Livestock Improvement Corp [NZAX: LIC], which provides testing and artificial breeding services to the dairy industry, has been freed from legislative constraints on changing its constitution or demutualising following the transfer of its core database to DairyNZ.
The restrictions had been put in place because LIC, as it is known, held a genetics data base on the entire New Zealand dairy herd. In 2012, LIC and DairyNZ agreed to the transfer of the database to the Dairy Industry Good Animal Database to be run by DairyNZ, an industry group for New Zealand dairy farmers. Under the rules, LIC had to get consent from the Minister for Primary Industries to change its constitution or demutualise.
Chief executive Wayne McNee told BusinessDesk there were no plans to change the cooperative but the new freedom would help the company achieve its target of reaching $1 billion of revenue by 2025. It plans to do this through a combination of organic growth, expanding overseas and through acquisitions.
LIC had no need to publicly raise any capital for acquisitions because it carried no long-term debt and had "significant seed funding available," McNee said.
Shares of LIC trade on the NZX in a market restricted to members of the cooperative. They were last quoted at $6.341, giving the company a market value of $187 million.
Last month LIC reported full-year profit dropped about 24 percent to $18 million, reflecting spending on technology and infrastructure and a drop in the value of its biological elite bull team.
McNee said LIC is upbeat about the outlook for the dairy industry despite this year's slide in prices of dairy products.
"We still see massive opportunity in the dairy industry and we see a good year for us," he said.