REG - Heath(Samuel) & Sons - Half-year Report
21/11/2023 07:00
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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 £7.78m 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 £441k compared to £610k in the six months to 30
September 2022, a reduction of £169k. 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 £1.473m, £1.244m
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 £300k interim contribution to the pension fund
and £192k in payment of dividends.
The balance sheet nevertheless remains strong with net assets of £11.4m
(March 2023: £11.2m). The retirement benefit scheme deficit has reduced to
£195k from £537k 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 £1.030m.
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 30 ended 30 ended 31
September September March
2023 2022 2023
Unaudited Unaudited Audited
£'000 £'000 £'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 ended 30 September Half year ended 30 September Year ended 31 March
2023 2022 2023
Unaudited Unaudited Audited
£'000 £'000 £'000
411 488 931
Profit for the period
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 September At 30 September At 31 March
2023 2022 2023
Unaudited Unaudited Audited
£'000 £'000 £'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 Capital redemption reserve Revaluation reserve Retained earnings Total equity
£000 £000 £000 £000 £000
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 - - - (192) (192)
Equity dividends paid
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 ended 30 September Half year ended 30 September Year ended 31 March
2023 2022 2023
Unaudited Unaudited Audited
£'000 £'000 £'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 £411,000 (2022: profit £488,000) 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 ended 30 September Half year ended 30 September Year ended 31 March
2023 2022 2023
Unaudited Unaudited Audited
£'000 £'000 £'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 (£195,000) compared
to 31 March 2023 (£537,000) 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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