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RNS Number:8833P
Sinclair (William) Holdings PLC
18 September 2003
WILLIAM SINCLAIR HOLDINGS plc
PRELIMINARY STATEMENT OF RESULTS FOR THE YEAR ENDED 30 JUNE 2003
SUMMARY OF RESULTS
Year ended Year ended
30 June 2003 30 June 2002
#m #m
Turnover 51.3 63.5
Profit after Interest and before Taxation and Exceptional Charges 2.4 3.3
Loss Before Taxation (9.8) (6.1)
Pro Forma Earnings Per Share before Exceptional Charges for 4.9p 4.4p
Continuing Group
Earnings per share before Exceptional Charges 7.9p 10.2p
Earnings/(Loss) Per Share (47.7)p (27.3)p
Proposed Dividend Per Share 6.0p 6.0p
CHAIRMAN'S STATEMENT
Annual Review
Following a year of corporate activity and re-organisation the performance of
the Group for the year ended 30 June 2003 was in line with expectations.
On 15 November 2002 the Group completed its withdrawal from the pet market
through the disposal of the business and assets of Sinclair Animal and Household
Care Limited ("SAHC"). The Group is now focused on its Horticultural
activities.
On 4 March 2003 the Group issued a circular to shareholders seeking approval for
the purchase, by way of Tender Offer, of up to 6,095,000 Ordinary Shares at 63p
per share. Approval was obtained at the Extraordinary General Meeting held on
20 March 2003 and the buy-back of 6,095,000 shares was completed on 26 March
2003.
On 4 March 2003 the Group also announced the acquisition of 50 per cent of the
share capital of Freeland Horticulture Limited, a company specialising in the
sourcing and supply of green waste for use in the horticultural and landscape
markets.
As previously reported the Boothby factory in Cumbria was extensively damaged by
fire in August of last year. The facility has been rebuilt and went into full
production on 6 January 2003. The fire is the subject of an on-going insurance
claim. Discussions with our insurers and their loss adjustors continue to
progress satisfactorily and the results for the period include an estimate of
the exceptional profit arising from the insurance proceeds being in excess of
the book value of the assets damaged by the fire.
On a turnover of #51.3m (2002: #63.5m), profits after interest but before
exceptional items and taxation were #2.42m (2002: #3.28m). The current year
includes the results of SAHC for the period prior to disposal whereas the
comparative includes a full twelve months profit. The continuing Group,
excluding the pet division, reported a profit after interest but before tax and
exceptional items of #1.50m (2002: #1.40m).
The exceptional charges for the year total #12.2m. This figure includes a
#13.4m loss arising from the disposal of SAHC of which #11.4m relates to the
goodwill write back which was previously written off to reserves and which does
not reduce shareholders' funds.
This was partly offset by a profit of #0.2m relating to the sale of four
properties previously occupied by the Pet businesses. Three properties were
sold during the year. Contracts have been exchanged on the remaining property
with completion scheduled for late September.
A profit of #1.0m arises on the assets replaced as part of the insurance claim
referred to above.
As announced at the time of the disposal of SAHC, a re-organisation of the
central cost structure has been undertaken resulting in a cost reduction, before
exceptional items, of 34% over the previous year.
The continued emphasis on cash management has resulted in a reduction of working
capital in the Horticultural business of approximately #1.4m.
Earnings per share before exceptional items, were 7.9p compared to 10.2p in the
previous year. On a proforma basis, excluding discontinued operations, earnings
per share before exceptional items were 4.9p compared to 4.4p. After the
exceptional items earnings per share were a loss of 47.7p (2002: 27.3p loss).
The Board is recommending a final dividend of 4.5p per share (2002: 3.6p) which
together with the interim dividend of 1.5p per share (2002: 2.4p) already paid
results in a maintained dividend for the year of 6.0p. The dividend is covered
1.3 times by earnings per share before the exceptional items.
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 reduced from the #7.1m
stated in the Interim Report to approximately #6.6m at the end of June. The
change in benefits referred to below has had the effect of reducing the
liabilities by #1.1m.
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.
Whilst the next formal valuation is not due until April 2004 the Board, in
conjunction with its advisors, undertook an interim funding review. This
resulted in a change in the benefits provided under the scheme such that, with
effect from 1 August 2003, accrued benefits will increase in line with
inflation, rather than earnings. In addition both the employers' and employees'
funding rates have increased.
Each year brings fresh challenges which colleagues meet with total commitment
and I would like to pay tribute to their contribution in a year where the
challenges were heightened by the loss of a major production resource for five
months and the re-building of that resource in time for the major selling
season.
Trading Review
The adverse impact of both events in the Middle East, and foreign currency
exchange rate movements relating to both the US dollar and the Euro, on our
export activities and the effects of the continuing demise of the landscape
market for bark over the period, are the primary reasons for the decrease in
operating profits in our Horticultural business.
In a highly competitive environment the core business sectors of retail and
professional continued to maintain their supply positions within their
respective markets.
The retail result was achieved through a combination of maintained prices,
product offering and product mix which delivered improved margins overall in
both the J. Arthur Bower's branded products as well as within the own label
market.
Sinclair professional continues to address the changing shape of the commercial
market and maintained its market position delivering a like for like performance
on the previous year.
The season's trading pattern mirrored the previous year with sales during March
and April to both the retail and professional markets showing increases against
the previous year. However, the unfavourable weather and the general downturn
in consumer spend during May eroded the earlier gains.
The fine weather during April not only assisted sales but allowed peat
harvesting to commence earlier than normal and whilst the unfavourable weather
during May affected our ability to harvest during that month, the return of the
fine weather in June resulted in an increased harvest over the same period the
previous year.
Export sales in the first half of the year were ahead of the same period in the
previous year but margins were lower. During the second half turnover was at a
similar level to the previous year affected by uncertainties in the Middle East.
Margins however were reduced still further as the US dollar continued to
weaken and the Euro strengthened significantly. Overall, profits for this
business were lower than last year. These currency factors have continued into
the current financial year.
As previously reported the business experienced a reduction in sales following
the withdrawal of direct supply of bark to the landscape market. The levels of
activity resulting from reduced demand from distributors and the associated
unacceptable returns resulted in the decision to further reorganise the
business. During this year the number of sites is being rationalised and
overheads reduced accordingly.
The joint marketing agreement with Klasmann-Deilmann GmbH for the marketing,
sales and distribution of their product range into the professional sector met
sales expectations, although in the latter part of the year margins were
affected by the strengthening of the Euro.
As we have 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 purchase of 50 per cent of Freeland Horticulture Limited in March 2003 has
enabled the Group to secure access to quality recycled materials which will play
an important role in the future development of the business. During the period
Freeland continued to strengthen its position within the specialised topsoil
markets and in addition provided the Group with recycled soil conditioners and
peat alternatives for sale to the retail market under the J Arthur Bower's
brand.
Future Prospects & Strategy
For the coming year the Group has, through a cost reduction exercise, been
successful in mitigating the impact of wage/salary increases and the increase in
National Insurance contributions. However, a significant increase in insurance
premiums will lead to an overall increase in costs.
Although the future outlook of our main markets remain positive, trading and
operational conditions will continue to be challenging. As with many markets
within the retail sector, the polarisation of sales channels and routes to
market continue to add further pressure on prices and margins.
The two issues paramount in maximising future performance levels remain as
previously reported. Firstly the re-aligning of our logistical and distribution
activities to reduce the ever increasing burden of these costs. Secondly product
innovation, the development and introduction of products with a point of
differentiation, into a well serviced market, is not easily achieved.
Discussions with overseas companies, and our in-house resources, are focused at
delivering products capable of meeting our objective.
The further development of environmentally friendly products remains a key
driver in our marketing strategy.
Freeland continues to investigate and establish recycled materials available to
support sales to both the retail and professional markets, and products for the
wider housing and landscape markets. Freeland's in-house experience also allows
it to pursue high profile developments, such as The Eden Project, in the
creation of new and recycled growing media.
The favourable weather in the spring and summer months provided us with the
opportunity to harvest increased quantities of peat which will reduce the
requirement of imported peat from our Estonian operations and elsewhere.
Those areas of our export market which were adversely affected by the Iraqi
conflict show signs of recovery and whilst we look forward to increased sales
levels in these countries over the next 12 months margin pressures will remain.
The Board's strategy remains to deliver and maximise shareholder value, a
strategy which is now clearly focused on the future performance of its
Horticultural business.
Peter Barton 18 September 2003
Chairman
Enquiries:
Peter Barton, Chairman 01522 537561
Stephen Rowland, Finance Director 01522 537561
Consolidated Profit and Loss Account for the year ended 30 June 2003
Notes 2003 2003 2003 2002 2002 2002
Normal Exceptionals Total Normal Exceptionals Total
#'000 #'000 #'000 #'000 #'000 #'000
Turnover
Group and share of 52,020 - 52,020 63,980 - 63,980
joint ventures
Less share of joint (680) - (680) (495) - (495)
ventures turnover
---------- ---------- ---------- ---------- ---------- ----------
51,340 - 51,340 63,485 - 63,485
---------- ---------- ---------- ---------- ---------- ----------
Turnover
Continuing operations 1 45,264 - 45,264 43,648 - 43,648
Discontinued operations 6,076 - 6,076 19,837 - 19,837
----------- -------------- ----------- ------------ -------------- -------------
51,340 - 51,340 63,485 - 63,485
----------- -------------- ---------- ----------- -------------- ------------
Operating Charges (48,739) (101) (48,840) (59,645) (1,565) (61,210)
----------- -------------- ----------- ------------ -------------- -------------
Operating profit
Continuing operations 1
Horticultural division 2,387 - 2,387 3,023 (566) 2,457
Central costs (701) (101) (802) (1,063) (21) (1,084)
----------- -------------- ----------- ------------ -------------- -------------
1,686 (101) 1,585 1,960 (587) 1,373
Discontinued operations 915 - 915 1,880 (978) 902
----------- -------------- ----------- ------------ -------------- -------------
1/2 2,601 (101) 2,500 3,840 (1,565) 2,275
Share of operating 50 - 50 23 - 23
profit of joint
ventures
---------- ---------- ---------- ---------- ---------- ----------
2,651 (101) 2,550 3,863 (1,565) 2,298
Loss on disposal/ - (1,983) (1,983) - (1,549) (1,549)
closure of discontinued
businesses
Profit on sale of - 305 305 - - -
properties relating to
discontinued businesses
Goodwill writeback on - (11,450) (11,450) - (6,300) (6,300)
disposal/closure of
discontinued businesses
Profit arising on - 1,000 1,000 - - -
assets replaced as part
of insurance claim
----------- -------------- ----------- ------------ -------------- -------------
Profit/(loss) on 2,651 (12,229) (9,578) 3,863 (9,414) (5,551)
ordinary activities
before interest
Net interest payable (234) - (234) (579) - (579)
----------- -------------- ----------- ------------ -------------- ------------
Profit/(loss) on 1 2,417 (12,229) (9,812) 3,284 (9,414) (6,130)
ordinary activities
before taxation
Taxation on profit/ (764) 543 (221) (967) 911 (56)
(loss) on ordinary
activities
----------- -------------- ----------- ------------ -------------- -------------
Profit/(loss) for the 1,653 (11,686) (10,033) 2,317 (8,503) (6,186)
financial year
Dividends 7 (994) - (994) (1,359) - (1,359)
----------- -------------- ----------- ------------- -------------- -------------
Retained profit/(loss) 659 (11,686) (11,027) 958 (8,503) (7,545)
for the year
====== ======== ====== ======= ======== ========
Basic earnings/(loss) 4 7.9p (55.6)p (47.7)p 10.2p (37.5)p (27.3)p
per share
Statement of Historical Cost Profits and Losses for the year ended 30 June 2003
2003 2002
#'000 #'000
Reported loss on ordinary activities before taxation (9,812) (6,130)
Realisation of revaluation gains of previous years 72 -
Difference between actual depreciation charge based on revalued 48 22
amount and an historical cost charge
-------------- -------------
Historical cost loss on ordinary activities before taxation (9,692) (6,108)
======== ========
Historical cost loss for the year after taxation and dividends (10,907) (7,523)
======== =======
Statement of Total Recognised Gains and Losses for the year ended 30 June 2003
2003 2002
#'000 #'000
Loss for the financial year (10,033) (6,186)
Unrealised deficit on revaluation of properties - (1,060)
------------ ------------
Total recognised gains and losses (10,033) (7,246)
======= =======
Consolidated Balance Sheet as at 30 June 2003
2003 2002
#'000 #'000
Fixed assets
Tangible assets 9,858 13,067
Investments 1,476 221
------------ ------------
11,334 13,288
------------ ------------
Current assets
Properties held for resale 675 2,621
Stocks 5,856 7,514
Debtors 11,397 12,778
Cash at bank and in hand 2,678 4,153
------------ ------------
20,606 27,066
------------ ------------
Creditors: amounts falling due within one year
Borrowings (350) (3,603)
Other creditors (14,091) (14,634)
------------ ------------
(14,441) (18,237)
------------ ------------
Net current assets 6,165 8,829
------------ ------------
Total assets less current liabilities 17,499 22,117
Creditors: amounts falling due after - (126)
more than one year
Provisions for liabilities and charges (853) (1,769)
------------ ------------
Net assets 16,646 20,222
======= =======
Capital and reserves
Called up equity share capital 4,139 5,662
Capital redemption reserve fund 1,523 -
Share premium account - 4,868
Revaluation reserve 1,702 1,774
Other reserves 176 176
Profit and loss account 9,106 7,742
------------ ------------
Equity shareholders' funds 16,646 20,222
======= =======
Consolidated Cash Flow Statement for the year ended 30 June 2003
2003 2002
#'000 #'000
Cash flow from operating activities 3,157 9,789
Returns on investments and servicing of finance (264) (674)
Taxation (615) (202)
Acquisitions and disposals 3,875 -
Capital expenditure and financial investment 814 (1,385)
Equity dividends paid (1,064) (1,359)
--------- ---------
Cash inflow before financing 5,903 6,169
Net cash flow from financing (7,356) (620)
--------- ---------
(Decrease)/increase in cash in the period (1,453) 5,549
===== =====
Reconciliation of net cash flow to movement in net funds
(Decrease)/increase in cash in the period (1,453) 5,549
Cash outflow from change in debt 3,357 620
--------- ---------
Movement in net debt in the period 1,904 6,169
Net funds at 1 July 2002 424 (5,745)
--------- ---------
Net funds at 30 June 2003 2,328 424
====== ======
Notes to the Financial Statements
1. Segmental information
a) by class of business
Turnover Profit Before Taxation Net Assets
2003 2002 2003 2002 2003 2002
#'000 #'000 #'000 #'000 #'000 #'000
Horticultural division 45,264 43,648 2,387 2,457 14,003 14,964
Central costs - - (802) (1,084) (119) (603)
--------- --------- --------- --------- --------- ---------
Continuing Operations 45,264 43,648 1,585 1,373 13,884 14,361
Discontinued Operations 6,076 19,837 915 902 (75) 5,416
--------- --------- --------- --------- --------- ---------
51,340 63,485 2,500 2,275 13,809 19,777
===== ===== ===== =====
Share of operating profit of joint
ventures 50 23
--------- ---------
2,550 2,298
Loss on disposal/closure of (1,983) (1,549)
discontinued businesses
Profit on sale of properties 305 -
relating to discontinued
businesses
Goodwill writeback on disposal/ (11,450) (6,300)
closure of discontinued businesses
Profit arising on assets replaced 1,000 -
as part of insurance claim
--------- ---------
(9,578) (5,551)
Net interest payable (234) (579)
--------- ---------
(9,812) (6,130)
===== =====
2003 2002
#'000 #'000
b) by geographical market
United Kingdom 48,259 60,090
Europe 363 816
Middle and Far East 2,696 2,505
Other 22 74
--------- ---------
51,340 63,485
===== =====
Turnover originates wholly within the United Kingdom
2. Exceptional Items
a) Operating exceptional items 2003 2002
#000 #000
Property revaluation (101) (958)
Provision in respect of worked out - (246)
peat mosses
Provision against old export debts - (268)
Trading loss arising from decision - (93)
to close discontinued business
--------- ---------
(101) (1,565)
===== =====
b) Non-operating exceptional items
The 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
2003 2002
#'000 #'000
Operating profit 2,500 2,275
Depreciation 1,468 2,050
(Profit) on disposal of fixed assets (8) (6)
(Increase)/decrease in stocks (432) 1,231
(Increase)/decrease in debtors (1,147) 4,947
Increase/(decrease) in creditors 881 (1,352)
Movement in provisions (702) (300)
Adjustment to value of properties held for resale 101 -
Increase/(decrease) in amounts due to join ventures 496 (14)
Revaluation deficit - 958
-------- --------
3,157 9,789
===== =====
4. Earnings per share
Basic (loss)/earnings per ordinary share have been calculated by reference to
losses of #10,033,000 (2002: #6,186,000) and the average number of ordinary
shares in issue of 21,029,279 (2002: 22,649,046).
Basic (loss)/earnings per share before and after exceptional items have been
calculated as follows:
2003 2002
p p
(Loss)/earnings per share (47.7) (27.3)
Effect of elimination of:
(i) Operating exceptional items 0.5 6.0
(ii) Loss on disposal/closure of businesses 7.1 3.7
(iii) Profit on sale of properties (1.4) -
(iv) Goodwill write-back 54.4 27.8
(v) Profit on assets replaced as part of insurance (3.3) -
claim
(vi) Prior year tax adjustments (1.7) -
-------------- ---------------
7.9 10.2
-------------- ---------------
5. Reconciliation of movements to shareholders' funds
2003 2002
#'000 #'000
Retained loss for the year (11,027) (7,545)
Purchase of shares (3,999) -
Revaluation deficit - (1,060)
Goodwill realised 11,450 6,300
------------ -----------
(3,576) (2,305)
Opening shareholders' funds 20,222 22,527
------------ -----------
Closing shareholders' funds 16,646 20,222
======= =======
6. The principal accounting policies of the Group are set out in the Group's
2003 Annual Report and financial statements. The policies have remained
unchanged from the previous Annual Report.
7. The proposed final dividend will be paid on 21 November 2003 to Shareholders
on the Share Register at close of business on 31 October 2003. The
provisional ex-dividend date is 29 October 2003.
8. The figures set out above do not constitute the Company's statutory accounts
for the year ended 30 June 2003. The consolidated balance sheet at 30 June
2003 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 2003
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 2002 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 30 October 2003 at 11.00 am.
The Annual Report and Accounts will be sent to shareholders on 25 September
2003
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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