Half Yearly Report

RNS Number : 4410Z

Slingsby(H.C.)Plc

18 September 2015

 

18 September 2015

H C Slingsby plc

("Slingsby" or "the Company")

Report for the half year ended 30 June 2015

Statement by the Chairman

On 27 March 2015 we announced our acquisition of ESE Direct Ltd ("ESE"), a company based in Norwich which trades in the same industrial and commercial equipment sector as Slingsby, but with a largely different customer base and pricing strategy. This half year report includes three months' trading in ESE, helping to contribute to the increased sales compared with the same period last year.

The combined trading produced a small operating profit but with higher exceptional costs, arising out of the acquisition, meaning the Group incurred a slightly increased loss before tax of £408,000, when compared to the same period last year.

In our Trading Statement issued at the Annual General Meeting on 18 June 2015, we reported that sales in Slingsby in the first five months were around 3% lower than the same period in the prior year. We also reported that sales in ESE had also been below the comparable period in the prior year. The combined sales for the Group in the half year, on a comparable basis, were therefore around 2% lower than last year.

Trading in the first two months of the second half has continued to be volatile but ESE has achieved an improvement in July over sales in the same month in 2014.

As also announced in our June 2015 trading statement, Mr Christian Slingsby stood down as Sales Director to concentrate on a more customer facing role in the important market of the south of England. The Board wishes to thank him for his long service as a Director of the Company. Responsibility for overall sales together with marketing has been assumed by Lee Wright, who is leading the integration of our marketing strategy with our field sales activity. More investment is being made in acquiring new customers as well as maximising our relationships with Slingsby's base of loyal, long-standing customers and partners.

The acquisition of ESE was financed by the Company's cash resources and asset backed debt, so the Group has net debt of £1.3 million at the half year compared with net cash of £2.0 million at 30 June 2014.

In testing economic times and during significant changes to the Slingsby and ESE businesses, the Board wishes to express our thanks to our loyal workforce both in Bradford and in Norwich.

Having made a strategic acquisition for the first time in the Company's history, your Board is focussed on gaining the maximum benefit for shareholders from synergies between the two operating units and from subsequent growth in both of them.  The Directors believe the largely different customer bases and pricing strategies of ESE and Slingsby mean that the Group is strongly placed to take full advantage of the total market opportunity.

At 30 June 2015, the deficit on the Company's defined benefit pension scheme stood at £9.1 million, an increase of £0.6 million from 31 December 2014. This increase is mainly due to assumed future higher levels of inflation.  The Board recognises that the pension scheme is a significant issue for the Company and is examining ways of mitigating the position.  The increase in the pension deficit together with the losses in the period, have reduced net assets to £1.8 million.

In view of the trading performance, the Board has decided not to pay an interim dividend but to review dividend policy in light of the outturn for the full year.

J R Waterhouse

Non-Executive Chairman                                                                                                              18 September 2015

For further information please contact:

H C Slingsby plc

Dominic Slingsby, Managing Director                   01274 535 030

Morgan Morris, Financial Director

Sanlam Securities UK Limited

David Worlidge/James Thomas                            020 7628 2200

Unaudited Condensed Consolidated Income Statement for the half year ended 30 June 2015

		Half year	Half year	Year
		ended	ended	ended
		30/06/15 (Unaudited)	30/06/14 (Unaudited)	31/12/14 (Audited)
	Note	£'000	£'000	£'000
Revenue		7,725	6,371	12,587
		---------	---------	---------
Operating profit / (loss) before exceptional items		14	(10)	92
Exceptional items	2	(255)	(193)	(193)
		---------	---------	---------
Operating loss		(241)	(203)	(101)
Finance income		1	4	7
Finance costs		(168)	(182)	(359)
		--------	--------	--------
Loss before taxation		(408)	(381)	(453)
Taxation	3	69	49	154
		--------	--------	--------
Loss for the period attributable to equity shareholders		(339) --------	(332) --------	(299) --------
Basic and diluted loss per share		(33.9p)	(33.2p)	(29.9p)
		--------	--------	--------
Interim/Total dividend per share		0.0p	2.0p	6.0p
		--------	--------	--------

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 2014

			Half year	Half year	Year
			ended	ended	ended
			30/06/15 (Unaudited)	30/06/14 (Unaudited)	31/12/14 (Audited)
Items that will not be reclassified to profit or loss			£'000	£'000	£'000
Remeasurements of post-employment benefit obligations			(709)	553	(583)
Movement in deferred tax relating to retirement benefit obligation			142	(111)	116
Items that may be subsequently reclassified to profit or loss
Exchange adjustment			(20)	(10)	(17)
			--------	--------	--------
Other comprehensive expense			(587)	432	(484)
Loss for the period			(339)	(332)	(299)
			--------	--------	--------
Total comprehensive (expense)/income recognised for the period attributable to equity shareholders			(926)	100	(783)
			--------	--------	--------

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 2015

		30/06/15 (Unaudited)	30/06/14 (Unaudited)	31/12/14 (Audited)
		£'000	£'000	£'000
Assets
Non-current assets
Property, plant and equipment		6,182	5,997	5,952
Intangible assets Goodwill		1,382 2,379	543 -	473 -
Deferred tax asset		1,267	808	1,091
		---------	---------	--------
		11,210	7,348	7,516
		---------	---------	--------
Current assets
Inventories		1,861	1,854	1,951
Trade and other receivables		2,505	2,195	1,840
Cash and cash equivalents Derivative financial asset		333                -	2,037 -	1,940 4
Current tax asset		-	40	88
		---------	---------	---------
		4,699	6,126	5,823
		---------	---------	---------
Liabilities
Current liabilities
Trade and other payables Bank borrowings Finance lease liabilities		(3,300) (1,647) (20)	(2,357) - -	(2,083) - -
Derivative financial instruments		(7)	(21)	-
Current tax liabilities		(17)	-	-
		---------	---------	---------
		(4,991)	(2,378)	(2,083)
		---------	---------	---------
Net current (liabilities) / assets		(292)	3,748	3,740
		---------	---------	---------
Non-current liabilities
Retirement benefit obligation Finance lease liabilities		(9,075) (44)	(7,428) -	(8,471) -
		---------	---------	---------
Net assets		1,799	3,668	2,785
		---------	---------	---------
Capital and reserves
Called up share capital		250	250	250
Retained earnings		1,565	3,407	2,531
Translation reserve		(16)	11	4
		---------	---------	---------
Total equity		1,799	3,668	2,785
		---------	---------	---------

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	Retained earnings £'000	Translation reserve £'000	Total equity £'000
At 1 January 2014	250	3,417	21	3,688
Total comprehensive income/(expense) recognised for the period	-	110	(10)	100
Dividends paid	-	(120)	-	(120)
	---------	---------	---------	---------
At 30 June 2014	250	3,407	11	3,668
	---------	---------	---------	---------
At 1 January 2015	250	2,531	4	2,785
Total comprehensive expense recognised for the period	-	(906)	(20)	(926)
Dividends paid	-	(60)	-	(60)
	---------	---------	---------	---------
At 30 June 2015	250	1,565	(16)	1,799
	---------	---------	---------	---------

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 2015

		Half year	Half year	Year
		ended	ended	ended
		30/06/15 (Unaudited)	30/06/14 (Unaudited)	31/12/14 (Audited)
	Note	£'000	£'000	£'000
Cash flows from operating activities
Cash used in operations	4	(439)	(260)	(169)
UK corporation tax received		88	28	28
Interest paid		(12)	-	-
		---------	---------	---------
Cash used in operating activities		(363)	(232)	(141)
		---------	---------	---------
Cash flows from investing activities
Interest received		1	9	15
Purchase of property, plant and equipment		(40)	(27)	(112)
Purchase of intangible assets		(15)	(26)	(35)
Proceeds from sales of property, plant and equipment Acquisition of subsidiary, net of cash acquired                        5		93 (2,884)	18 -	25 -
		---------	---------	---------
Net cash outflow from investing activities		(2,845)	(26)	(107)
		---------	---------	---------
Cash flows from financing activities
Equity dividends paid Finance lease repayments		(20) (6)	(20) -	(120) -
		---------	---------	---------
Net cash outflow from financing activities		(26)	(20)	(120)
		---------	---------	---------
Net decrease in cash and cash equivalents		(3,234)	(278)	(368)
Opening cash and cash equivalents		1,940	2,325	2,325
Exchange differences		(20)	(10)	(17)
		---------	---------	---------
Closing cash and cash equivalents		(1,314)	2,037	1,940
		---------	---------	---------

The above unaudited consolidated statement of cash flows should be read in conjunction with the accompanying notes.

Notes to the Interim Report for the half year ended 30 June 2015

1.	Interim Financial Information
	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 prepared in accordance with the policies set out in the 2014 Annual Report and Accounts. The comparative figures for the year ended 31 December 2014 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, which did not contain an emphasis of matter paragraph and did not contain any statement under Section 498 of the Companies Act 2006. The 2014 accounts have been delivered to the Registrar of Companies.  The Company has chosen not to adopt IAS 34 'Interim Financial Statements'.
2.	Exceptional items	Half year	Half year	Year
		ended	ended	ended
		30/06/15 (Unaudited)	30/06/14 (Unaudited)	31/12/14 (Audited)
		£'000	£'000	£'000
	Restructuring costs	61	193	193
	Costs relating to the acquisition of ESE	194	-	-
		----------	---------	---------
		255 ----------	193 ---------	193 ---------
	The restructuring costs include salaries in lieu of notice, redundancy pay, holiday pay, social security costs and related legal expenditure.  The costs relating to ESE include professional fees associated with the acquisition.
3.	Taxation	Half year	Half year	Year
		ended	ended	ended
		30/06/15 (Unaudited)	30/06/14 (Unaudited)	31/12/14 (Audited)
		£'000	£'000	£'000
	Current tax	-	(9)	(89)
	Deferred tax	(69)	(40)	(65)
		---------	---------	---------
		(69)	(49)	(154)
		---------	---------	---------
	The effective tax rate is nil.
4.	Cash generated from operations
		Half year	Half year	Year
		ended	ended	ended
		30/06/15 (Unaudited)	30/06/14 (Unaudited)	31/12/14 (Audited)
		£'000	£'000	£'000
	Loss before tax	(408)	(381)	(453)
	Net finance costs	167	178	352
	Depreciation and amortisation	252	216	424
	Profit on sale of property, plant and equipment	(84)	(3)	(7)
	Pension deficit contributions	(260)	(270)	(540)
	Decrease/(Increase) in inventories	150	43	(53)
	(Increase)/Decrease in trade and other receivables	(155)	200	549
	Decrease in trade and other payables	(101)	(243)	(441)
		---------	---------	---------
	Cash used in operating activities	(439)	(260)	(169)
		---------	---------	---------

5.         Business Combination

On 27 March 2015, the Group acquired 100% of the share capital of ESE Direct Limited.  ESE operates in the same sector as the Group.  Total consideration was £4 million.  Details of total consideration, identifiable net assets acquired and provisional goodwill at the acquisition date are shown below:

                                                                                               £'000

	Total Consideration Cash paid on completion by Group Surplus cash in ESE at completion Consideration based on completion adjustments	3,270 600 101
	Deferred payment due 31 January 2016 Provisional recognised amounts of identifiable assets acquired and liabilities assumed Provisional goodwill Net cash outflow arising on the acquisition Cash paid on completion by Group Cash balances in ESE on completion (excluding surplus cash)	30 ---------- 4,001 --------- 1,622 2,379 --------- 4,001 -------- (3,270) 386 ---------- 2,884 ----------
6.	Availability of Interim Report The Interim Report will be available on the Company's website www.slingsby.com.

 

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