Elders Limited · ASX:ELD
Elders — FY2015 Earnings Presentation
25 slides from Elders's earnings presentation, Nov 16, 2015
Slide 1: 2015 Full Year Financial Results Presentation
16 November 2015 2015 Full Year Financial Results Presentation Attached is the presentation of the financial results for the 12 month period ended 30 September 2015. Peter Hastings Company Secretary 1
Slide 2: 2015 Full Year Results Presentation
2015 Full Year Results Presentation 16 November 2015
Slide 3: 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
Slide 4: FY15 Year in Review
FY15 Year in Review Positive environment, solid progress • Statutory net profit after tax of $38.3m up $35.3m • Underlying net profit after tax of $32.6m up $23.5m • Underlying EBIT of $45.8m up $18.2m • Operating cash outflow $5.3m for the year • Return on capital of 21.9% up from 13.6% at Septembe
Slide 5: FY15 Priorities
FY15 Priorities Delivered our promises to stakeholders Safety Operational Key Efficiency and Performance Performance Relationships Growth LTI frequency rate reduced $32.6m underlying profit up Improved levels of employee 45 branches on 90 day branch from 3.5 to 3.4 $23.5m effectiveness and e
Slide 6: Full Year Financial Performance
Full Year Financial Performance $ million FY15 Change FY14 Sales revenue 1,514.2 82.7 1,431.5 Underlying EBIT 45.8 18.2 27.6 Underlying finance cost (10.0) 5.7 (15.7) Underlying profit after tax 32.6 23.5 9.1 Reported profit after tax 38.3 35.3 3.0 Net debt (136.2) 1.4 (137.6) Operating cash flow (5
Slide 7: Performance by Product
Performance by Product Strong performance with livestock price tailwind Underlying profit movement $ million Product margin 3.1 (3.5) 5.7 (0.4) (1.0) (0.4) 16.3 32.6 3.7 9.1 FY14 Retail Agency Financial Feed & Live Export Costs Net finance Tax & NCI FY15 Underlying Products Services Services Process
Slide 8: Performance by Geography
Performance by Geography Improvement across all geographies Underlying profit movement $ million 0.7 5.1 (5.9) 5.7 (0.4) 6.7 11.6 32.6 9.1 FY14 Northern Southern Western International Corporate and Interest Tax & NCI FY15 Underlying Australia Australia Australia unallocated Underlying NPAT costs NPA
Slide 9: Capital Deployed
Capital Deployed Disciplined ROC focussed capital growth Return on Capital • ROC improvement drivers: • Agency growth requiring minimal capital 21.9% • Stronger bias to short haul Live Export 17.4% business with shorter working capital cycle 13.6% • Efficiency gains and profit improvement in -9.2% K
Slide 10: Operating Cash Flow
Operating Cash Flow Operating cash flow reflecting normalisation of working capital FY15 operating cash flow $ million Working capital movements • Strong generation of operating EBITDA (10.4) cash flow provided opportunity for hybrid acquisition (23.5) 62.2 51.8 • Efficient EBITDA cash conversion du
Slide 11: Net Debt
Net Debt Key debt ratios improved Net debt $ million 228.4 Key ratios Sept-14 Sept-15 Change Leverage [net debt to EBITDA] 7.8 3.3 + 4.5 137.6 136.2 Interest cover [EBIT to net interest] 0.6 3.4 + 2.8 At balance date Annual average 122.4 Gearing [net debt to equity] 241% 122% + 119% At balance Sept-
Slide 12: Capital Structure
Capital Structure Committed to simplifying capital structure • Progress to date in line with plan • $30m hybrid acquisition successfully completed in August 2015 using earnings cash flow • Ongoing review of optimal capital structure in relation to funding business growth and acquisitions • Immediate
Slide 13: Eight Point Plan Actions
Values, Performance Geographical Coverage Retail Products & Brand & Distribution Channels • Consignment stock • “Elders. Live it.” • Wholesale strategy • Margin management • “Stand Up. Speak Up” • livestock.com.au • Better supplier terms, • Performance culture • 45 branches on 90 day bra
Slide 14: FY16 Priorities
FY16 Priorities Safety Operational Key Efficiency and Performance Performance Relationships Growth • Continued emphasis on safety • Implementation of Eight Point • Maintain high levels of • Launch Elders Grain platform Plan initiatives employee effectiveness and • Strengthen employee safety enableme
Slide 15: Eight Point Plan FY16
Values, Performance Geographical Coverage Retail Products & Brand & Distribution Channels • Home brand strategy • Invest in leadership capabilities • Elders Online and wholesale • Agency product • Brand campaign strategy • Vendor managed inventory • Sponsorship activities • Foreign corpo
Slide 16: Outlook
Outlook Mixed operating conditions for the next year • Retail: Prospect of a strong El Nino likely to bring drier spring and summer in eastern Australia • Agency: • Livestock: Cattle and sheep prices to remain high driven by reducing global supply and strong international demand. Significant tighten
Slide 17: Appendix to Full Year Results Presentation
Appendix to Full Year Results Presentation
Slide 18: Business Model
Business Model Feed & Retail Financial Live Export Agency Services Processing Products Services Services Services ` Short haul livestock Long haul livestock Elders Indonesia Farm Supplies Killara Feedlot Elders China Real Estate Livestock Insurance Fertiliser Banking Grain Wool $926m retail sales 9.
Slide 19: Business Segmentation
Business Segmentation Northern Southern Western International Working FY15 Margin $ million Australia Australia Australia Geographies Capital Retail Products Farm Supplies and Fertiliser 111.5 146 Agency Services Livestock, Real Estate, Wool, and Grain 134.7 27 Financial Services Banking, Insurance
Slide 20: Business Performance by Product
Business Performance by Product Margin by product $ million FY14 FY15 +14% • Retail: Uplift in second half with +3% 134.7 positive conditions and gains from 107.8 111.5 118.4 strategic initiatives • Agency: Increase in livestock prices -1% +20% through reducing global supply and 25.8 25.4 15.3 18.4
Slide 21: Business Performance by Geography
Business Performance by Geography Margin by geography $ million FY14 FY15 +5% • North: Improvement in Livestock, Farm +10% 124.7 Supplies and Killara earnings 118.4 107.8 97.9 • South: Increase driven by strong +14% livestock prices and volume 50.3 44.0 -4% • West: Strong Livestock and Retail 18.9 1
Slide 22: 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 23: Growth Strategy by Product
Growth Strategy by Product Livestock Real Estate Acquisition Insurance Banking Farm supplies Grain Fertiliser Long haul Organic China Short haul Wool Indonesia Vietnam Financial Planning Killara Fix and Hold Controlled Growth 21
Slide 24: 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 25: Live it.
Live it.