Mole Valley Farmers delivers sturdy trading year for farmer shareholders despite challenging environment

Farmer owned business, Mole Valley Farmers reports another solid trading year with the business showing continued growth and improved efficiencies despite the challenging trading environment.

Overall business revenue for the year concluding 30 September 2014 was £422.5million. Despite falling agricultural commodity prices towards the latter half of the year, the company also saw an aggregated increase of £21.8million – 5.4% over the previous year.

Farmer Shareholder numbers have again risen on the year to over 8,000. A growing number of initiatives have evolved to continually deliver value back to the customer with total member rewards/savings in excess of £1million.

Overall gross margin remained virtually unchanged on the year at 14.6% in-line with budget projections and Mole Valley Farmers’ emphasis on ensuring they deliver a competitive pricing advantage.

Overheads have been controlled, resulting in administration costs as a percentage of sales being maintained and profit on ordinarily activities before taxation reducing to £5.2million.

The strength of the balance sheet has been enhanced further with the purchase of additional assets and now stands at £45.8million with overall business gearing remaining prudent at 31.9%, on par with last year.

The business has also continued to invest in its existing facilities with cash flow expenditure on fixed assets amounting to £4.9million. Some retail and manufacturing facilities have been upgraded which has helped improve efficiencies and deliver greater value and service to customers.

Investment in feed production facilities has increased sales revenue by £2.5million. This has helped improve market share, balance margins and improve volumes to nearly 60,000tonnes. Overall cost of production per tonne has reduced by nearly 5%. A key investment has also included a new IT infrastructure platform across the entire business which will help customer service.

Mole Valley Farmers chief executive Andrew Jackson explains how improvements have been made to help increase the quality and value of services available to farmer members.

“Our strategy during 2014 has been delivered in accordance with our overall business plan. We have continued to challenge our operational practices and where relevant advance the overall capability of our feed business,” he says.

“Our aim is to help improve farm efficiencies and productivity and together with investment in the people we employ, is part of a long term strategy to create a sustainable business that will support farmer members and agriculture into the future.”

During the year a new technical group was formed to join up the thinking across the business with regards to nutrition, health, veterinary services and grassland production. This visionary group aims to provide a more innovative approach to research and development, challenge existing thinking and better integrate the business’s on-farm offering.

Some new initiatives have included a range of moist blends, treated grains, specialist compounds and a revised range of sheep compounds.

“Our feed supplements and powdered minerals business have also had a progressive year with revenues increasing by 15%,” says Mr Jackson. “Our full review and appraisal of our retail store range of mineral formulations has also had pleasing results with sales increasing by 22% year on year.”

Fertiliser revenues have also increased by 18% to £29million. This growth has been achieved thanks to a strategic review of the company’s conventional fertiliser business and the establishment of additional supply sources for raw materials.

Overall, the business has delivered another “sturdy trading result”, however the retail side of the business has not performed as well as hoped, largely due to the mild weather and changing customer habits. The adverse effect on sales in Mole Valley Farmers stores alone was worth about £5million.

“Across all rural stores, like for like store sales grew overall by £5.6m, but performance has been mixed,” says Mr Jackson. “As a business we have given careful consideration to how we position and customise each of our rural store formats so that each offering can be adapted to best suit our regular customers.”

This has included introducing Sunday opening in some stores. During the year the business also started to introduce the new store format ‘Mole Countrystores’ to SCATS. This is part of a wider plan to integrate the heritage, value and character of ‘The Mole’ previously introduced to CWG and more recently into Farmway. This move is made with the intention of having a wider, more inclusive application to make the most of own brand labelling and initiatives across all store formats.

A new Farmer and Country membership scheme has also been introduced into the rebranded Farmway stores, with the scheme already signing up over 8,000 members.

The year also saw significant growth in Mole Valley Farmers crop packaging and fencing timber business with the launch of ‘Performance HD’ net wrap and ‘Shield Timber’ 15 year warrantied fencing timber. As a result, fencing and timber sales alone have grown 15%.

MoleCare Veterinary Services has also evolved thanks to the formation of a new joint venture partnership with St David’s Farm practice. This will help further expand the company’s veterinary expertise and geographical spread.

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