TIDMSLNG
RNS Number : 1237N
Slingsby(H.C.)Plc
18 May 2020
18 May 2020
H C SLINGSBY PLC
("Slingsby" or the "Company" or the "Group")
Audited Results for the year ended 31 December 2019
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. The Board continues to believe that it would
benefit from the appointment of new Non-Executive Directors. Whilst
this process should now be possible following the agreement with
regard to the pension scheme detailed below, we are unable to
proceed at present due to the Coronavirus restrictions.
Results
In the half year statement, I reported an operating profit of
GBP0.1m on sales of GBP9.9m. The full year operating profit (before
exceptional items) was GBP0.45m (2018: GBP0.52m) on sales of
GBP19.6m (2018: GBP19.8m). Group sales declined by around 1% which,
together with a reduction in gross margin, led to a profit before
taxation and exceptional items of GBP0.16m (2018: GBP0.26m) The
reduction in Group sales is attributable to lower sales of seasonal
products (both winter and summer) due to the milder weather in 2019
compared to 2018.
ESE Direct Limited ("ESE") contributed GBP6.4m of sales (2018:
GBP6.5m) and profit before tax and management charges of GBP0.39m
(2018: GBP0.45m). The lack of growth in sales at ESE 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 GBP1.7m to GBP0.7m
leading to a non-cash exceptional item of GBP1m.
During 2019, two executive members transferred out of the
Company's defined benefit pension scheme at values which led to an
overall reduction in the scheme deficit of GBP3.1m, which is
presented in the income statement as an exceptional gain. In
addition, a re-valuation of the Group's freehold property led to a
reversal of the previous impairment, and a further GBP0.7m
exceptional gain. After these non-cash items, the Group's profit
before tax was GBP2.9m (2018: loss of GBP0.6m).
Group earnings before interest, tax, depreciation, amortisation
and exceptional items ("EBITDA") in the year ended 31 December 2019
were GBP0.9m (2018: GBP1m). Net debt at 31 December 2019 was
GBP1.1m (2018: GBP1.1m).
Dividend
Due to the agreement reached with the Trustee of the defined
benefit pension scheme, the Board is unable to recommend a final
dividend for the year (2018: GBPnil). However, regardless of this
agreement, due to the reduced pre-exceptional profit performance
and the uncertainty caused by the Coronavirus, the Board would not
have recommended a payment be made.
Pension Scheme
Protracted discussions with the Trustee of the defined benefit
pension scheme and the pension authorities, regarding a long term
solution to the scheme deficit, led to an agreement by which the
Company re-commenced contributions paying GBP0.125m during the year
(2018: nil). The Company has agreed to pay GBP0.3m a year in
deficit reduction contributions which will be reviewed in June
2022. The Company will also continue to contribute GBP0.16m towards
scheme running costs. As a result of this agreement, the Group
agreed not to make distributions to shareholders prior to 1 June
2021 and to limit their quantum to GBP60,000 plus 50% of its net
cashflow.
The agreement removes uncertainty surrounding the Group's
contributions to the scheme and removes the risk that the Trustee
demand payment of arrears of contributions of GBP1.6m. At 31
December 2019, the pension scheme deficit decreased by GBP1.8m to
GBP6.6m (2018: GBP8.4m) largely due to the transfers out referred
to above. This improvement in the pension scheme position together
with the pre-exceptional profit before tax increased Group net
assets to GBP1.7m (2018: GBP0.2m).
Recent Trading
Group sales declined in Q1 of 2020 against the same period in
2019 by 4%. The Coronavirus pandemic had an adverse effect on sales
at ESE but this was almost offset by increased sales of certain of
the Group's products that saw increased demand due to the
Coronavirus. An improvement in the Group's overall margin and lower
overheads led to operating profit being higher than in the prior
year.
The market remains competitive and we are cautious regarding the
outlook. This is particularly the case due to significant
uncertainty created by the Coronavirus. We are seeing large falls
in demand from customers in certain adversely affected sectors and
order concentration on a limited number of product lines and from a
smaller number of customers. It is unclear as to the impact that
the virus will have on demand going forward.
Finally, I would like to thank our staff across the Group for
their efforts in 2019 and particularly since the outbreak of
Coronavirus. Across the Group, we are proud of our position as a
key supplier to the NHS and related sectors and have worked hard to
ensure that we have remained "open for business".
D.S. Slingsby
Interim Executive
Chairman
18 May 2020
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 (Nominated adviser Tel: 020 3328 5656
and Broker)
David Worlidge / Nicholas Chambers
Audited Consolidated Income Statement for the year ended 31
December 2019
Note 2019 2018
(Audited) (Audited)
GBP'000 GBP'000
Revenue 19,568 19,817
---------- ----------
----------------------------------------- ----- ----------- ---------------
Operating profit before exceptional
items 446 520
Exceptional items 2 2,726 (891)
----------------------------------------- ----- ----------- ---------------
Operating profit/(loss) 3,172 (371)
Finance costs (285) (262)
---------- ----------
Profit/(loss) before taxation 2,887 (633)
Taxation (552) (29)
---------- ----------
Profit/(loss) for the year attributable
to owners of the parent 2,335 (662)
---------- ----------
Basic and diluted earnings/(loss)
per share 4 233.5p (66.2p)
---------- ----------
Audited Consolidated Statement of Comprehensive Income and
Expense for the year ended 31 December 2019
2019 2018
(Audited) (Audited)
GBP'000 GBP'000
Profit/(loss) for the year 2,335 (662)
Items that will not be classified
to profit or loss:
Re-measurements of post-employment
benefit obligation (1,069) 604
Movement in deferred tax relating
to retirement benefit obligation 182 (103)
---------- ----------
Other comprehensive (expense)/income (887) 501
---------- ----------
Total comprehensive income/(expense)
for the year attributable to equity
shareholders 1,448 (161)
--------- ----------
Audited Consolidated Balance Sheet as at 31 December 2019
Note 2019 2018
(Audited) (Audited)
GBP'000 GBP'000
Assets
Non-current assets
Property, plant and equipment 5,296 4,578
Intangible assets 610 641
Goodwill 700 1,734
Deferred tax asset 1,115 1,434
-------- ----------
7,721 8,387
-------- ----------
Current assets
Inventories 2,134 1,947
Trade and other receivables 2,401 2,576
Derivative financial asset - 14
Cash and cash equivalents 1,278 1,458
-------- ----------
5,813 5,995
-------- ----------
Liabilities
Current liabilities
Trade and other payables (4,729) (5,261)
Derivative financial liability (8) -
Finance lease obligations (32) -
--------- ---------
(4,769) (5,261)
-------- ----------
Net current assets 1,044 734
-------- ----------
Non-current liabilities
Lease obligations (66) -
Retirement benefit obligation 3 (6,558) (8,438)
Deferred tax liabilities (470) (460)
-------- ----------
Net assets 1,671 223
-------- ----------
Capital and reserves
Share capital 250 250
Retained earnings 1,421 (27)
-------- ----------
Total equity 1,671 223
-------- ----------
Audited Consolidated Cash Flow Statement for the year ended 31
December 2019
2019 2018
(Audited) (Audited)
GBP'000 GBP'000
Note
Cash flows from operating activities
Cash generated from operations 5 404 893
Interest payable (36) (45)
UK corporation tax paid (57) (60)
-------- --------
Cash generated from operating activities 311 788
-------- --------
Cash flows from investing activities
Purchase of property, plant and equipment (212) (358)
Purchase of intangible assets (83) -
Proceeds from sales of property, plant
and equipment 20 41
-------- --------
(275) (317)
Net cash used in investing activities -------- --------
Cash flows from financing activities
Capital element of finance lease payments (36) (37)
Repayment of borrowings 397 (575)
Increase in overdraft (577) 603
-------- --------
Net cash used in financing activities (216) (9)
-------- --------
Net increase in cash and cash equivalents (180) 462
Opening cash and cash equivalents 1,458 996
-------- --------
Closing cash and cash equivalents 1,278 1,458
-------- --------
Audited Consolidated Statement of Changes in Shareholders'
Equity
Share Retained Total
capital earnings equity
GBP'000 GBP'000 GBP'000
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)
---------- ---------- ----------
1 January 2019 250 (27) 223
Profit for the year - 2,335 2,335
Other comprehensive expense
for the year - (887) (887)
Total comprehensive income --------- ----------
for the year ---------- 1,448 1,448
---------- ---------- ----------
31 December 2019 250 1,421 1,671
---------- ---------- ----------
Notes to the Audited Results for the year ended 31 December
2019
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 2019 and 31 December 2018 but has
been extracted from those accounts. The annual accounts
for the years ended 31 December 2018 and 31 December
2019 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 16, 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 2018. They are also consistent
with those in the full accounts for the year ended
31 December 2019 which have yet to be published.
Statutory accounts for 2018 have been delivered to
the Registrar of Companies and those for the financial
year ended 31 December 2019 will be delivered following
the Company's annual general meeting.
The auditors have reported on the accounts for the
year ended 31 December 2018 and their opinion was
unqualified, did not include any matters to which
the auditor drew attention by way of emphasis and
did not contain a statement under section 498(2)
or (3) of the Companies Act 2006.
The auditors have reported on the accounts for the
year ended 31 December 2019 and their opinion was
unqualified, did not contain a statement under section
498(2) or (3) of the Companies Act 2006, but did
include a matter to which the auditors drew attention
by way of emphasis without qualifying their report
relating to the basis of preparation which is reproduced
below:
"Material uncertainty related to going concern
We draw attention to note 1 in the financial statements,
which indicates that the group may be adversely affected
by the ongoing impact of the Covid-19 (coronavirus)
outbreak and in particular the potential impact of
a significant fall in demand on the group's cashflow.
As stated in note 1, these events or conditions,
along with the other matters as set forth in note
1, indicate that a material uncertainty exists that
may cast significant doubt on the Company's ability
to continue as a going concern. Our opinion is not
modified in respect of this matter."
Going concern
Extract from the accounts for the year ended 31 December
2019:
" The Group has made a profit for the year of GBP2.3m
largely due to non-cash exceptional items (2018 loss
GBP662,000) and had net current assets at 31 December
2019 of GBP1,044,000 (2018 net current assets of
GBP734,000). The result of the company for the financial
year was a profit of GBP2,236,000 (2018: loss GBP1,561,000).
An agreement has been reached with the pension scheme
Trustee, regarding the Company's short term contributions
to the Scheme which removed the risk that the Trustee
could demand repayment of the arrears of contributions
of GBP1.58m.
The Directors have prepared trading and cash flow
forecasts for the group for the period to 31 December
2021, which include the pension scheme contributions
as agreed. These forecasts indicate that the Group
will be able to operate within its banking facilities
and meet its liabilities as the fall due.
The overdraft element of the Group's banking facilities
expires on 30 April 2021.
The financial statements have therefore been prepared
on a going concern basis which assumes the group
will continue in operation for the foreseeable future.
However, the coronavirus pandemic could have a short
to medium term impact on the group's financial performance
which is not easy to forecast. The impact could be
from a significant fall in demand, from customer
credit losses (bad debts) or from late customer payments.
These would restrict the group's ability to generate
operating cashflow.
While the directors are taking steps to manage cashflow,
reduce costs and to plan appropriate mitigative commercial
actions to take during this period of instability
across the global economy, sensitivity analysis of
the trading and cashflow forecasts prepared for the
period to 31 December 2021 indicate some possible
scenarios relating to ongoing reduced sales activity
where the group may not be able to meet its liabilities
as they fall due. The directors believe that it remains
appropriate to prepare the financial statements on
a going concern basis, however the coronavirus outbreak
and the risks it may pose to the group give rise
to a level of material uncertainty relating to going
concern."
The financial statements do not include any adjustments
that would result from the basis of preparation as
a going concern being inappropriate.
2. Exceptional item 2019 2018
(Audited) (Audited)
GBP'000 GBP'000
Settlement gain 3,069 -
GMP equalisation - (216)
Asset impairment (1,034) (675)
Property impairment reversal 691 -
------------ ------------
2,726 (891)
------------ ------------
3. Retirement benefit obligation
2019 2018
(Audited) (Audited)
GBP'000 GBP'000
Present value of funded obligation 22,005 25,321
Fair value of scheme assets (15,447) (16,883)
------------ ------------
Net liability in balance sheet 6,558 8,438
------------ ------------
4. Profit/(loss) per share
Basic profit per share is based upon a profit of
GBP2,335,000 (2018: loss of GBP662,000) and on 1,000,000
(2018: 1,000,000) ordinary shares in issue during
the year.
There is no difference between basic profit 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
2019 2018
(Audited) (Audited)
GBP'000 GBP'000
Profit/(loss) before tax 2,887 (633)
Net finance costs 285 262
Depreciation and amortisation 414 463
Defined benefit pension scheme contributions (125) -
paid
Property impairment reversal (691) -
Settlement gain related to defined benefit (3,069) -
pension scheme
Exceptional impairment provision 1,034 675
Profit on sale of property, plant and
equipment (8) (16)
Exceptional charge for GMP equalisation - 216
Increase in inventories (186) (124)
Decrease/(increase) in trade and other
receivables 189 (214)
(Decrease)/increase in trade and other
payables (326) 264
------------ ------------
Cash generated from operating activities 404 893
------------ ------------
6. Dividends
No dividends were paid or declared during 2018 or
2019.
7. Availability of Report and Accounts
The financial statements for the year ended 31 December
2019, containing a notice of the Annual General Meeting
will be posted to shareholders shortly.
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
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END
FR ARMFTMTABBRM
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