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14 Nov 2022 07:00
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.
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• | 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.
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• | 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 Paul Roberts, Finance Director | T: 01691 827 142 |
KTZ Communications | Katie Tzouliadis / Dan Mahoney
| T: 020 3178 6378 |
Shore Capital (Nomad and Broker) | Stephane Auton / John More / Rachel Goldstein (corporate advisory) Henry Willcocks (corporate broking) | T: 020 7408 4090 |
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