The former Crafar family farms controversially bought by China's Shanghai Pengxin last year reported an operating loss in their first year of new ownership due to the widespread drought last summer.
Pengxin New Zealand Farm Management reported an operating loss of $1 million in the year ended June 30 on revenue of $10.5 million, according to its first annual report to the Overseas Investment Office. The farming operation, managed by state-owned enterprise Landcorp, was hit by the drought within six weeks of Pengxin purchasing the land, sapping milk production and driving up costs to buy additional feed.
"The critical focus for Pengxin and Landcorp was to manage the welfare of all animals on the property, and protect the farming position for the subsequent season," the report said.
The government signed off on Pengxin's application to buy the 16 farms out of receivership after several attempts by a rival consortium led by businessman Michael Fay to block the sale through the courts.
The approval included a raft of obligations to bring the farms up to scratch, and today's report to the OIO shows Pengxin complied with all the conditions of the consent as at June 30.
The deal required Pengxin to invest $16 million in the farms and to protect and enhance heritage sites. It had about $3 million of capital projects approved, or wholly or partially completed as at June 30, with a further $9.6 million forecast for the 2014 financial year.
Landcorp farming staff was slightly ahead of what was proposed in the application, with 97 full-time equivalents, and Pengxin had entered into a supply and purchase agreement with Miraka for ultra-heat treated milk to target the Chinese market, the report said.
Earlier this week, a joint venture between Shanghai Pengxin and the Synlait founders John Penno and Juliet Maclean, crossed the 90 percent threshold in their takeover bid for Synlait Farms, which operates 13 dairy farms in the South Island.