Company Reports & Accounts


By Roger Dean


NWF Agriculture Ltd The company, part of the NWF Group, reported revenues of £170,806,000 during the year ending 31 May 2019, £10,107,000 or 6.3 per cent ahead of the equivalent period twelve months earlier and the highest amount reported in the preceding twenty-five years. After direct costs, the Company’s Gross Profits amounted to


£6,485,000, £91,000 or 1.4 per cent ahead of the preceding twelve months. After the deduction of administrative expenses, the company was able to report operating profits of £55,000, or 2 per cent less than in the preceding twelve months. After the receipt of incomes from investments, interest incurred and similar charges, the company reported profits on ordinary activities of £3,187,000 in the year ending 31 May 2019, £1,001,000 more than in the preceding twelve months. However, it should be noted that the total pre-tax profit for the year under review includes £1,001,000 described as ‘income from a subsidiary’; an equivalent sum did not arise in the preceding financial year. In the company’s review of business, NWF Agriculture noted that


the year under review had been characterised by ‘some volatility’ in the feeds market, with a significant increase in demand from farmers in the long dry summer period which increased feed rates to offset the ensuing lack of forage in the winter. Nevertheless, NWF Agriculture increased feed volumes and market share against a contracting national ruminant feed market during its latest full year’s trading, but rising production costs and falling feed prices have held back profitability and revenues. The company’s total feed volume increased by 5.8per cent to 625,000 tonnes, from 591,000 tonnes in 2019. This increase was despite the 6 per cent national fall in feed market volumes year-on-year, occasioned by good silage stocks on farm after the 2018-19 shortfall; an additional factor was lower milk prices that caused farmers to reduce their spend on purchased feed inputs. The company reported that average milk prices in Great Britain


were ‘reasonably stable’ over the period under review. There was a period of intense pressure on prices toward the end of the financial year, when the pandemic lockdown saw milk service demand for milk and dairy products fall away sharply as offices closed. Milk production in Great Britain for the period, at 12.5 billion litres, was marginally down from 12.6 billion litres in the previous twelve months.


ForFarmers UK Ltd ForFarmers, the Dutch feed company operating across the Netherlands, Germany, Belgium, Poland and the UK, has posted a


PAGE 14 SEPTEMBER/OCTOBER 2020 FEED COMPOUNDER


first-half recovery in group profitability ‘from a weaker prior period’, despite the Covid-19 pandemic. But feed volumes are down. The UK business has recovered from last year’s first half loss


but was one of the Group’s national markets worst affected by the pandemic. The domestic UK business reported earnings before interest and tax of €1.75million from revenues of €294.8 million in the six months to June 2020 compared to a loss of €1.64 million from sales of €338.73 million during the first six months of 2019. ForFarmers UK reported that the UK market suffered from ‘a sharp decline in ruminant demand due to favourable weather and the Covid-19 pandemic’. Pig feed volumes were also down, with poultry feeds unchanged. In all, ForFarmers’ overall first-half UK total feed volumes fell by 12.2 per cent to 1.2 million tonnes compare with 1.39m tonnes in the first half of 2019. The company notes that Covid-19 controls in the period saw, in


common with the feed industry as a whole, demand for dairy products from the foodservice and catering sectors – normally accounting for a fifth of UK dairy consumption – plummet. This led to a fall in the milk price and consequently, in milk production as farmers reduced intensity of feeding. The mild spring weather meant an early turnout for grazed cattle and a reduction in supplementary feeding by sheep rearing farmers. While the UK pig sector weathered the COVID-19 crisis well, managing to maintain production as Chinese demand for pig meat continued to rise, ForFarmers’ UK pig feed sales fell in line with a major customer having a smaller number of finishing pigs. In the poultry sector, increased demand for eggs during the lockdown was offset by a lack of foodservice demand for poultry meat, but the company’s poultry feed volumes remained stable. UK management maintained ‘a strict focus on cost control and efficiency’, with last year seeing the closure of its Blandford and Crewe feed mills. This resulted in a 6.6 per cent fall in underlying operating costs; including a 9 per cent drop in the number of fulltime equivalent staff numbers compared to the end of first-half 2019. The company has made two additional observations: the first is


that it has increased its bad debt provision to reflect the worsening financial position of dairy farmers. It further notes that market and trading conditions for livestock farmers after Brexit remain ‘uncertain’, despite the end of EU transition approaching on 31 December. Accordingly, the company is making ‘a concerted effort to ensure a smooth supply of raw materials from other countries’. To put the foregoing in context, ForFarmers UK Ltd submitted its


annual Report & Accounts for the twelve months ending 31 December 2019 on 26 August 2020. In the period under review, the company generated revenues


of £564.08 million, £21.72 million or 3.7 per cent less than in the preceding twelve months. Direct costs fell by £21.5 million or 4.2 per cent leading to Gross Profits of £71.1 million, marginally down on the preceding twelve months by 0.3 per cent. After indirect costs, including a significant increase in ‘administrative expenses’ operating profits were negative, while pre-tax profits of £7.43 million in the year ending 1 December 2018 became a loss of £8.03 million in the year under review.


Comment section is sponsored by Compound Feed Engineering Ltd www.cfegroup.com


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