Australian Agricultural Company Limited · ASX:AAC
Australian Agricultural — FY2004 Earnings Presentation
31 slides from Australian Agricultural's earnings presentation, Aug 10, 2004
Slide 1: TTT TT TUTTE TTT TUT ESS
1 TTT TT TUTTE TTT TUT ESS LLL ee EE LLL LLL SSS 7 y La TT 2000.0 . E|// | 7 y Ly, LLL L ih Li) LE TE TT SSSI) ne y a ye Oo OD ee A> Les La SE ES Ny EE VM es iy Ly LE! |__| EE:EEb6)© > TTT i 00 || —s 2 _ 0 ____-_ | & CTT ee 7 iii Ly Ly ETT ee a Ly a A Ly as i Le, EE: _-_E- oe Lo LL Le iia 1) hhh) )9
Slide 2: Agenda
on 6. Performance to Strategic Targets FY04 Results Summary FY04 Operating Conditions Asset Growth Outlook & Guidance Questions
Slide 3: Performance to Strategic Targets
|. Performance to Strategic Targets
Slide 4: Earnings above forecast result as cattle market strengthens
Earnings above forecast result as cattle market strengthens Cash flow positive due to strong second half performance Balance sheet strengthened and record high herd numbers at year end Short term strategy execution modified to fit seasonal conditions Long term strategy of herd growth and development
Slide 5: Stated goals by year end '04
Stated goals by year end ‘04 Status at 30 June 04 Increase in Kgs produced by 20% Double Wagyu Sales Continued East Coast Expansion of 1824 East Coast Roll out of Jesters Jaffle Pie Continued pursuit_of Acquisition. Opportunities Increased Focus on Value Add revenue Residual impact of drought affect
Slide 6: FY04 Results Summary
HE EE EEE EEE a 7) LS Ll pion, : Co EMAL LEE _______ Hy Wie oe LIES SA ey Maa SG. oe ee LLL LLL LM LLL LLL LLL LLL SSE LLG AM ae } }§}§}§}8§8§8§ § == 2[2)3—CCOU.U!ULU.U.U Oe oa Ls FY04 Results Summary
Slide 7: FY01-FY04 financial summary
FYO1 FY02 FY03 FY04 Total Operating Revenue g24- 94.0 116.0 158.7 ($m) EBIT* ($m) 29.3 32.8 31.6 41.3 NPAT*($m) 15.9 20.6 18.3 22.2 Cattle Herd (head) 389,000 407,000 418,000 468,000 EPS (cents) NA 12.4. 9.6 11.2 DPS** (cents) NA 6.08 6.00 6.00 * FY01 Normalised for stand alone entity ™ FY03 6.0c =
Slide 8: Operating cash flow and cattle sales
30 June 30 June change 2004 2003 from FYOS Operating Cash flow ($m) 49 (6.3) aN NA Operating Cash flow b/f interest 128 49 Ay 261% & tax Beef Sold (kg millions) 44.9 33.5 Ay 34% Grain-fed Cattle Sales (head) 104,752 79,359 rN 32% Grass-fed Cattle Sales (head) - 73,990 - 49,216 2. 50% Total Cattle Sa
Slide 9: Assets at June 2004
‘~ change Assets at 30 June 2004 m from FYG3 Livestock 295.7 Ly 29% PP&E 290.4 Ls 30% Other Assets 53.5. Ay 40% Total 639.6 La 30% ° NTA = $1.78 per share vs. $1.54 at June 2003 ° Leverage = 31% vs. 25% at June 2003
Slide 10: NPAT, EBIT, total assets and beef kgs sold
SDV lee a ae a ean Cat ITI SUISSE aS ESS EEE Ziel , ey LE ae LLL CG Ce Ge ne ee a ee ee ee es : ae Net Profit After Tax Earnings Before interest and Tax NPAT 2004 2002 2008 fe 2001 2002 2003 2004 Year Total Assets Beet Kgs Soid 700 60 46 800 }—_ 40 600 t— 35 i 30 a i ¥ 26 E. § # 300 = 20 2 45 10 5 0
Slide 11: Dividend yield, leverage, PE and peer comparison
Dividend Yield Leverage Net Debt / (Debt +Equity) 60% ti 50% }— [|| | 40% t— ti 30% -— [|| | 20% — t— 10% r— AACo Ridle “Grainco Qld * Nufarm Market Sector o% , ‘ ' , I i y "P Cotton AACo Ridley Graincorp Qid Cotton Nufarm Price Earnings Ratio Equity / Market Cap % at June 30, 04 50 160% > 45 40 140
Slide 12: Monthly sales volume and indexed price
MONTHLY SALES VOLUME and INDEXED PRICE AACo Price Jul 01 = 100 Jul-02 E Aug-02 £ Jul-03 E Aug-03 f Feb-04 F Mar-04 [ May-03 Jun-03 £ Sep-03 Oct-03 F Nov-03 f Dec-03 E Jan-04 § Apr-03 Feb-03 E Mar-03 E Sep-02 ff Oct-02 F Nov-02 E Dec-02 f Jan-03 Apr-04 £ MH Grain-fed (__] Grass-fed -m— AACo Weighted
Slide 13: FY04 Operating Conditions
rr ie ae ( Co CO Ap La, Eg ne UT AE) i) LLL Australian Agricultural Company = = « gag. Se ee 3. FY04 Operating Conditions
Slide 14: Australian rainfall deciles and drought conditions
fy ‘ ‘ enh eee Acstralinn Goverement Burwsut of Meteorlugy Map nbom gor oa Australian Aaintall Deciles t y 1 February 1031 July 2004 > Disnibuiion Rased on Gridded Data y Product of fhe National Climate Contre f OC Conmonmcaih ofertas 2008, frien Daal Reicology WD code: ICRDAMUZOACANIZOUNI/S lary am
Slide 15: Property locations
oe a ae oe Ly ae oe ee a LLL LLL LLL LLL LLL LL LLG 8 8 8 8 8 8 § 8 = § = = =)—)—COCCCCC Ly) ce ee h————— py LO Oe 2 gf nnn Li La OID ag ee 4 Rockhampton Downs Tere Termamtves® ~ Northern Territory 4 i i 4 | i Tad i Clots Tastes Queensland A “a(jownstilla Australian Agricultural Company 9 _, Calteci
Slide 16: Asset Growth
Suess oe oe oe oe en Ne i 1 Aust oe a ee 4 ne 1 rali Cull LLL LLL CG ne Agri Asset Growth EN hs Vo) Co, Oe) an ay LG i CG ee Ee a ee ae Lo Lo Ua ee eR Te CEE Te ee ih ROHS, Sete 0 Se ae 7 Hh 7 7 PSE UU ee ue DD) Ae Ae
Slide 17: Land value uplift and carrying capacity
| | Wal : 4 | @ $40.7m uplift in land, buildings & improvements (booked as at 30 June 2004) XxX =f i Increasing the carrying capacity (cost efficiently) = increased land values = higher return from same property portfolio Effective environmental management increases property value AACo’s existing ca
Slide 18: Investment in Assets
$ million Investment in Assets FY00 FY01 FY02 FY03 FY04 B Repairs & Maintenance Expenditure Operational Capex m Expansionary Capex
Slide 19: Outlook & Guidance
te tem ae LLM LLM EL SE EE LL PENG, Ns a : . L La ett ce 2 es Le MLL iS ee ae ae Hi ee oe ie Le) iii ce ee <« } } } }§}§}§ § §==—=.—.CC]S..U.U.,.U.U.,.:.!.U.U.U.U.D.U.U.U.U.U.U.U “iid a ae } } }§}8§8 8 § § § § §§==§§ § = ©2])3§—3 — — —COCOU.r.!.!U.!.U.L.U.L.LULUL™LU,.,.U.D.U.U.U.U.U.U.UU aa Ae _ Aus
Slide 20: Returning to normal seasonal conditions
Returning to normal seasonal conditions Consolidation of current high cattle prices on strong demand Declining North American & Australian herd creating tight supply BSE concerns to ease, bans on US product into Japan to lift Increased focus on traceability Source verified product to benefit from st
Slide 21: QCMI Index vs US$
& & QCMI Index Vs US$ USD 250 200 + _ 150 4 = —s_ Index 8 —+_ USS 100 + 50 + $0.20 + $0.10 555558 8838 83ge 8 8 s 8 cc 4 i Da " ia 4 i= aD 2 2 Mt i 2 2 = i= $2326 8 ¢€3 22 2 €3 8 2 2 ZS Source: MLA AUD / USD exchange rate is one of many factors determining cattle prices Prices in 03/04 more signific
Slide 22: Feed Grain Prices
Feed Grain Prices 400 - 350 300 250 $/tonne 200 150 Jul-01 Nov-01 + dan-02 + Mar-02 5 Nov-03 + Jan-04 + Mar-04 + May-04 + Jul-04 5 @ @ Source: MLA Grain purchases timed to minimise supply risk Reduced grain prices improve average feedlot margins
Slide 23: Productivity improvements in core business
Productivity improvements in core business Increase sustainable carrying capacity Continue pursuit of acquisition opportunities Further expansion in breed development Continued growth of wholesale beef in Wagyu and “1824” brands Continuous improvement in : ~ safety ~ environment ~ management systems
Slide 24: Questions
Hesse ee RIE LEE EEE EEE EEE Se Ee Oe se Ly : ae ao : : a u oy Co i iii s ee ne oe y ee i Li is ie _ - co A : ye »=»§=§©)hChC by yy a Ped add red lone tal tele As isle hiunssles sont sty Cini La 5 ee ar ae oe LLL LLL LLL LLL LLL LLL LLL LL LL EE EEG ; OI ee 8 8 8 8§8§ 8 §§§=—=—_—_lCCOCOCOCOCOCOCOC.U
Slide 25: re hd
re hd ie ok ob Va 4 ae | ete: THE THE i Le a iE ia TE ig TE AE ee “Ge WE Ge ee a peewee “alll, Donne Te i, a ia ae Da Wa, vy,
Slide 26: Livestock valuation under AASB1037 SGARA
Livestock is valued in accordance with AASB1037 SGARA — ‘Self Generating & Regenerating Assets’ Cattle assets vary in value according to movements in market prices, weight, age and type Market prices are more easily determined in liquid markets with spot prices — trading stock In markets lacking liq
Slide 27: Trading and breeding cattle valuation
@ @ Trading Cattle ~ QCMI: an indicator only ~ Roma, Queensland cattle store sales ~ Prices quoted to AACo at year end Breeding Cattle ~ Large cattle property sales inclusive of breeding stock ~ Australian breeding herd outlook ~ US breeding herd & beef supplies outlook ~ Global beef demand outlook
Slide 28: Cattle types and descriptions
Type Description Calves Vealer Steers & Heifers Yearling Steers & Heifers Steers Heifers Manufacturing Steers Cows Bulls Feeder Steers Feeder Heifers Male and female calves less than 6 months old Castrate male or female cattle with no permanent teeth. Less than 12 months old and still suckling Castr
Slide 29: Glossary of industry terms
Term Definition ABARE Bos Indicus Bos Taurus - BSE Case Ready Meat DW Feedlot Lw MLA MSA QcMI SCU Turn-off Wagyu USDA Australian Bureau of Agricultural and Resource Economics Refers to tropical or humped breeds e.g. Brahman Refers to a class of temperate British and European breeds e.g. Angus Bovine
Slide 30: Financial term definitions
Term Description AASB Australian Accounting Standards Board Dividend Yield Dividend per share / Current Share Price DPS ‘Dividends per share EBIT Earnings before interest and income tax EPS Earnings per share Gearing Net Debt / Equity Leverage “Net Debt / (Net Debt + Equity) NTA Net Tangible Assets
Slide 31: Se oe oe oe oe ce oe oe . . o ae oe ae
Se oe oe oe oe ce oe oe . . o ae oe ae ie ce ce a ee ce ae ce . o o ce oe ce oe ce oe oe oe oe oe oe ce oe oe oe ou uy : . o a ie . o . 7 o ie . o . c . Oe ce ae ae a ae ne a ae ne ae ae ne ne a : 7 e ie ne ce a ne a ae oe oe ae oe ce oe oe ie : ie : ae : 7 ie . : 2 ie . 7 ie : ae o 2 ie . : 7 ie .
Australian Agricultural Company — FY2004 Earnings Presentation on 6ix