ALF - Allied Farmers Limited

[bull....]

i sold out for a loss on this , movis bovis creates to much uncertainty for me.

[percy]

Impossible to qualify at this stage.
PGW are working closely with their customers and industry bodies.
I expect ALF are as well.
I do like the huge increase in the livestock finance receivables.
Should be very profitable.
Lowered my average share price cost awhile ago,so will continue to hold my near "free ones."

[golden city]

I am Loading up Do like what they done so far Finance part look very interesting

[Vaygor1]

Where are you Vaygor1 and Forest.?
The result was a bit of a mixed bag.Trading was challenging in both livestock and calves..
Yet I see a great lot of positives.
The settlement from litigation was a handy $441,000.
The new Livestock finance subsidiary is gaining real traction, with receivables of $4.6mil up from $2.1mil last year.
The balance sheet keeps on improving with shareholders equity going from -[$3,887,000] in 2014 to a very healthy $3,466,000 this year.

Hi Percy et al.

I have been over-working myself a bit lately in a role that has morphed into a somewhat unenjoyable one, a little smidgeon of light at the end of the tunnel now... hopefully not from an oncoming train.

The ALF 2018 Annual result on the whole looks positive. The performance for the financial year ending 30-June-2018 is ahead of last year, but only because of the 1-off approx $440k injection from the PWC litigation case.

My preliminary notes follow. I am happy to be corrected if I have erred along the way....

(000)

NPBT $2,435

NPAT $2,225

Attrib $1,535

Shares 161,505

Eps 0.0095

Current Price $0.070

PE 7.3

Who was selling at 7c yesterday and why? Despite the bargain I am not buying as I already have enough.


The press reported 'No dividend was declared'.

Refer https://www.nzx.com/announcements/311018 dated 28-11-2017:
"The Directors considered it prudent to delay the declaration and payment of this dividend until later in the current financial year, recognising that Spring is a period of higher demand for working capital."

and also Refer https://www.nzx.com/announcements/314537 dated 21-2-2018:
"Consistent with prior years, after completion of financial statements for the full year the Board will determine whether a dividend will be paid."

Putting these statement together, I fully expect a dividend announcement in Nov/Dec 2018. The question is how much?

Refer https://www.nzx.com/announcements/306368 dated 30-8-2017
"ALF shall not reduce its equity capital by way of share re-purchase or other means without bondholders approval [i.e. from financial year ending 30-June-2017 to 30-June-2021] provided however that ALF may pay, in relation to each financial year of the term of the Bond, an interim and/or final dividend of up to 51% of the Net Profit After Tax for that interim and/or full year period."

I read above as ALF potentially paying a dividend of up to $1,535,000 x 51% = Max $782,850 or 0.4847 cents/share.

By my calcs, ALF have the free cashflow to pay all of the 0.4847 cents/share as a gross dividend if they want to. I anticipate (i.e. guess) ALF will announce before Christmas a dividend of 0.30 to 0.35 cents/share fully imputed, payable in January 2019.

Of note is that the current financial year (ending 30-June-2019) is the first year since buying L I Redshaw that annual payments associated with aquisition are no longer required. Theoretically, this will free up an additional $225,000 (or 0.14 cents/share) of cash compared to the financial year ending 30-June-2018, all other things being equal.

The newly established financing subsidiary of the Livestock Division looks like a growth area… well worth keeping an eye on.

When looking at equity, note there are off-balance-sheet assets. Also note the increase in Goodwill due to the completion of the 52% acquisition of LI Redshaw.

The USD/NZD exchange rate drop since last year will help improve ALF's H1 result (heavily influenced by export bobby-calf meat to the US) this financial year... again all other things being equal.

END

[percy]

Sorry I have been so rude and not replied earlier.
Thank you for your post.
Yes the finance side should be well worth watching.

[Vaygor1]

Further to my most recent post on this thread, I note the following on the matter of Bonds.
This from the latest ALF annual report....

Bonds

020 Bond

Albany Braithwaite Holdings Limited, an Associated Person of Director Mark Benseman, is currently the holder of 600,000 first ranking bonds issued in a $1 million bond issue on 9 October 2014 (“020 Bond”). The 020 Bond was due to mature on 31 September 2017, but the 020 Bondholders, including Albany Braithwaite Holdings Limited, agreed among other things, to extend the maturity date to 30 September 2021.

030 Bond

Albany Braithwaite Holdings Limited is currently the holder of 150,000 second ranking bonds issued in a $550,000 bond issued on 31 August 2016 (“030 Bond”). The 030 Bonds are due to mature on 30 September 2018. Two bondholders, one of whom is Albany Braithwaite Holdings Limited, will be repaid in full on maturity date. The remaining two 030 Bondholders, holding 300,000 bonds, have agreed among other things, to extend the maturity date for their 030 Bonds to 31 March 2019.

The 020 Bond is of no immediate issue regarding free cashflow, and as alluded to in my last post, it is these bondholders who have the medium term say on whether or not an annual dividend is paid.

The 030 Bond though, required a repayment of $250k (I understand it is 1$/bond) on 30-Sept-2018.
Unless extended, which has occurred in the past, the remaining $300k requires repayment on 31-March-2019

I don't think the $250k materially changes ALF's free cashflow to provide a dividend payment this Christmas/New Year, as this $250k bond payment effectively replaces the $225k LI Redshaw acquisition payment, which is no longer required. The final LI Redshaw payment occurred in the previous financial year.

Whether or not the remaining $300k (or part thereof) of the 030 bond is extended past 31-March-2019 is unknown at this stage.
If it has been decided by the 2 applicable bondholders that it all must be repaid on 31-March-2019, this might have an impact on the size of this year's Christmas/New Year dividend payout.

I have also recently observed the following:

USD/NZD exchange rate (up 10% on last year) favours ALF in their bobby calf export business. The bobby calf export business has a significant influence over ALF's H1 result.

Also, red meat export volumes across the country are up 25% on last year.

The price/head for livestock across the country has gone ballistic. If ALF's %age commission remains the same or similar as the past, then it looks like a very good year for ALF and all livestock agent companies.

I am expecting good results (and/or very encouraging guidance) regarding the new financing subsidiary of the Livestock Division. An update on this should be forthcoming at this year's Annual Shareholders Meeting held later this month.

[percy]

Thank you for your update.
I think the agm should have positve news/updates for us.
I hope you will be attending it.?

[Vaygor1]

Thank you for your update.
I think the agm should have positve news/updates for us.
I hope you will be attending it.?

I will do my best Percy but it looks like a bit of a long shot.
Currently in an Aussie town 5 hours behind New Zealand and just kicked off a project which may provide me a window to get back to NZ for the ASM.

Given my remote location and the venue for the meeting, the fastest possible time I could get there from here involves 23 hours travel one way.

You contemplating attending?

[percy]

I will do my best Percy but it looks like a bit of a long shot.
Currently in an Aussie town 5 hours behind New Zealand and just kicked off a project which may provide me a window to get back to NZ for the ASM.

Given my remote location and the venue for the meeting, the fastest possible time I could get there from here involves 23 hours travel one way.

You contemplating attending?

No.
Make me feel guilty.
Maybe only a few hours from ChCh.
We will have to make do with their presentations.
Will miss out all the gems you and Forest are good at finding out.....lol.

[Vaygor1]

Garry Bluett is stepping down. Announcement this morning...
https://www.nzx.com/announcements/326307

The share price is up straight away (on light volume so far today) and there's quite a bit of depth there too.

I can't understand it. Why would the share price go up? Garry has been a brilliant Chairman and without doubt was the central figure in saving the company from the brink. I would use stronger words than this, however Garry has always maintained ALF's recovery was truly a team effort.

Like Garry, the new Chair, Mark Bensemen has plenty of skin in the game.. including (directly and indirectly) being the largest shareholder of the business... so the news is certainly not bad by any stretch.