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Skilled for
growth
NWF Group plc
Annual Report and Accounts 2023
NWF Group is a specialist distributor
of fuels, food and feeds across the UK.
Our people are highly skilled and
focused on delivering for our
customers across all divisions.
Skilled for
growth
Fuels
Read more on page 10
Food
Read more on page 14
Feeds
Read more on page 18
Divisional highlights
Fuels’ resilient performance
was delivered by meeting
customers’ needs through
a period of continued
significant price volatility
and some localised
shortages of fuels.”
Food delivered a strong
performance improvement
as a result of increased
outloads and associated
backhaul work, fully utilised
warehouses throughout
the year and improved
efficiency levels.”
The outstanding
performance improvement
has been driven by farmers
utilising nutritional advice
to optimise diets and added
value products to benefit
from a record high
milk price.”
Dave Walmsley
Managing Director, Fuels
Angela Carus
Managing Director, Food
Andrew Downie
Managing Director, Feeds
Financial highlights for the year ended 31 May 2023
Revenue
Total dividend per share
Diluted headline EPS1
£1,053.9m
+20.0%
7.8p+4.0%
23
22
21
1,053.9
878.6
675.6
23
22
21
7.8
7.5
7.2
31.4p
-9.8%
23
22
21
31.4
34.8
20.4
Headline profit before tax1
Headline operating profit1
Net cash/(debt)2
£19.6m
-6.2%
23
22
21
19.6
20.9
11.9
£21.0m
-3.7%
£16.3m
23
22
21
21.0
21.8
23
22
16.3
9.0
12.9
(5.7)
21
1
Headline operating profit excludes exceptional items and amortisation of acquired intangibles. Headline profit before taxation excludes exceptional items,
amortisation of acquired intangibles and the net finance cost in respect of the Group’s defined benefit pension scheme. Diluted headline earnings per share also
takes into account the taxation effect thereon.
2 Net cash/(debt) excluding IFRS 16 lease liabilities.
Contents
Overview
IFC Divisional highlights
1 Financial highlights
2 At a glance
4 Chair’s statement
Strategic report
6 Chief Executive’s review
9 Divisional review
10
14
18
Divisional review: Fuels
Divisional review: Food
Divisional review: Feeds
22 Business model
24 Group financial review
27 Principal risks and uncertainties
ESG framework
31 ESG
43 Section 172
48 TCFD
52 Board of Directors and Company Secretary
54 Senior management
55 Corporate governance statement
61 Audit Committee report
64 Nomination Committee report
66 Directors’ remuneration report
70 Directors’ report
72 Statement of Directors’ responsibilities
Financial statements
73 Independent auditors’ report
78 Consolidated income statement
79 Consolidated statement of
comprehensive income
80 Consolidated balance sheet
81 Consolidated statement
of changes in equity
82 Consolidated cash flow statement
83 Notes to the Group financial statements
113 Parent Company balance sheet
114 Parent Company statement
of comprehensive income
114 Parent Company statement
of changes in equity
115 Notes to the Parent Company
financial statements
Shareholder information
125 Notice of Annual General Meeting
126 Notes to the Notice of Annual
General Meeting
128 Explanatory notes to the Notice
of Annual General Meeting
IBC Financial calendar
IBC Divisional contacts
IBC Advisors
NWF GROUP PLC NWF.CO.UK
1
Overview
At a glance
Specialist distribution
across the UK
What we do
Fuels
National depot
network
NWF Fuels is a leading
distributor of fuel oil and
fuel cards delivering over
636 million litres across the
UK to 100,000 customers.
Headline operating profit
Food
Leading ambient
consolidator
Boughey Distribution is
a leading consolidator of
ambient grocery products
to UK supermarkets
with over 1,000,000ft²
of warehousing
and significant
distribution assets.
Headline operating profit
Feeds
Focus on
nutrition
NWF Agriculture has grown
to be a leading national
supplier of ruminant
animal feed to 4,132
customers in the UK,
feeding one in six dairy
cows in Britain.
Headline operating profit
£12.9m
-25.0%
£4.2m+50.0%
£3.9m+116.7%
Read more on pages 10 to 13
Read more on pages 14 to 17
Read more on pages 18 to 21
Our strategic objectives
Ambitions and commitments by 2025
Create a culture
of safety
Invest in
our people
Build strong
partnerships
Read more on
pages 31 to 42
Respect the
environment
2
NWF GROUP PLC ANNUAL REPORT AND ACCOUNTS 2023
Embed a behavioural safety approach to encourage
positive open dialogue about safety in all our operations.
Improve standards and policies, risk assessments and
collaboration with our supply chain to maximise positive
impacts for our stakeholders.
Broaden our training and professional development
programmes and wider employee wellness initiatives.
Continue to invest in latest truck technology and fuel
sources, and plan for renewable energy transition.
How we do it
• Acquisitions and new
developments
• Additional dividend
amounts
• Share buy-backs
• Appropriate bank debt
Net op
era
ti
n
• Maintenance capital
• Strong balance sheet
• Minimum 50% payout
ratio dividend
p i t a l
a
erating a n d c
productivit y
p
O
Capital
allocations
policy
v
a
M
l
a
u
x
e
i
m
o
r
g
i
s
a
n
e
r
e
t
i
c d
e
v
urns and
elopment
g
c
a
s
h
f
l
o
w
x c e ss cash
E
Investment case
Strong management team
Solid track record with ambition
Growth opportunities
Consolidate and optimise
Asset backing
Strong balance sheet
7Fuels acquisitions since 2019
1clear strategy
£217.6m
total assets (2022: 213.9m)
Focus on returns
Return on capital
employed is a key metric
27.6%headline ROCE (2022: 30.3%)
Good cash generation
£32 million of cash generated
from operating activities
Growing dividend
Increased dividend for
11 consecutive years
107.6%
cash conversion (2022: 97.7%)
7.8ptotal dividend per share (2022: 7.5p)
NWF GROUP PLC NWF.CO.UK
3
Overview
Chair’s statement
A skilled team delivering
continued growth
I would like to offer my personal
thanks to all our employees for
their outstanding efforts and
commitment to the Group over
the last year.”
Philip Acton
Non-Executive Chair
Summary
• Very strong results for the Group in spite
of inflationary and cost-of-living
challenges.
• Continued increase in shareholder
returns; proposed increase in the total
dividend of 4.0% to 7.8p per share,
reflecting the strong performance and
the Board’s confidence in the prospects
of the business.
Total dividend per share
7.8p
(2022: 7.5p)
Overview
I am pleased to report another year of significant progress for the Group,
exceeding the market expectations that were established at the start of
the financial year. In a year with significant challenges from inflationary
pressures and the cost-of-living crisis, it has been particularly positive to
deliver strong performances from all three divisions.
As a consequence of the continued progress achieved, the Group’s strong
cash generation and the growing confidence in the Group’s future
prospects, the Board is recommending a final dividend of 6.8p per share,
to be paid to shareholders on 8 December 2023 (2022: 6.5p), giving a total
dividend of 7.8p per share (2022: 7.5p), which represents a 4.0% increase
on the prior year. This is the twelfth year that the Group has increased the
dividend, highlighting continual sustained improvements in performance.
Our business
NWF is a specialist distributor delivering fuel, food and feed across the
UK. Each of our trading divisions has scale and good market position
and is profitable and cash-generative. Each division trades under
different brands with their own brand architecture as follows:
• Fuels
• Food Boughey
• Feeds NWF Agriculture, SC Feeds, New Breed and Jim Peet
NWF Fuels (including a number of local sub-brands)
4
NWF GROUP PLC ANNUAL REPORT AND ACCOUNTS 2023
Key areas of focus for the Board in 2023
Responding proactively to market conditions
The Group has responded well to challenging market conditions
throughout the year. Inflation has been one of the most significant
challenges and as a specialist distributor it is critical that we operate
efficiently, provide a high level of service and effectively pass through
inflationary costs, which all divisions have achieved. The UK
experienced localised shortages for fuel supplies, particularly in the
autumn and winter months. We have been able to mitigate this through
our national supply agreements and the ability to move fuel around the
country demonstrating the value of our depot network, to ensure we
maintained service to our customers. The cost-of-living crisis impacted
consumers and we expect some of the volume decline in heating oil was
a result of consumers trying to use less energy, albeit the majority of the
volume reduction was a consequence of the mild winter. Volume in
Food and Feeds was not impacted by the market conditions as the
demand for ambient groceries was robust as was the case for milk and
dairy products, which are basic necessities.
Read more about our ESG ambitions on pages 31 to 42
Read more on Section 172(1) Statement on page 48
Delivering on strategy
The Group has a clearly articulated strategy which has a focus on
expanding the Fuel depot network through acquisitions, consolidating
a fragmented market. Two acquisitions have been completed in the
last twelve months and there is a strong and active pipeline of
opportunities. In Food, following the successful expansion with the
Crewe warehouse, we continue to evaluate the opportunities to further
expand our business with additional warehousing space backed by
customer contracts. In Feeds, we are focused on developing
nutritionists through the NWF Academy who can increase volumes and
utilise our national operations platform.
Cash generation
Cash generation remains a focus for the Group and it is good to report
a strong year end net cash balance of £16.3 million (excluding lease
liabilities), which highlights both the cash-generative nature of our
business and the capability and flexibility to finance growth
investment opportunities.
Rewarding good service
The consistent focus on excellence in customer service has been
critical across the Group to win new business and ensure we can pass
on inflationary cost increases as a specialist distributor.
Board oversight
The Board recognises the importance and value of ESG. We
have established a target of net zero by 2040 and continued
the focus on our four sustainability pillars across the Group.
An Executive Steering Committee meets regularly, reviewing
detailed performance measures. A key development in the
year has been the completion of our first TCFD disclosures, in
compliance with The Companies (Strategic Report) (Climate-
related Financial Disclosure) Regulations 2022, Sections 414C,
414CA and 414CB of the Companies Act 2006 to place
requirements on certain publicly quoted companies and large
private companies to incorporate TCFD-aligned climate
disclosures in their annual reports.
We continue to adopt the Quoted Companies Alliance
Corporate Governance Code (‘the QCA Code’) which we believe
has been constructed in a simple, practical and effective style
and that meaningful compliance with its ten main principles
should provide shareholders with confidence in how the
Group operates.
Board Changes
Richard Whiting, CEO, has informed the Board of his plan to
retire from NWF in March 2024 after leading the Group
successfully for the last 15 years. We are pleased to
announce Chris Belsham, will succeed Richard as CEO from
March 2024 as part of a managed succession plan and will,
from today, become Chief Executive Designate. Katie
Shortland, currently finance & transformation director
at Midland Expressway Ltd, will join the Board as Chief
Financial Officer in October 2023. I will continue to lead the
Group as Chair through this important transitionary period
until the AGM of 2024.I will continue to lead the Group as
Chair through this important transition period for the Group
as part of the Group’s succession planning process.
Philip Acton
Non-Executive Chair
1 August 2023
Create a culture
of safety
Invest in
our people
Build strong
partnerships
Respect the
environment
Read more about our ESG ambitions on pages 31 to 42
NWF GROUP PLC NWF.CO.UK
5
Overview Chief Executive’s review
NWF has delivered a very
strong set of results
NWF has delivered another great result,
significantly ahead of the market
expectations at the start of our financial
year. It is great that all three divisions
have outperformed in the year.”
Richard Whiting
Chief Executive
Summary
• Resilient performance from Fuels as a result
of providing excellent service to customers
amidst supply constraints and volatile oil
prices. Two fuel acquisitions completed in
line with our strategy to consolidate the
market, adding 39 million litres per annum.
• Strong performance improvement in
Food with increased outbound activity
and backloads along with warehouses
at an effective operating capacity
throughout the year, whilst continuing
to win new business.
• Outstanding performance in Feeds,
supporting ruminant farming customers
who benefitted from record-high
milk prices.
• Performance to date in the current
financial year has been in line with the
Board’s expectations.
Net cash
£16.3m
(2022: net cash £9.0m)
Overview
NWF has delivered another great result, significantly ahead of the
market expectations at the start of our financial year. The three
divisions have performed ahead of expectations in the year in spite
of inflationary and cost-of-living challenges. Strategic growth has
been delivered with the completion of two fuel acquisitions.
The continued focus on cash and very strong profit performance has
increased the year end net cash position (excluding lease liabilities),
which both demonstrates the ongoing cash-generative nature of our
business and the ability to fund acquisitions and development. In line
with our established progressive dividend policy, we are proposing
an increased dividend as part of our continuing focus on driving
shareholder returns.
Fuels delivered a significant performance in the year in spite of
lower demand for heating oil as a consequence of a mild winter and
consumers looking to minimise expenditure on energy, given higher
prices. During the autumn and winter there were localised supply issues
which were to our benefit as we have national supply agreements and
are able to move fuel effectively across the country, demonstrating the
value of our depot network to meet our customers’ needs. This delivered
higher than normal returns in the financial year and reflects the
flexibility and strong operating model of the business.
The Food division delivered another year of strong performance
improvement, ahead of our expectations. The result was delivered
through an increased number of outloads of our customers’ products
and ancillary backloads, along with fully utilising the warehouse
infrastructure with improved operating efficiencies. New business
has been won and we are currently utilising overflow warehousing
to manage this higher level of storage demand.
Feeds has delivered an outstanding year as a result of a number of
positive factors. The record high milk price for our dairy farmers has
driven an increased focus on nutritional advice to deliver additional
volumes for our customers. This has required the use of higher value
and added value products which supported performance. In addition,
in the summer months of 2022, gains were made on higher feed prices,
having purchased commodities earlier in the year at lower prices
before the Ukraine conflict started.
6
NWF GROUP PLC ANNUAL REPORT AND ACCOUNTS 2023
The Group has again demonstrated its capability to deliver a very strong
performance and has great resilience. With a positive cash position,
long-term funding in place and the cash-generative capability of the
Group, we will continue to consider acquisition opportunities, building
on our successful track record of acquiring and integrating businesses,
as well as investment in organic development.
Performance to date in the current financial year has been in line with
the Board’s expectations. Overall, the Board continues to remain
confident about the Group’s prospects.
Richard Whiting
Chief Executive
1 August 2023
The Group delivered headline operating profit of £21.0 million
(2022: £21.8 million) and headline profit before tax of £19.6 million
(2022: £20.9 million). Operating profit was £20.6 million
(2022: £13.2 million). Diluted headline earnings per share was
31.4p (2022: 34.8p).
Cash management remains strong with net cash of £16.3 million
(2022: net cash of £9.0 million) excluding lease liabilities, after
£2.1 million of net capital expenditure (2022: £3.2 million).
Outlook
In Fuels, we have a proven depot-based operating model and a clear
growth strategy to consolidate a fragmented fuels distribution market.
With a strong pipeline, acquisitions are being actively pursued and the
opportunity for growth remains significant.
On 7 July 2023, the Group acquired 100% of the trade and assets of
Geoff Boorman Fuels LLP, a 19 million litre fuel distributor based in
Edenbridge in Kent, supplying mainly domestic customers across the
South-West to the borders of Kent, Sussex and Surrey. The net cash
consideration of £2.6 million on a debt and cash free basis was settled
at completion.
In Food, we are targeting additional business to support our ambition
to expand our warehouse and transport operations and leverage our
team’s capability.
In Feeds, with commodity prices remaining volatile but farmers
supported by a good milk price, demand is anticipated to remain
solid and we are seeking volume growth on the back of our Academy,
additions to the sales team and utilising an effective national
operations platform.
NWF GROUP PLC NWF.CO.UK
7
Strategic report Chief Executive’s review continued
Q&A
Richard Whiting
Chief Executive
NWF Chief Executive, Richard Whiting, looks back over the challenges
and successes of the last 12 months in our latest Q&A.
Q. What were the key highlights from the last
Q. How has the Group coped with the availability and
12 months?
volatility of commodities?
A. It has been great that all three divisions have performed ahead
A. Commodity prices have remained extremely volatile over the last
of our expectations in the last 12 months; we’ve completed a Fuels
acquisition in line with our strategic plan and have renewed our
banking facilities at competitive rates for the next three years. We
have been successful meeting customers’ needs in supplying the key
products of Fuels, Food and Feeds with demand remaining robust in
spite of cost-of-living concerns and inflationary pressures.
Q. How has the Group coped with inflationary cost
increases during the year?
A. As a specialist distributor it is always critical that we are efficient in
our operations and distribution activities and provide a high level of
service. In demonstrating this to our customers we have been effective
in passing on inflationary cost increases and have some contracts with
customers that automatically pass through increased commodity
prices such as fuel.
Q. How has the Group approached and progressed its
first year of TCFD?
A. From the good work undertaken on our ESG reporting framework
we have been able to progress smoothly into our first year of TCFD
reporting and have utilised external support to ensure we are adopting
best practice in this regard. You can see the results throughout this
Annual Report.
Q. How has the Group been able to attract, retain and
motivate its employees?
A. A key focus of the Group is attracting, retaining and motivating our
people. We have increased our focus on non-financial initiatives
including wellness and healthcare support for all employees and a
Christmas hamper for all staff. The challenges of the cost-of-living
crisis have been considered across the Group and tailored support
has been provided to those most affected. Our employee turnover
has fallen in the year and we now have, as an example, a waiting list
for HGV drivers wanting to join our Food division.
year, with the impact of the Ukraine conflict resulting in significantly
higher prices in the early months, then prices began to fall, but
volatility remained significant as economic and political news broke.
Whilst there has been no shortage of feed commodities, oil supplies
have been interrupted as the UK moved way from importing from
Russia. This has caused temporary shortages at numerous locations
during the year; however, we have been able to meet our customer
needs as a result of national supply agreements and the ability to
trunk fuel around the country.
Q. How does energy transition play into your fuel
strategy?
A. In NWF Fuels we have 100,000 customers across the UK. Over the
coming years we will be managing the needs of these customers as
they transition their energy supply. In the case of domestic customers
using oil for home heating, this could be to HVO100 (hydrotreated
vegetable oil) and biofuels or hydrogen in the case of commercial
customers. NWF has the capability and expertise in logistics and
distribution to support our customers through the transition over
the longer term.
Q. How will the Group grow in the coming years?
A. NWF has a clear growth strategy which can build on the proven
resilience and performance of our existing businesses. In Fuels we
have the opportunity to consolidate a fragmented distribution market
through acquisitions. In Food we are looking to continue to grow our
business by adding additional warehousing and transport capacity to
meet our growing customers’ needs. In Feeds we are investing in the
NWF Academy to train nutritionists who can support the needs of
farmers across the country and increase the utilisation of our national
operating platform.
8
NWF GROUP PLC ANNUAL REPORT AND ACCOUNTS 2023
Divisional review
A business skilled at delivering
growth and returns
The Group has a clearly articulated strategy which has a focus on
expanding the Fuel depot network through acquisitions, consolidating
a fragmented market.
Fuels
Read more on pages 10 to 13
Resilient performance
With 100,000 customers being supplied across 27 fuel
depots, Fuels operates in markets that are large and
robust and, as a business, it has consistently proved
it can effectively manage the volatility in oil prices.
The industry remains highly fragmented, with many
small operators, which we continue to believe provides
an opportunity for NWF to further increase its
market share.
Watch our latest
video at nwf.co.uk
Food
Read more on pages 14 to 17
Continued successful development
The business operates in a competitive supply chain and
needs to continually demonstrate the value and service
that it provides to food manufacturers and importers. The
business has a leading position in consolidating ambient
grocery products in the North West, with high service
levels, industry leading systems and a strong operating
performance being the key components of its
customer proposition.
Watch our latest
video at nwf.co.uk
Feeds
Read more on pages 18 to 21
Outstanding performance
NWF provides nutritional advice to farmers across
the country with over 55 trained nutritional advisors
analysing forage and farmers’ objectives to deliver feed to
optimise performance. Feed is then produced from mills
across the UK and delivered directly to farmers, with the
majority of the business being dairy, but also supporting
beef and sheep farmers.
Watch our latest
video at nwf.co.uk
NWF GROUP PLC NWF.CO.UK
9
Strategic report Divisional review: Fuels
Fuels Customers
People
Our resilient performance
was delivered by meeting
customers’ needs through
a period of continued
significant price volatility
and some localised
shortages of fuels.”
Dave Walmsley
Managing Director, Fuels
100,000
(2022: 109,000)
329(2022: 338)
Litres of fuel delivered
Acquisitions
7since 2019
636m(2022: 663m)
Fuel depots owned
27(2022: 25)
geographical area
fragmented market
Our strategy
1 Consolidate a highly
2 Expand existing
3 Increase business density
4 Invest in a clean fleet
5 Active acquisition pipeline
in existing territories
10
NWF GROUP PLC ANNUAL REPORT AND ACCOUNTS 2023
Division KPIs
Revenue
£757.2m
+21.9%
23
22
21
757.2
621.1
447.8
Headline operating profit
Volume (litres)
£12.9m
-25.0%
23
22
21
12.9
17.2
9.3
636m-4.1%
23
22
21
636
663
695
Review of the year
Fuels’ resilient performance was delivered by meeting customers’ needs
through a period of continued significant price volatility and some localised
shortages of fuels, particularly during the autumn and winter period as the UK
moved away from using oil from Russia. We were able to maintain a good
service level across all 27 fuel depots as a result of national agreements
across a number of refineries and fuel terminals and the ability to move
fuel across the country to areas of shortages which drove higher returns.
The relatively mild winter reduced demand for heating oil along with the
cost-of-living crisis leading consumers to try and use less to offset higher
prices. Heating oil remained a lower cost source of home heating in
comparison to natural gas, the price of which was capped during the period.
Volumes declined by 4.1% to 636 million litres (2022: 663 million litres).
Revenue increased by 21.9% to £757.2 million (2022: £621.1 million) as a
consequence of higher oil prices, an increased diesel mix of fuel as a result
of the mild winter and duty changes to gas oil implemented in April 2022. The
average Brent Crude oil price in the year was $90 per barrel compared to $87
per barrel in the prior year. The volatility during the year was significant with
a high of $124 per barrel in June 2022 and a low of $74 per barrel in May 2023.
Headline operating profit was £12.9 million (2022: £17.2 million) as a
consequence of higher returns arising from supply concerns and pricing
volatility which results in a net profit of 2.0 pence per litre, higher than
expected. The prior year had one-off gains as a result of shortages and
volatility from the start of the Ukraine conflict which was reported last year.
Two acquisitions have been completed in the last 12 months. Sweetfuels
Limited (Oxfordshire) was acquired in December 2022 for £10.0 million
(on a cash free/debt free basis with a normal level of working capital) and
Geoff Boorman Fuels (Kent) for £2.6 million in July 2023. These accretive
acquisitions add 39 million litres of fuel to our business in a full year. The
acquisition pipeline of opportunities is healthy and this remains a focus for
our development activity. We have a proven post-acquisition integration
plan, retaining the local brand and customer facing parts of the business
and centralising finance, IT, procurement and credit control.
The Fuels division operates on a decentralised model with depot
management teams focused on optimising performance for the specific
conditions of their local markets. This model supported our ability to respond
swiftly and effectively to the increased consumer demand and significant
commodity price volatility. We continue to believe that our model is the most
effective way to maximise performance, given the industry structure, but we
also believe there are opportunities to leverage benefits from the breadth of
our growing network. As such, we continue to invest in enhancing systems
and capabilities for the Fuels division which we believe will improve
efficiencies and provide a strong platform for continued growth.
With over 100,000 customers (2022: 109,000) being supplied across 27 fuel
depots in the year (2022: 25), Fuels operates in large and robust markets
and, as a business, it has consistently proved it can effectively manage the
impact of volatility in oil prices. The industry remains highly fragmented,
with many small operators, which provides NWF with further opportunities
to consolidate the market and increase its market share.
Fuels: Market trends and
responses
Supply shortages and significant price volatility
Supply shortages have been experienced at numerous locations across
the UK, particularly in the autumn/winter period as suppliers sourced oil
from other parts of the world following the ban on the imports from
Russia. We were able to maintain supplies to our customers as a result of
national supply agreements and the ability to trunk oil around the country
if an area was suffering a shortage. Price volatility was greater than
normal as a result of news flow with regard to the conflict and global
economic conditions and the need for suppliers to pay higher prices for
spot fuel to gain sufficient supplies. This volatility and overall pricing
reduced as we moved in the final quarter of the year.
Households coping with higher energy bills and
availability of fuel
Households using oil for home heating were impacted by higher
prices as the cost of heating oil increased in the last year.
Positively, oil as an energy source remained the lowest cost source
of home heating and was c.11% below the energy cap for natural
gas. In addition, the Government provided a £200 payment to help
with the cost-of-living crisis for households not connected to
natural gas. As the price of oil has fallen, all our customers have
benefitted from lower prices which are now well below those seen
before the Ukraine conflict. We offer the ability for customers to
spread their payments over a 12-month period so they are not
impacted by significant bills.
Overview of the energy transition
Energy transition is a complex area where there is uncertainty on
solutions and, more significantly, timing. In the drive for net zero, our
customers will in time transition away from the use of fossil fuels.
The most significant customer group for NWF is domestic customers
who use oil for heating. With this key group, the current favoured
alternative solution is to move from kerosene (heating oil) to a HVO100
(hydrotreated vegetable oil) which is not a fossil fuel, has 90% less
carbon emissions and will work with existing boilers and heating
solutions. This has been successfully trialled and NWF is capable of
delivering this to all customers. For commercial customers, HVO100
is a potential solution and we have successfully trialled it on our
main site and now use it to operate all the tankers at one of our depots.
Alternatives such as hydrogen for HGVs look likely to be a longer-term
solution and we could, with our specialist distribution skills, be the
provider of these alternative energy sources.
Read more about our ESG strategy on page 31
NWF GROUP PLC NWF.CO.UK
11
Strategic report Divisional review: Fuels continued
Meet the MD
Dave Walmsley
Managing Director, Fuels
Q. What is your background?
A. My career began in retail before moving into B2B sales-driven
distribution businesses. These encompassed centralised
distribution of office products and palletised freight and localised
distribution of construction products, before entering the world of
fuel sale and distribution. For over 20 years I have led large
distribution organisations in the UK and in various European
countries with ten years’ experience of living and working
overseas. All the sectors I have worked in have been highly
competitive and commoditised, rely on high levels of service to
attract and retain customers and require highly energised teams
to own the customer relationship.
Q. What do you do at NWF?
A. As the MD of the Fuels division, my role is to determine and then hit
the strategic objectives to grow volume and profitability and return
shareholder value. To achieve this, I need to be developing a strong
team in both breadth and depth which can own and deliver the
result, as well as ensuring the business units are equipped with
the tools and support they need. I am also involved in streamlining
areas of focus and identifying acquisitions to complement our
existing footprint.
On a day-to-day basis my role is to ensure that we never run out
of fuel and that we are an effective partner to our suppliers and
customers, and that our people trust us with their careers.
Q. What does the future look like for your division?
A. Fuels has a bright future and is always a fun place to be, with a
stated intention and track record of investing in a growth strategy.
The business is very focused on developing internal talent to
support this growth and we have a clear and evidenced record of
preparing and then promoting relatively young talent to take on
senior roles. Whilst we offer a commoditised ‘need to have product’
to our customers, the team firmly believes there is more we can do
to enhance our service and offer even greater value add to both our
domestic and commercial customers.
Due to our ambitious plans, we have taken the opportunity to bring
in expert talent with fresh ideas to complement the depth of
experience on the team.
12
NWF GROUP PLC ANNUAL REPORT AND ACCOUNTS 2023
Skilled for growth
Depth of experience
Gemma Wakefield – Marketing Director
Gemma joined the business in a newly created Marketing
Director role in February 2023, and is responsible for building
a marketing strategy to meet the overall growth ambitions
of the Fuels division. Gemma brings a wealth of experience
with her and her career to date includes a variety of
marketing roles in a diverse range of companies from
SMEs to Fortune Global 500s. Gemma has brought new
technologies into the businesses she’s worked in including
digitalisation of marketing tactics.
Q. What attracted you to NWF Fuels?
A. During the interview process, what really stood out for
me were the people and the commitment of the senior
management team to delivering growth. In particular,
Dave Walmsley’s determination and focus shone
through and I felt he was someone who I could get
behind and would champion me in my role. I also
enjoy a challenge, and the landscape within the fuels
market is evolving with new fuels and technologies
being developed, meaning there will be plenty of
opportunities for my personal and professional
growth as we adapt our marketing strategy to
evolving market conditions.
Having worked in both B2B and B2C businesses
previously, I was attracted to this role as it encompasses
both, and I bring a depth of experience that will enhance
the current Fuels offering.
Q. What have you been involved in so far in
your first few months, and what lies ahead?
A. It’s been really exciting; there is so much opportunity
for us to grow our marketing strategy, and my focus
has been on putting the building blocks in place to
enable that. The aim of this is to enhance the customer
experience and trial new marketing tactics to
maximise growth opportunities.
I recently held a marketing strategy workshop with
key members of the Fuels management team, to really
delve under the skin of what makes us unique and
how we can use marketing tools to create value for
the business. From that, we have the strawman of
our new marketing strategy, which I will be developing
and fleshing out over the next 12 months, as we start
to implement it.
NWF GROUP PLC NWF.CO.UK
13
I am delighted to
welcome Gemma, who
brings with her a wealth
of marketing experience
and some great new
ideas. Gemma will be
leading the charge
through enhancing our
marketing and
supporting our
ambitious growth plan
and will bring her own
special brand of
enthusiasm to the role.”
Dave Walmsley
Managing Director, Fuels
Strategic report
Divisional review: Food
Food Pallets stored
Trucks
Food delivered a strong
performance improvement
as a result of increased
outloads and associated
backhaul work, fully utilised
warehouses throughout the
year and improved
efficiency levels.”
Angela Carus
Managing Director, Food
122,000
(2022: 118,000)
144(2022: 127)
People
785(2022: 724)
Trailers
320(2022: 264)
Our strategy
1 Optimise the customer mix
2 Optimise storage and
distribution solutions on the
Wardle and Crewe sites
spaces
3 Crewe – a centre of excellence
4 Total capacity 135,000 pallet
5 Value added niche businesses
6 E-fulfilment
7 Palletline
8 Targeting step-change
expansion backed by
customer and retailer
contracts
14
NWF GROUP PLC ANNUAL REPORT AND ACCOUNTS 2023
Division KPIs
Revenue
Headline operating profit
Pallets stored
£70.9m
+13.3%
£4.2m+50.0%
122,000
+3.4%
23
22
21
70.9
62.6
54.8
23
22
21
2.8
1.9
4.2
23
22
21
122,000
118,000
120,000
Food: Market trends and
responses
Significant inflation in the food supply chain
Inflation in the food supply chain has been well publicised and
it has been critical that we operate efficiently and continue to
provide a great level of service, which we have demonstrated
in the last year. We have been subject to numerous sources of
input inflation with wages, insurance rates, energy and fleet all
increasing in costs. We have been successful in passing these
inflationary costs through to our Food customers as we have been
able to demonstrate a high level of service throughout the year and
remain very competitive in a market where managing inflation is a
key challenge. We have an escalator in our contracts for fuel costs
which passes through increases or falls to our customers.
Availability of labour
We have been successful in recruiting and retaining our staff, with
labour turnover reducing in the year. There has been an intentional
focus on non-financial elements including healthcare provision
and a wellness programme along with Christmas hampers and
Easter eggs for all staff supported by a chocolate customer.
In addition, we paid a one-off bonus in January to lower paid
colleagues to support them through the challenges of the
increasing cost of living. Positively, we have a full complement
of warehouse staff and have a small waiting list for people wanting
to join us as HGV drivers.
Review of the year
Food delivered a strong performance improvement as a result of
increased outloads and associated backhaul work, fully utilised
warehouses throughout the year and improved efficiency levels.
Delivering a high level of service and operating efficiently has supported
the division in both passing through inflationary cost increases and
winning additional business from existing and new customers in the
year. Labour turnover has reduced and we are fully resourced for both
drivers and warehouse staff. A focus of the team has been on non-
financial initiatives including healthcare and wellbeing to improve
retention levels.
Revenue increased by 13.3% to £70.9 million (2022: £62.6 million).
Storage overall was at an average of 122,000 pallets (2022: 118,000
pallets), with warehouses effectively utilised across the year. Demand
for our customers’ products increased in spite of the cost-of-living
crisis. Retailers have reported stable demand for ambient grocery and
demand has particularly increased from the discounters winning
business from the higher priced retailers. Outloads were 7% higher
than prior year whilst storage levels were up 3%, highlighting a positive
overall increase in the stock turn of our customers’ products.
New business has been gained from existing and new accounts to the
extent that overflow warehousing is being utilised over the summer
peak period. We continue to evaluate opportunities to further expand
the warehouse base backed by customer contracts.
Headline operating profit was £4.2 million (2022: £2.8 million).
Whilst the packing room increased activity strongly in the year and
e-fulfilment was stable, it was not sufficient to offset a reduction
in Palletline contribution which suffered as hauliers used their
own vehicles more as a result of lower overall economic activity
and reduced network throughput.
Demand for our customers’ products continues to be stable and the
outlook for most product categories handled by the business is resilient.
The business operates in a competitive supply chain and needs to
continually demonstrate the value and service that it provides to
food manufacturers and importers. We have a leading position in
consolidating ambient grocery products in the North West, with high
service levels, industry leading systems and a consistent operating
performance being the key components of its customer proposition.
NWF GROUP PLC NWF.CO.UK
15
Strategic report Divisional review: Food continued
Meet the MD
Angela Carus
Managing Director, Food
Q. What is your background?
A. My journey to the boardroom started on the shop floor, picking for
a logistics company. Since then, I’ve worked in several logistics
businesses, working my way up through the ranks, from smaller
local operations through to global distribution businesses. I didn’t
start out with the ambition to aim for the top job, but I was lucky
enough to have people around me who championed me and
believed in my potential, even at points when I did not. As a female
in a male-dominated industry, I did always question ‘why not?’
if I was told that I couldn’t do something, which I hope has changed
the perceptions of some of the people around me and inspired
others to achieve their potential. I love to work in businesses
where the team is at the forefront, and I have found this at
Boughey, where there is a real entrepreneurial spirit and
I have great colleagues who complement my skill set.
Q. What do you do at NWF?
A. We have a team of nearly 800 colleagues and I am responsible for
leading them to safely deliver an on time, in full (‘OTIF’) service and
have a little bit of fun whilst doing it! Our people and culture feature
at the very heart of what we do and I’ve been keen to empower my
team with the freedom and creativity for us to drive innovation and
growth. My day-to-day responsibilities can be varied, from media
work to promote the business and visiting customers, to
presenting our exciting new strategy to the NWF Group plc Board.
More recently, a lot of my time has been spent working on our
impact assessment for our B Corp certification application. For
further details on this, please see page 51.
Q. What does the future look like for your division?
A. I’m proud of what we’ve achieved at both revenue and headline PBT
levels and I’m excited about what the future holds for us. Since I’ve
been with the business, we’ve increased our revenue year-on-year
and set an ambitious but achievable growth strategy. Alongside
my senior management team, we have recently had our ambitious
five-year strategy approved which will enable the business to grow
over the coming years. We acknowledge that we operate in a
challenging industry with an uncertain economic backdrop,
but we are confident that our plans are achievable and we can
navigate the path forward.
We are also looking forward to the outcome of our B Corp
application. If we are successful in achieving certification, we will
be one of the first logistics companies to attain the status, which
would be a great achievement. However, the principles of the
movement fit so well with our own ESG strategy and overall values
that, irrespective of the outcome, we will look to continuously
improve from the strong baseline we have set ourselves.
16
NWF GROUP PLC ANNUAL REPORT AND ACCOUNTS 2023
Skilled for growth
Depth of experience
Danny Earp – Warehouse Operations Director
Danny is a great
example of our home
-grown talent who
has enjoyed ongoing
success with the
business. He started
with the Company 19
years ago in our
warehouse operation
and made rapid
progression to
Director level at the
age of just 34. He is
a dedicated and
loyal member of
the team who has
supported our
growth strategies
and will be
instrumental
in helping us
deliver them.”
Angela Carus
Managing Director, Food
Shortly after leaving school, Danny took
a temporary role as an office clerk at
Boughey in 2004, which, based on his
great attitude and commitment to the job,
soon became a permanent position. Danny
has just completed his 19th year with the
business and is looking forward to the
future with NWF.
Q. Tell us about your career
with NWF
A. After a few months as an office clerk
where I learned about the business’
systems and processes, I was promoted
to Night Shift Supervisor. This was a steep
learning curve for me, being in my early
20s with only a small amount of experience
and suddenly managing a team of ten
people. I quickly learnt how to run the shift
and the depot for those night periods,
earning the trust of my team. After three
exciting years I was moved to a larger
warehouse, and my team was increased to
25. At this stage the business had decided
to implement a new ERP system, and,
having an aptitude for systems, I was
seconded to work on this project full time
in 2012. This was one of the most
challenging but fulfilling times of my
career, as I was involved in the full lifecycle
of the project from design to training to go
live. The project was a success with a
smooth transition to the new system.
Following this, I identified the requirement
for an IT Manager within the business, and
moved into that role, leading a team of
technical IT experts.
I did the IT role for three years, and was
offered the opportunity to begin my
development to Warehouse Operations
Director, which I achieved in 2017. My role
covers a variety of areas from warehouse
to IT, and my team now comprises almost
450 colleagues.
Q. You’ve been with NWF for a
number of years; what is it
that keeps you here?
A. As I’ve gained experience within the
business, I’ve always felt that I’ve been
enhancing my professional and personal
development, and when the opportunity
has arisen, I’ve been successful in being
promoted. I’ve had a number of mentors
who have championed me as I’ve
progressed my career, and I’m keen to
nurture talent within the Food business.
The business has gone through a lot of
positive change in the last few years, but
the people and their enthusiasm have
remained the same.
We have a strong people focus, and that
extends to our community, where we
are involved in a number of initiatives,
from sponsoring the local food festivals,
to supporting local schools with visits
and information.
Q. What are your key
achievements?
A. In 2017 I received the award from
the UK Warehousing Association for
Warehouse Manager of the Year, which
followed on from my team receiving
the Team of the Year award in 2014.
I was really proud of both of these
achievements, which were testament
to the hard work and dedication shown
by my team and me. I also successfully
completed my MBA in 2020, which was
supported by the business and funded
by the apprentice levy, giving me new
skills which I’ve utilised as we’ve been
building our new five-year strategy,
which we are about to embark upon
and should be an exciting period of
growth for the business.
Another achievement was opening
our Crewe warehouse in the middle
of the pandemic, and I’m really proud
that across our sites I’ve been able
to optimise the operational efficiency
in a complex warehouse environment.
We have a diverse portfolio of customers,
and being able to understand their
requirements and translate those into
an effective logistic solution is at the
heart of what I do on a day-to-day basis.
NWF GROUP PLC NWF.CO.UK
17
Strategic report
Divisional review: Feeds
FeedsTonnes
The outstanding
performance improvement
has been driven by farmers
utilising nutritional advice
to optimise diets and added
value products to benefit
from a record high
milk price.”
514,000
(2022: 528,000)
People
226(2022: 224)
Trucks
39(2022: 45)
Trailers
17(2022: 17)
Andrew Downie
Managing Director, Feeds
Our strategy
platform
1 Utilise national operations
2 Continue to develop feed
3 Promote personal
volumes across the country
development with the NWF
Academy
4 Increase nutritional range
offering to over 4,132 farmers
across the UK
18
NWF GROUP PLC ANNUAL REPORT AND ACCOUNTS 2023
Division KPIs
Revenue
Headline operating profit
Volume (tonnes)
£225.8m
+15.9%
£3.9m+116.7%
23
22
21
225.8
194.9
173.0
23
22
21
1.8
1.7
3.9
514,000
-2.7%
23
22
21
514,000
528,000
575,000
Review of the year
Feeds is focused on providing nutritional advice and on-time deliveries
of animal feed to farmers across the country. Total feed volume decreased
by 2.7% to 514,000 tonnes (2022: 528,000 tonnes). This reduction was
marginally lower than the overall market and resulted from a mild autumn
and a later transition to indoor housing for dairy herds.
Commodity prices were extremely volatile during the year. In comparison to
prior year, a basket of commodities was 5% higher overall, but from the start
of the year to the end in May 2023 they fell 27%. This volatility has in part been
driven by uncertainty around the Ukraine conflict and its material impact on
agricultural commodity markets.
Revenue was higher at £225.8 million (2022: £194.9 million) reflecting the
higher feed prices more than offsetting lower volumes in the year. Headline
operating profit was £3.9 million (2022: £1.8 million). The outstanding
performance improvement has been driven by farmers utilising nutritional
advice to optimise diets and added value products to benefit from a record
high milk price. In addition, the division benefitted from commodities
purchased prior to the Ukraine conflict being utilised over the summer
period when feed prices had increased.
We have continued investment in the NWF Academy in which new trainees
engage on an 18-month structured training programme to become future
NWF nutritionists. The Academy has recruited a fourth group to the
programme, which has been well received across the industry. Graduates
of the programme are now developing as successful nutritionists in our
national sales team.
Milk prices in the UK increased to a record of 51.6 pence per litre in
December 2022, supporting farming customers higher feed, energy and
labour costs. The average price for the year of 46.5p per litre compared to
an average in the prior year of 34.4p per litre. At the end of the financial year
the milk price had fallen to below 40 p per litre. Milk production was 0.8%
higher at 12.4 billion litres (2022: 12.3 billion litres).
Feeds has a very broad customer base, working with over 4,000 farmers
across the UK. This base, and the underlying robust demand for milk and
dairy products, results in a reasonably stable overall demand for our feed in
most market conditions.
Feeds: Market trends and
responses
Highest milk price at over 50p per litre
The high milk prices have rewarded our farming customers in the year
and reached record levels. This has supported farmers who have
higher labour, feed, fuel and fertiliser costs and has more than covered
the impact of the cost increase in commodities resulting from the
Ukraine conflict. The higher returns for farmers have benefitted NWF
as we provide nutritional advice which increases yields and lends
itself to higher protein feeds to optimise returns. Whilst farmers are
generating a good return with higher milk prices, they have not been
increasing herd sizes or expanding their farms as there are shortages
of labour and challenges in importing heifers from the continent
post-Brexit. This would suggest that even as the milk price reduces,
it should maintain at a sustainable level for farmers.
Impact of commodity shortages and price
volatility as a result of the Ukraine conflict
Spot commodity prices increased by an average of £50 per tonne
(17%) after the start of the conflict in Ukraine. These higher costs
were passed on to farmers as the herds moved from a winter to a
summer diet, which mitigated some of the impact. Subsequently
there has been significant volatility and uncertainty which is linked
to both the news flow from Ukraine and the uncertain economic
development of economies across the globe. There have been
no absolute shortages in the year but some substitution and
reformulation of diets was required. Moving into the winter period,
grains moved down in price whilst proteins remained high, again
resulting in some diet changes on farm to optimise performance
and returns for farmers.
Environmental impact of dairy farming
Dairy farming is a sustainable source of protein as much of the
nutrition is produced on the land and the proteins in feed are
often byproducts of human food production. The most significant
change a dairy farmer can make is to increase the yield of the herd
by using NWF nutritional advisors to increase output per cow.
CO2 emission from methane is a negative output of dairy farming
and NWF has developed specific diets which are proven to
reduce methane production in lactating dairy cows.
Read more about our ESG strategy on pages 31 to 42
NWF GROUP PLC NWF.CO.UK
19
Strategic report Divisional review: Feeds continued
Meet the MD
Andrew Downie
Managing Director, Feeds
Q. What is your background?
A. I’ve got a degree in business management and I spent the first six
years of my working life in a finance team as a management
accountant. My role, which was aligned closely with operations,
allowed me to challenge the team on factory performance from
a financial perspective, and it was soon identified that my skill
set was a strong operational one. I was given the opportunity to
explore my potential through moving into factory management
and worked my way up to Supply Chain Director, overseeing
acquisitions and, ultimately, the sale of that business to a larger
organisation. I worked across the acquiring group in a general
management role, achieving operational excellence in a
continuously changing business. The opportunity then arose
to join the Feeds business at NWF Group plc, which was an
exciting opportunity for me.
Q. What do you do at NWF?
A. I joined NWF Agriculture eight years ago and I love the challenge
and strategic vision required to meet the ever changing demands
of our fast moving customers. I introduced Productive Industries’
Brilliant Basics and Vital Few, which we use to continuously
improve processes to drive efficiencies to grow the business,
as well as the Feeds Sales Academy in 2018 to train the in-field
technical experts of the future that our business requires to grow.
On a day-to-day basis, my focus is on ensuring that quality and
performance are measured, and that our teams are working in safe
spaces. Health and safety has been a key focus of mine over the
last year, with the introduction and embedding of a zero-harm
approach, and evolving how we report our metrics through near
miss reporting.
Q. What does the future look like for your division?
A. I’m proud of what we have achieved over the past year, which
wouldn’t have happened without our people, who we continue to
make sure are safe and engaged and feel valued. We operate in a
large, stable market, but recognise that the expectations around
food standards continue to increase, with sustainability playing a
significant part. We will continuously look to innovate to ensure
that our offering exceeds the evolving needs of our customers,
whilst ensuring the basics around quality and H&S are maintained.
20
NWF GROUP PLC ANNUAL REPORT AND ACCOUNTS 2023
Rob has risen from the shop
floor to the Boardroom by
consistently displaying
values and passion that
engage the people around
him whilst driving the
business forward. He is
continuously looking for
ways to enhance our
performance and improve
our ways of working.”
Andrew Downie
Managing Director, Feeds
Skilled for growth
Depth of experience
Rob Warrington – Business Unit Director
for the North
After completing an agricultural course at Rodbaston College in 1999
and a brief period of managing his own business, Rob joined NWF
Agriculture in 2005 for what he thought would be a short stint working
in the blend plant. This year, he will celebrate his 18th year with the
business and is now Business Unit Director for the North.
Q. Tell us about your career with NWF
A. I joined the business in 2005, working in the blend plant
manufacturing bespoke blends for the ruminant animal feed
market. After four months, a position came up within operations
at Wardle Mill and I was successful in becoming the Mill Scheduler.
Over the course of three years I was introduced to all areas of
operations, and as the business evolved, I gained invaluable
experience across all sites. Following a transition period at one
of our mills, I was tasked with improving the performance of the
mill and recruiting a new team to run it. Following this successful
period, I was then promoted to Operations Manager, a role
I continued to grow in until later in 2015, when I became General
Manager of SC Feeds. I subsequently returned to Wardle to run the
SC Feeds sales function and my role was expanded to include NWF
transport. I restructured the transport function to meet the more
complex requirements of the market at the time, and am really
proud of what was achieved during this period.
After this, I was promoted to Supply Chain Director, taking
responsibility of all areas of the supply chain and operations.
Following a strategic review of how the business was run, I moved
to become Business Unit Director for the North, a role that allows
Feeds to better respond to the requirements of our customers
in the North of England and Scotland.
Q. You’ve been with NWF for a number of years;
what is it that keeps you here?
A. I’m an ambitious person and I feel the business has always been
able to match my ambition through varying the work I do,
increasing my responsibilities and exposing me to different and
new things. I’ve also always felt supported in my career and have
had mentors from within the business who have guided me on
my journey. I’m proud to be able now to share my knowledge and
experience to develop new talent in the business.
Also, working in a business like NWF Agriculture, which has the
support of the Group but is run independently, has allowed for
efficient and fast decision making to take place. I’ve always felt that
my ideas have been listened to at both a Feeds and Group level.
Finally, one of the biggest things is the people in the business;
there’s a really strong team spirit and culture in Feeds, with
everyone working towards shared objectives, so it’s a great team
to be part of.
NWF GROUP PLC NWF.CO.UK
21
Strategic report
Business model
Focused on value creation
What we do
Industry insight
Excellence in customer service
Customer service is the number one
priority, whether it is reaching nine out of
ten callers who have run out of fuel on the
same day, delivering excellent service
levels in food or delivering to farm within
24 hours when needed by farmers.
Building on a solid platform
The Group has established a solid
platform with strong profit development
and cash conversion. Competitive
banking facilities support the
Group’s development.
Understanding our markets
Established in 1871, the Group adds value
to our customers through an in-depth
knowledge of the oil, food distribution
and agricultural markets.
Strategic direction
Capital investment
Our strategy is to maintain a position
of financial strength whilst growing the
business through considered investment
in people, plant and equipment.
Acquisitions
The Group’s strategy is to make key
acquisitions to increase penetration, scale
or geographic reach within its divisions.
Organic growth
Organic growth continues to be driven
through our diversified and service
led divisions.
e
a p i t a l investment
C
Creating
shareholder
value
e in customer servic
c
n
e
l
l
e
c
x
E
O
r
g
a
n
i
c
g
r
o
w
t
h
B
uildi
n
g
o
n
a
s
o
l
i
d
p
l
a
t
f
o
r
m
s
n
Acquisitio
Understanding o u r m a r
s
t
e
k
Supported by our ESG strategy
Create
a culture
of safety
Invest
in our people
Build
strong
partnerships
Respect
the environment
Read more about our ESG strategy on page 31
22
NWF GROUP PLC ANNUAL REPORT AND ACCOUNTS 2023
Where we do it
The value we create
Fuels
Food
Feeds
•
Industry leading customer service
from 27 depots across the UK
• Scale delivers efficiency and value for
commercial and domestic customers
• Delivery flexibility focusing on
delivering to oil users who have
experienced a run-out
• Supply agreements with major oil
companies for security of supply and
competitive pricing
Customers
Excellent service
provided to over 104,250
customers across the
Group, our number
one priority.
Total customers
104,250
(2022: 113,500)
• Market leading national ambient
grocery consolidation service
• High service levels
• Award winning IT team and industry
leading systems with customers
utilising live stock and delivery data
• Efficient warehousing and transport
delivering a value proposition for food
manufacturers and importers
• High warehouse and vehicle
asset utilisation
Read more about our
engagement with
suppliers on page 44
Read more about our ESG
policies on pages 31 to 42
Suppliers
Our partnerships with
suppliers are vital to
ensure we meet all
stakeholder needs and
play an essential role
in our business.
Environment
We recognise
that we operate in
industries that can have a
significant impact on the
environment and that
we have a responsibility
to minimise its impact.
• Key nutritional advisor to over 4,000
ruminant farmers across the UK
• Technical support for farmers to
improve yields and farm profitability
• Class leading customer service
• Manufacture of high quality products
• High asset utilisation of mills and blend
sheds delivering value to customers
• Efficient transport fleet delivering
direct to farm
Shareholders
Total shareholder return
by the continued
profitable development
of our businesses
through a combination
of organic growth,
capital investment and
selective acquisitions.
Total dividend per share
7.8p(2022: 7.5p)
Read more about our
engagement with
shareholders on page 45
NWF GROUP PLC NWF.CO.UK
23
Strategic report Group financial review
Results significantly ahead
of expectations at the start
of the financial year
Headline profit before tax of £19.6
million and a net cash position of
£16.3 million.”
Chris Belsham
Chief Executive Designate
Summary
• Headline profit before tax of £19.6 million
(2022: £20.9 million).
• Profit before tax of £18.9 million
(2022: £12.0 million).
• Diluted headline EPS of 31.4p
(2022: 34.8p).
• Net cash (excluding lease liabilities)
of £16.3 million (2022: £9.0 million).
• The balance sheet remains in a robust
position with the Group cash positive at
the year end for the first time,
highlighting the resilience of the Group
and providing significant capacity to
support investment-driven growth.
24
NWF GROUP PLC ANNUAL REPORT AND ACCOUNTS 2023
Group results
Group revenue increased by 20.0% to £1,053.9 million (2022: £878.6 million)
with revenue growth from higher commodity prices in Fuels and Feeds
and an increase in activity levels in Food. Headline operating profit was
£21.0 million, a decrease of 3.7% (2022: £21.8 million). Operating profit
increased 56.1% to £20.6 million (2022: £13.2 million).
Financing costs increased by £0.5 million to £1.7 million, reflecting the
increase in interest rates. This included the interest on bank debt of
£0.8 million (2022: £0.4 million) and headline interest cover was 26.3x
(excluding IAS 19 net pension finance costs and IFRS 16 lease interest)
(2022: 54.5x).
Headline profit before taxation decreased by 6.2% to £19.6 million
(2022: £20.9 million). Profit before taxation increased by £6.9 million
to £18.9 million (2022: £12.0 million). There were no exceptional items
in the year (2022: £8.3 million).
The tax charge for the year was £4.0 million (2022: £3.6 million). The
effective tax rate for the year was 21.2% (2022: 30.0%). The post-tax
profit for the year was £14.9 million (2022: £8.4 million).
The headline earnings per share of 31.4p represented a decrease of
10.3% (2022: 35.0p); diluted headline earnings per share decreased by
9.8% to 31.4p (2022: 34.8p). The proposed full year dividend per share
increased by 4.0% to 7.8p which reflects the strong performance and
the Board’s confidence in the prospects of the business. The proposed
dividend equates to a dividend cover ratio of 4.0x.
The finance costs in respect of the defined benefit pension scheme
were £0.3 million (2022: £0.3 million).
Balance sheet summary
The Group increased net assets by £9.8 million to £77.9 million
(2022: £68.1 million) reflecting a profit for the year of £14.9 million
(2022: £8.4 million), strong cash conversion and a positive movement
in working capital.
Tangible and intangible fixed assets increased by £7.4 million to
£75.5 million as at 31 May 2023 (2022: £68.1 million) as a result of the
acquisition of Sweetfuels Limited in Fuels. The depreciation (excluding
IFRS 16 depreciation on right of use assets) and amortisation charges
for the year to 31 May 2023 were £4.8 million and £0.6 million
respectively (2022: £4.6 million and £0.5 million respectively).
Group level ROCE (based on headline operating profit) was 27.6% as
at 31 May 2023 (2022: 30.3%).
Net working capital decreased by £3.1 million in the year with all three
divisions experiencing a reduction. The Group’s inventories decreased
by £2.4 million to £7.4 million (2022: £9.8 million) with trade and other
receivables decreasing to £87.4 million (2022: £96.2 million) and a
decrease in trade and other payables to £92.5 million (2022: £100.6
million) as oil and commodity prices reduced.
Net cash (excluding lease liabilities) increased by £7.3 million to £16.3 million
(2022: net cash £9.0 million), as a result of ongoing disciplined cash
management, a strong trading performance and some short-term working
capital benefits due to the timing of the year end.
The deficit of the Group’s defined benefit pension scheme increased
by £0.3 million to £9.6 million (2022: £9.3 million). The value of pension
scheme assets decreased by £10.1 million to £29.6 million (2022:
£39.7 million) as a result of lower asset values. The value of the scheme
liabilities decreased by £9.8 million to £39.2 million (2022: £49.0 million)
driven by a significant increase in the discount rate used to calculate
the present value of the future obligations (2023: 5.35%; 2022: 3.45%).
The discount rate is based on the yield available on AA rated corporate
bonds, which have increased during the year.
Group results for the year ended 31 May 2023
Revenue
Cost of sales and administrative expenses
Headline operating profit¹
Exceptional items
Amortisation of acquired intangibles
Operating profit
Financing costs
Headline profit before tax¹
Exceptional items
Amortisation of acquired intangibles
Net finance cost in respect of defined benefit
pension scheme
Profit before taxation
Income tax expense
Profit for the year
Headline EPS¹
Diluted headline EPS¹
Dividend per share
Headline dividend cover¹
Headline interest cover
2023
£m
1,053.9
(1,032.9)
2022
£m
878.6
(865.4)
21.0
—
(0.4)
20.6
(1.7)
19.6
—
(0.4)
(0.3)
18.9
(4.0)
14.9
31.4p
31.3p
7.8p
4.0
26.3
21.8
(8.3)
(0.3)
13.2
(1.2)
20.9
(8.3)
(0.3)
(0.3)
12.0
(3.6)
8.4
35.0p
34.8p
7.5p
4.6
54.5
1
Headline operating profit is statutory operating profit of £20.6 million (2022: £13.2 million) before
exceptional items of £Nil (2022: £8.3 million) and amortisation of acquired intangibles of £0.4
million (2022: £0.3 million). Headline profit before taxation is statutory profit before taxation of
£18.9 million (2022: £12.0 million) after adding back the net finance cost in respect of the Group’s
defined benefit pension scheme of £0.3 million (2022: £0.3 million), the exceptional items and
amortisation of acquired intangibles. Headline EPS also takes into account the taxation effect
thereon. Headline dividend cover is calculated using diluted headline EPS.
Balance sheet as at 31 May 2023
Tangible and intangible fixed assets
Right of use assets
Net working capital
Reimbursement assets
Derivative financial instruments
Net cash (excluding IFRS 16 lease liabilities)
Lease liabilities
Provision for liabilities
Current income tax liabilities
Deferred income tax liabilities
Retirement benefit obligations
2023
£m
75.5
29.1
2.3
1.7
0.1
16.3
(29.8)
(2.7)
(0.8)
(4.2)
(9.6)
2022
£m
68.1
27.5
5.4
2.8
0.2
9.0
(28.2)
(3.8)
(0.4)
(3.2)
(9.3)
Net assets
77.9
68.1
Cash flow and banking facilities
The closing net cash (excluding IFRS 16 lease liabilities) was £16.3 million
(2022: net cash £9.0 million).
The cash impact of working capital movements was a cash inflow of £4.1
million. Net cash generated from operating activities and after IFRS 16
lease payments was £22.6 million (2022: £21.3 million) representing a
cash conversion ratio of 107.6% of headline operating profit (2022: 97.7%).
Net capital expenditure in the year at £2.1 million (2022: £3.2 million)
was lower than the annual depreciation charge, excluding IFRS 16
depreciation, of £4.8 million (2022: £4.6 million).
The Group’s banking facilities, totalling £61.0 million, were renewed in
May 2023 and are committed through to 31 May 2026 with the exception
of the bank overdraft facility of £1.0 million which is renewed annually.
There remains substantial facility headroom available to support the
development of the Group. Within the total facility of £61.0 million, the
Group has an invoice discounting facility, the availability of which
depends on the level of trade receivables available for refinancing and
which is subject to a maximum drawdown of £50.0 million. In addition,
the Group has agreed an accordion of £10.0 million on each of the invoice
discounting facility and the revolving credit facility. The banking facilities
are provided subject to ongoing compliance with conventional banking
covenants against which the Group has substantial levels of headroom.
NWF GROUP PLC NWF.CO.UK
25
Strategic report Group financial review continued
Cash flow and banking facilities continued
Cash flow and banking facilities for the year ended 31 May 2023
Operating cash flows before movements in working capital and provisions
Working capital movements
Interest paid
Tax paid
Net cash generated from operating activities
Capital expenditure (net of receipts from disposals)
Acquisition of subsidiaries – cash paid (net of cash acquired)
Net cash used in investing activities
Net decrease in bank borrowings
Repayment of capital element of leases
Dividends paid
Net cash used in financing activities
Net increase in cash and cash equivalents
Cash and cash equivalents at beginning of year
Cash and cash equivalents at end of year
2023
£m
32.9
4.1
(1.4)
(3.1)
32.5
(2.2)
(9.5)
(11.7)
—
(9.9)
(3.7)
2022
£m
34.4
(0.7)
(0.9)
(2.7)
30.1
(3.2)
—
(3.2)
(9.5)
(8.8)
(3.5)
(13.6)
(21.8)
7.2
9.1
16.3
5.1
4.0
9.1
Going concern
The Group has an agreement with NatWest Group for credit facilities
totalling £61.0 million. With the exception of the bank overdraft facility
of £1.0 million, which is renewed annually, these facilities are committed
through to 31 May 2026. The Group’s banking facilities, provided by
NatWest Group, were renewed on 31 May 2023 and are committed until
31 May 2026. The Group is profitable, cash-generative, has a strong
balance sheet position and a good relationship with its lender. As at
31 May 2023, the Group had available funds of £77.3 million (based on
cash balances, invoice discounting availability, RCF and overdraft
facilities), against which the Group was utilising £Nil.
The Board has prepared cash flow forecasts for the period to 31 May 2025.
Under this base case scenario, the Group is expected to continue to
have significant headroom relative to the funding available to it and to
comply with its banking covenants.
The Board has also considered a severe downside scenario based on
a significant and sustained reduction in Fuels’ profitability alongside
underperformance in Food and Feeds. This downside scenario excludes
any mitigating actions that the Board would be able to take to reduce
costs. Under this scenario, the Group would still expect to have
sufficient headroom in its financing facilities.
Accordingly, the Directors, having made suitable enquiries, and based
on financial performance to date and forecasts along with the available
banking facilities, have a reasonable expectation that the Group has
adequate resources to continue in operational existence for the
foreseeable future. The Group therefore continues to adopt the going
concern basis of accounting in preparing the annual financial statements.
Share price
The market price per share of the Company’s shares at 31 May 2023 was
259.5p (2022: 220.0p) and the range of market prices during the year
was between 220.0p and 286.0p.
Chris Belsham
Chief Executive Designate
1 August 2023
26
NWF GROUP PLC ANNUAL REPORT AND ACCOUNTS 2023
Principal risks and uncertainties
A robust risk
management process
Effective risk management aids decision making, underpins the delivery
of the Group’s strategy and objectives and helps to ensure that the risks
the Group takes are adequately assessed and actively managed.
Risk management framework
Identify risk
• Divisional reviews
• Executive and Non-Executive Directors
• External specialists
Assess risk
Impact
•
• Likelihood
Respond
• Avoid
• Mitigate
• Transfer
Implement mitigation
• Controls
• Designated owner
Review performance
• Risk and controls testing
• Updates to Audit Committee
Risk management framework
The Board is ultimately responsible for the Group’s risk management
framework. The risk management process involves the identification
and prioritisation of key risks, and the development of appropriate
controls and plans for mitigation, together with a comprehensive
system of review. There are a number of ways in which risks are
identified and assessed across the Group.
At a divisional level, the management teams are responsible for
identifying and assessing new risks, as well as monitoring existing risks.
Risks are assessed using consistent measurements of impact and
likelihood. Changes to existing risks, the emergence of new risks and
plans for mitigation are discussed at monthly management meetings
held with the Executive Directors, and recorded in the respective
divisional risk register, as appropriate. The divisional management
teams are responsible for the maintenance of their risk register.
Each divisional risk register is reviewed twice a year by the
Executive Directors.
At a Group level, there is a continuous process of considering risk.
New and emerging risks are identified through the reviews conducted
at a divisional level and the experience brought by the Executive and
Non-Executive Directors and as a result of the engagement of certain
external specialists in areas including IT security, health and safety,
pensions, taxation and climate. As at divisional level, each risk is
assessed based upon its impact and likelihood. The Group maintains a
consolidated risk register whereby each recorded risk has a designated
owner who is responsible for ensuring that effective controls are in
place to mitigate the risk. The consolidated Group risk register is
reviewed at least twice a year by the Audit Committee.
The Board obtains assurance that the risk management and related
control systems in place are effective through a rolling programme of
risk and controls testing across the Group and internal control updates
to the Audit Committee at each meeting. Further details can be found
on page 61.
Whilst we consider the transitional risks of climate change a principal
risk, this year we report for the first time our TCFD disclosures, in which
we expand upon this to include the physical and transitional risks and
opportunities associated with climate change in further detail. For
further information please see pages 48 to 51.
As with all businesses, the Group is affected by a number of risks and
uncertainties, some of which are beyond our control. The table overleaf
shows the principal risks and uncertainties which could have a material
adverse impact on the Group. This is not an exhaustive list and there
may be risks and uncertainties of which the Board is not aware, or
which are believed to be immaterial, which could have an adverse effect
on the Group.
NWF GROUP PLC NWF.CO.UK
27
Strategic report Principal risks and uncertainties continued
Risk impact key
Increased
No change
Decreased
1. Commodity prices and volatility in
2. Transitional risks of climate change
3. Pension scheme
raw material prices
volatility
The Group’s Feeds and Fuels divisions operate
in sectors which are vulnerable to volatile
commodity prices both for fuel and for
raw materials.
Increases in the ongoing deficit associated with
the Group’s defined benefit pension scheme
would adversely impact the strength of the
Group’s balance sheet and could lead to an
increase in cash contributions payable
by the Group.
The long-term profitability of our current
businesses is more likely to be impacted by
Government strategy and policy in relation to
the decarbonisation of the economy, rather than
as a direct impact of climate change. The view of
the Board is that the main risk to the Group is a
transitional risk as the Government introduces
policies which could negatively impact
the Group.
There are also potential additional costs to the
Group, arising from the need to redesign and
replace infrastructure as a result of ambitions
towards decarbonisation.
The Group maintains close relationships
with key suppliers, enabling optimal negotiated
prices, and where appropriate implements
purchasing framework agreements. The Feeds
business utilises forward contracts for key raw
materials to ensure that the impact of volatility
can be partially mitigated through committed
prices and volumes.
Multiple sources of supply are maintained for all
key raw materials.
The Directors monitor the regulatory
environment on an ongoing basis to identify and
anticipate changes in requirements which may
impact the Group and also consider the impact
on the financial statements.
For consideration of the longer-term impacts of
climate-related risks on the demand for oil, see
the CEO’s Q&A on page 8.
The defined benefit pension scheme has been
closed to new entrants since 2002 and closed to
future accrual from April 2016. Regular meetings
are held with both the scheme’s trustees and
professional advisors to monitor and review
the investment policy, the Group’s funding
requirements and any other available
opportunities to mitigate this risk.
t
c
a
p
m
i
d
n
a
n
o
i
t
p
i
r
c
s
e
d
k
s
i
R
s
n
o
i
t
c
a
g
n
i
t
a
g
i
t
i
M
e
g
n
a
h
C
Increases in commodity prices have been
successfully managed through the year in Fuels.
Increases in commodities impacted the
performance of Feeds during the first half of the
year but were successfully managed in the
second half.
Changes in the regulatory environment and a
focus on decarbonisation of the economy may
result in a long-term risk to Group profitability.
Remains a principal risk.
r • Brent Crude oil prices
• Raw material commodity prices
k
s
i
r
y
e
K
o
t
a
c
d
n
i
i
• Government consultations and ambitions
towards decarbonisation
• RPI/CPI inflation rates
• Mortality rate assumptions
• Scheme asset performance
The Executive team meets with the senior
management teams in each division each month
to review and discuss performance, including
consideration of the impact of input price
volatility.
e
c
n
a
n
r
e
v
o
G
t
h
g
i
s
r
e
v
o
The Board is responsible for managing the
long-term transitional risks to the Group.
The Executive team provides the Board
with regular updates from meetings with
the scheme trustees and advice taken from
professional advisors.
28
NWF GROUP PLC ANNUAL REPORT AND ACCOUNTS 2023
4. Recruitment, retention and
development of our key people
5. Infrastructure and IT systems
6. Non-compliance with legislation
and regulations
Recruiting and retaining the right people
is crucial for the success of the Group and
its development.
Furthermore, the Group is entering a stage of
transition at the Board and senior executive
level as a consequence of planned retirements.
There is a risk around a limited number of key
executives across the Group.
IT system failures or business interruption
events (such as cyber incidents) could have a
material impact on the Group’s ability to
operate effectively.
The Group operates in diverse markets and each
sector has its own regulatory and compliance
frameworks which require ongoing monitoring
to ensure that the Group maintains full compliance
with all legislative and regulatory requirements.
Any incident of major injury or fatality or which
results in significant environmental damage
could result in reputational or financial damage
to the Group.
Remuneration policies are regularly reviewed
to ensure employees are appropriately
incentivised. A succession planning exercise
has been undertaken, with a Group succession
plan developed which identifies and seeks
to address any gaps. Key appointments are
approved by the Nomination Committee.
The Remuneration Committee also ensures
that it receives appropriate benchmark data
which is used in the monitoring and formulation
of remuneration policy for key employees
and executives.
The Group has internal IT support teams
together with close relationships with key
software vendors and consultants. Significant
investment has been made by the Group in
upgrading and maintaining its core IT systems in
each of the three operating divisions following
the cyber incident in the prior year. During the
year, the Group appointed a Chief Information
and Digital Officer (‘CIDO’) to further strengthen
IT leadership at a senior level and has continued
its relationship with its external Chief
Information and Security Officer (‘CISO’).
Expertise within the operating divisions
is supplemented by ongoing advice from
professional advisors and the involvement
of the Head Office function which closely
monitors existing business practices and any
anticipated changes in regulatory practices
or requirements.
The Group employs appropriately qualified
and experienced health and safety personnel
and retains health and safety specialists to
ensure compliance.
Remains a principal risk.
Remains a principal risk.
Remains a principal risk.
t
c
a
p
m
i
d
n
a
n
o
i
t
p
i
r
c
s
e
d
k
s
i
R
s
n
o
i
t
c
a
g
n
i
t
a
g
i
t
i
M
e
g
n
a
h
C
r • Key executive remuneration
• Executive retention rate
• Executive objective achievement
o
t
a
c
d
n
i
i
k
s
i
r
y
e
K
• IT investment as a proportion of Group
operating profit
• Number of LTIs/RIDDORs
• Employee training hours
• Number of HMRC inspections
The Remuneration Committee meets three
times a year and is responsible for reviewing
and approving executive level recruitment and
remuneration policies.
The Group Chief Information and Digital Officer
(‘CIDO’) and Chief Information and Security
Officer (‘CISO’) provide regular updates to the
Executive team and the Board.
Divisional Managing Directors are responsible
for compliance with laws and regulations and
provide regular updates to the Board via the
Company Secretary.
e
c
n
a
n
r
e
v
o
G
t
h
g
i
s
r
e
v
o
NWF GROUP PLC NWF.CO.UK
29
Strategic report
Principal risks and uncertainties continued
Risk impact key
Increased
No change
Decreased
7. Impact of weather on earnings volatility
8. Strategy development and change management
The demand for both the Feeds and Fuels divisions is impacted by weather
conditions and the severity of winter conditions, which directly affect
the short-term demand for heating oil and animal feeds. The inherent
uncertainty regarding weather conditions represents a risk of volatility
in the profitability of the Fuels and Feeds divisions.
Significant development of the Group is only achievable via a significant
acquisition or several smaller transactions. The current strategic plan
is focused on Fuels acquisitions, which tend to be smaller and therefore
do not represent a significant risk on an individual basis.
Whilst the Fuels division seeks to mitigate this risk through the provision of
a range of fuels including commercial fuels, there will always be volatility in
the profitability of the Fuels division related to weather. The Feeds division
seeks to mitigate the extent of weather conditions on the profitability of the
business through its concentration on the key dairy sector where there is a
strong underlying demand.
The Board maintains oversight of Group strategy development. The Group
management team is engaged in ongoing review of competitor activity,
development, acquisition and market opportunities. All potential
acquisitions are subject to a review of their ability to generate a return
on capital employed and their strategic fit with the Group. The Group
conducts appropriate internal and external due diligence prior to
completing any acquisition.
Remains a principal risk in Fuels and Feeds.
Remains a principal risk.
t
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a
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o
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p
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s
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s
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c
a
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t
a
g
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t
i
M
e
g
n
a
h
C
r • Volatility of earnings
• Number and severity of weather events
k
s
i
r
y
e
K
o
t
a
c
d
n
i
i
• Performance of acquisitions against business case
The Executive team meets with the senior management teams each month
to review and discuss performance, including consideration of the impact
of weather events on earnings volatility.
The Executive team performs periodic strategic reviews of the Group and
presents these to the Board for discussion and debate.
e
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30
NWF GROUP PLC ANNUAL REPORT AND ACCOUNTS 2023
ESG
Strengthening our approach to ESG
Our ESG strategy was launched in 2020 after conducting a materiality
assessment that looked at defining what mattered most to our stakeholders,
both internally and externally. As outlined below, there are a number of material
issues that have been defined against each pillar, these are our top priorities
across the business and where we feel we can have the greatest impact.
We’ve had fantastic engagement with the strategy since it launched and we
have been strengthening our approach to effectively deliver results against our
targets. Key to this has been building a strong governance mechanism.
Strategic objectives
People material issues:
• Employee engagement
• Training and development
• Diversity and inclusion
Create a culture
of safety
Safety material issues:
• Safety first
• Road risk management
• Fleet management
Invest in
our people
Build strong
partnerships
Environment material
issues:
• Operating responsibly
• Climate change and carbon
Respect the
environment
Partnerships material
issues:
• Customer relations
• Supply chain management
• Community relations
Sustainability governance
Strengthening our approach to how we govern sustainability has
been a primary focus for the Group this year. We believe that by
building the right structures across the business it will help improve
progress against our long-term ambitions, ensure the quality of our
sustainability reporting and also encourage our employees to do
more for good.
The Board has overall responsibility and provides oversight for the
Group’s sustainability performance. This includes the approval of
targets and KPIs to measure progress and to ensure the correct level
of funding and resourcing is provided to ensure the Group achieves
consistent results across all four sustainability pillars.
The ESG Steering Committee consists of representatives from across
all three divisions and it is responsible for implementing the Group’s
sustainability strategy. Key responsibilities include identifying and
implementing new initiatives, providing training and support to areas
of the business that need upskilling and monitoring data to ensure
progress is being achieved.
The ESG Steering Committee is also responsible for creating separate
working groups which use their expertise to drive improvements and
progress sustainability initiatives within the Group. During the year,
a specific focus has been on fleet efficiency and utilisation which led
to a working group with particular expertise in this area working
to identify potential improvements for the divisions.
NWF GROUP PLC NWF.CO.UK
31
ESG framework ESG continued
The ESG Steering Committee meets monthly and includes the following individuals:
Board
For details of the Board see pages 52 and 53
ESG Committee
• Richard Whiting, Chief Executive
• Chris Belsham, Chief Executive designate
• Rob Andrew, Company Secretary
• Dave Walmsley, Fuels Managing Director
• Angela Carus, Food Managing Director
• Andrew Downie, Feeds Managing Director
• Samantha Douglas, Group Financial Controller
• Annette Dale, Deputy Company Secretary
Divisional leadership
Fuels
Food
Feeds
Targeted actions
For more information on TCFD see pages 48 to 51
A requirement when forming this Committee was to ensure it included
the appropriate mix of skills, experience, and operational and
commercial knowledge to address the ESG risks and opportunities
relevant to NWF. We recognise that to realise the full value from our
sustainability strategy, we must continue to identify opportunities,
develop initiatives and embed these throughout our businesses and
operations with progress regularly reported back to the Board; the ESG
Steering Committee plays a key role in achieving this.
The Chief Exexcutive designate, in his capacity as Group Finance Director
has been delegated the responsibility for climate-related issues and the
Group’s ESG strategy. The Group Finance Director briefs the Board on the
work of the ESG Steering Committee. The Board has the ultimate
responsibility for reviewing the appropriateness of climate risk
management processes and controls in place within the Group.
A key development in the year has been the completion of our first TCFD
disclosures, in compliance with The Companies (Strategic Report)
(Climate-related Financial Disclosure) Regulations 2022, Sections 414C,
414CA and 414CB of the Companies Act 2006 to place requirements on
certain publicly quoted companies and large private companies to
incorporate TCFD-aligned climate disclosures in their annual reports.
Key achievements
Through the ESG Steering Committee, we have progressed a number of
workstreams during the year in order to improve the value added by our
sustainability strategy. These workstreams have included:
• engaging with our divisions to measure the metrics that have been
defined as the most relevant indication of performance against our
four strategic pillars;
• improving the quality of our data collection by requiring all divisions
to use a template of agreed metrics for reporting;
• the creation of a new supplier due diligence process and specifically
the introduction of a Supplier Code of Conduct and risk-assessed
approach to further supplier due diligence;
32
NWF GROUP PLC ANNUAL REPORT AND ACCOUNTS 2023
• the development of health and safety culture and structure, including
through holding intra-group workshops to provide opportunities to
share best practice and have live question and answer sessions; and
• investment in people and their learning and development to create
a motivated and sustainable workforce.
Given the diverse nature of our three operations, our focus, having already
established relevant and appropriate metrics, has been to measure and
understand them as we work towards setting targets to enable our
ambitious 2040 net zero target. To strengthen our understanding of how
we can measure the targets, subject matter experts from across the
Group were invited to share their knowledge with the Committee on
topics such as improving fuel efficiency to help upskill the Committee
members in more technical areas of expertise. Our ESG update on pages
31 to 42 comprises predominantly Group consolidated metrics, but we
also include a number of division-specific measures where we have
concluded these are more appropriate and insightful.
Having established a reporting framework and spent time embedding
this in our monthly reporting cycle to the Board, the ESG reporting now
sits alongside our financial reporting. Furthermore, another significant
area of focus for the ESG Steering Committee has been identifying,
developing and progressing the key initiatives that will drive
performance against these metrics. These are reported in further detail
over pages 31 to 42.
Finally, we have further developed our ESG Roadmap, in which we
reflect on our progress to date and begin to map out the work the Group
plans to undertake over the next two years, and in the longer term, in
order to make progress towards our 2040 ambitions. Our ESG Roadmap
to 2040 is detailed on pages 34 and 35.
What we have achieved so far
The Group has made significant progress on its ESG framework in 2023.
Create a culture of safety
The health, safety and welfare of our employees and the wider
community are a top priority in our operations across all of our
divisions. Our safety practices are overseen by Health and
Safety Officers and are assisted by the engagement of
specialist external advisors. Regular audits are undertaken as
well as internal monthly and external annual reporting to the
Board. Whilst the incidence of RIDDOR reportable accidents
has disappointingly increased in the current year, we are
confident that this is not an indication of a less safe working
environment following a root cause analysis of each incident.
For more information see page 36
Number of RIDDORs
17+88.9%
23
22
21
17
9
12
Invest in our people
Our long-term success is dependent upon our people.
We are committed to building a workforce for the future
where our people are healthy and happy and can fulfil
their potential. We recognise that engaged employees,
who feel valued, are crucial to our business, and it also
means they continue to be motivated and deliver the
best possible service to our customers. This year
through targeted actions, we have successfully
increased our eNPS score, and reduced our
voluntary labour turnover.
For more information see pages 37 and 38
Build strong partnerships
The strength of our partnerships is at the heart of every
decision we make. We continue to seek new ways to
collaborate and innovate with our customers and
suppliers to deliver long-term sustainable value. A key
work flow this year has been the introduction of our
Supplier Code of Conduct to codify our commitment to
conducting our business sustainably and responsibly.
For more information see page 39
Employee Net Promoter Score
6.8
6.0
6.8+13.3%
23
22
Group OTIF
86.0%
2022: 82.9%
Respect the environment
We strive for continual improvement when it comes to
our environmental performance, monitoring carbon
emissions and waste across our supply chain and
promoting a healthy environment.
For more information see pages 40 and 41
Scope 1, 2 and 3 emissions (tCO2e)
29,374
-2.3%
23
22
21
29,374
30,062
30,699
NWF GROUP PLC NWF.CO.UK
33
ESG framework ESG continued
Our ESG Roadmap to 2040
Our sustainability progress and future goals
Since our last report, we have further developed our commitment to delivering
long-term sustainable value by defining our 2040 ambitions and aligning our
reporting measures to drive progress towards them. Critical to our success is
collaboration between our divisions and key stakeholders and our focus going
forward will be to define key milestone targets against which we can measure
our progress.
Strategic objectives
Create a culture of safety
Build strong partnerships
Invest in our people
Respect the environment
Where we are now?
What will we do over the
next two years?
2023
2024
2025
• Committed to four long-term ESG ambitions including
a net zero target.
• Identification of key ESG reporting measures across four
strategic objectives and embedded into monthly reporting.
• Initial target setting and specific ESG initiatives identified.
• Development of the measurement of our metrics.
• Embedded ESG Steering Committee.
• Preparation of our first TCFD disclosures.
• Introduction of our Group-wide Supplier Code of Conduct.
• Continued improvement of our near miss reporting and
embedding a culture of safety.
• Measurement of customer NPS score through the Happiness Index.
• Development of our TCFD disclosures.
• Further development of ESG initiatives.
• Embedding ESG initiatives within the NWF business model.
• Roll-out of near miss reporting across the Group.
• Continued investment in fleet and trialling of emerging technologies.
• Measurement of our employee population as we work toward
the creation of a diversity and inclusion policy.
• Implementation of new learning and development programmes
for our people.
Key achievements
Key targets
Key safety metrics defined and health and safety-specific
initiatives discussed monthly by the ESG
Steering Committee.
The Group has created a new supplier due diligence
process and has shared our Supplier Code of Conduct
with all our suppliers during FY23.
Improved our eNPS score by 0.8 points through targeted
actions across the Group to demonstrate our investment in
our people and to grow our culture.
An assessment of environmental impact (including carbon
emissions impact) is now included in all major capital
investment projects.
For more information on our ESG initiatives see pages 36 to 41
Aim to reduce number of road accidents, lost time injuries
and RIDDORs from current reported metrics.
Maintain and improve OTIF scores and, having provided
our Supplier Code of Conduct to our suppliers, ensure this
is maintained and provided to all new suppliers.
Roll out further employee engagement surveys and identify
key areas to improve employee satisfaction and wellbeing.
Develop our diversity and inclusion strategy. Set a target
for our net promoter score by division.
100% of our fleet to meet EURO 6 standards and focus on
driver behaviour to improve MPG.
2020 baseline metrics
• 1,517 driver training hours in Food. Improved to 10,225 in 2023.
• 17 RIDDORs. Now at 17 at 31 May 2023.
• 18 Feeds Academy Trainees. Total trained to date 33.
• Total emissions of 31,533tCO2e. Decreased by 6.8% to 31 May 2023.
• 21.21 tCO2e/sq ft1 reduced to 13.61 tCO2e/sq ft1 at 31 May 2023.
1
tCO2e/year defined as tonnes of CO2 equivalent per year.
34
NWF GROUP PLC ANNUAL REPORT AND ACCOUNTS 2023
ESG initiatives developed during 2023
Supplier Code of Conduct
For more information
regarding building strong
partnerships see
page 39
Development of our Health
and Safety Charter
Development of our
TCFD disclosure
Enahncing our recording
of metrics
For more information
regarding this see
page 36
For more information
regarding TCFD see
pages 48 to 51
For more information on
our ESG initiatives during
2023 see pages 36 to 41
S uppliers
s
Em plo y e e
C
o
m
m
u
n
i
t
y
Our 2040 ambitions
Zero harm
Reduce accidents and incidents to a
minimal level with a zero-harm target.
Opportunities for all
Deliver a culture of equality, diversity and
inclusion supported by a programme of
development in place for every employee.
Leverage business partnerships
Develop, test and adopt emerging technologies
to support sustainable delivery and value for our
customers.
Net zero emissions
Achieve net zero carbon emissions
within our own operations by 2040.
S
h
a
r
e
h
old
ers
u sto m ers
C
Environm e n t
What are our medium-
term commitments
and ambitions?
2026>
Embed a behavioural safety approach to
encourage positive, open dialogue about
safety in all our operations.
Improve standards and policies, risk
assessments and collaboration with our
supply chain to maximise positive impacts
for our stakeholders.
Broaden our training and professional
development programmes and wider
employee wellness initiatives.
Continue to invest in the latest truck
technology and fuel sources, and plan
for renewable energy transition.
Building Strong
Partnerships
During the year we have issued a ‘Supplier
Code of Conduct’ to all of our suppliers,
which sets out our commitment to
conducting business sustainably,
responsibly and to the highest
professional and ethical standards.
Annette Dale, Deputy Company
Secretary commented ‘the successful roll
out of our code of conduct sets out the
minimum standards that must be met by
any party wishing to supply products or
services to the Group. Positively we have
had strong engagement from our
supplier base.’
Read more on page 39
NWF GROUP PLC NWF.CO.UK
35
ESG framework ESG continued
Create a culture of safety
Implement a safety-first approach
We implement a safety-first approach in all
activities and our 2040 ambition is to reduce
accidents and incidents to a minimal level,
with a zero-harm target.
Focus on road safety
A common feature of our three divisions is
their fleet and across the Group we operate
over 300 commercial vehicles. Road safety
for our employees and the general public is
therefore of significant importance. All safety
incidents, including personal injuries, product
spills, road traffic accidents and near misses,
are recorded and thoroughly investigated
to identify the underlying causes, control
weaknesses and learn from any errors.
Health and safety information is reported
to the Board monthly, with any incidents
reported immediately and an improvement
plan outlined. We continually work to improve
our performance towards a goal of zero harm.
Progress in 2023
During the year, we have identified the key
reporting measures we will use to monitor
our progress as a Group with regard to safety.
The following initiatives are examples of the
progress we have made in championing safety
across the Group:
• Roadmaps to ISO 14001 are in place for Food
and Feeds accreditation, with Fuels
retaining its compliance status.
• Fuels maintained its ISO 45001 and 9001 ratings.
• All of the Food and Feeds fleet and 95% of
the Fuels fleet is EURO 6 compliant, which
will increase as the fleet is replaced with
newer vehicles.
• Food achieved its BRCGS supply chain
assurance AA rated standard.
• Regular health and safety audits of key
locations by both internal and external parties.
• Food became an accredited member of the
‘Driver Vehicle and Standards Agency
Earned Recognition’ scheme.
• Monthly reporting to the Board with an
annual review by external advisors.
The Group monitors accidents and injuries in
line with the Reporting of Injuries, Diseases
and Dangerous Occurrences Regulations 2013,
and the number of reportable incidents across
the Group in the year ended 31 May 2023 was
seventeen (2022: nine).
Our 2040 ambitions
Zero harm
Reduce accidents and incidents to a minimal
level with a zero-harm target
Number of accidents per 1m km
7.142022: 3.81
Number of driver training hours per
year
10,225
2022: 7,034
LTIs
16.1
2022: 23.1
RIDDORs
172022: 9; 2021: 12
Focus on:
Evolution of H&S
Dawn Davies, who featured in our Annual Report and Accounts last year and was
promoted to Health and Safety Manager in June 2023, shares an update on the
progress made in Feeds on health and safety initiatives during the year.
'Since last year we’ve been embedding our 'zero-harm' safety first strategic
objective across the Feeds business. We have enhanced our communications,
with health and safety now featuring at every monthly floor briefing. Our
in-house near miss reporting is now fully embedded and we have seen the
benefits of it over the past year; for example the number of near misses
reported has increased by 88.0% when comparing this year to last year.
‘Our induction and training materials have been improved to include hazard
tests, and we’ve put in additional back stop systems to our elevators and added
flameless venting panels. We’ve also been working in collaboration with an
industry-wide body delivering guidelines for safe farm operating, to ensure
that our drivers are safe when delivering feed.'
The success of near miss reporting in the Feeds division was discussed at an
ESG Steering Committee in early 2023 and a decision was made to roll out near
miss reporting across the Group.
36
NWF GROUP PLC ANNUAL REPORT AND ACCOUNTS 2023
Invest in our people
Progress in 2023
Engagement with our employees remains
paramount to our success.
The following further initiatives demonstrate
the outcomes of engagement with our
employees and further development of ESG
initiatives to develop our people and promote
wellbeing across the Group:
• During the year, the Group has continued our
regular programme of free fitness classes
provided by a local team of personal trainers
in our on-site studio at Wardle and Crewe.
We have invested in equipment to enhance
the performance and quality of these
sessions. We have also invested in and
updated our gym app which provides access
to virtual workouts for all our colleagues
working across our various locations.
• The Group continues to partner with ‘The
Happiness Index’ and in 2022 rolled out the
first in a new programme of Group-wide
employee engagement surveys. The second
survey took place in spring 2023. The results
of these surveys will enable NWF to focus on
areas of importance to our people and drive
improvements in their experience at work.
• Our Feeds Sales Training Academy
continues to thrive in its fourth year and to
produce the Feeds advisors of the future.
During the year, the Fuels Aspire
programme has been introduced,
developing the future managers and leaders
of the business. The inaugural cohort of 12
individuals have been through a 12-month
programme, learning about all aspects of
the business and honing their professional
skills. The success of the programme has
been demonstrated with three promotions
from within the cohort. For further details
see below.
• We welcomed the ‘Health and Wellbeing’
bus to the Wardle and Crewe sites, giving
our people access to state of the art health
checks and tests, to aid with early
intervention and education on health.
• Our Food division introduced a bus service
between our Crewe and Wardle sites,
removing c.16 vehicles from the commute
between the two.
• Feeds and Group Head Offices have been
refurbished during the year, providing great
working spaces for our teams to work and
collaborate. We now offer free tea and
coffee to all employees across the Group.
• Across the Group we celebrated 320 employees
(2022: 333 employees) with over ten years’
service, equivalent to 22.8% of our employees.
• The Food and Feeds divisions have
introduced an employee feedback tool,
‘You Said, We Did’, which has seen the
introduction of free period products in
all female toilets.
Our 2040 ambitions
Opportunities for all
Deliver a culture of equality, diversity and
inclusion supported by a programme of
development in place for every employee
Learning and development expenditure
£0.3m2022: £0.3m
Voluntary labour turnover
17.0%
2022: 24.4%
Employee NPS
6.82022: 6.0
Focus on:
Aspire programme
As part of the strategic growth of the Fuels division, the management team
has put in place a bespoke management development programme aimed at
developing and growing the future leaders in the business. Over the course of the
year, participants attend ten workshops covering both personal development and
business knowledge, culminating in a project delivering solutions for existing
business objectives. Bev Monaghan, Learning and Development Manager, said:
‘The first cohort coming through the Aspire programme has been a real success
story; of the 12 participants, we’ve already seen three promotions and we
anticipate more when opportunities arise. Aspire provides the framework for
the essential knowledge, skills and behaviours expected of our leaders.’
Cohort participant Harry Boxall, newly appointed Depot Manager at Evesons Fuels,
also commented:
‘The Aspire development programme, along with completing my supervisor
apprenticeship, is probably the reason I was promoted to Depot Manager so
quickly. The programme covers a lot, from project management and technical
sales to handling difficult conversations and other scenarios. I haven’t yet had the
chance to use all the skills I’ve gained, but they have 100% helped boost my
confidence and build solid foundations for managing the depot.’
NWF GROUP PLC NWF.CO.UK
37
ESG framework ESG continued
Invest in our people continued
Gareth Bell – Microlise Awards 2023
Already acknowledged by the Food division as both an accomplished driver and an
outstanding ambassador, Gareth Bell has now received national recognition of his
aptitude at the 2023 Microlise Awards.
Fleet management in-cab technology supplier Microlise organises the annual
awards to reward outstanding driver performance. Gareth scooped the top
award in the Extra Mile category, which puts the spotlight on the extraordinary
commitment and effort that an individual puts into their working life. This includes
taking their day-to-day duties above and beyond what’s required.
The nomination highlighted Gareth’s dedication, commitment and reliability, and
his position as an excellent role model for other drivers.
As a trusted colleague, he has been assigned challenging customer-focused roles
which included a three-month spell based at a customer site, Arla Foods Settle,
to oversee the smooth passage of a new contract.
Passionate about upholding safety on the road, Gareth arranged a visit to a local
school to highlight the need for vigilance around large vehicles and to point out
potential hazards. He was also nominated for a Microlise Award in 2022 after his
heroic actions supporting and safeguarding a driver who was driving erratically
and dangerously on the motorway due to a serious health condition.
Working as a full-time tramper, spending four nights out in his vehicle each week,
Gareth sets out to Wardle from his home in Anglesey each Monday at 4.00a.m.,
returning home on a Friday evening. He says: 'I can honestly say that I love my job
and there is never a Monday morning when I wake up and dread going to work.'
Gareth originally pursued a profession in accountancy, but his love of driving,
which began with trips out in his dad’s lorry when he was a youngster, soon
found him heading for a career on the road.
Ionela Tone – Everywoman Awards 2023
Ionela Tone moved to the UK from Romania in 2019 after completing a
postgraduate degree in finance and working for a number of companies
in Bucharest, including as a customer service specialist for Vodafone.
In 2020, she joined the Food division as a Warehouse Operative working on
a four-on, four-off shift pattern and after just three months, due to a colleague
unfortunately becoming ill, had the opportunity to work as a Team Leader, initially
in a temporary capacity before being promoted to a permanent role.
During her studies for the ILM Level 3 Diploma in Management, Ionela carried out
a project on warehouse productivity which came to the attention of Warehouse
Operations Director Danny Earp. On the back of this project, Danny saw the
potential for a Warehouse Productivity Analyst and gave Ionela the opportunity
to establish the role.
Following her hard work and tenacity to cement her new role, which has made
a real difference to warehouse productivity, the Company nominated Ionela for
The Warehousing Award – Above and Beyond at the 2023 Everywoman Transport
and Logistics Awards. The awards recognise the industry’s exceptional talent.
Not surprisingly after her prolific career progress, Ionela has been shortlisted
alongside three other industry colleagues for the award and will attend a special
event in London.
Speaking about being shortlisted, Ionela said: ‘Being in the final has made me very
proud; I still can’t believe it! I always thought that the only limits you have are those
that you create. Being a finalist has reinforced this belief which I hope I can pass on
to my colleagues, my friends and, most of all, my two daughters as I would like the
new generation to no longer believe in stereotypes and to be able to create the life
they envision. My dream is to create a place where people will come to work with
the same joy I do.’
38
NWF GROUP PLC ANNUAL REPORT AND ACCOUNTS 2023
Build strong partnerships
Customer relationships
We want to gain a deeper understanding of
our customers’ needs so we can continue to
offer them more choice, better quality and
improved standards, as well as great value.
The following initiatives demonstrate how we
are seeking to improve engagement with our
customers across the Group:
• All three divisions have used the Happiness
Index to assess their customer NPS,
enhancing our understanding of our
customer base and allowing us to further
develop strategies to retain and grow
our business.
• Through regular attendance at trade and
agricultural shows, and its team of sales
reps, the Feeds division has continued
to engage directly with customers.
• Fuels has employed a new Marketing
Director to grow and enhance its
understanding of the marketplace and
support delivery of strategic objectives.
• Food has encouraged its customers to
remove waste from the supply chain and
participate in the FareShare initiative,
delivering almost 2 million meals to those
in need in the lifetime of the project.
Supply chain management
It is critical to NWF that we work together
with suppliers to promote responsible
business practices. As such, we have created
a new supplier due diligence process and
during the year have introduced our Supplier
Code of Conduct, which was issued to all our
suppliers, and a risk assessed approach to
further supplier due diligence. Our Supplier
Code of Conduct codifies our commitment
to conducting our business sustainably,
responsibly, and to the highest professional and
ethical standards and formally establishes the
minimum standards that must be met by any
entity that supplies products or services to the
Group. Building upon this, at the end of the year
we introduced additional due diligence
procedures for those suppliers with the perceived
greatest risk of supply chain modern slavery.
Furthermore, the following ESG initiatives have
been pursued during the year:
• Our Feeds division has completed work with
suppliers to create a range of compound
feeds which do not contain soya or palm
kernel, which have been launched under
the ‘Sustain’ range of feeds.
• Fuels has continued to distribute its
lower carbon part-renewable HVO30
and HVO100 product to commercial and
agricultural customers.
• We have trialled the use of an electric truck
in our Food division, and will bring it into our
fleet to support the Palletline business in
FY24. We are continuing to look at how we
could expand the use of electric trucks
across the rest of the fleet.
Our 2040 ambitions
Leverage business
partnerships
Develop, test and adopt emerging
technologies to support sustainable delivery
and value for our customers
OTIF
Fuels
71.5%
2022: 65.7%
Food
96.4%
2022: 96.7%
Feeds
90.2%
2022: 86.2%
Focus on:
FareShare
Neil Trotter, Transport Operations Director in our
Food Division shared an update on Fairshare:
‘We have a longstanding partnership with FareShare,
a national network of charitable food redistributors.
This year we have been encouraging our customers to
donate their surplus food and have 33 signed up to do
so. We have grown our contributions through joint
marketing campaigns, and are able to deliver the
surplus food to FareShare at cost price or free.
‘The FareShare network includes nearly 9,500
charities and community groups, including food
banks, school breakfast clubs, homeless shelters and
community cafes. It also has trusted status with
supermarkets, meaning the movement of food, which
would have otherwise gone to landfill, is as frictionless
as possible.’
Over the last year we have facilitated our customers
donating 0.4 million meals and over 157,184kg of food.
NWF GROUP PLC NWF.CO.UK
39
ESG framework ESG continued
Respect the environment
Our approach to ‘TCFD’
The Task Force on Climate-related Financial
Disclosures (‘TCFD’) requires companies to
identify, measure, quantify and report upon
the risks and opportunities of climate change.
This year we present our first TCFD disclosures,
in compliance with The Companies (Strategic
Report) (Climate-related Financial Disclosure)
Regulations 2022, Sections 414C, 414CA and
414CB of the Companies Act 2006 to place
requirements on certain publicly quoted
companies and large private companies to
incorporate TCFD-aligned climate disclosures
in their annual reports. Our TCFD Report can
be found on pages 48 to 51.
Below we set out the pillars of UK-CFD
and our approach:
Our 2040 ambitions
Fleet meeting EURO 6 standards
Net zero emissions
Achieve net zero carbon emissions within our
own operation by 2040
97%2022: 94%
Average age of fleet
3.47 years
2022: 3.14 years
LED lighting across sites
92%2022: 58%
MPG
Fuels
9.72
2022: 7.76
Food
10.44
2022: 10.32
Feeds
6.702022: 6.85
Pillars
Recommended disclosure
Governance
Strategy
Disclosure of
governance structures,
oversight and
management
processes in place
to manage climate-
related risks and
opportunities.
Disclosure of the actual
and potential impacts
of climate-related risks
and opportunities
on the organisation’s
businesses, strategy
and financial planning
where material.
NWF alignment
• Responsibility for climate-related issues and our ESG strategy is held
by our Group Finance Director.
• The Board has overall responsibility for reviewing the risk management
processes and controls in place within the Group and ensuring that
they are appropriate, which includes climate-related and ESG risk.
• Our ESG Steering Committee is responsible for reviewing
performance against our KPIs and monitoring the progress of
climate/ESG-related initiatives.
• During the year, a strategy day was held by the Board to consider the
longer-term impacts and opportunities presented by climate change
on the Group.
• Further work has been completed to define our ‘Roadmap to 2040’
and embed climate/ESG-related issues within the Group’s long-term
business model and strategy.
Risk
management
Disclosure of how the
organisation identifies,
assesses and manages
climate-related risks.
• The Group’s risk management programme, which assesses key risks
and the required internal controls, is delegated to Directors and
managers and is reviewed twice annually by the Audit Committee.
• Principal risks, including climate-related risks, are identified and
Metrics and
targets
Disclosure of the
metrics and targets
used to assess and
manage relevant
climate-related risks
and opportunities
where material.
addressed using the risk management process detailed on pages 27 to 30.
• Climate-related risks and opportunities are set out on page 28.
• The Group has outlined its long-term ambitions for 2040, which include
a net zero target.
• Our carbon emissions are disclosed in accordance with
SECR requirements.
• The Group has defined its KPI metrics for ESG reporting.
Further information
Corporate Governance
Statement on pages
55 to 60.
ESG Framework on
page 31.
Principal Risks and
Uncertainties on pages
27 to 30.
Q&A with Chief
Executive on page 8.
Divisional Reviews on
pages 9 to 21.
Roadmap to 2040 on
pages 34 and 35.
Principal Risks and
Uncertainties on pages
27 to 30.
Corporate Governance
Statement on pages
55 to 60.
ESG Framework on
pages 31 to 42.
40
NWF GROUP PLC ANNUAL REPORT AND ACCOUNTS 2023
Focus on:
Alternative energy sources
NWF is committed to investing in the latest technologies to reduce
carbon emissions. Following discussions with our vehicle supplier,
we have successfully trialled a Volvo electric truck that has a range
of 180 kilometres. Whilst the UK doesn’t have the infrastructure in
place to support LGV electric vehicles, we will bring this into our fleet
over the summer and will use this vehicle to support shorter journeys
for the Palletline network.
At the Great Yarmouth fuel depot, HVO100 is now used by the fleet
of six tankers making deliveries to customers. At our Wardle site, the
fuel depot has a dedicated HVO100 tank for use by all three divisions
in on-site vehicles such as shunters and JCBs.
Fleet management
Across our divisions we promote sustainable logistics, investing in
clean fleet and energy initiatives to achieve this. In addition, our
strategy to maximise fleet capacity to minimise empty running miles
provides the best environmental solution, across all our divisions.
Mitigating our carbon emissions
We are challenging ourselves to think differently, and by driving
efficiencies across our operations we aim to minimise the amount
of waste and plastics we produce, use resources more responsibly
and ultimately protect the natural environment.
Our current environmental initiatives include:
• a dedicated tank based at Wardle to allow all site vehicles such
as JCBs and shunters to be fuelled by HVO100 rather than diesel.
There is no upfront cost in switching to this fuel type, albeit the
running costs are slightly higher than diesel;
• continued use in Fuels of HVO100 to fuel its own tankers to make
deliveries to customers from its depot in Great Yarmouth;
• sharing of best practice, including driver debrief programmes
developed in Food being shared with our Fuels division to promote
good behaviours and efficient driving;
• launch of Fusion initiative in Feeds, focusing on reducing the
environmental impact of feed manufacture through a combination
of efficiencies in operations and transport, procurement policies,
diet and feeding habits and on-farm support;
• continued replacement of lighting to LED efficient lighting across
all divisions;
• planned installation of solar panels across a number of our
locations, to increase the amount of clean energy we are able
to use; and
• a commitment to invest in a clean, modern and efficient fleet.
NWF GROUP PLC NWF.CO.UK
41
ESG framework ESG continued
SECR statement
We measure and report our energy
and carbon data across the entire
Group (Food, Fuels and Feeds),
providing comprehensive data to
substantiate our overall
environmental impact.
Our SECR Statement includes all emission sources required under the
2019 regulations for the financial year ended 31 May 2023. Information
regarding energy efficiency action taken during the year can be found
on page 40.
NWF Group generated 29,374 carbon dioxide equivalent tonnes (‘tCO2e’)
of emissions during the year (2022: 30,062). 78% of this energy is
consumed by making deliveries to customers using our transport
fleet. Our transport fleet efficiency is a key part of our energy saving
initiatives, looking for savings through more efficient driving,
investment in clean modern vehicles and optimum routing.
We have chosen two carbon intensity ratios that reflect our business
performance. Our carbon intensity ratio for the year ended 31 May 2023
was 81.94 tCO2e per commercial vehicle (2022: 91.10), and 13.61 tCO2e per
1,000 sq ft of warehouse and office space (2022: 20.22), representing
a 32.7% decrease on last year. This can be partly attributed to reduced
electricity usage as a result of lower volumes of feed manufactured.
In order to calculate the carbon emissions, we have used the emission
factors from the UK Government’s GHG Conversion Factors for Company
Reporting 2021. One of the requirements of the SECR regulations is to
report our total UK energy use in kilowatt hours (‘kWh’); for this we have
used the 2021 conversion factors. The Scope 1 and 2 emissions reported
are for all facilities across the Group under our operational control. This
includes all distribution centres, manufacturing sites, oil depots and
offices, plus fleet under our ownership. Scope 3 transport emissions
relate to those emissions from employees, who use their own or hire car
vehicles used in the course of business. Other fuel emissions include
kerosene used for creating steam in feed manufacturing facilities and
gas oil/LPG used to fuel on-site vehicles. As NWF Group is a UK-based
company, it is not required to report any global activity emissions.
Purchased electricity has been calculated based on locations-based
emissions factors.
Carbon emissions (tCO2e) 1
Transport (Scope 1)
Transport (Scope 3)
Purchased electricity (Scope 2)
Other fuels (Scope 1)
Total emissions
Carbon intensity ratio 1 (tCO2e/commercial vehicle)
Carbon intensity ratio 2 (tCO2e/1,000 sq ft of warehouse and office space)
2022/23
23,058
55
4,108
2,153
29,374
81.94
13.61
2021/22
23,218
33
4,639
2,172
30,062
91.10
20.22
2020/21
22,913
26
5,294
2,466
30,699
101.32
20.65
Total UK energy usage (kWh)
115,531,843
116,737,255
117,717,572
1
tCO2e/year defined as tonnes of CO2 equivalent per year.
Energy consumption
Energy consumption
In line with our target and aim to become net zero as a group, along
with providing tangible examples of the results NWF are achieving.
We would draw the readers’ attention to the results we are already
achieving in energy reduction. In respect of the Carbon Intensity Ratio
1 (tCO2e/commercial vehicle) and Carbon Intensity Ratio 2 (tCO2e/1,000
sq ft of warehouse and office space) we have seen reductions by 10.1%
and 32.7% respectively. We attribute this to the installation of LED
lighting across our sites and depots and continue to look for ways
to reduce our energy consumption further.
42
NWF GROUP PLC ANNUAL REPORT AND ACCOUNTS 2023
Section 172
How we engage with
our stakeholders
NWF Group plc depends on the trust
and confidence of all its stakeholders
to operate sustainably in the long term.
The Group seeks to build strong partnerships, create a culture of safety,
invest in its people, respect the environment in which it operates and
generate sustainable value for shareholders.
The Directors of NWF Group plc (‘the Group’) have discharged their
duties as set out in Section 172(1) of the Companies Act 2006; they
have had regard to the matters set out in Section 172(1) (a) to (f) when
performing their duty to promote the success of the Group for the
benefit of its members as a whole. In doing so, the Directors must
have regard (amongst other matters) to:
(a) the likely consequences of any decision in the long term;
(b) the interests of the Group’s employees;
(c) the need to foster the Group’s business relationships with suppliers,
customers and others;
(d) the impact of the Group’s operations on the community and
the environment;
(e) the desirability of the Group maintaining a reputation for high
standards of business conduct; and
(f) the need to act fairly between members of the Group.
The Board’s understanding of the interests of the Group’s
stakeholders is informed by the programme of stakeholder
engagement detailed overleaf.
Section 172 considerations are embedded in decision making at
Board level and throughout the Group. Examples of how the Directors
discharged their Section 172 duty when taking principal decisions
during the year are set out on pages 46 and 47.
Customers
With over 150 years’ experience in adding value to our
customers’ businesses, our commitment to customer
service remains critical to our success.
Stakeholder expectations
• Reliable service, on time and in full.
• Quality products representing value for money.
• Knowledgeable and responsive teams which provide technical
excellence in their respective fields.
Why we engage
• To reinforce our customer-focused culture and focus on
delivering excellence in customer service.
• To ensure high levels of availability and delivery metrics,
achieving high service levels and delivering value.
• To develop customer-focused solutions, ensuring the Group
understands and responds to evolving customer needs.
• To drive improvements and reduce complaints.
How we engage
• Each division has experienced customer service teams
engaging with customers on a daily basis. Through our network
of local fuel depots, a dedicated customer service team in Food
and on-farm sales representatives in Feeds, we are in constant
communication with our large and diverse customer base.
• Regular monitoring of performance against service level
agreements and quality standards.
• Customer visits and attendance at relevant industry trade fairs
and shows.
• Regular programme of site tours for customers and other
community groups or business partners.
Outcomes of engagement
• Following customer satisfaction surveys performed across the
Group in early 2023, we have an understanding of our customer
views and are able to put targetted actions into place to
enhance our offering.
NWF GROUP PLC NWF.CO.UK
43
ESG framework Section 172 continued
Suppliers
Employees and community
Through collaborative and mutually beneficial
relationships, NWF can continue to deliver
efficient, quality services and high standards
in a sustainable manner.
Stakeholder expectations
• Compliance with contractual terms and conditions.
• Co-operation to allow our suppliers to improve their products
and services and to resolve any issues.
• To be treated fairly.
Why we engage
• To maintain strong relationships to ensure high supplier standards.
• To seek new ways to collaborate and innovate.
• To ensure our suppliers conduct their business in an ethical and
sustainable manner.
• To enable our operations to become more efficient and ensure
continuity of supply and competitive pricing.
How we engage
• Holding regular meetings and/or site visits with key suppliers.
• Feedback from suppliers is monitored and provided to the
Executive Directors who update the Board at regular intervals.
Outcomes of engagement
• The Fuels division is working closely with fuel producers
to develop the next generation of fuels.
• Roll-out over FY23 of our Supplier Code of Conduct
to all suppliers.
Our employees are fundamental to the long-term
success and execution of the Group’s strategy.
Stakeholder expectations
• Fair salary and benefits.
• An inclusive and diverse workplace with opportunities for
personal development and flexible working.
• Job security and satisfaction, with support for wellbeing
and the opportunity for feedback.
Why we engage
• To ensure that all employees are valued and are given the
opportunity to provide feedback and participate in shaping
the development of the Group.
• To underpin our culture of safety and ensure that employees at
all levels in the business play a role in promoting and upholding
a strong focus on health and safety, for the benefit of the Group
and the wider community.
• To ensure we maintain a skilled, technically competent and
motivated workforce and provide appropriate opportunities
for development and personal growth.
• To encourage equal opportunities and a more diverse workforce.
How we engage
• The Chief Executive holds a series of twice-yearly presentations
for staff, where the financial results of the Group and
development of its strategy are shared, with employees invited
to discuss and ask questions.
• Through our partnership with ‘The Happiness Index’ we are able
to invite regular feedback tailored to specific needs.
• At a divisional level, regular employee briefings are conducted,
either via floor briefings or monthly newsletters, to enable
regular sharing of information.
• Intranet, email communication and newsletters are used to keep
employees up to date with divisional and Group activities.
Outcomes of engagement
• We continue to offer an agile working policy to promote flexible
working, and have improved office spaces across the Group.
• We continue to offer our programme of free weekly fitness classes
in our on-site studio, provided by a local team of personal trainers.
44
NWF GROUP PLC ANNUAL REPORT AND ACCOUNTS 2023
Shareholders
The environment
Our aim is to provide a transparent, clear, consistent
message across our communication channels giving
shareholders the opportunity for direct, personal
contact with our senior executives on a regular basis.
We strive for continual improvement when it comes
to our environmental performance, monitoring
carbon emissions and waste across our supply chain
and promoting a healthy environment.
Stakeholder expectations
• For the Group to operate as efficiently as possible and maintain
high environmental standards.
• For the environmental impact of the Group to be minimised.
Why we engage
• To ensure adherence to relevant environmental legislation
and regulations.
• To better understand environmental challenges and how we can
contribute to meeting those challenges.
• To ensure that high environmental standards are respected
at each of the Group’s sites.
How we engage
• We work with our customers and suppliers to improve the
efficiency of our operations.
• We engage with customers to understand environmental
challenges they face and then innovate to develop solutions
to try to alleviate those challenges.
Outcomes of engagement
• Investment in clean, modern fleets.
• Enhancement to trucks to improve efficiency and MPGs.
Stakeholder expectations
• Responsible and sustainable growth ambitions.
• Share price accretion.
• Progressive dividend policy.
• Resilience to adverse market conditions.
Why we engage
• To ensure the Group responds to the evolving needs and
interests of shareholders and aligns its strategy accordingly.
• To communicate and explain how we aim to deliver growth and
create value, by maximising the potential of the business.
• To give shareholders the opportunity for direct, personal contact
with our Board members on a regular basis.
How we engage
• Investor roadshows are held twice a year to coincide with the Group’s
half year and final results, allowing our institutional investors to meet
with the Chief Executive and Group Finance Director.
• Recorded webcasts presenting our half year and final results
are made available for investors through the Group’s website,
nwf.co.uk. The Investors section of the website also includes
access to the Annual Report and Accounts, presentations and
trading updates.
• The AGM provides further opportunity for the shareholder
community to engage directly with the Board of Directors.
Outcomes of engagement
• Engagement with our shareholders has influenced our
acquisition, capital investment and progressive dividend policy.
• As a result of shareholder engagement, we were successful in
being awarded ‘Best Investor Communication Award’ at The AIM
Awards 2022.
See our Roadmap to 2040 on pages 34 and 35
NWF GROUP PLC NWF.CO.UK
45
ESG framework Section 172 continued
Decision making by the Board
Board information
Board strategic discussion
Board decision
• CEO communications re competitive
activity, market trends and analyst reports.
• Professional experience and qualification.
• Training and induction.
• Monthly provision of Board papers
including financial and non-financial
information.
• Advice and presentations by internal
and external subject matter experts.
• The Board satisfies itself that the
information provided is sufficient,
accurate and comprehensive to
support decision making. Further
information is sought, if required.
• Section 172 considerations are taken
into account in the Board’s strategic
discussions, including the long-term
impacts on the Group and
its stakeholders.
• Feedback from outcomes/actions
of decisions is communicated back
to the Board.
• Actions are taken to implement
the Board’s decisions.
Stakeholders
Customers
Suppliers
Employees and community
Shareholders
Environment
Decision 1: Board succession
Section 172 considerations
Likely long-term consequences
Employee interests
Relationships with customers,
suppliers and others
The impact on the community and
environment
Maintaining a reputation for high
standards of business conduct
Acting fairly between members of
the Group
Matter for discussion
Section 172 considerations
Actions and outcomes
The Board considered the appropriate skills,
experience and qualifications necessary for the
Group’s long-term success.
Determining the needs of the Group and its employees
and the need to foster the Group’s relationships with
customers and suppliers were also critical in the
decision-making process.
The Board identifies recruitment,
retention and development of our key
people as a principal risk to the Group
(see page 29). Succession planning
for our senior management team is
therefore a key matter for consideration
and discussion by the Board.
During the year, Richard Whiting,
Chief Executive, announced his
intention to retire from NWF with
effect from March 2024. Following the
recommendation of the Nomination
Committee that Chris Belsham,
formerly Group Finance Director, be
appointed Chief Executive upon
Richard’s retirement, the Board also
considered the successor for the
Group Finance Director position.
An external executive search and leadership
consulting firm was appointed to assist the Board
in the search for the successors to these two key
roles. Having identified the competencies for
both roles following consideration of the needs of
the Group’s stakeholders, the Board accepted the
Nomination Committee’s recommendation that
Chris Belsham, formerly Group Finance Director,
be appointed Chief Executive in March 2024.
Following an extensive search, recruitment
and interview process, Katie Shortland will be
appointed Chief Financial Officer in October 2023.
Katie is an experienced finance and business
leader with extensive experience working in
infrastructure, engineering and manufacturing.
For more information on Chris Belsham, Chief
Executive Designate, see page 52. Further details
on Katie Shortland can be found on page 65.
46
NWF GROUP PLC ANNUAL REPORT AND ACCOUNTS 2023
Decision 2: Acquisition of Sweetfuels Limited
Matter for discussion
Section 172 considerations
Actions and outcomes
A key strategy of the Group is to grow
through acquisition. During the year,
the Group acquired 100% of the share
capital of Sweetfuels Limited, adding
a depot, and bringing a number of
employees, customers and suppliers.
Prior to acquisition, the Board carefully considered the
business case to ensure that our investment would
deliver an appropriate return for our shareholders.
The Board considered the appropriateness of the
post-acquisition model to ensure that its employees
were integrated efficiently into the wider Group ensuring
the long-term success of the depot. The Board considered
the impact to its new customer base and ensured
appropriate plans were in place to notify those
stakeholders of the continuity of supply through the depot.
Sweetfuels Limited was successfully hived up
within four months post-acquisition.
The post-acquisition model was successful in
ensuring our new employees felt welcomed into
the Group, and there was no disruption to supply
for our new customers.
For more information on the acquisition please
see page 62.
Decision 3: ESG and first year of TCFD reporting
Matter for discussion
Section 172 considerations
Actions and outcomes
To ensure that the Group remains
resilient and progresses its ambitious
aim to meet net zero by 2040, the
Board has completed its first year
of TCFD reporting and progressed
its ESG agenda.
In response to the increasing importance of ESG
for employees and shareholders, an ESG Steering
Committee reporting to the Board was introduced in
the previous financial year and has been responsible
for overseeing the Group’s response to ESG and
TCFD disclosures.
In preparing the TCFD disclosures the Board has
considered the appropriateness of the climate-related
risks and opportunities and mitigating actions thereon.
The ESG Steering Committee has met monthly.
The Remuneration Committee has included
ESG-related objectives for the Executive
Directors for FY24. For further details, please see
the Remuneration Report on pages 66 to 69.
For more information on our TCFD disclosure
please see pages 48 to 51.
NWF GROUP PLC NWF.CO.UK
47
ESG framework TCFD
Our approach to TCFD
Governance
The Board is ultimately responsible for the Group’s risk management
framework which includes both climate-related risks and opportunities.
The risks and opportunities relating to climate change are identified,
considered and managed at a divisional level. Divisional management
completes management reporting which includes the climate-related
risks and associated metrics, which are reviewed by an ESG Steering
Committee. The ESG Steering Committee also reviews the ongoing
environmental initiatives which NWF is undertaking.
The ESG Steering Committee meets monthly and includes the following
individuals:
• the Chief Executive and Group Finance Director;
• the Group Financial Controller;
• the Company Secretary and Deputy Company Secretary; and
• the Managing Directors for NWF’s three divisions (Fuels, Food and Feeds).
For more information see page 31
The Group Finance Director has been delegated the responsibility for
climate-related issues and the Group’s ESG strategy. The Group Finance
Director briefs the Board on the work of the ESG Steering Committee. The
Board has the ultimate responsibility for reviewing the appropriateness of
climate risk management processes and controls in place within the
Group. Workshops have been held with the Committee to enhance its
understanding of TCFD and ensure adequate governance.
We have produced disclosures that align with the current TCFD
requirements in compliance with The Companies (Strategic Report)
(Climate-related Financial Disclosure) Regulations 2022, Sections 414C,
414CA and 414CB of the Companies Act 2006 to place requirements on
certain publicly quoted companies and large private companies to
incorporate TCFD-aligned climate disclosures in their annual reports, but
recognise that further work is required for full TCFD disclosure
requirements to be met. We will be reviewing the full disclosure framework
in light of the requirements placed on the Group and will consider where
appropriate enhancements to our current disclosures can be made, which
will include understanding how we can quantify our financial risks.
We have considered how the full requirements of TCFD align to the UK
Companies Act and have presented a ‘Non-Financial and Sustainability
Information Statement’ that we have referenced as ‘TCFD’ throughout this
report that focuses on the 8 disclosure requirements as prescribed by the
Companies Act.
Risk management
Transitional risk of climate change is considered a principal risk for the
Group; therefore, it is governed in line with the Group’s overall risk
management framework. For further details please see page 27.
The risk management process involves the identification and
prioritisation of key risks, the development of appropriate controls and
the plans for mitigation. There are a number of ways in which risks are
identified and assessed and managed across the Group.
At a divisional level, the management teams are responsible for identifying
and assessing new risks, as well as managing existing risks. Risks are
assessed using consistent measurements of impact and likelihood.
Changes to existing risks, the emergence of new risks and plans for
mitigation are discussed at monthly management meetings held with the
Executive Directors, and recorded in the respective divisional risk registers,
as appropriate. The divisional management teams are responsible for the
maintenance of their divisional risk registers. Each divisional risk register
is further reviewed twice a year by the Executive Directors.
At a Group level, there is a continuous process of considering risk. New
and emerging risks are identified through the reviews conducted at a
divisional level and the experience brought by the Executive and
Non-Executive Directors and from the engagement of certain external
specialists in subject areas including climate. The Group maintains a
consolidated risk register whereby each recorded risk has a designated
owner who is responsible for ensuring that effective controls are in
place to mitigate the risk. The consolidated Group risk register is
reviewed at least twice a year by the Audit Committee.
Historically, the risk identification process has reviewed how NWF
will be impacted by Government strategy and policy in relation to the
decarbonisation of the economy, rather than the direct impact of
climate change. In preparation for these reporting requirements, we
have engaged with an external consultant to identify and assess the
impact of climate-related risks. Over time, we will seek to further embed
specific and material climate-related risks and opportunities into our
risk management framework to ensure an integrated approach.
Strategy
We have identified climate-related risks and opportunities over three
time horizons which are defined below:
• short term: up to five years in line with our forecasting cycle;
• medium term: five to ten years; and
• long term: beyond ten years.
NWF is comprised of three divisional business units, which are each
impacted by climate differently. There will be many value creation
opportunities as the world transitions to a low carbon economy;
however, NWF will also be exposed to physical and transition risks. Our
external advisors and we (C.1.4) have identified a range of such risks and
opportunities across different time horizons and indicated our
resilience to the impact of these as listed in the table below.
Risk register
Risk detail
Impact
Transition: Policy and legal
Resilience
(1) Mandates on
regulation of existing
products and services.
Time horizon
Long term
Fuels: A key part of value creation is from the commercial and
domestic oil market. With increased regulation and associated
costs on domestic oil, we would expect to see our customer
base transition their traditional oil boilers to alternative
low-carbon fuels, air or ground source heat pumps, biomass
boilers, resulting in revenue loss. We also anticipate there to be
increasing difficulty in sourcing capital funding for carbon
intensive industries such as Fuels, with increased regulation
and pressure on banks and investors. The impact of increased
regulation would reduce revenue and gross margins.
In response to these risks, we have assessed that our
Fuels division can quickly adapt its operating model to
transporting alternative low carbon fuels, as we already
have the relevant infrastructure and skills for this
development. Our industry and Group are acutely aware
of the carbon intensive nature of our business models and
thus there will likely be an industry-wide technological
adaptation and adoption process.
48
NWF GROUP PLC ANNUAL REPORT AND ACCOUNTS 2023
Risk detail
Impact
Resilience
Transition: Policy and legal continued
(2) Increased price of
GHG emissions through
carbon tax.
Time horizon
Medium term
Group: The prevalence of carbon pricing is expected to
expand, thereby causing the price of carbon to increase.
This would lead to an increase in operating costs for the
Group as a result of energy price implications or carbon
taxes on our Scope 1 and 2 emissions. The introduction
of carbon pricing in the value chain would also increase
the cost of carbon intensive raw materials, which could
have a material financial impact on our business because
of operating in a carbon intensive industry.
Transition: Technology
(3) Development of
emerging low carbon
technology.
Time horizon
Long term
Group: Our business is typically guided by industry-wide
technological advancement into low carbon technologies.
There is an increasing shift towards electric vehicles and
non-fossil fuel fleet because of Government policy changes.
As a Group, we are tracking greenhouse gas emissions
from divisional businesses, with metrics implemented
to reduce GHG emissions across the Group. We are also
planning to install solar panels on sites in a bid to reduce
our Scope 1 and 2 emissions and create cost savings.
In anticipation of this risk, and to build resilience into our
Fuels division, we are using HVO100 (fuel containing 100%
hydrotreated vegetable oil) to fuel our own tankers at
one of our depots to make customer deliveries. We also
offer HVO30 and HVO100 as a product for sale to our
commercial customers.
We also use HVO100 powered vehicles at our main Wardle
site for shunting and JCBs.
Meanwhile, across the Group, we continue to explore the
possibility of replacing some of our fleet with electric
vehicles as part of our plan for renewable energy transition.
Transition: Market
(4) Change in consumer
preferences.
Time horizon
Long term
Physical: Chronic
(5) Average increase in
global temperature.
Time horizon
Long term
Fuels: The shift away from oil heating towards lower
carbon intensive fuel types, particularly amongst domestic
customers, which could result in a risk of loss of revenue.
Feeds: We also expect there to be an increase in operating
costs for our Feeds division with the increase in raw
materials as supply chain demand increases for lower
methane feed types. Changes in consumer demand could
impact dairy and meat consumption nationally, impacting
our customer base and overall demand for feed.
To mitigate the exposure to risk in the Fuels division, there is
an ongoing process of reviewing new liquid fuel products to
the market, and the assessment of our preparedness to
adapt our fleet for these new fuels. We are also monitoring
the development of all energy sources including hydrogen
as a potential solution for our customers’ heating and
transportation requirements. The Feeds division is, similarly,
engaged in a product monitoring process and trialling
alternative, low methane producing feed products to help
reduce emissions.
Fuels: The proximity to the coast and river flood plains of a
limited number of our depots could impact our ability to
operate from those locations in extreme weather scenarios.
Food: The Food division will also be impacted, to a lesser
extent than the rest of the Group. Currently we operate
ambient storage facilities, but with increased average
temperatures this may have an impact on our stored
goods, thus having an increase in our operating costs.
Furthermore, the prevalence of more extreme weather
patterns will increase degradation to the UK road
infrastructure, increasing the potential damage to our
fleet and increasing the time of delivery and potential
damage to goods transported.
Feeds: When identifying physical risks to the Feeds
division, we expect to see an increased interruption to our
supply chain as harvest patterns shift, revenue decline with
livestock losses due to extreme weather events reducing
our customer base and, finally, an increase in the
competition for raw materials to produce feed.
To combat these identified risks, we have, for the Feeds
division, begun to increase diversification into our supply
chain and engage with our suppliers to understand how
they might mitigate these impacts in supply.
Further downstream of our business we have engaged with
our customer base to understand how they might increase
their own resilience in their business models.
Within the Fuels divisions we have a nationwide network
of depots, and supplies could be diverted to impacted
areas of the country should one of our depots be
temporarily closed.
We are also considering the installation of solar panels at
a number of our sites in a bid to reduce our Scope 1 and 2
emissions and create cost savings for generating
electricity.
NWF GROUP PLC NWF.CO.UK
49
ESG framework TCFD continued
Opportunities
In addition to climate-related risks, we have identified a number of opportunities for NWF in the transition to a lower carbon economy.
Opportunity detail
Impact
Transition: Energy sources
Strategic response
(1) Reduce Scope 1 and
2 emissions to
minimal.
Time horizon
Long term
Group: There is a large opportunity for the Group to
be more resource efficient, particularly as part of its
energy consumption, consequently reducing operating
costs. This will also contribute significantly to the net zero
by 2040 target. Reductions in Scope 1 and 2 emissions
may be achieved through the installation of solar panels
at NWF’s sites and the expanded use of renewable energy
in its operations.
Transition: Products and services
(2) Growth in low
carbon heating
market.
Time horizon
Long term
Fuels: The Fuels division has the opportunity to offer an
alternative heating product to transport. This can be
achieved through technological advancements to produce
wide-scale, lower carbon fuel alternatives, ultimately
reducing our Scope 3 emissions. At present, there is no
meaningful change in consumer demand towards lower
carbon alternatives.
Transition: Resources
(3) Use of more
efficient modes of
transport by converting
fleet.
Time horizon
Long term
Group: Utilising renewable energy and alternative drive
concepts through emerging technology will ultimately
reduce our carbon emissions and create efficiencies,
enhancing our reputation with our customers. Improving
the efficiency of our fleet will increase the useful economic
life of the vehicles we use and create potential cost savings.
We are considering the installation of solar panels at a
number of our sites in a bid to reduce our Scope 1 and 2
emissions and create cost savings.
We are continuing to support the distribution of lower
carbon part-renewable HVO30 and HVO100 product to
commercial and agricultural customers.
We are already trialling the use of electric vehicles in the
Food division and will continue to work with our
commercial vehicle suppliers to understand how emerging
technologies can benefit NWF.
Scenario analysis - ‘What if?’
Transition risk will crystallise as we move to a low carbon economy;
we have as a Group not yet conducted an in-depth quantitative
scenario analysis. However, we have considered the broader qualitative
ramifications of climate change to our business model and the Group
by considering two possible scenarios, which we deem at this stage
to be a suitable and relevant baseline scenario set to work from.
Scenario A: Significant steps towards addressing climate
change are taken resulting in higher transition risks
In this scenario, we view an early committed action by society to
reduce global emissions in conjunction with policies and legislation
immediately implemented towards a low carbon economy intensifying
over time. This action is viewed as an effective way to limit global
warming to less than 2°C in line with the Paris Agreement.
Scenario B: Limited action towards addressing climate
change leading to potentially higher physical risks
In this scenario, consumer preferences do not shift and/or policies to
address climate change are not implemented sufficiently resulting in
ambitions falling behind Paris Agreement targets and resulting in an
increase in global temperatures above 3°C, with associated sea level
rises and extreme weather changes.
We have already conducted the initial stages of research into the
broader physical impacts of sea level rises and increased flooding in
line with the leading consensus from the IPCC (2021). In this scenario,
we see an impact in both our supply chain and low lying depots, which
are at risk of flooding.
As NWF gains more experience with qualitative scenario analysis,
we will endeavour to develop our scenarios and associated analysis
utilising quantitative information to illustrate potential pathways and
outcomes. In this way, we will be able to provide a more in-depth
quantitative assessment of the climate risks and opportunities faced
by our businesses. We believe these scenarios cover a varied range
to provide a robust assessment of future outcomes relevant to
NWF’s business.
NWF is well placed to be able to adapt to each of these scenarios, with
a system of monitoring incoming regulation and development of new
products and services as well as a management structure that allows
for the free flow of information between a divisional business unit and
the Group. In considering our risks and opportunities, we have reviewed
the specific impacts of each of these two scenarios and their impact
on our business units and activities.
Metrics and targets
To measure progress against our net zero 2040 target, we have key
performance indicators in place to monitor our Scope 1, 2 and 3
emissions across the entire Group (Fuels, Food and Feeds).
In order to calculate our emissions, we use emissions factors from the
UK Government’s GHG Conversion Factors for Company Reporting 2022.
Data is consolidated using the operational control approach. These
metrics are tracked monthly as part of management reporting and are
presented below for the year ended 31 May 2023.
We are committed to playing our part in the UK’s ambition to achieve
net zero by 2050, and develop our own Net Zero Transition Plan. As
such, the Group has set an ambitious target to achieve net zero by 2040
across our own operations (Scope 1 and 2 emissions) (H.1.1, H.1.3, H.1.4).
We are also looking to perform a more detailed Scope 3 assessment and
set targets associated with climate risks along our value chain in future
periods (H.1.5, H.1.6, G.1.1).
The Board appreciates the importance of setting mid-term targets, but
recognises further analysis of existing data is required before robust
targets are set, which can be meaningfully linked to the Group’s
long-term target.
50
NWF GROUP PLC ANNUAL REPORT AND ACCOUNTS 2023
Similarly, the Group will include ESG measures to the annual bonus for
personal objectives incorporated into the remuneration policy in future,
for the executives. The climate-related KPIs used to monitor progress
against our net zero 2040 target are on pages 34 and 35 and are
monitored monthly as part of management reporting submitted
to the Board.
Read more about our energy and carbon emissions on page 40
Focus on:
Sustainability – Our B
Corp ambitions
Our Food division has been progressing its sustainability approach
by embarking on a journey to apply for B Corp certification, a global
non-profit network whose aim is to drive high standards of social and
environmental performance, transparency and accountability. The
certification aligns with our ESG ambitions and Boughey Distribution
Limited will be one of the first distribution businesses in the UK to
achieve the status should its application be successful.
Sarah Hall, ESG Manager in our Food division, tells us more about
the project:
‘It will be a great achievement to become certified with the
movement, showcasing our high standards around sustainability.
The movement is a journey, and we will be continuously challenged to
maintain and improve on the high baseline we have set for ourselves.
Earlier this year we issued our first Impact Assessment which
supports our application. Some of our key achievements towards our
sustainability goals are that we have recycled 100% of our waste oil in
our garage, donated hundreds of thousands of tonnes of surplus food
to our distribution charity partner FareShare, removed 750,000
plastic labels used in handling and distribution, and installed 100%
LED lighting across our sites. We also launched ‘Ask Angela’ and
‘You Said, We Did’, enabling us to understand and engage with our
employees more effectively and improve their working environment
in the process through implementing, in many cases, ideas that they
have suggested.
‘We are really excited about this chapter in our sustainability
journey and are looking forward to certification and taking further
steps forward.’
NWF GROUP PLC NWF.CO.UK
51
ESG framework Board of Directors and Company Secretary
A skilled and capable Board
Philip Acton
Non-Executive Chair
Appointed to the Board: August 2013
Richard Whiting
Chief Executive
Appointed to the Board: October 2007
Chris Belsham
Chief Executive Designate
Appointed to the Board: April 2017
Skills and experience
• Considerable board, leadership and
strategy skills derived from Executive
and Non-Executive roles.
• Extensive experience in mergers and
acquisitions, operations and finance.
• Broad sector experience in agriculture,
warehousing, distribution, engineering
and manufacturing.
• Qualified Chartered Accountant with a
degree in accounting and finance.
Skills and experience
• Considerable leadership and strategic
experience in a number of manufacturing
and specialist distribution businesses in
the building products and consumer
products sectors.
• Broad experience including Chief
Financial Officer of a FTSE small cap
business and operating at a senior
level in sales and marketing roles in
a FTSE 100 building products group.
• Background in consumer products
across international markets with global
sourcing and operations experience.
• Mergers and acquisition expertise
across multiple sectors and markets.
Skills and experience
• Considerable strategic and leadership
experience at both NWF and as Head
of Corporate Finance and Equity
Partner at Irwin Mitchell LLP.
• Extensive mergers and acquisition,
valuation and financing expertise
across a range of sectors following
fourteen years as a corporate finance
advisor with KPMG with a focus on
listed clients.
• Qualified Chartered Accountant and
Fellow of the Institute of Chartered
Accountants for England and Wales,
having qualified with PwC in 1999.
Key development
A B C D E F G H
Key development
A B C D E F G H
Key development
A B C D E F G H
Committee membership
• Audit
• Remuneration
• Disclosure
• Nomination (Chair)
Committee membership
• Disclosure
Committee membership
• Disclosure (Chair)
Other current appointments
N/A
Other current appointments
N/A
Other current appointments
N/A
Past appointments
Chief Operating Officer for Genus Europe
and Asia. Group Finance Director Genus
plc. Group Finance Director Scholes
Group plc.
Past appointments
Group Finance Director of Heywood
Williams Group plc. Managing Director of
the datacom division of Brand-Rex Ltd.
Past appointments
Equity Partner and Head of Corporate
Finance at Irwin Mitchell LLP.
52
NWF GROUP PLC ANNUAL REPORT AND ACCOUNTS 2023
Key development
A External advisor updates
B Professional network
C Institute updates
D Investor forums
E Self study
F Industry bodies
G Other non-executive roles
H Member of Institute of Directors
Richard Armitage
Senior Independent Non-Executive Director
Appointed to the Board: July 2020
Dawn Moore
Independent Non-Executive Director
Appointed to the Board: September 2022
Rob Andrew
Company Secretary
Appointed: February 2004
Skills and experience
• Extensive financial, strategic, mergers
and acquisitions and governance
experience, gained within a range of
commercial organisations including
consumer goods and distribution.
• A board level executive in large
complex organisations for the last
fourteen years.
• Experience of investor relations and
debt capital markets, with strong
banking relationships.
• Qualified Chartered Management
Accountant.
Skills and experience
• A Fellow of the Chartered Institute
of Personnel and Development.
• Almost 30 years of HR, communications
and management experience, both
in the UK and internationally.
• Substantial experience of setting the
strategic direction for all aspects of HR,
people and organisational development
across a range of sectors.
• Winner of several national awards for work
on diversity and inclusion, people strategy
and culture change in the last five years.
• Extensive experience over the last ten
years as a Non–Executive Director in
the public, private and third sectors.
Skills and experience
• Chartered Secretary with extensive
experience in quoted company
requirements.
• Extensive experience in health and
safety management and providing
frameworks to ensure best practice
and compliance.
• Significant experience on wide ranging
property matters including
acquisitions and disposals of freehold
and leasehold interests.
• Strong focus on people matters,
focusing on improvements in HR
culture and employee engagement.
Key development
A B C D E F G H
Key development
A B C D E F G H
Key development
A B C D E F G H
Committee membership
• Audit (Chair)
• Remuneration
• Nomination
Committee membership
• Audit
• Remuneration (Chair)
• Nomination
Other current appointments
Chief Financial Officer at Morgan
Advanced Materials plc
Other current appointments
Group People and Communications
Director for J Murphy & Sons Ltd
Past appointments
Chief Financial Officer at Victrex plc.
Past appointments
Non-Executive Director of Lords Group
Trading plc. Director of Human
Resources of Morgan Sindall plc.
Non-Executive Director of Sheffield
Teaching Hospitals NHS Foundations
Trust. Executive Director (HR) of Tarmac.
NWF GROUP PLC NWF.CO.UK
53
ESG framework Senior management
Key development
A External advisor updates
B Professional network
C Institute updates
D Investor forums
E Self study
F Industry bodies
G Other non-executive roles
H Member of Institute of Directors
Skills27+27+
Mergers and acquisitions (5)
Finance (4)
Strategy and leadership (4)
Board experience (1)
Sector experience (2)
Sales and marketing (1)
Operations (1)
Dave Walmsley
Managing Director, Fuels
Angela Carus
Managing Director, Food
Andrew Downie
Managing Director,Feeds
Experience
Appointed Managing Director of the Fuels
division in November 2022. Previously
held the position of Managing Director of
SIG Distribution and senior positions at
Palletways and Lyreco.
Experience
Appointed Managing Director of the
Food division in January 2022. Angela has
worked in the logistics sector since leaving
school and held a variety of senior positions
before joining the Group from Culina, where
she was a director of operations.
Experience
Appointed Managing Director of
the Feeds division in February 2015.
Previously held the position of head
of operations at ABF plc and senior
positions at AB World Foods and
Patak’s Foods Limited.
What this experience
means for NWF
Please see page 12.
What this experience
means for NWF
Please see page 16.
What this experience
means for NWF
Please see page 20.
Key skills
• Strategy and leadership
• Operations
• Sales and marketing
Key skills
• Strategy and leadership
• Sector experience
• Operations
• Sales and marketing
Key skills
• Strategy and leadership
• Operations
• Finance
• Mergers and acquisitions
• Sales and marketing
Key development
A B C D E F G H
Key development
A B C D E F G H
Key development
A B C D E F G H
Richard Huxley
Obituary
During the year, the Group received the sad news of the death of Richard Huxley, our previous Managing
Director of the Fuels business, following a short illness. Richard’s contribution and commitment to the Fuels
business over the years was invaluable and he is sorely missed by the NWF team. Our thoughts and best
wishes are, of course, with his family.
54
NWF GROUP PLC ANNUAL REPORT AND ACCOUNTS 2023
22
+
22
+
22
22
+
+
6
6
+
+
11
11
+
+
6
6
+
+
6
6
+
+
L
L
Corporate governance statement
Ongoing development
Strong corporate governance is vital if we
are to deliver on our corporate objectives.”
Philip Acton
Non-Executive Chair
Dear shareholder,
On behalf of the Board, I am pleased to present NWF Group plc’s Corporate
Governance Statement for the year ended 31 May 2023. This statement
provides details of our current governance framework and practices and
how we discharge our governance duties.
Whilst 2022/23 has again been another challenging year, I am delighted
that the Group has achieved another very strong performance despite the
inflationary and cost-of-living challenges. The Group has reaffirmed its
clear, long-term strategy and improved performance whilst mitigating,
wherever possible, the risks faced by the businesses.
In my role as Chair, I am responsible for the Board including its effective
leadership and composition, assessing and improving its performance,
and leading the Group’s corporate governance culture to ensure that an
appropriate governance framework is embedded within the Group and its
businesses. The Board recognises the fundamental importance of maintaining
a strong corporate governance framework in order to continue to create
long-term value and 2022/23 has seen the continuation of the evolution
of the Group’s governance framework, as the Group continues to develop.
The Group has continued to adopt the Quoted Companies Alliance Corporate
Governance Code (‘the QCA Code’) as the basis of its governance structure
and has complied with all principles of the QCA Code throughout the year.
Given the Group’s size, we also endeavour to have regard to the provisions
of the UK Corporate Governance Code to the extent that we believe this is
appropriate. As such, all Board Directors are required to stand for annual
re-election and our independence policy provides that Non-Executive
Directors are unable to serve for more than nine years except in exceptional
circumstances. In keeping with this policy, I previously announced that
I would be stepping down from the Board having completed nine years’
service. My tenure is to be extended for a limited period of time (making in
aggregate a tenure of ten years) until the 2024 AGM in order to continue
to facilitate effective succession planning and the development of a
diverse Board.
As has been announced, Richard Whiting will retire from his role as
Chief Executive in March 2024. I would like to thank Richard for his
substantial contribution to the development of the Group over the last 15
years. I am pleased to report that Chris Belsham, currently Chief
Executive Designate having been Group Finance Director since 2017, will
be appointed Chief Executive in March 2024. Chris’ promotion
recognises the key role he has played in the Group’s performance and
strategic direction since joining the Board. Following a review of the
skills, experience, personal qualities and capabilities of the existing
Board members and those required as the Group continues to evolve, a
rigorous recruitment process was undertaken during the year to recruit
Chris’ successor (further details on this and the Chief Executive
succession can be found in the Nomination Committee Report on pages
64 and 65) and I am pleased that Katie Shortland will be joining the
Board as Chief Financial Officer in October 2023. During the year, we
also welcomed Dawn Moore to the Board as Non-Executive Director
and Chair of the Remuneration Committee. Dawn’s appointment has
strengthened the Board through the introduction of new experience,
diversity and skills, particularly within the social aspects of ESG.
The Board recognises that the sustainability of the Group is key to its
long-term success. As such, 2022/23 saw a focus on strengthening our
approach to how we govern sustainability (further details can be found
on pages 31 to 42). A key development in the year has been the
completion of our first TCFD disclosures (which can be found on pages
48 to 51), in compliance with The Companies (Strategic Report)
(Climate-related Financial Disclosure) Regulations 2022 and Sections
414C, 414CA and 414CB of the Companies Act 2006.
The Board acknowledges that a prerequisite of a strong corporate
governance framework is a healthy corporate culture. Whilst the culture
within each of the Group’s businesses is different, reflecting the diverse
environments in which each business operates, those cultures are
predicated upon ethical values, integrity and transparency.
For our strategy and business model to succeed in creating sustainable
value in the long term, and to enable the mitigation of our principal risks and
uncertainties (as detailed on pages 27 to 30), positive relationships with the
Group’s various stakeholders must be cultivated. This will only be achieved
through integrity and transparency. The Board monitors the Group’s culture
through engagement with the Group’s stakeholders (further details on how
we engage can be found on pages 43 to 45), the regular review of the Group’s
consolidated risk register and any changes to the principal risks and
uncertainties, and externally facilitated employee and customer surveys
which allow us both to engage and identify areas of focus.
In order to promote a healthy corporate culture, the Group operates a
whistleblowing policy which allows concerns regarding unethical or unsafe
behaviours to be raised in confidence and promptly investigated. To ensure
ethical values and behaviours are recognised and respected, the Group has
a suite of policies in place, covering areas such as anti-corruption and
bribery, equal opportunities, prevention of the facilitation of tax evasion
and modern slavery. As a result, the Board is satisfied at this time that
an ethical culture exists within the Group.
Philip Acton
Non-Executive Chair
1 August 2023
NWF GROUP PLC NWF.CO.UK
55
ESG framework Corporate governance statement continued
Delivering growth and
building trust
Our strategy
The Group’s strategy is to consolidate and optimise its operations
to deliver long-term sustainable value for its shareholders and
stakeholders. This is achieved by the implementation of the Group’s
acquisition strategy, focused on the consolidation of the highly
fragmented fuel market (further details can be found on pages 10 to 13),
and investing in the Group’s people, businesses and product development
to create innovative products and services. The Group’s business model
is set out on pages 22 and 23 and on the Business Model page of our
website, nwf.co.uk/about-us/business-model.
Effective risk management and internal control
The achievement of the Group’s strategy is dependent upon the
effective identification and management of new and existing risks.
The Board recognises though that the risks faced by the Group also
present opportunities for innovation and growth. The principal risks and
uncertainties affecting the Group, and how these risks are identified,
assessed, managed and reviewed, are explained on pages 27 to 30.
The Board has overall responsibility for ensuring that the Group
maintains an effective system of internal control which directs the
Group’s activities in order to ensure the safeguarding of assets, to
assist in the delivery of the Group’s strategic, financial and operational
ambitions and to provide it with reasonable assurance regarding the
reliability of financial information that is used within the business.
There are, however, inherent limitations in any system of internal
control and accordingly even the most effective system can provide
only reasonable, and not absolute, assurance against material
misstatement or loss.
The Board obtains assurance that the risk management and related
control systems in place are effective in a number of ways. During the
year, a rolling programme of risk and controls testing has been
undertaken across the Group with a focus on various key areas of risk
identified. This programme was undertaken through a combination of
internal and external resource and the results were reported to the
Board. The Group’s risk management programme, which assesses key
risks and the required internal controls that are delegated to Directors
and managers at all levels in the Group, is reviewed regularly in order to
ensure that it continues to meet the Board’s requirements. Although the
Group does not have a formal internal audit function, targeted reviews
and visits to operations are conducted by the Head Office team and
professional advisors. The results of these reviews are communicated
back to the Audit Committee. An internal control update is provided to
the Audit Committee at each meeting. Further details can be found on
pages 61 to 63.
Engagement with our shareholders and stakeholders
The Board is committed to open and honest two-way dialogue with the
Group’s shareholders and stakeholders in order to both understand their
views, needs and expectations and provide a fair and understandable
assessment of the Group’s position which will allow shareholders and
other stakeholders to make informed decisions about the Group.
56
NWF GROUP PLC ANNUAL REPORT AND ACCOUNTS 2023
Key shareholder engagements
June 2022
• Trading Statement RNS
July 2022
• Notice of Final Results RNS
August 2022
• Appointment of Non-Executive Director RNS
• Preliminary Results Online meetings/CEO and Group FD
presentation/RNS
• Chair Succession Update RNS
September 2022
• AGM Statement and Trading Update RNS
• AGM Held at Wychwood Park Hotel, Weston, Crewe
December 2022
• Trading Update and Acquisition Analyst communication/RNS
January 2023
• Notice of Half Year Results RNS
• Half Year Results Online meetings/CEO and Group FD
presentation/RNS
March 2023
• Trading Update Analyst communication/RNS
April 2023
• Presentations to local shareholder group and prospective investors
Whilst the Group has a diverse range of shareholders, they can be
broadly categorised as follows:
1.
three independent pension funds registered in Iceland (each holding
c.5% of the issued share capital) as set out on page 71;
2. other institutional investors;
3. private individuals; and
4. employees and ex-employees.
The Board has a proactive approach to shareholder liaison, led by the
Chief Executive, and feedback is provided regularly to the Board. This
approach includes our AGM (where votes in favour are consistently over
75%), biannual investor roadshows and annual meetings with
significant shareholders.
The Chair and the Non-Executive Directors will always make themselves
available to meet with shareholders. Each AGM is a particular opportunity
for this. Normal relationships with shareholders are maintained by the
Executive Directors, who brief the Board on shareholder issues and who
relay the views of the Group’s advisors to the Board.
The Investors section of our website, nwf.co.uk/investors, includes
historical Annual Reports, Notices of AGMs and voting history for a
minimum of five years.
Details of how we engage with our other stakeholders and the outcomes
of this engagement can be found on pages 43 to 45. During the year,
the level of reporting to the Board on stakeholder engagement and
concerns has increased in line with our commitment to sustainability.
Maintaining a dynamic
management framework
Board
Matters reserved for the Board
• Setting the Group’s values, standards, strategic aims and
• Ensuring maintenance of a sound system of internal control
objectives.
• Approval of budgets and reviewing performance in line with these.
• Extension or cessation of the Group’s activities.
• Approval of financial reports and policies, dividends and the
dividend policy.
and risk management.
• Approval of major capital projects, material contracts and
major investments.
• Changes to the structure, size and composition of the Board,
membership of Board Committees and succession planning.
• Approval of remuneration policies.
Audit
Committee
Its remit is to:
• monitor the
integrity of financial
reporting; and
• keep under review
the Group’s internal
control and risk
management
systems.
Remuneration
Committee
Its remit is to:
• determine
appropriate short
and long-term total
reward packages
for the Executive
Directors; and
• satisfy itself that
good practices
apply to all Group
employees
through the relevant
management
structures.
Nomination
Committee
Its remit is to:
• develop and
maintain a rigorous
and transparent
procedure for
making
recommendations
on Board, and
material subsidiary
company board,
appointments; and
• ensure plans are in
place for orderly
succession to Board
and senior
management
positions.
Disclosure
Committee
Its remit is to:
• consider whether
announcements are
required to be made
in relation to inside
information.
Executive
Directors and
senior
management
Their remit is to:
implement the
•
strategy agreed by
the Board; and
• manage the Group
on a day-to-day
basis.
ESG Steering
Committee
Its remit is to:
implement the
•
Group’s
sustainability
strategy with key
responsibilities
being the
identification and
implementation of
new initiatives,
providing training
and support to
areas of the
business that need
upskilling and the
regular monitoring
of data to ensure
progress is being
achieved.
A clearly defined Board structure
The principal roles of the Board are to provide effective leadership,
ensure an ethical corporate culture and effective risk management
system are embedded throughout the Group, oversee external reporting
and set the Group’s strategy in order to deliver shareholder value.
A formal schedule of matters requiring Group Board approval, which is
available in its entirety at nwf.co.uk/about-us/governance/board-
responsibilities, is maintained and regularly reviewed to ensure
sufficient separation between the responsibilities of the Board and
the operation of the Group’s business.
Board Committees
There are currently four Board Committees to which the Board
delegates specific responsibilities: the Audit Committee, Remuneration
Committee, Nomination Committee and Disclosure Committee. The
responsibilities of each Committee are detailed in its terms of reference
which are reviewed annually and are available on the Group’s website.
Further details on the activities of the Audit Committee, the
Remuneration Committee and the Nomination Committee can be found
on pages 61 to 63, pages 66 to 69 and pages 64 and 65 respectively. The
Chair of each Committee formally reports to the Board in respect of the
Committee’s activities and recommendations.
Executive Directors and senior management
The implementation of the strategy agreed by the Board and day-to-day
management of the Group is delegated to the Executive Directors and
senior management. This structure allows for decisions to be made in
an efficient manner by the most appropriate people. Each division’s
senior management team has a monthly meeting with the Executive
Directors to report on the division’s progress and any challenges. Senior
management also regularly attends Board meetings to brief the Board
on business opportunities and developments.
ESG Steering Committee
The implementation of the Group’s sustainability strategy is delegated
to the ESG Steering Committee which comprises:
• the Group Chief Executive and Group Finance Director;
• the Group Financial Controller;
• the Company Secretary and Deputy Company Secretary; and
• the Managing Directors for the Group’s three divisions (Fuels, Food
and Feeds).
The ESG Steering Committee typically meets on a monthly basis.
Further details on its activities can be found on pages 32 and 33.
NWF GROUP PLC NWF.CO.UK
57
ESG framework Corporate governance statement continued
Maintaining an experienced
and capable Board with clearly
defined roles
In order for the Board to be effective, there needs to be clearly defined
roles for Board members, an appropriate balance of Executive and
Non-Executive Directors, sufficient time committed by Directors to their
roles, a comprehensive, tailored induction for each Director upon
joining the Board and the provision of quality information in a timely
manner. The Board must comprise an appropriate balance of skills,
experience and personal qualities.
Upon joining the Group, each Director completes a full, formal and tailored induction programme. This programme ensures each new Director
is fully informed, engaged and supported, enabling the Director to effectively contribute to the Group from the start of their appointment.
Director induction
Information
Once appointed, each Director is provided with a comprehensive
information pack which includes:
Engagement
A tailored engagement programme is created for each new
Director which includes activities such as:
• summary of the Group’s history and markets;
• details of the Group’s strategy;
• guidance on their legal and regulatory responsibilities as a Director
of an AIM-listed business;
• briefings with the Chief Executive and the Group Finance Director;
• meeting with the Company Secretary;
• one-to-ones with the senior management team;
• meetings with individuals within the Group to enhance the
• information on the Group’s corporate governance arrangements,
Directors’ understanding of the businesses and its culture; and
including key policies and procedures;
• minutes and papers from the Board and relevant Committee
meetings from at least the last six months;
• copies of the latest Board and relevant Committee evaluations;
• the latest shareholder analysis;
• ESG briefing;
• organigrams; and
• details of key contacts and key advisors.
• key site visits.
Board composition
The Board currently comprises a Non-Executive Chair, a Senior Independent
Non-Executive Director, an independent Non-Executive Director and two
Executive Directors. As previously announced, Richard Whiting will retire
from his role as Chief Executive in March 2024 and will be replaced by Chris
Belsham, currently Chief Executive Designate. Katie Shortland will join the
Board as Chief Financial Officer in October 2023.
Board composition
Diversity
20+20+
Non-Executive Chair (1)
Executive Directors (2)
Senior Independent
Non-Executive Director (1)
Independent Non-Executive Director (1)
80+80+
Male (4)
Female (1)
58
NWF GROUP PLC ANNUAL REPORT AND ACCOUNTS 2023
Length of tenure
40+40+
0 – 3 years (2)
4 – 6 years (1)
Over 7 years (2)
40
+
40
+
20
20
+
+
20
20
+
+
L
L
20
+
20
+
L
L
20
+
20
+
40
40
+
+
L
L
Board roles
The roles of Chair and Chief Executive are separated and clearly understood
and have been agreed by the Board. The Chair is responsible for the
Board including its effective leadership and composition, assessing
and improving its performance, and leading the Group’s corporate
governance culture. The Chief Executive is responsible for developing
the Group’s strategy and the operating performance of the Group.
The Senior Independent Non-Executive Director conducts the Chair’s annual
appraisal and acts as a sounding board for the other Directors. Further
information on the role of the Senior Independent Director can be found at
nwf.co.uk/about-us/governance/corporate-governance-statement.
The Company Secretary has specific responsibility to assist the Chair
and the rest of the Board to uphold the best corporate governance
standards. A full role description for the Company Secretary is available
at nwf.co.uk/about-us/governance/corporate-governance-statement.
Board operation
The Board normally meets eleven times a year with additional meetings
being called when required.
The number of Board and Committee meetings held in the year ended
31 May 2023, together with the attendance record for each Director,
is detailed below.
Comprehensive briefing papers are circulated to Directors one week
in advance of each scheduled meeting to allow sufficient time for the
consideration of the papers provided.
Skills and experience
The importance of the Board having an appropriate mix of skills, qualities
and experience in order to deliver the strategic objectives of the Company
for the benefit of its shareholders and stakeholders is understood. All
Directors have extensive and varied experience and the Board as a whole
contains a diverse mix of personal qualities. The biographical details of
the current Directors, including their skills and experience, are set out on
pages 52 and 53. The biographical details of Katie Shortland are included
in the Nomination Committee Report on page 65. The biographical details
of the senior management team are set out on page 54.
To ensure that the Directors have the necessary up-to-date experience,
skills and capabilities, each Director undergoes an annual performance
appraisal and the Board’s effectiveness as a whole is evaluated on an
annual basis (further details can be found on page 60). A training log
is maintained in respect of all Directors and senior management and
is updated on a quarterly basis. In addition, the Group’s Nominated
Advisor and Broker provides an annual briefing to the Board on areas
including regulatory updates, the AIM Rules and Market Abuse
Regulation requirements. An annual health and safety briefing is also
provided to the Board by the Group’s external health and safety advisors,
providing the Directors with information on current health and safety
trends. Information on upcoming legal, regulatory and accounting
changes are also prepared internally and provided to the Board as and
when appropriate.
All Directors and senior management are able to access the advice and
services of the Company Secretary. Furthermore, all Directors have
access to the Group’s advisors and are able, if necessary, to take
independent professional advice in the furtherance of their duties at
the Group’s expense.
The Board and the Committees to the Board are supported by external
advisors on a regular basis in respect of matters such as remuneration,
pensions, taxation, property and health and safety. Deloitte LLP
continued to act as professional advisors to the Remuneration
Committee during the year. Grant Thornton also continued to act as
the Group’s virtual Chief Information and Security Officer to oversee
the Group’s information security regime.
Independence
The Board recognises the importance of the diverse expertise and experience
brought by its Non-Executive Directors as well as the need for the periodical
refreshing of the Board. The Board has reviewed the independence of each
Non-Executive Director and considers that all are independent. The factors
considered by the Board in reaching this conclusion included all Non-
Executive Directors being financially independent of the Group and none of
the Non-Executive Directors being connected with or a major shareholder, or
member of a stakeholder group. The tenure of the Non-Executive Directors
was also considered and, although it was recognised that the Non-Executive
Chair’s tenure now exceeds nine years, all the Non-Executive Directors were
deemed to demonstrate independence of judgement and character. All
Directors will continue to be re-elected on an annual basis and, prior to being
proposed for re-election, will undergo a performance evaluation to ensure
their performance continues to be effective and that their independence is
maintained, where appropriate.
Time commitment
The Board has adopted a formal time commitments (overboarding)
policy which provides that when making new appointments, and
considering additional appointments for existing Directors, the Board
shall take into account other demands on the Directors’ time. Significant
commitments shall be disclosed with an indication of the time involved
and additional external appointments shall not be undertaken without
prior approval of the Board.
Full-time Executive Directors are permitted to take a maximum of one non-
executive directorship or other significant appointment, subject to prior
approval of the Board.
Non-Executive Directors are required to limit their number of board
appointments to a total of five public company board roles. An independent
board chair role will count as two board roles.
Non-Executive Directors’ time commitments are reviewed annually to
ensure each Director has sufficient time to fulfil their role.
Attendance of Directors at meetings during year ended 31 May 2023
Board1
Disclosure Committee
Audit
Committee
Remuneration
Committee
Nomination
Committee
T P Acton (Non-Executive Chair)
R J Armitage (Senior Independent
Non-Executive Director)2
D M Moore (Independent Non-Executive Director)2, 3
D S Downie (Independent Non-Executive Director)4
R A Whiting (Chief Executive)5,6
C J Belsham (Chief Executive Designate)5, 6
Attended
Did not attend
Not required to attend
1 During the year, additional Board meetings were held on specific subjects.
2
R J Armitage and D M Moore are not members of the Disclosure Committee but normally
attend Disclosure Committee meetings by invitation.
3 D M Moore was appointed on 1 September 2022.
4 D S Downie resigned as of 29 September 2022.
5
6
R A Whiting and C J Belsham are not members of the Audit Committee but attend Audit
Committee meetings by invitation.
R A Whiting and C J Belsham are not members of the Remuneration Committee but attend
Remuneration Committee meetings by invitation.
NWF GROUP PLC NWF.CO.UK
59
ESG framework
Audit Committee report
Monitoring all aspects
of reporting and risk
The Audit Committee’s primary
responsibilities are to monitor
the integrity of the Group’s
financial statements and
review the effectiveness
of it’s internal controls.”
Richard Armitage
Chair of the Audit Committee
Meetings in 2023
3(2022: 3)
Members of the Audit Committee
R J Armitage (Chair)
T P Acton
D M Moore
D S Downie1
1 D S Downie resigned as of 29 September 2022.
Attended
Did not attend
Not required to attend
Dear shareholder,
I am pleased to present the Audit Committee Report for the year ended
31 May 2023.
Composition
The Audit Committee consists of the Chair and two Non-Executive
Directors and is chaired by myself as a Senior Independent
Non-Executive Director. The Audit Committee met on three
occasions during the year, consistent with the prior year.
Responsibilities
The Audit Committee has terms of reference in place which have
been formally approved by the Board and are made available at the
AGM and on the Group’s website. Its primary responsibilities include
reviewing the effectiveness of the Group’s internal control systems and
monitoring the integrity of the Group’s financial statements and external
announcements of the Group’s results. The Committee reports to the
Board on all these matters. The Committee defers to the wider Board
on the matters of bribery, whistleblowing and modern slavery and the
Group policies concerning these matters can be found at nwf.co.uk.
Key areas of focus in the year ended 31 May 2023
The Audit Committee has monitored the Group’s financial performance
and resilience as the UK navigates uncertain and volatile economic
conditions, compounded by a cost-of-living crisis. There has also been
continued volatility in commodity prices arising from the conflict
in Ukraine.
Specific activities in this financial year have included the oversight
of the preparation of our first set of TCFD disclosures, further details
of which can be found on pages 48 to 51.
The Audit Committee continues to pay particular attention to the
development of the Group’s IT systems in order to ensure there is
continued progress in enhancing the resilience of the Group’s
information systems.
In the forthcoming financial year 2023/24, the Audit Committee will
review our preparations for anticipated changes in the UK Corporate
Governance Code, with specific focus expected on our internal controls
for financial reporting.
Experience of the Audit Committee
The Audit Committee comprises the Chair and two Non-Executive
Directors, two of whom are qualified accountants and possess
extensive financial leadership experience.
NWF GROUP PLC NWF.CO.UK
61
ESG framework
Audit Committee report continued
External audit
The Audit Committee also approves the appointment and remuneration
of the Group’s external auditors and satisfies itself that they maintain
their independence regardless of any non-audit work performed by
them. The Group adopts the following policy governing the performance
of non-audit work by the external auditors. The auditors are permitted
to provide non-audit services which are not, and are not perceived to
be, in conflict with auditor independence, providing they have the skill,
competence and integrity to carry out the work, and are considered to
be the most appropriate advisors to undertake such work in the best
interests of the Group. All assignments are monitored by the Committee.
The respective responsibilities of the Directors and external
auditors in connection with the financial statements are explained
in the Statement of Directors’ Responsibilities on page 72 and the
Independent Auditors’ Report on pages 73 to 77. Details of services
provided by, and fees payable to, the auditors are shown in note 5 of the
Group financial statements.
Whilst the Audit Committee has not adopted a formal policy in respect
of the rotation of the external auditors, one of its principal duties is to
make recommendations to the Board in relation to the appointment of
the external auditors. Various factors are taken into account by the
Committee in this respect, including the quality of the reports provided
to the Committee, the level of service provided and the level of
understanding of the Group’s business.
PricewaterhouseCoopers LLP have been the Group’s external auditors
for many years. The Audit Committee considers that the relationship
with the auditors is working well and remains satisfied with their
effectiveness and independence. Accordingly, it has not considered
it necessary to date to require the firm to re-tender for the audit work.
The auditors are required to rotate the audit partner responsible for the
Group and subsidiary audits every five years. The previous audit partner
has rotated off the audit after a three-year term, and has been replaced
by Kate Finn as audit partner. There are no contractual obligations
restricting the Group’s choice of auditors. As an AIM-listed Group, the
Group does not have a requirement to put the audit out to tender every
ten years; however, this is kept under review by the Audit Committee
to decide if tendering is appropriate.
Internal audit
The Group does not have a formal internal audit function but
performs targeted reviews and visits to operations by the Head Office
team and professional advisors. The Head Office function performs
a rolling programme of internal control reviews with the divisions.
External auditors are engaged to conduct annual internal control
reviews into areas of specifically identified risk. The results of
these reviews are communicated back to the Audit Committee.
This approach is considered appropriate and proportionate for
the size of the organisation.
Internal control and risk management
An internal control update is provided to the Audit Committee at each
meeting. The principal risks are also reviewed and any changes in risk
ratings are discussed to ensure that appropriate risk mitigations are
in place where relevant.
Going concern
The Board has prepared cash flow forecasts for the period to 31 May 2025.
Under this base case scenario, the Group is expected to continue to
have significant headroom relative to the funding available to it and
to comply with its banking covenants.
The Board has also considered a severe downside scenario based on
a significant and sustained reduction in Fuels’ profitability alongside
underperformance in Food and Feeds. This downside scenario excludes
any mitigating actions that the Board would be able to take to reduce
costs. Under this scenario, the Group would still expect to have
sufficient headroom in its financing facilities.
Significant issues considered in relation to the
financial statements
The Audit Committee assesses whether suitable accounting policies
have been adopted and whether management has made appropriate
estimates and judgements. The Committee reviews accounting papers
prepared by management which provide details on the main financial
reporting judgements. The Committee also reviews reports by the
external auditors on the half year and full year results which highlight
any issues arising from their work undertaken in respect of the half year
review and year end audit. The specific areas of risk in relation to the
financial statements reviewed by the Committee were:
1. Acquisition accounting
On 21 December 2022, Sweetfuels Limited was acquired by the Group
and hived up into the Fuels division on 31 March 2023. The acquisition
and resulting intangibles balance are material balances and as such
management has reviewed the assumptions used in deriving the
balances, which have been considered appropriate.
2. The carrying value of goodwill and fixed assets
The Group’s goodwill and fixed assets are material balances.
Annual impairment reviews are performed which use key judgements
including estimates of future business performance and cash
generation, discount rates and long-term growth rates. The Committee
is comfortable with the key assumptions applied and management’s
conclusion that an impairment of goodwill and other intangibles was
appropriate. There are no indications of impairment identified in the
Fuels, Food or Feeds CGU.
3. The carrying value of trade receivables
The Group holds material trade receivable balances, and the
calculations of provisions for impairment are estimates of future events
and therefore uncertain. The Committee has reviewed the current year
provisions against trade receivables, including an assessment of the
adequacy of the prior year provisions, and is satisfied with
management’s conclusions that the provisioning levels are appropriate.
4. Pensions including obligations and assumptions
The Group’s defined benefit pension scheme is material to its financial
position. The amounts shown in the balance sheet are highly sensitive
to changes in key actuarial assumptions which are set by reference to
advice from professional advisors. Full disclosure of the pension
scheme is provided in note 26 to the financial statements.
62
NWF GROUP PLC ANNUAL REPORT AND ACCOUNTS 2023
5. Exceptional items
There have been no exceptional items noted during the current financial
year that are deemed exceptional in both nature and quantum, and
therefore there are no accounting issues to note.
6. Alternative performance measures (‘APMs’)
The Group refers to a number of APMs throughout the Annual Report
and Accounts. APMs are used by the Group to provide further clarity and
transparency on the Group’s financial performance. The APMs are used
internally by management to monitor business performance, for
budgeting and for determining Directors’ remuneration.
The Committee is aware that the APMs are non-IFRS measures. APMs
used by the Group are as follows:
• headline operating profit, which refers to reported operating
profit after adding back exceptional items and amortisation of
acquired intangibles;
• headline profit before tax, which refers to reported profit before tax
after adding back the net finance cost in respect of the Group’s
defined benefit pension scheme, exceptional items and amortisation
of acquired intangibles;
• headline EBITDA, which refers to reported operating profit after
adding back exceptional items and amortisation of acquired
intangibles. The headline EBITDA calculation excludes the impact
of IFRS 16 depreciation;
• headline earnings, which refers to profit for the year after adding
back the net finance cost in respect of the Group’s defined benefit
pension scheme, exceptional items, amortisation of acquired
intangibles and the exceptional impact of remeasuring deferred
tax balances, and taking into account the tax effect thereon;
• headline EPS, which refers to the reported EPS calculation based
on headline earnings;
• headline ROCE, which refers to the return on capital based
on headline operating profit; and
• net debt, which is adjusted to exclude the impact of the adoption
of IFRS 16.
The Committee considers that the APMs, all of which exclude the
impact of non-recurring items or non-operating events, provide useful
information for shareholders on the underlying trends and performance
of the Group.
Richard Armitage
Chair of the Audit Committee
1 August 2023
NWF GROUP PLC NWF.CO.UK
63
ESG framework Nomination Committee report
Strength and depth
for the future
Planned leadership transition has
been a key area of focus during the
year and will remain so for
2023/24.”
Philip Acton
Chair of the
Nomination Committee
Meetings in 2023
5(2022: 2)
Members of the Nomination Committee
T P Acton (Chair)
R J Armitage
D M Moore
Attended
Did not attend
Not required to attend
Dear shareholder,
I am pleased to present the Nomination Committee Report which covers
the year ended 31 May 2023.
Composition
The Nomination Committee consists of myself, as Chair of the
Committee, and two independent Non-Executive Directors.
The Nomination Committee meets at least twice a year and, this year,
it met on five occasions.
Responsibilities of the Nomination Committee
The Nomination Committee has an established annual schedule of
events as well as terms of reference in place which have been formally
approved by the Board, are annually reviewed and updated, and are
available at nwf.co.uk/investors/aim-rule-26. The Committee’s main
responsibilities include developing and maintaining a rigorous and
transparent procedure for making recommendations on Board,
and material subsidiary company board, appointments and ensuring
plans are in place for orderly succession to Board and senior management
positions. The Committee reports to the Board on all matters under its remit.
The Committee has a key role in ensuring the Board, its Committees
and senior management team have the appropriate balance of skills,
experience, qualities and capabilities they need to be successful and
effective now, and as the businesses evolve. The process by which
Board and other senior management appointments are determined
is detailed in the Committee’s terms of reference.
Key areas of focus in the year ended 31 May 2023
Succession planning has been the main area of focus for the
Nomination Committee during the year.
Specific activities undertaken include:
• succession of the Chief Executive;
• succession of the Group Finance Director;
• recommendation of appointment for the Fuels Managing Director
position; and
• a review of the succession plans for the Board following the
above changes.
64
NWF GROUP PLC ANNUAL REPORT AND ACCOUNTS 2023
Succession of the Chief Executive
During the year, Richard Whiting indicated his intention to retire from
his role as Chief Executive of the Group in March 2024, having held the
role of Chief Executive since 2007.
The process for identifying a new Chief Executive was led by the
Committee, with the support of executive search and leadership
consulting firm Spencer Stuart. Spencer Stuart is independent and
has no other connection to the Group.
Review of succession plans
Following the successful instigation of the Committee’s existing
succession plans, a review and update of the current plans is underway.
The results of the appraisals undertaken by the Board, its Committees
and in respect of the Chair (as detailed on page 60) are being used to
inform the development of the succession plans. The Committee is also
focusing on extending the succession plans to encompass other senior
management positions.
The Committee reviewed the skills, qualities and capabilities required
for the Chief Executive role, alongside the Committee’s established
succession plans, and identified Chris Belsham as the preferred
candidate for the role. Chris is an experienced Director who has served
on the Board for six years as Group Finance Director (prior to becoming
Chief Executive Designate) and has played a key role in the Group’s
performance and strategic direction since joining the Board.
Nomination Committee evaluation
The Committee annually evaluates its performance. The first evaluation
was conducted in 2022 using a comprehensive, tailored questionnaire.
Further details can be found on page 60. The evaluation concluded that
overall the Committee was functioning effectively however an annual
schedule of events would be created to assist the Committee in the
discharge of its responsibilities.
Following identification as the preferred candidate, Chris underwent
a detailed multi-stage assessment, facilitated by Spencer Stuart,
which culminated in the production of a structured development and
transition plan to support Chris’ continued development. Chris will be
appointed Chief Executive in March 2024, following Richard’s retirement
from the Group.
Succession of the Group Finance Director
Following the decision to appoint Chris Belsham as Chief Executive
upon Richard Whiting’s retirement from the Board, the Committee
oversaw the recruitment process for the successor for the Group
Finance Director role. Competency and role descriptions for the position
were compiled, and a comprehensive search and selection process was
undertaken, again utilising the services of Spencer Stuart.
A shortlist of candidates was prepared, with candidates undertaking a
rigorous assessment process consisting of multi-stage interviews with
members of the Board as well as assessments. Following the conclusion
of the assessment process, the Committee recommended Katie
Shortland for appointment as Chief Financial Officer, with Katie joining
the Board in October 2023. Katie is an experienced finance and
business leader with extensive experience working in infrastructure,
engineering and manufacturing and is currently Finance &
Transformation Director at Midland Expressway Limited, having held
other senior finance positions at Meggitt Plc and Rolls-Royce Plc.
Appointment of Fuels Managing Director
Following the untimely death of Richard Huxley during the year, the
Committee oversaw the appointment of a Managing Director for Fuels.
Having successfully led the Fuels business as Interim Managing Director
since July 2022, Dave Walmsley underwent an interview process with
the Board before being recommended by the Committee for appointment
as Managing Director of Fuels. The Board accepted the recommendation
and Dave was appointed to the position on 1 November 2022.
Philip Acton
Chair of the Nomination Committee
1 August 2023
Areas of focus for 2023/24
Board and Committee composition
• Reviewing the composition of the Board and its Committees to
identify the skills, experience, qualities and capabilities
required. This will include analysing the results of the Board
performance evaluation process that relate to the composition
of the Board and succession planning.
• Reviewing the Directors’ time commitments to ensure
sufficient time is devoted to enable the Board to discharge its
duties.
Succession planning
• Undertaking a rigorous process to establish the Chair’s
successor.
• Keeping under review the appropriateness of the succession
plans for the Board and senior management positions.
Diversity and inclusion
• Reviewing the Group’s policy on diversity and inclusion,
including its objectives and linkage to the Group’s strategy.
NWF GROUP PLC NWF.CO.UK
65
ESG framework Directors’ remuneration report
Rewarding performance
We have followed the
guidance contained in the
Quoted Companies Alliance
Remuneration Committee Guide
when preparing this report.”
Dawn Moore
Chair of the Remuneration
Committee
Meetings in 2023
8(2022: 3)
Members of the Remuneration Committee
D M Moore (Chair)
T P Acton
R J Armitage
D S Downie
Attended
Did not attend
Not required to attend
1 D S Downie resigned as of 29 September 2022.
Dear shareholder,
I am pleased to present the Directors’ Remuneration Report for the year
ended 31 May 2023.
As an AIM-listed entity, the Group is not required to comply with
Schedule 8 of the Large and Medium-sized Companies and Groups
(Accounts and Reports) Regulations 2008 as amended, nor the
principles in respect of Directors’ remuneration in the UK Corporate
Governance Code 2018. Nevertheless, the Board recognises the
importance of providing shareholders with appropriate information
with respect to Executive remuneration and has followed the guidance
contained in the Quoted Companies Alliance Remuneration Committee
Guide when preparing this report.
The aim of this report is to provide shareholders with information to
understand our remuneration strategy and its linkage to the Group’s
financial performance. The report consists of three sections: this
introduction, the Directors’ remuneration policy and an annual report
on remuneration, which will again be the subject of an ‘advisory’
shareholder vote.
Composition
The Remuneration Committee consists of the Chair and two
independent Non-Executive Directors and is currently chaired by
myself as an independent Non-Executive Director.
Group performance in 2022/23
The Group has delivered another very strong set of results, again
demonstrating its resilience and growth. The Group’s financial
performance is detailed in the Strategic Report on pages 4 to 30. Overall
Group performance has been taken into consideration by the
Remuneration Committee when determining remuneration matters.
Key pay out-turns for 2022/23
For 2022/23, the performance achieved against financial and
operational targets resulted in 94% of the maximum annual bonus
being paid.
Given our headline earnings per share (‘EPS’) performance of 31.4p at
31 May 2023, 61% of the LTIP awards granted in August 2020 will vest
in August 2023. As all awards granted from 2020 onwards are subject
to a two-year Company holding period, these awards will not be
exercisable until 2025.
66
NWF GROUP PLC ANNUAL REPORT AND ACCOUNTS 2023
Remuneration policy review
The annual review of our remuneration policies, with our external
advisors, has been conducted to ensure that the policies are aligned to
growth ambitions and the current marketplace. As a result, three
changes to the remuneration policies have been made as follows:
• clarifying that any base salary increase for Executives will usually
correspond to the level of increase applied across the Group, but may
be less;
• alignment of pension contributions with the wider workforce
contribution rate; and
• the introduction of a two-year deferral period in respect of 20% of the
annual bonus received for the Chief Executive and Chief Financial
Officer roles upon Chris Belsham and Katie Shortland (respectively)
assuming those roles. The deferred bonus will be in the form of
Company shares.
Looking forward to 2023/24
During 2022/23, the Committee considered the extent to which ESG
targets could be incorporated into the annual bonus and LTIP
performance criteria. Following this review, ESG considerations will be
reflected in the annual bonus targets for 2023/24 through the inclusion
in individual’s personal objectives.
An in-depth review of our remuneration policies will continue to be
undertaken annually with the assistance of external advisors, to ensure
alignment with the current marketplace and our growth ambitions.
A review of the structure of the annual bonus scheme will also be
conducted in 2023/24 for all roles within the Committee’s scope,
alongside an evaluation of job families.
Base salary for Executive Directors
As of 1 June 2023, Richard Whiting and Chris Belsham received a 3%
increase in basic salary to £328,000 and £197,250 respectively. This was
lower than the average increase for the Group’s employees of 5.54%.
Advisory vote
At the AGM to be held on 28 September 2023, this report, excluding
the remuneration policy section, will again be subject to an ‘advisory’
shareholder vote (Resolution 10).
Dawn Moore
Chair of the Remuneration Committee
1 August 2023
Remuneration policy
The Group’s remuneration principles are as follows:
• remuneration structures should be appropriate to the business, efficient and cost effective in delivery;
• complexity is discouraged in favour of simple and understandable remuneration structures;
• remuneration structures should seek to align Executive and shareholder interests including through a meaningful level of personal shareholding;
• remuneration structures should promote long-term focus through features such as deferral and measuring performance over the long term;
• structures should include performance adjustments (malus) and/or clawback provisions;
• pay should be aligned to the long-term sustainable success and the desired corporate culture throughout the organisation with increases in base
salary of Executives being aligned to, or less than, those of the wider workforce; and
• the Remuneration Committee ensures that rewards properly reflect business performance.
2023/24 remuneration policy
The principles of our approved remuneration policy are as follows:
Element
Operation
Maximum opportunity
Performance metrics
There is no maximum salary;
however, any increase will
usually correspond to or,
where appropriate, be less
than the level of increase
applied across the Group.
100% of base salary.
Base salary reviews and any
increases are based upon pay
conditions throughout the Group,
the Directors’ experience, skills
and performance, market
conditions and the Group’s
performance.
For 2023/24, 75% of the bonus
will be based on headline profit
before tax performance with
the remaining 25% based
on the achievement of
personal objectives.
Base salary
Designed to attract and retain
Directors with the skills and
experience needed to deliver
long-term sustainable growth.
Positioned competitively in line
with the market.
Annual bonus
To reward and motivate based
upon challenging personal
objectives and budget.
Reviewed annually.
Any changes will normally take effect from
1 June each year.
Performance is measured over one financial
year with weightings and targets being reviewed
and set at the start of each financial year.
Malus and clawback provisions will be applied
in a number of cases, including, but not
limited to:
• a gross misstatement of the performance
of the business;
• gross misconduct; or
• a miscalculation of the extent to which
targets have been met.
20% of the annual bonus received for the Chief
Executive and Chief Financial Officer roles (upon
Chris Belsham and Katie Shortland assuming
those roles respectively) will be subject to a
two-year deferral period with the deferred
bonus being in the form of Company shares.
NWF GROUP PLC NWF.CO.UK
67
ESG framework Directors’ remuneration report continued
Remuneration policy continued
2023/24 remuneration policy continued
Element
Operation
Maximum opportunity
Performance metrics
Long-Term Incentive Plan
To align the interests of the
Executive Directors with
shareholders.
Awards are usually made annually.
Performance is measured over three years.
Malus and clawback provisions will be applied in
a number of cases, including, but not limited to:
• a gross misstatement of the
performance of the business;
• gross misconduct; or
• a miscalculation of the extent to which
targets have been met.
Upon vesting, a Company holding period of
two years applies to all awards made after 2020.
Executive Directors are expected to hold shares
of value equivalent to 100% of their salary by the
fifth anniversary of their appointment.
100% of base salary at the time
of the award.
For 2023/24, the awards will
be subject to EPS performance
as follows:
• 30% may vest for
performance of RPI + 2% per
annum; and
• up to a maximum of 100%
may vest for performance
of RPI + 8% per annum.
Pension and benefits
To provide a competitive
package to attract and
retain skilled and
experienced Directors.
The Executive Directors are entitled to receive
pension contributions from the Group.
They can elect for those contributions to be
paid in the form of taxable pension allowance
or direct payments into a defined contribution
pension scheme.
The Executive Directors are entitled to a
standard Director benefits package, including a
company car and private medical cover.
In respect of pension
contributions, 30% of base
salary for R A Whiting and 15%
of base salary for C J Belsham.
For all new Executive Director
appointments, pension
contributions will be a
maximum of 6% of base salary,
in line with the wider workforce.
None.
Annual report on remuneration 2022/23
Directors’ emoluments
Name of Director
C J Belsham
R A Whiting
Non-Executive
T P Acton
R J Armitage
D S Downie²
D M Moore³
Aggregate emoluments
Fees/basic
salary
£’000
Benefits
£’000
192
319
82
43
15
32
683
14
20
—
—
—
—
34
Bonus
£’000
180
299
—
—
—
—
LTIP ¹
£’000
140
232
—
—
—
—
Pension
£’000
25
84
—
—
—
—
2023
Total
£’000
551
954
82
43
15
32
2022
Total
£’000
629
1,069
82
43
43
—
479
372
109
1,677
1,866
1
Calculated as an LTIP award for the three years ended 31 May 2023. C J Belsham and R A Whiting will be awarded 54,074 and 89,976 shares respectively, at the three-month average price
of 258.22p. The award will not vest until after the date of this report.
2 D S Downie resigned on 29 September 2022.
3 D M Moore was appointed on 1 September 2022.
Annual bonus
For the year ended 31 May 2023, Executive Directors were eligible to receive a bonus of up to 100% of base salary, subject to the achievement
of challenging headline profit before tax targets and personal objectives.
2023 bonus targets
Determination
Up to 75% of basic salary
based on headline profit
before tax.
The profit element of the bonus has a minimum threshold set at 95% achievement of budget.
If this is achieved, 30% of the maximum available bonus for this element may be paid.
If headline profit before tax is as budgeted, 50% of the maximum available bonus for
this element may be paid.
If headline profit before tax is 125% of budget, the maximum available bonus for this
element may be paid.
A sliding scale operates between these thresholds.
Performance against targets
The maximum available
profit-related bonus will be
paid in respect of headline PBT
performance in FY23.
68
NWF GROUP PLC ANNUAL REPORT AND ACCOUNTS 2023
Annual report on remuneration 2021/22 continued
Annual bonus continued
2023 bonus targets
Determination
Performance against targets
Up to 25% of base salary
based on personal
objectives.
R A Whiting considers the extent to which personal objectives have been achieved by C
J Belsham to determine the award under the personal objectives element of the bonus.
75% achievement of personal
objectives.1
The Chair of the Board considers the extent to which personal objectives have been
achieved by R A Whiting.
In both cases, the Remuneration Committee has the ultimate approval on the
achievement.
1 This is the average figure for C J Belsham and R A Whiting in respect of the achievement of personal objectives.
Long-Term Incentive Plan
The table below summarises the outstanding Performance Share Plan awards. 2020 awards are based on absolute EPS performance in the year
ended 31 May 2023. 2021 awards are based on absolute EPS performance in the year ending 31 May 2024. 2022 awards are based on absolute EPS
performance in the year ending 31 May 2025.
C J Belsham
R A Whiting
Share price
at date of
grant
205.0p
217.0p
230.0p
205.0p
217.0p
230.0p
Number of
shares
vesting at
maximum
88,902
85,714
83,261
Face value
of shares
vesting
at maximum
£182,250
£186,000
£191,500
147,927
£303,250
142,512
£309,250
138,478
£318,500
EPS for
maximum
vesting ¹
34.2p
31.9p
49.8p
34.2p
31.9p
49.8p
Award date
4 August 2020 2
3 August 2021 2
31 January 2023 2
4 August 2020 2
3 August 2021 2
31 January 2023 2
Number of
shares
vesting at
threshold
(30%)
26,671
25,714
24,978
44,378
42,753
41,543
EPS for
threshold
vesting ¹
29.2p
27.2p
42.2p
29.2p
27.2p
42.2p
Performance
year ending
31 May 2023
31 May 2024
31 May 2025
31 May 2023
31 May 2024
31 May 2025
1
EPS targets based on headline EPS – year ended 31 May 2023 for the 2020 award, year ending 31 May 2024 for the 2021 award and year ending 31 May 2025 for the 2022 award. EPS targets for
maximum and threshold vesting are based on the forecast RPI as at 31 May 2023.
2 A holding period of two years will apply to all awards made after 2020 upon vesting.
C J Belsham and R A Whiting exercised options over 107,590 and 179,066 shares respectively during the year, at the three-month average price of
214.81p.
On the basis of the EPS achieved for the year ended 31 May 2023, it is expected that 61% of the maximum award for C J Belsham and R A Whiting, in
respect of the awards granted on 4 August 2020, will vest in 2023.
Directors’ interests
The Directors who held office at 31 May 2023 had the following interests in the ordinary shares of the Group:
Name of Director
T P Acton
R J Armitage
D M Moore
C J Belsham
R A Whiting
31 May
2023
Number
30,000
10,000
—
162,845
505,122
Payments for loss of office
No payments for loss of office were made during the year ended 31 May 2023 to previous Directors (31 May 2022: none).
Terms and conditions for Non-Executive Directors
Non-Executive Directors do not have service contracts but appointment letters setting out their terms of appointment. All Non-Executive Directors
are appointed for one year with renewal for further one-year terms if performance is satisfactory, normally renewable on a similar basis subject
to re-election at the Group’s AGM.
NWF GROUP PLC NWF.CO.UK
69
ESG framework
Directors’ report for the year ended 31 May 2023
The Directors present their report together with the audited Annual
Report and Accounts of the Parent Company (‘the Company’) and the
Group for the year ended 31 May 2023.
The Directors consider that the Annual Report and Accounts, taken as a
whole, is fair, balanced and understandable and provides the information
necessary for shareholders to assess the Group and Parent Company’s
performance, business model and strategy.
Business review and future developments
A review of the performance of the Group during the year, including
principal risks and uncertainties, key performance indicators and
comments on future developments, is included in the Strategic Report
and is included in this report by cross-reference. The Strategic Report
has been reviewed and approved by the Board of Directors.
• On the basis of the above, the Directors continue to adopt the going
concern basis of accounting in preparing the annual financial statements.
Forward-looking statements
The Annual Report and Accounts include certain statements that are
forward-looking statements. These statements appear in a number
of places throughout the Strategic Report and include statements
regarding the Group’s intentions, beliefs or current expectations and
those of its officers, Directors and employees concerning, amongst
other things, the results of operations, financial condition, liquidity,
prospects, growth and strategies of the Group’s businesses. By their
nature, these statements involve uncertainty since future events and
circumstances can cause results and developments to differ materially
from those anticipated.
Results and dividends
The Group recorded revenue in the year of £1,053.9 million
(2022: £878.6 million) and profit after tax of £14.9 million
(2022: £8.4 million).
The Directors recommend a final dividend for the year of 6.8p per
share (2022: 6.5p) which, if approved at the AGM, will be payable on
8 December 2023. Together with the interim dividend paid during the
year of 1.0p per share (2022: 1.0p), this will result in a total dividend of
7.8p per share (2022: 7.5p) amounting to £3.9 million (2022: £3.7 million).
Financial risk management
Information relating to the principal risks and uncertainties of the Group
has been included within the Strategic Report and is included in this
report by cross-reference. Further information relating to the financial
risks of the Group has been included within note 23, Financial
instruments and risk management.
Going concern
The Group’s business activities, together with the factors likely to
affect its future development, performance and position, are set out
in the Group Financial Review on pages 24 to 26. The financial position
of the Group and its cash flows, liquidity position and borrowing
facilities are also described in the Group Financial Review. In addition,
note 23 of the Group financial statements includes the Group’s
objectives, policies and processes for managing its capital,
its financial risk management objectives, details of its financial
instruments and hedging activities and its exposure to price, interest
rate, credit and liquidity risk. Accordingly, the Directors, having made
suitable enquiries, have a reasonable expectation that the Company
and the Group have adequate resources to continue in operational
existence for the foreseeable future based on the following factors:
• The Group has an agreement with NatWest Group for credit facilities
totalling £61.0 million. With the exception of the bank overdraft facility
of £1.0 million, which are renewed annually, these facilities are
committed through to 31 May 2026. The Group’s banking facilities,
provided by NatWest Group, were renewed on 29 June 2018 and are
committed until 31 October 2023. The Group is profitable and
cash-generative, and has a strong balance sheet position and a good
relationship with its banker. As at 31 May 2023, the Group had
available funds of £77.3 million (based on cash balances, invoice
discounting availability, RCF and overdraft facilities), against which
the Group was utilising £Nil.
• The Board has prepared cash flow forecasts for the period to
31 May 2025. Under this base case scenario, the Group is expected
to continue to have significant headroom relative to the funding
available to it and to comply with its banking covenants.
• The Board has also considered a severe downside scenario based on
a significant and sustained reduction in Fuels’ profitability alongside
underperformance in Food and Feeds. This downside scenario
excludes any mitigating actions that the Board would be able to take
to reduce costs. Under this scenario, the Group would still expect to
have sufficient headroom in its financing facilities.
70
NWF GROUP PLC ANNUAL REPORT AND ACCOUNTS 2023
Directors and their interests
The Directors of the Company who were in office during the year and
up to the date of signing the financial statements were:
• Philip Acton;
• Richard Armitage;
• David Downie (resigned 29 September 2022);
• Dawn Moore (appointed 1 September 2022);
• Chris Belsham; and
• Richard Whiting.
The Directors who held office as at 31 May 2023 had the following
interests in the ordinary shares of the Group.
Name of Director
T P Acton
R J Armitage
D M Moore
C J Belsham
R A Whiting
31 May
2023
Number
30,000
10,000
—
162,845
505,122
In addition to the interests in ordinary shares shown above, the Group
operates a Performance Share Plan (‘the LTIP’) for senior executives,
under which certain Directors have been granted conditional share
awards. Subject to achieving performance targets, the maximum
number of ordinary shares which could be issued to Directors in the
future under such awards is shown below:
C J Belsham
R A Whiting
31 May
2023
Number
257,877
428,917
Further information on the Directors’ interests in the LTIP conditional
share awards can be found in the Directors’ Remuneration Report.
The market price of the Group’s shares at the end of the financial year
was 259.5p (31 May 2022: 220.0p) and the range of market prices during
the year was between 220.0p and 286.00p.
No changes took place in the interests of Directors between 31 May 2023
and the date of signing the financial statements.
Further details on related party transactions with Directors are provided
in note 30 of the Group financial statements.
Directors’ indemnities
The Group has made qualifying third party indemnity provisions for the
benefit of the Directors, which were in force during the year and up to
the date of this report.
Takeover Directive requirements
The Group has one class of equity share, namely 25p ordinary shares.
The shares have equal voting rights and there are no special rights or
restrictions attaching to any of them or their transfer to other persons.
Rules governing the appointment and replacement of Directors, and
those relating to the amendment of the Group’s Articles of Association,
are contained within those Articles of Association, a copy of which is
located on the Group’s website (nwf.co.uk).
Notice of AGM
A Notice of AGM, with explanatory notes, accompanies these financial
statements.
Corporate governance
The Group’s statement on corporate governance can be found in the
Corporate Governance Statement which is incorporated by reference
and forms part of this Directors’ Report.
Independent auditors
The auditors, PricewaterhouseCoopers LLP, have indicated their
willingness to continue in office and a resolution concerning their
reappointment will be proposed at the AGM.
By order of the Board
Rob Andrew
Company Secretary
Wardle
Nantwich
Cheshire
CW5 6BP
Registered number: 02264971
1 August 2023
Major shareholdings as at 31 May 2023
Name of shareholder
Interactive Investor
Festa Lífeyrissjóður
Sameinaði Lífeyrisjóðurinn
Lífeyrissjóður Vestmannaeyja
Close Brothers Asset Management
Cazenove Capital Management
Schroder Investment Management
Hargreaves Lansdown
Canaccord Genuity Wealth Management
Number
2,688,555
2,382,389
2,382,389
2,382,389
2,211,366
1,951,132
1,703,653
1,679,842
1,650,000
%
5.44
4.82
4.82
4.82
4.48
3.95
3.45
3.40
3.34
Employee engagement
The Group systematically provides employees with information on
matters of concern to them, consulting them or their representatives
regularly, so that their views can be taken into account when making
decisions that are likely to affect their interests. Employee involvement
in the Group is encouraged, as achieving a common awareness on the
part of all employees of the financial and economic factors affecting the
Group plays a major role in its performance.
The Group is committed to an active equal opportunities policy
from recruitment and selection, through training and development,
performance reviews and promotion to retirement. The Group’s policy
is to promote an environment free from discrimination, harassment and
victimisation, where all employees receive equal treatment regardless
of gender, race, ethnic or national origin, health condition, disabilities,
age, marital or civil partner status, sexual orientation or religion. All
decisions relating to employment practices will be objective, free from
bias and based solely upon work criteria and individual merit.
Further information and examples of the Group’s engagement with
employees can be found in our Section 172 Statement on page 43 and
sustainability strategy on pages 37 and 38.
Business relationships
The Group recognises its responsibility to act fairly in our engagements
with customers, suppliers, investors and any regulators, all of whom are
integral to the success of the Group. The strength of the Group’s
business relationships is vital and the Group aims to collaborate with
customers and suppliers to deliver long-term sustainable solutions.
Further information and examples of the Group’s engagement with
customers, suppliers and others can be found in our Section 172
Statement on pages 43 to 45 and sustainability strategy on page 39.
NWF GROUP PLC NWF.CO.UK
71
ESG framework Statement of Directors’ responsibilities for the year ended 31 May 2023
Directors’ confirmations
In the case of each Director in office at the date the Directors’ Report
is approved:
• far as the Director is aware, there is no relevant audit information
of which the Group’s and Company’s auditors are unaware; and
• they have taken all the steps that they ought to have taken as a Director
in order to make themselves aware of any relevant audit information
and to establish that the Group’s and Company’s auditors are aware
of that information.
By order of the Board
Rob Andrew
Company Secretary
Wardle
Nantwich
Cheshire
CW5 6BP
Registered number: 02264971
1 August 2023
The Directors are responsible for preparing the Annual Report and the
financial statements in accordance with applicable law and regulation.
Company law requires the Directors to prepare financial statements
for each financial year. Under that law, the Directors have prepared
the Group financial statements in accordance with UK-adopted
International Accounting Standards and the Company financial
statements in accordance with United Kingdom Generally Accepted
Accounting Practice (United Kingdom Accounting Standards, comprising
FRS 101 ‘Reduced Disclosure Framework’, and applicable law).
Under Company law, Directors must not approve the financial
statements unless they are satisfied that they give a true and fair view
of the state of affairs of the Group and Company and of the profit or loss
of the Group for that period. In preparing the financial statements,
the Directors are required to:
• select suitable accounting policies and then apply them consistently;
• state whether applicable UK-adopted International Accounting
Standards have been followed for the Group financial statements
and United Kingdom Accounting Standards, comprising FRS 101
have been followed for the Company financial statements, subject
to any material departures disclosed and explained in the
financial statements;
• make judgements and accounting estimates that are reasonable
and prudent; and
• prepare the financial statements on the going concern basis unless
it is inappropriate to presume that the Group and Company will
continue in business.
The Directors are responsible for safeguarding the assets of the Group
and Company and hence for taking reasonable steps for the prevention
and detection of fraud and other irregularities.
The Directors are also responsible for keeping adequate accounting
records that are sufficient to show and explain the Group’s and Company’s
transactions and disclose with reasonable accuracy at any time the
financial position of the Group and Company and enable them to ensure
that the financial statements comply with the Companies Act 2006.
The Directors are responsible for the maintenance and integrity of the
Company’s website. Legislation in the United Kingdom governing the
preparation and dissemination of financial statements may differ from
legislation in other jurisdictions.
72
NWF GROUP PLC ANNUAL REPORT AND ACCOUNTS 2023
Independent auditors’ report
to the members of NWF Group plc
Report on the audit of the financial statements
Opinion
In our opinion:
• NWF Group plc’s group financial statements and parent company financial statements (the “financial statements”) give a true and fair view of the
state of the group’s and of the parent company’s affairs as at 31 May 2023 and of the group’s profit and the group’s cash flows for the year then ended;
• the group financial statements have been properly prepared in accordance with UK-adopted international accounting standards as applied in
accordance with the provisions of the Companies Act 2006;
• the parent company financial statements have been properly prepared in accordance with United Kingdom Generally Accepted Accounting
Practice (United Kingdom Accounting Standards, including FRS 101 “Reduced Disclosure Framework”, and applicable law); and
• the financial statements have been prepared in accordance with the requirements of the Companies Act 2006.
We have audited the financial statements, included within the Annual Report and Accounts (the “Annual Report”), which comprise: the Consolidated
and Parent Company balance sheets as at 31 May 2023; the Consolidated income statement, the Consolidated and Parent Company statements of
comprehensive income, the Consolidated and Parent Company statements of changes in equity and the Consolidated cash flow statement for the
year then ended; and the notes to the financial statements, which include a description of the significant accounting policies.
Basis for opinion
We conducted our audit in accordance with International Standards on Auditing (UK) (“ISAs (UK)”) and applicable law. Our responsibilities under
ISAs (UK) are further described in the Auditors’ responsibilities for the audit of the financial statements section of our report. We believe that the
audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Independence
We remained independent of the group in accordance with the ethical requirements that are relevant to our audit of the financial statements in the
UK, which includes the FRC’s Ethical Standard, as applicable to listed entities, and we have fulfilled our other ethical responsibilities in accordance
with these requirements.
Our audit approach
Overview
Audit scope
• The Group consists of four trading components alongside its Parent Company and other holding companies. Our audit focused on those
components with the most significant contribution to the Group’s results, being NWF Agriculture Limited, NWF Fuels Limited, Boughey
Distribution Limited along with NWF Group plc (the Parent Company).
• The components within the scope of our work accounted for 98% of Group revenue and 97% of Group profit before tax.
Key audit matters
• Defined benefit pension plan liabilities (group and parent).
• Calculation of the fair value of the intangible assets acquired (group).
Materiality
• Overall group materiality: £944,000 (2022: £1,000,000) based on 5% of profit before tax (2022: profit before tax adjusted for exceptional items).
• Overall parent company materiality: £520,000 (2022: £530,000) based on 1% of total assets.
• Performance materiality: £708,000 (2022: £750,000) (group) and £390,000 (2022: £397,500) (parent company).
The scope of our audit
As part of designing our audit, we determined materiality and assessed the risks of material misstatement in the financial statements.
Key audit matters
Key audit matters are those matters that, in the auditors’ professional judgement, were of most significance in the audit of the financial statements of
the current period and include the most significant assessed risks of material misstatement (whether or not due to fraud) identified by the auditors,
including those which had the greatest effect on: the overall audit strategy; the allocation of resources in the audit; and directing the efforts of the
engagement team. These matters, and any comments we make on the results of our procedures thereon, were addressed in the context of our audit
of the financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.
This is not a complete list of all risks identified by our audit.
Calculation of the fair value of the intangible assets acquired is a new key audit matter this year. Goodwill impairment of the Feeds CGU, which was
a key audit matter last year, is no longer included because of the impairment recognised in prior year alongside the improved performance in the
CGU. Otherwise, the key audit matters on page 74 are consistent with last year.
NWF GROUP PLC NWF.CO.UK
73
Financial statements Independent auditors’ report continued
to the members of NWF Group plc
Report on the audit of the financial statements continued
Our audit approach continued
Key audit matters continued
Key audit matter
How our audit addressed the key audit matter
Defined benefit pension plan liabilities (group and parent)
Refer to note 2 (Significant accounting policies), page 89 (Critical accounting
estimates and judgements) and note 26 (Retirement benefit obligations)
within the Notes to the Group financial statements and note 1 (Significant
accounting policies) and page 118 (Critical accounting estimates and
judgements) within the Notes to the Parent Company financial statements.
The Group and the Parent Company have a defined benefit pension plan
net liability of £9.6 million (2022: £9.3 million), which is significant in the
context of both the overall balance sheet of the Group and the Parent Company.
A major constituent of this net liability is the value attributed to the gross
liabilities of the pension scheme. The valuation of these gross liabilities of
£39.2 million (2022: £49.0 million) requires significant judgement and
expertise primarily in respect of the key actuarial assumptions used. These
assumptions include both financial assumptions, e.g. the discount rate and
inflation, but also key demographic assumptions, e.g. mortality rates.
Modest changes in a number of these key assumptions can have a material
impact on the calculation of the liability and therefore a significant effect
on the financial position of the Group and the Parent Company. We therefore
focused our work on this area.
We performed the following procedures:
• Obtained the external actuary’s report used in valuing the scheme’s
liabilities. Using our experience of the valuation of similar schemes,
and our own pension specialists, we challenged a number of the key
inputs in the report and evaluated the methodologies adopted by
the actuary in forming the valuation consistent with industry practice
and our expectations;
• Agreed the key financial assumptions used within the valuation of the
scheme’s liabilities, including the discount and inflation rates, to our
internally developed benchmarks. Further we considered the
appropriateness and reasonableness of the approach taken to
setting the mortality assumptions;
• Assessed the membership data used in valuing the schemes’ liabilities
and tested any significant changes since the last valuation; and
• Reviewed the related disclosures within the financial statements for
reasonableness and to determine if they are consistent with relevant
accounting standards.
Based on our work performed, we concluded that the actuarial
assumptions used in calculating the pension liability were within an
acceptable range and appropriate disclosures have been made in the
financial statements.
Calculation of the fair value of the intangible assets
acquired (group)
Refer to note 2 (Significant accounting policies), page 89 (Critical
accounting estimates and judgements) and note 11 (Business combinations)
within the Notes to the Group financial statements.
During the year, the Group acquired 100% of the share capital of
Sweetfuels Limited. Management have performed an exercise to
identify the fair value of identifiable intangible assets acquired.
Customer relationships of £2.3 million, brands of £0.8 million and
goodwill of £6.5 million have been recognised in the Consolidated
balance sheet.
We performed the following proccedures:
• Obtained relevant purchase documents and considered
management’s identification of intangible assets and assessed this
for completeness;
• Evaluated management’s significant judgements and estimates of
intangible assets acquired, utilising our valuation experts to assess
the methodology applied and key assumptions used (such as
discount and royalty rates), where relevant;
• Agreed the key inputs used within the valuation, including future
growth assumptions, royalty rate, discount rate and customer
attrition to supporting information and checked the mathematical
accuracy of management’s calculations; and
We have focussed our work in this area given the significant judgements
and estimates involved in determining the fair value of the identifiable
intangible assets acquired.
• Reviewed the related disclosures within the financial statements for
reasonableness and to determine if they are consistent with relevant
accounting standards.
Based on our work performed, we concluded the fair value of the
identifiable intangible assets acquired to be reasonable.
How we tailored the audit scope
We tailored the scope of our audit to ensure that we performed enough work to be able to give an opinion on the financial statements as a whole,
taking into account the structure of the group and the parent company, the accounting processes and controls, and the industry in which they operate.
The Group is organised into eight reporting components consisting of four trading entities, along with a Parent Company and three holding
companies and the Group financial statements are a consolidation of these reporting components. The reporting components vary in size. The
trading entities are all based in the UK and operate their own accounting function, which report to the Group finance team.
Our audit focused on those components with the most significant contribution to the Group’s results, being NWF Agriculture Limited, NWF Fuels
Limited, Boughey Distribution Limited along with NWF Group plc (the Parent Company).
Audit work across the Group, including the trading entities and Parent Company, was performed by the same audit team based out of our
Manchester office.
The impact of climate risk on our audit
As part of our audit we made enquiries of management to understand the extent of the potential impact of climate risk on the group’s and parent
company’s financial statements, and we remained alert when performing our audit procedures for any indicators of the impact of climate risk. Our
procedures did not identify any material impact as a result of climate risk on the group’s and parent company’s financial statements.
74
NWF GROUP PLC ANNUAL REPORT AND ACCOUNTS 2023
Report on the audit of the financial statements continued
Our audit approach continued
Materiality
The scope of our audit was influenced by our application of materiality. We set certain quantitative thresholds for materiality. These, together with
qualitative considerations, helped us to determine the scope of our audit and the nature, timing and extent of our audit procedures on the individual
financial statement line items and disclosures and in evaluating the effect of misstatements, both individually and in aggregate on the financial
statements as a whole.
Based on our professional judgement, we determined materiality for the financial statements as a whole as follows:
Overall materiality
£944,000 (2022: £1,000,000).
£520,000 (2022: £530,000).
Financial statements - group
Financial statements - parent company
How we determined it
Rationale for benchmark applied
5% of profit before tax
(2022: profit before tax adjusted for
exceptional items)
1% of total assets
Profit before tax is considered to be a key
metric to assess the performance of the
Group, and is a generally accepted auditing
benchmark. In prior year, profit before tax was
adjusted for exceptional items of £8.3 million,
which were £nil for the year ended 31 May
2023.
Total assets are considered to be appropriate
as the Parent Company is not profit oriented.
The Parent Company is a holding company, with
assets relating to investments in subsidiaries
and investment property which is utilised by the
Group’s trading entities. Total assets is a
generally accepted auditing benchmark.
For each component in the scope of our group audit, we allocated a materiality that is less than our overall group materiality. The range of materiality
allocated across components was £420,000 to £875,000. Certain components were audited to a local statutory audit materiality that was also less
than our overall group materiality.
We use performance materiality to reduce to an appropriately low level the probability that the aggregate of uncorrected and undetected
misstatements exceeds overall materiality. Specifically, we use performance materiality in determining the scope of our audit and the nature
and extent of our testing of account balances, classes of transactions and disclosures, for example in determining sample sizes. Our performance
materiality was 75% (2022: 75%) of overall materiality, amounting to £708,000 (2022: £750,000) for the group financial statements and £390,000
(2022: £397,500) for the parent company financial statements.
In determining the performance materiality, we considered a number of factors - the history of misstatements, risk assessment and aggregation
risk and the effectiveness of controls - and concluded that an amount in the middle of our normal range was appropriate.
We agreed with those charged with governance that we would report to them misstatements identified during our audit above £45,000 (group audit)
(2022: £50,000) and £21,000 (parent company audit) (2022: £26,500) as well as misstatements below those amounts that, in our view, warranted
reporting for qualitative reasons.
Conclusions relating to going concern
Our evaluation of the directors’ assessment of the group’s and the parent company’s ability to continue to adopt the going concern basis of
accounting included:
• We assessed management’s basecase forecast, as well as their severe but plausible downside scenario, which have formed the basis for the
Group’s assessment and conclusions with respect to their ability to continue as a going concern;
• We obtained the terms of the Group’s new financing facility and related covenants, and considered the availability of bank facilities and
compliance with covenants over the going concern period;
• We agreed the opening position of the Group’s cash flow forecasts to the June 2023 management accounts. We also agreed the gross debt
and cash per the 31 May 2023 audited financial statements to the cash flow forecast;
• We evaluated the historical accuracy of the budgeting process to assess the reliability of the forecasts;
• We held discussions with management to assess and challenge the key assumptions made, using our knowledge of the business and industry
and performed sensitivities over the key assumptions; and
• We reviewed the disclosures within the Annual Report and Accounts with respect to going concern and are satisfied that they are consistent
with the assessment performed.
Based on the work we have performed, we have not identified any material uncertainties relating to events or conditions that, individually or
collectively, may cast significant doubt on the group’s and the parent company’s ability to continue as a going concern for a period of at least twelve
months from when the financial statements are authorised for issue.
In auditing the financial statements, we have concluded that the directors’ use of the going concern basis of accounting in the preparation of the
financial statements is appropriate.
However, because not all future events or conditions can be predicted, this conclusion is not a guarantee as to the group’s and the parent company’s
ability to continue as a going concern.
Our responsibilities and the responsibilities of the directors with respect to going concern are described in the relevant sections of this report.
NWF GROUP PLC NWF.CO.UK
75
Financial statements Independent auditors’ report continued
to the members of NWF Group plc
Report on the audit of the financial statements continued
Reporting on other information
The other information comprises all of the information in the Annual Report other than the financial statements and our auditors’ report thereon. The
directors are responsible for the other information. Our opinion on the financial statements does not cover the other information and, accordingly,
we do not express an audit opinion or, except to the extent otherwise explicitly stated in this report, any form of assurance thereon.
In connection with our audit of the financial statements, our responsibility is to read the other information and, in doing so, consider whether the
other information is materially inconsistent with the financial statements or our knowledge obtained in the audit, or otherwise appears to be materially
misstated. If we identify an apparent material inconsistency or material misstatement, we are required to perform procedures to conclude whether
there is a material misstatement of the financial statements or a material misstatement of the other information. If, based on the work we have performed,
we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report based on
these responsibilities.
With respect to the Strategic report and Directors’ report, we also considered whether the disclosures required by the UK Companies Act 2006 have
been included.
Based on our work undertaken in the course of the audit, the Companies Act 2006 requires us also to report certain opinions and matters as described below.
Strategic report and Directors’ report
In our opinion, based on the work undertaken in the course of the audit, the information given in the Strategic report and Directors’ report for the
year ended 31 May 2023 is consistent with the financial statements and has been prepared in accordance with applicable legal requirements.
In light of the knowledge and understanding of the group and parent company and their environment obtained in the course of the audit, we did not
identify any material misstatements in the Strategic report and Directors’ report.
Responsibilities for the financial statements and the audit
Responsibilities of the directors for the financial statements
As explained more fully in the Statement of Directors’ responsibilities, the directors are responsible for the preparation of the financial statements
in accordance with the applicable framework and for being satisfied that they give a true and fair view. The directors are also responsible for such
internal control as they determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether
due to fraud or error.
In preparing the financial statements, the directors are responsible for assessing the group’s and the parent company’s ability to continue as a going
concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the directors either
intend to liquidate the group or the parent company or to cease operations, or have no realistic alternative but to do so.
Auditors’ responsibilities for the audit of the financial statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether
due to fraud or error, and to issue an auditors’ report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a
guarantee that an audit conducted in accordance with ISAs (UK) will always detect a material misstatement when it exists. Misstatements can arise
from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic
decisions of users taken on the basis of these financial statements.
Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design procedures in line with our responsibilities,
outlined above, to detect material misstatements in respect of irregularities, including fraud. The extent to which our procedures are capable of
detecting irregularities, including fraud, is detailed below.
Based on our understanding of the group and industry, we identified that the principal risks of non-compliance with laws and regulations related
to health and safety legislation, and we considered the extent to which non-compliance might have a material effect on the financial statements.
We also considered those laws and regulations that have a direct impact on the financial statements such as the Companies Act 2006 and UK tax
legislation. We evaluated management’s incentives and opportunities for fraudulent manipulation of the financial statements (including the risk of
override of controls), and determined that the principal risks were related to posting inappropriate journal entries to improve financial performance,
and management bias in accounting estimates and judgements. Audit procedures performed by the engagement team included:
• Discussions with the audit committee and management including consideration of known or suspected instances of non-compliance with laws
and regulation or fraud;
• Reviewing minutes of meetings of those charged with governance;
• Identifying and testing journal entries, in particular those with unusual account combinations which impact revenue or reduce expenditure to
manipulate the financial performance of the Group or contain certain unusual key words such as fraud or error; and
• Assessing key judgements and estimates made by management for evidence of inappropriate bias, including the valuation of the defined benefit
pension plan liabilities and the calculation of the fair value of the intangible assets acquired.
76
NWF GROUP PLC ANNUAL REPORT AND ACCOUNTS 2023
Report on the audit of the financial statements continued
Responsibilities for the financial statements and the audit continued
Auditors’ responsibilities for the audit of the financial statements continued
There are inherent limitations in the audit procedures described above. We are less likely to become aware of instances of non-compliance with
laws and regulations that are not closely related to events and transactions reflected in the financial statements. Also, the risk of not detecting a
material misstatement due to fraud is higher than the risk of not detecting one resulting from error, as fraud may involve deliberate concealment by,
for example, forgery or intentional misrepresentations, or through collusion.
Our audit testing might include testing complete populations of certain transactions and balances, possibly using data auditing techniques.
However, it typically involves selecting a limited number of items for testing, rather than testing complete populations. We will often seek to target
particular items for testing based on their size or risk characteristics. In other cases, we will use audit sampling to enable us to draw a conclusion
about the population from which the sample is selected.
A further description of our responsibilities for the audit of the financial statements is located on the FRC’s website at: www.frc.org.uk/
auditorsresponsibilities. This description forms part of our auditors’ report.
Use of this report
This report, including the opinions, has been prepared for and only for the parent company’s members as a body in accordance with Chapter 3 of Part 16
of the Companies Act 2006 and for no other purpose. We do not, in giving these opinions, accept or assume responsibility for any other purpose or to
any other person to whom this report is shown or into whose hands it may come save where expressly agreed by our prior consent in writing.
Other required reporting
Companies Act 2006 exception reporting
Under the Companies Act 2006 we are required to report to you if, in our opinion:
• we have not obtained all the information and explanations we require for our audit; or
• adequate accounting records have not been kept by the parent company, or returns adequate for our audit have not been received from
branches not visited by us; or
• certain disclosures of directors’ remuneration specified by law are not made; or
• the parent company financial statements are not in agreement with the accounting records and returns.
We have no exceptions to report arising from this responsibility.
Kate Finn (Senior Statutory Auditor)
for and on behalf of PricewaterhouseCoopers LLP
Chartered Accountants and Statutory Auditors
Manchester
1 August 2023
NWF GROUP PLC NWF.CO.UK
77
Financial statements Consolidated income statement
for the year ended 31 May 2023
Revenue
Cost of sales
Gross profit
Administrative expenses
Headline operating profit1
Exceptional items
Amortisation of acquired intangibles
Operating profit
Finance costs
Headline profit before taxation1
Net finance cost in respect of the defined benefit pension scheme
Exceptional items
Amortisation of acquired intangibles
Profit before taxation
Income tax expense
Profit for the year attributable to equity shareholders
Earnings per share (pence)
Basic
Diluted
Headline earnings per share (pence)1
Basic
Diluted
Note
3,4
5
14
4
7
5
14
5
8
10
10
10
10
2023
£m
1,053.9
(999.8)
54.1
(33.5)
2022
£m
878.6
(823.3)
55.3
(42.1)
21.0
—
(0.4)
20.6
(1.7)
19.6
(0.3)
—
(0.4)
18.9
(4.0)
14.9
30.2
30.1
31.4
31.3
21.8
(8.3)
(0.3)
13.2
(1.2)
20.9
(0.3)
(8.3)
(0.3)
12.0
(3.6)
8.4
17.1
17.0
35.0
34.8
1
Headline operating profit is statutory operating profit of £20.6 million (2022: £13.2 million) before exceptional items of £Nil (2022: £8.3 million) and amortisation of acquired intangibles
of £0.4 million (2022: £0.3 million). Headline profit before taxation is statutory profit before taxation of £18.9 million (2022: £12.0 million) after adding back the net finance cost in respect
of the Group’s defined benefit pension scheme of £0.3 million (2022: £0.3 million), the exceptional items and amortisation of acquired intangibles. Headline earnings per share also takes
into account the taxation effect thereon.
The results relate to continuing operations.
The notes on pages 83 to 112 form part of these Group financial statements.
78
NWF GROUP PLC ANNUAL REPORT AND ACCOUNTS 2023
Consolidated statement of comprehensive income
for the year ended 31 May 2023
Profit for the year attributable to equity shareholders
Items that will never be reclassified to income statement:
Remeasurement (loss)/gain defined benefit pension scheme
Tax on items that will never be reclassified to income statement
Total other comprehensive (expense)/income
Total comprehensive income for the year
The notes on pages 83 to 112 form part of these Group financial statements.
Note
26
2023
£m
14.9
(2.3)
1.0
(1.3)
13.6
2022
£m
8.4
4.0
(1.0)
3.0
11.4
NWF GROUP PLC NWF.CO.UK
79
Financial statements
Consolidated balance sheet
as at 31 May 2023
Non-current assets
Property, plant and equipment
Right of use assets
Intangible assets
Current assets
Inventories
Trade and other receivables
Reimbursement assets
Cash and cash equivalents
Derivative financial instruments
Total assets
Current liabilities
Trade and other payables
Current income tax liabilities
Borrowings
Lease liabilities
Provision for liabilities
Derivative financial instruments
Non-current liabilities
Borrowings
Lease liabilities
Provision for liabilities
Deferred income tax liabilities
Retirement benefit obligations
Total liabilities
Net assets
Equity
Share capital
Share premium
Retained earnings
Total equity
Note
12
13
14
15
16
17
18
23
19
20
21
22
23
20
21
22
24
26
25
2023
£m
43.7
29.1
31.8
104.6
7.4
87.4
1.7
16.3
0.2
113.0
217.6
(92.5)
(0.8)
—
(9.8)
(1.9)
(0.1)
2022
£m
45.4
27.5
22.7
95.6
9.8
96.2
2.8
9.1
0.4
118.3
213.9
(100.6)
(0.4)
—
(8.6)
(3.1)
(0.2)
(105.1)
(112.9)
—
(20.0)
(0.8)
(4.2)
(9.6)
—
(19.7)
(0.7)
(3.2)
(9.3)
(34.6)
(32.9)
(139.7)
(145.8)
77.9
68.1
12.4
0.9
64.6
77.9
12.3
0.9
54.9
68.1
The Group financial statements on pages 78 to 112 were approved by the Board of Directors on 1 August 2023 and were signed on its behalf by:
R A Whiting
Director
C J Belsham
Director
The notes on pages 83 to 112 form part of these Group financial statements.
80
NWF GROUP PLC ANNUAL REPORT AND ACCOUNTS 2023
Consolidated statement of changes in equity
for the year ended 31 May 2023
Balance at 1 June 2021
Profit for the year
Items that will never be reclassified to income statement:
Actuarial gain on defined benefit pension scheme (note 26)
Tax on items that will never be reclassified to income statement
Total other comprehensive income
Total comprehensive income for the year
Transactions with owners:
Issue of shares
Dividends paid (note 9)
Value of employee services
Charge to equity for equity-settled share-based payments
Total transactions with owners
Balance at 31 May 2022
Profit for the year
Items that will never be reclassified to income statement:
Actuarial loss on defined benefit pension scheme (note 26)
Tax on items that will never be reclassified to income statement
Total other comprehensive expense
Total comprehensive income for the year
Transactions with owners:
Issue of shares
Dividends paid (note 9)
Value of employee services
Charge to equity for equity-settled share-based payments
Total transactions with owners
Balance at 31 May 2023
The notes on pages 83 to 112 form part of these Group financial statements.
Share
capital
£m
12.3
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
0.1
—
—
—
0.1
12.4
Share
premium
£m
Retained
earnings
£m
Total
equity
£m
59.5
8.4
4.0
(1.0)
3.0
11.4
—
(3.5)
(0.1)
0.8
(2.8)
68.1
14.9
(2.3)
1.0
(1.3)
46.3
8.4
4.0
(1.0)
3.0
11.4
—
(3.5)
(0.1)
0.8
(2.8)
54.9
14.9
(2.3)
1.0
(1.3)
13.6
13.6
(0.1)
(3.7)
(0.6)
0.5
(3.9)
—
(3.7)
(0.6)
0.5
(3.8)
0.9
64.6
77.9
0.9
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
12.3
0.9
NWF GROUP PLC NWF.CO.UK
81
Financial statements
Consolidated cash flow statement
for the year ended 31 May 2023
Net cash generated from operations
Interest paid
Income tax paid
Net cash generated from operating activities
Cash flows used in investing activities
Purchase of intangible assets
Purchase of property, plant and equipment
Acquisition of subsidiaries – cash paid (net of cash acquired)
Proceeds on sale of property, plant and equipment
Net cash used in investing activities
Cash flows used in financing activities
Decrease in bank borrowings
Capital element of finance leases
Dividends paid
Net cash used in financing activities
Net increase in cash and cash equivalents
Cash and cash equivalents at beginning of year
Cash and cash equivalents at end of year
The notes on pages 83 to 112 form part of these Group financial statements.
Note
28
14
12
9
29
29
29
2023
£m
37.0
(1.4)
(3.1)
32.5
(0.1)
(3.1)
(9.5)
1.0
(11.7)
—
(9.9)
(3.7)
2022
£m
33.7
(0.9)
(2.7)
30.1
(0.2)
(3.4)
—
0.4
(3.2)
(9.5)
(8.8)
(3.5)
(13.6)
(21.8)
7.2
9.1
16.3
5.1
4.0
9.1
82
NWF GROUP PLC ANNUAL REPORT AND ACCOUNTS 2023
Notes to the Group financial statements
for the year ended 31 May 2023
1. General information
NWF Group plc (‘the Company’) is a public limited company incorporated and domiciled in England, United Kingdom, under the Companies Act
2006. The principal activities of NWF Group plc and its subsidiaries (together ‘the Group’) are the sale and distribution of fuel oils, the warehousing
and distribution of ambient groceries and the manufacture and sale of animal feeds. Further information on the nature of the Group’s operations
and principal activities is set out in note 4 of the Group financial statements.
The address of the Company’s registered office is NWF Group plc, Wardle, Nantwich, Cheshire CW5 6BP. The Company has its primary listing on AIM,
part of the London Stock Exchange.
The Group financial statements were authorised for issue by the Board of Directors on 1 August 2023.
2. Significant accounting policies
The Group’s principal accounting policies are set out below.
Basis of preparation
The financial statements of NWF Group plc have been prepared in accordance with UK-adopted International Accounting Standards.
The Group financial statements have been prepared in accordance with UK-adopted International Accounting Standards (‘IFRS’) and with the
requirements of the Companies Act 2006 applicable to companies reporting under those standards. The Group financial statements have been
prepared on the going concern basis and on the historical cost convention modified for the revaluation of certain financial instruments.
The preparation of financial statements in conformity with IFRS requires the use of certain critical accounting estimates, which are outlined in the
critical accounting estimates and judgements section of these accounting policies. It also requires management to exercise its judgement in the
process of applying the Group’s accounting policies. The accounting policies have been applied consistently throughout the period, other than
where new policies have been adopted.
Going concern
Based on financial performance to date and forecasts along with the available banking facilities, there is a reasonable expectation that the Group
has adequate resources to continue in operational existence for the foreseeable future. The Group therefore continues to adopt the going concern
basis of accounting in preparing the annual financial statements.
The Group’s banking facilities, provided by NatWest Group, were renewed on 31 May 2023 and are committed until 31 May 2026 and provides a credit
facility of £61.0 million, which includes a £1.0 million overdraft that is renewed annually. The Group is profitable, cash-generative, has a strong
balance sheet position and a good relationship with its lender. As at 31 May 2023 the Group had available funds of £77.3 million (based on cash
balances, invoice discounting availability, RCF and overdraft facilities).
The Board has prepared cash flow forecasts for the period to 31 May 2025. Under this base case scenario, the Group is expected to continue to have
significant headroom relative to the funding available to it and to comply with its banking covenants.
The Board has also considered a severe downside scenario based on a significant and sustained reduction in Fuels’ profitability alongside
underperformance in Food and Feeds. This downside scenario excludes any mitigating actions that the Board would be able to take to reduce costs.
Under this scenario, the Group would still expect to have sufficient headroom in its financing facilities.
The Group therefore continues to adopt the going concern basis of accounting in preparing the annual financial statements.
Alternative performance measures (‘APMs’)
The Directors consider that headline operating profit, headline profit before taxation, headline EBITDA, headline ROCE and headline earnings
per share measures, referred to in these Group financial statements, provide useful information for shareholders on underlying trends
and performance.
Headline operating profit is reported operating profit after adding back exceptional items and amortisation of acquired intangibles.
Headline profit before taxation is reported profit before taxation after adding back the net finance cost in respect of the Group’s defined benefit
pension scheme, exceptional items and amortisation of acquired intangibles, to show the underlying performance of the Group.
Headline EBITDA refers to reported operating profit after adding back exceptional items and amortisation of acquired intangibles. The headline
EBITDA calculation excludes the impact of IFRS 16 depreciation.
Headline ROCE refers to the return on capital employed calculated as headline operating profit as a proportion of net assets.
The calculation of headline earnings includes any exceptional impact of remeasuring deferred tax balances. The calculations of basic and diluted
headline earnings per share are shown in note 10 of the Group financial statements.
NWF GROUP PLC NWF.CO.UK
83
Financial statements 2. Significant accounting policies continued
Adoption of new and revised standards
The following new standards, amendments to standards or interpretations are mandatory for the first time for the financial year beginning 1 June 2023.
The Company has adopted the following new standards, amendments and interpretations now applicable. None of these standards and
interpretations have had any material effect on the Company’s results or net assets.
Standard or interpretation
Content
IFRS 4
Insurance Contracts
Applicable for financial year
beginning on
1 June 2022
The following standards, amendments and interpretations are not yet effective and have not been adopted early by the Company:
Standard or interpretation
Content
Amendments to IAS 1
Amendments to IAS 8
Amendments to IAS 12
Presentation of Financial Statements
Accounting Policies
Income Taxes
Amendments to IFRS 17
Insurance Contracts
IFRS Practice Statement 2
Making Materiality Judgements
Amendments to IFRS 16
Leases on Sale and Leaseback
Applicable for financial year
beginning on
1 June 2023
1 June 2023
1 June 2023
1 June 2023
1 June 2023
1 June 2024
These standards are not expected to have a material impact on the Company in the current or future reporting periods or on foreseeable
future transactions.
Consolidation
The Group financial statements incorporate the financial statements of NWF Group plc (‘the Company’) and entities controlled by the Company
(its ‘subsidiaries’) made up to 31 May each year. Control is achieved where the Company has the power to govern the financial and operating policies
of an investee entity so as to obtain benefits from its activities.
Subsidiaries are fully consolidated from the date on which control is transferred to the Group. They are de-consolidated from the date that
control ceases.
The acquisition of subsidiaries is accounted for using the acquisition method. The consideration transferred for the acquisition of a subsidiary
is the fair value of the assets transferred, the liabilities incurred and the equity interests issued by the Company. The consideration transferred
includes the fair value of any asset or liability resulting from a contingent consideration arrangement. Acquisition-related costs are expensed as
incurred. Identifiable assets acquired and liabilities and contingent liabilities assumed in a business combination are measured initially at their
fair values at the acquisition date. On an acquisition-by-acquisition basis, the Group recognises any non-controlling interest in the acquiree either
at fair value or at the non-controlling interest’s proportionate share of the acquiree’s net assets.
The excess of the consideration transferred, the amount of any non-controlling interest in the acquiree and the acquisition date fair value of any
previous equity interest in the acquiree over the fair value of the Group’s share of the identifiable net assets acquired is recorded as goodwill. If this
is less than the fair value of the net assets of the subsidiary acquired in the case of a bargain purchase, the difference is recognised directly in the
income statement.
Intercompany transactions, balances and unrealised gains on transactions between Group companies are eliminated. Unrealised losses are also
eliminated. Accounting policies of subsidiaries have been changed where necessary to ensure consistency with the policies adopted by the Group.
If the initial accounting for a business combination is incomplete by the end of the first reporting period in which the combination occurs, the Group
reports provisional amounts for the items for which the accounting is incomplete. Those provisional amounts are adjusted during the measurement
period (see below), or additional assets or liabilities are recognised, to reflect new information obtained about facts and circumstances that existed
at the date of acquisition that, if known, would have affected the amounts recognised as of that date.
The measurement period is the period from the date of acquisition to the date the Group obtains complete information about facts and
circumstances that existed at the date of acquisition, and is subject to a maximum of one year.
Revenue recognition
Revenue comprises the fair value of the consideration received or receivable for the sale of goods and services in the ordinary course of the
Group’s activities. Revenue is shown net of value added tax, estimated returns, rebates and discounts, and after eliminating sales within the Group.
Accumulated experience is used to estimate and provide for these items, using the expected value method, and revenue is only recognised
to the extent that it is highly probable that a significant reversal will not occur.
The Group does not expect to have any contracts where the period between transfer of the promised goods or services to the customer and
payment by the customer exceeds one year. As a consequence, the Group does not adjust any of the transaction prices for the time value of money.
Specific types of revenue are recognised as follows:
84
NWF GROUP PLC ANNUAL REPORT AND ACCOUNTS 2023
Notes to the Group financial statements continuedfor the year ended 31 May 2023 2. Significant accounting policies continued
Fuels and Feeds
Revenue from the sale of goods in each of these segments is recognised when they are delivered to the customer and the performance obligations
have been met; that is, the products are delivered to the specific location, the risk of loss has been transferred and the Group has objective evidence
that all criteria for acceptance have been satisfied.
A receivable is recognised when the goods are delivered, since this is the point in time that the consideration is unconditional because only the
passage of time is required before the payment is due. Revenue from sale of fuels includes fuel duty.
Food
Revenue from storage, handling and re-packaging of customers’ products is recognised when the relevant service has been performed and
the performance obligations have been met. For distribution, revenue performance obligations are met when the customers’ products arrive
at the destination.
Customers are invoiced on a daily, weekly or monthly basis and consideration is payable when invoiced. A receivable is recognised when the
services are provided, since this is the point in time that the consideration is unconditional because only the passage of time is required before
the payment is due.
Interest income
Interest income is recognised on a time proportion basis using the effective interest rate method.
Segment reporting
A business segment is a group of assets and operations engaged in providing products or services that are subject to risks and returns that
are different from those of other business segments. A geographical segment is engaged in providing products and services within a particular
economic environment that are subject to risks and returns which are different from those of segments operating in other economic environments.
Segment reporting information is shown in note 4 of the Group financial statements.
Taxation
The income tax expense represents the sum of current and deferred income tax. Tax is recognised in the income statement, except to the extent
that it relates to items recognised in other comprehensive income or directly in equity. In this case the tax is also recognised in other
comprehensive income or directly in equity, respectively.
Current income tax is based on taxable profits for the year. Taxable profit differs from profit as reported in the income statement because
it excludes items of income and expense that are taxable or deductible in other years and it further excludes items that are never taxable or
deductible. The Group’s liability for current tax is calculated using tax rates that have been enacted or substantively enacted by the balance
sheet date.
Deferred income tax is provided in full, using the liability method, on temporary differences arising between the tax bases of assets and liabilities
and their carrying amounts in the Group financial statements. However, deferred income tax is not accounted for if it arises from initial recognition
of an asset or liability in a transaction other than a business combination that at the time of the transaction affects neither accounting nor taxable
profits or losses.
Deferred income tax is determined using tax rates (and laws) that have been enacted or substantively enacted by the balance sheet date and are
expected to apply when the related deferred income tax asset is realised or the deferred income tax liability is settled.
Deferred income tax assets are recognised to the extent that it is probable that future taxable profits will be available against which the temporary
differences can be utilised.
Deferred income tax assets and liabilities are offset when there is a legally enforceable right to offset current tax assets against current tax liabilities
and when the deferred income taxes relate to the same fiscal authority.
Borrowing costs
Borrowing costs that are directly attributable to the construction of qualifying assets, which are assets that necessarily take a substantial period
of time to get ready for their intended use, are added to the cost of those assets, until such time as the assets are substantially ready for their
intended use.
All other borrowing costs are recognised in the income statement in the period in which they are incurred.
Dividend distribution
The distribution of a dividend to the Company’s shareholders is recognised in the Group’s financial statements in the period in which it is approved
by the Company’s shareholders.
Property, plant and equipment
All property, plant and equipment is stated at historical cost less accumulated depreciation. Historical cost includes expenditure that is directly
related to the acquisition of the items.
Subsequent costs are included in the asset’s carrying amount, or recognised as a separate asset, as appropriate, only when it is probable that future
economic benefits associated with the asset will flow to the Group, and the cost of the asset can be measured reliably. All other repairs and
maintenance expenditure is charged to the income statement during the financial period in which it is incurred.
NWF GROUP PLC NWF.CO.UK
85
Financial statements 2. Significant accounting policies continued
Property, plant and equipment continued
Land is not depreciated. Depreciation on other assets is calculated, using the straight-line method, to reduce their cost to their residual values over
their useful economic lives, as follows:
Freehold and long leasehold buildings
10 – 50 years
Plant and machinery
Cars and commercial vehicles
3 – 10 years
4 – 8 years
Residual values and useful lives are reviewed, and adjusted if appropriate, at each balance sheet date. An asset’s carrying amount is written down
immediately to its estimated recoverable amount, if the asset’s carrying amount is greater than its estimated recoverable amount.
Gains and losses on disposal are determined by comparing the proceeds of disposal with the carrying value and are recognised in the income statement.
Right of use assets and lease liabilities
Under IFRS 16, a right of use asset and lease liability are recognised for all leases except ‘low value’ and ‘short-term’ leases where lease payments
are recognised on a straight-line basis over the lease term. For the Group, the standard results in the recognition of almost all leases on the balance
sheet as a right of use asset, with a corresponding lease liability.
At the inception of a contract, the Group performs an assessment to determine whether the contract is, or contains, a lease. Key aspects of this
determination are the specific identification of an asset that is subject to the lease and that the lease conveys the right to direct and control the
use of the identified asset for a period of time.
Where a contract is determined to contain a lease, the lease liability is recognised from the commencement date of the lease, the commencement
date being defined as the date at which the lessor makes the underlying asset available for use. The lease liability is recognised at an amount equal
to the present value of the future lease payments during the lease term.
Lease payments are discounted using the Group’s incremental borrowing rate, since the interest rate implicit in the Group’s leases is not
readily determinable.
After the commencement date, lease payments are allocated between the outstanding lease liability on the balance sheet and finance costs.
Finance costs are charged to the income statement over the lease period using the effective interest method.
A right of use asset is initially recognised at the commencement date and measured at cost, which comprises the amount of the initial
measurement of the lease liability, any lease payments made at or before the commencement date, any initial direct costs incurred by the Group
and an estimate of any cost for dismantling or restoring the asset at the end of the lease term.
The right of use asset is subsequently depreciated in accordance with the depreciation requirements in IAS 16 ‘Property, Plant and Equipment’
which results in depreciation on a straight-line basis over the shorter of the asset’s useful life and the lease term. The Group also applies IAS 36
‘Impairment of Assets’ to determine whether the right of use asset is impaired and to account for any impairment loss identified.
Remeasurement of the lease liability occurs if, after the commencement date, there is a change in future lease payments or a change in the lease
term. Any remeasurement of the lease liability results in a corresponding adjustment of the right of use asset. If the carrying amount of the right of
use asset has already been reduced to zero, the remaining remeasurement is recognised in the income statement. The Group remeasures the lease
liability to reflect those revised lease payments only when there is a change in the cash flows, using an unchanged discount rate. Reassessment of
leases in the Group occurs where lease consideration changes due to a market rent review clause or where there are changes to variable lease
payments dependent on an index or rate.
A lease modification arises where there is a change in scope of the lease, or the consideration for the lease, which was not part of the original
terms and conditions of the lease. In the event of a lease modification, the Group accounts for this as a separate lease, providing the modification
increases the scope of the lease by adding the right to use one or more underlying assets and the consideration for the lease increases by an
amount commensurate with the stand-alone price for the increase in scope and any appropriate adjustments to that stand-alone price, to reflect
the circumstances of the particular contract.
Intangible assets
Goodwill
Goodwill represents the excess of the cost of an acquisition over the fair value of the Group’s share of the identifiable net assets of the acquired
subsidiary at the date of acquisition.
Goodwill on acquisitions of subsidiaries is included within intangible assets. Goodwill is tested annually for impairment and carried at cost less
accumulated impairment losses. Impairment losses on goodwill are recognised immediately in the income statement and are not subsequently
reversed. Gains and losses on the disposal of an entity include the carrying amount of goodwill relating to the entity sold.
Goodwill is allocated to each of the Group’s cash-generating units for the purpose of impairment testing. The allocation is made to those
cash-generating units or groups of cash-generating units that are expected to benefit from the business combination in which they arose,
identified according to operating segment.
Brands
Separately acquired brands are shown at historical cost less accumulated amortisation. Brands acquired in a business combination are recognised
at fair value at the date of acquisition. Brands have a finite useful life and are carried at cost less accumulated amortisation and represent an
acquired intangible asset. Amortisation is calculated, using the straight-line method, to allocate the cost of brands over their estimated useful lives
of either ten or twenty years.
86
NWF GROUP PLC ANNUAL REPORT AND ACCOUNTS 2023
Notes to the Group financial statements continuedfor the year ended 31 May 2023
2. Significant accounting policies continued
Intangible assets continued
Customer relationships
Separately acquired customer relationships are shown at historical cost less accumulated amortisation. Customer relationships acquired in a
business combination are recognised at fair value at the date of acquisition. Customer relationships have a finite useful life and are carried at cost
less accumulated amortisation and represent an acquired intangible asset. Amortisation is calculated, using the straight-line method, to allocate
the cost of these assets over their estimated useful lives of ten years.
Computer software
Costs associated with maintaining computer software programs are recognised as an expense as incurred. Costs incurred to acquire computer
software licences and directly attributable costs incurred to bring the software into use are capitalised. Directly attributable costs include software
development employee costs. Capitalised computer software costs are amortised over their estimated useful lives on a straight-line basis (three
to seven years).
Cloud-based software provided under a Software as a Service (‘SaaS’) arrangement is assessed separately to determine whether any power to
obtain future economic benefit from the software arises and if access to those benefits can be restricted. If not, such costs are recognised as an
expense. A further assessment of any configuration and customisation costs associated with the SaaS arrangement is made to determine if such
services are distinct from the provision of the software and therefore establish the appropriate period over which to expense such costs.
Impairment of non-financial assets
Assets that have an indefinite useful life, for example goodwill, are not subject to amortisation and are tested annually for impairment. Assets that
are subject to amortisation or depreciation are reviewed for impairment whenever events or changes in circumstances indicate that the carrying
amount may not be recoverable. An impairment loss is recognised as the amount by which the asset’s carrying amount exceeds the recoverable
amount. The recoverable amount is the higher of the asset’s fair value less costs to sell and its value in use. Non-financial assets, other than
goodwill, that suffer an impairment are reviewed for possible reversal of the impairment at each reporting date.
Inventories
Inventories are stated at the lower of cost and net realisable value. Cost is determined using the average costing method. The cost of finished
goods and goods for resale comprises purchase cost and, in the case of finished goods, the cost of transporting the goods to their stock location.
Net realisable value comprises the estimated selling price in the ordinary course of business less applicable variable selling expenses. Provision
is made for obsolete, slow-moving or defective items where appropriate.
Trade and other receivables
Trade receivables are recognised initially at fair value and subsequently measured at amortised cost using the effective interest method, less
provision for impairment. Under IFRS 9, the Group elected to use the simplified approach to measure the loss allowance at an amount equal to
lifetime expected credit losses for trade receivables. Under the accounting standard, the Group continues to establish a provision for impairment
of trade receivables when there is objective evidence that the Group will not be able to collect all amounts due according to the original terms of the
receivables. Significant financial difficulties of the counterparty, probability that the counterparty will enter bankruptcy or financial reorganisation,
and default or delinquency in payments are considered indicators that the trade receivable is impaired.
In addition, IFRS 9 requires the Group to consider forward-looking information and the probability of default when calculating expected credit
losses. The measurement of expected credit losses reflects an unbiased and probability weighted amount that is determined by evaluating the
range of possible outcomes as well as incorporating the time value of money. The Group considers reasonable and supportable customer-specific
and market information about past events, current conditions and forecasts of future economic conditions when measuring expected credit losses.
The amount of the provision is the difference between the carrying amount and the present value of estimated future cash flows of the asset,
discounted, where material, at the original effective interest rate. The carrying amount of the asset is reduced through the use of a provision for
receivables impairment, and the amount of the loss is recognised in the income statement within administrative expenses. When a trade receivable
is uncollectable, it is written off against the provision for receivables impairment. Subsequent recoveries of amounts previously written off are
credited against administrative expenses in the income statement.
Derivative financial instruments and hedging activities
A derivative is initially recognised at fair value on the date that the associated contract is entered into and then is remeasured at fair value at each
subsequent balance sheet date.
The method of recognising the resulting gain or loss depends on whether or not the derivative is designated as a hedging instrument and, if so, the
nature of the item being hedged. During the current and prior year, none of the Group’s derivative financial instruments have been designated as
effective hedges. Changes in the fair value of derivative financial instruments that do not qualify for hedge accounting are recognised in the income
statement as they arise.
Reimbursement assets
The Group recognises a reimbursement asset in respect of third party claims made against the Group, but which under the terms of its insurance
policy, the Group is indemnified. All of the expenditure required to settle such claims will be reimbursed by the insurer under the terms of the policy,
and therefore it is virtually certain that reimbursement will be received.
NWF GROUP PLC NWF.CO.UK
87
Financial statements 2. Significant accounting policies continued
Cash and cash equivalents
Cash and cash equivalents include cash in hand, deposits held at call with banks and bank overdrafts. The Group recognises cash when it is within
its control, and in accordance with IFRS 9, when it has the contractual right to obtain cash from the bank. Cash in transit between Group companies
at a period end is recognised within the receiving company’s balance sheet. Cash in transit to or from external entities at a period end is
not recognised where the Group does not have the contractual right to obtain the cash and is therefore not deemed to exercise control
over it. The Group’s cash recognition policies are aligned with the IFRIC Committee tentative agenda decision in September 2021 as follows:
in respect of incoming receipts via electronic transfer, the Group recognises cash as a financial asset on the transfer settlement date, and not
before. In respect of cheques received, the Group classifies these as ‘promissory notes’ and recognises within cash equivalents all cheques dated
and deposited with the bank up to and including the reporting period end. In respect of card receipts, the Group recognises a cash equivalent on
the transaction date as the conversion to cash is very quick and the credit risk is deemed very low. In respect of outgoing payments, where there
is often a delay between the remittance date and the transfer settlement date, the Group de-recognises the cash from financial assets on the
transfer remittance date, and not after. Bank overdrafts are shown within borrowings in current liabilities on the balance sheet. Within the banking
arrangement is the right to off-set
Trade and other payables
Trade and other payables are recognised initially at fair value and subsequently measured at amortised cost using the effective interest method.
Exceptional items
The Group’s income statement separately identifies exceptional items. Such items are those that, in the Directors’ judgement, are one-off in nature
or non-operating and need to be disclosed separately by virtue of their size or incidence and may include, but are not limited to, restructuring costs,
acquisition-related costs, costs of implementing new systems, cyber-related costs, impairment of assets and income from legal or insurance
settlements. In determining whether an item should be disclosed as an exceptional item, the Directors consider quantitative as well as qualitative
factors such as the frequency, predictability of occurrence and significance. This is consistent with the way financial performance is measured by
management and reported to the Board. Disclosing exceptional items separately provides additional understanding of the performance of the Group.
Bank borrowings
Borrowings are recognised initially at fair value, net of transaction costs incurred. Borrowings are subsequently stated at amortised cost. Any
difference between the proceeds (net of transaction costs) and the redemption value is recognised in the income statement over the period of the
borrowings, using the effective interest method.
Borrowings are classified as current liabilities unless the Group has an unconditional right to defer settlement of the liability for at least one year
after the balance sheet date.
Retirement benefit costs
The Group operates various pension schemes, including defined contribution and defined benefit schemes.
For defined contribution schemes, the Group pays contributions to publicly or privately administered pension insurance schemes on a mandatory,
contractual or voluntary basis. The contributions are recognised as an employee benefit expense in the income statement when they are due.
The assets of the schemes are held separately from those of the Group in funds under the control of trustees.
The liability recognised in the balance sheet in respect of defined benefit schemes is the present value of the defined benefit obligation at the
balance sheet date less the fair value of scheme assets, together with adjustments for unrecognised actuarial gains or losses and past service
costs. The defined benefit obligation is calculated annually by independent actuaries using the Projected Unit Credit Method. The present value
of the defined benefit obligation is determined by discounting the estimated future cash outflows using interest rates of high quality corporate
bonds that are denominated in the currency in which the benefits will be paid and that have terms to maturity approximating to the terms of the
related pension liability. The Group has considered the recognition requirements of IFRIC 14 and determined that they do not apply to the scheme.
The net pension finance cost is determined by applying the discount rate, used to measure the defined benefit pension obligation at the beginning
of the accounting period, to the net pension obligation at the beginning of the accounting period taking into account any changes in the net pension
obligation during the period as a result of cash contributions and benefit payments.
Pension scheme expenses are charged to the income statement within administrative expenses.
Actuarial gains and losses are recognised immediately in the statement of comprehensive income. Net defined benefit pension scheme deficits
before tax relief are presented separately on the balance sheet within non-current liabilities. The attributable deferred income tax asset is shown
net within deferred income tax liabilities in the balance sheet and is subject to the recognition criteria as set out in the accounting policy on
deferred income tax.
Share-based payments
In the year ended 31 May 2023, the Group operated one (2022: one) equity-settled share-based payment plan, details of which can be found in note
27 of the Group financial statements.
The fair value of the employee services received in exchange for the grant of share awards is recognised as an expense. Equity-settled
share-based payments are measured at fair value (excluding the effect of non-market-based vesting conditions) at the date of 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 and adjusted for the effect of non-market-based vesting conditions.
Fair value is measured by the use of a Black Scholes 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.
Employer social security contributions payable in connection with the grant of share awards are considered an integral part of the grant itself
and the charge is treated as a cash-settled transaction.
88
NWF GROUP PLC ANNUAL REPORT AND ACCOUNTS 2023
Notes to the Group financial statements continuedfor the year ended 31 May 2023 2. Significant accounting policies continued
Provisions
Provisions are recognised when the Group has a present legal or constructive obligation as a result of past events, it is probable that an outflow
of resources will be required to settle the obligation and the amount has been reliably estimated. Provisions are not recognised for future
operating losses.
Share capital
Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of new shares are shown in equity as a deduction, net
of tax, from the proceeds of issue.
Critical accounting estimates and judgements
The Group makes estimates and assumptions concerning the future. The resulting accounting estimates will, by definition, seldom equal the related
actual results. The assumptions that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within
the next financial year are discussed below.
Defined benefit pension scheme – valuation assumptions
The balance sheet carrying values of defined benefit pension scheme surpluses or deficits are calculated using independently commissioned
actuarial valuations. These valuations, including the impact of GMP, are based on a number of assumptions, including the most appropriate
mortality rates to apply to the profile of scheme members and the financial assumptions regarding discount rates and inflation. All of these are
estimates of future events and are therefore uncertain. Further details can be found in note 26 of the Group financial statements.
Assessment of impairment
The Group tests annually for impairment of goodwill and fixed asset balances, which involves using key judgements including estimates of future
business performance and cash generation and discount rates.
The recoverable amounts of CGUs are determined using value in use calculations. The value in use calculations use post-tax cash flow projections
based on the Board-approved budget for the year ending 31 May 2024 and four years of divisional strategic plans thereafter.
These value in use calculations are subject to a series of sensitivity analyses using reasonable assumptions concerning the future performance
of the CGUs and assessing the impact of a 1% increase in the discount rate. For further details of our assessment of impairment please see note 13.
Carrying value of trade receivables
The Group holds material trade receivable balances and the calculations of provisions for impairment are estimates of future events and therefore
uncertain. IFRS 9 requires the Group to consider forward-looking information and the probability of default when calculating expected credit
losses. The Group considers reasonable and supportable customer-specific and market information about past events, current conditions and
forecasts of future economic conditions when measuring expected credit losses.
Valuation of acquired intangibles
IFRS 3 requires separately identifiable intangible assets to be recognised on acquisitions. The principal estimates used in valuing these intangibles
are generally based on the future cash flow forecast to be generated by these assets and the selection of appropriate discount rates to apply to the
cash flows.
A 1% increase in the discount rate applied to the future cash flows would reduce the value attributable to acquired intangibles by £0.1 million.
From a completeness perspective, the Directors are not aware of any other critical judgements within the Group that give rise to a significant risk
of material adjustment within the next financial year.
3. Revenue
An analysis of the Group’s revenue is as follows:
Sale of goods
Rendering of services
2023
£m
983.0
70.9
1,053.9
2022
£m
816.0
62.6
878.6
NWF GROUP PLC NWF.CO.UK
89
Financial statements 4. Segment information
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 Fuels,
Food and Feeds.
The Board considers the business from a products/services perspective. In the Board’s opinion, all of the Group’s operations are carried out in the
same geographical segment, namely the UK.
The nature of the products/services provided by the operating segments is summarised below:
Fuels
Food
Feeds
–
–
sale and distribution of domestic heating and industrial and road fuels
warehousing and distribution of clients’ ambient grocery and other products to supermarket and other retail distribution centres
– manufacture and sale of animal feeds and other agricultural products
Segment information about the above businesses is presented below.
The Board assesses the performance of the operating segments based on a measure of operating profit (‘headline 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-segment transactions are entered into under the normal commercial terms and conditions that would also be available to unrelated third parties.
Segment assets exclude deferred income tax assets and cash at bank and in hand. Segment liabilities exclude taxation, borrowings and retirement
benefit obligations. Excluded items are part of the reconciliation to consolidated total assets and liabilities.
2023
Revenue
Total revenue
Inter-segment revenue
Revenue
Result
Headline operating profit
Amortisation of acquired intangibles
Operating profit as reported
Finance costs (note 7)
Profit before taxation
Income tax expense (note 8)
Profit for the year
Other information
Depreciation and amortisation
Property, plant and equipment additions (note 12)
2023
Balance sheet
Assets
Segment assets
Cash and cash equivalents (note 18)
Consolidated total assets
Liabilities
Segment liabilities
Deferred income tax liabilities (note 24)
Current income tax liabilities
Retirement benefit obligations (note 26)
Consolidated total liabilities
90
NWF GROUP PLC ANNUAL REPORT AND ACCOUNTS 2023
Fuels
£m
765.0
(7.8)
757.2
12.9
(0.4)
Food
£m
70.9
—
70.9
4.2
—
Feeds
£m
Group
£m
225.8
1,061.7
—
(7.8)
225.8
1,053.9
3.9
—
21.0
(0.4)
20.6
(1.7)
18.9
(4.0)
14.9
15.3
3.1
Group
£m
6.0
0.7
Fuels
£m
6.3
1.1
Food
£m
3.0
1.3
Feeds
£m
101.9
50.0
49.4
201.3
16.3
217.6
(78.0)
(23.2)
(23.9)
(125.1)
(4.2)
(0.8)
(9.6)
(139.7)
Notes to the Group financial statements continuedfor the year ended 31 May 2023
4. Segment information continued
2022
Revenue
Total revenue
Inter-segment revenue
Revenue
Result
Headline operating profit
Segment exceptional item (note 5)
Group exceptional item (note 5)
Amortisation of acquired intangibles
Operating profit as reported
Finance costs (note 7)
Profit before taxation
Income tax expense (note 8)
Profit for the year
Other information
Depreciation and amortisation
Property, plant and equipment additions (note 12)
2022
Balance sheet
Assets
Segment assets
Cash and cash equivalents (note 18)
Consolidated total assets
Liabilities
Segment liabilities
Deferred income tax liabilities (note 24)
Current income tax liabilities
Retirement benefit obligations (note 26)
Consolidated total liabilities
5. Profit before taxation
Profit before taxation is stated after charging:
Cost of inventories recognised as an expense (included in cost of sales)
Depreciation of property, plant and equipment (note 12)
Depreciation of right of use assets (note 13)
Amortisation of other intangible assets (note 14)
Profit on disposal of property, plant and equipment
Staff costs (note 6)
Provision for receivables impairment (note 16)
Exceptional items
Fuels
£m
628.9
(7.8)
621.1
17.2
—
(0.3)
Food
£m
62.7
(0.1)
62.6
2.8
—
—
Feeds
£m
194.9
—
194.9
1.8
(8.4)
—
5.2
0.9
Fuels
£m
5.9
1.1
Food
£m
2.9
1.4
Feeds
£m
Group
£m
886.5
(7.9)
878.6
21.8
(8.4)
0.1
(0.3)
13.2
(1.2)
12.0
(3.6)
8.4
14.0
3.4
Group
£m
106.5
48.3
50.0
204.8
9.1
213.9
(88.7)
(20.1)
(24.1)
(132.9)
(3.2)
(0.4)
(9.3)
(145.8)
2023
£m
2022
£m
929.4
756.0
4.8
9.9
0.6
(0.5)
58.6
2.3
—
4.6
8.9
0.5
—
55.6
1.5
8.3
NWF GROUP PLC NWF.CO.UK
91
Financial statements 5. Profit before taxation continued
A net exceptional cost of £Nil (2022: £8.3 million) is included in administrative expenses. Exceptional items by type are as follows:
Impairment of goodwill and other intangible assets
Impairment of property, plant and equipment
Insurance reclaim credit
Net exceptional cost
Services provided by the Company’s auditors
During the year, the Group obtained the following services from the Company’s auditors:
Fees payable to the Company’s auditors for the audit of the Company and consolidated annual financial statements
Fees payable to the Company’s auditors for other services:
– audit of the financial statements of the Company’s subsidiaries pursuant to legislation
– non-audit assurance services
– tax compliance services
Total auditors’ remuneration
2023
£m
—
—
—
—
2023
£’000
58
498
2
33
591
2022
£m
7.9
0.5
(0.1)
8.3
2022
£’000
48
311
2
51
412
Fees relating to the audit of the financial statements in the current year ending 31 May 2023 included £75,000 of additional costs relating to the
previous year that have not recurred in the current year.
6. Staff costs
The average monthly number of persons (including Directors) employed in the Group during the year was:
Fuels
Food
Feeds
Head Office
2023
Number
2022
Number
332
763
224
20
342
705
227
18
1,339
1,292
Staff costs (including Directors) are outlined below.
Total directors remuneration for the year to 31 May 2023 was split between short term employee benefits of £1.3 million (2022: £1.4 million) and share
based payments of £0.4 million (2022: £0.5 million).
Total remuneration for the highest paid Director was £1.0 million (2022: £1.1 million). Shares awarded under a long term incentive plan was 89,976
shares (2022: 92,667).They exercised options over 179,066 shares during the year (2022: 83,079).
Directors’ remuneration is also set out in the Remuneration Report, within the table entitled Directors’ emoluments on page 68.
Wages and salaries
Social security costs
Share-based payments (note 27)
Other pension costs (note 26)
2023
£m
50.9
5.7
0.5
1.5
58.6
2022
£m
48.0
5.4
0.8
1.4
55.6
In addition to the above staff costs, the Group incurred no termination costs (2022: £Nil), and £2.4 million (2022: £2.4 million) in respect of costs of
agency workers.
Other pension costs above are amounts charged to operating profit in respect of defined contribution pension schemes.
92
NWF GROUP PLC ANNUAL REPORT AND ACCOUNTS 2023
Notes to the Group financial statements continuedfor the year ended 31 May 2023 7. Finance costs
Interest on bank loans and overdrafts
Finance costs on lease liabilities relating to IFRS 16 (note 21)
Total interest expense
Net finance cost in respect of defined benefit pension schemes (note 26)
Total finance costs
8. Income tax expense
Current tax
UK corporation tax on profits for the year
Adjustments in respect of prior years
Current tax expense
Deferred tax
Origination and reversal of temporary differences
Adjustments in respect of prior years
Effect of increased tax rate on opening balances
Deferred tax expense (note 24)
Total income tax expense
2023
£m
0.8
0.6
1.4
0.3
1.7
2023
£m
3.8
—
3.8
0.4
(0.3)
0.1
0.2
4.0
2022
£m
0.4
0.5
0.9
0.3
1.2
2022
£m
3.8
(0.1)
3.7
(0.1)
—
—
(0.1)
3.6
During the year ended 31 May 2023, corporation tax has been calculated at blended tax of 20% (being 19% until 31 March 2023, and 25% thereon) of
estimated assessable profits for the year (2022: 19%).
The tax charge for the year can be reconciled to the profit per the income statement as follows:
Profit before taxation
Profit before taxation multiplied by the standard rate of UK corporation tax of 20.0% (2022: 19.0%)
Effects of:
– expenses not deductible for tax purposes
– super-deduction allowance
– impact of share-based payments
– impact of increased tax rate on opening balances
– adjustments in respect of prior years
Total income tax expense
2023
£m
18.9
3.8
0.4
(0.1)
0.1
0.1
(0.3)
4.0
2022
£m
12.0
2.3
1.7
(0.1)
(0.2)
—
(0.1)
3.6
£1.0 million has been recognised in other comprehensive income, relating to a £0.6 million credit to equity arising on the movement within
the deferred tax provision (2022: £1.4 million debit to equity) (note 24) and a movement in current tax of a credit of £0.4 million (2022: £0.4 million).
The tax charge in the current year is higher (2022: higher) than the standard tax charge as a result of the level of the Group’s disallowable expenses
related to acquisition costs and other non-qualifying depreciation.
NWF GROUP PLC NWF.CO.UK
93
Financial statements
9. Dividends paid
Final dividend for the year ended 31 May 2022 of 6.5p (2021: 6.2p) per share
Interim dividend for the year ended 31 May 2023 of 1.0p (2022: 1.0p) per share
Amounts recognised as distributions to equity shareholders in the year
Proposed final dividend for the year ended 31 May 2023 of 6.9p (2022: 6.5p) per share
2023
£m
3.2
0.5
3.7
3.4
2022
£m
3.0
0.5
3.5
3.2
The proposed final dividend is subject to approval at the AGM on 8 December 2023 and has not been included as a liability in these Group financial
statements.
10. Earnings per share
The calculation of basic and diluted earnings per share is based on the following data:
Earnings (£m)
Earnings for the purposes of basic and diluted earnings per share being profit for the year attributable to equity
shareholders
Number of shares (‘000)
Weighted average number of shares for the purposes of basic earnings per share
Weighted average dilutive effect of conditional share awards
Weighted average number of shares for the purposes of diluted earnings per share
Earnings per ordinary share (pence)
Basic earnings per ordinary share
Diluted earnings per ordinary share
Headline earnings per ordinary share (pence)
Basic headline earnings per ordinary share
Diluted headline earnings per ordinary share
The calculation of basic and diluted headline earnings per share is based on the following data:
Profit for the year attributable to equity shareholders
Add back/(deduct):
Net finance cost in respect of defined benefit pension scheme (note 26)
Exceptional items (note 5)
Amortisation of acquired intangibles (note 14)
Tax effect of the above
Headline earnings
2023
2022
14.9
8.4
49,355
196
49,109
299
49,551
49,408
30.2
30.1
31.4
31.3
2023
£m
14.9
0.3
—
0.4
(0.1)
15.5
17.1
17.0
35.0
34.8
2022
£m
8.4
0.3
8.3
0.3
(0.1)
17.2
94
NWF GROUP PLC ANNUAL REPORT AND ACCOUNTS 2023
Notes to the Group financial statements continuedfor the year ended 31 May 2023
11. Business combinations
On 21 December 2022, the Group acquired 100% of the share capital of Sweetfuels Limited, a 20 million litre fuel distributor based in Faringdon in
Oxfordshire. The headline purchase price for the acquisition was £10.0 million on a cash debt free basis before acquisition costs. The total gross
consideration paid was £14.3 million, after adjusting the purchase price for cash acquired. The net consideration paid was £10.2 million after
adjusting for cash acquired and acquisition costs.
Details of the total consideration and the provisional fair values of the assets and liabilities acquired are shown below:
Intangible assets - goodwill
Intangible assets - brand
Intangible assets - customer relationships
Property, plant and equipment
Stock
Trade and other receivables
Cash
Trade and other payables
Current income tax liability
Deferred tax liability
Fair value of assets acquired
£m
6.5
0.8
2.3
0.5
0.2
2.5
4.8
(1.8)
(0.6)
(0.9)
14.3
Provisional goodwill of £6.5 million arises from the acquisition and is attributable to the acquired business and the expected economies of scale
from combining the operations of the Group and the acquisition. None of the goodwill is expected to be deductible for income tax purposes.
As the acquisition was made in the year, the above amounts are provisional and subject to adjustment.
Net cash outflow arising on the acquisition:
Total gross consideration
Excess cash acquired
Net cash flow arising on completion
Additional debt like items acquired at completion
Headline purchase price
Acquisition-related costs
Net consideration paid
£m
(14.3)
4.8
(9.5)
(0.5)
(10.0)
(0.2)
(10.2)
Acquisition-related costs of £0.2 million have been charged to the income statement in the year ended 31 May 2023.
The following amounts have been recognised within the consolidated income statement in respect of the acquisition made in the year: revenue –
£7.2 million; and profit – £0.4 million.
Had the acquisition taken place at the start of the financial year, the consolidated income statement would show: revenue – £14.9 million; and profit
– £1.1 million.
In its last financial year to 31 July 2022 Sweetfuels Limited made an operating profit of £1.8 million.
NWF GROUP PLC NWF.CO.UK
95
Financial statements 12. Property, plant and equipment
Cost
At 1 June 2021
Additions
Transfers in from right of use asset
Disposals
At 1 June 2022
Additions
Acquired through business combinations
Disposals
At 31 May 2023
Accumulated depreciation and impairment
At 1 June 2021
Charge for the year
Transfers in from right of use asset
Impairment charge
Disposals
At 1 June 2022
Charge for the year
Disposals
At 31 May 2023
Carrying amount
At 31 May 2023
At 31 May 2022
Freehold
land and
buildings
£m
Long
leasehold
land and
buildings
£m
Plant and
machinery
£m
Cars and
commercial
vehicles
£m
37.9
0.4
—
—
38.3
0.4
—
(0.2)
38.5
12.6
0.9
—
—
—
13.5
0.9
(0.2)
14.2
24.3
24.8
3.1
—
—
—
3.1
—
—
—
3.1
0.4
0.1
—
—
—
0.5
0.1
—
0.6
2.5
2.6
32.6
2.9
—
(0.9)
34.6
2.5
0.1
(4.4)
32.8
16.3
2.6
—
0.5
(0.7)
18.7
3.0
(4.1)
17.6
15.2
15.9
6.3
0.1
0.3
(2.3)
4.4
0.2
0.4
(2.5)
2.5
3.3
1.0
0.1
—
(2.1)
2.3
0.8
(2.3)
0.8
1.7
2.1
Total
£m
79.9
3.4
0.3
(3.2)
80.4
3.1
0.5
(7.1)
76.9
32.6
4.6
0.1
0.5
(2.8)
35.0
4.8
(6.6)
33.2
43.7
45.4
The Group has pledged certain freehold land and buildings with a carrying value of £20.6 million (2022: £20.9 million) to secure banking facilities
granted to the Group.
Depreciation charges are recognised in administrative expenses in the consolidated income statement.
96
NWF GROUP PLC ANNUAL REPORT AND ACCOUNTS 2023
Notes to the Group financial statements continuedfor the year ended 31 May 2023
13. Right of use assets
Cost
At 1 June 2021
Additions
Disposals
Transfers out to property, plant and equipment
At 1 June 2022
Additions
Acquired
Disposals
Transfers out to property, plant and equipment
At 31 May 2023
Accumulated depreciation and impairment
At 1 June 2021
Charge for the year
Disposals
Transfers out to property, plant and equipment
At 1 June 2022
Charge for the year
Disposals
Transfers out to property, plant and equipment
At 31 May 2023
Carrying amount
At 31 May 2023
At 31 May 2022
Properties
£m
Commercial
vehicles
£m
9.1
0.6
(0.2)
—
9.5
—
0.2
—
—
9.7
2.1
1.5
(0.2)
—
3.4
1.5
—
—
4.9
4.8
6.1
29.8
10.7
(0.8)
(0.3)
39.4
11.3
—
(0.8)
—
49.9
11.4
7.4
(0.7)
(0.1)
18.0
8.4
(0.8)
—
25.6
24.3
21.4
Depreciation charges are recognised in administrative expenses in the consolidated income statement.
14. Intangible assets
Cost
At 1 June 2021
Additions
At 1 June 2022
Additions
Acquisition of business (note 11)
Disposals
At 31 May 2023
Accumulated amortisation and impairment
At 1 June 2021
Charge for the year
Impairment charge
At 1 June 2022
Charge for the year
Disposals
At 31 May 2023
Carrying amount
At 31 May 2023
At 31 May 2022
Goodwill
£m
Computer
software
£m
Customer
relationships
£m
Brands
£m
28.2
—
28.2
—
6.5
—
34.7
0.6
—
7.5
8.1
—
—
8.1
26.6
20.1
6.8
0.2
7.0
0.1
—
(0.1)
7.0
6.0
0.2
0.2
6.4
0.2
(0.1)
6.5
0.5
0.6
2.2
—
2.2
—
2.3
—
4.5
0.4
0.3
—
0.7
0.3
—
1.0
3.5
1.5
1.4
—
1.4
—
0.8
—
2.2
0.7
—
0.2
0.9
0.1
—
1.0
1.2
0.5
Total
£m
38.9
11.3
(1.0)
(0.3)
48.9
11.3
0.2
(0.8)
—
59.6
13.5
8.9
(0.9)
(0.1)
21.4
9.9
(0.8)
—
30.5
29.1
27.5
Total
£m
38.6
0.2
38.8
0.1
9.6
(0.1)
48.4
7.7
0.5
7.9
16.1
0.6
(0.1)
16.6
31.8
22.7
Amortisation or impairment charges have been charged to administrative expenses in the consolidated income statement.
NWF GROUP PLC NWF.CO.UK
97
Financial statements
14. Intangible assets continued
Customer relationships
Customer relationships are allocated as follows:
Fuels
Brands
Brands are allocated as follows:
Fuels
2023
£m
3.5
2023
£m
1.2
Goodwill
Goodwill acquired is allocated, at acquisition, to cash-generating units (‘CGUs’) that are expected to benefit from that business combination.
The carrying value of goodwill is allocated as follows:
Feeds
Fuels
2023
£m
4.4
22.2
26.6
2022
£m
1.5
2022
£m
0.5
2022
£m
4.4
15.7
20.1
The Group tests annually for impairment of goodwill, or more frequently if there are indications that goodwill may be impaired. The recoverable
amounts of CGUs are determined using value in use calculations. The value in use calculations use post-tax cash flow projections based on the
Board-approved budgets and four years of divisional strategic plans thereafter. Subsequent cash flows are extrapolated using the growth rates
detailed below.
The Group identifies its CGUs as the smallest identifiable group of assets that generate cash inflows, and which are largely independent of the cash
inflows of the other assets or groups of assets. CGU specific discount rates are applied in each of the impairment tests as the principal risks and
uncertainties associated with each CGU may vary as they operate in different industries and as such the Group risks identified on pages 27 to 30
may impact each CGU differently.
The value in use calculations described above indicate ample headroom and therefore do not give rise to impairment concerns.
Value in use assumptions and sensitivities
The rates used to discount the projected cash flows, equating to the pre-tax discount rates based on comparative businesses, are as follows:
Fuels
Feeds
2023
%
13.16
11.90
2022
%
10.43
10.26
The headroom on the value in use calculations for Fuels and Feeds are £96.0 million and £38.8 million respectively. The following sensitivities have
been performed on the CGU Board-approved forecasts, the impact of which still result in satisfactory headroom and do not give rise to further
impairment:
Decrease EBITDA by 10%
Increase discount rate by 1%
Reduction in value in use
Fuels
£m
12.6
14.4
Feeds
£m
3.5
6.9
98
NWF GROUP PLC ANNUAL REPORT AND ACCOUNTS 2023
Notes to the Group financial statements continuedfor the year ended 31 May 2023 15. Inventories
Raw materials and consumables
Finished goods and goods for resale
16. Trade and other receivables
Trade receivables
Less: provision for impairment
Trade receivables – net
VAT recoverable
Other receivables
Prepayments and accrued income
Contract assets
2023
£m
3.2
4.2
7.4
2023
£m
85.7
(3.1)
82.6
0.6
0.1
3.3
0.8
2022
£m
3.6
6.2
9.8
2022
£m
93.9
(2.8)
91.1
0.9
0.1
3.2
0.9
87.4
96.2
The fair value of trade and other receivables is equivalent to their carrying amount. Trade and other receivables are non-interest bearing and
are substantially denominated in Sterling. Under IFRS 9, the Group is required to utilise objective evidence as well as consider forward-looking
information and the probability of default when calculating expected credit losses. The maturity of financial assets and history of write-offs is
therefore used as an indicator as to the probability of default. Trade receivables are written off when they have been overdue for a number of years,
or if a customer has entered into insolvency and there is no expectation of recovery.
The loss allowance as at 31 May 2023 and 31 May 2022 was determined as follows for trade receivables:
31 May 2023
Expected loss rate
Gross carrying amount (£m)
Loss allowance (£m)
31 May 2022
Expected loss rate
Gross carrying amount (£m)
Loss allowance (£m)
Movements on the Group provision for impairment of trade receivables are as follows:
At 1 June
Provision for receivables impairment
Unused amounts reversed/receivables written off in the year
At 31 May
The other classes of receivables do not contain impaired assets.
Current
<30 days
past due
30 to
60 days
past due
>60 days
past due
1.39%
2.39%
6.32%
71.39%
70.5
1.0
10.1
0.2
3.1
0.2
2.0
1.7
Current
0.14%
76.3
0.1
<30 days
past due
30 to
60 days
past due
>60 days
past due
1.70%
5.80%
88.05%
11.0
0.2
3.9
0.2
2.7
2.3
2023
£m
2.8
2.3
(2.0)
3.1
Total
85.7
3.1
Total
93.9
2.8
2022
£m
1.6
1.5
(0.3)
2.8
The maximum exposure to credit risk at the reporting date is the carrying amount of each class of receivable, limited by credit insurance applicable
to the Fuels business.
NWF GROUP PLC NWF.CO.UK
99
Financial statements
17. Reimbursement assets
Reimbursement assets
2023
£m
1.7
2022
£m
2.8
The Group recognises a reimbursement asset in respect of third party claims made against the Group, but which under the terms of its insurance
policy, the Group is indemnified. All of the expenditure required to settle such claims will be reimbursed by the insurer under the terms of the policy,
and therefore it is virtually certain that reimbursement will be received. A corresponding provision for insurance claims has been recognised in
note 22.
18. Cash and cash equivalents
Cash at bank and in hand
The fair value of cash and cash equivalents is equivalent to their carrying amount.
19. Trade and other payables
Current
Trade payables
Social security and other taxes
Accruals
The fair value of trade and other payables is equivalent to their carrying amount.
20. Borrowings
Current
Invoice discounting advances
Non-current
Revolving credit facility
Total borrowings
2023
£m
16.3
2023
£m
82.2
1.3
9.0
92.5
2022
£m
9.1
2022
£m
90.0
1.4
9.2
100.6
2023
£m
2022
£m
—
—
—
—
—
—
—
—
—
—
The Group’s banking facilities, provided by NatWest Group, were renewed on 31 May 2023 and are committed until 31 May 2026. The Group is
profitable, cash-generative and has a strong balance sheet position and a good relationship with its lender. Further information on the facilities,
which total £61.0 million (2022: £65.0 million), is outlined below.
Invoice discounting advances
Under a Group netting arrangement the balance on the invoice discounting advance facility at 31 May 2023 was £Nil (2022: £Nil). The invoice
discounting advance is a committed facility with an expiry date of 31 May 2026 (2022: 31 October 2023). The availability of invoice discounting
facilities is dependent on the level of current trade receivables available for refinancing and is subject to a maximum drawdown of £50.0 million
(2022: £50.0 million).
The facility is secured by way of a fixed and floating charge against the Group’s trade receivables. Interest is charged at 1.25% (2022: 1.25%)
per annum above the bank’s base rate.
The Group incurred non-utilisation fees on its committed invoice discounting facility. The Group will incur non-utilisation fees only in respect
of committed and undrawn facilities of up to £20.0 million (2022: £20.0 million).
100
NWF GROUP PLC ANNUAL REPORT AND ACCOUNTS 2023
Notes to the Group financial statements continuedfor the year ended 31 May 2023
20. Borrowings continued
Revolving credit facility
The Group has a revolving credit facility of £10.0 million (2022: £10.0 million) with an expiry date of 31 May 2026 (2022: 31 October 2023). Interest
is charged on amounts drawn down at 1.72% per annum above SONIA (2022: 1.72% above SONIA) depending on the ratio of net debt to EBITDA.
The amount drawn down under the revolving credit facility at 31 May 2023 is £Nil (2022: £Nil).
The Group incurs non-utilisation fees on its committed revolving credit facility. The Group will incur non-utilisation fees only in respect of
committed and undrawn facilities of up to £10.0 million (2022: £10.0 million).
Bank overdrafts
The Group’s net bank overdraft facility at 31 May 2023 is repayable on demand and is subject to a maximum limit of £1.0 million (2022: £1.0 million).
None of the facility was utilised at 31 May 2023 (2022: £Nil). Interest is charged at 1.5% per annum over the bank’s base rate (2022: 1.5% per annum
over the bank’s base rate).
The above facilities are subject to quarterly covenant tests on interest cover and net debt to EBITDA ratios. The covenants have been set at levels
that provide sufficient headroom and flexibility for the Group until maturity of the facilities in May 2026.
Bank borrowings amounting to £Nil (2022: £Nil) are secured by way of unscheduled mortgage debentures provided by the Company and certain
subsidiaries within the Group to NatWest Group which incorporate a fixed charge over their book debts and floating charges over all their other assets.
In addition to the above, the Group has agreed accordion facilities on the invoice discounting facility of £10.0 million (2022: £Nil) and on the revolving
credit facility of £10.0 million (2022: £5.0 million).
All bank borrowings are denominated in Sterling and are repayable as follows:
Within one year
Between two and five years
2023
£m
—
—
—
2022
£m
—
—
—
Bank borrowing facilities by expiry date
The Group has a number of bank borrowing facilities which were partly drawn down at 31 May 2023. The Group is in compliance with all covenants.
Facilities expiring:
Within one year
Between two and five years
2023
2022
Facility
£m
50.0
10.0
60.0
Amount
drawn
£m
—
—
—
Facility
£m
50.0
10.0
60.0
Amount
drawn
£m
—
—
—
The availability of invoice discounting facilities included above, amounting to £49.0 million (31 May 2022: £49.0 million), is dependent on the level of
trade receivables available for refinancing.
21. Lease liabilities
Cost
At 1 June 2021
Additions
Lease liability payments (including finance costs)
Finance costs
At 1 June 2022
Additions
Transferred in through business combinations
Lease liability payments (including finance costs)
Finance costs
At 31 May 2023
Properties
£m
Commercial
vehicles
£m
7.4
0.6
(1.6)
0.1
6.5
—
0.2
(1.6)
0.1
5.2
18.4
10.7
(7.7)
0.4
21.8
11.3
—
(9.0)
0.5
24.6
Total
£m
25.8
11.3
(9.3)
0.5
28.3
11.3
0.2
(10.6)
0.6
29.8
NWF GROUP PLC NWF.CO.UK
101
Financial statements 21. Lease liabilities continued
Lease liabilities are comprised of the following balance sheet amounts:
Current
Amounts due within one year
Non-current
Amounts due after more than one year
Total
Lease liabilities are as follows:
Not more than one year
Minimum lease payments
Interest element
Present value of minimum lease payments
Between one and five years
Minimum lease payments
Interest element
Present value of minimum lease payments
More than five years
Minimum lease payments
Interest element
Present value of minimum lease payments
22. Provision for liabilities
Current
Provision for insurance claims
Provision for dilapidations
Other provisions
Non-current
Provision for dilapidations
Total
2023
£m
2022
£m
9.8
8.6
20.0
29.8
2023
£m
10.4
(0.6)
9.8
19.9
(0.8)
19.1
1.0
(0.1)
0.9
19.7
28.3
2022
£m
9.0
(0.4)
8.6
19.2
(0.5)
18.7
1.0
—
1.0
2023
£m
2022
£m
1.7
0.2
—
1.9
0.8
2.7
2.8
0.1
0.2
3.1
0.7
3.8
The Group recognises a provision for liabilities in respect of third party claims made against the Group. A corresponding reimbursement asset of
£1.7 million (2022: £2.8 million) has been recognised as all of the expenditure required to settle such claims will be reimbursed by the insurer under
the terms of the policy. As the Group expects insurance claims to be settled within one year, recognition of these balances is made with current
assets and current liabilities. During the year £1.5 million of the provision has been utilised, £1.2 million of new provision has been created and £0.7
million has been released.
The Group also recognises current and non-current provisions for dilapidations totalling £1.0 million (2022: £0.8 million) in respect of leased
properties and commercial vehicles. Movement on the provisions for dilapidations and other provisions has been recognised in the the income
statement.
102
NWF GROUP PLC ANNUAL REPORT AND ACCOUNTS 2023
Notes to the Group financial statements continuedfor the year ended 31 May 2023
23. Financial instruments and risk management
The Group’s financial instruments comprise cash, bank overdrafts, invoice discounting advances, rolling credit facility, lease liabilities, commodity
derivatives and various items such as receivables and payables, which arise from its operations. All financial instruments in 2023 and 2022 were
denominated in Sterling. There is no material foreign exchange risk in respect of these instruments.
The carrying amounts of all of the Group’s financial instruments are measured at amortised cost in the financial statements, with the exception
of derivative financial instruments. Derivative financial instruments are measured subsequent to initial recognition at fair value.
IFRS 13 (amended) ‘Financial Instruments: Disclosures’ requires disclosure of financial instruments measured at fair value, grouped into Levels 1 to 3
below, based on the degree to which fair value is observable:
• Level 1 fair value measurements are those derived from unadjusted quoted prices in active markets for identical assets or liabilities;
• Level 2 fair value measurements are those derived from inputs, other than quoted prices included within Level 1 above, that are observable
for the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices); and
• Level 3 fair value measurements are those derived from valuation techniques that include inputs for the asset or liability that are not based
on observable market data (unobservable inputs).
All of the Group’s derivative financial instruments as described on page 104 (forward supply contracts) were classified as Level 2 in the current
and prior year. There were no transfers between levels in either the current or prior year.
Financial liabilities
The book value, fair value and interest rate profile of the Group’s financial liabilities were as follows:
At 31 May 2023
Financial liabilities carried at amortised cost:
Trade and other payables1
Floating rate invoice discounting advances
Lease liabilities repayable within one year
Financial liabilities carried at fair value: derivatives
Revolving credit facility
Lease liabilities repayable after one year
Total
1 Excludes social security and other taxes.
At 31 May 2022
Financial liabilities carried at amortised cost:
Trade and other payables1
Floating rate invoice discounting advances
Lease liabilities repayable within one year
Financial liabilities carried at fair value: derivatives
Revolving credit facility
Lease liabilities repayable after one year
Total
1 Excludes social security and other taxes.
Total book and
fair value
£m
92.5
—
9.8
0.1
102.4
—
20.0
20.0
122.4
Total book and
fair value
£m
99.2
—
8.6
0.2
108.0
—
19.7
19.7
127.7
NWF GROUP PLC NWF.CO.UK
103
Financial statements
23. Financial instruments and risk management continued
Financial assets
The book value, fair value and interest rate profile of the Group’s financial assets were as follows:
At 31 May 2023
Trade and other receivables2
Financial assets carried at amortised cost: cash and cash equivalents
Financial assets carried at fair value: derivatives
2 Excludes prepayments.
At 31 May 2022
Trade and other receivables2
Financial assets carried at amortised cost: cash and cash equivalents
Financial assets carried at fair value: derivatives
Total book and
fair value
£m
84.1
16.3
0.2
100.6
Total book and
fair value
£m
93.0
9.1
0.4
102.5
2 Excludes prepayments.
Financial risk management
The Group’s operations expose it to a variety of financial risks: price risk; interest rate risk; credit risk; and liquidity risk. Given the size of the Group,
the Directors have not established a sub-committee of the Board to monitor financial risk management, but have established policies that are
implemented and monitored by the Executive Directors.
Price risk
The Group is exposed to commodity price risk principally in respect of certain raw materials in the Feeds business and oil-related products in the
Fuels business.
The Feeds business enters into forward supply contracts in order to manage the impact of price movements on its gross margin. At 31 May 2023,
the Group had open forward supply contracts with a principal value of £39.6 million (2022: £49.8 million). The fair value of forward supply contracts
recognised on the balance sheet is £0.1 million (2022: £0.2 million).
The fair value of forward supply contracts is based on generally accepted valuation techniques using inputs from observable market data on
equivalent instruments at the balance sheet date. The contracts are settled on a gross cash basis and are classified as current assets or liabilities,
as all contractual cash flows fall due to be settled in less than one year.
The Group has not designated any of these contracts as hedging instruments during the period under review. As a result, changes in the fair value
of non-hedging forward supply contracts amounting to £Nil have been credited to the income statement in the year (2022: £Nil).
The Fuels business’ oil-related products are subject to changes in the world commodity price for crude oil. However, the relatively low stockholding
maintained and daily price monitoring systems used to determine selling prices enable the business to effectively manage the risk of gross margin
erosion. Forward supply contracts are not utilised by this business.
The extent of these risks is regularly reviewed and assessed by the Executive Directors and reported back to the Board. This process is considered
to be effective given the size and nature of the risks involved, but will be reviewed in the future should circumstances change.
Interest rate risk
The Group is exposed to interest rate risk due to its floating rate borrowings.
The Directors review the interest rate hedging policy on at least an annual basis. The Group monitors its exposure to interest rate risk primarily
through sensitivity analysis. On the basis of the Group’s analysis, it is estimated that a rise of one percentage point in interest rates on floating rate
borrowings would have reduced 2023 profit before taxation by approximately £0.2 million (2022: £0.3 million).
Credit risk
Where appropriate, relevant credit checks are performed on potential customers before sales are made. The amount of exposure to any individual
customer is controlled by means of a credit limit that is monitored regularly by management and, in the case of a financially material value, by the
Executive Directors. In addition, the Fuels business maintains credit insurance for certain higher value accounts in order to manage the potential
financial loss incurred on certain bad debts.
104
NWF GROUP PLC ANNUAL REPORT AND ACCOUNTS 2023
Notes to the Group financial statements continuedfor the year ended 31 May 2023 23. Financial instruments and risk management continued
Financial risk management continued
Liquidity risk
The Group actively maintains a mixture of medium-term and short-term debt finance, which is designed to ensure that it has access to sufficient
available funds for ongoing working capital needs as well as planned capital investment and expansion generally. The amount of debt finance
required is reviewed at least annually by the Directors.
All of the Group’s financial instruments, with the exception of certain borrowings (see note 20), have a contractual maturity of less than one year,
based on the earliest date on which the contractual cash flows are required to be settled.
Capital risk
The Group’s objectives when managing capital are to safeguard the Group’s ability to continue as a going concern in order to provide returns
to shareholders and benefits to other stakeholders, and to maintain an optimal capital structure to reduce the cost of capital. In order to maintain
or adjust the capital structure, the Group may adjust the amount of dividends paid to shareholders, return capital to shareholders, issue new shares
or sell assets to reduce debt.
The Group monitors capital risk on the basis of the net debt/EBITDA ratio. This ratio is calculated as net cash (excluding lease liabilities) divided
by headline operating profit before interest, depreciation and amortisation as shown below:
Borrowings (£m) (note 20)
Obligations under hire purchase agreements now recognised in lease liabilities (£m)
Less: cash at bank and in hand (£m)
Net debt/(cash) (£m) (excluding lease liabilities)
Headline EBITDA (£m)
Net (cash) EBITDA ratio
The Group has set an internal covenant limit of 2.0x net debt/EBITDA.
2023
—
—
(16.3)
(16.3)
25.8
(0.6x)
2022
—
0.1
(9.1)
(9.0)
26.6
(0.3x)
24. Deferred income tax assets and liabilities
The following are the principal categories of deferred tax assets and liabilities recognised by the Group and the movements thereon during the
current and prior year:
Deferred income tax liability/(asset) at 1 June 2021
Charge/(credit) to income statement (note 8)
Debit to equity
Deferred income tax liability/(asset) at 31 May 2022
Charge/(credit) to income statement (note 8)
Deferred tax on acquisitions
Credit to equity
Deferred income tax liability/(asset) at 31 May 2023
Accelerated
tax
depreciation
£m
Retirement
benefit
obligations
£m
5.8
0.1
—
5.9
0.2
—
—
6.1
(3.7)
—
1.4
(2.3)
—
—
(0.1)
(2.4)
Other
£m
(0.2)
(0.2)
—
(0.4)
—
0.9
—
0.5
Total
£m
1.9
(0.1)
1.4
3.2
0.2
0.9
(0.1)
4.2
Deferred income tax assets and liabilities are offset when there is a legally enforceable right to offset current tax assets against current tax liabilities
and when the deferred income taxes relate to the same fiscal authority. The deferred income tax assets disclosed above are deemed to be
recoverable.
Deferred tax assets of £2.4 million relating to losses brought forward have not been provided for, as it is not expected they can be utilised in the
foreseeable future.
The majority of the deferred taxation balance is expected to reverse after more than 12 months.
NWF GROUP PLC NWF.CO.UK
105
Financial statements 25. Share capital
Authorised: ordinary shares of 25p each
Balance at 1 June 2022, 31 May 2022 and 31 May 2023
Allotted and fully paid: ordinary shares of 25p each
Balance at 1 June 2021
Issue of shares (see below)
Balance at 31 May 2022
Issue of shares (see below)
Balance at 31 May 2023
Number
of shares
‘000
Total
£m
80,000
20.0
Number
of shares
‘000
49,004
130
49,134
274
49,408
Total
£m
12.3
—
12.3
0.1
12.4
During the year ended 31 May 2023, 273,800 shares (2022: 130,198 shares) with an aggregate nominal value of £68,450 (2022: £32,550) were issued
under the Group’s conditional Performance Share Plan.
The maximum total number of ordinary shares, which may vest in the future in respect of conditional Performance Share Plan awards outstanding
at 31 May 2023, amounted to 1,202,049 (31 May 2022: 1,386,289). These shares will only be issued subject to satisfying certain performance criteria
(see the Directors’ Remuneration Report and note 27).
26. Retirement benefit obligations
The Group operates several defined contribution pension schemes for qualifying employees. The assets of the schemes are held separately from
those of the Group in funds under the control of trustees. The total cost charged to the income statement of £2.2 million (2022: £1.9 million)
represents the contributions payable to these schemes by the Group at the rates specified in the scheme rules.
There were no outstanding or prepaid contributions at the balance sheet date (2022: £Nil).
Defined benefit scheme
The Group operates a defined benefit pension scheme providing benefits based on final pensionable earnings, which is closed to future accrual.
NWF Group Benefits Scheme
The scheme is administered by a fund that is legally separated from the Group. The trustees of the pension fund are required by law to act in the
interest of the fund and of all relevant stakeholders in the scheme. The trustees are responsible for the investment policy with regard to the assets
of the fund.
The scheme was closed to new members during the year ended 31 May 2002 and closed to future accrual with effect from April 2016.
The triennial actuarial valuation of this scheme was completed in the year ended 31 May 2021, with a deficit of £16.8 million at the valuation date of
31 December 2019. The present value of the defined benefit obligation and the related current service cost were measured using the Projected Unit
Credit Method. In these financial statements this liability has been updated in order to derive the IAS 19R valuation as of 31 May 2023. The next full
triennial valuation will be completed in the year ending 31 May 2024.
The triennial valuation resulted in Group contributions of £2.1 million per annum, including recovery plan payments of £1.8 million for financial
years ending 31 May 2022 and 31 May 2023. From 1 June 2022 to 31 December 2027 recovery plan payments of £2.1 million per annum will be paid.
In addition, from 1 January 2022 a percentage increase based on total dividend growth over £3.1 million will be paid.
The average duration of the benefit obligation at the balance sheet date is 14 years. The defined benefit obligation includes benefits for current
employees, former employees and current pensioners. Approximately 43% of the liabilities are attributable to current and former employees and
57% to current pensioners.
The scheme typically exposes the Group to actuarial risks such as investment risk, interest rate risk and longevity risk, as described below:
• Investment risk: The present value of the defined benefit scheme liability is calculated using a discount rate determined by reference to high
quality corporate bond yields. If the return on plan assets is below this rate, it will create a scheme deficit. Currently, the scheme has a relatively
balanced investment in equities, bonds, property funds and alternatives, cash and diversified growth funds. Due to the long-term nature of
scheme liabilities, the trustees of the pension fund consider it appropriate that a reasonable portion of the scheme assets should be invested
in equities, property funds and diversified growth funds to leverage the return generated by the fund.
• Interest risk: A decrease in the bond interest rate will increase the scheme liability but this will be partially offset by an increase in the return
on the scheme’s bond investments.
• Longevity risk: The present value of the defined benefit scheme liability is calculated by reference to the best estimate of the mortality of the
scheme participants both during and after their employment. An increase in the life expectancy of the scheme participants will increase the
scheme’s liability.
106
NWF GROUP PLC ANNUAL REPORT AND ACCOUNTS 2023
Notes to the Group financial statements continuedfor the year ended 31 May 2023
26. Retirement benefit obligations continued
Defined benefit scheme continued
NWF Group Benefits Scheme continued
The principal actuarial assumptions as at the balance sheet date, used for the purposes of the actuarial valuations, were as follows:
Discount rate
Future salary increases
RPI inflation
CPI inflation
Pension increases in payment (LPI 5%)
The mortality assumptions adopted imply the following life expectancies:
Current pensioners – male life expectancy at age 65
Future pensioners currently aged 45 – male life expectancy at age 65
2023
%
5.35
n/a
3.15
2.60
2.86
2023
Years
20.4
21.7
2022
%
3.45
n/a
3.40
2.80
3.30
2022
Years
20.3
21.6
The 2023 mortality assumptions above are based on S3PXA tables with CMI 2021 improvements and a long-term trend rate of 1.25% (2022: S3PXA
tables with CMI 2021 improvements and a long-term trend rate of 1.25%).
The amounts recognised in the balance sheet in respect of the defined benefit scheme are as follows:
Present value of defined benefit obligations
Fair value of scheme assets
Deficit in the scheme recognised as a liability in the balance sheet
Related deferred tax asset (note 24)
Net pension liability
Amounts recognised in the income statement in respect of the defined benefit scheme are as follows:
Past service cost
Administrative expenses
Interest on the net defined benefit liability
Total cost recognised in the income statement
2023
£m
(39.2)
29.6
(9.6)
2.4
(7.2)
2023
£m
—
0.4
0.3
0.7
2022
£m
(49.0)
39.7
(9.3)
2.3
(7.0)
2022
£m
—
0.3
0.3
0.6
Gains and losses arising from the remeasurement of the net defined benefit liability have been reported in the statement of comprehensive income,
as shown below:
Actuarial loss on plan assets
Actuarial gain arising from changes in financial assumptions
Remeasurement (loss)/gain
2023
£m
(11.9)
9.6
(2.3)
2022
£m
(6.4)
10.4
4.0
NWF GROUP PLC NWF.CO.UK
107
Financial statements 26. Retirement benefit obligations continued
Defined benefit scheme continued
NWF Group Benefits Scheme continued
Changes in the present value of the defined benefit obligation are as follows:
At 1 June
Interest cost
Remeasurement (gains)/losses:
– actuarial gains arising from changes in financial assumptions
– actuarial losses/(gains) arising from changes in demographic assumptions
– actuarial losses on experience assumptions
Benefits paid
At 31 May
Changes in the fair value of scheme assets are as follows:
At 1 June
Interest income
Remeasurement losses:
– actuarial losses on plan assets
Contributions by employer
Expenses
Benefits paid
At 31 May
The major categories and fair values of scheme assets at the balance sheet date are as follows:
Equity-linked bonds
LDI
Credit fund
Diversified growth fund
Cash
Annuity policies
Total
2023
£m
49.0
1.7
2022
£m
60.0
1.2
(11.5)
(10.2)
0.3
1.6
(1.9)
39.2
2023
£m
39.7
1.5
(11.9)
2.6
(0.4)
(1.9)
29.6
(0.6)
0.4
(1.8)
49.0
2022
£m
45.1
0.9
(6.4)
2.2
(0.3)
(1.8)
39.7
Fair value of assets
2023
£m
9.6
6.2
5.5
7.5
0.5
0.3
29.6
2022
£m
4.6
10.4
6.6
17.1
0.7
0.3
39.7
None of the fair values of the assets shown above include any of the Group’s own financial instruments or any property used by the Group at the
balance sheet date.
The actual return on scheme assets was a £10.4 million loss (2022: £5.5 million loss).
Asset-liability matching reviews of the NWF Group Benefits Scheme are performed regularly. The results of reviews are used to assist the trustees
and the Group to determine the optimal long-term asset allocation with regard to the structure of the liabilities of the scheme. They are also used
to assist the trustees in managing the underlying volatility inherent in investment performance and the risk of a significant increase in the scheme
deficit, by providing information used to determine the scheme’s investment strategy.
108
NWF GROUP PLC ANNUAL REPORT AND ACCOUNTS 2023
Notes to the Group financial statements continuedfor the year ended 31 May 2023 26. Retirement benefit obligations continued
Defined benefit scheme continued
NWF Group Benefits Scheme continued
The main strategic choices that are formulated in an actuarial and technical policy document of the fund are described below:
• asset mix is based on a strategic allocation of 40% diversified growth funds, 35% liability-driven investment (‘LDI’) funds, 20% passive equity
and 5% multi-asset credit;
• it is the policy of the fund to cover its exposure to the interest rate risk of the defined benefit liability by the use of LDI funds. LDI funds are
derivative-based investments that give leveraged exposures to the bond markets;
• inflation risk is mitigated by the use of LDI funds. LDI funds are derivative-based investments that give leveraged exposures to the bond markets;
• the fund does not have a material foreign exchange exposure and does not, therefore, use foreign exchange derivatives to hedge its foreign
exchange risk;
• active management is within the diversified growth fund and the multi-asset credit fund; and
• there are 15 pensioner members with annuity policies held in the name of the pension scheme trustee. The arrangements are held with Aviva plc
and Scottish Widows Limited. These policies fully match the pension obligations of those pensioners insured and are therefore set equal to the
present value of the related obligations.
As all of the above assets are held in a pooled arrangement, they do not hold a quoted market price in active markets.
There has been no change in the processes used by the Group to manage its risks from the prior year.
Significant actuarial assumptions for the determination of the defined benefit liability are discount rate, price inflation and mortality. The sensitivity
analyses shown below have been determined based on reasonably possible changes of the respective assumptions occurring at the balance sheet
dates, while holding all other assumptions constant.
Impact on defined benefit obligation
0.25% change in discount rate
0.25% change in RPI inflation
One-year change in the life expectancy at age 65
Increase
£m
Decrease
£m
(1.3)
0.9
1.5
1.3
(0.9)
(1.5)
27. Share-based payments
In the year ended 31 May 2023, the Group operated one (2022: one) equity-settled share-based payment plan as described below.
The Group recognised total expenses of £0.5 million in respect of equity-settled share-based payment transactions in the year ended 31 May 2023
(2022: £0.8 million).
Long-Term Incentive Plan (‘the Plan’)
The Group operates a Performance Share Plan for senior executives, further details of which can be found in the Directors’ Remuneration Report
in the Group financial statements. Under the Plan, the Group has made awards of conditional shares, which have yet to be exercised, to certain
Directors on 4 August 2020 (vesting date: August 2023), 3 August 2021 (vesting date: August 2024) and 31 January 2023 (vesting date: August 2025).
The vesting of these conditional share awards is subject to the Group achieving absolute earnings per share targets.
Details of the maximum total number of ordinary shares, which may be issued in future periods in respect of conditional share awards outstanding
at 31 May 2023, 31 May 2022, 31 May 2021 and 31 May 2020, are as shown below.
At 1 June
Granted in the year
Exercised in the year
Lapsed/forfeited in the year
At 31 May
2023
Number of
conditional
shares
1,386,289
400,766
(529,080)
(55,927)
1,202,049
2022
Number of
conditional
shares
1,400,421
420,046
(245,657)
(188,521)
1,386,289
2021
Number of
conditional
shares
1,441,604
437,164
(478,347)
—
1,400,421
2020
Number of
conditional
shares
1,216,945
529,080
—
(304,421)
1,441,604
The estimate of the fair value of the services received in return for the conditional share awards is measured based on a Black Scholes model. The
aggregate of the estimated fair values of the awards at 31 May 2023 shown above is £2.1 million (31 May 2022: £2.4 million), before taking into account
the likelihood of achieving non-market-based performance conditions.
NWF GROUP PLC NWF.CO.UK
109
Financial statements 27. Share-based payments continued
Long-Term Incentive Plan (‘the Plan’) continued
For awards granted in the current and prior years, the inputs into the Black Scholes model are as follows:
Share price at grant date
Black Scholes fair value
Exercise price
Expected volatility
Expected life
Expected dividend yield
Risk-free interest rate
2023
£2.30
£1.88
£Nil
31.53%
2.33 years
3.36%
3.26%
2022
£2.17
£1.96
£Nil
30.40%
2.83 years
3.57%
0.10%
2021
£2.05
£1.83
£Nil
31.09%
2.82 years
4.03%
(0.13)%
2020
£1.66
£1.49
£Nil
25.13%
2.84 years
3.91%
0.38%
Expected volatility was determined by calculating the historical volatility of the Group’s share price over the previous three years. 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.
28. Net cash generated from operating activities
Profit before tax
Adjustments for:
Depreciation of property, plant and equipment
Depreciation of right of use assets
Amortisation of other intangible assets
(Profit)/loss on disposal on property, plant and equipment
Impairment of intangible assets
Impairment of property, plant and equipment
Finance costs
Fair value profit on financial derivative
Share-based payment expense
Value of employee services
Contribution to pension scheme not recognised in income statement
2023
£m
18.9
4.8
9.9
0.6
(0.5)
—
—
1.7
(0.1)
0.5
(0.7)
(2.2)
2022
£m
12.0
4.6
8.9
0.5
—
7.9
0.5
1.2
(0.1)
0.8
(0.1)
(1.8)
Operating cash flows before movements in working capital and provisions
32.9
34.4
Movements in working capital:
Decrease/(increase) in inventories
Decrease/(increase) in trade and other receivables
(Decrease)/increase in trade and other payables
Net cash generated from operations
29. Analysis of cash and cash equivalents and reconciliation to net debt
Cash and cash equivalents (note 18)
Borrowings (note 20)
Hire purchase obligations1
Total Group (excluding lease liabilities)
Lease liabilities (excluding hire purchase obligations transferred)
Total Group (including lease liabilities)
2.4
8.7
(7.0)
37.0
1 June
2022
£m
9.1
—
(0.1)
9.0
(28.2)
(19.2)
Other
non-cash
movements
£m
—
—
—
—
(12.1)
(12.1)
Cash
flow
£m
7.2
—
0.1
7.3
10.5
17.8
(3.2)
(23.9)
26.4
33.7
31 May
2023
£m
16.3
—
—
16.3
(29.8)
(13.5)
1 Following the adoption of IFRS 16 ‘Leases’, hire purchase obligations are now recognised within lease liabilities, shown here for comparative purposes only.
110
NWF GROUP PLC ANNUAL REPORT AND ACCOUNTS 2023
Notes to the Group financial statements continuedfor the year ended 31 May 2023
30. Related party transactions
Key management compensation
The remuneration of key management personnel of the Group, who are the Executive and Non-Executive Directors of the Company, the Executive
Directors of its subsidiaries and certain key managers of the Group, is set out below in aggregate for each of the categories specified in IAS 24
‘Related Party Disclosures’:
Short-term employee benefits (salary and bonus)
Post-employment benefits
Share-based payments
2023
£m
4.2
0.3
0.6
5.1
2022
£m
4.3
0.3
1.1
5.7
Further information on remuneration of Directors can be found in the Directors’ Remuneration Report.
Directors’ transactions
T P Acton purchased, in the normal course of business and under normal terms and conditions, goods to the value of £4,820 as a customer of the
Group in the year ended 31 May 2023 (2022: £2,574). At 31 May 2023, the amount outstanding was £815 (2022: £Nil). During the year, the highest
amount outstanding totalled £1,574 (2022: £713).
R A Whiting purchased, in the normal course of business and under normal terms and conditions, goods to the value of £3,765 as a customer of the
Group in the year ended 31 May 2023 (2022: £3,211). At 31 May 2023, the amount outstanding was a credit balance of £822 (2022: £681 outstanding).
During the year, the highest amount outstanding totalled £263 (2022: £1,517).
S R Andrew purchased, in the normal course of business and under normal terms and conditions, goods to the value of £Nil as a customer of the
Group in the year ended 31 May 2023 (2022: £1,265). At 31 May 2023, the amount outstanding was £Nil (2022: £150). During the year, the highest
amount outstanding totalled £Nil (2022: £380).
D S Downie purchased, in the normal course of business and under normal terms and conditions, goods to the value of £1,005 as a customer of
the Group in the year ended 31 May 2023 (2022: £4,284). At 31 May 2023, the amount outstanding was £Nil (2022: £105). During the year, the highest
amount outstanding totalled £Nil (£1,474).
M Adcock purchased, in the normal course of business and under normal terms and conditions, goods to the value of £479 as a customer of the
Group in the year ended 31 May 2023 (2022: £2,739). At 31 May 2023, the amount outstanding was a credit balance of £121 (2022: £300). During
the year, the highest amount outstanding was a credit balance of £121 (2022: £150).
M Nicholls purchased, in the normal course of business and under normal terms and conditions, goods to the value of £2,614 as a customer of
the Group in the year ended 31 May 2023 (2022: £1,856). At 31 May 2023, the amount outstanding was £Nil (2022: £265). During the year, the highest
amount outstanding £Nil (2022: £329).
G Franks purchased, in the normal course of business and under normal terms and conditions, goods to the value of £1,247 as a customer of the
Group in the year ended 31 May 2023 (2022: £1,051). At 31 May 2023, the amount outstanding was £Nil (2022: £Nil). During the year, the highest
amount outstanding totalled £767 (2022: £548).
31. Commitments for capital expenditure
Authorised and contracted but not provided for
2023
£m
6.3
2022
£m
9.9
32. Contingent liabilities
The Group’s bank facilities are provided under an arrangement with NatWest Group. The Group has pledged security in favour of the bank over
certain freehold land and buildings with a carrying value at 31 May 2023 of £20.6 million (2022: £20.9 million). This is secured by way of unscheduled
mortgage debentures which incorporate a fixed charge over specified property including land, plant and machinery and goodwill and a floating
charge over all other property, assets and rights owned now or in the future which are not subject to an effective fixed charge.
The Group has an arrangement with the bank under which cash balances are offset against borrowings. The Company has given a guarantee in
respect of the net bank borrowings within the Group under this arrangement amounting to £Nil at 31 May 2023 (2022: £Nil). The Group has an
intercompany cross-guarantee arrangement with the bank under which the Company and various subsidiaries provide security for each other.
NWF GROUP PLC NWF.CO.UK
111
Financial statements 32. Contingent liabilities continued
The Company and certain subsidiaries have granted a fixed and floating charge in favour of the trustees of a defined benefit pension scheme
(‘the NWF Group Benefits Scheme’). This security, which is subordinated to the bank, creates a fixed charge over certain freehold land and buildings,
subject to a maximum value of £5.0 million (2022: £5.0 million), and a floating charge over all other assets.
The Company has also given certain guarantees to third parties in respect of operating lease and supply agreement commitments due from various
subsidiary companies.
No loss is expected to result from these arrangements.
33. Contingent assets
There are no contingent assets recognised by the Group as at 31 May 2023 (2022: £Nil).
34. Post-balance sheet events
On 7 July 2023, the Group acquired 100% of the trade and assets of Geoff Boorman Fuels LLP, a 19 million litre fuel distributor based in Edenbridge
in Kent, supplying mainly domestic customers across the South West to the borders of Kent, Sussex and Surrey. The net cash consideration
of £2.6 million on a debt and cash-free basis was settled at completion.
112
NWF GROUP PLC ANNUAL REPORT AND ACCOUNTS 2023
Notes to the Group financial statements continuedfor the year ended 31 May 2023 Parent Company balance sheet
as at 31 May 2023
Non-current assets
Property, plant and equipment
Investment property
Investments
Finance lease receivables
Reimbursement asset
Current assets
Trade and other receivables
Finance lease receivables
Cash and cash equivalents
Current liabilities
Trade and other payables
Lease liabilities
Provision for liabilities
Net current assets
Total assets less current liabilities
Non-current liabilities
Borrowings
Lease liabilities
Provision for liabilities
Deferred tax liabilities
Retirement benefit obligations
Net assets
Capital and reserves
Share capital
Share premium
Retained earnings
Total shareholders’ funds
Note
3
4
5
6
7
9
6
10
11
12
11
12
8
13
2023
£m
0.3
21.8
15.3
2.3
0.4
40.1
5.8
1.2
4.5
2022
£m
0.4
22.0
15.3
3.4
0.4
41.5
5.4
1.1
6.7
11.5
13.2
(3.3)
(1.3)
—
6.9
47.0
—
(2.5)
(0.5)
(0.6)
(9.6)
(3.3)
(1.3)
(0.2)
8.4
49.9
—
(3.8)
(0.4)
(0.6)
(9.3)
33.8
35.8
12.4
0.9
20.5
33.8
12.3
0.9
22.6
35.8
The Company’s profit for the year was £3.2 million including dividends received (2022: £8.3 million).
The Parent Company financial statements on pages 113 to 124 were approved by the Board of Directors on 1 August 2023 and were signed on its
behalf by:
R A Whiting
Director
C J Belsham
Director
The notes on pages 115 to 124 form part of these Parent Company financial statements.
NWF GROUP PLC NWF.CO.UK
113
Financial statements
Parent Company statement of comprehensive income
for the year ended 31 May 2023
Profit for the year attributable to equity shareholders
Items that will never be reclassified to income statement:
Actuarial (loss)/gain on defined benefit pension scheme
Tax on items that will never be reclassified to income statement
Total other comprehensive (expense)/income
Total comprehensive income for the year
The notes on pages 115 to 124 form part of these Parent Company financial statements.
Parent Company statement of changes in equity
for the year ended 31 May 2023
2023
£m
3.2
(2.3)
1.0
(1.3)
1.9
2022
£m
8.3
4.0
(1.0)
3.0
11.3
Called up
share
capital
£m
Share
premium
account
£m
Retained
earnings
£m
Total
shareholders’
funds
£m
12.3
0.9
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
12.3
0.9
—
—
—
—
0.1
—
—
—
0.1
12.4
—
—
—
—
—
—
—
—
—
14.3
8.3
4.0
(1.0)
11.3
(3.5)
(0.1)
0.6
(3.0)
22.6
3.2
(2.3)
1.0
1.9
(0.1)
(3.7)
(0.5)
0.3
(4.0)
27.5
8.3
4.0
(1.0)
11.3
(3.5)
(0.1)
0.6
(3.0)
35.8
3.2
(2.3)
1.0
1.9
—
(3.7)
(0.5)
0.3
(3.9)
0.9
20.5
33.8
Balance at 1 June 2021
Profit for the year
Items that will never be reclassified to income statement:
Actuarial gain on defined benefit pension scheme
Tax on items that will never be reclassified to income statement
Total comprehensive income for the year
Transactions with owners:
Dividends paid
Value of employee services
Credit to equity for equity-settled share-based payments
Total transactions with owners
Balance at 31 May 2022
Profit for the year
Actuarial gain on defined benefit pension scheme
Tax on items that will never be reclassified to income statement
Total comprehensive income for the year
Transactions with owners:
Issue of shares
Dividends paid
Value of employee services
Credit to equity for equity-settled share-based payments
Total transactions with owners
Balance at 31 May 2023
The notes on pages 115 to 124 form part of these Parent Company financial statements.
114
NWF GROUP PLC ANNUAL REPORT AND ACCOUNTS 2023
Notes to the Parent Company financial statements
for the year ended 31 May 2023
1. Significant accounting policies
Basis of preparation
The company is registered in England and Wales. The registered office address is Wardle, Nantwich, Cheshire CW5 6BP.
The separate financial statements of the Company have been prepared in accordance with Financial Reporting Standard 101 ‘Reduced Disclosure
Framework’ (‘FRS 101’), on the going concern basis and under the historical cost convention, and in accordance with the Companies Act 2006
(as applicable to companies using FRS 101) and applicable accounting standards in the UK.The principal accounting policies, which have been
applied consistently to all the years presented, are set out below.
These financial statements and accompanying notes have been prepared in accordance with the reduced disclosure framework for all years presented.
The following exemptions from the requirements of IFRS have been applied in the preparation of these financial statements, in accordance with FRS 101:
• the following paragraphs of IAS 1 ‘Presentation of Financial Statements’:
• 10(d) (statement of cash flows);
• 16 (statement of compliance with all IFRS);
• 11 (cash flow statement information);
• 134 – 136 (capital management disclosures);
• 38A (requirement for minimum of two primary statements, including cash flow statements); and
• 38B - D (additional comparative information);
• IFRS 7 ‘Financial Instruments: Disclosures’;
• IAS 7 ‘Statement of Cash Flows’;
• IAS 24 (paragraphs 17 and 18a) ‘Related Party Disclosures’ (key management compensation);
• IAS 24 ‘Related Party Disclosures’ – the requirement to disclose related party transactions between two or more members of a group;
• IAS 16 ‘Property, Plant and Equipment’ (paragraph 73(e)) – reconciliations between the carrying amount at the beginning and end of the period; and
• IAS 38 ‘Intangible Assets’ (paragraph 118(e)) – reconciliations between the carrying amount at the beginning and end of the period.
As the Group financial statements include the equivalent disclosures, the Company has taken the exemptions available under FRS 101 in respect
of the following disclosures:
• IFRS 2 ‘Share-based Payments’ in respect of Group equity-settled share-based payments; and
• certain disclosures required by IFRS 13 ‘Fair Value Measurement’ and disclosures required by IFRS 7 ‘Financial Instruments: Disclosures’.
Adoption of new and revised standards
The following new standards, amendments to standards or interpretations are mandatory for the first time for the financial year beginning 1 June 2022.
The Company has adopted the following new standards, amendments and interpretations now applicable. None of these standards and
interpretations have had any material effect on the Company’s results or net assets.
Standard or interpretation
Content
IFRS 4
Insurance Contracts
Applicable for financial year
beginning on
1 June 2022
The following standards, amendments and interpretations are not yet effective and have not been adopted early by the Company:
Standard or interpretation
Content
Amendments to IAS 1
Amendments to IAS 8
Amendments to IAS 12
Amendments to IFRS 17
Presentation of Financial Statements
Accounting Policies
Income Taxes
Insurance Contracts
IFRS Practice Statement 2
Making Materiality Judgements
Amendments to IFRS 16
Leases on Sale and Leaseback
Applicable for financial year
beginning on
1 June 2023
1 June 2023
1 June 2023
1 June 2023
1 June 2023
1 June 2024
These standards are not expected to have a material impact on the Company in the current or future reporting periods and on foreseeable
future transactions.
Parent Company profit and loss account
The Company has not presented its own profit and loss account as permitted by Section 408 of the Companies Act 2006. The Company’s profit for
the year was £3.2 million including dividends received (2022: £8.3 million). The profit for the year is shown in the statement of changes in equity and
on the face of the balance sheet. There are no material differences between the profit for the year in the current and prior year and its historical cost
equivalent. Accordingly, no note of historical cost profits and losses has been presented.
NWF GROUP PLC NWF.CO.UK
115
Financial statements Notes to the Parent Company financial statements continued
for the year ended 31 May 2023
1. Significant accounting policies continued
Going concern
Based on financial performance to date and forecasts along with the available banking facilities, there is a reasonable expectation that the Company
has adequate resources to continue in operational existence for the foreseeable future.
The Board has prepared cash flow forecasts for the period to 31 May 2025. Under this base case scenario, the Company is expected to continue
to have significant headroom relative to the funding available to it and to comply with its banking covenants.
The Board has also considered a severe downside scenario based on a significant and sustained reduction in Fuels’ profitability alongside
underperformance in Food and Feeds. This downside scenario excludes any mitigating actions that the Board would be able to take to reduce costs.
Under this scenario, the Company would still expect to have sufficient headroom in its financing facilities.
The Company therefore continues to adopt the going concern basis of accounting in preparing the annual financial statements.
Dividend distribution
The distribution of a dividend to the Company’s shareholders is recognised as a liability in the Company’s financial statements in the period in which
it is approved by the Company’s shareholders (please refer to note 9 of the Group financial statements).
Property, plant and equipment
Property, plant and equipment are stated at cost. Cost includes the original purchase price of the asset and the costs attributable to bringing the
asset to its working condition for its intended use. Depreciation is calculated to write off the cost of property, plant and equipment over their useful
economic life on a straight-line basis as follows:
Plant and machinery
3 – 10 years
Assets under construction are not depreciated until they are put into use.
Borrowing costs that are directly attributable to the construction of qualifying assets are capitalised.
Investment properties
Owner-occupied land and buildings owned by the Company and which are rented to subsidiary companies are treated as investment properties
in accordance with IAS 40 ‘Investment Property’. Investment properties are valued using the cost model. Investment properties are stated at cost,
which includes the original purchase price of the asset and the costs attributable to bringing the asset to its working condition for its intended use.
Depreciation is calculated to write off the cost of the investment property over its useful economic life on a straight-line basis over 10 – 50 years.
Investment in subsidiary undertakings
Investments in Group undertakings are stated at cost, unless their value has been impaired in which case they are valued at the lower of their
realisable value or value in use.
Finance lease receivables and lease liabilities
The Company holds the head lease on a property which is occupied by a subsidiary company under a sub-lease arrangement. The Company
recognises both a finance lease receivable and a lease liability in respect of this arrangement.
The finance lease receivable is measured initially at the amount of the net investment in the lease, which is the gross investment in the lease
discounted using the implicit interest rate in the lease, in accordance with IFRS 16. The gross investment in the lease is the aggregate of the lease
payments receivable. Each lease payment received is allocated between the receivable and finance income. The finance income is credited to
the income statement over the lease period so as to produce a constant periodic recognition of interest on the remaining balance of the asset
for each period.
At the inception of a contract, the Company performs an assessment to determine whether the contract is, or contains, a lease. Key aspects of
this determination are the specific identification of an asset that is subject to the lease, and that the lease conveys the right to direct and control
the use of the identified asset for a period of time.
Where a contract is determined to contain a lease, the lease liability is recognised from the commencement date of the lease, the commencement
date being defined as the date at which the lessor makes the underlying asset available for use. The lease liability is recognised at an amount equal
to the present value of the future lease payments during the lease term.
Lease payments are discounted using the Company’s incremental borrowing rate at the time of the inception of the lease.
Reimbursement assets
The Company recognises a reimbursement asset where it has virtual certainty that an economic inflow of resources will be received.
Deferred taxation
Deferred taxation is recognised in respect of all timing differences that have originated but not reversed at the balance sheet date where
transactions or events that result in an obligation to pay more tax in the future or a right to pay less tax in the future have occurred at the balance
sheet date.
Deferred income tax is determined using tax rates (and laws) that have been enacted or substantively enacted by the balance sheet date and are
expected to apply when the related deferred income tax asset is realised or the deferred income tax liability is settled.
Deferred tax assets are regarded as recoverable and recognised in the financial statements when, on the basis of available evidence, it is more
likely than not that there will be suitable taxable profits from which the future reversal of the timing differences can be deducted. The recoverability
of tax losses is assessed by reference to forecasts which have been prepared and approved by the Board. The deferred tax assets and liabilities are
not discounted.
116
NWF GROUP PLC ANNUAL REPORT AND ACCOUNTS 2023
1. Significant accounting policies continued
Provisions
Provisions are recognised when the Company has a present legal or constructive obligation as a result of past events, it is probable that an
outflow of resources will be required to settle the obligation and the amount has been reliably estimated. Provisions are not recognised for
future operating losses.
Other receivables
Other receivables are recognised initially at fair value and subsequently measured at amortised cost using the effective interest method, less
provision for impairment. Under IFRS 9, effective from 1 June 2018, the Group elected to use the simplified approach to measure the loss allowance
at an amount equal to lifetime expected credit losses for trade receivables. Under the new accounting standard, the Group continues to establish
a provision for impairment of trade receivables when there is objective evidence that the Group will not be able to collect all amounts due according
to the original terms of the receivables. Significant financial difficulties of the counterparty, probability that the counterparty will enter bankruptcy
or financial reorganisation, and default or delinquency in payments are considered indicators that the trade receivable is impaired. In addition,
IFRS 9 requires the Group to consider forward-looking information and the probability of default when calculating expected credit losses.
The measurement of expected credit losses reflects an unbiased and probability weighted amount that is determined by evaluating the range
of possible outcomes as well as incorporating the time value of money. The Group considers reasonable and supportable customer-specific and
market information about past events, current conditions and forecasts of future economic conditions when measuring expected credit losses.
The amount of the provision is the difference between the carrying amount and the present value of estimated future cash flows of the asset,
discounted, where material, at the original effective interest rate. The carrying amount of the asset is reduced through the use of a provision for
receivables impairment, and the amount of the loss is recognised in the income statement within administrative expenses. When a trade receivable
is uncollectable, it is written off against the provision for receivables impairment. Subsequent recoveries of amounts previously written off are
credited against administrative expenses in the income statement.
Cash and cash equivalents
Cash and cash equivalents include cash in hand, deposits held at call with banks and bank overdrafts. Bank overdrafts are shown within borrowings
in current liabilities on the balance sheet. The Company recognises cash when it is within its control, and in accordance with IFRS 9, when it has the
contractual right to obtain cash from the bank. The Company’s cash recognition policies are aligned with the IFRIC Committee tentative agenda
decision in September 2021.
Trade and other payables
Trade and other payables are recognised initially at fair value and subsequently measured at amortised cost using the effective interest method.
Retirement benefit costs
The Company operates various pension schemes, including defined contribution and defined benefit schemes.
Defined contribution schemes
For defined contribution schemes, the Group pays contributions to publicly or privately administered pension insurance schemes on a mandatory,
contractual or voluntary basis. The contributions are recognised as an employee benefit expense in the income statement when they are due.
The assets of the schemes are held separately from those of the Group in funds under the control of trustees.
Defined benefit scheme
The Company is the sponsoring employer in a funded Group-operated defined benefit pension scheme, the NWF Group Benefits Scheme, and has
therefore recognised the defined liability, in full, on the Company balance sheet.
The liability recognised in the balance sheet in respect of defined benefit schemes is the present value of the defined benefit obligation at the
balance sheet date less the fair value of scheme assets, together with adjustments for unrecognised actuarial gains or losses and past service
costs. The defined benefit obligation is calculated annually by independent actuaries using the Projected Unit Credit Method. The present value
of the defined benefit obligation is determined by discounting the estimated future cash outflows using interest rates of high quality corporate
bonds that are denominated in the currency in which the benefits will be paid and that have terms to maturity approximating to the terms of the
related pension liability.
The net pension finance cost is determined by applying the discount rate, used to measure the defined benefit pension obligation at the beginning
of the accounting period, to the net pension obligation at the beginning of the accounting period taking into account any changes in the net pension
obligation during the period as a result of cash contributions and benefit payments.
Pension scheme expenses are charged to the income statement within administrative expenses.
The Company has considered the recognition requirements of IFRIC 14 and determined that they do not apply to the scheme.
Actuarial gains and losses are recognised immediately in the statement of comprehensive income. Net defined benefit pension scheme deficits
before tax relief are presented separately on the balance sheet within non-current liabilities. The attributable deferred income tax asset is included
within the deferred income tax asset in the balance sheet and is subject to the recognition criteria as set out in the accounting policy on deferred
income tax.
NWF GROUP PLC NWF.CO.UK
117
Financial statements Notes to the Parent Company financial statements continued
for the year ended 31 May 2023
1. Significant accounting policies continued
Share-based payments
In the year ended 31 May 2023, the Company operated one (2022: one) equity-settled share-based payment plan. Equity-settled share-based
payments are measured at fair value (excluding the effect of non-market-based vesting conditions) at the date of grant.
The fair value determined at the grant date of equity-settled share-based payments issued to the Company’s employees is expensed on
a straight-line basis over the vesting period, based on the Company’s estimate of shares that will eventually vest and adjusted for the effect
of non-market-based vesting conditions.
The fair value determined at the grant date of equity-settled share-based payments issued to employees of subsidiary undertakings is recognised
as an addition to the cost of investment in subsidiary undertakings on a straight-line basis over the vesting period, based on the Company’s
estimate of shares that will eventually vest and adjusted for the effect of non-market-based vesting conditions.
Fair value is measured by the use of a Black Scholes 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.
Employer social security contributions payable in connection with the grant of share awards are considered an integral part of the grant itself
and the charge is treated as a cash-settled transaction.
Share capital
Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of new shares are shown in equity as a deduction,
net of tax, from the proceeds of issue.
Critical accounting estimates and judgements
The Company makes estimates and assumptions concerning the future. The resulting accounting estimates will, by definition, seldom equal the
related actual results. The assumptions that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities
within the next financial year are discussed below.
Defined benefit pension scheme – valuation assumptions
The balance sheet carrying values of defined benefit pension scheme surpluses or deficits are calculated using independently commissioned
actuarial valuations. These valuations, including the impact of GMP, are based on a number of assumptions, including the most appropriate
mortality rates to apply to the profile of scheme members and the financial assumptions regarding discount rates and inflation. All of these are
estimates of future events and are therefore uncertain. Further details can be found in note 26 of the Group financial statements.
Assessment of impairment
The Company tests annually for impairment of investments and fixed asset balances, which involves using key judgements including estimates
of future business performance and cash generation, discount rates and long-term growth rates.
The recoverable amounts of CGUs are determined using value in use calculations. The value in use calculations use post-tax cash flow projections
based on the Board-approved budget for the year ending 31 May 2024 and four years of divisional strategic plans thereafter.
These value in use calculations are subject to a series of sensitivity analyses using reasonable assumptions concerning the future performance
of the CGUs and assessing the impact of a 1% increase in the discount rate.
From a completeness perspective, the Directors are not aware of any other critical judgements within the Group that give rise to a significant risk
of material adjustment within the next financial year.
2. Remuneration of Directors and auditors
Details of Directors’ remuneration are shown in the Directors’ Remuneration Report on page 66. Details of auditors’ remuneration are shown
in note 5 of the Group financial statements.
118
NWF GROUP PLC ANNUAL REPORT AND ACCOUNTS 2023
3. Property, plant and equipment
Cost
At 1 June 2022
Additions
At 31 May 2023
Accumulated depreciation
At 1 June 2022
Charge for the year
At 31 May 2023
Carrying amount
At 31 May 2023
At 31 May 2022
4. Investment property
Cost
At 1 June 2022
Additions
Disposals
At 31 May 2023
Accumulated depreciation
At 1 June 2022
Charge for the year
Disposals
At 31 May 2023
Carrying amount
At 31 May 2023
At 31 May 2022
Plant and
machinery
£m
1.1
—
1.1
0.7
—
0.7
0.4
0.4
Investment
property
£m
34.4
0.4
(0.1)
34.7
12.4
0.6
(0.1)
12.9
21.8
22.0
The fair value of the investment property at 31 May 2023 was £42.0 million (2022: £47.6 million). The valuation is based on a market valuation
by an independent RICS valuer with recent experience in the location and category of the asset being valued. Rental income of £2.7 million
(2022: £2.7 million) and direct operating expenses of £2.3 million (2022: £2.2 million) arising from investment property have been recognised
in the income statement.
5. Investments
Cost and carrying amount
At 1 June 2022
At 31 May 2023
The Directors believe that the carrying value of the investments is supported by their underlying net assets.
Total
£m
1.1
—
1.1
0.7
—
0.7
0.4
0.4
Total
£m
34.4
0.4
(0.1)
34.7
12.4
0.6
(0.1)
12.9
21.8
22.0
£m
15.3
15.3
NWF GROUP PLC NWF.CO.UK
119
Financial statements
Notes to the Parent Company financial statements continued
for the year ended 31 May 2023
5. Investments continued
The Company directly owns the whole of the issued ordinary shares of the following subsidiary undertakings:
Company
NWF Agriculture Holdings Limited
NWF Distribution Holdings Limited
NWF Fuels Holdings Limited
Dragon Petroleum Limited
North Western Farmers Limited
NWF Limited
Business activity
Holding company – Feeds operations
Holding company – Food operations
Holding company – Fuels operations
Dormant
Dormant
Dormant
All of the above companies are registered and operate in England and Wales. The registered office for all directly owned subsidiary undertakings is
Wardle, Nantwich, Cheshire CW5 6BP.
The Company also indirectly owns all of the issued ordinary shares of the following subsidiary undertakings:
Company
NWF Agriculture Limited
New Breed (UK) Limited
Boughey Distribution Limited
NWF Fuels Limited
Consols Oils Limited
Caldo Fuel Oil Limited (formerly Figaro Number Two Limited)
David Hermon Hodge Group Limited
David Hermon Hodge Limited
Hermon Hodge Limited
Preston Fuels Limited
Ron Darch & Sons Co Limited
Midland Fuel Oil Supplies Limited
Staffordshire Fuels Limited
Swan Petroleum Limited
Browns of Burwell Limited
Broadland Fuels Limited
Knutsford Domestic Fuel Oil Company Limited
Figaro Number One Limited
Sweetfuels Limited
Business activity
Supplier of animal feedstuffs and seeds
Supplier of animal feedstuffs and seeds
Warehousing and food distribution
Fuel distribution
Dormant
Dormant
Dormant
Dormant
Dormant
Dormant
Dormant
Dormant
Dormant
Dormant
Dormant
Dormant
Dormant
Dormant
Dormant
All of the above companies are registered and operate in England and Wales. The registered office for all indirectly owned subsidiary undertakings
is Wardle, Nantwich, Cheshire CW5 6BP.
As required, the Company guarantees all outstanding liabilities to which the subsidiary companies listed above are subject at the end of the
financial year, until they are satisfied in full and the guarantee is enforceable against the parent undertaking by any person to whom the subsidiary
companies listed above are liable in respect of those liabilities.
6. Finance lease receivables
Finance lease receivables are comprised of the following balance sheet amounts:
Current
Amounts receivable within one year
Non-current
Amounts receivable after more than one year
Total
120
NWF GROUP PLC ANNUAL REPORT AND ACCOUNTS 2023
2023
£m
1.2
2.3
3.5
2022
£m
1.1
3.4
4.5
6. Finance lease receivables continued
Lease receivables are as follows:
Not more than one year
Minimum lease receivables
Interest element
Present value of minimum lease receivables
Between one and five years
Minimum lease receivables
Interest element
Present value of minimum lease receivables
2023
£m
1.3
(0.1)
1.2
2.4
(0.1)
2.3
2022
£m
1.3
(0.2)
1.1
3.6
(0.2)
3.4
7. Reimbursement asset
The Company recognises a reimbursement asset of £0.5 million (2022: £0.4 million) in respect of certain future lease dilapidations costs receivable
from subsidiary companies occupying property under a sub-lease arrangement with the Parent Company.
8. Deferred income tax
The following are the principal categories of deferred tax assets and liabilities recognised by the Company and the movements thereon:
Deferred income tax liabilities/(assets) at 1 June 2022
Debit to income statement
Credit to equity
Deferred income tax liabilities/(assets) at 31 May 2023
Accelerated
tax
depreciation
£m
Retirement
benefit
obligations
£m
3.3
—
—
3.3
(2.3)
—
(0.1)
(2.4)
Other
£m
(0.4)
0.1
—
(0.3)
Total
£m
0.6
0.1
(0.1)
0.6
Deferred income tax assets and liabilities are offset when there is a legally enforceable right to offset current tax assets against current tax liabilities
and when the deferred income taxes relate to the same fiscal authority. The deferred income tax assets disclosed above are deemed to be recoverable.
9. Other receivables
Amounts owed by Group undertakings
Prepayments
Corporation tax recoverable
VAT recoverable
All of the amounts owed by Group undertakings shown above are repayable on demand.
2023
£m
0.5
0.7
4.4
0.2
5.8
2022
£m
1.1
0.6
3.5
0.2
5.4
NWF GROUP PLC NWF.CO.UK
121
Financial statements
Notes to the Parent Company financial statements continued
for the year ended 31 May 2023
10. Trade and other payables
Trade payables
Accruals
Other taxation and social security
2023
£m
0.7
2.5
0.1
3.3
2022
£m
1.1
2.1
0.1
3.3
The Group has a net bank overdraft facility amounting to £1.0 million, none of which has been utilised by the Company at 31 May 2023 (2022: none
utilised). This facility is secured by way of unscheduled mortgage debentures provided by the Company and certain subsidiaries within the Group
to NatWest Group which incorporate a fixed charge over trade receivables and floating charges over all their other assets.
11. Lease liabilities
Cost
At 1 June 2021
Lease liability payments (including finance costs)
Finance costs
At 31 May 2022
Lease liability payments (including finance costs)
Finance costs
At 31 May 2023
Lease liabilities are comprised of the following balance sheet amounts:
Current
Amounts due within one year
Non-current
Amounts due after more than one year
Total
Lease liabilities are as follows:
Not more than one year
Minimum lease payments
Interest element
Present value of minimum lease payments
Between one and five years
Minimum lease payments
Interest element
Present value of minimum lease payments
Property
£m
6.3
(1.3)
0.1
5.1
(1.4)
0.1
3.8
2023
£m
1.3
2.5
3.8
2023
£m
1.4
(0.1)
1.3
2.6
(0.1)
2.5
Total
£m
6.3
(1.3)
0.1
5.1
(1.4)
0.1
3.8
2022
£m
1.3
3.8
5.1
2022
£m
1.4
(0.1)
1.3
3.9
(0.1)
3.8
12. Provision for liabilities
The Company recognises a current liability for provisions of £Nil (2022: £0.2 million) and a non-current liability in respect of a provision
for dilapidations on leased properties of £0.5 million (2022: £0.4 million).
122
NWF GROUP PLC ANNUAL REPORT AND ACCOUNTS 2023
13.Called Up Share capital
Authorised: ordinary shares of 25p each
Balance at 1 June 2022, 31 May 2022 and 31 May 2023
Allotted and fully paid: ordinary shares of 25p each
Balance at 1 June 2021
Issue of shares (see below)
Balance at 31 May 2022
Issue of shares (see below)
Balance at 31 May 2023
Number
of shares
‘000
Total
£m
80,000
20.0
Number
of shares
‘000
49,004
130
49,134
274
49,408
Total
£m
12.3
—
12.3
0.1
12.4
During the year ended 31 May 2023, 273,800 shares (2022: 130,198 shares) with an aggregate nominal value of £68,450 (2022: £32,550) were issued
under the Group’s conditional Performance Share Plan.
The maximum total number of ordinary shares, which may vest in the future in respect of conditional Performance Share Plan awards outstanding
at 31 May 2023, amounted to 1,257,976 (31 May 2022: 1,386,289). These shares will only be issued subject to satisfying certain performance criteria
(see the Directors’ Remuneration Report and note 27 of the Group financial statements).
14. Employee benefit expense
Wages and salaries
Social security costs
Share-based payments
Other pension costs
2023
£m
2.3
0.4
0.3
0.1
3.1
2022
£m
2.1
0.4
0.5
0.1
3.1
The average monthly number of persons (including Directors) employed in the Company during the year was 20 (2022: 18).
15. Related party transactions
The Company has taken advantage of the exemption included in IAS 24 ‘Related Party Disclosures’ to not disclose details of transactions with Group
undertakings, on the grounds that it is the Parent Company of a group whose financial statements are publicly available.
Directors’ transactions
T P Acton purchased, in the normal course of business and under normal terms and conditions, goods to the value of £4,820 as a customer of the
Group in the year ended 31 May 2023 (2022: £2,574). At 31 May 2023, the amount outstanding was £815 (2022: £Nil). During the year, the highest
amount outstanding totalled £1,574 (2022: £713).
R A Whiting purchased, in the normal course of business and under normal terms and conditions, goods to the value of £3,765 as a customer of the
Group in the year ended 31 May 2023 (2022: £3,211). At 31 May 2023, the amount outstanding was a credit balance of £822 (2022: £681 outstanding).
During the year, the highest amount outstanding totalled £263 (2022: £1,517).
S R Andrew purchased, in the normal course of business and under normal terms and conditions, goods to the value of £Nil as a customer of the
Group in the year ended 31 May 2023 (2022: £1,265). At 31 May 2023, the amount outstanding was £Nil (2022: £150). During the year, the highest
amount outstanding totalled £Nil (2022: £380).
D S Downie purchased, in the normal course of business and under normal terms and conditions, goods to the value of £1,005 as a customer of the
Group in the year ended 31 May 2023 (2022: £4,284). At 31 May 2023, the amount outstanding was £Nil (2022: £105). During the year, the highest
amount outstanding totalled £Nil (2022: £1,474).
Details of the Directors’ interests in the ordinary share capital of the Company are provided in the Directors’ Report.
NWF GROUP PLC NWF.CO.UK
123
Financial statements Notes to the Parent Company financial statements continued
for the year ended 31 May 2023
16. Share-based payments
The Performance Share Plan (‘the LTIP’)
The Company operates a Performance Share Plan for senior executives, further details of which can be found in the Directors’ Remuneration Report
in the Group financial statements.
Under the LTIP, the Company has made awards of conditional shares to certain Directors and employees, details of which can be found in note 27
of the Group financial statements.
The Company recognised total expenses of £0.5 million (including NI) in respect of the LTIP’s equity-settled share-based payment transactions
in the year ended 31 May 2023 (2022: £0.7 million).
17. Pensions
The Company is the sponsoring employer in the NWF Group Benefits Scheme, a pension arrangement providing benefits based on final pensionable
pay. Details of the NWF Group Benefits Scheme, its liabilities and assets, together with the principal assumptions used in the valuation of its
liabilities, are given in note 26 to the Group financial statements.
Contributions into the scheme and amounts charged to the profit and loss account during the year were £2.2 million (2022: £2.2 million). There were
no outstanding or prepaid contributions at the balance sheet date (2022: £Nil).
The Company also operated a money purchase scheme during the year and contributions during the year amounted to £0.1 million (2022: £0.1 million).
There were no outstanding or prepaid contributions at the balance sheet date (2022: £Nil).
18. Contingent liabilities
The Company’s bank facilities are provided under an arrangement with NatWest Group. The Company has pledged security in favour of the bank
over certain freehold land and buildings with a carrying value at 31 May 2023 of £20.6 million (2022: £20.9 million). This is secured by way of
unscheduled mortgage debentures which incorporate a fixed charge over specified property including land, plant and machinery and goodwill
and a floating charge over all other property, assets and rights owned now or in the future which are not subject to an effective fixed charge.
The Company has an arrangement with the bank under which cash balances are offset against borrowings. The Company has given a guarantee
in respect of the net bank borrowings within the Group under this arrangement amounting to £Nil at 31 May 2023 (2022: £Nil).
The Company and certain subsidiaries have granted a fixed and floating charge in favour of the trustees of a defined benefit pension scheme
(‘the NWF Group Benefits Scheme’). This security, which is subordinated to the bank, creates a fixed charge over certain freehold land and
buildings, subject to a maximum value of £5.0 million (2022: £5.0 million), and a floating charge over all other assets.
The Company has also given certain guarantees to third parties in respect of operating lease and supply agreement commitments due from various
subsidiary companies.
No loss is expected to result from these arrangements.
19. Contingent assets
There are no contingent assets recognised by the Company as at 31 May 2023 (2022: £Nil).
124
NWF GROUP PLC ANNUAL REPORT AND ACCOUNTS 2023
Notice of Annual General Meeting
Notice is hereby given that the Annual General Meeting (‘the Meeting’) of NWF Group plc (‘the Company’) will be held at Wychwood Park Hotel,
Weston, Crewe CW2 5GP, on Thursday 28 September 2023 at 10.30a.m. to transact the business as specified below.
As Ordinary Business: to consider and, if thought fit, pass the following resolutions which will be proposed as Ordinary Resolutions.
1.
To receive, adopt and approve the Company’s Annual Report and Accounts for the financial year ended 31 May 2023 together with the Directors’
Report and Auditors’ Report thereon.
2. To declare a final dividend of 6.8p per share for the financial year ended 31 May 2023 payable on 8 December 2023 to shareholders who are on
the register of members of the Company at the close of business on 3 November 2023.
3. To re-elect Philip Acton as a Director of the Company.
4. To re-elect Richard Whiting as a Director of the Company.
5. To re-elect Chris Belsham as a Director of the Company.
6. To re-elect Richard Armitage as a Director of the Company.
7. To re-elect Dawn Moore as a Director of the Company.
8. To reappoint PricewaterhouseCoopers LLP as auditors of the Company to hold office from the conclusion of the Meeting until the conclusion
of the next Meeting of the Company at which the Company’s accounts are laid before the Company.
9. To authorise the Directors or Audit Committee of the Company to set the auditors’ remuneration.
10. To approve the Directors’ Remuneration Report (excluding the Directors’ remuneration policy contained within that report) as set out in the
Company’s Annual Report and Accounts for the financial year ended 31 May 2023.
As Special Business: to consider and, if thought fit, pass the following resolutions which will be proposed as Special Resolutions except for
Resolution 11 which will be proposed as an Ordinary Resolution.
Directors’ authority to allot shares
11. That the Board of Directors of the Company (‘the Board’) be generally and unconditionally authorised pursuant to Section 551 of the Companies
Act 2006 (‘the Act’) to allot Relevant Securities (as hereinafter defined):
11.1 up to an aggregate nominal amount of £4,117,330 (the equivalent of 16,469,321 ordinary shares); and
11.2
comprising equity securities (as defined by Section 560 of the Act) up to an aggregate nominal amount of £8,234,660 (the equivalent
of 32,938,642 ordinary shares) (such amount to be reduced by the nominal amount of any Relevant Securities allotted under paragraph
11.1 above) in connection with an offer by way of a rights issue:
(a)
(b)
to holders of ordinary shares in proportion (as nearly as may be practicable) to their respective existing holdings; and
to holders of other equity securities as required by the rights of those securities,
but subject to such limits, exclusions or other arrangements as the Board may deem necessary or expedient in relation to treasury shares,
fractional entitlements, record dates, legal, regulatory or practical problems in or under the laws of any territory or the requirements of any
regulatory body or stock exchange,
provided that this authority shall, unless renewed, varied or revoked by the Company, expire on the date which is 15 months after the date of the
Meeting or, if earlier, the date of the next Meeting of the Company save that the Company may, before such expiry, make offers or agreements
which would or might require Relevant Securities to be allotted and the Board may allot Relevant Securities in pursuance of such offer or
agreement notwithstanding that the authority conferred by this resolution has expired.
This Resolution 11 revokes and replaces all unexercised authorities previously granted to the Board to allot Relevant Securities but without
prejudice to any allotment of shares or grant of rights already made, offered or agreed to be made pursuant to such authorities.
For the purposes of this Resolution 11, ‘Relevant Securities’ means:
• shares in the Company other than shares allotted pursuant to:
• an employee share scheme (as defined by Section 1166 of the Act);
• a right to subscribe for shares in the Company where the grant of the right itself constituted a Relevant Security;
• a right to convert securities into shares in the Company where the grant of the right itself constituted a Relevant Security; or
• any right to subscribe for, or to convert any security into, shares in the Company other than rights to subscribe for, or convert any
security into, shares allotted pursuant to an employee share scheme (as defined by Section 1166 of the Act). References to the
allotment of Relevant Securities in this Resolution 11 include the grant of such rights.
NWF GROUP PLC NWF.CO.UK
125
Shareholder information
Notice of Annual General Meeting continued
General disapplication of pre-emption rights
12. That, subject to the passing of Resolution 11 on page 125, the Board be and it is hereby empowered, pursuant to Section 570 and Section 573 of
the Act, to allot equity securities (as defined in Section 560 of the Act) for cash pursuant to the authority conferred by Resolution 11 on page 125
or to sell treasury shares as if Section 561 of the Act did not apply to any such allotment or sale, provided that this power shall be limited to:
12.1
the allotment of equity securities in connection with a rights issue or other pro rata offer in favour of holders of equity securities (but in the
case of the authority granted under paragraph 11.2 of Resolution 11 on page 125, by way of a rights issue only) where the equity securities
respectively attributable to the interests of all those persons at such record dates as the Board may determine are proportionate (as nearly
as may be) to the respective numbers of equity securities then held by them subject to such limits, exclusions or other arrangements as the
Board may consider necessary or expedient to deal with treasury shares, fractional entitlements, record dates, practical or legal difficulties
under the laws of any territory or the requirements of any regulatory body or stock exchange or by virtue of equity securities being
represented by depositary receipts or any other matter whatsoever;
12.2
the allotment (otherwise than pursuant to paragraph 12.1 above) of equity securities up to an aggregate nominal amount of £1,235,199; and
12.3
in each case such power shall expire upon the expiry of the general authority conferred by Resolution 11 on page 125, except that the
Company may before such expiry make offers or agreements which would or might require equity securities to be allotted and/or shares
held by the Company in treasury to be sold or transferred after such expiry and the Board may allot equity securities and/or sell or transfer
shares held by the Company in treasury in pursuance of such offers or agreements as if the power conferred by this resolution had
not expired.
All previous unutilised authorities under Sections 570 and 573 of the Act shall cease to have effect (save to the extent that they are exercisable
by reason of any offer or agreement made prior to the date of this Resolution 12 which would or might require shares to be allotted on or after
that date).
By order of the Board
Rob Andrew
Company Secretary
1 August 2023
Registered office
Wardle
Nantwich
Cheshire
CW5 6BP
Notes to the Notice of Annual General Meeting
These notes are important and require your immediate attention.
1.
To attend the Meeting in person, please arrive at the venue for the Meeting by 10.15a.m. to enable your shareholding to be checked against the
register of members of the Company and your attendance recorded.
2. Shareholders are encouraged to email any questions in respect of the Company’s Annual Report and Accounts for the financial year ended
31 May 2023 or the Meeting to investor.relations@nwf.co.uk in advance of the Meeting. Responses to questions will be provided as soon as
reasonably possible, following receipt.
3. A shareholder entitled to vote at the Meeting is entitled to appoint another person of his/her choice as that shareholder’s proxy to exercise all
or any of that shareholder’s rights to attend, speak and vote at the Meeting on his/her behalf. A shareholder may appoint more than one proxy
in relation to the Meeting, provided that each proxy is appointed to exercise the rights attached to a different share or shares held by that
shareholder. A proxy need not be a shareholder of the Company.
126
NWF GROUP PLC ANNUAL REPORT AND ACCOUNTS 2023
Notes to the Notice of Annual General Meeting continued
4. A proxy or proxies can be appointed by:
•
submitting a form of proxy electronically by accessing the shareholder portal at www.signalshares.com. To submit a form of proxy
electronically, you will require your username and password. If you have not previously registered to use the shareholder portal then
this can be done using your investor code (‘IVC’) (which can be found on your share certificate or by contacting Link Group as detailed
in paragraph 12 below), along with your surname and postcode. Once the portal has been accessed, click on ‘vote online’ on the home page
and follow the instructions. All electronic proxy appointments must be made by no later than 10.30a.m. on 26 September 2023 (or, in the
event that the Meeting is adjourned, no later than 48 hours before the time appointed for the adjourned meeting);
• CREST members using the CREST electronic proxy appointment service (as detailed in paragraph 6); or
• completing and returning a paper form of proxy (which is enclosed with the document of which this Notice forms part). To appoint more
than one proxy, the form of proxy should be photocopied and all completed forms returned together to Link Group in accordance with the
instructions in paragraph 5 below.
5. If a paper form of proxy is used to appoint a proxy or proxies, the form of proxy must be completed, signed and returned, together with any power
of attorney or any other authority under which it is signed, or a notarially certified copy of such authority, to the Company’s registrars, Link Group,
PXS 1, Central Square, 29 Wellington Street, Leeds LS1 4DL, so that it is received no later than 10.30a.m. on 26 September 2023. In the event of a
conflict between a blank paper form of proxy and a form of proxy which states the number of shares to which it applies, the specific form of proxy
shall be counted first, regardless of whether it was sent or received before or after the blank form of proxy, and any remaining shares in respect
of which you are the registered holder will be apportioned to the blank form of proxy.
6. CREST members who wish to appoint a proxy or proxies through the CREST electronic proxy appointment service may do so for the Meeting
to be held at 10.30a.m. on 28 September 2023 and any adjournment(s) thereof by using the procedures described in the CREST Manual. CREST
personal members or other CREST sponsored members, and those CREST members who have appointed a voting service provider, should refer
to their CREST sponsors or voting service provider(s), who will be able to take the appropriate action on their behalf.
In order for a proxy appointment or instruction made by means of CREST to be valid, the appropriate CREST message (‘a CREST Proxy
Instruction’) must be properly authenticated in accordance with Euroclear UK & International Limited’s specifications and must contain the
information required for such instructions, as described in the CREST Manual. The message must be transmitted so as to be received by the
Company’s agent, Link Group (CREST Participant ID: RA10), no later than 48 hours before the time appointed for the Meeting (or, in the event
that the Meeting is adjourned, no later than 48 hours before the time appointed for the adjourned meeting). For this purpose, the time of receipt
will be taken to be the time (as determined by the time stamp applied to the message by the CREST Application Host) from which the Company’s
agent is able to retrieve the message by enquiry to CREST in the manner prescribed by CREST.
CREST members and, where applicable, their CREST sponsor or voting service provider should note that Euroclear UK & International Limited
does not make available special procedures in CREST for any particular messages. Normal system timings and limitations will therefore apply in
relation to the input of CREST Proxy Instructions. It is the responsibility of the CREST member concerned to take (or, if the CREST member is a
CREST personal member or sponsored member or has appointed a voting service provider, to procure that their CREST sponsor or voting service
provider takes) such action as shall be necessary to ensure that a message is transmitted by means of the CREST system by any particular time.
In this connection, CREST members and, where applicable, their CREST sponsor or voting service provider are referred in particular to those
sections of the CREST Manual concerning practical limitations of the CREST system and timings.
The Company may treat as invalid a CREST Proxy Instruction in the circumstances set out in Regulation 35(5)(a) of the Uncertificated Securities
Regulations 2001.
7. If you wish to change your proxy instructions, you should submit a new proxy appointment using the methods detailed above. Your attention
is particularly drawn to the deadline for receipt of proxy appointments (as detailed in paragraphs 4, 5 and 6 above) as these are applicable to
amended proxy instructions. In the event that more than one valid proxy appointment is received for the same share or shares, the appointment
received last before the deadline for receipt of proxy appointments will take precedence.
8. Only those shareholders entered on the register of members of the Company at the close of business on 26 September 2023 or, in the event
that the Meeting is adjourned, on the register of members as at the close of business on the day two working days before the date of any
adjourned meeting, shall be entitled to attend and vote at the Meeting in respect of the number of ordinary shares registered in their names
at that time. Changes to the entries on the register of members after the close of business on 26 September 2023 or, in the event that the Meeting
is adjourned, on the register of members after the close of business on the day two working days before the date of the adjourned meeting, shall
be disregarded in determining the rights of any person to attend or vote at the Meeting.
9. Any corporation which is a shareholder can appoint one or more corporate representatives who may exercise on its behalf all of its powers
as a shareholder provided that they do not do so in relation to the same shares.
10. Copies of the following documents will be available for inspection at the Company’s registered office during normal working hours on any
weekday (Saturdays, Sundays and public holidays excepted) from the date of this Notice until the date of the Meeting and at the place of the
Meeting for 15 minutes prior to and during the Meeting:
• copies of all service agreements or letters of appointment under which the Directors of the Company are employed by the Company.
11. Addresses (including electronic addresses) in this document are included strictly for the purposes specified and not for any other purpose.
12. Except as provided above, shareholders who have general queries about the Meeting should use the following means of communication (no other
methods of communication will be accepted):
• calling Link Group on +44 (0)371 664 0300. Calls are charged at the standard geographic rate and will vary by provider. Calls from outside
the United Kingdom will be charged at the applicable international rate. Lines are open between 9.00a.m. and 5.30p.m. (UK time), Monday
to Friday, excluding public holidays in England and Wales.
NWF GROUP PLC NWF.CO.UK
127
Shareholder information
Explanatory notes to the Notice of Annual General Meeting
Ordinary Business
Each resolution will be proposed as an Ordinary Resolution. This means that, for each of the resolutions to be passed, more than half of the votes
cast must be in favour of the resolution.
The Ordinary Resolutions are routine and deal with the presentation of the Annual Report and Accounts for the financial year ended 31 May 2023,
the declaration of a final dividend, the reappointment of Philip Acton, Richard Whiting, Chris Belsham, Richard Armitage and Dawn Moore as
Directors of the Company, and the reappointment of PricewaterhouseCoopers LLP as auditors as well as the authorisation of the Directors to set the
auditors’ remuneration and the approval of the Directors’ Remuneration Report (excluding the Directors’ remuneration policy contained within that
report). The vote in respect of Resolution 10 will be ‘advisory’ only, which means that it is not binding on the Company and the Directors’ entitlement
to remuneration is not conditional on it.
Biographical details of the Directors standing for re-election can be found on pages 52 and 53.
Special Business
Resolution 11 will be proposed as an Ordinary Resolution and Resolution 12 will be proposed as a Special Resolution. In order for a Special Resolution
to be passed, at least three-quarters of the votes cast must be in favour of the resolution.
Resolution 11 – authority to allot shares (Ordinary Resolution)
The authority conferred on the Directors at last year’s Meeting to allot the share capital of the Company expires at the conclusion of the forthcoming
Meeting. The Board recommends that this authority be renewed.
Paragraph 11.1 of Resolution 11 will, if passed, authorise the Directors to allot the Company’s unissued shares up to a maximum nominal amount of
£4,117,330, which represents an amount which is equal to one-third of the aggregate nominal value of the issued and unconditionally allotted
ordinary share capital of the Company (excluding treasury shares) as it was at close of business on 31 July 2023, the latest practicable date before
the publication of this Notice. As at close of business on 31 July 2023, the Company did not hold any treasury shares.
Paragraph 11.2 of Resolution 11 will, if passed, authorise the Directors to allot unissued shares in connection with a rights or other issue in favour of
holders of equity securities (which would include ordinary shareholders) as required by the rights of those securities, up to a maximum aggregate
nominal amount of £8,234,660, which represents an amount which is equal to two-thirds of the aggregate nominal value of the issued and
unconditionally allotted ordinary share capital of the Company as it was at close of business on 31 July 2023 (such amount to be reduced by the
nominal amount of any Relevant Securities issued under the authority conferred by paragraph 11.1 of Resolution 11).
The authorities sought in Resolution 11 are in substitution for all existing authorities, granted in the Company’s Articles of Association or otherwise,
and without prejudice to previous allotments made under such existing authorities. The authorities will each expire 15 months after the date of the
Meeting or, if earlier, at the conclusion of the next Meeting of the Company. The Directors have no present intention of exercising these authorities
but believe that it is in the best interests of the Company to have the authorities available so that the Board has the flexibility to take advantage of
business opportunities as they arise.
Resolution 12 – disapplication of pre-emption rights (Special Resolution)
Resolution 12, which will be proposed as a Special Resolution, seeks to renew the authority conferred on the Directors at last year’s Meeting to
issue equity securities of the Company for cash without application of the pre-emption rights provided by Section 561 of the Act. The authority being
sought provides for non-pre-emptive allotments of equity securities: (i) to ordinary shareholders in proportion to their shareholdings then existing;
(ii) to holders of other equity securities as required by, or subject to (as the Directors consider necessary), the rights of those securities, and to deal
with treasury shares, fractional entitlements and legal and practical problems in any territory, for example on a rights issue or other similar share
issue; and (iii) for cash up to an aggregate nominal value of £1,235,199, which represents 10% of the issued ordinary share capital of the Company
as it was at close of business on 31 July 2023, the latest practicable date before the publication of this Notice.
The authority being sought is in substitution for all existing authorities, granted in the Company’s Articles of Association or otherwise, and without
prejudice to previous allotments made under such authorities, and will expire 15 months after the date of the Meeting or, if earlier, at the conclusion
of the next Meeting of the Company. The Directors have no present intention of exercising these authorities but believe that it is in the best interests
of the Company to have the authorities available so that the Board has the flexibility to take advantage of business opportunities as they arise.
The authority sought and the limits set by this resolution will also disapply the application of Section 561 of the Act from a sale of treasury shares
to the extent also specified in this resolution.
128
NWF GROUP PLC ANNUAL REPORT AND ACCOUNTS 2023
28 September 2023
2 November 2023
3 November 2023
8 December 2023
Early February 2024
Early February 2024
May 2024
31 May 2024
Early August 2024
Late August 2024
Tel: 01829 260900
www.nwffuels.co.uk
Tel: 01829 260704
www.boughey.co.uk
Tel: 0800 262397
www.nwfagriculture.co.uk
Financial calendar
Annual General Meeting
Dividend:
– Ex-dividend date
– Record date
– Payment date
Announcement of half year results
Publication of Interim Report
Interim dividend paid
Financial year end
Announcement of full year results
Publication of Annual Report and Accounts
Divisional contacts
Fuels
Food
Feeds
Advisors
Registrars
Link Group
Central Square
29 Wellington Street
Leeds LS1 4DL
Solicitors
Brabners LLP
Horton House
Exchange Flags
Exchange Street E
Liverpool L2 3YL
Independent auditors
PricewaterhouseCoopers
LLP
No. 1 Spinningfields
1 Hardman Square
Manchester M3 3EB
Bankers
NatWest Group
Corporate Banking
1st Floor
1 Hardman Boulevard
Manchester M3 3AQ
Financial PR
MHP Group
60 Great Portland Street
London W1W 7RT
Registered office
NWF Group plc
Wardle
Nantwich
Cheshire CW5 6BP
Nominated advisor
and broker
Peel Hunt LLP
7th Floor
100 Liverpool Street
London EC2M 2AT
Registered number
02264971
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NWF Group plc
Wardle
Nantwich
Cheshire
CW5 6BP
Telephone: 01829 260260
www.nwf.co.uk