SAMUEL HEATH & SONS plc ("the Company")

INTERIM REPORT

Half year ended 30 September 2020

CHAIRMAN'S STATEMENT

This has been the most extraordinary half year in my rather lengthy business career. Regrettably there is still not yet a clear outcome by any means.

Our trading performance for the six months until September 30th was quite a lot better than feared but still only produced a small profit of £6k before exceptional items (2019: £363k), on sales of £4.850m (2019: £6.920m). As I mentioned in my annual report, without any doubt this was greatly aided by the Government's furlough scheme. This was imaginative and effective. It helped us on all sides of the business, but particularly on the sales side. However, as it was coming to an end, we had to make some difficult decisions to protect the future of the Company. This resulted in considerable redundancy payments, shown in the accounts as exceptional. This brought our total half year results to a loss of £224k before taxation (2019: profit £363k).

You cannot run a business like ours successfully for long without a considerable sales team, focussed marketing activities and continual research and development. We have therefore brought these back into play for the second half of the year. This is clearly not without risk.

There are differing views on the next six months. We have the U.S. election which could affect a manufacturer at the luxury end of the market, the unknown outcome of the talks with the EU, and, by far the worst of all, the return in volume of the Coronavirus. Anybody offering a forecast in these circumstances would be extremely unwise.

This leaves the question of the dividend. Apart from the ethical question of whether we should pay out dividends when in receipt of Government money, notwithstanding the millions we have paid over the years in taxes, there is more importantly the possible cash requirements of the Company over the next six months. We have therefore decided not to pay an interim dividend but hope to return to normality next year.

This announcement contains inside information for the purposes of Article 7 of EU Regulation 596/2014.

Sam Heath

Chairman

11 November 2020

For further information, please contact:

Samuel Heath & Sons Plc

Simon Latham, Company Secretary

0121 766 4200

Cairn Financial Advisers LLP

James Caithie / Jo Turner

020 7213 0880

Unaudited Interim Financial Report

For the Half Year ended 30 September 2020

CONSOLIDATED INCOME STATEMENT

Half year

Half year

Year

ended 30

ended 30

ended 31

September

September

March

2020

2019

2020

Unaudited

Unaudited

Audited

£'000

£'000

£'000

Revenue

4,850

6,920

13,887

Cost of sales

(3,062)

(3,598)

(6,798)

Gross profit

1,788

3,322

7,089

Selling and distribution costs

(1,344)

(1,776)

(3,543)

Administrative expenses

(940)

(1,067)

(2,012)

Other operating income - grant (note 6)

596

-

-

Operating profit

100

479

1,534

Finance income

14

9

25

Finance cost

(108)

(125)

(191)

Profit before taxation and exceptional items

6

363

1,368

Exceptional item (note 5)

(230)

-

-

(Loss)/profit before taxation

(224)

363

1,368

Taxation

43

(69)

(299)

(Loss)/profit for the period

(181)

294

1,069

Basic and diluted (loss)/earnings per ordinary share (note 4)

(7.1p)

11.6p

42.2p

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

Half year

Half year

Year ended

ended 30

ended 30

31 March

September

September

2020

2019

2020

Unaudited

Unaudited

Audited

£'000

£'000

£'000

(Loss)/profit for the period

(181)

294

1,069

Items that will not be reclassified to profit or loss:

(1,239)

Actuarial gain/(loss) on defined benefit pension scheme

204

291

Deferred tax on actuarial loss/(gain)

218

(34)

(55)

Deferred tax rate change

-

-

125

Revaluation of property, plant and equipment

-

-

182

Deferred taxation on revaluation of assets

-

-

(23)

(1,021)

170

520

Total comprehensive income for the period

(1,202)

464

1,589

CONSOLIDATED STATEMENT OF FINANCIAL POSITION

At 30

At 30

At 31

September

September

March

2020

2019

2020

Unaudited

Unaudited

Audited

Non-current assets

£'000

£'000

£'000

Intangible assets

135

74

151

Property, plant and equipment

3,541

3,519

3,635

Deferred tax assets

1,103

972

887

4,779

4,565

4,673

Current assets

Inventories

3,869

3,883

4,230

Trade and other receivables

1,689

2,216

2,370

Cash and cash equivalents

3,424

3,100

3,016

8,982

9,199

9,616

Total assets

13,761

13,764

14,289

Current liabilities

Trade and other payables

(1,772)

(1,665)

(1,868)

Right of use lease liabilities

(53)

(57)

(58)

Current tax payable

(36)

(239)

(79)

(1,861)

(1,961)

(2,005)

Non-current liabilities

Right of use lease liabilities

(26)

(75)

(46)

Retirement benefit scheme

(7,413)

(7,050)

(6,575)

(7,439)

(7,125)

(6,621)

Total liabilities

(9,300)

(9,086)

(8,626)

Net assets

4,461

4,678

5,663

Equity

Called up share capital

254

254

254

Capital redemption reserve

109

109

109

Revaluation reserve

1,308

1,224

1,349

Retained earnings

2,790

3,091

3,951

Equity shareholders' funds

4,461

4,678

5,663

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

Share

Capital

Revaluation

Retained

Total equity

capital

redemption

reserve

earnings

reserve

£000

£000

£000

£000

£000

Balance at 31 March 2019

254

109

1,277

2,748

4,388

Total transactions with owners

Equity dividends paid

-

-

-

(174)

(174)

Profit for the period

-

-

-

294

294

Other comprehensive income for the

-

-

-

170

170

period

Reclassification of depreciation on

-

-

(53)

53

-

revaluation

Total comprehensive income for the

-

-

(53)

517

464

period

Balance at 30 September 2019

254

109

1,224

3,091

4,678

Total transactions with owners

Equity dividends paid

-

-

-

(140)

(140)

Profit for the period

-

-

-

775

775

Other comprehensive income for the

-

-

159

191

350

period

Reclassification of depreciation on

-

-

(34)

34

-

revaluation

Total comprehensive income for the

-

-

125

1,000

1,125

period

Balance at 31 March 2020

254

109

1,349

3,951

5,663

Total transactions with owners

-

-

-

-

-

Equity dividends paid

Loss for the period

-

-

-

(181)

(181)

Other comprehensive income for the

-

-

-

(1,021)

(1,021)

period

Reclassification of depreciation on

-

-

(41)

41

-

revaluation

Total comprehensive income for the

-

-

(41)

(1,161)

(1,202)

period

Balance at 30 September 2020

254

109

1,308

2,790

4,461

CONSOLIDATED CASH FLOW STATEMENT

Half year

Half year

Year

ended 30

ended 30

ended 31

September

September

March

2020

2019

2020

Unaudited

Unaudited

Audited

Cash flow from operating activities

£'000

£'000

£'000

(Loss)/profit for the period before taxation

(224)

363

1,368

Adjustments for:

155

Depreciation

192

405

Amortisation

16

8

16

Loss/(profit) on disposal of property, plant and equipment

-

3

(3)

Net finance cost/(income)

(14)

7

(25)

Defined benefit pension scheme expenses

98

137

228

Contributions to defined benefit pension scheme

(500)

(266)

(783)

Operating cash flow before movements in working capital

(469)

444

1,206

Changes in working capital:

361

Decrease/(increase) in inventories

106

(241)

Decrease/(increase) in trade and other receivables

658

46

(84)

(Decrease)/increase in trade and other payables

(65)

23

79

Cash generated from operations

485

619

960

Taxation paid

-

-

(180)

Net cash from operating activities

485

619

780

Cash flow from investing activities

(61)

Payments to acquire property, plant and equipment

(510)

(502)

Proceeds from the sale of property, plant and equipment

-

19

14

Payments to acquire intangible assets

-

-

(85)

Net finance income

14

(5)

25

(47)

(496)

(548)

Cash flow from financing activities

(30)

Payment for right of use assets

(2)

(55)

Dividends paid

-

(174)

(314)

(30)

(176)

(369)

Net increase in cash and cash equivalents

408

(53)

(137)

Cash and cash equivalents at beginning of period

3,016

3,153

3,153

Cash and cash equivalents at end of period

3,424

3,100

3,016

NOTES TO THE INTERIM FINANCIAL REPORT

  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 2020 is not audited and does not constitute statutory accounts as defined in section 434 of the Companies Act 2006. The statutory accounts for the year ended 31 March 2020 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 2019 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 and interpretations issued by the International Financial Reporting Interpretations Committee as adopted by the European Union.
    The group has not availed itself of early adoption options in standards and interpretations.
    The principal accounting policies adopted are as set out in the Annual Report for the year ended 31 March 2020. 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 2020 from the movements in discount rates and inflation during the six months.
  3. DIVIDENDS
    No Interim dividend is proposed (paid 20 March 2020: 5.5p).
  4. (LOSS)/EARNINGS PER SHARE
    The basic and diluted (loss)/earnings per share are calculated by dividing the relevant loss after taxation of £181,000 (30 September 2019: profit £294,000) by the average number of ordinary shares in issue during the period being 2,534,322 (2019: 2,534,322). The number of shares used in the calculation is the same for both basic and diluted earnings.

5.EXCEPTIONAL ITEM

The exceptional item for the 6 months to 30 September 2020 relates to restructuring costs within the business.

6. OTHER OPERATING INCOME - GRANT FUNDING

Income has been received from government grants providing support during the Coronavirus pandemic:

JRS

£571,000

Borough Hammersmith & Fulham

£ 25,000

Income has been accounted for under the accruals method.

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Samuel Heath & Sons plc published this content on 12 November 2020 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 12 November 2020 11:12:02 UTC