PGG Wrightson Limited — Interim / Quarterly Report 2017

Mar 27, 2017

For the six months ended 31 December 2016

Half Year Report

==> picture [146 x 32] intentionally omitted <==

----- Start of picture text -----

Helping grow the country
----- End of picture text -----

Operating EBITDA $26.0m

Net profit after tax $16.0m

Net interest bearing debt $156m

Fully imputed interim dividend 1.75¢

Solid first half

PGG WRIGHTSON LIMITED

Chairman and Chief Executive Officer’s REPORT

For the six months ended 31 December 2016, PGW achieved Operating EBITDA of $26.0 million, down $5.0 million from the strong result in the corresponding period last year.

Shareholders will receive a fully imputed interim dividend of 1.75 cents per share payable on 4 April 2017.

==> picture [361 x 236] intentionally omitted <==

Mark Dewdney Guanglin (Alan) Lai CHIEF EXECUTIVE OFFICER CHAIRMAN

Operating Earnings for PGG Wrightson Limited (“PGW”, “the Group”, or “the Company”) before interest, tax, depreciation and amortisation (Operating EBITDA) for the six months to 31 December 2016 was $26.0 million, down $5.0 million from the strong result in the corresponding period last year. Net profit after tax for the period was $16.0 million, broadly in line with the corresponding period last year.

As expected the tougher trading environment resulted in a dip in earnings for the first half of the year. With some key trading months still ahead of us, we remain on track to deliver a full year Operating EBITDA in the $62 million to $68 million range as signalled at the October 2016 Annual Shareholders Meeting. In addition, we now expect full year net profit after tax to be higher than last year - in the range of $46 million to $51 million. This increase is due to

several non-operating gains we expect to realise in the second half of the year, such as gains on property we plan to sell.

We continue to operate well in New Zealand and across our other markets. This first half result was affected by the continued caution of dairy farm spending across the New Zealand market - this conservative approach has slowed irrigation development which impacts our Water business.

HALF YEAR REPORT 2016 | 1

“…the really pleasing thing is that PGW has continued to perform consistently through these demanding conditions. It is a credit to our people and a positive indicator that reflects well on the value that we deliver to our customers, whatever the market conditions.”

Mark Dewdney, Chief Executive Officer

But it is not just the price of milk. Tough wool trading conditions, lower production levels across New Zealand for milk and red meat, and a wet start to spring led to cautious spending from most of our farming customers during the six months to 31 December 2016. These trading conditions led to a 2% decline in revenue. Despite this, net profit after tax remained broadly unchanged against the previous corresponding period.

Our Company benefits from being a diversified business. This half year our Water and Wool businesses had softer earnings versus the corresponding period last year due to the tougher trading conditions. Our New Zealand Seeds business was also back slightly, but our other business units all performed at, or better than the previous corresponding period.

We now look toward the second half of the financial year, which is traditionally the strongest trading period for us, with some optimism that we will see the impact of improving sentiment in the dairy sector. In particular, the early signals are positive for re-grassing and seed demand to pick up in the autumn.

Our continued focus on cash flow means our balance sheet remains strong, with lower levels of working capital and lower net interest bearing debt of $156.2m compared with our net interest bearing debt at December 2015 of $167.4 million.

PGW is meeting its budgets through these challenging trading conditions. As we foreshadowed, the lower confidence seen in the dairy sector through calendar 2015 and the first half of 2016 has impacted earnings. In that context this is a very pleasing result for the period given the market conditions.

RURAL SERVICES

Retail

Retail increased Operating EBITDA by $2.0 million compared to the same period last year. Margins also showed an increase year-on-year. Despite some challenges with weather and competitor activity all three business areas; Rural Supplies, Fruitfed and Agritrade contributed to the strong Retail result. The full year report will report on the Water business as part of the new Retail and Water group as outlined on page 6.

Our Fruitfed business continues to go from strength to strength with horticulture in New Zealand having another strong half year with all sectors enjoying positive returns. This has helped our Fruitfed business increase revenues and its contribution again.

Rural Supplies performed strongly despite the lower spend from dairy customers, increasing market share particularly in the key agronomy categories of ag-chem and seed. PGW differentiates itself in the rural supplies market through our advice-based offering and high level of service through our expert technical and on-farm teams. Our business continues to reap the rewards of this approach. It is an excellent achievement to continue to grow in this environment.

Livestock

Our Livestock business repeated last year’s interim Operating EBITDA. The year-on-year drop in national lamb and mutton kill led to a 1% fall in tallies. However this volume decline was offset by sheep prices being buoyed by a strong store market driven by low supply and high demand due to good feed conditions.

2 | PGG WRIGHTSON LIMITED

Over the last 12 months beef prices have stabilised, and there remains steady demand due to good levels of feed in some areas and a reduction in the availability of grazing contracts.

Livestock traditionally makes most of its contribution to earnings in the second half of the financial year and changes in livestock prices and volumes can have a significant impact on our full year results. However with a continued strong beef commodity price, a flat outlook for sheep meat, a recovering dairy sector (both cattle volumes and prices) and continued momentum in revamped supply chain products, we expect a similar full year Operating EBITDA to last year from this segment.

The Livestock business has started implementing a strategy that will see the continued evolution and rationalisation of the Saleyard infrastructure.

Water

As expected, the low confidence levels in the dairy sector at the beginning of the season is impacting PGW Water, with less dairy conversions and irrigation upgrades being undertaken. Water is well back on last year’s first half result, and this has contributed to the yearon-year decline at the Group level. With the improved confidence in the dairy sector in recent months we expect demand to improve and this should start to lift earnings from financial year 2018. The other area of opportunity for the business is further water schemes. We await decisions around a number of these, in particular the Central Plains Water Stage II which would see an additional 20,000ha of land irrigated in Canterbury.

Wool

Wool Operating EBITDA decreased by $1.4 million compared to the same period last year.

Our Wool business performance was challenged by difficult trading conditions with falling wool prices impacting private buying and auction trading, reducing volumes, revenue and margins. International wool prices have fallen approximately 50% over the past six months with the consequence that some growers are preferring to hold their wool bales either on farm or in our wool stores, awaiting prices to recover. On a positive note, once the price expectation gap between buyers and sellers of wool closes we will be well positioned to sell through growers’ excess inventory, but until then our Wool business’ earnings will be constrained.

Real Estate

Our Real Estate business continues to perform well, with strengthening activity in the market contributing to the best revenue result in six years. This half year the market strength was based off a strong lifestyle market and a lift in rural sales, which has been challenged in recent years.

SEED AND GRAIN

Seed and Grain’s Operating EBITDA was back on the same period last year by $1.7 million. While the South American business had a promising start to the year and the Australian business delivered a steady performance for the first six months, this was offset by a number of factors in the New Zealand market, including a more cautious spend from our dairy and dairy-related clients.

Overall, Seed and Grain is performing well. We are expecting a solid result at year end as the earnings of this business is generally skewed more towards the second half of the financial year.

New Zealand

Our New Zealand Seeds business is a key first half year earner for Seed and Grain. This is in part due to the emphasis on the spring-sown forage options including brassicas, fodder beet and forage cereals that are critical to winter feeding programmes. As expected, New Zealand Seeds fell short of last year’s impressive first half result.

Good demand for cereal seed during spring and increased interest in domestic cereal and maize grain over recent months has enabled the Grain business to perform to expectations for the first six months.

The New Zealand Turf business had a good first half year aided by revegetation projects and the continued work in Canterbury with earthquake remediation projects.

HALF YEAR REPORT 2016 | 3

for a good second half for our Australian business, with actual performance reliant on the timing and amount of autumn rain.

We are optimistic regarding the upcoming autumn pasture renewal season. There is no doubt that dairy farmers, in particular, are in a better position to invest in new pasture and genetics to boost productivity.

South America

The South American business had a promising start to the year, with the first half ending with good signs of recovery across the whole region.

Australia

While predominantly a second half business, Australian Seeds have maintained their year-on-year contribution, with improved margins achieved across most product categories.

After a very tough previous year in Uruguay due to a drop in commodity prices and extreme weather conditions, the agriculture sector has started to move again. Most South American sales in the first half of the financial year are driven by the cropping sector – including soybean, wheat, maize and sorghum seed sales along with agrichemicals and fertilisers for these crops. Earnings exceeded expectations for the first half of the year, and we enter the key second half of the year with optimism.

Growth initiatives continue to be a focus in Australia. Increased warehousing and logistics capability in Melbourne and Brisbane support the Group’s strategy to improve operational efficiency. This, along with the acquisition of GrainSearch has built capacity in cereal research and development and supports our growth strategy to expand in the cereal market.

Some of the big projects completed in the last twelve months that are key to the future of PGW’s operations in the region are now contributing to the business, including the new Technology and Logistics Centre and Head Office in Montevideo.

Looking ahead, good sheep and beef prices are supportive of investment in pasture renewal as are improved dairy prices. With favourable seasonable conditions, good commodity prices and good seed supplies, we are optimistic

“The Board and I are pleased PGW is meeting its budgets through these challenging trading conditions. As we foreshadowed, the lower confidence seen in the dairy sector through calendar 2015 and the first half of 2016 has impacted earnings. In that context this is a very pleasing result for the period given the market conditions.”

HUMAN RESOURCES

Health and Safety

As part of our strategy to build a strong health and safety culture across our business, an online Health and Safety Risk Management system was successfully implemented in late 2016. This system has been well received across our diverse business and assists us to analyse and intervene as well as share lessons learned from our health and safety performance.

As part of our commitment to build a strong health and safety culture, a new role of Group Health and Safety Manager was established to refresh our overall health, safety and wellbeing strategy. The new appointment commenced in lateFebruary 2017 to work with our leaders to deliver on a revitalised Group health, safety and wellbeing framework, culture and management systems.

Agriculture New Zealand

In December 2016 we closed Agriculture New Zealand (AgNZ), our private training enterprise business. Following a strategic review and a consultative change process with our employees, AgNZ was no longer viewed as a core part of the Company’s overall strategy. Furthermore the business was not considered to be commercially viable in light of changes to the funding model under which it operated.

A key focus for the Company was to ensure AgNZ honoured all obligations to employees, students, funders and other stakeholders.

Alan Lai, Chairman

4 | PGG WRIGHTSON LIMITED

==> picture [548 x 284] intentionally omitted <==

The seed production research team windrowing a Cocksfoot trial at McCaw Farming near Methven in January. This prepares the trial for subsequent seed harvest. (Left to right) John Foley, Richard Merrilees (driving plot windrower) and Murray Kelly.

Seed and Grain

‘WALKING ENCYCLOPEDIA’ WINS RESEARCH AWARD

PGG Wrightson Seeds Senior Production

Agronomist Murray Kelly, who has been involved with seed production for over 40 years, has been described as a walking encyclopedia on the subject.

Murray, who is based at the Company’s Kimihia Research Centre near Lincoln in Canterbury, had his contribution to the industry recognised in December 2016 when he was awarded the Foundation for Arable Research (FAR) researcher of the year.

FAR’s Chief Executive Nick Pyke said, “every year Murray runs many on-farm trials, focusing on topical problems and specific weed issues. The development of plantain as a viable seed crop, giving seed grower’s economic returns is largely the result of 20 years’ work that Murray led.

“In addition to this, for the last 10 years Murray has worked with FAR and AgResearch staff to deliver new research and understanding on ryegrass management to the FAR ryegrass discussion groups. With his significant contribution to the industry, Murray’s award is richly deserved” Nick said.

Murray is well known internationally in seed production circles and has attended many International Herbage Seed Group events. He has regular contact with seed production teams and growers based in Tasmania, Denmark, Oregon and Uruguay.

Group General Manager of PGW’s Seed and Grain John McKenzie adds, “as a business we rely heavily on the expertise of our staff and Murray Kelly is a great example of the passion, commitment and loyalty our team has to achieving excellence in seed production.”

Murray says, “I am very fortunate to be a member of team who have shared goals in the field of seed production and market development. You can’t do it on

your own and I accepted the award of researcher of the year from FAR on behalf on our team at PGG Wrightson Seeds.

“Our team develops techniques by conducting replicated trials. We manage variables (inputs) into crops and monitor the effects those inputs have on crop yield and quality. The Cocksfoot Grass Trial Plot at John McCaw’s farm near Methven, which our team cut in mid-January, is an example of this. The information we gain from each trial not only inputs into the research development programme but also provides valuable insight that is packaged up into training programmes and technical support for the wider PGW Seeds team and clients,” said Murray.

HALF YEAR REPORT 2016 | 5

PERFORMANCE

Cash Flow and Debt

Our continued focus on cash flow means our balance sheet remains strong. The seasonality of our business results in our working capital and debt levels growing from June through to December each year. This December we experienced lower levels of working capital and lower net interest bearing debt than the previous December. Net interest bearing debt was $156.2 million compared with our net interest bearing debt at December 2015 of $167.4 million.

Operating cash flows for the six months were negative $16.2 million, which is broadly in line with the previous corresponding period. The cash flow this half includes lump sum funding contributions of $6.0 million made to the Group’s defined benefit plans.

Net cash flow from investing activities was positive $2.3 million compared to a net cash outflow of $19.8 million for the same period last year.

We have completed several significant investments in recent years such as the logistics centre in Uruguay. As a result, capital expenditure has reduced from $32.7 million for the six months to December 2015, to $10.9 million for the six months to December 2016.

Distributions

In February the Board of Directors declared an interim dividend of 1.75 cents per share to be paid to shareholders registered at the record date of 10 March 2017. The dividend will be fully imputed and paid to shareholders on 4 April 2017.

Group Structure Changes

As our Company continues to operate within tough trading conditions, we need to continue to find ways to reduce operating costs and to improve efficiencies in the way we deliver.

Due to this focus, in the last quarter of 2016 we implemented a realigned Group structure, separating the Rural Services businesses into two operating Groups: Agency and Retail and Water. The new Retail and Water group is led by Stephen Guerin, who has been very successful in growing the Retail business. The new Agency group comprises the Livestock, Wool, Real Estate, Insurance and Financial Services businesses. The newly-created position of Group General Manager Agency is currently being overseen by CEO Mark Dewdney until an appointment is made.

These two operating groups join the Seed and Grain group to give us three broad trading groups under the PGW umbrella, along with a Group Corporate function. Our full year report will reflect the new Group structure.

Outlook

Looking ahead, PGW is maintaining its 2017 full year Operating EBITDA guidance.

Overall, confidence in commodity markets is generally higher compared with recent years. As referenced earlier, dairy prices have staged a welcome recovery over the last five months. Beef prices show some signs of stabilising at good levels – down on the peaks of 2014 and 2015, but still good by historic standards. Sheep meat prices also seem to be stabilising, horticulture continues to go from strength to strength. We are also seeing encouraging signs of

recovery in the Uruguayan agricultural sector as they look to put the floods of 2016 behind them.

Overall, we expect trading conditions will improve for us for the remainder of this financial year. It is very pleasing that PGW has continued to perform consistently through the demanding conditions. It is a credit to our people and a positive indicator that reflects well on the value that we deliver to our customers, whatever the market conditions. It’s been a while since PGW has felt the wind at its back, and the early indications for the 2018 financial year are encouraging. Our 2016 earnings were outstanding and we are optimistic that 2018 can be even better.

On behalf of the Board of Directors and Management team we extend our thanks to our customers, suppliers, employees and shareholders and thank them for their ongoing support.

==> picture [113 x 35] intentionally omitted <==

Alan Lai

Chairman

Mark Dewdney Chief Executive Officer

6 | PGG WRIGHTSON LIMITED

==> picture [548 x 250] intentionally omitted <==

PGW’s Auctioneer John McKone and his team look for bids for Lot 104 at the first of the three day Standardbred Sale series in February 2017.

Livestock

STANDARDBRED DIVISION CELEBRATES 30 YEARS

PGG Wrightson’s Standardbred division celebrates its 30th year as a small but solid contributor to the Group’s performance since 1987.

While the organisation’s roots have been intertwined with the horse industry for over 100 years (back to the early days of the Canterbury Horse Bazaar and later through the Trentham Thoroughbred Sales) it wasn’t until 1987 that a Standardbred division was established.

The Standardbred division specialises in the trading of harness horses. The team has a dedicated staff of five, collectively with over 125 years’ experience at PGW between them. They have provided a solid and consistent service delivery for 30 years and as a result they are well respected in the industry. Prior to 1987 there were seven organisations selling Standardbred horses throughout New Zealand, but since 1991 PGW have been the sole auctioneer to the industry.

Another unique aspect of this division is how it operates. The division generates 90 percent of its annual turnover each February over three consecutive days of

electronic database of Standardbred race records and pedigrees. This database is unequalled in the country, so we consider it one of our most valued assets.”

national yearling sales (day one at the NZ Bloodstock Karaka Sales Complex, and the following two days at the Canterbury A&P Showgrounds in Christchurch).

PGW’s Standardbred Representatives Bruce Barlass and Peter Lagan have been with the division since 1987. Bruce said, “the team experiences an unusual combination of excitement and angst on the three big days of the year. We need to get it right, or it impacts significantly on the annual performance of the division and so far we have. In the last 30 years, the team have catalogued and sold over 20,000 Standardbred horses – this is something we are all very proud of.

While horse trading has been around for centuries, the New Zealand Standardbred market is ever-changing. World-wide the number of horses being bred is decreasing, yet the demand and values at the top end have continued to grow. This was illustrated at the February 2017 sale when 16 horses sold for $100,000 or more. In the last five years the number of weanlings (7-8 months old) being sold has increased as the price of yearlings has increased.

“A great deal has changed in the industry since 1987. When our division started the pedigrees in the catalogue were handwritten, but over the last 30 years our team has developed an

It is likely that the Standardbred division will continue to see changes in the industry but given their track record to date, they will continue to be a solid performing division for PGW.

The 2017 sales saw an increase in demand from Australia,

but the need for greater race stakes in New Zealand meant a drop off in demand in the middle market from New Zealand buyers. Despite this, the combined Auckland and Christchurch sales still produced a total turnover of $11.25 million. A total of 370 horses were sold this year at an average of $37,880 in Auckland and $27,302 in Christchurch.

HALF YEAR REPORT 2016 | 7

Retail and Water WE ARE PART OF YOUR TEAM

==> picture [548 x 537] intentionally omitted <==

8 | PGG WRIGHTSON LIMITED

The ‘One PGW’ approach kicked into action in the early hours of Monday 14 November in the areas most affected by the 7.8 magnitude earthquake.

Many farmers and horticulturists – from North Canterbury through to Marlborough – were badly affected by the devastating impact of the series of November 2016 earthquakes, and will continue to be for some time. One North Canterbury farming family’s story will sound familiar to many.

Matt and Vicky Stainton farm 520 hectares in North Canterbury alongside their son Josh and his partner Doris. While Matt focuses on the dry stock block, Josh runs the dairy block which milks 950 cows.

spray programme. Dave monitored their fodder beet crop and other crops on the farm that would be critical for the Stainton’s dairy grazing programme during the 2017 winter months.

Matt said, “we had so much on our plate in November, we just couldn’t stretch ourselves any further, so it was a huge relief to have Dave assist us with the crop management. He knows what he is doing, and this is very helpful support for us. Things are pretty dry here now and along with the water supply and fencing issues, we also have some buildings to repair including all the farm houses. It’ll be a while before we get everything back to normal.”

After the first earthquake woke the family in the early hours of Monday 14 November 2016, their first priority was to make sure that everyone on the farm were safe and well. Then they checked on the dairy shed (which had significant damage) as the cows were due for milking at 5am.

Their next priority was to ensure that stock had a reliable source of water, given the dry pasture conditions. They quickly discovered the dry stock block’s water supply system was severely damaged, including kilometres of piping, so a new water pump and generator was quickly sourced for livestock supply. With their focus on stock management, water supply and fencing repairs to contain stock, the Staintons sought help from Culverden based PGW Technical Field Representative, Dave Wooldridge, to monitor their crop programme.

As part of Dave’s ongoing crop monitoring programme, he visited the Staintons in early February 2017, to review the progress of their crops, including Rivage Fodder Beet. Matt and Vicky were pleased to see that the crop was doing well and they were on track to achieve their goal of 18 tonne/ hectare dry matter by early June.

They had planted over 25 hectares of Rivage Fodder Beet in early November and the first four weeks is critical for crop management, particularly the

PGW’s TFR Dave Wooldridge walks a paddock of fodder beet with Vicky and Matt Stainton at their farm near Waiau in February 2017.

PGW’s Upper South Island Regional Manager Chris Adam said, “it was important for all business units to stay connected and ensure we took a coordinated approach to customers. Many of our clients had lost their homes, critical farm buildings and had water supply, fencing and road access issues.

“Initially, we made contact where we could to make sure people were safe and we provided whatever support they needed to keep their businesses running. We relied heavily on our strong customer relationships across all business units, to consider individual circumstances and tailor our approach. While some clients were just happy with a quick call, others were looking for a more hands on approach.

“Our stores became another hub for the community and our staff went the extra mile to assist clients with whatever they could to keep going – whether it was helping to rehome staff or have food supplies delivered to their farms.

“Of course, staff were our number one priority. The safety of our staff and their families, many of which were personally affected, was key for us. We brought in extra resource from Christchurch to allow them to get themselves sorted, and provided support to source product for the local teams.

“This was a massive earthquake event and so the repair and recovery will take some time. We are not going to fix this in months, it will take years. With this in mind, we have set up new processes and additional resources to support our clients in whatever way they need. Whether it is logistics to help them transport lambs off farms with access issues, fencing supplies or technical expertise for crops, we are there for them,” Chris said.

HALF YEAR REPORT 2016 | 9

: Our People DOING WHAT WE DO BEST

10 | PGG WRIGHTSON LIMITED

KEY FINANCIAL DISCLOSURES

FOR THE SIX MONTHS ENDED 31 DECEMBER 2016

The financial statements contained on pages 11–31 have been approved by the Board of Directors on 20 February 2017.

==> picture [92 x 38] intentionally omitted <==

Alan Lai Bruce Irvine Chairman Director and Audit Committee Chairman

==> picture [596 x 537] intentionally omitted <==

HALF YEAR REPORT 2016 | 11

KEY FINANCIAL DISCLOSURES

PGG WRIGHTSON LIMITED

INTERIM STATEMENT OF PROFIT OR LOSS

For the six months ended 31 December 2016

NOTE	UNAUDITED AUDITED UNAUDITED DEC 2016 JUN 2016 DEC 2015 $000 $000 $000
Continuing operations Operating revenue Cost of sales Gross proft Other income Employee benefts expense Research and development Other operating expenses Equity accounted earnings of investees Operating EBITDA Non-operating items Fair value adjustments 1 Depreciation and amortisation expense EBIT Net interest and fnance costs 2 Proft from continuing operations before income taxes Income tax expense Proft from continuing operations Discontinued operations Proft from discontinued operations (net of income taxes) Net proft after tax Net proft after tax attributable to: Shareholders of the Company Non-controlling interest Net proft after tax Earnings per share Basic earnings per share (New Zealand Dollars) 3 Continuing operations Basic earnings per share (New Zealand Dollars) 3	607,771 1,181,624 623,066 (450,308) (854,871) (461,669)
	157,463 326,753 161,397 30 725 388 (79,969) (156,148) (79,175) (2,650) (4,515) (2,850) (49,215) (96,390) (48,579) 323 (244) (245)
	(131,481) (256,572) (130,461)
	25,982 70,181 30,936
	1,932 (1,684) (1,157) (283) (232) 400 (5,188) (9,170) (4,111)
	22,443 59,095 26,068 (1,511) (10,474) (3,520)
	20,932 48,621 22,548 (4,955) (8,832) (6,558)
	15,977 39,789 15,990 12 (211) 76
	15,989 39,578 16,066
	15,998 38,823 15,947 (9) 755 119
	15,989 39,578 16,066
	0.021 0.052 0.021 0.021 0.053 0.021

The accompanying notes form an integral part of these financial statements.

12 | PGG WRIGHTSON LIMITED

PGG WRIGHTSON LIMITED

==> picture [87 x 24] intentionally omitted <==

INTERIM STATEMENT OF OTHER COMPREHENSIVE INCOME

For the six months ended 31 December 2016

	UNAUDITED AUDITED UNAUDITED DEC 2016 JUN 2016 DEC 2015 $000 $000 $000
Net proft after tax Other comprehensive income/(loss) for the period Items that will never be reclassifed to proft or loss Changes in fair value of equity instruments Remeasurements of defned beneft liability Deferred tax on remeasurements and change of defned beneft liability Items that are or may be reclassifed to proft or loss Foreign currency translation diferences for foreign operations Efective portion of changes in fair value of cash fow hedges Deferred tax on changes in fair value of cash fow hedges Other comprehensive income/(loss) for the period, net of income tax Total comprehensive income for the period Total comprehensive income/(loss) attributable to: Shareholders of the Company Non-controlling interest Total comprehensive income for the period	15,989 39,578 16,066
	504 5,433 4,856 3,343 (4,831) 1,554 (2,564) 1,353 (435)
	1,283 1,955 5,975 942 (8,513) (3,924) (2,039) 3,888 2,811 571 (1,088) (787)
	(526) (5,713) (1,900)
	757 (3,758) 4,075
	16,746 35,820 20,141
	16,773 35,098 20,055 (27) 722 86
	16,746 35,820 20,141

The accompanying notes form an integral part of these financial statements.

HALF YEAR REPORT 2016 | 13

KEY FINANCIAL DISCLOSURES

PGG WRIGHTSON LIMITED

INTERIM SEGMENT REPORT

For the six months ended / as at 31 December 2016

(a) Operating Segments

The Group has two primary operating divisions: Rural Services and Seed & Grain. Rural Services operates within New Zealand. Seed & Grain primarily operates within New Zealand with additional operations in Australia and South America.

Rural Services is further separated into three reportable segments, as described below, which are that segment’s strategic business units. The strategic business units offer different products and services, and are managed separately because they require different skills, technology and marketing strategies. Within each segment, further business unit analysis may be provided to management where there are significant differences in the nature of activities. The Chief Executive Officer or Chairman of the Board reviews internal management reports on each strategic business unit on at least a monthly basis.

• Retail. Includes the Rural Supplies and Fruitfed retail operations, AgNZ (Consulting), Agritrade and ancillary sales support, supply chain and marketing functions.

• Livestock. Includes rural Livestock trading activities and Export Livestock.

• Other Rural Services. Includes Insurance, Real Estate, Wool, PGG Wrightson Water, AgNZ (Training), Regional Admin, Finance Commission

• and other related activities. PGG Wrightson Water will be included as part of the Retail segment for the 30 June 2017 financial statements.

(b) Operating Segment Information

==> picture [548 x 373] intentionally omitted <==

----- Start of picture text -----

||||||||
|---|---|---|---|---|---|---|
|TOTAL|RURAL SERVICES|SEED & GRAIN|
|UNAUDITED|AUDITED|UNAUDITED|UNAUDITED|AUDITED|UNAUDITED|
|DEC 2016|JUN 2016|DEC 2015|DEC 2016|JUN 2016|DEC 2015|
|$000|$000|$000|$000|$000|$000|
|Total segment revenue|436,848|771,647|449,815|203,521|453,168|201,419|
|Intersegment revenue|–|–|–|(36,419)|(51,920)|(33,929)|
|Total external operating revenues|436,848|771,647|449,815|167,102|401,248|167,490|
|Operating EBITDA|29,376|52,979|32,770|9,982|44,621|11,697|
|Non–operating items|829|(3,147)|(3,248)|(118)|(418)|(397)|
|Fair value adjustments|17|458|400|(300)|(19)|–|
|Depreciation and amortisation expense|(1,452)|(2,771)|(1,390)|(2,658)|(4,397)|(1,735)|
|EBIT|28,770|47,519|28,532|6,906|39,787|9,565|
|Net interest and finance costs|1,726|(1,699)|(1,189)|(1,437)|(3,845)|(218)|
|Profit/(loss) from continuing operations|
|before income taxes|30,496|45,820|27,343|5,469|35,942|9,347|
|Income tax (expense) / income|(8,868)|(12,982)|(7,508)|(2,831)|(10,262)|(5,649)|
|Profit/(loss) from continuing operations|21,628|32,838|19,835|2,638|25,680|3,698|
|Discontinued operations|–|–|–|–|–|–|
|Net profit after tax|21,628|32,838|19,835|2,638|25,680|3,698|
|Segment assets|347,081|252,629|341,908|338,758|360,602|322,448|
|Investment in equity accounted investees|–|–|–|21,107|17,890|16,947|
|Assets held for sale|352|819|–|5,497|–|–|
|Total segment assets|347,433|253,448|341,908|365,362|378,492|339,395|
|Segment liabilities|(176,807)|(133,193)|(184,003)|(160,073)|(183,293)|(154,775)|

----- End of picture text -----

The accompanying notes form an integral part of these financial statements.

14 | PGG WRIGHTSON LIMITED

==> picture [87 x 24] intentionally omitted <==

Seed & Grain. Includes Australasia Seed (New Zealand and Australian manufacturing and distribution of forage seed and turf), Grain (sale of cereal seed and grain trading), South America (various related activities in the developing seeds markets including the sale of pasture and crop seed and farm inputs, together with operations in the areas of livestock, real estate and irrigation), and other Seed & Grain (research and development, international, production and corporate seeds).

Other. Other non-segmented amounts relate to certain Corporate activities including Finance, Treasury, HR and other support services including corporate property services and include adjustments for discontinued operations (PGW Rural Capital Limited) and consolidation adjustments.

The profit/(loss) for each business unit combines to form total profit/(loss) for the Rural Services and Seed & Grain segments. Certain other revenues and expenses are held at the Corporate level for the Corporate functions noted above.

Assets allocated to each business unit combine to form total assets for the Rural Services and Seed & Grain business segments. Certain other assets are held at a Corporate level including those for the Corporate functions noted above.

==> picture [449 x 373] intentionally omitted <==

----- Start of picture text -----

TOTAL OPERATING SEGMENTS OTHER TOTAL
UNAUDITED AUDITED UNAUDITED UNAUDITED AUDITED UNAUDITED UNAUDITED AUDITED UNAUDITED
DEC 2016 JUN 2016 DEC 2015 DEC 2016 JUN 2016 DEC 2015 DEC 2016 JUN 2016 DEC 2015
$000 $000 $000 $000 $000 $000 $000 $000 $000
640,369 1,224,815 651,234 3,821 8,729 5,761 644,190 1,233,544 656,995
(36,419) (51,920) (33,929) – – – (36,419) (51,920) (33,929)
603,950 1,172,895 617,305 3,821 8,729 5,761 607,771 1,181,624 623,066
39,358 97,600 44,467 (13,376) (27,419) (13,531) 25,982 70,181 30,936
711 (3,565) (3,645) 1,221 1,881 2,488 1,932 (1,684) (1,157)
(283) 439 400 – (671) – (283) (232) 400
(4,110) (7,168) (3,125) (1,078) (2,002) (986) (5,188) (9,170) (4,111)
35,676 87,306 38,097 (13,233) (28,211) (12,029) 22,443 59,095 26,068
289 (5,544) (1,407) (1,800) (4,930) (2,113) (1,511) (10,474) (3,520)
35,965 81,762 36,690 (15,033) (33,141) (14,142) 20,932 48,621 22,548
(11,699) (23,244) (13,157) 6,744 14,412 6,599 (4,955) (8,832) (6,558)
24,266 58,518 23,533 (8,289) (18,729) (7,543) 15,977 39,789 15,990
– – – 12 (211) 76 12 (211) 76
24,266 58,518 23,533 (8,277) (18,940) (7,467) 15,989 39,578 16,066
670,892 613,231 664,356 32,964 50,372 71,177 718,803 663,603 735,533
21,107 17,890 16,947 78 110 91 21,185 18,000 17,038
5,849 819 – 2,311 4,794 1,557 8,160 5,613 1,557
697,848 631,940 681,303 35,353 55,276 72,825 748,148 687,216 754,128
(336,880) (316,486) (338,778) (135,383) (96,431) (143,388) (472,263) (412,917) (482,166)
----- End of picture text -----

HALF YEAR REPORT 2016 | 15

KEY FINANCIAL DISCLOSURES

PGG WRIGHTSON LIMITED

INTERIM SEGMENT REPORT (CONTINUED)

For the six months ended / as at 31 December 2016

(b) Operating Segment Information continued

==> picture [726 x 388] intentionally omitted <==

----- Start of picture text -----

||||||||
|---|---|---|---|---|---|---|
|RURAL SERVICES|RURAL SERVICES|
|RETAIL|LIVESTOCK|
|UNAUDITED|AUDITED|UNAUDITED|UNAUDITED|AUDITED|UNAUDITED|
|DEC 2016|JUN 2016|DEC 2015|DEC 2016|JUN 2016|DEC 2015|
|$000|$000|$000|$000|$000|$000|
|Total segment revenue|318,904|479,772|306,631|27,429|73,111|30,265|
|Intersegment revenue|–|–|–|–|–|–|
|Total external operating revenues|318,904|479,772|306,631|27,429|73,111|30,265|
|Operating EBITDA|26,843|29,154|24,799|2,565|15,234|2,592|
|Non–operating items|203|390|12|746|(3,177)|(3,243)|
|Fair value adjustments|–|–|–|17|458|400|
|Depreciation and amortisation|(744)|(1,239)|(617)|(330)|(635)|(305)|
|EBIT|26,302|28,305|24,194|2,998|11,880|(556)|
|Net interest and finance costs|380|(660)|(403)|(114)|(269)|(103)|
|Profit/(loss) from continuing operations before income taxes|26,682|27,645|23,791|2,884|11,611|(659)|
|Income tax (expense) / income|(7,686)|(7,892)|(6,662)|(930)|(3,251)|337|
|Profit/(loss) from continuing operations|18,996|19,753|17,129|1,954|8,360|(322)|
|Discontinued operations|–|–|–|–|–|–|
|Net profit after tax|18,996|19,753|17,129|1,954|8,360|(322)|
|Segment assets|213,736|101,630|211,018|73,365|78,816|58,876|
|Investment in equity accounted investees|–|–|–|–|–|–|
|Assets held for sale|264|763|–|88|56|–|
|Total segment assets|214,000|102,393|211,018|73,453|78,872|58,876|
|Segment liabilities|(131,726)|(51,854)|(130,444)|(27,778)|(49,656)|(24,760)|

----- End of picture text -----

The accompanying notes form an integral part of these financial statements.

16 | PGG WRIGHTSON LIMITED

==> picture [87 x 24] intentionally omitted <==

==> picture [304 x 388] intentionally omitted <==

----- Start of picture text -----

RURAL SERVICES
OTHER RURAL SERVICES TOTAL RURAL SERVICES
UNAUDITED AUDITED UNAUDITED UNAUDITED AUDITED UNAUDITED
DEC 2016 JUN 2016 DEC 2015 DEC 2016 JUN 2016 DEC 2015
$000 $000 $000 $000 $000 $000
90,515 218,764 112,919 436,848 771,647 449,815
– – – – – –
90,515 218,764 112,919 436,848 771,647 449,815
(32) 8,591 5,379 29,376 52,979 32,770
(120) (360) (17) 829 (3,147) (3,248)
– – – 17 458 400
(378) (897) (468) (1,452) (2,771) (1,390)
(530) 7,334 4,894 28,770 47,519 28,532
1,460 (770) (683) 1,726 (1,699) (1,189)
930 6,564 4,211 30,496 45,820 27,343
(252) (1,839) (1,183) (8,868) (12,982) (7,508)
678 4,725 3,028 21,628 32,838 19,835
– – – – – –
678 4,725 3,028 21,628 32,838 19,835
59,980 72,183 72,014 347,081 252,629 341,908
– – – – – –
– – – 352 819 –
59,980 72,183 72,014 347,433 253,448 341,908
(17,303) (31,683) (28,799) (176,807) (133,193) (184,003)
----- End of picture text -----

HALF YEAR REPORT 2016 | 17

KEY FINANCIAL DISCLOSURES

PGG WRIGHTSON LIMITED

INTERIM STATEMENT OF CASH FLOWS

For the six months ended 31 December 2016

NOTE	UNAUDITED AUDITED UNAUDITED DEC 2016 JUN 2016 DEC 2015 $000 $000 $000
Cash fows from operating activities Cash was provided from: Receipts from customers Dividends received Interest received Cash was applied to: Payments to suppliers and employees Contributions to defned beneft plans Interest paid Income tax paid Net cash fow from operating activities Cash fows from investing activities Cash was provided from: Proceeds from sale of property, plant and equipment and assets held for sale Net decrease in fnance receivables Net proceeds from sale of investments Cash was applied to: Purchase of property, plant and equipment Purchase of intangibles Net increase in fnance receivables Net cash paid for purchase of investments Net cash fow from investing activities Cash fows from fnancing activities Cash was provided from: Increase in external borrowings and bank overdraft Cash was applied to: Dividends paid to shareholders Dividends paid to minority interests Repayment of loans to related parties Net cash fow from fnancing activities Net increase/(decrease) in cash held Opening cash Cash and cash equivalents 4	566,771 1,242,386 567,162 1 6 2 1,282 2,038 919
	568,054 1,244,430 568,083 (567,335) (1,188,736) (566,114) (6,030) – – (3,417) (6,579) (3,723) (7,465) (13,903) (10,420)
	(584,247) (1,209,218) (580,257)
	(16,193) 35,212 (12,174) 8,673 19,898 12,758 22 1,079 – 4,424 9,692 159
	13,119 30,669 12,917 (6,950) (30,750) (22,454) (933) (2,176) (722) – – (26) (2,975) (10,895) (9,533)
	(10,858) (43,821) (32,735)
	2,261 (13,152) (19,818) 32,144 7,035 57,115
	32,144 7,035 57,115 (15,252) (28,602) (15,260) (289) (205) (287) (163) – (10)
	(15,704) (28,807) (15,557)
	16,440 (21,772) 41,558
	2,508 288 9,566 7,561 7,273 7,273
	10,069 7,561 16,839

The accompanying notes form an integral part of these financial statements.

18 | PGG WRIGHTSON LIMITED

PGG WRIGHTSON LIMITED

==> picture [87 x 24] intentionally omitted <==

RECONCILIATION OF PROFIT AFTER TAX WITH NET CASH FLOW FROM OPERATING ACTIVITIES

For the six months ended 31 December 2016

	UNAUDITED AUDITED UNAUDITED DEC 2016 JUN 2016 DEC 2015 $000 $000 $000
Proft after taxation Add/(deduct) non–cash/non operating items: Depreciation, amortisation and impairment Fair value adjustments Net (proft)/loss on sale of assets/investments Bad debts written of (net) Change in deferred taxation Earnings of equity accounted investees Discontinued operations Efect of foreign exchange movements Other non–cash/non–operating items Add/(deduct) movement in working capital items: Movement in working capital due to sale/purchase of businesses Change in inventories and biological assets Change in accounts receivable and prepayments Change in trade creditors, provisions and accruals Change in income tax payable/receivable Change in other current assets/liabilities Net cash fow from operating activities	15,989 39,578 16,066 5,188 9,170 4,111 283 232 (400) (1,636) (5,321) (2,819) 494 1,483 505 (8,453) (2,001) 111 (323) 244 245 (12) 211 (76) (307) (6,131) (2,520) (3,244) 10,246 4,785
	7,979 47,711 20,008
	(3,433) (583) (541) 29,739 3,990 37,855 (83,702) (15,290) (100,292) 27,337 10,620 36,821 8,433 (2,604) (2,203) (2,546) (8,632) (3,822)
	(24,172) (12,499) (32,182)
	(16,193) 35,212 (12,174)

The accompanying notes form an integral part of these financial statements.

HALF YEAR REPORT 2016 | 19

KEY FINANCIAL DISCLOSURES

PGG WRIGHTSON LIMITED

INTERIM STATEMENT OF FINANCIAL POSITION

As at 31 December 2016

NOTE	UNAUDITED AUDITED UNAUDITED DEC 2016 JUN 2016 DEC 2015 $000 $000 $000
ASSETS Current Cash and cash equivalents 4 Short–term derivative assets Trade and other receivables Finance receivables Assets classifed as held for sale Biological assets Inventories Other investments 6 Total current assets Non–current Long–term derivative assets Biological assets Deferred tax asset Investments in equity accounted investees 5 Other investments 6 Intangible assets Property, plant and equipment 7 Total non–current assets Total assets LIABILITIES Current Debt due within one year 4 Short–term derivative liabilities Accounts payable and accruals Income tax payable Defned beneft liability 9 Total current liabilities Non–current Long–term debt 4 Long–term derivative liabilities Other long–term liabilities Defned beneft liability 9 Total non–current liabilities Total liabilities EQUITY Share capital Reserves Retained earnings Total equity attributable to shareholders of the Company Non–controlling interest Total equity Total liabilities and equity	10,069 7,561 16,839 2,595 3,743 2,917 335,314 250,486 335,497 – – 784 8,160 5,613 1,557 927 843 1,888 214,251 244,074 209,163 3,822 6,691 –
	575,138 519,011 568,645 2,412 1,516 380 61 108 107 22,787 14,334 12,222 21,185 18,000 17,038 1,925 2,165 17,345 6,655 7,079 6,832 117,985 125,003 131,559
	173,010 168,205 185,483
	748,148 687,216 754,128
	70,034 36,623 82,640 748 1,438 1,362 269,426 239,696 269,542 10,555 2,392 1,706 1,117 2,642 –
	351,880 282,791 355,250 96,283 97,511 101,595 762 940 445 9,138 8,588 8,402 14,200 23,087 16,474
	120,383 130,126 126,916
	472,263 412,917 482,166 606,324 606,324 606,324 5,231 2,033 8,876 (337,778) (336,101) (345,847)
	273,777 272,256 269,353 2,108 2,043 2,609
	275,885 274,299 271,962
	748,148 687,216 754,128

The accompanying notes form an integral part of these financial statements.

20 | PGG WRIGHTSON LIMITED

==> picture [87 x 24] intentionally omitted <==

ADDITIONAL FINANCIAL DISCLOSURES INCLUDING NOTES TO THE FINANCIAL STATEMENTS

FOR THE SIX MONTHS ENDED 31 DECEMBER 2016

==> picture [548 x 531] intentionally omitted <==

HALF YEAR REPORT 2016 | 21

ADDITIONAL FINANCIAL DISCLOSURES

PGG WRIGHTSON LIMITED

NOTES TO THE FINANCIAL STATEMENTS

For the six months ended 31 December 2016

1 FAIR VALUE ADJUSTMENTS

1 FAIR VALUE ADJUSTMENTS
	UNAUDITED AUDITED UNAUDITED DEC 2016 JUN 2016 DEC 2015 $000 $000 $000
Assets held for sale Biological assets Investments 2 NET INTEREST AND FINANCE COSTS	– (670) – 10 552 400 (293) (114) –
	(283) (232) 400
	UNAUDITED AUDITED UNAUDITED DEC 2016 JUN 2016 DEC 2015 $000 $000 $000
Finance income contains the following items: Other interest income Finance income Interest funding contains the following items: Interest on loans and overdrafts Net interest on interest rate derivatives Fair value change on interest rate derivatives Efective interest on expected earnout payments Efective interest on expected defned beneft pension ESCT payments Other interest expense Bank facility fees Interest funding expense Foreign exchange contains the following items: Net gain/(loss) on foreign denominated items Fair value change on foreign exchange derivatives Foreign exchange income/(expense) Net interest and fnance costs	80 73 82
	80 73 82
	(2,722) (6,304) (3,383) (173) (282) (77) 585 (846) (122) (558) (809) – (229) – – (506) (3) (146) (417) (845) (477)
	(4,020) (9,089) (4,205)
	120 (3,717) (1,061) 2,309 2,259 1,664
	2,429 (1,458) 603
	(1,511) (10,474) (3,520)

22 | PGG WRIGHTSON LIMITED

==> picture [87 x 24] intentionally omitted <==

3 EARNINGS PER SHARE AND NET TANGIBLE ASSETS

3 EARNINGS PER SHARE AND NET TANGIBLE ASSETS
	UNAUDITED AUDITED UNAUDITED DEC 2016 JUN 2016 DEC 2015 000 000 000
Number of shares Weighted average number of ordinary shares Number of ordinary shares	754,849 754,849 754,849
	754,849 754,849 754,849
	UNAUDITED AUDITED UNAUDITED DEC 2016 JUN 2016 DEC 2015 $000 $000 $000
Net Tangible Assets Total assets Total liabilities less intangible assets less deferred tax	748,147 687,216 754,128 (472,263) (412,917) (482,166) (6,654) (7,079) (6,832) (22,787) (14,334) (12,222)
	246,443 252,886 252,908
	UNAUDITED AUDITED UNAUDITED DEC 2016 JUN 2016 DEC 2015 $ $ $
Net tangible assets per share Earnings per share	0.326 0.335 0.335 0.021 0.052 0.021

HALF YEAR REPORT 2016 | 23

ADDITIONAL FINANCIAL DISCLOSURES

PGG WRIGHTSON LIMITED

NOTES TO THE FINANCIAL STATEMENTS[(CONTINUED)]

For the six months ended 31 December 2016

4 CASH AND FINANCING FACILITIES

4 CASH AND FINANCING FACILITIES
	UNAUDITED AUDITED UNAUDITED DEC 2016 JUN 2016 DEC 2015 $000 $000 $000
Cash and cash equivalents Current fnancing facilities Term fnancing facilities	10,069 7,561 16,839 (70,034) (36,623) (82,640) (96,283) (97,511) (101,595)
	(156,248) (126,573) (167,396)

The Company has a syndicated facility agreement which provides bank facilities of up to $176.00 million. The agreement contains various financial covenants and restrictions that are standard for facilities of this nature, including maximum permissible ratios for debt leverage and operating leverage. The Company has granted a general security deed and mortgage over all its wholly-owned New Zealand and Australian assets to a security trust. These assets include the shares held in South American subsidiaries and equity accounted investees. ANZ Bank New Zealand Limited acts as security trustee for the banking syndicate (ANZ Bank New Zealand Limited, Bank of New Zealand and Westpac New Zealand Limited).

The Company’s bank syndicate facilities provide:

• A term debt facility of $116.00 million maturing on 1 August 2018.

• A working capital facility of up to $60.00 million maturing on 1 August 2018.

The syndicated facility agreement also allows the Group, subject to certain conditions, to enter into additional facilities outside of the Company syndicated facility. The additional facilities are guaranteed by the security trust. These facilities amounted to $19.41 million as at 31 December 2016 providing:

• Overdraft facilities of $9.54 million.

• Guarantee and trade finance facilities of $6.53 million.

• Finance lease facilities of $3.34 million.

In addition, the bank financing of the Group’s South American operations is provided by Uruguayan-authorised banks. Two of the Group’s whollyowned Uruguayan subsidiaries (Wrightson Pas S.A. and Agrosan S.A.) are jointly and severally financed by a club structure. The club facilities contain various financial covenants and restrictions that are standard for facilities of this nature. The club facilities are denominated in USD, secured by a mortgage over the new Uruguay logistics centre and provide:

• An amortising logistics centre facility of $14.37 million (USD 10 million) maturing on 17 September 2022.

• A committed facility of $17.24 million (USD 12 million) maturing on 17 September 2018.

• Separate to the club facility, the Group’s South American operations have various unsecured financing facilities that amounted to $20.13 million (USD 14.00 million) as at 31 December 2016.

5 ACQUISITION OF EQUITY ACCOUNTED INVESTEE

Agri Optics New Zealand Limited

On 11 October 2016 the Group acquired a 51% investment in Agri Optics New Zealand Limited. This jointly controlled entity is accounted for using the equity method and is included in the Group’s Seed & Grain business segment. The acquisition involved an upfront payment and an earn out component determined over the next two years based on the financial performance of the business. The initial investment recorded for the investee was $0.80 million which includes management’s estimate of the fair value of the earn out. Agri Optics New Zealand Limited is a Canterbury-based precision agriculture business.

24 | PGG WRIGHTSON LIMITED

==> picture [87 x 24] intentionally omitted <==

6 OTHER INVESTMENTS

6 OTHER INVESTMENTS
NOTE	UNAUDITED AUDITED UNAUDITED DEC 2016 JUN 2016 DEC 2015 $000 $000 $000
Current investments BioPacifcVentures 10 Advances to equity accounted investees Non-current investments BioPacifcVentures 10 Sundry other investments including saleyards Advances to equity accounted investees	230 3,170 – 3,592 3,521 –
	3,822 6,691 –
	– – 12,040 1,925 2,165 1,650 – – 3,655
	1,925 2,165 17,345

Investment in BioPacificVentures

In 2005 the Group committed $14.00 million to an international fund established for investment in food and agriculture life sciences. The investment in BioPacificVentures has an anticipated total lifespan of 12 years. At 31 December 2016 $13.95 million has been drawn on the committed level of investment (30 June 2016: $13.95 million, 31 December 2015: $13.95 million). A fair value gain of $0.50 million was recorded in the Statement of Other Comprehensive Income for the BioPacificVentures investment in the period to 31 December 2016 (30 June 2016: fair value gain of $5.43 million, 31 December 2015: fair value gain of $4.86 million). In addition the Group received a capital return of $3.52 million from its BioPacificVentures investment in the period to 31 December 2016 (30 June 2016: $9.68 million, 31 December 2015: $0.08 million).

Advances to equity accounted investees

This advance is a loan to the South American investee entity Fertimas S. A. Interest is payable on the balance and no provision for doubtful debts was recorded against the loan as at 31 December 2016 (30 June 2016: nil, 31 December 2015: nil).

Sundry other investments including saleyards

Saleyard investments, which do not have a market price in an active market and whose fair value can not be reliably determined, are carried at cost.

7 PROPERTY, PLANT AND EQUIPMENT

Acquisitions and disposals

During the period to 31 December 2016, the Group acquired assets with a cost of $4.26 million (30 June 2016: $30.75 million, 31 December 2015: $22.41 million), together with assets acquired through business combinations of nil (30 June 2016: $0.23 million, 31 December 2015: $0.23 million). Assets with a net book value of $10.08 million were disposed during the period to 31 December 2016 (30 June 2016: $19.88 million, 31 December 2015: $11.93 million), resulting in a gain on disposal of $1.10 million (30 June 2016 Gain: $4.99 million, 31 December 2015 Gain: $2.99 million).

8 SEASONALITY OF OPERATIONS

The Group is subject to significant seasonal fluctuations. The Retail business is weighted towards the first half of the financial year as demand for New Zealand farming inputs are generally weighted towards the Spring season. Livestock and Seed & Grain activities are significantly weighted to the second half of the financial year. Seed & Grain revenues reflect the fact the Group operates in geographical zones that suit Autumn harvesting and sowing. New Zealand generally has spring calving and lambing and so Livestock trading is weighted towards the second half of the financial year in order for farmers to maximize their incomes. Other business units have similar but less material cycles. The Group recognises that this seasonality is the nature of the industry and plans and manages its business accordingly.

HALF YEAR REPORT 2016 | 25

ADDITIONAL FINANCIAL DISCLOSURES

PGG WRIGHTSON LIMITED

NOTES TO THE FINANCIAL STATEMENTS[(CONTINUED)]

For the six months ended 31 December 2016

9 DEFINED BENEFIT ASSET / LIABILITY

During the period the Group made lump sum contributions to the two defined benefit plans amounting to $6.03 million. In addition the assets and liabilities of the Wrightson Retirement Plan were transferred to the PGG Wrightson Employee Benefits Plan during the period. This resulted in the Wrightson Retirement Plan having no liability as at 31 December 2016.

10 COMMITMENTS

10 COMMITMENTS
NOTE	UNAUDITED AUDITED UNAUDITED DEC 2016 JUN 2016 DEC 2015 $000 $000 $000
There are commitments with respect to: Capital expenditure not provided for Investment in BioPacifcVentures 6 Contributions to Primary Growth Partnership	2,365 1,427 7,786 51 51 51 1,167 1,429 1,952
	3,583 2,907 9,789

Primary Growth Partnership – seed and nutritional technology development

The Group announced on 18 February 2013 that it had completed the contracting process for the Primary Growth Partnership (PGP) programme with the Ministry of Primary Industries. The PGP programme is a Seed and Nutritional Technology Development Programme that aims to deliver innovative forages for New Zealand farms. As a result of entering into the partnership the Group is committed to contributions to the partnership of $3.61 million over the six year life of the programme which ends on 31 December 2018. As at 31 December 2016 total contributions of $2.44 million (30 June 2016: $2.18 million, 31 December 2015: $2.00 million) have been made to the programme.

Forward purchase commitments

The Group as part of its ordinary course of business enters into forward purchase agreements with seed and wool growers. These commitments extend for periods of up to 3 years. These commitments are at varying stage of execution, therefore there remains uncertainty associated with yield, quality and market price. The Group is unable to sufficiently quantify the value of these commitments.

11 CONTINGENT LIABILITIES

PGG Wrightson Max Rewards loyalty programme

PGG Wrightson operates the Max Rewards loyalty programme. A provision is retained for the expected level of points redemption. A contingent liability of $0.12 million represents the balance of unexpired points that do not form part of the provision (30 June 2016: $0.13 million, 31 December 2015: $0.13 million). Losses are not expected to arise from this contingent liability.

12 RELATED PARTIES

Parent and ultimate controlling party

The immediate parent of the Group is Agria (Singapore) Pte Limited and the ultimate controlling party of the Group is Agria Corporation.

Transactions with key management personnel

Transactions with key management personnel
	UNAUDITED AUDITED UNAUDITED DEC 2016 JUN 2016 DEC 2015 $000 $000 $000
Key management personnel compensation comprised: Short-term employee benefts Post-employment benefts Termination benefts	3,622 5,798 3,300 64 205 189 – – –
	3,686 6,003 3,489

26 | PGG WRIGHTSON LIMITED

==> picture [87 x 24] intentionally omitted <==

13 EVENTS SUBSEQUENT TO END OF INTERIM PERIOD

Assets held for sale

Subsequent to 31 December 2016 an unconditional sale agreement was entered into for one of the assets classified as held for sale. The sale is expected to settle in February 2017 and will result in the disposal of property with a book value of $5.50 million. The Group expects to realise a gain of approximately $5.00 million on the disposal of this asset.

Dividend

On 20 February 2017 the Directors of PGG Wrightson Limited resolved to pay an interim dividend of 1.75 cents per share on 4 April 2017 to shareholders on the Company’s share register as at 5.00pm on 10 March 2017. This dividend will be fully imputed.

14 REPORTING ENTITY

PGG Wrightson Limited (the “Company”) is a company domiciled in New Zealand, registered under the Companies Act 1993 and listed on the New Zealand Stock Exchange. The Company is an FMC Entity in terms of the Financial Markets Conduct Act 2013.

The interim financial statements of PGG Wrightson Limited for the six months ended 31 December 2016 comprise the Company and its subsidiaries (together referred to as the “Group”) and the Group’s interest in associates and jointly controlled entities. Financial statements have been prepared in accordance with the requirements of the Financial Markets Conduct Act 2013 and the Financial Reporting Act 2013.

The Group is primarily involved in the provision of goods and services within the agricultural sector.

15 BASIS OF PREPARATION

Statement of Compliance

The interim financial statements have been prepared in accordance with New Zealand Generally Accepted Accounting Practice (“NZ GAAP”). They comply with the New Zealand equivalents to International Financial Reporting Standards (“NZ IFRS”) and other applicable Financial Reporting Standards as applicable for profit oriented entities, and in particular NZ IAS 34. The interim financial statements comply with International Financial Reporting Standards as issued by the International Accounting Standards Board, as applicable for profit oriented entities.

The interim financial statements do not include all of the information required for full annual financial statements. The same accounting policies and methods of computation are followed in the interim financial statements as applied in the Group’s latest annual audited financial statements. These statements were approved by the Board of Directors on 20 February 2017.

Standards and Interpretations That Have Been Issued or Amended But Are Not Yet Effective

A number of new standards and interpretations are not yet effective for the period ended 31 December 2016 and have not been applied in preparing these interim financial statements. None of these standards are expected to have a significant impact on these financial statements except for:

• IFRS 9 (2014) Financial Instruments has been issued. The final component of IFRS 9 (2014) introduces a new expected credit loss model for calculating impairment. IFRS 9 (2014) is effective for annual periods beginning on or after 1 January 2018. The Group does not plan to adopt IFRS 9 (2014) early and the extent of the impact has not yet been determined. The Group early adopted IFRS 9 (2013) from 1 January 2015. IFRS 9 (2013) provides amended general hedge accounting requirements.

• IFRS 15 Revenue from Contracts with Customers has been issued. This standard introduced a new revenue recognition model for contracts with customers. The standard is effective for annual periods beginning on or after 1 January 2018. The Group does not plan to adopt IFRS 15 early and the extent of the impact has not yet been determined.

• IFRS 16 Leases has been issued. This standard eliminates the classification of leases as either operating leases or finance leases. The standard uses a single lessee model which requires a lessee to recognise on the Statement of Financial Position assets and liabilities for all leases with a term of more than 12 months. The standard is effective for annual periods beginning on or after 1 January 2019. The Group does not plan to adopt IFRS 16 early and the extent of the impact has not yet been determined.

• A variety of minor improvements to standards have been made in order to clarify various treatments of specific transactions. These are not expected to have an impact on the Group’s financial results.

HALF YEAR REPORT 2016 | 27

ADDITIONAL FINANCIAL DISCLOSURES

PGG WRIGHTSON LIMITED

INTERIM STATEMENT OF CHANGES IN EQUITY

For the six months ended 31 December 2016

		FOREIGN CURRENCY	REALISED CAPITAL
	SHARE	TRANSLATION	AND OTHER
	CAPITAL	RESERVE	RESERVES
	$000	$000	$000
Balance at 1 July 2015	606,324	(269)	23,443
Total comprehensive income for the period
Proft or loss	–	–	–
Other comprehensive income
Foreign currency translation diferences	–	(3,891)	–
Efective portion of changes in fair value of equity instruments, net of tax	–	–	–
Efective portion of changes in fair value of cash fow hedges, net of tax	–	–	–
Defned beneft plan actuarial gains and losses, net of tax	–	–	–
Total other comprehensive income	–	(3,891)	–
Total comprehensive income for the period	–	(3,891)	–
Transactions with shareholders, recorded directly in equity
Contributions by and distributions to shareholders
Dividends to shareholders	–	–	–
Total contributions by and distributions to shareholders	–	–	–
Balance at 31 December 2015	606,324	(4,160)	23,443
Balance at 1 January 2016	606,324	(4,160)	23,443
Total comprehensive income for the period
Proft or loss	–	–	–
Other comprehensive income
Foreign currency translation diferences	–	(4,589)	–
Efective portion of changes in fair value of equity instruments, net of tax	–	–	–
Efective portion of changes in fair value of cash fow hedges, net of tax	–	–	–
Defned beneft plan actuarial gains and losses, net of tax	–	–	–
Total other comprehensive income	–	(4,589)	–
Total comprehensive income for the period	–	(4,589)	–
Transactions with shareholders, recorded directly in equity
Contributions by and distributions to shareholders
Dividends to shareholders	–	–	–
Total contributions by and distributions to shareholders	–	–	–
Transfer to retained earnings	–	–	–
Balance at 30 June 2016	606,324	(8,749)	23,443

28 | PGG WRIGHTSON LIMITED

==> picture [87 x 24] intentionally omitted <==

==> picture [445 x 547] intentionally omitted <==

----- Start of picture text -----

REVALUATION HEDGING DEFINED BENEFIT FAIR VALUE RETAINED NON–CONTROLLING TOTAL
RESERVE RESERVE PLAN RESERVE RESERVE EARNINGS INTEREST EQUITY
$000 $000 $000 $000 $000 $000 $000
556 (1,332) (14,609) (3,021) (346,534) 2,810 267,368
– – – – 15,947 119 16,066
– – – – – (33) (3,924)
– – – 4,856 – – 4,856
– 2,024 – – – – 2,024
– – 1,119 – – – 1,119
– 2,024 1,119 4,856 – (33) 4,075
– 2,024 1,119 4,856 15,947 86 20,141
– – – – (15,260) (287) (15,547)
– – – – (15,260) (287) (15,547)
556 692 (13,490) 1,835 (345,847) 2,609 271,962
556 692 (13,490) 1,835 (345,847) 2,609 271,962
– – – – 22,876 636 23,512
– – – – – – (4,589)
– – – 577 – – 577
– 776 – – – – 776
– – (4,597) – – – (4,597)
– 776 (4,597) 577 – – (7,833)
– 776 (4,597) 577 22,876 636 15,679
– – – – (13,424) 82 (13,342)
– – – – (13,424) 82 (13,342)
– – 990 – 294 (1,284) –
556 1,468 (17,097) 2,412 (336,101) 2,043 274,299
----- End of picture text -----

HALF YEAR REPORT 2016 | 29

ADDITIONAL FINANCIAL DISCLOSURES

PGG WRIGHTSON LIMITED

INTERIM STATEMENT OF CHANGES IN EQUITY[(CONTINUED)]

INTERIM STATEMENT OF CHANGES IN EQUITY (CONTINU	ED)
For the six months ended 31 December 2016
		FOREIGN CURRENCY	REALISED CAPITAL
	SHARE	TRANSLATION	AND OTHER
	CAPITAL	RESERVE	RESERVES
	$000	$000	$000
Balance at 1 July 2016	606,324	(8,749)	23,443
Total comprehensive income for the period
Proft or loss	–	–	–
Other comprehensive income
Foreign currency translation diferences	–	960	–
Efective portion of changes in fair value of equity instruments, net of tax	–	–	–
Efective portion of changes in fair value of cash fow hedges, net of tax	–	–	–
Defned beneft plan actuarial gains and losses, net of tax	–	–	–
Total other comprehensive income	–	960	–
Total comprehensive income for the period	–	960	–
Transactions with shareholders, recorded directly in equity
Contributions by and distributions to shareholders
Investment in minority interest	–	–	–
Dividends to shareholders	–	–	–
Total contributions by and distributions to shareholders	–	–	–
Transfer to retained earnings	–	1,491	(875)
Balance at 31 December 2016	606,324	(6,298)	22,568

30 | PGG WRIGHTSON LIMITED

==> picture [87 x 24] intentionally omitted <==

REVALUATION	HEDGING	DEFINED BENEFIT	FAIR VALUE	FAIR VALUE	RETAINED	NON–CONTROLLING	TOTAL
RESERVE	RESERVE	PLAN RESERVE		RESERVE	EARNINGS	INTEREST	EQUITY
$000	$000	$000		$000	$000	$000	$000
556	1,468	(17,097)		2,412	(336,101)	2,043	274,299
–	–	–		–	15,998	(9)	16,341
–	–	–		–	–	(18)	1,087
–	–	–		504	–	–	504
–	(1,468)	–		–	–	–	(1,468)
–	–	779		–	–	–	427
–	(1,468)	779		504	–	(18)	550
–	(1,468)	779		504	15,998	(27)	16,891
–	–	–		–	–	381	381
–	–	–		–	(15,252)	(289)	(15,686)
–	–	–		–	(15,252)	92	(15,305)
–	–	1,807		–	(2,423)	–	–
556	–	(14,511)		2,916	(337,778)	2,108	275,885

HALF YEAR REPORT 2016 | 31

PGG WRIGHTSON LIMITED

CORPORATE DIRECTORY

Board of Directors

for the six months ended 31 December 2016

Guanglin (Alan) Lai Chairman

Trevor Burt Deputy Chairman

Bruce Irvine

John Nichol Lim Siang (Ronald) Seah

Wah Kwong (WK) Tsang John Fulton is an Alternate Director for Wah Kwong Tsang

Kean Seng U

Executive Team

for the six months ended 31 December 2016

Mark Dewdney Chief Executive Officer

Cedric Bayly General Manager Wool

Julian Daly General Manager Strategy and Corporate Affairs/ Company Secretary

Grant Edwards General Manager Insurance and Financial Services

David Green General Manager New Zealand Seeds

Stephen Guerin Group General Manager Retail and Water

John McKenzie Group General Manager Seed and Grain

Registered Office

PGG Wrightson Limited 57 Waterloo Road Hornby Christchurch 8140

PO Box 292 Christchurch 8042 Telephone: 0800 10 22 76 (NZ only) +64 3 372 0800 (International) Email: enquires@pggwrightson.co.nz

Auditors

KPMG 62 Worcester Boulevard PO Box 1739 Christchurch 8140 Telephone +64 3 363 5600

Company number 142962 NZBN 9429040323497

Peter Moore General Manager Livestock

Peter Newbold General Manager Real Estate

Peter Scott Chief Financial Officer

Rachel Shearer General Manager Human Resources

Brent Sycamore General Manager Grain

Managing your shareholding online:

To change your address, update your payment instructions and to view your investment portfolio, including transactions, please visit:

www.investorcentre.com/nz

General enquiries can be directed to: Computershare Investor Services Limited Level 2, 159 Hurstmere Road Takapuna, Auckland 0622

• 8[ enquiry@computershare.co.nz]

• Private Bag 92119, Auckland 1142, New Zealand

• )[ Telephone +64 9 488 8777]

• 6[Facsimile +64 9 488 8787]

Please assist our registrar by quoting your CSN or shareholder number.

32 | PGG WRIGHTSON LIMITED

==> picture [123 x 34] intentionally omitted <==

==> picture [596 x 610] intentionally omitted <==

Helping grow the country