SLINGSBY (H.C.) PLC — Earnings Release 2013

Apr 28, 2014

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RNS Number : 5961F

Slingsby(H.C.)Plc

28 April 2014

H C SLINGSBY PLC ("Slingsby" or the "Company" or the "Group")

Unaudited Preliminary Announcement for the year ended 31 December 2013

Statement by the Chairman

In a statement I issued on behalf of the Board at our 2013 AGM last June, I stated that "the Board's expectations are for a small pre-tax loss for the first half of 2013" and that "in the absence of an upturn in our markets and the economy as a whole, similar trading for the six months to 31 December 2013 will result in a more substantial loss for the second half". The Company subsequently reported in September 2013 a pre-tax loss for the first half of £32,000.

Sales in September and October did show a welcome improvement before falling away again substantially in the last two months of the financial year. Fierce price competition continued to put margins under pressure. A trading statement was therefore issued on 10 February 2014 in which it was stated that "As a result of further difficult and variable trading in the second half of the year the Board now expects that the Company will incur a pre-tax loss substantially in excess of its previous expectations for the year ended 31 December 2013".

I am disappointed to report that the Company incurred a pre-tax loss for the 2013 year of £249,000 on sales of £14.0 million compared with a profit before tax of £102,000 on sales of £14.6 million in 2012. The second half year pre-tax loss was therefore £217,000. Comprehensive action has therefore been taken to reduce overheads significantly since the year end. Following a fundamental review in December and post year end, we have reduced our workforce by approximately 20 per cent, including a layer of management. The manufacturing unit has been closed with all in-house designed products now sub contracted out for manufacture to trade only suppliers in the UK. The design, final assembly and commissioning of premium added value product, have been retained within the business. We have rationalised our Irish operations and consolidated activity in Northern Ireland and the Republic.

In the meantime, sales in the first three months of 2014 were 11 per cent below those of the comparative period last year, with margins continuing to be under pressure from aggressive pricing by competitors. In addition, exceptional restructuring costs of approximately £180,000 have been incurred in the current year.

The full benefit of our cost reductions will not take effect until June and will result in reduced monthly overhead costs which, even on the current depressed level of sales, would improve the Company's monthly operating performance going forward in the second half of 2014. The Board believes this will provide a secure platform for recovery as our initiatives to increase sales take effect.

Our new enterprise system and web site were installed in November 2013 and following some teething problems, this substantial investment is showing benefits. We are now able to be more responsive to opportunities online by offering more flexible and differentiated pricing. We continue to strive for best service at a competitive price. We therefore look to an improving level of sales in the second half of 2014 and into 2015.

On behalf of the board I wish to thank our loyal staff in these most difficult times.

Our balance sheet continues to be strong, particularly our positive cash position, which stood at £2.3 million as at 31 December 2013 (2012: £2.8 million). Despite these reported results and taking into account the actions already taken to improve the future position, we wish to maintain a dividend, albeit on a reduced level. The Board is therefore recommending a final dividend of 10p per share (2012: 15p), payable on 4 July 2014 to shareholders on the register on 6 June 2014. The total dividend for 2013 is therefore 12p (2012: 19p).

John Waterhouse

Non-Executive Chairman

28 April 2014

Registered Office

Otley Road

Baildon, Shipley

West Yorkshire BD17 7LW

For further information, please contact:

H C Slingsby PLC	Tel:  01274 535 030
Dominic Slingsby, Managing Director Ray Hudson, Financial Director
Sanlam Securities UK Limited	Tel:  020 7628 2200
David Worlidge

H C SLINGSBY PLC (the "Company")

Unaudited Consolidated Income Statement for the year ended 31 December 2013

	Note	2013 £'000	2012 £'000
Turnover		13,965	14,588
		----------	----------
Operating profit before exceptional items		137	489
Exceptional items	2	-	129
Operating profit		137	360
Finance income		26	43
Finance expense		(412)	(301)
		----------	----------
(Loss)/profit before taxation		(249)	102
Taxation		154	70
		----------	----------
(Loss)/profit for the year attributable to equity shareholders		(95)	172
		----------	----------
Basic and diluted/(loss) earnings per share	4	(9.5p)	17.2p
		----------	----------

The results set out above derive entirely from continuing operations.

Unaudited Consolidated Statement of Comprehensive Income and Expense for the year ended 31 December 2013

		2013 £'000	2012 £'000
Remeasurements of post-employment benefit obligation		1,641	(1,339)
Movement in deferred tax relating to retirement benefit obligation		(623)	46
Exchange adjustment		6	(7)
		----------	----------
Net income/(expense) recognised directly in equity		1,024	(1,300)
(Loss)/profit for the year		(95)	172
		----------	----------
Total recognised income/(expense) for the year attributable to equity shareholders		929	(1,128)
		--------	----------

Unaudited Consolidated Group Balance Sheet as at 31 December 2013

	Note	2013 £'000	2012 £'000
Assets
Non-current assets
Property, plant and equipment		6,130	6,358
Intangible assets Deferred tax asset		595  910	202  1,419
		--------	----------
		7,635	7,979
		--------	----------
Current assets
Inventories		1,897	2,270
Trade and other receivables		2,401	2,443
Cash and cash equivalents		2,325	2,836
Current tax asset		28	-
		--------	----------
		6,651	7,549
		--------	----------
Liabilities
Current liabilities
Trade and other payables		(2,503)	(2,722)
Derivative financial liability		(26)	(7)
Current tax liabilities		-	(12)
		--------	----------
		(2,529)	(2,741)
		--------	----------
Net current assets		4,122	4,808
		--------	----------
Non-current liabilities
Retirement benefit obligation	3	(8,069)	(9,838)
		--------	----------
Net assets		3,688	2,949
		--------	----------
Capital and reserves
Called up share capital		250	250
Retained earnings		3,417	2,684
Translation reserve		21	15
		--------	----------
Total equity		3,688	2,949
		--------	----------

Unaudited Consolidated Cash Flow Statement for the year ended 31 December 2013

		2013 £'000	2012 £'000
	Note
Cash flows from operating activities
Cash generated from operations	5	166	1,041
UK corporation tax paid		-	(108)
		--------	--------
Cash generated from operating activities		166	933
Cash flows from investing activities
Interest received		44	40
Purchase of property, plant and equipment		(64)	(92)
Purchase of intangible assets		(484)	(183)
Proceeds from sales of property, plant and equipment		11	26
		--------	--------
Net cash outflow from investing activities		(493)	(209)
Cash flows from financing activities
Equity dividends paid	6	(190)	(320)
		--------	--------
Net cash outflow from financing activities		(190)	(320)
		--------	--------
Net (decrease)/increase in cash and cash equivalents		(517)	404
Opening cash and cash equivalents		2,836	2,439
Exchange differences		6	(7)
		--------	--------
Closing cash and cash equivalents		2,325	2,836
		--------	--------

Unaudited Statement of Changes in Shareholders' Equity

	Share Capital £'000	Retained earnings £'000	Translation reserve £'000	Total equity £'000
1 January 2012	250	4,125	22	4,397
Total recognised expense for the year	-	(1,121)	(7)	(1,128)
Dividends paid	-	(320)	-	(320)
	----------	----------	----------	----------
1 January 2013	250	2,684	15	2,949
Total recognised income for the year	-	923	6	929
Dividends paid	-	(190)	-	(190)
	----------	----------	----------	----------
31 December 2013	250	3,417	21	3,688
	----------	----------	----------	----------

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

Notes to the Unaudited Preliminary Announcement for the year ended 31 December 2013

1.		The unaudited preliminary results have been prepared in accordance with International Financial Reporting Standards ("IFRS") and IFRIC interpretations as adopted by the EU and with those parts of the Companies Act 2006 applicable to companies reporting under IFRS.  The preliminary announcement does not constitute statutory accounts within the meaning of Section 434 of the Companies Act 2006. The financial information included in this preliminary announcement does not include all the disclosures required by IFRS or the Companies Act 2006 and accordingly it does not itself comply with IFRS or the Companies Act 2006. The financial statements for the year ended 31 December 2013, upon which the auditors have still to report, will be issued to shareholders on 22 May 2014 and will be available to members of the public at the registered office of the Company and on the Company's website www.slingsby.com from that date. The statutory accounts for the year ended 31 December 2013 will be delivered to the Registrar following the company's Annual General Meeting. The Annual General Meeting will be held at 10.00 am on 20 June 2014 at the Marriot Hollins Hall Hotel, Hollins Hill, Baildon, Shipley, BD17 7QW.
2.		Exceptional item	2013	2012
			£'000	£'000
		Redundancy costs	-	129
			------------	------------
3.		Retirement benefit obligation	2013	2012
			£'000	£'000
		Present value of funded obligation	20,649	21,669
Fair value of scheme assets	(12,580)	(11,831)
	------------	------------
Net liability in balance sheet	8,069	9,838
	------------	------------
4.		(Loss)/Earnings per share
		Basic (loss)/earnings per share is based upon (losses)/earnings of (£95,000) (2012: £172,000) and on 1,000,000 (2012: 1,000,000) ordinary shares in issue during the year. There is no difference between basic (loss)/earnings per share and diluted (loss)/earnings per share for both years as there are no potentially dilutive shares in issue.
5.		Cash generated from operations
			2013	2012
			£'000	£'000
		(Loss)/profit before tax	(249)	102
		Net finance costs	386	258
	Depreciation and amortisation		369	381
	Loss/(profit) on sale of property, plant and equipment		11	(9)
	Pension deficit contributions		(540)	(540)
	Decrease in inventories		373	2
	Decrease in trade and other receivables		23	114
	(Decrease)/increase in trade and other payables		(207)	733
			------------	------------
	Cash generated from operating activities		166	1,041
			------------	------------
6.	Dividends
	The interim and final dividends for the 2012 financial year of 4.0p and 15.0p, totalling £190,000 were paid and deducted from reserves in the year ended 31 December 2013. The dividends for the 2011 financial year totalling £320,000 were paid and deducted from reserves in 2012.

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