Half Yearly Report

RNS Number : 0088R

Wynnstay Group PLC

24 June 2015

 



AIM: WYN 

WYNNSTAY GROUP PLC

("Wynnstay" or "the Group")

Half Year Results

For the six months to 30 April 2015

Key Points

·    Encouraging performance - despite a difficult trading backdrop, with low output prices for farmers

-     underlying* operating profit up 4.9% to £5.13m

-     balanced business model has underpinned results

·    Revenue of £200.56m (2014: £222.49m) - affected by commodity price deflation

-     market share maintained or improved in key product areas

·    Pre-tax profit up to £4.82m (2014: £4.70m)

·    Earnings per share up to 20.26p (2014: 19.41p)

·    Net debt at 30 April 2015 of £8.09m (2014: £10.86m), a 25% reduction

·    Net assets at 30 April 2015 up to £80.28m (2014: £74.54m)

·    Interim dividend of 3.7p, an increase of 8.8% (2014: 3.4p)

·    Agricultural Division - revenue at £147.33m, operating profit at £2.23m

-     increased feed volumes partly offset impact of low grain price on arable activities

·    Specialist Retail Division - revenue at £53.18m, operating profit at £2.85m

-     good performance, with CPF acquisition benefits coming through as planned

·    New five year corporate growth plan agreed

-     organic and acquisitive growth opportunities on existing foundations

·    Long term outlook remains very positive; short term headwinds reflecting lower output prices

* underlying operating profit is before intangible amortisation and share-based payments 

Chief Executive Ken Greetham commented:

"I am very pleased to report that the balanced business model has allowed us to deliver an encouraging first half performance, with underlying* operating profit up 4.9% to £5.13m, despite a difficult backdrop, with poor output prices for farmers. The main drivers of this resilient performance were the continuing progress within our Specialist Retail activities and increased feed volumes, which helped to offset the change in trading patterns within the arable sector. 

Trading conditions for farmers have been difficult for the last two years. However the industry is cyclical and the macro economic factors around world demand remain compelling.

Our recently completed business planning exercise highlights the growth opportunities available to the Group and the Board remains confident about Wynnstay's continued future growth, built on the existing solid foundations.

The business continues to benefit from its broad base of activities and overall current trading is in line with management expectations."

Enquiries:

Wynnstay Group plc	Ken Greetham, Chief Executive Paul Roberts, Finance Director	T: 01691 827 142 T: 020 3178 6378 (today)
KTZ Communications	Katie Tzouliadis	T: 020 3178 6378
Shore Capital (Nomad and Broker)	Stephane Auton / Patrick Castle	T: 020 7408 4090

CHAIRMAN'S STATEMENT

INTRODUCTION

I am very pleased to report an encouraging first half performance, with underlying* operating profit increasing by 4.9% to £5.13m, against a difficult backdrop with low output prices for farmers. Wynnstay's resilient performance once again highlights the benefit of the Group's wide spread of agricultural activities across both the arable and livestock sectors. On revenue of £200.56m, profit before tax increased by 2.6% to £4.82m and earnings per share were 4.4% higher at 20.26p.  

The main drivers of this resilient performance were the continuing progress within our Specialist Retail activities, with the benefits of the Carmarthen & Pumsaint Farmers ("CPF") acquisition and new marketing initiatives coming through, as well as increased feed volumes. These helped to offset the change in trading patterns within the arable sector, which was felt across the industry. 

Whilst output prices still remain unacceptably low for many farmers, the balance of trade should reverse in the foreseeable future, improving trading conditions for our customer base. As we reported at the AGM, we have recently completed our planning exercise to map out the potential organic and acquisitive growth opportunities for the Group over the next five years. The new corporate plan has been developed giving clear direction for balanced growth across all aspects of the business and we are investing in production and marketing initiatives to support our continuing development.  

*underlying operating profit is before intangible amortisation and share based payments

FINANCIAL RESULTS

Revenue for the six months to 30 April at £200.56m (2014: £222.49m) was 10% lower year-on-year. This largely reflected continuing commodity price deflation in certain core product groups, in particular grain and traded raw materials, where there was a £15m reduction in sales as a result. The impact of this deflation is most evident in the Agricultural Division, where sales were lower at £147.33m (2014: £171.50m).  Also accounting for some of this reduction is our FertLink joint venture, which has now assumed the direct management of some fertiliser trade previously transacted via Glasson.  As in prior years, the contribution from our joint ventures will be consolidated into results at the full year. While our Specialist Retail operations are also largely geared towards farm supplies the product mix was less affected by commodity price deflation and the operations contributed increased sales of £53.18m (2014: £50.81m), benefiting from both the incorporation of additional country stores as well as like-for-like growth across Wynnstay Stores and Just for Pets.  

Underlying operating profit increased by 4.9% to £5.13m (2014: £4.89m). After intangible amortisation and share-based payment charges costs of £0.18m (2014: £0.03m), operating profit was 1.8% higher at £4.95m (2014: £4.86m). Operating profits at the Agricultural Division reduced by 5% to £2.23m (2014: £2.35m), with the low grain price affecting arable product margins, particularly in fertiliser and grain trading. A good feed performance partly offset this reduced income stream. Operating profit at our Specialist Retail operations increased by 10% to £2.85m (2014: £2.58m), aided by the realisation of the planned benefits from the CPF acquisition completed at the end of 2013.

Net finance costs reduced further to £0.13m (2014: £0.16m), as a result of lower average net debt through the period, assisted by the beneficial working capital implications of commodity price deflation. The month of April typically represents the peak of the Group's working capital cycle and the net debt at 30 April 2015 was £8.09m (2014: £10.86m), a 25% reduction year-on-year.

Profit before tax increased by 2.6% to £4.82m (2014: £4.70m) and earnings per share were 4.4% higher at 20.26p (2014: 19.41p), benefiting from the further reduction in general corporation tax rates.  

Net assets at 30 April 2015 were 7.7% higher at £80.28m (2014: £74.54m), which represents approximately £4.20 per share (2014: £3.94 per share), based on the weighted average number of shares in issue during the period of 19.13m (2014: 18.91m).

DIVIDEND 

The Board is pleased to declare an increased interim dividend of 3.7p per share (2014: 3.4p).  This represents a rise of 8.8% and is in line with our policy to increase the pay-out ratio while still maintaining a prudent level of cover. The interim dividend will be paid on 30 October 2015 to shareholders on the register at the close of business on 25 September 2015. As in previous years, a Scrip Dividend alternative will also be available, with the last day for election for this scheme being 15 October 2015.

REVIEW OF OPERATIONS

AGRICULTURE

Prices for agricultural outputs remain below the realistic cost of production for many farmers, mainly as a result of the current surplus in the global supply of grain and dairy products. This has created a more competitive environment within the agricultural supply industry as well as reducing demand for fertiliser. Against this difficult backdrop the Agricultural Division has delivered robust results, maintaining or improving market share.

Feed Products

Volumes compound and blended feeds increased by 9% over the equivalent period in 2014, outperforming a subdued market. Our investment in the Group's production and distribution facilities has improved efficiency within the Division whilst enabling us to maintain competitive prices for our customers. The broad range of ruminant and monogastric products minimises the effects of volatility within the industry and Wynnstay is well placed within the sector.

Glasson Grain

Glasson has delivered a solid performance despite a reduction in sales of fertiliser and raw materials for feed, as compounders reverted to the use of home produced cereals. The business has benefited from increased sales of specialist products which have supported a good contribution to the Group.

Arable Products

Sales of cereal and herbage seeds have been buoyant and the business continues to increase its presence in the market. Demand for fertiliser has been lower than the equivalent period last year, as farmers held back from buying in anticipation of a fall in prices. However the spot market has been encouraging, helped by the recent realignment of prices which will benefit sales over the summer period. The large grain harvest of 2014 has contributed to an increase in traded volume. However the continuing low grain prices have resulted in some pressure on margins. Grain stocks 'on farm' remain higher than normal and, with a good harvest anticipated for 2015, volumes are expected to be high, giving encouraging trading opportunities for the forthcoming marketing season.  

SPECIALIST RETAIL

Wynnstay Stores - Farm supplies

The Wynnstay Stores business, which is principally geared towards farm supplies and which works closely with the Group's wider agricultural operations, now has 42 outlets.  This includes the seven CPF outlets acquired in October 2013, as well as two new stores added in the period, at Aberystwyth in November and Ross-on-Wye in January. Total sales over the period increased by 6% with like-for-like sales rising by 2%. 

The expected benefits of the CPF acquisition continued to come through over the period.  In addition, our new initiatives to work alongside our farmer customers and assist in bringing improved efficiency to the industry are progressing well. One such initiative is the introduction of specialist ventilation and lighting systems for dairy enterprises.

We plan to continue to grow our network of stores to expand our geographical presence and extend our farmer customer base which has benefits for the Group's wider operations. 

Just for Pets - Pet products

Our pet product business performed well during the first half of the year, with like-for-like sales up by 2.8%. Although its contribution is behind the same period in the prior year, due to costs associated with business expansion, the core business is performing to budget. At the beginning of June, we opened a new store, at Cambourne, Cambridgeshire and have further new stores planned to open over the next 12 months. 

JOINT VENTURES AND ASSOCIATE

Wynnstay benefits from an involvement in a number of joint ventures and associate initiatives which extend the activities of the Group. As already noted, with the maturation of our FertLink fertiliser joint venture, it is now directly handling fertiliser trade previously managed by our Glasson operation. All businesses have been performing in line with management expectation over the period and, as in previous years, their results are not included in this report and will be consolidated into the Group's full year figures. 

BOARD CHANGES

After 17 years, Lord Carlile CBE QC, Non-executive Vice-Chairman retired from the Board at the AGM in March. His contribution to Wynnstay over this time has been significant and we wish him well in his retirement. Non-executive Director Philip Kirkham has assumed the position of Vice-Chairman.

We are currently recruiting an additional Non-executive Director to the Board and will make an announcement in due course. 

OUTLOOK

Trading conditions for farmers have been difficult for the last two years, firstly as a result of adverse weather conditions, and secondly, with the downward pressure on farm gate prices which has resulted in some prices being below the realistic cost of production. However the industry is cyclical and the macro economic factors around world food demand remain compelling. The changing market environment will bring opportunities to the industry as customers strive for efficiency within production systems.

Our recently completed business planning exercise highlights the growth opportunities available to the Group and the Board remains confident about Wynnstay's continued future growth, built on the existing solid foundations.

The business continues to benefit from the broad base of activities and overall current trading is in line with management expectations.

Jim McCarthy

Chairman

WYNNSTAY GROUP PLC

CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

For the six months ended 30 April 2015

		Unaudited six months ended 30 April 2015	Unaudited six months ended 30 April 2014	Audited year ended 31 October 2013
	Note	£'000	£'000	£'000
Revenue		200,556	222,492	413,558
Cost of sales		(172,410)	(195,399)	(360,353)
Gross Profit		28,146	27,093	53,205
Manufacturing, distribution and selling costs		(20,344)	(19,812)	(40,838)
Administrative expenses		(2,855)	(2,671)	(4,455)
Other operating income	10	185	281	588
Group Operating Profit Before intangible amortisation and  share-based payment costs		5,132	4,891	8,500
Intangible amortisation  and share-based payments		(183)	(28)	(109)
Group Operating Profit		4,949	4,863	8,391
Interest income		21	26	52
Interest expense		(148)	(188)	(378)
Share of profits in associate and joint ventures	2	-	-	536
Share of tax incurred in associate and joint ventures		-	-	(108)
Profit Before Taxation		4,822	4,701	8,493
Taxation	4	(947)	(1,030)	(1,796)
Profit For The Period		3,875	3,671	6,697
Earnings per 25p share	5	20.26p	19.41p	35.28p
Diluted earnings per 25p share	5	20.02p	19.17p	34.63p

WYNNSTAY GROUP PLC

CONDENSED CONSOLIDATED BALANCE SHEET

As at 30 April 2015

		Unaudited as at 30 April 2015	Unaudited as at 30 April 2014	Audited as at 31 October 2014
	Note	£'000	£'000	£'000
Assets
Non-current assets
Goodwill		17,521	17,014	17,209
Property, plant and equipment		18,490	17,546	18,289
Investments		3,643	3,365	3,643
Intangibles		83	95	89
		39,737	38,020	39,230
Current assets
Inventories		30,929	37,338	29,758
Trade and other receivables		64,054	66,804	48,749
Held for sale assets	6	2,372	2,372	2,372
Financial assets - loans to joint ventures		2,802	2,967	2,802
Cash and cash equivalents	12	91	2,860	8,990
		100,248	112,341	92,671
Total Assets		139,985	150,361	131,901
Liabilities
Current Liabilities
Financial liabilities - borrowings		(6,646)	(10,390)	(3,938)
Trade and other payables		(50,134)	(60,736)	(47,088)
Current tax liabilities		(1,047)	(1,113)	(678)
		(57,827)	(72,239)	(51,704)
Net Current Assets		42,421	40,102	40,967
Non-Current Liabilities
Financial liabilities - borrowings		(1,537)	(3,332)	(2,300)
Trade and other payables		(50)	-	(339)
Deferred tax liabilities		(292)	(254)	(327)
		(1,879)	(3,586)	(2,966)
Total Liabilities		(59,706)	(75,825)	(54,670)
Net Assets		80,279	74,536	77,231
Equity
Ordinary shares	7	4,835	4,761	4,777
Share premium		28,251	27,407	27,633
Other reserves		2,593	2,721	2,796
Retained earnings		44,600	39,647	42,025
Total equity		80,279	74,536	77,231

WYNNSTAY GROUP PLC

CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY

For the six months ended 30 April 2015

		Share capital	Share premium	Other reserves	Retained earnings	Total equity
	Note	£'000	£'000	£'000	£'000	£'000
Balance at 1 November 2013		4,713	26,986	2,697	37,153	71,549
Profit for the period		-	-	-	3,671	3,671
Total comprehensive income for the period		-	-	-	3,671	3,671
Transactions with owners of the company, recognised directly in equity
Shares issued during the period		48	421	-	-	469
Dividends		-	-		(1,177)	(1,177)
Equity settled share-based payments transactions		-	-	24	-	24
Total contributions by and distributions to owners of the Group		48	421	24	(1,177)	(684)
At 30 April 2014		4,761	27,407	2,721	39,647	74,536
Profit for the period		-	-	-	3,026	3,026
Total comprehensive income for the period		-	-	-	3,026	3,026
Transactions with owners of the company, recognised directly in equity
Shares issued during the period		16	226	-	-	242
Dividends		-	-	-	(648)	(648)
Equity settled share-based payments transactions		-	-	75	-	75
Total contributions by and distributions to owners of the Group		16	226	75	(648)	(331)
At 31 October 2014		4,777	27,633	2,796	42,025	77,231
Profit for the period					3,875	3,875
Total comprehensive income for the period					3,875	3,875
Transactions with owners of the company, recognised directly in equity
Shares issued during the period	7	58	618			676
Own shares acquired by ESOP trust				(380)		(380)
Dividends	8				(1,300)	(1,300)
Equity settled share-based payments	13			177		177
Total contributions by and distributions to owners of the Group		58	618	(203)	(1,300)	(827)
At 30 April 2015		4,835	28,251	2,593	44,600	80,279

WYNNSTAY GROUP PLC

CONDENSED CONSOLIDATED CASH FLOW STATEMENT

For the six months ended 30 April 2015 

		Unaudited six months ended 30 April 2015	Unaudited six months ended 30 April 2014	Audited year ended 31 October 2014
	Note	£'000	£'000	£'000
Cash flow from operating activities
Cash (used in) / generated from operations	13	(7,378)	(5,384)	11,773
Interest received		21	26	52
Interest paid		(148)	(188)	(378)
Tax paid		(613)	(1,143)	(2,271)
Net cash flows from operating activities		(8,118)	(6,689)	9,176
Cash flows from investing activities
Acquisition in period		(387)	-	(120)
Proceeds on sale of property, plant and equipment		180	81	289
Purchase of property, plant and equipment	13	(707)	(713)	(2,450)
Proceeds on sale of investment		-	-	150
Investment in held for sale assets		-	(85)	(85)
Net cash used by investing activities		(914)	(717)	(2,216)
Cash flows from financing activities
Net proceeds from the issue of ordinary share capital		676	469	711
Net proceeds from drawdown of new loans		-	272	272
Finance lease principal repayments		(482)	(399)	(792)
Repayments of borrowings		(986)	(1,056)	(2,054)
Dividends paid to shareholders		(1,300)	(1,177)	(1,825)
Own shares acquired by ESOP Trust		(380)	-	-
Net cash generated from financing activities		(2,472)	(1,891)	(3,688)
Net (decrease)/increase in cash and cash equivalents		(11,504)	(9,297)	3,272
Cash and cash equivalents at beginning of period		8,389	5,117	5,117
Cash and cash equivalents at end of period	12	(3,115)	(4,180)	8,389

WYNNSTAY GROUP PLC

NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS

1.     Basis of preparation

The Interim Report was approved by the Board of Directors on 23 June 2015.

The condensed financial statements for the six months to 30 April 2015 have been prepared in accordance with International Accounting Standard (IAS) 34 Interim Financial Reporting except as disclosed in note 2.

The financial information for the Group for the year ended 31 October 2014 set out above is an extract from the published financial statements for that year which have been delivered to the Registrar of Companies. The auditors' report on those financial statements was not qualified and did not contain statements under section 498(2) or 498(3) of the Companies Act 2006. The information contained in this document does not constitute statutory accounts within the meaning of section 434 of the Companies Act 2006.

The financial information for the six months ended 30 April 2015 and for the six months ended 30 April 2014 is unaudited.

The condensed consolidated interim financial statements should be read in conjunction with the annual consolidated financial statements for the year ended 31 October 2014, which have been prepared in accordance with IFRS as adopted by the EU.

The Directors have prepared the condensed consolidated interim financial statements on a going concern basis, having satisfied themselves from a review of internal budgets and forecasts and current banking facilities that the Group has adequate resources to continue in operational existence for the foreseeable future.

2.   Consolidation of share of results in joint ventures and associate

As the Group has a policy of using audited accounts for the consolidation of its share of the results of joint ventures and associate activities, no such consolidation has occurred during the six months to 30 April 2015. Although this is not in accordance with IFRS the impact on the financial statements is not material.

Relevant results will be accounted for during the second half of the financial year.

3.     Significant accounting policies

The condensed financial statements have been prepared on an historical cost basis or fair value basis as appropriate.

The same accounting policies, presentation and methods of computation are followed in these condensed financial statements as were applied in the preparation of the Group's financial statements for the year ended 31 October 2014. A copy of these financial statements is available from the Company's Registered Office at Eagle House, Llansantffraid, Powys SY22 6AQ.

The following adopted IFRS have been issued but have not been applied by the Group in these financial statements.

Their adoption is not expected to have a material effect on the financial statements. International  Financial Reporting Standards ("IFRS")	EC Effective for accounting periods commencing on or after
Defined Benefit Plans: Employee Contributions - IAS 19	1 February 2015

Amendments to existing standards
Certain elements of the Annual improvements to IFRSs 2010-2012 Cycle	1 February 2015
Certain elements of the Annual improvements to IFRSs 2011 -2013 Cycle	1 January 2015

The accounting policies applied by the Group in these condensed consolidated interim statements are the same as those applied by the Group in its consolidated financial statements for the 12 months ending 31 October 2013. There have been a number of minor changes to standards which became applicable for the year ended 31 October 2014, none of which have been assessed as having a significant impact on the Group.

4.     Taxation

The tax charge for the six months ended 30 April 2015 and 30 April 2014 is based on an apportionment of the estimated tax charge for the full year.

The effective tax rate is 19.64% which is lower than the standard rate of 20% (2014: 21%). Taxable profit differs from the profit as reported in the Group Statement of Comprehensive Income because it excludes items of income and expense that are taxable or deductible in other years and it further excludes items that are never taxable or deductible.  The Chancellor has announced a reduction in the main rate of UK corporation tax to 20% effective from 1 April 2015 enacted on 2 July 2013. This will reduce the Group's future current tax charge accordingly. The deferred tax liability has been calculated based on a rate of 20% substantively enacted at the balance sheet date.

5.     Earnings per share

Earnings per share have been calculated based on the profit attributable to ordinary shareholders of £3,875,277 (six months ended 30 April 2014: profit of £3,671,086) and the weighted average number of shares in issue of 19,128,725 (2014: 18,909,774). Diluted earnings per share are based on the aggregate weighted average number of shares and all potential shares adjusted for their proposed issue price, of 19,356,042 (2014: 19,148,773).

6.     Held for sale assets   

Held for sale assets relates to a freehold property that has been redeveloped and is being marketed for sale.

7.     Share capital

During the current period a total of 232, 277 (2014: 192,505) shares were issued with an aggregate nominal value of £58,069 (2014: £48,127) fully paid up for equivalent cash of £676,301 (2014: £468,876). Included in these issues were 53,470 (2014: 40,423) shares allotted to shareholders exercising their rights to receive dividends under the Company's scrip dividend scheme and 178,807 shares (2014: 152,082) allotted to relevant holders exercising options in the Company. No other shares (2014: nil) were allocated during the period. As at 30 April 2015 a total of 19,340,696 shares are in issue (2014: 19,042,672).

8.     Dividends

During the period ended 30 April 2015 an amount of £1,300,240 (2014: £1,177,373) was charged to reserves in respect of equity dividends paid. An interim dividend of 3.70p per share (2014: 3.40p) will be paid on 31 October 2015 to shareholders on the register on 25 September 2015. New elections to receive Scrip Dividends should be made in writing to the Company's Registrars before 15 October 2015.

9.     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 access 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 Agricultural, Specialist Retail 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 Retail - Supplies of a wide range of specialist products to farmers, smallholders and pet owners

Other - Miscellaneous operations not classified as agriculture or specialist retail

The Board assesses the performance of the operating segments based on a measure of operating profit. Finance income and costs are not included in the segmental result that is assessed by the Board.

Other information provided to the Board is measured in a manner consistent with that in the financial statements. Inter-segmental transactions are entered into under the normal commercial terms and conditions that would be available to unrelated third parties.

The Board has assessed the movement in net assets within each operating segment and notes that there has been no material differences compared to the previous year.

The segment results for the period ended 30 April 2015 are as follows:

		Agriculture	Specialist Retail	Other	Total
		£'000s	£'000s	£'000s	£'000s
Unaudited for the six months ended 30 April 2015:
Revenue		147,334	53,176	46	200,556
Segment result		2,225	2,850	(126)	4,949
Share of result of associate & joint ventures		-	-	-	-
		2,225	2,850	(126)	4,949
Interest income					21
Interest expense					(148)
Profit before tax					4,822
Taxation					(947)
Profit for the period attributable to shareholders					3,875
Unaudited for the six months ended 30 April 2014 :
Revenue		171,503	50,809	180	222,492
Segment result		2,352	2,584	(73)	4,863
Share of result of associate & joint ventures		-	-	-	-
		2,352	2,584	(73)	4,863
Interest income					26
Interest expense					(188)
Profit before tax					4,701
Taxation					(1,030)
Profit for the period attributable to shareholders					3,671
Audited for the year ended 31 October 2014 :
Revenue		308,711	104,617	230	413,558
Segment result		3,476	4,798	117	8,391
Share of result of associate & joint ventures		326	77	133	536
		3,802	4,875	250	8,927
Interest income					52
Interest expense					(378)
Profit before tax					8,601
Taxation					(1,904)
Profit for the year attributable to shareholders					6,697

10.  Other operating income

	Unaudited as at 30 April 2015	Unaudited as at 30 April 2014	Audited as at 31 October 2014
	£'000s	£'000s	£'000s
Rental income	185	145	375
Profit / gain on sale of lease	-	136	136
Other operating income	-	-	77
Other operating income	185	281	588

11.  Business combinations

On 12 January 2015 the Group completed the purchase of the goodwill and certain assets of Ross Feed Limited, a supplier of agricultural and hardware goods based in Ross-on-Wye, Herefordshire.

Details of the estimated asset values acquired and the provisional price paid are given below, together with the previous trading performance of the business acquired as extracted in the latest available unaudited accounts of the business.

Date of acquisition	12 January 2015
	Fair Value
	£000
Plant and equipment	19
Inventories	116
Goodwill	312
Total fair value of acquisition	447
Consideration paid as follows:
Net cash paid on completion and confirmation of Net Asset values following complete completions	387
Fair value of contingent consideration to be paid after one year completion	60
Total fair value of  acquisition	447

The final consideration to be paid is subject to the financial performance of the acquired business in the period from acquisition to 1 January 2016. Management believe the maximum consideration of £60,000 to be the Fair Value of the deferred consideration payable.

The Directors have considered whether any specific intangibles can be identified within the value paid for goodwill.

Revenue in the year to 30 June 2014, being the latest complete information available, was £1,044,000 and profit on ordinary activities before tax in that year was £123,000.  The acquisition of the business extends the Group's geographic trading area and farmer customer base, as well as adding an additional outlet to the Group's Country Store Chain.

12.  Cash and cash equivalents  and bank overdrafts

	Unaudited as at 30 April 2015	Unaudited as at 30 April 2014	Audited as at 31 October 2014
	£'000s	£'000s	£'000s
Cash and cash equivalents per balance sheet	91	2,860	8,990
Bank overdrafts	(3,206)	(7,040)	(601)
Cash and cash equivalents per cash flow statement	(3,115)	(4,180)	8,389

13.  Cash generated (used in)/generated from operations

		Unaudited six months  ended 30 April 2015	Unaudited  six months ended 30 April 2014	Audited  year ended 31 October 2014
		£'000s	£'000s	£'000s
Profit for the period		3,875	3,671	6,697
Adjustments for:
Taxation		947	1,030	1,796
Depreciation of tangible fixed assets		1,298	1,270	2,509
Amortisation of  intangibles		6	4	10
(Profit) on disposal of property, plant and equipment		(146)	(64)	(171)
Interest income		(21)	(26)	(52)
Interest expense		148	188	378
Share of results of joint ventures and associate		-	-	(428)
Share based payment expenses		177	24	99
Changes in working capital (excluding effects of acquisitions and disposals of subsidiaries)
Decrease in short term loan to joint ventures		-	100	265
(Increase)/ decrease in inventories		(1,055)	(6,736)	844
(Increase)/ decrease in trade and other receivables		(15,305)	(15,533)	2,522
Increase/ (decrease) in payables		2,698	10,688	(2,696)
Cash (used in)/ generated from operations		(7,378)	(5,384)	11,773

During the six months to 30 April 2015, the Group purchased property, plant and equipment of £1,516,000 (2014: £973,000) of which £809,000 (2014: £260,000) relates to assets acquired under finance leases.

14. Other reserves

Included in Other reserves are share-based payments: the group issues equity-settled share-based payments to certain employees. Equity-settled share-based payments are measured at fair value at the date of the grant. The fair value determined at the grant date of the equity-settled share-based payments is expensed on a straight-line basis over the vesting period, based on the Group's estimate of shares that will eventually vest.

The Group operates a number of share option and Save As You Earn schemes and fair value is measured by use of a recognised valuation model. The expected life used in the model has been adjusted, based on management's best estimate, for the effects of non-transferability, exercise restrictions and behavioural considerations.

At 30 April 2015, the ESOP Trust, which is consolidated within the Group's financial statements, held 77,256 Wynnstay Group Plc shares. The resulting impact has been a £380,000 decrease in the other reserves figure as shown in the condensed consolidated statement of changes in equity.

15. Group financial commitments

As at 30 April 2015, the Group's contingent liabilities in respect of bank guarantees for one of its joint ventures amounted to £125,000 (2011: £125,000).

16. Capital commitments

As at 30 April 2015 the Group had capital commitments as follows:

	Unaudited as at 30 April 2015	Unaudited as at 30 April 2014	Audited as at 31 October 2014
	£'000s	£'000s	£'000s
Contracts placed for future capital expenditure not provided in the financial statements	262	1,007	598

17. Related parties

Transactions between the Company and its subsidiaries, which are related parties have been eliminated on consolidation and are not disclosed in this note. Transactions between the Group and its joint ventures and associate are described below:

	Transaction value			Balance outstanding
	Unaudited Six months ended 30 April 2015	Unaudited Six months ended 30 April 2014	Audited Year ended 31 October 2014	Unaudited As at   30 April 2015	Unaudited As at  30 April 2014	Audited As at 31 October 2014
	£'000s	£'000s	£'000s	£'000s	£'000s	£'000s
Sales of goods to Joint ventures and associate	14,928	11,772	24,954	7,563	4,459	2,086
Purchases of goods from Joint ventures and associate	6,052	8,114	15,052	1,676	7,452	394
Interest receivable from Joint ventures and associate	-	-	67	-	-	-
Loans with joint ventures	-	-	-	2,802	2,967	2,802

Sales of goods to related parties were made at the Group's usual list prices, less average discounts. Purchases were made at market price discounted to reflect the quantity of goods purchased and the relationship between parties.

 

END

 

 

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