PGG Wrightson Limited (PGW) Earnings Call Transcript

[Foreign Language] Good morning, everyone. I'm Sarah Brown, Independent Director and Chair of the Audit Committee of PGG Rights Limited. I'll be chairing this meeting on behalf of our Chair, Joo Hai Lee and I'd like to welcome you to our 2022 Annual Shareholders Meeting. This is the first occasion PGG Wrightson has had a hybrid meeting with some attending in person and others via our online platform. Before we get started, there are a few housekeeping matters to cover. In the unlikely event of an emergency, during the meeting, we ask meeting attendees to please make your way to the nearest exit to the forecourt area. The convention center staff will assist throughout the evacuation process. In case of a seismic event, please take cover and staff will advise and assist should we need to evacuate the building. Toilets are located at the back of the room. We are recording this meeting and the presentation will be posted on our website later today. I confirm that we have a quorum. And accordingly, I declare the 2022 Annual Shareholders Meeting open. We will refer to PGG Wrightson as PGW throughout the presentation today. We're delighted to host our meeting in Hawke's Bay, a region that's very important to our business. Unfortunately, last year's meeting was planned to be here, and it had to be canceled and held online due to uncertainty surrounding COVID. This is the fourth occasion PGW has hosted our Annual Shareholders Meeting in Hawke's Bay since 2011, and we're delighted to be back. We held our 2011 meeting in Hastings. In 2014, we were here in this very venue, and we hosted our 2016 meeting at the Mission Estate Winery in Taradale. Today's online meeting is being held via Computershare's online meetings platform, which allows shareholders, proxies and guests to attend the meeting virtually. All attendees can watch this live webcast of the meeting and read the company documents associated with the meeting. All shareholders attending, whether in person or online can participate in the meeting and submit questions and cast votes. If you're joining us online and have a question to submit during the live meeting, please select the Q&A tab on the right half of your screen any time, type your question into the field and press Send. Your question will be submitted. Should you require any assistance, you can type your query and one of the Computershare team will assist with the chat function and reply to your query. Alternatively, you can call Computershare on (0800) 650-034. Please note that while you can submit questions from now on, we won't address them until the relevant time in the meeting. Please also note that your questions may be moderated or if we receive multiple questions on one topic, they might be amalgamated together. Finally, due to time constraints, we may run out of time to answer all your questions. If that happens, we'll endeavor to answer them in due course via e-mail. Accordingly, I encourage online participants to submit your questions to provide us with the best opportunity to respond. Voting today will be conducted by way of a poll on all items of business. If you are eligible to vote at this meeting, you'll be able to cast your vote under the Vote tab. Once the voting has opened, the resolutions will allow votes to be cast. To vote, simply select your voting direction from the options shown on the screen. You can vote for all resolutions at once or on by each resolution. Your vote has been cast when the tech appears. To change your vote before voting closes, you can select change your vote. You've got the ability to change your vote up until the time I declare voting closed which will be at the close of the meeting. In order to provide you with enough time to vote, voting is now open on all items of business. The resolutions will now be available in the vote tab. Please submit your votes at any time. [Voting]

The PGW Board had one change to its membership during the year. Rodger Finlay retired from the Board on the 30th of June 2022, having served as the Chair of the Board for 3 years. The Board has previously acknowledged and thanked Rodger for his leadership during his tenure. On the first of July 2022, Joo Hai Lee was appointed Chair and Meng Foon and Garry Moore joined the Board as independent directors. Garry is also a member of the Audit Committee. Before we begin the formal business of the meeting, I would like to introduce the Board who are all attending our meeting today. Seated alongside me is PGW's Chair, Joo Hai Lee. In the first row, we have Independent Director, Meng Foon, Independent Director, Garry Moore. Director, U. Kean Seng, and Independent Director, Dr. Charlotte Severne. Almost all members of the executive team are here today. Seated alongside me is PGG Wrightson's Chief Executive Officer, Stephen Guerin, along with Chief Financial Officer, Peter Scott and General Manager, Corporate Affairs, Julian Daly, who is also a Company secretary. I'd like to acknowledge other members of the executive team who are in attendance, GM Wool, Grant Edwards, GM Livestock and Real Estate, Peter Newbold, GM People & Safety, Rachel Shearer. An apology has been received from GM Retail and Water, Nick Berry. I'd like to acknowledge that we have representatives from our share register, Computershare, and Broker Web, Risk Services, our insurance broker partner here with us in Napier. Bruce Loader from our auditors, Ernst & Young, is joining us online. Other than Nick Berry, no apologies have been notified prior to the meeting. Are there any apologies from the floor that we should note in imminence. The Company Secretary has confirmed that the notice of meeting was sent on 20 September 2022 to all registered shareholders and to other persons entitled to receive that notice. I can confirm that the minutes of the company's previous Annual Shareholders Meeting held virtually on 6 December 2021 were approved as a true and correct record at the Board meeting on 22 February, 2022. The minutes of the meeting are posted on the Shareholder Information section of our website. The financial statements and the reports of the directors and auditors for the year ending 30 June 2022 are set out in the company's annual report. On 20 September, 2022, the annual report was posted on the company's website and our NZX page, and a copy of the report has been sent to shareholders who had requested one. Please note that we will refer to both GAAP and non-GAAP performance issues. We use operating earnings before interest, tax, depreciation and amortization or operating EBITDA as a key measure of performance and I encourage you to refer to our full accounts for details of how this relates to GAAP measures. I can confirm that 342 shareholders have appointed proxies for the purpose of this meeting in respect of approximately 37 million shares. I've covered the opening formalities, and I will now move to the general business of the meeting. I'll begin by providing an overview of the highlights of the 2022 financial year, and then I will hand over to our Chief Executive Officer, Stephen Guerin. Stephen will provide the financial and operational overview for individual businesses, and he will also summarize how our business is trading for the current financial year to date. I will conclude our presentation by discussing our forecast guidance for the full year to 30 June 2023. An opportunity to respond to questions will follow before we move to the formal business of resolutions that will be put to the meeting for voting. As outlined in the notice of meeting, the business of the meeting comprises 4 ordinary resolutions: relating to the election of Meng Foon and Garry Moore as Independent Directors; my reelection as Independent Director; and authorizing the Board to determine our auditor's fee. Our operating EBITDA was $67.2 million, which was up $11.1 million or 20%. Net profit after tax was $23.4 million (sic) [ $24.3 million ] up $1.6 million or 7%. Operating revenue of $952.7 million, an increase of $104.9 million or 12.4%. Gross profit of 24.5 -- sorry, $248.5 million, an increase of 11.3%. Net cash flow from operating activities of $23.7 million, which was down 58.9%. Total shareholder returns up -- of plus 38%. Fully imputed dividends for the year of $0.30 per share. These exceptional results are a record for the business. And it's an outcome the PGW team is very proud of and especially after a really challenging year at many levels. Like all businesses, we have had to navigate managing COVID-19 protocols, dealing with a high proportion of health-related staffing absences, responding to supply chain challenges and resourcing the business in an extremely tight labor market. Group operating EBITDA of $67.2 million is an outstanding result and an increase of $11.1 million or 20% on last year's strong result. Normalized EBIT, excluding nonoperating items, increased by 36% compared to FY '21 to $39.1 million. Importantly, these results were achieved as a result of significantly higher revenue of $952.7 million, up $105 million or 12% from FY '21, with margins broadly in line with last year. NPAT in this financial year was $24.3 million, which was up $1.6 million or 7% on last year. We launched our group strategy refresh in 2021, which builds on our proud heritage and strong fundamentals, while focusing on the fast evolving future landscape for agriculture and growth opportunities. The strategic pillars highlighted in the strategy provide clarity and focus, and we have been embedding these into our operations. The strategy leverages our collective nationwide reach and scale and also a differentiated offering, in particular, a technical offering and innovation focus to grow our market share and further cement PGW's position as leaders in the field. We have targeted 3 results and measures areas as part of our group strategy to track our performance. These measures relate to our financial performance, safety performance and customer experience. The measures cover 3 important areas where we want to grow and improve. Financial performance measures. Our internal financial performance measures include 2 key indicators: First, we target growth through the cycles and excessive Consumer Price Index, CPI. This is measured by comparing our normalized earnings before interest and tax, EBIT, growth against the CPI. For FY '22, we achieved a normalized EBIT growth of 36%, which is 29% above CPI. We normalized EBIT by excluding nonoperating items, impairments and fair value gains/losses. This was an extremely pleasing growth performance against our strategic KPI. A second financial measure that we target is to achieve a total shareholder return, TSR, exceeding 10% per annum. TSR is calculated annually based on the movement in our share price plus the dividends paid. The TSR for FY '22 was plus 38% and significantly exceeded our KPI by plus 28%. Health and safety measure. The health, safety and well-being of our people is of critical importance to us. To track our safety performance, we measure our total recordable injury frequency rate known as TRIFR performance, so we can demonstrate continuous improvement in our safety outcomes. For FY '22, PGW achieved a TRIFR reduction of 3% versus our FY '20 baseline. This reflects well on our group-wide focus to continue to improve our safety performance outcomes. Customer experience measure. A key feature of PGW's success as a business is the trust our clients place in our company, people and brand. Given customer experience is so important to our continued success as a business, an objective in our strategy is to target incremental improvement in our PGW group net promoter scores or NPS. NPS is a commonly used measurement of customer satisfaction and loyalty, which is based on a customer's likelihood to recommend a service or business. For FY '22, we achieved a positive 5-point improvement in PGW's NPS from last year's customer research. This positive result is consistent with our KPI to continually strive for incremental improvement. I'll now ask Stephen Guerin, our Chief Executive to provide an operational overview.

Thank you, Sarah. [Foreign Language] and good morning, everyone. I'm glad to be here at the Hawke's Bay as part of the AGM today. PGW recorded operating cash flows during the year of $23.7 million, which benefited from our strong operating EBITDA performance. As a business, we invested in working capital during the year, including growing our range of GO-STOCK receivables to $66.1 million at the 30th of June 2022, an increase of $20.2 million or 44% from 30 June 2021. In addition, inventories were 20.6 million higher than 30 June 2021, which reflects a conscious decision to have product available for clients due to challenges in shipping and supply chain, due to the impact of COVID-19 challenges together with higher levels of inventory from price increases for the same reasons. Capital expenditure of $8.8 million was $2 million higher than 30 June 2021, which was impacted by a slowing in the implementation of projects as a consequence of COVID-19 related disruptions. Our net interest-bearing debt was $32.8 million as at 30 June 2022. PGW renewed and extended the bank facilities for a 3-year term in late 2021. It was pleasing to see PGW recognized as a finalist in the 2021 Deloitte Top 200 businesses awards for outstanding change in business performance among New Zealand's largest companies. During the year, we refreshed our websites and our client Online Account Services Portal. New websites have a consistent contemporary design and provide an improved user experience. Our updated client Online Account Services Portal provides enhanced performance with the capability to add new features and functionality over time. We also initiated a company-wide business improvement program that will simplify PGW's IT systems and streamline our processes so we can be more flexible, secure and efficient when it comes to the fundamentals of our operations and client service. This program of work is underway and will span several years, and we look forward to the operational benefits and efficiencies this will deliver over time. As at 30 June 2022, PGW employed 1,844 employees, including casual, fixed-term, commission and permanent staff. Our continued focus on investing at our people to provide them with the tools and competence to succeed in their roles, sees us introducing our revised People & Safety strategy in FY '23 to best support the refreshed group strategy. Three key pillars surround the strategy, being leadership and expertise, safe and certain and recognition are the anchors of this strategy, and provide a foundation of the coming 3 years. PGW recognizes the importance of robust learning and development initiatives. And we continue to ensure our programs are fit for advancing our group strategy. With a wide-ranging suite of safety and wellbeing, sales, leadership and management skills alongside technical competency courses available to our people, both in-person and through e-learning modules, we're encouraged by the growth and depth of expertise at our business. Our people's can-do attitude as we responded to the COVID-19 challenges consistently evolving was appreciated as we best manage the challenging environment to ensure the ongoing safety and well-being of our teams and communities. The pandemic brought disruption to our businesses in a myriad of ways, and we are proud of the way our team members' commitment to the business and clients and communities under these demanding circumstances. Two key programs, which were successfully reestablished after the COVID-19 lockdowns have been our PGW Academy and trainee programs, which focus on developing our internal talent pipeline and the TO LEAD, which combines proven leadership principles with what is a critical PGW which are -- sorry, which are principles, which -- with what is critical in our PGW context. With the revised safety and well-being road map and recognized model -- resourcing model, PGW is honoring our commitment to continuous improvement in our vision to embed a safety culture of citizenship, whereby safety is a core part of everyone's role and is a shared responsibility. A cornerstone of the -- [Indiscernible] I'll start that paragraph again. Our cornerstone of the revised road map is ensuring that we have a disciplined approach to the controlling our critical risks. We partnered with HSE Global and spent time with our people to best understand first-hand the risk management challenges they face in their daily work and to identify opportunities for improvement. The popular Zero Incident Process, ZIP, as we refer to it internally, training sessions continued across the company. Development of our environment and sustainability strategy is a PGW Group's strategic priority, and we have been progressing our sustainability journey. We are working towards determining our environmental and sustainability positioning, objectives and measures and embedding these in everything we do. During the year, the environment, social and governance, or ESG work, group engaged with colleagues across the business and with our suppliers to determine PGW's carbon emissions. We now have an established process in place to capture our emissions so we can report on these in the future. We undertook a materiality assessment to determine of which ESG factors are most important to our stakeholders and material to our business objectives and activities as well as our societal and environment impacts. Further information about our ESG initiatives and our materiality assessment or included the PGW commentary and ESG sections of our annual report. I'll now turn to the -- our operational highlights for last year. Some of the operational highlights we achieved over the year included the following: our Fruitfed Supplies technical research development, or R&D team, conducted 59 new product trials across the Bay of Plenty, Tasman region, Pukekohe county, Canterbury regions and here in the Hawke's Bay. Nearly 1/3 of all the treatments in our R&D trials this year were biological products, which are more environmentally and friendly alternatives to the current chemistry available. Agritrade released our Time Casual proprietary product in the Australian market under The Zinc Capsule branding. Time Capsule is animal health facial eczema treatment for livestock. Our Real Estate business experienced the highest volume of rural sales in a decade, a 16% increase in rural sales for the year versus FY '21. Our people completed more than 15,000 online learning and compliance courses. It's great to be back here at the Hawke's Bay, which is such an important region for our business, as Sarah has mentioned. Hawke's Bay has a region as a wine and food province, [Indiscernible] but there are also amazing beaches, stunning scenery and some wonderful architecture. PGW is founded on legacy of the brands within the region, 2 of certificates or Williams & Kettle, which was founded in Napier 1891 and New Zealand Fruitgrowers Federation, which has operated in its first store at Hastings at 1920. Therefore, as a company, we have worked closely with customers at Hawke's Bay throughout our long history and in many cases, we have relationships that span many generations. Our business covers the whole region, which could be considered one of the engine rooms of PGW business due to the wide diversity of land type, land usage or bought around the climate of the area. These are areas of strength of our business and the region alike. Livestock will -- sorry, these areas are strict to their business and the region alike, being our Livestock, Wool, horticulture and viticultural businesses. There have been significant change in land use across the region, critically to everything the Bay is water. While you would perhaps realize that today, when you're driving around the region, Hawke's Bay can be proud to localized wide-spread drought with extended periods of below average rainfall. Significantly droughts have -- were experienced on several occasions in the last couple of decades. Hawke's Bay normally has a temperature climate, which is neither too hot, cold nor too wet, although it does enjoy some very hot stage during summer. Wairoa in the North is home to our retail business and Real Estate office, there is a base for local Livestock agents. Wairoa saleyards operate in association with local farming entities and families. Our Napier Wool store is the only North Island hub for our PGW Wool business and our North Island auction center is also located there. Hastings could be considered a bigger site as there are 2 retail stores on site. Our rural supply store and our Fruitfed supply store, our Real Estate office and our regional office. Directly across the road is the Stortford Lodge saleyards facility, which hosts 2 sales a week throughout the year. It provides a hub through which much of our Livestock business in the Hawke's Bay revolves. While Pukekohe around the South or Central Hawke's Bay provides a base for a full-service rural supply store as well as our Real Estate office. There are a vast array of support services work from these sites. Our Livestock, Wool representatives, technical field representatives, customer services representatives, category support matters, our crop monitoring teams, our R&D teams, product management and technical customer services alongside our Real Estate agents. Across the wide region, we have 125 colleagues work in our business. And there is a number -- and this number increases to the very busy spring season. We have clients with significant local, national and international export operations such as Rockit apples, Mr Apple, [Indiscernible] and Apiti farms who utilize a range of PGW services. We have -- with the significant land use changes at recent times and we have seen the Hawke's Bay transform from a predominantly sheep and beef farming area to a diversified region with strong viticulture and horticultural sectors. Response to these developments, we have adjusted our business structure to reflect these changes so we can continue to support our customers with the products and services that they require. The Board and the executive spent a enjoyable morning yesterday at Whenua Maori Farm with Paul and Cathy Sherwood who are second generation farmers on the land. Paul and Cathy are great supporters of PGW Wool and our Rural Supplies business. Whenua Maori farms, farm around 3,000 [indiscernible] 800 Hoggets replacements. They also finished 5,000 lambs and 400 risen 2-year-old [indiscernible] each year. Their cropping is based around [Indiscernible] stock only and growing our capital stock. I'll now discuss the performance of our 2 operating groups, Retail & Water and than the Agency Group. Our Retail & Water business incorporates Rural Supplies, Fruitfed Supplies, Agritrade and water. Retail & Waters operating EBITDA was an impressive $52.5 million, up $15 million on the prior year. Our Retail & Water business performed extremely well. It achieved an outstanding result with new highs. Our core focus remains to add value to our clients' businesses, much of this through the superior technical ability of our people. During the year, we continue to invest in trading our people from both a technical and sales perspective. Our commitment to personal development and upscaling of staff supports a very stable and knowledgeable rep force. Our clients see the value in the expertise of our people, and we continue to see new clients coming into the stores and asking reps to come on or orchard. This is reflected in the incremental market share gains we are seeing. To achieve these results, our teams have moved increased product volumes through our store network. Our investment in our logistics model has assisted us in delivering product on-farm and on-orchard in a timely efficient manner, which ensures our rep force will have more time to give our clients valuable advice. COVID-19 has caused increased uncertainty of stress, especially amongst our frontline teams. As COVID-19 spreads throughout the region, it became a challenge to keep our stores open at reduced staffing levels. We have developed a plan to deal with the temporary closures and staff moved between stores to patch gaps to keep the doors open for service to our clients. Our teams have been incredibly resilient and the key focus on service of our clients in a challenging and rapidly changing environment. Supply chain disruption has continued. It has impacted time lines in sourcing products. Being able to get the right product to our clients at the right time has highlighted the importance of strong relationships we have with suppliers. To help mitigate supply chain risks, we have also sourced product earlier that carried more inventory than we would have historically. Our e-commerce channel continues to increase sales and the number of orders [indiscernible] in a second year of operation. A positive on-flow impact of e-commerce channel is that it has [indiscernible] our product range online and contributes to boost in-store cash sales, an increased the number of inquiries the business receives. Work has commenced on a new build of retail store operations in Richmond and we have planning underway also for -- in Timaru and Ohakune retail stores. It's been an outstanding year for the Rural Supplies business. Through our client-focused offering, we have seen growth in a relatively tough market. Rural Supplies has sustained the momentum -- sustained the momentum of recent years and has investigated opportunities to expand into adjacencies and categories, which have unmeet client demand. Our reps continue to increase the usage of technical platforms, which streamlined their day-to-day activities and make their interactions with clients more efficient. An investment in our people through training with a focus on sales to ensure we have -- we are supporting our clients with the right advice, the right products for the job and by providing a welcoming environment in our stores. Our promotional activity for Rural Supplies showcases our people and our expertise in the field that we have more stores and reps than others servicing the sector. Our stores and people are part of the local communities in which they operate and as a rural business, we are proud of our investment in the regions. Fruitfed Supplies had another excellent year with new operating EBITDA and revenue achievements. We've retained a high market share across our horticultural sector and categories and continue to build relationships as a key supplier in the winery imports and the viticultural industry. We continue to see significant investment by clients in large horticultural developments. Fruitfed Supplies has been well placed to benefit from these developments in supporting supply of significant amount of capital equipment. Many of these developments that have been -- we have assisted with over the past few years are now coming into production and Fruitfed supplies, as generally seen as the logical partner for clients as their investments transition from the development into production. Our corporate client base is expanding, and we have grown a number of long-term agreements in place with our customers. Land-use change continues with a number of growers, including the corporate market, diversifying their portfolios and investing in the horticultural sector. The vegetable sector is a growth opportunity for Fruitfed Supplies, and we have increased our market share in this area through a number of targeted initiatives. A full marketing plan campaign includes promoting the brand and services offered and a refresh Fruitfed Supplies website were delivered during the year. Our Technical Team conducted a number of R&D trials across the sector, looking for new products and chemistry that will help and support our clients. Our focuses sales training program was also rolled out to increase the knowledge of our front-line staff. Agritrade, our wholesale business division, manufactures, sells and distributes products to improve farmer and grower production. Agritrade has continued to perform well over the past year. This was despite COVID-19 and supply chain challenges, causing volatility in sourcing products and price increases that have borne by the total supply chain. During the year, 12 products that were new to New Zealand market were commercialized, including Cervidae, a Triple Deer Drench, which is the only registered deer product of its kind on the market in New Zealand. Our zinc animal health treatment capsule for facial eczema, in dairy cattle was launched in Australia. Internationally shipping delays combined with domestic logistic issues and challenge -- have caused challenges. The fragility of the international freight system and increased costs highlighted the importance of strong relationships the team have with our partners, which has assisted in ensuring the flow of key products and inputs to our clients at the right time. Implementation of our Water Strategy has continued to increase business with new and repeat clients. Technology initiatives, including improving our client asset management system and online tracking of pivot builds to increase efficiencies in project delivery. Product shortage and shipping disruptions caused delays in product delivery space for water is expected to hinder project completion in the near term. Our water technicians completed certified training with Valley Irrigation, resulting in the team being the only Valley distributor in New Zealand who can offer an 8-year extended warranty. The team have also been audited with the Valley 365 Asia Pacific largest subscription award. Turning to our Agency business. The Agency Group incorporates Livestock, Wool, Real Estate and Real Estate businesses. Operating EBITDA was $21.8 million, down $3.3 million on the prior year's strong result. Our Livestock business performed well in a challenging climate with higher revenue and operating EBITDA achieved. The strong values achieved in the dairy livestock were supported by an increase in tallies and promotional links to bidr in a hybrid sales model. The South Island recorded strongest trading performance at all classes in a decade. Solid values were reached in all categories, especially cattle and sheep, which was compensated by a reduction in tallies. During the year, our GO-STOCK DAIRY product was launched. GO-STOCK Dairy is the extension of our GO-STOCK grazing contracts, which are continuing to grow with increased uptake with transacted stock volumes at these high values -- high levels -- highest levels. PGW's online trading platform, bidr, continued to grow its database of buyers. This was bolstered by the successful launch of live streaming of cattle saleyards at a number of saleyards, as well as, continued demand for on-farm hybrid auction coverage. Although the velvet business experienced shipping delays and port closures in China, the outlook was positive with further sales growth predicted in the Asian markets. During the year, PGW's velvet team exported its first ever dry-processed shipment of velvet to China. The Deer Team had a successful year with both live sale numbers and prices on the rise. Venison prices are now recovering back to the near 5-year average and are forecast to lift as logistical challenges reduce. Strong wool market remains challenging, and this has been accentuated by the pandemic-related disruption negatively impacted on demand. Fine wool prices remained solid, with merino being supported by high value grower contracts and healthy auction values. Our Wool contract business grew and our client base benefit from fine wools, organic wool and crossbred lamb wool contracts delivering good premiums. We also saw a please increase in wool volumes exported compared to last financial year. The team did well at managing the wool flow through our 4 wool stores and on to our overseas clients in what has been a very difficult season. We are pleased with the continued growth for PGW Wools Integrity Program, which provides quality standard assurances to international marketplace around consumer expectations. To demonstrate our belief in the future of this natural, sustainable, and biodegradable fiber, we have made significant investments in machinery in our logistical operations, and we have employed new trainees into the Wool business. Our Real Estate business has enjoyed another successful year. Whilst returns in the growth -- the returns in the residential and lifestyle channels have been challenging, sales volumes of our rural properties have been strong. The growth of rural property segment benefited from our increased market share and a number of property sales exceeding $30 million, with a kiwifruit property achieving a record $2 million per canopy hectare. We anticipate continued solid performance in the rural market segment with viable spring appraisals and listings due to continued horticultural growth in carbon, forestry, interest in sheep and beef properties. This business expanded during the year through the acquisition of Real Estate New Zealand in Ashburton and Te Awamutu Real Estate office moved into new premises. After the very winter, soil moisture levels are currently ranging from between normal to well above normal across the country. However, this has delayed some planting, the application of some inputs and the installation of some capital equipment, such as wood machines. Our Retail & Water business have had a solid start to the year. Our water business is busy and performing well due to the arrival of pivots from delayed shipments. Trading of our Livestock business was pleasing given the wet ground conditions with good volumes of animals traded at all classes across both islands. We've seen good support for our GO-Stock grazing contracts. The forecast of normalization of spring conditions with warmer temperatures and less rainfall will be welcomed by our clients in the business. PGW is well positioned to assist our farmer and grower client space with their cultivation needs as they gear up their operations, and we move towards the warm production months. We recently relaunched our Rural Supplies brand campaign, which communicates our store teams -- communicates our store teams and our technical field representatives [ passion ] for helping their clients and local communities under the tagline, working alongside you each season for the year. The [ campaign trains ] the way the stores and field representatives work closely with their clients and highlights the way we are an integral part of each of the local communities we operate and that our staff go the extra mile to help our customers meet their aspirations. The campaign also focuses on how the technical knowledge of our team delivers value on farm. Real Estate business experienced reduced activity in the lifestyle and residential markets compared to the strong performance during the same period last year. Farm sales are continuing to hold up a value but volume has impacted the first quarter of last year due to COVID restrictions delayed due diligence processes for those high-value properties. I'll now hand back to Sarah to discuss the outlook for the business.

Thank you, Stephen. Thank you for providing an overview of the 2022 financial year and the first quarter of 2023. I will now provide an update on our current outlook. The positive run for most New Zealand agri-sectors looks likely to continue through the remainder of 2022 and into the coming year. However, inflationary pressures on input costs will likely impact on-farm profits and exporters will still need to navigate high shipping costs and challenging logistics. While input prices are increasing, rising food prices are expected to be beneficial overall for New Zealand's agricultural sector. Most agricultural industries are facing similar pressures to other businesses, including a tight labor market and disruption to production from ongoing challenges presented by the pandemic. Labor shortages are constraining production, including limiting fruit harvesting and leading to delays in meat processing. These macroeconomic factors coupled with concerns relating to the raft of regulatory and compliance change impacting the sector are shown through an adverse farmer sentiment surveys. While the Rabobank rural confidence survey results released in early October for the last quarter have shown some improvement. Overall, New Zealand farmer confidence remains in net negative territory. On balance, while we remain cautiously optimistic about the financial year ahead, there are mixed signals in the macroeconomic environment. Consumers and export countries want high quality and safe food that our farmer and grower clients export. Both beef and spring lamb schedules are forecast to remain positive and dairy commodity pricing strong. However, we've seen a cold and wet start to spring, and in some areas, late-season frosts, which have resulted in a delay in early demand for imports. Farmer concerns regarding the proposed agricultural emissions scheme and other regulation are also negatively impacting on-farm sentiment. All these factors are contributing to increased levels of uncertainty. Overall, though, we consider the macroeconomic indicators for the New Zealand agricultural sector remain positive. Trading for the first quarter has been broadly in line with expectations, including a subdued real estate market. While it remains early in the financial year, we are forecasting an operating EBITDA result for the financial year to 30 June 2023 of around $62 million. While this is back from last year's very strong operating EBITDA result of $67.2 million, it is based upon our current assessment of a less certain operating environment. It is very early in the year, however, and we'll be in a better position to assist us after the busy spring trading period. In the meantime, the business remains focused on continuing to deliver on our strategy and creating value as we hit into the busy spring trading period. Ladies and gentlemen, we'll now respond to questions. Do we have any questions from online? Nothing has come through online. So we've got nothing that's come through online. Sure. Fantastic.

Thanks for that. Got a good year last year, a great result. Thank you very much. Excellent result. I just wondered what your dividend policy was because last year's earnings per share about $0.33 and a dividend fully imputed of $0.30. So it's quite a high payout in terms of retaining some earnings to grow the business or reduce debt. So just what is your dividend policy?

Our dividend policy is actually available -- I believe it's available on the website, Julian?

It is, yes. Its available.

Yes. But it's very much on a case-by-case year-by-year basis. Julian, are you able to access that?

I am.

I'm just conscious Paul, I'll give you the exact wording rather than ...

It takes into a number of factors actually, including cash flow positions, et cetera.

Sorry, Paul, could you hear that? That was Peter answering that... Yes, yes -- including cash flow position.

It takes a lot of number of factors.

Yes, yes. Including cash flow position.

We're about -- and this is -- don't see -- but it was a very good and generous.

It was also a very, very good year for a very good year in fact.

The correction estimated operating EBITDA is about 13% down on last year. And so that's going to bring the net profit down more. And so I just [indiscernible] volatility and share price probably. And just this question probably over right is a personal shareholder in ether put more to price of the business vaccines stuck around the $20 million in -- how do we get -- how do we get some more risk growth in business.

I'd certainly take on board a point, therefore, I can assure you that directors are very much considering the growth of the business. I think the investment into IT is key for us next year. And those factors will be taken into account when we consider our dividend in February.

So Paul, to answer you specifically about the -- what we take -- yes. The policy itself takes into account working capital requirements. CapEx, so Capital expenditure, and as Sarah had mentioned just on IT, we've got some significant investment in the intention of shareholders -- sorry, the interest of shareholders, free cash flow and the relevant market price. Now if we go back to a year or 2, remember that we didn't pay any dividend at 1 stage when we were in COVID in the next period, we did actually pay a healthy dividend of $0.16 then [ '14 ] and [ '16 ]. So that's kind of the recent history. That's 1 period, there was no dividend declared at all when we're in the middle of COVID.

Thank you, Peter. Any further questions, yes?

[ Kiran Maxine ]. Climate change poses a significant risk to the horticultural and agricultural sector. And I wondered how the Board is taking this into consideration and your deliberations.

There are yes, very much taking that into consideration. I think it's discussed at every meeting. just effect, for example, the weak spring that we've had. But there are also ongoing obligations in terms of our environmental reporting, which bring those obligations to front of mind at any meeting.