Elders Limited · ASX:ELD
Elders — Investor Presentation (July 2019)
43 slides from Elders's investor presentation, Jul 15, 2019
Slide 1: Acquisition of Australian Independent Rural Retailers (AIRR) and Equity Raising
ACQUISITION OF AUSTRALIAN Not for release to US wire services or distribution in the United States of America INDEPENDENT RURAL RETAILERS (AIRR) AND EQUITY RAISING Investor presentation 15 July 2019 Not for release to US wire services or distribution in the United States of America
Slide 2: Important notice and disclaimer
Important notice and disclaimer IMPORTANT NOTICE AND DISCLAIMER Not for release to US wire services or distribution in the United States of America The following notice and disclaimer applies to this investor presentation (Presentation or document) and you are therefore advised to read this carefull
Slide 3: Not financial product advice
Important notice and disclaimer Not financial product advice Not for release to US wire services or distribution in the United States of America This Presentation does not constitute financial product or investment advice or any recommendation to acquire New Shares or accounting, legal or tax advice
Slide 4: Future performance
Important notice and disclaimer Future performance Not for release to US wire services or distribution in the United States of America This Presentation contains certain "forward-looking statements" that are based on management's beliefs, assumptions and expectations and on information currently ava
Slide 5: Acknowledgements
Important notice and disclaimer Acknowledgements: Not for release to US wire services or distribution in the United States of America You acknowledge and agree that: • determination of eligibility of investors for the purposes of the institutional or retail components of the Entitlement Offer is det
Slide 6: Agenda
Not for release to US wire services or distribution in the United States of America AGENDA 01 Executive Summary 7 02 AIRR overview 10 03 Acquisition rationale 14 04 Equity Raising overview 21 Appendices A Pro forma balance sheet 24 B Key risks 26 C Summary of SID terms 37 D International offer 39 No
Slide 7: Executive summary
Not for release to US wire services or distribution in the United States of America 01 EXECUTIVE SUMMARY Not for release to US wire services or distribution in the United States of America
Slide 8: Executive summary
Executive summary — Elders has entered into a scheme implementation deed (SID) with AIRR Holdings Limited (AIRR) to acquire 100% of AIRR’s shares on issue by way of a recommended scheme of arrangement for $10.851 per share (AIRR Acquisition or Acquisition) Transaction Not for release to US wire serv
Slide 9: Executive summary
Executive summary — Estimated net synergies from the AIRR Acquisition of $6.6 - 9.3 million per annum1, to be gradually realised over the next two years — Including a full year contribution from AIRR2, the Acquisition is expected to deliver low single digit EPS accretion adjustment on an FY19 Not fo
Slide 10: AIRR Overview
Not for release to US wire services or distribution in the United States of America 02 AIRR OVERVIEW Not for release to US wire services or distribution in the United States of America
Slide 11: AIRR is a national wholesale platform with scale
AIRR is a national wholesale platform with scale Not for release to US wire services or distribution in the United States of America Overview 8 Warehouses and 5 retail locations Established in 2006 Head Office Member based buying and marketing group for independent rural Warehouses merchandise a
Slide 12: Strong track record of quality growth and financial discipline
Strong track record of quality growth and financial discipline Not for release to US wire services or distribution in the United States of America AIRR’s EBITDA profile ($m) AIRR’s growth strategy Grow AIRR and Tuckers member base 22 21 Leverage buying, marketing and selling strengths to create
Slide 13: Diversified by product, customer and geography
Diversified by product, customer and geography Not for release to US wire services or distribution in the United States of America FY18 sales by product category FY18 revenue by geography FY18 revenue by customer type Western Tasmania Retail Crop Australia 2% 4% protection 8% Other South Wholesale 2
Slide 14: Acquisition Rationale
Not for release to US wire services or distribution in the United States of America 03 ACQUISITION RATIONALE Not for release to US wire services or distribution in the United States of America
Slide 15: Consistent with Elders' Corporate Acquisition Principles
Consistent with Elders’ Corporate Acquisition Principles Not for release to US wire services or distribution in the United States of America Australian base and — AIRR is an Australian business, with Elders seeking 100% ownership 100% ownership (under tax umbrella) — Ability to utilise Elders’ acc
Slide 16: Compelling strategic rationale
Compelling strategic rationale Not for release to US wire services or distribution in the United States of America — Established, reputable and scaled wholesale business Large scale — Strong track record of growth with FY13 – FY191 EBITDA CAGR of 18% wholesale business with a strong track — Divers
Slide 17: Disciplined diversified portfolio management
Disciplined diversified portfolio management Not for release to US wire services or distribution in the United States of America Digital and Feed and Wholesale Real Estate Financial Retail products Agency services technical processing products services services services services Farm supplies Farm s
Slide 18: Wholesaling to independent retailers provides an attractive growth avenue for Elders
Wholesaling to independent retailers provides an attractive growth avenue for Elders Not for release to US wire services or distribution in the United States of America Number of rural services stores nationally1 AIRR’s benefits to its independent retailer members Increased retail margin through b
Slide 19: Potential net synergies of $6.6 - 9.3 million over two years with low integration risk
Potential net synergies of $6.6 - 9.31 million over two years with low integration risk Not for release to US wire services or distribution in the United States of America Estimated synergies Light touch integration Light touch integration with no changes to management, brands and operations Key
Slide 20: Acquisition sources and uses
Acquisition sources and uses Not for release to US wire services or distribution in the United States of America Sources A$m Uses A$m Scrip funding1 79 Acquisition of 100% of the shares in AIRR 157 Placement and Entitlement Offer 137 Repayment of estimated AIRR net debt 30 Repayment of Elders’ debt
Slide 21: Equity Raising Overview
Not for release to US wire services or distribution in the United States of America 04 EQUITY RAISING OVERVIEW Not for release to US wire services or distribution in the United States of America
Slide 22: Overview of the Equity Raising
Overview of the Equity Raising — Elders is funding the purchase price for the AIRR Acquisition, transaction costs and repayment of debt1 through: — $137 million Equity Raising launched today and fully underwritten by Macquarie Capital (Australia) Limited2 Not for release to US wire services or distr
Slide 23: Equity Raising timetable
Equity Raising timetable Event Date Not for release to US wire services or distribution in the United States of America Trading halt and announcement of Acquisition and Equity Raising, Placement and Institutional Entitlement Offer opens Monday, 15 July 2019 Placement closes Tuesday, 16 July 2019 Ins
Slide 24: Appendix A: Pro Forma Balance Sheet
Not for release to US wire services or distribution in the United States of America APPENDIX A PRO FORMA BALANCE SHEET Not for release to US wire services or distribution in the United States of America
Slide 25: Pro forma balance sheet
Pro forma balance sheet AIRR Elders AIRR Acquisition Proforma A$m Equity Raise December-181 March-192 eliminations3 adjustments3 combined Not for release to US wire services or distribution in the United States of America Cash and cash equivalents - 2 2 Trade and other receivables 52 436 488 Invento
Slide 26: Appendix B: Key Risks
Not for release to US wire services or distribution in the United States of America APPENDIX B KEY RISKS Not for release to US wire services or distribution in the United States of America
Slide 27: Key risks
Key risks INTRODUCTION Not for release to US wire services or distribution in the United States of America This section discusses some of the key risks associated with an investment in New Shares in Elders. These risks may affect the future operating and financial performance of Elders and the value
Slide 28: Key risks (continued)
Key risks (continued) Not for release to US wire services or distribution in the United States of America Acquisition specific risks (continued) Following the Acquisition, Elders will be required to account for any outstanding liabilities that AIRR has incurred in the past, including liabilities whi
Slide 29: Key risks (continued)
Key risks (continued) Not for release to US wire services or distribution in the United States of America Acquisition specific risks (continued) There are potential integration risks for the Acquisition, including potential delays and costs in implementing necessary changes, and difficulties in inte
Slide 30: Key risks (continued)
Key risks (continued) Not for release to US wire services or distribution in the United States of America Acquisition specific risks (continued) Following completion of the Acquisition, Elders will undertake a formal fair value assessment of all of the assets, liabilities and contingent liabilities
Slide 31: Key risks (continued)
Key risks (continued) Not for release to US wire services or distribution in the United States of America Equity raising risks Elders has entered into an underwriting agreement under which the Underwriter has agreed to fully underwrite the Equity Raising, subject to the terms and conditions of the u
Slide 32: Key risks (continued)
Key risks (continued) Not for release to US wire services or distribution in the United States of America Risks related to an investment in Elders (business risks) Safety risks are inherent in Elders’ business activities including livestock handling, remote driving, manual handling and chemical hand
Slide 33: Key risks (continued)
Key risks (continued) Not for release to US wire services or distribution in the United States of America Risks related to an investment in Elders (continued business risks) Elders provides credit to many counterparties, both domestically and internationally, and may be exposed to losses associated
Slide 34: Key risks (continued)
Key risks (continued) Not for release to US wire services or distribution in the United States of America Risks related to an investment in Elders (continued business risks) A key driver of Elders’ business is customer loyalty. Elders’ businesses rely on a number of business relationships and contra
Slide 35: Key risks (continued)
Key risks (continued) Not for release to US wire services or distribution in the United States of America General There are general risks associated with investments in equity capital such as Elders shares. The trading price of shares in Elders may fluctuate with movements in equity capital markets
Slide 36: Key risks (continued)
Key risks (continued) Not for release to US wire services or distribution in the United States of America General (continued) ASX imposes various listing obligations on Elders which must be complied with on an ongoing basis. Whilst Elders must comply with its listing ASX listing obligations, there c
Slide 37: Appendix C: Summary of SID Terms
Not for release to US wire services or distribution in the United States of America APPENDIX C SUMMARY OF SID TERMS Not for release to US wire services or distribution in the United States of America
Slide 38: Summary of SID terms
Summary of SID terms — On 15 July 2019, Elders and AIRR entered into a scheme implementation deed that governs the terms upon which the parties propose that AIRR Overview Not for release to US wire services or distribution in the United States of America propound and implement a Scheme of Arrangemen
Slide 39: Appendix D: International Offer Jurisdictions
Not for release to US wire services or distribution in the United States of America APPENDIX D INTERNATIONAL OFFER JURISDICTIONS Not for release to US wire services or distribution in the United States of America
Slide 40: International offer restrictions
International offer restrictions This document does not constitute an offer of New Shares of Elders in any jurisdiction in which it would be unlawful. In particular, this document may not be distributed to any person, and the New Shares may not be offered or sold, in any country outside Australia ex
Slide 41: International offer restrictions
International offer restrictions European Economic Area - Belgium and Germany This document has been prepared on the basis that all offers of New Shares will be made pursuant to an exemption under the Directive 2003/71/EC ("Prospectus Directive"), as amended and implemented in Member States of the E
Slide 42: Singapore
International offer restrictions Singapore This document and any other materials relating to the New Shares have not been, and will not be, lodged or registered as a prospectus in Singapore with the Monetary Authority of Singapore. Accordingly, this document and any other document or materials in co
Slide 43: Not for release to US
Not for release to US wire services or distribution in the United States of America Not for release to US wire services or distribution in the United States of America