Debt restructuring has been completed and the asset management division has been wound down, chairman Garry Bluett said.
ALF made a pre-tax profit of $1.57 million for the year ended June 30. In the same period a year earlier, the profit was $1.1m but $600,000 of that was from one-off gains.
The latest result reflected a full year’s trading, without any one-off impacts, Bluett said.
It had been an excellent year. Group profit after-tax was $705,000, up from $128,000.
The balance sheet finally showed positive shareholders’ funds. The June 30 figure was only $105,000 but compared to several prior years with negative shareholders’ funds of $1.47m a year earlier, $3.88m in 2014, $5.46m in 2013 and $2.7m in 2012 because of the impact of earlier failed investments in the finance company sector.
As well, the balance sheet did not reflect the full value of ALF’s 66% shareholding in operating subsidiary NZ Farmers Livestock (NZFL) because of accounting standards governing prior related-party transactions.
ALF’s Livestock division reported a 52% increase in pre-tax earnings, up to $2.26m from $1.48m, on income up 8%.
Livestock sales performed well in the second half of the year with a high turnover caused by dairy farmers reducing overall herd numbers, Bluett said.
Returns from the meat processing business (bobby calves) were also higher. Costs and headcounts were steady but selling prices were higher and a lower exchange rate also helped the bottom line.
During the year ALF bought a 17% stake in Hawke’s Bay firm Redshaw Livestock, with an agreement to lift that to 52% over the next two years.
Business synergies between the two groups were starting to be realised. The holding was now at 34%.
ALF had also increased its shareholding in NZFL, buying back a share parcel sold earlier to help meet debt repayments. The higher shareholding would be fully reflected in the 2017 year results, Bluett said.
Since balance date NZFL had taken on several experienced livestock agents in Northland and the South Island and was actively working to grow the business further.
A Finance subsidiary had been formed focus on dairy bulls.
The wind-down of the asset management division, a substantial reduction in shareholder numbers after a small-shareholder sale programme and lower audit and insurance costs from simplification and reduced risk in the business along with lower interest costs on the secured debt had all helped reduce ALF’s corporate costs. That would also be reflected in the 2017 accounts.
Total assets at balance date were $12.78m. Total liabilities of $12.62m included borrowings of $5.3m.
Earlier in August ALF said it had secured a new $550,000 bond to replace a maturing $600,000 bond. As well as a lower amount, the new bond was also at a lower interest rate of 7.75% down from 12%, Bluett said.
The lower capital amount reflected the group’s improved cash and operating position and reduced corporate costs.
