Quarterly Report • Jul 13, 2016
Quarterly Report
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National Storage Mechanism | Additional information
RNS Number : 9872D
Heath(Samuel) & Sons PLC
13 July 2016
HEATH (Samuel) & SONS PLC
13th JULY 2016
PRELIMINARY RESULTS FOR THE YEAR ENDED 31ST MARCH 2016
CHAIRMAN'S STATEMENT
It is pleasing to report a very much better year to March 31st, 2016.
The profit before tax was £947,000 (2015: £443,000). It has to be said that this comparison is with a particularly disappointing figure the year before. This applies also to the operating profit of £1,156,000 (2015: £598,000) on revenue of £12,584,000 (2015: £11,198,000).
Our customers insist on shorter delivery times and, as a result of decisions to facilitate these, our inventories increased by £164,000. Nevertheless our cash position improved by £430,000.
Capital expenditure during the year was £422,000 and average numbers of staff increased from 130 to 139.
During the year Mr Martin Legge relinquished the role of Senior Non-executive director and this role has been taken on by Mr Anthony Buttanshaw. Mr Legge remains on the Board.
Quite clearly, our pension fund deficit causes us some concern. It has slightly improved to £6,101,000 (2015: £6,568,000). A further cut in bank rate is the last thing we would want to worsen the position. During the year payments were made of £311,000. In view of the improved profit, this year's payment will be £511,000.
We are recommending an increase of 10% on our final dividend from 6.25p to 6.875p, making an overall increase in the dividend for the year of 5.4%.
Now for the future. If there is one thing that is bad for our type of business it is uncertainty. While I am writing this, there is certainly plenty of that around, both in the U.K., our largest market, and also in many of our other markets in the world. The feedback from our customers tells us that this is already having considerable effect on the level of new business activity that they are experiencing. It takes much longer for us to feel the impact on this decrease than it did when we were conducting most of our business through the retail trade.
On 23rd June the UK voted in a referendum to leave the European Union. All I can say is that during my considerable time with the Company, we have experienced various extremes of government policies and world situations. During these, we have survived and sometimes prospered.
I can only add that for the first three months of the current financial year we have not suffered. The next nine months could see a very different picture.
Sam Heath
Chairman
13th July 2016
For further information:
| Samuel Heath & Sons Plc | |
| John Park - Company Secretary | +44 (0)121 772 2303 |
| Cairn Financial Advisers LLP | +44 (0)20 7148 7900 |
| James Caithie/Jo Turner |
CONSOLIDATED INCOME STATEMENT FOR THE YEAR ENDED 31 MARCH 2016
| Note | 2016 | 2015 | |||
| £000 | £000 | ||||
| Continuing operations | |||||
| Revenue | 4 | 12,584 | 11,198 | ||
| Cost of sales | (6,528) | (5,873) | |||
| Gross profit | 6,056 | 5,325 | |||
| Distribution costs | (3,083) | (3,006) | |||
| Administrative expenses | (1,817) | (1,721) | |||
| Operating profit | 1,156 | 598 | |||
| Finance income | 360 | 430 | |||
| Finance costs | (569) | (585) | |||
| Profit before taxation | 947 | 443 | |||
| Taxation | 5 | (178) | (49) | ||
| Profit for the year | 769 | 394 | |||
| Basic and diluted earnings per ordinary share | 7 | 30.3p | 15.5p | ||
| CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME | |||||
| 2016 | 2015 | ||||
| £000 | £000 | ||||
| Profit for year | 769 | 394 | |||
| Items that will be reclassified to profit or loss: | |||||
| Cash flow hedges | (71) | 58 | |||
| (71) | 58 | ||||
| Items that will not be reclassified to profit or loss: | |||||
| Actuarial gain/(loss) on defined benefit pension scheme | 411 | (2,888) | |||
| Deferred taxation on actuarial (gain)/loss | (205) | 578 | |||
| 206 | (2,310) | ||||
| Total comprehensive income/(loss) for the year | 904 | (1,858) | |||
CONSOLIDATED STATEMENT OF FINANCIAL POSITION AT 31 MARCH 2016
| 2016 £000 |
2015 £000 |
|||
| Non current assets | ||||
| Intangible assets | 128 | 184 | ||
| Property, plant and equipment | 1,581 | 1,475 | ||
| Deferred tax asset | 1,098 | 1,313 | ||
| 2,807 | 2,972 | |||
| Current assets | ||||
| Inventories | 3,321 | 3,157 | ||
| Trade and other receivables | 2,153 | 2,085 | ||
| Derivative financial instruments | - | 56 | ||
| Cash and cash equivalents | 2,078 | 1,648 | ||
| Total current assets | 7,552 | 6,946 | ||
| Total assets | 10,359 | 9,918 | ||
| Current liabilities | ||||
| Trade and other payables | (1,317) | (1,126) | ||
| Derivative financial instruments | (15) | - | ||
| Current tax payable | (147) | (72) | ||
| Total current liabilities | (1,479) | (1,198) | ||
| Non current liabilities | ||||
| Retirement benefit scheme | (6,101) | (6,568) | ||
| Deferred tax liability | (79) | (58) | ||
| Total non current liabilities | (6,180) | (6,626) | ||
| Total liabilities | (7,659) | (7,824) | ||
| Net assets | 2,700 | 2,094 | ||
| Equity | ||||
| Called up share capital | 254 | 254 | ||
| Capital redemption reserve | 109 | 109 | ||
| Retained earnings | 2,337 | 1,731 | ||
| Equity shareholders' funds | 2,700 | 2,094 | ||
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY FOR THE YEAR ENDED 31 MARCH 2016
| Share capital |
Capital redemption reserve | Retained earnings | Total equity |
|
| £000 | £000 | £000 | £000 | |
| Balance at 31st March 2014 | 254 | 109 | 3,887 | 4,250 |
| Equity dividends paid | - | - | (298) | (298) |
| Profit for year | - | - | 394 | 394 |
| Other comprehensive loss for the year | - | - | (2,252) | (2,252) |
| Total comprehensive loss for year | - | - | (1,858) | (1,858) |
| Balance at 31st March 2015 | 254 | 109 | 1,731 | 2,094 |
| Equity dividends paid | - | - | (298) | (298) |
| Profit for year | - | - | 769 | 769 |
| Other comprehensive income for the year | - | - | 135 | 135 |
| Total comprehensive income for year | - | - | 904 | 904 |
| Balance at 31st March 2016 | 254 | 109 | 2,337 | 2,700 |
CONSOLIDATED STATEMENT OF CASHFLOWS FOR THE YEAR ENDED 31 MARCH 2016
| Note | 2016 | 2015 | ||
| £000 | £000 | |||
| Cash flow from operating activities | ||||
| Profit for the year before tax | 947 | 443 | ||
| Adjustments for: | ||||
| Depreciation | 313 | 357 | ||
| Amortisation | 56 | 61 | ||
| Impairment of intangible assets | - | 135 | ||
| Profit on disposal of property, plant and equipment | (7) | (8) | ||
| Finance income | (10) | (11) | ||
| Defined benefit pension scheme expenses | 255 | 210 | ||
| Contributions to defined benefit pension scheme | (311) | (400) | ||
| Operating cash flow before movements in working capital | 1,243 | 787 | ||
| Changes in working capital: | ||||
| Increase in inventories | (164) | (258) | ||
| Increase in trade and other receivables | (68) | (266) | ||
| Increase/(decrease) in trade and other payables | 159 | (39) | ||
| Cash generated from operations | 1,170 | 224 | ||
| Taxation paid | (72) | (106) | ||
| Net cash flow from operating activities | 1,098 | 118 | ||
| Cash flows from investing activities | ||||
| Payments to acquire property, plant and equipment | (390) | (225) | ||
| Proceeds from the sale of property, plant and equipment | 10 | 70 | ||
| Payments to acquire intangible assets | - | (54) | ||
| Finance income | 10 | 11 | ||
| (370) | (198) | |||
| Cash flows from financing activities | ||||
| Interest paid | - | - | ||
| Dividends paid | 6 | (298) | (298) | |
| (298) | (298) | |||
| Net increase/(decrease) in cash and cash equivalents | 430 | (378) | ||
| Cash and cash equivalents at beginning of period | 1,648 | 2,026 | ||
| Cash and cash equivalents at end of period | 2,078 | 1,648 | ||
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 2015. The adoption of the following IFRSs has not impacted upon the financial statements:
IAS 19 - Employee Benefits - Amendment
Annual Improvements to IFRSs 2010-2012 Cycle
Annual Improvements to IFRSs 2011-2013 Cycle
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, and are not expected to have a material impact on the group:
IAS 16 and IAS 38 - Clarification of Acceptable Methods of Depreciation and Amortisation - effective 2017
IAS 27 - Equity Method in Separate Financial Statements - Amendment - effective 2017
IAS 1 - Disclosure Initiative - effective 2017
Annual Improvements to IFRSs 2012-2014 Cycle - effective 2017
Amendments to IFRS 10, IFRS 12 and IAS 28 - Investment Entities - Applying the consolidation exception - effective 2017
IAS 12 - Recognition of Deferred Tax - Amendment - effective 2018
IAS 7 - Disclosure Initiative - effective 2018
IFRS 9 - Financial Instruments - effective 2019
IFRS 15 - Revenue from Contracts with Customers - effective 2019
IFRS 16 - Leases - effective 2020
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.
In accordance with Section 435 of the Companies Act 2006, The Group confirms that the financial information for the years ended 31 March 2016 and 2015 are derived from the Group's audited financial statements and that these are not statutory accounts and, as such, do not contain all information required to be disclosed in the financial statements prepared in accordance with IFRS. The statutory accounts for the year ended 31 March 2016 have been audited and approved, but have not yet been filed.
The Group's audited financial statements for the year ended 31 March 2016 received an unqualified audit opinion and the auditor's report contained no statement under section 498(2) or 498(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.
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 geographically market
| 2016 £000 |
2015 £000 |
||
| Overseas | 4,882 | 4,201 | |
| Home | 7,702 | 6,997 | |
| 12,584 | 11,198 |
5. Income taxes
| 2016 £000 |
2015 £000 |
||
| Current taxes | 147 | 62 | |
| Deferred taxes | 31 | (13) | |
| Total income taxes | 178 | 49 |
Corporation tax is calculated at 20% (2015: 20%) of the estimated assessable profit for the year.
Tax reconciliation
| 2016 £000 |
2015 £000 |
||||
| Profit for the year | 947 | 443 | |||
| Corporation tax charge thereon at 20% (2015: 20%) | 190 | 89 | |||
| Adjusted for the effects of: | |||||
| Marginal relief | - | 1 | |||
| Prior year adjustments | 1 | (10) | |||
| Research and development claim | (15) | (21) | |||
| Other adjustments | 2 | (10) | |||
| Total income taxes | 178 | 49 | |||
| Effective tax rate | 18.8% | 11.1% | |||
6. Dividends
| 2016 | 2015 | ||
| £ 000 | £ 000 | ||
| Final dividend for the year ended 31st March 2015 of 6.25 pence per share (2014: 6.25 pence per share) | 158 | 158 | |
| Interim dividend for the year ended 31st March 2016 of 5.50 pence per share (2015: 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 2016 of 6.875 pence per share amounting to £174,000. 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 £769,000 (2015: £394,000) by the average number of ordinary shares in issue during the year being 2,534,322 (2015: 2,534,322). The number of shares used in the calculation is the same for both basic and diluted earnings.
8. Notice of annual general meeting
Notice is hereby given that the 2016 Annual General Meeting of the Company will be held at the registered office of the Company, Leopold Street, Birmingham, on 12th August 2016 at 12.00 noon. The final Ordinary Share dividend of 6.875 pence, if approved, will be payable on 19th August 2016 to ordinary shareholders registered at close of business on 22nd July 2016.
This information is provided by RNS
The company news service from the London Stock Exchange
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