Final Results

RNS Number : 1776Y

Heath(Samuel) & Sons PLC

03 July 2008

 



HEATH (Samuel) & SONS PLC

3RD JULY 2008

PRELIMINARY RESULTS FOR THE YEAR ENDED 31ST MARCH 2008

CHAIRMAN'S STATEMENT

The results for the year to 31st March 2008 were well down on the previous one, but not quite as much as anticipated. Turnover fell 4%, and operating profit was down from £1,469,000 to £1,182,000.

In March, non-Executive Director Charles Flint died. His keen and probing mind and wise counsel will be very much missed by his colleagues.

Roger Jeynes will also be relinquishing his directorship of the Management Board, as he moves to much shorter working hours. He has been responsible for the development of two world patented and unique products, the Perkomatic and later the Perko-Powermatic door closers. Unbeknown to him, we did try to obtain recognition for this, and his work in Europe with C.E.N., on a more countrywide basis. We were told that he was almost certainly of the wrong ethnic background for such an award. What strange times we live in, when you might consider engineering innovation to be vital to this country. These remarks are, in no way, meant to show any lack of appreciation of the skills and hard work of the wide variety of people, with whom I have had the privilege to work, for over fifty years.

Your Directors believe that a purchase of the Company's shares at the right price level could benefit the Company, and thereby its shareholders. Accordingly, your Directors are seeking your approval for the purchase of up to 15% of the issued share capital, 380,298 shares, between Annual General Meetings. 

The change in the product mix, which was foreseen for the previous year, is continuing. We have commodity prices through the roof, and by any standards difficult trading conditions practically everywhere. This is combined with the reluctance of the market to accept higher prices against any logical rationale. All this forces me to anticipate a further significant fall in profits for the coming year.

However, on the basis of the Company's strong balance sheet, your Directors are recommending a same again final dividend of 12.5 pence per share.

CONSOLIDATED INCOME STATEMENT

		Total  2008		Total  2007
		£000		£000
Continuing operations
Revenue		12,191		12,712
Cost of sales		5,355		5,702
Gross profit		6,836		7,010
Distribution costs		384		411
Administrative expenses		5,270		5,130
Operating profit:
Net of contributions to pension deficit		672		964
Contributions to pension deficit		510		505
		1,182		1,469
Finance income		778		787
Finance costs		568		523
		210		264
Profit before taxation		1,392		1,733
Taxation		345		349
Profit for the year		1,047		1,384
Basic and diluted earnings per ordinary share		41.3 p		54.5 p

CONSOLIDATED BALANCE SHEET

		2008 £000		2007 £000
Non current assets
Property, plant and equipment		2,934		3,201
Deferred tax asset		101		235
		3,035		3,436
Current assets
Inventories		2,787		2,645
Trade and other receivables		2,166		2,135
Cash and cash equivalents		1,728		1,901
Total current assets				6,681
Total assets		9,716		10,117
Current liabilities
Trade and other payables		986		1,183
Current tax payable		213		245
Total current liabilities		1,199		1,428
Non current liabilities
Pension scheme deficit		360		783
Deferred tax liability		252		292
Total non current liabilities		612		1,075
Total liabilities		1,811		2,503
Net assets		7,905		7,614
Equity
Called up share capital		254		254
Capital redemption reserve		109		109
Retained earnings		7,542		7,251
Equity shareholders' funds		7,905		7,614

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

	Share capital	Capital redemption reserve	Retained earnings	Total equity
	£000	£000	£000	£000
Balance at 31st March 2006	255	108	6,733	7,096
Actuarial losses on defined benefit pension scheme	-	-	(301)	(301)
Deferred taxation on items taken to equity	-	-	90	90
Net income recognised directly in equity	-	-	(211)	(211)
Profit for the period	-	-	1,384	1,384
Total recognised income and expense for the period	-	-	1,173	1,173
Purchase of own shares	(1)	1	-	-
Premium on purchase of own shares	-	-	(57)	(57)
Equity dividends paid	-	-	(598)	(598)
Balance at 31st March 2007	254	109	7,251	7,614
Actuarial loss on defined benefit pension scheme	-	-	(200)	(200)
Deferred taxation on items taken to equity	-	-	40	40
Net loss recognised directly in equity	-	-	(160)	(160)
Profit for the period	-	-	1,047	1,047
Total recognised income and expense for the period	-	-	887	887
Equity dividends paid	-	-	(596)	(596)
Balance at 31st March 2008	254	109	7,542	7,905

  CONSOLIDATED AND PARENT CASH FLOW STATEMENTS 

	Note	2008		2007
		£000		£000
Net cash inflow from operating activities	6	519		205
Cashflow from investing activities
Purchases of property, plant and equipment		(226)		(490)
Proceeds from sale of property, plant and equipment		33		51
Interest received		97		99
Net cash outflow from investing activities		(96)		(340)
Net cash outflow from financing activities
Purchase of own shares		-		(57)
Equity dividends paid		(596)		(598)
Net cash outflow from financing activities		(596)		(655)
Decrease in cash and cash equivalents		(173)		(790)
Cash and cash equivalents at beginning of period		1,901		2,691
Cash and cash equivalents at end of period		1,728		1,901

1.     Adoption of new and revised Standards

In the current year, the Group has adopted all of the new and revised Standards and Interpretations issued by the International Accounting Standards Board (IASB) and the International Financial Reporting Interpretations Committee (IFRIC) of the IASB that are relevant to its operations and effective for accounting periods beginning on 1st April 2007. The adoption of the following IFRSs has not impacted the audited financial statements other than for disclosure.

IFRS 3 - Business Combinations 

IFRS 7 - Financial Instruments - disclosure

IAS 1 - Presentation of Financial Statements

IAS 27 - Consolidated and Separate Financial Statements

At the date of authorisation of these financial statements, the following Standard which has not been applied in these financial statements was in issue but not yet effective:

IFRS 8 - Operating Segments

The other Standards and Interpretations are not expected to have any significant impact on the Group's financial statement, in their periods of initial application, except for the additional disclosures on operating segments when the relevant standard comes into effect for periods commencing on or after 1st January 2009.

2.     Accounting policies

Basis of accounting

The financial statements, upon which this financial information is based, have been prepared using accounting policies consistent with International Financial Reporting Standards (IFRS) for the first time. The disclosures required by IFRS 1 concerning the transition from UK GAAP to IFRS are given in note 7.

The financial statements have been prepared under the historical cost basis.  

3.    Critical accounting and key sources of estimation

Critical judgements in applying the entity's accounting policies

In the process of applying the entity's accounting policies, which are described above, the directors have made the following judgements that have the most significant effect on the amounts recognised in the financial statements.

Income taxes

The Group is subject to income taxes in the United Kingdom. Judgment is required in determining the provision for income taxes. There are many transactions and calculations for which the ultimate tax determination is uncertain during the ordinary course of business. The Group recognises liabilities for anticipated tax audit issues based on estimates of whether additional taxes will be due. Where the final tax outcome of these matters is different from the amounts that were initially recorded, such differences will impact the income tax and deferred tax provisions in the period in which such determination is made.

The recoverable amounts of the Group's deferred tax assets have been determined based on the Board's estimates of future taxable profits and income and tax rates. 

Key sources of estimation uncertainty

The key assumptions concerning the future, and other key sources of estimation uncertainty at the balance sheet date, that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year, are discussed below.

Retirement benefit scheme deficit

The valuation of expected returns on assets and the present value of the liabilities of the scheme are determined by assumptions and estimates made by the directors based on the current information to hand. Therefore amounts are open to fluctuations in the future due to unforeseen changes or additional factors that come to light following the year end.

 4.  Dividends

	2008		2007
	£ 000		£ 000
Final dividend for the year ended 31st March 2007 of 12.5 pence per share (2006: 12.5 pence per share)	317		319
Interim dividend for the year ended 31st March 2008 of 11.0 pence per share (2007: 11.0 pence per share)	279		279
	596		598

In addition to the dividends paid during the year the directors are recommending a final dividend for 2008 of 12.5 pence per share amounting to £317,000. The proposed final dividend is subject to approval at the Annual General Meeting (see note 8) and has not been included as a liability in these accounts.

5.   Earnings per share

The basic and diluted earnings per share are calculated by dividing the relevant profit after taxation of £1,047,000 (2007: £1,384,000) by the average number of ordinary shares in issue during the year being 2,535,000 (2007: 2,538,700). The number of shares used in the calculation is the same for both basic and diluted earnings.

6.     Notes to the cash flow statement

	2008		2007
	£000		£000
Results from operating activities	1,182		1,469
Depreciation of property, plant and equipment	468		450
Gain on disposal of property, plant and equipment	(8)		(2)
Operating cash flows before movements in working capital	1,642		1,917
Increase in inventories	(142)		(454)
(Increase)/decrease in receivables	(31)		19
Decrease in payables	(197)		(572)
Pension contributions	(510)		(505)
Cash generated by operations	762		405
Income tax paid	(243)		(200)
Net cash flow from operating activities	519		205

Cash and cash equivalents (which are presented as a single class of assets on the face of the balance sheet) comprise cash at bank and other short-term highly liquid investments with a maturity of three months or less.

 7.      Explanation of transition to IFRS

The Group has applied IFRS 1 'First Time Adoption of International Financial Reporting Standards' as a starting point for reporting under IFRS. The Group's date of transition is 1st April 2006 and comparative information has been restated to reflect in the Group's adoption of IFRS except where otherwise required or permitted by IFRS 1.

IFRS 1 requires an entity to comply with each IFRS and IAS effective at the reporting date for its first financial statements prepared under IFRS. As a general rule, IFRS 1 requires such standards to be applied retrospectively. However, the standard allows several optional exemptions from full retrospective application.  

The Group has elected to take advantage of the following exemption. Business combinations made prior to 1st April 2006 will not be accounted for under IFRS 3 'Business Combinations' and as such the value of goodwill in the balance sheet at that date will be the same amount under IFRS as that recorded in the UK GAAP financial statements, subject to the completion of an annual impairment review.

No adjustments were required in order for the Group to comply with IFRS. 

8.     Annual General Meeting

The Annual General Meeting has been fixed for Friday 15th August 2008 at 12 noon. The final Ordinary Share dividend of 12.5 pence will be declared payable on 22nd August 2008 to ordinary shareholders registered at close of business on 25th July 2008.

9.     Section 240 statement 

The financial information set out above does not constitute the company's statutory accounts for the years ended 31st March 2008 or 2007. Statutory accounts for 2007, which were prepared under UK GAAP, have been delivered to the Registrar of Companies, and those for 2008 prepared under IFRS, will be delivered in due course. The auditors have reported on the 2007 accounts; their report was unqualified, did not include references to any matters by way of emphasis without qualifying their report and did not contain statements under Section 237 (2) or (3) of the Companies Act 1985. 

 

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