TIDMWYN
RNS Number : 3895D
Wynnstay Group PLC
31 January 2018
31 January 2018
AIM: WYN
Wynnstay Group plc
("Wynnstay" or the "Group" or the "Company")
Final Results
For the year ended 31 October 2017
Key points
Financial
-- Significantly improved trading backdrop benefited agricultural operations
- upturn in farm output prices (including for milk) boosted farmer sentiment
- however, overall results were impacted by pet products business, Just for Pets Limited
-- Revenue from continuing operations rose by 10.5% to GBP390.72m (2016 restated: GBP353.73m)
- partly reflecting a reversal of commodity price deflation
-- Underlying* pre-tax profit from continuing operations up 9.2%
to GBP7.97m (2016 restated: GBP7.30m)
Reported profit before tax, including the impact of Just for
Pets Limited, of GBP1.15m (2016: GBP7.29m)
-- Basic earnings per share from continuing operations up 8.7%
to 32.29p (2016 restated: 29.71p)
-- Net cash up to GBP4.51m at year end (2016: GBP4.28m)
-- Net assets at 31 October 2017 stood at GBP85.39m (2016: GBP86.95m)
-- Proposed increased final dividend of 8.40p (2016: 8.00p),
taking total for the year to 12.60p (2016: 12.00p), a rise of
5%
-- New financial year has started in line with management expectations
Operational
-- Agricultural Division - revenue of GBP280.87m, operating profit up 11% to GBP3.34m
- recovery in trading conditions for both livestock and arable farmers
- higher volumes across most categories, including dairy feed and fertiliser
- investment plans in place for 2018 to increase capacity in feeds and seeds
-- Specialist Retail Division - revenue from continuing
operations of GBP109.73m, operating profit up 6.0% to GBP4.74m
- revenues up across the majority of stores as farmer sentiment recovered
- refurbishment programme continues across retail outlets
-- Just for Pets Limited (formerly part of the Specialist Retail
Division) was regrettably placed into administration on 10 October
2017
-- Acquisition of fertiliser blending facility at Montrose in
November 2017, expanding the Group's geographic reach in
Scotland
-- Trading conditions are firmer than this time last year;
Company is well-placed to develop further
*Underlying pre-tax profit includes Group's share of pre-tax
profit from joint ventures and associate investments but excludes
the exceptional item and share-based payments. A reconciliation is
shown in note 15.
Ken Greetham, Chief Executive of Wynnstay, commented:
"Our core agricultural business delivered a significantly
improved performance year-on-year, reflecting better trading
conditions for our farmer customers, with milk and other farm
output prices recovering from the depressed levels of the last two
years. The recovery in prices over 2017 drove a greater sense of
optimism across the agricultural sector.
"The Group's results as a whole were impacted by Just for Pets
Limited, which was very regrettably placed into administration in
early October. However, this decisive action helped to minimise the
potential adverse effect on both creditors and employees,
preserving most jobs.
"The agricultural trading backdrop is stronger than this time
last year and the new financial year has started in line with
management expectations. We continue to invest in the Group's
infrastructure, focusing on manufacturing and logistics, and
believe that the business remains well-placed to develop and grow.
While Brexit creates some uncertainties, we remain confident of the
Group's market positioning.
"2018 is our centenary year and we look forward to marking it
with a number of events and initiatives for all staff, customers
and other stakeholders."
Enquiries:
Wynnstay Group plc Ken Greetham, Chief Executive Today
Paul Roberts, Finance Director T: 020 3178
6378
KTZ Communications Katie Tzouliadis / Irene T: 020 3178
Bermont-Penn / Emma Pearson 6378
Shore Capital (Nomad Stephane Auton / Patrick T: 020 7408
and Broker) Castle 4090
CHAIRMAN'S STATEMENT
OVERVIEW
Wynnstay's core agricultural and specialist retail activities
generated a significantly improved performance on the prior year(1)
. However, financial results for the Group as a whole have been
impacted by the trading difficulties at our pet products operation,
though decisive action has minimised the effect on employees and
creditors of Just for Pets Limited, as well as shareholders in the
Group.
A key feature of the year was the improvement in the trading
backdrop, with market prices for agricultural outputs recovering
over the year. For many farmers, particularly in the dairy sector,
output prices had previously fallen to below the cost of
production. The recovery in prices over the period, therefore,
lifted sentiment across the sector, driving an upturn in demand for
most agricultural inputs, including feeds.
The benefit of this recovery in demand is evident in the Board's
preferred alternative performance measure of underlying pre-tax
profit(2) from continuing operations, which rose by 9.2% to
GBP7.97m (2016 restated: GBP7.30m) despite some margin pressure.
Revenues generated by Wynnstay's continuing operations increased to
GBP390.72m (2016 restated: GBP353.73m), reflecting increased
activity in most sectors, as well as inflation in certain product
categories. The Group's reported pre-tax profit(3) includes a
one-off charge, associated with the Just for Pets Limited business,
which reduced the outcome to GBP1.15m (2016: GBP7.29m) for the
year.
The most marked improvements in output prices were in the
livestock sector, particularly dairy, where milk prices increased
sharply over the last 12 months, although they did not reach the
levels seen in 2013. We remain encouraged about the level of demand
for livestock feed in the current year.
Seed sales were in line with last year's record level and
overall fertiliser sales were higher year-on-year. This reflected
increased activity in Glasson's fertiliser business in northern
England and Scotland. Grain volumes were lower compared to the
prior year, partly a result of the smaller harvest of 2016 but also
reflecting farmers' reluctance to trade grain as prices declined
during the autumn period.
Sales from the network of Wynnstay Stores increased as farmers
invested in their enterprises, with a significant improvement in
hardware, supplements and animal health products. Our stores
provide a valuable route to market, both for our own products and
for those of national suppliers, and we intend to further expand
our geographic presence as well as invest in ongoing store upgrades
and refurbishments. Further details on the Group's trading
performance are provided in the Chief Executive's Review.
The Board is encouraged by the progress that has been made
during the year in the Group's continuing operations, and plans to
make further investments across all aspects of the business as it
continues to strengthen Wynnstay's position as a major supplier of
agricultural products and services to farmers and the rural
community.
(1) 2016 results have been restated to reclassify the Just for
Pets Limited operation during the year ended 31 October 2017 as
discontinued.
(2) The underlying pre-tax profit calculation is defined and
shown in note 15 on page 23.
(3) Reported pre-tax profit is profit for the year, adding back
taxation and share of tax incurred by associates and joint
ventures.
FINANCIAL RESULTS
For the year to 31 October 2017, revenues from continuing
operations increased by 10.5% to GBP390.72m (2016 restated:
GBP353.73m), owing partly to a reversal of the commodity price
deflation experienced in recent years. Agriculture sales
contributed GBP280.87m (2016: GBP249.74m), which reflected higher
average unit values for most feed, seed, grain and fertiliser
products. Specialist Retail revenue increased by 5.7% to GBP109.73m
(2016 restated: GBP103.86m), with good like-for-like growth in many
important product categories as farmer confidence improved and
farm-related investment increased.
Reported profit before tax from continuing operations increased
by 6.2% to GBP7.66m (2016 restated: GBP7.21m) and, on the Board's
preferred alternative performance measure of "Underlying Group
pre-tax profit", which includes the gross share of results from
joint ventures and associates, but excludes share-based payments
and exceptional items, the Group achieved an increase of 9.2% on
the prior year to GBP7.97m (2016 restated: GBP7.30m).
The improvement in trading conditions is reflected in both
operating divisions, with Agriculture contributing GBP3.34m (2016:
GBP3.01m) to operating profit, a rise of 11.0% year-on-year. This
includes an improved performance in the FertLink and Bibby joint
ventures. Our Specialist Retailing activities contributed GBP4.74m
(2016 restated: GBP4.47m), a 6.0% increase, which mainly reflected
improved revenues across nearly all stores. Other activities
recorded a similar loss to the prior year of GBP0.10m (2016: loss
of GBP0.10m).
Net finance costs increased slightly to GBP0.15m (2016 restated:
GBP0.14m) as commodity inflation created higher average working
capital utilisation.
Basic earnings per share from continuing operations were 8.7%
higher at 32.29p per share (2016 restated: 29.71p). Costs
associated with the discontinued Just for Pets Limited business
amounted to GBP6.59m (2016 restated: income of GBP0.06m). This
resulted in a reported loss for the year after tax of GBP0.28m
(2016: profit of GBP5.83m).
Cash generation remained strong during the year and, at the year
end, the Group's net cash position was GBP4.51m (2016:
GBP4.28m).
Balance sheet net assets stood at GBP85.39m (2016: GBP86.95m) at
the year end, equating to GBP4.37 (2016: GBP4.48) per share, and
the return on net assets from continuing operations was 9.4% (2016
restated: 8.4%).
DIVID
Reflecting the recovery in the performance of continuing
operations, the Board is pleased to propose the payment of an
increased final dividend of 8.40p per share (2016: 8.00p). This,
together with the interim dividend of 4.20p per share, paid on 31
October 2017, takes the total dividend for the year to 12.60p, an
increase of 5.0% on last year (2016: 12.00p).
The final dividend will be paid on 30 April 2018 to shareholders
on the register on 3 April 2018. A scrip dividend alternative will
continue to be available as in previous years. The last date for
election for the scrip dividend will be 16 April 2018.
COLLEAGUES
Wynnstay has tremendously dedicated and talented colleagues
across its operations and, on behalf of the Board, I would like to
thank them all for their input and hard work during the year. Their
expertise and commitment will help to drive Wynnstay's performance
and future growth.
OUTLOOK
Wynnstay has the benefit of a strong balance sheet and a broad
base of activities covering all aspects of agricultural inputs.
This has been a significant factor in Wynnstay's resilient
performance during the prolonged downturn which affected the whole
of UK agriculture. It also creates a robust platform for the
Group's future growth and development.
The improvement in farmgate prices has generated an increase in
demand for most agricultural inputs and, with market prices at more
realistic levels for farmers, there is a greater degree of
stability within the industry.
Currently, the medium-to-long term picture is less clear, due to
the ongoing negotiation process for the UK's exit from the European
Union and the likely shift in the nature of support mechanisms for
UK agriculture. However, the Government has indicated its support
for the industry as a whole, and Brexit comes at a time when world
demand for agricultural products for food and also for energy
continues to increase. This is a positive driver for the industry
and should bring further opportunities for Wynnstay.
While there are some uncertainties over the next few years, the
Board remains confident of the Group's market positioning and is
firmly focused on the opportunities presented by the evolving UK
market.
Jim McCarthy
Chairman
CHIEF EXECUTIVE'S REVIEW
INTRODUCTION
The Group's core agricultural businesses delivered a
significantly improved performance year-on-year, despite continuing
margin pressures. However, as expected, Wynnstay's results overall
were impacted by Just for Pets Limited ("JfP"), which was
regrettably placed into administration on 10 October 2017.
The Group's profit before tax from continuing operations
increased to GBP7.66m (2016 restated: GBP7.21m). Underlying pre-tax
profit(1) (as defined in note 15 on page 23) from continuing
operations, increased by 9.2% to GBP7.97m (2016 restated:
GBP7.30m). The rise in the Group's profitability reflected an
uplift in activity across most of the Group's businesses as trading
conditions for farmers improved. Revenues from continuing
operations rose to GBP390.72m (2016 restated: GBP353.73m), with
inflation affecting nearly all bulk commodities.
Including the effect of JfP, the Group's reported profit before
tax was GBP1.15m(2) (2016: GBP7.29m). As previously announced,
JfP's performance was hit by deteriorating trading conditions and
its ultimate move into administration was one of the most difficult
situations that the Group has experienced. We are, however, pleased
that the decisive actions taken helped to minimise the potential
adverse effects on all those concerned, including employees, with a
high proportion of jobs preserved. JfP's trading losses in the
second half, along with the costs relating to its administration,
have been recognised in the Group's results as well as the related
goodwill impairment charge, which was taken in the first half of
the year.
The improvement in farmgate prices during the year came as
welcome relief to our farmer customers and, while questions around
Brexit are likely to cause some ongoing caution, output prices are
now at a more sustainable level for producers. This has boosted the
farming industry and increased demand for most inputs, particularly
dairy feed, which had suffered from reduced demand in the previous
year.
The business continues to seek organic and acquisitive
expansion, and I am pleased to highlight the acquisition, by
Glasson, of a fertiliser blending facility at Montrose, in November
2017. It is an opportunity for us to increase our share in the UK
fertiliser market with further geographic expansion into Scotland.
There are also investment plans in place that will enable us to
improve efficiency and expand our capacity in feeds and seeds,
along with an ongoing refurbishment programme at our retail
outlets.
The agreement of terms for the UK's exit from the EU remains
unresolved and this creates a degree of uncertainty in the
agricultural market. However, the UK is a relatively efficient
producer of most agricultural products and this, combined with
pledged support from the UK Government, gives a degree of comfort
to the industry. Whatever the outcome of the final Brexit
negotiations, there is no doubt that improving productivity will
remain a significant focus for most farming enterprises, and
Wynnstay is well positioned, with its broad range of products and
services, to aid efficiency within the sector.
(1) Underlying pre-tax profit includes the gross share of
results from joint ventures and associates, but excludes
share-based payments and exceptional items.
(2) Reported profit before tax is profit for the year, adding
back taxation and share of tax incurred by associates and joint
ventures.
REVIEW OF ACTIVITIES
Agriculture
The Group's agricultural operations provide a full range of
inputs to arable and livestock farmers. This is complemented by
crop marketing services and, in most regions, a network of country
stores, which offer Wynnstay's customers a one-stop shop, catering
for their needs with a wide range of products.
The Agricultural Division generated an operating contribution
for the year of GBP3.34m, up 11.0% year-on-year (2016: GBP3.01m),
although we experienced some variation in contribution across
product sectors. Revenues rose by 12.5% to GBP280.87m (2016:
GBP249.74m), which reflected volume increases across most
agricultural inputs, except grain, as well as some inflationary
impact in feed and grain prices.
The significant decline in output prices experienced by farmers
in 2015 carried through into 2016, but the welcome upturn in prices
over the course of 2017 has now brought a degree of optimism to the
sector.
Demand for feed and fertiliser, which can be viewed as the
drivers for yield, increased in the period, mirroring the general
UK market. We experienced some variation in order patterns for
fertiliser as farmers timed their orders around fluctuations in
market prices during the year. Demand for seed was in line with
previous years', however the smaller 2016 harvest meant that grain
volumes were lower year-on-year.
Wynnstay's position as a supplier of a comprehensive range of
agricultural inputs, combined with our retail business model
continues to create opportunities for the Group to expand its
presence both within its existing trading areas and beyond.
Feed Products
The previously reported increase in farm output prices,
particularly for milk, increased UK demand for feed products. This
is reflected in the strong upturn in feed demand year-on-year, and
it also provides us with confidence for sales over the winter
period. The increased volume of milk in the UK market has given
rise to some concern over milk prices, which have peaked at around
30p/litre, and there is some possibility of a slight reduction.
With a generally stable UK and world market, we believe that this
is likely to be short-term, and we do not expect to see a repeat of
the reduction in prices experienced in 2015.
The business produces a range of monogastric and ruminant feeds
which, along with the supply of blended feeds and traded raw
materials, provides stability to the feed business, as well as
protection against potential volatility in any one sector of the
livestock market. The supply of bagged feeds brings further
predictability and stability to production. Demand for bagged feed,
which is mainly sold through the retail stores, increased during
the year, and our investment in the new bagging facility, in 2016,
helped to satisfy demand efficiently. Further investment in both
our compound feed mills is planned for 2018.
There is an ongoing requirement for the farming industry to
improve efficiencies, and Wynnstay is well placed to provide a wide
range of products, along with advice from its in-house specialists,
to aid the process.
Glasson Grain
The Glasson business, based in Lancashire, is involved in the
supply of raw materials, processing of specialist feed products and
the marketing of fertiliser, both wholesale and direct-to-farm.
While demand for raw materials was lower than the previous year,
sales of fertiliser increased significantly, albeit with some
reduction in margin in a competitive market. The business has
increased its market penetration in the north of England and
Scotland, and the acquisition of the Montrose production facility
in Scotland, after the year end, will further enhance sales in the
area.
The financial outcome for the year is in line with the previous
year, with an increase in contribution from fertiliser balancing a
reduction within the trading division of the business.
Arable Products
The arable business remains strong, although lower grain
volumes, along with continued margin pressure, have reduced the
contribution of this area of activity compared to the prior year.
Combined sales of cereal and herbage seed was in line with the
record performance of the previous year, and the business is well
placed as a major supplier of seed to UK farmers. Further capital
investment is budgeted for in 2018 to support additional expansion
of the site at Astley in Shropshire.
Demand for fertiliser was strong in the spring and summer
periods, although, in contrast to the previous year, higher prices
in the autumn tempered demand for early, out-of-season orders. As a
result, it is expected that there will be a stronger spot market as
farmers buy for the spring usage period.
The smaller 2016 harvest, combined with a reticence of farmers
to sell grain from the larger 2017 crop, contributed to a reduction
in volumes year-on-year in GrainLink, our in-house grain marketing
business. We also experienced some margin pressure as traders
competed in a subdued market. Wheat prices weakened slightly during
the autumn period, however longer term futures prices indicate a
general level of stability at above the average cost of production.
Overall, farm stocks of grain are higher than in 2016, most of
which will be traded before the 2018 harvest.
Specialist Retail
Revenue from ongoing specialist retailing activities increased
by 5.7% to GBP109.73m (2016 restated: GBP103.86m), with a 6.0%
increase in contribution to GBP4.74m (2016 restated: GBP4.47m).
Our specialist retailing activities now comprise the Group's
network of Wynnstay Stores, which supply a wide range of products
for farmers and country dwellers, and Youngs Animal Feeds, which
offers a range of products for equine and small animals. This
follows the Group's very difficult decision to withdraw from the
pet products market. The pets sector has seen very challenging
trading conditions since late 2015 and JfP began to experience a
deterioration in trading in 2016. In the first half of FY 2017, it
became apparent that the JfP business did not have sufficient scale
as a standalone retailer to survive an increasingly difficult
trading environment. Following consultation with advisors, and
careful and extensive consideration of possible solutions,
including a sale of the business, the decision was taken to
institute an administration process. While this was extremely
disappointing, we are pleased that the decisive action helped to
minimise, as much as possible, the effect of a very challenging
situation on employees and creditors to the JfP business.
Wynnstay Stores
The Group's network of Wynnstay Stores has a strong geographic
presence throughout Wales and the west of England.
Like-for-like sales across the Stores business increased by 5%,
with the upturn reflecting improved sentiment in the livestock
sector, a result of higher output prices for milk and meat. This
has been particularly evident in animal health and hardware
products as well as milk powders, which our specialists within the
Agricultural Division also advise on. The success of our Dairy and
Sheep & Beef catalogues has also contributed to the improvement
in sales, although a change in product mix across the store network
has led to a slight reduction in average margin.
We continue to invest in the network of Wynnstay Stores, and we
finished a total refurbishment of the Craven Arms outlet, in
Shropshire, early in the year. In January 2018, we also completed
the relocation of our store in Ruthin, in Denbighshire.
The Wynnstay Agricentre business, based in the south west of the
UK, operates a slightly different model, with a high percentage of
products delivered to farms. During the year, we have focused on
the efficiency of its delivery network, and this has resulted in
the closure of two outlets and initiatives to create better
customer service processes. We have also invested in personnel in
the region, ahead of an anticipated improvement in sales throughout
the trading area.
Wynnstay Stores provide an important route to market across a
wide geographic area for both our own products and those supplied
by national and international manufacturers. We anticipate further
growth in our specialist retailing activities as we expand the
Group's trading area, and envisage new opportunities arising for
the development of products within the Agricultural Division.
Youngs Animal Feeds
The Youngs business manufactures and markets a range of equine
products to specialist outlets across the centre of the UK. We are
currently in the process of reorganising this activity to optimise
its operations within the Group.
Joint Ventures and Associates
The Group has four joint venture businesses (Bibby Agriculture,
Wyro, FertLink and Total Angling) as well as two associate
businesses (Wynnstay Fuels and Celtic Pride). These extend the
Group's activities and strengthen its marketing channels for a
number of products. Their combined contribution was higher
year-on-year, benefiting in particular from an improved performance
from FertLink, which reflected a recovery in volumes in the
fertiliser marketplace.
STAFF
The last two years have been challenging for our farmer
customers and all those involved in the agricultural supply
industry. The talent and dedication of our personnel forms the
bedrock of the Group's success and I would like to take this
opportunity to record my personal appreciation to all our staff who
have contributed so much this year. 2018 is a centenary year for
Wynnstay and there are a number of plans underway to mark this
milestone, which we look forward to with great enthusiasm.
OUTLOOK
The recovery in output prices has brought a welcome improvement
in demand for all agricultural inputs. The improvement is
principally a result of a more balanced world market, particularly
for milk products. Prices have also been enhanced by the
devaluation of sterling, which brought added benefits to the UK
industry. The improved pricing appears to be sustainable, at least
in the short-term, and the farming industry is eagerly awaiting the
outcome of the Brexit negotiations to understand the full
implications for demand and prices in the medium to long-term.
The macroeconomic factors of increasing population, dietary
changes, and the strategic importance of a sustainable food supply
are significant points of consideration for the industry. While
farming, rural communities and the environment will still require
some level of Government support, the increasing focus on
agricultural efficiency and productivity will create opportunities
for the industry. We believe that Wynnstay is well placed to
support long-term growth across the sector, with its wide range of
innovative products and services, and well-established industry
relationships.
The new financial year has started in line with management
expectations. While Brexit creates some uncertainty, the
improvement in output prices has brought about a sense of renewed
optimism, and the trading backdrop is firmer than this time last
year, which is encouraging. As we embark on our centenary year, we
plan to continue to invest in the Group's infrastructure,
particularly focusing on manufacturing and logistics, which will
improve the Group's efficiency and yield broader benefits in the
medium to long-term.
I look forward to providing a further update on trading at
Wynnstay's AGM in March with the meeting's venue returning to
Shrewsbury Town FC.
Ken Greetham
Chief Executive
WYNNSTAY GROUP PLC
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
For the year ended 31 October 2017
2017 (Restated)
2016
Note GBP000 GBP000 GBP000 GBP000
------- ---------- ------- ----------
CONTINUING OPERATIONS
Revenue 2 390,724 353,726
Cost of sales (337,835) (303,439)
------- ---------- ------- ----------
GROSS PROFIT 52,889 50,287
Manufacturing distribution
and selling costs (40,009) (38,724)
Administrative expenses (5,335) (4,570)
Other income 326 364
------- ---------- ------- ----------
GROUP OPERATING PROFIT
BEFORE INTANGIBLE AMORTISATION,
SHARE-BASED PAYMENTS,
INVESTMENT IMPAIRMENT
AND COSTS OF CORPORATE
RESTRUCTURING 7,871 7,357
Intangible amortisation
and share-based payments (156) (78)
------- ---------- ------- ----------
GROUP OPERATING PROFIT
BEFORE, INVESTMENT IMPAIRMENT
AND COSTS OF CORPORATE
RESTRUCTURING 7,715 7,279
Investment impairment
and costs of corporate
restructuring 4 (95) -
------- ---------- ------- ----------
GROUP OPERATING PROFIT 5 7,620 7,279
Interest income 3 66 69
Interest expense 3 (219) (153) (208) (139)
------- ---------- ------- ----------
Share of profits in associate
and joint ventures accounted
for using the equity
method 267 93
Share of tax incurred
by associate and joint
ventures 6 (70) 197 (26) 67
------- ---------- ------- ----------
PROFIT BEFORE TAXATION
FROM CONTINUING OPERATIONS 7,664 7,207
Taxation 7 (1,359) (1,436)
------- ---------- ------- ----------
PROFIT FOR THE YEAR FROM
CONTINUING OPERATIONS 6,305 5,771
DISCONTINUED OPERATIONS
(Loss)/profit for the
year from discontinued
operations after tax 8 (6,586) 58
(LOSS)/PROFIT FOR THE
YEAR (281) 5,829
BASIC EARNINGS PER ORDINARY
SHARE (PENCE) 10
Profit from continuing
operations 32.29 29.71
(Loss)/profit from discontinued
operations (33.72) 0.30
------- ---------- ------- ----------
(1.43) 30.01
------- ---------- ------- ----------
DILUTED EARNINGS PER
ORDINARY SHARE (PENCE) 10
Profit from continuing
operations 31.87 29.51
Loss/(profit) from discontinued
operations (33.29) 0.30
------- ---------- ------- ----------
(1.42) 29.81
------- ---------- ------- ----------
The prior year comparatives have been restated to reclassify the
Just for Pets Limited operation discontinued during the year ended
31 October 2017 as a discontinued operation (see Note 8).
There was no other comprehensive income during the current and
prior year.
WYNNSTAY GROUP PLC
CONSOLIDATED BALANCE SHEET
As at 31 October 2017
2017 2016
Note GBP000 GBP000
--------- ---------
ASSETS
NON-CURRENT ASSETS
Goodwill 14,266 18,147
Investment property 2,372 2,372
Property, plant and equipment 18,709 20,535
Investments accounted
for using equity method 3,444 3,457
Intangibles 95 109
--------- ---------
38,886 44,620
--------- ---------
CURRENT ASSETS
Inventories 30,056 31,344
Trade and other receivables 62,961 50,316
Financial assets
- loan to joint venture 2,844 2,786
Cash and cash equivalents 11 8,914 10,111
--------- ---------
104,775 94,557
--------- ---------
TOTAL ASSETS 143,661 139,177
LIABILITIES
CURRENT LIABILITIES
Financial liabilities
- borrowings 12 (2,512) (2,626)
Trade and other payables (52,738) (44,750)
Current tax liabilities (847) (905)
--------- ---------
(56,097) (48,281)
--------- ---------
NET CURRENT ASSETS 48,678 46,276
--------- ---------
NON-CURRENT LIABILITIES
Financial liabilities
- borrowings 12 (1,896) (3,202)
Trade and other payables (22) (388)
Deferred tax liabilities (254) (358)
(2,172) (3,948)
--------- ---------
TOTAL LIABILITIES (58,269) (52,229)
--------- ---------
NET ASSETS 85,392 86,948
========= =========
EQUITY
Share capital 13 4,916 4,874
Share premium 29,529 28,848
Other reserves 3,319 2,933
Retained earnings 47,628 50,293
TOTAL EQUITY 85,392 86,948
========= =========
WYNNSTAY GROUP PLC
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
As at 31 October 2017
Share Share Retained Total
capital premium earnings
account Other reserves
Group GBP000 GBP000 GBP000 GBP000 GBP000
--------- -------- -------------- ---------- --------
At 1 November 2015 4,848 28,439 2,890 46,678 82,855
Profit for the year - - - 5,829 5,829
--------- -------- -------------- ---------- --------
Total comprehensive
income for the year - - - 5,829 5,829
--------- -------- -------------- ---------- --------
Transactions with owners
of the Company recognised
directly in equity:
Shares issued during
the year 26 409 - - 435
Own shares acquired
by
ESOP trust - - (20) - (20)
Dividends - - - (2,214) (2,214)
Equity settled share-
based payment transactions - - 63 - 63
--------- -------- -------------- ---------- --------
Total contributions
by and distributions
to owners of the Company 26 409 43 (2,214) (1,736)
--------- -------- -------------- ---------- --------
At 31 October 2016 4,874 28,848 2,933 50,293 86,948
--------- -------- -------------- ---------- --------
Loss for the year - - - (281) (281)
--------- -------- -------------- ---------- --------
Total comprehensive
loss for the year - - - (281) (281)
--------- -------- -------------- ---------- --------
Transactions with owners
of the Company recognised
directly in equity:
Shares issued during
the year 42 681 - - 723
Own shares disposed
of by ESOP trust - - 244 - 244
Dividends - - - (2,384) (2,384)
Equity settled share-based
payment transactions - - 142 - 142
--------- -------- -------------- ---------- --------
Total contributions
by and distributions
to owners of the Company 42 681 386 (2,384) (1,275)
--------- -------- -------------- ---------- --------
At 31 October 2017 4,916 29,529 3,319 47,628 85,392
========= ======== ============== ========== ========
There was no other comprehensive income during the current and
prior years.
WYNNSTAY GROUP PLC
CONSOLIDATED CASH FLOW STATEMENT
For the year ended 31 October 2017
2017 (Restated)
2016
Note GBP000 GBP000
-------- -----------
Cash flows from operating
activities
Cash generated from continuing
operations 14 6,053 8,477
Interest received 66 69
Interest paid (219) (208)
Tax paid (1,496) (1,315)
Net cash flows from operating
activities in continuing
operations 4,404 7,023
Net cash generated from operating
activities in discontinued
operations 282 388
-------- -----------
Net cash generated from operating
activities 4,686 7,411
Cash flows from investing
activities
Proceeds from sale of property,
plant and equipment 177 223
Purchase of property, plant
and equipment (2,018) (2,140)
Proceeds on sale of investments 150 290
Disposal of subsidiary, net
cash disposed of (678) -
Purchase of intangibles - (3)
Own shares acquired by ESOP
trust - (20)
Own shares disposed of by
ESOP trust 244 -
Net cash flows used by investing
activities in continuing
operations (2,125) (1,650)
Net cash used in investing
activities in discontinued
operations (36) (607)
-------- -----------
Net cash used by investing
activities (2,161) (2,257)
Cash flows from financing
activities
Net proceeds from the issue
of ordinary share capital 723 435
Finance lease principal repayments (1,152) (835)
Repayment of borrowings (896) (2,162)
Dividends paid to shareholders (2,384) (2,214)
-------- -----------
Net cash flows generated
from financing activities
in continuing operations (3,709) (4,776)
Net cash used in financing
activities in discontinued
operations (13) (14)
-------- -----------
Net cash generated from financing
activities (3,722) (4,790)
Net (decrease)/increase in
cash and cash equivalents (1,197) 364
Cash and cash equivalents
at the beginning of the period 10,111 9,747
-------- -----------
Cash and cash equivalents
at the end of the period 11 8,914 10,111
WYNNSTAY GROUP PLC
NOTES TO THE ACCOUNTS
1. The Company is taking advantage of the exemption in s408 of
the Companies Act 2006, not to present its individual income
statement and related notes of these approved financial
statements.
2. SEGMENTAL REPORTING
IFRS 8 requires operating segments to be identified on the basis
of internal financial information about the components of the Group
that are regularly reviewed by the chief operating decision maker
("CODM") to allocate resources to the segments and to assess their
performance.
The chief operating decision maker has been identified as the
Board of Directors ("the Board"). The Board reviews the Group's
internal reporting in order to assess performance and allocate
resources. The Board has determined that the operating segments,
based on these reports are Agriculture, Specialist 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 segment, namely the United
Kingdom.
Agriculture - manufacturing and supply of animal feeds,
fertiliser, seeds and associated agricultural products.
Specialist Retail - supply 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 segment result that is assessed by the
Board. Other information provided to the Board is measured in a
manner consistent with that in the financial statements.
Inter-segmental transactions are entered into under the normal
commercial terms and conditions that would be available to
unrelated third parties.
No segment is individually reliant on any one customer.
The segment results for the year ended 31 October 2017 for
continuing operations are as follows:
Specialist
Agriculture Retail Other Total
Year ended 31 October GBP000 GBP000 GBP000 GBP000
2017
-------------- ----------- -------- ----------
Revenue from external
customers 280,870 109,727 127 390,724
-------------- ----------- -------- ----------
Segment result
Group operating profit
before investment impairment
and costs of corporate
restructuring 3,017 4,740 (42) 7,715
Share of results of
associate and joint
ventures before tax 320 - (53) 267
-------------- ----------- -------- ----------
3,337 4,740 (95) 7,982
Investment impairment
and costs of corporate
restructuring (95)
Interest income 66
Interest expense (219)
----------
Profit before tax from
continuing operations 7,734
Income taxes (includes
tax of associate and
joint ventures) (1,429)
----------
Profit for the year
attributable to equity
shareholders from continuing
operations 6,305
----------
Segment net assets 33,908 39,739 7,239 80,886
Corporate net cash (note
12) 4,506
----------
Total net assets 85,392
----------
The segment results for the year ended 31 October 2016 for
continuing operations are as follows:
Specialist
Agriculture Retail Other Total
Year ended 31 October GBP000 GBP000 GBP000 GBP000
2016 (restated)
-------------- ----------- -------- ----------
Revenue from external
customers 249,736 103,864 126 353,726
-------------- ----------- -------- ----------
Segment result
Group operating profit
before investment impairment
and costs of corporate
restructuring 2,934 4,414 (69) 7,279
Share of results of
associate and joint
ventures before tax 72 51 (30) 93
-------------- ----------- -------- ----------
3,006 4,465 (99) 7,372
Interest income 69
Interest expense (208)
----------
Profit before tax 7,233
Income taxes (includes
tax of associate and
joint ventures) (1,462)
----------
Profit for the year
attributable to equity
shareholders from continuing
operations 5,771
----------
Segment net assets 32,173 40,538 7,104 79,815
Corporate net cash (note
12) 4,283
----------
Total net assets 84,098
----------
3. FINANCE COSTS
2017 (Restated) 2016
GBP000 GBP000
Continuing Discontinued Continuing Discontinued
Interest expense: operations operations operations operations
------------ ------------- ------------ -------------
Interest payable
on borrowings (114) - (95) -
Interest payable
on finance leases (105) (3) (113) (1)
Interest and similar
charges payable (219) (3) (208) (1)
Interest income 66 - 69 -
Interest receivable 66 - 69 -
------------ ------------- ------------ -------------
Finance costs (153) (3) (139) (1)
------------ ------------- ------------ -------------
4. INVESTMENT IMPAIRMENT AND COSTS OF CORPORATE RESTRUCTURING
Continuing operations 2017 2016
GBP000 GBP000
------------ -------
Investment impairment 60 -
Costs of corporate restructuring 35 -
------------ -------
The investment impairment relates to the accounting disposal of
unlisted investments. The costs of corporate restructuring relate
to the dissolution of dormant subsidiaries.
5. GROUP OPERATING PROFIT
The following items have been included in arriving at operating
profit:
2017 (Restated) 2016
GBP000 GBP000
Continuing Discontinued Continuing Discontinued
operations operations operations operations
------------ ------------- ------------ -------------
Staff costs 24,975 2,838 24,232 2,972
Depreciation of
property, plant
and equipment:
- owned assets 1,947 320 1,825 316
- under finance
leases 710 4 623 4
Amortisation of
intangibles 14 - 15 -
Profit on disposal
of fixed assets (73) (8) (127) (1)
Other operating
lease rentals
payable 2,242 2,073 1,786 1,703
Repairs and maintenance
expenditure on
plant, property
and equipment 1,851 92 1,671 110
Trade receivables
impairment 65 - 8 -
Services provided by the Group's auditor:
During the year the Group obtained the following services from
the Group's auditor:
2017 (Restated) 2016
GBP000 GBP000
Continuing Discontinued Continuing Discontinued
operations operations operations operations
------------ ------------- ------------ -------------
Audit services
- statutory
audit 102 8 85 9
Tax services 8 - 8 -
XBRL tagging 2 - 2 -
Included in the Group Audit fee are fees of GBP5,000 (2016:
GBP5,000) paid to the Group's auditor in respect of the parent
company. The fees relating to the parent company this year are
borne by one of the Group's subsidiaries.
6. SHARE OF POST-TAX PROFITS /(LOSS) OF ASSOCIATE AND JOINT VENTURES
2017 2016
GBP000 GBP000
------- -------
Continuing operations
Share of post-tax profit in
associate 17 31
Share of post-tax profits/(loss)
in joint ventures 180 36
Total share of post-tax profits/(loss)
of associate and joint ventures 197 67
======= =======
7. TAXATION
2017 (Restated)
2016
Analysis of tax charge in year GBP000 GBP000
Continuing operations
------- ----------
Current tax
- Continuing operations 1,490 1,677
- Adjustments in respect of prior
years (56) (161)
------- ----------
Total current tax 1,434 1,516
------- ----------
Deferred tax
- Accelerated capital allowances (75) (80)
------- ----------
Total deferred tax (75) (80)
------- ----------
Tax on profit on ordinary activities 1,359 1,436
======= ==========
8. DISCONTINUED OPERATIONS
The Group disposed of Just for Pets Limited, a part of the
Specialist Retail segment, on 10 October 2017 when Just for Pets
Limited entered administration and on this date recognised a
disposal of the assets and liabilities of Just for Pets Limited for
nil consideration.
An analysis of the result of discontinued operations which have
been included in the consolidated income statement, and the loss
recognised on the re-measurement to fair value less costs to
disposal, are as follows:
2017 2016
GBP000 GBP000
-------- --------
Revenue 13,125 14,417
Expenses (14,044) (14,339)
-------- --------
(Loss)/profit before tax of discontinued
operations (919) 78
Taxation - (20)
-------- --------
(Loss)/profit after tax of discontinued
operations (919) 58
Costs incurred in relation to
administration of Just for Pets
Limited (77) -
Group goodwill impairment charges (3,881) -
Pre-tax loss recognised on the
measurement to fair value less
costs to sell (1,709) -
Taxation - -
(Loss)/profit for the year from
discontinued operations (6,586) 58
-------- --------
Effect of the disposal on the financial position
of the Group:
2017
GBP000
Property, plant and equipment (1,477)
Inventories (1,715)
Trade and other receivables (633)
Cash and cash equivalents (678)
Trade and other payables 2,765
Deferred tax liabilities 29
--------
Net assets and liabilities (1,709)
--------
Net cash outflow (678)
9. DIVIDS
2017 2016
GBP000 GBP000
------- -------
Final dividend paid for prior
year 1,559 1,436
Interim dividend paid for current
year 825 778
2,384 2,214
======= =======
Subsequent to the year end it has been recommended that a final
dividend of 8.40p net per ordinary share (2016: 8.00p) be paid on
30 April 2018. Together with the interim dividend already paid on
31 October 2017 of 4.20p net per ordinary share (2016: 4.00p), this
would result in a total dividend for the financial year of 12.60p
net per ordinary share (2016: 12.00p).
10. EARNINGS PER SHARE
Basic earnings Diluted
per share earnings
per share
(Restated) (Restated)
2017 2016 2017 2016
-------- ----------- -------- -----------
Continuing operations
Earnings attributable
to shareholders (GBP000) 6,305 5,771 6,305 5,771
Weighted average number
of shares in issue during
the year (number '000) 19,529 19,425 19,782 19,557
Earnings per ordinary
25p share (pence) 32.29 29.71 31.87 29.51
Discontinued operations
(Loss)/earnings attributable
to shareholders (GBP000) (6,586) 58 (6,586) 58
Weighted average number
of shares in issue during
the year (number '000) 19,529 19,425 19,782 19,557
(Loss)/earnings per ordinary
25p share (pence) (33.72) 0.30 (33.29) 0.30
Continuing operations
Basic earnings per 25p ordinary share from continuing operations
is calculated by dividing profit for the year from continuing
operations attributable to ordinary shareholders by the weighted
average number of ordinary shares in issue during the year.
For diluted earnings per share from continuing operations, 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.
Discontinued operations
Basic earnings per 25p ordinary share from discontinued
operations is calculated by dividing (loss)/profit for the year
from discontinued operations attributable to ordinary shareholders
by the weighted average number of ordinary shares in issue during
the year.
For diluted earnings per share from discontinued operations, 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.
11. CASH AND CASH EQUIVALENTS AND BANK OVERDRAFTS
2017 2016
GBP000 GBP000
------- -------
Cash and cash equivalents
per balance sheet 8,914 10,111
Bank overdrafts - -
------- -------
Cash and cash equivalents
per cash flow statement 8,914 10,111
======= =======
12. FINANCIAL LIABILITIES - BORROWINGS
Current
2017 2016
GBP000 GBP000
------- -------
Bank loans and overdrafts
due within one year
or on demand:
Secured overdrafts - -
Secured loans 866 905
------- -------
866 905
Loan capital (unsecured) 672 664
Other loanstock (unsecured) 16 16
Net obligations under
finance leases 958 1,041
------- -------
2,512 2,626
============================= ======= =======
Non-current
2017 2016
GBP000 GBP000
------- -------
Bank loans:
Secured 1,120 1,986
------- -------
1,120 1,986
Net obligations under
finance leases 776 1,216
------- -------
1,896 3,202
======= =======
Bank loans and overdrafts of GBPnil (2016: GBPnil) relating to
subsidiary companies, are secured by an unlimited composite
guarantee given by all the trading entities within the Group.
Finance lease obligations are secured on the assets to which
they relate.
2017 2016
GBP000 GBP000
-------- -------
Borrowings are repayable
as follows:
On demand or within one
year 2,512 2,626
In the second year 1,316 1,605
In the third to fifth years
inclusive 580 1,597
Over five years - -
-------- -------
4,408 5,828
======== =======
Finance leases included
above are repayable as
follows:
On demand or within one
year 958 1,041
In the second year 491 729
In the third to fifth years
inclusive 285 487
Over five years - -
-------- ------------------
1,734 2,257
======== ==================
The net borrowings are:
Borrowings as above 4,408 5,828
Cash and cash equivalents (8,914) (10,111)
-------- ------------------
Net cash (4,506) (4,283)
======== ==================
13. SHARE CAPITAL
2017 2016
No. No.
of of
shares shares
'000 GBP000 '000 GBP000
-------- ------- -------- -------
Authorised
Ordinary shares of
25p each 40,000 10,000 40,000 10,000
-------- ------- -------- -------
Allotted, called up
and fully paid
Ordinary shares of
25p each 19,665 4,916 19,495 4,874
======== ======= ======== =======
During the year 59,289 shares (2016: 77,429) were issued with an
aggregate nominal value of GBP14,822 (2016: GBP19,357) and were
fully paid up for equivalent cash of GBP344,979 (2016: GBP367,244)
to shareholders exercising their right to receive dividends under
the Company's scrip dividend scheme.
A total of 110,896 (2016: 26,800) shares with an aggregate
nominal value of GBP27,724 (2016: GBP6,700) were issued for a cash
value of GBP377,614 (2016: GBP67,804) to relevant holders
exercising options in the Company. No other shares were issued for
cash in this financial year (2016: nil).
14. CASH GENERATED FROM OPERATIONS
2017 (Restated)
2016
GBP000 GBP000
--------- -----------
Profits for the year from
continuing operations 6,305 5,771
Adjustments for:
Tax 1,359 1,436
Investment impairment 60 -
Depreciation of tangible
fixed assets 2,657 2,448
Amortisation of other intangible
fixed assets 14 15
Profit on disposal of property,
plant and equipment (73) (127)
Interest income (66) (69)
Interest expense 219 208
Share of results of joint
ventures and associate (197) (67)
Share-based payments 142 63
Changes in working capital
(excluding effects of acquisitions
and disposals of subsidiaries):
(Increase)/decrease in short
term loan to joint ventures (58) 16
(Increase)/decrease in inventories (1,048) 607
Decrease in trade and other
receivables (13,654) (1,862)
Increase in payables 10,393 38
Cash generated from continuing
operations 6,053 8,477
========= ===========
15. RECONCILIATION OF UNDERLYING PRE-TAX PROFIT FROM CONTINUING OPERATIONS
2017 (Restated)
2016
GBP000 GBP000
Profit before tax 7,664 7,207
Share-based payments 142 63
Share of tax incurred by
associate and Joint ventures 70 26
Investment impairment and
costs of corporate restructuring 95 -
Underlying pre-tax profit 7,971 7,296
------- -----------
16. EVENTS ARISING AFTER THE OF THE REPORTING PERIOD
On 1 November 2017, Glasson Grain Limited acquired 100% of
certain trade and assets, which together comprise a mill and
related processing facilities located at Montrose. The business is
intended to be run as a going concern. The acquisition will enable
Glasson Grain Limited to better service customers throughout
Scotland. The consideration was GBP550,000, which is represented by
GBP1 paid on 1 November 2017 and GBP549,999 payable by 1 November
2020. The payment of the deferred consideration is contingent on
the resolution of certain conveyancing issues which management
expect to be satisfactorily resolved within the three year
period.
The business combination accounting is in progress and will be
completed before the next reporting period.
Assets acquired:
GBP000
------------------------------- -------
Property, plant and equipment 550
Consideration 550
-------------------------------- -------
The Directors consider it impractical to estimate the recent
historical financial performance of the acquired trade and assets,
as the operation was one element of a larger business recently
initially acquired by Origin UK Operations Limited, and which was
subsequently required to be divested for competition remedy
purposes.
17. RESPONSIBILTY STATEMENT
The Directors below confirm to the best of their knowledge:
-- the financial statements, prepared in accordance with the
applicable set of accounting standards, give a true and fair view
of the assets, liabilities, financial position and profit or loss
of the Company and the undertakings included in the consolidation
taken as a whole; and
-- the management report includes a fair review of the
development and performance of the business and the position of the
issuer and the undertakings included in the consolidation taken as
a whole, together with a description of the principal risks and
uncertainties that they face.
J J McCarthy
P M Kirkham
B P Roberts
K R Greetham
D A T Evans
H J Richards
S J Ellwood
18. CONTENT OF THIS REPORT
The financial information set out above does not constitute the
Group's statutory accounts for the years ended 31 October 2017 or
31 October 2016, but is derived from those accounts.
Statutory accounts for 2016 have been delivered to the Registrar
of Companies. The auditor, KPMG Audit Plc, has reported on the 2016
accounts; the report (i) was unqualified, (ii) did not include a
reference to any matters to which the auditor drew attention by way
of emphasis without qualifying their report, and (iii) did not
contain a statement under section 498(2) or (3) of the Companies
Act 2006.
The statutory accounts for 2017 will be delivered to the
Registrar of Companies following the Annual General Meeting. The
auditor, KPMG LLP, has reported on these accounts; their report is
unqualified, does not include a reference to any matters to which
the auditor drew attention by way of emphasis without qualifying
their report, and; does not include a statement under either
section 498(2) or (3) of the Companies Act 2006.
The Annual Report and full Financial Statements will be posted
to shareholders during the week commencing 12 February 2018.
Further copies will be available to the public, free of charge,
from the Company's Registered Office at Eagle House,
Llansantffraid, Powys, SY22 6AQ or on the Company's website at
www.wynnstay.co.uk.
19. ANNUAL GENERAL MEETING
The Annual General Meeting of the Company will be held at The
Sovereign Suite, Shrewsbury Town Football Club, Oteley Road,
Shrewsbury, Shropshire, SY2 6ST on Tuesday 20(th) March 2018 at
11.45am.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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