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2023 ReportHC Slingsby plc Report & Accounts for the year ended 31st December 2015 Solicitors Squire Patton Boggs (UK) LLP 2 Park Lane Leeds LS3 1ES Financial Advisors & Brokers Allenby Capital Limited 3 St. Helens Place London EC3A 6AB Website & E-Mail The company’s website address is: www.slingsby.com The company’s e-mail address is: sales@slingsby.com Directors & Advisors Directors J. R. Waterhouse – Executive Chairman D. S. Slingsby – Operations Director M. L. Morris – Financial 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 Registrars plc The Registry 34 Beckenham Road Beckenham Kent BR3 4TU Independent Auditors PricewaterhouseCoopers LLP Benson House 33 Wellington Street Leeds LS1 4JP We are one of the UK market leaders in the distance selling of industrial & commercial equipment. 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. Contents Statement by the Chairman Strategic report Report of the Directors Corporate Governance Statement of Directors’ Responsibilities Independent Auditors’ Report 1 2 4 6 7 8 Consolidated Income Statement 10 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 Notice of Annual General Meeting Notes to the Notice of Annual General Meeting 11 12 13 14 15 16 16 17 36 37 39 Contents Report & Accounts 2015 | HC Slingsby plc Report & Accounts 2015 | HC Slingsby plc Statement by the Chairman In my 2015 half year statement I reported a pre-tax trading loss (before exceptional items) of £0.15m on sales of £7.7m. Sales in the autumn did show some improvement before falling away in the last two months of the year. The full year pre-tax trading loss (before exceptional items) was £0.35m (2014: £0.26m) on sales of £17.1m (2014: £12.6m). Together with the exceptional restructuring cost and costs associated with the acquisition of ESE of £281,000, the full year pre-tax loss for 2015 was £0.63m (2014: £0.45m). 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. The consideration was £3.4m net of surplus cash on acquisition. This was financed through a combination of cash and asset backed finance. ESE contributed £4.8m of turnover and £0.13m profit before tax to the group following its acquisition (prior to amortisation of intangible assets arising on acquisition). Whilst ESE’s performance since acquisition has fallen short of initial expectations, we expect that recent management changes and the realisation of synergies will improve profit contribution in 2016. Sales to 30th of April 2016 for the Slingsby business are 3.3% down on the corresponding period in 2015 but there are some signs that the decline against the prior year has slowed. The market continues to be extremely competitive and we have to respond to that challenge with further significant changes in the way we do business. Your Board recognises that continuing losses are not acceptable and that urgent action is necessary to return your company to profitability. On 19 April 2016 Dominic Slingsby stood down as Managing Director of H C Slingsby plc to take up the post of Operations Director. On behalf of all shareholders I thank him for his many years of service as Managing Director. We shall seek a new Managing Director but in the meantime I have taken responsibility for the group as Interim Executive Chair- man until the new Managing Director is in post. We shall in the meantime also seek one or more new Non-Executive Directors to strengthen our Board and help our recovery. When the new Board is complete I expect to retire from the Company. Lee Wright, Sales and Marketing Director, has also resigned from the Board, on 19 May 2016, and I thank him for his many years of service as a director. On behalf of the Board I would once again like to thank all our loyal staff in both Bradford and in Norwich after another difficult year. All their experience and ingenuity will be required to turn your company back into profit. In view of the continuing loss in 2015, the Board is unable to recommend a final dividend for the year (2014: 6p). These are difficult times for your Company as we strive to adapt to meet the challenges of today’s market and I ask that shareholders show their support for the Board’s recovery plan by re-electing all the Directors offering themselves for re-election at the Annual General Meeting on 30 June. J. R. Waterhouse Executive Chairman 25 May 2016 Report & Accounts 2015 | HC Slingsby plc 1 Report & Accounts 2015 | HC Slingsby plcReport & Accounts 2015 | HC Slingsby plcHC Slingsby plc 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 2015, 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 2016 we plan to further invest in our pricing strategy across the group. Our acquisition of ESE Direct Limited provides the opportunity to differentiate our core value proposition with a second brand in the highly competitive web sales arena. The acquisition fits directly into our core operations and we expect to continue to generate synergies to augment ESE’s contribution to group profitability. 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. 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 2015 35.5% (27.4%) (3.7%) 36.6% 2014 (9.9%) (16.3%) (3.6%) 40.0% Notes: Sales growth includes sales from ESE Direct Limited acquired on 27 March 2015. Comparable sales growth was (1.7%). Return on capital employed is calculated as loss before taxation over the total equity at the year end. Excluding ESE the comparative is (28.3%). Return on sales is calculated as loss before taxation over revenue. Excluding ESE the comparative is (5.2%). A review of the business is included in the Statement by the Chairman on page 1. 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 uncertain economic environment could result in a general reduction in business activity and a consequent loss of income for the group. The main risk arising from the group’s financial instruments is liquidity risk. The group ensures that it has sufficient bank facilities 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. The group’s borrowings are on floating rates of interest and so the cost of these facilities would increase should interest rates rise. The Board keeps these risks under regular review. 2 Report & Accounts 2015 | HC Slingsby plc Strategic Report continued 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 Following the significant investment made in our IT system, we continue to work with our IT partners to further augment our systems. During 2016, we plan to implement the Slingsby business system at ESE Direct Limited. Competition 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. 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 The costs of the acquisition of ESE Direct Limited resulted in an exceptional item of £193,000. A further exceptional item of £88,000 related to redundancy and compensation costs (total exceptional items £281,000). In the prior year, redundancy costs were £193,000. 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 cash flows and balance sheet. Contributions to this scheme totalled £500,000 during 2015 and, together with the substantial costs of running the scheme, represents a significant commitment for the Group to meet. 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. By order of the Board M. L. Morris Company Secretary 25 May 2016 3 Report & Accounts 2015 | HC Slingsby plcReport & Accounts 2015 | HC Slingsby plcHC Slingsby plc Report of the Directors The directors are pleased to present their annual report and audited consolidated financial statements for the year ended 31 December 2015. 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 as follows: J.R. Waterhouse C.J. Slingsby (resigned 17 June 2015) D.S. Slingsby L.R. Wright (resigned 19 May 2016) M.L. Morris (appointed 13 February 2015) R.G. Hudson (resigned 13 February 2015) Dividends The following dividends have been proposed for the 2015 financial year: An interim dividend of nil pence per share (2014: 2p per share) The directors recommend a final dividend of nil pence per share (2014: 4p per share) £’000 - - In addition to the above, C. J. Slingsby and D. S. Slingsby together have a non-beneficial interest in respect of 64,000 (2014: 64,000) ordinary shares. 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 25 May 2016: M. Chadwick* J. Crowther Jones & Mr. T. E. Jones J. H. Ridley S. E. Slingsby M. Miller (registered in the name of Platform Securities Nominees Limited) H. Slingsby Number of ordinary Shares of 25p each Percentage Holding 180,295 18.0% 54,866 54,302 51,167 48,381 47,138 37,000 32,500 30,835 30,061 5.5% 5.4% 5.1% 4.8% 4.7% 3.7% 3.3% 3.1% 3.0% Directors’ Interests The beneficial interests of the directors and their immediate families in the shares of the company are: K. J. Williams S. Whittaker S. A. Williams Number of ordinary shares of 25p each H C Slingsby plc Retirement Benefits Scheme 31 December 2015 1 January 2015 * 80,995 registered in the name of Goodbody Stockbrokers Nominees Ltd and 99,300 in the name of Rulegale Nominees Limited J.R. Waterhouse C.J. Slingsby D.S. Slingsby R.G. Hudson L.R. Wright M.L. Morris 1,000 53,886 51,167 - 2,000 1,000 1,000 53,886 51,167 3,400 2,000 - 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 2015 and 25 May 2016. None of the directors had any beneficial interest in any contract of significance to which the company was a party, other than their employment contracts, subsisting during the year. 4 Report & Accounts 2015 | HC Slingsby plc Report of the Directors continued 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 22 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 6 of the financial statements. By order of the Board M. L. Morris Company Secretary 25 May 2016 5 Report & Accounts 2015 | HC Slingsby plcReport & Accounts 2015 | HC Slingsby plcHC Slingsby plc Corporate Governance The Board recognises the value and importance of high standards of corporate governance. Accordingly, whilst the UK Corporate Governance Code does not apply to AIM companies, the Board intends to observe the requirements of the Corporate Governance Code for small and mid-size companies (“the Code”) published by the Quoted Companies Alliance to the extent that they consider appropriate in light of the Group’s size and resources. 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: J. R. Waterhouse D. S. Slingsby M. L. Morris – – – Executive Chairman* Operations Director* Financial Director and Company Secretary * Member of both Audit and Remuneration Committees 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. 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 25 May 2016 6 Report & Accounts 2015 | HC Slingsby plc 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 25 May 2016 7 Report & Accounts 2015 | HC Slingsby plcReport & Accounts 2015 | HC Slingsby plcHC Slingsby plc Independent auditors’ report to the members of H C Slingsby plc Report on the financial statements Our opinion In our opinion: • • • • H C Slingsby plc’s group 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 2015 and of the group’s loss and the group’s and the company’s cash flows for the year then 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 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 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 in 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 returns adequate for our audit have not been received from branches not visited by us; 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. The financial statements, included within the Annual Report & Accounts (the “Annual Report”), comprise: Directors’ remuneration • • • • • the consolidated and company balance sheets as at 31 December 2015; the consolidated income statement and statement of consolidated comprehensive income and expense for the year then ended; the consolidated and company cash flow statements for the year then ended; the statement 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 the preparation of the financial statements is IFRSs as adopted by the European Union, and applicable law and, as regards the 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. 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 statement and the audit Our responsibilities and those of the directors As explained more fully in the Statement of Directors’ Responsibilities set out on page 7, 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 and 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 or to any other person to whom this report is shown or into whose hands it may come save where expressly agreed by our prior consent in writing. 8 Report & Accounts 2015 | HC Slingsby plc Independent auditors’ report to the members of H C Slingsby plc continued What an audit of financial statements involves We conducted our audit in accordance with 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 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. We primarily focus our work in these areas by assessing the directors’ judgements against available evidence, forming our own judgements, and evaluating the disclosures in the financial statements. We test and examine information, using sampling and other auditing techniques, to the extent we consider necessary to provide a reasonable basis for us to draw conclusions. We obtain audit evidence through testing the effectiveness of controls, substantive procedures or a combination of both. In addition, we read all the financial and non-financial information in 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. Randal Casson (Senior Statutory Auditor) for and on behalf of PricewaterhouseCoopers LLP Chartered Accountants and Statutory Auditors Leeds 25 May 2016 9 Report & Accounts 2015 | HC Slingsby plcReport & Accounts 2015 | HC Slingsby plcHC Slingsby plc Consolidated Income Statement For the year ended 31 December 2015 Revenue Cost of sales Gross profit Distribution costs Administrative expenses Operating (loss)/profit before exceptional item Exceptional item Operating loss Finance income Finance costs Loss before taxation Taxation Loss for the year attributable to owners of the parent Note 3 6 7 8 9 2015 £’000 17,061 (10,812) 6,249 (3,566) (2,974) (10) (281) (291) 1 (342) (632) 194 (438) 2014 £’000 12,587 (7,549) 5,038 (2,726) (2,413) 92 (193) (101) 7 (359) (453) 154 (299) Basic and diluted loss per share 10 (43.8p) (29.9p) 10 Report & Accounts 2015 | HC Slingsby plc Statement of Consolidated Comprehensive Income and Expense For the year ended 31 December 2015 Loss for the year 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 income/(expense) Note 2015 £’000 2014 £’000 24 16 (438) (299) 242 (213) (13) 16 (583) 116 (17) (484) Total comprehensive expense for the year attributable to equity shareholders (422) (783) 11 Report & Accounts 2015 | HC Slingsby plcReport & Accounts 2015 | HC Slingsby plcHC Slingsby plc Statements of Consolidated and Company Changes in Shareholders’ Equity For the year ended 31 December 2015 Group 1 January 2014 Loss for the year Other comprehensive expense for the year Total comprehensive expense for the year Dividends paid 1 January 2015 Loss for the year Other comprehensive income/(expense) for the year Total comprehensive expense for the year Dividends paid 31 December 2015 12 12 Share capital £’000 Retained earnings £’000 Translation reserve £’000 Note 250 – – – – 250 – – – – 250 3,417 (299) (467) (766) (120) 2,531 (438) 29 (409) (60) 2,062 21 – (17) (17) – 4 – (13) (13) – (9) Total equity £’000 3,688 (299) (484) (783) (120) 2,785 (438) 16 (422) (60) 2,303 The translation reserve comprises foreign exchange differences arising from the translation of the financial statements of foreign operations. Note 12 12 Share capital £’000 250 – – – – 250 – – – – 250 Retained earnings £’000 3,181 (286) (467) (753) (120) 2,308 (447) 29 (418) (60) 1,830 Total equity £’000 3,431 (286) (467) (753) (120) 2,558 (447) 29 (418) (60) 2,080 Company 1 January 2014 Loss for the year Other comprehensive expense for the year Total comprehensive expense for the year Dividends paid 1 January 2015 Loss for the year Other comprehensive income for the year Total comprehensive expense for the year Dividends paid 31 December 2015 12 Report & Accounts 2015 | HC Slingsby plc Company 1 January 2014 Loss for the year Dividends paid 1 January 2015 Loss for the year Other comprehensive expense for the year Total comprehensive expense for the year Other comprehensive income for the year Total comprehensive expense for the year Dividends paid 31 December 2015 Note 12 12 Share capital £’000 250 250 – – – – – – – – 250 Retained earnings £’000 3,181 (286) (467) (753) (120) 2,308 (447) 29 (418) (60) 1,830 Total equity £’000 3,431 (286) (467) (753) (120) 2,558 (447) 29 (418) (60) 2,080 Consolidated Balance Sheet As at 31 December 2015 Assets Non-current assets Property, plant and equipment Intangible assets Goodwill 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 Finance lease obligations Net current (liabilities)/assets Non-current liabilities Finance lease obligations Retirement benefit obligation Deferred tax liabilities Net assets Capital and reserves Share capital Retained earnings Translation reserve Total equity Note 2015 £’000 2014 £’000 13 14 14 16 17 18 20 19 21 21 24 16 25 6,102 1,279 2,409 1,446 11,236 5,952 473 - 1,694 8,119 1,778 2,340 11 192 - 4,321 1,951 1,840 4 1,940 88 5,823 (4,653) (44) (4,697) (376) (66) (8,033) (458) 2,303 250 2,062 (9) 2,303 (2,083) - (2,083) 3,740 - (8,471) (603) 2,785 250 2,531 4 2,785 The financial statements on pages 10 to 35 were approved by the Board of Directors on 25 May 2016 and were signed on its behalf by: D. S. Slingsby Director M. L. Morris Director H C Slingsby plc Registered Number: 452716 13 Report & Accounts 2015 | HC Slingsby plcReport & Accounts 2015 | HC Slingsby plcHC Slingsby plc Company Balance Sheet As at 31 December 2015 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 Finance lease obligations Net current (liabilities)/assets Non-current liabilities Finance lease obligations Retirement benefit obligation Deferred tax liabilities Net assets Capital and reserves Share capital Retained earnings Total equity Note 2015 £’000 2014 £’000 13 14 15 16 17 18 20 19 21 21 24 16 25 5,877 352 4,001 1,446 11,676 1,731 1,876 62 11 - 3,680 (4,690) (44) (4,734) (1,054) (66) (8,033) (443) 2,080 250 1,830 2,080 5,952 473 – 1,694 8,119 1,951 1,844 1,691 4 88 5,578 (2,059) - (2,059) 3,519 - (8,471) (609) 2,558 250 2,308 2,558 The financial statements on pages 10 to 35 were approved by the Board of Directors on 25 May 2016 and were signed on its behalf by: D. S. Slingsby Director M. L. Morris Director H C Slingsby plc Registered Number: 452716 14 Report & Accounts 2015 | HC Slingsby plc Consolidated Cash Flow Statement For the year ended 31 December 2015 Cash flows from operating activities Cash generated from/(used in) operations Interest payable UK corporation tax received Cash generated from/(used in) operating activities Cash flows from investing activities Interest received Purchase of property, plant and equipment Acquisition of subsidiary (net of cash acquired) 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 Capital element of finance lease payments New finance leases Proceeds from borrowings Net cash generated from / (used in) financing activities Net decrease in cash and cash equivalents Opening cash and cash equivalents Exchange differences Closing cash and cash equivalents 2015 £’000 2014 £’000 Note 171 (38) 93 226 (169) - 28 (141) 13 28 14 12 1 (198) (3,585) 112 (26) (3,696) (60) (20) 130 1,202 1,252 (2,218) 1,940 15 (112) - 25 (35) (107) (120) - - - (120) (368) 2,325 (13) (17) (291) 1,940 Cash and cash equivalents Cash Overdraft Group 2015 £’000 192 (483) (291) 2014 £’000 1,940 - 1,940 Company 2015 £’000 62 (483) (421) 2014 £’000 1,691 - 1,691 15 Report & Accounts 2015 | HC Slingsby plcReport & Accounts 2015 | HC Slingsby plcHC Slingsby plc Company Cash Flow Statement For the year ended 31 December 2015 Cash flows from operating activities Cash generated from / (used in) operations Interest payable UK corporation tax received Cash generated from / (used in) operating activities Cash flows from investing activities Interest received Purchase of property, plant and equipment Acquisition of subsidiary 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 Capital element of finance leases payments New finance leases Proceeds from borrowings Net cash generated from / (used in) financing activities Net decrease in cash and cash equivalents Opening cash and cash equivalents Closing cash and cash equivalents Note to the Cash Flow Statements For the year ended 31 December 2015 Cash generated from/(used in) operating activities Loss before tax Net finance costs Depreciation and amortisation Profit on sale of property, plant and equipment Pension deficit contributions Decrease/(increase) in inventories Decrease/(increase) in trade and other receivables Increase/(Decrease) in trade and other payables Cash generated from/(used in) operating activities 16 Note 13 14 12 2015 £’000 597 (38) 137 696 1 (176) (3,971) 112 (26) (4,060) (60) (20) 130 1,202 1,252 (2,112) 1,691 (421) 2014 £’000 (158) - 28 (130) 15 (112) - 25 (35) (107) (120) - - - (120) (357) 2,048 1,691 Group Company 2015 £’000 (632) 341 530 (99) (500) 232 29 270 171 2014 £’000 2015 £’000 2014 £’000 (453) 352 424 (7) (540) (53) 549 (441) (169) (628) (436) 342 382 (99) (500) 220 (37) 917 597 352 424 (7) (540) (53) 546 (444) (158) Report & Accounts 2015 | HC Slingsby plc Notes to the Accounts 1. 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. Despite the loss for the year and net current liabilities as at 31 December 2015, the directors’ consider that the going concern basis is appropriate given the Group’s borrowing facilities are adequate to cover the reasonably foreseeable future. Accounting Developments Impact of new International Financial Reporting Standards The group has not adopted any new or amended IFRSs as of 1 January 2015 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 2016 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 subsidiaries undertakings up to 31 December 2015 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. The group applies the acquisition method to account for business combinations. The consideration transferred for the acquisition of a subsidiary is the fair values for the assets transferred and the liabilities incurred to the former owners of the acquired. Identifiable assets acquired and liabilities and contingent liabilities assumed in a business combination are measured initially at their fair values at the acquisition date. Acquisition related costs are expensed as incurred. 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 24); 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 Recognition of intangibles in respect of business combinations (see note 28). 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. 17 Report & Accounts 2015 | HC Slingsby plcReport & Accounts 2015 | HC Slingsby plcHC Slingsby plc Notes to the Accounts continued 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. 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 Short leasehold property -- 10% 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. Brand and domain names and customer lists are amortised on a straight line basis at 5% to 33%. Goodwill Goodwill arising on acquisitions comprises the excess of the fair value of the consideration for investments in subsidiary undertakings over the fair value of the net identifiable assets acquired at the date of the acquisition. Goodwill arising on acquisitions is included in intangible assets. Goodwill is not amortised but is tested annually for impairment and carried at cost less accumulated impairment losses. Gains and losses on the disposal of an entity include the carrying amount of goodwill relating to the entity sold. Goodwill is allocated to cash-generating units for the purpose of impairment testing. Each of those cash-generating units represents the lowest level within the Group at which the associated level of goodwill is monitored for management purposes and are not larger than the operating segments determined in accordance with IFRS8 “Operating Segments”. 18 Report & Accounts 2015 | HC Slingsby plc Notes to the Accounts continued Impairment of non-financial assets Assets not subject to amortisation are tested annually for impairment. Assets that are subject to amortisation are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. An impairment loss is recognised for the amount by which the asset’s carrying amount exceeds its recoverable amount. The recoverable amount is the higher of an asset’s fair value less costs to sell and value in use. For the purposes of assessing impairment, assets are grouped at the lowest levels for which there are separately identifiable cash flows (cash generating units). Non-financial assets, other than goodwill that suffered an impairment, are reviewed for possible reversal of the impairment at each reporting date. 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. 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. 19 Report & Accounts 2015 | HC Slingsby plcReport & Accounts 2015 | HC Slingsby plcHC Slingsby plc Notes to the Accounts continued 2. 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. 3. Exceptional Item Redundancy and compensation costs Acquisition of ESE 2015 £’000 88 193 281 Costs relating to the acquisition of ESE relate to legal, accounting and advisory services together with bank facility costs. 4. Employee Information Staff costs for the company during year: Wages and salaries Social security costs Other pension costs (note 24) The average monthly number of persons employed by the company during the year was: Selling and distribution Manufacturing Administration 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 2014 £’000 193 - 193 2014 £’000 2,166 208 167 2,541 2014 Number 54 8 23 85 2015 £’000 2,771 244 167 3,182 2015 Number 82 - 30 112 2015 £’000 2014 £’000 411 19 430 130 86 503 19 522 127 85 Four directors have accrued benefits under a deferred benefit scheme (2014: four). One director accrues benefits under a defined contribution pension scheme (2014: one). Payments in respect of compensation for loss of office totalled £80,000 and are not included above. 20 Report & Accounts 2015 | HC Slingsby plc Notes to the Accounts continued 6. Operating Loss Operating loss is stated after charging/(crediting): Profit 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 – Compliance Advisory Total fees payable to company’s auditors 7. Finance Income Bank interest receivable 8. Finance Costs Interest payable on bank borrowings Interest payable on finance lease liabilities Net retirement benefit obligation finance costs (note 24) 9. 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 2015 £’000 (99) 308 222 36 4 13 40 7 10 1 58 2015 £’000 1 2015 £’000 36 2 304 342 2015 £’000 - (49) (49) (115) (30) (145) (194) 2014 £’000 (7) 268 156 9 7 18 42 6 7 19 74 2014 £’000 7 2014 £’000 - - 359 359 2014 £’000 - (89) (89) (79) 14 (65) (154) 21 Report & Accounts 2015 | HC Slingsby plcReport & Accounts 2015 | HC Slingsby plcHC Slingsby plc Notes to the Accounts continued 9. Taxation (continued) Factors affecting the tax credit for the year: 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 20.25% (2014: 21.5%) Expenses not deductible for tax purposes Adjustments to tax in respect of prior years – current year – deferred tax Tax credit for the year 2015 £’000 (632) (128) 13 (49) (30) (194) 2014 £’000 (453) (96) 17 (89) 14 (154) The standard rate of tax in the UK changed from 21% to 20% with effect from 1 April 2015. Accordingly, the company’s losses for this accounting period are taxed at an effective rate of 20.25%. Deferred tax assets and liabilities are measured at a rate of 18% as at 31 December 2015. A change to the UK corporation tax rate was announced on 16 March 2016. The change announced is to reduce the main rate to 17% from 1 April 2020. Changes to reduce the UK corporation tax rate to 19% from 1 April 2017 and to 18% from 1 April 2020 had already been substantively enacted on 26 October 2015. As the change to 17% had not been substantively enacted at the balance sheet date, its effects are not included in these financial statements. 10. Loss Per Share Basic loss per share is based upon a loss of £438,000 (2014: £299,000) and on 1,000,000 (2014: 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 £447,000 (2014: £286,000). 12. Dividends Interim dividend paid for the 2014 financial year of 2.0p (2013: 2.0p) Final dividend paid for the 2014 financial year of 4.0p (2013: 10.0p) No dividends are proposed for the 2015 financial year as set out in the Report of the Directors. 2015 £’000 20 40 60 2014 £’000 20 100 120 22 Report & Accounts 2015 | HC Slingsby plc Notes to the Accounts continued 13. Property, Plant and Equipment Group Cost 1 January 2014 Additions Disposals 1 January 2015 Additions Acquisition of subsidiary (note 28) Disposals 31 December 2015 Accumulated depreciation 1 January 2014 Charge for the year Disposals 1 January 2015 Acquisition of subsidiary Charge for the year Disposals 31 December 2015 Net book amount At 31 December 2015 At 31 December 2014 At 31 December 2013 Short Leasehold Freehold land Property and buildings Equipment £’000 £’000 £’000 Total £’000 8,894 107 (107) 8,894 198 427 (330) 9,189 2,300 36 (107) 2,229 193 313 (330) 2,405 1,955 2,763 163 (89) 268 (89) 2,029 2,942 131 196 (317) 2,039 366 200 345 154 308 (317) 3,087 6,102 5,952 6,131 - - - - 5 114 - 119 - - - 23 7 - 30 89 - - 6,594 71 - 6,665 - - - 6,665 808 105 – 913 - 105 - 1,018 5,647 5,752 5,786 HC Slingsby PLC Retirement Benefits Scheme holds a charge over the company’s freehold land and buildings. HSBC Bank plc holds charges over all of the assets and undertakings of the Group. Equipment includes the following amounts where the group is lessee under finance leases: Cost of assets subject to finance leases Accumulated depreciation 2015 £’000 144 (20) 124 2014 £’000 - - - The group leases various motor vehicles under non-cancellable finance lease agreements. The assets are leased on a term of 3 years. 23 Report & Accounts 2015 | HC Slingsby plcReport & Accounts 2015 | HC Slingsby plcHC Slingsby plc Notes to the Accounts continued 13. Property, Plant and Equipment (continued) Company Cost 1 January 2014 Additions Disposals 1 January 2015 Additions Disposals 31 December 2015 Accumulated depreciation 1 January 2014 Charge for the year Disposals 1 January 2015 Charge for the year Disposals 31 December 2015 Net book amount At 31 December 2015 At 31 December 2014 At 31 December 2013 Depreciation is charged to administrative expenses in the Income Statement. Freehold land and buildings Equipment £’000 £’000 6,594 71 – 6,665 -- – 6,665 808 105 – 913 105 – 1,018 5,647 5,752 5,786 2,300 36 (107) 2,229 174 (330) 2,073 1,955 163 (89) 2,029 131 (317) 1,843 230 200 345 Total £’000 8,894 107 (107) 8,894 174 (330) 8,738 2,763 268 (89) 2,942 236 (317) 2,861 5,877 5,952 6,131 24 Report & Accounts 2015 | HC Slingsby plc Notes to the Accounts continued 14. Intangible Assets Cost 1 January 2014 Additions Disposals 1 January 2015 Additions – Acquisition of subsidiary (note 28) 31 December 2015 Accumulated amortisation 1 January 2014 Charge for the year Disposals 1 January 2015 Charge for the year Acquisition of subsidiary (note 28) Disposals 31 December 2015 Net book amount At 31 December 2015 At 31 December 2014 At 31 December 2013 Group Group Company Brand and Domain Names and Customer Lists IT Software and trademarks Goodwill TOTAL IT Software £’000 £’000 £’000 £’000 £’000 -- -- -- -- -- -- -- -- 2,409 2,409 1,000 1,000 -- -- -- -- -- -- -- -- 2,409 -- -- -- -- -- -- 75 -- -- 75 925 -- -- 776 35 (36) 775 30 805 182 156 (36) 302 147 2 -- 451 354 473 594 776 35 (36) 775 1,030 1,805 182 156 (36) 302 222 2 -- 526 1,279 473 594 Amortisation is charged to administrative expenses in the Income Statement. Goodwill relates to the ESE Direct Limited cash generating unit (see note 28). 776 35 (36) 775 25 800 182 156 (36) 302 146 - -- 448 352 473 594 25 Report & Accounts 2015 | HC Slingsby plcReport & Accounts 2015 | HC Slingsby plcHC Slingsby plc Notes to the Accounts continued 15. Investment in Subsidiary Wholly owned subsidiary, Slingsby Mail Order Limited, is incorporated in the Republic of Ireland. The results are fully consolidated in the group financial statements. 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. On 27 March 2015 the Company acquired 100% of the issued share capital of ESE Direct Limited. The cost and carrying value of this investment is £4m which the Directors believe is supported by the underlying net assets and their future cash generation. The Company directly owns 100% of the issued share capital of the following subsidiary undertakings, registered in England and Wales except for Slingsby Mail Order Limited which is registered in the Republic of Ireland. Company Slingsby Mail Order Limited ESE Direct Limited Eastern Storage Limited ESE Projects Limited Eastern Storage Equipment Limited Slingsby Trading Post Limited Slingsby Manufacturing Limited Slingsby Metro Equipment Limited 16. Deferred Tax Business Activity Distribution of Industrial and Commercial Equipment Distribution of Industrial and Commercial Equipment Dormant Dormant Dormant Dormant Dormant Dormant The deferred tax balances in these financial statements are attributable to the following: Deferred tax asset Pension liability Deferred tax liabilities Short term timing differences Rolled over capital gain Group Company 2015 £’000 2014 £’000 2015 £’000 2014 £’000 1,446 1,694 1,446 1,694 (291) (167) (458) (418) (185) (603) (276) (167) (443) (424) (185) (609) The deferred tax asset relates to the deficit on the company’s defined benefit pension scheme. The company is making payments into this scheme to reduce the deficit and the corresponding asset will reduce in line with these reductions. As movements in the pension deficit arise from changes in actuarial assumptions as well as from deficit reduction payments (see note 24), it is difficult to forecast the movement in the related deferred tax asset. Movements in deferred tax assets/(liabilities) are as follows: Pension liability £’000 1,614 (36) 116 1,694 - (35) (213) 1,446 Short term timing Rolled over differences capital gain £’000 (519) 101 – (418) (35) 162 – (291) £’000 (185) -- – (185) - 18 – (167) Total £’000 910 65 116 1,091 (35) 145 (213) 988 Group 1 January 2014 (Charged)/credited to income statement Credited to equity 1 January 2015 – Group and Company Acquired on acquisition (note 28) (Charged)/credited to income statement Charged to equity 31 December 2015 26 Report & Accounts 2015 | HC Slingsby plc Notes to the Accounts continued 16. Deferred Tax (continued) Company 1 January 2014 (Charged)/credited to income statement Credited to equity 1 January 2015 (Charged)/credited to income statement Charged to equity 31 December 2015 Pension liability £’000 1,614 (36) 116 1,694 (35) (213) 1,446 Short term timing Rolled over differences capital gain £’000 (519) 95 – (424) 148 – (276) £’000 (185) -- – (185) 18 – (167) Total £’000 910 59 116 1,085 131 (213) 1,003 17. Inventories Group Company Raw materials and work in progress Finished goods and goods for resale 2015 £’000 215 1,563 1,778 2014 £’000 198 1,753 1,951 2015 £’000 168 1,563 1,731 2014 £’000 198 1,753 1,951 Inventories are presented net of provisions for write-downs, based on management’s estimate of net realisable value. The amount (credited)/charged to the income statement in respect of write-downs of inventories was (£24,000), (2014: £11,000). The cost of inventories recognised as an expense and included in the group’s cost of sales was £10,561,000 (2014: £7,159,000) and £6,802,000 (2014: £6,790,000) for the company. The provision for obsolete stock at the year end is £387,000 (2014: £411,000). 18. Trade and Other Receivables Trade receivables Receivables from subsidiary Prepayments Group 2015 £’000 2,013 – 327 2,340 2014 £’000 1,626 – 214 1,840 Company 2015 2014 £’000 £’000 1,642 13 221 1,876 1,590 43 211 1,844 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 2015 Provision made for impaired receivables Unused provision reversed Receivables written off during the year as uncollectable At 31 December 2015 Group 2015 £’000 16 19 (10) (7) 18 2014 £’000 18 19 (9) (12) 16 Company 2015 £’000 16 19 (10) (7) 18 2014 £’000 18 19 (9) (12) 16 Receivables due from subsidiary were not impaired at 31 December 2015 and 31 December 2014. 27 Report & Accounts 2015 | HC Slingsby plcReport & Accounts 2015 | HC Slingsby plcHC Slingsby plc Notes to the Accounts continued 18. Trade and Other Receivables (continued) At 31 December 2015 group trade receivables of £18,000 (2014: £16,000) and company trade receivables of £18,000 (2014: £16,000) 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 2015 £’000 - 18 18 2014 £’000 2 14 16 2015 £’000 - 18 18 2014 £’000 2 14 16 At 31 December 2015 group trade receivables of £866,000 (2014: £768,000) and company trade receivables of £835,000 (2014: £750,000) 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 2015 £’000 840 26 866 2014 £’000 734 34 768 2015 £’000 724 26 750 2014 £’000 716 34 750 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 Payables to subsidiary Other taxation and social security payable Other payables Accruals Debt financing and overdraft Group Company 2015 £’000 2,278 62 2,340 2014 £’000 1,801 39 1,840 2015 £’000 1,876 – 1,876 2014 £’000 1,844 – 1,844 Group Company 2015 £’000 2,248 - 338 12 370 1,685 4,653 2014 £’000 1,670 - 230 12 171 - 2,083 2015 £’000 1,768 822 236 12 167 1,685 4,690 2014 £’000 1,664 - 219 12 164 - 2,059 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. The Group’s debtor finance and overdraft facilities (provided by HSBC Bank plc) carry interest rates of 2.1% and 2.55%-4% above the prevailing Bank of England Base Rate respectively. The Group’s overdraft facility is due for renewal on 18 December 2016. The Group debtor finance facility is a total of £3m and the overdraft facility is the sum of £750,000. 28 Report & Accounts 2015 | HC Slingsby plc Notes to the Accounts continued 20. Derivative Financial Instruments Forward foreign currency contracts and options Assets Liabilities 2015 £’000 11 2014 £’000 4 2015 £’000 – 2014 £’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. 21. Borrowings Finance Leases The future minimum finance lease payments are as follows: Not later than one year Later than one year and not later than five years Total gross payments Impact of finance charges Carrying value of liability Group Company 2015 £’000 48 73 121 (11) 110 2014 £’000 - - - - - 2015 £’000 48 73 121 (11) 110 2014 £’000 - - - - - The finance lease liabilities relate to motor vehicles leased on a term of 3 years. 22. 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 its debtor finance and overdraft facilities. These are based on floating rates of interest. Accordingly should interest rates increase, the group and company’s interest cost would rise. The group does not use interest rate hedges. 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 ensuring that the group has sufficient cash and borrowing facilities in place. 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. 23. Capital Risk Management The capital structure of the group consists of cash, equity, debtor finance and overdraft. 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. This situation is monitored using budgets and by calculation of a gearing ratio (debtor financing and overdraft less cash/net assets). At 31 December 2015, the gearing ratio was 65% (2014: nil). 29 Report & Accounts 2015 | HC Slingsby plcReport & Accounts 2015 | HC Slingsby plcHC Slingsby plc Notes to the Accounts continued 24. Pension Commitments Group and Company Retirement Benefit Obligations At 31 December 2015 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 2016 fiscal year is £540,000 (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 chaired by an independent representative Richard Sacre and composed of nominees of 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 19.1 years. Investment strategy Approximately 50% of the Scheme’s assets are held in equity type assets, and 50% 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 £64,000 as at 31 December 2015. 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 50% 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. 30 Report & Accounts 2015 | HC Slingsby plc Notes to the Accounts continued 24. Pension Commitments (continued) 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 £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 £0.9m 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 2015 would be 22 (24.4) years and the future life expectancy from age 65 for a male (female) non-pensioner member currently aged 45 of 23.8 (26.3) 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 2015 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 2015 by a qualified independent actuary. 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 2015 £’000 22,397 817 (582) (639) 21,993 2015 £’000 13,926 513 (340) 500 (639) 13,960 2014 £’000 20,649 935 1,455 (642) 22,397 2014 £’000 12,580 576 872 540 (642) 13,926 31 Report & Accounts 2015 | HC Slingsby plcReport & Accounts 2015 | HC Slingsby plcHC Slingsby plc 2015 £’000 2014 £’000 21,993 (13,960) 8,033 22,397 (13,926) 8,471 Notes to the Accounts continued 24. Pension Commitments (continued) 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 Total amount recognised in the statement of consolidated income SOCI Actuarial (gain)/loss Actuarial (gain)/loss 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 2015 £’000 817 (513) 304 2015 £’000 (242) (242) 2015 £’000 316 155 471 2014 % 57 43 100 2015 % 50 50 100 2015 £’000 7,045 6,915 13,960 3.9% At 31 December 2015 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 2015 £’000 64 32 2014 £’000 935 (576) 359 2014 £’000 583 583 2014 £’000 378 148 526 2014 £’000 7,993 5,933 13,926 3.7% 2014 £’000 120 Report & Accounts 2015 | HC Slingsby plc Notes to the Accounts continued 24. 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 2015 3.90% 3.90% 3.10% 2.10% 0.00% 3.10% 4.00% 4.20% 87.0 89.4 88.8 91.3 2014 3.70% 3.70% 3.10% 2.10% 0.00% 3.00% 4.00% 4.20% 86.9 89.3 88.7 91.2 25% of pension at age 65 at a rate of 13.0:1 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 (2014: £148,000) have been charged to operating profit. ESE Direct Limited also provided a defined contribution scheme in respect of certain employees. Contributions payable to that scheme from 1 April 2015 to 31 December 2015 totalled £7,000 and have been charged to operating profit. 25. 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 2015 Number 1,200,000 1,000,000 2015 £’000 300 250 2014 Number 2014 £’000 1,200,000 1,000,000 300 250 33 Report & Accounts 2015 | HC Slingsby plcReport & Accounts 2015 | HC Slingsby plcHC Slingsby plc Notes to the Accounts continued 26. Operating Lease Commitments At 31 December 2015, the group had the following outstanding future aggregate minimum lease payments under non-cancellable operating leases as follows: Operating leases commitments: – within one year – in more than one year but less than five years – more than 5 years Operating lease charges recognised in the income statement as shown in note 6. 2015 £’000 51 148 72 2014 £’000 16 – - 27. Related Party Transactions Key Management Key management personnel comprise the group’s executive directors. Their remuneration is set out in note 5. Included within directors’ remuneration is the amount of £30,345 to Morris and Daughters Limited for the services of Morgan Morris who is a director and shareholder in that company. At 31 December 2015, £1,995 was outstanding. There were no other transactions with key management. Company – Transactions With Subsidiaries Sales amounting to £394,000 (2014: £369,000) were made by HC Slingsby plc to Slingsby Mail Order Limited. Amounts due to Slingsby Mail Order Limited at 31 December 2015 were £122,000 (2014: £nil). Amounts due from Slingsby Mail Order Limited at 31 December 2015 were £0 (2014: £43,000). Sales amounting to £78,268 were made by HC Slingsby plc to ESE Direct Limited. Purchases amounting to £13,654 were made to HC Slingsby plc by ESE Direct Limited. Amounts due to ESE Direct Limited were £nil in respect of trading activities and £701,000 in respect of an inter-company loan. Amounts due from ESE Direct Limited were £13,054. 28. Business Combination On 27 March 2015, the Company purchased 100% of the share capital of ESE Direct Limited. Consideration was £4m 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. Total Consideration Cash paid by Group Deferred payment due 31 January 2016 £’000 3,971 30 4,001 34 Report & Accounts 2015 | HC Slingsby plc Notes to the Accounts continued 28. Business Combination (continued) The assets and liabilities recognised as a result of the acquisition are as follows: Book and Fair Value Short leasehold property Equipment Trademarks Stock Trade receivables Other receivables Cash Trade payables Other payables Corporation Tax Deferred Tax Intangible Assets: Brand Intangible Assets: Domain names, Website and Customer List Net Identifiable Assets Add: Goodwill Total Consideration £’000 91 182 2 60 356 879 386 (662) (624) (43) (35) 250 750 1,592 2,409 4,001 The goodwill is attributable to the profitablity of the acquired business. It will not be deductable for tax purposes. Revenue and profit contribution The acquired business contributed revenue of £4.8m and a profit before tax of £134,000 before management charges (£89,000 after management charges) to the group for the period from 1 April 2015 to 31 December 2015. If the business had been acquired for the full year, it would have contributed revenue of £6.6m and a profit before tax of £102,000 before management charges (£56,000 after management charges). Costs relating to the acquisition have been charged to exceptional items in the consolidated income statement for the year ended 31 December 2015. Purchase consideration – cash outflow Cash paid by the Group Cash balances in ESE on completion (excluding surplus cash) Goodwill monitoring £’000 (3,971) 386 (3,585) Goodwill is monitored by management at the Cash Generating Unit (“CGU”) level. A CGU is consdiered to be an individual company. The goodwill recognised on the acquisition of ESE Direct Limited has been tested for impairment using the following assumptions: - - - Budgets for the next 5 years Extrapolation of expected future cash flows using a terminal growth rate of 2% Sales growth of between 4 and 7 % - Capital expenditure of between £150,000 and £50,000 per annum - Gross margins projected based on recent trends - Pre-tax discount rate of 15% On the above basis, the directors consider that there are no reasonably possible changes to a key assumption which would give rise to an impairment charge. 29. Subsequent Events After the balance sheet date, the company entered into a new overdraft finace facility with HSBC Bank plc totalling £750,000. Under the terms of this facility, the company is to grant HSBC Bank plc a fixed charge over its freehold property. 35 Report & Accounts 2015 | HC Slingsby plcReport & Accounts 2015 | HC Slingsby plcHC Slingsby plc Five Year Summary Income Statement Turnover Gross profit Operating (loss)/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 2015 £’000 17,061 6,249 (10) (281) (632) (438) (43.8p) 2014 £’000 12,587 5,038 92 (193) (453) (299) (29.9p) 2013 £’000 13,965 5,502 137 -- (249) (95) (9.5p) 2012 £’000 14,588 6,155 489 129 102 172 17.2p 2011 £’000 15,221 6,779 633 – 422 320 32.0p 0.0p 0.0p 2.0p 4.0p 2.0p 10.0p 4.0p 15.0p 4.0p 28.0p Cash Flow Statement Cash (used in)/generated by operating activities 171 (169) 166 1,041 (81) Balance Sheet Net current (liabilities)/assets Net assets Cash and cash equivalents (376) 2,303 192 3,740 2,785 1,940 4,122 3,688 2,325 4,808 2,949 2,836 5,147 4,397 2,439 * 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. 36 Report & Accounts 2015 | HC Slingsby plc Notice of Annual General Meeting Notice is given that the sixty-eighth Annual General Meeting of H C Slingsby plc (“the Company”) will be held at the Marriot Hollins Hall Hotel & Country Club, Hollins Hill, Baildon, Shipley, West Yorkshire BD17 7QW on 30 June 2016 at 10am for the following purposes: To consider and, if thought fit, to pass the following resolutions as ordinary resolutions: 1. 2. 3. 4. 5. 6. 7. To receive the Company’s annual accounts for the financial year ended 31 December 2015 together with the directors’ report and auditor’s report on those accounts. To elect as a Director, Morgan Morris, who was appointed to the Board on 13 February 2015. To re-elect as a Director, John Waterhouse who retires from the Board in accordance with the Company’s articles of associa- tion. To re-elect as a Director, Dominic Slingsby who retires from the Board in accordance with the Company’s articles of associa- tion. To reappoint PricewaterhouseCoopers LLP as auditors of the Company. To authorise the Directors of the Company to determine the remuneration of the auditors. In substitution for any equivalent authorities and powers granted to the Directors prior to the passing of this Resolution, to authorise the Directors of the Company pursuant to section 551 of the Companies Act 2006 (the “Act”) to exercise all pow- ers of the Company to allot equity securities (as defined in section 560 of the Act): 7.1 7.2 up to an aggregate nominal amount of £25,000; and comprising equity securities up to a nominal amount of £125,000 (including within such limit any equity securities issued under paragraph 7.1 above) in connection with an offer by way of a rights issue: (a) (b) to holders of ordinary shares of 25 pence each in the capital of the Company (“Ordinary Shares”) in propor- tion (as nearly as may be practicable) to their existing holdings; and to holders of other equity securities as required by the rights of those securities or as the directors otherwise consider necessary, and so that the directors may impose any limits or restrictions and make any arrangements which they consider necessary or appropriate to deal with any treasury shares, fractional entitlements, record dates, legal, regulatory or practical problems in, or under the laws of, any territory or any matter. The authority granted by this Resolution shall (unless previously revoked, varied or extended by the Company in general meeting) expire on the conclusion of the next Annual General Meeting of the Company after the passing of this resolution or, if earlier, on the date falling 15 months from the date of the passing of this Resolution, save that the Company may at any time before such expiry make an offer or agreement which would or might require equity securities to be allotted after such expiry and the Directors may allot equity securities in pursuance of such an offer or agreement as if this authority had not expired. To consider and, if thought fit, to pass the following resolution as a special resolution: 8. Subject to the passing of resolution 7, to empower the Directors to allot equity securities (as defined in section 560 of the Act) of the Company for cash under the authority given by resolution 7 and/or where the allotment is treated as an allotment of equity securities under section 560(2)(b) of the Act, in either case as if section 561(1) of the Act did not apply to such al- lotment provided that such power shall be limited: 8.1 to the allotment of equity securities in connection with an offer of equity securities (but in the case of the authority granted under paragraph 7.2 of resolution 7, by way of a rights issue only): (a) (b) to the holders of the Ordinary Shares in the capital of the Company in proportion as nearly as practicable to their respective holdings of such shares; to holders of other equity securities as required by the rights of those securities or as the directors otherwise consider necessary, and so that the directors may impose any limits or restrictions and make any arrangements as the directors may otherwise consider necessary or appropriate to deal with treasury shares, fractional entitlements, record dates, or legal, regulatory or practical problems in, or under the laws of, any territory or any other matter; and 8.2 in the case of the authority granted under paragraph 7.1 of resolution 7 and/or in the case of any transfer of trea- sury shares which is treated as an allotment of equity securities under section 560(2)(b) of the Act, to the allotment otherwise than pursuant to paragraph 8.1 above, of equity securities up to an aggregate nominal value equal to £25,000; 37 Report & Accounts 2015 | HC Slingsby plcReport & Accounts 2015 | HC Slingsby plcHC Slingsby plc Notice of Annual General Meeting cont provided that such power shall (unless previously renewed, varied or revoked by the Company in general meeting) expire on the conclusion of the next Annual General Meeting of the Company after the passing of this Resolution or, if earlier, on the date falling 15 months from the date of the passing of this Resolution, save that the Company may before such expiry make an offer or agreement which would or might require equity securities to be allotted after such expiry and the Directors may allot equity securities in pursuance of such offer or agreement as if the power conferred hereby had not expired. By order of the board ...…….................................. M.L. Morris Company Secretary 25 May 2016 Registered office H C Slingsby plc Otley Road Baildon Shipley BD17 7LW Registered in England and Wales No. 00452716 38 Report & Accounts 2015 | HC Slingsby plc Notes Entitlement to attend and vote 1 Proxies 2 3 The right to vote at the meeting is determined by reference to the register of members. Only those shareholders registered in the register of members of the Company as at 6.00pm on 28 June 2016 (or, if the meeting is adjourned, 6.00pm on the date which is two working days before the date of the adjourned meeting) shall be entitled to attend and vote at the meeting in respect of the number of shares registered in their name at that time. Changes to entries in the register of members after that time shall be disregarded in deter mining the rights of any person to attend or vote (and the number of votes they may cast) at the meeting. A shareholder is entitled to appoint another person as his or her proxy to exercise all or any of his or her rights to attend and to speak and vote at the meeting. A proxy need not be a shareholder of the Company. 1. A shareholder may appoint more than one proxy in relation to the meeting, provided that each proxy is appointed to exercise the rights attached to a different share or shares held by that shareholder. Failure to specify the number of shares each proxy appointment relates to or specifying a number which when taken together with the numbers of shares set out in the other proxy appointments is in excess of the number of shares held by the shareholder may result in the proxy appointment being invalid. 2. A proxy may only be appointed in accordance with the procedures set out in note 3 below and the notes to the proxy form. The appointment of a proxy will not preclude a shareholder from attending and voting in person at the meeting. A form of proxy is enclosed. When appointing more than one proxy, complete a separate proxy form in relation to each appointment. Additional proxy forms may be obtained by contacting the Company’s registrar or the proxy form may be photocopied. State clearly on each proxy form the number of shares in relation to which the proxy is appointed. To be valid, a proxy form must be received by post or (during normal business hours only) by hand at the offices of the Company’s registrar, Capita Asset Services at PXS, 34 Beckenham Road, Beckenham, Kent, BR3 4TU no later than 10am on 28 June 2016 (or, if the meeting is adjourned, no later than 48 hours before the time of any adjourned meeting). Corporate Representatives 4 A shareholder which is a corporation may authorise one or more persons to act as its representative(s) at the meeting. Each such representative may exercise (on behalf of the corporation) the same powers as the corporation could exercise if it were an individual shareholder, provided that (where there is more than one representative and the vote is otherwise than on a show of hands) they do not do so in relation to the same shares. Joint Holders 5. In the case of joint holders of shares, the vote of the first named in the register of members who tenders a vote, whether in person or by proxy, shall be accepted to the exclusion of the votes of other joint holders. Total voting rights 6. As at 24 May 2016 (being the latest practicable date prior to publication of this Notice, the Company’s issued share capital consists of 1,000,000 Ordinary Shares, carrying one vote each. No Ordinary Shares are held by the Company in treasury. Therefore, the total voting rights in the Company as at 25 May 2016 are 1,000,000. Explanatory Notes to Resolutions 2, 7 and 8 Resolution 2 - Election of Morgan Morris Morgan Morris was appointed as a director of the Company by the Board on 13 February 2015. He is being put up for election at this year’s Annual General Meeting as he was not formally appointed by shareholders at last year’s Annual General Meeting. Resolution 7 – Authority to Allot Shares Paragraph 7.1 of this Resolution would give the directors the authority to allot Ordinary Shares or grant rights to subscribe for or convert any securities into Ordinary Shares up to an aggregate nominal amount of £25,000 (representing 100,000 Ordinary Shares). This amount represents approximately 10% of the issued ordinary share capital of the Company as at 25 May 2016, being the latest practicable date prior to publication of this Notice of Annual General Meeting (the «Latest Practicable Date»). In accordance with the latest guidance issued by the Association of British Insurers, paragraph 7.2 of this Resolution would give the Board authority to allot Ordinary Shares or grant rights to subscribe for or convert any securities into Ordinary Shares in connection with a rights issue, to existing shareholders in proportion (as nearly as may be practicable) to their existing holdings, up to an aggregate nominal amount of £125,000 (representing 500,000 Ordinary Shares), as reduced by the nominal amount of any shares issued under paragraph 7.1 of this resolution. This amount (before any reduction) represents approximately 50% of the issued ordinary share capital of the Company as at the Latest Practicable Date. The authority and power pursuant to Resolution 7 will expire on the later of 15 months from the date it is passed or the conclusion of the Company’s next Annual General Meeting. The Board will continue to seek to renew these authorities at each Annual General Meeting in accordance with current best practice. The Board has no present intention to exercise these authorities. Resolution 8 - Disapplication of Pre-emption Rights This Resolution would give the Board the authority to allot Ordinary Shares for cash without first offering them to existing shareholders in proportion to their existing shareholdings. This authority would be limited to an aggregate nominal amount of £25,000 (representing 100,000 Ordinary Shares). This aggregate nominal amount represents 10% of the issued Ordinary Share capital of the Company as at the Latest Practicable Date. The authority and power pursuant to Resolution 8 will expire on the later of 15 months from the date Resolution 8 is passed or the conclusion of the Company›s next Annual General Meeting. The Board has no present intention to exercise these authorities. 39 Report & Accounts 2015 | HC Slingsby plcReport & Accounts 2015 | HC Slingsby plcHC Slingsby plc HC Slingsby plc T: F: W: E: 01274 535 030 01274535035 Sales@Slingsby.com www.slingsby.com
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