REG - Wynnstay Group PLC - Half Year Results <Origin Href="QuoteRef">WYWYN.L</Origin> - Part 2
21/06/2017 07:05
- Part 2: For the preceding part double click ID:nRSU6448Ia
went into administration during the period.
11. Goodwill
After initial recognition, goodwill is subject to annual impairment test or
more frequently if events or changes in circumstances indicate that it might
be impaired, in accordance with IAS 36.
Cost £'000s
At November 2016 and 30 April 2017 19,784
Aggregate impairment
At 1 November 2016 1,637
Impairment charge 3,881
At 30 April 2017 5,518
Net book value
At 30 April 2017 14,266
At 31 October 2016 18,147
Goodwill impairment
Goodwill arising on business combinations is not amortised but is reviewed for
impairment on an annual basis, or more frequently if there are indications
that goodwill may be impaired.
Goodwill acquired in a business combination is allocated to groups of cash
generating units according to the level at which management monitor that
goodwill.
Recoverable amounts for cash generating units are based on the higher of value
in use and fair value less cost to sell. Value in use is calculated from cash
flow projections for the next five years using data from the Group's latest
internal forecasts, the results of which are reviewed by the Board.
The key assumptions for the value in use calculations are those regarding
discount rates and growth rates. Management estimate discount rates using
pre-tax rates that reflect the current market assessment of the time value of
money and the risks specific to the cash generating units. Growth rates are
based on past experience and expectations of future changes in the market.
Given the current economic climate, a sensitivity analysis has been performed
in assessing the recoverable amounts of goodwill.
In April 2017 and October 2016 impairment reviews were performed by comparing
the carrying value of goodwill with the recoverable amount of the cash
generating units to which goodwill has been allocated.
The impairment charge of £3,880,535 relates to the impairment on the CGU of
the Group's subsidiary Just for Pets Limited.
Goodwill is allocated to specific cash generating units ("CGU") as it arises
The Group has a number of CGUs in both Agriculture and the Specialist Retail
sectors. The carrying value of goodwill allocated to the Agriculture CGU is
£7,776,514 (2016: £7,776,514), and to Specialist Retail is £6,489,560 (2016:
£10,370,095).
The pre-tax discount rates used to calculate value in use ranges from between
9% to 12% for both the Agriculture and Specialist retail segments. These
discounts rates are derived from the Group's weighted average cost of capital
and adjusted for the specific risks relating to each CGU.
The forecasts are extrapolated based on estimated long term growth rates of 1%
to 3% for both Agriculture and Specialist Retail segments
The Directors have considered the sensitivity to key assumptions and are
satisfied that there are no reasonably probable changes in key assumptions
which would cause the carrying amount of the CGU to exceed its recoverable
amount
12. Cash and cash equivalents and bank overdrafts
Unaudited as at 30 April 2017 Unaudited as at 30 April 2016 Audited as at 31 October 2016
£'000s £'000s £'000s
Cash and cash equivalents per balance sheet 22 2,762 10,111
Bank overdrafts (3,335) (13) -
Cash and cash equivalents per cash flow statement (3,313) 2,749 10,111
13. Cash (used in)/generated from operations
Unaudited six months ended 30 April 2017 Unaudited six months ended 30 April 2016 Audited year ended 31 October 2016
£'000s £'000s £'000s
(Loss)/Profit for the period (659) 3,340 5,829
Adjustments for:
Taxation 784 735 1,456
Impairment of goodwill 3,881 - -
Depreciation of tangible fixed assets 1,422 1,431 2,768
Amortisation of intangibles 7 7 15
Impairment of investments 61 - -
(Profit) on disposal of property, plant and equipment (26) (83) (128)
Interest income (8) (18) (69)
Interest expense 95 118 209
Share of results of joint ventures and associates - - (67)
Share based payment expenses 75 62 63
Changes in working capital (excluding effects of acquisitions and disposals of subsidiaries)
Decrease in short term loan to joint venture - - 16
(Increase)/ decrease in inventories (4,921) (2,322) 350
(Increase)in trade and other receivables (12,896) (8,850) (1,709)
Increase in payables 2,813 2,547 164
Cash (used in)/ generated from operations (9,372) (3,033) 8,897
During the six months to 30 April 2017, the Group purchased property, plant
and equipment of £1,202,000 (2016: £1,357,000) of which £127,000 (2016:
£754,000) relates to assets acquired under finance leases.
14. Other reserves
Included in Other reserves are share-based payments: the Group issues
equity-settled share-based payments to certain employees. Equity-settled
share-based payments are measured at fair value at the date of the grant. The
fair value determined at the grant date of the equity-settled share-based
payments is expensed on a straight-line basis over the vesting period, based
on the Group's estimate of shares that will eventually vest.
The Group operates a number of share option and Save As You Earn schemes and
fair value is measured by use of a recognised valuation model. The expected
life used in the model has been adjusted, based on management's best estimate,
for the effects of non-transferability, exercise restrictions and behavioural
considerations.
At the 30 April 2017, the ESOP Trust, which is consolidated within the Group's
financial statements held 53,377 Ordinary Shares in the Group.
15. Group financial commitments
As at 30 April 2017, the Group's contingent liabilities in respect of bank
guarantees for one of its associates amount to £125,000 (2011: £125,000).
16. Capital commitments
As at 30 April 2017 the Group had capital commitments as follows:
Unaudited as at 30 April 2017 Unaudited as at 30 April 2016 Audited as at 31 October 2016
£'000s £'000s £'000s
Contracts placed for future capital expenditure not provided in the financial statements 282 2,005 361
17. Related parties
Transactions between the Company and its subsidiaries, which are related
parties have been eliminated on consolidation and are not disclosed in this
note. Transactions between the Group and its joint ventures and associates are
described below:
Transaction value Balance outstanding
Unaudited six months ended 30 April 2017 Unaudited six months ended 30 April 2016 Audited year ended 31 October 2016 Unaudited as at 30 April 2017 Unauditedas at 30 April 2016 Audited as at 31 October 2016
£'000s £'000s £'000s £'000s £'000s £'000s
Sales of goods to joint ventures and associates 12,220 6,480 10,594 6,077 3,670 2,684
Purchases of goods from joint ventures and associates 8,327 3,677 5,346 1,356 2,758 65
Interest receivable from joint ventures and associates - - 58 - - -
Loans with joint ventures - - - 2,786 2,802 2,786
Sales of goods to related parties were made at the Group's usual list prices,
less average discounts. Purchases were made at market price discounted to
reflect the quantity of goods purchased and the relationship between parties.
This information is provided by RNS
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