Replacement: Final Results

RNS Number : 1755T

Heath(Samuel) & Sons PLC

20 July 2022

 

The Company's announcement (RNS Number: 0331T) of 20 July 2022 misstated the record date for the recommended final dividend as 27 July 2022. This should have stated 29 July 2022.

The full amended text is shown below. All other details remain unchanged.

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 29th 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	[phone]
Cairn Financial Advisers LLP	[phone]
James Caithie/Jo Turner

________________________ CONSOLIDATED INCOME STATEMENT_________________________

for the year ended 31st March 2022

	Note		2022			2021
			£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)
Operating profit			2,152			801
Finance income			10			4
Finance cost			(132)			(185)
Profit before taxation			2,030			620
Taxation	4		(558)			(227)
Profit for the year attributable to owners of the parent company			1,472			393
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
Equity shareholders' funds		7,676		5,617

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY FOR THE YEAR ENDED 31st MARCH 2021

	Share capital	Capital redemption reserve	Revaluation reserve	Retained earnings	Total 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 £000		2021 £000
Overseas			6,687		5,132
UK			7,328		6,407
			14,015		11,539

4.  Income taxes

	2022 £000		2021 £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 £000		2021 £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 (2020: nil pence per share)	175		-
Interim dividend for the year ended 31st March 2022 of 5.50 pence per share (2021: nil pence per share)	139		-
	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 . 

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.

 

END

 

 

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