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IN PERSPECTIVE A REVIEW OF THE 2009 FINANCIAL YEAR

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our market-led strategy We are linking customers to farmers via long term contract supply pricing options. We are committed to a suite of technological innovations and we are investing in a unique new brand – a brand that we believe will influence red meat consumer buying habits throughout our markets. It’s all part of our vision: to be a fully integrated market-led company investing in consumer products that will differentiate and add value to our farmer partners, our customers and our people.

CONTENTS 2 11 12 13

Chairman and Chief Executive Review Income Statement Balance Sheet Five Year Historical Summary

ANNUAL MEETING OF SHAREHOLDERS The 2009 Annual Meeting of Silver Fern Farms Limited Shareholders will be held on Wednesday, 27 January 2010. The Notice of Annual Meeting will be provided separately to Shareholders.


THE 2009 FINANCIAL YEAR WILL BE RECORDED AS A WATERSHED YEAR FOR YOUR COMPANY, DURING WHICH WE MADE SUBSTANTIAL PROGRESS IN OUR TRANSFORMATION FROM A TRADITIONAL MEAT PROCESSOR/ SALES ORIENTED CO-OPERATIVE TO A MARKET-LED FOOD COMPANY.

1


chairman and chief executive review

Eoin Garden Chairman

Keith Cooper Chief Executive

The need to invest in longer term value adding strategies is imperative if we are to position our company for the unprecedented global demand for red meat protein predicted immediately following recovery of the current global economic crisis. Under our plate to pasture strategy, Silver Fern Farms has this year: • Launched the Silver Fern Farms brand locally and internationally • Established the Backbone® contract procurement programme and developed a number of market based procurement contracts • Invested in innovation, technology and R&D projects including X-ray carcase analysis, robotics and radio frequency identification (RFID) • Recruited key marketing personnel to develop the in-market strategy • Formed joint ventures into non-core businesses, including: • rendering through Farm Brands Limited • Livestock Logistics, a joint venture to create a more efficient transport model • Integrated supply chains between farmers and large customers to deliver specific genetics and product type. The past trading year has been dominated by the global credit crunch, widespread recession in the majority of New Zealand’s key markets and a highly volatile New Zealand dollar exchange rate. Reflecting this trading environment, your company recorded a net operating profit before tax of $43.4 million, from total income of $2,015 million. In line with our focus on strengthening the balance sheet, total borrowings were reduced by $57.7 million to $184.5 million. This includes the SFF020 Bonds repayment of $50 million during March 2009. However it should be noted this result included a one off gain from the settlement with PGW of $37 million and other minor one off items, to deliver an actual operating profit of $5.1 million. Rebates In view of the economic environment and the company’s recent focus on recapitalisation of the business, the directors have resolved that no shareholder distributions would be paid for the year ended August 2009. Whilst this will be disappointing, your directors believe it is prudent financial management and distributions should be looked at over the long term and not at each year in isolation. Capital restructuring On 30 July 2009 Silver Fern Farms’ shareholders voted in favour of constitutional changes which endorse the need to align the company’s capital and governance structure in support of our long term strategy, designed to ensure the co-operative’s longevity for future generations of New Zealand farmers. The approval of a new Constitution means that Silver Fern Farms now has the ability to introduce a modern capital structure which not only protects the company, but gives shareholders increased benefits over past structures. Clear benefits for your company include: • The new performance premium pools system • Removal of redemption risk • An enhanced governance structure, allowing for skills based governance, not restricted by wards or occupation • Flexibility to raise capital if and when required in the future. Exchange Offer A total of 5,787 shareholders, holding 42.9 million shares and representing 75% of the total 57.5 million shares eligible for exchange, participated in the offer which closed on 9 October 2009. Shareholders elected to subscribe for a further 22.2 million shares under the associated rights offer. The results reflect a high level of positive shareholder engagement with the new structure of their company.

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Equity Ratio

Total debt 350

$334.1m

300

60% 55

$242.2m

250

$184.5m

200

45

150

40

100

35

50

30

0

2007

2008

2009

52.4%

50 41.3% 35.2%

25

2007

2008

2009

Project Optimal The Capital Restructuring, last year’s Project Rightsize and the proposed PGG Wrightson Partnership were all major business events in their own right, requiring significant Board and management focus and resources. Despite those significant events, the need for best practice, at both governance and management level, is ever present. Launched at the end of the 2009 financial year, ‘Project Optimal’ is focused on testing all parts of the current business model to ensure optimal efficiencies. The project is targeted at a number of core business areas: • Procurement • Marketing • Operations • Freight optimisation. The aim is to interrogate the way in which we do things, to ensure right resources are in place per business unit, while streamlining overheads and maximising margins to the benefit of our shareholders. The Supply Model For 2009 the Backbone® programme has been simplified into two cornerstone programmes: • The Backbone® Committed Supplier Programme, providing suppliers with certainty of processing space, access to additional supplier premiums and flexibility • The Backbone® Integrated Value Chain Programme, offering certainty on prices for livestock and linking supplier partners directly to a group of key global customers, with supply into a strengthened customer programme. Backbone® Partnership Club As part of its integrated value chain offering, Silver Fern Farms has established a new partnership between key suppliers and a select group of retail and food service customers. This partnership will provide our farmers with specific information about the retail partners within the programme, enabling our farmer partners to grow livestock that meets the exact customer specification and delivery periods, provides rewards for meeting those criteria and allows a collective approach to maintain both consistency and continuity of supply. Performance Premium Pools Farmer suppliers who wish to access premium prices for livestock may continue to participate in the marketing rebate scheme, which is now targeted at specific supply criteria as per Silver Fern Farms’ Backbone® supply programme. A key aspect of these ‘Performance Premium Pools’ is that participants will no longer be compelled to subscribe for shares in Silver Fern Farms using the proceeds of their rebates. Rather, eligibility to participate in the Marketing Rebate System will be determined based on the number of Rebate Shares, Supplier Investment Shares, and Ordinary Shares that are held. A supplier wishing to participate in a Performance Premium Pool must hold Ordinary Shares, Supplier Investment Shares, or Rebate Shares (in any combination) in a ratio of eight shares for each Production Equivalent (‘PE’) for the first 5,000 PEs and thereafter three shares for every subsequent PE up to a maximum requirement of 100,000 shares. Performance Premium Pools reflect market returns dependent upon: • Proportion of stock supplied meeting quality specification weights and grades • Meeting Backbone® committed supply plan numbers • Quality attributes determined by X-ray carcase analysis • Other specific market related criteria as per customer requirements. Meatpro As part of enhancing service levels to its supplier partners, Silver Fern Farms has recently installed Meatpro, a new back office system which co-ordinates livestock supply, kill sheet analysis, supplier payment and supplier management information, and integrates those functions with product inventory and sales information. This is an integrated financial solution for Silver Fern Farms and its suppliers, and will serve to significantly streamline administrative processes. As part of the change, all livestock payments have moved to a 14-day turnaround from kill date.

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LAUNCH OF BRANDED CONSUMER PRODUCTS

A cut you’d expect in a Restaurant (at a price you’d expect in a Supermarket)

As of November 2009 Silver Fern Farms’ branded consumer products for lamb and venison will be available at leading supermarkets throughout New Zealand and in international markets. In early October France’s biggest retail co-operative, Intermarché, rolled out a range of chilled, consumer ready Silver Fern™ branded lamb leg roasts, boneless rumps, French racks and lamb stir fry into their retail meat cabinets. This level of New Zealand branded product entry into supermarket shelf space is a first for France. As an endorsement to the launch, All Blacks® Ma’a Nonu, Tony Woodcock and Andrew Hore were part of the marketing launch. TOP: A selection of the new retail packs that are now available at selected supermarkets throughout New Zealand. ABOVE: The recent launch at Intermarché with All Blacks® Ma’a Nonu, Tony Woodcock and Andrew Hore received wide international coverage.

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MARKET OUTLOOK LAMB AND MUTTON

The global economic crisis had a significant impact on importer activity as uncertainty surrounded many market sectors. Hardest hit have been the high-end restaurant trade and tourism industries as consumers reduce their spending. Lamb products are an integral part of these two sectors and sales have been impacted as importers have adopted more conservative purchasing programmes. Despite the uncertainty, shipping flows have kept pace with seasonal production ensuring stocks, both in New Zealand and in-market, have been managed at low levels. Market signals suggest that lamb stocks at season’s end are low, setting a positive scene for the commencement of the 2009/10 season. Chilled retail growth continued during the 2008/09 season with programme expansions by our major retail partners. This business continues to develop year on year improving carcase returns back to New Zealand due to the premium for chilled over most frozen market prices. While we see continued increases in chilled volumes moving into 2010, lamb prices are at historically high levels in most markets in spite of the global economic crisis. Opportunities to lift retail prices further will be limited against a highly competitive retail environment and reductions in prices of most competing proteins. New Zealand will fully utilise its European Quota again this year, despite some early year uncertainty. With the 15% lamb slaughter reduction in 2009, and attendant lower lamb availability, a greater range of lamb cuts plus some quantities of mutton carried over from the higher 2008 slaughter were utilised to fulfil quota this year, providing increased overall returns. The 2010 season lamb forecasts from Meat and Wool New Zealand Economic Service suggest a further 2.2% drop in lamb production which will further tighten lamb availability and should keep demand firm. However with market prices at historical highs and with lamb continuing to be highly priced against other proteins, value extraction for lamb requires strategic direction. We are confident that our “plate to pasture� strategy will continue to develop consumer focused products that will return additional value to our farmer partners. The main negative impact is the volatility of the New Zealand dollar against all major currencies. Approximately 75% of the increased lamb returns for 2009 were as a result of currency gains, which have been largely eroded in the last two months of the slaughter season. Continued New Zealand dollar strength would have an unfortunate and significant impact on our returns and therefore farmer payments in the 2010 season.

Importer

Retailer

Processor (including seafreight)

21%

12.5%

2.5% 45%

19%

Packer

Farmer

AVERAGE COST COMPONENT OF LAMB RETAIL PRICE INTO STORE (UK) Calculated on chilled cuts destined for retail $115

110 105 100 95 90 85 80 75 70 Sep

Oct

Nov

Dec

Jan

Feb

Mar

Apr

May

Jun

Jul

Aug

2009 LAMB PURCHASE PRICES PER HEAD Average prices for schedule only

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MARKET OUTLOOK BEEF

The New Zealand beef industry has been affected through 2009 by the ongoing negative recessionary sentiments. The downturn in tourism, of between 30 – 40% in some of our major markets has seriously impacted the food service hotel / restaurant sector, particularly for higher valued cuts. At the same time demand for manufacturing beef used in burgers remains steady to slightly firmer. The US market this year was dominated by a low domestic market price, dairy herd culls and general poor demand. Despite a small increase in overall imported beef entering the US the main focus for processors was the abundant and cheap supply of US domestic lean beef. This was supported by an increase of approximately 30% or 190,000 head of manufacturing cows from the dairy industry retrenchment. Currency, of course, is a key influence on the beef industry as not only does it affect the NZD net returns but also influences the global flow of New Zealand beef exports. There is also a concern that South American countries are making great progress in gaining access to markets that have traditionally been closed to them. Whilst tonnages from South America are forecast to be lower through 2010, low production costs will continue to see their beef very competitively priced. The Middle East has not escaped the effects of the recession and markets such as Dubai are under pressure particularly from the tourist and food service sector. In Taiwan, Japan and Korea all buyers are concentrating on reducing inventory levels and forward orders have been reduced accordingly. Silver Fern Farms and its supplier partners must therefore continue to focus on the quality of our grass fed beef. We must promote and preserve the global perception that we are established as world leaders in food safety to protect health conscious consumers.

Wholesale

Foodservice / Retail

14%

31%

39% 16%

Ingredient

Grinding

SILVER FERN FARMS’ STEER MARKETS for the year ended 31 August 2009

$950

900 850 800 750 700 650 600 550 500 Sep

Oct

Nov

Dec

Jan

Feb

Mar

Apr

May

2009 STEER PURCHASE PRICES PER HEAD Average prices for schedule only

6

Jun

Jul

Aug


MARKET OUTLOOK VENISON

The past 12 months have reflected the impacts of the economic crisis on key venison markets. However with the weaker exchange rates through much of the year, particularly against the Euro, and also the above-average market prices, average schedules were the highest on record. Dry conditions and relatively large kills in early 2008, saw reduced production of chilled venison for the traditional Northern Hemisphere game season (July to early November 2008) by 31%, from the previous year. Whilst normally this would have created issues, the arrival of the global economic crisis brought consumer resistance to the high venison prices and the resulting lower demand balanced the reduced supply. Higher value frozen items, aimed at mid to top-tier restaurants, also slowed in demand, which led to a carry over into the 2009 year. Lower value items are still in firm demand, and this looks set to continue as processing numbers further decline. From 480,000 in the 2008/9 year, production in the coming 12 months is expected to be between 350,000 – 400,000 head. This is approximately two thirds of the 2007 production level, and will continue to impact market dynamics. For the coming year, there is caution as key markets remain in recession, with many customers impacted by current market and economic conditions. Silver Fern Farms supports initiatives that focus on improved farmer returns. Accordingly on your behalf we are supporting Johne’s disease research with a voluntary levy of $1 per head. For the sake of transparency we are deducting this on your purchase invoices as opposed to deducting within schedule calculations.

Austria

USA

Italy

UK

Others

3% 1% 4%

Germany

9% 35%

10% 5% 6% 10%

Switzerland

Netherland

3%

14%

France

Sweden

Belgium

SILVER FERN FARMS’ VENISON MARKETS for the year ended 31 August 2009

$490

480 470 460 450 440 430 420 410 400 Sep

Oct

Nov

Dec

Jan

Feb

Mar

Apr

May

Jun

Jul

Aug

2009 HIND PURCHASE PRICES PER HEAD – excludes feral Average prices for schedule only

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MARKET OUTLOOK CO-PRODUCTS

Hides – The collapse of hide prices in September 2008, closely followed by the financial crisis which saw reduced credit limits for tanners resulted in the worst market conditions ever experienced by the industry. Whilst CIF prices fell to 50% of July 2008 prices, the market has now rebounded by 25% during October 2009 and the outlook is for stability and slightly increased prices during 2010. Skins – A sharp slump in October 2008 due to the financial crisis in the USA, was followed in February 2009 by greater stability as the Indian market emerged as a new supplier of leather garments to Europe. Stable prices have continued through to August 2009 and the outlook is for this to continue through 2010. Casings – Prices for natural casings increased by 45% in USD terms since October 2007 and shortages of supply have occurred during 2009 due to significant reduction in the New Zealand lamb kill. Added to this the significant improvement of the Euro against the USD also presented European casings distributors with a major advantage over their US competitors. Demand for natural casings is expected to be firm into 2010, however the use of synthetic casings is certainly increasing in the cheaper segment of the market as natural casings become more expensive. Tallow – As with most commodities there is expected to be good demand from China for tallow for the 2009/2010 season. Industry Good International Sheepmeat Forum The International Sheepmeat Forum for Producers and Industry was held in Brussels in early October. Meat & Wool New Zealand (M&WNZ), as a key organiser along with COPA-COGECA, UECBV, the European Meat Processing and Trading Union and Meat and Livestock Australia aimed to bring together the world’s sheepmeat producers to address common issues. Key conclusions of the forum were clearly aligned with Silver Fern Farms’ ‘plate to pasture’ strategy, serving to endorse our own initiatives and commercial direction across: • Improved efficiency: new technology, ongoing investment in R&D and exchange and transfer of knowledge. Specifically the forum acknowledged the need for greater cooperation across different parts of the supply chain, and opportunities to capture the benefits of year round supply. • The environment: from genetic selection, animal feed adaptation and efficiency, usage of by-products for energy production. The forum also encourages the adoption of new methodologies/technologies that increase productivity with a lower emission footprint. • The consumer: recognised there is a need to focus on: •

New customers and market segments

Capturing the younger generation

Muslim markets

Trends for boneless meal solutions

Development of new products to fit convenience needs

Enhanced enjoyment of cooking and recognition of healthy benefits

Educating consumers about a product’s attributes and how to use it

Partnership with retailers with better pack presentation and training.

Silver Fern Farms would lend support to the creation of the “International Lamb Meat Task Force” as a starting point for promoting cooperation, recommendations and designing common and global strategies aimed at increasing lamb consumption around the world. Meat & Wool New Zealand As an international exporter and marketer of meat products regularly working in partnership with M&WNZ, Silver Fern Farms believes M&WNZ plays a vital role in the pastoral sector. We support beef marketing programmes in North Asia, and can endorse the value M&WNZ staff in Korea, China and Japan have added to both generic and joint-venture marketing programmes in these regions. We have also enjoyed good support from M&WNZ for our marketing initiatives in the Middle East, North America and Germany, promoting lamb and beef. M&WNZ brings meat marketing companies together, providing a more consultative approach to global market activities, which will be further enhanced with leveraged models with industry to grow in-market investment.

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New man-made wetlands at Shannon provide a ‘natural’ solution to effluent treatment.

National Animal Identification and Tracing (NAIT) NAIT aims to provide New Zealand livestock owners, processors and government with timely and quality information on the current location, movement history and other key attributes associated with livestock. The industry remains strongly supportive of this initiative, particularly given the sentiment of large international customers towards improved traceability and food security. For New Zealand, the days of competitive advantage solely on the basis of price are over. Rather, we are competing on the same footing as a host of other global protein producers, so it is important that our product upholds not only the promise of quality, but also key measures such as bio-security, on-farm traceability and management systems. These are the true measures of NAIT’s worth to the industry NAIT TIMELINE NOV.

2010 Cabinet Approval sought

JULY

2011 Design & build system Voluntary use & beta testing

JULY

2012 Mandated for cattle

Mandated for deer

The Environment Silver Fern Farms appointed a Group Environmental Manager during the financial year, whose role is to manage group-wide initiatives which will enable the company to adhere to the many regulatory elements of compliance, respect the growing customer expectations and apply our own environmental disciplines implicit in a company of this size. Environmental initiatives during 2009 were largely focused on improving our operational impacts on the environment, and included: • Commissioning of the award winning bio-fuel boiler at Finegand with EFI. The boiler ensures the highest standards of waste treatment are maintained and it is expected to reduce coal use at the plant by 1,300 tonnes a year and cut carbon dioxide emissions by more than 2,000 tonnes annually • Use of an artificial wetlands at Shannon and Te Aroha, to ‘polish’ surface run off effluent from land based effluent treatment sites • The introduction of riparian ‘buffer zones’ at these sites to allow endemic vegetation to grow, also improving the quality of surface water run-off • Use of commercial crops such as grass, lucerne and a hemp trial, to remove nutrients from land-based effluent treatment sites at Fairton, Takapau and Pareora. The latter site is also trialling a land filtration trench whereby effluent moves into the underlying soil profile providing a natural filtering and treatment activity before reaching the sea nearby for further natural filtration. Innovation Silver Fern Farms continues to set new standards for industry innovation and technology development. The company also plays a leadership role in the New Zealand meat industry to support industry-wide developments, including ‘Ovine Automation Limited’ – an R&D consortium including most New Zealand meat companies – which is investigating automation opportunities for sheep slaughter.

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X-ray grading – placing value on carcases and improving decision making through processing and information back to breeders.

Market Value Traceability System: As part of the company’s commitment to traceability, quality and innovation, it was announced during the financial year that Robotic Technologies Limited (RTL) – a joint venture between Silver Fern Farms and Scott Technology – has developed the world’s first X-ray grading system for lamb processing. This ‘Market Value Traceability System’ (MVTS), is being rolled out at all of the company’s sheep and lamb plants, as an important measure of quality and value. Information on yield is used to capture maximum value of carcases by using technology to make cutting decisions which optimise the size and shape of muscles to best suit customer requirements. Accurate yield information by cut will also enable better data to be reported to suppliers, helping on-farm improvements in animal productivity. The X-ray process also identifies optimal cutting points for the commercialised RTL automated carcase cutting machine and considerably improves the throughput and efficiency of our processing rooms. Traceability: RFID product tracking systems are currently being introduced at our plants from slaughter through to boning. Not only will these provide traceability to meet customer requirements, but gains are expected in boning yields and plant productivity. Human Resources Change within the business has been ongoing throughout the year and has presented a number of challenges. Our ability to recognise the need to change followed by the determination to implement is a key factor in having a successful business. Our ‘people focus’ has been to continue to develop a sense of accountability for areas of responsibility through empowered leadership and the use of a variety of people management tools. These tools provide a strong foundation to meet the challenges in the business environment, now and in the future. We continue to strive for improvements in all areas of human resource management, such as health and safety, communication, performance management, and leadership training and personal development. Dedication and Commitment On behalf of the Board and management of Silver Fern Farms we take this opportunity to express our gratitude to our shareholder partners who have backed their company through this past year, and the ongoing transformation of their business. We acknowledge the commitment and support of Messrs Borthwick, Curd, Lawson and Shaw, who retired as part of the governance review process, and in addition, the contributions of Messrs Luff and Grogan who resigned during the year and Mr McNab who retired in January 2009. The commitment of these directors to the business has been highly constructive, in some cases over many years. Our staff have continued to show dedication and courage throughout this process of change, working towards achieving positive outcomes. With their continued support, as a proud progressive partnership, we will provide a long term sustainable future for all our stakeholders.

EOIN GARDEN Chairman

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KEITH COOPER Chief Executive


INCOME STATEMENT For the year ended 31 August 2009 An extract from the 2009 Annual Report

PARENT

NZD IN THOUSANDS ($000) Continuing Operations

2009

2008

CONSOLIDATED 2009

2008

Revenue

1,962,907

1,898,635

2,001,934

1,963,210

Other revenue

10,258

20,494

12,656

26,707

Total income

1,973,165

1,919,129

2,014,590

1,989,917

Raw materials and consumables used

1,352,884

1,214,317

1,365,931

1,266,067

Employee benefits expense

274,863

304,747

283,104

316,369

Depreciation and amortisation

24,197

26,043

24,679

27,025

Finance costs

24,184

32,050

24,257

32,389

Other operational expenses

300,226

263,225

312,610

273,080

–

–

(1,105)

(3,189)

78,747

5,114

Share of profits of associate

Profit/(loss) from continuing operations before member distributions, income tax and non-recurring items Member distributions

(667) 75,654

153

14,478

153

14,478

(3,342)

64,269

4,961

61,176

Profit/(loss) before income tax and non-recurring items

Total non-recurring items

38,625

(43,654)

38,398

(24,558)

Profit before income tax

35,283

20,615

43,359

36,618

Income tax expense (benefit)

66

(2,826)

(238)

Net profit for the period

35,217

23,441

43,597

(954) 37,572

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BALANCE SHEET As at 31 August 2009 An extract from the 2009 Annual Report

NZD IN THOUSANDS ($000)

PARENT

2009

2009

2008

ASSETS Current Assets Cash and cash equivalents 593 2,531 1,554 Trade and other receivables 111,863 171,058 105,439 Inventories 104,284 138,575 150,398 Livestock 26,416 3,149 26,416 Other Current Assets 27,968 30,347 28,186

3,845 158,407 190,977 3,149 30,543

Total Current Assets

311,993

386,921

Non-current Assets Property, plant and equipment 275,579 269,695 277,763

272,384

271,124

2008

CONSOLIDATED

345,660

Investments in subsidiaries and associates Other Non-current Assets

76,038 2,719

71,563 3,780

10,702 2,739

5,609 3,791

Total Non-current Assets

354,336

345,038

291,204

281,784

Total Assets

625,460

690,698

603,197

668,705

LIABILITIES Current Liabilities Bank overdraft 437 2,225 452 Trade and other payables 76,274 93,364 71,811 Provisions 14,972 29,002 15,094 Interest bearing loans and borrowings 688 116,064 688 Bonds payable – 50,780 – Other Current Liabilities 8,834 18,797 1,074

2,996 92,555 29,108 116,064 50,780 10,650

Total Current Liabilities

89,119

302,153

Non-current Liabilities Provisions 11,340 10,931 11,340 Interest bearing loans and borrowings 108,183 332 108,183 Bonds payable 75,615 75,040 75,615 Other Non-current Liabilities 2,573 2,880 2,679

10,932 332 75,040 4,127

Total Non-current Liabilities Excluding Members’ Shares

101,205

310,232

197,711

89,183

197,817

90,431

Total Liabilities Excluding Members’ Shares

298,916

399,415

286,936

392,584

Net Assets Excluding Members’ Shares

326,544

291,283

316,261

276,121

Convertible redeemable preference shares Supplier investment shares Members’ ordinary shares

1,622 24,754 47,769

2,654 23,937 47,777

1,622 24,754 47,769

2,654 23,937 47,777

Total Members’ Shares

74,145

74,368

74,145

74,368

Net Assets

252,399

216,915

242,116

201,753

EQUITY Equity Attributable to Equity Holders of the Parent Retained earnings 197,405 Other reserves 54,994

157,242 59,673

191,841 50,275

143,298 58,455

Total Equity

216,915

242,116

201,753

12

252,399


FIVE YEAR HISTORICAL SUMMARY As at 31 August 2009 An extract from the 2009 Annual Report

NZD IN MILLIONS ($m)

Notes

2009

2008

2007

2006

2005

Total income

2,014.6

1,989.9

1,846.2

2,027.6

2,029.7 31.6

Income Statement Operating earnings before interest and tax (EBIT)

29.4

108.0

(6.6)

43.2

Net operating profit before tax

5.1

75.7

(36.9)

11.4

8.3

Non-recurring items

38.4

(24.6)

(31.9)

17.7

12.8

Income tax benefit

0.2

1.0

(7.1)

2.1

(1.3)

Net profit after tax

43.8

52.1

(75.7)

31.4

19.9

Less member distributions

(0.2)

(14.5)

(3.4)

(11.9)

(14.3)

Net profit after member distributions

43.6

37.6

(79.1)

19.5

5.6

Total assets

603.2

668.7

658.9

762.1

741.5

Net working capital

1

222.5

250.8

244.8

326.1

276.8

Net debt

2

183.4

241.4

332.2

393.2

381.0

Total equity including members’ shares

316.3

276.1

232.2

261.8

237.1

95.7

61.8

85.4

35.2

19.5

Financial Position

Cash flow Net cash flows from operating activities

Key Ratios EBIT to total income

3

1.5%

5.4%

Return on assets Return on equity Equity ratio

-0.4%

2.1%

1.6%

4

4.9%

16.2%

5

13.8%

18.9%

-1.0%

5.7%

4.3%

-32.6%

12.0%

6

52.4%

41.3%

35.2%

8.4%

34.3%

32.0%

NOTES: 1. Current assets less current liabilities (exclusive of net debt items) 2. Total interest bearing debt debt less cash and cash equivalents 3. EBIT / total income 4. EBIT / total assets 5. Net profit after tax / closing equity (including members’ shares) 6. Equity (including members’ shares) / total assets.

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100% MADE OF NEW ZEALAND More information: www.silverfernfarms.co.nz Silver Fern Farms Head Office: Harvest Court, 218 George St, PO Box 941, Dunedin • tel. +64 3 477 3980

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Silver Fern Farms - In perspective