REG - Heath(Samuel) & Sons - Final Results
20/07/2022 07:00
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RNS Number : 0331T Heath(Samuel) & Sons PLC 20 July 2022
HEATH (SAMUEL) & SONS PLC
20th JULY 2022
PRELIMINARY RESULTS FOR THE YEAR ENDED 31st MARCH 2022 AND NOTICE OF AGM
CHAIR'S STATEMENT
Our financial performance clearly indicates that we have had a very successful
year. The improvements in the first half, following the destabilising effects
of Covid-19 and lockdowns, have continued throughout the second half. However,
this was achieved with unsustainably low costs and it is therefore important
that we manage future profit expectations as I explain further on.
Revenue for the year of £14.015m represented a 21% increase compared to last
year (2021: £11.539m). Operating profit for the year was £2.152m (2021:
£1.123m before exceptional items) and profit before tax £2.030m (2021:
£0.942m before exceptional costs). In 2021, £322k exceptional costs relating
to GMP equalisation and re-organisation were charged, after which profit
before tax was £620k.
As 2021 was affected by Covid-19 and lockdowns, it is instructive to compare
2022 with the 2020 year, when revenues were at a similar level (2020:
£13.887m). The increase in operating profit over 2020 was £618k (2020:
£1.534m), but this must be viewed in the context of a £626k reduction in
selling and distribution costs, which was in large part involuntary and caused
by reductions in sales staff, the absence of trade shows to attend and lower
marketing spend. These costs have now been reinstated as being essential for
the future growth of the business. Nevertheless, the overall performance was
excellent, reflecting the input provided by our very competent and skilled
executive management team, supported by a loyal hard-working workforce.
Our sales profile during the year was varied, influenced in part by Covid
patterns. Following the end of lockdown in June 2021, we saw a significant
jump in orders in July, as customer projects put on hold during lockdown
started back up. The order flow then reduced through much of the remainder of
2021, picking up again in December and continuing through the quarter to March
2022. It has remained strong into the quarter to June 2022. Trade shows have
begun to take place again, and we have attended shows in the UK, North
America, and Europe, which should help support interest in our products and
the order stream.
So, to our forecast for the trading year to 31 March 2023. I can report that
we are experiencing continued momentum in sales during our first financial
quarter, both at home and abroad, in particularly overseas. However, compared
to 2021/2022, we are also experiencing some significant cost increases. As
already mentioned, selling and marketing costs have increased and
additionally, product development is an area of increased focus with emphasis
on new product ranges. Increases in global energy costs, freight costs, and
commodity prices are all impinging on margins. Supply chain disruption is an
area where we have particular concerns, so we have been taking action to
mitigate the effects, such as building longer lead times into our inventory
and committing to raw material supplies much further in advance. Fortunately,
we do have an advantage in that we manufacture a high proportion of our
product inhouse, compared to our competitors.
The outturn for the year to 31(st) March 2023 is clearly dependent on our
markets continuing to hold up, which is by no means certain in the current
climate, but also on avoiding potentially serious disruption in supplies and
being able to mitigate or pass on escalating costs increases.
In conclusion, whilst we have started the year well there are a number of
headwinds which makes the Board cautious about the outturn for the year as a
whole.
In view of these very strong results, we have no hesitation in recommending an
increase in the final dividend to 7.5625p, which will be paid on 2nd September
2022 to shareholders registered as at 27th July 2022.
AR Buttanshaw
Chair
19th July 2022
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:
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 2022
2022 2021
Note
£000 £000
Revenue 3 14,015 11,539
Cost of sales (6,975) (6,568)
Gross profit 7,040 4,971
Selling and distribution costs (2,917) (2,469)
Administrative expenses excluding exceptional items (1,986) (2,004)
Other operating income 15 625
Operating profit before exceptional items 2,152 1,123
Exceptional items - GMP equalisation 7 - (70)
Reorganisation 7 - (252)
801
Operating profit 2,152
Finance income 10 4
Finance cost (132) (185)
620
Profit before taxation 2,030
Taxation 4 (558) (227)
Profit for the year attributable to owners of the parent company 393
1,472
Basic and diluted earnings per ordinary share 6 58.1p 15.5p
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
for the year ended 31st March 2022
2022 2021
£000 £000
Profit for the year 1,472 393
Items that will not be reclassified to profit or loss:
Actuarial gain/(loss) on defined benefit pension scheme 693 (542)
Deferred taxation on actuarial gain/(loss) (173) 103
Deferred tax rate change 381 -
901 (439)
Total comprehensive income for the year 2,373 (46)
CONSOLIDATED STATEMENT OF FINANCIAL POSITION AS AT 31st MARCH 2022
2022 2021
£000 £000
Non-current assets
Intangible assets 442 186
Property, plant and equipment 3,670 3,413
Deferred tax asset 425 741
4,537 4,340
Current assets
Inventories 3,916 3,682
Trade and other receivables 1,836 2,108
Current Tax receivable - 25
Cash and cash equivalents 4,410 3,682
10,162 9,497
Total assets 14,699 13,837
Current liabilities
Trade and other payables (1,982) (1,769)
Lease liabilities (62) (55)
Current tax payable (13) -
(2,057) (1,824)
Non-current liabilities
Lease liabilities (129) -
Retirement benefit scheme (4,837) (6,396)
(4,966) (6,396)
Total liabilities (7,023) (8,220)
Net assets 7,676 5,617
Equity
Called up share capital 254 254
Capital redemption reserve 109 109
Revaluation reserve 1,186 1,267
Retained earnings 6,127 3,987
7,676
Equity shareholders' funds 5,617
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY FOR THE YEAR ENDED 31st MARCH 2021
Share Capital redemption reserve Revaluation reserve Retained Total
capital earnings Equity
£000 £000 £000 £000 £000
Balance at 31st March 2020 254 109 1,349 3,951 5,663
Profit for the year - - - 393 393
Reclassification of depreciation on revaluation - - (82) 82 -
Other comprehensive income for the year - - - (439) (439)
Total comprehensive income for the year - - (82) 36 (46)
Balance at 31st March 2021 254 109 1,267 3,987 5,617
Total transactions with owners
Equity dividends paid - - - (314) (314)
Profit for the year - - - 1,472 1,472
Reclassification of depreciation on revaluation - - (81) 81 -
Other comprehensive income for the year - - - 901 901
Total comprehensive income for the year - - (81) 2,454 2,373
Balance at 31st March 2022 254 109 1,186 6,127 7,676
CONSOLIDATED STATEMENT OF CASHFLOWS FOR THE YEAR ENDED 31st MARCH 2021
2022 2021
£000 £000
Cash flow from operating activities
Profit for the year before taxation 2,030 620
Adjustments for:
Depreciation 359 370
Amortisation 50 45
Loss/(profit) on disposal of property, plant and equipment 4 (41)
Net finance (income)/costs (12) 21
Defined benefit pension scheme expenses 170 280
Contributions to defined benefit pension scheme (1,036) (1,000)
Operating cash flow before movements in working capital 1,565 295
Changes in working capital:
(Increase)/decrease in inventories (234) 548
Decrease in trade and other receivables 272 262
Increase/(decrease) in trade and other payables 195 (43)
Cash generated from operations 1,798 1,062
Taxation paid - (109)
Net cash from operating activities 1,798 953
Cash flows from investing activities
Payments to acquire property, plant and equipment (444) (169)
Proceeds from the sale of property, plant and equipment 11 63
Payments to acquire intangible assets (306) (79)
Finance income/(costs) 12 (21)
(727) (206)
Cash flows from financing activities
Lease payments (46) (59)
Dividends paid (314) -
CBILS loan received 950 -
CBILS loan repaid (950) -
(360) (59)
Net increase in cash and cash equivalents 711 688
Cash and cash equivalents at beginning of year 3,682 3,016
Effect of exchange rate differences on cash and cash equivalents 17 (22)
Cash and cash equivalents at end of year 4,410 3,682
NOTES TO THE PRELIMINARY ANNOUNCEMENT
1. Basis of preparation
The Group has prepared its consolidated financial statements for the year
ended 31st March 2022 in accordance with UK-adopted International Accounting
Standards. The accounting policies applied are consistent with those included
in the financial statements of the Group for the year ended 31st March 2021.
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 2022
were approved by the Board of Directors on 19th July 2022 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 2021 have been delivered to the Registrar of Companies. The auditor's
reports on the statutory accounts for the years ended 31st March 2022 and 31st
March 2021 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 where the provision is reviewed
against expected future stock usage, the stock provision at year end was
£2.211m (2021: £2.137m).
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
2022 2021
£000 £000
Overseas 6,687 5,132
UK 7,328 6,407
14,015 11,539
4. Income taxes
2022 2021
£000 £000
Current taxes:
Current year 32 (22)
Adjustments in respect of prior periods 2 -
34 (22)
Deferred taxes:
Origination and reversal of temporary differences 348 139
Change in tax rate 152 -
Adjustments in respect of prior periods 24 110
524 249
Total income taxes 558 227
Corporation tax is calculated at 19% (2021: 19%) of the estimated assessable
profit for the year.
Tax reconciliation
2022 2021
£000 £000
Profit for the year 2,030 620
Corporation tax charge thereon at 19% (2021: 19%) 386 118
Adjusted for the effects of:
Prior year adjustments 26 110
Research and development claim (68) -
Changes in tax rates 152 -
Other adjustments 62 (1)
Total income taxes 558 227
5. Dividends
2022 2021
£000 £000
Final dividend for the year ended 31st March 2021 of 6.875 pence per share 175 -
(2020: nil pence per share)
-
Interim dividend for the year ended 31st March 2022 of 5.50 pence per share 139
(2021: nil pence per share)
314 -
The directors are recommending a final dividend of 7.5625 pence per share
(2021: 6.875 pence per share) which will be proposed as a resolution at the
forthcoming Annual General Meeting. An interim dividend was paid during the
year of 5.5 pence per share (2021: nil pence per share).
6. Earnings per share
The basic and diluted earnings per share are calculated by dividing the
relevant profit after taxation of £1,472,000 (2021: £393,000) by the average
number of ordinary shares in issue during the year being 2,534,322 (2021:
2,534,322). The number of shares used in the calculation is the same for both
basic and diluted earnings.
7. Exceptional items
There were no exceptional costs for 2022.
In November 2020, there was a further High Court ruling in relation to
guaranteed minimum pension benefits. The latest ruling states that trustees of
defined benefit schemes that provided guaranteed minimum payments should
revisit, and where necessary, top-up historic cash equivalent transfer values
that were calculated on an unequalised basis if an affected member makes a
successful claim. The impact of the ruling implies that pension scheme
trustees are responsible for equalising the guaranteed minimum payments for
members who transferred out of its defined benefit pension scheme. This
resulted in an increase in the liabilities of the scheme of £70,000 in 2021,
which was recognised in the results as a past service cost in exceptional
items.
Included within exceptional costs for 2021 are the costs of restructuring the
business to size itself better. Costs for exceptional redundancy amounted to
nil (2021: £252,000).
8. Notice of annual general meeting
Notice is hereby given that the 2022 Annual General Meeting of the Company
will be held at the registered office of the Company, Leopold Street,
Birmingham, on 25(th) August 2022 at 12.00 noon.
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
(http://www.samuel-heath.com/investor-relations) .
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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