TIDMSNCL
RNS Number : 9429U
Sinclair (William) Holdings PLC
04 January 2012
4 January 2012
WILLIAM SINCLAIR HOLDINGS PLC
("William Sinclair", the "Company" or the "Group")
Audited Preliminary Results for the 12 months ended 30 September
2011
William Sinclair Holdings PLC is one of the UK's leading
producers of commercial horticulture and branded garden products.
Its well established brands include J Arthur Bower's, Silvaperl and
New Horizon - the leading brand in the fast growing peat free
garden compost and organic plant foods sector. William Sinclair's
customers include The Garden Centre Group, Sainsburys, Morrisons,
Wilkinson, Homebase and B&Q as well as an extensive range of
independent garden centres.
FINANCIAL HIGHLIGHTS
-- 54% increase in profit before tax to GBP3.18 million (12
months to 30 September 2010: profit before tax of GBP2.06
million)
-- 13.6% increase in operating profit before exceptional items
-- Dividend up 24% for the year to 6.2p, an increase of 1.2p per share
-- Net cash increased after acquisition costs, dividend growth
and accelerated pension contributions
-- Results are after the costs of Natural England's restrictions
at Bolton Fell - estimated at GBP600,000 profit impact in the two
years to date
-- Strong balance sheet and further acquisition targets
COMPANY HIGHLIGHTS
-- Successful acquisition of Growing Success and a specialist aggregate business
-- Strong performance by Freeland - SuperFyba production achieves target efficiency
-- Closure and consolidation in Lincoln of Growing Success'
manufacturing operation in Barnsley
-- Post year end strategic acquisition of composting business of
Yorkshire Horticultural Supplies
Bernard Burns, Chief Executive, William Sinclair Holdings Plc,
said:
"In a year when the economy has been littered with banana skins
we have continued to improve the Company's performance. Prudent
action has been taken to mitigate against the insolvency of large
customers, delays in planning permissions and a UK economy which is
stalling. The right decisions made have delivered results to be
proud of. With strongly developing strategic advantages in key
areas of the market that provide promising growth prospects, we are
in the best position possible to manage any further deterioration
in consumer spending during 2012."
For further information:
William Sinclair Holdings PLC Tel: 01522 537561
Bernard Burns, Chief Executive
Peter Williams, Finance Director
Arbuthnot Securities Tel: 020 7012 2000
Andrew Kitchingman
Adam Lloyd
Paul Gillam
CHAIRMAN'S STATEMENT
It is very pleasing to report to shareholders an increase in
profit before taxation of more than 54% to GBP3.18 million for the
year ended 30 September 2011, despite the extremely challenging
economic environment. Even after allowing for last year's
exceptional items, profit before taxation has increased by 26%.
The Company made two related acquisitions during the financial
year and these, combined with a strong performance from our
Silvaperl business, meant that sales grew by 12.0%. Further
operational efficiencies improved performance, lifting operating
profits before exceptional item by 13.6% reaffirming the belief
that William Sinclair is the lowest cost producer in the industry.
Adversely affecting performance were one-off acquisition and
integration costs, fuel price increases, the poor peat harvest and
an increase in customer failures.
The harsh winter of 2011 benefited the Company with increased
demand from consumers replacing plants damaged and destroyed by the
severe frosts. The warm weather in March and April, the important
spring and Easter buying season, also boosted demand. The industry
again suffered a poor harvest during the summer months but the
on-going improvement in the Company's peat drying technology
ensured harvesting could continue.
William Sinclair's specialist soils subsidiary, Freeland
Horticulture, continues to perform strongly. Demand for Freeland's
SuperFyba product, a unique peat alternative made from green
compost oversize, continues to outstrip supply and strategic steps
have been taken to increase production capability. On 8 November
2011, the Company announced the acquisition of the green composting
business of Yorkshire Horticultural Supplies ("YHS"). As part of
its operations YHS produced green compost oversize thereby
providing more of the raw material required for the manufacture of
SuperFyba.
Through its award winning New Horizon product William Sinclair
already produces the highest quality peat free products available
on the market and the Company supports and encourages moves to
eliminate peat altogether. However, the Board believes that a peat
free market will not be achieved in any reasonable time frame
without legislation. While efforts by the Company are being
directed towards the government's peat free objectives, for the
foreseeable future consumers will continue to demand substantial
volumes of peat. William Sinclair has the capacity to meet this
demand with access to peat bogs in Scotland that are not currently
operational and additionally, it is fully expected that the refusal
of planning permission to harvest peat bogs in Greater Manchester
is only temporary.
Discussions with Natural England regarding our Bolton Fell bog
and the adjacent manufacturing facility are on-going and positive
progress is expected in the next few months. The cessation of
harvesting at Bolton Fell has already begun and peat levels
extracted from the bog are reducing. However the Board believes
that the Company can offset this fall in production by utilising
other bogs and using increased supplies of green compost and
SuperFyba and is therefore confident that sufficient resources are
available for the coming season.
After more than six years of excellent service, Phillip Nuttall,
a non-executive director, resigned and left the Board. We welcomed
his replacement, Hugh Etheridge, who has considerable experience as
a non-executive and in the waste recycling industry. The strong
performance in 2011 has only been possible because of the
commitment and excellent performance made by all of William
Sinclair's employees and I would like to record the Board's
appreciation of their tremendous efforts.
Integration of our recent acquisitions has been completed and
this, together with further organic and acquisition opportunities
and sustained efficiency improvements, should ensure that earnings
growth will continue. We are therefore recommending a final
dividend of 4.4p, giving a total for the year of 6.2p, an increase
of 1.2p per share (24 %).
Bill Simpson
Chairman
CHIEF EXECUTIVE'S STATEMENT
The Group made excellent progress in the year ended 30 September
2011.
The 2011 selling season
The selling season started well with strong consumer demand in
March and April which was reflected by the Company achieving record
despatches in each of these months, confirming the Company's
successful retail strategy. Demand fell away sharply in May, June
and July as UK consumers reacted to high fuel prices coupled with
concern over public sector job security. Consumer demand returned
to normal levels in August and September and the low stock levels
being held by many retailers resulted in a strong end to the
selling season for the Company.
Due to the experienced management team and cost controls in
place, margins in our traditional horticulture business improved
slightly despite the substantial increase in fuel costs. The cost
of oil is critical to the business and the rise from $85 per barrel
in November 2010 to $125 per barrel in March 2011 was greater than
anticipated. The Company's distribution contract has a fuel
escalator built into it so the cost between March and May, the peak
selling season, is particularly important. Early purchase of
packaging and further improvements in despatch efficiency minimised
the consequence of this inflation on the Company's reported
profits.
The majority of the sales growth for this business was generated
by the recent acquisition of Growing Success and a specialty
aggregate business. Our performance demonstrates the Company's
ability to integrate value enhancing bolt on acquisitions.
Two large customers, Monro Group and Focus DIY, which both
became insolvent during the year, were important distribution
channels for William Sinclair in the professional and retail
markets respectively. The knock on effect was that the normal sales
patterns within the retail market became distorted. Following the
insolvency of Focus DIY in June 2011, our competitors sold stock
into the market at heavily discounted prices and this continued
until late autumn.
A world shortage of vermiculite ore caused by the extended
closure of a large mine in China led to an increase in demand for
Silvaperl's products. As a consequence Silvaperl performed strongly
during the year. The price of ore moved sharply upwards and
Silvaperl increased its selling price. Consequently turnover has
increased markedly with margins remaining similar to last year.
William Sinclair's soil specialist division, Freeland
Horticulture, enjoyed substantial sales growth partly due to the
Olympic development and its ability to win high specification
construction projects. Overall margin was adversely affected by an
issue on one contract but has now returned to normal levels.
Bolton Fell
In December William Sinclair announced it was in the process of
referring its compensation claim for its interests at the Bolton
Fell site in Cumbria to the Lands Tribunal. The substantial gap
between the Company's valuation and that of Natural England, whose
most recent offer was GBP12 million, provides evidence that the
negotiation team from Natural England does not have the authority
to engage directly in a process that might significantly close the
gap. The Company has therefore concluded that the authority of a
Court is necessary to achieve a successful outcome.
In April 2010 the Company received a GBP9 million prepayment in
anticipation of this compensation. This money remains unassigned
within the balance sheet; no portion of it has been taken to
profit. However some costs which are separately recoverable in
accordance with the agreement, such as professional fees, have been
capitalised and will eventually be reimbursed.
Under the contract with Natural England the Company agreed a
phased cessation of harvesting at Bolton Fell by November 2013,
along with a cap on the total peat extracted by that time. Other
restrictions were also agreed including a ban on the use of peat
drying technology at the site. The directors estimate the
cumulative impact of these restrictions on the reported profits of
the Company to 30 September 2011 to be approximately GBP600,000. By
the end of the financial year the Company had ceased harvesting on
approximately 45% of the moss.
The Company's advisers believe that Court action could take two
years or more to conclude the Bolton Fell compensation
agreement.
Environmental policy
The support by William Sinclair for possible legislation as a
means to phase out the use of peat has been widely reported within
the industry. In May 2011 the Company wrote to the Minister with
responsibility for soil policy, Richard Benyon MP, in combination
with other manufacturers, retailers and NGO's who collectively
account for nearly 70% of UK growing media. The correspondence made
it clear that William Sinclair and the other associated parties
believe that legislation will be required to achieve government
targets on peat reduction. The following paragraphs set out the
logic behind William Sinclair's position on peat.
Does William Sinclair support the argument that the harvesting
of peat is environmentally harmful? Peat bogs can be successfully
restored at the conclusion of an extraction process. William
Sinclair has been very successful at doing this and the Company has
been a net generator of mire habitat over the last 30 years. We
therefore reject arguments that peat extraction is harmful from a
habitat perspective. However the issue of releasing otherwise
sequestered carbon into the atmosphere and thereby contributing to
global warming through the emission of greenhouse gases is much
more difficult to assess. This is demonstrated by the research
carried out by the university of Warwick on behalf of Defra, titled
"A preliminary assessment of the greenhouse gases associated with
growing media". It can be found on the internet by searching the
title.
William Sinclair believes that this argument has not been
properly proven but that while doubt remains, a cautionary approach
is environmentally prudent. Peat is not essential to a vibrant
horticulture industry and therefore until there is proof that it is
not contributing to global warming, William Sinclair should explore
all opportunities to stop using it.
Why support legislation when a voluntary process is available?
William Sinclair, as one of the leading suppliers in the
horticulture industry, is calling for a better system of regulation
as the voluntary approach to peat reduction has consistently failed
to meet its targets. Given the uncertainty surrounding the
ecological impact of peat extraction it is unreasonable to place
the burden of change on consumers and retailers. Most lack the
expertise or the economic imperative to drive such a fundamental
change in the horticultural industry. Therefore it is highly
unlikely that there will be any change in the use of peat without
the impetus of legislation. The argument for change is currently
being sustained by charities and NGO's that have a narrow
perspective on this issue. Ideally this issue should be viewed from
a wider perspective as it requires scientific, rigorous and
objective analysis with input from technical experts and government
as well as business stakeholders. The Company believes therefore
that eventually legislation is necessary and inevitable. Careful
regulation can sustain the UK horticulture industry and even grow
the market. Bad legislation may damage or destroy the industry.
Consequently the Company is working to achieve an outcome whereby,
when legislation is introduced, it works to the benefit of the
industry. Many within the industry continue to support a voluntary
process which will quite obviously fail because the failure of this
initiative is their objective. William Sinclair is pursuing a more
pragmatic, constructive and honest engagement with the government
and responsible environmental groups but is making it clear that
the case against peat remains unproven.
Why do you say the market will grow and UK growers and retailers
will benefit from legislation? William Sinclair recognises that
moving to a peat-free market in the early stage will initially
attract a small cost premium as production volumes are small with
fixed manufacturing costs. As production volumes increase
manufacturing costs will only rise marginally, bringing the
production costs of peat-free materials down. The Company believes
that gardeners care about the environment and will accept the
additional cost just as consumers did when the UK moved to CFC-free
aerosols, lead-free petrol and energy-saving light bulbs.
Furthermore, as high-volume peat-free production comes on stream
economies of scale will result in a lowering of peat-free prices
for retail customers and the professional grower market, as well as
generate improved margins for retailers and producers.
Why doesn't William Sinclair give up peat if it feels strongly
about it? William Sinclair is a commercial operation which is run
for the benefit of a number of stakeholders including its
shareholders. Any policy that requires a company to act to its
financial detriment is putting the future of that business at risk.
William Sinclair will continue to use peat in its products for as
long as it offers the best commercial value for its shareholders.
The Company can prosper in either a peat-using market or a
peat-free market. The Company would not prosper in a peat-using
market if it unilaterally forsook peat.
Why is William Sinclair appealing the Salford Council refusal of
planning permission for peat extraction at Chat Moss? The use of
peat within horticulture is inevitable until at least 2030 as there
is, and will remain, an insufficient supply of alternative
materials. The industry consumes approximately 3 million m(3) of
peat each year. The increase in availability of peat alternatives
is approximately in line with market growth. The market has grown
in volume by around 2.5% per annum for the last 12 years driven by
demographics and this is likely to continue for the foreseeable
future. Research from ADAS UK Ltd for Defra titled "Availability
and supply of alternative materials for use in growing media to
meet the UKBAP target on reduced peat use in horticulture project
code SP8019" supports this assertion. Therefore William Sinclair
will require peat to meet customer demand for approximately the
next 19 years. Peat from Chat Moss generates the lowest CO(2)
emissions per m(3) of all of William Sinclair's sources and is
arguably the lowest in the industry. Without Chat Moss the Company
will harvest bogs in Scotland that are currently mothballed. The
overall usage of peat will remain constant but the net
environmental outcome will be detrimental. William Sinclair is
appealing the decision not to grant planning permission and success
will result in the best available environmental outcome. The appeal
will be heard in March 2012 and the decision will be made by the
Secretary of State for the Environment.
The latest Defra policy on peat can be summarised as follows:
Peat will voluntarily be phased out of growing media by 2013, in
soil conditioners by 2015, in relation to the direct procurement in
contracts for plants, in government and the public sector (new
contracts) and in the amateur gardener market for bagged growing
media by 2020, and a phase out by 2030 for professional
horticulture.
A task force under the chairmanship of Dr Alan Knight has been
set up by Defra to monitor progress towards these targets and to
propose policy changes if it becomes apparent that the current
methodology is failing. William Sinclair has representation as a
member of the task force and remains strongly of the opinion that
legislation is the only route to achieve a peat free horticulture
industry.
The 2011 harvest
The harvest in the industry during 2011 was again poor with the
pattern of wet summers in the north of England and Scotland
continuing for the last five years, resulting in successive
moderate or poor harvests. In addition the agreement with Natural
England on Bolton Fell and the Chat Moss planning dispute have also
reduced the 2011 Company harvest. In 2008 the Company was forced to
import a substantial quantity of peat from Ireland which had a
detrimental effect on the profitability of the business.
Consequently the Company instigated a research programme to
overcome this problem and developed a unique technology for drying
peat. The Company will purchase peat from Ireland during the next
financial year, however, due to the efficiency of this drying
technology the imported volume will be less than 20% of the volume
imported in 2008. The effect on profit in the current financial
period should be negligible but the carbon footprint of our
operations will inevitably increase.
Bank facilities and balance sheet
Lloyds Banking group remains very supportive of William
Sinclair. The acquisition of the business of Growing Success and a
specialist aggregate business during the reported year and the
subsequent recent purchase of the assets and trade of Yorkshire
Horticultural Supplies have all been financed from cash generated
within the core business and have not required any additional loan
facility. If further attractive acquisition opportunities present
themselves during the current period, these can also be financed by
borrowing at competitive rates.
The Company increased its annual deficit payment to the pension
scheme by GBP150,000 to GBP750,000 and accelerated the timing of
the payment to take advantage of strong cashflows in March
2011.
Research and development
Freeland Horticulture has developed a unique technology that can
process a by-product of the compost industry called oversize into
SuperFyba. This is the best peat alternative currently commercially
available. Over a million tonnes of this by-product are produced
within the UK each year and the majority of it is currently
disposed of by being spread on arable land or sent to landfill
sites at substantial cost to the composter. The SuperFyba
manufacturing process was developed at a site near Basingstoke
which is now producing at full capacity and target production
efficiencies have been achieved. The Company intends to purchase a
second plant within the next six months with planning permission
currently being sought for a site near Doncaster.
Three million cubic metres of peat are consumed by the UK
horticulture industry each year. Management believe that this peat
usage could eventually be completely replaced by SuperFyba. Current
generation of oversize in the UK is sufficient to provide all
necessary source material.
William Sinclair Horticulture has developed drying technology
that is capable of producing around 50,000 m(3) of material
(currently peat) per annum. A doubling of this capacity was brought
on stream by the end of 2011.
The Silvaperl business is currently evaluating an alternative
process for producing vermiculite that utilises microwave
technology to achieve exfoliation. This is potentially both more
cost effective and environmentally cleaner than the current method
of production. The process has been developed by e2V plc, a leading
developer of technology for high performance systems and equipment.
e2V's decision to partner with Silvaperl for the first industrial
scale implementation of the development of vermiculite has given
Silvaperl a worldwide profile in the industry.
Acquisitions
The Company announced in November 2010 the acquisition of the
assets and trade of Growing Success Organics (GSO) and in early
December an aggregate business, both from Monro South Horticulture.
The total cost of these profit enhancing acquisitions was GBP0.8
million.
Growing Success had a production facility at Barnsley which was
closed during July 2011 and the manufacturing will now take place
at the Company's Lincoln factory with a consequential reduction in
overhead and transport cost. The integration of these businesses
has been achieved efficiently and is expected to make a greater
contribution to the profits of the Company in the current year.
Following the end of the year under review, the Company
announced the acquisition, by its Freeland subsidiary, of the
assets and trade of Yorkshire Horticultural Supplies ("YHS"). The
Company believes that the YHS business will be profit neutral
during the current year.
Based near Doncaster, the main business of YHS is the processing
of garden and amenity waste for the local authorities of Barnsley,
Rotherham and Doncaster. The acquisition marks the beginning of a
process of vertical integration to diversify William Sinclair's raw
material sources away from peat towards improving the quality of
alternative sources of materials to a level suitable for consumer
products. The Company plans to expand the activities of the YHS
business with substantial investment. William Sinclair will
continue to lead the market in peat alternatives both technically
and in terms of capacity and quality.
Outlook
Growing media as a product category has sustained volume growth
of 2.5% per annum for over a decade partly due to the ageing
population. Demographic trends suggest this ageing process will
continue for at least the next 10 years. The horticulture industry
is under increasing pressure from government and NGO's to eliminate
the use of peat in growing media for environmental reasons. Almost
all major retailers involved with gardening have within their
corporate responsibility statements a commitment to reduce or
eliminate the use of peat in their growing media in the short or
medium term.
William Sinclair has a substantial lead over the rest of the
market in terms of product efficacy, material availability and
brand reputation in the peat free area. The development of
SuperFyba and the acquisition of YHS strengthens this lead
further.
Management believes that this strength will lead to continued
growth in market share for William Sinclair over the next five
years. As demand grows and supply reduces (peat accounts for around
40% of growing media currently) it is inevitable that prices will
rise and the Company predicts that market value growth will be
greater than volume growth.
The Company is well placed to deliver sustainable turnover and
profit growth for a number of years. In addition the Company has a
number of acquisition opportunities under consideration. The
current year will deliver a full contribution from Freeland's
SuperFyba plant at Basingstoke and the consolidation of the Growing
Success products into the Lincoln operation will reduce overheads
further. Management believe that these actions will outweigh the
loss of profit caused by the reduction in harvesting at Bolton Fell
and Chat Moss.
I look forward to delivering another year of significant
progress.
Bernard Burns
Chief Executive
WILLIAM SINCLAIR HOLDINGS PLC
Group Income Statement
for the year ended 30 September 2011
2011 Before Exceptional 2010
Exceptional Item
Total Item (Note Total
6)
Notes GBP000 GBP000 GBP000 GBP000
Revenue 54,263 48,456 - 48,456
Operating expenses (50,894) (45,490) - (45,490)
Provision against assets
held for resale 6 - - (460) (460)
--------- ------------- ------------ ---------
Group operating profit 3,369 2,966 (460) 2,506
Finance income 39 57 - 57
Finance costs (85) (183) - (183)
Other finance costs -
pensions (141) (317) - (317)
Profit before taxation 3,182 2,523 (460) 2,063
Tax (expense)/credit (789) (479) 75 (404)
Profit for the year 2,393 2,044 (385) 1,659
========= ============= ============ =========
All results relate to
continuing operations.
Profit for the period
is attributable to:
Owners of the parent company 2,350 2,007 (385) 1,622
Minority interests 43 37 - 37
--------- ------------- ------------ ---------
2,393 2,044 (385) 1,659
========= ============= ============ =========
Earnings per share (pence)
Basic EPS on profit for
the year 4 13.9p 9.8p
Diluted EPS on profit
for the year 4 13.4p 9.7p
WILLIAM SINCLAIR HOLDINGS PLC
Group statement of comprehensive income
for the year ended 30 September 2011
2011 2010
GBP000 GBP000
Profit for the year 2,393 1,659
-------- -------
Other comprehensive income:
Actuarial losses on defined benefit pension plans (1,107) (443)
Tax on items taken directly to or transferred from
equity 476 178
-------- -------
Other comprehensive income for the year, net of
tax (631) (265)
-------- -------
Total comprehensive income for the year 1,762 1,394
======== =======
Attributable to:
Owners of the parent company 1,719 1,357
Minority interests 43 37
-------- -------
Total comprehensive income for the year 1,762 1,394
======== =======
WILLIAM SINCLAIR HOLDINGS PLC
Group statement of financial position
at 30 September 2011
2011 2010
Notes GBP000 GBP000
Property, plant and equipment 19,607 20,196
Intangible assets 1,998 1,607
------- -------
21,605 21,803
------- -------
Current assets
Inventories 13,083 10,929
Trade and other receivables 8,409 9,324
Cash and cash equivalents 3,448 3,650
------- -------
24,940 23,903
------- -------
Assets held for sale 6 1,645 1,651
------- -------
Total assets 48,190 47,357
------- -------
Current liabilities
Trade and other payables 9,249 9,256
Financial liabilities - borrowings 641 744
Corporation tax payable 490 328
------- -------
10,380 10,328
------- -------
Non-current liabilities
Financial liabilities - borrowings 162 1,099
Deferred tax liabilities 231 383
Provisions 121 232
Defined benefit pension plan deficit 10,164 9,601
Receipt from Natural England 3 9,000 9,000
------- -------
19,678 20,315
------- -------
Total liabilities 30,058 30,643
------- -------
Net assets 18,132 16,714
======= =======
WILLIAM SINCLAIR HOLDINGS PLC
Group statement of financial position
at 30 September 2011 (continued)
2011 2010
GBP000 GBP000
Capital and reserves
Equity share capital 4,256 4,139
Share premium account 150 -
Capital redemption reserve 1,523 1,523
Revaluation reserve 7,841 7,822
Other reserves 176 176
Retained earnings 3,905 2,806
------- -------
Group shareholders' equity 17,851 16,466
Minority interests 281 248
------- -------
Total equity 18,132 16,714
======= =======
WILLIAM SINCLAIR HOLDINGS PLC
Group statement of changes in equity
for the year ended 30 September 2011
Equity Share Capital Reval' Other Retained Total Minority Total
share premium redemp' reserve reserves earnings interest equity
capital account reserve
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
At 30 September
2010 4,139 - 1,523 7,822 176 2,806 16,466 248 16,714
--------- --------- --------- --------- ---------- ---------- -------- ---------- --------
Profit for the
year - - - - - 2,350 2,350 43 2,393
--------- --------- --------- --------- ---------- ---------- -------- ---------- --------
Other
comprehensive
income:
Actuarial losses
on defined
benefit
pension plans - - - - - (1,107) (1,107) - (1,107)
Tax on items
taken directly
to or
transferred
from equity - - - 214 - 262 476 - 476
Depreciation
transfer - - - (195) - 195 - - -
--------- --------- --------- --------- ---------- ---------- -------- ---------- --------
Total other
comprehensive
income - - - 19 - (650) (631) - (631)
--------- --------- --------- --------- ---------- ---------- -------- ---------- --------
Total
comprehensive
income - - - 19 - 1,700 1,719 43 1,762
--------- --------- --------- --------- ---------- ---------- -------- ---------- --------
Transactions
with owners:
Equity shares
issued 117 150 - - - - 267 - 267
Share based
payments - - - - - 263 263 - 263
Deferred tax - - - - - 38 38 - 38
Equity dividends
paid - - - - - (902) (902) (10) (912)
--------- --------- --------- --------- ---------- ---------- -------- ---------- --------
Transactions
with owners 117 150 - - - (601) (334) (10) (344)
--------- --------- --------- --------- ---------- ---------- -------- ---------- --------
At 30 September
2011 4,256 150 1,523 7,841 176 3,905 17,851 281 18,132
--------- --------- --------- --------- ---------- ---------- -------- ---------- --------
WILLIAM SINCLAIR HOLDINGS PLC
Group statement of changes in equity
for the year ended 30 September 2011 (continued)
Equity Share Capital Reval' Other Retained Total Minority Total
share premium redemp' reserve reserves earnings interest equity
capital account reserve
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
At 30 September
2009 4,139 - 1,523 7,906 176 1,915 15,659 220 15,879
--------- --------- --------- --------- ---------- ---------- ------- ---------- --------
Profit for
the year - - - - - 1,622 1,622 37 1,659
--------- --------- --------- --------- ---------- ---------- ------- ---------- --------
Other
comprehensive
income:
Actuarial
losses on
defined benefit
pension plans - - - - - (443) (443) - (443)
Tax on items
taken directly
to or transferred
from equity - - - 111 - 67 178 - 178
Depreciation
transfer - - - (195) - 195 - - -
--------- --------- --------- --------- ---------- ---------- ------- ---------- --------
Total other
comprehensive
income - - - (84) - (181) (265) - (265)
--------- --------- --------- --------- ---------- ---------- ------- ---------- --------
Total
comprehensive
income - - - (84) - 1,441 1,357 37 1,394
--------- --------- --------- --------- ---------- ---------- ------- ---------- --------
Transactions
with owners:
Equity shares - - - - - - - - -
issued
Share based
payments - - - - - 106 106 - 106
Deferred
tax - - - - - 6 6 - 6
Equity dividends
paid - - - - - (662) (662) (9) (671)
--------- --------- --------- --------- ---------- ---------- ------- ---------- --------
Transactions
with owners - - - - - (550) (550) (9) (559)
--------- --------- --------- --------- ---------- ---------- ------- ---------- --------
At 30 September
2010 4,139 - 1,523 7,822 176 2,806 16,466 248 16,714
--------- --------- --------- --------- ---------- ---------- ------- ---------- --------
WILLIAM SINCLAIR HOLDINGS PLC
Group statement of cash flows
for the year ended 30 September 2011
2011 2010
GBP000 GBP000
Notes
Operating activities
Group operating profit 3,369 2,506
Adjustments to reconcile Group operating
profit to net cash
inflows from operating activities
Depreciation of property, plant
and equipment 1,866 1,812
Amortisation of intangible assets 199 47
Impairment of assets held for sale 6 500
Profit on disposal of property,
plant and equipment (51) (32)
Negative goodwill taken to the income (60) -
statement
Share-based payments 263 106
Difference between pension contributions
paid and amounts
recognised in the income statement (685) (620)
Increase in inventories (1,824) (2,291)
Decrease/(increase) in trade and
other receivables 915 (1,374)
(Decrease)/increase in trade and
other payables (7) 2,233
(Decrease)/increase in provisions (115) 1
-------- --------
Cash generated from operations 3,876 2,888
Income taxes paid (265) (572)
-------- --------
Net cash flow from operating activities 3,611 2,316
-------- --------
Investing activities
Interest received 39 57
Sale of property, plant and equipment 52 66
Purchases of property, plant and
equipment (1,241) (1,694)
Payments to acquire intangible fixed
assets (50) (48)
Acquisitions in the period (847) -
Receipt from Natural England 3 - 9,000
-------- --------
Net cash flow from investing activities (2,047) 7,381
-------- --------
WILLIAM SINCLAIR HOLDINGS PLC
Group statement of cash flows
for the year ended 30 September 2011 (continued)
2011 2010
GBP000 GBP000
Financing activities
Interest paid (81) (183)
Dividends paid to owners of the parent (902) (662)
Dividends paid to minority interests (10) (9)
Repayment of borrowings (1,019) (714)
Equity shares issued 267 -
-------- --------
Net cash flow from financing activities (1,745) (1,568)
-------- --------
Increase in cash and cash equivalents (181) 8,129
Cash and cash equivalents at the beginning
of the period 3,629 (4,500)
-------- --------
Cash and cash equivalents at the period
end 3,448 3,629
======== ========
WILLIAM SINCLAIR HOLDINGS PLC
Notes
1 Statutory accounts
The consolidated financial statements of William Sinclair
Holdings PLC are prepared on a going concern basis and in
accordance with International Financial Reporting Standards (IFRSs)
as adopted by the European Union, International Financial Reporting
Interpretations Committee (IFRIC) interpretations and Standing
Interpretations Committee (SIC) interpretations as adopted by the
European Union and with those parts of the Companies Act 2006
applicable to those companies reporting under IFRSs. The
consolidated financial statements are prepared in accordance with
the historical cost convention, as modified by the revaluation of
freehold and leasehold properties.
The Group financial statements are presented in sterling and all
values are rounded to the nearest thousand pounds (GBP000) except
when otherwise indicated.
These results for the year to 30 September 2011 together with
the corresponding amounts for the year to 30 September 2010 are
extracts from the 2011 annual report and do not constitute
statutory accounts within the meaning of section 434 of the
Companies Act 2006.
The statutory accounts for the year ended 30 September 2011,
which have been audited by PricewaterhouseCoopers LLP, incorporate
an unqualified audit report and do not contain a statement under
either section 498(2) or 498(3) of the Companies Act 2006.
This preliminary announcement of the results for the year ended
30 September 2011 was approved by the Board of directors on 3
January 2012.
The accounting policies used for the 2011 figures are unchanged
on those used for the 2010 comparatives.
The statutory accounts for the period ended 30 September 2010
have been delivered to the Registrar of Companies and the statutory
accounts for the year ended 30 September 2011 will be delivered to
the Registrar of Companies following the Annual General Meeting of
William Sinclair Holdings PLC.
2 Analysis of net cash/(debt)
1 Oct Cash 30 Sept
2010 flow 2011
GBP000 GBP000 GBP000
Cash at bank and in hand 3,650 (202) 3,448
Overdrafts (21) 21 -
Loans (1,822) 1,019 (803)
-------- ------- --------
1,807 838 2,645
======== ======= ========
3 Receipt from Natural England
On 22 March 2010 the Group signed an agreement with Natural
England to facilitate the cessation of peat harvesting from its
site at Bolton Fell in Cumbria and to accelerate the process of
peat bog regeneration. Under the arrangement Natural England agreed
to pay the Group an advance payment of GBP9 million pending
subsequent negotiation of the full extent of compensation due to
the Group and to have the option to acquire the shares of Boothby
and Penicuik Peat Company Limited which holds the majority of the
title to the Bolton Fell moss site. This initial payment was made
in April 2010.
William Sinclair's professional advisors calculate the value of
the compensation due to the Group to be substantially greater than
the GBP9 million advance payment. The agreement provides that in
the event that compensation has not been agreed between the parties
before 30 November 2011 the matter can be referred by either side
to the Lands Tribunal for a decision. The Group is in the process
of exercising this right and a timetable for hearing the matter is
expected shortly from the Lands Tribunal. It is possible that
payment of further compensation could be delayed by a further year
or more. Consequently the receipt of GBP9 million is shown as a non
current item.
Under the agreement William Sinclair has implemented a phased
withdrawal of peat harvesting from Bolton Fell. An accelerated
programme of regeneration is now the responsibility of Natural
England. William Sinclair's own team expects to be working closely
with environmental experts from Natural England and other agencies
to set out new plans to regenerate the peat bog in a practical and
structured way.
4 Earnings per share
Basic earnings per share amounts are calculated by dividing
profit for the period attributable to owners of the parent by the
weighted average number of ordinary shares outstanding during the
period.
Diluted earnings per share amounts are calculated by dividing
the profit attributable to owners of the parent by the weighted
average number of ordinary shares outstanding during the period
adjusted for the dilutive effect of share options outstanding at
the period end.
The following reflects the income and share data used in the
basic and diluted earnings per share computations:
2011 2010
GBP000 GBP000
Diluted net profit attributable to owners of the
parent 2,350 1,622
======= =======
2011 2010
No. No.
Basic weighted average number of shares ('000s) 16,890 16,554
Dilutive potential ordinary shares:
Employee share options ('000s) 681 199
------- -------
Diluted weighted average number of shares ('000s) 17,571 16,753
======= =======
There have been no transactions involving ordinary shares or
potential ordinary shares between the reporting date and the date
of completion of these financial statements.
5 Segment information
Within the horticulture sector the Board reviews the results of
its Freeland business and certain ancillary businesses separately
from those of its core horticulture business. The revenues and
operating profits of these segments are shown below together with a
reconciliation to the Group results.
External sales Internal Sales Total Sales
2011 2010 2011 2010 2011 2010
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
Revenue
Horticulture 44,738 40,919 122 133 44,860 41,052
Freeland 5,696 4,195 50 78 5,746 4,273
Other 3,829 3,342 - - 3,829 3,342
-------- ------- -------- ------- ------- -------
Total 54,263 48,456 172 211 54,435 48,667
Less intra group
sales elimination - - (172) (211) (172) (211)
Total revenue 54,263 48,456 - - 54,263 48,456
======== ======= ======== ======= ======= =======
Segment revenue includes transactions between business segments.
These transactions are eliminated on consolidation. Sales between
segments are carried out at arm's length. The revenue from external
parties reported to the executive directors is measured in a manner
consistent with that in the income statement.
2011 2010
GBP000 GBP000
Operating profit
Horticulture 3,868 4,156
Freeland 462 412
Other 463 271
-------- --------
Total segment operating profit 4,793 4,839
Central costs (1,424) (2,333)
-------- --------
Total Group operating profit 3,369 2,506
Finance income 39 57
Finance costs (85) (183)
Other finance costs - pensions (141) (317)
Total Group profit before tax 3,182 2,063
======== ========
Central costs include the administration costs of the holding
company such as directors' remuneration, professional fees and
stock exchange costs as well as the impairment of assets held for
sale and no longer used in the horticulture segment.
Operating profit as reported above includes impairment,
depreciation and amortisation charges as follows:
Depreciation
Impairment and amortisation
2011 2010 2011 2010
GBP000 GBP000 GBP000 GBP000
Horticulture - - 1,792 1,562
Freeland - - 224 243
Other - - 40 44
Central costs - 500 9 10
-------- ------- --------- ---------
Total - 500 2,065 1,859
======== ======= ========= =========
Asset and liability information is not reported to the chief
operating decision maker on a segment basis and therefore has not
been disclosed.
6 Exceptional item
There were no exceptional items in the year ended 30 September
2011.
In the year ended 30 September 2010 the Group wrote down the
carrying value of certain surplus freehold properties held for
resale by a net amount of GBP460,000.
The assets held for resale comprise a surplus freehold property
for which the Group is actively seeking a
purchaser. The property is empty and is not being used by the Group.
7 Dividends paid and proposed
2011 2010
GBP000 GBP000
Declared and paid during the period:
Equity dividends on ordinary shares:
Final dividend for September 2010: 3.50p (September
2009 - 2.50p) 596 414
Interim for September 2011: 1.80p (September
2010 - 1.00p) 306 248
Dividends paid 902 662
======= =======
Proposed for approval by shareholders at the
AGM:
Final dividend for September 2011 4.40p (2010
- 3.50p) 749 579
======= =======
Subject to shareholders' approval the final dividend of 4.40p
per share will be paid on 15 March 2012 to shareholders on the
register on 17 February 2012.
8 Share capital
Issued and fully paid 2011 2010 2011 2010
No. No. GBP000 GBP000
Ordinary shares of 25p each 17,024,046 16,554,046 4,256 4,139
=========== =========== ======= =======
During the year two directors exercised share options which
generated GBP267,000 on the issue of 470,000 ordinary shares.
9 Annual General Meeting
The Company intends to post the Report and Accounts to
shareholders on 24 January 2012. The Annual General Meeting of the
Company will be held at The Bentley Hotel, Newark Road, South
Hykeham, Lincoln LN6 9NH on 24 February 2012 at 11.00 a.m. Copies
of this announcement are available from the Company's registered
office, Firth Road, Lincoln, LN6 7AH during normal office hours and
on the Company's website www.william-sinclair.co.uk.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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