Elders Limited · ASX:ELD
Elders — Bell Potter Emerging Leaders Conference 2019
32 slides from Elders's conference presentation, Sep 19, 2019
Slide 1: Bell Potter Emerging Leaders Conference Presentation
For personal use only 19 September 2019 Bell Potter Emerging Leaders Conference Presentation Attached is a presentation being given today by Elders’ Chief Executive Officer, Mr Mark Allison, to an emerging leaders conference being hosted by Bell Potter. Peter Hastings Company Secretary 1
Slide 2: Elders Limited - Bell Potter Emerging Leaders Conference
Elders Limited For personal use only Bell Potter Emerging Leaders Conference Sydney 19 September 2019
Slide 3: Disclaimer & Important Information
DISCLAIMER & IMPORTANT INFORMATION For personal use only Forward looking statements Non-IFRS information This presentation is prepared for informational purposes only. It This presentation refers to and discusses underlying profit to contains forward looking statements that are subject to risk enabl
Slide 4: Agenda
For personal use only AGENDA 01 Elders Today 02 Business Model 03 Eight Point Plan 04 Strategic Growth 05 AIRR Overview 06 Financial Performance 07 Priorities & Outlook 08 Summary
Slide 5: Elders Today
ELDERS TODAY For personal use only ▪ Australia’s largest listed full service rural service and products supplier ▪ 180 years old ▪ 1,900 employees ▪ 450 points of presence in Australia and overseas ▪ Servicing over 40,000 primary producers across Australia and international markets 4
Slide 6: Points of Presence
POINTS OF PRESENCE For personal use only ▪ Over 450 points of presence in Australia and overseas including full service branches, real estate and insurance franchises ▪ Key produce areas covered through our footprint ▪ Targeted expansion of footprint through recruitment and acquisition 5
Slide 7: Eight Point Plan – FY18 to FY20
EIGHT POINT PLAN – FY18 TO FY20 For personal use only 6
Slide 8: Business Model
BUSINESS MODEL For personal use only Digital and Feed and Wholesale Real Estate Financial Retail Products Agency Services Technical Processing Products Services Services Services Services Fee for service Farm supplies Farm supplies Livestock Farmland Agri-finance Killara Feedlot (148 agronomists) Fe
Slide 9: Growth Strategy – FY18 to FY20
GROWTH STRATEGY – FY18 TO FY20 For personal use only Organic Acquisition 50% Maintain Cost 50% ▪ Drive continuous business ▪ Continue to evaluate strategically aligned ▪ Invest in resourcing to identify, improvement opportunities to expand our business integrate and support both organic and acquisit
Slide 10: Strategic Gaps
STRATEGIC GAPS Stable platform geared for the next wave of growth, under the second Eight Point Plan, including 20 new branches by 2020 For personal use only Key gaps in market, geographical, product and service areas to be filled through organic growth and acquisition, with 20 new branches by 2020
Slide 11: Growth Plan – FY18 to FY20
GROWTH PLAN – FY18 TO FY20 For personal use only ▪ 5 – 10% growth through the cycles of above 20% ROC (15-18% ROC post AIRR) ▪ Consistent with assumptions Livestock prices eased post FY17 ▪ EBIT improvement in the period to FY20 is anticipated to be derived from: - organic and acquisition growth - c
Slide 12: AIRR Overview
For personal use only AIRR OVERVIEW
Slide 13: AIRR Profile
AIRR PROFILE For personal use only Overview 8 Warehouses and 5 retail locations ▪ Established in 2006 ▪ Member based buying and marketing group for independent rural Head Office merchandise and pet and produce stores Warehouses ▪ National wholesale business with network of eight warehouses Retail st
Slide 14: Consistent Quality Growth
CONSISTENT QUALITY GROWTH For personal use only AIRR’s EBITDA profile ($m) AIRR’s growth strategy ✓ Grow AIRR and Tuckers member base 22 21 ✓ Leverage buying, marketing and selling strengths to create sales and margin growth 19 17 ✓ Expand AIRR warehouse footprint by creating further satellite wareh
Slide 15: Enhanced Diversification
ENHANCED DIVERSIFICATION For personal use only FY18 sales by product category FY18 revenue by geography FY18 revenue by customer type Crop Western Tasmania Retail protectio Australia 2% 4% Other n South 8% Wholesale Australia Victoria 26% 22% 29% 9% 28% Members 56% Animal health Queensland New Anima
Slide 16: Attractive Wholesale Segment
ATTRACTIVE WHOLESALE SEGMENT For personal use only Number of rural services stores nationally1 AIRR’s benefits to its independent retailer members ✓ Increased retail margin through better buying and promotions 352 ~360 ✓ Product rebates for AIRR members paid in the same month of product purchase 302
Slide 17: Low Integration Risk, Net Synergies of $6.6m - 9.3m
LOW INTEGRATION RISK NET SYNERGIES OF $6.6m - 9.3m1 For personal use only Estimated synergies Light touch integration ▪ Light touch integration with no changes to management, brands and ▪ Opportunity to capture incremental margin operations from backward integration of animal health, crop protection
Slide 18: Consistent with Elders' Corporate Acquisition Principles
CONSISTENT WITH ELDERS’ CORPORATE ACQUISITION PRINCIPLES For personal use only Australian base and — AIRR is an Australian business, with Elders seeking 100% ownership P 100% ownership (under tax umbrella) — Ability to utilise Elders’ accumulated tax losses — Provides new standalone business in rura
Slide 19: Financial Performance
For personal use only FINANCIAL PERFORMANCE
Slide 20: Elders Financial Progress FY14 to FY19
ELDERS FINANCIAL PROGRESS FY14 TO FY19 For personal use only 75 72-75 Contributed to by: Underlying EBIT ($m) 71 ▪ Resetting of operational strategy, focusing 2H on running a pure-play agribusiness 1H ▪ Favourable livestock prices 56 29 30 38-41 ▪ Footprint expansion, acquisitions and investments, s
Slide 21: FY19 Half Year Results Summary
FY19 HALF YEAR RESULTS SUMMARY For personal use only ▪ Lost time injuries of 1, prior period nil, LTIFR up from 0.7 to 1.0 ▪ Underlying net profit after tax of $26.4m, down $13.3m ▪ Underlying EBIT of $33.5m, down $12.2m ▪ Underlying EBITDA of $36.0m, down $11.9m ▪ Operating cash outflow of $13.1m f
Slide 22: Performance by Product
PERFORMANCE BY PRODUCT Benefits of acquisitions offset by reduced summer crop plantings, drought affected agency volumes and delayed winter crop For personal use only Underlying profit movement $ million Product margin 2.1 3.7 4.1 0.1 1.6 0.9 0.2 6.0 1.1 39.7 26.4 1H FY18 Agency Real Estate Financia
Slide 23: Performance by Geography
PERFORMANCE BY GEOGRAPHY Impact of drought affecting mainly the North and South Eastern Australia For personal use only Underlying profit movement $ million 2.1 4.3 6.2 1.1 0.7 2.1 1.1 39.7 26.4 Northern Southern Western Interest, tax 1H FY19 1H FY18 Acquisitions International Corporate and Australi
Slide 24: Capital Employed
CAPITAL EMPLOYED Return on Capital still strong, although below target of 20% For personal use only ▪ Underlying return on capital was 18.4% reflecting: Underlying Return on Capital 1 - Recent investment activity performance impeded by unfavourable seasonal conditions - Expenditure and Investment in
Slide 25: Operating Cash Flow
OPERATING CASH FLOW Acquisition and seasonal driven increase in working capital For personal use only Operating cash inflow (excluding Titan) of $22.9 Cash flow $ million Working capital movements “Base” million reflected: ▪ Positive EBITDA 13.4 29.0 0.7 0.3 ▪ Higher Livestock working capital at 5.6
Slide 26: Net Debt
NET DEBT Increased working capital although significant headroom within financial covenants For personal use only Net debt (excluding Titan) at balance date was $32 Net Debt million higher than March last year because of: ▪ Higher Livestock working capital at balance date Average net debt (excluding
Slide 27: Priorities & Outlook
For personal use only PRIORITIES & OUTLOOK
Slide 28: FY19 Priorities
FY19 PRIORITIES Continue to invest in Eight Point Plan for long term growth For personal use only Safety Operational Key Efficiency and Performance Performance Relationships Growth ▪ 1 lost time injury, compared to nil ▪ $36.0m underlying EBITDA, down ▪ Continued to work with key retail ▪ Launch of
Slide 29: FY19 Outlook
FY19 OUTLOOK Winter cropping conditions expected to return to average in the second half Elders reiterates FY19 guidance and remains confident to deliver: For personal use only ▪ Underlying EBIT in the range of $72 to $75 million ▪ Underlying NPAT in the range of $61 to $64 million ▪ Continue to pur
Slide 30: Summary
For personal use only SUMMARY
Slide 31: Summary
SUMMARY For personal use only ▪ Elders reiterates FY19 guidance and remains confident to deliver: - Underlying EBIT in the range of $72 to $75 million - Underlying NPAT in the range of $61 to $64 million ▪ Eight Point Plan continues to deliver consistent high return growth ▪ Enhanced diversification
Slide 32: For personal use only
For personal use only
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