That should contribute to creating enduring value in the group, chairman Rob Hewett says.
“We recognise the need to grow long-term value in the investment for all shareholders and to encourage suppliers of livestock to become shareholders so shareholders can realise the value of their shares if they wish,” he wrote in the annual report.
The co-operative received an $874,000 dividend from the operating company, Silver Fern Farms, which Hewett said was not enough to enable both the payment of a dividend on all shares as well as a reward payout of any meaningful value.
A payment to all shareholders would have amounted to only 0.4c a share.
The co-operative board had considered keeping the cash but doesn’t need the money. At the December 31 balance date it had just over $18 million in cash and no debt.
So, it was to make the patronage payment on April 26 to supplier/shareholders as at December 31 who qualify under the shares/supply criteria. It amounted to a payment of 3c (without tax credits) a share on the qualifying shares.
The annual report said the co-operative had 179 new shareholders in 2018, up from 104 in 2017 and 70 in 2016.
Hewett said that is a positive trend and, importantly, there is growth in shareholders who are also livestock suppliers.
Of the new shareholders, 84% had supplied sufficient stock numbers to qualify for the payment.
The rewards programme also gives fully-shared suppliers preference for processing space and access to supply programmes.
Hewett said shareholder supply was broadly consistent with the previous year, with an 84.2% shareholder commitment for volumes year-on-year, up from 82.9%.
The co-operative’s $874,000 is half of the full dividend of $1.7m paid out by SFF, the other half going to China-based shareholder Shanghai Maling.
Both shareholders have five directors on the SFF board but Shanghai Maling has a casting vote in the event of a deadlock.
The co-op paid a fully-imputed dividend of 2.8c a share to all shareholders on the 2017 result and qualifying shareholders also received a patronage reward of 2.9c a share in spite a co-op bottom-line loss of $5.6m and was paid from a $6m dividend received from SFF.
Co-op after-tax profit in 2018 was $904,000.
A dividend of 34.1c a share was paid during the 2017 year out of the funds Shanghai Maling paid the co-op for the half-share in SFF.
The annual report notes that under the agreement between the co-operative, Shanghai Maling and the operating company, SFF provides administration services to the co-op and pays all reasonable costs of the co-op, excluding director fees, up to a maximum $500,000 a year.
In 2018 the co-op’s costs were $706,000 so its own share was $206,000. SFF paid the balance, compared to a $454,000 contribution a year earlier.
The co-op pays the fees of the five directors it appoints to the operating company board. They amounted to $500,500 and co-op director fees totalled $203,455.
Hewett, Trevor Burt, Dan-Jex Blake, Jane Taylor and Richard Young are directors of both entities. Tony Balfour, Fiona Hancox and Tony O’Boyle are directors of the co-op only.
