PGG WRIGHTSON LIMITED For the six months ended 31 December 2014
PGG Wrightson LimitedInterim Statement of Profit or Loss
For the six months ended 31 December
Continuing operations
Operating revenue Cost of sales Gross profit
Note
Other income
Employee benefits expense Research and development Other operating expenses
Operating EBITDA (excluding earnings of associates)
Equity accounted earnings of associates
Operating EBITDA (including earnings of associates)
Non-operating items 1
Fair value adjustments 2
EBITDA
Depreciation and amortisation expense
Results from continuing operating activities
Net interest and finance costs 3
Profit from continuing operations before income taxes
Income tax expense
Profit from continuing operations
Discontinued operations
Profit from discontinued operations (net of income taxes) 4
Profit for the period
Earnings per share
Basic earnings per share (New Zealand Dollars) 5
Continuing operations
Basic earnings per share (New Zealand Dollars) 5
The accompanying notes form an integral part of these financial statements.
1
PGG Wrightson LimitedInterim Statement of Other Comprehensive Income
For the six months ended 31 December
Profit for the period
Other comprehensive income/(loss) for the period Items that will never be reclassified to profit or loss Changes in fair value of equity instruments Remeasurements of defined benefit liability
Deferred tax on remeasurements of defined benefit liability
Items that are or may be reclassified to profit or loss Foreign currency translation differences for foreign operations Effective portion of changes in fair value of cash flow hedges Income tax on changes in fair value of cash flow hedges
Other comprehensive income/(loss) for the period, net of income tax
Total comprehensive income for the period
Profit attributable to: Shareholders of the Company Non-controlling interest
Profit for the period
Total comprehensive income/(loss) attributable to:
Shareholders of the Company
Non-controlling interest
Total comprehensive income for the period
The accompanying notes form an integral part of these financial statements.
2
PGG Wrightson Limited
Interim Segment Report
For the six months ended 31 December
(a) Operating Segments
The Group has two primary operating divisions: Rural Services and Seed & Grain. Rural Services is further separated into three reportable segments, as described below, which are that segment's strategic business units. The strategic business units offer different products and services, and are managed separately because they require different skills, technology and marketing strategies. Within each segment, further business unit analysis may be provided to management where there are significant differences in the nature of activities. The Chief Executive Officer or Chairman of the Board reviews internal management reports on each strategic business unit on at least a monthly basis.
- Retail. Includes the Rural Supplies and Fruitfed retail operations, AgNZ (Consulting), Agritrade and ancillary sales support, supply chain and marketing functions.
- Livestock. Includes rural Livestock trading activities and Export Livestock.
- Other Rural Services. Includes Insurance, Real Estate, Wool, PGG Wrightson Water, AgNZ (Training), Regional Admin, Finance Commission and other related activities.
- Seed & Grain. Includes Australasia Seed (New Zealand and Australian manufacturing and distribution of forage seed and turf), Grain (sale of cereal seed and grain trading), South America (various related activities in the developing seeds markets including the sale of pasture and crop seed and farm inputs, together with operations in the areas of livestock, real estate and irrigation), and other Seed & Grain (Research and development, international, production and corporate seeds).
Other non-segmented amounts relate to certain Corporate activities including Finance, Treasury, HR and other support services including corporate property services and include adjustments for discontinued operations (PGW Rural Capital Limited) and consolidation adjustments.
(b) Operating Segment Information
Total segment revenue
Intersegment revenue
Total external operating revenues
Operating EBITDA (excluding earnings of associates)
Equity earnings of associates
Operating EBITDA (including earnings of associates)
Non-operating items
Fair value adjustments
EBITDA
Depreciation and amortisation
Results from continuing operating activities
Net interest and finance costs
Profit/(loss) from continuing operations before income tax
Income tax (expense) / income
Profit/(loss) from continuing operations
Discontinued operations
Profit/(loss) for the period
Segment assets
Equity accounted investees
Assets held for sale
Total segment assets
Segment liabilities
The accompanying notes form an integral part of these financial statements.
3
PGG Wrightson Limited Interim Segment Report continued For the six months ended 31 December
(b) Operating Segment Information continued
Retail
Livestock
Other Rural Services Rural Services
Total segment revenue
Intersegment revenue
Total external operating revenues
Operating EBITDA (excluding earnings of associates)
Equity earnings of associates
Operating EBITDA (including earnings of associates)
Non-operating items Fair value adjustments EBITDA
Depreciation and amortisation
Results from continuing operating activities
Net interest and finance costs
Profit/(loss) from continuing operations before income tax
Income tax (expense) / income
Profit/(loss) from continuing operations
Discontinued operations
Profit/(loss) for the period
Segment assets
Equity accounted investees
Assets held for sale
Total segment assets
Segment liabilities
The accompanying notes form an integral part of these financial statements.
4
PGG Wrightson Limited Interim Statement of Cash Flows For the six months ended 31 DecemberCash flows from operating activities
Cash was provided from:
Receipts from customers Dividends received Interest received
Cash was applied to:
Payments to suppliers and employees
Interest paid
Income tax paid
Net cash flow from operating activities
Cash flows from investing activities
Cash was provided from:
Proceeds from sale of property, plant and equipment and assets held for sale
Net decrease in finance receivables
Net proceeds from sale of investments
Cash was applied to:
Purchase of property, plant and equipment
Purchase of intangibles (software)
Net cash paid for purchase of investments
Net increase in finance receivables
Net cash flow from investing activities
Cash flows from financing activities
Cash was provided from:
Increase in external borrowings and bank overdraft
Repayment of loans by related parties
Cash was applied to:
Dividends paid to shareholders Dividends paid to minority interests Repayment of loans to related parties
Repayment of external borrowings and bank overdraft
Net cash flow from financing activities
Net increase in cash held
Opening cash
Cash and cash equivalents
Reconciliation of Profit After Tax With Net Cash Flow from Operating Activities
Profit after taxation
Add/(deduct) non-cash/non operating items: Depreciation, amortisation and impairment Fair value adjustments
Net (profit)/loss on sale of assets/investments
Bad debts written off (net) (Increase)/decrease in deferred taxation Equity accounted earnings from associates Contractual obligations accrual Discontinued operations
Effect of foreign exchange movements
Other non-cash/non-operating items
Add/(deduct) movement in working capital items:
Movement in working capital due to sale/purchase of businesses (Increase)/decrease in inventories and biological assets (Increase)/decrease in accounts receivable and prepayments Increase/(decrease) in trade creditors, provisions and accruals Increase/(decrease) in income tax payable/receivable Increase/(decrease) in other assets/liabilities
Net cash flow from operating activities
The accompanying notes form an integral part of these financial statements.
5
PGG Wrightson LimitedInterim Statement of Financial Position
As at 31 December
ASSETS Current
Note
Cash and cash equivalents 6
Short-term derivative assets Trade and other receivables Finance receivables
Income tax receivable
Assets classified as held for sale
Biological assets
Inventories
Total current assets
Non-current
Long-term derivative assets
Biological assets
Deferred tax asset
Investments in equity accounted associates
Other investments 7
Intangible assets
Property, plant and equipment 8
Total non-current assets
Total assets
LIABILITIES Current
Debt due within one year 6
Short-term derivative liabilities Accounts payable and accruals Income tax payable
Total current liabilities
Non-current
Long-term debt 6
Long-term derivative liabilities Other long-term provisions Defined benefit liability
Total non-current liabilities
Total liabilities
EQUITY Share capital Reserves
Retained earnings
Total equity attributable to shareholders of the Company
Non-controlling interest
Total equity
Total liabilities and equity
These financial statements have been authorised for issue on 23 February 2015.
Alan Lai Bruce Irvine
Chairman Director
The accompanying notes form an integral part of these financial statements.
6
PGG Wrightson Limited Additional financial disclosures including notes to the accountsFor the six months ended 31 December 2014
PGG Wrightson Limited
Additional financial disclosures including notes to the accounts
For the six months ended 31 December
1 Non-operating Items
Capital gains/(losses) on sale of businesses, property plant and equipment
Sale of investment in 4Seasons Feeds Limited
Bargain gain on acquisition of business Defined benefit superannuation plan Restructuring
Other non-operating items
2 Fair Value Adjustments
Continuing operations Assets held for sale Biological assets
3 Interest - Finance Income and Expense
Finance income contains the following items: Other interest income
Finance income
Interest funding contains the following items: Interest on interest rate swaps Interest on bank loans and overdrafts Other interest expense
Bank facility fees
Interest funding expense
Foreign exchange contains the following items:
Net gain/(loss) on foreign denominated items
Derivatives not in qualifying hedge relationships
Foreign exchange income/(expense) Net interest and finance costs
4 Discontinued Operations
On 31 August 2011 the Group sold its finance subsidiary PGG Wrightson Finance Limited (PWF) to Heartland New Zealand Limited's wholly-owned subsidiary Heartland Building Society (Heartland). In connection with the PWF sale transaction the Group transferred certain excluded loans to its wholly owned subsidiary, PGW Rural Capital Limited (PGWRC), which has worked to realise or refinance these facilities over the short to medium term. As at 31 December 2014 four loans remain in PGWRC.
5 Earnings Per Share and Net Tangible Assets
Number of shares
Weighted average number of ordinary shares
Number of ordinary shares
Net Tangible Assets
Total assets
Total liabilities
less intangible assets
less deferred tax
Net tangible assets per security
Earnings per share
7
PGG Wrightson Limited
Additional financial disclosures including notes to the accounts continued
For the six months ended 31 December
6 Cash and Bank Facilities
Cash and cash equivalents
Bank overdraft Current bank facilities Term bank facilities
The Company entered into a new syndicated facility agreement on 20 December 2013. This agreement currently provides bank facilities of up to $176.00 million. The Company has granted a general security deed and mortgage over all its wholly-owned New Zealand and Australian assets to a security trust. These assets include the shares held in South American subsidiaries and associates. ANZ Bank New Zealand Limited acts as security trustee for the banking syndicate (ANZ Bank New Zealand Limited, Bank of New Zealand Limited and Westpac New Zealand Limited).
The Company's bank syndicate facilities include:
- Term debt facilities of $160.00 million maturing on 1 August 2016.
- A working capital facility of up to $60.00 million maturing on 1 August 2016.
The syndicated facility agreement also allows the Group, subject to certain conditions, to enter into additional facilities outside of the Company syndicated facility. The additional facilities are guaranteed by the security trust. These facilities amounted to $26.40 million as at 31 December 2014 including:
- Overdraft facilities of $9.56 million.
- Guarantee and trade finance facilities of $6.54 million.
- Standby letters of credit of $10.30 million in respect of the current Uruguayan bank facilities outlined below.
The Group had current Uruguayan bank facilities amounting to $29.78 million as at 31 December 2014 which are secured in part by the standby letters of credit outlined above.
7 Other Investments Note
Non-current investments
BioPacificVentures 9
Sundry other investments including saleyards
Advances to associates
Investment in BioPacificVentures
In 2005 the Group committed $14.00 million to an international fund established for investment in food and agriculture life sciences. The investment in BioPacificVentures has an anticipated total lifespan of 12 years. At 31 December 2014 $13.74 million has been drawn on the committed level of investment (30 June 2014: $13.57 million, 31 December 2013: $13.45 million). A fair value loss of $2.44 million was recorded in the Statement of Other Comprehensive Income for the BioPacificVentures investment in the period to 31 December 2014.
Saleyard investments, which do not have a market price in an active market and whose fair value can not be reliably determined, are carried at cost.
8 Property, Plant and Equipment
Acquisitions and disposals
During the period to 31 December 2014, the Group acquired assets with a cost of $4.15 million (30 June 2014: $39.35 million, 31 December 2013: $4.63 million), together with assets acquired through business combinations of Nil (30 June 2014: $0.17 million, 31 December 2013: $0.22 million).
Assets with a net book value of $0.16 million were disposed during the period to 31 December 2014 (30 June 2014: $1.60 million, 31 December 2013: $0.51 million), resulting in a gain on disposal of $0.27 million (30 June 2014 Gain: $0.71 million, 31 December 2013 Gain: $0.59 million).
9 Commitments Note
There are commitments with respect to:
Capital expenditure not provided for
Investment in BioPacificVentures 7
Contributions to Primary Growth Partnership
Primary Growth Partnership - seed and nutritional technology development
The Group announced on 18 February 2013 that it had completed the contracting process for the Primary Growth Partnership (PGP) programme with the Ministry of Primary Industries. The PGP programme is a Seed and Nutritional Technology Development Programme that aims to deliver innovative forages for New Zealand farms. As a result of entering into the partnership the Group is committed to contributions to the partnership of $3.95 million over the six year life of the programme which ends on 31 December 2018. As at 31 December 2014 total contributions of $1.25
million (30 June 2014: $0.93 million, 31 December 2013: $0.62 million) have been made to the programme.
10 Contingent Liabilities
PGG Wrightson Loyalty Reward Programme
The PGG Wrightson Loyalty Reward Programme is run in conjunction with the co-branded ASB Visa reward card. A provision is retained for the expected level of points redemption. A contingent liability of $0.15 million represents the balance of live points that do not form part of the provision. Losses are not expected to arise from this contingent liability.
8
PGG Wrightson Limited
Additional financial disclosures including notes to the accounts continued
For the six months ended 31 December
11 Seasonality of Operations
The Group is subject to significant seasonal fluctuations. The Retail business is weighted towards the first half of the financial year as demand for farming inputs are generally weighted towards the Spring season. Livestock and Seed & Grain activities are significantly weighted to the second half of the financial year. Seed & Grain revenues reflect the fact the Group operates in geographical zones that suit Autumn harvesting and sowing. New Zealand generally has spring calving and lambing and so Livestock trading is weighted towards the second half of the financial year in order for farmers to maximize their incomes. Other business units have similar but less material cycles. The Group recognises that this seasonality is the nature of the industry and plans and manages its business accordingly.
12 Related Parties
Parent and ultimate controlling party
The immediate parent of the Group is Agria (Singapore) Pte Ltd and the ultimate controlling party of the Group is Agria Corporation.
Transactions with key management personnel
Key management personnel compensation comprised: Short-term employee benefits
Post-employment benefits
Termination benefits
13 Events Subsequent to End of Interim Period
Dividend
On 23 February 2015 the Directors of PGG Wrightson Limited resolved to pay an interim dividend of 2.0 cents per share on 8 April 2015 to shareholders on the Company's share register as at
5.00pm on 12 March 2015. This dividend will be fully imputed.
Fixed assets
In January 2015 the Group committed to building a new logistics centre in Montevideo, South America. This commitment included the purchase of land for $2.1 million together with the payment of
$3.0 million in respect of initial design and building work in February 2015.
There have been no other material events after the reporting date that would affect the interpretation of the interim financial statements or the performance of the Group.
14 Reporting Entity
PGG Wrightson Limited (the "Company") is a company domiciled in New Zealand, registered under the Companies Act 1993 and listed on the New Zealand Stock Exchange. The Company is an issuer in terms of the Financial Reporting Act 2013.
The interim financial statements of PGG Wrightson Limited for the six months ended 31 December 2014 comprise the Company and its subsidiaries (together referred to as the "Group") and the
Group's interest in associates and jointly controlled entities.
The Company is primarily involved in the provision of rural services.
15 Basis of Preparation
The interim financial statements have been prepared in accordance with New Zealand Generally Accepted Accounting Practice ("NZ GAAP"). They comply with the New Zealand equivalents to International Financial Reporting Standards ("NZ IFRS") as applicable for interim financial statements for profit orientated entities, and in particular NZ IAS 34. The financial statements comply with International Financial Reporting Standards as issued by the IASB, as applicable for profit oriented entities.
The interim financial statements do not include all of the information required for full annual financial statements. The same accounting policies and methods of computation are followed in the interim financial statements as applied in the Group's latest annual audited financial statements.
Certain comparative amounts have been reclassified to conform with the current period's presentation.
In the current period the Group changed the format of the presentation of the financial statements. These changes are designed to enhance reader comprehension and visibility of results and performance. The overall aim is to improve disclosure effectiveness. The key changes include:
- Changing the order of the primary financial statements and other note disclosures.
- Separating the Interim Statement of Comprehensive Income into the Interim Statement of Profit or Loss and the Interim Statement of Other Comprehensive Income.
9
PGG Wrightson Limited
Interim Statement of Changes in Equity
For the six months ended 31 December
Foreign currency translation
Realised capital and
Revaluation
Hedging Defined benefit
Retained
Non- controlling
Share capital
reserve
other reserves
reserve
reserve
plan reserve Fair value reserve
earnings
interest Total equity
$000 $000 $000 $000 $000 $000 $000 $000 $000 $000
Balance at 1 July 2013 606,324 (6,665) 23,629 686 (108) (15,693) 3,570 (359,275) 3,638 256,106 Total comprehensive income for the period Profit or loss - - - - - - - 13,082 324 13,406 Other comprehensive income Foreign currency translation differences - (6,243) 85 (94) - - - 1,319 (183) (5,116) Effective portion of changes in fair value of equity instruments, net of tax - - - - - - 38 - - 38 Effective portion of changes in fair value of cash flow hedges, net of tax (36) - (36) | |
Reclassification upon sale of Heartland New Zealand Limited investment Defined benefit plan actuarial gains and losses, net of tax Total other comprehensive income Total comprehensive income for the period Transactions with shareholders, recorded directly in equity Contributions by and distributions to shareholders Buy out of non-controlling interest Dividends to shareholders Total contributions by and distributions to shareholders Balance at 31 December 2013 | - - - - - - (3,471) 3,471 - - - - - - - 5,843 - - - 5,843 |
Reclassification upon sale of Heartland New Zealand Limited investment Defined benefit plan actuarial gains and losses, net of tax Total other comprehensive income Total comprehensive income for the period Transactions with shareholders, recorded directly in equity Contributions by and distributions to shareholders Buy out of non-controlling interest Dividends to shareholders Total contributions by and distributions to shareholders Balance at 31 December 2013 | - (6,243) 85 (94) (36) 5,843 (3,433) 4,790 (183) 729 |
Reclassification upon sale of Heartland New Zealand Limited investment Defined benefit plan actuarial gains and losses, net of tax Total other comprehensive income Total comprehensive income for the period Transactions with shareholders, recorded directly in equity Contributions by and distributions to shareholders Buy out of non-controlling interest Dividends to shareholders Total contributions by and distributions to shareholders Balance at 31 December 2013 | - (6,243) 85 (94) (36) 5,843 (3,433) 17,872 141 14,135 |
Reclassification upon sale of Heartland New Zealand Limited investment Defined benefit plan actuarial gains and losses, net of tax Total other comprehensive income Total comprehensive income for the period Transactions with shareholders, recorded directly in equity Contributions by and distributions to shareholders Buy out of non-controlling interest Dividends to shareholders Total contributions by and distributions to shareholders Balance at 31 December 2013 | - - (498) - - - - - (483) (981) - - - - - - - (7,642) (64) (7,706) |
Reclassification upon sale of Heartland New Zealand Limited investment Defined benefit plan actuarial gains and losses, net of tax Total other comprehensive income Total comprehensive income for the period Transactions with shareholders, recorded directly in equity Contributions by and distributions to shareholders Buy out of non-controlling interest Dividends to shareholders Total contributions by and distributions to shareholders Balance at 31 December 2013 | - - (498) - - - - (7,642) (547) (8,687) |
Reclassification upon sale of Heartland New Zealand Limited investment Defined benefit plan actuarial gains and losses, net of tax Total other comprehensive income Total comprehensive income for the period Transactions with shareholders, recorded directly in equity Contributions by and distributions to shareholders Buy out of non-controlling interest Dividends to shareholders Total contributions by and distributions to shareholders Balance at 31 December 2013 | 606,324 (12,908) 23,216 592 (144) (9,850) 137 (349,045) 3,232 261,554 |
Balance at 1 January 2014 606,324 (12,908) 23,216 592 (144) (9,850) 137 (349,045) 3,232 261,554 Total comprehensive income for the period Profit or loss - - - - - - - 29,167 (315) 28,852 Other comprehensive income Foreign currency translation differences - (506) 104 (96) - - - (1,319) (129) (1,946) | |
Effective portion of changes in fair value of equity instruments, net of tax Effective portion of changes in fair value of cash flow hedges, net of tax Defined benefit plan actuarial gains and losses, net of tax Total other comprehensive income Total comprehensive income for the period Transactions with shareholders, recorded directly in equity Contributions by and distributions to shareholders | - - - - - - (880) - - (880) - - - - 416 - - - - 416 - - - - - (2,159) - - - (2,159) |
Effective portion of changes in fair value of equity instruments, net of tax Effective portion of changes in fair value of cash flow hedges, net of tax Defined benefit plan actuarial gains and losses, net of tax Total other comprehensive income Total comprehensive income for the period Transactions with shareholders, recorded directly in equity Contributions by and distributions to shareholders | - (506) 104 (96) 416 (2,159) (880) (1,319) (129) (4,569) |
Effective portion of changes in fair value of equity instruments, net of tax Effective portion of changes in fair value of cash flow hedges, net of tax Defined benefit plan actuarial gains and losses, net of tax Total other comprehensive income Total comprehensive income for the period Transactions with shareholders, recorded directly in equity Contributions by and distributions to shareholders | - (506) 104 (96) 416 (2,159) (880) 27,848 (444) 24,283 |
Effective portion of changes in fair value of equity instruments, net of tax Effective portion of changes in fair value of cash flow hedges, net of tax Defined benefit plan actuarial gains and losses, net of tax Total other comprehensive income Total comprehensive income for the period Transactions with shareholders, recorded directly in equity Contributions by and distributions to shareholders | |
Sale to non-controlling interest - - - 60 - - - - - 60 | |
Dividends to shareholders Total contributions by and distributions to shareholders Balance at 30 June 2014 | - - - - - - - (15,264) (931) (16,195) |
Dividends to shareholders Total contributions by and distributions to shareholders Balance at 30 June 2014 | - - - 60 - - - (15,264) (931) (16,135) |
Dividends to shareholders Total contributions by and distributions to shareholders Balance at 30 June 2014 | 606,324 (13,414) 23,320 556 272 (12,009) (743) (336,461) 1,857 269,702 |
Balance at 1 July 2014 606,324 (13,414) 23,320 556 272 (12,009) (743) (336,461) 1,857 269,702
Total comprehensive income for the period
Profit or loss - - - - - - - 19,477 240 19,717
Other comprehensive income
Foreign currency translation differences - 2,759 - - - - - - 291 3,050
Effective portion of changes in fair value of
equity instruments, net of tax
Effective portion of changes in fair value of cash flow hedges, net of tax
Defined benefit plan actuarial gains and
losses, net of tax
- - - - - (2,450) - - (2,450)
- - - - 99 - - - - 99
- - - - - (2,251) - - - (2,251)
Total other comprehensive income - 2,759 - - 99 (2,251) (2,450) - 291 (1,552)
Total comprehensive income for the period Transactions with shareholders, recorded directly in equity
Contributions by and distributions to shareholders
- 2,759 - - 99 (2,251) (2,450) 19,477 531 18,165
Buy out of non-controlling interest - - - - - - - - - -
Dividends to shareholders - - - - - - - (26,689) (208) (26,897)
Total contributions by and distributions to
shareholders
- - - - - - - (26,689) (208) (26,897)
Balance at 31 December 2014 606,324 (10,655) 23,320 556 371 (14,260) (3,193) (343,673) 2,180 260,970
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