Offer Q&A

What are soft commodities?

Commodities that are grown rather than mined and include (but are not limited to) wheat, barley, chickpeas, sorghum and cotton. PrimeAg plans also to produce some livestock products (beef cattle and sheepmeat/wool).

What are the investment highlights?

  • Exposure to the growing global demand for soft commodities.
  • Economies of scale and innovative "Hub" structure, makes PrimeAg a globally competitive low cost producer of agricultural commodities.
  • Geographic spread of properties over 1,200 km mitigates climatic risk.
  • Production is further secured through the ownership of irrigation water entitlements.
  • Price risk is mitigated through the production of a diverse range of commodities and having the ability to switch between these commodities in response to price movements or climatic changes.
  • An experienced Board and management team with the skills and vision to build a great Australian agricultural company.
  • Agricultural commodity prices are not strongly correlated with Australian share prices on the ASX.
  • Quantitative and qualitative selection criteria, including return on investment, are used to evaluate and prioritise properties for purchase.
  • Sustainability focus on efficient water use, efficient chemical use, reduced carbon emissions, efficient nitrogen use and increased carbon sequestration.

What are the key risks?

The key risks of the Offer include but are not limited to:

Risks associated with the business:

  • soft commodity price fluctuations;
  • drought, flood, hail, bush fires and other extreme weather conditions;
  • change in water regulations;
  • lack of operating history;
  • availability, cost and timing of acquisition of further agricultural properties;
  • reliance on key personnel and ability to attract personnel;
  • pests and diseases;
  • water sustainability;
  • regulation and legislation;
  • interest rates;
  • exchange rates; and
  • asset liquidity.

Risks associated with investing in Shares:

  • stock market fluctuations;
  • general economic conditions;
  • liquidity; and
  • taxation issues.

What will be PrimeAg's net debt?

At the time of listing, PrimeAg will have no debt. Further acquisitions may be funded by long term debt and seasonal working capital requirements may be funded by short term debt. Major plant and equipment may be funded by leasing arrangements.

PrimeAg's Dividend Policy

It is the Board's intention to pay a dividend of approximately 40% of net profit after tax every six months in arrears, subject to general business and financial conditions, working capital requirements, PrimeAg's taxation position, future capital expenditure requirements, the availability of sufficient franking credits and any other factors the Board considers relevant.