TIDMSNCL
RNS Number : 6195G
Sinclair (William) Holdings PLC
10 June 2013
10 June 2013
WILLIAM SINCLAIR HOLDINGS PLC
("William Sinclair", the "Company" or the "Group")
Unaudited Interim Results for the six months ended 31 March
2013
William Sinclair Holdings PLC is one of the UK's leading
producers of horticulture products. William Sinclair's customers
include The Garden Centre Group, B&Q, Tesco, Wilkinson,
Morrisons and Makro as well as a large number of independent garden
centres and garden centre groups.
Highlights
-- Ellesmere Port
- GBP15 million development of Ellesmere Port on track
o Demolition works completed
o Restructuring works continuing
- Preparation for relocation of Silvaperl complete
- Option signed to acquire additional 12 acres
-- SuperFyba
- Production commenced at Ellesmere Port
- Operational difficulties have delayed full implementation
- New controls have now improved quality and consistency
-- Financials & Operations
- Revenue GBP20.4 million (2012: GBP26.2 million) due to unseasonal weather
- Loss before tax GBP1.8 million (2012: profit GBP0.4 million)
reflecting reduced revenue and Ellesmere Port development
- Interim dividend 1.5p per share (2012: 1.9p)
- Sales and marketing review complete
Peter Rush, Chief Executive, William Sinclair Holdings PLC,
said:
"Our flagship site at Ellesmere Port is already demonstrating
its potential. The cost savings and operational efficiencies that
the site will generate are now expected to beat previous
projections. SuperFyba, after a slow start, is now under better
control and will be producing at forecast volumes and quality by
the end of June. Additionally, we are ready to move the Silvaperl
facility, currently at Gainsborough, to Ellesmere Port where
savings from bulk buying of ores and more efficient handling of the
product will allow significant margin improvements. The relocation
of Silvaperl will be complete by the end of the calendar year.
"Turning Ellesmere Port into a fully functioning manufacturing
and bagging facility is a project that will take up to three years
to complete. Its development is on track leading to the creation of
one of the most advanced production facilities in the horticulture
industry."
For further information:
William Sinclair Holdings PLC Tel: 01522 537561
Peter Rush, Chief Executive
Peter Williams, Finance Director
Mark Way, Corporate Communications Tel: 07786 116991
WH Ireland
Andrew Kitchingman Tel: 0113 394 6619
Nick Field Tel: 0207 220 1658
CHAIRMAN'S STATEMENT
For the 6 months ended 31 March 2013 (unaudited)
During the six months to 31 March 2013 William Sinclair made
good progress in the development of the Company's flagship site at
Ellesmere Port with significant savings already identified in areas
being transferred to the site. The production of SuperFyba has
commenced and detailed plans and a timetable for the relocation of
Silvaperl production have been agreed, leading to significant
future financial benefits.
Trading Review
Sales during the first half reduced to GBP20.4 million (2012:
GBP26.2 million) reflecting the impact on gardening activity of
what the Meteorological Office confirmed was the coldest Spring in
more than 50 years. The unpleasant weather continued well into
April and favourable weather did not really return until May.
Although sales picked up significantly over the bank holidays we
will not recover all the sales lost earlier in the season.
With the scarcity of peat experienced by the entire European
horticulture industry during 2012, the Company was forced to
purchase more expensive peat from overseas. This impacted William
Sinclair's margins and this, combined with reduced sales and the
Ellesmere Port development costs, produced a pre-tax loss of GBP1.8
million (2012: profit GBP0.38 million).
Reflecting the impact of these events and future development
costs at Ellesmere Port, the interim dividend is reduced to 1.5p
per share (2012: 1.9p).
Ellesmere Port
Development progress at the 41 acre Ellesmere Port site into a
manufacturing, packaging and distribution facility is on track with
a number of the Company's operations either already successfully
relocated or in the process of being moved. Costs associated with
the development are in line with internal budgets and remain
closely controlled by the Company's management.
Peter Rush, appointed on 1 March 2013 as the Group's new Chief
Executive, brings extensive experience in the planning, design,
development and operation of manufacturing sites and his expertise
is proving invaluable to the transformation of the facility.
During the first half of the year utilities were installed at
Ellesmere Port providing the site with industrial scale mains
electricity supplies. The demolition of a number of the outer
buildings and the sale and disposal of older equipment not required
by William Sinclair was completed.
Detailed plans for the relocation of the Company's Silvaperl
division have now been finalised and Silvaperl's raw material
storage facility has been completed.
Preparations are also being made at Ellesmere Port for new
bagging, storage and distribution facilities as part of the Group's
long term development of the site. Planning and design of these
facilities is currently being finalised and the site should be
ready for full operational use during Summer 2014.
The development of Ellesmere Port is a long-term project that
will incur additional costs for a further two years. When
Silvaperl's relocation to Ellesmere Port is complete, haulage,
property, manufacturing, energy and operational costs for this
division will all be substantially reduced. We now project cost
savings of around 15% within Silvaperl demonstrating the
significant financial benefits that the new site can generate.
SuperFyba
SuperFyba is firmly established as the benchmark for the UK
horticulture industry's genuine peat alternative. Production
volumes will be increasing at both the Freeland Horticulture site
near Doncaster and the two production lines at Ellesmere Port where
24 hour manufacturing is now possible.
SuperFyba's raw material is the oversize branches and twigs
produced as a waste by-product during the green composting process.
Significant supplies of oversize are available across the UK and
Freeland is in discussions with a number of the UK's largest
suppliers to secure the volumes we require.
With the arrival of warmer weather and increased levels of green
composting activity, the availability of oversize is improving and
production levels of SuperFyba will be increased further. In 2012
the industry experienced a very poor peat harvest leading to short
supplies of raw materials for growing media in 2013. With SuperFyba
now available and with a normal peat harvest in 2013 Sinclair will
have more than sufficient raw material for the 2014 sales
season.
Freeland Horticulture has now filed a patent application to
secure protection of its SuperFyba production process.
Following its successful supply to the Olympics, Freeland
Horticulture recently won the contract to supply the topsoils for
the Queen Elizabeth Olympic Park legacy site in Stratford, another
prestigious award that reaffirms the leading position Freeland has
in the specialist soils sector.
Investment program
Following the appointment of Peter Rush as Chief Executive, an
extensive review of the Company's products, sales and marketing
strategy was completed. In addition to the investment at Ellesmere
Port, the Company will, at the same time, reinvigorate its brands
and products with an investment into new product development, point
of sale and marketing activity.
William Sinclair has a reputation for producing high quality
growing media based on its research and development expertise and
its ability to create growing material to support plant growth.
This R&D capability, which provides a unique differentiation
for the Company, is to be strengthened.
Bolton Fell
The Company has to date received a GBP9 million interim payment
under the terms of the agreement reached with Natural England in
March 2010. Peat harvesting will cease completely at Bolton Fell by
November 2013 and the regeneration of the site will be accelerated
soon after that. The overall level of compensation due to the
Company from Natural England has not yet been agreed and the matter
has been referred to the Lands Tribunal. Exchanges of information
are taking place in an attempt to understand better the position
adopted by each party.
Steps are also being taken with a view to resolving the major
value sensitive matters that separate Natural England and the
Company. If this can be achieved it is possible that a full hearing
of the case at the Tribunal may be avoided.
Outlook
Ellesmere Port provides very substantial financial and
operational efficiencies for William Sinclair and a clear
development plan of the flagship site is in place. Costs associated
with the development, which are being closely managed, will
continue to impact the Company's financial performance for the next
two years as some operations will require duplicated overheads.
These costs will reduce upon completion of the site and quickly be
recovered by the efficiency gains already proven by the planned
relocation of Silvaperl.
This year the weather has negatively impacted the Company's
sales during much of the important growing season, which is now
nearing its end. Although May has been a good month for us revenues
for the full year are likely to be only a little ahead of 2012. As
a consequence our profit before tax will be significantly lower
than our previous expectations. In spite of these short term,
unfavourable conditions, the mid to long-term prospects for the
Company remain strong with the underlying business in excellent
health.
With normal weather patterns we will see consumer demand
returning as there is strong customer loyalty towards William
Sinclair's horticulture products. This loyalty, combined with our
significant peat reserves, a unique peat alternative technology;
reduced manufacturing costs via our flagship site, rigorous cost
management and a highly experienced management team, will ensure
that the Company is well positioned to further improve
profitability.
Retirement
I have already announced my retirement to take effect at the end
of September 2013 and I am delighted that Hugh Etheridge, already a
non executive director, has accepted the Board's invitation to be
the next chairman. I am confident that the new team will continue
to move the Company forward.
Bill Simpson
Chairman
Group Income Statement Six months Six months Year
for the six months ended 31 March ended ended ended
2013 (unaudited) 31 March 31 March 30 Sept
2013 2012 2012
Notes GBP'000 GBP'000 GBP'000
Revenue 20,446 26,184 48,240
Operating expenses (22,106) (25,673) (47,698)
Exceptional item - Chat Moss impairment - - (665)
Group operating (loss)/profit (1,660) 511 (123)
Finance income 3 3 33
Finance costs (172) (42) (120)
Other finance costs - pensions (57) (94) (194)
(Loss) / profit before taxation (1,886) 378 (404)
Tax credit / (charge) 1 406 (95) 1
(Loss) / profit for the period (1,480) 283 (403)
=========== =========== =========
(Loss) / profit for the period
is attributable to:
Equity holders of the parent company (1,433) 260 467
Minority interests (47) 23 64
----------- ----------- ---------
(1,480) 283 (403)
=========== =========== =========
All results relate to continuing
operations.
Earnings per share (pence)
Basic EPS on (loss) / profit for
the period 3 (8.4)p 1.5p (2.7)p
Diluted EPS on (loss) / profit
for the period (8.4)p 1.5p (2.7)p
Dividend per share 2 1.9p 1.9p 4.5p
Group 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
2013 (unaudited) 2013 2012 2012
GBP'000 GBP'000 GBP'000
(Loss) / profit for the period (1,480) 283 (403)
----------- ----------- ---------
Other comprehensive income
Actuarial (loss)/gain on defined
benefit pension scheme (1,202) (2,734) (3,741)
Gain on revaluation - - 1,219
Tax on items taken directly to
or transferred from equity 316 684 708
----------- ----------- ---------
Other comprehensive income, net
of tax (886) (2,050) (1,814)
----------- ----------- ---------
Total comprehensive income for
the period (2,366) (1,767) (2,217)
=========== =========== =========
Attributable to:
Equity holders of the parent company (2,319) (1,790) (2,281)
Minority interests (47) 23 64
(2,366) (1,797) (2,217)
=========== =========== =========
Group Equity Share Capital
Statement share premium redemption Revaluation Other Retained Minority Total
of Changes in capital account reserve reserve reserves earnings Total interests equity
Group
Shareholders'
Equity
(Unaudited)
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
At 1 October
2012 4,256 150 1,523 8,790 176 (170) 14,725 333 15,058
-------- -------- ---------- ------------ ---------- --------- --------- ----------- ---------
Loss for the
six
months to 31
March
2013 - - - - - (1,433) (1,433) (47) (1,480)
Depreciation
transfer - - - (102) - 102 - - -
Actuarial
losses
on defined
benefit
pension
scheme - - - - - (1,202) (1,202) - (1,202)
Tax on items
taken
directly to
or
transferred
from
equity - - - - - 316 316 - 316
Total
comprehensive
income - - - (102) - (2,217) (2,319) (47) (2,366)
-------- -------- ---------- ------------ ---------- --------- --------- ----------- ---------
Equity shares
issued 9 - - - - - 9 - 9
Share based
payments - - - - - 60 60 - 60
Equity
dividends
paid - - - - - (444) (444) - (444)
Transactions
with
owners 9 - - - - (384) (375) - (375)
At 31 March
2013 4,265 150 1,523 8,688 176 (2,771) 12,031 286 12,317
At 1 October
2011 4,256 150 1,523 7,841 176 3,905 17,851 281 18,132
-------- -------- ---------- ------------ ---------- --------- --------- ----------- ---------
Profit for the
six months to
31
March 2012 - - - - - 260 260 23 283
Depreciation
transfer - - - (98) - 98 - - -
Actuarial
gains
on defined
benefit
pension
scheme - - - - - (2,734) (2,734) - (2,734)
Tax on items
taken
directly to
or
transferred
from
equity - - - - - 684 684 - 684
Total
comprehensive
income - - - (98) - (1,692) (1,790) 23 (1,767)
-------- -------- ---------- ------------ ---------- --------- --------- ----------- ---------
Share based
payments - - - - - 191 191 - 191
Equity
dividends
paid - - - - - (749) (749) - (749)
Transactions
with
owners - - - - - (558) (558) - (558)
At 31 March
2012 4,256 150 1,523 7,743 176 1,655 15,503 304 15,807
At 1 October
2011 4,256 150 1,523 7,841 176 3,905 17,851 281 18,132
-------- -------- ---------- ------------ ---------- --------- --------- ----------- ---------
(Loss)/profit
for
the year to
30
September
2012 - - - - - (467) (467) 64 (403)
Depreciation
transfer - - - (186) - 186 - - -
Actuarial
losses
on defined
benefit
pension
scheme - - - - - (3,741) (3,741) - (3,741)
Revaluation - - - 1,219 - - 1,219 - 1,219
Tax on items
taken
directly to
or
transferred
from
equity - - - 84 - 792 708 - 708
Total
comprehensive
income - - - 949 - (3,230) (2,281) 64 (2,217)
-------- -------- ---------- ------------ ---------- --------- --------- ----------- ---------
Share based
payments - - - - - 203 203 - 203
Deferred tax - - - - - 25 25 - 25
Equity
dividends
paid - - - - - (1,073) (1,073) (12) (1,085)
-------- -------- ---------- ------------ ---------- --------- --------- ----------- ---------
Transactions
with
owners - - - - - (845) (845) (12) (857)
At 30
September
2012 4,256 150 1,523 8,790 176 (170) 14,725 333 15,058
Group Statement of Financial
Position As at As at As at
as at 31 March 2013 (unaudited) 31 March 31 March 30 Sept
2013 2012 2012
Notes GBP'000 GBP'000 GBP'000
Non-current assets
Property, plant and equipment 20,471 19,561 19,697
Intangible assets 1,848 1,948 1,898
Deferred tax assets 787 - 471
23,106 21,509 22,066
---------- ---------- ---------
Current assets
Inventories 13,414 13,091 10,605
Trade and other receivables 19,982 24,557 10,139
Corporation tax recoverable 599 453 257
Cash and cash equivalents 285 849 925
34,280 38,950 21,926
---------- ---------
Assets held for sale 7,514 1,645 7,514
---------- ---------- ---------
Total assets 64,900 62,104 51,506
========== ========== =========
Current liabilities
Trade and other payables (12,804) (14,519) (7,038)
Financial liabilities - borrowings (16,064) (10,300) (2,074)
Corporation tax payable - (194) -
---------- ---------- ---------
(28,868) (25,013) (9,112)
Receipt from Natural England (9,000) - (9,000)
---------- ---------- ---------
(37,868) (25,013) (18,112)
---------- ---------- ---------
Non-current liabilities
Financial liabilities - borrowings - - (5,000)
Provisions (137) (131) (132)
Defined benefit pension plan
deficit (14,578) (12,153) (13,204)
Receipt from Natural England 6 - (9,000) -
---------- ---------- ---------
(14,715) (21,284) (18,336)
Total liabilities (52,583) (46,297) (36,448)
========== ========== =========
Net assets 12,317 15,807 15,058
========== ========== =========
Capital and reserves
Equity share capital 4,265 4,256 4,256
Share premium account 150 150 150
Capital redemption reserve 1,523 1,523 1,523
Revaluation reserve 8,688 7,743 8,790
Other reserves 176 176 176
Retained earnings (2,771) 1,655 (170)
---------- ---------- ---------
Group shareholders' equity 12,031 15,503 14,725
Minority interests 286 304 333
---------- ---------- ---------
Total equity 12,317 15,807 15,058
========== ========== =========
Group Cash Flow Statement
for the six months ended 31 March 2013 (unaudited)
Six months Six months Year
ended ended ended
31 March 31 March 30 Sept
2013 2012 2012
GBP'000 GBP'000 GBP'000
Net cash flow from operating activities (7,380) (10,352) (471)
Net cash flow from investing activities (1,643) (953) (7,123)
Net cash flow from financing activities (769) (1,110) 3,159
Decrease in cash in the period (9,792) (12,415) (4,435)
========== ========== =========
Opening cash and cash equivalents (987) 3,448 3,448
Decrease in cash and cash equivalents (9,792) (12,415) (4,435)
---------- ---------- ---------
Closing cash and cash equivalents (10,779) (8,967) (987)
========== ========== =========
Notes to the consolidated Cash Flow Statement
Cash flow from operating activities
Group operating (loss) / profit (1,660) 511 (123)
Amortisation of intangible assets 50 50 164
Depreciation of property, plant and equipment 906 1,002 1,934
Impairment of assets - - 640
Profit on disposal of property, plant
and equipment (34) - (222)
Share based payments 60 191 203
Difference between pension contributions
paid and amounts recognised in the income
statement 115 (839) (895)
(Increase) / decrease in inventories (2,809) (8) 2,478
Increase in trade and other receivables (9,843) (16,148) (1,730)
Increase / (decrease) in trade and other
payables 5,766 5,270 (2,211)
Increase in provisions 5 10 6
---------- ---------- ---------
Cash generated from operations (7,444) (9,961) 244
Income taxes received / (paid) 64 (391) (715)
---------- ---------- ---------
(7,380) (10,352) (471)
========== ========== =========
Six months Six months Year
ended ended ended
31 March 31 March 30 Sept
2013 2012 2012
GBP'000 GBP'000 GBP'000
Cash flow from investing activities
Interest received 3 3 33
Sale of property, plant and equipment 135 - 266
Purchase of property, plant and equipment (1,781) (956) (7,358)
Payments to acquire intangible fixed
assets - - (64)
(1,643) (953) (7,123)
========== ========== =========
Cash flow from financing activities
Interest paid (172) (42) (115)
Dividends paid to minority interests - - (12)
Dividends paid to equity shareholders (444) (749) (1,073)
New borrowings - - 5,000
Repayment of borrowings (162) (319) (641)
Issue of new shares 9 - -
(769) (1,110) 3,159
========== ========== =========
Reconciliation of net cash flow to movement in net debt
Six months Six months Year
ended ended ended
31 March 31 March 30 Sept
2013 2012 2012
GBP'000 GBP'000 GBP'000
(Decrease) / increase in cash and short
term deposits (9,792) (12,415) (4,435)
Cash flow from change in borrowings 162 319 (4,359)
---------- ---------- --------
Movement in net debt in the period (9,630) (12,096) (8,791)
Net cash at 1 October (6,149) 2,645 2,645
Net (debt)/cash at period end (15,779) (9,451) (6,149)
========== ========== ========
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 2.6p per share (2012: 4.4p) was paid on 14
March 2013 to shareholders on the register on 15 February 2013. An
interim dividend of 1.5p per share (2012: 1.9p) will be paid on 7
August 2013 to shareholders on the register on 13 July 2013.
3. Earnings per share
Basic earnings per share have been calculated by reference to a
weighted average of 17,038,629 (2012: 17,024,046) shares in issue
during the period.
4. 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 2012. These policies are expected to be followed in
the financial statements for the year ending 30 September 2013.
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 2012
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
2013.
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.
5. Bolton Fell
William Sinclair is in the process of disposing of its peat
interests at Bolton Fell in accordance with the rules set out in
compulsory purchase legislation. Early attempts at settlement
having proved unsuccessful, the matter has been referred to the
Upper Chamber of the Lands Tribunal for resolution.
Exchanges of information are continuing to assist each party to
understand better the position of the other. William Sinclair's
professional advisors have now identified a number of important
points of difference between the Group's claim and the position
adopted by Natural England. The Group is attempting to resolve
these points separately which should take less time than a full
hearing and allow the gap between Natural England and William
Sinclair to be narrowed considerably.
William Sinclair has already exited a significant proportion of
the peat bog at Bolton Fell in accordance with the phased
withdrawal agreed with Natural England. The 2013 harvest from the
remainder of the bog is the last peat harvest that will take place
at Bolton Fell. The task of regenerating the peat bog is now the
responsibility of Natural England and the Group is awaiting tender
documents to allow it to bid for the first phase of this
regeneration work. William Sinclair's own team has been working
closely with environmental experts from Natural England and other
agencies to set out the best way to complete the work.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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