Slide 1: Ridley Corporation
Ridley RidleyCorporation Corporation 14 S September t b 2010 1
Slide 2: Index
Ridley Presentation Corporation Index 1. Overview 2 2. Ridley Agriproucts 3. Cheetham Salt 4. Outlook 2
Slide 3: Ridley Corporation
Ridley Corporation Ridl Corporation Ridley C ti Limited Li it d (RIC) is: i a processor of value-added agricultural products Australia’s largest processor of stockfeed products (Ridley Agriproducts) A Australia’s li ’ llargest producer d and d refiner fi of salt products (Cheetham Salt) In add
Slide 4: An Agribusiness like no other
An Agribusiness like no other Ridley’s performance is most linked to salt and the intensive industries of poultry, aquafeeds dairy and pork for which intensive feeding is critical to success aquafeeds, Ridley’s business is focussed on intensive industries that are less weather reliant and it has
Slide 5: Increases in contracted sales
Increases in contracted sales Agriproducts Contracted Contracted Volumes Volumes Cheetham Contracted Domestic Sales Values 65.0% 60% 61 9% 61.9% 49% 58.6% 50% 60.0% 55.6% 37% 40% 55.0% % 50.4% 30% 25% 26% 50.0% 20% 45 0% 45.0% 10% 40.0% 0% F07 F08 F09 F10 FY07 FY08 FY09 FY10 5
Slide 6: Low Correlation to Crop Prodn and Prices
Low Correlation to Crop Prodn and Prices Low Correlation between Ridley EBIT* and Low Correlation between Ridley EBIT* and Crop Production Wheat Prices 450 $50.0 35.0 $50.0 Crop Production (mt) $45.0 400 $45.0 30.0 Ridley EBIT + JVs $40.0 350 $40.0 25.0 $35.0 $35.0 300 $30.0 $30.0 20.0 250 $25.0 $25
Slide 7: Share Price Performance
Share Price Performance From 6 Mayy 2008 (day ( yp prior to announcement of outcomes of strategic g review)) $1.60 $1.40 +17% $1.20 $1.00 -20% $0 80 $0.80 -27% $0.60 $0.40 Ridley Source: IRESS ASX 200 $0.20 Small Ords $- 7
Slide 8: Total Shareholder Return
Total Shareholder Return From 6 Mayy 2008 (day ( yp prior to announcement of outcomes of strategic g review)) $1.60 34% $1.40 $1.20 -11% $1.00 $0 80 $0.80 -20% $0.60 $0.40 Source: IRESS Ridley TSR $0.20 ASX 200 Accum. Index S ll O Small Ords d AAccum. IIndex d $- 8
Slide 9: Financial Highlights
Financial Highlights Consolidated result 2009 2010 Group NPAT of $29.1m, up $8.8m or 43% on 2009 before significant items; up Sales Revenue 819.4 728.0 $16.2m or 125% after significant items EBIT - AgriProducts 24.4 29.0 Second successive record EBIT result for AgriProducts of $29.0m despite Dai
Slide 10: Financial Highlights
Financial Highlights Includes Ridley Inc. Sale Post Ridley Inc. FY06 FY07 FY08 FY09 # FY10 ROE in double figures for ROE (%) 8.2% 6.7% 3.2% 4.7% 10.4% first time EBITDA ($m) 81.5 74.4 48.3 41.3 58.5 NPAT EBIT ($m) 59.7 51.7 36.3 30.2 46.2 above c.FY06 NPAT ($m) 27.7 22.7 10.4 12.9 29.1 levels Net De
Slide 11: Ridley Agriproducts
Ridley Agriproducts 11
Slide 12: Agriproducts Overview
Agriproducts Overview Market ~12mt of animal feed consumed annually in Australia ~6mt freely traded and the other 50% owned by integrators, feedlots etc Ridley has ~1.5mt (25%) of the freely traded market and ~12.5% of the total market Southern and Eastern Australia spread of assets meaning
Slide 13: Positive outlook in major segments
Positive outlook in major segments Poultry: growth from new long term customer contracts,, market g growth of chicken consumption p S t Sector 2009 2010 O tl k Outlook and growth in niche turkey and duck sectors (kt) (kt) Aqua-feed: sales growth and market penetration Poultry 708 764 continued o
Slide 14: Agriproducts Financial Summary
Agriproducts Financial Summary AgriProducts (A$m) FY09 FY10 Record EBIT result of $29.0m, business well positioned for Sales ($) $ 716.9 620.0 further growth EBIT 24.4 29.0 $5.5m (18%) improvement in Depreciation 6.7 7.6 EBITDA over 2009 EBITDA 31.1 36.6 Net working orking capital Net Working
Slide 15: Competitive Advantages
Competitive Advantages 9 Southern and Eastern Australia spread of assets assets, meaning larger national customers can deal with one supplier 9 Lower volatility through sector diversification 9 Stable cash flows and strong conversion of EBITDA to cash 9 Unique position in the Agri-sector with relati
Slide 16: Favourable macro environment
Favourable macro environment Different drivers to broader economy y Limits to the availability of arable land and increased focus on intensive feeding 2050 world growth requirements: ¾ 70% increase in food production required by growing population ¾ Meat production to increase by 200mt to 470m
Slide 17: Cheetham Salt
Cheetham Salt Premium i Solar Salt 17
Slide 18: Cheetham Salt Overview
Cheetham Salt Overview Cheetham owns: 11 solar salt fields with combined production capacity of ~1.4mt 5 refineries (one in Indonesia) including a flake salt plant ~70% domestic market share Joint Venture interests: Salpak: JV with Cerebos in Australian retail salt (major brand Saxa) Weste
Slide 19: Segment Summary
Segment Summary Sector FY09 FY10 Soda Ash volumes down slightly g y due to weaker demand from Penrice Soda Ash 580.4 566.8 Chemical includes one additional chlor- Chemical 143.4 164.6 alkali water treatment shipment Food 93.9 94.4 Food F d population l ti increase i offset ff t by b some Pool
Slide 20: Cheetham Financial Summary
Cheetham Financial Summary Cheetham (A$m) FY09 FY10 EBIT result of $16.8m, up $3.9m or 30% on 2009 Sales ($) $ 101.5 107.9 EBIT (excl. JV NPAT) 12.9 16.8 Sales revenue growth of 6.3% in line with 5.8% volume increase Depreciation 4.7 4.6 EBITDA 17.6 21.3 No one-off crude salt losses or ERP imp
Slide 21: Competitive Position
Competitive Position Competitive Advantages 9 Irreplaceable salt field assets a barrier to entry 9 Market share, price leader and sector diversification 9 Majority M j it off the th business b i secured d with ith llong tterm contracts t t 9 Ownership of large parcels of land with significant proper
Slide 22: Growth Prospects
Growth Prospects Projects leading to above GDP profit growth over the next 3 years: 9 Recent consolidation of refineries 9 Recent reopening of Port Alma salt field due to increased demand 9 R Recentt upgrading di off B Bajool j l refinery fi tto iincrease plant l t efficiency ffi i and d iimprove pr
Slide 23: Property
Property Strategy remains to unlock the potential value of land close to urban centres and surplus to operating requirements Some small initial sales but with potential larger scale sites the focus is on delivery of longer term revenue streams offering shareholders greater value in real terms
Slide 24: Lara
Lara Lara Salt Avalon Fields Airport 912ha site adjacent to Avalon airport, Vic Medium term 1-3 1 3 years Land available now Carrying value ~$0.5m 24
Slide 25: Dry Creek Development Area
Dry Creek Development Area Lara12kms 316ha located Salt from Adelaide CBD Avalon Fields Longer term 5 years+ Airport Salt field relocation required Crystalliser Ponds Recent Delfin development 912ha site adjacent to Avalon airport, Vic Medium term 1-3 1 3 years Adelaide CBD ~12km Land available now
Slide 26: Outlook
Ridley RidleyCorporation Corporation Outlook 26
Slide 27: Outlook greater than GDP
Outlook greater than GDP Salt demand typically yp yggrows with GDP however g growth above this will come from: ¾ Progressive benefits from Bajool refinery capital upgrades which will reduce freight and manufacturing costs in F11 and F12 ¾ Reopening of Port Alma field in 2009 will reduce salt costs
Slide 28: Why invest in Ridley
Why invest in Ridley Shareholder returns growing steadily with dividends to be progressively franked Less volatile than the overall market Less volatile than other agribusiness g stocks Organic growth greater than GDP Low risk of earnings downsides Now in a position to look at opportunit
Slide 29: Conclusion
Conclusion Ridley’s business is a cash cow and an agribusiness lik no other like th 29
Slide 30: Ridley Corporation
Ridley Corporation We ffeed the ffood that ends upp on y your pplate Premium Solar Salt 30
Slide 31: Questions
Ridley RidleyCorporation Corporation Questions 31
Slide 32: Appendix Consolidated Financials
Ridley RidleyCorporation Corporation Appendix Consolidated Financials 32
Slide 33: Profit & Loss
Profit & Loss Consolidated result 2009 2010 Group NPAT of $29.1m slightly above midpoint of guidance of $28-$30m $28 $30m given at Sales Revenue 819.4 728.0 half year EBIT - AgriProducts 24.4 29.0 Second successive record result for AgriProducts EBIT - Cheetham 12 9 12.9 16 8 16.8 Severe rain
Slide 34: Balance Sheet
Balance Sheet Consolidated result 2009 2010 Increase in Current Assets reflecting cash on hand of $7.0m, $7 0m $10.2m $10 2m Total Current Assets 173.6 179.6 reduction in debtors offset by $11.3m of inventory build Total Current Liabilities 121.1 117.1 $17.1m of P,P&E additions offset by Net Cur
Slide 35: Working Capital
Working Capital Consolidated result 2009 2010 Increased focus on credit limit Cash 0.3 7.0 managementt & ti timely l debt d bt collection Trade Debtors 88.4 77.7 Other Debtors and prepayments 3.9 4.4 Inventory increase of $11.3m Inventory y 79.2 90.5 reflects $9.0m of longer raw material positio
Slide 36: Capital Expenditure
Capital Expenditure Items Agri Salt Total $7.3m of development capital $m $m $m expenditures in Cheetham Salt, primarily to complete the refinery Bajool Refinery - 4.8 4.8 upgrade program Indonesia Refinery - 2.1 2.1 $5.5m $5 5m ERP implementation with first Other 3.5 0.4 3.9 site achieved in th
Slide 37: Cashflow
Cashflow Consolidated result 2009 2010 Strong operating cash flow of $49.4m; 2009 inflated by working capital Operating Cash flow before 58.1 49.4 reduction from high opening debtor and dividends received, interest inventory positions and tax Salt joint venture distributions normally Salt Joint
Slide 38: Strong cashflow conversion
Strong cashflow conversion Agriproducts 2009 2010 Consolidated 2009 2010 EBITDA 31.1 36.6 Agriproducts EBITDA 31.1 36.6 Working Capital Change 23.3 (2.5) Cheetham EBITDA + JVs 24.7 28.5 Operating Cashflow 54.4 34.1 Corporate Costs (6 8) (6.8) (6 8) (6.8) Cash Conversion % 175% 93% EBITDA (incl JV NP
Slide 39: Financial Ratios
Financial Ratios Consolidated result 2009 2010 G Gearing i stable t bl att 25% Net Debt 69.1 72.0 Very strong debt servicing Equity 276.2 285.1 capacity Total Assets 468 6 468.6 484 3 484.3 ROE has improved significantly to Gearing (Net Debt / Equity) 25.0% 25.2% exceed 10% for the first time