Allied Farmers div. rate increased

Press, 24 August 1977, Page 22

Allied Farmers div. rate increased

Commercial

Allied Farmers co-opera-tive, Ltd, has raised its dividend from 12 per cent to 14 per cent (14c a share) —all tax-free—after a 29 per cent increase in profit to 51,165,000 in the year to June 30.

The company will also raise $1,321,250 in a one-for-three issue of convertible preference shares. The chairman (Mr D. L. Hazard) believes the company will do as well, if not better, in the current year. Trading profit was 26.7 per cent higher at $1,143,000 after depreciation of $449,000 (up $76,000) and tax of $922,000 (up $198,000). In addition there was a tax-free profit of $445,400 from the construction contracts of Arabco Traders in Arabia. The sale of land at Wiri resulted in a capital profit of $332,000. Because of a revaluation of assets, earning rate on shareholders’ funds eased from 11.8 per cent to 10.3 per cent, but that on higher capital rose from 35.7 per cent to 38.4 per cent.

The dividend takes $417,000, and is covered 2.8 times.

After a $1,678,000 revaluation, shareholders’ funds are $3,415,000 higher at $11,985,000, including capital increased by $llB,OOO to $3,021,000.

The specified preference shares will have a nominal value of 125 c and carry a 12 per cent dividend. They will convert one-for-one into ordinary shares on December 31. 1982. The issue is non-renounce-able, with minimum entitlements of 100 and the right to apply for oversubscriptions. The past year was one of consolidation, Mr Hazard says in his review. The livestock incentive and increased prices brought a resurgence of confidence throughout the farming industry. This substantially improved merchandising and hte expansion in the Waikato, where livestock numbers handled increased considerably, pushed sales up 23 per cent to $42,281,000 and com-

missions 51 per cent to $2,948,000.

More funds were required to finance and service the increased volumes and this is the reason for the issue.

As announced, a 50 per cent interest was taken in a joint maize venture with a group of farmers at Te Awamutu along the lines of the Dargaville Grains venture. Mr Hazard welcomes the lifting from 10 per cent to 15 per cent of the interest limit set by the Moneylenders’ Act.

Many clients, particularly farmers with other business interests and businessmen owning farms, have taken advantage of the comparatively low rates, Mr Hazard says.

“This has cost us money which benefited the entrepreneur rather than the genuine fanner.”

With the Arabian construction contracts completed, the company will from now on concentrate on trading — from which it is already beginning to get the benefits.

The company has bought out its partner in Arabco traders, which now is a fully-owned subsidiary. It has a 49 per cent interest in a Bahrain supermarket, to which it is exporting and 25 per cent in Emirates foods, which has just begun running the Dubai cold store. It has already placed orders with Allied Farmers.

The proposed joint-venture in Oman has been replaced by a wholly-owned Omani venture with which the company has a supply arrangement.