Wednesday 28th August 2019
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Rural services provider Allied Farmers has reported a third year of flat profitability after strengthening its balance sheet with new capital in the year to June 30 and it's signalling it may consider a small public debt issue if investment opportunities emerge.
Net profit after tax was $2 million for the last financial year, roughly unchanged from the $2.2 million reported the previous year.
The company is not yet declaring a dividend, but appears likely to at its annual meeting in November, for payment in January.
While the company is signalling another year of "steady" earnings, chairman Mark Benseman said opportunities for incremental growth through acquisition of or creation of new businesses were possible and that the company was keen to recruit further agents and increase its digital offerings.
A modest public bond offer was a possibility in the event that the company identified appropriate investment opportunities.
"We're seeing a reduction in the appetite of the banks to lend into the agricultural sector," Benseman told BusinessDesk. "That's an advantage for us because our livestock financing business has benefited from that."
Allied has some $4.7 million of farm lending on its books and is lightly geared compared to recent years, with a net debt to equity ratio of around 30 percent after a $1.5 million capital raising in March.
"We are able to step in where the banks have been unwilling and we see opportunity in that area," he said.
"The challenges that have been evident in the livestock business over the last 12 months are likely to remain in the near term" and included a mixture of the Mycoplasma bovis eradication initiative, climate change and other environmental pressures, new regulatory requirements and the unsettled global trade outlook, as well as changing consumer preferences.
"We see significant opportunities around effective deployment and use of new technologies and information resources."
The company reported positive cashflow of $1.73 million, reflecting the capital-raising, compared with a $1 million outflow the previous year.
Allied's share price has fallen 12.8 percent in the last 12 months, closing yesterday at 68 cents per share.
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