Wellington, Feb 25 NZPA - Rural services company PGG Wrightson reported half year profit of $4.1 million, compared to a year earlier loss of $32.8m, but revenue was hit by lower farm gate returns for the company's customers.
The result for the previous December half had reflected non-operating losses of $8.1m and fair value adjustments with a total negative effect of $47.2m. In the latest December half-year, those items were favourable by a net $6.3m, PGG Wrightson said today.
Revenue from continuing operations for the six months to December was $583.3m, compared with a historical high level of $735.3m in the December 2008 half-year which was driven by a record dairy payout and buoyant lamb returns.
Chairman Keith Smith said capital raising had enabled PGG Wrightson to re-establish a solid financial position after a period in which customer and market focus had been diverted by speculation about financial issues.
The company now had a strong balance sheet that complemented its core operating strengths in agribusiness customer relationships, technology, knowledge and experience.
Recapitalisation had provided a net $207m of new capital via share placements and a rights issue, enabling the company to retire a $200m amortising facility three months ahead of schedule, and to renegotiate long-term funding arrangements.
The fund raising included a $36.2m placement of shares to Agria Corporation.
In January, the group raised about $33.8m from the issue of convertible redeemable notes to Agria, with the proceeds invested in preference shares issued by PGG Wrightson Finance.
A reduction in revenue and operating earnings, compared to a year earlier, had been expected, affected by the impact on the group's farmer and grower customers of generally lower farm gate returns and, to a large extent, by a lack of liquidity in funding for the agricultural sector.
Excellent growing conditions had allowed farmers to minimise spending on fertiliser and supplementary stockfeed. That had a significant impact on sales, but as those items generally were lower margin, the impact on earnings was minimal, PGG Wrightson said.
The company today also today announced a series of changes to its board of directors, that would reduce membership from 11 to 10.
Sir John Anderson would join the board as an independent director and become chairman, while existing chairman Mr Smith would remain on the board as an independent director.
Craig Norgate and Baird McConnon, who had been directors since the formation of PGG Wrightson as nominees of Rural Portfolio Investments Limited (RPI), would step down from the board. Both were directors of Wrightson when that company merged with Pyne Gould Guinness in 2005 to form PGG Wrightson.
Alan McConnon, who had been nominated by RPI, would become a director of PGG Wrightson.
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