Wynnstay Group PLC Trading Update (2161G)

TIDMWYN

RNS Number : 2161G

Wynnstay Group PLC

14 November 2022

THIS ANNOUNCEMENT CONTAINS INSIDE INFORMATION FOR THE PURPOSES OF THE MARKET ABUSE REGULATION (EU) 596/2014 WHICH FORMS PART OF UK LAW BY VIRTUE OF THE EUROPEAN UNION (WITHDRAWAL) ACT 2018 ("MAR"). IN ADDITION, MARKET SOUNDINGS (AS DEFINED IN MAR) WERE TAKEN IN RESPECT OF CERTAIN OF THE MATTERS CONTAINED IN THIS ANNOUNCEMENT, WITH THE RESULT THAT CERTAIN PERSONS BECAME AWARE OF SUCH INSIDE INFORMATION, AS PERMITTED BY MAR. UPON THE PUBLICATION OF THIS ANNOUNCEMENT, THIS INSIDE INFORMATION IS NOW CONSIDERED TO BE IN THE PUBLIC DOMAIN AND SUCH PERSONS SHALL THEREFORE CEASE TO BE IN POSSESSION OF INSIDE INFORMATION.

AIM: WYN

WYNNSTAY GROUP PLC

("Wynnstay" or "the Group")

TRADING UPDATE

The Board of Wynnstay, the agricultural supplies group, is pleased to provide a further update on trading for the financial year ended 31 October 2022.

Since the trading update provided on 6 September 2022, which reported a strong trading backdrop across many core activities, it is now clear that the Group's results for the financial year will be ahead of market forecasts issued after that announcement.

This position reflects not only a favourable trading performance in the final months of the financial year, but also a higher than initially expected contribution from joint venture activities and an additional, non-cash profit from grain trading operations within the Group's Agriculture Division of approximately GBP0.5 million.

 
 --   The beneficial trading conditions described in the September 
       statement continued through to the financial year-end, 
       further benefiting arable performance with additional 
       income across grain, seed and fertiliser categories. 
 --   Joint Venture businesses Bibby Agriculture Limited and 
       Wyro Developments Limited have both substantially exceeded 
       initial financial performance expectations, and the contribution 
       from these activities will be higher than budgeted. 
 --   Wynnstay's Agriculture Division's reported profit will 
       be increased by the accounting treatment in relation to 
       financial derivatives used to commercially hedge forward 
       physical transactions. The Group's accounting policies, 
       in accordance with International Financial Reporting Standard 
       9, require certain open derivative contracts to be valued 
       by reference to a recognised market price as at the financial 
       year-end. On Monday, 31 October 2022, (the date of the 
       Group's financial year-end) there was a spike in London 
       Wheat futures prices caused by the Russian Government's 
       announcement of its withdrawal from the Ukraine grain 
       export agreement on Saturday, 29 October 2022. These closing 
       reference prices have the effect of generating an additional 
       approximate GBP0.5m of non-cash reported profit in the 
       financial year to 31 October 2022. On Wednesday, 2 November 
       2022, the Russian Government announced the reversal of 
       its decision and London Wheat futures prices decreased 
       by approximately the same amount as they had initially 
       increased. This effectively extinguished the reported 
       additional non-cash profit, but the reversal will be accounted 
       for in the new financial year. 
 
       This accounting treatment has no effect on the grain trading 
       book of Wynnstay's Agricultural Division, where the derivative 
       contracts in place at the financial year-end are used 
       to commercially hedge physical contracts to be executed 
       in the next financial year. It simply accelerates the 
       recognition of the fair value from the relevant transactions. 
 

As previously announced, the Board is very conscious of inflationary pressures for the business, farmers and the end-consumer and of the uncertain macroeconomic background. It therefore believes it prudent to leave its expectations for the new financial year and beyond unchanged.

Enquiries:

 
 Wynnstay Group plc     Gareth Davies, Chief          T: 01691 
                         Executive                     827 142 
                         Paul Roberts, Finance 
                         Director 
 
 KTZ Communications     Katie Tzouliadis / Dan        T: 020 3178 
                         Mahoney                       6378 
 Shore Capital (Nomad   Stephane Auton / John         T: 020 7408 
  and Broker)            More / Rachel Goldstein       4090 
                         (corporate advisory) 
                         Henry Willcocks (corporate 
                         broking) 
 

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November 14, 2022 02:00 ET (07:00 GMT)