The core Wynnstay business supplies goods and services to farmers. The Group is committed to sustained development within the agriculture
sector and will strive for continued growth with a view to optimising 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. Wynnstay’s objective is to establish itself as the ‘supplier of choice’ within its trading areas, providing a comprehensive offering that
caters for the needs of arable, livestock and mixed farms.
The Group’s development strategy to achieve ‘Supplier of Choice’:
The Group is confident that macro-economic factors, including world population growth, the need for higher levels of national self sufficiency,
and the existence of an ideal production environment in terms of climate, expertise and market, should continue to make the UK a strong and growing food producer. The Group believes there are significant opportunities for the continued growth of its successfully established business model supplying goods primarily to farmers to support the production of food in the UK.
Over a period of the last thirty years, a twin stranded growth strategy has been successfully implemented which has seen Group revenues
grow from £12m in 1988 to £462m in 2018. These two strands are represented by focused acquisitions, and gradual organic expansion through increasing geographic reach and product extension. This twin approach has seen the Group conclude over 50 corporate transactions in the last thirty years, together with expanding its supplied product range to more than 25,000 SKU’s (Stock Keeping Units or individual product items) as the Group became a preferred route to market for many of its main suppliers. The fragmented nature of the supply sector into farming and the rural economy has supported the success of this strategy, the Board believes that many opportunities remain, and that the continuation of this approach, with additional financial resource, will continue to produce rewarding results for all stakeholders in the business. The growth focus will therefore remain on developing the twin strands as follows:
- Act as a consolidator in the UK agricultural supply sector.
- Continue to seek “bolt-on” geographic transactions.
- Seek larger acquisition opportunities to complement existing activities and enhance economies of scale.
- Explore opportunities with innovative product (producers or suppliers, and disruptors).
- Companies that are innovative in their outlook.
- Expand use of Customer Relationship Systems and data usage to increase sales to individual customers.
- Develop new sales channels, including on-line, digital catalogues and van sales.
- Continue to develop sales to customers via cutting edge technical advice.
- Seek new store and operating centre opportunities to grow trading footprint.
- Continue to innovate in terms of new products, technology and suppliers.
- To continue to train personnel to enhance the business.
The Company’s growth prospects are underpinned by macro-economic factors which point to increased demand for agricultural produce, mainly as a result of an increasing world population and shifting dietary habits. 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 Board remains optimistic about the future of the UK agricultural industry. We believe that demand for seed, feed and other agricultural inputs will continue to be strong and that Britain will remain
a competitive player in food production.
Political factors must be considered in any strategic planning process, in particular the political uncertainty that currently exists within the industry. In terms of UK Government support, the UK Agriculture Bill has been presented with a proposed framework concentrating future financial support for economic resilience and public money for public goods. Economic resilience will focus on improving efficiencies within farming businesses and increasing market potential. The Public Goods Scheme will enable land managers to be paid for the production of outcomes for which there is currently no functioning market e.g. water, soil and air quality. Financial support is guaranteed to 2022 with a transition period thereafter. This is a positive outcome for UK farming business and demonstrates the commitment of the UK Government to a strong agricultural sector.
Therefore, a Group strategy which is designed to minimise risks by ensuring a broad and balanced spread of activities across all the main agricultural input areas will be pursued. This policy of having a broad-based business limits the impact of any adverse performance in any single activity and has helped shelter the Group from periodic commodity volatility extremes in the past.
The agricultural markets that the Group operate within continue to be supplied by a relatively fragmented industry, which has allowed the business to develop through a clear strategy of consolidation and growth. The political uncertainty, the change of Government support for agriculture, the increased efficiencies through technology and innovation demanded from our customer base will enhance rationalisation within the agricultural supply industry. The Group has a strong track record of both organic and acquisitive growth and the Board is confident that the Group is well placed to continue to grow the business. Wynnstay’s robust balance sheet, strong commercial relationship and highly skilled staff will capitalise upon opportunities to enhance this successful growth strategy.
Agricultural businesses continue to seek efficiencies throughout the sector through the embracement of innovation, technology, automation and technical advice. The Group will continue to focus on new product development, R&D and an ongoing investment in routes to market to enhance the performance of our customers’ farming businesses.
We are also investing in our advisory services to farmers and have a strong team of specialists (including dairy, poultry, animal health, calf, hardware and arable) who assist customers in identifying areas to improve efficiency. As the pressures on UK agriculture to become more efficient and to enhance productivity increases, we believe that the advisory element of our services will become more important.
The Group continues to be committed to a programme of modernisation within the business with particular emphasis being given to investment
into our feed mills and seed processing facilities, distribution and eCommerce/on-line sales to ensure effective and efficient supply of the wide range of products that the Group can offer. This will be supported by effective marketing to drive operational efficiencies.
Long Term Viability
The Group works within a corporate plan to ensure clear direction and focus for strategic development of the business. Initially instigated in 2015 and substantially reviewed in early 2017, the current plan provides a framework into 2019, following which further clarity on Brexit related issues is expected. Regular reviews of planned goals take place to confirm they remain appropriate in changing circumstances. Annual budgets are set in line with corporate goals but recognise specific market conditions at the time.
The Group’s major focus is closely linked to the viability of the UK agricultural industry. Well publicised information on macro-economic factors associated with world supply of food and energy point to a resilient industry. However, the UK’s forthcoming exit from the EU will undoubtedly change the support mechanism for the farming sector. While it is too early to get a full understanding on future Government policy, any changes will be given careful consideration in the ongoing development of the business. The strategy of operating across multiple agricultural enterprises mitigates risk, and the Group will constantly review the long term outlook for the various sectors of the industry in light of all new information as it becomes available. The Board remains optimistic for the overall future of the UK agricultural industry, as the country has the climate, natural resource and expertise to remain a competitive player in the production of many food commodities. The focus on improved efficiency at all points of the food production cycle should offer further opportunities for the marketing of products and services offered by the Group.
The Group has identified four main groupings associated with the business, each has specific outline goals which must be balanced to satisfy the expectations of all stakeholders.
Shareholders – where the Group focuses on financial performance which supports a progressive dividend policy and capital growth in share value.
Customers – where the Group seeks to excel in terms of range, 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 Developments
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