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Elders is paying its first dividend in nearly a decade after doubling its profit

Tony Lewis/Getty Images.

Agribusiness Elders has announced a statutory net profit after tax of $116 million for the year ended September 30, up from $51.6 million in the prior year.

Underlying profit after tax, not including one-off items, rose to $57.7m — an increase of $16.5m from the 2016 results.

Shares in the Adelaide-based business were up by more than 8% in afternoon trade:

The headline profit figures included a $38.3 million impairment reversal, which unwound previous investment losses booked against the Elders brand name.

“Management has determined in the current year that there is a reversal of the previously recognised impairment loss in relation to the Brand Name due to sustained positive results in line with the Eight Point Plan over a number of years, including the removal of profit and loss volatility and other uncertainty due to the exit of the Live Export segment,” the company said in the notes accompanying its financial statements.

This table from Elders’ Annual Report shows a summary of one-off items not included in underlying profit after tax:

Source: Elders Limited

Elders announced a fully franked dividend of 7.5 cents per share, payable on 15 December 2017. Shareholders will also receive an additional fully-franked special dividend of 7.5 cents.

“It is pleasing that we have been able to declare a final and special dividend, which are Elders’ first shareholder dividends since 2008,” Chief Executive Mark Allison said.

Operating cash flow increased to $81.6 million in the 2017 financial year, up from $48.6 million in the prior period, offset by cash outflows for investing and financing activities which left the company’s net cash position unchanged from the prior year.

“Both investing and financing cash outflows were higher than last year through increased acquisition activity and a focus on simplifying the Company’s capital structure,” Elders said.

The company reported underlying return of capital of 26.8%, above its 20% benchmark.

“Exiting from the non-core Live Export business (while maintaining our important involvement in the trade through the sourcing of livestock) is not only driving cost efficiencies but has allowed us to invest in areas, such as technical and digital services, which are much more aligned with our growth agenda,” Allison said.

“Looking ahead to 2020, Elders is focused on growth and development, improving our service offering for clients and delivering value to our shareholders.”

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