Allied Farmers Limited (NS) Analysis

Overview

Allied Farmers Limited and its subsidiaries NZ Farmers Livestock Ltd, Farmers Meat Export Ltd and NZ Farmers Livestock Finance Ltd are a rural services group, with its predominant activities comprising the sale of livestock agency services, the procurement and processing of calves, and the provision of livestock financing.

Performance

The following information was extracted from Allied Farmers Limited's annual report, released on 23 August 2024:

The Directors of Allied Farmers Limited (“Allied Farmers” or “Allied Group”) (ALF:NZX) are pleased to report an audited net profit before tax for the year to 30 June 2024 of $7.315 million (FY23 $ 4.071 million), with an audited net profit after tax attributable to Allied Farmers’ shareholders of $5.206 million (FY23 $3.338 million) which was an increase of 55.96% from the previous year.

The increased FY24 profit was driven by one-off $4.2 million gain on the book value of the sale and licence back by NZ Farmers Livestock Limited of its interest in the Frankton saleyards, of which $2.85 million was attributable to Allied Farmers’ shareholders.

Excluding this one-off gain, NZ Rural Land Management Limited (NZRLM) earnings were significantly higher than FY23 on the back of management, performance and transaction fees generated from a number of NZ Rural Land Company Limited (NZL) transactions successfully executed by NZRLM, but this was largely offset by lower earnings from NZ Farmers Livestock Limited for the comparative period.

Allied Group FY24 profitability was also impacted by a full year amortisation of the NZRLM Management Contract acquired in March 2023 (a non-cash impact) together with interest on the Heartland loan to fund the acquisition, suspension of dividends from NZL, and costs associated with strategic initiatives such as the amendment to Allied Farmers’ constitution.