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Silver Fern Farms' 'back In The Black'

Contributor:
Fuseworks Media
Fuseworks Media

31 October 2008 - Silver Fern Farms, New Zealand's leading marketer and exporter of red meat, has returned to financial profitability for the 12 months to end 31 August 2008 on the strength of a more favourable exchange rate, increased throughputs and cost containment measures aimed at improving operational efficiency and reducing debt.

Reporting under the New Zealand equivalents of International Financial Reporting Standards (IFRS) for the first full year, net profit before member distributions and tax was $51.2 million compared to a loss of $68.8 million for the same period last year.

The reported 2007 net loss before tax has been restated to reflect IFRS adjustments of $31.3m and the balance sheet reflects changes to retained earnings, restatement of the asset revaluation reserve, deferred tax and the reclassification of issued capital.

The farmer cooperative declared a rebate on livestock supplied and a dividend on Supplier Investment Shares (SIS), effectively rewarding shareholders at both levels within the cooperative model. Total rebates of $11.5 million were paid on 30 September 2008 plus a cash dividend of 10 cents (imputed value 14.9 cents/ share) per fully paid SIS held as at 31 August 2008, paid on 25 September 2008.

Eoin Garden, Silver Fern Farms chairman, said the results were gratifying in light of the volatile financial environment, characterised by swings in exchange rate on all major trading currencies of in excess of 20 percent. "In many respects it was a watershed year for Silver Fern Farms, and we worked hard to ensure we reached our targets. We recognise that, while the average values paid to suppliers for livestock during the season continued to increase, further progress was required to achieve the ultimate goal of delivering sustainable returns to supplier-partners."

Mr Garden said one of the company's main priorities was to reduce debt during the year, which was achieved through tighter inventory control, improved margins, disposal of non-core assets and the issue of SIS. "Under our 'Rightsize' repositioning strategy we focused on improved business profitability, debt reduction, disposal of non-core assets, plant reconfiguration and rebranding to Silver Fern Farms."

Net non-recurring expenses related to the implementation of the company's repositioning strategy amounted to a net $25.3 million, primarily in redundancy payments related to the closure or part closure of six operational sites and five lamb chains.

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