Allied Farmers posted an 88 percent drop in annual profit after an overhaul of the business increased the firm’s tax bill, and as its profitable livestock unit was held back by the slowing dairy sector.
Net profit attributable to shareholders dropped to $128,000, or 0.12 cents per share, in the 12 months ended June 30, from $1.02 million, or 1.03 cents, a year earlier, the Hawera-based company said in a statement. That included a tax expense of $460,000, and an increased share of earnings going to minority interests. Revenue fell 5 percent to $15.3 million, including a $635,000 gain from Allied settling an existing obligation. On June 29, Allied issued $25,000 of shares and paid $400,000 in cash to complete the settlement of a $2 million debt to Speirs Group, which had already received $528,000 of stock.
The company avoided liquidation in 2013 by selling bonds. Last year it sold down its stake in NZ Farmers Livestock to 57 percent to help repay $2 million owed to Crown Asset Management. The entity was set up in 2012 to acquire the assets of five failed finance companies, and the debt was repaid by the government under its retail deposit guarantee scheme, including Allied Nationwide Finance.
Allied’s directors signed off on the unaudited accounts as a ‘going concern’, and expect the company to generate enough cash to meet their obligations as they fall due. “The directors are intending to negotiate with the bond holder about a repayment plan or extension of the facility; seeking to confirm arrangements with other creditors; have planned a series of dividends from NZ Farmers Livestock Ltd and continuing to look for growth opportunities for NZ Farmers Livestock Ltd,” according to a filing to the NZX.
The company’s livestock unit posted a 1.3 percent decline in sales to $14.7 million, while profit fell 11 percent to $1.21 million, as uncertainty over the dairy payout weighed on sales in the second half of the year.
Chairman Garry Bluett said the company will look to keep growing the livestock business, and has bought a stake in Hawkes Bay-based Redshaw Livestock since the June 30 balance date.
The asset management unit, which housed the former Hanover and United Finance assets, generated a profit of $231,000. It held $90,000 of assets and $30,000 of liabilities as at June 30, down from $103,00 of assets and $942,000 of liabilities a year earlier.
Allied strengthened its balance sheet, reducing its equity deficit to $1.48 million as at June 30, from $3.89 million a year earlier.
The company’s shares last traded at 6.4 cents, and have dropped 9.9 percent this year.