annual general meeting 2007 - growers.goldencircle.com.au fileconvertible notes investment fee - -...
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2006 REVIEW
Down $12.6 m versus 2005
NET PROFIT AFTER TAX
Down $10.7m versus 2005
EBIT
Up $3.3m versus 2005SALES
2006 REVIEWSales
- Significantly below forecast
Cost Increases
- Major increases in raw materials and packaging supplies
Price Increases
- Poorly managed resulting in reduced margins
Pineapple Yields
- Lower than expected
2006 REVIEW
Capital Investment
- Savings not realised
Supply Chain
- Poor overall planning resulting in excess waste and out of stocks
Cost Control
- Poor transparency in financial systems leading to poor cost control management
2006 REVIEWDEC DEC DEC DEC2003 2004 2005 2006
$m $m $m $m
Sales 403.5 414.1 388.8 392.1
EBIT -25.9 5.5 11.7 1.0
Finance Costs 10.2 10.6 9.5 9.3] B&B $12.3Convertible Notes Investment Fee - - 5.5 7.7] Other $ 4.7
Net Profit After Tax -31.1 -19.4 -4.7 -17.8
OJC
Sales 87.9 89.5 78.7 80.7 (exc Griffith)
EBIT -6.9 2.0 -4.8 4.1 (exc Griffith)
GCL (Northgate) & NEW ZEALAND
Sales 315.6 324.6 310.1 311.4
EBIT -19.0 3.5 15.3 -3.0
PROFIT PERFORMANCE – ACTUAL WITHOUT BABY FOOD SALE
-8-6-4-202468
1012
2004 2005 2006
200420052006
$
Mil
EBIT
2006 IN REVIEW
� Many issues not visible to the Board in a timely manner, especially cost blow-outs and poor pricing implementation (850 price lists discovered by new sales team).
� A number of major surprises came to light at the end of the year when final year end reconciliations were completed.
2007 ACTIONS
As previously announced on February 1 2007, once actu al results were apparent the Board instigated a major business re view with management to rationalise and simplify business act ivities with actions now being implemented:
− reduce costs− focus on core business requirements/projects− optimise pricing to improve margins− improve supply chain management to reduce wastage and out of
stocks− improve working capital management to release more cash to run
business− improve activity based costing− improve customer service levels
Total Category Performance L/Kg (QTR % growth)
-5
-0.8
-1.8-1.6
-3.1
-6.9-7-6-5-4-3-2-10
Ambient Juice/Drink
Chilled Juice/Drink
Cordial Canned Fruit Canned Vegetables
Jam
Source: AZTEC Scandata 22/04/07
Golden Circle Performance by Category L/Kg (QTR % growth)
-7.8
31.6
-8.1-12.9 -10.9
-39.1
-40
-30
-20
-10
0
10
20
30
40
Ambient Juice/DrinkChil led Jui ce/DrinkCordi al
Canned Fruit
Canned Vege tablesJam
QTR % Grow th
Source: AZTEC Scandata 22/04/07
2007 ACTIONS
MAJOR CHANGES NOW BEING IMPLEMENTED
� Aggressive cost reduction program is now being actioned across the entire business
� Catch up price increases being implemented several times in 2007
� Simplification of business
2007 ROAD TO RECOVERY
Cost Reduction Targeting over $20 Million annualize d savings
- total positions to be reduced by 130 across allparts of business
- recruitment freeze/attrition/contract terminations/redundancies
- additionally discussions commenced with the Union (EBA)for further restructuring at the Northgate factory
- purchasing, productivity, ingredient changes
2007 ROAD TO RECOVERY
Simplification - reduction/elimination for some product lines that bring complexity and contribute little
- export/route/foodservice/retail
- change the way we handle some ingredients to improve cash flow/reduce costs
Prices - prices in 2006 only up an effective 2.8%
- in 2007 price increases occurring in Jan/May/July/Oct to recover cost increasesand improve margins
ISSUES 2007 AND BEYOND
Costs & Margins
- Continued drive to reduce costs and improve profits
Pineapple Supply in Decline
- Options to Correct
Growth in Business
- Chilled Beverages
- Ambient Beverages
- Other?
Finance Costs
- Need to find more cost effective solutions
2007 OUTLOOK AND BEYOND
With the major cost reductions and significant price increases now being implemented we should see a positive EBIT result in 2007 versus the $8.4m loss (excluding baby food sale) in 2006.
The business will be much more profitable going into 2008 when the full effects will be achieved.
Election of Director John Schmoll
That Mr Schmoll, who will retire at the close of the meeting in accordance with clause 13.17 of the Company’s constitution, be re-elected as a director of the Company.
Election of Director Chris Riordan
That Mr Chris Riordan, who will retire at the close of the meeting in accordance with clause 13.17 of the Company’s constitution, be re-elected as a director of the Company.
To allow Non-Grower Directors and the CEO to purchase and sell shares.
Approval is sought to change the Company’s constitution (and consequently the operating conditions of its Australian Market Licence (Operating Rules)) to allow Directors and the Chief Executive Officer to purchase and sell the Company’s shares.
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