Australian Agricultural Company Limited · ASX:AAC
Australian Agricultural — H1 FY2014 Earnings Presentation
24 slides from Australian Agricultural's earnings presentation, Nov 7, 2013
Slide 1: Financial Results for the half-year ended 30 September 2013
For personal use only AUSTRALIAN AGRICULTURAL COMPANY LIMITED Financial Results for the half-year ended 30 September 2013 7 November 2013
Slide 2: Disclaimer
Disclaimer Important information For personal use only Summary information only This presentation contains general information about the Australian Agricultural Company Limited and its consolidated entities (“AACo”) and its activities current as at the date of this presentation. It is provided in su
Slide 3: Business Overview
Business Overview For personal use only AACo well positioned to execute on its strategic agenda with a significantly strengthened balance sheet following completion of the $299 million Capital Raising in mid-October Experienced AACo Board and management team focussed on driving Return on Capital Emp
Slide 4: Business Overview (cont'd)
Business Overview (cont’d) For personal use only Improving global trading environment: promising signals from new Federal Government on negotiation of Free Trade Agreements and re-opening of Indonesian live trade burgeoning global beef demand thematic remains strong Global beef price vs. domestic ca
Slide 5: Business Overview (cont'd): global beef demand
Business Overview (cont’d) The success of AACo’s strategy depends on securing a fraction of burgeoning global beef demand For personal use only China Beef Consumption Beef Imports 1990 to 2012 Beef Imports to Sep 2013 10 4 9 8 kg / capita (retail weight) 3 kT (shipped weight) MT (carcasse weight) 7
Slide 6: Results Overview
Results Overview For personal use only Half year results to 30 September 2013 adversely affected by continuing drought conditions and the ongoing negative effects of the 2011 temporary suspension of live exports Adverse impact of slump in domestic cattle markets partially mitigated through a timely
Slide 7: Summary financial results for months to September 2013
Summary financial results for 6 months to 30 September 2013 For personal use only 1 Sales $177.7m decrease of $15.6m compared to the pcp EBITDA2 $(28.8)m decrease of $21.5m compared to the pcp EBITDA (excl. Market Value Changes ) 3 $(34.3)m decrease of $35.7m compared to the pcp NPAT $(31.6)m decrea
Slide 8: Summary financial performance
Summary financial performance 6 months to 6 months to Change For personal use only $m 30 Sep 2013 30 Sep 2012 ($m) Sales 177.7 193.3 (15.6) Cattle gross margin1 1.5 27.8 (26.3) Branded Beef gross margin 7.2 1.7 5.5 Farming gross margin 2.7 4.9 (2.2) Gross operating margin 11.4 34.4 (23.0) EBITDA (28
Slide 9: EBITDA to Operating Cash Flow Reconciliation
EBITDA to Operating Cash Flow Reconciliation EBITDA has been significantly affected by a number of non-cash livestock valuation For personal use only movements, while Operating Cash Flow is ahead of the pcp 0.00 48.10 (1.00) 0.80 2.11 (10.00) (20.00) $million (30.00) (28.79) (40.00) (12.34) (1.76) (
Slide 10: Statutory EBITDA to 'Cash' EBITDA Reconciliation
Statutory EBITDA to ‘Cash’ EBITDA Reconciliation For personal use only 6 months to 6 months to Change ($ million) 30 Sep 2013 30 Sep 2012 Statutory EBITDA1 (28,787) (7,329) (21,458) Add back: non-cash Market Value Changes to Livestock2 (5,562) 8,697 EBITDA ex. Market Value Changes (34,349) 1,368 (35
Slide 11: Branded Beef - Overview
AACo Branded Beef - Overview For personal use only AACo sells high quality beef to more than 30 countries AACo is focussed on investing in appropriate channel and brand marketing strategies to increase gross margins for its products In October 2013 AACo was awarded two gold medals by the Australian
Slide 12: Branded Beef - Results
AACo Branded Beef - Results For personal use only Management initiatives around price optimisation, cost control, yield maximisation and working capital management have driven strong results in the Branded Beef division These initiatives have positioned the Branded Beef division to take advantage of
Slide 13: Operations - Overview
AACo Operations - Overview For personal use only Trading herd - both weight gained and total size of herd is down compared to the pcp due to the drier conditions Breeding herd - dry conditions have resulted in an earlier weaning and sales program, however Core and Elite Breeding Cows have been retai
Slide 14: Operations - Climate
AACo Operations - Climate Poor climatic conditions are currently the key driver of depressed domestic cattle market For personal use only prices. Conditions on some properties are at ‘lowest on record’ levels Australian Rainfall Deciles since 1 October 2012 Australian Agricultural Company Limited 14
Slide 15: Operations - Markets
AACo Operations - Markets Domestic cattle prices continue to be depressed For personal use only Eastern Young Cattle Indicator (EYCI) 450 400 350 300 c/kg cwt 2011 250 2012 2013 200 150 100 2 4 6 8 10 12 14 16 18 20 22 24 26 28 30 32 34 36 38 40 42 44 46 48 50 52 Week Australian Agricultural Company
Slide 16: Operations - Cattle Sales
AACo Operations - Cattle Sales The 6 months to 30 September 2013 has seen a significant lift in Grass Finished as well as Breeder and Feeder cattle sales at substantially lower prices compared to the pcp due to the For personal use only impact of drier conditions, combined with a reduction in Live E
Slide 17: Operations - Herd Movements
AACo Operations - Herd Movements For personal use only 800 700 676.2 134.7 123.7 172.5 600 14.5 552.5 30.1 551.6 7.7 500 521.5 Head (‘000) 400 300 200 100 0 Opening Total Opening Calf Opening Branded Purchases Natural Increase Cattle Sales Attrition Closing Branded Calf Accrual Closing Total Herd (3
Slide 18: Operations - Herd Composition
AACo Operations - Herd Composition Total herd numbers and average animal weights have declined as the season has continued For personal use only to deteriorate 800 550 700 676.2 646.0 450 35.3 123.7 600 42.0 551.6 38.8 30.1 350 Unbranded Calves 500 139.2 45.8 Feedlots Average Weight (kg) 115.7 Easte
Slide 19: Operations - Breeder Herd Composition
AACo Operations - Breeder Herd Composition For personal use only 400 372.8 350 315.7 306.1 300 218.8 250 Productive Cows Head ('000) 209.3 179.7 200 Heifer Yearling Heifer Joiner Bulls 150 100 117.0 67.3 99.2 50 22.8 25.2 13.6 14.3 13.9 13.6 0 30 Sep 12 31 Mar 13 30 Sep 13 Notes: 1. Heifer Yearling
Slide 20: Operations - Herd Valuation Summary
AACo Operations - Herd Valuation Summary For personal use only Herd Valuations ($mil) 350 296.0 300 245.7 250 226.5 200 30 Sep 13 31 Mar 13 150 30 Sep 12 100 75.0 76.3 65.1 69.9 61.5 50 39.6 43.2 35.4 25.6 0 Feedlots Eastern Trading Northern Trading Breeding Australian Agricultural Company Limited 2
Slide 21: Processing - Darwin Beef Processing Facility
AACo Processing - Darwin Beef Processing Facility Development of the Darwin Beef Processing Facility currently on budget and expected to be For personal use only operational in the second half of calendar year 2014 Darwin Beef Processing Facility Construction Photos Key construction and equipment co
Slide 22: Property Update
Property Update AACo continues to optimise its property portfolio to support its strategic agenda For personal use only Property Divestment In May this year the company sold part of the Goonoo aggregation in Queensland, totalling 19,404 hectares, for $23 million and Brighton Downs, a 420,000 hectare
Slide 23: Significantly Strengthened Balance Sheet
Significantly Strengthened Balance Sheet The 30 September 2013 Balance Sheet shown below includes $97.6m1 received under the Institutional component of the Capital Raising announced on 12 September 2013. A further $114.4m1 and $80.0m was For personal use only received from the balance of the equity
Slide 24: Summary
Summary For personal use only Financial results for 1HFY14 have been adversely impacted by continuing dry conditions and the ongoing negative effects of the 2011 temporary suspension of live exports Branded Beef division margins showing significant improvements - key positive milestone consistent wi
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