Australian Agricultural Company Limited · ASX:AAC
Australian Agricultural — H1 FY2018 Earnings Presentation
26 slides from Australian Agricultural's earnings presentation, Nov 15, 2017
Slide 1: FY18 Interim Results Presentation
For personal use only co THE ART OF AUSTRALIAN BEEF FY18 Interim Results Presentation 15 November 2017
Slide 2: Agenda
For personal use only Agenda Results Summary & Strategic Update Business Update Financial Overview Trading Conditions & Priorities Q&A AUSTRALIAN BEEF
Slide 3: Results Summary and Strategic Update
Ede ~ ~ only Fompertsoneal Results Summary and Strategic Update Donald McGauchie
Slide 4: H1 FY18 Results Summary
For personal use only • Operating EBITDA of $16.1 million up 16% versus the previous corresponding period (pcp) demonstrates progress made to consolidate and execute the strategy to become a branded business • Stronger sale price / kg across Luxury/Prestige and Premium brands; Livingstone Beef prici
Slide 5: For personal use only
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Slide 7: The Macro Backdrop
The Macro Backdrop Increased competition from US exports US Export Volumes % change (6 mos to Jun 17 vs pep) 70% 60% 50% 40% 30% 59% 27% 28% 19% 20% 138% 10% | 7% | 0% a Japan Korea HK Taiwan ASEAN EU Source: USDA compiled by USMEF Stronger Australian dollar AUDUSD exchange rate 0.82 0.70 + Ny SA NY
Slide 8: Business Update
Business Update Hugh Killen & Dane FitzGibbon
Slide 9: For personal use only
For personal use only • Execution of brand and marketing strategy • Distributor partnership approach • Transitioning to internal sourcing • Cost of production optimisation • Cattle procurement • Cost of conversion efficiency • Sale price and product mix optimisation
Slide 10: Luxury/Prestige Brands
Luxury/Prestige Brands Price performance from differentiated product positioning Volumes (Kg m) Price/kg ($) Sales ($m) $16.00 100 6.7 6.6 6.7 5.8 80 5.0 $14.00 60 $12.00 40 $10.00 20 $8.00 + 0+ H1 H2 H1 H2 Hi Hl H2 Hi H2 Hl H2 Hi H2 Hi HIFY17 H1FY18 FY16 FY16 FY17 FY17 FY18 FY14FY14 FY15FY15 FY16 F
Slide 11: Premium Brands
Premium Brands Significant volume step down, in line with strategic intent Volumes (Kg m) Price/kg ($) Sales ($m) $12.00 17 60.0 $10.00 40.0 $8.00 20.0 $6.00 Hi H2 Hl He 4H $4.00 + 00% HIFYI7 FY16 FY16 FY17 FY17 FY18 Hl He Wi He Wi He Hi He Hi FY14FY14FY15FY15FYIGFY16FY17FY17FY18 H1 FY18 Key Points
Slide 12: Livingstone Beef
Livingstone Beef Challenging trading conditions Volumes (Kg m) mmm Volume —a#—Avg head/day processed (RHS) 16 14.4 600 12 73 400 8 200 4 0 1 1 : : 0 H1FY16 H2FY16 H1FY17 H2FY17 H1FY18 H1 FY18 Key Points * Challenging trading environment due to several factors including: — higher cattle buy price — l
Slide 13: Branding & Marketing Progress
Branding & Marketing Progress Strategy being validated in target markets H1 FY18 Key Points success in target launch markets * Taiwan launch in June 2017 operational performance through: Branding & Marketing strategy being validated through Singapore one year anniversary event in October 2017 Result
Slide 14: Branding & Marketing Transition
Branding & Marketing Transition Opportunity to drive margin through a disciplined roll-out in higher value markets wanna nanan nnn nn nanan a 2n2 == === == ===] Historical Brands------------------------------------------------- MASTER . AA Darling Downs Wagyu PREMIUM BEEF we WESTHOLME Singapore Sing
Slide 15: Supply Chains Optimisation
Supply Chains Optimisation Improving our supply chains to ensure we deliver against our brand promises H1FY18 Key Points Supply chains being transformed to deliver against customer expectations — Supporting distributor partnership approach and greater control through to the chef Transition to intern
Slide 16: Group Costs
Group Costs Impacted by higher input costs Production and Cost of Production 50 $3.50 40 $3.00 30 $2.50 20 10 $2.00 0 $1.50 HIFY16 H2FY16 H1FY17 H2FY17 HI1FY18 mms Kilograms produced (m KG LW) —— Cost of production ($/kg LW) H1 FY18 Key Points Operating EBITDA Margin (%) 13.4% HIFY16 H2FY16 H1FY17 H
Slide 17: Financial Overview
For personal use only Financial Overview : Scott Prebble
Slide 18: Profit and Loss
Profit and Loss Branded beef sales 169.9 195.9 (26.0) Cattle sales 27.3 18.2 9.1 Total sales revenue 197.2 214.1 (16.9) Processing & logistics costs (41.5) (43.4) 19 Total sourcing & production costs (147.6) (167.1) 19.5 Livestock attrition (19.7) (10.4) (9.3) Innovation & technology (3.3) (5.4) 21
Slide 19: EBITDA Reconciliation
+] BITDA Reconciliation Operating EBITDA 16.1 13.9 2.2 Difference between the movement of inventory at standard cost versus market value (52.6) 74.4 (127.0) Statutory EBITDA (36.5) 88.3 (124.8) H1FY18 Key Points Eastern Young Cattle Indicator (EYCI A$) * Unrealised price-driven inventory valuation a
Slide 20: Cash Flow
Cash Flow Operating EBITDA. 16.1 13.9 2.2 Cattle inventory movement at standard cost (40.1) (41.4) 13 Change in working capital (8.4) 18 (10.2) Finance costs (13.5) (9.5) (4.0) Other (1.6) 0.7 (2.3) Net operating cash flow (47.5) (34.5) (13.0) Cash used in investing activities (11.2) (8.9) (2.3) Cas
Slide 21: Balance Sheet
Balance Sheet So 80 Sept2017 81 Mar 2017 Change Livestock$m 653.1 662.5 (9.4) Property, Plant, Equipment $m 792.0 792.4 (0.4) Net Debt$m 360.7 328.8 (31.9) Gearing ratio (%) 26.4% 24.4% (2.0ppt) Net Tangible Assets ($/share) $1.71 $1.82 ($0.11) H1FY18 Key Points * Balance sheet remains strong with s
Slide 22: Trading Conditions & Priorities
Trading Conditions & Priorities Donald McGauchie
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Slide 24: For personal use only
For personal use only
Slide 25: 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 26: For further information please contact
For personal use only co THE ART OF AUSTRALIAN BEEF For further information please contact Jolanta Masojada Investor Relations Adviser TR@aaco.com.au
Australian Agricultural Company — H1 FY2018 Earnings Presentation on 6ix