LIC Half Year Financial Results

Livestock Improvement
Corporation Limited (LIC)
Interim Financial Statements
For the six months ended
30 November 2019

Livestock Improvement Corporation
Consolidated financial statements
For the six months ended 30 November 2019
In thousands of NZD
ContentsPage
Introduction1
Key results and position
Our results for the period2
Our position2
Our cash flows for the period3
Changes in our position for the period3
More details
Business analysis4
Equity and contingencies5
Other information6
Introduction
These financial statements set out the performance, position and cash flows of Livestock Improvement Corporation Limited
("LIC" or the "Company") and its subsidiaries (the "Group") for the six months ended 30 November 2019.
LIC is domiciled in New Zealand, registered under the Companies Act 1993 and the Co‐operative Companies Act 1996, and as of
1 July 2019 is listed on the Main Board of the New Zealand Stock Exchange Limited ("NZX"). LIC is an FMC Reporting Entity for
the purposes of the Financial Reporting Act 2013 and the Financial Markets Conduct Act 2013.
These financial statements comply with NZ GAAP as appropriate for Tier 1, for‐profit entities, which comply with NZ IAS 34. The
Interim Financial Statements should be read in conjunction with the annual report for the year ended 31 May 2019. The
accounting policies applied are consistent with those used in the comparative period (the six months to 30 November 2018) and
in the audited annual report for the year ended 31 May 2019‐with the exception of NZ IFRS 16: Leases, which was adopted at
the beginning of the current period: 1 June 2019. The adoption of NZ IFRS 16 increased assets and liabilities by $13.8m and
$14.5m respectively at 1 June 2019 with the difference recognised directly in retained earnings.
The functional currency of the Company and the presentation currency of the financial statements is New Zealand Dollars
("NZD").
The financial statements have been prepared on a GST exclusive basis, with the exception of trade receivables and trade
payables, which are reported inclusive of GST.
The key estimations and judgements made in preparing these financial statements are: the valuation of the Bull team; the
impairment testing of software and other intangible assets; and the valuation of an Ordinary Share in relation to the July 2018
share structure simplification. There has been no significant changes to these estimations and judgements for the six month
period to 30 November 2019.
1

Key results and position
Livestock Improvement Corporation
Consolidated financial statements
For the six months ended 30 November 2019
In thousands of NZD
STATEMENT OF RESULTS FOR THE PERIODYear to 31 May
201920182019
NoteUnauditedUnauditedAudited
Revenue1163,420161,089246,541
Purchased materials(20,053)(18,104)(36,447)
People costs(57,842)(58,180)(100,749)
Depreciation and amortisation(15,287)(13,169)(26,804)
Research and developmen
t(5,245)(5,058)(13,624)
Other expenses(21,844)(20,449)(41,653)
Net finance costs(557)(403)(336)
Bull team revaluation‐‐1,920
Fair value change in Nil Paid Share receivabl
e‐‐1,258
Profit/(loss) before tax expense42,59245,72630,106
Tax expense(12,308)(12,960)(7,936)
Profit/(loss) for the period30,28432,76622,170
Hedge revaluations(59)‐146
Investment revaluation
s(3,078)(62)3,707
Land & buildings revaluations‐‐542
(3,137)(62)4,395
Comprehensive income for the period27,14732,70426,565
Profit per Ordinary Share (excl. treasury stock)0.21$ 0.23$ 0.1
6$ 
Supplementary non‐GAAP note to the results for the period:
Profit/(loss) for the period30,28432,76622,170
Less Bull team revaluation‐‐(1,920)
Less Fair value change in Nil Paid Share receivable(1,258)
Tax effect on Bull team revaluation‐‐538
Underlying earnings30,28432,76619,530
Underlying earnings per Ordinary Share (excl. treasury stock)0.21$ 0.23$ 0.14$ 
STATEMENT OF POSITION AT PERIOD ENDYear to 31 May
201920182019
UnauditedUnauditedAudited
Cash8,5177,7234,529
Debtors80,19983,82345,254
Bull team122,728120,808122,728
Land, buildings and equipmen
t494,82476,24381,034
Software, goodwill and other intangible assets72,09974,15473,781
Nil Paid Shares Receivabl
e15,77915,47918,690
Other assets30,56230,81434,719
Total assets424,708409,044380,735
Creditors39,55926,22028,590
Borrowings22,12125,6284,661
Deferred ta
x39,45739,71040,838
Other liabilities21,38321,90215,209
Total liabilitie
s122,520113,46089,298
Share capital278,43276,44178,432
Retained earning
s2183,468180,207169,765
Other reserves240,28838,93643,240
Total equit
y302,188295,584291,437
DirectorDirector
Date: 29 January 2020Date: 29 January 2020
2

Key results and position
Livestock Improvement Corporation
Consolidated financial statements
For the six months ended 30 November 2019
In thousands of NZD
STATEMENT OF CASH FLOWS FOR THE PERIODYear to 31 May
201920182019
NoteUnauditedUnauditedAudited
Customer receipts125,760121,932247,470
Supplier payment
s(103,095)(100,619)(190,454)
Tax payments(7,882)(1,719)(2,565)
Other operating cash flows(403)(243)294
Net operating cash flows614,38019,35154,745
Software development(8,278)(9,746)(18,994)
Net sales/(purchases) of land, buildings and equipment(5,498)(7,724)(16,177)
Other investment cash flows(1,350)(1,689)(1,639)
Net investment cash flows(15,126)(19,159)(36,810)
Drawdown/(repayment) of bank debt17,5006,000(15,000)
Issue of Co‐operative Control Shares‐1,1301,130
Nil Paid Share payments3292060
Dividends paid(13,112)(2,113)(2,113)
Net financing cash flows4,7175,037(15,923)
Movement in cash for period3,9715,2292,012
Cash at beginning of the yea
r4,5292,5212,521
Currency movement on cash holdings17(27)(4)
Cash at end of the period8,5177,7234,529
STATEMENT OF CHANGES IN POSITION FOR THE PERIOD
Share capital
Retained 
earnings
Other 
reserves 
Total 
equity
Balance at 1 June 201853,126150,14138,834242,101
Profit/(loss) for the period‐32,51025632,766
Dividends paid‐(2,444)(92)(2,536)
Hedge revaluations‐‐ ‐‐
Investment revaluation
s‐‐(62)(62)
Co‐operative Control Shares converted to Ordinary Shares7,392‐‐7,392
Nil Paid Shares issued15,923‐‐15,923
Balance at 30 November 2018 (Unaudited)76,441180,20738,936295,584
Balance at 1 June 201853,126150,14138,834242,101
Profit/(loss) for the year‐22,06710322,170
Dividends paid‐(2,443)(92)(2,535)
Hedge revaluations‐‐146146
Investment revaluations‐‐3,7073,707
Land & buildings revaluation
s‐‐542542
Transfer of asset revaluations on sale7,392‐‐7,392
Investment Share repurchase
s17,914‐‐17,914
Balance at 31 May 2019 (Audited)78,432169,76543,240291,437
Balance at 1 June 201978,432169,76543,240291,437
Adjustments on adoption of NZ IFRS 16‐(702)‐(702)
Profit/(loss) for the period‐30,02825630,284
Dividends paid‐(15,623)(71)(15,694)
Hedge revaluations‐‐(59)(59)
Investment revaluation
s‐‐(3,078)(3,078)
Balance at 30 November 2019 (Unaudited)78,432183,46840,288302,188
3

More details
Livestock Improvement Corporation
Consolidated financial statements
For the six months ended 30 November 2019
In thousands of NZD
1. Business analysis
2019 
(Unaudited)
NZ market 
genetics Herd testing
Farm 
software
Farm 
automationOther EliminationsTotal
External revenue88,22213,77225,62110,05225,753‐163,420
Inter‐segment revenue‐‐‐1,575841(2,416)‐
Total revenue88,22213,77225,62111,62726,594(2,416)163,420
Depreciation & amortisation(542)(2,189)(3,783)(2,104)(6,669)‐(15,287)
Segment profit before ta
x61,3986,56415,6673,50916,139‐103,277
Bull team revaluation‐
Unallocated amounts(60,685)
Profit/(loss) before tax 42,592
2018 
(Unaudited)
NZ market 
genetics Herd testing
Farm 
software
Farm 
automationOther EliminationsTotal
External revenue89,04513,28323,19013,39622,175‐161,089
Inter‐segment revenue‐‐‐1,821693(2,514)‐
Total revenue89,04513,28323,19015,21722,868(2,514)161,089
Depreciation & amortisation(347)(1,365)(3,747)(1,835)(5,875)‐(13,169)
Segment profit before ta
x61,2626,23814,3415,27016,298‐103,409
Bull team revaluation‐
Unallocated amounts(57,683)
Profit/(loss) before tax 45,726
NZ market 
genetics Herd testing
Farm 
software
Farm 
automationOther EliminationsTotal
External revenue97,87632,81545,12719,67551,048‐246,541
Inter‐segment revenue‐‐‐2,354820(3,174)‐
Total revenue97,87632,81545,12722,02951,868(3,174)246,541
Depreciation & amortisation(731)(3,138)(7,625)(3,816)(11,494)‐(26,804)
Segment profit before tax66,74411,40628,0256,59135,262‐148,028
Bull team revaluation1,920
Unallocated amounts(119,842)
Profit/(loss) before tax 30,106
LIC's business, particularly the Parent's artificial breeding business, is highly seasonal. November results, since they incorporate the
majority of the artificial breeding revenues but not a similar proportion of total costs, are not indicative of the second half result nor,
therefore, the full year result.
The Group operates in four key operating segments as set out below. Figures in the following tables reflect information regularly
reported to the Chief Executive on those key operating segments:
‐ NZ market genetics: provides bovine genetic breeding material and related services, predominately to dairy farmers
‐ Herd testing: herd testing and animal recording for pastoral farmers
‐ 
Farm software: data recording and farm management information services 
‐ Farm automation: provides dairy automated equipment and technology
The Other segment includes international operations, diagnostics, animal health, research & development and support services.
Unallocated amounts include personnel costs, administrative and other fixed costs and net finance costs.
Year to 31 May 2019 
(Audited)
4

More details
Livestock Improvement Corporation
Consolidated financial statements
For the six months ended 30 November 2019
In thousands of NZD
2. Equity
Other reserves and equity
Hedge 
revaluation 
reserve
Investment 
revaluation 
reserve
Non‐
controlling 
interestsTotal
Balance at 1 June 2018(49)4,76633,87923838,834
Profit/(loss) for the period‐‐ ‐256256
Dividends paid‐‐ ‐(92)(92)
Revaluations‐(62)‐‐(62)
Balance at 30 November 2018 (Unaudited)(49)4,70433,87940238,936
Balance at 1 June 2018(49)4,76633,87923838,834
Profit/(loss) for the year‐‐ ‐103103
Dividends paid‐‐ ‐(92)(92)
Revaluations1463,707542‐4,395
Balance at 31 May 2019 (Audited)978,47334,42124943,240
Balance at 1 June 2019978,47334,42124943,240
Profit/(loss) for the period‐‐ ‐256
256
Dividends paid‐‐ ‐(71)(71)
Revaluations(59)(3,078)‐‐(3,137)
Balance at 30 November 2019 (Unaudited)385,39534,42143440,288
3. Contingencies
Following the approval by shareholders of the share simplification described above, a small number of shareholders elected to
exercise their minority buy‐out rights arising from the proposal under the Companies Act 1993 ("Act"). On 19 April 2018 LIC
bought back 1,334,396 Investment Shares as a result of the shareholders exercising their rights. The shares are held by LIC as
treasury stock. Those shareholders that exercised their minority buy‐out rights have objected to the price proposed by LIC, being
$4.00 per share, and the final purchase price to be paid by LIC for the affected shares will therefore be determined in an
arbitration. The $4.00 price was the relative value attributed to each investment share under the share simplification proposal
accepted by shareholders. Each investment share was reclassified into four fully paid ordinary shares with a relative value of
$1.00 per share. No provision has been made for any additional payments in these financial statements as LIC believes the price
paid was fair and reasonable and is supported by independent valuations.
During July 2018, LIC's share capital was reorganised and its constitution amended to reflect the share simplification approvals
obtained at LIC's Special Meeting of Shareholders held on 14 March 2018. As part of the reorganisation LIC's two classes of
shares were bought together into a single class of Ordinary Shares. Ordinary Shares have both voting rights and the right to
receive dividends based on the profits of the Company.
Land & building 
revaluation 
reserve
5

More details
Livestock Improvement Corporation
Consolidated financial statements
For the six months ended 30 November 2019
In thousands of NZD
4. Acquisitions and disposals
Year to 31 May
201920182019
UnauditedUnauditedAudited
(i) Land, buildings and equipment
Acquisitions *5,2387,71816,292
Disposals851451
(ii) Software and other intangible assets
Acquisitions8,0938,79019,204
Disposals‐‐82
* Excludes the impact of NZ IFRS 16: Leases which increased Land, buildings and equipment by $15.8m in 2019.
5. Transactions with related parties, directors and management
Year to 31 May
201920182019
UnauditedUnauditedAudited
Remuneration of 
key management and directors2,4372,2764,319
Sale of goods and services to key management and directors366440597
6. Reconciliation of the Profit/(loss) for the period to Net operating cashflows
Year to 31 May
201920182019
UnauditedUnauditedAudited
Profit for the period30,28432,76622,170
Adjusted for non‐cash items:
Depreciation and amortisation15,28713,16926,804
Fair value change in Nil Paid Share receivabl
e‐‐(1,920)
Working capital movements and other non‐cash items(31,191)(26,584)8,113
Net operating cash flows14,38019,35155,167
7. Audit
8. Dividend
The Group has had the following short term transactions with key management and directors during the period:
In accordance with the Financial Reporting Act 2013 these interim financial statements are not required to be audited and
therefore, in line with previous years, have not been audited.
In relation to the 2019 financial year LIC declared a dividend o
f10.98c per Ordinary Share, or $15.6 million (2018: 1.71 cents
per Investment Share, or $2.4 million).
6

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Private Bag 3016
Hamilton 3240
New Zealand

0800 651 156
www.lic.co.nz
LIC is the trading name of Livestock Improvement Corporation Limited
Results for announcement to the market
29 January 2020

LIC Half-Year Revenue Up As Farmers Invest In ‘Precision Farming’
Performance Highlights H1 2019-20:
 $163 million total revenue, up 1.4% from $161 million in the same period last year.
 $30.3 million net profit after tax (NPAT), down 7.6% from $32.8 million in the same period last year.
 $58.4 million earnings before interest, tax, depreciation and amortisation (EBITDA), down 1.5%.
 $43.1 million earnings before interest and tax (EBIT), down 6.5%.
 Underlying earnings (NPAT excl bull valuation change)* range remains forecast to be $21-25 million for year-end,
up from $19.5 million in 2018-19.
Livestock Improvement Corporation (NZX: LIC) (LIC) announces its half-year financial results for the six
months to 30 November 2019.

Total revenue was up on the same period as last year and, while NPAT, EBIT and EBITDA were down due
to timing of expenses incurred within the period, the co-op’s guidance for underlying earnings* at year-end
is still expected to be above the prior year.

LIC continues to operate a strong balance sheet with total assets including cash, software, land and
buildings and bull teams of $425 million, up from $409 million on the same period as last year. Cash flows
from operations were $14.4 million, down from $19.4 million for the same period last year.

Half year results incorporate the majority of revenues from the farmer owned co-operative’s core artificial
breeding (AB) and herd testing services, but not a similar proportion of total costs so are not indicative of
the second half, nor the full year, result. Revenue from international and technology products is also spread
through the year. No dividend is declared at half year.

Board Chair Murray King said the result was in line with market guidance reported in July and is
underpinned by the co-op achieving the milestones on its strategic roadmap, which have shaped LIC into a
modern, progressive and high performing co-op.

“This is another solid result which builds on all the work we have done in recent years to transform the
business and drive an innovation-led growth strategy to keep LIC and our farmers leading the global
pastoral dairy system.

“LIC’s strategy is built off a global understanding of the factors driving change in global dairy markets and
here in New Zealand. This is important at a time when dairy farmers need certainty and trusted partners to
help them navigate the change. It requires financial strength, high-performance and a clear focus on the
innovations needed on-farm to keep our customers’ farms competitive, profitable, sustainable and efficient.

“Data is the fuel to drive this strategy forward and we will continue to drive our access to and use of data. It
provides the insights for LIC’s herd improvement and technology innovations and to enable real-time
decision making on-farm. It also improves our ability to make the right decisions about where to invest and
where to focus our critical R&D spend,” King said.

Page 2 of 2
Precision Farming Solutions Boost Sales
King said the result was driven by a continued shift towards ‘precision farming’ with farmers investing more
in genetics and technology solutions that support them to produce more with less and drive further
improvements in efficiency and sustainability.

Sales in New Zealand during the half-year period reflected increased demand for LIC’s premium AB
products to deliver increased value on-farm, including genomic bulls, sexed semen, and genetics offerings
in A2A2, short gestation and Wagyu.

Demand for animal health and diagnostics testing also increased, with more farmers proactively monitoring
the health and wellbeing of their herd against diseases such as BVD and Johne’s, to enable early
diagnosis, treatment and to minimise production loss.

More farmers are also adopting LIC’s technology solutions including satellite pasture management service
SPACE, which continues to grow in popularity, and more farmers are making the switch to LIC’s web-based
MINDA LIVE system and MINDA app for animal recording and insights.

International markets continued to perform strongly, King said, particularly Australia, South America and
South Africa. However, the automation subsidiary business was challenged by a shortage of capital in the
market with revenue down 23% from the same period as last year.

“New Zealand dairy farmers are becoming world leaders in precision farming - they are using cost-effective,
innovative solutions to get more value on-farm and ultimately do more with less. This was also evident in
the 2018-19 Dairy Statistics with farmers achieving record milk production while cow numbers continue to
decline.

“This is good for our dairy industry’s profitability, competitiveness and reputation in global markets. It shows
our farmers are evolving with the times, and demonstrating careful stewardship of their land, their cows and
the resources they need to produce milk.

“We’re proud of the role we play to help ensure cows around the country are year-on-year healthier and
more efficient at converting grass into milk, in turn enabling farmers to reduce their environmental footprint,
and we work hard to develop and deliver solutions that make this easy for them.

“LIC has one of the highest rates of investment in Research and Development in the primary sector (5.6%
of revenue in 2018-19) and our investment decisions are critical to ensuring New Zealand dairy farmers
and our co-op can continue to lead the global pastoral dairy system into the future.”

Outlook
Underlying earnings (NPAT excl bull valuation change)
*
at year-end remains forecast to be in range of $21-
25 million, assuming no significant climate event or milk price drop takes place between now and then nor
any major impacts from M. bovis.

LIC expects underlying earnings* in 2020-21 to be in the range of $21-27 million.

ENDS
For more information and commentary about the result, visit www.halfyearinreview.lic.co.nz.

Media enquiries: Ashleigh Sattler, ashleigh.sattler@lic.co.nz, 027 617 1942
Shareholder enquiries: 0800 264 632

*Notes to Financial Information: Underlying Earnings is the company’s NPAT excluding bull valuation and nil paid share valuation movements and is considered useful
to investors as it is the basis on which LIC has historically reported and it is the basis on which LIC makes its determination of dividends. Non-GAAP financial information
does not have a standardised meaning prescribed by GAAP and therefore may not be comparable to similar financial information presented by other entities. As this is a
half-year update, the numbers relating to November 2019 have not been audited. These numbers should be all read in conjunction with the interim financial accounts.

About LIC: LIC is a farmer-owned co-operative that provides a range of services and solutions to improve the productivity and prosperity of farmers. This includes dairy
genetics, information technology, herd testing, DNA parentage verification and farm advisory services through FarmWise. Subsidiary business LIC Automation also
provides integrated automation systems and unique milk testing sensors that present real-time data while a cow is being milked. With origins dating back to 1909, LIC
has a long history of world-leading innovations for the dairy industry. Today the New Zealand-based co-operative employs more than 700 permanent staff, swelling to
2000 during the peak dairy mating season. LIC also has offices in the United Kingdom, Ireland and Australia. All LIC profit is returned to its farmer owners/shareholders
in dividends, or reinvested for new solutions, research and development. www.lic.co.nz

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Results announcement
29 January 2020

Results for announcement to the market
Name of issuer Livestock Improvement Corporation Limited
Reporting Period 6 months to 30 November 2019
Previous Reporting Period 6 months to 30 November 2018
Currency NZD

Amount (000s) Percentage change
Revenue from continuing
operations
$163,420 +1.45%
Total Revenue $163,420 +1.45%
Net profit/(loss) from
continuing operations
$30,284 -7.57%
Total net profit/(loss) $30,284 -7.57%
Interim Dividend
Amount per Quoted Equity
Security
No dividend has been declared
Imputed amount per Quoted
Equity Security
Not applicable
Record Date Not applicable
Dividend Payment Date Not applicable
Current period Prior comparable period
Net tangible assets per
Quoted Equity Security
$1.86 $1.79
A brief explanation of any of
the figures above necessary
to enable the figures to be
understood
These results reflect the highly seasonal nature of our business
activity and are not indicative of the second half, nor the full year
result. For commentary on the results, please refer to the
market statement.

The Net Tangible Assets per Quoted Equity Security excludes
LIC ordinary shares held as treasury stock and unquoted LIC Nil
Paid shares which have the same voting and dividend rights as
LIC’s quoted ordinary shares.

Authority for this announcement
Name of person

authorised
to make this announcement
Gillian Brennan
Contact person for this
announcement
Gillian Brennan
Contact phone number +64 7 856 0838
Contact email address Gillian.Brennan@lic.co.nz
Date of release through MAP

29 January 2020

Unaudited financial statements accompany this announcement.