2020 Annual Meeting Chair Speech and Dividend Announcement

CHAIR SPEECH FOR ANNUAL MEETING 24 NOVEMBER 2020
Good morning Ladies and Gentlemen,
Welcome
My name is Richard Perry and I’m the Chair of Allied Farmers. I welcome you all to our Annual General
Meeting today on the behalf of the Board and the Management team. Joining me today are my fellow
directors – Philip Luscombe, Marise James, and Ross Verry and our Management team including Steve
Morrison our CE, Brian Lee our CFO, Bill Sweeney our GM Livestock and Ross O’Neill who leads our
legal and company secretariat affairs. I would also like to welcome the Allied staff joining us today.
Financial Statements
The financial statements and the reports of the directors and auditors for the year ending 30 June
2020 are set out in the company’s 2020 Annual Report. The Annual Report was sent to shareholders
via a link or hard copy on 31 August 2020 and is available on the company’s website.
Chair Address
It was my privilege to assume the Chair role from 1 July this year taking over from Mark Benseman
who had been Chair for a number of years and who has now retired from the Allied Board. Before
addressing you today, I would like to acknowledge the contribution of Mark as a director and Chair for
over five years and having been a supportive shareholder longer than that.
Mark made an impressive contribution to Allied which among other things has seen its capital
structure simplified and refreshed, a clear strategy developed and communicated, a refreshing of the
Allied Board to bring in Directors with skills and experience in the areas of operations and strategic
focus, and contributing significant amounts of time supporting the Management team and the Board
where needed.
So as I address you today, I can say to you that our 130 year old company is in good health having
weathered quite a battering over the last year or so and has some exciting and value-adding
opportunities both in the core business and in the area of strategic diversification.
Later in my address I will be putting forward certain motions that the Board consider very important
and fundamental to the ongoing growth and strategic development of Allied. Before I briefly explain
I will give you an overview of how the proceedings will go today, a brief chat about the 2019/20 year,
an overview of the 2020/21 landscape and an explanation of the motions. After that, our Chief
Executive, Steve Morrison, will provide some more detailed explanation of the 2019/20 performance.
There will then be the opportunity for you to ask questions and discuss the 2020 Annual Report. After
that discussion, I will formally put the business resolutions to the meeting.
So, to the 2019/2020 year – a year marked by significant national drought, a global pandemic, and
political uncertainty and volatility. It’s fair to say it was a hard year on many farmers, probably in the
main due to dr ought, but exacerbated by disruptions to meat processing, sale yards and global
markets. Fortunately, the Allied team through New Zealand Farmers Livestock experienced a very
strong financial first half year which positioned us well as we approached the second half. Despite the
significant loss in second half revenue we were able to maintain delivery of services through our skilled
team and through some real team innovation, worked very hard to achieve in essence a financial break

even second half of the year. This was a significant achievement by the team supporting farmers in
the field in some very difficult operating conditions.
The financial results are shown in the slides and demonstrate the challenges of the last trading year.
Overall, our profit of $1.2 million is down $800,000 from the previous year’s $2 million. Our Chief
Executive Steve Morrison will provide more detail on that later in the presentation but the result
basically reflects lower livestock trading revenue driven largely by the drought and Covid-19 issues
and slightly higher costs reflecting the ongoing cost pressures we like all businesses face. Despite this,
our revenue continues to be consistent with our growth over previous years and our balance sheet
continues to strengthen.
The year was a reminder of the importance of diversification and while that does exist to a degree in
the rural services area, part of our strategy has been to both grow our existing livestock business and
also diversify by investing to deliver the solutions to food producers that will be needed as we move
through the next five years as an industry.
Our year’s highlights included (slide):
• Continuing to service our clients during the Covid-19 lockdown to deploy NZ’s first ever hybrid
auction system that allowed sale yards to re-open safely in a limited capacity and famers to
participate in live auctions online and remotely.
• Improving our approaches to health and safety, risk management and staff wellbeing through
a number of initiatives including the extension of some staff benefits such as health insurance
for staff.
• The further strengthening of our Board with the appointment of Ross Verry to chair our
Finance business and lead the development of that opportunity.
• Appointment of KPMG as the new auditors including the refinement and improvement of our
financial statements to “cut the clutter” and improve transparency and communication of our
financial performance and position to stakeholders.
• The clarity obtained in challenging and resolving an issue with IRD in respect of using the
accumulated tax losses of the company.
• Evaluating several strategic opportunities to deliver new solutions to our customers either via
partnering or investment with the most visible being the NZRLM opportunity.
We are continuing to work very hard on our core business as we move forward in what remain
somewhat challenging farming conditions. I don’t think I need to tell any of you of the upcoming and
ongoing challenges for our agricultural sector in terms of water and environment taxes and legislation,
market trading conditions in the face of the pandemic and extended closure of the food service sector
This has been compounded by the extended credit crunch on the agricultural sector and financial
implications of a print money, zero interest rate environment and its impact on “real assets” such as
farms and food producing land. These are all uncertainties and realities of today’s and tomorrow’s
business environment, but also provide us with opportunities.
As an island with strong bio security, and a re-thought out approach to border management, we can
continue to produce high quality and environmentally friendly food for our customers who value the
providence, taste and quality of our products. It is critical that our food producers continue to receive
high value and cost effective support and access to solutions that will assist in delivering this vision.
This includes support across several areas in which the Allied Group has expertise – finance,
agricultural technologies, and livestock solutions. So I remain positive.
To support and extend these initiatives, Allied has for some months indicated its intention to grow its
capital to support the investment in strategic growth initiatives. Today we seek support with three
strategic initiatives.

The first strategic initiative presented to the shareholders is the 50% investment in NZ Rural Land
Management Company through the issue of 5 million Allied shares at 50 cents per share.
This initiative has been negotiated and evaluated for several months and is only transacted when the
NZ Rural Land Company has successfully raised $75million in its IPO. The deal has been approached
and evaluated based on NZRLC growing in size over time and this is seen as highly realistic in an
environment where food producers are becoming increasingly constrained for capital. Our Board and
management team has for some time been observing an ongoing reduction in core bank lending to
the agricultural and rural sectors and we are witnessing an increasing demand for alternative sources
of rural capital.
NZRLC provides one solution, and if NZRLC grows as we expect, the size and value of the Management
Company will scale and increase without requiring substantial additional capital in NZRLM. The deal is
expected to well exceed our internal return thresholds and be value accretive to the Allied
shareholders with the potential to grow and become an ongoing profit and dividend contributor to
the Allied Group. We also see this as a contributor to shaking the impasse for many around dairy farm
sales, perhaps adding to some owner options.
In addition, we are shortly proposing to offer our shareholders the opportunity to participate in our
1:3 rights issue capital raise also at 50 cents per share. This will give our shareholders the opportunity
to increase their shareholdings at the same price as the placement to the current Management
Company owners, and without having to pay broking fees. Importantly, any rights to these shares not
taken up will be listed for sale on the NZX, meaning that it may be possible for shareholders to receive
some value for the rights they do not wish to exercise, and for shareholders who want more shares
than their entitlement, to buy these rights.
Lastly, we seek shareholder approval to issue up to $5 million in shares at 50 cents per share by way
of placement. This level of capital, coupled with new capital from the rights issue, will give us the
funds we require to accelerate our diversification strategy.
By way of example, the intention is to invest a proportion of the new funds into the growth of our
finance subsidiary, Rural Funding SolutioNZ. Through NZ Farmers Livestock we have successfully
operated a small and efficient seasonal livestock financing business that has performed well over the
last five years. However, we need capital to grow Rural Funding SolutioNZ to a meaningful scale. This
will enable us to improve our finance offering to our NZ Farmers Livestock client base, as well as likely
widen our product offering, term structure and services to the wider rural sector. As we scale this area
we will consider additional growth strategies including exploring strategic partnering and alternative
funding options, and hiring additional resources.
We will also continue to evaluate ways of supporting new solutions in the wider agricultural and
Agritech space. This will include the ongoing investment in Mylivestock and continuing to evaluate
whether we can support the growth and value of companies developing new technologies with either
our expertise or capital. In the last year, we have closely evaluated a number of opportunities in this
area and we will continue this as part of our ongoing diversification strategy.
It is proposed that we will place the shares in stages over the next twelve months. Initially we will seek
placements of up to $2 million worth of shares predominately to fund the finance initiative I have
previously outlined, followed by placements in excess of that amount for the purpose of funding
additional identified opportunities that meet strict investment criteria approved by the Board. In this
way, we will not have significant amounts of new capital on our balance sheet that is not readily able
to be deployed on these opportunities. Be assured that the Board criteria for approving any new
investment, and by extension raising additional capital, include the investment meeting our strategic
objectives and achieving an acceptable rate of return.

Finally, I’m delighted to announce a dividend to holders of our existing shares of 1.2 cents per share
(fully imputed). This dividend will not be available to any participants in the placements (including the
vendors of the Management Company) or participants in our rights issue. To achieve this in the current
financial year is a pleasing accomplishment, but you will note that it is lower this year to reflect the
lower profit. As has been the case for the last few years, the dividend will be paid in January 2021.
So I close by commending to you your diligent and hard working Board, Management and Staff who
really go to great lengths to ethically and responsibly deliver the best outcomes possible to our
shareholders. We will and continue to faithfully and energetically represent, protect and grow your
interests and look forward to your ongoing support as we deliver value from an exciting array of future
opportunities.
-ends-

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1

Welcome & Introduction
2

Allied Farmers Limited
20202019
$m$m
Income
20.120.6
Expenses
(19.0)
(18.4)
Taxation
0.1
(0.2)
Net Profit After Tax
1.2
2.0
Parent Owners Share
0.8
1.3
3
SUMMARY PROFIT AND LOSS

4
Growing the business, with an improving balance sheet
0.0
5.0
10.0
15.0
20.0
25.0
20162017201820192020
Revenue ($m)
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
20162017201820192020
Gearing
Net Debt / (Net Debt + Equity)
* Gearing FYE 2020 includes lease liabilities on properties of $0.5m

5
Highlights
•DeployedNZ’sfirsthybridauctionsystemallowingyardsto
re-openduringCOVID-19lockdown.
•Improvinghealthandsafety,riskmanagementandstaff
wellbeing.
•StrengthenedBoardwiththeappointmentofRossVerryto
chairandleadourFinancebusiness.
•AppointedKPMGasauditors,refinementoffinancial
statementsto“cuttheclutter”andimprove
transparency/communication.
•ChallengedandresolvedanIRDaccumulatedtaxlosses
issue.
•Evaluatedseveralstrategicopportunitiestodelivernew
solutions,withthemostvisiblebeingtheNZRLMopportunity.

Dividend
1.2cents per share
17.9 M shares $214,266
Fully Imputed $495,970
Gross Dividend 1.67 cents per share
Record Date 14 December 2020
Payment Date 15 January 2021
6

Allied Farmers - Rural
CEO - Steve Morrison
7

•NZ Farmers Livestock Agency
•MyLivestock platform and App
•Redshaw Livestock
•Farmers Meat Export
•Livestock Finance – Bullplanand
general
•AFL’s Rural Finance SolutioNZ
•Associated Auctioneers JV interests
(SaleyardsManagement)
Working with Farmers for Farmers
8

•To be the bestsolution provider to
livestock farmers, growing value for them
and our investors.
•Experienced and growing team
•Adding value for clients -every day
•Sales/purchase channel & Deal closure
•Win-Win business
•Moving with (or ahead of) the times
•Integrated Finance and FMEL businesses
9

A Challenging Year
•Life with M bovis– Biosecurity pledge
•Ahead at the half year – across the board
•Widespread severe drought –affects lingering even
today
•Covid19 – Essential service & Auckland lockdown
access
•Supported our staff, appreciated the Govsupport
•Worked hard for farmers
•Yards opened at Level 3 – safely
•Hybrid (limited attendance real + on-line) auctions
•Agent regulation
•Adding value for clients - every day
10

11

12

13

Today:
•Ongoing Growth – recruitment, digital, acquisition, Northland,
South Island, yard access
•NZFLL Group EBT
•Solid livestock agency performance
•FMEL growth – Covidchallenges; exploring options
•Redshawsin line with acquisition basis
•CovidManagement & Recovery
•Continued bank support
•Looking to wider AFL initiatives
14

Current Performance
2020/21 Performance – first 4 months
Livestock- Slow start, accelerating in November
- Farmer caution, weather/grass
- M bovis
- Softer market pricing
- Dairy farm sales/movements
- Positive - with farmer focus and a good team
-Digital effort & investment
Meat Processing - Third year in Manawatu
- A tough year with Covidmarket impacts
- Behind last year but ahead of expectation
Finance- Good contribution but NZFLFL book below target
- Livestock lending steady, Bullplanbehind to date
- Funding terms constraints
- Allied/funding options to grow – RFS, etc..
- Core business support
15

•Health and Safety of our staff a key priority – Audit, charter, car-tracking, operational focus
•Structure, resource and focus to ensure compliance, animal welfare and risk management
16

Looking Forward:
•Working with farmers for farmers
•Building & supporting teams
•Digital tools/enablement
•Developing FMEL business
•Broader farmer finance options
•Agri-innovation
•Integrating/enabling parent
initiatives
•Enhancing control
•Building value & contribution
17

18

Thank you
Working with Farmers for Farmers
19

Questions
20

Business Resolutions
21

Resolution 1. Approval of Consideration Shares Placement
That, under NZX Listing Rule 4.2.1(a) (Shareholder approval for issues by
Ordinary Resolution), the Company is authorised to issue Elevation Capital
Management Limited, Richard Paget Milsom, RPMilsomInvestments Limited
and Hopeton Trustee Company Limited up to 5,000,000 shares in the 12
month period commencing from the date this resolution is passed at an issue
price of NZD$0.50 per share as consideration of, and payment for, 50% of the
securities in New Zealand Rural Land Management Limited Partnership and its
general partner.
22

Resolution 2. Approval of Capital Raise Placements
That the Company is authorised to issue shares to investors under Listing Rule
4.2.1(a) (Shareholder approval for issues by Ordinary Resolution) within 12
months of the date of the Meeting for an issue price of NZD$0.50 per share
and in an aggregate number of up to 10,000,000 shares (and in any event not
to directors of Allied Farmers or associated persons, within the meaning of the
NZX Listing Rules, of such directors) and otherwise on the basis described in
this Notice of Meeting.
23

Resolution 3. Auditor’s Fees
That the re-appointment of KPMG as the auditor of the Company be recorded
and the Directors be authorised to fix the auditor’s remuneration for the
ensuing year.
24

General Business
25

Ends
26

Ends
27

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Please note: all cash amounts in this form should be provided to 8 decimal places

Section 1: Issuer information
Name of issuer Allied Farmers Limited
Financial product name/description Ordinary Shares
NZX ticker code ALF
ISIN (If unknown, check on NZX
website)
NZALFE0001S1
Type of distribution
(Please mark with an X in the
relevant box/es)
Full Year X Quarterly
Half Year Special
DRP applies
Record date 14/12/2020
Ex-Date (one business day before the
Record Date)
11/12/2020
Payment date (and allotment date for
DRP)
15/01/2021
Total monies associated with the
distribution
1

$214,265.75
Source of distribution (for example,
retained earnings)
Retained Earnings
Currency
Section 2: Distribution amounts per financial product
Gross distribution
2
$0.01666666
Gross taxable amount
3
$0.01666666
Total cash distribution
4
$0.01200000
Excluded amount (applicable to listed
PIEs)
N/A
Supplementary distribution amount Nil
Section 3: Imputation credits and Resident Withholding Tax
5

Is the distribution imputed Fully Imputed



1
Continuous issuers should indicate that this is based on the number of units on issue at the date of the form
2
“Gross distribution” is the total cash distribution plus the amount of imputation credits, per financial product, before the deduction of
Resident Withholding Tax (RWT).
3
“Gross taxable amount” is the gross distribution minus any excluded income.
4
“Total cash distribution” is the cash distribution excluding imputation credits, per financial product, before the deduction of RWT.
This should include any excluded amounts, where applicable to listed PIEs.
5
The imputation credits plus the RWT amount is 33% of the gross taxable amount for the purposes of this form. If the distribution is
fully imputed the imputation credits will be 28% of the gross taxable amount with remaining 5% being RWT. This does not constitute
advice as to whether or not RWT needs to be withheld.

If fully or partially imputed, please
state imputation rate as % applied
6

28%
Imputation tax credits per financial
product
$0.00466666
Resident Withholding Tax per
financial product
$0.00083333
Section 4: Distribution re-investment plan (if applicable)
DRP % discount (if any)
%
Start date and end date for
determining market price for DRP

Date strike price to be announced (if
not available at this time)

Specify source of financial products to
be issued under DRP programme
(new issue or to be bought on market)

DRP strike price per financial product
$
Last date to submit a participation
notice for this distribution in
accordance with DRP participation
terms

Section 5: Authority for this announcement
Name of person

authorised to make
this announcement
Brian Lee
Contact person for this
announcement
Brian Lee
Contact phone number 027 201 3040
Contact email address brian.lee@alliedfarmers.co.nz
Date of release through MAP

24/11/2020





6
Calculated as (imputation credits/gross taxable amount) x 100. Fully imputed dividends will be 28% as a % rate applied.