Australian Agricultural Company Limited · ASX:AAC
Australian Agricultural — H1 2006 Earnings Presentation
37 slides from Australian Agricultural's earnings presentation, Aug 10, 2006
Slide 1: Half Year Results Presentation as at 30 June 2006
Half Year Results Presentation as at 30 June 2006 Don Mackay — Chief Executive Officer 10 August 2006
Slide 2: Agenda
Major achievements for the Half 2006 First Half Operating Conditions Operating Results Summary Segment Results Balance Sheet & Dividend Investment Profile Outlook & Guidance Questions
Slide 3: Major achievements for the Half
Completion of $4m Marilla purchase in January Acquisition of Westholme Wagyu stud for $10m Commenced Wagyu Breeding programme Full acquisition of Chefs Partner Launched Greg Norman and Master Kobe Brands Won 2006 Rabobank Red Meat Innovation Award for “Best Branded Product” for the third year in suc
Slide 4: Queensland Rainfall Anomalies January-June 2006
Queensland Raintall Anomalies 4 January 9 20 June 2006 Product af the Nattonal Cilmate Comlee Haintal anomaly (roam 400mm Six months to June well above average rainfall in Northern Queensland
Slide 5: Northern Territory Rainfall Anomalies January to June 2006
Nonhem Territory Raintall Anomalies | January to 30 June 2006 Product at the Naiional Clewate Canine Six months to June well above average rainfall in most of N.T. 6
Slide 6: Australian Rainfall Anomalies 1 January to 30 June 2005
Australian Government Bureay of Meteorviogy Australian Rainiall Anomalies B 1 January to 30 June 2005 5 Product of the National Gimate Centre Reparnerinoan go Haindall anemia {ini} 120mm ohm (8 Cosmmacalih of flatrafa 27>, flrdeaion Dura of Bicicoroiogy
Slide 7: Actual vs Long Term Average rainfall months to June
Actual vs Long Term Average rainfall 6 months to June LT avg 2006 112005 4200 4000 SOdjOull||IIN JOIpess MUO SP uoners UREA 9e9'C oousop: y9eg"s euejuei)- eg 'e Aemjen yInog- MOIEYZ BOUL Ys MOIDZ Ayeuobyeg- Mog z yBeucsg- marg'z unueg- MouD’e, sumog vosyBug- Mog'z sped wIeyogA- Poaig’ | B]OOPLOAA: p
Slide 8: Monthly Rainfall across all stations (mm) 2006
Monthly Rainfall across all stations (mm) 2006 5000 The late and generous wet has delayed mustering and revenue generating activities by 2 months Actual BLT Avg
Slide 9: 10
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Slide 10: ASCo Beef Price Indicator with Benchmarks
& ASCo Beef Price Indicator with Benchrrarks WVionthly : July 2002 June 2006 3 EB8SBESBES cikg DW @ S < Sen BRS RBBESEBE (AX Al Sales ama Co Grainfed Sears pe ESYCP =O} = COM EYCI = Eastern States Young Cattle Indicator MLA predicts over $4.00 this year—— =< See <i Index SS
Slide 11: Eastern States Young Cattle Indicator Price
Eastern States Young Cattle Indicator Price 4.6% rise over 7 months 3% decline over the 6 months WUBIEAA posseig By 19d syus9 320 310 9007 /80/Z 9002/20/92 9008/20/6 g00c/20/eb 90B71L0/S 9002/90/82 g00¢/90/L2 900 /90/FE BODE /90/L QO07SO/LE 900%/S0/r% BODe/SO/LE 900 /S0/0E BOBzISO/E 90% 0/92 9008 /r
Slide 12: Operating Results Summary
Jun 06 Jun 05 ee EBITDA ($m) 16.7 20.6 NPAT ($m) 8.5 67. Cattle Herd (head)* 528,578 555,635 EPS (cents) 3.4 3.1 * After sale of Wrotham Park Herd on 30 June 2006— approx 36k head
Slide 13: Operating Results Summary: Cash Flow and Cattle Sales
# * Jun 06 Jun 05 SS ea Operating Cash flow# (16.0). 2.0 | Cattle Sold (head) * 68,565 88,844 Kgsold(D.W)* ————=S«17.8m~——~S~S=« =m Avg selling Price/ Hd * $1,001 $926 Avg Selling Price/Kg* ‘$3.85. $3.57 Operating Cash flow is affected by herd retention as shown by lower herd sales compared to the p
Slide 14: Herd Statistics Jun-06
|Herd Statistics Jun-06 | Head Opening Herd 31/1205 206,566 Plus Purchases 36 017 Plus Natural Increase 93.660 Less Trade Sales - 63 565 Less Wrotham herd sale * - 36 546 Less Provision for mortality - f,a41 Less Rations - #11 Closing Herd 30/6/06 5276 O78 «Sale of bulls, store cattle, weaners, bree
Slide 15: Purchase
Purchase ee : — stir Dass “NORTHERN FERRITORY. os a . cin Nene . Dinca a ee se : : . os oy 16
Slide 16: Land Valuations and sale
$30,000,000 $20,000,000 $10,000,000 $0 Land Vaiuations and sale oa 1984 1985 1989 1995 1999 2003 2004 2005 sold 2006 Note. The above valuations were extracted from archives and underlying valuation assumptions and methodologies may have varied from year to year. The purpose of the graph is to demons
Slide 17: Cattle and Farming
‘Cattle and Farming Impact of cattle mark ta market at 30 June and lower weights booked due Revenue 56,451 BB B56 | -17% [to delayed mustering Less Overheads 49,038 51 2907 -4% [Reduced overheads Segment Result 6.413 15,539 -69% —|Direct revenue impact Profiton Sale of Non Current Assets 4.496 336 S
Slide 18: The season was good in Northern Australia and poor south of the tropic
The season was good in Northern Australia and poor south of the tropic of Capricorn this has had two major influences on AAco both positive and negative *The North — positive impact on AAco operations . The good season in the north has secured abundant feed and water for most of our breeding & growi
Slide 19: The South: Negative impact on the industry
The South — Negative impact on the industry — thus indirectly affecting AAco + The poor season in the south has meant graziers who were unable to agist to better feed supplies have been forced to sell into an over- supplied market « Uncertainty of the US re-entry to Japan caused the general price re
Slide 20: Monthly branded beef sales Jan - Jun
Monthly branded beef sales Jan 04 - Jun 06 6,000,000 §,000,000 4,000,000 3,006,000 2,000,000 + 1,000,000 ea a | ye — a a oe ae ne yi Nov-05 Jun-06 21
Slide 21: Wagyu and Chefs Partner
* Wagyu ~ Demand for Wagyu has been increasing resulting in good margins and will derive strategic leverage from the Westholme herd » Fixed overheads increased in the build up phase of our export marketing drive. -~ Greg Norman Prime ~ 1824 Export (e.g. Bennigan’s Korea and China) ~ Master Kobe * Ch
Slide 22: Assets at June 2006
4 change Assets at 30 June 2006 om from Dec 2005 Livestock (a) 364.2 °F 2% PP8E (a) 473.5 VW 3% Other Assets (b) 143.2 A 68% Total 980.9 A 4% (a) Reduction in assets from sale of Wrotham Park Station and its associated herd. (b) Other Assets — the main growth was in receivables due to the sale of Wr
Slide 23: Liabilities and Equity
Liabilities and Equity om 30 June 2006 2005 Borrowings foe 2829 A. 41% Other Liabilities 130.1 V 1% Reserves & Equity - 567.9 A 2% Total 980.9 A 4% * Increased debt due to some small capital acquisitions coupled with herd retention strategy 24
Slide 24: Dividend history
Final t a 14-Sep-06 16-Oct-06 eclared Final r 20 16-Sep-05 14-Oct-05 |Paid Final 6 0 16-Sep-04 13-Oct-04 |Paid ‘Final 4 100 24-Oct-03 28-Novw-O3 |Paid Anterim 2 100 19-May-03 13-Jun-05 |Paid Final 6.038 100 23-Aug-02 4-OctO2 [Paid The 2006 dividend of 7 cents per share is: « consistent with prior ye
Slide 25: AACo is a long term prime rural land owner and market leader in cattle
AACo is a long term prime rural land owner and a market leader in cattle production with an increasing presence in branded beef. The returns generated are in the form of: 1. Profit from the production of beef cattle 2. Profit from the distribution of wholesale branded beef 3. Profit from sale of lan
Slide 26: Return on $40,000 investment
Australian Agricultural Company Limited Last Update: 09 August 2006 Return on $40,000 investment ee Stock —- Sector = Market $95,000 $27 200 Bat 400) $15,600 Fo,900 $4,000 T T T T 1 0804 oad O88 o8ne aaah fee | Jy 18.4% Source ~ Commonwealth Securities Website (Commsec) 27
Slide 27: Seasonal conditions and market outlook
Northern Australia - Seasonal conditions — The late rain in April whilst slowing production in the first half will be beneficial in the second half Australia - Cattle prices suffered through April, May and June but have rebounded in July. The world demand for beef remains strong, however there may b
Slide 28: Maximise revenue per unit for shareholders by improving productivity
Maximise revenue per unit for shareholders by improving productivity: « through breed development « utilising market intelligence and improving channel management « increasing sustainable carrying capacity through best practice land management « controlling costs Maintain the drive to produce tracea
Slide 29: Continuous improvement and guidance for the balance of 2006
Achieve continuous improvement in: ~ safety - environmental management ~ risk management and governance systems This is reflected in AAco’s maintenance of its “A” rating by the independent research firm Reputex Pty Ltd. Guidance for the balance of 2006 If cattle prices remain at present levels (as a
Slide 30: Questions
Questions 31
Slide 31: Appendices
Slide 32: Livestock is valued in accordance with AASB141 Agriculture
Livestock is valued in accordance with AASB141 ‘Agriculture’ Cattle assets vary in value according to movements in market prices, weight, age and type Market prices are more easily determined in liquid markets with spot prices — trading stock In markets lacking liquidity, prices determined reflect a
Slide 33: Trading Cattle and Breeding Cattle valuation
* Trading Cattle -- QCMI: an indicator only -~ Roma, Queensland cattle store sales ~ Prices quoted to AACo at year end « Breeding Cattle ~ Large cattle property sales inclusive of breeding stock -~ Australian breeding herd outlook -~ US breeding herd & beef supplies outlook -~ Global beef demand out
Slide 34: Cattle type descriptions
Type Description Calves Vealer Steers & Heifers Yearling Steers. & Heifers Steers Heifers Manufacturing Steers Cows Bulls Feeder Steers Feeder Heifers Male and female calves less than 6 months old Castrate male or female cattle with no permanent teeth. Less than 12 months old and still suckling ~. C
Slide 35: Glossary
Srey Definition ABARE - Bos Indicus Bos Taurus BSE Case Ready Meat DW Feedlot LW MLA MSA QcMi SCU Turn-off Wagyu USDA Australian Bureau of Agricultural and Resource Economics - ; Refers to tropical or humped breeds e.g. Brahman Refers to a class of temperate British and European breeds e.g. Angus Bo
Slide 36: Financial definitions
Dividend Yield DPS EBIT EPS Gearing Leverage NTA NPAT Deserintion sess SS Eg Le USS Australian International Financial Reporting Standards. Dividend per share / Current Share Price Dividends per share Earnings before interest and income tax Eamings per share Net Debt / Equity Net Debt / {Net Debt +
Slide 37: www.aaco.com.au
www .aaco.com.au For more information contact: Don Mackay CEO or Stephen Toms CFO Ph: (07) 33684400 Email: ceo@aaco.com.au 38
Australian Agricultural Company — H1 2006 Earnings Presentation on 6ix