Thursday 30th August 2018
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Allied Farmers expects the outbreak of Mycoplasma bovis and efforts to contain the cattle disease will slow down activity in its core livestock division.
The Hawera-based company's livestock unit increased stock sales 1 percent in the year ended June 30, although lower international meat prices shrank margins and the unit reported a 2.6 percent decline in earnings to $2.6 million. Chair Garry Bluett said the company was always going to struggle to repeat the "exceptional growth" from the year earlier and noted the M.bovis outbreak will pose a number of challenges for the rural services firm.
"While the planned eradication program will see a demand for livestock and possible opportunities, the uncertainties around livestock movements could cause some general slowdown in ordinary livestock transactions," he said in a statement. "At this stage it is too early to assess any financial impact."
Allied Farmers' net profit was largely flat at $1.5 million in the year ended June 30, boosted by its $441,000 share of proceeds from a lawsuit taken by the liquidator of Dave Henderson’s Property Ventures Ltd.
The company was a beneficiary of the litigation against PVL after selling various loans to the litigation funders in 2013. The company took on the loans in its ill-fated 2009 acquisition of the Hanover and United finance group's loan book that wasn't worth as much as initially thought. It sold them for $100,000, and had said it could rise to $500,000 or more. The additional payment was contingent on a successful lawsuit.
Liquidator Robert Walker, backed by litigation funder LPF Group, settled with auditor PricewaterhouseCoopers and went on to discontinue pursuing Henderson and his fellow directors.
Allied Farmers has been focusing on its livestock division, having largely wound down the residual assets from its acquisition of the Hanover and United Finance loan books in 2009.
The company has set up a livestock financing division, which Bluett said "performed creditably – ahead of the budgets set".The unit initially focusing on financing service bulls and has branched out into general livestock lending. As at June 30, its loan book was $4.6 million, up from $2.1 million a year earlier.
The shares last traded at 8 cents and have declined 17 percent so far this year.
The board didn't declare a dividend.
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