Silver Fern Farms Limited provides the following trading update on the
current year financial indicators as projected to 31 August 2008. These
indicators are inclusive of possible restructuring costs which are yet to be
confirmed, and accordingly no profit projections are included.
Shareholder approval of the proposed investment in Silver Fern Farms by PGG
Wrightson (PGW) is being sought after financial year end, and therefore the
projections in the table below reflect current trading only and not any
prospective benefits from the PGW transaction.
Financial indicators
31 August 2008 (Projected) 31 August 2007 (actual)
Total Borrowings $230m* $330m
Gross margin (%) 20 14
Shareholders equity (%) 48 37
Return on capital (%) 10 (18)
(*This includes costs related to plant closures under Project Rightsize.)
If the transaction with PGW is approved, funds invested by PGW will be used
principally to reduce debt, but also for working capital and capital
expenditure purposes.
In addition, Silver Fern Farms will have the resources and financial
flexibility to fast-track the change programme already underway, invest in
process improvements and position the company more attractively to progress
opportunities for industry consolidation.
On a pro forma basis, Silver Fern Farms anticipates savings in funding costs
of approximately $16m per annum, or a return on capital projects that will
produce in excess of 15 percent per annum following the PGW investment.
The above financial benefits are in addition to the projected benefits of the
integrated supply chain model flowing from the integration of PGW''s livestock
procurement business with that of Silver Fern Farms. These benefits will
accrue collectively to suppliers, shareholders and Silver Fern Farms.
Additional financial details will be made available when the business case
model is approved for release, estimated to be within the next three weeks.
For further information please contact:
Keith Cooper
Chief Executive, Silver Fern Farms
64 3 477 3980
64 21 442 190
Media enquiries can also be forwarded to:
Brent Melville
Group Communications, Silver Fern Farms
64 3 474 6595
64 27 444 1322
End CA:00167048 For:SFF Type:FORECAST Time:2008-07-04:11:56:48