PGW - PGG Wrightson

**Balance** · 19-12-2018, 02:42 PM

Not a good trading update. Ouch!

https://www.nzx.com/announcements/328607

Seed & Grain to record a loss (vs profit of $2.6m) for half year ending 31 Dec.

Fortunately, sale of business still on track however according to trading update so buyer still there.

All over to the Commerce Commission now!

**Snoopy** · 19-12-2018, 09:36 PM

Originally Posted by Balance

Not a good trading update. Ouch!

https://www.nzx.com/announcements/328607

Seed & Grain to record a loss (vs profit of $2.6m) for half year ending 31 Dec.

Fortunately, sale of business still on track however according to trading update so buyer still there.

"One seed failure does not a South American summer make."

Or maybe it does in this case? There is something wrong with the way the PGW seed business is being run in my view. If you read back through ten years of annual reports, something like 7 out of 10 years are suffering from 'abnormal weather conditions'. This smacks to me of problems with the weather measuring stick, not the weather. PGW need to embrace whatever the 'new' normal weather is in Australia and Uruguay, and plan around that. It is going to have to be a long game, because you won't derive any profit from farmers on the edge of bankruptcy. But farmers in New Zealand have cultivars that can cope with drought. Perhaps such cultivars in drought hit Australian states need Australian State Government support to establish? Maybe the Uruguayan Government would be up to some intervention too.? All this would be an anathema to NZ Capitalists. But maybe if you want to succed in a foreign market, perhaps you should try to start thinking like foreigners?

All over to the Commerce Commission now!

I still hope the seeds sale is refused. But I am prepared to ride this buck either way.

SNOOPY

**percy** · 20-12-2018, 07:24 AM

Your post confirms why the seed business should be sold.

**Balance** · 20-12-2018, 07:37 AM

Originally Posted by percy

Your post confirms why the seed business should be sold.

Hard to disagree with that comment.

PGW had its time in the sun under Norgate who envisaged a global agricultural powerhouse with a NZ base - much as he saw Fonterra as a global dairy powerhouse.

Its time seems to to be well and truly pass - like all things passed their used by date, time to move on.

Disc. Reality check!

**iceman** · 20-12-2018, 09:32 AM

Tim Hunter's article behind paywall on NBR today is a must read for current (and former) shareholders. What a sorry and shady saga this Agria involvement appears to be https://www.nbr.co.nz/story/pgg-wrightson-china-files-0

**Snoopy** · 20-12-2018, 09:45 AM

Originally Posted by Balance

Hard to disagree with that comment.

PGW had its time in the sun under Norgate who envisaged a global agricultural powerhouse with a NZ base - much as he saw Fonterra as a global dairy powerhouse.

Its time seems to to be well and truly pass - like all things passed their used by date, time to move on.

Disc. Reality check!

The PGW seed business has a history that goes back well before the Norgate era. In Uruguay at least ten years before (in the Wrightson era). In New Zealand some 150 years before. Norgate's main mistake was going into Uruguay and telling the local farmers there that he knew better and they should do things 'the New Zealand Way.' I am talking about dairy farming here, but no doubt the same attitude spilled over into the seed business. Seeds is the only 'proprietary intellectual property' that PGW has. For the rest of their business they are simply ticket clipping merchants. There is no unique selling point.

The seed sale document disclosed in detail - detail that has never been disclosed before - that NZ Seeds generates by far the most profits and also sells by far the most company created cultivars. If they could get the sales of proprietary cultivars up in other markets, that would be one key to growing profitability in those markets. Even in New Zealand there is potential for profit to double. Fran O'Sullivan in that Herald article noted that PGW had evidence that the optimal time to resow on a farm was every ten years, yet most farmers only put in new pasture cover every twenty. Hands up who thinks PGW will be able to double their profits in the 'PGW Rural Rump' that remains?

None of the above will be easy, nor will it be immediate. But the alternative future of retreating back home and stumbling along until usurped by your 'Elders' and betters, seems far less palatable to this shareholder at least.

SNOOPY

**Balance** · 21-12-2018, 09:07 AM

https://www.radionz.co.nz/news/busin...on-shareholder

Dodged one bullet.

**Snoopy** · 21-12-2018, 02:23 PM

Originally Posted by Balance

https://www.radionz.co.nz/news/busin...on-shareholder

Dodged one bullet.

So Agria settled claims with the United States Securities and Exchange Commission over allegations.

"It resulted in the company paying $US3 million ($NZ4.4m), and Mr Lai $US400,000, ($NZ590,000) although there were no admissions of liability."

So no admission of fraudulent accounting and market manipulation by Agria and Alan Lai. Yet the OIO in New Zealand has 'forced Agria to reduce its stake' in PGW from 50.2% to 46.6% (on what grounds?).

"The settlement also provided for penalty proceedings to be filed in the High Court, .."

'Penalty proceedings' for doing what exactly? What will the charge be?

It looks now like Ngai Tahu has been working beside their former shareholding partners to appease the NZ legal system. But the combined Agria /Ngai Tahu combination still controls PGW with a combined 50.2% holding as before. I would argue that with 46.6% of the shares directly owned by Agria, that Agria still maintains effective control.

I went to the OIO office website and there was no mention of this OIO decision. Also no mention on the NZX website. This is a very strange 'announcement' brokered by RNZ. I wonder what the source was?

SNOOPY