Monday 23rd November 2020
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On 9 November 2020 Allied Farmers Limited’s (NZX: ALF ) (Allied) advised in its 2020 Notice of Annual Meeting that it will offer eligible shareholders the opportunity to participate in a pro rata renounceable rights issue at an issue price of $0.50 cents per share through a rights issue of 1 new ordinary share for every 3 existing ordinary shares held.
Allied is pleased to now confirm that it will open the pro rata renounceable rights issue in early December 2020. Shareholders will be able to apply for additional shares at the same price of $0.50 cents per share through an oversubscription facility to take up unexercised rights, and any rights that shareholders do not wish to take up will be quoted and able to be bought and sold on the NZX.
Also as previously announced, if approved at the 2020 Annual Meeting, and most likely after the renounceable rights issue, Allied proposes to commence placements over the next 12 months of up to 10 million Allied Farmers shares to existing shareholders and new investors at the same price of $0.50 cents per share. These placements will potentially raise up to $5,000,000 of new capital for Allied Farmers.
In the first 6 months of this financial year prices for Allied’s processed veal and related products, appreciable proportions of which are ultimately sold through food service channels and other Covid affected markets internationally, have been significantly lower. The veal processing business contribution has always been sensitive to market price movements outside of our control, and accordingly, because it makes up a significant part of revenues in the first 6 months of the financial year, in turn the interim result has always being disproportionately impacted by the performance of this business.
The ongoing effects of the drought earlier this calendar year and lower market prices for livestock have also adversely affected commission revenue in our livestock agency business. However, recently we are seeing more encouraging signs with favourable weather and growth conditions contributing to an improvement in farmer sentiment, sale tallies and prices. This gives us cautious confidence in a stronger second half of year, which is when the majority of livestock contribution is normally generated.
As a result of these trading conditions, particularly in veal processing, Allied expects that the 6 months result to 31st December 2020 will be significantly below the corresponding prior period, with an after tax profit in a range of $200,000 - $400,000 (assuming a successful NZ Rural Land Company Initial Public Offering).
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