Cuts put Affco in trim condition

By PHILIPPA STEVENSON

Meat company Affco may be stripped to the bones after restructuring, but its annual meeting yesterday was a beefy affair by recent standards.

An unusually voluble chairman Sam Lewis gave - for him - long-winded replies to a great deal more questions from shareholders than had been voiced at any company meeting for many a day.

About 50 shareholders, including major stakeholder Peter Spencer making a rare appearance, turned out for the 48-minute meeting.

The more relaxed gathering was perhaps a sign that Lewis, who was executive chairman of the company for 18 months until September, had put behind him the months of what he acknowledged for the first time was "crisis management".

Affco reported an after-tax loss of $12.3 million for the year to last September on turnover of $991.9 million.

The company was no longer in the restructuring mode which had cut staff and costs and was now in a position to begin extracting benefits from a stable operation enjoying strong support from its major shareholders, Lewis said.

A new venue, too, could have contributed to the bonhomie. Affco, which last month moved its headquarters to Horotiu, north of Hamilton, from Auckland after nearly 100 years in the city, did the same with its annual meeting. It switched from the Ellerslie racecourse to a Hamilton hotel where, Lewis noted, there was no motorway congestion.

Chief executive Tony Egan also stressed the pared-back approach. Affco had accepted the simple philosophy that it was a meat company in business to do the basics well.

Debt repayment would be the priority for the year.

Short and long-term debt stood at $87 million, of which $40 million was seasonal borrowing from a total facility of $90 million, Egan said.

Shareholders, who have seen the share price rise from 15c to 18c in recent days, were keen to know the reason for the movement, and when they would finally see a dividend.

Lewis said he expected intense discussions at the end of the financial year in September among directors almost equally divided between those wanting to repay debt and those keen to declare a dividend.

Asked how the company was adding value, not just cutting costs, Egan said Affco, with its major shareholder, Talley's Fisheries, was gauging the strength of its sales team by using a competing in-house marketer to determine whether the Affco team was getting the best price. The marketer is South Pacific Meats' Mark Smith.