The payout will come from the underlying after-tax earnings of $3.05 million achieved by the dairy farm services group in the year ended May 31.
LIC’s former co-operative shares and listed investment shares were cancelled and converted into a single ordinary share class on the NZAX on July 19 after a long-running and expensive transformation programme.
The dividend, totalling $2.22m and carrying imputation credits, will be paid on August 17 to shareholders registered on August 3. Trading in the new shares will begin on NZAX on July 23.
The transformation process has one-off costs of $20.66m in the latest year, reducing the reported earnings before interest and tax (Ebit) to $14.9m from $32.6m a year earlier.
However, Ebit also includes the non-cash revaluation of the group’s breeding bulls, which was an $8.6m gain compared to a $24.6m gain previously.
Chairman Murray King said excluding the revaluation and transformation costs impacts, ordinary Ebit was $27m for the year, well over the double the previous year.
Revenues were $236.4m from $203.5m.
The reported after-tax profit was $9.3m, down from $20.8m, because of the one-off costs and lower added bull values. A significant increase is expected this year.
As a business LIC is more match-fit than it had been before and better positioned to deliver good outcome for farmers, King said.
The core services of artificial breeding (AI) and herd testing performed strongly.
“Ongoing volatility in milk prices, increasing environmental constraints and new biosecurity challenges such as Mycoplasma bovis show how critical it is that we take nothing for granted and that we continue our focus on agility and being ready to respond to disruptive threats.”
LIC extensively tested its breeding bulls and found no sign or indication of M bovis.
“We are taking nothing for granted but we are confident that the measures we have in place will protect our bulls and customers from the disease,” King said.
Indications of LIC’s strengthening operating position are in the operating cashflow figures, up to $37.8m from $25.36m, and in the balance sheet where borrowings were reduced to $19.6m from $32m on total assets consistent at just over $341m. That pushed shareholders’ equity up to $242m from $233.4m, providing a ratio of 71% equity to total assets.
The main dairy genetics (AI) business increased revenue to $92.9m from $81.4m a year earlier and pre-tax profit rose to $62.3m from $49.6m. Herd-testing also made gains with revenue up to $31.3m and pre-tax profit to $12m from $24.6m and $7.9m respectively. As with the AI services, farm software is a high margin business for the group though growth is slower. Revenue rose to $43.9m from $41.2m and pre-tax profits to $26.8m from $24.7m.
LIC expects to spend $13.2m, 5.6% of revenue, on research and development this year, from $13.9m or 6.9% last year.
King said this year will not have any transformation costs, which will boost the operating earnings and provide underlying after-tax earnings of between $18m and $22m, assuming there are no significant adverse events.
In the annual report directors said the company has bought back 1.33m investment shares from people not accepting the capital restructuring issue of shares. There is disagreement over the price to be paid for them and arbitration is under way.
