Financial
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Record results, ahead of market expectations, reflected: |
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recovery in farmer spending patterns with improved farmgate prices |
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long, dry Summer, which boosted H2 performance across many key activities |
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Revenue from continuing operations rose by 18.4% to £462.66m (2017: £390.72m) |
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acquisitions contributed £28.2m to increase |
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Gross profit rose by 16.7% to £61.71m (2017: £52.89m) |
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Underlying* Group pre-tax profit from continuing operations up 20.5% to £9.60m (2017: £7.97m). Reported pre-tax profit increased by 24.4% to £9.53m (2017: £7.66m) |
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Basic earnings per share from continuing operations up 21.1% to 39.11p (2017: 32.29p) |
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Net assets at 31 October 2018 increased by 6.7% to £91.07m (2017: £85.39m) |
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Proposed increased final dividend of 8.95p (2017: 8.40p), taking total for the year to 13.36p (2017: 12.60p), a rise of 6.03% |
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Trading at the start of the new financial year is in line with management expectations |
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Operational
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Agriculture Division – revenue up 19.0% to £334.34m, operating profit up 28.4% to £4.29m |
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record sales of feed, grass seed and fertiliser, helped by extended, warm dry weather in H2 |
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exceptionally strong performance from the Glasson business |
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increased production capacity in blended fertiliser with acquisition of Montrose, in East Scotland in November 2017 |
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grain trading activity expanded into Lincolnshire, with new office opened in Grantham |
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Specialist Agricultural Merchanting Division – revenue up 16.9% to £128.26m, operating profit up 16.7% to £5.53m |
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like-for-like revenue rose 9.8% y.o.y, with very strong sales of bagged feed, hardware and animal health products from depots |
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Group's trading footprint was expanded, especially in the South West, through acquisitions. Former Countrywide depots remain on track to make a first time contribution to earnings in 2019 |
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Increased investment in manufacturing facilities, depots, logistics fleet |
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Despite Brexit uncertainty, the Group is well-placed for future growth, backed by its broad spread of activities, increased geographic presence, and strong balance sheet |
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*Underlying pre-tax profit is a non-GAAP (generally accepted accounting principles) measure and is not intended as a substitute for GAAP measures and may not be calculated in the same way as those used by other companies. Refer to Note 17 for an explanation on how this measure has been calculated and reasons for its use.
Gareth Davies, Chief Executive of Wynnstay, commented:
“I am pleased to report record profit and revenue in what was Wynnstay's Centenary Year. These strong results reflected the continued recovery in farmer spending with the improvement in farmgate price, also the unusually long dry Summer, which boosted feed, fertiliser and seed sales in the second half of the year. All of Wynnstay's key activities, including sales across our network of depots, showed year-on-year growth.
“We continued to expand our trading area with a number of acquisitions. We now have a greater foothold in the West Country, and the acquisition of the Montrose fertiliser facility gives us our first operational presence in East Scotland.
“The UK agricultural trading backdrop remains robust although farmers have seen higher costs, particularly in feed, mostly driven by the long dry summer weather. While Brexit uncertainties remain, we are confident that British agriculture has positive long-term prospects, underpinned by macro-economic drivers as well as the UK's relative lack of food self-sufficiency.
“Trading for the new financial year has started in line with management expectations. There are important trading months ahead and we will provide a further update at the Group's AGM in late March.”
CHAIRMAN'S STATEMENT
OVERVIEW
I am pleased to report record financial results in what was Wynnstay's Centenary Year. These very strong figures, which are well above our expectations at the start of the financial year, reflect the continuing recovery in farmer confidence and spending, driven by improved farmgate prices. Trading in the second half of the year also benefited from the unusually dry summer weather that extended well into the autumn months and boosted sales of feed, fertiliser, and seed in particular.
FINANCIAL RESULTS
Group revenues from continuing operations for the year to 31 October 2018 increased by 18.4% to £462.66m (2017: £390.72m), with acquisitions contributing £28.2m and inflation accounting for about £22.3m of the rise.
Sales in the Agriculture Division rose by 19% to £334.34m (2017: £280.87m), with the increase reflecting higher average unit values for most feed, seed and grain products and stronger volumes. Revenue from the Specialist Agricultural Merchanting Division increased by 17% to £128.26m (2017: £109.73m), with acquisitions contributing £7.83m to this rise and £10.7m accounted for by strong like-for-like growth in many important product categories.
DIVIDEND
The Board is pleased to propose the payment of a final dividend of 8.95p per share. Together with the interim dividend of 4.41p per share, paid on 31 October 2018, this takes the total dividend for the year to 13.36p, an increase of 6.03% on last year (2017: 12.60p).
The final dividend will be paid on 30 April 2019 to shareholders on the register on 29 March 2019. A script dividend alternative will continue to be available as in previous years. The last date for election for the script dividend will be 16 April 2019.
OUTLOOK
We believe that the long-term prospects for UK agriculture are positive, despite the current uncertainties surrounding political reform and the changes to the way in which farmers will be supported. The Agriculture Bill, which is currently progressing through Parliament, supports and promotes investment in sustainable business models, and incentivises greater efficiency and environmental management. Macro-economic factors point to increased demand for agricultural produce as a result of increasing world population and shifting dietary habits, which British agriculture stands to benefit greatly from. We believe that Wynnstay can play an important role in supporting the future needs of farmers as they respond to the new challenges and opportunities ahead.
Wynnstay remains well-placed to grow and develop. The business is now wholly-focused on its agricultural activities and the acquisitions that we have completed over the last year have expanded our trading areas and our customer base, providing growth opportunities for the future.
We have strong routes into our farming customer base and continue to invest in our product range and in the different ways in which we engage with customers, including online. Our depots remain a strong channel to market, complemented by our growing advisory services, educational events and specialist catalogues. We intend to continue to develop our 'multi-channel' approach over the coming year.
We also have a programme of investment in place to continue to improve efficiencies, with a strong focus on enhancing our manufacturing facilities and upgrading systems.
Trading at the start of the current financial year is in line with management expectations and looking further ahead, the Board remains confident of continuing organic and acquisitive growth opportunities. Wynnstay's breadth of activities and strong balance sheet will continue to provide a secure underpinning to the Group's position as we develop and expand the business.
Jim McCarthy
Chairman