AF Biomass Limited (07974167): administration
- Status
- Administration ended
- Administration began
- 2021-06-22
- Administrators
- Andrew Mctear, Joanna Watts
- Administrators' firm
- Begbies Traynor
- Formerly
- AF ABC Limited
- Incorporated
- 2012-03-02
- Location
- Norwich
- Industry
- 01630 Post-harvest crop activities
Why it went into administration
- Loss of a key customer, supplier or contract
- Competition / price pressure
- Weather / natural events
From the administrators' statement
Incorporated in March 2012 the Company was conceived as a subsidiary of the farmers’ buying cooperative The AF Group Ltd. The trading purpose was the procurement of straw from members of the buying group for resale to the livestock and energy markets, in particular power stations located in Ely, Snetterton and Sleaford, and to take advantage of Government policy favoring the generation of sustainable energy. Straw was procured using a combination of spot contracts and grower (in the swathe) contracts which were paid for in stages during the growing season with final payment and reconciliation following delivery of the straw to the power station. The cash flow of the staged payments was funded by a loan from the parent company. Bailing and haulage was also undertaken in the process.
In 2013 the Company reported revenues of £2.4m and in 2014, following its first full year of trading, the Company reported revenues of £1.6m and a net loss of £47,000 which reflected the wet autumn conditions, subsequently impairing the movement of straw and leading fo contractual issues with one of the customers. Over the course of the next few years profit increased and then continued to fluctuate, peaking at £129,000 in 2018 despite widespread shortages of straw from the 2017 harvest. However, it was noted at the time that this shortage of straw would have negative impacts the following year and so the 3 main power stations agreed not to enforce their long term contracts to supply straw.
As a result of the poor 2018 harvest the Company incurred losses of c.£9,000 in 2019 due to the shortage of straw. This was exacerbated by increased haulage costs and straw prices. Recognising the onerous nature of the contracts, the Company amended the terms with the power statlons, who did not enforce the shortfall following the renegotiations however there were also no reductions jin the tonnage required to be supplied or improvements to pricing. Fortunately the good weather meant the 2019 harvest was strong and a net profit of £255,000 was achieved.
Administrators' statement of proposals (2021-08-17) · Companies House register