Samuel Heath - Return on net tangible assets

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Samuel Heath (LSE:HSM) has been consistently profitable, but has it produced good returns on net tangible assets? Also, given the strong link between a company’s return on net tangible assets over the long stretch and share performance will it be enlightening to estimate intrinsic value using return on net tangible assets data?

To answer these questions we need to look at the historical numbers.

Profits, assets and liabilities

£’000s  Year end September 2020   2019   2018   2017
INCOME STATEMENT
Profit after tax 1,069 738 980 1,013
Amortisation charge this year for accounting goodwill following acquisitions 0 0 0 0
Exceptional items distorting profits (positive or negative) 0 240 0 0
Profit for shareholders 1,069 978 980 1,013
CURRENT ASSETS AND LIABILITIES
Inventories 4,230 3,989 3,930 3,789
Receivables 2,370 2,286 2,287 2,169
Cash needed for operations (assumed) 1,000 1,000 1,000 1,000
Other current assets 0 0 0 0
Payables -1,868 -1,789 -1,474 -1,400
Short-term debt 0 0 0 0
Other current liabilities -137 -171 -175 -158
Working capital for operations 5,595 5,315 5,568 5,558
Surplus cash (assumed) 2,016 2,153 1,366 1,079
NON-CURRENT ASSETS AND LIABILITIES
Property, Plant and Equipment 3,635 3,210 3,337 3,511
Goodwill in BS 0 0 0 0
Previously written-off acquired goodwill – add back 0 0 0 0
Other acquired intangible assets in BS 0 0 0 0
Previously written-off other acquired intangibles – add back 0 0 0 0
Long-term debt 0 0 0 0
Other non-current liabilities -46 0 -175 -158
Net non-current assets for operations 3,589 3,210 3,162 3,353
OTHER ITEMS TO CONSIDER
Defined benefit pension deficit 6,575 7,420 6,472 6,501
Internally generated intangible assets capitalised to BS 151 82 85 79
Investments (in shares, bonds, etc.) 0 0 0 0
Operating lease non-cancellable commitments 25 210 109 159
Preference share capital 0 0 0 0
Minority interests in profit 0 0 0 0
Minority interests in net assets 0 0 0 0
£’000s  Year end September 2016   2015   2014   2013
INCOME STATEMENT
Profit after tax 769 394 443
Amortisation charge this year for accounting goodwill following acquisitions 0 0 0
Exceptional items distorting profits (positive or negative) 0 0 0
Profit for shareholders 769 394 443
CURRENT ASSETS AND LIABILITIES
Inventories 3,321 3,157 2,899 2,731
Receivables 2,153 2,085 1,819 1,909
Cash needed for operations (assumed) 1,000 1,000 1,000 219
Other current assets 0 56 0 1,401
Payables -1,317 -1,126 -1,164 -949
Short-term debt 0 0 0 0
Other current liabilities -162 -72 -118 -19
Working capital for operations 4,995 5,100 4,436 5,292
Surplus cash (assumed) 1,078 648 1,026 0
NON-CURRENT ASSETS AND LIABILITIES
Property, Plant and Equipment 1,581 1,47

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