Dairy Equity posts loss

Dairy Equity, which is proceeding with a return of capital and wind up of the company, yesterday reported an interim loss.

The company reported an after-tax loss of $2.293 million in the six months to February 28. It did not provide a comparison. The loss was achieved on revenue from ordinary activities of just $32,000.

The company had a $1.914 million writedown in the carrying value of its Fonterra Fair Value Shares. The company operates through SWAPs agreements with dairy farmers, which involve Dairy Equity agreeing to buy Fair Value Shares for each kilogram of milk solids farmers supply to Fonterra. But there was a slow take-up due to the lack of farmer acceptance of the mechanism and uncertainty over Fonterra's capital structure.