Ricegrowers Ltd. Class B · ASX:SGLLV
Ricegrowers Ltd. Class B — Investor Presentation (June 2018)
29 slides from Ricegrowers Ltd. Class B's investor presentation, June 2018
Slide 1: ASX Proposal In-depth Information Session: SunRice Strategy and the Need for Funding
xxxxxx xxxxx February 6, 2014 ASX Proposal In-depth Information Session: SunRice Strategy and the Need for Funding June 2018
Slide 2: SunRice Group Strategy
xxxxxx xxxxx February 6, 2014 SunRice Group Strategy Rob Gordon - CEO
Slide 3: 2012 Strategy and its benefits
In 2012, we pursued a Strategy that moved from marketing the Australian rice crop to servicing market demand for branded rice products. The 2012 Strategy Benefits of this Strategy 1 Move from bulk to branded ▪ Less volatile pricing ▪ Higher profits and returns 2 Premiumisation ▪ Less volatile pricin
Slide 4: Healthy financial performance with strong sales and profit growth
This translated into a very healthy financial performance, marked by strong sales and profit growth in addition to significant increases in shareholder returns Group Revenue ($bn) Net Profit After Tax Return on Capital Debt / (Debt + Equity) ($m) Employed (%) (%) 15.8% +6%1 +96% 15.1% 39.7% 1.25 1.2
Slide 5: What's been a challenge?
What’s been a challenge? 1 Ensuring an attractive 2 3 Over reliance on 1-2 key Volatility of the AU return for our Riverina markets supply rice grower Medium Grain commands less of More challenging conditions for a premium the Riverina rice grower Sovereign risk Increased The increase High water in
Slide 6: Food trends that affect SunRice
Fortunately, being an Australian-owned branded rice player today is exciting given that the world is changing in our favour Food trends that affect SunRice 6
Slide 7: Opportunity to grow and diversify – 1/6
Our opportunity to grow and diversify, whilst playing to our core capability is an exciting path for the company – 1/6 Food trend SunRice intent Developing countries that are rice eating nations are ramping up the Diversify into new markets wealth curve, in search for premium and convenience ▪ New m
Slide 8: Opportunity to grow and diversify – 2/6
Our opportunity to grow and diversify, whilst playing to our core capability is an exciting path for the company – 2/6 Food trend SunRice intent Rice eating nations are becoming Aggressive expansion of our Low GI Rice obese and diabetic, and will likely especially into Asia favour a Low GI offering
Slide 9: Opportunity to grow and diversify – 3/6
Our opportunity to grow and diversify, whilst playing to our core capability is an exciting path for the company – 3/6 Food trend SunRice intent An ongoing global fascination with Aggressive expansion of Short Grains to Sushi consumers in new and existing markets ▪ Not many places in the world can g
Slide 10: Sidebar: Low GI and Sushi returns
Sidebar: A look at Low GI and Sushi returns show that they offer an attractive proposition to the Riverina grower Indexed – a comparison of paddy returns Medium Grain to High-returning markets = ▪ The Riverina should be positioned as Indexed at 100 the premium Medium Grain source for 219 premium Med
Slide 11: Opportunity to grow and diversify – 4/6
Our opportunity to grow and diversify, whilst playing to our core capability is an exciting path for the company – 4/6 Food trend SunRice intent Diversify the portfolio by building our Healthy Snacking on the rise high-value Rice-based Snacks into a (including Gluten Free Snacks) sales pillar ▪ Heal
Slide 12: Opportunity to grow and diversify – 5/6
Our opportunity to grow and diversify, whilst playing to our core capability is an exciting path for the company – 5/6 Food trend SunRice intent Movement away from sugars, gluten and animal protein has led to growth Diversify the portfolio by building a high- in rice flour, rice syrups, rice bran +
Slide 13: Opportunity to grow and diversify – 6/6
Our opportunity to grow and diversify, whilst playing to our core capability is an exciting path for the company – 6/6 Food trend SunRice intent Many rice-eating nations are Emphasise and invest in our commitment searching for food safety assurances to quality ▪ The clean and green rice offering of
Slide 14: Key initiatives warrant a look at our capital base
The key initiatives that fall out of this Strategy warrant a look at our capital base The types of activities and investments we will be pursuing ▪ Agronomic packages for Riverina growers 1 Expand our Low GI and ▪ Investments in ANZ facilities to ensure $ 30-50m Sushi rices into new end premium qual
Slide 15: Strengthening cash-generative businesses: CopRice and Riviana
We wish to strengthen some of the existing cash-generative businesses of our portfolio in order to increase our ability to direct our profit towards these growth initiatives – this would likely be done through acquisition CopRice: an established player that is With Riviana’s strong address book, we
Slide 16: $200-300m capital estimate
Given our strategic priorities, we would require an estimated $200-300m of additional capital over the next 3-5 years 1 Expand our Low GI and Sushi rices into new end markets, especially Asia 2 Grow our Healthy Snacks business $200-300m 3 Build a regional Ingredients business in capital both Rice an
Slide 17: Driving better farm gate returns
Driving better farm gate returns • The recently completed C18 harvest has highlighted the strength of SunRice’s pool and fixed price contract arrangements, as demonstrated by the gross profit margins achieved across our premium varieties based on contract prices for the 2018 crop year. • As announce
Slide 18: Driving better farm gate returns (cont.)
Driving better farm gate returns (cont.) • The following table shows gross profit margins for the top 20% of yields achieved for Reiziq, Doongara, Opus and Koshihikari in C18*. Reiziq (MIA) Reiziq (MV) Doongara Opus Koshihikari Yield (tonnes per 13.5 T/Ha 13.0 T/Ha 13.3 T/ha 12.2 T/Ha 9.4 T/ha hecta
Slide 19: Profits Businesses critical to ongoing success
Profits Businesses critical to ongoing success ▪ Includes International Rice $ Million SunRice NPAT Business, Rice Food, 55 Riviana and CopRice 52.0 50 49.2 ▪ Diverse mix of profit C17 Guidance businesses 45.0 45 - Riviana - SunFoods 40 36.0 - Trukai 35 ▪ Increasing globally traded 34.2 volumes requ
Slide 20: A well funded and capitalised SunRice
xxxxxx xxxxx February 6, 2014 A well funded and capitalised SunRice
Slide 21: SunRice's funding options
SunRice’s funding options Profits Cash tied up in the business Surplus assets Borrrowing from the banks Raising equity 21
Slide 22: Sources of funds – profits
Sources of funds – profits • SunRice’s NPAT has averaged $41 million Net Profit After Tax ($m) over six years since 2012 • From this we have paid out on average +12% approximately 40% in dividends 52 49 45 • Dividend represents the necessary return paid to shareholders on their investment 36 34 34 •
Slide 23: Sources of funds – Net Working Capital
Sources of funds – Net Working Capital (NWC) SunRice’s NWC is influenced by debtors (money owed to us from customers), inventory (both Australian Crop Paddy and general inventory of supplies) and creditors (a combination of general creditors and growers payments). The business has been focused on pu
Slide 24: Sources of funds – asset sales
Sources of funds – asset sales • SunRice has very few surplus assets: o Banna Avenue o Hull Farm o PNG rental properties • Limited buyers, however, sale of these assets could potential raise around $10 million one off Asset sales is a limited source of one off funds to support growth opportunities 2
Slide 25: Sources of funds – debt
Sources of funds – debt • Incremental ‘core debt’ borrowing capacity is ~$100m – Applying banking covenant on EBITDA multiple to the Obligor Group, which is a sub-group of SunRice that jointly guarantees debt facilities contracted in Australia • Borrowing this amount would likely result in considera
Slide 26: Sources of funds – current equity raising ability
Sources of funds – current equity raising ability • Dividend Reinvestment Plan (DRP): o Previous participation rates between 2006-2011 ranged from 27-36% o 30% of $20 million dividend is $6 million pa o DRP reactivated: ~11% take up this year ($2.1 million) • Grower Share Purchase Plan (GSPP): ~31%
Slide 27: Sources of funds summary
Sources of funds summary • Post dividend profits: limited to around $20m pa • Sale of surplus assets: scope to raise $10m one off • Debt: limited headroom with associated risk to raise ~$100m one off • Existing equity raising ability up to $8m pa • Total at a full stretch SunRice could raise $100 –
Slide 28: The ASX proposal is the most logical solution
The proposal to keep SunRice’s existing structure, transfer listing of B Class Shares from the NSX to the ASX and remove the ownership restrictions on B Class Shares is the most logical solution • The ASX Proposal represents a straightforward change to help deliver on our objectives, including: – Im
Slide 29: Questions
xxxxxx xxxxx February 6, 2014 QUESTIONS
Ricegrowers Limited (SunRice) — Investor Presentation (June 2018) on 6ix