TIDMWYN
RNS Number : 3923A
Wynnstay Group PLC
02 February 2022
2 February 2022
AIM: WYN
Wynnstay Group Plc
("Wynnstay" or the "Group" or the "Company")
Final Results
For the year ended 31 October 2021
Record results;
Group is well-positioned for the year ahead
KEY POINTS
Financial
-- Record results, benefiting from:
- improved farmer sentiment post Brexit, strong farmgate prices
and exceptional gains from fertiliser blending activities
-- Revenue up 16% to GBP500 .39m (2020: GBP431.40m), including
significant commodity price inflation
-- Underlying pre-tax profit* up 37% to GBP11.44m (2020:
GBP8.37m) /Reported pre-tax profit increased to GBP10.99m (2020:
GBP6.98m after GBP1.2m of non-recurring items)
-- Basic earnings per share up 60% to 44.40p (2020: 27.73p including non-recurring items)
-- Net cash up 10% to GBP9.24m (31 October 2020: GBP8.42m)
-- Net assets up 8% to GBP105.72m/GBP5.25 per share (31 October
2020: GBP98.18m/GBP4.92 per share)
-- Proposed final dividend of 10.50p (2020: 10.00p); total
dividend up 6% to 15.50p (2020: 14.60p).
-- Eighteenth consecutive year of dividend increases.
Operational
-- Agriculture Division - revenue up 19% to GBP358.96m (2020:
GBP302.58m), operating profit contribution up 47% to GBP4.22m
(2020: GBP2.88m)
- total feed volumes 6.5% ahead year-on-year. After higher
production and distribution costs, operating profit was in line
with prior year
- arable activities benefited from a return to more normal
harvest tonnages and yields and a good autumn 2021 planting
season
- outperformance from Glasson, benefiting from three-fold price
increase across the market in fertiliser raw material prices in
H2
-- Specialist Agricultural Merchanting Division - revenue up 10%
to GBP141.43m (2020: GBP128.81m) operating profit contribution up
24% to GBP7.15m (2020: GBP5.78m)
- excellent performance reflected increased farmer confidence and return to farm investment
- strong sales across all major product categories, including bagged feed and hardware
-- Two bolt-on acquisitions, acquired in Q2 2021, have
integrated well, added new customers, and expanded trading area
-- New digital trading portal launched in H1; steady adoption from customers as expected
-- Investment programmes to increase manufacturing and processing capacity progressed well
-- Non-executive Board appointment and key senior management
appointments made, including, Commercial Sales & Marketing
Director, Group Engineering Manager and Environmental &
Sustainability Manager
Outlook
-- Trading in new financial year has started in line with
expectations, and Group is well positioned to achieve its growth
objectives for the year
* Underlying pre-tax profit is a non-GAAP (generally accepted
accounting principles) measure and is not intended as a substitute
for GAAP measures and may not be calculated in the same way as
those used by other companies. Refer to Note 15 for an explanation
on how this measure has been calculated and the reasons for its
use.
Gareth Davies, Chief Executive of Wynnstay Group plc,
commented:
"These record results reflect the significantly improved trading
environment as well as our initiatives to drive growth,
productivity and efficiency. Strong farmgate prices and the lifting
of uncertainties around Brexit and future financial support have
promoted a return to farm investment. Results also benefited from a
strong second half across the Group, especially for our arable
operations. The 2021 harvest was good, with tonnages and yields
reverting to more normal levels, and our fertiliser blending
activities generated a windfall gain in a highly disrupted
marketplace.
"Trading in the new financial year has begun well, in line with
our expectations. We have a clear growth plan with strategic
investment programmes under way, and new opportunities. While there
are challenges with rising costs, we are confident that Wynnstay is
well-positioned to achieve its growth objectives for the year, and
view prospects for continuing development very positively."
Enquiries:
Wynnstay Group Plc Gareth Davies, Chief T: 020 3178 6378 (today)
Executive T: 01691 827 142
Paul Roberts, Finance
Director
KTZ Communications Katie Tzouliadis / Dan T: 020 3178 6378
Mahoney
Shore Capital (Nomad Stephane Auton / Patrick T: 020 7408 4090
and Broker) Castle / John More
CHAIRMAN'S STATEMENT 2021
OVERVIEW
I am delighted to report record results in my first annual
statement since becoming Chairman in March 2021. Underlying pre-tax
profit* increased by 37% to set a new high of GBP11.44m (2020:
GBP8.37m) and revenues increased by 16% to GBP500.39m (2020:
GBP431.40m), also a record high. Both these results were
significantly ahead of initial market expectations. Basic earnings
per share, including non-recurring items, rose by 60% to a record
44.40p (2020: 27.73p ).
The Group's very strong performance benefitted from a
substantial rise in farmer confidence as farmgate prices
strengthened and the uncertainty surrounding Brexit and future
Government support for agriculture lifted. The Group's balanced
business model came to the fore once again, ensuring that we were
not over-exposed to the variations of any individual sector.
The year also demonstrated the resilience and commitment of
Wynnstay staff, who continued to provide an outstanding and
uninterrupted service to our customers despite the additional
challenges created by the coronavirus pandemic.
Both the Agriculture Division and Specialist Agricultural
Merchanting Division benefited from the significant improvement in
the trading environment as well as the actions we have taken to
improve productivity and efficiencies.
Within the Agriculture Division, feed volumes were higher
year-on-year, although margins were affected by increased costs.
The return to more normal harvest tonnages and yields - against
last year's historic lows - buoyed arable activities in the second
half of the financial year, especially grain trading. Autumn
planting was also strong, benefiting seed sales. Fertiliser
blending at Glasson, the UK's second largest fertilizer blending
operator, experienced a significant one-off benefit from the
three-fold increase in selling prices towards the end of the
financial year. The latter reflected significant increases in the
world price of natural gas, which is used in the production of
ammonium nitrate fertiliser.
The Specialist Agricultural Merchanting Division, which includes
our depot network and Youngs Animal Feeds, performed exceptionally
well, helped by strong sales across all major categories, including
Wynnstay-branded bagged feed and hardware. We continued to review
and invest in the depot network, making adaptations so that it
remains an efficient sales channel. At the same time, we continued
to develop our digital presence, having launched our new customer
portal in the first half of the financial year. This is part of our
multi-channel sales approach, and while digital sales remain
modest, as pre-launch research suggested, we will continue to
enhance digital engagement with the customer base.
It is also pleasing to report that our joint venture businesses
and associate company performed well, contributing well ahead of
our expectations. The two bolt-on acquisitions we made in the
second quarter of the financial year have integrated extremely
well, and strategically we have benefited from the addition of new
trading areas, an increase in the customer base, and the addition
of staff with expertise and local knowledge.
GROWTH STRATEGY
Wynnstay's growth plans focus on organic growth, acquisitions,
expert advice, multi-channel engagement and ESG. At the forefront
of the Board's thinking is our customer base of arable and
livestock farmers and our desire to ensure that the Group continues
to provides them with valued expertise and advice, a wide range of
products and services that cater for their changing needs, and an
overall high-level of customer service. Ultimately, our aim is to
enable farmers to grow food in a manner that is profitable,
efficient, sustainable and environmentally-enhancing.
Over the financial year, we made good progress across a number
of areas of our growth strategy. I am very pleased to highlight
that we have:
-- continued to expand our specialist advisory teams;
-- incrementally expanded our volumes in key feed markets,
including dairy and free range egg production;
-- increased seed volumes, including expanding the range of our environmental seed offering;
-- progressed investment to increase our feed manufacturing
capacity and completed an initial planning phase of our two-year
programme to scale our seed processing activities;
-- completed two complementary bolt-on acquisitions (the
agricultural division of the Armstrong Richardson Group, which
supplies inputs to farmers in the North East of England, and the
fertiliser manufacturing business and assets of HELM Great Britain
Limited, based in South Yorkshire);
-- launched a new digital platform, which supports our multi-channel goals; and
-- further developed our ESG strategy. This focuses on both our
own internal carbon reductions initiatives, and on how we can
support our farming customers with their environmental
objectives.
FINANCIAL RESULTS
Group revenue increased by 16% to GBP500 .39m (2020:
GBP431.40m), with the increase reflecting increased volumes, an
eight-month contribution from our two acquisitions, and significant
commodity inflation.
Underlying Group pre-tax profit rose by 37% to a record
GBP11.44m (2020: GBP8.37m). Underlying Group pre-tax profit is the
Board's alternative performance measure, and includes the gross
share of results from joint ventures and excludes share-based
payments and non-recurring items. Reported pre-tax profit increased
to GBP10.99m (2020: GBP 6.98m after GBP1.2m of non-recurring items
). Basic earnings per share increased by 60% to 44.40p (2020:
27.73p).
Both Divisions contributed double digit growth, with a 19%
uplift in revenues from the Agriculture Division to GBP358.96m
(2020: GBP302.58m), and a 10% revenue increase from the Specialist
Agricultural Merchanting Division to GBP141.43m (2020: GBP128.81m).
The operating profit contribution from the Agriculture Division was
GBP4.22m (2020: GBP2.88m), a rise of 46% year-on-year, with the
Specialist Agricultural Merchanting Division increasing its
contribution by 24% to GBP7.15m (2020: GBP 5.78m) .
The Group generates good operational cash flows although, this
year, cash generated from operations was affected by commodity
inflation, and amounted to GBP10.55m (2020: GBP19.83m). Net cash at
the financial year-end increased by 10% to GBP9.24m (31 October
2020: GBP8.42m). October typically represents the highest point of
net cash in the Group's annual working capital cycle.
During the year, 89,687 new ordinary shares (2020: 155,035) were
issued for a total equivalent cash amount of GBP0.439m (2020:
GBP0.392m) to existing shareholders exercising their right to
receive dividends in the form of new shares. A further 158,138
shares were issued for a total cash consideration of GBP0.586m
(2020: nil) to employees exercising rights over approved share
options.
Group net assets at the financial year end increased by 8% to
GBP105.72m (31 October 2020: GBP98.18m), a record high. Based on
the weighted average number of shares in issue during the financial
year of 20.120m (2020: 19.952m), this equates to a GBP5.25 per
share (2020: GBP4.92). Return on net assets from underlying pre-tax
profits increased to 10.8% (2020: 8.6%).
Capital investment in fixed assets including right of use assets
in the financial year rose to GBP5.85m (2020: GBP4.01m), and net
working capital at the financial year end increased by 24% to
GBP46.81m (31 October 2020: GBP37.89m). The increase reflected both
the growth and commodity price inflation.
During the financial year, the share price traded in a range
between a low of GBP2.85 in November 2020 and a high of GBP5.92 in
August 2021.
DIVID
The Board is pleased to propose an increased final dividend of
10.50p per share to be paid on 29 April 2022 (2020: 10p per share)
to shareholders on the register as at 1 April 2022. Together with
the interim dividend of 5.00p per share, paid on the 29 October
2021, this makes a total dividend of 15.50p per share for the year
(2020: 14.60p), an increase of 6%. The final dividend is subject to
shareholder approval at the forthcoming AGM on 22 March 2022.
We are proud to note that the total dividend represents the
eighteenth consecutive year of dividend growth since Wynnstay
joined AIM in 2004.
BOARD AND COLLEAGUES
The Board would like to acknowledge the dedication and hard work
of the Wynnstay Team over the year. Working under the additional
challenges created by the coronavirus pandemic, our staff have
continued to provide our customers with an exemplary service, and
on behalf of the Board I would like to thank everyone for their
vital contribution to these excellent results.
We were delighted to welcome new staff to the team. Over the
year we appointed Paul Jackson as Commercial Sales & Marketing
Director and Steve Reading as Group Engineering Manager. Lewis
Davies, who has been involved in the creation of our ESG strategy
also assumed the role of Environmental and Sustainability Manager.
These new roles support our long-term growth plans.
At the AGM in March 2021, Jim McCarthy stepped down as Chairman
to become a Non-executive Director, subsequently retiring from the
Board and Group in July 2021 after ensuring a smooth handover. On
behalf of everyone at Wynnstay, I would like to thank him for his
tremendous service to the Group over 10 years, the last eight years
as Chairman. His insights and counsel have contributed
significantly to Wynnstay's development, and we wish him well in
his retirement.
On 1 July 2021, we were very pleased to appoint Catherine
Bradshaw as a Non-executive Director. She has also assumed the role
of Chairman of the Audit and Risk Committee. Catherine has over 20
years' experience in financial and general management roles, and is
Group Financial Controller of Greencore Group plc, a leading UK
manufacturer of convenience food, having joined the FTSE 250 listed
business in 2015. Prior to this, she worked in senior financial
positions at Wm Morrison Supermarkets plc and Northern Foods plc,
the food manufacturer. She further strengthens the Board with her
knowledge and experience, and we are delighted to welcome her to
the Group.
OUTLOOK
The UK agricultural sector is emerging from a prolonged period
of uncertainty created by Brexit. However, farmer sentiment has
greatly improved and the sector has returned to investment, with
the landmark UK Agriculture Act providing clarity over future
financial support to farmers. Whilst there is a significant level
of general economic uncertainty and rising costs, with farmgate
prices remaining strong, prospects for the industry continue to be
very encouraging.
In the near term, there are challenges for our business, with
cost inflation, security of supply of overseas product and the
coronavirus situation receiving our full attention. Nonetheless, we
believe that Wynnstay is well-positioned to continue to its
long-term growth and development. We have a clear strategy for
growth, balanced business model, and strong financial underpinning,
with a robust balance sheet and good cash flows. There is also an
important role for us to play in supporting our farmer customers as
they begin to adjust their farming practises in the light of the
new Agriculture Act, which aims to boost productivity and reward
environmental improvements in the farming sector.
Trading in the new financial year has started well, and we view
the year ahead with confidence and expect the Group to deliver its
ongoing growth objectives.
Steve Ellwood
Chairman
CHIEF EXECUTIVE'S REPORT
INTRODUCTION
The Group's results are at record levels and are significantly
ahead of our original expectations. Strong farmgate prices and
improved farmer sentiment helped to support these excellent results
as well as the initiatives we have taken to strengthen the business
and our continuing strong focus on advice and customer service. The
breadth of the Group's agricultural activities across the arable
and livestock sectors also continued to provide a strong
underpinning to the Group's performance, balancing sector
variations.
The Group managed the challenges created by the ongoing
coronavirus pandemic well. These included supply chain and labour
disruptions. We have also managed inflationary pressures, which
caused certain operational costs to increase.
The Agriculture Division experienced a strong second half with
arable operations benefiting from a more normal harvest compared to
the exceptionally poor harvest in 2020, when yields and tonnage
declined to a 39-year low. Grain trading volumes and autumn seed
sales in the second half were both strong. Fertiliser blending
activities at Glasson greatly outperformed expectations,
experiencing a one-off boost from existing stock after sharp price
increases towards the end of the second half, which arose from the
global price rise in natural gas, a key fertiliser ingredient.
Feed sales were higher year-on-year and ahead of the national
trend. We increased sales in dairy and free-range poultry feed, two
markets that we are particularly targeting. Higher production and
distribution costs, however, squeezed overall feed margins. The
Group's on-farm feed specialists continue to provide customers with
advice on best feed usage.
The Specialist Agricultural Merchanting Division performed
exceptionally well, with higher sales and a significant increase in
profits against last year. There was strong demand across all major
categories, including Wynnstay-produced bagged feed, hardware,
animal health and milk replacers.
Our joint venture businesses, especially Bibby Agriculture
Limited and WYRO Developments Limited, also delivered a performance
above our expectations.
The two bolt-on acquisitions acquired respectively in February
and March 2021 integrated well, and contributed to the strength of
these results. Both have extended our geographical trading area in
the eastern side of England.
Our new digital trading portal, launched in the first half of
the financial year, is seeing further steady adoption by customers,
and we are also providing advice via regular podcasts, featuring
both guest specialists and Wynnstay experts.
We continue to invest in our sites, operations and staff. In
addition to our ongoing investment to increase the Group's seed
processing capacity and update the seed plant at Astley with new
technologies, we are now well-advanced in the planning stages of
our investment programme to increase our manufacturing capacity at
Carmarthen Mill.
ESG factors constitute an important pillar of the Company's
growth strategy. Following the appointment of our Environmental and
Sustainability Manager in February 2021, we have commenced a number
of new initiatives to reduce the Group's carbon emissions. We are
also continuing to expand the range of products and services that
will support the transition farmers are making under the new
Agriculture Act, which links financial support to environmental
priorities. We see the Group playing an important role in
supporting farmers as they transition to the new Environmental Land
Management Scheme ("ELMS").
REVIEW OF ACTIVITIES
Agriculture Division
The Agriculture Division manufactures and processes feed,
fertiliser and seed in addition to selling a comprehensive range of
agricultural inputs that cater for the needs livestock, arable and
dairy farmers. Our teams of specialist advisors help our farmer
customers to produce food in a more sustainable, environmentally
friendly and profitable way.
Glasson Grain Limited and GrainLink, the Group's crop marketing
business, are also reported within this Division.
Total revenue within the Division rose by 19% to GBP358.96m
(2020: GBP302.58m) and operating profit increased by 47% to
GBP4.22m (2020: GBP2.88m).
Feed Products
Feed activities encompass feed for dairy, beef, sheep and free
range egg producers. This wide offering provides an internal hedge
against sector variations. In addition, we sell feed raw materials,
liquid feeds and feed supplements. Feed is manufactured both in
bulk form, which is delivered direct to farm, and bagged form. In
bagged form, it is predominantly marketed under our well-known
'Wynnstay' brand and sold through our depot network.
Total feed volumes were 6.5% above the previous year and higher
than the national trend. However, operating profit was affected by
higher manufacturing, distribution and raw material costs and was
in line with the previous year. Pleasingly, we increased volumes
within the dairy and poultry sectors, both key growth areas for us,
and expanded sheep feed volumes. Our team of Youngstock advisors
have further enhanced our position as market leader in the milk
replacer sector.
With sustainable agriculture embedded in our strategy, we
introduced a range of climate-friendly feed diets during the year.
These incorporate sustainably-produced raw materials, including
soya and palm kernel. We plan to launch a range of ruminant diets
that will include a feed ingredient that reduces methane emissions
and is endorsed by the Carbon Trust. We expect demand for our
climate-friendly rations to grow strongly. Our on-farm advisors are
also working with customers to help them deliver their desired
environmental objectives. Our bagged feed is now packaged within
plastic bags that contain a minimum of 30% recyclable plastic, and
we continue to work with our suppliers to increase this proportion
further.
We continued to focus on improving our feed manufacturing
efficiencies. We achieved record production at our factory at
Llansantffraid, and will be accelerating our investment programme
at our feed mill at Carmarthen during the coming year.
We expect feed demand throughout the winter months to remain
strong as fodder, although in abundant supply, is of varying
quality. In addition, agricultural commodity prices remain high,
with milk prices likely to increase further, which will support
feed demand. However, we also expect margins to come under
pressure, reflecting the very volatile raw material market and
higher energy, fuel and labour costs.
Arable Products
Our arable operations supply a wide range of services and
products to arable and grass-land farmers. These include seeds,
fertilisers and agricultural chemicals, as well as grain marketing
services.
After a difficult first half, which reflected the exceptionally
poor planting season and poor harvest in 2020, arable operations
delivered a strong second half performance.
Grain trading performance for the year as a whole was better
than the prior year, with improved margins. While, as previously
stated, this is against a poor comparative, the financial
contribution from this activity was ahead of our expectations.
Sales of both cereal and grass seed were strong in the second
half, after weaker first half sales. Grass seed sales for the year
were higher than the previous year, including the contribution from
our acquisition. This was a pleasing result and like-for-like sales
although slightly down on the prior year, performed better than
national sales, which decreased by 10% year-on-year.
In line with our environmental strategy, we continued to extend
our environmental seed offerings and, in March 2021, also appointed
an Environmental Seed Specialist. Our objective is to offer arable
farmers sustainable, environmentally-friendly seed mixtures, which
include pollinators and deep-rooted herbs. We started planning for
our two-year investment programme at our seed plant in Astley. We
are assessing our processing options within the East of England,
and in the meantime, continue to work with partners to process
cereal seed in the region.
Fertiliser sales within Wynnstay Agricultural Supplies Limited
decreased by 7% year-on-year. This reflected three main factors;
reduced demand as a result of adverse growing conditions in the
spring, the good grass-growing summer, and the dramatic rise in
fertiliser prices, which tripled towards the end of the financial
year. Fertiliser prices rose significantly as a result of the sharp
increase in the price of natural gas, which is used to produce
ammonium nitrate, the key ingredient of high-nitrogen
fertiliser.
Farmers within Wales are now preparing to comply with nitrate
pollution prevention legislation, which aims to reduce losses of
nitrogen from agriculture to water. This follows a decision to
designate the whole of Wales as a Nitrate Vulnerable Zone ("NVZ"),
with full compliance expected from 2024. We are therefore ensuring
that relevant members of our teams are qualified under the
Fertiliser Advisers Certification and Training Scheme ("FACTS"),
and expect to work with an increasing number of customers on
fertiliser application strategies and manure management.
Cereal and oilseed rape prices have been extremely strong,
rising to record levels over recent months. This supports our
positive view of prospects for the sector, although farm costs have
also increased significantly and there are also labour challenges
affecting transportation.
Glasson Grain Limited
Glasson Grain Limited ("Glasson") operates from Glasson dock,
near Lancaster, and has three core activities, fertiliser blending,
the supply of feed raw materials, and the manufacture of
added-value products to specialist animal feed retailers.
Glasson's performance was ahead of our expectations, with
results reaching a record high. Fertiliser blending activities
achieved record volumes and well above budgeted margins in the
second half of the year. Already holding stock, Glasson experienced
an exceptional benefit from the substantial increase in fertiliser
raw material prices across the market in the second half of the
financial year. The feed raw material trading operations also
delivered a strong performance reflecting buoyant demand.
Specialist animal feed volumes, which includes bird, equine and
game feed, were impacted by the effects of coronavirus
restrictions, which reduced demand.
The fertiliser blending business of HELM Great Britain Limited
in South Yorkshire, that we acquired in March 2021, has been
integrated into Glasson, and performed very well. Its acquisition
has consolidated Glasson's position as the second largest
fertiliser blending operator in the UK.
During the second half, we completed a restructuring of the
operations, discontinuing non-core activities, such as stevedoring.
This has left Glasson now wholly concentrated on growing its core
activities.
SPECIALIST AGRICULTURAL MERCHANTING DIVISION
The Specialist Agricultural Merchanting Division comprises a
network of 54 depots located within predominantly livestock areas
of England and Wales. Its activities are supported by supplementary
routes to market, which include specialist catalogues, our sales
trading desk and our digital sales platform. The depots work
closely with our sales specialists to provide customers with
in-depth advice. The Division also includes Youngs Animal Feeds,
our specialist wholesale business. Youngs Animal Feeds manufactures
and markets a range of equine products throughout Wales and the
Midlands.
The Division delivered very strong results, with total revenue
increasing by 10% to GBP141.43m (2020: GBP128.81m), and
like-for-like revenue up 12%. Operating profit rose by 24% to
GBP7.15m (2020: GBP5.78m).
Wynnstay Depots and Youngs Animal Feeds
The excellent performance the Division delivered reflected
increased farmer confidence and a return to farm investment. Sales
were especially strong across Wynnstay-branded bagged feed, animal
health products, milk replacers and agricultural hardware, which
includes fencing and farm metalwork products. While there were
supply chain challenges with some products over the year, caused by
the coronavirus situation and Brexit-related delays, our broad pool
of suppliers minimised the disruption.
We continued with our depot optimisation programme, and
amalgamated the distribution depot at Cleersview in Somerset with
the depot at Sedgemoor. We also purchased the site we previously
leased at Llangadog. This has enabled us to increase storage space
and improves customer service levels in the locality.
Youngs Animal Feeds performed strongly, and significantly ahead
of the prior year. The closure of the Huyton store at the end of
the previous year removed material costs, benefiting profitability.
During the year, we rebranded our in-house produced feed fibre
products as 'Sweet Meadow' and are targeting new markets for this
sector-leading product.
JOINT VENTURES AND ASSOCIATE COMPANY
Wynnstay has three joint venture companies, Bibby Agriculture
Limited, WYRO Developments Limited and Total Angling Limited, as
well as one associate company, Celtic Pride Limited. The combined
operating profit contribution from these companies was
significantly better than expected.
ENVIRONMENTAL, SOCIAL AND GOVERNANCE ("ESG")
We are committed to achieving net carbon zero across the Group
by 2040, and a key pillar of our growth strategy is to help farmers
feed the UK in a more sustainable way.
We believe that Wynnstay is well-positioned to offer solutions
at all points of food production through a 'whole farm' approach.
There are significant gains to be made in reducing carbon emissions
through the use of precision-farming techniques. These include
precise nutrient use for crops and livestock feeding management.
Management of soil within a sustainable rotation is also key to
environmental outcomes. As mentioned, earlier, we are working on
extending our range of products and services that support
environmental goals and a more sustainable approach to farming.
We have formed a trading partnership with Caplor Energy, which
installs, maintains and services alternative energy systems and
storage on farms. The partnership will enable us to provide our
extensive customer base of farmers and growers with the opportunity
of generating and storing their own renewable electricity on their
farms.
Within the business we have continued to implement initiatives
to reduce energy consumption and carbon emissions. LED lighting
continues to be installed across the operations and our
distribution fleet is making greater use of electric forklifts,
hybrid cars, and B20 fuel.
The appointment of Lewis Davies as Environmental and
Sustainability Manager in February 2021 was designed to further
accelerate the development of our ESG strategy. He was previously
involved with the creation of Wynnstay's sustainability objectives,
which encompass raw materials sourcing, waste management and energy
efficiency as primary areas of focus. He is also a member of the
sustainability committee of the agrisupply industry's leading trade
association, the Agricultural Industries Confederation (AIC), and
will act as a representative for Wynnstay as the Company works with
its peers to promote increased sustainability throughout UK
agriculture. Wynnstay is also a corporate member of Linking
Environment and Farming ("LEAF"), which works with farmers, the
food industry, scientists and consumers to encourage and enable
sustainable farming. LEAF also campaigns to increase public
understanding of, and demand for, environmentally and sustainably
sourced product.
Social and charitable contributions are important to the Group.
In order to raise money, encourage regular exercise and promote
general well-being, we initiated a "North to South" challenge.
Colleagues, their friends and family were invited to see how many
times they could walk, run, swim or cycle 644 miles, which equates
to the distance between our most northerly office in Montrose and
our most southerly store in Helston. The monies raised from the
challenge were donated to our nominated charity, the Royal
Agricultural Benevolent Institution, which supports farming
families in times of need.
The Board remains committed to the highest standards of
appropriate corporate and commercial governance to support the
delivery of long term shareholder value.
COLLEAGUES
My colleagues throughout the business have performed
exceptionally well in a trading environment where pandemic
considerations remained paramount. They continued to prioritise the
health and welfare of their fellow colleagues and customers while
keeping the business operating smoothly.
I am extremely grateful for everyone's hard work, commitment and
team-minded approach, which has contributed greatly to these record
results. I would like to thank all our employees for their
outstanding efforts.
OUTLOOK
The trading environment has improved significantly, and farmer
sentiment across the agricultural sector is strong. Most farmers
are experiencing high value returns for their products, and the
Agriculture Act has brought clarity over financial support
arrangements for farmers following the UK's departure from the
European Union. The current level of financial support from the UK
Government will remain unchanged until 2024, with a transition
period thereafter, which will provide stability to the industry
over the medium term.
Following Brexit, the UK Government has agreed a number of trade
deals with non-EU countries. Although some of these deals may also
have increased the opportunity for agricultural food imports to
enter the UK, they have opened up new markets across the world, at
a time when global demand for food is continuing to increase.
Against this positive trading backdrop, there are some near term
pressures for farmers, with farm input inflation and increased
operational costs.
Nonetheless, we remain confident about Wynnstay's growth
prospects. We continue to invest across the Group in line with our
strategic growth plans. We are increasing manufacturing and
distribution capacity and efficiency, extending our environmental
offering, and continuing with our depot optimisation programme.
Ensuring that we are in a position to assist customers with
expert advice remains critically important. The new Agriculture
Act, which has introduced a support system very different to CAP,
by aligning financial support to sustainability and environmental
concerns, makes this aspect of our service all the more relevant.
We are placing significant emphasis on sourcing sustainably
produced products and materials to supply to our customers, as well
as increasing the Group's specialist knowledge base. This will help
to reinforce our position as a trusted supplier of choice to
farmers as they transition to the new requirements under the
Agriculture Act, including ELMS.
While digital purchasing of agricultural inputs is still
relatively low amongst our customer base, we continue to invest in
our new digital platform and to increase the ways in which we
communicate and engage digitally with customers.
Trading in the new financial year has started in line with
expectations. The agricultural backdrop is currently strong and
Wynnstay is well positioned to grow the business, both organically
and by acquisition. We are confident that our strategic growth
plans, strong cash flows, robust balance sheet and balanced
business model, stand us in good stead for continuing success into
the medium term.
Gareth Davies
Chief Executive Officer
WYNNSTAY GROUP PLC
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
For the year ended 31 October 2021
2021 2020
Note GBP000 GBP000 GBP000 GBP000
------- ---------- ------- ----------
Revenue 2 500,386 431,398
Cost of sales (432,493) (370,630)
Gross profit 67,893 60,768
Manufacturing, distribution
and selling costs (50,072) (46,033)
Administrative expenses (7,096) (6,945)
Other operating income 361 351
Adjusted operating profit(1) 11,086 8,141
Amortisation of acquired intangible
assets, goodwill impairment
and share-based payment expense 4 (477) (132)
Non-recurring items 4 - (1,194)
------------------------------------- ----- ------- ---------- ------- ----------
Group operating profit 10,609 6,815
Interest income 193 164
Interest expense (383) (436)
------- ---------- ------- ----------
3 (190) (272)
Share of profits in joint ventures
and associates accounted for
using the equity method 677 538
Share of tax incurred by joint
ventures and associates (105) (100)
------- ---------- ------- ----------
6 572 438
Profit before taxation 10,991 6,981
Taxation 7 (2,057) (1,448)
------- ---------- ------- ----------
Profit for the year 8,934 5,533
Other comprehensive income
Items that will be reclassified
subsequently to profit or loss
:
Net change in the fair value 263 -
of cashflow hedges taken to
equity, net of tax
Other comprehensive income 263 -
for the period
------------------- ------- ------------
Total comprehensive income
for the period 9,197 5,533
=================== ======= ============
Basic earnings per share 10 44.40p 27.73p
Diluted Earnings per share 10 43.53p 27.57p
------------------- ------- ------------
WYNNSTAY GROUP PLC
CONSOLIDATED BALANCE SHEET
As at 31 October 2021 2021 2020
Note GBP000 GBP000
--------- ---------
ASSETS
NON-CURRENT ASSETS
Goodwill 14,322 14,367
Investment property 2,372 2,372
Property, plant and equipment 16,746 17,545
Right-of-use assets 11,043 11,240
Investments accounted for using
equity method 3,433 3,611
Intangibles 236 225
Derivative financial instruments 5 -
48,157 49,360
--------- ---------
CURRENT ASSETS
Derivative financial instruments 320 49
Inventories 50,550 34,190
Trade and other receivables 72,511 55,757
Financial assets - loan to
joint ventures 3,319 3,889
Cash and cash equivalents 12 19,641 19,980
146,341 113,865
--------- ---------
TOTAL ASSETS 194,498 163,225
--------- ---------
LIABILITIES
CURRENT LIABILITIES
Financial liabilities - borrowings 12 (672) (1,572)
Lease liabilities 12 (3,995) (3,483)
Derivative financial instruments (53) (219)
Trade and other payables (76,212) (51,917)
Current tax liabilities (1,218) (784)
Provisions (243) (146)
(82,393) (58,121)
--------- ---------
NET CURRENT ASSETS 63,948 55,744
--------- ---------
NON-CURRENT LIABILITIES
Financial liabilities - borrowings 12 - -
Lease liabilities 12 (5,731) (6,509)
Trade and other payables (38) (141)
Derivative financial instruments (140) -
Deferred tax liabilities (474) (276)
(6,383) (6,926)
--------- ---------
TOTAL LIABILITIES (88,776) (65,047)
--------- ---------
NET ASSETS 105,722 98,178
--------- ---------
EQUITY
Share capital 11 5,075 5,013
Share premium 31,600 30,637
Other reserves 4,131 3,525
Retained earnings 64,916 59,003
TOTAL EQUITY 105,722 98,178
--------- ---------
WYNNSTAY GROUP PLC
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
As at 31 October 2021
Share Cashflow
Share premium Other hedge Retained
capital account reserves reserves earnings Total
Group GBP000 GBP000 GBP000 GBP000's GBP000 GBP000
---------- --------- ---------- ---------- ----------- ----------
At 1 November 2019 4,974 30,284 3,429 - 56,261 94,948
Profit for the year - - - 5,533 5,533
Total comprehensive
profit for the year - - - - 5,533 5,533
---------- --------- ---------- ---------- ----------- ----------
Transactions with owners
of the Company, recognised
directly in equity:
Shares issued during
the year 39 353 - - - 392
Dividends - - - - (2,791) (2,791)
Equity settled share-based
payment transactions - - 96 - - 96
Total contributions
by and distributions
to owners of the Company 39 353 96 - (2,791) (2,303)
---------- --------- ---------- ---------- ----------- ----------
At 31 October 2020 5,013 30,637 3,525 - 59,003 98,178
---------- --------- ---------- ---------- ----------- ----------
Profit for the year - - - - 8,934 8,934
Net change in the fair
value of cashflow hedges
taken to equity, net
of tax - - - 263 - 263
Total comprehensive
income for the year - - - 263 8,934 9,197
---------- --------- ---------- ---------- ----------- ----------
Transactions with owners
of the Company, recognised
directly in equity
Shares issued during
the year 62 963 - - - 1,025
Dividends - - - - (3,021) (3,021)
Equity settled share-based
payment transactions - - 343 - 343
-
---------- --------- ---------- ---------- ----------- ----------
Total contributions
by and distributions
to owners of the Company 62 963 343 - (3,021) (1,653)
---------- --------- ---------- ---------- ----------- ----------
At 31 October 2021 5,075 31,600 3,868 263 64,916 105,722
---------- --------- ---------- ---------- ----------- ----------
WYNNSTAY GROUP PLC
CONSOLIDATED CASH FLOW STATEMENT
For the year ended 31 October 2021
2021 2020
Note GBP000 GBP000
-------- --------
Cash flows from operating activities
Cash generated from operations 13 10,554 19,833
Interest received - cash 3 193 164
Interest paid - cash 3 (102) (141)
Settlement of provision (96) (10)
Tax paid (1,462) (1,510)
Net cash generated from operating activities 9,087 18,336
-------- --------
Cash flows from investing activities
Proceeds from sale of property, plant
and equipment 340 194
Purchase of property, plant and equipment (1,563) (1,058)
Acquisition of business and assets,
net of cash acquired 14 (2,156) -
Acquisition of subsidiary undertaking,
net of cash acquired 14 (82) (125)
Decrease in short term loans to joint
ventures 570 524
Dividends received from joint ventures
and associates 753 2
Net cash used by investing activities (2,138) (463)
-------- --------
Cash flows from financing activities
Net proceeds from the issue of ordinary
share capital 1,025 392
Lease repayments (4,392) (4,632)
Repayment of borrowings (900) (1,470)
Dividends paid to shareholders 8 (3,021) (2,791)
Net cash used by financing activities (7,288) (8,501)
-------- --------
Net increase in cash and cash equivalents (339) 9,372
Cash and cash equivalents at the beginning
of the period 19,980 10,608
Cash and cash equivalents at the end
of the period 12 19,641 19,980
======== ========
The cashflow movements for 2020 have been adjusted to reflect
the incorrect treatment of the repayment in short term loans to
joint ventures which has been reclassified from cash generated from
operations to cashflows from investing activities.
WYNNSTAY GROUP PLC
NOTES TO THE ACCOUNTS
1. GENERAL INFORMATION AND SIGNIFICANT ACCOUNTING POLICIES
The Company is taking advantage of the exemption in s408 of the
Companies Act 2006 not to present its individual income statement
and related notes that form part of this approved financial
information.
Basis of Preparation
The Group's financial statements have been prepared in
accordance with international accounting standards in conformity
with the requirements of the Companies Act 2006. The Group
financial statements have been prepared under the historical cost
convention other than certain assets which are at deemed cost under
the transition rules, share-based payments which are included at
fair value and certain financial instruments which are explained in
the relevant section below. A summary of the material Group
accounting policies is set out below and have been applied
consistently.
The preparation of financial statements in conformity with IFRS
requires the use of certain critical accounting estimates and
assumptions that affect the reported amounts of assets and
liabilities at the date of the financial statements, and the
reported amounts of revenues and expenses during the reporting
period. Although these estimates are based on management's best
knowledge of the amount, event or actions, actual results
ultimately may differ from those estimates.
Going Concern
The directors have prepared the financial information presented
for Group and Company on a going concern basis having considered
the principal risks to the business and the possible impact of
plausible downside trading scenarios. The Board have concluded that
they have a reasonable expectation that the entity has adequate
resources to continue in operational existence for the foreseeable
future. The Group's business activities, together with the factors
likely to affect its future development, performance and position
are set out in the Strategic Report of the Group's Annual Report.
The financial position of the Group and the principal risks and
uncertainties are also described in the Strategic report.
The Group has a sound financial base and forecasts that show
profitable trading and sufficient cash flow and resources to meet
the requirements of the business, including compliance with banking
covenants and on-going liquidity. In assessing their view of the
likely future financial performance of the Group, the Directors
consider industry outlooks from a variety of sources, and various
trading scenarios. This analysis showed that the Group is well
placed to manage its business risks successfully despite the
current uncertain economic outlook with regards to the on-going
Coronavirus outbreak. More detail on outlook is contained within
the Group's Annual Report.
In conclusion, the Directors have a reasonable expectation that
the Group has adequate resources to continue in operational
existence for the foreseeable future. Thus, they continue to adopt
the going concern basis of accounting in preparing the annual
financial statements.
2. SEGMENTAL REPORTING
IFRS 8 requires operating segments to be identified on the basis
of internal financial information about the components of the Group
that are regularly reviewed by the chief operating decision maker
("CODM") to allocate resources to the segments and to assess their
performance.
The chief operating decision maker has been identified as the
Board of Directors ("the Board"). The Board reviews the Group's
internal reporting in order to assess performance and allocate
resources. The Board has determined that the operating segments,
based on these reports are Agriculture, Specialist Agricultural
Merchanting and Other.
The Board considers the business from a product/service
perspective. In the Board's opinion, all of the Group's operations
are carried out in the same geographical segment, namely the United
Kingdom.
Agriculture - manufacturing and supply of animal feeds,
fertiliser, seeds and associated agricultural products.
Specialist Agricultural Merchanting - supplies of a wide range
of specialist products to farmers, smallholders, and pet
owners.
Other - miscellaneous operations not classified as Agriculture
or Specialist Agricultural Merchanting.
The Board assesses the performance of the operating segments
based on a measure of operating profit. Non-recurring costs and
finance income and costs are not included in the segment result
that is assessed by the Board. Other information provided to the
Board is measured in a manner consistent with that in the financial
statements. No segment is individually reliant on any one
customer.
The segment results for the year ended 31 October 2021 are as
follows:
Specialist
Agricultural
Year ended 31 October Agriculture Merchanting Other Total
2021 GBP000 GBP000 GBP000 GBP000
------------ -------------- -------- ---------
Revenue from external
customers 358,961 141,425 - 500,386
------------ -------------- -------- ---------
Segment result
Group operating profit
before non-recurring
items 3,697 7,120 (208) 10,609
Share of results of
joint ventures before
tax 524 33 120 677
4,221 7,153 (88) 11,286
------------ -------------- -------- ---------
Non-recurring items -
Interest income 193
Interest expense (383)
---------
Profit before tax from
operations 11,096
Income taxes (includes
tax of joint ventures
and associates) (2,162)
---------
Profit for the year
attributable to equity
shareholders from operations 8,934
=========
Other Information:
------------ -------------- -------- ---------
Depreciation and amortisation 3,463 2,676 - 6,139
Fixed asset additions 3,760 2,094 - 5,854
------------ -------------- -------- ---------
Segment assets 101,812 66,237 6,808 174,857
Segment liabilities (56,547) (20,139) - (76,686)
------------ -------------- -------- ---------
98,171
Add corporate net cash
(note 12) 9,243
Less corporate tax liabilities (1,692)
---------
Net assets 105,722
---------
Included in the segment
assets above are the
following investments
in joint ventures and
associates 2,386 115 840 3,341
2 . SEGMENTAL REPORTING (continued)
The segment results for the year ended 31 October 2020 are as
follows:
Specialist
Agricultural
Year ended 31 October Agriculture Merchanting Other Total
2020 GBP000 GBP000 GBP000 GBP000
------------ -------------- -------- ---------
Revenue from external
customers 302,580 128,807 11 431,398
------------ -------------- -------- ---------
Segment result
Group operating profit
before non-recurring
items 2,411 5,728 (130) 8,009
Share of results of
joint ventures before
tax 471 53 14 538
2,882 5,781 (116) 8,547
------------ -------------- -------- ---------
Non-recurring items (1,194)
Interest income 164
Interest expense (436)
---------
Profit before tax from
operations 7,081
Income taxes (includes
tax of joint ventures
and associates) (1,548)
---------
Profit for the year
attributable to equity
shareholders from operations 5,533
=========
Other Information:
------------ -------------- -------- ---------
Depreciation and amortisation 3,548 2,630 - 6,178
Fixed asset additions 2,510 1,505 - 4,015
------------ -------------- -------- ---------
Segment assets 78,265 57,708 7,272 143,245
Segment liabilities (34,401) (18,022) - (52,423)
------------ -------------- -------- ---------
90,822
Add corporate net cash
(note 12) 8,416
Less corporate tax liabilities (1,060)
---------
Net assets 98,178
---------
Included in the segment
assets above are the
following investments
in joint ventures and
associates 2,711 91 719 3,521
3. FINANCE COSTS
2021 2020
GBP000 GBP000
Interest expense:
Interest payable on borrowings (102) (141)
Interest payable on finance leases (281) (295)
Interest and similar charges payable (383) (436)
------- -------
Interest income 193 164
Interest receivable 193 164
------- -------
Finance costs (190) (272)
======= =======
4. AMORTISATION OF ACQUIRED INTANGIBLE ASSETS, IMPAIRMENT OF
GOODWILL, SHARE-BASED PAYMENTS AND NON-RECURRING ITEMS
2021 2020
GBP000 GBP000
------- -------
Amortisation of acquired intangible assets
and share-based payments
Amortisation of intangibles 39 36
Impairment of goodwill 95 -
Cost of share-based reward 343 96
477 132
------- -------
Non-recurring items
Business re-organisation costs - 185
Goodwill and Investment impairment - 601
Huyton store closure costs - 256
Decommissioning of Selby seed plant - 152
------- -------
1,194
======= =======
Non-recurring items in relation to 2020 were:
- Business re-organisation costs relating to redundancy expenses
of colleagues leaving the business as a result of re-organising
operations during the year.
- Goodwill impairment relating to the GrainLink cash generating unit.
- Huyton depot store closure costs comprising redundancy and
costs associated with exiting the leased premises.
- Decommissioning of Selby seed plant including the costs of
vacating a leased property and transferring the plant and machinery
to a new location.
5. GROUP OPERATING PROFIT
The following items have been included in arriving at operating
profit:
2021 2020
GBP000 GBP000
Staff costs 31,085 30,031
Cost of inventories recognised as an expense 431,423 363,446
Depreciation of property plant and equipment:
- owned assets 2,165 2,290
Amortisation of right-of-use assets 3,974 3,888
Amortisation of intangibles 39 36
Fair value changes on derivative financial
instruments 23 395
Hedge ineffectiveness for the period 114 -
(Profit) on disposal of fixed assets (86) (142)
(Profit) / Loss on disposal of right of use
assets (14) 25
Other operating lease rentals payable 205 244
Services provided by the Group's auditor
During the year the Group obtained the following services from
the Group's auditor:
2021 2020
GBP000 GBP000
Audit services - statutory audit 119 99
6. SHARE OF POST-TAX PROFITS OF JOINT VENTURES
2021 2020
GBP000 GBP000
Total share of post-tax profits of
joint ventures 572 438
======= =======
7. TAXATION
2021 2020
Analysis of tax charge in year GBP000 GBP000
------- -------
Current tax
- Operating activities 1,901 1,496
- Adjustments in respect of prior years (4) (73)
------- -------
Total current tax 1,897 1,423
------- -------
Deferred tax
- Accelerated capital allowances 57 165
- other temporary and deductible differences 103 (140)
------- -------
Total deferred tax 160 25
------- -------
Tax on profit on ordinary activities 2,057 1,448
======= =======
8. DIVIDS
2021 2020
GBP000 GBP000
------- -------
Final dividend paid for prior year 2,007 1,870
Interim dividend paid for current
year 1,014 921
3,021 2,791
======= =======
Subsequent to the year end it has been recommended that a final
dividend of 10.50p net per ordinary share (2020: 10.00p) be paid on
29 April 2022. Together with the interim dividend already paid on
29 October 2021 of 5.00p net per ordinary share (2020: 4.60p) this
will result in a total dividend for the financial year of 15.50p
net per ordinary share (2020: 14.60p).
10. EARNINGS PER SHARE
Basic earnings Diluted earnings
per share per share
2021 2020 2021 2020
-------- ------- --------- ---------
Earnings attributable to shareholders
(GBP000) 8,934 5,533 8,934 5,533
Weighted average number of shares
in issue during the year (number
'000) 20,120 19,952 20,524 20,070
Earnings per ordinary 25p share
(pence) 44.40 27.73 43.53 27.57
Basic earnings per 25p ordinary share is calculated by dividing
profit for the year from continuing operations attributable to
ordinary shareholders by the weighted average number of ordinary
shares in issue during the year.
For diluted earnings per share, the weighted average number of
ordinary shares is adjusted to assume conversion of all dilutive
potential ordinary shares (share options) taking into account their
exercise price in comparison with the actual average share price
during the year.
2021 2020
----------------------------------- -----------------------------------
Earnings Weighted Earnings Earnings Weighted Earnings
average per share average per share
number number
of shares of shares
(number (number
'000) '000)
--------- ----------- ----------- --------- ----------- -----------
Earnings per
ordinary 25p
share (pence) 8,934 20,120 44.40 5,533 19,952 27.73
Effect of
dilutive securities
Share options - 404 (0.87) - 118 (0.16)
Diluted Earnings
per ordinary
25p share
(pence) 8,934 20,524 43.53 5,533 20,070 27.57
--------- ----------- ----------- --------- ----------- -----------
11. SHARE CAPITAL
2021 2020
----------------- ------------------
No. of GBP000 No. of GBP 000
shares shares
000 000
-------- ------- -------- --------
Authorised
Ordinary shares of 25p
each 40,000 10,000 40,000 10,000
-------- ------- -------- --------
Allotted, called up and
fully paid
Ordinary shares of 25p
each 20,299 5,075 20,051 5,013
======== ======= ======== ========
During the year 89,687 shares (2020: 155,035) were issued with
an aggregate nominal value of GBP22,421 (2020: GBP38,759) and were
fully paid up for equivalent cash of GBP439,095 (2020: GBP392,135)
to shareholders exercising their right to receive dividends under
the Company's dividend scrip scheme. A further 158,138 shares were
issued with a nominal value of GBP39,534 and equivalent cash value
of GBP586,310 (2020: Nil) to satisfy the exercise of employee
options.
12. CASH AND CASH EQUIVALENTS, BORROWINGS AND LEASE
LIABILITIES
2021 2020
GBP000 GBP000
Current
Cash and cash equivalents per balance
sheet and cash flow 19,641 19,980
Bank loans and overdrafts due within
one year or on demand:
Secured loans - (897)
Loanstock (unsecured) (672) (675)
- -
Financial liabilities - borrowings (672) (1,572)
Net obligations under finance leases:
Non-property leases (1,626) (1,473)
Property leases (2,369) (2,010)
-------- ----------
Lease liabilities (3,995) (3,483)
Total current net cash and lease liabilities 14,974 14,925
Non-current
Bank loans:
Secured loans - -
- -
-------- ----------
Financial liabilities - borrowings - -
Net obligations under leases:
Non-property leases (1,881) (2,228)
Property leases (3,850) (4,281)
-------- ----------
Lease liabilities (5,731) (6,509)
Total non-current net debt and lease
liabilities (5,731) (6,509)
Total net cash and lease liabilities 9,243 8,416
-------- ----------
Memo: total net cash and lease liabilities
excluding property leases 15,462 14,707
======== ==========
-- Cash and cash equivalents
Cash and cash equivalents are all cash at bank and held with
HSBC UK Bank Plc, except for GBP585,000 (2020: GBP311,000) which is
held at International FC Stones for wheat futures hedging. HSBC UK
Bank Plc's credit rating per Moody's is A1 (2020: A2). GBP412,000
of the cash and cash equivalent balance is denominated in EUR (99%)
and USD (1%) (2020: GBP38,000, in EUR (90%) and USD (10%). All
other amounts are denominated in GBP and are at booked fair value.
Loan stock is redeemable at par at the option of the Company.
Interest of 0.5% (2020: 0.5%) per annum is payable to the
holders.
-- Borrowings
Bank loans and overdrafts are secured by an unlimited composite
guarantee of all trading entities within the Group. Outstanding
bank loans as at October 2020 were repaid during the year and the
rate of interest on that loan was 0.85% over base rate up to the
point of repayment.
Loan stock is redeemable at par at the option of the Company or
the holder. Interest of 0.5% (2020: 0.5%) per annum is payable to
the holders.
13 . C ASH GENERATED FROM OPERATIONS
2021 2020
GBP000 GBP000
--------- ---------
Profits for the year from operations 8,934 5,533
Adjustments for:
Tax 2,057 1,448
Investment and goodwill impairment 95 601
Depreciation of tangible fixed assets 2,165 2,290
Amortisation of right-of-use assets 3,974 3,888
Amortisation of other intangible fixed
assets 39 36
Profit on disposal of property, plant
and equipment (86) (142)
Profit on disposal of right-of-use
asset (14) 25
Loss on relinquishment of property
leases 26 -
Interest income (193) (164)
Interest expense 383 436
Share of post-tax results of joint
ventures (572) (438)
Share-based payments 343 96
Derivative held at fair value 23 395
Provision made 193 156
Changes in working capital (excluding
effects of acquisitions and disposals
of subsidiaries):
Decrease in inventories (14,583) 8,049
Decrease in trade and other receivables (16,753) 8,055
(Decrease)in payables 24,523 (10,431)
Cash generated from operations 10,554 19,833
========= =========
14. BUSINESS COMBINATIONS
Agricultural division of Armstrong Richardson & Co.
Limited
On 12 February 2021, Wynnstay (Agricultural Supplies) Limited
entered into a business combination and acquired 100% of the trade
and some of the assets of the agricultural division of Armstrong
Richardson & Co. Limited.
The provisional consideration is GBP548,000 which is represented
by GBP154,000 paid on completion for certain assets, deferred
consideration paid during the year of GBP344,000 for inventory and
debtors and contingent consideration of GBP50,000 relating to
goodwill, which is expected to be paid by 12 February 2023. The
consideration payable is dependent on employee retention and future
product volume.
The fair value of the contingent consideration has been based on
management expectation of future performance of the business and
could range from GBPnil to GBP50,000.
Amounts included in the Consolidated Statement of Comprehensive
Income for the period to 31 October 2021 as extracted from
management accounts are revenues of GBP4,761,000 and profit before
tax of GBP3,000.
HELM Great Britain Limited
On 3 March 2021, Glasson Grain Limited entered into a business
combination and acquired 100% of the manufacturing activity and
assets of the dry fertiliser blending business of HELM Great
Britain Limited.
The provisional consideration is GBP1,658,000 which is
represented by GBP1,658,000 paid during the year for certain assets
and inventory.
Amounts included in the Consolidated Statement of Comprehensive
Income period to 31 October 2021 as extracted from management
accounts are revenues of GBP11,065,000 and profit before tax of
GBP742,000.
Fertiliser Agricultural Total
division division of
of HELM Great Armstrong Richardson
Britain Limited & Co. Limited
GBP'000 GBP'000 GBP'000
------------------------------- ----------------- ---------------------- --------
Provision for fair value
of asset acquired
Goodwill - 50 50
Intangible assets - 50 50
Property, plant and
equipment 225 16 241
Other debtors - 88 88
Inventories 1,433 344 1,777
------------------------------- ----------------- ---------------------- --------
Provisional consideration 1,658 548 2,206
Contingent and deferred - (394) (394)
------------------------------- ----------------- ---------------------- --------
Settled in cash at completion 1,658 154 1,812
Settled in cash before
the year end - 344 344
------------------------------- ----------------- ---------------------- --------
Total settled in cash
during the year 1,658 498 2,156
------------------------------- ----------------- ---------------------- --------
Contingent consideration
outstanding at the year
end - 50 50
------------------------------- ----------------- ---------------------- --------
Acquisition costs of GBP17,000 arose as a result of the above
transactions which have been recognised as part of administrative
expenses.
Both acquisitions were parts of larger legal entities and
therefore the historic sales, gross profit and profit before tax in
the period prior to the acquisition is not publicly available.
The business combination accounting will be finalised 12 months
from the date of acquisition.
Contingent and deferred consideration of GBP82,000 was paid
during the period to 31 October 2021 relating to prior period
acquisitions, resulting in a total outflow of GBP2,238,000 in the
period to 31 October 2021.
15. ALTERNATIVE PERFORMANCE MEASURE
Using the Board's preferred alternative performance measured
referred to as Underlying pre-tax profit, which includes the gross
share of results from joint ventures and associates but excludes
share-based payments and non-recurring items, the Group achieved
GBP11.44m (2020: GBP8.37m). A reconciliation with the reported
income statements and this measure, together with the reasons for
its use is given below:
2021 2020
GBP000 GBP000
------- -------
Profit before tax 10,991 6,981
Share of tax incurred by joint ventures
and associates 105 100
Share-based payments 343 96
Non-recurring items - 1,194
------- -------
Underlying pre-tax profit 11,439 8,371
======= =======
The Board provides this alternative performance measure as it
believes it provides a view of the underlying commercial
performance of the current trading activities, providing investors
and other users of the accounts with an improved view of likely
future performance by making the following adjustments to the IFRS
results for the following reasons:
-- The add back of tax incurred by joint ventures and
associates. The Board believes the incorporation of
the gross result of these entities provides a fuller
understanding of their combined contribution to the
Group performance.
-- The add back of share-based payments. This charge
is a calculated using a standard valuation model,
with the assessed non-cash cost each year varying
depending on new scheme invitations and the number
of leavers from live schemes. These variables can
create a volatile non-cash charge to the income statement,
which is not directly connected to the trading performance
of the business.
-- Non-recurring items. The Group's accounting policies
include the separate identification of non-recurring
material items on the face of the income statement,
which the Board believes could cause a misinterpretation
of trading performance if not disclosed. See note
4.
16. RESPONSIBILTY STATEMENT
The Directors below confirm to the best of their knowledge:
-- the financial statements, prepared in accordance with
the applicable set of accounting standards, give a
true and fair view of the assets, liabilities, financial
position and profit or loss of the Company and the
undertakings included in the consolidation taken as
a whole; and
-- the management report includes a fair review of the
development and performance of the business and the
position of the issuer and the undertakings included
in the consolidation taken as a whole, together with
a description of the principal risks and uncertainties
that they face.
S J Ellwood
P M Kirkham
B P Roberts
G W Davies
H J Richards
C Bradshaw
17. CONTENT OF THIS REPORT
The financial information set out above does not constitute the
Group's statutory accounts for the years ended 31 October 2021 or
31 October 2020 but is derived from those accounts.
Statutory accounts for 2020 have been delivered to the Registrar
of Companies. The auditor at the time, BDO LLP, has reported on the
2020 accounts; the report (i) was unqualified, (ii) did not include
a reference to any matters to which the auditor drew attention by
way of emphasis without qualifying their report, and (iii) did not
contain a statement under section 498(2) or (3) of the Companies
Act 2006.
The statutory accounts for 2021 will be delivered to the
Registrar of Companies following the Annual General Meeting. The
auditor, RSM UK Audit LLP, has reported on these accounts; their
report is unqualified, does not include a reference to any matters
to which the auditor drew attention by way of emphasis without
qualifying their report, and; does not include a statement under
either section 498(2) or (3) of the Companies Act 2006.
The Annual Report and full Financial Statements will be
available to shareholders during February 2022. Further copies will
be available to the public, free of charge, from the Company's
Registered Office at Eagle House, Llansantffraid, Powys, SY22 6AQ
or on the Company's website at www.wynnstay.co.uk.
18. ANNUAL GENERAL MEETING
The Annual General Meeting of the Company will be held on
Tuesday 22 March 2022 at 11.45am. Further details will be published
on the Company's website www.wynnstayplc.co.uk .
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END
FR UASARUSUURUR
(END) Dow Jones Newswires
February 02, 2022 02:00 ET (07:00 GMT)
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