Stock revaluations hurt Livestock profits

Fairfax Media

LIVESTOCK BULLISH: Dairy farmer co-operative Livestock Improvement Corporation's posted net profit of $15.6 million for the year to May, down from $19 million last year. Annual revenue was however rose to $132 million, up 18 percent from the previous year's $112 million. Livestock shares last trade at $3.35, close to the group's 52 week high of $3.50.

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Dairy farmer co-operative Livestock Improvement Corporation's annual profit has been dragged down to the tune of $3.4 million by breeding stock revaluations.

Livestock today posted net profit of $15.6 million for the year to May, down from $19 million last year.

Livestock's annual revenue was $132 million, up 18 percent from the previous year's $112 million.

Livestock chairman Stuart Bay attributed the drop in profit to the increase in the value of breeding bulls and stags being less than last year's increase. This latest 2007-08 year was the first time Livestock has used International Financial Reporting Standards.

"One major impact of IFRS reporting is the requirement to revalue our elite bull and stag teams each year. For 2007-08 this amounted to a $6.9 million gain in value after tax, and, in 2006-07 a $12.4 million revaluation gain, after tax" Bay said.

Bay expected these re-evaluations under IFRS to be significant and volatile each year, and said that underlying net earnings were a more meaningful measure of performance for the co-operative.

Net underlying earnings are the operating profit before breeding stock revaluations.

Livestock's underlying net earnings rose $2 million to $8.7 million.

The co-operative is paying fully imputed dividends for the first time, with co-operative control shareholders receiving 10.4 cents per share.

Investment shares will receive a dividend of 33.8 cents per share.

Livestock shares last traded at $3.35, close to the group's 52 week high of $3.50.

- © Fairfax NZ News