TIDMHSM
RNS Number : 7215G
Heath(Samuel) & Sons PLC
21 July 2023
HEATH (SAMUEL) & SONS PLC
21 JULY 2023
PRELIMINARY RESULTS FOR THE YEARED 31 MARCH 2023 AND NOTICE OF
AGM
CHAIR'S STATEMENT
As anticipated in the half year report, the second half proved
to be more difficult than the first half, with tightening market
conditions adding to the expected reductions in margins. However,
given the uncertainties at the half year, the overall result was
better than we feared might be the case, also taking into account
that the previous year saw exceptional outperformance at the profit
level due to what we highlighted at the time to be unsustainably
low cost levels.
Total revenue for the year of GBP14.717m represented a 5%
increase compared to the prior year (2022: GBP14.015m). Operating
profit for the year was GBP1.167m (2022: GBP2.152m) and profit
after tax GBP0.931m (2022: GBP1.472m).
The sales increase versus prior year occurred almost exclusively
in the first half, with sales decreasing in the second half
compared to the first half (GBP7.157m versus GBP7.560m). The USD
exchange rate movement against Sterling accounted for virtually all
the increase. The order book held up reasonably well during the
year, but sales were held back by production difficulties caused by
machinery breakdowns and labour shortages.
As mentioned above, and in the half year report, profit margins
have reduced as the result of a number of factors. Machine
breakdowns and maintenance have been particularly disruptive, as
some Computer Numerical Control (CNC) lathes are coming to the end
of their useful lives. Replacements have been ordered, requiring
new programming and tooling, but there are long lead times before
they can be fully commissioned. Shortages of skilled labour have
also caused delays and inefficiencies and, whilst the staffing
situation has now improved, new recruits require long training
periods. Energy costs increased by GBP366k (71%) year on year and
general cost inflation also took its toll. The other major cost
increase arose from investment in sales and marketing resources:
selling and distribution costs increased by 22%, as a result of
recruiting more sales personnel, resuming attendance at
international trade fairs, and investing in new product
development. The directors consider this investment to be essential
to secure the future health of the business.
The balance sheet continued to be robust, indeed more so than in
the prior year, with net assets increasing from GBP7.676m to
GBP11.193m. The increase was due to the reduction in the pension
scheme deficit from GBP4.8min 2022 to GBP0.5m in 2023 (calculated
under IAS 19 rules), as a result of the increase in interest rates
and gilt yields. However, the most recent Actuarial Valuation
showed a deficit of GBP5.528m at 31 March 2022. The directors
decided to ask the scheme trustees to request an Annual Funding
Update from the scheme actuary as at 31 March 2023. This has been
received and shows a deficit of GBP1.030m.
Cash and cash equivalents decreased by GBP1.697m, from GBP4.410m
to GBP2.717m. Capital expenditure accounted for GBP1.163m, and
mainly comprised the cost of replacing production machinery. Also
GBP311k was capitalised as product development costs and GBP471k
was spent increasing inventories as part of our policy of securing
supplies and avoiding supply chain disruption.
We have experienced some weakness in sales in the first quarter
of the year to 31 March 2024. Anecdotal reports from our customers,
both in the UK and North America, indicate a marked downturn in
their order books. We will need to wait until after the usually
quiet summer period to find out whether this is a longer-term
market issue. In any event, it seems unlikely that there will be
much good news on the macro-economic front, with the Bank of
England determined to raise interest rates and cool the economy
down quickly. Growth is slowing in the US market, although we
currently have only a small market presence and there are
significant opportunities for us to increase our market share.
The investment in new equipment will enable us to accelerate the
cycle time for getting new product ranges into the market. We have
recently launched a new range called 'The Forme Collection', which
is generating much excitement in our customer base. It combines a
high quality, elegant design with more efficient, lower cost
production, and correspondingly lower price point, and we are
hopeful that this will assist in combatting any adverse market
conditions.
Much depends on the markets in 2023/24 and market conditions
will not be helpful at least for the first half, so we are
expecting the order book to decline and therefore some worsening in
trading. We are still working through historical orders. In the
near term, production continues to be constrained by the time it
takes to bring new equipment up to speed and we are currently
having to work significant overtime to meet our order book.
However, the directors are hopeful that the actions they have been
taking will give us a fair chance of restoring growth in the second
half year. I would like to congratulate the executive management
team for their pro-active approach in meeting the challenges and
also our loyal staff for working diligently to provide an excellent
service for our customers.
AR Buttanshaw
Chair
20 July 2023
DIVID
The directors recommend the maintenance of the final dividend at
7.5626p per share (2022: 7.5625p). The final dividend will be paid
on 21 September 2023 to shareholders on the register at the close
of business on 4 August 2023. The ex-dividend date for this payment
is 3 August 2023.
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 +44 (0)121 766 4200
Cairn Financial Advisers LLP +44 (0)20 7213 0880
James Caithie/Jo Turner
________________________ CONSOLIDATED INCOME
STATEMENT_________________________
for the year ended 31 March 2023
2023
Note 2022
GBP000 GBP000
Revenue 3 14,717 14,015
Cost of sales (7,950) (6,975)
Gross profit 6,767 7,040
Selling and distribution costs (3,556) (2,917)
Administrative expenses (2,097) (1,986)
Other operating income 53 15
Operating profit 1,167 2,152
Finance income 34 10
Finance cost (133) (132)
Profit before taxation 1,068 2,030
Taxation 4 (137) (558)
Profit for the year attributable
to owners of the Parent Company 931 1,472
Basic and diluted earnings per
ordinary share 6 36.7p 58.1p
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
for the year ended 31 March 2023
2022
GBP000 GBP000
Profit for the year 931 1,472
Items that will not be
reclassified
to profit or loss:
Actuarial gain on defined
benefit
pension scheme 3,588 693
Deferred taxation on actuarial
gain (891) (173)
Deferred tax rate change - 381
Revaluation of property, plant
and equipment 293 -
Deferred Tax on revaluation (73) -
2,917 901
Total comprehensive income for
the year 3,848 2,373
--------- ----------
___________________________STATEMENTS OF FINANCIAL
POSITION_____________________
31 March 2023
Group
2023 2022
GBP000 GBP000
Non-current assets
Intangible assets 691 442
Property, plant and
equipment 4,754 3,670
Investments - -
Deferred tax assets - 425
--------- --------
5,445 4,537
Current assets
Inventories 4,387 3,916
Trade and other receivables 1,629 1,836
Current tax receivable 37 -
Amounts owed by group
undertakings - -
Cash and cash equivalents 2,717 4,410
--------- --------
8,770 10,162
Total assets 14,215 14,699
Current liabilities
Trade and other payables (1,644) (1,982)
Amounts owed to group
undertakings - -
Lease liabilities (62) (62)
Deferred tax liability (723) -
Current tax payable - (13)
--------- --------
(2,429) (2,057)
Non-current liabilities
Lease liabilities (56) (129)
Retirement benefit
scheme (537) (4,837)
--------- --------
(593) (4,966)
Total liabilities (3,022) (7,023)
Net assets 11,193 7,676
--------- --------
Equity
Called up share capital 254 254
Capital redemption
reserve 109 109
Revaluation reserve 1,220 1,186
Retained earnings 9,610 6,127
Total equity attributable
to owners of the Parent
Company 11,193 7,676
_________________ CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
__________________
for the year ended 31 March 2023
Attributable to owners of the Parent Company
Share Capital Revaluation Retained Total
capital redemption reserve Earnings Equity
reserve
GBP000 GBP000 GBP000 GBP000 GBP000
Balance at 31 March 2021 254 109 1,267 3,987 5,617
-------- ----------- ------------ --------- -------
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 2,372
-------- ----------- ------------ --------- -------
Balance at 31 March 2022 254 109 1,186 6,127 7,676
-------- ----------- ------------ --------- -------
Total transactions with owners
Equity dividends paid - - - (331) (331)
-------- ----------- ------------ --------- -------
Profit for the year - - - 931 931
Reclassification of depreciation
on revaluation - - (81) 81 -
Other comprehensive income
for the year - - 115 2,802 2,917
-------- ----------- ------------ --------- -------
Total comprehensive income
for the year - - 34 3,814 3,848
-------- ----------- ------------ --------- -------
Balance at 31 March 2023 254 109 1,220 9,610 11,193
-------- ----------- ------------ --------- -------
___________________________STATEMENTS OF CASHFLOWS
_____________________________
for the year ended 31 March 2023
Group
2023 2022
GBP000 GBP000
Cash flow from operating activities
Profit for the year before taxation 1,068 2,030
Adjustments for:
Depreciation 401 359
Amortisation 107 50
Loss on disposal of property, plant
and equipment 41 4
Net finance costs (34) (12)
Defined benefit pension scheme expenses 166 170
Contributions to defined benefit pension
scheme (877) (1,036)
Operating cash flows before movements
in working capital 872 1,565
Changes in working capital:
(Increase) in inventories (471) (234)
Decrease in trade and other receivables 170 272
(Decrease)/increase in trade and other
payables (338) 195
Cash generated from operations 233 1,798
Taxation paid - -
Net cash generated from operating
activities 233 1,798
Cash flows used in investing activities
Payments to acquire property, plant
and equipment (1,167) (444)
Proceeds from the sale of property,
plant and equipment 41 11
Payments to acquire intangible assets (357) (306)
Net finance income 34 12
(1,449) (727)
Cash flows from financing activities
Lease payments (58) (46)
Dividends paid (331) (314)
CBILS Loan received - 950
CBILS Loan repaid - (950)
(389) (360)
Net (decrease)/increase in cash and
cash equivalents (1,605) 711
Cash and cash equivalents at beginning
of year 4,410 3,682
Effect of exchange rate differences
on cash and cash equivalents (88) 17
Cash and cash equivalents at end of
year 2,717 4,410
NOTES TO THE PRELIMINARY ANNOUNCEMENT
1. Basis of preparation
The Group has prepared its consolidated financial statements for
the year ended 31 March 2023 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 31 March 2022.
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 31
March 2023 were approved by the Board of Directors on 20 July 2023
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 2022 have been delivered to the Registrar of
Companies. The auditor's reports on the statutory accounts for the
years ended 31 March 2023 and 31 March 2022 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 GBP2.512m (2022:
GBP2.211m).
Research and development - the Group reviews the projects worked
on during the year and capitalises the costs of those projects
deemed to generate profits in future years, GBP311,000 was
capitalised in the year (2022: GBP276,000). The Company takes full
advantage of available taxation support.
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
2023 2022
GBP000 GBP000
Overseas 7,276 6,687
UK 7,441 7,328
14,717 14,015
------- -------
4. Income taxes
2023 2022
GBP000 GBP000
Current taxes:
Current year - 32
Adjustments in respect of prior periods (41) 2
-------- --------
(41) 34
Deferred taxes:
Origination and reversal of temporary differences 211 348
Change in tax rate - 152
Adjustments in respect of prior periods (33) 24
-------- --------
178 524
Total income taxes 137 558
-------- --------
Corporation tax is calculated at 19% (2021: 19%) of the
estimated assessable profit for the year.
Tax reconciliation
2023 2022
GBP000 GBP000
Profit for the year 1,068 2,030
-------- -------
Corporation tax charge thereon at 19% (2022:
19%) 203 386
Adjusted for the effects of:
Prior year adjustments (73) 26
Research and development claim - (68)
Changes in tax rates 68 152
Revaluation (73) -
Other adjustments 12 62
Total income taxes 137 558
-------- -------
5. Dividends
2023 2022
GBP000 GBP000
Final dividend for the year ended 31 March
2022 of 7.5625 pence per share (2021: 6.875
pence per share) 192 175
Interim dividend for the year ended 31st
March 2023 of 5.50 pence per share (2022:
5.50 pence per share) 139 139
331 314
------ ------
The directors are recommending a final dividend for 2023 of
7.5625 pence per share amounting to GBP192,000. The proposed final
dividend is subject to approval at the Annual General Meeting and
hence has not been included as a liability in these accounts.
6. Earnings per share
The basic and diluted earnings per share are calculated by
dividing the relevant profit after taxation of GBP931,000 (2022:
GBP1,472,000) by the average number of ordinary shares in issue
during the year being 2,534,322 (2022: 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 2023.
8. Notice of annual general meeting
Notice is hereby given that the 2023 Annual General Meeting of
the Company will be held at the registered office of the Company,
Leopold Street, Birmingham, on 7 September 2023 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.
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END
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