ANNUAL
REPORT
AND ACCOUNTS
2020
Financial Performance Highlights
Key Strengths
Contents
Page
1
2
01
Strategic Report
Principal Activities and Business Model
3
Business snapshot - Carmarthen Mill Investment and Dairy Feed Supply 4
Business snapshot - Glasson Grain
5
6-7
Group Strategy
8-11
Chairman’s Statement
12
Business snapshot - Specialist Events
13-18
Chief Executive’s Review
19
Business snapshot - Developing our Sales Channels
20-23
Finance Review
23
Company Details and Advisors
24
Business snapshot - Animal Health and Welfare
25
Business snapshot - Wynnstay’s Partnership with Poultry
26-28
Principal Risks and Uncertainties
02 ESG Framework
Business snapshot – Qualified Advice from our People
Environmental Strategy and SECR Statement
Corporate Governance Statement
Corporate Values
Our Environment
Social
S172 Statement
Directors’ Responsibility Statement
Board of Directors and Company Secretary
Senior Management
Business snapshot – Our Specialist – Calf & Youngstock Team
Directors’ Report
Directors’ Remuneration Report
Independent Auditor’s Report
29
30-31
32-33
34
35
36-38
39-40
41
42-43
44
45
46-47
48-53
54-55
58-59
57
56
Principal Accounting Policies
Notes to the Financial Statements
Consolidated and Company Balance Sheet
Consolidated and Company Cash Flow Statement
Consolidated Statement of Comprehensive Income
Consolidated and Company Statement of Changes in Equity
03 Financial Statements
04 Shareholder Information
Notes to Notice of Annual General Meeting
Notice of Annual General Meeting
Shareholder Fraud Warning
Financial Calendar
60
95
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96
61-64
65-94
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www.wynnstayplc.co.uk ANNUAL REPORT AND ACCOUNTS 2020
Financial Performance Highlights - Continuing Operations
ABOUT WYNNSTAY
Wynnstay Group was established in 1918 as a farmers’ cooperative,
converting to a Plc in 1992. The core Wynnstay business supplies
goods and services to farmers and rural communities. Wynnstay helps
livestock and arable farmers to produce food in a more sustainable,
environmentally friendly and profi table way. We provide our customers
with quality products, specialist advice and an effi cient service that is
industry leading.
Group Revenue
£431.40m
2019: £490.60m
Underlying Pre-tax Profi t*
£8.37m
2019: £8.01m
Profi t before Tax
£6.98m
2019: £7.55m
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Earnings per Share
27.73 pence
2019: 30.95 pence
Shareholders’ Funds
£98.18m
2019: £94.95m
Dividend per Share
14.60 pence
2019: 14.00 pence
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Group Revenue (£m)
Underlying Pre-tax Profi t*
Earnings per Share (pence)
Dividend per Share (pence)
£431.40m
£8.37m
27.73p
14.60p
*Underlying pre-tax profi t is a non-GAAP (generally accepted accounting principles) measure and is not intended as a substitute for GAAP measures and may not be calculated in
the same way as those used by other companies. Refer to the Finance Review for an explanation on how this measure has been calculated and the reasons for its use.
ANNUAL REPORT AND ACCOUNTS 2020 Wynnstay Group Plc
1
Key Strengths
Committed and loyal colleagues who off er
technical advice to support the prosperity
of our
through
farmer customer base
effi ciencies and new innovations.
A strong balance sheet with the capacity to
support future growth.
A robust and balanced business model with two
complementary divisions - Agriculture and Specialist
Agricultural Merchanting.
A broad range of agricultural products, including innovative
and sustainable products, marketed via a multichannel sales
off ering.
Opportunities for future growth into the currently fragmented
farming and rural economy by increased geographic reach though
organic and focused acquisitions.
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Principal Activities and Business Model
The business model is aligned with the buying needs and habits of our farming customer base, which includes arable, livestock and mixed farms.
The Group is committed to sustained development within the agricultural sector and strives for continued growth with a view to optimising the
return to all stakeholders. The Group is confident that macro-economic factors, including world population growth and the need for higher levels
of national self-sufficiency, should continue to make the UK a strong and growing food producer. In addition, the UK farming sector benefits from
a favourable growing climate.
FEED
GLASSON
ARABLE
CUSTOMER
DEPOTS
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AGRICULTURE
SPECIALIST
AGRICULTURAL
MERCHANTING
YOUNGS ANIMAL
FEEDS
Agriculture
Comprises the manufacturing and supply of a comprehensive
range of agricultural inputs to customers across many parts
of the UK.
Specialist Agricultural Merchanting
Supplies specialist agricultural and associated sundry products
to customers throughout Wales, Midlands, North West and
South West of England.
DEPOTS
The Group’s Specialist Agricultural Merchanting depots are well
established and provide a comprehensive range of products for
farmers and rural dwellers. The Group operates 54 depots across
Wales, the Midlands, North West and South West England, supplying
to farmers, small holders and rural dwellers.
Our team is trained to help customers with technical advice and our
customers can purchase via depot, catalogue or van service.
We partner with pharmaceutical companies to provide specialist
advice on animal health and other agricultural products.
YOUNGS ANIMAL FEEDS
Youngs Animal Feeds operates from its production facility at Standon,
Staffordshire, and two other locations, selling a range of equine and
small animal feeds through to wholesalers and retailers in Wales and
the Midlands. The Sweet Meadow branded equine feed range is a
market leading product.
FEED
The Group operates two multi-species compound feed mills and one
blending plant, offering a full range of animal nutrition products to the
agricultural market in bulk or bags. Third party mills are also used to
satisfy additional seasonal and geographic requirements.
GLASSON
Glasson operates from Glasson Dock, near Lancaster. It is a producer
of blended fertiliser, a supplier of feed raw materials and a manufacturer
of added-value products to specialist animal feed retailers.
The business operates fertiliser blending manufacturing facilities at
Winmarleigh, Goole and Montrose, and also sources from a facility at
Birkenhead. It is currently the second largest fertiliser blender in the
UK.
Glasson complements the Group strategy by providing a further
internal hedge against commodity volatility in the agricultural supply
sector.
ARABLE
The Group’s arable activities supply a wide range of products to arable
and grassland farmers, including seed, fertiliser and agro-chemicals.
Seed processing facilities are located at Shrewsbury, Shropshire and
Selby, Yorkshire.
GRAINLINK
GrainLink is the Group’s in-house grain marketing company and
provides farmers with an independent professional marketing service
backed by the financial security of the Wynnstay Group. The Company
has access to major markets for specialist milling and malting grain as
well as feed into mills. GrainLink operates from Shrewsbury, Shropshire.
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ANNUAL REPORT AND ACCOUNTS 2020 Wynnstay Group Plc
BUSINESS SNAPSHOT -
Carmarthen Mill Investment and Dairy Feed Supply
The continued investment in feed storage
bins, control systems and production
capacity at our Carmarthen Mill will further
enhance production efficiency at the site,
which primarily caters for dairy, cattle and
sheep farmers in South Wales. This project
is part of the ongoing investment in our
processing facilities, ensuring we are well
equipped to cater for the needs of our
customers now, and in the future.
is
Our supply of feed to dairy farms in the
surrounding region to our Carmarthen
further enhanced by our
Mill
specialist Ruminant Teams, who work
closely with farmers to ensure that the
management of their livestock is to the
highest standard possible to ensure
maximum productivity.
The team offer a range of on-farm
services including locomotion scoring,
forage analysis along with building
design consultation to ensure the best
welfare standards possible for livestock.
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www.wynnstayplc.co.uk ANNUAL REPORT AND ACCOUNTS 2020 BUSINESS SNAPSHOT -
Glasson Grain
Glasson Grain Limited is based at the
port of Glasson Dock, near Lancaster.
The company was founded in 1979 as
a trader and importer of animal feed
commodities, and has since grown
to be active across a much broader
field. Today, Glasson operates across
three main areas - the supply of
feed raw materials, the production
of fertiliser and the manufacture of
specialist added value animal feed
products.
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Glasson Grain Limited are
the second largest blender
of fertiliser in the UK,
operating from sites
at Montrose, Goole,
Winmarleigh and
Birkenhead.
The cornmill at Glasson produces
a wide range of animal feeds for the
farm, equine, poultry and wild bird
markets, these added value products
are sold through a variety of agricultural
merchants.
Glasson specialise in the supply of raw
materials to compounders and feed
blenders and merchant businesses
throughout the UK.
the Group
Glasson complements
strategy by providing
further
diversification to the Group’s balanced
business model.
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ANNUAL REPORT AND ACCOUNTS 2020 Wynnstay Group Plc
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ANNUAL REPORT AND ACCOUNTS 2020 Wynnstay Group Plc
Growth Strategy
Wynnstay helps livestock and arable farmers to
produce food in a more sustainable, environmentally-
friendly and profi table way. We provide our customers
with quality products, specialist advice and an effi cient
service that is industry leading.
OUR STRATEGIC GOAL
Acquire, keep and deepen our
relationships with customers
OUR BUSINESS MODEL
Balanced business that gets
stronger with scale
OUR FINANCIAL GOAL
Generate strong and
EXPAND SALES
CREATING VALUE
LEAN COST BASE
OUR PROPOSITION
EXCEPTIONAL CUSTOMER
SERVICE QUALITY PRODUCTS
INNOVATIVE PRODUCTS
COMPREHENSIVE RANGE
MULTIPLE SALES CHANNELS
DELIVERY TO FARM
DEPOT NETWORK
SPECIALIST ADVICE
STRONG CASH GENERATION
INVEST FOR THE FUTURE
PEOPLE
TECHNOLOGY AND IT SYSTEMS
MANUFACTURING
ACQUISITIONS
TRUSTED EXPERTS
We have deep expertise
across our sectors and
have been continuing
to expand our specialist
advisory teams in dairy, egg
production, beef, sheep,
animal health, youngstock,
arable, seed and fertiliser.
INNOVATIVE
PRODUCTS
We constantly seek to
bring new and innovative
products to market that
will allow our customers to
farm both more sustainably
and competitively.
CHANNELS TO
MARKET
We are developing our
channels to market. The
increasing shift to digital
will enable us to get closer
to our customers, open
up new opportunities and
reduce costs.
MANUFACTURING
We are investing to
increase our manufacturing
and processing capability
and for effi ciency and
environmental gains.
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www.wynnstayplc.co.uk ANNUAL REPORT AND ACCOUNTS 2020
Our Pillars
Wynnstay has a clearly defined growth strategy, with key areas of focus
EXPERT
GUIDANCE
ORGANIC
GROWTH
ACQUISITIONS
MULTI-CHANNEL
VISION
ESG
The quality of our
advice enables us to
stand-out and create
deeper relationships
with customers. We
have strong teams
of specialists who
assist customers
in identifying areas
to improve their
business so that they
can produce food
profitably, efficiently,
sustainably and in
an environmentally
beneficial way.
There are very good
opportunities for us to
increase our market
share across all our
key areas of operation
and to expand
our manufacturing
capability. As we
increase our share
of the market, we
intend to continue
to maintain our wide
offering of products
and services for
livestock, arable and
mixed farms. This
balanced approach
smooths sector
volatility.
Acquisitions have
played an important
role in Wynnstay’s
development to
date, and remain an
important element of
our growth strategy
alongside organic
expansion. We look
for acquisitions that
complement our
existing areas of
operation and will add
value.
Technology offers new
ways of selling our
products and services
and enhancing our
customer proposition.
We are investing
to take advantage
of these new
opportunities and
align ourselves with
the shift in customers’
buying habits and
engagement.
Helping farmers to
feed the country in a
more sustainable way
is our fundamental
goal. It has the
power to transform
lives for the better.
We are proud to be
pursuing this aim
and, alongside this,
to uphold high ESG
values.
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TWIN-TRACKED GROWTH
The fragmented nature of the UK’s agricultural supplies market presents growth opportunities, and the Group has demonstrated its ability to
increase its market share organically and through complementary acquisitions.
The Group’s strategy focuses on developing these twin strands of acquisitive and organic growth as follows:
ACQUISITION
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ANNUAL REPORT AND ACCOUNTS 2020 Wynnstay Group Plc
Chairman’s Statement
A very resilient
trading
performance in
an unprecedented
year of challenges
OVERVIEW
FINANCIAL RESULTS
The Group has delivered a very resilient trading performance in an
unprecedented year of challenges. Underlying pre-tax profi t* increased
by 4% to £8.37m (2019: £8.01m) on revenues of £431.40m (2019:
£490.60m). This pleasing result, which is ahead of original market
expectations, was helped by a strong close to the year, particularly for
feed sales, which benefi ted both the Agricultural Division and Specialist
Agricultural Merchanting Division. It also refl ects well on the Group’s
strategy, which is focused on further developing existing products and
services, strengthening channels to market, and improving effi ciency
and productivity. Our balanced business model, which spans both
arable and livestock sectors, also provided a strong natural hedge to
the sector variations experienced in the year.
The challenges over the fi nancial year were signifi cant even without
the coronavirus crisis. We started the fi nancial year with subdued
farmer confi dence, arising from lower farmgate prices and continuing
Brexit uncertainty. The abnormally wet 2019 autumn severely
disrupted planting, resulting in one of the worst seasons on record
and consequently low demand for arable inputs and a historically poor
autumn harvest and reduced grain trading. The onset of the coronavirus
pandemic created further diffi culties. However, our teams responded
magnifi cently and, as an essential service provider, we worked hard
to rapidly adopt new safety practices so that we could continue to
operate all our sites while ensuring the welfare of our colleagues,
customers, suppliers and communities. Other than for a short period
when a handful of depots were closed, we have kept all our depots,
manufacturing and processing facilities open and operating in line with
government restrictions.
Despite the additional demands of responding to the pandemic, we
made good progress with strategic growth initiatives. We continued
with our outlet optimisation programme, closing two sites, and have
further strengthened our specialist advisory teams, particularly in
youngstock, animal health, dairy and free range egg production, all of
which are growth areas for the Group. We have also introduced a sales
trading desk to support our on-farm specialists, and will be continuing
to focus on developing our channels to market, including digital. With
the expiry of our lease on our Selby seed plant in Yorkshire, we closed
this site in December and are exploring options for a new site. We
are also planning to invest in our seed processing plant at Astley in
Shrewsbury to increase capacity and effi ciency.
Towards the end of the fi nancial year, we put into eff ect a reorganisation
of the Group’s management structure. These changes encompassed
the creation of new management roles with new designated areas of
responsibility and reporting lines. The new management structure will
better support our growth plans for the business and strengthen our
operational eff ectiveness. We expect to conclude this signifi cant major
initiative over the coming months.
Group revenue decreased by 12% to £431.40m (2019: £490.60m),
which mainly refl ected commodity price defl ation and signifi cantly
reduced volumes in certain categories, notably grain trading. The
impact was felt most by the Agriculture Division, where revenue
was down by 16% to £302.58m (2019: £358.69m). Revenue in the
Specialist Agricultural Merchanting Division was 2% lower at £128.81m
(2019: £131.84m). This mainly refl ected the impact of restricted trading
protocols, introduced at the start of the coronavirus crisis. Like-for-like
sales for this Division reduced by 1%.
Underlying pre-tax* profi t, the Board’s preferred alternative performance
measure, which includes the gross share of results from joint ventures
and excludes share-based payments and non-recurring items,
increased by 4% to £8.37m (2019: £8.01m). The Agriculture Division
contributed £2.88m (2019: £2.95m) to this result, which included
contributions from joint ventures, and the Specialist Agricultural
Merchanting Division contributed £5.78m (2019: £5.24m). Other
activities generated a small loss of £0.12m (2019: loss of £0.05m).
On an IFRS basis, reported profi t before taxation was £6.98m (2019:
£7.55m).
The Group incurred a number of additional charges in the year, mainly
relating to its strategic reorganisation, but also including site closure
charges and goodwill impairments charges. Together these amounted
to £1.19m (2019: £0.3m).
The Group adopted the new accounting standard, IFRS 16, relating
to leases, which replaces rental expense with right-of-use asset
amortisation and interest. As a result, reported net fi nance costs
increased by £0.09m to £0.27m (2019: £0.18m excluding IFRS 16).
Profi t after taxation was £5.53m (2019: £6.13m), and basic earnings
per share was 27.73p (2019: 30.95p).
Cash fl ows and balance sheet
Continued strong cash generation, together with tight control of working
capital, left the business with net cash, before lease obligations, at
the fi nancial year-end of £18.41m (31 October 2019: £7.57m). After
deducting total lease obligations of £9.99m (2019: £3.72m excluding
IFRS 16), total net cash at 31 October 2020 amounted to £8.42m
(2019: £3.84m).
The Group’s balance sheet remains strong with net assets 3% higher
at £98.18m (2019: £94.95m) at the fi nancial year-end. This equates to
£4.92 (2019: £4.79) per share, and the return on net assets was 8.6%
(2019: 8.5%).
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www.wynnstayplc.co.uk ANNUAL REPORT AND ACCOUNTS 2020
*Underlying pre-tax profi t is a non-GAAP (generally accepted accounting principles)
measure and is not intended as a substitute for GAAP measures and may not be
calculated in the same way as those used by other companies. Refer to Note 15 for an
explanation on how this measure has been calculated and the reasons for its use.
DIVIDEND
OUTLOOK
The Board is pleased to propose the payment of a final dividend of
10.00p per share. Together with the interim dividend of 4.60p per
share, paid on 31 October 2020, this takes the total dividend for the
year to 14.60p, an increase of 4.3% on last year (2019: 14.00p).
The final dividend will be paid on 30 April 2021 to shareholders on the
register on 6 April 2021, subject to shareholder approval at the AGM.
A scrip dividend alternative will continue to be available as in previous
years. The last date for election for the scrip dividend will be 16 April
2021.
THE BOARD AND COLLEAGUES
On behalf of the Board, I would like to thank all our colleagues for
their professionalism and dedication in a very difficult year. The drive
to ensure that the business was able to adapt swiftly to the new
conditions created by the coronavirus pandemic and to maintain
operations, while ensuring the safety of colleagues, customers and
suppliers, was outstanding.
Following our reorganisation of operations, Andrew Evans stood down
from the Board on 1 December 2020. Nonetheless, he remains a
key member of the Senior Executive Team in his new role of Group
Operations and Feeds Director. On behalf of my fellow Directors,
I would like both to formally acknowledge Andrew’s contribution as
a member of the Board since 2008, and to welcome his ongoing
significant contribution as member of the Senior Executive Team.
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Now that a non-tariff trade agreement has been concluded with the
EU, the picture for UK agriculture is significantly clearer as we start
2021, and a major uncertainty has been removed. We expect to see
investment recommence and the sector move forward, with UK food
producers also having the ability to seek new markets for agricultural
products. The UK Agriculture Bill will change the way that farmers
are supported by the Government, and we anticipate that a more
resilient agricultural sector will result. We also expect opportunities
for Wynnstay to provide support as farmers focus on environmental
investment and efficiencies. We therefore view medium and long-term
prospects for our industry positively.
Agricultural commodity prices have generally improved over the past
12 months and the short-term outlook remains strong. Winter cereal
plantings are significantly greater than a year ago, in line with a more
normal sowing season. This will drive demand for arable inputs and
yield a larger crop to trade post-harvest.
While the coronavirus and associated restrictions remain a concern,
the onset of the national vaccination programme should help to
underpin social and economic recovery. We have clear targets for the
business over the next few years. These include continuing investment
to improve productivity and support growth, and a focus on ensuring
that we are best placed to support UK farmers as they pivot to new
priorities, including environmental initiatives and the adoption of new
farming practices. We see a significant role for Wynnstay in supporting
farmers with products and services to help drive sustainability and
greater efficiency as well as to reduce carbon emissions, including the
management of farm waste.
Our ongoing investment in widening the Group’s knowledge base
and advisory teams, and the importance we place on innovative
products and services by working with our valued suppliers, is integral
to positioning Wynnstay as a leading UK agricultural supplier. The
reorganisation that we have substantially completed is also part of this
strategy, and should support greater innovation and flexibility as we
look to develop and grow our channels to market.
The new financial year has started well, and the Board remains confident
that the Group is well-placed to progress with its strategic objectives.
We will also continue to assess acquisition opportunities that align with
our growth strategy, and look to the future with confidence.
Jim McCarthy
Chairman
26 January 2021
The picture for UK
agriculture is now
clearer and the Group is
well-placed to progress
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ANNUAL REPORT AND ACCOUNTS 2020 Wynnstay Group Plc
Adroddiad Y Cadeirydd
Fasnachu wydn
iawn yn ystod
blwyddyn llawn
heriau na welwyd
ei thebyg o’r blaen
TROSOLWG
Mae’r Grŵp wedi llwyddo i fasnachu yn wydn iawn yn ystod blwyddyn
llawn heriau na welwyd ei thebyg o’r blaen. Cynyddodd yr elw cyn
treth isorweddol* o 4% i £8.37m (2019: £8.01) ar refeniw o £431.40m
(2019: £490.60m). Cafodd y canlyniad dymunol hwn, sy’n well na
disgwyliadau gwreiddiol y farchnad, gymorth gan ddiwedd cryf i’r
fl wyddyn, yn arbennig ar gyfer gwerthiant bwydydd anifeiliaid, a oedd
o les i’r Is-adran Amaethyddol a’r Is-adran Masnachu Amaethyddol
Arbenigol. Yn ogystal, mae’n adlewyrchu yn dda ar strategaeth y Grŵp,
sy’n canolbwyntio ar ddatblygu’r cynnyrch a’r gwasanaethau presennol
ymhellach, cryfhau sianelau i’r farchnad, a gwella eff eithlonrwydd a
chynhyrchiant. Roedd ein model busnes cytbwys, sy’n rhychwantu’r
sectorau tir âr a da byw, yn darparu gwarchodaeth naturiol gref hefyd i
amrywiadau’r sector a brofwyd yn ystod y fl wyddyn.
Roedd yr heriau yn ystod y fl wyddyn ariannol yn sylweddol hyd yn
oed heb argyfwng y coronafeirws. Gwnaethom ddechrau’r fl wyddyn
ariannol pan oedd hyder ff ermwyr yn isel, a achoswyd gan brisiau
is wrth giât y ff erm a’r ansicrwydd yn sgil ‘Brexit’. Gwnaeth hydref
anarferol o wlyb yn 2019 amharu yn ddifrifol ar y plannu, gan arwain
at un o’r tymhorau gwaethaf ar gofnod ac o ganlyniad llai o alw am
fewnbynnau tir âr a chynhaeaf gwael yn hanesyddol yn yr hydref a
llai o fasnachu grawn. Roedd cychwyn pandemig y coronafeirws
yn creu mwy o anawsterau. Fodd bynnag, ymatebodd ein timau yn
wych ac, fel darparwr gwasanaethau hanfodol, gwnaethom ni weithio
yn galed er mwyn mabwysiadu arferion diogelwch newydd yn gyfl ym,
fel y gallem ni parhau i weithredu ein holl safl eoedd, tra’n sicrhau lles
ein cydweithwyr, ein cwsmeriaid, ein cyfl enwyr a’n cymunedau. Ar
wahân i gyfnod byr pan oedd dyrnaid o ganolfannau ar gau, rydym ni
wedi cadw ein holl ganolfannau, ein cyfl eusterau gweithgynhyrchu a’n
cyfl eusterau prosesu ar agor ac yn gweithredu yn unol â chyfyngiadau’r
llywodraeth.
Er gwaethaf y gofynion ychwanegol wrth ymateb i’r pandemig, rydym
wedi gwneud cynnydd da gyda mentrau twf strategol. Rydym wedi
parhau â rhaglen optimeiddio ein safl eoedd, gan gau dau safl e, ac
rydym wedi cryfhau ein timau cynghori arbenigol ymhellach, yn arbennig
gyda stoc ifanc, iechyd anifeiliaid, cynhyrchu llaeth ac wyau maes, a’r
mae’r rhain i gyd yn feysydd twf ar gyfer y Grŵp. Yn ogystal, rydym
wedi cyfl wyno desg masnachu gwerthiant i gefnogi ein harbenigwyr ar
y ff erm, a byddwn ni’n parhau i ganolbwyntio ar ddatblygu ein sianelau
i’r farchnad, gan gynnwys ein sianelau digidol. Gyda’r brydles ar ein
safl e prosesu hadau yn Selby, Swydd Efrog yn dod i ben, gwnaethom
gau’r safl e hon ym mis Rhagfyr ac rydym yn edrych am ddewisiadau
ar gyfer safl e newydd. Yn ogystal, rydym yn cynllunio buddsoddi yn
ein safl e prosesu hadau yn Astley yn yr Amwythig er mwyn cynyddu
cynhwysedd a eff eithlonrwydd.
Tua diwedd y fl wyddyn ariannol, rydym wedi ad-drefnu strwythur rheoli’r
Grŵp. Mae’r newidiadau hyn wedi cwmpasu creu swyddogaethau
rheoli newydd gyda meysydd cyfrifoldeb dynodedig a llinellau adrodd
newydd. Bydd y strwythur rheoli newydd yn cefnogi ein cynlluniau twf
ar gyfer y busnes ac yn cryfhau ein heff eithlonrwydd gweithredol yn
well. Rydym yn disgwyl cwblhau’r fenter arwyddocaol fawr hon dros
y misoedd nesaf.
CANLYNIADAU ARIANNOL
Gostyngodd refeniw’r Grŵp o 12% i £431.40m (2019: £490.60m), a
oedd yn bennaf yn adlewyrchu datchwyddiant ym mhrisiau nwyddau
a nifer sylweddol lai mewn rhai categorïau, yn enwedig masnachu
grawn. Teimlwyd yr eff aith fwyaf gan yr Is-adran Amaethyddiaeth, lle’r
oedd yn refeniw wedi gostwng o 16% i £302.58m (2019: £358.69m).
Roedd refeniw yn yr Is-adran Masnachu Amaethyddol Arbenigol 2% yn
is ar £128.81m (2019: £131.84). Roedd hyn yn bennaf yn adlewyrchu
eff aith y protocolau masnachu cyfyngedig, a gyfl wynwyd ar ddechau
argyfwng y coronafeirws. Gostyngodd gwerthiant cyfatebol ar gyfer
yr Is-adran o 1%.
Cynyddodd elw cyn treth isorweddol*, mesur perff ormiad amgen a
ff efrir gan y Bwrdd, sy’n cynnwys cyfran gros o ganlyniadau o fentrau
ar y cyd ac sy’n eithrio taliadau yn seiliedig ar gyfranddaliadau ac
eitemau anghylchol, o 4% i £8.37m (2019: £8.01m). Cyfrannodd yr
Is-adran Amaethyddiaeth £2.88m (2019: £2.95m) at y canlyniad hwn,
a oedd yn cynnwys cyfraniadau o fentrau ar y cyd, a chyfrannodd yr
Is-adran Masnachu Amaethyddol Arbenigol £5.78m (2019: £5.24m).
Gwnaed colled fechan mewn gweithgareddau eraill o £0.12m (2019:
colled o £0.05m). Ar sail IFRS, roedd yr elw a adroddwyd cyn treth yn
£6.98m (2019: £7.55m).
*Mae elw cyn treth yn fesur nad yw’n GAAP (egwyddorion cyfrifyddu a dderbynnir yn gyff redinol) ac ni chaiff ei fwriadu yn lle mesurau GAAP ac ni chaniateir ei gyfrif yn yr un modd
â’r rhai a ddefnyddir gan gwmnïau eraill. Cyfeiriwch at Nodyn 15 am esboniad ar sut mae’r mesur hwn wedi’i gyfrifo a’r rhesymau dros ei ddefnyddio.
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Gwariodd y Grŵp ar nifer o daliadau ychwanegol yn ystod y flwyddyn,
a oedd yn bennaf yn gysylltiedig â’i ad-drefnu strategol, ond hefyd yn
cynnwys taliadau cau safleoedd a thaliadau amhariadau ewyllys da.
Gyda’i gilydd, roedd y rhain yn gyfanswm o £1.19m (2019: £0.3m).
Mabwysiadodd y Grŵp y safon cyfrifyddu newydd, sef IFRS 16, a oedd
yn ymwneud â phrydlesi, sy’n disodli cost rhent gydag amorteiddiad
a llog ased hawl i ddefnyddio. O ganlyniad, adroddwyd bod costau
cyllid net wedi cynyddu o £0.09m i £0.27m (2019: £0.18m ac eithrio
IFRS 16).
Roedd elw ar ôl treth yn £5.53m (2019: £6.13m), ac roedd enillion
sylfaenol fesul cyfranddaliad yn 27.73c (2019: 30.95c).
LLIF ARIAN A MANTOLEN
Gadawodd cynhyrchu arian parod parhaus, ynghyd â rheolaeth dynn ar
gyfalaf gwaith, y busnes gydag arian parod net, cyn rhwymedigaethau
prydles, ar ddiwedd y flwyddyn ariannol o £ 18.41m (31 Hydref 2019:
£ 7.57m). Ar ôl didynnu cyfanswm rhwymedigaethau prydles o £
9.99m (2019: £ 3.72m heb gynnwys IFRS 16), cyfanswm yr arian net
ar 31 Hydref 2020 oedd £ 8.42m (2019: £ 3.84m).
Mae mantolen y Grŵp yn parhau yn gryf, gydag asedau net 3% yn
uwch ar £98.18m (2019: £94.95m) ar ddiwedd y flwyddyn ariannol.
Mae hyn gyfystyr â £4.92 (2019: £4.79) y cyfranddaliad, ac roedd yr
enillion ar asedau net yn 8.6% (2019: 8.5%).
DIFIDEND
Mae’r Bwrdd yn falch iawn o gynnig talu difidend terfynol o 10.00c fesul
cyfranddaliad. Ynghyd â’r difidend interim o 4.60c fesul cyfranddaliad,
a dalwyd ar 31 Hydref 2020, mae hyn yn golygu bod cyfanswm y
difidend am y flwyddyn yn 14.6c, cynnydd o 4.3% ers y llynedd (2019:
14.00c).
Bydd y difidend terfynol yn cael ei dalu ar 30 Ebrill 2021 i gyfranddalwyr
ar y gofrestr ar 6 Ebrill 2021, yn amodol ar gymeradwyaeth gan
y cyfranddalwyr yn y CCB. Bydd dewis amgen y difidend sgrip yn
parhau i fod ar gael fel ag yn y blynyddoedd blaenorol. Y dyddiad olaf
ar gyfer dewis y difidend sgrip yw 16 Ebrill 2021.
Y BWRDD A’R CYDWEITHWYR
Ar ran y Bwrdd, hoffwn ddiolch i’n holl gydweithwyr am eu
proffesiynoldeb a’u hymroddiad yn ystod blwyddyn anodd iawn. Bu
ymgyrch ragorol i sicrhau bod y busnes yn gallu addasu yn gyflym i’r
amodau newydd a grëwyd gan bandemig y coronafeirws a chynnal
gweithrediadau, wrth sicrhau diogelwch y cydweithwyr, y cwsmeriaid
a’r cyflenwyr.
Yn dilyn ad-drefnu yn ein gweithrediadau, ymddiswyddodd Andrew
Evans o’r Bwrdd ar 1 Rhagfyr 2020. Er hynny, mae’n parhau yn
aelod allweddol o’r Uwch Dîm Gweithredol yn ei swydd newydd fel
Cyfarwyddwr Gweithrediadau a Bwydydd y Grŵp. Ar ran fy nghyd-
Gyfarwyddwyr, hoffwn gydnabod nid yn unig cyfraniad Andrew fel
aelod o’r Bwrdd ers 2008, ond hoffwn hefyd groesawu ei gyfraniad
sylweddol parhaus fel aelod o’r Uwch Dîm Gweithredol.
RHAGOLWG
Yn awr bod cytundeb masnachu di-dariff wedi cael ei gytuno gyda’r
UE, mae’r darlun ar gyfer amaethyddiaeth yn y DU yn sylweddol
gliriach wrth i ni ddechrau 2021, ac rydym wedi cael gwared ag
ansicrwydd mawr. Disgwyliwn weld buddsoddi yn ailddechrau a’r
sector yn symud ymlaen, gyda chynhyrchwyr bwyd y DU hefyd yn
meddu ar y gallu i chwilio am farchnadoedd newydd ar gyfer cynnyrch
amaethyddol. Bydd Bil Amaethyddiaeth y DU yn newid y ffordd y mae
ffermwyr yn cael eu cefnogi gan y Llywodraeth ac rydym yn rhagweld
y bydd sector amaethyddol gwydn yn ymddangos. Yn ogystal, rydym
yn disgwyl cyfleoedd i Wynnstay ddarparu cefnogaeth wrth i ffermwyr
ganolbwyntio ar fuddsoddiad amgylcheddol ac effeithlonrwyddau. O
ganlyniad, rydym yn gweld y bydd y rhagolygon canolig a’r rhagolygon
hirdymor ar gyfer ein diwydiant yn rhai cadarnhaol.
Mae prisiau nwyddau amaethyddol yn gyffredinol wedi gwella yn ystod
y 12 mis diwethaf ac mae’r rhagolygon tymor byr yn parhau yn gryf.
Mae plannu ydau gaeaf yn sylweddol uwch na blwyddyn yn ôl, yn
unol â thymor hau mwy arferol. Bydd hyn yn sbarduno’r galw am
fewnbynnau tir âr ac yn cynhyrchu cnwd mwy i’w fasnachu ar ôl y
cynhaeaf.
Tra bod y coronafeirws a’r cyfyngiadau cysylltiedig yn parhau yn
bryder, dylai cychwyn y rhaglen frechu genedlaethol helpu i ategu
adferiad cymdeithasol ac economaidd. Mae gennym ni dargedau
eglur ar gyfer y busnes am yr ychydig flynyddoedd nesaf. Mae’r
rhain yn cynnwys buddsoddiad i wella cynhyrchiant a chefnogi twf,
a ffocws ar sicrhau ein bod yn y lle gorau i gefnogi ffermwyr y DU
wrth iddyn nhw symud at flaenoriaethau newydd, yn cynnwys mentrau
amgylcheddol a mabwysiadu arferion ffermio newydd. Gwelwn
swyddogaeth arwyddocaol i Wynnstay i gefnogi ffermwyr gyda
chynnyrch a gwasanaethau i helpu sbarduno cynaliadwyedd a mwy
o effeithlonrwydd, yn ogystal â lleihau allyriadau carbon, yn cynnwys
rheoli gwastraff ar ffermydd.
Mae ein buddsoddiad parhaus i ehangu sail gwybodaeth a thimau
cynghori’r Grŵp, a’r pwysigrwydd yr ydym yn ei roi ar gynnyrch a
gwasanaethau arloesol drwy weithio gyda’n cyflenwyr gwerthfawr, yn
rhan annatod er mwyn gosod Wynnstay fel prif gyflenwr amaethyddol
yn y DU. Mae’r ad-drefnu yr ydym ni bron wedi’i gwblhau hefyd yn
rhan o’r strategaeth hon, a dylai gefnogi mwy o arloesi a hyblygrwydd,
wrth i ni edrych ymlaen at ddatblygu a thyfu ein sianelau i’r farchnad.
Mae’r flwyddyn ariannol newydd wedi dechrau yn dda ac mae’r Bwrdd
yn parhau yn hyderus fod y Grŵp mewn sefyllfa dda i symud ymlaen â’i
amcanion strategol. Yn ogystal, byddwn yn parhau i asesu cyfleoedd
caffael sy’n cydweddu â’n strategaeth dwf, ac edrych i’r dyfodol yn
hyderus.
Jim McCarthy
Cadeirydd
26 Ionawr 2021
Mae’r darlun ar gyfer amaethyddiaeth yn
y DU yn fwy eglur ac mae’r Grŵp mewn
sefyllfa dda i symud ymlaen
11
ANNUAL REPORT AND ACCOUNTS 2020 Wynnstay Group Plc
BUSINESS SNAPSHOT -
Specialist Events
line with our strategy of offering
In
customers technical advice, we host
a number of specialist events for our
customers, including The Arable Event
and The Sheep & Beef Event, although
due to Coronavirus these two events were
not held during 2020. Arrangements for
2021 will be confirmed, and the events will
continue to provide an ideal opportunity for
knowledge transfer between farmers,
suppliers and industry bodies, and
demonstrate our commitment to
offering expert advice to our
valued customers.
The Arable Event was established
in 2013 and attracts in the region
of 1,500 visitors and exhibitors
through
its gates annually. The
event has become the key practical
demonstration for arable farmers in
the west of the UK, showcasing trail
plots of selected varieties, keynote
speakers, machinery demonstrations
and a host of trade stands.
The Sheep and Beef Event was originally
established in 2015 and attracted over
800 sheep and beef farmers to the
most recent event held at Hereford
Livestock Market. The event hosts
practical demonstrations, trade stands
and keynote speakers offering expert
advice for the red meat sector.
1212
www.wynnstay.co.uk ANNUAL REPORT AND ACCOUNTS 2020
www.wynnstayplc.co.uk ANNUAL REPORT AND ACCOUNTS 2020 Chief Executive’s Review
INTRODUCTION
Wynnstay’s strengths have been clearly demonstrated in what was
an exceptionally diffi cult year for both the agricultural sector and
wider society. Farmer confi dence at the start of the fi nancial year was
low because of weaker farmgate prices and ongoing Brexit-related
uncertainties. The highly disrupted autumn planting season in 2019
and the dry, late spring created further diffi culties for arable farmers
while, from March 2020, the coronavirus pandemic and government
sanctions to control virus spread aff ected farmers across all sectors.
Farmgate prices for red meat and milk were especially hit by the initial
national lockdown, although they recovered during the year.
Wynnstay’s results for the full year are signifi cantly better than our
expectations at the time of the interim results following a stronger than
anticipated second half of the year. Reduced revenue of £431.40m
(2019: £490.60m) principally refl ected commodity defl ation and
decreased volumes of traded commodities, especially grain, feed raw
materials and fertiliser. Underlying pre-tax profi t at £8.37m was 4%
ahead of last year (2019: £8.01m), itself a diffi cult year for the sector,
and we are pleased with this outcome given the circumstances.
The results were underpinned by our robust balance sheet and
balanced business model, with its broad spread of products and
services, which ensure that we are not unduly exposed to any particular
sector. While a weaker performance from arable activities materialised
as expected, feed sales performed very well, benefi ting both our
Divisions. The second half was especially strong for manufactured
feed (bulk and bagged) in terms of both volume and gross margins,
and we secured new business particularly in the dairy and free range
egg sectors. Glasson Grain generated a solid performance, although
below last year’s record level.
The Specialist Agricultural Merchanting Division delivered a 10%
improvement in profi t contribution, although sales of some product
lines were adversely aff ected by initial lockdown restrictions. This was
helped by the effi ciency programme introduced during the last fi nancial
year, and which remains under way.
We continued to invest across the Group, and have now started a
major three year investment programme at our Carmarthen feed
mill. This will signifi cantly increase our manufacturing capacity and
improve productivity. We are also considering options for a new seed
processing facility. This would replace our former plant at Selby, and
in the meantime, we will be investing in our seed processing plant at
Astley, in Shropshire to increase capacity and productivity.
Results were
underpinned by
our balanced
business model
and robust
balance sheet
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Increasingly we are focusing on accelerating our environmental and
sustainability agenda, addressing raw materials and products sourcing
and carbon impact. We have made progress with utilising bio-diesel
for our commercial delivery fl eet, and will make further improvements
across the business to reduce carbon emissions. In addition, we
envisage playing a signifi cant role in supporting our customers
with environmental initiatives, which are a key focus of the new UK
Agriculture Bill.
In the second half of the year, we substantially completed a signifi cant
reorganisation of our operational management, further information on
which is provided below.
REORGANISATION
We completed a review of the Group’s core organisational structure
and implemented a number of changes that will better support the
Board’s plans for the Group’s future growth and development,
including our investment programmes.
At the heart of the changes has been a reorganisation of the
management of Wynnstay (Agricultural Supplies) Limited, where we
have created new senior management roles. These cover Group
Operations and Feeds, Arable including GrainLink, and Sales and
Marketing. Reporting lines have been reorganised accordingly. We
believe this new structure provides for enhanced eff ectiveness and
sales agility. It also supports our multi-channel and environmental and
sustainability strategies. I would like to thank Andrew Evans, who is
now heading Group Operations and Feeds, for leading this important
reorganisation.
ANNUAL REPORT AND ACCOUNTS 2020 Wynnstay Group Plc 13
Chief Executive’s Review continued
REVIEW OF ACTIVITIES
AGRICULTURAL DIVISION
The Agriculture Division manufactures and processes a wide range
of agricultural inputs, including feeds, fertiliser and seeds, as well as
providing grain-marketing services. Over recent years, the Division has
focused on enhancing its offering through specialist advisory teams
and this remains a focus.
Divisional revenue was 16% lower at £302.58m (2019: £358.69m),
mainly reflecting lower commodity prices and the very poor winter
planting season and dry spring, which reduced activity across
certain product categories, especially grain, feed raw materials and
merchanted fertiliser. The Division’s profit contribution reduced by 2%
year-on-year to £2.88m (2019: £2.95m).
FEED
We manufacture both ruminant and monogastric products
in
compounded, blended and meal form. This wide range provides
protection against fluctuations in demand. All our manufactured feed
is sold under the Wynnstay brand, and in addition to bulk deliveries
to farm, a growing percentage of our feed is sold in 20kg or 500kg
bagged form, predominantly via our depot network.
Total feed volumes were in line with last year, and gross margins
improved, helped by our strong positions in raw materials and
production efficiencies.
Compound dairy feed volumes strengthened in the second half of the
financial year after a weaker first half and matched last year’s level. This
reflected the recovery in milk prices after lower demand in the early
part of the financial year as a result of good on-farm forage stocks, the
mild winter and a drop in demand for liquid milk from the hospitality
sector during the coronavirus lockdown. We have also gained new
customers following a successful campaign led by our dairy technical
team.
ARABLE PRODUCTS
It has been a challenging year for our arable activities. This was
caused by the exceptionally wet autumn of 2019, which drastically
reduced farmers’ ability to sow winter cereal crops, and the dry spring
that followed, which had a detrimental impact on yields. As a result,
demand for fertiliser and other inputs reduced, traded grain volumes
contracted, and there was decreased demand for seed in autumn
2020, given the significant carry-over of unsown seed from the prior
year. Margins were also squeezed as suppliers chased reduced
volumes.
The UK wheat harvest in 2020 was 37.5% lower than the 2019 harvest,
the lowest production seen since 1981. While this, together with the
reduced oilseed rape crop, dramatically impacted trading volumes
for GrainLink, our specialist combinable crop marketing business,
the business still made a profitable contribution to the Division’s
performance. GrainLink is currently considering alternative protein
crops to contract with growers. We have also moved grain traders to
remote working and closed the Grantham trading office, so reducing
costs. With a more normal autumn planting season in 2020, we expect
a significantly improved performance from GrainLink in 2021.
Spring cereal seed sales were boosted by farmers turning to spring
sowing after the exceptionally poor winter cereals seed planting season,
and sales were up 40% on the previous year. With an estimated carry-
over of 30% of the 2019 purchased winter cereal seed, as expected,
winter 2020 sales were down year-on-year. Margins were also affected
by the necessity to purchase seed from third parties because yields
of contracted seed were low. Grass seed sales performed above the
previous year.
We decommissioned our seed plant in Selby when its lease came
up for renewal in December 2020, and are now in the process of
identifying a suitable site for a modern, new plant. We will continue to
invest at our Astley seed processing plant and will be utilising facilities
with collaborative partners in 2021.
Poultry feed sales for the free range egg market continued to grow, and
we have further strengthened our specialist poultry team of advisors
to drive expansion. Demand from the sheep feed market recovered
from the previous year both for breeding sheep feed and lamb finishing
rations as farmers chose to market their lambs earlier, in order both
to take advantage of higher market prices and before a potential “no-
deal” Brexit.
National fertiliser usage contracted by approximately 10%, and our
own merchanted sales was similarly affected. We have continued to
focus on improving our market position, with our suitably qualified
FACTS advisors offering expert advice covering all aspects of fertiliser
usage. We have also launched a sales trading desk that will offer an
additional route to market, complementing our specialist team at
Astley.
We have continued to focus on the technical knowledge within our
teams, and as well as strengthening our poultry team, we have
strengthened our specialist teams in dairy, youngstock, beef and
sheep. This will support our growth plans in these areas.
We started a significant expansion programme at our Carmarthen
feed mill, although its commencement was delayed by the coronavirus
pandemic. This major investment will be completed over the next three
years. It will significantly increase our feed manufacturing capacity,
improve efficiency and support better environmental practices.
Looking forward, strong market prices and the large acreage of
autumn plantings give us confidence for a significantly improved arable
performance in 2021.
Agriculture - Revenue (note 2, pages 66 – 67)
2020
2019
2018
£302.58m
£358.69m
£334.34m
Down 15.6% as a result of lower commodity
prices and a reduction in certain products
traded especially grain, feed raw materials
and merchanted fertiliser
Agriculture - Segment Result (note 2, pages 66 – 67)
2020
2019
2018
£2.88m
£2.95m
Down £0.07m on
£56.11m lower
revenues
£4.29m
14
www.wynnstayplc.co.uk ANNUAL REPORT AND ACCOUNTS 2020
GLASSON GRAIN LIMITED
The Glasson Grain business, which is based at
Glasson Dock near Lancaster, comprises three
core activities, the supply of feed raw materials, the
production and distribution of fertilisers, and the
manufacture of added value animal feed products.
Glasson generated a solid performance, in line with
management expectations although below last
year’s outstanding performance.
The fertiliser blending operation manufactured
record volumes, with all three sites contributing to
this result. Margins came under some pressure as
competitors reacted to lower demand, refl ected
in the 10% reduction in national usage. However,
prices recovered in the second half and Glasson
remains
largest blended-fertiliser
manufacturer in the UK. Feed raw material volumes
were lower than last year, because of both the mild
winter and an abundance of grass in the summer
period. Our added value animal feed products
performed well and although the coronavirus
impacted sales to the wild bird market, we secured
some additional markets.
the second
The business is well placed for the current fi nancial
year.
A challenging
year for
our arable
activities, after
a record low
winter planting
season and
very poor yields
Feed processing sites in Powys
Feed processing sites in Powys
and Carmarthenshire, blending
and Carmarthenshire, blending
plant in Gwynedd, arable and seed
plant in Gwynedd, arable and seed
processing site in Shropshire, raw
processing site in Shropshire, raw
materials and feed processing site
materials and feed processing site
in Lancashire, fertiliser processing
in Lancashire, fertiliser processing
sites at Lancashire, Angus and
sites at Lancashire, Angus and
Yorkshire.
Yorkshire.
Montrose
Montrose
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Glasson
Winmarleigh
Goole
Rhosfawr
Astley
Llansantff raid
Carmarthen
Condover
Feed processing sites
Fertiliser processing sites
Seed processing site
Trading activity
ANNUAL REPORT AND ACCOUNTS 2020 Wynnstay Group Plc 15
Chief Executive’s Review continued
SPECIALIST AGRICULTURAL MERCHANTING DIVISION
The Specialist Agricultural Merchanting Division trades predominantly
through a network of 54 depots but also via additional channels-to-
market, including specialist catalogues for the dairy, poultry, beef and
sheep sectors, and online. Youngs Animal Feeds is accounted for
within this Division. It manufactures and distributes a wide range of
equine products, which are sold in Wales and the Midlands through
three dedicated outlets and a number of Wynnstay depots.
Divisional revenue was 2% lower at £128.81m (2019: £131.84m),
although like-for-like revenue was just 1% down, with the year-on-year
reductions mainly reflected the constrictions to trading at the onset
of the first national coronavirus-related lockdown. The Division’s profit
contribution increased by 10% to £5.78m (2019 £5.24m), helped by
stronger sales in the second half and previous efficiency initiatives.
WYNNSTAY DEPOTS AND YOUNGS ANIMAL FEEDS
We are pleased with the performance of the depots during a year in
which the challenges to normal operations were severe, and included
temporary depot closures to the public, a switch over to an “order and
collect” only service, and the establishment of a coronavirus-secure
environment following Government guidelines to ensure the safety to
our employees and customers. Many customers have continued to
operate on an “order and collect” basis.
While the wet and mild winter period in the first half impacted sales
of certain product categories, such as hardware materials and feed
blocks, sales in the second half of the financial year closed strongly.
Wynnstay-branded bagged feed sales were very good, helped by a
vigorous marketing campaign in our trading area, as were sales of
animal health products, milk replacers and fencing products.
Sales and profits at Youngs Animal Feeds were lower year-on-year,
affected by the cancellation of horse events due to the coronavirus.
However the popularity of our feed range remains high and the
business retains a loyal customer base.
We continued with our network optimisation and efficiency
programmes. In July, we closed the Wynnstay depot at Salisbury in
Wiltshire, taking depot numbers to 54, and, in October, closed the
Youngs Animal Feed outlet in Huyton in Merseyside, when its lease
came up for renewal. Nonetheless, we were able to retain the majority
of both customer bases.
ENVIRONMENTAL INITIATIVES
We continue to push forward with sustainable sourcing and to evaluate
the origin of all of our feed raw materials. We are pleased to report that
soya within Wynnstay feed rations has moved entirely to sustainable
sources.
As part of our strategy to reduce carbon emissions, the majority of our
commercial delivery fleet now utilises fuel product with bio-diesel, and
we are looking at adaptations to decrease fuel usage. We have also
continued with the conversion of the composition of Wynnstay feed
bags, which now include a minimum of 30% recyclable plastic. Our
feed formulation specialists have introduced lower protein rations and
are trialling methane inhibitors to reduce carbon emissions.
Llansantffraid Feed Mill has recently undergone its third annual ‘Green
Dragon’ audit, after first gaining this accreditation in November 2018.
We completed the audit and maintained our Level 3 accreditation, with
no non-conformances. The accreditation is awarded to organisations
that are taking action to understand, monitor and control their impacts
on the environment.
16
Staff responded
tremendously to
the coronavirus
crisis, and we
continued to
serve fully all
customers
Specialist Agricultural Merchanting -
Revenue (note 2, pages 66 – 67)
Like for like sales
1% lower
2020
2019
2018
£128.81m
£131.84m
£128.26m
Specialist Agricultural Merchanting -
Segment Result (note 2, pages 66 – 67)
2020
2019
2018
£5.78m
£5.24m
£5.54m
Up £0.54m on
£0.03m lower
revenues
www.wynnstayplc.co.uk ANNUAL REPORT AND ACCOUNTS 2020 SPECIALIST AGRICULTURAL MERCHANTING SITES
54 Wynnstay depots
3 Youngs Animal Feeds
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ANNUAL REPORT AND ACCOUNTS 2020 Wynnstay Group Plc
In an excellent
position to make
good progress
Chief Executive’s Review continued
JOINT VENTURE AND ASSOCIATE COMPANIES
Wynnstay has three joint venture companies, Bibby Agriculture Limited,
Wyro Developments Limited and Total Angling Ltd and one associate
company, Celtic Pride Limited. The three JVs performed well during
the year and the combined profit contribution from the four businesses
was higher year-on-year.
COLLEAGUES
The past year has been exceptionally challenging for all our colleagues
and I am extremely proud of their outstanding response during this
time, and their commitment to the business. It has meant that we
were able to maintain all our operations and provide customers with a
continued high level of service. Colleagues have also shown great care
regarding the health and welfare of fellow colleagues, customers and
suppliers. I look forward to a successful year ahead.
OUTLOOK
The UK’s trade deal with the EU has introduced clarity and stability for
UK farming and removed an obstacle that has been inhibiting farmer
confidence and investment spending. The new UK Agricultural Bill
maps out the support that the Government will provide to farmers post-
Brexit, and 2021 marks the start of a seven year transition period that
will see direct payments reduce and farmers incentivised for efficiency
and environmental projects. The continued social and economic
impacts of the coronavirus pandemic mean that uncertainties remain.
However, we anticipate that farmers will adjust to the new world and
invest in their businesses to improve efficiency and productivity while
also addressing environmental issues.
Our commitment to the environment and sustainability, both through
carbon footprint reduction and steps to source sustainable products
and promote precision farming, will help support our customers. It
will also ensure that we are playing our part to benefit both the local
communities in which we live and work, and society more widely.
A major investment programme in our manufacturing facilities is now
under way and will help advance our environmental goals as well as
enhancing productivity and efficiency.
The operational reorganisation that we are in the process of completing
supports our growth ambitions and in particular has created more
focused sales channels. Progress with the development of our digital
offering continues.
The new financial year has started well. Stronger farmgate prices
towards the end of 2020, along with the EU settlement and UK
Agricultural Bill, have helped to buoy sentiment across the farming
sector. Wynnstay’s performance to date is in line with management
expectations, and we believe that our strong financial position and
balanced business model puts us in an excellent position to make
good progress over the coming year and beyond.
We look to the future with confidence.
Gareth Davies
Chief Executive
26 January 2021
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www.wynnstayplc.co.uk ANNUAL REPORT AND ACCOUNTS 2020 BUSINESS SNAPSHOT -
Developing our Sales Channels
As a Group we recognise that our
customers want to trade with us in
different ways, and as a result we
continually look to develop our routes
to market in line with the changing
needs of our customer base.
In 2020 we launched a Trading Desk
based from our office in Shrewsbury,
Shropshire, with the purpose of offering
our customers a dedicated team
available to speak to over the phone to
source their agricultural inputs.
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2021 will see us launching our customer
portal, offering our trade customers an
easy and convenient way to access their
account information, pay their statement
and change their preferences, as well as
being able to browse and order products
online for collection or delivery.
We believe that it is important to provide
customers with the flexibility of multiple
buying channels, ensuring our offering is
aligned to their individual requirements.
ANNUAL REPORT AND ACCOUNTS 2020 Wynnstay Group Plc
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ANNUAL REPORT AND ACCOUNTS 2020 Wynnstay Group Plc
Finance Review
The results highlight
the success of the
balanced business
model
GROUP STRUCTURE
TRADING RESULTS
The Group’s eff ective legal structure continues to be a holding
company, Wynnstay Group Plc, which has investments in four wholly
owned active trading subsidiaries which are:
• Wynnstay (Agricultural Supplies) Limited, an agricultural
merchant.
•
•
•
Glasson Grain Limited, a feed and fertiliser merchant.
GrainLink Limited, a grain merchant.
Youngs Animal Feeds Limited, an equine and pet products
distributor.
Additionally, Wynnstay Group Plc holds investments in the principal
joint ventures and associate companies outlined in note 18 in the
accounts, and certain other property and investment assets.
For reporting purposes the Group’s operations are classifi ed into
the
two main divisional segments, Agriculture, encompassing
manufacturing and supply of a comprehensive range of agricultural
inputs delivered to customers, and Specialist Agricultural Merchanting,
covering the supply of products, primarily to farmers, linked through
the provision of expert advice of their use. An additional reporting
segment called “Others” is used for peripheral activities not readily
attributable to either of the main segments.
The Group was able to continue trading (with some modifi cations
to protect the safety our of colleagues, customers, suppliers and
communities) and was not signifi cantly impacted fi nancially. More
details are contained within the Chief Executive’s Review on pages
14 to 18.
Group revenue in the period decreased to £431.40m (2019:
£490.60m), with the decrease being a combination of lower volumes
of certain bulk categories, most notably traded grain, and commodity
defl ation where lower unit values is estimated to have reduced revenue
by some £20.6m for the period. Most of the fall in revenues have
occurred in the Agriculture division which saw sales reduced by 15.6%
to £302.58m (2019: £358.69m), inclusive of lower volumes of low
margin categories such as grain and straight raw materials trading.
The Specialist Agricultural Merchanting division saw revenue reduce to
£128.81m (2019: £131.84m), with like for like activities showing only
a 1% reduction despite the trading restrictions implemented during
Coronavirus lockdowns.
20
www.wynnstayplc.co.uk ANNUAL REPORT AND ACCOUNTS 2020
Group adjusted1 operating profit was £8.14m (2019:
£7.76m), and profit before taxation on an IFRS basis
was £6.98m (2019: £7.55m). On the Board’s preferred
alternative performance measure referred to as Underlying
pre-tax profit, which includes the gross share of results
from joint ventures but excludes share-based payments
and non-recurring items, the Group achieved £8.37m
(2019: £8.01m). A reconciliation with the reported income
statement and this measure, together with the reasons
for its use is shown:
Profit before tax
Share of tax incurred by joint ventures & associates
Share-based payments
Non-recurring items
Underlying pre-tax profit
2020
£000
6,981
100
96
1,194
8,371
2019
£000
7,553
103
49
301
8,006
1Adjusted results are after adding back amortisation of acquired intangible assets,
share-based payment expense and non-recurring items.
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The Board uses this alternative performance measure as it believes the underlying commercial performance of the current trading activities
is better reflected, and provides investors and other users of the accounts with an improved view of likely future performance by making the
following adjustments to the IFRS results for the following reasons:
•
•
•
The add back of tax incurred by joint ventures and associates. The Board believes the incorporation of the gross result of these entities
provides a fuller understanding of their combined contribution to the Group performance.
The add back of share-based payments. This charge is a calculated using a standard valuation model, with the assessed non-cash cost
each year varying depending on new scheme invitations and the number of leavers from live schemes. These variables can create a
volatile non-cash charge to the income statement, which is not directly connected to the trading performance of the business.
Non-recurring items. The Group’s accounting policies include the separate identification of non-recurring material items on the face of the
income statement, which the Board believes could cause a misinterpretation of trading performance if not disclosed. The non-recurring
items include the completion of the business re-organisation efficiency program which commenced in 2019, an impairment of goodwill,
costs associated with one of the Youngs Animal Feeds depots, and decommissioning costs of the Selby seed plant. An analysis of these
charges is given in Note 5 to the accounts.
Inclusive of contributions from joint ventures our Agriculture division generated an operating profit before non-recurring items of £2.88m (2019:
£2.95m), while our Specialist Merchanting division produced £5.78m (2019: £5.24m). Other activities generated a small loss of £0.12m (2019:
£0.05m).
TAXATION
The Group’s tax charge including joint ventures of
£1.55m (2019: £1.52m) represents 21.9% (2019: 19.9%)
of the Group pre-tax profit of £7.08m (2019: £7.66m).
Additional deferred tax provisions have contributed to this
respective increase as these have now been recalculated
at a higher rate following the government’s decision to
cancel the planned reduction in corporation tax to 17%.
A reconciliation relating to Group’s tax charge and Group
pre-tax profit is shown:
Total tax
Taxation
Share of tax incurred by associate and joint venture
Group pre-tax profit from operations
Profit before taxation from operations
Share of tax incurred by joint ventures and associates
2020
£000
1,448
100
1,548
6,981
100
7,081
2019
£000
1,421
103
1,524
7,553
103
7,656
In accordance with Schedule 19 of the Finance Act 2016, the Group has published a Tax Strategy document on its website, which confirms that
the organisation is committed to full compliance with all statutory obligations and adopts a policy of full disclosure to HMRC. The Group refrains
from using offshore tax jurisdictions and will not use specifically constructed tax avoidance schemes or arrangements.
EARNINGS PER SHARE AND DIVIDEND
Basic earnings per share were 27.73p (2019: 30.95p), based on a weighted average number of shares in issue during the year of 19.952m
(2019: 19.812m). The Board proposes to recommend the payment of a final dividend of 10.00p per share to be paid on the 30 April 2021, which
when added to the interim dividend of 4.60p per share paid on the 31 October 2020, makes a total of 14.60p for the year (2019: 14.00p), an
increase of 4.3%. The total dividend is expected to be covered 1.90 times (2019: 2.21 times) by earnings after non-recurring items. The total
dividend represents the seventeenth consecutive year of payment growth since the business was floated on the Alternative Investment Market of
the London Stock Exchange in 2004. This current dividend cover remains within the range which can support the continuing progressive policy.
Current Company distributable reserves amount to £15.82m, (2019: £16.29m) and are adequate to cover over five years of current dividend
payment levels. Adequate anticipated cash resources and future generation assumptions also support the Board’s view that the current policy
is sustainable. A process of subsidiary dividend payments to the parent Company continues so as to ensure adequate liquidity and capital are
available to support the progressive dividend policy.
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ANNUAL REPORT AND ACCOUNTS 2020 Wynnstay Group Plc
Finance Review continued
IFRS 16 LEASES
During the year the Group adopted the new accounting standard, IFRS 16 relating to leases, which has had the effect of recognising on the
balance sheet right-of-use (ROU) assets previously treated as operating leases. This has mainly related to rented property leases and has the
effect of reclassifying rental costs in the income statement into amortisation and finance charges. Further details on the impact are given in notes
23 and 35, which show that £7.80m of new ROU assets and were recognised on adoption together with a similar figure of forward new lease
liabilities. Technically, these new lease liabilities will be classified as additional debt, but the Group’s banking covenants have been adjusted so
as to ignore this change.
CASHFLOW AND NET CASH
Strong cash generation in trading activities continued as measured by reference to the key performance indicator called EBITDA (defined below),
which essentially reports operating profit in broad cash terms. A reconciliation of this measure to reported IFRS profit before tax is provided
below:
IFRS reported pre-tax profit
Tax on joint venture and associate income
Net profit on disposal of property, plant and equipment
and right-of-use assets
Profit on disposal of Associate
Interest
Depreciation & ROU amortisation
Intangible amortisation and share-based payments
Non-cash non-recurring costs
EBITDA
2020
£000
6,981
100
(117)
-
272
6,178
132
601
14,147
2019
£000
7,553
103
(170)
(84)
184
3,579
77
-
11,242
In addition to the increased EBITDA, a strong control of working capital requirements enabled the Group report significantly improved cash
balances as the year end. A reconciliation of EDITDA, as shown above, to the net cash position is provided in the table below:
EBITDA before non-recurring items
Adjustment for pre-tax joint ventures
Working capital movements – balance sheet
Cash generated from operations – as reported
Net finance charges
Tax paid
Net capital expenditure
Acquisitions (including deferred payments)
Other proceeds
Dividends
Issue of new equity
Net increase in cash
IFRS 16 lease liabilities recognised on adoption
Opening net cash / (debt)
Closing net cash
2020
£000
14,147
(538)
6,763
20,372
(272)
(1,510)
(3,889)
(125)
196
(2,791)
392
12,373
(7,801)
3,844
8,416
2019
£000
11,242
(463)
3,977
14,756
(184)
(1,680)
(4,974)
(923)
135
(2,683)
374
4,821
-
(977)
3,844
SHARE CAPITAL AND BALANCE SHEET
During the year a total of 155,035 (2019: 124,212) new ordinary shares were issued for a total equivalent cash amount of £0.392m (2019:
£0.373m) to existing shareholders exercising their right to receive dividends in the form of new shares.
Group net assets at the year end amounted to £98.18m (2019: £94.95m). Based on the weighted average number of shares in issue during the
year of 19.952m, (2019: 19.812m) this represented a net asset value per share of £4.92 (2019: £4.79). During the financial year the share price
traded in a range between a high of £3.47 in August 2020 and a low of £2.00 in March 2020. Based on these balance sheet values, Return on
Net Assets from Underlying Pre-tax profits was 8.6% (2019: 8.5%).
Capital investment in fixed assets amounted to £4.01m (2019: £4.92m) in the year, and net Working Capital, which is defined as, the net
of inventory, trade and other receivables and trade and other payables, decreased by 14% as at the year end, standing at £37.57m (2019:
£43.81m).
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www.wynnstayplc.co.uk ANNUAL REPORT AND ACCOUNTS 2020 Key Performance Indicators
REVENUE:
The invoiced value of sales from the Group’s activities, measured at a fair value net of all rebates and excluding value added tax. £431.40m
(2019: £490.60m).
KEY PERFORMANCE INDICATORS
EBITDA:
The performance of the business is regularly monitored against financial key performance indicators (KPI’s), defined as follows:
Earnings before interest, tax, depreciation and amortisation, and excluding non-recurring costs, and share-based payment expense.
£14.15m (2019: £11.24m)
EARNINGS PER SHARE:
Profit for the year after taxation divided by the weighted average number of shares in issue during the year 27.73p (2019: 30.95p).
UNDERLYING PRE-TAX PROFIT:
Underlying pre-tax profit includes the Group’s share of pre-tax profit from joint ventures and associate investments but excludes non-
recurring costs and share-based payment expense. £8.37m (2019: £8.01m).
RETURN ON NET ASSETS:
Underlying pre-tax profit, with intangible amortisation added back, divided by the balance sheet net asset value. 8.6% (2019: 8.5%).
NET ASSETS PER SHARE:
The balance sheet net asset value, divided by the weighted average number of shares in issue during the year. £4.92 (2018: £4.79).
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Under the exceptionally challenging trading circumstances prevalent during the year, the Board are pleased with the financial performance
and believes the results highlight the success of the balanced business model, which this year has sheltered the Group from the difficulties
experienced in the arable sector.
Paul Roberts
Finance Director
26 January 2021
Company Details
COMPANY NUMBER
02704051
REGISTERED OFFICE
Eagle House
Llansantffraid Ym Mechain
Powys
SY22 6AQ
Advisors
AUDITOR
BDO LLP
3 Hardman Street
Manchester
M3 3AT
NOMINATED ADVISOR
Shore Capital and Corporate Limited
Cassini House
57 St James’s Street London
SW1A 1LD
SOLICITORS
Harrisons Solicitors LLP
11 Berriew Street
Welshpool
Powys, SY21 7SL
DWF LLP
5 St Paul’s Square
Liverpool, L3 9AE
PRINCIPAL BANKERS
HSBC Plc
Wales Corporate Banking Centre
15 Lammas Street
Carmarthen
SA31 3AQ
NOMINATED STOCKBROKER
Shore Capital Stockbrokers Ltd
Cassini House
57 St James’s Street London
SW1A 1LD
REGISTRARS
Neville Registrars Limited
Neville House
Steelpark Road
Halesowen
West Midlands
B62 8HD
23
ANNUAL REPORT AND ACCOUNTS 2020 Wynnstay Group Plc
BUSINESS SNAPSHOT -
Animal Health and Welfare
We continually look for innovations within
the agricultural sector which improve the
health and welfare of livestock, whilst also
maximising returns for our customers.
introducing
We work with global animal health
pharmaceutical companies such as
Zoetis and Elanco to support their mission
of
innovative medicines,
vaccines and diagnostic products to
the market, to help livestock farmers
deliver
treatment of disease.
targeted and eff ective
Elixir + is a development from the
energised calf milk range, off ering
increased energy density with
specialised additive inclusion to
further support calf performance.
24
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www.wynnstayplc.co.uk ANNUAL REPORT AND ACCOUNTS 2020
www.wynnstay.co.uk ANNUAL REPORT AND ACCOUNTS 2020
Wynnstay Restore 5+ provides
protection to livestock from
the impact of mycotoxins on
their health.
BUSINESS SNAPSHOT -
Wynnstay’s Partnership with Poultry
Our Team of Poultry Specialists offer
leading
poultry producers
advice to achieve exceptional production
standards.
industry
The team are available to advise on all
stages of free-range egg production,
from unit planning and development
to the efficiency of the egg production
process. Our specialists act as an
extension to the on-farm team, forming
a close partnership with farmers,
to the benefit of the poultry
enterprise.
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supermarkets
team work closely with egg
Our
to
processors and
understand their unique requirements,
ensuring our range of nutrition products
can be specifically designed to cater
for their needs, and the need of the end
consumer.
The established relationships that we
have across the supply chain ensure
that Wynnstay can be at the forefront
of innovations and developments within
the free-range egg sector.
ANNUAL REPORT AND ACCOUNTS 2020 Wynnstay Group Plc
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ANNUAL REPORT AND ACCOUNTS 2020 Wynnstay Group Plc
Principal Risks and Uncertainties
For the year ended 31 October 2020
The Group aims to mitigate the risks it faces as we seek to create sustainable growth over the medium to long-term by adopting an approach
that is appropriate to the business activities being conducted and the scale of the enterprise. The Board retain overall responsibility for reviewing
risk management strategies and this statement provides information about the exposure to the main identified risks and the controls in place to
mitigate against these issues. The executive directors work closely with the non-executive directors who provide oversight and scrutiny in this
area to ensure that risk management is appropriately aligned with commercial strategy. During the year the Board reviewed and updated their
risk register which is regularly considered for changing circumstances.
In all businesses, there are some risks and uncertainties which are not able to be fully controlled. The table below sets out the principal risks
and uncertainties which could have a material impact on the Group, the list is not exhaustive, and it is possible that there will be other risks or
uncertainties that could have a material adverse impact. Whilst all companies are subject to some financial risk, the Group continues to have a
strong balance sheet and low gearing which are priorities for the Board.
RISK
DESCRIPTION OF RISK
MITIGATING ACTIONS
Increasing
Operational: Coronavirus pandemic
The coronavirus pandemic presents a number of different
risks to the business, not least to the health and welfare of
our colleagues, customers, suppliers and the communities in
which the Group operates. While the majority of activities are
considered essential services and can continue to operate,
the potential consequences of disease and lockdown
restrictions on the wider economy jeopardises resource
availability and demand.
The Group has taken appropriate actions in accordance
with government regulations and guidance to ensure
a Coronavirus secure operating environment. These
precautions have included remote working operations
where possible, significant
in protective
equipment in work places and depots, and risk assessed
safety precautions where staff still have to interact with
each other or other contacts such as customers and
suppliers.
investment
Decreasing
Operational: Brexit and the political backdrop
While the recently signed Trade and Co-operation Agreement
between the UK and EU initially avoids the implementation of
tariffs, the potential for adverse consequences remains for the
business, both in terms of direct disruption and with regard to
the commercial prosperity of the Group’s predominant farmer
customer base.
Potential disruption issues include:
- Imported product supply chains
We continue to closely monitor the government’s Brexit
arrangements and adapt our plans to respond to the latest
arrangements.
While the Group has limited direct importation activities, it
does rely on smooth supply chains for certain products and
raw materials which could be disrupted due to congestion
and customs procedures at point of UK entry which could
affect manufacturing and merchanting operations.
Some of our raw material inputs and goods for resale are
sourced from worldwide locations and where possible
we plan to purchase from a variety of sources in order to
minimise reliance on a single point of supply.
- Customer exports
Some of our customers export their end product, so changes
in demand for whatever reason for their products could in
turn affect their demand for the Group’s products.
The Group diversifies where possible to avoid reliance on
individual customer or product groups, such as offering
products to arable and livestock farmers.
- Exchange rate volatility
Leading to commodity price risk.
- Historic reliance of our customers on government support
Detailed mitigating actions for commodity price risk are in
place and discussed further below.
Our core farmer base has historically relied upon financial
support provided and managed by the EU. The UK
replacement support
implemented
governments have
schemes but with different priorities for accessing payments
going forward. A potential reduction in the funding may lead
to uncertainty and impact our customer buying patterns.
respective government’s agricultural
The
legislative
frameworks have been fully investigated and resources
allocated to assist our customers to access the available
funding for joint commercial benefit. The Group will adapt
commercial plans and approaches to respond to the latest
arrangements.
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www.wynnstayplc.co.uk ANNUAL REPORT AND ACCOUNTS 2020 RISK
DESCRIPTION OF RISK
MITIGATING ACTIONS
Increasing
Operational: IT systems including cyber security
Much of the Group’s activities rely on networked IT systems
and the breakdown of any of these systems through
mechanical fault, data loss or malicious activity could lead
to failure in customer fulfilment processes together with
reputational and financial damage.
The Group has internal IT support teams to manage its
computer systems, including procedures for recovery from
disruption.
The potential risk of cyber attacks has increased with the
level of remote home working.
Security training for all relevant staff has increased together
with reviews of all network systems to identify and address
vulnerabilities.
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No change
Operational: Recruitment, retention and development of our key people
Recruiting and retaining the right people is crucial to the
success of the Group.
Succession planning and development of key colleagues
is regularly considered at Board level. The Remuneration
Committee develops policies to attract, retain and motivate
the right people for the success of the Group.
No change
Operational: Supply chain efficiency
The Group requires access to raw materials and goods for
resale and any disruption to its supply chains would damage
revenue streams
Strategic partnerships with suppliers are managed by
specialist colleagues who aim to ensure inventories are
kept at an optimum level.
No change
Financial: Commodity prices and currency exchange rates
The Group’s raw material inputs (grain, feed inputs), along
with the farmer customer outputs (dairy, meat, agricultural
goods) are subject to world prices which are impacted by
world supply and demand, political factors and currency
exchange rates which could lead to fluctuating demand for
the Group’s products.
The Group does not engage in the taking of speculative
commodity positions, but it does have to make significant
forward purchases of certain raw materials, particularly
for use in its animal feed and fertiliser manufacturing
operations.
No change
Financial: Availability of finance and interest rates
Fluctuating commodity prices can adversely impact the
Group’s working capital requirements and it is possible that
interest rates charged may increase.
Position reporting systems are in place, together with
appropriate limits, to ensure the Board is appraised of the
exposure level on a regular basis. Where available, hedging
tools such as commodity futures contracts on the London
LIFFE market are used to manage pricing decisions.
is managed by entering
Foreign currency risk
into
currency purchase agreements at the time the underlying
transaction for the purchase of raw materials is completed.
The adjusted fair value of these contracts is now material.
At the year end the principal amounts relating to forward
purchased currency amounted to £8,733k (2019: £9,178k).
The Group monitors headroom in its banking facilities and
maintains adequate capacity to absorb unexpected but
foreseeable trading patterns and conditions. Debt facilities
are in place with HSBC Bank Plc which include variable
overdraft and committed revolving credit facilities and term
loans, together with separate asset funding lines.
The majority of debt has floating interest rates linked to
bank base rates. The Board reviews its option to fix the
rates attached to debt through the use of interest swap
derivatives.
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ANNUAL REPORT AND ACCOUNTS 2020 Wynnstay Group Plc
Principal Risks and Uncertainties continued
RISK
DESCRIPTION OF RISK
MITIGATING ACTIONS
Increasing
Operational: Operating climate
- Impact of weather conditions and climate change
Demand for the Group’s products is affected by climatic
conditions as these impact demand for animal feed and
associated products and arable activities and so customer
demand can be impacted by the weather which, in turn,
could lead to volatility of earnings.
- Consumer awareness
There is growing evidence of consumer awareness and
concern about sustainability of products purchased,
including food.
The Group monitors trends and, as noted above, seeks
to diversify where possible to avoid reliance on individual
customer or product groups, such as offering products to
arable and livestock farmers.
The Board monitors developments in consumer buying
patterns in relation to sustainability and looks to ensure that
the Group offers a range of products to meet consumer
preferences. The Group
industry trade
associations and maintains close contact with government
policy development.
is active
in
- Government regulation and licences
A number of the operating sites within the Group require
specific environment regulated permits or other governmental
approvals or licences. Non-compliance with the terms of
such approvals could result in the withdrawal of authority
to operate certain activities which could lead to volatility of
earnings or loss of reputation..
No change
Financial: Credit
The Board oversees environment and
regulatory
compliance by receiving regular updates from management
and monitoring the results of audits.
A significant proportion of the Group’s trade is conducted on
credit terms and as such the risk of non-payment is always
present.
Customers are credit checked and appropriate limits set up
prior to goods being supplied. The Group actively monitors
accounts using the credit control policy and the Board
regularly monitors debtor days. The historic incidence of
bad debts is low.
- Grain trading business
The grain trading business derives a significant proportion of
revenue from a small number of key customers, leading to
substantial customer credit balances.
The Group utilises credit insurance in order to provide
partial cover against default by certain large customers for
grain.
No change
Operational: Industry consolidation and change
The Group operates in a fragmented market which is
undergoing consolidation. Our strategy is to grow through
a combination of organic and acquisition-based means in
order to remain competitive and benefit from economies of
scale.
Consequently, it is important to successfully identify, execute
and integrate growth opportunities in order to mitigate the
risk of customer loss and competition.
The Group pursues a sensible growth strategy by seeking
to increase its market share through geographic expansion
and acquisitions.
The Group continues to invest its sales channels, capturing
data through a customer relationship management tool
in order to identify and manage customer sales, service,
support and quality across our catalogue direct to farm and
specialist agricultural merchanting depot network.
28
www.wynnstayplc.co.uk ANNUAL REPORT AND ACCOUNTS 2020 ESG FRAMEWORK
OUR ENVIRONMENT
Our impact on our environment is one of the major investment priorities for the Group as it strives to reduce any adverse impact that its activities
may have on the environment. Our strategic approach not only seeks to do the right thing but recognises this can bring internal cost efficiency
and produce external revenue opportunities. The Group seeks to operate all activities in a sustainable manner, and management are actively
encouraged to consider and minimise the environmental impact of their operations. The aim is to become a carbon neutral business, coupled
with a sustainability strategy which supports our customers to become more efficient in the production of food. More details on our strategy for
Sustainability and limiting environmental impact is contained later in this report.
During the year, we undertook a project to incorporate the use of
biofuel in our HGV fleet. We undertook an in-depth analysis including
our vehicle age, type and maintenance requirements, investigated
what processes and procedures would be required to manage the
use of biofuel and consider the cost implications. In July 2020 we
commenced a trial of running all the HGV vehicles operating from our
Llansantffraid site to the B10 Biofuel product, which contains 10%
biofuel. In October 2020 this was extended to all our Astley based
HGV vehicles, together comprising approximately 75% of our HGV
fleet. Following the success of this project we are continuing to seek
further improvements and are considering options such as modifying
the gearbox configuration of HGV’s to reduce fuel consumption.
Wynnstay only uses Certified Soyameal in ALL its feed production to
the recognised FEFAC standards. This ensures that we are promoting
and paying for farms in South America to be sustainably run to the
standards set basis RTRS (Roundtable for Responsible Soya) or
equivalent, which include within these standards no child, slave or
indentured labour and Zero deforestation. We are also members of the
UK Round Table for Responsible Soya and sit on the AIC Sustainability
Committee.
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Wynnstay is currently bagging its own produced feed in bags
containing 30% recycle material. This will be increased as higher
inclusion bags suitable for using with Animal feed become available
from the supply chain.
Wynnstay joined the Green Dragon Scheme in 2018 and has
maintained this certification every year since, with the last audit
conducted remotely due to coronavirus restrictions in November 2020.
Green Dragon is an accredited scheme which manufacturers of animal
feeds are encouraged to join to minimise their environmental impact.
Since joining, Wynnstay has continued to improve efficiencies in our
mills and reduced emissions per tonne of manufactured feed.
29
ANNUAL REPORT AND ACCOUNTS 2020 Wynnstay Group Plc
Environmental Strategy
SUSTAINABILITY AND LIMITING ENVIRONMENTAL IMPACT
ESG is recognised as one of the major investment priorities for the Group as it strives to reduce any adverse impact that its activities may have
on the environment. Our strategic approach not only seeks to do the right thing but recognises this can bring internal cost efficiency and produce
external revenue opportunities. The Group seeks to operate all activities in a sustainable manner, and management are actively encouraged
to consider and minimise the environmental impact of their operations. The aim is to become a carbon neutral business, coupled with a
sustainability strategy which supports our customers to become more efficient in the production of food.
Energy usage is recorded across the Group and reported centrally for monitoring, with individual departments tasked with efficiency improvement
targets on a unit productivity basis. During the year the Group continued to implement improvement opportunities identified from the audit
conducted to comply with Phase two of the Energy Savings Opportunity Scheme managed by National Resources Wales. Further LED lighting
schemes have been installed in several locations, and a number of refurbishment projects were completed in depots to improve the Energy
Performance Certificate (EPC) ratings in those buildings. Capital expenditure on environmental and water management projects at Carmarthen
mill has been ongoing, and at the Llansantffraid mill continues to operate an Environment Management System (EMS) under the Green Dragon
environment accreditation scheme. Recycling processes operate across the Group for plastics, paper, cardboard, metal, wood, electrical
equipment and used oils. Fuel efficiency is paramount in vehicle investment decisions, and mileage management is a key task for all fleet
responsible personnel.
INTERNAL ACTIVITIES & PRIORITIES:
Production plants
Maximise production efficiencies through investment.
Exploit alternative energy opportunities.
Operate within our EMS at all sites.
Logistics
Reduce our cost to serve by improving vehicle utilisation and exploiting end user capacity, but not at the cost of customer satisfaction.
Exploit alternative fuel technology in both the truck and car fleets.
Continuous development in system efficiency via process control.
Maximise supply chain efficiency working with all stakeholders to meet set targets and goals.
Seek most efficient factory to end user supply routes.
Purchasing
Take a balanced view of product procurement in terms of net return coupled with environmental protection and sustainable sourcing.
Exploit GNFR (Goods Not For Resale) opportunities across the group.
Ensure we have full visibility of supplier ESG and Sustainability policies.
Develop efficient supply chain systems exploiting supplier support and funding.
Implement anti-slavery and supply chain labour standards.
Encourage the use of recycled plastic wherever possible.
Enhance supplier relations for the benefit of the business.
Merchanting
Exploit alternative energy solutions.
Implement store optimisation plan.
Target a 100% recycled packaging policy.
Support sustainable farming practices.
General
Initiate sustainable working practices for staff utilising technology i.e. home working.
Seek to reduce energy waste and improve water management policies .
Monitor carbon foot-print to manage reduction with a net zero target for 2040 or sooner.
Monitor air emissions to improve quality.
Supporting the customer with Environmental and Sustainable strategies
Use the business diversity to offer sustainable and cost competitive ingredients to the feed production sites.
Support customers with sustainable production initiatives.
Support customers with environmental compliance.
Develop outlets for recycling plastic.
30
www.wynnstayplc.co.uk ANNUAL REPORT AND ACCOUNTS 2020 Environmental Strategy continued
(SECR) STATEMENT
We measure and report our energy and carbon data across the whole Group, giving comprehensive data to authenticate the environmental
impact of the Company. Our SECR statement includes all emission sources required under the 2019 regulations for the fi nancial year ended 31
October 2020. As this is the fi rst year of reporting, we shall be using this reporting year as the benchmark for the 2020/2021 year.
Wynnstay Group used 12,710 carbon dioxide equivalent tonnes (tCO2e) of energy during the year. 31% of energy was used in producing
compound and blended feeds in our production plants, and a further 54% was used by our fl eet of road vehicles. Both production and transport
effi ciency are key to our energy savings plans, looking for effi ciencies in factory throughput and miles achieved per litre of road fuel respectively.
The carbon intensity ratio we have chosen is the best refl ection of our total activity across all our operations based on the total tonnage traded
of primary agricultural inputs and grain. Our carbon intensity ratio for the year ended 31 October 2020 was 8.14 tCO2e per 1,000 tonnes
of agricultural inputs and grain traded. For future periods we shall set reduction targets for our carbon emissions to enable us to begin the
measurement of energy effi ciency along with fi nancial performance.
In order to calculate the carbon emissions, we have used the emission factors from the UK Government’s GHG Conversion Factors for Company
Reporting 2020. One of the requirements of the new SECR regulations is to report our total UK energy use in kilowatt hours (kWh); for this we
have used the 2020 conversion factors. The Scope 1 and 2 emissions reported are for all operational facilities under our control and for which
we have direct management responsibility.
Streamline Energy and Carbon Reporting
Carbon Emissions
Direct Emissions Scope 1
Direct Emissions Scope 2
Other Emissions Scope 3
Total Emissions
Tonnes of CO2 equivalent PA (tCO2e)*
9,086
3,582
42
12,710
Delivered tonnage of agricultural inputs and grain
1,560,895 Tonnes
Carbon Intensity Ratio (tCO2e per 1,000 tonnes traded)
8.14
Total UK Energy Usage (kWh)
53,320,243
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ANNUAL REPORT AND ACCOUNTS 2020 Wynnstay Group Plc 31
Wynnstay helps livestock and arable farmers
to produce food in a more sustainable,
environmentally friendly and profitable
way. We provide our customers with quality
products, specialist advice and an efficient
service that is industry leading.
THRIVE
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www.wynnstayplc.co.uk ANNUAL REPORT AND ACCOUNTS 2020 THRIVE
TEAMWORK
Together we are more effective
We can be more effective as a business through collaboration and teamwork. This
means communicating our goals well and listening to the ideas and concerns of all
members of the team.
HONESTY, COMMITMENT & QUALITY
We aim high
By aiming high, we will succeed in creating a stronger, better business. It applies in all
sorts of ways, including the quality of our products, the service we offer, the efficiency
of our processes, and in the advice we provide. Ultimately, if we are a step ahead,
customers will be assured of quality products, expert advice and good value.
RESPECT
Respect and fairness are essential
We believe that relationships flourish where there is mutual respect, and that people
should be treated fairly and equitably. This is most relevant in the work place but it also
cuts across all professional relationships, including with partners, suppliers and
customers.
INNOVATION
Innovation is the future
Farming is changing and we want to provide farmers with access to the innovation that
is driving sustainable and more effective farming practices. To that end we are
constantly looking across the market for new products and approaches that will allow
us to provide farmers with the tools they need to maximise their potential. We apply the
same spirit to our business to ensure continuing development and improvement.
VALUE CREATION
A better tomorrow
Our objective is to generate value for shareholders and for society, as well as for our
customers and people. We endeavour to run the business in such a way that we offer
participation in a business model with an attractive long-term financial profile, which
also contributes to society.
ENVIRONMENTAL SUSTAINABILITY
A more sustainable world
We consider our environmental impact when making business decisions. We are
dedicated to making our supply chain more sustainable, and are working hard towards
contributing to a more sustainable world.
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ANNUAL REPORT AND ACCOUNTS 2020 Wynnstay Group Plc
BUSINESS SNAPSHOT -
Qualified Advice from our People
Our business is built on the foundation of
offering our customers the highest standard
of customer service and specialist advice,
to ensure they can achieve the best return
on investment from their enterprise.
Our teams from across the business take
part in specialist training and development
activities to gain expert qualifications
relevant to their field of expertise. This
ensures that the professional advice that
they provide is in line with the highest
industry standards.
We believe that the
investment we make in
the training and development
of our people is of the utmost
importance to developing our
valued colleagues, and providing
the highest level of service to our
customers.
The following institutions support our
business with maintaining best practice
training standards:
CIM
Marketing
Management
CIMA
Chartered Institute
of Management
Accountants Level 7
UFAS
Feed
IOSH
Health and Safety
Management
BASIS
Pesticides and
Fertilisers
AMTRA
Animal Health
FACTS
Fertiliser
20twenty
Leadership and
Management
CIPD
People Management
and Development
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www.wynnstayplc.co.uk ANNUAL REPORT AND ACCOUNTS 2020
SOCIAL
Our business is only as good as our colleagues, it’s our colleagues that
make the business what it is. It is the views, thoughts and opinions of our
colleagues that are absolutely crucial to how we develop. Our aim is to make
Wynnstay an even better place to work and a better company to trade with.
COLLEAGUES
These words from our Chief Executive launched our new Colleague Forum, which aims to systematically provide information to colleagues,
operate as a mechanism to seek input into the Group’s strategic decision making process, encourage involvement in business performance and
achieve a common awareness of the fi nancial and economic factors aff ecting the performance of the Group. One of the areas that the Colleague
Forum contributed to in the year was the creation of Wynnstay THRIVE, our corporate values which are shown on pages 32 and 33.
As well at the Colleague Forum, we have an Ideas Hub, mechanisms for colleagues to directly ask questions our Chief Executive, and, subject to
government guidance and safe working practises during the coronavirus pandemic, senior colleagues visit as many sites as possible. Colleague
health and safety continues to be our utmost priority and during the year there were two RIDDORS which compares to seven in the previous year.
We support our colleague performance at work through the People Management and Development Framework. This is a set of basic principles
and standards which are aligned to attract, retain and develop driven, committed and adaptable individuals who are passionate about our
industry and our business. We strive to support career path development and opportunities creation through a mix of learning initiatives including
Professional Development Training Schemes through to experiential learning schemes, to optimise performance of our Colleagues, teams and
organisation as a whole. Reward opportunities include profi t-related pay and Save as You Earn schemes.
We continue to invest in our colleagues and off er training and development, and where possible, internal promotions. We have established
partnerships with educational and learning facilities and careers specialists who have an affi nity and links with our industry and its contributors.
Four colleagues graduated from the 20Twenty Business Growth Course provided by Cardiff Metropolitan University.
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Credit to PRW Photography: Gareth Davies, Wynnstay Chief Executive Offi cer presenting the NFU Cymru/ Wynnstay Sustainable Agriculture Award to Rosalyn Llewellin and Jason
Llewellin with John Davies, NFU Cymru President.
COMMUNITIES
Making a positive diff erence to the communities in which we operate is important to the Group – we support the communities surrounding
our depots and business offi ces by supporting local events, fundraising activities and community groups. We have partnered with the NFU by
sponsoring the NFU Cymru/Wynnstay Sustainable Agriculture Award and also supported the Royal Agricultural Benevolent Institution.
We also have active links with Harper Adams University, which is a specialist provider of higher education for the agricultural and rural sector,
including sponsoring the Wynnstay Beef and Wynnstay Youngstock awards.
Across the Group we directly donated £3,653 to charity over the course of the year further £7,706 to sponsorship of community events, such
as local agricultural shows. The level of sponsorship was lower than normal due to coronavirus pandemic restrictions on events. Our former
associate Wynnstay Fuels Limited also donated £5,000 to charity.
ANNUAL REPORT AND ACCOUNTS 2020 Wynnstay Group Plc 35
Corporate Governance Statement
For the year ended 31 October 2020
“In essence, good corporate governance is about having the right people
(in the right roles), working together, and doing the right things to deliver
value for shareholders as a whole over the medium to long-term…. Good
corporate governance creates shareholder value by improving performance,
whilst reducing or mitigating the risks that a company faces as it seeks to
create sustainable growth over the medium to long-term.”
This quotation is from the QCA Corporate Governance Code which is the recognised code adopted by our Board. Details on how compliance
with this code has been achieved during the year are contained in this corporate Governance Statement. Further details on how the Board have
taken the needs of all stakeholders into account when making signifi cant decisions during the year are included in the S172 statement on pages
39 to 40. Details of how the directors have been remunerated in the year are contained in the Directors’ Remuneration Report on pages 48 to 53.
Dear Shareholder,
On behalf of the Board, I am pleased to present our Corporate Governance Statement for the year ending 31 October 2020.
As a Board we place the highest value on our ESG framework order to deliver long-term shareholder value and our governance strategy is
supported by the QCA Corporate Governance Code for Small and Mid-size Quoted Companies, published in April 2018 (“the Code”). I am
pleased to report that the Group remained in compliance throughout the year, and this report describes how this was achieved. Where relevant
information is contained elsewhere in this document, references are given.
DELIVER GROWTH
Principle 1
Establish a strategy and business model which promote long-term value for shareholders
Principle 2
Seek to understand and meet shareholder needs and expectations
Principle 3
Take into account wider stakeholder and social responsibilities and their implications for long-term success
Principle 4
Embed eff ective risk management, considering both opportunities and threats, throughout the organisation
MAINTAIN A DYNAMIC MANAGEMENT FRAMEWORK
Principle 5
Maintain the board as a well-functioning, balanced team led by the chair
Principle 6
Ensure that between them the directors have the necessary up-to-date experience, skills and capabilities
Principle 7
Evaluate board performance based on clear and relevant objectives, seeking continuous improvement
Principle 8
Promote a corporate culture that is based on ethical values and behaviours
Principle 9
Maintain governance structures and processes that are fi t for purpose and support good decision-making by the board
BUILD TRUST
Principle 10
Communicate how the company is governed and is performing by maintaining a dialogue with shareholders and
other relevant stakeholders
DELIVER GROWTH
Principle 1: Long term value creation is at the heart of our business; our goal is to help farmers feed the country in a more sustainable way. This
year has brought unprecedented operational challenges as a result of the Coronavirus global pandemic and a very poor harvest for UK cereal
crops. The resilience of the Group’ balanced business model is demonstrated in this year’s fi nancial results. More detail on how we adapted to
the unfolding environment whilst maintaining the safety of our colleagues, customers, communities and suppliers is contained in the Strategic
Report and within our S172 statement on page 39. An overview of the Group’s business model is provided on page 3 and the principal risks
and uncertainties are described on page 26 to 28. Our strong balance sheet and liquidity position provides a stable platform for further growth.
Principle 2: The Board appreciates that the diverse shareholder base of the Group may have diff ering objectives from their investment in
the business, and therefore the importance of ensuring that the Board, and non-executive directors (“NED”) in particular, have an up to date
understanding of these perspectives is well recognised.
Directors will therefore proactively engage with both institutional and private investors and will seek out opinions on unusual or potentially
controversial matters before adopting policy changes or tabling shareholder resolutions. The Board will always review written feedback reports
from investors following fi nancial results “roadshows” and will also always consider information received from institutional voter advisory fi rms.
Philip Kirkham is the nominated independent NED who makes himself available to shareholders who may require independent Board contact, in
addition to the regular investor meetings hosted by the Group Chief Executive and the Group Finance Director
Details on how the Board have taken the views of all stakeholders into consideration when making signifi cant decisions in the year are contained
within the S172 statement on page 39 to 40.
36
www.wynnstayplc.co.uk ANNUAL REPORT AND ACCOUNTS 2020
Principle 3: We create value by operating in a sustainable way, to help livestock and arable farmers grow food that is profitable, sustainable and
environmentally friendly. The Directors recognise the importance of managing the business in a responsible, fair and ethical manner, and strive
to engender such values in every aspect of the Group’s operations. More detail on how the Group engages with sustainable farming practices
is contained in the Sustainability report on page 29 to 31 and in our business snapshot on supporting Animal Health and Welfare on page 24.
Customer feedback is sought via both sales colleagues and senior management, and also by market research. We regularly review customer
sales related metrics using our CRM tool.
We have recently focused efforts on increasing the communication between directors and colleagues through a number of mechanisms, including
results Roadshows led by the Executive Team, newsletters, Colleague Forums, and opportunities for all Colleagues to put questions directly to
the Chief Executive.
Principle 4: The Board’s risk appetite is explained within the Principal Risk and Uncertainties on page 26 to 27, which also includes an analysis
of significant risks and mitigations. The Board retains ultimate responsibility for determining our risk appetite and overseeing management
strategies, with the support of the Audit Committee which discusses internal controls and risk management at its regular meetings. The Group
does not currently have a formal internal audit function and at present the Board believes that existing management resource is sufficient to
adequately control the Group in its current size, however this matter continues to be actively reviewed.
The key procedures within the control structure include:
• managers at all levels in the Group have clear lines of reporting responsibility within a clearly defined organisational structure;
•
comprehensive financial reporting procedures exist, with budgets covering profits, cash flows, balance sheet and capital expenditure
being prepared and adopted by the Board annually. Actual results are reported monthly to the Board and results compared with budgets
and last year’s actual. Revised forecasts and associated actions are prepared as appropriate; and
•
there is a structured process for appraising and authorising capital projects. With clearly defined authorisation levels
MAINTAIN A DYNAMIC MANAGEMENT FRAMEWORK
Principle 5: The current Board composition is shown below. During the period, the Board has reviewed the Group’s organisational structure and
subsequently decided that the Group Board would no longer include the position of Agricultural Director, reducing the number of Executive Directors
by 1. The role of Chairman is elected by the whole Board on an annual basis. Jim McCarthy was elected Chairman in November 2013 and has
been re-elected each year to date. All members are able to take independent professional advice on matters associated with the Company at the
Company’s expense. We confirm that all the non-executive directors are considered to be suitably independent and the Board is satisfied that it has
an appropriate mix of capabilities, skills and personal qualities and is not dominated by one person or group of people.
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ent Stakehold e r
agement
g
n
E
d
n
e
p
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d
n
I
Senior
Independent
NED
O
p
e
r
a
t
i
n
g
Chief
Executive
P
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r
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B o a r d Leadership
Chairman
Independent
NED
Independent
NED
Independent
NED
The Board is
an effective,
balanced
team, led by
the Chair
Finance
Director
C
o
m
pany Secretary support s g o o d g
n c e
a
e r n
v
o
a) Audit & Risk
Committee
b) Remuneration
Committee
c) Nominations
Committee
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ANNUAL REPORT AND ACCOUNTS 2020 Wynnstay Group Plc
Corporate Governance Statement continued
A formal schedule of matters requiring Board approval is maintained and regularly reviewed and covers items such as Group strategy, approval
of budgets and financial results, dividend policy, major capital expenditure, corporate governance and Board appointments and comprehensive
briefing papers are circulated prior to each meeting. The Board usually meets once per month with additional meetings when necessary. The Board
met each month during the year and all members attended each meeting, which were held remotely via video conference during the Coronavirus
outbreak. The Board and its sub-committees are supported by external advisors as required.
Principle 6: Biographical details and key skills of the Directors and their skills are included on pages 42 to 43. The executive directors all have
considerable experience in the agricultural supply industry and have spent much of their careers with the Group, providing a significant degree
of management continuity. The non-executives bring a range of business and commercial expertise to the Board, including direct agriculture and
specialist merchanting experience. Steve Ellwood is Audit Committee Chair and has relevant financial oversight experience through his roles at
HSBC and Smith & Williamson. The Board is satisfied that it has an appropriate balance of sector, financial and public markets skills and experience
and is not dominated by any one person or group of people.
Principle 7: The Chairman is responsible for the periodic performance reviews of the Board, its sub-committees and non-executive directors.
Stakeholder feedback is sought and acted upon. An appraisal of performance of the Board and each Executive Director and Company Secretary
has been undertaken during the year. The Board approves annual objectives for the Executive Directors and Company Secretary and measures
performance against these objectives when deciding whether to award a performance related bonus. During 2020 the Board carried out an internal
review of effectiveness which commenced with discussions between the Chairman and Company Secretary and an appropriate questionnaire was
developed. The Company Secretary collated the detailed responses, along with verbatim comments, and analysed the results; considering whether
there were common themes and the degree of consensus of the responses. The output was anonymised and, in the first place, reviewed by the
Chairman, which will be followed by discussions with the whole Board.
Principle 8: During the year, the Group launched Wynnstay THRIVE, our corporate values which are described on pages 32 to 33. Wynnstay
THRIVE involved collaboration throughout the companies within our Group structure and colleagues at all levels. The Board supports THRIVE
as it facilitates our corporate culture which is based on ethical values and behaviours. The Group also has a number of policies and procedures
designed to safeguard our ethical values, including Whistleblowing, Equal Opportunities, Training and continuing professional development and,
where possible, colleague internal promotions.
Principle 9: The Board is supported by Shore Capital and Corporate Limited (our NOMAD) who are consulted on matters when appropriate.
The Board is supported by three sub-committees, membership of which is shown on pages 42 to 43.
a) Audit and Risk
The committee meets to provide oversight of the financial reporting process, the external audit process including maintaining auditor objectivity and
independence in relation to non-audit services, the Group’s system of internal controls, compliance with laws and regulations and risk management.
The Committee met four times during the year and all members attended.
b) Remuneration
The committee meets to consider remuneration policy for executive directors and senior managers and the supervision of employee benefit
structures throughout the Group. The Committee met four times during the year and all members attended.
c) Nominations
Meets to consider senior appointments, and the composition, structure and size of the Board. The Committee monitors whether the Board has
the right skills, experience and knowledge to operate effectively, taking into account changes to the business needs of the Group. The Committee
also oversees succession planning for senior appointments, along with monitoring diversity and inclusion. There were two meetings during the year.
The Board is satisfied that the Group’s governance structures and processes are appropriate to its size, complexity and appetite and tolerance
to risk and keeps these structures under review as the Group develops over time. The Board regularly monitors developments to Corporate
Governance regulations and processes and will regularly review the continuing suitability of the QCA code.
BUILD TRUST
Principle 10: Details of how the Group’s financial performance and position, including cashflow and net cash are included in the Finance Review
on page 20 to 23. Details on how key judgements relating to the coronavirus pandemic and Brexit are on page 64 in the Financial Statements.
Under the exceptional and challenging trading circumstances through the year, the Board are pleased with the financial performance. The Board
believes this highlights the success of the balanced business model, which has to some extent sheltered the Group from the difficulties experienced
in the arable sector. Consequently, the directors have a reasonable expectation that the Group has adequate resources to continue trading for the
foreseeable future and continue to adopt the going concern basis in the preparation of the Financial Statements.
The Group utilises a risk register to record, mitigate and monitor risks. Arrangements for how the Group uses Financial Instruments to manage some
risks are contained in the Financial statements note on pages 85 to 87.
The Directors’ Remuneration report is contained on pages 48 to 53.
Arrangements for maintaining a dialogue with shareholders and other relevant stakeholders are described under Principles 2 and 3.
Jim McCarthy
Chairman
26 January 2021
38
www.wynnstayplc.co.uk ANNUAL REPORT AND ACCOUNTS 2020 Wynnstay Group PLC - Section 172 Statement
Financial Year ending 31 October 2020
BACKGROUND
STAKEHOLDERS
For periods beginning on or after 1 January 2019, all large companies
are required to include a separate statement in their strategic report
that explains how its directors have had regard to wider stakeholder
needs when performing their duty under s172 of the Companies Act
2006. The introduction of this new disclosure requirement has not
changed the underlying statutory duties of a director, which are set
out below:
The Group has identified five main stakeholder groupings associated
with the business, and produced specific outline corporate goals
for each, which must be balanced to satisfy the expectations of
all stakeholders and to achieve the overall strategic ambitions of
the Business. Engagement channels are well developed for each
grouping, which provide strong two-way communication links ensuring
the Board are always cognisant of expectations.
Section 172(1) of the Companies Act 2006
A director of a company must act in the way he/she considers, in good
faith, would be most likely to promote the success of the company for
the benefit of its members as a whole, and in doing so have regard
(amongst other matters) to:
a. The likely consequences of any decision in the long term;
b. The interests of the company’s employees;
c. The need to foster the company’s business relationships with
suppliers, customers and others;
d. The impact of the company’s operations on the community and
the environment;
e. The desirability of the company maintaining a reputation for high
standards of business conduct and,
f. The need to act fairly between members of the company
The Board and its individual directors have acted in accordance
with these statutory obligations while conducting their duties during
the financial year to 31 October 2020, and have taken into account
relevant issues, factors and wider stakeholder group concerns when
considering business strategy and the decisions necessary to execute
that strategy. The Directors recognise the importance of managing
the business in a responsible, fair and ethical manner, and strive to
engender such values in every aspect of the Group’s operations.
Customers – where the Group seeks to excel in terms of range,
value, quality, and service. The relationship nature of the Group’s
trading activities require strong communication links with individual
customers which are maintained through named account managers
and other dedicated sales contact personnel, regular correspondence
and increasingly through digital interaction channels. The Group has
specialist teams who are able of offer advice on a range of agricultural
matters, more details can been found on page 34.
Shareholders – the Board seeks to execute its strategy in a
sustainable way in line with our corporate values, Wynnstay THRIVE
(pages 32 to 33). We utilise the principles set out in the QCA to use
good corporate governance and build trust, communicating updates
on financial performance in a timely and appropriate manner Directors
will routinely engage with both institutional and private investors and
will seek out opinions on unusual or potentially controversial matters
before applying policy changes.
Colleagues – where the Group aims to attract, develop and reward
high quality personnel, and ensure a safe, productive and interesting
environment to work in, thus encouraging the highest levels of
customer service. The Group has an active Colleague Forum and a
senior management “open-door” policy to encourage open dialogue
across the business. Senior executives regularly visit all operational
locations with due regard to Coronavirus safety and staff are routinely
updated on developments through correspondence, newsletters,
blogs and meetings.
Suppliers – the Group has a comprehensive network of reliable and
supportive suppliers, and seeks to select suppliers who offer sustainable
partnerships in order to offer better value to our customers. Product
managers regularly engage with suppliers, developing marketing
initiatives that align to the commercial objectives of the business.
Communities – where the Group aims to be an active and positive
participant in the local communities in which it operates. Participation
in social engagement with various community contacts is encouraged.
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ANNUAL REPORT AND ACCOUNTS 2020 Wynnstay Group Plc
Wynnstay Group PLC - Section 172 Statement continued
KEY BOARD DECISIONS
During the year certain key Board decisions and their implications on relevant stakeholders groups can be categorised as follows:
ISSUE & DECISION
STAKEHOLDER
GROUPS
OUTCOMES
Coronavirus Response – Coronavirus Response – The Board’s
overriding priority is the safety and welfare of colleagues, customers,
suppliers and communities. The global pandemic created significant
social and economic disruption, and
introduced
Coronavirus secure working environments and implemented policies
to ensure compliance with government regulation and guidance while
continuing to service Customers effectively.
the Board
Due to the Coronavirus pandemic, there was some initial disruption as
essential safety measures were implemented, such as depot order &
collect. The safety reassurance provided for Customers, Colleagues
and local Communities was essential. These decisions facilitated
the safe continuity of trading across all activities to the benefit of
Shareholders and Suppliers as well as all other stakeholders.
All
Regular communications have been made throughout the Coronavirus pandemic with all stakeholder groups to ensure that there is a clear and consistent
understanding of our Coronavirus response.
Renewal of Banking Facilities – The Group’s revolving Credit
Facility expired in June 2020 and revised terms were successfully
negotiated by the Board despite the severe pressure on banks
created by the need to provide government supported loans across a
wide area of the economy. New facilities of up to £20.5m were agreed
with HSBC with the committed element agreed through to 2023.
Customers
Shareholders
Colleagues
Suppliers
While the Coronavirus pandemic created liquidity concerns in some
sectors of the economy, the Group’s liquidity was not sufficiently
impacted. We were able to provide reassurance as to our financial
position and facility headroom to all commercial partners, alleviating
any immediate concerns. The renewal process secured funding for
the medium term should there be any further disruption to the financial
system, and available finance
Arranging appropriate finance is part of the long term financial security of the Group, which benefits all stakeholders. We provide updates on the Group’s financial
performance to colleagues in a variety of ways, via team meetings, newsletters, colleague forum meetings and emails and opportunities to ask questions directly
to the Chief Executive.
Carmarthen Mill Capacity Investment - As part of the Group’s
periodic review of corporate plans, the South Wales milk-field was
identified as a geographic area of importance for future growth
development. To facilitate this opportunity the Board considered
and provisionally approved plans to increase the feed production
capacity at the our mill in Camarthen which manufactures compound
and blend feed. The investment is expected to exceed £5m over a
three to four year period and make the business the predominant
manufacturer in the area.
Customers
Shareholders
Colleagues
Suppliers
The investment commitment provides confidence to customers to
trade with the business, while Colleagues are assured of long term
high quality employment in uncertain times. The attractive potential
returns for the Business will also enhance the Group as an investment
proposition for Shareholders.
Colleagues across the business have been involved in formulating these investment plans. The Carmarthen Mill manager has played an active role in rolling out the
communication to the wider colleague group, and together we look forward to being to increase our local offering to Dairy farmers in South Wales
Review of Sales Channels – The Board recognised that evolving
customer buying preferences required a review of the traditional
routes to market used by the Business, and that further investment
would be required in different channels. This included identifying an
optimal Merchanting depot network, the establishment of a new call
centre based trading desk, and the creation of a comprehensive
digital commercial strategy.
All
The long term continued success of the business is in the best interest
of all stakeholders, and this can only be achieved through ensuring
Customer satisfaction. While the review has caused some short-term
adverse impacts, particularly to colleagues in some locations closed
during the year, the long term streamlining of costs in the supply chain
will ensure the continued competitiveness of the Business.
Colleagues from all operational areas have contributed to our strategy to optimise sales channels. Any colleagues adversely impacted by closures have been
communicated to in person by senior members of staff. As plans become appropriately progressed, communications have been made to the wider colleague base,
for example, when the new call centre based trading desk was launched.
Further examples of the Group’s engagement with Customers, Suppliers and Colleagues are referenced in the Chairman’s Statement, Chief Executive’s Review and
Finance Review sections of this Strategic Report.
40
www.wynnstayplc.co.uk ANNUAL REPORT AND ACCOUNTS 2020 Directors’ Responsibility Statement of the directors in respect of the
Annual Report and Accounts, Strategic Report and Directors’ Report and
the Financial Statements
The Directors are responsible for preparing the Annual Report and
Accounts, Strategic Report and Directors’ Report and the financial
statements in accordance with applicable law and regulations.
The Directors are responsible for keeping adequate accounting
records that are sufficient to show and explain the Parent Company’s
transactions and disclose with reasonable accuracy at any time the
financial position of the Parent Company and enable them to ensure
that the financial statements comply with the Companies Act 2006.
Company law requires the Directors to prepare Group and Parent
Company financial statements for each financial year. Under that law
they have elected to prepare both the Group and the Parent Company
financial statements in accordance with international accounting
standards in conformity with the requirements of the Companies Act
2006 and applicable law. As required by the AIM Rules of the London
Stock Exchange they are required to prepare the Group financial
statements in accordance with international accounting standards
in conformity with the requirements of the Companies Act 2006 and
applicable law and have elected to prepare the Parent Company
financial statements on the same basis.
Under Company law the 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 Parent Company and of their
profit or loss for that period. In preparing each of the Group and Parent
Company financial statements, the Directors are required to:
•
select suitable accounting policies and then apply them select
suitable accounting policies and then apply them consistently;
• make judgements and estimates that are reasonable and
prudent;
•
•
state whether they have been prepared in accordance with
in accordance with international accounting standards in
conformity with the requirements of the Companies Act 2006;
and
prepare the financial statements on the going concern basis
unless it is inappropriate to presume that the Group and the
Parent Company will continue in business.
They have general responsibility for taking such steps as are reasonably
open to them to safeguard the assets of the Group and to prevent and
detect fraud and other irregularities.
Under applicable law and regulations, the Directors are also responsible
for preparing a Directors’ Report, Corporate Governance Statement
and Directors Remuneration Statement that complies with that law
and those regulations.
The Directors are responsible for the maintenance and integrity of
the corporate and financial information included on the Company’s
website. Legislation in the United Kingdom governing the preparation
and dissemination of financial statements may differ from legislation in
other jurisdictions.
By order of the Board
Claire Williams
Company Secretary
26 January 2021
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ANNUAL REPORT AND ACCOUNTS 2020 Wynnstay Group Plc
Board of Directors and Company Secretary
RC
NC
James John McCarthy
Chairman
Jim joined the Board in July 2011 and was appointed Chairman of the Group in November 2013. He has over
40 years’ experience in fast-moving retail industry, having served as CEO of Poundland Group plc, MD of
Convenience at J Sainsbury plc, and 10 years as CEO of T&S Store plc. Jim is also Non-Executive Chairman at
UP Global Sourcing Holdings plc.
KEY SKILLS
Sector experience
Strategy and leadership
Mergers and acquisitions
AC
RC
NC
Philip Michael Kirkham
Vice-Chairman / Senior Independent Non-Executive Director
Philip joined the Board in April 2013. He runs a mixed farming business in the West Midlands and has signifi cant
experience in the UK livestock sector. He is also Non-Executive Chairman of Meadow Quality Limited, a multi-
species livestock marketing business.
KEY SKILLS
Sector experience
Strategy and leadership
AC
NC
Howell John Richards
Independent Non-Executive Director
Howell joined the Board in July 2014. He has signifi cant experience within the agricultural industry and has
established a large dairy enterprise business in South Wales. As a member of a number of well recognised
committees, Howell promotes the UK dairy industry and supports initiatives for young entrants into UK farming.
KEY SKILLS
Sector experience
Strategy and leadership
AC
Stephen Ellwood
Independent Non-Executive Director
Steve joined the Board in April 2016. He has a wealth of experience within the UK agriculture and agri-food
sectors after spending 10 years as Head of Agriculture at HSBC, following on as Head of Food and Agriculture
at Smith & Williamson for four years. Steve is also a Non-Executive Director at NIAB, AH Worth and Company
and Velcourt Group.
KEY SKILLS
Sector experience
Strategy and leadership
Mergers and acquisitions
£
Finance
42
www.wynnstayplc.co.uk ANNUAL REPORT AND ACCOUNTS 2020
NC
Gareth Wynn Davies
Chief Executive Offi cer
Gareth was appointed to the Board as Chief Executive in May 2018. He joined Wynnstay in 1999 as Sales
Manager for South Wales and became Head of Agriculture in 2008. He is also a Non-Executive Director at Hybu
Cig Cymru - Meat Promotion Wales.
KEY SKILLS
Sector experience
Sales and marketing
Strategy and leadership
Mergers and acquisitions
Bryan Paul Roberts
Finance Director
Paul joined the Board in 1997. He joined Wynnstay in 1987 having previously worked in the animal feed industry.
He is a Fellow of the Chartered Institute of Management Accountants.
KEY SKILLS
Sector experience
Company secretarial
Mergers and acquisitions
£
Finance
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Claire Alexander Williams
Company Secretary
Claire became Company Secretary in January 2020. She joined Wynnstay in 2017 as Group Financial Controller.
She is a member of the Institute of Chartered Accountants in England and Wales.
KEY SKILLS
Company secretarial
£
Finance
COMMITTEE MEMBERSHIP
AC Audit Committee
NC Nominations Committee
RC Remuneration Committee
Committee chair
ANNUAL REPORT AND ACCOUNTS 2020 Wynnstay Group Plc 43
Senior Management
David Andrew Thomas Evans
Group Operations and Feeds Director
Andrew joined Wynnstay in 1996 as Marketing Manager and became Retail Manager in 2003. He also owns a
dairy farm in Mid Wales.
KEY SKILLS
Sector experience
Sales and marketing
Strategy and leadership
David Chadwick
Managing Director, Glasson Grain
Dave joined the Group in August 2006 when Wynnstay acquired Glasson Grain. Dave has signifi cant commercial
experience in international trading of animal feeds and fertiliser.
KEY SKILLS
Strategy and leadership
Sales and marketing
Operations and supply chain
Stuart Dolphin
Arable Director
Joined the Group in May 2011 when Wynnstay acquired Wrekin Grain which subsequently became GrainLink.
Stuart has signifi cant commercial experience in commodity trading and arable farming, including seed, fertiliser
and agronomy.
KEY SKILLS
Strategy and leadership
Sales and marketing
Operations and supply chain
Samantha Jayne Roberts
Group Personnel Manager
Samantha joined the Group in July 2000 and held a variety of roles before assuming Group Personnel Manager
in July 2005.
KEY SKILLS
Human resource management and development
Health and safety
44
www.wynnstayplc.co.uk ANNUAL REPORT AND ACCOUNTS 2020
BUSINESS SNAPSHOT -
Our Specialists- Calf & Youngstock Team
Within the business we have a
number of sector specific specialist
teams who are dedicated to offering
our customers expert advice.
Our Calf & Youngstock Team work
directly with farmers to ensure the
management of youngstock on-
farm is to the highest health and
welfare standards possible, in turn
ensuring maximum productivity.
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Our team of eight Calf & Youngstock
Specialists cover the entire Wynnstay
trading area and offer an extensive
range of on-farm support services,
at no extra cost, to enable our
customers to grow their farm output.
The team provide further opportunities
for knowledge transfer to customers
by holding on-farm workshops
and through the production and
communication of training guides
and specialist publications.
45
ANNUAL REPORT AND ACCOUNTS 2020 Wynnstay Group Plc 45
ANNUAL REPORT AND ACCOUNTS 2020 Wynnstay Group Plc
Directors’ Report
For the year ended 31 October 2020
The Directors present their report together with the audited financial statements of the Parent Company (“the Company”) and the Group for the
year ended 31 October 2020.
INFORMATION CONTAINED WITHIN OTHER PARTS OF THE ANNUAL REPORT AND ACCOUNTS
Further information on the activities of the business, Group strategy, likely future developments and principal risks and uncertainties are contained
in the Strategic Report.
RESULTS AND DIVIDENDS
Interim dividend per share paid
Final dividend per share proposed
Total dividend
Group revenue
Group profit after tax
DIRECTORS AND THEIR INTERESTS
2020
4.60p
10.00p
14.60p
2020
£000
431,398
5,533
2019
4.60p
9.40p
14.00p
2019
£000
490,602
6,132
Subject to approval at the Annual General meeting, the final dividend
will be paid on 30 April 2021 to shareholders on the register at the
close of business on 06 April 2021. The share price will be marked
ex dividend with effect 01 April 2021. In accordance with the rules of
the Company’s script dividend scheme, eligible shareholders will be
entitled to receive their dividend in the form of additional shares. New
mandate forms for this scheme should be signed and lodged with the
Company Secretary 14 days before the dividend payment date of 30
April 2021.
Details of authorised and issued share capital and the movement in the
year is detailed in note 26 to the financial statements.
The Directors who held office during the year and as at 31 October 2020 had the following interests in the ordinary shares of the Company:
Gareth Davies
Steve Ellwood
Andrew Evans
Philip Kirkham
Jim McCarthy
Howell Richards
Paul Roberts
25p Ordinary Shares
SAYE Options
Discretionary Options
2020
31,787
4,700
23,377
11,137
50,000
2,810
98,998
2019
21,091
4,700
22,130
1,077
34,700
2,810
98,498
2020
7,795
-
2,618
-
-
-
2019
7,986
-
-
-
-
-
2020
35,896
-
20,226
-
-
-
2019
8,000
-
-
-
-
-
6,857
3,121
30,318
8,000
Further information on the Directors’ discretionary options, including the performance criteria, can be found in the Directors’ remuneration
Report, with the numbers shown in the above table representing the maximum available to vest.
In addition to the above shareholdings, Gareth Davies and Paul Roberts are trustees of the Company’s Employee Share Ownership Plan trust
which at the year end held 16,834 shares (2019: 16,834 shares). Accordingly, these directors were deemed to hold an additional non-beneficial
holding in such shares.
No director at the year end held any interest in any subsidiary or associate company.
Further details on related party transactions with Directors are provided in note 31 to the financial statements.
Under Article 91, two directors will retire from the Board by rotation at the Annual General Meeting on 23 March 2021 and being eligible, offer
themselves for re-election.
During the year, the Company purchased and maintained liability insurance for its Directors and Officers which remained in force at the date of
this report.
SHARES AND SUBSTANTIAL SHAREHOLDINGS
At 31 October 2020, the following shareholders held 3% or more of the issued share capital of the Company:
Registered Shareholder
Beneficial Holder
Number
of shares
% of issued
share capital
Lion Nominees Limited
Discretionary managed funds of Close Asset Management Limited
2,505,019
12.5
Euroclear Nominees Limited
Discretionary managed funds of DBAY Partners
Rulegale Nominees Limited
Discretionary managed funds of James Sharp & Co
1,276,769
691,801
4.8
3.2
The Directors are not aware that any other person, Company or Group of Companies held 3% or more of the issued share capital of the Company.
46
www.wynnstayplc.co.uk ANNUAL REPORT AND ACCOUNTS 2020 At the Annual General Meeting held on the 24 March 2020 the Directors received authority from the shareholders to:
•
Allot shares
This gives Directors the authority to allot shares and maintains flexibility in respect of the Company’s financing arrangements. The nominal value
of ordinary shares which the Director may allot in the period up to the next Annual General Meeting to be held on 23 March 2021 is limited to
£450,000. The directors do not have any present intention of exercising this authority other than in connection with the issue of ordinary shares
in respect of the Company’s share option plans. This authority will expire on 23 March 2021, but the Directors intend to seek to renew the same
•
Disapplication of rights of pre-emption
This disapplies rights of pre-emption on the allotment of shares by the Company and the sale of treasury shares. This authority allows the
Directors to allot equity securities for cash pursuant to the authority to allot shares mentioned above, and to sell treasury shares for cash without a
pre-emptive offer to existing shareholders, up to an aggregate amount of £450,000. This authority will expire on 23 March 2021, but the Directors
intend to seek to renew the same.
•
To buy own shares
This authority allows the Company to buy its own shares in the market, as permitted under the Articles of Association of the Company, up to a
limit of 500,000 ordinary shares. The Directors have no immediate plans to exercise the powers of the Company to purchase its own shares and
would only plan to do so if they were satisfied that a purchase would result in an increase in expected earnings per share and was in the best
interests of the Company at the time. This authority will expire on 23 March 2021, but the Directors intend to seek to renew the same.
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DIRECTORS’ STATEMENT AS TO DISCLOSURE OF
INFORMATION TO AUDITORS
The Directors who were members of the Board at the time of approving
the Directors’ Report are listed on pages 42 to 43.
Having made enquires of fellow Directors each of these Directors, at
the date of this report, confirms that:
•
•
to the best of each Director’s knowledge and belief, there is
no relevant audit information of which the Group’s auditor is
unaware; and
each Director has taken all the steps a director might
reasonably be expected to have taken to be aware of relevant
audit information and to establish that the Group’s auditor is
aware of that information.
This confirmation is given and should be interpreted in accordance
with the provisions of s418 of the Companies Act 2006.
INDEPENDENT AUDITORS
BDO LLP have indicated their willingness to continue in office and
accordingly a resolution proposing their reappointment will be
submitted to the Annual General Meeting.
By order of the Board
Claire Williams
Company Secretary
26 January 2021
COLLEAGUES
The Group has procedures for keeping its colleagues informed about
the progress of the business, and more information is available in the
ESG report on page 35.
The Group continues to encourage employee motivation by operating
a Savings Related Share Option Scheme open to all employees.
The Group provides training and support for all employees where
appropriate and gives a full and fair consideration to disabled applicants
in respect of duties which may be effectively performed by a disabled
person. Where existing employees become disabled, the Group will
seek to continue employing them, bearing in mind their disability and
provided suitable duties are available. Failing this, all attempts will
be made to provide a continuing income. No colleagues have been
furloughed during the coronavirus pandemic.
Health and Safety matters are a high priority issue for the Board, who
consider a monthly report on developments and any incidents that
may have occurred, including accidents and near misses.
PAYMENT OF SUPPLIERS
The Group agrees terms and conditions with suppliers before business
takes place and, while there is no Group code or standard it is not
Group policy to extend supplier payment terms beyond that agreed.
There are no suppliers subject to special arrangements.
The average credit terms for the Group as a whole based on the year
end trade payables figure and a 365 day year is 44 days (2019: 56
days).
LAND AND BUILDINGS
In the opinion of the Directors, the current open market value of the
Group’s interest in land and buildings exceeds the book value at 31
October 2019 as provided in note 16 to the financial statements by
approximately £6,200,000 (2019: £6,200,000).
POLITICAL AND CHARITABLE DONATIONS
Details of support to the community is given in ESG report on page 35.
There were no political donations during the year (2019: none).
47
ANNUAL REPORT AND ACCOUNTS 2020 Wynnstay Group Plc
BOARD REMUNERATION POLICY
All matters relating to remuneration of the Directors of the Company
are determined by the Remuneration Committee whose decisions
are made with a view to achieving the broad objective of rewarding
individuals for the nature of their work and the contribution they make
towards the Group achieving its business objectives. Proper regard is
given to the need to recruit and retain high quality and motivated staff
at all levels and to ensure the effective management of the business.
The Committee will be cognisant of comparative pay levels after taking
into account geographic location and the operations of the business
and takes appropriate external professional advice where considered
necessary.
The remuneration policy for Directors is set so as to achieve the above
objectives and is broadly split into Executive and Non-Executive
categories, and consists of the following components in each sub
category:
Directors’ Remuneration Report
Board Remuneration
INTRODUCTORY STATEMENT
As Chair of the Remuneration Committee and on behalf of the Board of
Directors, I am delighted to present our report on Board remuneration
for the Financial Year ended 31 October 2020.
Our approach to remuneration
The Committee’s approach to remuneration is based on offering a
competitive but not excessive reward package for Executive Directors
that aligns their pay with the strategy of the Group. We seek to
encourage, incentivise and motivate those behaviours in our Executive
Directors which we believe will deliver long-term success for the Group
and strong returns for its shareholders. In addition to seeking to align
the interests of Executive Directors with those of shareholders, our
Policy seeks to adopt best practice and comply with all relevant laws
and corporate governance regulations, giving the Group a sound basis
for long-term growth and progression.
With regard to Executive Directors, the Committee will seek to ensures
that:
•
•
•
the remuneration packages offered are competitive within
the marketplace that the Company operates, allowing it to
attract and retain the talent necessary to deliver the results
demanded by the Board and the Company’s shareholders;
the performance-based elements of remuneration are aligned
with the Group’s strategic objectives, with measures that
reward exceptional achievement whilst avoiding rewarding
poor performance; and
the remuneration structures provide the mechanisms to
protect shareholders where necessary and adopt a sufficiently
long-term basis for aligning the interests of Executive Directors
with those of investors.
Committee decisions on remuneration
During 2020 the Committee granted the initial invitations under the
Performance Share Plan (“PSP”) long-term incentive arrangement
for Executive Directors and other Senior Managers which had been
approved by shareholders in March 2019. These invitations were in the
form of a grant of nil cost options over a number of shares equating to
up to 40% of the individual’s base salary divided by the market price
of shares on the day before the grant. The number of shares eligible
to vest after three years will depend on stretching performance targets
based on diluted earnings per share growth (75%) and the Group’s
return on capital employed (25%).
The Committee also introduced the revised Annual Performance
Bonus schemes for Executive Directors during 2019 which contained
ambitious performance criteria including targets based on profit before
tax covering 75% of the potential maximum bonus and stretching,
specific and measurable strategic and/or individual objectives covering
25%.
In line with comparable companies, the Committee proposes that
under the Remuneration Policy:
•
•
the maximum bonus opportunity in the APB will be 100% of
base salary in the case of all Executive Directors; and
the maximum award opportunity under the PSP will be over
shares with a market value at grant of 100% of base salary.
The performance criteria attached to all awards will ensure that the
maximum opportunity will only be realised in the event of exceptional
performance, and no payments will be made where performance has
been inadequate.
The Remuneration Committee remains fully committed to an open and
honest dialogue with our shareholders, and we welcome your views on
any aspects of remuneration at any time.
48
www.wynnstayplc.co.uk ANNUAL REPORT AND ACCOUNTS 2020 EXECUTIVE DIRECTORS:
Basic Salary
Purpose: To provide an appropriate amount of basic fixed income to enable the recruitment and retention of effective management to implement
Group strategy.
Operation: The Committee reviews base salaries on an annual basis, consistent with the reviews conducted for other employees. The review
takes into account:
•
•
•
•
•
•
absolute and relative Group profitability;
any changes to the scope of each role and responsibilities;
any changes to the size and complexity of the Group;
salaries in comparable organisations;
pay increases elsewhere in the Group; and
the impact of any increases to base salary on the total remuneration package.
Maximum opportunity: The Remuneration Committee has set no overall maximum on salary increases, as it believes that this creates an
anchoring effect for Executive Directors and other employees.
Performance measures: None, although individual performance, skills and experience are taken into consideration by the Remuneration
Committee when setting salaries.
Annual Bonus Plan (ABP)
Purpose: To incentivise the Executive Directors to deliver the Group’s corporate strategy by focusing on annual goals that are consistent with
longer-term strategic objectives.
Operation: Bonus targets are reviewed and set on an annual basis. Pay-out levels are determined by the Remuneration Committee after the year-end,
after completion of the audit, based upon a rigorous assessment of performance against the targets.
Malus provisions apply for the duration of the performance period and any deferral period allowing the Remuneration Committee to reduce to
zero any unvested or deferred awards. Clawback provisions apply to cash amounts paid and shares or cash released for three years following
payment or release, allowing the Remuneration Committee to claim back all or any amount paid or released.
The circumstances in which malus and/or clawback provisions may be triggered include:
•
•
•
if the assessment of any performance condition was based upon erroneous or inaccurate or misleading information;
if a material misstatement is discovered that results in the audited accounts of the Group being adjusted; or
in the event of any action or conduct of a participant that amounts to fraud or gross misconduct.
Maximum opportunity: The maximum annual bonus opportunity that can be earned for any year is capped at 100% of base salary for all
Executive Directors. Payments at or approaching these levels would require an exceptional level of performance.
Performance measures: The payment of awards under the APB is dependent upon performance conditions based upon:
•
•
profit before tax (PBT) after accrual for bonus payments (75% weighting);
stretching, specific and measurable strategic and/or individual objectives. (25% weighting).
The Remuneration Committee believes the chosen metrics are suitably aligned with the Group’s strategy and are focused on delivering long-term
growth and shareholder return.
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Wynnstay Profit Related Pay
Purpose: An all-employee scheme in which the Executive Directors participate on the same basis as all other employees, designed to encourage
achievement of profit budgets within main trading subsidiaries.
Operation: An employee scheme to reward all staff with a pro-rata profit share, based on a pre-set formula. Paid in February following the
announcement of the financial results for the previous year, after completion of the annual audit.
Performance measures: Based upon the pre-tax profit of two trading subsidiaries, as a net percentage of revenues adjusted for commodity
inflation and subject to a total cap on the overall all-employee pay-out of 10% of profits of the participating companies.
Performance Share Plan (PSP)
Purpose: To incentivise Executive Directors to focus on the long-term strategic objectives of the Group and to deliver substantial shareholder
value, aligning their interests with the interests of shareholders.
Operation: Awards may be granted annually under the PSP and will consist of rights over shares with a value calculated as a percentage of base
salary. Vesting is subject to the Group’s performance, measured over three years and is followed by a holding period in respect of 50% of the
vested shares, of which one half are released after a one-year holding period and one half after a two-year holding period. Malus provisions apply
for the duration of the performance period and shares held under deferral arrangements, allowing the Remuneration Committee to reduce to zero
any unvested or deferred awards. Clawback provisions apply until two years after the date upon which any entitlement becomes unconditional,
allowing the Remuneration Committee to claim back all or part of the value of any shares vested.
The circumstances in which malus and/or clawback provisions may be triggered are as stated in relation to the APB above.
The principal terms of the PSP were approved by shareholders at the 2018 AGM.
Maximum opportunity: The maximum PSP award opportunity per Executive Director, in respect of any financial year, is limited to rights over
shares with a market value at grant of 100% of base salary.
Performance measures: The vesting of all awards made under the PSP is dependent upon performance conditions based upon:
•
•
EPS growth (75% weighting)
Return on capital employed (25% weighting)
The Remuneration Committee believes the chosen metrics are suitably aligned with the Group’s strategy and are focused on delivering long-term
growth and shareholder return.
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ANNUAL REPORT AND ACCOUNTS 2020 Wynnstay Group Plc
Directors’ Remuneration Report continued
All-employee share plans
Purpose: To align the interests of the broader employee base with the interests of shareholders and to assist with recruitment and retention.
Operation: The Group currently operates a HM Revenue & Customs-approved Save As You Earn plan. In accordance with the relevant tax
legislation, the Executive Directors are entitled to participate on the same basis (and subject to the same maximums) as other Group employees.
Maximum opportunity: As determined by the statutory limits in force from time to time.
Performance measures: None.
Pension
Purpose: To provide an income for Executive Directors during their retirement and enable the Group to recruit and retain suitable individuals.
Operation: Fixed company contributions expressed as a percentage of current basic salary for each individual are paid into a personal pension
scheme held in that individual’s name. In addition, death in service cover provides for four times current annual salary paid into trust, where death
occurs during the term of the Director’s employment contract. .
Benefits
Purpose: To attract and retain suitable Executive Directors and assist Executive Directors in the performance of their duties.
Operation: The benefits provided by the Group to Executive Directors are currently restricted to the provision of a company car and private
medical insurance.
Maximum opportunity: Dependent upon the cost of providing the relevant benefits and the individual’s personal circumstances. The
Remuneration Committee examines the cost of benefit provision and will only agree to provide benefits that are in line with market practice and
cost-effective for the Group.
Performance measures: None.
The executive director’s remuneration terms are detailed in individual contracts of employment and associated amendment documentation,
which amongst other points contain standard details as follows:
•
•
•
•
•
Notice period to be given by the Company is twelve months.
Notice period to be given by the Director is six months.
Paid holiday entitlement of 23 days plus bank holidays.
Post employment restrictive covenants lasting twelve months.
Standard non-compete restrictions during employment.
NON-EXECUTIVE DIRECTORS:
Basic Annual Fee
Purpose: To attract and retain a balanced skill set of individuals to ensure strong stewardship and governance of the Group.
Operation: Fees are set so as to reflect the factors pertinent to respective positions, taking into account the anticipated amount of time
commitment, and comparative rates paid by other companies of a similar size. The Non-Executive Directors do not participate in share option
awards, performance bonuses or pension arrangements. Fees are reviewed by the Remuneration Committee on an annual basis.
Travelling Expenses
Purpose: To reimburse legitimately incurred costs of attending necessary Board and associated meetings.
Operation: Pre-set rates used to reimburse mileage, travel, accommodation and other incurred expenses in line with those used for other
employees.
Medical Insurance Benefit
Purpose: To assist Directors in the completion of their duties.
Operation: Benefits restricted to the provision of private medical insurance for those directors who do not have alternative arrangements in
place.
The non-executive director’s remuneration terms are detailed in individual letters of appointment, which amongst other points contain standard
details as follows:
•
•
•
Initial appointment for a period of twelve months.
Renewal of appointment for a fixed period of three years after initial twelve months.
Post employment restrictive covenants lasting twelve months.
50
www.wynnstayplc.co.uk ANNUAL REPORT AND ACCOUNTS 2020 Remuneration Report
EXECUTIVE DIRECTOR REMUNERATION
In line with the above policy, the Remuneration Committee have approved the following details of executive director remuneration, which are
designed to ensure both the continued competitiveness of remuneration levels, and the satisfaction of current investor expectations with regard
to governance arrangements for Long Term Incentive Plans:
Basic Salaries. A current annual salary effective from November 2020, is shown in the table below in column A. The previous annual salary,
where relevant, is shown in column B, with the actual amounts received during the last financial year shown in column C.
Basic Salary
Executive Director
G W Davies
B P Roberts
D A T Evans
Column A
Column B
Column C
Current Basic
Previous Basic
Actual Salary
Salary
Salary
Received as a Director
£000
206
165
N/A
£000
204
163
148
Nov 18 – Oct 19
£000
204
163
148
Annual Performance Bonuses and Profit Related Pay. The bonus payments made to executive directors in June 2020, and therefore during
the financial year under review, were in relation to the performance of the business for the financial year 2018/19. These payments were made
under the auspices of the new Annual Performance Bonus scheme which includes potential payments of up to 75% of basic salary based on
the Group’s financial performance, and up to 25% based on stretching, specific and measurable strategic and/or individual objectives. The
respective bonus payments made for the financial year ending October 2019, received in June 2020, in relation to both the financial performance
and personal objectives elements of the Annual Performance Bonus scheme are shown in the table below in columns A & B respectively. The
prior year comparatives relate to payments made in relation to financial year 2017/18 under old contractual bonus schemes based on fixed
percentages of the profits of certain business units.
The Executive Directors also participate in the Wynnstay Profit Related Pay Scheme, (“PRP”) which is a scheme for employees of Wynnstay
Group plc and Grainlink Limited, and which pays an annual bonus based on a formula which produces a percentile result which is then applied
to the relevant individual’s prior year earnings. The formula calculation is the aggregate of the pre-tax profit of Wynnstay (Agricultural Supplies)
Limited and Grainlink Limited divided by the aggregate of the combined revenues. The scheme is subject to a limiting factor preventing the total
paid under the arrangements from exceeding 10% of the profits of the participating companies. The relevant rate for 2019, paid in February 2020,
was 1.9% (2019: 3.1%), with the actual PRP paid to each individual executive shown in Column C below. The anticipated rate for 2020, to be
paid in February 2021 relating to the last financial year is 2.5% of relevant earnings.
Bonuses £000
Column A
Column B
Column C
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Executive Director
Financial Performance
Personal Objectives
Total 2020
Total 2019
G W Davies
B P Roberts
D A T Evans
Nil
Nil
Nil
30
20
7
30
20
7
46
52
46
Feb 20
PRP received
Feb 19
5
4
3
2
4
4
51
ANNUAL REPORT AND ACCOUNTS 2020 Wynnstay Group Plc
Directors’ Remuneration Report continued
Pension and death in service life cover. Individual Company contributions to personal pension plans are based on the value of the Executive
Directors basic salary only. The annual defined Company contributions to a personal pension scheme held in the individual’s name, expressed
as a percentage of basic salary, and the amounts paid on behalf of each individual for their period of service as a director during the last financial
year, are shown in the table below under column A and column B respectively. The death in service life assurance cover is provided in a Group
policy covering all members, with individual costs attributed to separate members being unavailable. However, the scheme to which all the
executive directors belong, had a total renewal cost at November 2019 of £81,180 (2018: £81,165), and there were 667 (2018: 631) members
covered, equating to an average cost of £122 per person (2018: £129).
Pension
Executive Director
Gareth Davies
Paul Roberts
Andrew Evans
Column A
Pension %
Column B
Pension Contribution
9.6%
9.6%
9.6%
£000
20
19
14
Benefits in kind. Each executive director was supplied with a company car during the financial year, primarily for the furtherance of their duties.
However, these vehicles were available for the executive’s private use and as such have a taxable benefit in kind value calculated in accordance
with HMRC rules. These values for the tax year ending April 2020 are shown in the table below in column A. Executives refund the cost of fuel they
use for private motoring on a monthly basis. Additionally, the Company pays the cost of providing private medical insurance for the executives to
ensure that should they require treatment this is provided as quickly as possible and minimises any period of potential absence from their duties.
The cost to the Company of this cover for each individual in 2019 is shown below in column B.
Benefits in kind
Executive Director
Gareth Davies
Paul Roberts
Andrew Evans
Column A
Column B
Company Car Value
Private Medical Cover
£11,337
£12,028
£6,695
£618
£618
£425
From the end of the tax year ending April 2020, B P Roberts surrendered the provision of the company car previously supplied to him in return
for a monthly car allowance of £600. He therefore received a total of £4,200 for the period April 2020 to October 2020.
Long-Term Incentives. The Remuneration Policy provides for a Performance Share Plan (PSP) to incentivise executive directors to focus
on the long-term strategic objectives of the Group and to deliver substantial shareholder value, aligning their interests with the interests of
shareholders. This PSP is intended to grant option awards annually, with rights over shares to a value calculated as a percentage of base salary.
Other conditions are explained in the Remuneration Policy above. Grants of options under this arrangement were made in January 2020 to three
executive directors each with rights over shares to the value of 40% of their respective annual salaries, as at the date of grant, and as shown in
the combined option table below. Which shows all outstanding options open at the year end.
The performance criteria attached to the PSP options are as follows:
1. 75% of the Award Shares will vest if the Company’s Earnings Per Share (“EPS”) grows at an annual rate exceeding the rate of growth
of the Retail Price Index (“RPI”) plus 8%. Where this growth is not met, provided EPS grows at an annual rate of at least RPI plus 1%,
30% of the Award Shares tested under the EPS target will vest. Between these criteria, the Award Shares will vest on a straight-line basis.
2. 25% of the Award Shares will vest if the Company’s Return on Capital Employed (“ROCE”) increases to at least 12.6% for the financial
year ending 31 October 2022. Where this target is not met, provided a minimum ROCE employed of 10% is met, the Award Shares will
vest between these two criteria on a straight-line basis.
Outstanding options as at October 2020 for directors who had served during the year.
Share Option Table
PSP LTIP Schemes
Other Outstanding Options
Executive Director
G W Davies
B P Roberts
D A T Evans
Maximum Award
No. of Options
SAYE
No. of Options
CSOP
No. of Options
27,896
22,318
20,226
7,795
6,857
2,618
8,000
8,000
Nil
Further information relating to the PSP is set out in the Rules of the scheme which are published on the Group’s website at
https://wynnstayplc.co.uk/corporate-governance/wynnstay-performance-share-plan/
52
www.wynnstayplc.co.uk ANNUAL REPORT AND ACCOUNTS 2020
Other Share Schemes. The executive directors have in the past participated in the discretionary Approved Company Share Option Plan
(CSOP), which is a tax efficient scheme providing the opportunity to hold up to £30,000 of option value, which, if the scheme rules and legislation
are complied with, can be exercised free of income tax liability for the holder. The current outstanding options are shown in a table above and
are exercisable up to March 2022 without any performance criteria attached to them. Additionally, the current executive directors are eligible to
participate in Save As You Earn (SAYE) option invitations, subject to the scheme and legislative limitations. Such options held by the executive
directors, as at October 2020 are also shown in the table above, and again do not have any performance criteria attached to them. Depending
on the particular scheme, they are exercisable between August 2021 and March 2024, with further details provided in the Director’s Report on
page 36 and in Note 9 to the accounts.
NON-EXECUTIVE DIRECTOR REMUNERATION
The remuneration of the Non-Executive Directors is and has been paid in accordance with the policy outlined above and has been set so
as to reflect the factors pertinent to their respective positions. The 2020/2021 information in the table below reflects a decision made by the
Remuneration Committee to increase Non-Executive Director fees for the first time since 2016. The increase was in line with the general award
given to colleagues over the 2016 to 2020 time period. Details of the amounts received during the last financial year and the current levels of
Basic Annual Fees being paid are given in the table below:
Non-Executive Director
Financial Year ending 31 October 2020
Financial Year ending 2020/2021
J J McCarthy
P M Kirkham
S J Ellwood
H J Richards
Basic Fee
£000
Benefits in
kind
£000
Travelling
Expenses
£000
Current Basic
Fee
£000
50
34
34
34
0
1
0
1
1
1
2
1
54
37
37
37
Benefits in kind
£000
0
1
0
1
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Philip M. Kirkham
Vice-Chairman and Chairman of Remuneration Committee
26 January 2021
53
ANNUAL REPORT AND ACCOUNTS 2020 Wynnstay Group Plc
Independent auditor’s report to the members of Wynnstay Group Plc
OPINION
We have audited the financial statements of Wynnstay Group Plc (the ‘parent
company’) and its subsidiaries (the ‘Group’) for the year ended 31 October
2020 which comprise the consolidated statement of comprehensive
income, consolidated and company balance sheets, consolidated and
company statement of changes in equity, consolidated and company cash
flow statements, principal accounting policies and notes to the financial
statements.
The financial reporting framework that has been applied in the preparation
of the Group and parent company financial statements is applicable law
and international accounting standards in conformity with the requirements
of the Companies Act 2006 and, as regards the parent company financial
statements, as applied in accordance with the provisions of the Companies
Act 2006.
In our opinion:
•
•
•
•
the financial statements give a true and fair view of the state of the
Group and of the parent company’s affairs as at 31 October 2020
and of the group’s profit for the year then ended;
the Group financial statements have been properly prepared in
accordance with international accounting standards in conformity
with the requirements of the Companies Act 2006;
the parent company financial statements have been properly
prepared in accordance with international accounting standards
in conformity with the requirements of the Companies Act 2006;
and
the financial statements have been prepared in accordance with
the requirements of the Companies Act 2006.
BASIS FOR OPINION
We conducted our audit in accordance with International Standards on
Auditing (UK) (ISAs (UK)) and applicable law. Our responsibilities under
those standards are further described in the Auditor’s responsibilities for the
audit of the financial statements section of our report. We are independent
of the parent company and the Group in accordance with the ethical
requirements that are relevant to our audit of the financial statements in
the UK, including the FRC’s Ethical Standard as applied to listed entities,
and we have fulfilled our other ethical responsibilities in accordance with
these requirements. We believe that the audit evidence we have obtained is
sufficient and appropriate to provide a basis for our opinion.
CONCLUSIONS RELATING TO GOING CONCERN
We have nothing to report in respect of the following matters in relation to
which the ISAs (UK) require us to report to you where:
•
•
the directors’ use of the going concern basis of accounting in the
preparation of the financial statements is not appropriate; or
the directors have not disclosed in the financial statements any
identified material uncertainties that may cast significant doubt
about the Group’s or the parent company’s ability to continue to
adopt the going concern basis of accounting for a period of at
least twelve months from the date when the financial statements
are authorised for issue.
KEY AUDIT MATTERS
Key audit matters are those matters that, in our professional judgment,
were of most significance in our 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) we identified, 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.
This matter was 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 this matter.
54
IMPAIRMENT OF GOODWILL
As described in Note 1 (accounting policies) and Note 13 (Goodwill), the
Group recognises goodwill of £14.3m (2019: £15m). Management are
required to review the carrying value of annually for impairment.
The Group continues to operate in an environment of fluctuating commodity
prices, competitor activity and pressure on margins. Management exercise
significant judgement in determining the underlying assumptions used in
the impairment review; the assumptions include the discount rate used,
the allocation of assets to cash generating units (CGU), the future growth
rates and the future cash flows attributed to each CGU. The sensitivities
associated with these reviews have been disclosed in Note 13.
An impairment of £601k (as disclosed in Note 13) relating to the Grainlink
CGU has been recorded.
The potential impairment of the group’s goodwill is a significant risk for the
audit given the judgements involved.
How we addressed the Key Audit Matter in the Audit:
• We checked the calculations in management’s model for the
impairment assessment by verifying the mathematical accuracy
of the model prepared. We also checked the model’s consistency
with the prior period which has been assessed by our valuation
specialists;
• We assessed the reasonableness of the assumptions underlying
management’s assessment of goodwill, including those around
short term and long term growth rate, future changes in cash
flows in particular within the Grainlink CGU by challenging the
appropriateness of any assumptions made against corroborating
evidence. We also assessed the discount rates used by
comparing these with internally and externally derived data and
using our own valuation specialists;
• We checked the allocation of assets to cash generating units
(CGU’s) ensuring accuracy;
• We considered the sensitivities performed by management as
an appropriate range of reasonably possible outcomes. We also
performed further sensitivity analysis on the key assumptions
noted above;
• We also assessed whether the Group’s disclosures about the
sensitivity of the outcome of the impairment assessment to
changes in key assumptions reflected the risks inherent in the
valuation of goodwill.
Key observations
Based on the work undertaken, we considered management’s judgements
in this area to be appropriate.
OUR APPLICATION OF MATERIALITY
Group materiality
2020
Group materiality
2019
Basis for materiality
£324,000
£375,000
5% of profit before
tax (2019: 5% of
profit before tax)
We apply the concept of materiality both in planning and performing our
audit, and in evaluating the effect of misstatements. We consider materiality
to be the magnitude by which misstatements, intruding omissions, could
influence the economic decisions of reasonable users that are taken on the
basis of the financial statements.
Importantly, misstatements below these levels will not necessarily be
evaluated as immaterial as we also take account of the nature of identified
misstatements, and the particular circumstances of their occurrence, when
evaluating their effect on the financial statements as a whole.
We consider profit before tax to be the most significant determinant of the
Group’s financial performance used by shareholders given the listed status
of the Group.
Performance materiality is the application of materiality at the individual
account or balance level set at an amount to reduce to an appropriately
low level the probability that the aggregate of uncorrected and undetected
misstatements exceeds materiality for the financial statements as a whole.
www.wynnstayplc.co.uk ANNUAL REPORT AND ACCOUNTS 2020 Performance materiality was set at £226,000 (2019: £262,500) which
represents 70% (2019: 70%) of the above materiality levels. This was the
threshold selected in response to the aggregation risk for the Group audit
and our assessment of the overall control environment and the low level of
misstatements in the past.
Whilst materiality for the financial statements as a whole was £324,000
(2019: £375,000), each component of the Group was audited to a
lower level of materiality. Audits of the components were performed at a
materiality level calculated by reference to a proportion of Group materiality
appropriate to the relative scale of the business concerned. The Parent
company materiality was £243,000 (2019: £45,000). We also applied
component materiality’s, which ranged from £130,000 to £291,000,
having regard to the mix of size and risk profile of the Group across the
components.
We agreed with the Audit Committee that we would report to the committee
all individual audit differences identified during the course of our audit in
excess of £9,000 (2019: £11,250). We also agreed to report differences
below these thresholds that, in our view, warranted reporting on qualitative
grounds.
MATTERS ON WHICH WE ARE REQUIRED TO REPORT BY
EXCEPTION
In the light of the knowledge and understanding of the Group and the
parent company and its environment obtained in the course of the audit,
we have not identified material misstatements in the strategic report or the
directors’ report.
We have nothing to report in respect of the following matters in relation
to which the Companies Act 2006 requires us to report to you if, in our
opinion:
•
•
•
•
adequate accounting records have not been kept the parent
company, or returns adequate for our audit have not been
received from branches not visited by us; or
the parent company financial statements are not in agreement
with the accounting records and returns; or
certain disclosures of directors’ remuneration specified by law are
not made; or
we have not received all the information and explanations we
require for our audit.
AN OVERVIEW OF THE SCOPE OF OUR AUDIT
Our Group audit was scoped by obtaining an understanding of the Group
and its environment, including Group-wide controls, and assessing the
risks of material misstatement at the Group level.
RESPONSIBILITIES OF DIRECTORS
As explained more fully in the Responsibility statement of the directors in
respect of the Annual Report and Accounts, Strategic Report and Directors’
Report and the Financial
The Group has 12 subsidiaries, 3 (2019: 3) of which were determined to be
significant components to the Group alongside the parent entity and were
subject to full scope audits.
Together with the parent company and its Group consolidation, which
was also subject to a full scope audit, these components represented
the principal business units of the group and accounted for 100% of the
Group’s revenue and profit before tax and 99% of the group’s assets.
The work on all significant components, including the audit of the parent
company, was performed by the Group audit team.
The remaining 1% of the total Group assets is represented by 5 reporting
components none of which contributed to the Group’s revenue or profit
before tax and none of which individually represented more than 1% of
total group assets. For these non significant components, BDO LLP
performed analytical reviews at an aggregated Group level to re-examine
our assessment that there were no significant risk of material misstatement
within these.
OTHER INFORMATION
The directors are responsible for the other information. The other information
comprises the information included in the annual report and financial
statements 2020, other than the financial statements and our auditor’s
report thereon. Our opinion on the financial statements does not cover the
other information and, except to the extent otherwise explicitly stated in
our report, we do not express any form of assurance conclusion 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 such material inconsistencies or apparent material
misstatements, we are required to determine whether there is a material
misstatement in 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 in this regard.
OPINIONS ON OTHER MATTERS PRESCRIBED BY THE
COMPANIES ACT 2006
In our opinion, based on the work undertaken in the course of the audit:
•
•
the information given in the strategic report and the directors’
report for the financial year for which the financial statements are
prepared is consistent with the financial statements; and
the strategic report and the directors’ report have been prepared
in accordance with applicable legal requirements.
Statements set out on page the directors are responsible for the preparation
of the financial statements and for being satisfied that they give a true
and fair view, and for such internal control as the directors 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.
AUDITOR’S 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 auditor’s 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.
A further description of our responsibilities for the audit of the financial
statements is located on the Financial Reporting Council’s website at:
www.frc.org.uk/auditorsresponsibilities. This description forms part of our
auditor’s report.
USE OF OUR REPORT
This report is made solely to the parent company’s members, as a body,
in accordance with Chapter 3 of Part 16 of the Companies Act 2006.
Our audit work has been undertaken so that we might state to the parent
company’s members those matters we are required to state to them in an
auditor’s report and for no other purpose. To the fullest extent permitted
by law, we do not accept or assume responsibility to anyone other than the
parent company and the parent company’s members as a body, for our
audit work, for this report, or for the opinions we have formed.
Stuart Wood (Senior Statutory Auditor)
For and on behalf of BDO LLP, Statutory Auditor
Manchester
United Kingdom
26 January 2021
BDO LLP is a limited liability partnership registered in England and Wales (with
registered number OC305127).
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55
ANNUAL REPORT AND ACCOUNTS 2020 Wynnstay Group Plc
Consolidated Statement of Comprehensive Income
For the year ended 31 October 2020
2020
2019
Note
£000
£000
£000
£000
Revenue
Cost of sales
Gross profit
Manufacturing, distribution and selling costs
Administrative expenses
Other operating income
Adjusted operating profit1
Intangible amortisation and share-based payments
Non-recurring items
Group operating profit
Interest income
Interest expense
Share of profits in joint ventures accounted for using the
equity method
Share of tax incurred by joint ventures
Profit before taxation
Taxation
Profit for the year and other comprehensive income
attributable to the equity holders
Basic earnings per ordinary share (pence)
Diluted earnings per ordinary share (pence)
2
4
5
5
3
3
7
10
12
12
431,398
(370,630)
60,768
(46,033)
(6,945)
351
8,141
(132)
(1,194)
6,815
(272)
438
6,981
(1,448)
5,533
27.73
27.57
164
(436)
538
(100)
490,602
(428,621)
61,981
(48,177)
(6,434)
385
7,755
(77)
(301)
7,377
(184)
360
7,553
(1,421)
6,132
30.95
30.95
164
(348)
463
(103)
The notes on pages 61 to 94 form part of these financial statements.
There was no other comprehensive income during the current or prior year.
1Adjusted results are after adding back amortisation of acquired intangible assets, share-based payment expense and non-recurring items.
56
www.wynnstayplc.co.uk ANNUAL REPORT AND ACCOUNTS 2020 Consolidated and Company Balance Sheet
For the year ended 31 October 2020
Registered Number 2704051
Group
2020
£000
Note
ASSETS
NON-CURRENT ASSETS
Goodwill
Investment property
Property, plant and equipment
Right-of-use assets
Investment in subsidiaries
Investments accounted for using equity method
Intangibles
CURRENT ASSETS
Inventories
Trade and other receivables
Financial assets
- loans to joint venture
Cash and cash equivalents
TOTAL ASSETS
LIABILITIES
CURRENT LIABILITIES
Borrowings
Lease liabilities
Trade and other payables
Current tax liabilities
NET CURRENT ASSETS
NON-CURRENT LIABILITIES
Borrowings
Lease liabilities
Trade and other payables
Deferred tax liabilities
TOTAL LIABILITIES
NET ASSETS
EQUITY
Share capital
Share premium
Other reserves
Retained earnings
Total Equity
Jim McCarthy – Director
Paul Roberts - Director
13
15
16
23
17
17
14
19
20
18
22
22
23
21
22
23
21
25
26
14,367
2,372
17,545
11,240
-
3,611
225
49,360
34,190
55,850
-
3,889
19,980
113,909
163,269
(1,572)
(3,483)
(52,326)
(784)
(58,165)
55,744
-
(6,509)
(141)
(276)
(6,926)
(65,091)
98,178
5,013
30,637
3,525
59,003
98,178
The Company generated profit of £2,325,000 (2019: profit of £3,142,000).
The financial statements were approved by the Board of Directors on 26 January 2021 and signed on its behalf.
The notes on pages 61 to 94 form part of these financial statements.
2019
£000
14,968
2,372
23,225
-
3,175
261
44,001
42,239
63,887
-
4,413
10,608
121,147
165,148
(3,686)
-
(62,113)
(894)
(66,693)
54,454
(3,078)
-
(201)
(228)
(3,507)
(70,200)
94,948
4,974
30,284
3,429
56,261
94,948
Company
2020
£000
-
2,372
8,937
41,961
191
-
53,461
-
-
-
3,889
7
3,896
57,357
(1,572)
-
(838)
(118)
(2,528)
1,368
-
-
-
-
-
(2,528)
54,829
5,013
30,637
3,356
15,823
54,829
2019
£000
-
2,372
9,095
42,562
191
-
54,220
-
-
-
4,413
7
4,420
58,640
(2,140)
-
(658)
(133)
(2,931)
1,489
(902)
-
-
-
(902)
(3,833)
54,807
4,974
30,284
3,260
16,289
54,807
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ANNUAL REPORT AND ACCOUNTS 2020 Wynnstay Group Plc
Consolidated Statement of Changes in Equity
As at 31 October 2020
Group
At 31 October 2018
Profit for the year
Total comprehensive income for the year
Transactions with owners of the Company, recognised directly in equity:
Shares issued during the year
Own shares disposed of by ESOP trust
Dividends
Equity settled share-based payment transactions
Total contributions by and distributions to owners of the Company
At 31 October 2019
Profit for the year
Total comprehensive income for the year
Transactions with owners of the Company, recognised directly in equity:
Shares issued during the year
Dividends
Equity settled share-based payment transactions
Total contributions by and distributions to owners of the Company
Share
capital
£000
4,943
Share
premium
account
£000
29,941
Other
reserves
Retained
earnings
Total
£000
3,377
£000
£000
52,812
91,073
-
-
31
-
-
-
31
-
-
343
-
-
-
343
-
-
-
3
-
49
52
6,132
6,132
6,132
6,132
-
-
374
3
(2,683)
(2,683)
-
49
(2,683)
(2,257)
4,974
30,284
3,429
56,261
94,948
-
-
39
-
-
39
-
-
353
-
-
353
-
-
-
-
96
96
5,533
5,533
5,533
5,533
-
392
(2,791)
(2,791)
-
96
(2,971)
(2,303)
At 31 October 2020
5,013
30,637
3,525
59,003
98,178
All amounts are derived from continuing operations.
The notes on pages 61 to 94 form part of these financial statements.
There was no other comprehensive income during the current and prior years.
58
www.wynnstayplc.co.uk ANNUAL REPORT AND ACCOUNTS 2020 Company Statement of Changes in Equity
As at 31 October 2020
Company
At 31 October 2018
Profit for the year
Total comprehensive income for the year
Transactions with owners of the Company, recognised directly in equity:
Shares issued during the year
Own shares disposed of by ESOP trust
Dividends
Equity settled share-based payment transactions
Total contributions by and distributions to owners of the Company
At 31 October 2019
Profit for the year
Total comprehensive income for the year
Transactions with owners of the Company, recognised directly in equity:
Shares issued during the year
Dividends
Equity settled share-based payment transactions
Total contributions by and distributions to owners of the Company
Share
capital
£000
4,943
Share
premium
account
£000
29,941
Other
reserves
Retained
earnings
Total
£000
3,208
£000
£000
15,830
53,922
-
-
31
-
-
-
31
-
-
343
-
-
-
343
-
-
-
3
-
49
52
3,142
3,142
3,142
3,142
-
-
374
3
(2,683)
(2,683)
-
49
(2,683)
(2,257)
4,974
30,284
3,260
16,289
54,807
-
-
39
-
-
39
-
-
353
-
-
353
-
-
-
-
96
96
2,325
2,325
2,325
2,325
-
392
(2,791)
(2,791)
-
96
(2,791)
(2,303)
At 31 October 2020
5,013
30,637
3,356
15,823
54,829
The notes on pages 61 to 94 form part of these financial statements.
There was no other comprehensive income during the current and prior years.
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ANNUAL REPORT AND ACCOUNTS 2020 Wynnstay Group Plc
Consolidated and Company Cash Flow Statement
As at 31 October 2020
Cash flows from operating activities
Cash generated from operations
Interest received
Interest paid
Tax paid
Net cash generated from operating activities
Cash flows from investing activities
Proceeds from sale of property, plant and equipment
Purchase of property, plant and equipment
Acquisition of subsidiaries, net of cash acquired
Own shares disposed of by ESOP trust
Dividends received from joint ventures and associates
Dividends received from subsidiaries
Net cash used by investing activities
Cash flows from financing activities
Proceeds from the issue of ordinary share capital
Lease payments
Repayment of borrowings
Dividends paid to shareholders
Net cash used by financing activities
Net increase in cash and cash equivalents
Cash and cash equivalents at the beginning of the period
Cash and cash equivalents at the end of the period
The notes on pages 61 to 94 form part of these financial statements.
Note
32
Group
Company
2020
£000
20,372
164
(436)
(1,510)
18,590
194
(1,058)
(125)
-
2
-
2019
£000
14,756
164
(348)
(1,680)
12,892
288
(2,412)
(893)
3
132
-
(987)
(2,882)
392
(4,362)
(1,470)
(2,791)
(8,231)
9,372
10,608
19,980
374
(1,798)
(1,971)
(2,683)
(6,078)
3,932
6,676
10,608
2020
£000
1,264
85
(19)
(97)
1,233
-
(266)
-
-
2
2,900
2,636
392
-
(1,470)
(2,791)
(3,869)
-
7
7
2019
£000
2,223
31
(59)
(50)
2,145
-
(1,007)
-
3
132
3,000
2,128
374
-
(1,961)
(2,683)
(4,270)
3
4
7
60
www.wynnstayplc.co.uk ANNUAL REPORT AND ACCOUNTS 2020 Principal Accounting Policies
GENERAL INFORMATION
Wynnstay Group Plc has a number of operations. These are described in the segmental analysis in note 2.
Wynnstay Group Plc is a company incorporated and domiciled in the United Kingdom. The address of its registered office is shown on page 23.
The Company has its primary listing on AIM, part of the London Stock Exchange.
ACCOUNTING POLICIES
The Group’s principal accounting policies adopted in the preparation of these financial statements are set out below.
BASIS OF PREPARATION
The Group’s financial statements have been prepared in accordance
International Financial
with
Reporting Interpretation Committee
international accounting standards,
(IFRIC) interpretations and those provisions of the Companies Act
2006 applicable to companies reporting under IFRS. The Group
financial statements have been prepared under the historical cost
convention other than certain assets which are at deemed cost under
the transition rules, share-based payments which are included at fair
value and certain financial instruments which are explained in the
relevant section below. A summary of the material Group accounting
policies is set out below and have been applied consistently.
The preparation of financial statements in conformity with IFRS requires
the use of certain critical accounting estimates and assumptions that
affect the reported amounts of assets and liabilities at the date of
the financial statements, and the reported amounts of revenues and
expenses during the reporting period. Although these estimates are
based on management’s best knowledge of the amount, event or
actions, actual results ultimately may differ from those estimates.
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 Strategic report on pages 3 to 28. The financial position of the
Group and the principal risks and uncertainties are also described in
the Strategic report.
The Group has a sound financial base and forecasts that show
profitable trading and sufficient cash flow and resources to meet the
requirements of the business, including compliance with banking
covenants and on-going liquidity. In assessing their view of the likely
future financial performance of the Group, the Directors consider
industry outlooks from a variety of sources, and various trading
scenarios. This analysis showed that the Group is well placed to
manage its business risks successfully despite the current uncertain
economic outlook with regards to the on-going Coronavirus outbreak.
More detail on outlook is contained within the Strategic Report on
page 18.
In conclusion, the Directors have a reasonable expectation that the
Group has adequate resources to continue in operational existence for
the foreseeable future. Thus, they continue to adopt the going concern
basis of accounting in preparing the annual financial statements.
BASIS OF CONSOLIDATION
The Group’s consolidated financial statements incorporate the financial
statements of Wynnstay Group Plc (‘the Company’) and entities
controlled by Wynnstay Group Plc (its ‘subsidiaries’) together with the
Group’s share of the results of its joint ventures and associates.
Where the company has control over an investee, it is classified as a
subsidiary. The company controls an investee if all three of the following
elements are present: power over the investee, exposure to variable
returns from the investee, and the ability of the investor to use its
power to affect those variable returns. Control is reassessed whenever
facts and circumstances indicate that there may be a change in any of
these elements of control.
De-facto control exists in situations where the company has the
practical ability to direct the relevant activities of the investee without
holding the majority of the voting rights. In determining whether de-
facto control exists the company considers all relevant facts and
circumstances, including:
•
•
•
•
the size of the company’s voting rights relative to both the size
and dispersion of other parties who hold voting rights;
substantive potential voting rights held by the company and
by other parties;
other contractual arrangements; and
historic patterns in voting attendance.
The consolidated financial statements present the results of the
company and its subsidiaries (“the Group”) as if they formed a single
entity. Intercompany transactions and balances between Group
companies are therefore eliminated in full.
The consolidated financial statements incorporate the results of
business combinations using the acquisition method. In the statement
of financial position, the acquiree’s identifiable assets, liabilities
and contingent liabilities are initially recognised at their fair values
at the acquisition date. The fair value of deferred and contingent
consideration is assessed using management judgement to reflect
the likelihood of the pertinent matters being achieved. The results of
acquired operations are included in the consolidated statement of
comprehensive income from the date on which control is obtained.
They are deconsolidated from the date on which control ceases.
Associates are entities over which the Group has significant influence
but not control, generally accompanied by a share of between 20%
and 50% of the voting rights. Joint ventures are entities over which the
Group has joint control. Investments in joint ventures and associates
are accounted for using the equity method.
REVENUE RECOGNITION
Revenue is income arising for the sale of goods and services in the
ordinary course of the Group’s activities, net of value added taxes
and discounts. Revenue is recognised when performance obligations
are satisfied, and control has transferred to the customer. Although
the Group does provide some services (agronomy, such as analysis
of nutritional content of silage samples), the vast majority of revenue
relates to sale of goods and consequently the level of judgement
required to determine the transaction price or the timing of transfer
of control is low. All revenue is derived from UK operations. The
Group uses two operating segments which relate how our customers
purchase products.
Agriculture
For feed, seed, fertiliser and other agricultural products sold in bulk to
farmer customers, revenue is recognised on collection by, or delivery
to, the customer and the Group had evidence that all criteria for
acceptance have been satisfied.
Specialist Agricultural Merchanting
For goods sold in depots, revenue is recognised at the point of sale.
For goods sold through catalogues or online, revenue is recognised
on collection by, or delivery to, the customer. Some contracts provide
customers with a limited right of return, but experience has shown that
61
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Principal Accounting Policies continued
the value of these returns is immaterial.
AMORTISATION OF ACQUIRED INTANGIBLE ASSETS, SHARE-BASED
PAYMENT EXPENSE AND NON-RECURRING ITEMS
Amortisation of acquired intangible assets, share-based payment
expense and non-recurring items that are material by size and/or by
nature are presented within their relevant income statement category
but highlighted separately on the face of the consolidated statement of
comprehensive income and within a note to the financial statements,
see note 5. The separate disclosure of profit before these items
helps provide a better indication of the Group’s underlying business
performance is discussed in the non-IFRS alternative performance
measure ‘Underlying pre-tax profit’ in the Finance Review on page 21.
Events which may give rise to non-recurring items include, but are not
limited to, gains or losses on the disposal of subsidiaries/businesses,
gains or losses on the disposal or revaluation of properties, gains or
losses on the disposal of investments, the restructuring of the business,
the integration of new businesses, acquisition related costs, changes
to estimates in relation to deferred and contingent consideration for
prior period business combinations and asset impairments including
impairment of goodwill.
GRANT INCOME
Government grants are recognised in profit or loss on a systematic
basis over the periods in which the Group recognises expenses for the
related costs for which the grants are intended to compensate, which
in the case of grants related to assets requires setting up the grant
as deferred income or deducting it from the carrying amount of the
asset. The Group only recognises grant income when the conditions
for receiving the grant are met and there is a more than 50% likelihood
that the grant will not be repaid in a subsequent period.
FINANCIAL INSTRUMENTS
Financial assets and liabilities are recognised on the Company and
Group’s consolidated balance sheet when the Company and/or Group
becomes a party to the contractual provisions of the instrument. The
main categories of financial instruments are:
Trade and other receivables and loans to joint ventures
Wynnstay’s objective is to hold trade receivables in order to collect
contractual cash flows and the contractual cash flows are solely
payments of principal and interest. Trade and other receivables are
initially recognised at fair value plus transaction costs that are directly
attributable to their acquisition or issue and are subsequently carried at
amortised cost using the effective interest rate method, less provision
for impairment.
Impairment provisions for trade debtors are recognised based on
the simplified approach within IFRS 9 using a provision matrix in
the determination of the lifetime expected credit losses. To measure
expected credit losses on a collective basis, trade receivables are
grouped based on similar aging. The expected loss rates are based on
the Groups historical credit losses experience over the twelve month
period prior to the period end. During this process the probability of
the non-payment of the trade debtors is assessed. For trade debtors,
which are reported net, such provisions are recorded in a separate
provision account with the loss being recognised within administrative
expenses in the statement of comprehensive income. On confirmation
that the trade debtor will not be collectable, the gross carrying value of
the asset is written off against the associated provision.
Impairment provisions for receivables from related parties and loans to
related parties are recognised based on a forward looking expected
credit loss model. The methodology used to determine the amount
of the provision is based on whether there has been a significant
increase in credit risk since initial recognition of the financial asset. For
those where the credit risk has not increased significantly since initial
recognition of the financial asset, twelve month expected credit losses
along with gross interest income are recognised. For those for which
credit risk has increased significantly, lifetime expected credit losses
along with the gross interest income are recognised. For those that are
determined to be credit impaired, lifetime expected credit losses along
with interest income on a net basis are recognised.
62
Investments
Investments are measured at fair value in the statement of financial
position, with value changes recognised in profit or loss, except for
those equity investments for which the entity has elected to present
value changes in ‘other comprehensive income’. Cost is used as an
appropriate estimate of fair value for investments where in limited
cases there is insufficient, recent information available to measure fair
value.
Interest-bearing borrowings
Interest-bearing bank loans and overdrafts are initially recorded at
fair value, net of attributable transaction costs. Subsequent to initial
recognition, interest-bearing borrowings are stated at amortised cost
with any difference between proceeds and redemption value being
recognised in the Group Statement of Consolidated Income over the
period of the borrowings on an effective interest basis.
Financial guarantees.
The Group enters into financial guarantees with its subsidiaries. These
guarantees are accounted for as insurance contracts.
Trade payables
Trade and other payables are recognised at fair value are recognised
at fair value, less any impairment losses.
Equity instruments
Equity instruments issued by the Group and/or Company are recorded
at the proceeds received, net of direct issue costs. An equity instrument
is any contract that evidences a residual interest in the assets of the
Group and/or Company after deducting all of its liabilities.
Derivative financial instruments and hedging
The Group uses derivative financial instruments to hedge its exposure
to foreign exchange, and commodity risks arising from day to day
activities. The Group does not hold or issue derivative financial
instruments for trading purposes, however, if derivatives do not qualify
for hedge accounting they are accounted for as such.
Derivative financial instruments are recognised and stated at fair value.
Where derivatives do not qualify for hedge accounting, any gains or
losses on re-measurement are immediately recognised in the Group
Statement of Consolidated Income. Where derivatives qualify for hedge
accounting, recognition of any resultant gain or loss depends on the
nature of the hedge relationship and the item being hedged. In order
to qualify for hedge accounting, the Group is required to document
from inception the relationship between the item being hedged and
the hedging instrument. Furthermore, to document and demonstrate
an assessment of the relationship between the hedged item and the
hedging instrument.
Derivative financial instruments with maturity dates of more than one
year from the balance sheet date are disclosed as non-current.
Fair value hedging
Derivative financial instruments are classified as fair value hedges
when they hedge the Group’s exposure to changes in the fair value of
a recognised asset or liability. Changes in the fair value of derivatives
that are designated and qualify as fair value hedges are recorded in
the Group Statement of Comprehensive Income together with any
changes in the fair value of the hedged item that is attributable to the
hedged risk.
INVENTORIES
Inventories are stated at the lower of cost and net realisable value.
Cost comprises direct materials and, where applicable, direct labour
costs and those overheads that have been incurred in bringing the
inventories to their present location and condition. Where appropriate,
cost is calculated on a specific identification basis. Otherwise
inventories are valued using the first-in-first-out method. Net realisable
value represents the estimated selling price less all estimated costs
to completion and costs to be incurred in marketing, selling and
www.wynnstayplc.co.uk ANNUAL REPORT AND ACCOUNTS 2020 distribution.
LEASES
All leases are accounted for by recognising a right-of-use asset and a
lease liability except for:
•
•
leases of low value assets; and
leases with a duration of 12 months or less.
IFRS 16 was adopted 1 November 2019 without restatement of
comparative figures. For an explanation of the transitional requirements
that were applied as at 1 November 2019, see note 34.
The following policies apply subsequent to the date of initial application,
1 November 2019
Lease liabilities are measured at the present value of the contractual
payments due to the lessor over the lease term, with the discount rate
determined by reference to the rate inherent in the lease unless (as is
typically the case) this is not readily determinable, in which case the
group’s incremental borrowing rate on commencement of the lease is
used. Variable lease payments are only included in the measurement of
the lease liability if they depend on an index or rate. In such cases, the
initial measurement of the lease liability assumes the variable element
will remain unchanged throughout the lease term. Other variable lease
payments are expensed in the period to which they relate.
On initial recognition, the carrying value of the lease liability also
includes:
•
•
•
•
•
amounts expected to be payable under any residual value
guarantee;
the exercise price of any purchase option granted in favour of
the group if it is reasonable;
certain to assess that option;
any penalties payable for terminating the lease, if the term of
the lease has been estimated; and
on the basis of termination option being exercised.
Right-of-use assets are initially measured at the amount of the lease
liability, reduced for any lease incentives received, and increased for:
•
•
•
lease payments made at or before commencement of the
lease;
initial direct costs incurred; and
the amount of any provision recognised where the group is
contractually required to dismantle, remove or restore the
leased asset (typically leasehold dilapidations.)
Subsequent to initial measurement lease liabilities increase as a result
of interest charged at a constant rate on the balance outstanding
and are reduced for lease payments made. Right-of-use assets are
amortised on a straight-line basis over the remaining term of the lease
or over the remaining economic life of the asset if, rarely, this is judged
to be shorter than the lease term.
When the group revises its estimate of the term of any lease (because,
for example, it re-assesses the probability of a lessee extension or
termination option being exercised), it adjusts the carrying amount
of the lease liability to reflect the payments to make over the revised
term, which are discounted using a revised discount rate. The carrying
value of lease liabilities is similarly revised when the variable element of
future lease payments dependent on a rate or index is revised, except
the discount rate remains unchanged. In both cases an equivalent
adjustment is made to the carrying value of the right-of-use asset,
with the revised carrying amount being amortised over the remaining
(revised) lease term. If the carrying amount of the right-of-use asset is
adjusted to zero, any further reduction is recognised in profit or loss.
GOODWILL
Goodwill represents the excess of the cost of acquisition over the fair
value of the identifiable assets, liabilities and contingent liabilities of the
acquired entity at the date of the acquisition. At the date of acquisition,
goodwill is allocated to cash generating units for the purpose of
impairment testing. Goodwill is recognised as an asset and assessed
for impairment annually. Any impairment is recognised immediately in
the Group Statement of Comprehensive Income. Once recognised, an
impairment of goodwill is not reversed.
IMPAIRMENT OF ASSETS
At each reporting date, the Group assesses whether there is any
indication that an asset may be impaired. Where an indicator of
impairment exists, the Group makes an estimate of recoverable
amount. Where the carrying amount of an asset exceeds its
recoverable amount the asset is written down to its recoverable
amount. Recoverable amount is the higher of fair value less costs to
sell and value in use and is considered for each individual asset. If the
asset does not generate cash flows that are largely independent of
those from other assets or groups of assets, the recoverable amount
of the cash generating unit to which the asset belongs is determined.
Discount rates reflecting the asset specific risks and the time value of
money are used for the value in use calculation.
INVESTMENT PROPERTY
Investment properties are properties which are held either to earn rental
income or for capital appreciation or for both. Investment properties
are stated at fair value. Any gain or loss arising from the change in fair
value is recognised in profit and loss. Rental income from investment
property is accounted for on a receivable basis.
PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment are stated at cost, net of accumulated
depreciation and any provision for impairment losses. Depreciation is
provided at rates calculated to write off the cost less estimated residual
value of fixed assets over their expected useful lives as follows:
freehold property
•
2.5% - 5% per annum straight line
leasehold land and buildings
•
over the period of the lease
plant and machinery and office equipment
•
10% - 33% per annum straight line
• motor vehicles
20% - 30% per annum straight line
INTANGIBLE ASSETS
The cost of an intangible asset acquired in a business combination is
its fair value at its acquisition date.
EMPLOYMENT BENEFIT COSTS
The Group operates a defined contribution pension scheme.
Contributions to this scheme are charged to the Group Statement of
Comprehensive Income as they are incurred, in accordance with the
rules of the scheme.
TAXATION
The income tax expense represents the sum of the current income tax
and deferred income tax. Current income tax is based on the taxable
profits for the year. Taxable profit differs from the profit as reported in
the Group Statement of Comprehensive Income 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. No material uncertain tax positions exist as at 31 October 2020.
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Principal Accounting Policies continued
DEFERRED TAX
Deferred tax assets have been recognised in respect of temporary
differences giving rise to deferred tax assets where the directors believe
it is probable that these assets will be recovered. Deferred tax liabilities
have been recognised in respect of accelerated capital allowances.
Deferred tax is calculated in full on temporary differences under the
liability method using a tax rate of 19% (2019: 17%), the rate which
is expected to be effective when the temporary differences reverse.
CRITICAL ACCOUNTING ESTIMATES AND JUDGEMENTS
The Group makes certain estimates and assumptions regarding the
future. Estimates and judgements are continually evaluated based on
historic experience and other factors, including expectations of future
events that are believed to be reasonable under the circumstances.
In the future, actual experience may differ from these estimates and
assumptions. The estimates and assumptions that have a significant
risk of causing a material adjustment to the carrying amount of assets
and liabilities within the next financial year are discussed below.
JUDGEMENTS
On-going coronavirus pandemic
The coronavirus outbreak occurred during this financial reporting period
and conditions continue to evolve since the end of the reporting period
(31 October 2020). Wynnstay is classified as operating in an essential
key industry, and as such has been able to generally continue activities
throughout the crisis, while at all times adhering with appropriate
government guidance and regulation. The most significant impact
on trading has been in the depots within the Specialist Agricultural
Merchanting segment, which for safety reasons moved to an order and
collect trading policy for part of the financial year. The situation remains
fluid and further modifications to trading practices may be required in
the future, depending on the prevailing local conditions, and availability
of colleague resource. However, the resilient trading experience
through the crisis to date provides confidence that Group can continue
to operate positively and profitably while current restrictions remain in
place.
Potential impact of Brexit
The UK left the EU on 31 January 2020. The Group’s operations are
all located in the UK, but some does import some raw materials and
goods for resale from both the EU and other jurisdictions, and the
business is sensitive to currency exchange rates which have been
volatile through the Brexit discussions. Of greater commercial concern
during recent uncertainty was the potential impact on the prosperity
of the Group’s farmer customers of a no-deal conclusion to trade
talks with the EU after the end of the transition arrangement on the 31
December 2020. The general absence of tariffs on food exports from
the UK with the implementation of the new Trade and Co-operation
Agreement with the EU had alleviated the concerns. The director’s
current assessment is therefore that the Group’s operations will not be
materially adversely impacted by Brexit.
At the time of authorising these Financial Statements, the directors
are satisfied that there are no material uncertainties related to the
coronavirus pandemic or Brexit that may cast significant doubt on the
Group’s ability to continue as a going concern.
Application of the “own use” exemption
Forward contracts are entered into by the Group to purchase and/
or sell grain and other agricultural commodities, and management
judge that these forward commodity contracts are entered into for
the Groups “own use” rather than as trading instruments when they
are entered into. The IFRS 9 Financial Instruments: Recognition and
Measurement “own use” exemption removes the otherwise required
requirement to revalue all open forward contracts to fair value at the
year end.
The Group does utilise derivative grain futures contracts to commercially
hedge its open positions. At the period end any open derivatives are
64
fair valued, see note 24.
ESTIMATES AND ASSUMPTIONS
Impairment of goodwill
The carrying value of goodwill must be assessed for impairment
annually. This requires an estimation of the value in use of the
cash generating units to which goodwill is allocated. Value in use
is dependent on estimations of future cash flows from the cash
generating unit and the use of an appropriate discount rate to discount
those cash flows to their present value.
Directors consider the sensitivity to key assumptions. An impairment
of £601,000 has been recognised relating to the GrainLink cash
generating unit. The reasonably possible changes in key assumptions
which could have a material impact on the carrying value of goodwill
are shown in note 13.
Incremental borrowing rate
The determination of the incremental borrowing rate used to measure
lease liabilities on adoption of IFRS 16 at 1 November 2019, which has
been calculated as 2.09%.
Provision for slow moving inventory
The financial statements include a provision for irrecoverable inventories
based on management’s estimation of items that have become slow
moving, obsolete, defective or have the potential to deteriorate or
expire to an extent that the respective net recoverable value becomes
impaired. The carrying value of this inventory provision at 31 Oct 2020
was £380,000 or 1.1% of the total consolidated inventory value at that
date. There is a risk that the provision will not match the inventories
that ultimately prove to be irrecoverable.
Provision for impairment of trade receivables
The financial statements include a provision for impairment of trade
receivables that is based on management’s estimation of recoverability
and expected credit loss under IFRS 9. There is a risk that the
provision will not match the trade receivables that ultimately prove to
be irrecoverable, see note 20.
Fair value measurement
A number of assets and liabilities included in the Group’s financial
statements require measurement at, and/or disclosure of, fair value.
The fair value measurement of the Group’s financial and non-financial
assets and liabilities utilises market observable inputs and data as far
as possible. Inputs used in determining fair value measurements are
categorised into different levels based on how observable the inputs
used in the valuation technique are (the ‘fair value hierarchy’):
•
•
•
quoted prices (unadjusted) in active markets for identical
assets or liabilities (Level 1);
inputs other than quoted prices included within Level 1 that
are observable for the asset or liability, either directly (that is,
as prices) or indirectly (that is, derived from prices) (Level 2);
and
inputs for the asset or liability that are not based on observable
market data (that is, unobservable inputs) (Level 3).
The classification of an item into the above levels is based on the
lowest level of the inputs used that has a significant effect on the fair
value measurement of the item. Transfers of items between levels are
recognised in the period they occur.
The Group measures a number of items at fair value:
•
•
•
•
Investment property (note 15)
Financial instruments (note 24)
Deferred and contingent consideration (note 24)
Equity settled share-based payment liabilities (note 27)
www.wynnstayplc.co.uk ANNUAL REPORT AND ACCOUNTS 2020 Notes to the Financial Statements
For the year ended 31 October 2020
1. GENERAL INFORMATION & SIGNIFICANT ACCOUNTING POLICIES
The Company is taking advantage of the exemption in s408 of the Companies Act 2006 not to present its individual income statement and
related notes that form part of these approved financial statements.
Changes in accounting policies
a) New standards, interpretations and amendments effective from 1 January 2019
New standards impacting the Group that will be adopted in the annual financial statements for the year ended 31 October 2020, and which have
given rise to changes in the Group’s accounting policies are:
•
•
IFRS 16 Leases (IFRS 16); and,
IFRIC 23 Uncertainty over Income Tax Treatments (IFRIC 23).
Details of the impact of IFRS 16 have had are given in note 34 below. The adoption of IFRIC 23 has not had a material impact. Other new
and amended standards and Interpretations issued by the IASB that will apply for the first time in the next annual financial statements are not
expected to impact the Group as they are either not relevant to the Group’s activities or require accounting which is consistent with the Group’s
current accounting policies.
b) New standards, interpretations and amendments not yet effective
There are a number of standards, amendments to standards, and interpretations which have been issued by the IASB that are effective in future
accounting periods that the group has decided not to adopt early. The following amendments are effective for the period beginning 1 January
2020:
•
•
•
IAS 1 Presentation of Financial Statements and IAS 8 Accounting Policies, Changes in Accounting Estimates and Errors (Amendment –
Definition of Material)
IFRS 3 Business Combinations (Amendment – Definition of Business)
Revised Conceptual Framework for Financial Reporting
In January 2020, the IASB issued amendments to IAS 1, which clarify the criteria used to determine whether liabilities are classified as current
or non-current. These amendments clarify that current or non-current classification is based on whether an entity has a right at the end of
the reporting period to defer settlement of the liability for at least twelve months after the reporting period. The amendments also clarify that
‘settlement’ includes the transfer of cash, goods, services, or equity instruments unless the obligation to transfer equity instruments arises
from a conversion feature classified as an equity instrument separately from the liability component of a compound financial instrument. The
amendments are effective for annual reporting periods beginning on or after 1 January 2022.
Wynnstay Group Plc is currently assessing the impact of these new accounting standards and amendments. The Group does not believe that
the amendments to IAS 1 will have a significant impact on the classification of its liabilities.
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ANNUAL REPORT AND ACCOUNTS 2020 Wynnstay Group Plc
Notes to the Financial Statements continued
2. SEGMENTAL REPORTING
IFRS 8 requires operating segments to be identified on the basis of internal financial information about the components of the Group that are
regularly reviewed by the chief operating decision maker (“CODM”) to allocate resources to the segments and to assess their performance.
The chief operating decision maker has been identified as the Board of Directors (‘the Board’). The Board reviews the Group’s internal reporting
in order to assess performance and allocate resources. The Board has determined that the operating segments, based on these reports are
Agriculture, Specialist Agricultural Merchanting and Other.
The Board considers the business from a product/service perspective. In the Board’s opinion, all of the Group’s operations are carried out in the
same geographical segment, namely the United Kingdom.
Agriculture – manufacturing and supply of animal feeds, fertiliser, seeds and associated agricultural products.
Specialist Agricultural Merchanting – supplies a wide range of specialist products to farmers, smallholders, and pet owners.
Other – miscellaneous operations not classified as Agriculture or Specialist Agricultural Merchanting.
The Board assesses the performance of the operating segments based on a measure of operating profit. Non-recurring costs and 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. No segment is individually reliant on any one customer.
The segment results for the year ended 31 October 2020 are as follows:
Year ended 31 October 2020
£000
£000
Specialist
Agricultural
Merchanting
Agriculture
Other
£000
Total
£000
Revenue from external customers
Segment result
Group operating profit before non-recurring items
Share of results of joint ventures before tax
Non-recurring items
Interest income
Interest expense
Profit before tax from operations
Income taxes (includes tax of joint ventures)
Profit for the year attributable to equity shareholders from operations
Assets
Segment net assets
Corporate net cash (note 22)
Net assets after corporate net cash
302,580
128,807
11
431,398
2,411
471
2,882
5,728
53
5,781
(130)
14
(116)
44,867
37,623
7,272
8,009
538
8,547
(1,194)
164
(436)
7,081
(1,548)
5,533
89,762
8,416
98,178
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www.wynnstayplc.co.uk ANNUAL REPORT AND ACCOUNTS 2020 2. SEGMENTAL REPORTING continued
The segment results for the year ended 31 October 2019 are as follows:
Year ended 31 October 2019
Revenue from external customers
Segment result
Group operating profit before non-recurring items
Share of results of joint ventures and associates before tax
Non-recurring items
Interest income
Interest expense
Profit before tax from operations
Income taxes (includes tax of joint ventures and associates)
Profit for the year attributable to equity shareholders from operations
Assets
Segment net assets
Corporate net cash (note 22)
Net assets after corporate net cash
3. FINANCE COSTS
Interest expense:
Interest payable on borrowings
Interest payable on leases
Interest receivable
Net finance costs
4. OTHER OPERATING INCOME
Rental income
Specialist
Agricultural
Merchanting
Agriculture
£000
£000
358,687
131,843
2,417
534
2,951
5,240
4
5,244
Other
£000
72
21
(75)
(54)
47,213
36,097
7,794
2020
£000
(141)
(295)
(436)
164
(272)
2020
£000
351
Total
£000
490,602
7,678
463
8,141
(301)
164
(348)
7,656
(1,524)
6,132
91,104
3,844
94,948
2019
£000
(191)
(157)
(348)
164
(184)
2019
£000
385
67
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ANNUAL REPORT AND ACCOUNTS 2020 Wynnstay Group Plc
Notes to the Financial Statements continued
5. AMORTISATION OF ACQUIRED INTANGIBLE ASSETS, SHARE-BASED PAYMENTS AND NON-RECURRING ITEMS
Amortisation of acquired intangible assets and share-based
payments
Amortisation of intangibles
Cost of share-based reward
Non-recurring items
Business re-organisation costs
Business combination expenses
Goodwill and Investment impairment
Huyton depot closure costs
Decommissioning of Selby seed plant
2020
£000
36
96
132
185
-
601
256
152
1,194
2019
£000
28
49
77
297
4
-
-
-
301
Business re-organisation costs relate to the redundancy related expenses of colleagues leaving the business as a result of re-organising operations
and was completed during the year.
The goodwill impairment relates to the GrainLink cash generating unit, see note 13.
Huyton depot store closure costs comprise redundancy costs and costs associated with exiting the leased premises.
Decommissioning of Selby seed plant relates to the costs of vacating a leased property and transferring the plant and machinery to a new location.
6. GROUP OPERATING PROFIT
The following items have been included in arriving at operating profit:
Staff costs
Cost of inventories recognised as an expense
Depreciation of property plant and equipment:
Amortisation of right-of-use assets (2019: depreciation of assets
held under finance leases)
Amortisation of intangibles
(Profit) on disposal of fixed assets
Loss on disposal of right-of-use asset
Other operating lease rentals payable
Services provided by the Group’s auditor
During the year the Group obtained the following services from the Group’s auditor:
Audit services – statutory audit
2020
£000
30,031
315,785
2,290
3,888
36
(142)
25
244
2020
£000
99
2019
£000
30,143
347,239
3,289
290
28
(170)
-
3,221
2019
£000
93
Included in the Group audit fee are fees of £5,304 (2019: £4,000) paid to the Group’s auditor in respect of the Parent Company. The fees relating
to the Parent Company are borne by one of the Group’s subsidiaries and not recharged.
7. SHARE OF POST-TAX PROFITS OF JOINT VENTURES AND ASSOCIATES
Share of post-tax profits in joint ventures
Total share of post-tax profits of joint ventures
2020
£000
438
438
2019
£000
360
360
68
www.wynnstayplc.co.uk ANNUAL REPORT AND ACCOUNTS 2020 8. STAFF COSTS
The aggregate payroll costs, including Directors’ emoluments, charged in the financial statements for the Group were as follows:
Wages and salaries
Social security costs
Pension and other costs
Cost of share-based reward
2020
£000
26,384
2,442
1,109
96
30,031
The average number of employees, including Directors, employed by the Group during the year was as follows:
Administration
Production
Sales, distribution and depots
The parent company did not have any employees in the current or prior year.
9. DIRECTORS’ REMUNERATION
Directors’ emoluments
Social security costs
Company contributions to money purchase pension schemes
Aggregate gains made on the exercise of Approved SAYE options
2020
No.
104
141
654
899
2020
£000
772
92
50
-
914
2019
£000
26,600
2,510
984
49
30,143
2019
No.
106
144
728
978
2019
£000
850
99
48
-
997
Details of the Directors’ interest in the share capital of the company, including outstanding share options at the year end, are provided in the
Directors’ Report. The following remuneration detail is provided in accordance with AIM Rule 19.
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Name of Director
Executives
Gareth Davies
Paul Roberts
Andrew Evans (resigned 1 December 2020)
Non-Executives
Jim McCarthy
Steve Ellwood
Philip Kirkham
Howell Richards
2020
£000
250
203
165
50
34
35
35
772
2019
£000
262
229
207
50
34
35
35
852
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ANNUAL REPORT AND ACCOUNTS 2020 Wynnstay Group Plc
Notes to the Financial Statements continued
9. DIRECTORS’ REMUNERATION continued
Retirement benefits are accruing to the following number of directors under:
Money purchase pension scheme
Contribution paid by the Group to money purchase pension schemes in respect of such directors
were:
Gareth Davies
Paul Roberts
Andrew Evans
10. TAXATION
Analysis of tax charge in year:
Current tax
- operating activities
- adjustments in respect of prior years
Total current tax
Deferred tax
- accelerated capital allowances
- other temporary and deductible differences
Total deferred tax
Tax on profit on ordinary activities
Current tax
Profit on ordinary activities before tax
Profit on ordinary activities multiplied by standard rate of
corporation tax in the UK of 19.00% (2019: 19.00%)
Effects of:
Tax effect of share of profit of joint ventures and associates
Other items
Expenses not deductible for tax purposes
Adjustment to tax charge in respect of prior years
Movement on unrecognised deferred tax
Total tax charge for year
70
2020
No.
3
2020
£000
20
16
14
50
2020
£000
1,496
(73)
1,423
165
(140)
25
1,448
2020
£000
6,981
1,326
(83)
-
137
(73)
141
1,448
2019
No.
3
2019
£000
19
15
14
48
2019
£000
1,502
(50)
1,452
(31)
-
(31)
1,421
2019
£000
7,553
1,435
(68)
(8)
43
(50)
69
1,421
www.wynnstayplc.co.uk ANNUAL REPORT AND ACCOUNTS 2020 11. DIVIDENDS
Final dividend paid for prior year
Interim dividend paid for current year
2020
£000
1,870
921
2,791
2019
£000
1,770
913
2,683
Subsequent to the year end it has been recommended that a final dividend of 10.00p net per ordinary share (2019: 9.40p) be paid on 30 April 2021.
Together with the interim dividend already paid on 31 October 2020 of 4.60p net per ordinary share (2019: 4.60p) this will result in a total dividend
for the financial year of 14.60p net per ordinary share (2019: 14.00p).
12. EARNINGS PER SHARE
Earnings attributable to shareholders (£000)
Weighted average number of shares in issue during the year (number ‘000)
Earnings per ordinary 25p share (pence)
Basic earnings per share
Diluted earnings per share
2020
5,533
19,952
27.73
2019
6,132
19,812
30.95
2020
5,533
20,070
27.57
2019
6,132
19,812
30.95
Basic earnings per 25p ordinary share is calculated by dividing profit for the year from operating activities attributable to ordinary shareholders by
the weighted average number of ordinary shares in issue during the year.
For diluted earnings per share, the weighted average number of ordinary shares is adjusted to assume conversion of all dilutive potential ordinary
shares (share options) taking into account their exercise price in comparison with the actual average share price during the year.
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ANNUAL REPORT AND ACCOUNTS 2020 Wynnstay Group Plc
Notes to the Financial Statements continued
13. GOODWILL
After initial recognition, goodwill is subject to annual impairment tests or more frequently if events or changes in circumstances indicate that it might
be impaired, in accordance with IAS 36.
Goodwill impairment
Goodwill arising on business combinations is not amortised but is
reviewed for impairment on an annual basis, or more frequently if there
are indications that goodwill may be impaired. Goodwill acquired in a
business combination is allocated to groups of cash generating units
according to the level at which management monitor that goodwill.
Recoverable amounts for cash generating units are based on the higher
of value in use and fair value less costs to sell. Value in use is calculated
from cash flow projections for the next 5 years using data from the
Group’s latest internal forecasts, the results of which are reviewed by
the Board.
The key assumptions for the value in use calculations are those
regarding discount rates, growth rates and cashflows to be achieved
expected changes in margins. Management estimate discount rates
using pre-tax rates that reflect the current market assessment of the
time value of money and the risks specific to the cash generating
units. Changes in selling prices and direct costs are based on past
experience and expectations of future changes in the market. Given the
current economic climate, a sensitivity analysis has been performed in
assessing the recoverable amounts of goodwill.
Annual impairment reviews were performed by comparing the carrying
value of goodwill with the recoverable amount of the cash generating
units to which goodwill has been allocated.
Goodwill is allocated to specific cash generating units (“CGUs”) as it
arises.
The Group has a number of CGUs in both the Agriculture and the
Specialist Agricultural Merchanting sectors. The CGU’s are assessed
as legal entities and there has been no change from the prior period.
The carrying amount of goodwill allocated to the Agriculture CGUs
is £7,558,000 (2019: £8,159,000), and to Specialist Agricultural
Merchanting is £6,809,000 (2019: £6,809,000).
The pre-tax discount rates used to calculate value in use were 9.2%
(2019: 9.5%) for Agriculture and 9.2% (2019: 9.5%) for Specialist
Agricultural Merchanting. These discount rates are derived from the
Groups weighted average cost of capital and adjusted for the specific
risks relating to each CGU.
The forecasts are extrapolated based on estimated long-term average
growth rates of 2.0% (2019: 2.0%) for both Agriculture and Specialist
Agricultural Merchanting.
The Directors have considered the sensitivity to key assumptions and
the majority of the Group’s impairment tests have significant headroom,
except for the GrainLink CGU within the Agricultural segment for
which an impairment charge of £601,000 has been recognised. The
recognition of the impairment is subject to reasonably possible changes
in key assumptions which are discussed below.
Group
Cost
At 1 November 2018
Additions
At 31 October 2019
and 31 October 2020
Aggregate impairment
At 1 November 2018
and 31 October 2019
Impairment
At 31 October 2020
Net book value
At 31 October 2020
At 31 October 2019
£000
16,126
150
16,276
1,308
601
1,909
14,367
14,968
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www.wynnstayplc.co.uk ANNUAL REPORT AND ACCOUNTS 2020 13. GOODWILL continued
Goodwill is allocated to this CGU as follows:
Group
GrainLink
2020
£000
3,605
2019
£000
4,206
The recoverable amount of this CGU is based upon its value in use, determined by discounting future cashflows to be generated from the continuing
use for the CGU.
The key assumptions used in the estimation of the recoverable amount are set out below. The values assigned to the key assumptions represent
management’s assessment of future trends in the relevant industries and have been based on historical data and future forecasts from both internal
and external sources.
GrainLink
Discount rate
Terminal value growth rate
Budgeted EBIT
2020
9.2%
2.0%
2019
9.5%
2.0%
Budget in year 1, followed by an
increases of £124k in year 2, £100k in year 3,
£44k in year 4 and £51k in year 5
Increase of £203k in year 1
followed by £107k in year 2
followed by 1% growth in years 3-5
Management have prepared the discounted future cashflows on a basis which they believe is achievable. Investment in additional resource has
already commenced and actual results will be closely monitored against detailed plans. If the plans do not proceed as expected, it is possible that
further impairment may be required. The differences between the assumptions applied in the impairment review and those which would lead to the
carrying amount being equal to the recoverable amount are shown below.
GrainLink
Discount rate
Terminal value growth rate
Budgeted EBIT growth rate (average of next 5 years)
Change required for carrying amount to be equal to recoverable amount
2020
(0.6%)
(0.7%)
£19,000
2019
0.3%
(0.4%)
(£5,000)
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If the key assumptions used to perform the GrainLink CGU impairment review were changed, this would result in a higher impairment being
recognised. The following table shows the impact of changing the key assumptions.
Assumption
Discount rate
Terminal value growth rate
50% success of strategic plan
actions
Change
+1.0% to 10.2%
-1.0% to 1.0%
£319k to £260k
Additional Impact
Total Impairment
£852k
£674k
+£1,526k
£1,452k
£1,274k
£2,116k
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ANNUAL REPORT AND ACCOUNTS 2020 Wynnstay Group Plc
Notes to the Financial Statements continued
14. INTANGIBLE ASSETS
Cost
Balance as at 1 November 2018
Additions
At 31 October 2019 and 31 October 2020
Aggregate amortisation
Balance as at 1 November 2018
Charge for the year
At 31 October 2019
Charge for the year
At 31 October 2020
Net book value At 31 October 2020
Net book value At 31 October 2019
15. INVESTMENT PROPERTY
Fair value
Group
At 1 November 2018, 31 October 2019 and 31 October 2020
Company
Total
£000
155
200
355
66
28
94
36
130
225
261
Customer order
books
£000
Trademarks
£000
10
-
10
1
1
2
2
4
6
8
145
200
345
65
27
92
34
126
219
253
£000
2,372
At 1 November 2018, 31 October 2019 and 31 October 2020
2,372
Investment property relates to a redeveloped property in Pwllheli, the Group continues to actively market the property.
The Directors have determined the fair value of the investment property at the year end, this is with reference to market evidence. The amount of
rent receivable from the Investment property was £196,000 (2019: £178,000).
The Directors’ valuation is based on market rental yield. If the market rental yield increased the fair value would be expected to increase.
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www.wynnstayplc.co.uk ANNUAL REPORT AND ACCOUNTS 2020 16. PROPERTY, PLANT AND EQUIPMENT
Leasehold land
and buildings
£000
Freehold land
and buildings
£000
Plant,
machinery
and office
equipment
£000
Motor
vehicles
£000
Right-of-use
assets
£000
Group
Cost
At 1 November 2018
Additions
Acquisitions
Disposals
Reclassification
At 31 October 2019
1,170
79
14,284
982
-
-
-
-
-
6
21,885
859
10
(45)
(6)
10,123
2,995
18
(1,818)
-
1,249
15,272
22,703
11,318
Right-of-use assets recognised on
adoption of IFRS 16
Asset transferred on adoption of IFRS 16
-
-
-
-
-
(51)
At 1 November 2019
1,249
15,272
22,652
Additions
Disposals
49
-
235
-
833
(416)
-
(6,458)
4,860
67
(1,065)
-
-
-
-
-
-
7,801
6,509
14,310
2,831
(74)
Total
£000
47,462
4,915
28
(1,863)
-
50,542
7,801
-
58,343
4,015
(1,555)
At 31 October 2020
1,298
15,507
23,069
3,862
17,067
60,803
Depreciation
At 1 November 2018
Charge for the year
On disposals
At 31 October 2019
Asset transferred on adoption of IFRS 16
At 1 November 2019
Charge for the year
On disposals
At 31 October 2020
Net book value at 31 October 2020
Net book value at 1 November 2019
251
79
-
330
-
330
84
-
414
884
919
5,302
13,979
360
-
1,459
(42)
5,662
15,396
-
(9)
5,662
15,387
370
-
6,032
9,475
9,610
1,424
(415)
16,396
6,673
7,265
5,951
1,681
(1,703)
5,929
(1,979)
3,950
412
(1,014)
3,348
514
910
-
-
-
-
1,988
1,988
3,888
(49)
5,827
11,240
12,322
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3,579
(1,745)
27,317
-
27,317
6,178
(1,478)
32,017
28,786
31,026
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ANNUAL REPORT AND ACCOUNTS 2020 Wynnstay Group Plc
Notes to the Financial Statements continued
16. PROPERTY, PLANT AND EQUIPMENT continued
Company
Cost
At 1 November 2018
Additions
Reclassification
At 31 October 2019
Additions
At 31 October 2020
Depreciation
At 1 November 2018
Charge for the year
At 31 October 2019
Charge for the year
At 31 October 2020
Net book value at 31 October 2020
Net book value at 31 October 2019
The Company was not impacted by the implementation of IFRS 16.
Freehold land and
buildings
£000
Leasehold land and
buildings
£000
612
24
-
636
28
664
159
61
220
64
284
380
416
12,757
977
5
13,739
227
13,966
4,721
339
5,060
349
5,409
8,557
8,679
Total
£000
13,369
1,001
5
14,375
255
14,630
4,880
400
5,280
413
5,693
8,937
9,095
76
www.wynnstayplc.co.uk ANNUAL REPORT AND ACCOUNTS 2020 17. FIXED ASSET INVESTMENTS
Group
Cost
At 1 November 2018
Share of profit or investment income
Disposal
At 31 October 2019
Share of profit or investment income
Dividend distribution
At 31 October 2020
Provision for impairment
At 1 November 2018 and 31 October 2019
At 31 October 2020
Net book value at 31 October 2020
Net book value at 31 October 2019
Company
Cost
At 1 November 2018
At 31 October 2019 and 2020
Provision for impairment
At 1 November 2018
At 31 October 2019 and 2020
Net book value at 31 October 2020
Net book value at 31 October 2019
Joint
ventures
£000
Associates
£000
Other unlisted
investments
£000
2,721
360
-
3,081
396
-
3,477
-
-
3,477
3,081
52
-
(48)
4
42
(2)
44
-
-
44
4
90
-
-
90
-
-
90
-
-
90
90
Total
£000
2,863
360
(48)
3,175
438
(2)
3,611
-
-
3,611
3,175
Share in group
undertakings
£000
Joint
ventures
£000
Associates
£000
Total
£000
42,562
42,562
-
-
42,562
42,562
191
191
-
-
191
191
-
-
-
-
-
-
42,753
42,753
-
-
42,753
42,753
77
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ANNUAL REPORT AND ACCOUNTS 2020 Wynnstay Group Plc
Notes to the Financial Statements continued
18. SUBSIDIARIES, JOINT VENTURES AND ASSOCIATES
SUBSIDIARIES
Subsidiary undertakings represent the following limited companies, all of which were incorporated in the UK:
Company name
Proportion of shares
held (Ordinary) %
Nature of business
Registered office address
Glasson Group (Lancaster) Limited
100
Holding company
Glasson Grain Limited
Wynnstay (Agricultural Supplies) Limited
Woodheads Seeds Limited
Youngs Animal Feeds Limited
GrainLink Limited
Wrekin Grain Limited
Eifionydd Farmers Limited
Shropshire Grain Limited
Welsh Feed Producers Limited
Banbury Farm and General Supplies Limited
Stanton Farm Supplies Limited
100
100
100
100
100
100
100
100
100
100
100
Feed and Fertiliser merchant
Agricultural merchant
Dormant company
Equine and pet products distributor
Grain merchant
Dormant company
Dormant company
Dormant company
Dormant company
Dormant company
Dormant company
West Quay, Glasson Dock,
Lancaster, Lancs, LA2 0DB
Eagle House, Llansantffraid Ym
Mechain, Powys, SY22 6AQ
Investments in the subsidiaries listed above are held directly by Wynnstay Group Plc, with the exception of the following which are direct subsidiaries
of the respective following companies:
Wynnstay Agricultural (Supplies) Limited Youngs Animal Feeds Limited Glasson Group (Lancaster) Limited
Stanton Farm Supplies Limited Eifionydd Farmers Limited Glasson Grain Limited
JOINT VENTURES
Interests in joint ventures are represented by the following limited companies, all of which were incorporated in the UK:
Company name
Interest
Nature of business
Registered office address
Bibby Agriculture Limited
50% - Ordinary
50% - Preference
Distribution of compound animal feeds
Old Croft, Stanwix, Carlisle, Cumbria, United
Kingdom, CA3 9BA
Wyro Developments Limited
50% - Ordinary
Property development
Total Angling Limited
50% - Ordinary
Retailer of angling products
Eagle House, Llansantffraid Ym Mechain,
Powys, SY22 6AQ
Investments in joint ventures listed above are held directly by Wynnstay Group Plc.
Joint ventures are accounted for using the equity method.
The aggregate amounts of the Group’s share of joint venture assets and liabilities are:
Non-current assets
Current assets
Current liabilities
Non-current liabilities
Net Assets
78
2020
£000
721
5,407
(2,702)
(4)
3,422
2019
£000
690
5,625
(3,316)
-
2,999
www.wynnstayplc.co.uk ANNUAL REPORT AND ACCOUNTS 2020 18. SUBSIDIARIES, JOINT VENTURES AND ASSOCIATES continued
The aggregate amount of the Group’s share of joint venture revenue and expenses not included in these financial statements are:
Revenue
Expenses
2020
£000
16,907
(16,369)
The aggregate amount of the Group’s share of pre-tax profits included in these financial statements is:
Group’s share of joint ventures profit before tax
2020
£000
438
2019
£000
17,493
(17,131)
2019
£000
360
PRINCIPAL ASSOCIATES
The above interest in associates is represented by the following limited companies, which are incorporated in the UK:
Company name
Interest
Nature of business
Registered office address
Celtic Pride Limited
33.3%
Production and marketing of premium welsh beef
Castell Howell Foods Ltd, Celtic Pride Ltd Cross Hands
Food Park, Cross Hands, Llanelli, Carmarthenshire,
Wales, SA14 6SX
Summarised financial information in respect of the Group’s associates are as follows:
Total assets
Total liabilities
Net assets
Group’s share of associates’ net assets
Total revenue
Profit for the period
Group’s share of associates’ profit before tax
2020
£000
186
(63)
123
41
-
-
-
2019
£000
422
(301)
121
40
2,378
37
15
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For the purposes of consolidation, the following periods of account have been used for each of the associated undertakings and joint ventures:
Company
Wyro Developments Limited
Bibby Agriculture Limited
Total Angling Limited
Celtic Pride Limited
Accounting period
31 October 2020
31 August 2020
31 October 2020
31 January 2020
79
ANNUAL REPORT AND ACCOUNTS 2020 Wynnstay Group Plc
Notes to the Financial Statements continued
18. SUBSIDIARIES, JOINT VENTURES AND ASSOCIATES continued
TRADING TRANSACTIONS
During the year, the Group and Company entered into the following trading transactions with subsidiaries, joint ventures and associates:
Transactions and balances with subsidiaries
Amounts due from subsidiary undertakings:
Trade receivables
Loans
Amounts due to subsidiary undertakings:
Trade payables
Transactions reported in the statement of comprehensive
income:
Income received
Purchases
Transactions and balances with joint ventures
Amounts due from joint ventures:
Trade receivables
Loans
Amounts due to associated undertaking:
Trade payables
Transactions reported in the statement of comprehensive income:
Revenue
Purchases
Company
2020
£000
-
590
590
-
413
192
Group
Company
2020
£000
427
3,889
4,316
(5)
(5)
5,467
(139)
2019
£000
-
4,413
4,413
96
96
5,651
215
2020
£000
-
3,889
3,889
-
-
-
-
2019
£000
-
(458)
(458)
-
402
296
2019
£000
-
4,413
4,413
-
-
-
-
The above loan has been assessed for impairment under IFRS 9 Financial Instruments expected credit loss model and no adjustments have been
required.
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www.wynnstayplc.co.uk ANNUAL REPORT AND ACCOUNTS 2020 19. INVENTORIES
Raw materials and consumables
Finished goods and goods for resale
Group
2020
£000
5,994
28,196
34,190
2019
£000
10,691
31,548
42,239
Inventories are stated after a provision for impairment of £380,000 (2019: £380,000) (Company £nil (2019: £nil)).
20. TRADE AND OTHER RECEIVABLES
Current
Trade receivables
Other receivables
Fair value of derivatives
Group
2020
£000
53,465
2,292
93
55,850
2019
£000
61,641
1,942
304
63,887
Company
2020
£000
-
-
-
Company
2020
£000
-
-
-
-
2019
£000
-
-
-
2019
£000
-
-
-
-
The carrying value of trade and other receivables classified at amortised cost approximates fair value. No receivables are pledged as collateral or
sold to discounting or debt factoring services.
The Group applies the IFRS 9 simplified approach to measuring expected credit losses using a lifetime expected credit loss provision for trade
receivables and contract assets. To measure expected credit losses on a collective basis, trade receivables and contract assets are grouped based
on similar credit risk and aging. The contract assets have similar risk characteristics to the trade receivables for similar types of contracts.
The expected loss rates are based on the Group’s historical credit losses experienced over the three year period prior to the period end. The
historical loss rates are then adjusted for current and forward-looking information on macroeconomic factors affecting the Group’s customers. The
Group has identified the gross domestic product (GDP), unemployment rate and inflation rate as the key macroeconomic factors in the UK.
The lifetime expected loss provision for trade receivables is as follows:
31 October 2020
Expected loss rate
Gross carrying amount
Loss provision
31 October 2019
Expected loss rate
Gross carrying amount
Loss provision
Current
£000
More than 30
days past due
£000
More than 60
days past due
£000
More than 120
days past due
£000
0.2%
34,157
74
Current
£000
0.1%
37,652
46
0.6%
10,147
63
1.3%
4,064
54
8.7%
5,790
502
More than 30
days past due
£000
More than 60
days past due
£000
More than 120
days past due
£000
0.3%
12,428
32
0.6%
5,252
31
9.2%
7,071
653
Total
£000
54,158
693
Total
£000
62,403
762
81
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ANNUAL REPORT AND ACCOUNTS 2020 Wynnstay Group Plc
Notes to the Financial Statements continued
20. TRADE AND OTHER RECEIVABLES continued
Movements in the impairment allowance for trade receivables are as follows:
Opening provision for impairment of trade receivables
Increase during the year
Receivables written off during the year as un-collectible
Impairment (loss)/gain during the year
At 31 October
21. TRADE AND OTHER PAYABLES
Current
Trade payables
Amounts owed to Group undertakings
Other payables
Accruals and deferred income
Deferred and contingent consideration
Non-current
Deferred and contingent consideration
Group
2020
£000
762
234
(303)
(69)
693
Group
2020
£000
46,048
-
999
4,256
102
51,405
2019
£000
708
81
(27)
54
762
2019
£000
57,659
-
867
2,795
151
61,472
127
185
Company
2020
£000
-
-
-
-
-
Company
2020
£000
-
589
249
-
-
838
2019
£000
-
-
-
-
-
2019
£000
-
458
200
-
-
658
Total financial liabilities, excluding loans and borrowings, classified as
financial liabilities and measured at amortised cost
51,532
61,657
-
658
Current
Other taxes and social security
Fair value of derivatives
Non-current
Government grants
Total trade and other payables
658
263
921
562
79
641
14
52,467
16
62,314
838
-
-
-
-
-
-
-
658
658
The carrying value of trade and other payables classified as financial liabilities measured at amortised cost approximates fair value.
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www.wynnstayplc.co.uk ANNUAL REPORT AND ACCOUNTS 2020 22. CASH, CASH EQUIVALENTS, BORROWINGS AND LEASE LIABILITIES
Current
Cash and cash equivalents per balance sheet
Cash and cash equivalents per cash flow statement
Bank loans and overdrafts due within one year or on demand:
Secured loans
Loanstock (unsecured)
Net obligations under finance leases
Borrowings
Non-property leases
Property leases
Lease liabilities
Total current net cash/(debt) and lease liabilities
Non-current
Bank loans
Secured bank loans
Net obligations under finance leases
Borrowings
Non-property leases
Property leases
Lease liabilities
Total non-current net (debt) and lease liabilities
Total net cash/(debt) and lease liabilities
Group
2020
£000
19,980
19,980
(897)
(675)
-
(1,572)
(1,473)
(2,010)
(3,483)
14,925
-
-
-
(2,228)
(4,281)
(6,509)
(6,509)
8,416
2019
£000
10,608
10,608
(1,457)
(683)
(1,546)
(3,686)
-
-
-
Company
2020
£000
7
7
(897)
(675)
-
(1,572)
-
-
-
2019
£000
7
7
(1,457)
(683)
-
(2,140)
-
-
-
6,922
(1,565)
(2,133)
(902)
(2,176)
(3,078)
-
-
-
(3,078)
3,844
-
-
-
-
-
-
-
(1,565)
(902)
-
(902)
-
-
-
(902)
(3,035)
Memo: excluding property leases
14,707
3,844
(1,565)
(3,035)
All amounts are denominated in GBP and are at book and fair value. The Loanstock is redeemable at par at the option of the Company. Interest of
0.5% (2019: 1.5%) per annum is payable to the holders.
CASH AND CASH EQUIVALENTS
Cash and cash equivalents are all cash at bank and held with HSBC Bank Plc, except for £311,000 (2019: £148,000) which is held at INTL FC
Stones for futures trading. HSBC Bank Plc’s credit rating per Moody’s is A2 (2019: Aa3).
BANK BORROWINGS
Bank loans and overdrafts are secured by an unlimited composite guarantee of all of the trading entities within the Group. One company within the
Group had an overdraft of £253,000 (2019: £230,000). The outstanding loan will be repaid within 1 year, the rate of interest on this loan is 0.85%
over base per annum.
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ANNUAL REPORT AND ACCOUNTS 2020 Wynnstay Group Plc
Notes to the Financial Statements continued
23. LEASES
Nature of leasing activities (in the capacity as lessee)
The group leases a number of properties, certain items of plant and equipment and vehicles. The table below shows the number of leases at 31
October 2020.
Group
Number of lease contracts
Fixed payments %
Property leases with fixed payments
Leases of plant and equipment
Vehicle leases
52
9
108
31%
5%
64%
Land and buildings
£000
Plant, machinery and
motor vehicles
£000
7,684
970
(2,363)
(25)
6,266
4,638
1,861
(1,525)
-
4,974
Land and buildings
£000
Plant, machinery and
motor vehicles
£000
3,839
1,861
143
(2,142)
-
3,701
7,684
970
152
(2,490)
(25)
6,291
2020
£000
117
127
244
Total
12,322
2,831
(3,888)
(25)
11,240
Total
11,523
2,831
295
(4,632)
(25)
9,992
Within one
year
£000
One to two
years
£000
Two to five
years
£000
Over five
years
£000
Total
£000
3,483
2,743
3,194
572
9,992
Group
Right-of-use assets
At November 2019
Additions
Amortisation
Disposal
At 31 October 2020
Group
Lease liabilities
At 1 November 2019
Additions
Interest expense
Lease payments
Disposal
At 31 October 2020
Group
Short-term lease expense
Low value lease expense
Group
Lease liabilities
84
www.wynnstayplc.co.uk ANNUAL REPORT AND ACCOUNTS 2020 24. FINANCIAL INSTRUMENTS
RISK MANAGEMENT
The Group is exposed through its operations to the following financial risks:
•
•
•
•
•
credit risk;
interest rate risk;
foreign exchange risk;
other market price risk; and,
liquidity risk.
In common with all other businesses, the Group is exposed to risks that arise from its use of financial instruments. This note describes the Group’s
objectives, policies and processes for managing those risks and the methods used to measure them. Further quantitative information in respect of
these risks is presented throughout these financial statements.
There have been no substantive changes in the Group’s exposure to financial instrument risks, its objectives, policies and processes for managing
those risks or the methods used to measure them from previous periods unless otherwise stated in this note.
(i) Principal financial instruments
The principal financial instruments used by the Group, from which financial instrument risk arises, are as follows:
•
•
•
•
•
•
•
Trade receivables
Cash and cash equivalents
Investments in quoted and unquoted equity securities
Trade and other payables
Bank overdrafts
Floating- rate bank loans
Forward currency contracts
(ii) Financial instruments by category
Group
Financial assets
Cash and cash equivalents
Trade and other receivables
Derivatives
Fair value through profit or loss
Amortised cost
2020
£000
-
-
93
93
2019
£000
-
-
304
304
2020
£000
19,980
55,757
-
75,737
Group
Fair value through profit or loss
Amortised cost
Financial liabilities
Trade and other payables
Loans and borrowings
Deferred and contingent consideration
Derivatives
2020
£000
-
-
229
263
492
2019
£000
-
-
336
79
415
2020
£000
51,303
1,572
-
-
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s
2019
£000
10,608
63,583
-
74,191
2019
£000
61,321
6,764
-
-
52,875
68,085
85
ANNUAL REPORT AND ACCOUNTS 2020 Wynnstay Group Plc
Notes to the Financial Statements continued
24. FINANCIAL INSTRUMENTS continued
RISK MANAGEMENT continued
(iii) Financial instruments not measured at fair value
Financial instruments not measured at fair value includes cash and cash equivalents, trade and other receivables, trade and other payables, and
loans and borrowings. Due to their short-term nature, the carrying value of cash and cash equivalents, trade and other receivables, and trade and
other payables approximates their fair value. For details of the fair value hierarchy, valuation techniques, and significant unobservable inputs related
to determining the fair value of deferred and contingent consideration which is classified in Level 3 of the fair value hierarchy, refer to the valuation
techniques table below.
(iv) Financial instruments measured at fair value
The fair value hierarchy of financial instruments measured at fair value is provided below:
Group
Financial assets
Derivative financial assets (designated
hedge instruments)
Derivative financial assets (fair value
through profit or loss)
Financial liabilities
Derivative financial liabilities (fair value
through profit or loss)
Deferred and contingent
consideration
Level 1
2020
£000
93
-
93
-
-
-
2019
£000
194
-
194
-
-
-
Level 2
2020
£000
-
-
-
263
-
263
2019
£000
-
110
110
79
-
79
Level 3
2020
£000
-
-
-
-
229
229
2019
£000
-
-
-
-
336
336
There were no transfers between levels during the period.
The valuation techniques and significant unobservable inputs used in determining the fair value measurement of level 2 and level 3 financial
instruments, as well as the inter-relationship between key unobservable inputs and fair value, are set out in the table below:
Financial instrument
Valuation techniques used
Derivative financial assets and
liabilities (designated hedge
instruments)
Market prices published by
INTL FC Stones
Derivative financial assets and
liabilities (fair value through
profit or loss)
Comparative sales and
purchases for contracts at
balance sheet date
Significant unobservable
inputs (level 3 only)
Inter-relationship between
key unobservable inputs
and fair value (level 3 only)
Not applicable
Not applicable
Not applicable
Not applicable
Deferred and contingent
consideration
Realisation of completion net
assets and achievement of
earn-outs
Management accounts
information
Any adjustments to net assets
or profitability of management
accounts department reflected
in fair value
86
www.wynnstayplc.co.uk ANNUAL REPORT AND ACCOUNTS 2020 24. FINANCIAL INSTRUMENTS continued
(iv) Financial instruments measured at fair value continued
The reconciliation of the opening and closing fair value balance of level 3 financial instruments is provided below:
As at 31 October 2018
Payments out of deferred and contingent consideration in year
Payments of deferred and contingent consideration in year
As at 31 October 2019
Payments out of deferred and contingent consideration in year
As at 31 October 2020
Deferred and contingent consideration
£000
(788)
(150)
602
(336)
107
(229)
The sensitivity analysis of a reasonably possible change in one significant unobservable input, holding other inputs constant, of level 3 financial
instruments is not provided as the item above only has one input as described in the valuation table.
GENERAL OBJECTIVES, POLICIES AND PROCESSES
The Board has overall responsibility for the determination of the Group’s risk management objectives and policies and, whilst retaining ultimate
responsibility for them, it has delegated the authority for designing and operating processes that ensure the effective implementation of the objectives
and policies to the Group’s finance function. The Board receives monthly reports from the Group Financial Director through which it reviews the
effectiveness of the processes put in place and the appropriateness of the objectives and policies it sets. The overall objective of the Board is to
set policies that seek to reduce risk as far as possible without unduly affecting the Group’s competitiveness and flexibility. Further details regarding
these policies are set out below:
i) Credit risk
Credit risk is the risk of financial loss to the Group if a customer or counterparty to a financial instrument fails to meet its contractual obligations and
arises principally from the Group’s receivables from customers and investment securities. A significant proportion of the Group’s trade is conducted
on credit terms and as such a risk of non-payment is always present.
Detailed systems of credit approval before initial supply, the operation of credit limits and an active credit control policy act to minimise this risk and
historically the incidence of bad debts is low. The Group’s grain trading activities has exposed it to certain substantial customer credit balances, and
to assist in mitigating this perceived risk, a credit insurance policy has been purchased to provide partial cover against default by certain customers.
The overdue accounts are reviewed monthly at divisional management meetings to mitigate exposure to credit risk and make provisions accordingly.
Concentration of credit risk with respect to trade receivables is limited due to the Group’s customer base being large and unrelated.
ii) Interest rate risk
While currently most of the Group’s term debt is floating base rate linked, the Board constantly review their option to fix the rates attached to this
debt through the use of Interest rate swap derivatives. Fixed rate term finance is used for the acquisition of vehicles. During 2020 and 2019, the
Group’s borrowings at variable rate were denominated in sterling.
At 31 October 2020, if interest rates had been 100 basis points higher/lower with all variables held constant, profit after tax and net assets would
have been £27,000 (2019: £69,000) lower/higher mainly as a result of higher/lower interest expense on floating rate borrowings. The directors
consider that 100 basis points is the maximum likely change in GBP interest rates over the next year, being the period up to the next point at which
the Group expects to make these disclosures.
iii) Foreign exchange risk
The main currency related risk to the Group comes from the forward purchasing of imported raw materials for our Glasson Grain Limited business.
This risk is mainly managed by entering into currency purchase agreements at the time the underlying transaction is completed. The fair value of
these contracts is not material. As at the year end the principal amounts relating to forward purchased currency amounted to £8,733,434 (2019:
£9,178,020).
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ANNUAL REPORT AND ACCOUNTS 2020 Wynnstay Group Plc
Notes to the Financial Statements continued
24. FINANCIAL INSTRUMENTS continued
GENERAL OBJECTIVES, POLICIES AND PROCESSES continued
iv) Other market risk
While the Group does not engage in the taking of speculative commodity positions, it does have to make significant forward purchases of certain
raw materials, particularly for use in its animal feed manufacturing activities. Position reporting systems are in place to ensure the Board is apprised
of the exposure level on a regular basis, and where possible hedging tools, primarily wheat futures contracts on the London LIFFE market, are used
to manage price decisions.
v) Liquidity risk
Liquidity risk is the risk that the Group will not be able to meet its financial obligations as they fall due.
The Group has appropriate overdraft and revolving credit facilities in place to allow flexibility in managing liquidity. It is the Group’s policy to maintain
committed undrawn facilities in order to provide flexibility in the management of the Group’s liquidity.
The Board receives regular monthly cash flow projections as well as information regarding net cash/(debt) at each month end period. At the end
of the financial year, these projections indicated that the Group is expected to have sufficient liquid resources to meet its obligations under all
reasonably expected circumstances.
The table below analyses the Group and Company’s financial liabilities which will be settled on a net basis into relevant maturity groupings based
on the remaining period at the balance sheet date to the contractual maturity date. The amounts disclosed in the tables are the contractual
undiscounted cash flows.
Group
Bank loans and other borrowings
Finance lease liabilities
Derivatives
Trade and other payables
Company
Within
one
year
£000
1,577
3,734
263
51,419
56,993
Within
one
year
£000
Total
£000
1,577
10,700
263
51,546
64,086
Total
£000
Bank loans and other borrowings
1,577
1,577
Amounts due from Group
undertakings
Trade and other payables
589
249
589
249
2,415
1,415
2020
One to
two
years
£000
Two to
five
years
£000
-
-
2,868
3,417
-
85
-
42
Over
five
years
£000
-
681
-
-
Total
£000
3,071
3,869
79
61,657
2019
One to
two
years
£000
907
Two to
five
years
£000
-
1,041
1,207
-
53
-
132
Within
one
year
£000
2,164
1,621
79
61,472
2,953
3,429
681
68,676
65,336
2,001
1,339
Over
five
years
£000
-
-
-
-
-
2020
One to
two
years
£000
-
-
-
-
2019
Two to
five
years
£000
Over
five
years
£000
Within
one
year
£000
One to
two
years
£000
Two to
five
years
£000
Over
five
years
£000
Total
£000
-
-
-
-
-
-
-
-
3,071
2,164
907
458
200
458
200
-
-
3,729
2,822
907
-
-
-
-
-
-
-
-
88
www.wynnstayplc.co.uk ANNUAL REPORT AND ACCOUNTS 2020 GENERAL OBJECTIVES, POLICIES AND PROCESSES continued
vi) Capital disclosures
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 for
shareholders and benefits for other stakeholders; and to maintain an efficient capital structure to optimise 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 on the basis of the gearing ratio. This ratio is calculated as net cash/(debt) divided by total equity. Net cash/(debt) is
calculated as cash and cash equivalents less total borrowings (including current and non-current borrowings) and lease liabilities. Total equity is as
shown in the consolidated balance sheet.
Cash and cash equivalents
Loans and borrowings
Lease liabilities
Net cash
Total equity
Net cash to equity ratio (%)
2020
£000
19,980
(1,572)
(9,992)
8,416
98,178
8.57%
2019
£000
10,608
(6,764)
-
3,844
94,948
4.05%
The Group monitors cash balances and net (cash)/debt on a daily basis to ensure adequate headroom exists on banking facilities and that it is
compliant with banking covenants.
25. DEFERRED TAXATION
At 1 November
Charge for the year
At 31 October
The provision for deferred taxation is made up as follows:
Accelerated capital allowances
Other temporary and deductible differences
26. SHARE CAPITAL
Authorised
Ordinary shares of 25p each
Allotted, called up and fully paid
Ordinary shares of 25p each
Group
2020
£000
228
25
253
Group
2020
£000
392
(139)
253
2019
£000
228
-
228
2019
£000
228
-
288
Company
2020
£000
-
-
-
Company
2020
£000
-
-
-
2020
No. of shares
000
2020
£000
2019
No. of shares
000
2019
£000
-
-
-
2019
£000
-
-
-
2019
£000
F
i
n
a
n
c
i
a
l
S
t
a
t
e
m
e
n
t
s
40,000
10,000
40,000
10,000
20,051
5,013
19,896
4,974
During the year 155,035 shares (2019: 124,212) were issued with an aggregate nominal value of £38,759 (2019: £31,053) and were fully paid up
for equivalent cash of £392,135 (2019: £373,457) to shareholders exercising their right to receive dividends under the Company’s Scrip dividend
scheme.
No other shares were issued (2019: nil).
89
ANNUAL REPORT AND ACCOUNTS 2020 Wynnstay Group Plc
Notes to the Financial Statements continued
27. SHARE-BASED PAYMENTS
The following options were exercised, lapsed and outstanding at the year end:
Exercise
Price per
share £
Exercisable by
Apr 2015 - Feb 2024
As at
1 November
2019
Issued in
year
Lapsed
in year
As at
31 October
2020
Discretionary Share Option Schemes
Granted April 2012
3.7500
Apr 2015 - Mar 2022
Granted October 2014
5.4750
Oct 2017 - Oct 2024
Granted January 2020 Nil cost
Oct 2022 - Mar 2023
Savings Related Option Schemes
Granted July 2016
3.7000
Aug 2021 - Jan 2022
Granted September 2018 4.0000
Oct 2023 - Mar 2024
Granted August 2020
2.7500
Sep 2023 - Feb 2024
24,000
263,000
-
287,000
275,992
275,000
-
551,392
838,392
-
-
146,647
146,647
-
-
459,528
459,528
606,175
-
(112,000)
-
(112,000)
(114,783)
(139,905)
(2,550)
(257,238)
(369,238)
24,000
151,000
146,647
321,647
161,209
135,495
456,978
753,682
1,075,329
During the year Nil (2019: Nil) Discretionary Share Options and Nil (2019: Nil) Savings Related Options were exercised and satisfied by the allotment
of Nil (2019: Nil) new shares by the Company. The change in the number of other Discretionary and Savings Related Options relate to members
withdrawing from the scheme by leaving employment, exercise conditions not being met or by employees closing their savings contracts. During the
period 146,647 new nil cost options were granted to certain executives under the terms of the Performance Share Plan approved by shareholders
in March 2019.
During the year, the Group charged £96,000 (2019: £49,000) of share-based remuneration cost to its Group Statement of Comprehensive Income
based on a movement in the fair value of outstanding options granted after November 2002.The weighted average fair value of these options were
estimated by using the Black-Scholes option-pricing model and the following assumptions:
Weighted average assumptions
Share price at year end
Average share price
Exercise price
Expected volatility
Weighted average remaining contractual life
Number of options
Risk free interest rate at inception
Number of options exercisable
2020
£2.85
£2.93
£2.66
42.69%
2.29 years
900,329
0.10% - 0.75%
175,000
2019
£2.78
£3.51
£3.85
34.70%
2.75 years
551,392
0.50% - 0.75%
287,000
The expected volatility used was the standard deviation of the daily share price over the previous year and the risk fee interest rate was based on
bank base rate at the inception of each scheme.
90
www.wynnstayplc.co.uk ANNUAL REPORT AND ACCOUNTS 2020 28. CAPITAL COMMITMENTS
At 31 October 2020 the Group and Company had capital commitments as follows:
Contracts placed for future capital expenditure not provided in
the financial statements
29. PENSION COMMITMENTS
Group
2020
£000
264
2019
£000
808
Company
2020
£000
-
2019
£000
-
The Group operates two defined contribution pension schemes which are administered on separate bases. The pension and associated costs
charge for the year £1,109,000 (2019: £984,000). The liability owed to the pension schemes at 31 October 2020 was £147,000 (2019: £139,000).
30. EMPLOYEE SHARE OWNERSHIP TRUST
The Company operates an employee share ownership trust (ESOP). As at 31 October 2020, 16,834 ordinary 25p shares (2019: 16,834 ordinary
25p shares) were held by the trust with an aggregate market value of £47,977 2019: £65,011). The assets, liabilities, income and costs of the ESOP
are incorporated into the financial statements of the Group.
31. RELATED PARTY TRANSACTIONS
During the year sales and purchases took place between the Group and a number of its directors. All transactions were carried out on an arm’s
length basis. Directors and their remuneration is disclosed within the Director’s Remuneration disclosure (note 9)
Group
Gareth Davies
Steve Ellwood
Andrew Evans (resigned 1 December 2020)
Philip Kirkham
Jim McCarthy
Howell Richards
Paul Roberts
Total sales
Balance outstanding
2020
£000
2
-
297
352
-
3,382
1
4,034
2019
£000
2
-
305
360
-
3,798
1
4,466
2020
£000
-
-
84
37
-
1,316
-
1,437
During the year Group companies entered into the following transactions with related parties who are not members of the Group:
Group
Purchases from NIAB, a company whose Directors include
S J Ellwood
Total sales
Balance outstanding
2020
£000
119
2019
£000
136
2020
£000
-
F
i
n
a
n
c
i
a
l
S
t
a
t
e
m
e
n
t
s
2019
£000
-
-
58
63
-
1,084
-
1,205
2019
£000
21
91
ANNUAL REPORT AND ACCOUNTS 2020 Wynnstay Group Plc
Notes to the Financial Statements continued
32. CASH GENERATED FROM OPERATIONS
Group
Company
Profit for the year from operations
Adjustments for:
Tax
Dividend received
Investment and goodwill impairment
Depreciation of tangible fixed assets
Amortisation of right-of-use assets
Amortisation of other intangible fixed assets
Profit on disposal of property, plant and equipment
Loss on disposal of right-of-use asset
Profit from distribution from Joint ventures and associates
Interest income
Interest expense
Share of results of joint ventures and associates
Share-based payments
Changes in working capital (excluding effects of
acquisitions and disposals of subsidiaries):
Decrease/(increase) in short-term loans to joint venture
Decrease in inventories
Decrease in trade and other receivables
(Decrease)/increase in payables
Cash generated from operations
33. RECONCILIATION OF LIABILITIES FROM FINANCING
As at 1 November 2018
Cash-flows
- New Borrowings
Non-cash flows
- New finance leases
- Finance leases acquired through business combinations
- Loans and borrowings classified as non-current at 31
October 2018 becoming current during year ended 31
October 2019
2020
£000
5,533
1,448
-
601
2,290
3,888
36
(142)
25
-
(164)
436
(438)
96
524
8,049
8,055
(9,865)
20,372
2019
£000
6,132
1,421
-
-
3,579
-
28
(170)
-
(84)
(164)
348
(360)
49
(1,601)
10,171
7,426
(12,019)
14,756
2020
£000
2,325
82
(2,900)
601
424
-
-
-
-
(2)
(85)
19
-
96
524
-
-
180
1,264
Group
Non-
Current
loans and
borrowings
£000
3,766
Current
loans and
borrowings
£000
3,887
Non-
Current
loans and
borrowings
£000
2,356
Total
£000
7,653
Company
Current
loans and
borrowings
£000
2,647
2019
£000
3,141
127
(3,000)
-
402
-
-
-
-
(132)
(31)
59
-
49
(1,601)
-
2,799
410
2,223
Total
£000
5,003
-
(3,769)
(3,769)
2,057
15
793
15
2,850
30
-
-
-
(1,961)
(1,961)
-
-
-
-
-
(2,760)
2,760
-
(1,454)
1,454
As at 31 October 2019
3,078
3,686
6,764
Amounts reclassified as lease liabilities on
adoption of IFRS 16
(2,176)
(1,546)
(3,722)
As at 1 November 2019
902
2,140
3,042
902
-
902
2,140
3,042
-
-
2,140
3,042
Cash-flows
-Repayments of borrowings
Non-cash flows
-
(1,470)
(1,470)
-
(1,470)
(1,470)
- Loans and borrowings classified as non-current at
31 October 2019 becoming current during year
ended 31 October 2020
(902)
902
-
(902)
902
-
As at 31 October 2020
-
1,572
1,572
-
1,572
1,572
92
www.wynnstayplc.co.uk ANNUAL REPORT AND ACCOUNTS 2020 34. EFFECTS OF CHANGES IN ACCOUNTING POLICES
Effects Of Changes In Accounting Polices
The Group adopted IFRS 16 Leases with a transition date of 1 November 2019. The Group has chosen not to restate comparatives on adoption
of IFRS 16, and therefore, the revised requirements are not reflected in the prior year financial statements. Rather, these changes have been
processed at the date of initial application (i.e 1 November 2019) and recognised in the opening equity balances. Other new and amended
standards and Interpretations issued by IASB did not impact the Group as they either not relevant to the Group’s activities or require accounting
which is consistent with the Group’s current accounting policies.
i) IFRS 16 Leases
Effective 1 November 2019, IFRS 16 has replaced IAS 17 Leases and IFRIC 4 Determining whether an Arrangement Contains a Lease.
IFRS 16 provides a single lessee accounting model, requiring the recognition of assets and liabilities for all leases, together with options to exclude
leases where the lease term is 12 months or less, or there the underlying asset is of low value.
IFRS 16 substantially carried for the lessor account in IAS 17, with the distinction between operating leases and finance leases being retained. The
Group does not have significant leasing activities acting as a lessor.
TRANSITION METHOD AND PRACTICAL EXPEDIENTS UTILISED
The Group adopted IFRS 16 using the first variation of the modified retrospective approach, and therefore at initial application recognised a right-
of-use asset and lease liability of £7.3m using the Group incremental borrowing rate at 1 November 2019. Hence there was no impact to net
assets on 1 November 2019. The Group elected to apply the practical expedient to not reassess whether a contract is, or contains a lease at
the date of initial application. Contracts entered into before the transition date that were not identified as leases under IAS 17 and IFRIC 4 were
not reassessed. The definition of a lease under IFRS 16 was applied only to contracts entered into or changed on or after 1 November 2019.
IFRS 16 provides for certain optional practical expedients, including those related to the initial adoption of the standard. The Group applied for
the following practical expedients when applying IFRS 16 to leases previously classified as operating leases under IAS 17:
(a) apply a single discount rate to the portfolio of leases with reasonably similar characteristics;
(b) exclude initial direct costs from the measurement of right-of-use assets at the date of initial application for the lease where the right-of-use
asset was determined as if IFRS 16 had been applied since the commencement date;
(c) reliance on previous assessments on whether leases are onerous as opposed to preparing an impairment review under IAS 36 as at the
date of initial application; and
(d) applied the exemption not to recognise right-of-use assets and liabilities for leases with less than 12 months of lease term remaining as
of the date of initial application.
As a lessee, the Group previously classified leases as operating or financial leases based on its assessment of whether the lease transferred
substantially all of the risk and rewards of ownership. Under IFRS 16, the Group recognises right-of-use assets and lease liabilities for most
leases. However, the Group has elected not to recognise right-of-use asset and lease liabilities for some leases of low value assets based on the
value of the underlying asset when new or for short-term leases with a lease term of 12 months or less.
Classification before IFRS 16 Classification under IFRS 16
Operating Leases
Land and buildings: Right-of-use assets are
measured at an amount equal to the lease
liability, adjusted by the amount of any prepaid
or accrued lease payments.
All other: the carrying value that would have
resulted from IFRS 16 being applied from the
commencement date of the leases, subject to
the practical expedients noted above.
Measured at the present value of the remaining
lease payments, discounted using the Group’s
incremental borrowing rate as at 1 November
2019. The Group’s incremental borrowing rate
could be obtained from an independent creditor
under comparable terms and conditions.
The weighted-average rate applied was 2.09%
Finance Leases
Carrying values brought forward, reclassified
from property, plant and equipment into right-
of-use assets
Carrying values brought forward from financial
liabilities – borrowings into lease liabilities
F
i
n
a
n
c
i
a
l
S
t
a
t
e
m
e
n
t
s
93
ANNUAL REPORT AND ACCOUNTS 2020 Wynnstay Group Plc
Notes to the Financial Statements continued
34. EFFECTS OF CHANGES IN ACCOUNTING POLICES continued
i) IFRS 16 Leases continued
The following table presents the impact of adopting IFRS 16 on the statement of financial position as at 1 November 2019.
ASSETS
NON-CURRENT ASSETS
Property, plant and equipment
Right-of-use assets
LIABILITIES
Current Liabilities
Borrowings
Lease Liabilities
NON CURRENT LIABILITIES
Borrowings
Lease Liabilities
Equity
Retained Earnings
(a)
(b)
(c)
(d)
(c)
(d)
(e)
As Originally presented
at 31 October 2019
£000
IFRS 16
adjustments
£000
1 November
2019
£000
23,225
-
(3,686)
-
(3,078)
-
56,261
(4,521)
12,322
18,704
12,322
1,546
(3,937)
2,176
(7,586)
(2,140)
(3,937)
(902)
(7,586)
-
56,261
(a) Property, plant and equipment was adjusted to reclassify leases previously classified as finance type to right-of-use assets. The adjustment
reduced the cost of property, plant and equipment by £6.5m and accumulated amortisation by £2.0m for a net adjustment of £4.5m.
(b) The adjustment to Right-of-use assets is comprised of £4.5m finance type leases and £7.8m operating type leases, resulting in a total
adjustment of £12.3m.
(c) Loans and borrowings were adjusted to reclassify leases previously classified as finance type leases to lease liabilities.
(d) The following table reconciles the minimum lease commitments disclosed in the Group’s 31 October 2019 annual financial statements to
the amount of lease liabilities recognised on 1 November 2019.
Minimum operating lease commitments at 31 October 2019
Less: short-term leases not recognised under IFRS 16
Less: low value leases not recognised under IFRS 16
Other amendments
Undiscounted lease payments
Less: effect of discounting using the incremental borrowing rate as at the date of initial application
Lease liabilities for leases classified as operating type under IAS 17
Plus: leases previously classified as finance type under IAS 17
Lease Liability as at 1 November 2019
£000
7,848
(5)
(40)
458
8,261
(460)
7,801
3,722
11,523
(e) Retained earnings were not impacted as a result of adopting IFRS 16.
ii) IFRIC 23 Uncertainty over Income Tax Treatments
IFRIC 23 provides guidance on the accounting for current and deferred tax liabilities and assets in circumstances in which there is uncertainty over
income tax treatments. The Interpretation requires:
•
•
•
the Group to determine whether uncertain tax treatments should be considered separately, or together as a group, based on which
approach provides better predictions of the resolution;
the Group to determine if it is probable that the tax authorities will accept the uncertain tax treatment; and
if it is not probable that the uncertain tax treatment will be accepted, measure the tax uncertainty based on the most likely amount or
expected value, depending on whichever method better predicts the resolution of the uncertainty. This measurement is required to be
based on the assumption that each of the tax authorities will examine amounts they have a right to examine and have full knowledge
of all related information when making those examinations.
No adjusting entries were required on the date of application, 1 November 2019.
94
www.wynnstayplc.co.uk ANNUAL REPORT AND ACCOUNTS 2020 Financial Calendar
27 January 2021
Announcement of 2020 Results
23 March 2021
Annual General Meeting
06 April 2021
Dividend Record Date
30 April 2021
Payment of Final 2020 Dividends
June 2021
Announcement of 2021 Interim Results
Shareholder Fraud Warning
Shareholders are advised that as the Company’s share register is a
public document, details concerning individual shareholdings may be
available to people who may try to use such information for fraudulent,
scam or other criminal purposes. Extreme diligence is recommended
whenever you receive any un-solicited contact about your Wynnstay
Group plc shares or any other investment holding. Fraudsters can
be very persuasive and will use high pressure tactics to try to scam
investors they believe to have disposable resources. Such contact
may be used to sell shares or other investments which may be fake or
worthless, or to try to persuade you to dispose of existing investments
for below their market value.
The Financial Conduct Authority (FCA) has a very useful website
providing information on known frauds and scams, and identifying
companies that may be operating in an unauthorised or illegal manner,
which is likely to increase the risk associated with doing business with
them. Please visit https://www.fca.org.uk/scamsmart.
Some simple advice to avoid investment scams and share frauds
include :
1.
2.
3.
4.
Hang up on cold calls – if you are cold called in relation
to investment opportunities there is a high risk that it may
involve an attempted scam. The safest thing to do is to hang
up.
Check out any firm – before considering any relationship
with a new individual or firm offering financial services,
check them out on the Financial Services Register on the
FCA website. Generally all businesses legally authorised to
offer such services will be regulated by the FCA.
Get impartial advice – before handing over any money in
relation to new investments, think about seeking advice
from someone unconnected to the new contact or entity
that would receive your funds.
Report a scam – if you suspect you have been approached
by attempted fraudsters, then please report it to the FCA
by using the reporting form available on the FCA website.
If you have actually lost money to an investment fraud,
you should report it to the police using the Action Fraud
National Reporting scheme on 0300 123 2040 or http://
www.actionfraud.police.uk/.
REMEMBER, IF IT SOUNDS TOO
GOOD TO BE TRUE, IT PROBABLY IS !
S
h
a
r
e
h
o
l
d
e
r
I
n
f
o
r
m
a
t
i
o
n
95
ANNUAL REPORT AND ACCOUNTS 2020 Wynnstay Group Plc
Notice of Annual General Meeting
At the date of this Notice, the Government’s regulations and
guidance prohibit public gatherings and it will therefore not be
possible for shareholders to attend the Meeting in person, and
your immediate attention is drawn to the Notes to this Notice
on page 97.
Notice is hereby given that the twenty ninth Annual General Meeting
(the “Meeting”) of Wynnstay Group plc (the “Company”) will be held
virtually from the Wynnstay Group plc registered office at Eagle House,
Llansantffraid, Powys, SY22 6AQ on Tuesday 23 March 2021 at 11.45
am to transact the following business:
ORDINARY BUSINESS
1.
2.
3.
4.
5.
6.
To receive and adopt the Company’s annual accounts for
the financial year ended 31 October 2020 together with the
Directors’ Report and Auditors’ Report on those accounts.
To declare a final dividend for the year ended 31 October
2020.
To re-appoint the following Director who retires by rotation
under Article 91: Philip Michael Kirkham.
To re-appoint the following Director who retires by rotation
under Article 91: Howell John Richards.
To re-appoint BDO LLP as auditors, to hold office from the
conclusion of the Meeting to the conclusion of the next
Meeting at which accounts are laid before the Company at
a remuneration to be determined by the Directors.
To approve an amendment to the rules of the Wynnstay
Performance Share Plan (“PSP”), which are produced in
final form to this meeting and initialled by the Chairman of
the meeting for the purposes of identification, specifically to:
(i) change rule 5.1 of the PSP to increase the limit restricting
the grant of awards where the total number of “Dilutive
Shares” as defined in the PSP rules, from 10% to 15% of
the issued share capital of the Company.
(ii) change rule 5.2 of the PSP to increase the limit restricting
the grant of awards where the total number of “Discretionary
Dilutive Shares” as defined in the PSP rules, from 5% to
10% of the issued share capital of the Company.
SPECIAL BUSINESS
To consider and, if thought fit, pass the following Resolutions which will
be proposed as Special Resolutions:
7.
That, the Directors be and they are hereby generally and
unconditionally authorised for the purposes of Section 551
of the Companies Act 2006 (the “Act”) to exercise all powers
of the Company to allot equity securities up to an aggregate
nominal amount of £450,000 provided that this authority
shall, unless renewed, varied or revoked by the Company
in General Meeting, expire on the earlier of the next Annual
General Meeting of the Company and 15 months from the
date of this Resolution save that the Company may, before
such expiry, make an offer or agreement which would or
might require relevant securities to be allotted after such
expiry, and the Directors may allot relevant securities in
pursuance of such offer or agreement notwithstanding
that the authority conferred by this Resolution has expired.
This authority is in substitution for all previous authorities
conferred upon the Directors pursuant to Section 551 of the
Companies Act 2006, but without prejudice to the allotment
of any relevant securities already made or to be made
pursuant to such authorities.
96
8.
That, subject to passing Resolution 6 earlier, the Directors
be and they are empowered pursuant to Section 570 of the
Act to allot equity securities wholly for cash pursuant to the
authority conferred by the previous Resolution as if Section
561 of the Act did not apply to any such allotment, provided
that this power shall be limited to the allotment of equity
securities:
(a) in connection with an offer of such securities
by way of rights to holders of Ordinary Shares in
proportion (as nearly as may be practicable) to their
respective holdings of such shares, but subject to such
exclusions or other arrangements as the Directors may
deem necessary or expedient in relation to fractional
entitlements or any legal or practical problems under
the laws of any territory, or the requirements of any
regulatory body or stock exchange; and
(b) otherwise than pursuant to sub-paragraph (a) above
up to an aggregate nominal amount of £450,000, and
shall expire on the earlier of the next Annual General
Meeting of the Company and 15 months from the
date of this Resolution save that the Company many,
before such expiry make an offer or agreement which
would or might require equity securities to be allotted
after such expiry and the Directors may allot equity
securities in pursuance of any such offer or agreement
notwithstanding that the power conferred by this
Resolution has expired.
9.
That, the Company be and is generally and unconditionally
authorised for the purposes of Section 701 of the Act to
make one or more market purchases (within the meaning of
Section 693 of the Act) on the London Stock Exchange of
Ordinary Shares of £0.25 each in the capital of the Company
provided that:
(a) the maximum aggregate number of Ordinary Shares
authorised to be purchased is 500,000 (representing
approximately 2.4% of the Company’s issued ordinary
share capital);
(b) the minimum price which may be paid for such
shares is £0.25 per share;
(c) the maximum price which may be paid for an
Ordinary Shares shall not be more than 5% above the
average of the middle market quotations for an ordinary
share as derived from the London Stock Exchange
Daily Official List for the five business days immediately
preceding the date on which the ordinary share is
purchased;
(d) unless previously renewed, varied or revoked, the
authority conferred shall expire at the conclusion of the
Company’s next Annual General Meeting or 15 months
from the date of passing this Resolution, if earlier; and
(e) the Company may make a contract or contracts
to purchase Ordinary Shares under the authority
conferred prior to the expiry of such authority which will
or may be executed wholly or partly after the expiry of
such authority and may make a purchase of ordinary
shares in pursuance of any such contract or contracts.
By Order of the Board
Claire Williams
26 January 2021
Company Secretary
Wynnstay Group Plc
Eagle House
Llansantffraid-ym-Mechain
Powys, SY22 6AQ
www.wynnstayplc.co.uk ANNUAL REPORT AND ACCOUNTS 2020
Notes to Notice of Annual General Meeting
The proposed increase of 5% in the respective limits for
each of the above categories will provide the Remuneration
Committee the authority to grant new awards prior to 2023
which is deemed in the best interests of the Company.
The draft rules of the revised PSP will be available on
request from the Company’s registered offi ce (at Eagle
House, Llansantff raid, Powys SY22 6AQ) from the date of
this Notice until the end of the Annual General Meeting.
4.
Authority to allot shares
Special resolutions 7 & 8 are put forward to give the directors
authority to allot new shares (including to those shareholders
exercising their preference to receive dividends in the form
of Scrip shares). The resolutions limit the requested authority
to the stated maximum as an added shareholder protection.
These authorities give the directors the fl exibility in fi nancing
possible business opportunities and are normal practise for
a company of this size and are routinely put to shareholders.
5.
Authority to purchase shares
Special resolution 9 is put forward to give the directors the
ability to buy back and cancel existing shares if they feel
that such action would benefi t all remaining shareholders
and are normal practise for a company of this size and are
routinely put to shareholders.
6.
Documents on display
Copies of necessary documents will be available on the
Company’s website prior to and during the Meeting.
7.
Enquiries relating to the Meeting
Members are welcome to contact the Company Secretary
with any enquiries relating to the Meeting or the Agenda
during normal business hours at any time prior to the
Meeting. Enquiries concerning shareholdings should be
directed to the Company’s external registrar at the following
address: Neville Registrars, Neville House, Steelpark Road,
Halesowen, West Midlands, B62 8HD (Tel. 0121 585 1131).
1.
Meeting format
As at the date of this Notice, the Government’s regulations
and guidance prohibit public gatherings and it will therefore
not be possible for shareholders to attend the Meeting
in person, and therefore proceedings will take place
virtually with arrangements in place to allow participation
by shareholders to the best extent practically possible,
including:
- All resolutions will be decided on a poll of members, votes
for which will require to be submitted no later than 24 hours
before the meeting.
- Shareholders may submit questions to be addressed
during the meeting by emailing their question to
shareholder_communications@wynnstay.co.uk no later than
7 days before the meeting.
- Shareholders may listen to the meeting on a conference
call by requesting a contact number ahead of the meeting
by emailing shareholder_communications@wynnstay.co.uk
no later than 24 hours before the meeting.
.
2.
Appointment of proxies
A member of the Company is entitled to appoint a proxy
to exercise all or any of their rights to attend, speak and
vote at the Meeting. A form of proxy accompanies this
document and if it is to be used, it must be deposited at the
Companies Head Offi ce not less than 24 hours before the
meeting.
3.
Amendment of the rules of the Wynnstay Performance
Share Plan
Resolution 6 relates to the proposal to change the rules
of the employee share plan that is intended to reward and
incentivise the executive directors and key members of
senior management. The reason for the proposal is that the
current limits initially incorporated in the plan are eff ectively
preventing the issue of any awards under the scheme until
2023 because of previously allotted shares during the last
ten years. The defi nitions of Dilutive Shares and Discretionary
Dilutive Shares for the purpose of the PSP are:
Dilutive Shares: on any date, all shares of the Company
which:
(a) have been issued, or transferred out of treasury, on the
exercise of options granted, or in satisfaction of any other
awards made, under any Share Incentive Plan (including
the Plan) during the ten years ending on (and including)
that date; and
(b) remain capable of issue, or transfer out of treasury,
under any Existing Award.
For the avoidance of doubt, Shares subject to Transfer Only
Awards are not Dilutive Shares.
Discretionary Dilutive Shares: Dilutive Shares which:
(a) were acquired under; or
(b) remain subject to Existing Awards granted under, any
Share Incentive Plan (including the Plan) under which
awards:
(a) are made at the discretion of the Committee or any
other grantor; and
(b) do not have to be off ered to all, or substantially all,
employees who are eligible to participate.
ANNUAL REPORT AND ACCOUNTS 2020 Wynnstay Group Plc
ANNUAL REPORT AND ACCOUNTS 2020 Wynnstay Group Plc
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Wynnstay Group PLC
Eagle House, Llansantffraid, Powys, SY22 6AQ
01691 828512
www.wynnstayplc.co.uk
Registered in Wales and England