Australian Agricultural Company Limited · ASX:AAC
Australian Agricultural — FY2006 Earnings Presentation
44 slides from Australian Agricultural's earnings presentation, Feb 6, 2007
Slide 1: Results Presentation for the year ended 31 December 2006
Australian Agricultural Company Limited CO Results Presentation for the year ended 31 December 2006
Slide 2: Key operational Highlights
Key operational Highlights AAco's system delivered certainty of su, je ‘hy traceable beef to ts customers in a difficult year in many areas of Australia AAco: ° Increased beef production by 9% Improved calving from 67% to 71% Grew the herd by 11% Undertook strategic property transactions that underp
Slide 3: AAco Strategic Report Card - 2006
AAco Strategic Report Card - 2006 Strategy Target Outcome Comment Double the herd in 10 years 8.6% p.a increase Increase Kg of Beef Production 11% increase to 556k head Increased Kilos produced from 67m to 73m (8%) Balanced between retained heifers and new acquisitions Better calving and genetics co
Slide 4: Major Projects / Achievements in 2006
Major Projects / Achievements in 2006 In chronological order: Month 2006 | Comment January 2006 | Settled contract to buy Marilla (adjacent to Goonoo) for $4m April 2006 Acquired remaining 55% to attain 100% of Chef Partner business for $3.2m. Former CEO, Pat Dempsey joins executive team as GM Whole
Slide 5: P&L Comparative and effect of cattle values
P&L Comparative and effect of cattle values nny ‘Value Add Business (Wholsale Beef / Gross Margin 10,005 5,137 Qverheads (fF f5) (4,194) ‘Contribution 2,630 953
Slide 6: Recognition in 2006
“RECOGNITION in 2006 . 2006 Red Meat Innovation Award - 1824 * NAB Agribusiness Awards for Excellence 2006: - Australian Greenhouse Office Environment and Energy Management Award — Ernst and Young Risk Management Award . 3rd place - Best Company Investor relations Outside ASX 200 6
Slide 7: Profit and Loss details 2006
Profit and Loss details 2006 Comialed Comaled Aunt fo09 F000 O60 ; Revenue from Ordinary Activities "84.386 140,338” 150,507] 213,155] 42% Pre cattle valuation Market Valuation Component of Biological Assets’SGARA 43,429 42,092 32,935) (17,385))néa Revenue from disposal of non current assets 0 18,19
Slide 8: Trade Cattle Price Movements during 2006
Trade Cattle Price Movements during 2006 $9m decrement Millions $ Trading Herd Valuations 160.00 ”, decrement rr” room $3m decrement 140,00 mh, 420,00 148.68 Tm 72.8% i 100.00 ti] 0 i 3.0% i IN I i / | io 60,00 a 1 Hi ih Hl 5.0% 40.00 wn In a (| Hh 0) He 6.0% 20.00 ii b «7.0% Quarter mmm Book Value
Slide 9: AAco Cattle Inventory Movements
AAco Cattle Inventory Movements AAco Herd Statistics Dec04 Dec.05 Dec.06 ‘Opening Inventory 395 140 529 691 502 B65 ‘Purchases 197 099 aT 948 114,903 Natural Increase 119,025 143,216 165 900 Deaths/Rations (11 848) (16 676) (18 189) ‘Sales (175,725) (165,313) (199 0024 Closing Balance 524,091 507,86
Slide 10: The EYCI has not been a good indicator in 2006
The EYCI has not been a good indicator in 2006 due to heavy weighting from drought affected southern cattle AACo Beef Price Indicator with Benchmarks Monthly : July 2002 - December 2006 QCM index August 3 2 é January 08 September October November December 26 Jan 07 a 5 £ 38 [Atco a Sales ummm ANCo G
Slide 11: 12.6% of the AAco trade cattle herd is worth approximately $14.5m
12.6% of the AAco trade cattle herd is worth approximately $14.5m or Example of volatility in market pricing on a spot basis EPS of 5.8 cents (post 30% notional tax) 350 330 310 290 270 250 Eastern States Young Cattle Indicator October 06 to Jan 07 —EYCI 12.6 % rise in the month of January 07 gf $3.
Slide 12: Balance Sheet 2006 - Assets
vee BALANCE SHEET 2006 - ASSETS 35 Current Assets no cn . : ss Cash and cash equivalents : 10,825, 13,640 Offset difference with receivables Receivables | 9,343 6,716 as above Interest rate swaps / 1,603, - Inthe money this year Inventories | 21,635, 12.241 Mainly fuel stores, consumables fence wire
Slide 13: Balance Sheet 2006 - Liabilities
BALANCE SHEET 2006 - LIABILITIES Current Liabilities Payables Provisions Anterest hearing liabilities 24,285 Includes Chefs payables 2,199, i 11,875 Debt funding of herd retention, Wagyu expansion and working | Capital Anterest rate swaps a — _ 269 36,648. ‘Total Current Liabilities ‘Non-Current Lia
Slide 14: Balance Sheet 2006 - Equity
BALANCE SHEET 2006 - EQUITY Issued capital 136,400 134,220 Options Exercised ‘(Reserves . 357,134 227,213 Mainly post tax increase in land of $29m Retained profits (accurnulated : Sa710 97,054, losses) : Dividend paid exceeded NPAT this year by $?m ‘Total parent entity interest in 682,244 chi rr eqq
Slide 15: Capital Expenditure 2006 - Cash Flow Summary
CAPITAL EXPENDITURE 2006 Cash Flow Summary ‘Receipts 99 G07 ter soo] 205,004) 228 278 ‘Payments (os 740] (v2 ee) (iFO,S05)) 225,715) ‘Interest (6 320) era) (5.825) (17199) Tax 505) G11) (4,005) 503 ‘Other, GST ete ) 1271 566| 5,700 EPR aa a earn The planned herd retention strategy of approximately 2
Slide 16: Capital Expenditure 2006
CAPITAL EXPENDITURE 2006 Stay in Business Capex Expansionary Capex Development Cap Balance of Equity in Chefs 4,006 Wagyu stud and breeding herds 11,970, Anthony Lagoon and Eva Downs + herd ‘Sale of Wrotharn park + herd Purchase of Marilla and net sundries ‘Purchase of Violet Wale and sundries 100,3
Slide 17: TSR over years (based on Dec close)
TSR over 5 years (based on Dec 31 close) Total Shareholder Return on a $10,000 investment over the last five years 26,000 24,000 22,000 20,000 48,000 S8&P/ASX 300 46,000 44,000 42,000 40,000 8,000 6,000 Dec-01 Dec-02 Dec-03 Dec-04 Dec-05 Des-06 mee AACO mmm = S&P/ASX 300 Accumulation index 7
Slide 18: Cattle Production Factors 2006
CATTLE PRODUCTION FACTORS 2006 Rainfall North South Grass Fertility Grain Genetics Risk Management 18
Slide 19: Months to December 2006
12 Months to December 2006 Significant operational items ° Rainfall in the first half was abundant on the northern properties, the second half however was drier than normal. The extensive wet allowed soil moisture to remain and augers well for the 2007 season Prices for store (trade) cattle have bee
Slide 20: Average monthly rainfall pattern
Average monthly rainfall pattern Monthly Rainfall across all stations (mm) 2006 Above average and late wet caused delay in branding / / Drier second half i x / \ _~ = @ add Jan-O6 Feb-O06 Mar-06 Apr-O06 May06 Jun-06 Jul-06 Aug-06 Sep-06 Oct-06 Nov-06 Dec-06 Actual BELT Avg 20
Slide 21: Actual rainfall pattern 2006
Actual rainfall pattern 2006 — overall an average outcome 14000 0 Jan-O6 = Feb-O06 = Mer-06— Apr-06— May-06— Wun 06 JUHOSG = AGG = Sep 06 Oct 0G N06 Cumulative rainfall across all stations (mm) Lack of rain in second haif brought a good start back to an average outcome for the year =@=LTAg Actual 21
Slide 22: Rainfall months to June
Rainfall 6 months to June 06 - very good for breeding stations — below average in the south — second half poor in all areas. Actual vs Long Term Average rainfall (mm) 12 months to Dec 06 {& LT avg 2006 $ 8 «4 3s 2g a = « 2» ¢ s # € & g£ 8 § ¢ € ¢€ 8 @ ¢§ = € @ € € € & @ 2 § gs 8 z 2 ¢ 2 6 s 6 € & €
Slide 23: AASI Index up to Dec
“AASI” Index up to Dec 06 AAco Adjusted Seasonal Index (AASI) ced heavily by n excellent r the ain in 23
Slide 24: Grain Prices
Grain Prices Sorghum 350 300 250 (SALI) 200 150 100 PPPPEhaiags Se ££ = = FSF FS Sorghum Despite rising grain prices AAco limited ration cost increases to just 6%
Slide 25: Fertility
vee FERTILITY Branding Percentages * 75.0% 70.0% 65.0% 60.0% | | : q j 2002 2003 2004 2005 2006 OBranding % * Branding % = Calves Branded / Breeding Females eligible to have a calf branded during the year.
Slide 26: Branded Beef Total Monthly Sales Wagyu + 1824
Branded Beef Total Monthly Sales Wagyu + 1824 Monthly branded beef sales Jan 04 - Dec 06 8,000,000 7,000,000 6,000,000 ] 5,000,000 a Al A Al el 4,000,000 ye i A | | a Vy | Ve 2,000,000 + ”" i} | yy, a y) V4 7 yy 7 V | U y D U Vy Uy | I /] 7 J 4,000,000 | ih | Li ° ud ul | Ud Sep-04
Slide 27: 1824 Volumes in $
x” 1824 Volumes in $ 1824 $ monthly sales volume and linear trend 3,500,000 3,000,000 2,500,000 2,000,000 4,500,000 7,000,000 500,000 ie) EHH © HP OY SS SHY SG HF KH HY CY Eo EF & SOS YY FSF F YY YF OS & © SL F FS SL ¥ FFP FPF HK WN eg We MW Ge ww W aw of Wg
Slide 28: The Beef Market
THE BEEF MARKET World Domestic USA Brazil Japan 4g@,*| Korea ,
Slide 29: 1000 Tonnes of Beef and Veal Consumed
1000 Tonnes of Beef and Veal Consumed 53,000- 52,000, 51,000- 50,000- 49,000, 48,000; 47,000, 46,000; 45,000- s £§ & £& £ S World Consumption Source : USDA 29
Slide 30: World Import quantities - 1000 Tonnes of Beef and Veal
A World Import quantities - 1000 Tonnes of Beef and Veal ePRPPG Total of importing nations Source : USDA 30
Slide 31: Beef: Per Capita Consumption Summary Selected Countries
Beef: Per Capita Consumption Summary Selected Countries 2002 Sources: USDA -FAS attache reports, official statistics, and results of office research. weer Argentina ei Australia 35. Braz 3a. Bulgaria a Canada 31 China, Peoples Repulse of 4 European Undo 1¢ as. Egypt 8 Hong Kong a2 india 2f a Japan a
Slide 32: World Imports by Nation
WORLD IMPORTS BY NATION *1000T 2007 Forecast imported Beef and Veal * 1000Tonnes Horg Kong 2% Taiwan2% Philippines 3% Canada 3% Ga Korea Republic of 4% guesses Egypt 4% ther Countries 5% zzz Mexico7% ZEEE EU-25 10% Japan 14% Russian Federation 17% gas Urited States 28% @ 2007fF 2006 US imports its c
Slide 33: 1000 Tonnes Regional Exporters 2007 forecast
1000 Tonnes Regional Exporters 2007 forecas Europe and Russia Other 200 39 india and China 38% % 885 12% North America 1160 16% Australia & NZ 2065 27% Beef and Veal Source : USDA 33
Slide 34: Australia
50 OC Australia AE RERET, Source : USDA 34
Slide 35: 1000 Tonnes Produced of Beef and Veal
1000 Tonnes Produced of Beef and Veal ss S FS & F FS & USA 0 Australia Source : USDA ly
Slide 36: Brazil Australia
Brazil 0 Australia Source : USDA 36
Slide 37: 1000 Tonnes Exported
1000 Tonnes Exported =o 2 I 2000 2001 2002 2003 2004 2005 2006 2007f CL Australia B USA [ Brazil Source: USDA 7»
Slide 38: 1000 Tonnes Consumed of Beef and Veal
1,600- 1,400, 1,2007 1,000-) 800, 6007 400) 200-7 1000 Tonnes Consumed of Beef and Veal © SP PRP RPE @ Japan Consumption CJ Imports Source: USDA *8
Slide 39: 1000 Tonnes Imported of Beef and Veal
VV NNN NNN 1000 Tonnes Imported of Beef and Veal “@- 2002 2003 2004 2005 2006 2007f @ Korea (Sth) imports 1000T Source: USDA 39
Slide 40: The Future
THE FUTURE Outlook for 2007 Outlook for 2015
Slide 41: Outlook for 2007
Outlook for 2007 Market Outlook Factors influencing the market in Australia as assessed by AACo are: ¢ Cattle prices are likely to lift with a return to more normal seasons in the South as graziers re-stock. ¢« Asustained drop in fuel prices while welcome remains unlikely * Seasonal conditions — Des
Slide 42: Outlook for 2007 continued
Outlook for 2007 continued The world supply of quality beef remains limited by historically low herd numbers in the USA and Australia and herd health issues in South America, although current USDA forecasts indicate some growth this year. The protocols restricting access of US beef into Japan and Ko
Slide 43: Outlook for 2015
oa res Outlook for 2015 The long term strategic plan enunciated in 2005 continues to embrace the following targets for the core business: 1. To more than double the herd size 2. To Triple the production of feed crops 3. To improve land carrying capacities by up to 20% on selected properties 4. To ac
Slide 44: Looking to the future - business development opportunities under consideration
Looking to the future - business development opportunities under consideration Increasing participation in the portion control section of the beef supply chain — our new facility has space to quadruple its current capacity. This will be driven by internal development, however see note 5. Further bra
Australian Agricultural Company — FY2006 Earnings Presentation on 6ix