Last checked at 8 May 2018 07:00
H C SLINGSBY PLC
("Slingsby" or the "Company" or the "Group")
Audited Results for the year ended 31 December 2017
Statement by the Chairman
Board Composition
Following the Board changes in 2016, I remain as Interim Executive Chairman. We continue to seek to appoint a non-executive chairman and to search for an additional new non-executive director. Although we have identified a number of highly suitable candidates, this is proving to be more protracted than anticipated due to the ongoing uncertainty regarding the pension fund commitments.
Results
In the half year statement, I reported an operating profit of £0.29m on sales of £9.9m. The full year operating profit (before exceptional items) was £0.56m (2016: operating loss of £0.26m) on sales of £19.2m (2016: £18m). The Group increased sales by 7% and reduced overheads leading to a profit before taxation and exceptional items of £0.2m (2016: loss of £0.6m). This represents a significant turnaround and would have resulted in a profit before taxation being reported for the first time since 2012.
However, during December 2017, we commissioned a valuation of the freehold property at Baildon. This valuation was £1.22m lower than the carrying amount of the property held on the balance sheet and accordingly we decided that it was appropriate to impair the property. This impairment is shown as an exceptional item in the profit and loss account. This non-cash charge is disappointing to report as it results in a loss before tax of
£1m (2016: £0.7m) which does not reflect the much improved performance of the Group.
ESE Direct Limited ("ESE") contributed £6.8m of sales (2016: £6.5m) and profit before tax and management charges of £0.4m (2016: £0.2m). The improved profitability of ESE reflects an increase in sales and also a reduction in overheads and an improvement in the margin from actions to further integrate the businesses.
Group earnings before interest, tax, depreciation and amortisation ("EBITDA") in the year ended 31 December 2017 was £1m (2016: £0.27m) before exceptional items. Net debt at 31 December 2017 was £1.6m (2016: £1.7m).
Dividend
In view of the loss in 2017 and the uncertainty around the pension fund commitments, the Board is unable to recommend a final dividend for the year (2016: £nil).
Pension Scheme
We remain in discussion with the Trustee of the defined benefit pension scheme regarding a long term solution to the deficit. During 2017, the Company made no deficit reduction payments (2016: £0.27m). At 31 December 2017, the pension scheme deficit decreased by £1m to £8.6m (2016: £9.6m). This improvement in the pension scheme position together with the pre-exceptional profit before taxation has mitigated the impact on the balance sheet of the freehold property impairment, such that Group net assets remain almost unchanged from the position at 31 December 2016.
As discussions regarding the pension position are ongoing and whilst during this time the Company is not paying deficit reduction contributions, there is uncertainty as to the quantum and timing of future payments to the scheme.
Recent Trading
In Q1 of 2017, the Group benefitted from several unusually large orders which were received in 2016. These large orders have not recurred in 2018 and as such Group sales in the 3 months to 31 March 2018 are 6% below prior year. Group sales growth in Q1 of 2017 against the same period in 2016 was 10% providing a strong comparative. Group sales in Q1 of 2018 are 3% higher compared with the same period in 2016. Group order intake for the four months to 30 April 2018 is 1% up on the prior year.
The market remains competitive and whilst we consider that the Group is on a stronger footing due to the changes in marketing strategy, which includes a renewed focus on product development, and from synergies realised, we are cautious regarding the outlook.
Finally, I would like to thank our staff across the Group for their efforts in 2017. Our performance to date in 2018 continues to provide grounds for optimism but we must maintain our focus to build on what has been achieved.
D. S. SlingsbyInterim Executive Chairman
8 May 2018
For further information, please contact:
H C Slingsby PLC | Tel: 01274 535 030 |
Dominic Slingsby, Interim Executive Chairman Morgan Morris, Group Chief Executive
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Allenby Capital Limited | Tel: 020 3328 5656 |
David Worlidge/Nicholas Chambers
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Audited Consolidated Income Statement for the year ended 31 December 2017
| Note | 2017 (Audited) £'000 | 2016 (Audited) £'000
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Revenue |
| 19,240 | 18,044 |
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| ---------- | ----------
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Operating profit/(loss) before exceptional items |
| 557 | (261) |
Exceptional items | 2 | (1,221) | (102) |
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Operating loss |
| (664) | (363) |
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Finance costs |
| (331) | (369) |
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| ---------- | ---------- |
Loss before taxation |
| (995) | (732) |
Taxation |
| (62) | 76 |
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| ---------- | ---------- |
Loss for the year attributable to owners of the parent |
| (1,057) | (656) |
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| ---------- | ---------- |
Basic and diluted loss per share | 4 | (105.7p) | (65.6p) |
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| ---------- | ---------- |
Audited Consolidated Statement of Comprehensive Income and Expense for the year ended 31 December 2017
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| 2017 (Audited) £'000
| 2016 (Audited) £'000
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Loss for the year |
| (1,057) | (656) |
Items that will not be classified to profit or loss: |
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Re-measurements of post-employment benefit obligation |
| 1,276 | (1,555) |
Movement in deferred tax relating to retirement benefit obligation |
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(246) |
280 |
Items that may be subsequently reclassified to profit or loss: |
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Exchange adjustment |
| 8 | 31 |
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| ---------- | ---------- |
Other comprehensive income/(expense) |
| 1,038 | (1,244) |
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| ----------
| ---------- |
Total comprehensive expense for the year attributable to equity shareholders |
(19) |
(1,900) | |
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| -------- | ---------- |
Audited Consolidated Balance Sheet as at 31 December 2017
| Note | 2017 (Audited) £'000
| 2016 (Audited) £'000
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Assets |
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Non-current assets |
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Property, plant and equipment |
| 4,472 | 5,838 |
Intangible assets |
| 877 | 1,108 |
Goodwill |
| 2,409 | 2,409 |
Deferred tax asset |
| 1,464 | 1,733 |
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| -------- | ---------- |
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| 9,222 | 11,088 |
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| -------- | ---------- |
Current assets |
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Inventories |
| 1,823 | 1,811 |
Trade and other receivables |
| 2,376 | 2,525 |
Cash and cash equivalents |
| 996 | 632 |
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| -------- | ---------- |
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| 5,195 | 4,968 |
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| -------- | ----------
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Liabilities |
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Current liabilities |
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Trade and other payables |
| (4,964) | (5,517) |
Derivative financial liability |
| (7) | (13) |
Finance lease obligations |
| (30) | (44) |
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| --------- | --------- |
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| (5,001) | (5,574) |
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| -------- | ---------- |
Net current assets/(liabilities) |
| 194 | (606) |
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| -------- | ---------- |
Non-current liabilities |
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Finance lease obligations |
| (7) | (37) |
Retirement benefit obligation | 3 | (8,610) | (9,626) |
Deferred tax liabilities |
| (415) | (416) |
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| -------- | ---------- |
Net assets |
| 384 | 403 |
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| --------
| ----------
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Capital and reserves |
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Share capital |
| 250 | 250 |
Retained earnings |
| 134 | 131 |
Translation reserve |
| - | 22 |
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| -------- | ---------- |
Total equity |
| 384 | 403 |
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| -------- | ---------- |
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Audited Consolidated Cash Flow Statement for the year ended 31 December 2017
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| 2017 (Audited) £'000 | 2016 (Audited) £'000 |
| Note |
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Cash flows from operating activities |
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Cash generated from/(used in) operations | 5 | 334 | (84) |
Interest payable |
| (70) | (61) |
UK corporation tax received |
| 25 | 23 |
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| -------- | -------- |
Cash generated from/(used in) operating activities |
| 289 | (122) |
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| -------- | -------- |
Cash flows from investing activities |
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Purchase of property, plant and equipment |
| (88) | (98) |
Acquisition of subsidiary (net of cash acquired) |
| - | (30) |
Purchase of intangible assets |
| (20) | (40) |
Proceeds from sales of property, plant and equipment |
| 9 | 51 |
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| -------- | -------- |
Net cash used in investing activities |
| (99) -------- | (117) -------- |
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Cash flows from financing activities |
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Capital element of finance lease payments |
| (44) | (57) |
New finance leases |
| - | 27 |
Proceeds from borrowing |
| (39) | 50 |
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| -------- | -------- |
Net cash (used in)/generated from financing activities |
| (83) | 20 |
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| -------- | -------- |
Net increase/(decrease) in cash and cash equivalents |
| 107 | (219) |
Opening cash and cash equivalents |
| (479) | (291) |
Exchange differences |
| 5 | 31 |
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| -------- | -------- |
Closing cash and cash equivalents |
| (367) | (479) |
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| -------- | -------- |
Audited Consolidated Statement of Changes in Shareholders' Equity
| Share capital £'000 | Retained earnings £'000 | Translation reserve £'000 | Total equity £'000 |
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1 January 2016 | 250 | 2,062 | (9) | 2,303 |
Loss for the year | - | (656) | - | (656) |
Other comprehensive (expense)/income for the year | - | (1,275) | 31 | (1,244) |
| ---------- | ---------- | ---------- | ---------- |
Total comprehensive (expense)/income for the year | - | (1,931) | 31 | (1,900) |
| ---------- | ---------- | ---------- | ---------- |
1 January 2017 | 250 | 131 | 22 | 403 |
Loss for the year | - | (1,057) | - | (1,057) |
Other comprehensive income for the year | - | 1,030 | 8 | 1,038 |
Transfer | - | 30 | (30) | - |
Total comprehensive income/( expense) for the year | ---------- | --------- 3 | -------- (22) | ---------- (19) |
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| ---------- | ---------- | ---------- | ---------- |
31 December 2017 | 250 | 134 | - | 384 |
| ---------- | ---------- | ---------- | ---------- |
The translation reserve comprises foreign exchange differences arising from the translation of the financial statements of foreign operations.
Notes to the Audited Results for the year ended 31 December 2017
1. | The preliminary financial information does not constitute statutory accounts within the meaning of Section 434 of the Companies Act 2006 for the financial years ended 31 December 2017 and 31 December 2016, but has been extracted from those accounts. The annual accounts for the years ended 31 December 2016 and 31 December 2017 have been prepared in accordance with International Financial Reporting Standards ("IFRS") and IFRIC interpretations as adopted by the EU. The financial information included in this preliminary announcement does not include all the disclosures required in accounts prepared in accordance with IFRS and accordingly it does not itself comply with IFRS.
The accounting policies used in the preparation of this preliminary announcement have remained unchanged from those set out in the statutory accounts for the year ended 31 December 2016. They are also consistent with those in the full accounts for the year ended 31 December 2017 which have yet to be published.
Statutory accounts for 2016 have been delivered to the Registrar of Companies and those for the financial year ended 31 December 2017 will be delivered following the Company's annual general meeting. The auditors have reported on the accounts for the years ended 31 December 2016 and 31 December 2017 and their opinions were unqualified, did not include any matters to which the auditor drew attention by way of emphasis and did not contain statements under section 498(2) or (3) of the Companies Act 2006.
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2. | Exceptional item | 2017 (Audited) | 2016 (Audited) |
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| £'000
| £'000
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| Redundancy and compensation costs | - | (102) |
| Impairment of property, plant and equipment | (1,221) | - |
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| ------------ | ------------ |
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| (1,221) | (102) |
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| ------------ | ------------ |
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3. | Retirement benefit obligation |
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| 2017 | 2016 |
| Present value of funded obligation | (Audited) £'000 | (Audited) £'000 |
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| Fair value of scheme assets | 26,666 | 26,792 |
Net liability in balance sheet | (18,056) | (17,166) | |
| ------------ | ------------ | |
| 8,610 | 9,626 | |
| ------------ | ------------ | |
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4. | Loss per share
Basic loss per share is based upon losses of £1,057,000 (2016: £656,000) and on 1,000,000 (2016: 1,000,000) ordinary shares in issue during the year.
There is no difference between basic loss per share and diluted loss per share for both years as there are no potentially dilutive shares in issue.
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5. | Cash generated from/(used in) operating activities |
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| 2017 (Audited) | 2016 (Audited) |
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| £'000
| £'000
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| Loss before tax | (995) | (732) |
| Net finance costs | 331 | 369 |
| Depreciation and amortisation | 480 | 527 |
| Asset impairment | 1,221 | - |
| Profit on sale of property, plant and equipment | (4) | (5) |
| Pension deficit contributions | - | (270) |
| Increase in inventories | (12) | (33) |
| Decrease/(increase) in trade and other receivables | 143 | (169) |
| (Decrease)/increase in trade and other payables | (830) | 229 |
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| ------------ | ------------ |
| Cash generated from/(used in) operating activities | 334 | (84) |
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| ------------ | ------------ |
6. | Dividends | ||
| No dividends were paid or declared during 2016 or 2017.
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7. | Availability of Report and Accounts | ||
| The financial statements for the year ended 31 December 2017, will be issued to shareholders on 21 May 2018 and will be available to members of the public at the registered office of the Company and on the Company's website: www.slingsby.com from that date.
The statutory accounts for the year ended 31 December 2017 will be delivered to the Registrar following the Company's Annual General Meeting. The Annual General Meeting will be held at 10.00 am on 19 June 2018 at HC Slingsby plc, Otley Road, Baildon, Shipley, BD17 7LW.
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