Last checked at 4 Aug 2023 07:00
The information contained within this announcement is deemed by the Company to constitute inside information pursuant to Article 7 of EU Regulation 596/2014 as it forms part of UK domestic law by virtue of the European Union (Withdrawal) Act 2018 as amended. With the publication of this announcement, this information is now considered to be in the public domain.
4 August 2023
H C Slingsby plc
("Slingsby" or "the Company")
Report for the half year ended 30 June 2023
Statement by the Chairman
Trading
In my statement in the trading update of 15 June 2023, I reported that Group sales in the four months to 30 April 2023 were 3% higher than prior year at a higher gross margin. However overhead costs had increased, leading to an unaudited profit before tax of £0.1m compared to £0.19m in the four months ending 30 April 2022. We were cautious regarding the outlook for the business due to significant uncertainty remaining mainly caused by the continuing conflict in Ukraine, the risk of a recession in the Group's main UK market and the longer term impacts of Coronavirus and Brexit not yet being fully known.
Group sales in the six months to 30 June 2023 ("H1") are 4% higher than in the same period in 2022. The trends in gross margin and overheads have continued in the second quarter and as a result unaudited profit before tax was £0.20m in the six months ended 30 June 2023 compared to an unaudited profit before tax of £0.24m in the same period in 2022. The H1 profit is after £0.13m (2022: £0.07m) of finance costs which relate to interest charges on the pension scheme deficit.
In June 2023 we were notified that one of our main logistics partners had ceased trading, subsequently entering insolvency proceedings. This caused some disruption to operations and increased freight costs during that month because alternative transport options came at a higher cost. This had a modest impact upon gross margin in June and an effect on gross margin could persist during the remainder of the year, despite the Company implementing mitigating initiatives which are ongoing.
The market continues to be highly competitive, and it remains unclear what impact the aforementioned factors will have on demand going forward. Inflationary pressures remain, particularly in regards to overheads and this is considered by the Directors likely to persist for the remainder of the year. In the current economic environment, there is also heightened potential for credit related issues should customers become insolvent.
Balance sheet
The Group had net assets of £4.41m at 30 June 2023 (£4.68m at 30 June 2022) compared to net assets of £4.32m at 31 December 2022. The reduction in net assets from 30 June 2022 is due to an increase in the pension scheme deficit outweighing profits generated. The Company made deficit reduction contributions totalling £200,000 in the six months to 30 June 2023 in line with the agreement with the pension scheme's Trustee. The triennial review carried out by the scheme actuary is underway and a new schedule of contributions is required to be agreed between the Company and the scheme Trustee before 31 March 2024. This causes the potential for uncertainty regarding the Group's future cash flows.
Cashflow
The Group had net cash of £0.4m at 30 June 2023 (£0.5m at 30 June 2022) compared to £0.03m at 31 December 2022. The Group continues to operate within its existing banking facilities and the Directors continue to believe that the Group has additional funding options available should the need arise.
Board Composition
The Board continues to believe that it would benefit from the appointment of new Non-Executive Directors. The Board is continuing to explore solutions to the issue with the objective remaining to appoint new Non-Executive Directors and a Non-Executive Chairman.
Statement by the Chairman (continued)
Dividend
Due to the uncertain outlook, the Board has decided not to declare an interim dividend.
People
We would like to thank our employees for their hard work and flexibility during continued challenging times.
Dominic Slingsby
Interim Executive Chairman and Operations Director
For further information please contact:
H C Slingsby plc
Dominic Slingsby, Interim Executive Chairman 01274 535 030
Morgan Morris, Group Chief Executive
Allenby Capital Limited (Nominated Advisor and Broker)
Alex Brearley/George Payne 020 3328 5656
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Unaudited Condensed Consolidated Income Statement for the half year ended 30 June 2023
Half year | Half year | Year | ||
ended | ended | ended | ||
30/06/23 (Unaudited) | 30/06/22 (Unaudited) | 31/12/22 (Audited) | ||
Note | £'000 | £'000 | £'000
| |
Revenue | 11,458 | 10,977 | 21,564 | |
--------- | --------- | --------- | ||
Operating profit before exceptional items | 329 | 316 | 627 | |
Exceptional items | - | - | - | |
Finance costs | (132) | (72) | (142) | |
-------- | -------- | -------- | ||
Profit before taxation | 197 | 244 | 485 | |
Taxation | 2 | (68) | (62) | (105) |
-------- | -------- | -------- | ||
Profit for the period attributable to equity shareholders | 129 -------- | 182 -------- | 380 -------- | |
Basic and diluted weighted average earnings per share | 12.3p | 17.3p | 36.2p | |
-------- | -------- | -------- | ||
The results set out above derive entirely from continuing operations.
The above unaudited condensed consolidated income statement should be read in conjunction with the accompanying notes.
Unaudited Consolidated Statement of Comprehensive Income and Expense for the half year ended 30 June 2023
Half year | Half year | Year |
| |||
ended | ended | ended |
| |||
30/06/23 (Unaudited) | 30/06/22 (Unaudited) | 31/12/22 (Audited) |
| |||
| £'000 | £'000 | £'000 |
| ||
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Profit for the period | 129 | 182 | 380 |
| ||
| -------- | -------- | -------- |
| ||
Items that will not be reclassified to profit or loss |
|
|
|
| ||
Remeasurements of post-employment benefit obligations | (49) | 2,985
| 2,235
|
| ||
Movement in deferred tax relating to retirement benefit obligation |
12 |
(746) |
(559) |
| ||
| -------- | -------- | -------- |
| ||
Other comprehensive (expense)/income | (37) | 2,239 | 1,676 |
| ||
| ||||||
-------- | -------- | -------- |
| |||
Total comprehensive income recognised for the period attributable to equity shareholders |
92 |
2,421 |
2,056 |
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-------- | -------- | -------- |
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The above unaudited consolidated statement of comprehensive income and expense should be read in conjunction with the accompanying notes.
Unaudited Consolidated Balance Sheet as at 30 June 2023
30/06/23 (Unaudited) | 30/06/22 (Unaudited) | 31/12/22 (Audited) | ||
£'000 | £'000 | £'000 | ||
Assets | ||||
Non-current assets | ||||
Property, plant and equipment | 5,357 | 5,332 | 5,418 | |
Intangible assets | 315 | 319 | 249 | |
Goodwill | 700 | 700 | 700 | |
Deferred tax asset | 1,369 | 1,216 | 1,373 | |
--------- | --------- | -------- | ||
7,741 | 7,567 | 7,740 | ||
--------- | --------- | -------- | ||
Current assets | ||||
Inventories | 2,695 | 2,806 | 2,683 | |
Trade and other receivables | 3,285 | 3,120 | 2,962 | |
Cash and cash equivalents Derivative financial asset | 2,464 - | 2,229 3 | 2,243 - | |
--------- | --------- | --------- | ||
8,444 | 8,158 | 7,888 | ||
| --------- | --------- | ---------
| |
Liabilities | ||||
Current liabilities | ||||
Trade and other payables Bank borrowings Lease obligations | (3,307) (2,031) (20) | (3,579) (1,764) (15) | (2,687) (2,217) (20) | |
Derivative Financial Liability | (7) | - | - | |
Current tax liabilities | (154) | (96) | (103) | |
--------- | --------- | --------- | ||
| (5,519) | (5,454) | (5,027) | |
| --------- | --------- | --------- | |
Net current assets | 2,925 | 2,704 | 2,861 | |
| --------- | --------- | --------- | |
Non-current liabilities | ||||
Retirement benefit obligation Lease obligations | (5,475) (103) | (4,865) - | (5,492) (113) | |
Deferred tax liabilities | (677) | (722) | (677) | |
--------- | --------- | --------- | ||
Net assets | 4,411 | 4,684 | 4,319 | |
| --------- | --------- | ---------
| |
Capital and reserves | ||||
Share capital | 262 | 262 | 262 | |
Share premium | 24 | 24 | 24 | |
Retained earnings | 4,125 | 4,398 | 4,033 | |
--------- | --------- | --------- | ||
Total equity | 4,411 | 4,684 | 4,319 | |
--------- | --------- | --------- | ||
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The above unaudited consolidated balance sheet should be read in conjunction with the accompanying notes.
Unaudited Consolidated Statement of Changes in Shareholders' Equity
Share Capital £'000 | Share premium £'000 | Retained earnings £'000 | Total equity £'000 | |
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|
|
| |
At 1 January 2022 | 262 | 24 | 1,977 | 2,263 |
Total comprehensive income recognised for the period |
- |
- |
2,421 |
2,421 |
| --------- | --------- | --------- | --------- |
At 30 June 2022 | 262 | 24 | 4,398 | 4,684 |
--------- | --------- | --------- | --------- | |
At 1 January 2023 | 262 | 24 | 4,033 | 4,319 |
Total comprehensive income recognised for the period | - | - | 92
| 92 |
--------- | --------- | --------- | --------- | |
At 30 June 2023 | 262 | 24 | 4,125 | 4,411 |
--------- | --------- | --------- | --------- |
The above unaudited consolidated statement of changes in shareholders' equity should be read in conjunction with the accompanying notes.
Unaudited Consolidated Statement of Cash Flows for the half year ended 30 June 2023
Half year | Half year | Year |
| ||
ended | ended | ended |
| ||
30/06/23 (Unaudited) | 30/06/22 (Unaudited) | 31/12/22 (Audited) |
| ||
Note | £'000
| £'000
| £'000
|
| |
Cash flows from operating activities |
| ||||
Cash generated from/(used in) operations | 3 | 611 | 228 | (27) |
|
UK corporation tax paid | - | - | (49) |
| |
Interest paid | (3) | - | - |
| |
--------- | --------- | --------- |
| ||
Cash generated from operating activities | 608 | 228 | (76) |
| |
--------- | --------- | --------- |
| ||
Cash flows from investing activities |
| ||||
Interest received | 2 | - | - |
| |
Purchase of property, plant and equipment | (74) | (101) | (211) |
| |
Purchase of intangible assets | (125) | - | (22) |
| |
Proceeds from sales of property, plant and equipment | 6 | 9 | 24 |
| |
--------- | --------- | --------- |
| ||
Net cash outflow from investing activities | (191) | (92) | (209) |
| |
--------- | --------- | --------- |
| ||
Cash flows from financing activities |
| ||||
Capital element of lease payments |
(10) |
(17) |
(35) |
| |
(Decrease)/increase in overdraft | (186) | 111 | 564 |
| |
--------- | --------- | --------- |
| ||
Net cash (used in)/generated from financing activities | (196) | 94 | 529 |
| |
--------- | --------- | ---------
|
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Net increase in cash and cash equivalents | 221 | 230 | 244 |
| |
| |||||
Opening cash and cash equivalents | 2,243 | 1,999 | 1,999 | ||
| |||||
--------- | --------- | --------- |
| ||
Closing cash and cash equivalents | 2,464 | 2,229 | 2,243 |
| |
--------- | --------- | --------- |
| ||
The above unaudited consolidated statement of cash flows should be read in conjunction with the accompanying notes.
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Notes to the Interim Report for the half year ended 30 June 2023
1. | Interim Financial Information
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The unaudited condensed consolidated interim financial information does not constitute statutory accounts within the meaning of Section 434 of the Companies Act 2006. The interim financial statements, which are unaudited and have not been reviewed by the Company's auditors, have been presented and prepared in accordance with the policies set out in the 2022 Annual Report and Accounts. The comparative figures for the year ended 31 December 2022 do not constitute full financial statements and have been abridged from the full accounts for the year ended on that date, on which the auditors gave an unqualified report. They did not contain any statement under Section 498 of the Companies Act 2006. The 2022 accounts have been delivered to the Registrar of Companies. The Company has chosen not to adopt IAS 34 'Interim Financial Statements'.
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2. | Taxation | Half year | Half year | Year |
ended | ended | ended | ||
30/06/23 (Unaudited) | 30/06/22 (Unaudited) | 31/12/22 (Audited) | ||
£'000 | £'000 | £'000 | ||
|
|
| ||
Current tax | 52 | 40 | 96 | |
Deferred tax | 16 | 22 | 9 | |
--------- | --------- | --------- | ||
68 | 62 | 105 | ||
--------- | --------- | --------- | ||
The effective tax rate is 25%. | ||||
3. |
Cash generated from/(used in) operations | |||
Half year | Half year | Year | ||
ended | ended | ended | ||
30/06/23 (Unaudited) | 30/06/22 (Unaudited) | 31/12/22 (Audited) | ||
£'000 | £'000 | £'000 | ||
|
|
| ||
Profit before tax | 197 | 244 | 485 | |
Net finance costs | 135 | 72 | 142 | |
Depreciation and amortisation | 194 | 215 | 464 | |
Defined benefit pension scheme contributions paid Property impairment reversal | (200) - | (159) - | (352) - | |
Profit on sale of property, plant and equipment | (6) | (9) | (24) | |
Increase in inventories | (12) | (476) | (353) | |
Increase in trade and other receivables | (323) | (352) | (192) | |
Increase/(decrease) in trade and other payables | 626 | 693 | (197) | |
--------- | --------- | --------- | ||
Cash generated from/(used in) operating activities | 611 | 228 | (27) | |
--------- | --------- | --------- | ||
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4. Availability of Interim Report
The Interim Report will be available on the Company's website www.slingsby.com.