ALF - Allied Farmers Limited

[percy]

Hi Percy.

I interpreted the 30th August announcement differently.

My interpretation of the announcement is that the initial partial settlement, no matter how big or small it is, either in magnitude (in it's own right) or weighting compared to the Directors' potential payout, casts no further light on the Liquidators final position. The announcement then paints a kind of (in my view) extreme scenario to help explain why.

It may well be that getting nothing out of the Directors will still provide copius quantities of fruit so long as the Liqidators dont blow screeds of money between now and when the final outcome with the Directors' case is determined.

I think a settlement prior to court is likely. The announcement stated the outcome would not likely be determined in this calender year, so agreement in Jan or early Feb next year remains a real possibility.

Agreed...............L

[Vaygor1]

A Tip-Top result for sure. Any increase in NPBT of 52% can't be all bad.

I am a little disappointed (and a little surprised) that no dividend is forthcoming yet. However, in the vast majority of cases a resumption or commencement of dividend payments is normally signalled at the AGM which in ALF's case is due later this year.

Dividends do get a mention in the last bullet point of the Bond Extension announcement earlier today whereby the $1M bond is extended at reduced interest rates from 30-Sept-2017 until 30-Sept-2021. One of the conditions of the bond is:

"ALF shall not reduce its equity capital by way of share re-purchase or other means without bondholders approval, 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."

So the bondholders (who I think are predominantly [exclusively?] board-members anyway) have a bit of control for the next 4 years over any dividend payment by limiting it to 51% of NPAT, unless they authorise otherwise.

This announcement is the 1st I have heard on any potential dividend constraint. If this was in force over the last 12 months (which it could have been I conject), this years NPAT result of $1.554 million limits ALF's max dividend payout (without requiring bondholders approval) to $787k. A limit that would be exceeded if a 1/2 cent dividend was paid.... 161.5 million shares x $0.005 = $807k.

Further to the attached post, I have given the matter of a potential upcoming dividend some thought...

In most situations I know of, the signal to recommence a dividend is announced at the ASM, which in ALF's case is the end of November. The announcement referred to in the attached post is in itself practically a signal in my view.

As a result, I hold a reasonable expectation of a dividend this current financial year (which commenced 1-July) to be distributed using last financial years profit available through their free operating cashflow.... fingers crossed.

[winner69]

Is this a hope it will be all OK for the full year type of announcement ......don’t expect miracles.

[percy]

Is this a hope it will be all OK for the full year type of announcement ......don’t expect miracles.

I don't think many rural sector investors expect miracles.

[Vaygor1]

Is this a hope it will be all OK for the full year type of announcement ......don’t expect miracles.

Hi Winner.

I don't believe their will be any issues surrounding ALF's full year announcement which is about 10 months away.

At the ASM held in late November last year, the board revealed they had internally held robust discussions about whether or not to pay a modest dividend following the result of their Financial Year Ending 30-June-2016. The reason they gave back then for not paying was some small legacy debt to a couple of creditors they felt should be taken care of first... that it could be a little embarrassing for ALF if/when these creditors become aware of a dividend being paid while still being owed some money by ALF.

So I think the expectation for ALF to pay a dividend following the result for Year Ending 30-June-2017 was reasonable, and I also believe they were/are in a position to do so.
But at the same time, and with this wonderful thing called hindsight, I also think it prudent for ALF to pay dividends in any given year using the free cashflow available from their previous financial year.

I good deal of my ALF purchases are now 3-4 baggers, so I am a very happy holder. I think though, it will be a dividend payout (however small) that will make headlines and re-rate the SP.

[Vaygor1]

.... I think though, it will be a dividend payout (however small) that will make headlines and re-rate the SP.

Another SP re-rating of course could well be the result of the litigation ongoing between the LPF group and PwC. If successful, ALF is likely to benefit. I think, if successful, ALF's equity will double at least. While there is no guarantee of LPF coming out on top once all the chips are down, their track record is pretty impressive.

In the latest NBR Oct-17 there is an article on the LPF Group which I think makes very interesting reading....

"Since it was established in 2009 LPF has backed 20 legal actions. Of the 14 completed so far, LPF says it has obtained a successful outcome in all of them - a 100% clean sweep."

[forest]

"Since it was established in 2009 LPF has backed 20 legal actions. Of the 14 completed so far, LPF says it has obtained a successful outcome in all of them - a 100% clean sweep."

That is very encouraging for the share holders of ALF.

[Out to lunch]

To be clear, ALF get paid out on the PwC claim (settled Aug 17) and/or the Directors claim (Feb18 trial). So as percy said you'd hope the PwC money won won't get fully spent on a failed Directors claim.
Looks like Vero was behind PwC's insurance, I wonder who is behind the Directors indemnity insurance.

Also on the opco, interesting read from PGW's 31/8 announcement around the sector, sheep numbers down but strong dairy confidence. No comment on beef. Also I wonder the impact of Mycoplasma Bovis on farmer confidence in buying dairy or even beef herds. Dairy farmers would be rightfully overly-cautious buying stock that were close to the affected farm. Definition of "close to the affected farm" would be different for each farmer: Chch farmers would avoid South Canterbury/Oamaru stock, SI west coast farmers would avoid the SI east coast stock, and north island farmers would avoid south island stock.

[Out to lunch]

Tim Hunter has put an article out this morning detailing the insurance or lack thereof behind the PVL directors.

[Fatboyj]

Any snipits you can post from the article? Is Hendo's name mentioned anywhere?