Slide 1: 2022 Full-Year Results Presentation
Monday 14 November 2022 2022 Full-Year Results Presentation Attached is the Elders Limited (ASX:ELD) presentation of the financial results for the 12 month period ended 30 September 2022. Further Information: Mark Allison, Managing Director & Chief Executive Officer, 0439 030 905 Media Enquiries: Me
Slide 2: Elders Limited FY22 Full Year Results Presentation
Elders Limited FY22 Full Year Results Presentation 14 November 2022 Presented by Mark Allison Managing Director and CEO Paul Rossiter Group Treasurer and Acting CFO
Slide 3: Disclaimer and Important Information
DISCLAIMER AND IMPORTANT INFORMATION The material in this presentation has been prepared by Elders Limited and is general background about Elders' activities and performance at the date of this presentation. The information is in summary form, does not purport to be complete, and where derived from
Slide 4: Agenda
Agenda Business Update Financial Results Growing our Business Market Outlook Questions 3
Slide 5: FY22 Highlights
FY22 Highlights PEOPLE CUSTOMERS COMMUNITY SHAREHOLDERS 12.6 #1 $2.7m 97.3 cents TRIFR1 most trusted donations and underlying earnings agribusiness brand sponsorships per share2 79% employee 49 1000+ 56.0 cents engagement net promoter local community dividends score sports teams and per share 42% ev
Slide 6: FY22 Financial Summary
FY22 Financial Summary SALES GROSS MARGIN UNDERLYING EBIT $3.4b $652.7m $232.1m +35% +23% +39% from $2.5b from $529.4m from $166.5m COSTS COST TO EARN RATIO RETURN ON CAPITAL $420.6m Costs / gross margin R12 EBIT/ R12 avg net operating assets +16% 64% 26.2% from $362.9m from 69% from 22.5% CASH CONV
Slide 7: Safety, Health & Well-Being
Safety, Health & Well-Being Lost time injuries (LTI) 6 lost time injuries in FY22 9 This year, Elders announced the rollout of Automated External Defibrillators (AED) across 10% 6 its northern branches, in Queensland and 5 Northern Territory with the aim of supporting safer Average communities and w
Slide 8: Sustainability
Sustainability OUR PRINCIPLES CLIMATE TARGETS1 OUR ACHIEVEMENTS Target 2022 2021 100% renewable electricity in all Australian we provide our customers and clients sites in 2022 achieved through with the goods and services they need Target Achieved procurement and retirement of LGCs2 100% renewab
Slide 9: Financial Results
Financial Results 8
Slide 10: FY22 Financial Performance: Summary
FY22 Financial Performance: Summary Diversification, customer focus and innovation driving improvement Sales ($m) Underlying EBIT ($m) 232 3,445 CAGR CAGR +21.1% +32.6% 167 2,549 2,093 121 1,599 1,626 75 74 FY18 FY19 FY20 FY21 FY22 FY18 FY19 FY20 FY21 FY22 SG&A ($M) vs Cost to Earn (%) Adjusted Unde
Slide 11: FY22 Financial Performance: Summary
Ready FY22 Financial Performance: Summary Continuing to deliver strong performance across key metrics Key metrics ($m) FY22 FY21 Var % Sales revenue 3,445.3 2,548.9 896.4 35% Gross margin 652.7 529.4 123.3 23% Gross Margin % 18.9% 20.8% (1.9%) n/a Costs 420.6 362.9 57.7 16% Cost to earn % 64
Slide 12: FY22 Financial Performance: Gross Margin
Ready FY22 Financial Performance: Gross Margin Strategic diversification across product categories delivering a resilient earnings base +32.6% Total Gross Margin 652.7 529.4 172.9 +4.0% 147.0 141.3 FY21 FY22 130.4 FY21 FY22 +19.4% +52.8% +21.5% 73.1 +7.0% +22.9% +82.3% 61.2 61.6 58.2 50.7 41.3 44.2
Slide 13: FY22 Financial Performance: Geography
FY22 Financial Performance: Geography Strong growth across all geographies, with diversification of our EBIT reducing risk Western Australia Queensland & 22.6% 12.2% Northern Territory +16.5% +60.0% 55 64 34 22 FY21 FY22 FY21 FY22 South Australia New South Wales 15.5% 18.7% +37.4% +53.7% 44 52 32 34
Slide 14: FY22 Financial Performance: Product
FY22 Financial Performance: Product Diversity of earnings insulates against market variability, strategic initiatives driving margin improvement FY21 NPAT 151.1 FY21 FY22 Rural Products Gross Margin by Category ($m) 383 Retail Fertiliser 87.7 222.3 310.0 Products 284 Wholesale Products Wholesale 220
Slide 15: FY22 Financial Performance: Costs
FY22 Financial Performance: Costs Strategic investment in key people and acquisitions driving increased costs, offset by revenue growth PEOPLE Cost ($m) vs Cost to Earn (%) FY21 Costs 362.9 FY21 FY22 network growth +118 FTE corporate services +58 FTE increased STIP incentives ($1.5m) People 22
Slide 16: FY22 Financial Performance: Capital
FY22 Financial Performance: Capital Return on capital increased, working capital days reduced despite an inflationary environment Return on Capital (%)1 Average Working Capital ($m) +7.3% +118.8 26.2% 607 22.5% 3 Year Avg 488 18.9% 22.5% 403 63 63 59 FY20 FY21 FY22 FY20 FY21 FY22 Working Capital Day
Slide 17: Cash Flow
Cash Flow Operating cash flow reduced due to investment in net working capital to fund 40% Rural Products sales growth LOWER CASH CONVERSION HIGHER NET WORKING CAPITAL TO SUPPORT GROWTH DIVIDENDS INCREASED Operating Cash Flow ($m) Rural Products Dividend (cents per share) Sales Growth (m) +$817m Sal
Slide 18: FY22 Financial Performance: Net Debt
FY22 Financial Performance: Net Debt Low leverage positions the business for future growth Net debt, balance date ($m) Leverage ratio Interest cover Gearing ratio (times) (times) (%) +68.0 Average net debt / EBITDA EBITDA / net interest Average net debt / closing equity 284.9 +8.9 -0.5 216.9 -0.2 In
Slide 19: FY22 Dividend and Earnings Per Share
FY22 Dividend and Earnings Per Share Earnings and dividends per share continue to grow Underlying Earnings per Share (cents) Adjusted Underlying Earnings per Share (cents) Underlying tax expense recognised from 1 October 2021 Excluding additional tax expense impacting earnings per share FY22 underly
Slide 20: Tax Insights
Tax Insights Tax losses expected to be fully utilised by FY24 Deferred tax asset (tax losses) $m Tax losses 110 Utilised Carried forward Elders estimates it will most likely utilise all tax losses recognised as a Deferred Tax Asset by FY24 60 50 50 Tax expense FY22 Carried beginning in FY22, und
Slide 21: Growing our Business
Growing our Business
Slide 22: 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 cycles across health and safety, community, environment in rural and regional Australia AMBITION at 15% ROC and governance OUR BUSINE
Slide 23: We are delivering on our Eight Point Plan commitment
We are delivering on our Eight Point Plan commitment 1 5 100% renewable electricity achieved in all Australian sites1 WIN 13 acquisitions DEVELOP A interim targets to 2025 and 2030, net zero emissions by 20502 MARKET SHARE focus continues on recruitment of the best talent and investment SUST
Slide 24: We Are Committed To Attracting & Retaining The Best People
We Are Committed To Attracting & Retaining The Best People More people, highly skilled, engaged and diverse WE HAVE MORE PEOPLE… …WHO ARE HIGHLY ENGAGED… …AND DIVERSE FTEs Engagement1 Female non-executive Women in senior directors executive positions 10.9% CAGR +3% 2,585 76% 76% 78% 79% 2,294 1,897
Slide 25: Growth opportunities
Growth opportunities Ongoing investment in innovative solutions to improve customer productivity and efficiency BRAND BRANCH STRENGTHENING INNOVATION OPTIMISATION OPTIMISATION SERVICE OFFERING leverage one of Australia’s most- expansion own brand portfolio expansion new EGM Strategy, Sustain
Slide 26: There Are Still Plenty Of Opportunities to Grow
There Are Still Plenty Of Opportunities to Grow Points of presence increased by 21 locations +21 NEW LOCATIONS SINCE SEPTEMBER 2021 GROWTH OPPORTUNITIES TO GAIN MARKET SHARE AND GROW MEMBER BASE IN NEW GEOGRAPHIES Elders’ Points of Presence Strategic Geographic Locations Rural Products competitive l
Slide 27: Acquisitions a long term growth enabler
Acquisitions a long term growth enabler Growth from acquisitions compounding over time, as post completion synergies embed in business model Acquisitions include: • AIRR, LIT 653 • Equity Investments: QBE Insurance, Clear Grain CAGR 529 Exchange +14% Acquisition growth • Bolt on acquisitions Titan b
Slide 28: Elders Wool Handling
INVESTMENT IN SUSTAINABLE ELDERS INNOVATION OPERATIONS 2023 350kw WOOL Launch Solar System LED lighting HANDLING Building state of the art software Use of and machinery electric handling equipment AUTOMATED EXCEPTIONAL WAREHOUSE CUSTOMER SERVICE 22 300,000+ Autonomous Bales per annum Guided Vehicles
Slide 29: Systems Modernisation Program
Systems Modernisation Program Modernised systems to deliver a more customer centric, cost efficient and enabled team Wave 1 FY22 $m FY23 $m Wave Capex 4.5 6.4 1 Internal financial and people foundation Enhanced Opex - underlying 4.4 3.4 customer experience Opex- non underlying 0.7 - Wave Supply chai
Slide 30: Market Outlook
Market Outlook
Slide 31: FY22 Financial Performance: Gross Margin Growth
FY22 Financial Performance: Gross Margin Growth Growing contribution from acquisitions, strong organic growth, favourable seasonal conditions FY21 includes YP Ag, Cudgegong, Within our control FY21 ACQUISITIONS Narrogin, Forbes/Parkes Real Estate Acquisitions1 Organic Growth Market $28.6m $37.2m $
Slide 32: ABARES September Market Outlook
ABARES September Market Outlook ABARES summer crop outlook complicated by recent unseasonal rainfall Beef & Veal1 Sheep1 Wool1 Winter Cropping2 Summer Cropping2 Average saleyard prices (c/kg) Average saleyard prices (c/kg) Eastern Market Indicator (c/kg) Area planted (‘000 ha) Area planted (‘000 ha)
Slide 33: Market Outlook
Market Outlook Favourable cropping outlook for FY23 moderated following unseasonal spring rainfall RURAL AGENCY FINANCIAL FEED & COSTS AND REAL ESTATE PRODUCTS SERVICES SERVICES PROCESSING CAPITAL winter crop outlook easing of restocking demand for broadacre favourable market supply chain
Slide 34: Elders historical performance vs weather and world events
Elders historical performance vs weather and world events Resilient share price and earnings growth with geographical, product and service diversity insulating against severe weather events El Niño 2017-2019 Drought La Niña Underlying EBIT $232m Drought Bushfires $167m Floods $121m FY14 45% baseline
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Slide 37: Business Model
Business Model Diversification by product, service, market segment and geography RURAL PRODUCTS FEED & DIGITAL AND REAL ESTATE FINANCIAL AGENCY SERVICES PROCESSING TECHNICAL WHOLESALE SERVICES SERVICES RETAIL PRODUCTS SERVICES SERVICES PRODUCTS Fee for Service Rural Products Rural Products Livestock
Slide 38: Profit Sensitivity
Profit Sensitivity Movements in market factors are mostly mitigated by our diversified portfolio $m 14 12 10 8 6 4 2 +100k head +$10 +500k head +$25m +50bps +100bps +100bps +$50 +100bps +10% 0 -$50 -10% -2 -100k head -500k head -100bps -$10 -$25m -50bps -100bps -100bps -4 -6 -8 -10 -12 -14 Cattle Pr
Slide 39: Elders Capital Management Framework
Elders Capital Management Framework Aligned with Elders Eight Point Plan to deliver Total Shareholder Return (TSR) in the top quartile of ASX200 companies at investment grade risk KEY FEATURES OF OUR CAPITAL MANAGEMENT FRAMEWORK CAPITAL MANAGEMENT FRAMEWORK Compelling Total Shareholder Return (TSR)
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