Anglia Farmers has reported an increased turnover but lower surplus from its latest full year of trading, the last under inaugural chief executive Clarke Willis OBE. New CEO Jon Duffy is promising a more customer focussed approach.
The AF Group made an operating surplus of £760,000 on revenues of £234.2 million in the year ended January 31st 2017, compared to £871,306 and £230.92m in the previous year. The net surplus was £229,821, down from £323,197 twelve months earlier. Members’ funds stood at £3.14m, up from £2.81m, at the year end, with membership growing by 91 to 3,100, with an average spend of £95,000.
The company says its growth in turnover outperformed the market with a backdrop of lower agricultural commodity prices, although these are now rising again following the mid 2016 sterling devaluation. “2016 was a challenging year all round,” notes AF chairman Nigel Savory. “Whilst the volume of products purchased on behalf of our members was up on the previous year, the number of invoices we processed increased by an even greater percentage, indicating that our members were only purchasing items when they were really needed. Actual turnover did not increase in line with volumes, as lower commodity prices held the costs of inputs down.”
Ongoing IT investment saw an additional spend of £370,000 during the year. This has seen 28% of the half million invoices processed during the year received electronically, with the target to achieve 45% by the end of 2017.
Of the group subsidiaries, the AF Affinity non-farmer purchasing service returned a net surplus of £85,686 on sales of £8.3m and straw specialist AF Biomass a net surplus of £60,880 on revenues in excess of £4m. The AF Finance pooled collective investment scheme loaned £4.3m to members and returned £9,140 to the group in retained interest and fees.
Last year saw the creation of AF Logic, a new service to source, store and distribute crop protection products. The company says this was in response to concern from its members over the continued consolidation of the crop protection supply chain, but concedes that the venture “has not been well received by the supply chain” and has met ”a robust reaction from distribution which made the start of the business more difficult than anticipated”. The new business lost £181,000 on revenues of £1m, although the group notes that this initial loss includes start up costs, while its six months’ sales only cover the autumn period.
“The AF Group has delivered another solid performance and strengthens its position as a vital link in the supply chain from input suppliers to retailers,” says Mr Willis, who joined the business as chief executive in 2002, charged with merging the Mid Norfolk Farmers and Loddon Farmers co-operatives into a single business. “I leave the AF Group business on a sound financial footing and wish it every success in the future.”
Mr Duffy, who succeeded him as chief executive in March this year, states: “AF members are in a unique position, being both customers and owners of the business. I am clear in my approach that AF needs to add real value to our members in the shape of saving time and cost. We’ll do this by sourcing the right product or service, with the right advice, delivered smoothly and efficiently with ease of administration.
“Collective buying power is essential in our business,” he continues. “Members need to collaborate with their input requirements to allow AF to negotiate deals on behalf of our customers. AF is entering into effective dialogue with our partners of choice for the benefit of the membership, and collaboration between members and suppliers is vital.”
Mr Duffy says the Brexit negotiations have added to industry uncertainty, but the impact of leaving the EU is unlikely to be clear until at least 2019. Accordingly, the business is preparing a five-year strategy to show where it needs to be in 2022/23, and the necessary steps to get there.