Silver Fern Farms Co-Operative:
Positive Result for Co-Operative And Patronage Reward Declared
• The following information covers the results for two separate companies; Silver Fern Farms Co-operative Limited,
and its investment Silver Fern Farms Limited.
• Silver Fern Farms Co-Operative Limited and Shanghai Maling own Silver Fern Farms Limited in equal partnership.
• Silver Fern Farms Co-operative for the 12 months ended 31 December 2018:
o Net profit before tax of $2.4m
o After tax result of $0.9m
o No debt, cash and short-term deposits of $18.1m, Total Shareholder Equity of $283m.
• Silver Fern Farms Co-operative declares $874k unimputed Patronage Reward distribution to eligible supplying
• Note the following results for Silver Fern Farms Limited are for the 12 month period from 1 January to 31
December 2018 which is a change to previous reporting periods:
o Sales of $2.4 billion
o Earnings before interest, tax, depreciation and amortisation (EBITDA) including share of associate earnings of
o Net profit after tax of $5.8m
o Increased investment in capital expenditure, up $8m to $29m
o Declared a $1.7m dividend to shareholders
Dunedin 29 March 2019: Silver Fern Farms Co-operative has reported a net profit before tax of $2.4m for the 2018
The after-tax result for the period was a net profit of $0.9m. This reversed an after-tax loss of $5.6m in 2017 – albeit
that result was over a 15-month period which included losses from discontinued operations.
Silver Fern Farms Co-operative Chairman Rob Hewett said the Co-operative will receive a $874k dividend from their 50%
shareholding in Silver Fern Farms Limited.
“While significantly down on last year’s $4.1m dividend, we are pleased that Silver Fern Farms Limited was in a position
to pay a dividend to its two shareholders. The $874k dividend we will receive marks the first time that Silver Fern
Farms Limited has been in a position to pay back-to-back distributions out of operating profit to its shareholders,” Mr
“The Co-operative remains in a strong position with no debt.”
Mr Hewett stated that the Board was determined to support moves to improve the performance of its investment Silver Fern
“It should be noted that our investment – Silver Fern Farms Limited – is undergoing a process of consolidation. It is in
a period of intensive capital investment across infrastructure and systems to ensure it can sustain a high level of
performance. While the level of profitability is lower than desirable as it goes through this process, we have an
expectation that we will be in a position to derive future value from our equal share in the company. This is in
addition to the high level of service supplying shareholders currently receive.”
For the period Silver Fern Farms Limited achieved sales of $2.4 billion, earnings before interest, tax, depreciation and
amortisation (EBITDA) including share of associate earnings of $32.4m, and net profit after tax of $5.8m. The Company
increased the level of capital expenditure, up $8m to $29m, across health and safety, compliance, asset replacement and
operational improvement over the course of the year.
Silver Fern Farms Limited Chief Executive Simon Limmer stated: “The 2018 after-tax result, while it represented a
back-to-back profit for the business, is not at the level we are aiming to achieve for the Company.”
“It is acknowledged we must lift the profitability of the business in order to sustain our aggressive capital
re-investment programme, and to more actively progress our in-market investment in sales and marketing to grow value in
“Alongside the significant capital investment in Silver Fern Farms, the company continued to pay out strong farm gate
pricing across all species.”
In 2018 beef made a slight gain in procurement market share versus 2017, with sheepmeat and venison remaining the same.
“Prices for beef and venison products held up throughout 2018 and returns to both farmers and processors equitably
reflected the market realities.”
“While sheepmeats were a notable performer for the Company in 2017, However, in 2018 returns could not sustain
satisfactory levels of profitability. This was due in large part to strong farmgate prices for sheepmeats not adequately
reflecting in-market returns at crucial points of the season when processing volumes were low and eroded our operational
efficiency. December 2018 was the worst December result for the company in the last ten years.”
Post balance date, Silver Fern Farms Limited announced an un-imputed dividend of $1.7m which will be equally distributed
between the two shareholders, Silver Fern Farms Co-operative and Shanghai Maling. This is in-line with the Company’s
dividend policy of paying a minimum dividend of 30% of the Company’s net profit after tax.
Rob Hewett said the Co-operative had decided to distribute the $874k as a Patronage Reward only payable to qualifying
supplying shareholders. “We decided to not retain the dividend from Silver Fern Farms Limited. This option was
considered, the Board saw no additional requirement for the Co-operative to hold funds at this time.
“We recognise the need to grow long-term value in the investment for the benefit of all shareholders. And we want to see
greater alignment between supply and shareholding.
“We believe we can contribute to creating this enduring value by encouraging commitment of livestock supply through the
Patronage Reward. This was one of the fundamentals behind the establishment of the
Co-operative’s Patronage Reward mechanism.
“This dividend received by the Co-operative is un-imputed. The Co-operative Board has declared a distribution in the
form of an unimputed patronage reward payable to those shareholders who have met the livestock supply criteria set out
in our shareholder benefits programme.
“This will represent an un-imputed patronage reward (on qualifying shares) of 3.0 cents per share. The patronage reward
is based on shareholding as at 31 December 2018. Payment date for the patronage reward will be 26 April.
“A highlight for the year was the constitutional review process, which saw strong engagement and a 92 percent vote in
support. Our Constitution is now fit for purpose and ensures we have created a process for constructive rejuvenation for
the governance of our Co-operative as well as for Silver Fern Farms Limited.”
The Annual Report will be available on April 12, ahead of the Co-operative’s Annual Meeting which will be held in
Dunedin on 1 May.
Key financial metrics FY 2018 Silver Fern Farms Co-operative Ltd. Silver Fern Farms Ltd.
Net Profit Before Tax $2.4m $6.3m
Net Profit After Tax $0.9m $5.8m
EBITDA Not applicable $32.4m
Revenue Not applicable $2.4 billion