REG - Wynnstay Group PLC - Final Results
01/02/2023 07:00
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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 £713.03m (2021: £500.39m), primarily the
impact of commodity inflation
· Underlying Group PBT* (incl. one-off gains) up 98% to £22.61m
(2021: £11.44m)
· Reported pre-tax profit up 92% to £21.12m (2021: £10.99m)
· Basic EPS up 86% to 82.72p (2021: 44.40p)
· Net cash up 53% to £14.15m (31 Oct 2021: £9.24m)
· Net assets up 24% to record £130.70m or £6.31 per share (2021:
£105.72m /£5.25 per share)
· Successful £10.3m (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 £564.26m (2021:
£358.96m), segmental profit contribution up 247% to £14.66m (2021: £4.22m)
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
£148.77m (2021: £141.43m) segmental profit contribution up 11% to £7.95m
(2021: £7.15m)
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 Executive T: 020 3178 6378 (today)
Paul Roberts, Finance Director T: 01691 827 142
KTZ Communications Katie Tzouliadis / Robert Morton / Dan Mahoney T: 020 3178 6378
Shore Capital (Nomad and Broker) Stephane Auton / John More / Rachel Goldstein T: 020 7408 4090
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
£22.61m (2021: £11.44m) and revenues increased by 42% to £713.03m (2021:
£500.39m), with significant inflation primarily driving the uplift in
revenue. Reported profit before taxation was £21.12m (2021: £10.99m). 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 £12.1m 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 £1.5m. Both
acquisitions are earnings enhancing. In August 2022, we also raised £10.3m
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 £713.03m (2021: £500.39m).
This rise reflected significant commodity inflation, with the Humphrey
acquisition making a first-time partial revenue contribution of £31.58m.
Underlying Group pre-tax profit, the Board's alternative performance measure,
rose by 98% to a record £22.61m (2021: £11.44m) 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 £21.12m
(2021: £10.99m). 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 £564.26m (2021: £358.96m),
and the Specialist Agricultural Merchanting Division a 5% rise to £148.77m
(2021: £141.43m). The segmental profit contribution from the Agriculture
Division increased by 247% year-on-year to £14.66m (2021: £4.22m), with the
Specialist Agricultural Merchanting Division contributing £7.95m (2021:
£7.15m), an 11% rise.
The Group generates good operational cash flows, with cash generated from
operations being £13.84m (2021: £10.57m) despite the challenges of working
capital inflation.
Cash and cash equivalents at 31 October 2022 increased by 53% to £14.15m
(2021: £9.24m). 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 £0.457m (2021:
£0.439m). 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 £10.58m (2021: £0.59 million).
Capital investment in fixed assets amounted to £5.31m (2021: £5.61m) in the
year and £10.23m, net of cash acquired, was invested in acquisitions (2021:
£2.21m).
Group net assets at the financial year end increased by 24% to £130.70m
(2021: £105.72m), 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
£6.31 per share (2021: £5.25 per share).
Return on assets from underlying pre-tax profits, increased to 17.4% (2021:
10.8%).
DIVIDENDS
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 £564.26m
(2021: £358.96m) and segmental contribution (see Note 2 of the financial
statements) rose by 247% to £14.66m (2021: £4.22m).
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 £0.4 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 £148.77m (2021: £141.43m). Its segmental contribution rose by 11% to
£7.95m (2021: £7.15m), 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 £0.80m (2021: £0.68m). 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 £1 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 £000 £000 £000 £000
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 4 (416) (477)
share-based payment expense
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 808 677
equity method
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)
17,142 8,934
Profit for the year
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, (2,462) 263
net of tax
- Recycle cashflow hedge to income statement 2,336 -
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 £000 £000
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 premium account Other reserves Cashflow
Share hedge Retained
capital reserves earnings Total
Group £000 £000 £000 £000's £000 £000
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 £000 £000
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:
Year ended 31 October 2022 Agriculture Specialist Agricultural Merchanting Other Total
£000 £000 £000 £000
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 2,746 117 1,150 4,013
ventures and associates
2. SEGMENTAL REPORTING (continued)
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
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 2,386 115 840 3,341
ventures and associates
3. FINANCE COSTS
2022 2021
£000 £000
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
£000 £000
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
£000 £000
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
£000 £000
Audit services - statutory audit 175 119
6. SHARE OF POST-TAX PROFITS OF JOINT VENTURES
2022 2021
£000 £000
Total share of post-tax profits of joint ventures 676 572
7. TAXATION
2022 2021
Analysis of tax charge in year £000 £000
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. DIVIDENDS
2022 2021
£000 £000
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 per share Diluted earnings per share
2022 2022
2021 2021
Earnings attributable to shareholders (£000) 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 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 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 £19,000 (2021: £22,000) and were fully paid up for
equivalent cash of £459,000 (2021: £439,000) 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 £491,000
(2021: £40,000) were issued for a cash value of £10,581,000 (2021:
£586,000), 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
£000 £000
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 £1,652,000 (2021: £585,000) 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. £3,623,000 (2021: £412,000) 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
£9,485,000 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. CASH GENERATED FROM OPERATIONS
2022 2021
£000 £000
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 £13.147m inclusive of cash and cash equivalents of
£1.011m.
Current Non-Current Total
£'000 £'000 £'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 £nil to £2.000m.
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 £1.830m, 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
£'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: £'000
Cash settled to vendor during the period 11,147
Contingent as at 31 October 2022 2,000
Provisional Consideration 13,147
Cashflow Statement: £'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 £0.563m 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 £41.446m and profit before
tax was £1.634m. 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
£31.567m and profit before tax of £0.643m.
Contingent consideration of £0.098m was paid during the period to 31 October
2022 relating to other prior period acquisitions, resulting in a total gross
cash outflow of £11.245m or £10.234m 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 £1.5m (inclusive of up to £0.1m 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 £6.40m, and
a profit before tax of £0.42m. Net assets at 30 September 2021 were
£0.92m. 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 £22.61m (2020: £8.37m).
A reconciliation with the reported income statements and this measure,
together with the reasons for its use is given below:
2022 2021
£000 £000
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
(http://www.wynstayplc.co.uk) .
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