Farmer-controlled feed manufacturer, agricultural inputs supplier and rural retailer Mole Valley Farmers has posted a slightly higher operating profit on 9% higher revenues from its latest full year of trading, despite the “very complex trading environment” during the period.

The business made an operating profit of £2.49 million on revenues of £463.7m in the year ended September 30th 2017, compared to £2.45m and £425.6m in the previous twelve months. But pre-tax profit fell to £1.40m from £1.62m “primarily due to losses on the disposal of fixed assets and a self-imposed capping of gross margins across the feed business, combined with some one-off costs”.

Net assets stood at £38.45 at the year-end (£37.88m). There was a £1.7m reduction in working capital requirements, with working capital as a percentage of revenue falling from 5.1% to 4.3%.

Growth for the Agriculture division was held back by reduced margins despite a 9% increase in feed volumes sold. The company says the devaluation of sterling following the Brexit referendum affected its feed material costs at the same time as the group instituted a feed price margin cap to benefit its dairy farmer members coping with a low milk price. However, these constraints had largely resolved themselves by Q4 and the start of the current financial year.

Recent investment in the feed mills helped improve manufacturing efficiency, with volumes rising to 865,000 tonnes of finished feeds. MVF also kept the price of straights such as soya, rapemeal and maize below the spot market price for its customers. At the same time, the group has increased the range of innovative feed products and nutritional services available to customers, from the Omni-Gen AF supplement to cow signals training and its Precision Nutrition service.

The business also upgraded its delivery fleet to Euro 6 vehicles with a consequent 10% saving in fuel use.

MVF ended its joint venture fertiliser importation and distribution arrangement with Groupe Roullier last year. It has since reorganised its fertiliser supply operation, with a new blending facility at Newport now fully open. The business added 60,000 tonnes of product over the year and contributed revenues of £39m.

“We consider our combined agriculture business to be in good shape, with a solid base and further scope to advance,” notes chief executive Andrew Jackson.

The Group’s Retail division saw revenues increase by 4.3% to £211m with several stores reporting double digit growth.  The business acquired two retail operations – Gwinear Farmers in Cornwall and TCS Country Supplies in Gloucestershire – during the year. Its agreement to buy the Countrywide Farmers retail operation, which could double its stores portfolio, came after the year end.

The year saw a focus on streamlining the retail management, with the closure of a couple of underperforming outlets. There has been investment in the sourcing and logistics functions, with consolidation of supply into a single distribution centre, although delays in this process caused some disruption.

“Our year-on-year growth can be attributed to a number of considerations,” notes Mr Jackson. “This includes the continued support of our farming shareholders – who in their own right continue to face uncertainty – together with the dedicated work and efforts of staff across the company. The positive contribution from previous investments has also played a part, together with our overall pricing and service provision, which consistently features across our wider commercial measures, with both retail transactions and feed volumes continuing to grow.”

MVF chairman Graeme Cock adds: “Our priority remains the core business activities which set us apart from others and underpin our strategy.  We must build for the future to ensure Mole Valley Farmers continues to create a competitive pricing arena for farm inputs and that the company has a robust and sustainable outlook, even if a trade deal with Europe isn’t concluded as intended.”