TIDMHSM

RNS Number : 5815S

Heath(Samuel) & Sons PLC

10 July 2020

HEATH (SAMUEL) & SONS PLC

10th JULY 2020

PRELIMINARY RESULTS FOR THE YEARED 31ST MARCH 2020

CHAIRMAN'S STATEMENT

This statement will be very much in two halves. The first part will deal with the very successful past year's trading, and the second, and probably much more important for the future of the Company, the prospects for the next financial twelve months, which has potentially been thrown into chaos by the Coronavirus pandemic Covid-19.

Revenue at GBP13.887m was very similar to last year (2019: GBP13.893m) and profit before tax was GBP1.368m (2019: GBP1.181m) before exceptional items (last year's Exceptional cost of GMP Equalisation of GBP0.299m). These results were affected very little until the end of March, because we had a healthy order book. Then came the closures of the majority of our customers throughout the world. We have never closed the factory, having taken all the necessary safety measures quite correctly required by Law. However, because of the consequent drop in sales, we did then move to working with a skeleton staff. The Government help, especially through its furlough scheme in looking after our people who have been unable to work, has been invaluable to us. The result of this sharp downturn in activity will unsurprisingly have a devastating effect on our profitability in the current year. However, it would have been so much worse if we had not continued working as we did. I would like to thank all the people from top to bottom, who were involved with this. We ended 2019-20 with a strong balance sheet, and good liquidity evidenced by our strong cash balance, which has put us in good stead in the current financial year.

It is very difficult to know how the world will change after these events. Some of these changes could very much affect an organisation such as ours which has historically built its reputation with face-to-face meetings with its customers throughout the world and by exhibiting at trade exhibitions globally as well.

Output to the end of June was 37.6% down on the same period last year. Clearly there will be a significant loss on this figure. Extensive work has been done on a wide range of forecast scenarios for the current financial year. There has been input from all the Board on these figures, which has been much welcomed. What they all show is a large negative effect on cash flow, not helped by us continuing to fund the large deficit in our Pension Scheme, which I have previously discussed. With this in mind the Board does not believe that this is the correct time to pay a final dividend, even though our balance sheet is strong. We will revisit this decision at the time of the Interim announcement.

Sam Heath

Chairman

9th July 2020

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 2020

 
                                                               2020      2019 
                                               Note 
                                                             GBP000    GBP000 
 
Revenue                                         3            13,887    13,893 
 
Cost of sales                                               (6,798)   (7,125) 
 
Gross profit                                                  7,089     6,768 
 
Selling and distribution costs                              (3,543)   (3,474) 
Administrative expenses                                     (2,012)   (1,915) 
 
 Operating profit (a)                                         1,534     1,379 
 
Finance income                                                   25        13 
Finance cost                                                  (191)     (211) 
 
 
Profit before taxation and exceptional 
 items                                                        1,368     1,181 
 
Exceptional item - GMP equalisation             7                 -     (299) 
 
Profit before taxation                                        1,368       882 
 
Taxation                                        4             (299)     (144) 
 
Profit for the year attributable 
 to owners of the parent Company                              1,069       738 
 
 
Basic and diluted earnings per 
 ordinary share                                 6             42.2p     29.1p 
                                                      =============  ======== 
 
(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 2020 
                                                               2020      2019 
                                                             GBP000    GBP000 
 
Profit for the year                                           1,069       738 
 
 
Items that will not be reclassified 
 to profit or loss: 
Actuarial gain/(loss) on defined 
 benefit pension scheme                                         291     (933) 
Deferred taxation on actuarial 
 (gain)/loss                                                   (55)       159 
Deferred tax rate change                                        125         - 
Revaluation of property, plant 
 and equipment                                                  182         - 
Deferred taxation on revaluation 
 of assets                                                     (23)         - 
 
                                                                520     (774) 
 
 
Total comprehensive income for 
 the year                                                     1,589      (36) 
                                                      -------------  -------- 
 

CONSOLIDATED STATEMENT OF FINANCIAL POSITION AS AT 31st MARCH 2020

 
 
                                        2020      2019 
                                      GBP000    GBP000 
 Non-current assets 
 Intangible assets                       151        82 
 Property, plant and equipment         3,635     3,210 
 Deferred tax asset                      887     1,048 
                                   ---------  -------- 
                                       4,673     4,340 
 
 Current assets 
 Inventories                           4,230     3,989 
 Trade and other receivables           2,370     2,286 
 Cash and cash equivalents             3,016     3,153 
                                   ---------  -------- 
                                       9,616     9,428 
 
 Total assets                         14,289    13,768 
 
 Current liabilities 
 Trade and other payables            (1,868)   (1,789) 
 Right of use lease liabilities         (58)         - 
 Current tax payable                    (79)     (171) 
                                   ---------  -------- 
                                     (2,005)   (1,960) 
 
 Non-current liabilities 
 Right of use lease liabilities         (46)         - 
 Retirement benefit scheme           (6,575)   (7,420) 
                                     (6,621)   (7,420) 
 
 Total liabilities                   (8,626)   (9,380) 
 
 Net assets                            5,663     4,388 
                                   ---------  -------- 
 
 Equity 
 Called up share capital                 254       254 
 Capital redemption reserve              109       109 
 Revaluation reserve                   1,349     1,277 
 Retained earnings                     3,951     2,748 
 
 
   Equity shareholders' funds          5,663     4,388 
 
 

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY FOR THE YEARED 31st MARCH 2020

 
                                      Share    Capital    Revaluation   Retained    Total 
                                    capital   redemption    reserve     earnings   Equity 
                                               reserve 
                                     GBP000       GBP000       GBP000     GBP000   GBP000 
 
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 
Total transactions with owners 
Equity dividends paid                     -            -            -      (314)    (314) 
                                   --------  -----------  -----------  ---------  ------- 
 
Profit for the year                       -            -            -      1,069    1,069 
Reclassification of depreciation 
 on revaluation                                                  (87)         87        - 
Other comprehensive income 
 for the year                             -            -          159        361      520 
                                   --------  -----------  -----------  ---------  ------- 
Total comprehensive income 
 for the year                             -            -           72      1,517    1,589 
 
Balance at 31st March 2020              254          109        1,349      3,951    5,663 
                                   --------  -----------  -----------  ---------  ------- 
 

CONSOLIDATED STATEMENT OF CASHFLOWS FOR THE YEARED 31st MARCH 2020

 
 
                                                         2020    2019 
                                                       GBP000  GBP000 
Cash flow from operating activities 
 
Profit for the year before taxation                     1,368     882 
 
Adjustments for: 
Depreciation                                              405     348 
Amortisation                                               16      27 
Profit on disposal of property, plant and equipment       (3)    (16) 
Net finance costs/(income)                               (25)      17 
Defined benefit pension scheme expenses                   228     530 
Contributions to defined benefit pension scheme         (783)   (516) 
 
 
Operating cash flow before movements in working 
 capital                                                1,206   1,272 
 
Changes in working capital: 
Increase in inventories                                 (241)    (59) 
(Increase)/decrease in trade and other receivables       (84)       6 
Increase in trade and other payables                       79     310 
 
Cash generated from operations                            960   1,529 
 
Taxation paid                                           (180)   (184) 
 
Net cash from operating activities                        780   1,345 
 
Cash flows from investing activities 
 
Payments to acquire property, plant and equipment       (502)   (239) 
Proceeds from the sale of property, plant and 
 equipment                                                 14      35 
Payments to acquire intangible assets                    (85)    (23) 
Finance (costs)/income                                     25    (17) 
 
 
                                                        (548)   (244) 
 
Cash flows from financing activities 
 
Payment for right of use assets                          (55)       - 
Dividends paid                                          (314)   (314) 
 
                                                        (369)   (314) 
 
 
Net (decrease)/increase in cash and cash equivalents    (137)     787 
 
Cash and cash equivalents at beginning of year          3,153   2,366 
 
Cash and cash equivalents at end of year                3,016   3,153 
 
 

NOTES TO THE PRELIMINARY ANNOUNCEMENT

   1.     Basis of preparation 

The Group has prepared its consolidated financial statements for the year ended 31st March 2020 in accordance with International Financial Reporting Standards as adopted by the European Union. The accounting policies applied are consistent with those included in the financial statements of the Group for the year ended 31st March 2019 except for changes required on the adoption of IFRS 16 "Leases".

IFRS 16 brings operating leases onto the statement of financial position. The Group has used the modified retrospective transition approach on adoption of IFRS 16 Leases, where the initial right of use asset values recognised on property leases of GBP159k are equal to the present value of the future lease payments as at the date of transition (1 April 2019). The adoption of IFRS 16 did not have a material impact on the Group's consolidated results or financial position.

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 2020 were approved by the Board of Directors on 9th July 2020 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 2019 have been delivered to the Registrar of Companies. The auditor's reports on the statutory accounts for the years ended 31st March 2020 and 31st March 2019 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 
                                2020     2019 
                              GBP000   GBP000 
Overseas                       5,969    6,027 
Home                           7,918    7,866 
                              13,887   13,893 
                             -------  ------- 
 
   4.     Income taxes 
 
                                                        2020      2019 
                                                      GBP000    GBP000 
Current taxes: 
Current year                                              81       169 
Adjustments in respect of prior periods                   11        11 
                                                    --------  -------- 
                                                          92       180 
Deferred taxes: 
Origination and reversal of temporary differences        174      (36) 
Change in tax rate                                         8         - 
Adjustments in respect of prior period                    25         - 
                                                    --------  -------- 
                                                         207      (36) 
 
Total income taxes                                       299       144 
                                                    --------  -------- 
 

Corporation tax is calculated at 19% (2019: 19%) of the estimated assessable profit for the year.

Tax reconciliation

 
                                                    2020     2019 
                                                  GBP000   GBP000 
 Profit for the year                               1,368      882 
                                                --------  ------- 
 
 Corporation tax charge thereon at 19% (2018: 
  19%)                                               260      168 
 Adjusted for the effects of: 
 Prior year adjustments                               36       11 
 Research and development claim                     (21)      (7) 
 Changes in tax rates                                  8        - 
 Other adjustments                                    16     (28) 
 
 Total income taxes                                  299      144 
                                                --------  ------- 
 
 Effective tax rate                                21.9%    16.3% 
                                                --------  ------- 
 
   5.     Dividends 
 
                                                 2020    2019 
                                               GBP000  GBP000 
Final dividend for the year ended 31st March 
 2019 of 6.875 pence per share (2018: 6.875 
 pence per share)                                 174     174 
 Interim dividend for the year ended 31st 
  March 2020 of 5.50 pence per share (2019: 
  5.50 pence per share)                           139     139 
 
                                                  313     313 
                                               ------  ------ 
 

The directors do not recommend a final dividend for this year, in view of the uncertainty resulting from the coronavirus pandemic.

   6.     Earnings per share 

The basic and diluted earnings per share are calculated by dividing the relevant profit after taxation of GBP1,069,000 (2019: GBP738,000) by the average number of ordinary shares in issue during the year being 2,534,322. The number of shares used in the calculation is the same for both basic and diluted earnings.

   7.     Exceptional item 

In 2019, the business 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 2020 Annual General Meeting of the Company will be held at the registered office of the Company, Leopold Street, Birmingham, on 7(th) August 2020 at 12.00 noon.

The Board is monitoring closely the current UK Government guidance on public gatherings and meetings, and in light of this the Company will proceed with the AGM with the minimum quorum of shareholders present to conduct business. Any shareholders who try to attend on the day unfortunately will be refused entry. The Board recognises the importance of the AGM to Shareholders and would encourage any wishing to vote to do so by proxy.

   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.

END

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July 10, 2020 02:30 ET (06:30 GMT)