TIDMSNCL

RNS Number : 1117J

Sinclair (William) Holdings PLC

02 August 2012

2 August 2012

WILLIAM SINCLAIR HOLDINGS PLC

("William Sinclair" or "the Company")

Trading Update

William Sinclair, one of the UK's leading suppliers of growing media to the horticulture industry, announces a Trading Update following the exceptionally unfavourable weather that has continued to suppress consumer activity and to prevent any significant peat harvesting operations.

The Company announced on 5 July 2012 that the UK had experienced record levels of rainfall which had adversely affected the Company's ability to harvest peat from its peat bogs in Cumbria and in Scotland. The Company also announced that a sustained period of good weather was required to enable it to resume full scale peat harvesting operations.

An improvement in the weather has not occurred and consequently the Company achieved no conventional peat harvest during July.

Drying technology

To help manage marginal shortfalls in conventional harvesting caused by poor weather William Sinclair developed artificial peat drying technologies. While this technology has performed well this year, the extent of the recent wet weather has meant the demands placed on it has exceeded its capacity.

Following successive failures of conventional harvests and in light of recent refinements to the technology which have reduced the unit cost of production, William Sinclair will now substantially increase its drying capacity by commissioning further drying machines. This extra capacity will come on stream in November this year.

Under the agreement with Natural England, these machines cannot be located at their most efficient location at Bolton Fell and will instead be sited at other peat bogs owned by the Company.

Increased production of SuperFyba

The Company announced on 20 July 2012 that it had acquired a new site at Ellesmere Port which would create substantial Group cost savings. The site has been secured at an important time as it provides a new location for the production of SuperFyba. The Company also announced, on 16 July 2012, that it is to purchase a second SuperFyba processing line to be based "in the north of England". The Company now confirms that this additional production capability will be commissioned at Ellesmere Port and will comprise a full cleaning line together with two new extruding machines rather than only one.

The Ellesmere Port site has the considerable advantage of having access to industrial scale mains electricity supplies which will generate significant cost savings for the production of SuperFyba. Along with other logistical advantages this makes the site an ideal strategic location to expand William Sinclair's SuperFyba operation.

The effect of this investment will be to double annual SuperFyba production capacity from the previously reported 150,000 m3 per annum to around 300,000 m3 per annum. This additional capacity will come on stream in December 2012.

Customer service

The combination of increased SuperFyba production and peat drying will ensure the Company can fulfil its obligations to its customer base over the long term. However because of the time required to establish this production the Company will be forced in the very short term to scale back bagging operations and to buy in some peat from third party suppliers at a substantial price premium.

The inefficiency associated with volume changes and the higher material costs will mean that even with an assumption of normal weather patterns for August and September the Company will not now meet the market's profit expectations for this financial year. While selling prices across the industry are likely to go up, the Company will still feel some effect from the shortage of raw materials during the next financial year.

The Company continues to have a strong balance sheet, uses its cash generation to invest in the future of the business and expects to maintain its dividend policy.

For further information:

   William Sinclair Holdings PLC                      Tel: 01522 537561

Bernard Burns, Chief Executive

Peter Williams, Finance Director

   Westhouse Securities                                        Tel: 0207 601 6100

Tom Price

Adam Lloyd

Paul Gillam

This information is provided by RNS

The company news service from the London Stock Exchange

END

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