Farmer-owned trader GrainCo has written off £4.5m in its latest accounts for grain stored on its behalf by failed merchant Alexander Inglis & Son.
Despite this, the business, which is in turn owned by storage and marketing group Tynegrain, reported a pre-tax profit of £385,457 for the year ended 30 June 2021. This compares with a pre-tax sum of £2.087m the previous year.
Turnover at GrainCo rose to almost £181.9m in the latest year, from £174.7m in the 2020 accounts.
Without the write off, the business would have made a £4.9m pre-tax profit.
Managing director Gary Bright pointed out that the company has a strong balance sheet, with net assets of £20.6m.
“We benefit from being a business with diverse income streams and significant revenue, which allowed this loss to be absorbed and still make a profit ,” said Mr Bright.
“We have a full recovery stock insurance policy so I’m confident that the loss [of the stored grain value] will be recovered.”
A note to the accounts states: “During the year, Alexander Inglis & Son, a company that provided storage facilities to the company entered administration. Stock owned by GrainCo and stored by Alexander Inglis & Son on the company’s behalf was included in GrainCo’s stock at a value of over £4,530,006. The directors have written off this stock in full in the financial statements to 30 June 2021, as the administrators report would indicate that it is unlikely that this grain will be recovered.
“The company is taking legal advice regarding this matter. Due to the sensitivity of this, the directors do not consider it is appropriate to disclose any further information at this time.”
The Inglis business went into administration in May 2021, with the administrators’ report subsequently showing a likely deficit of £70m, although trade estimates put it higher than this.
Farmers accounted for more than one-third of the 166 unsecured creditors listed in a report issued by the administrators in July and were owed more than £6m by the Inglis business. This sum is separate to that claimed for crops stored on behalf of growers and merchants.
The administrators have subsequently confirmed that there is expected to be no funds available to pay unsecured creditors.
GrainCo markets 1m tonnes of grain, oilseeds and pulses every year, buying from growers between Hull and Aberdeen.
Tynegrain has stores and port stores throughout the north-east of England and Scotland and exports an average of 200,000 tonnes a year from its deep water berth on Tyne Dock, which can accommodate vessels of up to 66,000t.
The business also owns PelletCo, a supplier of wood pellets for boilers and animal bedding throughout the UK.