Record rebate for Ballance farmers
28 July 2011
Record rebate for Ballance farmers
Rising rural confidence brings healthy result for Ballance
Ballance Agri-Nutrients will pay shareholders a record rebate and dividend of $50.29 per tonne after achieving an $85.9 million operating profit for the 2010/11 financial year, more than four times the $20.7 million achieved in the prior year.
The total average payment to shareholders of $50.29 per tonne includes a rebate of $46 per tonne on fertiliser purchased and an imputed dividend of $0.10 per share, resulting in a total distribution to shareholders of $49 million. Ballance’s rebate payment is calculated based on both the quantity and the value of the product purchased. This means that farmers who have purchased higher-value products such as DAP, triple superphosphate or potash will receive a rebate and dividend in excess of $62 per tonne, with urea returning a rebate of over $54 per tonne.
In addition the Directors will be recommending to shareholders at the Annual Meeting to raise the share price from $7.00 to $7.50, which will equate to another $16.2 million of value being returned to shareholders this year.
Ballance Chairman, David Graham said the satisfying distribution to shareholders followed a strong second-half performance by the co-operative, including record March sales.
“After a late spring and a slow start to summer we saw farming confidence improve, helped along initially by good returns in the dairy sector. We then saw demand increase sharply through autumn with the red meat sector also enjoying much better prices. This optimism in the sector meant that farmers were prepared to spend on fertiliser to make the most of good growing and market conditions.”
Group sales volumes at 1,392,400 tonnes were 19% ahead of the previous year. Ballance recorded a 9.7% increase in total revenue of $760.1 million for the financial year. Cashflow from operating activities was $84 million compared with $155.8 million for the prior year, reflecting the co-operative’s decision to carry more inventory to meet anticipated demand increases.
Ballance Chief Executive Larry Bilodeau said the co-operative’s ability to hold prices through the autumn period, buffering shareholders from any international price increases, also contributed to the good year end result.
“It’s very pleasing that we could support our shareholders in their push for more efficient production throughout the year as well as end the year in a good position to return some of their fertiliser investment through a very good rebate.”
Ballance’s operating costs were $15 million higher at $146 million, mainly as a result of higher volumes sold.
“Like everyone, we faced higher fuel prices which drove internal transportation costs up, and with larger sales volumes, the cost of freight also increased, along with the selling and distribution expenses associated with those higher volumes. We have worked hard to be more efficient and cost effective over the last two years and we will be keeping up the discipline to ensure we control the costs we can influence.”
The co-operative ended the year well placed to invest in growth opportunities, having reduced debt from $91 million to $38 million.
“A good example is the recent investment in animal nutrition, Seales Winslow. This puts us on a path to meet farmers’ complete animal nutrient needs from pasture through to supplements, something which is very much in line with our goals to support our shareholders to achieve higher production, better returns and a smaller environmental footprint,” said Mr Bilodeau.
Consistent with its desire to help shareholders farm more productively and sustainably the co-operative also recently purchased a 51% shareholding in Farmworks Systems Ltd, and has added the company’s farm management portal, known as Ag-Hub, to the products and services Ballance sells to farmers.
Total shareholder assets rose by 15% to $527.4 million and the co-operative ended the year with a shareholder equity ratio of 63% compared to 65.3%, with the decrease attributable to the treatment of cash reserves under New Zealand accounting standards. On a like-for-like basis, shareholders’ equity would have increased to 66%.
Mr Bilodeau said the co-operative had begun the new financial year and its second decade operating under the Ballance brand in good financial and operational shape.
“The work we have put into upgrading our distribution centres means our customers get their fertiliser faster and more conveniently. We’ve enhanced our service with online ordering, we’ve invested well in expanding the business and we’re confident with our growth plans.
“The fact that we’ve accomplished all of this along with a record profit and record return to shareholders is particularly gratifying.”
Ballance shareholders will receive the co-operative’s Annual Review, which highlights key achievements for the year, in late August, and the Ballance Annual Meeting will be held in Napier on 21 September 2011