REG - Wynnstay Group PLC - Interim Results
03/07/2023 07:00
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RNS Number : 6519E Wynnstay Group PLC 03 July 2023
AIM: WYN
Wynnstay Group Plc
("Wynnstay" or the "Group" or the "Company")
Interim Results for the six months ended 30 April 2023
Group remains on track to deliver its underlying FY23 targets
KEY POINTS
Financial
· Good overall result in softer trading conditions; underlying
performance in line with management expectations
· Revenue up 22% to £409.14m (2022: £335.66m)
o commodity price inflation accounted for estimated £48m of the rise
o full period contributions from Humphrey and Tamar acquisitions
· Adjusted operating profit* was £5.78m, (2022: £10.43m, including
one-off fertiliser gains)
o H1 2022 results benefitted from the significant one-off fertiliser stock
price gains. In this reporting period, the fertiliser blending activities at
Glasson contended with a reversal of the abnormal spike in fertiliser raw
material prices, which created one-off adverse stock realisations
· Underlying pre-tax profit* (including an estimated £1.5m of one-off
adverse Glasson fertiliser stock realisations) of £5.25m (2022: £10.21m) /
Reported pre-tax profit of £5.07m (2022: £9.56m, including one-off
fertiliser gains)
· Basic earnings per share were 17.20p (2022: 36.99p)
· Net debt (pre IFRS 16) of £10.68m (30 April 2022: £7.62m);
reflected acquisition funding and high working capital requirements, which
typically peak around April and reduce in H2
· Net assets up 18% to £131.97m/£5.90 per share (30 April 2022:
£111.68m/£5.50 per share)
· Increased interim dividend of 5.50p (2022: 5.40p) - following 19
years of unbroken annual dividend growth
Operational
· Breadth of Group activities remains a strength, helped to balance
sector variations
· Agriculture Division - revenue of £333.57m (2022: £263.03m),
operating profit contribution of £2.08m, including c.£1.5m one-off adverse
Glasson fertiliser stock realisations (2022: £6.06m, including positive
Glasson fertiliser stock gains)
o Glasson contended with a sharp reversal of fertiliser raw material prices
back to pre-exceptional and more sustainable levels
o feed volumes decreased by 1.3% and by 7% on a like-for-like basis, in line
with the sector. Cost inflation around labour, distribution and packaging
costs
o arable activities benefited from record grain trading volumes and strong
demand for winter and spring cereal seed inputs, while fertiliser sales were
suppressed by high prices in line with national trends
· Specialist Agricultural Merchanting Division - revenue of £75.57m
(2022: £72.63m), operating profit contribution of £3.44m (2022: £4.28m)
o like-for-like sales increased, reflecting inflation
· Acquisitions: integrating the strategically important Humphrey
acquisition and smaller Tamar acquisition. In Q2, Group assumed the activities
of S.G. Deakins, an agricultural inputs supplier and trader based in Powys
· Investment programmes across Group progressed well, including
Carmarthen feed mill project
Outlook
· Overall outlook for H2 is encouraging, with strong arable sector
performance. Board expects Group to achieve its underlying growth objectives
for the financial year although pressures remain
*Adjusted operating profit and Underlying pre-tax profit are non-GAAP
(generally accepted accounting principles) measures and are not intended as
substitutes for GAAP measures and may not be calculated in the same way as
those used by other companies. Refer to Note 6 for an explanation on how these
measures have been calculated and the reasons for their use.
Gareth Davies, Chief Executive of Wynnstay Group plc, commented:
"The Group performed well against softer trading conditions compared to last
year and underlying performance is in line with our expectations. The
extraordinary one-off gains of last year, generated by escalating fertiliser
prices, were absent. Instead, our fertiliser blending operation at Glasson
contended with a sharp reversal in the price of fertiliser back to the
pre-exceptional and more sustainable levels of late 2021, which created
one-off adverse stock realisations.
"During the first half, we continued with the integration of the Humphrey
acquisition and with investment programmes across the Group to improve
efficiencies and increase capacity.
"The overall outlook for the Group's performance in the second half is
encouraging, with the arable sector looking strong. However, taking a cautious
view, at this stage we do not expect to make up the full impact of the Glasson
shortfall. Outside that one-off cost, we remain on track to achieve our
targets for the year."
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 T: 020 3178 6378
Shore Capital (Nomad and Broker) Stephane Auton, Henry Willcocks John More, Rachel Goldstein T: 020 7408 4090
Wynnstay will be hosting an online presentation of the Company's results on
Friday, 7 July at 1.00 p.m. Shareholders and potential investors can register
to join the online presentation at https://bit.ly/WYN_H1_webinar
(https://lsems.gravityzone.bitdefender.com/scan/aHR0cHM6Ly9iaXQubHkvV1lOX0gxX3dlYmluYXI=/630EA74382150A1BA57B49084CE8753A7C13801200A08907686073511B79E8E2?c=1&i=1&docs=1)
. Further information can be obtained from KTZ Communications.
CHAIRMAN'S STATEMENT
INTRODUCTION
After last year's exceptional interim results, which benefited from
substantial one-off gains as well as a very strong trading environment,
interim results this year reflected softer trading conditions and a
significant unwinding of inflated fertiliser raw material values, which has
impacted profits. Against this changed backdrop, we are pleased with
Wynnstay's trading performance. Underlying performance is in line with our
expectations, and they demonstrate once again the strength of our broad range
of activities that span both the arable and livestock sectors.
Last year's substantial one-off gains were mostly felt by our fertiliser
blending activity at Glasson, where raw material stock values were driven to
historic highs by soaring natural gas prices. By contrast, over this period,
Glasson contended with a global reversal in fertiliser prices, back towards
the pre-exceptional levels of late 2021. We estimate that this unwinding of
the price spike impacted operating profit by approximately £1.5m and welcome
the pricing shift towards more sustainable and realistic levels.
Inflationary pressures were also a significant feature in the period. In
particular, higher labour and distribution costs adversely affected margins.
Commodity price inflation drove an estimated two-thirds (£48m) of the
increase in Group revenue in the period, which rose to £409.14m, up 22%
(2022: £335.66m). As expected, Group profitability was significantly lower
than the comparable period last year, with adjusted operating profit of
£5.78m* (2022: £10.43m) and underlying profit before tax of £5.25m* (2021:
£10.21m), which in both cases include the £1.5m adverse Glasson fertiliser
stock realisations. Given the exceptional nature of first half results in
2022, it is useful to note that the adjusted operating profit for the first
six months of 2021, delivered in a favourable trading environment, was
£5.68m.
During the period, we started the important integration of the Humphrey
free-range poultry feed business, acquired in March 2022, and expect this to
be completed by the financial year-end. At the same time, the free-range egg
sector nationally was affected by Avian Influenza, which reduced the national
flock. The market is now recovering although there will be a time-lag before
laying-hen numbers recover fully. We managed costs effectively during this
time, and the Humphrey business made a positive but lower contribution than in
the prior six months. The free-range poultry feed market remains an important
area of focus for us.
As previously reported, in November 2022, we acquired Tamar Milling Limited
("Tamar"), the animal feed blending business based in Cornwall. It has
broadened our geographic footprint and provided the Group with its first
manufacturing facility in the South West of England. Tamar made a positive
contribution to our first half results, in line with our expectations. At the
end of December 2022, we assumed the activities of S.G. Deakins, based in
Radnorshire, in Powys. The business supplies agricultural inputs to farmers
and runs a small trading team focused on grain, fertiliser and seeds.
These acquisitions continue to extend our farming customer base, add
manufacturing capacity, support efficiency improvements and offer scope for
further growth. We are delighted to welcome all our new colleagues and
customers to the Group, and will continue to review further opportunities that
fit our acquisition criteria.
Our investment programmes across the Group are progressing well and will
support our growth plans as well as deliver efficiency benefits. In addition,
we completed some organisational changes, which further support the delivery
of growth objectives. These included the creation of two new Senior Management
roles, Group Innovation, Sustainability & Food Supply Chain Director, and
Head of Strategy Delivery.
FINANCIAL RESULTS
Financial results principally reflect the absence of the abnormal and
significant one-off gains experienced at our fertiliser blending operation at
Glasson in the same period last year, but also the effects of inflation, more
cautious farmer sentiment and adverse stock realisations at Glasson, driven by
sharply unwinding global fertiliser raw material prices, which significantly
impacted margins.
Revenue increased by 22% to £409.14m (2022: £335.66m), with commodity price
inflation accounting for an estimated £48.0m of the increase. Group revenue
benefited from full period contributions from both the Humphrey and Tamar
acquisitions, acquired in March 2022 and November 2022 respectively. The
Agriculture Division accounted for £333.57m of the Group's total revenue
(2022: £263.03m), up by 27% against the same period last year, while the
Specialist Agricultural Merchanting Division contributed £75.57m (2022:
£72.63m), up by 4%.
Adjusted operating profit, which is before non-recurring costs, share-based
payments and intangible amortisation, and includes an estimated £1.5m of
one-off adverse stock realisations at Glasson, was £5.78m (2022: £10.43m
including positive Glasson fertiliser stock gains). The Agricultural Division
contributed an operating profit of £2.08m (2022: £6.06m), with this result
including the £1.5m adverse stock realisations at Glasson. The Specialist
Agricultural Merchanting division contributed an operating profit of £3.44m
(2022: £4.28m). Other activities contributed a slight operating loss of
£0.02m (2022: loss of £0.07m). As in prior years, the contribution from our
Joint Ventures will be consolidated in the second half of our full year
results.
Non-recurring costs amounted to £0.03m and related to the transaction and
funding costs of the Tamar acquisition (2021: £0.52m, the Humphrey
acquisition). Net finance costs, including IFRS 16 charges, totalled £0.40m
(2022: £0.19m), and reflected the new loans drawn to fund recent acquisitions
and the increase in interest rates over the period. Share-based payment
expenses for the period increased to £0.15m (2022: £0.13m).
Underlying pre-tax profit, which excludes share-based payments and
non-recurring items, but includes the adverse stock realisations at Glasson,
was £5.25m* (2022: £10.21m). Reported profit before tax was £5.07m (2021:
£9.56m).
The effective tax rate for the period was higher than the same period last
year at 24.1% (2022: 21.4%) because of the Government's introduction of the
new 25% tax rate during the current year. The total tax charge for the period
was £1.22m (2022: £2.05m), and profit after tax was £3.85m (2022: £7.51m).
Basic earnings per share were 17.20p (2022: 36.99p).
Net assets at 30 April 2023 were up by 18.1% year-on-year to £131.97m (30
April 2022: £111.68m). The increase includes the net proceeds from the
fundraising in August 2022. Net assets per share were £5.90 per share (30
April 2022: £5.50 per share), based on the weighted average number of shares
in issue during the period of 22.39m (2022: 20.31m).
Net debt on a pre IFRS 16 basis (excluding property leases) increased to
£10.68m at 30 April 2023 (2022: £7.62m). The rise reflected both acquisition
funding and continued high working capital requirements, which resulted from
the ongoing commodity price inflation. Working capital in any given year
typically peaks around April, and reduces over the second half, and the Group
is expected to close the financial year with net cash. Total Right of Use
property lease liabilities amounted to £5.62m (2022: £5.13m) resulting in
reported accounting net debt of £16.30m (2022: £12.75m).
DIVIDEND
In line with its progressive dividend policy, the Board is pleased to declare
an increased interim dividend of 5.50p per share (2021: 5.40p), up by 1.8%
year-on-year. Dividend cover remains prudent at over two times earnings.
The interim dividend will be paid on 31 October 2023 to shareholders on the
register at the close of business on 29 September 2023. As in previous years,
the Scrip Dividend alternative will continue to be available, with the last
day for election for this scheme being 14 October 2023.
REVIEW OF OPERATIONS
AGRICULTURE DIVISION
Farmgate prices at the start of the new financial year were off the peaks of
2022 although still strong compared to the average of the last five years,
albeit with sector variation. As the period progressed, milk and grain prices
decreased while free-range egg and beef prices increased, with beef prices
rising to a historic high. Free-range egg producers suffered from the outbreak
of Avian Influenza, causing a significant reduction in laying-hen numbers
nationally. These have now begun to recover. Inflationary pressures have
generally increased the costs of production for farmers, and coupled with
weaker farmgate prices in certain sectors, this affected farmer sentiment and
buying habits.
Feed Products
Manufactured feed volumes reduced by 1.3% and by 7% on a like-for-like basis
over the same period last year, which was in line with the sector. The
decrease reflected a number of factors including weaker milk prices and Avian
Influenza. In addition, margins were pressured by inflation, which affected
labour, distribution and packaging costs. We successfully mitigated some of
the pressures through efficiency initiatives.
We started the integration of the Humphrey business into the Group's wider
poultry operations in the period, combining the two sales teams and rebranding
the business as Wynnstay Humphrey Feed & Pullets; this rebranding was
completed just after the first half. We expect to substantially complete the
integration of the Humphrey business by the financial year-end. Reflecting the
nationwide reduction in laying-hen numbers, feed volumes were lower, however
we scaled back costs to protect returns. The redevelopment of the mothballed
poultry feed mill at Calne, acquired with the acquisition of Humphrey, remains
under consideration.
Our project to increase the manufacturing capacity of our multi-species feed
mill at Carmarthen continued to progress successfully in the period.
Arable Products
There was significant variation in performance across our product categories.
The breadth of our offering to the arable sector limited exposure to any
single segment, and the overall performance was encouraging.
GrainLink, our grain marketing business, performed extremely strongly,
contributing well ahead of our expectations. The volume of grain traded
increased to a new record level, up by 27% against what was already a record
level last year. The Eastern Region performed particularly well.
The autumn seed planting season in 2022 went well, with good volumes of winter
cereals planted and the favourable growing conditions experienced since then
bodes well for the forthcoming 2023 harvest and healthy grain trading volumes.
The spring-sown cereal crops acreage has also increased above last year's
level (and the national average), reflecting farmer confidence in grain
prices. Against that, grass seed sales were lower than the comparative period
last year, which reflected the dry weather and, as expected, fertiliser
volumes in Wynnstay Agricultural Supplies were down in line with national
trends, with high prices suppressing demand.
Glasson Grain Limited ("Glasson")
Glasson operates in three main areas; feed raw materials, blended fertiliser
production, and the manufacture of specialist animal feed products.
Like last year, the fertiliser blending operations made most impact on
Glasson's performance although in the opposite direction, creating adverse
stock realisations this year, compared to substantial one-off gains last year.
As a manufacturer across four sites, Glasson carries substantial physical
volumes of fertiliser raw material for blending. Therefore the reversal of
last year's rapid escalation in worldwide values for fertiliser raw materials,
back towards pre-exceptional levels, impacted stock values and margins.
Glasson handled this well. Fertiliser prices are now back to the pre-Ukraine
war levels, which we see as a major positive, and Glasson is replacing its
fertiliser raw materials at these more sustainable levels.
Feed raw materials activity performed in line with management expectations
while specialist animal feed products, Glasson's smallest activity,
underperformed. We are restructuring this operation, in order to reduce labour
and manufacturing costs.
SPECIALIST AGRICULTURAL MERCHANTING DIVISION
Specialist Agricultural Merchanting and Youngs Animal Feeds
The Division operates a chain of 53 depots (H1 2022: 54), which cater for the
needs of farmers and other rural dwellers. It operates very closely with the
Agricultural Division, providing a strong channel to market for
Wynnstay-manufactured products.
Total and like-for-like sales for the period were ahead of the same period
last year, reflecting the impact of inflation. The Division's net contribution
was adversely affected by lower volumes of bagged feed, which were down by
10%, and lower hardware sales, which decreased by 13%, as well as increased
overhead costs.
We continued to develop our digital offering and the number of farmers who
have signed up to our customer portal is increasing steadily. The portal
enables customers to access their Wynnstay accounts and place orders online.
In the main, the majority of digital activity is non-trading related.
Youngs, our specialist equine feeds operation, delivered a profitable
contribution to the division, although like the rest of the equine sector, it
experienced volume and margin pressures.
JOINT VENTURES AND ASSOCIATES
As in previous years, results from joint ventures and associate companies do
not feature in half-year results but will be consolidated into Wynnstay's full
year results.
ESG
Last year, we established a Sustainable Farm Advisory Team, bringing together
a group of external specialists chaired by Philip Wynn, Chairman of LEAF
(Linking the Environment And Farming) and a Director of Dyson Farming. The
Team is assisting us with the development of our ESG strategy and delivery
plans, including the roadmap we are developing to integrate the
recommendations of the Financial Stability Board's Task Force on
Climate-related Financial Disclosures ("TCFD").
We have a number of programmes currently under way to reduce carbon emissions
and energy consumption. These programmes encompass the Group's vehicle fleet,
biofuel use and energy requirements. We have committed over £1.0m to solar
panel projects in the current period and expect this to be the first phase of
a rollout of renewables over the next five years. We will report more fully
on TCFD at the financial year-end.
As well as our internal environmental goals, we are well-placed to assist
farmers with solutions to their environmental issues. Precision-farming
techniques will be playing an increasingly important role in limiting carbon
emissions and protecting soil, water and air quality. We are supporting
customers with advice, products, and services necessary to adapt to the new
environmental and efficiency priorities set by the UK Agriculture Act. Our
"whole farm approach" launched last year, now forms an integral part of our
on-farm specialist advice. We are continuing to introduce novel
environmentally-beneficial products into our offering.
Our 'Colleagues Forum' continues to be developed as well as initiatives to
support the local communities in which we operate. As ever, our staff remain
highly engaged with charitable efforts, which we are pleased to foster and
support.
BOARD CHANGES
In April 2023, we were delighted to appoint Steven Esom as a senior
Independent Non-executive Director. He succeeded Philip Kirkham, who retired
in May 2023, after 10 years on the Board, latterly as Vice-chairman and Senior
Non-executive Director.
I would like to take this opportunity to thank Philip Kirkham for his great
support and wise counsel both to me and all his other colleagues, and to wish
him well in his retirement.
Steven has significant experience in the UK food and retailing industries,
including the agrifood sector. Over the course of his executive career, he was
Managing Director of Waitrose & Partners and involved in Waitrose-owned
farmlands, as well as Executive Director of Food at Marks & Spencer. He
also held senior commercial buying roles at J Sainsbury plc for 12 years. As a
non-executive, he is Chairman of Sedex, a leading global supply chain
consultancy focused on environmental, social and governance outcomes, Chairman
of Andrews & Partners Ltd, the residential estate agency and lettings and
management group, and Chairman of Advantage Travel Partnership, the UK's
largest independent travel agent group. For nine years, until 2018, he was a
non-executive director of Cranswick plc, a leading UK food producer and
FTSE-250 constituent.
Today, we also announce that Paul Roberts, Group Finance Director, has
informed us of his decision to step down from his position and to retire from
the Group after many years of outstanding service. We have started a
recruitment process to consider suitable candidates and, until this process is
concluded, Paul will remain in his role in order to ensure a smooth handover
to his successor. We thank Paul for his continuing commitment to Wynnstay and
his colleagues, and will make a further announcement on this process in due
course.
OUTLOOK
Despite a number of headwinds in the broader economy, we believe that the
overall outlook for the second half of the financial year is encouraging.
Our diversified business model will continue to ensure that we are well-placed
to negotiate sector variations and believe that the Group will manage expected
commodity price volatility effectively.
For the remainder of the financial year, our arable activities look
well-positioned, underpinned by the good Autumn and Spring plantings and
expectations of a good 2023 grain harvest. While the short-term demand for
fertiliser has been affected by high prices, we view the retreat of fertiliser
raw material prices back to pre-exceptional levels as a positive and see
current pricing levels as more sustainable. We are confident that our
fertiliser blending operations are very well-placed as the supply base
restructures.
Demand for feed products in the second half of this financial year will remain
affected by farmer sentiment, which is influenced by farmgate prices and
production costs. We are already seeing wide sector variations, including
lower feed demand from dairy farmers, reflecting the current unrealistic milk
prices versus production costs, while more positively, national free-range
laying hen numbers are now starting to recover, stimulated by improving egg
prices and lower producer costs. The breadth of our feed activities will help
to balance overall performance.
Wynnstay's financial position remains strong, and the business continues to
generate good cash flows over the full year cycle. Our capital investment
programmes across the Group are progressing well and will support future
growth plans and productivity improvements. We will also continue to review
acquisition opportunities in line with our strategic growth plan.
The outlook for the second half is encouraging, with the arable sector looking
strong. We believe it prudent at this stage to view Glasson losses as unlikely
to be recovered. That aside, at this stage of the season, the Board believes
that the Group remains on track to deliver its underlying financial targets,
and we continue to view long-term growth prospects very positively.
Steve Ellwood
Chairman
* See Note 6 for explanation of Non GAAP measures.
WYNNSTAY GROUP PLC
CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
For the six months ended 30 April 2023
Unaudited Unaudited Audited
six months ended six months ended year
30 April 2023 30 April 2022 ended
31 October 2022
Note £000 £000 £000
CONTINUING OPERATIONS
Revenue 4 409,139 335,661 713,034
Cost of sales (369,194) (294,399) (622,228)
Gross profit 39,945 41,262 90,806
Manufacturing, distribution and selling costs (29,199) (27,059) (59,386)
Administrative expenses (5,198) (3,962) (9,307)
Other operating income 5 227 193 335
Adjusted operating profit* 6 5,775 10,434 22,448
Amortisation of acquired intangible assets and share -based payment expense 7 (269) (165) (416)
Non-recurring items 7 (28) (523) (1,094)
Group operating profit 5,478 9,746 20,938
Interest income 200 25 166
Interest expense (604) (211) (656)
Share of profits in joint ventures and associate accounted for using the - - 808
equity method
Share of tax incurred in by joint venture and associate - - (132)
Profit before taxation 5,074 9,560 21,124
Taxation 8 (1,223) (2,047) (3,982)
Profit for the period 3,851 7,513 17,142
Other comprehensive income 70 42 (2,462)
Items that will reclassify subsequently to profit or loss:
· net change in the fair value of cashflow hedges taken to equity,
net of tax
· recycle of cashflow hedge taken to income statement (286) - 2,336
Other comprehensive income for the period (216) 42 (126)
Total comprehensive income for the period 3,635 7,555 17,016
Basic earnings per ordinary share (pence) 13 17.20 36.99 82.72
Diluted earnings per ordinary share (pence) 13 16.84 36.07 80.65
* Adjusted operating profit is after adding back amortisation of acquired
intangible assets, share-based payment expense and non-recurring items. See
note 6.
WYNNSTAY GROUP PLC
CONDENSED CONSOLIDATED BALANCE SHEET
As at 30 April 2023
Unaudited Unaudited Audited
six months six months ended year ended
ended 30 April 2022 31 October 2022
30 April 2023
Note £000 £000 £000
ASSETS
NON-CURRENT ASSETS
Goodwill 15,530 17,465 16,133
Intangibles assets 5,046 4,940 4,936
Investment property 1,850 2,372 1,850
Property, plant and equipment 22,728 18,340 20,840
Right-of-use assets 10 10,015 9,861 8,202
Investments accounted for using the equity method 4,100 3,430 4,101
Derivative financial instruments - - 1
59,269 56,408 56,063
CURRENT ASSETS
Inventories 59,050 63,721 71,095
Trade and other receivables 108,710 103,254 96,575
Financial assets - loans to joint ventures 1,059 2,090 1,067
Cash and cash equivalents 11 1,381 6,112 31,177
Derivative financial instruments - 359 598
170,200 175,536 200,512
TOTAL ASSETS 229,469 231,944 256,575
LIABILITIES
CURRENT LIABILITIES
Financial liabilities - borrowings (2,975) (2,569) (3,043)
Lease liabilities (3,312) (3,685) (3,344)
Trade and other payables (76,510) (96,761) (105,015)
Current tax liabilities (918) (1,793) (1,639)
Derivative financial instruments (137) (825) (53)
Provisions (108) (351) (345)
(83,960) (105,984) (113,439)
NET CURRENT ASSETS 86,240 69,552 87,073
NON-CURRENT LIABILITIES
Financial liabilities - borrowings (5,691) (7,588) (313) (6,640)
Lease liabilities (5,706) (5,025) (3,999)
Trade and other payables (35) (37) (36)
Derivative financial instruments - - (80)
Deferred tax liabilities (2,109) (1,629) (1,680)
(13,541) (14,279) (12,435)
TOTAL LIABILITIES (97,501) (120,263) (125,874)
NET ASSETS 131,968 111,681 130,701
EQUITY
Share capital 14 5,639 5,094 5,585
Share premium 42,431 31,989 42,130
Other reserves 3,785 4,303 4,267
Retained earnings 80,113 70,295 78,719
TOTAL EQUITY 131,968 111,681 130,701
WYNNSTAY GROUP PLC
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY
For the six months ended 30 April 2023
Share Capital Share Premium Other Reserves Cash Flow Hedge Reserve Retained Earnings Total Equity
£000 £000 £000 £000 £000 £000
Balance at 1 November 2021 5,075 31,600 3,868 263 64,916 105,722
Profit for the period - - - - 7,513 7,513
Change in the fair value of cash flow hedges taken to equity, net of tax - - - 42 - 42
during period
Total comprehensive income for the period - - - 42 7,513 7,555
Transactions with owners of the Company, recognised directly in equity
Shares issued during the period 19 389 - - - 408
Dividends - - - - (2,134) (2,134)
Equity settled remuneration transactions - - 130 - - 130
Total contributions by and distributions to owners of the Group 19 389 130 - (2,134) (1,596)
At 30 April 2022 5,094 31,989 3,998 305 70,295 111,681
Profit for the period - - - - 9,629 9,629
Change in the fair value of cash flow hedges taken to equity, net of tax - - - (168) - (168)
during period
Total comprehensive income for the period - - - (168) 9,629 9,461
Transactions with owners of the Company, recognised directly in equity
Shares issued during the period 491 10,141 - - - 10,632
Dividends - - - - (1,205) (1,205)
Equity settled remuneration transactions - - 132 - - 132
Total contributions by and distributions to owners of the Group 491 10,141 132 - (1,205) 9,559
At 31 October 2022 5,585 42,130 4,130 137 78,719 130,701
Profit for the period - - - - 3,851 3,851
Net change in the fair value of cash flow hedges taken to equity, net of tax - - - 70 - 70
Recycle of cashflow hedge taken to income statement - - - (286) - (286)
Total comprehensive income for the period - - - (216) 3,851 3,635
Transactions with owners of the Company, recognised directly in equity
Shares issued during the period 54 301 - - - 355
Dividends - - - - (2,608) (2,608)
Own shares acquired by ESOP trust - - (225) - - (225)
Equity settled remuneration transactions - - 145 - - 145
Recycle of equity remuneration transactions - - (186) - 151 (35)
Total contributions by and distributions to owners of the Group 54 301 (266) - (2,457) (2,368)
At 30 April 2023 5,639 42,431 3,864 (79) 80,113 131,968
WYNNSTAY GROUP PLC
CONDENSED CONSOLIDATED CASH FLOW STATEMENT
For the six months ended 30 April 2023
Unaudited Unaudited Audited
six months ended six months ended year
30 April 2023 30 April 2022 ended
31 October
2022
Note £000 £000 £000
Cash flow from operating activities
Cash (used in)/generated from operations 9 (16,763) (9,316) 13,839
Interest received 200 25 166
Interest paid (433) (84) (399)
Tax paid (1,599) (1,311) (3,342)
Net cash (used in)/generated from operating activities (18,595) (10,686) 10,264
Cash flows from investing activities
Acquisition of subsidiaries and other businesses and their assets (net of cash 17 (2,709) (8,572) (10,234)
acquired)
Proceeds of sale of property, plant and equipment & ROU assets 122 492 264
Purchase of property, plant and equipment (2,836) (1,418) (3,560)
Decrease in short term loans to joint ventures 8 1,229 2,252
(Increase) in short term loan to ESOP trust ventures (195) - -
Receipts from Unlisted Investments - 2 7
Dividends received from joint ventures - - 4
Net cash used by investing activities (5,610) (8,267) (11,267)
Cash flows from financing activities
Net proceeds from the issue of ordinary share capital 320 408 11,040
Lease payments 10 (2,263) (2,335) (4,229)
New Borrowings - 9,485 9,485
Repayments of loans (1,423) - (474)
Dividends paid to shareholders 15 (2,608) (2,134) (3,339)
Net cash from /(used in) financing activities (5,974) 5,424 12,483
(30,179) (13,529) 11,480
Net (decrease) / increase in cash and cash equivalents
Cash and cash equivalents at beginning of period 31,177 19,641 19,641
Effects of exchange rate changes (23) - 56
Cash and cash equivalents at end of period 11 975 6,112 31,177
WYNNSTAY GROUP PLC
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
GENERAL INFORMATION
Wynnstay Group Plc has a number of operations. These are described in the
segment analysis in note 4.
Wynnstay Group Plc is a company incorporated and domiciled in the United
Kingdom. The address of its registered office is shown in note 3.
1. BASIS OF PREPARATION
The Interim Report was approved by the Board of Directors on 30 June 2023.
The condensed financial statements for the six months to the 30 April 2023
have been prepared in accordance with International Accounting Standard (IAS)
34 and the Disclosure Guidance and Transparency Rules sourcebook of the UK's
Financial Conduct Authority, except as disclosed in note 3.
The financial information for the Group for the year ended 31 October 2022 set
out above is an extract from the published financial statements for that year
which have been delivered to the Registrar of Companies. The auditor's report
on those financial statements was not qualified and did not contain statements
under section 498(2) or 498(3) of the Companies Act 2006. The information
contained in this document does not constitute statutory accounts within the
meaning of section 434 of the Companies Act 2006.
The financial information for the six months ended 30 April 2023 and for the
six months ended 30 April 2022 are unaudited. The consolidated financial
statements are presented in sterling, which is also the Group's functional
currency. Amounts are rounded to the nearest thousand, unless otherwise
stated.
The condensed consolidated interim financial statements should be read in
conjunction with the annual consolidated financial statements for the year
ended 31 October 2022, which have been prepared in accordance with UK adopted
International Accounting Standards.
2. GOING CONCERN
The Directors have prepared the condensed consolidated interim financial
statements on a going concern basis, having satisfied themselves from a review
of internal budgets and forecasts and current banking facilities that the
Group has adequate resources to continue in operational existence for the
foreseeable future.
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, and the continuing commodity price volatility exacerbated by
the ongoing conflict in Ukraine.
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.
3. SIGNIFICANT ACCOUNTING POLICIES
The condensed financial statements have been prepared under the historical
cost convention other than shared-based payments, which are included at fair
value and certain financial instruments which are explained in the annual
consolidated financial statements for the year ended 31 October 2022.
The Group has a policy of using annual results for the consolidation of its
share of the results of joint ventures, and as such no consolidation has
occurred in these condensed financial statements which is consistent with
previous years.
The condensed consolidated interim financial statements for the six months to
30 April 2023 have been prepared on the basis of the accounting policies
expected to be adopted for the year ending 31 October 2023. These are
anticipated to be consistent with those set out in the Group's latest annual
financial statements for the year ended 31 October 2022. A copy of these
financial statements is available from the Company's Registered Office at
Eagle House, Llansantffraid, Powys, SY22 6AQ.
New standards and interpretations
New and amended standards adopted in the annual financial statements for the
year ended 31 October 2022 did not have any significant impact on those
results and changes implemented from the 1 January 2023 are similarly not
having any material impact on the Group as they are either not relevant to the
Group's activities or require accounting which is consistent with the Group's
current accounting policies.
Critical accounting estimates and judgements
The Group makes certain estimates and assumptions regarding the future. These
estimates and judgements are continually evaluated based on historic
experience and other factors, including expectations of future events that are
believed to be reasonable under the circumstances. At 30 April 2023 management
have not identified any indicators of impairment within the Group. In the
future, actual experience may differ from these estimates and assumptions,
however it is believed these are not significant nor likely to cause a
material adjustment to the carrying amount of assets and liabilities within
the next financial year.
4. 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 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 period ended 30 April 2023 and comparative periods
are as follows:
Unaudited for the six months ended Specialist
30 April 2023: Agriculture Agricultural Merchanting Other Total
£000 £000 £000 £000
333,569 75,570 - 409,139
Revenue from external customers
Segment results:
Group operating profit before non-recurring items 2,078 3,444 (16) 5,506
Share of result of Joint Ventures - - - -
2,078 3,444 (16) 5,506
Non-recurring items (note 7) (28)
Interest income 200
Interest expense (604)
Profit before taxation 5,074
Taxation (1,223)
Profit for the period attributable to shareholders 3,851
4. SEGMENTAL REPORTING continued
Specialist
Unaudited for the six months ended Agriculture Agricultural Merchanting Other Total
30 April 2022:
£000 £000 £000 £000
263,034 72,627 - 335,661
Revenue from external customers
Segment results:
Group operating profit before non-recurring items 6,062 4,276 (69) 10,269
Share of result of Joint Ventures - - - -
6,062 4,276 (69) 10,269
Non-recurring items (note 7) (523)
Interest income 25
Interest expense (211)
Profit before taxation 9,560
Taxation (2,047)
Profit for the period attributable to shareholders 7,513
Audited for the year ended Agriculture Specialist Other Total
31 October 2022: Agricultural Merchanting
£000 £000 £000 £000
564,263 148,771 - 713,034
Revenue from external customers
Segment results:
Group operating profit before non-recurring items 14,108 7,939 (15) 22,032
Share of result of Joint Ventures 553 8 247 808
14,661 7,947 232 22,840
Non-recurring items (note 7) (1,094)
Interest income 166
Interest expense (656)
Profit before taxation 21,256
Taxation (including on Joint ventures) (4,114)
Profit for the year attributable to shareholders 17,142
5.OTHER OPERATING INCOME
Unaudited Unaudited Audited
six months six months year
ended ended ended
31 October 2022
30 April 2023 30 April 2022
£000 £'000 £000
Rental income 226 193 333
Grant income 1 - 2
227 193 335
6. ALTERNATIVE PERFORMANCE MEASURES
On the Board's preferred alternative performance measures referred to as
Adjusted operating profit and Underlying pre-tax profits which are
respectively, Group operating profit adding back amortisation of acquired
intangible assets, share-based payment expense and non-recurring items, and
the Group profit before tax adding back share-based payment expense,
non-recurring items and including the value of the share of tax incurred by
joint ventures and associates. On these measures the Group achieved Adjusted
operating profit of £5.78m (2022: £10.43m) and Underlying pre-tax profits of
£5.25m (2022: £10.21m).
Reconciliation with the reported income statement for this measure, Operating
profit before non-recurring items and Underlying pre-tax profit and the Profit
before tax shown on the Condensed Statement of Comprehensive Income, together
with reasons for their use is given below.
Unaudited Unaudited Audited
six months six months year
ended ended ended
30 April 2023 30 April 2022 31 October 2022
£000 £000 £000
Profit before tax 5,074 9,560 21,124
Share of tax incurred by joint ventures and associate - - 132
Non-recurring items (note 7) 28 523 1,094
Net finance costs 404 186 490
Share of results from joint ventures before tax - - (808)
Operating profit before non-recurring items 5,506 10,269 22,032
(note 8)
Share of results from joint ventures and associate before tax - - 808
Segment results plus share of results from joint ventures and associate before 5,506 10,269 22,840
tax (note 4)
Share-based payments 145 130 262
Net finance charges (404) (186) (490)
Underlying pre-tax profit 5,247 10,213 22,612
Unaudited Unaudited Audited
six months six months year
ended ended ended
30 April 2023 30 April 2022 31 October 2022
£000 £000 £000
Profit before tax 5,074 9,560 21,124
Share of results from joint ventures - - (808)
Share of tax incurred by joint ventures - - 132
Net finance charges 404 186 490
Share-based payments 145 130 262
Amortisation of intangibles 124 35 154
Non-recurring items (note 7) 28 523 1,094
Adjusted operating profit 5,775 10,434 22,448
The Board uses alternative performance measures as it believes the underlying
commercial performance of the current trading activities is better reflected,
and provides investors and other users of the accounts with an improved view
of likely future performance by making adjustments to the IFRS results for the
following reasons:
• Share of results from joint ventures and associate
Provides a fuller understanding of activities directly under management
control and those incorporated from joint ventures.
• The add back of tax incurred by joint ventures and associate
The Board believes the incorporation of the gross result of these entities
provides a fuller understanding of their combined contribution to the Group
performance.
• Net finance charges
Provides an understanding of results before interest received and paid.
• Share-based payments
This charge is 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.
• Amortisation of acquired intangible assets
This charge relates to intangible assets created from prior business
combinations, hence provides a fuller understanding of current operating
performance.
• 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.
7. AMORTISATION OF ACQUIRED INTANGIBLE ASSETS AND SHARE-BASED PAYMENTS
AND NON-RECURRING ITEMS
Unaudited Unaudited Audited
six months six months Year
ended ended ended
31 October 2022
30 April 2023 30 April 2022
£000 £000 £000
Amortisation of acquired intangible assets and share-based payments
Amortisation of intangibles 124 35 154
Cost of share-based reward 145 130 262
269 165 416
Non-recurring items
Acquisition transaction costs 28 523 572
Fair value change in investment property - - 522
28 523 1,094
Acquisition transaction costs relate to the Business Combination (see note 17)
of Humphrey Poultry Holdings Limited in March 2022 and Tamar Milling Limited
in November 2022.
8. TAXATION
The tax charge for the six months ended 30 April 2023 and 30 April 2022 is
based on an apportionment of the estimated tax charge for the full year.
The effective tax rate is 24.1% (6 months ended 30 April 2022: 21.4%) which is
higher than the prior year following the Government's decision to raise the
standard rate of Corporation Tax to 25% with effect from April 2023 (2022:
19.0%).
9. CASH (USED IN)/GENERATED FROM OPERATIONS
Unaudited Unaudited Audited
six months six months ended Year ended
30 April 2022
31 October 2022
ended
30 April 2023
£000 £000 £000
Profit for the period 3,851 7,513 17,142
Adjustments for:
Taxation 1,223 2,047 3,982
Depreciation of tangible fixed assets 1,163 1,109 2,289
Amortisation of other intangible fixed assets 124 35 154
Amortisation of right-use-assets 2,024 2,019 4,086
Profit on disposal of property, plant and equipment (31) (104) (132)
Profit on disposal of right-of-use asset - - (86)
Fair value movement in investment property - - 522
Movement in provisions (237) - (6)
Net interest income / (expense) 233 59 233
Interest on right of use liabilities 171 127 257
Derivative held as Fair Value FVPL 434 632 (627)
Hedge ineffectiveness (118) - 104
Government grant (1) (1) (2)
Share of results of joint ventures and associate - - (676)
Share-based payment expense 145 130 262
ESOP trust revaluation (31) - -
Changes in working capital (excluding effects of acquisitions and disposals of
subsidiaries)
Increase in inventories 12,998 (11,028) (18,401)
Increase in trade and other receivables (11,074) (25,106) (18,467)
Increase in trade and other payables (27,637) 13,252 23,205
Cash (used in)/generated from operations (16,763) (9,316) 13,839
During the six months to 30 April 2023, the Group entered new land and
building leases creating right-of-use assets of £2,417,000 (2022: £nil) and
purchased property, plant and equipment of £3,776,000 (2022: £2,381,000) of
which £940,000 relates to other right-of-use assets (2022: £965,000).
10. LEASES
The following tables shows the movement in right-of-use assets and lease
liabilities, along with the aging of the lease liabilities.
Right-of-use assets Land and buildings Plant, machinery & motor vehicles Total
£000 £000 £000
At 1 November 2021 6,113 4,930 11,043
Additions - 965 965
Arising on acquisition of subsidiary undertakings - 210 210
Reclassification 55 (55) -
Amortisation (1,102) (917) (2,019)
Disposals - (338) (338)
At 30 April 2022 5,066 4,795 9,861
Additions - 784 784
Reclassification (55) (256) (311)
Amortisation (1,092) (974) (2,066)
Disposals - (66) (66)
At 31 October 2022 3,919 4,283 8,202
Additions 2,417 940 3,357
Arising on acquisition of subsidiary undertakings 307 217 524
Reclassification 54 (86) (32)
Depreciation (1,175) (849) (2,024)
Disposals - (12) (12)
At 30 April 2023 5,522 4,493 10,015
Lease liabilities Land and buildings Plant, machinery & motor vehicles Total
£000 £000 £000
At 1 November 2021 6,220 3,506 9,726
Additions - 965 965
Reclassification - 17 17
Arising on subsidiary acquisition - 210 210
Interest expense 60 67 127
Lease payments (1,144) (1,191) (2,335)
At 30 April 2022 5,136 3,574 8,710
Additions - 784 784
Reclassification - (17) (17)
Interest expense 53 77 130
Lease payments (1,137) (757) (1,894)
Disposals - (370) (370)
At 31 October 2022 4,052 3,291 7,343
Additions 2,417 940 3,357
Arising on acquisition of subsidiary undertakings 307 147 454
Interest expense 92 79 171
Lease payments (1,245) (1,018) (2,263)
Disposals - (44) (44)
At 30 April 2023 5,623 3,395 9,018
Within 1 year 1-2 years 2-5 years Over 5 years Total
£000 £000 £000 £000 £000
3,312 2,997 1,652 1,057 9,018
Lease liabilities
11. NET CASH
Unaudited Unaudited Audited
six months ended six months ended year
30 April 2023
30 April 2022
ended
31 October 2022
£000 £000 £000
Cash and cash equivalents per balance sheet 1,381 6,112 31,177
Bank overdrafts repayable on demand (406) - -
Cash and cash equivalents per cash flow statement 975 6,112 31,177
Bank loans due within one year or on demand (1,897) (1,897) (2,371)
Loan capital (672) (672) (672)
Net cash due within one year (1,594) 3,543 28,134
Bank loans due after one year (5,691) (7,588) (6,640)
Total net (debt) / cash excluding leases (7,285) (4,045) 21,494
12. FINANCIAL INSTRUMENTS
The Board has overall responsibility for the determination of the Group's risk
management objectives and policies and whilst retaining ultimate
responsibility for them, it has delegated the authority for designing and
operating processes that ensure the effective implementation of the objectives
and policies to the Group's finance function. The Board receives monthly
reports from the Group Financial Director through which it reviews the
effectiveness of the processes put in place and the appropriateness of the
objectives and policies it sets. The overall objective of the Board is to set
policies that seek to reduce risk as far as possible without unduly affecting
the Group's competitiveness and flexibility.
The Group's principle financial instruments (other than derivatives)
compromise loans, cash and short -term deposits; the main purpose of these
instruments is to raise finance for the Group's operations; and additionally
include trade and other receivables, trade and other payables and lease
liabilities.
The Group also enters derivative transactions, principally foreign exchange
contracts and wheat futures to manage commodity price and currency risks
arising from the Group's operations.
The Group's policy does not permit use of derivatives for speculative
purposes. However, some derivatives do not qualify for hedge accounting, or
are specifically not designated as a hedge where gains and losses on the
hedging instrument and the hedged item naturally offset in the Group's income
statement. Treasury operates on a centralised basis, where Derivatives are
only used for economic hedging purposes and not as speculative investments and
are classified as 'held for trading', other than designated and effective
hedging instruments and are presented as current assets or liabilities if they
are expected to be settled within 12 months after the end of the reporting
period, otherwise they are classified as non current.
The principal financial instruments used by the Group, from which risk arises,
are as follows:
· Cash and cash equivalents
· Trade receivables
· Trade and other payables
· Borrowings
· Forward currency contracts
· Wheat futures contracts
The following financial instruments have been recognised in the Group's
respective financial statements:
GROUP
Financial Assets Apr 23 Apr 22 Oct 22
£000 £000 £000
Cash and cash equivalents per balance sheet 1,381 6,112 31,177
Trade receivables, net of loss allowance 106,854 98,139 94,823
Loan to joint venture 1,059 2,090 1,067
Derivative of financial instruments - 359 599
109,294 106,700 127,666
GROUP
Financial Liabilities Apr 23 Apr 22 Oct 22
£000 £000 £000
Bank loans and other borrowings 8,666 10,157 9,683
Lease liabilities 9,018 8,710 7,343
Trade payables and other payables 76,205 81,823 101,858
Deferred and contingent consideration 199 3,785 2,099
Derivative financial instruments 137 825 133
94,225 105,300 121,116
Financial instruments not measured at fair value includes cash and cash
equivalents, trade and other receivables, trade and other payables, loans and
borrowings, and lease liabilities. Due to their short-term nature, the
carrying value of cash and cash equivalents, trade and other receivables, and
trade and other payables approximates their fair value.
IFRS 13 requires financial instruments that are measured at fair value to be
classified according to the valuation technique used:
· Level 1 - quoted prices (unadjusted) in active markets for identical
assets or liabilities
· Level 2 - inputs, other than level 1 inputs, that are observable for
the asset or liability, either directly (i.e. as prices) or indirectly (i.e.
derived form prices)
· Level 3 - unobservable inputs
All derivative financial assets and liabilities are classified as Level 1
instruments as they are quoted market prices. Contingent consideration is
measured at fair value using Level 3 inputs such as entity projections of
future probability.
Fair value Amortised cost
Financial Assets Apr 23 Apr 22 Oct 22 Apr 23 Apr 22 Oct 22
£000 £000 £000 £000 £000 £000
Trade Receivables, net of loss allowance - - - 106,854 98,139 94,823
Loans to joint ventures - - - 1,059 2,090 1,067
Derivative financial instruments (Level 1) - 359 599 - - -
- 359 599 107,913 100,229 95,890
Fair value Amortised cost
Financial Liabilities Apr 23 Apr 22 Oct 22 Apr 23 Apr 22 Oct 22
£000 £000 £000 £000 £000 £000
Bank loans and other borrowings - - - 8,666 10,157 9,683
Lease liabilities - - - 9,018 8,710 7,343
Trade and other payables - - - 76,205 81,823 101,858
Deferred and contingent consideration 199 3,785 2,099 - - -
Derivative financial instruments (Level 1) 137 825 133 - - -
336 4,610 2,232 93,889 100,690 118,884
The Group is exposed through its operation to the following financial risks:
· Credit risk
· Foreign exchange risk
· Commodity market price risk
· Interest rate risk
· Liquidity risk
· Capital management risk
The policies and processes for managing each of these risks are summarised in
the Group's annual report published in February 2023 and available on the
Company's website.
13. EARNINGS PER SHARE
Basic earnings per 25p ordinary share has been calculated by dividing profit
for the period attributable to ordinary shareholders by the weighted average
number of ordinary shares in issue during the period. 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 and
warrants) taking into account their exercise price in comparison with the
actual average share price during the year.
Unaudited Unaudited
six months six months
ended ended
30 April 2023 30 April 2022
22,388,625 20,311,023
Weighted average number of shares in issue: basic
Earnings per share: basic in pence 17.20 36.99
Weighted average number of shares in issue: diluted 22,869,576 20,831,327
Earnings per share: diluted in pence 16.84 36.07
14. SHARE CAPITAL
Number of shares Total Nominal Value
000s £000
Allotted and fully paid: ordinary shares 25p each
Balance at 31 October 2021 20,299 5,075
Issue of shares 77 19
Balances at 30 April 2022 20,376 5,094
Issue of shares 1,964 491
Balances at 31 October 2022 22,340 5,585
Issue of shares 215 54
Balances at 30 April 2023 22,555 5,639
The shares issued in the period related to 142,000 in relation to Performance
Share Plan options (2022: 26,000) and 73,000 (2022: 51,000) shares allotted to
shareholders exercising their rights to receive dividends under the Company's
scrip dividend scheme. No other shares were allocated during the current or
prior period.
As at 30 April 2023 a total of 22,554,586 shares are in issue (2022:
20,376,156).
15. DIVIDENDS
During the period ended 30 April 2023 an amount of £2,608,000 (2022:
£2,134,000) was charged to reserves in respect of equity dividends paid. An
interim dividend of 5.50p per share (2022: 5.40p) will be paid on 31 October
2023 to shareholders on the register on the 29 September 2023. New elections
to receive Scrip Dividends should be made in writing to the Company's
Registrars before 14 October 2023.
16. OTHER RESERVES
Included in Other reserves are share-based payments; as 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 2023 the ESOP Trust, which is consolidated within the Group
financial statements, held 127,043 (2022: 16,834) Ordinary Shares in the
Group.
17. BUSINESS COMBINATION NOTE
Tamar Milling Limited
On 16 November 2022, Wynnstay Agricultural Supplies entered a business
combination and acquired 100% of the shares of Tamar Milling Limited. The
provisional consideration is £1.746m inclusive of cash and cash equivalents
of £32k.
Current Non- Current Total
£000 £000 £000
Trade receivables net of loss allowance 1,015 - 1,015
Other receivables 45 - 45
Inventories 953 - 953
Cash and cash equivalents 32 - 32
Trade payables (722) - (722)
Other payables (292) - (292)
Lease liabilities (141) (313) (454)
Deferred tax - (119) (119)
Net Current Assets and Non-Current Liabilities 890 (432) 458
Tangible fixed assets - 788 788
Underlying Net Assets of Acquiree 890 356 1,246
The provisional consideration payable is dependent on future product volumes
and profitability 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 £0.1m.
A full analysis of the provisional consideration is provided in the table
below. 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 Acquired Adjustment Fair Value of Net Assets
£'000 £'000 £'000
Fair value of net assets acquired
Goodwill - 302 302
Intangibles - customer accounts - 234 234
Property, plant and equipment 264 - 264
ROU Assets 524 - 524
Inventories 953 - 953
Trade receivables 1,015 - 1,015
Other receivables 45 - 45
Cash and cash equivalents 32 - 32
Trade payables (722) - (722)
Other payables (292) - (292)
Lease liabilities (454) - (454)
Deferred tax (119) (36) (155)
Net Assets 1,246 500 1,746
Acquisition date- fair value of the total net assets acquired 1,746
Representing:
Cash settled to vendor during the period 1,646
Deferred consideration outstanding at 100
30 April 2023
Provisional Consideration 1,746
Cash Flow Statement:
Cash settled to vendor during the period 1,646
Less cash and cash equivalents acquired (32)
Cash settled to vendor during the period for prior acquisitions 1,095
2,709
Directly attributable acquisition costs of £28k were incurred with the
transaction, and these have been recognised as non-recurring expenses in the
income statement for the period. During the last available audited accounts of
the acquired entity, for the period to September 2021, the annual aggregate
revenues on a non-consolidated basis amounted to £6.397m and profit before
tax was £0.422m. 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 period to April 2023 in
relation to the acquired business are revenues of £4.17m and profit before
tax of £0.05m.
Contingent and deferred consideration of £1,095m was paid during the period
to 30 April 2023 relating to other prior period acquisitions, resulting in a
total gross cash outflow of £2.741m or £2.709m net of cash acquired with the
Tamar Milling transaction.
Following the acquisition of Humphrey Poultry (Holdings) Limited on the 18
March 2022, and the final calculation of the contingent consideration relating
to that transaction on the 28 February 2023, the acquisition accounting has
been finalised within the twelve-month period required under IFRS 3. The
resultant adjustments to previously reported provisional accounting entries
have been, a reduction of £0.905m in carried Goodwill and an equivalent
reduction in Deferred Consideration.
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