HEATH (SAMUEL) & SONS PLC

Quarterly Report • Jul 11, 2019

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RNS Number : 1536F

Heath(Samuel) & Sons PLC

11 July 2019

HEATH (SAMUEL) & SONS PLC

11th JULY 2019

PRELIMINARY RESULTS FOR THE YEAR ENDED 31ST MARCH 2019

CHAIRMAN'S STATEMENT

It is pleasing to report the results for the year, in which revenue was a little down, but underlying operating profits improved.

Sales revenue was £13.89m (2018: £14.35m) and profit before tax was £0.88m (2018: £1.18m). This was after the exceptional item for Guaranteed Minimum Pension (GMP) Equalisation relating to our pension fund which we have had to recognise this year.  The operating profit was better than last year at £1.38m (2018: £1.34m) reflecting savings made through overheads.

As I am certain shareholders are aware, this year has been the same as the one before with regard to trading conditions. The uncertainty around Brexit has caused us all sorts of continuing problems. These are perhaps surprisingly not led by uncertainty of sales to business customers within the EU, but much more seriously from our supplies from there. It is having, most importantly of all, a very bad effect on our business, and our future prospects, with our London and South Eastern customers within the UK.

It is therefore more difficult than ever to forecast where we might be in twelve months' time. You can imagine that I do not enjoy being so indecisive, but it is a unique situation we find ourselves in. Perhaps I could add, as a company listed on the London Stock Exchange since 1890, there must have been other times equally difficult, which we managed to get through.

Having said that, overall business activity has held up well up to the time of writing this statement. This has undoubtedly been helped by our considerable investment in some excellent designs and products, together with that in plant, machinery and IT systems in order to manufacture them efficiently.

Our current profitability allows us to recommend, in addition to the interim dividend of 5.5p per share which was paid 23rd March 219, a final dividend at the same level as last year, at 6.875p per share, which will be paid on 16th August 2019 to shareholders registered as at 19th July 2019.

Sam Heath

Chairman

10th July 2019

This announcement contains inside information for the purposes of Article 7 of EU Regulation 596/2014.

For further information:

Samuel Heath & Sons Plc
Simon Latham - Company Secretary	+44 (0)121 766 4200
Cairn Financial Advisers LLP	+44 (0)20 7213 0880
James Caithie/Jo Turner

CONSOLIDATED INCOME STATEMENT FOR THE YEAR ENDED 31st MARCH 2019

	Note		2019			2018
			£000			£000
Revenue	3		13,893			14,354
Cost of sales			(7,125)			(7,232)
Gross profit			6,768			7,122
Selling & distribution costs			(3,474)			(3,767)
Administrative expenses			(1,915)			(2,020)
Operating profit a			1,379			1,335
Finance income			13			30
Finance cost			(211)			(188)
Profit before taxation and exceptional items			1,181			1,177
Exceptional item - GMP equalisation	7		(299)			-
Profit before taxation			882			1,177
Taxation	4		(144)			(197)
Profit for the year attributable to owners of the parent company			738			980
Basic and diluted earnings per ordinary share	6		29.1p			38.7p
a Operating profit is calculated as profit before net finance costs, exceptional items and taxation.
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
for the year ended 31st March 2019
			2019			2018
			£000			£000
Profit for the year			738			980
Items that will not be reclassified to profit or loss:
Actuarial loss on defined benefit pension scheme			(933)			(234)
Deferred taxation on actuarial loss			159			40
Deferred taxation on revaluation of assets			-			44
			(774)			(150)
Total comprehensive income for the year			(36)			830

CONSOLIDATED STATEMENT OF FINANCIAL POSITION AT 31st MARCH 2019

		2019		2018
		£000		£000
Non-current assets
Intangible assets		82		85
Property, plant and equipment		3,210		3,337
Deferred tax asset		1,048		853
		4,340		4,276
Current assets
Inventories		3,989		3,930
Trade and other receivables		2,286		2,287
Cash and cash equivalents		3,153		2,366
		9,428		8,583
Total assets		13,768		12,859
Current liabilities
Trade and other payables		(1,789)		(1,474)
Current tax payable		(171)		(175)
		(1,960)		(1,649)
Non-current liabilities
Retirement benefit scheme		(7,420)		(6,472)
Total liabilities		(9,380)		(8,121)
Net assets		4,388		4,738
Equity
Called up share capital		254		254
Capital redemption reserve		109		109
Revaluation reserve		1,277		1,357
Retained earnings		2,748		3,018
Equity shareholders' funds		4,388		4,738

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY FOR THE YEAR ENDED 31st MARCH 2019

	Share capital	Capital redemption reserve	Revaluation reserve	Retained earnings	Total Equity
	£000	£000	£000	£000	£000
Balance at 31st March 2017	254	109	1,389	2,609	4,361
Total transactions with owners
Equity dividends paid	-	-	-	(453)	(453)
Profit for the year	-	-	-	980	980
Reclassification of depreciation on revaluation	-	-	(76)	76	-
Other comprehensive income for the year	-	-	44	(194)	(150)
Total comprehensive income for the year	-	-	(32)	862	830
Balance at 31st March 2018	254	109	1,357	3,018	4,738
Total transactions with owners
Equity dividends paid	-	-	-	(314)	(314)
Profit for the year	-	-	-	738	738
Reclassification of depreciation on revaluation			(80)	80	-
Other comprehensive income for the year	-	-	-	(774)	(774)
Total comprehensive income for the year	-	-	(80)	44	(36)
Balance at 31st March 2019	254	109	1,277	2,748	4,388

CONSOLIDATED STATEMENT OF CASHFLOWS FOR THE YEAR ENDED 31st MARCH 2019

	2019		2018
	£000		£000
Cash flow from operating activities
Profit for the year before taxation	882		1,177
Adjustments for:
Depreciation	348		365
Amortisation	27		58
Profit on disposal of property, plant and equipment	(16)		(10)
Net finance (income)/cost	17		(30)
Defined benefit pension scheme expenses	530		237
Contributions to defined benefit pension scheme	(516)		(500)
Operating cash flow before movements in working capital	1,272		1,297
Changes in working capital:
Increase in inventories	(59)		(141)
Decrease/ (increase) in trade and other receivables	6		(118)
Increase in trade and other payables	310		74
Cash generated from operations	1,529		1,112
Taxation paid	(184)		(157)
Net cash from operating activities	1,345		955
Cash flows from investing activities
Payments to acquire property, plant and equipment	(239)		(222)
Proceeds from the sale of property, plant and equipment	35		41
Payments to acquire intangible assets	(23)		(64)
Finance (costs)/income	(17)		30
	(244)		(215)
Cash flows from financing activities
Dividends paid	(314)		(453)
	(314)		(453)
Net increase in cash and cash equivalents	787		287
Cash and cash equivalents at beginning of year	2,366		2,079
Cash and cash equivalents at end of year	3,153		2,366

NOTES TO THE PRELIMINARY ANNOUNCEMENT

1.     Basis of preparation

The Group has prepared its consolidated financial statements for the year ended 31st March 2019 in accordance with International Financial Reporting Standards as adopted by the European Union. There was no impact on the reported results due to the adoption of IFRS 9 and IFRS 15. The accounting policies applied are consistent with those included in the financial statements of the Group for the year ended 31st March 2018 except for changes required on the adoption of IFRS 15 "Revenue from Contracts with Customers" and IFRS 9 "Financial Instruments".

The financial information contained in this preliminary announcement does not constitute the Group's statutory accounts within the meaning of Section 434 of the Companies Act 2006.

The annual report and financial statements for the year ended 31st March 2019 were approved by the Board of Directors on 10th July 2019 along with this preliminary announcement.   The annual report and financial statements will be delivered to the Registrar of Companies after the Annual General Meeting.

The statutory accounts of Samuel Heath & Sons PLC for the year ended 31 March 2018 have been delivered to the Registrar of Companies. The auditor's reports on the statutory accounts for the years ended 31st March 2019 and 31st March 2018 were unqualified and did not contain a statement under section 498 of the Companies Act 2006.

2.     Critical accounting and key sources of estimation

Critical accounting estimates, assumptions and judgements

Estimates and judgements are continually evaluated and are based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances.

The Group makes estimates and assumptions concerning the future.  The resulting accounting estimates and assumptions will, by definition, seldom equal the related actual results. The Group has evaluated the estimates and assumptions that have been made in relation to the carrying amounts of assets and liabilities in these financial statements.

The key accounting judgements and sources of estimation uncertainty with a significant risk of causing a material adjustment to assets and liabilities in the next 12 months include the following:

Pensions - movements in equity markets, interest rates and life expectancy could materially affect the level of surpluses and deficits in the defined benefit pension scheme.

Valuation of property, plant and equipment - the Group reviews the value, useful economic lives and residual values attributed to assets on an on-going basis to ensure they are appropriate. Changes in market value, economic lives or residual values could impact the carrying value and charges to the income statement in future periods.

Provisions - using information available at the balance sheet date, the Directors make judgements based on experience on the level of provision required against assets, including inventory and trade receivables. Further information received after the balance sheet date may impact the level of provision required.

Deferred tax assets - deferred tax assets are recognised to the extent that it is probable that taxable profit will be available against which the losses can be utilised. Management judgement is required to determine the amount of deferred tax assets that can be recognised, based upon the likely timing and level of future taxable profits.

3.     Revenue by geographic market
			2019 £000		2018 £000
Overseas			6,027		6,013
Home			7,866		8,341
			13,893		14,354

4.     Income taxes

	2019 £000		2018 £000
Current taxes:
Current year	169		175
Adjustments in respect of prior periods	(11)		(1)
	180		174
Deferred taxes:
Origination and reversal of temporary differences	(36)		23
Total income taxes	144		197

Corporation tax is calculated at 19% (2018: 19%) of the estimated assessable profit for the year.

Tax reconciliation

		2019 £000		2018 £000
	Profit for the year	882		1,177
	Corporation tax charge thereon at 19% (2018: 19%)	168		224
	Adjusted for the effects of:
	Prior year adjustments	11		(1)
	Research and development claim	(7)		(22)
	Other adjustments	(28)		(4)
	Total income taxes	144		197
	Effective tax rate	16.3%		16.7%

5.     Dividends

	2019		2018
	£000		£000
Final dividend for the year ended 31st March 2018 of 6.875 pence per share (2017: 6.875 pence per share)	174		174
Interim dividend for the year ended 31st March 2017 of 5.50 pence per share	-		139
Interim dividend for the year ended 31st March 2019 of 5.50 pence per share (2018: 5.50 pence per share)	139		139
	313		452

In addition to the dividends paid during the year the directors are recommending a final dividend for 2019 of 6.875 pence per share amounting to £174,000. The proposed final dividend is subject to approval at the Annual General Meeting and hence has not been included as a liability in these accounts.

6.     Earnings per share

The basic and diluted earnings per share are calculated by dividing the relevant profit after taxation of £738,000 (2018: £980,000) by the average number of ordinary shares in issue during the year being 2,534,322 (2018: 2,534,322). The number of shares used in the calculation is the same for both basic and diluted earnings.

7.     Exceptional item

The business has recognised the past service cost resulting from Guaranteed Minimum Pension (GMP) equalisation as an exceptional item on the basis that it is a one off cost of substance arising from a legal case during the financial year.

GMP equalisation is the recognition that during the 1990s benefits accrued differently for men and women based on their then different retirement ages.

8.     Notice of annual general meeting

Notice is hereby given that the 2019 Annual General Meeting of the Company will be held at the registered office of the Company, Leopold Street, Birmingham, on 9th August 2019 at 12.00 noon. The final dividend of 6.875 pence, if approved, will be payable on 16th August 2019 to ordinary shareholders registered at close of business on 19th July 2019.

9.     Posting of accounts

The report and accounts are being posted to shareholders today where requested, and are available on the Company's website, at www.samuel-heath.com/investor-relations. 

This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact rns@lseg.com or visit www.rns.com.

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