Slide 1: 2022 Half-Year Results Investor Presentation
Monday 23 May 2022 2022 Half-Year Results Investor Presentation Attached is the Elders Limited (ASX:ELD) investor presentation in connection with the financial results for the 6 month period ended 31 March 2022. Elders’ Managing Director and Chief Executive Officer, Mark Allison, and Chief Financial
Slide 2: Presented by Mark Allison CEO and Tania Foster CFO
23 May 2022 Presented by Mark Allison CEO Tania Foster 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 Business Performance Growing our Business Market Outlook Closing Summary Questions 3
Slide 5: 1H22 Highlights
1H22 Highlights PEOPLE CUSTOMERS COMMUNITY SHAREHOLDERS 12.6 #1 $0.3m 58.3 cents TRIFR1 most trusted to RFDS over renewed underlying earnings agribusiness brand three-year sponsorship per share 78% employee 48 $1.1m 28.0 cents engagement net promoter sponsorships and dividends score donations per sh
Slide 6: 1H22 Financial Summary
1H22 Financial Summary SALES GROSS MARGIN EBIT $1.5b $326.5m $132.8m +38% +35% +80% from $1.1b from $241.6m from $73.8m COSTS COST TO EARN RATIO RETURN ON CAPITAL Costs / gross margin R12 EBIT/ R12 avg net operating assets $193.6m 59% 27.8% +15% from $167.8m from 69% from 20.1% CASH CONVERSION LEVER
Slide 7: Safety, Health & Well-Being
Safety, Health & Well-Being Lost time injuries (LTI) 1 lost time injury in 1H22 9 10% compound reduction in 5 TRIFR since FY18 Average 3 2 1 FY18 FY19 FY20 FY21 1H22 100% branch risk radar2 Total recordable injuries frequency rate completed during Krystal Bowden Safety Week SALES SUPPORT OFFICER, JA
Slide 8: Sustainability
Sustainability OUR PRINCIPLES CLIMATE TARGETS1 OUR PROGRESS ▪ We provide our customers and clients Targets set to reduce our Scope 1 and 2 ▪ Targeting solar and LED lighting site with the goods and services they need greenhouse gas emissions: upgrades to reduce emissions ▪ We support our people and
Slide 9: Financial Results
Financial Results
Slide 10: 1H22 Financial Performance: Summary
Ready 1H22 Financial Performance: Summary Strong performance across our key metrics Key metrics ($m) 1H22 1H21 Var % Sales revenue 1,514.8 1,100.5 414.3 38% Gross margin 326.5 241.6 84.9 35% Costs 193.6 167.8 25.8 15% Earnings before interest and tax 132.8 73.8 59.0 80% Net profit after tax
Slide 11: 1H22 Financial Performance: Summary (five-year growth)
1H22 Financial Performance: Summary Consistent 1H growth over the last five years Sales Revenue ($m) EBIT ($m) 2H 2H 2,549 167 1H 1H 2,093 133 121 1,599 1,626 1,448 93 1,515 1,192 75 74 68 850 893 29 +19.2% 40 +30.5% 1,101 74 750 733 900 53 46 34 FY18 FY19 FY20 FY21 1H22 FY18 FY19 FY20 FY21 1H22 Cos
Slide 12: 1H22 Financial Performance: Product
1H22 Financial Performance: Product Favourable performance across all products Change in product margin ($m) ▪ sales activity +47% RETAIL FINANCIAL ▪ strong demand for fertiliser and PRODUCTS SERVICES ▪ +9% in gross written premiums 1H21 1H21 1H22 crop protection chemicals 68.2 ▪ improved Livestock
Slide 13: 1H22 Financial Performance: Gross Margin Growth
1H22 Financial Performance: Gross Margin Growth Steady contribution from acquisition, organic growth and market ▪ organic growth: market share RURAL Acq Organic Growth Market movements and margin PRODUCTS $10.5m $38.4m $36.0m improvement (+1.2%) ▪ market growth: based on ABARES 12% area planted (+10
Slide 14: 1H22 Financial Performance: Gross Margin
Ready 1H22 Financial Performance: Gross Margin A diversified business model across product categories +11.1% Total Gross Margin +62.0% 327 82.2 242 79.2 74.0 1H21 1H22 1H21 48.9 +29.0% 1H22 +37.6% 37.8 +102.4% 33.3 +13.7% +54.6% 29.3 +22.4% 25.1 24.2 23.3 20.1 20.5 +54.2% 16.4 12.4 13.4 13.0 9.1 5.9
Slide 15: 1H22 Financial Performance: Geography
1H22 Financial Performance: Geography Strong growth across all geographies, with diversification of our EBIT reducing risk Western Australia 20.6% Queensland & 10.9% Northern Territory +24.3% +100.0% 31 16 25 8 1H21 1H22 1H21 1H22 South Australia New South Wales 16.7% 18.6% +51.2% +103.0% 25 28 16 1
Slide 16: 1H22 Financial Performance: Costs
1H22 Financial Performance: Costs Investment in people and strategic initiatives driving increased costs PEOPLE MOTOR 1H21 Costs 167.8 1H21 1H22 VEHICLE ▪ +83 additional motor vehicles ▪ network growth +129 FTE ▪ rising fuel costs ($1.3m or +45%) ▪ Corporate Services +46 FTE ▪ partially offset by lo
Slide 17: 1H22 Financial Performance: Capital
1H22 Financial Performance: Capital Return on capital increasing, despite higher working capital to support growth Return on Capital (%)1 YTD Average Working Capital ($m) +5.9 +103.0 27.8% 586 483 488 22.5% 3 Year Avg 22.0% 20.1% 1H21 FY21 1H22 1H21 FY21 1H22 Trade & Other Receivables ($m) Inventori
Slide 18: 1H22 Financial Performance: Cash Flow
1H22 Financial Performance: Cash Flow Growth in debtors and inventory consistent with sales growth and higher commodity prices Operating cash flow ($m) Cash conversion (%)2 187.0 -97% 0.7 32.7 36% 132.8 20.8 (149.6) -61% (38.7) 1H21 1H22 (218.5) (55.4) 164.4 Working Capital to Sales (%)3 -1.7% EBIT
Slide 19: 1H22 Financial Performance: Net Debt
1H22 Financial Performance: Net Debt Improving ratios, despite increased net debt Net debt, balance date ($m) Leverage ratio Interest cover Gearing ratio Average net debt / EBITDA EBITDA / net interest Average net debt / closing equity +120.6 Including / excluding AASB 16 384.5 -0.6 -7.2 1.8 55.7 45
Slide 20: 1H22 Dividend & Capital Management
1H22 Dividend & Capital Management Earnings and dividends per share continue to grow Underlying Earnings per Share (cents) Dividends per Share (cents) Underlying tax expense recognised from 1 October 2021 42 impacting earnings per share Full year 2H 97 1H 1H 22 28 70 22 55 58 53 18 18 13 +5.1% 9 9 +
Slide 21: Business Performance
Business Performance | ers)
Slide 22: Rural Products
Rural Products Gross margin improving year on year via our backward integration strategy Sales Revenue ($m) Gross margin ($m) vs (%) +360 +43% +62 1,205 +53% 179 846 117 13.8% 14.8% 1H21 1H22 1H21 1H22 Elders own brand vs third party sales1 (%) 1H22 gross margin by category (%) Other Retail Fertilis
Slide 23: Agency Services
Agency Services Cattle and sheep volumes down as a consequence of restocking Cattle Volumes (million) Sheep Volumes (million) 2H 2H 1H 1H 1.8 9.9 9.6 1.7 9.5 9.4 1.5 1.6 0.9 4.4 3.9 3.8 3.9 0.9 0.8 0.8 5.2 -1.6% 0.7 -1.5% 5.5 5.6 5.8 5.4 0.7 0.8 0.9 0.8 FY18 FY19 FY20 FY21 1H22 FY18 FY19 FY20 FY21 1
Slide 24: Real Estate Services
Real Estate Services Strong demand for farmland and residential property Farmland Sales ($m) Residential Sales ($m) 2H 1,597 2H 1,457 1H 1,496 1H 1,263 1,117 811 773 1,048 543 867 873 710 727 579 615 452 +33.6% 350 364 786 +24.7% 720 684 470 502 363 415 361 FY18 FY19 FY20 FY21 1H22 FY18 FY19 FY20 FY
Slide 25: Financial Services
Financial Services Market conditions support growth in Insurance products and restocking finance Rural Bank Loan and Deposit Book ($b)1 StockCo book1 and On Balance Sheet Livestock Funding balance ($m) Full year StockCo 1H 158.4 -1.2% Livestock Funding +21.9% Loan 121.7 book 3.0 3.0 3.0 3.0 2.8 93.1
Slide 26: Feed & Processing Services
Feed & Processing Services 1H recovery in Killara with strong domestic and export demand Killara Feedlot cattle exits (‘000s)1 Elders Fine Foods sales ($m) 2H 2H 1H 65.1 1H 17.8 63.2 60.2 56.0 14.4 13.7 32.3 8.5 32.4 31.6 10.9 29.2 35.5 7.5 7.9 +7.3% 7.6 6.0 +11.7% 30.9 32.9 9.2 26.7 28.6 6.5 6.2 4.
Slide 27: Growing our Business
Growing our ’ Business ,
Slide 28: Our Values, Ambition and Strategic Priorities
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 BUSINESS UNITS RURAL A
Slide 29: We are Delivering on our Eight Point Plan Commitment
We are Delivering on our Eight Point Plan Commitment 1 5 ▪ interim targets to 2025 and 2030, net zero emissions by 2050 WIN ▪ five acquisitions DEVELOP A MARKET SHARE ▪ focus continues on recruitment of high quality personnel and SUSTAINABILITY ▪ solar and LED lighting site upgrades to reduce emissi
Slide 30: 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 …AND DIVERSE TO PROVIDE THE WE HAVE MORE PEOPLE… …WHO ARE HIGHLY ENGAGED… BEST CUSTOMER SERVICE FTEs Engagement1 (%) Female non-executive Women in senior directors executive positions 9.5% CAG
Slide 31: We Continue To Invest In Innovative Solutions
We Continue To Invest In Innovative Solutions Innovation is an important investment for future growth WE HAVE EMBARKED ON SYSTEMS MODERNISATION AND DEVELOPED WE ARE ALSO BUILDING OUR PORTFOLIO OF OWN BRAND PRODUCTS… NEW PRODUCTS, BRANDS, INNOVATIVE SOLUTIONS TO IMPROVE CUSTOMER EXPERIENCE SysMod on
Slide 32: There Are Still Plenty Of Opportunities to Grow
There Are Still Plenty Of Opportunities to Grow Points of presence increased by 15 locations +15 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 33: Market Outlook
Market Outlook
Slide 34: ABARES March Outlook Update
ABARES March Outlook Update Improved winter cropping; decline in cattle price as rebuild continues, however remains historically high Beef & Veal Sheep Wool Cropping Average saleyard prices (c/kg) Average saleyard prices (c/kg) Eastern Market Indicator (c/kg) Area planted to winter crop (‘000 ha) +1
Slide 35: Market Outlook
Market Outlook FY22 expected to finish positively with livestock prices remaining elevated and favourable cropping outlook ▪ positive winter crop outlook, with area planted forecast to rise 3% to 23.4 million hectares1, expected to drive strong demand in the second half for ▪ continued uptake of our
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Slide 37: Closing Summary
Ready Closing Summary Strong financial performance in 1H22 expected to continue in 2H22, with full year EBIT guidance in the range of 30 to 40% above FY21 underlying EBIT and a target of 90% cash conversion Supply chain challenges have been mitigated by holding higher inventory levels, but residual
Slide 38: Appendix
Appendix
Slide 39: Business Model
Business Model1 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 Livestoc
Slide 40: Profit Sensitivity
Profit Sensitivity1 Movements in market factors are mostly mitigated by our diversified portfolio $10m $5m +500k head +$50 +500k head +$25m +50bps +100bps +100bps +$50 +100bps +10% $0m -10% -$50 -500k head -500k head -100bps -$50 -$25m -50bps -100bps -100bps -$5m -$10m Cattle Price Cattle Volumes Sh
Slide 41: 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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