Results were boosted by strong sales of the company's New Horizon peat free compost, together with a strong professional market helped by better sales of British-grown plants and operational efficiencies being driven through. There has also been an increase in the interim dividend payment to 1.5p.
Since the year end, interim payment of £9m compensation received from Natural England for phased withdrawal from Bolton Fell in Cumbria, peat harvest started early thanks to good weather conditions and good progress being made on peat-free substitutes.
Results for the six months to 31 March for the company, which sells to retailers including The Garden Centre Group (formerly Wyevale), Wilkinson, Homebase and B&Q and independent garden centres were:
- Revenue of £21.8 million (six months to 31 March 2009: £22.3 million), reflecting a slightly late start to the main selling season this year
- Operating profit of £0.44 million (six months to 31 March 2009: profit of £0.19 million)
- Strong balance sheet with net debt £2.06 million lower than at 31 March 2009
- Increase in interim dividend to 1.5p (six months to 31 March 2009: 1.0p)
- Trade benefiting from actions taken to ensure availability of ample raw materials in a tight market
- Interim agreement reached in March on future of Bolton Fell and initial £9 million compensation received in April
- Good weather has enabled an early start to the peat harvest for the next selling season
Bernard Burns, chief executive, William Sinclair Holdings, said: "We have continued to build on the successes of last year and are delighted with a stronger first half performance, which has resulted in a profit in a period that traditionally has been loss-making. This improvement has been driven by strong sales of our market leading peat-free New Horizon product.
"We have also benefited from further operational efficiencies and gains from the Metcalf acquisition coming through. A better peat harvest last year has also meant that we have not had to buy any expensive imported product. Demand in the UK commercial growing sector has been strong with the euro's relative strength to sterling making home grown products more appealing than expensive imports.
"Since the half year end, we have received an advance payment of £9 million compensation from Natural England for Bolton Fell. This opens up a range of opportunities to further improve our efficiency, accelerate our programmes to generate more peat-free products and make the company less weather sensitive.
"We are working on a number of technology programmes and possible acquisitions that will reinforce our strong position. While still early in the season, trading in April was strong with sales and margins ahead on a like for like basis. Good weather, both in April and May, has allowed an early start to the peat harvest and we are well positioned for the second half of the year."
Sinclair reported: "Although the poor peat harvest in 2009 caused severe shortages throughout the industry our own self sufficiency, helped by some early success with our synthetic peat from Freeland and encouraging progress with a peat drying project, gave us a considerable advantage.
"The award winning New Horizon peat free range continues to lead the market in its sector. A Spring campaign by government to persuade consumers not to use peat based product was also a factor leading to a 44% growth in sales of this product range.
"The volatility of the euro versus the pound has given UK growers an advantage, including, in particular, over the Dutch and our commercial customers are busier as a result.
"The severe winter weather resulted in the Freeland operation delaying supply of material to a number of large civil projects. This market sector is already depressed by the recession. Horticulture operations coped well in spite of difficulties with transport and we benefited from a drier spell from March onwards. The improved weather since the beginning of March has boosted activity at Freeland and indications are that volumes will increase further with contracts linked to the Olympics.
"Trading in April was strong with sales and margins ahead on a like for like basis. Good weather, both in April and May, has allowed an early start to the peat harvest and, if normal or better conditions prevail throughout the summer, the directors are confident that progress can be maintained."