Company Reports & Accounts
By Roger Dean
The ForFarmers Group has reported on its first six months of operations during 2018. However, while the release referred to ForFarmers’ operations on a Group basis, the company also reported with reference specifically to the UK operation, ForFarmers UK Ltd – the name changed from BOCM Pauls as of 4 March 2015. The data was published in euros, which complicates any analysis of the picture in sterling terms. January 2018 opened with sterling standing at €1.1274 and the first half of 2018 finished with sterling at €1.1308, a very small appreciation. Developments in the first six months of 2017 were more dramatic with sterling opening the year at €1.1786 and falling to €1.13.91, after having been at €1.1957 in mid-April. It is not clear what effect currency movements will have on the overall profitability picture in 2017-18 and this will only emerge when the company’s UK accounts are submitted to Companies House. ForFarmers UK reported sales of €321.63 million during the
first half of 2018, €5.98 million or 1.9 per cent higher than in the corresponding period of 2017. These sales generated Gross Profit of €63.69 million, €2.9 million more than in the same period of 2017 and equivalent to a Gross Profit ratio of 19.8 per cent compared to 19.2 per cent during the equivalent period a year previously. Taking into account Operating Expenses and other operating income, the company generated an Operating Profit of €5.55 million compared to €5.50 million during the first six months of 2017; this generated an operating profit ratio of 1.72 per cent compared to 1.74 per cent in the first half of 2017, a slight deterioration. The removal of ‘incidental items’ resulted in an underlying Operating Profit of €5.13 million as against €5.50 million during the first half of 2017, resulting in an underlying Operating Profit ratio of 1.6 per cent as against 1.7 per cent a year-earlier. When depreciation and amortisation are added back into
Underlying Operating Profit, ForFarmers UK Ltd generated EBITDA (1) of €11.06 million as against €11.05 million in the equivalent period of 2017, a slight improvement. However, when EBITDA is compared to Gross Profit, the ratio of 17.4 per cent is lower than the 18.2 per cent recorded in the first six months of 2017. In the ruminant sector, demand for what ForFarmers UK describe
as ‘performance feed’ increased and it will come as no surprise that the company attributes this to the lower availability of roughage compared to 2017. The number of dairy farmers is declining whilst the dairy herd remains fairly stable. Milk prices were at a lower level than in the first half year of 2017. The demand for pig meat is increasing
1. Earnings Before Interest, Tax, Depreciation and Amortisation
(this appears to be a phenomenon not confined to the UK) and, as a result, pig prices have started to rise again. A recent large acquisition in the swine sector by one of the three largest processors is indicative of ongoing consolidation in this sector. The poultry sector is seeing growing consumer interest in chicken meat and eggs. One might ask the question of whether this reflects current economic conditions or whether increased underlying demand is at the root of consumer interest. ForFarmers UK report that, while the financial situation of livestock farmers has improved in recent months, farm businesses, particularly small and medium-sized ones, ‘remain reluctant to take investment decisions to grow their businesses, primarily because of the continuing uncertainty about the impact of Brexit’. As regards their UK business, ForFarmers UK Ltd reports that
compound feed volume remained ‘about stable’. Volume in the ruminant sector was higher, particularly as regards sales to dairy farmers. Volume was lost in the swine sector, primarily as a result of not extending contracts with low margins. Lower volumes were also sold to the poultry sector, where ForFarmers has ‘a limited presence’. By and large, ForFarmers UK are reporting on conditions that
would currently appear to characterise much of the UK’s livestock feed sector. As what is widely regarded as the biggest feed manufacturer in the UK, its full year results will be awaited with interest. For some reason, the availability of feed manufacturers reporting
‘full’ results in this issue of Feed Compounder is limited but this affords the opportunity to look at the apparent fortunes of some of the industry’s smaller participants. It is important to note that a company which qualifies as ‘small’ under the Companies Act 2006 is exempt from audit provided they satisfy two of the following three criteria: Annual turnover not more than £6.5 million; Balance sheet total not more than £3.26 million; Average number of employees not more than 50. The latest accounts for Protein Feeds Ltd (Company Number
01476247) refer to the year ending 31 March 2018. The balance sheet total amounts to £1.04 million, slightly down on the £1.11 million reported in the preceding twelve months. This appears to reflect a contraction in the profit and loss component of the company’s balance sheet, since the called-up share capital and the revaluation reserve components remain unchanged. The latest accounts for Manor Farm Feeds Ltd (Company Number
03046514) are also made up to 31 March 2018. The balance sheet shows that shareholders’ funds totalled £2.68 million as of that date, £357,040 more than at the close of the previous accounting year, all of which was attributed to an increase in retained earnings. The latest accounts for Donald Cooke Ltd (Company Number
04615811), a company whose activities are described as the ‘Retail sale of flowers, plants, seeds, fertilisers, pet animals and pet food in specialised stores’ show the balance sheet for the twelve months ending 31 October 2017 at £2.8 million, £460,256 or 19.7 per cent more than in the preceding twelve months. Part of this is attributable to a very small increase in called up share capital, but the bulk is attributable to an increase in the share premium account and the remainder reflecting an increase in the profit and loss account.
PAGE 18 SEPTEMBER/OCTOBER 2018 FEED COMPOUNDER
Comment section is sponsored by Compound Feed Engineering Ltd
www.cfegroup.com
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