Half Yearly Report
18/09/2015 07:00
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 | |
| -------- | -------- | -------- | ||
| 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) | ||
| -------- | -------- | -------- | |||
| 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 | |
| --------- | --------- | --------- |
| 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 |
| --------- | --------- | --------- | --------- |
| 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 | |
| --------- | --------- | --------- | ||
| 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) | |
| --------- | --------- | --------- | ||
| 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. | ||