The information contained within this announcement is deemed by the Company to constitute inside information pursuant to Article 7 of EU Regulation 596/2014 as it forms part of UK domestic law by virtue of the European Union (Withdrawal) Act 2018 as amended. Upon the publication of this announcement via the Regulatory Information Service, this inside information is now considered to be in the public domain.

                                                                                    2 May 2023

H C SLINGSBY PLC

("Slingsby" or the "Company" or the "Group")

Audited Results for the year ended 31 December 2022

Statement by the Chairman

Board Composition

Following the Board changes in 2016, I remain as Interim Executive Chairman and since 2018 Morgan Morris has been the appointed Group Chief Executive.  The Board continues to believe that it would benefit from the appointment of new Non-Executive Directors.  This should now be possible following the release of restrictions relating to the Coronavirus, the agreement with regard to the pension scheme detailed below and the re-instatement of Directors' and Officers' insurance cover in respect of claims relating to the pension scheme, which had deterred previously suitable candidates. The Board will continue to explore solutions to this issue, with the objective remaining to appoint new Non-Executive Directors and a Non-Executive Chairman.

Results

In the half year statement, I reported an operating profit (before exceptional items) of £0.32m on sales of £11.0m. The full year operating profit (before exceptional items) was £0.63m (2021: £0.41m) on sales of £21.6m (2021: £19.8m). Group sales increased by 9%, which together with an improved gross margin, led to a profit before taxation and exceptional items of £0.49m (2021: £0.29m).  The increase in Group sales is principally due to the Group passing cost price increases which occurred across its product ranges on to customers.  This action resulted in the improvement in gross margin in 2022. 

Profit before tax of £0.8m in 2021, included an exceptional item of £0.53m relating to the increase in value of the freehold property at Baildon.  Within 2022, there have been no exceptional items recorded.

ESE Direct Limited ("ESE") contributed £7m of sales (2021: £6.4m) and profit before tax and management charges of £0.54m (2021: £0.53m).  ESE's sales increased mainly due to passing on cost prices increases to customers.

Group earnings before interest, tax, depreciation, amortisation and exceptional items ("EBITDA") in the year ended 31 December 2022 were £1.1m (2021: £0.9m).  The Group had net cash (after overdraft balances included in trade and other payables) as at 31 December 2022 of £0.03m (2021: £0.35m).  Group cash balances reduced due to increased working capital requirements and investment in fixed assets.

Dividend

Despite the agreement reached with the Trustee of the defined benefit pension scheme enabling the recommencement of dividends, the Board does not recommend the declaration of a final dividend for the year ended 31 December 2022 (2021: £nil).  This is due to the Board adopting a prudent view to maintain cash resources within the Group.

Under the agreement with the pension scheme, dividends are limited in their quantum to £60,000 plus 50% of net cashflow over £150,000 per annum.

Pension Scheme

The Company paid £0.35m (2021: £0.36m) in deficit reduction contributions during 2022.  The Company also continues to contribute £0.16m (2021: £0.16m) towards the scheme's running costs.  The Group is scheduled to pay £406,000 in deficit reduction contributions in 2023.  Contributions rise each year by inflation with a review at 1 January 2023 which is in progress.

At 31 December 2022, the pension scheme deficit decreased by £2.4m to £5.49m (2021: £7.94m). This improvement in the pension scheme position (which is £1.7m after the decrease in the related deferred tax asset) together with the profit generated in the year, increased the Group's net assets to £4.3m (2021: £2.3m).  The improved pension position was largely due to increases in the discount rate.

Recent Trading and Future Developments

Group sales in Q1 of 2023 against the same period in 2022 increased by 5%.  This improvement in sales at a higher gross margin was offset by increased overhead costs.  This led to an unaudited profit before tax in Q1 2023 of £0.12m compared to £0.16m in the same period in 2022.

On 30^th March 2023, Slingsby acquired certain assets of Stakrak Limited ("Stakrak").  Stakrak trades primarily through the websites Stakrak, GasCageDirect and SecurityCagesDirect selling a range of similar and

complimentary products but specialising in mesh cage solutions.  The consideration for the purchase was £0.11m funded from existing cash resources.

The market remains competitive, and the Board is cautious regarding the outlook.  This is particularly the case due to the significant uncertainty that remains caused by the continuing conflict in the Ukraine, the risk of a recession in the Group's main UK market and that the longer term impacts of the Coronavirus pandemic and Brexit are not yet fully known.  It is unclear as to the impact that these events will have on demand going forward.

In addition, inflationary pressures remain leading to cost increases across the product range and in overheads.  This could impact on the Group's gross margin and profits in 2023.  Whilst supply chain issues have lessened both in terms of supply of components and availability of transport, they remain problematic and impact on customer service levels and in some instances could lead to lost sales opportunities.

Finally, I would like to thank our staff across the Group for their efforts in 2022.  The Group has faced numerous challenges in recent years which were overcome due to the positive attitude and hard work of our employees.

For further information, please contact:

Consolidated Income Statement for the year ended 31 December 2022

Consolidated Statement of Comprehensive Income and Expense for the year ended 31 December 2022

 Consolidated Balance Sheet as at 31 December 2022

 Consolidated Cash Flow Statement for the year ended 31 December 2022

Consolidated Statement of Changes in Shareholders' Equity

Notes to the Preliminary Results for the year ended 31 December 2022