A ‘defining year’ for Silver Fern Farms

23 October 2009

A ‘defining year’ for Silver Fern Farms

Silver Fern Farms has posted financial results that were ‘broadly in line with expectations’, and reflected the global economic environment and the highly volatile NZ dollar exchange rate.

Eoin Garden, Silver Fern Farms’ Chairman says shareholders should be pleased the company comes out of the past year in a vastly stronger financial position than recent years. “This is no mean achievement given the current economic environment which has had severe impacts on many businesses and sectors.”

Net profits for the year ended August 2009 were $43.6m, from total income of $2,015m. Removing the gain from the settlement with PGG Wrightson of $37m and other one off items saw operating profit at $5.1m.

In line with the company’s continued focus on balance sheet strength, total debt was reduced by $57.7m to $184.5m during the year, including the SFF020 Bonds repayment of $50m during March 2009.

In view of the economic environment and the company’s recent focus on recapitalisation of the business, the directors have resolved that no shareholder distributions will be paid for the year ended August 2009.

Mr Garden says 2009 had been a ‘defining year’ during for Silver Fern Farms and its stakeholders, during which the group had made substantial and measurable progress towards its transformation from a traditional, sales oriented meat processor to a market led food company.

Following on from last financial year’s successful Rightsize project, under which the group cut back debt dramatically, the group had also:

-       Successfully launched its new brand both locally and internationally

-       Established and enhanced its Backbone® contract procurement programme for suppliers

-       Made substantial investments in innovation, technology and R&D projects including X-ray carcase analysis, robotics and RFID technology

-       Formed joint ventures into its non-core businesses, including rendering through Farm Brands Limited and into transport through Livestock Logistics

-       Integrated the logistics and marketing side of Rissington, building capabilities in integrated supply chains.

Capital Restructuring

On 30 July 2009 Silver Fern Farms’ shareholders voted in favour of constitutional changes, effectively endorsing the need to align the company’s capital and governance structure.

Mr Garden says approval of that new Constitution means that the company now had the ability to introduce a modern capital structure which both protected the company and offered increased benefits over past structures including a new market rebate system and an enhanced governance structure focused on skills based governance.

Subsequently, a total of 5,787 shareholders, holding 42.9m shares and representing 75% of the total 57.5m shares eligible for exchange, had participated in the offer which closed on 9 October 2009. Shareholders elected to subscribe for a further 22.2m shares under the associated rights offer. “The results reflect a high level of positive shareholder engagement with the new structure of their company,” says Mr Garden.

The ordinary shares will list on the Unlisted trading platform on 27 October.

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