Hostile Richmond takeover cost $140m

Buying Richmond cost PPCS $140 million, the Dunedin meat processor's annual report shows.

In July, PPCS completed the takeover of the publicly listed Richmond, paying $40 million for the 37 per cent it did not already own.

Litigation costs associated with the takeover were non-recurring items of $3.1 million and $1.9 million in the past two financial years respectively.

The net value of Richmond's assets was $160 million.

Earlier PPCS announced a $38.1 million pre-tax profit on turnover of $2.2 billion.

PPCS's pre-tax profit was $17 million and Richmond's 11-month contribution $23 million. There was an adjustment for a $5.2 million inter-company dividend and a consolidation adjustment to give a $38.1 million pre-tax profit.

Chairman Jim Pringle said with ownership secure, the focus was on reducing costs through synergies.

"Integration is now well under way, with a group-wide senior management structure in place and reviews of most departments' structures and systems complete."

The accounts show 42 staff employed by Richmond and its subsidiaries were paid $100,000 or more. But since the August 31 balance date that has been reduced by 17.

The highest paid Richmond employee was earning between $440,000 and $450,000.

In comparison, PPCS and its subsidiaries employ 25 people who are paid $100,000 or more, with the highest paid staff member taking home between $380,000 and $390,000.

Chief executive Stewart Barnett said the focus this year would be supplier relationships and international markets.

He said there were already benefits from the merger, with improved market strategies, increasing returns and reduced costs.

Last season's low lamb numbers hindered the company's ability to meet demand, but demand had stayed firm and the price for lamb in Britain had increased.

Venison farmers continued to off-load stock, with slaughter rates 13 per cent higher in 2003 than the previous year and remaining high this year.

Markets were being developed in Europe and the United States and the number of animals expected to be slaughtered in 2005 could fall by 5 to 10 per cent.

Barnett said the beef sector needed to address issues such as reliance on North America, where it was facing competition from South America and Canada.

Group operating revenue was $2.2 billion, up from $1.3 billion in 2003.

Trade receivables were up from $47.8 million for the consolidated group in 2003 to $147.3 million.

- NZPA