The bottom-line result was boosted by a one-off payment of $441,000 from litigation on a long written-down property loan from years ago. The asset had been assigned to a third party, which took the court action.
ALF reported an after-tax profit of $1.53 million for the year-ended June 30, compared to $1.55m previously.
Ordinary group revenues and earnings come from the New Zealand Farmers Livestock business and the bobby calf processing and export operations.
The revenue was $18.3m, up from $17.3m. Total revenue rose to $18.68m from $17.47m.
ALF operates the rural business through the 66%-owned NZ Farmers Livestock subsidiary, which owns the bobby calf processing and export business, the new NZFL Finance business and 52% of Hawke’s Bay livestock agency Redshaw. The balance of the NZFL shares are owned by the company’s managers and agents.
Group after-tax earnings were $2.225m and the $1.53m represents ALF’s share.
A notable part of the result was the increase in ALF’s shareholders’ funds to $3.46m from $1.82m a year earlier. It had negative shareholders’ funds for several years up to 2015 as it battled to survive after heavy losses in its property-based finance company business.
The group has started up a new finance company in the last two years but only to service clients’ livestock activities.
The new division performed creditably and ahead of budget, group chairman Garry Bluett said.
From an initial base of bull funding it had expanded into general livestock. At balance date, the finance book was up to $4.6m from $2.1m a year earlier.
There would be challenges for the livestock business this year because of the spread of Mycoplasma bovis and steps to contain it, Bluett said.
Uncertainties around livestock movement could cause some slowdown in ordinary livestock transactions but it is too early to assess any financial impact.
ALF is evaluating opportunities for the NZFL business to expand its activities.
The early outlook for the bobby calf processing is positive, with international prices for calf products starting to improve. The business has been expanded south into Manawatu for calf procurement. Margins can easily fluctuate and are lower in the latest year than previously but the group is looking to expand and had handled autumn calves during the year.
The $441,000 payment on the loan litigation was about the final step for the ALF asset management division, which has now ceased operating. All assets of any value have been realised, Bluett said.
Operating cashflow for the year is $1.78m, down from $2.96m.
At balance date ALF had total assets of $20.3m, up from $14.5m a year earlier. The ratio of debt to total debt plus equity is still very high at 83% but the ratio of borrowings alone is comfortable at 24%, down from 33% previously. Interest costs are covered five times by the Ebit operating earnings.
