Editor’s Notebook is sponsored by Compound Feed Engineering Ltd


SC Feeds produces in excess of 80,000 tonnes of compounds and


blends a year, a useful addition to the 481,000 tonnes produced by NWF in their financial year ending 31 May 2013. The total consideration for the acquisition is up to £6.75m on a cash


www.cfegroup.com


the H7N9 virus in an eighty year old man who normally resides in the neighbouring mainland Chinese city of Shenzhen. He was subsequently reported to have died.


MODULATION IN COURT Elsewhere in this issue of Feed Compounder, we observe that England has set a modulation rate of 12 per cent, which looks to be a fairly mealy- mouthed compromise between the NFU and DEFRA Secretary Owen Patterson who wanted to go for a full 15 per cent modulation. Scotland has set a rate of 9.5 per cent while Wales has gone the whole hog and set a rate of 15 per cent. But the CAP modulation rate in Northern Ireland will be set at zero


per cent; in other words, there will be no switching Pillar One money – direct payments to farmers – to Pillar Two – developing the rural economy. This was as a result of the DARDI agriculture minister’s plan for a 7 per cent cut in direct support being successfully challenged - in the High Court no less. In December 2013, the DARDNI agriculture minister, Michelle


O’Neill, announced proposals under the CAP reforms to transfer 7 per cent of Pillar 1 payments to fund rural development projects under Pillar 2. But the province’s finance minister, Simon Hamilton, went to the High Court to prevent Ms O’Neill going ahead with her plan. Mr Hamilton’s based his legal challenge on the premise that Ms O’Neill had not consulted her fellow executive ministers about her plan which would have transferred £100 million from direct farm payments over a six-year period. The Department of Finance and Personnel noted that it was the


minister’s view that the DARDNI minister was acting in breach of the ministerial code. The Lord Chief Justice confined himself to observing that it was ‘a


case about political failure’. No doubt the Northern Ireland administration will be seeking to resolve the meaning of this Delphic utterance.


NWF ACQUIRES SC FEEDS A few more details have emerged about the NWF Group’s acquisition of SC Feeds. The latter, being the size that it is, only publishes an abbreviated


balance sheet, the last available being for the twelve months ending 30 April 2012. However, the NWF Group’s announcement added the fact that, in the twelve months ending 30 April 2013, SC Feeds made pre-tax profits of £0.76 million and possessed net assets of £1.25 million


PAGE 16 JANUARY/FEBRUARY 2014 FEED COMPOUNDER


free, debt free basis (subject to completion accounts). The total amount payable will consist of an initial consideration of £6.0 million in cash, to be satisfied from NWF’s existing banking facilities and up to £0.75m to be satisfied by the issue of new ordinary shares in the NWF Group. The final amount of the equity involved will be determined following the agreement on completion accounts early in early 2014. NWF say that the acquisition will be earnings-enhancing in the first full year. There is a curious footnote to all this in that I remember some


years ago that Whitchurch, Shropshire-based GP Feeds had taken SC Feeds as its main supplier because it was the only manufacturer who was prepared to accept the voluminous and comprehensive entirety of GP Feeds’ demands as regards product consistency and formulations. I don’t know whether SC Feeds is still GP Feeds principal supplier but if the answer is in the affirmative, I wonder what happens now. NWF, in their latest trading update, report that the Feeds division


traded well in the six months ending November 2013 with ‘a continued focus on meeting the needs of farmers who have experienced better silage production than in the prior year and benefited from improved milk prices’. The Group plans to announce interim results on Tuesday 4 February 2014.


ECONOMIC UPDATE The sharp fall in the rate of inflation as measured by the Consumer Price Index, from September’s 2.7 per cent to 2.2 per cent in October continued into November with 2.1 per cent, the lowest monthly increase since November 2009. In its December update, the Office of National Statistics reported that


the UK’s Gross Domestic Product (GDP) in volume terms was estimated to have increased by 0.8 per cent between the second and third quarters of 2013, unrevised from the Second Estimate of GDP published on 27 November 2013. The closely watched Markit/CIPS surveys for manufacturing and


construction were positive; that for services was published after this edition of Feed Compounder went to the printers. The seasonally adjusted Markit/CIPS Purchasing Managers Index for manufacturing posted 57.3 in December, down slightly from November’s 33-month high of 58.1, but still a level indicative of ‘a robust improvement in overall operating conditions’. Adjusted for seasonal factors, the Markit/CIPS UK Construction Index, at 62.1 in December was down only slightly from November’s 75-month peak of 62.6 and was, in any case, well above the 50.0 value that separates expansion from contraction. As regards manufacturing, David Noble, Chief Executive Officer


at the Chartered Institute of Purchasing & Supply said that ‘UK manufacturing ended 2013 on a high and with all signs of powering ahead into 2014’. As regards construction, he noted that continued strong expansion marked an outstanding end to 2013 for UK construction, positioning the sector on a solid recovery path for 2014.


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