HC Slingsby plc
01274 535 030
01274 535 035
sales@slingsby.com
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Report &
Accounts
HC Slingsby plc report and accounts for the year ended 31st December 2017
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.
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Report & Accounts 2017 | HC Slingsby plc
Report & Accounts 2017 | HC Slingsby plc Directors & Advisors
Directors
D. S. Slingsby – Interim
Executive Chairman and
Operations Director
M. L. Morris – Group Chief
Executive
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
Link Asset Services
The Registry
34 Beckenham Road
Beckenham
Kent BR3 4TU
Independent Auditors
RSM UK Audit LLP
Central Square
Fifth Floor
29 Wellington Street
Leeds
LS1 4DL
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
Website: www.slingsby.com
E-mail: sales@slingsby.com
Contents
Statement by the Chairman
Strategic Report
Report of the Directors
Corporate Governance
Statement of Directors’
Responsibilities
Independent Auditors’ Report
1
3
5
7
8
9
Consolidated Income Statement
12
Statement of Consolidated
Comprehensive Income
and Expense
Statement 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
13
13
14
15
16
17
17
18
37
38
41
Report & Accounts 2017 | HC Slingsby plc
Report & Accounts 2017 | HC Slingsby plc
Contents
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Report & Accounts 2017 | HC Slingsby plcReport & Accounts 2017 | HC Slingsby plc
Statement by the Chairman
Board Composition
Following the Board changes in 2016, I remain as Interim Executive Chairman. We continue to seek to appoint a non-executive
chairman and to search for an additional new non-executive director. Although we have identified a number of highly suitable
candidates, this is proving to be more protracted than anticipated due to the ongoing uncertainty regarding the pension fund
commitments.
Results
In the half year statement, I reported an operating profit of £0.29m on sales of £9.9m. The full year operating profit (before
exceptional items) was £0.56m (2016: operating loss of £0.26m) on sales of £19.2m (2016: £18m). The Group increased sales
by 7% and reduced overheads leading to a profit before taxation and exceptional items of £0.2m (2016: loss of £0.6m). This
represents a significant turnaround and would have resulted in a profit before taxation being reported for the first time since 2012.
However, during December 2017, we commissioned a valuation of the freehold property at Baildon. This valuation was £1.22m
lower than the carrying amount of the property held on the balance sheet and accordingly we decided that it was appropriate
to impair the property. This impairment is shown as an exceptional item in the profit and loss account. This non-cash charge
is disappointing to report as it results in a loss before tax of £1m (2016: £0.7m) which does not reflect the much improved
performance of the Group.
ESE Direct Limited (“ESE”) contributed £6.8m of sales (2016: £6.5m) and profit before tax and management charges of
£0.4m (2016: £0.2m). The improved profitability of ESE reflects an increase in sales and also a reduction in overheads and an
improvement in the margin from actions to further integrate the businesses.
Group earnings before interest, tax, depreciation and amortisation (“EBITDA”) in the year ended 31 December 2017 was £1m
(2016: £0.27m) before exceptional items. Net debt at 31 December 2017 was £1.6m (2016: £1.7m).
Dividend
In view of the loss in 2017 and the uncertainty around the pension fund commitments, the Board is unable to recommend a final
dividend for the year (2016: £nil).
Pension Scheme
We remain in discussion with the Trustee of the defined benefit pension scheme regarding a long term solution to the deficit.
During 2017, the Company made no deficit reduction payments (2016: £0.27m). At 31 December 2017, the pension scheme
deficit decreased by £1m to £8.6m (2016: £9.6m). This improvement in the pension scheme position together with the
pre-exceptional profit before taxation has mitigated the impact on the balance sheet of the freehold property impairment, such that
Group net assets remain almost unchanged from the position at 31 December 2016.
As discussions regarding the pension position are ongoing and whilst during this time the Company is not paying deficit reduction
contributions, there is uncertainty as to the quantum and timing of future payments to the scheme.
Recent Trading
In Q1 of 2017, the Group benefitted from several unusually large orders which were received in 2016. These large orders have
not recurred in 2018 and as such Group sales in the 3 months to 31 March 2018 are 6% below prior year. Group sales growth in
Q1 of 2017 against the same period in 2016 was 10% providing a strong comparative. Group sales in Q1 of 2018 are 3% higher
compared with the same period in 2016. Group order intake in the four months to 30 April 2018 is 1% up on the prior year.
The market remains competitive and whilst we consider that the Group is on a stronger footing due to the changes in marketing
strategy, which includes a renewed focus on product development, and from synergies realised, we are cautious regarding the
outlook.
Finally, I would like to thank our staff across the Group for their efforts in 2017. Our performance to date in 2018 continues to
provide grounds for optimism but we must maintain our focus to build on what has been achieved.
D.S.Slingsby
Interim Executive Chairman
4 May 2018
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Report & Accounts 2017 | HC Slingsby plc 2
Report & Accounts 2017 | HC Slingsby plcReport & Accounts 2017 | HC Slingsby plc Strategic Report
Business overview
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: handling and lifting, wheels and castors, ladders and steps, storage and shelving, office, safety and security, PPE and
workwear, cleaning and hygiene, mailroom and packaging, workshop and maintenance, waste and recycling, premises, lockers and
cloakroom, signs and labels, and 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 is reflective of
the current market conditions.
The group continues to build upon its strengths in distance selling and to enhance its e-commerce offering. The acquisition
of the ESE brand in 2015 diversified the group into different customer segments with an alternative service proposition and
pricing strategy. We believe that deploying e-commerce initiatives with our customers will produce efficiencies as well as growth
opportunities. During 2017, we have continued to work with our IT partners to improve our e-commerce offering and to become
a true omni-channel business. Our field based sales personnel remain vital in personalising our service offering and in providing
bespoke solutions to customers’ needs.
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. The main ways in which we do this are through are
experienced personnel, our broad based product offering where we ensure we offer a choice of options and price points and
through our web based knowledge centre. Next day delivery is offered on a substantial proportion of our lines to further augment
our service levels.
We continue to generate synergies following the acquisition of ESE. ESE is seeing the full year benefits of the common business
IT platform and has increased the amount of products sourced from Slingsby in its range.
The directors believe that the group’s strong core brand values of quality, reliability, product range and service excellence remain as
true today as they have done over the past 125 years of trading and this is recognised by the number of repeat customers.
We believe that this stronger focus on value, depth of product offer and service has arrested the decline in sales experienced over
recent years.
Key Performance Indicators and Business Performance
Sales growth
Return on capital employed
Return on sales
Gross profit margin
Notes:
2017
6.6%
(259.1%)
(5.2%)
35.0%
2016
5.8%
(181.6%)
(4.1%)
34.9%
Return on capital employed is calculated as loss before taxation over the total equity at the year end. This has declined due to the reduction in net
assets caused by increased losses due to the exceptional item.
Return on sales is calculated as loss before taxation over revenue. This has declined due to the increased loss due to the exceptional item.
A review of the business is included in the Statement by the Chairman on page 1 and forms part of the Strategic Report.
Principal risks
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.
Funding and liquidity risk
The main risk arising from the group’s financial instruments is liquidity risk and ensuring that the group 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.
Regulatory
We remain fully compliant with all regulatory requirements and 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.
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Report & Accounts 2017 | HC Slingsby plc
Approvals
We are committed 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.
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 profits before tax, cash flow and balance sheet.
Whilst the group made no deficit reduction contributions during 2017 (2016: £270,000) the group did contribute £160,000 towards
the running costs of the scheme which are reflected in overheads. Discussions with the pension Trustee and relevant authorities
remain ongoing concerning an appropriate longer term solution for the scheme. The quantum and timing of future pension
contributions is therefore a significant uncertainty for the company.
Health and Safety
We 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
through continued compliance with ISO140001 Environmental Management Standard.
By order of the Board
M. L. Morris
Company Secretary
4 May 2018
4
Report & Accounts 2017 | HC Slingsby plcReport & Accounts 2017 | HC 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 2017. 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:
D. S Slingsby
M. L. Morris
Dividends
The following dividends have been proposed for the 2017 financial year:
An interim dividend of nil pence per share (2016: 0p per share)
The directors recommend a final dividend of nil pence per share (2016: 0p per share)
Directors’ Interests
The beneficial interests of the directors and their immediate families in the shares of the company are:
£’000
-
-
D. S. Slingsby
M.L. Morris
Number of ordinary shares of 25p each
31 December 2017
1 January 2017
115,167
1,000
115,167
1,000
There have been no other changes in the directors’ shareholdings between 31 December 2017 and the date of this report.
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.
The holding of D.S.Slingsby includes a non-beneficial interest of 64,000 (2016: 64,000) ordinary shares.
Going Concern
The directors have prepared trading and cash flow forecasts for the group for the period to 31 December 2019, which assume that
the pension scheme contributions will recommence at their previous level. These forecasts indicate that the group will be able to
operate within its banking facilities and meet its liabilities as they fall due.
The overdraft element of the group’s banking facilities expires on 30 April 2019.
The financial statements have therefore been prepared on a going concern basis which assumes the group will continue in
operation for the foreseeable future.
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 4 May 2018:
M. Chadwick*
J. Crowther Jones & Mr. T. E. Jones
J. H. Ridley
C. J. Slingsby
S. E. Slingsby and Mr Hugh Padfield
M. Miller (registered in the name of Platform Securities Nominees Limited)
H. Slingsby
K. J. Williams
S. Whittaker
S. A. Williams
H C Slingsby plc Retirement Benefits Scheme
Number of ordinary
Shares of 25p each
Percentage
Holding
180,295
54,866
54,302
53,886
51,167
48,381
47,138
37,000
32,500
30,835
30,061
18.4%
5.5%
5.4%
5.4%
5.1%
4.8%
4.7%
3.7%
3.3%
3.1%
3.0%
* 80,995 registered in the name of Goodbody Stockbrokers Nominees Ltd and 99,300 in the name of Rulegale Nominees Limited
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Report & Accounts 2017 | HC Slingsby plc
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 RSM UK Audit 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 annual report.
By order of the Board
M. L. Morris
Company Secretary
4 May 2018
6
Report & Accounts 2017 | HC Slingsby plcReport & Accounts 2017 | HC 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, usually 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:
D. S. Slingsby
M. L. Morris
–
–
Interim Executive Chairman and Operations Director*
Group Chief Executive and Company Secretary
* Acting Chairman of both Audit and Remuneration Committees
As noted in the Chairman’s statement, the Directors continue their search for a suitable non-executive Director to bring more
balance to the composition of the Board.
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
4 May 2018
7
Report & Accounts 2017 | HC Slingsby plc Statement of Directors’ Responsibilities
The directors are responsible for preparing the Strategic Report and the Directors’ Report and the financial statements in
accordance with applicable law and regulations.
Company law requires the directors to prepare group and company financial statements for each financial year. The directors are
required by the AIM Rules of the London Stock Exchange to prepare group financial statements in accordance with International
Financial Reporting Standards (“IFRS”) as adopted by the European Union (“EU”) and have elected under company law to prepare
the company financial statements in accordance with International Financial Reporting Standards (“IFRS”) as adopted by the
European Union (“EU”).
The financial statements are required by law and IFRS adopted by the EU, to present fairly the financial position of the group and
the company. The Companies Act 2006 provides in relation to such financial statements that references in the relevant part of that
Act to financial statements giving a true and fair view are references to their achieving a fair presentation.
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 each of the group and company financial statements, the directors are required to:
a.
select suitable accounting policies and then apply them consistently;
b. make judgements and accounting estimates that are reasonable and prudent;
c.
d.
state whether they have been prepared in accordance with IFRSs adopted by the EU ; and
prepare the financial statements on the going concern basis unless it is inappropriate to presume that the group and the
company will continue in business.
The directors are responsible for keeping adequate accounting records that are sufficient to show and explain the group’s and the
company’s transactions and disclose with reasonable accuracy at any time the financial position of the group and the company
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 group and the company 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
4 May 2018
8
Report & Accounts 2017 | HC Slingsby plcReport & Accounts 2017 | HC Slingsby plc Independent auditors’ report to the members of H C Slingsby plc
Opinion
We have audited the financial statements of H C Slingsby plc (the ‘parent company’) and its subsidiaries (the ‘group’) for the year
ended 31 December 2017 which comprise the consolidated income statement, the statement of consolidated comprehensive
income and expense, the statement of consolidated and company changes in shareholders’ equity, the consolidated and company
balance sheets, the consolidated and company cash flow statements and notes to the financial statements, including a summary
of significant accounting policies. The financial reporting framework that has been applied in their preparation is applicable law
and International Financial Reporting Standards (IFRSs) as adopted by the European Union and, as regards the parent company
financial statements, as applied in accordance with the provisions of the Companies Act 2006.
In our opinion:
•
•
•
•
the financial statements give a true and fair view of the state of the group’s and of the parent company’s affairs as at 31
December 2017 and of the group’s loss for the year then ended;
the group financial statements have been properly prepared in accordance with IFRSs as adopted by the European Union;
the parent company financial statements have been properly prepared in accordance with IFRSs as adopted by the European
Union and as applied in accordance with the Companies Act 2006; and
the financial statements have been prepared in accordance with the requirements of the Companies Act 2006.
Basis for opinion
We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our
responsibilities under those standards are further described in the Auditor’s responsibilities for the audit of the financial statements
section of our report. We are independent of the group and parent company in accordance with the ethical requirements that are
relevant to our audit of the financial statements in the UK, including the FRC’s Ethical Standard as applied to SME listed entities
and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we
have obtained is sufficient and appropriate to provide a basis for our opinion.
Conclusions relating to going concern
We have nothing to report in respect of the following matters in relation to which the ISAs (UK) require us to report to you where:
•
•
the directors’ use of the going concern basis of accounting in the preparation of the financial statements is not appropriate; or
the directors have not disclosed in the financial statements any identified material uncertainties that may cast significant doubt
about the group’s or the parent company’s ability to continue to adopt the going concern basis of accounting for a period of at
least twelve months from the date when the financial statements are authorised for issue.
Key audit matters
Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the financial
statements of the current period and include the most significant assessed risks of material misstatement (whether or not due to
fraud) we identified, including those which had the greatest effect on the overall audit strategy, the allocation of resources in the
audit and directing the efforts of the engagement team. These matters were addressed in the context of our audit of the financial
statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.
Impairment of non-current assets
Management have identified that the group has two cash generating units (CGUs), HC Slingsby and ESE Direct. The non-current
assets attributable to each CGU at 31 December 2017 were £4.5m for HC Slingsby and £3.2m for ESE Direct. The non-current
assets of ESE Direct include £2.4m of goodwill and therefore this CGU is subject to annual impairment testing. The non-current
assets of HC Slingsby do not include any non-amortising assets and therefore an impairment test is only performed where
management believe that there may be an indicator of impairment. Given the significant non-current assets allocated to each CGU,
any adjustments to carrying amount could have a material impact on the financial statements.
Impairment testing requires management to compare the carrying amount of the CGUs attributable assets and liabilities with
the higher of fair value and value in use. Where the carrying amount is higher than fair value or value in use then an impairment
charge arises. Impairment testing involves a significant degree of judgement because management’s determination of value in use
is based on a number of assumptions including an assessment of future trading performance and the selection of an appropriate
discount rate.
ESE Direct
Management provided us with an impairment test for ESE Direct as detailed in note 14. We performed audit work on this test by:
•
Assessing the appropriateness and application of the model used including consideration of the assumptions made about the
discount rate and the expected future trading performance, and
• Reviewing historic performance and accuracy of forecasting and considering the sensitivity analysis performed by
management.
We discussed the forecasts, discount rate and sensitivity analysis with management and challenged key assumptions, requesting
evidence where available to support management’s conclusions.
9
Report & Accounts 2017 | HC Slingsby plc HC Slingsby
During the year management obtained a valuation of the freehold property in Baildon. The valuation of the property was below
the carrying amount and management concluded that this was an indicator of impairment. Based on the subsequent impairment
testing carried out, and as disclosed in note 13, an impairment charge of £1.2m has been recognised. We reviewed the valuation
report, carried out audit work on the valuation in use calculation provided by management in line with our work performed on the
value in use calculations prepared on the ESE cash generating unit and assessed management’s conclusion about the quantum of
the impairment charge made.
Our application of materiality
When establishing our overall audit strategy, we set certain thresholds which help us to determine the nature, timing and extent of
our audit procedures and to evaluate the effects of misstatements, both individually and on the financial statements as a whole.
During planning we determined a magnitude of uncorrected misstatements that we judge would be material for the financial
statements as a whole (FSM). During planning FSM was calculated as £133,000, which was not changed during the course of our
audit. We agreed with the Audit Committee that we would report to them all unadjusted differences in excess of £5,000, as well as
differences below those thresholds that, in our view, warranted reporting on qualitative grounds.
An overview of the scope of our audit
Our audit approach covered 100% of group revenue, group profit and total group assets and liabilities. It was performed to the
materiality levels set out above.
Other information
The directors are responsible for the other information. The other information comprises the information included in the annual
report, other than the financial statements and our auditor’s report thereon. Our opinion on the financial statements does not cover
the other information and, except to the extent otherwise explicitly stated in our report, we do not express any form of assurance
conclusion thereon.
In connection with our audit of the financial statements, our responsibility is to read the other information and, in doing so, consider
whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the audit or
otherwise appears to be materially misstated. If we identify such material inconsistencies or apparent material misstatements,
we are required to determine whether there is a material misstatement in the financial statements or a material misstatement of
the other information. If, based on the work we have performed, we conclude that there is a material misstatement of this other
information, we are required to report that fact. We have nothing to report in this regard.
Opinions on other matters prescribed by the Companies Act 2006
In our opinion, based on the work undertaken in the course of the audit:
•
•
the information given in the Strategic Report and the Directors’ Report for the financial year for which the financial statements
are prepared is consistent with the financial statements; and
the Strategic Report and the Directors’ Report have been prepared in accordance with applicable legal requirements.
Matters on which we are required to report by exception
In the light of the knowledge and understanding of the group and the parent company and their environment obtained in the course
of the audit, we have not identified material misstatements in the Strategic Report or the Directors’ Report.
We have nothing to report in respect of the following matters in relation to which the Companies Act 2006 requires us to report to
you if, in our opinion:
•
•
•
adequate accounting records have not been kept by the parent company, or returns adequate for our audit have not been
received from branches not visited by us; or
the parent company financial statements are not in agreement with the accounting records and returns; or
certain disclosures of directors’ remuneration specified by law are not made; or
• we have not received all the information and explanations we require for our audit.
Responsibilities of directors
As explained more fully in the directors’ responsibilities statement on page 8, the directors are responsible for the preparation of
the financial statements and for being satisfied that they give a true and fair view, and for such internal control as the directors
determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to
fraud or error.
In preparing the financial statements, the directors are responsible for assessing the group’s and the parent company’s ability
to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis
of accounting unless the directors either intend to liquidate the group or the parent company or to cease operations, or have no
realistic alternative but to do so.
10
Report & Accounts 2017 | HC Slingsby plcReport & Accounts 2017 | HC Slingsby plc Independent auditors’ report to the members of
H C Slingsby plc (continued)
Auditor’s responsibilities for the audit of the financial statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material
misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a
high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs (UK) will always detect a material
misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the
aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial
statements.
A further description of our responsibilities for the audit of the financial statements is located on the Financial Reporting Council’s
website at: http://www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditor’s report.
This report is made solely to the company’s members, as a body, in accordance with Chapter 3 of Part 16 of the Companies Act
2006. Our audit work has been undertaken so that we might state to the company’s members those matters we are required to
state to them in an auditor’s report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume
responsibility to anyone other than the company and the company’s members as a body, for our audit work, for this report, or for
the opinions we have formed.
Michael Thornton (Senior Statutory Auditor)
For and on behalf of RSM UK AUDIT LLP, Statutory Auditor
Chartered Accountants,
Central Square,
Fifth Floor,
29 Wellington Street,
Leeds,
LS1 4DL
4 May 2018
11
Report & Accounts 2017 | HC Slingsby plc
Consolidated Income Statement
For the year ended 31 December 2017
Revenue
Cost of sales
Gross profit
Distribution costs
Administrative expenses
Operating profit/(loss) before exceptional item
Exceptional item
Operating loss
Finance income
Finance costs
Profit/(loss) before taxation and exceptional items
Exceptional items
Loss before taxation
Taxation
Note
2017
£’000
2016
£’000
19,240
(12,514)
6,726
18,044
(11,752)
6,292
(3,775)
(3,615)
(3,746)
(2,909)
557
(1,221)
(261)
(102)
(664)
(363)
-
(331)
226
(1,221)
(995)
(62)
-
(369)
(630)
(102)
(732)
76
3
6
7
8
9
Loss for the year attributable to owners of the parent
(1,057)
(656)
Basic and diluted loss per share
10
(105.7p)
(65.6p)
12
Report & Accounts 2017 | HC Slingsby plcReport & Accounts 2017 | HC Slingsby plc
Statement of Consolidated Comprehensive Income and Expense
For the year ended 31 December 2017
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)
Total comprehensive expense for the year attributable to equity shareholders
Note
2017
£’000
(1,057)
2016
£’000
(656)
24
16
1,276
(246)
(1,555)
280
8
31
1,038
(1,244)
(19)
(1,900)
Statement of Consolidated and Company Changes in
Shareholders' Equity
For the year ended 31 December 2017
Group
1 January 2016
Loss for the year
Other comprehensive (expense)/income for the year
Total comprehensive (expense)/income for the year
1 January 2017
Loss for the year
Other comprehensive income/(expense) for the year
Transfer
Total comprehensive income/(expense) for the year
31 December 2017
Share
capital
£’000
Retained
Translation
earnings
£’000
reserve
£’000
250
–
–
–
250
–
–
-
–
250
2,062
(656)
(1,275)
(1,931)
131
(1,057)
1,030
30
3
134
(9)
–
31
31
22
–
8
(30)
(22)
-
Total
equity
£’000
2,303
(656)
(1,244)
(1,900)
403
(1,057)
1,038
-
(19)
384
The translation reserve comprises foreign exchange differences arising from the translation of the financial statements of foreign
operations.
Company
1 January 2016
Loss for the year
Other comprehensive expense for the year
Total comprehensive expense for the year
1 January 2017
Loss for the year
Other comprehensive income for the year
Total comprehensive income for the year
31 December 2017
13
Share
capital
£’000
250
–
–
–
250
–
–
–
250
Retained
earnings
£’000
1,830
(671)
(1,275)
(1,946)
(116)
(845)
1,030
185
69
Total
equity
£’000
2,080
(671)
(1,275)
(1,946)
134
(845)
1,030
185
319
Report & Accounts 2017 | HC Slingsby plc
Consolidated Balance Sheet
As at 31 December 2017
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
Liabilities
Current liabilities
Trade and other payables
Derivative financial liability
Finance lease obligations
Net current assets/(liabilities)
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
2017
£’000
2016
£’000
13
14
14
16
17
18
20
19
20
21
21
24
16
25
4,472
877
2,409
1,464
9,222
5,838
1,108
2,409
1,733
11,088
1,823
1,811
2,376
2,525
-
996
5,195
(4,964)
(7)
(30)
(5,001)
-
632
4,968
(5,517)
(13)
(44)
(5,574)
194
(606)
(7)
(8,610)
(415)
384
250
134
-
384
(37)
(9,626)
(416)
403
250
131
22
403
The financial statements on pages 12 to 36 were approved by the Board of Directors on 4 May 2018 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 2017 | HC Slingsby plcReport & Accounts 2017 | HC Slingsby plc
Company Balance Sheet
As at 31 December 2017
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
Liabilities
Current liabilities
Trade and other payables
Derivative financial liability
Finance lease obligations
Net current liabilities
Non-current liabilities
Finance lease obligations
Retirement benefit obligation
Deferred tax liabilities
Net assets
Capital and reserves
Share capital
Retained earnings
Total equity
Note
2017
£’000
2016
£’000
13
14
15
16
17
18
20
19
20
21
21
24
16
25
4,391
139
4,001
1,464
9,995
1,823
2,096
168
-
4,087
(4,821)
(7)
(30)
(4,858)
(771)
(7)
(8,610)
(288)
319
250
69
319
5,710
258
4,001
1,733
11,702
1,810
2,005
256
-
4,071
(5,534)
(13)
(44)
(5,591)
(1,520)
(37)
(9,626)
(385)
134
250
(116)
134
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 £845,000 (2016: loss £671,000).
The financial statements on pages 12 to 36 were approved by the Board of Directors on 4 May 2018 and were signed on its behalf
by:
D. S. Slingsby
Director
M. L. Morris
Director
H C Slingsby plc
Registered Number: 452716
15
Report & Accounts 2017 | HC Slingsby plc
Consolidated Cash Flow Statement
For the year ended 31 December 2017
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
Purchase of property, plant and equipment
Payment in respect of ESE acquisition
Proceeds from sales of property, plant and equipment
Purchase of intangible assets
Net cash used in investing activities
Cash flows from financing activities
Capital element of finance lease payments
New finance leases
Proceeds from borrowings
Net cash (used in)/generated from financing activities
Net increase/(decrease) in cash and cash equivalents
Opening cash and cash equivalents
Exchange differences
Closing cash and cash equivalents
Note
2017
£’000
2016
£’000
13
14
334
(70)
25
289
(88)
-
9
(20)
(99)
(44)
-
(39)
(83)
107
(84)
(61)
23
(122)
(98)
(30)
51
(40)
(117)
(57)
27
50
20
(219)
(479)
5
(367)
(291)
31
(479)
16
Report & Accounts 2017 | HC Slingsby plcReport & Accounts 2017 | HC Slingsby plc Company Cash Flow Statement
For the year ended 31 December 2017
Cash flows from operating activities
Cash used in operations
Interest payable
UK corporation tax received
Cash used in operating activities
Cash flows from investing activities
Purchase of property, plant and equipment
Payment in respect of ESE acquistion
Proceeds from sales of property, plant and equipment
Purchase of intangible assets
Net cash used in investing activities
Cash flows from financing activities
Capital element of finance leases payments
New finance leases
Proceeds from borrowings
Net cash (used in)/generated from 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 2017
Cash generated from/(used in) operating activities
Loss before tax
Net finance costs
Depreciation and amortisation
Asset impairment
Profit on sale of property, plant and equipment
Pension deficit contributions
Increase in inventories
Decrease/(increase) in trade and other receivables
(Decrease)/increase in trade and other payables
Cash generated from/(used in) operating activities
17
Note
13
14
2017
£’000
(112)
(70)
21
(161)
(85)
-
9
(20)
(96)
(44)
-
(39)
(83)
(340)
(855)
(1,195)
2016
£’000
(317)
(61)
23
(355)
(60)
(30)
31
(40)
(99)
(57)
27
50
20
(434)
(421)
(855)
2016
£’000
(760)
369
331
-
-
(270)
(79)
(118)
210
(317)
Group
Company
2017
£’000
(995)
331
480
1,221
(4)
-
(12)
143
(830)
334
2016
£’000
(732)
369
527
-
(5)
(270)
(33)
(169)
229
(84)
2017
£’000
(939)
331
317
1,221
(4)
-
(13)
(93)
(932)
(112)
Report & Accounts 2017 | HC Slingsby plc Notes to the Accounts
1. Accounting Policies
Basis of Preparation
The financial accounts are prepared in Sterling, which is the functional currency of the group. Monetary amounts in these
statements are rounded to the nearest £’000.
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.
Going concern
The group has made a loss for the year of £1,057,000 (2016 loss £656,000) and had net current assets at 31 December 2017 of
£194,000 (2016 net current liabilities of £606,000). The result of the company for the financial year was a loss of £845,000
(2016: loss £671,000).
With agreement of the pension scheme Trustee, the company suspended deficit reduction contributions to the defined benefit
pension scheme from 1 July 2016 until a longer term solution to the pension deficit can be found. Discussions are ongoing and
therefore there is uncertainty as to the quantum and timing of future payments to the scheme.
The directors have prepared trading and cash flow forecasts for the group for the period to 31 December 2019, which assume that
the pension scheme contributions will recommence at their previous level. These forecasts indicate that the group will be able to
operate within its banking facilities and meet its liabilities as the fall due.
The overdraft element of the group’s banking facilities expires on 30 April 2019.
The financial statements have therefore been prepared on a going concern basis which assumes the group will continue in
operation for the foreseeable future.
Impact of new International Financial Reporting Standards
At the date of authorisation of these financial statements, the following Standards and Interpretations which have not been applied
in these financial statements were in issue but not yet effective:
IFRS9 Financial Instruments: The IASB issued IFRS9 to include a logical model for classification and measurement, a single
forward looking expected loss impairment model, and a substantially reformed approach to hedge accounting. Endorsed by the EU
and effective from 1 January 2018.
IFRS15 Revenue from contracts with customers:dealing with the recognition of revenue from contracts and customers. Endorsed
by the EU and effective from 1 January 2018.
IFRS16 Leases: Introduces a single lessee accounting model and eliminates the previous distinction between an operating lease
and a finance lease. Endorsed by the EU and effective from 1 January 2019.
The directors are assessing the impact of IFRS15 and whether the application of IFRS15, once effective, will have a material
impact on the results of the company. The directors are also currently assessing the impact of IFRS16 on the Group’s financial
statements but have not as yet formed a conclusion.
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 2017 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.
The judgements made in the process of applying the group’s accounting policies that have the most significant effect on the
amount recognised in the financial statements and the estimates and assumptions that have a significant risk of causing a material
adjustment to the carrying amounts of assets and liabilities within the next financial year are addressed below.
• Actuarial assumptions used in the calculation of the defined benefit pension scheme liability. Measurement of the
defined benefit pension obligations requires estimation of future changes in salaries and inflation, as well as mortality rates,
the expected return on assets and the selection of a suitable discount rate. Defined benefit pension obligations at the reporting
date were valued at £8.6m (2016: £9.6m) (see note 24 for further disclosure).
18
Report & Accounts 2017 | HC Slingsby plcReport & Accounts 2017 | HC Slingsby plc Notes to the Accounts (continued)
1. Accounting Policies (continued)
•
Selection of appropriate rates of amortisation and depreciation for intangible and tangible non-current assets.
The annual depreciation and amortisation charges of amortisation and depreciation for intangible and tangible non-current
assets are sensitive to changes in the estimated useful economic lives of the assets. The useful economic lives and residual
values are reassessed annually. They are amended when necessary to reflect current estimates, based on technological
advancement, future investments, economic utilisation and physical condition of the assets (see notes 13 and 14 for the
carrying amount of intangible and tangible non-current assets)
• Allowances against the valuation of inventories. Inventories are stated at the lower of cost and net realisable value. When
estimating the net realisable value of inventories, management considers the nature and condition of inventory, as well as
applying assumptions around anticipated saleability of finished goods and future usage of raw materials. The stock provision at
the reporting date amounted to £442,000 (2016: £403,000) (see note 17 for the net carrying amount of inventories and details
of the provisions made).
•
•
Impairment of goodwill and intangible assets. The directors review whether goodwill is impaired on an annual basis
which requires an estimation of the value in use of the cash generating units to which the goodwill, and any intangible assets,
are allocated. This involves estimation of future cash flows and choosing a suitable discount rate (see note 14 for further
disclosure).
Impairment of tangible non-current assets. At each reporting date the directors review the carrying amount of the group's
tangible non-current assets to determine whether there has been any indication that those assets have suffered an impairment
loss. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of any
impairment loss. In the current year, this review resulted in an impairment charge against the Baildon property as detailed in
note 13.
• Deferred tax estimation. Recognition of deferred tax assets and liabilities involves making a series of assumptions. As far
as deferred tax assets are concerned, their realisation ultimately depends upon taxable profits being available in the future.
Deferred tax assets are recognised only when it is probable that taxable profits will be available against which the deferred
tax asset can be utilised and it is probable that the entity will earn sufficient taxable profit in future periods to benefit from
a reduction in tax payments. This involves the directors making assumptions within their overall tax-planning activities and
periodically reassessing them in order to reflect changed circumstances as well as tax regulations. Moreover, the measurement
of a deferred tax asset or liability reflects the manner in which the entity expects to recover the asset’s carrying value or settle
the liability. At 31 December 2017 the group has recognised deferred tax assets of £1,464,000
(2016: £1,733,000) and deferred tax liabilities of £415,000 (2016: £416,000) (see note 16 for disclosure of the group’s
deferred tax assets and liabilities).
Revenue and Recognition of Income
Revenue comprises the fair value of the consideration received or receivable from the sale of goods and services in the ordinary
course of the group’s activities. Revenue is shown net of value added tax, returns, rebates and discounts and after eliminating
sales within the group. Revenue is recognised when the goods are dispatched to the customer.
Employee Benefits
The group operates a defined benefit and a defined contribution pension scheme for its employees.
Defined benefit scheme: The pension liability recognised in the balance sheet in respect of the defined benefit scheme is the
present value of the defined benefit obligation at the balance sheet date less the fair value of the scheme assets. The defined
benefit obligation is calculated tri-annually by independent actuaries using the projected unit method and this valuation is updated
at each balance sheet date. The present value of the defined benefit obligation is determined by discounting the estimated future
cash outflows using interest rates of high quality corporate bonds that have terms to maturity approximating to the terms of the
related pension liability.
Past service costs are recognised immediately in income. Actuarial gains and losses arising from experience adjustments and
changes in actuarial assumptions are recognised in full in the statement of comprehensive income in the period in which they arise.
Defined contribution scheme: contributions payable are charged to the income statement in the accounting year in which they are
incurred. The group has no further payment obligations once the contributions have been paid to this scheme.
Leases
Leases in which a significant portion of the risks and rewards of ownership are retained by the lessor are classified as operating
leases. Payments made under operating leases, net of any incentives received from the lessor, are charged to the income
statement on a straight-line basis over the period of the lease. Other leases are classified as finance leases.
Assets and liabilities under finance leases are recognised at amounts equal to their fair value and depreciated at rates consistent
with similar assets. Payments made are apportioned between finance charges and the reduction in capital value of the liability.
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 funtional 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.
19
Report & Accounts 2017 | HC Slingsby plc 1. Accounting Policies (continued)
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”.
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.
20
Report & Accounts 2017 | HC Slingsby plcReport & Accounts 2017 | HC Slingsby plc
Notes to the Accounts (continued)
1. Accounting Policies (continued)
Derivative Financial Instruments
Derivative financial instruments are initially recognised at fair value on the date a contract is entered into and are subsequently
re-measured 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
Final 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.
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.
3. Exceptional Items
Redundancy and compensation costs
Asset impairment
The asset impairment is explained more full in note 13.
4. Employee Information
2017
£’000
-
1,221
1,221
Staff costs
Wages and salaries
Social security costs
Other pension costs
The average monthly number of persons employed during the year was:
Group
2017
£’000
2,490
202
72
2,764
2016
£’000
2,718
238
148
3,104
Company
2017
£’000
1,950
162
61
2,173
2016
£’000
102
-
102
2016
£’000
2,045
180
134
2,359
Group
2017
Number
2016
Number
Company
2017
Number
2016
Number
80
25
105
83
27
110
62
20
82
64
20
84
Selling and distribution
Administration
21
Report & Accounts 2017 | HC Slingsby plc
5. Directors’ Remuneration (including pension contributions)
Salary
Dominic Slingsby
Morgan Morris
Highest paid director:
Aggregate emoluments
Defined benefit scheme accrued pension at end of year
2017
£’000
2016
£’000
106
65
171
106
87
115
76
191
115
86
Dominic Slingsby has accrued benefits under a deferred benefit scheme. The defined benefit scheme accrued pension at the end
of the year was £87,000 (2016:£86,000). Morgan Morris accrued benefits under a defined contribution pension scheme amounting
to £2,100 (2016: £375).
6. Operating Profit / (loss)
Operating profit/(loss) is stated after charging/(crediting):
Profit on disposal of property, plant and equipment
Depreciation on property, plant and equipment
Amortisation of intangible assets
Operating lease charges
– land and buildings
– other
Foreign exchange gain/(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 the 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)
2017
£’000
(4)
229
251
36
5
14
32
5
6
1
44
2017
£’000
-
2017
£’000
67
4
260
331
2016
£’000
(5)
282
245
36
4
(27)
32
6
5
-
43
2016
£’000
-
2016
£’000
56
5
308
369
22
Report & Accounts 2017 | HC Slingsby plcReport & Accounts 2017 | HC Slingsby plc
Notes to the Accounts (continued)
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
– changes in tax rate
Total taxation charge/(credit)
Factors affecting the tax credit for the year:
2017
£’000
61
(21)
40
(33)
(27)
82
22
62
2016
£’000
-
(27)
(27)
(42)
(7)
-
(49)
(76)
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 19.25% (2016: 20%)
Expenses not deductible for tax purposes
Effects of changes in tax rates
Adjustments to tax in respect of prior years
– current year
– deferred tax
Tax charge/(credit) for the year
2017
£’000
(995)
(192)
44
52
(21)
55
62
2016
£’000
(732)
(146)
104
-
(27)
(7)
(76)
The standard rate of tax in the UK changed from 20% to 19% with effect from 1 April 2017. Accordingly, the company’s profits for
this accounting period are taxed at an effective rate of 19.25%. Deferred tax assets and liabilities are measured at a rate of 17% as
at 31 December 2017.
10. Earnings Per Share
Basic loss per share is based upon a loss of £1,057,000 (2016: loss of £656,000) and on 1,000,000 (2016: 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. Profit 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 £845,000 (2016:loss £671,000).
12. Dividends
Interim dividend paid for the 2017 financial year of 0.0p (2016: 0.0p)
Final dividend paid for the 2017 financial year of 0.0p (2016: 0.0p)
No dividends are proposed for the 2017 financial year as set out in the Report of the Directors.
2017
£’000
2016
£’000
-
-
-
-
-
-
23
Report & Accounts 2017 | HC Slingsby plc 13. Property, Plant and Equipment
Group
Cost
1 January 2016
Additions
Disposals
1 January 2017
Additions
Disposals
31 December 2017
Accumulated depreciation
1 January 2016
Charge for the year
Disposals
1 January 2017
Charge for the year
Asset impairment
Disposals
31 December 2017
Net book amount
At 31 December 2017
At 31 December 2016
At 31 December 2015
Short Leasehold
Freehold land
Property
and buildings
Equipment
£’000
£’000
£’000
119
–
–
119
-
–
6,665
6
–
6,671
-
–
119
6,671
30
11
–
41
11
–
–
52
67
78
89
1,018
106
–
1,124
106
1,221
–
2,451
4,220
5,547
5,647
2,405
58
(205)
2,258
88
(69)
2,277
2,039
165
(159)
2,045
112
–
(65)
2,092
185
213
366
Total
£’000
9,189
64
(205)
9,048
88
(69)
9,067
3,087
282
(159)
3,210
229
1,221
(65)
4,595
4,472
5,838
6,102
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 and a fixed charge over the freehold land and buildings.
During December 2017, as part of a review of our funding options, we instructed a firm of professional surveyors to carry out a
valuation of the freehold site at Baildon. The resulting valuation of £4.2m was £1.2m below carrying value. After consideration of
the property’s value to the business, we have decided to impair the asset value to the level of the valuation, being its fair value,
resulting in an exceptional non-cash charge of £1.22m.
Equipment includes the following amounts where the group is lessee under finance leases:
Cost of assets subject to finance leases
Accumulated depreciation
Group and Company
2017
£’000
144
(82)
62
2016
£’000
144
(45)
99
The group leases various motor vehicles under non-cancellable finance lease agreements. The assets are leased on a term of 3
years.
24
Report & Accounts 2017 | HC Slingsby plcReport & Accounts 2017 | HC Slingsby plc
Notes to the Accounts (continued)
13. Property, Plant and Equipment (continued)
Company
Cost
1 January 2016
Additions
Disposals
1 January 2017
Additions
Disposals
31 December 2017
Accumulated depreciation
1 January 2016
Charge for the year
Disposals
1 January 2017
Charge for the year
Asset impairment
Disposals
31 December 2017
Net book amount
At 31 December 2017
At 31 December 2016
At 31 December 2015
Depreciation is charged to administrative expenses in the Income Statement.
14. Intangible Assets
Freehold land
and buildings
Equipment
£’000
£’000
6,665
6
-
6,671
-
-
6,671
1,018
106
–
1,124
106
1,221
-
2,451
4,220
5,547
5,647
2,073
54
(157)
1,970
85
(69)
1,986
1,843
91
(127)
1,807
72
-
(64)
1,815
171
163
230
Total
£’000
8,738
60
(157)
8,641
85
(69)
8,657
2,861
197
(127)
2,931
178
1,221
(64)
4,266
4,391
5,710
5,877
Group
Group
Company
Brand and
Domain
Names and
IT Software
Customer
and
Goodwill
£’000
Lists
£’000
Trademarks
£’000
TOTAL
£’000
IT Software
£’000
2,409
1,000
805
1,805
-
2,409
-
2,409
-
-
-
-
-
2,409
2,409
2,409
-
1,000
-
1,000
75
100
175
100
275
725
825
925
74
879
20
899
451
145
596
151
747
152
283
354
74
1,879
20
1,899
526
245
771
251
1,022
877
1,108
1,279
800
40
840
20
860
448
134
582
139
721
139
258
352
Cost
1 January 2016
Additions
1 January 2017
Additions
31 December 2017
Accumulated amortisation
1 January 2016
Charge for the year
1 January 2017
Charge for the year
31 December 2017
Net book amount
At 31 December 2017
At 31 December 2016
At 31 December 2015
25
Report & Accounts 2017 | HC Slingsby plc
14. Intangible Assets (Continued)
Amortisation is charged to administrative expenses in the Income Statement.
On 27 March 2015, the Company purchased 100% of the share capital of ESE Direct Limited. Goodwill of £2.4m arose on the
acquisition.
In 2017, the acquired business contributed revenue of £6.8m (2016:£6.5m) and profit before tax of £0.4m (2016:£0.2m) before
management charges to the group.
Goodwill monitoring
Goodwill is monitored by management at the Cash Generating Unit (“CGU”) level. A CGU is considered to be an individual
company. The group tests goodwill for impairment on at least an annual basis by comparing the carrying amount of the CGU with
it’s value in use. Value in use is estimated based on future cash flow discounted to present value using a pre-tax discount rate that
reflects current market assessments of the time value of money. An impairment charge arises where the carrying value exceeds the
value in use.
The carrying amount of the ESE Direct Limited CGU has been tested for impairment using a discounted cash flow model based on
the following assumptions:
- Most recent budgets /forecasts for the next 5 years
- Extrapolation of expected future cash flows using a terminal growth rate of 2%
- Sales growth of 1% in year one and 6 % thereafter based on forecasts and prior year perfomance
- Capital expenditure of £20,000 per annum based on forecasts
- Gross margins projected based on recent trends
- Discount rate (pre-tax weighted average cost of capital “WACC”) of 15%
On the above basis, the directors have concluded that there is no material impairment for the CGU and they consider that there are
no reasonably possible changes to a key assumption which would give rise to an impairment charge.
The key assumption made by the directors in preparing these forecasts is sales growth and the WACC. Modest sales growth of
1% for 2018 reflects the impact of strong one-off sales in Q1 2017, with growth returning to 6% thereafter driven by expanding web
sales. The directors performed sensitivity analysis on the basis of sales growth at 50% of assumed levels. At these reduced levels
value in use would be equal to the carrying amount.
15. Investment in Subsidiary
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. This
investment represents the whole of the amount shown in the company’s balance sheet.
The company owned 100% of the €1 ordinary share capital in Slingsby Mail Order Limited, incorporated in the Republic of Ireland.
The results are fully consolidated in the group financial statements. Its principal activity was the merchanting of materials handling
and distribution equipment. The carrying value of this investment is considered impaired and has been fully provided against. The
company was dormant throughout the year and was dissolved on 25th April 2018.
The Company directly owns 100% of the issued share capital of the following subsidiary undertakings, registered in England and
Wales at 1 Otley Road, Baildon, Shipley BD17 7LW.
Company
ESE Direct Limited
Eastern Storage Limited
ESE Projects Limited
Eastern Storage Equipment Limited
Slingsby Trading Post Limited
Slingsby Manufacturing Limited
Slingsby Metro Equipment Limited
Business Activity
Distribution of Industrial and Commercial Equipment
Dormant
Dormant
Dormant
Dormant
Dormant
Dormant
16. Deferred Tax
The deferred tax balances in these financial statements are attributable to the following:
Deferred tax asset
Pension liability
Deferred tax liabilities
Accelerated capital allowances
Losses
Intangible asset
Rolled over capital gain
Group
2017
£’000
2016
£’000
1,464
1,733
(418)
131
(128)
-
(415)
(460)
211
-
(167)
(416)
Company
2017
£’000
1,464
(420)
132
-
-
(288)
2016
£’000
1,733
(417)
199
-
(167)
(385)
26
Report & Accounts 2017 | HC Slingsby plcReport & Accounts 2017 | HC Slingsby plc
Notes to the Accounts (continued)
16. Deferred Tax (continued)
The deferred tax asset relates to the deficit on the company’s defined benefit pension scheme. 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:
Group
Accelerated
Pension
capital
Intangible
liability
Tax losses
allowances
£’000
£’000
£’000
assets
£’000
Rolled over
capital gain
£’000
1 January 2016
Credited to income statement
Credited to equity
1 January 2017 – Group and Company
(Charged)/credited to income statement
Charged to equity
31 December 2017
1,446
7
280
1,733
(23)
(246)
1,464
184
27
–
211
(80)
–
131
(475)
15
-
(460)
42
-
-
-
(128)
(418)
(128)
(167)
-
–
(167)
167
–
-
Company
Pension liability
Tax losses
Accelerated
capital
allowances
Rolled over
capital gain
1 January 2016
Credited to income statement
Credited to equity
1 January 2017
(Charged)/credited to income statement
Charged to equity
31 December 2017
17. Inventories
Raw materials and work in progress
Finished goods and goods for resale
£’000
1,446
7
280
1,733
(23)
(246)
1,464
£’000
146
53
–
199
(67)
–
132
£’000
(422)
5
(417)
(3)
(420)
£’000
(167)
-
–
(167)
167
–
-
Group
2017
£’000
201
1,622
1,823
2016
£’000
178
1,633
1,811
Company
2017
£’000
201
1,622
1,823
Total
£’000
988
49
280
1,317
(22)
(246)
1,049
Total
£’000
1,003
65
280
1,348
74
(246)
1,176
2016
£’000
178
1,632
1,810
Inventories are presented net of provisions for write-downs, based on management’s estimate of net realisable value. The amount
charged to the income statement in respect of write-downs of inventories was £85,000, (2016: £19,000). The cost of inventories
recognised as an expense and included in the group’s cost of sales was £12,179,000 (2016: £11,580,000) and £8,133,000
(2016: £7,325,000) for the company. The provision for obsolete stock at the year end for the group and company is £442,000
(2016: £403,000).
27
Report & Accounts 2017 | HC Slingsby plc
18. Trade and Other Receivables
Trade receivables
Receivables from subsidiary
Prepayments
Group
2017
£’000
2,022
-
354
2,376
2016
£’000
2,157
-
368
2,525
Company
2017
£’000
1,705
92
299
2,096
2016
£’000
1,638
54
313
2,005
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 2017
Provision made for impaired receivables
Unused provision reversed
Receivables written off during the year as uncollectable
At 31 December 2017
Group
2017
£’000
45
50
(32)
(35)
28
2016
£’000
18
46
(11)
(8)
45
Company
2017
£’000
39
19
(25)
(8)
25
2016
£’000
18
38
(11)
(6)
39
Receivables due from subsidiary were not impaired at 31 December 2017 and 31 December 2016.
At 31 December 2017 group trade receivables of £28,000 (2016: £45,000) and company trade receivables of £25,000 (2016:
£39,000) 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
2017
£’000
-
28
28
2016
£’000
5
40
45
Company
2017
£’000
-
25
25
2016
£’000
3
36
39
At 31 December 2017 group trade receivables of £920,000 (2016: £1,188,000) and company trade receivables of £717,000 (2016:
£769,000) 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
2017
£’000
896
24
920
2016
£’000
1,068
120
1,188
Company
2017
£’000
705
12
717
2016
£’000
761
8
769
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.
28
Report & Accounts 2017 | HC Slingsby plcReport & Accounts 2017 | HC Slingsby plc
Notes to the Accounts (continued)
18. Trade and Other Receivables (continued)
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 subsidiaries
Other taxation and social security payable
Other payables
Accruals
Debtor financing and overdraft
Group
2017
£’000
1,965
57
2,022
Group
2017
£’000
1,652
-
364
12
361
2,575
4,964
2016
£’000
2,136
21
2,157
2016
£’000
2,416
-
276
12
450
2,363
5,517
Company
2017
£’000
1,740
57
1,797
Company
2017
£’000
1,190
608
217
11
220
2,575
4,821
2016
£’000
1,671
21
1,692
2016
£’000
1,734
930
200
11
296
2,363
5,534
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 4.25% and 2.55%-4% above
the prevailing Bank of England Base Rate respectively. The overdraft element of the group’s banking facilities expires on the 30
April 2019. Our debtor finance facility remains unaffected. The group debtor finance facility is a total of £3m (subject to suitable
debt being available) and the overdraft facility is the sum of £750,000.
20. Derivative Financial Instruments
Forward foreign currency contracts and options
Group and Company
Assets
2017
£’000
-
2016
£’000
-
Liabilities
2017
£’000
7
2016
£’000
13
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 2018. They have been valued using year end
market data.
21. Borrowings
Group and company borrowings include debtor financing, overdraft and finance leases, the debtor financing and overdraft
amounting to £2,575,000 (2016:£2,363,000) is repayable within one year, the maturity of the finance leases is set out below:
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
2017
£’000
2016
£’000
Company
2017
£’000
2016
£’000
33
8
41
(4)
37
48
41
89
(8)
81
33
8
41
(4)
37
48
41
89
(8)
81
The finance lease liabilities relate to motor vehicles leased on a term of 3 years.
29
Report & Accounts 2017 | HC Slingsby plc
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.
The principle financial instruments used by the group from which financial risk arises are as follows:
Group
Company
Financial assets
Trade receivables (note18)
Receivables from subsidiary (note 18)
Forward foreign currency contracts and options (note 20)
Cash and cash equivalents
Financial liabilities
Debt financing and overdraft (note19)
Trade payables (note 19)
Accruals (note 19)
Other payables (note 19)
Forward foreign currency contracts and options (note 20)
2017
£’000
2,022
-
-
996
3,018
2017
£’000
2,575
1,652
725
12
7
4,971
2016
£’000
2,157
-
-
632
2,789
2016
£’000
2,363
2,416
726
12
13
5,530
2017
£’000
1,705
92
-
168
1,965
2017
£’000
2,575
1,190
437
11
7
4,220
2016
£’000
1,638
54
-
256
1,948
2016
£’000
2,363
1,734
496
11
13
4,617
Foreign Exchange Risk
The group is exposed to foreign exchange risk from purchasing a portion of its supplies in foreign currencies. The company
enters into forward foreign currency contracts to manage its exposure to currency fluctuations that arise on purchase contracts
denominated in foreign currencies.
The carrying value of the group’s foreign currency denominated financial assets and monetary liabilities at the reporting date are as
follows:
Euros
Dollars
Assets
2017
£’000
100
4
2016
£’000
21
14
Liabilities
2017
£’000
-
7
2016
£’000
92
-
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 of 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 2017, the gearing ratio was
411% (2016:430%).
30
Report & Accounts 2017 | HC Slingsby plcReport & Accounts 2017 | HC Slingsby plc Notes to the Accounts (continued)
24. Pension Commitments
Group and Company
Retirement Benefit Obligations
At 31 December 2017 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 2018 fiscal year
is subject to the outcome of discussions between the Company and the appropriate authorities. 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 sole corporate Trustee that has control over its operation, funding and investment strategy. The Trustee will
consult with the Company on certain matters.
Funding the liabilities
UK legislation requires the Trustee 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’s funding objective was identified. The Company agreed to pay annual contributions of £540,000
(£540,000 in 2016) to remove the shortfall over 14 years. An amount of £270,000 was paid in 2016 and no payments were
made during 2017. Deficit reduction contributions remain suspended pending discussion between the Company and the relevant
authorities.
The weighted average duration of the defined benefit obligation is 19.9 years.
Investment strategy
Approximately 10% of the Scheme’s assets are held in equity type assets, and 90% 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
£30,000 as at 31 December 2017.
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 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 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 90% 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. 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 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.
31
Report & Accounts 2017 | HC Slingsby plc 24. Pension Commitments (continued)
Winding up
Although currently there are no plans to do so, with the company’s approval, the Trustee could choose to wind up the Scheme
in which case the benefits would have to be bought out with an insurance company. The cost of buying-out benefits would be
significantly more than the defined benefit obligation calculated in accordance with IAS 19 (revised).
The measurement of the company’s net defined benefit liability is particularly sensitive to changes in certain key assumptions,
which are:
Discount rate
Inflation
Mortality rates
This has been selected following actuarial advice received, taking into account the duration of the
liabilities. An increase or decrease in the discount rate of 0.25% would result in a decrease or increase
of approximately £1.3m in the present value of the defined benefit obligation.
The methodology used to derive the assumption adopted is consistent with discount rate methodology.
An increase or decrease in the inflation rate of 0.25% would result in an increase or decrease of
approximately £1m in the present value of the defined benefit obligation.
The mortality assumptions adopted are based on actuarial advice received and reflect the most recent
information as appropriate. The assumptions used indicate that the future life expectancy of a male
(female) pensioner reaching age 65 in 2017 would be 21.4 (23.2) years and the future life expectancy
from age 65 for a male (female) non-pensioner member currently aged 45 of 22.8 (24.8) 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 £1.1m.
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 2017
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 2016
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
2017
£’000
26,792
716
(254)
(588)
26,666
2016
£’000
21,993
845
4,592
(638)
26,792
32
Report & Accounts 2017 | HC Slingsby plcReport & Accounts 2017 | HC Slingsby plc
Notes to the Accounts (continued)
24. Pension Commitments (continued)
Reconciliation of fair value of scheme assets
Fair value of scheme assets at start of year
Interest income
Return on scheme assets
Contributions by the Company
Benefits paid
Fair value of scheme assets at end of year
Amounts to be recognised in the balance sheet
Present value of funded obligation
Fair value of scheme assets
Net liability in balance sheet
Amounts to be recognised in the income statement
Interest on obligation
Interest income on scheme assets
Total expense
Total amount recognised in the statement of consolidated income SOCI
Actuarial (gain)/loss
Actuarial (gain)/loss recognised in SOCI
Pension cost
Defined benefit scheme net interest charge
Defined contribution scheme
Scheme assets
Equities
Gilts and bonds
Total scheme assets
Expected rate of return on scheme assets
2017
%
10
90
100
2017
£’000
1,908
16,148
18,056
2.7%
2017
£’000
17,166
456
1,022
-
(588)
18,056
2016
£’000
13,960
537
3,037
270
(638)
17,166
2017
£’000
2016
£’000
26,666
(18,056)
8,610
26,792
(17,166)
9,626
2017
£’000
716
(456)
260
2017
£’000
(1,276)
(1,276)
2017
£’000
260
55
315
2016
%
53
47
100
2016
£’000
845
(537)
308
2016
£’000
1,555
1,555
2016
£’000
308
148
456
2016
£’000
9,050
8,115
17,165
3.9%
At 31 December 2017 the scheme assets were invested in a diversified portfolio that consisted primarily of equity and debt
securities. The fair value of the scheme assets as a percentage of total scheme assets and target allocations is set out above.
33
Report & Accounts 2017 | HC Slingsby plc
24. Pension Commitments (continued)
Amount of Company related investments included in fair value of assets
Company’s own financial instruments
2017
£’000
30
2016
£’000
22
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
Mortality Assumption; Base mortality table
2017
2.50%
2.50%
3.20%
2.10%
0.00%
3.00%
4.00%
4.20%
86.4
87.8
88.2
89.8
2016
2.70%
2.70%
3.30%
2.20%
0.00%
3.10%
4.00%
4.20%
86.4
88.1
88.5
90.4
25% of pension at
age 65 at a rate of 13.0:1
25% of pension at
age 65 at a rate of 13.0:1
– 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 110% has been applied to the notes under the standard tables. An allowance for future improvements has been
made in line with the CMI 2015 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 £44,000 (2016: £120,000) 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 of
£11,000 (2016: £14,000) 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
2017
Number
1,200,000
1,000,000
2017
£’000
300
250
2016
Number
1,200,000
1,000,000
The company has one class of Ordinary shares which carry no right to fixed income. Each carries a right to vote at general
meetings of the company.
2016
£’000
300
250
34
Report & Accounts 2017 | HC Slingsby plcReport & Accounts 2017 | HC Slingsby plc
Notes to the Accounts (continued)
26. Operating Lease Commitments
At 31 December 2016, 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
2017
£’000
36
144
33
2016
£’000
36
144
33
Operating lease charges recognised in the income statement as shown in note 6 and arise in respect of property leases.
27. Key Management
Key management personnel comprise the group’s executive directors. Their remuneration is set out in note 5. Included within
director’s remuneration is the amount £nil (2016:£63,713) to Morris and Daughters Limited for the services of Morgan Morris who is
a director and shareholder in that company. At 31 December 2017, £nil (2016:£nil) was outstanding.
There were no other transactions with key management.
Company – Transactions With Subsidiaries
Sales amounting to £nil (2016: £99,000) were made by HC Slingsby plc to Slingsby Mail Order Limited.
Amounts due to Slingsby Mail Order Limited at 31 December 2017 were £nil (2016: £202,000).
Sales amounting to £799,439 (2016:£462,935) were made by HC Slingsby plc to ESE Direct Limited
.
Purchases amounting to £nil (2016:£2,287) were made to HC Slingsby plc by ESE Direct Limited.
Amounts due to ESE Direct Limited were £nil (2016:£nil) in respect of trading activities and £608,215 (2016: £728,215) in respect of
an inter-company loan.
Amounts due from ESE Direct Limited were £92,363 (2016:£54,000).
35
Report & Accounts 2017 | HC Slingsby plc
28. Reconciliation of net debt
Group
Cash
Bank overdraft (note 19)
Debt financing (note 19)
Finance leases (note 21)
Net debt
Company
Cash
Bank overdraft (note 19)
Debt financing (note 19)
Finance leases (note 21)
Net debt
At 1 January
2017
£’000
632
(1,111)
(479)
(1,251)
(81)
(1,811)
Foreign
exchange
At 31
December
Cashflow
movements
£’000
359
(252)
107
39
44
190
£’000
5
-
5
-
-
5
At 1 January
2017
£’000
Cashflow
£’000
256
(1,111)
(855)
(1,251)
(81)
(2,187)
(88)
(252)
(340)
39
44
(257)
2017
£’000
996
(1,363)
(367)
(1,212)
(37)
(1,616)
At 31
December
2017
£’000
168
(1,363)
(1,195)
(1,212)
(37)
(2,444)
36
Report & Accounts 2017 | HC Slingsby plcReport & Accounts 2017 | HC Slingsby plc Five Year Summary
Income Statement
Turnover
Gross profit
Operating profit/(loss) before exceptional item
Exceptional item
Loss before tax
Loss for the financial year
Earnings/(loss) per share – basic and diluted
Dividend Per Ordinary Share*:
– Interim
– Final
2017
£’000
19,240
6,726
557
(1,221)
(995)
(1,057)
(105.7p)
2016
£’000
2015
£’000
2014
£’000
2013
£’000
18,044
6,292
(261)
(102)
(732)
(656)
(65.6p)
17,061
6,249
(10)
(281)
(632)
(438)
(43.8p)
12,587
5,038
92
(193)
(453)
(299)
(29.9p)
13,965
5,502
137
-
(249)
(95)
(9.5p)
0.0p
0.0p
0.0p
0.0p
0.0p
0.0p
2.0p
4.0p
2.0p
10.0p
Cash Flow Statement
Cash generated from /(used by) operating activities
334
(84)
171
(169)
166
Balance Sheet
Net current assets/(liabilities)
Net assets
Pension deficit (net of deferred tax asset)
Net (debt)/cash excluding finance leases
Cash and cash equivalents
194
384
(7,146)
(1,579)
996
(607)
403
(7,893)
(1,731)
632
(376)
2,303
(6,587)
(1,493)
192
3,740
2,785
(6,777)
1,940
1,940
4,122
3,688
(6,455)
2,325
2,325
* 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.
37
Report & Accounts 2017 | HC Slingsby plc Notice of Annual General Meeting
Notice is given that the seventieth Annual General Meeting of H C Slingsby plc (“the Company”) will be held at HC Slingsby plc,
Otley Road, Baildon, Shipley, West Yorkshire BD17 7LW on 19 June 2018 at 10am for the following purposes:
To consider and, if thought fit, to pass the following resolutions as ordinary resolutions:
1. To receive the Company’s annual accounts for the financial year ended 31 December 2017 together with the Directors’
reports and auditor’s report on those accounts.
2. To re-elect as a Director, Morgan Morris who retires from the Board in accordance with the Company’s articles of
association.
3. To reappoint RSM UK Audit LLP as auditors of the Company to hold office until the end of the next general meeting at
which accounts are laid before the Company.
4. To authorise the Directors of the Company to determine the remuneration of the auditors.
5.
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 powers of the Company to allot equity securities (as defined in section 560 of the Act):
5.1
5.2
(a)
(b)
up to an aggregate nominal amount of £83,250; and
comprising equity securities up to a nominal amount of £166,750 (including within such limit any equity
securities issued under paragraph 5.1 above) in connection with an offer by way of a rights issue:
to holders of ordinary shares of 25 pence each in the capital of the Company (“Ordinary Shares”) in
proportion (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 resolutions as special resolutions:
6.1
Subject to the passing of resolution 5, to authorise 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 5 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
allotment provided that such authority shall be limited:
(a)
to the allotment of equity securities in connection with an offer of equity securities (but in the case of the authority
granted under paragraph 5.2 of resolution 5, by way of a rights issue only):
(i)
(ii)
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
(b)
in the case of the authority granted under paragraph 5.1 of resolution 5 and/or in the case of any transfer of
treasury 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 6.1(a) above, of equity securities up to an aggregate nominal value
equal to £12,500;
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.
38
Report & Accounts 2017 | HC Slingsby plcReport & Accounts 2017 | HC Slingsby plc
Notice of Annual General Meeting (continued)
6.2
Subject to the passing of resolution 5, and in addition to any authority granted under Clause 6.1 of this resolution, to
authorise 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 5 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 allotment provided that such
authority shall be:
(a)
(b)
limited to the allotment of equity securities up to an aggregate nominal amount of £12,500; and
used only for the purpose of financing (or refinance if the authority is to be used within 6 months after
the original transaction) a transaction which the Directors determine to be an acquisition or other capital
investment of a kind contemplated by the Statement of Principles on Disapplying Pre-Emption Rights
most recently published by the Pre-Emption Group prior to the date of this notice
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.
The resolutions in Clauses 6.1 and 6.2 revoke and replace all unexercised powers previously granted to the Directors to
allot equity securities as if section 561 of the Act did not apply but without prejudice to any allotment of equity securities
already made or agreed to be made pursuant to such authorities.
7.
To authorise the Company generally and unconditionally, pursuant to section 701 of the Act to make one or more market
purchases (within the meaning of 693(4) of the Act) on the London Stock Exchange plc (the “London Stock Exchange”)
of Ordinary Shares provided that:
(a)
(b)
(c)
(d)
(e)
the maximum aggregate number of Ordinary Shares authorised to be purchased is 100,000
(representing approximately 10 per cent. of the Company’s issued share capital);
the minimum price (exclusive of expenses) which may be paid for such Ordinary Shares is 25p
pence per share;
the maximum price (exclusive of expenses) which may be paid for an Ordinary Share is not more than
the higher of: (i) 5 per cent. above the average of the middle market quotations for an Ordinary Share
as derived from the London Stock Exchange Daily Official List for the five business days immediately
preceding the day on which the Ordinary Share is contracted to be purchased; and (ii) the price
stipulated by Article 3(2) of Delegated Regulation (EU) 2016/1052 of 8 March 2016 relating to the
conditions applicable to buy-back programmes and stabilisation measures;
unless previously revoked or varied, the authority hereby conferred shall expire fifteen months after
the passing of this resolution or, if earlier, at the conclusion of the next annual general meeting of the
Company after the passing of this resolution; and
the Company may make a contract or contracts to purchase Ordinary Shares under the authority
hereby conferred prior to the expiry of such authority which will or may be executed wholly or partly after
the expiry of such authority, and may make a purchase of Ordinary Shares in pursuance of any such
contract or contracts.
Registered Office
HC Slingsby plc Otley Road Baildon , Shipley, West Yorkshire BD17 7LW
By order of the Board
M.L.Morris Company Secretary
Registered in England and Wales
No. 00452716
4 May 2018
Registered in England and Wales No. 00452716
39
Report & Accounts 2017 | HC Slingsby plc
40
Report & Accounts 2017 | HC Slingsby plcReport & Accounts 2017 | HC Slingsby plc Notes to the Notice of Annual General Meeting
Entitlement to attend and vote
1.
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 close of business on 15 June 2018 (or, if the meeting is adjourned, as at close of business 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 determining the rights of any person to attend or vote (and the number of votes they may
cast) at the meeting.
Proxies
2.
3.
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. 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. 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, Link Asset Services at The Registry,
34 Beckenham Road, Beckenham, Kent, BR3 4TU no later than 10am on 15 June 2018 (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 4 May 2018 (being the latest practicable date prior to publication of this Notice of Annual General Meeting (the “Latest Practicable Date”), 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 4 May 2018 are 1,000,000.
Explanatory Notes to Resolutions 5, 6 and 7.
Resolution 5 – Authority to Allot Shares
Paragraph 5.1 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 £83,250 (representing 333,000 Ordinary Shares). This amount represents approximately 33.3% of the issued Ordinary
Share Capital of the Company as at the ‘Latest Practicable Date’.
Paragraph 5.2 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
£166,750 (representing 667,000 Ordinary Shares), as reduced by the nominal amount of any shares issued under paragraph 5.1 of this resolution. This amount (before
any reduction) represents approximately 66.7% of the issued ordinary share capital of the Company as at the Latest Practicable Date.
Resolutions 5.1 and 5.2 are in accordance with the Investment Association Guidelines issued in July 2016
The authority and power pursuant to resolution 5 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 6 – 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 and is in accordance with The Pre-Emption Group Statement of Principles.
41
Report & Accounts 2017 | HC Slingsby plc This authority would be limited to:
(a) an aggregate nominal amount of £12,500 (representing 50,000 Ordinary Shares). This aggregate nominal amount represents 5% of the issued Ordinary Share
capital of the Company as at the Latest Practicable Date and could be used for any purpose; and
(b) an additional aggregate nominal amount of £12,500 (representing 50,000 Ordinary Shares). This aggregate nominal amount represents 5% of the issued Ordinary
Share capital of the Company at the Latest Practicable Date and could only be used for an acquisition or specified capital investment.
The authority and power pursuant to resolution 6 will expire on the latter of 15 months from the date resolution 6 is passed or the conclusion of the Company’s next
Annual General Meeting.
The Board has no present intention to exercise these authorities.
Resolution 7 — General authority for the Company to purchase its own Ordinary Shares
Shareholders will be asked to provide the general authority for the Company to make market purchases on the London Stock Exchange of its Ordinary Shares,
subject to certain limitations set out below.
The Board has no immediate plans for the Company to make purchases of its Ordinary Shares if the proposed new general authority becomes effective but would
like to be able to act quickly if circumstances arise in which they consider such purchases by the Company of its Ordinary Shares to be desirable. Accordingly, it
is proposed that the Board be given a new general authority to purchase the Company’s Ordinary Shares on the terms contained in resolution 7 in the Notice of
Annual General Meeting.
The proposed new general authority will be limited, by the terms of resolution 7 in the Notice of Annual General Meeting, to purchases of up to 100,000 Ordinary
Shares, representing approximately 10 per cent. of the current issued share capital of the Company. The minimum price per Ordinary Share payable by the
Company (exclusive of expenses) will be 25p. The maximum to be paid on the exercise of such new general authority (exclusive of expenses) will be an amount
not exceeding the higher of (i) 5 per cent. above the average of the middle-market quotation for Ordinary Shares as derived from the London Stock Exchange Daily
Official List for the five business days immediately preceding the date of each purchase, and (ii) the price stipulated by Article 3(2) of the Commission Delegated
Regulation (EU) 2016/1052 of 8 March 2016 relating to the conditions applicable to buy-back programmes and stabilisation measures (being the higher of the price
of the last independent trade and the highest current independent purchase bid on the trading venue where the purchase is carried out).
The Board will only exercise the new general authority to purchase Ordinary Shares if it considers that such purchases of Ordinary Shares can be expected to result
in an increase in earnings per share after such purchases and are in the best interests of shareholders generally. The Directors would also consider carefully the
extent of the Company’s borrowings and its general financial position. Any such purchase of Ordinary Shares will be financed out of profits available for distribution.
The actual cash required to fund any buy-backs of Ordinary Shares pursuant to the new general authority will be met from existing cash resources and/or borrowing
facilities. Shareholders should note that any shares purchased by the Company will be cancelled and not made available for reissue. The number of shares in issue
will accordingly be reduced.
The maximum number of Ordinary Shares and the permitted price range are stated for the purpose of compliance with statutory and London Stock Exchange
requirements in seeking the authority. This should not be taken as any representation of the number of Ordinary Shares (if any) which the Company might purchase,
nor the terms upon which the Company would intend to make any such purchases, nor does it imply any opinion on the part of the Directors as to the market or
other value of the Company’s shares. In seeking this general authority, the Board is not indicating any commitment to buy back Ordinary Shares. Shareholders
should not, therefore, assume that any purchases will take place.
In addition, the requirements of the London Stock Exchange prevent the Company from purchasing its own shares during the period of two months before the
announcement of its half-year or full-year results (or, if shorter, the period from the end of the Company’s relevant financial period up to and including the time of the
relevant announcement), or at any other time when the directors are in a possession of unpublished price sensitive information in relation to the Company’s shares.
The general authority set out in resolution 7 in the Notice of Annual General Meeting will expire fifteen months’ after the resolution is passed or, if earlier, on the date
of the next annual general meeting of the Company. However, in order to maintain the Board’s flexibility of action, it is envisaged that this general authority may be
renewed annually at annual general meetings of the Company.
Details of Ordinary Shares purchased pursuant to the new general authority will be notified to the London Stock Exchange by 7.30 a.m. on the business day
following the date of dealing and to the registrar of companies within 28 days of the date of purchase. Details will also be included in the Company’s report and
financial statements in respect of the financial year in which any such purchases take place.
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