PGG Wrightson boardroom wrangle: New chairman Garry Moore seeks to ‘flush the dunny and move on’

PGG Wrightson is looking forward to getting back to business as usual.

It’s back to business as usual for PGG Wrightson (PGW) after a board room wrangle, new chairman Garry Moore says.

Last month, former PGW chairman Alan Lai’s Agria – which owns 44 per cent of the company – withdrew a notice seeking a shareholders meeting to consider several directorship changes.

The New Zealand Shareholders Association (NZSA), which opposed the moves, said it was pleased with the eventual outcome.

“I would say though that we are still wary that the same systemic issue is still there in the sense that Agria remains a significant shareholder in PGW,” NZSA chief executive Oliver Mander said.

“Like many companies on the NZX, it is an example of where a controlling shareholder can use that control to affect the interests of minority shareholders,” he said.

PGW chairman Garry Moore said it was time to move on.

“The key point is that we are over our governance issues and want to move forward and demonstrate that we are a good shop,” he said.

Moore, an investment adviser with over 36 years of experience in the financial services industry, quoted former All Blacks coach Steve Hansen’s now famous remark uttered after a rare test match loss.

“The phrase I have been using is, let’s ‘flush the dunny’ and move on.

“It’s not original, but that’s how I feel.

“There is a legitimate right on a six-man board to have a couple of representatives, but in New Zealand we focus on what is best for all shareholders, and those tensions come and go,” he said.

PGW has in recent years been a generous dividend payer.

Last year, the company paid out 22 cents a share in dividends, despite its net interest-bearing debt doubling to $65.3m.

The previous year to June 2022 showed a record net profit of $24.3m, with the total dividend coming in at an effective 30 cents a share.

Long-running boardroom wrangles are understood to have been about the level of dividend extraction, relative to sustainable levels of debt carried by the company.

In its six-month result, released in February, PGW’s net profit fell by 40 per cent to $12.7 million.

The company downgraded its ebitda guidance for the June year to $50m from $52m.

At its profit announcement, PGW said the board had “by a majority” determined that PGW would reinvest capital back into growing the business by suspending the interim dividend to avoid adding debt in the face of rising interest costs.

“The board considers PGW has performed well in difficult market conditions impacting the primary sector and wider economy,” it said then.

“It is recognised that uncertainties remain and it is prudent to wait until the full financial year is complete before reviewing the dividend payout ratio (if any).”

PGW’s governance issues come at a time when many farmers are struggling.

Sheep farming is going through times. Photo / Shawn McAvinue

Moore said that farmers, particularly sheep farmers, are doing it tough, rekindling uncomfortable memories of the mid-1980s slump.

Both the big meat companies - Alliance Group and Silver Fern Farms, have turned in annual losses.

Moore has been an independent on the board for 18 months - the last five weeks as chairman when he replaced U Kean Seng, who had been acting chair since last July.

Christchurch-based Moore has been involved with the company in various roles for many years.

“Bits and pieces have been bolted onto it over the years and it has managed to maintain a very loyal staff and customer base, despite the comings and goings in the boardroom,” he said.

“We are focusing on the customers and a lot of our customers are shareholders, so it’s with their interests at heart that we want to move forward and focus on the future of farming and horticulture in New Zealand.”

At the same time, the company has been investing heavily in technology.

While sheep farming is a problem right now, Moore said there were “green shoots” in other places.

“On-farm costs are high, and inflation has hit farmers pretty hard.”

PGW had a “blend” of businesses.

“While it’s dry, irrigation is going all right. Real estate has been tough but it is picking up.”

In dairy, a weak New Zealand dollar was helping to offset weaker prices.

“But so much of it is demand-driven out of China, especially for meat, that we just have to wait for that demand to show its head again,” Moore said.

“At the moment, it’s just not quite there.”

Jamie Gray is an Auckland-based journalist, covering the financial markets and the primary sector. He joined the Herald in 2011.