Pgg Wrightson Limited · NZX:PGW
Pgg Wrightson — H1 FY2010 Earnings Presentation
25 slides from Pgg Wrightson's earnings presentation, February 2010
Slide 1: Briefing on Half Year Results
PGG Wrightson Limited Briefing on Half Year Results Six months to 31 December 2009
Slide 2: Keith Smith, Chairman
eats smi Chairman, ANY sti \\ oN \ x UN J p an 2 PGG Wrightson
Slide 3: Overview
Overview • Trading conditions are tight, but in line with our expectations for the period. • Capital raise activity completed, including repayment of the amortised debt facility of $200m, three months earlier than required. • New cornerstone shareholder – Agria, a welcome addition to the register. •
Slide 4: Recapitalisation of PGG Wrightson
Recapitalisation of PGG Wrightson PGG Wrightson (PGW or the Company) raised $250.7m of new capital (before fees and costs) to repay debt and increase equity in PGG Wrightson Finance through: • $36.2m placement of ordinary shares to Agria Corporation at $0.88 per share • $180.7m 9 for 8 renounceable
Slide 5: Governance
Governance As of 1st March • Sir John Anderson will be appointed as a Director and Chairman • Keith Smith will remain on the Board as an independent Director • Craig Norgate, Baird McConnon and Murray Flett will retire from the Board. • Alan McConnon will be appointed to the Board as RPI’s nominated
Slide 6: Governance (continued)
Governance (continued) With effect from 1st March, the Board will be comprised as follows; Sir John Anderson (Chairman) Sir Selwyn Cushing Keith Smith Bill Thomas George Gould Bruce Irvine Xie Tao Guanglin (Alan) Lai Alan McConnon Tim Miles (Managing Director) 6
Slide 7: Tim Miles, Managing Director
Tim Miles Managing Director
Slide 8: Half Year Highlights
Half Year Highlights Customer Services • Restructuring service delivery around advice from experienced and skilled locally-based staff. • Enhanced our account management approach. Seeds, Grain and Nutrition • Seed & Grain performed strongly with sales performance similar to last year through the fir
Slide 9: Half Year Highlights (continued)
Half Year Highlights (continued) Financial Services • Confirmed capital injection of approximately $33.8m to PGG Wrightson Finance following the issue of Convertible Redeemable Notes by PGG Wrightson to Agria Corporation. • Reinvestment rates were at industry-leading levels at the long run average o
Slide 10: Half Year Highlights (continued)
Half Year Highlights (continued) Financial Services (continued) • Insurance earnings increased during a period when on-farm discretionary spend was being revised downwards. • Real Estate took action to minimise costs whilst maintaining structure and market presence, the business is positioned well f
Slide 11: Operating Results
Operating Results Year on Year Movements 11
Slide 12: Customer Services
Customer Services ‘000s Dec 2009 Dec 2008 Dec 2007* Dec 2006* Sales 364,770 481,765 385,940 357,601 EBITDA 10,468 21,011 14,458 14,755 * Adjusted for Wool Rural Supplies & Fruitfed •EBITDA back 26% ($6.4m) against a strong Dec 08 operating performance with different expectations on milk payouts. •Re
Slide 13: Customer Services (continued)
Customer Services (continued) ‘000s Dec 2009 Dec 2008 Dec 2007* Dec 2006* Sales 364,770 481,765 385,940 357,601 EBITDA 10,468 21,011 14,458 14,755 Livestock * Adjusted for Wool •Excellent growing conditions have impacted livestock trading, farmers retaining animals to rebuild capital stock post 07/0
Slide 14: Financial Services
Financial Services ‘000s Dec 2009 Dec 2008 Dec 2007 Dec 2006 Sales 41,076 50,448 52,831 39,542 EBITDA 7,307 8,412 10,426 8,886 PGG Wrightson Finance •Revenues held firm with industry-leading re-investment rates with high net interest margins maintained throughout the half. •EBITDA performance was st
Slide 15: Seed, Grain and Nutrition
Seed, Grain and Nutrition ‘000s Dec 2009 Dec 2008 Dec 2007 Dec 2006 Sales 122,001 145,675 122,380 102,994 EBITDA 12,930 17,268 8,019 8,131 Seed & Grain •Overall sales up 5%, margin back slightly on mix, against Dec 08 on a difficult trading environment. NZ forage sales showed solid volumes, in Dec 0
Slide 16: South America
South America ‘000s Dec 2009 Dec 2008 Dec 2007 Dec 2006 Sales 52,832 55,302 16,097 2,626 EBITDA 3,306 2,308 1,316 802 South America • Revenues in USD were up $3.4m, EBITDA in USD was up by $1m. Half of the earnings increase stemmed from Seeds reducing cost of goods sold across categories, and a move
Slide 17: Significant Events
Significant Events Subsequent to Period End Board changes to: • PGG Wrightson • Appointment of two independents to PGG Wrightson Finance $33.8m of additional equity into PGG Wrightson Finance (now $100m total equity). Repayment of $22.8m subordinated facility to South Canterbury Finance. PGG Wrights
Slide 18: Outlook
Outlook First six months in line with expectations for the period as per our Offer Document. January EBITDA also in line with Offer Document’s expectations for the month. Big earnings months of March, April and May are still to come. Balanced outlook: • Credit availability to agriculture generally •
Slide 19: Jason Dale, Chief Financial Officer
Jason Dale Chief Financial Officer
Slide 20: Earnings Overview
Earnings Overview Unaudited Dec 2009 Dec 2008 Dec 2007 Dec 2006 $m $m $m $m Revenue 583.3 735.3 619.8 542.4 Cost of sales (448.2) (578.9) (482.2) (412.1) Gross profit 135.1 156.4 137.6 130.3 Earnings before interest, tax, depreciation and amortisation 24.9 45.1 29.5 27.1 (EBITDA) Depreciation and am
Slide 21: Balance Sheet Review
Balance Sheet Review Unaudited Dec 2009 Dec 2008 $m $m Current Assets Cash and equivalents 36.2 17.8 Trade and other receivables 303.8 306.6 Finance receivables 418.0 342.7 Inventories 176.6 180.2 Other 21.1 19.9 Total Current Assets 955.7 867.2 Non Current Assets Other Investments 92.3 89.9 Finance
Slide 22: Cash flow from Operations
Cash flow from Operations Unaudited Dec 2009 Dec 2008 $m $m EBITDA 24.9 45.1 Depreciation and amortisation expense (3.6) (3.3) Equity accounted earnings of associates 0.8 0.9 Non-operating items (0.2) (8.1) Fair value adjustments 6.6 (47.2) Net interest and finance costs (24.2) (15.8) Income tax exp
Slide 23: Keith Smith, Chairman
eats smi Chairman, ANY sti \\ oN \ x UN J p an 2 PGG Wrightson
Slide 24: Dividend Policy
Dividend Policy • As stated in the Offer Document for the recent Rights Issue, the Board decided that there would be no interim or final dividend declared for FY2010. • It is expected that dividends will resume in the FY2011 financial year. 24
Slide 25: Closing
Closing • Solid financial position • Strong platform for performance and growth • Focus on – Cash generation – Business model for the future • Immediate outlook is difficult to predict, – Credit to farmers is currently tight – Commodity markets stabilising • We are confident that PGW is well-positio