Report & Accounts
For the year ended 31st December 2020
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 45,000 high quality
products covering everything you need for the
workplace from handling and lifting and premises
equipment to retail and office supplies, including
many new ideas to help keep your business running
smoothly.
Our Commitment:
Providing our customers with an extensive product range,
outstanding service and efficient delivery.
2
Annual Report & Accounts | 2020
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 Group
Central Square
29 Wellington Street
Leeds
LS1 4DL
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 - 2020
Contents
Statement by the Chairman
Strategic Report
Report of the Directors
Corporate Governance
Statement of Directors’
Responsibilities
Independent Auditors’ Report
Consolidated Income Statement
Statement of Consolidated
Comprehensive Income and Expense
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
4
6
9
11
14
15
19
20
21
22
23
24
25
25
26
49
50
52
Annual Report & Accounts | 2020
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
£0.5m on sales of £10.5m. I am pleased to report that the full
year operating profit (before exceptional items) was £1.3m
(2019: £0.4m) on sales of £21.8m (2019: £19.6m). Group sales
increased by around 11% which together with an improvement
in gross margin led to a profit before taxation and exceptional
items of £1.1m (2019: £0.2m). The increase in Group sales is
due to demand for Coronavirus related products, as customers
sought to continue or restart their operations compliantly.
ESE Direct Limited (“ESE”) contributed £5.9m of sales
(2019: £6.4m) and profit before tax and management charges
of £0.5m (2019: £0.39m). ESE’s customer base was impacted
by the Government lockdown measures resulting from the
Coronavirus pandemic. Profit before tax increased, however,
due to control of overheads. Overheads were £1.16m in 2020
compared to £1.42m in 2019.
Group earnings before interest, tax, depreciation, amortisation
and exceptional items (“EBITDA”) in the year ended 31
December 2020 were £1.7m (2019: £0.9m). Largely as a
result of the profit performance, the Group had net cash at
31 December 2020 of £0.3m (2019: net debt of £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 (2019: £nil). However, depending
upon trading during 2021 and its level of confidence going
forward, the Board’s intention is to re-commence dividend
payments to shareholders as soon as it is practicable and
prudent to do so.
Pension Scheme
The Company paid £0.3m in deficit reduction contributions
during 2020. The Company also continues 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 over £150,000. More
details regarding future pension contributions are contained in
the Strategic Report.
At 31 December 2020, the pension scheme deficit increased
by £1.6m to £8.2m (2019: £6.6m) largely due to a reduction
in the discount rate which had the effect of increasing scheme
liabilities outweighing an increase in scheme assets. This
deterioration in the pension scheme position decreased Group
net assets to £1.2m (2019: £1.7m) despite the profit generated
during the year.
During November 2020, a High Court ruling relating to
how Guaranteed Minimum Pensions were calculated when
members transferred out of the scheme was decided. This
decision has the impact of increasing the liabilities of the
scheme by requiring trustees to revisit historic transfers and
top-up cash equivalent transfer value (CETV) payments that
were not adjusted from the unequal effect of GMP. The
Company has taken advice from the scheme actuary and
considers the impact to be immaterial to the results. A fuller
assessment will be made during the current year.
Recent Trading
Group sales in Q1 of 2021 against the same period in 2020
increased by 8%. This improvement in sales offset the impact
of a fall in gross margin leading to an unaudited profit before tax
in Q1 2021 being in line with that achieved in the same period
in 2020 of £0.1m.
The market remains competitive and we are cautious regarding
the outlook. This is particularly the case due to significant
uncertainty that remains caused by the Coronavirus. Whilst the
Group’s sales grew in 2020 due to demand for Coronavirus
related products, this will not necessarily continue to be the
case, particularly for items which are more capital equipment
in nature. The Group also benefitted from disruption to supply
chains which led to the Group receiving orders for virus related
products during 2020 which will not repeat in 2021. As such,
it is unclear as to the impact that the virus will have on demand
going forward.
In addition, the Group is experiencing significant cost increases
particularly for steel, plastic and timber products. We have also
experienced exceptionally high shipping costs and delays in
receiving goods. These increases impacted on gross margin in
Q1 2021 and could continue for the remainder of the year.
Finally, I would like to thank our staff across the Group for their
efforts in 2020. The outbreak of Coronavirus presented the
Group with operational and organisational challenges which
were overcome due to the attitude and hard work of our
employees. Across the Group, we remain proud of our position
as a key supplier to the NHS and related sectors and worked
hard to ensure that we have remained “open for business”.
D.S.Slingsby
Interim Executive Chairman,
6 May 2021
4
Annual Report & Accounts | 2020 Annual Report & Accounts | 2020
55
Annual Report & Accounts | 2020 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 45,000
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.
Whilst the Group’s sales grew in 2020 as customers purchased
goods in order to continue or re-start their operations during
the Coronavirus pandemic, there remains uncertainty about
the impact on the economy which could impact on demand
and lead to credit related issues should companies become
insolvent. Part of the sales growth experienced was for
Coronavirus related equipment which is durable in nature.
Demand of this nature may not be at the level experienced
during 2020 going forward.
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 2020, we continued to invest in
a new website for the Slingsby business and to strengthen our
product sourcing and sales teams.
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 127
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
2020
11.4%
91.7%
5.1%
34.9%
2019
(1.3%)
172.8%
14.7%
34.5%
Notes:
Return on capital employed is calculated as profit/loss before taxation over the total equity at the year end. This has declined due to reduction in profit before tax.
Return on sales is calculated as profit/loss before taxation over revenue. This has declined due to the reduction in profit before tax described as part of the Chairman’s statement.
A review of the business is included in the Statement by the Chairman on page 4 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 described
below. These risks and uncertainties are subjected to regular
review and where appropriate, processes are established to
minimise the level of exposure.
People
The principal asset of the Group is the commitment and skill
of its people. The retention of these people is therefore key to
the success of the business. The Group has in place incentive
schemes which are related to its results and which allow all
employees to participate in the success of the Group as a
whole.
Economic and market cycles and volatility
The Group’s operating performance is influenced by the
economic conditions of the regions in which it operates,
principally the UK. The continued uncertain economic
environment could result in a general reduction in business
activity and a consequent loss of income for the Group. The
Coronavirus pandemic and the Government measures imposed
has created uncertainty as to the state of the economy moving
forward. In addition, the impact of Brexit on the economy is not
fully known.
6
Annual Report & Accounts | 2020
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 and £0.3m in 2020. In addition,
the Group contributed £0.16m towards the running costs of
the scheme which are reflected in overheads. The Group is
scheduled to pay £313,500 in deficit reduction contributions
in 2021 and £359,000 in 2022. Contributions rise each year
by inflation with a review at 1 January 2023. 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 and in
2021 an additional £60,000 is payable under this mechanism.
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 over
£150,000. 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 (1)(a) to (f) of Companies Act 2006). These matters
are the likely consequences of any decision in the long term,
the interests of the Company’s workforce, the desirability of
the company maintaining a reputation for high standards of
business conduct, the need to foster the Company’s business
relationships with suppliers, customers and others, the impact
of the Company’s operations on the community and the
environment and the need to act fairly, as between members of
the Company.
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 below, in the
Corporate Governance section of this annual report (pages 8 –
10) and above.
Stakeholder Engagement
Shareholders
The major interests in the Company’s shares are set out in
the directors’ report. Key metrics for our shareholders are the
share price, earnings per share and the level of dividends paid.
Through the publication of our half and full year financial reports
we inform shareholders regarding the status of their Company.
Further shareholder engagement includes the AGM (although
attendance is temporarily suspended due to the restrictions
imposed as a result of the pandemic) and discussions with
investors when questions are asked.
7
Annual Report & Accounts | 2020 Strategic Report (continued)
Employees
The Board believes that the Group’s success is reliant on the
commitment of our employees. We pride ourselves on our
friendly and safe working environment. Employee feedback is
sought through formal review processes and via the head of
each department. Training is provided where necessary.
Customers and suppliers
The Board recognises that the Group depends on its
customers and its supply chain. Customer feedback is sought
through the use of a third party operated review service as well
as encouraged through other communication channels.
We regularly engage with suppliers through visits to their
facilities and via a formal appraisal system.
Environment
The Group recognises its obligation to minimise its impact
on the environment. This is achieved by complying with
the IS014001 quality standard and support of certain
environmentally focussed charities.
More information on how 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 11
– 13) and in respect of the environment at the relevant section
above.
Principal decision made – Remaining open
throughout the pandemic
The Coronavirus pandemic presented the Group with
the challenge of how to remain open for business whilst
safeguarding the health and safety of all employees, particularly
those who were not able to work from home.
The Group remained open so that it could continue to supply
customers, some of whom are NHS bodies or care homes, so
that they could continue in operation or re-start when permitted
to do so. To safeguard employees, the Group installed
sanitising stations, temperature checking equipment and issued
all staff with PPE and cleaning products. Procedures regarding
social distancing and segregation were also introduced.
The Group took advantage of Government cash flow support
schemes and paid its suppliers on normal or improved trading
terms.
This decision contributed to the profit achieved in the year.
By order of the Board
M. L. Morris
Company Secretary
6 May 2021
8
Annual Report & Accounts | 2020 Report of the Directors
The directors are pleased to present their annual report and
audited consolidated financial statements for the year ended 31
December 2020. 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.
Going Concern
The directors have prepared trading and cash flow forecasts for
the Group for the period to 31 December 2022, 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 Board’s
conclusion in this regard is strengthened by the Group’s net
cash position at 31 December 2020.
Consistent with the directors’ expectations, the overdraft
element of the Group’s banking facilities was renewed at the
same level until 30 April 2022 on 27 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.
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 2020
financial year (2019: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
31 December
2020
115,167
53,500
2019
115,167
1,000
D. S. Slingsby
M.L. Morris
There have been no other changes in the directors’
shareholdings between 31 December 2020 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 (2019: 64,000) ordinary shares.
9
Annual Report & Accounts | 2020 Report of the Directors (continued)
Substantial Interests
So far as the directors are aware these were the following
substantial interests, other than those included in directors’
interests, in the shares of the Company at 4 May 2021:
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 11-13
of the annual report.
Number of
ordinary Shares
of 25p each
Percentage
Holding
180,295
67,835
54,866
54,302
53,886
51,167
17.2%
6.5%
5.2%
5.2%
5.1%
4.9%
48,381
4.6%
By order of the Board
47,138
37,440
32,500
4.5%
3.6%
3.1%
M. L. Morris
Company Secretary
6 May 2021
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
*Registered in the name of Davycrest Nominees
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.
10
Annual Report & Accounts | 2020 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 2020
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.
All directors are expected to devote such time as is necessary
for the proper performance of their duties. Directors are
expected to prioritise and attend Board meetings and
Committee meetings of which they are members and any
additional meetings wherever possible. After taking into
consideration the availability and time commitment demanded
of individual members, the Chairman was satisfied that the
members of the Board were able to devote sufficient time and
resource to perform their roles for the Group.
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 2020
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
2020 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 d irectors 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.
11
Annual Report & Accounts | 2020 Corporate Governance (continued)
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:
Extent of current
compliance
Fully compliant
Fully compliant
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
Take into account
wider stakeholder
and social
responsibilities and
their implications for
long term success
Fully compliant
Embed effective
risk management,
considering both
opportunities and
threats, throughout
the organisation
Partially compliant
Maintain the board
as a well-functioning,
balanced team led
by the chair
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,
Relations with
Shareholders section
above.
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 report
within 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 contact 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. Customer feedback is obtained from a third
party operated review system. Employees have reviews with
their line manager and are encouraged to provide feedback.
Employees are also encouraged to express any concerns to
the Board or the Human Resources Manager. All feedback is
reviewed by the Board and acted upon accordingly.
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.
As well as tight oversight exercised by the executive
directors, and appropriate trained and qualified staff, the
Board engages appropriate auditors and consultants to
assist in identifying and managing risk.
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.
12
Annual Report & Accounts | 2020 Extent of current
compliance
Fully compliant
Principle
Ensure that between
them the directors
have the necessary
up-to date
experience, skills
and capabilities
Commentary
Further
disclosure(s)
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.
Board and
Committee
meetings section
of the Corporate
Governance report
within the Annual
Report
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, although the Chairman has actively encouraged
self-evaluation by all Board members, and feedback on the
conduct and content of board meetings. A more structured
performance review system will exist in the future upon the
appointment of an independent non-executive Chairman.
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 discloses 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.
None.
www.slingsby.com;
Investors Relations,
Corporate
Governance
Board and
Committee
meetings section
of the Corporate
Governance report
within the Annual
Report
www.slingsby.com;
Investor Relations
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
By order of the Board
D Slingsby
Interim Executive Chairman
6 May 2021
13
Annual Report & Accounts | 2020 Statement of Directors’
Responsibilities
The directors are responsible for preparing the Strategic
Report, 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 have elected under company law and the AIM Rules
of the London Stock Exchange to prepare the group financial
statements in accordance with international accounting
standards in conformity with the requirements of the
Companies Act 2006 and have elected under company law
to prepare the company financial statements in accordance
with international accounting standards in conformity with the
requirements of the Companies Act 2006 and applicable law.
The group and company financial statements are required by
law and international accounting standards in conformity with
the requirements of the Companies Act 2006 to present fairly
the financial position of the group and the company and the
financial performance of the group. 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 requirements of 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 corporate and financial information included on the H C
Slingsby Plc 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
6 May 2021
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
international accounting standards in conformity with the
requirements of the Companies Act 2006;
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.
14
Annual Report & Accounts | 2020 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 2020 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
cashflow statement, the company cashflow statement, the
notes to the cashflow statement and the notes to the financial
statements, including significant accounting policies. The financial
reporting framework that has been applied in their preparation
is applicable law and International Accounting Standards in
conformity with the requirements of the Companies Act 2006 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 2020 and of the group’s profit for the year
then ended;
the group financial statements have been properly
prepared in accordance with International Accounting
Standards in conformity with the requirements of the
Companies Act 2006;
the parent company financial statements have been
properly prepared in accordance with International
Accounting Standards in conformity with the requirements
of the Companies Act 2006 and as applied in accordance
with the Companies Act 2006; and
Basis for opinion
We conducted our audit in accordance with International
Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our
responsibilities under those standards are further described
in the Auditor’s responsibilities for the audit of the financial
statements section of our report. We are independent of the
group and parent company in accordance with the ethical
requirements that are relevant to our audit of the financial
statements in the UK, including the FRC’s Ethical Standard as
applied to SME listed entities and we have fulfilled our other
ethical responsibilities in accordance with these requirements.
We believe that the audit evidence we have obtained is
sufficient and appropriate to provide a basis for our opinion.
Conclusions relating to going concern
In auditing the financial statements, we have concluded that
the directors’ use of the going concern basis of accounting
in the preparation of the financial statements is appropriate.
Our evaluation of the directors’ assessment of the group’s
•
the financial statements have been prepared in accordance
with the requirements of the Companies Act 2006.
Scope
and parent company’s ability to continue to adopt the going
concern basis of accounting included reviewing and evaluating
management’s latest forecasts and plans, considering the
appropriateness and sensitivity of key assumptions and
reviewing the key terms of debt facilities.
Based on the work we have performed, we have not identified
any material uncertainties relating to events or conditions that,
individually or collectively, may cast significant doubt on the
group’s or the parent company’s ability to continue as a going
concern for a period of at least twelve months from when the
financial statements are authorised for issue.
Our responsibilities and the responsibilities of the directors with
respect to going concern are described in the relevant sections
of this report.
Summary of our audit approach
Key audit
matters
Group
• Provision for slow moving inventory
Materiality
Parent Company
• Provision for slow moving inventory
Group
• Overall materiality: £149,000
(2019: £83,000)
• Performance materiality: £111,000
(2019: £62,000)
Parent Company
• Overall materiality: £112,000
(2019: £57,000)
• Performance materiality: £84,000
(2019: 43,000)
Our audit procedures covered 100% of
revenue, 100% of total assets and 100% of
profit 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.
15
Annual Report & Accounts | 2020 Independent Auditors’ Report to the Members of H C Slingsby plc
(continued)
Provision for slow moving inventory
Key audit matter
description
The group and company had inventory of £2,224,000 and an associated provision for obsolescence of
£631,000 at 31 December 2020. 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 in respect of stock obsolescence. Given the value of inventory held at the
balance sheet date, and the estimation inherent in the calculation of the inventory provision, the adequacy
of the recorded provision represents one of the most significant risks of material misstatement.
How the matter was
addressed in the
audit
Our audit work on the inventory provision calculation included:
• Obtaining and reviewing the provision calculation and challenging and corroborating the
appropriateness of key assumptions.
• Testing the mathematical accuracy of the provision 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 assess whether net realisable value is higher than inventory cost.
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
£149,000 (2019: £83,000)
£112,000 (2019: £57,000)
Group
Parent company
Basis for determining
overall materiality
8.8% of profit before interest, tax, depreciation,
amortisation and exceptional items
8.6% 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
£111,000 (2019: £62,000)
Basis for determining
performance materiality
75% of overall materiality
£84,000 (2019: 43,000)
75% of overall materiality
Reporting of
misstatements to the
Audit Committee
Misstatements in excess of £7,000 and
misstatements below that threshold that, in our
view, warranted reporting on qualitative grounds.
Misstatements in excess of £6,000 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 of which are based in the UK. 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%
16
Annual Report & Accounts | 2020
Other information
The other information comprises the information included in
the annual report, other than the financial statements and
our auditor’s report thereon. The directors are responsible
for the other information contained within the annual report.
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.
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 course of 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 this gives rise to a material misstatement
in the financial statements themselves. If, based on the work
we have performed, we conclude that there is a material
misstatement of this other information, we are required to
report that fact.
We have nothing to report in this regard.
Opinions on other matters prescribed by
the Companies Act 2006
In our opinion, based on the work undertaken in the course of
the audit:
•
•
the information given in the Strategic Report and the
Directors’ Report for the financial year for which the
financial statements are prepared is consistent with the
financial statements; and
the Strategic Report and the Directors’ Report have been
prepared in accordance with applicable legal requirements.
Matters on which we are required to
report by exception
In the light of the knowledge and understanding of the group
and the parent company and their environment obtained
in the course of the audit, we have not identified material
misstatements in the Strategic Report or the Directors’ Report.
We have nothing to report in respect of the following matters in
relation to which the Companies Act 2006 requires us to report
to you if, in our opinion:
•
•
•
adequate accounting records have not been kept by the
parent company, or returns adequate for our audit have
not been received from branches not visited by us; or
the parent company financial statements are not in
agreement with the accounting records and returns; or
certain disclosures of directors’ remuneration specified by
law are not made; or
• we have not received all the information and explanations
we require for our audit.
Responsibilities of directors
As explained more fully in the directors’ responsibilities
statement set out on page 9, 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.
The extent to which the audit was
considered capable of detecting
irregularities, including fraud
Irregularities are instances of non-compliance with laws and
regulations. The objectives of our audit are to obtain sufficient
appropriate audit evidence regarding compliance with laws and
regulations that have a direct effect on the determination of
material amounts and disclosures in the financial statements,
to perform audit procedures to help identify instances of non-
compliance with other laws and regulations that may have a
material effect on the financial statements, and to respond
appropriately to identified or suspected non-compliance with
laws and regulations identified during the audit.
In relation to fraud, the objectives of our audit are to identify
and assess the risk of material misstatement of the financial
statements due to fraud, to obtain sufficient appropriate audit
evidence regarding the assessed risks of material misstatement
due to fraud through designing and implementing appropriate
responses and to respond appropriately to fraud or suspected
fraud identified during the audit.
However, it is the primary responsibility of management, with
the oversight of those charged with governance, to ensure that
the entity’s operations are conducted in accordance with the
provisions of laws and regulations and for the prevention and
detection of fraud.
17
Annual Report & Accounts | 2020 Independent Auditors’ Report to the Members of H C Slingsby plc
(continued)
In identifying and assessing risks of material misstatement
in respect of irregularities, including fraud, the group audit
engagement team:
•
obtained an understanding of the nature of the industry
and sector, including the legal and regulatory framework
that the group and parent company operate in and how
the group and parent company are complying with the
legal and regulatory framework;
•
•
inquired of management, and those charged with
governance, about their own identification and assessment
of the risks of irregularities, including any known actual,
suspected or alleged instances of fraud;
discussed matters about non-compliance with laws
and regulations and how fraud might occur including
assessment of how and where the financial statements
may be susceptible to fraud.
The most significant laws and regualtions were determined as follows:
Legislation / Regulation
Additional audit procedures performed by the Group audit engagement team included:
International accounting
standards in conformity
with the Companies Act
2006
Tax compliance
regulations
• Review of the financial statement disclosures and testing to supporting documentation
• Completion of disclosure checklists to identify areas of non-compliance
•
Inspection and review of tax computations prepared by external tax advisors
• Consideration of whether any matter identified during the audit required reporting to an
appropriate authority outside the entity
The areas that we identified as being susceptible to material misstatement due to fraud were:
Risk
Audit procedures performed by the audit engagement team:
Management override of
controls
•
Testing the appropriateness of journal entries and other adjustments
• Assessing whether the judgements made in making accounting estimates are indicative of a
potential bias
•
Evaluating the business rationale of any significant transactions that are unusual or outside
the normal course of business.
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.
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
6 May 2021
18
Annual Report & Accounts | 2020
Consolidated Income Statement
For the year ended 31 December 2020
Revenue
Cost of sales
Gross profit
Distribution costs
Administrative expenses (including exceptional credit of £2,726,000 in 2019)
Operating profit before exceptional items
Exceptional items
Operating profit
Finance income
Finance costs
Profit before taxation and exceptional items
Exceptional items
Profit before taxation
Taxation
Profit for the year attributable to owners of the parent
Note
2
3
6
7
8
3
9
2020
£’000
21,806
(14,194)
7,612
(3,897)
(2,452)
1,263
-
1,263
-
(154)
1,109
-
1,109
(163)
946
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
Basic and diluted weighted average earnings per share
10
92.3p
233.5p
All profits of the group arise from continuing operations.
19
Annual Report & Accounts | 2020
Statement of Consolidated
Comprehensive Income and Expense
For the year ended 31 December 2020
Profit 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
Total comprehensive (expense)/income for the year attributable to equity
shareholders
All profits of the group arise from continuing operations.
Note
24
16
2020
£’000
946
2019
£’000
2,335
(1,784)
(1,069)
339
(1,445)
182
(887)
(499)
1,448
20
Annual Report & Accounts | 2020
Statement of Consolidated and
Company Changes in Shareholders’
Equity
For the year ended 31 December 2020
Group
1 January 2019
Profit for the year
Other comprehensive income/(expense) for the year
Total comprehensive income/(expense) for the year
1 January 2020
Profit for the year
Other comprehensive income/(expense) for the year
Total comprehensive income/(expense) for the year
Issue of shares
31 December 2020
Company
1 January 2019
Profit for the year
Other comprehensive income/(expense) for the year
Total comprehensive income/(expense) for the year
1 January 2020
Profit for the year
Other comprehensive income/(expense) for the year
Total comprehensive income/(expense) for the year
Issue of shares
31 December 2020
Share capital
£’000
250
-
-
-
250
-
-
-
12
262
Share capital
£’000
250
-
-
-
250
-
-
-
12
262
Share
premium
£’000
-
-
-
-
-
-
-
-
24
24
Share
premium
£’000
-
-
-
-
-
-
-
-
24
24
Retained
earnings
Total equity
£’000
(27)
2,335
(887)
1,448
1,421
946
(1,445)
499
-
922
£’000
223
2,335
(887)
1,448
1,671
946
(1,445)
499
36
1,208
Retained
earnings
Total equity
£’000
(991)
2,236
(887)
1,349
358
773
(1,445)
(672)
-
(314)
£’000
(741)
2,236
(887)
1,349
608
773
(1,445)
(672)
36
(28)
21
Annual Report & Accounts | 2020 Consolidated Balance Sheet
As at 31 December 2020
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
Share Premium
Retained earnings
Total equity
Note
2020
£’000
2019
£’000
13
14
14
16
17
18
20
19
20
21
21
24
16
25
25
5,084
518
700
1,553
7,855
2,224
2,632
-
1,781
6,637
5,296
610
700
1,115
7,721
2,134
2,401
-
1,278
5,813
(4,454)
(4,729)
(7)
(34)
(8)
(32)
(4,495)
(4,769)
2,142
1,044
(32)
(8,175)
(582)
1,208
262
24
922
1,208
(66)
(6,558)
(470)
1,671
250
-
1,421
1,671
The financial statements on pages 19 to 48 were approved by the Board of Directors on 6 May 2021 and were signed on its behalf by:
D. S. Slingsby
Director
H C Slingsby plc
Registered Number: 00452716
M. L. Morris
Director
22
Annual Report & Accounts | 2020
Company Balance Sheet
As at 31 December 2020
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 assets/liabilities
Non-current liabilities
Retirement benefit obligation
Deferred tax liabilities
Net (liabilities)/assets
Capital and reserves
Share capital
Share premium
Retained earnings
Total equity
Note
2020
£’000
2019
£’000
13
14
15
16
17
18
20
19
20
24
16
25
25
4,965
93
1,517
1,553
8,128
2,224
2,406
-
167
4,797
(4,268)
(7)
(4,275)
522
(8,175)
(503)
(28)
262
24
(314)
(28)
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
As permitted by Section 408 of the Companies Act 2006, the company has not published its own income statement. The profit and
total comprehensive income of the company for the financial year was £773,000 (2019: £2,236,000).
The financial statements on pages 19 to 48 were approved by the Board of Directors on 6 May 2021 and were signed on its behalf by:
D. S. Slingsby
Director
H C Slingsby plc
Registered Number: 00452716
M. L. Morris
Director
23
Annual Report & Accounts | 2020
Consolidated Cash Flow Statement
For the year ended 31 December 2020
Cash flows from operating activities
Cash generated from operations
Interest paid
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 share issue
Repayment of borrowings
Proceeds of borrowing
Increase / (decrease) 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
2020
£’000
1,594
(13)
(41)
1,540
(108)
6
(18)
(120)
(36)
36
(1,034)
-
117
(917)
503
1,278
1,781
2019
£’000
404
(36)
(57)
311
(212)
20
(83)
(275)
(36)
-
-
397
(577)
(216)
(180)
1,458
1,278
24
Annual Report & Accounts | 2020 Company Cash Flow Statement
For the year ended 31 December 2020
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
Proceeds from share issue
Repayment of borrowings
Proceeds from borrowing
Increase / (decrease) 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
2020
£’000
1,070
(13)
1,057
(104)
6
(18)
(116)
36
(1,034)
-
117
(881)
60
107
167
Note to the Cash Flow Statements
For the year ended 31 December 2020
Group
Company
Cash generated from operating activities
Profit 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
Increase in inventories
(Increase)/decrease in trade and other receivables
Increase/(decrease) in trade and other payables
Cash generated from operating activities
2020
£’000
1,109
154
430
(304)
-
-
-
(6)
(90)
(231)
532
1,594
2019
£’000
2,887
285
414
(125)
(691)
(3,069)
1,034
(8)
(186)
189
(326)
404
2020
£’000
881
150
276
(304)
-
-
-
(6)
(90)
(294)
457
1,070
2019
£’000
174
(36)
138
(179)
20
(83)
(242)
-
-
397
(577)
(180)
(284)
391
107
2019
£’000
2,764
280
261
(125)
(691)
(3,069)
1,047
(8)
(186)
136
(235)
174
25
Annual Report & Accounts | 2020 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 accounting standards in conformity with
the requirements of the Companies Act 2006. 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 £0.9m
(2019 £2.3m) and had net current assets at 31 December 2020
of £2.1m (2019 net current assets of £1m). The result of the
company for the financial year was a profit of £0.8m
(2019: £2.2m).
The financial statements have therefore been prepared on a
going concern basis which assumes the group will continue in
operation for a period of at least 12 months from the date of
approval of the financial statements.
The directors have prepared trading and cash flow forecasts for
the Group for the period to 31 December 2022, 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.
Consistent with the directors’ expectations, the overdraft
element of the Group’s banking facilities was renewed at the
same level until 30 April 2022 on 27 April 2021.
New accounting standards and
interpretations
Adoption of IFRS
The Group and Company financial statements have been
prepared in accordance with IFRS, IAS and IFRS Interpretations
Committee (“IFRSIC”) effective as at 31 December 2020.
The Group and Company have not chosen to adopt any
amendments or revised standards early.
Where applicable, the following amendments to accounting
standards were adopted by the Group on the effective date
during the current year. The Group has applied these standards
in the preparation of the financial statements and has not
adopted any new or amended standards early.
Amendment to IFRS 3
Business Combinations
1 January 2020
Amendments to IFRS 9, IAS 39 and IFRS17
Interest Rate Benchmark Reform
1 January 2020
Amendments to IAS 1 and IAS 8
Definition of Material
1 January 2020
IAS in conformity with the requirements of the
Companies Act 2006
Departure from EU IFRS on Brexit
31 January 2020
Amendment to IFRS 16
Leases - COVID-19 Related Rent Concessions
1 June 2020
Any significant impact on adoption is included in these notes.
IFRS issued but not yet effective
At the date of issue of these financial statements, the following accounting standards and interpretations, which have not been
applied, were in issue but not yet effective. The directors do not anticipate adoption of the standards listed below will have a material
impact on the financial statements or they consider the implementation too uncertain to speculate on the impact on the accounts at
this point in time.
Amendments to IFRS 4
Insurance Contracts – deferral of IFRS19
1 January 2021
Amendments to IFRS 9, IAS 39, IFRS 7, IFRS 4 and IFRS 16
Interest Rate Benchmark Reform - Phase 2
1 January 2021
26
Annual Report & Accounts | 2020
Basis of Consolidation
The financial statements of the Group consolidate the financial
statements of H C Slingsby p lc and its subsidiaries up to 31
December 2020 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 entity. Identifiable assets acquired and liabilities
and contingent liabilities assumed in a business combination
are measured initially at their fair values at the acquisition date.
Acquisition related costs are expensed as incurred.
Exceptional Items
Exceptional items are disclosed separately in the financial
statements where it is necessary to do so to provide further
understanding of the financial performance of the Group. They
are material items of income or expense that have been shown
separately due to the significance of their nature or amount.
Accounting Estimates and Judgements
The preparation of these financial statements requires
management to make estimates and judgements that affect
the reported amounts of assets and liabilities at the date of
the financial statements and the reported amounts of revenue
during the reporting year. Actual results could materially differ
from these estimates.
The 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 £8.2m (2019: £6.6m). This
movement was due to the impact of changes in actuarial
assumptions. During November 2020, a High Court ruling
relating to how Guaranteed Minimum Pensions were
calculated when members transferred out of the scheme
was decided. This decision has the impact of increasing
the liabilities of the scheme by requiring trustees to revisit
historic transfers and top-up cash equivalent transfer
values (CETV) payments that were not adjusted from the
unequal effect of GMP. The Company has taken advice
from the scheme actuary and considers the impact to be
immaterial to the results. This view is based on information
available for 18 out of 29 years covered by the ruling.
Using the information from the 18 known years, a pro-
rated total for transfer values would be £651,000. From
previous work undertaken by the scheme actuary in this
regard, an increase in CETV of 0.9% would be required,
leading to an additional liability of approximately £10,000.
A fuller assessment will be made during the current year.
• Selection of appropriate rates of amortisation and
depreciation for intangible and tangible non-current assets.
The annual depreciation and amortisation charges 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 £631,000 (2019: £408,000) (see note 17 for
the net carrying amount of inventories and details of the
provisions made).
•
•
Impairment of goodwill and intangible assets. The directors
review whether goodwill is impaired on an annual basis
which requires an estimation of the value in use of the cash
generating units to which the goodwill, and any intangible
assets, are allocated. This involves estimation of future
cash flows and choosing a suitable discount rate (see note
14 for further disclosure). As disclosed in notes 3 and 14,
the results for the year ended 31 December 2020 include
an impairment of £nil (2019: £1,034,000).
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
27
Annual Report & Accounts | 2020 Notes to the Accounts (continued)
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 2020 the Group has recognised
deferred tax assets of £1,553,000 (2019:£1,115,000) and
deferred tax liabilities of £582,000 (2019: £470,000) (see
note 16 for disclosure of the Group’s deferred tax assets
and liabilities).
Revenue and Recognition of Income
Revenue comprises the fair value of the consideration received
or receivable from the sale of goods and services in the
ordinary course of the Group’s activities. Revenue is shown net
of value added tax, returns, rebates and discounts and after
eliminating sales within the group. Revenue is recognised when
the goods are dispatched to the customer.
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 the income statement. 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
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.
28
Annual Report & Accounts | 2020 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% per annum.
Goodwill
Goodwill arising on acquisitions comprises the excess of the
fair value of the consideration for investments in subsidiary
undertakings over the fair value of the net identifiable assets
acquired at the date of the acquisition. Goodwill arising on
acquisitions is included in intangible assets.
Goodwill is not amortised but is tested annually for impairment
and carried at cost less accumulated impairment losses. Gains
and losses on the disposal of an entity include the carrying
amount of goodwill relating to the entity sold.
Goodwill is allocated to cash-generating units for the purpose
of impairment testing. Each of those cash-generating units
represents the lowest level within the group at which the
associated level of goodwill is monitored for management
purposes and are not larger than the operating segments
determined in accordance with IFRS8 “Operating Segments”.
Impairment of non-financial assets
Assets not subject to amortisation are tested annually for
impairment. Assets that are subject to amortisation are
reviewed for impairment whenever events or changes in
circumstances indicate that the carrying amount may not be
recoverable. An impairment loss is recognised for the amount
by which the asset’s carrying amount exceeds its recoverable
amount. The recoverable amount is the higher of an asset’s fair
value less costs to sell and value in use. For the purposes of
assessing impairment, assets are grouped at the lowest levels
for which there are separately identifiable cash flows (cash
generating units). Non-financial assets, other than goodwill that
suffered an impairment, are reviewed for possible reversal of
the impairment at each reporting date.
Investments
Investments are stated at cost, less provision for impairment
where necessary.
Deferred taxation
Deferred taxation is recognised, using the full liability
method, on temporary differences arising between the tax
bases of assets and liabilities and their carrying amount in
the consolidated financial statements. Deferred taxation is
determined using tax rates (and laws) that have been enacted,
or substantially enacted, by the balance sheet date, and are
expected to apply when the related deferred taxation asset is
realised or deferred taxation liability is settled.
Deferred taxation assets are recognised only to the extent that
it is probable that future taxable profits will be available against
which the temporary differences can be utilised.
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.
29
Annual Report & Accounts | 2020 Notes to the Accounts (continued)
Financial assets other than derivatives
The Group classifies its financial assets as subsequently
measured at amortised cost under IFRS 9 if they meet 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
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.
• 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.
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.
Financial assets include trade receivables, amounts due from
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 introduced an expected credit loss model which
broadens the information that the Group 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 and other payables
Trade and other payables are recognised initially at fair value
and subsequently measured at amortised cost using the
effective interest method.
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.
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.
30
Annual Report & Accounts | 2020 3. Exceptional Items
DB pension settlement gain
Goodwill impairment provision
Property impairment reversal
2020
£’000
-
-
-
-
2019
£’000
3,069
(1,034)
691
2,726
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 DB pension settlement gain is explained more fully in note 24.
4. Employee Information
Staff costs
Wages and salaries
Social security costs
Other pension and life assurance costs
Group
2020
£’000
2,827
246
80
3,153
2019
£’000
2,625
231
81
2,937
Company
2020
£’000
2,385
206
66
2,657
2019
£’000
2,168
181
68
2,417
The average monthly number of persons, including directors, employed during the year was:
Group
Company
2020
Number
2019
Number
2020
Number
2019
Number
Selling and distribution
Administration
78
21
99
85
22
107
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
65
17
82
2020
£’000
107
154
261
151
3
70
18
88
2019
£’000
102
105
207
102
3
Morgan Morris accrued benefits under a defined contribution pension scheme amounting to £3,004 (2019: £2,600).
31
Annual Report & Accounts | 2020
Notes to the Accounts (continued)
6. Operating Profit
Operating profit is stated after charging/(crediting):
Profit on disposal of property, plant and equipment
Depreciation on property, plant and equipment
Amortisation of intangible assets
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
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)
2020
£’000
(6)
320
110
(17)
40
5
-
-
45
2020
£’000
-
2020
£’000
13
4
137
154
2019
£’000
(8)
300
114
1
36
5
6
1
48
2019
£’000
-
2019
£’000
35
5
245
285
32
Annual Report & Accounts | 2020
9. Taxation
Current tax
UK corporation tax:
– current year
Deferred tax:
UK deferred tax:
– origination and reversal of timing differences
– adjustments due to chage of tax rate
Total taxation charge
Factors affecting the tax credit for the year:
2020
£’000
2019
£’000
150
150
89
(76)
13
163
41
41
(511)
-
511
552
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
2020
£’000
1,109
211
28
(76)
-
-
163
2019
£’000
(2,887)
(549)
65
62
-
-
552
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 19% (2019: 17%) as at 31 December 2020.
10. Earnings Per Share
Basic earnings per share is based upon a profit of £946,000 (2019: £2,335,000) and on 1,025,000 (2019: 1,000,000) weighted
average ordinary shares in issue during the year.
There is no difference between basic earnings per share and diluted earnings 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 profit and
total comprehensive income of the company for the financial year was a profit of £773,000 (2019: £2,236,000).
33
Annual Report & Accounts | 2020
Notes to the Accounts (continued)
12. Dividends
Interim dividend paid for the financial year of 0.0p (2019: 0.0p)
Final dividend paid for the financial year of 0.0p (2019: 0.0p)
2020
£’000
-
-
-
Equipment
Right-of-
use assets
13. Property, Plant and Equipment
Group
Cost
1 January 2019 – as previously reported
Right-of-use assets on transition to IFRS 16
Additions
Disposals
1 January 2020
Additions
Disposals
31 December 2020
Accumulated depreciation
1 January 2019
Charge for the year
Reversal of previous impairment provision
Disposals
1 January 2020
Charge for the year
Disposals
31 December 2020
Net book amount
At 31 December 2020
At 31 December 2019
At 31 December 2018
Short
Leasehold
Property
£’000
119
–
–
–
119
–
–
Freehold
land and
buildings
£’000
6,671
–
–
–
6,671
–
–
£’000
2,445
–
212
(397)
2,260
108
(16)
119
6,671
2,352
652
11
–
–
73
10
–
83
36
46
57
2,556
106
(691)
–
1,971
106
–
2,077
4,594
4,700
4,115
2,039
150
–
(384)
1,805
172
(16)
1,961
391
455
406
£’000
–
128
–
–
128
–
–
128
–
33
–
–
33
32
–
65
63
95
–
2019
£’000
-
-
-
Total
£’000
9,235
128
212
(397)
9,178
108
(16)
9,270
4,657
300
(691)
(384)
3,882
320
(16)
4,186
5,084
5,296
4,578
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 elected to adjust the carrying value in line with the valuation by reversing a portion of the historic impairment, leading to
an exceptional non-cash impairment reversal of £0.7m in the year ended 31 December 2019.
The carrying amount and depreciation of right-of-use assets all relate to property leases.
Depreciation is charged to administrative expenses in the Income Statement.
34
Annual Report & Accounts | 2020 Company
Cost
1 January 2019
Additions
Disposals
1 January 2020
Additions
Disposals
31 December 2020
Accumulated depreciation
1 January 2019
Charge for the year
Reversal of previous impairment provision
Disposals
1 January 2020
Charge for the year
Disposals
31 December 2020
Net book amount
At 31 December 2020
At 31 December 2019
At 31 December 2018
Depreciation is charged to administrative expenses in the Income Statement.
Freehold
land and
buildings
£’000
6,671
–
–
6,671
–
–
Equipment
Total
£’000
2,154
179
(322)
2,011
104
(16)
£’000
8,825
179
(322)
8,682
104
(16)
6,671
2,099
8,770
2,556
106
(691)
–
1,971
106
–
1,750
143
–
(309)
1,584
160
(16)
4,306
249
(691)
(309)
3,555
266
(16)
2,077
1,728
3,805
4,594
4,700
4,115
371
427
404
4,965
5,127
4,519
35
Annual Report & Accounts | 2020
Notes to the Accounts (continued)
14. Intangible Assets
Cost
1 January 2019
Additions
Disposals
1 January 2020
Additions
Disposals
31 December 2020
Accumulated amortisation
1 January 2019
Goodwill impairment
Charge for the year
Disposals
1 January 2020
Charge for the year
Disposals
31 December 2020
Net book amount
At 31 December 2020
At 31 December 2019
At 31 December 2018
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
1,000
899
1,899
-
-
-
-
2,409
1,000
-
-
-
-
2,409
1,000
675
1,034
-
-
1,709
-
-
1,709
700
700
1,734
375
-
100
-
475
100
-
575
425
525
625
83
(6)
976
18
-
994
883
-
14
(6)
891
10
-
901
93
85
16
83
(6)
1,976
18
-
1,994
1,258
-
114
(6)
1,366
110
-
1,476
518
610
641
860
83
(6)
937
18
-
955
846
-
12
(6)
852
10
-
862
93
85
14
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 expected future cash flows 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 followed by a further non-cash
impairment during 2019 of £1,034,000 such that goodwill relating to the ESE acquisition is £700,000.
36
Annual Report & Accounts | 2020
The carrying amount of the ESE Direct Limited CGU has been tested for impairment using a discounted cash flow model based on
the following assumptions:
- Most recent budgets /forecasts for the next 5 years
-
-
Extrapolation of expected future cash flows using a terminal growth rate of 2%
Sales increase of 5% and then 2% growth over the period based on forecast perfomance
- 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%
The Directors performed sensitivity analysis on assumptions concerning sales growth assuming no growth over the period. On this
sensitised basis, there was no impairment.
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 followed by a further impairment of £1.1m in 2019 such that
the net book value of the investment was £1.52m. 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
2020
£’000
Company
2019
£’000
2020
£’000
2019
£’000
1,553
1,115
1,553
1,115
(508)
7
(81)
(582)
(457)
77
(90)
(470)
(510)
7
-
(503)
(458)
77
-
(381)
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.
37
Annual Report & Accounts | 2020 Notes to the Accounts (continued)
16. Deferred Tax (continued)
Movements in deferred tax assets/(liabilities) are as follows:
Group
1 January 2019
(Charged)/credited to income statement
Credited to other comprehensive income
1 January 2020 – Group and Company
(Charged)/credited to income statement
Credited to other comprehensive income
31 December 2020
Company
1 January 2019
(Charged)/credited to income statement
Credited to other comprehensive income
1 January 2020
(Charged)/credited to income statement
Credited to other comprehensive income
31 December 2020
17. Inventories
Raw materials and work in progress
Finished goods and goods for resale
Pension
liability
Tax losses
Accelerated
capital
allowances
Intangible
assets
Total
£’000
£’000
£’000
£’000
£’000
1,434
(501)
182
1,115
99
339
1,553
89
(12)
–
77
(70)
–
7
(440)
(17)
-
(457)
(51)
-
(508)
(109)
19
-
(90)
9
-
(81)
Pension
liability
Tax losses
Accelerated
capital
allowances
£’000
£’000
£’000
1,434
(501)
182
1,115
99
339
1,553
89
(12)
–
77
(70)
–
7
(443)
(15)
-
(458)
(52)
-
(510)
Group
2020
£’000
220
2,004
2,224
2019
£’000
221
1,913
2,134
Company
2020
£’000
220
2,004
2,224
974
(511)
182
645
(13)
339
971
Total
£’000
1,080
(528)
182
734
(23)
339
1,050
2019
£’000
221
1,913
2,134
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 £287,000 (2019: £41,000). The cost of inventories
recognised as an expense and included in the Group’s cost of sales was £14,811,000 (2019: £13,277,000) and £10,582,000
(2019: £8,674,000) for the Company. The provision for obsolete stock at the year-end for the Group and Company is £631,000
(2019: £408,000).
38
Annual Report & Accounts | 2020 18. Trade and Other Receivables
Trade receivables
Receivables from subsidiary
Prepayments
Group
Company
2020
£’000
2,200
–
432
2,632
2019
£’000
2,008
–
393
2,401
2020
£’000
1,892
106
408
2,406
2019
£’000
1,659
78
375
2,112
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 allowances. 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 2020
Expected credit loss
Unused provision reversed
Receivables written off
At 31 December 2020
Group
2020
£’000
5
68
(4)
(60)
9
2019
£’000
20
38
(35)
(18)
5
Company
2020
£’000
4
64
(4)
(57)
7
2019
£’000
18
32
(30)
(16)
4
Receivables due from subsidiary were not impaired at 31 December 2020 and 31 December 2019 as the expected credit loss is not
considered to be material.
The carrying amounts of the group’s and company’s receivables are denominated in the following currencies:
Pound sterling
Euro
Group
Company
2020
£’000
2,115
85
2,200
2019
£’000
1,939
69
2,008
2020
£’000
1,913
85
1,998
2019
£’000
1,668
69
1,737
39
Annual Report & Accounts | 2020
Notes to the Accounts (continued)
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
2020
£’000
1,864
-
150
373
14
547
-
1,506
4,454
2019
£’000
1,643
-
41
292
13
317
1,034
1,389
4,729
Company
2020
£’000
1,427
608
85
286
11
345
-
1,506
4,268
2019
£’000
1,214
608
-
209
11
177
1,034
1,389
4,642
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.
Group and Company borrowings include debtor financing, overdraft and leases. The debtor financing and overdraft amounting to
£1,506,000 (2019: £2,423,000) are repayable within one year.
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. 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. The overdraft element of the Group’s banking facilities expires on
the 30 April 2021. The debtor finance facility remains unaffected. The debtor finance facility is a total of £2m (subject to suitable
debt being available) and the overdraft facility (net of cash) is the sum of £500,000.
20. Derivative Financial Instruments
Forward foreign currency contracts and options
Group and Company
Assets
2020
£’000
-
2019
£’000
-
Liabilities
2020
£’000
7
2019
£’000
8
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 2021. They have been valued using year end market data.
21. Leases and financial commitments
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
2020
£’000
34
32
66
2019
£’000
32
66
98
Company
2020
£’000
-
-
-
2019
£’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 (2019 - £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 (2019 - £40,000).
40
Annual Report & Accounts | 2020
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
2020
£’000
2019
£’000
Company
2020
£’000
2019
£’000
2,200
2,008
1,892
1,659
-
-
1,781
3,981
2020
£’000
1,506
-
1,864
547
14
66
7
-
-
1,278
3,286
2019
£’000
2,423
-
1,643
317
13
98
8
106
-
167
2,165
2020
£’000
1,506
608
1,427
345
11
-
7
78
-
107
1,844
2019
£’000
2,423
608
1,214
177
11
-
8
4,004
4,502
3,904
4,441
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 Group made a foreign exchange gain of £17,000 in 2020 (2019 - £1,000 loss).
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
2020
£’000
85
-
2019
£’000
69
1
Liabilities
2020
£’000
-
10
2019
£’000
-
8
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.
41
Annual Report & Accounts | 2020
Notes to the Accounts (continued)
22. Financial Risk Management (continued)
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.
The maximum exposure of the group at the end of the reporting period is the carrying value of financial assets totalling £3,981,000
(2019: £3,286,000).
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 2020, the gearing ratio was 0% (2019:44%).
24. Pension Commitments
control over its operation, funding and investment strategy. The
Trustee will consult with the Company on certain matters.
Group and Company Retirement Benefit
Obligations
At 31 December 2020 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 2021 fiscal
year is £314,000. 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
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
2020 and a shortfall of £11.3m against the Trustee’s funding
objective was identified. The Company agreed to pay
contributions of £304,500 in 2020 (2019: £125,000) to remove
the shortfall over 28 years. Contributions are scheduled to
increase to £313,500 in 2021 and to £359,000 in 2022. In
2021 an additional payment of £60,000 is payable due to the
Company’s cash generation.
The weighted average duration of the defined benefit obligation
is 20.1 years.
Investment strategy
Approximately 11% (2018: 11%) of the Scheme’s assets
are held in equity type assets, and 89% (2019: 89%) 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 £75,000 as at
31 December 2020 (2019: 30,061 shares with a fair value of
£20,000).
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
42
Annual Report & Accounts | 2020 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 £1.3m in the present value of
the defined benefit obligation.
The methodology used to derive the
assumption adopted is consistent with
discount rate methodology. An increase
or decrease in the inflation rate of 0.25%
would result in an increase or decrease of
approximately £0.9m 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 2020 would be 21.1 (23.7)
years and the future life expectancy from age
65 for a male (female) non-pensioner member
currently aged 45 of 22.7 (25.2) years.
The increase or decrease in the present value
of the defined benefit obligation due to a
member living one year longer, or one year
less, would be approximately £1.1m.
The methods used to carry out the sensitivity analyses
presented above for the material assumptions are the same
as those the Company has used previously. The calculations
alter the relevant assumption by the amount specified, whilst
assuming that all other variables remained the same. This
approach is not necessarily realistic, since some assumptions
are related: for example, if the scenario is to show the effect
if inflation is higher than expected, it might be reasonable to
expect that nominal yields on corporate bonds will increase
also. However, it enables the reader to isolate one effect from
another.
providing volatility and risk in the short term. As the Scheme
matures, the expectation is that the Trustee would reduce the
level of investment risk by investing more in assets that better
match the liabilities. In essence this would see a gradual sale
of equities and the purchase of gilts and corporate bonds. The
company is of the view that, due to the long term nature of the
Scheme’s liabilities, it is appropriate to continue with a degree
of equity investment so as to manage the Scheme’s long term
liabilities efficiently.
The Trustee has derived its investment strategy, in consultation
with the company, so as to reflect the Scheme’s long term
liabilities. At the current time approximately 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 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:
43
Annual Report & Accounts | 2020
Notes to the Accounts (continued)
24. Pension Commitments (continued)
Year ended 31 December 2020
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 2020 and updated to 31 December 2020
by a qualified independent actuary.
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.
GMP equalisation
In October 2020, a Court ruling had the impact of increasing scheme liabilities for equalisation of pensions in respect of members
who transferred out of the scheme since 1990. Together with the Scheme’s actuary, the directors have assessed the impact of this
and consider it to be immaterial.
Reconciliation of the present value of the defined benefit obligation
Present value of defined benefit obligation at beginning of year
Settlement gain
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
Fair value of scheme assets at start of year
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
44
2020
£’000
22,005
-
454
3,458
-
(736)
25,182
2020
£’000
15,447
317
1,674
304
-
(736)
17,007
2019
£’000
25,321
(3,069)
720
2,769
(2,965)
(771)
22,005
2019
£’000
16,883
475
1,700
125
(2,965)
(771)
15,447
2020
£’000
25,182
(17,007)
8,175
2019
£’000
22,005
(15,447)
6,558
Annual Report & Accounts | 2020
Amounts to be recognised in the income statement
Settlement gain (note 3)
Interest on obligation
Interest income on scheme assets
Total expense
Total amount recognised in the statement of consolidated income SOCI
Actuarial loss/(gain)
Actuarial loss/(gain) recognised in (SOCI)
Pension cost
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
2020
%
12
88
100
2020
£’000
1,963
15,044
17,007
1.45%
2020
£’000
-
454
(317)
137
2020
£’000
1,784
1,784
2020
£’000
-
137
67
204
2019
%
13
87
100
2019
£’000
(3,069)
720
(475)
(2,824)
2019
£’000
1,069
1,069
2019
£’000
(3,069)
245
66
(2,758)
2019
£’000
1,946
13,501
15,447
2.1%
At 31 December 2020 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
2020
£’000
75
2019
£’000
20
45
Annual Report & Accounts | 2020
Notes to the Accounts (continued)
24. Pension Commitments (continued)
Principal actuarial assumptions at the Balance Sheet date:
The assumptions as at the reporting date are used to determine the present value of the benefit obligation at that date. The key
financial assumptions are set out below:
Discount rate
Long term rate of return on assets
RPI Inflation
CPI Inflation
Pension increases:
Non-Executive pension accrued before 1 January 1992 (0% fixed)
Non-Executive pension accrued after 1 January 1992 (RPI max 5%)
Executive pension accrued before 1 January 1992 (4% fixed)
Executive pension accrued after 1 January 1992 (RPI min 4%, 5% max)
Pre and post retirement mortality
Retiring today:
- Males
- Females
Retiring in 20 years:
- Males
- Females
Cash commutation
2020
1.45%
1.45%
2.85%
2.30%
0.00%
3.00%
4.00%
4.15%
86.4
87.7
88.7
90.2
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
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 (2019: £53,000) 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
£14,000 (2019: £13,000) have been charged to operating profit.
46
Annual Report & Accounts | 2020 25. Share Capital
Ordinary shares of 25p
Allotted, called up and fully paid
Ordinary shares of 25p
2020
Number
2020
£’000
2019
Number
2019
£’000
1,050,000
262
1,000,000
250
On 1st July 2020, the Company issued 50,000 ordinary 25p shares with a par value of £12,500 for consideration of 72.5p each
(total consideration received £36,250. 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.
At the 2019 Annual General Meeting, the restriction on the authorised share capital was revoked by amending the articles of
association of the Company.
26. 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
£119,000 and in respect of Morgan Morris £173,000.
There were no other transactions with key management.
Company – Transactions With Subsidiaries
Sales amounting to £1,036,185 (2019: £668,647) were made by HC Slingsby plc to ESE Direct Limited. HC Slingsby plc levied
management charges upon ESE Direct Limited of £180,000 in 2020 (2019: £180,000).
Purchases amounting to £nil (2019: £nil) were made by HC Slingsby plc from ESE Direct Limited.
Amounts due to ESE Direct Limited were £nil (2019: £nil) in respect of trading activities and £608,215 (2019: £608,215) in respect of
an inter-company loan.
Amounts due from ESE Direct Limited were £105,773 (2019: £78,128).
47
Annual Report & Accounts | 2020
Notes to the Accounts (continued)
27. 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)/cash
Company
Bank overdraft (note 19)
Debt financing (note 19)
Cash and cash equivalents
Net debt
At 1
January
2020
£’000
(1,389)
(1,034)
(98)
1,278
(1,243)
Cashflow
£’000
(117)
1,034
36
503
1,456
At 1
January
2020
£’000
(1,389)
(1,034)
107
(2,316)
Foreign
exchange
and other
movements
At 31
December
2020
£’000
£’000
-
-
(4)
-
(4)
(1,506)
-
(66)
1,781
209
Cashflow
At 31
December
2020
£’000
(117)
1,034
60
977
£’000
(1,506)
-
167
(1,339)
48
Annual Report & Accounts | 2020 Five Year Summary
Income Statement
Turnover
Gross profit
Operating profit/(loss) before exceptional item
Exceptional item
Profit/(loss) before tax
Profit/(loss) for the financial year
Profit/(loss) per share – basic and diluted
Dividend Per Ordinary Share*:
– Interim
– Final
Cash Flow Statement
2020
£’000
2019
£’000
21,806
19,568
6,743
446
2,726
2,887
2,335
7,612
1,263
-
1,109
946
92.3p
0.0p
0.0p
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)
233.5p
(66.2p)
(105.7p)
(65.6p)
0.0p
0.0p
0.0p
0.0p
0.0p
0.0p
0.0p
0.0p
Cash generated from /(used by) operating activities
1,540
404
893
334
(84)
Balance Sheet
Net current assets/(liabilities)
Net assets
Pension deficit (net of deferred tax asset)
Net cash/(debt) excluding leases
Cash and cash equivalents
2,142
1,208
(6,622)
275
1,781
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
* 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.
49
Annual Report & Accounts | 2020 Notice of Annual General Meeting
Notice is given that the seventy third 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 9 June 2021 at 10am to consider, in accordance
with section 656 Companies Act 2006 (“the Act”) whether any,
and if so what, steps should be taken to deal with the situation
that the net assets of the Company are less than half its called
up share capital. In addition, the meeting will consider and, if
thought fit, pass the resolutions as set out below. Resolutions 1
to 5 will be proposed as ordinary resolutions and resolutions 6
to 8 as special resolutions.
At the time of publication of this notice, the UK government
has put in place a national lockdown with “stay at home”
measures and restrictions on travel and social contact. In light
of these measures, the Annual General Meeting will be held as
a ‘closed’ meeting and shareholders will not be able to attend
in person. The Company will make arrangements such that the
legal requirements to hold the meeting can be satisfied through
the minimum number of directors. 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
appointing the Chair of the Annual General Meeting as
his or her proxy.
The Company acknowledges that, as a result of COVID-19, the
UK government may change current restrictions or implement
further measures relating to the holding of general meetings
during the affected period. Any changes to the Annual General
Meeting (including where and how the Annual General Meeting
is conducted) will be communicated to shareholders before the
meeting through our website at www.slingsby.com and, where
appropriate, published via regulatory news service.
Ordinary resolutions:
1. To receive the Company’s annual accounts for the
financial year ended 31 December 2020 together with the
Directors’ reports and auditor’s report on those accounts.
2. To re-elect as a Director, Dominic Slingsby 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 annual
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
£87,500; and
(b) comprising equity securities up to a nominal amount
of £175,000 (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
50
Annual Report & Accounts | 2020
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 £13,125;
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
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 £13,125; 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 105,000 (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 AIM Appendix of 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 (as applicable and as amended by the
Market Abuse (Amendment) (EU Exit) Regulations
2019/310);
(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
(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
6 May 2021
51
Annual Report & Accounts | 2020
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 7 June 2021 (or, if
the meeting is adjourned, as at lose 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 Group (previously called
Capita), on Tel: 0371 664 0300. Calls are charged
at the standard geographic rate and will vary by
provider. 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 Group at Central Square, 29
Wellington Street, Leeds, LS1 4DL by 10 am on 7 June
2021.
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 in the CREST
52
Annual Report & Accounts | 2020
Manual. The message must be transmitted so as to be
received by the issuer’s agent (ID RA10) by 10am on 7
June 2021. 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 4 May 2021 (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 1,050,000 Ordinary Shares,
carrying one vote each. No Ordinary Shares are held by
the Company in treasury. Therefore, the total voting rights
in the Company as at 4 May 2021 are 1,050,000.
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 £87,500 (representing 350,000
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 £175,000 (representing 700,000
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
£13,125 (representing 52,500 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
53
Annual Report & Accounts | 2020 Notes to the Notice of Annual General Meeting (continued)
without first being required to offer such shares to the existing
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 £13,125 (representing
52,500 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 105,000 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) (as applicable and as amended by the
Market Abuse (Amendment) (EU Exit) Regulations 2019/310).
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.
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HC Slingsby plc
01274 535 030
01274 535 035
sales@slingsby.com
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