Annual Report & Accounts - Countrywide Farmers

Chairman’s Report 2008
Introduction
I am delighted to be able to report to you a record operating profit since the company was formed and acknowledge the great
contribution of our executive team and more importantly all our staff during the past year in delivering the record level of
trading profits.
The results are especially pleasing after all the hard work completed in the last eighteen months restructuring and improving
the businesses and have been achieved against the backdrop of general economic conditions that have deteriorated
significantly in the last twelve months and commodity markets in both agriculture and energy that have been highly volatile.
The Managing Director’s Review details the progress achieved in each of our trading divisions on pages 3 to 5.
Financial Results
I am pleased to report a total group operating profit of £1.8m (2007: £0.3m before exceptional costs). This strong
performance has been achieved across all our businesses with a detailed commentary provided in the Managing Director’s
Review. Interest costs of £0.7m excluding FRS 17 finance income (2007: £1.1m) reflect the lower levels of borrowings
particularly during the first half of the year. The Group reports a profit before taxation for the year of £1.4m (2007: £4.3m).
The 2007 results included the benefit of the net profit on disposal of fixed assets of £6.0m, principally the Evesham site, partly
offset by exceptional costs of £0.9m.
The sustained increase in commodity prices during 2008 has led to higher levels of both trade debtors and stocks particularly
in the second half of the year, and maximum efforts have been applied to manage the impact on business working capital.
I am delighted to report net debt at 31 May 2008 of £12.0m which is below last year. Gearing at 31 May 2008 remains at
40% of shareholder funds (2007: 40%).
Strategy
During the year the Board approved a three year strategy intended to deliver a sustained improvement in the performance
of the company to the benefit of all our stakeholders. Our vision is for Countrywide to be the leading business in the supply
of products and advice to the rural community, by offering quality and value for money, supported by expert knowledge and
a personal service.
Our retail business aims to continue to expand through opening new stores and improving all aspects of customer service.
On the product side, new ranges are planned to continue to improve margins. Our Energy business looks to grow through
a combination of organic growth and growth by acquisition in particular extending its current trading area. In Agriculture we
continue to enhance customer service with improvements in the technical skills of our sales force to ensure we develop our
business to meet changing customer needs. Looking across all three businesses, we are targeting opportunities to sell our
full range of products to our existing customers as well as expanding the current customer base.
We aim to offer maximum flexibility to our customers whether they prefer to buy in person, by telephone or via the internet.
Finally the continued development, training and motivation of our staff are paramount in delivering this strategy. I am delighted
that many important elements of this plan are already being implemented and further details are provided in the Managing
Director’s Review.
Long Term Incentive Plan for Key Executives
The Board approved the recommendation of the Remuneration Committee to adopt a Long Term Incentive Plan (LTIP) on
29 May 2008 designed to align the interests of a small number of key executives with those of the shareholders by focusing
on long term value creation. Full details of the scheme are provided in Note 24 .The LTIP awards will only be released in full
or in part, in three years’ time, on the satisfaction of challenging profit and cash targets for the business based on the three
year strategic plan. The Board firmly believes that the introduction of the LTIP will help retain and motivate the executive
directors and key senior management to deliver the recently approved three year strategic plan.
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