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Allied Farmers Announces Profit

27 February 2008

Allied Farmers Announces $2.4 Million For The Half-Year

Allied Farmers Ltd Chairman, John Loughlin today announced that the company had made an unaudited half yearly pre tax profit of $2.4 million for the half year ended 31 December 2007. This is the first time the company has reported under International Financial Reporting Standards and the result compared to a profit of $1.4 million on a like for like basis for the half year ended 31 December 2006.

The operating businesses of Allied Nationwide Finance and Allied Farmers Rural division made a combined profit of $5.7 million before tax, parent company costs and parent company interest. Parent Company interest costs have increased by $1.1 million. This reflects the acquisition cost of Nationwide Finance Limited.

The Allied Farmers Group CEO, David Bale, said “this was a significant improvement on previous half yearly results. The Rural division had produced 24% improvement on the back of better return in the dairy industry.”
He further commented “the Finance company traded well for the first half of the year. The turmoil in the NZ finance industry and the global credit crunch has put pressure on the reinvestment rates over this period. Thus, it is pleasing that Allied Nationwide Finance Limited had made an audited half yearly profit of $3.4 million before tax”.

He said “that the summarised audited half yearly accounts for Allied Nationwide Finance Limited will be made available to the NZX and from ANF and Allied Farmers websites. A copy will be sent to all debenture holders.”

The audited accounts show ANF had $41 million in the bank at 31 December and this remains the case today.

”The Board decided to maintain extremely high levels of liquidity in ANF over the last six months. This has had an earnings cost in excess of $0.5 million in the first half and a similar cost is likely in the second half. There had been a conscious decision to trade off short-run profitability in favour of absolute depositor security and longer term positioning in the sector.”

The profit included $0.8 million one off gains from asset sales that approximately matched the $0.5 million one off costs of business integration and change in the same period.

Mr Bale noted that “during the first half the company launched its Mylivestock website for national livestock trading and recruited its first staff for its South Island livestock operation. These are very significant developments for the future.”

Mr Loughlin said “the Board is very pleased with the way that management and staff have taken the opportunity in the Rural business and professionally dealt with the challenges in the Finance sector. Mr Loughlin said “that the next six monthly results would reflect the negative interest margin on the high cash holdings and could be affected by the reinvestment rate in the Finance company. Excellent groundwork had been laid for a strong second half in the Rural Division, but this could be softened by the effect of the drought in the Waikato and extremely dry conditions in Taranaki.

The indication is that the Group will produce a pre-tax profit of $6.0 million for the full year.

This is $1 million below the guidance provided to NZX approximately 9 months ago”
In view of the fact that this forecast is almost $10m ahead of last year’s result, the Directors have decided to pay a 2.5 cent per share fully imputed quarterly dividend on 15 June 2008. It is the intention to institute a program of quarterly dividends to be paid on 15 September, 15 December and 15 March.


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