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2023 ReportHC Slingsby plc REPORT & ACCOUNTS For the year ended 31st December 2019 M. L. Morris Group Chief Executive D. S. Slingsby Interim Executive Chairman and Operations Director We Are: One of the UK market leaders in the distance selling of industrial and commercial equipment. We do: 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 new product development to help keep your business running smoothly. Our Commitment: Providing our customers with an extensive product range, outstanding service and efficient delivery. 2 Annual Report & Accounts | 2019 Directors and 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 6 Wellington Place Leeds LS1 4AP Financial Advisors & Brokers Allenby Capital Limited 5 St. Helens Place London EC3A 6AB Website & E-Mail Website: www.slingsby.com E-mail: sales@slingsby.com Report and Accounts - 2019 Contents Statement by the Chairman Strategic Report Report of the Directors Corporate Governance Statement of Directors’ Responsibilities Independent Auditors’ Report Consolidated Income Statement 4 6 8 10 13 14 18 Statement of Consolidated Comprehensive Income and Expense 19 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 20 21 22 23 24 24 25 48 49 51 Annual Report & Accounts | 2019 3 Statement by the Chairman Board Composition Following the Board changes in 2016, I remain as Interim Executive Chairman and during 2018 Morgan Morris was appointed Group Chief Executive. The Board continues to believe that it would benefit from the appointment of new Non-Executive Directors. Whilst this process should now be possible following the agreement with regard to the pension scheme detailed below, it is unable to proceed at present due to the Coronavirus restrictions. Results In the half year statement, I reported an operating profit of £0.1m on sales of £9.9m. The full year operating profit (before exceptional items) was £0.45m (2018: £0.52m) on sales of £19.6m (2018: £19.8m). Group sales declined by around 1% which together with a reduction in gross margin led to a profit before taxation and exceptional items of £0.16m (2018: £0.26m) The reduction in Group sales is attributable to lower sales of seasonal products (both winter and summer) due to the milder weather in 2019 compared to 2018. ESE Direct Limited (“ESE”) contributed £6.4m of sales (2018: £6.5m) and profit before tax and management charges of £0.39m (2018: £0.45m). The lack of growth in sales at ESE led us to re-evaluate the value of goodwill held as an asset on the balance sheet following the acquisition. Following this re-evaluation, we decided to impair the value of goodwill from £1.7m to £0.7m leading to a non-cash exceptional item of £1m. During 2019, two executive members transferred out of the Company’s defined benefit pension scheme at values which led to an overall reduction in the scheme deficit of £3.1m which is presented in the income statement as an exceptional gain. In addition, a re-valuation of the Group’s freehold property led to a reversal of the previous impairment, and a further £0.7m exceptional gain. After these non-cash items, the Group’s profit before tax was £2.9m (2018: loss of £0.6m). Group earnings before interest, tax, depreciation, amortisation and exceptional items (“EBITDA”) in the year ended 31 December 2019 were £0.9m (2018: £1m). Net debt at 31 December 2019 was £1.1m (2018: £1.1m). Dividend Due to the agreement reached with the Trustee of the defined benefit pension scheme, the Board is unable to recommend a final dividend for the year (2018: £nil). However, regardless of this agreement, due to the reduced pre-exceptional profit performance and the uncertainty caused by the Coronavirus, the Board would not have recommended a payment be made. Pension Scheme Protracted discussions with the Trustee of the defined benefit pension scheme and the pension authorities, regarding a long term solution to the scheme deficit, led to an agreement by which the Company re-commenced contributions paying £0.125m during the year (2018: nil). The Company has agreed to pay £0.3m a year in deficit reduction contributions which will be reviewed in June 2022. The Company will also continue to contribute £0.16m towards scheme running costs. As a result of this agreement, the Group agreed not to make distributions to shareholders prior to 1 June 2021 and to limit their quantum to £60,000 plus 50% of its net cashflow. More detail on this agreement is contained in the relevant section of the Strategic Report. The agreement removes uncertainty surrounding the Group’s contributions to the scheme and removes the risk that the Trustee demand payment of arrears of contributions of £1.6m. At 31 December 2019, the pension scheme deficit decreased by £1.8m to £6.6m (2018: £8.4m) largely due to the transfers out referred to above. This improvement in the pension scheme position together with the pre-exceptional profit before tax increased Group net assets to £1.7m (2018: £0.2m). Recent Trading Group sales declined in Q1 of 2020 against the same period in 2019 by 4%. The Coronavirus pandemic had an adverse effect on sales at ESE but this was almost offset by increased sales of certain of the Group’s products that saw increased demand due to the Coronavirus. An improvement in the Group’s overall margin and lower overheads led to operating profit being higher than in the prior year. The market remains competitive and we are cautious regarding the outlook. This is particularly the case due to significant uncertainty created by the Coronavirus. We are seeing large falls in demand from customers in certain adversely affected sectors and order concentration on a limited number of product lines and from a smaller number of customers. It is unclear as to the impact that the virus will have on demand going forward. Finally, I would like to thank our staff across the Group for their efforts in 2019 and particularly since the outbreak of Coronavirus. Across the Group, we are proud of our position as a key supplier to the NHS and related sectors and have worked hard to ensure that we have remained “open for business”. D.S.Slingsby Interim Executive Chairman 15 May 2020 4 4 Annual Report & Accounts | 2019 Annual Report & Accounts | 2019 Annual Report & Accounts | 2019 Annual Report & Accounts | 2019 5 Annual Report & Accounts | 2019 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, 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 and the confidence level of businesses. The uncertainty regarding the outcome of Brexit negotiations could impact on customer confidence leading to a reduction in sales. The Government’s response to Coronavirus has abruptly impacted on demand from certain of the Group’s customer sectors. Order intake is unpredictable and focussed on a smaller number of products and customers than normal. There is considerable uncertainty as to the impact on demand and the potential for credit related issues should companies become insolvent. 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 2019, we began investing in a new website for the Slingsby business and strengthened our product sourcing team. 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 our 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 with product sourced from Slingsby increasing during the year. 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 is what differentiates our business. Key Performance Indicators and Business Performance Sales growth Return on capital employed Return on sales Gross profit margin 2019 (1.3%) 2018 3.0% 172.8% (283.9%) 14.7% 34.5% (3.2%) 35.1% Notes: Return on capital employed is calculated as profit/loss before taxation over the total equity at the year end. This has improved due to the improvement in net assets. Return on sales is calculated as profit/loss before taxation over revenue. This has improved due to the profit for the year. 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. 6 Annual Report & Accounts | 2019 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 and prepares profit and loss account and cashflow forecasts as appropriate. Regulatory The Group remains 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. Approvals The Group is committed to continuous improvement in both Quality and Environmental Management, we remain UKAS (UK Accreditation Service) accredited to the international standards ISO 9001:2015 and ISO 14001:2015 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 movements in the Group’s profits before tax, cash flow and balance sheet. The Group re-commenced deficit reduction contributions during 2019 paying £0.125m (2018: nil) and the Group contributed £0.16m towards the running costs of the scheme which are reflected in overheads. The Group is scheduled to pay £305,000 in deficit reduction contributions in 2020 rising each year by inflation with a review at 30 June 2022. The Group will also continue to contribute £0.16m each year towards the Scheme’s running costs. The Scheme will also receive 50% of any net cashflow generated by the Group over £150,000. The Group now has certainty over its short term contributions to the Scheme and has removed the risk that the arrears of contributions (£1.58m) can be demanded by the Trustee. As a condition of the above arrangement, the Group has agreed not to make any distribution to shareholders prior to 1 June 2021 and to restrict such distributions to an amount not greater than £60,000 plus 50% of its net cashflow. The Group is obliged to consult with the Trustee regarding certain other matters but is not obliged to change its approach as a result. Health and Safety and Environmental Sustainability 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. In addition to statutory and regulatory compliance, the Group takes pride in its environmental initiatives which have been recognised through continued compliance with ISO14001 Environmental Management Standard. Statement by the Directors in Performance of their Statutory Duties in Accordance with S172(1) Companies Act 2006 The board of directors of HC Slingsby PLC consider both individually and together, that they have acted in the way they consider in good faith, would be most likely to promote the success of the Company for the benefit of its members as a whole (having regard to the stakeholders and matters set out in S172 of Companies Act 2006). The Board considers its stakeholders to be its shareholders, employees, customers, suppliers/creditors and the environment. The way that the Company considers and discharges its obligations in respect of S172 Companies Act 2006 in respect of its stakeholders can be found in the Corporate Governance section of this annual report (pages 6 – 8) and in respect of the environment at the relevant section above. Significant Decision Made During the year, the directors concluded an agreement with the Trustee of its defined benefit pension scheme. Details of the agreement are contained in the relevant section above. In arriving at this decision, the directors considered the positions of the defined benefit pension scheme (as a major creditor of the company), those of scheme members who are employees, deferred pensioners who are no longer employees and pensioners, and those of its shareholders (given the curtailment of future dividends). After due consideration, the directors considered that the agreement satisfactorily balanced the interests of both stakeholders by the re-commencement of affordable repayments to a large creditor whilst still allowing future returns to shareholders. By order of the Board M. L. Morris Company Secretary 15 May 2020 7 Annual Report & Accounts | 2019 Report of the Directors Going Concern The directors have prepared trading and cash flow forecasts for the Group for the period to 31 December 2021, which include the pension scheme contributions as agreed. 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 2021. The financial statements have therefore been prepared on a going concern basis which assumes the Group will continue in operation for the foreseeable future. However, the coronavirus pandemic could have a short to medium term impact on the Group’s financial performance which is not easy to forecast. The impact could be from a significant fall in demand, from customer credit losses (bad debts) or from late customer payments. These would restrict the Group’s ability to generate operating cashflow. While the directors are taking steps to manage cashflow, reduce costs and to plan appropriate mitigative commercial actions to take during this period of instability across the global economy, sensitivity analysis of the trading and cashflow forecasts prepared for the period to 31 December 2021 indicate some possible scenarios relating to ongoing reduced sales activity where the Group may not be able to meet its liabilities as they fall due. The directors believe that it remains appropriate to prepare the financial statements on a going concern basis, however the coronavirus outbreak and the risks it may pose to the Group give rise to a level of material uncertainty relating to going concern. The financial statements do not include any adjustments that would result from the basis of preparation as a going concern being inappropriate. Additional information can be found at note 1. The Directors are pleased to present their annual report and audited consolidated financial statements for the year ended 31 December 2019. 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 Directors do not propose a dividend in respect of the 2019 financial year (2018:nil). Directors’ Interests The beneficial interests of the directors and their immediate families in the shares of the Company are: Number of ordinary shares of 25p each 31 December 1 January 2019 2019 115,167 115,167 1,000 1,000 D. S. Slingsby M.L. Morris There have been no other changes in the directors’ shareholdings between 31 December 2019 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 (2018: 64,000) ordinary shares. 8 Annual Report & Accounts | 2019 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 6-8 of the annual report. Post Balance Sheet Events Following the year end, the Group’s activities have been impacted by the global coronavirus pandemic. We are seeing falls in demand from customers in certain adversely affected sectors and order concentration on a limited number of product lines and from a smaller number of customers. It is unclear as to the impact that the virus will have on demand going forward. Whilst the precise impact of the pandemic is uncertain the Directors have re-forecast profitability and cashflows for the foreseeable future to take into account expected outcomes. Details of actions being undertaken to mitigate the impact of the pandemic are provided in the Going Concern accounting policy. By order of the Board M. L. Morris Company Secretary 15 May 2020 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 13 May 2020: Number of ordinary Shares of 25p each Percentage Holding M. Chadwick* K. J. Williams 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 P.S. Allen S. Whittaker C. N. Bennett H C Slingsby plc Retirement Benefits Scheme 180,295 67,835 54,866 54,302 53,886 51,167 18.0% 6.8% 5.5% 5.4% 5.4% 5.1% 48,381 4.8% 47,138 37,440 32,500 31,000 30,061 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 Financial Instruments The Group’s financial instruments comprise cash, banking facilities, 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 remains in force. 9 Annual Report & Accounts | 2019 Corporate Governance HC Slingsby PLC is committed to high standards of corporate governance and follows the requirements of the Corporate Governance Code (“the Code”) published by the Quoted Companies Alliance in April 2018, a full version of which is available at http://www.theqca.com. The Board explains below the extent of compliance with the Code. The Board and Committee Meetings The Board meets on a formal basis regularly and during 2019 there were 7 formal board meetings. 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: Dominic S. Slingsby Interim Executive Chairman and Operations Director* Dominic joined the Group in 1982 and after an initial spell as a Sales Representative became Marketing Manager in 1985. He was appointed to the Board in 1990 and became Managing Director in 1997 before taking the dual role of Interim Executive Chairman & Operations Director in 2016. He is a member of both the Audit and Remuneration Committees. Dominic Slingsby’s service agreement specifies a rolling 12 month notice period. Morgan L. Morris Group Chief Executive and Company Secretary Morgan joined the Board as Interim Finance Director in February 2015 becoming Group Chief Executive in May 2018. Previously Morgan was Finance and Commercial Director for a speciality chemicals manufacturer and prior to that held the position of Corporate Recovery Director for Ernst & Young, as well as a range of Pan-European roles for Arthur Andersen. Morgan holds a Business Finance & Economics degree, is FCA qualified and is a licensed insolvency practitioner. He is a member of the Audit and Remuneration Committees. Morgan Morris’ service agreement specifies a rolling 6 month notice period. *Acting Chairman of both Audit and Remuneration Committees The Board are mindful of the need to keep skills and experience up to date which is done through a combination of courses, continuing professional development through professional bodies, reading and on the job experience. 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. Both Directors attended all 7 board meetings during the year. Audit Committee The audit committee meets as required but at least twice a year. In addition to reviewing the Annual and Interim Reports prior to their release, it keeps the scope, cost effectiveness, independence and objectivity of the external auditors under review. This includes monitoring the level of non-audit fees. The external auditors attend its meetings as required. There were two audit committee meetings during 2019 attended by both Directors. Remuneration Committee The committee is responsible for determination of the remuneration and remuneration policy for the group’s executive directors and senior executives setting the scale and structure of such remuneration. Directors’ service agreements and notice periods are reviewed with due regards to the interests of shareholders. There was one meeting of the remuneration committee during 2019 attended by both Directors. 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. The Board adopted the Quoted Companies Alliance Corporate Governance Code in April 2018. The extent of compliance with the ten principles that comprise the Code, together with an explanation of any areas of non-compliance are set out below: 10 Annual Report & Accounts | 2019 Principle Establish a strategy and business model which promote long term value for shareholders Seek to understand and meet shareholder needs and expectations Fully compliant Fully compliant Fully compliant Partially compliant Take into account wider stakeholder and social responsibilities and their implications for long term success Embed effective risk management, considering both opportunities and threats, throughout the organisation Maintain the board as a well-functioning, balanced team led by the chair Extent of current compliance Fully compliant Commentary Further disclosure(s) The relevant information concerning the Group’s model and strategy can be found in the Strategic Report within the Annual Report. Strategic Report section of the Annual Report www.slingsby.com; Investor Relations, AGM notices www.slingsby.com; Investor Relations, Corporate Governance Principal Risks section of the Strategic Report within the Annual Report Board and Committee meetings section of the Corporate Governance part of the Annual Report Key risks and mitigating actions are detailed in the Principal Risks section of the Strategic Report within the Annual Report. The Company’s details are displayed on its website allowing shareholders to contact the Company if they so wish. The Company holds an annual general meeting to which all members are invited and during which, time is set aside to allow questions from attending members to any board member. As the Company is small, it does not have a dedicated investor relations department and so the CEO is responsible for reviewing all communications received from members and determining the most appropriate response. Directors and employees adopt a broad view during decision making to take meaningful account of the impact of the business on all key stakeholder groups. The Board recognises that the Group’s long term success is reliant on the efforts of its employees, customers and suppliers and through maintaining relationships with its regulators. Feedback from employees, customer groups, suppliers and others is actively encouraged. The Group operates a system of internal controls designed (to the extent considered appropriate) to safeguard Group assets and protect the business from identified risks, including risk to reputation. The Board currently comprises only two Executive Directors who receive high quality information in a timely manner to facilitate proper assessment of the matters requiring a decision or insight. The Board have been seeking the appointment of one or more Non-Executive Directors for some time but in the light of the Company’s very significant pension deficit and the highly publicised issues facing directors of public companies with a deficit on its pension fund, it has not been possible to identify persons prepared to accept such a role. It is the Board’s intention to appoint at least one Non- Executive Director at the earliest opportunity. The Board does not consider Dominic Slingsby to be independent in view of his family’s large combined interest in the Company. Although Morgan Morris is an executive director and therefore cannot be considered by the Board to be totally independent, Morgan Morris is independent of Dominic Slingsby and the rest of the Slingsby family. 11 Annual Report & Accounts | 2019 Corporate Governance (continued) Extent of current compliance Fully compliant Principle Ensure that between them the directors have the necessary up-to date experience, skills and capabilities Partially compliant Fully compliant Non-compliant Evaluate board performance based on clear and relevant objectives, seeking continuous improvement Promote a corporate culture that is based on ethical values and behaviours Maintain governance structures and processes that are fit for purpose and support good decision-making by the board Fully compliant Communicate how the company is governed and is performing by maintaining a dialogue with shareholders and other relevant stakeholders Further disclosure(s) Board and Committee meetings section of the Corporate Governance part of the Annual Report www.slingsby.com; Investors Relations, Corporate Governance Board and Committee meetings section of the Corporate Governance part of the Annual Report www.slingsby.com; Investor Relations Commentary The Board is satisfied that the current composition provides the required degree of skills, experience, diversity and capabilities appropriate to the needs of the business. Steps are taken to challenge the status quo, and encourage proper consideration of any dissenting opinion. Board composition and succession planning are subject to review taking account of the potential future needs of the business. The Board has not taken any specific external advice on a matter, other than in the normal course of business as an AIM quoted company and other than in respect of the Company’s defined benefit pension scheme. The Directors rely on the Company’s advisory team to keep their skills up to date and through attending market updates and other seminars provided by the advisory team, the London Stock Exchange and other intermediaries. Board evaluation has not been carried out as part of a formal process during 2019, although the Chairman has actively encouraged self-evaluation by all Board members, and feedback on the conduct and content of board meetings. The Board will consider whether a more structured approach is required in future. The Board promotes high ethical and moral standards. The Board and all employees expect to be judged by, and accountable for their actions. The Board currently comprises two Executive Directors. The Board is currently non-compliant with the QCA Code as it does not comprise any Non-Executive Directors. The Company is seeking appropriate candidates to join the Board, most notably an Independent Chairman and Independent Non-Executive Director. Whilst a number of highly suitable candidates have been identified, appointments have not been made due to the ongoing uncertainty regarding the pension fund commitments and its potential impact on personal liability. The roles of Chairman and Chief Executive are separated. The Chief Executive is responsible for the operating performance of the Company and its subsidiaries. The Board attaches great importance to providing shareholders with clear and transparent information on the Group’s activities and strategy. Details of all shareholder communications are provided on the Company’s website, including historical annual reports and governance related material together with notices of all general meetings for the last five years. From 2019 the Company will disclose outcomes of all general meeting votes. The Company lists contact details on its website and on all announcements released via RNS, should shareholders wish to communicate with the Board. By order of the Board M. L. Morris Company Secretary 15 May 2020 12 Annual Report & Accounts | 2019 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. 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 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. M. L. Morris Company Secretary 15 May 2020 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. state whether they have been prepared in accordance with IFRSs adopted by the EU ; and d. 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. 13 Annual Report & Accounts | 2019 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 2019 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 balance sheet, the company balance sheet, the consolidated cash flow statement, the company cash flow statement and the 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 2019 and of the group’s profit 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. Material uncertainty related to going concern We draw attention to note 1 in the financial statements, which indicates that the group may be adversely affected by the ongoing impact of the Covid-19 (coronavirus) outbreak and in particular the potential impact of a significant fall in demand on the group’s cashflow. As stated in note 1, these events or conditions, along with the other matters as set forth in note 1, indicate that a material uncertainty exists that may cast significant doubt on the Company’s ability to continue as a going concern. Our opinion is not modified in respect of this matter. Summary of our audit approach Key audit matters Group • Impairment of goodwill • Provision for slow moving inventory Materiality Parent Company • Impairment of investment in subsidiary Group • Overall materiality: £83,000 • Performance materiality: £62,000 Parent Company Overall materiality: £57,000 Performance materiality: £43,000 Scope Our audit procedures covered 100% of revenue, 100% of total assets and 100% of loss before tax. Key audit matters Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the group and parent company 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 group and parent company financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters. In addition to the matter described in the Material uncertainty related to going concern section], we have determined the matters described below to be the key audit matters to be communicated in our report. 14 Annual Report & Accounts | 2019 Impairment of goodwill Key audit matter description The non-current assets of the ESE Direct cash generating unit (CGU) includes £700,000 of goodwill (after a current year impairment charge of £1,034,000) and this CGU is subject to annual impairment testing. Management have disclosed details relating to their impairment test in note 14. Impairment testing requires management to compare the carrying amount of the CGUs attributable assets with the higher of fair value less costs to sell 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 which could have a material impact on the financial statements and gives rise to the risk of material misstatement. How the matter was addressed in the audit Management provided us with an impairment test for the ESE Direct CGU. We performed audit work on this impairment 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. • 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 and considering the existence of any contradictory evidence which may have indicated that management’s conclusion was not appropriate. As a result of these discussions, management issued a revised impairment test which showed an impairment charge of £1m. We reviewed this model in the light of our previous findings. Finally, we reviewed the disclosures made in the financial statements to ensure that they were in accordance with the applicable financial reporting framework. Provision for slow moving inventory Key audit matter description How the matter was addressed in the audit The group had inventory of £2,134,000 at 31 December 2019 and an associated provision for obsolescence of £408,000. As disclosed in the accounting policies, inventories are held at the lower of cost and net realisable value. As disclosed in note 1 and note 17, management estimate the extent to which provisions are required to cover stock obsolescence. Given the quantum of inventory held at the balance sheet date, and the estimation inherent within the calculation of the inventory provision, the adequacy of the recorded provision represents one of the most significant risks of material misstatement. Our audit work on the inventory provision calculation included: • Obtaining and reviewing the calculation and considering and challenging the appropriateness of any judgements and assumptions made therein. • Testing the mathematical accuracy of the calculation and assessing the accuracy of the source data. • Identifying potentially obsolete or slow-moving inventory with reference to historic utilisation of inventory and comparing to the provision recognised. • Testing a sample of sales to test whether net realisable value is higher than inventory cost. Impairment of investment in subsidiary (parent company only) Key audit matter description As disclosed in note 15, the company has an investment in ESE Direct Limited of £1,500,000 (after recording an impairment provision against this balance of £1,100,000). Management is required to perform impairment testing on this balance where there is an indicator of impairment. In light of the impairment test performed for the ESE Direct CGU, the risk is that the parent company balance sheet may not properly reflect any impairment in the cost of investment. How the matter was addressed in the audit Management provided us with their calculation of the impairment provision of £1,100,000. In order to assess the adequacy of the provision we tested whether the parent company investment was written down to the higher of the fair value less costs to sell and value in use of the ESE Direct CGU. The work we performed is documented in the key audit matter ‘Impairment of goodwill’ above. 15 Annual Report & Accounts | 2019 Independent auditors’ report to the members of H C Slingsby plc (continued) 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. When evaluating whether the effects of misstatements, both individually and on the financial statements as a whole, could reasonably influence the economic decisions of the users, we take into account the qualitative nature and the size of the misstatements. Based on our professional judgement, we determined materiality as follows: Overall materiality Group £83,000 Parent company £57,000 Basis for determining overall materiality 9.7% of profit before interest, tax, depreciation, amortisation and exceptional items 9.7% of profit before interest, tax, depreciation, amortisation and exceptional items Rationale for benchmark applied The adjusted measure has been selected on the basis that this benchmark is of most relevance to the users of the financial statements. The adjusted measure has been selected on the basis that this benchmark is of most relevance to the users of the financial statements. Performance materiality £62,000 £43,000 Basis for determining performance materiality 75% of overall materiality 75% of overall materiality Reporting of misstatements to the Audit Committee Misstatements in excess of £4,000 and misstatements below that threshold that, in our view, warranted reporting on qualitative grounds. Misstatements in excess of £3,000 and misstatements below that threshold that, in our view, warranted reporting on qualitative grounds. An overview of the scope of our audit The group consists of 2 components, both located in the United Kingdom. The coverage achieved by our audit procedures was: Number of components Revenue Total assets Profit before tax Full scope audit Total 2 2 100% 100% 100% 100% 100% 100% 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. 16 Annual Report & Accounts | 2019 Use of our 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 15 May 2020 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, 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. 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. 17 Annual Report & Accounts | 2019 Consolidated Income Statement For the year ended 31 December 2019 Revenue Cost of sales Gross profit Distribution costs Administrative expenses (including exceptional credit of £2,726,000 in 2019 (2018 £891,000 loss) Operating profit before exceptional items Exceptional items Operating profit/(loss) Finance income Finance costs Profit before taxation and exceptional items Exceptional items Profit/(loss) before taxation Taxation Profit /(loss) for the year attributable to owners of the parent Note 2 3 6 7 8 3 9 2019 £’000 19,568 (12,825) 6,743 (4,139) 568 446 2,726 3,172 - (285) 161 2,726 2,887 (552) 2,335 2018 £’000 19,817 (12,867) 6,950 (4,120) (3, 201) 520 (891) (371) - (262) 258 (891) (633) (29) (662) Basic and diluted profit/(loss) per share 10 233.5p (66.2p) 18 Annual Report & Accounts | 2019 Statement of Consolidated Comprehensive Income and Expense For the year ended 31 December 2019 Profit/(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 Other comprehensive (expense)/income Total comprehensive income/(expense) for the year attributable to equity shareholders Note 24 16 2019 £’000 2,335 (1,069) 182 (887) 1,448 2018 £’000 (662) 604 (103) 501 (161) 19 Annual Report & Accounts | 2019 Statement of Consolidated and Company Changes in Shareholders’ Equity For the year ended 31 December 2019 Group 1 January 2018 Loss for the year Other comprehensive income for the year Total comprehensive expense for the year 1 January 2019 Profit for the year Other comprehensive expense for the year Total comprehensive income for the year Share capital £’000 250 - - - 250 - - - Retained earnings Total equity £’000 £’000 134 (662) 501 (161) (27) 2,335 (887) 1,448 384 (662) 501 (161) 223 2,335 (887) 1,448 1,671 31 December 2019 250 1,421 Company 1 January 2018 Loss for the year Other comprehensive income for the year Total comprehensive expense for the year 1 January 2019 Profit for the year Other comprehensive expense for the year Total comprehensive income for the year 31 December 2019 Share capital £’000 250 - - - 250 - - - 250 Retained earnings Total equity £’000 £’000 69 (1,561) 501 (1,060) (991) 2,236 (887) 1,349 358 319 (1,561) 501 (1,060) (741) 2,236 (887) 1,349 608 20 Annual Report & Accounts | 2019 Consolidated Balance Sheet As at 31 December 2019 Note 2019 £’000 2018 £’000 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 Lease obligations Net current assets Non-current liabilities Lease obligations Retirement benefit obligation Deferred tax liabilities Net assets Capital and reserves Share capital Retained earnings Total equity 13 14 14 16 17 18 20 19 20 21 21 24 16 25 5,296 610 700 1,115 7,721 2,134 2,401 - 1,278 5,813 4,578 641 1,734 1,434 8,387 1,947 2,576 14 1,458 5,995 (4,729) (5,261) (8) (32) - - (4,769) (5,261) 1,044 734 (66) (6,558) (470) 1,671 250 1,421 1,671 - (8,438) (460) 223 250 (27) 223 The financial statements were approved by the Board of Directors on 15 May 2020 and were signed on its behalf by: D. S. Slingsby Director H C Slingsby plc Registered Number: 452716 M. L. Morris Director 21 Annual Report & Accounts | 2019 Company Balance Sheet As at 31 December 2019 Assets Non-current assets Property, plant and equipment Intangible assets Investments in subsidiaries 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 Net current liabilities Non-current liabilities Retirement benefit obligation Deferred tax liabilities Net assets Capital and reserves Share capital Retained earnings Total equity Note 2019 £’000 2018 £’000 13 14 15 16 17 18 20 19 20 24 16 25 5,127 85 1,517 1,115 7,844 2,134 2,112 - 107 4,353 (4,642) (8) (4,650) (297) (6,558) (381) 608 250 358 608 4,519 14 2,564 1,434 8,531 1,947 2,235 14 391 4,587 (5,067) - (5,067) (480) (8,438) (354) (741) 250 (991) (741) 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 profit of £2,236,000 (2018: loss £1,561,000). The financial statements were approved by the Board of Directors on 15 May 2020 and were signed on its behalf by: D. S. Slingsby Director H C Slingsby plc Registered Number: 452716 M. L. Morris Director 22 Annual Report & Accounts | 2019 Consolidated Cash Flow Statement For the year ended 31 December 2019 Cash flows from operating activities Cash generated from operations Interest payable UK corporation tax paid Cash generated from operating activities Cash flows from investing activities Purchase of property, plant and equipment Proceeds from sales of property, plant and equipment Purchase of intangible assets Net cash used in investing activities Cash flows from financing activities Capital element of lease payments Proceeds from / (repayment) of borrowings (Decrease) / Increase in overdraft Net cash used in financing activities Net (decrease)/increase in cash and cash equivalents Opening cash and cash equivalents Closing cash and cash equivalents Note 13 14 2019 £’000 404 (36) (57) 311 (212) 20 (83) (275) (36) 397 (577) (216) (180) 1,458 1,278 2018 £’000 893 (45) (60) 788 (358) 41 - (317) (37) (575) 603 (9) 462 996 1,458 23 Annual Report & Accounts | 2019 Company Cash Flow Statement For the year ended 31 December 2019 Cash flows from operating activities Cash generated from/(used in) operations Interest payable Cash generated from/(used in) operating activities Cash flows from investing activities Purchase of property, plant and equipment Proceeds from sales of property, plant and equipment Purchase of intangible assets Net cash used in investing activities Cash flows from financing activities Capital element of lease payments Proceeds from / (repayment) of borrowings (Decrease) / Increase in overdraft Net cash used in financing activities Net (decrease)/increase in cash and cash equivalents Opening cash and cash equivalents Closing cash and cash equivalents Note 13 14 2019 £’000 174 (36) 138 (179) 20 (83) (242) - 397 (577) (180) (284) 391 107 Note to the Cash Flow Statements For the year ended 31 December 2019 Group Company Cash generated from/(used in) operating activities Profit / (loss) before tax Net finance costs Depreciation and amortisation Defined benefit pension scheme contributions paid Property impairment reversal Settlement gain related to defined benefit pension scheme Exceptional impairment provision Profit on sale of property, plant and equipment Exceptional charge for GMP equalisation Increase in inventories Decrease/(increase) in trade and other receivables (Increase)/Decrease in trade and other payables Cash generated from/(used in) operating activities 2019 £’000 2,887 285 414 (125) (691) (3,069) 1,034 (8) - (186) 189 (326) 404 2018 £’000 (633) 262 463 - - - 675 (16) 216 (124) (214) 264 893 2019 £’000 2,764 280 261 (125) (691) (3,069) 1,047 (8) - (186) 136 (235) 174 2018 £’000 594 (45) 549 (358) 41 - (317) (37) (575) 603 (9) 223 168 391 2018 £’000 (1,567) 262 330 - - - 1,436 (16) 216 (124) (152) 209 594 24 Annual Report & Accounts | 2019 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 (IFRIC) 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 profit for the year of £2.3m largely due to non-cash exceptional items (2018 loss £662,000) and had net current assets at 31 December 2019 of £1,044,000 (2018 net current assets of £734,000). The result of the company for the financial year was a profit of £2,236,000 (2018: loss £1,561,000). An agreement has been reached with the pension scheme Trustee, regarding the Company’s short term contributions to the Scheme which removed the risk that the Trustee could demand repayment of the arrears of contributions of £1.58m. The Directors have prepared trading and cash flow forecasts for the group for the period to 31 December 2021, which include the pension scheme contributions as agreed. 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 2021. The financial statements have therefore been prepared on a going concern basis which assumes the group will continue in operation for the foreseeable future. However, the coronavirus pandemic could have a short to medium term impact on the group’s financial performance which is not easy to forecast. The impact could be from a significant fall in demand, from customer credit losses (bad debts) or from late customer payments. These would restrict the group’s ability to generate operating cashflow. While the directors are taking steps to manage cashflow, reduce costs and to plan appropriate mitigative commercial actions to take during this period of instability across the global economy, sensitivity analysis of the trading and cashflow forecasts prepared for the period to 31 December 2021 indicate some possible scenarios relating to ongoing reduced sales activity where the group may not be able to meet its liabilities as they fall due. The directors believe that it remains appropriate to prepare the financial statements on a going concern basis, however the coronavirus outbreak and the risks it may pose to the group give rise to a level of material uncertainty relating to going concern. The financial statements do not include any adjustments that would result from the basis of preparation as a going concern being inappropriate. Initial application of IFRS 16 Leases During the year, the Group adopted IFRS 16 ‘Leases’ (“IFRS 16”) for the first time. IFRS 16 replaces IAS 17 ‘Leases’ (“IAS 17”). The Group previously classified leases between ‘finance leases’ that transferred substantially all the risks and rewards incidental to ownership of the asset to the Group, and ‘operating leases’. The main change on application of IFRS 16 is the accounting for ‘operating leases’ where rentals payable (as adjusted for lease incentives) were previously expensed under IAS 17 on a straight-line basis over the lease term. Under IFRS 16 a right-of- use asset and a lease liability are recognised for all leases except ‘low-value’ and ‘short’ term leases where lease payments are recognised on a straight-line basis over the lease term. The Group has applied IFRS 16 retrospectively to all leases, but has elected to recognise the cumulative effect against opening reserves at 1 January 2019. Therefore, the comparative figures are as previously reported under IAS 17. The Group has applied this approach subject to the transition provisions set out below: • For all contracts that existed prior to 1 January 2019, the Group has not applied IFRS 16 to reassess whether each contract is, or contains, a lease; • A single discount rate has been applied to portfolios of leases with similar characteristics; • Initial direct costs have been excluded from the measurement of the right-of-use assets; and • Hindsight has been applied in determining the lease term for contracts that contain lease extension or termination options. As at 1 January 2019, the Group recognised right-of-use assets and a lease liability of £128,000 in the statement of financial position. The right-of-use assets recognised at 1 January 2019 were assessed for impairment. No impairment losses have been recognised as a result. The amounts recognised for leases at 1 January 2019, have been measured as follows: • • The lease liability is measured at the present value of the remaining lease payments at 1 January 2019, discounted at the lessee’s incremental borrowing rate at that date. The right-of-use asset is measured at the amount of the lease liability recognised in accordance with the measurement set out above. 25 Annual Report & Accounts | 2019 Notes to the Accounts (continued) Impact of new International Financial Reporting Standards The following other new standards and amended standards, none of which have had a material impact on these financial statements, are mandatory and relevant to the Group for the first time for the financial period commencing 1 January 2019: 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. • IFRIC23: Uncertainty over Income Tax Treatments • Amendments to IAS 19: Plan amendment, curtailment or settlement • Annual Improvements to IFRS Standards 2015-2017 Cycle Accounting standards in issue but not yet effective At the date of authorisation of these financial statements the following standards and interpretations, which have not been applied in these financial statements and which are considered potentially relevant, were in issue but not yet effective (and in some cases had not yet been adopted by the EU): • Amendments to References to the Conceptual Framework in IFRS Standards • Amendments to IAS 1 and IAS 8: Definition of Material • Amendments to IAS 1: Presentation of Financial Statements: Classification of Liabilities as Current or Non- current • Amendments to IFRS 3 Business Combinations The Directors anticipate that the adoption of the amendments to standards in future periods will have no material impact on the recognition and measurement of assets, liabilities and the associated performance of the Group or the Company when the relevant standards and interpretations come into effect. Basis of Consolidation The financial statements of the Group consolidate the financial statements of H C Slingsby plc and its subsidiaries up to 31 December 2019 using the acquisition method of 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 date on which control is transferred to the group. 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. 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 estimates and 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, and the selection of a suitable discount rate. Defined benefit pension obligations at the reporting date were valued at £6.6m (2018: £8.4m). This movement was due to the transfers out of the Scheme during 2019 and the impact of changes in actuarial assumptions. • 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 £408,000 (2018: £374,000) (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 26 Annual Report & Accounts | 2019 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). As disclosed in notes 3 and 14, the results for the year ended 31 December 2019 include an impairment of £1m. 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. • 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 2019, this review resulted in an increase in the carrying value of the Baildon property and a reversal against an impairment provision previously recorded, as detailed in note 13. The revised carrying amount has been derived from a professional valuation of the property and whilst any valuation involves a degree of estimation, the directors consider that the degree of uncertainty is sufficiently reduced by the use of an appropriately qualified third party and have concluded that a partial reversal of the previous impairment recorded in 2017 is appropriate. • 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 2019 the group has recognised deferred tax assets of £1,150,000 (2018:£1,434,000) and deferred tax liabilities of £470,000 (2018: £460,000) (see note 16 for disclosure of the group’s deferred tax assets and liabilities). • Lease liabilities. In determining the lease term the Group assesses whether it is reasonably certain to exercise, or not to exercise, options to extend or terminate a lease. This assessment is made at the start of the lease and is re- assessed if significant events of changes in circumstances occur that are within the lessee’s control. When the interest rate implicit in the lease is not readily determinable, the Group estimates the incremental borrowing rate based on its external borrowings secured against similar asset, adjusted for the term of the lease. The Group applied a rate of 5% to all its leases disclosed in note 21, as it represents the Group’s expected borrowing rate. Contracts with customers are typically fixed price based on agreed amounts and invoiced on dispatch to the customer in line with the standard terms and conditions of the group. Typically, the Group’s standard payment terms are 30 days from date of invoice but certain customers have longer agreed terms. 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 credit 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 and settlement gains 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 On commencement of a contract which gives the Group the right to use assets for a period of time in exchange for consideration, the Group recognises a right-of-use asset and a lease liability unless the lease qualifies as a ‘short-term’ lease (term is twelve months or less with no option to purchase the lease asset) or a ‘low-value’ lease (where the underlying asset is £4,000 or less when new). The lease liability is initially measured at the present value of the lease payments during the lease term discounted using the interest rate implicit in the lease, or the incremental borrowing rate if the interest rate implicit in the lease cannot be readily determined. The lease term is the non-cancellable period of the lease plus extension periods that the Group is reasonably certain to exercise and termination periods that the Group is reasonably certain not to exercise. Lease payments include 27 Annual Report & Accounts | 2019 Notes to the Accounts (continued) fixed payments, less any lease incentives receivable, variable lease payments dependant on an index or a rate and any residual value guarantees. The lease liability is subsequently increased for a constant periodic rate of interest on the remaining balance of the lease liability and reduced for lease payments. Interest on the lease liability is recognised in profit or loss. Variable lease payments not included in the measurement of the lease liability as they are not dependent on an index or rate, are recognised in profit or loss in the period in which the event or condition that triggers those payments occurs. 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 functional 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. Monetary 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. 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. A right-of-use asset is recognised at commencement of the lease and initially measured at the amount of the lease liability, plus any incremental costs of obtaining the lease and any lease payments made at or before the leased asset is available for use by the Group. The right-of-use asset is subsequently measured at cost less accumulated depreciation and any accumulated impairment losses. Right-of-use assets are depreciated on a straight-line basis over the lease term. Intangible Assets Intangible assets are stated at cost less accumulated amortisation. They are recognised if it is probable 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. 28 Annual Report & Accounts | 2019 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. Deferred tax assets and liabilities are offset where there is a legally enforceable right to offset current tax assets and liabilities and where the deferred tax balances relate to the same taxation authority. 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 and age. Financial assets other than derivatives The Group classifies its financial assets as subsequently measured at amortised cost under IFRS 9 if they meets both of the following criteria: • Hold to collect business model test. The asset is held within a business model whose objective is to hold the financial asset in order to collect contractual cash flows; and • Solely payments of principal and interest (SPPI) contractual cash flow characteristics test. The contractual terms of the financial asset give rise to cash flows that are SPPI on the principal amount outstanding on a specified date. Financial assets include trade receivables, amounts due and owed to subsidiaries and cash and cash equivalents. Trade and Other Receivables Trade and other receivables that do not contain a significant financing component are initially recognised at fair value and subsequently held at amortised cost less provision for impairment. IFRS 9 introduces an expected credit loss model which broadens the information that an entity is required to consider when determining its expectations of impairment. Under this model, expectations of future events must be taken into account and this could result in the earlier recognition of impairments. 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. Financial liabilities Financial liabilities are classified as either financial liabilities at amortised cost or financial liabilities at fair value through profit or loss. Financial liabilities include trade and other payables, derivative financial instruments and bank borrowings. Trade payables Trade payables are recognised initially at fair value and subsequently measured at amortised cost using the effective interest method. Derivative financial instruments Derivative financial instruments are initially recognised at fair value on the date a contract is entered into and are subsequently 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. Current tax assets and liabilities are offset where the entity has a legally enforceable right to offset and intends either to settle on a net basis, or to realise the asset and settle the liability simultaneously. 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. 29 Annual Report & Accounts | 2019 Notes to the Accounts (continued) 2. Segmental Reporting Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision-maker. The chief operating decision-maker, who is responsible for allocating resources and assessing performance of the operating segments, has been identified as the Chief Executive Officer. 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, profits/ (losses), assets and liabilities are wholly attributable to that business segment. The operations of the group are based in the UK. 3. Exceptional Items Settlement gain GMP equalisation Goodwill impairment provision Property impairment reversal 2019 £’000 3,069 - (1,034) 691 2,726 2018 £’000 - (216) (675) - (891) The reversal of the property impairment is explained more fully in note 13 and further details relating to the goodwill impairment provision are included in note 14. The GMP equalisation charge and the settlement gain are explained more fully in note 24. 4. Employee Information Staff costs Wages and salaries Social security costs Other pension and life assurance costs Group 2019 £’000 2,625 231 81 2,937 2018 £’000 2,586 220 72 2,878 Company 2019 £’000 2,168 181 68 2,417 2018 £’000 2,087 177 61 2,325 The average monthly number of persons, including directors, employed during the year was: Group Company 2019 Number 2018 Number 2019 Number 2018 Number 85 22 107 87 23 110 70 18 88 69 19 88 Selling and distribution Administration 30 Annual Report & Accounts | 2019 5. Directors’ Remuneration (including pension contributions) Dominic Slingsby Morgan Morris Highest paid Director: Aggregate emoluments Defined contribution / defined benefit scheme accrued pension at end of year 2019 £’000 102 105 207 102 3 2018 £’000 106 70 176 106 89 Dominic Slingsby had accrued benefits under a defined benefit scheme from which he transferred out during 2019. The defined benefit scheme accrued pension at the end of the year was therefore £nil (2018: £89,000). Morgan Morris accrued benefits under a defined contribution pension scheme amounting to £2,600 (2018: £1,980). 6. Operating profit/(loss) Operating loss is stated after charging/(crediting): Goodwill impairment Property impairment reversal 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 losses/(gains) 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 2019 £’000 1,034 691 (8) 300 114 - - 1 36 5 6 1 48 2018 £’000 675 - (16) 227 236 36 5 48 36 5 6 1 48 31 Annual Report & Accounts | 2019 Notes to the Accounts (continued) 7. Finance Income Bank interest receivable 8. Finance Costs Interest payable on bank borrowings Interest payable on lease liabilities Net retirement benefit obligation finance costs (note 24) 9. Taxation Current tax UK corporation tax: – current year Deferred tax: UK deferred tax: – origination and reversal of timing differences – adjustments in respect of prior years Total taxation charge Factors affecting the tax credit for the year: 2019 £’000 - 2019 £’000 35 5 245 285 2019 £’000 41 41 511 - 511 552 2018 £’000 - 2018 £’000 43 3 216 262 2018 £’000 57 57 (27) (1) (28) 29 The tax on the Group’s loss before tax differs from the theoretical amount that would arise using the weighted average tax rate applicable to profits of the Group as follows: Profit/(loss) before taxation Tax at the UK corporation tax rate of 19% 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 for the year 2019 £’000 2,887 549 65 (62) - - 552 2018 £’000 (633) (120) 149 1 - (1) 29 The Group profits for this accounting period are taxed at an effective rate of 19%. Deferred tax assets and liabilities are measured at a rate of 17% as at 31 December 2019. 32 Annual Report & Accounts | 2019 10. Profit/(loss) Per Share Basic profit per share is based upon a profit of £2,335,000 (2018: loss of £662,000) and on 1,000,000 (2018: 1,000,000) ordinary shares in issue during the year. There is no difference between basic profit 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 profit of £2,236,000 (2018: loss £1,561,000). 12. Dividends Interim dividend paid for the financial year of 0.0p (2018: 0.0p) Final dividend paid for the financial year of 0.0p (2018: 0.0p) 13. Property, Plant and Equipment Group Cost 1 January 2018 Additions Disposals 1 January 2019 – as previously reported Right-of-use assets on transition to IFRS 16 1 January 2019 Additions Disposals 31 December 2019 Accumulated depreciation 1 January 2018 Charge for the year Disposals 1 January 2019 Charge for the year Reversal of previous impairment provision Disposals 31 December 2019 Net book amount At 31 December 2019 At 31 December 2018 At 31 December 2017 Short Leasehold Property £’000 119 – – 119 – 119 – – Freehold land and buildings £’000 6,671 – – 6,671 – 6,671 – – 119 6,671 52 10 – 62 11 – – 73 46 57 67 2,451 105 – 2,556 106 (691) – 1,971 4,700 4,115 4,220 Equipment £’000 2,277 358 (190) 2,445 – 2,445 212 (397) 2,260 2,092 112 (165) 2,039 150 – (384) 1,805 455 406 185 2019 £’000 - - - Right-of- use assets £’000 – – – – 128 128 – – 128 – – – – 33 – – 33 95 – – 2018 £’000 - - - Total £’000 9,067 358 (190) 9,235 128 9,363 212 (397) 9,178 4,595 227 (165) 4,657 300 (691) (384) 3,882 5,296 4,578 4,472 33 Annual Report & Accounts | 2019 Notes to the Accounts (continued) 13. Property, Plant and Equipment (continued) 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 2017, the Board instructed a firm of professional surveyors to carry out a valuation of the freehold land and buildings at Baildon. The resulting valuation of £4.2m was £1.2m below the carrying value. This resulted in an exceptional non-cash impairment charge of £1.22m in the year ended 31 December 2017. During October 2019, the same firm undertook a further valuation of the property on behalf of the Company’s bank. This valuation of £4.7m was £0.7m above the adjusted, depreciated, carrying value. The Board have elected to adjust the carrying value in line with the recent valuation by reversing a portion of the historic impairment, leading to an exceptional non-cash impairment reversal of £0.7m. The carrying amount and depreciation of right-of-use assets all relate to property leases. Company Cost 1 January 2018 Additions Disposals 1 January 2019 Additions Disposals 31 December 2019 Accumulated depreciation 1 January 2018 Charge for the year Disposals 1 January 2019 Charge for the year Reversal of previous impairment provision Disposals 31 December 2019 Net book amount At 31 December 2019 At 31 December 2018 At 31 December 2017 Depreciation is charged to administrative expenses in the Income Statement. Freehold land and buildings £’000 6,671 – – 6,671 – – 6,671 2,451 105 – 2,556 106 (691) – 1,971 4,700 4,115 4,220 Equipment Total £’000 1,986 358 (190) 2,154 179 (322) 2,011 1,815 100 (165) 1,750 143 – (309) 1,584 427 404 171 £’000 8,657 358 (190) 8,825 179 (322) 8,682 4,266 205 (165) 4,306 249 (691) (309) 3,555 5,127 4,519 4,391 34 Annual Report & Accounts | 2019 14. Intangible Assets Cost 1 January 2018 Additions 1 January 2019 Additions Disposals 31 December 2019 Accumulated amortisation 1 January 2018 Charge for the year Goodwill impairment 1 January 2019 Goodwill impairment Charge for the year Disposals 31 December 2019 Net book amount At 31 December 2019 At 31 December 2018 At 31 December 2017 Group Goodwill Group IT Software and Trademarks Brand and Domain Names and Customer Lists Company TOTAL IT Software £’000 £’000 £’000 £’000 £’000 2,409 - 2,409 - - 1,000 - 1,000 - - 2,409 1,000 - - 675 675 1,034 - - 1,709 700 1,734 2,409 275 100 - 375 - 100 - 475 525 625 725 899 - 899 83 (6) 976 747 136 - 883 - 14 (6) 891 85 16 152 1,899 - 1,899 83 (6) 1,976 1,022 236 - 1,258 - 114 (6) 1,366 610 641 877 860 - 860 83 (6) 937 721 125 - 846 - 12 (6) 852 85 14 139 Amortisation is charged to administrative expenses in the Income Statement. Goodwill monitoring Goodwill, which relates entirely to the acquisition of ESE Direct Limited in 2015, is monitored by management at the Cash Generating Unit (“CGU”) level. A CGU is considered to be an individual company. The Group tests CGUs containing 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. During 2018, an impairment charge of £675,000 was recognised as an exceptional non-cash item. 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: Extrapolation of expected future cash flows using a terminal growth rate of 2% Sales decrease of 4% and then no growth over the period based on forecasts and prior year perfomance - Most recent budgets /forecasts for the next 5 years - - - Capital expenditure of £5,000 per annum based on forecasts - Gross margins projected based on recent trends - Discount rate (derived from pre-tax weighted average cost of capital “WACC”) of 15% 35 Annual Report & Accounts | 2019 Notes to the Accounts (continued) 14. Intangible Assets (continued) On the above basis, goodwill was impaired by £1m. The Directors performed sensitivity analysis on assumptions concerning sales growth assuming that sales fell by 5% in 2020 and then did not grow over the period. On this sensitised basis, goodwill is impaired by £1.2m. The Directors have concluded that it would be prudent to write down, as a non-cash exceptional item, the value of goodwill by £1m to £0.7m. 15. Investment in Subsidiary On 27 March 2015 the Company acquired 100% of the issued share capital of ESE Direct Limited. The cost of investment was £4m. During 2018 an impairment provision of £1.4m was recorded such that the net book value of the investment was £2.6m. Following the impairment testing detailed at note 14 above, the value of this investment has been further impaired during the year by a further £1.1m to £1.5m. This investment represents the whole of the amount shown in the Company’s balance sheet. 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 Principal 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 Retirement benefit obligations Deferred tax liabilities Accelerated capital allowances Losses Intangible asset Group 2019 £’000 2018 £’000 Company 2019 £’000 2018 £’000 1,115 1,434 1,115 1,434 (457) 77 (90) (470) (440) 89 (109) (460) (458) 77 - (381) (443) 89 - (354) 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. 36 Annual Report & Accounts | 2019 16. Deferred Tax (continued) Movements in deferred tax assets/(liabilities) are as follows: Group 1 January 2018 (Charged)/credited to income statement Credited to other comprehensive income 1 January 2019 – Group and Company (Charged)/credited to income statement Credited to other comprehensive income 31 December 2019 Company 1 January 2018 (Charged)/credited to income statement Credited to other comprehensive income 1 January 2019 (Charged)/credited to income statement Credited to other comprehensive income 31 December 2019 17. Inventories Raw materials and work in progress Finished goods and goods for resale Pension liability Tax losses Accelerated capital allowances Intangible assets £’000 £’000 £’000 £’000 1,464 73 (103) 1,434 (501) 182 1,115 131 (42) – 89 (12) – 77 (418) (22) - (440) (17) - (457) (128) 19 - (109) 19 - (90) Pension liability Tax losses Accelerated capital allowances £’000 £’000 £’000 1,464 73 (103) 1,434 (501) 182 1,115 132 (43) – 89 (12) – 77 (420) (23) - (443) (15) - (458) Group 2019 £’000 221 1,913 2,134 2018 £’000 197 1,750 1,947 Company 2019 £’000 221 1,913 2,134 Total £’000 1,049 28 (103) 974 (511) 182 645 Total £’000 1,176 7 (103) 1,080 (528) 182 734 2018 £’000 197 1,750 1,947 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 £41,000 (2018: £18,000). The cost of inventories recognised as an expense and included in the Group’s cost of sales was £13,277,000 (2018: £13,343,000) and £8,674,000 (2018: £8,746,000) for the Company. The provision for obsolete stock at the year-end for the Group and Company is £408,000 (2018: £374,000). 37 Annual Report & Accounts | 2019 Notes to the Accounts (continued) 18. Trade and Other Receivables Trade receivables Receivables from subsidiary Prepayments Group Company 2019 £’000 2,008 – 393 2,401 2018 £’000 2,289 – 287 2,576 2019 £’000 1,659 78 375 2,112 2018 £’000 1,905 70 260 2,235 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 lifetime expected credit loss provision. The ageing profile is used by management in reviewing receivables and the group applies the IFRS 9 simplified approach to measuring expected credit losses. The expected loss rates are based on the group’s historical credit losses experienced and these rates are then adjusted for current and forward looking information on macroeconomic factors affecting the group’s customers. Movements on the group and company provisions for impairment of trade receivables are: At 1 January 2019 Expected credit loss Unused provision reversed Receivables written off At 31 December 2019 Group 2019 £’000 20 38 (35) (18) 5 2018 £’000 28 30 (27) (11) 20 Company 2019 £’000 18 32 (30) (16) 4 2018 £’000 25 26 (24) (9) 18 Receivables due from subsidiary were not impaired at 31 December 2019 and 31 December 2018 as the expected credit loss is not considered to be material. Overdue receivables against which no provision has been made are not considered to be material and 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 2019 £’000 825 10 835 2018 £’000 1,011 29 1,040 Company 2019 £’000 689 2 691 The carrying amounts of the group’s and company’s receivables are denominated in the following currencies: Pound sterling Euro 38 Group Company 2019 £’000 1,939 69 2,008 2018 £’000 2,225 64 2,289 2019 £’000 1,668 69 1,737 2018 £’000 827 22 849 2018 £’000 1,911 64 1,975 Annual Report & Accounts | 2019 19. Trade and Other Payables Trade payables Payables to subsidiaries Corporation tax payable Other taxation and social security payable Other payables Accruals Debtor financing Overdraft Group 2019 £’000 1,643 - 41 292 13 317 1,034 1,389 4,729 2018 £’000 1,905 - 57 333 13 350 637 1,966 5,261 Company 2019 £’000 1,214 608 - 209 11 177 1,034 1,389 4,642 2018 £’000 1,426 608 - 239 11 180 637 1,966 5,067 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 3.1% and 3.3% above the prevailing Bank of England Base Rate respectively. The overdraft element of the Group’s banking facilities expires on the 30 April 2021. The debtor finance facility remains unaffected. The Group debtor finance facility is a total of £2m (subject to suitable debt being available) and the overdraft facility is the sum of £500,000. 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. 20. Derivative Financial Instruments Forward foreign currency contracts and options Group and Company Assets 2019 £’000 - 2018 £’000 14 Liabilities 2019 £’000 8 2018 £’000 - Gains and losses on the carrying value of forward foreign currency contract assets and liabilities are recognised in the income statement. The forward foreign currency contracts existing at the year-end mature in 2020. They have been valued using year end market data. 21. Borrowings and Financial Commitments Group and Company borrowings include debtor financing, overdraft and leases. The debtor financing and overdraft amounting to £2,423,000 (2018: £2,603,000) are repayable within one year. The maturity of the lease obligations is set out below: Lease obligations Not later than one year Later than one year and not later than five years Carrying value of liability Group 2019 £’000 32 66 98 2018 £’000 - - - Company 2019 £’000 - - - 2018 £’000 - - - The Group leases premises for ESE expiring November 2022 with a break date at 1 December in any year of the term. The total cash outflow for leases during the year was £36,000. The Company has a commitment by way of a guarantee issued to HMRC in respect of the deferment of import duty and VAT in the sum of £40,000. 39 Annual Report & Accounts | 2019 Notes to the Accounts (continued) 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 principal financial instruments used by the Group from which financial risk arises are as follows: 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) Payable to subsidiary (note 19) Trade payables (note 19) Accruals (note 19) Other payables (note 19) Lease obligations (note 21) Forward foreign currency contracts and options (note 20) Group 2019 £’000 2018 £’000 Company 2019 £’000 2018 £’000 2,008 2,289 1,659 1,905 - - 1,278 3,286 2019 £’000 2,423 - 1,643 317 13 98 8 - 14 1,458 3,761 2018 £’000 2,603 - 1,905 350 13 - - 78 - 107 1,844 2019 £’000 2,423 608 1,214 177 11 - 8 70 14 391 2,380 2018 £’000 2,603 608 1,426 180 11 - - 4,502 4,871 4,441 4,828 Foreign Exchange Risk The Group is exposed to foreign exchange risk from purchasing a portion of its supplies and by making a portion of its sales 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 2019 £’000 69 1 2018 £’000 64 14 Liabilities 2019 £’000 - 8 2018 £’000 - - 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. An analysis of maturity of the group’s debtor finance and overdraft facilities is provided in note 21 above. The interest rates applicable to the group’s debtor finance and overdraft facilities are disclosed in note 19. 40 Annual Report & Accounts | 2019 Liquidity Risk In the normal course of business the Group and Company is exposed to liquidity risk. The group’s 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. Further details relating to the nature and maturity of the group’s borrowing facilities are included in notes 19 and 21 above. 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 and is further described in note 18 above. There are no significant concentrations of credit risk. 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 2019, the gearing ratio was 44% (2018:513%). 24. Pension Commitments Group and Company Retirement Benefit Obligations At 31 December 2019 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 2020 fiscal year is £305,000. 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. The scheme 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 2017 and a shortfall of £9.8m 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 and 2018. Deficit reduction contributions re-commenced in 2019 and the Company paid £125,000 during the year. The weighted average duration of the defined benefit obligation is 20.6 years. Investment strategy Approximately 11% (2018: 10%) of the Scheme’s assets are held in equity type assets, and 89% (2018: 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 £20,000 as at 31 December 2019 (2018: 30,061 shares with a fair value of £25,000). 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 41 Annual Report & Accounts | 2019 Notes to the Accounts (continued) 24. Pension Commitments (continued) 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 89% 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. 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 This has been selected following actuarial Inflation advice received, taking into account the duration of the liabilities. An increase or decrease in the discount rate of 0.25% would result in a decrease or increase of approximately £1.1m in the present value of the defined benefit obligation. The methodology used to derive the assumption adopted is consistent with discount rate methodology. An increase or decrease in the inflation rate of 0.25% would result in an increase or decrease of approximately £0.8m in the present value of the defined benefit obligation. Mortality rates 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 2019 would be 21.1 (23.0) years and the future life expectancy from age 65 for a male (female) non-pensioner member currently aged 45 of 22.4 (24.5) 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 £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 2019 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 2017 and updated to 31 December 2019 by a qualified independent actuary. Guaranteed minimum pension On 26 October 2018, the High Court issued a judgement in a claim involving Lloyds Banking Group’s defined benefit pension schemes. The judgement concluded that the schemes should be amended to equalise pension benefits for men and women in relation to guaranteed minimum pension benefits. The Company has worked with its independent actuary who has assessed the increase in liabilities from this judgement to be £216,000. This cost was recognised in the consolidated income statement as an exceptional item in 2018. Settlement gain During 2019, two executive members transferred out of the scheme with the agreement of the scheme’s independent trustee. The level of benefits which the two members agreed to transfer from the scheme was below the level which they were entitled to receive, as calculated by the independent scheme actuary. This resulted in a reduction in scheme liabilities which was £3.1m greater than the reduction in assets which were transferred to the two members and resulted in a settlement gain. 42 Annual Report & Accounts | 2019 24. Pension Commitments (continued) Reconciliation of the present value of the defined benefit obligation Present value of defined benefit obligation at beginning of year GMP equalisation Settlement gain (note 3) Interest cost Effect of changes in financial assumptions Settlements paid Benefits paid Present value of defined benefit obligation at end of year Reconciliation of fair value of scheme assets 2019 £’000 2018 £’000 25,321 26,666 - (3,069) 720 2,769 (2,965) (771) 22,005 2019 £’000 216 - 659 (1,585) - (635) 25,321 2018 £’000 Fair value of scheme assets at start of year 16,883 18,056 Interest income Return on scheme assets Contributions by the Company Settlements paid 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 GMP equalisation (note 3) Settlement gain Interest on obligation Interest income on scheme assets Total expense 475 1,700 125 (2,965) (771) 15,447 2019 £’000 22,005 (15,447) 6,558 2019 £’000 - (3,069) 720 (475) (2,824) 443 (981) - - (635) 16,883 2018 £’000 25,321 (16,883) 8,438 2018 £’000 216 - 659 (443) 432 43 Annual Report & Accounts | 2019 Notes to the Accounts (continued) 24. Pension Commitments (continued) Amounts to be recognised in the income statement Actuarial loss/(gain) Actuarial loss/(gain) recognised in (SOCI) Pension cost GMP equalisation Settlement gain 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 2019 £’000 1,069 1,069 2019 £’000 - (3,069) 245 66 (2,758) 2018 % 10 90 100 2018 £’000 (604) (604) 2018 £’000 216 - 216 57 489 2018 £’000 1,686 15,197 16,883 2.9% 2019 % 13 87 100 2019 £’000 1,946 13,501 15,447 2.1% At 31 December 2019 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. Amount of Company related investments included in fair value of assets Company’s own financial instruments 2019 £’000 20 2018 £’000 25 44 Annual Report & Accounts | 2019 24. Pension Commitments (continued) Principal actuarial assumptions at the Balance Sheet date: The assumptions as at the reporting date are used to determine the present value of the benefit obligation at that date. The key financial assumptions are set out below: Discount rate Long term rate of return on assets RPI Inflation CPI Inflation Pension increases: Non-Executive pension accrued before 1 January 1992 (0% fixed) Non-Executive pension accrued after 1 January 1992 (RPI max 5%) Executive pension accrued before 1 January 1992 (4% fixed) Executive pension accrued after 1 January 1992 (RPI min 4%, 5% max) Pre and post retirement mortality Retiring today: - Males - Females Retiring in 20 years: - Males - Females Cash commutation 2019 2.10% 2.10% 2.80% 1.90% 0.00% 3.00% 4.00% 4.20% 86.1 87.4 88.0 89.5 2018 2.90% 2.90% 3.20% 2.10% 0.00% 3.00% 4.00% 4.20% 86.2 87.6 88.2 89.7 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 Mortality Assumption; Base mortality table – Males – standard table SINMA (appropriate to the members’ years of birth) – Females – standard table SINFA (appropriate to the members’ years of birth) A scaling factor of 110% has been applied to the notes under the standard tables. An allowance for future improvements has been made in line with the CMI 2016 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 £53,000 (2018: £46,000) 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 £13,000 (2018: £11,000) have been charged to operating profit. 45 Annual Report & Accounts | 2019 Notes to the Accounts (continued) 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 2019 Number 2019 £’000 2018 Number 1,200,000 300 1,200,000 1,000,000 250 1,000,000 2018 £’000 300 250 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. 26. Lease Commitments At 31 December 2018, 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 2019 £’000 - - - 2018 £’000 36 105 - Differences between the operating lease commitments disclosed at 31 December 2018 under IAS 17 discounted at the incremental borrowing rate at 1 January 2019 and lease liabilities recognised at 1 January 2019 are explained below: Operating leases commitments disclosed at 31 December 2018 Discounted using the lessee's incremental borrowing rate at the date of initial application Lease liability recognised as at 1 January 2019 (note 21) £’000 141 (13) 128 27. Related Party Transactions Key Management Key management personnel comprise the Group’s Executive Directors. Their remuneration (net of employer’s national insurance costs) is set out in note 5. The total cost including employer’s national insurance costs in respect of Dominic Slingsby would be £113,000 and in respect of Morgan Morris £114,000. There were no other transactions with key management. Company – Transactions With Subsidiaries Sales amounting to £668,647 (2018: £663,300) were made by HC Slingsby plc to ESE Direct Limited. HC Slingsby plc levied management charges upon ESE Direct Limited of £180,000 in 2019 (2018: £180,000). Purchases amounting to £nil (2018:£330) were made by HC Slingsby plc from ESE Direct Limited. Amounts due to ESE Direct Limited were £nil (2018:£nil) in respect of trading activities and £608,215 (2018: £608,215) in respect of an inter-company loan. Amounts due from ESE Direct Limited were £78,128 (2018:£69,522). 46 Annual Report & Accounts | 2019 28. Movement in liabilities arising from financing activities Group Bank overdraft (note 19) Debt financing (note 19) Lease obligations (note 21) Cash and cash equivalents Net debt Company Bank overdraft (note 19) Debt financing (note 19) Cash and cash equivalents Net debt At 1 January 2019 Recognised on adoption of IFRS16 Cashflow Foreign exchange and other movements At 31 December 2019 £’000 (1,966) (637) - 1,458 (1,145) £’000 £’000 £’000 £’000 - - (128) - (128) 577 (397) 36 (180) 36 At 1 January 2019 £’000 (1,966) (637) 391 (2,212) - - (6) - (6) (1,389) (1,034) (98) 1,278 (1,243) Cashflow At 31 December 2019 £’000 £’000 577 (397) (284) (104) (1,389) (1,034) 107 (2,316) 29. Post balance sheet events Following the year end, the group’s activities have been impacted by the global coronavirus pandemic. We are seeing large falls in demand from customers in certain adversely affected sectors and order concentration on a limited number of product lines and from a smaller number of customers. It is unclear as to the impact that the virus will have on demand going forward. Whilst the precise impact of the pandemic is uncertain, the directors’ have re-forecast profit and loss and cashflow forecasts for the foreseeable future to take into account expected outcomes. Details of actions being undertaken to mitigate the impact of the pandemic are provided in the Going Concern accounting policy and Directors’ Report. 47 Annual Report & Accounts | 2019 Five Year Summary Group Income Statement Turnover Gross profit Operating profit/(loss) before exceptional item Exceptional item Profit/(loss) before tax Profit/(loss) for the financial year 2019 £’000 19,568 6,743 446 2,726 2,887 2,335 2018 £’000 19,817 6,950 520 (891) (633) (662) 2017 £’000 19,240 6,726 557 (1,221) (995) (1,057) 2016 £’000 18,044 6,292 (261) (102) (732) (656) 2015 £’000 17,061 6,249 (10) (281) (632) (438) Profit/(loss) per share – basic and diluted 233.5p (66.2p) (105.7p) (65.6p) (43.8p) Dividend Per Ordinary Share*: – Interim – Final Cash Flow Statement 0.0p 0.0p 0.0p 0.0p 0.0p 0.0p 0.0p 0.0p 0.0p 0.0p Cash generated from /(used by) operating activities 404 893 334 (84) 171 Balance Sheet Net current assets/(liabilities) Net assets Pension deficit (net of deferred tax asset) Net (debt)/cash excluding leases Cash and cash equivalents 1,044 1,671 (5,443) (1,145) 1,278 734 223 (7,004) (1,145) 1,458 194 384 (7,146) (1,579) 996 (607) 403 (7,893) (1,731) 632 (376) 2,303 (6,587) (1,493) 192 * 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. 48 Annual Report & Accounts | 2019 Notice of Annual General Meeting Notice is given that the seventy second 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 2020 at 10am to consider and, if thought fit, pass the following resolutions. Resolutions 1 to 5 will be proposed as ordinary resolutions and resolutions 6 to 8 as special resolutions. Ordinary resolutions: 1. To receive the Company’s annual accounts for the financial year ended 31 December 2019 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 (“Act”) to exercise all powers of the Company to allot equity securities (as defined in section 560 of the Act): (a) up to an aggregate nominal amount of £83,250; and (b) comprising equity securities up to a nominal amount of £166,750 (including within such limit any equity securities issued under paragraph (a) above) in connection with an offer by way of a rights issue: (i) (ii) 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. Special resolutions: 6 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 (b) 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 (a) 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 (a) of this resolution 6) 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. 7. Subject to the passing of resolutions 5 and 6, and in addition to any authority granted under resolution 6 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 49 Annual Report & Accounts | 2019 (e) 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 BD17 7LW Registered in England and Wales No.00452716 By order of the Board M.L. Morris Company Secretary 15 May 2020 Notice of Annual General Meeting (continued) 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) limited to the allotment of equity securities up to an aggregate nominal amount of £12,500; and (b) 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. 8. To authorise the Company generally and unconditionally 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) 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 25 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; (d) unless previously revoked or varied, the authority hereby conferred shall expire 15 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 50 Annual Report & Accounts | 2019 Notes to the Notice of Annual General Meeting Entitlement to attend and vote 1. IMPORTANT NOTE REGARDING ATTENDANCE IN PERSON: In light of the Coronavirus pandemic Shareholders and their proxies will not be allowed to attend the meeting in person, as to do so would be inconsistent with current Government guidelines relating to COVID-19 (as published as at the date of this notice), in particular the advice for people to avoid public gatherings, all non-essential travel and social contact. Any shareholder seeking to attend the Annual General Meeting in person will be refused entry. Accordingly, Shareholders are urged to exercise their votes by submitting their proxy and appoint the Chair of the Annual General Meeting as his or her proxy. 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 17 June 2020 (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. 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. 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. A proxy may only be appointed in accordance with the procedures set out in note 3 below and the notes to the proxy form. 3. You can vote either: • • by logging on to www.signalshares.com and following the instructions; You may request a hard copy form of proxy directly from the registrars, Link Asset Services (previously called Capita), on Tel: 0871 664 0300. Calls cost 12p per minute plus your phone company’s access charge. Calls outside the United Kingdom will be charged at the applicable international rate. Lines are open between 09:00 – 17:30, Monday to Friday excluding public holidays in England and Wales. • in the case of CREST members, by utilising the CREST electronic proxy appointment service in accordance with the procedures set out below. In order for a proxy appointment to be valid a form of proxy must be completed. In each case the form of proxy must be received by Link Asset Services at 34 Beckenham Road, Beckenham, Kent, BR3 4ZF by 10 am on 17 June 2020. Completion of the form of proxy or appointment or a proxy through CREST will not prevent a member from attending and voting in person. However, in light of the Coronavirus pandemic situation, Shareholders and their proxies will not be allowed to attend the meeting. Any member or his proxy attending the General Meeting has the right to ask any question at the Annual General Meeting relating to the business of the Annual General Meeting. However, in light of the Coronavirus pandemic Shareholders are urged to appoint the Chair of the meeting as his or her proxy as given the Coronavirus situation, Shareholders and their proxies will not be allowed to attend the meeting in person. 4. If you return more than one proxy appointment, either by paper or electronic communication, the appointment received last by the Registrar before the latest time for the receipt of proxies will take precedence. You are advised to read the terms and conditions of use carefully. Electronic communication facilities are open to all shareholders and those who use them will not be disadvantaged. 5. CREST members who wish to appoint a proxy or proxies through the CREST electronic proxy appointment service may do so for the Meeting (and any adjournment of the Meeting) by using the procedures described in the CREST Manual (available from www.euroclear.com/site/ public/EUI). CREST Personal Members or other CREST sponsored members, and those CREST members who have appointed a service provider(s), should refer to their CREST sponsor or voting service provider(s), who will be able to take the appropriate action on their behalf. 6. In order for a proxy appointment or instruction made by means of CREST to be valid, the appropriate CREST message (a ‘CREST Proxy Instruction’) must be properly authenticated in accordance with Euroclear UK & Ireland Limited’s specifications and must contain the information required for such instructions, as described 51 Annual Report & Accounts | 2019 Notes to the Notice of Annual General Meeting (continued) in the CREST Manual. The message must be transmitted so as to be received by the issuer’s agent (ID RA10) by 10am on 17 June 2020. For this purpose, the time of receipt will be taken to mean the time (as determined by the timestamp applied to the message by the CREST application host) from which the issuer’s agent is able to retrieve the message by enquiry to CREST in the manner prescribed by CREST. After this time, any change of instructions to proxies appointed through CREST should be communicated to the appointee through other means. 7. CREST members and, where applicable, their CREST sponsors or voting service providers should note that Euroclear UK & Ireland Limited does not make available special procedures in CREST for any particular message. Normal system timings and limitations will, therefore, apply in relation to the input of CREST Proxy Instructions. It is the responsibility of the CREST member concerned to take (or, if the CREST member is a CREST personal member, or sponsored member, or has appointed a voting service provider(s), to procure that his CREST sponsor or voting service provider(s) take(s)) such action as shall be necessary to ensure that a message is transmitted by means of the CREST system by any particular time. In this connection, CREST members and, where applicable, their CREST sponsors or voting system providers are referred, in particular, to those sections of the CREST Manual concerning practical limitations of the CREST system and timings. The Company may treat as invalid a CREST Proxy Instruction in the circumstances set out in Regulation 35(5) (a) of the Un-certificated Securities Regulations 2001. Corporate representatives 8. 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 9. 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 10. As at 13 May 2020 (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 13 May 2020 are 1,000,000. Explanatory Notes to Resolutions 5, 6, 7 and 8 Resolution 5 – Authority to Allot Shares Paragraph (a) 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 (b) 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 (a) 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. Resolution 5 is in accordance with the Investment Association’s Share Capital Management Guidelines issued in July 2016 (the “Guidelines”). 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. Resolutions 6 and 7 – Disapplication of Pre-emption Rights These resolutions 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. The purpose of resolution 6 is to give the Directors the authority to allot equity securities for cash otherwise than to existing shareholders pro rata to their holdings. Apart from offers or invitations in proportion to the respective number of shares held, this authority would be limited to the allotment of equity securities for cash up to 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. The figure of 5% reflects the Guidelines. The Board will have due regard to the Guidelines and the Statement of Principles on Disapplying Pre-emption Rights published by the Pre-Emption Group (the “Principles”) in relation to any exercise of this authority. Resolution 7 also gives the Directors the additional authority, in certain limited circumstances, to allot equity securities for cash without first being required to offer such shares to the existing 52 Annual Report & Accounts | 2019 shareholders in proportion to their existing shareholdings. The disapplication of pre-emption rights in respect of a further 5% of the Company’s issued share capital, in addition to the authority proposed to be granted pursuant to resolution 6 reflects the Guidelines and the Principles. This authority would be limited to the allotment of equity securities for cash up to 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 (within the meaning of the Principles). The authority and power pursuant to resolutions 6 and 7 will expire on the latter of 15 months from the date the relevant resolution is passed or the conclusion of the Company’s next Annual General Meeting. Resolutions 6 and 7 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. The Board has no present intention to exercise these authorities. Resolution 8 — 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 8 in the Notice of Annual General Meeting. The proposed new general authority will be limited, by the terms of resolution 8 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 8 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. 53 Annual Report & Accounts | 2019 Notes 54 Annual Report & Accounts | 2019 • Advanced search and filters • Quick Quote and Quick Shop facility • Simple, secure checkout • Web exclusive products and offers • Product demonstrations • Legislation advice Online e For eprocurement email eprocurement@slingsby.com Find us on Facebook facebook.com/slingsbyplc Follow us on Twitter @hcslingsby Follow us on LinkedIn HC Slingsby PLC 55 Annual Report & Accounts | 2019 HC Slingsby plc 01274 535 030 01274 535 035 sales@slingsby.com T: F: E: W: www.slingsby.com
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