LIC 2018/19

Delivering For Our Farmers

Highlights
  • 246.5M
    Total Revenue
    up 4% from $236.4 million last year.
  • 19.5M
    Underlying Earnings
    up 541% from $3.0 million last year. This is Net Profit After Tax (NPAT) excluding the increase on fair value of the biological assets and related tax effect.
  • 15.6M
    10.98c per share
    Full Year Dividend
    up from $2.4 million / 1.71c last year. Fully imputed will be paid to shareholders on 23 August, representing 80% of underlying earnings.
  • 13.6M
    R&D investment
    continues to be high at 5.5% of revenue.
  • 22.2M
    Net Profit After Tax (NPAT)
    up 139% from $9.3 million last year.
  • 21-25M
    Expected future underlying earnings for 2019-20
    Assuming no significant climate event or milk price drop takes place between now and then nor any major impacts from biosecurity threats such as M. bovis.
  • * Please refer to the full market announcement to read notes about financial information.

“Our focus has been on delivering what we said we would do to improve the company’s performance. This is important at a time when dairy farmers need certainty and trusted partners to help them navigate the rapidly changing domestic and global industry.”

Murray King, LIC Chairman
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Creating a Platform for Growth

Separation
of LIC

Completed on
01/12/16

Transformation
Programme

Delivering Ongoing
Benefits

Share
Simplification

Implemented
July 2018

Strategy
Refresh

Completed July 2018
Embedded and Ongoing

A strong platform for future growth

“We went through the downturn, the low milk price, the transformation process and we have really come out the other end of that strongly, the result this year reflects that turnaround, improvement in business performance and improvement in profitability.”

Wayne McNee, LIC Chief Executive
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Our Strategy & Purpose

  • 60%
    Optimise the core

    Drive value from the current business

  • 30%
    Enhance the core

    Growth through innovation

  • 10%
    Capture value beyond the core

    Leverage existing capabilities for profitable growth outside pastoral dairy

  • Our Purpose

    LIC is a dairy farmer owned cooperative which empowers livestock farmers through the delivery of superior genetics and technology.

  • Our Ambition

    Continuing to lead the global pastoral dairy system

  • Our Potential

    Global Pastoral Genetics and Farm Management

Company Overview
  • 20+
    Countries
  • 16
    Sites
  • 11K
    New Zealand Customers
  • 771
    FTE Staff
  • 246.5M
    Full Year 18/19 Revenue4%

Directors' Report

LIC result reflects performance, profitability turnaround

The LIC Board is pleased to present the co-op’s financial results for the year ending 31 May 2019. The result is in line with expectations and reflects a turnaround in performance and profitability.

With a significant increase in profitability, as well as new records in strength of balance sheet, operating cash flow, and total revenue, the result is further evidence LIC is in great financial shape.

It means we can not only deliver a solid dividend to shareholders – the largest since 2013 – but the business can also continue its significant investment in R&D, digital transformation and consider new options and opportunities to deliver innovation-led growth.

This turnaround is a success story for LIC, after reporting a loss in 2016.

Our focus has been on delivering what we said we would do to improve the company’s performance. This is important at a time when dairy farmers need certainty and trusted partners to help them navigate the rapidly changing domestic and global industry.

LIC is the DNA of New Zealand’s dairy industry, providing superior genetics and agri-tech solutions to continually improve the productivity and profitability of your farm.

We have to make sure that in the data-driven future of global dairy, LIC and our farmers are in a position to be the disruptors, not the disrupted. That takes financial strength, high-performance and a clear focus on the innovations needed to keep our farmers ahead of the game.

The major strategic projects we have completed since 2016 to shape LIC into a modern, progressive co-op have enabled this year’s strong result. Importantly, we believe the results are sustainable and we are confident that we will continue to build on them in the coming years.

Innovation-led growth

While 2017-18 was a year of transformation, including capital restructure, and a strategy refresh, 2018-19 was about embedding LIC’s new innovation-led growth strategy with an ongoing focus on the core NZ dairy industry.

LIC’s investment in R&D remained high at $13.6M, or 5.5% of revenue, which continues to be well above the primary sector average of around 1%. We also received additional funding from MBIE and MPI to boost two key R&D projects aimed at driving improvements in the health and wellbeing of the national herd and more sustainable milk production.

Protecting the national herd from Mycoplasma bovis (M. bovis)

More than $800,000 was invested in new measures to protect its customers from the M. bovis cattle disease, including a world-leading daily testing regime for its bulls and significant changes to its herd testing operations. The co-op absorbed these costs to avoid additional price increases in 2018-19. An additional 64ha of farm land was also purchased in the Waikato to increase our biosecurity quarantine facilities.

Other business highlights

Sales from core products including artificial breeding (AB) and herd testing were strong, with 5.68 million AB straws sold and 10.96 million milk samples processed. Demand for animal health testing was also high, particularly Johne’s disease testing, and international business sales of genetics and automation technology continued to grow, particularly in the United Kingdom and Ireland.

Genetics sales in New Zealand saw farmers seeking to add further value to their herd by extending their AB period and with increased uptake of A2A2 genetics and genomic bull teams which provides access to elite new genetics earlier. The ‘A2 bull team’, introduced in 2018 to meet the growing demand of A2 milk, accounted for 10% of AB sales in its debut season, as more farmers look to breed towards an A2A2 herd.

During the year LIC also continued to improve its SPACE service and make it available to more farmers around the country. The satellite pasture management service, which offers a free trial period, now has more than 1000 customers registered for the annual subscription.

Previous strategic investments - in farm financial management software provider, Figured (2014), Australian heat detection aid manufacturer, Beacon (2015), and UK-based NMR (2017) - also made good gains in 2018-19 and this is reflected in the result.

Outlook

We are confident these results are sustainable and will be built on in the coming years.

We expect underlying earnings to increase to $21-25 million in 2019-20, assuming no significant climate event or milk price drop takes place between now and then nor any major impacts from biosecurity threats such as M. bovis.

Thank you for all your support over the last 12 months, and for backing us in recent years to make the necessary changes to turn this business around.

We look forward to another positive and busy 12 months.





Thank you

The LIC board, management team, and staff thank you for all your support over the last twelve months. We're very proud of the result we have been able to deliver this year and look forward to another positive and busy twelve months.

Download Result Announcement
Download Annual Report

To view previous results please click below.

2018/19 Half Year Financial Result
2017/18 Full Year Financial Result