SAMUEL HEATH & SONS plc

("the Company")

INTERIM REPORT

Half year ended 30 September 2016

CHAIRMAN'S STATEMENT

The results for the half year to September 30th were obviously satisfactory. Sales revenue was up to £6,635,000 (2015: £6,061,000). Operating profit was also up at £832,000 (2015: £542,000). Profit before tax was £728,000 (2015: £437,000).  This general improvement took place in most markets in which we operate and was fairly evenly spread over most of our product groups.

It is with great sadness that I report that in August our Financial Director, Paul Turner, died after a short illness at the age of 49. He had made a large contribution to the Company during his nine years with us.

I have said before that the job for businesses is to work in the circumstances they are given and not to expect to change them. We equally hope to be interfered with as little as possible as a trade off to this.

The immediate future and long term outlook is going to be affected by the current uncertain situation.  Seventy-five per cent of our purchases are being impacted by the devaluation of the Pound against the Dollar and the Euro.  Our main purchase of brass is directly hit by both these currencies. Our sterling prices are therefore going to have to rise.  It is always difficult to foresee the acceptance of these new prices, particularly since, in the current circumstances, increases of competitors are going to be phased in haphazardly.

Perhaps also, longer term, the health of our business will be very dependent on the prosperity being enjoyed in London and the South East.  It is for these reasons that I am extremely cautious in forecasting the results for the second six months of the year. Experience tells us that there can be rapid changes in spending patterns.

The Bank of England decided to lower interest rates after the Brexit vote.  This has had an immediate impact on our pension scheme deficit.  This now stands at £10,805,000, as against £5,292,000 at the end of September 2015.  Since we are allowed only to pay dividends when total assets exceed liabilities, we are prevented from paying a dividend at this time.  If the position changes by the year end, we hope to make up for this lack of payment at that time.  Meanwhile I find it extremely ironic that this situation has arisen, when the Company is announcing its record operating profit before tax at the interim stage in the forty-five years, in which I have been Chairman.  I can only add that increased spending in order to keep the economy moving is unlikely to be carried out by Samuel Heath and Sons shareholders.

Sam Heath

Chairman

16th November 2016

For further information , please contact:

Samuel Heath & Sons Plc

John Park, Company Secretary                                          0121 772 2303

Cairn Financial Advisors LLP

James Caithie                                                                        020 7213 0882