PGG Wrightson Limited (PGW) Earnings Call Transcript & Summary

Good morning everyone. I'm John Nichol. Chairman and Independent Director and a member of PGG Wrightson's Audit Committee. I rejoined the Board on the 14th of October, 2025 and became a share on the 16th of October. Previously, I was a PGG Wrightson's Director and remote Audit Committee from 22nd of October 2013 to the 30th of April 2019. I'd like to welcome you all to our 2026 Annual Shareholders Meeting. It happens to be the 175. Today's meeting is being held both in person and online through Computershare's online meeting platform. Before we get started, there are a few housekeeping matters to cover and the unlikely event of an emergency during the meeting, a word more directors to safe exit, hotel staff will assist evacuation process. In case of a seismic event, please take cover and your chairs running -- not sure if you bet of it. Staff will advise and assist. Toilets are located to the left through the doors you entered this room and follow the signs. For those of you who have parked in the hotel car park, please assure you have validated your parking by scanning the QR code at the back of the room. We're recording this meeting and will be posted on our website later today. I confirm that we have a quorum and I declare the 2026 Annual Shareholders Meeting open. We will refer to PGG Wrightson Unlimited as PGW throughout our presentation today. As today's online meeting is being held by Computershare's online meeting platform, shareholders, proxies and guests can attend the meeting virtually. All shareholders attending whether in person or online can participate in the meeting, submit questions and cast votes. If you are joining us virtually and have a question to submit during the meeting, please select the Q&A tab on the right half of your screen at any time. It seems ironic that I'm offering advice to people to use laptops and computers and type your question into the field and press submit. Should you require any assistance, you can type your query in the chat function and one of the Computershare team will apply to your query. Please note that while you can submit questions from now on, we will not address them until the relevant part of the meeting. Please also note that your questions may be moderated or if we receive multiple questions on one topic, they may be amalgamated. Finally, due to time constraints, we may run out of time to answer all your questions. If this happens, we'll endeavor to answer them in due course via e-mail. Voting today will be conducted by way of a poll on all items of business. For those online, if you're eligible to vote at this meeting, you'll be able to cast your vote under the vote tab. Once voting is open, the resolutions and voting options will allow voting. To vote simply select your direction from the options shown on screen. Your vote has been cast when the tick appears. To change your vote for voting closes, you can select change your vote. You can change your vote up until the time I declare voting closed. For those in the room, if you do not have a voting paper, please talk to one of the Computershare team who can assist you. Voting papers will be collected at the end of the resolutions and voting section of the meeting by the Computershare team who will act as scrutineers. The results will be released through the NZX after the meeting. I'll now open the online voting for resolutions. So please submit your vote at any time. The resolutions will now be available on the vote tab. The PGW Board had 3 changes to its membership during the 2026 year. At last year's Annual Shareholders' Meeting on the 14th of October 2025, shareholders voted against the reelection of the then appointed Chair Garry Moore and Independent Chair, Sarah Brown. Later that day, I joined the PGW Board and as dependent Director of the Audit Committee, on the 16th of October was appointed the Chair. Before we begin the formal business of the meeting, I'd like to introduce the Board who attend our meeting today. In the first row, we have Mark Allison, Mark joined the Board as a non-independent director on the 1st of July 2006. We also have Independent Director at Wilson Liu; and Director U. Kean Seng; and Independent Director, Dr. Charlotte Severne. Members of the executive team here today. Seated alongside me is PGW CEO, Stephen Guerin, along the Chief Financial Officer, Peter Scott and General Manager, Corporate Affairs, Julian Daly, although they run the other way. I'd like to acknowledge the other members of the executive team who are in attendance, GM Retail & Water, Nick Berry; People & Safety, Sarah Mears; Livestock & Real Estate, Peter Newbold; and GM Wool, Rachel Shearer, emphasis on Shearer. This is Peter Scott's last ASM as he is leaving PGW at the end of this month, having been with the company for over 11 years. I wish to take this opportunity on behalf of the Board to thank Peter for his contribution to PGW. Peter has played a key role on several significant milestones to the business over the years, including the divestment of PGG Wrightson seeds in 2019, the transformation of PGW's IT platforms and ensuring the business has retained ongoing financing capacity to support growth initiatives, including GO-STOCK and the acquisition of the Nexan Group. Congratulations to Bryan Harrison, who's down there who joined PGW in 2010 and has been the Group Financial Controller since 2018 on his appointment to the executive team as CFO from November. Also congratulate Angela Huntley, who will join PGW's executive team from November, the newly established role of General Manager Business Services and Technology. Angela is currently PGW's Business Support Services Manager, and she's been with PGW since 2014. I'd like to acknowledge that we have representatives from our share register, Computershare, our auditors, Ernst & Young; and representatives from Rabobank and BNZ with Westpac attending online. We're also joined by the New Zealand Shareholders Association CEO, Olivia Stan -- Olivia Amanda. No apologies have been notified prior to the meeting. Are there any apologies from the floor that we should note? The company executive has confirmed that the notice of meeting was sent on September 2026 to all registered shareholders and to other persons entitled to receive that notice. I confirm the minutes of the company's previous Annual Shareholders' Meeting held on 14th of October 2025. We're approved as a true and correct record of the Board meeting on 24th of November 2025. The minutes of the meeting are posted on the investor -- Investor Center section of our website. The financial statements and the reports of the directors and orders for the year ended 30 June 26 as set out in the company's annual report. On 15th September 2026, the annual report was posted on PGW's website and our NGX page and a physical copy of the report was sent to shareholders who requested it. We also released our sustainability report and climate statement for the year ended 30 June '26, which provides an overview of our sustainability performance and activities over the past financial year, including our climate-related disclosures. This report is also available on our website. Please note that we will refer to both GAAP and non-GAAP performance measures. We use operating earnings before interest, tax, depreciation and amortization or operating EBITDA, is a key measure of performance, and I encourage you to refer to our full accounts for details of how this relates to GAAP measures. I can confirm that 677 shareholders have appointed proxies for the purposes of this meeting in respect of approximately 50 million shares. I'll now move to the order of the business of the meeting. It's quite a long introduction. I'll begin by providing a brief overview of the performance results and sustainability highlights, and then I'll hand over to our Chief Executive, Stephen Guerin. Stephen will provide an operational overview for individual business units, and he'll also summarize how our business is trading the current financial year-to-date. I will conclude our presentation by discussing our forecast guidance for the financial year to 30 June 2027. The time for questions will follow before we move to the formal business of resolutions and voting. As outlined in the notice of meeting, the business of the meeting comprises 3 ordinary resolutions relating to the election of myself as an Independent Director. The election of Mark Allison as a Director and authorizing the Board to determine the auditors' remuneration. Before I discuss our financial performance highlights, I'd like to acknowledge the 175th anniversary of George Gold opening [indiscernible] first general store in May 1851. Over the year, significant tributaries, including Pingo Guinness, Right Stevenson, Delgatti Williamson, Kate O'Donald Reid and many others have come together to serve rural communities nationwide. Our story is woven into the history of New Zealand agriculture. From stock and station services to rural and horticultural supplies, research and real estate, our legacy has continually adapted to meet the needs of farmers and grows strong relationships, practical experience, expertise and a deep understanding of real life from the backbone of our team's work today. The trust has been doing over generations and remains central to our business. Although our heritage the source of deep pride our focus remains firmly on the future. Financial year performance for the year ending 30 June '26. All comparisons with the prior financial year, Operating revenue of $1.1 billion was up $99 million or 10%. Operating EBITDA of $64.3 million, was up $8.2 billion or 15%. Net profit after tax of $15.6 million, was up $4.9 million or 46%. Cash flow from operating activities of $52.6 million, was up $40.2 million, earnings per share of $0.206 per share, was up $0.65 per year. Fully imputed final dividend, $0.055 per share was paid on 6th of October 2026, bringing total fully imputed dividends paid for the year to $0.10 per share. Sustainability highlights for the financial year 30 June '26 include PGW is continuing its voluntary climate reporting beyond the regulatory requirements. We achieved a 23% reduction in greenhouse gas emissions since FY '21 baseline and 100% of PGW sites are supplied by renewable energy. As I just mentioned, PGW's group operating revenue of $1.1 million was up $99 million or 10% on the prior financial year. This marks the first time PGW has exceeded $1 billion in revenue since the divestment of PGG Wrightson seeds in 2019, which is a positive indicator of the continued growth in our business. PGW delivered a strong financial performance in financial year '26, with group operating EBITDA increasing to 64.3%, up $8.2 million or 15% on the prior year. This result was driven by improved performances from both our retail and water and agency groups. These businesses were supported by favorable commodity prices across several sectors and recovery and farmer confidence which encouraged greater investment across the rural economy. Within Retail & Water, we achieved record revenue with growth across both business units, improved conditions in the sheep, beef, dairy and horticultural sectors support and increased customer activity throughout the year. Rural supplies delivered a strong result benefiting from favorable market conditions, reinvestment on farm and solid execution. Fruit Fed horticulture also performed well with increased revenue driven by strong activity in the KB fruit sector and continued investment by growers despite ongoing challenges across parts of arable farming in the bitterculture sector. Agri Trade continues its positive momentum, supported by growth in agri chemical sales, a successful integration of Nexan and a continued focus on supply chain efficiency and operational excellence. Our agency group delivered another good result supported by favorable contents across the livestock wall and real estate sectors. Livestock was to stand out performing -- was the standout performer benefiting from historically elevated capital and dairy prices, robust international demand for red meat improved farm profitability and renewed pharma confidence. The ball sector also experienced improving conditions during the year. The strengthening prices and greater collaboration across the industry, contributing to increased optimism. Real estate delivered an improved performance as activity increased across rural lifestyle and residential markets. In particular, demand for dairy and horticulture property strengthened, supported by improved farm economics, lower interest rates and renewed by confidence. Across both operating groups, we remain focused on supporting our customers strengthen our market positions and investing in initiatives that will drive sustainable long-term growth for PGW. Net profit after tax of $15.6 million in financial year '26, was up $4.9 million, 46%. Then PGG benefited from the improved operating result and foreign exchange gain. The year includes a full year of amortization expense related to the Microsoft D365 interpose reporting platform, which went live in April 2025. Our strategy continues to guide decision-making and investment across the group, providing a framework for growth and innovation. During financial year '26, we progressed several initiatives designed to strengthen our customer offering, build technical capability and reinforce PGW's position as the trusted patent to New Zealand's farmers and growers. One of the most significant developments during the year was the continued integration of the Nexan business. The integration has progressed well with the action on PGW teams working closely together to leverage the complementary strengths. The acquisition has enhanced our animal health capability, expanded our proprietary product portfolio and strengthened our ability to deliver innovative solutions that support customer productivity and performance. FY '26 also marked the first full season of trading the Blue Ag, our proprietary agrichemical range. Early adoption has been encouraging and strong support from both our rural supplies and fruit fed horticulture previously known as Fruitfed Supplies teams. Blue Ag enhanced supply chain resilience provides customers the greater choice and further differentiates PGW's agronomy offering in the marketplace. Another important milestone has been the successful establishment of our hosting research station, established to strengthen our technical expertise and innovation pipeline that facility is already generating valuable technical and commercial insights that will help inform future product and service development, ultimately benefiting our farmer and grower customers. Together, these initiatives demonstrate our commitment to investing in the capabilities, products and expertise that will support our customers and position PGW for continued success in the year ahead. Our FY '26 results reflect solid progress against the 3 strategic performance measures that underpin PGW's long-term success. These measures cover financial performance measures, safety performance and customer experience. These measures help us to check our progress against our strategic objectives and ensure we remain focused on delivering sustainable value for shareholders and other shareholders. I'll begin with our financial performance measures. Our first financial KPIs, normalized earnings tax or EBIT with a target of 10% growth over a rolling 3-year period. Over the 3 years to FY '26 delivered growth of 91.4%, significantly exceeding our target and reflecting the substantial improvement in earnings across the group. Our second financial KPIs return on capital employed or ROCE with a target of 10% growth over a rolling 3-year period. We missed this target by a small margin by achieving an average of 8.1% on a 3-year cycle. While is with below our target, the result was influenced by the challenging trading conditions experienced in FY '24. Our third financial KPIs earnings per share. For FY '26, our target was $0.157 per share, we exceeded this target delivering earnings per share of $0.206, supported by stronger performance across rural supplies, livestock and real estate business. Turning now to safety. Ensuring our people return home safe and well every day remains a fundamental priority. We continue to strengthen our safety culture and encouraged by the positive progress being made as the health and safety and well-being program matures, particularly in the area of critical risk management. Our safety KPI focuses on continuous annual improvement and our total recordable injury frequency rate or driver in FY '26, we achieved our target recording of 3.5% reduction in traffic compared with the previous year. Our final performance measure is customer experience recognized as critical role it plays in sustainable business performance. We measure this through an externally surveyed group Net Promoter Score known as NPS, which is internationally recognized indicator of customer satisfaction and loyalty. Independent market research confirmed a significant 111.1% year-on-year increase in PGW's group NPS compared to FY '25, resulting in us achieving this KPI. Overall, these results demonstrate continued progress against our strategic objectives and provide a strong platform for future growth. Before I hand over to PGW's Chief Executive Officer, Stephen Guerin, I would like to thank you our shareholders for your continued support and commitment to PGW. We value the confidence you placed in our company and remain focused on executing our strategy, strengthening the business and creating long-term value to shareholders. Several weeks ago, we invite all shareholders to take part in the short survey to help us better understand what matters most to you as an investor and your perspectives on PGW. We launched the survey to gain insight so that we can continue to improve our shareholder communications and engagement. The survey was opened for a month from 9 September to 9 October. We'll now analyze results and hope to gain insights into what attracts investors to PGW on what drives long-term investment decisions, expectations around growth, dividends, capital allocation and shareholder returns. Our investors assess the performance, strategy and future opportunities of the business, which financial metrics and outcomes are the most important when evaluating PGW's investment views on risk, valuation and factors that increase investment confidence. The feedback will help inform how we engage with you as shareholders and communicate our strategy and performance. We also hope that the feedback will provide insights into the priorities of our investor base. Thank you to everyone who participated. I now invite Stephen to provide an operational overview for the year.

Thank you, John. [indiscernible], and good morning to everyone. I'm delighted to be here with you today to give this presentation. Operating cash flow represents the cash generated by PGW's day-to-day trading activities and is a key measure of the group's ability to convert earnings to cash and funding working capital and support of the business' growth. PGW delivered a significant improvement of the cash generation during FY '26 with operating cash flows increasing to $52.6 million, an increase of $40.2 million on the prior year of $12.4 million. This resulted from the improved financial performance of the business, along with favorable working capital movements compared to the prior year. The group saw a further $7 million growth in gross stock receivables. Tax payments were $2.2 million higher than the prior year. Cash outflow from investing activities was $24.5 million, an increase of [ $10.3 million ] versus the prior comparative period. This included $19.7 million in respect to the Nexsan Group acquisition with fixed assets and intangible purchases of $6.6 million, partially offset by proceeds from fixed asset disposals totaling $1.6 million. We continue to invest for future growth during the year has included the acquisition of the Nexan business, along with ongoing investment in GO-STOCK and our wider business infrastructure, which was funded by debt. Net interest-bearing debt or NIBD was $2.4 million higher than the prior comparative period at $88 million, reflecting the strong operating cash flows and the deliberate strategic investments undertaken during the year as I've noted. In the FY '26 financial statements, we have fully provisioned our credit exposure in relation to the ongoing [indiscernible] solvency. And I refer you to Notes 3 and 11 on the financial statements for more details. While we continue to work on recovery options, we have taken a conservative view from a financial reporting perspective. We have taken a conservative view with the provision of the entire $5 million. We've also completed a review of our syndicated banking facilities, extending them through to September 2029, and increasing available funding capacity provides additional flexible financial flexibility to support future growth opportunities and included the expansion of GO-STOCK. Our people remain central to our success. And during the year, we continued to invest in leadership and development and systems to support our teams. In June 2026, PGW had 1,532 permanent and temporary or fixed-term employees. PGW also engaged 146 casual employees, 160 commission agents and 3 specialist consultants, bringing the total staff head count to 1,841 people. We introduced new coaching a leadership development program supported several significant organizational is and continue to modernize our people systems to improve our people's experience. Other safety and wellbeing remain core focused on PGW. During FY '26, we strict our health and safety framework through the implementation of several key risk management standards and continue to invest health -- health monitoring and work and well-being. I'm also pleased to report we saw a reduction in lost time in dress, as John has already spoken about. The MAX Rewards loyalty program continues to foster customer value by developing and strengthening our key customer relationships. Sustainability remains an important part of PGW's support -- as PGW's support in agriculture and horticultural sectors. We're responding to changing customer regulatory and stakeholder expectations. During FY '26, despite changes in New Zealand's climate reported requirements, our Board reaffirmed commitment to transparency and accountability through the continuation a voluntary portal aligned with these climate standards. Our sustainability report and climate statement mark our third of our climate-related disclosures. I'm pleased to report that PGW reduced greenhouse gas emissions by 23% compared to the FY '21 baseline, driven by ongoing improvements in defense efficiency and operational emissions management. We are well on the way towards achievement of our goal of a 30% reduction of greenhouse gases by 2030. During the year, we continued to expand our live emissions vehicle fleet by increasing number of hybrid vehicles to 106 and introducing vehicle -- electric vehicle options. We also made further progress in strengthening responsible business practices across our supply chain through an expanded supply due diligence program, helping to ensure we are well prepared for the evolving regulatory environment. On behavior, we remain focused on the practical initiatives that deliver environmental and commercial benefits. These include the rollout of rooftop solar installations across the selected sites, supporting lower emissions, improved energy resilience and long-term value creation. We are encouraged by the progress we've made and remain committed to supporting a sustainable future for both PGW and the rural sectors we reserve. I'll now discuss the individual business unit results. The regional water business includes rural supplies, fruitfed horticulture, water and ag trade, delivering -- delivered a strong result for the FY '26 year. Operating revenue was $851.2 million, which was up $78.3 million or 10% on FY '25. This is a record year for the division, with both revenue and gross margin reached the highest levels to date. Rural suppliers achieved record sales in [indiscernible] and fruitfed horticulture successfully maintained market share or navigating challenging conditions in the viticultural sector. Operating EBITDA for the group was $44.5 million, which improved $2.3 million or 6% from the prior year result. Throughout the year, we remain focused on and disciplined focus on disciplined margin management, inventory control, working capital management while also investing in initiatives, which will support future growth. As John has mentioned, one of those key milestones was the acquisition of the Nexan Group a well-established animal health business whose products have been distributed through Agri trade for more than a decade. This acquisition strengthens our animal health offering and supports our strategy of increasing value through greater integration of products and services across the supply chain. We also launched the Blue Ag, our new private label agrichemical range. Customers' uptake during the first full season has been encouraging, improving supply chain resilience, improving pharma and grow, providing farmers growth of additional choice at a competitive market. Another important investment was the establishment of our dedicated research station near Hastings. During the year, our team completed 98 trials across New Zealand and treated 42 [indiscernible] state. These trials help strengthen our technical expertise and ensure that the advice and solutions we provide our customers are supported by robust science-based evidence. We continue to invest capability across the business, fruitfed horticulture launched is agronomy accreditation program providing a structured pathway to develop and recognize the expertise in our horticultural teams. We also expanded the reach of our Blue Sheet dire podcast, which has become a valuable platform for sharing practical Dodge and industry insight with customers, staff and the wider sector. The investment in our physical network has continued, including the opening of our new integrated retail real estate, regional office facility into a cargo and the redevelopment of the existing -- the redevelopment of the existing building to house all of their business units in our new fruitfed horticulture site and Hastings, which opened just recently in September. These investments demonstrate our ongoing commitment to support our customers, strengthen our regional presence and position the business for future growth. Looking more closely at the individual business unit rural supplies delivered record sales and profit, supported by positive farmer confidence and increased investment across many farming sectors or trading conditions were generally favorable market decons varied by sector. Demand was particularly strong in the categories such as animal health, water infrastructure fencing and past renewal. Fruitfed horticulture increased revenue despite mixed conditions across the sector. Here for each sector continued to perform strongly, supported by ongoing [indiscernible] development and investment, while the group and wine sector remains subdued. Throughout the year, we maintained a strong focus on customer relationships, technical capability, innovation, further strengthening this position as a trusted partner for growth. The water business delivered pleasing sales results with increased activity across irrigation pumping stock water systems and service projects. team continued to build on its reputation of a high-quality project delivery and customer support while maintaining a strong focus on safety and operational performance. Despite compared to the market and ongoing supply chain challenges, the water business achieved solid growth through disciplined management of inventory, working capital and project delivery. Agri trade performed well during the year, giving a strong growth and Agrochemicals strengthens positioners and animal health through the acquisition of Nexan. The business continues to supply both all supplies to fruitfed horticulture to deliver an efficient and resilient supply chain while managing freight cost pressures, ongoing global supply disruption, continued investment and distribution capability, and we have some optimization, further improve service levels for customers across the [indiscernible]. Turning the agency businesses, which comprises the livestock wall and real estate businesses. The agency group delivered an outstanding result for FY '26. Operating revenue of $221.5 million, up $20.5 million or 10%. Operating EBITDA of $29 million was an increase of $5.5 million or 23% on the prior year. Strong market conditions across the agriculture with improved farmer confidence and increased transactional activity supported performance across all 3 businesses. Livestock delivered an exceptional result benefiting from elevated prices across the ship beef and dairy marts, underpinned by favorable international demand, improved fund economics and robust pharma confidence. Our GO-STOCK product continued to gain momentum, providing farmers with greater financial ability, while strengthening long-term customer relationships make an increased improvement contribution to meetings. We also continue to invest both our physical and digital livestock trading platforms, increased sale yard activity reinforced the importance of our [indiscernible] bidder, our online training system continued to expand its reach and imports with approximately [ 30% ] of all sale add bids placed with the platform during the year. Supply chain partnerships also gained momentum during the year with increased volumes being directed through our preferred processor channels. The wall business result was broadly in line with the prior year, albeit with a small reduction in the volumes transacted reflected the country's declining ship block. There was encouraging signs of strong oil prices reaching the highest levels of decades and -- optimus -- Chris [indiscernible] demerging across the industry. Growing demand for natural fibers combined with lower well production internationally helped support improved market conditions. We maintained the focus on strengthening the long-term sustainability of the mall sector through greater industry collaboration, intended creation of Signal National Open Criar auction. We also continue to develop the wall integrity trademark which provides traceability, assurance and increasingly sought by customers and supply chains. Our export business block of bars will perform well, increasing export volumes into key international markets despite decline in well production nationally. Our real estate business delivered an improved result supported by increased activity across rural lifestyle and the rural residential markets. Demand strengthens across dairy, shipment beef and horticulture progress as lower interest rates improve farm economics and reviewed by our confidence encourage greater market activity. During the year, we launched PGW Real Estate Accelerator program. designed to develop and support the next generation of real estate agents, helping to strengthen capability, support future growth and support future growth of the business. In closing, I might like to offer my personal thanks to Peter Scott, our CFO, who leaves us on the 13th of October, for his support to myself or the business by time as CEO. I wish you all the very best, Peter. I'll now hand to John to discuss the first quarter of FY '27 and the outlook.

Thanks, David. Now for the current outlook. While much of PGW's key trading period remains ahead. First quarter performance has been encouraging, particularly in Retail & Water. Earnings from livestock PGW second largest business unit weighted towards the second half of the financial year. This positive start together with generally favorable conditions and continued confidence across much of the primary sector supports a cautiously optimistic outlook for FY '27. Based on current trading and market conditions, PGW expects operating EBITDA for the financial year ending June 2027 be approximately $70 million. We will assess this forecast after the key second quarter trading months and we'll update the market as appropriate. The outlook for New Zealand agriculture remains generally positive. Rabobank's recent real confidence survey recorded the 9th consecutive quarter for net positive farmer confidence, supported by strong commodity prices and improved farming profitability. Farmers remain confident about their business prospects while investment intentions remain comparatively robust, notwithstanding higher input costs. Elevated fuel fertilizer financing and other farm input costs continue to affect farm profitability. A weaker New Zealand dollar compounds some imported costs while also supporting export returns. Despite these pressures, overall sector conditions remain favorable. Confidence is also evident in the rural property market, although activity continues to vary by region and property type. Conditions remain supportive, particularly for dairy and kiwifruit properties. This activity is expected to benefit PGW's real estate business. In dairy, favorable milk price forecast resilient global demand and positive farm gate returns have supported on farm investment. Red meat pricing also remains favorable, underpinned by constrained global supply and continued demand across key export markets. including the United States land market. Water culture continues to perform well. Kiwifruit and apple is benefiting from solid export demand, while improved strong oil prices are providing some support to grow returns despite a reduction in the New Zealand market. Conditions remain more challenging parts of the arable and better culture sectors were lower commodity prices, market oversupply in some categories and ongoing cost pressures have created a more cautious operating environment. Weather conditions remain an important influence on sector performance. [indiscernible] October outlook indicates that Leo conditions may be a dominant influence on climatic conditions. This brings an increased risk of dry conditions, particularly in Eastern regions. Farmers and PGW will continue to monitor production conditions as the season progresses. Against this backdrop, PGW expects customer activity supported by generally favorable farm gate returns, continued investment in farm productivity, animal performance and on-farm infrastructure and ongoing activity in ruble property markets. New Zealand's general election in November Manfred domestic Agri Secretary -- agri sector policy, while global economic, geopolitical and phlematic risks remain. Despite these uncertainties, New Zealand agriculture enters financial year '27 in a stronger position than it has been for several years. With its nationwide footprint, technical expertise, innovation and enduring customer relationships remains well positioned to support customers and capitalize on opportunities across New Zealand's primary.

We'll now take questions in relation to our presentations from shareholders or their proxies from the room and then online. If you are present, please wait until the microphone is provided to you and state your name. Have we got any questions? Microphone on the way.

Is that right, can you hear me?

Yes.

My name is David Tennison. I'm a long-time shareholder. Now I've got a slightly obscure to ask a question on. And interestingly, I was actually talking briefly to departing CFO briefly about it just before the meeting. Now you've managed to increase the expiry date of your financial arrangements with the banks, which I think sounds very good because you've gone out to 2029 and that saves you sort of screaming around changing -- trying to change these things year by year. But I did notice one point in the -- if I refer to the annual report, it's Page -- it's on the Section -- Section 9 on cash and financing facilities. And there was a small change in the past you've had a facility for working capital and the facility for what you call core [indiscernible] trying to make sense. But this year, I noticed you've actually got 3 -- effectively 3 facilities. You've got your core debt, you've got your working capital, and you've got special facility for going stock. And although it's a small change, it struck me is that, that could be a change in or a change in thinking as to how you organize the business going forward. And I'm just wondering, was it that [indiscernible] could pull a little bit more detail as to why you went from the 2 categories of debt to 3?

Well, this that's an interesting question. We're all very interested in Peter, we'll be trying to give a brief response to that.

Hopefully, you can all hear me. So thanks, David, for that question. What actually happened was that since the divestment of PGW Seeds in 2019, we actually hadn't gone and really taken a global look at our -- a more detailed look at our overall structure. And what we really were doing all that time with GO was we actually had an individual go balance sheet, we were funding go through either the core or the working capital facility. So when we met with the banks over the last couple of years probably. They're really quite distinct parts of our borrowing, if you like. So that's where we said we need to restructure our borrowing to a more appropriate way of actually looking at it because it's something we'll realize. If you look at our net debt, which includes go, it's probably appropriate to take go out because we've got security over all the animals. We can actually you could undo got at some stage if you really wanted to. So it's a different kind of facility. It's low if you look at our delinquency, it's extremely low. So it's a different kind of facility. And that's why we really took the opportunities to restructure properly and get the 3 facilities, aligned -- more aligned to what it is. Working capital, for example, we've got $100 million working capital facility. And that really shows the cycle of our debt as well. So our core facility reduced from $100 million down to $50 million, which is more likely what it really is. So that's the reason that we took the opportunity to actually restructure our facilities along the lines, they really are ready operating. Hope that makes sense.

Okay. It's a great answer. Thanks, Peter. And I think sort of illustrates mix other things, how successfully the GO-STOCK program has I really think that's been a bit of a game changer for the company. I commend you for getting into it and expanding it. But I just want to -- before I finish this, I've got a kind of a follow-up question to this, and that is GO-STOCK has been pretty successful. And it sounds as if the Nexan acquisition was well thought out and a good thing. If we go back to your presentation, one of the key points you missed on was the -- I put it down the KPI of 8.1% over on new investment -- or sorry, on all investment over 3 years versus your goal of 10%, which is -- okay, it's a small miss, but either the lease, it's a difficult business to understand not entirely surprised. But extending from that, my thought that it's actually very difficult for a company like PGW to earn its cost of capital. And that's not meant to be a slower on the business because if you compare it to the people across the street, which farm loans collective. I think you've more or less traced them in your performance. So congratulations for that. But my thoughts that maybe you should actually look to have a lower debt structure overall because one thing that stood out and again talking to Peter before the meeting, we've had a really rollercoaster live a year right. And we went to the highs of getting a dividend of $0.30 per share over the year, which was fantastic. And then, of course, if I think last a couple of years later and we got nothing. So what I'm wondering is, is there a kind of a middle path you can see that we can avoid these highs and lows and provide sort of a steadier for shareholders than it's been in the past.

There no interesting observation. We're keen to have ongoing growth reflected both in an increasing dividend over time and hopefully receive the performance of the company reflected in the share price. Leave everybody to make their own judgment as to the share price, the dividend we're doing now. But in terms of the risk relative to our funding, as Peter said, the go is a fairly liquid -- the GO-STOCK is a fairly liquid product. So if we came under some strike, we'd be in a fairly good position to liquidate that fairly promptly and repay the debt. So we consider the debt position to be relatively conservative. Any other questions?

Yes, [indiscernible] Mike. Just we'll touch on that mix and a little bit there. So it's the $1 million contributed debt. How much of that were we already capturing before you acquired the business. As a distributor, just retailing product, how much incremental profit has come from actual ownership of Nexan?

So how much of the profit is relative to Nexan is...

You've had a long relationship with Nexan. You've been selling their products for a long time. My real question is how much incremental profit has come from the actual ownership of Nexan versus just retail and new products.

Right. Okay. I'll take that -- so a couple of things in space. The results for the year and 11 months of trading, just to point that one out. We have had -- we do know what the performance of the extent business was prior to acquisition because that was part of our due diligence process. I just want to comment on -- it's not to your specific question, but I'll come back to that. The product is not sold through the PGW network. It is sold to our other -- it comes into the PGW network, and we sell it out to our competitive businesses, the farm [indiscernible] business, the farm-sourced business and independent veteran channel. So by acquiring the business in terms of the in terms of business, we've been able to go up the market and capture the wholesale margin. In terms of your particular question, it is somewhat commercially sensitive in terms of the actual number. But in terms of year-on-year growth in terms of that business, I think it's plus 20% in terms of what we've been able to see based on that historical that we've seen as far as the business is confirmed. And I would add that in terms of acquiring the Nexsan business, part of our strategy is not only to expand our offering from an animal health perspective, but also to cap their future pipeline, and we see real opportunity in terms of that future pipeline of product as well. So the business at the size that it was in terms of its private ownership didn't have that capacity capability to invest on that and also confidence around the distribution through the network. And with us taking the management with that, we've been able to be -- able to see that come through in the next 2 to 3 years. So that's part of our strategy.

So long term, what sort of growth are you expecting out of Nexan?

I'm going to treat that one as a commercially sensitive question, if you don't mind.

We changed tax a little bit there. And the provisions for receivables here, there's a pretty big increase noted for that one particular customer that's in [indiscernible]. Obviously, it's happened. My sort of thinking and question around that is how did something so large pull through the gaps on one particular account. With that account within limits within policy, with the exceptions made, there had to be some red flags before this account default at what's happening there.

So you'll take the question?

It's sort of -- I mean, obviously, we don't like taking those sorts of hits, and we're planning on not taking any more. However, when you been around 175 years and you're a key player in most sectors within the primary sector, if you're going to do that business, you're going to have exposures. So the challenge that we, as a Board, have been put into management is they're well aware that we don't appreciate such things. And the challenge is to learn from the experience that we've just been through. Having said that, we have a very robust process for managing our accounts receivable.

Yes. So this account obviously didn't default overnight. What was the -- what's happened beforehand?

So we had a prior trade industry with the account they'd be cleared on time. We got to the peak of the season, which was the -- let's call, the February window, and we were receiving payments on the accounts. And then the IRD took action and which came as a surprise to a number in the sector, including PGW. We've had -- as John presented credit process that flows through. And that came out of the blue for everyone, if you look across the agri sector, a number of people were surprised by what happened there with an unpaid tax bill essentially. And what will be reported from the liquidators perspective and you talk courses to the underlying call that we haven't seen that detail, but it just come out of the blue as far as the business is concerned. Sorry, sorry, the sector is concerned, included PGW.

It's the business, we're probably all thinking of that's been reported in the media we there. There is some inference that they were trading in solvency for some time.

I guess it is that I did reference it in my presentation is the Cubic crunch businesses, which is the one that end we're ready in the media like based and also the liquid data support. So yes.

And yes, going forward, how can we progress what can we do to limit our risk and our exposure?

Well, as I'm saying, if we're going to be a dominant player, we're going to have exposure. We could pick up our tent and go away altogether. We don't depend on doing that. We've just got to get smart on how we do it and manage those exposures, hopefully, without getting call.

We have looked back there's been a moment of self reflection for the business in terms of as it should be. We have looked back and seen how we've performed over the last few years as far as the business is concerned and the new as far as the new operating structure post the seeds business. And that includes things like the covered years, the downturn in agriculture from a -- which we saw in 2024 year, which obviously puts pressure on farm debt and so forth. And the number is I acknowledge the number this year is not what we'd like to see at all. The number is at the low end of what you would expect for a business of our size. So quite considerably. I'm using the NGX reported data here, and they say that this range between 2% and 5% over that same period. Ours is 0.28% over this 5 years on an average basis. So I don't want to underplay the impact of this last year's result and the reflection that it's been for the business. But just also some context around the long-term, long-term view of how we see the sector and our relationship there.

Can we reconcile sort of the increase in revenue there for a little bit, mostly interesting -- is it just price inflation? Is it actual volume increasing around lifestyle real estate transactions? Obviously, commodity prices are up. So I expect to see a much stronger commission there, but is it actual volume growth? Or is it just purely price inflation?

It's a combination of everything, but bear in mind that in terms of how we report the livestock, it's only the commission on the lifestyle transaction, not the livestock itself.

So it's a combination -- as John said, it's a combination of both. Certainly, there has been -- from a retail perspective, there's been price inflation in the marketplace with particularly likes of tax and trust right at the moment, you can't get temps and troughs, -- sorry, with the price movement of fuel. But we have seen more on farm activity. Confidence [indiscernible] fertilizer more speed on past innovation, more spend in our irrigation business, for example, water integration, investment stocker system. So it is a combination of both.

Yes. But it's a pretty good pipeline of capital work coming through particularly given the mainland distribution there. I guess thinking back to sort of '22 yet a similar EBITDA result on much lower revenue. We're at a different place today, but we're still sort of falling short that -- how are we going to get back to those levels.

That's not an unreasonable challenge, and that's a challenge we face all the time. Obviously, the business is going to fluctuate from 1 year to the next. We've just given an indication that we're expecting things to improve. We'd like to think that, that trend will continue. We're forever looking at ways of but more of the pie and making that a bit of higher but bigger. So I can't tell you specifically how we're going to do that, but I can assure you there's an enormous amount of energy going into doing it.

Do you think GO-STOCK's a good way to sort of -- are you tracking any sort of referrals or cross-selling in each of business you're capturing by offering that product?

I think GO-STOCK is an outstanding product are we capturing new activity because...

Yes, the answer is yes. We just talk to some team -- teams just last week about that particular topic. GO-STOCK is one. We've talked about the opportunity along so livestock -- livestock teams and their wall teams, for example, the opportunities in that space. The work that the retail team are doing in terms of our Blue Ag initiatives to grow profitability and margin from that going up the supply chain a bit further there. So -- and we've introduced a couple of new products within the GO-STOCK range as well. So just expanding it into some all on the same outpaces but some different places in the marketplace as well. So, yes.