Ricegrowers Ltd. Class B · ASX:SGLLV
Ricegrowers Ltd. Class B — Corporate Update (2017)
14 slides from Ricegrowers Ltd. Class B's corporate update, 2017
Slide 1: SunRice Grower Forum
SunRice Grower Forum A well funded and capitalised SunRice John Brennan Group Chief Financial Officer
Slide 2: Background and Context
Background and Context • You have heard from Rob about the strategy… • Performance over the last six years has been strong • …and there are many exciting opportunities to profitably grow the business for the benefit of you, the growers and SunRice shareholders alike • However these opportunities wil
Slide 3: Sources of Funds – Profits
Sources of Funds – Profits • SunRice’s NPAT has averaged $40 million over the last five years • From this we have paid out on average 50% in dividends. • Dividend represents the necessary return paid to shareholders on their investment • Many of our shareholders depend on this income • Funds availab
Slide 4: Sources of Funds – Cash tied up in the Business
Sources of Funds – Cash tied up in the Business • $280m at the end of April 2017 • Made up of • Money owed by customers (receivables) – minimse by timely collection • Stock and Inventory – optimise, customer service vs lead time less • Money owing to suppliers (payables) – maximise by agreeing reaso
Slide 5: Sources of Funds – Asset Sales
Sources of Funds – Asset Sales • SunRice has very few surplus assets – Banna Avenue – Hull Farm – PNG rental properties • Limited buyers but……. • 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 5
Slide 6: Sources of Funds – Debt
Sources of Funds – Debt • Incremental ‘core debt’ borrowing capacity is ~$100 million – Applying banking covenant on EBITDA multiple to the….. – EBITDA of the Obligor Group, which is a sub-group of SunRice that jointly guarantees debt facilities contracted in Australia • Borrowing this amount would
Slide 7: Sources of Funds – Current Equity Raising Ability
Sources of Funds – Current Equity Raising Ability • Dividend Reinvestment Plan (DRP): • Previous participation rates between 2006-2011 ranged from 27-36% • 30% of $20 million dividend is $6 million pa • DRP reactivated: 11% take up this year ($2 million) • Grower Share Purchase Plan (GSPP): likely t
Slide 8: SunRice's Share trade at a significant discount
SunRice’s Share trade at a significant discount… • SunRice trades at a discount to its ASX listed peers on all measures, including Price to Earning ratios (PER) FY18 PER 28.1x 24.9x 22.8x 15.7x 14.9x 14.1x Avg: 15.9x 11.6x 11.4x 11.2x 10.4x 10.3x 6.8x Goulburn Costa Tassal SunRice Fonterra Select Ha
Slide 9: Sources of Funds – Summary so far
Sources of Funds – Summary so far….. • Post dividend profits: limited to around $20m pa • Cash in business: opportunity to access $50m one off • 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
Slide 10: Is 'External' Equity Capital an Option?
Is ‘External’ Equity Capital an Option? As is Open • Potential benefits would include: Share Price $4 >$7* – Increase liquidity – Share price appreciation Cost of 16% <10% equity – Less expensive Dilutive Yes No – Attract well funded investors – Less dilutive for shareholders At Call No No – No reca
Slide 11: Where could SunRice Raise 'External' Equity?
Where could SunRice Raise ‘External’ Equity? • ASX is currently problematic for capital structures of agricultural companies • NSX is flexible but limited. • Stock exchanges present similarities, and relevant advantages and disadvantages – All address estate planning challenges and grower business r
Slide 12: Sources of Funds – adding External Capital
Sources of Funds – adding External Capital • Post dividend profits: limited to around $20m pa • Cash in business: opportunity to access $50m one off • Sale of surplus assets: scope to raise $10m one off • Debt: limited headroom with associated risk to raise ~$100m one off • Existing equity raising a
Slide 13: Conclusions
Conclusions • We will need funds to pursue exciting growth strategy while managing risk • There is a range of options • Debt is appropriate, but relying solely on debt would increase risk profile • Equity capital is important but has challenges – At current share price expensive and dilutive – Limit
Slide 14: Thank you – Any questions
Thank you – Any questions 14
Ricegrowers Limited (SunRice) — Corporate Update (2017) on 6ix