REG - Wynnstay Group PLC - Final Results
02/02/2022 07:00
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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 £500.39m (2020: £431.40m), including
significant commodity price inflation
· Underlying pre-tax profit* up 37% to £11.44m (2020: £8.37m)
/Reported pre-tax profit increased to £10.99m (2020: £6.98m after £1.2m 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 £9.24m (31 October 2020: £8.42m)
· Net assets up 8% to £105.72m/£5.25 per share (31 October 2020:
£98.18m/£4.92 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 £358.96m (2020:
£302.58m), operating profit contribution up 47% to £4.22m (2020: £2.88m)
- 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
£141.43m (2020: £128.81m) operating profit contribution up 24% to £7.15m
(2020: £5.78m)
- 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 Executive T: 020 3178 6378 (today)
Paul Roberts, Finance Director T: 01691 827 142
KTZ Communications Katie Tzouliadis / Dan Mahoney T: 020 3178 6378
Shore Capital (Nomad and Broker) Stephane Auton / Patrick Castle / John More T: 020 7408 4090
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 £11.44m (2020: £8.37m) and revenues increased by 16% to
£500.39m (2020: £431.40m), 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 £500.39m (2020: £431.40m), 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 £11.44m (2020:
£8.37m). 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 £10.99m (2020: £6.98m after £1.2m 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 £358.96m (2020: £302.58m), and a 10%
revenue increase from the Specialist Agricultural Merchanting Division to
£141.43m (2020: £128.81m). The operating profit contribution from the
Agriculture Division was £4.22m (2020: £2.88m), a rise of 46% year-on-year,
with the Specialist Agricultural Merchanting Division increasing its
contribution by 24% to £7.15m (2020: £5.78m).
The Group generates good operational cash flows although, this year, cash
generated from operations was affected by commodity inflation, and amounted to
£10.55m (2020: £19.83m). Net cash at the financial year-end increased by 10%
to £9.24m (31 October 2020: £8.42m). 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 £0.439m (2020: £0.392m) 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
£0.586m (2020: nil) to employees exercising rights over approved share
options.
Group net assets at the financial year end increased by 8% to £105.72m (31
October 2020: £98.18m), 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 £5.25 per share (2020: £4.92). 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 £5.85m (2020: £4.01m), and net working capital at the
financial year end increased by 24% to £46.81m (31 October 2020: £37.89m).
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
£2.85 in November 2020 and a high of £5.92 in August 2021.
DIVIDEND
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 £358.96m (2020: £302.58m)
and operating profit increased by 47% to £4.22m (2020: £2.88m).
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 £141.43m (2020: £128.81m), and like-for-like revenue up 12%.
Operating profit rose by 24% to £7.15m (2020: £5.78m).
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 £000 £000 £000 £000
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 4 (477) (132)
share-based payment expense
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 677 538
equity method
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)
8,934 5,533
Profit for the year
Other comprehensive 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 263 -
Other comprehensive income for the period 263 -
Total comprehensive income for the period 9,197 5,533
Basic earnings per share 10 44.40p 27.73p
Diluted Earnings per 10 43.53p 27.57p
share
WYNNSTAY GROUP PLC
CONSOLIDATED BALANCE SHEET
As at 31 October 2021 2021 2020
Note £000 £000
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 premium account Other reserves Cashflow
Share hedge Retained
capital reserves earnings Total
Group £000 £000 £000 £000's £000 £000
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 £000 £000
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:
Year ended 31 October 2021 Agriculture Specialist Agricultural Merchanting Other Total
£000 £000 £000 £000
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 2,386 115 840 3,341
ventures and associates
2. SEGMENTAL REPORTING (continued)
The segment results for the year ended 31 October 2020 are as follows:
Year ended 31 October 2020 Agriculture Specialist Agricultural Merchanting Other Total
£000 £000 £000 £000
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 2,711 91 719 3,521
ventures and associates
3. FINANCE COSTS
2021 2020
£000 £000
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
£000 £000
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
£000 £000
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
£000 £000
Audit services - statutory audit 119 99
6. SHARE OF POST-TAX PROFITS OF JOINT VENTURES
2021 2020
£000 £000
Total share of post-tax profits of joint ventures 572 438
7. TAXATION
2021 2020
Analysis of tax charge in year £000 £000
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. DIVIDENDS
2021 2020
£000 £000
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 per share Diluted earnings per share
2021 2021
2020 2020
Earnings attributable to shareholders (£000) 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 average number of shares (number '000) Earnings per share Earnings Weighted average number of shares (number '000) Earnings per share
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 shares £000 No. of shares £000
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 £22,421 (2020: £38,759) and were fully paid up for
equivalent cash of £439,095 (2020: £392,135) 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 £39,534 and
equivalent cash value of £586,310 (2020: Nil) to satisfy the exercise of
employee options.
12. CASH AND CASH EQUIVALENTS, BORROWINGS AND LEASE LIABILITIES
2021 2020
£000 £000
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 £585,000 (2020: £311,000) 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). £412,000 of the cash and cash equivalent balance is
denominated in EUR (99%) and USD (1%) (2020: £38,000, 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. CASH GENERATED FROM OPERATIONS
2021 2020
£000 £000
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 £548,000 which is represented by £154,000
paid on completion for certain assets, deferred consideration paid during the
year of £344,000 for inventory and debtors and contingent consideration of
£50,000 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 £nil
to £50,000.
Amounts included in the Consolidated Statement of Comprehensive Income for the
period to 31 October 2021 as extracted from management accounts are revenues
of £4,761,000 and profit before tax of £3,000.
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 £1,658,000 which is represented by
£1,658,000 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
£11,065,000 and profit before tax of £742,000.
Fertiliser division Agricultural division of Armstrong Richardson & Co. Limited Total
of HELM Great Britain Limited
£'000 £'000 £'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 £17,000 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 £82,000 was paid during the period
to 31 October 2021 relating to prior period acquisitions, resulting in a total
outflow of £2,238,000 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 £11.44m (2020: £8.37m).
A reconciliation with the reported income statements and this measure,
together with the reasons for its use is given below:
2021 2020
£000 £000
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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