Silver Fern Farms has confirmed a positive 2015 financial result and further inroads made on debt reduction.

For the financial year ended September 2015, the company achieved Earnings before Interest, Tax, Depreciation and Amortisation (EBITDA) of $86.9m. This represented a 28 percent improvement on the $68.1m achieved in 2014. Net profit before tax for the year was $27.2m, up from $1.8m in 2014.

Chairman Rob Hewett said Silver Fern Farms’ shareholders will be pleased by the audited result.

“This is a positive result, delivered in an environment where there were a number of constraints. What was particularly pleasing was that all species made a significant contribution to the overall improvement,” said Mr Hewett.

“However, whilst a significant improvement on 2014, we still have progress to make to achieve a return that reflects the amount of capital we have invested in the business over the course of a season,” Mr Hewett said.

Mr Hewett said a key aim for 2015 was to put the company on a sustainable financial footing.

“To achieve that we needed to both reduce debt under our own steam, and to introduce new equity. It is pleasing to report that we reduced our net debt from $289m at the end of the 2014 financial year to $121m at the end of 2015, a reduction of $168m through our own initiatives - being profitable, reducing inventory, selling non-core assets, and winding down the investment in our dairy bull beef scheme. Further, on 16th of October, shareholders voted overwhelmingly in support of the investment by Shanghai Maling of $261m into Silver Fern Farms. The combination of our improvement and the new investment will put Silver Fern Farms into not only a position of financial stability but one of strength.”

Chief Executive Dean Hamilton said: “We achieved our goal of a material and sustainable improvement in profitability. Pleasingly, we were profitable across all three species - beef, sheepmeat and venison. Beef and venison both had good results, and our big focus on turning around the performance of our sheepmeat business is starting to achieve results – with a meaningful profit, the first one in four years. More importantly, we see significant scope for continued improvement across all three species.”

“We achieved the performance whilst managing the business within a prudent risk framework. Disciplines around managing our inventory, committed livestock purchases and product sales meant that we did not carry excessive risk in achieving the result. Year-end inventory of $73m was the lowest level for at least the last 7 years,” Mr Hamilton said.

“The season presented a number of challenges for the company including our limited financial flexibility at times to respond to changing conditions, and therefore livestock supply patterns from our farmer partners. Looking forward, we are confident that a combination of our improved financial performance and the new investment will provide us with more flexibility to respond to changes in the operating environment.

“Our people in the company have worked incredibly hard to achieve this result. I know they are looking forward to a positive 2016 and the opportunities on the horizon through our partnership with Shanghai Maling.”

The Annual report will be available in late November ahead of the company’s Annual Meeting which will be held in Dunedin on December 16.

Summary of key financial items FY2015 FY2014 FY2013 FY2012 FY2011
Total income $2.45b $2.33b $2.01b $2.04b $2.11b
Operating earnings before interest, tax, depreciation and amortisation (EBITDA) $86.9m $68.1m $22.0m $9.0m $87.7m
Operating earnings before interest and tax (EBIT) $58.0m $39.3m ($8.5m) ($16.2m) $60.9m
Net profit before tax $27.2m $1.8m ($36.5m) ($42.3m) $40.7m
Net profit after tax $24.9m $0.5m ($28.6m) ($31.0m) $30.9m
Total assets $627.1m $760.8m $833.3m $828.5m $708.2m
Net working capital $136.2m $233.7m $288.6m $294.5m $213.6m
Net debt $120.9m $288.6m $387.6m $347.7m $153.2m
Total equity including members' shares $368.4m $340.7m $320.2m $349.0m $394.8m
Operating cash flow $152.3m $91.5m ($5.1m) ($104.0m) $12.9m
Equity ratio at balance date 59.4% 45.2% 38.7% 42.2% 56.2%