DEL Preliminary Announcement Full Year Results to 31-8-08
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Dairy Equity Limited (DEL) | 5:21 pm, Tuesday 28 October 2008 | DEL | 0.200 |
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Dairy Equity Limited Full Year Results 31-8-2008
Reporting Period 12 months to 31-8-2008
Previous Reporting Period Interim results 6 months to 29-2-2008
Amount (000s)
Revenue from ordinary activities $1582
Percentage change -52.13%
Profit (loss) from ordinary activities after tax attributable to security holder. ($1882)
Percentage change -246.91%
Net profit (loss) attributable to security holders ($1882)
Percentage change -246.91%
Final Dividend Amount per security n.a.
Comments:
Dairy Equity Limited (DEL) Annual Audited Result for the year ended 31 August 2008 (Financial Year - FY2008) is an after tax loss of $1,882,000. Operating profit of $1,033,000 was offset by a $2,606,000 reduction in the carrying value of the Company’s SWAP investments (investment in the beneficial ownership of Fonterra Fair Value Shares) as a result of a $1.22 decrease in the Fair Value Share price from $6.79 to $5.57 announced by Fonterra for the current season.
DEL stopped investing in Fonterra Fair Value Shares prior to the start of FY2008 due to concerns over the low level of returns forecast by Fonterra and uncertainty related to a review by Fonterra of its capital structure.
At its Annual Shareholder meeting in December 2007, DEL shareholders passed a resolution requesting the DEL Board to explore opportunities for the realization of its investments, with a view to returning net proceeds to shareholders.
The Company’s principal focus during the 2008 financial year has therefore been on selling assets and returning to shareholders, both un-invested cash and the proceeds of asset sales, whilst preserving shareholder value.
DEL was initially able to sell/redeem 25% of its SWAP shares (894,624 Fair Value Shares) via farmer counter parties for $6.052 million (Av.$6.76/Fair Value Share). These proceeds, together with $22.927 million of un-invested cash were returned to shareholders in two capital payments, one of $22.878 million in April 2008 and another of $6.101 million in August 2008.
This capital was returned to shareholders by way of a High Court approved scheme of arrangement in which DEL made pro rata repurchases of 57,958,720 existing DEL shares, which it then cancelled. Earlier in the year, DEL had purchased 685,000 existing DEL shares by way of an on-market buy back. These shares were also subsequently cancelled, and at the end of FY2008 there were 33,556,280 DEL shares on issue with a net tangible asset (NTA) backing of close to 41 cents/share.
Following the return of capital and prior to the end of financial year, DEL sold/redeemed a further 273,216 shares for $1.591 million. 56,957 Fonterra shares were redeemed at an average price of $6.79. Subsequent to the end of the financial year DEL sold a further 216,259 Fonterra shares back to farmer counterparties at $5.57/Fair Value Share. We are investigating how we can return these funds to shareholders without any tax impact.
In total, DEL has now sold/redeemed 1,213,084 Fonterra shares or 38.5% of the number it originally purchased. Most sales/redemptions have been as a result of transacting with farmer counterparties.
The Annual Shareholder Meeting is scheduled for 12 December and the board will provide a further update, including the future direction of the company at that time.
Company Background
DEL’s business model was based on gaining equity exposure to Fonterra Fair Value Shares by transacting with Fonterra shareholders (the farmers who supply it with milk) to acquire from them via agreements called SWAPs, the investment benefits associated with the Fair Value Shares they hold in order to supply the co-operative with milk.
Peter Jensen
Chairman
Dairy Equity Limited
For further information please contact:0274 972 551
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