ALF reported an after-tax profit of $615,000 for the six months ended December 31, down from $907,000 a year earlier.
However, its Livestock division made a pre-tax profit of $1.24 million for the period, up from $750,000, a 65% improvement.
NZ Farmers Livestock (NZFL) is 66%-owned by ALF and was continuing to trade ahead of expectations, group chairman Garry Bluett said.
Livestock was now effectively the group’s only operating division.
Overall, stock sales were lower than a year earlier because of lower dairy livestock values but NZFL’s trading margins were higher and costs were controlled.
Returns from the calf processing business improved, helped by better pricing and especially a more favourable exchange rate.
“We’re pretty happy with it. It’s been hard work but we think we’re getting our share of business.”
About 60% of ALF’s business was dairy livestock, impacted by the lower dairy cow values, though trading volumes were higher. The end of May herd-changeover period was important for the group and indications were buyers were holding back waiting for prices to come back further, Bluett said.
“We’d expect it to get busy in the next couple of months.”
NZFL also owns 17% of Hawke’s Bay-based Redshaw Livestock. Trading figures weren’t disclosed but results were in line with expectations. Redshaw was a sheep and beef business, but ALF expected opportunities as dairying increased in the Hawke’s Bay.
The group has largely wound down its Asset Management division, which has spent the last few years seeking recoveries related to former finance company operations.
“It’s been hard work but we think we’re getting our share of business.”
Garry Bluett
Allied Farmers
One-off recoveries were a significant part of the group result last year. In the latest period, the profit was $120,000, down from $590,000 earlier.
The group was now well-placed to shift its primary focus towards growth for the NZFL business, Bluett said. A couple' of growth opportunities were being worked on, but were not near disclosure stage.
The balance sheet showed ALF still had negative shareholders’ funds, though the deficit has been reduced to $439,000 from $2.37m a year earlier, and from $1.47m at the latest June 30 full-year balance date..
Total assets were $12.2m and total liabilities were $12.64m, including borrowings of $5.59m. The directors had started to look at opportunities to refinance maturing bonds at a lower interest cost, Bluett said. In January, NZFL refinanced its debt with ANZ at a reduced cost.
Under accounting rules, ALF cannot include the goodwill being built-up in the NZFL business into its own consolidated balance sheet because it earlier sold its livestock business and saleyard interests into NZFL in a related-party transaction.
ALF paid $1m last November for a 9.26% stake in NZFL to build its total stake up to 66%. That figure would give NZFL a market value of nearly $10.8m, and ALF’s shareholding a value of just over $7m.
If earnings momentum was maintained through the second half, the accounts could show positive shareholders’ funds, despite the exclusion of the goodwill value, Bluett said.
ALF has begun a process to rationalise its shareholder base, requiring shareholders owning less than marketable parcels to increase them or have their shares sold.
Starting on March 18 it was arranging the sale of holdings of less than 1000 shares.
