Allied Farmers Limited, Special Meeting 2025

25 October 2025

Allied Farmers (ALF)

The company will hold its Annual Shareholders Meeting at 11.00am Thursday 6 November 2025.

It will be a virtual meeting. You can join the meeting online at this link.

Company Overview

Allied Farmers Limited has a legacy dating back to 1889 with the formation of The Egmont Farmers’ Union Limited as a stock and station company. This company was sold to Hawera-based The Farmers’ Co-operative Organisation Society of New Zealand Limited. 1914 is the recorded starting date of the company today.

In 1997, the company revised its Constitution and changed its name to Allied Farmers Limited, listing on the NZX in May 2002 (after having traded on the NZX’s unlisted security facility since 1998). It has a long history of providing services to the agricultural sector.

Allied Farmers Limited today is an investment company focused on the agricultural sector, with two principal investments – a 67.7% shareholding in New Zealand Farmers Livestock Limited (NZFL) and 100% ownership of New Zealand Rural Land Management Partnership (NZRLM), the Manager of NZX- listed company New Zealand Rural Land Company (NZL.NZX).

In August 2025. the company announced it had reached conditional agreement to sell its holding in NZ Farmers Livestock Limited (NZFL) to Rural Livestock Ltd (RLL), a South Island based livestock agency. A resolution to approve the sale is to be considered at the Annual Shareholder Meeting.

Current Strategy

Allied Farmers is an investment vehicle focused on delivering earnings per share growth for shareholders by;

• providing strategic guidance and support to its investments to ensure that their business strategies are designed to deliver sustainable earnings growth in line with Allied Farmers’ expectations; and
• exploring growth opportunities that leverage its core strengths in the rural and asset management sectors and optimises the utilisation of the company’s tax losses.

Previous Year Shareholder Meeting

NZSA recorded the following key items at last year’s annual shareholder meeting:

1. The Board is focused on delivering earnings per share growth for shareholders and exploring growth opportunities that leverage its strengths in the rural and asset management sectors.
2. Allied Group net profit before tax was $7.315 million compared to $4.071 million for 2023.
3. The increased FY24 profit was driven by a one off $4.2 million gain on the book value of the sale-and-lease-back by NZ Farmers Livestock Limited of its interest in a livestock saleyard, of which $2.85 million was attributable to Allied Farmers’ shareholders.

The meeting report is available at this link.

Disclaimer

To the maximum extent permitted by law, New Zealand Shareholders Association Inc. (NZSA) will not be liable, whether in tort (including negligence) or otherwise, to you or any other person in relation to this document, including any error in it.

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Key

The following sections calculate an objective rating against criteria contained within NZSA policies.

Governance

NZSA assessment against its key policy criteria are summarised below.

Directors Fees:  Disclosure is generally good. The Board Charter notes “The Directors’ remuneration is paid in the form of Directors’ fees, payable in cash and/or equity securities. The Board may determine that additional allowances be paid to a Director, as appropriate, to reflect additional services provided to the Company by that Director. The total fees available to be paid to Directors is subject to shareholder approval.”

The Annual Report clearly states that Directors did not receive any share-based payments or performance incentives.

Director Share Ownership:  The Board Charter notes that Directors “are encouraged” to own shares, implying no compulsion. This is a position supported by NZSA.

CEO Remuneration:  The company discloses its remuneration policy on its website, which includes an overview of the remuneration philosophy applicable to the company. The Remuneration and Nominations Committee are responsible for implementing the policy.

Incentives: The CEO is paid a short-term incentive (STI) in cash and a long-term incentive (LTI by way of Performance Share Rights

NZSA encourages fulsome disclosure in relation to any incentive payments made to the CEO, including disclosure of measures (or measure ‘groups’), weightings, targets, and the level of achievement versus target for each component associated with any awards. This methodology is supported by the new NZX Remuneration Reporting Template.

The target STI is 50% of the base salary, with the maximum set at 100% of the salary. The measures, weightings and achievement are disclosed. For FY25, the STI was awarded at 75% of base remuneration (FY24: 100%). The company also discloses the FY26 targets.

For the LTI, the award target is not disclosed – although the company discloses that it issued 144,032 performance rights at 76 cents each, with a face value of these rights $109,464. The measure is based on average NPAT, assessed over a three-year vesting period. NZSA prefers the LTI to include a total shareholder return (TSR) measure.

NZSA observes that future performance rights are to be issued on the basis of the total number of shares on issue, however, this seems an unusual basis upon which to base an LTI award. We would far prefer a relationship of award linked to base salary.

NZSA prefers a weighting towards the LTI to ensure the CEO is aligned with the interests of long-term shareholders.

The company does not disclose the gender pay gap and CEO/employee remuneration ratio.

Golden Parachutes: In the interests of transparency, NZSA believes there should be explicit disclosure around the severance terms and notice periods associated with the CEO, including whether specific termination payments are offered.

It is pleasing to note no golden parachutes or similar payments are offered. Termination is by way of either the CEO or the company giving 3-month notice.

Director Independence:  Two of the three Directors are independent.

Board Composition: There is clear disclosure on an individual Board skills matrix in the Corporate Governance Report that describes the skills required to govern the company and its relationship to individual Directors.

The Annual Report discloses changes to Directors other roles. NZSA prefers a full disclosure of other roles in the interests of ease of use and transparency.

The Board has a good degree of functional and experiential diversity relevant to Allied Farmers.

Director Tenure:  NZSA looks for evidence of ongoing succession or ‘staggered’ appointment dates that reduce the risks associated with effective knowledge transfer in the event of succession. We also prefer a term maximum of 9-12 years, unless there are exceptional circumstances that may apply.

The Chair, Shelley Ruha, was appointed in 2022 and the CEO/Managing Director Richard Milsom in 2023. Philip Luscombe was appointed in 2005. We note he is standing for re-election at the ASM.

ASM Format: Allied Farmers is holding a virtual meeting. NZSA prefers a hybrid meeting (i.e., physical, and virtual) as a way of promoting shareholder engagement while maximising participation.

We note almost 70% of NZX companies hold hybrid meetings and this is the expectation of shareholders. We note the Notice of Meeting states the company has chosen to hold a virtual meeting due to the low turnout of shareholders at previous in person meetings. While we acknowledge the rationale, NZSA believes companies have a responsibility to allow shareholders to engage with Directors, the CEO and senior management on a face-to-face basis.

This comment is particularly relevant for a meeting which will consider the sale of a key investment, which drives the larger portion of ALF’s current operating profits.

Independent Advice for the Board & Risk Management:  NZSA looks for evidence, through disclosures, that a Board has access to appropriate internal and external expertise to support board assurance activities. We also look to see Boards are across their risk management responsibilities.

The Board Charter and Corporate Governance Report both offer clear disclosure that Board members can seek external and internal advice to support decision-making, while the Corporate Governance Statement notes that internal assurance staff (including General Counsel and CFO) have unfettered access to the Board.

The company offers disclosure of financial risks, with limited disclosure of business or operational risk categories provided in the Corporate Governance Report. The Corporate Governance Report offers clear disclosure on risk management and governance processes.

Audit

NZSA assessment against its key policy criteria are summarised below.

Audit Independence:  Good disclosure.

Audit Rotation:  The company ensures the Lead Audit Partner is rotated at 5 years as required by the NZX Listing Rules. BDO Auckland replaced RSM Hayes as Audit Firm in May 2025. We would encourage this appointment date along with the consequential appointment date of the Lead Audit Partner and their rotation date is disclosed in each year’s Annual Report.

Environmental Sustainability

Due to its size, Allied Farmers does not meet the requirements of a climate-reporting entity as defined by the New Zealand Climate Standards, and is not mandated to prepare climate-related disclosures.

NZSA policies encourage issuers to take a “broad approach” to environmental risks; this may result in disclosures that offer more insight into relevant environmental risks for the business beyond climate change. Allied Farmers do recognise the importance of non-financial issues in their Corporate Governance Statement, and encourage readers to see the Sustainability Statement they prepared in 2020.

NZSA encourages disclosure on key environmental sustainability matters, including sustainability governance, the assessment of sustainability risks and their impacts on strategy.

NZSA does not complete RAG assessments on non-Climate Reporting Entities.

Ethical and Social

NZSA assessment against its key policy criteria are summarised below.

Whistleblowing:  Good disclosure.

Political Donations:  The Annual Report discloses no political donations are made.

Financial & Performance

Allied Farmer’s share price rose from $0.78 to $0.82 (as of 22^nd October 2025) over the last 12 months – a 6% rise. This compares favourably with the NZX 50 which rose 4% in the same period. The capitalisation of ALF is $24m placing it 98^th out of 115 companies on the NZX by size and makes it a mid-sized company.

¹ per share figures based off actual shares at balance date (not weighted average)

² Attributable to shareholders of Allied Farmers.

Operating revenues were up 11% to $30.6m, and operating profit was up 28% to $4.7m. This is a good result and gives the highest operating profit to date.  NPAT was down 45% to $2.9m but remembering last year’s profit benefitted from a one off gain on sale of property providing $4.2m.

EPS similarly fell 45% to $0.10. This places ALF on a very low PE of 8. PE’s for ALF are consist in the 7-8 range.

ALF are in sound financial position with a positive current ratio, but the debt equity ratio increased substantially to 1.08, as the company took on an additional $10m of debt to purchase investment property assets. More details on these investment property assets can be found in Note C3 on page 33 of the Annual Report.

After the positive result, NTA per share continued its rise, up another 12% to $0.54. Shares trade at a 52% premium to NTA.

The company has not provided any forward-looking statements as at time of writing. On the 28^th August, the company announced the sale of NZ Farmers Livestock Limited for approximately $7.45m. We note that this business generated $2.49m of NPBT in FY25.

In the absence of dividends (a position supported by NZSA in the context of the company’s tax losses), the sale of NZFL does provide an opportunity for the Board to consider a partial capital return to offer a cash benefit to shareholders – depending on the availability of other investment opportunities.

WAF Limited is the largest shareholder with an 19.99% stake in the company.

Resolutions

This is an administrative resolution.

We will vote undirected proxies IN FAVOUR of this resolution.

Shelley was appointed to the Board in November 2022, and Chair in April 2023. She is a director and investor of companies across a variety of industries. She is also the board chair of NZX listed PaySauce Limited, and is a director of Heartland Bank Limited, Partners Life Limited, and 9 Spokes International Limited. Shelley’s previous directorships include Hobson Wealth Limited, Paymark Limited, JB Were Limited and The Icehouse. Shelley has a Bachelor of Commerce.

We will vote undirected proxies IN FAVOUR of this resolution.

Philip Luscombe was appointed to the Board in December 2005 and is Chair of New Zealand Farmers Livestock Limited. As a former agricultural research scientist, and with a broad farming background, Philip has experience in the agricultural sector. Philip is the board chair and a shareholder of the Argyll Dairy Farm group of farms in Otago. He is also an independent director of Te Rua O Te Moko Limited and a former director of PKW Farms Limited, Kiwi Cooperative Dairies Limited, Kiwi Milk Products Limited, Dairy Insight, Dexcel, and NZAEL Limited. Philip has a BAgSci(Hons).

We note the statement in the Notice of Meeting around the reasons the Board regard him as an independent Director notwithstanding his long tenure.

At the time of his last re-election in 2022 we stated,

“If he is re-elected his will have served 20 years at the end of that time. We understand his continuing tenure in the context of both the strategic re-organisation of the company and the need for institutional knowledge, given the relative recency of other director appointments. 

Nonetheless, we believe this should be his last term. We will support his re-election but would find it difficult to support a further term. In this context, we expect the company to offer clarity as to Mr. Luscombe’s future succession plans.”

We have seen no evidence to change our position that his re-election in 2022 should have been his last term. From NZSA’s perspective, his ongoing appointment is not just about independence, but also increases the risk for shareholders of knowledge transfer to an incoming director.

We will vote undirected proxies AGAINST this resolution.

Allied Farmers Rural Limited, a wholly owned subsidiary of the Company, has agreed to sell all of its shares in NZ Farmers Livestock Limited (“NZFL”) to Rural Livestock Limited (“RLL”) for approximately $7.45 million (subject to certain post-completion adjustments), under an agreement for sale and purchase of shares dated 27 August 2025  The other two shareholders in NZFL, Stockmans Holdings Limited  and Agent Company Limited, have also agreed to sell all of their NZFL shares to RLL under the Agreement.

The Board has commissioned Simmons Corporate Finance to prepare an independent report and a copy of this is included with the Notice of Meeting. The report concludes,

“In our opinion, after having regard to all relevant factors, the terms and conditions of the NZFL Sale are fair to the Company’s shareholders not associated with the Related Parties (the Non-associated Shareholders).”

We will vote undirected proxies IN FAVOUR of this resolution.

Proxies

You can vote online or appoint a proxy at https://nz.investorcentre.mpms.mufg.com/voting/ALF

Instructions are on the Proxy/voting paper sent to you.

Voting and proxy appointments close 11.00am Tuesday 4 November 2025.

Please note you can appoint the Association as your proxy. We will have a representative attending the meeting.

The Team at NZSA