TIDMWYN
RNS Number : 4928O
Wynnstay Group PLC
01 February 2023
AIM: WYN
Wynnstay Group Plc
("Wynnstay" or the "Group" or the "Company")
Final Results
For the year ended 31 October 2022
Record results and well-positioned for FY 2023
KEY POINTS
Financial
-- Record results reflect a strong trading performance and
substantial one-off gains arising from macroeconomic events (which
management does not believe will be repeated)
-- Revenue up 42% to GBP713.03 m (2021: GBP500.39m), primarily
the impact of commodity inflation
-- Underlying Group PBT* (incl. one-off gains) up 98% to GBP22.61m (2021: GBP11.44m)
-- Reported pre-tax profit up 92% to GBP21.12m (2021: GBP10.99m)
-- Basic EPS up 86% to 82.72p (2021: 44.40p)
-- Net cash up 53% to GBP14.15m (31 Oct 2021: GBP9.24m)
-- Net assets up 24% to record GBP130.70m or GBP6.31 per share
(2021: GBP105.72m /GBP5.25 per share)
-- Successful GBP10.3m (net) equity placing in August 2022 supports ongoing growth plans
-- Proposed final dividend of 11.60p (2021: 10.50p); total
dividend up 9.7% to 17.00p (2021: 15.50p)
o 19(th) consecutive year of dividend increases
Operational
-- Agriculture Division - revenue up 57% to GBP564.26m (2021:
GBP358.96m), segmental profit contribution up 247% to GBP14.66m
(2021: GBP4.22m)
o one-off gains from impact of global events on fertiliser
operations, with raw material stock values at Glasson substantially
boosted by natural gas prices and constricted supply, and very
strong contribution from merchanted fertiliser sales even on lower
volumes
o feed volumes up by 6%, ahead of national market trends
o grain marketing activity, GrainLink, traded record volumes
o total seed sales decreased, reflecting seasonal factors and
exit from lower-margin cereal seed sales, but grass seed
performance was ahead of national trend
-- Specialist Agricultural Merchanting Division - revenue up 5%
to GBP148.77m (2021: GBP141.43m) segmental profit contribution up
11% to GBP7.95m (2021: GBP7.15m)
o performance better than expected, boosted by strong bagged
feed sales and efficiencies
o continued investment in depot network and staff training
-- Joint Venture businesses contributed ahead of management expectations
-- Humphrey acquisition is integrating well and contributed in
line with management expectations at time of purchase in March
2022. It has added increased feed manufacturing capacity and
further growth opportunities
-- Investment in seed processing facility at Astley completed
and major investment programme at feed plant at Carmarthen
started
-- ESG strategy supported by the establishment of a Sustainable Farm Advisory Team
Outlook
-- Post period acquisition of Tamar Milling Ltd, animal feed
business based in Cornwall, in November 2022, extends geographic
footprint, farmer customer base and manufacturing capacity
-- Board believes Wynnstay remains well-positioned to attain its
growth targets despite the economic headwinds
* 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 results are exceptional and set record highs across all
key financial measures. While global events have driven substantial
one-off financial gains that we do not expect to repeat, the Group
in any case traded very strongly, helped by strong farmgate prices
and growth and efficiency initiatives.
"We also made excellent progress with our strategic growth
plans. The Humphrey acquisition has significantly expanded our
geographic trading area and added feed manufacturing capacity,
creating further growth opportunities. Our recent acquisition in
November 2022 of Tamar Milling further extends our trading
footprint, and we continue to drive investment in capacity,
efficiency, and staff across the Group.
"Trading in the new financial year to date has been in line with
expectations. While there are economic headwinds, we remain
confident of achieving our growth targets."
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 / Robert T: 020 3178 6378
Morton / Dan Mahoney
Shore Capital (Nomad Stephane Auton / John T: 020 7408 4090
and Broker) More / Rachel Goldstein
CHAIRMAN'S REPORT
OVERVIEW
The Group performed strongly during the year and trading results
set new record highs across all key financial measures. It should
be noted that results benefited substantially from some singular
gains that we do not expect to be repeated in the new financial
year.
Underlying pre-tax profit* (which includes these gains) rose by
98% to GBP22.61m (2021: GBP11.44m) and revenues increased by 42% to
GBP713.03m (2021: GBP500.39m), with significant inflation primarily
driving the uplift in revenue. Reported profit before taxation was
GBP21.12m (2021: GBP10.99m). Basic earnings per share, including
non-recurring items, rose by 86% to 82.72p (44.40p).
These exceptionally strong results are significantly ahead of
initial market expectations. They reflect a combination of factors;
the benefits of growth and efficiency initiatives, farmer
confidence, which was underpinned by strong farm gate prices across
most sectors, but also significant one-off gains, in particular,
stock gains in our fertiliser activity, which we do not believe
will be repeated.
The advantages of the Group's diversified business model, with
its broad spread of products across agricultural supplies, was
again evident, with less robust sub-sectors offset by more positive
sector performances elsewhere.
Both Divisions contributed increased revenue and operating
profit, with almost all the Group's exceptional performance
delivered by the Agricultural Division. In this Division, feed
volumes were c.6% higher than last year and ahead of industry
trends, and arable activities benefited from record commodity
prices and a good 2022 harvest. Grain trading at GrainLink, our
grain marketing activity, reached record volumes and its
contribution also benefited from a significant one-off, non-cash
gain at the end of the financial year that has since unwound, as
previously announced. Total seed volumes reduced modestly,
reflecting seasonal factors although the decrease in cereal volumes
also reflected our decision to reduce the number of low-margin
wholesale cereal seed trades. In line with industry trends,
fertiliser volumes were significantly lower than last year, which
reflected the extreme rise in prices created by the highly
disrupted natural gas market. These market conditions however also
drove very significant stock gains at Glasson Grain Limited
("Glasson"), resulting in an exceptional performance, not expected
to be repeated.
The Specialist Agricultural Merchanting Division performed very
well, helped by increased efficiency and strong branded bagged feed
sales. The unusually dry summer dampened demand for some product
lines. We continued to invest in and optimise our depot network,
including closing a depot at Bethania in mid-Wales, while
successfully transferring sales to neighbouring sites.
Our Joint Venture businesses, Bibby Agriculture Limited, which
provides feed and forage products, and WYRO Developments Limited,
which develops residential homes, both contributed to the Group's
outperformance, delivering significantly higher contributions than
originally expected .
The acquisition of the Humphrey Poultry (Holdings) Ltd
("Humphrey") businesses based in Hampshire in March for an expected
final consideration of GBP12.1m net of cash acquired, was a
strategic highlight in the year. In mid-November 2022, just after
the financial year end, we also acquired Tamar Milling Limited
("Tamar"), a manufacturer and supplier of blended and coarse mix
feed products based in Cornwall, for an initial consideration of up
to GBP1.5m. Both acquisitions are earnings enhancing. In August
2022, we also raised GBP10.3m net, via an equity placing to UK
institutional shareholders and these new funds will support our
ongoing acquisition and organic growth strategy.
* Underlying pre-tax profit is a non-GAAP measure and is not
intended as a substitute to GAAP measures. Refer to Note 15 for a
reconciliation on the calculation of this measure and the reasons
for its use.
GROWTH STRATEGY
Wynnstay's growth strategy is centered on three key pillars,
organic and acquisitive growth, a multi-channel sales approach, and
Environmental, Social and Governance ("ESG"). At the forefront of
the Board's thinking is our customer base of arable and livestock
farmers. We aim to ensure that the Group continues to provide them
with trusted advice, a wide range of products and services that
cater for their changing needs, and high customer service.
Ultimately, our objective is to support farmers to grow food
profitably, sustainably and in an environmentally enhancing
manner.
Against the context of our growth strategy, I am very pleased to
highlight progress in the following areas in particular:
-- Organic and acquisitive growth
o Our acquisitions of the Humphrey business and Tamar have
significantly expanded the Group's trading footprint. They have
materially extended our presence in the South of England as well as
in the Midlands and Wales, bringing new farmer customer bases as
well as additional supply chain relationships.
o Both businesses have increased our feed manufacturing
capability, with the additional capacity also opening up the
opportunity to implement operational efficiencies.
o The Humphrey business has significantly increased our market
share in poultry feed for free-range egg production, boosting our
market share to an estimated c.11% from c.6%.
o We completed our investment projects at our seed processing
plant at Astley, which have added new capability and improved
efficiency.
o Organic growth also continues to be supported by our
investment in our specialist advisory services. Our two industry
events , The Arable Event and The Beef and Sheep Event, which
resumed in person in the year, also serve to support technical
knowledge transfer to farmers across our trading regions and were
very well attended.
-- Multi-channel
o Increased numbers of customers have now registered for our
digital portal, typically using it to access their accounts. While
farmers' purchasing habits remain strongly aligned towards
depot-based purchases rather than digital purchases, we nonetheless
continue to monitor buying patterns closely as we further develop
our multi-channel sales strategy.
-- ESG
o Our ESG work continued to evolve and we established a
Sustainable Farm Advisory Group in the year. It is made up of
recognised industry leaders, who are assisting us in the
development our ESG strategy and delivery plans.
o We launched a Holistic Whole Farm Solution in the year and
further advanced our offering of climate-friendly feeds.
o We intend to invest in on-site solar arrays, which will
provide the dual benefits of reducing the Group's carbon footprint
and its exposure to the wholesale energy markets.
FINANCIAL RESULTS
Group revenue increased by 42% year-on-year to GBP713.03m (2021:
GBP500.39m). This rise reflected significant commodity inflation,
with the Humphrey acquisition making a first-time partial revenue
contribution of GBP31.58m.
Underlying Group pre-tax profit, the Board's alternative
performance measure, rose by 98% to a record GBP22.61m (2021:
GBP11.44m) over the year. This includes the one-off trading gains
(which we do not believe will be repeated), gross share of results
from joint ventures but excludes share-based payments and
non-recurring items. Reported pre-tax profit increased by 92% to
GBP21.12m (2021: GBP10.99m). Basic earnings per share increased by
86% to 82.72p (2021: 44.40p).
Both Divisions contributed to revenue and profit growth, with
the Agricultural Division delivering a 57% uplift in revenues to
GBP564.26m (2021: GBP358.96m), and the Specialist Agricultural
Merchanting Division a 5% rise to GBP148.77m (2021: GBP141.43m).
The segmental profit contribution from the Agriculture Division
increased by 247% year-on-year to GBP14.66m (2021: GBP4.22m), with
the Specialist Agricultural Merchanting Division contributing
GBP7.95m (2021: GBP7.15m), an 11% rise.
The Group generates good operational cash flows, with cash
generated from operations being GBP13.84m (2021: GBP10.57m) despite
the challenges of working capital inflation.
Cash and cash equivalents at 31 October 2022 increased by 53% to
GBP14.15m (2021: GBP9.24m). October typically represents the
highest point of net cash in the Group's annual working capital
cycle.
During the year, 75,891 new ordinary shares (2021: 89,687) were
issued to existing shareholders who exercised their right to
receive dividends in the form of new shares. The equivalent cash
amount totalled GBP0.457m (2021: GBP0.439m). A further 1,965,689
shares were issued via the institutional equity placing and as a
result of employee options being exercised, for a total cash
consideration of GBP10.58m (2021: GBP0.59 million).
Capital investment in fixed assets amounted to GBP5.31m (2021:
GBP5.61m) in the year and GBP10.23m, net of cash acquired, was
invested in acquisitions (2021: GBP2.21m).
Group net assets at the financial year end increased by 24% to
GBP130.70m (2021: GBP105.72m), a record high. Based on the weighted
average number of shares in issue during the year of 20.722m (2021:
20.120m), this equates to GBP6.31 per share (2021: GBP5.25 per
share).
Return on assets from underlying pre-tax profits, increased to
17.4% (2021: 10.8%).
DIVIDS
The Board is pleased to propose an increased final dividend of
11.60p per share. The final dividend will be paid on 28 April 2023
(2021:10.50p per share) to shareholders on the register on 31 March
2023. Together with the interim dividend of 5.40p per share, paid
on the 31 October 2022, this makes a total dividend of 17.00p per
share for the year (2021: 15.5p per share), an increase of 9.7% on
the previous year. The final dividend is subject to shareholder
approval at the forthcoming AGM on 21 March 2023.
The total dividend payment represents the 19(th) consecutive
year of dividend growth since Wynnstay joined AIM in 2004. This
dividend is covered 4.1 times by earnings after non-recurring items
(2021: 2.8 times).
BOARD AND COLLEAGUES
The Board would like to acknowledge the dedication and hard work
of the Wynnstay team over the year. Our staff continue to provide
customers with an excellent service and on behalf of my fellow
Directors, I would like to thank everyone for their vital
contribution to the 2022 results.
We are delighted to welcome the senior management teams and
staff of Humphrey and Tamar to the Group. We are currently in the
process of recruiting a Head of Strategic Delivery to work with
senior management on key projects, including acquisitions and their
successful integration into the business.
Philip Kirkham, Board Vice-Chairman and Senior Independent
Director is due to retire during 2023. We have commenced a
recruitment process for an appropriately qualified successor and
will make a further announcement on the outcome of this process in
due course.
OUTLOOK
The Group has made strong operational and strategic progress
against its goals. While a number of one-off gains drove an
exceptional financial performance this year, which we do not expect
to be repeated in the new financial year, Group performance was
also very strong.
Looking ahead at prospects over 2023, the sector is facing
inflationary headwinds, as we have previously commented. We
anticipate this to impact raw material prices, as well as the
Group's energy, labour and distribution costs. We plan to manage
these headwinds through efficiency and productivity improvements
and other measures where possible. Farmers are facing similar
pressures although there have been some welcome downward moves in
energy and distribution costs in recent weeks.
Financially, the Group generates good cashflows and the balance
sheet remains robust. This gives a solid platform for continuing
development and supports our ongoing investment plans. These
include a major programme of works at Carmarthen Mill, renewable
energy projects and investments in the depot network. In the
meantime, the Board continues to review acquisition opportunities
that meet its criteria.
We believe that Wynnstay is in a good position to make further
progress and to achieve its growth targets for the financial
year.
Steve Ellwood
Chairman
CHIEF EXECUTIVE'S REPORT
INTRODUCTION
The Group's financial results this year are exceptional. They
reflect a strong performance, which was supported by a favourable
trading environment across most sectors, very significant one-off
gains (which we do not expect to be repeated) arising from global
events, and inflation. These one-off gains predominantly arose from
the fertiliser processing activity at Glasson Grain Ltd, which
experienced substantial stock gains following the sharp price
increases in natural gas over 2022, a key ingredient in fertiliser
production, particularly following the invasion of the Ukraine by
Russia.
Inflation was a major feature during the year, which impacted
grain and feed prices as well as fertiliser prices. It contributed
significantly to the Group's revenue outcome. Nonetheless, we
managed these inflationary pressures well, particularly in relation
to energy, fuel and labour costs. We have also sought to position
the business to be able to manage anticipated cost increases in the
year ahead.
We are pleased to have outperformed national trends in the
sectors in which we operate, and have made material progress in
expanding the Group's geographical coverage, as well as increasing
Group manufacturing capacity.
The acquisition of Humphrey Poultry (Holdings) Ltd ("Humphrey"),
based at Twyford in Hampshire, in March 2022, fulfilled multiple
strategic aims. Significantly, it has opened up new geographic
areas for us, particularly in the South of England, nearly doubled
our market share in poultry feed for free-range egg production, and
added additional feed manufacturing capacity, with the potential to
further enhance the Group's feed manufacturing operations. A
further acquisition, Tamar Milling Ltd, an animal feed business
based in Cornwall, which we completed after the end of the
financial year, has expanded our geographic reach in the South West
of England. Both acquisitions are immediately earnings
enhancing.
The Joint Venture businesses, particularly Bibby Agriculture Ltd
and WYRO Developments Limited, have performed very well,
contributing above our expectations.
We have continued to invest significantly in the business. Our
investment project at our seed processing plant in Astley was
completed, doubling grass seed mixing capacity and adding new
cereal seed processing technology. Our major capital investment
programme at the Carmarthen feed mill has started and is on course
to be completed in early 2024. We are also considering options to
redevelop the mothballed feed plant at Calne in Wiltshire.
Environment, Social and Governance principles ("ESG") is an
important pillar of Group strategy. We continue to provide products
and services to our customers that will help them deliver their
environmental ambitions, including meeting new Government policy
and legislation, in particular Environmental Land Management
Schemes ("ELMS"), the Sustainable Farming Scheme and Nitrate
Vulnerable Zones.
REVIEW OF ACTIVITIES
AGRICULTURE DIVISION
The Agriculture Division manufactures and processes feed,
fertiliser and seed, in addition to supplying a comprehensive range
of agricultural inputs for both arable and livestock farmers. The
Division includes Glasson Grain Limited, GrainLink, the Group's
specialist crop marketing business, and, since March 2022, the
Humphrey business.
Revenue generated by the Agriculture Division increased by 57%
to GBP564.26m (2021: GBP358.96m) and segmental contribution (see
Note 2 of the financial statements) rose by 247% to GBP14.66m
(2021: GBP4.22m).
Feed
Feed products are manufactured at our main feed mills at
Llansantffraid, Carmarthen and Twyford (acquired in March 2022),
supported by three blending facilities at Rhosfawr, Condover, near
Shrewsbury and Whitstone in Cornwall (acquired in November 2022).
We manufacture feed for dairy, beef, sheep and free-range egg
producers, the wide offering providing an internal hedge against
variations in individual sector performance. Feed is offered in
compounded, blended or meal form and can be bought in bulk or
bagged. The majority of the Wynnstay-branded bagged feed is sold
through our depot network. Our customers are also able to source
feed raw materials, liquid feeds and feed supplements from us. We
support our feed offering with a technical sales team, which
provides on-farm specialist advice on animal nutrition. This is a
differentiator for us to the wider market.
Our feed volumes during the financial year increased by 6% to a
record level and outperformed the national trend. Demand was
boosted by the dry summer, which reduced available grass and
forage. Dairy feed volumes were up by 7%, poultry by 2% and sheep
by 5%. Although feed volumes were strong, margins were affected by
raw material volatility and increased fuel and packaging costs,
which we were not able to pass on fully. This resulted in the
contribution from feed being slightly behind last year.
We have made further progress in enhancing the sustainability of
our offering, a key component of our overall strategy. We launched
a range of ruminant feeds that include a methane inhibitor approved
by the Carbon Trust. We are also working on a collaborative project
to reduce phosphate excretion from laying hens in order to reduce
water pollution.
The Humphrey business, which was acquired in March 2022, made a
good first-time contribution, in line with our expectations. This
was very pleasing given the pressures that the egg industry
experienced over the year, with feed, energy and labour costs
increasing without the corresponding increase in egg price. In
addition, Avian Influenza resulted in the culling of laying flocks,
which also reduced feed demand, a factor that is likely to continue
in 2023, while the organic sector has been affected by consumers
trading down to cheaper conventionally-produced eggs. We have
successfully reduced our cost base to mitigate these
challenges.
Our major investment programme at Carmarthen Mill is well under
way and on schedule to be completed by early 2024. It will
significantly increase our feed manufacturing capacity as well as
drive efficiency. As part of the acquisition of the Humphrey
business, we acquired a mothballed feed plant at Calne in
Wiltshire. There is an opportunity to redevelop this site and
replace the leased facility at Twyford, which was retained by the
vendors. We are considering all our options in developing the site
to ensure optimal benefits as we expand capacity and take advantage
of the opportunities to increase our market share in the South West
of England.
The increase in the price of grain during the second half of
2022 resulted in significant feed price rises for the winter of
2022/2023. Additionally, the mild autumn enabled farmers to keep
livestock out at grass longer than normal. This reduced feed demand
during the early part of the winter.
Arable Products
Our arable operations supply a wide range of services and
products to arable and grassland farmers. These include seeds,
fertilisers and agro-chemical, as well as grain marketing
services.
Overall, the Arable Division performed very well, with
significant contributions from GrainLink and our in-house
fertiliser trading operation.
GrainLink experienced an exceptional year, increasing volumes
traded by 31% to a record high. This reflected the good harvest
yields in both 2021 and 2022 and increased market share on the
eastern side of the country, where we had invested in additional
resource. Grain markets were extremely volatile in the period and
GrainLink's already strong contribution to Group results received a
significant boost by an unusual and very short-lived surge in the
price of wheat contracts on 31 October 2022, our financial year
end. As previously reported, this was caused by the Russian
Government's decision, which was reversed 72 hours later, to
withdraw from an agreement allowing grain to be exported from
Ukraine. This short-lived price movement created an additional,
non-cash accounting profit of approximately GBP0.4 million.
GrainLink's "Arable Event" successfully returned in June after a
break of two years due to the coronavirus. The specialised event
attracted around 800 farmers, who came to listen to keynote
speakers and obtain information on cutting-edge arable farming
technology.
Total cereal seed volumes were 19% lower year-on-year. This
reflected an increase in "farmer-saved" cereal seed being used for
autumn plantings after the early and good quality 2022 harvest, and
our decision to reduce lower-margin wholesale sales. Demand for
grass seed was also lower, with the dry spring and summer resulting
in a smaller acreage of both conventional and environmental grass
seed being sown. Nonetheless, our grass seed volumes, which were
down by 9%, were better than the national market trend.
We completed the investment at our seed processing plant at
Shrewsbury. This has enabled us to double grass seed mixing
capacity. We also installed a colour sorter into the cereal
processing facility, which now enables us to process hybrid cereal
seed. We are collaborating with seed breeders and stakeholders
within the sector to ensure that we continue to deliver innovation
to our arable customers.
Merchanted fertiliser sales performed ahead of last year and
management expectations. While the dry spring and summer, coupled
with significant price increases, flattened demand, particularly
from the livestock sector, improved margins more than offset lower
tonnage.
A large acreage of winter cereals was planted in the autumn of
2022. This typically results in a reduction of spring sown seed.
The large acreage of autumn sown seed bodes well for both demand
for crop inputs and a good harvest in 2023, although weather can
influence yield. We therefore view the outlook for the arable
sector positively, despite farmers' increased input costs.
Glasson Grain Limited ("Glasson")
Glasson is the second largest fertiliser blender in the UK, and
is based at Glasson Dock near Lancaster. As well as fertiliser
blending, Glasson has two other core activities, the supply of feed
raw materials and the manufacture of added-value animal feed
products.
Glasson delivered a record result, driven by one-off gains
(which we do not believe will be repeated) from the fertiliser
blending activity, which benefited from rising and volatile raw
material prices. This followed increases in the price for natural
gas - a key raw material in the production of fertiliser.
Sanction-related restrictions on Russian businesses tightened
global supplies of fertiliser products, substantially increasing
fertiliser prices. Whilst this reduced demand, it also generated
significant stock gains for Glasson. Gas prices rose again in the
summer of 2022, resulting in further fertiliser price rises. This
was followed by the permanent closure of the CF Industries
fertiliser production plant and certain manufacturers suspending
production, and the market remains tight.
The specialist animal feed operation experienced lower demand
for wild bird food and associated products, and margins were also
affected by rising energy and labour costs. The feed trading
operation performed ahead of management expectation, maintaining
both volumes and margins in a volatile market.
SPECIALIST AGRICULTURAL MERCHANTING DIVISION
The Specialist Agricultural Merchanting Division comprises a
network of 53 depots, located within predominantly livestock areas
of England and Wales. The depots supply a range of products that
cater predominantly for the needs of farmers but also rural
dwellers. The depot network is supported by our multi-channel sales
route to market, which includes a sales trading desk, specialist
catalogues and a digital platform. The division also incorporates
Youngs Animal Feeds, based in Staffordshire, which manufactures a
range of equine products. These are marketed throughout Wales and
the Midlands region.
Revenue from the Specialist Agricultural Merchanting Division
increased by 5% to GBP148.77m (2021: GBP141.43m). Its segmental
contribution rose by 11% to GBP7.95m (2021: GBP7.15m), which was
well ahead of management expectations and driven by strong sales of
higher-margin products, such as own-brand bagged feed, as well as
increased efficiencies.
Like-for-like sales at the depots increased by 5% year-on-year.
The long, dry summer affected sales of certain product categories
such as crop packaging, animal health and fencing products, and
spend on certain discretionary items reduced.
We continued with our depot optimisation programme, closing the
Bethania depot in Ceredigion in September 2022 while retaining its
trade via other depots in the area. We also continued to invest in
staff training, so that customers benefit from valuable advice and
guidance on products and their usage. Depot staff also continue to
work closely with our on-farm specialists.
Youngs Animal Feeds has been affected by the cost-of-living
increase, particularly in the second half of the year, with volumes
and margins impacted by the squeeze on consumer spending. This is
likely to continue into the new financial year.
JOINT VENTURES AND ASSOCIATE COMPANY
Wynnstay has three joint venture companies, Bibby Agriculture
Limited, WYRO Developments Limited and Total Angling Limited, and
an associate company, Celtic Pride Limited.
The combined contribution from our joint ventures and associated
company was significantly higher than budgeted at GBP0.80m (2021:
GBP0.68 m ). This reflected a strong performance from Bibby
Agriculture Limited and the completion of a housing development
site at WYRO Developments Limited.
ENVIRONMENTAL, SOCIAL AND GOVERNANCE ("ESG")
ESG considerations are very important to us as we continue to
develop the Group. Our ESG strategy has two fundamental aims. These
are to achieve net carbon zero by 2040 and to help farmers feed the
UK in an environmentally and sustainable way.
In order to support our ESG strategy, during the year we set up
a Sustainable Farm Advisory Team, comprising industry experts. They
will work with the Board and with the Environmental and
Sustainability Manager and provide counsel on our strategy and
delivery plans.
Over the next twelve months we will be focused on developing a
roadmap to enable the Group to fully integrate the recommendations
of the Financial Stability Board's Task Force on Climate-related
Financial Disclosures("TCFD"). This will improve and increase the
reporting of the Group's climate-related financial information.
Internally, we have a number of programmes under way to reduce
carbon emissions and energy consumption. These cover the Group's
lighting, vehicle fleet, biofuel use and power requirements. A
major initiative is a GBP1 million investment in solar photovoltaic
panels at six of our sites that have high electricity usage. We
intend this to be the first phase of a multi-site rollout of
renewables over the next five years.
In terms of our offering to farmers, Wynnstay is well-placed to
provide solutions at all points of food production. Precision
farming techniques can play a significant role in reducing carbon
emissions and protecting soil, water and air quality. These include
precision nutrient use for crops and livestock feeding management.
Careful soil management is also critical to better environmental
outcomes. New Government policy and legislation in England and
Wales, such as ELMS, the Sustainable Farming Scheme and Nitrate
Vulnerable Zones, are also requiring farmers to adopt new
practices.
We have continued to increase our offering of sustainable
products during the year, and launched our Holistic Whole Farm
Solution through our sales team. We also introduced into our range
of ruminant feeds a methane inhibitor, which has been approved by
the Carbon Trust, and are also working on other feed products.
We take our social and community responsibilities very
seriously. Our 'Colleagues Forum', introduced in the last financial
year, gives our staff the opportunity to more easily offer their
views on how to improve the business, and we wish to see this
initiative further develop. We continue to support the local
communities in which we operate through projects and supporting
local charities. We also support the charitable efforts of our
staff, which include fundraising events for the Royal Agricultural
Benevolent Institution and Children with Cancer.
As a Board, we aim to maintain very high standards of
appropriate corporate and commercial governance, which will support
the delivery of long-term shareholder value.
COLLEAGUES
I would like to thank all our staff for their loyalty,
commitment, and dedication over the year. The Group's record
results have been underpinned by their hard work in what was a
challenging year, with disruption from coronavirus, supply issues,
inflation, and the cost-of-living crisis. Wynnstay colleagues have
continued to demonstrate our values, and I am extremely proud of
them all.
OUTLOOK
Trading in the first two months of the new financial year was in
line with management expectations, and, looking further ahead, we
remain confident of continuing progress against our strategic
plans. We are also conscious of inflationary pressures, which will
increase costs for our customers, suppliers and consumers, and have
taken steps to manage these pressures. Farmgate prices are off the
peaks of 2022, and although there is sector variation, especially
for free-range eggs, prices are still strong against the average of
the last five years.
The year's excellent financial results included substantial
one-off profits that we do not believe will be repeated in the new
financial year. Nonetheless, the trading performance was also
strong, and the Group remains well-positioned to build on this
performance.
We remain firmly focused on our long-term growth ambitions and
are investing with confidence across the Group and will continue to
seek complementary acquisitions.
Gareth Davies
Chief Executive Officer
WYNNSTAY GROUP PLC
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
For the year ended 31 October 2022
2022 2021
Note GBP000 GBP000 GBP000 GBP000
------- ---------- ------- ----------
Revenue 2 713,034 500,386
Cost of sales (622,228) (432,493)
Gross profit 90,806 67,893
Manufacturing, distribution
and selling costs (59,386) (50,072)
Administrative expenses (9,307) (7,096)
Other operating income 335 361
Adjusted operating profit(1) 22,448 11,086
Amortisation of acquired intangible
assets, goodwill impairment
and share-based payment expense 4 (416) (477)
Non-recurring items 4 (1,094) -
------------------------------------------------------------- ----- ------- ---------- ------- ----------
Group operating profit 20,938 10,609
Interest income 166 193
Interest expense (656) (383)
3 (490) (190)
Share of profits in joint ventures
and associates accounted for
using the equity method 808 677
Share of tax incurred by joint
ventures and associates (132) (105)
6 676 572
------- ---------- ------- ----------
Profit before taxation 21,124 10,991
Taxation 7 (3,982) (2,057)
------- ---------- ------- ----------
Profit for the year 17,142 8,934
Other comprehensive (expense)
/ income
Items that will be reclassified
subsequently to profit or loss
:
* Net change in the fair value of cashflow hedges taken
to equity, net of tax (2,462) 263
2,336 -
* Recycle cashflow hedge to income statement
Other comprehensive (expense)
/ income for the period (126) 263
------------------- ------- ------------
Total comprehensive income
for the period 17,016 9,197
=================== ======= ============
Basic earnings per share 9 82.72p 44.40p
Diluted Earnings per share 9 80.65p 43.53p
------------------- ------- ------------
(1) Adjusted operating profit are after adding back amortisation
of acquired intangible assets, goodwill impairment, share-based
payment expense and non-recurring items.
WYNNSTAY GROUP PLC
CONSOLIDATED BALANCE SHEET
As at 31 October 2022 2022 2021
Note GBP000 GBP000
---------- ---------
ASSETS
NON-CURRENT ASSETS
Goodwill 16,133 14,322
Intangible assets 4,936 236
Investment property 1,850 2,372
Property, plant and equipment 20,840 16,746
Right-of-use assets 8,202 11,043
Investments accounted for using
equity method 4,101 3,433
Derivative financial instruments 1 5
56,063 48,157
---------- ---------
CURRENT ASSETS
Inventories 71,095 50,550
Trade and other receivables 96,575 72,511
Financial assets - loan to
joint ventures 1,067 3,319
Cash and cash equivalents 11 31,177 19,641
Derivative financial instruments 598 320
200,512 146,341
---------- ---------
TOTAL ASSETS 256,575 194,498
---------- ---------
LIABILITIES
CURRENT LIABILITIES
Financial liabilities - borrowings 11 (3,043) (672)
Lease liabilities 11 (3,344) (3,995)
Derivative financial instruments (53) (53)
Trade and other payables (105,015) (76,212)
Current tax liabilities (1,639) (1,218)
Provisions (345) (243)
(113,439) (82,393)
---------- ---------
NET CURRENT ASSETS 87,073 63,948
---------- ---------
NON-CURRENT LIABILITIES
Financial liabilities - borrowings 11 (6,640) -
Lease liabilities 11 (3,999) (5,731)
Trade and other payables (36) (38)
Derivative financial instruments (80) (140)
Deferred tax liabilities (1,680) (474)
(12,435) (6,383)
---------- ---------
TOTAL LIABILITIES (125,874) (88,776)
---------- ---------
NET ASSETS 130,701 105,722
---------- ---------
EQUITY
Share capital 10 5,585 5,075
Share premium 42,130 31,600
Other reserves 4,267 4,131
Retained earnings 78,719 64,916
TOTAL EQUITY 130,701 105,722
---------- ---------
YNNSTAY GROUP PLC
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
As at 31 October 2022
Share Cashflow
Share premium Other hedge Retained
capital account reserves reserves earnings Total
Group GBP000 GBP000 GBP000 GBP000's GBP000 GBP000
---------- --------- ---------- ---------- ----------- ----------
At 1 November 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
---------- --------- ---------- ---------- ----------- ----------
Profit for the year - - - - 17,142 17,142
Net change in the fair
value of cashflow hedges
taken to equity, net of
tax - - - (2,462) - (2,462)
Recycle cashflow hedge
to income statement - - - 2,336 - 2,336
Total comprehensive income
for the year - - - (126) 17,142 17,016
---------- --------- ---------- ---------- ----------- ----------
Transactions with owners
of the Company, recognised
directly in equity
Shares issued during the
year 510 10,530 - - - 11,040
Dividends - - - - (3,339) (3,339)
Equity settled share-based
payment transactions - - 262 - - 262
Total contributions by
and distributions to owners
of the Company 510 10,530 262 - (3,339) 7,963
---------- --------- ---------- ---------- ----------- ----------
At 31 October 2022 5,585 42,130 4,130 137 78,719 130,701
---------- --------- ---------- ---------- ----------- ----------
WYNNSTAY GROUP PLC
CONSOLIDATED CASH FLOW STATEMENT
For the year ended 31 October 2022
2022 2021
Note GBP000 GBP000
--------- --------
Cash flows from operating activities
Cash generated from operations 12 13,839 10,577
Interest received 3 166 193
Interest paid 3 (399) (102)
Net movement in provisions - (96)
Tax paid (3,342) (1,462)
Net cash generated from operating
activities 10,264 9,110
--------- --------
Cash flows from investing activities
Proceeds from sale of property, plant
and equipment 264 340
Purchase of property, plant and equipment (3,560) (1,563)
Acquisition of business and assets,
net of cash acquired 13 (98) (2,156)
Acquisition of subsidiary undertaking,
net of cash acquired 13 (10,136) (82)
Decrease in short term loans to joint
ventures 2,252 570
Disposal of investments 7 -
Dividends received from joint ventures
and associates 4 753
Net cash used by investing activities (11,267) (2,138)
--------- --------
Cash flows from financing activities
Net proceeds from the issue of ordinary
share capital 11,040 1,025
Proceeds from new bank loan 9,485 -
Lease repayments (4,229) (4,392)
Repayment of borrowings (474) (900)
Dividends paid to shareholders 8 (3,339) (3,021)
Net cash generated from / (used in)
financing activities 12,483 (7,288)
--------- --------
Net increase in cash and cash equivalents 11,480 (316)
Effects of exchange rate changes 56 (23)
Cash and cash equivalents at the beginning
of the period 19,641 19,980
Cash and cash equivalents at the end
of the period 11 31,177 19,641
========= ========
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 accordance
with UK-adopted International Accounting Standards and applicable
law. 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 accordance with
UK-adopted International Accounting Standards 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. 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.
All revenue during the year has arisen from revenue recognised
at a point in time, and there were no revenues from transactions in
2022 or 2021 with individual customers which amounted to 10% or
more of Group revenues.in that period.
The segment results for the year ended 31 October 2022 are as
follows:
Specialist
Agricultural
Year ended 31 October Agriculture Merchanting Other Total
2022 GBP000 GBP000 GBP000 GBP000
------------ -------------- -------- ----------
Revenue from external
customers 564,263 148,771 - 713,034
------------ -------------- -------- ----------
Segment result
Group operating profit
before non-recurring
items 14,108 7,939 (15) 22,032
Share of results of
joint ventures before
tax 553 8 247 808
14,661 7,947 232 22,840
------------ -------------- -------- ----------
Non-recurring items (1,094)
Interest income 166
Interest expense (656)
----------
Profit before tax from
operations 21,256
Income taxes (includes
tax of joint ventures
and associates) (4,114)
----------
Profit for the year
attributable to equity
shareholders from operations 17,142
==========
Other Information:
------------ -------------- -------- ----------
Depreciation and amortisation 3,772 2,591 12 6,375
Non-current asset additions 13,490 1,260 - 14,750
------------ -------------- -------- ----------
Segment assets 146,008 75,099 4,212 225,319
Segment liabilities (80,906) (24,544) - (105,450)
------------ -------------- -------- ----------
119,869
Add corporate net cash
(note 11) 14,151
Less corporate and deferred
tax liabilities (3,319)
----------
Net assets 130,701
----------
Included in the segment
assets above are the
following investments
in joint ventures and
associates 2,746 117 1,150 4,013
2 . SEGMENTAL REPORTING (continued)
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
Non-current asset additions 3,860 2,094 - 5,954
------------ -------------- -------- ---------
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 11) 9,243
Less corporate and deferred
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
3. FINANCE COSTS
2022 2021
GBP000 GBP000
Interest expense:
Interest payable on borrowings (399) (102)
Interest payable on finance leases (257) (281)
Interest and similar charges payable (656) (383)
------- -------
Interest income from banks deposits 66 57
Interest income from customers 100 136
Interest receivable 166 193
------- -------
Finance costs (490) (190)
======= =======
4. AMORTISATION OF ACQUIRED INTANGIBLE ASSETS, IMPAIRMENT OF
GOODWILL, SHARE-BASED PAYMENTS AND NON-RECURRING ITEMS
2022 2021
GBP000 GBP000
------- -------
Amortisation of acquired intangible assets
and share-based payments
Amortisation of intangibles 154 39
Impairment of goodwill - 95
Cost of share-based reward 262 343
416 477
------- -------
Non-recurring items
Business combination costs 572 -
Fair value movement in Investment property 522 -
------- -------
1,094 -
======= =======
Non-recurring items in relation to 2022 were:
- Business combination costs relating to the acquisition of
Humphrey Poultry (Holdings) Limited.
- The fair value movement in investment property followed a
professional valuation carried out by BNP Paribas Real Estate in
July 2022.
5. GROUP OPERATING PROFIT
The following items have been included in arriving at operating
profit:
2022 2021
GBP000 GBP000
Staff costs 37,724 31,085
Cost of inventories recognised as an expense 617,170 431,423
Depreciation of property plant and equipment:
- owned assets 2,290 2,165
Amortisation of right-of-use assets 4,085 3,974
Amortisation of intangibles 154 39
Fair value (gains) / losses on derivative
financial instruments (627) 23
Hedge ineffectiveness for the period 104 114
(Profit) on disposal of fixed assets (132) (86)
(Profit) on disposal of right of use assets (86) (14)
Other operating lease rentals payable 349 205
Services provided by the Group's auditor
During the year the Group obtained the following services from
the Group's auditor:
2022 2021
GBP000 GBP000
Audit services - statutory audit 175 119
6. SHARE OF POST-TAX PROFITS OF JOINT VENTURES
2022 2021
GBP000 GBP000
Total share of post-tax profits of joint
ventures 676 572
======= =======
7. TAXATION
2022 2021
Analysis of tax charge in year GBP000 GBP000
------- -------
Current tax
- Operating activities 3,627 1,901
- Adjustments in respect of prior years 136 (4)
------- -------
Total current tax 3,763 1,897
------- -------
Deferred tax
- Accelerated capital allowances (76) 57
- other temporary and deductible differences 295 103
------- -------
Total deferred tax 219 160
------- -------
Tax on profit on ordinary activities 3,982 2,057
======= =======
8. DIVIDS
2022 2021
GBP000 GBP000
------- -------
Final dividend paid for prior year 2,134 2,007
Interim dividend paid for current
year 1,205 1,014
3,339 3,021
======= =======
Subsequent to the year end it has been recommended that a final
dividend of 11.60p net per ordinary share (2021: 10.50p) be paid on
28 April 2023. Together with the interim dividend already paid on
29 October 2022 of 5.40p net per ordinary share (2021: 5.00p) this
will result in a total dividend for the financial year of 17.00p
net per ordinary share (2021: 15.50p).
9. EARNINGS PER SHARE
Basic earnings Diluted earnings
per share per share
2022 2021 2022 2021
-------- ------- --------- ---------
Earnings attributable to shareholders
(GBP000) 17,142 8,934 17,142 8,934
Weighted average number of shares
in issue during the year (number
'000) 20,722 20,120 21,254 20,524
Earnings per ordinary 25p share
(pence) 82.72 44.40 80.65 43.53
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.
10. SHARE CAPITAL
2022 2021
----------------- ------------------
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 22,340 5,585 20,299 5,075
======== ======= ======== ========
During the year 75,891 shares (2021: 89,687) were issued with an
aggregate nominal value of GBP19,000 (2021: GBP22,000) and were
fully paid up for equivalent cash of GBP459,000 (2021: GBP439,000)
to shareholders exercising their right to receive dividends under
the Company's dividend scrip scheme. A further 1,965,689 (2021:
158,138) shares with a nominal value of GBP491,000 (2021:
GBP40,000) were issued for a cash value of GBP10,581,000 (2021:
GBP586,000), with 65,689 being to satisfy the exercise of employee
options and 1,900,000 shares issued in a private placing to
institutional shareholders.
11. CASH AND CASH EQUIVALENTS, BORROWINGS AND LEASE LIABILITIES
2022 2021
GBP000 GBP000
Current
Cash and cash equivalents per balance
sheet and cash flow 31,177 19,641
Bank loans and other loans due within
one year or on demand:
Secured loans (2,371) -
Loanstock (unsecured) (672) (672)
- -
Financial liabilities - borrowings (3,043) (672)
Net obligations under finance leases:
Non-property leases (1,647) (1,626)
Property leases (1,697) (2,369)
--------- --------
Lease liabilities (3,344) (3,995)
Total current net cash and lease liabilities 24,790 14,974
Non-current
Bank loans:
Secured loans (6,640) -
Financial liabilities - borrowings (6,640) -
Net obligations under leases:
Non-property leases (1,645) (1,881)
Property leases (2,354) (3,850)
--------- --------
Lease liabilities (3,999) (5,731)
Total non-current net debt and lease
liabilities (10,639) (5,731)
Total net cash and lease liabilities 14,151 9,243
--------- --------
Memo: total net cash and lease liabilities
excluding property leases 18,202 15,462
========= ========
-- Cash and cash equivalents
Cash and cash equivalents are all cash at bank and held with
HSBC UK Bank Plc, except for GBP1,652,000 (2021: GBP585,000) which
is held at International FC Stones for wheat futures hedging. HSBC
UK Bank Plc's credit rating per Moody's is Aa3 (2021: Aa3) for long
term deposits. GBP3,623,000 (2021: GBP412,000) of the cash and cash
equivalent balances is denominated in foreign currencies (EUR (99%)
and USD (1%)) (2021: (90%) and USD (10%)). All other amounts are
denominated in GBP and are at booked at fair value.
-- Borrowings
Bank loans and overdrafts are secured by an unlimited composite
guarantee of all trading entities within the Group. During the
year, a new bank loan of GBP9,485,000 was drawn structured as a
term facility with quarterly repayments of 5% of the original loan
amount. Interest on this loan is 1.75% over the daily SONIA rate up
to the point of repayment.
Loan stock is redeemable at par at the option of the Company or
the holder. Interest of 1.5% (2021: 0.5%) per annum is payable to
the holders.
12 . C ASH GENERATED FROM OPERATIONS
2022 2021
GBP000 GBP000
--------- ---------
Profits for the year from operations 17,142 8,934
Adjustments for:
Tax 3,982 2,057
Investment and goodwill impairment - 95
Fair value movement in Investment property 522 -
Depreciation of tangible fixed assets 2,289 2,165
Amortisation of right-of-use assets 4,086 3,974
Amortisation of other intangible fixed
assets 154 39
Profit on disposal of property, plant
and equipment (132) (86)
Profit on disposal of right-of-use
asset (86) (14)
Loss on relinquishment of property
leases - 26
Interest income (166) (193)
Interest expense 656 383
Share of post-tax results of joint
ventures (676) (572)
Share-based payments 262 343
Derivative held at fair value (627) 23
Hedge ineffectiveness 104 46
Government grant (2) -
Movement in provisions (6) 193
Changes in working capital (excluding
effects of acquisitions and disposals
of subsidiaries):
(Increase) in inventories (18,401) (14,583)
(Increase) in trade and other receivables (18,467) (16,730)
Decrease in payables 23,205 24,477
Cash generated from operations 13,839 10,577
========= =========
13. BUSINESS COMBINATIONS
Humphrey Poultry (Holdings) Limited
On 18 March 2022, Wynnstay plc entered a business combination
and acquired 100% of the shares of Humphreys Poultry Holdings
Limited, which in turn owns 100% of the shares in two commercial
and operational entities Humphreys Feeds Limited and Humphreys
Pullets Limited.
The consideration is GBP13.147m inclusive of cash and cash
equivalents of GBP1.011m.
Current Non-Current Total
GBP'000 GBP'000 GBP'000
Trade Debtors 5,003 - 5,003
Other Debtors 595 - 595
Inventories 2,144 - 2,144
Cash and cash equivalents 1,011 - 1,011
Trade Creditors (3,469) - (3,469)
Other Creditors (368) - (368)
Leases (146) (64) (210)
Deferred tax - (104) (104)
==================================== ======== =========== ========
Net Current Assets and Non-Current
Liabilities 4,770 (168) 4,602
------------------------------------ ======== =========== --------
Tangible fixed assets - 1,545 1,545
------------------------------------ ======== =========== --------
Net Assets 4,770 1,377 6,147
------------------------------------ ======== =========== --------
The provisional consideration payable is dependent on future
product volumes of the commercial business acquired. The fair value
of the contingent consideration has been based on management's
expectation of the future performance of the business and that
could range from GBPnil to GBP2.000m.
A full analysis of the provisional consideration is provided in
the table below which includes the break-down of the tangible fixed
assets which incorporates freehold land and buildings for the
amount of GBP1.830m, which reflects the current fair value
assessment carried out by an independent third-party valuation,
which has not impacted the consideration, but only the analysis.
The goodwill balance represents the assembled workforce and future
sales opportunities and is not expected to be deductible for tax
purposes.
Fair Value of
Net Assets
GBP'000
Fair value of net assets acquired
Goodwill 1,811
Intangible - Brands 3,759
Intangible - Key and other accounts 1,095
Property, plant and equipment 2,566
Right of use assets 210
Trade Debtors 5,003
Other Debtors 595
Inventories 2,144
Cash and cash equivalents 1,011
Trade payables (3,469)
Other payables (368)
Lease liabilities (210)
Deferred tax (1.000)
------------------------------------------ --------------
Acquisition date - fair value of total
net assets acquired 13,147
------------------------------------------ --------------
Represented by: GBP'000
Cash settled to vendor during the period 11,147
Contingent as at 31 October 2022 2,000
------------------------------------------ --------------
Provisional Consideration 13,147
------------------------------------------ --------------
Cashflow Statement: GBP'000
Cash settled to vendor during the period 11,147
less cash and cash equivalents acquired (1,011)
plus, cash settled to vendors during
the period for prior acquisition 98
------------------------------------------ --------------
Acquisition date - fair value of total
net assets acquired 10,234
------------------------------------------ --------------
Directly attributable acquisition costs of GBP0.563m were
incurred with the transaction, and these have been recognised as
non-recurring expenses in the income statement for the period and
included in operating activities in the cash flow statement. During
the last available audited accounts of the acquired entities, for
the period to February 2021, the annual aggregate revenues on a
non-consolidated basis amounted to GBP41.446m and profit before tax
was GBP1.634m. Business combination accounting is expected to be
finalised within 12 months from the completion date of the
acquisition.
Amounts included in the Consolidated Statement of Comprehensive
Income in the period to 31 October 2022 in relation to the acquired
business are revenues of GBP31.567m and profit before tax of
GBP0.643m.
Contingent consideration of GBP0.098m was paid during the period
to 31 October 2022 relating to other prior period acquisitions,
resulting in a total gross cash outflow of GBP11.245m or GBP10.234m
net of cash acquired with the Humphrey transaction.
14. POST BALANCE SHEET EVENT
Acquisition of Tamar Milling Limited
On 17 November 2022, Wynnstay Group PLC announced that Wynnstay
(Agricultural Supplies) Ltd had acquired the entire share capital
of Tamar Milling Ltd, a manufacturer and supplier of blended feed
products ("Tamar"), for an initial consideration of up to GBP1.5m
(inclusive of up to GBP0.1m of contingent consideration based on
future product volumes).
Based in Whitstone, Cornwall, Tamar is a highly complementary
acquisition to the Group, which strengthens the Company's presence
in the south-west of England, adds a new farming customer base and
provides good cross selling opportunities for other Group
activities. The acquisition establishes the Group's first
south-western feed manufacturing facility which enables the
provision of its own bulk feed offering for the first time.
In the year ended 30 September 2021, Tamar generated revenues of
GBP6.40m, and a profit before tax of GBP0.42m. Net assets at 30
September 2021 were GBP0.92m. The transaction initially appears to
satisfy the IFRS 3 requirements of a business combination, and the
Group intends to account for the acquisition in the year ended 31
October 2023 where IFRS 3 criteria have been satisfied. As of the
date of this report, insufficient information is available to
complete the business combination accounting as transaction
completion accounts have not been completed by the vendors.
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
GBP22.61m (2020: GBP8.37m). A reconciliation with the reported
income statements and this measure, together with the reasons for
its use is given below:
2022 2021
GBP000 GBP000
------- -------
Profit before tax 21,124 10,991
Share of tax incurred by joint ventures
and associates 132 105
Share-based payments 262 343
Non-recurring items 1,094 -
------- -------
Underlying pre-tax profit 22,612 11,439
======= =======
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 A Bradshaw
17. CONTENT OF THIS REPORT
The information in this announcement has been extracted from the
audited statutory financial statements for the year ended 31
October 2022 and as such, does not constitute statutory financial
statements within the meaning of section 435 of the Companies Act
2006 as it does not contain all the information required to be
disclosed in the financial statements prepared in accordance with
UK-adopted International Accounting Standards.
Statutory accounts for 2021 have been delivered to the Registrar
of Companies. The auditor, RSM UK Audit LLP, has reported on the
2021 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 2022 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 2023. 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 21 March 2023 at 11.45am in the Sovereign Suite at
Shrewsbury Town Football Club, Oteley Road, Shrewsbury, Shropshire,
SY2 6ST. Further details will be published on the Company's website
www.wynstayplc.co.uk .
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END
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