Half of that bottom-line figure is for the shareholders in the Silver Fern Farms Co-operative and the other half benefits new 50%-shareholder Shanghai Maling.
There will be a dividend payout for shareholders and a throughput reward payment for qualifying shareholders.
The operating group SFF Ltd had Ebitda earnings of $50.9m, compared to a loss of $7.5m in the previous full year to September 30, 2016. The change of balance date followed the Shanghai Mailing investment.
The net profit before abnormal items was $25.6m, and the bottom-line profit followed a $10.2m charge on discontinued operations, mainly the cost of closing the Fairton processing works at Ashburton.
Silver Farms Co-operative reported a loss for the year, because of complexities relating to the change in group ownership and structure, group chairman Rob Hewett said.
However, the SFF Ltd result provided the more meaningful picture. It was a pleasing improvement after the 2016 year, which had been one of the toughest on record.
Revenues were $2.2 billion, the same as the prior year.
The profit was achieved on similar levels of throughput and reflected improved in-market conditions for sheep and venison, a reduction in overhead costs following plant closures and improved efficiencies.
A major gain flowed from the paying down of borrowings after the $260m capital injection by Shanghai Maling. Of that amount, $203m was used for debt reduction and $57m was paid to the co-operative.
For the year, borrowing costs were reduced to $3.3m from $14.8m previously.
SFF Ltd also spent $21m on capital expenditure, the highest level in four years, Hewett said.
The co-operative reported for a 15-month year and made a profit after tax of $7.8m. After allowing for discontinued operations (mainly Fairton), there was a net loss of $5.6m.
Silver Fern Farms Co-op had owned 100% of SFF Ltd for the first two months of the trading year. The move to 50% ownership had produced some non-cash accounting gains.
At balance date, Silver Fern Farms Co-op had no borrowings and total shareholder equity of $271m, including $16.6m in cash.
Silver Fern Ltd will pay a total $12m dividend to the two shareholders, $6m each. The co-op’s share is taxable but Hewett said the tax paid would come back to co-op shareholders as imputation credits on the dividends they will receive.
The co-op will pay $3.2m in the dividend to all shareholders and a further $900,000 to shareholders meeting the livestock supply criteria.
The main dividend, paid on April 27, will amount to a fully-imputed 2.8c a share, and the patronage dividend to qualifying shareholders will be 2.9c a share.
Hewett said the about 60% of livestock processed by SFF Farms Ltd was supplied by co-op shareholders.
The co-op’s 50% shareholding in SFF Ltd was valued at $268m at balance date.
