Australian Agricultural Company Limited · ASX:AAC
Australian Agricultural — H1 FY2016 Earnings Presentation
27 slides from Australian Agricultural's earnings presentation, Nov 25, 2015
Slide 1: Financial Results Presentation for the Half Year ended 30 Sept 2015
AUSTRALIAN AGRICULTURAL COMPANY LIMITED Financial Results Presentation for the Half Year ended 30 Sept 2015 ©OOO0e00 Jason Strong Managing Director 25 November 2015 co
Slide 2: Important information
Important information 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 summary and does not purport to be
Slide 3: H1 FY16 highlights: safety, financial, operational, strategy
• Improvement in LTIFR by > 40%. Safety • For personal use only Ongoing focus and a critical component of our approach • 71% ($107.2 million) increase in total sales • Operating EBITDA2 of $11.5 million compared to a loss of $8.2 million Financial • Statutory EBITDA2 of $92.1million compared to a lo
Slide 4: Key business metrics H1 FY14 to H1 FY16
Before PCP Now For personal use only H1 FY14 H1 FY15 H1 FY16 Total sales revenue ($m) 177 151 258 Meat1 sales as a % of revenue 47% 76% 84% Net internal transfers of cattle from Grassfed to Grainfed / 12 8 24 Northern Beef (mil kg LW) Grassfed cow breeding herd (‘000 head) 168 178 173 Average age of
Slide 5: Our Vision, Our Promise, Our Goals
OUR VISION, OUR PROMISE, OUR GOALS VISION To be trusted globally as producers of the finest quality Australian beef. PROMISE To share the Australian experience. GOALS Organisational Build an Secure Enhance cattle Optimise Exploit our Safety alignment authentic processing procurement ——_ production k
Slide 6: Agenda
Agenda 1. H1FY16 Results 2. Operations Update 2.1 Safety 2.2 Sales and Processing 2.3 Production and Sourcing 3. Strategy Update 4. Recent Industry Awards 5. Appendix co
Slide 7: H1 FY16 financial results summary
For personal use only $M H1 FY16 H1 FY15 Variance Meat & By-product Sales 217.6 115.5 102.1 Live Cattle Sales 36.4 28.2 8.2 Crop Sales 4.2 7.3 (3.1) Total Sales Revenue 258.2 151.0 107.2 Operating EBITDA1 11.5 (8.2) 19.7 Statutory EBITDA1 92.1 (4.5) 96.6 Net Operating Cash Flow (3.0) (55.3) 52.3 The
Slide 8: Cash flow
For personal use only $M H1 FY16 H1 FY15 Variance Cash from operations 7 (52) 59 Net finance costs (10) (4) (6) Net cash (outflow) from (10) (52) 42 investing activities Net proceeds from 15 50 (35) borrowings Net increase / (decrease) 2 (58) 60 in cash The significant improvement in cash from opera
Slide 9: Balance sheet
For personal use only $M 30-Sept-15 31-Mar-15 Variance Biological assets – 550 465 85 Livestock Trade and other 30 30 - receivables Inventories and 38 37 1 consumables PPE & Intangibles 667 668 (1) Trade & other payables (36) (34) (2) Net debt (371) (356) (15) Other liabilities (69) (49) (20) A ne
Slide 10: Operating EBITDA by division
For personal use only Operating EBITDA1 ($M) H1 FY16 H1 FY15 Variance Grainfed 2.7 5.1 (2.4) Grassfed 16.9 0.3 16.6 Northern Beef 1.3 (3.0) 4.3 Corporate (9.3) (10.6) 1.3 Group 11.5 (8.2) 19.6 Despite increased sales volumes and prices, the Grainfed division was impacted by higher volumes of light
Slide 11: Safety
For personal use only • Improvement in LTIFR by >40% • However, management remains focused on continued improvement. • The ‘Leading Safety’ Management Capability Training Program continues to be rolled out across the company. • The program aims to further enhance the safety culture in the organisati
Slide 12: Sales key metrics
Key metrics UoM H1 FY16 H1 FY15 Variance For personal use only $/kg CW 12.88 12.18 6% Wagyu Meat & By-product Sales mil kg CW 6.7 5.5 21% $/kg CW 8.18 7.43 10% Shortfed/Other Meat & By-product Sales mil kg CW 11.7 6.5 80% $/kg CW 4.72 n/a n/a Northern Beef Meat & By-product Sales mil kg CW 7.3 n/a n
Slide 13: Grainfed key metrics
For personal use only Key metrics UoM H1 FY16 H1 FY15 Variance Gross processing cost $/kg HSCW 1.21 1.13 7% Cost of Production $/kg LW 3.45 3.50 (1%) Kilograms produced mil kg LW 18.1 12.2 48% $/kg HSCW 5.15 4.22 22% Finished cattle purchases mil kg HSCW 7.1 6.2 15% $/kg LW 3.18 2.53 26% Store Cattl
Slide 14: Northern Beef and Grassfed key metrics
For personal use only Key metrics UoM H1 FY16 H1 FY15 Variance Northern $/kg LW 1.60 n/a n/a Finished Cattle Purchases Beef mil kg LW 9.2 n/a n/a Cost of Production $/kg LW 1.87 1.36 37% Kilograms produced mil kg LW 21.9 29.2 (25%) Grassfed $/kg LW 1.81 1.27 43% Store Cattle Purchases mil kg LW 1.8
Slide 15: Strategy update: three strategic levers
For personal use only Now that AACo is a vertically-integrated business, the focus is shifting towards further increasing operating margins and returns by adapting our activities to deliver increased scale and improvements in productivity and efficiency Centred around driving three interlinked str
Slide 16: Product branding
For personal use only Background • Our traceable supply, sustainable practices and our unique heritage means that our boxed beef products can occupy a unique position in global food markets • Furthermore, our involvement throughout the supply chain gives our brands an authenticity, which is difficul
Slide 17: Innovation and technology
For personal use only Background • With its vertically-integrated and large-scale supply chains, AACo has the unique ability to collect and analyse data, which when combined with the latest technology, can be leveraged to aid decision making and improve results. • AACo is focused on unlocking step c
Slide 18: Optimising our supply chains
3. Strategy Update (cont.) @ Optimising our supply chains DE For personal use only GRAINFED GRASSFED NORTHERN BEEF Sales, Marketing & Distribution Logistics Processing Production Purchasing 18
Slide 19: Recent industry awards: Wagyu brands
For personal use only 2015 has been a highly successful year for AACo’s Wagyu beef brands, winning numerous medals across the country in branded beef competitions. AACo was recognised as a finalist for the Royal Agricultural Society’s President’s Medal – the country’s most prestigious agricultural a
Slide 20: Recent industry awards: full blood and pure blood Wagyu
For personal use only AACo’s full blood and pure blood Wagyu beef has also received a number of awards this year. • World Wagyu Forum Branded Beef Awards Fullblood Class – Gold Medal • World Wagyu Forum Branded Beef Awards Fullblood Class – Grand Champion Beef Brand • Royal Melbourne Fine Food Award
Slide 21: Summary of H1 FY16 highlights
• Improvement in LTIFR by > 40%. Safety For personal use only • Ongoing focus and a critical component of our approach • 71% ($107.2 million) increase in total sales • Operating EBITDA2 of $11.5 million compared to a loss of $8.2 million Financial • Statutory EBITDA2 of $92.1million compared to a lo
Slide 22: Questions
For personal use only Questions
Slide 23: AACo principal activities and properties
For personal use only • The principal activities are: o Sales and marketing of boxed beef and cattle; o Production of beef including breeding, backgrounding, feedlotting and processing of cattle; and o Ownership, operation and development of grazing and farming properties. • AACo owns and operates a
Slide 24: Grainfed supply chain
The business has been transformed to a vertically integrated beef business, focused on extracting value For personal use only throughout each of the 3 key supply chains - Grainfed, Grassfed and Northern Beef. Grainfed supply chain - focused on supplying premium grain finished Wagyu and shortfed beef
Slide 25: Grassfed supply chain
For personal use only Grassfed supply chain - predominantly focused on supplying feeder cattle into the Grainfed operations and cull cows into Northern Beef’s Livingstone Beef Processing Facility. The Grassfed supply chain also sells live export cattle, however the volume sold has substantially redu
Slide 26: Northern Beef supply chain
For personal use only Northern Beef - sells manufacturing meat primarily to overseas customers. Northern Beef contains the Livingstone Beef Facility and Pell Station. Pell station provides a strategic amalgamation point for cattle destined for the Livingstone Beef Facility.
Slide 27: Map of AACo properties, feedlots and processing plants
For personal use only © Locality = Major Highway «Secondary Highway BB icoowned properties BB agistment properties HH Custom feeding feedlots @ Meat processing plants
Australian Agricultural Company — H1 FY2016 Earnings Presentation on 6ix