REG - Heath(Samuel) & Sons - Final Results
07/08/2024 07:00
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RNS Number : 4487Z Heath(Samuel) & Sons PLC 07 August 2024
HEATH (SAMUEL) & SONS PLC
7 August 2024
PRELIMINARY RESULTS FOR THE YEAR ENDED 31 MARCH 2024 AND NOTICE OF AGM
CHAIR'S STATEMENT
I am pleased to report that the year has turned out considerably better than
the Board had feared at the half year. The weaker order book mentioned at the
half year continued below par until December 2023, when we experienced a
marked upturn that continued broadly until the end of the financial year,
albeit remaining below budget. The production team did a good job of
converting the orders to sales, so that sales for the year ended at £15.24m
compared to £14.72m in 2023, a 3.5% increase.
Also as mentioned at the half year, management took actions to trim costs and
improve efficiency, and this resulted in an improvement in gross profit margin
from 44.8% in the first half to 48.5% in the second half (46.6% for the full
year compared to 46.0% prior year). An easing of the very high utility costs
also contributed to better second half performance, although the year overall
still saw a significant utility cost increase of £203k (24%).
Selling and distribution costs increased in the second half as a result of the
resumption of trade shows and expansion of the sales team, with an overall
year on year increase of 12%. Administrative overheads increased by 10%
compared to prior year, mainly due to general cost inflation.
The resulting operating profit was £832k (2023: £1,167k) and profit after
tax was £768k (2023: £931k).
Net assets increased to £12.18m (2023: £11.19m), but this increase included
the recognition of a £766k surplus in the pension fund (net of deferred tax),
which the Directors do not consider to be appropriate to distribute, but which
accounting guidelines require to be included as an asset. Cash and cash
equivalents decreased to £1.68m (2023: £2.72m) after spending £0.85m on
fixed and intangible assets (mainly production machinery), £0.91m on
contributions to the pension fund and £0.31m on dividend distributions. Also,
investment in trading stocks increased by £0.45m.
The pension scheme deficit recorded as of 31 March 2023 was £537k on a going
concern basis. Under the same IAS Rules, a £1.02m surplus was calculated as
of 31 March 2024. The Directors again decided to ask the trustees to request
an Annual Funding Update from the Scheme actuary: using the same underlying
basis as the last triennial valuation in 2022, a surplus of £1.37m was
calculated. The Directors have also asked the trustees to accelerate by one
year the triennial valuation due on 31 March 2025. This will then become the
basis for agreeing future contributions with the trustees and the pensions
regulator. At this time, the Board has agreed a reduced company contribution
in 2025 of £300k.
Independently, the Board and pension trustees consider that it is time to
investigate the option to buy out the fund, while in the meantime adopting a
more cautious investment strategy to match more closely the scheme assets and
liabilities, such that if interest rates and discount rates fall, the
investment assets will move in alignment, and vice versa. The trustees are in
the process of appointing a fiduciary manager to achieve this and prepare the
fund for buy out. It must be understood that the fund would still have a
shortfall calculated on a 'wind-up' basis, but detailed work is needed to
ascertain exactly the size of the shortfall.
Outlook
The order book has held up reasonably well during the first few months of the
new financial year. We have seen a number of projects that were on hold come
to fruition amidst a more positive environment, although our UK customers are
expressing concern about the impact of political change on their client base,
particularly for international clients with multiple homes, who are in some
cases waiting to see where best to invest in their property.
Although we have seen a good start to the new financial year, we are mindful
of our customers' concerns and are budgeting cautiously, while allowing
sufficient flexibility should trade remain consistently positive.
Recruitment has been less difficult than in 2023 and we are pleased to welcome
a number of highly skilled new colleagues to the company.
We are also taking delivery of a further high specification CNC lathe in July
which will help drive efficiency in our machine shop and new product
development. The problems experienced last year with machine breakdowns and
inefficiency are now much less frequent.
With the introduction of new spout patterns, we have widened the One Hundred
Collection into Modern and Luxe ranges, which should reach a broader client
base. Approvals in the USA for our Forme collection finally came over the line
in late spring 2024 so we should see continued growth of this popular new
collection in our biggest export market. We have exciting new finishes and
marketing events lined up in our key markets which will help bring us even
closer to our customer base.
Having cut the interim dividend in the light of trading concerns at the time,
the directors now recommend increasing the final dividend to 8.5625p, which
will be paid on 20 September 2024 to shareholders registered as at 16 August
2024, the ex-dividend date for the payment is 15 August 2024. This will bring
the total for the year (Interim and Final) to £331k (2023: £331k), the same
total dividend as last year.
Anthony Buttanshaw
Non-Executive Chair
7 August 2024
DIVIDEND
The directors recommend a final dividend of 8.5625 pence per share (2023:
7.5625 pence). The final dividend will be paid on 20 September 2024 to
shareholders on the register at the close of business on 16 August 2024. The
ex-dividend date for this payment is 15 August 2024.
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 2024
2024 2023
Note
£000 £000
Revenue 3 15,237 14,717
Cost of sales (8,137) (7,950)
Gross profit 7,100 6,767
Selling and distribution costs (3,973) (3,556)
Administrative expenses (2,313) (2,097)
Other operating income 18 53
1,167
Operating profit 832
Finance income 64 34
Finance cost (12) (133)
1,068
Profit before taxation 884
Taxation 4 (116) (137)
Profit for the year attributable to owners of the Parent Company 931
768
Basic and diluted earnings per ordinary share 6 30.3p 36.7p
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
for the year ended 31 March 2024
£000 £000
Profit for the year 768 931
Items that will not be reclassified to profit or loss:
Actuarial gain on defined benefit pension scheme 693 3,588
Deferred taxation on actuarial gain (174) (891)
Revaluation of property, plant and equipment - 293
Deferred tax on revaluation - (73)
519 2,917
Total comprehensive income for the year 1,287 3,848
__________________STATEMENT OF FINANCIAL POSITION_____________________
31 March 2024
Group
2024 2023
£000 £000
Non-current assets
Intangible assets 911 691
Property, plant and equipment 4,733 4,754
Investments - -
Retirement benefit scheme 767 -
6,411 5,445
Current assets
Inventories 4,842 4,387
Trade and other receivables 2,071 1,629
Current tax receivable - 37
Cash and cash equivalents 1,684 2,717
8,597 8,770
Total assets 15,008 14,215
Current liabilities
Trade and other payables (1,989) (1,644)
Lease liabilities (60) (62)
(2,049) (1,706)
Non-current liabilities
Lease liabilities (25) (56)
Retirement benefit scheme - (537)
Deferred tax liability (759) (723)
(784) (1,316)
Total liabilities (2,833) (3,022)
Net assets 12,175 11,193
Equity
Called up share capital 254 254
Capital redemption reserve 109 109
Revaluation reserve 1,146 1,220
Retained earnings 10,666 9,610
Total equity attributable to owners of the Parent Company 12,175 11,193
The prior year deferred tax liability has been reclassified to non-current in
line with IAS 1 guidance.
_____________ CONSOLIDATED STATEMENT OF CHANGES IN EQUITY __________________
for the year ended 31 March 2024
Attributable to owners of the Parent Company
Share Capital redemption reserve Revaluation reserve Retained Total
capital Earnings Equity
£000 £000 £000 £000 £000
Balance at 31 March 2022 254 109 1,186 6,127 7,676
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
Total transactions with owners
Equity dividends paid - - - (305) (305)
Profit for the year - - - 768 768
Reclassification of depreciation on revaluation - - (74) 74 -
Other comprehensive income for the year - - - 519 519
Total comprehensive income for the year - - (74) 1,361 1,287
Balance at 31 March 2024 254 109 1,146 10,666 12,175
__________________________STATEMENTS OF CASHFLOWS
_____________________________
for the year ended 31 March 2024
Group
2024 2023
£000 £000
Cash flow from operating activities
Profit for the year before taxation 884 1,068
Adjustments for:
Depreciation 535 401
Amortisation 154 107
Loss on disposal of property, plant and equipment 1 41
Net finance costs (52) 99
Defined benefit pension scheme expenses 38 41
Contributions to defined benefit pension scheme (909) (877)
Operating cash flows before movements in working capital 651 880
Changes in working capital:
(Increase) in inventories (455) (471)
(Increase)/decrease in trade and other receivables (442) 170
Increase/(decrease) in trade and other payables 345 (213)
Cash generated from operations 99 366
Taxation paid 38 -
Net cash generated from operating activities 137 366
Cash flows used in investing activities
Payments to acquire property, plant and equipment (476) (1,167)
Proceeds from the sale of property, plant and equipment 1 41
Payments to acquire intangible assets (374) (357)
Net finance income/(cost) 62 (99)
(787) (1,582)
Cash flows from financing activities
Lease payments (71) (58)
Dividends paid (305) (331)
(376) (389)
Net (decrease)/increase in cash and cash equivalents (1,026) (1,605)
Cash and cash equivalents at beginning of year 2,717 4,410
Effect of exchange rate differences on cash and cash equivalents (7) (88)
Cash and cash equivalents at end of year 1,684 2,717
NOTES TO THE PRELIMINARY ANNOUNCEMENT
1. Basis of preparation
The Group has prepared its consolidated financial statements for the year
ended 31 March 2024 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 2023.
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 2024
were approved by the Board of Directors on 7 August 2024 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 2023 have been delivered to the Registrar of Companies. The auditor's
reports on the statutory accounts for the years ended 31 March 2024 and 31
March 2023 were unqualified and did not contain a statement under section 498
of the Companies Act 2006.
2. Key areas of judgment and sources of estimation uncertainty
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. The key assumptions used to value pension assets and
liabilities are set out in note 23 "Retirement benefit scheme". Where a
surplus on a defined benefit scheme arises, the rights of the Trustees to
prevent the Group obtaining a refund of that surplus in the future are
considered in determining whether it is necessary to restrict the amount of
the surplus that is recognised. The Retirement benefit scheme is in surplus at
31 March 2024. The directors have made the judgement that these amounts meet
the requirements of recoverability and a surplus of £1.02m has been
recognised.
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
£3.287m (2023: £2.688m).
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, £355,000 was capitalised in the year (2023: £311,000). The
Company takes full advantage of available taxation support.
3. Revenue by geographic market
2024 2023
£000 £000
Overseas 7,316 7,276
UK 7,921 7,441
15,237 14,717
4. Income taxes
2024 2023
£000 £000
Current taxes:
Current year - -
Adjustments in respect of prior periods - (41)
- (41)
Deferred taxes:
Origination and reversal of temporary differences 203 211
Adjustments in respect of prior periods (87) (33)
116 178
Total income taxes 116 137
Corporation tax is calculated at 25% (2023: 19%) of the estimated assessable
profit for the year.
Tax reconciliation
2024 2023
£000 £000
Profit for the year 884 1,068
Corporation tax charge thereon at 25% (2023: 19%) 221 203
Adjusted for the effects of:
Prior year adjustments (87) (73)
Research and development claim (71) -
Changes in tax rates - 68
Fixed asset differences 42 -
Revaluation - (73)
Other adjustments 11 12
Total income taxes 116 137
5. Dividends
2024 2023
£000 £000
Final dividend for the year ended 31 March 2023 of 7.5625 pence per share 192 192
(2022: 7.5625 pence per share)
139
Interim dividend for the year ended 31st March 2024 of 4.50 pence per share 113
(2023: 5.50 pence per share)
305 331
The directors are recommending a final dividend for 2024 of 8.5625 pence per
share amounting to £217,000. 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 £768,000 (2023: £931,000) by the average
number of ordinary shares in issue during the year being 2,534,322 (2023:
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 2024 Annual General Meeting of the Company
will be held at the registered office of the Company, Leopold Street,
Birmingham, on 5 September 2024 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
(http://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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