competition
from new
and existing
businesses
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 in improving on-line trading platforms and other digital
methods.
COVID-19/Brexit
N/A
Continued overleaf
JAMES LATHAM PLC ANNUAL REPORT 2021
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 or obsolete.
Supplier
political risks
or failure
could result
in shortages
of product
COVID-19/Brexit
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/Brexit
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 and obsolete stocks are monitored regularly and action
taken to mitigate the risk.
With some sectors of the economy closed for long periods of time,
this has lead to a change in our product mix. Our predictive stock
programmes and concentration on slow moving stocks has allowed us to
control our inventory levels in light of the changing market conditions.
To mitigate the risk from these pressures, the group’s 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.
Both the effect of the pandemic and Brexit on supply chains caused
difficulties in getting the right levels of inventory available for sale.
Supply chains have been disrupted with containers often in the
wrong part of the world. We also worked with our ports and external
warehouse suppliers to ensure that additional space was available
should it be necessary, and set up an additional warehouse in the
Republic of Ireland.
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 2021
Strategic Report
Principal Risks and Uncertainties
Inherent risk
Risk Description
Risk Mitigation
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 initially fell considerably as well as gilt yields decreasing,
which had an effect on the scheme deficit. The Trustees and the Company
were 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. The infrastructure is regularly reviewed and updated.
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 continued
to improve our Cyber security systems. Our IT disaster recovery plans
include provisions for Cyber Attack
Our GDPR policy is regularly reviewed and we ensure that our marketing
activities are appropriately carried out.
We recognise 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 trade
from a depot
Inability to trade from a depot due to an incident,
internally or externally, could cause loss of
revenue and profits.
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.
COVID-19
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.
COVID-19
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 can react quickly to any closure of
a depot, whether as a deliberate decision or as a result of staff illness,
and consolidate sales and warehouse activity at a reduced number of
locations without affecting our ability to service our essential customers.
The group, through the Remuneration Committee, is committed to having
remuneration, training and development policies to make James Latham
the employer of choice. Benchmarking takes place to ensure our senior
staff are rewarded appropriately.
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 2021
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 6.
To maximise shareholder value over the medium term
2021
2020
2019
75.4
2021
1.8%
2020
1.0%
2019
8.0%
64.0
61.6
40
50
60
70
80
%
0
5
10
15
Earnings per share increased 19.5%.
Like for like revenue, adjusted for the effects of
acquisitions and working days, increased 1.8%.
To increase sales of third party certified legal
and sustainable timber products
To provide a safe working environment for
our staff
2021
2020
2019
97.86%
2021
5.45
0.67
Accident
Reportable
97.47%
97.19%
2020
2019
7.77
8.16
0.73
0.37
%
96
97
98
99
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
2021
2020
2019
Tonnes
1,073
1,018
1,015
2021
2020
2019
Times
5.6
6.2
6.1
400
600
800
1,000
1,200
4
5
6
7
Weight of product sold per working day
continues to increase.
Stock turn, based on volumes, is below our budget of
6.5 times due to some increased stock on water due to
supply difficulties plus stocks acquired for LDT Ireland.
16
JAMES LATHAM PLC ANNUAL REPORT 2021
Strategic Report
Operating Review
Results for the year to 31 March 2021
Revenue for the year ended 31 March 2021 was £250.2m,
£3.1m higher than the previous year.
The first quarter trading was dominated by managing
the potential impact of the COVID-19 pandemic on
our staff and business. The introduction of lockdown
restrictions and social distancing measures dominated
proceedings. The business swiftly adopted remote
working for staff that could work from home, while
also following government advise for social distancing
measures to protect staff continuing to work in our sites.
This enabled us to remain open where we could and
service vital NHS projects and those customers
who continued manufacturing.
As might have been expected, demand for product
fell sharply at the beginning of April, however activity
levels soon started to recover with most market sectors
and customers returning through Q1 and into Q2.
Subsequently we have witnessed a good recovery in
volumes throughout the remaining trading period across
all regions of our business driven primarily by commodity
panels where we have experienced the strongest demand.
Scotland and the Republic of Ireland seem to have been
the most affected regions with more severe lockdowns.
Shopfitting, Exhibitions and the Aviation sectors have
been impacted during the pandemic and have been slow
to recover. All other sectors seem to have recovered.
The final quarter trading showed a real increase in both
business confidence and customer activity.
Home office in EGGER laminate by JL Interiors.
Depots performance during this period was encouraging
and a reflection of the earlier long term investments made
into both infrastructure and staff.
Stock management has remained a vital part of our
success story during an extremely turbulent year and
maintaining the correct balance between stock levels and
fluctuating demand has been challenging. Our long term
relationships with key suppliers assisted. As the Global
recovery has continued to gain momentum the balance
between supply and demand has created shortages and
some product groups have become limited by availability
with some manufacturers introducing allocation systems.
Consequently, the replacement cost for the vast majority
of timber and panel products has continued to rise.
In addition to this the shipment of goods has been
disrupted creating delays while costs have escalated.
Sales per working day
2021
2020
1,400
1,200
1,000
800
600
400
200
0
April
M ay
June
July
August
Septe m ber
October
N ove m ber
D ece m ber
January
February
M arch
JAMES LATHAM PLC ANNUAL REPORT 2021
17
Strategic Report
Operating Review
Men’s locker room project in Querkus Vivace Oak.
Despite all the distractions and demands during
this period the business has remained focused on
progressing its long-term strategies whilst also introducing
several new initiatives aimed at assisting with these
objectives. The redevelopment of the Gateshead site was
successfully completed and has provided an excellent
platform. New capex projects and recruitment plans were
temporarily postponed in Q1 along with close control
measures of all overheads which are reflected in the
results. The investment in our Dresser Mouldings business
continued along with our product development for
specialist cladding, this combined project is expected to
be fully operational in 2022.
We also opened up a timber pack
only business under the LDT banner,
trading out of Dublin and servicing
the whole of Ireland. This business
started in February 2021 with over
£1m of timber packs and is proving
very successful.
Service levels with our customers and suppliers
throughout this period has been excellent and reflected in
customer retention and satisfaction statistics. We have
continued to extend the operational hours of our sites
and increased the number of sites that are working
24/5. Trade into Ireland as a result of Brexit has caused
delays at the ports and increased costs on all sides. With
the introduction of digital communications, we have
managed to maintain good regular contact with our major
manufacturing suppliers and customers throughout the
pandemic. New internal communication systems have been
developed to ensure all staff including remote workers
remain engaged and are included. The impact of social
distancing and reduction of business travel combined with
the use of digital communication has helped productivity
and created efficiencies. We intend to adopt and develop
these measures in the future.
Our digital marketing activity continued with the
introduction of a number of new strategies to help increase
the Latham brand and product awareness. These have been
well received with a significant increase in customer activity
and interaction across all the communication channels.
Our focus on the A&D specification sector is showing
encouraging progress.
18
JAMES LATHAM PLC ANNUAL REPORT 2021
Strategic Report
Operating Review
The second half results reflect activity levels and returning
business confidence across our sectors. They highlight
the agility and market awareness of the James Latham
management team throughout all the challenges that have
been thrown at industry over the last few years including
Brexit and effects of the pandemic which prevail.
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
fourteen 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 place
The group’s business is widely spread throughout many
sectors of the UK economy.
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
2021
2020
17
25
14
27
4
5
4
3
4
6
1
1
11
8
11
5
5
4
4
5
6
2
2
8
7
11
TOTAL
100
100
End products are used in both the public and private
sectors. Our top ten customers account for 9% (2020: 9%)
of sales and our top 25 customers represent 14% (2020:
14%) of sales.
Rothwell Robinson for the
British Antarctic Survey
James Latham has been supplying
Rothwell Robinson with sheet
materials for every BAS job since
their first order in 1997. This year we
have supplied pre-cut Birch Plywood
sheets for a prefabricated research
station just inside the Antarctic circle.
Since the first job, they’ve carried out
around 40 BAS projects and we’ve
supplied them all. An impressive
tally for a prestigious client – and
surely a definite contender for
‘longest distance travelled’ for any
Lathams product!
JAMES LATHAM PLC ANNUAL REPORT 2021
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;
Gross margins have improved from 17.6% to 18.0%
with margins increasing through the year. Cost prices
have risen 7.3% this year with the majority of this rise
occurring in the second half of 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.
Due to the COVID-19 pandemic, we concentrated on
developing our existing businesses for most of this
financial year. In March 2021, we expanded our LDT
operation into Ireland, opening up a new warehouse north
of Dublin, to sell timber packs to the merchant sector.
• Controlling cashflows to maximise cash available for
the business and shareholders.
This year the focus was on stock control and debtors
days which were more challenging at the beginning of
the financial year due to the COVID-19 pandemic and at
the end of the financial year due to global supply issues.
• 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 risks associated with
COVID-19, potential supply issues caused by Brexit and
global supply issues, and Cyber security.
• Maintaining dividend cover at between 2.5 times
and 4 times earnings.
Dividend cover this year is 3.6 times (2020: 4.1 times).
20
JAMES LATHAM PLC ANNUAL REPORT 2021
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 1.3% to £250.2m. The first quarter
of the year showed significant reductions in revenues due
to the COVID-19 pandemic, but overall like for like volumes
have increased by 6.6% and prices have risen by 7.3%.
The largest increases in volumes were in commodity
products with a lower cost per m3 compared with our value
added products. The board remained focussed on managing
margins to enable us to remain competitive in commodity
products but grow margins in our focus products and other
products where there are market shortages, 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
five 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 19.0% to £19.0m from £16.0m
last year. Group net profit before taxation increased to
£18.6m from £15.7m 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 and Irish 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 £3.6m represents an effective rate
of 19.4%, compared with 20.3% 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 UK government is expected to confirm that the UK
corporation tax rate will rise to 25% with effect from 1 April
2023 which could add over £1m to our annual tax bill.
Pension scheme
At 31 March 2021 the deficit of the defined benefit
scheme under International Financial Reporting
Standards was £2.6m compared with £11.8m last year.
Discount rates, represented by yields on corporate
bonds reduced to 2.1% from 2.4%. Assets under
management, especially equities, recovered after
the large market movements seen at the end of the
last financial year caused by the COVID-19 pandemic.
Total assets have grown £10.6m. In note 20.2 to the
accounts, we have provided some sensitivity analysis
around the various assumptions used to illustrate
this volatility.
The triennial valuation was concluded during the year.
The actuarial deficit at 31 March 2020 increased to £25m
and, having taken into account post valuation experience
with the recovery of market valuations, the Trustees agreed
a deficit recovery plan of £3m a year to start 1 April 2021.
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
2021
2,561
2020
2019
2018
2017
11,812
8,714
8,382
16,625
NHS Nightingale Hospitals
A number of James Latham products were used during the emergency roll out of Nightingale Hospitals in
response to the Covid pandemic. Ranging from Antimicrobial, thermoformable laminates such as Kydex
for over-bed tables and patient bays (in all over 50 tonnes of Kydex was used!), to Flame retardant and
acoustic door blanks for the temporary wards and corridors and on to Non-slip Buffalo Board to transform
the turf playing surfaces of national stadiums into temporary hospital floors, Latham products were
specified and installed extensively.
JAMES LATHAM PLC ANNUAL REPORT 2021
21
Strategic Report
Financial Review
Modern Artisans create a
masterpiece in London
Whilst our customer Solid Surface London
used a number of our products during the
fit out of a prestigious bar and restaurant in
London, it is the extensive use of Aristech
Studio Collection architectural resin in Honey
Onyx that steals the show. Constructed by
hand from many parts, then thermoformed
and assembled using hidden joints, the 4m
illuminated dining table in the private lounge
looks like one long slab of glowing lava.
Matching risers in the staircases and washing
facilities in the restrooms really make this
project unique.
Cash flow and working capital
At the end of the year cash balances of £28.6m were held,
up from £17.0m 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 increase in
cash levels occurred at the start of the financial year as we
collected pre pandemic debts from customers but were
purchasing less inventory. This position was maintained
during the year as we continued to control our working
capital requirements. 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 £1,772,000 of discounts
received compared with £1,599,000 last year.
22
JAMES LATHAM PLC ANNUAL REPORT 2021
Control of cash flow from customers is closely monitored.
The key performance indicator of debtors days, taking
into account our credit terms, has reduced from 51.4 days
to 49.0 days. Bad debts this year were minimal against a
budget of 0.4%, and last year of 0.2%. We 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 94.5% of accounts owing over £40,000 covered
by credit insurance. During the year the UK government
put in place COVID credit insurance cover to provide
additional support during the pandemic. This will come to
an end in June 2021 but I am pleased that the vast majority
of these limits are now covered under our normal policy.
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. During this year they had to control stocks coming
in at the start of the financial year due to the significant
decline in turnover, and then control these stock levels
during the recovery in the midst of global supply issues
and Brexit. At 31 March 2021 stock turn is 5.6 times
compared with our target of 6.5 times. This increased stock
is partly due to the investment of £1m in additional timber
stocks in Dublin for the new LDT Ireland operation which
started in March 2021. In addition the global supply issues
have meant that our products are taking much longer to
arrive in the UK and then taking longer to clear the ports.
There were no significant overstocked areas giving any
concern to us at the year end.
Good stock and debtor control has allowed 115%
(2020: 86%) of profit before tax to be available as free
cash for investment and distribution.
Cash and Cash Equivalents
2021
2020
2019
2018
2017
28,618
16,950
15,541
13,989
17,246
Strategic Report
Financial Review
Hardwood stocks.
Capital investment
At the start of the financial year until the end of June 2020,
all capital investments decisions were put on hold whilst
we assessed the state of the market due to the COVID-19
pandemic. We completed the warehouse and office project
at Gateshead and started a project to replace and improve
the racking at Thurrock. In addition we moved all our IT
infrastructure onto a new improved platform and provided
updated equipment to all the depots.
Net assets at the year end were £121.8m (2020: £104.3m).
The group’s pre-tax return on capital for the year was 19.2%
(2020 15.9%), which continues to be above our weighted
average cost of capital.
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.
I am very grateful for all the work that all my Head Office
team has put in this year. For the whole of this financial
year my team has been working from home, and there has
been no disruption to the service they provide, both to
customers and suppliers, and to our depots, in the most
trying of circumstances.
David Dunmow
Finance Director
JAMES LATHAM PLC ANNUAL REPORT 2021
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 2021, the board met 6 times, with
all directors attending each meeting. Due to the COVID-19
pandemic, all the board meetings were held via video
conferencing and these proved just as effective as face to
face meetings. 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 virtually attended the group annual
operational budget and strategy meeting, as well as making
individual visits to operational sites.
24
JAMES LATHAM PLC ANNUAL REPORT 2021
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 and Abbey Woods
business, the company’s trading subsidiaries, 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 and my appraisal is
performed by the non-executive directors.
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 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 and the risk register 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,
which meets twice a year, 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 2021
25
Corporate Governance
Corporate Governance Report
AE Core can be thermoformed or vacuum formed to almost any desired shape.
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
23 June 2021
26
JAMES LATHAM PLC ANNUAL REPORT 2021
Corporate Governance
Directors and Advisors
Directors’ biographies
Nick Latham BSc Chairman
Nick Latham, age 53 has worked in the
company for 29 years and was appointed to the
board in 2007. He is a director of Lathams
Limited and provides advice to the Remuneration
Committee. He sits on the main board of the
Timber Research and Development Association
and is a board director of Timber Development
UK (TDUK).
David Dunmow BSc FCA
Finance Director and Company Secretary
David Dunmow, age 57, has worked in the
company for 27 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 and Abbey Wood Agencies
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 56, has worked in the
company for 20 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 50 has worked in the company
for 28 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 62, 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 a director of
CCRTM Ltd and Trebartha Hydro Ltd, and is a
previous director of Mithras Investment Trust plc.
Paula Kerrigan Non-Executive Director
Paula Kerrigan, age 49, 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.
Stockbrokers and
Nominated Adviser
SP Angel Corporate
Finance LLP
Prince Frederick House
35-39 Maddox Street
London W1S 2PP
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
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
Nick Latham
David Dunmow
Andrew Wright
Piers Latham
Fabian French
Paula Kerrigan
JAMES LATHAM PLC ANNUAL REPORT 2021
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.
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 2021 was the
achievement of £15,425,000 operating profit, as measured
in the depots management accounts, an increase of 3.7%
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 137.2% of the target
operating profit was achieved earning 19.5% of basic
salary. The Remuneration Committee has agreed that,
following a benchmarking exercise, for the year ended
31 March 2022 the bonus will be based on achievement
of target profits, with the maximum bonus increasing to
35% of basic salary on achieving 130% of 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 5.05% of basic salary to 421 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 2021
Pension Scheme
The executive directors are members of the James Latham
plc Pension and Assurance Scheme which is a final salary
scheme. The directors are required to contribute 8% of
pensionable salary. In 2003 the definition of pensionable
salary was amended to exclude bonuses, and increases in
pensionable salary would be restricted to a maximum of
Consumer Price Inflation plus 1%.
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 directors agreed that any
service contracts issued to new directors would be
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
At the start of the financial year there was considerable
uncertainty about how the pandemic would affect the
results and cash flow of the company and so the executive
and non-executive directors voluntarily took a 20% pay
cut from 1 April 2020 until 30 June 2020 when the results
returned back to previous levels. In December 2020, the
Remuneration Committee agreed that as the business
had recovered significantly from the first quarter, that
these voluntary pay cuts would be repaid to the directors.
The decision on bonuses, normally payable in July and
August 2020 was delayed until the end of September 2020,
when the Remuneration Committee decided that 75% of
the bonuses earned would be paid in September 2020 with
the remaining 25% carried forward to be paid in July and
August 2021. The payment dates for bonuses earned for
the year ended 31 March 2021 will return to normal.
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 2021.
James Latham plc total shareholder return
60
50
40
30
20
10
0
-10
2016
2017
2018
2019
2020
2021
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
Non-executive
P.L.F. French
P. Kerrigan
Total
2020
2021
2020
2021
2020
2021
2020
2021
2020
2021
2020
2021
2020
207
195
189
181
170
146
181
160
34
35
34
35
815
752
1
1
15
15
10
15
18
17
-
-
-
-
44
48
53
42
48
40
44
34
48
37
-
-
-
-
261
238
252
236
224
195
247
214
34
35
34
35
193
153
1,052
953
3
2
3
2
3
2
2
2
-
-
-
-
11
8
TOTAL
£000
299
265
302
271
257
218
283
240
34
35
34
35
35
25
47
33
30
21
34
25
-
-
-
-
146
103
1,209
1,064
JAMES LATHAM PLC ANNUAL REPORT 2021
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 2021
31 March 2020
Ordinary shares
Preference shares
Ordinary shares
Preference shares
Beneficial owner
Beneficial owner
Beneficial owner
Beneficial owner
Beneficial owner
Beneficial owner
639,996
138,153
637,002
28,198
370,052
-
-
-
567
-
-
-
638,237
136,458
635,312
29,983
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 2021
31 March 2020
2,475
2,475
2,475
1,237
2,475
2,475
2,475
1,237
Options were granted on 2 January 2020 at 727p per share, and the options are exercisable on 1 March 2023.
30
JAMES LATHAM PLC ANNUAL REPORT 2021
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 2020
Granted during
the year
Exercised
Outstanding
31 March 2021
Exercise
price
N.C. Latham
D.A. Dunmow
P.F. Latham
A.G. Wright
586
636
560
718
466
-
586
636
560
718
466
-
586
636
560
718
466
-
707
586
636
560
718
466
-
-
-
-
-
-
486
-
-
-
-
-
486
-
-
-
-
-
486
-
-
-
-
-
-
486
(586)
-
-
-
-
-
(586)
-
-
-
-
-
(586)
-
-
-
-
-
(707)
-
-
-
-
-
-
-
636
560
718
466
486
-
636
560
718
466
486
-
636
560
718
466
486
-
586
636
560
718
466
486
£6.825
£7.075
£8.025
£6.26
£9.65
£9.25
£6.825
£7.075
£8.025
£6.26
£9.65
£9.25
£6.825
£7.075
£8.025
£6.26
£9.65
£9.25
£5.65
£6.825
£7.075
£8.025
£6.26
£9.65
£9.25
Exercise period
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
16.12.25 to 15.12.30
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
16.12.25 to 15.12.30
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
16.12.25 to 15.12.30
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
16.12.25 to 15.12.30
No performance conditions attach to these options. Mr N.C. Latham, Mr D.A. Dunmow and Mr P.F. Latham made a gain of
£1,422 and Mr A.G. Wright made a gain of £2,545 on options exercised during the year.
Paula Kerrigan,
Chairman of the Remuneration Committee
23 June 2021
JAMES LATHAM PLC ANNUAL REPORT 2021
31
Corporate Governance
Directors’ Report
The directors have pleasure in presenting their annual
report and the audited accounts for the year ended
31 March 2021. 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, employee policies and
engagement policies with suppliers, customers and other
stakeholders. 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 2021 are
set out on page 40. The directors recommend the
following dividends:-
Ordinary dividends
Interim dividend paid, 5.7 pence
(2020: 5.5 pence) per ordinary share
Final dividend proposed, 15.5 pence
(2020: 10.0 pence) per ordinary share
Total ordinary dividends, 21.2 pence
(2020: 15.5 pence) per ordinary share
£000
1,133
3,082
4,215
The directors recommend payment of the final dividend
on 27 August 2021 to shareholders on the register of
members at the close of business on 6 August 2021.
Balance sheet and post balance sheet events
The balance sheet on page 42 shows the group’s financial
position. No significant events have occurred since the
balance sheet date.
Real wood veneer understairs storage by Somerville Joinery.
32
JAMES LATHAM PLC ANNUAL REPORT 2021
Directors
All 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, David Dunmow and
Andrew Wright 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.
Share capital
Details of the share capital is shown in note 22.
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 70. The company holds 259,200 ordinary shares
as treasury shares, with a view to being used for future
employee share schemes. In addition the Trustees of
the James Latham Employee Benefits Trust holds
10,222 shares with a view to being used for employee
share schemes.
Corporate Governance
Directors’ Report
Laminate storage.
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 193,215 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 17,226 options
were issued at an option price of £9.25. In addition
15,903 options were exercised after being held for five
years, 1,307 at an option price of £2.295, 2,017 at an
option price of £2.725, 2,423 at an option price of £3.96,
2,510 at an option price of £5.65 and 7,673 at an option
price of £6.825.
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 23 June 2021, 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
639,996
637,002
%
6.11
5.10
3.44
3.22
3.29
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 2021 were 35 days
(2020: 29 days). Payment practices and performance data
for Lathams Limited is published https://check-payment-
practices.service.gov.uk/company/00967247/reports.
JAMES LATHAM PLC ANNUAL REPORT 2021
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.
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
Shareholders receive more than 20 working days notice
of the Annual General Meeting, where directors will be
available for questions and a trading update provided.
In arriving at their opinion, the directors considered:-
• The group’s cash flow forecasts and revenue projections
for the period to 30 June 2022
• Sensitivity of these projections to reasonable changes in
trading conditions
• Cash and borrowing facilities available to the group
• Consideration of the principal risks and uncertainties
outlined on pages 13 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 £16,369 (2020: £15,780).
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.
The board continues to monitor closely the restrictions
caused by the COVID-19 pandemic. Our preference is to
welcome shareholders to this years AGM, especially given
that shareholders were prevented from attending last year.
Subject to Public Health England guidance the Annual
General Meeting will be held at Unit 1, Swallow Park, Finway
Road, Hemel Hempstead, Herts, HP2 7QU on 25 August 2021
at 12.00pm. An announcement will be made to the Stock
Exchange should guidance change which places restrictions
over the holding of the AGM. Last year all resolutions were
passed with over 95% of the votes in favour.
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 8. 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 9. 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 10. 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
23 June 2021
34
JAMES LATHAM PLC ANNUAL REPORT 2021
Corporate Governance
Statement of Directors’ Responsibilities
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 have elected under company law to
prepare group financial statements in accordance with
international accounting standards in conformity with the
requirements of the Companies Act 2006. The Directors
have elected under company law to prepare the company
financial statements in accordance with international
accounting standards in conformity with the requirements
of the Companies Act 2006.
The group and company financial statements are
required by law and international accounting standards
in conformity with the requirements of the Companies
Act 2006, to present fairly the financial position and
performance of the group and company. 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 international accounting standards in conformity
with the requirements of the Companies Act 2006;
d. 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.
Flexible Birch Plywood.
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.
On behalf of the Board of Directors
Nick Latham
Chairman
23 June 2021
JAMES LATHAM PLC ANNUAL REPORT 2021
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 2021 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 significant accounting policies.
The financial reporting framework that has been applied
in their preparation is applicable law and International
Accounting Standards in conformity with the requirements
of the Companies Act 2006 and, as regards the parent
company financial statements, as applied in accordance
with the provisions of the Companies Act 2006.
In our opinion:
• 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 2021 and of the group’s profit for the
year then ended;
• the group financial statements have been properly
prepared in accordance with International Accounting
Standards in conformity with the requirements of the
Companies Act 2006;
• the parent company financial statements have been
properly prepared in accordance with International
Accounting Standards in conformity with the
requirements of the Companies Act 2006 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.
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.
36
JAMES LATHAM PLC ANNUAL REPORT 2021
Conclusions relating to going concern
In auditing the financial statements, we have concluded
that the directors’ use of the going concern basis of
accounting in the preparation of the financial statements
is appropriate. Our evaluation of the directors’ assessment
of the group’s and parent company’s ability to continue
to adopt the going concern basis of accounting included
reviewing and evaluating managements cash flow forecast
for the twelve months from anticipated approval of the
financial statements and the results of scenario analysis
as well as considering post year end results and cash
positions.
Based on the work we have performed, we have not
identified any material uncertainties relating to events
or conditions that, individually or collectively, may cast
significant doubt on the group’s or the parent company’s
ability to continue as a going concern for a period of at
least twelve months from when the financial statements
are authorised for issue.
Our responsibilities and the responsibilities of the directors
with respect to going concern are described in the relevant
sections of this report.
Summary of our audit approach
Key audit matters
Group
• Inventory
Materiality
Group
• Overall materiality: £930,000
(2020: £766,000)
• Performance materiality:
£698,000 (2020: £575,000)
Parent Company
• Overall materiality: £401,000
(2020: £384,000)
• Performance materiality:
£301,000 (2020: £288,000)
Our audit procedures covered
100% of revenue, total assets
and profit before tax.
Scope
Corporate Governance
Independent Auditor’s Report
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.
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
As set out in Note 16, the group carried inventory amounting to £48.3m at 31 March 2021 and details
of the accounting policies applicable during the year are set out in note 1.10 and 1.20. The risk exists
that inventory quantities may not be supported by the amount of inventory physically held by the
Group. Furthermore, 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 carrying value
of inventory could have a material impact on the financial statements.
How the matter
was addressed
in the audit
Our audit procedures included attending a sample of the group’s year end inventory counts and
performing procedures to test the robustness of the count process. We tested a sample of items
to confirm that quantities counted had been correctly reflected within the year end inventory figures.
In addition, we carried out testing of the weighted average cost calculations for a sample of items
held within inventory at 31 March 2021.
To audit the adequacy of the provision against inventory, we reviewed the ageing of inventory at
31 March 2021 by depot compared to the ageing at 31 March 2020 and sought explanations for any
significant movements. We have also reviewed the level of provision as at 31 March 2021 compared
to the provision at the previous year end to assess whether there had been unexpected changes in
provision levels. In addition, we examined post year-end sales to test whether net realisable value
was greater than cost and considered the results of this in the context of the year end inventory
carrying values.
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.
JAMES LATHAM PLC ANNUAL REPORT 2021
37
Corporate Governance
Independent Auditor’s Report
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
£930,000 (2020: £766,000)
£401,000 (2020: £384,000)
Basis for determining
overall materiality
5% of profit before tax
4% 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
£698,000 (2020: £575,000)
£301,000 (2020: £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 £46,000
(2020: £38,000) and misstatements below
that threshold that, in our view, warranted
reporting on qualitative grounds.
Misstatements in excess of £20,000 and
(2020: £19,000) misstatements below that
threshold that, in our view, warranted
reporting on qualitative grounds.
An overview of the scope of our audit
The group consists of three components, all of which
are based in the UK and Republic of Ireland. Full scope
audits were performed for all three components.
statements themselves. 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.
Other information
The other information comprises the information
included in the annual report, other than the financial
statements and our auditor’s report thereon. The directors
are responsible for the other information contained within
the annual report. 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.
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 course of 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 this
gives rise to a material misstatement in the financial
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.
38
JAMES LATHAM PLC ANNUAL REPORT 2021
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.
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.
Corporate Governance
Independent Auditor’s Report
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.
The extent to which the audit was considered
capable of detecting irregularities, including fraud
Irregularities are instances of non-compliance with laws
and regulations. The objectives of our audit are to obtain
sufficient appropriate audit evidence regarding compliance
with laws and regulations that have a direct effect on the
determination of material amounts and disclosures in the
financial statements, to perform audit procedures to help
identify instances of non-compliance with other laws and
regulations that may have a material effect on the financial
statements, and to respond appropriately to identified
or suspected non-compliance with laws and regulations
identified during the audit.
In relation to fraud, the objectives of our audit are to
identify and assess the risk of material misstatement of
the financial statements due to fraud, to obtain sufficient
appropriate audit evidence regarding the assessed risks
of material misstatement due to fraud through designing
and implementing appropriate responses and to respond
appropriately to fraud or suspected fraud identified
during the audit.
However, it is the primary responsibility of management,
with the oversight of those charged with governance,
to ensure that the entity’s operations are conducted in
accordance with the provisions of laws and regulations and
for the prevention and detection of fraud. In identifying
and assessing risks of material misstatement in respect
of irregularities, including fraud, the group audit
engagement team:
• obtained an understanding of the nature of the industry
and sector, including the legal and regulatory framework
that the group and parent company operate in and how
the group and parent company are complying with the
legal and regulatory framework;
JAMES LATHAM PLC ANNUAL REPORT 2021
39
Corporate Governance
Independent Auditor’s Report
• inquired of management, and those charged with governance, about their own identification and assessment of the risks
of irregularities, including any known actual, suspected or alleged instances of fraud;
• discussed matters about non-compliance with laws and regulations and how fraud might occur including assessment of
how and where the financial statements may be susceptible to fraud.
The most significant laws and regulations were determined as follows:
Legislation / Regulation
International Accounting
Standards in conformity with the
requirements of the Companies
Act and Companies Act 2006
Additional audit procedures performed by the Group audit
engagement team included:
Review of the financial statement disclosures and testing to supporting
documentation.
Completion of disclosure checklists to identify areas of non-compliance.
Tax compliance regulations
Inspection of advice received from external tax advisors.
Inspection of correspondence with local tax authorities.
Consideration of whether any matter identified during the audit required
reporting to an appropriate authority outside the entity.
UK timber regulations
Inquiry of management.
Inspection of board minutes and legal and regulatory correspondence.
The areas that we identified as being susceptible to material misstatement due to fraud were:
Risk
Audit procedures performed by the audit engagement team:
Management override of controls
Testing the appropriateness of journal entries and other adjustments;
Assessing whether the judgements made in making accounting estimates
are indicative of a potential bias; and
Evaluating the business rationale of any significant transactions that are
unusual or outside the normal course of business.
A further description of our responsibilities for the audit
of the financial statements is located on the Financial
Reporting Council’s website at: http://www.frc.org.uk/
auditorsresponsibilities. This description forms part of
our 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
23 June 2021
40
JAMES LATHAM PLC ANNUAL REPORT 2021
Financial Statements
Consolidated Income Statement
For the year ended 31 March 2021
£’000s
Notes
2021
2020
247,100
Revenue
Cost of sales (including warehouse costs) 3 (205,060) (203,656)
250,162
2
Gross profit
43,444
Selling and distribution costs 3 (17,464) (19,251)
Administrative expenses 3 (8,598) (8,196)
45,102
Operating profit
Finance income
Finance costs
Profit before tax
Tax expense
19,040
11
15,997
5
82
6 (453) (417)
3
15,662
7 (3,616) (3,181)
18,598
Profit after tax attributable to owners
of the parent company
Earnings per ordinary share (basic)
Earnings per ordinary share (diluted)
9
9
14,982
75.4p
75.2p
12,481
63.1p
63.0p
Consolidated Statement of Comprehensive Income
For the year ended 31 March 2021
£’000s
Notes
2021
Profit after tax
Other comprehensive income:
Actuarial gain/(loss) on defined benefit
pension scheme
Deferred tax relating to components of
other comprehensive income
Foreign translation (charge)/gain
Other comprehensive income for the year,
net of tax
Total comprehensive income attributable to
the owners of the parent company
2020
12,481
14,982
6,717
(4,823)
(1,276)
(58)
916
80
5,383
(3,827)
20,365
8,654
JAMES LATHAM PLC ANNUAL REPORT 2021
41
Financial Statements
Consolidated and Company Balance Sheet
As at 31 March 2021
£’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
2021
2020
2021
2020
10
11
12
13
14
15
16
17
14
18
19
19
14
20
21
15
-
872
1,655
35,342
4,064
534
42,467
48,262
48,003
28,618
-
872
1,822
35,952
4,895
2,258
45,799
9,613
-
-
9,613
-
-
18 21
791 812
-
23
10,445
10,446
44,288
-
47,046 3,992
168
16,950
-
3,221
929
4,150
124,883
108,284
4,160
167,350
154,083
14,605
14,596
1,123
34,761
-
-
1,178
28,686
-
-
35,884
29,864
592
3,137
2,561
592
3,857
11,812
21 392
3,289
3,339
9,650
45,534
19,942
49,806
10
1,193
1,807
-
3,010
13
1,131
-
-
1,144
592
592
808
799
-
-
- 59
- 15
1,391
4,401
1,474
2,618
121,816
104,277
10,204
11,978
5,040
25
5,040
167
5,040
22
167 25
23
24 (471) (619) (471) (619)
395
7,137
398
116,682
398
99,433
395
5,073
5,040
Total equity attributable to
shareholders of the parent company
121,816
104,277
10,204
11,978
The Company’s profit for the year was £1,052,000 (2020: £2,971,000).
These accounts were approved and authorised for issue by the Board of Directors on 23 June 2021 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 2021
Financial Statements
Consolidated Statement of Changes in Equity
Attributable to owners of the parent company
Issued
capital
£’000
5,430
-
Share-based
payment
reserve
£’000
Own
shares
£’000
259 (923)
-
-
Capital
reserve
£’000
3
-
Retained
earnings
£’000
93,427
12,481
Total
equity
£’000
98,196
12,481
- - (4,823) (4,823)
-
-
-
-
-
-
-
-
Balance at 1 April 2019
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 credit
-
-
-
Total comprehensive income for the year
Transactions with owners:
-
-
-
Dividends
- (253) (261)
Exercise of options
- (45)
Deferred tax on share options
-
-
Purchase of preference shares
-
5
Cancellation of preference shares (395)
- 478
- 87
-
Change in investment in ESOP shares
-
-
Share-based payment expense
64
- 916 916
- 80 80
-
8,654
8,654
- (3,633) (3,633)
-
1,463 949
- (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)
398
99,433
104,277
Profit for the year
Other comprehensive income:
Actuarial gain on defined benefit
pension scheme
Deferred tax relating to components
of other comprehensive income
Foreign translation charge
Total comprehensive income for the year
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
14,982
14,982
6,717
6,717
- (1,276) (1,276)
- (58) (58)
-
20,365
20,365
Transactions with owners:
Dividends
Exercise of options
Deferred tax on share options
Share-based payment expense
-
-
-
- (20) 148
-
-
-
-
6
156
- (3,121) (3,121)
-
133
6
-
156
-
5
-
-
Total transactions with owners
- 142
148
- (3,116) (2,826)
Balance at 31 March 2021
5,040
167 (471)
398
116,682
121,816
JAMES LATHAM PLC ANNUAL REPORT 2021
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
259 (923)
-
6,814
11,580
-
-
-
-
- 2,971 2,971
-
2,971
2,971
Issued
capital
£’000
5,430
-
-
Balance at 1 April 2019
Profit for the year
Total comprehensive income
for the year
Transactions with owners:
Dividends
-
-
Exercise of options
- (253) (261)
- (45)
Deferred tax on share options
-
-
-
5
Purchase of preference shares
- 478
Cancellation of preference shares (395)
87
-
-
Change in investment in ESOP shares
-
64
-
Share-based payment expense
-
- (3,633) (3,633)
1,463 949
-
- (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
Profit for the year
Total comprehensive income for the year
-
-
-
-
-
-
-
-
1,052
1,052
1,052 1,052
Transactions with owners:
Dividends
Exercise of options
Deferred tax on share options
Share-based payment expense
-
-
-
- (20) 148
-
-
-
-
6
156
- (3,121) (3,121)
5
-
133
6
-
-
156
-
-
Total transactions with owners
- 142 148
- (3,116) (2,826)
Balance at 31 March 2021
5,040
167 (471)
395
5,073
10,204
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 2021
Financial Statements
Consolidated and Company Cash Flow Statement
For the year ended 31 March 2020
Group
Company
£’000s
Notes
2021
2020
2021
2020
Net cash flow from operating activities
Cash generated from operations
Interest paid
Income tax paid
25
21,374
13,528 (3,238) 751
(51) (51) (48) (48)
(3,191) (3,851) (3) (943)
Net cash inflow/(outflow) from operating activities
18,132
9,626 (3,289) (240)
Cash flows from investing activities
Interest received and similar income
Dividend received
Acquisition of businesses
Purchase of property, plant and equipment
Proceeds from sale of property, plant
and equipment
11
-
15
4,806
- (578) - -
(1,968) (3,886) - (11)
5
3,850
82
-
8 152 - -
Net cash (outflow)/inflow from investing activities
(1,949) (4,230)
3,855
4,810
Cash flows from financing activities
Sale of treasury shares
1,036
Lease liability payments (1,394) (1,390) (13) (18)
Equity dividends paid (3,121) (3,633) (3,121) (3,633)
1,036
-
-
Net cash outflow from financing activities
(4,515) (3,987) (3,134) (2,615)
Increase/(decrease) in cash and cash
equivalents for the year
Cash and cash equivalents at
beginning of year
11,668
1,409 (2,568)
1,955
16,950
15,541
929 (1,026)
Cash and cash equivalents at end of year
28,618
16,950 (1,639)
929
Balance sheet cash and cash equivalents
Bank overdraft in current liabilities (note 19)
28,618
-
16,950
168
- (1,807)
929
-
Cash and cash equivalents at end of year
28,618
16,950 (1,639)
929
JAMES LATHAM PLC ANNUAL REPORT 2021
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
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 Accounting
Standards in conformity with the requirements of the
Companies Act 2006.
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 standards that are effective
for the current year
A number of new or amended standards became applicable
for the current reporting period and as a result the group
and company has applied the following standards:
- Amendments to IFRS 9, IAS 39 and IFRS 7: Interest Rate
Benchmark Reform.
- Amendments to IAS 1 and IAS 8: Definition of Material.
- Amendments to References to the Conceptual Framework
in IFRS Standards.
The above requirements did not have a material impact on
the financial statements of the group or company.
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 16: COVID-19 related rent
concessions (effective for periods commencing on or
after 1 June 2020).
- Amendments to IFRS 9, IAS 39, IFRS 7 and IFRS 16:
Interest Rate Benchmark Reform, phase 2 (effective for
periods commencing on or after 1 January 2021).
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 or Company’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.
For our credit customers, the payment falling will be due
under our standard payment terms and any outstanding
balance shown in trade receivables.
46
JAMES LATHAM PLC ANNUAL REPORT 2021
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.
1.2 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 Functional and presentational currency
The presentation currency of the Group is Sterling.
All Group companies have a functional currency of
Sterling (other than Abbey Wood Agencies Limited which
has a functional currency of the Euro) consistent with
the presentation currency of the Group’s consolidated
financial statements.
Amounts presented in these financial statements have
been rounded to the nearest £’000.
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:
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.
Estimated residual values and useful lives are reviewed
annually and adjusted where necessary.
JAMES LATHAM PLC ANNUAL REPORT 2021
47
Financial Statements
Notes forming part of the Group Accounts
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 2021 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.
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.
48
JAMES LATHAM PLC ANNUAL REPORT 2021
Financial Statements
Notes forming part of the Group Accounts
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.
1.13 Leased assets
The Group as a Lessee
For any new contracts entered into, 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.
Where leases are twelve months or less or of low value,
payments made are expensed evenly over the period of
the lease.
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.
1.15 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 2021, 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.
JAMES LATHAM PLC ANNUAL REPORT 2021
49
Financial Statements
Notes forming part of the Group Accounts
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.
1.20 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. 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.
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.
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 Government grants
Grants received from the government are recognised
at their fair value where there is reasonable assurance
that the grant will be received and the group will comply
with all attached conditions. Government grants in
respect of the Coronavirus Job Retention Scheme (“CJRS”)
are recognised in the period to which the underlying
staff costs relate to. The Group has elected to deduct the
amount received in respect of CJRS against the related
staff cost expense (see note 4).
50
JAMES LATHAM PLC ANNUAL REPORT 2021
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
2021
£’000
2020
£’000
8,731
62
47
241,322
8,702
80
276
238,042
250,162
247,100
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
Profit for the year has been arrived at after taking account the following charges/(credits):
Employee remuneration (note 4)
Net foreign exchange (gains)/losses
Cost of inventories recognised as an expense and included
in ‘cost of sales’ in the consolidated income statement
Government grants from furlough scheme (note 4)
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)
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
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
2021
£’000
19,153
(292)
2020
£’000
19,126
30
193,685
(1,195)
2,576
1,290
192,524
-
2,280
1,343
(6) (121)
167
167
10 10
83
9
11
15,631
231,122
83
6
11
15,644
231,103
JAMES LATHAM PLC ANNUAL REPORT 2021
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:
Group
Company
2021
Number
2020
Number
2021
Number
2020
Number
Management and administration
Warehousing
Selling
Distribution
66
161
137
77
441
65
146
146
75
432
26
-
-
-
26
The aggregate payroll costs of these
employees were as follows:
£’000
£’000
£’000
16,424
Wages and salaries
1,695
Social security costs
58
Apprenticeship levy
Pension costs
2,015
Government grants from furlough scheme (1,195)
156
Share-based payment
15,511
1,631
59
1,861
1,577
181
6
3,259
- (12)
156
64
19,153
19,126
5,167
26
-
-
-
26
£’000
1,419
181
5
2,255
-
64
3,924
Of the above payroll costs, £4,938,000 (2020: £4,803,000) is included in cost of sales, £9,099,000 (2020: £9,859,000) is
included in selling and distribution costs, and £5,116,000 (2020: £4,464,000) is included in administrative expenses in
the income statement.
The UK governement has offered a range of financial support packages to help companies affected by COVID-19.
The Group has elected to deduct the grants from the furlough scheme in reporting the related cost of sales, selling
and distribution and administrative expenses.
5. Finance income
Interest receivable
The interest received is on bank deposits.
2021
£’000
11
2020
£’000
82
52
JAMES LATHAM PLC ANNUAL REPORT 2021
Financial Statements
Notes forming part of the Group Accounts
2021
£’000
2020
£’000
3
3
242 179
160 187
48
48
6. Finance costs
On bank loans and overdrafts
On pension liability
Interest on lease liabilities
On 8% Cumulative Preference shares
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.
453
417
7. Tax expense
The charge for taxation on profit comprises:
Current year:
UK corporation tax at 19% (2020: 19%)
Deferred taxation - post employment benefits
- change in tax rates
- other
Profit before taxation
Tax at 19% (2020: 19%)
2021
£’000
2020
£’000
-
3,112
2,555
454 366
117
50 143
3,616
18,598
3,534
3,181
15,662
2,976
Tax effect of expenses/credits that are not deductible/
taxable in determining taxable profit
(93)
IBAs derecognised in current year (17) (16)
117
Change in tax rates
197
Other
-
40
59
Total tax charge
3,616
3,181
The change in tax rates in the previous year is based on the future corporation tax rate increasing from 17% to 19%.
JAMES LATHAM PLC ANNUAL REPORT 2021
53
Financial Statements
Notes forming part of the Group Accounts
8. Dividends
2021 2020
Ordinary dividends:
Final 10.0p per share paid 4 September 2020 (2019: 12.9p)
Interim 5.7p per share paid 29 January 2021 (2020: 5.5p)
1,987
1,134
2,541
1,092
£’000
£’000 £’000 £’000
3,121 3,633
The Directors propose a final dividend for 2021 of 15.5p per share, that, subject to approval by the shareholders,
will be paid on 27 August 2021 to shareholders on the register on 6 August 2021.
Based on the number of shares currently in issue, the final dividend for 2021 is expected to absorb £3,082,000.
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.
2021
Number
’000
2020
Number
’000
Issued ordinary share capital
20,160
Less: weighted average number of own shares held in treasury (259) (359)
Less: weighted average number of own shares held in ESOP Trust (19) (20)
20,160
Weighted average share capital
Add: dilutive effects of share options issued
Weighted average share capital for diluted earnings per ordinary
share calculation
19,882
31
19,781
23
19,913
19,804
54
JAMES LATHAM PLC ANNUAL REPORT 2021
Financial Statements
Notes forming part of the Group Accounts
10. Fixed asset investments – Company
Shares:
At 1 April 2019, 2020 and 31 March 2021
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%
James Latham Trustee Limited
England and Wales
£1 Ordinary
100%
Importing and
distribution of timber
and panel products
Importing and
distribution of timber
and panel products
Corporate Trustee
Company
LDT Westerham Limited
England and Wales
£1 Ordinary
Baüsen Limited
England and Wales
£1 Ordinary
James Latham (Midland and Western) Limited* England and Wales
£1 Ordinary
Advanced Technical Panels Limited*
England and Wales
£1 Ordinary
Latham Timber Centres (Bridgwater) Limited England and Wales
£1 Ordinary
James Latham (Warehousing) Limited
England and Wales
£1 Ordinary
Dresser Mouldings (Rochdale) Limited*
England and Wales
£1 Ordinary
100%
100%
100%
100%
100%
100%
100%
Dormant
Dormant
Dormant
Dormant
Dormant
Dormant
Dormant
* 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 2019
Additions
At 1 April 2020
Additions
At 31 March 2021
Impairment
At 1 April 2019, 31 March 2020 and 31 March 2021
Net book value
At 31 March 2021
At 31 March 2020
At 31 March 2019
Goodwill
£’000
648
349
997
-
997
125
872
872
523
JAMES LATHAM PLC ANNUAL REPORT 2021
55
Financial Statements
Notes forming part of the Group Accounts
11. Goodwill (continued)
Goodwill of £349,000 arose upon the acquisition of the shares and assets of Dresser Mouldings (Rochdale) Limited.
The date of acquisition was 31 October 2019 and was satisfied via net cash consideration of £578,000 and included
Property Plant and Equipment acquired of £218,000.
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 is 6% (2020: 6%) which is derived from the group’s estimated weighted average cost of capital.
The key assumptions in the impairment review used a growth rate of 5.5%, (2020: 5%) with a perpetuity rate of 2%
(2020: 2%).
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 2019, 2020 and 31 March 2021
Amortisation
At 1 April 2019
Charge for the year
At 1 April 2020
Charge for the year
At 31 March 2021
Net book value
At 31 March 2021
At 31 March 2020
At 31 March 2019
Trademark
£’000
Customer
Lists
£’000
Total
£’000
1
-
-
-
-
-
1
1
1
2,016
2,017
28
167
195
167
362
1,654
1,821
1,988
28
167
195
167
362
1,655
1,822
1,989
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. 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 2021
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 2019
Additions
Acquisition
Disposals
At 1 April 2020
Additions
Disposals
At 31 March 2021
Depreciation:
At 1 April 2019
Acquisition
Disposals
Charge for the year
At 1 April 2020
Disposals
Charge for the year
At 31 March 2021
Net book value
At 31 March 2021
At 31 March 2020
At 31 March 2019
28,754
944
-
-
29,698
472
-
30,170
46,473
3,886
549
- (1,421) (1,421)
17,104
2,942
549
615
-
-
49,487
615
-
1,968
- (174) (174)
19,174
1,496
615
20,496
51,281
399
-
3,392
12,314
333
-
- - (1,392) (1,392)
2,280
8,523
333
1,834
408
38
3,800
-
501
4,301
25,869
25,898
25,362
437
9,298
13,535
- (172) (172)
37 2,038 2,576
474
11,164
15,939
141
178
216
9,332
9,876
8,581
35,342
35,952
34,159
Included in freehold property is land with a book value of £8,519,000 (2020: £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
2021
£’000
1,650
789
137
2,576
2020
£’000
1,427
750
103
2,280
JAMES LATHAM PLC ANNUAL REPORT 2021
57
Financial Statements
Notes forming part of the Group Accounts
13.2 Company
Cost:
At 1 April 2019
Additions
At 1 April 2020
Additions
At 31 March 2021
Depreciation:
At 1 April 2019
Charge for the year
At 1 April 2020
Charge for the year
At 31 March 2021
Net book value
At 31 March 2021
At 31 March 2020
At 31 March 2019
Plant, equipment and vehicles
£’000
363
11
374
-
374
350
3
353
3
356
18
21
13
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
1-54 years
1-4 years
2021
Average
remaining
lease
8 years
2 years
2020
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 2021
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:
Company
Property
£’000
Vehicles
£’000
Total
£’000
Cost:
At 1 April 2019
Additions
Acquisitions
At 1 April 2020
Additions
Disposals
Group
Vehicles
£’000
831
246
-
Property
£’000
4,141
-
1,020
Total
£’000
4,972
246
1,020
5,161
242
1,077
217
6,238
459
- (97) (97)
At 31 March 2021
5,403
1,197
6,600
Depreciation:
At 1 April 2019
Charge for the year
At 1 April 2020
Charge for the year
Disposals
At 31 March 2021
Balance sheet value
At 31 March 2021
At 31 March 2020
At 31 March 2019
-
896
-
447
-
1,343
896
903
1,343
1,290
- (97) (97)
447
387
1,799
737
2,536
3,604
4,265
-
460
630
-
4,064
4,895
-
816
-
-
816
-
-
816
-
15
15
14
-
29
787
801
-
29
-
-
29
-
-
29
-
18
18
7
-
25
4
11
-
The depreciation charge is included in the income statement as follows:
Cost of sales
Selling and distribution costs
Administrative expenses
Group
Company
2021
£’000
903
321
66
1,290
2020
£’000
896
380
67
1,343
2021
£’000
-
-
33
33
845
-
-
845
-
-
845
-
33
33
21
-
54
791
812
-
2020
£’000
-
-
21
21
JAMES LATHAM PLC ANNUAL REPORT 2021
59
Financial Statements
Notes forming part of the Group Accounts
14. Leases (continued)
b) Lease liabilities
Lease liabilities are presented in the balance sheet as follows:
Current
Non-current
Group
Company
2021
£’000
1,123
3,137
4,260
2020
£’000
1,178
3,857
5,035
2021
£’000
10
799
809
2020
£’000
13
808
821
The lease liabilities are secured by the related underlying assets. The undiscounted maturity analysis of lease
liabilities at 31 March 2021 is as follows:
Within
1 year
£’000
1-2 years
£’000
2-5 years
£’000
5-10 years
£’000
over
10 years
£’000
2021
2020
Total
£’000
Total
£’000
Lease payments
6,273
Finance values (124) (90) (148) (162) (602) (1,126) (1,238)
5,386
1,003
1,246
1,066
1,337
734
Net present values
1,122
976
855
572
735
4,260
5,035
At 31 March 2021 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
2021
£’000
104
2020
£’000
245
A total of £1,394,000 (2020: £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
The directors consider that the carrying amount of right of use assets and lease liabilities approximates their fair value.
60
JAMES LATHAM PLC ANNUAL REPORT 2021
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
Roll over
gains on
assets
£’000
Other (*)
£’000
Intangible
assets
£’000
Total
£’000
1,577
As at 1 April 2019 asset
As at 1 April 2019 liability
(Charge)/credit to the income statement (366)
Change in tax rates in income statement
Credit to other comprehensive
income and equity
Acquisitions
873
-
-
1,577
-
- (1,577) (842) (343) (2,762)
40 (509)
- (117)
- (183)
174 (185) (106)
-
- (55)
- (38)
-
818
- (38)
At 31 March 2020 asset
At 31 March 2020 liability
2,258
2,258
- (1,762) (1,224) (303) (3,289)
-
-
-
Credit/(charge)to the income statement (454)
Charge to other comprehensive
income and equity (1,270)
At 31 March 2021 asset
At 31 March 2021 liability
- (39) (11) (504)
-
-
-
-
- (1,270)
-
534
534
- (1,762) (1,263) (314) (3,339)
* 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 2019
Charge to the income statement
Credit to other comprehensive income and equity
At 31 March 2020
Credit to the income statement
Credit to other comprehensive income and equity
Post-
employment
benefits
£’000
Accelerated
capital
allowances
£’000
Total
£’000
2
96
94
(36)
- (36)
(46) (29) (75)
27
6
12 (27) (15)
5
-
32
6
At 31 March 2021
45 (22) 23
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.
JAMES LATHAM PLC ANNUAL REPORT 2021
61
Financial Statements
Notes forming part of the Group Accounts
16. Inventories
2021
£’000
2020
£’000
Finished goods and goods for resale
45,101
Less: provisions for slow moving and obsolete stock (1,114) (813)
49,376
48,262
44,288
The inventories impairment charge for the year ended 31 March 2021 was £812,000 (2020: £672,000).
Impairment charges reversed during the year were £517,000 (2020: £516,000). 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).
The Company has no inventory
17. Trade and other receivables
Group
Company
Trade receivables
Other receivables:
Other receivables
Amounts owed by subsidiaries
Tax receivable
Prepayments
2021
£’000
44,645
1,658
-
182
1,518
3,358
2020
£’000
43,545
1,438
-
103
1,960
3,501
48,003
47,046
2021
£’000
3
-
631
3,331
27
3,989
3,992
2020
£’000
3
2
439
2,720
57
3,218
3,221
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 £161,000(2020: £383,000). 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 (2020: nil).
At 31 March 2021, £44,215,000 (2020: £42,353,000) of trade and other receivables were denominated in sterling,
£2,003,000 (2020: £2,386,000) were denominated in Euros and £85,000 (2020: £244,000) were denominated in US
dollars The Company balances are all denominated in sterling.
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 £209,000 (2020: £263,000).
62
JAMES LATHAM PLC ANNUAL REPORT 2021
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
2021
£’000
23,461
6,376
-
2,308
2,616
34,761
2020
£’000
20,126
5,161
-
1,107
2,292
28,686
2021
£’000
39
571
1
425
157
2020
£’000
53
685
7
268
118
1,193
1,131
Trade and other payables principally comprise amounts outstanding for trade purchases and ongoing costs.
The average credit period taken for trade purchases is 35 days (2020: 29 days). The directors consider that the
carrying amount of trade payables approximates to their fair value.
At 31 March 2021, £23,392,000 (2020: £17,542,000) of trade and other payables were denominated in sterling,
£1,553,000 (2020: £2,041,000) in US dollars, £762,000 (2020: £1,627,000) in Euros and £62,000 (2020: £23,000) 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 £238,000 (2020: £369,000).
19. Interest bearing loans and borrowings
Group
Company
Current liabilities
Bank overdraft
Non-current liabilities
Cumulative preference shares
of £1 each (note 21)
Total
2021
£’000
-
-
592
592
2020
£’000
-
-
592
592
2021
£’000
1,807
1,807
592
592
2020
£’000
-
-
592
592
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.
JAMES LATHAM PLC ANNUAL REPORT 2021
63
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
2021
£’000
2,561
2020
£’000
11,812
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. 53% of the assets
are invested in equities, with 43% under passive management by Blackrock and 10% in a Multi-Asset Credit fund
managed by Wellington. 45% are held in bonds and gilts, with 21% in a Buy and Maintain Fund managed by Mercers,
8% in an Absolute Return Fund managed by Wellington and 8% in an Index Linked fund managed by Blackrock, with
the remaining 8% in a HLV Property Fund managed by Aviva and 2% 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 £2,015,000 (2020: £1,861,000). Of the charge, £366,000
(2020: £316,000) is included in cost of sales, £948,000 (2020: £946,000) is included in selling and distribution costs,
and £701,000 (2020: £599,000) 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 2020. 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 2020 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.
64
JAMES LATHAM PLC ANNUAL REPORT 2021
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 defined benefit obligation of £71,364,000 (2020: £69,995,000) includes £18,179,000 (2020: £18,706,000) in relation to
active members, £15,042,000 (2020: £15,729,000) in relation to deferred members and £38,143,000 (2020: £35,560,000)
in relation to members in retirement.
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.
2021
£’000
2020
£’000
Change in benefit obligation
69,819
Benefit obligation at beginning of year
636
Service cost
-
Past service cost
1,647
Interest cost
Actuarial loss
279
Benefits paid (3,243) (2,361)
Premiums paid (26) (25)
69,995
583
142
1,641
2,272
Benefit obligation at end of year
Analysis of defined benefit obligation
Schemes that are wholly or partly funded
71,364
71,364
69,995
69,995
Change in scheme assets
61,105
Fair value of scheme assets at beginning of year
Interest income
1,468
Return on plan assets (excluding interest income) 8,989 (4,544)
Employers contributions (incl. employer direct benefit payments)
2,540
Benefits paid from plan (3,243) (2,361)
Expenses paid (26) (25)
58,183
1,399
3,501
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
68,803
71,364
68,803
2,561
58,183
69,995
58,183
11,812
JAMES LATHAM PLC ANNUAL REPORT 2021
65
Financial Statements
Notes forming part of the Group Accounts
20.2. Group defined benefit pension scheme (continued)
2021
£’000
2020
£’000
Components of pension expense
636
Current service cost
-
Past service cost
Interest cost
1,647
Income on plan assets (1,399) (1,468)
583
142
1,641
Total pension expense recognised in the income statement
967 815
Actuarial (gain) immediately recognised (6,717) 4,823
Total recognised in the statement of other Comprehensive income (6,717) 4,823
Cumulative amount of actuarial loss immediately recognised
9,650
16,367
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
2021
2020
52.5%
37.8%
8.3%
1.5%
100.0%
2021
£’000
36,088
25,982
5,687
1,046
68,803
47.5%
41.8%
9.5%
1.2%
100.0%
2020
£’000
27,640
24,332
5,545
666
58,183
Equity instruments, bond instruments and property occupied are held in pooled investment vehicles with quoted
market prices.
66
JAMES LATHAM PLC ANNUAL REPORT 2021
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
2021
2.10%
3.80%
3.30%
2.80%
2.70%
22.5
24.6
23.8
25.8
2.10%
3.80%
2020
2.40%
3.10%
2.60%
2.10%
2.15%
23.5
25.5
24.9
27.0
2.40%
3.20%
Sensitivity analysis of the key assumptions
The main exposures of the defined benefit obligations relate to the volatility in the carrying value of the assets and
liabilities. The valuation of the scheme’s assets is dependant on the volatility of market conditions. 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
(2,912)
Discount rate increases by 0.25%
2,213
Inflation rate increases by 0.25%
Life expectancy increases by one year 3,302
History of plan assets and defined benefit obligation
Present value of defined benefit obligation
Fair value of plan assets
Net liability
2021
£’000
71,364
68,803
2,561
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
8,382
16,625
Contributions
The group expects to contribute £3,663,000 to the pension scheme for the year ending 31 March 2022.
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 £1,280,000 (2020: £1,248,000).
JAMES LATHAM PLC ANNUAL REPORT 2021
67
Financial Statements
Notes forming part of the Group Accounts
21. Other payables (non-current liabilities)
Other taxation and social security
Other payables
Group
Company
2021
£’000
-
21
21
2020
£’000
47
345
392
2021
£’000
-
-
-
2020
£’000
7
52
59
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
2021, 2020 and 2019
Preference shares
Authorised Issued
8% Cumulative Preference Shares of £1 each
Number
£’000
Number
£’000
At 1 April 2019
Cancelled during the year
At 31 March 2020 and 2021
Share Capital
Ordinary share capital
1,500,000
-
1,500
987
- (395,000) (395)
987,000
1,500,000
1,500
592,000
592
2021
£’000
5,040
5,040
2020
£’000
5,040
5,040
All issued ordinary shares are fully paid and are freely transferrable. Rights and obligations attaching to the
shares are set out in the Company’s Articles of Association.
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
2021 or 2020.
68
JAMES LATHAM PLC ANNUAL REPORT 2021
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:
2021
2020
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
245,658
206,128
(20,677) 7.17 (3,509)
(16,885) 5.30 (174,963)
273,314
17,226
7.18
9.25
Outstanding at the end of the year
252,978
7.45
273,314
5.83
7.42
6.92
5.57
7.18
The weighted average share price for options exercised during the year was £9.04 (2020: £8.47).
Details of the options outstanding at 31 March 2021 are shown below. 6,000 (2020: 13,000) of these options were
exercisable at the year end.
Range of exercise prices
Number of shares
Weighted average expected
remaining life (years)
2021
2020
CSOP
£1.65-£9.65
81,093
SAYE
£7.27
171,885
CSOP
SAYE
£1.65-£9.65
80,080
£7.27
193,234
3.0
1.9
3.0
2.9
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:
Share price at grant date
Option exercise price
Expected volatility
Option life
Risk free interest rate
Fair value
CSOP
£9.25
£9.25
64.4%
5 years
0.20%
£4.91
2021
SAYE
-
-
-
-
-
-
2020
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
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.
The group recognised total expenses of £156,000 (2020: £64,000) 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 2021 was 155,241 (2020: 161,168).
JAMES LATHAM PLC ANNUAL REPORT 2021
69
Financial Statements
Notes forming part of the Group Accounts
24. Own shares
Ordinary shares
£’000
Preference shares
£’000
Total
£’000
At 1 April 2019
Cost
Cancellation of treasury shares
Transfer to employees 174
445
923
- (478) (478)
- 174
478
At 31 March 2020
619
-
619
Transfer to employees (148)
- (148)
At 31 March 2021
471
-
471
The investment in own shares represents 10,222 25p Ordinary shares (2020: 28,246 25p Ordinary shares) held on
behalf of the James Latham plc Employee Benefits Trust, a discretionary trust. This represents 0.03% (2020: 0.1%) 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 2021 259,200 (2020: 259,200) 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.
25. Cash generated from operations
Profit before tax
18,598
15,662 (3,415) (2,160)
Group
Company
2021
£’000
2020
£’000
2021
£’000
2020
£’000
335 20 (15)
Adjustment for finance income and expense
22
25
Depreciation and amortisation
3,790
Profit on disposal of property, plant and equipment (6) (121)
-
-
Increase in inventories (3,974) (1,659)
-
-
(Increase)/decrease in receivables (878) (3,963) (12) 2,773
5,779 1,324 (12) 67
Increase/(decrease) in payables
Retirement benefits (2,776) (1,904)
-
64
64
Share-based payments non cash amounts
442
4,033
-
156
156
Cash generated from operations
21,374
13,528 (3,238) 751
70
JAMES LATHAM PLC ANNUAL REPORT 2021
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 2019
Cash flow
Discount unwind on lease liabilities
15,541 (6,238) (597) 8,706
5
2,804
- (187)
1,409
1,390
- (187)
At 31 March 2020 16,950 (5,035) (592) 11,323
Additions in the year
-
-
-
Cash flow 11,668
13,062
- (160)
Discount unwind on lease liabilities
-
-
Non cash movement on pension scheme liability
- (459)
1,394
- (160)
-
-
At 31 March 2021
28,618 (4,260) (592)
24,225
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
2021
£’000
1,052
125
146
11
1,334
2020
£’000
953
119
103
8
1,183
There are 4 (2020: 4) directors to whom retirement benefits are accruing under defined benefit schemes, and 4 (2020: 4)
directors that exercised share options during the year.
Emoluments for the highest paid director totalled £261,000 (2020: £238,000). The highest paid director exercised
586 CSOP share options during the year at a gain of £1,422. The highest paid director had an accrued defined benefit
pension of £64,000 (2020: £63,000) 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 (2020: nil).
• Receiving an annual management charge to cover services provided of £2,559,000 (2020: £2,492,000).
• 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.
JAMES LATHAM PLC ANNUAL REPORT 2021
71
Financial Statements
Notes forming part of the Group Accounts
27. Capital commitments
At 31 March 2021, there were capital commitments contracted for but not provided in the accounts of £2,077,000
(2020: £876,000).
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 pages 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
2021
Trade payables
Accruals
Other payables
Lease liabilities
Total
2020
Trade payables
Accruals
Other payables
Lease liabilities
Total
Less than
6 months
£’000
Between
6 months
and 1 year
£’000
Between
1 and
5 years
£’000
More than
5 years
£’000
23,461
2,616
2,308
623
29,008
20,126
2,292
1,107
665
24,190
-
-
-
623
623
-
-
-
664
664
Total
£’000
23,461
2,616
2,329
5,386
-
-
21
2,069
-
-
-
2,071
2,090
2,071
33,792
-
-
345
2,843
-
-
-
2,101
20,126
2,292
1,452
6,273
3,188
2,101
30,143
COMPANY
2021
Trade payables
Accruals
Amounts owed to Subsidiaries
Other payables
Lease liabilities
Bank overdraft
Total
2020
Trade payables
Accruals
Amounts owed to Subsidiaries
Other payables
Lease liabilities
Bank overdraft
Total
Less than
6 months
£’000
Between
6 months
and 1 year
£’000
Between
1 and
5 years
£’000
More than
5 years
£’000
39
157
1
425
19
1,807
2,448
53
118
7
268
19
-
465
-
-
-
-
15
-
15
-
-
-
-
19
-
19
-
-
-
-
121
-
121
-
-
-
52
125
-
177
-
-
-
-
1,488
-
1,488
-
-
-
-
1,518
-
1,518
Total
£’000
39
157
1
425
1,643
1,807
4,072
53
118
7
320
1,681
-
2,179
72
JAMES LATHAM PLC ANNUAL REPORT 2021
Financial Statements
Notes forming part of the Group Accounts
28. Financial instruments (continued)
Foreign currency risk
Approximately 39% 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 2021 was £7,000 in US Dollars (2020 £86,000), £244,000 in
Euros (2020: £316,000) and £29 in Canadian dollars (2020: £258) 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 £25,000 (2020: £40,000).
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
2021
£’000
2020
£’000
2021
£’000
2020
£’000
Fixed rate instruments
Cumulative preference shares of £1 each (592) (592) (592) (592)
Variable rate instruments
Cash and cash equivalents
Bank overdraft
28,618
-
16,950
168
- 1,807
929
-
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 £286,000 (2020: £170,000)
in the group and £20,000 (2020: £9,000) in the company.
JAMES LATHAM PLC ANNUAL REPORT 2021
73
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 a minimal figure of sales this year, compared with our
target of 0.4%. Under 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. Also under 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
2021
£’000
44,645
1,658
-
28,618
74,921
2020
£’000
43,545
1,438
-
16,950
61,933
2021
£’000
3
-
631
168
802
2020
£’000
3
2
439
929
1,373
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
2021
£’000
23,461
2,329
-
2,616
-
28,406
2020
£’000
20,126
1,452
-
2,292
-
23,870
2021
£’000
39
425
1
157
1,807
2,429
2020
£’000
53
320
7
118
-
498
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.
74
JAMES LATHAM PLC ANNUAL REPORT 2021
Notice of Annual General Meeting
Notice is hereby given that the one hundred and twenty
second Annual General Meeting of the Company will be held at
Unit 1 Swallow Park, Finway Road, Hemel Hempstead, Herts,
HP2 7QU on Wednesday 25 August 2021 at 12.00pm. Resolutions
1 to 8 inclusive will be proposed as ordinary resolutions, and
resolutions 9 and 10 will be proposed as special resolutions.
The board continues to monitor closely the restrictions
caused by the COVID-19 pandemic. Our preference is to
welcome shareholders to this years AGM, especially given that
shareholders were prevented from attending last year. Subject
to Public Health England guidance the Annual General Meeting
will be held in person but an announcement will be made to
the Stock Exchange should guidance change which places
restrictions over the holding of the AGM.
Ordinary business
1. To receive and adopt the Directors’ Report and Accounts for
the year ended 31 March 2021 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 David Dunmow as a director, who retires
by rotation.
6. To re-elect Andrew Wright as a director, who retires
by rotation.
7. 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.
Other business
8. 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.”
9. Disapplication of pre-emption rights: To consider, and
if thought fit, pass the following resolution: “THAT subject
to the passing of the previous Resolution 8, 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 8:
(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.”
10. 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
23 June 2021
JAMES LATHAM PLC ANNUAL REPORT 2021
75
Notice of Annual General Meeting
Notes:
The Report and Accounts are sent to all members of the Company.
Holders of preference shares are not entitled to be present,
either personally or by proxy, or to vote at any general meeting
so long as the dividends on such preference shares are regularly
paid or unless a resolution is to be proposed for winding up
the Company, reducing its capital or selling its undertaking or
adversely affecting the rights of the holders of preference shares.
A member entitled to attend and vote at the above Meeting
is entitled to appoint one or more proxies to attend, speak
and vote on his/her behalf. A proxy need not be a member of
the Company.
Any corporation which is a member can appoint one or more
corporate representatives who may exercise on its behalf all of
its powers as a member provided that they do not do so in
relation to the same shares.
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.
Copies of directors’ contracts of service, the register of interests
of directors, the Company’s memorandum of association and
the articles of association will be available for inspection at the
Registered Office during normal business hours from the date of
the above notice until the close of 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 12.00pm
on Monday 23 August 2021 are entitled to attend and 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 attend and vote at the adjourned meeting.
At 23 June 2021, 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, subject to
opening an account at www.computershare.trade, 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.computershare.
trade. 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 2021
James Latham Locations
1
2
3
4
4
5
6
7
8
9
• •
James Latham Dudley
T: 01384 234444
F: 01384 233121
E-mail: panels.dudley@lathams.co.uk
timber.dudley@lathams.co.uk
James Latham Fareham
T: 01329 854800
E-mail: panels.fareham@lathams.co.uk
timber.fareham@lathams.co.uk
• •
James Latham Gateshead
T: 0191 469 4211
F: 0191 469 2615
E-mail: panels.gateshead@lathams.co.uk
timber.gateshead@lathams.co.uk
• •
James Latham Leeds
T: 0113 387 0830
F: 0113 387 0855
E-mail: leeds@lathams.co.uk
• •
ATP (Advanced Technical Panels)
T: 0113 387 0850
F: 0113 387 0855
E-mail: atp@lathams.co.uk
•
James Latham Scotland
T: 01698 838777
F: 01698 831452
Email: scotland@lathams.co.uk
• •
James Latham Leicester
T: 0116 288 9161
F: 0116 281 3806
E-mail: panels.leicester@lathams.co.uk
timber.leicester@lathams.co.uk
• •
• •
James Latham Yate
T: 01454 315421
F: 01454 323488
E-mail: panels.yate@lathams.co.uk
timber.yate@lathams.co.uk
James Latham Hemel Hempstead
T: 01442 849000
F: 01442 239287
E-mail: panels.hemel@lathams.co.uk
•
James Latham Thurrock
T: 01708 869800
F: 01708 860900
E-mail: panels.thurrock@lathams.co.uk
•
10
James Latham Purfleet
T: 01708 864477
F: 01708 862727
E-mail: timber.purfleet@lathams.co.uk
•
KEY:
•
•
PANEL PRODUCTS
TIMBER PRODUCTS
Distribution
facilities
1
2
3
Port Of Tilbury
Port of Liverpool
Port of Grangemouth
SCOTLAND
5
3
3
GATESHEAD
3
LDT
NAUL
17
ABBEY WOODS DUBLIN 13
LEEDS 4
DRESSER MOULDINGS 15
12
2
2
MANCHESTER SHOWROOM
LEICESTER 6
DUDLEY
1
ABBEY WOODS CORK 14
HEMEL HEMPSTEAD 8
YATE 7
LONDON SHOWROOM 11
LDT 16
9
10
THURROCK
PURFLEET
1
1
FAREHAM 2
11
12
13
James Latham -
Product Specification Showroom
London
Suite 301, Business Design Centre,
52 Upper Street, Islington, N1 0QH
T: 020 7288 6417
E-mail: BDC@lathams.co.uk
James Latham -
Product Specification Showroom
Manchester
31a Tib St, Manchester M4 1LX
T: 0161 537 1185
E-mail: pssm@lathams.co.uk
Abbey Woods - Ireland, Dublin
T: +353 01 839 3435
F: +353 01 832 5968
E-mail: sales@abbeywoods.ie
www.abbeywoods.ie
• •
14
15
16
Abbey Woods - Ireland, Co. Cork
T: +353 021 421 1788
F: +353 021 421 1786
E-mail: sales@abbeywoods.ie
www.abbeywoods.ie
• •
Dresser Mouldings
T: 01706 658900
E-mail: sales@dressermouldings.com
www.dressermouldings.com
•
•
LDT
T: 01959 561777
E-mail: LDTSales@directtimber.co.uk
www.directtimber.co.uk
17 LDT Ireland
•
E-mail: Pack.Sales@directtimber.com
e marketing@lathams.co.uk
w www.lathamtimber.co.uk
Designed by: www.gdadesign.biz
Printed on: Galerie Satin
Cover: 300gsm Text: 150gsm
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