RNS Number:7814V
Sinclair (William) Holdings PLC
25 February 2004
WILLIAM SINCLAIR HOLDINGS plc
INTERIM RESULTS FOR THE SIX MONTH PERIOD ENDED
31 DECEMBER 2003
Following the sale of the business and assets of Sinclair Animal and Household
Care Limited ("SAHC") in November 2002, the highly seasonal nature of the
Group's continuing Horticulture business is reflected in the results for the
first six months of the year.
The turnover of the continuing Group, excluding SAHC, was #14.6m (2002: #14.3m).
The operating loss of the continuing Group, including the Group's share of
joint ventures, for the first six months was #669,000 (2002: #391,000). The
results for the current period reflect a change in the method of including
overhead in the valuation of finished goods stock so as to more closely reflect
the phasing of production throughout the financial year. The effect of this
change is to increase the loss in the first six months by some #300,000. There
is no impact on the results for the full year.
The loss per share was 3.2p compared to earnings per share, before exceptionals,
of 1.3p for the comparative period of the previous year. The comparative
figure,on a pro-forma basis, excluding discontinued operations, was a loss of
1.5p. After the exceptional items the loss per share in the comparative period
was 51.7p.
The dividend for the half year is unchanged at 1.5p per share.
Full implementationof Financial Report Standard No 17 ("FRS17") has been
deferred until accounting periods commencing on or after 1 January 2005.
Although not currently recognised in the balance sheet of the Group, the FRS17
deficit of the fair value of the assets against the present value of the
liabilities for the defined benefit element of the Group's Pension Scheme has
remained virtually unchanged from the #6.6m deficit reported at the end of June
2003 and now totals #6.5m. Whilst the market value of the assets of the fund
have increased by #1.4m during the period, there has been very little
improvement in the deficit due to changes in actuarial assumptions relating to
inflation and pension increases.
The defined benefit element of the scheme has been closed to new entrants since
1996. At the last actuarial valuation dated 6 April 2001 the actuarial value of
the assets represented 106% of the benefits which had accrued to members. The
next triennial actuarial valuation of the scheme will take place in April 2004.
TRADING REVIEW
Sales of the horticulture business in the first half were in line with
expectations and were at a similar level to the comparative period for the
previous year. Sales to the gardening and professional sectorswere marginally
higher than the previous year. However, these improvements were largely offset
by lower sales in our export markets and the effect of our planned withdrawal
from direct supply of bark to the landscape market which we announced in last
year's interim report.
Comparison of year on year performance at this stage is against the background
of the relatively low level of sales in the first half compared to the second
six months. Sales to the gardening sector were influenced by the favourable
performance of the J Arthur Bower's branded product range where sales increased
by 5%. Similarly, within the professional grower market, sales of the Sinclair
brand of growing media increased by 4%. Pricing pressure in our markets, but
particularly in the gardening sector, continue to restrict the growth in
headline turnover.
Sales to our export markets were down on the previous year largely as a result
of the weakness of the US dollar. The weakness of the US dollar and the
strength of the Euro had a major impact on the profitability of this business
with operating profits lower than in the comparative period.
Competition has intensified in both the retail and professional markets and the
downward pressure on prices and the upward pressure on haulage costs continue to
influence the margins achieved. However, I am pleased to report that following
the dry weather last summer, the higher than expected peat harvest in the UK has
eliminated the immediate requirement for the import of more expensive peat from
our operations in Estonia and elsewhere.
The cost reduction exercise, outlined in the last Annual Report, aimed at
mitigating wage/salary increases and the increase in National Insurance
contributions remains on course and, excluding the impact of the significant
increase in insurance premiums, overheads show a small reduction over the
corresponding period for the previous year. However, including insurance
premiums there has been an overall increasein costs.
The acquisition of Freeland Horticulture last year, and its access to composted
green waste, has assisted in the gain of new listings for 'Organic Garden
Compost'. In addition, Freeland continues to develop specialist soils,
incorporating composted green waste, for the landscaping market.
The net cash outflow in the first half reflects the nature of the business as
working capital is increased in line with the seasonal demand of the next six
months. Management of both debtors and creditors has improved over the same
period last year. Stocks, in total, are at a similar level to last year.
Underlying stocks, excluding raw peat stocks, have reduced by 15%.
As we previously stated, English Nature have indicated that certain parts of the
Bolton Fell peat site may be submitted to the Department of Environment, Food
and Rural Affairs as a candidate for Special Area of Conservation. The Board is
continuing discussions with English Nature that may enable a commercial
resolution for its lost resource and increased operating costs.
THE FUTURE
In the medium term the issues fundamental to the future performance of the
business remain as stated in the last Annual Report, namely minimising transport
and distribution costs and the widening of our product range. In the short
term, the second six months of the year shows a dramatic increase in activity
driven by consumer and grower demand, both of which are influenced by the
weather. We are well placed in terms of structure, stock and service
capabilities to meet this anticipated demand and now await a good gardening
spring.
The Board's strategy remains unchanged; to deliver and maximise shareholder
value.
Peter Barton
Chairman
25 February 2004
Consolidated Profit and Loss Account
for the six months ended 31 December 2003 (unaudited)
Six months ended
31 December 2003
Notes Exceptionals Total
#'000 #'000 #'000
Turnover
Group and share of joint ventures 1 15,062 - 15,062
Less share of joint ventures turnover (462) - (462)
14,600 - 14,600
Turnover - continuing operations 1 14,600 - 14,600
14,600 - 14,600
Operating (loss)/profit
- continuing operations 2 (709) - (709)
Share of operating profit of joint ventures 40 - 40
(Loss)/profit on ordinary activities before interest (669) - (669)
Net Interest payable (104) - (104)
(Loss)/profit on ordinary activities before taxation(773) (773)
Taxation on (loss)/profit on ordinary activities 3 247 - 247
(Loss)/profit for the period (526) - (526)
Dividends 4 (249) - (249)
Retained (loss)/profit for the period (775) - (775)
Basic (loss)/earnings per share 5 (3.2)p (3.2)p
Dividends per share 1.5p
There are no gains or losses other than the profit or loss for each period
Consolidated Profit and Loss Account
for the six months ended 31 December 2003 (unaudited)
Six months ended
31 December 2002
(Restated)
Exceptionals Total
#'000 #'000 #'000
Turnover
Group and share of joint ventures 20,574 - 20,574
Less share of joint ventures turnover (177) (177)
20,397 - 20,397
Turnover- continuing operations 14,321 - 14,321
- discontinued operations 6,076 - 6,076
20,397 - 20,397
Operating (loss)/profit
- continuing operations (410) - (410)
- discontinued operations 915 - 915
505 - 505
Share of operating profit of joint ventures 19 - 19
524 - 524
Loss on disposal/closure of discontinued businesses - (1,883) (1,883)
Profit on sale of properties relating to discontinued - 305 305
businesses
Goodwill write back on disposal/closure of discontinued - (11,450) (11,450)
businesses
Profit arising on assets replaced as part of insurance claim - 900 900
(Loss)/profit on ordinary activities before interest 524 (12,128) (11,604)
Net interest payable (96) - (96)
(Loss)/profit on ordinary activities before taxation 428 (12,128) (11,700)
Taxation on (loss)/profit on ordinary activities (128) 128 -
(Loss)/profit for the period 300 (12,000) (11,700)
Dividends (340) - (340)
Retained (loss)/profit for the period (40) (12,000) (12,040)
Basic (loss)/earnings per share 1.3p (53.0)p (51.7)p
Dividend per share 1.5p
Consolidated Profit and Loss Account
for the six months ended 31 December 2003 (unaudited)
Year ended
30 June 2003
Exceptionals Total
#'000 #'000 #'000
Turnover
Group and share of joint ventures 52,020 - 52,020
Less share of joint ventures turnover (680) - (680)
51,340 - 51,340
Turnover- continuing operations 45,264 - 45,264
- discontinued operations 6,076 - 6,076
51,340 - 51,340
Operating (loss)/profit
- continuing operations 1,686 (101) 1,585
- discontinued operations 915 - 915
2,601 (101) 2,500
Share of operating profit of joint ventures 50 - 50
2,651 (101) 2,550
Loss on disposal/closure of discontinued businesses - (1,983) (1,983)
Profit on sale of properties relating to discontinued - 305 305
businesses
Goodwillwrite back on disposal/closure of discontinued - (11,450) (11,450)
businesses
Profit arising on assets replaced as part of insurance claim - 1,000 1,000
(Loss)/profit on ordinary activities before interest 2,651 (12,229) (9,578)
Net interest payable (234) - (234)
(Loss)/profit on ordinary activities before taxation 2,417 (12,229) (9,812)
Taxation on (loss)/profit on ordinary activities (764) 543 (221)
(Loss)/profit for the period 1,653 (11,686) (10,033)
Dividends (994) - (994)
Retained (loss)/profit for the period 659 (11,686) (11,027)
Basic (loss)/earnings per share 7.9p (55.6)p (47.7)p
Dividends per share 6.0p
Reconciliation of movements in shareholders funds
for the six months ended 31 December 2003 (unaudited)
Six months Six months Year ended
ended ended 30 June 2003
31 December 31 December
2003 2002
#'000 #'000 #'000
Retained (loss) for the period (775) (12,040) (11,027)
Purchase of shares - - (3,999)
Goodwill realised - 11,450 11,450
Opening shareholders' funds 16,646 20,222 20,222
Closing shareholders' funds 15,871 19,632 16,646
Consolidated Balance Sheet
as at 31 December 2003 (unaudited)
31 December 31 December 30 June
2003 2002 2003
#'000 #'000 #'000
Fixed assets
Tangible assets 9,777 10,197 9,858
Investments 1,516 221 1,476
11,293 10,418 11,334
Current assets
Properties held for resale - 776 675
Stocks 8,372 8,273 5,856
Debtors 8,991 9,711 11,397
Cash at bank and in hand 360 47 2,678
17,723 18,807 20,606
Creditors : amounts falling due within one year
Borrowings (5,698) (564) (350)
Other creditors (6,604) (7,965) (14,091)
(12,302) (8,529) (14,441)
Net current assets 5,421 10,278 6,165
Total assets less current liabilities 16,714 20,696 17,499
Creditors : amounts falling due after more than one - (20) -
year
Provisions for liabilities and charges (843) (1,044) (853)
Net assets 15,871 19,632 16,646
Capital and reserves
Called up share capital 4,139 5,662 4,139
Reserves 3,401 1,950 3,401
Profit and loss account 8,331 12,020 9,106
Equity shareholders' funds 15,871 19,632 16,646
Consolidated cash flow statement
for the six months ended 31 December 2003 (unaudited)
Six months Six months
ended 31 ended 31
December December 2002 Year ended
2003 30 June
2003
#'000 #'000 #'000
Cash flow from operating activities (6,221) (5,447) 3,157
Returns on investments and servicing of finance (104) (177) (264)
Taxation (146) (187) (615)
Acquisitions and disposals (600) 4,613 3,875
Capital expenditure and financial investment 150 1,052 814
Equity dividends paid (745) (815) (1,064)
Cash (outflow) / inflow before financing (7,666) (961) 5,903
Net cash flow from financing 2,874 (3,204) (7,356)
(Decrease) in cash in the period (4,792) (4,165) (1,453)
Reconciliation of net cash flow to movement in net debt
(Decrease) in cash in the period (4,792) (4,165) (1,453)
Cash(inflow)/outflow from change in debt (2,874) 3,204 3,357
Movement in net debt in the period (7,666) (961) 1,904
Net funds at 1 July 2003 2,328 424 424
Net (debt)/funds at 31 December 2003 (5,338) (537) 2,328
Consolidated cash flow statement
for the six months ended 31 December 2003 (unaudited)
Six months Six months Year
ended 31 ended 31
December December ended
2003 2002 30 June
2003
#'000 #'000 #'000
Cash flow from operating activities
Operating (loss)/profit (709) 505 2,500
Depreciation 600 784 1,468
Loss/(profit) on disposal of fixed assets 7 - (8)
(Increase) in stocks (2,516)(2,849) (432)
Decrease/(increase) in debtors 2,065 864 (1,147)
(Decrease)/increase in creditors (5,541) (4,079) 881
Movement in provisions (10) (577) (702)
Adjustment to value of properties held for resale - - 101
(Decrease)/increase in amounts due to associated (117) (95) 496
company
(6,221) (5,447) 3,157
Acquisitions and Disposals
Purchase of joint venture (600)- (618)
Net cash from disposal of business - (912) (912)
Net disposal proceeds from disposal of business - 5,525 5,405
(600) 4,613 3,875
Capital expenditure and financial investment
Purchase of tangible fixed assets (518) (2,979) (3,118)
Sale oftangible fixed assets - 1,878 1,781
Sale of properties held for resale 668 2,153 2,151
150 1,052 814
Financing
Purchase of own shares - - (3,999)
Repayment of bank loan - (3,000) (3,000)
New bank loan 3,000 - -
Capital element of finance leases and (126) (204) (357)
hire purchase agreements 2,874 (3,204) (7,356)
Notes to the Accounts
1. Turnover
Turnover in the 6 months ended 31 December 2002 has been restated to account for
the Klassman-Deilmann GmbH marketing arrangement on a basis consistent with the
other periods.
2. Operating exceptional items
The operating exceptional item in the year ended 30 June 2003 relates to a
property revaluation.
3. Taxation
The taxation credit on ordinary activities is calculated by applying the
Director's best estimate of the annual taxation rate to the loss for the period.
4. Dividend
The interim dividend of 1.5p per share will be paid on 7 May 2004 to
shareholders on the register on 13 April2004.
5. Earnings per share
Earnings per share have been calculated by reference to the average number of
shares in issue as follows:
31 December 2003 16,554,046
31 December 2002 22,649,046
30 June 2003 21,029,279
6. Basis of preparation of accounts
Other than the results for the full year to 30 June 2003, the financial
information included in the interim report is unaudited and has not been
reviewed in the context of Bulletin 1999/4 "Review of Interim Financial
Statements". The interim financial statements have been prepared on the basis
of the accounting policies set out in the financial statements for the year
ended 30 June 2003. The financial statements for the year to 30 June 2003 set
out above are abridged. Full accounts for that year, on which the auditors of
the Company issued an unqualified audit report, have been delivered to the
Registrar of Companies.
Enquiries:
Peter Barton Tel: 01522 537561
Chairman
Steve Rowland Tel: 01522 537561
Finance Director
Richard Welton Tel: 0121 632 2100
Arbuthnot Securities Limited
This information is provided by RNS
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