Delivering a sustainable farming future
Annual Report and Accounts 2023
Contents
Strategic Report
Operational Highlights
Financial Highlights
Group Structure
Wynnstay at a Glance
Our Divisions
Our Pillars
Business Model
Growth Strategy
Chairman’s Statement
Chief Executive’s Report
Finance Review
Company Details and Advisors
Principal Risks and Uncertainties
S172 Statement
ESG Framework
Environmental Strategy
TCFD Statement
SECR Statement
Social
Corporate Values
Corporate Governance Statement
Audit Committee Report
Directors’ Responsibility Statement
Board of Directors and Company Secretary
Senior Management
Directors’ Report
Directors’ Remuneration Report
Independent Auditor’s Report
Financial Statements
Consolidated Statement of Comprehensive Income
Consolidated and Company Balance Sheets
Consolidated and Company Statement of Changes in Equity
Consolidated and Company Cashflow Statement
Principal Accounting Policies
Notes to the Accounts
Shareholder Information
Notice of Annual General Meeting
Notes to Notice of Annual General Meeting
Financial Calendar
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4
5
6
7-10
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12
13
15-18
19-22
25-27
28
29-31
32-33
34
35-37
38
39-42
43-44
45-48
49-51
52
53-54
55-56
57-58
59-65
66-68
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70
71-72
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74-78
79-113
114
115-116
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Operational Highlights
ESG
SIGNIFICANT INVESTMENT
We have progressed well with our internal sustainability
objectives, focusing on carbon, water and waste. During the
year, we made a £1 million investment into a solar project.
This is part of a wider £5m renewable energy investment
programme spread over three years, which not only will help
us deliver a substantial element in our net zero programme but
will also be an attractive investment opportunity.
FEED
EXPANSION BY ACQUISITION
feed manufacturing capability
In November 2022, Tamar Milling was acquired, which
the
expanded our
Southwest. Following the acquisition of Humphrey Feeds
in the previous financial year, we brought our poultry feed
offerings together to form the combined brand Wynnstay
Humphrey Feeds & Pullets. We continued to make progress
with our investment programme in Carmarthen Mill, with the
new bin block completed and operational from January 2024.
into
GRAIN
RECORD PERFORMANCE
2023 saw an excellent performance by our grain trading
business GrainLink, who delivered record results following
a good-sized harvest, higher market penetration and our
eastern expansion.
3
ANNUAL REPORT AND ACCOUNTS 2023 Financial Highlights
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Group Revenue (£m)
Shareholder’s Funds
Underlying Pre-tax Profit*
£735.88m
£135.23m
£9.24m
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Dividend per Share (pence)
Earnings per Share (pence)
17.25p
30.75p
Colleagues
944
*Underlying pre-tax profit is a non-GAAP (generally accepted accounting principles) measure and is not intended as a substitute for GAAP measures and may not be calculated
in the same way as those used by other companies. Refer to Note 36 of the Financial Statements on page 112 for an explanation on how this measure has been calculated and
the reasons for its use.
4
ANNUAL REPORT AND ACCOUNTS 2023 Wynnstay Group Plc‘20‘23‘19‘21‘22‘20‘19‘21‘22‘23‘20‘19‘21‘22‘23‘20‘19‘21‘22‘23‘20‘19‘23‘21‘22‘20‘21‘23‘19‘22 Group Structure
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.
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.
Our Mission:
To help the farmer to feed the UK in a more sustainable way
AGRICULTURE
SPECIALIST
AGRICULTURAL
MERCHANTING
FEED
DEPOTS
ARABLE
YOUNGS ANIMAL FEEDS
GLASSON
5
ANNUAL REPORT AND ACCOUNTS 2023 Wynnstay at a Glance
2
COMPLEMENTARY & BALANCED DIVISIONS
A robust and balanced business model with two
complementary divisions - Agriculture and Specialist
Agricultural Merchanting.
944
COMMITTED AND LOYAL COLLEAGUES
Committed and loyal colleagues who offer technical
advice to support the prosperity of our farmer customer
base through efficiencies and an extensive range of
products.
25K
PRODUCTS
A broad range of agricultural products, marketed
via a multichannel sales offering.
12
53
33
MANUFACTURING SITES
Manufacturing sites across our trading area for
the production or processing of fertiliser, feed and
seed.
DEPOTS
53 depots across our trading areas catering for the
needs of farmers and rural dwellers.
ACQUISITIONS SINCE 2004
33 acquisitions alongside a number of other
commercial initiatives since 2004. Opportunities for
future growth into the currently fragmented farming
and rural economy by increased geographic reach
through organic and focused acquisitions.
6
ANNUAL REPORT AND ACCOUNTS 2023 Wynnstay Group Plc Our Divisions
Agriculture
Comprises the manufacturing and supply of a comprehensive range of agricultural inputs to customers across many parts of the
UK.
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.
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 offices in Shropshire
and Yorkshire.
FEED
The Group operates three feed mills and three blending plants, 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.
The Feed operation caters for the needs of dairy, sheep and beef
enterprises, and organic and conventional poultry feeds are marketed
under the brand Wynnstay Humphrey Feeds & Pullets following the
integration of Humphrey Feeds in 2023.
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, Montrose, and Howden, 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.
7
ANNUAL REPORT AND ACCOUNTS 2023 8
ANNUAL REPORT AND ACCOUNTS 2023 Wynnstay Group Plc Our Divisions
Specialist Agricultural Merchanting
Supplies specialist agricultural and associated sundry products to customers throughout Wales, the 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 53 depots across
Wales, the Midlands, North West and South West England, supplying
to farmers, smallholders and rural dwellers.
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, including our
own depot network, in Wales and the Midlands. The Sweet Meadow
branded equine feed range is a market-leading product.
Our team is trained to help customers with technical advice and our
customers can purchase via depot, click and collect or for direct
delivery.
We partner with pharmaceutical companies to provide specialist
advice on animal health and other agricultural products
9
ANNUAL REPORT AND ACCOUNTS 2023 10
ANNUAL REPORT AND ACCOUNTS 2023 Wynnstay Group Plc Our Pillars
EXPERT GUIDANCE
ACQUISITIONS
ORGANIC GROWTH
MULTI-CHANNEL
VISION
ESG
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.
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.
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.
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.
11
ANNUAL REPORT AND ACCOUNTS 2023 Business Model
OUR PROPOSITION
Trusted Experts
Product Range
Manufacturing
Capability
WE INVEST IN
Multi-Channel
Offering
Established
Culture & Values
People
Technology
Manufacturing
Acquisitions
CREATING STAKEHOLDER VALUE
Customers
Employees
Shareholders
Suppliers
Communities
12
ANNUAL REPORT AND ACCOUNTS 2023 Wynnstay Group Plc
Growth Strategy
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.
Acquisitions
Act as consolidator in
the UK agricultural supply
sector
Continue ‘bolt-on”
geographic transactions
Seek larger
opportunities to
complement existing
activities and enhance
economics of scale
Organic Growth
Enhance
relationships with
key customers
through CRM
Maximise
cross-selling
opportunities,
supported with
technical advice
from trained
colleagues
Develop new
sales channels,
including through
digital channels.
Seek new
depot and
operating centre
opportunities to
grow footprint and
increase efficiencies
Continuous
investment in
research and
development to
offer innovative
products
13
ANNUAL REPORT AND ACCOUNTS 2023 14
ANNUAL REPORT AND ACCOUNTS 2023 Wynnstay Group Plc Chairman’s Statement
“
Trading conditions
over the financial year
contrasted sharply to the
prior year”
on developing both our environmental offering to customers, and the
steps needed to attain the Group’s Net Zero ambitions. Our Renewable
Energy Programme to install solar arrays started and progressed well
in its first year of roll-out, and we are involved with some exciting
environmental projects. We will be adding to our teams of on-farm
specialists, who advise farmers on how to achieve their farming
objectives. These objectives increasingly concern environmental goals
as Government support shifts to payments according to environmental
outcomes.
FINANCIAL RESULTS
Group revenue for the year to 31 October 2023 increased by 3%
to £735.9 million (2022: £713.0 million). This included full year
contributions from two acquisitions, Humphrey Feeds and Tamar
Milling Ltd, partly offset by the significant correction in fertiliser prices,
which returned to more normalised levels from the historic highs
recorded in 2022, following Russia’s invasion of Ukraine.
As expected, adjusted operating profit and underlying Group pre-tax
profit, the Board’s alternative performance measure, both decreased
significantly year-on-year. However, after a weak final quarter, and
including the nominal, non-cash accounting loss of £0.8 million
relating to the grain trading book, adjusted operating profit was was
£9.3m (2022: £22.4m, which included significant one-off gains, in
particular fertiliser stock gains) and underlying Group pre-tax profit
was £9.2 million, (2022: £22.6 million). Further details on the non-cash
accounting loss of £0.8m are provided in the Financial Report and
Notes. Reported pre-tax profit was £8.7 million (2022: £21.1 million)
and basic earnings per share was 30.75p (2022: 82.72p).
Trading conditions over the financial year contrasted sharply to the
prior year. Farm gate prices were weaker across most categories and
farmer sentiment was lower as a result. The substantial one-off gains
arising from macroeconomic events that we had benefitted from last
year were absent too.
The stratospheric rise in fertiliser raw material prices, which generated
significant one-off gains in 2022, returned to more normal levels over
the year. This normalisation of prices led to one-off stock losses at
the Group’s fertiliser manufacturing operations, although it should be
noted that these losses were considerably less than the one-off stock
gains of the previous financial year. There were also margin challenges
from higher labour, distribution and energy costs.
While the Group was on target to achieve market forecasts for most
of the financial year, after a weak seasonally important final quarter,
we reported in November 2023 that results would be below market
expectations. Underlying Group pre-tax profit for the financial year was
£9.2 million, and Group revenue was £735.9 million. Revenue growth
reflected a first full year’s contribution from both Humphrey Poultry
(Holdings) Limited (“Humphrey Feeds”) and Tamar Milling Ltd following
their acquisition, as well as record grain trading volumes, in part, offset
by a reduction in raw material and fertiliser prices.
In the Agriculture Division, the integration of the two acquisitions,
Humphrey Feeds and Tamar Milling was completed, contributing
to a rise in revenue. However, the Division’s operating performance
was affected by the correction in fertiliser raw material prices, lower
demand for feed, which was experienced nationally, particularly for
dairy and poultry feed, and the disruption in post-harvest farming
activities in the final quarter caused by the prolonged wet weather.
Against this challenging background, GrainLink Limited, our grain
trading operation, produced record results, helped by both market
share growth and margin expansion.
The Specialist Agriculture Merchanting Division maintained footfall and
transaction numbers, although the rise in revenue mainly reflected
agricultural inflation, and reduced volumes of own-brand bagged feed
and a decrease in hardware sales delivered an overall lower margin
product mix. Higher energy and labour costs also reduced operating
profit.
Our joint ventures performed well and delivered a record contribution
to Group results.
The Agricultural Division delivered sales of £584.3 million (2022:
£564.3 million) and the Specialist Agricultural Merchanting sales of
£151.5 million (2022: £148.8 million). The segmental profit contribution
from the Agriculture Division was £3.7 million (2022: £14.7m),
which included contributions from joint ventures, with the Specialist
Agricultural Merchanting Division contributing £6.1 million before non-
recurring items (2022: £7.9m). Other activities generated a loss of
£0.04m (2022: profit of £0.23m).
The Group continued to generate good cash flows, and net cash
generated from operating activities was £17.2 million (2022: £10.3
million), helped by an easing of working capital requirements as raw
material prices decreased.
The Group net cash position excluding property leases at 31 October
2023 was £19.0 million (2022: £18.2 million). This calculation excludes
the classification of land and buildings leases as debt, which is in line
with the basis that the Group’s banking covenants are calculated.
October remains the highest point of net cash in the Group’s annual
working capital cycle.
We continued to invest across the Group in line with strategic plans.
This investment is aimed at increasing manufacturing capacity, driving
efficiencies and increased capabilities. We successfully completed the
first part of our investment at our feed mill in Carmarthen, and will
be proceeding with further investment. We also continued to focus
During the financial year, 111,181 (2022: 75,891) new ordinary shares
were issued to existing shareholders exercising their right to receive
dividends in the form of new shares. The total equivalent cash amount
was £0.5 million (2022: £0.6 million). A further 503,534 shares (2022:
65,689) were issued for a total cash consideration of £1.0 million
15
ANNUAL REPORT AND ACCOUNTS 2023 (2022: £0.3m) to employees exercising rights over approved share
options. In the prior financial year, 1,900,000 shares were issued in a
private placing to institutional holders for a total cash consideration of
£10.3 million.
Capital investment in fixed assets over the year amounted to £15.6
million (2022: £5.3 million). Of this, £6.2 million related to renewal of
property leases (2022: nil) and £2.7 million was invested in acquisitions
(2022: £10.2 million), including deferred consideration.
The balance sheet remains very robust. Group net assets at the
financial year-end increased to £135.2 million (2022: £130.7 million).
Based on the weighted average number of shares in issue during the
financial year of 22.525m (2022: 20.722m), this equates to a net asset
per share of £6.00 (2022: £6.31 per share). Return on net assets from
underlying pre-tax profit was 7.0% (2022: 17.4%).
DIVIDEND
The Board is pleased to propose an increased final dividend of 11.75p
per share (2022: 11.60p). This together with the interim dividend of
5.50p per share, paid on 31 October 2023, takes the total dividend for
the year of 17.25p (2022: 17.00p), a 1.5% rise on the previous financial
year. Subject to shareholder approval, the final dividend will be paid
on 30 April 2024 to shareholders on the register as at 02 April 2024.
This is the 20th consecutive year of dividend growth change since
2004, when Wynnstay joined AIM. It is covered 1.8 times by profit after
tax (2022: 4.1 times) and continues the Board’s progressive dividend
policy.
ESG
The business is committed to reaching Net Zero by 2040 and we are
making good early steps towards this aim. The 2023 Annual Report
and Accounts will include our first Task Force on Climate-related
Financial Disclosures (“TCFD”) report, and we have brought in external
expertise and established additional internal groups as we further
develop our Net Zero roadmap. We also commenced a significant
investment programme in solar energy, which continues in the new
financial year and beyond.
Our ESG programme is much wider than our own Net Zero ambitions.
It also encompasses our objective to assist our farmer customers
as they increasingly focus on environmental and biodiversity goals.
The transition period from payments based on the EU’s Common
Agricultural Policy (CAP) to a new system of financial support based
on environmental outcomes is driving change across UK farms.
Wynnstay’s on-farms teams provide advice and guidance on the
innovative products and services the Group offers, including our
expanding environmental seeds offering.
As we deepen our environmental expertise and offerings, we are
widening our links. In particular, I am pleased to highlight two exciting
projects in which Wynnstay is involved. The first is the ‘Dancing with
Daffodils’ research project. This is a revolutionary research project,
supported by the department of Farming, Environment and Rural
Affairs and Innovate UK, which is trialing the use of daffodils to reduce
cattle methane emissions. If successful, Wynnstay would be the
route-to-market for the new product. The second project is one with
Harper Adams University, which is exploring ways to grow soya beans
in the UK.
We continue to host specialist agricultural events for farmers, including
the Arable Event, and Beef and Sheep Event.
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BOARD AND COLLEAGUES
On behalf of the Board, I would like to thank our very dedicated people
for their hard work over the year. They provide customers with excellent
service, and my fellow directors and I are very pleased to acknowledge
their vital contribution to the Group’s success.
There have been two changes to the Board’s composition during the
financial year. Steven Esom was appointed as Senior Independent
Non-executive Director and head of the Renumeration Committee on
18 April 2023. He replaced Philip Kirkham who retired on 24 May
2023, after 10 years as a Board member. Steven has extensive senior-
level experience in the UK food and retailing industries and significant
experience of the UK agricultural sector. He was Managing Director
of Waitrose & Partners, where he regularly engaged with farmers and
was involved with the oversight of Waitrose-owned farmlands. He was
also Executive Director of Food at Marks & Spencer, and held senior
commercial buying roles at J Sainsbury plc for 12 years as well as at
Texas, the DIY retailer, then part of Ladbroke Group. Steven also holds
three other non-executive directorships. He is Chairman of Sedex, a
leading global supply chain consultancy focused on environmental,
social and governance (“ESG”) outcomes. He is also Chairman of
Andrews & Partners Ltd, the residential estate agency and lettings and
management group, and Chairman of Advantage Travel Partnership,
the UK’s largest independent travel agent group.
In July 2023, we announced that Paul Roberts, Finance Director, was
retiring after 36 years with Wynnstay. We subsequently appointed Rob
Thomas, FCA, as Group Finance Director designate, and Rob joined
the Group in this role on 2 October. On 2 January 2024, Rob took over
fully from Paul after a very smooth handover process. Paul continues
to assist in a consultancy capacity while the year-end audit process
completes.
Rob Thomas has significant financial and commercial experience in
senior roles, including in the agricultural and the supply chain sectors.
He joined Wynnstay from EFS Global Limited, the UK-based logistics
provider, where he was Group Finance Director. Before that, he
worked at NWF Group plc, the specialist distributor of fuel, food and
feed, for eight years until 2022. For the majority of his time there, he
was Finance Director of the feeds division, NWF Agriculture Limited,
which manufactures and supplies animal feeds to livestock farmers
across the UK. He has significant experience of M&A and strategic
planning. Rob’s earlier career was in accountancy with PwC, both in
the UK and overseas.
I take this opportunity to welcome Rob to Wynnstay and to pay tribute
to the outstanding contribution that Paul has made to the business
over his long year career. Paul joined the Board in 1997 and has
managed the Group’s finances in an exemplary manner over this time.
OUTLOOK
In November 2023, the Board reported that with uncertainty over milk
and other farm-gate prices, farmer sentiment is likely to remain cautious
in the short-term. We expect this to remain the case. However, with
our strong market position, good cash flows and very robust balance
sheet, the Board believes that the Group is well-positioned as we
continue with our strategic growth plans and investments, which will
further strengthen our position in the market. We continue to review
acquisition opportunities that fit our strategic criteria.
Steve Ellwood
Chairman
29 January 2024
16
ANNUAL REPORT AND ACCOUNTS 2023 Wynnstay Group Plc
Datganiad y Cadeiryd
Roedd amodau masnachu dros y flwyddyn ariannol yn cyferbynnu’n
llwyr â’r flwyddyn flaenorol. Roedd prisiau wrth gât y fferm yn
wannach ar draws y rhan fwyaf o gategorïau ac roedd ffermwyr yn
teimlo’n siomedig o ganlyniad. Roedd yr enillion untro sylweddol o
ddigwyddiadau macroeconomaidd yr oeddem wedi elwa ohonynt y
llynedd yn hefyd yn absennol.
Gostyngodd prisiau deunyddiau crai gwrteithiau i lefelau mwy normal
dros y flwyddyn, a hynny’n dilyn cynnydd stratosfferig a gynhyrchodd
enillion untro sylweddol yn 2022. Arweiniodd normaleiddio prisiau at
golledion stoc untro yng ngweithrediadau gweithgynhyrchu gwrtaith y
Grŵp, er y dylid nodi bod y colledion hyn yn sylweddol is nag enillion
stoc untro y flwyddyn ariannol flaenorol. Roedd heriau o ran maint yr
elw hefyd o ganlyniad i gostau llafur, dosbarthu ac ynni uwch.
Er bod y Grŵp ar y trywydd iawn i gyflawni rhagolygon y farchnad
ar gyfer y rhan fwyaf o’r flwyddyn ariannol, ar ôl chwarter olaf gwan
mewn tymor pwysig, fe wnaethom adrodd ym mis Tachwedd 2023
y byddai’r canlyniadau’n is na disgwyliadau’r farchnad. £9.2 miliwn
oedd elw gwaelodol cyn treth y Grŵp ar gyfer y flwyddyn ariannol, a
£735.9 miliwn oedd refeniw’r Grŵp. Roedd twf refeniw yn adlewyrchu
cyfraniad blwyddyn lawn gyntaf gan Humphrey Poulment (Holdings)
Limited (“Humphrey Feeds”) a Tamar Milling Ltd ar ôl i ni eu caffael,
yn ogystal â record o ran cyfeintiau masnachu grawn, sydd wedi’i
gwrthbwyso, yn rhannol, gan ostyngiad mewn deunydd crai a phrisiau
gwrtaith.
Yn yr Adran Amaethyddiaeth, cwblhawyd y gwaith o integreiddio’r ddau
gaffaeliad, Humphrey Feeds a Tamar Milling, gan gyfrannu at gynnydd
mewn refeniw. Fodd bynnag, effeithiwyd ar berfformiad gweithredol
yr Adran gan y cywiriad ym mhrisiau deunyddiau crai gwrtaith, llai o
alw am borthiant (a oedd yn gyffredin yn genedlaethol) yn enwedig ar
gyfer porthiant llaeth a dofednod, a’r tarfu ar weithgareddau ffermio
ar ôl cynaeafu yn y chwarter olaf a achoswyd gan y tywydd gwlyb
hirfaith. Yn erbyn y cefndir heriol hwn, cynhyrchodd GrainLink Limited,
ein gwaith masnachu grawn, y canlyniadau gorau erioed, gyda help
twf mewn cyfran y farchnad ac ehangu maint yr elw.
Roedd yr Adran Masnachwyr Amaethyddol Arbenigol wedi llwyddo i
gynnal niferoedd cwsmeriaid a thrafodion, er bod y cynnydd mewn
refeniw yn adlewyrchu chwyddiant amaethyddol yn bennaf. Roedd
gostyngiad yng nghyfanswm gwerthiannau porthiant rydym yn
gynhyrchu a bagio ein hunain a nwyddau wedi arwain at ostyngiad yn
maint yr elw yn gyffredinol ar draws amrywiaeth o gynnyrch. Roedd
costau llafur ac ynni uwch hefyd yn lleihau’r elw gweithredol.
Roedd ein mentrau ar y cyd wedi perfformio’n dda ac wedi sicrhau’r
cyfraniad mwyaf erioed at ganlyniadau’r Grŵp.
Rydym wedi parhau i fuddsoddi ar draws y Grŵp yn unol â
chynlluniau strategol. Nod y buddsoddiad hwn yw cynyddu capasiti
gweithgynhyrchu, gyrru arbedion effeithlonrwydd a chynyddu
galluoedd. Gwnaethom lwyddo i gwblhau rhan gyntaf ein buddsoddiad
yn ein melin borthiant yng Nghaerfyrddin, a byddwn yn bwrw ymlaen
â rhagor o fuddsoddiad. Rydym hefyd wedi parhau i ganolbwyntio
17
“
Roedd amodau
masnachu dros y flwyddyn
ariannol yn cyferbynnu’n
llwyr â’r flwyddyn flaenorol.”
ar ddatblygu ein cynnig amgylcheddol i gwsmeriaid, a’r camau sydd
eu hangen i gyflawni uchelgeisiau Sero Net y Grŵp. Mae ein Rhaglen
Ynni Adnewyddadwy i osod araeau paneli solar wedi dechrau
ac wedi datblygu’n dda yn ystod blwyddyn gyntaf chyflwyno, ac
rydym yn ymwneud â phrosiectau amgylcheddol cyffrous. Byddwn
yn ychwanegu at ein timau o arbenigwyr ar y fferm, sy’n cynghori
ffermwyr ar sut i gyflawni eu hamcanion ffermio. Mae’r amcanion
hyn yn ymwneud fwyfwy â nodau amgylcheddol wrth i’r Llywodraeth
gefnogi newidiadau i daliadau yn unol â chanlyniadau amgylcheddol.
CANLYNIADAU ARIANNOL
Roedd refeniw grŵp y flwyddyn hyd at 31 Hydref 2023 yn £735.9
miliwn, sef 3% o gynnydd (2022: £713.0 miliwn). Roedd hyn yn
cynnwys cyfraniadau blwyddyn lawn gan ddau gaffaeliad, Humphrey
Feeds a Tamar Milling Ltd, wedi’i gwrthbwyso’n rhannol gan y cywiriad
sylweddol mewn prisiau gwrtaith, a ddychwelodd i lefelau mwy normal
ar ôl gweld y prisiau uchaf a gofnodwyd mewn hanes yn 2022, a hynny
o ganlyniad i ymosodiad Rwsia ar Wcráin.
Yn ôl y disgwyl, bu gostwng sylweddol yn elw gweithredol wedi’i
addasu ac elw gwaelodol cyn treth y Grŵp (mesur perfformiad amgen
y Bwrdd), o un flwyddyn i’r llall. Fodd bynnag, ar ôl chwarter olaf gwan,
ac yn cynnwys y golled ariannol nominal, nad oedd yn arian parod,
o £0.8 miliwn mewn perthynas â’r llyfr masnachu grawn, roedd yr
elw gweithredol wedi’i addasu yn £9.3m (2022: £22.4m, a oedd yn
cynnwys enillion untro sylweddol, yn enwedig enillion stoc gwrtaith),
ac elw gwaelodol cyn treth y Grŵp oedd £9.2 miliwn, (2022: £22.6
miliwn). Mae rhagor o fanylion am y golled gyfrifyddu, nad yw’n arian
parod, o £0.8m ar gael yn yr Adroddiad Ariannol a’r Nodiadau. Roedd
yr elw cyn treth a adroddwyd yn £8.7 miliwn (2022: £21.1 miliwn) a’r
enillion sylfaenol fesul cyfranddaliad oedd 30.75c (2022: 82.72p).
Darparodd yr Adran Amaethyddol werthiannau o £584.3 miliwn (2022:
£55.3 miliwn) ac roedd gwerthiannau’r Masnachwyr Amaethyddol
Arbenigol gwerth £151.5 miliwn (2022: £148.8 miliwn). Roedd y
cyfraniad elw wedi’i segmentu gan yr Adran Amaethyddiaeth yn £3.7
miliwn (2022: £14.7m), a oedd yn cynnwys cyfraniadau gan fentrau
ar y cyd, gyda’r Adran Masnachwyr Amaethyddol Arbenigol yn
cyfrannu £6.1 miliwn cyn eitemau anghylchol (2022: £7.9m). Roedd
gweithgareddau eraill wedi arwain at golled o £0.04m (2022: elw o
£0.23m).
Parhaodd y Grŵp i gynhyrchu llifoedd arian da, ac roedd yr arian net
a gynhyrchwyd o weithgareddau gweithredol yn £17.2 miliwn (2022:
£10.3 miliwn), gyda chymorth llacio gofynion o ran cyfalaf gweithio
wrth i brisiau deunyddiau crai ostwng.
Roedd sefyllfa ariannol net y Grŵp ac eithrio prydlesau eiddo ar 31
Hydref 2023 yn £19.0 miliwn (2022: £18.2 miliwn). Nid yw’r cyfrifiad
hwn yn cynnwys dosbarthu prydlesi tir ac adeiladau fel dyled, sy’n unol
â’r sail bod cyfamodau bancio’r Grŵp yn cael eu cyfrifo. Mis Hydref
yw’r pwynt uchaf o ran arian net o hyd yng nghylch cyfalaf gweithio
blynyddol y Grŵp.
Yn ystod y Flwyddyn Ariannol 111,181 (2022: 75,891) rhoddwyd
cyfranddaliadau cyffredin newydd i gyfranddalwyr presennol a oedd
yn arfer eu hawl i gael difidendau ar ffurf cyfranddaliadau newydd.
Cyfanswm yr arian parod cyfatebol oedd £0.5 miliwn (2022: £0.6
miliwn). Cafodd 503,534 o gyfranddaliadau ychwanegol (2022:
65,689) eu cyhoeddi ar gyfer cyfanswm cydnabyddiaeth ariannol o
£1.0 miliwn (2022: £0.3m) i gyflogeion sy’n arfer hawliau dros opsiynau
cyfranddaliadau cymeradwy. Yn y flwyddyn ariannol flaenorol,
cyhoeddwyd 1,900,000 o gyfranddaliadau mewn cynigion preifat i
ANNUAL REPORT AND ACCOUNTS 2023 ddeiliaid sefydliadol ar gyfer cyfanswm cydnabyddiaeth ariannol o
£10.3 miliwn.
gydnabod eu cyfraniad hanfodol i lwyddiant y Grŵp.
Roedd buddsoddiad cyfalaf mewn asedau sefydlog dros y flwyddyn
yn £15.6 miliwn (2022: £5.3 miliwn). O hyn, roedd £6.2 miliwn yn
ymwneud ag adnewyddu prydlesu eiddo (2022: dim) a buddsoddwyd
£2.7 miliwn mewn caffaeliadau (2022: £10.2 miliwn), gan gynnwys
cydnabyddiaeth ohiriedig.
Mae’r fantolen yn parhau i fod yn gadarn iawn. Cynyddodd asedau
net y grŵp ar ddiwedd y flwyddyn ariannol i £135.2 miliwn (2022:
£130.7 miliwn). Yn seiliedig ar gyfartaledd pwysol y cyfranddaliadau a
roddwyd yn ystod blwyddyn ariannol 22.525m (2022: 20.722m), mae
hyn yn cyfateb i ased net fesul cyfranddaliad o £6.00 (2022: £6.31 y
cyfranddaliad). Roedd yr elw ar asedau net o’r elw gwaelodol cyn treth
sylfaenol yn 7.0% (2022: 17.4%).
DIFIDENDAU
Mae’r Bwrdd yn falch o gynnig difidend terfynol uwch o 11.75c y
cyfranddaliad (2022: 11.60p. Mae hyn, ynghyd â’r difidend interim o
5.50c y cyfranddaliad, a dalwyd ar 31 Hydref 2023, yn golygu bod
cyfanswm y difidend ar gyfer y flwyddyn yn 17.25c (2022: 17.00P),
cynnydd o 1.5% ar y flwyddyn ariannol flaenorol. Yn amodol ar
gymeradwyaeth y cyfranddalwyr, bydd y difidend terfynol yn cael ei
dalu i gyfranddalwyr - sydd ar y gofrestr ar 02 Ebrill 2024 - ar 30 Ebrill
2024.
Dyma’r 20fed flwyddyn yn olynol y mae newid mewn twf difidendau ers
2004, pan ymunodd Wynnstay ag AIM. Mae’r elw ar ôl treth yn ddigon
1.8 gwaith i dalu’r difidendau. (2022: 4.1 gwaith) ac yn parhau â pholisi
difidend blaengar y Bwrdd.
ESG
Mae’r busnes wedi ymrwymo i gyrraedd Sero Net erbyn 2040 ac rydym
yn cymryd camau cynnar da tuag at y nod hwn. Bydd Adroddiad a
Chyfrifon Blynyddol 2023 yn cynnwys ein hadroddiad Tasglu ar
Ddatgeliadau Ariannol sy’n gysylltiedig â’r Hinsawdd (“TCFD”), ac
rydym yn dwyn arbenigedd allanol i mewn ac wedi sefydlu grwpiau
mewnol ychwanegol wrth i ni ddatblygu ein map Sero Net ymhellach.
Gwnaethom hefyd ddechrau rhaglen fuddsoddi sylweddol mewn ynni
solar, sy’n parhau yn y flwyddyn ariannol newydd a thu hwnt.
Mae ein rhaglen ESG yn llawer ehangach na’n huchelgeisiau Sero Net
ein hunain. Mae hefyd yn cynnwys ein hamcan i helpu ein cwsmeriaid
sy’n ffermwyr wrth iddynt ganolbwyntio fwyfwy ar nodau amgylcheddol
a bioamrywiaeth. Mae’r cyfnod pontio o daliadau sy’n seiliedig ar Bolisi
Amaeth Cyffredin yr UE (PAC) i system newydd o gymorth ariannol sy’n
seiliedig ar ganlyniadau amgylcheddol yn sbarduno newid ar draws
ffermydd y DU. Mae timau Wynnstay sy’n ymweld â ffermydd yn rhoi
cyngor ac arweiniad ar y cynnyrch a’r gwasanaethau arloesol y mae’r
Grŵp yn eu cynnig, gan gynnwys ein cynnig hadau amgylcheddol sy’n
ehangu.
Wrth i ni gyfoethogi ein harbenigedd a’n cynigion amgylcheddol,
rydym yn ehangu ein cysylltiadau. Yn benodol, mae’n bleser gennyf
dynnu sylw at ddau brosiect cyffrous y mae Wynnstay yn rhan
ohonynt. Y cyntaf yw’r prosiect ymchwil ‘Dancing with Daffodils’.
Mae hwn yn brosiect ymchwil chwyldroadol, a gefnogir gan Adran
Amaethyddiaeth, yr Amgylchedd a Materion Gwledig ac Innovate UK,
sy’n treialu defnyddio cennin Pedr i leihau allyriadau methan gwartheg.
Os bydd yn llwyddiannus, Wynnstay fyddai’r llwybr i’r farchnad ar gyfer
y cynnyrch newydd hwn. Mae’r ail brosiect gyda Phrifysgol Harper
Adams, yn edrych ar ffyrdd o dyfu ffa soia yn y DU.
Rydym yn parhau i gynnal digwyddiadau amaethyddol arbenigol i
ffermwyr, gan gynnwys y Digwyddiad Âr, y Digwyddiad Cig Eidion a’r
Digwyddiad Defaid.
Y BWRDD A CHYDWEITHWYR
Ar ran y Bwrdd, hoffwn ddiolch i’n pobl ymroddedig iawn am eu
gwaith caled dros y flwyddyn. Maent yn rhoi gwasanaeth rhagorol i
gwsmeriaid, ac mae fy nghyd-gyfarwyddwyr a minnau’n falch iawn o
i
S
t
r
a
t
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g
c
R
e
p
o
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t
Bu dau newid i gyfansoddiad y Bwrdd yn ystod y flwyddyn ariannol.
Penodwyd Steven Esom yn Uwch Gyfarwyddwr Anweithredol
Annibynnol ac yn bennaeth y Pwyllgor Taliadau ar 18 Ebrill 2023.
Cymerodd le Philip Kirkham a ymddeolodd ar 24 Mai 2023, ar ôl
10 mlynedd fel aelod o’r Bwrdd. Mae gan Steven brofiad helaeth ar
lefel uwch yn y diwydiannau bwyd a manwerthu yn y DU a phrofiad
sylweddol o sector amaethyddol y DU. Roedd yn Rheolwr Gyfarwyddwr
Waitrose & Partners, lle bu’n ymgysylltu’n rheolaidd â ffermwyr ac
roedd yn ymwneud â goruchwylio tir fferm sy’n eiddo i Waitrose.
Roedd hefyd yn Gyfarwyddwr Gweithredol Bwyd yn Marks & Spencer,
ac roedd ganddo uwch rolau prynu masnachol yn J Sainsbury plc am
12 mlynedd yn ogystal ag yn Texas, yr adwerthwr DIY, rhan o Grŵp
Ladbroke gynt. Mae gan Steven dair swydd cyfarwyddwr anweithredol
arall hefyd. Mae’n Gadeirydd Sedex, ymgynghoriaeth cadwyn gyflenwi
fyd-eang flaenllaw sy’n canolbwyntio ar ganlyniadau amgylcheddol,
cymdeithasol a llywodraethu (“ESG”). Mae hefyd yn Gadeirydd
Andrews & Partners Ltd, yr asiantaeth ystadau preswyl a’r grŵp gosod
a rheoli eiddo, ac yn Gadeirydd Advantage Travel Partnership, grŵp
asiantau teithio annibynnol mwyaf y DU.
Ym mis Gorffennaf 2023, fe wnaethom gyhoeddi bod Paul Roberts,
Cyfarwyddwr Cyllid, yn ymddeol ar ôl 36 mlynedd gydag Wynnstay.
Yn dilyn hynny, fe wnaethom benodi Rob Thomas, FCA, yn ddarpar
Gyfarwyddwr Cyllid y Grŵp, ac ymunodd Rob â’r Grŵp yn y rôl hon
ar 2 Hydref. Ar 2 Ionawr 2024, cymerodd Rob yr awenau’n llawn gan
Paul ar ôl proses drosglwyddo ddidrafferth iawn. Mae Paul yn parhau
i gynorthwyo mewn rôl ymgynghorol tra bo’r broses archwilio diwedd
blwyddyn yn dod i ben.
Mae gan Rob Thomas brofiad ariannol a masnachol sylweddol mewn
rolau uwch, gan gynnwys yn y sectorau amaethyddol a’r gadwyn
gyflenwi. Ymunodd â Wynnstay o EFS Global Limited, y darparwr
logisteg sydd wedi’i leoli yn y DU, lle’r oedd yn Gyfarwyddwr Cyllid y
Grŵp. Cyn hynny, bu’n gweithio yn NWF Group plc am wyth mlynedd
tan 2022, lle roedd yn ddosbarthwr arbenigol ar gyfer tanwydd, bwyd
a phorthiant. Am y rhan fwyaf o’i amser yno, roedd yn Gyfarwyddwr
Cyllid i’r is-adran porthiant, NWF Agriculture Limited, sy’n cynhyrchu
ac yn cyflenwi porthiant anifeiliaid i ffermwyr da byw ledled y DU. Mae
ganddo brofiad sylweddol o M&A a chynllunio strategol. Roedd Rob
yn gyfrifydd gyda PwC gynt, yn y DU a thramor.
Cymeraf y cyfle hwn i groesawu Rob i Wynnstay a thalu teyrnged i’r
cyfraniad rhagorol y mae Paul wedi’i wneud i’r busnes yn ystod ei yrfa
hir. Ymunodd Paul â’r Bwrdd yn 1997 ac mae wedi rheoli cyllid y Grŵp
mewn modd rhagorol yn ystod y cyfnod hwn.
RHAGOLYGON
Ym mis Tachwedd 2023, o ganlyniad i’r ansicrwydd ynghylch llaeth a
phrisiau eraill wrth gât y fferm, dywedodd y bwrdd mae’n debygol y
bydd ffermwyr yn aros yn wyliadwrus yn y tymor byr. Rydym yn disgwyl
i hyn barhau. Fodd bynnag, gyda’n sefyllfa gref yn y farchnad, llifoedd
arian da a mantolen gadarn iawn, mae’r Bwrdd yn credu bod y Grŵp
mewn sefyllfa dda wrth i ni barhau â’n cynlluniau twf strategol a’n
buddsoddiadau, a fydd yn cryfhau ein sefyllfa yn y farchnad ymhellach.
Rydym yn parhau i adolygu cyfleoedd caffael sy’n cyd-fynd â’n meini
prawf strategol.
Steve Ellwood
Cadeirydd
29 Ionawr 2024
18
ANNUAL REPORT AND ACCOUNTS 2023 Wynnstay Group Plc
Chief Executive’s Report
“
We continued to make good
progress with our ESG strategy,”
Our Joint Ventures and associate business together delivered an
above-expected performance, helped by record trading at Bibby
Agriculture Ltd and positive contributions from WYRO and Total
Angling Ltd.
We continued to make good progress with our ESG strategy, both
internally and in relation to our farmer customers whose financial
support mechanisms are now increasingly linked to environmental
outcomes. In England approximately 50% of the previous Basic
Farm Payment under the Common Agricultural Policy is moving to
Environmental Land Management (“ELMs”) schemes by 2024, and the
devolved administrations will shape their respective support schemes
from 2025.
REVIEW OF ACTIVITIES
AGRICULTURE DIVISION
The Agriculture Division manufactures and processes a wide range of
agricultural inputs, including feeds, fertiliser and seeds, which cater
for the needs of both livestock and arable farmers. Glasson Grain
Limited (“Glasson”), whose operations include fertiliser blending, and
GrainLink, the Group’s crop marketing business, also report within this
Division.
Divisional revenue increased by 3.6% year-on-year to £584.3 million
(2022 £564.3 million) and the segmental contribution was £3.7 million
(2022: £14.7 million). Revenue was boosted by full-year contributions
from the Humphreys Feeds and Tamar Milling acquisitions, as well as
by increased activity at GrainLink Limited. However, operating profit
was impacted by a number of factors: the reversal in fertiliser raw
material prices, which impacted Glasson; the weaker free range egg
sector, which suffered from the outbreak of Avian Influenza and margin
pressures; and the difficult final quarter, when prolonged wet weather
impacted arable activities.
FEED
Wynnstay manufactures and supplies a wide range of feeds and animal
nutrition products for a range of sectors, including, dairy, beef, sheep,
and poultry. The business operates three feed mills and three blending
plants, and offers nutrition products in compounded, blended and
meal forms, both in bulk and in bags. This wide offering provides an
internal hedge against sector variations. Bagged feed is predominantly
marketed under our “Wynnstay brand” and sold through our depot
network.
Feed volumes on a like-for-like basis were 5.3% below the previous
year. This decrease largely reflected reduced demand from the dairy
sector, as a result of weaker milk prices, and from free range poultry
farmers, who were still recovering from Avian influenza and also
contending with reduced margins. The early spring and an abundance
of grass in the summer months were also factors dampening demand.
Efficiency initiatives have helped mitigate inflation-driven costs, which
were especially evident in labour, distribution and packaging costs. As
we move through the early months of the new financial year, with milk
prices still low, we expect demand from the dairy farmers to remain
suppressed.
The integration of the two acquisitions, Humphrey Feeds (purchased in
March 2022) and Tamar Milling (purchased in November 2022), into the
Group’s wider activities, was completed. Our offering to the free range
egg sector has been rebranded as ‘Wynnstay Humphrey Feeds and
Pullets’, and the respective sales teams combined. This has created
greater efficiencies in both feed manufacturing and distribution. Whilst
the Humphrey Feeds acquisition contributed positively to the Group’s
overall performance, its performance was below our expectations.
This reflected the challenges of the free range egg sector, including
the organic egg sub-sector, with a number of producers exiting the
marketplace. However, the more recent onset of higher free range egg
prices has stimulated confidence in the sector and acted as a boost
INTRODUCTION
Trading conditions over the financial year were markedly different from
the prior financial year, when the Group benefited from substantial one-
off gains, as well as strong farmgate prices, to deliver a record set of
results. By contrast, in the financial year under review, farmgate prices
were lower across most categories, impacting farmer sentiment and
spending. In addition, the global correction in fertiliser raw material
prices, which moved back to more normalised levels, created one-
off stock losses for Glasson Grain Ltd. This represented the opposite
picture to last year’s one-off gains when fertiliser raw material prices
soared to historic highs following Russia’s invasion of Ukraine. For
context, last year’s one-off gains were significantly greater than this
financial year’s one-off losses. Inflation also remained a factor for the
Group, affecting labour, distribution and packaging costs in particular.
The trading backdrop in the second half of the financial year was
weaker than the first half. Farm gate prices moved lower, especially
for milk and grain. In addition, the Group’s arable activities suffered
from the very wet autumn in a seasonally important period, with heavy
rains reducing the grain harvest and disrupting post-harvest farming
activities, particularly winter cereal seed planting.
More positively, GrainLink, the Group’s specialist crop marketing
business, delivered record annual results. This was driven by increased
volumes of grain purchased, helped by market share gains in the
eastern side of its trading area and good margin retention. This record
performance was even after the recognition of a non-cash nominal
accounting loss.
Both our acquisitions, Humphrey Feeds and Tamar Milling, have now
been fully incorporated into the business, and contributed positively
to the performance of the Group. Unlike Tamar Milling though, the
performance of Humphrey Feeds was below our expectations. The
business was affected by the challenges experienced by the free range
sector, driven by Avian influenza and weaker prices. However, the
sector is recovering, stimulated by higher egg prices.
The first phase of our investment at Carmarthen feed mill is now
complete, and we are considering the most viable and sustainable
options for replacing the feed volumes that we currently manufacture
at Twyford.
“
Trading conditions over
the financial year were markedly
different from the prior financial
year,”
19
ANNUAL REPORT AND ACCOUNTS 2023
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to recovery. Tamar Milling performed above management expectations
in its first full year contribution. The full potential of these acquisitions
is still to come through.
Our investment to expand the feed manufacturing capacity of our mill
at Carmarthen and to improve its operational efficiencies progressed
well over the year. Phase one, which included the installation of a bank
of blended feed out-loading bins, has been completed. The second
phase of investment is scheduled to commence and the feed mill
is now also being evaluated as we consider the most commercially
optimal solutions for replacing the manufacturing facility currently in
use at Twyford.
Our on-farm animal nutrition advisors continued to work very effectively
with customers to help them improve performance efficiency and
deliver their environmental objectives and respond to market demands.
We continue to focus on keeping abreast of the latest scientific
developments and aim to further strengthen our teams of specialists
across all sectors in support of our growth plans.
ARABLE PRODUCTS
Our arable operations supply a wide range of services and products
to arable and grassland farmers. These include seeds, fertilisers and
agrochemicals as well as grain marketing services.
We saw significant variations in performance within the arable division.
GrainLink, our grain and combinable crop marketing business delivered
record results, which were well ahead of management expectations.
This resulted from a 30% increase in grain marketing volumes and
good margin retention. GrainLink continued to gain market share on
the eastern side of the trading area. As we detail in the Financial Report,
GrainLink’s headline performance was impacted by the accounting
treatment of financial derivatives. It should be noted that this results
only from the application of International Financial Reporting Standard
9 and is a non-cash charge.
The final quarter of the financial year is a seasonally important period
for arable activities, and weather conditions were challenging. The very
wet summer and heavy rains in the autumn reduced the harvest size,
and its quality, and created very difficult autumn sowing conditions.
Land intended for autumn sowing has not been sown, impacting sales
of winter cereal seed, and some of the crop seed that was sown was
flood damaged. In addition, some of the decrease in winter cereal
seed sales also reflected our decision to exit from some low-margin
wholesale contracts.
While we anticipate that demand for spring sown cereal and
environmental seed mixtures will increase, as a result of reduced
autumn sowings, there are difficulties in the availability of spring seed
this season, following the poorer 2023 harvest yields.
Volumes of traditional grass seed mixtures were also impacted by the
weather and were 5% lower year-on-year. However, this was better
than the national trend, which showed an annual decrease of 10%.
Sales of our environmental seed mixtures grew strongly as farmers
adjusted and changed cropping rotations, in line with opportunities
to participate in the Government’s Environmental Land Management
Schemes. We expect demand for these environmental seed mixtures
to continue to increase. Our team of specialist advisors can offer
customers environmentally-friendly seed mixtures
include
pollinators, deep-rooted herbs and wildflowers. Demand for root
seeds has also increased as sheep farmers grow more crops to reduce
bought-in feed and participate in environmental schemes.
that
The completion of our investment at our seed plant at Astley in
Shropshire will enable us to double grass seed processing and
provides a platform to continue to increase sales in the future. It also
enhances our reputation for high-quality seeds.
Merchanted fertiliser volumes in the second half of the year were
stronger than in the first half and overall sales were up by 2% on the
prior year. This was significantly better than the estimated national
decrease in volumes of c. 10%. As fertilizer prices reduced from the
higher levels earlier in the year, demand improved, however margins
were affected in a falling market.
Farmer returns within the arable sector have been squeezed in
comparison to the very strong prior year, when grain supplies were
disrupted following the invasion of the Ukraine by Russia and prices
climbed to record highs. While the reduced acreage that has been
sown this autumn will impact the demand for crop inputs, including
fertiliser, farmers will plant alternative crops, which will require our
products and services.
GLASSON GRAIN LIMITED
Glasson Grain is the second largest fertiliser blender in the UK and is
based at Glasson Dock near Lancaster. As well as fertiliser blending,
Glasson has two other core activities, the supply of feed raw materials
and the manufacture of added-value animal feed products.
As we reported with first-half results, Glasson contended with
the sharp reversal of global fertiliser raw material prices, from the
unsustainable levels of the prior year, to more normalised levels. In
the last financial year, the stratospheric rise in raw material prices led
to significant one-off gains; by contrast, in this financial year, Glasson’s
performance has been distorted by adverse stock realisations. As
a fertiliser manufacturer, Glasson carries stocks of raw materials for
blending and therefore can be affected by price movements, up and
downwards. Fertiliser prices continued their correction in the second
half of the financial year and retained a degree of volatility in the autumn
period.
Overall, Glasson’s fertiliser volumes decreased by 4% year-on-year,
although it increased its market share. We anticipate that fertiliser usage
will change as farmers switch increasingly to precision application
techniques, stimulated by Government-supported environmental
schemes. As farmers shift their approach and carry out more detailed
nutrient management plans to identify crop requirements, Glasson is
well-placed to assist, having the ability to process bespoke fertilisers to
suit individual customer requirements. We anticipate opportunities to
add value to the business in the coming years, and expect to maintain
our position as the UK’s second largest manufacturer of blended
fertiliser.
Feed raw materials performed well and ahead of expectation. Although
volumes decreased by 11%, which was in line with national trends,
margins were better than last year and drove strong results. Glasson’s
smaller operation, the specialist animal feed activity, saw lower volumes
as the cost-of-living crisis reduced consumer demand for some of
the manufactured products. Higher energy and labour costs also put
pressure on margins. We are currently restructuring the operation to
mitigate costs.
Agriculture - Revenue
(note 2, pages 80-81)
£584.31m
£564.26m
£358.96m
Divisional revenue increased by 3.6% year-on-year to £584.3
million”
2023
2022
2021
“
Agriculture - Segment Result
(note 2, pages 80-81)
2023
£3.65m
2022
2021
£4.22m
£14.66m
ANNUAL REPORT AND ACCOUNTS 2023 Wynnstay Group Plc
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Chief Executive’s Report continued
SPECIALIST AGRICULTURAL MERCHANTING
DIVISION
The Specialist Agricultural Merchanting Division comprises a network
of 53 depots catering mainly for the needs of farmers but also rural
dwellers. Depots are mostly located within the livestock areas of
England and Wales. The network is supported by a multi-channel sales
route to market, which includes a digital sales platform, a sales trading
desk and specialist catalogues. Youngs Animal Feeds (“Youngs”)
is also accounted for in this division. Youngs manufactures and
distributes a wide range of equine products, which are sold through
three dedicated Youngs outlets, Wynnstay depots and via third-party
wholesale customers.
Revenue in the division increased to £151.5 million (2022: £148.8
million). However, this rise mostly reflected agricultural inflation, while
segmental contribution decreased to £6.1 million (2022: £7.9 million),
which was below management expectations. Footfall and the number
of transactions were in line with the previous year, but an overall lower
margin product mix had an impact on profitability. In particular, we felt
the effect of lower volumes of our own-brand bagged feed and lower
hardware sales. This shift in buying patterns reflected subdued farmer
sentiment, as farmers tightened their belts in response to lower farm
gate prices, and the good availability of grass in the second half also
had an effect on feed volumes. In addition, rising energy and labour
costs affected the Division’s cost base and we have put in place
actions to mitigate this.
We continue to develop our digital offering. The number of customers
who have signed up to our digital portal continued to increase. The
Specialist Agricultural Merchanting - Revenue
(note 2, pages 80-81)
2023
“
2022
2021
Revenue in the division increased to £151.5 million”
£151.48m
£148.77m
£141.43m
Specialist Agricultural Merchanting - Segment
Result
(note 2, pages 80-81)
2023
2022
2021
£6.13m
£7.95m
£7.15m
majority of the activity on the portal remains non-trading and accounts
related. During the coming year, we will be introducing a click-and-
collect service as we continue to develop our online offering.
Youngs Animal Feeds saw an increase in sales of its own- manufactured
fibre product, ‘Sweet Meadow’ and performed ahead of last year.
JOINT VENTURES AND ASSOCIATE COMPANY
Wynnstay has three joint venture companies, Bibby Agriculture Ltd,
WYRO Developments Limited and Total Angling Limited, as well as
an associate company, Celtic Pride Limited. The businesses together
made another strong contribution, which totalled £0.9 million (2022
£0.8 million). This was driven by a record performance from Bibby
Agriculture Limited, as well as positive contributions from WYRO and
Total Angling Limited.
ENVIRONMENTAL, SOCIAL AND GOVERNANCE
(“ESG”)
Our ESG strategy has two goals. As an organisation, Wynnstay is
working towards becoming carbon neutral by 2040. We are committed
to helping to protect the local and global environments, and aim to
minimise, as much as we can, any adverse environmental impacts
that our activities may have. Alongside this, we are focused on helping
farmers to feed the UK in a more sustainable way, providing advice and
access to more environmentally-friendly agricultural inputs and other
innovative products.
In the last financial year, we established The Sustainable Farm
Advisory Team. The team includes industry experts, and the objective
is to bring in additional expertise to help guide the decisions of our
Executive Management and our Sustainability Team as they develop
our environmental strategies. We have recently formed the Resource
Efficiency Action Team, which has been tasked with accelerating
resource efficiency gains across the Group.
In order to reduce Group energy costs and its carbon footprint, we
have invested £1.0m in solar voltaic panels and will be investing a
further £1.0m over the new financial year to install solar panels on
roofs of Group properties. The Group’s vehicle replacement policy is
now reshaping the vehicle fleet with electric/hybrid cars and lorries that
are more fuel efficient.
We continue to work with the wider industry and customers on carbon
and methane reduction projects. During the year, Wynnstay, along with
other partners from the industry, launched the revolutionary “Dancing
with Daffodils”. The project is investigating the potential use of a daffodil
extract to reduce methane emissions from cows. A 96% reduction in
methane emissions has been demonstrated in artificial cow stomachs
and a team of researchers at Scotland’s Rural College is now trialling
the extract’s use in real cows. The research team believes that the
daffodil extract, when added to livestock feed, could reduce methane
emissions by at least 30%. A four-year programme of trials has begun
at farms across the UK, and if they prove successful, it is intended that
Wynnstay provides the route-to-market for the end-product. Whilst
we already offer methane inhibitors within our climate-friendly range of
feed products, this potential new product would represent a significant
We are committed to helping to protect
the local and global environments,”
“
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ANNUAL REPORT AND ACCOUNTS 2023 Chief Executive’s Report continued
step forward in reducing methane emissions from ruminant animals.
In line with our environmental commitments and to address concerns
about poultry manure and phosphate levels in rivers, we introduced
a lower phosphorus feed option for free range layer hens. The
new feed formula, which optimises the level of the phytase enzyme
without compromising feed performance or bird health, improves diet
utilisation and results in an average reduction of 13.8% in in phosphate
excretion per bird per year. All of Wynnstay’s relevant manufactured
layer mashes now contain optimised doses of phytase.
Our colleagues remain of paramount importance, and we work hard to
encourage dialogue and engagement throughout the Group, including
the contribution of ideas as to how to improve the business, workplace
and performance. The Colleagues Ideas Hub was established as a
means by which staff can submit their ideas. If an idea is taken up
and shown to be successful, we also provide financial recognition. The
Executive Team regularly updates colleagues across the Group on the
Company’s progress, with both the Team and colleagues benefiting
from this regular engagement. We also support colleagues’ fundraising
initiatives. Fundraising proceeds are distributed to nominated charities,
principally Children with Cancer and The Royal Agricultural Benevolent
Institution (RABI), the award-winning charity which provides local
support to the farming community in England and Wales.
COLLEAGUES
I would like to take this opportunity to thank all our colleagues for their
continued hard work, loyalty and commitment over the past twelve
months. They have risen to the challenge of a more difficult trading
environment and continued to demonstrate Wynnstay’s values and
serve our customers well. I am proud of working alongside them.
I would also like to add my personal thanks to Paul Roberts, who
retired as Finance Director, on 2 January 2024 after a long and
successful career at Wynnstay. It has been a great pleasure to work
with him, and I join my colleagues in acknowledging his outstanding
contribution to the Group.
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proud of working
alongside them.”
OUTLOOK
The trading backdrop remains difficult. Farmer sentiment is cautious,
reflecting uncertainty over farmgate prices and the adjustment to
the Environmental Land Management Scheme and the Sustainable
Farming Scheme. We anticipate current low milk prices to continue
to suppress dairy feed demand, although some recovery is expected
in the coming months, and arable inputs are likely to be down in the
spring, following the significant reduction in autumn cereal planting. It
is also reasonable to expect a smaller 2024 harvest. Energy and labour
costs remain factors too.
While these are challenges for the entire sector in the short term,
Wynnstay’s strong balance sheet and good cash generation enables
us to continue to invest across the business in support of our growth
plans, and to consider acquisitions. The Group is well-placed in the
marketplace and its balanced business model helps to smooth sector
variations and remains a strength.
Gareth Davies
Chief Executive Officer
29 January 2024
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ANNUAL REPORT AND ACCOUNTS 2023 Wynnstay Group Plc
Finance Review
generated an operating profit before non-recurring items of £3.65m
(2022: £14.66m), and the Specialist Agricultural Merchanting Division
generated an operating profit before non-recurring items of £6.13m
(2022: £7.95m). Other activities generated a loss of £0.04m (2022:
£0.23m profit).
Whilst the Group’s underlying performance has been impacted
by the difficult trading environment across the agricultural sector,
particularly in the second half of the year, results were also affected
by the reversal of certain one-off gains experienced in 2022. This was
expected, and the most notable reversal was in fertiliser commodity
values. As previously reported, fertiliser commodity values peaked to
historic highs in 2022, which resulted in substantial one-off gains in the
raw material stock book at Glasson Grain Limited (“Glasson”). (As a
manufacturer, Glasson benefited because of its typically ‘long’ position
in raw materials i.e. it buys in and holds raw materials stock). In the
financial year under review, fertiliser prices reversed from their artificially
high peaks and this normalisation resulted in the opposite position i.e.
adverse stock realisations, which amounted to approximately £1.5m. It
should also be noted that the FY 2022 one-off stock gains significantly
outweighed the one-off stock losses in FY 2023.
As previously reported, FY 2022 results benefited from a non-cash
accounting gain of approximately £0.4m. This related to the fair value
of wheat contracts taken on the London ICE Futures market as a
hedge against the physical wheat contracts sold to customers. The
gain resulted from the application of International Financial Reporting
Standard (“IFRS”) 9, which requires that certain open derivative
contracts be valued by reference to a recognised market price as
at the financial year-end. As expected, this non-cash gain reversed
in FY 2023, and a further non-cash accounting loss of £0.4m was
recorded, in line with IFRS 9, which resulted in a total non-cash loss
of £0.8m in the financial year under review. This accounting treatment
has no effect on the grain trading book of the Agricultural Division. It
simply accelerates the recognition of the fair value from the relevant
transactions.
TAXATION
The Group’s total tax charge, including joint ventures, was £1.97m
(2022: £4.11m). This represents 22.12% (2022: 19.40%) of the
Group’s reported pre-tax profit of £8.90m (2022: £21.26m). The year-
on-year increase reflects the uplift in the main rate of Corporation Tax
from 1 April 2023. A reconciliation of the tax charge to reported pre-tax
profit is given below:
£000
Group’s tax charge
Taxation
Share of tax incurred by joint venture &
associate
2023
2022
1,776
3,982
192
132
1,968
4,114
TRADING RESULTS
A summary of the trading conditions experienced by the business over
the last financial year is provided in the Chief Executive’s Review on
pages 19-22.
The Group’s operations are divided into two main reporting segments;
the Agriculture Division, which manufactures and supplies agricultural
inputs; and the Specialist Agricultural Merchanting Division, which
provides products (and specialist advice) predominantly for farmers,
but also the wider rural community.
£000
Revenue
Adjusted operating profit
Underlying profit before tax
REVENUE
2023
2022
735,877
713,034
9,399
9,236
22,448
22,612
The Group generated revenue of £735.88m (2022: £713.03m) over
the financial year, a 3% increase over the prior year. This increase
reflected the first full year contribution from both the Humphrey
business and Tamar Milling, (acquired respectively in March 2022 and
November 2022) as well as higher grain trading activity, offset by more
normalised fertiliser prices after the very significant spiking of prices
in the prior year caused by macroeconomic events. The Agriculture
Division contributed £584.31m to Group revenues (2022: £564.26m),
up by almost 4% year-on-year. The Specialist Agricultural Merchanting
Division contributed £151.48m (2022: £148.77m), up by 2%, driven
by slightly higher like-with-like activity in the first half of the year, with
the second half experiencing lower volumes of bagged feed sales and
hardware products.
ADJUSTED
UNDERLYING PROFIT BEFORE TAXATION
OPERATING
PROFIT
AND
Group pre-tax profit from continuing
operations
As expected, Group adjusted operating profit and underlying profit
before taxation reduced significantly compared to the previous year,
which benefited from substantial one-off gains, mainly arising from
global events. As outlined in a trading update announcement on 30
November 2022, the outcome for the financial year was also impacted
by an adverse final quarter, which meant that final results were lower
than market expectations.
Group adjusted operating profit was £9.40m (2022: £20.45m), and
underlying profit before taxation was £9.24m (2022: £22.61m). These
performance metrics, which include the gross share of results from
joint ventures but exclude share-based payments and non-recurring
items, are the Board’s preferred alternative performance measure.
Their reconciliation with the reported income statement, and the
reasons for their use, are provided in Note 36 to the accounts.
Including contributions from joint ventures, the Agriculture Division
Profit before taxation from operations
8,704
21,124
Share of tax incurred by joint venture &
associate
192
132
8,896
21,256
Effective tax rate in Group accounts
20.40% 18.85%
Effective tax rate including joint ventures
22.12% 19.40%
In accordance with Schedule 19 of the Finance Act 2016, the Group
has published a Tax Strategy document on its website. The document
confirms the Group’s commitment to all its statutory obligations and its
full disclosure policy. The Group does not use offshore tax jurisdictions.
25
ANNUAL REPORT AND ACCOUNTS 2023 i
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EARNINGS PER SHARE & DIVIDEND
Basic earnings per share for the financial year was 30.75p (2022:
82.72p), based on a weighted average number of shares in issue
during the year of 22.525m (2022: 20.722m).
The Board recommends the payment of a final dividend of 11.75p
per share (2022: 11.60p), which will be paid on 30 April 2024 and
is subject to shareholder approval. Including the interim dividend of
5.50p per share (2022: 5.40p), paid on 31 October 2023, this takes
the total dividend for the financial year to 17.25p (2022: 17.00p), an
increase of 1.5% on the prior year.
CASH FLOW AND NET CASH
£000
Operating cash flows*
Working capital movement
Net interest
Tax paid
Net cash generated from operating activities
The proposed total dividend is the twentieth consecutive year of
dividend growth since the Group joined the Alternative Investment
Market of the London Stock Exchange in 2004.
Net capital expenditure
Cash paid for acquisition of subsidiaries
2023
16,020
4,252
(294)
(2,763)
17,215
(5,505)
(2,709)
2022
27,502
(13,663)
(233)
(3,342)
10,264
(3,296)
(10,234)
The proposed total dividend is covered 1.8 times by profit after tax
(2022: 4.1 times). Current Company distributable reserves amount to
£16.61m (2022: £16.55m) and can cover nearly four years of current
dividend payment levels. Anticipated cash resources and future cash
generation assumptions support the Board’s view that the Group’s
progressive dividend 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.
BALANCE SHEET
£000
Tangible & intangible fixed assets
Right of use assets
Investments in property & joint ventures
Net working capital
Loans to joint venture
Net cash (excluding IFRS 16 leases)
Lease liabilities
Derivative financial instruments
Provisions
Current tax liabilities
Deferred tax liabilities
Net assets
2023
45,087
14,129
6,257
61,030
639
23,717
(12,975)
(177)
-
(257)
(2,219)
2022
41,909
8,202
5,951
62,619
1,067
21,494
(7,343)
466
(345)
(1,639)
(1,680)
135,231
130,701
£000
Capital investment in fixed assets, including right-of-use assets,
amounted to £15.54m (2022: £5.31m) in the year. Of this, £6.16m
related to renewal of property leases (2022: £nil) and £2.71m
was invested in acquisitions (2022: £10.23m), including deferred
consideration.
Working capital, defined as inventories plus current trade and other
receivables less current trade and other payables, reduced by £1.59m
or 2.5% to £61.03m (2022: £62.62m). The reduction mainly reflected
lower commodity prices, which offset the impact of acquisitions
and higher levels of activity. The like-for-like working capital cash
movement of £4.22m represents a partial reversal of the working
capital increase of £13.66m incurred by the Group in the previous year,
which experienced significant commodity inflation. It has supported
the generation of strong positive operational cash flows during the
financial year.
The Group’s net assets at the financial year-end amounted to £135.23m
(2022: £130.70m). Based on the weighted average number of shares
in issue during the financial year of 22.525m (2022: 20.722m), this
equates to a net asset per share of £6.00 (2022: £6.31 per share).
Based on these balance sheet values, the return on net assets from
underlying pre-tax profit was 7.0% (2022: 17.4%).
Joint ventures, associates and trusts
600
2,263
Net cash used in investing activities
(7,614)
(11,267)
Proceeds from issue of share capital
Net movement in bank borrowings
Repayment of capital element of leases
Dividends paid
1,471
(2,345)
(5,042)
(3,868)
11,040
9,011
(4,229)
(3,339)
Net cash (used in)/ generated from
financing activities
(9,784)
12,483
Net movement in cash
Effects of exchange rate differences
Opening cash balances
Closing cash balances
(183)
61
31,177
31,055
11,480
56
19,641
31,177
*Before movements in working capital
Net cash generated from operating activities totalled £17.22m (2022:
£10.26m). The reported net cash position at the financial year-end
was £10.74m (2022: £14.15m). Excluding the classification of land
& building leases as debt, in accordance with the basis on which the
Group’s banking covenants are calculated, the net cash position was
£19.01m (2022: £18.20m).
The October financial year-end marks a trough in the Group’s working
capital cycle, and therefore typically reflects an optimal position over
the 12-month cycle.
Cash and cash equivalents
Bank borrowings
Net cash (excluding IFRS 16 leases)
2023
31,055
(7,338)
23,717
2022
31,177
(9,683)
21,494
IFRS 16 non-property leases
(4,708)
(3,292)
Net cash (excluding IFRS 16 property
leases) bank basis
19,009
18,202
Other IFRS 16 leases
Net Cash (IFRS)
(8,268)
10,741
(4,051)
14,151
During the financial year, a total of 111,181 (2022: 75,891) new ordinary
shares were issued to existing shareholders exercising their right to
receive dividends in the form of new shares. The total equivalent cash
amount was £0.474m (2022: £0.459m). A further 503,534 shares
were issued for a total cash consideration of £0.997m (2022: £0.32m)
to employees exercising rights over approved share options (2022:
65,689). In the prior financial year, 1,900,000 shares were issued in
a private placing to institutional holders for a total cash consideration
of £10.26m.
26
ANNUAL REPORT AND ACCOUNTS 2023 Wynnstay Group Plc
Key Performance Indicators
SHARE PRICE
The closing share price at 31 October 2023 was 382.5p. During the financial year, the shares traded in the range of
640.0p per share (in November 2022) and 360.0p per share (in October 2023).
The performance of the business is regularly monitored against financial key performance indicators (KPIs), defined as follows:
KPI
Revenue
2023
2022
£735.88m £713.03m
The invoiced value of sales from the Group’s activities, measured at a fair value net of all
rebates and excluding value added tax.
Adjusted EBITDA*
£16.89m £28.31m
Earnings before interest, tax, depreciation and amortisation, and investment property
fair value adjustment, tax on joint ventures, goodwill impairment, share-based payment
expenses and other non-cash charges.
Earnings per share
30.75p
82.72p
Profit for the year after taxation divided by the weighted average number of shares in
issue during the year.
Underlying pre-tax profit*
£9.24m £22.61m
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.
Return on net assets
7.0%
17.4%
Underlying pre-tax profit, with intangible amortisation added back, divided by the
balance sheet net asset value.
Net assets per share
£6.00
£6.31
The balance sheet net asset value, divided by the weighted average number of shares in
issue during the year.
*A reconciliation of these measures to reported IFRS profit before tax is provided in Note 36 to the accounts.
GOING CONCERN
As part of their normal year-end processes, the Board has reviewed commercial plans and budgets for the new financial year, and assessed the
principal identified risks and uncertainties for the Group. Detailed cashflow projections were prepared and considered against available funding
sources, which at the financial year-end included net cash of £10.74m, £3.0m of undrawn revolving credit facilities and £10.5m of unused overdraft
facilities with HSBC Bank UK plc (“HSBC”).
During the financial year, £7.5m of committed revolving credit facilities and an accordion facility of £2.5m expired. A direct replacement was agreed
with HSBC. This comprises a final form base facility of £10m with a £5m accordion facility, both on the same coupon and fee arrangements as the
expired facility.
Reflecting the Group’s strong cash position and an assessment of the Group’s needs in the short term, the Group has deferred the implementation
of the new facility with the agreement of HSBC. This, in turn, will defer the commencement of the fixed commitment term, payment of the
arrangement fee and the instigation of non-utilisation fees. The new facility will be available approximately one month after it is requested.
The Directors believe that the Group has adequate financial resources to support the operational requirements of the business for the foreseeable
future, and that it is appropriate to continue adopting the going concern concept in the preparation of financial statements.
Whilst the financial performance of the Group has been impacted by a difficult trading environment and certain negative one-off items, the Board
believes that the Group’s market position, strong balance sheet and balanced business model support its view that Wynnstay remains resilient and
is well-placed to navigate the current commercial environment.
Rob Thomas
Group Finance Director
29 January 2024
27
ANNUAL REPORT AND ACCOUNTS 2023
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Company Details and Advisors
DIRECTORS
SECRETARY
COMPANY NUMBER
REGISTERED OFFICE
AUDITOR
PRINCIPAL BANKERS
NOMINATED ADVISOR &
STOCKBROKER
S J Ellwood – Chairman
S D Esom (appointed 18 April 2023)
P M Kirkham (retired 24 May 2023)
C Bradshaw
H J Richards
G W Davies – Chief Executive
B P Roberts – Finance Director (retired 02 January 2024)
R J Thomas – Group Finance Director (appointed 02 October 2023)
C A Williams
2704051
Eagle House
Llansantffraid-Ym-Mechain
Powys
SY22 6AQ
Crowe UK LLP
Black Country House
Rounds Green Road
Oldbury
West Midlands
B69 2DG
HSBC UK Bank PLC
Wales Corporate Banking Centre
5 Callaghan Square
Cardiff
CF10 5BT
Shore Capital and Corporate Limited
Cassini House
57 St James’s Street
London
SW1A 1LD
REGISTRARS
Neville Registrars Limited
Neville House
Steelpark Road
Halesowen
West Midlands
B62 8HD
SOLICITORS
Harrisons Solicitors LLP DWF LLP
30 Broad Street 5 St Paul’s Square
Welshpool Liverpool
Powys L3 9AE
SY21 7RR
ANNUAL REPORT AND ACCOUNTS 2023 Wynnstay Group Plc
28
Principal Risks and Uncertainties
For the year ended 31 October 2023
The strategic ambition of the Group is to create sustainable growth over the medium to long-term by identifying appropriate business opportunities
and developing these within a risk management framework appropriate to the activities being conducted, the scale of the enterprise and
the resources available. The Executive Team has overall responsibility for reviewing risk management strategies, and together with the wider
executive team, regularly reviews the operating environment for evolving concerns. A risk register is maintained and overseen by the executive
directors, who take account of the specialist knowledge available across the Group. The non-executive directors provide oversight and scrutiny
in this area to ensure that risk management is appropriately aligned with commercial strategy.
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, but 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 remain priorities for the Board.
RISK
DESCRIPTION OF RISK
MITIGATING ACTIONS
Continuing
Operational: Health and safety protocols
An absolute priority for the Group remains the safety, health
and welfare of our colleagues, customers, suppliers and
the communities in which it operates. Causing harm to any
individuals through the Group’s activities or actions creates
moral, reputational and financial risk to the organisation,
as well as potential disruption through absence, loss of
experience and other consequential implications.
The Group has taken further tangible actions over the
last year to strengthen and embed the culture of mutual
responsibility for health and safety matters. Initiatives have
included extended training, increased dedicated resource,
including the appointment of a senior executive in the role
of Group Health & Safety Manager reporting directly to
the CEO, and enhanced auditing and external system and
policy reviews.
Recent experience from Covid 19 has highlighted the
potential threats to businesses from pandemics and other
infection risks.
Benefits from amended operating protocols have been
recognised, and the Group will be vigilant for emerging
concerns.
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, malicious activity or
obsolescence could lead to failure in customer fulfilment
processes together with reputational and financial damage.
The potential risk of cyber attacks has increased with the
expansion of the business and the use of remote working.
The Group has internal IT support teams to manage its
computer systems, including procedures for recovery from
disruption.
Security training continues for relevant staff and recovery
simulations have been successfully completed.
Investment has increased to update both hardware and
operating software solutions.
Continuing
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.
Increasing
Operational: Manufacturing Investments
The Group’s expansion strategy entails significant investment
in manufacturing capacity across a range of activities
including feed production, seed processing and fertiliser
blending. Such investment programs have failure risks
associated with them together with concerns such as delays,
cost overruns and other project management issues.
Considerable time and effort have been invested in
obtaining expert external professional support to the
design, planning and implementation phases of these
projects. The Group employs an operational director and
an engineering manager who regularly review these critical
plans, and report progress to the Board.
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ANNUAL REPORT AND ACCOUNTS 2023
RISK
DESCRIPTION OF RISK
MITIGATING ACTIONS
Continuing
Financial: Commodity prices, currency exchange rates
and general market volatility
The Group’s raw material inputs (grain, feed and fertiliser
ingredients), along with the farmer customer outputs (dairy,
meat, agricultural goods) are subject to world prices which
are impacted by supply and demand, political factors and
currency exchange rates which could lead to fluctuating
demand for the Group’s products.
The wider economy has experienced a period of considerable
volatility with higher cost inflation and increased interest rates.
The Group is not immune to such general pressures
Increasing
Financial: Availability of finance and interest rates
Fluctuating commodity prices can adversely impact the
Group’s working capital requirements and increases in
interest rates raise the Group’s cost base and can limit
capital availability. Recent Bank of England policy has been
to increase interest rates to contribute to managing high
inflationary pressures.
The Group does not engage in the taking of speculative
commodity positions, and uses position reporting
systems with appropriate buying limits in place to manage
its forward purchasing requirements for its manufacturing
operations.
Position reporting systems are in place and where
available, hedging tools such as commodity futures
contracts are used to manage pricing decisions, while
foreign currency risk is managed by entering into
agreements at the time of the underlying transaction.
Various hedging strategies have been used to fix costs
where possible including, in the electricity and fuel
markets. Management are also tasked with seeking
forward commitment arrangements utilising the Group’s
strong balance sheet where appropriate.
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 existing debt facilities have
floating interest rates linked to bank reference rates, but
the Board could readily fix these through the use of swap
derivatives if appropriate.
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Increasing
Operational: Operating environment
- Impact of weather conditions and climate change.
Demand for the Group’s products is affected by climatic
conditions which impact both livestock and arable activities,
and so customer demand can be impacted by the weather
which, in turn, could lead to volatility of earnings.
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.
- Animal diseases.
Much of the Group’s commercial activity entails the supply of
products into the livestock sector, and as such any disease
issue which impacts the number of animals may reduce the
opportunities for the business. The recent increasing incidents
of Avian Influenza represents serious commercial risks to an
important customer sector for the Group’s feed business.
The Group monitors area of concern and implements
operational bio-security protocols to minimise the risk
of contributing to the spread of disease. The Group is
not dependent on any single category of livestock and
maintains exposure to multiple farming enterprises to
reduce the impact from issues affecting any particular
sector.
-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.
Continuing
Financial: Credit
regulatory
The Board oversees environment and
compliance by
from
management and monitoring the results of internal
reviews and external compliance audits.
regular updates
receiving
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.
ANNUAL REPORT AND ACCOUNTS 2023 Wynnstay Group Plc
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Principal Risks and Uncertainties continued
RISK
DESCRIPTION OF RISK
MITIGATING ACTIONS
Continuing
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 in 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.
Increasing
Operational: Government policy and agricultural support
Following Brexit, the UK government and the respective
authorities in the devolved nations implemented replacement
agricultural policies, with evolving and different support
mechanisms for farmers, with an underlying focus on
sustainability and the environment. The potential for reduced
income for the Group’s predominant farmer customer base,
either from the direct changes in support payments or, to the
current commitments from an altered political agenda, could
impact the demand for the Group’s products.
The Group receives consultancy input on the implications
of government policy and closely monitors changes
to arrangements and adapts plans to respond to the
opportunities arising from such changes. The respective
government’s agricultural legislative frameworks have
been fully investigated and resources allocated to assist
our customers to access the available funding for joint
commercial benefit.
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ANNUAL REPORT AND ACCOUNTS 2023
Wynnstay Group PLC - Section 172 Statement
Financial Year ending 31 October 2023
BACKGROUND
STAKEHOLDERS
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. This disclosure requirement in no way changes
the underlying statutory duties of a director, which are set out below:
Section 172(1) of the Companies Act 2006
A director of a company must act in the way he/she considers, in good
faith, and would be most likely to promote the success of the company
for the benefit of its members 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 2023, 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.
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The Group continues to identify five main stakeholder groupings
associated with the business, and have 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 is always cognisant of expectations. Additional
information on engagement can be found the ESG Framework section
of the Annual Report.
Customers – where the Group seeks to excel in terms of range,
value, quality, and service. The relationship nature of the Group’s
trading activities requires 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 to offer advice on a range of agricultural
matters, and more details can be found within the Strategic Report.
Shareholders – the Board seeks to execute its strategy in a
sustainable way in line with our corporate values, Wynnstay THRIVE,
which is explained on pages 43-44. We utilise the principles set
out in the QCA code 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 a Colleague Forum and a senior management
“open-door” policy to encourage open dialogue across the business.
regularly visit
Senior executives and Non-executive directors
operational locations 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 with 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,
and the Group selects certain charities to support on an annual
basis. During the year some 240 examples of support were offered
to community initiatives in the form of sponsorship, other financial
support or practical assistance.
ANNUAL REPORT AND ACCOUNTS 2023 Wynnstay Group Plc
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Wynnstay Group PLC - Section 172 Statement continued
KEY BOARD DECISIONS
During the year, certain key Board decisions and their implications on relevant stakeholder groups can be categorised as follows:
ISSUE & DECISION
STAKEHOLDER
GROUPS
OUTCOMES
Executive Management Reorganisation – During the year, the
Chief Executive Officer refined his senior management team, and
presented these proposals to the Board for consideration. These
proposals created a focused Executive Team which assumed some
of the responsibilities previously held by subsidiary boards. The
primary intention of this reorganisation was to align and co-ordinate
management approaches across the Group and clarify specific
executive responsibilities. The changes included amendments to
the responsibilities of certain executives, including the extended role
of Group Sustainability & Innovation Director. A number of new roles
were also created including, Head of Strategic Delivery, and Group
Director of Feeds & Logistics. Additionally, below the Executive
Committee a new Health & Safety executive was recruited,
reporting directly to the CEO, to ensure the critical importance of
this philosophy is embedded across all activities of the Group.
The additional senior management resources have enabled a greater
focus on strategic planning and delivery of the corporate plan while
also clarifying executive responsibility for all stakeholder groups.
The widening of experience at the senior level adds resilience to the
operational management of the business and provides clarity for
lines of responsibility.
All
A clearer management structure assists with the Group’s People
Management & Development (PM&D) strategy, and the in-depth
management succession plans across the business.
Health & Safety must be embedded in the culture of the organisation,
and this has undoubtedly been strengthened by the additional
resource committed to this area, and the independence provided by
the direct CEO reporting line.
Installing a resilient and clear management structure across the business establishes the platform on which the next phase of the Group’s growth plan can be built.
Ensuring focused attention on the identified priorities for the business, supported by adequate processes and procedures overseen by competent individuals will
place the Group in a stronger position to succeed in the future.
Assessment of acquisition opportunities and integration
planning – In continuation of the Group’s well-communicated
acquisition strategy, the Board have continued to identify, appraise
and approach potential acquisition opportunities. At the beginning
of the year, the acquisition of Tamar Milling was completed, with
the business fully integrated into existing operations. During
the summer, the integration of Humphrey Feeds & Pullets was
commenced, including the roll-out of the new branding, maintaining
the Humphrey name across all the Group’s poultry activities. This
process was fully completed by the financial year end. A number
of other potential acquisition opportunities were considered and
rejected during the year, as they did not fit ideally with strategy or
have to potential to provide a satisfactory return.
Customers
Suppliers
Shareholders
The integration processes have again demonstrated the Group’s
historically successful track record of dealing with acquisitions
even in challenging commercial environments. The impact of Avian
Influenza on the Humphrey acquisition had not been fully anticipated
prior to completion, yet the operational plans implemented minimised
the potential disruption and maintained customer service levels and
the platform for recovery as the disease hopefully abates. Rejecting
inappropriate opportunities evidences the Group’s discerning
acquisition criteria, and the Board’s clear decision priorities focused
on earnings enhancement.
Acquisitions expand the Group’s geographic presence and the successful integration of last year’s transactions have strengthened Company’s brand and reputation
in the South West of England.
Assessment and approval of the continuing capacity
investment in the Carmarthen feed plant - The long-term
plan to improve the efficiency of, and increase the capacity at the
Carmarthen feed mill was regularly reviewed with the significant
Phase One investment in the out-loading facilities confirmed,
and other Phases reviewed for alternative approaches in light of
other activity decisions and business developments such as the
acquisition of the feed blending activity, Tamar Milling Ltd.
Customers
Colleagues
Suppliers
Shareholders
The opportunity to improve our operations in the strategically
important South Wales milk field was reiterated, and the first phase
investment of some £1.7m was committed and completed. The
new out-loading facility was completed towards the end of the
financial year and fully commissioned in November 2023. Initial
results are extremely encouraging, with the speed of vehicle
loading significantly improved over the traditional process, resulting
in much quicker vehicle turnaround times and customer service
improvements.
The investment in this strategically important asset demonstrates the Group’s commitment to customers in this growing dairy area, together with achieving
improvements in cost efficiencies and customer service levels.
Board Succession Planning – With Philip Kirkham approaching
ten years of non-executive service on the Board and Paul Roberts
indicating his intention to retire, the Board were able to complete
a smooth succession plan to replace one-third of their strength.
These transition requirements often bring disruption risks, so already
having a clear process in hand was essential to minimise delay and
resource distraction.
All
Already having a plan in place for the involvement of trusted and
experienced advisors to assist with the recruitment of replacement
directors clearly minimised the timetable and provided clarity to the
process steps. The rapid agreement of effective handover protocols
and focused induction plans facilitated smooth transitions and
enabled Steven Esom and Rob Thomas to hit the ground running in
making an immediate positive contribution to the Board.
The continued strengthening and refreshing of the Group’s Board in a smooth manner supports the reputational quality of the business in the minds of all
stakeholder categories.
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.
This Strategic Report on pages 3-33 was approved by the Board of Directors on 29 January 2024 and signed on its behalf by Steve Ellwood and Rob Thomas.
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ANNUAL REPORT AND ACCOUNTS 2023
Steve Ellwood
Cadeirydd
29 January 2024
Rob Thomas
Group Finance Director
29 January 2024
ESG Framework
Environmental Strategy
Our Environment
“Our mission is to help the farmer to feed the UK in a more sustainable way”
INTERNAL OPERATIONS
We have replaced six seven-year-old vehicles based at our Twyford mill
with six new Scania vehicles, increasing our fuel efficiency from 6mpg
to 9.5mpg. We have also taken delivery of two new Renault vehicles,
with more expected in 2024. In addition to this we have replaced three
older trailers with hydraulic blower trailers, which is saving an average
of 0.3 litres per tonne in diesel compared to a conventional trailer with
an independent engine.
We are continuing to increase the number of hybrid vehicles within
our fleet with 36 hybrids now integrated, and we are now running our
first full electric company car. We are continuing to trial electric vans,
which, although they are not yet integrated into the business, we do
still see merit in exploring this further with more plans to trial into 2024.
Furthermore, we are expecting delivery of a gas-fuelled lorry in spring
2024, which we will be trialling across our operations.
As outlined in the last report, we have been investing in renewable
energy generation at our sites. We have installed over 700kWp of solar
PV (photovoltaics) panels on five of our sites with high electricity usage.
Over the next 12 months, this investment is predicted to generate over
550,000kWh of electricity (which is 3% of total electricity usage across
the Group).
EXTERNAL
We are continuing to develop our Group sustainability proposition, to
build resilience into our own business and our customers’ businesses.
In spring 2024 we will be working closely with a group of farms to
improve their productivity and reduce their farm carbon footprint.
Wynnstay is committed to supporting our customers to tackle the
issue of waste plastic accumulating on farms. We have recently
committed our support to The Green Tractor Scheme. Green Tractor
was founded in 2020 by four agricultural plastic recycling specialists
who all shared the same ambition to provide a standard to the UK
agricultural industry, and the ability to recycle all agricultural plastics by
2030. They have identified some of the key areas of focus as being.
• Education surrounding separation and presentation of waste for
the farmers,
• Collaborating with and enabling recyclers to be more efficient and
effective,
• Lobbying
the government
to
force producers
to
remove
unnecessary plastics from the supply chain.
Wynnstay will be utilising assets available from Green Tractor to educate
and inform our customers as to the best practices for recycling and
what facilities are available within their region.
Due to the significant changes in agricultural policy and funding
since the UK’s exit from the EU, there has been increased interest in
environmental stewardship options. We have seen a growing uptake of
scheme agreements, SFI in England and ‘Growing for the Environment’
in Wales in the past year. This has led to an 80% increase in our
environmental stewardship mixture sales. With additional scheme
options expected this year, we would expect further interest in this
area throughout the season as our customers continue to implement
the options available to them.
We have continued to support our customers with managing their farm
manures and slurries through increased activity and focus on Nutrient
Management Plans, which aim to maximise the use of farm nutrients
alongside providing a range of complementary soil conditioners and
synthetic fertilisers where required.
As concern grows that poultry manure is associated with excessive
phosphate levels in rivers, at Wynnstay, we have focused on how
we can reduce the phosphorus levels in our layer’s feeds without
compromising bird performance and health. From January 2023, all
Wynnstay manufactured layer mashes from our Llansantffraid mill
contained triple doses of phytase. Optimising the level of phytase
enzyme in our layer feeds (increased to a triple dose) has allowed us
to reduce our total phosphorus levels and requirement for inorganic
sources, such as monocalcium phosphate (MCP), by increasing the
phosphorus available to the birds from the existing feed ingredients.
This improves diet utilisation and results in an average reduction of
13.8% in phosphorus excretion per bird per year.
Alongside nine project partners, Wynnstay is pleased to be involved
in the Innovate UK project ‘Dancing with Daffodils’, which focuses on
cultivating and processing daffodils. Research is being undertaken
to identify the potential of the incorporation of a compound found
in daffodils into ruminant diets to reduce methane emissions and
improve protein utilisation. Daffodils have already been shown to
have properties to improve human health. Galantamine, a compound
found in the plant, has been used for dementia and brain health in
humans for several years. ‘Dancing with Daffodils’ is a project looking
at developing a UK-based supply chain for a methane-reducing
additive for ruminants which is found in daffodils. The four-year project
started on 1 June 2023. However, some preliminary lab work has
been undertaken so the partners know the daffodil extract can be
used to reduce methane production and improve protein utilisation in
ruminants, the ongoing research is to now identify to what extent.
The best outcome is to replicate the results that have been seen in the
lab, which include:
• A reduction in methane production.
• The rumen working more efficiently, improving protein utilisation.
ADVISORY
Throughout 2023 we have been developing our sustainability approach
with the support of selected industry experts. As part of this approach,
we have formed two teams to reflect our dual sustainability approach
of internal operations and external opportunities.
• To support our internal operations, we have set up a Resource
Efficiency Action (REA) Team. The role of the REA Team will focus
on internal factors within the direct control of the business, carbon,
water and waste.
• To develop external opportunities, we have formed a Sustainable
Farming Advisory (SFA) Team. The role of the SFA Team is to
provide wise counsel and unbiased strategic advice to ensure
Wynnstay delivers a sustainable farming future.
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TCFD Statement
The Group recognise the significance of climate change and its financial materiality. That is why we are actively working to develop adaptation
measures to increase resilience to climate change while at the same time enriching our business offering to answer farmers’ evolving needs. In
parallel, we are on a continuous journey to reduce our impact on climate change and reach Net Zero by 2040.
We acknowledge that tackling climate change requires a long-term and embedded approach, so we are supportive of the aims and objectives
of the Financial Stability Board’s Task Force on Climate-related Financial Disclosures (“TCFD”) and are working to align with the
TCFD Recommendations.
We have adopted the TCFD framework and recommendations, this provides a structured approach to embed climate into our decision-making
and apply best practice on reporting and disclosures. We see this as an opportunity to build on our ongoing climate-related work, whilst taking
the first steps on the roadmap of TCFD reporting. In doing so, we ensure that our stakeholders can better understand Wynnstay’s operational
and business resilience to climate change as well as how we are increasingly incorporating the management of climate-related risks and
opportunities into our business.
ALIGNMENT STATUS
The following table provides a summary of our current alignment with TCFD recommendations.
TCFD pillar
Recommended disclosure
Current Status
Alignment
2023-2024
Objectives
Governance
Board’s oversight of climate-related
risks and opportunities.
Management’s role in assessing
and managing climate-related risks
and opportunities.
Strategy
Climate-related risks and
opportunities identified over the
short, medium, and long term.
Via the Audit Committee, the Board is
overseeing the Group’s Risk Register,
comprising climatic conditions. It is
supported by advisory teams to do so.
Responsibilities are assigned within
management to develop climate-related
strategy, best risk management practices,
as well as detailed metrics and targets.
The Group foresees shifts in market trends
because of climate change and is planning
further work to identify detailed climate-
related risks and opportunities, in 2024.
Impact of climate on the
organization’s businesses, strategy,
and financial planning.
As part of a comprehensive climate risk
analysis in 2024, the Group will evaluate
the materiality of climate risks and
opportunities on its business.
Resilience of the strategy, taking
into consideration different climate-
related scenarios.
Risk
Management
Processes for identifying and
assessing climate-related risks.
Processes for managing climate-
related risks.
How such processed are
integrated into overall risk
management.
Metrics &
Targets
Metrics used by the organization
to assess climate-related risks and
opportunities.
Scope 1, Scope 2, and, if
appropriate, Scope 3 greenhouse
gas emissions.
Targets used by the organization to
manage climate-related risks and
opportunities.
In 2024, the Group will assess its resilience
to climate-related physical and transition
risks in different climate scenarios through
scenario analysis.
Group risk managers are supported by the
Resource Efficiency Action team, and the
Sustainable Farming Advisory team who
monitor climate-related risks.
The Board sets up the Group overall
strategy taking into account all risks within
the Enterprise Risk Register. Climate-
related risks are part of the Published
Principal Risks and Uncertainties within the
Enterprise Risk Register.
Current metrics are GHG emissions:
Scope 1 and Scope 2. In 2024, the Group
will establish other metrics and targets to
track progress against climate risk and
opportunity management.
The Group Streamlined Energy and
Carbon Reporting Statement 2022/23
includes Scope 1, Scope 2, and part of
scope 3 emissions.
Our main climate-related target is to be
carbon neutral (Net Zero) by 2040. Other
intermediary targets will be developed in
2024 to manage climate-related risks and
opportunities.
In Progress
Objective 1
In Progress
Objective 2
Planned
Objective 3
Planned
Objective 3
Planned
Objective 4
In Progress
Objective 6
In Progress
Objective 7
Objective 8
In Progress
Objective 9
Advanced
Objective 5
In Progress
Objective 10
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ANNUAL REPORT AND ACCOUNTS 2023
TCFD Statement continued
CLIMATE ROADMAP OVERVIEW
Our 2024 Climate Roadmap is centred around 3 main activities that will enable the Group to continue aligning to the TCFD disclosure
recommendations.
Activity
1
Climate risk
analysis
2
Scenario
planning and
climate strategy
Detailed analysis of climate-related
risks and opportunities:
3, 6, 7 and 8
✓ Materiality of climate risks on strategy &
financial planning
2023-2024 Objectives
Outcome
• Physical risks: factories,
agricultural value chains, and
customers.
• Transition risks: upcoming
regulations, market changes,
and new technologies.
Development of climate
scenarios to stress-test
organizational resilience vs risks
and opportunities & identify best
strategic options.
4 and 6
✓ Updated climate risk assessment
methodology
✓ Strengthened alignment of climate risks
and opportunities with operational strategy,
decision making and financial planning
✓ Appropriate targets & metrics to set strategy
in motion
3
Net Zero
Reduction
Pathway
Continue to identify key reduction
areas, hotspots, and areas of
further focus to strengthen a clear
forward-looking roadmap that
communicates the reduction within
Scope 1, 2 and 3 emissions.
1, 2, 5, 9 and 10
✓ Transition Plan development for successful
emissions reductions
✓ Intensity targets for Scope 1 and 2
emissions
GOVERNANCE
Our current alignment
STRATEGY
Our current alignment
The Group is proactively aligning its governance system with TCFD
recommendations.
The Board retains overall responsibility for reviewing risk management
responsibilities have been assigned within
strategies. Clear
management to ensure the development of strong climate-related
strategy and risk management practices. Climate change is part of our
risk register which is maintained and regularly reviewed and overseen
by the executive directors, supported by the wider Executive Team
and the specialist knowledge available across the Group.
The Board and its sub-committees are supported by external advisors
as required, such as those sitting in the Resource Efficiency Action
team, and the Sustainable Farming Advisory team. Furthermore, the
Board has appointed a Sustainability Director within the Executive
Team to lead the implementation of our environmental strategy,
including our climate endeavours.
Strategic decisions are made in the context of our mission to help
farmers feed the UK in a more sustainable way. The Sustainability
Strategy is dual-focused on resource efficiency and future-proofing
profitability of Group activities. Further to this, our five-year commercial
strategy is underpinned by ESG components, among which our 2040
Net Zero goal. Climate-related risks and opportunities are intrinsically
linked with this dual focus and the ESG framework.
Going forward, the Group will not only identify detailed climate-
related risks and opportunities, but also assess their materiality on
the business model, strategic objectives, and financial planning. The
Group will also assess its resilience to climate-related physical and
transition risks through scenario analysis.
2023-2024 OBJECTIVES
2023-2024 OBJECTIVES
Objective 3
Objective 1
In the coming year, climate risks and opportunities will be formally
included in roles within the Group Board, the Executive Committee, as
well as in our Advisory Teams. We will align these different committees
behind processes and frameworks, enabling them to rigorously
monitor and manage climate risks and opportunities.
Objective 2
A governance body for timely climate risk discussions will officially be
empowered to lead our climate-related efforts. This committee will
serve to implement and track progress in the process of embedding
climate risks and opportunities management in the Group.
We will carry out a detailed assessment of climate risks and
opportunities in the short, medium, and long term. We will analyse
risks and opportunities to which the Group is directly exposed via
its operations and production facilities, or indirectly via its upstream
and downstream value chains. We will determine the materiality of
climate risks and opportunities, which will enable us to prioritize risks
to mitigate and opportunities to grasp.
Objective 4
Subsequently, we will develop multiple scenarios - including a
2°C or lower average global warming scenario - to stress-test our
organisational resilience in the face of multiple climate risks and
opportunities. This will serve to set detailed climate-related ambitions
and identify the best strategic climate options to be embedded into our
next 5-year strategy plan.
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TCFD Statement continued
Objective 5
Finally, and in parallel, we will enhance our calculation of scope 1, 2 and
3 emissions, following a value chain mapping exercise, and continue
to progress on our current decarbonization path. We will keep on
identifying key reduction areas, hotspots, and areas of further focus
to establish a clear forward-looking transition plan that communicates
the reduction within Scope 1, 2 and 3 emissions.
RISK MANAGEMENT
Our current alignment
The Group has started to analyse change in weather patterns as a
first climate-related risk and is on its way to add multiple other climate
related risks to be assessed and managed. Climatic conditions are
currently part of the Published Principal Risks and Uncertainties within
the Enterprise Risk Register, set up and managed by risk executives.
The Enterprise Risk Register is currently reviewed twice a year, and a
new process is being shaped to increase the frequency of its revision
by the Board and allocate more specific individual responsibility.
In parallel, the Group continues to invest internally in low-carbon
technologies and efficiencies (as described on page 34) to align its
internal operations with its objective of carbon neutrality by 2040.
Externally, the Group continues to develop its panel of products so that
farmers in the UK can farm more sustainably, reducing their carbon
emissions (as described on page 34).
2023-2024 OBJECTIVES
Objective 6
Our goal is first to create a robust risk assessment matrix for climate-
related risks to build on the current climate items on our risk register.
Objective 7
We will evolve our risk assessment methodology to be more science-
based and will further develop how we identify and monitor climate
risk within the Enterprise Risk Register. Our methodology will include
metrics to continuously monitor internal and external climate-related
risks and opportunities. Our climate risk mitigation plans will be
reviewed and updated regularly to ensure regulatory compliance
and competitiveness, as part of our Enterprise Risk Management
approach.
Objective 8
Finally, we will strengthen and detail the link between organizational
strategy and risk management with climate risks & opportunities.
Climate risks and opportunities will be embedded into core company
processes such as strategy, business planning, enterprise risk
management, and our acquisition thesis.
METRICS AND TARGETS
Our current alignment
Metrics and Targets will support our commitment to measure, monitor,
and report on the progress we make towards mitigating climate-related
risks and capitalizing on green opportunities. By employing a set of
carefully selected metrics, we will strive to provide a transparent view
of our climate impact and the effectiveness of our strategic responses.
In our journey to reach Net Zero by 2040 we currently measure and
report on 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 financial year ended 31 October
2023. As this is the fourth year of reporting, we shall be comparing this
year to the previous 2021/22 year, however the benchmark 2019/20
year is shown in the table below.
Wynnstay Group used 13,881 (2022: 12,832) carbon dioxide
equivalent tonnes (tCO2e) of energy during the year. 30% (2022: 32%)
of energy was used in producing compound and blended feeds in
our production plants, which saw the addition of Tamar Milling Ltd.
A further 61% (2022: 58%) was used by our fleet of vehicles, this
percentage increase being driven by an absolute rise in the litres of
Derv used. Both production and transport efficiency are key to our
energy savings plans, as we continue to seek efficiencies in factory
throughput and miles achieved per litre for road fuel respectively.
The carbon intensity ratio we have chosen is the best reflection of
our total activity across all our operations based on the total tonnage
traded of agricultural inputs and grain. Our carbon intensity ratio for
the year ended 31 October 2023 was 7.37tCO2e (2022: 7.24) 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 efficiency along with financial
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 2023. One of the requirements of the SECR
regulations is to report our total UK energy use in kilowatt hours
(kWh); for this we have used the 2023 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.
Current scope 3 emissions are emissions from the transportation of
employees between their homes and their worksites (category 7 of the
Greenhouse Gas Protocol).
2023-2024 OBJECTIVES
Objective 9
In 2024, the Group will establish other metrics and targets to track
progress against climate risk and opportunity management.
Objective 10
Our main climate-related target is to be carbon neutral (Net Zero) by
2040. Other intermediary targets will be developed in 2024 to manage
climate-related risks and opportunities.
37
ANNUAL REPORT AND ACCOUNTS 2023 SECR Statement
STREAMLINE ENERGY AND CARBON REPORTING
Carbon emissions (tCO2e)
Scope 1 Emissions
Scope 2 Emissions
Scope 3 Emissions
Total Emissions
Current
2022/23
10,567
3,282
32
13,881
Previous
2021/22
9,682
3,127
23
12,832
Benchmark
2019/20
9,086
3,582
42
12,710
Traded tonnage of agricultural inputs and grain
1,882,745
1,772,821
1,560,895
Carbon intensity ratio (tCO2e/1000t traded)
7.37
7.24
8.14
Total UK energy usage (kWh)
60,522,547
57,910,122
53,320,243
2023-2024 OBJECTIVES
For the next 12 months, continuing with our decarbonisation endeavours, we commit to establish Scope 1 & 2 emissions reduction targets,
aligned with GHG Protocol methodology.
In addition, we will work to establish other relevant metrics to track progress against climate risk mitigation or opportunity management; and
to set our climate strategy in motion. These additional metrics will permit to monitor several variables related to TCFD risk and opportunities
categories:
Risks
Physical
Policy and Legal
Technology
Market
Reputation
Opportunities
Resource efficiency
Energy Source
Products and Services
Markets
Resilience
These metrics will provide a solid foundation for setting clear, actionable targets. These targets will not only guide our sustainable operations
and investment decisions, but also help gauge our resilience to climate-related risks. Monitoring our progress through these metrics will
ensure continuous improvement and will reinforce our commitment to climate mitigation and adaptation, providing greater transparency for all
stakeholders.
38
ANNUAL REPORT AND ACCOUNTS 2023 Wynnstay Group Plc Social
EMPLOYEE ENGAGEMENT
Our Colleague Forum is a group of individuals from across the
business who meet to operate as a mechanism to seek input into the
Group’s strategic decision-making process, encourage involvement in
business performance and increase awareness of the financial and
economic factors affecting the Group. The Forum met once during
the year, including presentations from three different senior colleagues.
Topics covered included the acquisition and integration of Humphreys
Feed & Pullets, our marketing strategy and an overview of the annual
pay review decision-making process.
Our Colleague Ideas Hub is a route for individuals from across the
Group to submit ideas and suggestions for ways in which to improve
all aspects of our business. Individuals are recognised for their own
ideas and rewarded for suggestions which are progressed and
implemented. We were pleased to have received 6 suggestions
which have been considered by Senior Management during the year.
During the year, we also held a Colleague Ideas Week, which actively
encouraged colleagues to propose new ideas to improve business
productivity. During that week we received a total of 74 ideas from
across the business.
In 2023, a series of engaging Colleague Roadshows were held
throughout our trading area. During these events, the Executive Team
not only shared a comprehensive update on our business strategy but
also actively sought the valuable perspectives of our colleagues on
enhancing various facets of our operations. The Roadshow generated
a plethora of innovative suggestions and ideas aimed at refining our
business. Many of these recommendations are now being actively
implemented, and we are already witnessing the positive impact they
bring to our organisation.
Our Wynnstay Connect platform engages colleagues with company
strategy, initiatives, and developments, along with enabling efficient
interactive communications across the Group. The platform also
provides easy access links to career and development and benefits
hubs, including pension and Save as You Earn Share scheme portals.
Our Save as You Earn offering is popular with a mixture of colleagues
across sites and salary levels and the directors wish to continue to
encourage colleague participation.
PEOPLE MANAGEMENT AND DEVELOPMENT
FRAMEWORK
Our bespoke People Management and Development Framework
works to preserve our 1st Choice Employer brand while providing a
set of principles and guiding policies and processes to support the
management and progression of colleagues across the Group. The
core focus of the framework is to support the attraction, retention
and development of our people, providing management teams with
the comprehensive tools they need for the career management and
development of individuals and their teams.
DIVERSITY AND EQUAL OPPORTUNITIES
Wynnstay is proud to be an inclusive equal opportunities employer
within its geographical communities and promotes diversity at all levels
of the business. Wynnstay aims to provide a working environment
that respects the rights of each individual and where colleagues treat
each other with respect. Any behaviour that undermines this aim is
unacceptable.
TRAINING AND DEVELOPMENT
Our business is built on the foundation of offering customers the
highest standards of customer service and specialist advice. A key
part of delivering this service is the training and development of our
people, which not only ensures a high service level but also offers
career progression for our colleagues. We offer a range of training
courses and professional qualifications across our business which
include:
39
ANNUAL REPORT AND ACCOUNTS 2023
• Management and Leadership- 20Twenty Business Growth
• Sales and Personal Development - Wynnstay Sales Academy
• Specialist Expertise - BASIS (Pesticides and Fertiliser), FACTS
(Fertiliser), AMTRA (Animal Health), Wynnsan Training Academy
(Dairy hygiene), Cow Signals (Livestock health and welfare)
• People Management and Development - Chartered Institute of
Professional Development
• Marketing Management - Chartered Institute of Marketing
• Finance - Chartered Institute of Management Accountants
• Health and Safety - Institution of Occupational Safety and Health
HEALTH, SAFETY & WELFARE
The health, safety and welfare of our colleagues, customers, suppliers
and the wider communities in which we operate are an absolute priority
for Wynnstay. A focus on health and safety is built into the Group’s
whole approach to managing risks in all aspects of its business.
As a Group we are continually taking action to strengthen the safety
culture throughout our business. We have continued to embed a
culture of mutual responsibility for health and safety matters, extending
training to colleagues and made improvements to existing protocols.
In addition, we have appointed a senior executive to the role of Group
Health and Safety Manager, who will report directly to the CEO.
Our aims:
1. To continually build on and strengthen a ‘Culture of Safety’
2. To ensure that the organisation continually improves.
3. To ensure health and safety performance is measured and
monitored.
4. To maintain a skilled and competent workforce.
40
ANNUAL REPORT AND ACCOUNTS 2023 Wynnstay Group Plc Social continued
INDUSTRY INITIATIVES
Throughout the year, we championed various industry initiatives,
proudly sponsoring events like the NFU Cymru Wynnstay Sustainable
Agriculture Award, Harper Adams University Beef Award, NFU
Cymru Poultry Conference and The Cream Awards. Additionally, we
actively endorsed crucial industry campaigns such as Farm24. Our
dedicated involvement in these endeavours not only underscores our
commitment to the agricultural sector but also serves as a vital means
to connect with the next generation—fostering relationships with future
customers and potential colleagues.
Some of the industry initiatives and campaigns we have supported
NFU Cymru Wynnstay Sustainable Agriculture Award
NFU Cymru Sustainable Farming Conference
Dairy Vitality Award at The British Dairying Cream Awards
Harper Adams University Beef Award
NFU Cymru Poultry Conference
BFREPA Young Person Initiative
YFC Wales
Farm24
41
ANNUAL REPORT AND ACCOUNTS 2023
Social continued
COMMUNITY IMPACT
Our commitment to making a positive impact in the communities we
serve is important within our business. Throughout the year, we lent
our support to over 240 individual events or causes, ranging from local
agricultural shows to charitable initiatives, community groups, and
educational settings. In the spirit of giving back, we directly contributed
£1,780 to charitable causes and £26,383 to initiatives within both the
agricultural and local communities. Our colleague fundraising during
the year raised £4,666, which was split across two charities, Children
with Cancer UK and The Royal Agricultural Benevolent Institution
(R.A.B.I).
ENGAGING WITH OUR CUSTOMERS
As part of our customer engagement strategy, we held our annual
Arable Event, which is now in its 9th year—inviting customers to
explore trial plots, browse trade stands, watch demonstrations, and
listen to insights from keynote speakers in the agricultural industry.
Complementing these flagship events are various localised depot
events, on-farm workshops, and customer meetings, collectively
providing numerous opportunities
for ongoing and meaningful
engagement with our valued customers.
E
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ANNUAL REPORT AND ACCOUNTS 2023 Wynnstay Group Plc
42
Values
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
43
ANNUAL REPORT AND ACCOUNTS 2023 Values
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.
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F
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a
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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.
4444
ANNUAL REPORT AND ACCOUNTS 2023 Wynnstay Group Plc
Corporate Governance Statement
For the year ended 31 October 2023
On behalf of the Board, I am pleased to present our Corporate Governance Statement for the year ending 31 October 2023.
The Board places the highest priority on delivering long-term shareholder value, and as stewards of this responsibility, we believe it is critical
to maintain a governance strategy appropriate to the activities and scale of our business, based on honesty, integrity, and transparency. This
Statement provides details of the framework and practices the Board apply to satisfy these responsibilities. In accordance with AIM Rule 26,
the Board confirms that they apply the QCA Corporate Governance Code for Small and Mid-size Quoted Companies revised in April 2018 (“the
Code”) to the Group. I am pleased to report that the Board believe the Group have remained in compliance with the principles of the Code
throughout the year, and I would like to explain how this was achieved. Where relevant information is contained elsewhere in this document,
references are given, and the Board notes the QCA’s intention to update the Code in the near future.
The Code contains ten principles which are:
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 effective 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 ft 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 our predominantly farmer customers feed the country in
a more sustainable way. The Board updated its long-term strategy in 2020 with five key growth pillars, which are laid out in the Strategic Report
on page 11, and which support the development of the Group’s balanced business model, an overview of which is given on page 12. Key
developments in the business during the year are explained in the Chief Executive Review on page 19, and the Board’s major decisions during
the year are highlighted within our S172 statement on page 32.
Principle 2: The Board appreciates that the diverse shareholder base of the Group may have differing objectives for their investment in the
business, and therefore the importance of ensuring that non-executive directors (“NEDs”) in particular, have an up to date understanding of these
perspectives is well recognised.
Directors proactively engage with both institutional and private investors when appropriate 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 financial results “roadshows” and will also always consider information received from institutional voter advisory firms.
Until his retirement in May 2023, Philip Kirkham was the nominated independent NED who made himself available to shareholders who may
require independent Board contact, with this role being assumed by Steven Esom from that date.
Details on how the Board have taken the views of all stakeholders into consideration when making significant decisions in the year are contained
within the S172 statement on page 32.
45
ANNUAL REPORT AND ACCOUNTS 2023
Corporate Governance Statement continued
KEY SHAREHOLDER MILESTONES DURING THE YEAR
• Pre-Close Trading Update and announcement of Tamar acquisition provided to the Market.
• Notice of announcement of Final Results and presentation available for shareholders and potential investors.
• Announcement of Preliminary Final Results for 2022 together with details of the Final dividend for the period noting
this was the 19th consecutive year of dividend growth since listing on AIM.
• Results roadshow by CEO & FD to existing and potential shareholders.
• Live Results webinar with Q&A session.
• Annual General Meeting attended by 38 shareholders in person.
• Payment of Final Dividend and allotment and notification of appropriate Scrip Dividend shares.
• Announcement of Board appointment of Steven Esom.
• Announcement of Interim Final Results for 2023 together with details of the Interim dividend for the period.
• Announcement of the planned retirement of the FD.
• Announcement of relevant trading initiatives including sustainable farming awards and methane inhibition research.
• Announcement of Board appointment of Rob Thomas as new Group Finance Director.
• Payment of Interim Dividend and allotment and notification of appropriate Scrip Dividend shares.
November
2022
January
2023
February
2023
March
2023
April
2023
July
2023
September
2023
October
2023
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 ESG section of the Strategic Report. During the year, the commitment to the Environmental and Sustainability
elements of strategy was strengthened through the appointment of a Group Sustainability, Innovation and Food Supply Director, with Andrew
Evans appointed to lead the important initiatives already commenced in these critical areas, including a substantial renewable energy investment
program and the development of the customer focused Farm Resilience Program. The Sustainable Farming Advisory (“SFA”) team was further
developed and customer feedback sought via both sales colleagues, senior management, and targeted market research. We regularly review
customer sales-related metrics using our CRM tool. Please also refer to our TCFD Report on page 35.
Continually improving communication between directors and colleagues is important and a number of mechanisms are used across the Group
including, results Roadshows led by the Executive Team, newsletters, Colleague Forums, Health & Safety Committees, and opportunities for all
Colleagues to put questions directly to the Chief Executive, who operates an “open door” policy.
Principle 4: The Board’s risk appetite is explained within the Principal Risks and Uncertainties Report on page 29 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. The Committee would then make
any appropriate control improvement recommendations to the Board for implementation. 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, and with the appointment of the new Group Finance Director, the resource plan will
be refreshed.
The key procedures within the control structure include:
• A comprehensive risk register is maintained and regularly reviewed by the Board,
• 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 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 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 Board composition is shown on the next page. Continuity is an important element in the effective functionality of the Board, but
equally succession planning is critical to the business to ensure smooth transition of Board composition changes to uphold the independence
requirements of the Code. I was appointed Chairman in 2021 having had five years’ experience with the business, and the Board has successfully
navigated two important succession issues during the year. Following a comprehensive search process Steven Esom was appointed as a non-
executive in April in anticipation of the pending retirement of Philip Kirkham who had served for ten years. Following Paul Roberts’ announcement
of his intention to retire as Group Finance Director, a successful recruitment process culminated with the announcement in August of the
appointment of Rob Thomas as Group Finance Director from January 2024 when Paul also stepped down from the Board.
The roles of Chairman and Chief Executive on the Board are separate, and the Chairman is elected by the whole Board on an annual basis. All
Directors retire by rotation on a two or three-year cycle and, where eligible, are able to offer themselves for re-election at the appropriate AGM.
All Board members are able to take independent professional advice on matters associated with the Company at the Company’s expense. I
am happy to 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.
ANNUAL REPORT AND ACCOUNTS 2023 Wynnstay Group Plc
46
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Corporate Governance Statement continued
Principle 6: Biographical details of the Directors and their skills are included on pages 53 to 54. The executive directors all have considerable
experience in the agricultural supply industry, 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. Catherine Bradshaw is Audit Committee
Chair and has considerable and relevant financial oversight and reporting experience in her executive role as Director of Group Reporting and
Control at Cranswick plc. 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.
Details of membership and key
skills are on pages 53-54
ent Stakehold e r
agement
g
n
E
d
n
e
p
e
d
n
I
Senior
Independent
NED
O
p
e
r
a
t
i
n
g
Chief
Executive
P
e
r
f
o
r
m
a
n
c
e
B o a r d Leadership
Chairman
Independent
NED
The Board is
The Board is
an effective,
an effective,
balanced
balanced team,
team, led by
led by the
the Chair
Chairman
Independent
NED
Independent
NED
Group
Finance
Director
C
o
m
pany Secretary facilitate s g o o d g
n c e
a
e r n
v
o
a) Remuneration
Committee
b) Audit & Risk
Committee
c) Nominations
Committee
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, and
details of additional Board Committee meetings are described under Principle 9 below. The Board and its sub-committees are supported by
external advisors as required, who will also offer guidance in ensuring Directors maintain an adequate skill set to satisfactorily carry out their
duties. All Board members are able to call on the Company Secretary to arrange any required training, briefings or practical experience necessary
to improve their understanding of the business and its operating environment and their obligations as directors. During the year, our Company
Secretary, Claire Williams, returned to work after recuperating from a serious car accident. A table of meetings and attendances during the
financial year is given below:
Board
Main
Board
Additional
Audit Committee
Remuneration
Committee
Nominations
Committee
12
12
7
12
12
7
12
12
7
7
5
5
6
2
7
7
4
n/a
2
2
4
2
n/a
n/a
7
7
5
7
7
3
n/a
n/a
3
3
2
n/a
n/a
1
3
n/a
Number of Meetings
Steve Ellwood
Philip Kirkham
Howell Richards
Catherine Bradshaw
Steven Esom
Gareth Davies
Paul Roberts
47
ANNUAL REPORT AND ACCOUNTS 2023
Corporate Governance Statement continued
Principle 7: As Chairman I am responsible for the periodic performance reviews of the Board, its sub-committees and non-executive directors.
Stakeholder feedback is sought and acted upon where necessary and myself and our Senior Non-Executive, Steven Esom, routinely make ourselves
available to meet shareholders. An appraisal of the performance of the Board and each Executive Director has been undertaken at the year-end in
the form of confidential questionnaires and individual interviews with each Director conducted by the Chairman. The process reviewed elements in
five broad categories which were:
• Clarity of Company roles and responsibilities.
• Accountability and transparency.
• Personal skills, strengths and teamwork abilities.
• Stakeholder engagement.
• Board structure and processes.
The assessed conclusions of the review were of adequate results in each category with the improvements noted in the previous year being
maintained. During these discussions, any concerns over technical knowledge or sector understanding necessary to fulfil their role as a director of
the Company were considered with additional support arranged as necessary. Continuing professional development support was provided to the
Board during the year by specialist presentations from expert agricultural sector operators.
Additionally, the Company Secretary performed a review of research published on how effective boards act with reference to a number of large listed
companies. These findings were discussed with the Chairman, the Committee Chairs and the Executive Directors and an implementation plan was
agreed which spans into the next financial year.
The Board approves annual objectives for the Executive Directors and measures performance against these objectives when deciding whether to
award performance-related bonuses, details of which are reported in the Director’s Remuneration Report.
Principle 8: The Group promotes its Wynnstay THRIVE corporate values culture which is described on page 43-44. Wynnstay THRIVE involves
collaboration throughout the companies within our Group structure and with 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. The Board receives regular feedback on these concepts through the Colleagues Forum, Annual Employee Roadshows and
other senior executive interactions with the wider Company. The Board have appointed senior executives into management roles to lead the
implementation of our environmental strategy and further details of initiatives from this plan is provided in our ESG Framework report on page 34.
Principle 9: The Board is supported by Shore Capital and Corporate Limited who act as Nominated Advisor and are consulted on matters when
appropriate so that the Board can take their advice into account on relevant decision-making requirements. Close relationships are maintained
with the Group’s corporate law advisors, DWF Law LLP.
The Board is responsible for the development and oversight of strategy, with implementation of that strategy and day-to-day management of the
business delegated to the Executive Directors and Executive Team. Each trading entity has its own divisional executive board, on which the two
Executive Directors sit, and this structure ensures timely and effective decision making is made and implemented and that there is a direct link
back to the Group Board. Senior Management from across the Group are routinely invited to attend Board meetings for relevant discussions.
The Board is supported by three sub-committees, the membership of which is shown on pages 53 to 54.
• Audit
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.
• Remuneration
The committee meets to consider remuneration policy for executive directors and senior managers and the supervision of employee benefit
structures throughout the Group.
• Nominations
Meets as required to consider senior appointments.
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 in Corporate
Governance regulations and processes and will regularly review the continuing suitability of the QCA code.
BUILD TRUST
Principle 10: Details of the Group’s financial performance and position are provided throughout the annual report, and details on how key
judgements made during the year and their impact on stakeholders are explained on page 33. Considering the volatile trading circumstances
confronted by the business, the Board are satisfied with the financial performance of the Group during the year. Our results demonstrate the
resilience of our focused “farmer first” balanced business model upon which the Group’s long-term strategy is built. The Directors are confident
and 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. These results will be communicated through all the usual channels and
the arrangements for maintaining a dialogue with shareholders and other relevant stakeholders are described under Principles 2 and 3 above.
The Directors Remuneration report is presented on page 59-65, and the Audit Committee report has been prepared on page 49-51. Following a
commercial assessment of our relationship with RSM UK Audit LLP, the Board appointed new auditors for the year under review, with Crowe UK
LLP assuming the role from July 2023, which is in accordance with the Group’s view that periodic rotation of auditors is a matter of confidence
for stakeholders in the business.
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Chairman
29 January 2024
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ANNUAL REPORT AND ACCOUNTS 2023 Wynnstay Group Plc
Audit Committee Report
I am pleased to present the Audit Committee report for the year ended 31 October 2023, on behalf of the Board.
Purpose and Aim
The Audit Committee provides effective oversight and governance over the financial integrity of the Group’s financial reporting to ensure that
the interests of the Group’s shareholders are protected at all times. It assesses the quality of the external audit processes and ensures that the
risks which our businesses face are being effectively managed. The purpose of the Committee is to make recommendations on the reporting,
control, risk management and compliance aspects of the Directors’ and Group’s responsibilities, providing independent monitoring, guidance,
and challenge to executive management in these areas.
The Committee’s aim is to ensure high standards of corporate and regulatory reporting are maintained together with, an appropriate and
proportionate control environment, a robust risk management framework and effective compliance monitoring is in place. The Committee
believes that such standards enhance the effectiveness of the Group’s business and reduces the risks it faces.
Key Responsibilities
• The accounting principles, practices and policies applied in the Group’s Financial Statements.
• The adequacy and effectiveness of the internal control environment.
• The effectiveness of whistleblowing procedures.
• The effectiveness of the Group’s finance function.
• The appointment, independence, effectiveness, and remuneration of the Group’s external auditor, including the policy on non-audit services.
• The supervision of any tender process for the Group’s external auditor.
• External financial reporting and associated announcements.
• The Group’s risk management processes and performance.
• The Group’s compliance with the audit-related provisions of the appropriate Governance Code.
.
Audit Committee Membership
The composition of the Audit Committee meets the requirements of the appropriate Governance Code, but in line with good practice, membership
is reviewed annually.
Following the retirement of Philip Kirkham from the Board in May 2023, Steven Esom was appointed to the Committee.
The Board considers that each member of the Committee was throughout the year, and remains, independent within the terms of the QCA
Corporate Governance Code for Small and Mid-size companies. The knowledge and experience of the Committee members’ means that the
Committee as a whole is competent in the sector in which the Company operates. The Company Secretary also attends each Committee
meeting, and when appropriate, the Group Finance Director is invited to attend the Committee’s meetings.
During the year to 31 October 2023, the Committee comprised of:
Chair of the Committee
Members
Catherine Bradshaw
Philip Kirkham
Howell Richards
Steven Esom
Retired on 24 May 2023
Appointed on 18 April 2023
The Committee operates under terms of reference which are reviewed annually by the Committee and changes are recommended to the Board
for approval. The Committee has in its terms of reference the power to engage outside advisors and to obtain its own independent external
advice at the Company’s expense should it be deemed necessary. The Chair of the Committee reports to the next subsequent meeting of the
Board on any key issues, identifying any matters on which it considers that action or improvement is needed and makes recommendations on
the steps to be taken.
Key Areas of Focus During 2023
The Committee monitored the Group’s financial performance through a period of intense volatility in commodity prices, particularly fertiliser
raw materials, giving particular attention to the accurate valuation of such inventories in the Group’s financial statements, ensuring appropriate
accounting policies were applied at all times. With the announcement during the year of the retirement of the incumbent Group Finance Director,
the Committee conducted a review of the finance department resources and skill levels and have overseen the strengthening of resources
including the recruitment of a suitable replacement, with Rob Thomas joining the Group in October 2023.
External Audit
The Committee is responsible for approving the appointment and remuneration of the Group’s external auditors, including satisfying itself of their
independence and of the satisfactory commercial terms of the relationship.
Following the completion of the 2022 external audit, the Committee reported to the Board that it was satisfied with the quality and robustness
of the work carried out by RSM UK Audit LLP and recommended their reappointment at the forthcoming AGM, which was duly supported by
shareholders in March 2023. However, subsequently, RSM UK Audit LLP indicated that they would be seeking a significant increase in fees to
conduct the 2023 statutory audit, which the Committee felt unable to support without a market comparison. A limited scope tender process was
therefore conducted, following which RSM UK Audit LLP were asked to resign by the Board. Acceptable terms were agreed with Crowe U.K.
LLP in June 2023, who were subsequently appointed to conduct the 2023 audit.
49
ANNUAL REPORT AND ACCOUNTS 2023
Audit Committee Report continued
In line with the previous year, and in accordance with the audit plan agreed with Crowe U.K. LLP, the Group’s audit scope took advantage of the
exemption available under section 479 (c) of the Companies Act 2006 for five of its subsidiaries to be excluded from an independent statutory
audit, with Wynnstay Group PLC providing a parent guarantee in regard to these subsidiaries. The relevant companies are Glasson Group
(Lancaster) Limited (company number 03230345), Youngs Animal Feeds Limited (company number 04128486), Humphrey Poultry (Holdings)
Limited (company number 13882065), Humphrey Feeds Limited (company number 00884405) and Humphrey Pullets Limited (company number
06780228). These entities remain fully consolidated with the Group’s financial statements with their respective contributions audited to Group
materiality levels.
Meetings
The Committee meets regularly throughout the year, and four formal meetings relevant to the year under review were
held along with the audit close meeting in early 2024. The agenda for the formal meetings are linked to events in the
Company’s financial calendar.
The Committee addressed the following key agenda items during its four meetings in the financial period:
19 January 2023
21 March 2023
18 July 2023
12 September 2023
● Review of going concern
● Consider control
paper as basis of
accounts preparation.
improvement measures
and implementation.
● Consideration of intangible
asset impairment reviews.
● Consider audit fee
proposals for 2023.
● Risk register review.
● Receive external auditor’s
report on process and
results.
● Review draft 2022 Annual
Report and preliminary
results announcement.
●
●
●
●
Interim results accounting
treatment considerations.
● Review of in year acquisition
and accounting treatment.
Finance team resource
review and succession
requirements.
● Receipt and approval of
external auditor’s year end
audit plan.
Principal risks and
uncertainties review.
● Group internal controls and
resource review.
Introduction to new
external audit team.
● Risk register update
All members of the Committee attended all meetings during their respective periods of tenure. The Committee Chair regularly invites senior
company executives to attend meetings of the Committee to discuss or present specific items and the Group Finance Director, Paul Roberts,
attended all four of the meetings. The respective external auditor also attended two meetings of the Committee and has direct access to the
Committee Chair. The Committee also meets with the external auditor without the Executive Directors being present and the Committee Chair
also meets with the external auditor in advance of Committee meetings.
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ANNUAL REPORT AND ACCOUNTS 2023 Wynnstay Group Plc
Audit Committee Report continued
Financial reporting and significant accounting matters
The Committee considered the following financial reporting and key accounting issues with regard to the 2022 Financial Statements:
Carrying value of goodwill and intangible assets*
The carrying value of goodwill and intangible assets is systematically reviewed prior to year end. A consistent methodology is applied to the
individual cash generating units, taking account of market outlook, risk-adjusted discounted future cash flows, sensitivities, and other factors
which may have a bearing on impairment considerations. Specific focus has been given to Humphreys as a recent acquisition involving purchase
price allocation. The Committee considered the appropriateness of the assumptions including discount and growth rates.
Derivatives
Hedge accounting rules were reviewed to establish if it could be applied to other operating companies within the group where derivatives are
used, taking due consideration of the commercial dynamics of the operations. Including, taking
due consideration of the commercial dynamics of the operations. The Committee concluded it was not possible to apply hedge accounting rules
to the other companies, with the exception of Glasson Grain Limited, where cash flow hedges are used.
Control improvements
Regular reports on internal controls issues are presented to and discussed at the Audit Committee and a follow up process in place to audit
recommendations are fully implemented. The Group’s external auditor communicated, as part of their audit of the Financial Statements several
control recommendations. The Board, in reviewing key control observations, can confirm that actions are being undertaken to remedy the
weaknesses identified. During 2024, further work will be undertaken to review and enhance systems and processes across the Group.
Going concern and longer-term viability
The Committee reviewed the Group’s cashflow, net debt and leverage forecasts and noted that there was adequate headroom projected against
all the appropriate bank financial covenants throughout a forward three-year viability period. Current deflationary trends in commodity prices were
noted as being beneficial to working capital requirements, which had eased considerably over the last twelve-month period. The Committee
concluded that it was satisfied with these assumptions and that it was appropriate to assume the Group was a going concern and to prepare
financial results on that basis.
Fair, Balanced and Understandable
The Committee has reviewed the contents of this year’s Annual Report and Accounts and advised the Board that, in its view, the Annual Report
and Accounts, taken as a whole, is fair, balanced and understandable and provides the necessary information to enable shareholders to assess
the position and performance, strategy and business model of the Group. In reaching this conclusion the Committee has considered the
following:
• The preparation of the Annual Report is a collaborative process between Finance, Legal, Human Resources and Communications functions
within Wynnstay, ensuring the appropriate professional input to each section. External guidance and advice is sought where and when
appropriate.
• The coordination and project management is undertaken by a central team to ensure consistency and completeness of the document.
• An extensive review process is undertaken, both internally and through the use of external advisors.
• A final draft is reviewed by the Audit Committee members prior to consideration by the Board.
On behalf of the Board
Catherine Bradshaw
Chair of the Audit Committee
29 January 2024
51
ANNUAL REPORT AND ACCOUNTS 2023 Directors’ Responsibility Statement in Respect of the Annual Report and Accounts,
Strategic Report, Directors’ Report and the Financial Statements
The Directors are responsible for preparing the Annual Report and
the financial statements in accordance with applicable law and
regulations. Company law requires the Directors to prepare financial
statements for each financial year. Under that law the Directors have
elected to prepare the Group financial statements in accordance with
UK adopted international accounting standards and the Company
financial statements in accordance with UK Adopted International
Accounting Standards and applicable law. 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 the Company and of the profit or loss of the Group for that
year. The Directors are also required to prepare financial statements
in accordance with the rules of the London Stock Exchange for
companies trading securities on A.I.M.
In preparing these financial statements, the Directors are required to:
The Directors are responsible for keeping adequate accounting records
that are sufficient to show and explain the Company’s transactions and
disclose with reasonable accuracy at any time the financial position of
the Company and enable them to ensure that the financial statements
comply with the requirements of the Companies Act 2006. They are
also responsible for safeguarding the assets of the Company and
hence for taking reasonable steps for the prevention and detection of
fraud and other irregularities.
The Directors confirm that:
• so far as each of the Directors is aware, there is no relevant audit
information of which the Company’s auditors are unaware; and
• the Directors have taken all steps that they ought to have taken
as Directors to make themselves aware of any relevant audit
information and to establish that the auditors are aware of that
information.
• 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 UK
Adopted International Accounting Standards, subject to any
material departures disclosed and explained in the financial
statements; and
• prepare the financial statements on the going concern basis unless
it is inappropriate to presume that the Company will continue in
business.
The Directors are responsible for ensuring the Annual Report and
the financial statements are made available on a website. Financial
statements are published on the Company’s website in accordance
with legislation in the United Kingdom governing the preparation
and dissemination of financial statements, which may vary from
legislation in other jurisdictions. The maintenance and integrity of the
Company’s website is the responsibility of the Directors. The Directors’
responsibility also extends to the ongoing integrity of the financial
statements contained therein.
On behalf of the Board
Claire Williams
Company Secretary
29 January 2024
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ANNUAL REPORT AND ACCOUNTS 2023 Wynnstay Group Plc
52
Board of Directors and Company Secretary
Steve Ellwood
Chairman
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 Chairman of AH Worth and Company and is a Non-Executive Director at
NIAB and Velcourt Group.
Steven Esom
Senior Independent Non-Executive Director
Steven joined the Board in April 2023. He has extensive sector-level experience in the
UK food and retailing industries and significant experience of the UK agricultural sector.
Previously, Steven was Managing Director of Waitrose & Partners and also an Executive
Director of Food at Marks & Spencer. Steven is Chairman of Sedex, a leading global
supply chain consultancy focused on environmental, social and governance outcomes.
Catherine Bradshaw
Independent Non-Executive Director
Catherine joined the Board in July 2021. As a qualified chartered accountant, Catherine
brings a wealth of experience in financial control from previous roles at Northern Foods
Plc, Morrisons Plc, Greencore Plc, and currently as Director of Reporting and Controls at
Cranswick Plc.
NC
RC
KEY SKILLS
£
Finance
Mergers and acquisitions
Sector experience
Strategy and leadership
RC
AC
NC
KEY SKILLS
Mergers and acquisitions
Sales and marketing
Strategy and leadership
AC
RC
KEY SKILLS
£
Finance
Mergers and acquisitions
Strategy and leadership
Howell John Richards
Independent Non-Executive Director
Howell joined the Board in July 2014. He has significant 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.
AC
RC
KEY SKILLS
Sector experience
Strategy and leadership
53
ANNUAL REPORT AND ACCOUNTS 2023
Board of Directors and Company Secretary continued
Gareth Wynn Davies
Chief Executive Officer
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 and
Director of AIC (Agricultural Industries Confederation)
Rob Thomas
Group Finance Director
Rob joined the Board in October 2023 as Group Finance Director Designate and became
Group Finance Director on 2 January 2024. He has significant financial and commercial
experience in senior roles, including in the agricultural and the supply chain sectors. A
Chartered Accountant, Rob has significant experience of M&A and strategic planning.
His earlier career was in accountancy with PwC, both in the UK and overseas.
NC
KEY SKILLS
Mergers and acquisitions
Sales and marketing
Sector experience
Strategy and leadership
KEY SKILLS
£
Finance
Mergers and acquisitions
Sector experience
Strategy and leadership
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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
54
ANNUAL REPORT AND ACCOUNTS 2023 Wynnstay Group Plc
Senior Management
55
David Chadwick
Managing Director, Glasson Grain
Dave joined the Group in August 2006 when Wynnstay acquired Glasson Grain. Dave has significant
commercial experience in international trading of animal feeds and fertiliser.
KEY SKILLS
Operations and supply chain
Sales and marketing
Strategy and leadership
Stuart Dolphin
Arable Director
Joined the Group in May 2011 when Wynnstay acquired Wrekin Grain which subsequently became
GrainLink. Stuart has significant commercial experience in commodity trading and arable farming,
including seed, fertiliser and agronomy.
KEY SKILLS
Operations and supply chain
Sales and marketing
Strategy and leadership
Paul Jackson
Commercial Sales & Marketing Director
Paul joined Wynnstay in July 2021 having worked for AB Agri for 17 years most recently as Head of
Sales. He has over 35 years experience of working in the supply industry.
KEY SKILLS
Sales and marketing
Sector experience
Strategy and leadership
Neil Richardson
Group Feed & Logistics Operations Director
Neil joined the Group in March 2023 when Wynnstay acquired Humphrey Feeds & Pullets Ltd. Neil
brings to the team a wealth of experience within the feed sector, along with a passion for delivering
continuous improvement, and excellent customer service.
KEY SKILLS
Compliance
Operations and supply chain
Sector experience
Strategy and leadership
ANNUAL REPORT AND ACCOUNTS 2023 Senior Management continued
Andrew Evans
Group Sustainability, Innovation and Food Supply Chain 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
Operations
Sales and marketing
Sector experience
Strategy and leadership
Paul Godwin
Group Head of Strategic Delivery
Paul joined Wynnstay in 2003 to establish a professional purchasing and stock management team
for our Specialist Merchanting Division. He has held roles within the business with responsibility for
operations, health and safety, property and estate management and merchandising.
KEY SKILLS
Operations and procurement
Sector experience - retail
Strategy and leadership
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Samantha Roberts
Group Personnel Manager
Samantha joined the Group in July 2000 and held a variety of roles before assuming the position of
Group Personnel Manager in July 2005.
KEY SKILLS
Health and safety
Human resource management and development
56
ANNUAL REPORT AND ACCOUNTS 2023 Wynnstay Group Plc
Directors’ Report
For the year ended 31 October 2023
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 2023.
RESULTS AND DIVIDENDS
Interim dividend per share paid
Final dividend per share proposed
Total dividend
Group revenue
Group profit after tax
2023
5.50p
11.75p
17.25p
£000
735,877
6,928
2022
5.40p
11.60p
17.00p
£000
713,034
17,142
Subject to approval at the Annual General Meeting, the final dividend
will be paid on 30 April 2024 to shareholders on the register at the
close of business on 02 April 2024. The share price will be marked
ex-dividend with effect 28 March 2024. In accordance with the rules
of the Company’s scrip 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 2024.
Details of authorised and issued share capital and the movement in the
year are detailed in note 27 of the financial statements.
DIRECTORS AND THEIR INTERESTS
The Directors who held office during the year and as at 31 October 2023 had the following interests in the ordinary shares of the Company:
Gareth Davies
Steve Ellwood
Steven Esom
Catherine Bradshaw
Howell Richards
Paul Roberts
Rob Thomas
25p Ordinary Shares
SAYE Options
Discretionary Options
2023
50,143
4,700
-
-
2,810
102,046
-
2022
40,113
4,700
-
-
2,810
98,998
n/a
2023
-
-
-
-
-
-
-
2022
1,309
-
-
-
-
2023
30,634
2022
45,715
-
-
-
-
-
-
-
-
5,236
n/a
20,519
-
36,574
n/a
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 Rob Thomas are trustees of the Company’s Employee Share Ownership Plan trust
which at the year-end held 127,022 shares (2022: 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 32 to the financial statements.
Having been appointed during the year, Steven Esom and Rob Thomas, offer themselves for re-election under Article 86. In the prior year, Howell
Richards was elected under Article 91 at the 2023 AGM but having served nine years as a non-executive director, he has made it known that he
wishes to retire during the current year. A recruitment process will commence in due course to ensure the appointment of a new independent
non-executive director by the time Howell Richards steps down.
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
SUBSTANTIAL SHAREHOLDINGS
At 31 October 2023, 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
2,666,821
Rock Nominees Limited
Discretionary managed funds of Charles Stanley & Co
Luna Nominees Limited
Discretionary managed funds of Cazanove Capital
Rulegale Nominees Limited
Discretionary managed funds of James Sharp & Co
2,456,325
963,500
901,132
11.6
10.7
4.2
3.9
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, and no new notifications of substantial shareholdings have been received between 31 October 2023 and the date of this report.
57
ANNUAL REPORT AND ACCOUNTS 2023
Directors’ Report continued
SHAREHOLDER RESOLUTIONS
At the Annual General Meeting held on the 21 March 2023 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 21 March 2023 is limited to
£450,000. This authority will expire on 21 March 2024, 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 21 March 2024, 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 21 March 2024, but the Directors intend to seek to renew the same.
COLLEAGUES
The Group has procedures for keeping its colleagues informed about
the progress of the business, which include bi-monthly newsletters,
annual roadshows, financial results presentations and a Colleague
Forum.
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.
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.
ENGAGEMENT WITH CUSTOMERS, SUPPLIERS
AND OTHERS
Details of the identified main stakeholder groupings associated with the
business are provided in the s172 Statement of the Strategic Report,
but the continuing relationship nature of the Group’s trading activities
requires strong communication links with individual customers and
suppliers. This is achieved through dedicated personnel contacts,
regular correspondence and increasingly through digital interaction
channels.
PAYMENT OF SUPPLIERS
The Group agrees terms and conditions with suppliers before business
takes place and, while there is no formal 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 42 days (2022: 54 days).
FINANCIAL INSTRUMENTS AND RISKS
The Group has a number of financial instruments and these are
detailed, together with the risk management objectives and policies
relating to these instruments in Note 25 to the financial statements. The
main financial risks for the Group come from customer credit, foreign
exchange, commodity price volatility, intertest rate movements, cash
liquidity and capital management. The Board’s approach to managing
these risks are detailed in Note 25 of the financial statement.
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 2023 as provided in Note 16 to the financial statements by
approximately £9,718,000 (2022: £9,578,000). The director’s opinion
is supported by a valuation exercise carried out by BNP Paribas Real
Estate in July 2022.
POLITICAL AND CHARITABLE DONATIONS
Details of support to the community is given in ESG report. There were
no political donations during the year (2022: none).
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 53 -54.
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
Crowe U.K. LLP have indicated their willingness to continue in office
and accordingly a resolution proposing their reappointment will be
submitted to the Annual General Meeting.
OTHER MATTERS
The Company has chosen in accordance with Companies Act 2006,
s414C(11) to set out in the company’s strategic report information
required by Large and Medium-sized Companies and Groups
(Accounts and Reports) Regulations 2008, Sch. 7 to be contained in
the Directors’ Report. It has done so in respect of strategy and future
developments and principal risks and uncertainties.
By order of the Board
Clare Williams
Company Secretary
29 January 2024
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BOARD REMUNERATION POLICY
All matters relating to remuneration of the Directors of the Company
are determined by the Remuneration Committee whose decisions are
made to achieve 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 taking
appropriate external professional advice where considered necessary.
Equity based schemes are an effective way to align the interests
of participants and shareholders and provide an efficient and cost-
effective incentive for long-term value creation. All new incentives
or substantive changes to existing schemes will be subject to prior
approval by shareholders. Details of the current Share Plans can be
found here:
www.wynnstayplc.co.uk/esg/governance/wynnstay-share-plans.
Whilst the dilution limits vary in the individual Schemes, the
Remuneration Committee has undertaken a review of capacity, and
expects to operate within a maximum of 15% dilution in aggregate
across the schemes. The Remuneration Committee will monitor the
aggregate dilution on a regular basis and prior to the grant of new
options.
The remuneration policy for Directors is set 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
For the year ended 31 October 2023
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 2023. I would like to thank
Peter Kirkham for his service as Chair of the Remuneration Committee
until May 2023.
General approach to remuneration
The Committee’s approach to remuneration continues to be the
provision of competitive but not excessive reward packages for
Executive Directors, that align their pay with the strategy of the Group,
encouraging, incentivising and motivating behaviours which we believe
will deliver long-term success for the Group. The interests of Executive
Directors should align with those of shareholders, and our Policy seeks
to adopt practices to achieve this while complying 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:
i.
ii.
iii.
the remuneration packages offered are competitive within the
marketplace in which 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 the previous financial year, the Committee carried out a
benchmarking pay review exercise for the Executive Directors
with adjustments to basic pay implemented from March 2022. The
Executive Directors were then included in the standard company-wide
5% annual review award with effect from November 2022. Similarly,
Non-Executive Director’s fees were reviewed with adjustments
implemented from November 2022. The details of these individual
changes are provided later in this report within the respective
remuneration sections. Having been appointed to the Board, and
as Chair of the Remuneration Committee in April 2023, I intend to
conduct further bench-market reviews in the new year.
With the Nominations Committee having identified and recommended
the appointment of a new Group Finance Director during the year,
the Remuneration Committee negotiated the contract terms for
this appointment, with the candidate successfully commencing
employment in October 2023.
The Committee remained conscious of the general inflationary
pressures evident in the wider economy and the cost-of-living
challenges faced by colleagues across the business. In considering
the budgeted pay review proposal for the year commencing November
2023, the Committee were keen to support colleagues perceived
as under the most pressure from these issues and was pleased to
therefore announce a two-tiered review award. A 6% award was
therefore granted to colleagues with basic salaries below a threshold of
£25,000 per annum, with a 4.5% award granted to higher earners. The
Committee believed this represented a sound targeted use of available
resources, offering the most support to our lower-paid colleagues, and
reflecting well against the published Consumer Price Index (CPI) for
October 2023 which was 4.6%.
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.
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Directors’ Remuneration Report continued
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;
• the general economic conditions prevalent in the country:
• 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 Performance Bonus (APB)
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.
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.
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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.
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).
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.
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.
Maximum opportunity: As determined by the statutory limits in force
from time to time.
Performance measures: None.
ANNUAL REPORT AND ACCOUNTS 2023 Wynnstay Group Plc
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Directors’ Remuneration Report continued
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.
Supplemental Committee Chair Fees
Purpose: To acknowledge the additional time and input commitment
of chairing two of the important Board sub-committees, being Audit
and Remuneration.
Operation: An additional annually reviewed premium is added to the
Basic Annual Fee for the appointed Non-Executive holding the chair of
the respective committee for that relevant financial year.
Travelling Expenses
Purpose: To reimburse legitimately incurred costs of attending
necessary Board and associated meetings.
travel,
Operation: Pre-set rates used
accommodation and other incurred expenses in line with those used
for other employees.
to reimburse mileage,
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 the
initial twelve months.
• Post-employment restrictive covenants lasting twelve months.
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Directors’ Remuneration Report continued
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 concerning
governance arrangements for Long Term Incentive Plans:
Basic Salaries. A current annual salary effective from November 2023, 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
Gareth Davies
Paul Roberts
Rob Thomas
Column A
Column B
Current Basic
Previous Basic
Salary
Salary
£000
315*
194
180
£000
278
186
n/a
Column C
Actual Salary
as a Director
Nov 2022 – Oct 2023
£000
288
186
15
* During the period, an amendment was made to the contractual terms of employment for Gareth Davies, whereby the basic salary was increased
by an annualised amount of £23,484, with an equivalent reduction in the employer’s pension contribution.
Annual Performance Bonuses and Profit Related Pay. The bonus payments made to Executive Directors in March 2023, and therefore
during the financial year under review, were in relation to the performance of the business for the financial year 2021/22 which was a record year
for the Group in terms of financial performance. These payments were made under the auspices of the 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 bonus payments made for the financial years ending October 2022 and
October 2021, received in the following March, are shown in the table below in columns A & B respectively.
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 2022, paid in February
2023, was 2.7% (2022: 3.1%), with the actual PRP paid to each executive shown in Column C below. The anticipated rate for 2023, to be paid
in February 2024 relating to the last financial year is 2.4% of relevant earnings.
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Bonuses £000
Executive Director
Gareth Davies
Paul Roberts
Column A
Total 2022
265
177
Column B
Total 2021
206
158
Column C
Feb 23
13
9
PRP received
Feb 22
10
8
In October 2023, Rob Thomas joined the Board as an Executive Director and Group Finance Director Designate and was awarded an appointment
payment in lieu of foregone previous employment earnings.
ANNUAL REPORT AND ACCOUNTS 2023 Wynnstay Group Plc
62
Directors’ Remuneration Report continued
Pension and death in service life cover. IIndividual 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. Column C shows the anticipated contribution for each individual
for the new financial year starting November 2023. As explained above, the contribution rate for Gareth Davies was reduced during the period
in accordance with a salary consolidation arrangement. 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 both of the executive directors
belong, had a total renewal cost at November 2022 of £106,297 (2021: £108,575), and there were 580 (2021: 583) members covered, equating
to an average cost of £183 per person (2021: £186).
Pension
Executive Director
Gareth Davies
Paul Roberts
Rob Thomas
Column A
Pension %
8.2%
6.5%
12.0%
Column B
Column C
Pension Contribution
£000
Anticipated Pension
Contribution Rate 23/24
24
12
2
3.17%
12.00%
12.00%
Benefits in kind. Gareth Davies was supplied with a company car during the financial year, primarily for the furtherance of his duties. However,
this vehicle was available for the executive’s private use and as such has a taxable benefit in kind value calculated in accordance with HMRC
rules. The value for the tax year ending April 2023 is shown in the table below in column A. The cost of fuel used for private motoring is refunded
monthly. 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 relation to the 2023 financial year is shown below in column B. Paul Roberts and Rob Thomas received a monthly
car allowance for their respective tenure during the financial year with the total amounts received shown in Column C below. With effect from
November 2023, Rob Thomas will be supplied with a company car appropriate to his role.
Benefits in kind
Executive Director
Gareth Davies
Paul Roberts
Rob Thomas
Column A
Column B
Column C
Company Car Value Private Medical Cover Cash Settled Car Allowance
£5,690
n/a
n/a
£709
£709
n/a
n/a
£7,200
£333
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 during the financial year ending October
2023 were made in February 2023 and details are shown in the option table below, which also shows all outstanding options open at the year
end.
The performance criteria of the relevant options are tested at the end of the third financial year after the respective grant as follows:
- Awards granted January 2020 – Performance tested for Financial Year Oct 2022.
- Awards granted April 2021 – Performance tested for Financial Year Oct 2023.
- Awards granted February 2023 – Performance tested for Financial Year Oct 2025.
The performance criteria attached to the current 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 respecting
testing financial year. 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.
In accordance with scheme rules and relevant option contracts, the Remuneration Committee tested the performance conditions for the awards
granted in January 2020 against the audited financial results for the year to October 2022, with the following conclusions:
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ANNUAL REPORT AND ACCOUNTS 2023 Directors’ Remuneration Report continued
EPS Growth Rate
ROCE
Scheme Target
Actual Result
Range between RPI + 1% - 8%
Range between 10% - 12.6%
30.7%
16.6%
As the actual results for both criteria exceeded the maximum targets, the respective proportions for each element were awarded in full to both
executive directors as follows, with 50% released in February 2023, and 50% retained for future release in accordance with the scheme rules:
Total Award Shares
Granted
Feb 23
27,896
22,318
Total
Released
Feb 23
13,948
11,159
Total Retained for
2024 & 25
13,948
11,159
Gareth Davies
Paul Roberts
Outstanding options as at October 2023 for directors who had served during the year.
Executive Director
Gareth Davies
Paul Roberts
Rob Thomas
No. of Options
Granted
Apr 21
17,819
14,256
-
PSP Scheme
Maximum Award
No. of Options
Granted
Feb 23
30,634
20,519
-
SAYE
No. of Options
-
-
-
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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://www.wynnstayplc.co.uk/esg/governance/wynnstay-share-plans
- Other Share Schemes. The executive directors are eligible to participate in Save As You Earn (SAYE) option invitations, subject to the scheme
and legislative limitations. No such options were outstanding as at October 2023 as shown in the table above. SAYE options do not have any
performance criteria attached to them are exercisable in accordance with the scheme rules and dependent on an ongoing savings contract
administered by Equiniti Ltd, an authorised provider, being retained.
During the year Gareth Davies exercised 1,309 SAYE options and Paul Roberts exercised 5,236 SAYE options at a price of £2.75 each. Using
the market price on the day of exercise, £4.125 per share, gains of £1,800 and £7,200 respectively were generated although both directors
retained the shares.
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ANNUAL REPORT AND ACCOUNTS 2023 Wynnstay Group Plc
Directors’ Remuneration Report continued
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. 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
Received Financial Year Ending Oct 2023
Basic Fee
Supplemental Fee Benefits in kind
Travelling Expenses
£000
£000
£000
£000
Steve Ellwood– Chairman
Philip Kirkham (retired May 23)
Howell Richards
Catherine Bradshaw
Steven Esom
75
30
42
42
26
0
0
0
2
0
0
1
1
0
0
1
1
1
1
1
S J Ellwood – Chairman
Howell Richards
Catherine Bradshaw
Steven Esom
Payable Financial Year Ending Oct 2024
Basic Fee
Supplemental Fee Benefits in kind
Travelling Expenses
£000
£000
£000
£000
78
44
44
44
0
0
2
2
0
1
0
0
1
1
1
1
Steve Esom
Chairman of Remuneration Committee
29 January 2024
65
ANNUAL REPORT AND ACCOUNTS 2023 Independent Auditor’s Report to the Members of Wynnstay Group Plc
OVERVIEW OF OUR AUDIT APPROACH
Materiality
In planning and performing our audit we applied the concept of materiality.
An item is considered material if it could reasonably be expected to change
the economic decisions of a user of the financial statements. We used the
concept of materiality to both focus our testing and to evaluate the impact of
misstatements identified.
Based on our professional judgement, we determined overall materiality
for the Group financial statements as a whole to be £880,000, based on
approximately 6% of average consolidated profit before tax for years ended
31 October 2023 and 31 October 2022 Materiality for the Parent Company
financial statements as a whole was set at £170,000 based on 5% of the
average profit before tax for the years ended 31 October 2023 and 31
October 2022.
We use a different level of materiality (‘performance materiality’) to
determine the extent of our testing for the audit of the financial statements.
Performance materiality is set based on the audit materiality as adjusted for
the judgements made as to the entity risk and our evaluation of the specific
risk of each audit area having regard to the internal control environment. This
is set at £615,000 for the group and £120,000 for the parent.
Where considered appropriate performance materiality may be reduced
to a lower level, such as, for related party transactions and directors’
remuneration.
We agreed with the Audit Committee to report to it all identified errors in
excess of £45,000. Errors below that threshold would also be reported to it
if, in our opinion as auditor, disclosure was required on qualitative grounds.
Overview of the scope of our audit
The Group and its subsidiaries are accounted for at three main sites in the UK,
including the Parent company head office. We performed full scope audits
of the complete financial information of Wynnstay Group plc and the three
components, Wynnstay (Agricultural Supplies) Limited, GrainLink Limited
and Glasson Grain Limited. The work was performed directly by the Group
audit team. The operations that were subject to full-scope audit procedures
made up 97% of the consolidated revenues, 99% total profit before tax and
95% total assets and liabilities. The Group’s other subsidiary entities, Glasson
Group (Lancaster) Limited, Youngs Animal Feeds Limited, Humphrey Poultry
(Holdings) Limited, Humphrey Feeds Limited and Humphrey Pullets Limited
was subject to Specific procedures as they are not considered a signficiant
component.
Key Audit Matters
Key audit matters are those matters that, in our professional judgement,
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) that we identified. These matters
included those which had the greatest effect on: the overall audit strategy,
the allocation of resources in the audit; and directing the efforts of the
engagement team. These matters were addressed in the context of our audit
of the financial statements as a whole, and in forming our opinion thereon,
and we do not provide a separate opinion on these matters.
This is not a complete list of all risks identified by our audit.
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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 2023, which comprise:
• the Group statement of comprehensive income for the year ended
31 October 2023;
• the Group and Parent Company balance sheets as at 31 October
2023;
• the Group and Parent Company statements of changes in equity
for the year then ended;
• the Group and Parent Company statements of cash flows for the
year then ended; and
The financial reporting framework that has been applied in the
preparation of the financial statements is applicable law and UK-
adopted international accounting standards.
In our opinion the financial statements:
• give a true and fair view of the state of the Group’s and of the Parent
Company’s affairs as at 31 October 2023 and of the Group’s profit
for the period then ended;
• have been properly prepared in accordance with UK-adopted
international accounting standards;
• 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 Group and the Parent Company 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
In auditing the financial statements, we have concluded that the
directors’ use of the going concern basis of accounting in the
preparation of the financial statements is appropriate. Our evaluation of
the directors’ assessment of the Group’s and Parent Company’s ability
to continue to adopt the going concern basis of accounting included:
• Reviewed the group cash flow model provided by management and
challenged the key assumptions used in the forecasts, including
downside sensitivities of reduced sales volumes;
• Checking the numerical accuracy of management’s financial
projections;
• Reviewed the availability of facilities and cash reserves in the
context of both the financial projections and downside scenarios,
including an assessment of compliance with applicable covenants;
• Procedures to review and evaluate the historical accuracy of
management’s past projections;
• Reviewing the disclosures made in the financial statements relating
to going concern and agreeing it is consistent with management’s
assessment;
Based on the work we have performed, we have not identified any
material uncertainties relating to events or conditions that, individually
or collectively, may cast significant doubt on the Group or Parent
Company’s ability to continue as a going concern for a period of at
least 12 months from when the financial statements are authorised
for issue.
Our responsibilities and the responsibilities of the directors with respect
to going concern are described in the relevant sections of this report.
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Independent Auditor’s Report to the Members of Wynnstay Group Plc continued
Key audit matter
How the scope of our audit addressed the key audit matter
Revenue recognition (note 2)
Our audit work in this area included the following:
Revenue is a key driver of the business and used as an important
benchmark by shareholders for assessing the performance of the Group.
We deemed the significant risk to be in respect of existence and cut off
as this is the area considered to be most susceptible to misstatement
by management in close proximity to the year-end where there is an
incentive to meet performance targets
• Assessing the design effectiveness of the relevant controls in place
associated with revenue recognition;
• Testing a sample of revenue transactions across the Group to ensure
revenue recognition was appropriate by selection from the nominal
and agreeing amounts to sales invoice, cash receipts and proof of
delivery where applicable;
• Reviewing pre-year end and post year end invoices to ensure cut off
correctly applied;
• Performed testing using computer aided tool to corroborate sales
invoiced in the period to cash receipt;
• Reviewed contractual terms of business with both key customers and
suppliers to confirm basis of revenue recognition complies with IFRS
15.
Carrying value of goodwill and investments (notes 13 and 17)
Our audit work in this area included the following:
The Group holds goodwill at a carrying value of £15.5m. The Parent
Company also holds significant investments with a carrying value of
£54.2m. Recovery of these assets is dependent upon future cash flows
which are required to be discounted.
• Obtaining management’s impairment papers and value in use
calculations along with related workings to support the value in use
of each cash generating unit, including assessing the definition of
CGU’s used by management;
There is a risk that forecasts for these future cash flows are not met or
that the cash flows have not been discounted at an appropriate rate.
If the cash flows do not meet expectations the assets may become
impaired.
Due to the high level of estimation uncertainty and sensitivity in changes
to the assumptions on the future cash flows we identified the possible
impairment of assets as a key audit matter.
• Testing the mathematical accuracy of the value in use calculations,
as well as challenging key assumptions used in the preparation of the
discounted cash-flow model, including the discount rate, growth rate
and expected revenues.
Specialists within the audit team were used to assess for reasonableness
of the assumptions which significantly influence the value in use
calculation;
• Assessing the accuracy of historic forecasts compared to actual
results;
• Consideration given to any signficiant changes which may indicate an
impairment trigger such as technological, market, economic or legal
changes.
• Reviewing the disclosures in the financial statements in relation to
goodwill and investments
Our audit procedures in relation to these matters were designed in the
context of our audit opinion as a whole. They were not designed to enable
us to express an opinion on these matters individually and we express no
such opinion.
Other information
The directors are responsible for the other information contained within the
annual report. The other information comprises the information included in
the annual report, 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.
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 this
gives rise to a material misstatement in the financial statements themselves.
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.
Opinion on other matter prescribed by the Companies Act 2006
In our opinion based on the work undertaken in the course of our 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 directors’ report have been prepared in
accordance with applicable legal requirements.
67
ANNUAL REPORT AND ACCOUNTS 2023
Independent Auditor’s Report to the Members of Wynnstay Group Plc continued
Owing to the inherent limitations of an audit, there is an unavoidable risk
that some material misstatements of the financial statements may not be
detected, even though the audit is properly planned and performed in
accordance with the ISAs (UK). The potential effects of inherent limitations
are particularly significant in the case of misstatement resulting from fraud
because fraud may involve sophisticated and carefully organised schemes
designed to conceal it, including deliberate failure to record transactions,
collusion or intentional misrepresentations being made to us. We performed
testing on journal entries and used computer aided tools to assist this testing
to address the risk of fraud through management override of controls.
A further description of our responsibilities is available 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 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 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 company and
the company’s members as a body, for our audit work, for this report, or for
the opinions we have formed.
Mark Evans (Senior Statutory Auditor)
for and on behalf of
Crowe U.K. LLP
Statutory Auditor
Black Country House
Rounds Green Road
Oldbury
B69 2DG
29 January 2024
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Matters on which we are required to report by exception
In light of the knowledge and understanding of the Group and the Parent
Company and their 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 where the
Companies Act 2006 requires us to report to you if, in our opinion:
• adequate accounting records have not been kept by the parent company,
or returns adequate for our audit have not been received from branches
not visited by us; or
• 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.
Responsibilities of the directors for the financial statements
As explained more fully in the directors’ responsibilities statement set out
on page 52, 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 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.
Irregularities, including fraud, are instances of non-compliance with laws
and regulations. We design procedures in line with our responsibilities,
outlined above, to detect material misstatements in respect of irregularities,
including fraud. The extent to which our procedures are capable of detecting
irregularities, including fraud is detailed below:
We obtained an understanding of the legal and regulatory frameworks within
which the Group operates, focusing on those laws and regulations that have
a direct effect on the determination of material amounts and disclosures in
the financial statements. The laws and regulations we considered in this
context were relevant company law and taxation legislation in the UK, being
the principal jurisdiction in which the Group operates.
We identified the greatest risk of material impact on the financial statements
from irregularities, including fraud, to be the override of controls by
management. Our audit procedures to respond to these risks included
enquiries of management and those charged with governance about their
own identification and assessment of the risks of irregularities, used data
analytics techniques to identify any unusual transactions, sample testing on
the posting of journals, and reviewing accounting estimates for biases where
significant judgements are involved.
ANNUAL REPORT AND ACCOUNTS 2023 Wynnstay Group Plc
68
Consolidated Statement of Comprehensive Income
For the year ended 31 October 2023
2023
2022
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, goodwill impairment 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
Other comprehensive (expense) / income
Items that will reclassified subsequently to profit or loss:
- net change in the fair value of cashflow hedges taken to
equity, net of tax
- recycle cashflow hedge to income statement
Other comprehensive (expense) / income for the period
Total comprehensive income for the period
Basic Earnings per 25p share
Diluted Earnings per 25p share
2
4
5
5
6
3
3
18
7
10
12
12
528
(1,286)
865
(192)
735,877
(656,829)
79,048
(60,060)
(10,020)
371
9,339
(468)
(82)
8,789
(758)
673
8,704
(1,776)
6,928
49
(83)
(34)
6,894
30.75p
30.31p
166
(656)
808
(132)
713,034
(622,228)
90,806
(59,386)
(9,307)
335
22,448
(416)
(1,094)
20,938
(490)
676
21,124
(3,982)
17,142
(2,462)
2,336
(126)
17,016
82.72p
80.65p
1Adjusted results are after adding back amortisation of acquired intangible assets, goodwill impairment, share-based payment expense and non-recurring items.
The notes on pages 74 to 113 form part of these financial statements.
69
ANNUAL REPORT AND ACCOUNTS 2023 Consolidated and Company Balance Sheet
For the year ended 31 October 2023
Registered Number 2704051
ASSETS
NON-CURRENT ASSETS
Goodwill
Intangible assets
Investment property
Property, plant and equipment
Right-of-use assets
Investment in subsidiaries
Investments accounted for using equity method
Derivative financial instruments
CURRENT ASSETS
Inventories
Trade and other receivables
Amounts owed by subsidiary undertakings
Loans to joint venture
Current tax asset
Cash and cash equivalents
Derivative financial instruments
TOTAL ASSETS
LIABILITIES
CURRENT LIABILITIES
Borrowings
Lease liabilities
Trade and other payables
Amounts owed to subsidiary undertakings
Current tax liabilities
Provisions
Derivative financial instruments
NET CURRENT ASSETS
NON-CURRENT LIABILITIES
Borrowings
Lease liabilities
Trade and other payables
Derivative financial instruments
Deferred tax liabilities
TOTAL LIABILITIES
NET ASSETS
EQUITY
Share capital
Share premium
Other reserves
Retained earnings
Total Equity
Note
13
14
15
16
16, 24
17
17
25
19
20
20
18
20
23
25
23
24
21
21
22
25
23
24
21
25
26
27
Group
2023
£000
15,530
4,960
1,850
24,598
14,129
-
4,407
54
65,528
55,456
81,276
-
639
-
31,055
209
168,635
234,163
(2,595)
(3,762)
(75,694)
-
(257)
-
(432)
(82,740)
85,895
(4,743)
(9,213)
(9)
(8)
(2,219)
(16,192)
(98,932)
135,231
5,739
43,482
4,080
81,930
135,231
2022
£000
16,133
4,936
1,850
20,840
8,202
-
4,101
1
56,063
71,095
96,575
-
1,067
-
31,177
598
200,512
256,575
(3,043)
(3,344)
(105,015)
-
(1,639)
(345)
(53)
(113,439)
87,073
(6,640)
(3,999)
(36)
(80)
(1,680)
(12,435)
(125,874)
130,701
5,585
42,130
4,267
78,719
130,701
Company
2023
£000
-
-
1,850
9,870
543
54,203
191
-
66,657
-
-
3,629
639
23
7,312
-
11,603
78,260
(2,595)
(102)
(306)
(423)
-
-
-
(3,426)
8,177
(4,743)
(450)
-
-
-
(5,193)
(8,619)
69,641
5,739
43,482
3,808
16,612
69,641
restated *
2022
£000
-
-
1,850
9,333
-
55,108
191
-
66,482
-
9
2,109
1,067
102
10,919
-
14,206
80,688
(3,043)
-
(2,722)
(59)
-
-
-
(5,824)
8,382
(6,640)
-
-
-
-
(6,640)
(12,464)
68,224
5,585
42,130
3,961
16,548
68,224
* restated to correct the classification of certain bank accounts between group companies of £10.9m
The Company generated profit after tax of £3,781,000 (2022: profit of £3,415,000). The
financial statements were approved by the Board of Directors on 29 January 2024 and signed
on its behalf. The notes on pages 74 to 113 form part of these financial statements.
Steve Ellwood
Cadeirydd
Rob Thomas
Group Finance Director
70
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ANNUAL REPORT AND ACCOUNTS 2023 Wynnstay Group Plc
Consolidated Statement of Changes in Equity
As at 31 October 2023
Group
At 31 October 2021
Profit for the year
Share
capital
£000
5,075
-
Share
premium
account
£000
31,600
-
Other
reserves
£000
3,868
-
Net change in the fair value of cashflow hedges taken to
equity, net of tax
Recycle cashflow hedge to Income Statement
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
510
10,530
-
-
-
-
510
10,530
-
-
-
-
-
262
262
Cash Flow
Hedge
reserve
£000
263
-
(2,462)
2,336
(126)
Retained
earnings
Total
£000
£000
64,916
17,142
105,722
17,142
-
(2,462)
17,142
2,336
17,016
-
-
-
-
-
(3,339)
-
11,040
(3,339)
262
(3,339)
7,963
At 31 October 2022
5,585
42,130
4,130
137
78,719
130,701
Profit for the year
Net change in the fair value of cashflow hedges
taken to equity, net of tax
Recycle cashflow hedge to Income Statement
Total comprehensive income for the year
Transactions with owners of the Company, recognised
directly in equity:
Shares issued during the year
Dividends
Own shares acquired by ESOP trust
Equity settled share-based payment transactions
Recycle of equity remuneration reserves
-
-
-
-
-
-
-
-
154
1,352
-
-
-
-
-
-
-
-
Total contributions by and distributions to owners of
the Company
154
1,352
-
-
-
-
-
-
(225)
258
(186)
(153)
-
49
(83)
(34)
-
-
-
-
-
-
6,928
6,928
-
-
49
(83)
6,928
6,894
-
(3,868)
-
-
151
1,506
(3,868)
(225)
258
(35)
(3,717)
(2,364)
At 31 October 2023
5,739
43,482
3,9770
103
81,930
135,231
All values are derived from continuing operations.
The notes on pages 74 to 113 form part of these financial statements.
71
ANNUAL REPORT AND ACCOUNTS 2023 Company Statement of Changes in Equity
As at 31 October 2023
Company
At 31 October 2021
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
Share
capital
£000
5,075
Share
premium
account
£000
31,600
Other
reserves
Retained
earnings
Total
£000
3,699
£000
£000
16,472
56,846
-
-
-
-
510
10,530
-
-
-
-
-
-
-
-
262
262
3,415
3,415
3,415
3,415
-
(3,339)
-
(3,339)
11,040
(3,339)
262
7,963
Total contributions by and distributions to owners of the Company
510
10,530
At 31 October 2022
5,585
42,130
3,961
16,548
68,224
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
Own shares acquired by ESOP trust
Equity settled share-based payment transactions
Recycle of equity remuneration reserves
-
-
-
-
154
1,352
-
-
-
-
-
-
-
Total contributions by and distributions to owners of the Company
154
1,352
-
-
-
-
(225)
258
(186)
(153)
3,781
3,781
3,781
3,781
-
(3,868)
-
151
1,506
(3,868)
(225)
258
(35)
(3,717)
(2,364)
At 31 October 2023
5,739
43,482
3,808
16,612
69,641
The notes on pages 74 to 113 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 2023 Wynnstay Group Plc
Consolidated and Company Cash Flow Statement
As at 31 October 2023
Group
Company
Note
33
3
3
16
35
Cash flows from operating activities
Cash generated from operations
Interest received
Interest paid
Tax paid
Net cash generated / (used) from operating activities
Cash flows from investing activities
Proceeds from sale of property, plant and equipment
Purchase of property, plant and equipment
Acquisition of business and assets, net of cash acquired
Acquisition of subsidiary undertakings, net of cash acquired
Receipt of repayment of short term loans to joint ventures
Payment of short term loan to ESOP trust
Disposal of investments
Dividends received from joint ventures
Dividends received from subsidiaries
2023
£000
20,272
528
(822)
(2,763)
17,215
256
(5,761)
-
(2,709)
428
(195)
-
367
-
2022
£000
13,839
166
(399)
(3,342)
10,264
264
(3,560)
(98)
(10,136)
2,252
-
7
4
-
Net cash (used in) / generated by investing activities
(7,614)
(11,267)
Cash flows from financing activities
Proceeds from the issue of ordinary share capital
Proceeds from new loans
Lease payments
Repayment of borrowings
Dividends paid to shareholders
Net cash generated from / (used in) financing activities
Net increase / (decrease) in cash and cash equivalents
Effects of exchange rate changes
Cash and cash equivalents at the beginning of the period
27
23
24, 34
34
11
Cash and cash equivalents at the end of the period
23
*restated to correct the classification of certain bank accounts between group companies of £10.9m
The notes on pages 74 to 113 form part of these financial statements.
1,471
26
(5,042)
(2,371)
(3,868)
(9,784)
(183)
61
31,177
31,055
11,040
9,485
(4,229)
(474)
(3,339)
12,483
11,480
56
19,641
31,177
restated *
2022
£000
(10,154)
-
(171)
-
2023
£000
(827)
158
(515)
-
(1,184)
(10,325)
-
(1,038)
-
(1,095)
428
(195)
-
367
3,950
2,417
1,471
26
(98)
(2,371)
(3,868)
(4,840)
(3,607)
-
10,919
7,312
-
(905)
-
(11,147)
2,252
-
-
4
5,438
(4,358)
11,040
9,485
-
(474)
(3,339)
16,712
2,029
-
8,890
10,919
73
ANNUAL REPORT AND ACCOUNTS 2023 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 Eagle House,
Llansantffraid Ym Mechain, Powys, SY22 6AQ. The Company has its listing on AIM, part of the London Stock Exchange.
ACCOUNTING POLICIES
The Group and Company’s principal accounting policies adopted in the preparation of these financial statements are set out below.
BASIS OF PREPARATION
BASIS OF CONSOLIDATION
The Group’s financial statements have been prepared in accordance
with UK adopted International Accounting Standards. The Group and
Company’s financial statements have been prepared under the historical
cost convention other than certain assets which are at deemed cost
under the transition rules, and certain financial instruments which are
explained in the relevant section below. A summary of the material
Group and Company’s accounting policies is set out below, and these
have been applied consistently.
The preparation of financial statements in conformity with UK
adopted International Accounting Standards 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.
The Group has taken advantage of the audit exemption available under
section 479(A) of the Companies Act 2006 for five of its subsidiaries,
Glasson Group (Lancaster) Limited (company number 03230345),
Youngs Animal Feeds Limited (company number 04128486), Humphrey
Poultry (Holdings) Limited (company number 13882065), Humphrey
Feeds Limited (company number 00884405) and Humphrey Pullets
Limited (company number 06780228). The Company has provided
parent guarantees to these subsidiaries which have taken advantage
of the exemption from audit.
GOING CONCERN
The Directors have prepared the financial information presented for
the Group and Company on a going concern basis having considered
the principal risks to the business and the possible impact of plausible
downside trading scenarios. The Board have concluded that they have
a reasonable expectation that the Group and Company has adequate
resources to continue in operational existence for the foreseeable
future, and that the going concern assumption is appropriate. The
recent impact of the Covid-19 pandemic is no longer considered a
major risk to the Group’s business.
The Group’s business activities, together with the factors likely to affect
its future development, performance and position are set out in the
outlook comments of the Chairman’s Statement and Chief Executive’s
Review sections of the Strategic report on pages 15 to 22. 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. More detail on outlook is contained within the
Strategic Report on page 3-33.
In conclusion, the Directors have a reasonable expectation that
the Group and Company have 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.
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 balance
sheet, the acquiree’s identifiable assets, liabilities and contingent
liabilities are initially recognised at their fair values at the acquisition
date. The fair value of 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. In the Company financial
statements, investments in subsidiaries, joint ventures and associates
are accounted for at cost.
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 majority of the 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 main operating segments which relate to how our customers
purchase products, as described below:
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Principal Accounting Policies continued
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 historical experience has
shown that the value of these returns is immaterial.
Additionally the Group recognises an “Others” segment for any
minor peripheral activities not readily attributable to either of the main
segments.
Standard customer payments terms exist across the Group and vary
in detail depending on the commercial activity and product category,
but are agreed in advance in appropriate trading terms.
FINANCE INCOME
Finance income is recognised when it is probable that the economic
benefits will flow to the Group and the amount of revenue can be
measured reliably. Finance income is accrued on a time basis, by
reference to the principal outstanding and at the effective interest rate
applicable.
AMORTISATION OF INTANGIBLE ASSETS, SHARE-BASED
PAYMENTS AND NON-RECURRING EXPENSE 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 as discussed in the non-IFRS alternative performance
measure ‘Underlying pre-tax profit’ in note 36 to the Accounts.
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.
EMPLOYMENT BENEFIT COSTS
The Group operates a number of defined contribution pension
schemes. Contributions to these schemes are charged to the
Group Statement of Comprehensive Income as they are incurred, in
accordance with the rules of the scheme.
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 NON-FINANCIAL ASSETS
At each reporting date, the Group assesses whether there is any
indication that a non-financial 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
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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 property held to earn rentals and/or for capital appreciation,
is initially measured at cost and subsequently stated at fair value at
the reporting date, as determined by the directors and is periodically
supported by external valuers. Gains or losses arising from changes
in the fair value of investment property are recognised in the income
statement in the period in which they arise.
Gains or losses on disposal of an investment property are recognised
in the income statement on the unconditional completion of the sale.
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 building and right of use assets is over the
period of the lease;
• plant and machinery and office equipment 10% - 33% per annum
straight line; and
• motor vehicles 20% - 30% per annum straight line.
If the expenditure provides incremental future benefits so that it improves
the earning capacity or extends the life of the non-current asset beyond
its originally intended useful economic life, then it is treated as capital
expenditure. This is usually the case with non-climate compliant assets
where the Group seeks to modify appropriate assets where possible
as it works towards its zero-carbon footprint commitment which is
detailed in the strategic report. Climate uncertainty does not have a
material impact on the assessment of useful lives as the assets are
considered to be fit for purpose over the assessed useful economic
lives with reasonable repairs and maintenance.
The impact of historical climate related incidents indicates that any
financial impact on physical assets, including adapting them for use
is addressed by our existing capital programme. Major renovations
are depreciated over the remaining useful life of the related asset or
to the date of the next major renovation, whichever is sooner. Gains
and losses on disposals are calculated by comparing proceeds with
carrying amount and are included in the income statement.
INTANGIBLE ASSETS
Following initial recognition of an intangible asset, the cost model is
applied requiring the asset to be held at cost less any accumulated
amortisation and impairment. Amortisation begins when the asset is
ready for use.
The cost of an intangible asset acquired in a business combination with
a definite useful life (three to eight years) is amortised on a straight-line
basis, with the carrying value being its fair value at the acquisition date.
Where intangibles (including brands) have an indefinite life, they are not
amortised, but assessed for impairment during the year. See Note 14
for details on intangibles movement during the period.
FINANCIAL INSTRUMENTS
Recognition and derecognition
Financial assets and financial liabilities are recognised when the
Group becomes a party to the contractual provisions of the financial
instrument.
ANNUAL REPORT AND ACCOUNTS 2023 Principal Accounting Policies continued
Financial assets are derecognised when the contractual rights to the
cash flows from the financial asset expire, or when the financial asset
and substantially all the risks and rewards are transferred. A financial
liability is derecognised when it is extinguished, discharged, cancelled
or expires.
Classification and initial measurement of financial assets
Except for those trade receivables that do not contain a significant
financing component and are measured at the transaction price in
accordance with IFRS 15, all financial assets are initially measured at
the transaction price (where applicable).
Financial assets, other than those designated and effective as hedging
instruments, are classified into the following categories:
• amortised cost
• fair value through profit or loss (FVTPL)
• fair value through other comprehensive income (FVOCI).
The classification is determined by both:
• the entity’s business model for managing the financial asset
• the contract cash flow characteristics of the financial asset.
Subsequent measurement of financial assets
Financial assets and liabilities at amortised cost
Financial assets and liabilities are measured at amortised cost if they
meet the following conditions (and are not designated as FVTPL):
• they are held within a business model whose objective is to hold
the financial assets or satisfy the financial liabilities through the
associated contractual cash flows or
• the contractual terms of the financial assets and liabilities give rise
to cash flows that are solely payments of principal and interest on
the principal amount outstanding.
Financial assets at fair value through profit or loss (FVTPL)
Financial assets that are held within a different business model other
than ‘hold to collect’ or ‘hold to collect and sell’ are categorised at fair
value through profit and loss. Further, irrespective of business model
financial assets whose contractual cash flows are not solely payments
of principal and interest are accounted for at FVTPL. All derivative
financial instruments fall into this category, except for those designated
and effective as hedging instruments, for which the hedge accounting
requirements apply (see below), and will be charged through cost of
sales in the income statement.
Impairment of financial assets
impairment
IFRS 9’s
forward-looking
information to recognise expected credit losses – the ‘expected credit
loss (ECL) model’.
requirements use more
Instruments included loans and other debt-type financial assets
measured at amortised cost and FVOCI,
receivables,
contract assets recognised and measured under IFRS 15 and loan
commitments and some financial guarantee contracts (for the issuer)
that are not measured at fair value through profit or loss.
trade
Recognition of credit losses is dependent on the Group first identifying
a credit loss event. Instead, the Group considers a broader range
of information when assessing credit risk and measuring expected
credit losses, including past events, current conditions, reasonable
and supportable forecasts that affect the expected collectability of the
future cash flows of the asset.
Measurement of the expected credit losses is determined by a prob-
ability-weighted estimate of credit losses over the expected life of the
financial asset. For large one-off balances where there is no historical
experience, analysis is completed in respect of several reasonably
possible scenarios.
Other 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 Group has specifically elected
to present fair value changes are then shown in ‘other comprehensive
income’. Cost is used as an appropriate estimate of the fair value
for investments where in limited cases there is insufficient, recent
information available to measure fair value.
Trade and other receivables and loans to joint ventures
Trade receivables are initially recognised at their transaction price.
When a trade receivable is uncollectible, it is written off against the
impairment provision for trade receivables. Subsequent recoveries of
amounts previously written off are credited against costs in the income
statement. Short-term trade receivables do not carry any interest
and are stated at their amortised cost, as reduced by appropriate
allowances for estimated irrecoverable amounts.
The Group makes use of a simplified approach in accounting for
trade and other receivables and records the loss allowance as lifetime
expected credit losses. These are the expected shortfalls in contractual
cash flows, considering the potential for default at any point during the
life of the financial instrument.
The Group uses its historical experience, external indicators and for-
ward-looking information to calculate the expected credit losses.
The Group assess impairment of trade receivables on a collective
basis where they possess shared credit risk characteristics, they have
been grouped based on sector industry global default rates. Refer to
Note 20 for a detailed analysis of how the impairment requirements of
IFRS 9 are applied.
Financial liabilities and equity
Financial liabilities and equity instruments are classified according to
the substance of the contractual arrangements entered. An equity
instrument is any contract that provides a residual interest in the assets
of a business after deducting all other liabilities. Equity instruments
is- sued by the Group are recorded as the proceeds received, net of
direct issue costs.
Classification and measurement of financial liabilities
The Group’s financial liabilities include borrowings, trade and other
payables, derivative financial instruments and lease liabilities.
Financial liabilities are initially measured at fair value, and, where
applicable, adjusted for transaction costs unless the Group designated
a financial liability at fair value through profit or loss.
Subsequently, financial liabilities are measured at amortised cost
using the effective interest method except for derivatives and financial
liabilities designated at FVTPL, which are carried subsequently at
fair value with gains or losses recognised in profit or loss (other than
derivative financial instruments that are designated and effective as
hedging instruments).
All interest-related charges and, if applicable, changes in an
instrument’s fair value that are reported in profit or loss are included
within finance costs.
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 Consolidated Statement of Comprehensive
Income over the period of the borrowings on an effective interest basis.
Prepaid fees in relation to issuance of debt are held on the Balance
Sheet on the basis that such issuance is considered probable. If
issues do not occur, or are deemed not to be probable, such fees are
recognised in the income statement.
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Principal Accounting Policies continued
Financial guarantees
Where composite financial guarantees (not within the definition of
IFRS 9) over the general bank obligations of subsidiaries for debt
instruments held at amortised cost exist, such balances are netted in
Balance Sheet.
Trade and other payables
Trade and other payables are non-interest bearing and are stated at
their fair value and subsequently measured at amortised cost using the
effective interest method.
Derivative financial instruments
Derivative financial instruments are used to manage exposure to
market risks. The principal derivative instruments used by Wynnstay are
foreign exchange forward contracts and futures. The Group does not
hold or issue derivative financial instruments for trading or speculative
purposes. Derivative financial assets and liabilities are measured at fair
value. Changes in the fair value of any derivative instruments that do
not qualify for hedge accounting are recognised immediately in the
income statement.
Hedge accounting
At inception of the hedge relationship, the group documents the
economic relationship between hedging instruments and hedged
items, including whether changes in the cash flows of the hedging
instruments are expected to offset changes in the cash flows of
hedged items. The group documents its risk management objective
and strategy for undertaking its hedge transactions.
Derivatives designated as hedging instruments are classified at
inception of hedge relationship as cash flow hedges. Changes in the
fair value of derivatives designated as cash flow hedges are recognised
in other comprehensive income to the extent that the hedges are
effective. Ineffective portions are recognised in profit or loss immediately.
Amounts deferred in other comprehensive income are reclassified to
the income statement when the hedged item affects profit or loss.
When a hedging instrument expires or is sold, or when a hedge no
longer meets the criteria for hedge accounting, any cumulative gain or
loss existing in equity at that time remains in equity and is recognised
when the forecast transaction is ultimately recognised in the income
statement. When or if a forecast transaction is no longer expected
to occur, the cumulative gain or loss that was reported in equity is
immediately transferred in full to the income statement.
Both the ineffective portions and recycled amounts from OCI are put
through cost of sales, as management consider these to be integral to
commercial operations, rather than finance related.
Accounting for changes in credit risk
Accounting standards require that the fair value of financial instruments
reflects their credit quality and also changes in credit quality where
there is evidence that this has occurred. The credit risk associated
with the Group’s derivatives is reviewed at Treasury Management
Committee meetings monthly where the impact is not material, due to
the Group strong financial position.
INVENTORIES
Inventories (covering raw materials, consumables, finished goods and
goods for resale) are stated at the lower of cost and net realisable
value. Biological inventories are measured at fair value less estimated
cost to sell at the point of harvest. 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 distribution.
77
CASH AND CASH EQUIVALENTS
For the purposes of the Balance Sheet, cash and cash equivalents
comprise cash at bank, cash in hand, money market funds and short-
term deposits with an original maturity of three months or less. For the
Consolidated and Company statement of cash flows, cash and cash
equivalents consist of cash and cash equivalents as defined above, net
of outstanding bank overdrafts.
LEASES
The Group as a lessee, accounts for all leases by recognising a
right-of-use asset and a lease liability. At inception, the Group
assess whether the contract contains a lease or is a lease. A lease
is determined when the contract conveys the right to control an
identified asset for a period of time in exchange for consideration. The
Group recognises a right-of- use asset and a corresponding lease
liability for all lease agreements in which the Group is the lessee at the
lease commencement date.
The right-of-use asset is initially measured at cost, which comprises
the initial lease liability adjusted for any lease payment made at or
before the commencement date, plus any indirect initial costs incurred
and an estimate of costs to dismantle and remove the underlying asset
or to restore the underlying asset or the site on which it is located, less
any lease incentives received.
The right-of-use assets are then subsequently depreciated using
the straight-line method or reducing balance method from the
commencement date to the earlier of the lease term or useful life of
the underlying asset. Right-of-use assets are reviewed for indicators
of impairment on an annual basis.
The lease liability is initially measured at the present value of the lease
payments that are not paid at the commencement date, discounted at
the rate implicit in the lease, or, if the rate cannot be determined, the
Group’s incremental borrowing rate.
The incremental borrowing rate is based on the (i) reference rate, (ii)
financing spread and (iii) lease specific adjustments. The reference
rate is based on the UK Nominal Gilts aligned with the tenor of the
lease observed at the time of signing the contract. The financing
spread is based on the term of the debt, level of indebtedness, entity
and economic environment.
Lease payments included in the measurement of lease liabilities
includes the following:
• Fixed payments including in-substance fixed payments;
• Variable lease payments that depend on an index or rate, initially
measured using the index or rate at the commencement date; and
• The amount expected to be payable by the lessee under residual
value guarantees
The Group remeasures the lease liability when there is a change in
the future lease payments arising from a change in rate or index or,
a modification to the lease that is not accounted for as a separate
lease. In the latter case, the lease liability is remeasured by using a
revised discount rate. When the lease liability has been remeasured, a
corresponding adjustment is made to the carrying amount of the right-
of-use asset or is recorded in the profit or loss account if the carrying
amount of the right-of-use asset has been reduced to zero.
The Group has opted not to recognise right-of-use assets and lease
liabilities for low value assets and short-term leases (defined as a lease
with a lease term of 12 months or less). Instead, the lease payments
are recognised as an operating expense on a straight-line basis over
the length of the lease term or on a systematic basis.
CURRENT AND DEFERRED INCOME TAX
The tax charge/credit for the year comprises current and deferred tax.
Tax is recognised in the income statement, except to the extent that it
relates to items recognised directly in other comprehensive income. In
this case, the tax is recognised in other comprehensive income.
ANNUAL REPORT AND ACCOUNTS 2023 Principal Accounting Policies continued
Current tax assets and current tax liabilities are measured at the amount
expected to be recovered from or paid to the taxation authorities. The
tax rates and tax laws used to compute the amount are those that are
enacted or substantively enacted at the reporting date.
Management periodically evaluates positions taken in tax returns
with respect to situations in which applicable tax regulation is subject
to interpretation. Group relief claimed/surrendered between UK
companies is paid for at the applicable tax rate of 22.5% (2022: 19%)
for the year.
Deferred income taxation is provided in full using the liability method
on temporary differences arising between the tax bases of assets
and liabilities and their carrying amounts in the Group’s financial
statements, at rates expected to apply when they reverse, based on
current tax rates and law. Deferred income taxation is not provided on
the initial recognition of an asset or liability in a transaction, other than a
business combination, if at the time of the transaction there is no effect
on either accounting or taxable profit or loss.
Deferred income tax assets are recognised to the extent that there are
future taxable temporary differences from the unwind of the deferred
income tax liabilities, against which these deductible temporary
differences can be utilised or other future taxable profits. Deferred tax
assets and liabilities are not discounted. Deferred income taxation is
determined using the tax rates and laws that have been enacted, or
substantively enacted during the year and are expected to apply in the
periods in which the related deferred tax asset or liability is reversed.
No material uncertain tax positions exist as at 31 October 2023.
DEFERRED INCOMEl
Amounts received prior to the delivery of goods and services are
recorded as deferred income and released to the income statement
as they are provided.
PROVISIONS
Provisions are recognised when the Group has a present obligation
(legal or constructive) as a result of a past event and it is probable
that an outflow of resources embodying economic benefits will be
required to settle the obligation and a reliable estimate can be made
of the amount of the obligation. Provisions are measured at the best
estimate of the expenditure required to settle the obligation at the
reporting date and are discounted, where material, to present value
using a current, pre-tax rate that reflects, where appropriate, the
risks specific to the liability.
A restructuring provision is recognised when the Group has developed
a detailed formal plan for the restructuring and has raised a valid
expectation in those affected that it will carry out the restructuring by
starting to implement the plan or announcing its main features to those
affected by it. The measurement of a restructuring provision includes
only the direct expenditures arising from the restructuring, which are
those amounts that are both necessarily entailed by the restructuring
and not associated with the ongoing activities of the Group.
SHARE CAPITAL
Ordinary shares are classified as equity and are recorded at the par
value of proceeds received, net of direct issue costs, allowing for any
reductions in the par value. Where shares are issued above par value,
the proceeds in excess of par value are recorded in the share premium
account. Where shares have been issued following the exercise
of eligible nil-cost employee options, previously expensed equity
remuneration reserves are recycled to share capital at par value only.
DIVIDEND DISTRIBUTION
A dividend distribution to the Company’s shareholders is recognised as
a liability in the Group’s financial statements in the period in which the
shareholders’ right to receive payment of the dividend is established.
FOREIGN CURRENCY
The consolidated financial statements are presented in Sterling, which
is the parent company’s functional currency.
Transactions denominated in foreign currencies are initially recorded in
the functional currency using the exchange rates prevailing at the dates
of transactions. Monetary assets and liabilities denominated in foreign
currencies are retranslated into Sterling at the rates of exchange ruling
at the reporting date. Differences arising on translation are charged or
credited to the income statement.
SIGNIFICANT ACCOUNTING JUDGEMENTS AND ESTIMATES
The Group makes certain judgements and assumptions about the
measurement of certain assets, liabilities, revenues and expenses.
These assessments are continually evaluated based on historic
experience and expectations of future events that are believed to be
reasonable under the circumstances. Actual experience may differ
from these estimates and assumptions, however we believe these are
not significant nor likely to cause a material adjustment to the carrying
amount of assets and liabilities within the next financial year. The main
categories include:
Business combinations - Where valuation techniques are used to
determine the fair value of certain assets and liabilities acquired in a
business combination, including estimates of the fair value of contingent
consideration, which is dependent on the outcome of variables such
as future trade or profitability. See note 35 to the accounts.
Intangible asset impairment reviews - An impairment review is
conducted annually on intangible assets which are not being
amortised. Such reviews include management making judgements
of appropriate discount and growth rates, together with estimates of
future cashflows. See note 13 to the accounts.
Climate change - The Group has considered climate change as
part of the cashflow projections within going concern, impairment
assessments and viability, and the impact of climate change is not
deemed to have a significant impact on these assessments currently
and therefore they are not deemed to be a key source of estimation
uncertainty. The Group will continue to monitor the impacts of climate
change over the coming years.
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Notes to the Financial Statements
For the year ended 31 October 2023
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 and disclosures
a) New standards, interpretations and amendments effective from 31 October 2022
New standards impacting the Group adopted in the annual financial statements for the year ended 31 October 2023, and which have given rise
to changes in the Group’s accounting policies but have not had any significant impact on adoption are as follows:
• Amendments to IAS 8 Accounting policies, Changes in Accounting Estimates and Errors: Definition of
Accounting Estimates (issued on 27 August 2020)
• Amendments to IAS 1 Presentation of Financial Statements and IFRS Practice Statement 2: Disclosure of
Accounting policies (issued on 12 February 2021)
• Amendments to IAS 12 Income Taxes: Deferred Tax related to Assets and Liabilities arising from a Single
Transaction (issued 7 May 2021)
1 January 2023
1 January 2023
1 January 2023
The amendments listed above did not have any impact on the amounts recognised in prior periods and are not expected to significantly affect
the current or future periods.
b) New accounting pronouncements, that are not yet effective and have not been adopted early by the Group, to be adopted on or after 1
January 2024
• Amendments to IAS 7 and IFRS 7 Supplier Finance Arrangements (issued on 28 Nov 2023)
1 January 2024
• Amendments to IAS 1 Presentation of Financial Statements – classification of Liabilities as Current or Non-current
(published on 23 January 2020)
• Amendments to to IAS 1 Presentation of Financial Statements including Non-current Liabilities with Covenants and
Deferral of Effective Date Amendment (published on 12 July 2020)
1 January 2024
1 January 2024
• Amendments to IFRS 16 Lease Liability in a Sale and Leaseback arrangement (issued 11 May 2023)
1 January 2024
• Amendments to IAS 12 International Tax Reform – Pillar Two Model Rules (issued 19 July 2023)
1 January 2024
The 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.
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ANNUAL REPORT AND ACCOUNTS 2023 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.
All revenue during the current and prior financial years have arisen from revenue recognised at a point in time.
The segment results for the year ended 31 October 2023 are as follows:
Year ended 31 October 2023
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
Other information :
Depreciation and amortisation
Non-current asset additions including acquisitions
Segment assets
Segment liabilities
Add corporate net cash (note 23)
Less corporate and deferred tax liabilities
Net assets
Included in segment assets above are the following investments in
joint ventures and associates
Agriculture
Specialist
Agricultural
Merchanting
£000
£000
584,313
151,475
2,849
802
3,651
6,101
27
6,128
Other
£000
89
(79)
36
(43)
3,922
11,747
129,542
(57,306)
2,565
5,107
71,541
(20,632)
14
5
3,820
-
3,105
136
1,078
There were no revenues from transactions in the year with individual customers which amount to 10% or more of Group revenues.
Total
£000
735,877
8,871
865
9,736
(82)
528
(1,286)
8,896
(1,968)
6,928
6,501
16,859
204,903
(77,938)
126,965
10,742
(2,476)
135,231
4,319
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Notes to the Financial Statements continued
2. SEGMENTAL REPORTING continued
The segment results for the year ended 31 October 2022 are as follows:
Year ended 31 October 2022
£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 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
Other Information:
Depreciation and amortisation
Non-current asset additions including acquisitions
Segment assets
Segment liabilities
Add corporate net cash (note 23)
Less corporate and deferred tax liabilities
Net Assets
Included in segment assets above are the following investments in joint
ventures and associates
564,263
148,771
-
713,034
14,108
553
14,661
7,939
8
7,947
(15)
247
232
3,772
13,490
146,008
(80,906)
2,591
1,260
75,099
(24,544)
12
-
4,212
-
22,032
808
22,840
(1,094)
166
(656)
21,256
(4,114)
17,142
6,375
14,750
225,319
(105,450)
119,869
14,151
(3,319)
130,701
2,746
117
1,150
4,013
There were no revenues from transactions in the year with individual customers which amount to 10% or more of Group revenues.
3. FINANCE INCOME AND COSTS
Interest expense:
Interest payable on borrowings
Interest payable on leases
Interest receivable:
Interest received from bank deposits
Interest received from customers
Net finance costs
4. OTHER OPERATING INCOME
Rental income
Investment income
81
2023
£000
(822)
(464)
(1,286)
317
211
528
(758)
2023
£000
369
2
371
2022
£000
(399)
(257)
(656)
66
100
166
(490)
2022
£000
333
2
335
ANNUAL REPORT AND ACCOUNTS 2023 Notes to the Financial Statements continued
5. AMORTISATION OF 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 remuneration
Non-recurring items
Business combination expenses
Business reorganisation expenses
Fair value change in Investment property
Non-recurring items consisted of
in 2023:
2023
£000
210
258
468
28
54
-
82
• Business combination expenses in relation to the acquisition of Tamar Milling Limited in November 2022.
• Business reorganisation expenses made during the year at Glasson Grain Limited.
in 2022:
• Business combination expenses in relation to the acquisition of Humphreys Poultry (Holdings) Limited in March 2022
• The fair value change in investment property followed a professional valuation carried out by BNP Paribas Real Estate in July 2022.
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.
Depreciation of right-of-use assets
Amortisation of intangibles
Fair value (gains) / losses on derivative financial instruments
Hedge ineffectiveness for the period
(Profit) on disposal of fixed assets
Loss / (Profit) on disposal of right-of-use asset
Other short term and low value lease rental payments (see note 24)
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
2023
£000
38,430
646,673
2,312
4,189
210
809
(50)
(121)
2
323
2023
£000
225
2022
£000
154
262
416
572
-
522
1,094
2022
£000
37,724
617,170
2,290
4,085
154
(627)
104
(132)
(86)
349
2022
£000
175
Included in the Group audit fee are fees of £32,500 (2022: £25,000) 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
2023
£000
673
673
2022
£000
676
676
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ANNUAL REPORT AND ACCOUNTS 2023 Wynnstay Group Plc
Notes to the Financial Statements continued
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
2023
£000
33,251
3,292
1,629
258
38,430
The average number of employees, including Directors, employed by the Group during the year was as follows:
Administration
Production
Sales, distribution and depots
2023
No.
115
146
683
944
2022
£000
32,688
3,318
1,456
262
37,724
2022
No.
120
139
684
943
The parent company did not have any employees in the current or prior year other than executive directors who are remunerated by other Group
Companies, and four non-executive directors with a gross cost categorised as fees of £240,000 (2022: £220,000) not included in the above sums.
9. DIRECTORS’ REMUNERATION
Directors’ emoluments
Social security costs
Company contributions to money purchase pension schemes
Aggregate gains made on the exercise of Approved options
2023
£000
1,208
176
38
142
1,564
2022
£000
1,039
142
48
16
1,245
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.
Name of Director
Executives
Gareth Davies
Paul Roberts
Rob Thomas (appointed to the Board 2 October 2023)
Non-Executives
Steve Ellwood
Philip Kirkham (retired from the Board 24 May 2023)
Howell Richards
Catherine Bradshaw
Steven Esom (appointed to the Board 18 April 2023)
83
2023
£000
573
381
35
75
31
43
44
26
1,208
2022
£000
492
352
n/a
71
42
40
42
n/a
1,039
ANNUAL REPORT AND ACCOUNTS 2023 Notes to the Financial Statements continued
9. DIRECTORS’ REMUNERATION continued
Retirement benefits are accruing to the following number of directors:
Money purchase pension scheme
Contribution paid by the Group to money purchase pension schemes in respect of such directors were:
Gareth Davies
Paul Roberts
Rob Thomas (appointed to the Board 2 October 2023)
Gains made on the exercise of approved share options schemes in respect of such directors were:
Gareth Davies
Paul Roberts
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
Total tax charge for the year
2023
£000
1,474
(93)
1,381
438
(43)
395
1,776
2023
No.
3
£000
24
12
2
38
2023
£000
76
66
142
2022
No.
2
£000
28
20
n/a
48
2022
£000
16
-
16
2022
£000
3,627
136
3,763
(76)
295
219
3,982
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Factors affecting tax charge for the year
The tax assessed for the year is lower (2022: lower) than the standard rate of Corporation Tax in the UK applicable to the Group of 22.5%
(2022: 19%) and is explained as follows:
Current tax
Profit on activities before tax
Profit on activities multiplied by standard rate of corporation tax
in the UK of 22.50% (2022: 19.00%)
Effects of:
Tax effect of share of profit of joint ventures and associates
Expenses not deductible for tax purposes
Non-taxable intangible amortisation and other charges
Adjustment to tax charge in respect of prior years
Short term timing differences
Accelerated capital allowances
Movement on unrecognised deferred tax
Other items
Total tax charge for the year
Factors that may affect future tax charges
2023
£000
8,704
1,958
(192)
66
30
(93)
-
(103)
109
1
1,776
2022
£000
21,124
4,014
(132)
273
-
136
3
(76)
(366)
130
3,982
The main rate of Corporation Tax was raised from 19% to 25% with effect from April 2023, and accordingly only partially impacted the charge for
the current year, but this will increase proportionately for future periods.
84
ANNUAL REPORT AND ACCOUNTS 2023 Wynnstay Group Plc
Notes to the Financial Statements continued
11. DIVIDENDS
Final dividend paid for prior year
Interim dividend paid for current year
2023
£000
2,608
1,260
3,868
2022
£000
2,134
1,205
3,339
Subsequent to the year end it has been recommended that a final dividend of 11.75p per ordinary share (2022: 11.60p) be paid on 30 April 2024.
Together with the interim dividend already paid on 31 October 2023 of 5.50p net per ordinary share (2022: 5.40p) this will result in a total dividend
for the financial year of 17.25p net per ordinary share (2022: 17.00p).
12. EARNINGS PER SHARE
Earnings attributable to shareholders (£000)
Basic earnings per share
Diluted earnings per share
2023
6,928
2022
17,142
2023
6,928
2022
17,142
Weighted average number of shares in issue during the year (number ‘000)
22,525
20,722
22,853
21,254
Earnings per ordinary 25p share (pence)
30.75
82.72
30.31
80.65
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.
2023
2022
Weighted average
Earnings
number of shares
(number ‘000)
Earnings per
share
Earnings
Weighted average
number of shares
(number ‘000)
Earnings
per share
Earnings per ordinary 25p share (pence)
Effect of dilutive securities
Share options
Diluted Earnings per ordinary 25p share
(pence)
6,928
-
6,928
22,525
30.75
17,142
20,722
82.72
328
(0.44)
-
532
(2.07)
22,853
30.31
17,142
21,254
80.65
85
ANNUAL REPORT AND ACCOUNTS 2023 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.
Group
Cost
At 1 November 2021
Additions – Business Combinations
Impairment Charged
At 31 October 2022
Additions- Business Combination
Adjustment following completion of
previous acquisition accounting
At 31 October 2023
£000’s
Cost
16,326
1,811
-
18,137
302
(905)
17,534
£000’s
Impairment
£000’s
Net book value
(2,004)
-
-
(2,004)
-
-
(2,004)
14,322
1,811
-
16,133
302
(905)
15,530
During the period, in February 2023, the contingent consideration relating to the acquisition of Humphrey Poultry (Holdings) Limited was settled in
the sum of £1,095,000. This value was less than the provisionally assessed contingent consideration of £2,000,000, primarily as a result of a change
in anticipated trading conditions created in part by the impact of Avian Influenza on poultry flocks. As the timing of the recognition of this change was
within the maximum twelve month period permitted under IFRS 3 for finalising the business combination accounting relating to this transaction, the
adjustment to the provisionally assessed value of the contingent consideration and the settled amount, has resulted in a reduction in the acquired
value of goodwill of £905,000. New additions in the year relate to Tamar Milling Limited (see Note 35).
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 the smallest cash
generating units 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.
Goodwill is allocated to specific cash generating units (“CGU’s”) as it
arises, and 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 the only change from the prior year has
been the addition of a Humphrey CGU within the Agriculture segment
for the acquisition of Humphrey Poultry (Holdings) Limited.
The carrying amount of goodwill allocated to each CGUs is Glasson
£786,000 (2022: £786,000), Agricultural Supplies £10,232,000 (2022:
£9,930,000), Grainlink £3,606,000 (2022: £3,606,000) and Humphrey
£906,000 (2022: £1,811,000).
Annual impairment reviews were performed by comparing the carrying
value of the cash generating unit with its recoverable amount.
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.
A pre-tax discount rate of 8.70% was applied for all CGUs (2022: 7.13%
except Humphrey where a rate of 7.69% was used),
The forecasted cash flows are extrapolated based on a 2 to 5 year
average growth rate of 1% (2022: 1%) and perpetuity growth rate of 2%
(2022: 1.5%) for the Humphrey, Agriculture and Specialist Agricultural
Merchanting CGU’s. The short term growth rate of 1% has been used
to reflect current specific UK market conditions and performance
expectations based on management opinions for that timeframe, while
the 5 year plus perpetuity rate of 2% reflects a more realistic historic long
term growth rate for the UK economy.
All calculations indicated adequate headroom in these results for the
value in use compared to the carrying value.
Sensitivity analysis has been considered for the key assumptions
by applying a 100 basis point reduction to both the perpetuity growth
rate and the 2 to 5 year growth rate, and by applying 100 basis point
increase to the pre-tax discount rate. Each individual change, with all
other variables remaining constant, has had no impact on the result of
the impairment tests for the continuing defined CGU’s.
An impairment would only be triggered if the discount rate was to exceed
13.36%, which is 4.66% higher than applied in the testing analysis.
86
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ANNUAL REPORT AND ACCOUNTS 2023 Wynnstay Group Plc
Notes to the Financial Statements continued
14. INTANGIBLE ASSETS
Group
Cost
Brand
£000
Key and other
customer
accounts
£000
Customer books
£000
Trademarks
£000
Balance as at 1 November 2021
Additions – Business Combination
At 31 October 2022
Additions- Business Combination
(see note 35)
-
3,759
3,759
-
-
1,095
1,095
234
At 31 October 2023
3,759
1,329
Aggregate amortisation
Balance at 1 November 2021
Charge for the year
At 31 October 2022
Charge for the year
At 31 October 2023
-
-
-
-
-
Net book value At 31 October 2023
Net book value At 31 October 2022
3,759
3,759
-
113
113
171
284
1,045
982
395
-
395
-
395
163
39
202
38
240
155
193
10
-
10
-
10
6
2
8
1
9
1
2
Total
£000
405
4,854
5,259
234
5,493
169
154
323
210
533
4,960
4,936
The additions in the year relate to the acquisition of Tamar Milling Limited with the intangible items identified following a purchase price analysis
review which included a customer accounts value identified using the multiple excess earnings method.
87
ANNUAL REPORT AND ACCOUNTS 2023 Notes to the Financial Statements continued
15. INVESTMENT PROPERTY
Investment property relates to a redeveloped retail property in Pwllheli. The amount of rent receivable from the Investment property in the year was
£182,000 (2022: £211,000). Direct operating expenses associated with this investment property amounted to £4,992 in the year (2022: £17,082).
Group and Company
Balance as at 1 November 2021
Fair value movement
Balance as at 31 October 2022
Balance as at 31 October 2023
2023
£000
2,372
(522)
1,850
1,850
An Investment property valuation carried out by BNP Paribas Real Estate on 24 June 2022 concluded the property had an open market valuation
of £1,850,000. This market valuation of the investment property was therefore based on a level 2 category valuation where use was made of; sale
prices per square metre of similar properties in similar locations, observable current market rents per square metre for similar properties in similar
locations, and property yields derived from recent transactions. Consequentially, the Group and Company recognised a fair value movement charge
of £522,000 in the prior period which was treated as a non-recurring item in the Income Statement.
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ANNUAL REPORT AND ACCOUNTS 2023 Wynnstay Group Plc
Notes to the Financial Statements continued
16. PROPERTY, PLANT AND EQUIPMENT
Group
Cost
At 1 November 2021
Additions
Acquisitions
Reclassification
Disposals
Obsolete asset disposals
At 31 October 2022
Additions
Acquisitions (see note 35)
Reclassifications
Disposals
At 31 October 2023
Depreciation
At 1 November 2021
Charge for the year
Reclassifications
Disposals
Obsolete asset disposals
At 31 October 2022
Charge for the year
Reclassification
Disposals
Leasehold land
and buildings
£000
Freehold land
and buildings
£000
Plant,
machinery
and office
equipment
£000
Motor
vehicles
£000
Right-of-use
assets
£000
1,302
172
-
219
-
-
15,840
755
1,895
-
23,724
2,552
386
27
3,134
81
285
284
-
(446)
(830)
(6,234)
(204)
(2,292)
20,770
1,749
210
(2,760)
(873)
(994)
1,693
18,044
19,625
1,288
18,102
463
18
-
-
698
-
(8)
-
2,174
18,734
464
113
219
-
-
796
114
-
-
6,420
424
-
-
(446)
6,398
436
-
-
4,052
243
53
(118)
23,855
17,550
1,516
-
(790)
(6,234)
12,042
1,438
-
(72)
548
2
168
(178)
1,828
2,820
237
9,775
524
(1,749)
(1,684)
24,968
9,727
4,085
- (2,449)
(191) (469)
(2,292) (994)
574
324
48
(105)
841
9,900
4,189
(1,584)
(1,666)
10,839
Total
£000
64,770
5,309
2,776
(2,230)
(1,907)
(9,966)
58,752
15,536
787
(1,536)
(1,980)
71,559
36,981
6,375
(2,230)
(1,450)
(9,966)
29,710
6,501
(1,536)
(1,843)
32,832
At 31 October 2023
910
6,834
13,408
Net book value at 31 October 2023
Net book value at 1 November 2022
1,264
897
11,900
11,646
10,447
7,583
987
714
14,129
8,202
38,727
29,042
During the previous period (2022) a detailed review of historic records contained in the Group’s fixed asset registers were conducted which identified
all obsolete items which were removed from the accounting records and treated as obsolete asset disposals. The net book value of these items was
zero, and therefore there was no impact on the carrying fair value of the Group’s property, plant and equipment assets
89
ANNUAL REPORT AND ACCOUNTS 2023 Notes to the Financial Statements continued
16. PROPERTY, PLANT AND EQUIPMENT continued
Company
Cost
At 1 November 2021
Additions
At 31 October 2022
Additions
Disposals
At 31 October 2023
Depreciation
At 1 November 2021
Charge for the year
At 31 October 2022
Charge for the year
At 31 October 2023
Net book value at 31 October 2023
Net book value at 31 October 2022
Leasehold land and
buildings
£000
Freehold land and
buildings
£000
Right-of-use
assets
£000
763
150
913
393
-
14,294
755
15,049
645
-
1,306
15,694
363
89
452
86
538
768
461
5,775
402
6,177
415
6,592
9,102
8,872
-
-
-
630
-
630
-
-
-
87
87
543
-
Total
£000
15,057
905
15,962
1,668
-
17,630
6,138
491
6,629
588
7,217
10,413
9,333
90
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ANNUAL REPORT AND ACCOUNTS 2023 Wynnstay Group Plc
Notes to the Financial Statements continued
17. FIXED ASSET INVESTMENTS
Group
Cost and net book value
At 1 November 2021
Share of profit or investment income
Dividend distribution
Disposal
At 31 October 2022
Share of profit or investment income
Dividend distribution
Disposal
At 31 October 2023
Provision for impairment
At November 2022 and 31 October 2023
Net book value at 31 October 2023
Net book value at 31 October 2022
Company
Cost
At 1 November 2022
Business combination – Final acquisition account adjustment
At 31 October 2023
Provision for impairment
At 1 November 2022
At 31 October 2023
Net book value at 31 October 2023
Net book value at 31 October 2022
91
Joint Ventures
£000
Other unlisted
investments
£000
3,341
676
(4)
-
4,013
673
(367)
-
4,319
-
4,319
4,013
92
2
-
(6)
88
-
-
-
88
-
88
88
Share in group
undertakings
Joint Ventures &
Associates
£000
£000
55,709
(905)
54,804
(601)
(601)
54,203
55,108
191
-
191
-
-
191
191
Total
£000
3,433
678
(4)
(6)
4,101
673
(367)
-
4,407
-
4,407
4,401
Total
£000
55,900
(905)
54,995
(601)
(601)
54,394
55,299
ANNUAL REPORT AND ACCOUNTS 2023 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
Humphrey Poultry (Holdings) Limited
Humphrey Feeds Limited
Humphrey Pullets Limited
Wrekin Grain Limited
Eifionydd Farmers Limited
Shropshire Grain Limited
Welsh Feed Producers Limited
Tamar Milling Limited
100
100
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
Holding company
Agricultural merchant
Pullet supplier
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:
WynnstayAgricultural (Supplies)
Limited
Tamar Milling Limited
Youngs Animal Feeds Limited
Eifionydd Farmers Limited
Glasson Group (Lancaster)
Limited
Glasson Grain Limited
Humphrey Poultry (Holdings)
Limited
Humphrey Feeds Limited
Humphrey Pullets 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
Distribution of animal feeds
Montgomery Way, Carlisle, CA1 2UY
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 the joint ventures listed above are all 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
Cash and cash equivalents
Current liabilities
Financial liabilities
Non-current liabilities
Net Assets
2023
£000
687
4,950
679
(1,654)
(343)
-
4,319
2022
£000
710
6,032
177
(2,206)
(700)
-
4,013
92
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ANNUAL REPORT AND ACCOUNTS 2023 Wynnstay Group Plc
Notes to the Financial Statements continued
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
Net finance costs
2023
£000
26,375
(25,488)
(22)
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
2023
£000
865
2022
£000
24,198
(23,350)
(40)
2022
£000
808
ASSOCIATE
The interest in associates is represented by the following limited company, which is 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
2023
£000
312
(187)
125
41
-
-
-
2022
£000
297
(174)
123
41
-
-
-
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 2023
31 August 2023
31 October 2023
31 January 2023
93
ANNUAL REPORT AND ACCOUNTS 2023
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:
Company
Transactions and balances with subsidiaries
Amounts due from subsidiary undertakings:
Loans
Amounts due to subsidiary undertakings:
Loans
Transactions reported in the statement of comprehensive
income:
Income received
Purchases
2023
£000
3,629
3,629
(423)
(423)
608
154
restated *
2022
£000
2,109
2,109
(59)
(59)
492
134
* restated to correct the classification of certain bank accounts between group companies of £10.9m
Transactions and balances with joint ventures
Amounts due from joint ventures:
Trade receivables
Loans
Trade payables
Transactions reported in the statement of comprehensive income:
Revenue
Purchases
Group
Company
2023
£000
1,066
639
1,705
(33)
(33)
10,737
(176)
2022
£000
555
1,067
1,622
(70)
(70)
8,526
(280)
2023
£000
-
639
639
-
-
-
-
2022
£000
-
1,067
1,067
-
-
-
-
94
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ANNUAL REPORT AND ACCOUNTS 2023 Wynnstay Group Plc
Notes to the Financial Statements continued
19. INVENTORIES
Raw materials and consumables
Finished goods and goods for resale
Biological Assets
Group
2023
£000
17,773
36,752
931
55,456
2022
£000
20,416
49,971
708
71,095
Company
2023
£000
-
-
-
-
2022
£000
-
-
-
-
Inventories are stated after a provision for impairment of £330,000 (2022: £846,000) (Company £nil (2022: £nil)). During the period, the sum
of £Nil (2022: £406,000) was charged to the provision for impairment. £407,000 (2022: £1,824,000) of inventories included in the year end
balances relate to the acquisition during the year.
20. TRADE AND OTHER RECEIVABLES
Current
Amounts owed by subsidiary undertakings
Trade receivables, net of loss allowance
Prepayments and accrued income
Other receivables
Current tax asset
Group
2023
£000
-
78,241
2,049
986
-
81,276
2022
£000
-
94,823
1,084
668
-
96,575
Company
2023
£000
3,629
-
-
-
23
3,652
restated *
2022
£000
2,109
-
-
9
102
2,220
The carrying value of trade and other receivables classified at amortised cost approximates to their fair value. No receivables are pledged as
collateral or sold to discounting or debt factoring services. Amounts owed by subsidiary undertakings are repayable on demand or in line with
standard company credit terms.
* restated to correct the classification of certain bank accounts between group companies of £10.9m
The Group applies the IFRS 9 simplified approach to measuring expected credit losses using a lifetime expected credit loss provision for trade
receivables. To measure expected credit losses on a collective basis, trade receivables are grouped based on similar credit risk and aging.
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.
If the expected credit loss was to increase or decrease by 25 basis points across each category the impact on the income statement would be
£197,000 (2022: £240,000) loss or gain, respectively.
The lifetime expected loss provision for trade receivables is as follows:
Current
£000
0.07%
53,219
(36)
53,183
0.14%
68,482
(99)
68,383
More than 30
days past due
£000
More than 60
days past due
£000
More than 90
days past due
£000
0.17%
14,938
(26)
14,912
0.17%
16,242
(27)
16,215
0.92%
5,218
(48)
5,170
0.42%
5,681
(24)
5,657
11.14%
5,600
(624)
4,976
17.83%
5,559
(991)
4,568
Total
£000
0.93%
78,975
(734)
78,241
1.19%
95,964
(1,141)
94,823
31 October 2023
Expected loss rate
Gross carrying amount
Loss provision
Trade receivables, net of loss allowance
31 October 2022
Expected loss rate
Gross carrying amount
Loss provision
Trade receivables, net of loss allowance
95
ANNUAL REPORT AND ACCOUNTS 2023 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
(Decrease) / Increase during the year
Receivables written off during the year as un-collectible
At 31 October 2023
21. TRADE AND OTHER PAYABLES
Current
Trade payables
Amounts owed to subsidiary undertakings
Other payables
Accruals and deferred income
Other taxes and social security
Contingent consideration
Non-current
Contingent consideration
Government grants
Group
2023
£000
1,141
(245)
(162)
734
Group
2023
£000
69,158
-
1,454
3,777
1,106
199
75,694
-
9
9
2022
£000
1,057
495
(411)
1,141
2022
£000
85,694
-
5,922
10,242
1,083
2,074
105,015
25
11
36
Company
2023
£000
-
-
-
-
Company
2023
£000
-
423
303
3
-
-
729
-
-
-
2022
£000
-
-
-
-
2022
£000
-
59
319
403
-
2,000
2,781
-
-
-
Total trade and other payables
75,703
105,051
729
2,781
The carrying value of trade and other payables classified as financial liabilities is measured at amortised cost which approximates to fair value.
Contingent consideration is measured at fair value.
22. PROVISIONS
Balance as at 1 November 2021
Charge for the year
Utilised / reversed
At 31 October 2022
Utilised in year
Reversed in year
At 31 October 2023
Legal provision
Onerous rent
Site closure
At 31 October
i
F
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a
n
c
a
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l
S
t
a
t
e
m
e
n
t
s
Total
£000
243
282
(180)
345
(152)
(193)
-
2022
£000
193
108
44
345
2023
£000
-
-
-
-
The legal provision charged in the previous year related to disputes over the classification of certain types of grain where the achieved out-turn prices
have been lower than initially expected, with all claims settled during the current year. The provision for onerous rent relates to the reclassification
of a prior year charge from accruals in relation to the vacation of a leased property. The provision for onerous rent and site closure were all settled
during the current year.
96
ANNUAL REPORT AND ACCOUNTS 2023 Wynnstay Group Plc
Notes to the Financial Statements continued
23. CASH, CASH EQUIVALENTS, BORROWINGS AND LEASE LIABILITIES
Group
Company
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
Loan stock (unsecured)
Borrowings
Non-property leases
Property leases
Lease liabilities
Total current net cash/(borrowings) and lease liabilities
Non-current
Bank loans
Borrowings
Non-property leases
Property leases
Lease liabilities
Total non-current net (borrowings) and lease liabilities
Total net cash/(borrowings) and lease liabilities
2023
£000
31,055
31,055
31,055
(1,897)
(698)
(2,595)
(2,658)
(1,104)
(3,762)
24,698
(4,743)
(4,743)
(2,049)
(7,164)
(9,213)
(13,956)
10,742
2022
£000
31,177
31,177
31,177
(2,371)
(672)
(3,043)
(1,647)
(1,697)
(3,344)
24,790
(6,640)
(6,640)
(1,645)
(2,354)
(3,999)
(10,639)
14,151
Total net cash/(borrowings) and lease liabilities, excluding property
leases
19,010
18,202
2023
£000
7,312
7,312
7,312
(1,897)
(698)
(2,595)
-
(102)
(102)
4,615
(4,743)
(4,743)
-
(450)
(450)
(5,193)
(578)
(26)
restated *
2022
£000
10,919
10,919
(2,371)
(672)
(3,043)
-
-
-
7,876
(6,640)
(6,640)
-
-
-
(6,640)
1,236
1,236
* restated to correct the classification of certain bank accounts between group companies of £10.9m
CASH AND CASH EQUIVALENTS
Cash and cash equivalents are all non-restricted balances and are all cash at bank and held with HSBC UK Bank Plc, except for £1,500,000
(2022: £1,652,000) which is held at International FC Stones for wheat futures hedging purposes. HSBC UK Bank Plc’s credit rating per
Moody’s for long-term deposits is Aa3 (2022: Aa3).
£1,820,000 of the cash and cash equivalent balances are denominated in foreign currencies, EUR (98%) and USD (2%) (2022: £3,623,000, in EUR
(99%) and USD (1%)). All other amounts are denominated in GBP and are at booked fair value.
BORROWINGS
Bank loans and overdrafts are secured by an unlimited composite guarantee of all the trading entities within the Group. The outstanding bank loan
of £6,640,000 (2022: £9,011,000) is structured as a term facility with quarterly repayments of £474,250. Interest on this loan is 1.75% over the daily
SONIA rate up to the point of repayment.
Loan stock is redeemable at par at the option of the Company or the holder. Interest of 3.7% (2022: 1.5%) per annum is payable to the holders.
97
ANNUAL REPORT AND ACCOUNTS 2023 Notes to the Financial Statements continued
24. 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 2023.
Number of lease
contracts at
November 2022
Additions
Additions
Business
Combinations
Expired or
Disposed
Number of lease
contracts at October
2023
Fixed payments
%
39
18
154
211
-
13
4
31
48
2
1
-
-
1
-
(17)
-
(20)
(37)
-
36
22
165
223
16%
10%
74%
100%
2
100%
Group
Property leases
Plant and equipment
leases
Vehicle leases
Total
Company
Property leases
Company
Right-of-use assets
At November 2022
Additions
Additions - Business combination (see note 35)
Reclassification to PPE
Amortisation
Disposal
At 31 October 2023
Company
Right-of-use assets
At 1 November 2022
Additions
Amortisation
At 31 October 2023
Group
Lease liabilities
At 1 November 2022
Additions
Additions - Business combination (see note 35)
Interest expense
Lease payments
Disposal
At 31 October 2023
Land and buildings
£000
Plant, machinery and
motor vehicles
£000
3,919
6,163
307
248
(2,377)
-
8,065
4,283
3,612
217
216
(1,812)
(18)
6,064
Land and buildings
£000
Plant, machinery and
motor vehicles
£000
-
630
(87)
543
-
-
-
-
Land and buildings
£000
Plant, machinery and
motor vehicles
£000
4,052
6,163
307
248
(2,502)
-
8,268
3,291
3,612
146
216
(2,540)
(18)
4,707
Total
£000
8,202
9,775
524
(165)
(4,189)
(18)
14,129
Total
£000
-
630
(87)
543
Total
£000
7,343
9,775
453
464
(5,042)
(18)
12,975
98
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ANNUAL REPORT AND ACCOUNTS 2023 Wynnstay Group Plc
Notes to the Financial Statements continued
24. LEASES continued
Company
Lease liabilities
At 1 November 2022
Additions
Interest expense
Lease payments
At 31 October 2023
Group
Short-term lease expense
Low value lease expense
Land and buildings
£000
Plant, machinery and
motor vehicles
£000
-
630
20
(98)
552
-
-
-
-
-
2023
£000
308
15
323
Total
£000
-
630
20
(98)
552
2022
£000
341
8
349
The Company had no short-term or low value lease expense in either 2023 or 2022
Within one
year
£000
One to two
years
£000
Two to five
years
£000
Over five
years
£000
Total
£000
3,762
2,995
3,695
2,523
12,975
3,344
1,824
2,175
-
7,343
102
52
126
272
552
-
-
-
-
-
2023
Group
Lease liabilities
2022
Group
Lease liabilities
2023
Company
Lease liabilities
2022
Company
Lease liabilities
99
ANNUAL REPORT AND ACCOUNTS 2023 Notes to the Financial Statements continued
25. FINANCIAL INSTRUMENTS
FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES
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 Finance Director through which it reviews the
effectiveness of the processes put in place and the appropriateness of the objectives and policies it sets. The overall objective of the Board is to set
policies that seek to reduce risk as far as possible without unduly affecting the Group’s competitiveness and flexibility.
The Group’s principal financial instruments (other than derivatives) comprise loans, cash and short-term deposits; the main purpose of these
instruments is to raise finance for the Group’s operations; and additionally include trade and other receivables, trade and other payables and lease
liabilities.
The Group also enters derivative transactions, principally foreign exchange contracts and wheat futures contracts to manage commodity, price and
currency risks arising from the Group’s operations.
The Group’s policy does not permit the use of derivatives for speculative purposes. However, some derivatives do not qualify for hedge accounting,
or are specifically not designated as a hedge where gains and losses on the hedging instrument and the hedged item naturally offset in the Group’s
income statement. Treasury operates on a centralised basis, where Derivatives are only used for economic hedging purposes and not as speculative
investments and are classified as ‘held for trading’, other than designated and effective hedging instruments and are presented as current assets
or liabilities if they are expected to be settled within 12 months after the end of the reporting period, otherwise they are classified as non-current.
(i) Principal financial instruments
The principal financial instruments used by the Group, from which financial instrument risk arises, are as follows:
•
•
•
•
•
Cash and cash equivalents
Trade receivables
Trade and other payables
Borrowings
Forward foreign currency contracts
• Wheat futures contracts
(ii) Financial instruments by category
Financial Assets
Cash and cash equivalents
Amounts owed by subsidiary undertakings
Trade receivables, net of loss allowance
Loan to joint venture
Derivative financial instruments
Financial Liabilities
Bank loans and other borrowings
Finance lease liabilities
Amounts owed to Group undertakings
Trade payables and other payables
Accruals
Contingent consideration
Derivative financial instruments
Group
Company
2023
£000
31,055
-
78,241
639
263
110,198
2022
£000
31,177
-
94,823
1,067
599
127,666
2023
£000
7,312
3,629
-
639
-
11,580
Group
Company
2023
£000
7,338
12,975
-
70,612
3,777
199
440
95,341
2022
£000
9,683
7,343
-
91,616
10,242
2,099
133
121,116
2023
£000
7,338
552
423
303
3
-
-
8,619
*restated
2022
£000
10,919
2,109
-
1,067
-
14,095
2022
£000
9,683
-
59
319
403
2,000
-
12,464
* restated to correct the classification of certain bank accounts between group companies of £10.9m
100
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ANNUAL REPORT AND ACCOUNTS 2023 Wynnstay Group Plc
Notes to the Financial Statements continued
25. FINANCIAL INSTRUMENTS continued
(iii) Financial instruments carrying value
Financial instruments not measured at fair value includes trade and other receivables, trade and other payables and loans and borrowings.
Fair value
Amortised cost
Group financial assets
Trade receivables, net of loss allowance
Loan to joint venture
Derivative financial instruments
Group financial liabilities
Bank loans and other borrowings
Lease liabilities
Trade payables and other payables
Accruals
Contingent consideration
Derivative financial instruments
Company financial assets
Amounts owed by subsidiary undertakings
Loan to joint venture
Company financial liabilities
Bank loans and other borrowings
Lease liabilities
Amounts owed to subsidiary undertakings
Trade payables and other payables
Accruals
Contingent consideration
2023
£000
-
-
263
263
Fair value
2023
£000
-
-
-
-
199
440
639
2022
£000
-
-
599
599
2022
£000
-
-
-
-
2,099
133
2,232
2023
£000
78,241
639
-
78,880
Amortised cost
2023
£000
7,338
12,975
70,612
3,777
-
-
2022
£000
94,823
1,067
-
95,890
2022
£000
9,683
7,343
91,616
10,242
-
-
94,702
118,884
Fair value
Amortised cost
2023
£000
-
-
-
Fair value
2023
£000
-
-
-
-
-
-
-
2022
£000
-
-
-
2022
£000
-
-
-
-
-
2,000
2,000
2023
£000
3,629
639
4,268
Amortised cost
2023
£000
7,338
552
423
303
3
-
restated *
2022
£000
2,109
1,067
3,176
2022
£000
9,683
-
59
319
403
-
8,619
10,464
(iv) Derivative Financial instruments classification by type, level and non-current and current split
Derivative financial instruments specifically have been broken into their current and non-current component and by derivative instrument type under
hedge accounting and fair value through profit and loss.
Fair value
Current Non-Current
Current Non-Current
Asset derivative financial instruments:
Forward FX contracts- designated cash flow hedge instruments
Wheat futures contracts- designated cash flow hedge instruments
Wheat futures contracts- fair value through profit or loss
2023
£000
209
-
54
263
2022
£000
46
39
514
599
Liability derivative financial instruments:
£000
£000
Forward FX contracts- designated cash flow hedge instruments
Wheat futures contracts- designated cash flow hedge instruments
Wheat futures contracts- fair value through profit or loss
-
12
428
440
53
-
80
133
2023
£000
209
-
-
209
£000
-
12
420
432
2023
£000
-
-
54
54
£000
-
-
8
8
2022
£000
46
38
514
598
£000
53
-
-
53
2022
£000
-
1
-
1
£000
-
-
80
80
101
ANNUAL REPORT AND ACCOUNTS 2023 Notes to the Financial Statements continued
25. FINANCIAL INSTRUMENTS continued
The valuation techniques and significant unobservable inputs related to determining the fair value of derivatives (level 1) and deferred and contingent
consideration which is classified at level 3 in the fair value hierarchy, where the valuation techniques are explained in the table below.
Financial instrument
Valuation techniques used
Forward foreign exchange
contracts
Wheat futures contracts
Spot price at reporting date
including forward swap points
based off the appropriate
interest rate curve over 12
months
Market prices published by ICE
Futures Europe, MIC Code:
IFLX
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
Contingent
consideration
Realisation of net assets on
Management accounts
completion and target earnings
information
Any adjustments to net assets
or profitability of management
accounts
The fair value hierarchy of financial instruments measured at fair value is provided below. There were no transfers between levels during
the period.
Group
Financial assets
Derivative financial assets (designated
hedging instruments)
Derivative financial assets (fair value
through profit or loss)
Financial liabilities
Derivative financial liabilities
(designated hedging instruments)
Derivative financial liabilities (fair value
through profit or loss)
Contingent consideration
Level 1
2023
£000
209
54
263
Level 1
2023
£000
12
428
-
440
2022
£000
85
514
599
2022
£000
53
80
-
133
Level 2
2023
£000
-
-
-
Level 2
2023
£000
-
-
-
-
2022
£000
-
-
-
2022
£000
-
-
-
-
Level 3
2023
£000
-
-
-
Level 3
2023
£000
-
-
199
199
The reconciliation of the opening and closing fair value balance of level 3 financial instruments is provided below:
Contingent consideration
As at 31 October 2021
Payments contingent consideration in year
New contingent consideration in year
As at 31 October 2022
Payments out of contingent consideration in year
Acquisition accounting adjustment
Contingent consideration recognised in year
As at 31 October 2023
Group
£000
197
(98)
2,000
2,099
(1,095)
(905)
100
199
2022
£000
-
-
-
2022
£000
-
-
2,099
2,099
Company
£000
-
-
2,000
2,000
(1,095)
(905)
-
-
The sensitivity analysis of a reasonably possible change in one significant unobservable input, holding all other inputs constant within level 3 financial
instruments is not provided as the item above only has one input as described in the valuation table.
102
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Notes to the Financial Statements continued
25. FINANCIAL INSTRUMENTS continued
Hedging strategy
The objective of Wynnstay’s Treasury activity is to minimise the post-tax net cost of financial operations and reduce its volatility to benefit
earnings and cash flows. The Group uses few financial instruments to finance its operations, with derivative financial instruments used to
manage market risks from these operations. Derivatives principally comprise of foreign exchange forward contracts and wheat futures
contracts. These financial instruments reduce the uncertainty of foreign currency transactions and wheat price movements.
Derivatives are used exclusively for hedging purposes in relation to underlying business activities and not as trading or speculative instruments.
Hedge ratios are monitored on a monthly basis at Board level in line with the Group’s risk management policies and procedures where the hedged
item exposure is hedged with derivatives within an 90% to 100% range.
The main source of hedge ineffectiveness in these hedging relationships is the effect of the counterparty and the Group’s own credit risk on the
fair value of the foreign exchange forward contracts, which is not reflected in the fair value of the hedged item attributable to changes in foreign
exchange rates and ineffectiveness, including timing differences between the cash flows of the hedged item and the hedging instruments.
Foreign Exchange Contracts and Wheat Futures designated under cash flow hedges
During 2023, the Group entered into forward foreign exchange contracts which have been designated as cash flow hedges. These were entered
into to hedge the foreign exchange exposure arising on cash flows from Euro and USD denominated physical commodity purchase transactions.
The Group manages its cash flow wheat price risk by entering into offsetting futures contracts on the ICE Futures Europe market.
The notional value of foreign exchange forward contracts and wheat futures is the absolute total of outstanding positions at the balance sheet date.
Hedge effectiveness is determined at the inception of the hedge relationship and through periodic prospective effectiveness assessments to ensure
that an economic relationship exists between the hedged item and hedging instrument. The Group enters into hedge relationships where the critical
terms of the hedging instrument match exactly with the terms of the hedged item, and so a qualitative assessment of effectiveness is performed.
If changes in circumstances affect the terms of the hedged item such that the critical terms no longer match exactly with the critical terms of the
hedging instrument, the Group uses the hypothetical derivative method to assess effectiveness. Sensitivity analysis impacts for both 2023 and 2022
was not material.
During the year, total hedge ineffectiveness arising from forward foreign exchange contracts amounted to £50,000 (2022: £104,000) at the balance
sheet date.
Hedge Type
Hedging Instrument
Hedged Item
Nominal
Value
Average contracted
Derivatives prices
Maturing
Cash flow hedge Forward FX GBP/EUR Physical grains & fertilisers
£000
11,748
GBP/EUR 1.1574 Group Qrt 1 to Qrt 2 2024
Cash flow hedge Forward FX GBP/USD Physical grains & fertilisers
5,686
GBP/USD 1.2437 Group Qrt 1 to Qrt 2, 2024
Cash flow hedge
UK Feed Wheat
futures contract- IFLX
Physical Wheat
657
18,091
£271.32
Group Qrt 3, 2023
The amounts recognised in the hedging reserve and recycled to the Statement of Comprehensive Income (SoCI) are shown below:
2023
Cash flow hedges:
Variability in cash flow-
Wheat futures
Variability in cash flow-
Forward FX
2022
Cash flow hedges:
Variability in cash flow-
Wheat futures
Variability in cash flow-
Forward FX
Hedging
gains/ (losses)
recognised in
OCI reserves
Hedge cost/
ineffectiveness
recognised in P&L
Line item in SoCI
where hedge
ineffectiveness
is included
Hedged future cash
flows no longer
expected to occur
As hedged
item affects
SoCI
Line item in which
reclass
adjustment is
included
Amounts reclassified to SoCI
£000
(12)
150
138
40
143
183
£000
£000
-
Cost of sales
50
Cost of sales
50
-
Cost of sales
(104)
Cost of sales
(104)
-
-
-
-
-
-
£000
(235)
Cost of sales
152
Cost of sales
(83)
463
Cost of sales
1,873
Cost of sales
2,336
Set-off of financial assets and liabilities
Financial assets and liabilities are offset and the net amount reported in the Consolidated and Company Balance Sheets where there is a
legally enforceable right to offset the recognised amounts and there is an intention to settle on a net basis or realise the asset and settle the
liability simultaneously. According to the enforceable master netting agreements with the financial counterparties, in the event of default,
derivative financial instruments with the same counterparty can be net settled. In the event of default, subject to payment enforcements £Nil
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ANNUAL REPORT AND ACCOUNTS 2023 Notes to the Financial Statements continued
25. FINANCIAL INSTRUMENTS continued
(2022: £40,000) of assets and liabilities, respectively of the derivative financial instruments are subject to right for offsetting, under ISDA
(International Swaps and Derivatives Association) agreements.
There were no other material amounts offset in the Consolidated and Company Balance Sheets or associated with enforceable master
netting agreements.
Gross and net
presentation of derivatives
Gross Position
Right of offset to
net settle
Balance Sheet Net
Position
Gross Position
Right of offset to
net settle
Balance Sheet Net
Position
2023
2022
Asset derivative financial
instruments
Liability derivative
financial instruments
£000
263
440
£000
-
-
£000
263
440
£000
639
173
£000
(40)
(40)
£000
599
133
RISK MANAGEMENT OBJECTIVES, POLICIES AND
PROCESSES
The main risks arising for the Group are credit risk, foreign currency,
commodity price risk, intertest rate risk, liquidity risk and capital
management risk. The Board approves prudent treasury policies for
managing each of the risks which are summarised 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 potentially always present.
Detailed credit approval before initial supply, the operation of credit
limits and active credit control monitoring and policy, help to minimise
the incidence of bad debt risk. The Group’s grain trading activities is
exposed to substantial customer credit limits and to assist in mitigating
such riskier limits, a credit insurance policy is put in place to provide
partial cover against default by 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 diverse customer base being large and
unrelated.
ii) Foreign currency risk
The main currency related risk to the Group comes from the forward
purchasing of imported raw materials for use in our Agriculture division.
This risk is managed by entering into forward foreign exchange contracts
to coincide at the same time as when the underlying transaction is
priced and agreed for future delivery. The fair value of the contracts
was £258,000 as an asset and £49,000 as a liability with a net asset
of £209,000 (2022: £7,000 liability) with the principal nominal amounts
of the forward purchased currency, based in sterling of £17,434,000
(2022: £20,527,000).
The Group is primarily exposed to foreign exchange risk in relation to
Sterling against movements in US Dollar and Euro. Foreign exchange
risk arises from the translation of financial assets and liabilities that
are not in the functional currency of the entity that holds them. Based
upon the carrying value of the Group’s net financial assets and liabilities
denominated in a foreign currency as at 31 October 2023 and 31
October 2022, the exposure is minimal.
iii) Commodity market risk
Whilst the Group does not speculate in commodity trading, it does
have to make significant forward purchases of certain raw materials,
particularly for use within its animal feed manufacturing operations.
Position reporting systems and controls are in place to ensure the
Board is informed of exposure level via the Treasury Management
Committee on a regular basis, where the hedging of wheat contracts via
a commodities broker is transacted on the Inter-Continental Exchange
(ICE) futures market to manage commercial pricing decisions and
prevent margin erosion.
If the ICE futures price quoted in pounds sterling was to increase or
decrease by £1 on all contracts at the same time, with all other variables
held constant, this would result in a £79,000 gain or loss (2022: £34,000),
as at the year-end, which would feature either through FVPL or other
comprehensive income. As at 31 October 2023, the ICE futures market
open liability reflected in the Group’s financial statements amounted to
£387,000 (2022: £474,000 asset).
iv) Interest rate risk
The Group’s debt terms, historically have generally been floating rate
interest. The Board will periodically consider the option to fix interest
rates attached to such variable rate debt through utilising interest rate
swaps. However, where possible fixed rate term asset finance is used
for the acquisition of property, plant and equipment.
The Group raises borrowings in sterling only. During the year the
Company repaid debt borrowings of £2,371,000 (2022; £474,000).
At 31 October 2023, if interest rates had been 150 basis points higher
or lower with all other variables held constant, profit after tax and net
assets would have been £192,000 (2022: £135,000) lower or higher,
respectively mainly as a result of higher/ lower interest expense on
sterling floating rate borrowings. The directors consider that 150 basis
points increase is the maximum likely change in sterling interest rates
over the next year, being the period up to the next point at which the
Group expects to make these disclosures.
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 overdraft and revolving credit
facilities in place of £10.5m and £3.0m respectively (2022: £10.5m and
£7.5m) to manage liquidity needs. The overdraft facility is renewable in
April 2024, priced at 1.4% over base rate and the revolving credit facility
is committed to June 2025, priced at 1.6% over SONIA and the Board
believes these are adequate to provide prudent liquidity management.
The Board regularly receives monthly cash flow projections as well as
information regarding net cash/(debt), where these monthly projections
have indicated that the Group is expected to have sufficient liquid
resources to meet its obligations under all reasonably expected
circumstances. Refer to note 23 on net cash position.
The following table analyses the Group and Company’s financial liabilities
that will be settled on a net basis, where there is legal and constructive
obligation to do so, based on agreed contractual settlement dates, as
shown within time buckets in the table below. Interest projections for
both bank loans and other borrowings and lease liabilities, have been
calculated using the future effective rate of interest applicable to each
instrument type and then discounted using the appropriate UK gilt rate
to derive the present value of interest.
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Notes to the Financial Statements continued
25. FINANCIAL INSTRUMENTS continued
RISK MANAGEMENT OBJECTIVES, POLICIES AND PROCESSES continued
Group
Bank loans and other borrowings
Bank loans and other borrowings -
interest projections
Finance lease liabilities
Finance lease liabilities – interest projections
Derivatives
Trade payables and other payables
Accruals
Contingent consideration
Company
Bank loans and other borrowings
Bank loans and other borrowings -
interest projections
Finance lease liabilities
Finance lease liabilities – interest projections
Amounts due from subsidiary
undertakings
Trade payables and other payables
Accruals
Contingent consideration
vi) Capital management risk
2023
Within
one
year
£000
Two to
five
years
£000
Over
five
years
£000
Total
£000
7,338
2,595
4,743
617
130
487
-
-
12,975
3,763
2,350
440
258
432
70,612
70,612
3,777
3,777
199
199
6,689
1,833
2,523
259
8
-
-
-
-
-
-
-
2022
Within
one
year
£000
Two to
five
years
£000
Over
five
years
£000
Total
£000
9,683
3,043
6,640
991
345
646
7,343
3,344
3,999
602
133
213
53
91,616
91,616
10,242
10,242
2,099
2,074
389
80
-
-
25
98,308
81,766
13,760
2,782 122,709 110,930
11,779
2023
Within
one
year
£000
Two to
five
years
£000
Total
£000
7,338
2,595
4,743
617
552
109
423
303
3
-
130
102
22
423
303
3
-
487
178
61
-
-
-
-
Over
five
years
£000
-
-
272
26
-
-
-
-
9,345
3,578
5,469
298
2022
Within
one
year
£000
Two to
five
years
£000
Total
£000
9,683
3,043
6,640
991
345
646
-
-
59
319
403
-
-
59
319
403
2,000
13,455
2,000
6,169
-
-
-
-
-
-
7,286
-
-
-
-
-
-
-
-
-
Over
five
years
£000
-
38
-
-
-
-
-
-
-
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 and
benefits to shareholders’ whilst principally maintaining an efficient capital structure to optimise the cost of capital. In order to maintain or adjust the
capital structure, the Group adjusts the amount of dividends to, or to be paid to shareholders’, the return of equity capital to shareholders’, the
issuance of new shares (that could also possibly take the form of bonus script ordinary shares), the disposal of cash generative assets to settle the
Group’s debt exposure.
The Group monitors its gearing ratio for the purpose of capital management. 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 (both 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 (%)
2023
£000
31,055
(7,338)
(12,975)
10,742
135,231
7.94%
2022
£000
31,177
(9,683)
(7,343)
14,151
130,701
10.83%
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, where relevant.
105
ANNUAL REPORT AND ACCOUNTS 2023 Notes to the Financial Statements continued
26. DEFERRED TAXATION
At 1 November 2022
Tax equalisation
Business combination (see note 35)
Charge for the year in Statement of Income
Charge for the year in Statement of Changes in Equity
At 31 October 2023
The provision for deferred taxation is made up as follows:
Accelerated capital allowances
Other temporary and deductible differences
Group
2023
£000
1,680
-
155
395
(11)
2,219
Group
2023
£000
811
1,408
2,219
2022
£000
474
2
1,000
219
(15)
1,680
2022
£000
373
1,307
1,680
Company
2023
£000
-
-
-
-
-
-
Company
2023
£000
-
-
-
2022
£000
-
-
-
-
-
-
2022
£000
-
-
-
A deferred tax asset has not been recognised at Group or Company level in respect of the movement in fair value on an investment property
(see Note 15) as there is uncertainty as to whether an expected future capital gain will crystallise to offset the capital loss.
27. SHARE CAPITAL
Authorised
Ordinary shares of 25p each
Allotted, called up and fully paid
Ordinary shares of 25p each
2023
No. of shares
000
2023
Nominal Value
£000
2022
No. of shares
000
2022
Nominal Value
£000
40,000
10,000
40,000
10,000
22,955
5,739
22,340
5,585
During the year 111,181 shares (2022: 75,891) were issued with an aggregate nominal value of £28,000 (2022: £19,000) and were fully paid up
for equivalent cash of £474,000 (2022: £459,000) to shareholders exercising their right to receive dividends under the Company’s dividend scrip
scheme. A further 503,534 (2022: 1,965,689) shares with a nominal value of £126,000 (2022: £491,000) were issued for an equivalent cash value
of £997,000 (2022: £10,581,000), with 503,534 (2022: 65,689) shares being to satisfy the exercise of employee options. Of these employee option
shares, 141,766 (2022: Nil) were the result of the exercise of nil cost options under the Company’s Performance Share Plan, with the nominal value
being credited from the transfer of capital from the Equity Remuneration Reserve.
ANNUAL REPORT AND ACCOUNTS 2023 Wynnstay Group Plc 106
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Notes to the Financial Statements continued
28. SHARE-BASED PAYMENTS
The Group has three types of share-based payment schemes in operation at 31 October 2023. The executive directors and certain employees
participate in a performance share plan (PSP) under which the vesting of all awards made under the PSP is subject to an earnings per share (“EPS”)
and Return on Capital Employed (“ROCE”) growth target measured against average annual increases over a three-year period.
Certain senior employees participate in the discretionary Approved Company Share Option Plan (CSOP). Such schemes have no performance
criteria attached to their operation.
All employees, subject to eligibility criteria, may participate in the Save As You Earn plan. The scheme does not have any performance criteria
attached to its operation.
The following options were exercised, lapsed and outstanding at the year end:
Exercise
Price per
share £
Exercisable by
As at
01 November
2022
(Exercised)/
Issued in
year
Lapsed
in year
As at
31 October
2023
Discretionary Share Option Schemes
CSOP Granted October 2014
5.4750 Oct 2017 - Oct 2024
PSP Granted January 2020
Nil cost Oct 2022 - Mar 2023
PSP Granted April 2021
Nil cost Oct 2023 - Mar 2024
CSOP Granted April 2021
4.6250 Apr 2024 - Apr 2031
PSP Granted January 2023
Nil cost Oct 2025 - Mar 2026
Savings Related Option Schemes
Granted September 2018
Granted August 2020
Granted August 2022
4.0000 Oct 2023 - Mar 2024
2.7500 Sep 2023 - Feb 2024
5.5000 Sep 2025 - Feb 2026
120,425
141,766
81,609
154,000
-
497,800
112,170
390,493
141,142
643,805
1,141,605
-
(25,000)
95,425
(141,766)
-
-
139,311
(2,455)
(2,125)
(360,318)
-
(362,443)
(364,898)
-
(81,609)
(18,000)
-
(124,609)
(5,075)
(5,139)
(19,064)
(29,278)
(153,887)
-
-
136,000
139,311
370,736
104,970
25,036
122,078
252,084
622,820
During the year 141,766 (2022: 30,575) Discretionary Share Options and 362,443 (2022: 35,114) Savings Related Options were exercised and
satisfied by the allotment of 503,534 (2022: 65,689) new shares by the Company and the transfer of 675 (2022: Nil) existing shares from the Group’s
ESOP Trust. The other changes in the number of 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 139,311 new options
were granted to certain executives under the terms of the Group’s Performance Share Plan (2022: 142,710 options granted under a SAYE scheme
to all eligible employees).
The weighted average market share price at the time of exercise of options exercised during the year was £4.46 (2022: £6.08).
Fair Value of Options
During the year, the Group charged £258,000 (2022: £262,000) of share based remuneration cost to its Consolidated Statement of Comprehensive
Income based on a movement in the fair value of outstanding options granted after October 2014. The fair value of these options were estimated
by using the Black Scholes option pricing model, and for the new options granted during the year, the following assumptions were used:
Weighted average assumptions
Share price at year end
Average share price
Weighted average exercise price
Expected volatility
Weighted average remaining contractual life
Number of options
Risk free interest rate at inception
2023
£3.83
£4.87
£Nil
24.55%
2.00 years
139,311
4.00%
2022
£6.11
£5.84
£5.50
24.40%
2.85 years
141,142
1.25%
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.
107
ANNUAL REPORT AND ACCOUNTS 2023
Notes to the Financial Statements continued
29. CAPITAL COMMITMENTS
At 31 October 2023 the Group and Company had capital commitments as follows:
Contracts placed for future capital expenditure not provided in
the financial statements
Group
2023
£000
635
2022
£000
1,590
Company
2023
£000
-
2022
£000
-
30. PENSION COMMITMENTS
Following the acquisition of Humphrey Poultry (Holdings) Limited in 2022, the Group currently operates three defined contribution pension schemes
which are administered on separate bases to the Group’s trade. The pension and other associated costs charge for the year £1,401,000 (2022:
£1,456,000). The liability owed to the pension schemes at 31 October 2023 was £197,000 (2022: £169,000).
31. EMPLOYEE SHARE OWNERSHIP TRUST
The Company operates an employee share ownership trust (ESOP). As at 31 October 2023, 127,022 ordinary 25p shares (2022: 16,834 ordinary
25p shares) were held by the trust with an aggregate market value at the year end of £485,860 (2022: £102,855). The assets, liabilities, income and
costs of the ESOP are incorporated into the financial statements of the Group.
32. RELATED PARTY TRANSACTIONS
The Board confirms that they consider the Directors of the Company to be the only key management personnel. 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).
Gareth Davies
Steve Ellwood
Philip Kirkham as director of M&R Kirkham & Sons Ltd (retired 24 May 2023)
Howell Richards as a director of Cwrtmalle Ltd
Paul Roberts
Catherine Bradshaw
Steven Esom (appointed 18 Apr 2023)
Rob Thomas (appointed 2 Oct 2023)
Total sales
Balance outstanding
2023
£000
1
-
526
6,018
1
-
-
-
2022
£000
3
-
542
4,268
2
-
n/a
n/a
2023
£000
-
-
n/a
1,725
-
-
-
-
2022
£000
-
-
90
1,277
-
-
n/a
n/a
6,546
4,815
1,725
1,367
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 of which S J Ellwood is a director
Total sales
Balance outstanding
2023
£000
62
2022
£000
70
2023
£000
2
2022
£000
10
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Notes to the Financial Statements continued
33. CASH GENERATED FROM OPERATIONS
Group
Company
Profit for the year from operations
Adjustments for:
Tax
Group tax relief elections
Dividend received from subsidiaries
Dividends from Joint ventures and associates
Depreciation of tangible fixed assets
Amortisation of right-of-use assets
Fair value movement in investment property
Amortisation of intangible fixed assets
(Profit) on disposal of property, plant and equipment
Loss / (Profit) on disposal of right of use asset
ESOP trust revaluation
Derivative held as FVPL
Hedge ineffectiveness
Government grant
Net movement in provisions
Interest on lease liabilities
Net Interest expense
Share of post-tax results of joint ventures
Share-based payments
Changes in working capital (excluding effects of
acquisitions and disposals of subsidiaries):
Decrease / (Increase) in inventories
Decrease / (Increase) in trade and other receivables
(Decrease) / Increase in payables
Cash generated from / (used in) operations
2023
£000
6,928
1,776
-
-
-
2,312
4,189
-
210
(121)
2
(31)
809
(50)
(2)
(345)
464
294
(673)
258
16,592
16,360
(28,700)
20,272
2022
£000
17,142
3,982
-
-
-
2,289
4,086
522
154
(132)
(86)
-
(627)
104
(2)
(6)
257
233
(676)
262
(18,401)
(18,467)
23,205
13,839
2023
£000
3,781
(107)
187
(3,950)
(367)
501
87
-
-
-
-
(31)
-
-
-
-
20
357
-
258
-
(1,511)
(52)
(827)
restated *
2022
£000
3,415
(187)
-
(5,438)
(4)
492
-
522
-
-
-
-
-
-
-
-
-
171
-
262
-
(9,874)
487
(10,154)
34. RECONCILIATION OF LIABILITIES FROM FINANCING
* restated to correct the classification of certain bank accounts between group companies of £10.9m
As at 31 October 2021
Cash-flows
- Receipt of borrowings
- Repayments of borrowings
- Business combination
- Payment of lease liabilities
Non-cash flows
- Lease movements
- Loans and borrowings reclassified
As at 31 October 2022
Cash flows
- Receipt of borrowings
- Repayments of borrowings
- Business combination
- Payments of lease liabilities
Non-cash flows
- Lease movements
- Loans and borrowings reclassified
Group
Non-Current
£000
Current
£000
Total
£000
Non-Current
£000
5,731
4,667
10,398
-
Company
Current
£000
672
7,588
-
148
-
1,413
(4,241)
10,639
-
-
140
-
1,897
(474)
62
(4,229)
223
4,241
6,387
26
(2,371)
313
(5,042)
9,485
(474)
210
(4,229)
1,636
-
17,026
26
(2,371)
453
(5,042)
7,588
-
-
-
-
(948)
6,640
-
-
-
-
5,074
(1,897)
5,147
1,897
10,221
-
450
(1,897)
1,897
(474)
-
-
-
948
3,043
26
(2,371)
-
-
102
1,897
Total
£000
672
9,485
(474)
-
-
-
-
9,683
26
(2,371)
-
-
552
-
As at 31 October 2023
13,956
6,357
20,313
5,193
2,697
7,890
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ANNUAL REPORT AND ACCOUNTS 2023 Notes to the Financial Statements continued
2023
Lease Liabilities
Loan stocks
Borrowings
2022
Lease Liabilities
Loan stocks
Borrowings
Group
Non-Current
£000
Current
£000
Total
£000
Non-Current
£000
Company
Current
£000
9,213
3,762
12,975
-
4,743
13,956
698
1,897
6,357
698
6,640
20,313
3,999
3,344
7,343
-
672
672
6,640
2,371
9,011
10,639
6,387
17,026
450
-
4,743
5,193
-
-
6,640
6,640
102
698
1,897
2,697
-
672
2,371
3,043
Total
£000
552
698
6,640
7,890
-
672
9,011
9,683
35. BUSINESS COMBINATIONS
TAMAR MILLING LIMITED
On 16 November 2022, Wynnstay Agricultural Supplies entered a business combination and acquired 100% of the shares of Tamar Milling Limited.
The provisional consideration is £1,746,000 inclusive of cash and cash equivalents of £32,000.
Trade receivables net of loss allowance
Other receivables
Inventories
Cash and cash equivalents
Trade payables
Other payables
Lease liabilities
Deferred tax
Net Current Assets and Non-Current Liabilities
Tangible fixed assets
Underlying Net Assets of Acquiree
Current
£000
Non-Current
£000
1,015
45
953
32
(722)
(292)
(140)
-
891
-
891
-
-
-
-
-
-
(313)
(119)
(432)
787
355
Total
£000
1,015
45
953
32
(722)
(292)
(453)
(119)
459
787
1,246
The provisional consideration payable is dependent on future product volumes and profitability of the commercial business acquired. The fair value
of the contingent consideration has been based on management’s expectation of the future performance of the business and that could range from
£Nil to £100,000.
A full analysis of the provisional consideration is provided in the table below. The goodwill balance represents the assembled workforce and future
sales opportunities and is not expected to be deductible for tax purposes.
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Notes to the Financial Statements continued
35. BUSINESS COMBINATIONS NOTE (continued)
Fair value of net assets acquired
Goodwill
Intangibles - customer accounts
Property, plant and equipment
ROU Assets
Inventories
Trade receivables
Other receivables
Cash and cash equivalents
Trade payables
Other payables
Lease liabilities
Deferred tax
Net Assets
Acquisition date- fair value of the total net assets acquired
Representing:
Cash settled to vendor during the period
Deferred consideration outstanding at 31 October 2023
Provisional Consideration
Cashflow Statement:
Cash settled to vendor during the period
Less cash and cash equivalents acquired
Cash settled to vendor during the period for prior acquisitions
Fair Value of Net Assets
Acquired
£’000
-
-
263
524
953
1,015
45
32
(722)
(292)
(453)
(119)
1,246
Adjustment
£’000
302
234
-
-
-
-
-
-
-
-
-
(36)
500
Fair Value of
Net Assets
£’000
302
234
263
524
953
1,015
45
32
(722)
(292)
(453)
(155)
1,746
1,746
1,646
100
1,746
1,646
(32)
1,095
2,709
Subsequent to the year-end, a first instalment of the deferred consideration shown in the table above was paid to the vendors in the sum of
£37,000 in January 2024. Directly attributable acquisition costs of £28,000 were incurred with the transaction, and these have been recognised
as non-recurring expenses in the income statement for the period. During the last available audited accounts of the acquired entity, for the period
to September 2021, the annual aggregate revenues on a non-consolidated basis amounted to £6,397,000 and profit before tax was £422,000.
Business combination accounting is expected to be finalised within 12 months from the completion date of the acquisition. Amounts included in
the Consolidated Statement of Comprehensive Income period to October 2023 in relation to the acquired business are revenues of £7,430,000
and profit before tax of £110,000.
Contingent and deferred consideration of £1,095,000 was paid during the period to 31 October 2023 relating to other prior period acquisitions,
resulting in a total gross cash outflow of £2,741,000 or £2,709,000 net of cash acquired with the Tamar Milling transaction.
In February 2023, the contingent consideration relating to the acquisition of Humphrey Poultry (Holdings) Limited was settled in the sum of
£1,095,000. This value was less than the provisionally assessed contingent consideration of £2,000,000, primarily as a result of a change in
anticipated trading conditions created in part by the impact of Avian Influenza on poultry flocks. As the timing of the recognition of this change was
within the maximum twelve month period permitted under IFRS 3 for finalising the business combination accounting relating to this transaction, the
adjustment to the provisionally assessed value of the contingent consideration and the settled amount, has resulted in a reduction in the acquired
value of goodwill of £905,000 (see Note 13).
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ANNUAL REPORT AND ACCOUNTS 2023
Notes to the Financial Statements continued
36. ALTERNATIVE PERFORMANCE MEASURES
The Board of Directors consider that the following Alternative Performance Measures provide useful information for shareholders on underlying
trends and performance:
• Adjusted Operating Profit
• Underlying Profit Before Tax
• Adjusted EBITDA
The Board believes these Alternative Performance Measures reflect the underlying commercial performance of the current trading activities and
provide investors and other users of the accounts with an improved view of likely future performance. The rationale behind making adjustments to
the IFRS results is as follows:
• 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. An analysis of these
charges is given in Note 5 to the accounts.
A reconciliation of reported IFRS results to Alternative Performance Measures is shown below:
Adjusted Operating Profit
Adjusted results are after adding back amortisation of acquired intangible assets, goodwill impairment, share-based payment expense and non-
recurring items.
Operating profit
Amortisation of acquired intangibles
Share based payments
Non-recurring items
Adjusted Operating Profit
2023
£’000s
8,789
210
258
82
9,339
2022
£’000s
20,938
154
262
1,094
22,448
Underlying Profit Before Tax
Adjusted results which includes the gross share of results from joint ventures are after adding back share-based payment expense and non-
recurring items.
Profit before tax
Share of tax incurred by joint ventures & associates
Share based payments
Non-recurring items
Underlying profit before tax
2023
£’000s
8,704
192
258
82
9,236
2022
£’000s
21,124
132
262
1,094
22,612
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Notes to the Financial Statements continued
Adjusted EBITDA
Defined as earnings before interest, tax, depreciation and amortisation, and investment property fair value adjustment, tax on joint ventures, goodwill
impairment, share-based payment expenses and other non-cash charges.
IFRS reported pre-tax profit
Investment property fair value adjustment
Tax on joint venture & associate income
Net profit on disposal of assets
Interest
Depreciation and ROU amortisation
Intangible amortisation and share based payment expense
Other non-cash charges
Adjusted EBITDA
Property lease payments
Adjusted EBITDA after operating lease payments
2023
£’000s
8,704
-
192
(119)
758
6,501
468
381
16,885
(2,502)
14,383
2022
£’000s
21,124
522
132
(218)
490
6,375
416
(531)
28,310
(2,281)
26,029
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ANNUAL REPORT AND ACCOUNTS 2023 Notice of Annual General Meeting
Notice is hereby given that the thirty-first Annual General Meeting (the “Meeting”) of Wynnstay Group plc (the “Company”) will be held in the
Sovereign Suite, Shrewsbury Town Football Club, Oteley Road, Shrewsbury, Shropshire, SY2 6ST on Tuesday 26 March 2024 at 11.45 am to
transact the following business:
ORDINARY BUSINESS
1. To receive and adopt the Company’s annual accounts for the financial year ended 31st October 2023 together with the Directors’ Report
and Auditors’ Report on those accounts.
2. To declare a final dividend for the year ended 31 October 2023.
3. To re-appoint the following Director who retires under Article 86: Steven Esom
4. To re-appoint the following Director who retires under Article 86: Rob Thomas
5. To re-appoint the following Director who retires by rotation under Article 91: Steve Ellwood
6. To re-appoint Crowe UK 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.
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 £500,000 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.
8.
That, subject to passing Resolution 7 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 £500,000, 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 2.5% 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
Company Secretary
Wynnstay Group plc
Eagle House
Llansantffraid-ym-Mechain
Powys, SY22 6AQ
29 January 2024
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Notes to the Notice Of Annual General Meeting
1. Meeting format
As at the date of this Notice, the Board intend to hold the 2024 AGM as a physical meeting and shareholders are therefore invited to attend
a traditional meeting in person. All resolutions will be decided on a show of hands unless a poll of members is/has been requested.
- 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.
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 Office not less than 24 hours
before the meeting.
3. 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 flexibility in financing possible business opportunities and are normal practise
for a company of this size, and are routinely put to shareholders.
4. 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
benefit all remaining shareholders and are normal practise for a company of this size, and are routinely put to shareholders.
5. Documents on display
Copies of necessary documents will be available on the Company’s website prior to and during the Meeting.
6. 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.)
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Notes to Notice of Annual General Meeting
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
http://scamsmart.fca.org.uk/.
Some simple advice to avoid investment scams and share frauds include:
1. 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.
2. 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.
3. 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.
4. 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!
Financial Calendar
30 January 2024 Announcement of 2023 Results
26 March 2024 Annual General Meeting
02 April 2024
Dividend Record Date
30 April 2024 Payment of Final 2023 Dividends
June 2024 Announcement of 2024 Interim Results
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