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For personal use only

For personal use only

Directors
Chief Executive Officer

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2. Discuss the
1. Outline in

more detail
our strategic
plan

need for a
change in
Namoi
Cottons
corporate
structure

3. Provide

information
about the
review of our
existing
corporate
structure

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WHAT WOULD WE LIKE TO ACHIEVE?

4.

Provide a
high level
overview of
the most
suitable
future
corporate
structure for
Namoi
Cotton

5. Clearly

outline the
next steps
in the
corporate
structure
change
process

6. Seek feedback

from you our


stakeholders

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TABLE OF CONTENTS
1. Strategic plan why & targeted

outcomes

2. Strategic plan in more detail


3. The need for change

the corporate structure

4. The corporate structure review


5. The most suitable future corporate

structure

6. Next steps

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1.0 STRATEGIC PLAN WHY?

Pre-farm gate
evolution is
changing the way
Namoi Cotton has
to service its
growers & their
expectations

Global markets &


external forces
continue to evolve
changing the capital
& structural
requirements to
operate our core
businesses

Effectively position
the business for the
longer term with a
financial position
that can underwrite
the provision of
quality services &
products

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1.0 STRATEGIC PLAN TARGETED OUTCOMES


Improve the quality & effectiveness of our

service offerings to growers

Enhance our service offering to growers,

participating in their crop input


requirements

Maximise the productivity of our existing

asset base, delivering improved grower


services & financial returns

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1.0 STRATEGIC PLAN TARGETED OUTCOMES


Grow our existing core business

footprint in an incrementally economic


manner over the longer term
Grow & diversify the business,

balancing financial performance against


existing business volume variability
Realise the implicit value of our network

of assets delivering greater value to


stakeholders

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2.1 ENHANCED GROWER


ORIGINATION CAPACITY
Mix of face to face grower relationships & digital
technology (i.e. Grower Portal)
Improved
grower
interface:

Maximising the one stop shop nature of Namoi


Cottons business to add value to a growers business
experience
Big data provision to assist in improving the growers
over all farming enterprise

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2.1 ENHANCED GROWER


ORIGINATION CAPACITY

Differentiated
service
offering:

Customisation of our core business services


& products
Proposed provision of competitive & bundled
financing & risk management products
Potential provision of key cotton crop input
services & products

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2.2 GINNING NETWORK OPTIMISATION


Improved ginning services through
progressive capital investment
targeting service quality

Reduced cost based through


capital investment improvements,
ginning network optimisation &
key service internalisation

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2.2 GINNING NETWORK OPTIMISATION


Improved gin reliability through
standardised maintenance &
downtime practices utilising the
latest available technology

Ginning footprint expansion


leveraging significant economies of
scale

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2.3 COTTON SEED


Increased cotton seed storage

capacity in central & southern


regions
Greater optionality delivered

to growers in marketing their


cotton seed
Improved cotton seed returns

through access to alternative


markets

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2.4 LINT MARKETING & LOGISTICS

Balance of principal
lint marketing
volumes between
profitability & asset
utilisation

Increased DCT
trading
maximising
supply chain
utilisation

Provision of third
party lint cotton
storage, handling
& logistics
services

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2.5 DIVERSIFICATION
FOOD BASED COMMODITIES
What is
Strategic
Rationale?

Over time, growth into supply chain


operations of food commodities
produced broadly in our geographic
footprint
Leveraging existing infrastructure,
economies of scale, systems,
experience, producer relationships
& presence in regional locations

Underpinned by future Asian and


subcontinent demand for Australian
based sustainable & quality food
commodity production

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2.5 DIVERSIFICATION
FOOD BASED COMMODITIES
Utilisation of our Grower Services
team to originate food commodity
production linking growers to
traders/consumers

How to
Participate?

Utilisation of supply chain assets to


provide efficient & cost effective
transport & distribution solutions for
crop inputs to producers
Integration, development & utilisation
of multi-commodity sites providing
effective warehousing, storage,
handling, packing & transport services
for producers, exporters & consumers
in a highly efficient & flexible manner

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2.5 DIVERSIFICATION
FOOD BASED COMMODITIES
Limited to processing, handling, storing,
warehousing & transport of food based
agricultural commodities

Where to
Participate?

Initial model focus will be Fee for Service


Preferably include linkage with
surrounding producers (i.e. origination
capacity)
Smaller to mid tier operations &
businesses that would benefit from
economies of scale

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2.6 CORPORATE

Enhanced IT
platform for
improved grower
services & product
provision

Implementation of
latest digital
technology to
underpin core
business operating
efficiencies

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3.0 THE NEED FOR CHANGE IN THE


CORPORATE STRUCTURE

To achieve the
targeted outcomes
of its strategic plan,
the Namoi Cotton
business requires
capital

The current
corporate structure
limits acceptable
capital raising
alternatives
(price, value & risk)

Inability to access
effective capital at
any time and
promptly limits our
ability to execute on
business growth
opportunities

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4.0 THE CORPORATE STRUCTURE REVIEW


Morgans appointed as a corporate
advisor in late December 2015 to
assist in strategic deliberations

Morgans engagement on two advisory


streams:
Independent assessment &
refinement of strategic business
plan to evaluate any capital
requirements

Review of capital structure to


support implementation &
delivery of the strategic plan

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4.0 THE CORPORATE STRUCTURE REVIEW


Strategic plan refined & prioritised with a
balance between existing business growth &
business expansion over time

The current strategic initiatives based on initial


estimates require a level of capital between
$30m and $35m

Strategic plan is incrementally structured to


attempt to deliver immediate benefits for
stakeholders

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4.0 THE CORPORATE STRUCTURE REVIEW


Investigate an efficient way for Namoi
Cotton to raise capital to execute its
strategic plan

Maximise the value of Namoi Cotton now &


into the future

Introduce greater flexibility to raise capital


at any time to take advantage of strategic
growth opportunities as they arise

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4.0 THE CORPORATE STRUCTURE REVIEW


Preserve into the future the value
of the various assets of the
current Namoi Cotton business

Strengthen the overall financial


position of Namoi Cotton

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4.0 THE CORPORATE STRUCTURE REVIEW


Various corporate structure alternatives
were investigated including recent
relevant re-structures

Review process considered the evolution


of Namoi Cottons corporate structure to
date

Significant advice & work undertaken on


corporate, legal & taxation requirements

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5.0 THE MOST SUITABLE FUTURE


CORPORATE STRUCTURE
The proposed
The proposed

structure
should be the
simplest &
most effective
to meet the
needs of the
Namoi Cotton
business into
the future

Structure
should provide
the best
alignment
between
growers & the
long term
future business
activities of
Namoi Cotton

The Board is

recommending a
single ASX listed
class of share
(Structure)

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5.0 THE MOST SUITABLE FUTURE


CORPORATE STRUCTURE
The Structure should

deliver a
repositioning of
Namoi Cotton with
greater flexibility & a
more efficient means
to access capital at
any time

It is proposed,

(subject to regulatory
approval) that the
importance of
growers to Namoi
Cotton will be
recognised in the
Structure

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5.0 THE MOST SUITABLE FUTURE


CORPORATE STRUCTURE

Grower Member recognition in the


Structure will be achieved through:
A converted
shareholding
in the new
Initial
Structure,
Grower
shareholding
Board
with a
incentives to
limits to
representation
The ability
preliminary
align volume
reduce the
& significant
to share in
view pre any
provision to
possibility of
say in the
dividends
capital
Namoi Cotton
a change of
business
raising of
in the future
control
between
20% and
25%

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6.0 THE NEXT STEPS

Grower Member
& CCU holder
briefing
meetings

Evaluation of
feedback
received

Engagement
with the ATO,
ASX, ASIC &
Co-operatives
Registrar to
obtain
necessary
preliminary
approvals

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6.0 THE NEXT STEPS

Release of detailed
documents to
stakeholders setting
out the formal
Structure, including
Independent Experts
reports

Grower Member
vote with 75% of
Grower Members
voting having to
vote in favour for
approval

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6.0 THE NEXT STEPS

Court & other


regulatory
approvals
CCU Holder vote
with 75% of CCU
Holders voting
having to vote in
favour for approval

If approved, formal
implementation of the
Structure & a capital
raising to secure capital
for execution of the
strategic plan (existing
stakeholders to have
the first right of
participating in the
capital raising)

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FEEDBACK &
QUESTIONS

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NAMOI COTTON
CO-OPERATIVE LTD

STAKEHOLDER BRIEFING MEETING


CORPORATE STRUCTURE PROPOSAL
OCTOBER/NOVEMBER 2016