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RNS Number:2340I
Sinclair (William) Holdings PLC
04 March 2003
For Immediate Release 4 March 2003
WILLIAM SINCLAIR HOLDINGS plc
INTERIM RESULTS FOR THE SIX MONTH PERIOD ENDED
31 DECEMBER 2002
6 months ended
31 December 2002 31 December 2001
Sales #19.648m #23.804m
Profit before exceptional items and taxation #0.428m #0.237m
Earnings per share before exceptional items 1.3p 0.7p
Earnings per share (51.7)p (0.9)p
Dividend per share 1.5p 2.4p
Performance of the Group for the first six months was in line with the Board's
expectations. On 15 November 2002 the disposal of the business and assets of
Sinclair Animal and Household Care Limited ("SAHC") and certain freehold
properties ("the Disposal") was completed. The Group is now focused on it's
horticultural business and today also announces the acquisition of 50 per cent
of Freeland Horticulture Limited ("Freeland"), 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 have progressed
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 turnover of #19.6m (2001: #23.8m), profits after interest but before
exceptional items and taxation were ahead of the same period in the previous
year at #0.4m (2001: #0.2m). The current period includes the results of SAHC
prior to the Disposal. The continuing Group, excluding the pet division,
reported a loss after interest but before exceptional items of #0.5m (2001: loss
#0.8m).
The exceptional charges for the period total #12.1m. This figure includes #11.4m
which relates to the goodwill write-back arising from the Disposal which was
previously written off to reserves and which does not reduce shareholders'
funds. A loss of #1.9m arose from the Disposal. This was partially offset by a
profit of #0.3m from the sale of properties previously occupied by the pet
businesses. A profit of #0.9m arises on the assets replaced as part of the
insurance claim referred to above.
The continued emphasis on working capital management has resulted, prior to
taking account of the cash impact of the Disposal and the cessation of the pet
division's operations at Oldbury, which was announced in April of last year, in
an underlying reduction in borrowings of #2.5m.
Earnings per share, before exceptional items, were 1.3p compared to 0.7p in the
same period of the previous year. After exceptional items the loss per share was
51.7p (2001: 0.9p loss).
Full implementation of Financial Reporting Standard No. 17 ("FRS17") was
intended to be mandatory for companies with accounting periods ending on or
after 23 June 2002. However, full implementation has been deferred until after
the issue of an International Financial Reporting Standard on the same subject,
which is expected by 2005. Although not currently recognised in the balance
sheet of the Group, the FRS17 deficit of the fair value of assets against the
present value of the liabilities for the defined benefit element of the Group's
pension scheme has risen from the #5.0m as stated in the Group's last Annual
Report and Accounts, to approximately #7.1m at the end of December 2002. During
the period the market value of the assets has fallen by #1.3m and the
liabilities have increased as members approach retirement.
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 triennial actuarial valuation is not due until April 2004, the Board has
decided to undertake an interim funding review.
In the last Annual Report and Accounts the Group emphasised the highly seasonal
nature of its business and that future interim dividends would more closely
reflect the lower trading performance in the first half of the year. As a result
the Board is recommending an interim dividend of 1.5p per share (2001: 2.4p).
Pet Division
At the time of announcing the consolidation of the pet division in April of last
year the costs were expected to be no more than #2m. The accounts to 30 June
2002 included a provision of #1.5m relating to the expenditure committed at that
stage to the closure of the Oldbury and Bradford sites. I am pleased to report
that the actual costs have been contained within the provision made in those
accounts.
The Disposal was completed on 15 November 2002. The consideration received for
the Disposal was #6.4m, of which #0.3m is deferred until 15 May 2003. In
accordance with the requirements of the sale and purchase agreement, #0.9m of
excess cash that was held by SAHC at completion, the majority of which arose due
to lower than anticipated capital employed and hence net assets, was returned to
the purchaser. The costs associated with the transaction, including those
relating to management changes, amounted to #1.0m. The net assets of the
Disposal at completion were #6.4m. The loss on the Disposal was #1.9m.
In addition three properties that were retained within the Group and had
previously been occupied by the pet businesses, including those at Oldbury and
Bradford, were sold for a total consideration of #2.2m, realising a profit on
disposal of #0.3m.
The overall costs associated with our withdrawal from the pet market were in
line with our expectations.
Following the Disposal and as stated in the Circular announcing the Disposal,
sent to shareholders on 25 September 2002, Roger Feaviour resigned as Chief
Executive with effect from 31 December 2002. I am pleased that he will continue
to contribute to the future of the Group in his role of non-executive Director.
Trading Review - Horticulture Division
At a customer level the division continued during the first half year to
strengthen its market position. During the period we launched the range of J
Arthur Bowers peat reduced compost, replacing the previous all peat range. These
have been well received in the market place and we are the first major UK
business to take such steps to conserve its peat resources.
Operationally the division had a difficult period following the fire at Boothby
and the reduced availability of UK harvested peat arising from the wet weather
experienced last Summer. Customer service levels were maintained following the
fire by running additional shifts at the main Lincoln site and by way of
external sub-contracting. The lower levels of UK harvested peat will be
supplemented by product imported from our own operations in Estonia and other
overseas suppliers.
As we have previously stated, English Nature has 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 Special Area of Conservation. We still
await formal clarification of their position.
Following a complete review of the landscape market, and our position within the
supply chain, we have withdrawn from direct supply of bark to that market. Our
bark resources will now be concentrated on satisfying our internal requirements
for the environmentally friendly and other product ranges.
Overall sales for the division were in line with the same period of the previous
year with strong performances from the retail and export markets offsetting
continued weaknesses in overall demand from professional customers and the
reduction in sales following the withdrawal from direct supply to the landscape
bark market. Increased margins were achieved in both the retail and professional
sectors and were sufficient to offset the lower margins from the export and bark
products markets. The wet weather experienced in the UK during the summer months
of last year resulted in a lower than expected peat harvest which adversely
affected the results for the period. Overall the division reported break-even
for the period compared to an operating loss, before exceptional items, of #0.1m
in the same period the previous year.
During the period and in preparation for the gardening season, the division has
strengthened its product listings in major retail and garden centre outlets.
Acquisition of 50 per cent of Freeland
The Group has today acquired 50 per cent of the share capital of Freeland for a
total cash consideration of #1.2m. Freeland specialises in the sourcing and
supply of composted green waste to both the horticultural and landscape markets.
#0.6m of the total consideration of #1.2m was paid at completion with the
balance being payable on 31 August 2003. The Group has an option to acquire the
remaining 50 per cent of Freeland's share capital between 1 January 2008 and 31
December 2010 at a price based on a multiple of five times 50 per cent of the
average of the post tax profits, subject to certain adjustments, of Freeland as
shown by the audited statutory accounts for the two financial years ending
immediately prior to the date the option is exercised.
A trading relationship currently exists between Freeland and the Group relating
to green waste, a product supplied to the horticultural market. This is
purchased from Freeland and is used in a range of peat reduced products
(alongside peat) thereby conserving our finite peat resource for products where
no alternative to peat currently exists. This trading relationship will be
strengthened following the acquisition.
Freeland commenced trading in October 2000 and in the year to 30 June 2002
reported a profit before taxation of #0.1m on turnover of #1.1m. The Managing
Director, and founder, of Freeland is being retained under the terms of a
long-term service agreement.
The cash being used to fund the acquisition is being generated from current year
cash flow and working capital improvements.
The acquisition is expected to be earnings neutral during the current financial
year, after goodwill amortisation, and earnings enhancing thereafter.
The Future
Following our withdrawal from the pet market the Group is now focussed on
further developing its horticulture business. In addition, the Group has
simplified its central structure which will reduce costs.
Particular focus is being given to address two issues fundamental to the future
performance of the Group. As stated in the last Annual Report and Accounts, we
have recognised brands with a strong presence in the market place. In order to
maximise the return from our market position we have embarked on a strategy of
product development aimed at widening the offering to our customers without
further impacting on our already high distribution costs. Addressing the impact
of transport and distribution costs, which are aggravated by the bulky nature of
many of our products, continues to be a major challenge which faces the
business, and we continue to seek ways of minimising these ever increasing
costs.
The Board's current dividend policy reflects existing levels of profitability
and any increase will be linked to an improved trading performance
Peter Barton
Chairman
4 March 2003
Consolidated Profit and Loss Account
for the six months ended 31 December 2002 (unaudited)
Six months ended
31 December 2002
Before
Exceptional Exceptional
items Items Total
#000 #000 #000
Turnover - continuing operations 13,572 - 13,572
- discontinued operations 6,076 - 6,076
19,648 - 19,648
Operating profit / (loss)- continuing operations
Horticultural division 14 - 14
Central costs (405) - (405)
(391) - (391)
- discontinued operations 915 - 915
524 - 524
Loss on disposal of discontinued businesses - (1,883) (1,883)
Profit on sale of properties relating to discontinued - 305 305
businesses
- (1,578) (1,578)
Goodwill writeback on disposal of discontinued - (11,450) (11,450)
businesses
Profit arising on assets replaced as part of the - 900 900
insurance claim
Profit / (loss) on ordinary activities before interest 524 (12,128) (11,604)
Net Interest payable (96) - (96)
Profit / (loss) on ordinary activities before taxation 428 (12,128) (11,700)
Taxation on profit / (loss) on ordinary activities (128) 128 -
Profit / (loss) for the period 300 (12,000) (11,700)
Dividends (340) - (340)
Retained (loss) for the period (40) (12,000) (12,040)
Basic earnings / (loss) per share 1.3p (53.0)p (51.7)p
Dividends per share 1.5p
Consolidated Profit and Loss Account
for the six months ended 31 December 2001 (unaudited)
Six months ended
31 December 2001
Before
Exceptional Exceptional
items Items Total
#000 #000 #000
Turnover- continuing operations 13,677 - 13,677
- discontinued operations 10,127 - 10,127
23,804 - 23,804
Operating profit / (loss)- continuing operations
Horticultural division (91) (514) (605)
Central costs (457) - (457)
(548) (514) (1,062)
- discontinued operations 1,065 - 1,065
Profit / (loss) on ordinary activities before interest 517 (514) 3
Net Interest payable (280) - (280)
Profit / (loss) on ordinary activities before taxation 237 (514) (277)
Taxation on profit / (loss) on ordinary activities (71) 154 83
Profit / (loss) for the period 166 (360) (194)
Dividends (544) - (544)
Retained (loss) for the period (378) (360) (738)
Basic earnings / (loss) per share 0.7p (1.6)p (0.9)p
Dividends per share 2.4p
Consolidated Profit and Loss Account
for the year ended 30 June 2002 (unaudited)
Year ended
30 June 2002
Before
Exceptional Exceptional
items Items Total
#000 #000 #000
Turnover - continuing operations 43,648 - 43,648
- discontinued operations 19,837 - 19,837
63,485 - 63,485
Operating profit / (loss)- continuing operations
Horticultural division 3,046 (566) 2,480
Central costs (1,063) (21) (1,084)
1,983 (587) 1,396
- discontinued operations 1,880 (978) 902
3,863 (1,565) 2,298
Loss on closure of discontinued operations - (1,549) (1,549)
Goodwill writeback on closure of discontinued - (6,300) (6,300)
operations
Profit / (loss) on ordinary activities before interest 3,863 (9,414) (5,551)
Net Interest payable (579) - (579)
Profit / (loss) on ordinary activities before taxation 3,284 (9,414) (6,130)
Taxation on profit / (loss) on ordinary activities (967) 911 (56)
Profit / (loss) for the period 2,317 (8,503) (6,186)
Dividends (1,359) - (1,359)
Retained profit / (loss) for the period 958 (8,503) (7,545)
Basic earnings / (loss) per share 10.2p (37.5)p (27.3)p
Dividends per share 6.0p
Statement of total recognised gains and losses
for the six months ended 31 December 2002 (unaudited)
Six months Six months Year ended
ended 31 ended 31 30 June
December December 2002
2002 2001
#'000 #'000 #'000
(Loss) for the period (11,700) (194) (6,186)
Unrealised deficit on - - (1,060)
revaluation of properties
(11,700) (194) (7,246)
Reconciliation of movements in shareholders funds
for the six months ended 31 December 2002 (unaudited)
Six months Six months Year ended
ended 31 ended 31 30 June
December December 2002
2002 2001
#'000 #'000 #'000
Retained (loss) for the period (12,040) (738) (7,545)
Unrealised deficit on - - (1,060)
revaluation of properties
Goodwill write-back 11,450 - 6,300
Opening shareholders funds 20,222 22,527 22,527
Closing shareholders funds 19,632 21,789 20,222
Consolidated Balance Sheet
as at 31 December 2002 (unaudited)
31 December 31 December 30 June
2002 2001 2002
#'000 #'000 #'000
Fixed assets
Tangible assets 10,197 17,648 13,067
Investments 221 203 221
10,418 17,851 13,288
Current assets
Properties held for resale 776 996 2,621
Stocks 8,273 12,307 7,514
Debtors 9,711 13,432 12,778
Cash at bank and in hand 47 389 4,153
18,807 27,124 27,066
Creditors : amounts falling due within one year
Borrowings (564) (9,473) (3,603)
Other creditors (7,965) (11,369) (14,634)
(8,529) (20,842) (18,237)
Net current assets 10,278 6,282 8,829
Total assets less current liabilities 20,696 24,133 22,117
Creditors : amounts falling due after more than one year (20) (712) (126)
Provisions for liabilities and charges (1,044) (1,632) (1,769)
Net assets 19,632 21,789 20,222
Capital and reserves
Called up share capital 5,662 5,662 5,662
Reserves 1,950 7,993 6,818
Profit and loss account 12,020 8,134 7,742
Equity shareholders' funds 19,632 21,789 20,222
Consolidated cash flow statement
for the six months ended 31 December 2002 (unaudited)
Six months Six months Year ended
ended 31 ended 31 30 June
December December 2002
2002 2001
#'000 #'000 #'000
Net cash flow from operating (5,447) (2,104) 9,789
activities
Returns on investments and (177) (374) (674)
servicing of finance
Taxation (187) 168 (202)
Capital expenditure and 1,052 (926) (1,385)
financial investment
Sale of discontinued 4,613 - -
operations
Equity dividends paid (815) (815) (1,359)
Cash (outflow) / inflow before (961) (4,051) 6,169
financing
Net cash flow from financing (3,204) (391) (620)
(Decrease) / increase in cash (4,165) (4,442) 5,549
in the period
Reconciliation of net cash flow to movement in net debt
Decrease) / increase in cash (4,165) (4,442) 5,549
Cash outflow from change in debt 3,204 391 620
Movement in net debt in the period (961) (4,051) 6,169
Net funds/(debt) at 1 July 2002 424 (5,745) (5,745)
Net (debt) / funds at 31 December 2002 (537) (9,796) 424
Cash flow from operating activities
Six months Six months Year ended
ended 31 ended 31 30 June
December December 2002
2002 2001
#'000 #'000 #'000
Operating profit 524 3 2,298
Depreciation 784 1,000 2,050
(Profit) on disposal of fixed - (5) (6)
assets
(Increase)/ decrease in stocks (2,849) (3,284) 1,231
Decrease in debtors 864 4,344 4,947
(Decrease) in creditors (4,079) (3,936) (1,352)
Movement in provisions (577) 10 (300)
Adjustment to value of - 8 -
properties held for resale
(Decrease) in amounts due to (95) (198) (14)
associated company
Share of profit of associated (19) (46) (23)
company
Revaluation adjustment - - 958
(5,447) (2,104) 9,789
Capital expenditure and financial investment
Six months Six months Year ended
ended 31 ended 31 30 June
December December 2002
2002 2001
#'000 #'000 #'000
Purchase of tangible fixed (2,979) (931) (1,813)
assets
Sale of tangible fixed assets 1,878 5 428
Sale of properties held for 2,153 - -
resale
1,052 (926) (1,385)
Financing
Six months Six months Year ended
ended 31 ended 31 30 June
December December 2002
2002 2001
#'000 #'000 #'000
Repayment of bank loan (3,000) - -
Capital element of finance (204) (273) (540)
leases and hire purchase
agreements
Repayment of commercial loans - (118) (120)
New hire purchase funds - - 40
(3,204) (391) (620)
Notes to the Accounts
Operating exceptional items
Six months Six months Year ended
ended 31 ended 31 30 June
December December 2002
2002 2001
#'000 #'000 #'000
Provision in respect of worked - (246) (246)
out peat moss
Provision against old export - (268) (268)
debts
Property revaluation - - (958)
Trading loss arising from - - (93)
decision to close discontinued
business
- (514) (1,565)
2. Taxation
The taxation charge on profit on ordinary activities before exceptional
items is calculated by applying the Directors' best estimate of the annual
taxation rate to the profit for the period. The taxation credit on
exceptional items is the best estimate of the credit applicable to those
items.
3. Dividend
The interim dividend of 1.5 pence per share will be paid on 6 May 2003 to
those shareholders on the register on 22 April 2003.
4. Earnings per share
Earnings per share have been calculated by reference to 22,649,046 (2001:
22,649,046) shares in issue.
5. Basis of preparation of accounts
Other than the results for the full year to 30 June 2002, 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 2002. The financial statements for the year ended 30 June 2002 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 710 4503
Arbuthnot Securities Limited
This information is provided by RNS
The company news service from the London Stock Exchange
END
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