After a record profit last year, cashed-up former dairy farmer Dairy Brands has announced a 24.4 per cent fall in annual profit and will pay no dividend.
The company said it was also planning a share buy-back and looking for an unspecified "change in direction".
Dairy Brands posted a net after-tax profit
of $4.77 million for the year to May 31, compared with a profit of $6.32 million a year ago, when fat milk payouts lifted profit by more than 200 per cent.
Sales income dropped sharply, from $10.5 million last year to $3.9 million this year as the company sold most of its farms.
A $2 million operating deficit before tax and unusual items reflected a drought in Canterbury last year, the company said.
It had to buy large amounts of supplementary feed and transport stock to other farms during the winter.
But the deficit was boosted by the $6.7 million sale of some of its farming assets . They included Dairy Brand's last four dairy farms, which were sold in June.
After redistributing $22 million to shareholders through a buy-back last September, Dairy Brands also said it planned another buy-back, with shareholder approval.
It had to find a tax-effective distribution method before it could determine the amount of the buy-back.
The company also planned to remain a listed company and seek a "suitable investment opportunity" for its $12 million war chest.
Its principal shareholder, ASC Trust Company, supported the plan but would not participate in the proposed share buy-back.
One of the trust company's directors is wealthy businessman Duncan Saville, an international utilities investor who has been an Infratil NZ board member since that company was founded in 1994.
Shareholders were reminded that the terms of the buy-back "may result in the principal shareholder increasing their percentage holding in the company, dependent of course upon other shareholders taking up the proposed share buy-back offer".
KPMG has been appointed to prepare an independent report on the merits of the buy-back and to look at its fairness to other shareholders.
Shares in Dairy Brands closed up 3c to 65c.
Dairy Brands was set up in 1995 as a joint venture between then-listed farmer and horticulturist Apple Fields and Canterbury icecream firm Killinchy Gold.
- NZPA
