LIC annual result all about growth
NZax-listed dairy farmer co-operative Livestock Improvement Corporation has posted another creamtopped annual performance with an 88 per cent jump in operating profit after tax, a 21 per cent increase in revenue and a bumper dividend to shareholders.
In the past decade Hamilton-based LIC had doubled the size of its business and more than doubled the value of its shares, said chairman Stuart Bay.
Revenue for 2010-2011 at $166 million was a new high and achieved without increasing prices to farmers, he said.
Total dividend paid to LIC’S 10,728 shareholders – 560 more than last year – was $13.7m, compared to $12.3m last year. In the 10 years since LIC became a farmer co-operative it had delivered net dividends of $65m, Mr Bay said.
Underlying net earnings of $17.1m were strongly up on last year’s $9.1m and operating cash flows of $21.3m funded net investments of $22m.
Share value in the past five years had increased from $1.39 to $4.30 as at November 15, Mr Bay said. Equity at $185m represented 78 per cent of total assets of $237m.
Chief executive Mark Dewdney said earnings before interest and tax were $24.3m. Sales growth had been achieved across all products with highlights being a $1.1m increase in herd testing samples and genetics activity increasing by 250,000 semen straws.
Return on capital was 9.25 per cent. LIC has no term debt. Mr Dewdney said it was critical for LIC to turn in strong annual performances because the company expected to invest between $20m and $30m a year in future capital development and other major projects. The board had approved capital expenditure of $17.8m in the year and $20m was spent, which included completion of projects approved the previous year.
Mr Dewdney noted a balance sheet impairment of $1.5m, largely related to the write-down of the value of its farm land following the global financial crisis and associated recession.
He said LIC estimated the New Zealand artificial insemination market dipped by about 3 per cent in 2009, recovering in 2010.
LIC had increased total straws sales by 255,000, clawing back some of the market loss.
GOOD RESULT: Mark Dewdney says growth in sales and dividends has been achieved with all products.