Interim Results
Wynnstay Group PLC
21 June 2006
Wynnstay Group plc
WYN.L
WYNNSTAY GROUP PLC
('Wynnstay' or 'the Group')
Interim Results
for the six months ended 30 April 2006
Key Points
• Turnover of £52.40m (2005: £55.02m)
• Profits before tax of £1.31m (2005: £1.99m)
• Basic earnings per share of 10p (2005: 16.84p)
• Net assets of £24.21m (2005: £23.12m)
• Interim dividend of 1.75p per share (2005: Nil)
• Strategy of diversified business base provides robustness in challenging
market
Chairman, John Davies, commented,
'In January, when we announced Wynnstay's final results, we reported that we
expected trading this year to be challenging, with the commencement of the EU
Single Farm Subsidy Payment and the impact of energy price rises... The Spring
market was disappointing, showing no real recovery in fertiliser sales, and as
predicted, results for the six months to 30 April 2006 reflect this.
We expect some recovery within our core agricultural activity in our second
half, however, the impact of higher energy costs, particularly on the fertiliser
business, will continue.
The Group continues to look for acquisitions, continuing the strategy of acting
as a consolidator within the agriculture supply industry, whilst at the same time
developing our joint venture activities which should guarantee a profit stream
from outside the core business.'
Press enquiries:
Wynnstay Group plc Bernard Harris, Managing Director T: 020 7448 1000 today
Paul Roberts, Finance Director Thereafter: 01691 828512
Biddicks Katie Tzouliadis T: 020 7448 1000
WH Ireland Limited Robin Gwyn T: 0161 832 2174
CHAIRMAN'S STATEMENT
In January, when we announced Wynnstay's final results, we reported that we
expected trading this year to be challenging, with the commencement of the EU
Single Farm Subsidy Payment and the impact of energy price rises. Additionally,
we highlighted the importance of a recovery in fertiliser sales for the Group's
financial performance at the half year stage. Fertiliser sales had fallen
significantly as a result of higher prices and uncertainty created by the delay
in the Single Farm Subsidy Payment.
The Spring market was disappointing, showing no real recovery in fertiliser
sales, and as predicted, results for the six months to 30 April 2006 reflect
this. Turnover was £52.3m (2005: £55.017m) and profit before taxation reduced to
£1.310m (2005: £1.992m), basic earnings per share were 10p compared to 16.84p
for the corresponding period last year. As of 30 April 2006, the Group's net
assets stood at £24.21m (2005: £23.12m), an increase of 5%.
This is the first trading period where we have seen the effect of C.A.P. reform
on farmers' buying patterns and the delay in the payment of the Single Farm
Subsidy Payment has been a major factor in influencing demand for many of our
products. However, we believe that the influence of the changes will become less
prominent, as farmers become accustomed to the new regime.
DIVIDEND
The Board is pleased to declare the Group's first interim dividend. 1.75p per
share will be paid on 31 October 2006 to shareholders on the register at 29
September 2006.
OPERATIONS
Feed Division
Feed volumes overall improved by 5% against a contracted market. However,
margins were affected by higher energy and distribution costs which we were not
able to recover fully from customers.
Due to the prolonged winter weather, sheep feed sales were particularly strong,
improving by 25% to a new record level. There was also a strong performance from
dairy feed and blended feed sales which again showed strong growth.
Considerable work took place during the period on the Bibby Feed business, the
joint venture between the Group and Carrs Milling Industries. Some
rationalisation of the business was necessary. The Bibby business is trading
profitably and has made excellent progress in re-organising its activities.
Further benefits are anticipated from this new venture going forward.
The raw material trading department enjoyed a substantial increase in
profitability and continues to be an important division within the feed
division, as it also acts as a procurer for raw materials for our other feed
manufacture and blending activities.
Work has commenced on the new feed blending facility based at Rhosfawr, North
Wales, and the plant is anticipated to be in operation by late summer. The new
plant will bring considerable cost savings and benefits for manufacturing and
distributing feed in that area.
Arable Division
Higher prices and the well documented changes in the regime of E. U. support
payments to farmers adversely affected fertiliser sales and results from this
division reflect this. There has been some improvement in fertiliser demand
during May and early June, however higher prices continue to impact sales.
Cereal and herbage seed sales were largely maintained with the prospect of a
higher level of plantings in the autumn. Wheat prices are looking to be firmer
and this is leading to a more optimistic attitude amongst arable farmers. In
addition, new markets are opening up for both wheat and oil seed rape in the
production of bio-fuels, which will grow substantially in future years.
Shropshire Grain handled a slightly lower volume of product during the period
and continues to look to exploit quality markets for combinable crops.
Stores Division
The Stores Division, which caters for both farmers and the wider rural
community, performed well during the period, with a considerably improved
performance from the eight stores which we acquired from Eifionydd Farmers some
two years ago. Overall margin improvement continues and we are expanding our
range of products. We continue to promote our retail products through direct
mail marketing and the launch of our E-Commerce site in January has proved very
successful.
Sales of pet products increased by 13% and animal healthcare sales rose by 18%,
helped partially by the Quins acquisition which took place in December 2005.
Sales of household and hardware items also grew strongly due to better ranging,
purchasing and presentation. Outdoor clothing sales grew 11%, aided by an
improved offering and enhanced marketing.
In December 2005, we opened a major new store at Newtown, Powys. This has
contributed to the results for the first time and I am pleased to report it is
trading profitably and on budget.
Our programme of store improvements is making very good progress. We completed a
major refit at Oswestry, Shropshire, and will be upgrading our stores at Gaerwen
and Rhosfawr in North Wales over the second half of the year. We continue to
look for opportunities to expand this division and are currently evaluating a
number of sites.
Foxmoor
Foxmoor increased its sales substantially over the half year and is targeting a
significant uplift for the full year. The business continues to gain new
accounts throughout the United Kingdom and a new promotion in conjunction with
Matt James (Channel 4's City Gardener) has proved to be successful. This has
focused on a specialist range of architectural, drought-resistant plants, a
growing sector of the market. A new site has been acquired in Devon to increase
capacity by a further 25% and advanced sales for 2007 are already well ahead of
expectation. Production is running at full capacity and we are looking for
substantial ongoing growth from this business in the future.
JOINT VENTURES AND ASSOCIATE COMPANIES
Joint Ventures
Wyro Developments Ltd
Work is well advanced on a second site at Newtown, Powys, and reservations
received at the time of writing are on budget. The small former company site
development in North Wales has been completed and largely sold, whilst work has
commenced on two small developments near Welshpool, Powys, attracting keen
interest. We continue to target further sites to add to our land bank and are
close to agreeing the acquisition of two substantial sites, which will
accommodate a total of 100 units.
Youngs Animal Feeds
Youngs Animal Feeds acquired our partner's business, Dollin & Morris Ltd, in
December and has worked hard during the period to integrate the two businesses,
including the installation of an improved I.T. system. We have increased the
output of our new Molichop Equine Feed plant and expect considerable cost
savings to accrue when we combine production from our Congleton site in Cheshire
onto the one site. We have recently commissioned a new plant to pack wild bird
seed, a fast growing sector of the leisure feeds market, for sales both in our
stores and also to our existing customer base of pet stores and garden centres.
Welsh Feed Producers
The Carmarthen feed plant had a record winter in terms of production for our
expanding customer base. Securing of the Bibby Feed tonnage for the plant was
particularly beneficial and ensured that the mill was running to full capacity.
We have plans for further capital expenditure to improve efficiency.
Associate Company
Wynnstay Fuels
Our associate fuel business enjoyed its most successful period, helped by the
colder weather and continuing strong sales growth in its newest operation in
North Wales. A new state of the art fuel facility has been opened in Rhosfawr,
North Wales, and we have plans to expand the business further, increasing
distribution into Anglesey and Mid Wales.
OUTLOOK
We believe the current volatile period in agriculture will pass, as farmers
adjust to the new Single Farm Subsidy Payment and there are signs that livestock
prices are improving, helped by the lifting of the ban on the export of both
livestock and meat products. This has already improved prices substantially
which in turn will feed back to the supply industry.
There is increasing concerns with regard to the issue of 'food miles' and the
effects of the long supply chain for imported food products that could be
sourced in the UK. Major retailers are becoming more sensitive to these issues
and this is generally good news for British Agriculture.
We expect some recovery within our core agricultural activity in our second
half, however, the impact of higher energy costs, particularly on the fertiliser
business, will continue. We will meet the challenges in a way that ensures we
can continue to operate as a low cost provider.
The Group continues to look for acquisitions, continuing the strategy of acting
as a consolidator within the agriculture supply industry, whilst at the same time
developing our joint venture activities which should guarantee a profit stream
from outside the core business.
John Davies
Chairman
GROUP PROFIT AND LOSS ACCOUNT FOR THE SIX MONTHS ENDED 30TH APRIL 2006
Unaudited Unaudited Audited
six months six months year
ended ended ended
30th 30th April 31st
April 2005 October
2006 2005
Notes £'000 £'000 £'000
Turnover 52,375 55,017 100,806
Cost of sales (42,140) (44,464) (82,482)
Gross Profit 10,235 10,553 18,324
Selling and distribution costs (8,218) (7,868) (15,150)
Administrative expenses (594) (597) (918)
Operating profit 1,423 2,088 2,256
- Share of profits in joint 3
ventures and associates 0 0 521
- Profit from sale of fixed assets &
Investment Income 0 0 184
Profit on Ordinary activities
before Interest 1,423 2,088 2,961
- Net Interest Payable (116) (96) (92)
Profit on Ordinary activities
before taxation 1,307 1,992 2,869
Tax on profit on ordinary 4
activities (313) (530) (874)
Profit on ordinary activities after
taxation 994 1,462 1,995
GROUP BALANCE SHEET AS AT 30TH APRIL 2006
Unaudited Unaudited Audited
as at as at as at
30th April 30th April 31st October
2006 2005 2005
(restated)
Note £'000 £'000 £'000
Fixed assets Intangible 6 2,576 3,020 2,501
Tangible 8,943 8,575 8,769
Investments 2,975 1,655 2,763
14,494 13,250 14,033
Current assets
Stocks 9,425 8,082 8,284
Debtors 24,005 21,883 19,158
Cash at bank and in hand 6 6 1,646
33,436 29,971 29,088
Creditors: amounts falling due within one
year (21,101) (19,655) (18,716)
Net current assets 12,335 10,316 10,372
Total assets less current
liabilities 26,829 23,566 24,405
Creditors: amounts falling due after more
than one year (2,242) (249) (345)
Provisions for liabilities and
charges
Deferred taxation (189) (189) (189)
Other provisions 0 0 (250)
Net assets 24,398 23,128 23,621
Capital and reserves
Called up share capital 6 2,560 2,185 2,438
Share premium account 5,195 2,615 4,253
Profit and loss reserve 7 12,683 11,662 12,195
General reserve 1,582 1,582 1,582
Loanstock redemption reserve 6 2,378 5,084 3,153
Shareholders' funds 24,398 23,128 23,621
GROUP CASH FLOW STATEMENT FOR THE SIX MONTHS ENDED 30TH APRIL 2006
Unaudited Unaudited Audited
six months six months year ended
ended ended
30th April 30th April 31st October
2006 2005 2005
Note £'000 £'000 £'000
Cash flow from operating activities 8 (5,381) (3,323) 3,483
Returns on investments and
servicing of finance (116) (96) (92)
Taxation (240) (292) (719)
Net Capital expenditure and
financial investment (1,110) (375) (1,294)
Equity dividends paid (508) (391) (391)
Cash inflow before use of liquid
resources and financing (7,355) (4,477) 987
Financing - Issue of shares 289 166 523
Increase / (Decrease) in debt 2,610 (273) (739)
(Decrease) / Increase in cash in (4,456) (4,584) 771
the period
Reconciliation of net cash flow to
movement in net debt
£'000 £'000 £'000
(Decrease) / Increase in cash in the
period (4,456) (4,584) 771
Repayment of debt & lease financing 423 158 739
Change in net debt resulting from (4,033) (4,426) 1,510
cash flows
New finance lease and debt (3,033) (90) (371)
Movement in net debt in the period (7,066) (4,516) 1,139
Opening net debt (488) (1,627) (1,627)
Closing net debt (7,554) (6,143) (488)
NOTES TO THE INTERIM FINANCIAL INFORMATION
1. Basis of preparation.
The Interim Report was approved by the Board of Directors on 20th June 2006.
The financial information contained in this Interim Report has been prepared on
the basis of the accounting policies set out in the Groups' audited accounts for
the year ended 31st October 2005, as adjusted for the change in accounting for
dividends as explained in note 2 below.
The financial information for the six months ended 30th April 2006 and for the
six months ended 30th April 2005 is unaudited.
The financial information for the Group set out above does not constitute
'statutory accounts' within the meaning of Section 240 of the Companies Act
1985. The information for the year ended 31st October 2005 has been extracted
from the statutory accounts of Wynnstay Group plc for that year which received
an unqualified audit report and have been delivered to the Registrar of
Companies.
2. Dividend Reporting.
FRS 21 requires a change of accounting policy in respect of the accrual of
proposed dividends. Dividends are now included in the profit and loss account
reserve in the year in which the dividend is approved for payment. The full year
accounts for the year ended 31 October 2005 have been restated via a prior year
adjustment to reflect this change in accounting policy, no adjustment is
required for the interim period to 30 April 2005.
Dividends paid or proposed are no longer to be shown as part of the profit and
loss account statement.
In accordance with the announcement made in January 2006, the Board has declared
an Interim Dividend of 1.75p per share, which will be paid on the 31st October
2006 to shareholders on the register at the close of business on the 29th
September. A scrip dividend alternative will be available.
3. Consolidation of share of results of profits in joint ventures &
associates.
As the Group has a policy of using audited accounts for the consolidation of its
share of the profits of joint venture & associate activities, no such
consolidation has occurred during the six months to April 2006. Relevant results
will be accounted for during the second half of the financial year.
4. Taxation.
The tax charge for the six months to 30th April 2006 is based on an
apportionment of the estimated tax charge for the full year.
5. Earnings per Share.
Earnings per share have been calculated based on the profit on ordinary
activities after taxation of £993,605 (£1,461,811) and the weighted average
number of shares in issue of 9,931,675 (8,679,913). Diluted earnings per share
are based on the aggregate weighted average number of shares and all potential
shares, adjusted for the proposed issue price of 12,016,324 (12,115,333). Fully
diluted earnings per share uses the weighted average number of shares plus all
potential shares without adjusting for the proposed issue price of 12,868,595
(12,903,179).
6. Share capital and Convertible Loanstock.
During the period a total of 491,950 (59,673) shares were issued with an
aggregate nominal value of £122,988 (£14,918) fully paid up for equivalent cash
of £1,064,508 (£166,189). Included in these issues were 73,943 (59,673) shares
allotted to shareholders exercising their rights to receive dividends under the
Company's scrip dividend scheme and 410,132 (Nil) allotted to holders of
Convertible Loanstock in the Company. As at the 30th April 2006, there remains a
total of £314,571 of Convertible Loanstock in issue, with each £1 of such
Loanstock being convertible at the option of the holder into four £0.25 fully
paid ordinary shares in the Company prior to the 31st August 2006. After this
date the Loanstock is redeemable at par at the option of the Company. Interest
is payable to the holders of the Loanstock at the rate of 4% per annum.
Subsequent to the balance sheet date a further £105,277 of Loanstock has been
converted resulting in a further 421,108 shares being allotted. At the date of
this report a total of 10,663,007shares are in issue.
7. Prior year adjustment.
As explained in note 2, FRS 21 requires a change in accounting policy
in respect of the accrual of proposed dividends. These are now no
longer to be accrued until they have been approved by the shareholders
or paid.
As a consequence it is necessary to restate the comparative figures
for creditors and profit and loss account reserves as at 31 October
2005.
Audited
year ended
31st October
2005
(restated)
£'000
Creditors - as previously shown 19,223
Prior year adjustment (507)
------------
As restated 18,716
============
Profit and loss account reserve - as 11,688
previously shown
Prior year adjustment 507
------------
As restated 12,195
============
8. Reconciliation of operating profit to operating cashflows.
Unaudited Unaudited as Audited as
as at at at
30th April 30th April 31st
2006 2005 October
2005
£'000s £'000s £'000s
Operating profit 1,423 2,088 2,777
Depreciation of tangible fixed assets 529 510 1,047
Amortisation of intangible fixed
assets 125 114 236
Group share of associates and joint
ventures operating profit 0 0 (521)
Loans made to joint venture (1,233) 100 400
Movement in stock (1,141) (64) (266)
Movement in debtors (3,614) (4,773) (2,348)
Movement in creditors (1,470) (1,298) 2,158
------------------------------------
Net cash inflow from operating
activities (5,381) (3,323) 3,483
====================================
9. International Financial Reporting Standards (IFRS).
The London Stock Exchange has announced the requirement for AIM listed companies
to report financial results using IFRS from 2007, which means that Wynnstay will
be obliged to report under this format in its 2007/08 financial year. The
company has reviewed the implications of this change and will seek to implement
the new rules at the earliest practical opportunity. To illustrate the likely
major changes, a reconciliation for the current interim results is shown below
which also provides an indication of the presentational format likely to be
adopted by the Company.
RECONCILIATION BETWEEN UK GAAP REPORTING & IFRS
PROFIT AND LOSS ACCOUNT
Unaudited results for the six months ended 30th
April 2006
UK GAAP Effect of IFRS
transition to
IFRS
£'000 £'000 £'000
Revenue from Cont'
Activities 52,375 52,375
Cost of sales (42,140) (42,140)
Gross Profit 10,235 10,235
Selling and distribution
costs (7,622) (7,622)
Administrative expenses (536) (i) (20) (556)
Depreciation (529) (529)
Amortisation of Intangible
Assets (125) (ii) 125 0
Operating profit 1,423 105 1,528
Share of profits in joint
ventures 0 0
Net Interest Payable (116) (116)
Profit before taxation 1,307 105 1,412
Tax on profit (313) (iii) (30) (343)
Profit after taxation 994 75 1,069
Earnings per share 10.00p 0.76p 10.76p
- Headline
- Diluted 8.27p 0.62p 8.89p
(i) Being charge of share based remuneration IFRS 2
(ii) Add back of amortisation of goodwill IAS 38
(iii) Additional deferred tax relating to goodwill writing down allowance IAS 12
BALANCE SHEET
Unaudited results for the six months ended 30th April 2006
UK GAAP Effect of IFRS
transition to
IFRS
£'000 £'000 £'000
Non Current Assets :
Goodwill 2,576 (ii) 125 2,701
Property, plant &
equipment 8,943 8,943
Investments - equity
method 2,975 2,975
---------------------------------------------------------
14,494 125 14,619
---------------------------------------------------------
Current Assets :
Inventories 9,425 9,425
Trade receivables 21,522 21,522
Financial assets 2,483 2,483
Cash 6 6
---------------------------------------------------------
33,436 0 33,436
---------------------------------------------------------
Current Liabilities :
Financial liabilities -
borrowings (5,310) (5,310)
Trade payables (15,197) (i) (iv) (20) (15,217)
Current tax liabilities (594) (594)
---------------------------------------------------------
(21,101) (20) (21,121)
---------------------------------------------------------
Non Current Liabilities :
Financial liabilities -
borrowings (2,242) (2,242)
Deferred tax liabilities (189) (iii) (30) (219)
--------------------------------------------------------
(2,431) (30) (2,461)
--------------------------------------------------------
Net Assets 24,398 75 24,473
========================================================
Shareholders Equity
Ordinary shares 2,560 2,560
Share Premium 5,195 5,195
Retained earnings 12,683 75 12,758
Other reserves 1,582 1,582
Loanstock redemption 2,378 2,378
--------------------------------------------------------
Total Equity 24,398 75 24,473
========================================================
This information is provided by RNS
The company news service from the London Stock Exchange
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