Elders Limited · ASX:ELD
Elders — Investor Presentation (September 2009)
43 slides from Elders's investor presentation, Sep 4, 2009
Slide 1: Refinancing and Refocusing the Business
NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES OR TO U.S. PERSONS Elders Limited For personal use only Refinancing and Refocusing the Business 4 September 2009 1
Slide 2: Disclaimer
NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES OR TO U.S. PERSONS Disclaimer This presentation has been prepared by Elders Limited (ABN 34 004 336 636) (Elders) in connection with a proposed placement, conditional on shareholder approval, of fully paid ordinary shares in Elders (New Shares) (C
Slide 3: Disclaimer
NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES OR TO U.S. PERSONS Disclaimer Investors should also be aware that certain financial data included in this presentation are “non-GAAP financial measures” under Regulation G of the U.S. Securities Exchange Act of 1934. The disclosure of such non-GAA
Slide 4: Contents
NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES OR TO U.S. PERSONS Contents 1. Executive Summary For personal use only 2. Repositioning Elders 3. Rural Services Turnaround 4. Financial Overview 5. Details of Recapitalisation 6. Offer Details 7. Appendix – Additional Information 4
Slide 5: Executive Summary
NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES OR TO U.S. PERSONS Executive Summary Refinancing and refocusing the business on the core rural services franchise Company refocused under Agenda for Change to drive shareholder value For personal use only Renewed company with a refocused New m
Slide 6: Overview of the Recapitalisation
NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES OR TO U.S. PERSONS Overview of the Recapitalisation Resetting the balance sheet for the long term For personal use only Credit approved debt refinancing term sheets have been agreed with lenders with the bulk of the term debt on a 3- year term
Slide 7: Overview of the Recapitalisation: Sources and Uses
NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES OR TO U.S. PERSONS Overview of the Recapitalisation Approximately $1bn raised through asset sales and proposed Equity Raising For personal use only SOURCES AND USES # of Shares (m) Offer Price ($) Proceeds ($m) Conditional Placement¹ 2,667 0.15 40
Slide 8: Pro forma Net Debt
NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES OR TO U.S. PERSONS Pro forma Net Debt (100) Pro forma Net Debt to be reduced to approximately $200m For personal use only PRO FORMA NET DEBT 30 JUNE 2009 ($m) Debt Position Equity proceeds Cash outflows Asset Sales 80 (270) (69) (100) 61 (75) 29 9
Slide 9: Contents
NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES OR TO U.S. PERSONS Contents 1. Executive Summary For personal use only 2. Repositioning Elders 3. Rural Services Turnaround 4. Financial Overview 5. Details of Recapitalisation 6. Offer Details 7. Appendix – Additional Information 9
Slide 10: Repositioning Elders
NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES OR TO U.S. PERSONS Repositioning Elders Company refocused under Agenda for Change to drive shareholder value For personal use only Business rebuilt around core rural services franchise Renewed company with a refocused strategy Portfolio simp
Slide 11: Refocused Business Under Agenda for Change
NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES OR TO U.S. PERSONS Refocused Business Under Agenda for Change Capitalise on the brand value, earnings potential and capabilities of Elders For personal use only COMPANY REFOCUS FINANCIAL ENGAGE 1. STRUCTURE 2. ON ELDERS 3. PERFORMANCE 4. THE MARKE
Slide 12: Focused Management Structure
NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES OR TO U.S. PERSONS Focused Management Structure Old Management Structure New Management Structure For personal use only Amcom (51%) Elders Limited AACo Elders Limited CEO (43%) CEO Malcolm Jackman Webster Futuris ITC (33%) Automotive MD MD Vince M
Slide 13: Status Update
NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES OR TO U.S. PERSONS Status Update Delivering returns from core business and realising value from non-core assets For personal use only HIGHLIGHT DESCRIPTION STATUS Ongoing transformation to be implemented over next 2 - 3 years — Phase I: Restr
Slide 14: Elders Insurance Sale and JV Transaction Summary
NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES OR TO U.S. PERSONS Elders Insurance Sale and JV Transaction Summary Binding agreements for sale of Elders Insurance to QBE and establishment of MGIA distribution joint venture for $270m For personal use only Sale of Elders insurance underwriting
Slide 15: Sale of Elders' Timber Operations
NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES OR TO U.S. PERSONS Sale of Elders’ Timber Operations Binding agreement for sale of Elders’ hardwood timber processing business and its 50% interest in SmartFibre to Gunns for approximately $100m For personal use only Sale of hardwood timber proc
Slide 16: The New Elders: Repositioned for Improved Performance
NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES OR TO U.S. PERSONS The New Elders: Repositioned for Improved Performance Elders operates at the farm gate, at the intersection of primary producers and local and global markets For personal use only IMPROVED PERFORMANCE ELDERS IS NOT … ELDERS IS …
Slide 17: Contents
NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES OR TO U.S. PERSONS Contents 1. Executive Summary For personal use only 2. Repositioning Elders 3. Rural Services Turnaround 4. Financial Overview 5. Details of Recapitalisation 6. Offer Details 7. Appendix – Additional Information 17
Slide 18: Unique Business Model Provides Competitive Advantage
NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES OR TO U.S. PERSONS Unique Business Model Provides Competitive Advantage Integrated “one stop shop” positioned at the intersection of the farm gate and global demand for 170 years For personal use only Footprint Comprehensive national services an
Slide 19: Favourable Industry Outlook
NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES OR TO U.S. PERSONS Favourable Industry Outlook Continued food supply / demand imbalance as Australia becomes Asia’s food basket For personal use only TREND OVERVIEW IMPLICATIONS Population UN forecasts world population growth of 390 million from
Slide 20: Key Drivers for Margin Growth in FY2010 & Beyond
NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES OR TO U.S. PERSONS Key Drivers for Margin Growth in FY2010¹ & Beyond Incremental business change can drive tangible margin step change For personal use only INTERNAL DRIVERS EXTERNAL DRIVERS Peak priced stock washed through – improved inventory
Slide 21: Rural Services Transformation Program
NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES OR TO U.S. PERSONS Rural Services Transformation Program Phase I of the transformation program is completing with focus now turning to performance and growth For personal use only FY08 FY09 FY10 FY11 FY12 1 Restructure operations 2 Drive business
Slide 22: Farm Supply Prices Expected to Stabilise
NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES OR TO U.S. PERSONS Farm Supply Prices Expected to Stabilise Expected improvement in farm supply margins will drive Rural Services turnaround in FY2010¹ For personal use only GLYPHOSATE PRICES Farm input prices are stabilising 20.0 450 Factor 540
Slide 23: Pricing, Procurement & Logistics – Road to Margin Recovery
NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES OR TO U.S. PERSONS Pricing, Procurement & Logistics – Road to Margin Recovery Multiple initiatives to ensure margin recovery in FY2010 and beyond For personal use only PRICING PROCUREMENT Differentiated pricing strategies based on client value
Slide 24: Realigned to Benefit from the Recovery
NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES OR TO U.S. PERSONS Realigned to Benefit from the Recovery Significantly reduced operating and overhead structure leading to improved cost performance For personal use only HEAD COUNT SUPPORT CENTRE COSTS ($m) - Quarterly Down 11% Down Down 12% 20%
Slide 25: Contents
NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES OR TO U.S. PERSONS Contents 1. Executive Summary For personal use only 2. Repositioning Elders 3. Rural Services Turnaround 4. Financial Overview 5. Details Of Recapitalisation 6. Offer Details 7. Appendix – Additional Information 25
Slide 26: FY2009 in Context
NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES OR TO U.S. PERSONS FY2009¹ in Context FY2009 was a challenging year as the business embarked on its turnaround For personal use only During 2009, the business faced extremely difficult trading conditions Unprecedented market volatility, uncert
Slide 27: Financial Results FY2009 – Profit and Loss
NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES OR TO U.S. PERSONS Financial Results FY2009¹ – Profit and Loss² For personal use only Actual Actual COMMENTS 12 months ended 12 months ended $m 30 June 2008 30 June 2009 Underlying EBIT down 90% due to Sales Revenue (continuing) 3,274.7 2,627.7
Slide 28: Significantly Improved Outlook for FY2010
NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES OR TO U.S. PERSONS Significantly Improved Outlook for FY2010 IMPACT ON IMPACT ON FY2009¹ WHY WILL FY2010 BE DIFFERENT? FY2009 FY2010 For personal use only Volatility considered unlikely to repeat in near term, prices Volatility in fertili
Slide 29: Outlook for FY2010 – Profit and Loss
NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES OR TO U.S. PERSONS Outlook for FY2010¹ – Profit and Loss² Recovery in net profit driven by operational improvements and reduction in net interest Assumes $475m Assumes $550m For personal use only Equity Raising Equity Raising Historic Forecast For
Slide 30: FY2010 Rural Services EBIT forecast to Significantly Exceed FY2009
NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES OR TO U.S. PERSONS FY2010 Rural Services EBIT forecast to Significantly Exceed FY2009 A return to stable trading conditions, together with significant cost take-out programs expected to drive EBIT improvement in FY2010 For personal use only RURAL
Slide 31: FY2010 Outlook for Other Elders' Divisions
NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES OR TO U.S. PERSONS FY2010 Outlook for Other Elders’ Divisions For personal use only ELDERS FINANCIAL SERVICES AUTOMOTIVE After tax profit from Elders’ interest in Rural Bank is forecast to be Vehicle production volumes have stabilised supporte
Slide 32: Contents
NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES OR TO U.S. PERSONS Contents 1. Executive Summary For personal use only 2. Repositioning Elders 3. Rural Services Turnaround 4. Financial Overview 5. Details of Recapitalisation 6. Offer Details 7. Appendix – Additional Information 32
Slide 33: Pro Forma Debt Profile Post Asset Sales and Equity Raising
NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES OR TO U.S. PERSONS Pro Forma Debt Profile Post Asset Sales and Equity Raising Core term facilities syndicated and extended to September 2012 For personal use only #1 Term Facility¹ Amount Maturity COMMENTS 3-Year Term Credit-approved term sheets
Slide 34: Bank Covenants and Credit Metrics
NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES OR TO U.S. PERSONS Bank Covenants and Credit Metrics Going forward, there will be three covenants¹, tested quarterly on a rolling 12 month basis, commencing on 30 June 2010. The gearing covenant will be tested quarterly from 31 December 2009 For
Slide 35: Contents
NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES OR TO U.S. PERSONS Contents 1. Executive Summary For personal use only 2. Repositioning Elders 3. Rural Services Turnaround 4. Financial Overview 5. Details of Recapitalisation 6. Offer Details 7. Appendix – Additional Information 35
Slide 36: Offer Details
NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES OR TO U.S. PERSONS Offer Details Equity Raising of up to $550m at an offer price of $0.15 per share, comprising: For personal use only — $400m Conditional Placement — $150m SPP (up to $20,000 per shareholder¹) Proceeds applied to repay debt an
Slide 37: Indicative Equity Raising Timetable
NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES OR TO U.S. PERSONS Indicative Equity Raising Timetable For personal use only KEY MILESTONES TIMING Conditional Placement Friday, 4 September 2009 Investor Presentation and Prospectus lodged with ASIC and ASX Friday 4 September 2009 Elders Reco
Slide 38: Contents
NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES OR TO U.S. PERSONS Contents 1. Executive Summary For personal use only 2. Repositioning Elders 3. Rural Services Turnaround 4. Financial Overview 5. Details of Recapitalisation 6. Offer Details 7. Appendix – Additional Information 38
Slide 39: Pro forma Balance Sheet
NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES OR TO U.S. PERSONS Pro forma Balance Sheet¹ Pro forma Pro forma 12 months ended 12 months ended For personal use only $m 30 June 2009 30 June 2009 Current Assets Current Liabilities Cash and cash equivalents 467 Trade and other payables 298 Cash a
Slide 40: Summary Risk Factors
NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES OR TO U.S. PERSONS Summary Risk Factors Risks associated with Elders’ operations For personal use only RISK AREA SUMMARY OF RISK¹ Rural Services Seasonality, weather and Adverse weather or exposure to natural events could reduce the demand for E
Slide 41: Summary Risk Factors
NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES OR TO U.S. PERSONS Summary Risk Factors Risks associated with Elders’ operations For personal use only RISK AREA SUMMARY OF RISK Futuris Automotive Cyclicality of automotive If automotive sales and production levels decline or fail to improve in
Slide 42: Summary Risk Factors
NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES OR TO U.S. PERSONS Summary Risk Factors Risks associated with Elders’ capital structure RISK AREA SUMMARY OF RISK For personal use only Available finance Although Elders’ lenders have committed to the refinancing arrangements described in Sectio
Slide 43: Summary Risk Factors
NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES OR TO U.S. PERSONS Summary Risk Factors Risks associated with Elders’ capital structure For personal use only RISK AREA SUMMARY OF RISK QBE and Timber The sale of Elders’ insurance business and the entry into the joint venture arrangement in res