RNS Number:9751C
Sinclair (William) Holdings PLC
15 September 2004
WILLIAM SINCLAIR HOLDINGS plc
PRELIMINARY STATEMENT OF RESULTS FOR THE YEAR ENDED 30 JUNE 2004
SUMMARY OF RESULTS
UPDATE ON TRADING FOR THE CURRENT YEAR
Year ended Year ended
30 June 2004 30 June 2003
#m #mm
* Turnover 44.2 51.3
* Profit after Interest and before Taxation and Exceptional 1.4 2.4
Charges
* Profit/(Loss) Before Taxation 1.4 (9.8)
* Earnings Per Share before Exceptional Charges for Continuing 6.0p 4.9p
Group
* Earnings Per Share before Exceptional Charges 6.0p 7.9p
* Earnings/(Loss) Per Share 6.0p (47.7)p
* Proposed Dividend Per Share 6.0p 6.0p
CHAIRMAN'S STATEMENT
Following the sale of the business and assets of Sinclair Animal and Household
Care Limited ("SAHC") in November 2002, the results for the year to June 2004
reflect solely the activity of the Horticultural business.
The performance of the Group for the year ended 30 June 2004 did not meet our
original expectations and following the poor spring weather, the Board issued a
trading statement on 7 June 2004. However, despite these difficult trading
conditions the Group's performance was, on a consistent basis, in line with the
previous year.
On a turnover of #44.2m (2003 #51.3m), profits after interest but before
exceptional items and taxation were #1.41m (2003 #2.42m). The results for the
comparative period include those of SAHC for the period prior to disposal. The
comparative results for the continuing Group on a pro forma basis were a
turnover of #45.3m and a profit after interest but before tax and exceptional
items of #1.50m.
There are no exceptional items for the year ended 30 June 2004.
The on going review of the central cost structure announced at the time of the
disposal of SAHC resulted in further cost reductions. Whilst not separately
disclosed central costs are now 55% of the level they were prior to the disposal
of SAHC.
During the year we have continued to place emphasis on working capital
management. Stock levels have reduced despite the higher peat stocks following
the good harvest last summer. Unfortunately the later phasing of sales, and the
realignment of creditors from the unusually high position at last year end, has
impacted upon year end net cash which was #1.1m below last year. Following the
year end the net cash position for the end of July and August was better than
the same period last year.
Earnings per share before exceptional items were 6.0p (2003 7.9p). On a
pro-forma basis, excluding discontinued operations, earnings per share in 2003
before exceptional items were 4.9p. Earnings per share after exceptional items
in 2003 were a loss of 47.7p
The Board is recommending a final dividend of 4.5p per share (2003 4.5p) which
together with the interim dividend of 1.5p per share (2003 1.5p) already paid
results in a maintained dividend for the year of 6.0p. The dividend for the
year is covered.
Full implementation of Financial Reporting Standard No 17 ("FRS17") was intended
to be mandatory for companies with accounting periods ending on or after 22 June
2003. However, full implementation 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 at the level of #6.5m stated in the
Interim Report.
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 actuarial valuation dated 6 April 2004 is in the process of completion
but the results will not be finalised until later in the year. Initial
indications are that the actuarial funding rate, which impacts on profitability,
will increase marginally from that calculated as part of the interim funding
review completed last year. However, on a Minimum Funding Rate basis,
additional cash contributions will be required to fund the deficit. These will
have no impact on profitability.
On 1 September 2004 the Board appointed Bill Simpson as Senior Independent
Non-Executive Director. Bill was, until 2002, Chief Executive of Silentnight
Holdings PLC. He brings with him a wealth of experience in marketing consumer
products, a quality vital to the Group as it faces the challenges ahead. In
addition, he meets the requirement of independence and experience in Governance
as required by the revised Combined Code.
Charles Ouin who has been a Non-Executive Director since 1988 will be retiring
on 27 October 2004. Charles has made a valuable contribution to the Group and I
express the gratitude of the Board for his commitment and service.
In what has been a difficult year I would like to thank our employees for their
effort, resourcefulness and commitment.
Trading Review for the year ended 30 June 2004
The highly competitive nature of both our retail and professional markets
continued to reduce prices and margins. However, following the good peat
harvest in the summer of 2003 the need to import more expensive Baltic peat was
eliminated. Additionally, as outlined in last year's Annual Report, the
business suffered a significant increase in insurance costs.
The influence of the poor gardening weather during the March to May period
affected consumer demand and thus the opportunity for growth.
The cold wet March significantly reduced demand, particularly in the retail
market, below that of previous year; a feature reflected by the performance of
many of our retailers. Inroads into the shortfall were made in late April and
May, but the lower than anticipated level of consumer activity in the later May
Bank Holiday resulted in this uplift being insufficient to offset the earlier
March shortfall. The erratic nature of our retail trade is demonstrated by
comparing sales in March and May 2004 with the same months of the previous year.
In March 2004 sales were 30% down on the previous year. In May 2004 they were
30% up on the previous year.
Despite the difficult season our market position within our major retail core
sectors was maintained. Sales volumes of the J Arthur Bower's range of peat
based composts were at very similar levels to the previous year. Sales volumes
of our non-peat compost, under the New Horizon brand, showed a year on year
increase of 5%. Overall, sales of own label products were below those of the
previous year.
Within the professional market sales of the Sinclair range of products,
primarily growing media, were marginally below the level achieved in the
previous year. Fluctuations in demand were not so marked within this market.
However, demand weakened as the season progressed due to lower plant sales from
retail outlets which reduced the demand for replacement stock from the growers.
Sales of the Klassman range of products, through the joint sales and marketing
agreement with Klassman-Deilmann GmbH met expectations. A significant
proportion of this range is sold to growers of edible crops and was thus less
affected by the influence of the weather.
The sales and profitability of our export activities were down on the previous
year, once again influenced by the further strengthening of sterling against the
US dollar and the continuing disturbance in our Middle East markets.
During July and August 2003 and May and June 2004, the major months for peat
harvesting, the weather was in the main favourable. As a result we achieved a
better than budgeted harvest in the UK which negated the need to import the more
expensive peat from our Estonian operations.
The position of Bolton Fell as a possible candidate for designation as a Special
Area of Conservation remains unchanged and the Board await further clarification
from English Nature and The Department of the Environment Food and Rural Affairs
as to future developments in order that appropriate discussion can take place.
The availability of quality re-cycled materials, made possible by our 50 percent
share in Freeland Horticulture Limited, has enabled the Group to develop further
non-peat alternatives in the production of growing media. In addition Freeland
continues to develop and strengthen our position in the supply of topsoils to
the landscaping and construction industries. Whilst reporting an improved
trading performance when compared to the previous full financial year, the
results of Freeland were also adversely impacted by the poor weather.
Trading conditions within our respective retail and professional markets will
remain difficult and thus the pressure on pricing and margins will continue.
The business continues to constantly examine all aspects of its operations in
order to increase efficiency and/or reduce costs.
Investment in the Future
Over the next 18 months investment is planned at the Group's Lincoln site.
During 2004 eight acres of industrial storage space, in very close proximity to
the factory, was purchased. The additional space will remove bottlenecks at the
original Lincoln site and allow us to re-plan methods of production and
distribution. A major investment in new production machinery, planned for the
summer of 2005, will provide increased production capacity and a more efficient
process.
Peat remains an important ingredient within the Group's range of products for
both the retail and professional markets. However, it is a finite resource and
thus has to be conserved for those uses where no suitable substitution has yet
been found. Your Group will continue to be proactive in developing alternatives
to peat and the investment in Freeland is an integral part of this strategy.
Within the retail gardening market there is an emerging consumer base who prefer
to purchase a non-peat product and, in addition, seeks to use organic or
environmentally friendly products. This autumn we will launch, under the New
Horizon banner, a product range which consists of non-peat composts, soil
conditioners, plus organic plant foods and pest repellents, based on naturally
occurring substances. Whilst the J Arthur Bower's brand and product range will
remain the major driver in the retail market, the New Horizon range of products
gives the consumer choice and provides growth prospects for the future.
Within the professional market we will further extend the product offering to
growers through a strengthening of the relationship with Klassman-Deilmann GmbH.
An extended range of growing media is planned to be made available to the
Group which will provide the opportunity of widening our customer base.
CURRENT TRADING AND FUTURE PROSPECTS FOR THE YEAR ENDING 30 JUNE 2005
The profits of the Group for the current financial year are likely to be well
below those reported for the year ending 30 June 2004 and the Group's dividend
policy will continue to reflect earnings.
One of the major risk areas for the Group is the impact of weather on the
selling and harvesting season. As a consequence of the abnormal rainfall levels
experienced in the UK during July and August, the volumes of peat harvested have
been significantly below expectations. The weather conditions presently
prevailing have eliminated the opportunity for any clawback in September.
Although the lack of harvest will not affect our ability to supply the market
place following a stock build in the year to 30 June 2004, we will be unable, in
this financial year, to absorb into stock the direct costs associated with our
peat harvesting activity and we will incur additional expenditure.
We have been exporting horticultural products to the Middle East for a number of
years. However, due to a recent change in import regulations relating to
particular products in a significant market and following very recent
discussions with the authorities, we are concerned as to our ability to satisfy
our customer's requirements and expectations.
We are presently reviewing the structure to ensure that we have the strength,
skills and organisation to deal with the challenges ahead. The Board continues
to examine the options available to maximise shareholder value.
Peter Barton
Executive Chairman 15 September 2004
Enquiries:
Peter Barton, Executive Chairman 01522 537561
Stephen Rowland, Finance Director 01522 537561
Consolidated Profit and Loss Account for the year ended 30 June 2004
Notes 2004 2003 2003 2003
Total Normal Exceptionals Total
#'000 #'000 #'000 #'000
Turnover
Group and share of 45,260 52,020 - 52,020
joint ventures
Less share of joint (1,088) (680) - (680)
ventures turnover
---------- ---------- ---------- ----------
44,172 51,340 - 51,340
---------- ---------- ---------- ----------
Turnover
Continuing operations 1 44,172 45,264 - 45,264
Discontinued operations - 6,076 - 6,076
----------- ------------ -------------- -------------
44,172 51,340 - 51,340
---------- ----------- -------------- ------------
Operating Charges (42,553) (48,739) (101) (48,840)
----------- ------------ -------------- -------------
Operating profit
Continuing operations 1 1,619 1,686 (101) 1,585
Discontinued operations - 915 - 915
----------- ------------ -------------- -------------
1/2 1,619 2,601 (101) 2,500
Share of operating 81 50 - 50
profit of joint
ventures ----------- ---------- -------------- ----------
1,700 2,651 (101) 2,550
Loss on disposal/ - - (1,983) (1,983)
closure of discontinued
businesses
Profit on sale of - - 305 305
properties relating to
discontinued businesses
Goodwill writeback on - - (11,450) (11,450)
disposal/closure of
discontinued businesses
Profit arising on - - 1,000 1,000
assets replaced as part
of insurance claim
----------- ------------ -------------- -------------
Profit/(loss) on 1,700 2,651 (12,229) (9,578)
ordinary activities
before interest
Net interest payable (295) (234) - (234)
----------- ------------ -------------- ------------
Profit/(loss) on 1 1,405 2,417 (12,229) (9,812)
ordinary activities
before taxation
Taxation on profit/ (415) (764) 543 (221)
(loss) on ordinary
activities
----------- ------------ -------------- -------------
Profit/(loss) for the 990 1,653 (11,686) (10,033)
financial year
Dividends 7 (994) (994) - (994)
----------- ------------ -------------- -------------
Retained profit/(loss) (4) 659 (11,686) (11,027)
for the year
====== ======= ======== ========
Basic earnings/(loss) 4 6.0p 7.9p (55.6)p (47.7)p
per share
There are no gains or losses other than the profit or loss for each year.
Statement of Historical Cost Profits and Losses for the year ended 30 June 2004
2004 2003
#'000 #'000
Reported profit/(loss) on ordinary activities before taxation 1,405 (9,812)
Realisation of revaluation gains of previous years - 72
Difference between actual depreciation charge based on revalued 53 48
amount and an historical cost charge
-------------- -------------
Historical cost profit/(loss) on ordinary activities before 1,458 (9,692)
taxation
======== ========
Historical cost profit/(loss) for the year after taxation and
dividends
49 (10,907)
======== =======
Consolidated Balance Sheet as at 30 June 2004
2004 2003
#'000 #'000
Fixed assets
Tangible assets 10,157 9,858
Investments 1,516 1,476
------------ ------------
11,673 11,334
------------ ------------
Current assets
Property held for resale - 675
Stocks 5,300 5,856
Debtors 10,487 11,397
Cash at bank and in hand 1,614 2,678
------------ ------------
17,401 20,606
------------ ------------
Creditors: amounts falling due within one year
Borrowings (207) (350)
Other creditors (11,279) (14,091)
------------ ------------
(11,486) (14,441)
------------ ------------
Net current assets 5,915 6,165
------------ ------------
Total assets less current liabilities 17,588 17,499
Creditors: amounts falling due after (179) -
more than one year
Provisions for liabilities and charges (767) (853)
------------ ------------
Net assets 16,642 16,646
======= =======
Capital and reserves
Called up equity share capital 4,139 4,139
Capital redemption reserve fund 1,523 1,523
Revaluation reserve 1,702 1,702
Other reserves 176 176
Profit and loss account 9,102 9,106
------------ ------------
Equity shareholders' funds 16,642 16,646
======= =======
Consolidated Cash Flow Statement for the year ended 30 June 2004
2004 2003
#'000 #'000
Cash flow from operating activities 2,098 3,157
Returns on investments and servicing of finance (269) (264)
Taxation (458) (615)
Acquisitions and disposals (600) 3,875
Capital expenditure and financial investment (877) 814
Equity dividends paid (994) (1,064)
--------- ---------
Cash (outflow)/inflow before financing (1,100) 5,903
Net cash flow from financing 100) (7,356)
--------- ---------
Decrease in cash in the year (1,000) (1,453)
===== =====
Reconciliation of net cash flow to movement in net funds
Decrease in cash in the year (1,000) (1,453)
Cash (inflow)/outflow from change in debt (100) 3,357
--------- ---------
Movement in net funds in the year (1,100) 1,904
Net funds at 1 July 2003 2,328 424
--------- ---------
Net funds at 30 June 2004 1,228 2,328
====== ======
Notes to the Financial Statements
1. Segmental information
a) by class of business
Turnover Profit Before Taxation Net Assets
2004 2003 2004 2003 2004 2003
#'000 #'000 #'000 #'000 #'000 #'000
Continuing Operations 44,172 45,264 1,619 1,585 15,455 13,884
Discontinued Operations - 6,076 - 915 - (75)
--------- --------- --------- --------- --------- ---------
44,172 51,340 1,619 2,500 15,455 13,809
===== ===== ===== =====
Share of operating profit of joint
ventures 81 50
--------- ---------
1,700 2,550
Loss on disposal/closure of - (1,983)
discontinued businesses
Profit on sale of properties - 305
relating to discontinued
businesses
Goodwill writeback on disposal/ - (11,450)
closure of discontinued businesses
Profit arising on assets replaced - 1,000
as part of insurance claim
--------- ---------
1,700 (9,578)
Net interest payable (295) (234)
--------- ---------
1,405 (9,812)
===== =====
2004 2003
#'000 #'000
b) by geographical market
United Kingdom 41,234 48,259
Europe 421 363
Middle and Far East 2,512 2,696
Other 5 22
--------- ---------
44,172 51,340
===== =====
Turnover originates wholly within the United Kingdom
2. Exceptional Items
a) Operating exceptional items 2004 2003
#000 #000
Property revaluation - (101)
===== =====
b) Non-operating exceptional items
The prior year loss on disposal of discontinued businesses of #1.98m and the goodwill write-back
on discontinued businesses of #11.4m relates to the business and assets of Sinclair Animal and
Household Care Limited. The goodwill write-back has no impact on net assets as this was
previously written off to reserves.
3. Cash flow from operating activities
2004 2003
#'000 #'000
Operating profit 1,619 2,500
Depreciation 1,241 1,468
Loss/(profit) on disposal of fixed assets 5 (8)
Loss on property held for resale 7 -)
Decrease/(increase) in stocks 556 (432)
Decrease/(increase) in debtors 910 (1,147)
(Decrease)/increase in creditors (2,496) 881
Movement in provisions - (702)
Adjustment to value of properties held for resale - 101
Increase in amounts due to joint ventures 256 496
-------- --------
2,098 3,157
===== =====
4. Earnings per share
Basic earnings/(loss) per ordinary share have been calculated by reference to profits of #990,000
(2003: losses #10,033,000) and the average number of ordinary shares in issue of 16,554,046 (2003:
21,029,279).
Basic earnings/(loss) per share before and after exceptional items have been calculated as follows:
2004 2003
p p
Earnings/(loss) per share 6.0 (47.7)
Effect of elimination of:
(i) Operating exceptional items - 0.5
(ii) Loss on disposal/closure of businesses - 7.1
(iii) Profit on sale of properties - (1.4)
(iv) Goodwill write-back - 54.4
(v) Profit on assets replaced as part of insurance - (3.3)
claim
(vi) Prior year tax adjustments - (1.7)
-------------- ---------------
6.0 7.9
-------------- ---------------
5. Reconciliation of movements to shareholders' funds
2004 2003
#'000 #'000
Retained loss for the year (4) (11,027)
Purchase of shares - (3,999)
Goodwill realised - 11,450
------------ -----------
(4) (3,576)
Opening shareholders' funds 16,646 20,222
------------ -----------
Closing shareholders' funds 16,642 16,646
======= =======
6. The principal accounting policies of the Group are set out in the Group's 2004 Annual Report and
financial statements. The policies have remained unchanged from the previous Annual Report.
7. The proposed final dividend will be paid on 25 November 2004 to Shareholders on the Share Register
at close of business on 29 October 2004. The provisional ex-dividend date is 27 October 2004.
8. The figures set out above do not constitute the Company's statutory accounts for the year ended 30
June 2004. The consolidated balance sheet at 30 June 2004 and the consolidated profit and loss
account, consolidated cash flow statement, statement of total recognised gains and losses and
associated notes for the year then ended have been extracted from the Company's 2004 statutory
financial statements upon which the auditors' opinion is unqualified and does not include any
statement under section 237 of the Companies Act 1985. Those statutory financial statements have
not yet been delivered to the Registrar of Companies. The statutory financial statements for the
year ended 30 June 2003 have been delivered to the Registrar of Companies.
9. The Annual General Meeting of the Company will be held at The Bentley Hotel, Newark Road, South
Hykeham, Lincoln, LN6 9NH on 28 October 2004 at 11.00 am.
10. Copies of this announcement are available from the Company's registered office, Firth Road,
Lincoln, LN6 7AH during normal office hours.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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