Shareholder Update, May 2024

Dear valued shareholder,

Welcome to our first Shareholder Update for 2024. Going forward, we’ll send these updates quarterly so you can stay on top of how your co-operative is performing against our business strategy and key projects.

We have also recorded a short video, which you can view here, discussing some of the topics in this update.

We remain optimistic about the future of New Zealand’s primary sector, and we know that now is the time to keep our heads up and continue moving forward, despite the challenges we face. While fertiliser sales have been impacted by continuing economic pressures on farm, it’s pleasing to see that nutrient volumes are holding steady. We have a comprehensive cost control programme underway to preserve as much value for shareholders as possible and provide sustainability going forward, to support you and your role in the sector's continued prosperity. 

We continue to focus on our balance sheet and anticipate a reduction in our net debt by approximately $50m from $248m, as at 31 May last year. The sale proceeds from the divestment of Seales Winslow will also be used to reduce debt. This balance sheet focus, along with modest retentions, bolsters our equity ratio from 55% to a forecast c66% by the end of FY2024.

You can read a snapshot of Ballance’s current performance here.

Data sharing with Fonterra

Our arrangement with Fonterra will allow farmers to have their data shared between both co-operatives, minimising data entry duplication between digital tools used by shared Ballance and Fonterra farmers. Integrating both systems means that we can provide our farmers with better data driven recommendations and you can complete your compliance process for Nitrogen more efficiently.

Only shareholders who consent to share their data between each co-operative will have data transferred, so it is very much farmer-permissioned and at your control.

Gas efficiencies at Kapuni

Improving energy efficiency is a key focus of the team at Kapuni which, in addition to financial benefits, also benefits the environment. For example, each 0.1GJ improvement in gas efficiency translates to a reduction of 55.7kg of CO2 emitted. Over the past year, the team has focused on chasing fugitive emissions of CO2 throughout the plant, and we believe these are now below levels that we can accurately measure.

Stock availability

As we near the end of the season and financial year, our inventory plans are on target. We are managing our remaining inventory for this season to match demand where required and have shipping and manufacturing plans in place for next season, starting to arrive in June.

Making informed decision on the quality of your nutrients 

You may have seen recent media coverage on Australian fertiliser company, Marnco, which entered the New Zealand market in April. The coverage was in relation to one of Marnco’s products, which is being marketed as a single superphosphate (SSP).

We tested the product that Marnco is promoting as SSP and independent results showed that it does not meet the definitions and standards that the Fertiliser Council has defined for SSP under the Fertmark Code, relating to phosphate levels and solubility.

The Fertiliser Association of New Zealand has subsequently taken steps to address these concerns and protect our farmers and growers by ensuring they are not misled by unsubstantiated product claims and remain informed about their options for the best type of fertiliser for New Zealand soils. We will keep you informed of any developments.

Pausing our Kapuni decarbonisation project

Following a thorough review, the Ballance Board has made the decision to pause the phase one pathway of our large-scale decarbonisation project for our Kapuni ammonia urea plant. Despite this pause, we remain committed to reducing emissions in the production of nutrients critical to the country’s agriculture sector.

This decision is centered around the financial feasibility of implementing the plan in the current fiscal climate as well as the need for more certainty of the regulatory environment, including more clarity on the application of the Emissions Trading Scheme (ETS) and the use of carbon capture as a potential step towards meeting decarbonation goals.

Our commitment to reducing our emissions includes looking at alternative products and investigating methods for reducing carbon emissions, such as carbon capture.

Commerce Commission approval of Farmland’s purchase of SealesWinslow

We are pleased to announce that Farmlands has received approval from the Commerce Commission to proceed with the planned purchase of SealesWinslow. The purchase will create a national feed business with a bigger footprint and combined strengths to offer more value to customers. The teams will work together from the targeted sale date of 31 May 2024.

Annual Meeting

Our 2024 Annual Meeting will be held online on Wednesday 25 September. Shareholders will receive an email with a link to join the meeting along with further details, so please keep an eye on your inbox.

Directors Elections

The 2024 Directors election is also coming up. This year Dacey Balle in the North Ward and Cameron Henderson in the South Ward are retiring by rotation and have both confirmed they are standing for re-election. We will be calling for further nominations in the next couple of months once the nomination period opens. Should we receive more than one candidate in a ward, an election will be conducted. Shareholders will be notified of all candidates in wards and will be provided with information on how to vote in the election.

Shareholders are strongly encouraged to take part in this very important process and nationwide voting means that shareholders can now vote for any candidate, regardless of the ward they reside in.

We will also be calling for nominations for a new associate Director and will circulate information on that process too.

A quick reminder that you can reach out to either of us directly anytime, via email or phone, with any questions or feedback.

Warm regards,

Duncan Coull
027 472 7110

Kelvin Wickham
Chief Executive
021 513 028

This update may include forward-looking statements regarding future events and the future financial performance of Ballance Agri-Nutrients. Such forward-looking statements are based on the beliefs of and assumptions made by management along with information currently available at the time such statements were made. These forward-looking statements may be identified by words such as ‘guidance’, ‘anticipate’, ‘believe’, ‘estimate’, ‘expect’, ‘intend’, ‘will’, ‘plan’, ‘may’, ‘could’, ‘ambition’, ‘aspiration’ and similar expressions. Any statements in this announcement that are not historical facts are forward-looking statements. These forward-looking statements are not guarantees or predictions of future performance, and involve known and unknown risks, uncertainties and other factors, many of which are beyond Ballance Agri-Nutrients’ control, and which may cause actual results to differ materially from those projected in the forward-looking statements contained in this announcement. Factors that could cause actual results or performance to differ materially from those expressed or implied in the forward-looking statements are discussed herein and also include Ballance Agri-Nutrients’ anticipated growth strategies, Ballance Agri-Nutrients' future results of operations and financial condition, economic conditions and the regulatory environment in New Zealand, competition in the markets in which Ballance Agri-Nutrients operates, any impacts or risks to Ballance’s anticipated growth strategies, future financial condition and operations, economic conditions or the regulatory environment in New Zealand arising from or otherwise with Covid, other factors or trends affecting the primary sector generally and Ballance Agri-Nutrients’ financial condition. Except as required by law Ballance Agri-Nutrients undertakes no obligation to update any forward-looking statements whether as a result of new information, future events or otherwise. The information contained in this update has not been independently audited or reviewed.