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Ballance pays record rebate after record performance

1 August 2013

Ballance pays record rebate after record performance

Ballance Agri-Nutrients shareholders are in line for a record rebate and dividend of $65/tonne, along with a recommended 60 cent increase in the value of their co-operative’s shares to $8.10.

The rebate averaging $60.83 per tonne and a fully imputed dividend of 10 cents per share will be paid out nearly six weeks earlier during mid-August, with Ballance Chairman David Graham saying the payment has been brought forward to reward shareholders and assist them with cash flows at the start of the season.

“The drought may be over but the financial impacts are not, so we are fast-tracking the payment for shareholders in recognition of that so they can gain the full benefits of a good year for their co-operative as quickly as possible.”

Returns to shareholders will vary according to purchases, but based on an annual purchase of 100 tonnes, the rebate and dividend represents a $6,500 return to a fully paid shareholder. In total, Ballance’s 18,300 shareholders will receive a $65 million distribution. The recommended share value increase, driven by the co-operative’s strong balance sheet and steady financial performance, will represent a $1,800 gain for a farmer holding 3,000 shares to cover 100 tonnes of fertiliser purchases.

Mr Graham, who is retiring as Chairman in September, said Ballance has performed exceptionally well to achieve a record trading result of $92.6 million despite the drought drying up fertiliser demand and impacting sales volumes. This compares to the prior year result of $77.3 million. Group sales volumes at 1.33 million tonnes were 7.6% behind the prior year, reflected in Group revenue at $878 million compared to the prior year’s $915 million.

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“We are proud of the fact we have achieved a record result in a very trying year, and more importantly in a year in which we held or reduced fertiliser prices. We started strongly, with a good first half, but the drought quickly took its toll on demand. Despite this, we maintained a very good performance to deliver an excellent result. I can step down as Chairman on a high note, knowing the co-operative is in excellent financial and operational shape.”

Chief Executive Larry Bilodeau said the co-operative’s ability to deliver a record result and rebate came down to a very disciplined approach to costs right across the supply chain during a year in which prices were held steady.

“We managed purchasing well, achieving the stability in raw material pricing which enabled us to maintain steady prices and in fact lead market prices down while achieving reasonable margins. We also kept overall costs under tight control, supported by operating efficiencies.

“These include procurement savings in shipping and freight and competitive contracts for raw material purchases for fertiliser production. Having Kapuni back on-stream for a full year meant lower import volumes, and this was another contributor to the results.”

Within the animal feed division of the co-operative demand lifted as a result of the drought, however the revenues generated did not offset the reduction in fertiliser sales which fell below budget in the final quarter because of the dry conditions.

Mr Bilodeau said the co-operative was in sound financial shape with its equity ratio at a record high of 71.3% compared to last year’s 64.2%. Net debt was down $90 million to $6 million.

“We are optimistic about the year ahead. The drought is behind us and farmer confidence is improving. We are seeing positive signs across all sectors with the dairy payout forecasts looking good, improvements in dry stock prices, and a lift in optimism in the cropping and horticulture sectors. Sales are steady at this early point in the new financial year and we expect pricing to remain competitive.”


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