Samuel Heath & Sons PLC (LON:HSM)
INTERIM REPORT
Half year ended 30 September 2017
CHAIRMAN’S STATEMENT
The first half of the year was satisfactory. Revenue was up at £7.377m (2016: £6.635m). The profit before tax was 5.6% down at £687k (2016: £728k), the previous year having benefitted from the windfall drop in Sterling after the Brexit referendum as I reported in my last full year’s statement.
We sell all over the world, with exports increasing by 18%, but our performance has been very patchy in nearly all of our markets, with some doing much better than expected, some worse.
Although it is only a relatively short time since the end of September, we have to say that sales generally have weakened, particularly in the U.K. market, where the number of projects in the pipeline have decreased, not enormously but perhaps significantly. As always, it is difficult to forecast how this will affect the twelve months figures.
For the future, it is perhaps trite to say that we would prefer more clarity, but we would.
We are proposing an interim dividend of 5.5p per share (2016: deferred interim dividend of 5.5p), which will be paid on 23 March 2018.
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Unaudited Interim Financial Report For the Half Year ended 30 September 2017
CONSOLIDATED INCOME STATEMENT |
|||||
|
Half year ended 30 September |
Half year ended 30 September |
Year ended 31 March
|
|||
|
2017 |
2016 |
2017 |
|||
|
Unaudited |
Unaudited |
Audited |
|||
|
£’000 |
£’000 |
£’000 |
|||
|
Continuing operations |
|||||
|
Revenue |
7,377 |
6,635 |
13,053 |
||
|
Cost of sales |
(3,707) |
(3,141) |
(6,386) |
||
|
Gross profit |
3,670 |
3,494 |
6,667 |
||
|
Distribution costs |
(1,868) |
(1,664) |
(3,274) |
||
|
Administrative expenses |
(1,025) |
(998) |
(1,949) |
||
|
Operating profit |
777 |
832 |
1,444 |
||
|
Finance costs |
(90) |
(104) |
(210) |
||
|
Profit before taxation |
687 |
728 |
1,234 |
||
|
Taxation |
(131) |
(149) |
(221) |
||
|
Profit for the period |
556 |
579 |
1,013 |
||
|
Basic and diluted earnings per ordinary share |
21.9p |
22.8p |
40.0p |
||
|
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME |
|||||
|
Half year ended 30 September |
Half year ended 30 September |
Year ended 31 March
|
|||
|
2017 |
2016 |
2017 |
|||
|
Unaudited |
Unaudited |
Audited |
|||
|
£’000 |
£’000 |
£’000 |
|||
|
Profit for the period |
556 |
579 |
1,013 |
||
|
Items that will be reclassified to profit or loss: |
|||||
|
Cash flow hedges |
25 |
15 |
16 |
||
|
25 |
15 |
16 |
|||
|
Items that will not be reclassified to profit or loss: |
|||||
|
Actuarial (loss) on defined benefit pension scheme |
(34) |
(4,762) |
(629) |
||
|
Deferred tax on actuarial loss Revaluation of property, plant and Equipment Deferred taxation on revaluation of assets |
6 – – |
738 – – |
46 1,607 (218) |
||
|
(28) |
(4,024) |
806 |
|||
|
Total comprehensive income for the period |
553 |
(3,430) |
1,835 |
||
|
|
|
||||
|
CONSOLIDATED STATEMENT OF FINANCIAL POSITION |
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|
At 30 September |
At 30 September |
At 31 March |
||||
|
2017 |
2016 |
2017 |
||||
|
|
Unaudited |
Unaudited |
Audited |
|||
|
£’000 |
£’000 |
£’000 |
||||
|
Non-current assets |
||||||
|
Intangible assets |
50 |
99 |
79 |
|||
|
Property, plant and equipment |
3,398 |
1,848 |
3,511 |
|||
|
Deferred tax asset |
791 |
1,836 |
793 |
|||
|
4,239 |
3,783 |
4,383 |
||||
|
Current assets |
||||||
|
Inventories |
3,901 |
3,537 |
3,789 |
|||
|
Trade and other receivables |
2,342 |
1,978 |
2,169 |
|||
|
Derivative financial instruments |
25 |
– |
– |
|||
|
Cash and cash equivalents |
2,170 |
2,268 |
2,079 |
|||
|
8,438 |
7,783 |
8,037 |
||||
|
Total assets |
12,677 |
11,566 |
12,420 |
|||
|
Current liabilities |
||||||
|
Trade and other payables |
(1,327) |
(1,290) |
(1,400) |
|||
|
Current tax payable |
(289) |
(296) |
(158) |
|||
|
(1,616) |
(1,586) |
(1,558) |
||||
|
Non-current liabilities |
||||||
|
Retirement benefit scheme |
(6,463) |
(10,805) |
(6,501) |
|||
|
Deferred tax liability |
– |
(79) |
– |
|||
|
(6,463) |
(10,884) |
(6,501) |
||||
|
Total liabilities |
(8,079) |
(12,470) |
(8,059) |
|||
|
Net assets |
4,598 |
(904) |
4,361 |
|||
|
Equity |
||||||
|
Called up share capital |
254 |
254 |
254 |
|||
|
Capital redemption reserve |
109 |
109 |
109 |
|||
|
Revaluation reserve Retained earnings |
1,346 2,889 |
– (1,267) |
1,389 2,609 |
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|
Equity shareholders’ funds |
4,598 |
(904) |
4,361 |
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CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
|
Share capital |
Capital redemption reserve |
Revaluation reserve |
Retained earnings |
Total equity |
|
|
£000 |
£000 |
£000 |
£000 |
£000 |
|
|
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) |
|
Equity dividends paid |
– |
– |
– |
– |
– |
|
Profit for period |
– |
– |
– |
434 |
434 |
|
Other comprehensive income for the period |
– |
– |
1,389 |
3,442 |
4,831 |
|
Total comprehensive income for the period |
– |
– |
1,389 |
3,876 |
5,265 |
|
Balance at 31 March 2017 |
254 |
109 |
1,389 |
2,609 |
4,361 |
|
Equity dividends paid |
– |
– |
– |
(316) |
(316) |
|
Profit for period |
– |
– |
– |
556 |
556 |
|
Other comprehensive income for the period |
– |
– |
– |
(3) |
(3) |
|
Total comprehensive income for the period |
– |
– |
– |
553 |
553 |
|
Transfer relating to amortisation |
– |
– |
(43) |
43 |
– |
|
Balance at 30 September 2017 |
254 |
109 |
1,346 |
2,889 |
4,598 |
CONSOLIDATED CASH FLOW STATEMENT
|
Half year ended 30 September |
Half year ended 30 September |
Year ended 31 March |
|||
|
2017 |
2016 |
2017 |
|||
|
Unaudited |
Unaudited |
Audited |
|||
|
£’000 |
£’000 |
£’000 |
|||
|
Cash flow from operating activities |
|||||
|
Profit for the period before tax |
686 |
728 |
1,234 |
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|
Adjustments for: |
|||||
|
Depreciation |
186 |
130 |
272 |
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|
Amortisation |
28 |
29 |
57 |
||
|
Profit/(loss) on disposal of property, plant and equipment |
10 |
(18) |
(37) |
||
|
Finance income |
(4) |
(5) |
(7) |
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|
Defined benefit pension scheme expenses |
126 |
132 |
282 |
||
|
Contributions to defined benefit pension scheme |
(200) |
(189) |
(511) |
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|
Operating cash flow before movements in working capital |
832 |
807 |
1,290 |
||
|
Changes in working capital: |
|||||
|
(Increase)/decrease in inventories |
(107) |
(216) |
(468) |
||
|
(Increase)/decrease in trade and other receivables |
(203) |
134 |
(16) |
||
|
Increase/(decrease) in trade and other payables |
(40) |
13 |
117 |
||
|
Cash generated from operations |
482 |
738 |
923 |
||
|
Taxation paid |
– |
– |
(155) |
||
|
Net cash from operating activities |
482 |
738 |
768 |
||
|
Cash flow from investing activities |
|||||
|
Payments to acquire property, plant and equipment |
(80) |
(397) |
(646) |
||
|
Proceeds from the sale of property, plant and equipment |
– |
18 |
53 |
||
|
Proceeds from sale of financial assets |
– |
– |
(8) |
||
|
Finance income |
5 |
5 |
8 |
||
|
(75) |
(374) |
(593) |
|||
|
Cash flow from financing activities |
|||||
|
Dividends paid |
(316) |
(174) |
(174) |
||
|
(316) |
(174) |
(174) |
|||
|
Net increase/(decrease) in cash and cash equivalents |
91 |
190 |
1
|
||
|
Cash and cash equivalents at beginning of period |
2,079 |
2,078 |
2,078 |
||
|
Cash and cash equivalents at end of period |
2,170 |
2,268 |
2,079 |
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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 2017 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 2017 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 2016 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 2017 as well as all interpretations issued by the International Financial Reporting Interpretations Committee (“IFRIC”) at 30 September 2017.
The group has not availed itself of early adoption options in such standards and interpretations.
The principal accounting policies adopted are as set out in the Annual Report for the year ended 31 March 2017. 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 2017 from the movements in discount rates and inflation during the six months.
3. DIVIDENDS
An Interim dividend of 5.5p per share is proposed, payable on 23 March 2018. (30 September 2016: nil, although a deferred interim dividend was paid in August 2017 of 5.5p)
4. EARNINGS PER SHARE
The basic and diluted earnings per share are calculated by dividing the relevant profit after taxation of £556,000 (30 September 2016: £579,000) by the average number of ordinary shares in issue during the period being 2,534,322 (2016: 2,534,322). The number of shares used in the calculation is the same for both basic and diluted earnings.
