Elders Limited · ASX:ELD
Elders — H1 FY2016 Earnings Presentation
22 slides from Elders's earnings presentation, May 16, 2016
Slide 1: 2016 Half-Year Results Investor Presentation
16 May 2016 2016 Half-Year Results Investor Presentation Attached is the investor presentation in connection with the financial results for the 6 month period ended 31 March 2016. Elders CEO, Mark Allison, and CFO, Richard Davey, will deliver this presentation by webcast and simultaneous teleconfere
Slide 2: 2016 Half Year Results Presentation
2016 Half Year Results Presentation 16 May 2016
Slide 3: FY16 Half Year in Review
FY16 Half Year in Review Delivering continued progress • Statutory net profit after tax of $24.6m up $8.7m • Underlying net profit after tax of $19.4m up $3.2m • Underlying EBIT of $25.2m up $3.3m • Operating cash inflow $13.9m for the half • Return on capital of 22% up from 18% at March 2015 1
Slide 4: Progress on FY16 Priorities
Progress on FY16 Priorities Safety Operational Key Efficiency and Performance Performance Relationships Growth LTI reduced from 8 to 2 at half $19.4m underlying profit up Developing online client Controlled underlying cost base year from $16.2m community for ongoing market research New lea
Slide 5: Half Year Financial Performance
Half Year Financial Performance Change $ million 1H FY16 1H FY15 $m % Sales revenue 727.8 99.2 15.8% 628.6 Underlying EBIT 25.2 3.3 15.1% 21.9 Underlying finance cost (4.0) 0.9 18.4% (4.9) Underlying profit after tax 19.4 3.2 19.8% 16.2 Reported profit after tax 24.6 8.7 54.7% 15.9 Operating cash fl
Slide 6: Performance by Product
Performance by Product Improved Retail and Agency performance, offset by underperformance in Live Export Underlying profit movement $ million Product margin (0.5) (1.0) 7.4 (6.9) 6.6 (2.3) 0.9 (1.0) 19.4 16.2 1H FY15 Retail Products Agency Financial Feed & Live Export Costs Finance costs Tax & NCI 1
Slide 7: Performance by Geography
Performance by Geography Strong performance in the Australian geographies, offset by headwinds in International markets Underlying profit movement $ million 2.1 4.2 (9.3) 0.9 (1.0) 4.4 1.9 19.4 16.2 1H FY15 Northern Southern Western International Corporate and Finance costs Tax & NCI 1H FY16 Underly
Slide 8: Operating Cash Flow
Operating Cash Flow Positive operating cash flow underpinned by strong earnings Operating cash flow $ million Strong underlying EBITDA translated to cash flows for the business (7.8) Working capital cash flow usage reflects: 1.2 25.6 (8.6) Normal Retail seasonal (17.0) movements (2.0) 26.5 (4.
Slide 9: Capital Deployed
Capital Deployed Return on capital stable Return on Capital ROC highlights: Continued strong Agency earnings, with minimal capital requirement Retail return improved from 6% to 12% 21.9% 21.9% 17.8% Offset by reduced return on downstream livestock businesses Mar 15 Sept 15 Mar-16 Key movem
Slide 10: Net Debt
Net Debt Key ratios improving Net debt $ million 144.0 136.2 126.0 122.4 113.8 Key Ratios Mar-15 Sep-15 Mar-16 Change At balance date 86.8 Leverage [net debt to EBITDA] 2.2 3.3 2.7 (0.5) Average YTD Interest cover [EBIT to net interest] 1.9 3.4 5.9 4.0 Gearing [net debt to equity] 73% 122% 93% (20%)
Slide 11: Capital Structure
Capital Structure Committed to simplifying capital structure • Ongoing review of capital structure and options in relation to funding business growth and acquisitions • Hybrid remarketing process not initiated; 2.5% pa margin step up from 30 June 2016 • Continue to assess options around hybrid capit
Slide 12: Eight Point Plan Actions
Values, Performance Geographical Coverage Retail Products & Brand & Distribution Channels Capital light programs New leadership roles NSW expansion Better procurement WHS improvements Established Tasmanian footprint Price book improvements Investment in training and Ong
Slide 13: FY16 Outlook
FY16 Outlook Positive outlook for Australian businesses, with Live Export to remain under pressure Retail: The winter cropping outlook for northern and western Australia is positive, with average winter crop production expected in southern Australia Agency: Livestock: Cattle and sheep prices are e
Slide 14: Pathway to FY17 Target
Pathway to FY17 Target On track to meet EBIT $60m and ROC 20% target Tailwinds Livestock prices remain strong Potential China feeder and slaughter live export market Increased access to critical west Australian fertiliser market Strong pipeline of organic and acquisition growth opportunities
Slide 15: Appendix
Appendix 13
Slide 16: Business Segmentation
Business Segmentation Average Northern Southern Western International 1H FY16 $ million Working Australia Australia Australia Geographies Margin Capital Retail Products Farm Supplies and Fertiliser 53.1 147.8 Agency Services Livestock, Real Estate, Wool, and Grain 74.6 44.2 Financial Services Bankin
Slide 17: Business Performance by Product
Business Performance by Product Margin by product 1H FY15 1H FY16 $ million +11% • Retail: Increased earnings through 74.6 higher activity, particularly in in dryland +14% 67.2 cotton areas 53.1 46.4 • Agency: Strong livestock prices across -3% the country and higher broadacre real -11% estate activ
Slide 18: Business Performance by Geography
Business Performance by Geography Margin by geography $ million 1H FY15 1H FY16 +7% • North: Increase driven by strong +11% 66.1 livestock volume and prices, higher 61.5 55.3 broadacre real estate activity and 49.6 improvement in farm supplies in cotton +15% growing regions 20.9 24.1 -70% • South: I
Slide 19: Profit Sensitivity
Profit Sensitivity Underlying NPAT $(10m) $(7.5m) $(5m) $(2.5m) NPAT +$2.5m +$5m +$7.5m +$10m Sheep price -$20 -$10 +$10 +$20 Cattle price -$100 -$50 +$50 +$100 Sheep volume -1m head -500k head +500k head +1m head Cattle volume -200k head -100k head +100k head +200k head Retail sales -$50m -$25m +$2
Slide 20: Points of Presence
Points of Presence Elders’ footprint in Australian agriculture • Over 440 points of presence in Australia and overseas including full service branches, real estate and insurance franchises • Key produce areas covered through our footprint • Focus on improving reach into horticulture and sugar segmen
Slide 21: Live it.
Live it.
Slide 22: Disclaimer and Important Information
Disclaimer and Important Information Forward looking statements This presentation is prepared for informational purposes only. It contains forward looking statements that are subject to risk factors associated with the agriculture industry many of which are beyond the control of Elders. Elders’ futu