FY21 Half Year Report

Allied Farmers Ltd
201 Broadway, Stratford, 4332
PO Box 304, Stratford 4352
Phone: 06 765 6199
Web: www.alliedfarmers.co.nz
Email: headoffice@alliedfarmers.co.nz

26 February 2021

HALF YEAR 2021 REPORT

Half Year Result
The Directors of Allied Farmers Limited (NZX: ALF) report an unaudited after-tax profit of $0.531
million for the six months ended 31 December 2020. Pleasingly, this is higher than the previously
indicated range of $0.2 million to $0.4 million.
While ahead of budget and forecast, Allied Farmers’s pre-tax operating result in this period was
lower than the previous corresponding period ($1.18 million), with subsidiary New Zealand
Farmers Livestock’s (NZFL) result for the period significantly impacted by Covid-related pricing
impacts on veal processing returns.
As in previous years, the returns from the veal processing operations continue to be a major
contributor to first half year performance. However, investors are reminded that typically Allied
Farmers’s second half year profit is driven by factors distinct from the veal processing results that
drive first half year profit. The second half is strongly influenced by livestock trading and herd sale
activity, much of which will occur in the later part of the second half, and therefore it is not
possible to forecast full year profits based on first half performance.
While 2020 was undoubtedly a challenging year, through the dedication and creativity of our
staff, Allied Farmers starts 2021 in a strong position. For this, we thank the whole team.
Dividend

In November 2020 Allied Farmers declared a lower dividend of 1.2 cents per share fully imputed
(2 cents per share fully imputed in January 2020). This reflected that the FY20 full year result was
lower than the previous year.
Capital Raising and NZ Rural Land Management Investment

During the period Allied Farmers completed a successful oversubscribed rights issue raising
$2.976 million (less costs), the purchase of 50% of New Zealand Rural Land Management (NZRLM)
- the manager of newly NZX listed New Zealand Rural Land Company Limited (NZRLC) - through
the issue of new share capital, and an investment of 1.49% ownership in NZRLC. We were
delighted with the support from shareholders for these transactions, and with the successful IPO
of NZRLC, which was a necessary precursor to the NZRLM purchase.

Strategy

The Board is excited about the future for Allied Farmers and considers it is now very well placed
to execute on its strategy. With new capital raised and new shareholders on the register, its
investments in NZRLM and NZRLC, and shareholder approval to raise up to an additional $5
million of new capital via placements, Allied Farmers can move forward on expanding its presence
in the wider agricultural sector and on seeking agribusiness opportunities outside of its current
traditional lines of business.
In particular, and as previously indicated, the intention is to invest into the growth of our finance
subsidiary, Rural Funding SolutioNZ, to widen and improve our rural finance offering. In addition,
we continue to evaluate opportunities in the AgriTech space.
Business Update
Livestock Agency and Veal Processing
Livestock, after a slower start, finished strongly in the second quarter. The NZFL result was
dominated by well foreseen and budgeted Covid-related impacts on veal business revenues.
However, NZFL finished the half year ahead of expectations despite the challenging conditions
facing its business divisions.
The livestock agency business saw lingering drought concerns impacting trading behavior early in
the period, softer stock pricing in line with red meat schedules and pleasing market share and
tallies later in the half year. Dairy stock prices have held well to date and some movement in dairy
farm sales and forecast milk payouts bode well for herd sale volumes in the second half.
Building of the team and of market presence has continued and will be a continuing priority.
NZFL is committed to a strategy of providing a superior service to its farmer clients to assist them
to be successful in the operation of their own businesses. To this end, NZFL remains focused on
growing its livestock agency business through the recruitment of new agents, selected
development of new sale yards or access to existing yards, and a continued leadership in the NZ
live auction space.
The veal processing and trading profit was well behind prior year and very much in line with
budgeting for a severely Covid-affected year. This largely reflects foodservice impacts, skin pricing
changes, and the strengthening New Zealand dollar. Delivering a profit despite these conditions is
a pleasing result and underlines the resilience of this business.
Finance
While the livestock financing book was smaller in size than a year earlier, we are confident this
area presents good potential and is seeing effort on a range of fronts to deliver material growth
and some diversification. The provision of financing enhances NZFL’s ability to assist farmer
clients in the management of their cash flow, and credit risk is reduced by largely lending to
farmer clients with whom NZFL’s agents already have a strong relationship and understanding.
The Allied Farmers’s group financing effort was broadened during the period with the
commencement of lending by subsidiary Rural Funding SolutioNZ. Allied Farmers’s believes that
with traditional lenders continuing to show less support for New Zealand pastoral food producers,
there are significant opportunities to grow and nurture an alternative lending organization. This

will remain an area of focus for the group and will be well supported by new equity. We consider
the increased financing options will be welcomed by our customers.
Technology
The MyLiveStock web platform and app is an important part of group strategy and is valued by
clients. MyLiveStock now offers on-line bidding at each of its major yard auctions and creates
clear benefits to farmers and to the functioning of this critical market. Further development of
this platform is planned and ongoing.
NZ Rural Land Management and NZ Rural Land Company
NZRLC raised $75 million through its initial public offering (IPO) in late 2020. NZRLM, 50 percent
owned by Allied Farmers and NZRLC’s manager, is now progressing due diligence on dairy farms
in the South Island for NZRLC. While potential acquisitions were identified prior to the IPO,
extensive due diligence (e.g. irrigation reports, soil testing, etc), necessarily has taken time due to
the size of the dairy farms. NZRLC has advised its shareholders that it anticipates being in a
position to announce the terms of an acquisition in several weeks.
Outlook
The early stages of the second half of the financial year has been dry in some parts of the country
and continued disruption to the food export trade and global logistics caused by Covid-19. A
return to more normal weather patterns across the country, plus the expected future
containment of Covid-19, should support livestock trading activity. We are seeing some
encouraging in-market pricing despite the ongoing challenges and the strengthening New Zealand
dollar. Allied Farmers is certainly agile and well placed to contribute.
Allied Farmers takes much pride in working with New Zealand farmers who are vital in the global
food chain and are known for producing high quality food with care and responsibility.

Richard Perry
Chairman

---

Results for announcement to the market
Name of issuer Allied Farmers Limited
Reporting Period 6 months to 31 December 2020
Previous Reporting Period 6 months to 31 December 2019
Currency
Amount (000s) Percentage change
Revenue from continuing
operations
$13,093 -8.23%
Total Revenue $13,093 -8.23%
Net profit/(loss) from
continuing operations
$531 -55.04%
Total net profit/(loss) $531 -55.04%
Interim/Final Dividend
Amount per Quoted Equity
Security
Not proposed to pay dividends
Imputed amount per Quoted
Equity Security
N/A
Record Date N/A
Dividend Payment Date N/A
Current period Prior comparable period
Net tangible assets per
Quoted Equity Security
$0.37 $0.31
A brief explanation of any of
the figures above necessary
to enable the figures to be
understood
Refer to results release and unaudited financial statements.


Authority for this announcement
Name of person

authorised
to make this announcement
Brian Lee
Contact person for this
announcement
Brian Lee
Contact phone number 027 201 3040
Contact email address brian.lee@alliedfarmers.co.nz
Date of release through MAP

25/02/2021

Unaudited financial statements accompany this announcement.

---

Allied Farmers Group
Profit and Loss Statement
For the half year ended 31 December 2020
Unaudited
31-Dec
31-Dec
Note20202019
$000
$000
Revenue and other income
A1
13,095

14,267
Cost of sales and operating expenses
A1
(12,218)
(12,660)
Depreciation and amortisation
A1
(428)
(378)
Net interest income
B3
97
122

Profit before tax546
1,351

Income tax expense
(15)
(170)
Profit after tax 531
1,181

Profit attributable to:
Owners of the Parent
228
724

Non-controlling interests
303
457

Basic and Diluted earnings per share (cents)
0.79
4.05

Basic and Diluted earnings per share on a weighted average basis (cents)
0.98
4.05

Group
The notes to the Group financial statements from an integral part of these financial statements.
1

Allied Farmers Group
Statement of Cash Flows
For the half year ended 31 December 2020
Unaudited
31-Dec
31-Dec
2020
2019
Cash flows from/(to) operating activities$000$000
Cash receipts from customers17,708
16,131
Interest received317 509
Cash paid to suppliers and employees(16,177)
(17,442)
Interest paid
(218)
(390)
Income tax refund (paid)
322
(241)
Net cash flow from operating activities1,952

(1,433)
Cash flows from/(to) investing activities
Decrease (Increase) in finance receivables NZ Farmers Livestock Finance Ltd
(1,811)
(1,044)
Acquisition of subsidiary/investment net of cash acquired
(1,121)
-
Acquisition of intangibles, property, plant and equipment
(593)
(330)
Net cash flow from/(used in) investing activities(3,525)
(1,374)
Cash flows from/(to) financing activities
Purchase of shares in NZ Farmers Livestock Ltd
(11)
-
Drawdown of finance receivables borrowings
1,500
1,750
Drawdown of livestock trading borrowings
-
977
Drawdown of vehicle finance borrowings
393
-
Repayment livestock trading borrowings
(217)
-
Repayment of vehicle finance borrowings
(281)
(235)
Repayment of finance receivables borrowings
(1,650)
(149)
Rights Issue of shares in Allied Farmers Limited
2,706
-
Dividends paid
(419)
(585)
Net cash flow from/(used) in financing activities2,021
1,758
Net movement in cash and cash equivalents
448
(1,049)
Opening cash and cash equivalents
2,087
2,301
Closing cash and cash equivalents2,535 1,252
Reconciliation of Profit to Cash Surplus from Operating Activities
Profit for the year531

1,181

Adjustments for items not involving cash flows:
Impairment on receivables
80
-

(Profit)/loss on sale of assets
(6)
(31)
Depreciation
428
378

(Increase) Decrease in Deferred Tax
-
(34)
Other non cash items
(55)
-
447

313

Movement in trade and other receivables4,971
1,860

Movement in inventories
88
(611)
Movement in trade, other payables and employee benefits
(4,407)
(4,139)
Movement in taxation 322
(37)
Cash flow from operating activities1,952
(1,433)
Group
The notes to the Group financial statements from an integral part of these financial statements.
2

Allied Farmers Group
Balance Sheet
As at 31 December 2020
Unaudited
31-Dec30-Jun
Note
2020
2020
$000$000
Equity
Share capitalB1158,224
153,018

Accumulated Losses (148,207) (148,210)
Equity attributable to owners of the Parent10,017
4,808

Non-controlling interests1,681
1,582

Total equity11,698
6,390

Liabilities
Bank overdraft-
-
Trade and other payables7,329
11,779
Employee benefits1,017
973

Income tax payable3

-

Finance receivables bank borrowingsB2300
300

Bank borrowings and BondsB21,434
441

Lease liabilities241
454

Total current liabilities10,324
13,947
Bank borrowings and bondsB2912
2,122

Finance receivables bank borrowingsB2775
925

Lease Liabilities1,138
871

Total non-current liabilities2,825
3,918

Total liabilities13,149
17,865
Total liabilities and equity24,847
24,255
Assets
Cash and cash equivalents2,535
2,086

Trade ReceivablesC16,676
11,287
Inventories209
296

Income tax receivable-
319
Finance receivablesC15,394
3,583
Other receivables310
749

Total current assets15,124
18,320
Deferred tax assets790
790

Goodwill743
742

Intangible asset - computer software295
216

InvestmentsC23,628
7

Property - owned and leased4,267
4,180

Total non-current assets9,723
5,935

Total assets24,847
24,255
Group
The notes to the Group financial statements from an integral part of these financial statements.
3

Allied Farmers Group
Statement of Changes in Equity
For the half year ended 31 December 2020
Unaudited
Group
Share
Capital
Accumulated
losses
Parent Equity
Subtotal
Non-
Controlling
Interests
Total
$000
$000$000$000$000
Balance at 1 July 2019 153,018 (148,609)4,409 1,359
5,768

Profit after tax for the year- 767 767 451
1,218

Total comprehensive income for the year- 767 767 451
1,218

Dividends paid- (357)(357)(228)(585)
AFL Purchase Minority Shareholders Shares- (11)(11)-
(11)
Total transactions with owners- (368)(368)(228)(596)
Balance at 30 June 2020
153,018 (148,210)4,808 1,582
6,390

Balance at 1 July 2020 153,018 (148,210)4,808 1,582
6,390

Profit after tax for the period- 228 228 303
531

Total comprehensive income for the period-
228 228 303
531

Dividends paid- (215)(215)(203)(418)
AFL Purchase Minority Shareholders Shares- (11)(11)- (11)
AFL Shares issued to vendors of New Zealand Rural Land
Management Limited Partnership
2,500 - 2,500 -
2,500

Pro rata renounceable rights issue2,706 - 2,706 -
2,706

Total transactions with owners5,206 (226)4,980 (203)
4,777

Balance at 31 December 2020 158,224 (148,208)10,016 1,682
11,698
The notes to the Group financial statements from an integral part of these financial statements.
4

Allied Farmers Group
A. Financial performance
A1: How we operate and generate return for shareholders
Livestock services: An agency business facilitating sales and purchases of livestock both in saleyards and on farms.
Financial services: Providing livestock finance to farmer clients.
Parent operations: The ultimate holding company for Allied Group Investments and governance activity for the Group.
Segment information for the six months ending 31 December 2020
Livestock
Services
Financial
Services
Parent
Operations
Total
Commission and fee income6,128
-
- 6,128
Sale of goods6,922 -

- 6,922
Interest income77 239 -
316
Other Income45 - - 45
Total Income
13,172 239 - 13,411
Cost of goods sold6,126
-
- 6,126
Personnel expenses3,962 23
47 4,032
Depreciation and amortisation428 - - 428
Rental and operating leases3 - - 3
Other operating expenses1,786 42
229
2,057
Total Expenses
12,305 65 276 12,646
Finance Costs
(93)(89)(37)(219)
Profit/(loss) before tax
774 85 (313)546
Income tax (expense) / benefit(15)
Profit/(loss) after tax531
Current Assets12,418 1,575 1,131 15,124
Non Current Assets9,623 100
-9,723
Assets22,041
1,675 1,131
24,847
Current Liabilities7,876 2,107 341 10,324
Non Current Liabilities1,050 775
1,000
2,825
Liabilities8,926 2,882 1,341 13,149
Segment information for the six months ending 31 December 2019
Livestock
services
Financial
Services
Parent
Operations
Total
$000
$000$000 $000
Commission and fee income6,358 -
- 6,358
Sale of goods7,839 - - 7,839
Interest income128 249 4
381
Other Income70 - - 70
Total Income
14,395 249
4
14,648
Cost of goods sold6,215 - - 6,215
Personnel expenses
3,912

19
47 3,978
Depreciation and amortisation378 -
- 378
Rental and operating leases - -
1

1
Other operating expenses2,073 46
347 2,466
Total Expenses
12,578 65

395
13,038
Finance Costs
(143)(79)(37)(259)
Profit/(loss) before tax
1,674 105
(428)1,351
Income tax (expense) / benefit
(170)
Profit/(loss) after tax(70)1,181
Current Assets12,6293,350
2,341 18,320
Non Current Assets5,835100 -5,935
Assets18,464 3,450 2,341 24,255
Current Liabilities10,3113,520 116 13,947
Non Current Liabilities1,8681,050
1,000 3,918
Liabilities12,1794,5701,116 17,865
Group
Group
5

Allied Farmers Group
B. Funding
In this section
B1 Capital management
B1Share Capital
Note
Dec-20
Jun-20
Share capital ($000) 158,224
153,018
Number of shares issued and fully paid (000's)
Balance at beginning of year
17,855
178,547
Consolidation/Cancellation of shares
-
(160,692)
Issue of ordinary shares
C2
4,463
-
Pro rata renounceable rights issue
5,952
-
Balance at end of period
28,270
17,855
All ordinary shares rank equally as to voting, dividends and distribution of capital on liquidation.
B2 Debt funding
Payable within 1
year
Payable after 1
year
Undrawn Interest rate
$000$000$000
Finance receivables bank borrowings
300 775 - 4.35%
Bank borrowings
434 912 - 4.35%
Bonds
1,000 - - 7.30%
Total debt funding
1,734 1,687 -
Finance receivables bank borrowings
300 925 - 4.35%
Bank borrowings
441 1,122 - 4.35%
Bonds
- 1,000 - 7.30%
Total debt funding
741 3,047 -
B3 Net Interest income/(costs)
Dec-20
Dec-19
$000
$000
Interest received
316
381
Total interest income
316
381
Interest paid on borrowings
(105)
(128)
Interest paid on bonds
(37)
(37)
Lease costs
(77)
(94)
Total interest expenses
(219)
(259)
Net Interest income/(costs) 97 122
The Allied Group's capital includes share capital, accumulated losses and non controlling interests.
The Board manages the capital structure and makes adjustments to it in light of changes in economic conditions and the risk characteristics of the
On 24 December 2020 Allied Farmers Limited completed a one for three pro rata renounceable rights issue. Shareholders received one
ordinary share for every three ordinary shares held at 5pm on the closing date of 18 December 2020. As a result of the renounceable rights
issue the number of shares was increased by 5,951,576.
On 18 December 2020 Allied Farmers Limited purchased a 50 percent interest in NZ Rural Land Management Partnership (NZRLM). Refer also
Note C2. The NZRLM acquisition price paid was 5 million ALF shares in two tranches the first being 4,463,682 shares issued on 18 December
2020 and the second 536,318 shares issued on 14 January 2021. Therefore the number of shares on issue increased from 27,270,116 shares
to 28,806,434 shares on 14 January 2021.
This section explains how the Allied Group manages its various funding sources including capital structure and debt.
Jun-20
Dec-20
Group
Group
6

Allied Farmers Group
C. Our receivables, other assets and other payables
C1
Receivables
Dec-20Jun-20
6 Months12 Months
$000 $000
Receivables from livestock sales6,676 11,287
Finance receivables5,394 3,583
Total receivables12,070
14,870
Amounts are stated at carrying value, net of credit loss allowance
provisions
145 115
Receivables written off during the period-
52
The status of receivables at the reporting date is as follows:
Group receivables
Not yet due
1 - 30 days
overdue
31 - 60 days
overdue
Over 60 days
overdue
Total
$000
$000 $000$000$000
Receivables from livestock sales
5,318 1,051 131 261 6,761
Credit loss allowance (livestock)
-
- -
(85)(85)
Finance receivables
5,342
56 2 54 5,454
Credit loss allowance (finance)
- - - (60)(60)
Net receivable
10,660 1,107 133 170 12,070
Receivables from livestock sales
9,661 791 240 665 11,357
Credit loss allowance (livestock)
-
- - (70)(70)
Finance receivables
3,558 - 19 51 3,628
Credit loss allowance (finance)
- - - (45)(45)
Net receivable
13,219 791 259 601 14,870
C2
Investments
New Zealand Rural Land Company Limited
In December 2020 Allied Farmers Limited acquired 900,000 shares at an issue price of $1.25 per share in New Zealand Rural Land Company Limited for a
total cost of $1,125,000. This holding represented a 1.49% ownership in New Zealand Rural Land Company Limited as at 31 December 2020. These shares
are equity investments, quoted in the active market, which the Group has elected to designate as a financial asset at fair value through other comprehensive
income (FVOCI). The fair value of these shares as at 31 December 2020 is consistent with their carrying value and accordingly no adjustment to Other
Comprehensive Income is considered necessary.
On 18 December 2020 Allied Farmers Limited purchased a 50 percent interest in NZ Rural Land Management Partnership (NZRLM). NZRLM is the external
manager of The NZ Rural Land Company Limited (NZRLC) which listed on the NZX on Monday 21 December 2020. The NZRLM acquisition price paid was 5
million ALF shares at NZ$0.50 cents per share (cps) representing a total cost of $2,500,000. The Group applies NZ IFRS 11 to all joint arrangements. Under
NZ IFRS 11 investments in joint arrangements are classified as either joint operations or joint ventures depending on the contractual rights and obligations of
each investor. The Group has assessed the nature of this joint arrangements to be a joint venture. As a joint venture , the Group applies the equity method of
accounting. Under the equity method the investment is initially recognised at cost, and the carrying amount is increased or decreased to recognise the
investors share of the profit or loss of the investee after the date of acquisition.
Key Judgement
The loss allowances for receivables are based on assumptions about risk of default and expected loss rates. The Group uses judgement in making these
assumptions and selecting the inputs to the impairment calculation, based on the Group's past history and existing market conditions, as well as forward-
looking estimates at the end of each reporting period.
Group
Jun-20
Dec-20
Measurement and recognition
Receivables from livestock sales and Finance Receivables are measured on initial recognition at fair value, and are subsequently carried at amortised cost,
less provision for expected credit losses.
For Receivables from livestock sales, the provision for expected credit losses is based on the simplified approach, as permitted by NZ IFRS 9, and records the
loss allowances as lifetime expected credit losses from recognition. These are the expected credit losses that result from all possible default events over the
life of the financial instrument.
Finance Receivables are reviewed on an individual basis to determine whether any amounts are unrecoverable and an expected credit loss provision is
recorded. The expected credit losses are based on management's assessment of amounts considered uncollectible for specific customers based on age of
debt, history of payments, account activity, current and future economic factors and other relevant information. Debts known to be uncollectable are written-off
as bad debts to the profit and loss when identified.
7

Allied Farmers Group
D. Group Structure
D1
Subsidiaries2021
2020
Ownership
interest
Ownership
interest
Operating Subsidiaries of the Parent
Allied Farmers (New Zealand) Limited
Investment
100%
100%
Allied Farmers Rural Limited
Investment
100%
100%
Rural Land Management50%N/A
Rural Funding Solutionz Limited
Finance
100%
100%
Subsidiaries of Allied Farmers Rural Limited
NZ Farmers Livestock Limited
Livestock Agency and Finance
67%
67%
Subsidiaries of NZ Farmers Livestock Limited
Farmers Meat Exports Limited
Meat Processing and Trading
100%
100%
NZ Farmers Livestock Finance Ltd
Livestock Finance
100%
100%
Redshaw Livestock Limited
Livestock Agency
52%
52%
E. Other
E1
Related parties
Directors and key management personnel and their related parties
Dec-20Dec-19
6 Months6 Months
Transactions
$000 $000
Livestock sales
193
236
Livestock purchases
114
422
Commission revenue
6
22
Consultant Fees
58

10
Dividends received as minority shareholders of NZFL
119
132
Bonds on issue (holder Mark Benseman retired as a Director on 19 November 2020)
-
600
No debts with key management personnel were written off during the year (2019:nil).
E2Events Subsequent to Balance Date
About this report
Statement of compliance and basis of preparation
The financial statements have been prepared:
-
-
-presented on the basis of historical cost; and
-
The fair value of financial assets and liabilities approximates their carrying value.
The accounting policies have been consistently applied to the periods in these financial statements.
All companies within the Group are incorporated in and have their principal place of business in New Zealand, and have a balance date of 30
June.
New Zealand Rural Land Management Limited Partnership
Group
Allied Farmers Limited and Allied Farmers Rural Limited during the period has lent surplus funds to its subsidiary NZ Farmers Livestock Limited on commercial
terms set at arms length, these funds being on call and interest bearing at a rate comparable to the bank facilities. As at 31 December 2020 the total of these
funds lent to NZ Farmers Livestock Limited was $1.5 million (December 2019 $1.66 million).
The Group has a related party relationship with each of its subsidiary companies outlined in Section D. The Group has a related party relationship with its
directors and key management personnel.
A fully imputed dividend of $0.012 per share (2020:$0.02) was paid to eligible shareholders on 15 January 2021.
on the basis of going concern. The directors, having considered projected future performance and the availability of financing, consider the going concern basis to be
appropriate; and
in New Zealand dollars, with all values rounded to the nearest thousand dollars unless otherwise stated.
In preparing the Group financial statements, all material intragroup transactions, balances, income and expenses have been eliminated. Subsidiaries are consolidated on the date
on which control is obtained to the date on which control is lost.
Allied Farmers Limited is a for-profit entity domiciled in New Zealand and registered under the Companies Act 1993. The company is an FMC Entity in terms of the Financial
Markets Conduct Act 2013 and prepares its financial statements in accordance with that Act, the Financial Reporting Act 2013, and NZX Main Board Listing Rules.
The consolidated financial statements are for Allied Farmers Limited and its subsidiaries (together referred to as "Allied") and Allied's interests in associates as at end of the six
months ended 31 December 2020.
These Consolidated Financial Statements ("Financial Statements") have been approved for issue by the Board of Directors on 26th February 2021.
in accordance with Generally Accepted Accounting Practice (GAAP) in New Zealand and comply with International Financial Reporting Standards (IFRS) and the New
Zealand equivalents to IFRS (NZ IFRS) and other applicable financial reporting standards, as appropriate for a Tier 1 for-profit entity;
8