Silver Fern cuts debt by $203M

The co-operative posted a profit of $7.8 million. Photo/File.

Shanghai Maling's $260 million injection into Silver Fern Farms has allowed the company to slash debt by $203 million.

Yesterday, Silver Fern Farms announced details of its financial results which will be available today, ahead of its annual meeting in Dunedin on April 18.

The Silver Fern Farms Co-operative posted a net profit after tax of $7.8 million and an after-tax result of $5.6 million for the 15 months ended December 31, 2017.

Silver Fern Farms Ltd posted net profit after tax of $15.4 million with earnings before interest, tax, depreciation, abnormals and amortisation (ebitda) including a share of associate earnings of $50.9 million. Sales were $2.2 billion.

In a statement, chairman Rob Hewett said the accounting result for the first period of the partnership had a high level of complexity to account for the changes in company structure.

It contained some abnormal factors which would not be seen in future years.

The co-operative has moved to a December year-end, which necessitated a 15-month result for this period. From now on, there would be standard 12-month reporting periods.

The co-operative accounted for 100 per cent ownership of Silver Fern Farms Ltd for the first two months of the result period, followed by the 50 per cent stake by Shanghai Maling in early December 2016.

The move from 100 per cent ownership to 50 per cent ownership produced a non-cash accounting gain which was required to be included in the result for the period, which in part offset the seasonal losses sustained by Silver Fern Farms.

The board believed a more meaningful picture of the performance of its investment in Silver Fern Farms was represented by the most recent 12-month result.

The $15.4 million net profit after tax was after abnormal items of $10.2 million, primarily related to the closure of meat processing operations at its Fairton plant, near Ashburton, in May last year. Net profit prior to abnormals was $25.6 million.

The result for Silver Fern Farms Ltd was a material improvement on what was a particularly challenging year in 2016, Mr Hewett said.

"We are pleased to see an improved result. This was achieved on similar levels of throughput, and reflected improved in-market conditions for sheep and venison, as well as a reduction in overhead costs following plant closures and management's ongoing focus on improving efficiencies," he said.

Post balance date, Silver Fern Farms Ltd has announced an unimputed dividend of $12 million which would be split between the co-operative and Shanghai Maling.

The $6 million dividend was taxable in the hands of the co-operative and that would come back to shareholders in the form of an imputation credit.

The board had declared a $4.1 million distribution in the form of a fully imputed dividend of $3.2 million to all shareholders and a fully imputed patronage reward pool of $900,000 to shareholders who met the livestock supply criteria.

- Otago Daily Times.