Silver Fern Farms Co-operative Declare Dividend And Patronage Reward

Dunedin Thursday 23 July 2020: Silver Fern Farms Co-operative Limited has declared a dividend and patronage reward for shareholders totaling $7.9 million.

The decision comes following receipt of a cash dividend of $12.4 million to the Co-operative from Silver Fern Farms Limited. This dividend was generated from Silver Fern Farms Limited’s 2019 financial year, where it reported a net profit after tax of $70.7m in April this year.

At the time the dividend was deferred at the request of Silver Fern Farms Co-operative and Shanghai Maling until the outlook for the global trading environment became clearer. Silver Fern Farms Limited Co-Chair Rob Hewett said the operating company is in a strong position.

“While the world is still dealing with the Covid-19 pandemic, and there remain risks of disruptions to the supply chain, over the past quarter we have managed to export our food to customers who are willing to pay for safe, trusted and sustainably produced food from New Zealand,” Mr Hewett said.

“We were also able to fully repay the Government Wage Subsidy at the end of May, retain our 7,000 staff and provide solid farm-gate returns across most stock classes – a result we did not foresee at the start of Covid disruption.”

“This strong performance alleviated the cash-flow risks to the business through our peak operational season – which was the basis for the two shareholders to request a deferral of the 2019 dividend in April.”

Co-operative Chair Richard Young said the Co-operative was pleased with the performance of Silver Fern Farms Limited. “We are pleased that Silver Fern Farms Limited has been able to keep people safe whilst operating as an essential service to farmers and their communities, and to adeptly navigate through a rapidly changing global trading environment.”

“The decision for Silver Fern Farms Limited to defer the dividend and retain that cash within the business through this uncertain period was the right decision at the time as it gave the company greater flexibility and confidence around how it continued operations through Covid-19 restrictions.

“We believe that shareholders should be the first port of call for financial support and we were pleased to be in a position to offer up that support.

“Following its performance over the past four months, we are confident it no longer needs the financial support that came from the dividend deferral.”

The Co-operative will receive a cash dividend of $12.4 million. This Dividend payment translates to the Co-operative’s half share of a total dividend payment of 37.5 percent of Silver Fern Farms Limited’s Net Profit after Tax. It exceeds the 30 percent minimum dividend distribution as outlined in the shareholders agreement. The Co-operative has retained $4.5 million and has declared a dividend and patronage reward for shareholders totaling $7.9 million, fully-imputed.

“One of the factors that the Co-operative Board has considered is assurance that it has the financial reserves to ensure our own financial sustainability into the future,” Mr Young said.

“Currently our cash reserves over and above redeemable rebate shares and other shareholder claims is $1.25 million. Therefore, the Board determined that it would take the opportunity to build cash reserves in the Co-operative by retaining $4.5 million of the dividend.

“The $7.9 million distribution will be welcomed by our Co-operative shareholders. It is reward for a strong 2019 by Silver Fern Farms Limited, and it signals the current stability of the company. This is significant as our economy needs strong performers like Silver Fern Farms right now, and our Co-operative members and their communities will benefit.”

All ordinary and rebate shareholders at the record date of 31st July 2020 will receive a fully imputed dividend of 5.4 cents per share.

A fully imputed Patronage Reward of 6.0 cents per share is payable on qualifying shares to supplying shareholders based on supply during 2019. Both payments will be made on 14 August 2020.

“These two payments ensure our shareholders are appropriately rewarded for the sound financial result delivered by Silver Fern Farms in 2019. As is our intention given we are a Co-operative, our supplying shareholders are effectively twice as well rewarded on their qualifying shares.”

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