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Tasman Farms squeezes out profit

Wednesday 1st September 2010

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Tasmanian corporate farmer Tasman Farms has announced a 107% lift in profit to $567,000 for the year ended May 31 in the face of severe weather conditions which trimmed milk production and lower payout prices. 

TFL, which trades on New Zealand's Unlisted platform, farms just over 6,000 hectares of dairy and pastoral land in north west Tasmania following a large scale conversion of the land in the mid-2000s.

Production during the 2010 season fell 3.3% to 4.02 million kilograms of milk solids, and the average payout dropped 20% to NZ$5.34/kg ms.

TFL chairman John Watson said the opening 2010/11 price offered by the company's major Tasmanian milk processor, Fonterra Australia, is $5.02, though TFL anticipates further step-ups during the year to a final price of $6.21. For the coming season, 16 of the company's 23 farms will operate under lower-order share-farming agreements, one under a 50:50 agreement and the rest by managers employed by TFL.

"Large scale bull beef finishing has been phased out and replaced with a larger breeding cow operation and focus on high margin cattle finishing on the company's own account and through an agistment arrangement with the local meat processor," Watson said.

The total number of beef cattle carried fell to 5,235 head compared to 8,010 the previous year. Conversely, milking cow numbers rose to 15,589 from 13,143.

The company had two significant injections of new funds, including a Nov. 2009 issuing of two million shares at $1 each. In May 2010, the company raised a further $6.18 million from convertible redeemable notes issue to the majority equity holder, New Plymouth District Council.

"These funds will be used to finance further development of the company's existing operations in Tasmania, including wallaby-proof fencing, pasture renewal, soil fertility improvements, water reticulation and dairy shed technology."

The company which last traded at $0.71 cents a share intends to delist from Unlisted on September 14. No dividends have been declared or paid during the current or preceding financial years.

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