TIDMWYN
RNS Number : 6448I
Wynnstay Group PLC
21 June 2017
AIM: WYN
21 June 2017
WYNNSTAY GROUP PLC
("Wynnstay" or "the Group")
Half Year Results
For the six months to 30 April 2017
Key Points
-- Results benefited from greater demand for agricultural inputs
over the winter period but were affected by continued subdued
trading at pet products business, Just for Pets
-- Revenue of GBP205.32m (2016: GBP193.24m) - increase partly
driven by higher commodity prices
-- Adjusted* profit before tax, before goodwill & investment
impairment charges, is GBP4.07m (2016: GBP4.08m) - excluding the
pet products operation, the Group's performance for the first six
months improved year-on-year, with profitability ahead
-- Reported profit before tax, including goodwill &
investment impairment charges, is GBP0.13m (2016: GBP4.08m)
- goodwill & investment impairment charges of GBP3.94m
(2016: nil) related to Just for Pets
-- Adjusted * earnings per share, before goodwill &
investment impairment charges, of 16.84p (2016: 17.22p)
-- Reported loss per share of 3.38p (2016: earnings per share of 17.22p)
-- Net debt at period end (a seasonal peak) was GBP8.28m (2016:
GBP3.90m). The rise reflected commodity price inflation and
consequent higher average working capital utilisation. Ample
headroom in debt facilities
-- Net assets at 30 April 2017 stood at GBP85.03m (2016: GBP85.06m)
-- Interim dividend of 4.20p (2016: 4.00p) - an increase of 5.0%
-- Agricultural Division - revenue of GBP145.78m, operating profit of GBP1.54m
- greater demand for many agricultural inputs over the winter
period but feed and arable margins remained under pressure across
the sector
- broad portfolio of products helped to smooth marketplace variations
-- Specialist Retail Division - revenue of GBP59.48m, operating profit of GBP2.41m
- improved results at Wynnstay Stores
- Just for Pets generated a trading loss and a restructuring is
underway, with options under consideration
-- The trading backdrop has improved but challenges for the
agricultural supply industry remain. Nonetheless, Wynnstay remains
well-placed to continue its development
Ken Greetham, Chief Executive of Wynnstay, commented:
"The recovery in farmgate prices drove an improvement in demand
for many agricultural inputs over the winter period. Wynnstay's
agriculture-related activities, including Wynnstay Stores, have
benefited as a result over the first half and show year-on-year
progress.
"However, the trading loss at our Just for Pets chain has
impacted the Group's overall results and, given this unit's
performance, we have recognised a non-cash goodwill and investment
impairment charge and are restructuring the operations and
reviewing our options for the business.
"Looking forward, we are encouraged by the improvement in
farmgate prices for our farmer customers but believe that the rate
of recovery for the agricultural supply sector will remain
tempered. Nonetheless, Wynnstay is well-positioned to continue its
organic and acquisitive growth strategy. The breadth of the Group's
activities and strong balance sheet provide a solid foundation for
further development over the coming years."
Enquiries:
Wynnstay Group Ken Greetham, Chief T: 01691 827
plc Executive 142
Paul Roberts, Finance T: 020 3178 6378
Director (today)
KTZ Communications Katie Tzouliadis T: 020 3178 6378
/ Emma Pearson
Shore Capital Stephane Auton / T: 020 7408 4090
(Nomad and Broker) Patrick Castle
CHAIRMAN'S STATEMENT
INTRODUCTION
The Group's interim results reflect some easing in trading
headwinds for farmers, with an improvement in farmgate prices
resulting in a greater demand for many agricultural inputs over the
winter period. However feed and arable margins remained under
pressure across the sector. Wynnstay's breadth of agricultural
activities, including Wynnstay Stores, once again provided a degree
of resilience, helping to mitigate the variations across our
marketplaces. The most significant impact on the Group's results
was weaker trading at our pet products chain, Just for Pets. As we
previously reported, this business continued to experience subdued
demand, reflecting overall difficult trading conditions, and
incurred a trading loss during the period. We have therefore
recognised a non-cash goodwill impairment charge of GBP3.88m and
are reviewing options for the unit, with restructuring now also
underway.
Excluding the pet products operation, the Group's performance
for the first six months was better year-on-year, with
profitability ahead. However, including the trading loss at Just
for Pets, the Group's adjusted* profit before tax, before goodwill
& investment impairment charges, is marginally below last year
at GBP4.07m (2016: GBP4.08m). The Group's reported profit before
tax for the first half, including the impairment charges, is
GBP0.13m (2016: GBP4.08m).
An improvement in overall feed sales, which reflected the
national picture, was driven by higher demand for dairy feed.
However, total volumes in April reduced slightly as the mild
weather gave rise to early spring grass, benefiting livestock
farmers. We experienced strong demand for spring seed and
fertiliser although, as expected, grain trading volumes were behind
the previous year after a smaller 2016 harvest.
Within the Retail Division, Wynnstay Stores traded well, with a
small increase in like-for like-sales as famers begin to reinvest
in their enterprises. The diverse range of products offered by
Wynnstay Stores is a key attraction and drives footfall. By
contrast, Just for Pets experienced a reduction in like-for-like
sales and margins, reflecting high-street pressures and changes in
consumer shopping behaviour.
Looking ahead, there is a degree of short term stability as
farmgate prices begin to improve. Demand for inputs is expected to
remain robust although margin pressure is likely to remain a
feature of the industry. However, Wynnstay remains well-placed
within the sector with its broad portfolio of products, customer
focus and strong balance sheet.
FINANCIAL RESULTS
In order to provide a more representative view of the Group's
business performance (non-GAAP alternative performance measures),
the Directors provide adjusted figures for profit before tax,
operating profit and earnings per share, which take account of
non-cash charges for intangible amortisation, share-based payments,
and goodwill & investment impairment. A reconciliation table is
provided below*. The Directors believe that the non-recurring
nature of the goodwill impairment charge supports the presentation
of adjusted results and these adjusted results provide a better
understanding of the underlying performance of the business.
Revenue for the six months to 30 April 2017 totalled GBP205.32m
(2016: GBP193.24m), an increase of 6.25% on the same period last
year. The rise is partly attributable to higher commodity prices
after a three year period of sustained deflation. The Agriculture
Division contributed GBP145.78m (2016: GBP135.18m) to Group
revenues, with the Specialist Retail Division contributing
GBP59.48m (2016: GBP57.97m). Other activity revenues were GBP0.06m
(2016: GBP0.09m).
Operating profit before non-cash charges relating to intangible
amortisation, share-based payments, and the goodwill &
investment impairments, was flat at GBP4.24m (2016: GBP4.24m).
Non-cash charges amounted to GBP4.02m (2016: GBP0.07m), and mainly
reflected the goodwill & investment impairment charge of
GBP3.94m (2016: nil). This impairment charge is mostly against the
carrying value of goodwill attributed to the Just for Pets
business. Intangible amortisation and share-based payments amounted
to GBP0.08m (2016: GBP0.07m). Reported Group operating profit
reduced to GBP0.21m (2016: GBP4.18m).
Operating profit in the Agricultural Division was GBP1.54m
(2016: GBP1.82m), with low volumes of traded grain, and margin
pressures in other agricultural products, affecting the result.
Operating profit in our Specialist Retail operations increased to
GBP2.68m (2016: GBP2.40m), reflecting improved results at Wynnstay
Stores. The Agricentre business, acquired in October 2015, produced
an improved performance during the period. Other activities, which
include the charges relating to annual intangible amortisation and
share based payments of GBP0.08m (2016: GBP0.07m), incurred an
operating loss of GBP0.06m (2016: loss of GBP0.05m).
Net finance costs reduced slightly to GBP0.09m (2016: GBP0.10m)
helped by marginally lower average interest rates across the
period. With the return to commodity price inflation, we expect
average working capital and therefore debt and future finance costs
to trend up. The Group retains substantial headroom within its
existing debt facilities to accommodate this anticipated increase.
April is historically the Group's peak cash requirement period and
net debt at 30 April 2017 was GBP8.28m (2016: GBP3.90m), reflecting
higher levels of working capital utilisation in the first half.
Adjusted profit before tax, before goodwill amortisation and
share-based payments of GBP3.94m, is marginally below last year at
GBP4.07m (2016: GBP4.08m), reflecting the trading loss at Just for
Pets. Earnings per share before the goodwill & investment
impairment charge was 16.84p (2016: 17.22p) - see table below *. As
the impairment charge is likely to be disallowable for tax
purposes, a tax charge for the period has been provided on this
basis. This has resulted in a loss per share of 3.38p (2016:
earnings per share of 17.22p) based on the reported loss after
taxation of GBP0.66m for the period (2016: profit of GBP3.34m).
Net assets at 30 April 2017 were GBP85.03m (2016: GBP85.06m).
This represents approximately GBP4.36 per share (2016: GBP4.38 per
share), with the weighted average number of shares in issue during
the period at 19.49m (2016: 19.39m).
*Alternative performance measures
Adjusted profit before tax
Six months Six months
ended 30 ended
April 2017 30 April
2016
GBPmillions GBPmillions
Profit before tax 0.13 4.08
Goodwill and investment impairment 3.94 -
------------ ------------
Adjusted profit before tax 4.07 4.08
------------ ------------
Operating profit before non-cash charges
Six months Six months
ended 30 ended
April 2017 30 April
2016
GBPmillions GBPmillions
Operating profit per published
accounts 0.22 4.17
Intangible amortisation and
share-based payments 0.08 0.07
Goodwill and investment impairment 3.94 -
Operating profit before non-cash
charges 4.24 4.24
Earnings per share before goodwill and investment impairment
charges
Six months Six months
ended ended
30 April 30 April
2017 2016
(Loss)/earnings attributable
to shareholders (GBPmillions) (0.66) 3.34
Weighted average number of
shares in issue (number millions) 19.49 19.39
(Loss)/ earnings per share (3.38p) 17.22p
-------------------------------------- ----------- -----------
(Loss)/earnings attributable
to shareholders (GBPmillions) (0.66) 3.34
Add back Goodwill and investment
impairment (GBPmillions) 3.94 -
Earnings attributable to shareholder
after impairment 3.28 3.34
Weighted average number of
shares in issue (number millions) 19.49 19.39
Earnings per share after impairment
charges 16.84p 17.22p
-------------------------------------- ----------- -----------
DIVID
The Board is pleased to declare an increased interim dividend of
4.20p per share (2016: 4.00p), a rise of 5% year-on-year. The
interim dividend is in line with our progressive policy and will be
paid on 31 October 2017 to shareholders on the register at the
close of business on 29 September 2017. As in previous years, a
Scrip Dividend alternative will also be available, with the last
day for election for this scheme being 17 October 2017.
REVIEW OF OPERATIONS
AGRICULTURE
The last two years have been particularly challenging for
livestock and arable farmers. Pleasingly there has been some
improvement in grain and milk prices since the autumn of 2016,
although they have not recovered to levels previously attained. The
improvement in output prices has lifted farmer confidence, and
helped to generate greater demand for most inputs, and Wynnstay has
benefited from the increased volume of feed and arable products
although pressure on margins continued.
Feed Products
Strong demand for feed products over the winter months led to an
overall increase in feed volume in the first half year-on-year,
reflecting the national trend. The early 2017 spring tempered feed
demand and, in April, total volumes reduced mainly reflecting the
decrease in sheep feed. This contrasted with April volumes last
year, which benefited from the inclement weather conditions. The
improved milk price supports ongoing demand for dairy feed as
producers return to more traditional feeding patterns.
The range of our feed products, which cater for both ruminant
and monogastric livestock, along with our blended feed and traded
straight feeds, are key features of this business, and the breadth
and depth of our operations help to mitigate the effects of
volatility within the sector.
As expected the state-of-the-art bagging facility, which we
commissioned ahead of the winter period, helped to improve supply
chain efficiencies of bagged product direct to farm and through the
network of retail stores.
Glasson Grain
Glasson performed well in the first half. Fertiliser volumes
increased significantly although margins remained under pressure.
Sales of traded materials and specialist products were slightly
lower than the previous year but the business remains well placed
in the market.
Arable Products
The smaller grain harvest from the 2016 season limited the
volume of cereals marketed through the GrainLink and Woodheads
businesses and, as a result, the contribution from these activities
was below last year's level. Arable crops have benefitted from
recent rainfalls which should support prospects for a good 2017
harvest although it is still too early in the season to make firm
predictions.
Demand for fertiliser was strong over the winter period as
farmers ordered ahead of anticipated price increases. Helped by an
early spring, overall Group volumes exceeded the previous year.
Sales of cereal seed were also buoyant although slightly lower
in volume than the record performance achieved in 2016. There is
ongoing demand for herbage seed and agrochemicals as we enter the
busy spring growing season.
SPECIALIST RETAIL
Wynnstay Stores
Wynnstay Stores provide a valuable route to market for our
agricultural products and the stores also help to cement our
customer relationships. Like-for-like sales, adjusted for
inflation, improved by over 2% in the period. There was a strong
performance from key agricultural products, reflecting improved
farmer sentiment as they invested in their businesses. This was
particularly evident in increased demand for milk powders, animal
health and hardware products.
We continue to invest in the infrastructure of the operations.
We completed the refurbishment of our store at Craven Arms,
Shropshire, in the period, and we will be relocating our store in
Ruthin, Denbighshire, during the summer.
Just for Pets
As previously reported, certain stores at Just for Pets did not
deliver the expected performance and, overall, trading remained
subdued. This resulted in a loss from the chain during the first
half. Operating 25 stores, Just for Pets remains a relatively small
part of the Group compared to our core agricultural activities and,
accordingly, the Board is reviewing the options for the business
unit and is implementing restructuring measures in the second half.
A goodwill impairment of GBP3.89m for the goodwill value of the
asset has been accounted for in the period.
JOINT VENTURES AND ASSOCIATES
Results from the Group's joint ventures and associate companies
are not included in this half yearly report. They will, as usual,
be consolidated into Wynnstay's full year results.
OUTLOOK
It is encouraging to see an improvement in output prices for our
farmer customers. However the current oversupply of many
commodities in the Global market and the negotiations for the UK's
exit from the European Union will bring further challenges for many
farming enterprises. Nonetheless the strategic and environmental
importance of UK agriculture should provide a foundation for an
increasingly efficient industry in which a focus on productivity
will remain a major consideration for many customers.
All this provides for a challenging backdrop for the
agricultural supply industry and will affect the rate of recovery
of the supply sector. However Wynnstay is well-placed to continue
its organic and acquisitive growth strategy. In addition, it is
actively addressing the issues at Just for Pets. The breadth of our
activities, our talented team and strong balance sheet provide firm
foundations for the Group's further development over the coming
years.
Jim McCarthy
Chairman
WYNNSTAY GROUP PLC
CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
For the six months ended 30 April 2017
Unaudited Unaudited Audited
six months six months year ended
ended ended 31 October
30 April 30 April 2016
2017 2016
Note GBP'000 GBP'000 GBP'000
----------------------------- ----- ------------ ------------ ------------
Revenue 205,315 193,237 368,143
Cost of sales (176,270) (164,781) (310,750)
----------------------------- ----- ------------ ------------ ------------
Gross profit 29,045 28,456 57,393
Manufacturing, distribution
and selling costs (21,655) (21,131) (45,522)
Administrative expenses (3,337) (3,268) (4,889)
Other operating
income 9 183 187 454
----------------------------- ----- ------------ ------------ ------------
Group operating
profit before intangible
amortisation share-based
payment costs 4,236 4,244 7,436
Intangible amortisation
and share-based
payment costs (82) (69) (78)
----------------------------- ----- ------------ ------------ ------------
Group operating
profit after intangible
amortisation and
share-based payment
costs 4,154 4,175 7,358
Goodwill and investment
impairment 10 (3,942) - -
Group operating
profit 212 4,175 7,358
Interest income 8 18 69
Interest expense (95) (118) (209)
Share of profits
in associates and
joint ventures 2 - - 93
Share of tax incurred
in associates and
joint ventures - - (26)
Profit before taxation 125 4,075 7,285
Taxation 4 (784) (735) (1,456)
Profit for the period (659) 3,340 5,829
----------------------------- ----- ------------ ------------ ------------
Earnings per 25p
share before impairment
charges 5 16.84p 17.22p 30.01p
Diluted earnings
per 25p share before
impairment charges 5 16.53p 17.14p 29.81p
(Loss)/earnings
per 25p share 5 (3.38p) 17.22p 30.01p
Diluted (Loss)/earnings
per 25p share 5 (3.38p) 17.14p 29.81p
----------------------------- ----- ------------ ------------ ------------
WYNNSTAY GROUP PLC
CONDENSED CONSOLIDATED BALANCE SHEET
As at 30 April 2017
Unaudited Unaudited Audited
as at 30 as at 30 as at
April 2017 April 2016 31 October
2016
Note GBP'000 GBP'000 GBP'000
----------------------------- ----- ------------ ------------ ------------
Assets
Non-current assets
Goodwill 11 14,266 18,142 18,147
Investment property 2,372 2,372 2,372
Property, plant and
equipment 20,279 19,312 20,535
Investments 3,397 3,580 3,457
Intangibles 102 117 109
----------------------------- ----- ------------ ------------ ------------
40,416 43,523 44,620
----------------------------- ----- ------------ ------------ ------------
Current assets
Inventories 36,265 34,016 31,344
Trade and other receivables 63,212 57,457 50,316
Financial assets -
loans to joint ventures 2,786 2,802 2,786
Cash and cash equivalents 12 22 2,762 10,111
102,285 97,037 94,557
----------------------------- ----- ------------ ------------ ------------
Total assets 142,701 140,560 139,177
Liabilities
Current liabilities
Financial liabilities
- borrowings (6,014) (2,948) (2,626)
Trade and other payables (47,953) (47,519) (44,750)
Current tax liabilities (1,128) (1,107) (905)
(55,095) (51,574) (48,281)
----------------------------- ----- ------------ ------------ ------------
Net current assets 47,190 45,463 46,276
----------------------------- ----- ------------ ------------ ------------
Non-current liabilities
Financial liabilities
- borrowings (2,286) (3,711) (3,202)
Trade and other payables - - (388)
Deferred tax liabilities (289) (220) (358)
(2,575) (3,931) (3,948)
----------------------------- ----- ------------ ------------ ------------
Total liabilities (57,670) (55,505) (52,229)
----------------------------- ----- ------------ ------------ ------------
Net assets 85,031 85,055 86,948
----------------------------- ----- ------------ ------------ ------------
Equity
Share capital 6 4,883 4,862 4,874
Share premium 29,065 28,679 28,848
Other reserves 3,008 2,932 2,933
Retained earnings 48,075 48,582 50,293
Total equity 85,031 85,055 86,948
----------------------------- ----- ------------ ------------ ------------
WYNNSTAY GROUP PLC
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS'
EQUITY
For the six months ended 30 April 2017
Share Share Other Retained Total
capital premium reserves earnings equity
Note GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
---------------------------- ----- --------- --------- ---------- ---------- --------
Balance at 1 November
2015 4,848 28,439 2,890 46,678 82,855
Profit for the period - - - 3,340 3,340
---------------------------- ----- --------- --------- ---------- ---------- --------
Total comprehensive
income for the period - - - 3,340 3,340
---------------------------- ----- --------- --------- ---------- ---------- --------
Transactions with
owners of the company,
recognised directly
in equity
Shares issued during
the period 14 240 - - 254
Own shares acquired
by ESOP trust - - (20) - (20)
Dividends - - (1,436) (1,436)
Equity settled share-based
payments transactions - - 62 - 62
---------------------------- ----- --------- --------- ---------- ---------- --------
Total contributions
by and distributions
to owners of the
Group 14 240 42 (1,436) (1,140)
---------------------------- ----- --------- --------- ---------- ---------- --------
At 30 April 2016 4,862 28,679 2,932 48,582 85,055
---------------------------- ----- --------- --------- ---------- ---------- --------
Profit for the period - - - 2,489 2,489
---------------------------- ----- --------- --------- ---------- ---------- --------
Total comprehensive
income for the period - - - 2,489 2,489
---------------------------- ----- --------- --------- ---------- ---------- --------
Transactions with
owners of the company,
recognised directly
in equity
Shares issued during
the period 12 169 - - 181
Dividends - - - (778) (778)
Equity settled share-based
payments transactions - - 1 - 1
---------------------------- ----- --------- --------- ---------- ---------- --------
Total contributions
by and distributions
to owners of the
Group 12 169 1 (778) (596)
---------------------------- ----- --------- --------- ---------- ---------- --------
At 31 October 2016 4,874 28,848 2,933 50,293 86,948
---------------------------- ----- --------- --------- ---------- ---------- --------
Profit for the period - - - (659) (659)
---------------------------- ----- --------- --------- ---------- ---------- --------
Total comprehensive
income for the period - - - (659) (659)
---------------------------- ----- --------- --------- ---------- ---------- --------
Transactions with
owners of the company,
recognised directly
in equity
Shares issued during
the period 6 9 217 - - 226
Dividends 7 - - - (1,559) (1,559)
Equity settled share-based
payments 14 - - 75 - 75
---------------------------- ----- --------- --------- ---------- ---------- --------
Total contributions
by and distributions
to owners of the
Group 9 217 75 (1,559) (1,258)
---------------------------- ----- --------- --------- ---------- ---------- --------
At 30 April 2017 4,883 29,065 3,008 48,075 85,031
---------------------------- ----- --------- --------- ---------- ---------- --------
WYNNSTAY GROUP PLC
CONDENSED CONSOLIDATED CASH FLOW STATEMENT
For the six months ended 30 April 2017
Unaudited Unaudited Audited
six months six months year ended
ended ended 31 October
30 April 30 April 2016
2017 2016
Note GBP'000 GBP'000 GBP'000
-------------------------------- ----- ------------ -------------------------- -----------------------
Cash flow from operating
activities
Cash (used in) / generated
from operations 13 (9,372) (3,033) 8,897
Interest received 8 18 69
Interest paid (95) (118) (209)
Tax paid (630) (561) (1,346)
Net cash flows from
operating activities (10,089) (3,694) 7,411
-------------------------------- ----- ------------ -------------------------- -----------------------
Cash flows from investing
activities
Proceeds on sale of
property, plant and
equipment 63 121 224
Purchase of property,
plant and equipment 13 (1,075) (603) (2,748)
Proceeds on sale of
investments - 100 290
Purchase of intangibles - - (3)
Own shares acquired
by ESOP Trust - (20) (20)
Net cash used by investing
activities (1,012) (402) (2,257)
-------------------------------- ----- ------------ -------------------------- -----------------------
Cash flows from financing
activities
Net proceeds from the
issue of ordinary share
capital 226 254 435
Finance lease principal
repayments (574) (320) (849)
Repayments of borrowings (416) (1,400) (2,162)
Dividends paid to shareholders (1,559) (1,436) (2,214)
Net cash generated
from financing activities (2,323) (2,902) (4,790)
-------------------------------- ----- ------------ -------------------------- -----------------------
Net (decrease)/increase
in cash and cash
equivalents (13,424) (6,998) 364
Cash and cash equivalents
at beginning of period 10,111 9,747 9,747
Cash and cash equivalents
at end of period 12 (3,313) 2,749 10,111
-------------------------------- ----- ------------ -------------------------- -----------------------
WYNNSTAY GROUP PLC
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL
STATEMENTS
1. Basis of preparation
The Interim Report was approved by the Board of Directors on 20
July 2017.
The condensed financial statements for the six months to the 30
April 2017 have been prepared in accordance with International
Accounting Standard (IAS) 34 Interim Financial Reporting except as
disclosed in note 2.
The financial information for the Group for the year ended 31
October 2016 set out above is an extract from the published
financial statements for that year which have been delivered to the
Registrar of Companies. The auditors' 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 2017
and for the six months ended 30 April 2016 is unaudited.
The condensed consolidated interim financial statements should
be read in conjunction with the annual consolidated financial
statements for year ended 31 October 2016, which have been prepared
in accordance with IFRS as adopted by the EU.
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.
2. Consolidation of share of results in joint ventures and associates
As the Group has a policy of using audited accounts for the
consolidation of its share of the results of joint venture and
associate activities, no such consolidation has occurred during the
six months to 30 April 2017. Although this is not in accordance
with IFRS the impact on the financial statements is not material.
Relevant results will be accounted for during the second half of
the financial year.
3. Significant accounting policies
The condensed financial statements have been prepared on an
historical cost basis or fair value basis as appropriate.
The same accounting policies, presentation and methods of
computation are followed in these condensed financial statements as
were applied in the preparation of the Group's financial statements
for the year ended 31 October 2016. A copy of these financial
statements is available from the Company's Registered Office at
Eagle House, Llansantffraid, Powys SY22 6AQ.
New Standards issued but not yet effective
At the date of authorisation of these interim statements, the
following relevant major standard were in issue but not yet
effective. The Directors anticipate that the Group will adopt these
standards on their effective dates:
.
Effective
for accounting
periods commencing
on or after
IFRS 15 Revenue from Contracts with 1 January
Customers 2018
1 January
IFRS 9 Financial Instruments 2018
1 January
IFRS 16 Leases 2019
It is considered that the above standards and amendments, with
the exception of IFRS 16 'Leases', will not have a significant
effect on the results of the Group or Company.
IFRS16 is effective for accounting periods beginning on or after
1 January 2019. The Directors are currently reviewing the level of
the Group's leasing arrangements that would be brought within scope
of IFRS16. At the date of signing the interim statement the
Directors are not yet in a sufficiently advanced stage of their
reviews to be able to quantify any financial impact from this
standard.
The accounting policies applied by the Group in these condensed
consolidated interim statements are substantially the same as those
applied by the Group in its consolidated financial statements for
the 12 months ending 31 October 2016. There have been a number of
minor changes to standards which became applicable for the year
ended 31 October 2017, none of which have been assessed as having a
significant impact on the Group.
4. Taxation
The tax charge for the six months ended 30 April 2017 and 30
April 2016 is based on an apportionment of the estimated tax charge
for the full year.
The effective tax rate is 627% (2016: 18.03%) which is higher
than the standard rate of 19.50% (2015: 20%).
During this period the Group has goodwill and investment
impairment charges of GBP3,942,194 and these are likely to be
disallowable for tax purposes. The effective tax rate excluding the
Goodwill and Investment impairment is 19.30% because it excludes
certain items of income and expense that are taxable or deductible
in other years. Reductions in the UK corporation tax rate to 19%
(effective from 1 April 2017) and to 18% (effective 1 April 2020)
were substantively enacted on 26 October 2015. An additional
reduction to 17% (effective 1 April 2020) was substantively enacted
on 6 September 2016. This will reduce the Group's future current
tax charge accordingly. The deferred tax liability at the balance
sheet date has been calculated at 17%.
5. Earnings per share
Earnings per share before impairment have been calculated based
on the profit attributable to ordinary shareholders of GBP3,282,799
(six months ended 30 April 2016: profit of GBP3,339,926) and after
impairment charges a loss of GBP659,395 and the weighted average
number of shares in issue of 19,495,387 (2016: 19,392,684). Diluted
earnings per share are based on the aggregate weighted average
number of shares and all potential shares adjusted for their
proposed issue price, of 19,860,730 (2016: 19,489,260). In
accordance with IAS 33, diluted loss per share is not adjusted for
shares to be potentially issued, and is accordingly reported as
being the same as headline loss per share.
6. Share capital
During the current period a total of 35,104 (2016: 57,920)
shares were issued with an aggregate nominal value of GBP8,776
(2016: GBP14,480) fully paid up for equivalent cash of GBP226,226
(2016: GBP254,738). Included in these issues were 35,104 (2016:
52,120) shares allotted to shareholders exercising their rights to
receive dividends under the Company's scrip dividend scheme and Nil
shares (2016: 5,800) allotted to relevant holders exercising
options in the Company. No other shares (2016: nil) were allocated
during the period. As at 30 April 2017 a total of 19,530,296 shares
are in issue (2016: 19,448,884).
7. Dividends
During the period ended 30 April 2017 an amount of GBP1,558,804
(2016: GBP1,435,831) was charged to reserves in respect of equity
dividends paid. An interim dividend of 4.20p per share (2016:
4.00p) will be paid on 31 October 2017 to shareholders on the
register on 29 September 2017. New elections to receive scrip
dividends should be made in writing to the Company's Registrars
before 17 October 2017.
8. 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 access their
performance.
The CODM 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
Agriculturel, Specialist Retail 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 segments, namely the
United Kingdom.
Agriculture - Manufactures and supplies of animal feeds,
fertiliser, seeds and associated agricultural products.
Specialist Retail - Supplies of a wide range of specialist
products to farmers, smallholders and pet owners.
Other - Miscellaneous operations not classified as agriculture
or specialist retail.
The Board assesses the performance of the operating segments
based on a measure of operating profit. Finance income and costs
are not included in the segmental 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. Inter-segmental
transactions are entered into under the normal commercial terms and
conditions that would be available to unrelated third parties.
The Board has assessed the movement in net assets within each
operating segment and notes that there are no material differences
compared to the previous year.
The segment results for the period ended 30 April 2017 are as
follows:
Agriculture Specialist Other Total
Retail
GBP'000s GBP'000s GBP'000s GBP'000s
------------------------------------------------------ ------------ ----------- --------- ---------
Unaudited for the six months
ended 30 April 2017:
Revenue 145,776 59,484 55 205,315
------------------------------------------------------- ------------ ----------- --------- ---------
Segment results 1,537 2,675 (58) 4,154
Share of result of associates
& joint ventures - - - -
------------------------------------------------------ ------------ ----------- --------- ---------
1,537 2,675 (58) 4,154
Impairment charges (3,942)
Interest income 8
Interest expense (95)
---------
Profit before tax 125
Taxation (784)
---------
Profit for the period
attributable to shareholders (659)
Unaudited for the six months
ended 30 April 2016:
Revenue 135,179 57,972 86 193,237
------------------------------------------------------- ------------ ----------- --------- ---------
Segment results 1,817 2,405 (47) 4,175
Share of result of associates
& joint ventures - - - -
------------------------------------------------------ ------------ ----------- --------- ---------
1,817 2,405 (47) 4,175
Interest income 18
Interest expense (118)
---------
Profit before tax 4,075
Taxation (735)
---------
Profit for the period
attributable to shareholders 3,340
Audited for the year ended
31 October 2016:
Revenue 249,736 118,281 126 368,143
------------------------------------------------------- ------------ ----------- --------- ---------
Segment results 2,934 4,493 (69) 7,358
Share of result of associates
& joint ventures 72 51 (30) 93
------------------------------------------------------- ------------ ----------- --------- ---------
3,006 4,544 (99) 7,451
Interest income 69
Interest expense (209)
---------
Profit before tax 7,311
Income taxes (includes
tax of associates & joint
ventures) (1,482)
---------
Profit for the year attributable
to shareholders 5,829
9. Other operating income
Unaudited Unaudited Audited
as at as at as at
30 April 30 April 31 October
2017 2016 2016
GBP'000s GBP'000s GBP'000s
-------------------------- ---------- ---------- ------------
Rental income 183 187 388
Other operating income - - 66
-------------------------- ---------- ---------- ------------
Other operating income 183 187 454
-------------------------- ---------- ---------- ------------
10. Goodwill and investment impairment
Unaudited Unaudited Audited
as at as at as at
30 April 30 April 31 October
2017 2016 2016
GBP'000s GBP'000s GBP'000s
------------------------------------- ---------- ---------- ------------
Goodwill impairment 3,881 - -
Investment impairment 61 - -
------------------------------------- ---------- ---------- ------------
Goodwill and investment impairment 3,942 - -
------------------------------------- ---------- ---------- ------------
The Goodwill impairment charge relates to the Just for Pets
business, see note 11, the investment impairment relates to the
impairment of the investment in Welsh Feed Producers which went
into administration during the period.
11. Goodwill
After initial recognition, goodwill is subject to annual
impairment test or more frequently if events or changes in
circumstances indicate that it might be impaired, in accordance
with IAS 36.
Cost GBP'000s
At November 2016 and 30 April
2017 19,784
--------------------------------- ---------
Aggregate impairment
At 1 November 2016 1,637
Impairment charge 3,881
--------------------------------- ---------
At 30 April 2017 5,518
--------------------------------- ---------
Net book value
--------------------------------- ---------
At 30 April 2017 14,266
--------------------------------- ---------
At 31 October 2016 18,147
--------------------------------- ---------
Goodwill impairment
Goodwill arising on business combinations is not amortised but
is reviewed for impairment on an annual basis, or more frequently
if there are indications that goodwill may be impaired.
Goodwill acquired in a business combination is allocated to
groups of cash generating units according to the level at which
management monitor that goodwill.
Recoverable amounts for cash generating units are based on the
higher of value in use and fair value less cost to sell. Value in
use is calculated from cash flow projections for the next five
years using data from the Group's latest internal forecasts, the
results of which are reviewed by the Board.
The key assumptions for the value in use calculations are those
regarding discount rates and growth rates. Management estimate
discount rates using pre-tax rates that reflect the current market
assessment of the time value of money and the risks specific to the
cash generating units. Growth rates are based on past experience
and expectations of future changes in the market. Given the current
economic climate, a sensitivity analysis has been performed in
assessing the recoverable amounts of goodwill.
In April 2017 and October 2016 impairment reviews were performed
by comparing the carrying value of goodwill with the recoverable
amount of the cash generating units to which goodwill has been
allocated.
The impairment charge of GBP3,880,535 relates to the impairment
on the CGU of the Group's subsidiary Just for Pets Limited.
Goodwill is allocated to specific cash generating units ("CGU")
as it arises
The Group has a number of CGUs in both Agriculture and the
Specialist Retail sectors. The carrying value of goodwill allocated
to the Agriculture CGU is GBP7,776,514 (2016: GBP7,776,514), and to
Specialist Retail is GBP6,489,560 (2016: GBP10,370,095).
The pre-tax discount rates used to calculate value in use ranges
from between 9% to 12% for both the Agriculture and Specialist
retail segments. These discounts rates are derived from the Group's
weighted average cost of capital and adjusted for the specific
risks relating to each CGU.
The forecasts are extrapolated based on estimated long term
growth rates of 1% to 3% for both Agriculture and Specialist Retail
segments
The Directors have considered the sensitivity to key assumptions
and are satisfied that there are no reasonably probable changes in
key assumptions which would cause the carrying amount of the CGU to
exceed its recoverable amount
12. Cash and cash equivalents and bank overdrafts
Unaudited Unaudited Audited
as at as at as at
30 April 30 April 31 October
2017 2016 2016
GBP'000s GBP'000s GBP'000s
----------------------------- ---------- ---------- ------------
Cash and cash equivalents
per balance sheet 22 2,762 10,111
Bank overdrafts (3,335) (13) -
----------------------------- ---------- ---------- ------------
Cash and cash equivalents
per cash flow statement (3,313) 2,749 10,111
----------------------------- ---------- ---------- ------------
13. Cash (used in)/generated from operations
Unaudited Unaudited Audited
six months six months year
ended ended ended 31
30 April 30 April October
2017 2016 2016
GBP'000s GBP'000s GBP'000s
--------------------------------- ------------ ------------ ----------
(Loss)/Profit for
the period (659) 3,340 5,829
Adjustments for:
Taxation 784 735 1,456
Impairment of goodwill 3,881 - -
Depreciation of tangible
fixed assets 1,422 1,431 2,768
Amortisation of intangibles 7 7 15
Impairment of investments 61 - -
(Profit) on disposal
of property, plant
and equipment (26) (83) (128)
Interest income (8) (18) (69)
Interest expense 95 118 209
Share of results of
joint ventures and
associates - - (67)
Share based payment
expenses 75 62 63
Changes in working
capital (excluding
effects of acquisitions
and disposals of subsidiaries)
Decrease in short
term loan to joint
venture - - 16
(Increase)/ decrease
in inventories (4,921) (2,322) 350
(Increase)in trade
and other receivables (12,896) (8,850) (1,709)
Increase in payables 2,813 2,547 164
Cash (used in)/ generated
from operations (9,372) (3,033) 8,897
---------------------------------- ------------ ------------ ----------
During the six months to 30 April 2017, the Group purchased
property, plant and equipment of GBP1,202,000 (2016: GBP1,357,000)
of which GBP127,000 (2016: GBP754,000) relates to assets acquired
under finance leases.
14. Other reserves
Included in Other reserves are share-based payments: the Group
issues equity-settled share-based payments to certain employees.
Equity-settled share-based payments are measured at fair value at
the date of the grant. The fair value determined at the grant date
of the equity-settled share-based payments is expensed on a
straight-line basis over the vesting period, based on the Group's
estimate of shares that will eventually vest.
The Group operates a number of share option and Save As You Earn
schemes and fair value is measured by use of a recognised valuation
model. The expected life used in the model has been adjusted, based
on management's best estimate, for the effects of
non-transferability, exercise restrictions and behavioural
considerations.
At the 30 April 2017, the ESOP Trust, which is consolidated
within the Group's financial statements held 53,377 Ordinary Shares
in the Group.
15. Group financial commitments
As at 30 April 2017, the Group's contingent liabilities in
respect of bank guarantees for one of its associates amount to
GBP125,000 (2011: GBP125,000).
16. Capital commitments
As at 30 April 2017 the Group had capital commitments as
follows:
Unaudited Unaudited Audited
as at as at as at
30 April 30 April 31 October
2017 2016 2016
GBP'000s GBP'000s GBP'000s
----------------------------------- ---------- ---------- ------------
Contracts placed for future
capital expenditure not provided
in the financial statements 282 2,005 361
----------------------------------- ---------- ---------- ------------
17. Related parties
Transactions between the Company and its subsidiaries, which are
related parties have been eliminated on consolidation and are not
disclosed in this note. Transactions between the Group and its
joint ventures and associates are described below:
Transaction value Balance outstanding
---------------------
Unaudited Unaudited Audited Unaudited Unaudited Audited
six six year as at as at as at
months months ended 30 30 31 October
ended ended 31 October April April 2016
30 April 30 April 2016 2017 2016
2017 2016
GBP'000s GBP'000s GBP'000s GBP'000s GBP'000s GBP'000s
--------------------- ---------- ---------- ------------ ---------- ---------- ------------
Sales of goods
to joint ventures
and associates 12,220 6,480 10,594 6,077 3,670 2,684
Purchases of
goods from
joint ventures
and associates 8,327 3,677 5,346 1,356 2,758 65
Interest receivable
from joint
ventures and
associates - - 58 - - -
Loans with
joint ventures - - - 2,786 2,802 2,786
Sales of goods to related parties were made at the Group's usual
list prices, less average discounts. Purchases were made at market
price discounted to reflect the quantity of goods purchased and the
relationship between parties.
This information is provided by RNS
The company news service from the London Stock Exchange
END
IR EBLFLDQFLBBK
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