Interim Results
Wynnstay Group PLC
28 June 2004
28 June 2004
WYNNSTAY GROUP PLC
(Agricultural products and services Group)
MAIDEN UNAUDITED INTERIM RESULTS
for the six months ended 30 April, 2004
• Admission to AIM and placing to raise £1.5m achieved in May 2004
• Turnover rose by 30% to £58.5m (2003: £45.0m)
• Profit before tax increased to £1.8m (2003: £1.0m)
• Net assets strong at £19.3m (2003: £13.5m)
• Integration of farmers' co-operative, Eifionydd Farmers Association,
progressing well
- strengthens group in all key trading areas
• Good performances from three core divisions - Feeds, Arable and Stores
- higher grain prices benefited arable and grain trading businesses
- good growth in beef and poultry feed sales
- store sales benefiting from enlarged product range - especially equine
& pet products
• Continuing investment in feeds manufacturing plant in Powys and seeds
processing facility in Shrewsbury
- supporting plans to expand sales and widen offering
Bernard Harris, managing director of Wynnstay, commented,
'We are progressing well with our strategy to grow both organically and by
acquisition . Rationalisation is due in our industry and we believe that we are
particularly well placed to play an active part. Our move to AIM supports our
corporate ambitions to grow substantially over the next few years and we have
set ourselves an initial goal of achieving sales of £150 million.
One of the fundamental strengths of the Group is its broad range of agricultural
activities. This diversified approach will enable us to continue to develop
successfully.'
Press enquiries:
Wynnstay Group plc Bernard Harris, managing director T: 020 7448 1000 today
Paul Roberts, finance director Thereafter: 01691 828512
Biddicks Katie Tzouliadis T: 020 7448 1000
Kathryn van der Kroft
W.H. Ireland Limited Laurie Beevers T: 0161 832 6644
WYNNSTAY GROUP PLC
CHAIRMAN'S INTERIM STATEMENT
As shareholders are aware, the major event in recent months was Wynnstay's
successful admission to AIM and placing to raise £1.5m in May. These results
therefore are our first as a quoted company and I am pleased to report that
despite volatile market conditions, Wynnstay's performance over the six months'
period has been excellent.
Turnover for the six months to 30 April 2004 rose by 30% to £58.5m (2003:
£45.0m), with sales rising in all principal business areas. Eifionydd Farmers
Association ('EFA'), the farmers' co-operative we acquired in August last year,
contributed £7.7m to the group's turnover. Profit before tax increased to £1.8m
(2003: £1.0m); last year's results were affected by an exceptional item of
£585,000. Basic earnings per share were 16.7p compared to 9.35p in the
corresponding period last year.
The group's net assets now stand at £19.3m. This includes a goodwill element of
£1.6m, relating to EFA. The fair value of the consideration for the transaction
was re-assessed in accordance with accountancy standard FRS7. Current balance
sheet value now equates to 244p per share (net of EFA FRS7 goodwill, 223p per
share).
It is important to note that our continuing successful development partly arises
from the composition of the group. Our mix of related businesses - feeds,
arable and stores - ensures that Wynnstay has a broad base and this provides us
with particular advantages in our industry and improves our risk profile. For
instance, the higher grain prices experienced across the industry throughout the
period, depressed margins in our feeds division; however it benefited both our
grain trading and arable businesses.
Dividend
In line with its current dividend policy, the Board does not intend to pay an
interim dividend but will continue with its policy of improving returns to
shareholders when the year-end results are known.
Operations
Feeds Division (Animal nutrition products and services)
Divisional sales rose by 5.6% over the period. Volumes in the ruminant sector
were particularly strong, with sales of beef feed improving by 40%, partly due
to our Celtic Pride beef scheme. Sheep feed sales also improved, with volumes
rising by 11%, helped by higher flock numbers and better prices for sheep meat.
In the poultry sector, we signed several new accounts and sales improved by 20%.
This offset the decline in pig feed sales, which are trending down because of
lower national stock numbers.
While overall volumes rose, rising raw material prices had an adverse effect on
feed margins over the period, particularly as the effects of raw material price
increases could only be partially passed on to customers. Raw material prices
have now fallen sharply and we therefore expect margins in the division to
improve in the second half.
The major part of our investment programme in the Feeds Division is focused on
our flagship feeds plant, Llansantffraid Mill, based in Powys. During the first
half, we completed the construction of a new liquids additions plant and feed
blending facility. This will enable us to widen our product offering. Sales
from Llansantffraid Mill improved during the period by 9%.
We continue to use third party feed manufacturers in Cheshire and in the South
Midlands to good effect. During the first half, we made increased use of our
subcontractors, enabling us to drive sales and enhance our market share.
Carmarthen Mill, our joint venture operation in South Wales, had an excellent
winter's production, with improved output and quality, leading to higher sales.
The raw materials trading division enjoyed an excellent period, managing its
business well in a volatile market.
Arable Division (Seed, fertiliser and agro-chemicals)
Early fertiliser sales were excellent and we are continuing to grow our share of
the national market. We are now one of only three major national distributors
for Kemira GrowHow fertiliser and this factor, together with the
rationalisation of Kemira's customer base, will bring ongoing benefits to the
group.
The seed division made further progress, with substantial increases in sales of
maize, herbage and pulse seeds. We are close to completing the construction of
new warehousing and seed storage facilities at our plant in Astley Park in
Shrewsbury and expect these new facilities to be ready for use at the end of
July.
Higher grain prices helped our agro-chemical sales and the reduction in the set
aside acreage has also improved trading conditions for us.
Our grain trading arm, Shropshire Grain, continues to develop both its supply
and customer base. It turned in another excellent performance, also benefiting
from the higher grain prices.
Stores Division (24 stores principally in North and Mid Wales, and Shropshire)
The Stores Division enjoyed an excellent half-year and exceeded both its sales
and profit budgets. Excluding the contributions from our acquisitions last
year, sales grew by 11%, on a comparative basis. Our acquisitions have bedded
down well and have strengthened our presence in our chosen regions. Sales growth
was strong in our core agricultural business, where hardware volumes increased
by 16% and animal health care products rose by 7%. Sales were also strong in our
retail business, with equine products increasing by 22% and pet products by 11%.
During the period, we strengthened our retail team with the recruitment of
experienced supply chain management and purchasing staff. The integration of the
Eifionydd Farmers stores, acquired in August 2003, is continuing. The addition
of these stores has improved our buying power and utilisation of the central
distribution facility based at Astley, near Shrewsbury.
Joint Ventures and Associate Companies
Joint Ventures
• Wyro Developments Limited
Our property joint venture commenced work on a development near Newtown, Powys,
where we completed the purchase of a second tranche of land. This development
will ultimately provide 100 houses for sale across two sites. Early indications
of demand are very positive. Planning permission has been granted for the
redevelopment of a redundant company site in North Wales which should begin
during the second half of the year.
• Youngs Animal Feeds
Our joint venture equine and pet distribution business has enjoyed another
excellent performance during the period. It has benefited from new product
launches for its Molichop high fibre equine feeds, which have been well received
in the market. Youngs is constructing a new plant for Molichop production,
which is expected to be completed during the Autumn. The plant will be the most
advanced and largest of its kind in the UK, and is targeted to supply the high
fibre equine feed sector which is the fastest growing segment of the market.
Youngs continues to bring significant supply chain benefits to the group's
stores, for both pet and equine products.
• Welsh Feed Producers Limited
We are now in the strong position to develop this business further, especially
given ABF's decision to exit ruminant feed manufacture in the U.K. We will be
working closely with our partners, Clynderwen and Cardiganshire Farmers, to
reduce costs and improve sales in an increasingly important milk production
area.
Associate Companies
• Frank Rowe Ltd
Our associate business is a large-scale producer of cut flowers and pot plants
and has made considerable progress during the period, gaining additional
business from multiple retailers, particularly for pot plants. Facilities,
acquired during last year, have been further developed to improve the production
of cut flowers for multiple retailers.
• Wynnstay Fuels
Our associate fuels business has opened a new operating depot at one of the
former Eifionydd Farmers sites in North Wales, and has already gained
substantial business from the customer base that we inherited through the
acquisition. Higher fuel prices have also resulted in improved earnings for the
business.
Outlook
In the second half of the financial year, we expect feed margins to improve
substantially as ingredient prices fall, particularly grain prices. Demand for
feed remains on budget.
There are still considerable integration benefits to come from the acquisitions
of last year and our broad base of activities continues to be of considerable
benefit. We also continue to gain new customers in most of the markets in which
we operate.
Wynnstay's AIM flotation will bring on-going benefits to the group and we
believe we have a strong base on which to build and achieve our stated aim of
increasing group sales to £150m per annum within the next five years.
May I thank all shareholders, particularly those who are new to our company, and
customers for their continuing support. I am also deeply indebted to my fellow
directors and staff for all their efforts, particularly for the momentous task
of gaining our AIM quotation, which involved a huge amount of extra work, over
and above normal duties.
Improving shareholder value is our primary goal. I believe during this half
year, we have made huge strides and shareholders can be assured that the Board
will continue to do all in its power to develop the company for the benefit of
all stakeholders.
J. E. Davies
Chairman
WYNNSTAY GROUP PLC
GROUP PROFIT & LOSS ACCOUNT
For the six months ended 30th April 2004
Unaudited Unaudited Audited
six months Six months year
ended ended ended
30th April 30th April 31st October
2004 2003 2003
Notes £'000 £'000 £'000
Turnover 58,515 45,040 85,010
Cost of sales (48,628) (36,708) (69,009)
Gross profit 9,887 8,332 16,001
Selling and distribution costs (7,483) (6,229) (12,979)
Administrative expenses (494) (457) (769)
Exceptional administrative costs 3 0 (585) (585)
Operating profit 1,910 1,061 1,668
- share of profits in joint ventures & associates 0 0 229
Profit on ordinary activities before interest 1,910 1,061 1,897
- net interest payable (79) (35) (93)
Profit on ordinary activities before taxation 1,831 1,026 1,804
Tax on profit on ordinary activities 4 (530) (306) (552)
Profit on ordinary activities after taxation 1,301 720 1,252
Dividends 0 0 (331)
Profit on ordinary activities after tax 1,301 720 921
Earnings per share 5
- headline 16.70p 9.35p 16.34p
- fully diluted 11.07p 7.52p 13.69p
WYNNSTAY GROUP PLC
GROUP BALANCE SHEET
as at 30th April 2004
Unaudited as at Unaudited as at Audited as at
30th April 30th April 31st October
2004 2003 2003
Note £'000 £'000 £'000
Fixed assets
Intangible 6 2,296 652 601
Tangible 8,335 6,054 8,445
Investments 1,665 1,380 1,616
12,296 8,086 10,662
Current assets
Stocks 7,890 4,878 7,228
Debtors 20,275 14,876 14,229
Cash at bank and in hand 4 3 1,903
28,169 19,757 23,360
Creditors: amounts falling due within one
year (20,525) (13,711) (17,141)
Net current assets 7,644 6,046 6,219
Total assets less current liabilities 19,940 14,132 16,881
Creditors: amounts falling due after more
than one year (520) (571) (585)
Provisions for liabilities and charges (167) (99) (167)
Net assets 19,253 13,462 16,129
Capital and reserves
Called up share capital 7 1,973 1,922 1,948
Share premium account 1,574 1,428 1,428
Reserves 11,614 10,112 10,313
Loan Stock conversion reserve 6 4,092 0 2,440
Shareholders' funds 19,253 13,462 16,129
WYNNSTAY GROUP PLC
GROUP CASH FLOW STATEMENT
For the six months ended 30th April 2004
Unaudited Unaudited Audited
six months six months Year
ended ended ended
30th April 30th April 31st October
2004 2003 2003
Note £'000 £'000 £'000
Cash flow from operating activities 8 (4,894) 1,312 5,605
Returns on investments and servicing of
finance (79) (35) (82)
Taxation (149) (300) (540)
Capital expenditure and financial
investment (405) (964) (1,944)
Acquisition and disposal (135) (512) (605)
Equity dividends paid (331) (302) (302)
Cash inflow before use of liquid resources
and financing (5,993) (801) 2,132
Financing - Issue of shares 172 159 184
(Decrease)/Increase in debt (157) (464) (657)
(Decrease)/Increase in cash in the period (5,978) (1,106) 1,659
RECONCILIATION OF NET CASH FLOW TO MOVEMENT IN
NET DEBT
£000 £000 £000
(Decrease)/Increase in cash in the period (5,978) (1,106) 1,659
Cash inflow from increase in debt and leasing
finance 157 464 657
Change in net debt resulting from cash flows (5,821) (642) 2,316
Loans and finance lease acquired with
subsidiary 0 (258) (821)
New finance lease and debt (104) (220) (984)
Movement in net debt in the period (5,925) (1,120) 511
Opening net debt (888) (1,399) (1,399)
Closing net debt (6,813) (2,519) (888)
WYNNSTAY GROUP PLC
NOTES TO THE UNAUDITED INTERIM STATEMENT
1. Basis of preparation
The interim report was approved by the Board of Directors on 25 June 2004.
The financial information contained in this Interim Report has been prepared on the basis of the
accounting policies set out in the Group's audited accounts for the year ended 31st October 2003.
The financial information for the six months ended 30th April 2004 and for the six months ended 30th
April 2003 is unaudited.
The financial information for the Group set out above does not constitute 'statutory accounts' within
the meaning of Section 240 of the Companies Act 1985. The information for the year ended 31st October
2003 has been extracted from the statutory accounts of Wynnstay Group plc for that year which received
an unqualified audit report and have been delivered to the Registrar of Companies.
2. Admission to the Alternative Investment Market of the London Stock Exchange
On 24 May 2004, Wynnstay Group plc was admitted to the Alternative Investment Market of the London
Stock Exchange. At that time, the Company issued an additional 789,500 new ordinary shares of £0.25
each at £1.90 per share by way of a private placing.. After the expenses of the admission, net
proceeds of the placing amounted to £1,087,000.
3. Exceptional items
The exceptional item in 2003 related to an increase in the provision for bad debts, required as a
result of the appointment of an administrative receiver at Brandons plc, a large customer of the
Group's Feed Division.
4. Taxation
The tax charge for the six months to 30th April 2004 is based on an apportionment of the estimated tax
charge for the full year.
5. Earnings per share
Earnings per share have been calculated based on the profit on ordinary activities after taxation of
£1,300,630 (£719,640) and the weighted average number of shares in issue adjusted for the share
sub-division of 7,790,532 (7,689,732). Fully diluted earnings per share are based on the total of
shares in issue, staff options and shares anticipated to be issued following conversion of the
convertible loanstock of 11,751,920 (9,566,120).
WYNNSTAY GROUP PLC
NOTES TO THE INTERIM STATEMENT (continued)
6. Intangible assets
Intangible assets represent purchased Goodwill which is being amortised over the estimated life
of each transaction. In accordance with FRS 7, a revised fair value assessment has been made as
at the 30th April 2004 of the purchase consideration for the Eifionydd Farmers transaction. This
re-assessment is required due to the consideration being in the form of convertible loanstock,
the fair value of which fluctuates with the price of the Company's shares until the loanstock is
actually converted into ordinary shares in the Company. The conversion period is 1st September
2005 to 31st August 2006. The revised fair value has created an additional goodwill asset of
£1,652,000, which has been amortised in this period by £41,300. An equivalent adjustment has
been made to the loanstock redemption reserve.
7. Share capital
At the Company's annual general meeting on 25th March 2004, it was resolved to sub-divide the
10,000,000 issued and unissued ordinary shares of £1 each in the capital of the Company into
40,000,000 ordinary shares of £0.25 each ranking pari passu in all respects with each other.
8. Reconciliation of operating profit to operating cashflows
£000s £000s £000s
Operating profit 1,910 1,061 1,897
Profit on disposal of fixed assets 0 0 (25)
Depreciation and amortisation 587 462 1,192
Group share of associates and joint
ventures operating profit 0 0 (229)
Loans made to joint venture (1,957) 0 0
Write down in value of investment 0 0 25
Movement in stock (662) (140) (579)
Movement in debtors (4,088) (1,684) 706
Movement in creditors (684) 1,613 2,618
Net cash inflow from operating activities (4,894) 1,312 5,605
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