Ricegrowers Ltd. Class B · ASX:SGLLV
Ricegrowers Ltd. Class B — SunRice — Shareholder Meeting (August 2014)
31 slides from Ricegrowers Ltd. Class B's shareholder meeting presentation, Aug 22, 2014
Slide 1: CEO address introduction
Good morning everyone. I am delighted to be here today as Chief Executive Officer of SunRice. Twelve months ago I stood here and spoke about our company’s investment for growth. It is pleasing to report today that SunRice has in 2013/14, successfully continued our overall growth trajectory to move w
Slide 2: Key areas to be covered
I intend to cover a number of key areas: Firstly, Group performance for the 2013/14 year or Crop Year 13, including providing an overview of the year’s business and financial highlights. Next, our financial performance in detail, including Group profit and the paddy price; as well as detailing t
Slide 3: Group performance
Firstly then to Group performance. 3
Slide 4: Challenges managed in 2013/14
From the financial highlights you will see shortly, it may appear that on the surface SunRice had a flat year in 2013/14. It was in fact a year in which we faced, and successfully managed, a number of incredibly challenging issues across the Group. These included: • Adverse movements in foreign exch
Slide 5: Capital reinvestment and new Group strategy
We continued our program of substantial capital reinvestment to position the business for future growth; and to drive productivity and efficiency gains and reduce costs. The past year also saw us finalise and implement our new Group strategy; and as our Chairman mentioned, we also progressed the Cap
Slide 6: Full year financial performance
Our full year financial performance was pleasing overall, particularly given the challenges I just outlined. • Consolidated revenue for the Group of $1.151 billion was up 7.7% on the same period last year, marking the fourth straight year of revenue growth; • Group net profit after tax of $33.5 mill
Slide 7: Revenue by business, Australian pool
In breaking down the 2013/14 performance of SunRice further, I’d like to look firstly at the revenue results for the Group as a whole. It is worth noting that all areas of the business generated an increase in revenue for the year. You can see the largest revenue contribution came from our Australia
Slide 8: Global and domestic revenue performance
overseas markets, and while we focused our resources on sales of branded, value-added product, our International Commodities business also performed strongly, managing to achieve growth in revenue from lower volumes. Turning to the domestic market here in Australia and New Zealand, and in 2013/14 we
Slide 9: Net profit before tax by business
In terms of Net Profit Before Tax, this chart shows how each of the areas of our business contributed to SunRice’s full year profit result. Our global businesses were again the main contributors, generating $32 million of profit. Looking at Trukai in further detail, while the business achieved stron
Slide 10: Riviana profit performance
You can see from the chart that Riviana’s profit fell significantly from $10 million in 2012/13 to $1 million in 2013/14. This was due to the significant impact of challenging trading conditions, most notably adverse foreign exchange movements that resulted in a significant increase in import costs.
Slide 11: SunFoods performance and initiatives
the Australian drought. The past year, however, saw SunFoods incur a further substantial loss of $5.4 million, which was compounded by difficult trading conditions in U.S. tender markets. Pleasingly though, a number of long term growth initiatives started to deliver positive results. These included:
Slide 12: AGS study and grower service
And after discussion at recent RGA meetings, we commenced a study to assess AGS intake rates and what additional levels of grower service can be viably achieved to meet the requirements of growers. Please note there is no figure against the Australian Rice Milling and Marketing business on this char
Slide 13: Net profit before tax trend
This chart shows the trend for our Net Profit Before Tax over the last four years and highlights a number of key factors influencing the profit movements from 2012/13 to 2013/14. You can see the positive growth trend achieved in the period post drought, which peaked at a new level in 2012/13 and whi
Slide 14: Paddy price and milling yields
Turning now to the paddy price. Despite achieving strong volumes and good sales in C13, the related paddy returns were impacted by unusually low milling yields. To give you an idea, this included 400,000 tonnes of paddy with a yield of less than 45%, and of this, 175,000 tonnes achieved a yield belo
Slide 15: Year-on-year paddy price result
If we look at the year-on-year paddy result, the key aspects I’d like to point out include firstly, the $9 per tonne benefit that arose from favourable product and market mix, and foreign exchange movements. Secondly, you can see just how much of an effect the C13 crop challenges had on the paddy pr
Slide 16: Year-on-year net debt
Before reviewing the performance of our Group subsidiary and complementary businesses, I’d like to look at our year-on-year net debt position. As you can see from the chart, in 2013/14 our year-end net debt position - this being total borrowings less cash and cash equivalents - fell from $193 millio
Slide 17: Capital reinvestment program
To add to our Chairman’s earlier comments regarding investment in our Australian operations; in 2013/14, we continued our substantial capital re-investment program aimed at delivering productivity and efficiency improvements and reducing costs. Expenditure totalling $32 million was invested over the
Slide 18: Key business initiatives
I’d like to now provide an update on key business initiatives, including our Group Strategy and the Capital Structure Review. 13
Slide 19: Group strategy targets
This past year has seen us make good progress on our new Group strategy, which is now well into the execution stage. You may have noticed the inside front cover of our 2014 Annual Report outlined the key components of our Strategy, which calls for: • An increase in annual revenue from $1.2 billion t
Slide 20: Access to capital for acquisitions
improve our position in these markets, but we did not have the balance sheet to participate when the opportunities were presented. 14
Slide 21: Capital Structure Review
I’d like to now turn to the Capital Structure Review, and to elaborate on what our Chairman outlined earlier. 15
Slide 22: Objectives of the Capital Structure Review
The Review was initiated to identify if there is an alternate capital structure to better suit SunRice’s future needs. It is therefore a fundamental initiative to addressing our unique issues and the requirements of shareholders, including preserving the current structure of our industry and maintai
Slide 23: Benefits of access to capital
If SunRice is to build on its success in international markets and cement its position as a truly global player, we need to have access to capital for growth. Benefits will flow in the form of: • Increased ability to invest to establish new premium markets; • Better returns for both growers and shar
Slide 24: Funding an acquisition
Consider then how the business could fund an acquisition such as another Trukai, which contributes to both the pool and shareholders returns. A business of scale would require an investment of around $150 million. To fund this using debt would return gearing to unacceptable levels; while equity fund
Slide 25: Access to equity capital
agribusiness that may be exposed to a higher level of cyclical volatility. As I mentioned earlier, gaining access to capital to fund our future growth is one of the fundamental objectives of the Capital Structure Review. It is one of the reasons why we have invested the time and resources we have to
Slide 26: Progress with regulators
We know that our deliberations have been lengthy, but as the Chairman mentioned earlier, we have recently made progress in our discussions with regulators. We will continue to engage with them. Any proposition that emerges will be assessed against the objectives of the Capital Structure and the requ
Slide 27: Outlook for SunRice Group
Now to the outlook for SunRice Group. 20
Slide 28: Three years since drought
As we emerged from drought three years ago the business faced many challenges, including high debt; a need to invest in key infrastructure; and to recover overseas market share. Three years on and we have: • Grown revenue by more than 40%; • Established a consistent level of profit performance above
Slide 29: Outlook for paddy price and profit
If we focus on the outlook for 2013/14 or C14, and firstly to the paddy price. The current dynamics impacting paddy price appear favourable and lead us to a positive outlook, with the forecast foreign exchange rate and international pricing continuing to work in our favour. Additionally, when combin
Slide 30: Summary and questions
In summary and before I take questions, I’d like to leave you with the message that our business is in very good shape with a positive outlook for the year ahead. Thank you. 23
Slide 31: ens
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