TIDMSNCL
RNS Number : 6140H
Sinclair (William) Holdings PLC
01 June 2011
1 June 2011
WILLIAM SINCLAIR HOLDINGS PLC
("William Sinclair", the "Company" or the "Group")
Unaudited Interim Results for the six months ended 31 March
2011
William Sinclair Holdings PLC is one of the UK's leading
producers of commercial horticulture and branded garden products.
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 The
Garden Centre Group, Sainsbury's, Wilkinson, Homebase and B&Q
as well as an extensive range of independent garden centres.
Highlights
-- Profit before tax up to GBP0.65 million (2010: GBP0.19
million)
-- Revenue up 19% at GBP26.1 million (2010: GBP21.8 million)
-- Interim dividend of 1.8p per share (2010: 1.5p)
-- Increase in market share
-- Potential for further efficiency and margin improvements
-- Leading position in peat free alternatives
Bernard Burns, Chief Executive said:
"Our strategy is to exploit the company's pre-eminence in the UK
horticulture growing media market with particular emphasis on
consolidating our lead in peat free technology. We expect our
market to prosper from both demographic trends and the fragile
state of the UK economy as, traditionally, gardening becomes more
popular in times of austerity. It is pleasing to see the improving
financial performance that stems from management actions and I am
confident that William Sinclair will continue to generate
shareholder value."
For further information:
William Sinclair Holdings Tel: 01522 537561
Plc
Bernard Burns, Chief
Executive
Peter Williams, Finance
Director
Arbuthnot Securities Tel: 020 7012 2000
Andrew Kitchingman
Adam Lloyd
CHAIRMAN'S STATEMENT
For the 6 months ended 31 March 2011 (unaudited)
The six months to 31 March 2011 was a period of further
substantial improvement at William Sinclair with turnover,
operating profit and profit before taxation all showing improved
performance. The interim dividend has been increased from 1.5p to
1.8p per share.
Trading Review
Turnover was 19.5% higher than for the same period last year at
GBP26.1 million (2010: GBP21.8 million). The acquisition of Growing
Success and a small aggregates business provided much of this top
line growth but we also gained market share with our core product
ranges. Overall, the horticulture market showed a modest increase
but the Directors believe there was strong demand for growing media
as gardeners and nurseries replaced stock damaged by the severe
frosts early in the winter.
Our high quality product and service levels continue to attract
new customers despite the retail market struggling in some sectors.
The appointment of administrators at Focus DIY is the latest
evidence of these difficulties. William Sinclair's net exposure
here was limited due to the tight credit control procedures
adopted.
The integration of the recent acquisitions is progressing to
plan and we expect to complete this by the end of the financial
year. The acquisitions added modestly to operating profits in the
period but will contribute an increasing amount as the integration
is completed and the expected synergies deliver healthy margin
improvements.
Our operating profit improved by 70.5% to GBP757,000 (2010:
GBP444,000). This increase is despite the unexpected increase in
oil prices which impacted our transport, packaging and harvesting
costs. Further improvements in our transport efficiency have partly
offset these cost increases as has the forward purchase of some of
our packaging.
The relative strength of the Euro against Sterling continues to
benefit the Company whilst disadvantaging our overseas competitors.
The UK's professional growers, an important customer base for the
Company, also benefit from the current exchange rates.
With the benefit of the improved operating margins and some
lower finance costs, our pre-tax profits improved by 246% to
GBP647,000 (2010: GBP187,000).
Dividend
I am pleased to announce that we are making a further increase
to our interim dividend this year. A dividend of 1.80p per share
(2010: 1.50p) will be paid on 2 August 2011 to shareholders on the
register on 8 July 2011. This is a 20% increase on last year's
interim dividend.
Bolton Fell
We announced on 20 April 2011 that Natural England had requested
an extension to their deadline for responding to the Company's
compensation claim for ceasing our operations at Bolton Fell. We
expect to hear from Natural England later this month. The GBP9
million interim payment remains on the balance sheet and has not
been taken to our P&L account.
Peat Policy
The government's policy on peat will be laid out in a white
paper expected in June 2011. A cross section of the major
stakeholders in the industry, including William Sinclair, have
collectively written to the minister responsible to assert that we
do not believe the government's future targets for peat reduction
will be met through the current voluntary mechanism and only
legislation will provide the investment environment necessary for
further progress.
In New Horizon, William Sinclair has the market leading peat
free brand. In addition we have developed a unique technology which
uses waste green material to produce an excellent peat alternative.
This places the company in an extremely strong position should
there be legislation to support peat reduction.
An extension to an existing planning permission on part of one
of our peat bogs near Manchester has been withheld pending a
formal, long term decision. William Sinclair, as part of its
application, has committed to regenerating the bog once harvesting
has been completed, something it is not currently required to do.
The formal decision is expected imminently. Whilst we have other
peat resources, this is further evidence of the problems created by
a general desire to end peat harvesting without providing the
legislation to enforce change amongst consumers and growers.
Outlook
The Company's position within the market is strengthening with
our low cost base and market leading high quality products and
service levels. Growing media sales have remained exceptionally
strong throughout the spring, slightly tempered by poor sales of
lawn care products. The fragile state of the UK economy benefits
garden consumable markets as consumers spend time in a low cost
activity while spending reduces on holidays, home improvements and
capital consumer goods.
William Sinclair made an early start with its peat harvest
during April 2011. In the event that harvest targets continue to
remain on track the Board is confident that the Company will
comfortably achieve market forecasts.
Bill Simpson
Chairman
Six months Six months Year
Consolidated Income Statement ended ended ended
for the six months ended 31 31 March 31 March 30 Sept
March 2011 (unaudited) 2011 2010 2010
Notes GBP'000 GBP'000 GBP'000
Revenue 26,097 21,840 48,456
Operating expenses (25,340) (21,396) (45,490)
Provision against assets held
for resale - - (460)
Group operating profit 757 444 2,506
Finance income 2 12 57
Finance costs (46) (103) (183)
Other finance costs - pension (66) (166) (317)
Profit before taxation 647 187 2,063
Tax charge 1 (182) (51) (404)
Profit for the period 465 136 1,659
=========== =========== =========
Profit for the period is
attributable to:
Equity holders of the parent
company 448 124 1,622
Minority interests 17 12 37
----------- ----------- ---------
465 136 1,659
=========== =========== =========
All results relate to continuing
operations.
Earnings per share (pence)
Basic EPS on profit for the 3 2.7p 0.7p 9.8p
period
Diluted EPS on profit for the 2.7p 0.7p 9.7p
period
Dividend per share 2 1.8p 1.5p 5.0p
Consolidated Statement of Comprehensive Six months Six months Year
Income ended ended ended
for the six months ended 31 March 31 March 31 March 30 Sept
2011 (unaudited) 2011 2010 2010
GBP'000 GBP'000 GBP'000
Profit for the period 465 136 1,659
----------- ----------- ---------
Other comprehensive income
Actuarial gain/(loss) on defined
benefit pension scheme 1,800 1,229 (443)
Tax on items taken directly to
or transferred from equity (468) (344) 178
----------- ----------- ---------
Other comprehensive income, net
of tax 1,332 885 (265)
----------- ----------- ---------
Total comprehensive income for
the period 1,797 1,021 1,394
=========== =========== =========
Attributable to:
Equity holders of the parent company 1,780 1,009 1,357
Minority interests 17 12 37
1,797 1,021 1,394
=========== =========== =========
Consolidated
Statement of
Changes in
Group
Shareholders' Equity Share Capital
Equity share premium redemption Revaluation Other Retained Minority Total
(Unaudited) capital account reserve reserve reserves earnings Total interests equity
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
At 1 October
2010 4,139 - 1,523 7,822 176 2,806 16,466 248 16,714
-------- -------- ---------- ----------- --------- -------- ------- ---------- -------
Profit for the
six months to
31 March
2011 - - - - - 448 448 17 465
Depreciation
transfer - - - (95) - 95 - - -
Actuarial
gains on
defined
benefit
pension
scheme - - - - - 1,800 1,800 - 1,800
Tax on items
taken
directly to
or
transferred
from equity - - - - - (468) (468) - (468)
Total
comprehensive
income - - - (95) - 1,875 1,780 17 1,797
-------- -------- ---------- ----------- --------- -------- ------- ---------- -------
Share based
payments - - - - - 140 140 - 140
New shares
issued 117 150 - - - - 267 - 267
Equity
dividends
paid - - - - - (596) (596) - (596)
Transactions
with owners 117 150 - - - (456) (189) - (189)
At 31 March
2011 4,256 150 1,523 7,727 176 4,225 18,057 265 18,322
At 1 October
2009 4,139 - 1,523 7,906 176 1,915 15,659 220 15,879
-------- -------- ---------- ----------- --------- -------- ------- ---------- -------
Profit for the
six months to
31 March
2010 - - - - - 124 124 12 136
Actuarial
gains on
defined
benefit
pension
scheme - - - - - 1,229 1,229 - 1,229
Tax on items
taken
directly to
or
transferred
from equity - - - - - (344) (344) - (344)
-------- -------- ---------- ----------- --------- -------- ------- ---------- -------
Total
comprehensive
income - - - - - 1,009 1,009 12 1,021
-------- -------- ---------- ----------- --------- -------- ------- ---------- -------
Equity
dividends
paid - - - - - (414) (414) (414)
-------- -------- ---------- ----------- --------- -------- ------- ---------- -------
Transactions
with owners - - - - - (414) (414) - (414)
At 31 March
2010 4,139 - 1,523 7,906 176 2,510 16,254 232 16,486
======== ======== ========== =========== ========= ======== ======= ========== =======
At 1 October
2009 4,139 - 1,523 7,906 176 1,915 15,659 220 15,879
-------- -------- ---------- ----------- --------- -------- ------- ---------- -------
Profit for the
year to 30
September
2010 - - - - - 1,622 1,622 37 1,659
Depreciation
transfer - - - (195) - 195 - - -
Actuarial
losses on
defined
benefit
pension
scheme - - - - - (443) (443) - (443)
Tax on items
taken
directly to
or
transferred
from equity - - - 111 - 67 178 - 178
Total
comprehensive
income - - - (84) - 1,441 1,357 37 1,394
-------- -------- ---------- ----------- --------- -------- ------- ---------- -------
Share based
payments - - - - - 106 106 - 106
Deferred tax - - - - - 6 6 - 6
Equity
dividends
paid - - - - - (662) (662) (9) (671)
-------- -------- ---------- ----------- --------- -------- ------- ---------- -------
Transactions
with owners - - - - - (550) (550) (9) (559)
At 30
September
2010 4,139 - 1,523 7,822 176 2,806 16,466 248 16,714
Consolidated Statement of Financial As at As at As at
Position 31 March 31 March 30 Sept
as at 31 March 2011 (unaudited) 2011 2010 2010
Notes GBP'000 GBP'000 GBP'000
Non-current assets
Property, plant and equipment 19,969 20,929 20,196
Intangible assets 2,031 1,606 1,607
22,000 22,535 21,803
--------- --------- --------
Current assets
Inventories 13,958 10,220 10,929
Trade and other receivables 24,117 18,364 9,324
Cash and cash equivalents 596 499 3,650
38,671 29,083 23,903
--------- --------
Assets held for sale 1,651 2,151 1,651
--------- --------- --------
Total assets 62,322 53,769 47,357
========= ========= ========
Current liabilities
Trade and other payables (16,225) (11,691) (9,256)
Financial liabilities - borrowings (9,618) (14,000) (744)
Corporation tax payable (383) (488) (328)
--------- --------- --------
(26,226) (26,179) (10,328)
--------- --------- --------
Non-current liabilities
Financial liabilities - borrowings (513) (1,482) (1,099)
Deferred tax liabilities (851) (970) (383)
Provisions (242) (241) (232)
Defined benefit pension plan
deficit (7,168) (8,411) (9,601)
Receipt from Natural England 7 (9,000) - (9,000)
--------- --------- --------
(17,774) (11,104) (20,315)
Total liabilities (44,000) (37,283) (30,643)
========= ========= ========
Net assets 18,322 16,486 16,714
========= ========= ========
Capital and reserves
Equity share capital 4,256 4,139 4,139
Share premium account 150 - -
Capital redemption reserve 1,523 1,523 1,523
Revaluation reserve 7,727 7,906 7,822
Other reserves 176 176 176
Retained earnings 4,225 2,510 2,806
--------- --------- --------
Group shareholders' equity 18,057 16,254 16,466
Minority interests 265 232 248
--------- --------- --------
Total equity 18,322 16,486 16,714
========= ========= ========
( )
( )
Consolidated Cash Flow Statement
for the six months ended 31 March 2011 (unaudited)
Six months Six months Year
ended ended ended
31 March 31 March 30 Sept
2011 2010 2010
GBP'000 GBP'000 GBP'000
Net cash flow from operating activities (9,389) (6,032) 2,316
Net cash flow from investing activities (1,578) (1,398) 7,381
Net cash flow from financing activities (1,078) (873) (1,568)
(Decrease) / increase in cash in the
period (12,045) (8,303) 8,129
========== ========== ========
Opening cash and cash equivalents 3,629 (4,500) (4,500)
(Decrease) / increase in cash and cash
equivalents (12,045) (8,303) 8,129
---------- ---------- --------
Closing cash and cash equivalents (8,416) (12,803) 3,629
========== ========== ========
Notes to the consolidated Cash Flow
Statement
Cash flow from operating activities
Group operating profit 757 444 2,506
Amortisation of intangible assets 76 24 47
Depreciation of property, plant and
equipment 930 810 1,812
Negative goodwill on acquisition (31) - -
Impairment of assets held for sale - - 500
Profit on disposal of property, plant
and equipment - (5) (32)
Share based payments 140 - 106
Difference between pension contributions
paid and amounts recognised in the income
statement (699) 13 (620)
Increase in inventories (2,621) (1,582) (2,291)
Increase in debtors (14,793) (10,414) (1,374)
Increase in creditors 6,969 4,668 2,233
Increase in provisions 10 10 1
---------- ---------- --------
Cash generated from operations (9,262) (6,032) 3,071
Income taxes paid (127) - (572)
---------- ---------- --------
(9,389) (6,032) 2,316
========== ========== ========
Six months Six months Year
ended ended ended
31 March 31 March 30 Sept
2011 2010 2010
GBP'000 GBP'000 GBP'000
Cash flow from investing activities
Interest received 2 12 57
Sale of property, plant and equipment 1 19 66
Purchase of property, plant and equipment (667) (1,429) (1,694)
Payments to acquire intangible fixed
assets - - (48)
Acquisitions in the period (Note 5) (914) - -
Receipt from Natural England - - 9,000
---------- ---------- --------
(1,578) (1,398) 7,321
========== ========== ========
Cash flow from financing activities
Interest paid (46) (103) (183)
Dividends paid to minority interests - - (9)
Dividends paid to equity shareholders (596) (414) (662)
Repayment of borrowings (703) (356) (714)
Issue of new shares 267 - -
(1,078) (873) (1,568)
========== ========== ========
Reconciliation of net cash flow to movement in net debt
Six months Six months Year
ended ended ended
31 March 31 March 30 Sept
2011 2010 2010
GBP'000 GBP'000 GBP'000
(Decrease) / increase in cash and short
term deposits (3,054) (456) 2,695
Cash (outflow) / inflow from change in
borrowings (8,288) (7,491) 6,148
---------- ---------- --------
Movement in net debt in the period (11,342) (7,947) 8,843
Net debt at 1 October 1,807 (7,036) (7,036)
Net (debt)/cash at period end (9,535) (14,983) 1,807
========== ========== ========
Notes to the financial information
1. Taxation
The taxation charge on ordinary activities is calculated by
applying the Directors' best estimate of the full year effective
tax rate to the profit before taxation.
2. Dividend
A final dividend of 3.5p per share (2010: 2.5p) was paid on 17
March 2011 to shareholders on the register on 18 February 2011. An
interim dividend of 1.8p per share (2010: 1.5p) will be paid on 2
August 2011 to shareholders on the register on 8 July 2011.
3. Earnings per share
Basic earnings per share have been calculated by reference to a
weighted average of 16,825,200 (2010: 16,554,046) shares in issue
during the period.
4. New share issues
During the period the CEO and the finance director each
exercised share options that had been granted to them in 2005. A
total of 470,000 new 25p shares were issued on 13 January 2011 for
a total of GBP267,000. William Sinclair Holdings plc now has a
total of 17,024,046 shares of 25p in issue.
5. Acquisitions in the period
During the period the Group acquired the business and certain
assets of Growing Success Organics and British Playsand from Monro
Horticulture Limited. These assets have been included in the
balance sheet within tangible fixed assets, intangible fixed assets
and inventories as appropriate. The fair value of the consideration
paid is GBP914,000.
6. Basis of preparation
The financial information set out in the interim report has been
prepared in accordance with accounting policies under International
Financial Reporting Standards as adopted by the European Union
('IFRS') as detailed in the financial statements for the year ended
30 September 2010. These policies are expected to be followed in
the financial statements for the year ending 30 September 2011.
The interim report has been approved by the Board of Directors
and is neither audited nor reviewed. The interim financial
information does not constitute statutory accounts within the
meaning of section 434 of the Companies Act 2006.
The financial information for the year ended 30 September 2010
is extracted from the audited accounts for that period. Those
accounts have been delivered to the Registrar of Companies. The
auditors' report on them was unqualified and did not contain a
statement under either section 498(2) or section 498(3) of the
Companies Act 2006.
The Group does not consider that any standards or
interpretations issued by the International Accounting Standards
Board (IASB), but not yet applicable, will have a significant
impact on the financial statements for the year ending 30 September
2011.
A copy of this interim report will be posted to shareholders
shortly and will be available to view on the Company's website at
www.william-sinclair.co.uk.
7. Bolton Fell
In accordance with the agreement signed in March 2010 between
Natural England and William Sinclair, the Group has submitted a
formal claim for its interests at Bolton Fell in Cumbria. Natural
England had until 30 April 2011 to respond to this claim and to
present its own calculations. The Group was informed in April 2011
that Natural England would not be able to meet this deadline and a
six week extension was agreed.
William Sinclair's professional advisors calculated the value of
the compensation due to the Group to be substantially greater than
the GBP9 million advance payment. In the event that compensation
cannot be agreed between the parties before 30 November 2011 the
matter can be referred by either side to the Lands Tribunal for a
decision. In such circumstances it is possible that payment of
further compensation could be delayed by a further year or
more.
Under the agreement William Sinclair has implemented a phased
withdrawal of peat harvesting from Bolton Fell and is accelerating
its existing programme of regeneration. William Sinclair's own team
is working closely with environmental experts from Natural England
and other agencies to set out new plans to regenerate the peat bog
in a practical and structured way. The Group expects this agreement
to have an adverse effect on its 2011 harvest from the site.
This information is provided by RNS
The company news service from the London Stock Exchange
END
IR SDMFWFFFSEDI
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