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PGG posts $12.4 million full year profit


Monday 26th August 2002

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Rural services company Pyne Gould Guinness Ltd (PGG) today posted a net after tax profit of $12.4 million for the full year ending June 6.

The result is the company's first since its merger with Reid Farmers Ltd in September last year. It was boosted by the amortisation of $949,000 of goodwill resulting from the merger.

The company will pay a fully imputed dividend of 8.5 cents per share, compared with 7 cents a year ago.

Chairman Bill Baylis and chief executive George Gould said all operating divisions within the group had performed well during the period.

Operating cash flow for the period was a healthy $16.6 million.

Shareholders' equity increased to $100 million from $42.9 million a year earlier, reflecting the new capital issued to acquire PGG and this year's retained earnings.

PGG's operations include livestock, farm supplies, rural financing, rural real estate, insurance, grain and seed and wool. The company, which employs 500 staff throughout the South Island, operates from 42 stores and seven branches located from Blenheim to Invercargill.

All of PGG's continuing operations performed well during the period.

PGG Livestock and PGG Farm Supplies made the single largest contributions to the overall group result. Wool put in a good contribution in a challenging year. PGG Rural Finance and PGG Insurance continue to perform well , PGG Real Estate made a very significant contribution -- albeit slightly behind last year's record performance, and PGG Seeds continued to expand its business.

The merger of the two companies is now complete and is expected to lead to ongoing cost efficiencies of over $3 million per annum, compared with $2.5 million previously forecast.

Cost efficiencies have been made by removing duplication of resources, particularly in the areas of senior management and back office and by centralizing the two wool operations.

Administration, incorporating client services and back office functions, has been centralized in Dunedin, while senior management is geographically spread across the South Island from Invercargill to Blenheim.

During the year PGG acquired Stapletons Livestock and Roxborough-based Wards Horticulture, which added further strength to the group's livestock and farm supplies operations.

PGG also exited its only loss-making operation, the Dunedin-based wool processing business, to Clifton Woolscour in March this year.

Looking ahead Mr Baylis said the company was well positioned to continue achieving growth in earnings.

"The outlook for some sectors within the New Zealand rural economy is less certain, and not as positive, as it was 12 months ago. However, with some exceptions, our clients are still enjoying favourable trading conditions and from this we are confident that PGG will maintain its earnings momentum over the coming 12 months," he said.

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