NRI is success story of the 21st century

NRI chairman, Neil Earl, reflects on the solid year- end performance of NRI and its broader achievement as the rural independent success story of the 21st century.  

After 15 years as an independent buying
and marketing group,
NRI can proudly claim a 13
per cent share of the farm chemical and technical advisory market in rural Australia.  

As many Shareholders know, one of our corporate competitors – and arguably the oldest pastoral house to open in rural Australia – also holds a similar share of this market.  

However, what’s interesting is that it took that corporation 160 years to get to where NRI got to in just 15 years.  

How can that be? 
The answer lies with their two very different business models and philosophies for rural distribution.  

One, a listed public corporation, conservative, very established with hundreds of stores, all well-branded, indeed a household name.  

The other, an unlisted public company, progressive, not so well established and branded, just 100 stores and certainly not yet a household name.  

On the face of it, the odds are stacked against NRI. So why so successful and why so soon?  

As many readers know, the entire business world began to dramatically change around the turn of the 21st century.  

Nowhere was this more apparent than in Australia’s rural reselling sector – and I saw it first hand as a rural independent myself.  

Where ‘big and powerful’ used to mean ‘better’ in retailing circles, under the brave new order it’s more likely to mean ‘slow, unresponsive and expensive’ – perhaps with a bit of supplier ‘bullying’ thrown into the mix.  

While some of the world’s biggest corporate retailers got away with bullying their suppliers in the last century – to the point of market domination in Walmart’s case in the USA – most people simply won’t stand for that behaviour in business these days.  

They are too well educated and assertive. They know it’s wrong and aren’t afraid to speak up.  

As students of history know, an imbalance of power rarely lasts forever. Whether in business, politics or sport,  the underdog will eventually rise victorious – the long-suffering Western Bulldogs of the AFL are an apt example!  

All the pent-up frustrations, the tireless search for answers, eventually leads to a re-shaping of the game with new rules, ultimately giving the underdog a louder voice and a stronger hand.  

Around the time of NRI’s inception, many farmers, rural suppliers and rural independents all sensed there had to be a better way to do business.  

There had to be a smarter way to get rural merchandise from the point of manufacture, down the supply chain through the proverbial farm gate.  

Corporate dominance was at last being challenged; it could no longer be taken for granted.  


Seeds of success sown  

So it was that the seeds of NRI’s success were sown into this hot bed of industry upheaval – a time of great turbulence in rural distribution brought about by a series of corporate mergers and amalgamations.  

Out of the turbulence came a shift in the power balance. Farmers and suppliers slowly swung their support towards to smaller independent sector – the target audience of the new NRI group!  

With its leaner, meaner distribution model, NRI soon began attracting professional independent resellers of the highest quality.  

This gave us a wonderful base upon which to build the strongest, most formidable new independent buying and marketing group in rural Australia. The rest is history!  


Solid year-end performance  

Since NRI’s 2001 inception, the group has enjoyed a mighty 20% growth rate year-on-year for 15 years straight, reflecting a steadily expanding Shareholder base, most recently in northern NSW and Queensland.  

Group momentum continued to build as more rural independents, suppliers and farmers came to appreciate the group’s low-cost, supplier-direct distribution model  

Our steady growth trend also reflects the payoff for investing surplus profits into business development and membership growth – while ensuring operating expenses don’t exceed core business revenue.

This is a golden rule for staying liquid in the formative years of a new business.  This theme of judicious management is also reflected in the group’s latest year-end performance detailed in the 2016 annual report to Shareholders.  

In the end, our solid revenue and profit results delivered a healthy return on Shareholder funds of 18.7% on an after-tax basis.  

A fully-franked dividend of 22 cents per share was declared and paid to Shareholders in June 2016.  

Further, a fully-franked special dividend was paid based on individual Shareholder turnover transacted through NRI which your board deemed to be a fair and equitable distribution of funds.  

For this latest financial year, dividends and rebates paid to Shareholders were worth in excess of $2.8m which was paid out to you through your Central Desk.

It doesn’t take into account those negotiations central management does of your behalf that were paid directly to Shareholders by the group’s suppliers.  

Those rebates and other direct payments are worth at least 3 to 4 times that figure!  Based on the current valuation, the share allotment price would be $10.09 based on a 20% discount.  

Your board continues to hold the view that this discount will help minimise barriers to entry for quality independents seeking to join the NRI group.  

May the NRI brand and marketing momentum continue to build! 

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NATIONAL RURAL INDEPENDENTS

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