Chairman Garry Bluett says it has had a successful year in improving the result of the livestock division and restructuring some outstanding liabilities that existed at the start of the financial year.
The result was impacted by a one-off gain of $800,000 on the settlement of an historic obligation and the minimal impact of impairment of investments and loans that have been significant in prior years.
The livestock division, which includes the operation of NZ Farmers Livestock Ltd, owned 67% by Allied, reported a pre-tax profit of $1.88m, compared to $660,000 last year.
All North Island regions showed growth on the previous year with particularly strong performances in the Taranaki and Waikato regions, and encouraging numbers from Manawatu. Online livestock listing service MyLivestock.co.nz, continued to be well supported.
Returns from the meat processing operation were lower than the previous year, and while market share was maintained, margins were lower than the prior year. During the year the transfer of the saleyard assets from the parent company to NZ Farmers Livestock was completed at market value. This was the final stage of the plan to include all of the livestock operations under the NZ Farmers Livestock banner.
The asset management services division charged with the recovery of the ex Hanover and United Finance assets reported a small profit of $0.2m for the year; last year it suffered a $3.7m loss.
Bluett says this reflects some small over-recovery on the disposal of assets less some small write-downs on assets still held; these assets have now largely been sold, with the value of assets still to be recovered now under $0.1m. The AMS remains active in pursuing a number of possible avenues for improving the return from these assets.
Corporate interest costs reduced from $0.8m to $0.3m as secured loans continued to be repaid. The balance of secured debt owed to the senior lender was $2.6m at June 2014, down from $5.1m in June 2013.
The listed entity Allied Farmers Ltd has shareholders’ funds of $3m. As in the last year’s accounts, the group accounts still reflect negative equity as the consolidated result does not attribute the full market value of the investment in the NZ Farmers Livestock subsidiary or the saleyard properties held.
Bluett says the focus for the coming year will be to continue to grow the livestock business and to leverage off the client relationships and trust that exists with those clients to provide value for money services.
“The effect of the reduced dairy payout is likely to have some uncertain impact on dairy livestock sales and the continuing high dollar is already having some impact on meat exports at the early stage of this season.
“After many years of considerable effort restructuring the company, the directors are encouraged that the benefits of this restructuring are now starting to show in the financial performance and financial position of the company. There is still a lot of work to do and some potentially challenging situations, but considerable progress has been made during the year.
“However, shareholders and the various stakeholders should take comfort that after a prolonged period of difficult trading and commercial difficulties the benefits of these efforts are starting to be evident.”
