Good morning, and welcome to the Fevara Investor Presentation. Today, we are joined by Joshua Hoopes, Chief Executive Officer, and Gavin Manson, Chief Financial Officer. Questions are encouraged throughout this webinar and can be submitted via the Q&A box situated on the panel on the right-hand side of your screen. I will now hand over to Josh to begin the presentation.
Thank you. Thank you, everyone, for taking the time to join us and have an update on our half-year results, and we will also touch on progress against our strategic plan that we outlined about 18 months ago. My name is Joshua Hoopes. I'm the CEO of Fevara. I've now been with Fevara, previously Carr's Group, for just over two years, and I'm also joined by our CFO, Gavin Manson. For today, the agenda and plan is we will give you an overview of the half year, as well as a small introduction to the business for those who are new to Fevara and learning a little bit more about what we do and who we are. Gavin then will talk us through the financial review for the first half results of 2026.
I'll then come back and give a little bit of a deeper view on our progress against the strategy and operational progress. We'll go to a summary and outlook, and then I'm happy to take questions and cover anything else that would be useful for you all. For those who are less familiar with Fevara or perhaps new to us as a business, we are an international supplement business. Our focus area is specifically on extensive or pasture-based, grass-based livestock. We have three dominant product categories in our business. We have our Feed Licks, which is a dehydrated molasses lick, which also includes other vitamins and minerals and nutrients, and this is the predominant revenue and margin driver of our business. We also produce and manufacture and sell bagged minerals. We do this out of our facility in Scotland, as well as the two recently acquired businesses in Brazil.
Thirdly, we have a bolus range, which is a trace mineral supplement, which we previously were manufacturing in the U.K. and moved to an outsourced model towards the end of last financial year, and we can give you an update as we go on that as well. Our footprint as a business and across these product categories, our head office, we are based in Carlisle in the U.K. We, as I mentioned a minute ago, have a mineral manufacturing business in Scotland called Scotmin. We also have a feed lick dehydrated molasses manufacturing site just outside of Carlisle in Silloth in the U.K. We have two more wholly-owned low moisture block feed lick manufacturing sites in the U.S., and we also have two 50/50 joint venture-owned low moisture block sites, one in Germany and another one in the U.S.
You'll see in Brazil, the two new orange dots representing the two mineral businesses that we've acquired in the first half of this year. Our purpose and vision and our strategy, we are very specifically focused on pasture-based, grass-based livestock, and supplements to support farm profitability and animal productivity in that particular segment of agriculture. Our strategy that we laid out 18 months ago is three pillars. You can see it on the right-hand side of the screen here. The first pillar is improving our operating margin, and we think we've made very good progress, particularly in the first half of this year on that pillar. The second pillar is about delivering profitable commercial growth, and again, we'll talk through some of the progress we've made on this pillar, particularly with our low moisture block product category in the northern hemisphere, in the U.K., Europe, and the U.S.
The third strategic pillar we outlined 18 months ago was expansion into new growth markets. We see huge opportunity, particularly for the low moisture block product category in other high density, high population cattle states or countries, and we see Brazil as being the priority market there, and again, feel there's been some really strong progress made on that pillar, particularly in the first half of this year. With our half-year results this week, we also took the opportunity to outline our medium-term growth ambition and trajectory, and this is to deliver a triple region profit engine of $5 million EBITDA from each of our three core geographies today. $5 million EBITDA from the U.S., $5 million from the U.K. and Europe, and $5 million from Brazil.
We see this as a tangible plan and a tangible goal with a clear roadmap for us to take the business from where we are today and significantly grow, significantly transform it, along with the metrics that you can see on the right-hand side that would move us to over $120 million of revenue, $15 million of EBITDA at a double-digit EBIT margin, and very importantly to us, over a 20% return on capital employed, all done within the existing assets that we now have in the business as of today, with our focus on the strategic plans and our established risk and financial controls that we've established in the business. Moving into the highlights from the first half of 2026, we would say very strong strategic delivery. The trading continues to build and momentum continues to grow at pace.
We saw revenue up 2.2% on a constant FX basis, and within that, 22% year-on-year growth in the first half of our adjusted operating profit. A very strong stand-out performance in our U.K. business, up 26%, and 5% growth in the U.S. business as well. That leads to adjusted earnings per share increasing by 116% to 11%. That includes the reduction in shares after the tender offer last summer. To support our strategy and moving us forward, we completed a new group banking facility with HSBC for GBP 20 million. That will support our expansion and allow us the facility and financial resource to deploy the plans that we've laid out. We also highlight the second year of our significant profit improvement. This is a reflection of our continued focus on our strategic pillars.
In particular, over the first half of this year, the focus we've had on margin enhancement, and profitable commercial growth. Transformational progress on our third pillar with entry into Brazil, the two acquisitions, which we'll go into more detail later on in the presentation. With those highlights and introduction, I'll now hand over to Gavin to talk us through the details of the first half.
Good. Thank you very much, Josh. Good morning, everyone. I would just take you through a few slides on the financial performance in the first half, and also a measure of where we are against the medium-term metrics that Josh has just referred to. In terms of our profit and loss account, I think this is illustrative of the strategic and transformational progress that we've made in the business over recent times. The items to highlight are probably that we're very much focused on quality of earnings, so we have reduced some low-margin product sales in the U.K., but that was offset by extremely strong performance in our key strategic low moisture block product in the U.K., giving us 13% growth overall.
In a similar way, we had offsetting items in the U.S. for one part of the business growing very strongly, which was the southern states, driven from our Oklahoma site. Following some actions that we took in the second half of last year, we got 28% volume growth from that site. As I said, in the first half of the year, that was offset somewhat by the impact of weather conditions in the northern part of the United States. In essence, the normal extended snow coverage over the winter period in the northern states didn't happen at all or to any extent this year. That had an impact in terms of the utilization of our products in the northern states. Overall, broadly flat in the U.S. We had overall volume growth of 4%, and on a constant currency basis, the U.S. grew 4% as well.
Highlight our first contribution from Brazil, so our first acquisition of Macal, that Josh will give more details on later, happened on Christmas Eve. In essence, we have two months reflected in the first half results. They're also the two quietest months of the year seasonally in Brazil. Really just worth noting that both acquisitions in Brazil are proceeding according to plan, and we're very pleased with where we have got to so far. In terms of adjusted EBIT, a very strong performance from the U.K. as we've discussed, and the U.S. 5% growth irrespective of the weather conditions in the north. I think that just illustrates the increased resilience of our business as we focus on high margin and commercial delivery. We are becoming more resilient.
For those that we spoke to at the full year in December 2025, we noted that the performance of our fully owned businesses in 2025 was significantly stronger than our joint ventures. That really reflected the focus that we had placed on our owned operations first this year, and towards the end of last year, we've increased our focus on our joint ventures, and it's pleasing to see that we've got good performance in both our European joint venture based in Germany and also our main joint venture now in the U.S. Good strong performance. The other point to note from this slide is continued progress in reducing our central costs. We are approaching a baseline in our central costs, but there's still further annualization of costs that were taken out in the first half of FY 2026 to come.
Overall, we're pretty satisfied with our EBIT growth of 22% on a like for like basis in the first half of the year. Just to note, I always remind everyone that we are still a seasonal business. That growth in the first half reflects 35% growth on an LTM basis. Broadly speaking, with our northern hemisphere focus at the moment, roughly two-thirds of our revenue falls in the first half of the year. If we look at the balance sheet, it's a relatively straightforward balance sheet. This compares the half year to the end of February to the full year at the end of 2025. In essence, fixed assets have grown through the acquisition of Macal in Brazil. This reflects the potential deferred consideration from that acquisition fully accrued. The cash consideration was essentially GBP 5 million, including working capital.
Our working capital has grown slightly. That's partly a seasonal movement and partly the acquisition of Macal. Again, working capital remains a very firm focus of the group, and we made significant benefits last year, and we're continuing to target more benefits this year. We do still have a small number of assets held for sale. These are essentially non-productive properties that we're in process of selling. We also have one remaining engineering business that is held for sale as well that I'll touch on a little bit further later on. We are continuing to make steady progress in the implementation of the process to de-risk our pension scheme. We have a net asset on the balance sheet of GBP 1.3 million.
The process to go through the required data cleansing and legal processes is well underway, and we expect the pension asset to be removed from our balance sheet in early 2027, calendar year 2027. At the half year, we had net cash of GBP 1.4 million. As Josh said, we implemented a GBP 20 million facility with HSBC in November 2025. We have that available for our use as opportunities arise. The second of our two acquisitions in Brazil happened in mid-March, so that's moved us from a small net cash position to a small net debt position currently. However, we do have non-trading items to come in in the second half relating to the sale of the properties that I mentioned and other things. We're very comfortable with the cash position, and we have the firepower available to us to implement the strategy without any further requirements.
If we look at cash, the drivers of the cash movement in the six months were clearly the generation of profit through EBITDA offset by the acquisition of Macal. The other items of note is that in the first half of the year, we received GBP 1.4 million of essentially non-trading cash that's deferred consideration from previous transactions. As I said, we're expecting the full year non-trading cash to be around about GBP 6 million, depending on the exact timing of some transactions. I mentioned that I'd touch on our engineering business. If we just go to the next slide, please, Josh. The two items that we've covered here are adjusting items and our remaining discontinued operations.
In recent years, as we've gone through transformation, Carr's, and more recently Fevara has had relatively significant adjusting items going through our profit and loss account and cash. It's a focus area for us to significantly reduce or eradicate entirely adjusting items. Nonetheless, as we continue to transform and develop the business, there will be a small amount of continuing of adjusting items going forward. Nothing, I would say, of particular note on this occasion. The discontinued operations that we refer to are the final business that was in our prior engineering division. That's the business Chirton Engineering just outside Newcastle. It was essentially left behind in the main engineering transaction due to its focus on oil and gas products rather than nuclear engineering sector that the other parts of the division were focused on.
We're in discussions with a number of parties to conclude a sale of Chirton, and we hope to complete that before the end of this financial year. We're being quite conservative about what we'll get for that business, given the challenges that the oil and gas industry faces at the moment. We are implementing a plan to increase its activity in other sectors as well. We believe it's fundamentally a good business, but with some short-term sector challenges. Looking at our earnings per share and dividends per share. As we've mentioned already, very positive to see the earnings per share more than double in the first half of the year from 5.1 million, sorry, 5.1 pence per share to 11 pence per share.
As Josh mentioned, the drivers of that are the 22% growth in earnings, and also the 47% reduction in our number of shares in issue, then following the tender offer in the middle of 2025, where we returned GBP 70 million to shareholders. That tender offer really acted as a trigger for us to rebase our dividend policy, in the short term, reflecting a smaller business, albeit that with the growth plans that we're touching on today, we believe that we can regain the size the business was previously, but with a much more focused strategy. Last year, we rebased the dividends to 1.2 pence per share at both the interim and final stage. We've maintained that at the interim stage this year. Our dividend policy is a progressive policy, so we would anticipate that the level of dividends will increase as our profitability develops, as we've outlined.
We are going to retain a dividend cover of at least 2x going forward. Finally, I said that I would touch on our progress against the medium-term ambition and metrics that Josh mentioned before. This essentially is the progress in the period since Josh and I joined the business, and we developed the strategy, and I think it really reflects progress in all areas of what we're doing. As I mentioned earlier, I think the revenue focus to date has been on ensuring we have a high quality of earnings with high margin products. We're at a stage now where we're essentially ready to grow revenue significantly up towards the GBP 120 million target. Just over GBP 10 million of that growth will come from the acquisitions in Brazil that we've concluded over the last four months.
The balance will come from focused commercial activity on market share gains in the Northern Hemisphere markets, and also the launch of additional products as we go forward. In Brazil, it's all about developing the two businesses that we've acquired. In roughly 12 months' time from now, we'll be launching our differentiating low moisture block product in Brazil that will drive revenue and also drive the other metrics, the EBIT margin and return on capital employed. Overall, while we have further to go, we've made real progress over the last two years in our metrics, and the building blocks are in place. None of the building blocks is particularly difficult individually, and we are entirely focused on steady delivery towards the level of ambition we've quoted and hopefully beyond thereafter.
With that, I will hand back to Josh to give you a little bit more detail about the strategy and what we're doing.
Thanks, Gavin. We'll just turn to a reminder of the strategy that we set out 18 months ago. We identified the three strategic pillars, improving our operating margin, delivering profitable commercial growth, and expansion into new growth markets. Within those, at the start of the strategy, the start of the journey, the portfolio sitting in the group had various other commodity-based lower margin products. We've taken steps to remove those from the group and focus on higher margin, particularly branded products as well, to drive the growth.
Among those steps, there was further operational excellence plans and cost improvement plans, which again, we're starting to see more momentum coming through those, but also feeding into our commercial initiatives on differentiating our product portfolio, with further commercial focus, sales capability, and then really seeing where else we can take this high margin branded product portfolio, in particular low moisture blocks, which other geographies the product fits well in and has the opportunity to drive extra growth, with Brazil being a priority market for us. Going into each of those pillars with a little bit more detail, the key progress in this first pillar on improving operating margins is really that 2.5% improvement in operating margin in the first half of this year versus last year. That was derived through some focus on margin pricing.
We put in some small capital into our Oklahoma-based facility last year. We're starting to see that bulk storage translate through into improved margin. As we noted last summer, the closure of our subscale bolus manufacturing site in the U.K., moving to an outsourced provider in France, we've seen a significant improvement in our net product margin for that bolus product category. Further steps that we're really excited and enthusiastic about, we've recently, in the first half of this year, filed two new manufacturing process patents to support our existing patent portfolio. These are really focused on reducing our energy cost in that manufacturing process, as well as providing some potential throughput benefits.
Along with that, we've also completed an upgrade of the PLC controls in our U.K. low moisture block facility, and that's in advance of some further investment in warehousing and storage potential, which will again give us some further cost savings in next year as well. As Gavin alluded to, an ongoing focus as we are now a more focused business and integrated agricultural supplement business, we've taken the opportunity to right size the central costs and are pleased to see that 26%, nearly 27% reduction in those costs in the first half of this year versus last year. The improvement of our operating margin, the improvement of our cost controls will be an ongoing focus area for us, and we'll continue to expect improvement in that, supporting those long-term ambitions we've laid out today to get to the 10% EBIT margin on a full year basis.
On the commercial growth element, again, we've seen very good progress, in particular in the low moisture block product category, seeing that up 5.8% versus the prior year. That was really split with solid volume growth in the U.K. in the first half, as well as strong growth in the southern half of the U.S. This time last year, we highlighted a focus and a need to emphasize commercial improvement in our Oklahoma facility. In the first half of this year, that facility's volume is up over 20% year-over-year. As Gavin alluded to, there was a little bit of an unusual snow pattern and warm weather in the north half of the U.S., which, offsetting that, we have an overall volume growth of 4% in the U.S. on low moisture blocks.
In terms of other drivers of commercial growth in the product innovation side of things, the new Tracesure Bolus range, Tracesure Advance is now fully launched and available in the U.K. and Ireland. Again, that's now available at a much more profitable higher margin position than when we were manufacturing it ourselves. To support our summer sales and the seasonality of our summer U.S. business, we've also introduced a new fly control product, which is now live and available in the U.S., and we expect to see a good response from customers. We've had good feedback already, and to help drive further volume in the U.S. Then lastly, in this particular area of focus, you may have noted last week we announced a distribution agreement with the Brazilian-based company, Oceana Minerals, for their rumen buffer product, LithoNutri, as a feed additive in the U.K. and Ireland.
This is a very complementary product, sits very well within our existing sales team and route to market. We see this as another exciting opportunity to provide more value-add products and services to our customer and strengthen our margin profile as a business. Then there's been further focus on the joint ventures in the business over the last 12 months, in particular, the first half of this year. There was a capacity investment taken in our Tennessee joint venture two years ago. We're really pleased and excited to see that plant now starting to reach capacity with volume up 17% in the first half of this year. Our German joint venture has also performed very strongly, seeing volume growth in its primarily dairy-focused segment in Europe, 80% with that ongoing collaboration.
Then lastly, just to note, we exited a joint venture that we held in Iowa in the first half of this year, well, last week, post first half, but within this financial year. There's no material impact for doing that and was taken for operational and commercial differences. We don't anticipate any material impact from the exit of that joint venture as well. In the third pillar of expansion into new growth markets, we have a couple of slides following this one, diving into more detail on the two acquisitions in the Brazilian market in particular. To support those acquisitions and our entrance to the market, we've recruited three very experienced local Brazilian general managers for us. They are well-known in the industry. They are very familiar and have worked in the low moisture block product category in Brazil for many years.
We're pleased that one of those was appointed as our general manager of Brazil, following our operating model now with a general manager in the U.K. and Europe and a general manager in the U.S. as well. To support those acquisitions, we're already well underway with improving the sales team and growing their sales reach to drive the existing business and making it more profitable in advance of the low moisture block product becoming available, which really leads to the bottom element of this slide. The low moisture block equipment, our anticipation of building that factory in São Paulo on the Ceadesul site is also well underway. Contracts are signed, the project is commenced, and we expect to be producing low moisture blocks in Brazil this time next year.
Between then and now, we're also further improving the two business we've acquired with some good synergy progress, as well as bringing some additional products into their product range to help them grow and support that investment. There's a little bit more detail on Brazil. The chart on the left-hand side is the data showing Brazil's beef production compared to the U.S. beef production over the last 20 years. You'll see in the recent five to 10 years, a significant increase in Brazilian beef production. We believe that there is a strong underlying macro trend in Brazilian beef, which is supportive of the industry growth, but also incredibly supportive of our entry in the market with the low moisture block product category.
We see that as an important part of our investment thesis there and feel that there's very strong tailwinds behind us as we go into that market and expect to deliver significant growth from our presence in Brazil. On the right-hand side, you can see a map of Brazil. The darker the color of the shading in each state essentially represents the density of cattle in that state. You see the MS is Mato Grosso do Sul, where we've acquired Macal, which represents around 20 million head of beef cattle in that state alone. For reference or for comparison, there's around 30 million head of beef cattle in the U.S. cattle market.
You can see significant potential across São Paulo, where Ceadesul is based, and Goiás and Minas Gerais, those four states represent approximately 100 million head of cattle amongst that radius which is why we took the decision to acquire the second business, Ceadesul in São Paulo. The location there is strategically located right in the middle of the Brazilian sugar industry. Molasses is our primary raw material for the low moisture block product, and so we are well situated both from availability of raw material. But also then logistically well situated to execute a hub and spoke distribution model to those high-density cattle states when the low moisture block facility is up and running. Little bit more detail on Macal. As Gavin mentioned, the payment was GBP 5 million for the business. It's very cash generative and profitable, generating GBP 700,000 EBITDA.
We expect this to be immediately accretive on a full-year basis. Brazil is counter seasonal to our northern hemisphere businesses. As we have this for a couple of months in the first half, those would be the lower volume, smaller element of the season, and we expect in the full year that this will again be an accretive opportunity for us. Also very, very importantly, becomes our sales distribution for low moisture blocks in Mato Grosso do Sul, and through this company, giving us access to a significant, very large, cattle market in Mato Grosso do Sul. The second acquisition that closed in March, just a month or so ago, was for Ceadesul. This is also a mineral business based in São Paulo, focused more in the feedlot category with its existing mineral business.
The primary value or the primary cost of that purchase was for the freehold property. As you can see on the picture, the first warehouse in the picture is where the existing mineral business is located and manufactured from. Further in that picture, towards the background is a second facility. This is an empty facility, well-specified, perfectly located for us to then build our low moisture block manufacturing line. By doing it this way, piggybacking it onto an existing mineral business, we expect to have some real operational synergy and startup benefit, but also allows us to simplify our sales structure and enter the market in a really strategic and smooth way. For our plan to grow in Brazil, our stated ambition is to deliver $5 million EBITDA from Brazil over the medium term, over the next three to five years.
We've established a country leadership model similar to how we operate in the U.S. and Europe. There is some integration benefit to be had between the first two acquisitions in Brazil, Macal and Ceadesul. That's planning well or progressing well and going as planned. The low moisture block equipment, to get that plant up and running will be around GBP 4 million. The suppliers confirmed engineering work is underway. We are positive and enthusiastic about where that will take us there with an expected launch of the product in the second half of 2027. As I mentioned before, the commercial model for that business will be a hub and spoke distribution model where it will essentially wholesale to distributors within states, Macal being one of those distributors, Ceadesul being the distributor for São Paulo.
We will continue to build up distribution well in advance of the manufacturing site going live in those other high-density cattle states, as well as looking at other acquisition opportunities that could be supportive both in accretive, EBITDA, but also to act as distributor for low moisture block in other locations across Brazil. For a summary and outlook where that takes us and where we see the state of the market today. We see the global beef price at a retail level remaining to be incredibly resilient. Consumers continue to be willing to pay a high price for beef. Demand continues to be strong. That serves us well and puts us in a good position with an ongoing demand for our supplement products and how we service the cattle farmers, helping them be profitable and successful as they produce that meat for consumers.
If we go across the different markets, you can see the U.S. is roughly a 90 million cattle market, 30 million of that being beef, the remaining being primarily dairy. The cow-calf segment, which is our particular segment in the market, is seeing very strong profitability at farm level, given the high retail price of beef. We've noted in the past, the cattle cycle in the U.S., it has been in a contraction phase. The indications and the signs are now that contraction phase has ended and the market forecast or expectation is that for calendar year 2026, we'll start to see some moderate growth and expansion beginning, with a caveat or a watch on the drought conditions, particularly in the southern part of the U.S., southwest part of the U.S., which may affect the ability for that expansion to happen in those territories.
We'll keep a watching eye on that. Our commercial plans for the U.S. are primarily based on market share growth rather than market volume increase. We remain positive about our ability to deliver our U.S. target of $5 million EBITDA over the medium term. In the U.K., it's a similar picture of record high farm gate prices, farm profitability, particularly for beef farmers being very, very strong, allowing very good demand for our product. The U.K. and European market has been in a structural decline for many, many years. We see that continuing, but again see opportunity for us to grow our market share and our distribution reach across the U.K. and Europe to support our growth in this market. Just with a note on the Iran situation and global commodities, our livestock farmers are particularly lower input systems and grazing on grass.
They're less exposed to or less prevalent users of fertilizer and some of the agrochemical products affected by the Iran conflict, with the exception of the dairy industry having a slightly more exposure to that. We'll continue to watch that as it unfolds. In Brazil, you can see a significant cattle market, although only 15% of the global market. If you add up those market sizes, and you can see even with the entry into Brazil, we are still in less than 70% of the global cattle markets with our high margin, low moisture block product category. We see Brazil as being the priority in the near term and having huge potential for us. Brazil is also moving into a positive beef cycle, with farms having good farm-level profitability and the expectation that they will also grow their herds and have more cattle to feed.
Albeit there is some watch out and risk on the high price of beef with domestic Brazilian beef consumption switching people into lower cost elements of protein. With Brazil's export market continuing to be strong and robust, we see good demand for our products in Brazil with the underlying trends that we mentioned earlier of the improvements in genetics, nutrition, productivity is really shifting that industry on at a rapid pace and makes it well positioned for our product range as well as growth in supplementation in general in Brazil. In summary, and in terms of outlook, we are really pleased with the half year results. We think it's another milestone and demonstrates further good progress against our strategic plan set out 18 months ago.
We see some resilience in our segment of agriculture and our business model, and don't anticipate any near-term material impact from the conflict in the Middle East. You'll note on the slide as well, where we are more exposed to energy prices in the U.K. than our U.S. operations. We took the decision actually to fix our gas price to 2028 during last financial year. We also have our key raw materials priced to the end of this financial year. We don't expect any near-term impact, certainly in the first or in the second half of this financial year based on that conflict. As I mentioned, in terms of longer-term growth and opportunity, the entry into Brazil is a significant milestone for our business. We see it as having transformational potential for us as a business.
We also just continue to note that even with Brazil, there's still over 70% of the global market where we are currently not present with our product range, and we see really strong long-term potential for the business in other markets too. Trading since the first half is encouraging. We continue to be confident that we'll deliver a full-year result in line with market expectations. We feel that we have a very clear and strong strategy for growth that we're well positioned to allow Fevara to continue to grow and become a much more profitable, much larger business than it is today.
That leads to our medium-term ambitions that we'll just reiterate and close on with our target of a triple region profit engine, $5 million of EBITDA from the U.S., $5 million from the U.K. and Europe, and $5 million from Brazil, which takes us into over a $15 million EBITDA business with over 10% EBIT margin, over 20% return on capital employed, with a highly investable business model and scalable business model to also allow us for a long-term growth runway on top of that medium-term ambition. With that, we thank you for joining us and for your time, and also happy to take any questions.
Thank you to Josh and Gavin for the presentation. We have had a number of questions pre-submitted and submitted live. Just as a reminder, if you would like to ask a question, please type them into the Q&A box situated on the right-hand side of your screen. Our first question is: Margins seem to have improved a lot. Have you done the hard work now, or is there more to come?
Yeah, I'll answer this one. I think Gavin can probably comment as well. I think a lot of the hard work has been done, as we alluded to two years ago, pre laying out the strategy publicly. Carr's Group, as it was then, had an engineering division and an agriculture division, but within the agricultural division, it was an unintegrated agriculture business, is how I would describe it. There was a range of different businesses in that portfolio and several loss-making elements of that portfolio. A lot of the hard work done in terms of selling the New York bypass business, which was loss-making, or addressing the loss-making bolus business in the U.K., moving that to an outsource, the New Zealand loss-making activity as it was structured at that point in time.
I would say that a lot of the hard work's been done to structurally remove the dilutive elements. I think there's still opportunity for us to continue to sharpen our pricing position. There's further procurement activity that we're going after. There's a little bit of limited smaller capital programs that will give us some further margin and cost savings that we'll enact. As we laid out that medium-term ambition to get to 10% EBIT margin on a full-year basis, I think we're well on the way. I think there's strong momentum there, and there's still more that we can do. Making good progress. I think, Gavin, if you want to perhaps add something on that as well.
No, I think you've covered the major points. We've really done what we've described as the structural hard work, albeit that there's potential for more growth in Brazil. Now we get into the commercial rigor and the just really continuing to do things well, that will deliver the growth that we're looking for.
Thank you. Next, we have revenue was flat at just over GBP 50 million, but profits jumped significantly. What exactly drove that operational leverage, and is it sustainable?
Gavin, do you want to take that one?
Yes. Yeah, I think it is a little bit linked to the previous question. I think in the first half of this year, we saw the year-on-year benefits of some of the structural stuff that we'd done in the prior year. We closed essentially a commodity business in New York State in October of 2024. We got the benefit of that as we changed the way we do business in New Zealand, also in the prior year, which switched that from a loss-making operation to a profitable business. As we've touched on already, we moved our bolus production from a loss-making in-house operation to an outsourced source, and changed that business to make a positive contribution. There are some of these structural things that wouldn't be recurring. I think the opportunity goes beyond that in terms of the focus on our high margin products.
Our focus hasn't been on growing revenue to date. It has been focused on the quality of overall revenue and growing the good stuff, and that will continue and I think gives us opportunity to maintain a good drop-through of profit growth.
Thank you, Gavin. Next, we have net cash has reduced significantly year-over-year. How should investors think about cash generation versus reinvestment going forward?
I think the main point in relation to this is, and I think the questioner will be looking at the cash position at the interim point last year against the cash position at the interim point this year, and that has reduced significantly. Essentially, that was because we did the tender offer in the second half of last year. We returned GBP 70 million to shareholders in the second half of last year, and that allowed us to rebase our cash position. We are exactly where we want to be through a combination of the tender offer. We've also put in place the facility with HSBC that we've referred to. Again, as we referred to, we're still getting some benefit from the disposal of non-core assets. That will continue for a little while at least.
I think essentially the capital structure that we have is the one that we're comfortable with. We are focusing on return on capital employed, and therefore we essentially see ourselves as a relatively lean business going forward from a capital perspective.
Thank you. Our next question is, early trading in Brazil has been described as in line with expectations. How meaningful could Brazil become to the group revenues over the medium term?
I would say it could become transformational meaningful to the business over the medium term. As we laid out, the market potential in Brazil is very large. The early two acquisitions that we made will generate a good element of EBITDA for us as a business in the near term. As we introduce the low moisture block, the very high margin product into that category, we see that as being the first of what could be several low moisture block factories in that country to support a very long runway of growth for us.
Thank you. Following on from that, we have what audit and compliance oversight are in place for Brazil joint ventures?
Actually, I'll take that in the first instance. Well, first of all, it's important to know that our entry into Brazil isn't through joint venture, it's through wholly owned acquisitions. We have complete control over these businesses in terms of governance and compliance and everything else. The fact that they're in Brazil is no different from any other part of the group. We are implementing, or in the case of the earlier one, the December one, the governance processes that we have in the rest of the group are in operation in Macal. The acquisition in Ceará was more recent in mid-March, so we're still in the process of implementing some of that. We see Josh mentioned the general manager structure that we have for Brazil with a country manager for Brazil, in the same way that we have country managers for the U.S. and for Europe.
The application and the operation, the governance, compliance, everything else, financial controls will be no different in Brazil from anywhere else in the group.
Are there other international markets currently being evaluated for expansion?
Not in the near term. We went through a strategic process 18 months ago, looking at the potential markets. Brazil came out, far and away, the most attractive and interesting market. One of those reasons being that there is one low moisture block competitor who entered the market a few years ago. We are a fast second follower in that market, and there's good awareness of the product category and very positive demand for the product category there. Its underlying growth trends as being the world's lowest cost beef producer with, as you saw on those previous slides, significant growth and significant growth to come. That's definitely our near term focus. We see a laser focus on getting the low moisture block plant commissioned, running, and full as quickly as possible as the huge strategic priority.
Over the medium to long term, there are other very interesting markets with growing cattle populations where our low moisture block technology in particular supports a pasture-based system, supports farmers where forage is perhaps lower quality, and they would have significant return on investment from using this product. We see other markets to come. I would put those more into the medium term than the near term with, again, a laser focus on making Brazil transformational today.
Thank you. Please could you explain results or numbers for continuing operations versus group?
Yes. The continuing operations are essentially the activities that we have talked about predominantly. The only exception to that is the Chirton Engineering business that is classified as a discontinued operation. We haven't talked in detail about the results for Chirton, but we've described previously that it's broadly a break-even business at the moment. That is essentially how it's been in the first half. It doesn't contribute or dilute the performance of the business significantly. For normal accounting reporting requirements, it's disclosed as a discontinued activity.
Thank you, Gavin. Our next question is: given the growing overseas elements of Fevara's business, has the board considered the use of a hedging to mitigate currency risk?
Yes is the answer. We prefer the use of natural hedges so that you don't have to enter into contracts for financial derivative products. The answer to the question is we do hedge our currency risk.
Thank you. Our next question is: how is the conflict in the Middle East affecting business? What plans are you or have you put in place?
Yeah. I'll probably answer that with two parts to it. One is looking at our input costs, and then the second would be looking at demand for our product or farm level profitability. On the input cost side, as I mentioned in the slides, our energy profile, we are dehydrating molasses as one of our core manufacturing processes that uses gas and steam. In the U.S., we haven't seen a similar price pressure on that particular gas commodity as we have in the U.K. We took a decision half a year or so ago to fix our gas prices and energy costs in the U.K. until 2028. At the moment, on a manufacturing energy input perspective, we are feeling very resilient and in a good place. On the commodities that we purchase, again, in the U.S., we are very much domestic.
We buy our molasses from sugar manufacturers in the U.S. directly from them. The vast majority of our other ingredients, protein sources, and other commodities that go into our product are also typically locally sourced. Our customers are domestic as well. We have some insulation in our markets being as locally sourced and locally sold as possible with manufacturing near the customers. The U.K. is slightly different in the sense that we buy our molasses on the international market. Our U.K. facility is on a port in Silloth. We bring it in most of the time by ship, and that molasses will be bought from the U.S., from South America, sometimes in the past from India. At the moment, we have again bought forward to the end of the financial year, so we don't see any near term impact in that.
Over the more medium term, molasses typically will trade more aligned to the wheat market and somewhat linked or correlated to the sugar market as well, being a byproduct of the sugar industry. At the moment, as we look forward on prices, we see a little bit of price inflation, but it's not nearly as dramatic as others would be seeing in the chemical or oil markets that we see today. We're cautiously feeling resilient at the moment. The other prices that we do see increasing is cost of plastic for our tubs or logistics costs, but those are things that we typically have an ability to pass through to customers relatively easily, and we'll continue to preserve our margins in that way.
If we go to more of the demand side of our business, again, as I mentioned before, our core customer base are livestock farmers whose animals are predominantly fed from grass in a pasture. We describe that as a low input farming system, meaning those farmers typically spend very little money with inputs on their farm production. They're typically not fertilizing the pastures, buying the agrochemicals. Again, given our focus on pasture extensive livestock as the bulk of our revenue and focus, again, we're not seeing a serious impact on demand for our products in that way, as you might expect from an arable wheat or a barley farmer who's more exposed to fertilizer costs. I guess the last thing I would note is if you look at the profile of the retail price of beef in particular, it's incredibly high and incredibly strong.
The input costs of cattle farmers in the U.K., and the U.S. in particular, has not gone up nearly to the quantum as the retail price of beef and the value they're getting for their end product when they go to sell their cattle. Farm profitability, in particular the beef sector in the U.S. and the U.K. is very, very strong, has been very strong, and at the moment looks to continue to be strong. We expect no real material impact from the Iran conflict on demand for our product as well. I would say in summary, yeah, we're feeling cautiously resilient at the moment with what's going on in the Middle East, and we'll continue to watch and react as required.
Thank you, Josh. Next we have, "Central costs dropped quite a bit. How much further can you realistically take costs down?
I think I touched on the fact that there's some continued annualization of the cost reductions to come, so they'll be reflected through our costs in the second half. There is a limit to how far you can continue to reduce costs given the requirements of being a listed PLC. I would say that our head count and our cost base are probably approaching now a level where they're at a sustainable base. We continue to focus on managing things like our professional costs and these sort of things very hard. I would say the large part of the reductions now will come from the annualization of actions that have already taken place in the second half of the first half. There will be some more to come through in the second half, but don't expect it to carry on forever.
Thank you, Gavin. Our next question is, "What value is expected to be realized from sale of redundant buildings?
We're expecting, in the full year, non-cash trading income of around about GBP 6 million. In the first half, we received about GBP 1.4 million. Broadly speaking, there's about 4.5 million to come in the second half. Clearly the exact timing is subject to the completion of legal processes, so it can't always be predicted with great accuracy. That's the sort of level that we're expecting over the coming months.
Thank you. Our next question is, "Where do you see the biggest upside or risk to delivering on the current strategy?
I think that the risk, perhaps we could start there, is what I was speaking about a few minutes ago. Continuing to watch farm level profitability, particularly for the livestock farmers. That's one of the key metrics that we watch, ensuring that farmers are making sufficient profit to afford our product, invest in the productivity of their animals. Other risks that we continue to watch are disease outbreak, and how that might affect production, cattle, and livestock numbers. In terms of upside and how we see. If I speak more specifically about the GBP 15 million ambition that we outlined this week. The Northern Hemisphere, the U.S., and the U.K., from where we are forecasting to end this year, which will be predominantly Northern Hemisphere-based EBITDA. There's a clear plan to move that to GBP 10 million, and there's some further cost savings to come.
There's some virgin margin improvement that we highlighted through the presentation. With some moderate growth, I would say keeping in line with the volume growth that we've demonstrated in the first half of this year. Over the next couple of years, we could certainly see those businesses reaching that milestone. In Brazil, the upside really, as we've talked about, the core four cattle states that we are targeting in the first instance are roughly 100 million head of cattle, and there's one competitor there today. In the U.S., there's around 30 million head of beef cattle, with 15 or so of these factories similar to ours servicing that market.
The upside we see in Brazil as we move towards executing the low moisture block entry with our own factory there, and building strong distribution supported by very good mineral businesses in the state. We think $5 million EBITDA is certainly a great first milestone. Beyond that, given the size of that market and its profile and characteristics, and how it's expected to unfold over the next five to 10 years, we see that as potential transformational profit for the group over the medium term as well.
Thank you, Josh. Our next question is: Is the priority still a progressive dividend, or is growth investment taking precedence now?
I would say, with hedging our bets, probably both. We definitely are in a growth stage, as for all the reasons that we've highlighted, the opportunity in Brazil and elsewhere. Having said that, we do recognize that dividends are important to a significant number of our shareholders. That is essentially why we took the opportunity when we had the tender offer last year. We did consider whether we should cut dividends entirely at that stage and focus on growth, but we concluded that we should maintain to pay dividends, so we reduced the level to a base level that is sustainable and that we can grow progressively as the profitability of the business grows. It's at a level that won't get in the way of the investment and growth that we're doing at the same time.
Thank you, Gavin. We are now moving on to our final question for today. If you have any further questions, please email the team, who will respond to any questions that were not covered this morning. Our final question is: Why should an investor choose Fevara over a more established agri business?
That's a great question. I think, Gavin, do you want to go first, and then I'll answer it and-
Yeah. I would say, first of all, because of the growth opportunity that we've just been talking about. I think we're a transformational business. Over the last two years, we've been transforming what we've got, and through entry into Brazil, there's a further transformation opportunity that goes well beyond that. I think there's a lot of reasons to look at the Fevara internally from a very positive perspective. The other thing I would say, as part of that transformation, we are focusing very much on, as we repeatedly said during the course of a call on high margin products, and I think that gives us a resilience that some of the agriculture businesses that are more commodity price related don't have.
I think for these reasons, I would say both in terms of the wider market and in terms of internal stuff, I think we're well worth having a look at.
I would probably just add, I think we're also well worth a look at. I think that given our very specific focus on extensive livestock, it's a very specialist area in the wider agricultural space. As Gavin alluded to, given our business model of branded products that have long shelf life, that are typically sold more akin to an FMCG product than a commodity product, I think we occupy a really unique space in that extensive livestock segment. I also think our IP portfolio of these branded products that are supported by 40 different university trials from universities around the world that show a return on investment for the farmers who use them. They are incredibly convenient for farmers to use.
It really fits well with the value proposition for this particular segment, and it's a segment where we are certainly carving out a leadership position, and I think we can strengthen that position going forward. The combination of branded products backed by research, with some of the intellectual property on the manufacturing side that we've had in the past and continue to build upon, I think it gives us a really defendable position, and we're also targeting a market that is growing globally, with a product that works really well and solves some really important problems for the customers who buy it.
Thank you. We currently have no further questions, so I'll hand back over to Josh and Gavin for any closing remarks.
We would just say thank you again for taking the time. We are pleased with the half year results. We are really pleased with the progress against the strategy that we set out as a team 18 months ago. Look forward to continuing to demonstrate that progress over the rest of this full year and beyond. Thank you, everyone, for joining us today.
Thank you.
Thank you to the management team for joining us today. That concludes the Fevara Investor Presentation. Please take a moment to complete a short survey following this event. The recording of this presentation will be made available on Engage Investor. I hope you enjoyed today's webinar.