Australian Agricultural Company Limited · ASX:AAC
Australian Agricultural — H1 2007 Earnings Presentation
32 slides from Australian Agricultural's earnings presentation, Aug 7, 2007
Slide 1: Half Year Results Presentation as at 30 June 2007
For personal use only Half Year Results Presentation as at 30 June 2007 Don Mackay – Chief Executive Officer 7 August 2007 2
Slide 2: Presentation Outline
Presentation Outline For personal use only • Achievements for the Half • 2007 First Half Operating Conditions • Operating Results Summary • Segment Results • Balance Sheet & Dividend • Investment Profile • Outlook & Guidance • Questions 3
Slide 3: Achievements - the past 6 months
Achievements - the past 6 months For personal use only • Consolidated the two new breeding properties Anthony Lagoon and Eva Downs • Converted the Goonoo station and feedlot back from lease to freehold crystallising a capital gain of $21m after tax • Completed move to new processing and warehouse di
Slide 4: Seasonal Conditions – First half to June 2007
Seasonal Conditions – First half to June 2007 For personal use only Six months to June average to above average rainfall in most of Qld with the exception of South East zone 5
Slide 5: Seasonal Conditions – first half 2007
Seasonal Conditions – first half 2007 For personal use only Six months to June well above average rainfall in most of the Northern Territory 6
Slide 6: Seasonal Conditions – rainfall comparison
For personal use only 0 100 200 300 400 500 600 700 800 900 Austral Downs Avon Downs Brunette Downs Brighton Downs Carrum Clonagh Canobie Dalgonally Glentana Gregory Downs Headingly Kalmeta Lawn Hill LT Avg Meteor Downs Rockhampton Downs 2007 South Galway Wondoola Rainfall 6 months to June 2007 (mm.
Slide 7: Seasonal Conditions first half 2007
Seasonal Conditions first half 2007 For personal use only Monthly Rainfall across all stations (mm) 2007 4500 4000 3500 3000 Un-seasonal rain caused delays in mustering and 2500 sales activity 2000 1500 1000 500 0 Jan-07 Feb-07 Mar-07 Apr-07 May-07 Jun-07 Jul-07 Aug-07 Sep-07 Oct-07 Nov-07 Dec-07 Ac
Slide 8: Seasonal Conditions – a reasonable start to the year
Seasonal Conditions – a reasonable start to the year For personal use only Average Range 9
Slide 9: Market Conditions EYCI & QCMI – 2007
Market Conditions EYCI & QCMI – 2007 For personal use only AACo Beef Price Indicator with Benchmarks Monthly : July 2002 - June 2007 410 400 230 390 380 370 360 210 350 340 Q C M I Index 330 190 c /k g D W 320 310 300 290 170 280 270 260 150 250 240 230 220 130 ri l ri l ne ly 07 ay ch ch r r r r 02
Slide 10: 2007 Half Year Comparative Results
2007 Half Year Comparative Results For personal use only Jun 07 Jun 06 Total Operating 124.2 85.6 Revenue ($m) * EBITDA ($m) 26.3 16.7 NPAT ($m) 5.9 8.5 Cattle Herd ( head) * 630,515 528,578 EPS (cents) 2.4 3.4 * Revenue includes full six months of Chefs Partner sales (only 3 months in 2006) and als
Slide 11: 2006 Half Year Results
2006 Half Year Results For personal use only Jun 07 Jun 06 + Operating Cash flow # (20.0) (16.0) Cattle Sold (head) 65,587 68,565 Kg sold (D.W) 16.6m 17.8m Avg selling Price/ Hd * $1,071 $1,001 Avg Selling Price / Kg * $3.92 $3.85 Avg Kg/ DW sold * 273 259 # Operating Cash flow is affected by herd r
Slide 12: 2007 Half Year Results – cattle inventory
2007 Half Year Results – cattle inventory For personal use only 13
Slide 13: Segment Results – Earnings before interest & tax
Segment Results – Earnings before interest & tax For personal use only 14
Slide 14: Segment - Cattle and Farming – the last 6 months
Segment - Cattle and Farming – the last 6 months For personal use only The season was good in Northern Australia and poor south of the tropic of Capricorn. This has had two major influences on AAco. The North – positive impact on AAco operations • The good season in the North has secured abundant fe
Slide 15: Segment - Cattle and Farming – the last 6 months
Segment - Cattle and Farming – the last 6 months For personal use only 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
Slide 16: Branded Beef – the last six months
Branded Beef – the last six months • Wagyu For personal use only – Demand for Wagyu has been strong providing good margins however results have been negatively impacted by a higher AUD • Fixed overheads increased in the build up for our export marketing drive, the expansion of “1824 Premium Beef” in
Slide 17: 2007 Results – Balance Sheet
2007 Results – Balance Sheet For personal use only % change Assets at 30 June 2007 $m from Dec 2006 Livestock # 435.3 7.1% PP&E * 636.6 8.5% Other Assets 92.5 -3.9% Total 1,164.4 6.9% # Increase in livestock due to increased herd and sales deferred to the second half * Increase in PP&E arises from c
Slide 18: 2007 Results – Balance Sheet
2006 Results – Balance Sheet For personal use only % change Liabilities and Equity $m from Dec 30 June 2007 2006 Borrowings * 406.9 10.7% Other Liabilities + 152.4 9.6% Reserves & Equity # 605.1 3.9% Total 1164.4 6.9% * Increased debt to fund freehold acquisition of Goonoo and further development of
Slide 19: Results – Dividends
Results – Dividends For personal use only The 2007 final dividend of 7 cents per share is: • consistent with prior year • unfranked Dividend Re-investment Plan (DRP). The DRP is to be recommenced. The DRP will be underwritten and the funds ($17.5m) invested in breeding cattle (retained and purchased
Slide 20: Investment Profile
Investment Profile For personal use only AAco’s total shareholder return reflects the market’s intuition that the underlying assets of the business are a scarce resource and have reflected good capital growth over the years Source – Commonwealth Securities Website (Commsec) 21
Slide 21: External Market Outlook
External Market Outlook Overall a positive outlook for Australia For personal use only • Northern Australia seasonal conditions – The late rain in June whilst slowing production in the first half will be beneficial in the second half • Australia - Domestic cattle prices suffered all through the firs
Slide 22: The balance of the year ahead for AAco
The balance of the year ahead for AAco • Maximise revenue per unit for shareholders by For personal use only improving productivity: • through breed development and herd management • utilising market intelligence and improving channel management • increasing sustainable carrying capacity through bes
Slide 23: The balance of the year ahead for AAco
The balance of the year ahead for AAco For personal use only • 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. 24
Slide 24: The balance of the year ahead for AAco
The balance of the year ahead for AAco For personal use only Guidance for the balance of 2007 There are competing influences that will determine short term cattle prices and values through to December any of which can affect AAco’s earnings. These influences are: Positives: • A normal wet season in
Slide 25: Questions
Australian Agricultural Company For personal use only Questions 26
Slide 26: Appendices
For personal use only APPENDICES * APPENDICES
Slide 27: Appendix A: Livestock Valuation
Appendix A: Livestock Valuation For personal use only • 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 sto
Slide 28: Appendix B: Livestock Valuation Influences
Appendix B: Livestock Valuation Influences For personal use only • 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 br
Slide 29: Appendix C: Cattle Types
Appendix C: Cattle Types For personal use only Type Description Calves Male and female calves less than 6 months old Castrate male or female cattle with no permanent teeth. Less than Vealer Steers & Heifers 12 months old and still suckling Castrate male or female cattle. Predominately with no perman
Slide 30: Appendix D: Industry Terminology
Appendix D: Industry Terminology For personal use only Term Definition ABARE Australian Bureau of Agricultural and Resource Economics Bos Indicus Refers to tropical or humped breeds e.g. Brahman Bos Taurus Refers to a class of temperate British and European breeds e.g. Angus Bovine Spongiform Enceph
Slide 31: Appendix E: General Definitions
Appendix E: General Definitions For personal use only Term Description AIFRS Australian International Financial Reporting Standards Dividend Yield Dividend per share / Current Share Price DPS Dividends per share EBIT Earnings before interest and income tax EPS Earnings per share Gearing Net Debt / E
Slide 32: For more information contact
For personal use only www.aaco.com.au For more information contact: Don Mackay CEO or Stephen Toms CFO Ph: (07) 33684400 Email: ceo@aaco.com.au 33
Australian Agricultural Company — H1 2007 Earnings Presentation on 6ix