Retrospective Milk Pay Step Up a further boost to Members’ returns

Norco Co-operative Limited Media Statement

1 November 2016

Following on from the announcement made by the Chairman and Chief Executive Officer on 30 June 2016 that the Co-operative was able to provide a consistent and stable milk price for the 2016/17 financial year in the face of significant downgrades to milk prices in southern Australia, there is now a further benefit to be passed on to the Co-operative’s Members / Milk Suppliers.

As a result of better than budgeted trading performance for the first quarter of the 2016/17 financial year, the Board has announced the payment of a retrospective step-up payment of 0.5 cents per litre for milk produced in the period July to September 2016 which puts extra money directly into the pockets of our Members / Milk Suppliers.

Norco Chairman Mr Greg McNamara said:

“The Board is very proud to be able to announce this step-up payment to Members on the back of milk price stability year on year. This payment underlines our commitment to Members that, as a Co-operative, we are willing to maximise Members’ returns to ensure our dairy communities continue to be sustainable. Our capacity to make this payment is due to the overall financial performance of the Norco business divisions, in particular, our Rural Retail and Agribusiness divisions have had a very good start to the 2016/17 financial year and Norco Milk has experienced a strong margin uplift due to the recent swing by consumers towards branded products.

The ground swell of support by consumers making that strategic purchasing decison to support brands, and in particular, the Norco branded range of products, has certainly been a major driver in enabling our Co-operative to pass on that financial reward from the support provided and generated by the consumer, to our collective dairy farmer owners.

On average our dairy farmer owners can expect a retrospective payment of $1,350 per farm. We thank Norco’s consumers for all of their support and for their willingness to purchase Norco products.”

Norco Chief Executive Officer, Mr Brett Kelly stated that he appreciates the support provided by the retail trade that has collectively assisted Norco by increasing further ranging and distribution opportunities, which has allowed the Norco brand to be made available to a wider reach of consumers.

“With the support at the retail shop front and the lift in sales from the consumer, the generation of additional profits from our increased sales has allowed us to support our farmer owned community with a retrospective payment” said Mr Kelly.

Mr Kelly also thanked all of Norco’s teams for their hard work in contributing to a step-up payment being able to be paid but also cautioned that it is still a very difficult economy and market place that Norco operates in.

As always, the Co-operative’s ability to pay a step-up is assessed after the trading results are known for each quarter of the financial year.

Mr McNamara added:

“Norco and the Co-operative model continues to add value to our Members’ businesses. On top of this step-up announcement which will be paid with the October 2016 milk pay, the first quarter Suppliers’ Patronage Scheme rewards will also be paid at the same time. A 6.0 percent dividend will also be recommended to Members at the upcoming 2016 Annual General Meeting to be held on 9 November 2016. All of these payments contribute positively to our Members’ total average returns.”