Trading Update

The Board of Wynnstay, the agricultural supplies and specialist merchanting group, provides an update on trading for the financial year ended 31 October 2023 ("FY23").

The trading environment in the second half of the financial year was more difficult than the first, with lower farm-gate prices adversely affecting farmer spending patterns. In addition, the seasonally critical final quarter has been impacted by abnormally wet weather. As a result, the Group's results for the financial year are now expected to be below current market expectations.

The Agriculture Division suffered from disruption to post-harvest farming activities caused by the heavy rains, which resulted in lower sales of winter seed products, particularly in October. It also saw reduced demand for feed and fertiliser, reflecting both good on-farm grass growth and weaker farm-gate prices, especially for milk. As anticipated at interims, the Specialist Merchanting Division faced inflationary pressures and saw lower volumes of bagged feed sales and hardware products. By contrast, the Group's grain marketing business, GrainLink, which is accounted for within the Agriculture Division, delivered a record performance. Its strong results reflected both the good-sized harvest and higher market penetration.

The three Joint Ventures businesses recorded another strong total contribution, which is expected to be slightly ahead of the prior financial year.

Looking ahead, with uncertainty over milk and other farm-gate prices, farmer sentiment is likely to remain cautious in the short-term, but with a strong market position and balanced business model, the Board still anticipates that the next financial year will show an improvement over FY23.

The Group expects to announce its results for the year ended 31 October 2023 towards the end of January 2024 and will provide a further update on current trading at that time.

Accounting Note:

As previously reported, in the financial year ended 31 October 2022, Wynnstay's Agriculture Division recorded a non-cash, nominal accounting gain* of c.£434,000. This non-cash gain reversed in FY23, and in addition, by the same accounting treatment, the Agriculture Division is expected to recognise a non-cash, nominal accounting loss on derivative contracts of c. £375,000 for FY23, which will reverse in FY24. 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.

*This resulted from the accounting treatment of financial derivatives, in accordance with International Financial Reporting Standard 9, which requires that certain open derivative contracts be valued by reference to a recognised market price as at the financial year-end.

The information contained within this announcement is deemed by the Company to constitute inside information as stipulated under the UK version of the Market Abuse Regulation (EU) No. 596/2014 as it forms part of UK law by virtue of the European Union (Withdrawal) Act 2018.