Australian Agricultural Company Limited · ASX:AAC
Australian Agricultural — FY2012 Earnings Presentation
29 slides from Australian Agricultural's earnings presentation, Jan 31, 2013
Slide 1: Results Presentation Full Year ended 31 December 2012
For personal use only AUSTRALIAN AGRICULTURAL COMPANY LIMITED Results Presentation Full Year ended 31 December 2012 Australian Agricultural Company Limited
Slide 2: Disclaimer
Disclaimer For personal use only While every care has been taken in the preparation of this presentation, Australian Agricultural Company Limited (“AACo”) and each of their respective related bodies corporate and associated entities and each of their respective officers, employees, associates, agent
Slide 3: Summary
Summary For personal use only AACo has produced a satisfactory result given tough market conditions • AACo continued to generate record outcomes in the physical variables over which management can control, including weight gain, brandings and cropping • However, the markets in which we operate and h
Slide 4: Financial results summary
Financial results summary For personal use only Sales $321.2m 5% increase compared to FY11 EBITDA $32.2m 46% decrease compared to FY11 NPAT $(8.4)m 158% decrease compared to FY11 Net Debt $388.2m Gearing at 38% NTA $2.04 $0.11 NTA decrease compared to FY11 Notes: 1 Gearing based on net debt / (net d
Slide 5: Summary financial performance
Summary financial performance For personal use only Summary of financial performance of continuing operations1 $m FY12 FY11 Change Sales 321.2 306.0 5.0% Finished & Store Cattle gross margin 97.4 112.4 (13.3%) Wholesale Beef gross margin 4.1 5.0 (17.3%) Farming gross margin 7.8 1.5 440.4% Gross oper
Slide 6: Markets
Markets For personal use only Drivers behind the collapse in the Australian cattle price include: Domestic Markets Ongoing impacts from the live export suspension – led to oversupply of cattle in the domestic market Australian cattle herd is at its highest levels since 1977 at ~30 million head
Slide 7: Markets
Markets For personal use only Indicative imported US 90CL beef prices The US cattle herd is at a 60 year low following several years Global Markets of drought This will underpin US beef prices, which have increased rapidly in recent years and will reduce their ability to supply key Australian ex
Slide 8: Key operational drivers of the FY12 result
Key operational drivers of the FY12 result For personal use only Cattle sold and average selling price1 Beef kgs sold and average price / kg 300.0 2.20 18.0 16.6% (0.4%) 8.50 44.5% 3.8% 16.0 8.00 250.0 2.15 14.0 7.50 200.0 2.10 12.0 9.5 9.8 7.00 Head ('000) (5.9%) 7.9 $/kg lwt 150.6 10.0 6.50 kg (m)
Slide 9: NPAT FY12 v NPAT FY11
NPAT FY12 v NPAT FY11 For personal use only 5.1 Thousands Thousands A positive SGARA movement of $25mil in FY11 became a negative movement of $12 35.0 12.0 mil FY12 due to the volatility of local cattle 35.0 markets. Despite favourable global beef market movements, local markets moved in the opposit
Slide 10: Cattle Revenue Breakdown
Cattle Revenue Breakdown For personal use only $ mil FY12 FY11 Change Cattle Growth 76,840 66,224 16.0% Natural Increase 70,376 58,365 20.6% 1 Biological Transformation 40,406 37,402 8.0% Market Price SGARA (12,224) 25,478 (148.0%) Attrition (11,008) (16,092) (31.6%) 164,390 171,377 (4.1%) 1. Biolog
Slide 11: Financials by segment
Financials by segment For personal use only Revenue by segment Gross Margin by segment FY12 Revenue - $321.2 mil FY12 Gross Margin - $109.4mil 6% 7% 4% 50% 44% 89% Australian Agricultural Company Limited 11
Slide 12: Segment Overview
Segment Overview For personal use only Finished & Store Trading Herd Cattle Grass cattle • AACo focused in 2012 on adding weight to its herd and moving sales to the back of the year to take advantage of market opportunities and anticipated price rises • The Company had anticipated price rises as a r
Slide 13: Segment Overview
Segment Overview For personal use only Finished & Store 2012 saw an improvement in both brandings and attrition compared to the previous financial year Cattle 200.0 177.5 174.3 156.3 150.0 97.1 100.0 ‘000 head 50.0 0.0 -14.7 -22.4 -50.0 Purchases Brandings Attrition* FY11 FY12 *Attrition is net of r
Slide 14: Operational Update
Operational Update For personal use only The Indonesian live export market remains difficult due to the flow-on effects from the live cattle export Live Export suspension in 2011, which continue to impact AACo and the industry, these include: - Reduced volumes – the Indonesian Government reduced i
Slide 15: Operational Update
Operational Update FY12 Rainfall For personal use only • Weather conditions in the first six months of the year Weather were supportive with good rainfall • Conversely, the last six months of the year were drier than anticipated with the onset of wet conditions coming late to our properties • These
Slide 16: Cattle Trading
Cattle Trading For personal use only Cattle sales year on year (head) 300,000 250,000 82,409 200,000 80,177 150,000 50,470 59,107 100,000 28,536 36,673 33,422 20,492 50,000 47,166 50,184 0 FY11 FY12 Grass Finished Shortfed Grain Finished Wagyu Breeder and Feeder Live Export Cattle sales detail (head
Slide 17: Herd movements
Herd movements FY12 herd movements 800 For personal use only 174 (249) 700 97 96 682 600 5 (20) 585 578 500 '000 head 400 300 200 100 0 Closing Branded Cattle Over Last 4 Years 700 578 585 600 506 500 443 '000 head 400 300 200 100 0 FY09 FY10 FY11 FY12 Australian Agricultural Company Limited 17
Slide 18: Herd Profile
Herd Profile For personal use only Current herd size is 681,740 head (including calf accrual) Herd composition Herd by location Wagyu / Non-Wagyu 14% 11% 16% 42% 50% 14% 28% 7% 2% 10% 6% 6% 89% 5% Breeding Feedlot Stud Trading Calf Accrual Barkly Central and Southern QLD Non Wagyu Wagyu Channels D
Slide 19: Herd Profile
Herd Profile For personal use only Investment is constantly being made to ensure the herd has the optimal genetic and age profile Age Profile of Productive Bulls Age Profile of Productive Cows 25% 20% 20% 15% 15% % of Total % of Total 10% Dec-11 Dec-11 10% Dec-12 Dec-12 5% 5% 0% 0% 1 2 3 4 5 6 7 8
Slide 20: Herd Profile
Herd Profile For personal use only AACo is utilising its superior genetics and breeding programs to maximise profitability, as well as deliver cattle to suit end markets Barkly composite Brahman composite Gulf composite Wagyu program Australian Agricultural Company Limited 20
Slide 21: Segment Overview
Segment Overview For personal use only • The Wholesale Beef Group has maintained good margins on its Wagyu sales Composition of Sales Revenue Wholesale while margins on non-Wagyu product have continued to tighten. This Beef Group highlights the strength of AACo’s Wagyu supply chain (the non-Wagyu pr
Slide 22: Segment Overview
Segment Overview For personal use only Summer Crop Farming • Flooding at several of our properties impacted cotton and sorghum yields. An offsite chemical drift on Wylarah also impacted yields. Winter crop • Wheat and chickpeas performed well and the wheat in particular was very high quality. A dry
Slide 23: Balance sheet
Balance sheet For personal use only Existing bank facilities limit of $450m Balance sheet $m FY12 FY11 Cash and cash equivalents 22.4 23.4 Livestock 496.5 483.7 Property, Plant and equipment 602.9 608.5 Inventories 25.6 25.1 Other assets 20.1 24.2 Total assets 1,167.5 1,164.9 Interest bearing liab
Slide 24: AACo Property Portfolio
AACo Property Portfolio For personal use only TIPPERARY & FLOODPLAINS Melaleuca GROUP Leitchfield Pell Tipperary Delamere Montejinni Camfield Anthony Lagoon Benmarra GULF GROUP VICTORIA Eva Downs Wondoola RIVER Brunette Downs GROUP Canobie Dalgonally Avon Downs Austral Downs Carrum BARKLY GROUP Head
Slide 25: AACo Property Portfolio
AACo Property Portfolio For personal use only • During 2012 all properties were valued by an external valuer. The outcome of these valuations has given rise to an overall decline of $40.8 million (2011: increment $9.5 million) of which $8.1 million has been recognised as an impairment cost in the pr
Slide 26: Cash flow
Cash flow For personal use only $m FY12 FY11 $ Change Cash flow Net operating cash flow (0.8) (64.1) 63.3 Net capex (20.5) (17.9) (2.6) Cash flowfrom Proceeds statement / (Payment for) PPE 1.2 22.5 (21.3) Payments for Tipperary assets - (5.0) 5.0 Advance to Darwin Abattoir (20.6) - (20.6) Net invest
Slide 27: Operating cash flow
Operating cash flow For personal use only Operating cash flow composition FY12 (A$m) 350 4.0 300 16.2 (62.4) 250 139.1 (61.0) 200 (15.9) 150 100 (139.8) 148.9 50 (29.9) (0.8) 0 Net cash from Wholesale Beef Receipts from Sundry receipts Cattle purchases Wholesale Beef Cropping Costs Operating Costs I
Slide 28: Darwin Abattoir Update
Darwin Abattoir Update For personal use only An external Project Manager has been appointed and preparatory ground works are now Status Update underway Major elements of the plant are now in the process of going out to tender AACo is in advanced discussions with several parties looking to inve
Slide 29: Strategy
Strategy For personal use only We have achieved the majority of our goals as laid out in our turnaround strategy: The last 3 years The herd has been expanded to record levels and its genetics significantly improved Our plan to vertically integrate and capture more value from our herd is well a
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