HEATH (SAMUEL) & SONS PLC

Quarterly Report • Jul 16, 2014

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RNS Number : 3369M

Heath(Samuel) & Sons PLC

16 July 2014

HEATH (Samuel) & SONS PLC

16th JULY 2014

PRELIMINARY RESULTS FOR THE YEAR ENDED 31ST MARCH 2014

CHAIRMAN'S STATEMENT

It is a pleasure to be able to report a profit before taxation of £610,000 (2013: £450,000) on sales up by 8.9% to £10,979,000 (2013: £10,083,000). It is even more pleasing to see the increase in operating profit to £698,000 (2013: £350,000).  In connection to this, I should point out that we decided to be far more cautious with the Company's investments, in view of the uncertainties around the world. We have therefore disposed of all of our holdings, resulting in a profit on cost of £58,000, and are now keeping our cash reserves on deposit.

We experienced considerable success with most of the new lines launched during the year and there was improvement in some, but by no means all, of our markets. We should emphasise that trading has certainly not regained the position of pre-crisis level.

You would think from the daily news that we would be looking forward to a strong year ahead. So far in this trading period our sales have been below that achieved in the same trading period last year.  In addition, the current strength of Sterling compared to many world currencies, will have a detrimental effect on our sales revenue and profits, which are earned from overseas. It would seem that the caution seen in the Markets could well be correct. We must therefore add our own note of caution for the coming year, as it would seem that the turbulent trading conditions, which we have experienced in the last few years, are not yet at an end.

Our assets remain strong and we therefore propose a same again final dividend of 6.25p per share, making a total of 11.75p for the year.

Sam Heath

Chairman

16th July 2014

For further information:

Samuel Heath & Sons Plc
John Park - Company Secretary	0121 772 2303
Zeus Capital Limited	0161 831 1512
Ross Andrews/Jamie Peel

CONSOLIDATED INCOME STATEMENT FOR THE YEAR ENDED 31 MARCH 2014

	Note		2014		2013
			£000		£000
					(Restated)
Continuing operations
Revenue	4		10,979		10,083
Cost of sales			(5,647)		(5,311)
Gross profit			5,332		4,772
Distribution costs			(2,958)		(2,870)
Administrative expenses			(1,676)		(1,552)
Operating profit			698		350
Gain on sale of financial assets			58		132
Finance income			433		505
Finance costs			(579)		(537)
Profit before taxation			610		450
Taxation	5		(167)		(35)
Profit for the year			443		415
Basic and diluted earnings per ordinary share	7		17.5p		16.4p
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
			2014		2013
			£000		£000
					(Restated)
Profit for year			443		415
Actuarial gain/ (loss) on defined benefit pension scheme			294		(1,560)
Deferred taxation on actuarial gain/(loss)			(187)		329
Loss on available for sale financial assets			(115)		(17)
Cash flow hedges			1		(3)
Other comprehensive income			(7)		(1,251)
Total comprehensive income for the year			436		(836)

CONSOLIDATED STATEMENT OF FINANCIAL POSITION AT 31 MARCH 2014

		2014 £000		2013 £000
Non current assets
Intangible assets		326		370
Property, plant and equipment		1,668		1,838
Deferred tax asset		774		986
		2,768		3,194
Current assets
Inventories		2,899		2,731
Trade and other receivables		1,819		1,909
Derivative financial instruments		-		1
Available for sale financial assets		-		1,400
Cash and cash equivalents		2,026		219
Total current assets		6,744		6,260
Total assets		9,512		9,454
Current liabilities
Trade and other payables		(1,164)		(949)
Derivative financial instruments		(2)		(4)
Current tax payable		(116)		(15)
Total current liabilities		(1,282)		(968)
Non current liabilities
Retirement benefit scheme		(3,870)		(4,290)
Deferred tax liability		(110)		(84)
Total non current liabilities		(3,980)		(4,374)
Total liabilities		(5,262)		(5,342)
Net assets		4,250		4,112
Equity
Called up share capital		254		254
Capital redemption reserve		109		109
Retained earnings		3,887		3,749
Equity shareholders' funds		4,250		4,112

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY FOR THE YEAR ENDED 31 MARCH 2014

	Share capital	Capital  redemption reserve	Retained earnings	Total equity
	£000	£000	£000	£000
Balance at 31st March 2012	254	109	4,883	5,246
Equity dividends paid	-	-	(298)	(298)
Profit for year	-	-	415	415
Other comprehensive income for the year	-	-	(1,251)	(1,251)
Balance at 31st March 2013	254	109	3,749	4,112
Equity dividends paid	-	-	(298)	(298)
Profit for year	-	-	443	443
Other comprehensive income for the year	-	-	(7)	(7)
Balance at 31st March 2014	254	109	3,887	4,250

CONSOLIDATED STATEMENT OF CASHFLOWS FOR THE YEAR ENDED 31 MARCH 2014

	Note	2014		2013
		£000		£000
Net cash inflow from operating activities	8	908		72
Cash flow from investing activities
Purchases of property, plant and equipment		(221)		(268)
Proceeds from sale of property, plant and equipment		29		6
Purchase of intangible assets		(6)		(117)
Purchase of available for sale financial assets		(57)		(421)
Proceeds from sale of available for sale financial assets		1,400		676
Interest received		52		92
Net cash inflow/(outflow) from investing activities		1,197		(32)
Net cash outflow from financing activities
Equity dividends paid	6	(298)		(298)
Net cash outflow from financing activities		(298)		(298)
Increase/(decrease) in cash and cash equivalents		1,807		(258)
Cash and cash equivalents at beginning of period		219		477
Cash and cash equivalents at end of period		2,026		219

1          Adoption of new and revised Standards

The Group has adopted all of the new and revised Standards and Interpretations issued by the International Accounting Standards Board (IASB) and the International Financial Reporting Interpretations Committee (IFRIC) of the IASB that are relevant to its operations and effective for accounting periods beginning on 1st April 2013. The adoption of the following IFRSs has not impacted upon the financial statements:

IFRS 10 - Consolidated Financial Statements

IFRS 11 - Joint Arrangements

IFRS 12 - Disclosure of Interests in Other Entities

IFRS 13 - Fair Value Measurement

IAS 19 - Employee Benefits (see note below)

IAS 32 - Financial Instruments (Presentation)

IAS 1- Presentation of items of Other Comprehensive Income

IAS 27 - Separate Financial Statements (amended 2011)

IAS 28 - Investments in Associates and Joint Ventures

IAS 16 - Property, Plant and Equipment

IAS 34 - Interim Reporting

IAS 19 - Employee Benefits

The Group has adopted the revised standard in relation to Retirement Benefit Pension Schemes (IAS19 Employee Benefits). The prior year figures have therefore been restated for comparative purposes:

Impact of IAS19 on Consolidated Income Statement
		£000
Previously declared	-           profit for year (after taxation)	555
	-                basic and diluted earnings per share	21.9p
Administration costs of defined benefit pension scheme		(48)
Impact of change in measurement of expected return on pension scheme assets		(135)
Impact of change on deferred tax		43
Restated	-           profit for year (after taxation)	415
	-                basic and diluted earnings per share	16.4p

Impact of IAS19 Consolidated Statement of Comprehensive Income
		£000
Previously declared	-           total comprehensive income for the year	(836)
Decrease in profit for year (after taxation)		(140)
Change in actuarial loss on defined benefit pension scheme		183
Impact of change on deferred tax		(43)
Restated	-           total comprehensive income for the year	(836)

Adoption of IAS19 has had no impact of the Statement of Financial Position for the prior year.

At the date of authorisation of these financial statements, the following Standards and Interpretations which have not been applied in these financial statements were in issue but not yet effective:

IAS 27 - Separate Financial Statements (October 2012)

IFRS 10 - Consolidated Financial Statements (October 2012)

IFRS 12 - Disclosure of Interests in Other Entities (October 2012)

IFRS 14 - Regulatory Deferral Accounts (January 2014)

IAS 19 - Employee Benefits (November 2013)

IFRS 2 - Share Based Payment (December 2013)

IFRS 3 - Business Combinations (December 2013)

IFRS 8 - Operating Segments (December 2013)

IFRS 13 - Fair Value Measurement (December 2013)

IAS 16 - Property, Plant and Equipment (December 2013)

IAS 24 - Related Party Disclosures (December 2013)

IAS 38 - Intangible Assets (December 2013)

IAS 40 - Investment Property (December 2013)

2          Accounting policies

Basis of preparation of preliminary financial information

The financial statements, upon which this financial information is based, have been prepared using accounting policies consistent with International Financial Reporting Standards (IFRS) and International Financial Reporting Interpretation Committee (IFRIC) Interpretation as adopted by the European Union and the requirements of the Companies Act applicable to companies reporting under IFRS.

This financial information does not constitute the Company's statutory accounts as defined in Section 434 of the Companies Act 2006 and has been prepared on the basis of the accounting policies set out in the financial statements for the year ended 31 March 2014. Statutory accounts for 2013 have been delivered to the Registrar of Companies, and those for 2014 will be delivered in due course following the company's Annual General Meeting. The auditors have reported on the 2013 accounts and their report was unqualified, did not include references to any matters by way of emphasis without qualifying their report and did not contain statements under Section 498 (2) or (3) of the Companies Act 2006.  

The Annual Report and Financial Statements will be posted to shareholders shortly and thereafter will be available from the Company's registered office, and from the Company's website www.samuel-heath.com.

The financial statements have been prepared under the historical cost basis except for the valuation of Available for Sale Assets which have been revalued to market value. 

3          Critical accounting and key sources of estimation

Critical judgements in applying the entity's accounting policies

In the process of applying the entity's accounting policies the directors have made the following judgements that have the most significant effect on the amounts recognised in the financial statements.

Income taxes

The Group is subject to income taxes in the United Kingdom.  Judgment is required in determining the provision for income taxes. There are many transactions and calculations for which the ultimate tax determination is uncertain during the ordinary course of business. The Group recognises liabilities for anticipated tax audit issues based on estimates of whether additional taxes will be due. Where the final tax outcome of these matters is different from the amounts that were initially recorded, such differences will impact the income tax and deferred tax provisions in the period in which such determination is made.

The recoverable amounts of the Group's deferred tax assets have been determined based on the Board's estimates of future taxable profits and income and tax rates.

Key sources of estimation uncertainty

The key assumptions concerning the future, and other key sources of estimation uncertainty at the balance sheet date, that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year, are discussed below.

Valuation of intangible assets

Intangible assets are initially valued at their cost and then evaluated periodically for impairment. For purposes of valuation an intangible asset is considered impaired if its carrying value is less than the expected net cash flow from the asset.

Valuation of inventories

Determining the valuation of inventories requires an estimation of the obsolescence provision required to write down items to their realisable value.

Retirement benefit scheme deficit

The valuation of expected returns on assets and the present value of the liabilities of the scheme are determined by assumptions and estimates made by the directors based on the current information to hand.  Therefore amounts are open to fluctuations in the future due to unforeseen changes or additional factors that come to light following the year end.

4.             Sales revenue by geographical market

	2014 £000		2013 £000
Overseas	4,246		3,810
Home	6,733		6,273
	10,979		10,083

5.             Income taxes

	2014 £000		2013 £000
			(Restated)
Current taxes	116		20
Deferred taxes	51		15
Total income taxes	167		35

Corporation tax is calculated at 20% (2013: 20%) of the estimated assessable profit for the year.

Tax rate reconciliation

			2014 £000		2013 £000
					(Restated)
	Profit for the year		610		450
	Corporation tax charge thereon at 20% (2013: 20%)		122		90
	Adjusted for the effects of:
	Depreciation in excess of capital allowances		16		7
	Marginal relief		9		-
	Prior year adjustments		69		1
	Research and development claim		(1)		(28)
	Capitalisation of research and development expenditure		(11)		(23)
	Loan relationships		(15)		(13)
	Other adjustments		(22)		1
	Total income taxes		167		35
	Effective tax rate		27.4%		7.8%

6.             Dividends

	2014		2013
	£ 000		£ 000
Final dividend for the year ended 31st March 2013 of 6.25 pence per share (2012: 6.25 pence per share)	158		158
Interim dividend for the year ended 31st March 2014 of 5.50 pence per share (2013: 5.50 pence per share)	140		140
	298		298

In addition to the dividends paid during the year the directors are recommending a final dividend for 2014 of 6.25 pence per share amounting to £158,000. The proposed final dividend is subject to approval at the Annual General Meeting (see note 8) and has not been included as a liability in these accounts.

7.             Earnings per share

The basic and diluted earnings per share are calculated by dividing the relevant profit after taxation of £443,000 (2013 Restated: £415,000) by the average number of ordinary shares in issue during the year being 2,534,322 (2013: 2,534,322). The number of shares used in the calculation is the same for both basic and diluted earnings.

8.             Notes to the cash flow statement

	2014		2013
	£000		£000
			(Restated)
Operating profit	698		350
Depreciation, amortisation and impairment	425		385
Gain on disposal of property, plant and equipment	(13)		(6)
Pension scheme administration costs	42		48
Operating cash flows before movements in working capital	1,152		777
Increase in inventories	(168)		(116)
Decrease/(increase) in receivables	75		(29)
Increase/(decrease) in payables	214		(143)
Pension contributions	(350)		(350)
Cash generated by operations	923		139
Income tax paid	(15)		(67)
Net cash flow from operating activities	908		72

Cash and cash equivalents (which are presented as a single class of assets on the face of the Statement of Financial Position) comprise cash at bank and other short-term highly liquid investments with a maturity of three months or less.

9.             Notice of annual general meeting

Notice is hereby given that the 2014 Annual General Meeting of the Company will be held at the registered office of the Company, Leopold Street, Birmingham, on 15th August 2014 at 12.00 noon. The final Ordinary Share dividend of 6.25 pence, if approved, will be payable on 22nd August 2014 to ordinary shareholders registered at close of business on 25th July 2014.

This information is provided by RNS

The company news service from the London Stock Exchange

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