PGG reports good health

The figures for the six months ended December are not directly comparable with the previous year's $2.66 million profit because they incorporate trading from both Reid Farmers and the recently merged PGG business.

Nevertheless the company says the result "compares very favourably with last year's combined record profitability for both companies".

The Dunedin-based rural services company notched up sales for the period of $121.49 million compared to the prior year's sales of $53.8 million for Reid Farmers alone.

Chairman Bill Baylis says all divisions within the group had performed well during the interim period and the company is benefiting from internal initiatives as well as the very buoyant rural trading conditions.

"Overall the directors are pleased with the direction of the company and the level of financial performance achieved so far," he says.

CEO George Gould said that whilst some aspects of merger integration had been finalised, full integration of the two companies into one organisation would be completed by the end of the financial year.

"Our business is to provide high quality service to our farmer clients. The merger has enabled us to create efficiencies, to become stronger and provide a further enhanced quality of service - and a broader range of services.

"Efficiencies in administration and accounting functions and from centralising the combined wool operations have created ongoing savings in excess of the $2.5 million per annum forecast when directors recommended the merger to shareholders."

Cashflow for the interim period was $7.515 million, substantially higher than the accounting profit due to depreciation and also a significant component of amortisation of goodwill.

A strong second half is forecast, based on the current rural economic outlook and the internal efficiencies achieved as a result of the merger.

PGG says it will not be paying an interim dividend, consistent with previous policy.

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