TIDMHSM
RNS Number : 8236G
Heath(Samuel) & Sons PLC
18 November 2022
SAMUEL HEATH & SONS plc
("the Company")
UNAUDITED INTERIM REPORT
Half year ended 30 September 2022
CHAIR'S STATEMENT
As predicted in the year end statement, our trading performance
for the six months to 30 September 2022 reflected continuing
resilience in the sales line but a tightening of margins compared
to the outperformance of last year.
Sales increased 9.5% to GBP7.56m (2021: GBP6.9m) but this was
largely due to currency movements rather than volume growth. The
strength of the dollar compared to sterling has had a materially
beneficial effect as a significant proportion of our foreign sales
is denominated in dollars.
Profit before tax was GBP521k compared to GBP776k in the six
months to 30 September 2021. As expected, costs have increased
disproportionately since last year for a number of reasons. A
proactive decision was taken to restore selling and marketing costs
to pre-pandemic levels, particularly by resuming attendance at
international trade fairs (which were mostly cancelled during
lockdowns), but also in augmenting our sales teams at home and
abroad. Another area where costs were increased is product
development where more frequent new product launches are
targeted.
As might be expected, we have been adversely affected by the
general rise in energy and other costs, with our combined
electricity and gas cost more than doubling. Avoiding supply chain
disruption has also been a key concern and we have had to increase
order lead times and build stock levels, so as to minimise delays
in production. In addition, the recruitment market is very tight
particularly for the skills required on the factory floor; this is
a key concern in light of inevitable retirements in our loyal but
aging workforce. Credit is therefore due to our operations team for
the fact that, despite these problems, customer order lead times
have held up well, with, we believe, a number of our competitors
suffering much worse on this key measure.
First half performance was commendable in the current economic
environment and the executive team are to be congratulated for
managing the challenges so well. The order book has held up well to
date, but talk of a worldwide recession is likely to affect
customer sentiment. Strains on the supply chain and labour market
are of increasing concern and energy costs will increase further.
We are therefore hesitant to predict a result for the second half
of the year.
Our balance sheet remains robust with net assets increasing to
GBP11.1m (2021: GBP6.1m) and cash and cash equivalents of GBP3.5m
(2021: GBP4.9m which included the GBP950k cash received from the
Business Interruption Loan (since repaid) referenced in note 6).
The significant increase in net assets was due to the reduction of
the pension liability from GBP6.2m to zero, calculated under IAS 19
rules, resulting from higher interest rates and gilt yields (see
note 7). Shareholders should note however that the next formal
actuarial valuation is not due until 31 March 2025.
Anthony Buttanshaw
Chair
17 November 2022
Dividend
The directors recommend the maintenance of the interim dividend
at 5.5p per share (2021: 5.5p). The interim dividend will be paid
on 24 March 2023 to shareholders on the register at the close of
business on 24 February 2023. The ex-dividend date for this payment
is 23 February 2023.
For further information, please contact:
Samuel Heath & Sons Plc
Simon Latham, Company Secretary 0121 766 4200
Cairn Financial Advisers LLP
James Caithie / Jo Turner 020 7213 0880
This announcement contains inside information for the purposes
of the UK Market Abuse Regulation and the Directors of the Company
are responsible for the release of this announcement.
Unaudited Interim Financial Report
For the Half Year ended 30 September
2022
CONSOLIDATED INCOME STATEMENT
Half year Half year Year
ended ended 30 ended 31
30
September September March
2022 2021 2022
Unaudited Unaudited Audited
GBP'000 GBP'000 GBP'000
Revenue 7,560 6,904 14,015
Cost of sales (3,938) (3,510) (6,975)
Gross profit 3,622 3,394 7,040
Selling and distribution costs (1,981) (1,510) (2,917)
Administrative expenses (1,031) (1,051) (1,986)
Other operating income - grants (note
5) - 15 15
Operating profit 610 848 2,152
Finance income - 10 10
Finance cost (89) (82) (132)
Profit/(loss) before taxation 521 776 2,030
Taxation (33) (125) (558)
Profit for the period 488 651 1,472
Basic and diluted earnings per ordinary
share (note 4) 19.3p 25.7p 58.1p
=========== ================= ==================
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
Half year Half year Year ended
ended 30 ended 30 31 March
September September
2022 2021 2022
Unaudited Unaudited Audited
GBP'000 GBP'000 GBP'000
Profit for the period 488 651 1,472
Items that will not be reclassified
to profit or loss:
Actuarial profit/(loss) on defined
benefit pension scheme 4,210 (316) 693
Deferred tax on actuarial loss (1,052) 60 (173)
Deferred tax rate change 298 381
3,158 42 901
Total comprehensive income for the
period 3,646 693 2,373
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
At 30 At 30 At 31
September September March
2022 2021 2022
Unaudited Unaudited Audited
GBP'000 GBP'000 GBP'000
Non-current assets
Intangible assets 505 191 442
Property, plant and equipment 3,891 3,345 3,670
Deferred tax assets - 997 425
4,396 4,533 4,537
Current assets
Inventories 4,188 3,718 3,916
Trade and other receivables 2,115 2,113 1,836
Cash and cash equivalents 3,479 4,909 4,410
---------------- ----------------- ------------------
9,782 10,740 10,162
---------------- ----------------- ------------------
Total assets 14,178 15,273 14,699
---------------- ----------------- ------------------
Current liabilities
Trade and other payables (2,017) (1,862) (1,982)
Right of use lease liabilities (60) (26) (62)
Borrowings (note 6) - (84) -
Current tax payable (79) (101) (13)
(2,156) (2,073) (2,057)
Non-current liabilities
Right of use liabilities (87) - (129)
Borrowings (note 6) - (866) -
Deferred tax liability (806) - -
Retirement benefit scheme (note 7) - (6,198) (4,837)
(893) (7,064) (4,966)
---------------- ----------------- ------------------
Total liabilities (3,049) (9,137) (7,023)
---------------- ----------------- ------------------
Net assets 11,129 6,136 7,676
================ ================= ==================
Equity
Called up share capital 254 254 254
Capital redemption reserve 109 109 109
Revaluation reserve 1,145 1,125 1,186
Retained earnings 9,621 4,548 6,127
Equity shareholders' funds 11,129 6,136 7,676
================ ================= ==================
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
Attributable to owners of the Parent Company
Share Capital Revaluation Retained Total
capital redemption reserve earnings equity
reserve
GBP000 GBP000 GBP000 GBP000 GBP000
Balance at 31 March 2021 254 109 1,267 3,987 5,617
--------- ------------ ------------ --------------- ---------------
Total transactions with
owners
Equity dividends paid - - - (174) (174)
--------- ------------ ------------ --------------- ---------------
Loss for the period - - - 651 651
Other comprehensive income
for the period - - - 42 42
Reclassification of depreciation
on revaluation - - (42) 42 -
--------- ------------ ------------ --------------- ---------------
Total comprehensive income
for the period - - (42) 735 693
--------- ------------ ------------ --------------- ---------------
Balance at 30 September
2021 254 109 1,225 4,548 6,136
--------- ------------ ------------ --------------- ---------------
Total transactions with
owners
Equity dividends paid - - - (140) (140)
--------- ------------ ------------ --------------- ---------------
Profit for the period - - - 821 821
Other comprehensive income
for the period - - - 859 859
Reclassification of depreciation
on revaluation - - (39) 39 -
--------- ------------ ------------ --------------- ---------------
Total comprehensive income
for the period - - (39) 1,719 1,680
--------- ------------ ------------ --------------- ---------------
Balance at 31 March 2022 254 109 1,186 6,127 7,676
--------- ------------ ------------ --------------- ---------------
Total transactions with
owners
Equity dividends paid - - - (193) (193)
--------- ------------ ------------ --------------- ---------------
Profit for the period - - - 488 488
Other comprehensive income
for the period - - - 3,158 3,158
Reclassification of depreciation
on revaluation - - (41) 41 -
--------- ------------ ------------ --------------- ---------------
Total comprehensive income
for the period - - (41) 3,687 3,646
Balance at 30 September
2022 254 109 1,145 9,621 11,129
CONSOLIDATED CASH FLOW STATEMENT
Half year Half year Year ended
ended 30 ended 30 31 March
September September
2022 2021 2022
Unaudited Unaudited Audited
GBP'000 GBP'000 GBP'000
Cash flow from operating activities
Profit for the period before taxation 521 776 2030
Adjustments for:
Depreciation 168 150 359
Amortisation 48 24 50
Loss/(profit) on disposal of property,
plant and equipment (1) 10 4
Net finance costs/(income) - (10) (12)
Defined benefit pension scheme expenses 83 106 170
Contributions to defined benefit pension
scheme (533) (518) (1,036)
Operating cash flow before movements
in working capital 286 538 1,565
Changes in working capital:
(Increase)/decrease in inventories (272) (36) (234)
(Increase)/decrease in trade and other
receivables (279) (33) 272
Increase/(decrease) in trade and other
payables 57 124 195
Cash generated from operations (208) 593 1,798
Taxation paid - - -
Net cash from operating activities (208) 593 1,798
Cash flow from investing activities
Payments to acquire property, plant
and equipment (390) (93) (444)
Proceeds from the sale of property,
plant and equipment 1 - 11
Payments to acquire intangible assets (110) (29) (306)
Net finance income/(costs) - 10 12
Net cash outflow from investing activities (499) (112) (727)
Cash flow from financing activities
Payment for right of use assets (31) (30) (46)
Proceeds from new loans (note 6) - 950 950
Loans repaid - - (950)
Dividends paid (193) (174) (314)
Net cash outflow from financing activities (224) 746 (360)
Net increase in cash and cash equivalents (931) 1,227 711
Effect of exchange rate differences
on cash or cash equivalents - - 17
Cash and cash equivalents at beginning
of period 4,410 3,682 3,682
Cash and cash equivalents at end of
period 3,479 4,909 4,410
NOTES TO THE INTERIM FINANCIAL REPORT
1. BASIS OF PREPARATION OF INTERIM REPORT
As permitted, IAS34 'Interim Financial Reporting' has not been
applied in this interim report. The information for the period
ended 30 September 2022 is not audited and does not constitute
statutory accounts as defined in section 434 of the Companies Act
2006. The statutory accounts for the year ended 31 March 2022 were
given an unqualified audit report and did not contain statements
under section 498(2) or 498(3) of the Companies Act 2006. A copy of
the statutory accounts for that year has been delivered to the
Registrar of Companies. The interim accounts for the half year
ended 30 September 2021 were also unaudited.
2. ACCOUNTING POLICIES
Basis of accounting
The report has been prepared on a going concern basis in
accordance UK-adopted International Accounting Standards.
The group has not availed itself of early adoption options in
standards and interpretations.
The principal accounting policies adopted are as set out in the
Annual Report for the year ended 31 March 2022. The valuation of
inventories is considered to be the main area in terms of
significant accounting estimates and judgements.
The retirement benefit scheme liability recognised in these
interim accounts reflects the estimated change in the deficit at 30
September 2022 from the movements in discount rates and inflation
during the six months.
3. DIVIDENDS
A final dividend for the financial year 2022 of 7.5625p per
share (2021: 6.875p) was paid during the period.
An Interim dividend for the financial year 2023 of 5.5p per
share is proposed (2022: 5.5p), payable on 25 March 2023.
4. EARNINGS/(LOSS) PER SHARE
The basic and diluted earnings per share are calculated by
dividing the relevant profit after taxation of GBP488,000 (2021:
profit GBP651,000) by the average number of ordinary shares in
issue during the period being 2,534,322 (2021: 2,534,322). The
number of shares used in the calculation is the same for both basic
and diluted earnings.
5. OTHER OPERATING INCOME - GRANT FUNDING
Income has been received from government grants providing
support during the Coronavirus pandemic:
Half year Half year Year ended
ended 30 ended 30 31 March
September September
2022 2021 2022
Unaudited Unaudited Audited
GBP'000 GBP'000 GBP'000
Job Retention Scheme - 15 15
Total other operating income - 15 15
Income has been accounted for under the accruals method.
NOTES TO THE INTERIM FINANCIAL REPORT
6. BORROWINGS
At the end of April 2021, the Company drew down a loan under the
Coronavirus Business Interruption Loan Scheme (CBILS), for the
value of GBP950,000, which under the standard terms is interest
free for 12 months, with no penalty for early repayment.
This loan was repaid in full in March 2022.
7. RETIREMENT BENEFIT SCHEME
The retirement benefit scheme is valued in part using yield
rates, as indicated by government bonds. Towards the end of
September 2022, the rate of these bonds increased significantly,
causing the valuation of the scheme to move from a liability to
become an asset.
However, based on a review of the scheme deeds it is not clear
whether the Company has an unconditional right to a refund and
therefore for the purposes of the interim financial statements the
surplus has not been recognised as an asset in accordance with the
requirements of IAS 19 and IFRIC 14. In addition, the Directors
believe that the gilt yields at 30 September 2022 are not likely to
persist and indeed they have subsequently reduced. A future
movement (reduction) in bond yields may return the scheme to a
deficit position.
At 30 September 2022 the scheme had no exposure to Liability
Driven Investments.
Note:
Certain statements made in this announcement are forward-looking
statements. These forward-looking statements are not historical
facts but rather are based on the Company's current expectations,
estimates, and projections about its industry; its beliefs; and
assumptions. Words such as 'anticipates,' 'expects,' 'intends,'
'plans,' 'believes,' 'seeks,' 'estimates,' and similar expressions
are intended to identify forward-looking statements. These
statements are not a guarantee of future performance and are
subject to known and unknown risks, uncertainties, and other
factors, some of which are beyond the Company's control, are
difficult to predict, and could cause actual results to differ
materially from those expressed or forecasted in the
forward-looking statements. The Company cautions security holders
and prospective security holders not to place undue reliance on
these forward-looking statements, which reflect the view of the
Company only as of the date of this announcement. The
forward-looking statements made in this announcement relate only to
events as of the date on which the statements are made. The Company
will not undertake any obligation to release publicly any revisions
or updates to these forward-looking statements to reflect events,
circumstances, or unanticipated events occurring after the date of
this announcement except as required by law or by any appropriate
regulatory authority.
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END
IR BLBDBSUBDGDR
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