Slide 1: 2018 Full Year Financial Results Presentation
Monday, 12 November 2018 2018 Full Year Financial Results Presentation Attached is the presentation of the financial results for the 12 month period ended 30 September 2018. Peter Hastings Company Secretary 1
Slide 2: Elders Limited 2018 Year End Results Presentation
Elders Limited 2018 Year End Results Presentation 12 November 2018
Slide 3: Disclaimer and important information
Disclaimer and important information Forward looking statements Non-IFRS information This presentation is prepared for informational purposes only. It contains This presentation refers to and discusses underlying profit to enable analysis forward looking statements that are subject to risk factors a
Slide 4: FY18 Year in Review
FY18 Year in Review Strong performance for the year Lost time injuries decreased to 5 from 6, LTIFR down from 1.5 to 1.2 Underlying net profit after tax of $63.7m, up $5.3m Underlying EBITDA of $79.0m, up $4.3m Underlying EBIT of $74.6m, up $3.6m Operating cash outflow of $12.1m for the ye
Slide 5: FY18 Priorities
FY18 Priorities Delivering our promises to stakeholders Safety Operational Key Efficiency Performance Performance Relationships and Growth Lost time injuries reduced to 5 $79.0m underlying EBITDA, up Continued to work with retail key Continued to drive branch efficiency from 6, target is zer
Slide 6: Year End Financial Performance
Year End Financial Performance Change $ million FY18 FY17 $m % Sales revenue 1,613.3 30.8 2% 1,582.5 Underlying EBITDA 79.0 4.3 6% 74.8 Underlying EBIT 74.6 3.6 5% 71.0 Underlying profit after tax 63.7 5.3 9% 58.4 Statutory profit after tax 71.6 44.4 38% 116.0 Net debt 173.4 78.1 82% 95.3 Operating
Slide 7: Performance by Product
Performance by Product Continued strong performance in Retail despite dry conditions, offset by impact of 16% decline in cattle prices Underlying profit movement $ million Product margin 1.4 0.1 3.4 1.8 3.2 13.8 14.5 1.7 58.4 63.7 FY17 Retail Agency Real Estate Financial Feed and Digital and Costs I
Slide 8: Performance by Geography
Performance by Geography Geographic diversification with Southern Australia outperformance offsetting Northern Australia Underlying profit movement $ million 1.1 1.0 0.0 1.7 5.3 6.9 63.7 58.4 Northern Southern Western Corporate and Interest, FY18 FY17 International Australia Australia Australia unal
Slide 9: Capital Employed
Capital Employed Return on capital remains above 20% target Underlying return on capital for the year was 24.2%: Underlying Return on Capital 1 o Retail continues to perform strongly with incremental improvement year on year o Livestock impacted by 16% decline in cattle prices 28.6% 24.2% o Contin
Slide 10: Operating Cash Flow
Operating Cash Flow Strong profitability and increased Retail working capital Operating cash outflow of $12.1 million Cash flow Working capital movements reflected: $ million Strong EBITDA Higher Retail debtors driven by strong 59.4 sales late in the season and delay of 81.0 receipts, while dry
Slide 11: Net Debt
Net Debt Increased investment and Retail activity driving higher balance Net Debt Net debt at balance date was $173 million compared to $95 million at September 2017, with increased activity around year end and delayed debtor receipts of $30 million which were received in the first week of October
Slide 12: FY19 Outlook
FY19 Outlook Average winter cropping season and balanced growth from acquisitions and organic activity Retail Products A reduced summer cropping planting is anticipated in the first half of FY19 with continued dry conditions impacting demand for fertiliser and crop protection products Average wi
Slide 13: Strategic Priorities to 2020
Strategic Priorities to 2020
Slide 14: Eight Point Plan: 3 years to FY20 goal
Eight Point Plan: 3 years to FY20 goal To deliver 5 – 10% quality growth per annum through the cycles EBIT FY17 to FY20 Livestock price Other market Organic (50%) Acquisition (50%) Cost (0%) FY20 FY17 normalisation movements Livestock prices expected to ease post FY17 Market share gains achieved
Slide 15: Balanced growth plan to FY20
Balanced growth plan to FY20 Organic Acquisition Maintain Cost 50% 50% Drive continuous business Continue to evaluate strategically Invest in resourcing to identify, improvement aligned opportunities to expand integrate and support both our business organic and acquisition growth Capture gro
Slide 16: Strategic Gaps
Strategic Gaps Stable platform geared for the next wave of growth, including 20 new branches by 2020 Key gaps in market, geographical, product and service areas to be filled through organic growth and acquisition, with 20 new branches by 2020 Retail Increased market share and presence in high valu
Slide 17: Appendix
APPENDIX ‘ pa.
Slide 18: Appendix
Appendix Appendix 1: FY18 Results Additional Information Appendix 2: Business Model Appendix 3: Market Forces
Slide 19: FY18 Results Additional Information
FY18 RESULTS ADDITIONAL INFORMATION
Slide 20: Business Segmentation
Business Segmentation Average Northern Southern Western Int’l Digital & $ million FY18 Margin Working Australia Australia Australia Geographies Technical Capital Retail Products Farm Supplies and Fertiliser 148.5 175.3 Agency Services Livestock, Wool, and Grain 119.3 33.8 Farmland, Residential, Prop
Slide 21: Business Performance by Product
Business Performance by Product Margin by product FY18 FY17 $ million 11% Retail: Improved on last year, despite a dry winter (3%) 148.5 cropping season, from acquisition activity in 134.0 horticulture and organic growth across Southern 119.3 122.6 Australia 5% 9% Agency: Downside attributable t
Slide 22: Business Performance by Geography
Business Performance by Geography Margin by geography $ million FY18 FY17 9% Northern Australia: Unfavourable conditions impacting sales across most products, offset by (1%) 159.9 acquisition growth in horticulture and continued 146.6 growth in the Killara feedlot 130.1 130.9 8% Southern Austral
Slide 23: Business Model
BUSINESS MODEL
Slide 24: Elders Limited
Elders Limited Australia’s largest listed rural services and products supplier, operating since 1839 Mark Allison Chief Executive Officer Chief Executive Officer and Managing Director of Elders • Australia’s largest listed full service rural and Managing since May 2014 services and products suppli
Slide 25: Business Model
Business Model Digital and technical Feed and processing Retail products Agency services Real estate services Financial services services services Farm supplies Livestock Farmland Agri-finance Fee for service Killara Feedlot Fertiliser Wool Residential Insurance Auctions plus (50%) Elders Indonesia2
Slide 26: Points of Presence
Points of Presence 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
Slide 27: Business Division: Retail Services
Business Division Retail Services Business description Retail Services margin ($m) Elders is one of Australia’s leading suppliers of rural farm inputs including seeds, fertilisers, agricultural chemicals, animal health products and general rural merchandise. We also provide professional production a
Slide 28: Business Division: Agency Services
Business Division Agency Services Business description Elders provides a range of marketing options for livestock, wool, and grain. Agency Services margin ($m) - Livestock: our livestock agents and employees operate across Australia conducting on-farm sales to third parties, regular physical and onl
Slide 29: Business Division: Real Estate Services
Business Division Real Estate Services Business description Real Estate Services margin ($m) Elders’ real estate services include company owned rural agency services primarily involved in the marketing of farms, stations and lifestyle estates. It also includes a network of residential real estate ag
Slide 30: Business Division: Financial Services
Business Division Financial Services Business description Financial Services margin ($m) Elders distributes a wide range of banking, insurance and financial planning products through its Australian network. We work together with a number of third parties to enable us to deliver these products; Rural
Slide 31: Business Division: Feed and Processing Services
Business Division Feed and Processing Services Business description Feed and Processing Services margin ($m) In Australia, Elders operates Killara Feedlot, a beef cattle feedlot near Tamworth in New South Wales. Elders imports, processes and distributes premium Australian meat in China and Indonesia
Slide 32: Strong group financials
Strong group financials Sales ($m) Gross margin ($m) 1,491 1,583 1,613 338 355 1,276 285 305 FY15 FY16 FY17 FY18 FY15 FY16 FY17 FY18 Underlying EBIT ($m) Operating cashflow ($m) 71 75 56 82 39 49 (5) (12) FY15 FY16 FY17 FY18 FY15 FY16 FY17 FY18 1 Includes equity accounted profits.
Slide 33: Driving improved shareholder returns and sound capital management
Driving improved shareholder returns and sound capital management Underlying EPS (cps) Dividends per share (cps) 7.5 51 55 18 48 33 7.5 FY15 FY16 FY17 FY18 FY15 FY16 FY17 1 FY18 2 Average working capital balance ($m) Average net debt balance ($m) 237 161 122 135 137 223 212 216 FY15 FY16 FY17 FY18 F
Slide 34: Profit Sensitivity
Profit Sensitivity Underlying EBITDA $(10m) $(7.5m) $(5m) $(2.5m) EBITDA +$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
Slide 35: Market Forces
MARKET FORCES
Slide 36: Cattle
Cattle Australian Cattle herd The herd is in destocking phase due to drought conditions in Million heads Queensland and New South Wales, with a 1% decline in the cattle herd forecast for 2018-19. 30 Total cattle slaughterings are forecast to increase 5% in 2018- 28 19, however this will be offse
Slide 37: Sheep and Wool
Sheep and Wool National Sheep flock Shorn wool production NTLI and EMI Million heads Thousand tonnes greasy Ac/kg cwt & Ac/kg clean 74 350 -6% +17.3% -3% 750 2,000 72 700 1,800 70 650 +15.5% 1,600 68 300 600 1,400 66 550 1,200 64 500 1,000 62 250 450 800 2014 2015 2016 2017 2018 2019f 2014 2015 2016
Slide 38: Cropping
Cropping -10% Planted Area 2016-17 Thousand hectares 2017-18 In 2018-19 the planted area for winter crops has decreased by 12%, in 12.2 12.2 response to adverse seasonal conditions. Total production is also expected 2018-19f 11.0 +2% to fall by 12%. 4.8 In 2018-19 the cotton planted area is expe
Slide 39: Horticulture
Horticulture Other Gross Value of Horticulture Production The gross value of horticulture production is projected to Grapes $ billion increase to $11.4bn in 2018-19, underpinned by seasonal Vegetables conditions and favourable domestic and export demands. Fruit & Nuts The gross value of Australi
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