PGW - PGG Wrightson

[Agrarinvestor]

BP I think it will be an outrageous result

After all the worlds gone mad and pushed the PGW share price up to multi year high.

Bugger used that word push ....go Pushpay

Outrageous. I think they are inline.
http://www.sunsirs.com/uk/prodetail-89.html

All prices for fertilizers are up thats good.
Prices for wheat are stable and it looks like a positive uptrend.
http://www.finanzen.net/rohstoffe/weizenpreis/Chart

Do you have such charts available in New Zealand?
Are Farmers available that can say something about spending for 2017?

[nextbigthing]

https://www.nzx.com/companies/PGW/announcements/297069

[winner69]

https://www.nzx.com/companies/PGW/announcements/297069

Outrageous result?

Operating Ebitda down heaps in H1 but some recovery hoped for in H2 but still going to be less than last year

Are they getting desperate to create a good impression by putting in headlines 'full year increase in profit after tax forecasted'. Just as well for property sales - sneaky eh, maybe that's the outrageous bit.

Hope still seems to be the strategy - let's hope it works

[Beagle]

They use the word challenging a fair bit in the text of the result. Its certainly challenging being a shareholder which when there's so many other opportunities where companies are growing their earnings...Even from a gross dividend yield perspective this isn't nearly as good as it once was. 1.75 cps plus est 2.0 cps final = 3.75 cps fully imputed = 5.21 cps gross which on a 55 cent SP gives a gross divvy of 9.47% which I suppose is okay if you believe the talk of better times ahead in FY18. Pretty clear they are trying to prop up FY17 results artificially with property sales in the second half.

Can't help wondering how they're going with that expensive legacy pension plan...

[Snow Leopard]

Kind of as expected.

Nothing exciting, but seem to have a good handle on where there are going to which, is where they already are!

If you are really interested in the pension scheme(s) read the accounts, they get a mention or two.

Best Wishes
Paper Tiger

[Snoopy]

Am I right in saying that it is low interest rates, lowering the discount factor on future liabilities, that is doing the damage here? Somehow in a rising market, the value of pension plan assets dropped by 10%. Who are the fund managers that did that?

Did I read that expected Group contribution figure to the pension funds of $9.51m for FY2017, up from just $1.08m this year correctly? That is one hell of a hit on next years profit!

From note 9 of the Interim report for FY2017 (half year period ending 31st December 2016).

-----

Defined Benefit Asset/Liability

During the period the group made lump sum contributions to the two defined benefit plans, amounting to $6.03m. In addition the assets and liabilities of the Wrightson Retirement Plan were transferred to the PGG Wrightson Employee Benefits Plan during the period. This resulted in the Wrightson Retirement Plan having no liabiliity as at 31st December 2016.

------

That $6.03m is a good start towards the $9.51m PGW said they would put towards the deficit in their retirement plans. I said this would be a be negative on FY2017 profits. But this seems to be not the case, from my reading of the accounts. The "Interim Statement of Comprehensive Income" shows "Items that will never be reclassified to Profit or Loss". In those items I see:

Remeasurements of Defined Benefit Liability of $3.343m (so their liability has gone up :-O !!!)

Nevertheless the good old taxman has come to the rescue, at least mostly:

Deferred tax on remeasurements of Defined Benefit Liability of ($2.564m)

So my summary of what has happened.

1/ Pension scheme liability has gone up, but the tax man is funding most of the difference.
2/ Even though real cash has gone in to bailing out the scheme, accounting rules keep this cash sink out of the profit and loss statement.

No, I don't understand it either!

SNOOPY

[Beagle]

Kind of as expected.

Nothing exciting, but seem to have a good handle on where there are going to which, is where they already are!

If you are really interested in the pension scheme(s) read the accounts, they get a mention or two.

Best Wishes
Paper Tiger

Too many other more interesting accounts to read today...besides that I knew the other hound would go snooping

[Snow Leopard]

...Remeasurements of Defined Benefit Liability of $3.343m (so their liability has gone up :-O !!!)

Nevertheless the good old taxman has come to the rescue, at least mostly:

Deferred tax on remeasurements of Defined Benefit Liability of ($2.564m)

So my summary of what has happened.

1/ Pension scheme liability has gone up, but the tax man is funding most of the difference.
2/ Even though real cash has gone in to bailing out the scheme, accounting rules keep this cash sink out of the profit and loss statement.

No, I don't understand it either!

SNOOPY

Actually the liability has gone down and the tax man in theory wants more.
But this is all future stuff that varies from day to day and appears in P&L when or if it becomes reality.

The cash movement of $6.03M is that a movement. As a result of $6.03M cash disappearing from the assets an equal $6.03m disappears from the (pension scheme) liabilities.
No profit and no loss.

Any actual realised profits or losses as a result of the pension scheme will be buried in the P&L.

Just don't try and follow it to closely your brain will explode

Best Wishes
Paper Tiger

[Beagle]

No matter how they slice and dice it the pension scheme sucked $6m of cash out of the company this half. NO wonder they are having to sell and lease back property to try and maintain the dividend.
Creative accounting ? you folks be the judge...of course I couldn't possibly comment

[Snoopy]

Actually the liability has gone down and the tax man in theory wants more.
But this is all future stuff that varies from day to day and appears in P&L when or if it becomes reality.

The cash movement of $6.03M is that a movement. As a result of $6.03M cash disappearing from the assets an equal $6.03m disappears from the (pension scheme) liabilities.
No profit and no loss.

What an amazing escape. $6m in cash disappears, and there is no effect on the balance sheet! Ronnie Biggs take note. I guess this is why corporate accountants are paid so highly!

Nevertheless a little look at the balance sheet for comparative periods is in order:

	HY2017	FY2016	HY2016
Total Liabilities (A)	$472.236m	$412.917m	$482.166m
Total Assets (B)	$748.148m	$687.216m	$754.128m
Debt ratio (A)/(B)	63.1%	60.1%	63.9%
Inventories	$214.251m	$244.074m	$209.163m

Because PGW is a seasonal business, the first half of the year tends to be 'stock heavy'. Less inventory is on hand at the end of the financial year (June 30th) when the farming season is over, and the inventories have been cleaned out. However this was not true as at 30th June 2016. This might be reflecting excess stock from irrigation systems not installed, and seeds not sold due to flooding in South America, specifically Uruguay. The 'like for like' period HY2017 vs HY2016 shows a greater inventory in FY2017 (more of the irrigation system products from last season and more seeds still on hand?) but also a (slightly) lower debt ratio. Hmmmm.

SNOOPY