Enfer hit bylower test fees

By Paul Mooney

Enfer Technology, the company most associated in farmers' minds with BSE testing of slaughter cattle, has reported a sharp decline in turnover and profits.

The Clonmel based company made a pre-tax profit of €8.3 million on a turnover of €21.1 million in 2004 according to consolidated accounts just signed off by the directors. This compares with a profit of €17.2 million on a turnover of €29.7 million in 2003 - results that registered on every farmer's mind at the time. Of course, by any standard the latest profits are excellent too.

The picture can been seen at the top of table 1. While turnover fell sharply the cost of sales was little changed at €8.2 million, cutting gross profit margin to 61%. So what happened? No comment was available from the company this week but these figures would suggest a significant drop in testing fees in 2004 and probably some drop in number of tests carried out too.

In mid-2004 the Department of Agriculture stopped subsidising BSE testing leaving the beef factories to make the payment via a levy on farmers. The factories then managed to hammer down test fees by about 30% which would explain much of the drop in turnover. In addition, that year two other Irish companies began offering competing services.

Looking further down the profit and loss account, the company spent heavily on research and development as it did in 2003. Overheads rose by about 9% to 8.2 million, reflecting general inflation and salary increases across the sector. These outgoings halved operating profit to €8.3 million, down from €17.1 million in 2003. Interest payments were negligible reflecting the companies lack of debt.

The owners of the company, Louis Ronan and Michael O'Connor, made the headlines last year when It emerged they took out a dividend of €16.7 million in 2003. Now we see that the two shareholders took a smaller dividend of €9.5 million from the company in 2004 - approximately €8 million of this going to Ronan. This still left revenue reserves carried forward at €7.4 million. The two men and fellow director Martin Crowley, shared directors' remuneration of €424,667 in 2004.

Debtor days stood at 32 days in 2004 - the company gets payment on the month from the meat plants.

The company made investments of €1.7 million in fixed assets in 2004. In addition, it spent €500,000 purchasing a preferential shareholding in a Dublin based pharmaceutical firm, Bellwood Pharmaceuticals Ltd.

Meanwhile, BSE testing fees charged by Enfer and other companies increased in late 2005 which will help results in 2005. The big issue ahead for these companies is if or when the Department and EU lift the age for compulsory testing from the current 30 months to, say, 42 months as the BSE threat recedes.

Table 1 - Enfer Technology Consolidated profit and loss account to 31 December 2004 (€)