Including those costs the half-year, after-tax profit was $15.06m, down from $19.29m at the same time a year earlier.
However, revenues rose 16.6% to $153m – with demand helped by a higher milk price – and earnings before the one-off costs effect were considerably higher than previously, and would be recurring, King said.
On this basis, half-year operating earnings (Ebitda) were $57.5m, a 36% gain, and earnings before interest and tax (Ebit) was $43.2m, a 52% gain. With the costs included, reported Ebitda fell 12% to $36.8m, and Ebit fell 20% to $22.5m.
Allowing for the $15m after-tax charge, LIC now expects full-year underlying after-tax earnings of about $3m, similar to last year. In the 2019 year, with no further one-off costs, it expects underlying after-tax earnings to be in the $18m-$26m range. This is before including breeding bull team valuations.
The transformation programme had delivered a combination of significant recurring benefits and one-off cash benefits, would make the group more agile and responsive, and lead to significant earnings improvement in future years, King said.
A major example was the better management of travel undertaken by the 840 or so artificial breeding services staff during their spring season.
Over the past two years, travel mileage had been cut by about one million kilometres, meaning less time on the road and more time onfarm with farmers and their herds, and savings in time, fuel, and on-road costs.
A new herd-testing cancellation policy had also been introduced to achieve more efficiencies, resulting in a 50% reduction in short-notice cancellations.
Business growth initiatives had included the Wagyu beef programme as an alternative to bobby calves and an additional income source for farmers. This is the partnership in which First Light group bulls are crossed via AI with dairy cows to provide calves for Wagyu beef production.
Another had been the recently launched SPACE service, delivering pasture management data from satellites.
LIC had also sold its Otago-based Deer Improvement business so it could focus on the core dairy services work.
The transformation programme was one of two major developments for LIC, with the other being work on simplifying the group’s share structure to fix concerns over growing disparity between the co-operative shares and the listed investor shares. An update on this would be provided soon, King said.
The first half of the trading year is the busy time for dairy AI services, providing most of the group revenues, while total costs are spread over the full year.
LIC strengthened its already strong balance sheet year-on-year, with the ratio of debt-to-total debt plus equity at balance date improving to 33% from 35%, and the ratio of interest-bearing debt alone reducing to 10.5% from 14.5%.
Operating cashflow for the half-year was a positive $5.4m, compared to a $400,000 outflow previously.
