wynnstay annual report 2015

ANNUAL REPORT AND ACCOUNTS 2015

Wynnstay Group PlcEagle House, Llansantffraid, Powys, SY22 6AQ

01691 828512

www.wynnstay.co.uk

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Financial Highlights

STRATEGIC REPORTPrincipal Activities and Business ModelGroup StrategyChairman’s Statement Chief Executive’s Review Finance ReviewKey Performance Indicators and Risk Management

GOVERNANCE Board and AdvisorsBoard of DirectorsDirectors’ ReportCorporate Governance StatementDirectors’ Remuneration StatementIndependent Auditor’s Report

FINANCIAL STATEMENTSConsolidated Statement of Comprehensive Income Consolidated and Company Balance SheetConsolidated and Company Statement of Changes in Equity Consolidated and Company Cash Flow Statement Principal Accounting PoliciesNotes to the Financial Statements

SHAREHOLDER INFORMATIONNotice of Annual General MeetingNotes to Notice of Annual General MeetingFinancial Calendar

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2122 - 2324 - 2526 - 2829 - 33

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72 7374

Committed to becoming a leading supplier of products

and services Wynnstay Group manufactures and supplies agricultural products to farmers and the wider rural community in Wales, and Central England. 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 Associate Companies.

CONTENTS

Wynnstay Group Plc ANNUAL REPORT 2015

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FINANCIAL HIGHLIGHTS

Group Revenue

Underlying Earnings per Share**

Shareholders’ Funds

Group EBITDA

Underlying Group Pre-Tax Profit*

Dividend per Share

* Group pre-tax profits include the Group’s share of pre-tax profit from joint ventures and associate investments but excludes the exceptional item and share based payments.

£377.38 million

36.32 pence

£82.56 million

£11.70 million

£9.05 million

11.10 pence

2015

£413.56 million

35.28 pence

£77.23 million

£11.37 million

£8.70 million

10.20 pence

2014

GROWTH RECORD

Group Revenue (£m)

243.74

346.18375.78

413.48 413.56377.38

£377.38m(2014: £413.56m)

-8.75%

Underlying Earnings per Share (pence)

36.32p**

(2014: 35.28p)

+2.95%

‘15‘14‘13‘12‘11‘10 ‘15**‘14‘13**‘12‘11‘10

Underlying Group Pre-Tax Profit* (£m)

£9.05m(2014: £8.70m)

+4.02%

‘15‘14‘13‘12‘11‘10

Dividend per Share (pence)

11.10p(2014: 10.20p)

+8.82%

‘15‘14‘13‘12‘11‘10

27.4830.23

34.99 35.28

7.107.80

8.50

9.3010.20

11.10

6.13

7.09

8.028.64 8.70

9.0536.32

34.66

38.49

36.43

**Underlying EPS calculation excludes the exceptional item

**Underlying EPS calculation excludes the exceptional item

www.wynnstay.co.uk

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PRINCIPAL ACTIVITIES AND BUSINESS MODEL

AGRICULTURE

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 Associate Companies. By recognising the importance of quality, value and advice the Group strives to be the “supplier of choice” for its customer base.

Feed Division 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.

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

Arable Division 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 principal supplier of CF 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.

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.

The Agriculture Division covers the manufacturing and supply of a comprehensive range of agricultural inputs to customers throughout Wales, Central and more recently Southern England.


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SPECIALIST RETAIL

Wynnstay StoresThe rural retail outlets are well established and provide a comprehensive range of products for farmers and rural dwellers. The stores, which now number 51, operate throughout the trading area and supply a wide range of specialist products to farmers, smallholders and pet owners. Our dedicated team are happy to provide 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.

Just for PetsJust for Pets, which is based in Hartlebury in Worcestershire, currently has 23 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. Eight stores offer a walk in vaccination service and seven stores have groomers on site.

Youngs Animal FeedsYoungs Animal Feeds manufactures equine and small animal feeds from its production facility at Standon in Staffordshire. It also has 4 small retail outlets and acts as a distributor of products to the equine market through wholesalers and retailers in the west of the UK.

The Agriculture Division covers the manufacturing and supply of a comprehensive range of agricultural inputs to customers throughout Wales, Central and Southern England.

www.wynnstay.co.uk

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GROUP STRATEGY

The Group is committed to becoming a leading supplier of products and services in the rural and wider economy. In so doing, Wynnstay Group Plc will optimise the return to all stakeholders in the business.

In order to achieve this ambition, the Group recognises that it must excel in terms of value, quality and the development of its products, services and people. The Group strives to become the “Supplier of Choice” for its customer base.

Operational StrategyThe business operates in an environment where fundamental macro-economic drivers are supporting the growth of the principal activities. A growing world population and changing dietary habits are creating an increased demand for food production, which is supported by a political desire to promote greater productivity and self-sufficiency, in a sustainable manner. These factors provide a strong backdrop for expansion of the Group’s activities, although the inherent cyclical nature of much of the world’s food production can create certain short term stresses to the smooth operation of activities. The Board has always recognised that the natural processes involved in food production will, from time to time create risks to certain enterprises at different

times, either through climatic, disease, economic or other influences. The Group has therefore developed a strategy which is designed to minimise such risks through ensuring a broad and balanced spread of activities across all the main agricultural input areas, rather than relying on any specific single food enterprise. This policy of having a broad based business limits the impact of any adverse performance in any individual activity, and has helped shelter the Group from periodic commodity volatility extremes.

The main markets that the Group operates in are currently supplied by a relatively fragmented industry. 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 enthusiasm of staff available to the business, the consolidation strategy successfully carried out for a number of years can continue. The Board expect continued geographic expansion of the business’s core operating areas and a broadening of its product offering through the ongoing implementation of this strategy.

Corporate GoalsThe Group has separate outline goals

for what it identifies as the four main stakeholder groupings in the business, and these include:

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

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

Employees – where 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.

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

Business Review and Future

A review of the business and future developments of the Group and a discussion of the principal risks and uncertainties faced by the Group are presented in the Chairman’s Statement and Chief Executive’s Review included within the Group’s published accounts.

Developments


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LOCATIONS

www.wynnstay.co.uk

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CHAIRMAN’S STATEMENT

OverviewThe Group has delivered a resilient performance in a year which has seen some very difficult trading conditions for our farming customers, with continuing low farmgate prices. The spread of the Group’s activities across arable, feeds and retail continued to be a major strength and has supported the overall performance. Group pre-tax profit for the year, before exceptional charges and share-based payments, increased by 4% to £9.05m (2014 £8.70m), helped by the successful integration of recent acquisitions and growth across a number of product sectors. Revenues at £377.38m (2014: £413.56m) were impacted by ongoing commodity price deflation.

We continued to expand the business during the year, with a number of small acquisitions, benefiting both our Agricultural and Specialist Retail Divisions. Of particular note was the acquisition, at the year end, of Agricentre, the farm supplies operation in the West Country. Its addition extends the Group’s trading area and also provides additional opportunities across the range of our agricultural activities.

A more detailed account of the Group’s trading is set out in the Chief Executive’s review and while the business is reported under two Divisions, both are intrinsically linked, with strong synergies.

The Agricultural Division benefited from higher feed sales in the first half of the year and a good performance within the raw material sector. There was also

an increased volume of grain reflecting the larger UK harvest. Seed sales were encouraging and, although fertiliser demand was subdued, returns from the Agricultural Division improved over the prior year and were in line with overall expectations.

The Specialist Retail Division performed well and continues to develop. Recent acquisitions have integrated successfully and, including Agricentre, there are now 51 Wynnstay Stores, serving the agricultural and rural communities, and 23 Just for Pets outlets, providing a range of pet products predominately in urban areas. Youngs Animal Feeds, which supplies a range of equine and small animal feeds, complements both these activities and contributed positively.

Financial ResultsThe Group generated revenues of £377.38m (2014: £413.56m) for the year to 31 October 2015. Agricultural commodity price deflation is estimated to have accounted for approximately £32.00m of the reduction. Sales at the Agricultural Division were £270.05m (2014: £308.71m), reflecting lower unit values for most feed, grain and fertiliser product. The Specialist Retail Division contributed revenues of £107.19m (2014: £104.62m) with the increase mainly reflecting the increased number of outlets.

Group pre-tax profit, before share-based payments and exceptional costs,

increased by 4% to £9.05m (2014: £8.70m). The reduced reported statutory profit of £8.34m (2014: £8.49m) reflected increased share-based payments; re-organisational costs relating to the integration of the Agricentre acquisition and a reduced contribution from joint venture results.

Pleasingly both Divisions generated a year-on-year uplift in operating profit contribution. The operating profit contribution from the Agricultural Division increased by 8.7% to £4.13m (2014: £3.80m), with higher volumes in core product categories. The Specialist Retail division contributed a 4.1% increase in operating profit at £5.08m (2014: £4.88m), primarily reflecting the increased number of outlets. Other activities showed a loss of £0.26m (2014: profit of £0.25m), as a result of reduced joint venture income mainly from Agricultural activities and higher share-based payment costs.

Net finance charges reduced to £0.24m (2014: £0.33m) which reflected the continuing reduction in average net debt through the year as a result of strong trading cash flow and lower working capital.

Underlying earnings per share, before exceptional costs, increased by 2.9% to 36.32p (2014: 35.28p). Statutory basic earnings per share were 34.66p (2014: 35.28p).

Net assets at 31 October 2015 were 7.3% higher at £82.86m or £4.31 per share (2014: £77.23m or £4.07 per share).

Cash generation remained strong and at the year end, which represents the normal seasonal low in the working capital cycle, net cash stood at £2.14m (2014: £2.75m).

DividendThe Board is pleased to propose the payment of a final dividend of 7.40p per share (2014: 6.80p per share). Together with the interim dividend of 3.70p per share, paid on 30 October 2015, this takes the total dividend for the year to 11.10p (2014: 10.20p), an increase of 8.8% on the prior year.


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JIM MCCARTHY

The final dividend will be paid on 29 April 2016 to shareholders on the register on 29 March 2016. A scrip dividend alternative will continue to be available as in previous years. The last date for election of the scrip dividend will be 14 April 2016.

The BoardWe are delighted to announce the appointment of Stephen Ellwood as a Non-Executive Director. Steve has over 30 years’ experience in the agricultural banking sector, with the majority of his career spent at HSBC Bank Plc, where he was Head of Agriculture for 10 years. Steve currently serves as a Non-Executive Director of several companies in the sector, including Velcourt Farms Ltd, a leading UK farm management business. His appointment, which takes effect in April 2016, follows the retirement of Lord Carlile CBE, QC, who served as a Non-Executive Director for over 16 years. On behalf of the Board, I would like to warmly welcome Steve to the Group and reiterate our sincere thanks to Lord Carlile CBE, QC for his dedicated service and wise counsel over so many years.

ColleaguesI remain grateful to my colleagues across Wynnstay for their professionalism and commitment both to the Group and our customers. On behalf of the Board, I would like to take this opportunity to recognise their ongoing input and contribution to the business.

OutlookIn a year where the backdrop for our farming customers has been challenging, Wynnstay’s results demonstrate the resilience and progress we have made in continuing to drive the Group’s development.

Looking ahead farmgate prices still show little sign of the expected recovery, and continue to impact farmer income. In addition, early trading has seen a slower start, due in part to the late onset of winter. While it is still early in our calendar, a cautious view of the year ahead is appropriate since a continuation of these conditions will impact the Group’s performance.

The long term growth trends remain positive for UK agriculture, although the need to drive greater efficiencies through the sector is also a feature. We will continue to develop the Group’s activities and services, both organically and via acquisitions, and ensure that we can provide our farming customers with a breadth of competitively priced products complemented by technical support and advice.

Notwithstanding the current challenges in the sector, Wynnstay remains well

placed within its marketplace and is supported by strong cash flows and a robust balance sheet.

Jim McCarthyChairman

26 January 2016

The spread of the groups activities continued to be

a major strength

www.wynnstay.co.uk

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ADRODDIAD Y CADEIRYDD

TrosolwgMae’r Grŵp wedi perfformio’n gadarn mewn blwyddyn lle gwelwyd rhai amodau masnachu anodd iawn i’n cwsmeriaid yn y diwydiant ffermio, gyda phrisiau clwyd fferm isel parhaol. Parhaodd gweithgareddau’r Grŵp ym meysydd âr, porthiant a manwerthu i fod yn gryfder mawr ac mae hyn wedi helpu ei berfformiad cyffredinol. Cynyddodd elw cyn treth y Grŵp am y flwyddyn, cyn taliadau eithriadol a thaliadau seiliedig ar gyfranddaliadau, 4% i £9.05m (2014 £8.70m), a gafodd hwb yn sgil integreiddio caffaeliadau diweddar yn llwyddiannus a thwf mewn nifer o sectorau cynnyrch. Effeithiodd datchwyddiant parhaus o ran prisiau nwyddau ar refeniw o £377.38m (2014: £413.56m).

Gwnaethom barhau i ehangu’r busnes yn ystod y flwyddyn gyda nifer o gaffaeliadau bach, a oedd o fudd i’n His-adrannau Manwerthu Arbenigol ac Amaethyddol. Yn arbennig, ar ddiwedd y flwyddyn, caffaelwyd Agricentre, sef y cwmni cyflenwadau fferm yn Ne Orllewin Lloegr. Yn sgil hyn, ehangwyd ardal fasnachu’r Grŵp ac mae hefyd wedi esgor ar ragor o gyfleoedd mewn perthynas â’n holl weithgareddau amaethyddol.

Manylir weithgareddau masnachu’r Grŵp yn adolygiad y Prif Weithredwr ac, er yr adroddir ar y busnes o dan ddwy Is-adran, mae cysylltiad cynhenid rhwng y ddwy ynghyd â synergeddau cryf.

Elwodd yr Is-adran Amaethyddol ar werthiannau porthiant uwch yn ystod hanner cyntaf y flwyddyn a pherfformiodd

yn dda yn y sector deunydd crai. Cafwyd mwy o rawn yn yr ail hanner sy’n adlewyrchu’r cynhaeaf mwy o faint a gafodd y DU. Roedd gwerthiannau hadau yn galonogol ac, er bod y galw am wrtaith yn isel, gwellodd enillion yr Is-adran Amaethyddol o gymharu â’r flwyddyn flaenorol ac roeddent yn unol â disgwyliadau cyffredinol.

Perfformiodd yr Is-adran Manwerthu Arbenigol yn dda ac mae’n parhau i ddatblygu. Integreiddiwyd caffaeliadau diweddar yn llwyddiannus a, chan gynnwys Agricentre, ceir 51 o siopau Wynnstay bellach, sy’n gwasanaethu’r cymunedau amaethyddol a gwledig, ynghyd â 23 o siopau Just for Pets, sy’n darparu amrywiaeth o gynhyrchion anifeiliaid anwes, mewn ardaloedd trefol yn bennaf. Mae Youngs Animal Feeds, sy’n cyflenwi amrywiaeth o fwydydd ceffylau ac anifeiliaid anwes, yn ategu’r ddau weithgaredd hyn a gwnaeth gyfraniad cadarnhaol.

Canlyniadau AriannolCynhyrchodd y Grŵp refeniw o £377.38m (2014: £413.56m) am y flwyddyn a ddaeth i ben 31 Hydref 2015. Amcangyfrifir bod datchwyddiant mewn prisiau nwyddau amaethyddol wedi cyfrif am tua £32.00m o’r gostyngiad. Roedd gwerthiannau yn yr Is-adran Amaethyddol yn £270.05m (2014: £308.71m), sy’n adlewyrchu gwerthoedd uned is am y rhan fwyaf o gynnyrch porthiant, grawn a gwrtaith. Cyfrannodd yr Is-adran Manwerthu Arbenigol refeniw o £107.19m (2014: £104.62m) gyda’r

cynnydd yn adlewyrchu’r ffaith bod mwy o siopau yn bennaf.

Cynyddodd elw cyn treth y Grŵp, cyn taliadau yn seiliedig ar gyfranddaliadau a chostau eithriadol, 4% i £9.05m (2014: £8.70m). Mae’r gostyngiad a gofnodwyd o ran elw statudol, sef £8.34m (2014: £8.49m) yn adlewyrchu cynnydd mewn taliadau yn seiliedig ar gyfranddaliadau; costau adsefydlu yn ymwneud ag integreiddio Agricentre a llai o gyfraniad gan ganlyniadau cydfentrau.

Mae’n dda nodi i’r ddwy Is-adran sicrhau cynnydd o flwyddyn i flwyddyn o ran eu cyfraniad elw gweithredu. Cynyddodd cyfraniad elw gweithredu’r Is-adran Amaethyddol 8.7% i £4.13m (2014: £3.80m), gyda chategorïau cynnyrch craidd yn cofnodi cyfeintiau uwch. Cyfrannodd yr Is-adran Manwerthu Arbenigol gynnydd o 4.1% mewn elw gweithredu ar £5.08m (2014: £4.88m), sy’n bennaf yn adlewyrchu’r cynnydd yn nifer y siopau. Dangosodd gweithgareddau eraill golled o £0.26m, (2014: elw o £0.25m), o ganlyniad i lai o incwm gan gydfentrau yn deillio’n bennaf o weithgareddau Amaethyddol a thaliadau uwch yn seiliedig ar gyfranddaliadau.

Lleihaodd taliadau cyllid net i £0.24m (2014: £0.33m) a adlewyrchodd y gostyngiad parhaus mewn dyled net gyfartalog drwy gydol y flwyddyn o ganlyniad i lif arian parod masnachu cryf a chyfalaf gweithio is.

Cynyddodd enillion sylfaenol fesul cyfranddaliad, cyn costau eithriadol, 2.9% i 36.32c (2014: 35.28c). Roedd enillion sylfaenol statudol fesul cyfranddaliad yn 34.66c (2014: 35.28c).

Roedd asedau net ar 31 Hydref 2015 7.3% yn uwch ar £82.86m neu £4.31 fesul cyfranddaliad (2014: £77.23m neu £4.07 fesul cyfranddaliad).

Parhaodd lefelau cynhyrchu arian parod i fod yn gryf ac, ar ddiwedd y flwyddyn, sef yr isafbwynt tymhorol arferol yn y cylch cyfalaf gweithio, roedd arian parod net yn £2.14m (2014: £2.75m).

DifidendMae’n bleser gan y Bwrdd gynnig talu difidend terfynol o 7.40c fesul

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JIM MCCARTHY

cyfranddaliad (2014: 6.80c fesul cyfranddaliad). Ynghyd â’r difidend interim o 3.70c fesul cyfranddaliad, a dalwyd ar 30 Hydref 2015, mae hyn yn creu cyfanswm difidend o 11.10c ar gyfer y flwyddyn (2014: 10.20p), sef cynnydd o 8.8% o gymharu â’r flwyddyn flaenorol.

Caiff y difidend terfynol ei dalu ar 29 Ebrill 2016 i gyfranddalwyr sydd ar y gofrestr ar 29 Mawrth 2016. Bydd difidend sgrip amgen ar gael o hyd, fel mewn blynyddoedd blaenorol. Y dyddiad olaf ar gyfer ethol y difidend sgrip fydd 14 Ebrill 2016.

Y BwrddRydym yn falch o gyhoeddi y caiff Stephen Ellwood ei benodi’n Gyfarwyddwr Anweithredol. Mae gan Steve fwy na 30 mlynedd o brofiad yn y sector bancio amaethyddol, gyda’r rhan fwyaf o’i yrfa wedi’i threulio yn HSBC Bank plc, lle’r oedd yn Bennaeth Amaethyddiaeth am 10 mlynedd. Ar hyn o bryd, mae Steve yn Gyfarwyddwr Anweithredol gyda sawl cwmni yn y sector, gan gynnwys Velcourt Farms Ltd, sef busnes rheoli ffermydd blaenllaw yn y DU. Daw ei benodiad ym mis Ebrill 2016 yn sgil ymddeoliad yr Arglwydd Carlile CF CBE, sydd wedi bod yn Gyfarwyddwr Anweithredol ers dros 16 mlynedd. Ar ran y Bwrdd, hoffwn estyn croeso cynnes i’r Grŵp i Steve a diolch o waelod calon i’r Arglwydd Carlile am ei waith caled a’i gyngor doeth dros yr holl flynyddoedd.

CydweithwyrRwy’n parhau’n ddiolchgar i’m gydweithwyr o fewn Wynnstay am eu proffesiynoldeb a’u hymroddiad i’r Grŵp ac i’n cwsmeriaid. Ar ran y Bwrdd, hoffwn cymryd cyfle hwn i gydnabod eu mewnbwn a’u cyfraniad parhaus at y busnes.

RhagolygonMewn blwyddyn heriol i’n cwsmeriaid yn y diwydiant ffermio, mae canlyniadau Wynnstay yn dangos ei gadernid a’r cynnydd a wnaed wrth barhau i ddatblygu’r Grŵp.

Wrth edrych i’r dyfodol, nid oes fawr o arwydd o welliant o ran prisiau clwyd fferm fel y disgwyliwyd, a wnaiff barhau

i effeithio incwm ffermwyr. Hefyd, bu’r masnachu cynnaryn arafach, yn rhannol am fod y gaeaf wedi dechrau’n hwyr. Er ei bod yn ddyddiau cynnar, mae cymeryd pwyll wrth ystyried y flwyddyn i ddod yn ddoeth, os parheir yr amodau hyn cânt effaith andwyol ar berfformiad y Grŵp.

Mae’r tueddiadau hir-dymor o ran twf yn parhau’n gadarnhaol i ddiwydiant amaethyddol y DU er bod yr angen i gyflawni mwy o arbedion effeithlon yn y sector cyfan hefyd yn hanfodol. Byddwn yn parhau i ddatblygu gweithgareddau a gwasanaethau’r Grŵp, yn gyfundrefnol

a thrwy gaffaeliadau, ac yn sicrhau ein bod yn gallu darparu ystod eang o gynhyrchion am bris cystadleuol, a ategir gan gymorth a chyngor technegol, i’n cwsmeriaid yn y diwydiant ffermio.

Er gwaethaf yr heriau presennol a wynebir gan y sector, mae Wynnstay mewn sefyllfa dda yn y farchnad a chaiff ei gefnogi gan lifau arian parod cryf a mantolen gadarn.

Jim McCarthyCadeirydd

26 Ionawr 2016

Mae lledaeniad gweithgareddau’r Grŵp yn

parhau i fod yn gryfder mawr

www.wynnstay.co.uk

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CHIEF EXECUTIVE’S REVIEW

IntroductionWynnstay has delivered a pleasing performance in a trading environment that has been impacted by continuing low output prices for farmers. Group pre-tax profit, before exceptional charges and share based payments, increased by 4% to £9.05m (2014: £8.70m), a new record, on revenues which reduced to £377.38m (2014: £413.56m), reflecting commodity price deflation. These robust results were supported by recent acquisitions as well as increased volumes and efficiency gains in some sectors. Wynnstay’s balanced spread of activities, spanning the arable, livestock and retail sectors, also helped to underpin results, providing a smoothing effect against sector volatility.

We further expanded our Wynnstay Stores network adding a number of new outlets during the year, which strengthen our existing geographic footprint. At the year end, we completed the acquisition of Agricentre, a well-established farm supplies operation, trading through eight units in the West Country. The move is important as it extends Wynnstay’s presence into a major new geographic region and there are opportunities to enhance both Agricentre’s product range and the breadth of its activities. The integration process has started

well although the full benefits of this acquisition are not expected to come through for another 12 months.

Farmgate prices remain a challenge for the industry, with prices below the realistic cost of production for many farmers. However the longer term macroeconomic growth drivers for the sector remain compelling and we intend to continue to build on the Group’s solid foundations, developing Wynnstay’s presence both organically and through further acquisitions.

Review of Activities

Agricultural DivisionThe Agricultural Division performed well in a difficult market with operating profit increasing by 8.7% to £4.13m, (2014: £3.80m), helped by strong demand for feed in the first half and an improved raw materials performance. While revenues were impacted by commodity price deflation, decreasing by 13% to £270.05m (2014: £308.71m), we achieved year-on-year volume improvement in many product categories. Although margins remained under pressure, our focus on operational efficiencies contributed to the improved financial performance.

Our Agricultural Division works closely with our Wynnstay Stores network, which has grown significantly over recent years, and our expansion into new geographies provides further opportunities across the breadth of our agricultural activities.

Feed ProductsTotal feed volumes increased by 1.5% over the prior year, in line with market trends. After a strong first half, demand for feed was more subdued, reflecting both the prolonged autumn weather and the poor milk and meat prices affecting farmers. As in prior years, the broad spread of the Group’s feed activities, which include products for the ruminant and poultry markets, along with traded raw materials, helped to smooth the overall result. Slightly lower demand for dairy compound was balanced by an increased demand for blends and feed for poultry, beef and sheep.

We have continued to develop our team of dairy specialists as part of an ongoing initiative targeting the dairy sector. Working alongside both their farm sales and Wynnstay Stores colleagues, they help to ensure that customers have access to the full range of products and services essential to an efficient dairy


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enterprise. We also continued to improve our own efficiencies, which supports our aim of maintaining competitive prices for our customers.

GlassonThe Glasson business, which operates from port facilities at Glasson Dock, near Lancaster, is a long standing supplier of a broad range of raw materials to the agricultural wholesale market. It also manufactures specialist products for the wholesale merchants and processes fertiliser for both the wholesale sector and our own direct fertiliser sales. While overall volumes of raw materials were down year-on-year, the business generated a good financial contribution, supported by a favourable product mix. Good volumes of fertiliser and specialist products also offset a reduction in unit margins across these categories.

Arable ProductsOur arable activities cover a full range of arable inputs which are complemented by a farmer-focused grain trading business. We continued to make progress within the sector although margin pressure remained a feature. We were pleased with the performance of our seed activities; sales were strong and volumes were in line with the previous year.

Grain yields were good across the trading area although, with output prices remaining disappointing, farmers have been reluctant to market their grain. However, the increased yields provided a good opportunity for the grain trading teams at GrainLink and Woodheads Seeds and combined volumes increased over the previous year.

Demand for fertiliser was subdued in the first half as customers held back from buying in anticipation of a reduction in price. The resultant spot market was strong but margins remained under pressure. Autumn demand for fertiliser was tempered by weaker farmer sentiment and we therefore anticipate a shift in seasonal sales activity to the Spring of 2016.

Specialist Retail DivisionThe Specialist Retail Division, which encompasses Wynnstay Stores, Just for Pets and Youngs Animal Feeds, continued to make pleasing progress over the period, adding 13 new outlets. Total revenues rose by 2.5% to £107.19m (2014: £104.62m) and operating profit increased by 4.1% to £5.08m (2014: £4.88m).

Wynnstay StoresOur network of Wynnstay Stores, which are mainly geared towards farm supplies, has expanded significantly over recent years, and the acquisition of Agricentre, completed at the year end, takes the total number of outlets to 51 from 40 over the past twelve months.

Total sales for the year increased by 3.1%, benefiting from the opening of a

KEN GREETHAM

Wynnstay’s success reflects the efforts of all staff

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new store in Aberystwyth in November 2014 and the acquisitions of Ross Feed at Ross-on-Wye in January 2015 and S Jones in Bethania, Ceredigion, in September 2015. Reflecting commodity price deflation, like-for-like sales showed a marginal reduction of 1%.

The acquisition of Agricentre was an important strategic move, providing us with a trading entry into the West Country. Bringing an additional eight

units, the business, now rebranded ‘Wynnstay Agricentre’, has been trading across the West Country since 1961. Its model of small units, wholly geared to farmers, mirroring the approach we are taking with certain new stores.

Our store network represents an important route to market for UK and international suppliers, and we intend to continue to scale the operation. In an environment where farm incomes are

under pressure, our increased purchasing power will also help us ensure that we continue to offer our customers a broad range of competitively priced products and services.

Just for PetsTotal and like-for-like sales at our chain of pet product outlets, ‘Just for Pets’, increased marginally year-on-year. As expected, the contribution was below the prior year, reflecting the costs associated with expansion. We opened two new stores in the year, at Cambourne in June 2015 and Reading in October 2015, with a further outlet opened in Nottingham after the year end, in November 2015. We continue to identify potential new sites for stores and expect to open an additional outlet in the spring of 2016.

Youngs Animal FeedsYoungs manufactures and distributes a range of equine products that are sold by specialist outlets across the centre of the UK. The business has performed strongly over the year, expanding its position in the market, with further opportunities available from the continuing growth of the Specialist Retail Division.

Joint Ventures and AssociatesThe Group has five key joint venture businesses, (Bibby Agriculture, Wyro, GeoGen, FertLink and Total Angling) as well as two associate businesses (Wynnstay Fuels and Celtic Pride). These ventures continued to make a valuable contribution to the Group and the reduced contribution this year, compared to the prior year, mainly reflected the challenges of the agricultural market.

Staff Wynnstay’s success to date reflects the efforts of all staff, and I would like to take this opportunity to recognise the commitment, enthusiasm and drive of my colleagues across the Group and to record my personal appreciation.

I would also like to echo our Chairman’s thanks to Lord Carlile CBE, QC who retired from the Group in March 2015 after 16 years as a Non-Executive Director. I also have much pleasure in welcoming

CHIEF EXECUTIVE’S REVIEW continued


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Stephen Ellwood who will be joining Wynnstay as a Non-Executive Director in April 2016. Steve’s background as an agricultural specialist in commercial banking further strengthens our Board of Directors.

OutlookThe Group’s broad base of activities continues to underpin its resilient performance and we are pleased with the ongoing development of the business over the year.

However output prices for farmers remain low, with the combination of high levels of world food stocks, tempered demand in developing countries and fluctuating international currencies delaying a return to acceptable pricing. This means that our farmer customers will face ongoing challenges which will require further efficiencies throughout the agricultural industry.

In light of continuing low farmgate prices and subdued farmer sentiment, our view of the outlook for the new financial year ahead has become more cautious. Also the prolonged mild autumn has resulted in a slow start to the feed season. Nonetheless Wynnstay

remains well placed to progress with it’s strategic plans and we continue to focus on developing opportunities for ongoing growth. Looking further ahead, we remain optimistic about prospects for UK farming which are well supported by macroeconomic factors, including world population growth and increasing demand for food and energy.

I look forward to providing a further update at Wynnstay’s AGM in March. For those able to attend the meeting, please be aware that we will be returning to our regular venue, at Shrewsbury Town Football Club, for 2016.

Ken Greetham Chief Executive

26 January 2016

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FINANCE REVIEW

Group StructureThe Group is now legally structured as a holding company, Wynnstay Group Plc, which has investments in six wholly owned trading subsidiaries, namely;

• 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

PAUL ROBERTS

The Group has produced a increase of 4% in underlying

pre-tax profit

Operational results from these trading companies are divided into two main divisional segments for reporting purposes, Agriculture, encompassing the manufacturing and supply of a comprehensive range of agricultural inputs delivered to customers, and Specialist Retail, covering the supply of specialised products linked through the provision of expert advice of their use. An additional reporting segment called “Others” is used for peripheral activities not readily attributable to either of the main segments.

Additionally Wynnstay Group Plc holds investments in the principal joint ventures and associate companies outlined in Note 18 in the accounts, and certain other property and investment assets, which are again reported within one of the appropriate segments.

Trading ResultsThe financial performance of the business has been considered very satisfactory over the last year, considering the commercial environment in which the Group’s predominant farmer customers have had to operate within. A number of economic factors have contributed to further reductions in the prices received for many farm products, particularly for milk and grain, and this reduced farm income has adversely affected the Group. However improved efficiencies within the business, together with recent investment and expansion, has produced an increase of 4% in overall Group pre-tax profitability before share-based payments and other exceptional items which was £9.05m (2014: £8.70m).

The falling commodity prices that have adversely affected farmers have also contributed to a significant fall in Group revenue for the year, which was £377.38m (2014: £413.56m). Agriculture revenue was £270.05m (2014: £308.71m), which experienced generally lower selling prices as a result of commodity price deflation, with our total estimate of this effect being approximately £32.00m across the division. Average manufactured feed prices were some £23 per tonne lower across the year, while


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£million’s 2015 2014

Group pre-tax profit before share-based payments and exceptional costs 9.05 8.70

Share based payments (0.33) (0.10)

Exceptional costs (0.32) -

Share of tax incurred by joint ventures (0.06) (0.11)

Statutory profit before taxation 8.34 8.49

Share of tax incurred by joint ventures 0.06 0.10

Net interest 0.24 0.33

Depreciation 2.66 2.51

Intangible amortisation 0.01 0.01

Profit on disposal of fixed assets (0.26) (0.17)

Share based payments 0.33 0.10

Exceptional costs 0.32 -

EBITDA 11.70 11.37

TaxationThe Group’s tax charge of £1.73m (2014: £1.90m) represented 20.5% (2014: 22.1%) 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 slightly above the pro-rata standard rate for the period of 20.4% (2014: 21.8%) primarily as a result of certain cost items not being deductible for tax purposes. Actual tax cash payments in the year were £1.52m, (2014: £2.27m), which was lower than the charge for the period due to the payments on account of this financial year made by Glasson Grain and Wynnstay (Agricultural Supplies) Limited during the previous period.

Earnings Per Share and DividendUnderlying earnings per share (before exceptional costs) were 36.32p (2014: 35.28p), based on a weighted average number of shares in issue during the year of 19.243m (2014: 18.981m). After the exceptional costs, the basic earnings per share were 34.66p (2014: 35.28p), The Board proposes to recommend the payment of a final dividend of 7.40p per share to be paid on the 29 April 2016, which when added to the interim dividend of 3.70p per share paid on the 30 October 2015, makes a total of 11.10p for the year (2014: 10.20p), an increase of 8.8%. The total dividend is expected to be covered 3.10 times (2014: 3.44 times) by earnings, and represents the eighth consecutive year that the Board has been able to raise the dividend by over 8%.

fertiliser and grain prices averaged falls of £1 and £26 per tonne respectively. Our Specialist Retail operations produced revenue of £107.19m (2014: £104.62m), with the increase from new stores being once again tempered by deflation across a number of important product categories. Both retail chains experienced sales growth, with 3.1% achieved in the Country Stores and 1.2% at Just for Pets Limited.

Group Earnings before Interest, Tax, Depreciation and Amortisation (EBITDA) was £11.70m before the exceptional costs (2014: £11.37m), and was made up as follows:

Share Capital During the year a total of 282,545 (2014: 258,252) new ordinary shares were issued for a total equivalent cash amount of £0.878m (2014: £0.711m). A total of 200,812 (2014: 195,282) shares were issued in relation to the exercise of employee share options for a total consideration of £0.447m (2014: £0.321m). The remaining 81,733 (2014: 62,970) 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 £0.431m (2014: £0.390m). No other shares were issued during the year.

The Group pre-tax profit, which includes the Group’s share of pre-tax profits from joint ventures and associate investments, was £8.40m (2014: £8.60m) or £9.05m prior to share-based payments and exceptional costs (2014: £8.70m) (see table below). Net finance charges amounted to £0.24m (2014: £0.33m), which resulted in Group operating profit, inclusive of joint venture and associate contributions, of £8.64m (2014: £8.93m)

or £9.29m prior to share based payments and exceptional costs (2014: £9.03m). Of this total, Agriculture contributed £4.13m (2014: £3.80m) and the Specialist Retail operations £5.08m (2014: £4.88m). Other activities, which includes the charge for Group share-based payment costs of £0.33m (2014: £0.10m), contributed a loss of £0.26m (2014: profit of £0.25m), primarily as a result of the lower joint venture income and the higher share-based payment costs.

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Balance SheetGroup net assets at the year end amounted to £82.86m (2014: £77.23m). Based on the weighted average number of shares in issue during the year of 19.243m, (2014: 18.981m) this represented a net asset value per share of £4.31 (2014: £4.07). During the financial year the share price traded in a range between a low of £4.79 in May 2015 and a high of £6.00 in January 2015.

Capital investment in fixed assets amounted to £3.26m (2014: £3.06m) and a further £3.48m (2014: £0.20m) was invested in four (2014: one) acquisitions which were all structured as asset purchase transactions inclusive of goodwill and other intangibles.

Despite the lower commodity prices, responsible for the reduced revenue during the year, Net Working Capital, which is defined as, the net of inventory, trade and other receivables and trade and other payables, increased at the year end, standing at £35.3m (2014: £31.1m). The increase primarily being due to higher inventory levels as a result of the increased number of retail units open at the year end, which was 73 across both chains compared to 60 last year.

Cashflow, Net Cash and Banking FacilitiesThe business remains strongly cash generative and has once again funded the

continued growth in activities primarily from internally generated resources. The working capital increase mentioned above limited cashflow generation from operating activities to £6.85m (2014: £9.18m). Total net cash investment, including acquisitions but excluding assets acquired under finance leases amounted to £4.90m (2014: £2.22m). New equity finance, primarily from scrip dividends and employee options, was raised of £0.88m (2014: £0.71m). After the payment of £2.02m (2014: £1.82m) in dividends to shareholders, term debt repayments of £2.95m (2014: £2.85m), and new loans drawn of £3.50m (2014: £0.27m) there was a net increase in cash and cash equivalents in the business of £1.36m (2014: £3.27m increase). When this improvement in cash is added to the net reduction in term and other existing non liquid debts of £1.52m (2014: £2.24m) and after accounting for the new loan of £3.50m (2014: £0.27m), a total negative movement in funding in the year of £0.62m (2014: positive £5.24m) resulted. This left the net cash position at the year end at £2.14m compared to £2.75m at the beginning of the year.

However this strong cash position at the year end once again reflects 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 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. During the year new facilities were agreed with the Group’s primary bankers, HSBC, on improved terms, and which include a significant proportion on a committed five year term basis. The Board believes projected overall debt will remain well within these new arrangements, which currently amount to £20.0m in total.

Key Performance Indicators & Risk Management Details of Key Performance Indicators and the risks and uncertainties for the business are given in the Strategic Report on page 19.

Paul RobertsFinance Director26 January 2016

FINANCE REVIEW continued


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KEY PERFORMANCE INDICATORS AND RISK MANAGEMENT

Key Performance IndicatorsThe 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 8 and 9. These indicators are defined as follows:

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

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 ManagementRisks 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 £2,767,761 (2014: £3,655,694).

Commodity Price - 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 – 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. This policy continues, and new debt facilities have been agreed with HSBC Bank Plc during the year, which 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 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 geographic expansion and acquisitions. The Group specifically seeks to maintain a broad spread of activities across the main agricultural

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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.

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, thereby encouraging customer retention.

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.

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.

Paul RobertsFinance Director26 January 2016

KEY PERFORMANCE INDICATORS AND RISK MANAGEMENT continued


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BOARD AND ADVISORS

DirectorsJ J McCarthy

Lord Carlile CBE QC (retired 24 March 2015)B P Roberts

K R GreethamD A T EvansP M KirkhamH J Richards

Company Secretary

B P Roberts

Company Number2704051

Registered Office

Eagle HouseLlansantffraid Ym Mechain

PowysSY22 6AQ

Auditor

KPMG LLP8 Princes Parade

LiverpoolL3 1QH

Principal Bankers

HSBC PLC Corporate Banking Centre

3 RivergateBristol

BS1 6ER

Nominated Advisor and StockbrokerShore Capital Limited

Bond Street House11 Clifford Street

LondonW1S 4JU

Registrars

Neville Registrars LimitedNeville House18 Laurel Lane

HalesowenWest Midlands

B63 3DA

SolicitorsHarrisons Solicitors LLP

11 Berriew Street Welshpool

Powys SY21 7SL

DWF LLP5 St Paul’s Square

LiverpoolL3 9AE

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1.

2.

3.

BOARD OF DIRECTORS

1.Kenneth Richard

Greetham(Age 56)

Chief Executive

Ken joined the Board in 2008 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.

2.Bryan Paul

Roberts(Age 52)

Finance Director

Paul joined the Board in 1997 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.

3.David Andrew Thomas Evans

(Age 47)

Retail Director

Andrew joined the Board in 2008 and has executive responsibility for all the Group’s retail activities. He is also a dairy farmer in Mid Wales.

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4.

5.

6.

4.James John McCarthy

(Age 60)

Chairman

Jim 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 40 years. He is currently Chief Executive Officer of Poundland Limited.

5.Philip Michael

Kirkham(Age 58)

Vice-Chairman / Senior Independent Non-Executive Director

Philip joined the Board in April 2013. He runs a mixed farming business in the West Midlands and also has significant experience in the UK livestock sector. He is Non- Executive Chairman of National Milk Records Plc and a Director of Meadow Quality Ltd.

6.Howell John

Richards(Age 51)

Non-Executive Director

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.

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DIRECTORS’ REPORT For the year ended 31 October 2015

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 2015.

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

The address of the Company’s registered office is Wynnstay Group Plc, Eagle House, Llansantffraid-Ym-Mechain, Powys, SY22 6AQ.

The Company has its primary listing on AIM, part of the London Stock Exchange.

The Group financial statements were authorised for issue by the Board of Directors on 26 January 2016.

Further information on the activities of the business and the Group strategy are presented in the Chairman’s Statement,

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

Share CapitalThe movement in the share capital during the period is detailed in note 29 to the financial statements.

Results, Dividends, and Transfers to ReservesReported under IFRS as adopted by the EU the Group profit before taxation is £8,337,000 (2014: £8,493,000). After a taxation charge of £1,667,000 (2014: £1,796,000), the Group profit for the year is £6,670,000 (2014: £6,697,000).

The Directors recommend a final ordinary dividend of 7.40p per ordinary 25p share net (2014: 6.80p per ordinary 25p share net), to be paid on 29 April 2016 to

shareholders on the register at the close of business on 29 March 2016.

The share price will be marked ex dividend with effect from 24 March 2016. 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 29 April 2016.

Land and BuildingsIn 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 2015 (refer to note 16) by approximately £3,990,000 (2014: £3,980,000).

25p Ordinary Shares SAYE Option Discretionary Options

2015 2014 2015 2014 2015 2014

J J McCarthy - - - - - -

Lord Carlile CBE QC (retired March 2015) n/a 33,421 n/a - n/a -

B P Roberts 102,719 102,719 2,508 5,335 31,000 31,000

K R Greetham 44,138 42,725 2,371 3,784 31,000 31,000

D A T Evans 19,645 19,260 2,371 2,371 26,000 26,000

P M Kirkham - - - - - -

H J Richards - - - - - -

Directors and their interestsThe 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:

In addition to the above shareholdings, Mr B P Roberts and K R Greetham are trustees of the Company’s Employee Share Ownership Plan trust, which at the year end held 52,256 shares (2014: 10,494 shares). Accordingly these Directors were deemed to hold an additional non-beneficial holding in such shares.

No Director at the year end held any interest in any subsidiary or associate company. Biographical details of the Directors are set out before the Director’s report.

Directors’ Appointments and RetirementsUnder Article 91, Mr P M Kirkham and Mr K R Greetham retire from the Board by rotation at the forthcoming Annual General Meeting and, being eligible, offer themselves for re-election. The Nominations Committee have just completed the process of recruiting a new Non-Executive Director and have announced that Mr Stephen John Ellwood will join the Board in April 2016.

Directors’ and Officers’ Liability InsuranceDuring the year the Company purchased and maintained liability insurance for its Directors and Officers which remained in force at the date of this report.

EmployeesThe 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 for the Board, who consider a monthly report on developments and any incidents that

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may have occurred, including accidents and near misses.

Policy for Payment of CreditorsThe 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 45 days (2014: 42 days).

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 22 March 2016.

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 22-23. 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.

Statement of Directors’ Responsibilities in Respect of the Annual Report and Accounts, Strategic Report and Directors’ Report and the Financial StatementsThe Directors are responsible for preparing the Annual Report and Accounts, Strategic Report and Directors’ Report and the financial statements in accordance with applicable law and regulations. The Directors consider that these statements taken as a whole are:

• fair, balanced and understandable; and

• provide the information necessary for shareholders to assess the Company/Group’s position and performance, business model and strategy.

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.

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

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

Paul RobertsCompany Secretary

26 January 2016

Substantial ShareholdingsAt 31 October 2015, the following shareholders held 3% or more of the issued share capital of the Company:

Registered Shareholder Beneficial Holder

Ferlim Nominees Limited 9.0% Discretionary managed funds of Investec Wealth & Investment Limited

Chase Nominees Limited 6.9% Schroder Investment Management Limited

Goldman Sachs Securities Limited 5.3% Polar Capital

Vidacos Nominees Limited 3.5% Discretionary managed funds of Brown Shipley Private Bank

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

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CORPORATE GOVERNANCE STATEMENT

The Principles of Good GovernanceThe 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 DirectorsThe Board currently comprises six directors, three of whom are executive and three non-executives. The roles of Chairman and Chief Executive are separated. The Chairman is non-executive and is elected by the whole Board on an annual basis, with Mr J J McCarthy originally 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 and specialist retail skills, and are all deemed independent under the Guidelines. Mr P M Kirkham, having been appointed in April 2013, is deemed the Senior independent non-executive. The Chairman is responsible for the periodic performance reviews of the Board sub-committees and non-executive directors. Following the retirement of Lord Carlile CBE QC in March 2015, the Nominations Committee concluded that the correct balance of skills and experience for the effective stewardship of the business would be maintained through the appointment of a further non-executive director with specific corporate finance experience.

Following a rigorous recruitment process, the Chairman has just announced that Mr Stephen Ellwood has agreed to join the Board and will take up his appointment in April 2016. Mr Ellwood currently holds a number of non-executive positions in agricultural companies and is Chairman of the European Food & Farming Partnership. He has previously held the roles of Head of Agriculture at HSBC Bank Plc and the top ten professional services firm Smith & Williamson, and therefore will bring considerable broad skills to the Board.

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 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 CommitteesAudit Committee

This Committee currently consists of three non-executive directors: Mr P M Kirkham (Committee Chairman), Mr H J Richards and Mr J J McCarthy. Mr H J Richards replaced Lord Carlile CBE, QC on the Committee upon his retirement in March 2015. The Committee normally meets three times a year 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:

• The reliability of internal and external reporting systems;

• The safeguarding of assets from inappropriate use, loss and fraud;

• Identifying and properly managing liabilities; and

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

The Audit Committee met twice during the year and all committee members attended. 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 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 and Mr P M Kirkham and was chaired by Lord Carlile CBE QC until his retirement in March 2015, when he was replaced by Mr H J Richards. 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

For the year ended 31 October 2015

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senior managers, and the supervision of employee benefit structures throughout the Company. The Remuneration Committee met once during the year and all committee members attended.

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

Relations with shareholdersThe 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. Mr P M Kirkham is the nominated independent non-executive 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 ConcernThe Directors have prepared the financial statements on a going concern basis, having satisfied themselves from a review of internal budgets and forecasts and current bank facilities that the Group has adequate resources to continue in operational existence for the foreseeable future.

Internal ControlThe 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 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 structured process for appraising and authorising capital projects with clearly defined authorisation levels.

Corporate Social ResponsibilityThe 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 policies 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 Company, 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 all 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 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 10 across the Group, which was an increase on the previous year when there were 2 incidents.

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

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CORPORATE GOVERNANCE STATEMENT continued For the year ended 31 October 2015

deliveries. Fuel efficiency is paramount in vehicle investment decisions, and mileage management is a key task for all fleet responsible personnel.

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 Company also supports selected research projects with local educational establishments, and is currently working with the Animal Science Research Centre at Harper Adams University on a number of nutritional trials, and the Institute of Biological, Environmental and Rural Sciences at Aberystwyth University in grassland management projects. Each year the Company selects specified charities and organisations to work with, and has been pleased to support the Royal Agriculture Benevolent Institution and local Young Farmers Clubs to the extent of £5,000 in the current year. Additionally, customers at Just for Pets Limited have continued raising funds for the training of guide dog puppies. The total raised over the last four years now amounts to over £40,000, which has contributed to the training of eight dogs for this very worthy cause.

Auditor independenceThe Board is satisfied that KPMG LLP has adequate policies and safeguards in place to ensure that auditor objectivity and independence is maintained. The Company 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.

By order of the Board

Paul RobertsCompany Secretary

26 January 2016


29

DIRECTORS’ REMUNERATION STATEMENT For the year ended 31 October 2015

Introductory StatementAs a Company listed on the Alternative Investment Market 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 continues to 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

Executive Directors:Element Purpose Operation and Review

Basic Salary

Annual Performance

Bonuses

Profit Related Pay

Pension and Death in

Service Life Assurance

Benefits in Kind

Long Term Incentive Plans

Other Share Schemes

To attract and retain effective

management to implement

Group strategy.

To reward delivery of pre-agreed

annual financial objectives.

To encourage achievement

of profit budgets within main

trading subsidiaries.

To facilitate retention and

motivate effective management.

To assist Directors in the

completion of their duties.

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.

Reviewed by the Committee on an annual basis with effect from the beginning

of November, consistent with annual reviews conducted for all other employees.

The current values of individual approved salaries effective from November 2015,

together with the amounts actually being received are shown in the table on page

30. Paid monthly in arrears.

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.

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 on page 30. Paid in the

February following the announcement of the financial results for the previous year,

after completion of the annual audit.

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, generally running for a minimum period of three

years, with performance related conditions, where the maximum payout is set at

approximately one year’s basic salary paid in shares, at the end of the scheme,

based on the market value of those shares as at commencement.

HMRC Approved tax efficient share schemes as 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).

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 director’s current shareholdings are provided in the shareholding section of the Directors report.

Board Remuneration PolicyAll 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:

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Basic Annual Fee

Travelling Expenses

Medical Insurance Benefit

in Kind

To attract and retain a balanced

skill set of individuals to

ensure strong stewardship and

governance of the Group.

To reimburse legitimately

incurred costs of attending

necessary Board and associated

meetings.

To assist Directors in the

completion of their duties.

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.

Pre-set rates used to reimburse mileage, travel, accommodation and other incurred

expenses in line with those used for other employees.

Benefits restricted to the provision of private medical insurance for those Directors

who do not have alternative arrangements in place.

Non-Executive Directors:

Element Purpose Operation and Review

Basic Salary Column A Column B Column C

Executive Approved Basic Salary Current Basic

Director Salary Nov 14 – Oct 15 Salary

£000’s £000’s £000’s

K R Greetham 160 142 144

B P Roberts 130 103 105

D A T Evans n/a 89 90

Remuneration ReportExecutive Director Remuneration

In line with the above policy, the Remuneration Committee have approved the following details of executive director remuneration:

- 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 of 1.5% in November 2015, 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 Agriculture and Specialist Retail segment operating contributions adjusted for administrative costs. The respective bonus percentages, and the payments made for the financial year ending October 2014 are shown in the table on page 31 in columns A & B respectively. The Executive Directors also participate in the Company Profit Related Pay Scheme, (“PRP”) which is a scheme for employees of Wynnstay Group Plc and Grainlink Limited and which pays an annual bonus based on a formula which produces a percentile result which is then applied to the relevant individual’s prior year earnings. The formula calculation is the aggregate of the pre-tax profit of Wynnstay (Agricultural Supplies) Limited and Grainlink Limited divided by the aggregate of the combined revenues, adjusted for a commodity inflationary index, of those companies excluding inter-company turnover, expressed as a percentage. The relevant rate for 2014, paid in February 2015, was 3.6%, with the actual PRP paid shown in Column C below. The anticipated rate for 2015 relating to the last financial year is 3.6% of relevant earnings.

DIRECTORS’ REMUNERATION STATEMENT continued For the year ended 31 October 2015


31

Bonuses Column A Column B Column C

Executive Contractual Bonus PRP

Director Annual received Mar 15 received Feb 15

Bonus % £000’s £000’s

K R Greetham 0.750% 64 8

B P Roberts 0.375% 32 5

D A T Evans 0.400% 33 4

- 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 salary, and the amounts paid on behalf of each individual during the last financial year, are shown in the table below under column A and column B respectively. The death in service life assurance cover is provided in a Group policy covering all members, with individual costs attributed to separate members being unavailable. However the scheme to which all three of the executive directors belong had a total renewal cost at November 2014 of £62,996 (2013: £60,995), and there were 410 (2013: 376) members covered, equating to an average cost of £154 per person (2013: £162).

Pension Column A Column B

Pension

Executive Pension Contribution

Director % £000’s

K R Greetham 9.6% 13

B P Roberts 6.5% / 9.5%* 7 * Increase effective Aug 15

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 2015 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 2015 is shown below in column B.

Benefits in kind Column A Column B

Executive Company Car Private

Director Value Medical Cover

K R Greetham £9,409 £560

B P Roberts £7,882 £560

D A T Evans £7,760 £560

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- Long Term Incentives. The Remuneration policy allows for a single long term incentive plan to be in place at any one time, with a targeted overall maximum financial gain, over the life of the scheme, approximating to one years basic salary as at the beginning of the scheme, for a 100% achievement of the performance criteria. Following vesting of the previous scheme in March 2014, 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 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 Share Option table below. 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.

(MC) (EPS)

< £110m £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%

The reported financial value of gains made under the scheme will be defined as the difference between the market price of the shares on the date of option exercise and the option price, which will be £0.25, multiplied by the number of options actually exercised.

Share Option Table 2014 Scheme LTIP Other Outstanding Options

Executive Director Maximum Award SAYE CSOP

No. of Options No. of Options No. of Options

K R Greetham 23,000 2,371 8,000

B P Roberts 23,000 2,508 8,000

D A T Evans 18,000 2,371 8,000

- 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, if 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 Save 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 shown in the Share Option table above, and are exercisable between September 2017 and March 2022, with further details provided in the Director’s Report on page 24 and in note 9 to the accounts.

DIRECTORS’ REMUNERATION STATEMENT For the year ended 31 October 2015


33

Philip KirkhamVice-Chairman & Chairman of Remuneration Committee

26 January 2016

By order of the Board.

Basic Fee Benefits Travelling Current Benefits

in kind Expenses Basic Fee in kind

£000’s £000’s £000’s £000’s £000’s

J J McCarthy 49 - 1 49 -

P M Kirkham 33 1 1 34 1

Lord Carlile CBE, QC* 14 1 1 n/a n/a

H J Richards 33 1 1 34 1

2015 / 2016

*Retired March 2015

Financial Year ended Oct 2015

Non-Executive Director Remuneration

The remuneration of the Non-Executive Directors, is and has been paid in accordance with the policy outlined and has been set so as to reflect the factors pertinent to their respective positions. Details of the amounts received during the last financial year and the current levels of Basic Annual Fees being paid are given in the table below:

Non-Executive Director

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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 2015 set out on pages 36 to 40. 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.

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 AuditorAs explained more fully in the Directors’ Responsibilities Statement set on out pages 24 and 25, the Directors are responsible for the preparation of the financial statements and for being satisfied that they give a true and fair view.

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.

Opinion on Financial StatementsIn our opinion:

• the financial statements give a true and fair view of the state of the Group’s and of the Parent Company’s affairs as at 31 October 2015 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;

• 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 2006In 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 ExceptionWe 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;

Nicola Quayle

(Senior Statutory Auditor)

For and on behalf ofKPMG LLP, Statutory Auditor

Chartered Accountants 8 Princes Parade

LiverpoolL3 1QH

Date: 26 January 2016


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CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME For the year ended 31 October 2015

Revenue

Cost of sales

Gross profit

Manufacturing, distribution and selling costs

Administrative expenses

Other operating income

Group operating profit before intangible amortisation, share-based

payment costs and exceptional item

Intangible amortisation and share-based payments

Exceptional item

Group operating profit

Interest income

Interest expense

Share of profits/losses in associates and joint ventures

accounted for using the equity method

Share of tax incurred by associates and joint ventures

Profit before taxation

Taxation

Profit for the year

Earnings per 25p share before exceptional item

Diluted earnings per 25p share before exceptional item

Earnings per 25p share

Diluted earnings per 25p share

All of the above are derived from continuing operations.

The notes on pages 41 to 71 form part of these financial statements.

There was no other comprehensive income during the current and prior years.

Note

2

4

5

6

3

3

7

10

12

12

12

12

12

2015

£000

377,382

(321,874)

55,508

(42,265)

(4,666)

476

9,053

(344)

(319)

8,390

(240)

187

8,337

(1,667)

6,670

36.32p

35.91p

34.66p

34.27p

2014

£000

413,558

(360,353)

53,205

(40,838)

(4,455)

588

8,500

(109)

-

8,391

(326)

428

8,493

(1,796)

6,697

35.28p

34.63p

35.28p

34.63p

£000

52

(378)

536

(108)

£000

50

(290)

245

(58)

SHAR

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INFO

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37

CONSOLIDATED AND COMPANY BALANCE SHEET As at 31 October 2015

Registered number 2704051

Assets

Non-current assets

Goodwill

Investment property

Property, plant and equipment

Investments in subsidiaries

Investments accounted for using equity method

Intangibles

Current assets

Inventories

Trade and other receivables

Held for sale assets

Financial assets

- loan to joint venture

Cash and cash equivalents

Total assets

Liabilities

Current liabilities

Financial liabilities - borrowings

Trade and other payables

Current tax liabilities

Net current assets

Non-current liabilities

Financial liabilities – borrowings

Trade and other payables

Deferred tax liabilities

Total liabilities

Net assets

Equity

Share capital

Share premium

Other reserves

Retained earnings

Total Equity

Note

13

15

16

17

17

14

20

21

22

18

25

26

23

24

26

23

28

29

£000

18,155

2,372

19,424

-

3,680

124

43,755

31,694

48,607

-

2,802

9,750

92,853

136,608

(3,643)

(44,739)

(861)

(49,243)

43,610

(3,972)

(246)

(292)

(4,510)

(53,753)

82,855

4,848

28,439

2,890

46,678

82,855

£000

17,209

-

18,289

-

3,643

89

39,230

29,758

48,749

2,372

2,802

8,990

92,671

131,901

(3,938)

(47,088)

(678)

(51,704)

40,967

(2,300)

(339)

(327)

(2,966)

(54,670)

77,231

4,777

27,633

2,796

42,025

77,231

£000

-

2,372

7,984

18,182

599

-

29,137

-

32,578

-

2,802

1

35,381

64,518

(2,788)

(2,184)

(18)

(4,990)

30,391

(2,765)

-

-

(2,765)

(7,755)

56,763

4,848

28,439

2,721

20,755

56,763

2015

£000

-

-

8,258

18,182

749

-

27,189

-

29,896

2,372

2,802

12

35,082

62,271

(2,600)

(3,167)

(13)

(5,780)

29,302

(1,369)

(94)

-

(1,463)

(7,243)

55,028

4,777

27,633

2,627

19,991

55,028

2014

Group Company

2015 2014

The financial statements were approved by the Board of Directors on 26 January 2016 and signed on its behalf.

J J McCarthy – Director B P Roberts - DirectorThe notes on pages 41 to 71 form part of these financial statements.

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CONSOLIDATED STATEMENT OF CHANGES IN EQUITY For the year ended 31 October 2015

Group

At 1 November 2013

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 2014

Profit for the year


Transactions with owners of the Company, recognised directly in

equity


Own shares acquired by ESOP trust

Own shares disposed of by ESOP trust

Dividends



At 31 October 2015

Share

capital

£000

4,713

-

-

64

-

-

64

4,777

-

-

71

-

-

-

-

71

4,848

premium

account

£000

26,986

-

-

647

-

-

647

27,633

-

-

806

-

-

-

-

806

28,439

Other

reserves

£000

2,697

-

-

-

-

99

99

2,796

-

-

-

(380)

140

-

334

94

2,890

Retained

earnings

£000

37,153

6,697

6,697

-

(1,825)

-

(1,825)

42,025

6,670

6,670

-

-

-

(2,017)

-

(2,017)

46,678

Total

£000

71,549

6,697

6,697

711

(1,825)

99

(1,015)

77,231

6,670

6,670

877

(380)

140

(2,017)

334

(1,046)

82,855

Share

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


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


Company

At 1 November 2013

Profit for the year


Transactions with owners of the Company, recognised directly in equity


Dividends



At 31 October 2014

Profit for the year


Transactions with owners of the Company, recognised directly in

equity




Dividends



At 31 October 2015

Share

capital

£000

4,713

-

-

64

-

-

64

4,777

-

-

71

-

-

-

-

71

4,848

premium

account

£000

26,986

-

-

647

-

-

647

27,633

-

-

806

-

-

-

-

806

28,439

Other

reserves

£000

2,528

-

-

-

-

99

99

2,627

-

-

-

(380)

140

-

334

94

2,721

Retained

earnings

£000

21,635

181

181

-

(1,825)

-

(1,825)

19,991

2,781

2,781

-

-

-

(2,017)

-

(2,017)

20,755

Total

£000

55,862

181

181

711

(1,825)

99

(1,015)

55,028

2,781

2,781

877

(380)

140

(2,017)

334

(1,046)

56,763

Share

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COMPANY STATEMENT OF CHANGES IN EQUITY For the year ended 31 October 2015

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CONSOLIDATED AND COMPANY CASH FLOW STATEMENTFor the year ended 31 October 2015

Cash flows from operating activities

Cash generated from operations

Interest received

Interest paid

Tax paid

Net cash flows from operating activities

Cash flows from investing activities

Acquisitions in the year

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



Dividends received

Net cash used by investing activities

Cash cash generated 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

Net cash generated from financing 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

Note

38

25

2015

£000

8,609

50

(290)

(1,519)

6,850

(3,287)

313

(1,836)

150

-

(380)

140

-

(4,900)

877

3,500

(985)

(1,967)

(2,017)

(592)

1,358

8,389

9,747

2014

£000

11,773

52

(378)

(2,271)

9,176

(120)

289

(2,450)

150

(85)

-

-

-

(2,216)

711

272

(792)

(2,054)

(1,825)

(3,688)

3,272

5,117

8,389

2015

£000

(3,199)

-

-

-

(3,199)

-

119

(35)

150

-

(380)

140

2,750

2,744

877

3,500

-

(1,916)

(2,017)

444

(11)

12

1

2014

£000

1,759

-

(26)

(110)

1,623

-

132

(695)

150

(85)

-

-

-

(498)

711

-

-

(646)

(1,825)

(1,760)

(635)

647

12

Group Company


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PRINCIPAL 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 preparationThe Group’s financial statements have been prepared in accordance with International Financial Reporting Standards as adopted by the EU (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 is 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 concernAs highlighted in note 25 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.

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 debt facilities. These debt facilities consist of term and revolving credit loans, with an average maturity of four years, and overdraft facilities scheduled for review, as usual, in April 2016. No matters have been drawn to the Group’s attention by its bankers to suggest that the facilities or the existing overdraft arrangements may not be forthcoming.

Basis of consolidationThe 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 associates and joint ventures. Group inter-company 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.

Revenue recognitionRevenue 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 itemsNon-recurring items that are material by size and/or by nature are disclosed on the face of the consolidated statement of comprehensive income and within a note to the financial statements as “exceptional items”. Management consider that the separate disclosure of non-recurring items helps provide a better indication of the Group’s underlying business performance.

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

Trade 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

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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.

Derivative financial instruments and

hedging

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

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

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

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

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

LeasesLeases 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 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.

Investment property Investment properties are properties which are held either to earn rental income or for capital appreciation or for both. Investment properties are stated at fair value.

Any gain or loss arising from the change in fair value is recognised in profit and loss. Rental income from investment property is accounted for on a receivable basis.

Property, plant and equipmentProperty, 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

GoodwillGoodwill 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.

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43

Impairment of assetsAt 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. The 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.

Employment benefit costsThe 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.

Taxation including deferred taxationThe income tax expense represents the sum of the current income tax and deferred income tax. Current income tax is based on the taxable profits for the year. Taxable profit differs from the profit as reported in the Group Statement of Comprehensive Income because it excludes items of income and expense

that are taxable or deductible in other years and it further excludes items that are never taxable or deductible. The Group’s liability for current tax is calculated using tax rates that have been enacted or substantively enacted by the balance sheet date.

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.

DividendsFinal 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.

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

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

Cash and cash equivalentsCash 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 currenciesMonetary 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 trustThe 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.

Significant judgments, key assumptions and estimatesApplication of certain Group accounting policies requires management to make judgments, assumptions and estimates concerning the future as detailed below:

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.

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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.

Impairment of goodwill

The carrying value of goodwill must be assessed for impairment annually. This requires an estimation of the value in

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

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.

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

International Financial Reporting Standards (“IFRS”) Defined Benefit Plans: Employee Contributions – IAS 19 1 February 2015

Amendments to existing standards

Certain elements of Annual Improvements to IFRSs 2010 - 2012 Cycle 1 February 2015

Certain elements of Annual Improvements to IFRSs 2011 - 2013 Cycle 1 January 2015

Accounting for acquisitions of interest in joint operations – amendment to IFRS11 1 January 2016

Clarification of Acceptable Methods of Depreciation and Amortisation – Amendments to IAS 16 and IAS 38 1 January 2016

Agriculture: Bearer Plants – Amendments to IAS 16 and IAS 41 1 January 2016

There have been a number of minor changes to standards which became applicable for the year ended 31 October 2015, none of which have been assessed as having a significant impact on the Group.

EU effective date for accounting periods commencing on or after

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PRINCIPAL ACCOUNTING POLICIES continued


45

NOTES TO THE FINANCIAL STATEMENTS

1. The Company is taking advantage of the exemption in s408 of the Companies Act 2006 not to present its individual income statement and related notes that form part of these approved financial statements.

2. Segmental Reporting IFRS 8 requires operating segments to be identified on the basis of internal financial information about the components

of the Group that are regularly reviewed by the chief operating decision maker (“CODM”) to allocate resources to the segments and to 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.

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 2015 are as follows:

Year ended 31 October 2015

Revenue from external customers

Segment result

Share of results of associates and joint ventures before tax

Exceptional item

Interest Income

Interest expense

Profit before tax

Income taxes (includes tax of associate and joint ventures)

Profit for the year attributable to equity shareholders

Segment net assets

Corporate net cash (note 26)

Total net assets

Agriculture

£000

270,047

3,953

181

4,134

30,843

Specialist Retail

£000

107,193

5,006

76

5,082

42,727

Other

£000

142

(250)

(12)

(262)

7,150

Total

£000

377,382

8,709

245

8,954

(319)

50

(290)

8,395

(1,725)

6,670

80,720

2,135

82,855

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Year ended 31 October 2014

Revenue from external customers

Segment result

Share of results of associate and joint ventures before tax

Interest Income

Interest expense

Profit before tax

Income taxes (includes tax of associate and joint ventures)

Profit for the year attributable to equity shareholders

Segment net assets

Corporate net cash (note 26)

Total net assets

Agriculture

£000

308,711

3,476

326

3,802

29,449

Specialist Retail

£000

104,617

4,798

77

4,875

37,849

Other

£000

230

117

133

250

7,181

Total

£000

413,558

8,391

536

8,927

52

(378)

8,601

(1,904)

6,697

74,479

2,752

77,231

3. Finance Costs

Interest expense:

Interest payable on borrowings

Interest payable on finance leases

Interest and similar charges payable

Interest income

Interest receivable

Finance costs

2015

£000

(176)

(114)

(290)

50

50

(240)

2014

£000

(271)

(107)

(378)

52

52

(326)

4. Other Operating Income

Rental income

Profit on sale of Acocks Green

Other operating income

2015

£000

393

-

83

476

2014

£000

375

136

77

588

Exceptional costs

2015

£000

(319)

2014

£000

-

Exceptional costs relate to the expenses associated with the acquisition and re-organisation of the business and certain trading assets of the Agricentre Farm Supplies.

5. Exceptional item

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2. Segmental Reporting continued

NOTES TO THE FINANCIAL STATEMENTS continued


47

6. Group Operating Profit

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

Staff costs

Depreciation of property, plant and equipment: - owned assets

- under finance

Amortisation of intangibles

(Profit) on disposal of fixed assets

Other operating lease rentals payable

Repairs and maintenance expenditure on plant, property and equipment

Trade receivables impairment

2015

£000

25,428

1,968

697

10

(260)

3,243

1,693

116

2014

£000

23,816

1,945

564

10

(171)

2,858

1,630

68

7. Share of Post-Tax Profits / (Loss) of Associates and Join Ventures

Services provided by the Group’s auditor

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

Audit services – statutory audit

Tax services

XBRL tagging

2015

£000

97

8

2

2014

£000

95

4

1

Included in the Group Audit fee are fees of £5,000 (2014: £5,000) paid to the Group’s auditor in respect of the Parent Company. The fees relating to the Parent Company are borne by one of the Group’s subsidiaries.

Share of post-tax profit in associates

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

Total share of post-tax profits / (loss) of associates and joint ventures

2015

£000

39

148

187

2014

£000

85

343

428

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

Wages and salaries

Social security costs

Pension and other costs

Cost of share-based reward

2015

£000

22,262

2,044

788

334

25,428

2014

£000

21,041

1,887

789

99

23,816

8. Staff CostsST

RATE

GIC

REP

ORT

GO

VERN

ANC

EFI

NAN

CIA

L ST

ATEM

ENTS

SHAR

EHO

LDER

INFO

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48

9. Directors’ Remuneration

Directors’ emoluments

Company contributions to money purchase pension schemes

Aggregate gains made on the exercise of Approved SAYE options

2015

£000

638

27

12

677

2014

£000

621

25

296

942

Aggregate Directors’ remuneration

Details of the Directors’ interest in the share capital of the Company, including outstanding share options at the year end, are provided in the Directors‘ Report. The following remuneration detail is provided in accordance with AIM Rule 19.

Name of Director

Executives

K R Greetham

B P Roberts

D A T Evans

Non-Executives

J J McCarthy

J C Kendrick (retired 18 March 2014)

Lord Carlile CBE, QC (retired 24 March 2015)

P M Kirkham

H J Richards

Basic salary

£000

142

103

89

49

-

14

33

33

463

Benefits

in kind

£000

10

8

8

-

-

1

1

1

29

Annual

bonuses

£000

72

37

37

-

-

-

-

-

146

2015

Total

£000

224

148

134

49

-

15

34

34

638

2014

Total

£000

216

144

121

49

14

35

34

8

621

Money purchase pension scheme

Contribution paid by the Group to money purchase pension schemes in

respect of such Directors were:

K R Greetham

B P Roberts

D A T Evans

2015

No.

3

£000

14

7

6

27

2014

No.

3

£000

13

6

6

25

Retirements benefits are accruing to the following number of Directors under:

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

Administration

Production

Sales, distribution and retail

2015

No.

103

98

809

1,010

2014

No.

97

91

793

981

8. Staff Costs continued



49

Gains made on exercise of approved and unapproved share option schemes:

K R Greetham

B P Roberts

D A T Evans

2015

£000

4

8

-

12

2014

£000

136

91

69

296

10. Taxation

Analysis of tax charge in year

Current tax

- Continuing operations

- Adjustments in respect of prior years

Total current tax

Deferred tax

- Accelerated capital allowances

- Effect of decrease of rate

Total deferred tax

Tax on profit on ordinary activities

2015

£000

1,736

(34)

1,702

(35)

-

(35)

1,667

2014

£000

1,839

(111)

1,728

77

(9)

68

1,796

Factors affecting tax charge for the year

The tax assessed for the year is lower than (2014: lower) the standard rate of corporation tax in the UK applicable to the Group 20.42% (2014: 21.83%), explained as follows:

Profit on ordinary activities before tax

Profit on ordinary activities multiplied by standard rate of corporation tax in

the UK of 20.42% (2014: 21.83%)

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

Other items

Total tax charge for year

2015

£000

8,337

1,703

(38)

1

(35)

-

36

1,667

2014

£000

8,493

1,854

(93)

23

(111)

7

116

1,796

Factors that may affect future tax charges

Reductions in the UK corporation tax rate from 23% to 21% (effective from 1 April 2014) and 20% (effective from 1 April 2015) were substantively enacted on 2 July 2013. In the Budget on 8 July 2015, the Chancellor announced additional planned reductions to 18% by 2020. This will reduce the company’s future current tax charge accordingly.

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12. Earnings per share

Earnings attributable to shareholders

(£000)

Weighted average number of shares

in issue during the year (number

‘000)

Earnings per ordinary 25p share

(pence)

2015

6,989

19,243

36.32

2014

6,697

18,981

35.28

Basic earnings per share before

exceptional item

2015

6,670

19,243

34.66

2014

6,697

18,981

35.28

Basic earnings per share

2015

6,989

19,463

35.91

2014

6,697

19,338

34.63

Diluted earnings per share before

exceptional item

2015

6,670

19,463

34.27

2014

6,697

19,338

34.63

Diluted earnings per share

Basic earnings before exceptional item per 25p ordinary share is calculated by dividing the earnings with the full exceptional item added back, without any tax adjustment, attributable to ordinary shareholders by the weighted average number of ordinary shares in issue during the year.

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.

For diluted earnings before exceptional item per share, the weighted average number of ordinary shares is adjusted to assume conversion of all dilutive potential ordinary shares (share options) taking into account their exercise price in comparison with the actual average share price during the year.

For diluted earnings per share, the weighted average number of ordinary shares is adjusted to assume conversion of all dilutive potential ordinary shares (share options) taking into account their exercise price in comparison with the actual average share price during the year.

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11. Dividends

Subsequent to the year end it has been recommended that a final dividend of 7.40p net per ordinary share (2014: 6.80p) be paid on 29 April 2016. Together with the interim dividend already paid on 30 October 2015 of 3.70p net per ordinary share (2014: 3.40p) this would result in a total dividend for the financial year of 11.10p net per ordinary share (2014: 10.20p).

Final dividend paid for prior year

Interim dividend paid for current year

2015

£000

1,300

717

2,017

2014

£000

1,177

648

1,825



51

13. Goodwill

After initial recognition, goodwill is subject to annual impairment tests or more frequently if events or changes in circumstances indicate that it might be impaired, in accordance with IAS 36.

Group

Cost

At 1 November 2013

Additions

At 31 October 2014

Additions (note 19)

At 31 October 2015

Aggregate impairment

At 1 November 2013 and 31 October 2014

Impairment charge

At 31 October 2015

Net book value

At 31 October 2015

At 31 October 2014

Company

Cost

At 1 November 2013

Transfer to subsidiary

At 31 October 2014 and 31 October 2015

Aggregate impairment

At 31 November 2013

Transferred to subsidiary


Net book value

At 31 October 2015

At 31 October 2014

£000

18,651

195

18,846

946

19,792

1,637

1,637

During the previous year the goodwill was transferred to the trading subsidiary, 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.

-

18,155

7,554

(7,554)

-

894

(894)

-

-

-

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13. Goodwill continued

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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 five years using data from the Group’s latest internal forecasts, the results of which are reviewed by the Board.

The key assumptions for the value in use calculations are those regarding discount rates, growth rates and 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 2015 and 2014 impairment reviews were performed by comparing the carrying value of goodwill with the recoverable amount of the cash generating units to which goodwill has been allocated.

Goodwill is allocated to specific cash generating units (“CGUs”) as it arises.

The Group has a number of CGUs in both the Agriculture and the Specialist Retail sectors. The carrying amount of goodwill allocated to the Agriculture CGUs is £7,774,010 (2014: £7,681,510), and to Specialist Retail is £10,381,641 (2014: £9,527,640).

The pre-tax discount rates used to calculate value in use range from between 8.3% to 10.3% (2014:10.4%) for Agriculture and 10% to 11% (2014:10.4%) for Specialist Retail. These discount rates are derived from the Group’s weighted average cost of capital adjusted for the specific risks relating to each operating segment.

The forecasts are extrapolated based on estimated long term average growth rates of 2% - 3% (2014:0% - 3%) for both Agriculture and Specialist Retail.

The directors have considered the sensitivity to key assumptions and are satisfied that there are no reasonably probable changes in key assumptions which would cause the carrying amount of a CGU to exceed its recoverable amount.



53

14. Intangible Assets

Group

Cost

Balance as at 1 November 2014

Additions

At 31 October 2015

Aggregate amortisation

Balance as at 1 November 2014

Amortisation charge for the period

At 31 October 2015

Net book value

At 31 October 2015

At 31 October 2014

£000

100

45

145

11

10

21

124

89

During the year the fair value of intangibles of £45,000 were identified in the Acquisition of Agricentre Farm Supplies.

15. Investment Property

Group

Fair value

At 1 November 2014

Transferred from assets held for resale

At 31 October 2015

Company

At 1 November 2014

Transferred from assets held for resale

At 31 October 2015

£000

-

2,372

2,372

-

2,372

2,372

Investment property relates to a redeveloped property in Pwllheli, which has been reclassified to investment property as no realistic offers have been received . The Group continues to actively market the property.

The directors have determined the fair value of the investment property at the year end, this is with reference to market evidence, the amount of rent receivable from the Investment property was £202,500.

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16. Property, Plant and Equipment

The net book value of plant and machinery and motor vehicles above includes amounts of £2,377,614 (2014: £1,655,446) representing assets held under finance leases.

Company

Cost

At 1 November 2013

Additions

Reclassification

Disposals

At 31 October 2014

Additions

Disposals

At 31 October 2015

Depreciation

At 1 November 2013

Charge for the year

Reclassification

On disposals

At 31 October 2014

Charge for the year

On disposals

At 31 October 2015

Net book value

At 31 October 2015

At 31 October 2014

Leasehold

land and

buildings

£000

1,432

39

(362)

-

1,109

36

1,145

529

66

(76)

-

519

57

-

576

569

590

Freehold land

and

buildings

£000

12,071

926

362

(100)

13,259

35

(76)

13,218

3,743

279

76

(25)

4,073

302

(51)

4,324

8,894

9,186

Plant,

machinery

and office

equipment

£000

18,612

1,256

-

(24)

19,844

2,279

(128)

21,995

12,490

1,135

-

(20)

13,605

1,209

(188)

14,626

7,369

6,239

Motor

vehicles

£000

6,687

834

-

(705)

6,816

1,503

(867)

7,452

4,179

1,029

-

(666)

4,542

1,097

(779)

4,860

2,592

2,274

Total

£000

38,802

3,055

-

(829)

41,028

3,853

(1,071)

43,810

20,941

2,509

-

(711)

22,739

2,665

(1,018)

24,386

19,424

18,289

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Company

Cost

At 1 November 2013

Additions

Disposals

Transfer to subsidiary on hive down

At 31 October 2014

Additions

Disposals

At 31 October 2015

Depreciation

At 1 November 2013

Charge for the year

On disposals

Transfer to subsidiary on hive down

At 31 October 2014

Charge for the year

On disposals

At 31 October 2015

Net book value

At 31 October 2015

At 31 October 2014

Freehold

land and

buildings

£000

11,437

695

(100)

-

12,032

35

(76)

11,991

3,529

270

(25)

-

3,774

284

(51)

4,007

7,984

8,258

Plant,

machinery

and office

equipment

£000

11,955

-

-

(11,955)

-

-

-

-

8,959

-

-

(8,959)

-

-

-

-

-

-

Motor

vehicles

£000

5,975

-

-

(5,975)

-

-

-

-

3,755

-

-

(3,755)

-

-

-

-

-

-

Total

£000

29,367

695

(100)

(17,930)

12,032

35

(76)

11,991

16,243

270

(25)

(12,714)

3,774

284

(51)

4,007

7,984

8,258

The net book value of plant and machinery and motor vehicles above includes amounts of £nil (2014: £nil) representing assets held under finance leases.

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Company

Cost

At 1 November 2013

Disposal

Transferred to subsidiary company on hive down

At 31 October 2014

Disposal

At 31 October 2015

Provision for impairment

At 1 November 2013

Transferred to subsidiary company on hive down


Net book value

At 31 October 2015

At 31 October 2014

Joint

ventures

£000

920

(150)

-

770

(150)

620

69

-

69

551

701

Associates

£000

48

-

-

48

-

48

-

-

-

48

48

Other

unlisted

investments

£000

176

-

(176)

-

-

-

27

(27)

-

-

-

Total

£000

19,326

(150)

(176)

19,000

(150)

18,850

96

(27)

69

18,781

18,931

Share in group

undertakings

£000

18,182

-

-

18,182

-

18,182

-

-

-

18,182

18,182

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17. Fixed Asset Investments

Group

Cost

At 1 November 2013

Share of profit /(loss) or Investment income

Disposal

At 31 October 2014

Share of profit /(loss) or Investment income

Disposal

At 31 October 2015

Provision for impairment

At 1 November 2013, 31 October 2014 and 31 October 2015

Net Book Value

At 31 October 2015

At 31 October 2014

Joint

ventures

£000

2,682

343

(150)

2,875

148

(150)

2,873

69

2,804

2,806

Associates

£000

597

85

-

682

39

-

721

-

721

682

Other

unlisted

investments

£000

182

-

-

182

-

-

182

27

155

155

Total

£000

3,461

428

(150)

3,739

187

(150)

3,776

96

3,680

3,643



57

18. Principal Subsidiaries, Joint Venture and Associates

Principal subsidiaries

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

Company name

Proportion of shares held(Ordinary)% Nature of business

Glasson Group (Lancaster) Limited 100 Holding company

Glasson Grain Limited 100 Feed and Fertiliser merchant

Just for Pets Limited 100 Pet products retailer

Wynnstay (Agricultural Supplies) Limited 100 Agricultural merchant

Woodheads Seeds Limited 100 Seed merchants

Youngs Animal Feeds Limited 100 Equine and pet products distributor

Grainlink Limited 100 Grain merchant

Wrekin Grain Limited 100 Dormant company

Eifionydd Farmers Limited 100 Dormant company

Glasson Shipping Services Limited 100 Dormant company

Glasson Fertilisers Limited 100 Dormant company

Westhope Livestock Supplies Limited 100 Dormant company

MVZ Farm Supplies Limited 100 Dormant company

Shropshire Grain Limited 100 Dormant company

Welsh Feed Producers Limited 100 Dormant company

Wynnstay Country Farmstock Limited 100 Dormant company

Petssesories Limited 100 Dormant company

C & M Transport Limited 100 Dormant company

PSB (Country Supplies) Limited 100 Non trading company

Banbury Farm and General Supplies Limited 100 Dormant company

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) LimitedGlasson Shipping Services LimitedGlasson Grain LimitedGlasson Fertilisers Limited

Youngs Animal Feeds LimitedEifionydd Farmers

Just for Pets Limited Petssesories Limited

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Principal joint ventures

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

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:

Company name Interest Nature of businessWyro Developments Limited 50%- Ordinary Property development

Bibby Agriculture Limited 50% - Ordinary Distribution of compound animal feeds 50% - Preference

Geogen Technologies Limited 50% - Ordinary Supplier and installation of renewable energy

Total Angling Limited 50% - Ordinary Retailer of angling products

Fertlink Limited 50% Ordinary Fertiliser blending

Revenue

Expenses

2015

£000

28,266

(28,069)

2014

£000

31,251

(30,823)

Non-current assets

Current assets

Current liabilities

Non-current liabilities

Net assets

2015

£000

1,095

7,286

(5,805)

(121)

2,455

2014

£000

1,019

5,513

(4,081)

(95)

2,356

Group’s share of joint ventures profit before tax

2015

£000

197

2014

£000

428

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

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

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59

Principal associates

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

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

Total assets

Total liabilities

Net assets

Group’s share of associate net assets

Total revenue

Profit for the period

Group’s share of associate profit before tax

2015

£000

3,533

(1,747)

1,786

707

20,583

121

48

2014

£000

3,388

(1,806)

1,582

633

19,809

270

108

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

Company name Accounting period

Wyro Developments Limited

Wynnstay Fuels Limited

Bibby Agriculture Limited

Fertlink Limited

Geogen Technologies Limited

Total Angling Limited

Celtic Pride Limited

31 October 2015

31 December 2014

31 August 2015

31 October 2015

31 October 2015

31 October 2015

31 January 2015

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 and Celtic Pride Limited. In the opinion of the directors there is no material effect on the reported figures as a result of this departure.

Celtic Pride Limited 33.3% Production and marketing of premium welsh beef

Trading transactions

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

Transactions and balances with subsidiaries

Amounts due from subsidiary undertakings:

Trade receivables

Amounts due to subsidiary undertakings:

Trade payables

Transactions reported in the statement of comprehensive income:

Revenue

Purchases

2015

£000

-

-

-

-

Company

2014

£000

-

-

-

-

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Transactions and balances with associates

Amounts due from associate undertakings:

Trade receivables

Amounts due to associate undertakings:

Trade payables

Transactions reported in the statement of comprehensive

income:

Revenue

Purchases

2015

£000

5

5

55

55

22

356

2014

£000

4

4

104

104

35

545

2015

£000

-

-

-

-

-

-

2014

£000

-

-

-

-

-

-

Group Company

Transactions and balances with joint ventures

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

2015

£000

4,181

2,802

6,983

369

369

19,593

7,675

60

2014

£000

2,082

2,802

4,884

290

290

24,919

14,507

67

2015

£000

338

2,802

3,140

38

38

4,757

215

-

2014

£000

-

2,802

2,802

-

-

-

-

-

Group Company

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.

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19. Business Combinations

During the year the Wynnstay (Agricultural Supplies) Limited completed three acquisitions and Glasson Grain Limited completed one acquisition all structured as purchases of goodwill and other certain assets.

On the 12 January 2015, Wynnstay (Agricultural Supplies) Limited completed the purchase of certain assets of Ross Feed Limited, a supplier of agricultural and hardware goods based in Ross on Wye, Herefordshire. On the 21 September 2015 the assets of S. Jones & Sons were acquired, which is an agricultural merchant based in Llanon, Ceredigion. Finally on the 30 October 2015 Wynnstay (Agricultural Supplies) Limited purchased the trade and assets of the West Country based Agricentre farm supplies business from T.G. Jeary Limited.

On the 1 September 2015 Glasson Grain Limited completed the purchase of certain assets of Horti-Stores Limited, a supplier of packaging materials to the horticultural and agricultural industries based in Skelmersdale, West Lancashire.

Details of the trade, asset values acquired and the consideration are given below, together with details of historic revenue and operating profits, based on the latest practical available information:

Date of acquisition

Fair value of net assets on acquisition:

Plant and equipment

Inventories

Other intangible assets

Other current liabilities

Total anticipated goodwill

Total fair value of net assets on acquisition

Net cash paid on completion and asset confirmation

Fair value of contingent consideration

Total fair value of consideration

Historical annual revenue

Historical operating profit

Horti- Stores

1 Sept 2015

Fair Value

£000

-

55

-

-

92

147

101

46

147

*1 295

*1 59

Ross Feed

12 Jan 2015

Fair Value

£000

19

116

-

-

312

447

387

60

447

*2 1,044

*2 123

S. Jones & Sons

21 Sept 2015

Fair Value

£000

-

56

-

-

87

143

106

37

143

*3 1,168

*3 40

Agricentre

30 Oct 2015

Fair Value

£000

571

1,996

45

(324)

455

2,743

2,693

50

2,743

*4 17,067

*4 377

Total

Fair Value

£000

590

2,223

45

(324)

946

3,480

3,287

193

3,480

19,574

599

Notes: *1 - For the financial year to 31 March 2015

*2 - For the financial year to 30 June 2014

*3 - For the financial year to 31 March 2014

*4 - For the financial year to 31 December 2014

All these transactions extend the Group’s geographic trading area and farmer customer base, as well as adding additional outlets to the Group’s Country Store chain.

Payment of the contingent consideration for each transaction is dependent on the future financial performance of that respective acquired business, with the maximum and total anticipated contingent payment in each case being in line with the fair value that the Directors consider to be the most likely outcome.

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20. Inventories

Raw materials and consumables

Finished goods and goods for resale

2015

£000

3,388

28,306

31,694

2014

£000

6,584

23,174

29,758

2015

£000

-

-

-

2014

£000

-

-

-

Group Company

21. Trade and Other Receivables

CurrentTrade receivables

Amounts owed by group undertakings

Other receivables

Fair value of derivatives

2015

£000

45,834

-

2,682

91

48,607

2014

£000

45,876

-

2,598

275

48,749

2015

£000

-

32,578

-

-

32,578

2014

£000

-

29,891

5

-

29,896

Group Company

Trade receivables are stated after a provision for impairment of £835,536 (2014: £910,695) (Company £ nil (2014: £nil)).

22. Held for Sales Assets

Held for sale assets as at 1 November 2014

Transferred to Investment property

2015

£000

2,372

(2,372)

-

2014

£000

2,372

-

2,372

2015

£000

2,372

(2,372)

-

2014

£000

2,372

-

2,372

Group Company

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

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The assets previously categorised as ‘Held for sale assets’ representing a re-developed property in Pwllheli have been reclassified to investment property as no realistic offers have been received. The Group continues to actively market the property.



63

Trade payables

Amounts owed to group undertakings

Other taxes and social security

Other payables

Accruals and deferred income

Contingent consideration

Fair value of derivatives

2015

£000

39,310

-

650

1,537

2,893

244

105

44,739

2014

£000

42,160

-

783

674

2,694

365

412

47,088

2015

£000

-

2,070

-

63

-

51

-

2,184

2014

£000

-

2,783

-

45

-

339

-

3,167

Group CompanyCurrent

Included within the Company’s trade payables are £nil (2014: £nil) of inter-company trade creditors.

2014

£000

-

-

94

94

Other payables

Government grants

Contingent consideration

2015

£000

146

25

75

246

2014

£000

166

29

144

339

2015

£000

-

-

-

-

Group CompanyNon-current

23. Trade and Other Payables

24. Current Tax Liabilities

Current tax liabilities

2015

£000

861

861

2014

£000

678

678

2015

£000

18

18

2014

£000

13

13

Group Company

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25. Cash and Cash Equivalents and Bank Overdrafts

Cash and cash equivalents per balance sheet

Bank overdrafts

Cash and cash equivalents per

cash flow statement

2015

£000

9,750

(3)

9,747

2014

£000

8,990

(601)

8,389

2015

£000

1

-

1

2014

£000

12

-

12

Group Company

26. Financial Liabilities - Borrowings

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

Secured overdrafts

Secured loans

Loan capital (unsecured)

Other loanstock (unsecured)

Net obligations under finance leases

2015

£000

3

2,162

2,165

667

16

795

3,643

2014

£000

601

1,979

2,580

656

16

686

3,938

2015

£000

-

2,105

2,105

666

17

-

2,788

2014

£000

-

1,927

1,927

656

17

-

2,600

Group CompanyCurrent

Bank loans:

Secured

Net obligations under finance leases

2015

£000

2,888

2,888

1,084

3,972

2014

£000

1,549

1,549

751

2,300

2015

£000

2,765

2,765

-

2,765

2014

£000

1,369

1,369

-

1,369

Group CompanyNon-current

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.

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Borrowings are repayable as follows:

On demand or within one year

In the second year

In the third to fifth years inclusive

Over five years

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:

Borrowings as above

Cash and cash equivalents

Net (cash)/debt

2015

£000

3,643

1,473

2,499

-

7,615

795

572

512

-

1,879

7,615

(9,750)

(2,135)

2014

£000

3,938

1,791

509

-

6,238

686

419

332

-

1,437

6,238

(8,990)

(2,752)

2015

£000

2,788

848

1,917

-

5,553

-

-

-

-

-

5,553

(1)

5,552

2014

£000

2,600

1,369

-

-

3,969

-

-

-

-

-

3,969

(12)

3,957

Group Company

Finance lease obligations are secured on the assets to which they relate.

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

Barclays Bank Plc

HSBC Bank Plc

HSBC Bank Plc

Lombard Bank Loan

HSBC Bank Plc

Monthly

instalment

£53,774

£52,389

£57,730

£5,111

£68,811

Balance

outstanding

2015

£314,772

£671,623

£383,572

£183,759

£3,500,000

Balance

outstanding

2014

£944,197

£1,277,277

£1,076,336

£231,433

£3,500,000

Interest

rate

2.00% over base rate



4.75% per annum


Maturity

date

May 2016

Nov 2016

June 2016

Dec 2018

March 2020

Non-current

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

Bank loans and overdrafts include overdrafts totalling £222,233 (2014:£600,271) relating to subsidiary companies, which are secured by debentures over the assets of those companies.

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27. 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

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.

The Group’s derivative financial assets and liabilities that are measured at fair value at 31 October 2015, 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 While currently most of the Group’s term debt is floating base rate linked, the Board constantly review their

option to fix the rates attached to this debt through the use of Interest rate swap derivatives. Fixed rate term finance is used for the acquisition of vehicles.

• 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 £2,767,761 (2014: £3,655,694).

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Up to 3 Months

Over three months

2015

£000

7,557

1,233

2014

£000

5,954

1,439

2015

£000

-

-

2014

£000

-

-

Group Company

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• 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:

Bank overdraft

Bank borrowings

Loan capital

Finance leases

2015

£000

1.25%

1.7%

1.5%

6.1%

2014

£000

2.0%

2.4%

1.5%

5.9%

2015

£000

1.25%

1.6%

1.5%

-

2014

£000

2.0%

2.4%

1.5%

-

Group Company

• 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 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 (2014: £nil) of inter-company trade debtors.

At 31 October 2015 trade receivables of £8,790,230 (2014 £7,392,623), (Company £Nil (2014:£nil)) were past due but were not impaired.

These relate to a number of independent customers for whom their is no recent history of default the aging analysis is as follows:

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29. Share Capital

Authorised

Ordinary shares of 25p each

Allotted, called up and fully paid

Ordinary shares of 25p each

No. of

shares

000

40,000

19,391

£000

10,000

4,848

No. of

shares

000

40,000

19,108

£000

10,000

4,777

2015 2014

During the year 81,733 shares (2014: 62,970) were issued with an aggregate nominal value of £20,433 (2014: £15,743) and were fully paid up for equivalent cash of £430,808 (2014: £390,418) to shareholders exercising their right to receive dividends under the Company’s scrip dividend scheme.

A total of 200,812 (2014:195,282) shares with an aggregate nominal value of £50,203 (2014: £48,821) were issued for a cash value of £446,868 (2014: £320,511) to relevant holders exercising options in the Company. No other shares were issued for cash in this financial year (2014: Nil).

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28. Deferred Taxation

At 1 November

Transferred to subsidiary company

Charge for the year

At 31 October

2015

£000

327

-

(35)

292

2014

£000

259

-

68

327

2015

£000

-

-

-

-

2014

£000

105

(105)

-

-

Group Company

The provision for deferred taxation is made up as follows:

Accelerated capital allowances

2015

£000

292

2014

£000

327

2015

£000

-

2014

£000

-

Group Company



69

The following options were exercised, lapsed and outstanding at the year end:

Exercise

Price per

share £

2.5300

3.7500

5.4750

0.2500

2.2000

3.4000

5.0600

Exercisable by

Sept 2013 - Aug 2018

April 2015 - March 2022

Oct 2017 - Oct 2024

Oct 2017 - Mar 2018

April 2015 - Sept 2015

Sept 2017 - Feb 2018

Aug 2019 - Jan 2020

As at 1

November

2014

42,350

40,000

373,000

100,000

555,350

185,416

140,487

350,031

675,934

1,231,284

(Exercised)/

Issued in

year

(15,396)

(15,396)

(185,416)

-

-

(185,416)

(200,812)

Lapsed in

year

(154)

-

(8,000)

-

(8,154)

-

(5,291)

(28,438)

(33,729)

(41,883)

As at

31 October

2015

26,800

40,000

365,000

100,000

531,800

-

135,196

321,593

456,789

988,589

Discretionary Share Option Schemes

Granted August 2008

Granted April 2012

Granted October 2014

Granted October 2014

Granted March 2010

Granted August 2012

Granted July 2014

Savings Related Option Schemes

30. Share-based Payments

During the year 15,396 (2014: 184,779) Discretionary Share Options and 185,416 (2014: 10,503) 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

During the year, the Group charged £333,908 (2014: £99,269) of share based remuneration cost to its Group Statement of Comprehensive Income based on a movement in the fair value of outstanding options granted after November 2002.The weighted average fair value of these options were estimated by using the Black-Scholes option-pricing model and the following assumptions.

Weighted average assumptions

Share price at year end

Average share price

Exercise price

Expected volatility

Expected life

Number of options

Risk free interest rate

Number of options exercisable

2015

£5.17

£5.44

£4.08

19.95%

1.99 years

1,147,205

0.50%

66,800

2014

£5.47

£6.16

£4.10

9.43%

2.92 years

1,188,934

0.50%

42,350

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.

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31. Contingent Liabilities

The Company is part of a corporate cross guarantee arrangement between companies of Wynnstay Group Plc. 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 (2014: £nil).

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33. Operating Lease Commitments

Non-cancellable operating leases are payable as follows:

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

2015

£000

3,167

8,805

6,746

423

665

274

2014

£000

2,720

7,354

4,520

781

1,836

917

2015

£000

98

191

-

-

-

-

2014

£000

79

167

-

-

-

-

Land and buildings Other

34. Group Financial Commitments

The Group has guaranteed the overdrafts of one of its associates to a maximum of £125,000 (2014: £125,000).

35. Pension Commitments

The Group operates two defined contribution pension schemes which are administered on separate bases. The pension and associated costs charge for the year was £787,649 (2014: £789,126). The liability owed to the pension schemes at 31 October 2015 was £73,357 (2014: £74,623).

36. Employee Share Ownership Trust

The Company operates an employee share ownership trust (ESOP). As at 31 October 2015, 52,256 ordinary 25p shares (2014: 10,494 ordinary 25p shares) were held by the trust with an aggregate market value of £270,425 (2014: £57,402). The assets, liabilities, income and costs of the ESOP are incorporated into the financial statements of the Group.

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32. Capital Commitments

At 31 October 2015 the Group and Company had capital commitments as follows:

Contracts placed for future capital expenditure not provided in

the financial statements

2015

£000

377

2014

£000

598

2015

£000

-

2014

£000

-

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37. 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 8).

J J McCarthy

Lord Carlile CBE QC (retired 24 March 2015)

K R Greetham

D A T Evans

B P Roberts

P M Kirkham

H J Richards

2015

£000

-

-

691

263,647

296

368,224

2,946,862

3,579,720

2014

£000

-

-

849

281,696

385

298,262

2,093,523

2,674,715

31 October

2015

£000

-

-

45

53,779

43

33,335

447,084

534,286

31 October

2014

£000

-

-

23

31,720

78

33,327

395,402

460,550

Total Sales Balance Outstanding

38. Cash Generated From/ (Used In) Operations

Profit for the year

Adjustments for:

Tax

Dividend received

Depreciation of tangible fixed assets

Amortisation 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 inventories

Decrease/(increase) in trade and other receivables

(Decrease) in payables

Cash generated from/ (used in) operations

2015

£000

6,670

1,667

-

2,665

10

(260)

(50)

290

(187)

334

-

287

143

(2,960)

8,609

2014

£000

6,697

1,796

-

2,509

10

(171)

(52)

378

(428)

99

265

844

2,522

(2,696)

11,773

2015

£000

2,781

5

(2,750)

284

-

(94)

-

-

-

334

-

(2,682)

(1,077)

(3,199)

2014

£000

181

123

-

270

-

(57)

-

26

-

99

265

-

1,625

(773)

1,759

Group Company

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NOTICE OF ANNUAL GENERAL MEETING

Notice is hereby given that the twenty fourth Annual General Meeting (the “Meeting”) of Wynnstay Group plc (the “Company”) will be held at The Sovereign Suite, Shrewsbury Town Football Club, Oteley Road, Shrewsbury, Shropshire, SY2 6ST on 22 March, 2016 at 11.45 am to transact the following business:

Ordinary Business1. To receive and adopt the Company’s

annual accounts for the financial year ended 31 October 2015 together with the Directors’ Report and Auditors’ Report on those accounts.

2. To declare a final dividend for the year ended 31 October 2015.

3. To re-appoint the following Director who retires by rotation under Article 91:

Philip Michael Kirkham

4. To re-appoint the following Director who retires by rotation under Article 91:

Kenneth Richard Greetham

5. To re-appoint KPMG LLP as auditors, to hold office from the conclusion of the Meeting to the conclusion of the next Meeting at which accounts are laid before the Company at a remuneration to be determined by the Directors.

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

6. That, the Directors be and they are hereby generally and unconditionally authorised for the purposes of Section 551 of the Companies Act 2006 (the “Act”) to exercise all powers of the Company to allot equity securities up to an aggregate nominal amount of £450,000 provided that this authority shall, unless renewed, varied or revoked by the Company in General Meeting, expire on the earlier of the next Annual General Meeting of the Company and 15 months from the date of this Resolution save that the Company may, before such expiry, make an offer or agreement which would or might require relevant securities to be allotted after such expiry, and the Directors may allot relevant securities in pursuance of such

offer or agreement notwithstanding that the authority conferred by this Resolution has expired. This authority is in substitution for all previous authorities conferred upon the Directors pursuant to Section 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.

7. 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:-

(a) in connection with an offer of such securities by way of rights to holders of Ordinary Shares in proportion (as nearly as may be practicable) to their respective holdings of such shares, but subject to such exclusions or other arrangements as the Directors may deem necessary or expedient in relation to fractional entitlements or any legal or practical problems under the laws of any territory, or the requirements of any regulatory body or stock exchange; and

(b) otherwise than pursuant to sub-paragraph (a) above up to an aggregate nominal amount of £450,000,

and shall expire on the earlier of the next Annual General Meeting of the Company and 15 months from the date of this Resolution save that the Company many, before such expiry make an offer or agreement which would or might require equity securities to be allotted after such expiry and the Directors may allot equity securities in pursuance of any such offer or agreement notwithstanding that the power conferred by this Resolution has expired.

8. 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

Paul Roberts26 January 2016

Company SecretaryWynnstay Group plc

Eagle HouseLlansantffraid-ym-Mechain

Powys SY22 6AQ


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1. Appointment of proxies

A member of the Company is entitled to appoint a proxy to exercise all or any of their rights to attend, speak and vote at the Meeting. A form of proxy accompanies this document and if it is to be used, it must be deposited at the Companies Head Office not less than 24 hours before the meeting. A proxy does not need to be a member of the Company but must attend the Meeting to represent you.

2. Authority to continue to offer Scrip Dividends

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.

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.

NOTES TO THE NOTICE OF ANNUAL GENERAL MEETING

4. Authority to purchase shares

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.

6. Enquiries relating to the Meeting

Members are welcome to contact the Company Secretary with any enquiries relating to the Meeting or the Agenda during normal business hours at any time prior to the meeting. Enquiries concerning shareholdings should be directed to the Company’s external registrar at the following address: Neville Registrars, 18 Laurel Lane, Halesowen, West Midlands, B63 3DA (Tel. 0121 585 1131)

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FINANCIAL CALENDAR

27 January 2016

22 March 2016

29 March 2016

29 April 2016

June 2016

Announcement of 2015 results

Annual General Meeting

Dividend Record Date

Payment of Final 2015 Dividends

Announcement of 2016 Interim Results

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NOTES

Wynnstay Group PlcEagle House, Llansantffraid, Powys, SY22 6AQ

01691 828512www.wynnstay.co.uk

Registered in Wales and England