Silver Ferm Farms

[percy]

Co-operative $8.1m Distribution of
Dividend and Patronage Reward
Your Co-operative Board have decided to make a
distribution by way of a $6.3m dividend to all Ordinary
and Rebate Shareholders, as well as a $1.8m Patronage
Reward distribution. Combined this takes the total
distribution to qualifying shareholders to $8.1m.
The shareholder dividend equates to a net return of 5.5
cents per share fully imputed (7.6 cents per share gross).
The quantum of dividend reflects a tax paid return on
84 cents share price (as at 29/3/21) of 6.54% for
all shareholders.
The record date for the dividend is 16 April 2021.
The Patronage Reward will be distributed to shareholdersuppliers who are identified as eligible as at 31 December
2020 and who have an aligned shareholder-supplier
match. To be eligible, shareholder suppliers must
have supplied a minimum of 400 livestock units in the
2020 calendar year direct via our network of Livestock
Representatives. They will receive 5.7 cents per eligible
share fully imputed (7.9 cents equivalent gross).
Combined, the distribution of Dividend and Patronage
Reward reflects a tax paid return on 84 cents share price
(as at 29/3/21) of 13.28% for eligible shareholders.
We trust shareholders will see this as strong
acknowledgement of the commitment of all
Co-operative members, who, along with their
communities, and the New Zealand economy
as a whole, will benefit from this distribution.
The Share Standard
is based on the typical volume of stock units
that a supplier provides to Silver Fern Farms in
a calendar year.
A lamb/bobby/mutton represents
1 stock unit
a deer 6 stock units and
a cattle beast 12 stock units.
To qualify as fully-shared the following applies:
• For supply up to 5,000 stock units, the multiplier is 8
shares per stock unit, and over 5,000 stock units an
additional 3 shares per stock unit.
• Our largest suppliers only need to hold 200,000
shares in the Co-operative to be classified as
fully-shared

[percy]

Dividend and Patronage Reward
YEAR DIVIDEND
PER SHARE
PATRONAGE REWARD
PER SHARE
PAID OUT
2017 2.8c 2.8c April 2018
2018 – 3.0c* April 2019
2019 5.4c 6.0c August 2020
2020 5.5c 5.7c April 202

[percy]

http://www.silverfernfarms.coop/inve...nnual-reports/
For anyone who wishes to read SFF latest annual report.

[percy]

Company Name:Silver Fern Farms Co-operative Limited
Security:Silver Fern Farms Ords
Code:SFF
ISIN:NZSFFE0001S5
Listing Date:01/10/2009
Number of Shares Issued:100,378,874
Market Capitalisation:85,322,043
Last Price:0.850
Last Financial Year EPS:0.3537
P/E Ratio:2.403
Last 12 Months Gross Dividend Yield:6.353%

[percy]

52 week Number of Trades289
52 week Volume2,901,107
Last 12 Months Gross Dividend (NZ$)0.054

Liquidity.Nearly 3% of the shares on issue were traded.

ps.No of trades 289,slightly more than the 278 PAZ number of trades.

[percy]

Co-operative’s share of net assets of Silver Fern Farms Limited
Net assets of Silver Fern Farms Limited (100%)
NZD IN THOUSANDS ($000) 2020 2019
ASSETS
Current assets
Cash and cash equivalents 11,038 2,897
Trade and other receivables 245,712 287,780
Derivative financial instruments 14,364 17,109
Inventories 254,489 228,630
Tax receivable 12 -
Non-current assets classified as held for sale - 18,130
Total current assets 525,615 554,546
Non-current assets
Property, plant and equipment 320,319 295,088
Intangible assets 3,787 3,628
Investments in associates 21,881 17,483
Shares in unlisted companies 101 81
Right-of-use assets 18,059 14,316
Total non-current assets 364,147 330,596
TOTAL ASSETS 889,762 885,142
LIABILITIES
Current liabilities
Trade and other payables 141,415 134,032
Interest bearing loans and borrowings 64,392 130,773
Tax provision 26,617 6,037
Provisions 6,888 5,962
Derivative financial instruments 156 48
Lease liabilities 6,577 4,474
Total current liabilities 246,045 281,326
Non-current liabilities
Provisions 12,392 10,020
Deferred tax liabilities 9,848 12,653
Lease liabilities 11,973 10,120
Total non-current liabilities 34,213 32,793
TOTAL LIABILITIES 280,258 314,119
Net assets of Silver Fern Farms Limited (100%) 609,504 571,023
Co-operative’s share of net assets (50%) 304,752 285,511
Goodwill on initial recognition 15,421 15,421
Equity accounted investment in Silver Fern Farms Limited 320,173 300,93

[iceman]

Good news from the UK overnight with an agreement in principle of a NZ/UK FTA to be signed in August.

[Sideshow Bob]

I'm pretty shocked at the comments and will be interested to hear from feedback comes from the Coop, and probably not well put. Probably didn't help that the YouTube video cut off abruptly at the end! Richard Young didn't seem to have any handle on the numbers at all, considering "just been discussed this morning", and I thought this would have been fundamental info in this position.

I'm with GTM on this, as have a long history with the company, and while not a supplier myself, been a bondholder (which looked pretty dodge for redemption for a while), wider family supplied etc etc. However it is a different "beast" to 6-8 years ago and echo Percy's comments in #333

Would be good to get some clarity, because undoubtedly dry investors have provided liquidity and supported the share price over recent times. Otherwise why not just be a Zespri and have to be a supplier to trade/own shares? I think the issue is coming up because of profitability, and 2-3 good years, with the prospect of another - so haven't really had the issue of who gets the "lions share of the feed". Especially when alot of it has been stacked away.

So was around 32-33% of shares supplied over 400 stock units (which I would have thought a pretty low bar), and about 63-64% of Coop supply was from shareholders.

I can understand the desire to have supply as shareholders - without supply they are nothing and anything to try to make that supply more sticky. Especially when cow numbers are forecast to decrease, beef capacity increasing in the South Island, and farming is under pressure for alternate land use (eg trees) and from the govt. As a large fixed cost business means more livestock, more efficient and lower costs per unit.

That patronage reward has been at worst equal to non-supplying shares dividend over the last 4 year, usually higher. Makes it pretty compelling for farmers - over 30c dividends in the last 4 years. Problem being history and been historically poor performance.

In theory, if owning shares was compelling for dry investors, then it should be extra compelling for farmers to buy shares and the market do its thing. It just doesn't seem to be currently........

[Sideshow Bob]

In addition a lot of their plant and equipment is extremely old and I foresee huge capex going forward.
Returns in this industry have historically been extremely cyclical and conferred a very poor return on equity.

The comments in the video were shocking.
Freight, logistics and staff issues are clearly very serious matters.
Cheap metrics for sure...but for a range of good reasons in my opinion. Its not for me but good luck to dry shareholders.

Most plants are historic sites - a number over 100 years old (although a few SFF sites like Fairton, Canty have now gone, probably at least 3 SFF sites), while a good number would be 60's/70's/80's. While the structure of the plants (in some areas) may be old, the sub-structure is more modern - these guys operate under MPI, have various audits etc. R&M surely suffered when they were against the wall pre-Chinese, but increasing larger amounts have gone into capital expenditure, as Percy has pointed out. The question is how much is to maintain BAU, and how much will increase efficiency, reduce costs, increase revenue etc. I'm unsure.

There are areas where there are just increased compliance costs meaning for capital expenditure - ie water use and discharge for example. Also going away from coal in some areas.

With 14 plants, always going to need a reasonable level of capital expenditure. The one area that might need to spend a bit more is cold storage......

Like just about all primary industries, staffing is a real issue. Alot of plants in smaller, rural towns with limited, often ageing workforces. SFF definitely become more proactive on recruitment and retention.

Logistics is hitting every export industry currently. Understand trying to put increased freight costs on to customers but likely to end up back on returns to suppliers. As mentioned previously, my thoughts are that would be a little better than their competitors with Kotahi and likely getting more space - but still difficult. Got a few months now with lesser production, but need to try to get inventory down to low-season levels.

[Sideshow Bob]

Plate to Pasture Farmer Conference 2021 - The Future Starts Here | Latest News | Silver Fern Farms

Conference in Wellingtown, open to suppliers and shareholders.