REG - Wynnstay Group PLC - Trading Update

WynnstayAnnouncement

14/11/2022 07:00

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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 £0.5 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
      £0.5m 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 Executive                                            T: 01691 827 142

                                   Paul Roberts, Finance Director

 KTZ Communications                Katie Tzouliadis / Dan Mahoney                                            T: 020 3178 6378

 Shore Capital (Nomad and Broker)  Stephane Auton / John More / Rachel Goldstein (corporate advisory) Henry  T: 020 7408 4090
                                   Willcocks (corporate broking)

 

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