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12 Nov 2020 07:00
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 |
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| Half year |
| Half year |
| Year |
| ended 30 |
| ended 30 |
| ended 31 |
| September |
| September |
| March |
| 2020 |
| 2019 |
| 2020 |
| Unaudited |
| Unaudited |
| Audited |
| £'000 |
| £'000 |
| £'000 |
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Revenue | 4,850 |
| 6,920 |
| 13,887 |
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Cost of sales | (3,062) |
| (3,598) |
| (6,798) |
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Gross profit | 1,788 |
| 3,322 |
| 7,089 |
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Selling and distribution costs | (1,344) |
| (1,776) |
| (3,543) |
Administrative expenses | (940) |
| (1,067) |
| (2,012) |
Other operating income - grant (note 6) | 596 |
| - |
| - |
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Operating profit | 100 |
| 479 |
| 1,534 |
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Finance income | 14 |
| 9 |
| 25 |
Finance cost | (108) |
| (125) |
| (191) |
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Profit before taxation and exceptional items
| 6 |
| 363 |
| 1,368 |
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Exceptional item (note 5) | (230) |
| - |
| - |
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(Loss)/profit before taxation | (224) |
| 363 |
| 1,368 |
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Taxation | 43 |
| (69) |
| (299) |
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(Loss)/profit for the period | (181) |
| 294 |
| 1,069 |
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Basic and diluted (loss)/earnings per ordinary share (note 4) | (7.1p) |
| 11.6p |
| 42.2p |
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CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME | |||||
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| Half year ended 30 September |
| Half year ended 30 September |
| Year ended 31 March
|
| 2020 |
| 2019 |
| 2020 |
| Unaudited |
| Unaudited |
| Audited |
| £'000 |
| £'000 |
| £'000 |
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(Loss)/profit for the period | (181) |
| 294 |
| 1,069 |
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Items that will not be reclassified to profit or loss: |
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Actuarial gain/(loss) on defined benefit pension scheme | (1,239) |
| 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) |
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| (1,021) |
| 170 |
| 520 |
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Total comprehensive income for the period | (1,202) |
| 464 |
| 1,589 |
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CONSOLIDATED STATEMENT OF FINANCIAL POSITION | ||||||
| At 30 September |
| At 30 September |
| At 31 March | |
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| 2020 |
| 2019 |
| 2020 |
| Unaudited |
| Unaudited |
| Audited | |
| £'000 |
| £'000 |
| £'000 | |
Non-current assets |
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Intangible assets | 135 |
| 74 |
| 151 | |
Property, plant and equipment | 3,541 |
| 3,519 |
| 3,635 | |
Deferred tax assets | 1,103 |
| 972 |
| 887 | |
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| 4,779 |
| 4,565 |
| 4,673 | |
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Current assets |
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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 | |
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Total assets | 13,761 |
| 13,764 |
| 14,289 | |
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Current liabilities |
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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) | |
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Non-current liabilities |
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Right of use lease liabilities | (26) |
| (75) |
| (46) | |
Retirement benefit scheme | (7,413) |
| (7,050) |
| (6,575) | |
| (7,439) |
| (7,125) |
| (6,621) | |
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Total liabilities | (9,300) |
| (9,086) |
| (8,626) | |
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Net assets | 4,461 |
| 4,678 |
| 5,663 | |
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Equity |
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Called up share capital | 254 |
| 254 |
| 254 | |
Capital redemption reserve | 109 |
| 109 |
| 109 | |
Revaluation reserve Retained earnings | 1,308 2,790 |
| 1,224 3,091 |
| 1,349 3,951 | |
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Equity shareholders' funds | 4,461 |
| 4,678 |
| 5,663 | |
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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 |
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Balance at 31 March 2019 | 254 | 109 | 1,277 | 2,748 | 4,388 |
Total transactions with owners |
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Equity dividends paid | - | - | - | (174) | (174) |
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Profit for the period | - | - | - | 294 | 294 |
Other comprehensive income for the period Reclassification of depreciation on revaluation
| -
- | -
- | -
(53) | 170
53 | 170
- |
Total comprehensive income for the period | - | - | (53) | 517 | 464 |
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Balance at 30 September 2019 | 254 | 109 | 1,224 | 3,091 | 4,678 |
Total transactions with owners |
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Equity dividends paid | - | - | - | (140) | (140) |
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Profit for the period | - | - | - | 775 | 775 |
Other comprehensive income for the period Reclassification of depreciation on revaluation
| -
- | -
- | 159
(34) | 191
34 | 350
- |
Total comprehensive income for the period | - | - | 125 | 1,000 | 1,125 |
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Balance at 31 March 2020 | 254 | 109 | 1,349 | 3,951 | 5,663 |
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Total transactions with owners Equity dividends paid | - | - | - | - | - |
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Loss for the period | - | - | - | (181) | (181) |
Other comprehensive income for the period Reclassification of depreciation on revaluation
| -
- | -
- | -
(41) | (1,021)
41 | (1,021)
- |
Total comprehensive income for the period | - | - | (41) | (1,161) | (1,202) |
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Balance at 30 September 2020 | 254 | 109 | 1,308 | 2,790 | 4,461 |
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CONSOLIDATED CASH FLOW STATEMENT
| Half year ended 30 September |
| Half year ended 30 September |
| Year ended 31 March |
| 2020 |
| 2019 |
| 2020 |
| Unaudited |
| Unaudited |
| Audited |
| £'000 |
| £'000 |
| £'000 |
Cash flow from operating activities |
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(Loss)/profit for the period before taxation | (224) |
| 363 |
| 1,368 |
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Adjustments for: |
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Depreciation | 155 |
| 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) |
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Operating cash flow before movements in working capital | (469) |
| 444 |
| 1,206 |
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Changes in working capital: |
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Decrease/(increase) in inventories | 361 |
| 106 |
| (241) |
Decrease/(increase) in trade and other receivables | 658 |
| 46 |
| (84) |
(Decrease)/increase in trade and other payables | (65) |
| 23 |
| 79 |
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Cash generated from operations | 485 |
| 619 |
| 960 |
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Taxation paid | - |
| - |
| (180) |
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Net cash from operating activities | 485 |
| 619 |
| 780 |
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Cash flow from investing activities |
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Payments to acquire property, plant and equipment | (61) |
| (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 |
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| (47) |
| (496) |
| (548) |
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Cash flow from financing activities |
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Payment for right of use assets | (30) |
| (2) |
| (55) |
Dividends paid | - |
| (174) |
| (314) |
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| (30) |
| (176) |
| (369) |
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Net increase in cash and cash equivalents | 408 |
| (53) |
| (137) |
Cash and cash equivalents at beginning of period | 3,016 |
| 3,153 |
| 3,153 |
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Cash and cash equivalents at end of period | 3,424 |
| 3,100 |
| 3,016 |
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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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