Half-year Report

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

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

CONSOLIDATED CASH FLOW STATEMENT

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 2016 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 2016 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 2015 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 2016 as well as all interpretations issued by the International Financial Reporting Interpretations Committee ("IFRIC") at 30 September 2016.

The group has not availed itself of early adoption options in such standards and interpretations.

The financial statements have been prepared under the historical cost basis. The principal accounting policies adopted are as set out in the Annual Report for the year ended 31 March 2016. 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 2016 from the movements in discount rates and inflation during the six months.

3. Dividends

No interim dividend is proposed (30 September 2015: 5.5 pence per share).

4. EARNINGS PER SHARE

The basic and diluted earnings per share are calculated by dividing the relevant profit after taxation of £579,000 (30 September 2015: £350,000) by the average number of ordinary shares in issue during the period being 2,534,322 (2015: 2,534,322). The number of shares used in the calculation is the same for both basic and diluted earnings.