TIDMWYN
RNS Number : 3633Q
Wynnstay Group PLC
28 June 2022
28 June 2022
AIM: WYN
Wynnstay Group Plc
("Wynnstay" or the "Group" or the "Company")
Interim Results for the Six Months ended 30 April 2022
Record interim results driven by strong sector backdrop and
significant one-off gains
KEY POINTS
Financial
-- Record interim results, ahead of original management expectations,
driven by:
- firm market backdrop, with strong farmgate prices boosting
farmer sentiment
- significant one-off gains from fertiliser blending activities
at Glasson, caused by sharply rising natural gas prices
-- Revenue up 34% to GBP335.66m (2021: GBP249.71m), with significant
inflation - accounted for c.GBP80m of the rise
- GBP6.4m first contribution from Humphrey acquisition, completed
in March 2022
-- Underlying pre-tax profit*up 85% to GBP10.21m (20 21 : GBP5.53m)/
Reported PBT up 78% to GBP9.56m (20 21 : GBP5.36m)
-- Basic earnings per share, including non-recurring items, up
71% to 36.99p (20 21 : 21.62p)
-- Net debt at 30 April 2022 on a pre-IFRS 16 basis increased
to GBP7.62m (30 April 2021: GBP0.75m net cash), reflecting
acquisition funding and higher working capital requirements
due to inflation
-- Net assets up 10.5% to GBP111.68m/GBP5.50 per share at period
end (30 April 20 21 : GBP101.05m/GBP5.05 per share)
-- Interim dividend up 8.0% to 5.40p (20 21 : 5.00p)
Operational
-- Acquisition of the Humphrey businesses completed in March 2022
for initial payment of GBP9.5m
- in line with strategy to expand poultry feed manufacturing
capacity for the growing free-range egg sector and immediately
earnings enhancing
- extends Group's geographic trading area into the South,
the Midlands and South Wales
- opportunity to redevelop mothballed Calne mill into modern,
multi-species feed mill to support further expansion
-- Agriculture Division - revenue up 45% to GBP263.03m (20 21
: GBP180.72m), operating profit before non-recurring items
up 176% to GBP6.06m (20 21 : GBP2.20m)
- Glasson contribution significantly ahead due to one-off
stock price gains from fertiliser blending activities
- feed volumes up 3.25%, ahead of sector average, with good
growth in target markets
- grain trading volumes up 50%, reflected return to more
normalised harvest and good autumn planting season. Lower
spring cereal and grass seed sales, in line with sector
-- Specialist Agricultural Merchanting Division - revenue up 5%
to GBP72.63m (20 21 : GBP68.88m), operating profit before non-recurring
items up 26% to GBP4.28m (20 21 : GBP3.40m)
- favourable sales mix on lower total volumes; strong sales
of bagged feed, animal health care and hardware products
- efficiency improvements helped drive higher profitability
Outlook
-- Trading conditions remain positive - underpinned by firm farmgate
prices
-- Board believes Group is well-placed to achieve growth prospects
for the full year; exceptional gains of H1 not expected to
be repeated in H2
* Group remains focused on acquisitions in key target
areas
* Underlying pre-tax profit is a non-GAAP (generally accepted
accounting principles) measure and is not intended as a substitute
for GAAP measures and may not be calculated in the same way as
those used by other companies. Refer to Note 6 for an explanation
on how this measure has been calculated and the reasons for its
use.
Gareth Davies, Chief Executive of Wynnstay Group plc,
commented:
"These record interim results have been underpinned by a
favourable sector backdrop, with strong farmgate prices across most
sectors and positive farmer sentiment, as well as significant
one-off gains in our fertiliser blending activity.
"The acquisition of Humphrey Feeds and Pullets is exciting. It
significantly extends our geographic reach and opens up new growth
opportunities.
"While there are still challenges with cost inflation and supply
chain pressures, sector sentiment remains strong, and we are
confident about achieving our growth goals for the full year."
Enquiries:
Wynnstay Group Plc Gareth Davies, Chief T: 020 3178 6378 (today)
Executive T: 01691 827 142
Paul Roberts, Finance
Director
KTZ Communications Katie Tzouliadis / Dan T: 020 3178 6378
Mahoney
Shore Capital (Nomad Stephane Auton / John T: 020 7408 4090
and Broker) More
CHAIRMAN'S STATEMENT
INTRODUCTION
We are pleased to report record interim results, with underlying
pre-tax profit up by 85% to GBP10.21m* (2021: GBP5.53m) and revenue
up 34% to GBP335.66m (2021: GBP249.71m). Reported pre-tax profit
increased by 78% to GBP9.56m (2021: GBP5.36m).
These excellent results are ahead of our original expectations,
and reflect a strong trading backdrop, supported by buoyant
farmgate prices across most categories, which boosted farmer
sentiment and farm investment. There were also unexpected one-off
gains at our fertiliser blending activity at Glasson. This was
created by sharply rising fertiliser prices as a result of the
significant increases in the world price of natural gas, which is
used in the production of ammonium nitrate fertiliser. Fertiliser
prices have fallen slightly from their high point in March, and we
do not anticipate these one-off gains to be repeated.
There was widespread inflationary pressure in the period, which
was exacerbated by the Russian invasion of Ukraine in late February
and the ensuing sanctions imposed on Russia. Certain energy and
soft commodity prices reached levels not seen globally for several
decades. In the UK, wheat and fertiliser prices reached record
levels in March. While this dampened some demand, the effect of
inflation on Group revenues has been significant.
Operational conditions in the period continued to be affected by
the Coronavirus pandemic, in particular the high infection rates
associated with the Omicron variant and the inconsistency of supply
of certain products. Thanks to the efforts of our teams and wide
sourcing network, this did not affect customer service levels or
product provision. The working environment has now largely
normalised following the lifting of Government restrictions, and we
remain ready to react to any new guidance.
A major highlight in the first half was the acquisition in March
2022 of Humphrey Feeds Ltd, a manufacturer and supplier of poultry
feed, and Humphrey Pullets Ltd, which supplies point-of-lay pullets
("Humphrey"). Both businesses are based in Hampshire and mainly
supply farmers in the South of England, as well the Midlands and
South Wales. The provisional assessed consideration for the
acquisition was GBP13.2 million, with an initial GBP9.5 million
paid in cash at completion. This highly complementary acquisition
is in line with the Board's strategic plans to expand the Group's
poultry feed manufacturing capacity for the free-range egg sector,
a growing market, and extend the Group's geographic trading area.
As previously reported, we expect the Humphrey acquisition to
enhance earnings this financial year. In order to fund the
acquisition, the Company entered into a new GBP12.5m revolving
credit facility. Further details about the business and our plans
to develop the opportunities it brings are provided further on in
the report. We are delighted to welcome our new colleagues and
customers to the Group, and are pleased to report that the business
is bedding in well, as expected.
These trading results continue to demonstrate the benefits of
our balanced business model, supplying products to both livestock
and arable farming enterprises. Our investment programmes across
the Group are progressing, with substantial projects under way in
our feed and seed operations. The trading outlook for the second
half remains very positive and we expect to make further good
progress in the second half.
FINANCIAL RESULTS
First half results for the six months ended 30 April 2022 have
been significantly affected by rising commodity prices, which have
increased revenues and created one-off raw material gains in
fertiliser blending.
Revenue increased by 34% on the same period last year to
GBP335.66m (2021: GBP249.71m), with commodity price inflation
accounting for an estimated GBP80.00m of the overall increase. The
Humphrey acquisition, completed in mid-March 2022, contributed
GBP6.4m to Group revenues. Revenue generated by the Agriculture
Division increased by 45% to GBP263.03m (2021: GBP180.72m) while
the Specialist Agricultural Merchanting Division generated a 5%
increase at GBP72.63m (2021: GBP68.88m).
Adjusted operating profit, which is before non-recurring costs,
share-based payments and intangible amortisation, rose by 84% to
GBP10.43m (2021: GBP5.68m). The Agricultural Division contributed
operating profit of GBP6.06m (2021: GBP2.20m), up by 176% by
comparison with the same period last year. This result included the
one-off stock profits from fertiliser blending. The Specialist
Agricultural Merchanting division contributed operating profit of
GBP4.28m (2021: GBP3.40m). This 26% increase mainly reflected
improved margins, driven partly by efficiencies. Other activities
incurred a slight operating loss of GBP0.07m (2021: loss of
GBP0.12m). As in prior years, the contribution from our Joint
Ventures will be consolidated in the second half of our full year
results.
Non-recurring costs charged in the period amounted to GBP0.52m
and related to the transaction and funding costs of the Humphrey
acquisition (2021: Nil). Net finance costs, including IFRS 16
charges, totalled GBP0.19m (2021: GBP0.11m), and reflected the new
loans drawn to fund the acquisition. Share-based payment expenses
for the period decreased to GBP0.13m (2021: GBP0.16m).
Underlying pre-tax profit, which excludes share-based payments
and non-recurring items, increased by 85% to GBP10.21m* (2021:
GBP5.53m). Reported profit before tax increased by 78% to GBP9.56m
(2021: GBP5.36m). The effective tax rate for the period was higher
than the same period last year at 21.4% (2021: 19.1%). This was
because deferred tax rates were adjusted to recognise the future
increase in the Corporation Tax rate to 25% from April 2023, and
has resulted in a charge of GBP2.05m (2021: GBP1.03m). Profit after
tax increased by 73% to GBP7.51m (2021: GBP4.34m), and basic
earnings per share increased by 71% to 36.99p (2021: 21.62p).
Net assets at 30 April 2022 stood 10.5% higher year-on-year at
GBP111.68m (30 April 2021: GBP101.05m) and equates to GBP5.50 per
share (30 April 2021: GBP5.04 per share), based on the weighted
average number of shares in issue during the period at 20.31m
(2021: 20.06m).
Net debt on a pre IFRS 16 basis (excluding property leases)
increased to GBP7.62m at 30 April 2022 from a 2021 equivalent
position of GBP0.75m net cash. The rise reflected both acquisition
funding and significantly higher working capital requirements
resulting from the substantial commodity price inflation. Working
capital in any given year typically peaks around the April interim
period end, reducing over the second half. Total Right of Use
property lease liabilities amounted to GBP5.13m (2021: GBP5.60m)
resulting in reported accounting net debt of GBP12.75m (2021:
GBP4.85m).
DIVID
The Board is pleased to declare an increased interim dividend of
5.40p per share (2021: 5.00p), up by 8.0% on the equivalent payment
last year. The increased payment reflects both the strong results
and the Directors continuing confidence in growth prospects.
The interim dividend will be paid on 31 October 2022 to
shareholders on the register at the close of business on 30
September 2022. As in previous years, the Scrip Dividend
alternative will continue to be available, with the last day for
election for this scheme being 14 October 2022.
REVIEW OF OPERATIONS
AGRICULTURE DIVISION
Strong farmgate prices for most agricultural produce has
continued to underpin sector sentiment despite farm costs also
rising, particularly for fuel and energy. Prices for beef, lamb,
and especially grain in the first half were significantly ahead of
the same period last year, with milk prices also firm. Egg prices
were generally flat, although they have been increasing since
April.
Feed Products
Feed volumes rose on a like-for-like basis by 3.25% over the
same period last year and were above the average growth rate in the
sector. We increased volumes in key target areas, including dairy,
poultry and sheep feed, supported by our strategy of increasing the
number of our on-farm sales specialists.
Rising raw material and operating costs, including labour,
energy and packaging, continued to put pressure on margins.
Nonetheless, the feed division performed well, although its
operating margin was slightly lower than the same period last
year.
The acquisition of the Humphrey business opens up significant
future growth opportunities for the Group. While it immediately
adds additional poultry feed manufacturing capacity from a leased
facility in Twyford in Hampshire, there is scope to redevelop its
currently moth-balled freehold site at Calne in Wiltshire to create
a modern, multi-species mill, manufacturing both poultry and
ruminant feed. This would give us a strategically well-located feed
manufacturing facility and enable us to extend our trading
footprint in the South of England, including in the South West. In
addition, once operational, the Calne mill would also enable us to
efficiently develop local growth opportunities at Llansantffraid
and Carmarthen by transferring some production capacity at these
feed mills to the Calne facility. We also plan to extend sales of
other Wynnstay products and services to the new farmer customer
base that we have gained with the acquisition. The Humphrey
business made a first-time contribution to poultry feed sales in
line with our expectations.
Arable Products
The Arable operations have been the most affected by the
geopolitical factors that have driven raw material prices higher
and increased operating costs. Nonetheless, these have been managed
well.
The volume of grain traded by GrainLink, our grain marketing
business, was substantially ahead of the same period in the last
financial year, increasing by 50%. This increase largely reflected
a return to more normal harvest tonnages and yields in 2021
compared with the exceptionally poor harvest in 2020, and volume
gains made in our Eastern operations, following new business wins
generated by the expansion of dedicated resource in this area. One
impact of rising crop prices has been the need to meet very
significant margin calls on forward grain hedging contracts. We use
these contracts to provide an effective hedge between our grain
purchases from farmers and subsequent sales to food manufacturers.
Forward positions will unwind over the course of the next six
months as the physical grain is delivered and these contracts
unwind.
The Autumn seed planting season was strong, and good growing
conditions since then bode well for the forthcoming 2022 harvest
and grain trading volumes. With a good Autumn planting season, the
spring-sown cereal crops acreage was reduced, and grass seed sales
were also lower than the comparative period last year partly due to
the very dry weather in March and April 2022. However, both our
spring cereal and grass seed sales are in line with sector
averages.
The volume of fertiliser traded within Wynnstay Agriculture
Supplies decreased by some 26% compared with the equivalent period
last year, a reflection of elevated fertiliser prices. This
compares with industry contraction of about a third, and improved
margins have more than balanced the reduced tonnage.
Glasson Grain Limited ("Glasson")
Glasson operates in three main areas; feed raw materials,
fertiliser production and the manufacture of specialist animal feed
products.
As discussed earlier, the contribution to Group results from
Glasson significantly exceeded our original expectations. This was
driven by our fertiliser blending activity, which experienced
one-off stock price gains as the price of fertiliser rose,
reflecting the highly-disrupted natural gas (a key ingredient)
market. We have developed the fertiliser manufacturing business and
assets of HELM Great Britain Limited, purchased in March 2021,
building up its book of customers and establishing a good working
relationship with our existing fertiliser facility in nearby Goole.
The feed raw materials activity performed in line with
expectations. Volumes in Glasson's smallest activity, specialist
feed manufacturing, decreased reflecting more difficult
end-markets.
SPECIALIST AGRICULTURAL MERCHANTING DIVISION
Specialist Agricultural Merchanting and Youngs Animal Feeds
The Group's chain of 54 depots caters for the needs of farmers
and other rural dwellers and operates very closely with the
Agricultural Division, providing a strong channel to market for our
products.
The operating profit contribution from this activity was well
ahead of last year, helped by positive farmer confidence, a
favourable mix of sales, and the cumulative benefits of the
efficiency improvements that have been implemented across the
business. The depots saw good sales of higher margin bagged feed,
animal health care products and the more discretionary items in the
hardware categories, although total sales, excluding inflation,
were slightly down on the same period in the prior financial
year.
We continued to develop our digital offering and some 1,800
accounts are now signed up to our customer portal, which enables
customers to access their Wynnstay account and place orders
online.
Youngs, our specialist equine feeds operation, delivered a
profitable contribution to this division, although like the rest of
the equine sector, it experienced volume and margin pressures.
JOINT VENTURES AND ASSOCIATES
Results from the Group's joint ventures and associate companies
are not included in this half year report, and in accordance with
established policies will be consolidated into Wynnstay's full year
results.
ESG
In February 2021, we created a new management position, which
carried specific responsibility for leading the ongoing development
and implementation of the Group's ESG strategy. Our policies and
objectives are being effectively embedded across all of the Group's
operations. We are also working with our peers in the industry to
promote increased sustainability throughout UK agriculture,
including as a member of the sustainability committee of the
agrisupply industry's leading trade association, the Agricultural
Industries Confederation (AIC). We are now seeking to establish an
ESG Advisory Board with external members in order to support future
policy and planning.
A key pillar in the Group's growth strategy is supporting
customers with the advice, products, and services that are
necessary to adapt to the new environmental and efficiency
priorities set in the UK Agriculture Act. Our own focus on
sustainability will strengthen our ability to support customers'
environmental aims.
OUTLOOK
World politics and the UK economy have become much more volatile
and less predictable in recent months, and we are very aware of
increasing cost pressures and international supply chain
challenges. We will continue to navigate these challenges as
effectively as possible, and our balanced business model remains a
major strength. Recent world events have also sharpened the focus
on the importance of national food security, and this should help
to strengthen the position of UK agriculture. We believe we have a
significant role to play in helping to ensure that UK farmers are
able to feed the population sustainably and efficiently.
Our programme of investment at our Astley seed plant and at the
Carmarthen feed mill continues, and planning is under way for a new
multi-species feed mill at Calne, which will service farmers in the
South and West of the country.
As we look ahead and consider prospects for the second half of
the financial year, we remain very confident. The trading
environment for farmers remains well-supported by strong farmgate
prices, which will help to underpin ongoing farmer confidence and
investment. However, we do not expect the significant one-off gains
experienced in the first half of the financial year to be
repeated.
We remain focused on growth opportunities, including
acquisitions, and look to the future with confidence.
Steve Ellwood
Chairman
* Note 6. Explanation of Non GAAP measure.
WYNNSTAY GROUP PLC
CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
For the six months ended 30 April 2022
Unaudited Unaudited Audited
six months six months year
ended ended ended
30 April 30 April 31 Oct 2021
2022 2021
Note GBP000 GBP000 GBP000
--------------------------------------------------------- ----- ------------ ------------ -------------
CONTINUING OPERATIONS
Revenue 335,661 249,709 500,386
Cost of sales (294,399) (216,413) (432,493)
--------------------------------------------------------- ----- ------------ ------------ -------------
Gross profit 41,262 33,296 67,893
Manufacturing, distribution and
selling costs (27,059) (24,202) (50,072)
Administrative expenses (3,962) (3,604) (7,096)
Other operating income 5 193 185 361
--------------------------------------------------------- ----- ------------ ------------ -------------
Adjusted operating profit* 6 10,434 5,675 11,086
Amortisation of acquired intangible
assets and share -based payment
expense 7 (165) (197) (477)
Non-recurring items 7 (523) - -
--------------------------------------------------------- ----- ------------ ------------ -------------
Group operating profit 9,746 5,478 10,609
Interest income 25 51 193
Interest expense (211) (165) (383)
Share of profits in joint
ventures and associate accounted
for using the equity method 2 - - 677
Share of tax incurred in by
joint venture and associate - - (105)
--------------------------------------------------------- ----- ------------ ------------ -------------
Profit before taxation 9,560 5,364 10,991
Taxation 8 (2,047) (1,027) (2,057)
--------------------------------------------------------- ----- ------------ ------------ -------------
Profit for the period 7,513 4,337 8,934
Other comprehensive income
Items that will reclassified
subsequently to profit or
loss:
* net change in the fair value of cash flow hedges
taken to equity, net of tax 42 - 263
--------------------------------------------------------- ----- ------------ ------------ -------------
Other comprehensive income
for the period 42 - 263
--------------------------------------------------------- ----- ------------ ------------ -------------
Total comprehensive income for
the period 7,555 4,337 9,197
---------------------------------------------------------------- ------------ ------------ -------------
Basic earnings per ordinary
share (pence) 36.99 21.62 44.40
Diluted earnings per ordinary
share (pence) 36.07 21.30 43.53
* Adjusted operating profit is after adding back amortisation of
acquired intangible assets, share-based payment expense and
non-recurring items.
CONDENSED CONSOLIDATED BALANCE SHEET
As at 30 April 2022
Unaudited Unaudited Audited
six months six months year
ended ended ended
30 Apr 30 Apr 2021 31 Oct
2022 2021
Note GBP000 GBP000 GBP000
------------------------------------ ----- -------------------- ------------------- ---------
ASSETS
NON-CURRENT ASSETS
Goodwill 17,465 14,417 14,322
Investment property 2,372 2,372 2,372
Property, plant and equipment 18,340 17,654 16,746
Right-of-use assets 10 9,861 10,153 11,043
Investments accounted for using the
equity method 3,430 3,613 3,433
Intangibles 4,940 327 236
Derivative financial instruments - - 5
------------------------------------ ----- -------------------- ------------------- ---------
56,408 48,536 48,157
------------------------------------ ----- -------------------- ------------------- ---------
CURRENT ASSETS
Derivative financial instruments 359 227 320
Inventories 63,721 44,221 50,550
Trade and other receivables 103,254 75,180 72,511
Financial assets - loans to joint
ventures 2,090 3,865 3,319
Cash and cash equivalents 11 6,112 4,991 19,641
175,536 128,484 146,341
------------------------------------ ----- -------------------- ------------------- ---------
TOTAL ASSETS 231,944 177,020 194,498
LIABILITIES
CURRENT LIABILITIES
Financial liabilities - borrowings (2,569) (979) (672)
Lease liabilities (3,685) (3,173) (3,995)
Derivative financial instruments (825) (214) (53)
Trade and other payables (96,761) (64,551) (76,212)
Current tax liabilities (1,793) (1,019) (1,218)
Provisions (351) - (243)
(105,984) (69,722) (82,393)
------------------------------------ ----- -------------------- ------------------- ---------
NET CURRENT ASSETS 69,552 58,762 63,948
------------------------------------ ----- -------------------- ------------------- ---------
NON-CURRENT LIABILITIES
Financial liabilities - borrowings (7,588) - (313) -
Lease liabilities (5,025) (5,687) (5,731)
Trade and other payables (37) (87) (38)
Deferred tax liabilities (1,629) (474) (474)
Derivative financial instruments - - (140)
(14,279) (6,248) (6,383)
------------------------------------ ----- -------------------- ------------------- ---------
TOTAL LIABILITIES (120,263) (75,970) (88,776)
------------------------------------ ----- -------------------- ------------------- ---------
NET ASSETS 111,681 101,050 105,722
------------------------------------ ----- -------------------- ------------------- ---------
EQUITY
Share capital 14 5,094 5,034 5,075
Share premium 31,989 30,998 31,600
Other reserves 4,303 3,686 4,131
Retained earnings 70,295 61,332 61,916
TOTAL EQUITY 111,681 101,050 105,722
------------------- --- -------- -------- --------
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS'
EQUITY
For the six months ended 30 April 2022
Cash
Flow
Share Share Other Hedge Retained Total
Capital Premium Reserves Reserve Earnings Equity
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
Balance at 1 November
2020 5,013 30,637 3,525 - 59,003 98,178
Profit for the period - - - - 4,337 4,337
-------------------------------- --------- --------- ---------- --------- ------------ ----------
Total comprehensive income
for the period - - - - 4,337 4,337
-------------------------------- --------- --------- ---------- --------- ------------ ----------
Transactions with owners
of the Company, recognised
directly in equity
Shares issued during the
period 21 361 - - - 382
Dividends - - - - (2,008) (2,008)
Equity settled share-based
payment transactions - - 161 - - 161
-------------------------------- --------- --------- ---------- --------- ------------ ----------
Total contributions by
and distributions to owners
of the Group 21 361 161 - (2,008) (1,465)
-------------------------------- --------- --------- ---------- --------- ------------ ----------
At 30 April 2021 5,034 30,998 3,686 - 61,332 101,050
-------------------------------- --------- --------- ---------- --------- ------------ ----------
Profit for the period - - - - 4,597 4,597
-------------------------------- --------- --------- ---------- --------- ------------ ----------
Total comprehensive income
for the period - - - 263 4,597 4,860
-------------------------------- --------- --------- ---------- --------- ------------ ----------
Transactions with owners
of the Company, recognised
directly in equity
Shares issued during the
period 41 602 - - - 643
Dividends - - - - (1,013) (1,013)
Equity settled share-based
payment transactions - - 182 - - 182
-------------------------------- --------- --------- ---------- --------- ------------ ----------
Total contributions by
and distributions to owners
of the Group 41 602 182 - (1,013) (188)
-------------------------------- --------- --------- ---------- --------- ------------ ----------
At 31 October 2021 5,075 31,600 3,868 263 64,916 105,722
-------------------------------- --------- --------- ---------- --------- ------------ ----------
Profit for the period - - - - 7,513 7,513
-------------------------------- --------- --------- ---------- --------- ------------ ----------
Total comprehensive income
for the period - - - - 7,513 7,513
-------------------------------- --------- --------- ---------- --------- ------------ ----------
Transactions with owners
of the Company, recognised
directly in equity
Shares issued during the
period 19 389 - - - 408
Dividends - - - - (2,134) (2,134)
-------------------------------- --------- --------- ---------- --------- ------------ ----------
Change in the fair value
of cash flow hedges taken
to equity, net of tax during
period - - - 287 - 287
Recycle cash flow hedge
to Income Statement - - - (245) - (245)
Equity settled share-based
payment transactions - - 130 - - 130
-------------------------------- --------- --------- ---------- --------- ------------ ----------
Total contributions by
and distributions to owners
of the Group 19 389 130 42 (2,134) (1,554)
-------------------------------- --------- --------- ---------- --------- ------------ ----------
At 30 April 2022 5,094 31,989 3,998 305 70,295 111,681
-------------------------------- --------- --------- ---------- --------- ------------ ----------
CONDENSED CONSOLIDATED CASH FLOW STATEMENT
For the six months ended 30 April 2022
Unaudited Unaudited Audited
six months six months year
ended ended ended
30 April 30 April 31 October
2022 2021 2021
Note GBP000 GBP000 GBP000
----------------------------------------- ----- ------------ --------------------- ------------
Cash flow from operating activities
Cash (used in)/generated from
operations 9 (9,316) (7,351) 10,554
Interest received 25 51 193
Interest paid (84) (165) (102)
Settlement of provision - - (96)
Tax paid (1,311) (594) (1,462)
Net cash (used in)/generated
from operating activities (10,686) (8,059) 9,087
----------------------------------------- ----- ------------ --------------------- ------------
Cash flows from investing activities
Acquisition of subsidiaries
and other businesses and their
assets (net of cash acquired) 17 (8,572) (1,844) (2,238)
Proceeds of sale of property,
plant and equipment & ROU assets 492 95 340
Purchase of property, plant
and equipment (1,418) (1,009) (1,563)
Decrease in short term loans
to joint ventures 1,229 24 570
Receipt of Dividend from Unlisted -
Investment 2 -
Dividends received from joint
ventures - - 753
Net cash used by investing
activities (8,267) (2,734) (2,138)
----------------------------------------- ----- ------------ --------------------- ------------
Cash flows from financing activities
Net proceeds from the issue
of ordinary share capital 408 382 1,025
Lease payments (2,335) (1,977) (4,392)
New borrowings 9,485 - -
Repayments of loans - (593) (900)
Dividends paid to shareholders (2,134) (2,008) (3,021)
----------------------------------------- ----- ------------ --------------------- ------------
Net cash from/(used in) financing
activities 5,424 (4,196) (7,288)
----------------------------------------- ----- ------------ --------------------- ------------
Net decrease in cash and cash
equivalents (13,529) (14,989) (339)
----------------------------------------- ----- ------------ --------------------- ------------
Cash and cash equivalents at
beginning of period 19,641 19,980 19,980
Cash and cash equivalents at
end of period 11 6,112 4,991 19,641
----------------------------------------- ----- ------------ --------------------- ------------
WYNNSTAY GROUP PLC
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL
STATEMENTS
GENERAL INFORMATION
Wynnstay Group Plc has a number of operations. These are
described in the segment analysis in note 4.
Wynnstay Group Plc is a company incorporated and domiciled in
the United Kingdom. The address of its registered office is shown
in note 3.
1. BASIS OF PREPARATION
The Interim Report was approved by the Board of Directors on 27
June 2022.
The condensed financial statements for the six months to the 30
April 2022 have been prepared in accordance with International
Accounting Standard (IAS) 34 and the Disclosure Guidance and
Transparency Rules sourcebook of the UK's Financial Conduct
Authority, except as disclosed in note 3.
The financial information for the Group for the year ended 31
October 2021 set out above is an extract from the published
financial statements for that year which have been delivered to the
Registrar of Companies. The auditor's report on those financial
statements was not qualified and did not contain statements under
section 498(2) or 498(3) of the Companies Act 2006. The information
contained in this document does not constitute statutory accounts
within the meaning of section 434 of the Companies Act 2006.
The financial information for the six months ended 30 April 2022
and for the six months ended 30 April 2021 are unaudited. The
consolidated financial statements are presented in sterling, which
is also the Group's functional currency. Amounts are rounded to the
nearest thousand, unless otherwise stated.
The condensed consolidated interim financial statements should
be read in conjunction with the annual consolidated financial
statements for the year ended 31 October 2021, which have been
prepared in accordance with UK adopted International Accounting
Standards.
2. GOING CONCERN
The Directors have prepared the condensed consolidated interim
financial statements on a going concern basis, having satisfied
themselves from a review of internal budgets and forecasts and
current banking facilities that the Group has adequate resources to
continue in operational existence for the foreseeable future.
The Group has a sound financial base and forecasts that show
profitable trading and sufficient cash flow and resources to meet
the requirements of the business, including compliance with banking
covenants and on-going liquidity. In assessing their view of the
likely future financial performance of the Group, the Directors
consider industry outlooks from a variety of sources, and various
trading scenarios. This analysis showed that the Group is well
placed to manage its business risks successfully despite the
current uncertain economic outlook, and the ongoing issues created
by the continuing Coronavirus concerns and the war in Ukraine which
has caused significant commodity price volatility.
In conclusion, the Directors have a reasonable expectation that
the Group has adequate resources to continue in operational
existence for the foreseeable future. Thus, they continue to adopt
the going concern basis of accounting in preparing the annual
financial statements.
3. SIGNIFICANT ACCOUNTING POLICIES
The condensed financial statements have been prepared under the
historical cost convention other than shared-based payments, which
are included at fair value and certain financial instruments which
are explained in the annual consolidated financial statements for
the year ended 31 October 2021.
The Group has a policy of using annual results for the
consolidation of its share of the results of joint ventures, and as
such no consolidation has occurred in these condensed financial
statements which is consistent with previous years.
The condensed consolidated interim financial statements for the
six months to 30 April 2022 have been prepared on the basis of the
accounting policies expected to be adopted for the year ending 31
October 2022. These are anticipated to be consistent with those set
out in the Group's latest annual financial statements for the year
ended 31 October 2021. A copy of these financial statements is
available from the Company's Registered Office at Eagle House,
Llansantffraid, Powys, SY22 6AQ.
New standards and interpretations
New and amended standards adopted in the annual financial
statements for the year ended 31 October 2021 did not have any
significant impact on those results and changes implemented from
the 1 January 2021 are similarly not having any material impact on
the Group as they are either not relevant to the Group's activities
or require accounting which is consistent with the Group's current
accounting policies.
Critical accounting estimates and judgements
The Group makes certain estimates and assumptions regarding the
future. These estimates and judgements are continually evaluated
based on historic experience and other factors, including
expectations of future events that are believed to be reasonable
under the circumstances. At 30 April 2022 management have not
identified any indicators of impairment within the Group. In the
future, actual experience may di er from these estimates and
assumptions, however it is believed these are not significant nor
likely to cause a material adjustment to the carrying amount of
assets and liabilities within the next financial year.
4. SEGMENTAL REPORTING
IFRS 8 requires operating segments to be identified on the basis
of internal financial information about the components of the Group
that are regularly reviewed by the chief operating decision-maker
("CODM") to allocate resources to the segments and to assess their
performance.
The chief operating decision-maker has been identified as the
Board of Directors ("the Board"). The Board reviews the Group's
internal reporting in order to assess performance and allocate
resources. The Board has determined that the operating segments,
based on these reports are Agriculture, Specialist Agricultural
Merchanting, and Other.
The Board considers the business from a product/service
perspective. In the Board's opinion, all of the Group's operations
are carried out in the same geographical segment, namely the United
Kingdom.
Agriculture - manufacturing and supply of animal feeds,
fertiliser, seeds and associated agricultural products.
Specialist Agricultural Merchanting - supplies a wide range of
specialist products to farmers, smallholders, and pet owners.
Other - miscellaneous operations not classi ed as Agriculture or
Specialist Agricultural Merchanting.
The Board assesses the performance of the operating segments
based on a measure of operating pro t. Non-recurring costs and
nance income and costs are not included in the segment result that
is assessed by the Board. Other information provided to the Board
is measured in a manner consistent with that in the nancial
statements. No segment is individually reliant on any one
customer.
The segment results for the period ended 30 April 2022 and
comparative periods are as follows:
Unaudited for the six months Specialist
ended Agriculture Agricultural Other Total
30 April 2022: Merchanting
GBP000 GBP000 GBP000 GBP000
------------------------------------ -------------- -------------- -------- --------
Revenue from external customers 263,034 72,627 - 335,661
------------------------------------ -------------- -------------- -------- --------
Segment results :
Group operating profit before
non-recurring items 6,062 4,276 (69) 10,269
Share of result of Joint
Ventures - - - -
6,062 4,276 (69) 10,269
Non-recurring items (note
7) (523)
Interest income 25
Interest expense (211)
--------
Profit before taxation 9,560
Taxation (2,047)
--------
Profit for the period attributable
to shareholders 7,513
--------
Unaudited for the six months Specialist
ended Agriculture Agricultural Other Total
30 April 2021: Merchanting
GBP000 GBP000 GBP000 GBP000
------------------------------------ -------------- -------------- -------- -----------
Revenue from external customers 180,716 68,884 109 249,709
------------------------------------ -------------- -------------- -------- -----------
Segment results :
Group operating profit before
non-recurring items 2.197 3,398 (117) 5,478
Share of result of Joint
Ventures - - - -
------------------------------------ -------------- -------------- -------- -----------
2,197 3,398 (117) 5,478
Interest income 51
Interest expense (165)
-----------
Profit before taxation 5,364
Taxation (1,027)
-----------
Profit for the period attributable
to shareholders 4,337
-----------
Agriculture Specialist Other Total
Audited for the year ended Agricultural
31 October 2021: Merchanting
GBP000 GBP000 GBP000 GBP000
----------------------------------- ------------ -------------- ------- --------
Revenue from external customers 358,961 141.425 - 500,386
----------------------------------- ------------ -------------- ------- --------
Segment results :
Group operating profit before
non-recurring items 3,697 7,120 (208) 10,609
Share of result of Joint
Ventures 524 33 120 677
----------------------------------- ------------ -------------- ------- --------
4,221 7,153 (88) 11,286
Interest income 193
Interest expense (383)
--------
Profit before taxation 11,096
Taxation (including on Joint
ventures) (2,162)
--------
Profit for the year attributable
to shareholders 8,934
--------
5. OTHER OPERATING INCOME
Unaudited Unaudited Audited
six months six months year
ended ended ended
30 April 2022 30 April 31 October
2021 2021
GBP000 GBP'000 GBP000
--------------- --------------- ------------ ------------
Rental Income 193 185 361
--------------- --------------- ------------ ------------
6. ALTERNATIVE PERFORMANCE MEASURES
On the Board's preferred alternative performance measures
referred to as Adjusted operating profit and Underlying pre-tax
profits which are respectively, Group operating profit adding back
amortisation of acquired intangible assets, share-based payment
expense and non-recurring items, and the Group profit before tax
adding back share-based payment expense, non-recurring items and
including the value of the share of tax incurred by joint ventures
and associates. On these measures the Group achieved adjusted
operating profit of GBP10.43m (2021: GBP5.68m) and underlying
pre-tax profits of GBP10.21m (2021: GBP5.53m).
Reconciliation with the reported income statement for this
measure, Operating profit before non-recurring items and Underlying
pre-tax profit and the Profit before tax shown on the Condensed
Statement of Comprehensive Income, together with reasons for their
use is given below.
Unaudited Unaudited Audited
six months six months year
ended ended ended
30 April 30 April 31 October
2022 2021 2021
GBP000 GBP000 GBP000
--------------------------------------- ------------ ------------ ------------
Profit before tax 9,560 5,364 10,991
Share of tax incurred by joint
ventures and associate - - 105
Non-recurring items (note 7) 523 - -
Net finance costs 186 114 190
Share of results from joint ventures
before tax - - (677)
--------------------------------------- ------------ ------------ ------------
Operating profit before non-recurring
items (note 8) 10,269 5,478 10,609
Share of results from joint ventures
and associate before tax - - 677
--------------------------------------- ------------ ------------ ------------
Segment results plus share of results
from joint ventures and associate
before tax (note 4) 10,269 5,478 11,286
Share-based payments 130 161 343
Net finance charges (186) (114) (190)
--------------------------------------- ------------ ------------ ------------
Underlying pre-tax profit 10,213 5,525 11,439
--------------------------------------- ------------ ------------ ------------
Unaudited Unaudited Audited
six months six months year
ended ended ended
30 April 2022 30 April 31 October
2021 2021
GBP000 GBP000 GBP000
-------------------------------- --------------- ------------ ------------
Profit before tax 9,560 5,364 10,991
Share of results from joint
ventures - - (677)
Share of tax incurred by joint
ventures - - 105
Net finance charges 186 114 190
Share-based payments 130 161 343
Amortisation of intangibles 35 36 134
Non-recurring items (note
7) 523 - -
-------------------------------- --------------- ------------ ------------
Adjusted operating profit 10,434 5,675 11,086
-------------------------------- --------------- ------------ ------------
The Board uses alternative performance measures as it believes
the underlying commercial performance of the current trading
activities is better reflected, and provides investors and other
users of the accounts with an improved view of likely future
performance by making adjustments to the IFRS results for the
following reasons:
-- Share of results from joint ventures and associate
Provides a fuller understanding of activities directly under
management control and those incorporated from joint ventures.
-- The add back of tax incurred by joint ventures and
associate
The Board believes the incorporation of the gross result of
these entities provides a fuller understanding of their combined
contribution to the Group performance.
-- Net finance charges
Provides an understanding of results before interest received
and paid.
-- Share-based payments
This charge is calculated using a standard valuation model, with
the assessed non-cash cost each year varying depending on new
scheme invitations and the number of leavers from live schemes.
These variables can create a volatile non-cash charge to the income
statement, which is not directly connected to the trading
performance of the business.
-- Amortisation of acquired intangible assets
This charge relates to intangible assets created from prior
business combinations, hence provides a fuller understanding of
current operating performance.
-- Non-recurring items
The Group's accounting policies include the separate
identification of non-recurring material items on the face of the
income statement, which the Board believes could cause a
misinterpretation of trading performance if not disclosed.
7. AMORTISATION OF ACQUIRED INTANGIBLE ASSETS AND SHARE-BASED PAYMENTS AND NON-RECURRING ITEMS
Unaudited Unaudited Audited
six months six months Year
ended ended ended
30 April 2022 30 April 31 October
2021 2021
GBP000 GBP000 GBP000
----------------------------- --------------- ------------ ------------
Amortisation of acquired
intangible assets and
share-based payments
Amortisation of intangibles 35 36 39
Goodwill impairment - - 95
Cost of share-based
reward 130 161 343
----------------------------- --------------- ------------ ------------
165 197 477
----------------------------- --------------- ------------ ------------
Non-recurring items
Acquisition transaction 523 - -
costs
523 - -
----------------------------- --------------- ------------ ------------
Acquisition transaction costs relate to the Business Combination
(see note 17) of Humphrey Poultry Holdings Limited in March
2022.
8. TAXATION
The tax charge for the six months ended 30 April 2022 and 30
April 2021 is based on an apportionment of the estimated tax charge
for the full year.
The effective tax rate is 21.4% (6 months ended 30 April 2021:
19.1%) which is higher than the standard rate of 19.0% primarily
due to adjustments to deferred tax provisions following the
Government's decision to raise the standard rate of Corporation Tax
to 25% with effect from April 2023 (2021: 19.0%).
9. CASH (USED IN)/GENERATED FROM OPERATIONS
Unaudited Unaudited Audited
six months six months year
ended ended ended
30 April 30 April 31 October
2022 2021 2021
GBP000 GBP000 GBP000
----------------------------------------- ------------ ------------ -----------------------
Profit for the period 7,513 4,337 8,934
Adjustments for:
Taxation 2,047 1,027 2,057
Investment and goodwill impairment - - 95
Depreciation of tangible fixed
assets 1,109 1,042 2,165
Amortisation of other intangible
fixed assets 35 36 39
Depreciation of right-use-assets 2,019 1,932 3,974
Profit on disposal of property,
plant and equipment (104) (77) (86)
Profit on disposal of right-of-use
asset - - (14)
Loss on relinquishment of property
lease - - 26
Movement in provisions - - 193
Net interest income / (expense) 59 (24) (91)
Interest on right of use liabilities 127 138 281
Investment revaluation - (2) 2
Derivative held as Fair Value
P&L FVPL 632 - 23
Government grant (1) - (2)
Share of results of joint ventures
and associate - - (572)
Share-based payment expense 130 161 343
Changes in working capital (excluding
effects of acquisitions and disposals
of subsidiaries)
Increase in inventories (11,028) (8,254) (14,583)
Increase in trade and other receivables (25,106) (19,557) (16,753)
Increase in trade and other payables 13,252 11,890 24,523
Cash (used in)/generated from
operations (9,316) (7,351) 10,554
----------------------------------------- ------------ ------------ -----------------------
During the six months to 30 April 2022, the Group purchased
property, plant and equipment of GBP2,381,000 (2021: GBP1,832,000)
of which GBP965,000 relates to right-of-use assets (2021:
GBP845,000).
10. LEASES
The following tables shows the movement in right-of-use assets
and lease liabilities, along with the aging of the lease
liabilities.
Right-of-use assets Land and Plant, machinery Total
buildings & motor vehicles
GBP000 GBP000 GBP000
-------------------------------------- ----------- ------------------ --------
At 1 November 2020 6,266 4,974 11,240
Additions 400 445 845
Amortisation (1,120) (812) (1,932)
At 30 April 2021 5,546 4,607 10,153
Additions 2,261 1,185 3,446
Amortisation (1,257) (785) (2,042)
Disposals (437) (77) (514)
-------------------------------------- ----------- ------------------ --------
At 31 October 2021 6,113 4,930 11,043
Additions - 965 965
Arising on acquisition of subsidiary
undertakings - 210 210
Reclassification 55 (55) -
Depreciation (1,102) (917) (2,019)
Disposals - (338) (338)
At 30 April 2022 5,065 4,795 9,861
-------------------------------------- ----------- ------------------ --------
Lease liabilities Land and Plant, machinery Total
buildings & motor vehicles
GBP000 GBP000 GBP000
-------------------------------------- ----------- ------------------ --------
At 1 November 2020 6,291 3,701 9,992
Additions 424 238 662
Interest expense 71 67 138
Lease payments (1,184) (748) (1,932)
At 30 April 2021 5,602 3,258 8,860
Additions 2,237 1,392 3,629
Interest expense 62 81 143
Lease payments (1,235) (1,225) (2,460)
Disposal (446) - (446)
-------------------------------------- ----------- ------------------ --------
At 31 October 2021 6,220 3,506 9,726
Additions - 965 965
Reclassification - 17 17
Arising on acquisition of subsidiary
undertakings - 210 210
Interest expense 60 67 127
Lease payments (1,144) (1,191) (2,335)
At 30 April 2022 5,136 3,574 8,710
-------------------------------------- ----------- ------------------ --------
Within 1 year 1-2 years 2-5 years Over 5 Total
years
GBP000 GBP000 GBP000 GBP000 GBP000
--------------------- -------------- ---------- ---------- ------- -------
Lease liabilities 3,685 3,026 1,428 571 8,710
--------------------- -------------- ---------- ---------- ------- -------
11. NET CASH
Unaudited Unaudited Audited
six months six months year
ended ended ended
30 April 30 April 31 October
2022 2021 2021
GBP000 GBP000 GBP000
----------------------------------- ------------ ------------ ------------
Cash and cash equivalents per
balance sheet 6,112 4,991 19,641
Cash and cash equivalents per
cash flow statement 6,112 4,991 19,641
Bank loans due within one year
or on demand (1,897) (306) -
Loan capital (672) (673) (672)
Net cash due within one year 3,543 4,012 18,969
Bank loans due after one year (7,588) - -
Total net (debt) / cash excluding
leases (4,045) 4,012 18,969
----------------------------------- ------------ ------------ ------------
12. FINANCIAL INSTRUMENTS
The Board has overall responsibility for the determination of
the Group's risk management objectives and policies and whilst
retaining ultimate responsibility for them, it has delegated the
authority for designing and operating processes that ensure the
effective implementation of the objectives and policies to the
Group's finance function. The Board receives monthly reports from
the Group Financial Director through which it reviews the
effectiveness of the processes put in place and the appropriateness
of the objectives and policies it sets. The overall objective of
the Board is to set policies that seek to reduce risk as far as
possible without unduly affecting the Group's competitiveness and
flexibility.
The Group's principle financial instruments (other than
derivatives) compromise loans, cash and short -term deposits; the
main purpose of these instruments is to raise finance for the
Group's operations; and additionally include trade and other
receivables, trade and other payables and lease liabilities.
The Group also enters derivative transactions, principally
foreign exchange contracts and wheat futures to manage commodity
price and currency risks arising from the Group's operations.
The Group's policy does not permit use of derivatives for
speculative purposes. However, some derivatives do not qualify for
hedge accounting, or are specifically not designated as a hedge
where gains and losses on the hedging instrument and the hedged
item naturally offset in the Group's income statement. Treasury
operates on a centralised basis, where Derivatives are only used
for economic hedging purposes and not as speculative investments
and are classified as 'held for trading', other than designated and
effective hedging instruments and are presented as current assets
or liabilities if they are expected to be settled within 12 months
after the end of the reporting period, otherwise they are
classified as non current.
The principal financial instruments used by the Group, from
which risk arises, are as follows:
-- Cash and cash equivalents
-- Trade receivables
-- Trade and other payables
-- Borrowings
-- Forward currency contracts
-- Wheat futures contracts
The following financial instruments have been recognised in the
Group's respective financial statements:
GROUP
Financial Assets Apr 22 Apr 21 Oct 21
GBP000 GBP000 GBP000
------------------------------------------------ ------------------- ------------------ ------------------
Cash and cash equivalents 6,112 4,991 19,641
Trade receivables, net of loss
allowance 98,139 73,080 70,320
Loan to joint venture 2,090 3,865 3,319
Derivative of financial instruments 359 227 325
------------------------------------------------ ------------------- ------------------ ------------------
106,700 82,163 93,605
------------------------------------------------ ------------------- ------------------ ------------------
GROUP
Financial Liabilities Apr 22 Apr 21 Oct 21
GBP000 GBP000 GBP000
-------------------------------------------------- ------------------- ------------------ ------------------
Bank loans and other borrowings 10,157 979 672
Lease liabilities 8,710 8,860 9,726
Trade payables and other payables 81,823 63,029 69,868
Deferred and contingent consideration 3,785 229 197
Derivative financial instruments 825 214 193
-------------------------------------------------- ------------------- ------------------ ------------------
105,300 73,311 80,656
-------------------------------------------------- ------------------- ------------------ ------------------
Financial instruments not measured at fair value includes cash
and cash equivalents, trade and other receivables, trade and other
payables, loans and borrowings, and lease liabilities. Due to their
short-term nature, the carrying value of cash and cash equivalents,
trade and other receivables, and trade and other payables
approximates their fair value.
IFRS 13 requires nancial instruments that are measured at fair
value to be classi ed according to the valuation technique
used:
-- Level 1 - quoted prices (unadjusted) in active markets for identical assets or liabilities
-- Level 2 - inputs, other than level 1 inputs, that are
observable for the asset or liability, either directly (i.e. as
prices) or indirectly (i.e. derived form prices)
-- Level 3 - unobservable inputs
All derivative nancial assets and liabilities are classi ed as
Level 1 instruments as they are quoted market prices. Contingent
consideration is measured at fair value using Level 3 inputs such
as entity projections of future probability.
Fair value Amortised cost
Financial Assets Apr Apr 21 Oct Apr Apr Oct
22 21 22 21 21
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
---------------------------------- ------- ------- ------- -------- ------- -------
Trade Receivables, net of
loss allowance - - - 98,139 73,080 70.320
Trade and other receivables - - - 2,090 3.865 3,319
Derivative financial instruments
(Level 1) 359 227 325 - - -
---------------------------------- ------- ------- ------- -------- ------- -------
359 227 325 100,229 76,945 73,639
---------------------------------- ------- ------- ------- -------- ------- -------
Fair value Amortised cost
Financial Liabilities Apr Apr 21 Oct Apr Apr Oct
22 21 22 21 21
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
--------------------------------------- ------- ------- ------- -------- ------- -------
Bank loans and other borrowings - - - 10,157 979 672
Lease liabilities - - - 8,710 8,860 9,726
Trade and other payables - - - 81,823 63,029 69,868
Deferred and contingent consideration 3,785 229 197 - - -
Derivative financial instruments
(Level 1) 825 214 193 - - -
--------------------------------------- ------- ------- ------- -------- ------- -------
4,610 443 390 100,690 72,868 80,266
--------------------------------------- ------- ------- ------- -------- ------- -------
The Group is exposed through its operation to the following
financial risks:
-- Credit risk
-- Foreign exchange risk
-- Commodity market price risk
-- Interest rate risk
-- Liquidity risk
-- Capital management risk
The policies and processes for managing each of these risks are
summarised in the Group's annual report published in February 2022
and available on the Company's website.
13. EARNINGS PER SHARE
Basic earnings per 25p ordinary share has been calculated by
dividing profit for the period attributable to ordinary
shareholders by the weighted average number of ordinary shares in
issue during the period. For diluted earnings per share the
weighted average number of ordinary shares is adjusted to assume
conversion of all dilutive potential ordinary shares (share options
and warrants) taking into account their exercise price in
comparison with the actual average share price during the year.
Unaudited
Unaudited six months
six months ended
ended 30 April
30 April 2022 2021
-------------------------------------- --------------- ------------
Weighted average number of shares
in issue: basic 20,311,023 20,055,501
Earnings per share: basic in pence 36.99 21.62
Weighted average number of shares
in issue: diluted 20,831,327 20,365,205
Earnings per share: diluted in pence 36.07 21.30
14. SHARE CAPITAL
Number of shares Total Nominal
Value
000s GBP000
----------------------------------- ----------------- --------------
Allotted and fully paid: ordinary
shares 25p each
Balance at 31 October 2020 20,051 5,013
Issue of shares 86 21
----------------------------------- ----------------- --------------
Balances at 30 April 2021 20,137 5,034
Issue of shares 162 41
----------------------------------- ----------------- --------------
Balances at 31 October 2021 20,299 5,075
Issue of shares 77 19
----------------------------------- ----------------- --------------
Balances at 30 April 2022 20,376 5,094
----------------------------------- ----------------- --------------
The shares issued in the period related to 26,000 company share
options (2021: 24,000) and 51,000 (2021: 62,000) shares allotted to
shareholders exercising their rights to receive dividends under the
Company's scrip dividend scheme. No other shares were allocated
during the current or prior period.
As at 30 April 2022 a total of 20,376,000 shares are in issue
(2021: 20,137,000).
15. DIVIDS
During the period ended 30 April 2022 an amount of GBP2,134,000
(2021: GBP2,008,000) was charged to reserves in respect of equity
dividends paid. An interim dividend of 5.40p per share (2021:
5.00p) will be paid on 31 October 2022 to shareholders on the
register on the 30 September 2022. New elections to receive Scrip
Dividends should be made in writing to the Company's Registrars
before 14 October 2022.
16. OTHER RESERVES
Included in Other reserves are share-based payments; as the
Group issues equity-settled share-based payments to certain
employees. Equity-settled share-based payments are measured at fair
value at the date of the grant. The fair value determined at the
grant date of the equity-settled share-based payments is expensed
on a straight-line basis over the vesting period, based on the
Group's estimate of shares that will eventually vest.
The Group operates a number of share option and 'Save As You
Earn' schemes and fair value is measured by use of a recognised
valuation model. The expected life used in the model has been
adjusted, based on management's best estimate, for the effects of
non-transferability, exercise restrictions and behavioural
considerations.
At the 30 April 2022 the ESOP Trust, which is consolidated
within the Group financial statements, held 16,834 (2021: 16,834)
Ordinary Shares in the Group.
17. BUSINESS COMBINATION NOTE
Humphrey Poultry (Holdings) Limited
On 18 March 2022, Wynnstay Group plc entered a business
combination and acquired 100% of the share capital of Humphrey
Poultry (Holdings) Limited, which is the holding company for two
commercial and operational entities, Humphrey Feeds Limited and
Humphrey Pullets Limited.
The provisional assessed consideration is GBP13.171m inclusive
of GBP1.011m of cash. This provisional consideration is subject to
verification of a minimum underlying net asset target value of the
acquiree, including the cash, of GBP6.171m, which due to the timing
of the preparation of completion accounts for the acquiree, is
expected to be finalised during the second half of the Group's
financial year. The provisional consideration will be adjusted
should the confirmed net assets of the acquiree be higher or lower
than the target value. The Board believes at the time of half-year
announcement that the net assets are not likely to significantly
change.
The sum of GBP9.485m was paid on completion and the provisional
consideration includes a deferred contingent element subject to the
achievement of certain commercial targets to be assessed after the
first anniversary of completion. The fair value of a deferred
contingent consideration element has been based on management's
expectation of the future performance of the business and that
could range from GBPnil to GBP2.000m. The remainder of the
provisional consideration is to be paid upon final verification of
the acquiree's net assets as explained above, but which are
currently estimated to be analysed as follows:
Current Non- Current Total
GBP000 GBP000 GBP000
------------------------------------ -------- ------------- --------
Trade receivables net of loss
allowance 5,003 - 5,003
Other receivables 595 - 595
Inventories 2,144 - 2,144
Cash and cash equivalents 1,011 - 1,011
Trade payables (3,469) - (3,469)
Other payables (347) - (347)
Lease liabilities (146) (64) (210)
Deferred tax - (101) (101)
------------------------------------ -------- ------------- --------
Net Current Assets and Non-Current
Liabilities 4,791 (165) 4,626
Tangible fixed assets - 1,545 1,545
Underlying Net Assets of Acquiree 4,791 1,380 6,171
------------------------------------ -------- ------------- --------
A full analysis of the provisional consideration is provided in
the table below which includes the break-down of the tangible fixed
assets which incorporates freehold land and buildings in the amount
of GBP599k, which reflects the current view of fair value
assessment of this element of the purchase price. An independent
valuation of this property has been commissioned at the time of
this announcement, but this will not impact the provisional
consideration, but may adjust the analysis. The goodwill balance
represents the assembled workforce and future sales opportunities
and is not expected to be deductible for tax purposes.
Fair Value of Net
Assets
Total
GBP000
-------------------------------------------------- ------------------
Fair value of net assets required
Goodwill 3,143
Intangible - Brand 3,775
Intangible - Customer list 963
Property, plant and equipment 1,335
ROU assets 210
Cash and cash equivalents 1,011
Trade receivables 5,003
Other receivables 595
Inventories 2,144
Trade payables (3,469)
Other payables (347)
Lease liabilities (210)
Deferred tax (982)
-------------------------------------------------- ------------------
Net Assets 13,171
Acquisition date - fair value of the total
net assets acquired 13,171
-------------------------------------------------- ------------------
Represented by:
Cash settled to vendor during the period 9,485
Contingent on net asset verification outstanding
at 30 April 2022 1,686
Contingent and deferred outstanding at
30 April 2022 2,000
-------------------------------------------------- ------------------
Provisional Consideration 13,171
-------------------------------------------------- ------------------
Cash Flow Statement:
Cash Settled to vendor during the period 9,485
Less, cash and cash equivalents acquired (1,011)
Cash paid to other vendors during the period
for prior acquisitions 98
-------------------------------------------------- ------------------
8,572
-------------------------------------------------- ------------------
Directly attributable acquisition costs of GBP523k were incurred
with the transaction, and these have been recognised as
non-recurring expenses in the income statement for the period.
During the last available audited accounts of the acquired
entities, for the period to February 2021, the annual aggregate
revenues on a non-consolidated basis amounted to GBP41.446m and
profit before tax was GBP1.634m. Business combination accounting is
expected to be finalised within 12 months from the completion date
of the acquisition.
Amounts included in the Consolidated Statement of Comprehensive
Income period to 30 April 2022 in relation to the acquired business
are revenues of GBP6.407m and profit before tax of GBP0.183m.
Contingent and deferred consideration of GBP0.098m was paid
during the period to 30 April 2022 relating to other prior period
acquisitions, resulting in a total gross cash outflow of GBP9.583m
in the six-month period to 30 April 2022 or GBP8.572m net of cash
acquired with the Humphrey transaction.
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END
IR SEFFMWEESEDM
(END) Dow Jones Newswires
June 28, 2022 02:00 ET (06:00 GMT)
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