Stabilis Solutions, Inc. Annual Report 2014

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FY2014 Annual Report · Stabilis Solutions, Inc.

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Report & Accounts

for the year ended 31 December 2014

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Contents

Statement by the Chairman

Strategic Report

Report of the Directors

Corporate Governance

Statement of Directors’
Responsibilities

Independent Auditors’ Report

Consolidated Income Statement

Statement of Consolidated
Comprehensive Income and Expense

Statements of Consolidated and
Company Changes in Shareholders’
Equity

Consolidated Balance Sheet

Company Balance Sheet

Consolidated Cash Flow Statement

Company Cash Flow Statement

Note to the Cash Flow Statements

Notes to the Accounts

Five Year Summary

Directors and Advisers

Directors
J. R. Waterhouse –
Non-Executive Chairman
D. S. Slingsby – Managing Director
C. J. Slingsby – Sales Director
M. L. Morris – Financial Director
(appointed 13 February 2015)
R. G. Hudson – Financial Director
(resigned 13 February 2015)
L. R. Wright – Marketing Director

Company Secretary
M. L. Morris

Registered Office
Otley Road
Baildon, Shipley
West Yorkshire, BD17 7LW
Tel : (01274) 535030
Fax : (01274) 535035

Registered Number
452716

Registrars
Capita Asset Services
The Registry
34 Beckenham Road
Beckenham
Kent, BR3 4TU

Independent Auditors
PricewaterhouseCoopers LLP
Benson House
33 Wellington Street
Leeds, LS1 4JP

Solicitors
Squire Patton Boggs (UK) LLP
2 Park Lane
Leeds, LS3 1ES

Nominated Advisers & brokers
Sanlam Securities UK Limited
10 King William Street,
London, EC4N 7TW

Bankers
HSBC Bank plc
47 Market Street
Bradford, West Yorkshire, BD1 1LW

Website & E-Mail
The company’s website address is
www.slingsby.com

The company’s e-mail address is
sales@slingsby.com

We are one of the UK market leaders in the distance selling of industrial &
commercial equipment.

Notice of Annual General Meeting

We manufacture and distribute over 35,000 high quality products
covering everything you need for the workplace from handling and lifting
and premises equipment to retail and office supplies, including many new
ideas to help keep your business running smoothly.

We are committed to providing our customers with an extensive product
range, outstanding service and efficient delivery.

Notes to the Notice of Annual
General Meeting

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Statement by the Chairman

In my 2014 half year statement I reported a pre-tax trading loss
(before exceptional items) of £0.19m on sales of £6.4m. Sales in
the autumn did improve before falling away sharply in the last two
months. However the severe action taken in the first quarter to
reduce overheads took full effect in the second half and helped
restrict the pre-tax loss for the six months to £72,000. Hence
the full year pre-tax loss (before exceptional items) was £0.26m
(2013: £0.25m). Together with the exceptional restructuring cost
of £193,000, the full year pre-tax loss for 2015 was £0.45m. The
balance sheet remained strong with cash at £1.94m.

Sales so far in 2015 have improved after a slow start but remain
fragile. However, we have seen encouraging year on year
increased sales from our website reflective of our investment
in this area. Slingsby has recognised the constant need to drive
value along with its well established service offering and has
therefore invested further in its pricing proposition. This stronger
offer will keep Slingsby competitive in a market place where price
visibility is so readily accessible.

On 27 March 2015 we announced the acquisition of ESE
Direct Limited (“ESE”), a supplier of industrial and commercial
equipment operating in the same sector as Slingsby and based in
Norwich. In 2014 ESE had sales of £6.5m and declared a pre-tax
profit of £0.35m. Earnings before interest, tax, depreciation and
amortisation (“EBITDA”) and before directors’ pension costs were
£0.53m. The consideration was £3.3m net of cash on acquisition.
This was financed through a combination of cash and asset
backed finance.

The acquisition provides us with an opportunity to diversify our
brand portfolio enabling the more effective targeting of different
sub-sets of customers with alternative service propositions and
varying pricing strategies. We can also see significant synergy
between ESE and Slingsby, particularly in leveraging our supply
chains. ESE sell at a different level of the market and have grown

significantly particularly through on-line sales. We will combine the
strengths of both companies while continuing to trade with their
separate branding. Mike Wyard, previously Finance Director of
ESE, has been appointed as Managing Director of ESE and will
report to Dominic Slingsby.

Ray Hudson resigned as Finance Director at the end of the year
and the board thanks him for his many years service with the
company.

Morgan Morris has joined the Board as Interim Finance Director
and brings a variety of experience at this senior level. He
has made an immediate contribution, particularly to the ESE
acquisition.

On behalf of the Board I would like to thank all our loyal staff after
the most difficult year in Slingsby’s long history. I also want to
welcome the staff of ESE to the Slingsby family.

Despite the very significant investment in our acquisition, the Board
is still recommending a final dividend of 4p (2013: 10p) payable on
6th July 2015 to shareholders on the register at 5th June 2015. The
total dividend for 2014 is therefore 6p (2013: 12p).

J. R. Waterhouse
Non-Executive Chairman
18 May 2015

Morgan Morris has joined the Board as Interim Finance Director and brings a
variety of experience at this senior level. He has made an immediate contribution,
particularly to the ESE acquisition.

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Strategic Report

The group’s principal activity comprises the merchanting and distribution
of a highly diversified range of industrial and commercial equipment
primarily consisting of incidental purchasing supplies. The range spanning
some 35,000 products includes the following sectors: materials handling,
access, storage and shelving, office, safety and security, janitorial,
mailroom and packaging, workshop and maintenance, environmental and
waste management, premises, signs and labels, flooring and matting.

The sector is highly fragmented consisting of a small number of directly
comparable distance selling organisations and an increasingly large
number of specialist distributors. Our customer base is similarly diverse
and consequently demand derived from these organisations is reflective
of the current macroeconomic circumstances.

The group is seeking to build upon our strengths in distance selling and to
further enhance our e-commerce offering as well as to diversify our brand
portfolio to capture different customer segments who have alternative
service propositions and pricing strategies. We believe that deploying
e-commerce initiatives with not only customers but also key trading
partners will produce efficiencies as well as growth opportunities. During
2014, we have continued to work with our IT partners to improve our
e-commerce offering and to become a true omni-channel business.

During these continued challenging times, businesses will aggressively
seek to cut the cost of procurement. Our focus is not only on providing
value, choice and quality but moreover to differentiate ourselves by
providing excellent knowledge and service in an ever changing regulatory
environment. One key way in which we do this is by offering a broad
spectrum of specialist publications that have pioneered the provision of
knowledge and expertise to the facilities management and occupation
health sectors. Next day delivery is offered on a substantial proportion of
our lines to further augment our service levels.

In addition, during 2015 we plan to further invest in our pricing strategy
across the group. Our acquisition of ESE Direct Limited will provide the
opportunity to differentiate our core value proposition with a second brand
in the highly competitive web sales arena. The acquisition will fit directly
into our core operations and we expect to generate synergies to augment
ESE’s contribution to group profitability. As the acquisition took place
after the end of the financial year covered by these statements, further
information is disclosed at note 27 Post Balance Sheet Event.

The directors believe that the group’s strong core brand values of quality,
reliability and service excellence remain as true today as they have done
over the past 120 years of trading and this is recognised by the significant
number of repeat customers who, in an increasingly fragmented
marketplace, remain loyal. We believe that this focus on value and service
will arrest the decline in sales experienced over recent years.

Key Performance Indicators and
Business Performance

Sales growth
Return on capital employed
Return on sales
Gross profit margin

Notes:

2014

2013

(9.9%)
(16.3%)
(3.6%)
40.0%

(4.3%)
(6.8%)
(1.8%)
39.4%

1. Return on capital employed is calculated as loss before taxation over

the total equity at the year end.

Principal risks and uncertainties

The directors recognise that there are a number of risks that may affect
the performance of the business as below. These risks and uncertainties
are subjected to regular review and where appropriate, processes are
established to minimise the level of exposure.

People

The principal asset of the group is the commitment and skill of its people.
The retention of these people is therefore key to the success of the
business. The group has in place incentive schemes which are related to
its results and which allow all employees to participate in the success of
the group as a whole.

Economic and market cycles and volatility

The group’s operating performance is influenced by the economic
conditions of the regions in which it operates, principally the UK. The
continued difficult economic environment could result in a general
reduction in business activity and a consequent loss of income for the
group. The current credit market conditions mean financial institutions are
applying more stringent lending criteria and the availability of debt is low
by historical comparison thus affecting our customer demand patterns.

The main risk arising from the group’s financial instruments is liquidity risk.
The group ensures that it has sufficient cash resources available to meet
all short term cash requirements for the foreseeable future. The group
purchases a significant amount of its products from overseas suppliers
in foreign currencies and uses forward foreign currency contracts. At
present the directors do not believe that the group has significant interest
rate risk. The Board keeps these risks under regular review.

Commercial Relationships

The group benefits from many long term relationships with key
customers but having many thousands of customers gives us low
revenue concentration risk. The group, which has no significant supplier
dependency, is in frequent contact with its suppliers to ensure that it is
fully aware of market trends and innovations.

Technology Changes

By the end of 2013 the group had reached the end of the three year
technology plan. This plan has seen the successful implementation of the
following business solutions:

• A new website;

• A new back office system;

• New electronic links to a number of key customers;

•

A major upgrade of existing catalogue production systems to support
the new e-commerce solutions;

Significant investment in enhancing the data within the existing
systems;

A major renewal of existing hardware to efficiently support the new
infrastructure.

During 2014, we encountered some “teething problems” with the final
implementation which resulted in some additional work undertaken both
by our in-house IT team and our external providers. These problems
are now largely resolved. We do not expect further major investment in
technology development in the near future but will continue to refine the
system to maximise its capabilities.

2. Return on sales is calculated as loss before taxation over revenue.

Competition

A review of the business is included in the Statement by the Chairman on
page 1.

The group recognises that although it operates primarily within the UK it
has to be mindful of highly competitive pan-European and global activity
as well as service and performance criteria in local markets. Margins
are carefully monitored and the commercial offering is adjusted where
appropriate.

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Regulatory

To ensure that we remain fully compliant with all regulatory requirements
we constantly monitor changes in laws, regulations and standards relating
to employment, safety, environment and quality, to enable us to adapt our
policies and procedures accordingly. This ensures we continue to meet
customer requirements, minimise business impact and control costs,
whilst observing our legal and social responsibilities.

Approvals

To demonstrate our commitment to continuous improvement in
both Quality and Environmental Management we remain UKAS (UK
Accreditation Service) accredited to the international standards ISO
9001:2008 and ISO 14001:2004 respectively.

Exceptional Item

Due to continued tough trading conditions and as a result of our
investment in technology, the group made a number of redundancies
costing £193,000. In the prior year, redundancy costs were £nil.

Pensions

The group has an obligation to fund its defined benefit pension scheme
and this creates an exposure to interest rates, inflation, investment return
and the longevity of the plan members. The group eliminated these
risks for future service by the closure of the scheme to future accrual
from 31 March 2009; however, the funding of the past service liabilities
remains and has the potential to create significant variances in the group’s
operating profits, cash flow and balance sheet.

Contributions to this scheme totalled £540,000 during 2014 and, together
with the substantial costs of running the scheme, represents a significant
drain on resources.

Health and safety

We continue to meet our statutory and regulatory environmental
obligations, through membership of our local Eco-Network and
appropriate compliance schemes. The group initiatives in optimising our
carbon footprint not only benefit the environment but also reduce our
costs.

Environmental Sustainability

In addition to statutory and regulatory compliance, the group takes pride
in its environmental initiatives which have been recognised by winning
prestigious awards for carbon reduction.

Committed to reducing our carbon
footprint

Year on year we continue to reduce our carbon footprint, justifying the
Long Improvement Awards from Business in the Community (BITC) and
attaining Gold level in the 2013 Environmental Index. During the year we
switched our electrical supply to fully renewable energy sources.

By order of the Board

M. L. Morris
Company Secretary
18 May 2015

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Report of the Directors

The directors are pleased to present their annual report and audited
consolidated financial statements for the year ended 31 December 2014.
Future developments are considered in the Statement by the Chairman
on page 1.

H C Slingsby plc is a public limited company with securities traded on
the AIM market of the London Stock Exchange. It is incorporated and
domiciled in the United Kingdom and based in Baildon, West Yorkshire.

Directors

The directors of the company who were in office during the year and up
to the date of signing the financial statements are listed on the inside front
cover.

Dividends

The following dividends have been proposed for the 2014 financial year:

An interim dividend of 2p per share (2013: 2p per share)
paid in January 2015 amounted to

The directors recommend a final dividend of 4p per share
(2013: 10p per share) amounting to
Directors’ Interests

£’000

The beneficial interests of the directors and their immediate families in the
shares of the company are:

Number of ordinary shares
of 25p each

31 December
2014

1 January
2014

1,000
53,886
51,167
3,400
2,000

J. R. Waterhouse
C. J. Slingsby
D. S. Slingsby
R. G. Hudson
L. R. Wright

On 24 April 2015 M. L. Morris purchased 1,000 ordinary shares of 25p each.

There have been no other changes in the directors’ shareholdings
between 31 December 2014 and 18 May 2015.

None of the directors had any beneficial interest in any contract of
significance to which the company was a party, other than their service
contracts, subsisting during the year.

In addition to the above, C. J. Slingsby and D. S. Slingsby together have a
non-beneficial interest in respect of 64,000 (2013: 64,000) ordinary shares.

Post Balance Sheet Event

On 27th March 2015, the group announced the aquisition of ESE Direct
Limited as explained further within the Strategic Report on page 2 and
Statement by the Chairman on page 1.

Going Concern

After making appropriate enquiries, including a review of forecasts and
strategic plans, the directors have a reasonable expectation that the
group has adequate resources to continue in operational existence for
the foreseeable future. For this reason the going concern basis has been
adopted in preparing the group’s accounts.

Substantial Interests

So far as the directors are aware these were the following substantial
interests, other than those included in directors’ interests, in the shares of
the company at 18 May 2015:

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Number of
ordinary
Shares of
25p each

Percentage
Holding

M. Chadwick*

170,995

17.1%

J. Crowther Jones & Mr. T. E. Jones

J. H. Ridley

S. E. Slingsby

M. Miller (registered in the name of
Pershing Nominees Limited)

H. Slingsby

K. J. Williams

S. Whittaker

S. A. Williams

54,866

54,302

51,167

48,381

47,138

37,000

32,500

30,835

5.5%

5.4%

5.1%

4.8%

4.7%

3.7%

3.3%

3.1%

H C Slingsby plc Retirement Benefits
Scheme

30,061

3.0%

* 85,995 registered in the name of Goodbody Stockbrokers Nominees

Ltd and 85,000 in the name of Rulegale Nominees Limited

Financial Instruments

The group’s financial instruments comprise cash, forward foreign
exchange contracts and various items such as trade receivables and
trade payables that arise directly from its operations. The main purpose of
these financial instruments is to finance the group’s operations.

Financial risk management disclosures are included in note 21 to the
financial statements.

Indemnification of Directors

The company confirms that qualifying third party indemnity insurance
cover has been effected in respect of directors’ and officers’ liability to
protect “insured persons” in respect of liabilities devolving on them for
wrongful acts arising in the normal conduct of the business. This was in
place throughout the last financial year and is currently in force.

Audit Information

So far as each of the directors is aware, there is no relevant information that
has not been disclosed to the company’s auditors and each of the directors
believes that all steps have been taken that ought to have been taken to
make them aware of any relevant audit information and to establish that the
company’s auditors have been made aware of that information.

Independent Auditors

A resolution to reappoint PricewaterhouseCoopers LLP as the company’s
auditors and authorising the directors to fix their remuneration will be
proposed at the Annual General Meeting.

Corporate Governance

The company’s statement on corporate governance is included in the
Corporate Governance report on page 5 of the financial statements.

By order of the Board

M. L. Morris
Company Secretary
18 May 2015

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Corporate Governance

As a board, we recognise that applying sound governance principles
in running the company is essential. We apply the Quoted Companies
Alliance corporate governance guidelines (the ‘‘QCA Code’’) which are
widely recognised as a benchmark for corporate governance of smaller
quoted companies and are therefore most appropriate to H C Slingsby
plc. The company also complies with elements of the UK Corporate
Governance Code (the ‘‘UK Code’’) to the extent that it is appropriate to
do so for a company of its nature and size. The following is a summary of
procedures supporting this approach.

Relations with Shareholders

The company is ready, where practicable, to enter into a dialogue
with institutional shareholders based on the mutual understanding of
objectives. The board also uses the Annual General Meeting (“AGM”) to
communicate with private investors. The directors are available to answer
questions raised by shareholders at the AGM. The level of proxies lodged
on each AGM resolution and the numbers for, against and withheld for
each resolution are declared by the Chairman after the resolution has
been dealt with on a show of hands.

The Board

The board meets formally on a monthly basis and special meetings are
convened to discuss matters that require urgent consideration. In view of
the size of the group and the close involvement of the directors, informal
meetings take place frequently. Accordingly, a register of all meetings has
not been kept with which to record attendances. There is a Schedule of
Matters specifically reserved for the board’s decision. There is also an
established procedure for all directors to take independent professional
advice, if necessary, at the company’s expense. Additionally, all directors
have access to the advice and services of the Company Secretary and
the company maintains directors’ and officers’ liability insurance.

The board comprises the following and includes one non-executive
director:

J. R. Waterhouse

D. S. Slingsby

C. J. Slingsby

M. L. Morris

L. R. Wright

–

Non-Executive Chairman*

Managing Director*

Sales Director

Financial Director and Company Secretary

Marketing Director

* Member of both Audit and Remuneration Committees

Going Concern

Internal Controls

The board acknowledges that it is responsible for the group’s system of
Internal Control and for reviewing its effectiveness.

Reflecting the size of the group, a key control procedure is the close day-
to-day supervision of the business by the executive directors, supported
by the senior management with responsibility for key operations.

The executive directors are involved in the budget setting process,
constantly monitoring key performance indicators such as those
highlighted in the business review and reviewing the management
accounts on a monthly basis, noting and investigating major variances. All
significant capital expenditure decisions are approved by the board as a
whole, in line with the Schedule of Matters reserved for the board.

By order of the board

M. L. Morris
Company Secretary
18 May 2015

Statement of Directors’ Responsibilities

The directors are responsible for preparing the Annual Report and the
financial statements in accordance with applicable law and regulations.

Company law requires the directors to prepare financial statements for
each financial year. Under that law the directors have prepared the group
and parent company financial statements in accordance with International
Financial Reporting Standards (IFRSs) as adopted by the European
Union. Under company law the directors must not approve the financial
statements unless they are satisfied that they give a true and fair view of
the state of affairs of the group and the company and of the profit or loss
of the group for that period. In preparing these financial statements, the
directors are required to:

• Select suitable accounting policies and then apply them consistently;

• Make judgements and accounting estimates that are reasonable and

prudent;

• State whether applicable IFRSs as adopted by the European Union

have been followed, subject to any material departures disclosed and
explained in the financial statements; and

• Prepare the financial statements on the going concern basis, unless
it is inappropriate to presume that the company and the group will
continue in business.

The directors are responsible for keeping adequate accounting records
that are sufficient to show and explain the company’s transactions and
disclose with reasonable accuracy at any time the financial position
of the company and the group and enable them to ensure that the
financial statements comply with the Companies Act 2006. They are also
responsible for safeguarding the assets of the company and the group
and hence for taking reasonable steps for the prevention and detection of
fraud and other irregularities.

The directors are responsible for the maintenance and integrity of the
company’s website. Legislation in the United Kingdom governing the
preparation and dissemination of financial statements may differ from
legislation in other jurisdictions.

By order of the board

M. L. Morris
Company Secretary
18 May 2015

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Independent Auditors’ Report to the
members of H C Slingsby plc

Report on the financial statements

returns adequate for our audit have not been received from branches
not visited by us; or

Our opinion

In our opinion:

•

H C Slingsby plc’s financial statements, and company financial
statements (“the financial statements”), give a true and fair view of the
state of the group’s and of the company’s affairs as at 31 December
2014 and of the group’s loss and the group’s and the company’s cash
flows for the year ended;

the group financial statements have been properly prepared in
accordance with International Financial Reporting Standards (IFRSs)
as adopted by the European Union;

the company financial statements have been properly prepared in
accordance with International Financial Reporting Standards (IFRSs)
as adopted by the European Union and as applied in accordance with
the provisions of the Companies Act 2006; and

•

the financial statements have been prepared in accordance with the
requirements of the Companies Act 2006.

What we have audited

H C Slingsby plc’s financial statements comprise:

•

the consolidated and company balance sheets as at 31 December
2014;

the consolidated income statement and statement of consolidated
comprehensive income and expense for the year then ended;

the consolidated and company cash flow statements, and notes to
the cash flow statements, for the year then ended;

the statements of consolidated and company changes in
shareholders’ equity for the year then ended; and

the notes to the financial statements, which include a summary of
significant accounting policies and other explanatory information.

The financial reporting framework that has been applied in their
preparation is applicable law and IFRSs as adopted by the European
Union and, as regards the parent company financial statements, as
applied in accordance with the provisions of the Companies Act 2006.

In applying the financial reporting framework, the directors have made a
number of subjective judgements, for example in respect of significant
accounting estimates. In making such estimates, they have made
assumptions and considered future events.

Opinion on other matter prescribed by
the Companies Act 2006

In our opinion the information given in the Statement by the Chairman,
Strategic Report and the Report of the Directors for the financial year for
which the financial statements are prepared is consistent with the financial
statements.

Other matters on which we are required
to report by exception

Adequacy of accounting records and information and
explanations received

Under the Companies Act 2006 we are required to report to you if, in our
opinion:

• we have not received all the information and explanations we require

for our audit; or

• adequate accounting records have not been kept by the company, or

•

the company financial statements are not in agreement with the
accounting records and returns.

We have no exceptions to report arising from this responsibility.

Directors’ remuneration

Under the Companies Act 2006 we are required to report to you if, in our
opinion, certain disclosures of directors’ remuneration specified by law are
not made. We have no exceptions to report arising from this responsibility.

Responsibilities for the financial
statements and the audit

Our responsibilities and those of the directors

As explained more fully in the Statement of Directors’ Responsibilities set
out on page 5, the directors are responsible for the preparation of the
financial statements and for being satisfied that they give a true and fair
view.

Our responsibility is to audit and express an opinion on the financial
statements in accordance with applicable law and International Standards
on Auditing (UK & Ireland) (“ISAs (UK & Ireland)”). Those standards require
us to comply with the Auditing Practices Board’s Ethical Standards for
Auditors.

This report, including the opinions, has been prepared for and only for
the company’s members as a body in accordance with Chapter 3 of Part
16 of the Companies Act 2006 and for no other purpose. We do not,
in giving these opinions, accept or assume responsibility for any other
purpose to whom this report is shown or into whose hands it may come
save where expressly agreed by our prior consent in writing.

What an audit of financial statements involves

We conducted our audit in accordance with International Standards on
Auditing (UK & Ireland) (“ISAs (UK & Ireland)”). An audit involves obtaining
evidence about the amounts and disclosures in the financial statements
sufficient to give reasonable assurance that the financial statements are
free from material misstatement, whether caused by fraud or error. This
includes an assessment of:

• whether the accounting policies are appropriate to the group’s and the
parent company’s circumstances and have been consistently applied
and adequately disclosed;

•

the reasonableness of significant accounting estimates made by the
directors; and

•

the overall presentation of the financial statements.

In addition, we read all the financial and non-financial information in
the Report and Accounts (the “Annual Report”) to identify material
inconsistencies with the audited financial statements and to identify
any information that is apparently materially incorrect based on, or
materially inconsistent with, the knowledge acquired by us in the course
of performing the audit. If we become aware of any apparent material
misstatements or inconsistencies we consider the implications for our
report.

Arif Ahmad (Senior Statutory Auditor)
For and on behalf of PricewaterhouseCoopers LLP
Chartered Accountants and Statutory Auditors
Leeds
18 May 2015

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Consolidated Income Statement

For the year ended 31 December 2014

Revenue

Cost of sales

Gross profit

Distribution costs

Administrative expenses

Operating profit before exceptional item

Exceptional item

Operating (loss)/profit

Finance income

Finance costs

Loss before taxation

Taxation

Loss for the year attributable to equity shareholders

Note

2014
£’000

12,587
(7,549)

5,038

(2,726)
(2,413)

92
(193)

(101)

7
(359)

(453)
154

(299)

2013
£’000

13,965
(8,463)

5,502

(3,124)
(2,241)

137

–

137

26
(412)

(249)
154

(95)

Basic and diluted loss per share

(29.9p)

(9.5p)

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Statement of Consolidated
Comprehensive Income and Expense
For the year ended 31 December 2014

Items that will not be reclassified to profit or loss:

Remeasurements of post-employment benefit obligations

Movement in deferred tax relating to retirement benefit obligation

Items that may be subsequently reclassified to profit or loss:

Exchange adjustment

Other comprehensive (expense)/income

Loss for the year
Total comprehensive (expense)/income for the year attributable
to equity shareholders

Note

2014
£’000

2013
£’000

(583)

116

(17)

(484)
(299)

(783)

1,641

(623)

1,024
(95)

929

Statement of Consolidated and Company
Changes in Shareholders’ Equity

Group

1 January 2013

Loss for the year

Other comprehensive income for the year

Total comprehensive income for the year

Dividends paid

1 January 2014

Loss for the year

Other comprehensive expense for the year

Total comprehensive expense for the year

Dividends paid

31 December 2014

Note

Share
capital

£’000

250

–
–

250

–
–

250

Retained
earnings

£’000

Translation
reserve

£’000

2,684

(95)
1,018

923
(190)

3,417

(299)
(467)

(766)
(120)

2,531

–
6

6
–

–
(17)

(17)
–

Total
equity

£’000

2,949

(95)
1,024

929
(190)

3,688

(299)
(484)

(783)
(120)

2,785

The translation reserve comprises foreign exchange differences arising from the translation of the financial statements of foreign operations.

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Statement of Consolidated and Company
Changes in Shareholders’ Equity continued

Company

1 January 2013

Loss for the year

Other comprehensive income for the year

Total comprehensive income for the year

Dividends paid

1 January 2014

Loss for the year

Other comprehensive expense for the year

Total comprehensive expense for the year

Dividends paid

31 December 2014

Note

Share
capital
£’000

250

–

250

–

250

Retained
earnings
£’000

2,436

(83)

1,018

935

(190)

3,181

(286)

(467)

(753)

(120)

2,308

Total
equity
£’000

2,686

(83)

1,018

935

(190)

3,431

(286)

(467)

(753)

(120)

2,558

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Consolidated Balance Sheet

As at 31 December 2014

Assets
Non-current assets
Property, plant and equipment
Intangible assets
Deferred tax asset

Current assets
Inventories
Trade and other receivables
Derivative financial asset
Cash and cash equivalents
Current tax asset

Liabilities
Current liabilities
Trade and other payables
Derivative financial instruments

Net current assets
Non-current liabilities
Retirement benefit obligation
Net assets

Capital and reserves
Called up share capital
Retained earnings
Translation reserve
Total equity

Note

2014
£’000

2013
£’000

13
14
16

17
18
20

19
20

5,952
473
1,091
7,516

1,951
1,840
4
1,940
88
5,823

(2,083)
–
(2,083)
3,740

(8,471)
2,785

250
2,531
4
2,785

6,131
594
910
7,635

1,897
2,401
–
2,325
28
6,651

(2,503)
(26)
(2,529)
4,122

(8,069)
3,688

250
3,417
21
3,688

The financial statements on pages 7 to 28 were approved by the Board of Directors on 18 May 2015 and were signed on its behalf by:

D. S. Slingsby
Director

M. L. Morris
Director

H C Slingsby plc
Registered Number: 452716

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Company Balance Sheet

As at 31 December 2014

Assets
Non-current assets

Property, plant and equipment
Intangible assets
Investments in subsidiaries
Deferred tax asset

Current assets
Inventories
Trade and other receivables
Cash and cash equivalents
Derivative financial asset
Current tax asset

Liabilities
Current liabilities
Trade and other payables
Derivative financial instruments

Net current assets
Non-current liabilities
Retirement benefit obligation
Net assets

Capital and reserves
Called up share capital
Retained earnings
Total equity

Note

2014
£’000

2013
£’000

13
14
15
16

17
18

19
20

5,952
473
–
1,085
7,510

1,951
1,844
1,691

4
88
5,578

(2,059)
–
(2,059)
3,519

(8,471)
2,558

250
2,308
2,558

6,131
594
–
910
7,635

1,897
2,402
2,048
–
26
6,373

(2,482)
(26)
(2,508)
3,865

(8,069)
3,431

250
3,181
3,431

The financial statements on pages 7 to 28 were approved by the Board of Directors on 18 May 2015 and were signed on its behalf by:

D. S. Slingsby
Director

M. L. Morris
Director

H C Slingsby plc
Registered Number: 452716

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Consolidated Cash Flow Statement

For the year ended 31 December 2014

Cash flows from operating activities
Cash (used in)/generated from operations
UK corporation tax received
Cash (used in)/generated from operating activities
Cash flows from investing activities
Interest received
Purchase of property, plant and equipment
Proceeds from sales of property, plant and equipment
Purchase of intangible assets
Net cash used in investing activities
Cash flows from financing activities
Equity dividends paid
Net cash used in financing activities
Net decrease in cash and cash equivalents
Opening cash and cash equivalents
Exchange differences
Closing cash and cash equivalents

Company Cash Flow Statement

For the year ended 31 December 2014

Note

2014
£’000

(169)
28
(141)

15
(112)
25
(35)
(107)

(120)
(120)
(368)
2,325
(17)
1,940

2014
£’000

(158)
28
(130)

15
(112)
25
(35)
(107)

(120)
(120)
(357)
2,048
1,691

2013
£’000

166
–
166

44
(64)
11
(484)
(493)

(190)
(190)
(517)
2,836
6
2,325

2013
£’000

150
–
150

44
(64)
11
(484)
(493)

(190)
(190)
(533)
2,581
2,048

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Note to the Cash Flow Statements

For the year ended 31 December 2014

Cash (used in)/generated from operating activities

Loss before tax
Net finance costs
Depreciation and amortisation
Profit on sale of property, plant and equipment
Loss on disposal of intangible assets
Pension deficit contributions
(Increase)/decrease in inventories
Decrease/(increase) in trade and other receivables
Decrease in trade and other payables
Cash (used in)/generated from operating activities

Group

Company

2014
£’000

(453)
352
424
(7)
–
(540)
(53)
549
(441)
(169)

2013
£’000

(249)
386
369
(1)
12
(540)
373
23
(207)
166

2014
£’000

2013
£’000

(436)
352
424
(7)
–
(540)
(53)
546
(444)
(158)

(234)
386
369
(1)
12
(540)
373
(11)
(204)
150

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Notes to the Accounts

Accounting Policies

Basis of Preparation

The principal accounting policies adopted in the preparation of these financial statements, which have been applied consistently to all years presented,
are set out below.

The financial statements have been prepared in accordance with International Financial Reporting Standards as adopted by the European Union (IFRS
as adopted by the EU), IFRS Interpretations Committee (IFRSIC) interpretations as adopted by the EU and with the Companies Act 2006 applicable
to companies reporting under IFRS. The financial statements are prepared under the historical cost convention on a going concern basis, except for
derivative financial instruments which are measured at fair value through profit or loss.

Accounting Developments

Impact of new International Financial Reporting Standards

The group has not adopted any new or amended IFRSs as of 1 January 2014 that have had a material impact on the amounts reported.

A number of new amendments have been issued but are not effective until 1 January 2015 and have not been early adopted. The impact of these new
standards and amendments will be assessed in detail prior to adoption, however at this stage the Directors do not anticipate them to have a material
impact on the Group.

Basis of Consolidation

The financial statements of the group consolidate the financial statements of H C Slingsby plc and its subsidiary undertaking up to 31 December 2014
using acquisition accounting. Subsidiaries are entities over which the group has the power to govern the financial and operating policies. The results of
subsidiary undertakings acquired during a financial period are included from the effective date of acquisition. Intra-Group sales, Intra-Group balances
and Intra-Group profits are eliminated fully on consolidation, and consistent accounting policies have been adopted across the group.

Exceptional Items

Exceptional items are disclosed separately in the financial statements where it is necessary to do so to provide further understanding of the financial
performance of the group. They are material items of income or expense that have been shown separately due to the significance of their nature or
amount.

Accounting Estimates and Judgements

The preparation of these financial statements requires management to make estimates and judgements that affect the reported amounts of assets and
liabilities at the date of the financial statements and the reported amounts of revenue during the reporting year. Actual results could materially differ from
these estimates.

Key sources of estimation uncertainty that could cause an adjustment to be required to the carrying amount of asset or liabilities within the next
accounting year are:

• Assumptions used in the calculation of the defined benefit pension scheme liability (note 23); and

• Allowances against the valuation of inventories (note 17).

Key judgements applied are in respect of:

• Adoption of going concern basis (see Report of the Directors); and

• Non-impairment of fixed assets based on expected future performance of the business.

Revenue and Recognition of Income

Revenue comprises the fair value of the consideration received or receivable from the sale of goods and services in the ordinary course of the group’s
activities. Revenue is shown net of value added tax, returns, rebates and discounts and after eliminating sales within the Group. Revenue is recognised
when the goods are dispatched to the customer.

Employee Benefits

The group operates a defined benefit and a defined contribution pension scheme for its employees.

Defined benefit scheme: The pension liability recognised in the balance sheet in respect of the defined benefit scheme is the present value of the
defined benefit obligation at the balance sheet date less the fair value of the scheme assets. The defined benefit obligation is calculated tri-annually
by independent actuaries using the projected unit method and this valuation is updated at each balance sheet date. The present value of the defined
benefit obligation is determined by discounting the estimated future cash outflows using interest rates of high quality corporate bonds that have terms to
maturity approximating to the terms of the related pension liability.

Past service costs are recognised immediately in income. Actuarial gains and losses arising from experience adjustments and changes in actuarial
assumptions are recognised in full in the statement of comprehensive income in the period in which they arise.

Defined contribution scheme: contributions payable are charged to the income statement in the accounting year in which they are incurred. The group
has no further payment obligations once the contributions have been paid to this scheme.

Leases

Leases in which a significant portion of the risks and rewards of ownership are retained by the lessor are classified as operating leases.

Payments made under operating leases, net of any incentives received from the lessor, are charged to the income statement on a straight-line basis

over the period of the lease.

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Notes to the Accounts continued

Accounting Policies (continued)

Foreign Currency

Items included in the financial statements of each of the group entities are measured using the currency of the primary economic environment which the
entity operates (the financial currency). The consolidated financial statements are presented in GBP which is the group’s presentation currency.

Foreign currency transactions are translated using exchange rates prevailing at the date of the transactions, or, where forward currency contracts have
been taken out, at contractual rates. Per IAS 21 assets and liabilities are translated at exchange rates ruling at the end of each financial year. Gains and
losses on retranslation are recognised in the income statement.

Assets and liabilities of subsidiaries in foreign currencies are translated into sterling at the exchange rates ruling at the end of the financial year.
Differences on exchange arising from the retranslation of the opening net investment in subsidiary companies and from the translation of the results of
those companies at average rates are recognised as a separate component of equity and are reported in the statement of comprehensive income.

Property, Plant and Equipment

Property, plant and equipment is stated at cost net of accumulated depreciation and any provision for impairment. Cost comprises purchase cost
together with any incidental costs of acquisition. Depreciation is provided to write off the cost less the estimated residual value of the property, plant
and equipment by equal instalments over their estimated useful economic lives. The asset’s residual values and useful economic lives are reviewed, and
adjusted as appropriate, at each balance sheet date. The following rates are applied:

Freehold buildings –

2% per annum

Equipment

–

10% – 33% per annum

Freehold land is not depreciated.

Intangible Assets

Intangible assets are stated at cost less accumulated amortisation. They are recognised if it is possible that there will be future economic benefits
attributable to the asset, the cost of the asset can be measured reliably, the asset is separately identifiable and there is control over the use of the
asset. The assets are amortised over the period which the group expects to benefit from these assets. Provision is made for any impairment in value if
applicable.

IT software costs are amortised on a straight-line basis at a rate of 33% per annum.

Investments

Investments are stated at cost, less provision for impairment where necessary.

Deferred Taxation

Deferred taxation is recognised, using the full liability method, on temporary differences arising between the tax bases of assets and liabilities and
their carrying amount in the consolidated financial statements. Deferred taxation is determined using tax rates (and laws) that have been enacted, or
substantially enacted, by the balance sheet date, and are expected to apply when the related deferred taxation asset is realised or deferred taxation
liability is settled.

Deferred taxation assets are recognised only to the extent that it is probable that future taxable profits will be available against which the temporary
differences can be utilised.

Inventories

Inventories which include raw materials and work in progress, finished goods and goods for resale are stated at the lower of cost and net realisable
value. Raw materials are valued on a first in-first out basis. The cost of work in progress and finished goods includes an appropriate proportion of
production overheads.

Net realisable value is based on estimated selling price less additional costs to completion or disposal. Allowance is made for obsolete, defective and
slow-moving items based on annual usage.

Trade and Other Receivables

Trade and other receivables are initially recognised at fair value and subsequently held at amortised cost less provision for impairment. Provisions are
made for the difference between the asset’s carrying amount and the present value of estimated future cash flows. Subsequent recoveries of amounts
previously written off are credited to the Income Statement.

Trade Catalogues

Expenditure relating to the production and distribution of the main catalogue and supplementary mailings is written off in the financial statements in the
year when the catalogue is produced.

Cash and Cash Equivalents

Cash and cash equivalents include cash in hand, deposits held on call with banks, other short term highly liquid investments with original maturities of
three months or less, and bank overdrafts.

Trade Payables

Trade payables are recognised initially at fair value and subsequently measured at amortised cost using the effective interest method.

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Notes to the Accounts continued

Accounting Policies (continued)

Derivative Financial Instruments

Derivative financial instruments are initially recognised at fair value on the date a contract is entered into and are subsequently remeasured at their fair
value at each balance sheet date. The resulting gain or loss is recognised directly in the income statement. The group does not apply hedge accounting
in respect of its financial instruments, nor does it trade in any financial instruments.

Share Capital

Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of new shares are shown in equity as a deduction, net of tax,
from the proceeds.

Dividends

Dividends proposed by the board are recognised in the financial statements when they have been approved by shareholders. Interim dividends are
recognised when they are paid.

Current Taxation

The tax currently payable is based on taxable profit for the year. Taxable profit differs from net profit as reported in the income statement because
it excludes items that are not taxable or deductible. The group’s liability for current tax is calculated using tax rates that have been enacted or
substantively enacted by the balance sheet date.

The tax expense for the year comprises current and deferred tax that is recognised in the Income Statement, except that it relates to items recognised in
other comprehensive income or directly in equity, in which case the tax is also recognised in other comprehensive income or directly in equity respectively.

Segmental Reporting

Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision-maker. The chief operating
decision-maker, who is responsible for allocating resources and assessing performance of the operating segments, has been identified as the steering
committee that makes strategic decisions.

The group only has one business segment, which is its principal activity, being the merchanting and distribution of industrial and commercial equipment.
All of the group’s revenue, (losses)/profits, assets and liabilities are wholly attributable to that business segment. The operations of the group are based
in the UK and the Republic of Ireland. The Republic of Ireland operation makes up less than 10% of the group’s revenue and assets.

Exceptional Item

Redundancy cost

Employee Information

Staff costs for the group during year:
Wages and salaries

Social security costs

Other pension costs (note 23)

The average monthly number of persons employed by the group during the year was:

Selling and distribution

Manufacturing

Administration

2014
£’000
193

2014
£’000

2,166

208
526
2,900

2013
£’000
–

2013
£’000

2,496

244
592
3,332

Number

8
23
85

11
25
104

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Notes to the Accounts continued

5. Directors’ Remuneration

Aggregate emoluments

Company contributions to money purchase pension scheme

Highest paid director:

Aggregate emoluments

Defined benefit scheme accrued pension at end of year

Four directors have accrued benefits under a deferred benefit scheme, (2013: four).

One director accrues benefits under a defined contribution pension scheme (2013: one).

6. Operating (Loss)/Profit

Operating (loss)/profit is stated after charging/(crediting):

(Profit)/loss on disposal of property, plant and equipment
Depreciation on property, plant and equipment
Amortisation of intangible asset
Operating lease charges
– land and buildings
– other
Foreign exchange losses on operating activities
Services provided by the company’s auditors
Fees payable to the company’s auditors for the audit of parent company and consolidated financial statements
Fees payable to the company’s auditors for other services:
Other audit services pursuant to legislation:
The audit of Company’s subsidiaries pursuant to legislation
Other services pursuant to legislation:
Tax services

Finance Income

Bank interest receivable

Finance Costs

Net retirement benefit obligation finance costs (note 23)

2014
£’000

503

19
522

127

2014
£’000

(7)
268
156

9
7
18

26
74

2014
£’000
7

2014
£’000

359
359

2013
£’000

499

20
519

126

2013
£’000
11
282
87

9
11
19

10
58

2013
£’000
26

2013
£’000

412
412

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Notes to the Accounts continued

Taxation

Current year
UK corporation tax:
– current year
– adjustments in respect of prior years

Deferred tax:
UK deferred tax:
– origination and reversal of timing differences
– adjustments in respect of prior years

Total taxation credit

Factors affecting the tax credit for the year:

2014
£’000

2013
£’000

–
(89)
(89)

(79)
14
(65)
(154)

(40)
–
(40)

(4)
(110)
(114)
(154)

The tax on the company’s loss before tax differs from the theoretical amount that would arise using the weighted average tax rate applicable to profits of
the company as follows:

Loss before taxation
Tax at the UK corporation tax rate of 21.5% (2013: 23.25%)
Expenses not deductible for tax purposes
Adjustments to tax in respect of prior years
– current year
– deferred tax
Tax credit for the year

2014
£’000

(453)
(96)
17

(89)
14
(154)

2013
£’000

(249)
(58)
14

–
(110)
(154)

The standard rate of tax in the UK changed from 23% to 21% with effect from 1 April 2014. Accordingly, the company’s losses for this accounting
period are taxed at an effective rate of 21.5%. A further reduction to 20% from 1 April 2015 was substantively enacted on 17 July 2013 and therefore
deferred tax assets and liabilities are measured at a rate of 20% as at 31 December 2014.

10. Loss Per Share

Basic loss per share is based upon a loss of £299,000 (2013: £95,000) and on 1,000,000 (2013: 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.

11. Loss for the Financial Year

As permitted by Section 408 of the Companies Act 2006, the company has not published its own income statement. The result of the company for the
financial year was a loss of £286,000 (2013: £83,000).

12. Dividends

Interim dividend paid for the 2013 financial year of 2.0p (2012: 4.0p)
Final dividend paid for the 2013 financial year of 10.0p (2012: 15.0p)

2014
£’000

20
100
120

2013
£’000

40
150
190

Dividends proposed for the 2014 financial year are set out in the Report of the Directors. These will be paid in 2015 and have not been accrued in the
financial statements.

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Notes to the Accounts continued

13. Property, Plant and Equipment

Group and Company

Cost
1 January 2013
Additions
Disposals
1 January 2014
Additions
Disposals
31 December 2014
Accumulated depreciation
1 January 2013
Charge for the year
Disposals
1 January 2014
Charge for the year
Disposals
31 December 2014
Net book amount
At 31 December 2014
At 31 December 2013
At 31 December 2012

Depreciation is charged to administrative expenses in the Income Statement.

Freehold land
and buildings
£’000

Equipment
£’000

6,594
–
–
6,594
71
–
6,665

704
104
–
808
105
–
913

5,752
5,786
5,890

2,478
64
(242)
2,300
36
(107)
2,229

2,010
178
(233)
1,955
163
(89)
2,029

200
345
468

14.

Intangible Assets

Group and Company
Cost
1 January 2013
Additions
Disposals
1 January 2014
Additions
Disposals
31 December 2014
Accumulated amortisation
1 January 2013
Charge for the year
Disposals
1 January 2014
Charge for the year
Disposals
31 December 2014
Net book amount
At 31 December 2014
At 31 December 2013
At 31 December 2012

Amortisation is charged to administrative expenses in the Income Statement.

Total
£’000

9,072
64
(242)
8,894
107
(107)
8,894

2,714
282
(233)
2,763
268
(89)
2,942

5,952
6,131
6,358

IT Software
£’000

1,541
491
(1,256)
776
35
(36)
775

1,339
87
(1,244)
182
156
(36)
302

473
594
202

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Notes to the Accounts continued

15.

Investment in Subsidiary

The company’s wholly owned subsidiary, Slingsby Mail Order Limited, is incorporated in the Republic of Ireland, the results of which are fully
consolidated in the group accounts. Its principal activity is the merchanting of materials handling and distribution equipment. The company owns 100%
of its €1 ordinary share capital. The carrying value of this investment is considered impaired and has been fully provided against.

16. Deferred Tax

The deferred tax balances in these accounts are attributable to the following:

Pension liability
Short term timing differences
Rolled over capital gain

Group

Company

2014
£’000

1,694
(418)
(185)
1,091

2013
£’000

1,614
(519)
(185)
910

2014
£’000

1,694
(424)
(185)
1,085

2013
£’000

1,614
(519)
(185)
910

Deferred tax assets are recognised only to the extent that it is probable that future taxable profits will be available against which the temporary
differences can be utilised. Deferred tax assets and liabilities are offset where there is a legally enforceable right to offset and there is an intention to
settle the balance net.

Movements in deferred tax assets/(liabilities) are as follows:

Group and Company
1 January 2013
(Charged)/credited to income statement
Credited to equity
1 January 2014 – Group and Company
(Charged)/credited to income statement
Credited to equity
31 December 2014 – Group

Company
1 January 2014
(Charged)/credited to income statement
Credited to equity
31 December 2014

17.

Inventories

Group and Company
Raw materials and work in progress
Finished goods and goods for resale

Pension
liability
£’000

2,263
(26)
(623)
1,614
(36)
116
1,694

Pension
liability
£’000

1,614
(36)
116
1,694

Short term
timing
differences
£’000

Rolled over
capital gain
£’000

(631)
112
–
(519)
101
–
(418)

Short term
timing
differences
£’000

(519)
95
–
(424)

(213)
28
–
(185)
–
–
(185)

Rolled over
capital gain
£’000

(185)
–
–
(185)

2014
£’000

198
1,753
1,951

Total
£’000

1,419
114
(623)
910
65
116
1,091

Total
£’000

910
59
116
1,085

2013
£’000

169
1,728
1,897

Inventories are presented net of provisions for write-downs, based on management’s estimate of net realisable value. The amount charged to the
income statement in respect of write-downs of inventories was £11,000 (2013: £26,000). The cost of inventories recognised as an expense and
included in the group’s cost of sales was £7,159,000 (2013: £8,000,000) and £6,790,000 (2013: £7,691,000) for the company. The provision for
obsolete stock at the year end is £411,000 (2013: £400,000).

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Notes to the Accounts continued

18. Trade and Other Receivables

Trade receivables
Receivables from subsidiary
Prepayments

Group

Company

2014
£’000

1,626
–
214
1,840

2013
£’000

1,941
–
460
2,401

2014
£’000

1,590
43
211
1,844

2013
£’000

1,892
59
451
2,402

Trade and other receivables are non-interest bearing. There is no material difference between the carrying amount and the fair value of trade and other
receivables.

Trade receivables are presented net of provision for doubtful trade receivables. Provisions are estimated by management based on past default
experience and other factors as considered appropriate. The credit quality of financial assets that are neither past due nor impaired can be assessed by
reference to external credit ratings or to historical information about counterparty default rates.

Movements on the group and company provisions for impairment of trade receivables are:

At 1 January
Provision made for impaired receivables
Unused provision reversed
Receivables written off during the year as uncollectable
At 31 December

Group

Company

2014
£’000

18
19
(9)
(12)
16

2013
£’000

3
59
(7)
(37)
18

2014
£’000

18
19
(9)
(12)
16

2013
£’000

3
59
(7)
(37)
18

Receivables due from subsidiary were not impaired at 31 December 2014 and 31 December 2013.

At 31 December 2014 group trade receivables of £16,000 (2013: £18,000) and company trade receivables of £16,000 (2013: £18,000) were impaired.
The amount of provision is the full gross amount due. The receivables are considered to be impaired as they have either been disputed by the respective
customers or the customers are in financial difficulty. The ageing of these receivables is as follows:

Up to three months over terms
Over three months over terms

Group

Company

2014
£’000

2
14
16

2013
£’000

3
15
18

2014
£’000

2
14
16

2013
£’000

3
15
18

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Notes to the Accounts continued

18. Trade and Other Receivables (continued)

At 31 December 2014 group trade receivables of £768,000 (2013: £910,000) and company trade receivables of £750,000 (2013: £892,000) were past
due but not impaired. Overdue receivables against which no provision has been made relate to customers for whom there is no recent history of default
or any other indication that settlement will not be forthcoming. The ageing of these receivables is as follows:

Up to three months over terms
Over three months over terms

Group

Company

2014
£’000

734
34
768

2013
£’000

907
3
910

2014
£’000

716
34
750

2013
£’000

889
3
892

Receivables that are neither past due nor impaired are within credit limits for the respective customer and the directors are not aware of any reasons
that indicate the amounts due are disputed or not collectable. The maximum exposure to credit risk at the reporting date is the fair value of each class
of receivable shown above. The group does not hold any collateral as security.

The carrying amounts of the group’s and company’s receivables are denominated in the following currencies:

Pound sterling
Euro

19. Trade and Other Payables

Trade payables
Other taxation and social security payable
Other payables
Accruals

Group

Company

2013
£’000

2,343
58
2,401

2014
£’000

1,844
–
1,844

Group

Company

2013
£’000

1,920
311
15
257
2,503

2014
£’000

1,664
219
12
164
2,059

2013
£’000

2,402
–
2,402

2013
£’000

1,918
300
15
249
2,482

2014
£’000

1,801
39
1,840

2014
£’000

1,670
230
12
171
2,083

Trade and other payables are non-interest bearing. There is no material difference between the carrying amount and the fair value of trade and other
payables.

20. Derivative Financial Instruments

Forward foreign currency contracts and options

Assets

Liabilities

2014
£’000

2013
£’000

–

2014
£’000

–

2013
£’000

Gains and losses on the carrying value of forward foreign currency contract assets and liabilities are recognised in the income statement. The forward
foreign currency contracts existing at the year end mature in 2015. They have been valued using year end market data.

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Notes to the Accounts continued

21.

Financial Risk Management

In the normal course of business the group and company is exposed to certain financial risks, principally foreign exchange risk, interest rate risk, liquidity
risk and credit risk.

Foreign Exchange Risk

The group and company enters into forward foreign currency contracts to eliminate certain currency exposures that arise on purchase contracts
denominated in foreign currencies.

Interest Rate Risk

The group’s and company’s exposure to interest rate risk arises on cash and short term deposits and is managed through the appropriate mix of fixed
and floating rate interest rates. Cash deposits are placed for varying terms depending upon interest rates and yields based principally on LIBOR rates.
Cash at bank yields interest based principally on LIBOR rates.

Liquidity Risk

In the normal course of business the group and company is exposed to liquidity risk. The objective is to ensure that sufficient resources are available to
fund short term working capital and longer term strategic requirements. This is achieved through the use of an appropriate mix of short, medium and
long term deposits and investments.

Credit Risk

Credit risk principally arises on cash deposits and trade receivables. The credit risk arising on cash deposits is limited because the counterparties are
financial institutions with high credit ratings assigned by international credit rating agencies. The credit risk arising on trade receivables is spread over
large numbers of customers. There are no significant concentrations of credit risk.

Sensitivity Analysis

There is not expected to be a material impact on reported results and the balance sheet relating to the above risks.

22. Capital Risk Management

The capital structure of the group consists of cash and equity. The group’s objectives when managing capital are to safeguard the group’s ability to
continue as a going concern in order to provide returns for shareholders and benefits for other stakeholders and to maintain an optimal capital structure
to reduce the cost capital. In order to maintain the capital structure the group may adjust the amount of dividends paid to shareholders.

23. Pension Commitments

Group and Company

Retirement Benefit Obligations

At 31 December 2014 H C Slingsby plc (“the Company”) operated pension schemes for the benefit of its employees. The schemes are provided
through both defined benefit and defined contribution arrangements. This disclosure is concerned only with the defined benefit arrangement, the H C
Slingsby plc Retirement Benefits Scheme (“the Scheme”). The liability associated with the Scheme is material to the Company.

The Company’s objective is for the Scheme to target 100% funding on a basis that should ensure that benefits can be paid as they fall due.

Any shortfall in the assets directly held by the Scheme, relative to its funding target, will be financed over a period that ensures the contributions are
reasonably affordable to the Company. The expected contribution to the Scheme over the 2015 fiscal year is £500,000 (plus administration and other
expenses).The defined benefit scheme was closed to new entrants in 2006 and to future accrual in 2009.

Nature of Scheme

The Scheme targets a pension paid throughout life. The amount of pension depends on how long employees are active members of the scheme and
their salary when they leave the scheme (a ‘‘final salary’’ plan). The pension receives inflation-linked increases in the years before retirement. Once in
payment, pensions either do not increase or increase in line with inflation or a fixed rate. The Scheme was closed to future accrual in 2009.

It is governed by a Board of Trustees (the “Trustee Board”) that has control over its operation, funding and investment strategy. The Trustee Board
is now chaired by an independent representative Richard Sacre (following resignation of Dominic Slingsby, Christian Slingsby and Ray Hudson) and
composed of nominees of the Company and elected Scheme members. The Trustee Board will consult with the Company on certain matters.

Funding the liabilities

UK legislation requires the Trustee Board to carry out valuations at least every three years and to target full funding against a basis that prudently reflects
the Scheme’s risk exposure. The most recent valuation was carried out as at 1 January 2014 and a shortfall of £7.5m against the Trustee Board’s
funding objective was identified. The Company agreed to pay annual contributions of £540,000 (£500,000 in 2015) to remove the shortfall over 14 years.

The weighted average duration of the defined benefit obligation is 20.4 years.

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Notes to the Accounts continued

23. Pension Commitments (continued)

Investment strategy

Approximately 60% of the Scheme’s assets are held in equity type assets, and 40% are held in long term fixed interest and inflation linked securities.
Included within the fair value of the Scheme assets are 30,061 of the company’s shares, with a fair value of £120,000 as at 31 December 2014.

The Scheme’s liabilities are calculated using a discount rate set with reference to corporate bond yields; if Scheme assets underperform this yield, this
will increase the deficit. The Scheme holds a significant proportion of equities, which are expected to outperform corporate bonds in the long term while
providing volatility and risk in the short term. As the Scheme matures, the expectation is that the Trustee Board would reduce the level of investment risk
by investing more in assets that better match the liabilities. In essence this would see a gradual sale of equities and the purchase of gilts and corporate
bonds. The company is of the view that, due to the long term nature of the Scheme’s liabilities, it is appropriate to continue with a degree of equity
investment so as to manage the Scheme’s long term liabilities efficiently.

The Trustee Board has derived its investment strategy, in consultation with the company, so as to reflect the Scheme’s long term liabilities. At the current
time approximately 40% of the Scheme’s assets are invested in long term fixed interest and inflation linked securities of a duration that broadly matches
the duration of benefit payments. The balance is invested in a diversified portfolio of global equity type assets. Both the Trustee Board and the company
believe that equities offer the best returns over the long term with an acceptable level of risk. The Scheme’s investments are well diversified, such that
the failure of any single investment would not have a material impact on the overall level of assets.

It should be noted that the Trustee Board has sole responsibility for setting the investment strategy for the Scheme, albeit the company is consulted
over any change to investment strategy. The processes used to manage risks within the Scheme have not changed from previous periods. Derivatives
are not used to manage risks within the Scheme.

Other risks

Actions taken by the local regulator, or changes to European legislation, could result in stronger local funding standards, which could materially affect
the company’s cash flow.

There is a risk that changes in the assumptions for discount rate, price inflation or life expectancy could result in an increase in the deficit in the Scheme.
Other assumptions used to value the defined benefit obligation are also uncertain, although their effect is less material.

Winding up

Although currently there are no plans to do so, with the company’s approval, the Trustees could choose to wind up the Scheme in which case the
benefits would have to be bought out with an insurance company. The cost of buying-out benefits would be significantly more than the defined benefit
obligation calculated in accordance with IAS 19 (revised).

The measurement of the company’s net defined benefit liability is particularly sensitive to changes in certain key assumptions, which are:

Discount rate

Inflation

Mortality rates

This has been selected following actuarial advice received, taking into account the duration of the liabilities. An increase
or decrease in the discount rate of 0.25% would result in a decrease or increase of approximately £1.1m in the present
value of the defined benefit obligation.

The methodology used to derive the assumption adopted is consistent with discount rate methodology. An increase
or decrease in the inflation rate of 0.25% would result in an increase or decrease of approximately £1m in the present
value of the defined benefit obligation.

The mortality assumptions adopted are based on actuarial advice received and reflect the most recent information as
appropriate. The assumptions used indicate that the future life expectancy of a male (female) pensioner reaching age
65 in 2014 would be 21.9 (24.3) years and the future life expectancy from age 65 for a male (female) non-pensioner
member currently aged 45 of 23.7 (26.2) years.

The increase or decrease in the present value of the defined benefit obligation due to a member living one year longer,
or one year less, would be approximately £0.7m.

The methods used to carry out the sensitivity analyses presented above for the material assumptions are the same as those the company has used
previously. The calculations alter the relevant assumption by the amount specified, whilst assuming that all other variables remained the same. This
approach is not necessarily realistic, since some assumptions are related: for example, if the scenario is to show the effect if inflation is higher than
expected, it might be reasonable to expect that nominal yields on corporate bonds will increase also. However, it enables the reader to isolate one effect
from another.

Year ended 31 December 2014

The company’s policy is to recognise actuarial gains and losses immediately in full each year. The company operates a scheme in the UK with a final
salary section. A full actuarial valuation was carried out as at 1 January 2014 and updated to 31 December 2014 by a qualified independent actuary.

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Notes to the Accounts continued

23. Pension Commitments (continued)
Reconciliation of the present value of the defined benefit obligation

Present value of defined benefit obligation at beginning of year
Interest cost
Effect of changes in financial assumptions
Benefits paid
Present value of defined benefit obligation at end of year

Reconciliation of fair value of scheme assets

Fair value of scheme assets at start of year
Interest income
Return on scheme assets
Contributions by the Company
Benefits paid
Fair value of scheme assets at end of year

Amounts to be recognised in the balance sheet

Present value of funded obligation
Fair value of scheme assets
Net liability in balance sheet

Amounts to be recognised in the income statement

Interest on obligation
Interest income on scheme assets
Total expense

2014
£’000

20,649
935
1,455
(642)
22,397

2014
£’000

12,580
576
872
540
(642)
13,926

2014
£’000

22,397
(13,926)
8,471

2014
£’000

935
(576)
359

2013
£’000

21,669
914
(1,092)
(842)
20,649

2013
£’000

11,831
502
549
540
(842)
12,580

2013
£’000

20,649
(12,580)
8,069

2013
£’000

914
(502)
412

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Notes to the Accounts continued

23. Pension Commitments (continued)
Total amount recognised in the statement of consolidated income SOCI

Actuarial loss/(gain)
Actuarial loss/(gain) recognised in SOCI

Pension cost
Defined benefit scheme
Defined contribution scheme

Scheme assets

Equities
Gilts and bonds
Total scheme assets
Expected rate of return on scheme assets

2014
£’000

583
583

2014
£’000

378
148
526

2013
%

60
40
100

2013
£’000

(1,641)
(1,641)

2013
£’000

433
159
592

2013
£’000

7,541
5,039
12,580
4.6%

2014
%

57
43
100

2014
£’000

7,993
5,933
13,926
3.7%

At 31 December 2014 the scheme assets were invested in a diversified portfolio that consisted primarily of equity and debt securities. The fair value of
the scheme as a percentage of total scheme assets and target allocations is set out above.

Amount of Company related investments included in fair value of assets

Company’s own financial instruments

2014
£’000

120

2013
£’000

120

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Notes to the Accounts continued

23. Pension Commitments (continued)
Principal actuarial assumptions at the Balance Sheet date:

The assumptions as at the reporting date are used to determine the present value of the benefit obligation at that date. The key financial assumptions
are set out below:

Discount rate
Long term rate of return on assets
RPI Inflation
CPI Inflation
Pension increases:
– Non-Executive pension accrued before 1 January 1992

(0% fixed)

– Non-Executive pension accrued after 1 January 1992

(RPI max 5%)

– Executive pension accrued before 1 January 1992

(4% fixed)

– Executive pension accrued after 1 January 1992

(RPI min 4%, 5% max)

Pre and post retirement mortality
Retiring today:
– Males
– Females
Retiring in 20 years
– Males
– Females
Cash commutation

2014

3.70%
3.70%
3.10%
2.10%

0.00%

3.00%

4.00%

4.20%

86.9
89.3

2013

4.60%
4.60%
3.40%
2.50%

0.00%

3.30%

4.00%

4.20%

87.1
89.5

88.7
91.2
25% of pension at
age 65 at a rate of 12.5:1

88.8
91.5
25% of pension at
age 65 at a rate of 12.5:1

Mortality Assumption; Base mortality table

– Males – standard table SINMA (appropriate to the members’ years of birth)

– Females – standard table SINFA (appropriate to the members’ years of birth)

A scaling factor of 105% has been applied to the notes under the standard tables. An allowance for future improvements has been made in line with the
CMI 2013 Core Regulations assuming a long term annual note of improvement in mortality rates of 1.25% for men and women.

Defined Contribution Scheme

The company commenced the operation of a defined contribution scheme on 1 October 2006. Contributions payable by the company to the defined
contribution scheme of £148,000 (2013: £159,000) have been charged to operating profit.

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Notes to the Accounts continued

24. Share Capital

Ordinary shares of 25p
Authorised
At 1 January and 31 December
Allotted, called up and fully paid
At 1 January and 31 December

25. Operating Lease Commitments

2014
Number

2014
£’000

2013
Number

1,200,000

1,000,000

300

250

1,200,000

1,000,000

2013
£’000

300

250

At 31 December 2014, the group had the following outstanding future aggregate minimum lease payments under non-cancellable operating leases for
land and buildings as follows:

Operating leases commitments:
– within one year
– in more than one year but less than five years

Operating lease charges recognised in the income statement as shown in note 6.

26. Related Party Transactions

Key Management

2014
£’000

16
–

2013
£’000

20
–

Key management personnel comprise the group’s executive and non-executive directors. Their remuneration is set out in note 5.

There were no other transactions with key management.

Company – Transactions With Subsidiary

Sales amounting to £369,000 (2013: £308,000) were made by H C Slingsby plc to Slingsby Mail Order Limited.

Amounts due from Slingsby Mail Order Limited at 31 December 2014 were £43,000 (2013: £59,000).

27. Post Balance Sheet Event

On 27 March 2015, the Company purchased 100% of the share capital of ESE Direct Limited. Consideration was £3.9m on condition that ESE had
£600,000 of cash surplus to its working capital requirements.

ESE is a profitable company operating in the same sector. The acquisition presents the group with the opportunity to diversify its brand portfolio and
achieve economies of scale, particularly in the combined businesses’ supply chain.

Due to the proximity of the timing of the acquisition to the preparation of these financial statements, and that the final consideration is subject to
adjustment based on the preparation of financial accounts for ESE as at 31 March 2015, initial accounting for the business combination is incomplete. It
has, therefore not been possible to prepare the full disclosures as required by IFRS 3 including the amount of the final consideration and the fair values
of assets and liabilities.

As at 31 December 2014, ESE had unaudited net assets of £621,986.

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Five Year Summary

Income Statement
Turnover
Gross profit
Operating profit before exceptional item
Exceptional item
(Loss)/profit before tax
(Loss)/profit for the financial year
(Loss)/earnings per share – basic and diluted

Dividend Per Ordinary Share*:
– Interim
– Final

Cash Flow Statement
Cash (used in)/generated by operating activities

Balance Sheet
Net current assets
Net assets
Cash and cash equivalents

2014
£’000

12,587
5,038
92
(193)
(453)
(299)
(29.9p)

2.0p
4.0p

2013
£’000

13,965
5,502
137
–
(249)
(95)
(9.5p)

2.0p
10.0p

2012
£’000

2011
£’000

2010
£’000

14,588
6,155
489
129
102
172
17.2p

4.0p
15.0p

15,221
6,779
633
–
422
320
32.0p

4.0p
28.0p

16,652
7,380
1,259
–
1,082
717
71.7p

5.0p
35.0p

(169)

166

1,041

(81)

1,344

3,740
2,785
1,940

4,122
3,688
2,325

4,808
2,949
2,836

5,147
4,397
2,439

5,162
6,169
3,420

* Dividends per ordinary share are stated in respect of the years to which they relate. This is not the same as the years in which they are recognised in

the financial statements.

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Notice of Annual General Meeting

Notice is hereby given that the sixty-seventh Annual General Meeting of H C Slingsby plc will be held at the Marriot Hollins Hall Hotel & Country Club,
Hollins Hill, Baildon, Shipley, West Yorkshire, BD17 7QW on Thursday 18 June 2015 at 10.00 am.

You will be asked to consider and vote on the resolutions below.

1. To receive the report and financial statements of the Company for the year ended 31 December 2014.

2. To approve payment of a final dividend in the sum of 4.0p per ordinary share.

3. To reappoint PricewaterhouseCoopers LLP as auditors to the group and authorise the directors to fix their remuneration.

4. To reappoint as a director Mr C. J. Slingsby who will be retiring under the company’s articles of association at the meeting.

5. To reappoint as a director Mr L. R. Wright who will be retiring under the company’s articles of association at the meeting.

By Order of the Board

M. L. Morris
Company Secretary
H C Slingsby plc
Registered Office: Otley Road, Baildon, Shipley, BD17 7LW
18 May 2015

Appointment of Proxies

1. As a member of the company, you are entitled to appoint a proxy or proxies (see note 3 below) to exercise all or any of your rights to attend, speak
and vote at the meeting and you should have received a proxy form with this notice of meeting. You can only appoint a proxy using the procedures
set out in these notes and the notes to the proxy form.

2. A proxy does not need to be a member of the company but must attend the meeting to represent you. Details of how to appoint the Chairman of

the meeting or another person as your proxy using the proxy form are set out in the notes to the proxy form. If you wish your proxy to speak on your
behalf at the meeting you will need to appoint your own choice of proxy (not the Chairman) and give your instructions directly to them.

3. You may appoint more than one proxy provided each proxy is appointed to exercise rights attached to different shares within your overall

shareholding. You may not appoint more than one proxy to exercise rights attached to any one share. To appoint more than one proxy, each different
proxy appointment form must be received by Capita Asset Services no later than 48 hours before the time appointed for the meeting.

4. If you do not give your proxy an indication of how to vote on any resolution, your proxy will vote or abstain from voting at his or her discretion. A vote
withheld is also effectively an abstention; the vote will not be counted in the calculation of votes for or against the resolution. Your proxy will vote (or
abstain from voting) as he or she thinks fit in relation to any other matter which is put before the meeting.

5. The notes to the proxy form explain how to direct your proxy how to vote on each resolution or withhold their vote. To appoint a proxy using the

proxy form, the form must be:

— completed and signed;

— sent or delivered to Capita Asset Services at PXS, 34 Beckenham Road, Beckenham, Kent, BR3 4TU; and

— received by the Registrars no later than 48 hours before the time appointed for the meeting.

In the case of a member which is a company, the proxy form must be executed under its common seal or signed on its behalf by an officer of the
company or an attorney for the company.

Any power of attorney or any other authority under which the proxy form is signed (or a duly certified copy of such power or authority) must be included
with the proxy form.

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Appointment of Proxy by Joint Members

6. In the case of joint holders, where more than one of the joint holders purports to appoint a proxy, only the appointment submitted by the most senior
holder will be accepted. Seniority is determined by the order in which the names of the joint holders appear in the company’s register of members in
respect of the joint holding (the first-named being the most senior).

Changing Proxy Instructions

7. To change your proxy instructions simply submit a new proxy appointment using the methods set out above. Note that the cut-off time for receipt of
proxy appointments (see above) also applies in relation to amended instructions; any amended proxy appointment received after the relevant cut-off
time will be disregarded.

Where you have appointed a proxy or proxies and would like to change the instructions, please contact Capita Asset Services at 34 Beckenham
Road, Beckenham, Kent, BR3 4TU.

If you submit more than one valid proxy appointment in respect of the same shares, the appointment received last before the latest time for the
receipt of proxies will take precedence.

Termination of Proxy Appointments

8. In order to revoke a proxy instruction you will need to inform the company by sending a signed notice clearly stating your intention to revoke a proxy
appointment to the Registrars at Capita Asset Services, PXS, 34 Beckenham Road, Beckenham, Kent, BR3 4TU. In the case of a member which
is a company, the revocation notice must be executed under its common seal or signed on its behalf by an officer of the company or an attorney
for the company. Any power of attorney or any other authority under which the revocation notice is signed (or a duly certified copy of such power or
authority) must be included with the revocation notice.

The revocation notice must be received by the Registrars no later than 48 hours before the time appointed for the meeting.

If you attempt to revoke appointment but the revocation is received after the time specified then, subject to the paragraph directly below, your proxy
appointment will remain valid.

Appointment of a proxy does not preclude you from attending the meeting and voting in person. If you have appointed a proxy or proxies and attend
the meeting in person, your proxy appointment(s) will automatically be terminated.

Communication

9. Except as provided above, members who wish to communicate with the company in relation to the meeting should contact Mr Morgan L. Morris by

email at morgan.morris@slingsby.com or by telephone on (01274) 535030.

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Shareholder Notes

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24098.04 15 May 2015 2:46 PM Proof 8Statement by the Chairman 1Strategic Report 2Report of the Directors 4Corporate Governance 5Statement of Directors’ Responsibilities 5Independent Auditors’ Report 6Consolidated Income Statement 7Statement of Consolidated Comprehensive Income and Expense 8Statements of Consolidated and Company Changes in Shareholders’ Equity 8Consolidated Balance Sheet 10Company Balance Sheet 11Consolidated Cash Flow Statement 12Company Cash Flow Statement 12Note to the Cash Flow Statements 13Notes to the Accounts 14Five Year Summary 29Notice of Annual General Meeting 30Notes to the Notice of Annual General Meeting 30Business system & e-commerce solutionsAs part of our ongoing commitment to offer service of the highest quality, we have invested in a sophisticated new business and e-commerce solution.Our new business system has enabled us to streamline our business processes which allow us to offer an even better service for our customers both on and offline.Our new e-commerce solution gives our customers a vastly improved user experience through an improved search functionality, an advanced multinavigation and filtering system, and extensive advice and information.Annual Report & Accounts | 2014 | HC Slingsby plcSlingsby Annual Report 2014 Proof 8.indd 415/05/2015 14:47:26HC Slingsby plc
T: 01274 535030
F: 01274 535035
W: www.slingsby.com
E: sales@slingsby.com

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