TIDMWYN
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 GBP409.14 m (2022: GBP335.66m)
o commodity price inflation accounted for estimated GBP48m of
the rise
o full period contributions from Humphrey and Tamar
acquisitions
-- Adjusted operating profit* was GBP5.78m, (2022: GBP10.43m,
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 GBP1.5m of
one-off adverse Glasson fertiliser stock realisations) of GBP5.25m
(2022: GBP10.21m) / Reported pre-tax profit of GBP5.07m (2022:
GBP9.56m, including one-off fertiliser gains)
-- Basic earnings per share were 17.20p (2022: 36.99p)
-- Net debt (pre IFRS 16) of GBP10.68m (30 April 2022:
GBP7.62m); reflected acquisition funding and high working capital
requirements, which typically peak around April and reduce in
H2
-- Net assets up 18% to GBP131.97m/GBP5.90 per share (30 April
2022: GBP111.68m/GBP5.50 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 GBP333.57m (2022:
GBP263.03m), operating profit contribution of GBP2.08m, including
c.GBP1.5m one-off adverse Glasson fertiliser stock realisations
(2022: GBP6.06m, 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
GBP75.57m (2022: GBP72.63m), operating profit contribution of
GBP3.44m (2022: GBP4.28m)
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 T: 020 3178 6378 (today)
Executive T: 01691 827 142
Paul Roberts, Finance
Director
KTZ Communications Katie Tzouliadis, Robert T: 020 3178 6378
Morton
Shore Capital (Nomad Stephane Auton, Henry T: 020 7408 4090
and Broker) Willcocks John More,
Rachel Goldstein
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 . 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 GBP1.5m 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 (GBP48m) of the increase in Group revenue in
the period, which rose to GBP409.14m, up 22% (2022: GBP335.66m). As
expected, Group profitability was significantly lower than the
comparable period last year, with adjusted operating profit of
GBP5.78m* (2022: GBP10.43m) and underlying profit before tax of
GBP5.25m* (2021: GBP10.21m), which in both cases include the
GBP1.5m 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 GBP 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. A t 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 GBP409.14m (2022: GBP335.66m), with
commodity price inflation accounting for an estimated GBP48.0m 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 GBP333.57m of the Group's total
revenue (2022: GBP263.03m), up by 27% against the same period last
year, while the Specialist Agricultural Merchanting Division
contributed GBP75.57m (2022: GBP72.63m), up by 4%.
Adjusted operating profit, which is before non-recurring costs,
share-based payments and intangible amortisation, and includes an
estimated GBP1.5m of one-off adverse stock realisations at Glasson,
was GBP5.78m (2022: GBP10.43m including positive Glasson fertiliser
stock gains). The Agricultural Division contributed an operating
profit of GBP2.08m (2022: GBP6.06m), with this result including the
GBP1.5m adverse stock realisations at Glasson. The Specialist
Agricultural Merchanting division contributed an operating profit
of GBP3.44m (2022: GBP4.28m). Other activities contributed a slight
operating loss of GBP0.02m (2022: loss of GBP0.07m). 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 GBP0.03m and related to the
transaction and funding costs of the Tamar acquisition (2021:
GBP0.52m, the Humphrey acquisition). Net finance costs, including
IFRS 16 charges, totalled GBP0.40m (2022: GBP0.19m), 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 GBP0.15m (2022: GBP0.13m).
Underlying pre-tax profit, which excludes share-based payments
and non-recurring items, but includes the adverse stock
realisations at Glasson, was GBP5.25m* (2022: GBP10.21m). Reported
profit before tax was GBP5.07m (2021: GBP9.56m).
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 GBP1.22m (2022: GBP2.05m), and
profit after tax was GBP3.85m (2022: GBP7.51m). 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
GBP131.97m (30 April 2022: GBP111.68m). The increase includes the
net proceeds from the fundraising in August 2022. Net assets per
share were GBP5.90 per share (30 April 2022: GBP5.50 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 GBP10.68m at 30 April 2023 (2022: GBP7.62m). 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 GBP5.62m (2022:
GBP5.13m) resulting in reported accounting net debt of GBP16.30m
(2022: GBP12.75m).
DIVID
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 GBP1.0m 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 six months year
ended ended ended
30 April 30 April 31 October
2023 2022 2022
Note GBP000 GBP000 GBP000
------------------------------------------------------------------- ----- ------------ ------------ ------------
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 equity method - - 808
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
Items that will reclassify
subsequently to profit or
loss:
* net change in the fair value of cashflow hedges taken
to equity, net of tax 70 42 (2,462)
* 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 year ended
ended ended 31 October
30 April 30 April 2022
2023 2022
Note GBP000 GBP000 GBP000
------------------------------------ ----- ------------------ ------------------- ------------
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
Cash
Flow
Share Share Other Hedge Retained Total
Capital Premium Reserves Reserve Earnings Equity
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
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 during
period - - - 42 - 42
--------------------------------- --------- --------- ---------- --------- ------------ ----------
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 during
period - - - (168) - (168)
--------------------------------- --------- --------- ---------- --------- ------------ ----------
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 six months year
ended ended ended
30 April 30 April 31 October
2023 2022 2022
Note GBP000 GBP000 GBP000
----------------------------------------- ----- ------------ --------------------- ------------
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 acquired) 17 (2,709) (8,572) (10,234)
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
----------------------------------------- ----- ------------ --------------------- ------------
Net (decrease) / increase in
cash and cash equivalents (30,179) (13,529) 11,480
----------------------------------------- ----- ------------ --------------------- ------------
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 di er 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 classi ed as Agriculture or
Specialist Agricultural Merchanting.
The Board assesses the performance of the operating segments
based on a measure of operating pro t. Non-recurring costs and
nance 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 nancial
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 Specialist
ended Agriculture Agricultural Other Total
30 April 2023: Merchanting
GBP000 GBP000 GBP000 GBP000
------------------------------------ -------------- -------------- -------- -----------
Revenue from external customers 333,569 75,570 - 409,139
------------------------------------ -------------- -------------- -------- -----------
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 Agriculture Agricultural Other Total
ended Merchanting
30 April 2022:
GBP000 GBP000 GBP000 GBP000
------------------------------------ -------------- -------------- -------- -----------
Revenue from external customers 263,034 72,627 - 335,661
------------------------------------ -------------- -------------- -------- -----------
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
-----------
Agriculture Specialist Other Total
Audited for the year ended Agricultural
31 October 2022: Merchanting
GBP000 GBP000 GBP000 GBP000
----------------------------------- ------------ -------------- ------- --------
Revenue from external customers 564,263 148,771 - 713,034
----------------------------------- ------------ -------------- ------- --------
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
30 April 2023 30 April 31 October
2022 2022
GBP000 GBP'000 GBP000
--------------- --------------- ------------ ------------
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 GBP5.78m (2022: GBP10.43m) and Underlying
pre-tax profits of GBP5.25m (2022: GBP10.21m).
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 30 April 31 October
2023 2022 2022
GBP000 GBP000 GBP000
--------------------------------------- ------------ ------------ ------------
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
(note 8) 5,506 10,269 22,032
Share of results from joint ventures
and associate before tax - - 808
--------------------------------------- ------------ ------------ ------------
Segment results plus share of results
from joint ventures and associate
before tax (note 4) 5,506 10,269 22,840
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 31 October
2022 2022
GBP000 GBP000 GBP000
-------------------------------- --------------- ------------ ------------
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
30 April 30 April 31 October
2023 2022 2022
GBP000 GBP000 GBP000
------------------------------------ ------------ ------------ ------------
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 Year ended
ended ended 31 October
30 April 30 April 2022
2023 2022
GBP000 GBP000 GBP000
------------------------------------------ ------------ ------------ ------------
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
GBP2,417,000 (2022: GBPnil) and purchased property, plant and
equipment of GBP3,776,000 (2022: GBP2,381,000) of which GBP940,000
relates to other right-of-use assets (2022: GBP965,000).
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 Plant, machinery Total
buildings & motor vehicles
GBP000 GBP000 GBP000
-------------------------------------- ----------- ------------------ --------
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 Plant, machinery Total
buildings & motor vehicles
GBP000 GBP000 GBP000
-------------------------------------- ----------- ------------------ --------
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
GBP000 GBP000 GBP000 GBP000 GBP000
--------------------- -------------- ---------- ---------- ------------- -------
Lease liabilities 3,312 2,997 1,652 1,057 9,018
--------------------- -------------- ---------- ---------- ------------- -------
11. NET CASH
Unaudited Unaudited Audited
six months six months year
ended ended ended
30 April 30 April 31 October
2023 2022 2022
GBP000 GBP000 GBP000
----------------------------------- ------------ ------------ ------------
Cash and cash equivalents per
balance sheet 1,381 6,112 31,177
Bank overdrafts repayable on (406) - -
demand
----------------------------------- ------------ ------------ ------------
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
GBP000 GBP000 GBP000
------------------------------------------------ ------------------- ------------------- -------------------
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
GBP000 GBP000 GBP000
-------------------------------------------------- ------------------ ------------------- -------------------
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 nancial instruments that are measured at fair
value to be classi ed 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 nancial assets and liabilities are classi ed 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 Apr 22 Oct Apr Apr 22 Oct
23 22 23 22
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
---------------------------------- -------- ------- ------- -------- -------- -------
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 Apr 22 Oct Apr Apr 22 Oct 22
23 22 23
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
--------------------------------------- ------- ------- ------- ------- -------- --------
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
30 April 2023 2022
-------------------------------------- --------------- ------------
Weighted average number of shares
in issue: basic 22,388,625 20,311,023
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 GBP000
----------------------------------- ----------------- --------------
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. DIVIDS
During the period ended 30 April 2023 an amount of GBP2,608,000
(2022: GBP2,134,000) 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 GBP1.746m
inclusive of cash and cash equivalents of GBP32k.
Current Non- Current Total
GBP000 GBP000 GBP000
------------------------------------ -------- ------------- -------
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 GBPnil to GBP0.1m.
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 Adjustment Fair Value
of Net Assets of Net
Acquired Assets
GBP'000 GBP'000 GBP'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
30 April 2023 100
------------------------------------------ -------------------- ------------------ -----------
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 GBP28k 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 GBP6.397m and profit before
tax was GBP0.422m. 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 GBP4.17m and profit before tax of
GBP0.05m.
Contingent and deferred consideration of GBP1,095m was paid
during the period to 30 April 2023 relating to other prior period
acquisitions, resulting in a total gross cash outflow of GBP2.741m
or GBP2.709m 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 GBP0.905m in carried Goodwill and an
equivalent reduction in Deferred Consideration.
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END
IR SSLFWEEDSEIW
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