J A M E S L A T H A M P L C
ANNUAL REPORT & ACCOUNTS 2023
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
15 Principal Risks and Uncertainties
18 Key Performance Indicators
19 Operating Review
22 Financial Review
Corporate Governance
26 Corporate Governance Report
30 Directors and Advisors
31 Directors’ Remuneration Report
36 Directors’ Report
39 Statement of Directors’ Responsibilities
Financial Statements
Independent Auditor’s Report
40
45 Consolidated Income Statement
45 Consolidated Statement of Comprehensive Income
46 Consolidated and Company Balance Sheet
47 Consolidated Statement of Changes in Equity
48 Company Statement of Changes in Equity
49 Consolidated and Company Cash Flow Statement
50 Notes forming part of the Group Accounts
85 Notice of the Annual General Meeting
89 The Latham Group
Financial Highlights and Calendar
for the year ended 31 March 2023
Financial Highlights
Revenue
2023 up 6.0%
2022 up 54.0%
£408.4m 2020 up 5.1%
2021 up 1.3%
2019 up 9.4%
250.2
247.1
235.1
408.4
385.4
150
200
250
300
350
400
450
Earnings per share
(see Note 9)
179.5p
Total Dividend
per share
36.05p
2023 down 21.7%
2022 up 204.1%
2021 up 19.5%
2020 no change
2019 down 2.0%
2023 up 7.6%
2022 up 58.0%
2021 up 36.8%
179.5
229.3
75.4
63.1
63.1
0
50
100
150
200
250
36.05
33.5
21.2
2020 down 13.4%
15.5
2019 up 7.8%
17.9
10
15
20
25
30
35
40
Net profit attributable to
shareholders
£35.9m
Down 21.3%
Equity Shareholders Funds
£195.6m
Up 19.3%
Cash and Cash Equivalents
£62.6m
Up 69.1%
Financial Calendar
Record date for final dividend 2023
Annual General Meeting 2023
Payment of final dividend
Interim 2023/24 results announcement
Interim dividend expected payment date
Preliminary announcement of 2023/24 results
Annual General Meeting 2024
4 August 2023
23 August 2023
25 August 2023
30 November 2023
26 January 2024
27 June 2024
21 August 2024
JAMES LATHAM PLC ANNUAL REPORT 2023
1
Chairman’s Statement
I am very pleased to report excellent trading results for the
financial year to 31 March 2023. These results follow the
unprecedented trading results for the year to 31 March 2022
where we benefitted from our strong relationships with our
suppliers and our balance sheet strength, in navigating the
global supply chain issues and significant increases in the
market prices for our products.
The financial year to 31 March 2023 saw a gradual return
to more normal market conditions, with supply chains
becoming easier and cost prices of our products stabilising.
New challenges arose with inflation increasing rapidly
throughout much of the year, with increased energy
costs, due in part to the conflict in Ukraine. The impact
of inflation has been felt throughout the economy with a
reduction in both confidence levels and macroeconomic
growth forecasts. Our markets though remained resilient
to these challenges.
Final dividend
The Board has declared a final dividend of 20.8p per
Ordinary Share (2022: 19.0p) plus a special dividend of
8.0p (2022: 8.0p) to reflect the exceptional performances
both this year and the previous year. The dividend is
payable on 25 August 2023 to ordinary shareholders on the
Company’s register at close of business on 4 August 2023.
The ex-dividend date will be 3 August 2023. The total
dividend per ordinary share of 36.05p for the year (2022:
33.5p) is covered 5.0 times by earnings (2022: 6.8 times).
Revenue for the financial year to 31 March 2023 was
£408.4m, up 6.0% on last year’s £385.4m. Like for like
volumes taking into account working days and acquisitions,
increased by 5.3%, with the growth mainly on delivered
business from our own warehouses. The cost price of our
products is on average 6.5% higher (2022: 36.2% higher)
than at the start of the financial year.
Gross profit percentage for the financial year to 31 March
2023 was 19.6% compared with 23.8% in the previous
financial year, as the margins return to more normal levels.
This figure includes warehouse costs and seven depots now
run extended shift systems to improve our service levels.
Profit before tax is £44.5m, compared with last year’s
£57.9m. Profit after tax for the year is £35.9m compared
with last year’s £45.6m. Earnings per ordinary share
is 179.5p compared with last year’s 229.3p.
As at 31 March 2023 net assets have increased to £195.6m
(2022: £164.0m). Inventory levels have reduced to £67.5m
from £74.2m last year as the easing of supply chain conditions
meant we could reduce the investment we made last year
in additional inventories. Trade and other receivables at
the year end were £1.5m lower than the previous year with
debtors days remaining the same as the previous year.
Despite the challenges of the economic environment, bad
debts have remained small at 0.1% of revenues. Cash and
cash equivalents of £62.6m (2022: £37.0m) remain strong
with good cash flows from operating activities.
Current and future trading
The gradual trend of a more competitive market place
has continued into the new financial year, with margins
having returned to the longer term average. We have seen
price weakness in a few of our key product areas, as the
supply issues have become much easier, but our product
values are still considerably higher than they were before
the COVID-19 pandemic.
Although we have seen some weakness in prices, our
manufacturers still have significant cost pressures on raw
materials, energy and wages which should temper any
price weakness. Our overall volumes have continued to
increase compared with the previous financial year, but
there has been a shift in product mix to some lower value
products, in part due to product replacement and value
engineering by our customers.
We are mindful that this year will continue to be affected
by macroeconomic concerns as the year progresses, with
inflation remaining high, and the geopolitical back drop
causing uncertainty, but the fundamentals within the
majority of the market sectors in which we operate are
stable at this stage. We have a concern that the market in
Europe is quiet, and this could cause manufacturers to
export cheaper product to the UK market, and negatively
affect product values.
2
JAMES LATHAM PLC ANNUAL REPORT 2023
The group has delivered great results in challenging
circumstances due to the ability of the team to work together
to manage the challenges, and seize opportunities as they
present themselves, and this will continue. The board is
therefore very aware that the results for the last two years
have been exceptional, and far beyond the profits earned
before the start of the COVID-19 pandemic. The board’s
challenge is to navigate the business towards what is a more
normal and realistic profit achievement which takes into
account the market conditions we are operating in and the
inflationary overhead pressures that all companies are facing.
Development strategy
Our business, like many others, have faced numerous
challenges over the past two years, and these challenges
have helped the board identify opportunities to develop
the business. The service levels and product mix that
we offer our customers are becoming ever more critical,
so we are currently focusing on a comprehensive end to
end review of our supply chain in order to future proof
our business and ensure that we can meet and exceed
our future customer expectations.
We have invested in some melamine racking at IJK Timber,
our recent acquisition in Belfast, to allow them to increase
their product offering. The longer term objective is to
relocate this business to a modern facility to allow them
to stock the full range of our products and grow their
market share. The Yate site development was completed
in mid August 2022 which has resulted in a 25% increase
in capacity that will allow the depot to further develop the
business and grow market share. Our largest timber site
in Purfleet is now operating a 24/5 warehouse which will
enable increased volumes through the business, and now
seven sites are operating 24 hours a day, 5 days a week.
During the year we will be upgrading our ERP computer
system which will create efficiencies for the business, enable
us to integrate a modern warehouse management system,
and provide further opportunities to introduce best in class
computer software. Rather than and provide opportunities
to further introduce best in class computer software.
We are planning to purchase our site at Abbey Woods in
Dublin in the autumn of 2023, with the plan to modernise
the site and allow us to use part of the warehouse that was
used by the previous landlord, which will give us about
15% more capacity.
Environmental, Social and Governance (ESG) issues have
always been important to the board, and we plan to integrate
our ESG values into all of our strategic decisions and
incorporate performance measures to monitor our success.
Chairman’s Statement
We are planning to increase use of electric vehicles and
will start adding solar panels to our depots in order to
accelerate the move to a net zero carbon position.
The board remain focused on identifying acquisitions that
either help develop sales in specific market sectors, enable
the business to sell a wider product range to our existing
customers, or any geographical opportunities that arise.
Directors and staff
I would like to congratulate Nick Widlinski on his
appointment as an associate director of James Latham plc
as of 1st April 2023. Nick is currently the Panel Products
director on the Lathams Limited board and has worked in
the business for 14 years. This will enable Nick to attend
plc board meetings and listen to the discussions, albeit
without a vote, as part of our succession planning policy.
I would also like to thank Howard Hayes who retires as
director of our Hemel Hempstead site in September.
Howard has worked for the business for 40 years and has
been instrumental in the growth of the business at Hemel
Hempstead since we opened the site in 2001.
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
operating policy. Both boards are well balanced in terms
of experience and skills.
I believe that a major part of our success has been giving
autonomy to our site directors, and it is the communication
from both the timber and the panel trading committees
that meet regularly that feed crucial information to the local
teams which enables us to make the right trading decisions,
and allows the business to maintain its ability to react
quickly to the ever changing market conditions.
I would like to thank all the directors and everyone
within our group, as the results this year are exceptional
and could not have been achieved without the dedication
and commitment of all of our staff at James Latham.
Nick Latham,
Chairman, James Latham plc
20 July 2023
JAMES LATHAM PLC ANNUAL REPORT 2023
3
Strategic Report
Introduction
Outline of the Strategic Report
The directors present their Strategic Report for the
year ended 31 March 2023. 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
15
18 Key Performance Indicators
19 Operating Review
Financial Review
22
The Strategic Report was approved by the board of
directors on 20 July 2023 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 8 and 29.
4
JAMES LATHAM PLC ANNUAL REPORT 2023
• 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 undertake employee
surveys which we use 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 group. Further information is shown on
page 14.
• 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
on pages 8 to 14.
Hydrofugo Moisture resistant MDF, Oak veneered MDF and
Tulipwood by James Wilding Joinery.
Strategic Report
Introduction
Valchromat table being finished in Koate treatment.
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 2023 include:
a. Approving a full review of our supply chain and route
to market in order to future proof our business and
increase efficiency in inventory levels and throughput.
This is a long term project that will start to be
implemented over the next few years.
b. Approval of capital expenditure at our Yate branch
to extend the warehouse and provide more capacity
necessary for the future profits from this site.
c. Approval of the move of our Head Office from the
Hemel Hempstead trading depot to its own office at
Breakspear Park in Hemel Hempstead, to allow the
Hemel Hempstead depot more room to expand.
d. Agreeing a new investment strategy with the Trustees
of the James Latham Pension and Assurance Scheme to
accelerate the derisking of the scheme’s investments.
e. Approval of a one off cost of living payment to the
majority of our employees to help ease the pressures
caused by the sudden increase in inflation, at a cost
of £250,000.
f. 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.
g. 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.
JAMES LATHAM PLC ANNUAL REPORT 2023
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, commercial interior fitout and
many 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, decking and mouldings and other machined
products. We also supply commodity and specialist panel
products to timber and builders’ merchants.
Environmental interests in, and 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 providing
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 thirteen locations in the UK and
three locations in the Republic of Ireland, as shown in
The Latham Group map on page 89, as well as from various
port and storage locations around the UK.
Our timber 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 the United Kingdom.
We also hold a range of specialist products in Leeds for
distribution to the UK and Irish markets to complement
the business supplied directly by our depots.
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
Environmental, Social and Governance (ESG)
issues;
• 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 TDUK 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.
6
JAMES LATHAM PLC ANNUAL REPORT 2023
Strategic Report
James Latham plc and Our Objectives and Strategy
Our strategy for developing the business is two fold.
Firstly to ensure that we maintain and improve our
volumes of commodity products, including MDF,
OSB, Plywood, North American Hardwoods, European
Hardwoods and African Hardwoods. Secondly, alongside
the commodity products we sell an increasing amount
of speciality products, including Door Blanks,
Melamines, Laminates and other decorative panels,
Accoya, WoodEx ® and Decking. The Dresser Mouldings
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.
Melamine, decorative laminates and edging products
are important product groups and all Latham depots
offer a comprehensive range of products ex-stock,
including decors from Egger, Kronospan and CLEAF.
Sales of technical engineered and modified timber
are a key part of our strategic sales development for
timber. An enhanced range of products are stocked,
including Accoya, WoodEx ®, Decking and machined
and coated timbers.
Our Leeds depot acts as the central distribution point
for ATP, HI-Macs®, Avonite, 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. Overnight trunking
of goods between the depots enables us to provide an
increased range of stocks available for next day delivery.
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. These plans drive our
investment in our facilities 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.
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, technical and financial 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 specification website promotes our product offering
to professional specifiers, architects and designers.
We also put in place a programme of presentations to
architects for their Continual Professional Development.
Digital media has provided the company with the
opportunity to increase brand awareness across a wide
range of social media platforms including a series of short
videos available on the www.lathamtimber.co.uk website.
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.
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.
The challenges in achieving our strategic objectives are
considered within the Principal Risks and Uncertainties on
pages 15 to 17.
CNC’d HI-Macs® by IP Surfaces.
JAMES LATHAM PLC ANNUAL REPORT 2023
7
Strategic Report
Corporate Responsibility
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.lathamtimber.co.uk.
We allocate at least two 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.
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 Environmental, Social and Governance (ESG) 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.
ESG matters are of increasing importance with our
stakeholders, and in due course, as the broader company
ESG strategy develops, we will seek to incorporate
performance measures into the implementation of the
policy which support this.
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.
8
JAMES LATHAM PLC ANNUAL REPORT 2023
Timber is the only renewable resource used in
construction unlike steel and concrete which cannot
claim this as only a finite source is available. Due to
construction being responsible for 40% of the UK’s total
carbon footprint, construction companies need to look at
the choice of materials and construction methods used, as
well as the energy efficiency EPC ratings 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.
Horizon Boule Cherry.
Strategic Report
Corporate Responsibility
Horizon timber kitchen by Stonehams.
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.
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 Timber and Timber Products (Placing on the Market)
Regulations (“UKTR”) places 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. We are also audited by the Government body
in the Republic of Ireland responsible for legal sourcing
and recently passed the audit of our site in Dublin.
For a number of years we have had risk assessment
tools in place to monitor suppliers through the TDUK
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.
JAMES LATHAM PLC ANNUAL REPORT 2023
9
Strategic Report
Corporate Responsibility
Latham lorries awaiting loading at the new Yate warehouse extension.
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 table below:-
Carbon Dioxide Equivalent (CO2e) tonnes
Scope 1
Direct emissions from burning gas and solid fuel for heating and from
road use for sales and distribution
Scope 2
Indirect emissions from use of electricity
Total
Total kWh
Global Intensity Ratio
Tonnes of CO2 from scope 1 and 2 per £m of turnover
Tonnes of CO2 from scope 1 and 2 per thousand m3
Data shown is for the calendar years 2022, 2021 and 2020.
2020
2021
2022
3,466
4,369
4,562
202
3,668
301
4,670
290
4,852
15,815,599
20,346,194
21,018,283
14.86
8.80
12.98
9.69
11.73
10.44
10
JAMES LATHAM PLC ANNUAL REPORT 2023
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 of 21,018,283 kWh is further
analysed in the graphs below.
0.1%
7.0%
4.0%
2022
Calendar
Year
67.0%
19%
2.0%
1.0%
Electricity - 1,500,357 kWh
Cars Diesel - 368,336 kWh
Natural Gas - 781,257 kWh
LPG - 3,950,206 kWh
Cars Petrol - 179,929 kWh
HGV’s Diesel - 14,195,771 kWh
Gas and Fuel Oil - 39,840 kWh
2.5%
7.0%
3.6%
2021
Calendar
Year
65.7%
20.2%
0.9%
0.1%
Electricity - 1,418,451 kWh
Cars Diesel - 179,893 kWh
Natural Gas - 741,980 kWh
LPG - 4,114,379 kWh
Cars Petrol - 60,058 kWh
HGV’s Diesel - 13,364,325 kWh
Gas and Fuel Oil - 467,408 kWh
As a distribution company, the majority of our emissions
are from our vehicles. These are increased this year mainly
due to the increase in revenues and hence journeys
undertaken. We have continued to encourage working
from home on a hybrid basis where this is possible for
the efficient running of our operations. However as the
Strategic Report
Corporate Responsibility
economy has opened up after the COVID-19 pandemic,
our sales representatives have increased the number of
face to face visits to customers. The reduction in the
Global Intensity Ratio shows that progress is being made
in reducing our CO2 emissions.
We have started on the solar journey with panels
ordered and due to be fitted at our Leicester depot over
the coming months. This investment should prove to pay
for itself over five years from less energy paid for from the
grid. After this initial trial we will look at pushing this out
to more of our depots and become far more self sufficient
in our electricity generation.
All 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
or other sustainably fueled 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.
Our company car policy aims to increase the numbers
of energy efficient cars including plug-in hybrid and fully
electric cars. Back in 2019 we were almost exclusively
diesel, but the percentages now are as follows:
Diesel: 39% Petrol: 6% Hybrid: 47% Electric: 5%
We lease our cars over four years and by 2025 we expect all
our cars to be mainly hybrid or pure electric. We currently
have electric charging points at one of our depots only, but
we are looking at adding more to the other depots,
space permitting.
We invested in an additional nine electric combi trucks
over the last year. These will be the preferred choice of
combi truck going forward where we have enough capacity
of KVA from the national grid or solar to keep them
powered. The rest of our combi fleet is powered by LPG.
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.
JAMES LATHAM PLC ANNUAL REPORT 2023
11
Strategic Report
Corporate Responsibility
The Carbon Story
The growing interest in ‘Net-Zero Carbon’ construction
is very significant to us. Timber performs fantastically
when compared to Carbon Dioxide (CO2) intensive
materials such as concrete or steel which release CO2 into
the atmosphere during production. Conversely, timber
produces no CO2 during its growth, instead removing
carbon from the air and locking it away for its lifetime.
Our compliance team continue to work with the
Biocomposites Centre at the University of Bangor to
develop a unique calculator that can measure not only
the carbon locking potential of our products, but also the
carbon footprint created by their production, transport
and storage at our facilities. Not only is this data available
to our customers, but we also rank (1-4) the confidence
we have in the data and the sources it was taken from.
With a broad portfolio of products from around the world,
this ranking not only provides peace of mind for our
customers, but also encourages lower ranked suppliers to
improve the documentation available for us to make these
calculations. Tier four will be the next level of reporting
we will be required to do under SECR and we are already
working together with TDUK using their methodology.
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
2018
2019
2020
2021
2022
Landfill (tonne)
371
156
87
121
110
Diverted from
landfill (tonne)
479
681
707
838
820
Total waste
850
837
794
959
930
Diverted from
landfill
56%
81%
89%
87%
89%
Production Waste (Dresser Mouldings)
2020
2021
2022
Dust (tonne)
360
465
529
Liquid residue (tonne)
Trade effluent
Landfill
30
2
39
2
10
1
Whilst every effort has been made to ensure data is consistent across the
years, there are some differences in collection methods across this period.
Salvation Army Project Malachi
Continuing our long-term
relationship with the scheme,
Project Malachi in Ilford, London, is
The Salvation Army’s latest homeless
accommodation initiative and the first
of its kind to target rough sleepers
who have No Recourse to Public
Funds (NRPF). Further to a previous
project where we supplied Garnica
Efficiency plywood for indoor sleeping
pods, 2022 saw a further donation in
the form of 150 sheets of Duraply, an
external poplar plywood, to construct
an outdoor exercise and relaxation
area for the service users.
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JAMES LATHAM PLC ANNUAL REPORT 2023
Strategic Report
Corporate Responsibility
Support of our communities
Our depots and all our employees are part of their own
local communities and we encourage interaction with these
communities by charitable donations, fund raising activities
and volunteering.
Each year we ask our employees to nominate charities for
the company to support. Our employees vote on which
charity should receive a donation of £20,000, and this
year we supported MacMillan Nurses, with over half of all
employees having their say. All other charities nominated
also received a small donation.
We also support environmental
charities and this year donated
£20,000 to the Woodland Trust
to continue their work protecting
and creating native woodland in
the UK. In addition 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.
We donated £10,000 this year for them to continue their
work in regenerating industrial land and creating the first
forest to be created in England for over 100 years.
We have also pledged to encourage fund raising efforts
of our employees by matching up to £500 of any money
they raise. This year activities included half marathons,
Christmas jumper days, the Three Peaks Challenge and
donation of food to local food banks.
We also encourage volunteering by allowing all employees
to take a day off for volunteering at full pay.
Continuing our long-term relationship with the scheme,
Project Malachi in Ilford, London, is The Salvation
Army’s latest homeless accommodation initiative and
the first of its kind to target rough sleepers who have
No Recourse to Public Funds. Further to a previous
project where we supplied Garnica Efficiency plywood
for indoor sleeping pods, 2022 saw a further donation
in the form of 150 sheets of Duraply, an external poplar
plywood, to construct an outdoor exercise and relaxation
area for the service users.
As a business with a fond eye for history and tradition,
we were delighted to be involved in the resurrection of
an old favourite TV show – Challenge Anneka. In episode
3 of the latest series, the team helped Luton Sea and
Royal Marine Cadets with the renovation of their barracks
and construction of new sleeping quarters, using sheet
materials including OSB and exterior plywood provided
by our Thurrock Depot. Presenter Anneka Rice stated
“The Sea Cadets in Luton help hundreds of vulnerable
young people learn confidence and new skills. Who knew
that a leaky hanger right by Luton Airport could become
such a vital thing for this local community?”
Further to the success of last year’s campaign to introduce
young furniture makers to innovative products, we
once again worked with Rycotewood Furniture College
to donate materials for their 2023 2nd year Student
Competition. With a goal of producing ‘storage furniture’
the students got to choose from a selection of products
including HI-Macs®, UPM Grada plywood, various
hardwoods and the Dekodur range of real metal laminates
to allow them to learn about the possibilities of new
materials and really stretch their design scope.
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 the company.
We employ a full-time Health and Safety Manager who
reports to the board regularly, attends board meetings
twice a year and chairs health and safety meetings at
all depots. We have a 3-year action plan and all sites
are subject to audit, with their audit scores and trends
being monitored at quarterly management meetings.
Management and employees are actively involved in
improving our safety record, which is high on everyone’s
agenda. All employees take a personal responsibility for
making sure their actions and behaviour maintain safety
for all and we encourage reporting of “near misses” to
enable us to constantly improve our safety systems.
In addition, we recognise that safety extends beyond our
warehouses. We regularly monitor vehicle accidents in
our lorries and company cars to assess whether further
training is required. We operate a programme of lorry
driver mentoring and are members of 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.
JAMES LATHAM PLC ANNUAL REPORT 2023
13
Strategic Report
Corporate Responsibility
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.
We are pleased to have gained this year
accreditation under the Safety Schemes
in Procurement scheme.
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, through the company
intranet and internal newsletters.
We undertake staff surveys and have worked on the key
areas arising from the survey 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. We publish
our internal magazine, 1757, three times a year to help
communicate all the company initiatives to our staff.
Quarterly meetings are held in each location, chaired by
a board member, where employees’ views concerning
the performance of their profit centre are considered.
To encourage the involvement of employees in the
group’s performance, share option schemes are operated
together with bonuses linked to performance.
The group’s employment policies do not discriminate
between employees, or potential employees, on the grounds
of age, gender, disability, sexual orientation, colour, ethnic
origin or religious belief. We would make every effort
to enable employment to continue for any employees
that become disabled. The sole criterion for selection or
promotion is the suitability of any applicant for the job.
The group’s pay policy is to ensure that every employee,
other than 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, accountancy qualifications and the
Wood Science exams covering the properties and uses of
timber and panel products. We also use the government
apprenticeship levy to help train our staff in skills relevant
to our industry.
Details of the number of employees and their related
costs can be found in note 4 to the accounts, and key
decisions taken which have considered the employee
interests are set out on page 4.
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. These risks change and evolve and our
risk management processes take a balanced approach to
help us to deliver our strategic objectives over the medium
term 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. Where the risk
environment changes significantly, then these risk control
and communication processes are accelerated so that any
new information is passed up and down the company’s
structure as soon as possible.
14
JAMES LATHAM PLC ANNUAL REPORT 2023
Strategic Report
Principal Risks and Uncertainties
Business operations are controlled by the site director at
each location and they are responsible for training of their
staff, local controls including Quality Systems and service
levels, monitoring KPI’s and ensuring group policies
are adhered to. These controls are monitored at the
quarterly board meetings. Central functions such as health
and safety, insurance, IT, credit control, finance and HR
are controlled by the executive boards of James Latham
plc and Lathams Limited, who are responsible for assessing
these risks and setting policies and procedures and
ensuring that adequate training is given. Internal audit
activities, such as Health and Safety audits, financial
internal audits, Environmental Chain of Custody audits and
Quality System audits provide assurances to the board that
policies have been implemented properly and are being
adhered to.
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 31st March 2023 we paid particular attention
to the Supply Chain risks associated with the conflict in
Ukraine, Cyber Security and the high inflation and its effect
on our costs and the general economic environment.
The principle risks that are considered to potentially have
the most impact on the group’s future operating results
and the risk mitigation measures that we have introduced,
are considered below.
Market and Macroeconomic Conditions
Risk Status – High
Risk Direction – Increased
Description
The group’s sales are predominantly based in the UK and 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.
Price inflation, for both our products and overheads, and its
effect on the cost of living, is at its highest for many years and is
significantly affecting cost of goods sold and operating expenses.
Mitigation
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.
Our depots keep in close contact with our customers and discuss with them
how market conditions are affecting their business.
We undertake product price reviews and have regular reviews with our
customers to ensure that we pass on these price rises in as fair a way as
possible. We also recognise the effect of the cost of living increases on our
employees and on top of the pay review, have made a one off payment in
October 2022 to employees to help mitigate these increases.
Competition from new and existing businesses
Risk Status – Low
Risk Direction – Unchanged
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 different
routes to market.
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.
We continue to invest in improving on-line trading platforms and other digital
methods to meet customer demand.
Environmental Risks and Carbon Reduction
Risk Status – Medium
Risk Direction – Unchanged
Climate change could significantly affect our trading
environment as the economy moves to meeting the UK
governments pledge to achieve a net zero target by 2050.
Environmental matters are increasingly important to our
customers, employees and investors and we need to respond
to the increasing information expectations.
ESG forms an increasing part of board discussions and various initiatives are
being introduced or trialled including increasing the electric component of our
forklift and vehicle fleet, LED lighting and solar panels, and use of IT to reduce
travelling.
In addition, we are the first in the industry to publish data on the carbon impact
of our products, with our Carbon Calculator.
Continued overleaf
JAMES LATHAM PLC ANNUAL REPORT 2023
15
Strategic Report
Principal Risks and Uncertainties
Inventory levels move out of line with sales requirements and market prices
Risk Status – Medium
Risk Direction – Unchanged
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.
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 market for certain product lines changes, resulting in them
becoming overvalued and slow moving or obsolete.
The Global Supply Chain difficulties may cause demand for
some products to switch to alternative products.
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.
Supply Chain disruption could result in shortages of product
Risk Status – Medium
Risk Direction – Increasing
Although a high percentage of the group’s imported products
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.
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, including ports and shipping
lines, to ensure that we are pre-warned of difficulties of supply. We maintain
relationships with suppliers of alternative products.
We also maintain close relationships with customers to help them find alternative
sources of supply.
The effect of the Ukrainian conflict on supply chains continues to cause difficulties
with certain products and we have found alternative sources of supply for many of
our customers.
Reputational Risk
Risk Status – Low
Risk Direction – Unchanged
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.
Defined Benefit pension scheme funding could increase
Risk Status – Medium
Risk Direction – Unchanged
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.
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, and a plan
is in place with the Trustees to reduce risk in line with the changing maturity of
the scheme.
16
JAMES LATHAM PLC ANNUAL REPORT 2023
Strategic Report
Principal Risks and Uncertainties
Information technology failures impact our ability to trade
Risk Status – Medium
Risk Direction – Unchanged
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.
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, 365 days a year 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.
Cyber Security and Data Protection
Risk Status – Medium
Risk Direction – Increased
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.
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 invest in 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.
Inability to trade from a depot
Risk Status – Low
Risk Direction – Reduced
Inability to trade from a depot due to an incident, internally
or externally, or the effects of a pandemic, 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.
Our distribution network, as well as our inventories held at various ports, allow
us to manage customers requirements from a different location.
Inability to fill key roles within the organisation
Risk Status – Low
Risk Direction – Reduced
Our staff are key to the success of our business, and our
inability to fill key roles could affect our profitability.
The group, through the Remuneration Committee, is committed to 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 with this process
overseen by our HR Manager.
JAMES LATHAM PLC ANNUAL REPORT 2023
17
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
2023
2022
2021
21.7%
2023
5.0%
34.0%
2022
51.7%
14.5%
2021
0.8%
0
10
20
30
40
%
0
10
20
30
40
50
60
Return on Capital Employed, defined as
Operating profit divided by Net Assets plus
Non Current Liabilities less non current
pension surplus and deferred tax.
Like for like revenue, adjusted for the effects of
acquisitions and working days, increased 5.0%.
Carbon Emissions
Calendar Year
2022
2021
2020
To provide a safe working environment for our staff
11.73
12.98
2023
5.96
0.55
2022
4.18
0.40
14.86
2021
5.45
0.67
Accident
Reportable
%
0
5
10
15
20
0
2
4
6
8
10
12
14
Carbon emissions shown as Tonnes of CO2 from
Scope 1 and Scope 2 per £m of turnover
(see page 10).
Total number of injuries, no matter how minor, and
total number of reportable injuries, reported per
100,000 hours worked, remain low 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
m3
Times
2023
2022
2021
2,040
1,907
1,737
2023
2022
2021
6.7
5.8
6.2
500
1,000
1,500
2,000
2,500
4
5
6
7
Volume of product sold per working day
continues to increase.
Stock turn based on volumes is better than
our budget of 6.50 times.
18
JAMES LATHAM PLC ANNUAL REPORT 2023
Strategic Report
Operating Review
Results for the year ended 31 March 2023
Revenue for the year ended 31 March 2023 was £408.4m,
£23.0m higher than the previous year.
Collectively we have seen strong performances across
all regions and sectors of our business during this
financial year. The business experienced good demand
for its range of products with revenues and volumes in
line with our forecasts.
Supply lines have improved since the disruption caused
by the COVID-19 pandemic, meaning lead times have
shortened and product is more available. This is reflected
in our inventory levels which have reduced in line with
forecasts and have been well balanced throughout the year.
The cost of containerised freight has fallen significantly
reducing the landed cost of some commodity timber and
panels. Replacement costs have shown some pockets of
weakness reflecting global demand, however the underlying
cost prices of our products in this period have remained
relatively strong against the longer-term historical values.
As expected, margins have slowly reduced to more normal
levels. Efforts to improve systems and processes to drive
efficiencies and create opportunities across all areas of the
business have and will remain a focus. The highest rate
of inflation for 40 years, driven mainly by fuel and energy
costs, has made these efforts even more important and
overheads and payroll numbers have been under close
scrutiny all year, whilst maintaining and improving our
service levels. In addition the rising cost of energy has
affected our manufacturing suppliers driving inflationary
pressure on production and handling costs which has
been reflected in raw material prices.
Despite the widely reported weakening of confidence in
the UK economy, our customers, and the sectors they
operate in have generally remained busy. Customer
purchasing has adjusted during the year becoming project
lead or short-term, taking advantage of reduced lead
times and stock availability. Considering these challenges
overall demand has been good and generally followed our
expectations in this period.
Our relationship with suppliers has provided access to
increased volumes to meet customer demand. Working with
our key suppliers has enabled us to continue to revise and
expand our product range to grow our business strategically.
Customer service levels have remained strong which was
reflected in our customer retention and market penetration
objectives. We undertook a Customer Survey this year with
over 18,000 customers contacted, which highlighted how
important service was to them. Over 80% of responders
scored us at 8 out of 10 or better, and we achieved a Net
Promoter Score (NPS) of 46 which is a very good achievement
whilst giving us opportunities for further improvement.
Latham staff visit to the Moralt door factory.
JAMES LATHAM PLC ANNUAL REPORT 2023
19
Strategic Report
Operating Review
New melamine racking in the IJK Belfast site.
The move to a 24 hour a day 5 day a week operation at
our largest timber only site at Purfleet in October provided
a noticeable gain in service levels and potential capacity,
making this the seventh of our distribution sites to be
operating 24/5.
The conflict in Ukraine and sanctions placed on Russia
and Belarus created shortages in certain timber products,
especially Birch Plywood and the need for customers to
find alternative products. Consequently, we have worked
hard to help identify and provide customers with solutions.
To help mitigate reliance on any one form of energy we have
invested in electric powered trucks for material handling
and are about to trial the introduction of solar power.
Our investment in Northern Ireland is being successfully
integrated into the Latham business and we will continue
to invest in this opportunity. The installation of a new
racking facility in the Belfast site has been completed
which will increase the range of products available from
stock and improve customer service levels opening new
opportunities across Ireland. We will continue to develop
our combined business strategy across the whole of
Ireland. Brexit continues to play its part with alterations
to import legislation and changes to UK standards causing
some delays at the ports and creating additional work.
20
JAMES LATHAM PLC ANNUAL REPORT 2023
The expansion of the Yate site has been completed and is
fully operational providing more capacity to support the
development of business in the South West of England and
South Wales regions.
The investments made at Dresser Mouldings in new
machinery have enabled us to focus on quality and
customer service levels, cutting lead-times and improving
On Time In Full (OTIF) ratios. As expected, this
improvement is beginning to open new areas of business
for us across the James Latham customer base.
We have increased the resources and capacity of our
timber importing and pack sale division, Latham Direct
Timber (LDT), to grow market share. We have also added
a similar model for panel products, with our pack trading
division LDP.
The recruitment of well-trained or talented people for
specific roles remains challenging. Where possible we try
to promote from within and have focused heavily on
our staff training, career development strategies and
recruitment policies. The previous difficulties recruiting
lorry drivers though has improved.
Strategic Report
Operating Review
The launch of James Latham Carbon Calculator
received two industry awards for promoting the carbon
value of using wood products. The carbon story is a real
opportunity for the timber industry to differentiate from
other suppliers of building materials. We expect this
message to become increasingly important to all
our stakeholders.
Our marketing activities have been targeted on specific
products and market sectors and continue to create
opportunities. The work in this area has created a
significant increase in interaction across all our recognised
communication channels and raise awareness of the
James Latham brand.
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 sixteen 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.
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
2023
2022
15
26
16
24
4
6
4
4
4
6
2
2
10
7
10
5
6
5
4
5
6
1
1
10
8
9
TOTAL
100
100
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.
End products are used in both the public and
private sectors. Our top ten customers account for
8% (2022: 9%) of sales and our top 25 customers
represent 14% (2022: 14%) of sales.
Hamleys, Westfield, London
We worked with Fabricator Cre8ive
Joinery and Brand activators Dalziel &
Pow to produce this striking shopfront for
famous toy store Hamleys at their shop
in Westfield shopping centre. Supplying
a range of materials into the project, the
stand-out feature was this bright, shiny
façade in ‘Fiery Red’ HI-Macs® solid
surface. Manufactured in Bromsgrove in
the Midlands, then transported to site in
London for installation, the whole
project was undertaken at night to ensure
minimal disruption to the everyday
running of the busy retail centre.
JAMES LATHAM PLC ANNUAL REPORT 2023
21
Strategic Report
Financial Review
Financial review
A commentary on the group’s trading results is set out
in the Operating Review on pages 19 to 21, and the key
figures are considered below, with emphasis on the
financial performance.
Revenue Analysis
Over the last two financial years the impact of the COVID-19
pandemic and resultant supply chain disruption had a
significant positive effect on our revenues. In this financial
year revenues have stabilised as the markets slowly
returned to normal. Revenues are up 5.0% on a like for like
basis against the year to 31 March 2022. Cost prices rose
at a much slower rate in the first half of the year than in
the previous financial year, and remained stable for much
of the second half of the year. Volumes continued to grow
despite the more challenging macroeconomic conditions.
Revenue Growth Analysis
Volume
Price and Product Mix
Like for Like Revenue Growth
Acquisitions
Trading Days
2022
2023
+11.9%
+39.8%
+51.7%
+3.6%
-1.2%
+5.3%
-0.3%
+5.0%
+1.4%
-0.4%
Total Revenue Growth
+54.0%
+6.0%
Half Yearly Revenue Analysis
Half 1
Half 2
2022 vs 2021
2023 vs 2022
+81.2%
+33.7%
+9.7%
+2.2%
22
JAMES LATHAM PLC ANNUAL REPORT 2023
David Dunmow
Finance Director and Company Secretary
Operating profit
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 were market shortages, whilst still maintaining
our service levels. Gross profit % has reduced to 19.6%
from 23.8% as margins slowly return to normal levels,
which for the ten years prior to the COVID pandemic have
averaged 17.8%.
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 and improve service levels.
Seven depots are now operating a 24 hour system meaning
we can take orders later in the day to provide next day
deliveries where our customers require it. It also provides
opportunities to receive goods in during the night from
suppliers or from other depots.
Costs in each location are monitored closely by the board
through the quarterly meetings at each depot, with
detailed variance analyses being provided. We constantly
look for efficiencies in our overheads whilst continuing to
invest for the future. Transport and warehouse costs per
tonne have increased by 11.7% (2022: increased by 13.4%)
and 13.1% (2022: increased by 5.7%) respectively. There
have been continued inflationary pressures on these costs,
including energy, fuel and manpower costs.
Operating profit reduced to £43.7m from £58.2m last year.
Group net profit before taxation reduced to £44.5m from
£58.0m last year.
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 £8.6m represents an effective rate
of 19.3%, compared with 21.2% 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 rate of UK corporation tax rate will rise to 25% with
effect from 1 April 2023.
Earnings per share
The group reported a total profit after tax of £35.9m
(2022: £45.6m) resulting in a basic earnings per share
of 179.5p (2022: 229.3p) with diluted earnings per share
being 179.2p (2022: 228.3p).
Pension scheme
At 31 March 2023 there was a surplus in the defined
benefit scheme under International Financial Reporting
Standards of £7.2m compared with a surplus of £1.1m
last year. During the year we saw incremental rises in
interest rates from 0.5% at the start of the financial year
to 4.25% at 31 March 2023. This had a corresponding
effect on discount rates, represented by yields on
corporate bonds which increased to 4.7% from 2.7%.
This helped reduce the valuation of pension scheme
liabilities by £17m, although the assets under management
have reduced by £9.1m to £66.4m due to falls in the value
of defensive assets such as gilts and corporate bonds.
These falls show that the assets are acting as designed in
matching the movements in the liabilities. The company
paid in £4.4m of deficit recovery funding during the year,
which will continue until March 2024, when the deficit
recovery funding payment will be recalculated at the next
triennial valuation. In note 20.2 to the accounts, we have
provided some sensitivity analysis around the various
assumptions used to illustrate this volatility, and details
of the IFRIC 14 liability.
Strategic Report
Financial Review
The group is constantly assessing the risks in the pension
scheme, especially as more of the members are at or
close to pensionable age, and have continued to take the
opportunity afforded by good equity values to de-risk and
invest more in gilts and bonds. We also maintained a cap on
pensionable salary increases to a maximum of 1% over CPI.
Gross IAS19 surplus/deficit £000’s
2023
2022
2021
2020
2019
7,221
1,119
5,933
11,812
8,714
Cash flow and working capital
At the end of the year cash balances of £62.6m were held,
up from £37.0m 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.
Free Cash Flow
2023
’000’s
2022
’000’s
43,698
Operating Profit
Depreciation and other
902
non cash movements
124 (28,084)
Change in working capital
769 (30)
Net interest received/(paid)
Tax paid (7,498) (10,259)
58,165
42
Operating cash flow
37,135
20,694
Fixed Asset additions
less disposals (3,232) (4,257)
– (2,238)
Acquisitions
Free cash flow
33,903
14,199
JAMES LATHAM PLC ANNUAL REPORT 2023
23
Strategic Report
Financial Review
Morepeth Leisure Centre
Our Dresser Mouldings team worked with leading
UK contractor Willmott Dixon, to deliver an intricate
Accoya louvered façade for a low-carbon, state-of-the
art leisure centre in Morpeth, Northumberland. Prone
to inclement weather conditions due to its coastal
location in the north of the country, the façade had to be
highly resistant to wind driven rain and salt corrosion.
Working closely with the contractor M&C Roofing, the
605 individual bespoke louvres were all designed and
machined in the Dresser factory, delivered and installed
within 6 months of the initial order.
With the rise in interest rates from 0.5% to 4.25% in the
year, we have received more interest on our cash deposits,
earning £822,000 this year compared with £29,000 in the
previous financial year. We have also continued to use
our cash to obtain cash settlement terms with most of our
major suppliers allowing us to earn £2,795,000 of discounts
received compared with £2,656,000 last year.
62,609
Cash and Cash Equivalents
2023
2022
2021
2020
2019
37,030
28,618
16,950
15,541
Trade receivables have reduced to £61.4m (2021: £63.3m),
with the provision for impairment down to £200,000 from
£305,000. Control of cash flow from customers is closely
monitored as an indicator of the health of the markets
that we trade in. The key performance indicator of average
debtors days, taking into account our credit terms, has
slightly increased from 49.6 days to 49.9 days. Bad debts
this year were 0.06% against a budget of 0.4%, and 0.09%
last year. In times of increasing pressure on business with
cost rises and a more difficult macroeconomic environment,
this demonstrates the strength of our customer base.
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 96.0% (2022: 95.3%) of accounts
owing over £40,000 covered by credit insurance.
The Supply Chain difficulties that we saw last year eased
considerably during the year. This has lead to a significant
reduction in the volume of inventory in transit from last
year where we invested in additional inventories to meet
those challenges. This has also lead to a reduction in trade
payables as less orders needed to be placed for inventories.
Inventory Analysis
2023
2022
£ 000’s
Volume m3
£ per m3
£ 000’s
Volume m3
£ per m3
Depot locations
Port locations
In Transit
49,223
12,185
6,081
52,579
15,251
6,993
Total
67,489
74,823
936
799
870
902
43,116
11,303
19,811
46,762
13,151
24,629
74,230
84,542
922
859
804
878
24
JAMES LATHAM PLC ANNUAL REPORT 2023
Strategic Report
Financial Review
Financial risk management
In the course of our business, the group is exposed to
currency risk, interest rate risk, liquidity risk and credit risk.
The overall aim of the group’s financial risk management
strategy is to mitigate any potential negative effects on the
group’s assets and profitability. The group manages these
risks in accordance with group policies.
As the group trades predominantly in the UK and Ireland,
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 my Head Office
team has put in this year. They have embraced the hybrid
way of working which resulted in a seamless move to our
new head office, and have continued to provide a first class
service to our customers and suppliers and to our depots.
David Dunmow
Finance Director
JAMES LATHAM PLC ANNUAL REPORT 2023
25
Radial arm saw in use at Dresser Mouldings.
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. Our Supply Chain Team work
with our suppliers to strengthen our supply chain and
ensure we have inventory available when required by our
customers. At 31 March 2023 stock turn based on volumes
is 6.7 times (2022: 5.8 times) compared with our target
of 6.5 times. There were no significant overstocked areas
giving any concern to us at the year end.
Capital investment
We invested £1.4m on extending the warehouse at our
Yate depot providing extra capacity allowing us to grow
our market share in the South West of England. We also
invested £0.3m on new racking in the IJK site in Belfast, to
enable us to increase the product range available for our
Irish customers. We invested £0.8m (2022: £2.6m) on the
cyclical replacement of lorries and Combilift plant, which
includes £0.5m on electric Combilifts.
Net assets at the year end were £195.6m (2022: £164.0m).
The group’s pre-tax return on capital (defined as operating
profit divided by net shareholders funds plus non current
liabilities less non current pensions surplus and deferred tax)
for the year was 21.7% (2022 34.0%), which continues to be
above our weighted average cost of capital.
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. Good
corporate governance guides the overall group strategy,
and considers the risks and opportunities we face in
considering the future success of the business.
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. I also regularly visit our depots to ensure
these principles are understood and maintained.
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. There were no changes to the
board during the year.
In the year to 31 March 2023, the board met 5 times, with
all directors attending each meeting, except Andrew Wright
who attended 4 meetings and presented a written report on
the matters to be discussed at the meeting that was missed.
The board meetings were held via a mixture of in person
meetings and video conferencing which are 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. This included an off-site strategy
meeting at one of our key suppliers, where we looked
forward for the next five years to consider investment
plans and risks. In addition the executive directors
have a monthly conference call to discuss the monthly
management accounts and other matters of importance.
The non-executive directors are Fabian French and
Paula Kerrigan. I consider that all non-executives are
independent, as I consider that three terms of three years
is the maximum amount of time that a non-executive
director can serve before their independence is impaired.
In addition to the scheduled meetings, the non-executives
attend the group annual operational budget and strategy
meeting, as well as making individual visits to operational
sites. Each non executive director is expected to give a
time commitment of at least 12 days a year.
26
JAMES LATHAM PLC ANNUAL REPORT 2023
Corporate Governance
Corporate Governance Report
Principle 6 – Ensure that between them the
directors have the necessary up-to-date experience,
skills and capabilities.
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.
The board regularly visit the depots to ensure that our
core values are understood and are an integral part of
depot life. The core values are actively promoted so that
we maintain our culture of ethical, sustainable and safe
working to achieve a fully inclusive, engaged and healthy
workforce. Our staff survey this year concentrated on our
values and how to ensure that these values reached every
part of the business.
The directors’ biographies are shown on page 30. Each
executive director has many years experience within the
James Latham Group 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,
Andrew Wright and Piers Latham are actively involved in
the running of the Lathams Limited and Abbey Woods
business, the company’s trading subsidiaries. All directors
keep their skill sets up to date by training, discussions on
market trends with customers and suppliers, involvement
with trade and environmental organisations, and working
closely with our IT, pensions and HR advisors. 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.
European Oak door by ICM Kent Ltd.
JAMES LATHAM PLC ANNUAL REPORT 2023
27
Corporate Governance
Corporate Governance Report
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.
The Audit Committee
The members of the Audit Committee are Fabian French,
as chairman, and Paula Kerrigan. Andrew Wright and
David Dunmow also attend 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.
Rycotewood Furniture College
As part of a campaign to introduce
young furniture makers to innovative
products, we worked with Rycotewood
Furniture College to donate materials
for their 2022 2nd year Student
Competition. With a focus of colour
and curve, we selected HI-Macs®, UPM
Grada plywood, various hardwoods
and Valchromat through-coloured HDF
to allow students to learn about the
possibilities of new materials and really
stretch their design scope. Featured
here, winner Yuchen-Liu’s Bar Cabinet
in curved HI-Macs® Orange and Oak.
28
JAMES LATHAM PLC ANNUAL REPORT 2023
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. The Committee also discussed group pay
and employment policy including reviewing diversity and
equality, the gender pay gap report 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 31.
BUILD TRUST
Principle 10 – Communicate how the company is
governed and is performing by maintaining a dialogue
with shareholders and other relevant stakeholders.
We were pleased to be able to return to an in person AGM
this year following the closed meetings due to restrictions
in place during the COVID-19 pandemic, and this year are
looking to welcoming shareholders to the AGM in the
Holiday Inn, Breakspear Way, Hemel Hempstead, adjacent
to our new Head Office.
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.lathamtimber.co.uk as well as historical financial
and meeting information.
Corporate Governance
Corporate Governance Report
Red Cedar Cladding and Decking by Simon Hickey Limited.
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
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.
Nick Latham, Chairman
20 July 2023
JAMES LATHAM PLC ANNUAL REPORT 2023
29
Corporate Governance
Directors and Advisors
Directors’ biographies
Nick Latham BSc Chairman
Nick Latham, age 55 has worked in the
company for 31 years and was appointed to
the board in 2007. He provides advice to the
Remuneration Committee. He is a board director
of Timber Development UK (TDUK) and a
former director of the Timber Research and
Development Association.
David Dunmow BSc FCA
Finance Director and Company Secretary
David Dunmow, age 59, has worked in the
company for 29 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 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 58, has worked in the
company for 22 years and was appointed to the
board in 2015. He is Managing Director, chairing
the Lathams Limited board, and provides advice
to the Audit Committee.
Piers Latham BSc Executive Director
Piers Latham, age 52 has worked in the company
for 30 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 64, 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, St. George’s School Windsor and
Trebartha Hydro Ltd, and is a previous director
of Mithras Investment Trust plc.
Paula Kerrigan Non-Executive Director
Paula Kerrigan, age 51, was appointed a non-
executive director in 2017. She has a wide variety
of public company experience and is currently
Chief Strategy and Innovation Officer at Saga plc.
She sits on the Audit Committee and chairs the
Remuneration and Nominations Committee.
She has previously held C-suite strategy and
transformation roles at Greene King,
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.
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Clydesdale Bank Corporate
and Structured Finance
15th Floor
The Leadenhall Building
122 Leadenhall Street
London EC3V 4AB
Stockbrokers and
Nominated Adviser
SP Angel Corporate
Finance LLP
Prince Frederick House
35-39 Maddox Street
London W1S 2PP
Pensions Advisors
First Actuarial LLP
Network House
Basing View
Basingstoke
Hampshire RG21 4HG
Independent Auditor
RSM UK Audit LLP
25 Farringdon Street
London EC4A 4AB
Registered Office
James Latham plc
Unit C2 Breakspear Park
Breakspear Way
Hemel Hempstead
Herts HP2 4TZ
Registered Number 65619
Registered in England
and Wales
30
JAMES LATHAM PLC ANNUAL REPORT 2023
Nick Latham
David Dunmow
Andrew Wright
Piers Latham
Fabian French
Paula Kerrigan
As Chairman of the Remuneration and Nominations
Committee I am pleased to present the Directors
Remuneration report.
This year has seen inflation hit 40 year highs which has
affected colleagues from all around the group, with food
and energy prices rising considerably and interest rate
rises affecting mortgage and rental costs. We have tried
to balance the need to control costs with the need to
support our hard working and loyal workforce and have
introduced several initiatives to assist with the cost of
living crisis.
In October 2022 we paid a one off cost of living payment
of £500 to all staff earning under £45,000 per annum and
£250 to all other staff excluding directors. We also pay the
Real Living Wage and increased the wages of our lower
paid employees by up to 10% in October 2022.
This was in addition to the annual pay review. 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.
This year the overall pay increase was 5%. The executive
directors have their pay rises based on the same criteria as
all other employees.
We also made other benefits available to all staff,
including cash plans which help with covering medical
expenses such as dental and optical, discounts on a
range of resources to help well being, and made available
an employee assistance programme, with confidential
helplines for stress, financial and other medical issues.
Corporate Governance
Directors’ Remuneration Report
Remuneration Policy
The remuneration policy aims to ensure that all staff
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. When setting individual pay, we look at
their role and where it sits in the James Latham structure,
undertake benchmarking exercises to review the external
market, and review internally with others of equivalent
roles to ensure equality across the group.
The directors remuneration package consists of basic
salary, benefits (comprising car, private medical provision
and cash plan benefits), pensions, annual bonus schemes,
share option schemes and life assurance cover of 4 times
gross salary.
Performance related bonuses
All staff have the opportunity to earn a bonus based on
the performance targets of their individual profit centres,
which in the main reflect the performance of the individual
depot that they work in. I am pleased to report that over
70% of employees have earned a bonus of at least 5%.
The performance related bonuses earned by executive
directors are measured on the achievement of the sum of
the individual profit centre’s targets. These performance
targets are 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
2023 was the achievement of £30,290,000 operating profit,
as measured in the depots management accounts, an
increase of 74.9% over the previous year’s targets. Maximum
bonuses of 39.5% of basic salary are paid on achieving 130%
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 161.8% of the target
operating profit was achieved earning 39.5% of basic salary.
In addition to the performance related targets, 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 7.83% of basic salary to 541
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 page 33.
JAMES LATHAM PLC ANNUAL REPORT 2023
31
Pension Scheme
The James Latham plc Pension and Assurance Scheme,
which is a final salary scheme, was closed to new entrants
in 2003 and there remain 26 employees still accruing
benefits in 2023. All other staff are eligible to join the
defined contribution scheme which matches employee
contributions up to 7.5%.
The executive directors are all members of the
James Latham plc Pension and Assurance Scheme 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%, and so
for all directors their pensionable salary is lower than
their gross salary.
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.
Corporate Governance
Directors’ Remuneration Report
Black & White Building
Built on the site of one of the early James
Latham storage facilities from 1830, the Black
& White Building is the first timber, multi-
story, commercial building to be built in the
City of London since the great fire of 1666.
Working alongside specialist sustainable
architects Waugh Thistleton and Façade
contractor Pacegrade, we supplied the entire
engineered spruce timber curtain walling
system, plus additional panel products from
Viroc for internal communal areas, rooftop
furniture and other high traffic specifications.
32
JAMES LATHAM PLC ANNUAL REPORT 2023
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 2023.
James Latham plc total shareholder return
140
120
100
80
60
40
20
0
-20
-40
2018
2019
2020
2021
2022
2023
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
2022
2023
2022
2023
2022
2023
2022
2023
2022
2023
2022
2023
2022
236
225
207
198
200
190
203
195
39
37
39
37
924
882
1
1
7
9
1
1
2
7
-
-
-
-
113
115
102
104
95
96
102
104
-
-
-
-
350
341
316
311
296
287
307
306
39
37
39
37
11
18
412
419
1,347
1,319
3
3
3
3
3
3
26
12
-
-
-
-
35
21
TOTAL
£000
409
398
395
387
345
334
385
368
39
37
39
37
56
54
76
73
46
44
52
50
-
-
-
-
230
221
1,612
1,561
JAMES LATHAM PLC ANNUAL REPORT 2023
33
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 2023
31 March 2022
Ordinary shares
Preference shares
Ordinary shares
Preference shares
Beneficial owner
Beneficial owner
Beneficial owner
Beneficial owner
Beneficial owner
Beneficial owner
646,082
143,670
642,956
31,866
370,052
-
-
-
567
-
5,088
-
641,614
139,703
638,628
29,657
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 2023
31 March 2022
-
-
-
-
2,475
2,475
2,475
1,237
The Options granted on 2 January 2020 at 727p per share were exercised on 1 March 2023. Mr N.C. Latham, Mr D.A. Dunmow
and Mr P.F. Latham each made a gain of £12,697, and Mr A.G. Wright made a gain of £6,346 on the exercise of these options.
34
JAMES LATHAM PLC ANNUAL REPORT 2023
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 2022
Granted during
the year
Exercised
Outstanding
31 March 2023
Exercise
price
N.C. Latham
D.A. Dunmow
P.F. Latham
A.G. Wright
560
718
466
486
357
-
560
718
466
486
357
-
560
718
466
486
357
-
560
718
466
486
357
-
-
-
-
-
-
360
-
-
-
-
-
360
-
-
-
-
-
360
-
-
-
-
-
360
(560)
-
-
-
-
-
(560)
-
-
-
-
-
(560)
-
-
-
-
-
(560)
-
-
-
-
-
-
718
466
486
357
360
-
718
466
486
357
360
-
718
466
486
357
360
-
718
466
486
357
360
£8.025
£6.26
£9.65
£9.25
£12.60
£12.50
£8.025
£6.26
£9.65
£9.25
£12.60
£12.50
£8.025
£6.26
£9.65
£9.25
£12.60
£12.50
£8.025
£6.26
£9.65
£9.25
£12.60
£12.50
Exercise period
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
11.12.26 to 10.12.31
20.12.27 to 19.12.32
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
11.12.26 to 10.12.31
20.12.27 to 19.12.32
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
11.12.26 to 10.12.31
20.12.27 to 19.12.32
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
11.12.26 to 10.12.31
20.12.27 to 19.12.32
These options will only be exercised if the share price during the exercise period is in excess of the exercise price.
Mr N.C. Latham, Mr D.A. Dunmow and Mr P.F. Latham made a gain of £2,702 and Mr A.G. Wright made a gain of £2,814 on
options exercised during the year.
Deferred Share Bonus Plan
Participation by the directors in the James Latham plc Deferred Share Bonus Plan is as follows:
Outstanding
1 April 2022
Awarded
during the year
Exercised
Outstanding
31 March 2023
Exercise
price
Award
price
Vesting
Date
A.G. Wright
3,254
-
109
2,675
-
-
3,363
2,675
nil
nil
£9.15
£12.10
01.04.2024
01.04.2025
No performance conditions or voting rights apply to these shares, but dividends will be reinvested into additional shares
in the plan.
Paula Kerrigan,
Chairman of the Remuneration Committee
20 July 2023
JAMES LATHAM PLC ANNUAL REPORT 2023
35
Corporate Governance
Directors’ Report
The directors have pleasure in presenting their annual
report and the audited accounts for the year ended
31 March 2023. In accordance with section 414c(11)
of the Companies Act 2006, included in the Strategic
Review is the review of financial risk management, future
developments, 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 2023 are
set out on page 45. The directors recommend the
following dividends:-
Ordinary dividends
Interim dividend paid, 7.25 pence
(2022: 6.5 pence) per ordinary share
Final dividend proposed, 28.8 pence
(2022: 27.0 pence) per ordinary share
Total ordinary dividends, 36.05 pence
(2022: 33.5 pence) per ordinary share
£000
1,446
5,789
7,235
The directors recommend payment of the final dividend
on 25 August 2023 to shareholders on the register of
members at the close of business on 4 August 2023.
Balance sheet and post balance sheet events
The balance sheet on page 46 shows the group’s financial
position. No significant events have occurred since the
balance sheet date.
European Oak Stairs by MG Dales Joinery.
36
JAMES LATHAM PLC ANNUAL REPORT 2023
Directors
All directors of the company were directors throughout
the year. Each director’s biographical details are shown
on page 30.
In compliance with the Articles of Association, Fabian
French, Paula Kerrigan and Nick Latham will retire by
rotation and, being eligible, offer themselves for re-election.
Other than their service contracts, no director has a
material interest in any contract with the company.
Fabian French and Paula Kerrigan, as non-executive
directors, do not have a service contract with the company,
but each has received a letter of appointment for a two
year period. Details of directors’ emoluments, pension
rights, service contracts and the directors’ interests in
the ordinary shares of the company are included in the
Directors’ Remuneration Report on pages 31 to 35.
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 21.
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 23 on
page 79. During the year the company transferred its
remaining 209,200 ordinary shares held as treasury
shares to the Trustees of the James Latham Employee
Benefits Trust to use to satisfy employee share schemes.
The company also holds 208 preference shares in treasury.
In addition the Trustees of the James Latham Employee
Benefits Trust holds 60,362 shares with a view to being
used for employee share schemes.
Corporate Governance
Directors’ Report
Buffalo board being installed in Horse Box.
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. During the year 159,491
options were exercised at an option price of £7.27.
Substantial shareholdings
At 28 June 2023, the company had received notification
under the Disclosure Transparency Rules that the holdings
and voting rights exceeding the 3% notification threshold
were as follows:
On 21 August 2008, the shareholders approved by
special resolution the establishment of the Company
Share Option Scheme. During the year 15,680 options
were issued at an option price of £12.50. In addition
11,373 options were exercised after being held for five
years, 311 at an option price of £7.075 and 11,062 at
an option price of £8.025.
In addition 2,682 shares were awarded under the
Deferred Bonus Scheme 2010 at nil price to be exercised
after 3 years.
Employees
The strategic report on page 4 and 14 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.
Peter Latham
Close Asset Management Ltd
Robert Latham
Nick Latham
Piers Latham
Number
1,216,289
1,015,112
684,121
646,082
642,956
%
6.03
5.04
3.39
3.20
3.19
Suppliers
The group recognises the important part our suppliers
play in our trading success, including the development
of new products, new markets and meeting our
environmental targets. Regular meetings are held at the
highest level with our key suppliers to ensure our trading
and environmental requirements are understood and
forming strategic partnerships to develop the markets.
Operating businesses are responsible for agreeing the
terms and conditions under which business transactions
with their suppliers are conducted. The group’s policy is to
pay suppliers in accordance with these terms. The group’s
creditor days at 31 March 2023 were 33 days (2022: 34 days).
Payment practices and performance data for Lathams
Limited is published at https://check-payment-practices.
service.gov.uk/company/00967247/reports.
JAMES LATHAM PLC ANNUAL REPORT 2023
37
Corporate Governance
Directors’ Report
Going concern
After making appropriate enquiries, the directors have a
reasonable expectation that the company and the group
have adequate resources to continue in operational
existence for the foreseeable future. The directors
confirm that the business is a going concern and that
their assessment of the going concern position has been
prepared in accordance with the Guidance on the Going
Concern Basis of Accounting and Reporting On Solvency
and Liquidity Risks published by the Financial Reporting
Council in April 2016.
In arriving at their opinion, the directors considered:-
• The group’s cash flow forecasts and revenue
projections for the period to 31 July 2024
• 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 15 to 17.
Political and charitable donations
During the year the group made no political contributions
but made direct donations to various charitable
organisations amounting to £44,126 (2022: £22,934).
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 27 to the group accounts
and in the Financial Review on pages 22 to 25.
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.
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.
The Annual General Meeting will be held at the
Leverstock Suite, Holiday Inn, Breakspear Way,
Hemel Hempstead, Herts, HP2 4UA on 23 August 2023
at 12.30pm. Last year all resolutions were passed with
over 90% 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 7. Directors authority to allot shares.
This gives the board the power to allot ordinary shares or
other securities, up to an aggregate nominal amount of
£1,680,000 (or one third of the current ordinary shares).
Resolution 8. Dis-application of pre-emption rights.
The Companies Act 2006 provides that when ordinary
shares are being issued for cash, these shares must
first be offered to existing shareholders on a pro rata
basis. This resolution empowers the board to allot shares
not exceeding 5% of the issued share capital, without
offering to existing shareholders. The board only
anticipates using this power in conjunction with the
employee share schemes.
Resolution 9. Authority for the company to purchase
its own shares. This gives the board the power to purchase
up to 10% of the company’s shares at a price not more
than 105% of the average of the mid market price for the
ten business days preceding the date of the purchase.
On behalf of the Board of Directors
Nick Latham
Chairman
20 July 2023
38
JAMES LATHAM PLC ANNUAL REPORT 2023
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 parent company financial statements for each
financial year. The directors have elected under company
law and are required by the AIM rules of the London
Stock Exchange to prepare the group financial statements
in accordance with UK adopted International Accounting
Standards and have elected under company law to
prepare the parent company financial statements in
accordance with UK adopted International Accounting
Standards and applicable law.
The group and parent company financial statements
are required by law and UK adopted International
Accounting Standards to present fairly the financial
position and performance of the group and the 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.
In preparing each of the group and parent 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 UK-adopted International Accounting Standards;
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.
The directors are responsible for keeping adequate
accounting records that are sufficient to show and
explain the group’s and the company’s transactions and
disclose with reasonable accuracy at any time the financial
position of the group and the company and 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.
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 parent company and of the profit or loss of the group
for that period.
The directors are responsible for the maintenance and
integrity of the corporate and financial information
included on the James Latham plc Investors website,
www.lathamtimber.co.uk/Investors.
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
20 July 2023
Tulipwood Bookcase by Carrington Joiners.
JAMES LATHAM PLC ANNUAL REPORT 2023
39
Independent Auditor’s Report
To the members of James Latham plc
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 2023
which comprise the Consolidated Income Statement,
Consolidated Statement of Comprehensive Income,
Consolidated and Company Balance Sheet, Consolidated
Statement of Changes in Equity, Company Statement of
Changes in Equity, Consolidated and Company Cash
Flow Statement and notes forming part of the Group
Accounts, including summary of significant accounting
policies. The financial reporting framework that has
been applied in their preparation is applicable law and
UK-adopted International Accounting Standards 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 2023 and of the group’s profit for the
year then ended;
• the group financial statements have been properly
prepared in accordance with UK-adopted International
Accounting Standards;
• the parent company financial statements have been
properly prepared in accordance with UK-adopted
International Accounting Standards and as applied in
accordance with the Companies Act 2006; and
Emphasis of matter – dividends not in full
compliance with the Companies Act 2006
We draw attention to note 20.3 to the Group Accounts,
which sets out that James Latham plc has paid dividends
which management have determined subsequently were
not in full compliance with the Companies Act 2006.
The directors have taken legal advice, on the basis of
which a process has been commenced to address this
matter, but the process involved had not been completed
at the date the financial statements were signed off and
at this stage, although the directors are confident that
this process will be successfully completed, they are not
certain of the outcome. Our opinion is not modified in
respect of this matter.
Summary of our audit approach
Key audit matters
Group
• Inventory – valuation
Materiality
Group
• Overall materiality: £1,960,000
(2022: £2,720,000)
• Performance materiality:
£1,470,000 (2022: £2,040,000)
Parent Company
• Overall materiality: £77,700
(2022: £93,900)
• Performance materiality:
£58,200 (2022: £70,400)
• the financial statements have been prepared in accordance
with the requirements of the Companies Act 2006.
Scope
Our audit procedures covered 97%
of revenue, 97% of total assets
and 91% of profit before tax.
Basis for opinion
We conducted our audit in accordance with
International Standards on Auditing (UK) (ISAs (UK))
and applicable law. Our responsibilities under those
standards are further described in the Auditor’s
responsibilities for the audit of the financial statements
section of our report. We are independent of the group
and parent company in accordance with the ethical
requirements that are relevant to our audit of the
financial statements in the UK, including the FRC’s
Ethical Standard as applied to listed entities and we have
fulfilled our other ethical responsibilities in accordance
with these requirements. We believe that the audit
evidence we have obtained is sufficient and appropriate
to provide a basis for our opinion.
Key audit matters
Key audit matters are those matters that, in our
professional judgment, were of most significance in
our audit of the group and parent company financial
statements of the current period and include the most
significant assessed risks of material misstatement
(whether or not due to fraud) we identified, including
those which had the greatest effect on the overall audit
strategy, the allocation of resources in the audit and
directing the efforts of the engagement team. These
matters were addressed in the context of our audit of
the group and parent company financial statements as a
whole, and in forming our opinion thereon, and we do
not provide a separate opinion on these matters.
40
JAMES LATHAM PLC ANNUAL REPORT 2023
Independent Auditor’s Report
To the members of James Latham plc
Inventory provision valuation
Key audit matter
description
As set out in note 16 to the financial statements, the group carried inventory amounting to £67.5m
at 31 March 2023 (2022: £74.2m) and details of the accounting policies applicable during the year are
set out in notes 1.10 and 1.21. Provisioning is the element of the inventory balance which involves the
highest degree of management judgement, and therefore risk of fraud, in arriving at the year-end
inventory valuation and it is this aspect of the year-end inventory valuation that we have designated as
a key audit matter.
How the matter
was addressed
in the audit
To audit the appropriateness of the provision against inventory, we:
• considered management’s stock provisioning policy in the light of the requirements of IAS 2 Inventories
and in the context of the change in the market for the group’s products in the year.
• reviewed and compared the aged profile of inventory and the provision at 31 March 2023 on a group
and individual depot basis. We investigated any significant increase or decrease in the provision
compared to 31 March 2022 and assessed the provision as a percentage of total inventory year on year
to identify any significant changes.
• performed reliability testing on the underlying stock ageing data by testing a sample of sales orders
and stock receipts from Bistrack to supporting documentation to ensure that the transactions have
been recorded accurately.
• obtained loss-making sales report for the period post year end and calculated the total loss on sales
post year end (taking into account products subject to purchase rebates) and compared against the
value of total sales and margin achieved post year end.
• utilised data analytics to analyse the year end inventory value against post year end sales data.
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
£1,960,000 (2022: £2,720,000)
£77,700 (2022: £93,900)
Basis for determining
overall materiality
4.4% (2022: 4.7%) of profit before tax
0.5% (2022: 0.8%) 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 and has no trading activity of
its own.
Performance materiality
£1,470,000 (2022: £2,040,000)
£58,200 (2022: £70,400)
Basis for determining
performance materiality
Reporting of
misstatements to the
Audit Committee
75% of overall materiality
75% of overall materiality
Misstatements in excess of £98,000
(2022: £136,000) and misstatements below
that threshold that, in our view, warranted
reporting on qualitative grounds.
Misstatements of £3,880 (2022: £4,700)
and misstatements below that threshold
that, in our view, warranted reporting on
qualitative grounds.
JAMES LATHAM PLC ANNUAL REPORT 2023
41
Independent Auditor’s Report
To the members of James Latham plc
An overview of the scope of our audit
The group consists of 15 components, all of which are based in the UK and Republic of Ireland.
The coverage achieved by our audit procedures was:
Number of components
Revenue
Total assets
Profit before tax
Full scope audit
Analytical procedures
at group level
Total
2
1
3
97%
3%
97%
3%
100%
100%
91%
1%
92%
Other group companies are dormant and have no trade.
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 management’s cash flow forecast for the
twelve months from anticipated approval of the financial
statements and the results of sensitivity analysis as well as
considering post year end results and cash positions.
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 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.
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.
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.
We have nothing to report in this regard.
Opinions on other matters prescribed by the
Companies Act 2006
In our opinion, based on the work undertaken in the
course of the audit:
• the information given in the Strategic Report and the
Directors’ Report for the financial year for which the
financial statements are prepared is consistent with
the financial statements; and
• the Strategic Report and the Directors’ Report have
been prepared in accordance with applicable legal
requirements.
Matters on which we are required to report by
exception
In the light of the knowledge and understanding of the
group and the parent company and their environment
obtained in the course of the audit, we have not identified
material misstatements in the Strategic Report or the
Directors’ Report.
42
JAMES LATHAM PLC ANNUAL REPORT 2023
Independent Auditor’s Report
To the members of James Latham plc
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 on page 39, the directors are responsible
for the preparation of the financial statements and for
being satisfied that they give a true and fair view, and
for such internal control as the directors determine
is necessary to enable the preparation of financial
statements that are free from material misstatement,
whether due to fraud or error.
In preparing the financial statements, the directors are
responsible for assessing the group’s and the parent
company’s ability to continue as a going concern,
disclosing, as applicable, matters related to going
concern and using the going concern basis of accounting
unless the directors either intend to liquidate the group
or the parent company or to cease operations, or have
no realistic alternative but to do so.
Auditor’s responsibilities for the audit of the
financial statements
Our objectives are to obtain reasonable assurance
about whether the financial statements as a whole
are free from material misstatement, whether due
to fraud or error, and to issue an auditor’s report
that includes our opinion. Reasonable assurance is
a high level of assurance, but is not a guarantee that
an audit conducted in accordance with ISAs (UK) will
always detect a material misstatement when it exists.
Misstatements can arise from fraud or error and are
considered material if, individually or in the aggregate,
they could reasonably be expected to influence the
economic decisions of users taken on the basis of these
financial statements.
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;
• 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.
JAMES LATHAM PLC ANNUAL REPORT 2023
43
Independent Auditor’s Report
To the members of James Latham plc
The most significant laws and regulations were determined as follows:
Legislation / Regulation
UK-adopted International
Accounting Standards and
Companies Act 2006
Tax compliance regulations
Additional audit procedures performed by the Group audit
engagement team included:
• Review of financial statement disclosures and testing to supporting
documentation;
• Completion of disclosure checklists to identify areas of non-compliance.
• Inspection of any advice received from external tax advisers;
• Inspection of any 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 any 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:
Revenue recognition: cut-off
• Tested a sample of goods dispatched records either side of 31 March 2023,
inspected supporting documentation and determined the appropriate
accounting period in which each transaction in the sample should be recorded;
• Testing a sample of sales issued not yet invoiced as at 31 March 2023 to
supporting sales order and goods dispatched records;
• Tested a sample of credit notes raised in the month following the year end and
determining whether they are indicative of an error or potential misstatement
relating to revenue recorded in the year to 31 March 2023;
• Investigated any discrepancies where revenue does not appear to have been
recognised in the correct period according to the supporting documentation.
Inventory provision valuation
• This was a key audit matter. Therefore, the procedures performed are
described in the relevant section above.
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;
• 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: frc.org.uk/auditorsresponsibilities.
This description forms part of our auditor’s report.
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.
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.
William Farren FCA (Senior Statutory Auditor)
For and on behalf of
RSM UK Audit LLP
Statutory Auditor, Chartered Accountants
25 Farringdon Street, London, EC4A 4AB
20 July 2023
44
JAMES LATHAM PLC ANNUAL REPORT 2023
Financial Statements
Consolidated Income Statement
For the year ended 31 March 2023
£’000s
Notes
2023
2022
Continuing Operations
385,368
Revenue
Cost of sales (including warehouse costs) 3 (328,361) (293,839)
408,370
2
91,529
Gross profit
Selling and distribution costs 3 (24,214) (22,151)
Administrative expenses 3 (12,097) (11,213)
80,009
Operating profit
Finance income
Financing costs
Profit before tax
Tax expense
58,165
43,698
5 1,071
29
6 (258) (242)
3
57,952
7 (8,593) (12,310)
44,511
Profit after tax attributable to owners
of the parent company
Earnings per ordinary share (basic)
Earnings per ordinary share (diluted)
9
9
35,918
179.5p
179.2p
45,642
229.3p
228.3p
Consolidated Statement of Comprehensive Income
For the year ended 31 March 2023
£’000s
Notes
2023
2022
45,642
35,918
20.2 1,407
3,625
(632)
233
(424)
(29)
Profit after tax
Other comprehensive income:
Actuarial gain on defined benefit
pension scheme
Deferred tax relating to components of
other comprehensive income
Foreign translation charge
Other comprehensive income for the year,
net of tax
Total comprehensive income attributable to
the owners of the parent company
1,008
3,172
36,926
48,814
JAMES LATHAM PLC ANNUAL REPORT 2023
45
Financial Statements
Consolidated and Company Balance Sheet
As at 31 March 2023
Group
Company
£’000s
Notes
2023
2022
2023
Restated
2022
Restated
2021
Company Registration Number 65619
Assets
Non-current assets
Investments
Goodwill
Other intangible assets
Property, plant and equipment
Right-of-use-assets
Retirement benefit surplus
Deferred tax asset
Total non-current assets
Current assets
Inventories
Trade and other receivables
Cash and cash equivalents
Tax receivable
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
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
10
11
12
13
14
20
15
-
1,193
1,319
37,440
5,817
7,221
-
-
1,372
1,487
36,935
4,154
1,119
154
9,613
-
-
9,613
-
-
221 48
1,485
1,119
129
1,445
7,221
-
9,613
-
-
18
791
-
1,150
16
17
14
18
19
19
14
20
15
21
22
23
52,990
45,221
18,500
12,394
11,572
67,489
66,782
62,609
490
74,230
-
68,332 1,171
104
37,030
-
-
197,370
179,592
1,275
-
3,328
204
-
3,532
-
3,992
168
-
4,160
250,360
224,813
19,775
15,926
15,732
879
41,066
-
-
1,275
50,876
-
400
41,945
52,551
84
1,772
-
-
1,856
82
1,795
936
-
2,813
592
5,130
-
7,118
592
3,133
-
4,566
592
1,343
-
1,787
592
1,430
-
-
12,840
8,291 3,722
54,785
60,842 5,578
2,022
4,835
10
1,193
1,807
-
3,010
592
799
5,933
-
7,324
10,334
195,575
163,971
14,197
11,091
5,398
5,040
5,040
387
5,040
124
5,040
167
- (873) - (873) (471)
395
267
5,040
124 387
398
159,019
398
190,013
395
8,638
395
6,142
Total equity attributable to
shareholders of the parent company
195,575
163,971
14,197
11,091
5,398
The comparative Company financial information has been restated (see note 20.3).
The Company’s profit for the year was £7,653,000 (2022: £6,419,000 as restated). The entity has taken exemption from
presenting its unconsolidated income statement under section 408 of the Companies Act 2006.
These accounts were approved and authorised for issue by the Board of Directors on 20 July 2023 and signed on its behalf by:
N.C. Latham and D.A. Dunmow
The consolidated and company notes on pages 50 to 84 form part of these accounts.
46
JAMES LATHAM PLC ANNUAL REPORT 2023
Financial Statements
Consolidated Statement of Changes in Equity
Attributable to owners of the parent company
Issued
capital
£’000
5,040
-
Share-based
payment
reserve
£’000
Own
shares
£’000
167 (471)
-
-
Capital
reserve
£’000
398
-
Retained
earnings
£’000
Total
equity
£’000
113,950
45,642
119,084
45,642
-
-
-
-
-
-
-
-
-
-
-
-
-
-
- (24) 228
- 75
-
- (630)
-
-
-
169
- -
3,625
3,625
- (424) (424)
- (29) (29)
-
48,814
48,814
- (4,379) (4,379)
-
4 208
- 75
-
-
- 630
169
-
-
Balance at 1 April 2021
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
Transactions with owners:
Dividends
Exercise of options
Deferred tax on share options
Transfer of treasury shares
Share-based payment expense
Total transactions with owners
-
220 (402)
- (3,745) (3,927)
Balance at 31 March 2022
5,040
387 (873)
398
159,019
163,971
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
Transactions with owners:
Dividends
Exercise of options
Deferred tax on share options
Transfer to retained earnings
Share-based payment expense
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
- (386) 1,397
- (59)
-
- (524)
-
-
-
182
-
-
35,918
35,918
1,407
1,407
- (632) (632)
- 233 233
-
36,926
36,926
- (6,825) (6,825)
369
-
1,380
- (59)
-
-
-
182
-
524
-
Total transactions with owners
- (263)
873
- (5,932) (5,322)
Balance at 31 March 2023
5,040
124
-
398
190,013
195,575
JAMES LATHAM PLC ANNUAL REPORT 2023
47
Financial Statements
Company Statement of Changes in Equity
Issued
capital
£’000
5,040
-
5,040
-
-
-
-
Attributable to owners of the parent company
Share-based
payment
reserve
£’000
Own
shares
£’000
Capital
reserve
£’000
Restated
Retained
earnings
£’000
Total
equity
£’000
167 (471)
-
-
395
10,204
- (4,806) (4,806)
5,073
167 (471)
395
267
5,398
-
-
-
-
-
-
-
-
-
-
-
- (24) 228
- 75
-
- (630)
-
-
-
169
- 6,419 6,419
-
3,625
3,625
- (424) (424)
-
9,620
9,620
- (4,379) (4,379)
4 208
-
- 75
-
-
- 630
169
-
-
Balance at 1 April 2021
Prior period adjustment
Restated balance at 1 April 2021
Profit for the year (restated)
Other comprehensive income:
Actuarial gain on defined benefit
pension scheme (restated)
Deferred tax relating to components of
other comprehensive income (restated)
Total comprehensive income
for the year
Transactions with owners:
Dividends
Exercise of options
Deferred tax on share options
Transfer of treasury shares
Share-based payment expense
Total transactions with owners
- 220 (402)
- (3,745) (3,927)
Balance at 31 March 2022
5,040
387 (873)
395 6,142
11,091
Profit for the year
Other comprehensive income:
Actuarial gain on defined benefit
pension scheme
Deferred tax relating to components
of other comprehensive income
Total comprehensive income for the year
-
-
-
-
-
-
-
-
Transactions with owners:
Dividends
Exercise of options
Deferred tax on share options
Transfer to retained earnings
Share-based payment expense
-
-
- (386)
- (59)
-
-
1,397
-
- (524)
-
182
-
-
-
-
-
-
-
7,653
7,653
1,407
1,407
- (632) (632)
-
8,428
8,428
- (6,825) (6,825)
1,380
- 369
- (59)
-
-
-
182
-
524
-
Total transactions with owners
- (263)
873
- (5,932) (5,322)
Balance at 31 March 2023
5,040
124
-
395
8,638
14,197
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 Group’s share option schemes.
The capital reserve represents the cancellation of the preference shares.
* See note 20.3 for details regarding the restatement as a result of an error.
48
JAMES LATHAM PLC ANNUAL REPORT 2023
Financial Statements
Consolidated and Company Cash Flow Statement
For the year ended 31 March 2023
Group
Company
£’000s
Notes
2023
2022
2023
2022
Net cash flow from operating activities
Cash generated from/(used in) operations
Interest paid
Income tax paid
24
43,864
30,983 (2,223) (1,786)
(53) (59) (48) (48)
1,717 -
(7,498) (10,259)
Net cash inflow/(outflow) from operating activities
36,313
20,665 (554) (1,834)
Cash flows from investing activities
Interest received and similar income
Dividend received
Acquisition of businesses net of cash and
cash equivalents acquired
Purchase of property, plant and equipment
Proceeds from sale of property, plant
and equipment
822
-
29
-
46
8,500
1
7,209
- (2,238)
-
(3,304) (4,319) (200) (33)
-
72
62
-
-
Net cash (outflow)/inflow from investing activities
(2,410) (6,466)
8,346
7,177
Cash flows from financing activities
Lease liability payments (1,499) (1,408) (131) (57)
Equity dividends paid (6,825) (4,379) (6,825) (4,379)
Net cash outflow from financing activities
(8,324) (5,787) (6,956) (4,436)
Increase in cash and cash equivalents
for the year
Cash and cash equivalents at
beginning of year
25,579
8,412
836
907
37,030
28,618 (732) (1,639)
Cash and cash equivalents at end of year
62,609
37,030 104 (732)
Balance sheet cash and cash equivalents
Bank overdraft in current liabilities (note 19)
62,609
-
37,030
-
204
104
- (936)
Cash and cash equivalents at end of year
62,609
37,030
104 (732)
JAMES LATHAM PLC ANNUAL REPORT 2023
49
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 C2 Breakspear Park,
Breakspear Way, Hemel Hempstead, Herts, HP2 4TZ.
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 UK-adopted International
Accounting Standards and Companies Act 2006.
The accounts have been prepared under the historical
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 38. 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 IAS 16: Property, Plant and
Equipment – Proceeds before Intended Use (effective
1 January 2022)
- Annual Improvements 2018-2020 Cycle:
Amendments to IFRS 1, IFRS 9, IFRS 16 and IAS 4
(effective 1 January 2022)
- Amendments to IFRS 3: Reference to the Conceptual
Framework (effective 1 January 2022)
- Amendments IAS 37: Onerous Contracts – Cost of
Fulfilling a Contract (effective 1 January 2022)
The above amendments 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 IAS 1: Presentation of Financial Statements:
Classification of Liabilities as Current or Non-Current and
Classification of Liabilities as Current or Non-Current –
Deferral of Effect Date (effective 1 January 2023)
- IFRS17 Insurance Contracts (effective 1 January 2023)
- Amendments to IAS 1 ‘Classification of Liabilities as
Current or Non-Current (effective 1 January 2023)
- Amendments to IAS 1 and IFRS Practice Statement 2
‘Disclosure of Accounting Policies’ (effective 1 January 2023)
- Amendments to IAS 12 ‘Deferred Tax related to Assets
and Liabilities arising from a Single Transaction’ (effective
1 January 2023)
- Amendments to IAS 8 ‘Definition of Accounting Estimates’
(effective 1 January 2023)
- Amendments to IFRS16 ‘Lease liability in a sales and
Leaseback (effective 1 January 2024)
- Amendments to IAS 7 and IFRS 7 ‘Supplier Finance
Arrangements’ (effective 1 January 2024)
The Directors do not expect the adoption of these
standards and amendments to have a material impact on
the Financial Statements.
(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.
50
JAMES LATHAM PLC ANNUAL REPORT 2023
Financial Statements
Notes forming part of the Group Accounts
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 as this is when
the performance obligation in the contract is fulfilled and
when control of the goods transfers to 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.
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 of the Group’s consolidated
financial statements.
Amounts presented in the 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.
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.
JAMES LATHAM PLC ANNUAL REPORT 2023
51
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. For trade receivables, the group uses the
simplified approach permitted by IFRS 9 which requires
expected lifetime losses to be recognised from initial
recognition of receivables.
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 2023 or 31 March 2022
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.
52
JAMES LATHAM PLC ANNUAL REPORT 2023
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.
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.
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.
1.15 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 asset disclosed
in the balance sheet at 31 March 2023, and of the amounts
charged/credited to the income statement and equity, are
set out in note 20 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 at
the earlier of the date when a plan amendment or
curtailment occurs and the date when an entity recognises
any termination benefits, or related restructuring costs
under IAS 37 Provisions, Contingent liabilities and
Contingent Assets. 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 retirement benefit obligation recognised in the
balance sheet represents the present value of the defined
benefit obligation, as reduced by the fair value of scheme
assets. Any asset resulting from the calculation is limited
to the present value of available refunds and reductions
in future contributions to the plan. Where the Group
is considered to have a contractual obligation to fund
the pension scheme above the accounting value of the
liabilities, an onerous obligation is recognised.
Pension payments to the group’s defined contributions
schemes are charged to the income statement as they arise.
JAMES LATHAM PLC ANNUAL REPORT 2023
53
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.
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 a 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 expenses (see note 4.)
1.20 Investments in subsidiaries
Investements in subsidiaries are stated at cost less
accumulated impairment losses in the Company’s
balance sheet.
1.21 Accounting estimates and judgements
The directors have considered the critical accounting
estimates and judgements used in the financial statements
and concluded that the main areas of judgements and
estimation are:
i. Post-employment benefits
ii. Stock obsolescence provision
iii. Leased assets
These judgements and 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. Specifically, our
deficit recovery plan includes a potential requirement to
pay additional contributions, linked to future dividends
being above £4m in any year. A key accounting judgement
in relation to this is that future dividends are at the
discretion of the directors, can therefore be avoided, and
have not been taken into account of in the assessment
of the deficit recovery plan under IFRIC 14. 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,
including in respect of the estimation of the impact of
IFRIC 14 on the recognised asset/liability, actual outcomes
could differ from those assumptions and estimates.
In determining the recoverable amount of inventories
the Directors have to make estimates to arrive at cost
and net realisable value. Note 16 shows the estimate for
obsolete and slow moving stock which has been made
using a consistent approach to all stock lines. The estimate
is calculated by reviewing the activity and age of each
individual stockline to highlight those lines that could
result in future sales below cost if a provsion for obsolete
and slow moving stock had not been included.
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.
54
JAMES LATHAM PLC ANNUAL REPORT 2023
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 of Ireland.
The geographical turnover is as follows:
Republic of Ireland
Rest of Europe
Rest of the World
United Kingdom
2023
£’000
2022
£’000
17,079
16,937
68 271
38
368,122
-
391,223
408,370
385,368
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.
All revenue is recognised at a point in time for both financial years.
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 losses/(gains)
Cost of inventories recognised as an expense and included
in ‘cost of sales’ in the consolidated income statement
Government grants from furlough scheme
Depreciation of property, plant and equipment (note 13)
Depreciation of right-of-use assets (note 14)
(Profit)/loss 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
2023
£’000
27,835
324
306,779
-
2,773
1,232
(46)
168
2022
£’000
24,998
(367)
278,568
(12)
2,659
1,301
50
168
17 25
151
-
15
25,424
364,672
104
-
11
19,698
327,203
JAMES LATHAM PLC ANNUAL REPORT 2023
55
Financial Statements
Notes forming part of the Group Accounts
4. Information regarding employees
The monthly average number of persons, including directors, employed by the group during the year was as follows:
Management and administration
Warehousing
Selling
Distribution
The aggregate payroll costs of these
employees were as follows:
Wages and salaries
Social security costs
Apprenticeship levy
Pension costs
Government grants from furlough scheme
Share-based payment
Group
Company
2023
Number
2022
Number
2023
Number
2022
Number
77
210
158
98
543
73
191
144
90
498
30
-
-
-
30
28
-
-
-
28
£’000
£’000
£’000
£’000
22,494
2,477
95
2,587
20,503
2,230
77
2,031
- (12)
169
182
2,274
281
10
4,842
-
182
2,162
268
8
3,737
-
169
27,835
24,998
7,589
6,344
Of the above payroll costs, £7,698,000 (2022: £6,806,000) is included in cost of sales, £13,119,000 (2022: £11,718,000)
is included in selling and distribution costs, and £7,018,000 (2022: £6,474,000) is included in administrative expenses
in the income statement.
5. Finance income
On pension surplus
Bank deposit interest
Interest receivable
The interest received is on bank deposits.
6. Finance costs
On bank loans and overdrafts
On pension liability
Interest on lease liabilities
On 8% Cumulative Preference shares
2023
£’000
249
822
1,071
2023
£’000
2022
£’000
-
29
29
2022
£’000
5
11
- 18
165
48
205
48
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.
258
242
56
JAMES LATHAM PLC ANNUAL REPORT 2023
Financial Statements
Notes forming part of the Group Accounts
7. Tax expense
The charge for taxation on profit comprises:
2023
£’000
2022
£’000
Current year:
7,359
UK corporation tax at 19% (2022: 19%)
Prior year (769)
1,208
Deferred taxation - post employment benefits
769
- prior year
-
- change in tax rates
- other
10,383
-
827
-
879
26 221
Profit before taxation
Tax at 19% (2022: 19%)
8,593
44,511
8,457
12,310
57,952
11,011
Tax effect of expenses/credits that are not deductible/
68
taxable in determining taxable profit
IBAs derecognised in current year (21) (21)
Prior year – corporation tax (769)
-
-
769
Prior year – deferred tax
879
-
Change in tax rates
373
71
Other
86
Total tax charge
8,593
12,310
The change in tax rates in the prior year is based on the future corporation tax rate increasing from 19% to 25%.
8. Dividends
2023 2022
Ordinary dividends:
Final 27.0p per share paid 2 September 2022 (2021: 15.5p)
Interim 7.25p per share paid 27 January 2023 (2022: 6.5p)
5,380
1,445
3,084
1,295
£’000
£’000 £’000 £’000
6,825 4,379
The Directors propose a final dividend for 2023 of 28.8p per share, that, subject to approval by the shareholders,
will be paid on 25 August 2023 to shareholders on the register on 4 August 2023.
Based on the number of shares currently in issue, the final dividend for 2023 is expected to absorb £5,789,000.
JAMES LATHAM PLC ANNUAL REPORT 2023
57
Financial Statements
Notes forming part of the Group Accounts
9. Earnings per ordinary share
Earnings per ordinary share is calculated by dividing the net profit for the year attributable to ordinary shareholders
by the weighted average number of ordinary shares outstanding during the year.
Profit attributable to ordinary equity holders
2023
’000
35,918
2022
’000
45,642
20,160
Issued ordinary share capital
Less: weighted average number of own shares held in treasury (105) (234)
Less: weighted average number of own shares held in ESOP Trust (46) (21)
20,160
Weighted average share capital
Add: dilutive effects of share options issued
Weighted average share capital for diluted earnings per ordinary share calculation
Earnings per ordinary share (basic)
Earnings per ordinary share (diluted)
20,009
31
20,040
179.5p
179.2p
19,905
85
19,990
229.3p
228.3p
10. Fixed asset investments – Company
Shares:
At 1 April 2021, 2022 and 31 March 2023
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%
England and Wales
James Latham Trustee Limited
England and Wales
LDT Westerham Limited
Baüsen Limited
England and Wales
James Latham (Midland and Western) Limited* England and Wales
England and Wales
Advanced Technical Panels Limited*
Latham Timber Centres (Bridgwater) Limited England and Wales
England and Wales
James Latham (Warehousing) Limited
England and Wales
Dresser Mouldings (Rochdale) Limited*
Northern Ireland
Sarcon (No. 155) Limited
England and Wales
I.J.K. Timber Group Limited
Irvin and Sellers Limited*
Keizer Venesta Limited*
Northern Hardwoods Limited*
William Davidson (Timber) Limited*
Northern Ireland
Northern Ireland
Northern Ireland
Northern Ireland
* Indirectly held.
£1 Ordinary
£1 Ordinary
£1 Ordinary
£1 Ordinary
£1 Ordinary
£1 Ordinary
£1 Ordinary
£1 Ordinary
£1 Ordinary
£1 Ordinary
£1 Ordinary
£1 Ordinary
£1 Ordinary
£1 Ordinary
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
Importing and distribution
of timber and panel products
Importing and distribution
of timber and panel products
Corporate Trustee Company
Dormant
Dormant
Dormant
Dormant
Dormant
Dormant
Dormant
Dormant
Importing and distribution
of timber and panel products
Dormant
Dormant
Dormant
Dormant
All companies operate within the United Kingdom and the Republic of Ireland and their registered office is at Unit C2
Breakspear Park, Breakspear Way, Hemel Hempstead, Herts, HP2 4TZ except for Sarcon (No. 155) Limited, Irvin and Sellers
Limited, Keizer Venesta Limited, Northern Hardwoods Limited and William Davidson (Timber) Limited whose registered
office is 24-28 Duncrue Street, Belfast, Co Antrim, Northern Ireland, BT3 9AR.
58
JAMES LATHAM PLC ANNUAL REPORT 2023
Financial Statements
Notes forming part of the Group Accounts
11. Goodwill
Cost:
At 1 April 2021
Additions
At 1 April 2022
Additions
At 31 March 2023
Impairment
At 1 April 2021
Charge for impairment during the year
At 1 April 2022
Charge for impairment during the year
At 31 March 2023
Net book value
At 31 March 2023
At 31 March 2022
At 31 March 2021
Goodwill
£’000
997
500
1,497
-
1,497
125
-
125
179
304
1,193
1,372
872
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 pre-tax discount rate used is the group’s estimated weighted average cost of capital which is currently 6%
(2022: 6%). The key assumptions in the impairment review used an annual growth rate in gross margins of 5.5%
(2022: 5.5%) with a perpetuity rate of 2% (2022: 2%).
The review performed at the year end resulted in an impairment of the goodwill recognised on the acquisition of
Abbey Wood Agencies Limited. For all other goodwill, the year end review 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.
JAMES LATHAM PLC ANNUAL REPORT 2023
59
Financial Statements
Notes forming part of the Group Accounts
12. Intangible assets – Group
Cost:
At 1 April 2021 and 2022
Additions on acquisition
At 31 March 2023
Amortisation
At 1 April 2021
Charge for the year
At 1 April 2022
Charge for the year
At 31 March 2023
Net book value
At 31 March 2023
At 31 March 2022
At 31 March 2021
Trademark
£’000
Customer
Lists
£’000
1
-
1
-
-
-
-
-
1
1
1
2,016
-
2,016
362
168
530
168
698
1,318
1,486
1,654
Total
£’000
2,017
-
2,017
362
168
530
168
698
1,319
1,487
1,655
The amortisation charge is included in the income statement under administrative expenses.
The registered trademarks of the company are Woodex®, Buffalo® Board and Baüsen® 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.
The company does not have any intangible assets at 31 March 2023 or 31 March 2022.
60
JAMES LATHAM PLC ANNUAL REPORT 2023
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 2021
Additions
Acquisition
Disposals
At 1 April 2022
Additions
Disposals
At 31 March 2023
Depreciation:
At 1 April 2021
Disposals
Charge for the year
At 1 April 2022
Disposals
Charge for the year
At 31 March 2023
Net book value
At 31 March 2023
At 31 March 2022
At 31 March 2021
30,170
121
-
(3)
30,288
1,500
-
51,281
4,319
45
- (793) (796)
20,496
4,196
45
615
2
-
54,849
617
7
3,304
- (1,041) (1,041)
23,944
1,797
31,788
624
24,700
57,112
4,301
15,939
(1) - (683) (684)
2,659
11,164
2,192
429
474
38
4,729
-
448
512
12,673
17,914
- (1,015) (1,015)
37 2,288 2,773
5,177
549
13,946
19,672
26,611
25,559
25,869
75
105
141
10,754
11,271
9,332
37,440
36,935
35,342
Included in freehold property is land with a book value of £8,519,000 (2022: £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
2023
£’000
1,711
852
210
2,773
2022
£’000
1,678
803
178
2,659
JAMES LATHAM PLC ANNUAL REPORT 2023
61
Financial Statements
Notes forming part of the Group Accounts
13.2 Company
Cost:
At 1 April 2021
Additions
At 1 April 2022
Additions
Disposals
At 31 March 2023
Depreciation:
At 1 April 2021
Charge for the year
At 1 April 2022
Disposals
Charge for the year
At 31 March 2023
Net book value
At 31 March 2023
At 31 March 2022
At 31 March 2021
Plant, equipment and vehicles
£’000
374
33
407
200
(338)
269
356
3
359
(329)
18
48
221
48
18
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
19
91
Range of
remaining
lease
1-52 years
1-4 years
2023
Average
remaining
lease
8 years
2 years
2022
Average
remaining
lease
8 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.
62
JAMES LATHAM PLC ANNUAL REPORT 2023
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:
Group
Company
Property
£’000
Vehicles
£’000
Total
£’000
Cost:
6,600
At 1 April 2021
Additions
1,391
Disposals (80) (43) (123)
1,197
267
5,403
1,124
At 1 April 2022
7,868
2,895
Additions
Disposals (1,064) (302) (1,366)
6,447
2,570
1,421
325
At 31 March 2023
7,953
1,444
9,397
Depreciation:
2,536
At 1 April 2021
Charge for the year
1,301
Disposals (80) (43) (123)
1,799
916
737
385
Property
£’000
Vehicles
£’000
Total
£’000
816
683
845
29
733
50
- (15) (15)
1,499
-
-
1,499
64
-
-
64
1,563
-
-
1,563
29
20
54
25
39
19
- (15) (15)
3,714
At 1 April 2022
Charge for the year
1,232
Disposals (1,064) (302) (1,366)
1,079
280
2,635
952
At 31 March 2023
2,523
1,057
3,580
49
21
-
70
Balance sheet value
At 31 March 2023
At 31 March 2022
At 31 March 2021
5,430
387
5,817
1,429
3,812
3,604
342
460
4,154
4,064
1,450
787
The depreciation charge is included in the income statement as follows:
29
19
-
48
16
35
4
Cost of sales
Selling and distribution costs
Administrative expenses
Group
Company
2023
£’000
952
247
33
1,232
2022
£’000
916
309
76
1,301
2023
£’000
-
-
40
40
78
40
-
118
1,445
1,485
791
2022
£’000
-
-
39
39
JAMES LATHAM PLC ANNUAL REPORT 2023
63
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
2023
£’000
879
5,130
6,009
2022
£’000
1,275
3,133
4,408
2023
£’000
84
1,343
1,427
2022
£’000
82
1,430
1,512
The lease liabilities are secured by the related underlying assets. The undiscounted maturity analysis of lease
liabilities at 31 March 2023 is as follows:
Group
Within
1 year
£’000
1-2 years
£’000
2-5 years
£’000
5-10 years
£’000
over
10 years
£’000
2023
Total
£’000
2022
Total
£’000
Lease payments
5,560
Finance costs (167) (140) (324) (269) (558) (1,458) (1,152)
7,467
1,419
1,656
2,579
1,046
767
Net present values
879
627
1,332
2,310
861
6,009
4,408
Company
Within
1 year
£’000
1-2 years
£’000
2-5 years
£’000
5-10 years
£’000
over
10 years
£’000
2023
Total
£’000
2022
Total
£’000
Lease payments
2,448
Finance costs (43) (41) (108) (134) (558) (884) (936)
2,311
1,251
339
467
127
127
Net present values
84
86
231
333
693
1,427
1,512
At 31 March 2023 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
2023
£’000
1,001
2022
£’000
341
A total of £1,499,000 (2022: £1,408,000) was paid during the year in respect of lease principal for the Group.
A total of £131,000 (2022: £57,000) was paid during the year in respect of lease principal for the Company.
These figures are reflected in the statement of cash flows within financing activities.
64
JAMES LATHAM PLC ANNUAL REPORT 2023
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
1,174
1,174
-
As at 1 April 2021 asset
- (1,762) (1,263) (314) (3,339)
As at 1 April 2021 liability
(Charge)/credit to the income statement (827)
41 (1,048)
Change in tax rates in income statement 156 (556) (380) (99) (879)
Credit to other comprehensive
income and equity (349)
-
Acquisitions
- (349)
29
-
-
29
- (262)
-
-
-
-
At 31 March 2022 asset
At 31 March 2022 liability
154
154
- (2,318) (1,876) (372) (4,566)
-
-
-
(Charge)/credit to the income statement (1,208)
Credit to other comprehensive
income and equity (691)
- (837) 42 (2,003)
- (12)
- (703)
At 31 March 2023 asset
-
-
-
-
0
At 31 March 2023 liability (1,745) (2,318) (2,725) (330) (7,118)
* Includes accelerated capital allowances, industrial buildings allowances and trading losses.
15.2 Company
The deferred tax asset/(liability) is made up as follows:
At 1 April 2021 – restated
Charge to the income statement
Change in tax rates in income statement
Charge to other comprehensive income and equity
At 31 March 2022 – restated
Charge to the income statement
Charge to other comprehensive income and equity
At 31 March 2023
Restated Post-
employment
benefits
£’000
Accelerated
capital
allowances
£’000
Total
£’000
1,172 (22)
1,150
(826)
154
(349)
- (826)
- 154
- (349)
151 (22)
129
(1,208) (17) (1,225)
(691)
- (691)
(1,748) (39) (1,787)
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 2023
65
Financial Statements
Notes forming part of the Group Accounts
16. Inventories
2023
£’000
2022
£’000
Finished goods and goods for resale
75,237
Less: provisions for slow moving and obsolete stock (1,138) (1,007)
68,627
67,489
74,230
The inventories impairment charge for the year ended 31 March 2023 was £856,000 (2022: £603,000).
Impairment charges reversed during the year were £725,000 (2022: £710,000). 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 did not have any inventories at either 31 March 2023 or 31 March 2022.
17. Trade and other receivables
Trade receivables
Other receivables:
Other receivables
Amounts owed by subsidiaries
Tax receivable
Prepayments
Group
Company
2023
£’000
61,439
2,760
-
-
2,583
5,343
2022
£’000
63,295
2,912
-
-
2,125
5,037
66,782
68,332
2023
£’000
6
37
22
1,014
92
1,165
1,171
2022
£’000
14
3
1,550
1,717
44
3,314
3,328
The directors consider that the carrying amount of trade and other receivables approximates their fair value.
Trade receivables amounted to £61,439,000 (2022: £63,295,000), net of a provision of £200,000 (2022: £305,000) for
impairment. Movements on the group provisions for impairment were as follows:
At 1 April 2022
Provisions for receivables impairment
Receivables written off during the year as uncollectible
At 31 March 2023
Group
2023
£’000
2022
£’000
161
447
(623) (303)
305
518
200
305
66
JAMES LATHAM PLC ANNUAL REPORT 2023
Financial Statements
Notes forming part of the Group Accounts
17. Trade and other receivables (continued)
The following table provides information about the exposure to credit risk and expected credit losses for trade
receivables as at 31 December 2023.
2023
£’000
2022
£’000
Trade
receivables
Loss rate
percentage
Expected
credit loss
Trade
receivables
Loss rate
percentage
Expected
credit loss
Current (not past due)
34,538
0.0%
-
37,298
0.0%
Days overdue:
1 - 30
31 - 60
61 - 90
More than 90
21,638
4,815
372
276
61,639
0.0%
0.0%
0.0%
72.5%
0.3%
-
-
-
200
200
21,848
3,965
139
350
63,600
0.0%
0.0%
0.0%
87.1%
0.5%
-
-
-
-
305
305
The group has recognised an impairment against specifically identified expected credit losses (“ECLs”) at year end
of £200,000 (2022: £305,000). 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 (2022: £nil).
At 31 March 2023, £60,552,000 (2022: £62,063,000) of trade and other receivables were denominated in sterling,
£3,485,000 (2022: £3,723,000) were denominated in Euros and £128,000 (2022: £421,000) were denominated in US
dollars. The Company balances are all denominated in sterling.
Based on the balance sheet value of trade and other receivables, as shown above, a 10% change in the currency
exchange rate would lead to an increase or decrease in income and equity of £361,000 (2022: £414,000).
Amounts owed by subsidiaries are interest free and repayable on demand.
JAMES LATHAM PLC ANNUAL REPORT 2023
67
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
2023
£’000
25,745
7,694
-
5,247
2,380
41,066
2022
£’000
34,758
7,937
-
3,909
4,272
50,876
2023
£’000
80
763
9
771
149
2022
£’000
46
857
-
706
186
1,772
1,795
Trade and other payables principally comprise amounts outstanding for trade purchases and ongoing costs.
The average credit period taken for trade purchases is 33 days (2022: 34 days). The directors consider that the
carrying amount of trade payables approximates to their fair value.
At 31 March 2023, £28,613,000 (2022: £33,851,000) of trade and other payables were denominated in sterling,
£1,237,000 (2022: £2,593,000) in US dollars, £1,142,000 (2022: £2,133,000) in Euros and £nil (2022: £90,000) 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 (2022: £482,000).
19. Interest bearing loans and borrowings
Current liabilities
Bank overdraft
Non-current liabilities
Cumulative preference shares
of £1 each (note 21)
Total
Group
Company
2023
£’000
2022
£’000
2023
£’000
-
-
592
592
-
-
592
592
-
-
592
592
2022
£’000
936
936
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.
68
JAMES LATHAM PLC ANNUAL REPORT 2023
Financial Statements
Notes forming part of the Group Accounts
20. Retirement and other benefit obligation
Group
Retirement surplus (note 20.2) (14,960) (6,993)
IFRIC 14 adjustment
5,874
7,739
Net defined benefit surplus after IFRIC 14 adjustment (7,221) (1,119)
2023
£’000
2022
£’000
The company has the legal right to benefit from any surplus on the winding up of the scheme. The IAS19 valuation
at 31 March 2023 showed the scheme had an accounting surplus of £14,960,000. Under IFRIC 14, we are required to
consider how much of this surplus plus future committed deficit recovery contributions at the reporting date will be
recovered through a reduction of future contributions, or by refund of the surplus. A restriction of 35% has been applied
in respect of the authorised surplus payments charge that would be withheld by the scheme on a repayment of a surplus.
The annual funding update on an actuarial basis shows that at 31 March 2023, the scheme has a £3,680,000 deficit
(2022: £3,680,000 deficit) and we are on target to eliminate the actuarial deficit by the next triennial valuation on
31 March 2024, where the deficit recovery contributions will be reassessed. The IFRIC 14 adjustment is therefore a
technical accounting adjustment and unlikely to occur in practice.
20.1. Group pension schemes – Group and Company*
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. 22% (2022: 31%)
of the assets are invested in equities, with 12% (2022: 22%) under passive management by Blackrock and 10%
(2022: 9%) in a Multi-Asset Credit fund managed by Wellington. 78% (2022: 59%) are held in bonds and gilts, with
19% (2022: 18%) in a Buy and Maintain Fund managed by Mercers, 9% (2022: 8%) in an Absolute Return Fund
managed by Wellington and 42% (2022: 33%) in an Index Linked fund managed by Blackrock, with the remaining
8% (2022: 8%) in a HLV Property Fund managed by Aegon. In 2022, there was also 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 £2,587,000 (2022: £2,031,000). Of the charge, £487,000
(2022: £405,000) is included in cost of sales, £1,152,000 (2022: £924,000) is included in selling and distribution
costs, and £948,000 (2022: £702,000) 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.
* The pension scheme figures, along with any deferred tax have been included in the restated Company accounts for
2022 and 2021 and the accounts for 31 March 2023. The adjustments to the Company accounts can be seen in note 20.3.
JAMES LATHAM PLC ANNUAL REPORT 2023
69
Financial Statements
Notes forming part of the Group Accounts
20.2. Group defined benefit pension scheme
The group operates a defined benefit pension 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 £51,442,000 (2022: £68,534,000) includes £12,539,000 (2022: £18,516,000) in
relation to active members, £10,046,000 (2022: £14,275,000) in relation to deferred members and £28,857,000
(2022: £35,743,000) in relation to members in retirement.
The retirement benefit asset recognised in the balance sheet is the present value of the defined benefit obligations,
less the fair value of the scheme assets, adjusted for the impact of IFRIC 14. Actuarial gains and losses are immediately
recognised in the statement of other comprehensive income.
2023
£’000
2022
£’000
Change in benefit obligation
Benefit obligation at beginning of year
71,364
Service cost
596
1,480
Interest cost
Actuarial gain (17,126) (2,483)
Benefits paid (2,381) (2,425)
Premiums paid (13) 2
68,534
602
1,826
Benefit obligation at end of year
Analysis of defined benefit obligation
Schemes that are wholly or partly funded
51,442
51,442
68,534
68,534
Change in scheme assets
68,803
Fair value of scheme assets at beginning of year
Interest income
1,462
Return on plan assets (excluding interest income) (13,854) 3,644
4,041
Employer contributions (incl. employer direct benefit payments)
Benefits paid from plan (2,381) (2,425)
Expenses paid (13) 2
75,527
2,075
5,048
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
66,402
51,442
66,402
75,527
68,534
75,527
Net defined surplus before IFRIC 14 adjustment (14,960) (6,993)
5,874
IFRIC 14 adjustment
7,739
Net defined benefit surplus after IFRIC 14 adjustment (7,221) (1,119)
70
JAMES LATHAM PLC ANNUAL REPORT 2023
Financial Statements
Notes forming part of the Group Accounts
20.2. Group defined benefit pension scheme (continued)
2023
£’000
2022
£’000
Components of pension expense
596
Current service cost
Interest cost
1,480
Income on plan assets (2,075) (1,462)
602
1,826
Total pension expense recognised in the income statement
353
614
Actuarial gain immediately recognised (3,272) (6,127)
2,502
IFRIC 14 adjustment
1,865
Total recognised in the statement of other Comprehensive income (1,407) (3,625)
Cumulative amount of actuarial loss immediately recognised
7,990
9,397
2023
2022
Plan assets
The asset allocations at the year end were as follows:
Equities
Bonds
Property
Diversified Credit Fund
Other
Amounts included in the fair value of assets for
Equity instruments
Bond instruments
Property occupied
Diversified Credit Fund
Other assets used
Summary of Plan assets
Quoted assets
Unquoted assets
11.6%
60.5%
7.9%
19.7%
0.3%
100.0%
2023
£’000
7,723
40,164
5,278
13,030
207
66,402
2023
£’000
60,917
5,485
66,402
21.8%
50.6%
8.3%
17.4%
1.9%
100.0%
2022
£’000
16,495
38,189
6,277
13,116
1,450
75,527
2022
£’000
67,800
7,727
75,527
JAMES LATHAM PLC ANNUAL REPORT 2023
71
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
2023
4.70%
3.90%
3.30%
2.90%
2.90%
22.4
24.5
23.7
25.8
4.70%
3.90%
2022
2.70%
4.40%
3.80%
3.40%
3.30%
22.3
24.5
23.6
25.7
2.70%
4.40%
Maturity profile of obligations
The weighted average duration of the obligations of the defined benefit pension scheme is 13 years. At the time
of the most recent triennial valuation, 48% of the liabilities were in respect of members who were yet to retire.
At 31 March 2023, the youngest member of the scheme was 46 years old. It is therefore expected that all members
of the scheme will have retired in 19 years’ time.
Sensitivity analysis of the key assumptions
The main exposure 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:
(1,492)
Discount rate increases by 0.25%
Inflation rate increases by 0.25%
1,029
Life expectancy increases by one year 1,698
Impact on deficit
(Decrease)/increase
£’000
72
JAMES LATHAM PLC ANNUAL REPORT 2023
Financial Statements
Notes forming part of the Group Accounts
20.2. Group defined benefit pension scheme (continued)
The major categories and fair values of scheme assets at the end of the reporting period for each category are as follows:
Level 1:
Cash
Level 2:
Equities
Index-linked gilts
Total return fund
Multi-sector credit fund
Buy and maintain fund
Property funds
2023
£’000
207
7,723
27,684
6,183
6,847
12,480
5,278
66,402
2022
£’000
1,450
16,495
24,637
5,963
7,153
13,552
6,277
75,527
History of plan assets and defined benefit obligation
Present value of defined benefit obligation
Fair value of plan assets
2023
£’000
51,442
66,402
2022
£’000
68,534
75,527
2021
£’000
71,364
68,803
2020
£’000
69,995
58,183
2019
£’000
69,819
61,105
Net (asset)/ liability before impact of IFRIC 14
(14,960) (6,993)
2,561
11,812
8,714
Contributions
The group expects to contribute £3,689,000 to the pension scheme for the year ending 31 March 2024.
JAMES LATHAM PLC ANNUAL REPORT 2023
73
Financial Statements
Notes forming part of the Group Accounts
20.3. Company prior year adjustment
The 31 March 2022 Company balance sheet and statement of changes in equity have been restated to include the defined
benefit pension scheme. The pension scheme had previously only been included in the consolidated group figures. As the
Company is the sponsoring employer, the defined benefit pension scheme should be included in the Company balance
sheet. There is no impact on the Group figures.
The effect of this change in accounting on the Company balance sheet means that, had this method of accounting had
been introduced earlier, then between the years ended 31 March 2016 and 31 March 2023 there would not have been
sufficient distributable reserves in the Company to pay the dividends in those years, despite there being more than
sufficient distributable reserves in the Group.
As a result of this, James Latham plc has paid dividends between the years ended 31 March 2016 and 31 March 2023 which
management have determined subsequently were not in full compliance with the Companies Act 2006. The directors have
taken legal advice, on the basis of which a process has been commenced to address this matter. This process has not been
completed at the date the financial statements were signed off and, at this stage, although the directors are confident that this
process will be successfully completed, they are not certain of the outcome. In order to ensure the sufficiency of distributable
reserves in the Company going forward, dividends have been paid up from subsidiary companies to the Company.
The impact of the prior year adjustment on the Company figures can be seen as follows:
Company statement of changes in equity
2022
Year ended 31 March 2022
(originally presented)
£’000
Retained earnings at 1 April 2021
Profit for the year
Actuarial gain on defined benefit pension scheme
Deferred tax related to components of other
comprehensive income
Adjustment (restated)
2022
£’000
5,073 (4,806)
2,724
3,695
-
3,625
£’000
267
6,419
3,625
- (424) (424)
Total comprehensive income for the year
3,695 5,925
9,620
Total transactions with owners (extract) (3,745)
- (3,745)
Retained earnings at 31 March 2022
5,023 1,119
6,142
74
JAMES LATHAM PLC ANNUAL REPORT 2023
Financial Statements
Notes forming part of the Group Accounts
20.3. Company prior year adjustment (continued)
Balance Sheet
2022
(originally presented)
As at 31 March 2022
£’000
Adjustment (restated)
£’000
£’000
2022
Non-current assets
Investments
Property, plant and equipment
Right-of-use-assets
Retirement benefit surplus
Deferred tax asset
Total non-current assets
Current assets (extract)
Total assets
Current liabilities (extract)
Non-current liabilities
Interest bearing loans and borrowings
Lease liabilities
Total liabilities
Net assets
9,613
48
1,485
-
129
-
-
-
1,119
-
9,613
48
1,485
1,119
129
11,275
3,532
14,807
2,813
1,119
-
1,119
-
12,394
3,532
15,926
2,813
592
1,430
-
-
592
1,430
2,022
4,835
9,972
-
-
1,119
2,022
4,835
11,091
Capital and reserves
5,040
Issued capital
Share-based payment reserve
387
Own shares (873)
395
Capital reserve
5,023
Retained earnings
5,040
-
-
387
- (873)
395
-
6,142
1,119
Total equity
9,972
1,119
11,091
JAMES LATHAM PLC ANNUAL REPORT 2023
75
Financial Statements
Notes forming part of the Group Accounts
20.3. Company prior year adjustment (continued)
Balance Sheet
2021
(originally presented)
As at 31 March 2021
£’000
Adjustment (restated)
£’000
£’000
2021
Non-current assets
Investments
Property, plant and equipment
Right-of-use-assets
Deferred tax asset
Total non-current assets
Current assets (extract)
Total assets
Current liabilities (extract)
Non-current liabilities
Interest bearing loans and borrowings
Lease liabilities
Retirement and other benefit obligation
Total liabilities
Net assets
9,613
18
791
23
-
-
-
1,127
9,613
18
791
1,150
10,445
4,160
14,605
3,010
1,127
-
1,127
-
11,572
4,160
15,732
3,010
592
799
-
-
-
5,933
592
799
5,933
1,391
4,401
5,933
5,933
10,204 (4,806)
7,324
10,334
5,398
Capital and reserves
5,040
Issued capital
Share-based payment reserve
167
Own shares (471)
Capital reserve
395
Retained earnings
5,040
-
-
167
- (471)
395
-
5,073 (4,806)
267
Total equity
10,204 (4,806)
5,398
20.4. Defined contribution pension payments
The group operates a defined contribution scheme managed by Aegon. 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 £1,787,000 (2022: £1,392,000).
76
JAMES LATHAM PLC ANNUAL REPORT 2023
Financial Statements
Notes forming part of the Group Accounts
21. 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
2023, 2022 and 2021
Preference shares
Authorised Issued
8% Cumulative Preference Shares of £1 each
Number
£’000
Number
£’000
At 1 April 2020, 31 March 2022 and 2023
1,500,000
1,500
592,000
592
Share Capital
Ordinary share capital
2023
£’000
5,040
5,040
2022
£’000
5,040
5,040
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 an 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 2023
or 2022.
JAMES LATHAM PLC ANNUAL REPORT 2023
77
Financial Statements
Notes forming part of the Group Accounts
22. Share-based payment
Equity-settled share option schemes
Details of the share options outstanding during
the year are as follows:
Outstanding at beginning of year
Granted during the year
Forfeited during the year
Exercised during the year
252,978
16,280
(990) 7.27 (5,277)
(170,864) 7.32 (17,910)
246,071
18,416
7.68
10.64
2023
2022
Number
of share
options
Weighted
average
exercise
price (£)
Number
of share
options
Weighted
average
exercise
price (£)
7.45
10.12
7.42
6.62
Outstanding at the end of the year
92,633
8.95
246,071
7.68
The weighted average share price for options exercised during the year was £13.22 (2022: £12.22).
Details of the options outstanding at 31 March 2023 are shown below. 10,439 (2022: 3,742) of these options were
exercisable at the year end. No options expired during the periods covered by the above table.
Range of exercise prices
Number of shares
Weighted average expected
remaining life (years)
2023
2022
CSOP
SAYE
DBP
CSOP
SAYE
DBP
£3.96-£12.60
80,959
£7.27
5,738
£12.15
5,936
£3.96-£12.60
76,652
£7.27
166,219
£9.05
3,200
3.0
-
1.5
3.0
0.9
2.0
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.
Details of the outstanding options at 31 March are as follows:
Number of
shares
Grant
date
404 16.12.13
1,170 18.12.15
1,857 06.12.16
1,270 14.12.17
03.01.19
17,123
13,149 23.12.19
17,226 16.12.20
10.12.21
13,080
20.12.22
15,680
5,738 01.03.20
3,363 01.04.21
01.04.22
2,573
92,633
Expiry
date
16.12.23
18.12.25
06.12.26
14.12.22
03.01.29
23.12.29
16.12.30
10.12.31
20.12.32
01.09.23
31.03.24
31.03.25
CSOP
CSOP
CSOP
CSOP
CSOP
CSOP
CSOP
CSOP
CSOP
SAYE
DBP
DBP
78
JAMES LATHAM PLC ANNUAL REPORT 2023
Financial Statements
Notes forming part of the Group Accounts
22. Share-based payment (continued)
The inputs into the Black-Scholes model, expressed as weighted averages for options granted during the year are
as follows:
2023
2022
CSOP
SAYE
DBP
CSOP
SAYE
DBP
Share price at grant date
£12.50
Option exercise price £12.50
37.0%
Expected volatility
5 years
Option life
3.60%
Risk free interest rate
£4.79
Fair value
-
£12.15
- -
-
41.7%
3 years
-
1.61%
-
-
-
£12.60
£12.60
35.0%
5 years
0.74%
£4.00
-
-
-
-
-
-
£9.05
-
40.8%
3 years
0.80%
-
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 £182,000 (2022: £169,000) 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 2023 was 165,539 (2022: 161,958).
23. Own shares
At 1 April 2021
Cost
Transfer of treasury shares
Transfer to employees
At 31 March 2022
Transfer to employees
Transfer to retained earnings
At 31 March 2023
Ordinary shares
£’000
471
630
(228)
873
(1,397)
524
-
The investment in own shares represents 60,362 25p Ordinary shares (2022: 32,197 25p Ordinary shares) held on
behalf of the James Latham plc Employee Benefits Trust, a discretionary trust. This represents 0.30% (2022: 0.16%) of
the issued share capital. The maximum number of shares held during the year was 234,767 (1.16%). 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 2023 nil (2022: 209,200) 25p Ordinary shares were held by the company as Treasury Shares. These shares
are held with a view to being used for employee share schemes. During the year, the balance of 209,200 shares were
issued to the James Latham Employee Benefits Trust.
The own shares reserve has been transferred to retained earnings at 31 March 2023.
JAMES LATHAM PLC ANNUAL REPORT 2023
79
Financial Statements
Notes forming part of the Group Accounts
24. Cash generated from/(used in) operations
Profit before tax
Group
Company
2023
£’000
44,511
2022
£’000
57,952
2023
£’000
7,862
Restated
2022
£’000
6,469
Finance income and expense (813)
-
Dividend received
4,173
Depreciation and amortisation
Impairment
179
(Profit)/loss on disposal of property,
-
plant and equipment (46)
Decrease/(increase) in inventories
-
1,443
Decrease/(increase) in receivables
(Decrease)/Increase in payables (8,167)
698
Retirement benefits (4,446) (3,445) (4,446) (3,445)
169
Share-based payments non cash amounts
50
6,741 (23,990)
1,550 (18,034)
13,940
213 (2) 47
- (8,500) (7,209)
42
-
9
-
1,454
1,160
4,128
-
58
-
182
182
169
Cash generated from/(used in) operations
43,864
30,983 (2,223) (1,786)
Movement in net funds/(debt)
Cash and cash
equivalents
£’000
Leases
£’000
Preference
shares
£’000
Total
£’000
28,618 (4,260) (592)
At 1 April 2021
Additions in the year - (1,391)
Cash flow
1,408
- (165)
Discount unwind on lease liabilities
8,412
23,766
- (1,391)
-
9,820
- (165)
At 31 March 2022 37,030 (4,408) (592) 32,030
- (2,895)
Additions in the year
-
Cash flow 25,579
27,078
- (205)
Discount unwind on lease liabilities
- (2,895)
1,499
- (205)
At 31 March 2023
62,609 (6,009) (592)
56,008
80
JAMES LATHAM PLC ANNUAL REPORT 2023
Financial Statements
Notes forming part of the Group Accounts
25. Related party transactions
25.1 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
2023
£’000
1,347
186
230
35
1,798
2022
£’000
1,319
147
221
21
1,708
There are 4 (2022: 4) directors to whom retirement benefits are accruing under defined benefit schemes, and 4 (2022: 4)
directors that exercised share options during the year.
Emoluments for the highest paid director totalled £350,000 (2022: £341,000). The highest paid director exercised
3,035 CSOP share options during the year at a gain of £15,400. The highest paid director had an accrued defined
benefit pension of £81,000 (2022: £71,000) at the balance sheet date. Contributions to the highest paid director in
respect of which money purchase benefits may be payable totalled £56,000 (2022: £54,000).
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 31-35. The gain made by directors who exercised share options
during the year was £55,000 (2022: £11,000).
The company undertakes the following transactions with the active subsidiary companies:
• Receiving an annual management charge to cover services provided of £3,288,000 (2022: £2,897,000).
• 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 and dividends, there have been no related party transactions with the directors.
26. Capital commitments
At 31 March 2023, there were capital commitments contracted for but not provided in the accounts of £4,758,000
(2022: £2,415,000).
JAMES LATHAM PLC ANNUAL REPORT 2023
81
Financial Statements
Notes forming part of the Group Accounts
27. 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 22 to 25.
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
2023
Trade payables
Accruals
Other payables
Lease liabilities
Total
2022
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
25,745
2,380
5,247
523
33,895
34,758
4,272
3,909
702
43,641
-
-
-
523
523
-
-
-
701
701
Total
£’000
25,745
2,380
5,247
7,467
-
-
-
2,423
-
-
-
3,998
2,423
3,998
40,839
-
-
-
1,692
-
-
-
2,465
34,758
4,272
3,909
5,560
1,692
2,465
48,499
COMPANY
2023
Trade payables
Accruals
Amounts owed to subsidiaries
Other payables
Lease liabilities
Total
2022
Trade payables
Accruals
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
80
149
9
771
64
1,073
46
186
706
66
936
1,940
-
-
-
-
63
63
-
-
-
65
-
65
-
-
-
-
466
466
-
-
-
482
-
482
-
-
-
-
1,718
1,718
-
-
-
1,781
-
1,781
Total
£’000
80
149
9
771
2,311
3,320
46
186
706
2,394
936
4,268
82
JAMES LATHAM PLC ANNUAL REPORT 2023
Financial Statements
Notes forming part of the Group Accounts
27. 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% 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 2023 was £455,000 in US Dollars (2022: £620,000), £896,000
in Euros (2022: £634,000) and £29,000 in Canadian dollars (2022: £92,000) at variable interest rates.
Based on the balance sheet value of cash and cash equivalents, as shown above, a 10% change in the currency
exchange rate would lead to an increase or decrease in income and equity of £138,000 (2022: £135,000).
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
2023
£’000
2022
£’000
2023
£’000
2022
£’000
Fixed rate instruments
Cumulative preference shares of £1 each 592
592 592
592
Variable rate instruments
Cash and cash equivalents
Bank overdraft
62,609
-
37,030
-
104
-
204
936
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 £626,000 (2022: £370,000)
in the group and an increase or decrease in income and equity of £1,000 (2022: £7,000) in the company.
JAMES LATHAM PLC ANNUAL REPORT 2023
83
Financial Statements
Notes forming part of the Group Accounts
27. Financial instruments (continued)
Credit risk exposure
Credit risk arises on our 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 and prior 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
2023
£’000
61,439
2,760
-
62,609
2022
£’000
63,295
2,912
-
37,030
126,808
103,237
2023
£’000
6
37
22
104
169
2022
£’000
14
3
1,550
204
1,771
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
2023
£’000
25,745
5,247
-
2,380
-
33,372
2022
£’000
34,758
3,909
-
4,272
-
42,939
2023
£’000
80
771
9
149
-
2022
£’000
46
706
-
186
936
1,009
1,874
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.
84
JAMES LATHAM PLC ANNUAL REPORT 2023
Notice of Annual General Meeting
Notice is hereby given that the one hundred and twenty
fourth Annual General Meeting of the Company will be
held at the Leverstock Suite, Holiday Inn, Breakspear Way,
Hemel Hempstead, Hertfordshire, HP2 4UA on Wednesday
23rd August 2023 at 12.30pm. Resolutions 1 to 7 inclusive
will be proposed as ordinary resolutions, and resolutions 8
and 9 will be proposed as special resolutions.
8. Disapplication of pre-emption rights: To consider, and if
thought fit, pass the following resolution: “THAT subject
to the passing of the previous Resolution 7, pursuant to
section 571 of the Companies Act 2006, section 561 of
the Companies Act 2006 shall not apply to any allotment
or agreement to allot equity securities pursuant to the
authority conferred by Resolution 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.”
Ordinary business
1. To receive and adopt the Directors’ Report and
Accounts for the year ended 31 March 2023 together
with the Independent Auditor’s report thereon.
2. To declare the final dividend recommended by the
directors on the ordinary shares of the Company.
3. To re-elect Fabian French as a director, who retires
by rotation.
4. To re-elect Paula Kerrigan as a director, who retires
by rotation.
5. To re-elect Piers Latham as a director, who retires
by rotation.
6. To re-appoint RSM UK Audit LLP, Chartered
Accountants, as auditors to hold office from the
conclusion of the meeting to the conclusion of the next
meeting at which accounts are laid before the Company,
at a remuneration to be determined by the directors.
Other business
7. Directors authority to allot shares: To consider, and
if thought fit, pass the following resolution: “THAT in
substitution for all existing authorities, to the extent
unused, the directors be and they are generally and
unconditionally authorised for the purposes of section
551 of the Companies Act 2006 to exercise all the
powers of the Company to allot equity securities up to
an aggregate nominal amount of £1,680,000 provided
that this authority shall expire at the earlier of the
conclusion of the Company’s next Annual General
Meeting or 15 months from the date of the passing of
this resolution and that the Company may before such
expiry make offers or agreements which would or might
require relevant securities to be allotted after such
expiry and the Directors may allot relevant securities in
pursuance of such offers or agreements notwithstanding
that the authority conferred has expired. The expression
‘equity securities’ and ‘allotment’ shall bear the same
meanings respectively given to the same in section 560
Companies Act 2006.”
JAMES LATHAM PLC ANNUAL REPORT 2023
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Notice of Annual General Meeting
9. Authority of the Company to purchase its own shares:
To consider and, if thought fit, pass the following
resolution: “THAT the Company be and is generally and
unconditionally authorised to make one or more market
purchases (within the meaning of section 693 (4) of the
Companies Act 2006) of its Ordinary Shares of 25p each
provided that:
(a) the maximum aggregate number of Ordinary Shares
which may be purchased is 2,016,000 (representing
10% of the issued share capital of the Company);
(b) the price at which Ordinary Shares may be purchased
shall not be more than 105% of the average of the
closing middle market price for the Ordinary Shares
as derived from the AIM section of the London Stock
Exchange Daily Official List for the five business days
preceding the date of purchase and shall not be less
than 25p per Ordinary Share (in both cases exclusive
of expenses); and
(c) this power shall expire at the earlier of the
conclusion of the next Annual General Meeting of the
Company or 15 months from the date of the passing
of this resolution.”
By order of the Board
D.A. Dunmow
Company Secretary
Registered Office:
Unit C2, Breakspear Park, Breakspear Way,
Hemel Hempstead, Hertfordshire, HP2 4TZ
20 July 2023
Notes:
The Report and Accounts are sent to all members of the
Company who elect to receive a paper copy, or is available
on the Investor page at www.lathamtimber.co.uk.
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. A Form of Proxy, which may be used to
make such appointment and to give proxy instructions,
accompanies this Notice. To appoint more than one proxy,
(an) additional Form(s) of Proxy may be obtained by
contacting the Shareholder Helpline on 0370 707 1093
or you may photocopy the Form of Proxy. Calls to the
Shareholder Helpline number are charged at the standard
rate per minute plus network extras. Overseas holders
should contact +44 (0)370 707 1093. Lines are open from
8.00am to 5.30pm (GMT) Monday to Friday, excluding UK
public holidays.
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.
To be valid, the enclosed Form of Proxy and any power
of attorney or other authority (if any) under which it
is signed or a notarially certified copy thereof, must be
completed and returned so as to be received by the
Company’s registrars, Computershare Investor Services plc,
The Pavilions, Bridgwater Road, Bristol BS99 6ZY not less
than 48 hours (excluding non-working days) before the
time fixed for the holding of the meeting or, in the event
that the meeting is adjourned, any adjourned meeting.
Shareholders may appoint a proxy electronically by
visiting www.investorcentre.co.uk/eproxy. You will be
asked to enter the Control Number, Shareholder
Reference Number (SRN), and PIN shown on your Form
of Proxy and agree to certain terms and conditions.
To be valid, your proxy appointment and instructions
should reach Computershare no later than 12.30pm on
Monday 21 August 2023.
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JAMES LATHAM PLC ANNUAL REPORT 2023
Notice of Annual General Meeting
means of the CREST system by any particular time. In this
connection, CREST members and, where applicable, their
CREST sponsors or voting service providers are referred,
in particular, to those sections of the CREST Manual
concerning practical limitations of the CREST system and
timings. The Company may treat as invalid a CREST Proxy
Instruction in the circumstances set out in Regulation 35(5)
(a) of the Uncertificated Securities Regulations 2001.
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 6.00pm on Monday 21 August 2023 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 (excluding non-working
days) before the time fixed for the adjourned meeting shall
be entitled to attend and vote at the adjourned meeting.
At 20 July 2023, the Company’s issued share capital
consisted of 20,160,000 shares. The total number of voting
rights are therefore 20,160,000.
In the case of joint holders, the vote of the senior who
tenders a vote will be accepted to the exclusion of the
votes of the other joint holders. For this purpose, seniority
is determined by the order in which the names are stated
in the register of members of the Company in respect of
the joint holding.
CREST members who wish to appoint a proxy or proxies
through the CREST electronic proxy appointment service
may do so for this meeting and any adjournment(s)
thereof by using the procedures described in the CREST
Manual (available via www.euroclear.com). CREST
personal members or other CREST sponsored members,
and those CREST members who have appointed a voting
service provider(s), should refer to their CREST sponsor
or voting service provider(s), who will be able to take the
appropriate action on their behalf.
In order for a proxy appointment or instruction made by
means of the CREST service to be valid, the appropriate
CREST message (a “CREST Proxy Instruction”) must be
properly authenticated in accordance with Euroclear UK &
International Limited’s (‘Euroclear’) specifications and must
contain the information required for such instructions, as
described in the CREST Manual. The message, regardless
of whether it constitutes the appointment of a proxy or
is an amendment to the instruction given to a previously
appointed proxy must, in order to be valid, be transmitted
so as to be received by the Company’s agent (ID 3RA50) by
the latest time for proxy appointments set out in previous
notes above. For this purpose, the time of receipt will be
taken to be the time (as determined by the timestamp
applied to the message by the CREST Applications Host)
from which the Company’s agent is able to retrieve the
message by enquiry to CREST in the manner prescribed by
CREST. After this time any change of instructions to proxies
appointed through CREST should be communicated to the
appointee through other means.
CREST members and, where applicable, their CREST
sponsors or voting service providers should note that
Euroclear does not make available special procedures
in CREST for any particular messages. Normal system
timings and limitations will therefore apply in relation
to the input of CREST Proxy Instructions. It is the
responsibility of the CREST member concerned to take
(or, if the CREST member is a CREST personal member
or sponsored member or has appointed a voting service
provider(s), to procure that his CREST sponsor or
voting service provider(s) take(s)) such action as shall
be necessary to ensure that a message is transmitted by
JAMES LATHAM PLC ANNUAL REPORT 2023
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Notice of Annual General Meeting
Your personal data includes all data provided by you,
or on your behalf, which relates to you as a shareholder,
including your name and contact details, the votes you
cast and your reference number (as attributed to you by
the Company or its registrars). The Company determines
the purposes for which, and the manner in which, your
personal data is to be processed. The Company and any
third party to which it discloses the data (including the
Company’s registrars) may process your personal data for
the purposes of compiling and updating the Company’s
records, fulfilling its legal obligations and processing the
shareholder rights you exercise.
You may not use any electronic address (within the
meaning of section 333(4) of the Companies Act 2006)
provided in this Notice or in any related documents
(including the Form of Proxy and the Annual Report and
Financial Statements) to communicate with the Company
for any purposes other than those expressly stated.
Share dealing service for shareholders
We operate a share dealing services with our registrar,
Computershare Investor Services PLC, please view all
dealing options at www.computershare.com/dealing/uk
which provides shareholders with a simple way to
sell or purchase shares (subject to availability) on the
London Stock Exchange. Real time trading is available
during market hours (08.00 to 16.30 Monday to Friday
excluding bank holidays). In addition, you can place a sale
instruction outside of market hours. The commission is
1.4% subject to a minimum of £40. Before you can sell
your shares online, you will need to become a member of
Computershare’s Investor Centre.
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.
Under section 319A of the Companies Act, any Shareholder
attending the AGM has the right to ask questions at the
AGM relating to the business of the AGM. The Company
must cause to be answered any such question relating
to the business being dealt with at the AGM but no such
answer need be given if: (a) to do so would interfere
unduly with the preparation for the AGM or involve the
disclosure of confidential information; (b) the answer has
already been given on a website in the form of an answer
to a question; or (c) it is undesirable in the interests of the
Company or the good order of the AGM that the question
be answered.
Please keep your questions and statements short and
relevant to the business of the AGM to allow everyone who
wishes to speak the chance to do so. It would be helpful if
you could state your name before you ask your question.
The Chair may nominate a representative to answer a
specific question after the AGM or refer the question to
the Company’s website.
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JAMES LATHAM PLC ANNUAL REPORT 2023
JAMES LATHAM PLC ANNUAL REPORT 2023
89
JAMES LATHAM PLC
Unit C2, Breakspear Park, Breakspear Way, Hemel Hempstead, Hertfordshire, HP2 4TZ
Telephone 01442 849100 Fax 01442 267241 Email: plc@lathams.co.uk
www.lathamtimber.co.uk