Wynnstay Regulatory News (WYN)

AIM: WYN

WYNNSTAY GROUP PLC

("Wynnstay" or "the Group")

Half Year Results

For the six months to 30 April 2011

Key Points

·; Record half year results - supported by increased volumes from all major activities

·; Revenues up to £164.57m (2010: £120.34m), with:

- agricultural supplies contributing £129.76m (2010: £87.65m)

- specialist retailing contributing £34.65m (2010: £32.56m)

·; Operating profit up 11% to £4.15m (2010: £3.74m)

·; Profit before tax up 12% to £3.97m (2010: £3.55m)

·; Earnings per share up 1% to 17.91p (2010: 17.73p)

·; Net assets up 19% to £49.96m (2010: £42.02m)

·; Interim dividend up 8% to 2.60p (2010: 2.40p)

·; Agricultural supplies - breadth of activities continues to be a major strength

·; Specialist retailing businesses continue to grow steadily:

- Just for Pets chain; roll-out progressing well, 3 stores opened in H1

- Wynnstay Stores; like-for-like sales up 7%, supported by high level of non-discretionary spend by farmers and store refurbishment programme

·; Post period; acquisition in May 2011, of Wrekin Grain - gives Group a national presence in grain trading market

·; Board remains confident about prospects for the year and beyond

Ken Greetham, Chief Executive, commented,

"Wynnstay has achieved record interim results, which are particularly pleasing given that they were set against the backdrop of an agricultural market which has experienced significant inflation in raw material prices. The Group's diversified offering within the agricultural sector continues to be a strength and we saw volume increases across all our major agricultural activities - and in seed volumes in particular, thanks to the contribution from Woodheads, which we acquired in May last year. Further opportunities in the arable market will develop as a result of our recent acquisition, Wrekin Grain. Our specialist retailing activities continue to perform well overall, with the Wynnstay Stores chain benefitting from a high degree of non-discretionary spend by farmers and the roll-out of our Just for Pets outlets continuing well, with three stores opened in this half.

Looking ahead, we remain confident about prospects for the ongoing development of the business."

Enquiries:

CHAIRMAN'S STATEMENT

INTRODUCTION

I am pleased to report that the Group has delivered another strong performance, setting a new record for interim results. This encouraging performance, in line with our expectations, has been achieved in an agricultural market which has experienced significant inflation in raw material prices. It also underlines the benefit of the Group's diversified presence across the agricultural supplies marketplace.

Results were supported by volume increases across all our major agricultural activities although there was variation in margins, reflecting inflationary pressures. As expected, following the purchase of Woodheads Seeds, in May 2010, seed volumes have increased significantly, enhancing Wynnstay's presence in this sector.

Our specialist retailing activities, comprising Wynnstay Stores and Just for Pets, continue to perform well overall. Wynnstay Stores benefit from a high degree of non-discretionary spend by farmers and our store refurbishment programme has helped to stimulate growth. The expansion of Just for Pets outlets continued over the first half with three further openings, taking our total to 19.

After the period end, in May, we acquired Wrekin Grain Ltd ("Wrekin"), a leading independent grain marketing and agricultural inputs supplier, based in Telford, Shropshire. Supplying grain marketing services, seeds and fertiliser throughout the Midlands region, its addition will create further opportunities for the Group within the arable market.

FINANCIAL RESULTS

The Group's revenue for the six months to 30 April 2011 rose to £164.57m (2010: £120.34m). Our agricultural supplies division contributed sales of £129.76m (2010: £87.65m), with the increase partly reflecting the return of very significant commodity inflation as well as the contribution of Woodheads Seeds, acquired in May 2010. Our specialist retailing operations contributed £34.65m (2010: £32.56m), with significant like-for-like growth recorded in the Wynnstay Stores business and additional Just for Pets outlets.

Group operating profit improved by 11% to £4.15m (2010: £3.74m). Agricultural supplies contributed operating profits of £2.23m (2010: £2.03m), including a strong contribution from Woodheads Seeds. Our specialist retail operations produced £2.06m (2010: £1.66m), benefiting from the higher sales activity and an improvement in gross margins.

Net finance costs reduced to £0.18m (2010: £0.19m), despite a higher period end net debt position of £12.36m (2010: £10.54m) as a result of the inflation driven working capital levels. After other costs, including a share based payments charge, of £0.15m (2010: net income of £0.05m), profit before tax increased to £3.97m (2010: £3.55m), a rise of 12%. Earnings per share growth was limited to 1.0% at 17.91p (2010: 17.73p) as a result of the placing that occurred in June 2010.

Net assets at 30 April 2011 increased to £49.96m (2010: £42.02m). This represents approximately £3.03 per share (2010: £2.87 per share), based on the weighted average number of shares in issue during the period.

DIVIDEND

The Board is pleased to declare an interim dividend of 2.60p per share, which represents an 8% rise on last year (2010: 2.40p). The interim dividend will be paid on 31 October 2011 to shareholders on the register at the close of business on 30 September 2011. As in previous years, a Scrip Dividend alternative will also be available. The last date for election for the scrip dividend will be 17 October 2011.

REVIEW OF OPERATIONS

AGRICULTURE

Feed Products

Feed volume increased by 5% over the equivalent period last year, helped by strong demand over the winter period. Poultry feed volumes continue to move ahead both as we increase our presence in the free range egg market and as the free range egg production marketplace grows. During the winter, dairy feed volumes also increased, in line with industry trends, however higher prices in April combined with an early spring, which created perfect grazing conditions, affected demand for sheep feed. Significant increases in raw material prices along with higher fuel costs limited feed margins. However, the volatility within the industry created opportunity for our traders, particularly at Glasson, which made an excellent contribution to the Agricultural Division's results, supported by increased volume and margin.

Arable Products

The Group's acquisition of Woodheads Seeds in May 2010 has positioned Wynnstay as one of the major seed processors in the UK and our arable activities have been further boosted by last month's acquisition of Wrekin.

Demand for fertiliser was strong at the beginning of the financial year as farmers bought ahead of the market in anticipation of price increases, stimulated by strong World demand. Higher prices and dry weather in the spring tempered demand but early signs for the rest of 2011 are encouraging.

As expected, cereal seed sales are significantly ahead of 2010 as a result of the Woodheads Seeds acquisition. Herbage seed sales were also strong and are benefiting from the increased strength of the Wynnstay brand.

Our in-house grain marketing service, Shropshire Grain, which provides a route-to-market for farmers in our trading area, will be expanded considerably in the second half as we complete the integration of Wrekin. As we previously announced, the combined businesses give Wynnstay a national presence in grain trading and we will be rebranding the enlarged operation 'GrainLink'. The new customer base we have acquired with Wrekin also provides us with cross-selling opportunities and we see very good scope to develop these new relationships over time.

SPECIALIST RETAIL

Wynnstay Stores

Wynnstay Stores continued to demonstrate good growth, with sales increasing by 7% on a like-for- like basis. The stores carry a comprehensive range of products, including animal healthcare products, agrochemicals and agricultural hardware, which cater principally for the requirements of its farmer customer base but the product offering is also geared towards country dwellers in general. All outlets are merchandised to suit the demographics of their trading area and to maximise utilisation of the retail space.

After the period end, in June, the Group agreed to acquire a large new site in Oswestry, Shropshire. This site will become a flagship store, stocking a wider range of agricultural products than is typical. Refurbishment has already started and we will be moving our existing store in Oswestry to the new site once works are completed.

Just for Pets

The roll-out of our pet products chain is continuing steadily. We opened three new Just for Pets stores in the first half, at Bristol, Cambridge and Nuneaton and the total number of stores now stands at 19. As we previously indicated, we are seeing a change in spending patterns in some stores, which has meant that like-for-like sales are slightly behind 2010. However, footfall overall is good and spend at our newer stores is encouraging.

JOINT VENTURES

The associate and joint venture businesses are trading to expectation. In line with our normal policy, the Group's share of results of audited accounts for the companies will be consolidated within the full year results.

OUTLOOK

The outlook for the agricultural industry remains positive. World demand for arable products has led to high prices for cereals, giving good returns for arable farmers, which bodes well for the supply of all arable inputs. Current demand for fertiliser for arable usage is looking healthy, buoyed by farmers buying early in anticipation of further price rises. Our investment in Woodheads Seeds in 2010 has been complemented this year by the acquisition of Wrekin in May 2011. These acquisitions have strengthened our arable business, giving us a national presence, and will create further opportunities for us in this sector.

While higher grain prices will benefit arable farmers, they are likely to push up feed costs for livestock farmers, with dairy farmers expected to feel the effects most keenly. So far, the increase in the cost of milk production has not been matched by the farmgate price and, although there has been some increase, current milk prices continue to place producers under pressure. This may have some effect on short term dairy feed demand but our presence across all feed sectors (ruminant and monogastric) means that we expect to maintain current production levels.

Within our specialist retailing activities, sales at our Wynnstay Stores network of rural retail outlets remains strong. The refurbishment programme is ongoing and we expect continuing steady sales growth, supported by the high proportion of spend by farmers which is non-discretionary. The market for pet products continues to present attractive growth opportunities and the recent opening of outlets at Bristol, Nuneaton and Cambridge have extended our geographic trading area.

Wynnstay's financial position remains very robust and the balanced business model continues to support sustainable growth in revenues and profits. The Board remains confident about prospects for the ongoing development of the business.

John Davies

Chairman

WYNNSTAY GROUP PLC

CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

For the six months ended 30 April 2011

WYNNSTAY GROUP PLC

CONDENSED CONSOLIDATED BALANCE SHEET

As at 30 April 2011

WYNNSTAY GROUP PLC

CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY

WYNNSTAY GROUP PLC

CONDENSED CONSOLIDATED CASH FLOW STATEMENT

For the six months ended 30 April 2011

WYNNSTAY GROUP PLC

NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS

1. Basis of preparation.

The Interim Report was approved by the Board of Directors on 21 June 2011.

The condensed financial statements for the six months to the 30 April 2011 have been prepared in accordance with International Accounting Standard (IAS) 34 Interim Financial Reporting.

The financial information for the Group for the year ended 31 October 2010 set out above is an extract from the published financial statements for that year which have been delivered to the Registrar of Companies. The auditors' report on those financial statements was not qualified and did not contain statements under section 498(2) or 498(3) of the Companies Act 2006. The information contained in this document does not constitute statutory accounts within the meaning of section 434 of the Companies Act 2006.

The financial information for the six months ended 30 April 2011 and for the six months ended 30 April 2010 is unaudited.

The condensed consolidated interim financial statements should be read in conjunction with the annual consolidated financial statements for 31 October 2010, which have been prepared in accordance with IFRS.

2. Consolidation of share of results in joint ventures & associates.

As the Group has a policy of using audited accounts for the consolidation of its share of the results of joint venture & associate activities, no such consolidation has occurred during the six months to April 2011 or in the comparative period. Relevant results will be accounted for during the second half of the financial year.

3. Significant accounting policies.

The condensed financial statements have been prepared on a historical cost basis or fair value basis as appropriate.

The same accounting policies, presentation and methods of computation are followed in these condensed financial statements as were applied in the preparing of the Group's financial statements for the year ended 31 October 2010. A copy of these financial statements is available from the Company's Registered Office at Eagle House, Llansantffraid, Powys SY22 6AQ.

The following accounting standards, amendments and interpretations are not yet effective and have not been adopted early by the Group.

International Financial Reporting Standards ("IFRS")

IFRS 9: 'Financial instruments' 1 January 2013

IAS 24 (revised), 'Related party disclosure' 1 January 2011

Amendments to existing standards

Amendment to IFRS 1: 'Hyperinflation and fixes dates' 1 July 2011

Amendment to IFRS 7: 'Financial instruments: disclosures' 1 July 2011

Amendment to IAS 12: 'Income taxes' on deferred tax 1 January 2012

Amendment to IFRIC 14: 'Pre-payments of a Minimum Funding Requirement' 1 January 2011

Annual improvements to IFRSs 2010 1 January 2011

From the 1 November 2010 the following standards, amendments and interpretations became effective and were adopted by the Group:

International Financial Reporting Interpretations Committee ("IFRIC") interpretations

IFRIC 19: 'Extinguishing financial liabilities with equity instruments'

Amendments to existing standards

Amendment to IFRS 1 for additional exemptions

Amendment to IFRS 2: 'Share based payments - Group cash settled share-based payment transaction'

Amendment to IAS 32 Financial instruments: 'Presentation on classification of rights issues'

Annual improvements to IFRSs 2009

Amendment to IFRS 1: 'First time adoption'

The adoption of these standards, amendments and interpretations has not had a material effect on the net assets, results and disclosure of the Group.

4. Taxation.

The tax charge for the six months to 30th April 2011 is based on an apportionment of the estimated tax charge for the full year.

5. Earnings per share.

Earnings per share have been calculated based on the profit attributable to ordinary shareholders of £2,957,000 (six months ended 30 April 2010: profit of £2,591,000) and the weighted average number of shares in issue of 16,508,502 (2010: 14,611,480). Diluted earnings per share are based on the aggregate weighted average number of shares and all potential shares adjusted for their proposed issue price, of 16,909,489 (2010: 14,827,779).

6. Share capital.

During the current period a total of 72,717 (2010: 227,511) shares were issued with an aggregate nominal value of £18,179 (2010: £56,878) fully paid up for equivalent cash of £254,033 (2010: £535,483). Included in these issues were 72,717 (2010: 60,007) shares allotted to shareholders exercising their rights to receive dividends under the Company's scrip dividend scheme and nil shares (2010: 167,504) allotted to relevant holders exercising options in the Company. As at 30 April 2011 a total of 16,580,817 shares are in issue (2010: 14,770,812).

7. Dividends.

In the period an amount of £775,866 (2010: £630,200) was charged to reserves. An interim dividend of 2.60p per share (2010: 2.40p) will be paid on 31 October 2011 to shareholders on the register on 30 September 2011. New elections to receive Scrip Dividends should be made in writing to the Company's Registrars before 17 October 2011.

8. 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 Agricultural Supply, 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 segments, namely the United Kingdom.

Continuing operations

Agricultural Supply - Manufacturing and supply of animal feeds, fertiliser, seeds and associated agricultural products

Retail - Supplies of a wide range of specialist products to Farmers, Smallholders and Pet Owners

Other - Miscellaneous operations not classified as agriculture or 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 segmental 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 period ended 30 April 2011 are as follows:

9. Cash (used in) / generated from operations.

During the six months to 30 April 2011, the Group purchased Property, plant and equipment of £1,372,343 (2010: £1,482,000) of which £547,523 (2010: £573,000) relates to assets acquired under finance leases.

10. Other reserves.

Included in Other reserves are share-based payments: the group issues equity-settled share-based payments to certain employees. Equity-settled share-based payments are measured at fair value at the date of the grant. The fair value determined at the grant date of the 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.

The Group operates a number of share option schemes and fair value is measured by use of a recognised 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 behavioral considerations.

11. Group financial commitments.

As at the 30 April 2011, the Group's contingent liabilities in respect of bank guarantees for one of its joint ventures therefore amounts to £125,000 (2010: £125,000).

12. Capital commitments.

As at 30 April 2011 the Group had capital commitments as follows:

13. Related parties.

Transactions between the company and its subsidiaries, which are related parties have been eliminated on consolidation and are not disclosed in this note. Transactions between the Group and its joint ventures and associates are described below:

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 the relationship between parties.

14. Post Balance sheet events.

Acquisition - On 4 May 2011 the Group completed the acquisition of the entire share capital of Wrekin Grain Ltd, a leading independent grain marketing and agricultural inputs supplier based in Telford, Shropshire. Details of the trade, estimated asset values acquired and the provisional price paid are given below, together with the previous trading performance of the Company as reported in the latest available audited accounts of the business:

The final consideration to be paid is subject to confirmation of Net Assets

Audited financial performance information for the year ending March 2011 for the acquired business is unavailable. The acquisition of Wrekin Grain Limited will provide the Group with an expanded customer base, providing cross selling opportunities and the scope to develop new trading relationships. The expanded activities are intended as a platform to establish a national presence in grain marketing for the Group.