ALF
29/02/2016 08:31
HALFYR
PRICE SENSITIVE
REL: 0831 HRS Allied Farmers Limited
HALFYR: ALF: Increased Livestock Earnings Drive FY16 Half Year Result
ALLIED FARMERS EARNINGS DRIVEN BY 65% INCREASE IN LIVESTOCK OPERATING RESULT.
The Directors of Allied Farmers Ltd (ALF) are pleased to report an unaudited
after tax operating profit of $0.62m for the six months to 31 December 2015
(1HY:2014 $0.91m).
This is a strong operating result, benefiting from the Livestock Division's
trading performance improving by 65% compared to the same period last year,
and does not have the benefit of the Corporate and Asset Management one-off
gains that bolstered the group result for the corresponding six months period
ended 31 December 2014.
The Livestock Division reported a profit before tax of $1.24m for the 6 month
period. This was a $0.49m improvement on the same period last year when a
profit before tax of $0.75m was reported. NZ Farmers Livestock Limited
(NZFL), which is now 66% owned by Allied Farmers continues to perform ahead
of expectations. While overall livestock sales were behind the same period
last year due to lower dairy livestock values, margins were slightly higher
and costs were controlled. In addition, returns from the calf processing
business were ahead of last year largely due to improved pricing and the
benefit of a more favourable exchange rate. Returns from the 17 percent
shareholding in Redshaw Livestock acquired during the year were in line with
expectations for the first half.
The Asset Management Services division which has now largely been wound down
made a small profit of $0.12m for the 6 month period (1HY:2014 $0.59m)
Corporate overhead costs totalled $0.54m (1HY:2014: $0.62m). However, while
corporate costs were down 14% for the 6 month period, a one off gain of
$0.28m that occurred in 2014 was not repeated.
Following shareholder approval in December 2015, the company reacquired some
of the shares in NZFL that had been sold to fund part of the settlement with
Crown Asset Management Limited in 2014. This increase to a 66% shareholding
will result in a higher proportion of distributions from NZFL being paid to
the parent company in future periods.
The Company continues to focus on reducing its liabilities and cost base and
during the period:
o initiated a process to reduce the size of its share register via a small
shareholder offer which will result in administrative and compliance cost
savings
o obtained shareholder approval to provide the Board discretion to pay
directors' fees in shares
o entered into settlements with a number of legacy creditors to subscribe
for new shares in extinguishment of debt
o began to look at opportunities to refinance maturing bonds at a lower
interest cost.
The Directors now consider that the group is well placed to shift its primary
focus to growth. Given that NZFL is overwhelmingly the Company's most
significant asset, and following the successful acquisition of a shareholding
in Redshaw Livestock, the Company's strategic focus is on supporting NZFL in
its exploration and execution of growth opportunities.
The Allied Farmers group is currently actively exploring a number of these
opportunities to grow the livestock business and further enhancements as it
seeks to work with farmers for farmers, and to develop profitable businesses
aligned with this platform, and become New Zealand's pre-eminent New Zealand
owned livestock business.
Garry Bluett
Chairman
End CA:00278464 For:ALF Type:HALFYR Time:2016-02-29 08:31:19
