Pgg Wrightson Limited · NZX:PGW
Pgg Wrightson — FY2009 Earnings Presentation
28 slides from Pgg Wrightson's earnings presentation, Aug 27, 2009
Slide 1: PGG Wrightson Limited: Briefing on 2009 results
PGG Wrightson Limited Briefing on 2009 results 1
Slide 2: Keith Smith, Chairman
Keith Smith Chairman a PGG Wrightson
Slide 3: Overview – Trading Environment
Overview – Trading Environment • Most challenging operating environment in all countries – Worst global recession in 70 years • Very strong trading performance in first half • Very difficult operating environment in second half but especially the last quarter – Significant slowdown in activity with
Slide 4: Overview – Key Events
Overview – Key Events • Governance • Capital Structure • Banking • Operating Model • 2009 Results Two items had major impact on 2009 Financial Results – SFF Settlement $49.6m – NZ Farming Systems Uruguay investment writedown $39.2m 4
Slide 5: Tim Miles, Managing Director
Tim Miles Managing Director 5
Slide 6: Summary of 2008/09 Year
Summary of 2008/09 Year • Strong trading performance despite difficult environment – Seed, Grain and Nutrition business ahead of prior year – Rural Supplies revenue up year-on-year – Steady progress in South American business – Continued market support for Finance company • Strengthened people capab
Slide 7: Financial Overview
Financial Overview 2009 vs 2008 Jun 2009 $m Jun 2008 $m % Increase Revenue 1,293.1 1,196.9 8% EBITDA 76.7 84.1 -9% *excl wool Revenue EBITDA Customer Services Rural Supplies Fruitfed Livestock Export Livestock Irrigation Financial Services Finance Funds Management Real Estate Insurance Seed, Grain a
Slide 8: Financial Overview – Revenue quarterly variance
120,000,000 100,000,000 80,000,000 60,000,000 40,000,000 20,000,000 (20,000,000) (40,000,000) (60,000,000) (80,000,000) Revenue Quarterly variance 2009 vs. 2008 South America mSeed, Grain & Nutrition GFinancial Services Customer Services
Slide 9: Financial Overview – EBITDA quarterly variance
EBITDA Quarterly variance 2009 vs. 2008 15,000,000 10,000,000 5,000,000 4 @South America mSeed, Grain & Nutrition GFinancial Services (5,000,000) Customer Services (10,000,000) (15,000,000) (20,000,000)
Slide 10: Customer Services Overview
Customer Services Overview *Excl Wool EBITDA of $33.7m (2008 $36.5m) REVENUE of $777.1m (2008 $720.8m) • Further strong performance from Fruitfed • Rural supplies revenue up despite reduction in farmer spend • Solid Livestock contribution in difficult conditions • Initiatives: – Reorganisation of Re
Slide 11: Financial Services Overview
Financial Services Overview EBITDA of $15.2m (2008 $22.9m) REVENUE of $94.0m (2008 $117.5m) • PWF – Strong growth in lending, deposits and earnings in PWF – Reinvestment rate at 74% through period – Crown Deposit Guarantee – $100m bond issue completed successfully – $108.5m undrawn bank lines – Asse
Slide 12: Seed, Grain and Nutrition Overview
Seed, Grain and Nutrition Overview EBITDA of $43.2m (2008 $37.6m) REVENUE of $360.1m (2008 $335.6m) • Business grew despite economic conditions • Australian seeds business impacted by drought, Victorian bushfires and exposure to dairy • Strong demand for Seeds business in New Zealand in first half,
Slide 13: South America Overview
South America Overview EBITDA of $4.6m (2008 $2.9m) REVENUE of $95.6m (2008 $55.6m) • Business impacted by worst drought in 30 years • Seeds and Livestock businesses in Uruguay performed above expectations – Rural Supplies affected by reduced farmer spending • Disappointing year in Argentina – impac
Slide 14: Strategic Overview
Strategic Overview Driving better operational performance by doing more with what we have … • Increased focus on customer service offerings – Regional managers appointed to provide local leadership and move decision making closer to the customer – Presenting unified PGW face to Customers – Implement
Slide 15: Strategic Overview
Strategic Overview Driving better operational performance by doing more with what we have … • Improving operational efficiency – Approximately 10% reduction in headcount – 6.5% salary reduction – Focus on releasing working capital; inventory and debtors – Transportation o standardised fleet –annuali
Slide 16: Strategic Overview
Strategic Overview More focused on cash generation from our business portfolio … • Streamlining the portfolio of businesses – Exited non-performing businesses – Aust Livestock and Real Estate, Export Livestock • Retaining businesses with strong cashflow • Focus on NZ business with significant bottom
Slide 17: Jason Dale, Chief Financial Officer
Jason Dale Chief Financial Officer 17
Slide 18: Reconciliation of Operating Profit to Reported NPAT
Financial Overview Reconciliation of Operating Profit to Reported NPAT 2009 ($m) 2008 ($m) EBITDA 76.7 89.2 Discontinued business 4.3 -5.3 Depreciation/amortisation -6.5 -6.1 EBIT 74.5 77.8 Interest -31.4 -22.6 Taxation -13.1 -22.3 NOPAT 30.0 32.9 NZS performance fee (pre-tax) - 17.8 NZS share reval
Slide 19: Impact of IFRS valuation requirements
Financial Overview Impact of IFRS valuation requirements • Non recurring profitability include: – Non cash - mark to market adjustment resulted in a writedown on New Zealand Farming Systems Uruguay (NZS) shares ($39.2m). – There were positive one-off gains principally related to capital gains from t
Slide 20: Operating Cash Flow
Financial Overview Operating Cash Flow 2009 ($m) 2008 ($m) Receipts from customers 1,269.1 1,212.0 Dividends received 0.7 0.8 Interest received 59.6 53.2 Cash in 1,329.4 1,266.0 Payments to suppliers and employees -1,211.0 -1,161.2 Interest paid -62.1 -59.7 Income tax paid -4.4 -18.9 Cash out -1,277
Slide 21: Balance Sheet
Financial Overview Balance Sheet 2009 per 2008 per Financial 2009 Financial Statements Restated Statements $m $m $m Current assets 494.0 494.0 497.1 Non-current assets 490.2 490.2 467.4 Finance receivables 559.9 559.9 507.0 Total assets 1,544.1 1,544.1 1,471.5 Current liabilities 704.5 328.6 372.9 N
Slide 22: Capital Management Plan
Capital Management Plan • Debt covenants waived for 30 June 2009 • Revised package agreed with the banking syndicate for PGW Group • Requirement for repayment of $200m by 31 March 2010 • Continuation of initiatives to repay banking syndicate from the ongoing Amortisation Programme announced earlier
Slide 23: Revised Banking Package
Revised Banking Package The Company bank syndicate facilities include: – A term debt facility of $197.9 million that matures on 31 August 2012 (previously $275 million expiring by 30 September 2011). – An amortising debt facility of $200 million due to be repaid by 31 March 2010 (previously $125 mil
Slide 24: Ongoing Amortisation Programme
Ongoing Amortisation Programme • Continuing focus on existing business efficiencies • Amortising debt facility repayment programme – Operating cashflow o Target nil cash dividends o Cost savings – Working capital initiatives – operating cashflow $52m vs $26m – Ongoing disposal of sundry surplus asse
Slide 25: Keith Smith, Chairman
Keith Smith Chairman a PGG Wrightson
Slide 26: Distribution
Distribution The Board decided that there would be no further dividend declared in relation to the 2008/09 year. 26
Slide 27: Closing
Closing • Company looking to address the challenges and is dealing with the current environment • Global outlook unpredictable, but agriculture will be strong in medium-term – Improvement in commodity markets is inevitable and will favour quality producers – PGW well-placed to take advantage of incr
Slide 28: Outlook
Outlook • Market conditions for the rest of 2009 expected to be similar to today – may be some improvement in 2010. • Notwithstanding guidance provided previously on the FY10 financial year the following significant events have occurred since that announcement: – Farmer sentiment dropped dramaticall