Company Reports & Accounts
By Roger Dean
2 Agriculture Ltd (Company Number SC156515) This company, whose activities are described as the raising of live poultry and the manufacture of prepared feeds for farm animals, reported its results for the twelve months ending 30 December 2017 on 30 August 2018. Turnover during the period under review amounted to £319.48
million, an increase of £69.66 million or 27.9 per cent compared with the previous twelve months. Gross profits – sales less cost of sales – increased by £1.76 million or 5.4 per cent. As a result, the ratio of gross profits to sales fell from 13.1 per cent to 10.8 per cent, the lowest in several years. Profits before taxation amounted to £6.38 million, down by £3.08
million or nearly a third. As regards operating profits, the core feed milling operating profit increased but the ‘auxiliary’ live bird trading activity operating profit declined owing to reduced volume and margins. Increased feed sales reflected a 23 per cent increase in volumes, mainly as a result of the acquisition of the feed milling operation of Bernard Mathews Foods Ltd, together with an increased selling price of 10 per cent, reflecting rising raw material commodity prices. Increases in distribution and administrative costs during the period under review largely reflected increases in volumes and what the company describes as ‘general wage inflation’. The company’s pretax profit ratio, at 2 per cent, compared with 3.8
per cent during the preceding twelve months; this was sharply down on the preceding twelve months but comparable with the pretax profit ratios recorded in 2014 and 2015.
ForFarmers UK Ltd (Company Number 00062904) This company, whose half-year results were discussed in the September/ October edition of Feed Compounder, reported its results for the full year ending 31 December 2017 on 1 October 2018. Sales increased by £31.4 million or 6.1 per cent to £544.2 million.
The company describes market conditions as ‘challenging’ as a result of ‘increased pressures from rising raw material costs and commodity price volatility’. Illustrative of his, the company’s cost of sales rose by £32.6 million or 7.4 per cent, resulting in a £1.2 million or 1.7 per cent fall in Gross Profits, leading to a four-year low in the company’s Gross Profit ratio of 12.9 per cent. Despite this, the company was able to keep administrative and
distribution costs under control but the pressure on Gross Profitability was such as to cut the Operating Profit ratio from 2.7 per cent in 2016 to 1.9 per cent in the year under review, a four-year low. As a result, pretax profits of £8.61 million in 2016 fell to £7.75 million in the year under review, equivalent to a pretax profit ratio of 1.4 per cent, equivalent to the company’s average pretax profit ratio over the years 2008 to 2017.
PAGE 18 NOVEMBER/DECEMBER 2018 FEED COMPOUNDER
Frank Wright Ltd (Company Number 00111524) This company, whose principal activities are described as the manufacture, sale and distribution of animal feed supplements and associated products together with haulage and transport services, reported on its activities in the year ending 31 December 2017 on 17 September 2018. The company’s Directors note that the ‘Company continues to
operate in a market of low margins and highly volatile raw material prices where the Company is not always able to immediately pass through raw material price increases to the customer’. Sales during the twelve months under review, at £111.21 million, were £5 million or 4.7 per cent ahead of the previous twelve months. However, direct costs of sale rose by £5.06 million or 5.5 per cent, resulting in a Gross Margin percentage of 12 per cent; this compares with the previous accounting period of 12.7 per cent and constituted a fifteen-year low. Distribution costs, at £4.76 million, were £63,000 or 1.3 per cent
down on the previous year; however, administrative charges were ahead by £345,000 or 8.4 per cent. Operating profits fell as a result, from £4.58 million during the 2016 accounting year to £4.24 million, a fall of 7.4 per cent. Profits before deduction of taxes amounted to £4.36 million or
£284,000 or 6.1 per cent less than in the preceding accounting year. This was a ten-year low and represented a pretax profit ratio of 3.9 per cent, compared with 4.4 per cent for the 2016 accounting year.
J Stobart Ltd (Company Number 00783738) This company reported its results for the financial year ending 31 December 2017 on 2 October 2018. Turnover during the year in question, at £17.38 million represented an increase of £2.65 million compared with the previous accounting period, equivalent to an increase of 17.9 per cent. The company reported that the tonnage sold during the year was up by approximately 10 per cent in the year under review, while the balance in terms of sales value reflected ‘continuing increases in the market prices of the main raw materials such as wheat, barley, beet pulp and distillers’ grains’. This aspect was demonstrated by the increase in the costs of sales, consisting principally of raw material costs, which rose from ££12.19 million in 2016 to £14.6 million in the accounting year under review, an increase of £2.4 million or 19.7 per cent. As a result, the ratio of Gross Profits to Sales fell from 17.2 per cent in 2016 to 16 per cent in the year under review, a ten-year low. At £259,000, distribution costs were slightly lower than in the
preceding twelve months, while administrative costs rose by 7.2 per cent to £2.43 million, an increase of 7.2 per cent. The company reports that ‘labour and distribution costs remained relatively stable apart from fluctuations in the cost of fuels’. Operating profits, at £370,000, were £203,000 more than in the previous accounting year, an increase of 122 per cent. The company received a further £64,000 in the form of other interest receivable and similar income; this consisted of interest on loans and receivables, cash and interest payable by debtors. The company’s operating profit ratio in 2017 was 2.1 per cent, up
from 1.1 per cent in the previous accounting period and at a seven- year high. The company’s pretax profit ratio, at 2.5 per cent was at its highest since 2010.
Comment section is sponsored by Compound Feed Engineering Ltd
www.cfegroup.com
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