REG - Heath(Samuel) & Sons - Half-year Report <Origin Href="QuoteRef">HSM.L</Origin>

Samuel Heath and SonsAnnouncement

16/11/2016 08:05

RNS Number : 2636P
Heath(Samuel) & Sons PLC
16 November 2016
SAMUEL HEATH & SONS plc
("the Company")
INTERIM REPORT
Half year ended 30 September 2016
CHAIRMAN'S STATEMENT
The results for the half year to September 30th were obviously satisfactory. Sales revenue was up to 6,635,000 (2015: 6,061,000). Operating profit was also up at 832,000 (2015: 542,000). Profit before tax was 728,000 (2015: 437,000). This general improvement took place in most markets in which we operate and was fairly evenly spread over most of our product groups. 
It is with great sadness that I report that in August our Financial Director, Paul Turner, died after a short illness at the age of 49. He had made a large contribution to the Company during his nine years with us.
I have said before that the job for businesses is to work in the circumstances they are given and not to expect to change them. We equally hope to be interfered with as little as possible as a trade off to this.
The immediate future and long term outlook is going to be affected by the current uncertain situation. Seventy-five per cent of our purchases are being impacted by the devaluation of the Pound against the Dollar and the Euro. Our main purchase of brass is directly hit by both these currencies. Our sterling prices are therefore going to have to rise. It is always difficult to foresee the acceptance of these new prices, particularly since, in the current circumstances, increases of competitors are going to be phased in haphazardly.
Perhaps also, longer term, the health of our business will be very dependent on the prosperity being enjoyed in London and the South East. It is for these reasons that I am extremely cautious in forecasting the results for the second six months of the year. Experience tells us that there can be rapid changes in spending patterns.
The Bank of England decided to lower interest rates after the Brexit vote. This has had an immediate impact on our pension scheme deficit. This now stands at 10,805,000, as against 5,292,000 at the end of September 2015. Since we are allowed only to pay dividends when total assets exceed liabilities, we are prevented from paying a dividend at this time. If the position changes by the year end, we hope to make up for this lack of payment at that time. Meanwhile I find it extremely ironic that this situation has arisen, when the Company is announcing its record operating profit before tax at the interim stage in the forty-five years, in which I have been Chairman. I can only add that increased spending in order to keep the economy moving is unlikely to be carried out by Samuel Heath and Sons shareholders.
Sam Heath
Chairman
16th November 2016
For further information , please contact:
Samuel Heath & Sons Plc
John Park, Company Secretary 0121 772 2303
Cairn Financial Advisors LLP
James Caithie 020 7213 0882

Unaudited Interim Financial Report 
For the Half Year ended 30 September 2016
CONSOLIDATED INCOME STATEMENT






Half year ended 30 September 

Half year ended 30 September 

Year ended 31 March

2016

2015

2016

Unaudited

Unaudited

Audited

'000

'000

'000
Continuing operations





Revenue
6,635

 6,061

 12,584






Cost of sales
(3,141)

 (3,083)

(6,528)






Gross profit
3,494

 2,978

 6,056






Distribution costs
(1,664)

(1,543)

(3,083)
Administrative expenses
(998)

(893)

(1,817)






Operating profit
832

 542

 1,156







Finance costs
  (104)


(105)


(209)






Profit before taxation
728

 437

 947

Taxation

(149) 
  (87)

(178)






Profit for the period
579

 350

 769












Basic and diluted earnings per ordinary share
22.8p

13.8p

30.3p

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME







Half year ended 30 September 

Half year ended 30 September 

Year ended 31 March

2016

2015

2016

Unaudited

Unaudited

Audited

'000

'000

'000






Profit for the period
 579

 350

 769












Items that will be reclassified to profit or loss:






Cash flow hedges
  15

 (48)

 (71)







 15

 (48)

 (71)






Items that will not be reclassified to profit or loss:





Actuarial gain/(loss) on defined benefit pension scheme
 (4,762)

1,408

 411
Deferred tax on actuarial (gain)/loss
  738

 (255)

 (205)







 (4,024)

1,153

 206






Total comprehensive income for the period
 (3,430)

1,455

 904









 

 
CONSOLIDATED STATEMENT OF FINANCIAL POSITION

At 30 September 

At 30 September 

 At 31 March

2016

2015

2016
Unaudited

Unaudited

Audited

'000

'000

'000
Non-current assets





Intangible assets
99

156

 128
Property, plant and equipment
1,848

1,471

 1,581
Deferred tax asset
1,836

1,058

 1,098







3,783

2,685

 2,807






Current assets





Inventories
3,537

3,388

 3,321
Trade and other receivables
1,978

2,066

 2,153
Derivative financial instruments
 - 

 7

 - 
Cash and cash equivalents
 2,268

 1,887

 2,078

 7,783

 7,348

 7,552






Total assets
 11,566

 10,033

 10,359






Current liabilities





Trade and other payables
(1,290)

(1,133)

(1,317)
Derivative financial instruments
-

-

(15)
Current tax payable
(296)

(159)

(147)

(1,586)

(1,292)

(1,479)






Non-current liabilities





Retirement benefit scheme
(10,805)

(5,292)

(6,101)
Deferred tax liability
(79)

(58)

(79)

(10,884)

(5,350)

(6,180)






Total liabilities
(12,470)

(6,642)

(7,659)






Net assets
 (904)

 3,391

 2,700






Equity





Called up share capital
 254

 254

 254
Capital redemption reserve
 109

 109

 109
Retained earnings
(1,267)

 3,028

 2,337






Equity shareholders' funds
 (904)

 3,391

 2,700
























CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

Share capital
Capital redemption reserve
Retained earnings
Total equity

000
000
000
000





Balance at 31 March 2015
254
109
 1,731
 2,094





Equity dividends paid
-
-
 (158)
(158)





Profit for period
-
-
 350
 350
Other comprehensive income for the period
-
-
 1,105
 1,105
Total comprehensive income for the period


1,455
1,455





Balance at 30 September 2015
254
109
 3,028
 3,391





Equity dividends paid
-
-
(140)
(140)





Profit for period
-
-
 419
 419
Other comprehensive loss for the period
-
-
(970)
(970)
Total comprehensive loss for the period
-
-
(551)
(551)





Balance at 31 March 2016
254
109
 2,337
 2,700





Equity dividends paid
-
-
 (174)
(174)





Profit for period
-
-
 579
 579
Other comprehensive loss for the period
-
-
 (4,009)
 (4,009)
Total comprehensive loss for the period
-
-
 (3,430)
(3,430)





Balance at 30 September 2016
254
109
 (1,267)
 (904)






CONSOLIDATED CASH FLOW STATEMENT 

Half year ended 30 September 

Half year ended 30 September 

Year ended 31 March

2016

2015

2016

Unaudited

Unaudited

Audited

'000

'000

'000
Cash flow from operating activities











Profit for the period before tax
728

 437

 947






Adjustments for:





Depreciation
 130

 161

 313
Amortisation
 29

 28

 56
Profit on disposal of property, plant and equipment
(18)

 (3)

 (7)
Finance income
(5)

 (5)

 (10)
Defined benefit pension scheme expenses
 132

 133

 255
Contributions to defined benefit pension scheme
(189)

 -

 (311)






Operating cash flow before movements in working capital
 807

 751 

 1,243






Changes in working capital:





Increase in inventories
(216)

(231)

(164)
(Increase)/decrease in trade and other receivables
 134

 (63)

 (68)
Increase/(decrease) in trade and other payables
 13

 89

 159






Cash generated from operations
 738

 546

 1,170






Taxation paid
-

 -

(72)






Net cash from operating activities
738

 546

1,098 












Cash flow from investing activities





Payments to acquire property, plant and equipment
(397)

 (157)

 (390)
Proceeds from the sale of property, plant and equipment
 18

 3

 10
Proceeds from sale of financial assets
 -

 -

 -
Finance income
 5

 5

 10







(374)

 (149)

 (370)


















Cash flow from financing activities





Dividends paid
(174)

(158)

(298)







(174)

(158)

(298)












Net increase/(decrease) in cash and cash equivalents
190

239

 430
Cash and cash equivalents at beginning of period
2,078

 1,648

 1,648






Cash and cash equivalents at end of period
2,268

 1,887

 2,078


















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 2016 is not audited and does not constitute statutory accounts as defined in section 435 of the Companies Act 2006. The statutory accounts for the year ended 31 March 2016 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 2015 were also unaudited.
2. ACCOUNTING POLICIES
Basis of accounting
The report has been prepared on a going concern basis in accordance with International Financial Reporting Standards ("IFRS") as issued by the International Accounting Standards Board ("IASB") at 30 September 2016 as well as all interpretations issued by the International Financial Reporting Interpretations Committee ("IFRIC") at 30 September 2016. 
The group has not availed itself of early adoption options in such standards and interpretations. 
The financial statements have been prepared under the historical cost basis. The principal accounting policies adopted are as set out in the Annual Report for the year ended 31 March 2016. 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 2016 from the movements in discount rates and inflation during the six months.
3.  Dividends
No interim dividend is proposed (30 September 2015: 5.5 pence per share).
4. EARNINGS PER SHARE 
The basic and diluted earnings per share are calculated by dividing the relevant profit after taxation of 579,000 (30 September 2015: 350,000) by the average number of ordinary shares in issue during the period being 2,534,322 (2015: 2,534,322). The number of shares used in the calculation is the same for both basic and diluted earnings.

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