RNS Number : 3522X
Sinclair (William) Holdings PLC
24 June 2008
24th June 2008
WILLIAM SINCLAIR HOLDINGS PLC
INTERIM RESULTS FOR THE NINE MONTHS ENDED 31 MARCH 2008
William Sinclair Holdings Plc is one of the UK's leading producers of commercial horticulture and branded garden products. The Company
provides peat based and non peat growing media 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 Wyevale, Wilkinson, Tesco, Homebase and B&Q as well as an extensive range
of independent garden centres.
The Company has strong asset backing, is profitable and is quoted on the Alternative Investment Market ("AIM").
FINANCIAL HIGHLIGHTS
* Interim results for a 9 month period to facilitate the change of year end
to 30 September 2008
* Group turnover increased 25% to �27.8 million (2007: �22.2 million)
* Continuing strong performance from Freeland Horticulture
* Acquisition and integration of Joseph Metcalf business in January 2008
progressing well
* Increased focus on environmental products and further withdrawal from
non-profitable operations
* Good levels of both finished goods and raw materials stock ahead of
traditional busy selling period
* Loss before tax of �0.3 million (2007: profit of �0.1 million) reflecting
expected seasonality of the business
* No second Interim dividend for the 9 months to March 2008(Interim dividend
for the half year 1.0p per share)
Bernard Burns, Chief Executive, William Sinclair Holdings Plc, said:
"The successful integration of the Metcalf business, the continuing strength of Freeland and our focus on higher margin business will
ensure we stay one step ahead of the industry which is currently facing inflationary pressures.
"The Company is preparing for its forthcoming peat harvest and remains in line to meet market expectations."
For further information:
William Sinclair Holdings Plc Tel: 01522 537561
Bernard Burns, Chief Executive
Peter Williams, Finance Director
Arbuthnot Securities Tel: 020 7012 2000
Alastair Moreton
Alasdair Younie
Madano Partnership Tel: 020 7593 4000
Mark Way
Matthew Moth
www.madano.co.uk
Chairman's statement
Introduction
Our unaudited results for the 9 months ended 31 March 2008 are detailed below.
To facilitate the change of year end to 30 September 2008, we have a 15 month accounting period and this means that for the first time
we have produced results for a 9 month period.
Overall performance of the business was in line with expectations against a challenging market backdrop. The recently acquired Joseph
Metcalf business performed in line with expectations and Freeland had another strong period.
Demand for the 2008 growing season was lower than expected as the impact of the earliest Easter since 1913, combined with unusually wet
and cold weather in March, suppressed consumer activity.
Trading Review
Group turnover during the period was �27.8 million (2007: �22.2 million), an increase of 25%. This includes sales at Freeland for the
first time and almost 3 months sales from Joseph Metcalf, acquired early in January. Excluding the two acquisitions, sales were slightly
lower than the previous year which was mainly due to the change in Easter dates and the inclement weather, particularly during the build up
to the growing season in March
The loss before tax for the nine months was �0.3 million, which compares with the �0.1 million profit in the same period of 2007. The
basic loss per share was 2.1p (2007: profit of 0.9p) and the diluted loss per share was 2.0p (2007: profit of 0.8p).
Net debt, as at 31 March 2008, was �19.2 million (2007: �9.3 million). High net debt is usual for the period reflecting the higher
deliveries preceding the start of the growing season. The year on year increase is mainly due to the costs of acquiring Joseph Metcalf with
its associated working capital requirements.
There is no further interim dividend proposed for this period.
Business Review
Existing business
The early part of any financial year for William Sinclair is normally a combination of stock build up and deliveries to retailers and
growers in anticipation of the start of the growing season and associated demand which goes with this. The inclement weather during March
inhibited the usual levels of demand from our retailers although demand from professional growers remained strong.
With logistics comprising a significant part of the Company's cost of operation, the substantial increases in fuel charges as well as
raw material price increases have impacted on the Company's performance. This has been partly offset by the implementation of some price
increases. However the Company has incurred some reduction in profitability.
Freeland Horticulture
Freeland, our green waste and top soil business, continued to perform above expectations as it capitalises on increasing levels of
demand for 'environmentally friendly' products which can be sourced and produced in urban areas. Freeland's facilities and raw materials are
all located close to its markets.
Consequently Freeland is less exposed to the increase in haulage costs and the Company expects the division to perform well.
Joseph Metcalf
In January 2008, William Sinclair announced the acquisition of Joseph Metcalf Ltd and performance of the business has been in line with
expectations. Our post-acquisition review of Metcalf confirmed many of the synergies identified during our due diligence and we are
currently consulting with the workforce with a view to closing the business' operating site at Oswaldtwistle with the effect of further
reducing our overhead.
Outlook
The industry is experiencing cost price increases on chemicals, plastics, energy and transport. We have already implemented some price
increases and will be continuing to explore all opportunities to maintain margins in the light of further expected raw material, energy and
transport cost increases.
The Directors are confident that with the Company's industry leading quality of service levels and the focus on higher margin business,
the Company has a strong competitive advantage as its production is all located on mainland UK. This point of difference will become
increasingly significant as fuel costs continue to rise.
In addition William Sinclair is well positioned to take advantage of customers' increasing demand for the most environmentally friendly
products, which is met by our Freeland business, and to seize opportunities from the Company's high levels of service.
With the peat harvest about to begin, the Company anticipates that it will meet market expectations.
Annual General Meeting
Our 2008 Annual General Meeting will be held on Thursday 21 August 2008 and notice will be sent to shareholders shortly. Following the
change of the year end to 30 September, from 2009 we expect future Annual General Meetings to be held in February.
Bill Simpson
Chairman
Consolidated Income Nine months ended31 Nine months ended31 Year ended30
Statementfor the nine months March2008 March2007 June2007
ended 31 March 2008
(unaudited)
Notes �*000 �*000 �*000
Revenue 27,770 22,239 37,646
Operating expenses (28,003) (21,972) (36,070)
Operating (loss)/profit (233) 267 1,576
Share of post tax (3) 85 173
(loss)/profit of joint
ventures accounted for using
the equity method
Group operating (loss)/profit (236) 352 1,749
from continuing operations
Finance revenue 2 2 11
Finance costs (321) (197) (326)
Other finance expenses * 131 9 12
pensions
(Loss)/Profit from continuing (424) 166 1,446
operations before taxation
Tax expense 1 118 (24) (319)
(Loss)/Profit for the period (306) 142 1,127
(Loss)/Profit for the period
is attributable to:
Equity holders of the parent (350) 142 1,127
company
Minority interests 44 - -
(306) 142 1,127
Earnings per share (pence)
Basic EPS on profit for the 3 (2.1)p 0.9p 6.8p
period
Diluted EPS on profit for the (2.0)p 0.8p 6.7p
period
Dividends per share 2 1.0p 1.0p 3.5p
Consolidated Statement of Nine months ended31 Nine monthsended31 Year ended30
Recognised Income and Expenses March2008 March 2007 June2007
�*000 �*000 �*000
Actuarial (loss)/gains on (1,356) 1,847 2,463
defined benefit pension scheme
Revaluation of property, plant - - -
and equipment
Tax on items taken directly to 380 (554) (641)
or transferred from equity
Net Income recognised directly (976) 1,293 1,822
in equity
(Loss)/profit for the period (306) 142 1,127
Total recognised income and (1,282) 1,435 2,949
expense for the period
Attributable to:
Equity holders of the parent (1,326) 1,435 2,949
company
Minority interest 44 - -
(1,282) 1,435 2,949
Consolidated Balance Sheet
as at 31 March 2008 (unaudited) As at As at As at
31 March 31 March 30 June
2008 2007 2007
�'000 �'000 �'000
Non-current assets
Property, plant and equipment 16,777 12,862 12,900
Intangible assets 1,651 1,144 1,130
Investments accounted for using the equity 211 943 777
method
18,639 14,949 14,807
Current assets
Inventories 10,799 7,724 5,150
Trade and other receivables 21,807 14,897 10,981
Cash and short term deposits 1,136 125 335
33,742 22,746 16,466
Total assets 52,381 37,695 31,273
Current liabilities
Trade and other payables (11,993) (8,650) (9,824)
Financial liabilities (17,222) (8,746) (119)
Corporation tax payable (475) (6) (348)
(29,690) (17,402) (10,291)
Non-current liabilities
Financial liabilities (3,098) (667) (637)
Deferred tax liabilities (1,016) (1,473) (1,513)
Provisions (202) (188) (189)
Defined benefit pension plan deficit (3,584) (2,979) (2,303)
(7,900) (5,307) (4,642)
Total liabilities (37,590) (22,709) (14,933)
Net assets 14,791 14,986 16,340
Capital and reserves
Equity share capital 4,139 4,139 4,139
Capital redemption reserve 1,523 1,523 1,523
Revaluation reserve 3,566 3,501 3,566
Other reserves 176 176 176
Share based payments 67 46 51
Retained earnings 5,145 5,601 6,885
Group shareholders' equity 14,616 14,986 16,340
Minority interests 175 - -
Total equity 14,791 14,986 16,340
Consolidated cash flow statement
for the nine months ended 31 March 2008 (unaudited)
Nine months ended Nine months ended
31 March 2008 31 March 2007 Year ended
30 June
2007
�'000 �'000 �'000
Net cash flow from operating (11,541) (6,945) 2,162
activities
Net cash flow from investing (5,961) (960) (959)
activities
Net cash flow from financing 1,731 (617) (888)
activities
(Decrease)/ Increase in cash (15,771) (8,522) 315
in the period
Cash and cash equivalents at 1 335 20 20
July 2007
(Decrease)/Increase in cash (15,771) (8,522) 315
and cash equivalents
Cash and cash equivalents at (15,436) (8,502) 335
31 March 2008
Cash flow from operating
activities
Operating profit (233) 267 1,576
Amortisation of intangible 15 15 35
assets
Depreciation 923 782 1,032
(Profit) on disposal of fixed (5) (5) (291)
assets
Share based payments 16 18 23
Movement in provisions - - -
Pension contributions paid
less amounts recognised in 56 (172) (28)
the income statement.
Operating profit before
changes in working capital 772 905 2,347
and provisions
(Increase)/decrease in stocks (3,946) (2,757) (183)
(Increase)/decrease in debtors (8,642) (2,657) 1,259
(Decrease)/increase in (26) (2,280) (1,106)
creditors
Movement in reinstatement 13 18 19
provision
Income taxes received 288 (174) (174)
(11,541) (6,945) 2,162
Cash flow from investing
activities
Interest received 2 2 11
Sale of property, plant and 22 5 606
equipment
Purchase of property, plant (940) (967) (1,570)
and equipment
Purchase of intangible assets - - (6)
Purchase of shares in (3,735) - -
subsidiary
Cash on consolidation of (1,310) - -
subsidiary
(5,961) (960) (959)
Cash flow from financing
activities
Interest paid (321) (197) (320)
Dividends paid to minority (10) - -
interests
Dividends paid to equity (414) (331) (496)
shareholders
Dividend received from joint - - 47
venture
New loans in the period 3,000 - -
Repayment of borrowings (459) (54) (72)
Repayment of capital element (65) (35) (47)
of finance leases
1,731 (617) (888)
Reconciliation of net cash flow to movement in net debt
Nine months ended Nine months ended
31 March 2008 31 March 2007 Year ended
30 June
2007
�'000 �'000 �'000
Increase/(Decrease) in cash in 801 (28) 315
the period
Cash (inflow)/outflow from (19,564) (8,405) 119
change in debt
Movement in net debt in the (18,763) (8,433) 434
period
Net debt at 1 July 2007 (421) (855) (855)
Net debt at 31 March 2008 (19,184) (9,288) (421)
Notes to the Accounts
1. Taxation
The taxation credit on ordinary activities is calculated by applying the Directors' best estimate of the annual taxation rate to the
loss for the period.
2. Dividend
An interim dividend of 1.0p per share was paid on 6 May 2008 to shareholders on the register on 11 April 2008. No further interim
dividend is being paid.
3. Earnings per share
Earnings per share have been calculated by reference to 16,554,046 shares in issue.
4. Reconciliation of movements in equity attributable to members of the parent company
Nine months Nine months ended Year
ended 31 March ended
31 March 2007 30
2008 June
2007
�'000 �'000 �'000
Opening equity attributable to
members of parent company 16,340 13,864 13,864
Total recognised income and (1,326) 1,435 2,949
expenses for the period
Dividends paid (414) (331) (496)
Share based payments taken directly 16 18 23
to equity
Closing equity attributable to
members of the parent company 14,616 14,986 16,340
5. Acquisition of shareholding in Freeland Horticulture Ltd
In July 2007 the Group acquired an additional 37.5% of Freeland Horticulture Ltd ("Freeland") taking its stake to 87.5%. As a
consequence Freeland is no longer accounted for as a joint venture but is consolidated in full in the accounts of the Group with effect from
July 2007. The interests of the minority shareholder in the results of the business for the period to 31 March 2008 are shown in the
Consolidated Income Statement and the interests in the net assets of the business at 31 March 2008 are shown in the Consolidated Balance
Sheet. The cost of the acquisition was �757,000 and the directors believe the fair value of the assets acquired was �422,000.
6. Acquisition of Joseph Metcalf Ltd
In January 2008 the Group acquired the whole of the share capital of Joseph Metcalf Ltd ("Metcalf"). The results of Metcalf for the
period from acquisition to 31 March 2008 have been consolidated in the accounts of the Group and the balance sheet of Metcalf is
consolidated in the Group balance sheet as at 31 March 2008. The cost of the acquisition was �2,978,000. The directors believe the fair
value of the assets acquired was equal to the cost of acquisition but the figures included are provisional due to the timing of the
transaction and should be finalised by the end of this financial year.
7. Basis of preparation of accounts
The company has adopted International Financial Reporting Standards for the preparation of these interim accounts. The standards have
been applied consistently for the nine months to 31 March 2008 and for all comparatives shown.
The interim report has been approved by the Board of Directors and is neither audited nor reviewed. The information does not constitute
statutory accounts within the meaning of section 240 of the Companies Act 1985. The statutory accounts for the year ended 30 June 2007
received an unqualified audit report and have been filed with the Registrar of Companies.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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