TIDMHSM
RNS Number : 0455U
Heath(Samuel) & Sons PLC
21 November 2023
Samuel Heath & Sons plc
("Samuel Heath" or "the Company")
UNAUDITED INTERIM REPORT
Half year ended 30 September 2023
CHAIR'S STATEMENT
The weakness in sales experienced at the beginning of the first
half was offset by some recovery at the end of the half, so that
the six months sales of GBP7.78m represented a 3% increase over the
six months to 30 September 2022. However, this was only made
possible by an improvement in production efficiency restoring
output to the previous year's levels and so 'catching up' the
historical order book. The order book is now unfortunately much
weaker than the prior year, as mentioned later in this
statement.
Operating profit was GBP441k compared to GBP610k in the six
months to 30 September 2022, a reduction of GBP169k. The main cost
increases driving this reduction were a 37% increase in energy and
utility costs, additional spending on tooling, and payroll growth
(rate increases and recruiting to fill vacant skilled labour
vacancies).
Cash and cash equivalents at 30 September 2023 reduced to
GBP1.473m, GBP1.244m lower than at 31 March 2023. As indicated in
previous statements, necessary investment in production equipment
is partly responsible for the net cash outflows, but there was also
an increase in trade receivables and inventories. Cash outflows
also included GBP300k interim contribution to the pension fund and
GBP192k in payment of dividends.
The balance sheet nevertheless remains strong with net assets of
GBP11.4m (March 2023: GBP11.2m). The retirement benefit scheme
deficit has reduced to GBP195k from GBP537k at 31 March 2023,
calculated under IAS 19 rules. As reported in the previous
financial statements, the scheme actuarial valuation at 31 March
2023 recorded a deficit of GBP1.030m.
Addressing the second half, I have to report that trading
conditions have worsened materially and since June the order book
has been running consistently below management budget. The current
level of the order book reduces flexibility to plan efficient
production. We have taken soundings from our UK and EU marketplace
and there is no expectation that things will improve during this
calendar year. Orders and projects remain out there but, in some
cases, have been put on hold in the current uncertain economic
environment. The only area of continuing confidence appears to be
the USA, but there is no guarantee that this will continue.
These reductions in the order book will have a
disproportionately adverse effect on sales, margins and profits.
Therefore, action has now been taken to reduce costs and improve
efficiency, including 10 redundancies (7% of workforce).
Customer enthusiasm for our new 'Forme' range remains strong,
but delays in receiving regulatory approval in overseas markets are
proving frustrating, both for us and our customers. In any event,
it is probable that the second half will record a loss after
redundancy costs, unless there is some improvement in sales and the
markets. The directors are hopeful of remaining in the black for
the year as a whole and that sales will recover early in the new
calendar year.
Anthony Buttanshaw
Chair
20 November 2023
Dividend
As a result of the deteriorating trading conditions, the
directors recommend a reduction in the interim dividend to 4.5p per
share (2022: 5.5p). The interim dividend will be paid on 22 March
2024 to shareholders on the register at the close of business on 23
February 2024. The ex-dividend date for this payment is 22 February
2024.
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.
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
Unaudited Interim Financial Report
For the Half Year ended 30 September
2023
CONSOLIDATED INCOME STATEMENT
Half year Half year Year
ended ended 30 ended 31
30
September September March
2023 2022 2023
Unaudited Unaudited Audited
GBP'000 GBP'000 GBP'000
Revenue 7,784 7,560 14,717
Cost of sales (4,298) (3,938) (7,950)
Gross profit 3,486 3,622 6,767
Selling and distribution costs (1,956) (1,981) (3,556)
Administrative expenses (1,089) (1,031) (2,097)
Other operating income - grants (note
5) - - 53
Operating profit 441 610 1,167
Finance income - - 34
Finance cost (8) (89) (133)
Profit/(loss) before taxation 433 521 1,068
Taxation (22) (33) (137)
Profit for the period 411 488 931
Basic and diluted earnings per ordinary
share (note 4) 16.2p 19.3p 36.7p
=========== ================= =================
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
Half year Half year Year ended
ended 30 ended 30 31 March
September September
2023 2022 2023
Unaudited Unaudited Audited
GBP'000 GBP'000 GBP'000
Profit for the period 411 488 931
Items that will not be reclassified
to profit or loss:
Actuarial profit on defined benefit
pension scheme 45 4,210 3,588
Deferred tax on actuarial profit (11) (1,052) (891)
Revaluation of property, plant and
equipment - - 293
Deferred tax on revaluation - - (73)
34 3,158 2,917
Total comprehensive income for the
period 445 3,646 3,848
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
At 30 At 30 At 31
September September March
2023 2022 2023
Unaudited Unaudited Audited
GBP'000 GBP'000 GBP'000
Non-current assets
Intangible assets 723 505 691
Property, plant and equipment 4,951 3,891 4,754
Deferred tax assets - - -
5,674 4,396 5,445
Current assets
Inventories 4,690 4,188 4,387
Trade and other receivables 2,448 2,115 1,629
Current tax receivable - - 37
Cash and cash equivalents 1,473 3,479 2,717
----------- ----------------- -----------------
8,611 9,782 8,770
----------- ----------------- -----------------
Total assets 14,285 14,178 14,215
----------- ----------------- -----------------
Current liabilities
Trade and other payables (1,718) (2,017) (1,644)
Right of use lease liabilities (62) (60) (62)
Borrowings (note 6) - - -
Current tax payable (22) (79) -
(1,802) (2,156) (1,706)
Non-current liabilities
Right of use liabilities (24) (87) (56)
Deferred tax liability (818) (806) (723)
Retirement benefit scheme (note 6) (195) - (537)
(1,037) (893) (1,316)
----------- ----------------- -----------------
Total liabilities (2,839) (3,049) (3,022)
----------- ----------------- -----------------
Net assets 11,446 11,129 11,193
=========== ================= =================
Equity
Called up share capital 254 254 254
Capital redemption reserve 109 109 109
Revaluation reserve 1,183 1,145 1,220
Retained earnings 9,900 9,621 9,610
Equity shareholders' funds 11,446 11,129 11,193
=========== ================= =================
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 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
--------- ------------ ------------ --------------- ---------------
Total transactions with
owners
Equity dividends paid - - - (138) (1438
--------- ------------ ------------ --------------- ---------------
Profit for the period - - - 443 443
Other comprehensive income
for the period - - 115 (356) (241)
Reclassification of depreciation
on revaluation - - (40) 40 -
--------- ------------ ------------ --------------- ---------------
Total comprehensive income
for the period - - 75 127 202
--------- ------------ ------------ --------------- ---------------
Balance at 31 March 2023 254 109 1,220 9,610 11,193
--------- ------------ ------------ --------------- ---------------
Total transactions with
owners
Equity dividends paid - - - (192) (192)
--------- ------------ ------------ --------------- ---------------
Profit for the period - - - 411 411
Other comprehensive income
for the period - - - 34 34
Reclassification of depreciation
on revaluation - - (37) 37 -
--------- ------------ ------------ --------------- ---------------
Total comprehensive income
for the period - - (37) 482 445
Balance at 30 September
2023 254 109 1,183 9,900 11,446
CONSOLIDATED CASH FLOW STATEMENT
Half year Half year Year ended
ended 30 ended 30 31 March
September September
2023 2022 2023
Unaudited Unaudited Audited
GBP'000 GBP'000 GBP'000
Cash flow from operating activities
Profit for the period before taxation 433 521 1,068
Adjustments for:
Depreciation 238 168 401
Amortisation 63 48 107
Loss/(profit) on disposal of property,
plant and equipment - (1) 41
Net finance costs/(income) (57) - (34)
Defined benefit pension scheme expenses 83 83 166
Contributions to defined benefit pension
scheme (300) (533) (877)
Operating cash flow before movements
in working capital 460 286 872
Changes in working capital:
(Increase)/decrease in inventories (303) (272) (471)
(Increase)/decrease in trade and other
receivables (819) (279) 170
Increase/(decrease) in trade and other
payables 83 57 (338)
Cash (used in) / generated from operations (1,039) (208) 233
Taxation paid - - -
Net cash (used in) / from operating
activities (1,039) (208) 233
Cash flow from investing activities
Payments to acquire property, plant
and equipment (402) (390) (1,167)
Proceeds from the sale of property,
plant and equipment - 1 41
Payments to acquire intangible assets (95) (110) (357)
Net finance income/(costs) 57 - 34
Net cash outflow from investing activities (440) (499) (1,449)
Cash flow from financing activities
Payment for right of use assets (33) (31) (58)
Dividends paid (192) (193) (331)
Net cash outflow from financing activities (225) (224) (389)
Net decrease in cash and cash equivalents (1,244) (931) (1,605)
Effect of exchange rate differences
on cash or cash equivalents - - (88)
Cash and cash equivalents at beginning
of period 2,717 4,410 4,410
Cash and cash equivalents at end of
period 1,473 3,479 2,717
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 2023 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 2023 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 2022 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 2023. 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 2023 from the movements in discount rates and inflation
during the six months.
3. DIVIDENDS
A final dividend for the financial year 2023 of 7.5625p per
share (2022: 7.5625p) was paid during the period.
An Interim dividend for the financial year 2024 of 4.5p per
share is proposed (2023: 5.5p), payable on 22 March 2024.
4. EARNINGS PER SHARE
The basic and diluted earnings per share are calculated by
dividing the relevant profit after taxation of GBP411,000 (2022:
profit GBP488,000) by the average number of ordinary shares in
issue during the period being 2,534,322 (2022: 2,534,322). The
number of shares used in the calculation is the same for both basic
and diluted earnings.
5. OTHER OPERATING INCOME
Income was received for the financial year 2023 by recognition
of the fair value in foreign currency contracts held at 31 March
2023, but to be exercised during financial year ended 31 March
2024. There are no contracts currently held which would be
exercised post 31 March 2024.
Half year Half year Year ended
ended 30 ended 30 31 March
September September
2023 2022 2023
Unaudited Unaudited Audited
GBP'000 GBP'000 GBP'000
Fair value gain on foreign currency - - 53
Total other operating income - - 53
Income has been accounted for under the accruals method.
NOTES TO THE INTERIM FINANCIAL REPORT
6. 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. Yields have dropped since, returning the scheme to
a deficit position.
The improvement in a reduced deficit at 30 September 2023
(GBP195,000) compared to 31 March 2023 (GBP537,000) is largely a
result of reduced forward inflation estimates.
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 BRBDBXXDDGXG
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