PGG Wrightson has posted a net profit after tax and amortisation (NPATA) of $34.6 million for the six months to 31 December 2007, compared with $20.6 million for the December 2006 half year.

Benefits from dairying boom were helping offset difficulties faced by sheep and beef farmers.

The Chairman, Craig Norgate, said the result reflected improved underlying performance in most of the business, offsetting the impact of poor sheep prices, anda strong return from the establishment of NZ Farming Systems Uruguay Limited(NZFSU).

“This is an excellent result in challenging operating conditions, with dry weather, exchange rates and poor returns to sheep and beef farmers being of particular concern,” he said.

The interim dividend has been increased from four to five cents per share, fully imputed, and will be paid on 1 April to shareholders registered by 4 March. Under the Distribution Plan introduced in 2007, dividends are paid in the form of bonus shares and shareholders have the right to require the group to buy them back. The first dividend payment under the Distribution Plan, in October 2007, resulted in 44 percent of shareholders retaining their dividends in the form of shares.

Mr Norgate said that, while the operating environment remained uncertain, the group was continuing to perform well. The Board remained comfortable with the earnings guidance provided to the market in December 2007, for full-year NPATA of approximately $60 million, consisting of:

• Earnings from operations $39 million

• NZFSU Performance Fee (based on $1.50 share price) $8 million

• NZFSU share appreciation (based on $1.50 share price) $9 million

• Capital gains/one-offs $5 million

Operating revenue was $609.2 million for the half-year, compared with $523.1 million previously.

Results from operating activities (pre interest, tax and non-operating items) was $48.3 million, double the $23.5 million for the previous December half year.

Operating earnings for the December 2006 half-year have been adjusted to exclude gains on farm sales in Uruguay ($2.15 million) as these are included in non-operating income under International Financial Reporting Standards (IFRS). This is the first period for which the group has reported on the basis of IFRS.

Non-operating income totalled $5.4 million, compared with $10.3 million for the previous December half.

Mr Norgate said the initial return from NZFSU reflected the value created by the timely establishment of the company, ahead of a substantial increase in international dairy prices. This had been extended by an accelerated programme of land acquisition and farm development to take advantage of the favourable conditions.

“We have been delighted with the results, both for PGG Wrightson and for our fellow shareholders in NZFSU,” he said. The interim results include within operating earnings management fees and a performance fee of $11.9 million, which had an impact of $8 million on net earnings, and NZFSU share appreciation of $9 million.

The performance fee is set by a formula based on NZFSU’s share price growth and distributions, with the applicable share price for the half-year being $1.50.

Rural Services lifted operating earnings (EBITA) from $12.2 million to $14.6 million.

Financial Services lifted EBITA from $8.7 million to $23.2 million, assisted by the fee earnings from the NZFSU management contract. EBITA from Technology Services was down from $11 million (excluding the $2.15 million gains on farm sales) to $10.1 million.

The Chief Executive Officer, Barry Brook, said benefits from the dairying boom were helping to offset the impact on the business of the difficulties faced by sheep and beef farmers. “The changes made within our business over the past two years have established a strong foundation, and performance has improved across the group.

“It is particularly pleasing to see the benefits of expansion in PGG Wrightson Finance and Real Estate, and from the establishment of Funds Management. The Rural Supplies business has made a strong comeback and Fruitfed Supplies is performing well. The Seeds and Grain business continues to make a strong contribution, and recent acquisitions have helped position the business as the clear leader in the Southern Hemisphere.”

Proudly sponsored by PGG Wrightson