Wynnstay Group PLC Annual Report 2014

ANNUAL REPORT & ACCOUNTS 2 0 1 4

Wynnstay Group Plc

SPRING CEREAL SEEDS 2015

Strategic Report

Contents Wynnstay Group manufactures and supplies agricultural products to farmers and the wider rural community in Wales, the Welsh border counties, the Midlands, Lancashire and Yorkshire.

The Group operates two core divisions, Agriculture and Specialist Retail which includes the country stores business and the dedicated pet product stores.

Additionally the Group has interests in Joint Ventures and an Associate Company.

Financial Highlights

Delivering sustainable growth on a solid foundation 3

Governance

STRATEGIC REPORT Principal Activities and Business Model

4

Group Strategy

5

Chairman’s Statement

6

Chief Executive’s Review

10

Finance Review

14

Key Performance Indicators and Risk Management

17

Financial Statements

GOVERNANCE Advisors and Board

18

Directors’ Report

20

Corporate Governance Statement

22

Directors’ Remuneration Statement

24

Independent Auditor’s Report

28

Shareholder Information

FINANCIAL STATEMENTS Consolidated Statement of Comprehensive Income

30

Consolidated and Company Balance Sheet

31

Consolidated and Company Statement of Changes in Equity

32

Consolidated and Company Cash Flow Statement

33

Principal Accounting Policies

34

Notes to the Financial Statements

38

SHAREHOLDER INFORMATION

2

Notice of Annual General Meeting

64

Notes to Notice of Annual General Meeting

65

Financial Calendar

66

www.wynnstay.co.uk

2014

2013

£413.56 million

£413.48 million

35.28 pence

36.43 pence

Shareholders’ Funds

£77.23 million

£71.55 million

Group EBITDA

£11.37 million

£11.51 million

Group Pre-Tax Profit*

£8.60 million

£8.46 million

Dividend per Share

10.20 pence

9.30 pence

Group Revenue Earnings per Share

Strategic Report

Financial Highlights

* Group pre-tax profits include the Group’s share of pre-tax profit from joint ventures and associate investments, but excluding the exceptional costs.

Wynnstay Group Plc

ANNUAL REPORT 2014

Financial Statements Shareholder Information

8.60 2014 10.20 2014

8.46 2013 9.30 2013

7.82 2012 8.50

6.94 7.80 2011

7.10 2010

2009

2014

2013

6.50

(2013: 9.30p)

+9.68%

2012

2011

27.48 2010

26.42 2009

-3.16%

35.28

10.20p

(2013: 36.43p)

36.43

35.28p

34.99

Dividend per Share (pence)

30.23

Earnings per Share (pence)

2012

5.20

5.95 2010

2014

2013

2012

2011

2009

346.18

+1.65%

243.74 2010

214.95 2009

+0.02%

(2013: £8.46m)

2011

£8.60m

(2013: £413.48m)

413.56

£413.56m

413.48

Group Pre-Tax Profit* (£m)

375.78

Group Revenue (£m)

Governance

Growth Record

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Strategic Report

Principal Activities and Business Model

Governance

The Group principally operates as a leading supplier of agricultural products and services in the rural economy with the extension of activities to include specialist pet products in selected urban locations. There are two complementary divisions, Agriculture and Specialist Retail, further strengthened by the involvement in Joint Ventures and an Associate Company. By recognising the importance of quality, value and advice the Group strives to be the “supplier of choice” for its customer base.

Agriculture

Specialist Retail

The Agriculture Division covers the manufacturing and supply of a comprehensive range of agricultural inputs to customers throughout Wales, the West Midlands, Lancashire and Yorkshire.

Our Retail Division covers the supply of specialist agricultural and retail products to customers throughout Wales, the Midlands and Lancashire.

Feed Division

Wynnstay Stores

The Feed Division, which operates two compound feed mills and one blending plant, offers a full range of animal nutrition products to the agricultural market. The location of the mills allows for logistically efficient delivery of our products throughout our trading area, third party mills are also used to satisfy additional seasonal and geographic requirements. Both mills are multi species allowing the business to provide a broad range of products to service the requirements of ruminant and monogastric animals.

The rural retail outlets are well established and provide a comprehensive range of products for farmers and rural dwellers. The stores, which now number 42, operate throughout Wales, the West Midlands and Lancashire, and supply a wide range of specialist products to farmers, smallholders and pet owners. Our dedicated team are happy to help customers with technical advice on all aspects of the wide range of products available. Our increased diversity complements our core agricultural business, acting as an important route to market for pharmaceutical companies with whom the Group works closely to provide specialist professional advice to livestock farmers.

Financial Statements

Glasson, which operates from Glasson Dock near Lancaster has traditionally been a raw materials trader and fertiliser blender. Glasson’s activities now include the packaging of added value products supplied to specialist animal feed retailers. The business is also involved in a joint venture, FertLink, which has production facilities at Birkenhead and Goole.

Arable Division

Just for Pets

The Arable Division supplies a wide range of products to arable and grassland farmers throughout the trading area. The Group is recognised as a significant supplier of fertiliser, acting as a principle supplier of GrowHow and Yara products together with our own Top Crop brand of fertiliser. Seed is processed in Shropshire at the arable base as well as at Woodheads Seeds in Yorkshire. Agrochemicals are supplied to complete the range of products.

Just for Pets, which is based in Hartlebury in Worcestershire, currently has 20 specialist pet product stores operating on busy retail sites throughout the West Midlands extending east to Cambridge and south to Bristol. All stores offer a wide range of pet related products and are recognised as convenient one stop shops for all pet owners. Our staff have considerable experience within the pet sector and a significant proportion are qualified to offer specialist advice to pet owners. Two stores have an easipetcare concession offering veterinary clinic advice and services to customers; this is further complimented by vaccination clinics in six of our other stores.

Shareholder Information

GrainLink, the Group’s in-house grain marketing company, 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 throughout our trading area.

Woodheads Seeds operates a seed processing plant, near Selby in Yorkshire, supplying a full range of cereal and herbage seeds to farmers and wholesale customers. The Company also trades grain and supplies fertiliser to farmers in its trading area.

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Youngs Animal Feeds Youngs Animal Feeds manufactures equine and small animal feeds from its production facility at Standon in Staffordshire. It also acts as a distributor of products to the equine market through wholesalers and retailers in the west of the UK.

www.wynnstay.co.uk

The Group has a broad based business model supplying a full range of products to a wide customer base. Its activities are supported by positive macro-economic factors including, a growing world population and dietary change which is creating an increased demand for food products. The UK government has recognised the strategic importance of food production and promotes moves for greater productivity and selfsufficiency within the agricultural industry.

These factors create a sustainable market for products and services provided by the Group and gives opportunity for further development of the business model. However, the Board has always recognised that the natural processes involved in food production will create risks to certain enterprises at different times, either through climatic, disease, economic or other factors. The Group’s strategy is designed to minimise such risks through ensuring a broad and balanced spread of activities across the main agricultural input areas, rather than relying on any specific single enterprise. This strategy has provided resilience for the Group during periodic commodity volatility.

The main markets that the Group operates in are currently supplied by a relatively fragmented base. This provides a strong platform for the development of the business, which has a long track record of both organic and acquisitive growth. The Board is confident that with the expertise, balance sheet strength, and

Corporate goals have been identified to monitor the strategic success and value of the business to all stakeholders.

Corporate Goals Customers – the Group seeks to excel in terms of value, quality and service.

Employees – the Group aims to attract, develop and reward high calibre personnel, and ensure a safe, interesting and productive environment to work in, thus encouraging the highest levels of customer service.

Governance

Operational Strategy

enthusiasm of staff available to the business, the consolidation strategy successfully carried out for a number of years can continue. The strategy of continued geographic expansion and organic growth, by focusing on product innovation and efficiency of supply, is designed to optimise returns to all stakeholders.

Shareholders – the Group aims to maximise net worth through a progressive dividend policy and a financial performance that supports capital growth in share value.

Suppliers – the Group wishes to provide the best marketing route, thereby procuring preferential terms and offering better value for its customers.

Business review and future developments A review of the business and future developments of the Group are presented in the Chairman’s Statement and Chief Executive’s Review. A discussion of the principal risks and uncertainties faced by the Group are provided later in this section of the annual report.

Financial Statements

The Group seeks to excel in terms of value, quality and service

The Group is committed to becoming a leading supplier of products and services in the rural and wider economy.

Strategic Report

Group Strategy

Shareholder Information

Locations

Wynnstay Group Plc

ANNUAL REPORT 2014

5

Strategic Report

Chairman’s Statement Overview Wynnstay has performed well during the year, with increased profits and the successful integration of recent acquisitions aiding the expansion of our Specialist Retail Division. The variable climatic conditions experienced over the past few years have created volatility in the agricultural market.

This has been evident in a significant variation in yields of agricultural outputs, ultimately leading to a reduction in commodity pricing over the last twelve months.

Governance

Diversified activities balance volatility

Wynnstay’s diversified spread of agricultural activities helps balance the effect of volatility within its markets. The benefit of Wynnstay’s cross-sector activities has been particularly evident in the year under review, which saw a movement of income between the two halves of the financial year and indeed within different sectors of the Group.

Overall Group pre-tax profits increased to £8.60m year-on-year, a record high. Revenues of £413.56m were similar to the prior year reflecting both the increase in trading activity and price deflation across the sector.

Financial Statements

Deflation was particularly evident within the Agricultural Division where, despite an overall increase in volumes of trade, revenues reduced by 4% to £308.71m. Operating profit reduced to £3.80m mainly as a result of margin pressure on agricultural inputs and lower than expected market activity in fertiliser and grain in the second half of the year, a reduction which affected the sector as a whole.

Our Specialist Retail Division, which includes the agriculturally-biased Wynnstay Stores, Just for Pets and Youngs Animal Feeds, performed well during the year. Revenue increased by 16% to £104.62m boosted by the Carmarthen & Pumsaint Farmers business (“CPF”) acquired in October 2013. Operating profit increased by 10% to £4.88m. Wynnstay Stores now operates from 42 outlets, forming an essential link between farmer customers and our Agricultural Division.

Financial Results Shareholder Information

Revenues for the year to 31 October 2014 were similar to the previous year at £413.56m (2013: £413.48m). The Agricultural Division contributed £308.71m (2013: £323.00m) to the total, with commodity price deflation significantly affecting its result. The Specialist Retail Division contributed £104.62m (2013: £90.19m), with the year-on-year increase mainly driven by a first full year’s contribution from the CPF acquisition, which was completed in October 2013.

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Group pre-tax profit was £8.60m (2013: £8.46m prior to £0.35m of exceptional costs relating to the CPF acquisition and £8.11m after exceptional costs). The operating profit contribution from the Agricultural Division, including joint ventures, showed a year-on-year reduction at £3.80m (2013: £4.90m). This decrease primarily reflected margin pressure from lower market demand across core product categories. Including joint ventures the Specialist Retail Division contributed an operating profit of £4.88m (2013: £4.43m), with the CPF acquisition performing ahead of initial expectations. Other activities showed an operating profit of £0.25m (2013: loss of £0.39m) benefiting from improved joint venture contributions.

Net finance charges amounted to £0.33m (2013: £0.48m) due to reduced average net debt. After a Group taxation charge of £1.90m (2013: £1.94m), net earnings were 8.5% higher year-on-year at £6.70m (2013: £6.17m). This equates to 35.28p per share (2013: 36.43p). There was an increased number of shares in issue in the year following the fund raising in September 2013 to acquire the CPF business.

Net assets at 31 October 2014 were 8% higher at £77.23m or £4.07 per share (2013: £71.55m or £4.22 per share).

Strong cash flow produced a net cash position at the year end of £2.75m (2013: net debt £2.49m), with commodity deflation contributing to an improved working capital position and cash utilisation.

The return on net assets was 11.3% (2013: 12.1%), with the reduction mostly attributable to the additional capital raised towards the end of last year for the acquisition of CPF, from which further integration benefits are still expected.

Group Reorganisation We completed the Group restructuring prior to the commencement of trading for the 2013/14 financial year, transferring the existing trading activities conducted through Wynnstay Group Plc into our trading subsidiary, Wynnstay (Agricultural Supplies) Limited which was initially established to effect our acquisition of the CPF business.

This internal reorganisation has created a holding company and six trading subsidiaries which conduct the commercial activity of the business.

Accordingly, the Company’s financial statements reflect the reorganisation.

www.wynnstay.co.uk

Strategic Report

Dividend The Board is pleased to propose the payment of a final dividend of 6.80p per share (2013: 6.20p), representing a rise of 9.7% year-on-year. This, together with the interim dividend of 3.40p per share, paid on 31 October 2014, takes the total dividend for the year to 10.20p, an increase of 9.7% on the prior year (2013: 9.30p).

The final dividend will be paid on 30 April 2015 to shareholders on the register on 27 March 2015.

Subject to shareholder approval, a scrip dividend alternative will continue to be available as in previous years. The last date for election for the scrip dividend will be 16 April 2015.

factors, including increasing global food demand, should drive a return to more realistic prices.

Wynnstay is well placed to meet the short term challenges, with its broad spread of activities across the sector continuing to produce sustainable results, and we remain confident about the Group’s prospects. Our strategy of a combination of organic and acquisitive growth will continue, aided by our strong balance sheet and record of successful business acquisitions.

Strong balance sheet and record of successful business acquisitions

In July 2014, we were delighted to welcome Howell Richards to the Board as a Non-executive Director. He has over thirty years experience of the agricultural industry and practical experience of the commercial challenges in UK farming today, having established one of the largest dairy farms in the UK. Wynnstay will benefit from his knowledge and expertise.

Governance

The Board Jim McCarthy Chairman 20 January 2015

Financial Statements

Non-executive Director, Jeff Kendrick, retired from the Group at Wynnstay’s AGM in March 2014 and I would like to express the Board’s thanks once again for his tremendous contribution over 25 years of service. We also announce today that Lord Carlile will be retiring from the Board and the Company at the Group’s forthcoming AGM. Lord Carlile has added significant value as a Nonexecutive Director for over 16 years and Wynnstay has greatly benefited from his experience and wise counsel. We intend to make another Nonexecutive appointment in due course.

Colleagues All colleagues at Wynnstay show great dedication and commitment both to the Group and our customers. On behalf of the Board, I express our appreciation and gratitude; – Wynnstay’s success is the product of everyone’s hard work, passion and dedication.

Outlook

Wynnstay Group Plc

ANNUAL REPORT 2014

Shareholder Information

Long term prospects for the UK agricultural industry remain buoyant despite the short term issues which have arisen as a result of the decline in output prices. The industry remains cyclical, mainly driven by climatic conditions, with the resultant price volatility. While output prices for our farmer customers are currently weak, especially for the dairy sector, macro-economic

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Strategic Report

Datganiad y Cadeirydd Trosolwg Mae Wynnstay wedi perfformio’n dda yn ystod y flwyddyn, gan gynyddu elw, a llwyddo i integreiddio caffaeliadau diweddar gan gynorthwyo ehangiad ein Hisadran Manwerthu Arebnigol. Mae’r amodau hinsoddol amrywiol a gafwyd dros y blynyddoedd diwethaf wedi creu ansefydlogrwydd yn y farchnad amaethyddol. Mae hyn wedi bod yn amlwg mewn gwahaniaethau sylweddol ym meintiau’r allbynnau amaethyddol, gan arwain at ostyngiad mewn prisiau nwyddau dros y deuddeg mis diwethaf.

Governance

Amrywiaeth o weithgareddau yn cydbwyso ansefydlogrwydd

Mae amrywiaeth o weithgareddau amaethyddol Wynnstay yn helpu i gydbwyso effaith yr ansefydlogrwydd o fewn ei farchnadoedd. Mae budd gweithgareddau traws-sector Wynnstay wedi bod yn hynod o amlwg yn y flwyddyn dan sylw, a welodd symud mewn incwm rhwng dwy hanner y flwyddyn ariannol ac, yn wir, o fewn ^ sectorau gwahanol y Grwp.

^ i Cynyddodd elw cyn treth cyffredinol y Grwp £8.60m o flwyddyn i flwyddyn, sef y lefel uchaf erioed. Roedd refeniw o £413.56m yn debyg i’r flwyddyn flaenorol gan adlewyrchu ar y cynnydd mewn gweithgareddau masnachu a dadchwyddiant mewn prisiau ar draws y sector.

Financial Statements

Roedd dadchwyddiant yn hynod o amlwg o fewn yr Isadran Amaethyddiaeth lle gwelwyd gostyngiad mewn refeniw o 4% i £308.71m, er y cynnydd cyffredinol mewn meintiau masnachu.

Gostyngodd elw gweithredu i £3.80m, yn bennaf o ganlyniad i bwysau ymylol ar fewnbynnau amaethyddol a gweithgaredd y farchnad yn is na’r disgwyl yng ngwerthiant gwrtaith a grawn yn ystod ail hanner y flwyddyn. Dyma ostyniad a effeithiodd ar y sector gyfan.

Shareholder Information

Perfformiodd ein Hisadran Manwerthu Arbenigol, sy’n cynnwys siopau amaethyddol eu naws, Wynnstay Stores, Just for Pets a Youngs Animal Feeds, yn dda yn ystod y flwyddyn. Cynyddodd refeniw 16% i £104.62m a hybwyd gan fusnes Carmarthen & Pumsaint Farmers (“CPF”) a gaffaelwyd ym mis Hydref 2013. Cynyddodd elw gweithredu 10% i £4.88m. Mae Wynnstay Stores bellach yn gweithredu o 42 o allfeydd, gan greu cysylltiad hanfodol rhwng cwsmeriaid sy’n ffermwyr a’n Hisadran Amaethyddiaeth.

Canlyniadau Ariannol Roedd refeniw ar gyfer y flwyddyn hyd at 31 Hydref 2014 yn debyg i’r flwyddyn flaenorol o £413.56m (2013: £413.48m). Cyfrannodd yr Isadran Amaethyddiaeth £308.71m (2013: £323.00m) i’r cyfanswm, gyda dadchwyddiant mewn prisiau

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nwyddau yn effeithio ar y canlyniad yn sylweddol.

Cyfrannodd yr Isadran Manwerthu Arbenigol £104.62m (2013: £90.19m), gyda chynnydd o flwyddyn i flwyddyn yn cael ei lywio’n bennaf gan gyfraniad blwyddyn lawn gyntaf o gaffael CPF, a gwblhawyd ym mis Hydref 2013.

^ yn £8.60m (2013: Roedd elw cyn treth y Grwp £8.46m cyn £0.35m o gostau eithriadol yn ymwneud â chaffael CPF a £8.11m ar ôl costau eithriadol). Dangosodd y cyfraniad elw gweithredu o’r Isadran Amaethyddol, gan gynnwys mentrau ar y cyd, ostyngiad o flwyddyn i flwyddyn o £3.80m (2013: £4.90m). Roedd y gostyngiad hwn yn adlewyrchu’n bennaf y pwysau o ran elw o alw is yn y farchnad ar draws categorïau cynnyrch craidd.

Cyfrannodd yr Isadran Manwerthu Arbenigol, gany gynnwys mentrau ar y cyd, elw gweithredu o £4.88m (2013: £4.43), gyda chaffael CPF yn perfformio’n well na’r disgwyliadau cychwynnol.

Gwnaeth gweithgareddau eraill elw gweithredu o £0.25m (2013: colled o £0.39m) gan elwa ar gyfraniadau mentrau ar y cyd gwell.

Cyfanswm y taliadau cyllid net oedd £0.33m (2013: £0.48m) o ganlyniad i ddyled net gyfartalog ^ o £1.90m (2013: llai. Ar ôl tâl trethiant y Grwp £1.94m), roedd enillion net, sef £6.70m (2013: £6.17m), 8.5% yn uwch o flwyddyn i flwyddyn Mae hyn yn cyfateb i 35.28c fesul cyfranddaliad (2013: 36.43c). Roedd cynnydd yn nifer y cyfranddaliadau a gyhoeddwyd yn y flwyddyn ar ôl codi arian ym mis Medi 2013 er mwyn caffael busnes CPF. Roedd yr asedau net ar 31 Hydref 2014 8% yn uwch ar £77.23m neu £4.07 fesul cyfranddaliad (2013: £71.55m neu £4.22 fesul cyfranddaliad).

Roedd llif arian cryf wedi cynhyrchu sefyllfa arian parod net o £2.75m ar ddiwedd y flwyddyn (2013: dyled net o £2.49m), gyda dadchwyddiant mewn nwyddau yn cyfrannu at sefyllfa cyfalaf gweithio well a defnydd gwell o arian.

Roedd yr adenillion ar asedau net yn 11.3% (2013: 12.1%), gyda’r gostyngiad i’w briodoli’n bennaf i’r cyfalaf ychwanegol a godwyd tuag at ddiwedd y flwyddyn flaenorol wrth gaffael CPF, lle y mae disgwyl manteision integreiddio pellach.

^ Ad-drefnu’r Grwp ^ cyn Gwnaethom gwblhau ailstrwythuro’r Grwp dechrau masnachu ar gyfer y flwyddyn ariannol 2013/14 gan drosglwyddo’r gweithgareddau masnachu presennol a gynhaliwyd drwy’r Wynnstay Group Plc i’n his-gwmni masnachu, Wynnstay (Agricultural Supplies) Cyfyngedig a gafodd ei sefydlu’n gyntaf er mwyn i ni allu caffael busnes CPF.

www.wynnstay.co.uk

Difidend Mae’n bleser gan y Bwrdd gynnig talu difidend terfynol o 6.80c fesul cyfranddaliad (2013: 6.20c) sy’n gynnydd o 9.7% o flwyddyn i flwyddyn.

Mae hyn, ynghyd â’r difidend interim o 3.40c fesul cyfranddaliad, a dalwyd ar 31 Hydref 2014, yn creu cyfanswm difidend o 10.20c ar gyfer y flwyddyn, sy’n gynnydd o 9.7% o gymharu â’r flwyddyn flaenorol (2013: 9.30c).

Caiff y difidend terfynol ei dalu ar 30 Ebrill 2015 i gyfranddalwyr sydd ar y gofrestr ar 27 Mawrth 2015. Yn amodol ar gymeradwyaeth cyfranddalwyr, bydd difidend sgrip amgen ar gael o hyd, fel yn y blynyddoedd blaenorol. Y dyddiad olaf ar gyfer dewis cael difidend sgrip fydd 16 Ebrill 2015.

Strategic Report

Rhagolwg Mae’r rhagolygon hirdymor ar gyfer amaethyddiaeth yn y DU yn parhau i fod yn fywiog er y problemau tymor byr o ganlyniad i’r gostyngiad ym mhrisiau cynnyrch. Mae’r diwydiant yn parhau i fod yn fusnes cylchol, a gaiff ei lywio gan yr hinsawdd yn bennaf, gyda chyfnewidioldeb prisiau o ganlyniad i hynny. Tra bod prisiau cynnyrch ar gyfer ein cwsmeriaid sy’n ffermwyr yn wan ar hyn o bryd, yn enwedig ar gyfer y diwydiant llaeth, dylai ffactorau economaidd macro, gan gynnwys galw cynyddol am fwyd yn y byd, arwain at ddychwelyd i brisiau mwy realistig.

Mae Wynnstay mewn lle da i gyflawni’r sialensau tymor byr, gyda’i amrywiaeth eang o weithgareddau ar draws y sector yn parhau i gynhyrchu canlyniadau cynaliadwy, ac rydym yn ^ Y parhau i fod yn hyderus am ragolygon y Grwp. bwriad yw parhau are ein strategaeth o gyfuniad o dwf organig a thwf drwy gaffael, a gynorthwyir gan ein mantolen gref a’n hanes o gaffael busnesau llwyddiannus.

Mantolen gref a’n hanes o gaffael busnesau llwyddiannus

Governance

Mae’r ad-drefnu mewnol hwn wedi creu cwmni daliannol a chwe is-gwmni masnachu sy’n cynnal gweithgarwch masnachol y busnes. O ganlyniad, mae datganiadau ariannol y Cwmni yn adlewyrchu’r ad-drefnu.

Y Bwrdd

Jim McCarthy Cadeirydd 20 Ionawr 2015

Financial Statements

Ym mis Gorffennaf 2014, roeddem yn falch iawn o groesawu Howell Richards i’r Bwrdd fel Cyfarwyddwr Anweithredol. Mae ganddo dros 30 mlynedd o brofiad yn y diwydiant amaethyddol ynghyd â phrofiad ymarferol o heriau masnachol y byd ffermio yn y DU heddiw, gan iddo sefydlu un o’r ffermydd llaeth mwyaf yn y DU. Bydd ei wybodaeth a’i arbenigedd o fudd i Wynnstay.

Ymddeolodd y Cyfarwyddwr Anweithredol, Jeff ^ yng Nghyfarfod Cyffredinol Kendrick, o’r Grwp Blynyddol Wynnstay ym mis Mawrth 2014 a hoffem ar ran y Bwrdd, ddiolch iddo unwaith eto am ei gyfraniad aruthrol dros 25 mlynedd o wasanaeth. Rydym hefyd yn cyhoeddi heddiw y bydd yr Arglwydd Carlile yn ymddeol o’r Bwrdd a’r Cwmni yng Nghyfarfod Cyffredinol Blynyddol ^ nesaf y Grwp.

Mae’r Arglwydd Carlile wedi ychwanegu gwerth sylweddol fel Cyfarwyddwr Anweithredol am dros 16 blynedd ac mae ei brofiad a’i gyngor doeth wedi bod o fudd mawr i Wynnstay. Rydym yn bwriadu gwneud penodiad Anweithredol arall maes o law.

Cydweithwyr

Wynnstay Group Plc

ANNUAL REPORT 2014

Shareholder Information

Mae holl gydweithwyr Wynnstay yn dangos ^ ac llawer o ymroddiad ac ymrwymiad i’r Grwp i’n cwsmeriaid. Ar ran y Bwrdd, hoffwn ddatgan ein gwerthfawrogiad a’n diolchgarwch; - mae llwyddiant Wynnstay yn ganlyniad i waith caled, brwdfrydedd ac ymroddiad pawb.

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Strategic Report

Chief Executive’s Review Introduction

Governance

Resilience in a volatile market

Wynnstay has demonstrated resilience in a market which has seen a high degree of volatility over the past two years. The Group’s results are pleasing and in line with overall management expectations, with a robust second half contributing to a record annual profit before tax of £8.60m. Whilst revenue of £413.56m is flat year-on-year, the trading backdrop was markedly different to the comparable period last year, with price deflation, falling output prices and a significant variation in weather conditions, particularly between the two winter periods.

However the broad business base has once again provided a buffer against the challenges arising from the varied trading conditions during the year, and we are gaining market share across a number of sectors.

2014 was a year of both consolidation and investment to support further organic growth.

In particular, we completed the integration of recent acquisitions, including CPF purchased in October 2013, which made its first and higherthan-budgeted contribution to Group profitability in the second half of the year.

While output prices for our farmer customers remain a concern for the sector in the short term, long term prospects remain strong with the anticipated increase in demand continuing to be a feature of the well-accepted macro factors.

Review of Activities Agriculture The Agricultural Division generated £308.71m of revenue, a 4.4% decrease year-on-year, reflecting a change in product mix and price deflation.

Operating profits reduced to £3.80m after two years of strong results (2013: £4.90m). This reduction resulted from margin pressure across the Division’s raw material, fertiliser and seed activities which was experienced throughout the year. More broadly, results for the year also reflected the mild weather conditions of the winter, which contrasted significantly to those experienced in the prior year, as well as the subdued market conditions for agricultural outputs which affected trading activity in the second half of the year. A return to more normal weather patterns after the winter benefited crop production, resulting in good grazing and forage production for livestock farmers as well as high yields for many arable units.

Feed Products

Financial Statements

The business manufactures feed for the poultry and ruminant markets, and trades raw materials within the sector. Our broad spread of feed activities minimises the risk of exposure to any specific market segment and acts as a buffer against market volatility.

Shareholder Information

Demand for ruminant feed has been lower this year against the prior year, mainly due to the mild weather in the winter and spring, and lower milk prices reduced demand from dairy farmers.

However, whilst overall feed volumes for the year reduced by 2%, sales in the second half were strong, showing an increase over the equivalent period in 2013. There was a notable rise in sales of blended products which offset reduced sheep feed volumes in early spring. Our investment in production facilities has enabled efficiencies to be gained during the year contributing to an improved performance in manufactured feeds.

Glasson Operating its own port facilities at Glasson Dock, near Lancaster, the Glasson business is a long standing supplier of raw materials

10

www.wynnstay.co.uk

The arable division has developed well over recent years despite the poor weather conditions in 2012 and 2013. The Group is recognised as one of the major seed processors in the UK, and sales of cereal and herbage seed over the year reached record levels, reflecting high volumes in the autumn. However, margins came under pressure, largely as a result of the reduction in grain prices across the industry.

Fertiliser sales in the arable division increased by 19% year-on-year, incrementally benefiting from CPF’s first full year’s contribution. Demand was buoyant in the spring as farmers embraced ideal growing conditions but tempered in the autumn, with reduced margins, reflecting the pattern experienced by our Glasson business.

The UK grain harvest has been good in 2014 reaching the expectations previously indicated.

While this brings opportunity for the GrainLink and Woodheads grain trading teams, the fall in grain prices in the autumn to levels last seen in 2008 has meant that farmers have been reluctant to sell. We therefore expect a high proportion of the volume will be marketed during the 2015 financial year.

Specialist Retail The Specialist Retail Division, which comprises Wynnstay Stores, Just for Pets and Youngs Animal Feeds, performed well during the year.

Total revenues increased by 16% to £104.62m, with operating profit rising by 10% to £4.88m.

Wynnstay Group Plc

ANNUAL REPORT 2014

Strategic Report

Wynnstay Stores

The CPF stores were fully integrated during the year and made a good contribution in the second half. We also acquired Mansell Powell Supplies, a small agricultural business operating from Pontrilas in Herefordshire, and completed the relocation of our Llanfair Caereinion store in Mid Wales to a larger site, enabling us to offer a broader range of products to farmers and other local customers. Since the year end, we have added two further stores. In November 2014, we opened an outlet in Aberystwyth, an area not fully serviced previously and, in January 2015, acquired Ross Feed, a business selling a wide range of agricultural and smallholder products operating in Ross-on-Wye. This latest acquisition takes our stores total to 42 and further extends our geographic reach, in line with our strategic plans for the business.

Total stores revenues, including CPF stores, increased by 25% over the prior year. On a likefor-like basis, sales increased by 2% excluding adjustment for deflation in feed products. This result is particularly pleasing given the strong performance in the previous year which benefited from the very high feed demand during the extended winter period.

As we focus on the requirements of farmers, the retail team continues to investigate new products which can aid farmer efficiency. The new products we have introduced include large-scale ventilation and lighting systems for dairy units, and we have also further extended the range of our agricultural hardware products. Our new product initiatives have been well received and contributed to the stores’ performance this year.

Our focus on innovation continues and the Group is launching a comprehensive Dairy Catalogue containing over 3,000 products for the dairy industry. Both the expansion of our product range

Governance

The Wynnstay Stores chain of rural retail outlets, which now has 42 stores, including seven CPF outlets, provides a wide range of products for farmers and rural dwellers.

Total stores revenues, including CPF stores, increased by 25%

Financial Statements

Arable Products

These results benefited from the first full year’s contribution from CPF, with the business moving into profitability in the second half as expected.

CPF’s network of stores in South West Wales has now been fully integrated, strengthening our offering in this region. Just for Pets has seen pleasing like-for-like growth reflecting increased activity within the chain.

Shareholder Information

to the agricultural wholesale market. It also manufactures specialist products for wholesale merchants and processes fertiliser for both direct sale and to the wholesale sector. After two years of outperformance, this year’s contribution from Glasson was below the level of both prior years.

This reflected reduced margins across both Glasson’s raw materials trading and fertiliser activities. Volumes in raw materials however were buoyant as feed manufacturers sourced alternative raw materials to replace UK grain which was in short supply following the poor 2013 harvest. Fertiliser sales increased during the year within the Glasson and the FertLink joint venture business although sales in the latter part of the year were lower as farmers held back from buying for the 2015 cropping year. Demand for specialist products remains strong and the business continues to develop within this market.

11

Strategic Report

Chief Executive’s Review (continued)

Governance

Global food demand should drive a return to more acceptable prices

and this new dairy initiative will support our long term strategy to expand into new geographic trading areas as well as increase our penetration within our existing regions.

Just for Pets Just for Pets, our chain of pet product outlets, has seen the benefit of the marketing initiatives implemented over the past two years as consumer sentiment has improved. Average spend increased over the period, contributing to a 4.5% increase in like-for-like sales for the year. Sales at our Yardley outlet benefited from our decision to transfer the trade from the Acocks Green store since both operated within a similar retail catchment area.

Just for Pets focuses strongly on customer service and has received many awards recognising the quality of the staff and outlets in the Just for Pets chain. The number of outlets currently stands at 20 stores and we expect to open an additional outlet in the spring of 2015.

Youngs Animal Feeds

The Group benefits from the contribution of an associate business, Wynnstay Fuels, and a number of joint venture businesses, including Bibby Agriculture, Wyro, GeoGen, FertLink and Total Angling. All businesses have performed in line with management expectations and continue to make a valuable contribution to the Group.

Staff I would like to take this opportunity to recognise the commitment of all our staff to the continued development of the Group. Wynnstay’s success is based on the hard work, dedication and skills of all staff and I would like to record my personal appreciation and thanks.

I would also like to add my thanks both to Jeff Kendrick who retired from the Group in 2014 and to Lord Carlile who will be retiring at the forthcoming AGM. At the same time, I am delighted to welcome Howell Richards who joined Wynnstay as a Non-executive Director in July 2014.

Shareholder Information

Financial Statements

Youngs manufactures and distributes a range of equine products for distribution by specialist outlets across the centre of the UK. The business has performed well, maintaining its position in the market.

Joint Ventures and Associates

12

www.wynnstay.co.uk

Strategic Report

Outlook Output prices for our farmer customers have changed significantly over the last year and remain a concern especially for the dairy sector.

This, combined with the reform changes to the Common Agricultural Policy, will bring further changes to the agricultural industry including some short term challenges. However, the macro economic factors remain compelling as we see continued growth in world demand for food and energy, which should allow output prices to return to a more acceptable level, bringing renewed vigour to the sector.

Governance

The broad base to the Group gives a degree of resilience during the more challenging times and the business is well placed to offer the products and services required for an efficient agricultural industry. In line with our strategic plans for growth, we will be investing in our IT and management systems over the coming year to support the Group’s continuing development. Overall the agricultural sector remains strong and the Group’s broad spread of activities forms a solid foundation for continued development of the business and sustainable returns for all stakeholders.

Financial Statements

I look forward to providing an update on trading at Wynnstay’s AGM in March. For those able to attend our AGM please be aware that we have a new venue for 2015, Lion Quays Hotel and Spa, Weston Rhyn, Oswestry, Shropshire, SY11 3EN.

Shareholder Information

Ken Greetham Chief Executive 20 January 2015

Wynnstay Group Plc

ANNUAL REPORT 2014

13

Strategic Report

Finance Review Finance Review Group Structure

Governance

Last year we announced that the Group had established a new subsidiary, Wynnstay (Agricultural Supplies) Limited, which was used as the acquisition vehicle for the Carmarthen & Pumsaint Farmers (“CPF”) transaction on the 1 October 2013. Prior to the commencement of trading of the 2013/14 financial year, the existing trading activities previously conducted through Wynnstay Group Plc were “hived down” into this new trading subsidiary, so that all similar business was then conducted within the same trading entity. This left the Group with a more typical corporate structure of a holding Company, Wynnstay Group Plc, which has investments in six wholly owned trading subsidiaries, namely;

Financial Statements

Group pre-tax profit, which includes the Groups share of pre-tax profits from joint

Shareholder Information

ventures and associate investments was £8.60m

•

Wynnstay (Agricultural Supplies) Limited, an agricultural merchant.

•

Glasson Grain Limited, a feed and fertiliser merchant.

•

GrainLink Limited, a grain merchant.

•

Woodheads Seeds Limited, a seed and grain merchant.

•

Just for Pets Limited, a pet products retailer.

•

Youngs Animal Feeds Limited, an equine and pet products distributor.

Additionally Wynnstay Group Plc holds investments in the principal joint ventures and the associate Company outlined in Note 17 in the accounts, and certain other property and investment assets.

This change will be noted in the Company results of the attached financial statements, which now reflects this new role as a holding entity rather than a trading company.

Trading Results The financial performance of the business over the last year has been impacted by significant factors outside the control of the Group including; commodity price volatility, a mild and shortened winter, and reducing farm incomes particularly

Group revenue was £413.56m (2013: £413.48m), of which £308.71m (2013: £323.00m) came from Agriculture, which experienced generally lower selling prices across the year as a result of commodity price deflation. Average manufactured feed prices, for example were some £14 per tonne lower across the year, while fertiliser and grain prices averaged falls of £22 and £46 per tonne respectively. Our Specialist Retail operations produced revenue of £104.62m (2013: £90.19m), with most of the increase relating to a full year contribution from the CPF acquisition. However both retail chains also experienced like for like sales growth, with 2.0% achieved in the Country Stores and 4.5% at Just for Pets Limited.

The Group pre-tax profit, which includes the Group’s share of pre-tax profits from joint ventures and associate investments, was £8.60m (2013: £8.46m prior to £0.35m of exceptional costs relating to the CPF acquisition and £8.11m after exceptional costs). Net finance charges amounted to £0.33m (2013: £0.48m), which resulted in Group operating profit, inclusive of joint venture and associate contributions, of £8.93m (2013: £8.94m excluding exceptional item and £8.59m after exceptional item). Of this total, Agriculture Division contributed £3.80m (2013: £4.90m) and the Specialist Retail operations £4.87m (2013: £4.43m). Other activities, which includes the charge for Group share based payment costs, contributed a profit of £0.25m (2013: loss of £0.39m), primarily as a result of improved joint venture income.

Group Earnings before Interest, Tax, Depreciation and Amortisation (EBITDA) was £11.37m (2013: £11.51m before exceptional costs), and was made up as follows:

£millions

2014

2013

Profit before taxation

8.49

8.02

Share of tax incurred by joint ventures

0.10

0.09

Interest

0.33

0.48

Depreciation and freehold land impairment

2.51

2.52

Intangible amortisation

0.01

-

Profit on disposal of fixed assets

(0.17)

(0.13)

Share-based payments

0.10

0.18

-

0.35

11.37

11.51

Exceptional costs EBITDA 14

from falling milk and grain prices. Whilst these factors have acted to reduce revenue and profitability in our Agriculture Division, previous acquisition and development activity in our Specialist Retail and other operations have balanced the negative factors to allow the overall business to once again report record results in terms of Group pre-tax profitability.

www.wynnstay.co.uk

The Group’s tax charge of £1.90m (2013: £1.94m) represented 22.1% (2013: 23.9%) of the Group pre-tax profit, and again has benefited from the reduction in general corporation tax rates and the related reduction in deferred tax provisions.

However it remained above the pro-rata standard rate for the period of 21.8% (2013: 23.4%) primarily as a result of certain cost items not being deductible for tax purposes. Actual tax cash payments in the year were £2.27m, (2013: £2.04m) which included accelerated instalment payments at Glasson Grain, and initial quarterly payments on account of the current year for the new trading subsidiary Wynnstay (Agricultural Supplies) Limited.

Group net assets, inclusive of goodwill, at the year end amounted to £77.23m (2013: £71.55m).

Based on the weighted average number of shares in issue during the year of 18.981m, (2013: 16.941m) this represented a net asset value per share of £4.07 (2013: £4.22). During the financial year the share price traded in a range between a low of £5.44 in October 2014 and a high of £6.81 in March 2014.

Basic earnings per share were 35.28p (2013: 36.43p), based on a weighted average number of shares in issue during the year of 18.981m (2013: 16.941m). The Board proposes to recommend the payment of a final dividend of 6.80p per share to be paid on the 30 April 2015, which when added to the interim dividend of 3.40p per share paid on the 31 October 2014, makes a total of 10.20p for the year (2013: 9.30p), an increase of 9.7%.

The total dividend is expected to be covered 3.44 times (2013: 3.65 times) by earnings, and represents the seventh consecutive year that the Board has been able to raise the dividend by over 8%.

Net asset value per share of £4.07

Lower commodity prices, which restricted revenue growth, had a beneficial impact on working capital utilisation during the year, and as at the year end, enabled lower levels of inventories and trade receivables to be reported. This was partially offset by lower trade payables, but still resulted in an improvement in Net Working Capital, which is defined as, the net of inventory, trade and other receivables and trade and other payables, which at the year end was £31.1m (2013: £31.8m).

Financial Statements

Earnings Per Share and Dividend

Capital investment in fixed assets amounted to £3.06m (2013: £3.02m) and £0.20m (2013: £nil) was invested in goodwill when the Group acquired the trade of Mansell Powell Supplies in Pontrilas. Additionally a further small amount of £0.09m (2013: £0.13m) was invested during the year to enhance the Pwllheli development which continues to be marketed as an investment sale.

Strategic Report

Balance Sheet

Governance

Taxation

Share Capital

Wynnstay Group Plc

ANNUAL REPORT 2014

Shareholder Information

During the year a total of 258,252 (2013: 2,108,136) new ordinary shares were issued for a total equivalent cash amount of £0.711m (2013: £9.836m). A total of 195,282 (2013: 357,406) shares were issued in relation to the exercise of employee share options for a total consideration of £0.321m (2013: £0.801m). The remaining 62,970 (2013: 68,488) shares were issued to existing shareholders exercising their right to receive dividends in the form of new shares under the Company’s scrip dividend scheme for a total equivalent cash value of £0.390m (2013: £0.333m). No other shares were issued during the year. During the previous financial year there was a private institutional placing of new shares in which 1,682,242 shares were issued at a price of £5.35 per share, raising a net of expenses total of £8.702m. These funds were primarily used to fund the acquisition of the CPF business, with the surplus being applied for general corporate purposes.

15

Strategic Report

Finance Review (continued) Cashflow, Net Cash and Banking Facilities

However this strong cash position at the year end should be noted as representing the traditional seasonal trough of the Group’s working capital cycle, and as the business moves into the more usual heavy trading patterns of the winter and

Key Performance Indicators and Risk Management Details of Key Performance Indicators and the risks and uncertainties for the business are given in the Strategic Report on page 17.

Paul Roberts Finance Director 20 January 2015

Shareholder Information

Financial Statements

Governance

A total positive movement in funding in the year of £5.24m resulted in the net debt position at the beginning of the year of £2.49m being converted into a net cash position of £2.75m at the year end

Continued cash generation from trading, together with the working capital improvement mentioned above, has again produced another year of strong positive cashflow from operating activities, which was £9.18m (2013: £10.44m).

Total net cash investment, excluding assets acquired under finance leases amounted to £2.22m (2013: £6.38m, including acquisitions).

New equity finance, primarily this year from scrip dividends and employee options, was raised of £0.71m (2013: £9.84m). After the payment of £1.82m (2013: £1.47m) in dividends to shareholders, term debt repayments of £2.85m (2013: £2.54m), and new loans drawn of £0.27m (2013: £0.90m) there was a net increase in cash and cash equivalents in the business of £3.27m (2013: £10.79m increase). When added to the net reduction in term and other existing non liquid debts of £2.24m (2013: £1.41m) and accounting for the new loan of £0.27m (2013: £0.90m) a total positive movement in funding in the year of £5.24m (2013: £11.30m) was achieved. This resulted in the net debt position at the beginning of the year of £2.49m being converted into a net cash position of £2.75m at the year end.

spring, short term borrowings will again be required to finance peak trading activities. The Board continues to prioritise the maintenance of adequate banking facilities to accommodate unexpected commodity price volatility. Continued strong support from the Group’s primary bankers, HSBC, has enabled new facilities, on improved terms, to be offered and we expect these to be in place for use from April 2015, and which will include a significant proportion on a committed term basis. The Board believes projected overall debt will remain well within these new arrangements, which will replace all existing working capital facilities, which currently amount to £18.5m.

16

www.wynnstay.co.uk

EBITDA: Group pre-tax profit, including share of pre-tax profits of joint ventures and associates and profit on fixed asset disposals, before interest, taxation, depreciation, fixed asset impairment charges and share based payments.

Earnings per Share: Profit for the year after taxation divided by the weighted average number of shares in issue during the year excluding any shares held by the Group’s Employee Share Ownership Trust.

Return on Net Assets: Group pre-tax profit, including share of pre-tax profits of joint ventures and associates before intangible and amortisation, share-based payment charges or exceptional costs, divided by the balance sheet net asset value.

Net Asset per Share: The balance sheet net asset value, divided by the weighted average number of shares in issue during the year, excluding any shares held by the Group’s Employee Share Ownership Trust.

Risk Management Risks and uncertainties for the business are classified into two main categories, Financial and Operational. The Board monitor such risks and have developed policies for managing the uncertainties they bring. The main elements of these controls operate in the following areas: Financial Risk Management: The Group policies for managing treasury risks are developed and approved by the Board and are designed to minimise exposure to market volatility. They include: Interest Rate – While currently most of the Group’s term debt is floating base rate linked, the Board constantly reviews its option to fix the rates attached to this debt through the use of interest rate swap derivatives. Fixed rate term finance is used for the acquisition of vehicles.

Foreign Currency – The main currency related risk to the Group arises from the forward purchasing of imported raw materials for our Glasson business. This risk is mainly managed by entering into currency purchase agreements at the time the underlying transaction is completed.

The fair value of these contracts is not material.

As at the year end the principal amounts relating to forward purchased currency amounted to £3,655,694 (2013: £2,281,000).

Commodity Price - While the Group does not engage in the taking of speculative commodity positions, it does have to make significant forward

Wynnstay Group Plc

ANNUAL REPORT 2014

Credit – A significant proportion of the Group’s trade is conducted on credit terms and as such a risk of non payment is always present. Detailed systems of credit approval before initial supply, the operation of credit limits and an active credit control policy act to minimise this risk and historically the incidence of bad debts is low. The grain trading business has exposed the Group to certain substantial customer credit balances, and to assist in mitigating this perceived risk, a credit insurance policy has been purchased to provide partial cover against default by certain customers.

Finance Availability – The banking crisis of recent years and fluctuating commodity prices, which can adversely impact working capital levels, demonstrate the need to ensure that adequate financial resources are available to accommodate unexpected, but foreseeable, trading patterns and conditions. The Group has historically operated with banking facilities that provide healthy headroom above the anticipated maximum requirement as projected in working capital cycle forecasts. Whilst this remains the case, the Group is currently negotiating new banking arrangements that also include a significant element of committed facilities over a five year period.

Internal Controls – As the Group operates across a number of different markets in both its Agriculture and Specialist Retail segments, strong internal controls are required to ensure the business is not exposed to financial irregularities or losses that are not readily identifiable. Such controls include policies for the proper authorisation of the procurement of all products and services, and the sanctioning of expense expenditure and employment costs.

These policies are principally controlled by the Management Boards of the operating subsidiaries of the Group, who meet on a regular and routine basis. The Group Chief Executive and Finance Director attend all these meetings and undertake business and financial reviews of subsidiary activity with particular attention paid to the monitoring of actual performance against budget.

Operational Risk Management: Trading concerns are regularly reviewed in routine Management Board meetings of the operating subsidiaries of the Group, with conclusions reported to the Board. Existing identified risks include : Customer Loss and Competition – There is a constant risk of customer loss from increasing competition in the agricultural sector as the industry continues to consolidate with certain participants growing significantly over the last twelve months. The Group continues to counter this risk by pursuing a sensible growth strategy to increase its market share primarily through

Manufacturing Productivity – Much of the Group’s feed business is conducted on a customer “made to order” basis. This requires sophisticated order processing, manufacturing and delivery systems, as low lead times can provide a competitive advantage. The breakdown of any of these systems, through mechanical fault, weather and traffic disruption, or computer malfunctions and errors can create the risk of order fulfilment failure. The Group protects against this through the operation of multiple supply points, with third party manufacturing arrangements in place, and the back up of all IT systems supported with a disaster recovery plan. The increasing use of Customer Relationship Management (CRM) systems allow for higher levels of pre-emptive order processing encouraging customer retention.

Governance

Revenue: The invoiced value of sales from the Group’s activities, measured at a fair value net of all rebates and excluding value added tax.

geographic expansion and acquisitions. The Group specifically seeks to maintain a broad spread of activities across the main agricultural input areas to minimise threats affecting any particular farming enterprise. Significant investment continues in the Company’s sales channels, both in terms of the traditional direct teams and new trading desk facilities.

Supply Chain Efficiency – The Group’s considerable inventories both in the retail businesses and as raw materials for the manufacturing activities are vital to the success of the organisation, and disruption to this supply would damage revenue streams. To minimise this risk, the Group operates partnership relationships with as many suppliers as possible which endeavour to ensure that optimum stock levels are maintained in Group warehouses, in wholesaler locations or within committed supplier facilities.

A project team is currently working to optimise stock turn ratios while ensuring adequate availability through challenging seasonal cycles.

Financial Statements

The performance of the business is regularly monitored against Key Performance Indicators (KPI’s), (the results for which are reported in the Chairman’s Statement on page 6 and 7. These indicators are defined as follows:

purchases of certain raw materials, particularly for use in its animal feed manufacturing activities.

Position reporting systems are in place to ensure the Board is appraised of the exposure level on a regular basis, and where possible hedging tools, primarily wheat futures contracts on the London LIFFE market, are used to manage price decisions.

Reputation – The Group’s trading philosophy is to seek to be the “Supplier of Choice” to its customers. To achieve this, a reputation for quality products, service and value for money must be maintained. Through a comprehensive employee Information and Consultation policy, all members of staff and local management are tasked with enhancing the Group’s reputation in the eyes of customers and all other stakeholders of the business. The Group’s corporate plan is communicated to management at various levels within the business to facilitate a strong understanding of the ethos and culture necessary for continued success.

Fraud – More difficult general economic circumstances may increase the risk of fraud being perpetrated on the Group. The Board has recognised this increased risk, and continually reviews internal systems and controls, addressing areas of identified weaknesses including any matters raised as part of the Group audit process.

Shareholder Information

Key Performance Indicators

Strategic Report

Key Performance Indicators and Risk Management

Our 2014 Strategic Report from pages 4 to 17 has been reviewed and approved by the Board of Directors on the 20 January 2015.

Paul Roberts Finance Director 17

Strategic Report

Advisers

Shareholder Information

Financial Statements

Governance

DIRECTORS

SECRETARY

COMPANY NUMBER

REGISTERED OFFICE

AUDITOR

PRINCIPAL BANKERS

NOMINATED ADVISOR & STOCKBROKER

REGISTRARS

SOLICITORS

18

J J McCarthy J C Kendrick (retired 18 March 2014) Lord Carlile CBE QC B P Roberts K R Greetham D A T Evans P M Kirkham H J Richards (appointed 14 July 2014) B P Roberts

2704051

Eagle House Llansantffraid-ym-Mechain Powys SY22 6AQ

KPMG LLP 8 Princes Parade Liverpool L3 1QH

HSBC Plc Corporate Banking Centre 3 Rivergate Bristol BS1 6ER

Shore Capital Limited Bond Street House 11 Clifford Street London W1S 4JU

Neville Registrars Limited Neville House 18 Laurel Lane Halesowen West Midlands B63 3DA

Harrisons Solicitors LLP 11 Berriew Street Welshpool Powys SY21 7SL

DWF LLP 5 St Paul’s Square Liverpool L3 9AE

www.wynnstay.co.uk

avid Andrew Thomas Evans D (age 46)

Chairman

Retail Director

J im joined the Board in July 2011 and was appointed chairman of the Group in November 2013.

He has a wealth of corporate and management experience from a background in the retailing industry which spans over 38 years. He is currently Chief Executive Officer of Poundland Limited.

ndrew joined the Board in 2008 A and has executive responsibility for all the Group’s retail activities.

He is also a dairy farmer in Mid Wales.

L ord Carlile CBE QC (age 66)

Philip Michael Kirkham (age 57)

Vice-Chairman

Senior Independent Non-Executive Director

hilip joined the Board in April P 2013. He runs a mixed farming business in the West Midlands and also has significant experience in the UK livestock sector. He is nonexecutive chairman of National Milk Records Plc and a director of Meadow Quality Ltd.

Bryan Paul Roberts (age 51)

Kenneth Richard Greetham (age 55)

Finance Director

Chief Executive

aul joined the Board in 1997 P when he also became Company Secretary. He originally joined the Company in 1987 having previously worked in the animal feed industry. He is a fellow of the Chartered Institute of Management Accountants.

en joined the Board in 2008 K when he became Chief Executive.

He joined Wynnstay in 1997 following the integration of Shropshire Grain and was responsible for the development of the Group’s arable activities.

Financial Statements

L ord Carlile joined the Board in 1998 following a period as Chairman of the Company’s Special Share Trust while he was MP for Montgomeryshire. He currently also acts as a Deputy High Court Judge and is an active member of the House of Lords

Governance

James John McCarthy (age 59)

Strategic Report

Board of Directors

Howell John Richards (age 50) Non-Executive Director

Wynnstay Group Plc

ANNUAL REPORT 2014

Shareholder Information

Howell joined the Board in July 2014. He has significant experience within the agricultural supply industry and has established a large dairy enterprise 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.

19

Strategic Report

Directors’ Report for the year ended 31 October 2014 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 2014.

in the Chairman’s Statement, Chief Executive’s Review, Strategic Report and Corporate Governance Report included within the Group’s full published Annual Report.

Wynnstay Group Plc (“the Company”) is a public limited company incorporated and domiciled in the United Kingdom under the Companies Act 2006.

Share Capital

The address of the Company’s registered office is Wynnstay Group Plc, Eagle House, LlansantffraidYm-Mechain, Powys, SY22 6AQ. The Company has its primary listing on AIM, part of the London Stock Exchange.

Governance

The Group financial statements were authorised for issue by the Board of Directors on 20 January 2015.

Further information on the activities of the business and the Group strategy are presented

The movement in the share capital during the period is detailed in note 28 to the financial statements.

Results, Dividends and Transfers to Reserves Reported under IFRS the Group profit before taxation is £8,493,000 (2013: £8,021,000). After a taxation charge of £1,796,000 (2013: £1,850,000), the Group profit for the year is £6,697,000 (2013: £6,171,000).

The Directors recommend a final ordinary dividend of 6.80p per ordinary 25p share net (2013: 6.20p per ordinary 25p share net), to be paid on 30 April 2015,

to shareholders on the register at the close of business on 27 March 2015.

The share price will be marked ex dividend with effect from the 26 March 2015. 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 2015.

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 2014 (refer to note 15) by approximately £3,980,000 (2013: £3,705,000).

Directors and their interests The Directors of the company who held office during the year and their interests in the share capital of the Company at the year end were as follows: 25p Ordinary Shares

J J McCarthy J C Kendrick (retired 18 March 2014) Lord Carlile CBE QC

Financial Statements

B P Roberts

2014

2013

SAYE Option

Discretionary Options

2014

2013

2014

2013

-

-

-

-

-

-

n/a

10,375

n/a

-

n/a

-

33,421

32,909

-

-

-

-

102,719

105,219

5,335

4,150

31,000

44,500

K R Greetham

42,725

39,969

3,784

1,413

31,000

62,000

D A T Evans

19,260

18,965

2,371

-

26,000

35,500

P M Kirkham

-

-

-

-

-

-

H J Richards (appointed 14 July 2014)

-

n/a

-

n/a

-

n/a

In addition to the above shareholdings, Mr B P Roberts and Mr K R Greetham are trustees of the Company’s Employee Share Ownership Plan trust, which at the year end held 10,494 shares (2013: nil shares).

Accordingly these directors were deemed to hold an additional non-beneficial holding in such shares.

Shareholder Information

No Director at the year end held any interest in any subsidiary or associate Company. Mr J C Kendrick (retired 18 March 2014) held an interest in Morrey Oils Limited, the controlling shareholder in Wynnstay Fuels Limited, an associate of the Group. Biographical details of the Directors are set out before the Directors’ report.

20

Directors’ Appointments and Retirements

Directors’ and Officers’ Liability Insurance

Under Article 91, Mr J J McCarthy and Mr B P Roberts retire from the Board by rotation at the forthcoming Annual General Meeting and, being eligible, offer themselves for re election. Having been appointed during the year, Mr H J Richards retires under Article 86, and, being eligible, offers himself for re-election. Lord Carlile will retire from the Board after the Annual General Meeting having reached the Board’s agreed retirement age.

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.

Employees The Group has procedures for keeping its employees informed about the progress of the business. 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

www.wynnstay.co.uk

Strategic Report

Substantial Shareholdings

At 31 October 2014, the following shareholders held 3% or more of the issued share capital of the Company: Registered Shareholder

Beneficial Holder

Ferlim Nominees Limited

8.1%

Discretionary managed funds of Investec Wealth & Investment Limited

Chase Nominees Limited

7.7%

Schroder Investment Management Limited

Europe Nominees Limited

5.3%

Polar Capital

Vidacos Nominees Limited

3.4%

Discretionary managed funds of Brown Shipley Private Bank

The Directors are not aware of any other person, Company or Group of Companies that held 3% or more of the issued share capital of the Company.

Auditor Reappointment Pursuant to section 487 of the Companies Act 2006, a resolution proposing the reappointment of KPMG LLP will be submitted to the Annual General Meeting on 24 March 2015.

Disclosure of Information to Auditor The Directors who were members of the Board at the time of approving the Directors’ Report are listed on page 19. 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.

Wynnstay Group Plc

ANNUAL REPORT 2014

The Directors are responsible for preparing the Annual Report and Accounts, Strategic Report and Directors’ Report and the financial statements in accordance with applicable law and regulations.

Company law requires the Directors to prepare Group and Parent Company financial statements for each financial year. Under that law they have elected to prepare both the Group and the Parent Company financial statements in accordance with IFRSs as adopted by the EU and applicable law. As required by the AIM Rules of the London Stock Exchange they are required to prepare the Group financial statements in accordance with IFRSs as adopted by the EU and applicable law and have elected to prepare the Parent Company financial statements on the same basis.

Under Company law the Directors must not approve the financial statements unless they are satisfied that they give a true and fair view of the state of affairs of the Group and Parent Company and of their profit or loss for that period. In preparing each of the Group and Parent Company financial statements, the Directors are required to: •

select suitable accounting policies and then apply them consistently;

•

make judgments and estimates that are reasonable and prudent;

•

state whether they have been prepared in accordance with IFRSs as adopted by the EU; and

prepare the financial statements on the going concern basis unless it is inappropriate to presume that the Group and the Parent Company will continue in business.

Governance

The Group agrees terms and conditions with suppliers before business takes place and, while there is no Group code or standard it is not Group policy to extend supplier payment terms beyond that agreed. There are no suppliers subject to special arrangements. The average credit terms for the Group as a whole based on the year end trade payables figure and a 365 day year is 42 days (2013: 42 days).

•

The Directors are responsible for keeping adequate accounting records that are sufficient to show and explain the Parent Company’s transactions and disclose with reasonable accuracy at any time the financial position of the Parent Company and enable them to ensure that the financial statements comply with the Companies Act 2006.

They have general responsibility for taking such steps as are reasonably open to them to safeguard the assets of the Group and to prevent and detect fraud and other irregularities.

Under applicable law and regulations, the Directors are also responsible for preparing a Directors’ Report, Corporate Governance Statement and Directors’ Remuneration Statement that complies with that law and those regulations.

Financial Statements

Policy for Payment of Creditors

Statement of Directors’ Responsibilities in Respect of the Annual Report and Accounts, Strategic Report and Directors’ Report and the Financial Statements

The Directors are responsible for the maintenance and integrity of the corporate and financial information included on the Company’s website.

Legislation in the United Kingdom governing the preparation and dissemination of financial statements may differ from legislation in other jurisdictions.

By order of the Board

Shareholder Information

for the Board, who consider a monthly report on developments and any incidents that may have occurred, including accidents and near misses.

Paul Roberts Finance Director 20 January 2015

21

Strategic Report

Corporate Governance Statement for the year ended 31 October 2014 The Principles of Good Governance

Governance

The Board is committed to high standards of corporate governance. The adoption and maintenance of good governance is the responsibility of the Board as a whole, who have considered the twelve principles of good practice published in the QCA Corporate Governance Guidelines for Smaller Companies updated in 2013. The Board believes that it has incorporated these principles in formulating a Corporate Governance policy appropriate to the size of the Group, and which can provide comfort for the Company’s numerous and widespread shareholder base who have the right to expect the highest possible level of standards. The Directors are pleased to provide the following information:

The Board of Directors

Shareholder Information

Financial Statements

The Board currently comprises seven directors, three of whom are executive and four nonexecutives. The roles of Chairman and Chief Executive are separated. The Chairman is nonexecutive and is elected by the whole Board on an annual basis, with Mr J J McCarthy originally being appointed to this role in November 2013.

The executive directors all have considerable experience in the agricultural supply industry and have spent much of their careers with the Group, providing a significant degree of management continuity. The non-executives bring a range of business and commercial expertise to the Board, including direct agriculture, specialist retail, legal and political skills. Mr P M Kirkham, having been appointed in April 2013 is deemed the Senior independent non-executive, and Lord Carlile, CBE QC, although having served on the Board for longer than the code recommended period of nine years, is still deemed independent through the integrity provided from his other roles, which amongst other activities include acting as a circuit judge and a government advisor on various sensitive matters. Following the retirement of Mr J C Kendrick in March 2014, Mr H J Richards joined the Board in July 2014 further strengthening the agricultural trading knowledge and independence of the Board. The Chairman is responsible for the periodic performance reviews of the Board sub-committees and non-executive directors, and has concluded that the correct balance of skills and experience is in place for the effective stewardship of the business. A formal schedule of matters requiring Board approval is maintained, and covers such areas as Group strategy, approval of financial budgets and results, Board appointments, approval of major capital expenditure and dividend policy. The Board normally meet once a month with additional

22

meetings as necessary. Directors are able, if necessary, to take independent professional advice in furtherance of their duties, at the Company’s expense. All directors and some senior members of staff have adopted a set of guidelines in regard to their responsibilities for the management and conduct of the Company. The Board believes that this structure, together with the operation of its sub-committees described below, satisfies the flexible and effective management elements of the QCA guidelines.

Board Committees Audit Committee This Committee consists of Mr P M Kirkham (Committee Chairman), Lord Carlile CBE QC and Mr J J McCarthy. The Committee meets at least three times a year with additional meetings as required. The Committee has standard terms of reference which have been formally approved by the Board, and which include the supervision of the external audit process and the effectiveness of the internal financial controls. The terms of reference further task the Committee with identifying and evaluating significant internal and external risks faced by the Company, and then making recommendations to the Board on appropriate strategies for effectively managing these risks. Such risks include:

not compromise the auditors’ independence, objectivity or integrity and complies with ethical standards. Details of such services and fees are provided in note 6 to the accounts.

Remuneration Committee This Committee of the Board consists of Mr J J McCarthy, Mr P M Kirkham and is chaired

by Lord Carlile CBE QC. The Committee meets at least once a year and has standard terms of reference in place which have been formally approved by the Board. These terms of reference include the formulation of remuneration policies for executive directors and senior managers, and the supervision of employee benefit structures throughout the Company. The Remuneration Committee met twice during the year and all committee members attended with the exception of Mr J J McCarthy at one meeting.

Nomination Committee

•

The reliability of internal and external reporting systems;

This Committee of the Board currently consists of Mr J J McCarthy, Mr K R Greetham and is chaired by Mr P M Kirkham. The Committee meets at least once a year and has standard terms of reference in place which have been formally approved by the Board. The Committee is tasked with reviewing the leadership needs of the Company and making recommendations to ensure the continuity of such leadership through the identification, evaluation and appointment of both executive and non-executive directors.

•

The safeguarding of assets inappropriate use, loss and fraud;

The Nomination Committee met four times during the year and all committee members attended.

•

Identifying and liabilities; and

•

Ensuring the business operates within all applicable legislation and uses best practice wherever possible.

properly

from

managing

The Audit Committee met three times during the year and all committee members attended, with the exception of Mr J J McCarthy at one meeting.

The Committee agreed the nature and scope of the audit with the auditor and monitored their findings. The Committee organise internal audit assignments to test the operating effectiveness of internal systems and controls. These assignments are not completed by specific internal audit employees, but appropriate members of staff. The Committee has procedures in place to enable it to meet with the auditor without the presence of the Company’s management and it formulates and oversees the Company policy on maintaining auditor objectivity and independence in relation to non audit services. The policy is to ensure that the nature of the non audit services performed or the fee income relative to the audit does

Relations with Shareholders The Board recognises the importance of communicating with its shareholders and maintains dialogue with institutional shareholders and analysts, and presentations are made when financial results are announced. Lord Carlile CBE QC is the nominated independent nonexecutive Director who makes himself available to shareholders who may require an independent contact.

The Annual General Meeting is the principal forum for dialogue with private shareholders who are given the opportunity to raise questions at the meeting. The Company aims to send out notice of the Annual General meeting at least 21 working days before the meeting. Shareholders also have access to the Company’s website at www.wynnstay.co.uk.

Going Concern The Directors have prepared the financial statements on a going concern basis, having satisfied themselves from a review of internal

www.wynnstay.co.uk

The key procedures within the control structure include: •

•

•

Managers at all levels in the Group have clear lines of reporting responsibility within a clearly defined organisational structure; Comprehensive financial reporting procedures exist with budgets covering profits, cash flows 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 structural process for appraising and authorising capital projects with clearly defined authorisation levels.

Corporate Social Responsibility 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. Social, environmental and sustainable considerations are taken into account in the formulation of polices in the following areas of activity: Human resources – the relationship nature of much of the Group’s trading activities makes it heavily dependent on the quality and efficiency of the personnel involved in the business.

People management and development is therefore critical to the success of the Group, and considerable effort and investment is put into the recruitment, training, welfare and support of all staff. The Group is committed to creating a fair, enjoyable and fulfilling work environment and has policies in place to create opportunity, prevent discrimination, encourage engagement and keep staff informed on aspects of the business.

Health and safety – the Group takes the health and safety of its staff, customers and everyone else involved with the business very seriously. All

Wynnstay Group Plc

ANNUAL REPORT 2014

Sustainability and limiting environmental impact – the business seeks to operate all activities in a sustainable manner, and management are actively encouraged to consider and minimise the environmental impact of their operations. Energy usage is recorded across the Group and reported centrally for monitoring, with individual departments tasked with efficiency improvement targets on a unit productivity basis. A significant number of capital investment projects to improve energy efficiency have been completed in recent years, including solar power generation, biomass boiler installations and capacitor controlled electric motors in the feed mills. Recycling processes operate across the Group for plastics, paper, cardboard, metal, wood, electrical equipment and used oils. Central facilities are used for the collection of these items from individual stores by the Group’s own vehicle fleet following product deliveries. Fuel efficiency is paramount in vehicle investment decisions, and mileage management is a key task for all fleet responsible personnel.

Strategic Report

Auditor Independence The Board is satisfied that KPMG LLP has adequate policies and safeguards in place to ensure that auditor objectivity and independence is maintained. The Group meets its obligations for maintaining the appropriate relationship with the external auditors through the Audit Committee whose terms of reference include an obligation to consider and keep under review the degree of work undertaken by the external auditor, other than the statutory audit, to ensure such objectivity and independence is safeguarded.

Governance

The Board of Directors has overall responsibility for the system of internal controls, including financial, operational and compliance, operated by the Group and for its effectiveness. Such a system can only provide reasonable and not absolute assurance against material misstatement or loss, as it is designed to manage rather than eliminate the failure to achieve business objectives.

the National Federation of Young Farmers Clubs in the current year. Additionally, customers at Just for Pets Limited have raised funding for the training of a fifth guide dog puppy during the year, which will bring the total amount raised over the last three years to over £30,000 for this worthy cause.

By order of the Board.

Paul Roberts Secretary 20 January 2015

Financial Statements

Internal Control

staff receive basic training and where individual roles require, additional specialist support is provided. Occupational health specialists are utilised to screen employees who operate in environments with an added risk of exposure to noise, vibration or other hazards that may cause harm. The Group and subsidiary Boards routinely consider health and safety matters and ensure adequate resources are in place to enable all personnel to fulfil their obligations in this regard. The Audit Committee considers an annual report on safety, risk and compliance management and will require appropriate action be taken where areas of concern are identified.

Reportable injuries (Riddor) during the financial year numbered two across the core Group, which was a decrease on the previous year when there were eight incidents.

Supporting the community – playing an active part in the communities in which it operates is an important concept for the management of the business. Support includes community event sponsorship, charitable donations, educational and other group visits, provision of work experience, and assistance with time and resource provision for social and charitable initiatives. The Group also supports selected research projects with local educational establishments, and has recently assisted with a piece of work at Aberystwyth University into Campylobacter contamination in the UK poultry industry. Each year the Company selects specified charities and organisations to work with, and has been pleased to support the Royal Agriculture Benevolent Institution and

Shareholder Information

budgets and forecasts and current bank facilities that the Group has adequate resources to continue in operational existence for the foreseeable future.

23

Strategic Report

Directors’ Remuneration Statement for the year ended 31 October 2014 Introductory Statement

Governance

As a Company listed on the Alternative Investment Market (“AIM”) of the London Stock Exchange, the Company is exempt from the s420 obligation of the Companies Act 2006 to prepare a Directors’ remuneration report, and the s439 obligation to put a written remuneration policy to a shareholders vote once every three years.

However the Board believe that it should operate to the highest corporate governance standards appropriate to companies of its size and resource availability. It is therefore pleased to provide the following voluntary information, and to refer to the details of the Directors’ remuneration received

during the year which can be found in Note 9 to the Accounts which is provided in accordance with AIM Rule 19. Details of Directors’ current shareholdings are provided in the shareholding section of the Directors’ report.

Board Remuneration Policy All matters relating to remuneration of the Directors of the Company are determined by the Remuneration Committee whose decisions are made with a view to achieving the broad objective of rewarding individuals for the nature of their work and the contribution they make towards the

Group achieving its strategic aims. Proper regard is given to the need to attract 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.

The remuneration policy for Directors is set so as to achieve the above objectives and is broadly split into Executive and Non-Executive categories, and consists of the following components in each sub category:

Financial Statements

Executive Directors: Element

Purpose

Operation and Review

Basic Salary

To attract and retain effective management to implement Group strategy.

Reviewed by the Committee on an annual basis with effect from the beginning of October, consistent with annual reviews conducted for all other employees. The current values of individual approved salaries effective from October 2014, together with the amounts actually being received are shown in the table opposite. Paid monthly in arrears.

Annual Performance Bonuses

To reward delivery of pre-agreed annual financial objectives.

Individually constructed performance related schemes measured against specific criteria agreed annually. Paid in the March following the financial year to which the bonus relates, after completion of the annual audit.

Profit Related Pay

To encourage achievement of profit budgets within main trading subsidiaries.

Subsidiary Company wide employee scheme to reward all staff with a pro-rata profit share, based on a pre-set formula set out in the report opposite. Paid in the February following the announcement of the financial results for the previous year, after completion of the annual audit.

Pension and Death in Service Life Assurance

To facilitate retention and motivate effective management.

Benefits in Kind

To assist Directors in the completion of their duties.

Shareholder Information

Long Term Incentive Plans

Other Share Schemes

24

To align executive rewards with returns for shareholders and to encourage executive retention and strategic consistency.

To align executive rewards with benefits available for other managers in a tax efficient manner.

Fixed Company contributions expressed as a percentage of current basic salary for each individual paid into a personal pension scheme held in that individual’s name. The 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 restricted to the provision of a Company car and private medical insurance.

Single fixed term schemes, with performance related conditions, where the maximum payout is set at approximately one year’s basic salary paid in shares, based on the market value of those shares as at the commencement of the scheme.

HMRC Approved tax efficient share schemes offered to other employees which are also made available to Executive Directors on the same periodic basis. These include discretionary Company Share Option Plans (CSOP) and eligible Save As You Earn plans (SAYE).

www.wynnstay.co.uk

Strategic Report

Element

Purpose

Operation and Review

Basic Annual Fee

To attract and retain a balanced skill set of individuals to ensure strong stewardship and governance of the Group.

Fees are set so as to reflect the factors pertinent to respective positions, taking into account the anticipated amount of time commitment, and comparative rates paid by other companies of a similar size. The Non-Executive Directors do not participate in share option awards, performance bonuses or pension arrangements. Fees are reviewed by the Remuneration Committee on an annual basis.

Travelling Expenses

To reimburse legitimately incurred costs of attending necessary Board and associated meetings.

Pre-set rates used to reimburse mileage, travel, accommodation and other incurred expenses in line with those used for other employees.

Medical Insurance Benefit in Kind

To assist Directors in the completion of their duties.

Benefits restricted to the provision of private medical insurance for those Directors who do not have alternative arrangements in place.

Governance

Non-Executive Directors:

Remuneration Report Executive Directors’ Remuneration In line with the above policy, the Remuneration Committee have approved the following details of Executive Directors’ remuneration:

Basic Salary

Column A

Column B

Column C

Approved Salary £000’s

Basic Salary Nov 13 – Oct 14 £000’s

Current Basic Salary £000’s

K R Greetham

160

139

142

B P Roberts

130

101

103

D A T Evans

n/a

87

89

Executive Director

•

Financial Statements

Basic salaries. A current maximum approved salary limit for the roles of Chief Executive and Finance Director was approved by the Remuneration Committee in April 2012, which are shown in the table below in column A. Within these limits, the basic salaries paid during the last financial year are shown in column B, while the current annualised salaries, which were increased by the standard Company increment in October 2014 of 2.1%, are shown in column C.

Annual performance bonuses and profit related pay. The contractual bonus schemes for K R Greetham and B P Roberts are based on a fixed percentage of the Group pre-tax Profit, which includes the Group’s share of pre-tax profits from joint ventures and associate investments. The scheme for D A T Evans is based on a fixed percentage of the Retail segment operating contribution adjusted for administrative costs. The respective bonus percentages and payments are shown in the table on page 26 in columns A and B respectively. The Executive Directors also participate in the Company Profit Related Pay Scheme (“PRP”) which is a scheme for employees of Wynnstay (Agricultural Supplies) Limited 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 of those companies excluding inter-company turnover, expressed as a percentage. The relevant rate for 2013, paid in February 2014, was 3.4%, with the actual PRP paid shown in Column C on page 26. The anticipated rate for 2014 relating to the last financial year is 3.6% of relevant earnings.

Wynnstay Group Plc

ANNUAL REPORT 2014

Shareholder Information

•

25

Strategic Report

Directors’ Remuneration Statement (continued)

Governance

•

Bonuses

Column A

Column B

Column C

Executive Director

Contractual Annual Bonus %

Bonus received Mar 14 £000’s

PRP received Feb 14 £000’s

K R Greetham

0.750%

61

7

B P Roberts

0.375%

30

5

D A T Evans

0.400%

23

3

Pension and death in service life cover. Individual Company contributions to personal pension plans are based on the value of the Executive Directors basic salary only. The annual defined Company contributions to a personal pension scheme held in the individual’s name expressed as a percentage of current salary is shown in the table below in column A and the amounts paid on behalf of each individual during the last financial year is shown in column B. The death in service life assurance cover is provided in a Group policy covering all members, with individual costs attributed to separate members being unavailable. However the scheme to which all three of the Executive Directors belong had a total renewal cost at November 2013 of £60,995, and there were 376 members covered, meaning an average cost of £162 per person.

Pension Column A

Executive Pension Director %

Financial Statements

•

K R Greetham

9.6%

13

B P Roberts

6.5%

6

D A T Evans

6.5%

6

Benefits in kind. Each Executive Director is supplied with a Company car, primarily for the furtherance of their duties. However these vehicles are available for the executive’s private use and as such have a taxable benefit in kind value calculated in accordance with HMRC rules. These values for the tax year ending April 2014 are shown in the table below in column A. Executives refund the cost of fuel they use for private motoring on a monthly basis. Additionally the Company pays the cost of providing private medical insurance for the executives to ensure that should they require treatment this is provided as quickly as possible, and minimises any period of potential absence from their duties. The cost to the Company of this cover for each individual in 2014 is shown below in column B. Benefits in kind Executive Director

Shareholder Information

•

26

Column B Pension Contribution £000’s

Column A Company Car Value

Column B Private Medical Cover

K R Greetham

£8,473

£602

B P Roberts

£7,578

£602

D A T Evans

£7,432

£602

Long term incentives. The Remuneration policy allows for a single long term incentive plan to be in place at any one time. The 2008 scheme was structured as a Long Term Performance Related Unapproved Share Option Scheme and vested between October 2013 and March 2014. This scheme targeted an overall maximum financial gain approximating to one years basic salary as at the beginning of the scheme, for a 100% achievement of the performance criteria. The award was paid in ordinary shares based on the market value as at the time of exercise. The number of eligible options and the financial value of the gain obtained from the exercise of the awarded options for each executive are shown in the table opposite.

The financial value of the gain being defined as the difference between the market price of the shares on the date of option exercise and the option price, which was £0.25, multiplied by the number of options eligible to be exercised. Each executive qualified for the maximum 100% award based on the achievement of the performance criteria, which related to the basic earnings per share achieved in the financial year ending October 2013 and the market capitalisation of the Company on that date. These respective results were 36.43p and £104.5 million.

www.wynnstay.co.uk

2008 Scheme

Executive Director No of award

Options

Financial value of gain £000’s

Strategic Report

LTIP’s

2014 Scheme Maximum Award No. of Options

K R Greetham

22,756

136

23,000

B P Roberts

15,385

91

23,000

D A T Evans

11,538

69

18,000

(MC) (EPS)

£110m

£115m

£120m

£125m

£130m

£135m

£140m

>£140m

<36p

nil

nil

nil

nil

nil

nil

nil

nil

nil

36p

nil

30%

40%

50%

60%

70%

80%

90%

100%

37p

nil

40%

50%

60%

70%

80%

90%

100%

100%

38p

nil

50%

60%

70%

80%

90%

100%

100%

100%

39p

nil

60%

70%

80%

90%

100%

100%

100%

100%

40p

nil

70%

80%

90%

100%

100%

100%

100%

100%

41p

nil

80%

90%

100%

100%

100%

100%

100%

100%

42p

nil

90%

100%

100%

100%

100%

100%

100%

100%

>42p

nil

100%

100%

100%

100%

100%

100%

100%

100%

Other share schemes. The Executive Directors participate in the discretionary Approved Company Share Option Plan (CSOP), which is a tax efficient scheme providing the opportunity to hold up to £30,000 of option value, which providing the scheme rules and legislation are complied with, can be exercised free of income tax liability for the holder. Additionally the current Executive Directors are eligible to participate in Saye As You Earn (SAYE) option invitations, subject to the scheme and legislative limitations. Such options held by the Executive Directors, which do not have any performance criteria attached to them, are exercisable between April 2015 and April 2022 and details are provided in the Directors’ Report on page 20 and 21, and in Note 9 to the accounts.

Financial Statements

•

< £110m

Governance

Following the final vesting date of the above scheme, a new long term incentive plan was implemented for Executive Directors in October 2014 in line with the policy criteria outlined above. The scheme is again structured as a Long Term Performance Related Unapproved Share Option Scheme with options being exercisable within a six month period commencing on the third anniversary of the grant date, providing the performance conditions have been satisfied. The maximum award available for a 100% achievement of the performance criteria for each executive, in terms of eligible options, is shown in the table above. The performance conditions relate to the earnings per share (“EPS”) and market capitalisation (“MC”) of the Group as at October 2017, with the size of the award, as a percentage of the maximum available, based on the matrix below. The executive will pay an option price of 25p per share.

Non-Executive Directors’ 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: Financial Year ended Oct 2014

J J McCarthy P M Kirkham

Benefits in kind

Travelling Expenses

Current Basic Fee

Benefits in kind

£000’s

£000’s

£000’s

£000’s

£000’s

49

-

1

49

-

34

-

1

34

1

J C Kendrick *

14

-

-

n/a

n/a

Lord Carlile CBE, QC

34

1

1

34

1

8

-

-

34

1

1

H J Richards * 2

*1 Retired March 2014 *2 Appointed July 2014

Shareholder Information

Basic Fee Non-Executive Director

2014 / 2015

By order of the Board.

Lord Carlile CBE, QC Vice-Chairman and Chairman of Remuneration Committee 20 January 2015 Wynnstay Group Plc

ANNUAL REPORT 2014

27

Strategic Report

Independent Auditor’s Report to the Shareholders of Wynnstay Group Plc We have audited the financial statements of Wynnstay Group Plc for the year ended 31 October 2014 set out on pages 30 to 62.

The financial reporting framework that has been applied in their preparation is applicable law and International Financial Reporting Standards (IFRSs) as adopted by the EU and, as regards the Parent Company financial statements, as applied in accordance with the Companies Act 2006.

Governance

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.

Respective Responsibilities of Directors and Auditor As explained more fully in the Directors’ Responsibilities Statement set on out page 21, the Directors are responsible for the preparation of the financial statements and for being satisfied that they give a true and fair view.

Financial Statements

Our responsibility is to audit, and express an opinion on, the financial statements in accordance with applicable law and International Standards on Auditing (UK and Ireland). Those standards require us to comply with the Auditing Practices Board’s Ethical Standards for Auditors.

Scope of the Audit of the Financial Statements A description of the scope of an audit of financial statements is provided on the Financial Reporting Council website at www.frc.org.uk/auditscopeukprivate.

•

the Parent Company financial statements have been properly prepared in accordance with IFRSs as adopted by the EU and as applied in accordance with the provisions of the Companies Act 2006; and

•

the financial statements have been prepared in accordance with the requirements of the Companies Act 2006.

Opinion on other Matters Prescribed by the Companies Act 2006 In our opinion: •

the information given in the Strategic Report and Directors’ Report for the financial year for which the financial statements are prepared is consistent with the financial statements.

Matters on which we are Required to Report by Exception 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;

Opinion on Financial Statements In our opinion:

Shareholder Information

•

•

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 2014 and of the Group’s profit for the year then ended; the Group financial statements have been properly prepared in accordance with IFRSs as adopted by the EU;

Nicola Quayle (Senior Statutory Auditor) For and on behalf of

KPMG LLP, Statutory Auditor Chartered Accountants 8 Princes Parade Liverpool L3 1QH 20 January 2015

28

www.wynnstay.co.uk

Wynnstay Group Plc

ANNUAL REPORT 2014

29

Shareholder Information

Financial Statements

Governance

Strategic Report

Strategic Report

Consolidated Statement of Comprehensive Income for the year ended 31 October 2014 2014 Note

£000

2013 £000

£000

£000

413,558

413,481

Cost of sales

(360,353)

(363,728)

Gross profit

53,205

49,753

(40,838)

(36,672)

(4,455)

(4,319)

588

-

payment costs and exceptional item

8,500

8,762

Intangible amortisation and share-based payments

(109)

(182)

Revenue

2

Manufacturing, distribution and selling costs Administrative expenses Other operating income

4

Governance

Group operating profit before intangible amortisation, share-based

Exceptional item

5

-

(350)

Group operating profit

6

8,391

8,230

Interest income

3

52

Interest expense

3

(378)

46 (326)

(524)

(478)

Share of profits/losses in associate and joint ventures 536

accounted for using the equity method Share of tax incurred by associate and joint ventures

7

Financial Statements

Profit before taxation Taxation

10

Profit for the year

(108)

362 428

(93)

269

8,493

8,021

(1,796)

(1,850)

6,697

6,171

Earnings per 25p share

12

35.28p

36.43p

Diluted earnings per 25p share

12

34.63p

35.25p

All of the above are derived from continuing operations.

There was no other comprehensive income during the current or prior year.

Shareholder Information

The notes on pages 34 to 62 form part of these financial statements.

30

www.wynnstay.co.uk

Strategic Report

Consolidated and Company Balance Sheet as at 31 October 2014 Registered number 2704051 Group

Note

2014

2013

Company 2014

2013

£000

£000

£000

£000

Assets Non-current assets Goodwill

13

17,209

17,014

-

6,660

Property, plant and equipment

15

18,289

17,861

8,258

13,124

Investment in subsidiaries

16

-

-

18,182

18,182

Investments accounted for using equity method

16

3,643

3,365

749

1,048

Intangibles

14

89

99

-

-

39,230

38,339

27,189

39,014

Inventories

19

29,758

30,602

-

17,334

Trade and other receivables

20

48,749

51,271

29,896

36,819

Held for sale assets

21

2,372

2,287

2,372

2,287

17

2,802

3,067

2,802

3,067

Governance

Current assets

Financial assets -

loan to joint venture

Cash and cash equivalents

24

Total assets

8,990

6,636

12

647

92,671

93,863

35,082

60,154

131,901

132,202

62,271

99,168

Liabilities Financial liabilities - borrowings

25

(3,938)

(4,855)

(2,600)

(3,192)

Trade and other payables

22

(47,088)

(49,338)

(3,167)

(34,655)

Current tax liabilities

23

(678)

(1,221)

(13)

(700)

(51,704)

(55,414)

(5,780)

(38,547)

40,967

38,449

(29,302)

21,607

Net current assets / (liabilities)

Financial Statements

Current liabilities

Non-current liabilities Financial liabilities – borrowings

25

(2,300)

(4,269)

(1,369)

(4,237)

Trade and other payables

22

(339)

(711)

(94)

(417)

Deferred tax liabilities

27

(327)

(259)

-

(105)

(2,966)

(5,239)

(1,463)

(4,759)

(54,670)

(60,653)

(7,243)

(43,306)

77,231

71,549

55,028

55,862

4,777

4,713

4,777

4,713

Share premium

27,633

26,986

27,633

26,986

Other reserves

2,796

2,697

2,627

2,528

Retained earnings

42,025

37,153

19,991

21,635

Total Equity

77,231

71,549

55,028

55,862

Total liabilities Net assets Share capital

28

Shareholder Information

Equity

The financial statements were approved by the Board of Directors on 20 January 2015 and signed on its behalf.

J J McCarthy – Director

B P Roberts - Director

The notes on pages 34 to 62 form part of these financial statements.

Wynnstay Group Plc

ANNUAL REPORT 2014

31

Strategic Report

Consolidated and Company Statement of Changes in Equity as at 31 October 2014 Share capital £000

Share premium account £000

Other reserves £000

Retained earnings £000

Total £000

At 1 November 2012 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

4,186 -

17,677 -

2,515 -

32,448 6,171 6,171

56,826 6,171 6,171

527

9,309

-

-

9,836

Dividends Equity settled share-based payment transactions Total contributions by and distributions to owners of the Company At 31 October 2013

527 4,713

9,309 26,986

182 182 2,697

(1,466) (1,466) 37,153

(1,466) 182 8,552 71,549

Profit for the year

-

-

-

6,697

6,697

Total comprehensive income for the year Transactions with owners of the Company, recognised directly in equity Shares issued during the year

-

-

-

6,697

6,697

64

647

-

-

711

-

-

99

(1,825) -

(1,825) 99

64

647

99

(1,825)

(1,015)

4,777

27,633

2,796

42,025

77,231

Share capital £000

Share premium account £000

Other reserves £000

Retained earnings £000

Total £000

4,186 -

17,677 -

2,346 -

19,889 3,212 3,212

44,098 3,212 3,212

527 527 4,713

9,309 9,309 26,986

182 182 2,528

(1,466) (1,466) 21,635

9,836 (1,466) 182 8,552 55,862

Profit for the year

-

-

-

181

181

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

-

-

-

181

181

64 -

647 -

99

(1,825) -

711 (1,825) 99

Total contributions by and distributions to owners of the Company

64

647

99

(1,825)

(1,015)

4,777

27,633

2,627

19,991

55,028

Governance

Group

Dividends Equity settled share-based payment transactions Total contributions by and distributions to owners of the Company At 31 October 2014

Financial Statements

Company

Shareholder Information

At 1 November 2012 Profit for the year Total comprehensive income for the year Transactions with owners of the Company, recognised directly in equity Shares issued during the year Dividends Equity settled share-based payment transactions Total contributions by and distributions to owners of the Company At 31 October 2013

At 31 October 2014 There was no other comprehensive income during the current or prior year.

The notes on pages 34 to 62 form part of these financial statements.

32

www.wynnstay.co.uk

Strategic Report

Consolidated and Company Cash Flow Statement as at 31 October 2014 Group Note

2014 £000

Company 2013 £000

2014 £000

2013 £000

11,773 52 (378) (2,271)

12,956 46 (524) (2,036)

1,759 (26) (110)

(3,972) 30 (433) (802)

9,176

10,442

1,623

(5,177)

Cash flows from investing activities Acquisitions in the year Utilisation of cash acquired on acquisition Proceeds from sale of property, plant and equipment Purchase of property, plant and equipment Proceeds on sale of investments Investments in assets held for resale Purchase of investments Dividends received

(120) 289 (2,450) 150 (85) -

(5,254) 47 729 (1,878) 150 (130) (40) -

132 (695) 150 (85) -

(566) 678 (792) 150 (130) (41) 500

Net cash flows used by investing activities

(2,216)

(6,376)

(498)

(201)

Cash flows from financing activities Net proceeds from the issue of ordinary share capital Net proceeds from drawdown of new loans Finance lease principal repayments Repayment of borrowings Dividends paid to shareholders

711 272 (792) (2,054) (1,825)

9,836 896 (830) (1,708) (1,466)

711 (646) (1,825)

9,836 896 (774) (1,107) (1,466)

Net cash flows generated from financing activities

(3,688)

6,728

(1,760)

7,385

3,272 5,117 8,389

10,794 (5,677) 5,117

(635) 647 12

2,007 (1,360) 647

Net cash flows from operating activities

Net increase/(decrease) in cash and cash equivalents Cash and cash equivalents at the beginning of the period Cash and cash equivalents at the end of the period

24

Financial Statements

38

Governance

Cash flows from operating activities Cash generated from operations Interest received Interest paid Tax paid

Shareholder Information

The notes on pages 34 to 62 form part of these financial statements.

Wynnstay Group Plc

ANNUAL REPORT 2014

33

Strategic Report

Principal Accounting Policies Accounting Policies The Group’s principal accounting policies adopted in the preparation of these financial statements are set out below. These policies have been consistently applied to all years presented, unless otherwise stated.

Basis of preparation

Financial Statements

Governance

The Group’s financial statements have been prepared in accordance with International Financial Reporting Standards as adopted by the European Union (IFRS), International Financial Reporting Interpretation Committee (IFRIC) interpretations and those provisions of the Companies Act 2006 applicable to companies reporting under IFRS. The Group financial statements have been prepared under the historical cost convention other than certain assets which are at deemed cost under the transition rules, share based payments which are included at fair value and certain financial instruments which are explained in the relevant section below. A summary of the material Group accounting policies are set out below. The preparation of financial statements in conformity with IFRS requires the use of certain critical accounting estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting period. Although these estimates are based on management’s best knowledge of the amount, event or actions, actual results ultimately may differ from those estimates.

Going concern As highlighted in note 24 to the financial statements, the Group meets its day to day working capital requirements through the use of cash balances and overdraft facilities which are due for review on an annual basis. The current economic conditions create uncertainty, particularly over: (a) the level of demand for the Group’s products; (b) the exchange rate between sterling and the US dollar which has consequences for the cost of the Group’s raw materials; and (c) the availability of bank finance in the foreseeable future.

Shareholder Information

The Group’s forecasts and projections, taking account of reasonable possible changes in trading performance, show that the Group should be able to operate within the level of its current cash balances and overdraft facilities. These overdraft facilities are next scheduled for review, as usual, in April 2015, however the Group are currently finalising negotiations with their main bank for new debt arrangements on improved

34

terms, and have received a credit approved offer which is expected to be in place before April 2015. During these negotiations no matters have been drawn to the Group’s attention to suggest that the new facilities or the existing overdraft arrangements may not be forthcoming.

the consolidated statement of comprehensive income and within a note to the financial statements as exceptional items. Management consider that the separate disclosure of nonrecurring items helps provide a better indication of the Group’s underlying business performance.

Basis of consolidation

Financial instruments

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 associate and joint ventures. Group intercompany transactions are eliminated in full.

Results of subsidiary undertakings acquired are included in the financial statements from the effective date of control. The net assets, both tangible and intangible, of acquired subsidiary undertakings are incorporated into the financial statements on the basis of their fair value as at the effective date of control. All business combinations are accounted for by applying the acquisition method. Subsidiaries are entities where the Group has the power to govern the financial and operating policies, generally accompanied by a share of more than 50% of the voting rights. Subsidiaries are consolidated from the date on which control is assumed by the Group and are included until the date the Group ceases to control them. 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 associates and joint ventures are accounted for using the equity method.

Financial assets and liabilities are recognised on the Company and Group’s consolidated balance sheet when the Company and/or Group becomes a party to the contractual provisions of the instrument. The main categories of financial instruments are:

Revenue recognition Revenue represents the invoiced value of sales which fall within Wynnstay Group’s ordinary activities. Revenue is measured at the fair value of the contract, net of rebates excluding value added tax and after eliminating sales within the Group.

Revenue from the sale of goods is recognised either at the point of sale through the till or when the Group has transferred the significant risks and rewards of ownership of goods to the buyer, for example, delivering products into the customer’s possession, and when the amount of revenue can be measured reliably and when it is probable that the economic benefits associated with the transaction will flow to the Group.

Non-recurring items Non-recurring items that are material by size and/or by nature are disclosed on the face of

Trade receivables Trade and other receivables are recognised at fair value, less any impairment losses.

Investments Investments are initially measured at cost. They are classified as either ‘available-for-sale’, ‘fair value’, or ‘held to maturity’. Where securities are designated as at ‘fair value’ gains or losses arising from changes in fair value are included in the net profit or loss for the period. For ‘available-for-sale’ investments, gains or losses arising from changes in fair value are recognised directly in equity, until the security is disposed of or is determined to be impaired, at which time the cumulative gain or loss previously recognised in equity is included in the net profit or loss for the period. Equity investments that do not have a quoted market price in an active market and whose fair value cannot be reliably measured by other means are held at cost.

Interest-bearing borrowings Interest-bearing bank loans and overdrafts are initially recorded at fair value, net of attributable transaction costs. Subsequent to initial recognition, interest-bearing borrowings are stated at amortised cost with any difference between proceeds and redemption value being recognised in the Group Statement of Consolidated Income over the period of the borrowings on an effective interest basis.

Trade payables Trade and other payables are recognised at fair value.

Equity instruments Equity instruments issued by the Group and/or Company are recorded at the proceeds received, net of direct issue costs. An equity instrument is any contract that evidences a residual interest in the assets of the Group and/or Company after deducting all of its liabilities.

www.wynnstay.co.uk

Derivative financial instruments with maturity dates of more than one year from the balance sheet date are disclosed as non-current.

Fair value hedging Derivative financial instruments are classified as fair value hedges when they hedge the Groupâ&#x20AC;&#x2122;s exposure to changes in the fair value of a recognised asset or liability. Changes in the fair value of derivatives that are designated and qualify as fair value hedges are recorded in the Group Statement of Comprehensive Income together with any changes in the fair value of the hedged item that is attributable to the hedged risk.

Leases Leases are classified as finance leases at inception where substantially all of the risks and rewards of ownership are transferred to the Group.

Assets classified as finance leases are capitalised on the balance sheet and are depreciated over the expected useful life of the asset. The interest element of the rental obligations is charged to the Group Statement of Comprehensive Income over the period of the lease. Rentals paid under operating leases are charged to the Group Statement of Comprehensive Income on a straight-line basis over the term of the Wynnstay Group Plc

ANNUAL REPORT 2014

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 Lease premium - over the period of the lease Leasehold land and buildings - over the period of the lease Plant and machinery and office equipment - 10% - 33% per annum straight line Motor vehicles - 20% - 30% per annum straight line

Goodwill Goodwill represents the excess of the cost of acquisition over the fair value of the identifiable assets, liabilities and contingent liabilities of the acquired entity at the date of the acquisition.

At the date of acquisition, goodwill is allocated to cash generating units for the purpose of impairment testing. Goodwill is recognised as an asset and assessed for impairment annually.

Any impairment is recognised immediately in the Group Statement of Comprehensive Income.

Once recognised, an impairment of goodwill is not reversed.

Impairment of assets At each reporting date, the Group assesses whether there is any indication that an asset may be impaired. Where an indicator of impairment exists, the Group makes an estimate of recoverable amount. Where the carrying amount of an asset exceeds its recoverable amount the asset is written down to its recoverable amount. Recoverable amount is the higher of fair value less costs to sell and value in use, and is considered for each individual asset.

If the asset does not generate cash flows that are largely independent of those from other assets or groups of assets, the recoverable amount of the cash generating unit to which the asset belongs is determined. Discount rates reflecting the asset specific risks and the time value of money are used for the value in use calculation.

Strategic Report

The Group operates a defined contribution pension scheme. Contributions to this scheme are charged to the Group Statement of Comprehensive Income as they are incurred, in accordance with the rules of the scheme.

Inventories Inventories are stated at the lower of cost and net realisable value. Cost comprises direct materials and, where applicable, direct labour costs and those overheads that have been incurred in bringing the inventories to their present location and condition. Where appropriate, cost is calculated on a specific identification basis. Otherwise inventories are valued using the first-in-first-out method. Net realisable value represents the estimated selling price less all estimated costs to completion and costs to be incurred in marketing, selling and distribution.

Governance

Derivative financial instruments are recognised and stated at fair value. Where derivatives do not qualify for hedge accounting, any gains or losses on re-measurement are immediately recognised in the Group Statement of Consolidated Income.

Where derivatives qualify for hedge accounting, recognition of any resultant gain or loss depends on the nature of the hedge relationship and the item being hedged. In order to qualify for hedge accounting, the Group is required to document from inception the relationship between the item being hedged and the hedging instrument.

The Group is also required to document and demonstrate an assessment of the relationship between the hedged item and the hedging instrument, which shows that the hedge will be highly effective on an ongoing basis. This effectiveness testing is performed at each period end to ensure that the hedge remains highly effective.

Property, plant and equipment

Employment benefit costs

Taxation including deferred taxation The income tax expense represents the sum of the current income tax and deferred income tax.

Current income tax is based on the taxable profits for the year. Taxable profit differs from the profit as reported in the 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 Groupâ&#x20AC;&#x2122;s liability for current tax is calculated using tax rates that have been enacted or substantively enacted by the balance sheet date.

Financial Statements

The Group uses derivative financial instruments to hedge its exposure to foreign exchange, and commodity risks arising from day to day activities. The Group does not hold or issue derivative financial instruments for trading purposes, however, if derivatives do not qualify for hedge accounting they are accounted for as such.

lease. Leasehold land is normally classified as an operating lease. Payments made to acquire leasehold land are included in prepayments at cost and are amortised over the life of the lease.

Any incentives to enter into operating leases are recognised as a reduction of rental expense over the lease term on a straight-line basis.

Deferred income tax is provided in full, using the liability method, on temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the Group financial statements. However, deferred income tax is not accounted for if it arises from initial recognition of an asset or liability other than a business combination. Deferred income tax is determined using tax rates (and laws) that have been enacted or substantively enacted by the balance sheet date and are expected to apply when related deferred income tax asset is realised or the deferred income tax liability settled. Deferred income tax assets are recognised to the extent that it is probable that future taxable profits will be available against which the temporary differences can be utilised.

Shareholder Information

Derivative financial instruments and hedging

Dividends Final equity dividends to the shareholders of the Company are recognised in the period that they are approved by the shareholders. Interim equity dividends are recognised in the period that they are paid.

35

Strategic Report

Principal Accounting Policies (continued) Share-based payments

Governance

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 equitysettled 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. Fair value is measured by use of a 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. The movements in respect of equity-settled share-based payments are recognised in other reserves.

Financial Statements

Application of the “own use” exemption Forward contracts are entered into by the Group to purchase and/or sell grain and other agricultural commodities, and management judge that these forward commodity contracts are entered into for the Groups “own use” rather than as trading instruments when they are entered into. They continue to be held in accordance with the Group’s expected purchase, sale and/or usage requirements.

Impairment of goodwill

Investments held as fixed assets are shown at cost less provisions impairment.

The carrying value of goodwill must be assessed for impairment annually. This requires an estimation of the value in use of the cash generating units to which goodwill is allocated.

Value in use is dependent on estimations of future cash flows from the cash generating unit and the use of an appropriate discount rate to discount those cash flows to their present value.

Cash and cash equivalents, for the purposes of the consolidated cash flow statement, comprise cash at bank and in hand, money market deposits and other short term highly liquid investments with original maturities of three months or less and bank overdrafts. Bank overdrafts are presented in borrowings within current liabilities in the balance sheet.

Foreign currencies Monetary assets and liabilities denominated in foreign currencies are translated into sterling at the rate of exchange ruling at the balance sheet date. Transactions in foreign currencies are translated into sterling at the rate ruling on the date of the transaction. Exchange gains and losses are recognised in the Group Statement of Comprehensive Income.

Employee share ownership trust The Company operates an employee share ownership trust. The assets, liabilities, income and cost of the ESOP are incorporated into the financial statements of the Group.

Shareholder Information

Application of certain Group accounting policies requires management to make judgements, assumptions and estimates concerning the future as detailed:

Investments

Cash and cash equivalents

36

Significant judgements, key assumptions and estimates

Valuation of share-based payments The fair value of share-based payments is determined using valuation models and is charged to the Group Statement of Comprehensive Income over the vesting period.

Estimations of vesting and satisfaction of performance criteria are required to determine fair value.

Provision for impairment of trade receivables The financial statements include a provision for impairment of trade receivables that is based on management’s estimation of recoverability.

There is a risk that the provision will not match the trade receivables that ultimately prove to be irrecoverable.

Provision for impairment of inventories The financial statements include a provision for impairment of inventories that is based on management’s estimation of recoverability.

There is a risk that the provision will not match the inventories that ultimately prove to be impaired.

www.wynnstay.co.uk

Strategic Report

New standards and interpretations The following new accounting standards, amendments and interpretations to published standards are not yet effective and have not been adopted early by the Group:

EU effective date for accounting periods commencing on or after

Transition guidance : Amendments to IFRS 10, IFRS 11 and IFRS 12

1 January 2014

IFRS 10: ‘Consolidated financial statement’

1 January 2014

IFRS 11: ‘Joint arrangements’

1 January 2014

IFRS 12: ‘Disclosure of interest in Other Entities’

1 January 2014

1 January 2014

Governance

International Financial Reporting Standards (“IFRS”)

Amendments to existing standards Certain elements of Annual Improvements to IFRS 2009 - 2011

1 January 2014

IAS 27 (revised 2011): ‘Separate financial statements’

1 January 2014

IAS 28 (revised 2011): ‘Investments in associates and joint ventures’

1 January 2014

Shareholder Information

Financial Statements

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.

Wynnstay Group Plc

ANNUAL REPORT 2014

37

Strategic Report

Notes to the Financial Statements 1.

2.

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 a part of these approved financial statements.

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 Agriculture, Specialist Retail and Other.

Governance

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 segment result that is assessed by the Board. Other information provided to the Board is measured in a manner consistent with that in the financial statements.

Inter-segmental transactions are entered into under the normal commercial terms and conditions that would be available to unrelated third parties.

The segment results for the year ended 31 October 2014 are as follows: Agriculture Year ended 31 October 2014 Revenue from external customers Segment result

Financial Statements

Share of results of associate and joint ventures before tax

Specialist Retail

Other

£000

£000

£000

£000

308,711

104,617

230

413,558

3,476

4,798

117

8,391

326

77

133

536

3,802

4,875

250

8,927

Interest income

52

Interest expense

(378) 8,601

Profit before tax

(1,904)

Income taxes (includes tax of associate and joint ventures)

6,697

Profit for the year attributable to equity shareholders Segment net assets

29,449

37,849

7,181

77,231

Total net assets

Year ended 31 October 2013 Revenue from external customers Segment result Share of results of associate and joint ventures before tax

Agriculture

Specialist Retail

Other

Total

£000

£000

£000

£000

322,995

90,191

295

413,481

4,542

4,427

(389)

8,580

359

-

3

362

4,901

4,427

(386)

8,942

Exceptional item

Shareholder Information

74,479 2,752

Corporate net cash (note 25)

(350)

Interest income

46

Interest expense

(524)

Profit before tax

8,114

Income taxes (includes tax of associate and joint ventures)

(1,943)

Profit for the year attributable to equity shareholders Segment net assets

38

Total

6,171 29,553

37,194

7,290

74,037

Corporate net borrowings (note 25)

(2,488)

Total net assets

71,549 www.wynnstay.co.uk

Strategic Report

3.

Finance Costs 2014

2013

£000

£000

Interest payable on borrowings

(271)

(378)

Interest payable on finance leases

(107)

(108)

-

(38)

(378)

(524)

52

46

Interest expense:

Interest payable on other loans Interest and similar charges payable Interest income Interest receivable Finance costs

2014

2013

£000

£000

375

-

Other Operating Income

Rental income Grooming commission Profit on sale of Acocks Green Other operating income

5.

46 (478)

28

-

136

-

49

-

588

-

2014

2013

Governance

4.

52 (326)

Exceptional Item

Exceptional costs

£000

£000

-

(350)

Exceptional costs relate to the expenses associated with the acquisition and subsequent re-organisation of the business and certain trading assets of Carmarthen & Pumsaint Farmers.

Group Operating Profit

Financial Statements

6.

The following items have been included in arriving at operating profit: 2014 £000

£000

23,816

21,597

- owned assets

1,945

1,881

- under finance

564

641

Staff costs Depreciation of property, plant and equipment:

10

1

(Profit) on disposal of fixed assets

(171)

(131)

Other operating lease rentals payable

2,858

2,323

Repairs and maintenance expenditure on plant, property and equipment

1,630

1,715

68

52

2014

2013

£000

£000

95

90

4

4

Due diligence

-

27

XBRL tagging

1

1

Amortisation of intangibles

Trade receivables impairment

2013

Services provided by the Group’s auditor

Audit services – statutory audit Tax services

Shareholder Information

During the year the Group obtained the following services from the Group’s auditor:

Included in the Group audit fee are fees of £5,000 (2013: £43,500) 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.

Wynnstay Group Plc

ANNUAL REPORT 2014

39

Strategic Report

Notes to the Financial Statements (continued) 7.

Share of Post-tax Profit/(Loss) of Associate and Joint Ventures 2014

2013

£000

£000

85

54

Share of post-tax profits/(loss) in joint ventures

343

215

Total share of post-tax profits of associate and joint ventures

428

269

Share of post-tax profit in associate

8.

Staff Costs The aggregate payroll costs, including Directors’ emoluments, charged in the financial statements for the Group were as follows:

Governance

2014

2013

£000

£000

Wages and salaries

21,041

19,121

Social security costs

1,887

1,701

789

593

Pension and other costs Cost of share-based reward

99

182

23,816

21,597

The average number of employees, including Directors’ employed by the Group during the year was as follows: 2014 Administration Production

No.

No.

97

100

91

89

793

712

981

901

Shareholder Information

Financial Statements

Sales, distribution and retail

2013

40

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Strategic Report

9.

Directors’ Remuneration Aggregate Directors’ remuneration

Directors’ emoluments

2014

2013

£000

£000

621

642

25

25

Company contributions to money purchase pension schemes Aggregate gains made on the exercise of Approved SAYE options

296

52

942

719

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.

Benefits

Annual

2014

Basic salary

in kind

bonuses

Total

Total

£000

£000

£000

£000

£000

K R Greetham

139

9

68

216

210

B P Roberts

101

8

35

144

140

D A T Evans

87

8

26

121

112

J J McCarthy

49

-

-

49

33

J C Kendrick (retired 18 March 2014)

14

-

-

14

33

Lord Carlile CBE, QC

34

1

-

35

34

P M Kirkham

34

-

-

34

19

H J Richards (appointed 14 July 2014)

8

-

-

8

-

E G Owen (died September 2013)

-

-

-

-

45

J E Davies (retired March 2013)

-

-

-

-

16

466

26

129

621

642

Name of Director

2013

Governance

Executives

Retirements benefits are accruing to the following number of Directors under: Money purchase pension scheme

2014

2013

No.

No.

3

3

£000

£000

Financial Statements

Non-Executives

Contribution paid by the Group to money purchase pension schemes in respect of such Directors were: 13

13

B P Roberts

6

6

D A T Evans

6

6

25

25

2014

2013

£000

£000

136

22

K R Greetham

K R Greetham B P Roberts

91

8

D A T Evans

69

22

296

52

Wynnstay Group Plc

ANNUAL REPORT 2014

Shareholder Information

Gains made on exercise of Unapproved 5 year LTIP options (2013: Approved SAYE options)

41

Strategic Report

Notes to the Financial Statements (continued) 10.

Taxation 2014

2013

£000

£000

- continuing operations

1,839

1,915

- adjustments in respect of prior years

(111)

(7)

Total current tax

1,728

1,908

- accelerated capital allowances

77

(51)

- effect of decrease of rate

(9)

(7)

Total deferred tax

68

(58)

1,796

1,850

Analysis of tax charge in year Current tax

Deferred tax

Tax on profit on ordinary activities

Governance

Factors affecting tax charge for the year The tax assessed for the year is lower than (2013:lower) the standard rate of corporation tax in the UK applicable to the Group 21.83% (2013: 23.41%), explained as follows: 2014

2013

£000

£000

Profit on ordinary activities before tax

8,493

8,021

Profit on ordinary activities multiplied by standard rate of corporation tax in the UK of 21.83% (2013: 23.41%)

1,854

1,877

Other items

(93) 23 (111) 7 (9) 125

(63) 145 (7) 8 (7) (103)

Total tax charge for year

1,796

1,850

Financial Statements

Effects of: Tax effect of share of profit of associates and joint ventures Expenses not deductible for tax purposes Adjustment to tax charge in respect of prior years Utilisation of tax losses Effect of decrease in rate

Factors that may affect future tax charges 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 the rate of 20% substantively enacted at the balance sheet date.

11.

Dividends

Final dividend paid for prior year

Shareholder Information

Interim dividend paid for current year

2014

2013

£000

£000

1,177

946

648

520

1,825

1,466

Subsequent to the year end it has been recommended that a final dividend of 6.80p net per ordinary share (2013: 6.20p) be paid on 30 April 2015. Together with the interim dividend already paid on 31 October 2014 of 3.40p net per ordinary share (2013: 3.10p) this would result in a total dividend for the financial year of 10.20p net per ordinary share (2013: 9.30p).

42

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Strategic Report

12.

Earnings per share Basic earnings per share

Earnings attributable to shareholders (£000) Weighted average number of shares in issue during the year (number ‘000) Earnings per ordinary 25p share (pence)

Diluted earnings per share

2014

2013

2014

2013

6,697

6,171

6,697

6,171

18,981

16,941

19,338

17,508

35.28

36.43

34.63

35.25

Basic earnings per 25p ordinary share is calculated by dividing the earnings attributable to ordinary shareholders by the weighted average number of ordinary shares in issue during the year excluding those held in the Employee Share Ownership Trust (note 35) which are treated as cancelled.

13.

Governance

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 and warrants) taking into account their exercise price in comparison with the actual average share price during the year.

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 2012 Additions At 31 October 2013 Additions (note 18)

18,651 195

At 31 October 2014

18,846

At 31 October 2014

1,637

Net book value At 31 October 2014

17,209

At 31 October 2013 Company Cost At 1 November 2012 Transfer from investments At 31 October 2013 Transferred to subsidiary At 31 October 2014 Aggregate impairment At 1 November 2012 and 31 October 2013 Transferred to subsidiary

17,014

£000 6,618 936 7,554 (7,554) 894 (894)

At 31 October 2014

-

Net book value At 31 October 2014

-

At 31 October 2013

Financial Statements

1,637 -

Shareholder Information

Aggregate impairment At 1 November 2012 and 31 October 2013 Impairment charge

£000 17,251 1,400

6,660

During the year the goodwill was transferred to the trading subsidiary of Wynnstay (Agricultural Supplies) Limited as part of the hive down of the Company’s trade and assets of the trading business of Wynnstay Group Plc. During the year investments valued at £nil (2013: £936,401) have been transferred to goodwill in the Company, the investments trade and assets have been hived up into Wynnstay Group Plc in the current and preceding year in respect of PSB and Banbury acquisitions.

Wynnstay Group Plc

ANNUAL REPORT 2014

43

Strategic Report

Notes to the Financial Statements (continued) 13.

Goodwill (continued) Goodwill Impairment Goodwill arising on business combinations is not amortised but is reviewed for impairment on an annual basis, or more frequently if there are indications that goodwill may be impaired. Goodwill acquired in a business combination is allocated to groups of cash generating units according to the level at which management monitor that goodwill.

Recoverable amounts for cash generating units are based on the higher of value in use and fair value less costs to sell. Value in use is calculated from cash flow projections for the next 5 years using data from the Groupâ&#x20AC;&#x2122;s latest internal forecasts, the results of which are reviewed by the Board.

The key assumptions for the value in use calculations are those regarding discount rates, growth rates and 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.

In October 2014 and 2013, impairment reviews were performed by comparing the carrying value of goodwill with the recoverable amount of the cash generating units to which goodwill has been allocated.

Governance

The pre-tax discount rates used to calculate value in use was 10.4% (2013: 6% to 12%) in respect of Agriculture and 10.4% (2013: 9% to 15%) in respect of Specialist Retail. These discount rates are derived from the Groupâ&#x20AC;&#x2122;s weighted average cost of capital, as adjusted for the specific risks relating to each operating segment. The forecasts are extrapolated based on estimated long-term average growth rates of 0% to 3% (2013: 0% to 3%).

Management have identified a number of cash generating units within the two operating segments.

14.

Intangible Assets

Financial Statements

Group

ÂŁ000

Cost Balance as at 1 November 2012, 31 October 2013 and 31 October 2014

100

Aggregate amortisation Balance as at 1 November 2013

1

Amortisation charge for the period

10

At 31 October 2014

11

Net book value 89

At 31 October 2013

99

Shareholder Information

At 31 October 2014

44

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Strategic Report

15.

Property, Plant and Equipment

Group

Leasehold

Freehold

Plant, machinery

Motor

land and

land and

and office

vehicles

buildings

buildings

equipment

£000

£000

£000

£000

£000

1,355

12,269

18,094

6,035

37,753

77

9

1,709

1,221

3,016

Total

At 1 November 2012 Additions Acquisition through business combinations

-

-

113

136

249

Disposals

-

(207)

(1,304)

(705)

(2,216)

1,432

12,071

18,612

6,687

38,802

39

926

1,256

834

3,055

At 31 October 2013 Additions

(362)

362

-

-

-

-

(100)

(24)

(705)

(829)

1,109

13,259

19,844

6,816

41,028

482

3,513

12,152

3,858

20,005

47

301

1,207

967

2,522

Acquisition through business combinations

-

-

15

17

32

On disposals

-

(71)

(884)

(663)

(1,618)

529

3,743

12,490

4,179

20,941 2,509

Reclassification Disposals At 31 October 2014

Governance

Cost

At 1 November 2012 Charge for the year

At 31 October 2013

66

279

1,135

1,029

(76)

76

-

-

-

-

(25)

(20)

(666)

(711)

519

4,073

13,605

4,542

22,739

At 31 October 2014

590

9,186

6,239

2,274

18,289

At 31 October 2013

903

8,328

6,122

2,508

17,861

Charge for the year Reclassification On disposals At 31 October 2014

Financial Statements

Depreciation

Net book value

Shareholder Information

The net book value of plant and machinery and motor vehicles above includes amounts of £1,655,446 (2013: £2,213,173) representing assets held under finance leases.

Wynnstay Group Plc

ANNUAL REPORT 2014

45

Strategic Report

Notes to the Financial Statements (continued) 15.

Property, Plant and Equipment (continued)

Freehold

Company

Plant, machinery

Motor vehicles

Total

land and

and office

buildings

equipment

£000

£000

£000

£000

Cost 11,635

12,402

5,497

29,534

Additions

9

810

1,060

1,879

Disposals

(207)

(1,276)

(624)

(2,107)

-

19

42

61

11,437

11,955

5,975

29,367

695

-

-

695

At 1 November 2012

Acquisition through business combinations

Governance

At 31 October 2013 Additions Transfer to subsidiary company on hive down Disposals At 31 October 2014

-

(11,955)

(5,975)

(17,930)

(100)

-

-

(100)

12,032

-

-

12,032

16,080

Depreciation 3,328

9,277

3,475

Charge for the year

272

523

877

1,672

On disposals

(71)

(856)

(614)

(1,541)

At 1 November 2012

Acquisition through business combinations At 31 October 2013

Financial Statements

Charge for the year

-

15

17

32

3,529

8,959

3,755

16,243

270

-

-

270

-

(8,959)

(3,755)

(12,714)

(25)

-

-

(25)

3,774

-

-

3,774

At 31 October 2014

8,258

-

-

8,258

At 31 October 2013

7,908

2,996

2,220

13,124

Transfer to subsidiary company on hive down On disposals At 31 October 2014 Net book value

Shareholder Information

The net book value of plant and machinery and motor vehicles above includes amounts of £nil (2013: £2,028,576) representing assets held under finance leases.

46

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Strategic Report

16.

Fixed Asset Investments

Joint

Associate

ventures

Other

Total

unlisted investments

Group

£000

£000

£000

£000

2,577

543

181

3,301

40

-

-

40

Cost At 1 November 2012 Additions

215

54

1

270

Disposal

(150)

-

-

(150)

At 31 October 2013

2,682

597

182

3,461

Share of profit /(loss) or investment income

343

85

-

428

(150)

-

-

(150)

2,875

682

182

3,739

69

-

27

96

At 31 October 2014

2,806

682

155

3,643

At 31 October 2013

2,613

597

155

3,365

Share of profit or investment income Disposal At 31 October 2014

Governance

Additions

Provision for impairment At 1 November 2012, 31 October 2013 and 31 October 2014

Shareholder Information

Financial Statements

Net book value

Wynnstay Group Plc

ANNUAL REPORT 2014

47

Strategic Report

Notes to the Financial Statements (continued) 16.

Fixed Asset Investments (continued)

Shares

Joint

in group

ventures

Associate

Total

unlisted

undertakings Company

Other investments

£000

£000

£000

£000

£000

18,352

1,030

48

175

19,605

766

40

-

1

807

-

(150)

-

-

(150)

(936)

-

-

-

(936)

Cost

At 1 November 2012 Additions or Investment income Disposal

Governance

Transferred to goodwill

18,182

920

48

176

19,326

Disposal

-

(150)

-

-

(150)

Transferred to subsidiary company

-

-

-

(176)

(176)

18,182

770

48

-

19,000

31 October 2013

-

69

-

27

96

Transferred to subsidiary company

-

-

-

(27)

(27)

At 31 October 2014

-

69

-

-

69

18,182

701

48

-

18,931

18,182

851

48

149

19,230

At 31 October 2013

At 31 October 2014 Provision for impairment At 1 November 2012 and

Financial Statements

Net book value At 31 October 2014

Shareholder Information

At 31 October 2013

48

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Strategic Report

17.

Principal Subsidiaries, Joint Ventures and Associate

Principal subsidiaries Subsidiary undertakings represent the following limited companies, all of which were incorporated in the UK:

100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100

Holding company Feed and Fertiliser merchant Pet products retailer Agricultural merchant Seed merchants Equine and pet products distributor Grain merchant Dormant company Dormant company Dormant company Dormant company Dormant company Dormant company Dormant company Dormant company Dormant company Dormant company Dormant company Dormant company Non trading company Dormant company

Governance

Glasson Group (Lancaster) Limited Glasson Grain Limited Just for Pets Limited Wynnstay (Agricultural Supplies) Limited Woodheads Seeds Limited Youngs Animal Feeds Limited Grainlink Limited Wrekin Grain Limited Eifionydd Farmers Limited Glasson Shipping Services Limited Glasson Fertilisers Limited Westhope Livestock Supplies Limited MVZ Farm Supplies Limited Shropshire Grain Limited Welsh Feed Producers Limited Pigeon Post Limited Wynnstay Country Farmstock Limited Petssesories Limited C & M Transport Limited PSB (Country Supplies) Limited Banbury Farm and General Supplies Limited

Nature of business

Financial Statements

Company name

Proportion of shares held (Ordinary) %

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: Glasson Group (Lancaster) Limited Glasson Shipping Services Limited Glasson Grain Limited Glasson Fertilisers Limited Youngs Animal Feeds Limited Eifionydd Farmers

Wynnstay Group Plc

ANNUAL REPORT 2014

Shareholder Information

Just for Pets Limited Petssesories Limited

49

Strategic Report

Notes to the Financial Statements (continued) 17.

Principal Subsidiaries, Joint Ventures and Associate (continued)

Principal joint ventures The above interests in joint ventures are represented by the following limited companies, all of which were incorporated in the UK: Company name

Wyro Developments Limited

Interest

Nature of business

50%- Ordinary

Property development

Bibby Agriculture Limited

Geogen Technologies Limited

50% - Ordinary 50% - Preference 50% - Ordinary

Distribution of compound animal feeds

Total Angling Limited

50% - Ordinary

Retailer of angling products

Fertlink Limited

50% Ordinary

Fertiliser blending

Supplier and installation of renewable energy

Governance

Investments in joint ventures listed above are held directly by Wynnstay Group Plc, with the exception of Fertlink Limited which is a joint venture with Glasson Grain Limited.

Joint ventures are accounted for using the equity method.

The aggregate amounts of the Group’s share of joint venture assets and liabilities are:

Non-current assets Current assets Current liabilities Non-current liabilities

Financial Statements

Net assets

2014

2013

£000

£000

1,019

969

5,513

6,184

(4,081)

(5,145)

(95)

(130)

2,356

1,878

The aggregate amount of the Group’s share of joint venture revenue and expenses not included in these financial statements are: 2014

2013

£000

£000

Revenue

31,251

29,390

Expenses

(30,823)

(29,097)

2014

2013

£000

£000

428

293

The aggregate amount of the Group’s share of pre-tax profits included in these financial statements is:

Shareholder Information

Group’s share of joint ventures profit before tax

50

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Strategic Report

17.

Principal Subsidiaries, Joint Ventures and Associate (continued)

Principal associate The above interests in associates is represented by the following limited company, which was incorporated in the UK: Company name

Interest

Nature of Business

Wynnstay Fuels Limited

40%

Supply of petroleum products

Total assets Total liabilities Net assets

2014

2013

£000

£000

3,388

3,833

(1,806)

(2,464)

1,582

1,369

633

548

19,809

21,045

Profit for the period

270

173

Group’s share of associate profit before tax

108

69

Group’s share of associate net assets Total revenue

Governance

Summarised financial information in respect of the Group’s associate is as follows:

Company name

Interest

Wyro Developments Limited Wynnstay Fuels Limited Bibby Agriculture Limited Fertlink Limited Geogen Technologies Limited Total Angling Limited

31 October 2014 31 December 2013 31 August 2014 31 October 2014 31 October 2014 31 October 2014

Financial Statements

For the purposes of consolidation, the following periods of account have been used for each of the associated undertakings and joint ventures:

IAS 27 “Consolidated and separate financial statements” and IAS 28 “Investments in Associates” require the use of accounting periods within three months of the year end. Because of the other parties involved, Wynnstay Group Plc are unable to influence a change in accounting reference date of Wynnstay Fuels Limited. In the opinion of the directors there is no material effect on the reported figures as a result of this departure.

Trading transactions During the year, the Group and Company entered into the following trading transactions with subsidiaries, associates and joint ventures: Company 2014

2013

£000

£000

Amounts due from subsidiary undertakings: Trade receivables

-

413

Amounts due to subsidiary undertakings: Trade payables

-

1,688

Transactions reported in the statement of comprehensive income: Revenue Purchases

-

3,385 13,385

Wynnstay Group Plc

ANNUAL REPORT 2014

Shareholder Information

Transactions and balances with subsidiaries

51

Strategic Report

Notes to the Financial Statements (continued) 17.

Principal Subsidiaries, Joint Ventures and Associate (continued)

Group

Transactions and balances with associate

2014 £000

Company 2013 £000

2014 £000

2013 £000

Amounts due from associated undertaking: Trade receivables

Amounts due to associated undertaking: Trade payables

Governance

Transactions reported in the statement of comprehensive income: Revenue Purchases

4

4

-

4

4

4

-

4

104

64

-

64

104

64

-

64

35 545

45 1,066

-

45 1,065

Group

Transactions and balances with joint ventures

2014 £000

Company 2013 £000

2014 £000

2013 £000

Financial Statements

Amounts due from joint ventures: Trade receivables Loans

Amounts due to joint ventures: Trade payables

Transactions reported in the statement of comprehensive income: Revenue Purchases Income received

2,082 2,802

2,215 3,067

2,802

1,183 3,067

4,884

5,282

2,802

4,250

290 290

1,078

-

55

1,078

-

55

24,919 14,507 67

13,729 11,321 72

-

1,703 273 72

Shareholder Information

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 relationships between the parties.

52

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Strategic Report

18.

Business Combinations During the year the Group completed one acquisition which was structured as an asset purchase.

On 1 October 2014 Wynnstay (Agricultural Supplies) Limited completed the purchase of the goodwill and certain assets of Mansell Powell Supplies, a supplier of agricultural goods based in Pontrilas, Herefordshire, Powys, for an initial consideration of £154,001, consisting of goodwill of £120,000 and stock of £20,001, paid at completion, with a further £14,000 paid for stock upon completion of valuation. Additional contingent payments for goodwill of up to £75,000 may be paid over the next three years depending on the profitability of the acquired enterprise. The maximum consideration for goodwill of £195,000 has been measured as the fair value of the liability.

The acquisition 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.

Inventories Group

Company

2014 £000

2013 £000

2014 £000

6,584 23,174

7,759 22,843

-

1,290 16,044

29,758

30,602

-

17,334

2013 £000

Governance

19.

Raw materials and consumables Finished goods and goods for resale

20.

Trade and Other Receivables Group 2014 £000

Company 2013 £000

2014 £000

2013 £000

45,876 2,598 275

48,858 2,385 28

29,891 5 -

29,814 6,173 832 -

48,749

51,271

29,896

36,819

Financial Statements

Current Trade receivables Amounts owed by group undertakings Other receivables Fair value of derivatives

Trade receivables are stated after a provision for impairment of £910,695 (2013: £903,118) (Company £nil (2013: £459,876)).

21.

Held for Sale Assets Held for sale assets relate to a property formerly included within fixed assets but now held for resale.

Group

Company

2014 £000

2013 £000

2014 £000

2,372

2,287

2,372

2013 £000

Wynnstay Group Plc

ANNUAL REPORT 2014

Shareholder Information

Held for sale assets

2,287

53

Strategic Report

Notes to the Financial Statements (continued) 22.

Trade and Other Payables Current Group

Company

2014 £000

2013 £000

2014 £000

42,160 783 674 2,694 365 412

42,260 672 2,646 3,273 373 114

2,783 45 339 -

27,975 3,798 404 586 1,519 373 -

47,088

49,338

3,167

34,655

2013 £000

Trade payables Amounts owed to Group undertakings Other taxes and social security Other payables Accruals and deferred income Contingent consideration Fair value of derivatives

Governance

Included within the Company’s trade payables are £nil (2013: £1,687,553) of intercompany trade creditors.

Non-current Group 2014 £000

Company 2013 £000

2013 £000

2014 £000

Other payables Government grants Contingent consideration

Financial Statements

23.

166 29 144

256 38 417

94

417

339

711

94

417

Current Tax Liabilities Group

Company

2014 £000

2013 £000

2014 £000

678

1,221

13

700

678

1,221

13

700

2013 £000

Current tax liabilities

24.

Cash and Cash Equivalents and Bank Overdrafts

Shareholder Information

Group

Company

2014 £000

2013 £000

2014 £000

Cash and cash equivalents per balance sheet Bank overdrafts

8,990 (601)

6,636 (1,519)

12 -

647 -

Cash and cash equivalents per cash flow statement

8,389

5,117

12

647

2013 £000

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Strategic Report

25.

Financial Liabilities - Borrowings Current Group 2014 £000

Company 2014 £000

2013 £000

2013 £000

Loan capital (unsecured) Other loanstock (unsecured) Net obligations under finance leases

601 1,979 2,580

1,519 1,940 3,459

1,927 1,927

1,840 1,840

656 16 686

672 17 707

656 17 -

672 17 663

3,938

4,855

2,600

3,192

Governance

Bank loans and overdrafts due within one year or on demand: Secured overdrafts Secured loans

Non-current Group 2014 £000

Company 2014 £000

2013 £000

2013 £000

Bank loans: Secured

Net obligations under finance leases

1,549 1,549

3,354 3,354

1,369 1,369

3,355 3,355

751

915

-

882

2,300

4,269

1,369

4,237

Financial Statements

After 31 August 2006 the loanstock is redeemable at par at the option of the Company. Interest at 1.5% per annum is payable to the holders of the convertible unsecured loanstock.

Non-current

Monthly instalment

Balance outstanding 2014

Balance outstanding 2013

Interest rate

Maturity date

Barclays Bank Plc

£53,774

£944,197

£1,556,481

2% over base rate

May 2016

HSBC Bank Plc

£52,389

£1,277,277

£1,869,294

1.8% over base rate

Nov 2016

HSBC Bank Plc

£57,730

£1,076,336

£1,769,095

2.00% over base rate

June 2016

£5,111

£231,433

-

4.75% per annum

Dec 2018

Lombard Bank Loan

Shareholder Information

The bank loans include term loans repayable by instalments as follows:

These loans are secured by legal charges over certain of the Company’s freehold property.

Bank loans and overdrafts include overdrafts totalling £3,944,768 (2013: £1,519,346) relating to subsidiary companies, which are secured by debentures over the assets of those companies.

Wynnstay Group Plc

ANNUAL REPORT 2014

55

Strategic Report

Notes to the Financial Statements (continued) 25.

Financial Liabilities - Borrowings (continued) Finance lease obligations are secured on the assets to which they relate.

Group

Company

2014 £000

2013 £000

2014 £000

3,938 1,791 509 -

4,855 2,487 1,782 -

2,600 1,369 -

3,192 2,465 1,772 -

6,238

9,124

3,969

7,429

686 419 332 -

707 502 413 -

-

663 480 402 -

1,437

1,622

-

1,545

Borrowings as above Cash and cash equivalents

6,238 (8,990)

9,124 (6,636)

3,969 (12)

7,429 (647)

Net (cash)/debt

(2,752)

2,488

3,957

6,782

Borrowings are repayable as follows:

2013 £000

On demand or within one year In the second year In the third to fifth years inclusive Over five years

Governance

Finance leases included above are repayable as follows: On demand or within one year In the second year In the third to fifth years inclusive Over five years

The net borrowings are:

Financial Statements

26.

Financial Instruments Fair values of non-derivative financial assets and financial liabilities The fair value of current assets and current liabilities are assumed to approximate to book value due to the short-term maturity of these instruments.

Where market values are not available, fair values of financial assets and financial liabilities have been calculated by discounting expected future cash flows at prevailing interest rates. The fair value of current assets and current liabilities are assumed to approximate to the book value due to the short term maturity of the instruments. The fair value of the non current borrowings have been assessed and are not deemed to differ materially from book value.

Fair values of derivative financial assets and financial liabilities Derivatives are used to hedge exposure to market risks, and those that are held as hedging instruments are formally designated as hedges as defined in IAS 39. Derivatives may qualify as hedges for accounting purposes and the Group’s hedging policies are further described below.

Fair value hedges

Shareholder Information

The Group maintains futures based commodity contracts to hedge against the open long or short physical positions on its forward purchase and sales books. Changes in the fair value of derivatives that are designated and qualify as fair value hedges are recorded in the Group Statement of Comprehensive Income, together with any changes in the fair value of the hedged asset or liability that are attributable to the hedged risk.

The gain or loss on the hedging instrument and hedged item is recognised in the Group Statement of Comprehensive Income. If the hedge no longer meets the criteria for hedge accounting, the adjustment to the carrying value of the hedged item is amortised to the Group Statement of Comprehensive Income under the effective interest rate method.

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The Group’s derivative financial assets and liabilities that are measured at fair value at 31 October 2014, have been considered against the following hierarchical criteria to assess their classification level:

- quoted prices (unadjusted) in active markets for identical assets or liabilities (Level 1);

- inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (that is, as prices) or indirectly (that is, derived from prices) (Level 2); and

- inputs for the asset or liability that are not based on observable market data (that is, unobservable inputs) (Level 3).

All derivative financial assets and liabilities are classified as Level 1 instruments as they are valued at quoted market prices.

Risks associated with financial instruments The main risks to which the Group is exposed are as follows: •

Market Risk Market risk is the risk that changes in market prices, such as foreign exchange rates, interest rates and equity prices that will affect the Group’s income or the value of its holdings of financial instruments Interest rate risk

Governance

•

. hile currently most of the Group’s term debt is floating base rate linked, the Board constantly review their option to fix the rates W attached to this debt through the use of Interest rate swap derivatives. Fixed rate term finance is used for the acquisition of vehicles.

•

Foreign currency risk The main currency related risk to the Group comes from the forward purchasing of imported raw materials for our Glasson Grain business. This risk is mainly managed by entering into currency purchase agreements at the time the underlying transaction is completed. The fair value of these contracts is not material.

As at the year end the principal amounts relating to forward purchased currency amounted to £3,655,694 (2013: £2,281,000)

•

Commodity price risk While the Group does not engage in the taking of speculative commodity positions, it does have to make significant forward purchases of certain raw materials, particularly for use in its animal feed manufacturing activities. Position reporting systems are in place to ensure the Board is appraised of the exposure level on a regular basis, and where possible hedging tools, primarily wheat futures contracts on the London LIFFE market are used to manage price decisions.

Credit risk

Financial Statements

•

Credit risk is the risk of financial loss to the Group if a customer or counterparty to a financial instrument fails to meet its contractual obligations, and arises principally from the Group’s receivables from customers and investment securities.

A significant proportion of the Group’s trade is conducted on credit terms and as such a risk of non payment is always present.

Detailed systems of credit approval before initial supply, the operation of credit limits and an active credit control policy act to minimise this risk and historically the incidence of bad debts is low. The Group’s grain trading activities has exposed it to certain substantial customer credit balances, and to assist in mitigating this perceived risk, a credit insurance policy has been purchased to provide partial cover against default by certain customers.

The overdue accounts are reviewed monthly at divisional management meetings to mitigate exposure to credit risk and make provisions accordingly.

Concentration of credit risk with respect to trade receivables is limited due to the Group’s customer base being large and unrelated.

Due to this, management believes that there is no further credit risk provision required in excess of the normal provision for doubtful receivables. Included within the Company trade receivables are £nil (2013: £412,988) of intercompany trade debtors.

These related to a number of independent customers for whom there is no recent history of default.

The aging analysis is as follows: Group

Shareholder Information

At 31 October 2014 trade receivables of £7,392,623 (2013: £7,132,000), (Company £nil (2013: £5,365,000)) were past due but were not impaired.

Company

2014 £000

2013 £000

2014 £000

Up to 3 months

5,954

5,548

-

4,075

Over three months

1,439

1,584

-

1,290

2013 £000

Wynnstay Group Plc

ANNUAL REPORT 2014

57

Strategic Report

Notes to the Financial Statements (continued) 26.

Financial Instruments (continued) Liquidity risk Liquidity risk is the risk that the Group will not be able to meet its financial obligations as they fall due.

The Group has appropriate overdraft facilities in place to allow flexibility in managing liquidity.

The effective interest rates at the balance sheet dates were as follows:

Governance

Group

27.

Company

2014

2013

2014

2013

Bank overdraft

2.0%

2.2%

-

2.0%

Bank borrowings

2.4%

2.4%

2.4%

2.4%

Loan capital

1.5%

1.5%

1.5%

1.5%

Finance leases

5.9%

6.9%

-

6.9%

Deferred Taxation Group

Company

2014 £000

2013 £000

2014 £000

259 68 327

317 (58) 259

105 (105) -

2013 £000

At 1 November Transferred to subsidiary Company Charge for the year At 31 October

105 105

The provision for deferred taxation is made up as follows:

Financial Statements

Group

Company

2014 £000

2013 £000

2014 £000

327

259

-

2013 £000

Accelerated capital allowances

28.

105

Share Capital 2014 No. of shares 000

2013 £000

No. of shares 000

£000

Authorised Ordinary shares of 25p each

40,000

10,000

40,000

10,000

19,108

4,777

18,850

4,713

Allotted, called up and fully paid

Shareholder Information

Ordinary shares of 25p each

During the year 62,970 shares (2013: 68,488) were issued with an aggregate nominal value of £15,743 (2013: £17,122) and were fully paid up for equivalent cash of £390,418 (2013: £333,036) to shareholders exercising their right to receive dividends under the Company’s scrip dividend scheme.

A total of 195,282 (2013: 357,406) shares with an aggregate nominal value of £48,821 (2013: £89,352) were issued for a cash value of £320,511 (2013: £800,994) to relevant holders exercising options in the Company. No other shares were issued for cash in this financial year (2013: 1,682,242 shares with a nominal value of £420,560 were issued to other parties in a private share placing for a total net cash value of £8,702,310).

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29.

Share-Based Payments The following options were exercised, lapsed and outstanding at the year end: Exercise Price per share £

Exercisable by

As at 1 November 2013

(Exercised)/ Issued in year

Lapsed in year

As at 31 October 2014

152,450 177,000 40,000 -

(110,100) (74,679) 373,000 100,000

(102,321) -

42,350 40,000 373,000 100,000

369,450

288,221

(102,321)

555,350

12,273 186,829 153,717 -

(10,351) (152) 352,696

(1,922) (1,413) (13,078) (2,665)

185,416 140,487 350,031

352,819 722,269

342,193 630,414

(19,078) (121,399)

675,934 1,231,284

Discretionary Share Option Schemes Granted August 2008 Granted October 2008 Granted April 2012 Granted October 2014 Granted October 2014

2.5300 0.2500 3.7500 5.4750 0.2500

Sept 2013 - Aug 2018 Oct 2013 - Mar 2014 April 2015 - March 2022 Oct 2017 - Oct 2024 Oct 2017 - Mar 2018

Granted August 2008 Granted March 2010 Granted August 2012 Granted July 2014

2.2000 2.2000 3.4000 5.0600

Sept 2013 - Feb 2014 April 2015 - Sept 2015 Sept 2017 - Feb 2018 Aug 2019 - Jan 2020

Governance

Savings Related Option Schemes

During the year 184,779 (2013: 44,550) Discretionary Share Options and 10,503 (2013: 312,856) Savings Related Options were exercised and satisfied by the allotment of new shares by the Company. The change in the number of other Savings Related Options relates to members withdrawing from the scheme by leaving employment or closing their savings contracts.

Fair Value of Options after 7 November 2002

Weighted average assumptions Share price at year end Average share price Exercise price Expected volatility Expected life Number of options Risk free interest rate Number of options exercisable

2014

2013

£5.47 £6.16 £4.10 9.43% 2.92 years 1,188,934 0.50% 42,350

£6.28 £4.89 £2.17 12.6% 0.85 years 1,079,675 0.50% 341,723

Financial Statements

During the year, the Group charged £99,269 (2013: £181,647) of share based remuneration cost to its Group Statement of Comprehensive Income based on a movement in the fair value of outstanding options granted after November 2002. The weighted average fair value of these options were estimated by using the Black-Scholes option-pricing model and the following assumptions.

Shareholder Information

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 year end.

Wynnstay Group Plc

ANNUAL REPORT 2014

59

Strategic Report

Notes to the Financial Statements (continued) 30.

Contingent Liabilities The Company is part of a composite banking agreement with Just for Pets Limited, Wynnstay (Agricultural Supplies) Limited and Youngs Animal Feeds Limited.

Under the terms of the agreement the bank is authorised to offset credit balances to reduce the liabilities of the other companies included in the agreement. At the balance sheet date the potential combined liability to the companies was £nil (2013: £nil).

31.

Capital Commitments At 31 October 2014 the Group and Company had capital commitments as follows: Group 2014 £000

Company 2013 £000

2014 £000

2013 £000

Governance

Contracts placed for future capital expenditure not provided in the financial statements

32.

598

95

-

2013 £000

2014 £000

68

Operating Lease Commitments Non-cancellable operating leases are payable as follows: Land and buildings 2014 £000

Other 2013 £000

Financial Statements

Group Expiry date: Within 1 year Between 2 and 5 years Over 5 years Company Expiry date: Within 1 year Between 2 and 5 years Over 5 years

33.

2,720 7,354 4,520

2,620 8,163 4,190

79 167 -

99 94 -

781 1,836 917

369 1,247 510

-

-

Group Financial Commitments The Group has guaranteed the overdrafts of one of its joint ventures to a maximum of £125,000 (2013: £125,000).

34.

Pension Commitments The Group operates two defined contribution pension schemes which are administered on a separate basis. The pension and associated costs charge for the year was £789,126 (2013: £593,067). The liability owed to the pension schemes at 31 October 2014 was £74,623 (2013: £67,591).

35.

Employee Share Ownership Trust

Shareholder Information

The Company operates an employee share ownership trust (ESOP). As at 31 October 2014, 10,494 ordinary 25p shares (2013: nil ordinary 25p shares) were held by the trust with an aggregate market value of £57,402 (2013: £nil). The assets, liabilities, income and costs of the ESOP are incorporated into the financial statements of the Group.

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36.

Post Balance Sheet Event 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.

12 January 2015

Date of acquisition

Fair Value £000

Initial fair value of acquisition :

Plant and equipment Inventories Goodwill

19 170 312

Estimated total fair value of acquisition

501

Net cash paid on completion Less retention pending confirmation of Net Asset values at completion Fair value of contingent consideration to be paid after one year

365 76 60

Estimated total fair value of acquisition

501

Governance

Consideration paid as follows:

The final consideration to be paid is subject to confirmation of the Inventories value, and the financial performance of the acquired business in the period from acquisition to 1 January 2016.

In line with the sale and purchase agreement the maximum contingent consideration will be £60,000.

37.

Financial Statements

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.

Related Party Transactions During the year trading took place between the Group and a number of its Directors. All transactions were carried out on an arm’s length basis.

Transactions with Key Management Personnel Key management personnel are considered to be Directors and their remuneration is disclosed within the Director’s Remuneration disclosure (note 9).

J J McCarthy J C Kendrick (retired 18 March 2014) Lord Carlile CBE QC K R Greetham D A T Evans B P Roberts P M Kirkham H J Richards (appointed 14 July 2014)

Wynnstay Group Plc

ANNUAL REPORT 2014

Balance outstanding 2013

£

£

31 October 2014 £

31 October 2013 £

849 281,696 385 298,262 2,093,523

222 213,469 1,034 84,686 -

23 31,720 78 33,327 395,402

55 25,097 61 17,020 -

2,674,715

299,411

460,550

42,233

Shareholder Information

Total sales 2014

61

Strategic Report

Notes to the Financial Statements (continued) 38.

Cash Generated from/(used in) Operations Group

Company

2014 £000

2013 £000

2014 £000

6,697

6,171

181

3,212

2013 £000

1,796 2,509 10 (171) (52) 378 (428) 99

1,850 2,522 (131) (46) 524 (269) 182

123 270 (57) 26 99

879 (500) 1,672 (112) (30) 433 182

265 844 2,522 (2,696)

185 (1,000) (1,600) 4,568

265 1,625 (773)

185 (2,136) (9,108) 1,351

Cash generated from operations

11,773

12,956

1,759

(3,972)

Shareholder Information

Financial Statements

Governance

Profit for the year Adjustments for: Tax Dividend received Depreciation of tangible fixed assets Impairment of other intangible fixed assets (Profit) on disposal of property, plant and equipment Interest income Interest expense Share of results of joint ventures and associate Share-based payments Changes in working capital (excluding effects of acquisitions and disposals of subsidiaries): Decrease in short term loan to joint venture Decrease/(increase) in inventories Decrease/(increase) in trade and other receivables (Decrease)/increase in payables

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Wynnstay Group Plc

ANNUAL REPORT 2014

63

Shareholder Information

Financial Statements

Governance

Strategic Report

Strategic Report

Notice of Annual General Meeting Notice is hereby given that the twenty third Annual General Meeting (the “Meeting”) of Wynnstay Group Plc (the “Company”) will be held at The Lion Suite, Lion Quays Hotel and Spa, Weston Rhyn, Oswestry, Shropshire, SY11 3EN on Tuesday 24 March, 2015 at 11.45 am to transact the following business:

nominal amount of £450,000 provided that this authority shall, unless renewed, varied or revoked by the Company in General Meeting, expire on the earlier of the next Annual General Meeting of the Company and 15 months from the date of this Resolution save that the Company may, before such expiry, make an offer or agreement which would or might require relevant securities to be allotted after such expiry, and the Directors may allot relevant securities in pursuance of such offer or agreement notwithstanding that the authority conferred by this Resolution has expired. This authority is in substitution for all previous authorities conferred upon the Directors pursuant to Section 80 of the Companies Act 1985 or 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.

Ordinary Business

Governance

1.

2.

To declare a final dividend for the year ended 31 October 2014.

3.

To re-appoint the following Director who retires by rotation under Article 91: James John McCarthy

4.

5.

6.

Financial Statements

To receive and adopt the Company’s annual accounts for the financial year ended 31 October 2014 together with the Directors’ Report and Auditor’s Report on those accounts.

7.

To re-appoint the following Director who retires by rotation under Article 91: Bryan Paul Roberts To re-appoint the following Director who retires under Article 86: Howell John Richards To re-appoint KPMG LLP as auditor, to hold office from the conclusion of the Meeting to the conclusion of the next Meeting at which accounts are laid before the Company at a remuneration to be determined by the Directors.

To approve as an Ordinary Resolution, that the Directors be and they are hereby generally and unconditionally authorised subject to the provisions set out in Article 146 (Payment of Scrip Dividends) to offer shareholders the right to elect to receive Ordinary Shares, credited as fully paid, instead of the whole (or some part, to be determined by the Board) of any dividend to be declared during the period from the date of this Resolution to the expiry of the fifth anniversary of the date of this Resolution, on such terms and conditions as the Board may determine.

Shareholder Financial Statements Information Shareholder Information

Special Business

64

9.

To consider and, if thought fit, pass the following Resolutions which will be proposed as Special Resolutions :

8.

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

(a)

(b)

That, subject to passing Resolution 8 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: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 otherwise than pursuant to subparagraph (a) above up to an aggregate nominal amount of £450,000, and shall expire on the earlier of the next Annual General Meeting of the Company and 15 months from the date of this Resolution save that the Company may, 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.

10.

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 2.6% 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.

B P Roberts 20 January 2015 Company Secretary Wynnstay Group Plc Eagle House Llansantffraid-ym-Mechain Powys SY22 6AQ

www.wynnstay.co.uk

Authority to purchase shares

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. A proxy does not need to be a member of the Company but must attend the Meeting to represent you.

Special resolution 10 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.

5.

Documents on display

Copies of necessary documents will be available for at least 15 minutes prior to the Meeting and during the Meeting.

2.

Authority to continue to offer Scrip Dividends

6.

Enquiries relating to the Meeting

Under the Articles of Association of the Company, the Directors may with the authority of shareholders offer the opportunity to elect to receive scrip dividends in the form of new Ordinary Shares instead of cash.

Ordinary resolution 7 is put forward to allow the continuation of such shareholder authority following the expiry of a routine period, and simply grants approval for the continuation of the existing scheme for a further five years. The Board have no plans to alter or amend the terms or other conditions of the operation of the existing mandate based scheme and all existing instructions would be honoured on the approval of this resolution.

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 Companyâ&#x20AC;&#x2122;s external registrar at the following address: Neville Registrars, 18 Laurel Lane, Halesowen, West Midlands, B63 3DA (Tel. 0121 585 1131)

3.

Authority to allot shares

Special resolutions 8 and 9 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.

Governance

4.

Financial Statements

Appointment of proxies

Shareholder Financial Statements Information Shareholder Information

1.

Strategic Report

Notes to the Notice of Annual General Meeting

Wynnstay Group Plc

ANNUAL REPORT 2014

65

Strategic Report

Financial Calendar 21 January 2015

Announcement of 2014 Results

24 March 2015

Annual General Meeting

27 March 2015

Dividend Record Date

30 April 2015

Payment of Final 2014 Dividends

Announcement of 2015 Interim Results

Shareholder Financial Statements Information Shareholder Information

Financial Statements

Governance

June 2015

66

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Shareholder Financial Statements Information Shareholder Information

Financial Statements

Governance

Strategic Report

Notes

Wynnstay Group Plc

ANNUAL REPORT 2014

67

Wynnstay Group Plc Eagle House Llansantffraid Powys SY22 6AQ t: 01691 828512 f: 01691 828690 e: info@wynnstay.co.uk Registered in Wales and England

www.wynnstay.co.uk