Silver Fern Farms co-op says it’s a positive result

However, after accounting for discontinued operations, the 15-month period was a net loss of $5.6m.

The financial report is the first since 100% farmer-owned Silver Ferns Farms Co-op sold 50% of its meat processing business, Silver Fern Farms Ltd to Chinese company Shanghai Maling.

Silver Fern Farms co-op chairman Rob Hewett says the accounting result for the first period of the partnership has a high level of complexity to account for the changes in company structure over the period.

“We expected some complexity in reporting for this period as we account for the transition, and it does contain some abnormal factors related to the transaction which we will not see in future years.”

The 15-month report allows the co-op to move to a December year-end financial reporting from now on.

“From now on we will have standard 12-month reporting periods,” says Hewett.

The current 15-month result includes the 50% sale of Silver Ferns Farms Ltd; the co-op had 100% ownership of Silver Fern Farms Limited for the first two months of the result period; the 50:50 joint venture accounting for subsequent 13 months.

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

Hewett says that the board believes a more meaningful picture of the performance of its investment in Silver Fern Farms Limited is represented by the most recent 12-month result for that company to 31 December 2017.

For that period, Silver Fern Farms achieved sales of $2.2 billion, earnings before interest, tax, depreciation, abnormals and amortisation (EBITDA) including share of associate earnings of $50.9m, and net profit after tax of $15.4m.

The net profit after tax of $15.4m was after abnormal items of $10.2m primarily related to the closure of meat processing operations at its Fairton, Ashburton plant in May 2017.

Net profit for the period prior to abnormals was $25.6m.

Hewett says that the result for Silver Fern Farms Limited was a material improvement on what was a particularly challenging year in 2016.

“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.”

At a glance

• Silver Fern Farms Co-operative for the 15 months ended 31 December 2017:
  • o Net profit after tax (and before losses from discontinued operations) of $7.8m
  • o After tax result for the 15-month period net loss of $5.6m
  • o No debt, cash on hand of $16.6m, Total Shareholder Equity of $271m
• Silver Fern Farms Limited for the 12 month period ended 31 December 2017:
  • o Sales of $2.2 billion
  • o Earnings before interest, tax, depreciation, abnormals and amortisation (EBITDA) including share of associate earnings of $50.9m
  • o Net profit after tax of $15.4m