TIDMSLNG
RNS Number : 6928Y
Slingsby(H.C.)Plc
10 May 2019
H C SLINGSBY PLC
("Slingsby" or the "Company" or the "Group")
Audited Results for the year ended 31 December 2018
Statement by the Chairman
Board Composition
Following the Board changes in 2016, I remain as Interim
Executive Chairman and during 2018 Morgan Morris was appointed
Group Chief Executive. We continue to seek to appoint additional
new Non-Executive Directors. 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, as commented on further
below.
Results
In the half year statement, I reported an operating unaudited
profit of GBP0.21m on sales of GBP9.7m. The full year operating
profit (before exceptional items) was GBP0.52m (2017: operating
profit of GBP0.56m) on sales of GBP19.8m (2017: GBP19.2m). The
Group increased sales by 3% and with gross margin stable, despite a
rise in overheads this led to a profit before taxation and
exceptional items of GBP0.26m (2017: profit of GBP0.23m).
However, during 2018, sales at ESE did not grow as previously
expected. This led us to re-evaluate the value of goodwill held as
an asset on the balance sheet following the acquisition. Following
this re-evaluation, we decided to impair the value of goodwill from
GBP2.4m to GBP1.7m leading to a non-cash exceptional charge of
GBP675,000. Furthermore, we also recorded an exceptional charge of
GBP216,000 for Guaranteed Minimum Pension obligations ("GMP")
following the High Court ruling on this industry wide issue in
October 2018. These non-cash charges are disappointing to report as
they result in a loss before tax of GBP0.6m (2017: loss of GBP1m)
which does not reflect the stable operating performance of the
Group.
ESE Direct Limited ("ESE") contributed GBP6.5m of sales (2017:
GBP6.8m) and profit before tax and management charges of GBP0.45m
(2017: GBP0.44m). Sales fell due to large orders delivered in early
2017 not recurring in 2018 and to slower than forecast growth in
web sales. Despite this, profitability was maintained due to a
reduction in overheads and an improvement in the margin from
actions to further integrate the ESE business with the Slingsby
business.
Group earnings before interest, tax, depreciation and
amortisation ("EBITDA") in the year ended 31 December 2018 were
GBP1m (2017: GBP1m) before exceptional items. Net debt at 31
December 2018 was GBP1.1m (2017: GBP1.6m). This reduction in net
debt was despite capital expenditure of GBP0.36m (2017:
GBP0.1m).
Dividend
In view of the loss in 2018 and the uncertainty around the
pension fund commitments, the Board is unable to recommend a final
dividend for the year (2017: GBPnil).
Pension Scheme
We remain in discussion with the Trustee of the defined benefit
pension scheme regarding a long term solution to the deficit.
During 2018, the Company made no deficit reduction payments (2017:
nil). At 31 December 2018, the pension scheme deficit decreased by
GBP0.2m to GBP8.4m (2017: GBP8.6m). 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
goodwill impairment, such that Group net assets are GBP0.2m (2017:
GBP0.4m).
As discussions regarding the pension position are ongoing and
whilst during this time the Company is not paying deficit reduction
contributions, there remains uncertainty as to the quantum and
timing of future payments to the scheme.
Recent Trading
Group sales growth in Q1 of 2019 against the same period in 2018
was 5%. However, a reduction in Group margin and an increase in
Group overheads has led to operating profit for the period being
lower than in 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 and
product strategy, synergies realised and investments in IT and
equipment, we are cautious regarding the outlook. This is
particularly the case due to uncertainty created by the decision to
extend the Brexit process and its potential impact on the level of
corporate activity. What is now the initial Brexit date was an
event which the Group and a portion of its customer base had
planned for and the impact of unwinding these plans may impact
short term demand.
Finally, I would like to thank our staff across the Group for
their efforts in 2018. Our sales performance to date in 2019
continues to provide grounds for optimism and the investments made
during 2018 can be built upon to further enhance efficiency.
D.S.Slingsby
Interim Executive
Chairman
10 May 2019
For further information, please contact:
H C Slingsby PLC Tel: 01274 535 030
Dominic Slingsby, Interim Executive
Chairman
Morgan Morris, Group Chief Executive
Allenby Capital Limited Tel: 020 3328 5656
David Worlidge/Nicolas Chambers
Audited Consolidated Income Statement for the year ended 31
December 2018
Note 2018 2017
(Audited) (Audited)
GBP'000 GBP'000
Revenue 19,817 19,240
---------- ----------
------------------------------------- ----- ----------- ---------------
Operating profit before exceptional
items 520 557
Exceptional items 2 (891) (1,221)
------------------------------------- ----- ----------- ---------------
Operating loss (371) (664)
Finance costs (262) (331)
---------- ----------
Loss before taxation (633) (995)
Taxation (29) (62)
---------- ----------
Loss for the year attributable to
owners of the parent (662) (1,057)
---------- ----------
Basic and diluted loss per share 4 (66.2p) (105.7p)
---------- ----------
Audited Consolidated Statement of Comprehensive Income and
Expense for the year ended 31 December 2018
2018 2017
(Audited) (Audited)
GBP'000 GBP'000
Loss for the year (662) (1,057)
Items that will not be classified
to profit or loss:
Re-measurements of post-employment
benefit obligation 604 1,276
Movement in deferred tax relating
to retirement benefit obligation (103) (246)
Items that may be subsequently reclassified
to profit or loss:
Exchange adjustment - 8
---------- ----------
Other comprehensive income 501 1,038
---------- ----------
Total comprehensive expense for the year
attributable
to equity shareholders (161) (19)
-------- ----------
Audited Consolidated Balance Sheet as at 31 December 2018
Note 2018 2017
(Audited) (Audited)
GBP'000 GBP'000
Assets
Non-current assets
Property, plant and equipment 4,578 4,472
Intangible assets 641 877
Goodwill 1,734 2,409
Deferred tax asset 1,434 1,464
-------- ----------
8,387 9,222
-------- ----------
Current assets
Inventories 1,947 1,823
Trade and other receivables 2,576 2,376
Derivative financial asset 14 -
Cash and cash equivalents 1,458 996
-------- ----------
5,995 5,195
-------- ----------
Liabilities
Current liabilities
Trade and other payables (5,261) (4,964)
Derivative financial liability - (7)
Finance lease obligations - (30)
--------- ---------
(5,261) (5,001)
-------- ----------
Net current assets 734 194
-------- ----------
Non-current liabilities
Finance lease obligations - (7)
Retirement benefit obligation 3 (8,438) (8,610)
Deferred tax liabilities (460) (415)
-------- ----------
Net assets 223 384
-------- ----------
Capital and reserves
Share capital 250 250
Retained earnings (27) 134
-------- ----------
Total equity 223 384
-------- ----------
Audited Consolidated Cash Flow Statement for the year ended 31
December 2018
2018 2017
(Audited) (Audited)
GBP'000 GBP'000
Note
Cash flows from operating activities
Cash generated from operations 5 893 334
Interest payable (45) (70)
UK corporation tax (paid)/received (60) 25
-------- --------
Cash generated from operating activities 788 289
-------- --------
Cash flows from investing activities
Purchase of property, plant and equipment (358) (88)
Purchase of intangible assets - (20)
Proceeds from sales of property, plant
and equipment 41 9
-------- --------
(317) (99)
Net cash used in investing activities -------- --------
Cash flows from financing activities
Capital element of finance lease payments (37) (44)
Repayment of borrowings (575) (39)
Increase in overdraft 603 252
-------- --------
Net cash (used in)/generated from
financing activities (9) 169
-------- --------
Net increase in cash and cash equivalents 462 359
Opening cash and cash equivalents 996 632
Exchange differences - 5
-------- --------
Closing cash and cash equivalents 1,458 996
-------- --------
Audited Consolidated Statement of Changes in Shareholders'
Equity
Share Retained Translation Total
capital earnings reserve equity
GBP'000 GBP'000 GBP'000 GBP'000
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)
---------- ---------- ---------- ----------
1 January 2018 250 134 - 384
Loss for the year - (662) - (662)
Other comprehensive income
for the year - 501 - 501
Total comprehensive expense --------- -------- ----------
for the year ---------- (161) - (161)
---------- ---------- ---------- ----------
31 December 2018 250 (27) - 223
---------- ---------- ---------- ----------
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
2018
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 2018 and 31 December 2017, but
has been extracted from those accounts. The annual
accounts for the years ended 31 December 2017 and
31 December 2018 have been prepared in accordance
with International Financial Reporting Standards
("IFRS") and IFRIC interpretations as adopted by
the EU and with those parts of the Companies Act
2006 applicable to companies reporting under IFRS.
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.
With the exception of the adoption of IFRS 15 and
IFRS 9, 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 2017. They are also consistent
with those in the full accounts for the year ended
31 December 2018 which have yet to be published.
The adoption of IFRS 15 and IFRS 9 had no material
effect on the reported results in either period.
Statutory accounts for 2017 have been delivered to
the Registrar of Companies and those for the financial
year ended 31 December 2018 will be delivered following
the Company's annual general meeting. The auditors
have reported on the accounts for the years ended
31 December 2017 and 31 December 2018 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.
2. Exceptional item 2018 2017
(Audited) (Audited)
GBP'000 GBP'000
GMP equalisation (216) -
Asset impairment (675) (1,221)
------------ ------------
(891) (1,221)
------------ ------------
3. Retirement benefit obligation
2018 2017
(Audited) (Audited)
GBP'000 GBP'000
Present value of funded obligation 25,321 26,666
Fair value of scheme assets (16,883) (18,056)
------------ ------------
Net liability in balance sheet 8,438 8,610
------------ ------------
4. Loss per share
Basic loss per share is based upon losses of GBP662,000
(2017: GBP1,057,000) and on 1,000,000 (2017: 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.
5. Cash generated from/(used in) operating
activities
2018 2017
(Audited) (Audited)
GBP'000 GBP'000
Loss before tax (633) (995)
Net finance costs 262 331
Depreciation and amortisation 463 480
Exceptional impairment provision 675 1,221
Profit on sale of property, plant and
equipment (16) (4)
Exceptional charge for GMP equalisation 216 -
Increase in inventories (124) (12)
Decrease/(increase) in trade and other
receivables (214) 143
(Decrease)/increase in trade and other
payables 264 (830)
------------ ------------
Cash generated from operating activities 893 334
------------ ------------
6. Dividends
No dividends were paid or declared during 2017 or
2018.
7. Availability of Report and Accounts
The financial statements for the year ended 31 December
2018, containing a notice of Annual General Meeting,
will be posted to shareholders shortly.
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END
FR AMMMTMBJBBRL
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