Slide 1: 2020 Full Year Financial Results Presentation
Monday 16 November 2020 2020 Full Year Financial Results Presentation Attached is the presentation of the financial results for the 12 month period ended 30 September 2020. Further Information: Mark Allison Chief Executive Officer 0439 030 905 Media Enquiries: Stephanie Larkin Head of Marketing & Co
Slide 2: Elders Limited FY20 Results Presentation
Elders Limited FY20 Results Presentation 16 November 2020
Slide 3: Disclaimer and Important Information
DISCLAIMER AND IMPORTANT INFORMATION Forward looking statements This presentation is prepared for information 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’ future
Slide 4: FY20 Results Presentation Agenda
FY20 RESULTS PRESENTATION AGENDA COVID-19 Impacts ……………………….…….… 4 FY20 Key Highlights…………………………….… 5 Delivery Against Our FY20 Priorities…………..… 6 FY20 Financial Performance………………….….. 7 − By Product − By Geography − Capital − Cash Flow − Net Debt AIRR Acquisition…………….…………………..… 13 FY2
Slide 5: COVID-19 Impacts
COVID-19 IMPACTS No material impacts, so far Elders continues to monitor the impact of the COVID-19 outbreak on demand for Elders’ products and services, customers and supply chains: all farm inputs supply chains in which Elders participates are, at present, operating normally livestock supply c
Slide 6: FY20 Key Highlights
FY20 KEY HIGHLIGHTS Robust year across the business 2 lost time injuries (LTI), compared to 9 last year, with target of zero LTI frequency rate at 0.5, compared to 2.2 last year Safety Continued emphasis on employee and community safety, health and wellbeing in COVID-19 environment A COVID-1
Slide 7: Delivery Against Our FY20 Priorities
DELIVERY AGAINST OUR FY20 PRIORITIES Final year of second Eight Point Plan Operational Efficiency and Safety Performance Key Relationships Performance Growth Two lost time injuries (LTI), compared Target for 3 years to FY20 Implemented hardship relief to clients Acquired new AIRR sites as well
Slide 8: FY20 Financial Performance: Summary
FY20 FINANCIAL PERFORMANCE: SUMMARY Strong performance across our key metrics Sales Revenue $m Underlying EBIT $m FY20 Year-on-Year Change CAGR+10% Result FY19 Financial Metric Pre-AASB Result CAGR +24% 16 ($m) ($m) $m % 2,093 Sales revenue 2,092.6 1,626.0 466.6 29% 119 1,582 1,613 1,626 1,425 1,3
Slide 9: FY20 Financial Performance: Product
FY20 FINANCIAL PERFORMANCE: PRODUCT Additional earnings from Wholesale acquisition and outperformance across most products and services Change in product margin ($m) FY19 Acq Organic Market Other FY20 $63.6m +$26.4m +$26.7m +$7.8m ($15.5m) $109.0m Product margin 3.9 3.7 0.5 8.8 Retail Products ben
Slide 10: FY20 Financial Performance: Geography
FY20 FINANCIAL PERFORMANCE: GEOGRAPHY Improvement across all areas with increased investment in Group initiatives Change in underlying profit by geography ($m) Addition of Wholesale Products through acquisition of AIRR Underlying EBIT contributing $21.9 million of EBIT, outperforming expectations
Slide 11: FY20 Financial Performance: Capital
FY20 FINANCIAL PERFORMANCE: CAPITAL Return on Capital (ROC) 3-year average at 20.3% has outperformed 20% second EPP target Underlying Return on Capital1 Elders Rural Services’ underlying ROC increased to 20.2% (up 2.0%). This was achieved by: 3 Year Avg 20.3% Higher Retail Products return in part
Slide 12: FY20 Financial Performance: Operating Cash Flow
FY20 FINANCIAL PERFORMANCE: OPERATING CASH FLOW Cash conversion at 101% on underlying profit after tax $million FY20 FY19 Change Operating cash flow 110.5 11.2 99.3 Investing cash flow (123.1) (42.5) (80.6) Financing cash flow 56.0 26.9 29.1 Total cash flow 43.4 (4.4) 47.8 Operating cashflow of $110
Slide 13: FY20 Financial Performance: Net Debt
FY20 FINANCIAL PERFORMANCE: NET DEBT Net Debt up supporting growth, significant improvement across key ratios Net debt, at balance date Net debt, YTD average Net debt $m $m Net debt is up $39.8 million to $134.1 million at September 2020, mainly due to the acquisition of AIRR for which capital raisi
Slide 14: AIRR Acquisition
AIRR ACQUISITION Operational performance, progress on synergies and initiatives Operational Performance On track for delivery of acquisition synergies Acquisition of Wholesale Products has integrated AIRR and Tuckers This has been achieved through: retailer brands plus 8 warehouses and 5 retail lo
Slide 15: FY21 Market Outlook
FY21 MARKET OUTLOOK The agricultural sector remains on track for a recovery after successive years of drought-affected seasons in eastern Australia. Production is forecast to grow but the value of production is expected to remain steady due to reduced prices. COVID-19 continues to disrupt the agricu
Slide 16: Completion of Second Eight Point Plan
COMPLETION OF SECOND EIGHT POINT PLAN FY20 completes our second EPP, which was built on the foundations of our first EPP. Over the past 6 years, EBIT has grown 24% p.a., exceeding target of 5 to 10% year on year and LTIs have reduced to 2 ROC % Strategic Focus Outcomes Underlying EBIT and ROC Underl
Slide 17: Eight Point Plan
EIGHT POINT PLN Compelling shareholder returns Industry leading sustainability outcomes Most trusted Agribusiness brand OUR 2023 5-10% EBIT and EPS growth through the across health and safety, community, in rural and regional Australia AMBITION cycles at 15% ROC environment and governance OUR BUSINE
Slide 18: Strategic Opportunities
STRATEGIC OPPORTUNITIES Significant growth opportunities to gain share by serving new customers, in new geographies, with our multiple product and service portfolio We continue to focus on opportunities that allow us to win new customers and a greater share of existing customers across our diversifi
Slide 19: FY20 Key Highlights
FY20 KEY HIGHLIGHTS Robust year across the business 2 lost time injuries (LTI), compared to 9 last year, with target of zero LTI frequency rate at 0.5, compared to 2.2 last year Safety Continued emphasis on employee and community safety, health and wellbeing in COVID-19 environment A COVID-1
Slide 20: Impact of AASB 16 Leases
IMPACT OF AASB 16 LEASES Adopted 1 October 2019 Using the ‘modified retrospective approach’, whereby no comparative period Operating expenses $34.5m information is restated Depreciation $33.2m Recognised Right of Use Asset as equal to the calculated Lease Liabilities Profit & Loss1 Interest Expe
Slide 21: FY20 Financial Performance (incl. AASB 16)
FY20 FINANCIAL PERFORMANCE (INCL. AASB 16) Minimal impact on earnings; primarily impacts net debt FY20 FY20 FY20 FY19 1 Return on capital = Rolling 12 months Underlying EBIT / (working capital + investments + property, plant and equipment + intangibles (excluding brand name) – provisions) Statutor
Slide 22: Appendix
APPENDIX 21
Slide 23: Business Model
BUSINESS MODEL* Diversification by product, service, market segment and geography Rural Products Feed and Real Estate Digital and Agency Services Financial Services Processing Services Technical Services Retail Products Wholesale Products Services Fee for Service Farm Supplies Farm Supplies Livestoc
Slide 24: Results by Business Segmentation
FY20 RESULTS BY BUSINESS SEGMENTATION Retail and Wholesale Products plus Agency Services have the largest influence on Elders margin Northern Southern Western International FY20 Margin Avg. Working Central Other Australia Australia Australia Geographies ($m) Capital ($m) Retail Products Farm Supplie
Slide 25: Points of Presence
POINTS OF PRESENCE We have approx. 500 points of presence in Australia, catering to the needs of a variety of agricultural regions. We also supply a further 350+ sites with product through our wholesale members Elders Zones and Points of Presence Agricultural Land Use in Australia 1 2 1 Elders Owned
Slide 26: Profit Sensitivity
PROFIT SENSITIVITY Based on FY20 full year statistics 25
Slide 27: Industry and Market Outlook (Long Term)
INDUSTRY AND MARKET OUTLOOK (LONG TERM) Long Term Market Relevance Market Summary of Outlook Outlook to Elders The value of Australian agricultural production has increased steadily over recent years. It is estimated to be $61b in 2020-21, and remain constant until Agricultural 2024-25 Neutral pro