27-Sep-2012

Chairman's Review
For the Year Ended 30 June 2012

Please find Tandou Limited's Annual report for 2012 released today

Three years ago the Board set a strategy to build on our strengths in farming (agriculture, pastoral) and water taking advantage of our location in the Connected Murray. Our objective is to offer an investment opportunity that is best positioned to take advantage of irrigated farming and commodity prices with the added strength of a large water investment.

This year has been a successful step in the evolution of the Company's strategy.

  • Tandou's successful profit result of $7.5 million before tax demonstrates the Company's ability to generate consistent earnings and a strong return on investment from both its farming and water assets.
  • The external strategic review we commissioned reaffirms the Tandou business model, emphasising the importance of combining ownership of water entitlements and cropping operations to reduce earnings volatility.
Performance

The Company has now achieved consistent and solid returns over several periods through various seasonal and operating conditions.

Particularly pleasing for directors is that all operating divisions (cropping, pastoral and water) contributed profit to the Group result.

While current lower cotton price levels and the subsequent reduction in projected earnings from cotton production may have an impact during 2012/13, higher grain prices and continued profitable returns from the water business are expected to offset this to some extent.

Based on the Company's earnings diversity and the Board's confidence in the business fundamentals Tandou has developed a sustainable dividend policy aimed at providing a consistent return to its valued shareholders. This year we have declared a dividend for the first time in 9 years.

Outlook

Tandou has a recent track record of consistent earnings, proven management expertise and a strong balance sheet position.

With the positive longer term outlook for soft commodities and the growth of water values the Board believes the Company is well placed to deliver earnings growth. Directors also continue to explore further opportunities through generic growth or acquisition to expand Tandou's business scale and market relevance, while delivering increasing and sustainable returns to shareholders.

Increasing corporate and investor interest in Australian agriculture and irrigated water provides a platform of underlying support for the continued growth of the industry. "New" capital is redefining agribusiness as we currently know it creating opportunity for profitable growth. There is no doubt agriculture is an attractive long term investment option which is attracting strong interest from local and international investors. Tandou is well placed as a major player in the soft commodity and water space and has the framework and flexibility to adapt as the industry evolves.

In conclusion

Directors acknowledge the contribution of our loyal and dedicated management and staff. Tandou's success over recent years has largely been a result of their efforts and this has positioned the Company to take advantage of the positive outlook for our farming and water businesses.

The Board thanks all of our shareholders for your ongoing support and we look forward to seeing you at the Company's annual general meeting on 8 November 2012.



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