RNS Number:5275J
Sinclair (William) Holdings PLC
27 September 2006
WILLIAM SINCLAIR HOLDINGS plc
PRELIMINARY RESULTS FOR THE YEAR ENDED 30 JUNE 2006
William Sinclair is one of the UK's leading producers of commercial horticulture
and branded garden products. The company provides peat and fertiliser products
to the retail and commercial sectors.
William Sinclair's well established brands include J Arthur Bower's, Silvaperl
and New Horizon - the leading brand in the fast growing peat free garden compost
and organic plant foods sector.
William Sinclair's customers include national accounts such as Tesco, Wyevale,
B&Q and Homebase as well as an extensive range of independent garden centres.
FINANCIAL HIGHLIGHTS
*Profit increased 55% to #0.84 million (2005: #0.54 million).
*Turnover decreased 6% to #39.1 million following exit from unprofitable
export contracts.
*Recommended final dividend of 2.0p per share making a total of 3.0p,
unchanged from last year but now representing a more acceptable earnings
cover of 1.3.
*Basic EPS from continuing operations increased 60% to 4.0p (2005: 2.5p)
TURNAROUND STRATEGY
*Turnaround strategy into second year
*Board restructuring complete
*New product launches and expansion of decorative aggregates reducing
financial impact of cyclical nature of the industry
*Proposed move to AIM
Bernard Burns, Chief Executive, William Sinclair Holdings Plc, said:
"The Company is now into the second year of its recovery strategy and the
financial benefits of the actions taken are already beginning to show. We are
confident of generating further improvement across the business.
"William Sinclair has a portfolio of well established and highly regarded brands
with a loyal customer base. We are capitalising on these strengths to seize
market share from our competitors, particularly with independent garden centres.
In addition we have high expectations for our new product launches in the plant
foods and decorative aggregates sector.
"The industry has for too long blamed poor performance on the vagaries of the
weather. To reduce the impact of climate conditions William Sinclair is
broadening its range of products to lengthen the selling season. In addition the
company is developing techniques to continue harvesting during extreme climatic
conditions while protecting the end product.
"We look forward to making further progress with our margin performance and are
positive about the company's prospects."
For further information:
William Sinclair Holdings Plc 01522 537 561
Bernard Burns, Chief Executive
Mark Way/Caroline Sturdy, Madano 020 7593 4000
CHAIRMAN'S STATEMENT
I am pleased to be able to report an improvement in your Company's performance
in the year ended 30 June 2006. This reverses the decline seen over the last 5
years and is evidence that the measures adopted by the new management team are
beginning to show results.
Sales turnover was down by 6%, the result, mostly, of exiting unprofitable
export and domestic business. In a difficult market, we believe that we have
increased our market share in the domestic and professional growing sectors.
Importantly, profit before tax increased by 55% to #840k. This is an excellent
result but is only the start of what we believe will be a steady increase in
shareholder value.
In line with our stated intention to improve dividend cover, the Board is
recommending a final dividend of 2.0p per share making a total of 3.0p,
unchanged from last year but now representing a more acceptable earnings cover
of 1.3.
IFRS treatment
The results are the first full year figures since we adopted IFRS in December
2005. The results for the year ended June 2005 have been restated for comparison
purposes. Accounting regulations mean that we need to separately identify
several exceptional gains and losses. The underlying improvement in performance
is not distorted significantly by these exceptional items.
Board changes
Earlier this year we welcomed Ken Piggott to the Board as the Senior
Non-Executive Director. Ken has considerable experience in the retail sector
which will prove invaluable to us in the years ahead.
We recently said goodbye to Paul Davenport who has left to pursue other
interests. We wish him well with his future career.
Proposed transfer of company's shares to AIM
The Board is recommending a transfer of the Company's shares from the main
market to AIM (Alternative Investment Market). We believe that this will be a
more attractive market for the Company's shares and more detailed reasons and
benefits to the Company and to shareholders will be set out in a separate
document. The Board believes this is an essential move and I urge you to vote in
favour at the forthcoming AGM.
Change of year end
I would like to take this opportunity to give notice of our intention to change
the year end from 30 June to 30 September for the year after next (i.e.
September 2008). There are considerable benefits internally and the revised
timetable would be a much better reflection of our trading year. After next
year, therefore, we will report results for a 15 month period before reverting
to annual figures.
Outlook
Demand in our chosen markets is down a little from the previous years but we are
confident that the measures already in place coupled with our strong marketing
presence will continue to show improved results with a corresponding increase in
overall shareholder value.
Finally, I would like to thank all our employees for all their efforts and
cooperation during a year of significant change and development. It has been
much appreciated.
Bill Simpson
27 September 2006
CHIEF EXECUTIVE'S STATEMENT
This has been a year of steady progress as the new management team has
implemented a business turnaround strategy. Operating profits have risen by 55%
year on year to #0.84 million against a backdrop of difficult trading conditions
for the industry.
Following last year's strategic review of the business, we concluded that in
both the Retail and Professional markets we have significant competitive
advantages over our rivals but that the Company was failing to capitalize on
these strengths.
The Company has a strong portfolio of brands, including the 'New Horizon' range
which has a leading position in the fast growing peat-free garden compost and
organic plant foods sector. The Company's brands have a good reputation for
service and reliability.
Our peat resources are closer to the customers than our major competitors and
with transport costs representing a significant part of total costs for growing
media, this is an important strategic advantage.
In addition, we have efficient and new production facilities providing the
Company with the basic ingredients for a strong competitive position.
Solid progress in fixing operating issues and capitalizing on competitive
advantage
Over the last 12 months we have sought to resolve a number of operating
challenges and to set a course to take advantage of the Group's inherent
strengths, resulting in improved performance and enhanced shareholder value.
Positive Impact of Cost Reduction Programme
The increase in underlying profit stems primarily from the first phase of a cost
reduction programme, which delivered improvements in transport efficiencies and
in raw material costs.
The improvement in transport efficiencies by the end of the reporting period had
reduced the cost per pallet mile from 10p to 9p representing an improvement of
11% when compared with the previous year.
Changes in harvesting methods have led to better yields and a series of moisture
reduction measures has resulted in drier and lighter peat and therefore lower
transport charges and has resulted in improved quality. This has compensated for
a rise in plastic prices of 30%, a rise in energy prices of 60% and a rates
increase at our main operating site in Cumbria of 114% during the year
We believe that there will be further opportunities to continue improving our
operating cost base in the years ahead.
Further Improvement in Customer Service and Product Quality
Our key performance measures show a further improvement in customer service, an
area where Sinclair already leads the marketplace.
We are now clearly better than any of our major competitors in this critical
area with fewer late deliveries, smaller minimum orders and a wider range of
specialist delivery vehicles.
The quality and consistency of our product improved during the year as
investment in harvesting and storage equipment came on line.
Operations
UK Retail Market
We believe that total sales in the UK horticultural retail market fell by
between 6% and 8% compared with the previous year largely because of adverse
weather in the critical selling season. Average temperature was substantially
below seasonal norms and rainfall was approximately 50% above seasonal norms for
the 3 weeks before Easter. It wasn't until the last 4 weeks of the season (March
to May) that climate and sales improved.
Overall UK retail sales fell by just 2% to #24.8 million as we increased our
share of the growing media market.
UK Professional Market
We estimate that total sales in the Professional UK horticultural market were
down 10% year on year.
Our sales were only 3.5% down at #9.8 million, again reflecting our success in
winning market share. A management restructure took place during the year which
is now complete and will, we believe, bring focus to differing customer
objectives in different distribution channels.
Towards the end of the year we launched a blocking product, a drought-busting
product and we intend to launch a wood fibre growing medium that is both less
expensive and is nutritionally superior to the existing market leading product.
These and a number of other initiatives will increase the size of the
addressable UK market by 50%.
Silvaperl Market
Silvaperl, our industrial aggregates business, increased turnover by 2% to #3.3
million, largely through increased sales into non-horticultural markets.
Export Market
During the year we withdrew from several marginal export markets but
successfully negotiated compensation for this which is shown as exceptional
revenue. As a result, sales to this market fell by 53% to #1.3 million.
Capital structure and net debt
The Group's capital structure is as follows:
2006 2005
#000 #000
Net debt 855 1906
Group shareholders' equity 13,864 11,509
------- -------
Capital employed 14,719 13,415
------- -------
The Group's gearing has fallen from 14.2% to 5.8%, as a function of cash
generated from operations, the revaluation of the Group's properties and the
reduction in the pension deficit. This leaves the Group well within its target
of borrowing not more than 35% of capital employed.
Net debt comprises the balance of a fixed term loan originally taken out in
October 2004 for the purchase of additional, freehold storage land in Lincoln as
well as cash balances, overdrafts and finance leases as follows:
2006 2005
#000 #000
Cash and cash equivalent 153 96
Overdrafts (133) (997)
Loans (742) (800)
Finance leases (133) (205)
------- --------
Net debt (855) (1,906)
------- --------
Current trading and the year ahead
The performance of the business continues to improve and we believe that the
cost reduction programme has a considerable distance yet to go in terms of
adding to the strength of our ongoing performance. We believe that there are
opportunities in a number of areas:
*Our distribution distances are shorter than our competitors' and we
must make more of that advantage, especially when transport costs are a
relatively high part of total costs. We believe there are further savings to
be made in transport cost reduction;
*We are examining ways to reduce the raw material price across our product
range which we believe will enhance profitability;
*We are examining the number and position of our various manufacturing and
distribution sites. We believe that some consolidation is likely and that
the relocation of our key distribution points will yield substantial
overhead savings;
*There are a number of opportunities for us to unlock value and realise
assets from our balance sheet in terms of surplus land and sites and we are
examining a number of possible routes forward.
Moreover, in the year ahead, we expect to start growing our sales again as well
as gaining market share. The existing production capacity in the business
should facilitate all our short-term growth plans without the need for
substantial capital investment.
In particular, there are two major product launches this year which we believe
will make a good contribution.
First, we are stepping up our decorative aggregates product range, where we
believe our relationship with the horticultural retail trade will allow us to
leverage distribution. In addition, the new bagging plant at Lincoln will give
us a quality and efficiency in bagging which currently does not exist in this
market.
Secondly, in plant foods we already have a strong market position. We are
introducing new packaging that is waterproof and re-sealable. We do not believe
that there is anything similar available at a comparable retail price.
Consequently we expect to benefit from substantial growth in market share while
competitors take time to react to the innovation.
In addition, we are examining carefully a number of further reduced peat and
peat free products which will enhance our position in both the Retail and
Professional markets
After nearly a decade of profit decline, I believe we have established a
sustainable recovery. We must exploit to the maximum our critical market
advantages and strong existing market share in our key areas of operation.
Bernard Burns
27 September 2006
WILLIAM SINCLAIR HOLDINGS plc
Group Income Statement for the year ended 30 June 2006
Before Exceptional
exceptional items
items (Note 5) Total Total
2006 2006 2006 2005
Notes #000 #000 #000 #000
Revenue 38,889 240 39,129 41,453
Operating expenses 38,011 339 38,350 40,475
------- ------- ------- -------
Operating profit 878 (99) 779 978
Share of post tax profits
of associates and joint
ventures accounted for
using the equity method 201 173 374 75
------- ------- ------- -------
Group operating profit from
continuing operations 1,079 74 1,153 1,053
Finance revenue 29 - 29 6
Finance costs (310) - (310) (400)
Other finance expense-pensions (32) - (32) (116)
------- ------- ------- -------
Profit from continuing
operations before taxation 766 74 840 543
Tax expense (210) 29 (181) (124)
------- ------- ------- -------
Profit for the year
attributable to members
of the parent company 556 103 659 419
------- ------- ------- -------
Earnings per share (pence)
Basic EPS on profit for
the year 4 3.4p 4.0p 2.5p
Diluted EPS on profit for
the year 4 3.3p 3.9p 2.5p
WILLIAM SINCLAIR HOLDINGS plc
Group Statement of Recognised Income and Expense
for the year ended 30 June 2006
Notes 2006 2005
#000 #000
Income and expense recognised
directly in equity
Revaluation of property, plant and
equipment 964 2,376
Actuarial gains/(losses)on defined
benefit pension plans 2,135 (823)
------- -------
3,099 1,553
Tax on items taken directly to or
transferred from equity (929) (455)
------- -------
Net income recognised directly in equity 2,170 1,098
Profit for the year 659 419
------- -------
Total recognised income and expense for the year 3 2,829 1,517
------- -------
WILLIAM SINCLAIR HOLDINGS plc
Group Balance Sheet at 30 June 2006
2006 2005
Notes #000 #000
Non-current assets
Property, plant and equipment 12,677 12,308
Intangible assets 1,159 1,172
Investments accounted for using the equity method 858 519
Deferred tax assets - 83
------- -------
14,694 14,082
------- -------
Current assets
Inventories 4,967 5,550
Trade and other receivables 12,149 12,403
Cash and short-term deposits 153 96
------- -------
17,269 18,049
------- -------
Total assets 31,963 32,131
------- -------
Current liabilities
Trade and other payables 10,930 11,225
Financial liabilities 251 1,124
Corporation tax payable 131 -
------- -------
11,312 12,349
------- -------
Non-current liabilities
Financial liabilities 757 878
Deferred tax liabilities 853 -
Provisions 170 146
Defined benefit pension plan deficit 5,007 7,249
------- -------
6,787 8,273
------- -------
Total liabilities 18,099 20,622
------- -------
Net assets 13,864 11,509
------- -------
Capital and reserves
Equity share capital 3 4,139 4,139
Capital redemption reserve 3 1,523 1,523
Revaluation reserve 3 3,501 2,855
Other reserves 3 176 176
Share based payments 3 28 6
Retained earnings 3 4,497 2,810
------- -------
Group shareholders' equity 13,864 11,509
------- -------
WILLIAM SINCLAIR HOLDINGS plc
Group Cash Flow Statement for the year ended 30 June 2006
2006 2005
#000 #000
Operating activities
Group operating profit 779 978
Adjustments to reconcile group operating profit
to net cash inflows from operating activities
Depreciation and impairment of property,
plant and equipment 967 1,037
Amortisation and impairment of intangible assets 38 16
(Profit)/Loss on disposal of fixed assets (7) (38)
Share-based payments 22 6
Difference between pension contributions paid
and amounts recognised in the income statement (139) (128)
Decrease/(increase) in inventories 583 (288)
(Increase) in trade and other receivables (173) (1,712)
(Decrease) in trade and other payables (278) (1,179)
Movement in provisions 24 (136)
------- -------
Cash generated from operations 1,816 (1,444)
Income taxes received 384 57
------- -------
Net cash flow from operating activities 2,200 (1,387)
------- -------
Investing activities
Interest received 29 6
Sale of property, plant and equipment 1,012 44
Purchases of property, plant and equipment (1,377) (934)
Payments to acquire intangible fixed assets (25) -
------- -------
Net cash flow from investing activities (361) (884)
------- -------
Financing activities
Interest paid (327) (347)
Dividends paid to equity shareholders of the parent (496) (537)
Dividends received from joint ventures 35 21
New borrowings - 800
Repayment of borrowings (58) -
Repayment of capital element of finance leases
and hire purchase contracts (72) (21)
------- -------
Net cash flow from financing activities (918) (84)
------- -------
Increase in cash and cash equivalents 921 (2,355)
Cash and cash equivalents at the beginning of the year (901) 1,454
------- -------
Cash and cash equivalents at the year end 20 (901)
------- -------
WILLIAM SINCLAIR HOLDINGS plc
Notes
1 Statutory accounts
The Group Income Statement, Group Statement of Recognised Income and Expense,
Group Balance Sheet and Group Cash Flow Statement for the years ended 30 June
2006 and 2005 are not statutory accounts within the meaning of Section 240 (5)
of the Companies Act 1985. The statutory accounts for the years ended 30 June
2006 and 30 June 2005, which have been audited by Ernst & Young LLP, incorporate
an unqualified audit report and do not contain a statement under Section 237(2),
(3) or (4) of the Act. The statutory accounts for the year end 30 June 2005 have
been delivered to the Registrar of Companies and the statutory accounts for the
year ended 30 June 2006 will be delivered to the Registrar of Companies
following the Annual General Meeting of William Sinclair Holdings plc.
The results are the first full year figures since adoption of IFRS in December
2005. The results for the year ending June 2005 have been restated for
comparison purposes. The accounting policies used for the 2006 figures are
unchanged on those used for the 2005 comparatives.
This preliminary announcement of the results for the year ended 30 June 2006 was
approved by the Board of directors on 26 September 2006.
2 Analysis of Net Debt 1 July Cash 30 June
2005 flow 2006
#000 #000 #000
Cash at bank an in hand 96 57 153
Overdrafts (997) 864 (133)
Loans (800) 58 (742)
Finance leases (205) 72 (133)
------- ------- --------
Net debt (1,906) 1,051 (855)
------- ------- --------
3 Reconciliation of movements in equity
Equity Share
share Revaluation Other based Retained
capital reserve reserves payments earnings Total
#000 #000 #000 #000 #000 #000
At 1 July 2004 4,139 1,191 1,699 - 3,494 10,523
Total recognised
income and expense
for the year - 1,664 - - (147) 1,517
Share-based payment - - - 6 - 6
Equity dividends
paid - - - - (537) (537)
------- ------- ------ ------ ------ ------
At 30 June 2005 4,139 2,855 1,699 6 2,810 11,509
------- ------- ------ ------ ------ ------
At 1 July 2005 4,139 2,855 1,699 6 2,810 11,509
Total recognised
income and expense
for the year - 675 - - 2,154 2,829
Depreciation transfer - (29) - - 29 -
Share-based payment - - - 22 - 22
Equity dividends
paid - - - - (496) (496)
------- ------- ------ ------ ------ ------
At 30 June 2006 4,139 3,501 1,699 28 4,497 13,864
------- ------- ------ ------ ------ ------
4 Earnings per share
Basic earnings per share amounts are calculated by dividing net profit for the
year attributable to ordinary equity holders of the parent by the weighted
average number of ordinary shares outstanding during the year. Diluted earnings
per share amounts are calculated by dividing the net profit attributable to
ordinary equity holders of the parent (before deducting the cost of share based
payments) by the weighted average number of ordinary shares outstanding during
the year plus the weighted average number of ordinary shares that would be
issued under the company's share option scheme.
2006 2005
#000 #000
Net profit attributable to equity holders of the parent
- continuing operations 659 419
Cost of share based payments 15 4
------- -------
Diluted net profit attributable to equity holders of
the parent 674 423
------- -------
2006 2005
No. No.
Basic weighted average number of shares 16,554 16,554
Dilutive potential ordinary shares:
Employee share options 561 217
------ ------
Diluted weighted average number of shares 17,115 16,771
------ ------
There have been no other transactions involving ordinary shares or potential
ordinary shares between the reporting date and the date of completion of these
financial statements.
5 Exceptional items
2006 2005
#000 #000
Recognised in arriving at operating profit:
Income from termination of sales contracts 240 -
Settlement of commercial dispute with suppliers (106) -
Reorganisation redundancy costs and professional fees (165) -
Disposal of assets by joint venture 105 -
------ ------
74 -
------ ------
The income from the termination of sales contracts arose on giving up the
Sangral brand in the Middle East market. The settlement of a commercial dispute
with a supplier arose on resolution of a dispute over pallet quantities on hire
from the supplier.
Reorganisation, redundancy costs and professional fees relate primarily to the
departure of a main board director and a senior divisional manager.
The disposal of assets by a joint venture relates to the disposal by Ou
Alutaguse Turvas of peat and other assets which realised a profit in the joint
venture of #173,000 against which provision has been made of #68,000 in respect
of management bonuses on the disposal.
6 Dividends paid and proposed
2006 2005
#000 #000
Declared and paid during the year:
Equity dividends on ordinary shares:
Second Interim for June 2004: 2.25p - 372
Final dividend for June 2005: 2.00p (June 2004 - nil) 331 -
Interim for June 2006: 1.00p (June 2005 - 1.00p) 165 165
------ ------
Dividends paid 496 537
------ ------
Proposed for approval by shareholders at the AGM:
Final dividend for June 2006: 2.00p (2005 - 2.00p) 331 331
------ ------
Subject to shareholders' approval the final dividend of 2p per share will be
paid on 12 December 2006 to shareholders on the register on 17 November 2006.
7 Annual General Meeting
The Company intends to post the Report and Accounts to shareholders on 20
October 2006. The Annual General Meeting of the Company will be held at The
Bentley Hotel, Newark Road, South Hykeham, Lincoln, LN6 9NH on 21 November 2006
at 11.00 am. Copies of this announcement are available from the Company's
registered office, Firth Road, Lincoln, LN6 7AH during normal office hours.
This information is provided by RNS
The company news service from the London Stock Exchange
END
FR UNUKRNORKUAR
William Sinclair (LSE:SNCL)
Historical Stock Chart
From Jul 2024 to Jul 2024
William Sinclair (LSE:SNCL)
Historical Stock Chart
From Jul 2023 to Jul 2024
