Ridley Corporation Limited – Update on Property Sale

Property Sale and Inventory Update: Ridley Corporation Limited (ASX: RIC) advised that it has finished the sale of its second parcel of surplus land at Lara, referred to as Lot B, for the total consideration of $5.0 Mn. The undeveloped land represents a sum of 237.0 Hectares (Ha) in nearness to Avalon airport.

The terms of the deal incorporate the payment of $0.5 Mn at the date of sale, with the balance to be received in three equal instalments of $1.5 Mn payable 12 months, 24 months and 36 months after the date of sale. With a low-cost base which reflects the long period of tenure, a pre-tax profit of about $4.4 Mn is expected to be generated before net present valuing the deferred consideration.

Following up its release of 18 April 2018, the group advised the market that there has been no further supply of raw material from Red Lea in Q4FY18. Further, Maroota operations have consequently been rescaled to accommodate the reduction in processing volume and the group continues to make positive progress towards developing a new revenue stream for its Maroota site to replace the lost earnings, however, this will not make a significant positive contribution to the FY18 earnings. Subsequently, the full value of the finished goods inventory of about $8.4 Mn will be written down to zero at 30 June 2018. This decision brings to account an additional $5.4 Mn of cost over and above the estimated full-year pre-tax impact of $5.6 Mn.

According to the management, the group has generated positive shareholder value through the sale of Lot B at Lara. This represents good value for the shareholders.

The stock is trading at $ 1.365, close to 52-week low levels with the market capitalization of $424.79 Mn.


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