Australian Agricultural Company Limited · ASX:AAC
Australian Agricultural — H1 FY04 Earnings Presentation
30 slides from Australian Agricultural's earnings presentation, Feb 10, 2004
Slide 1: Half Year FY04 Results, 10 February 2004
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Slide 2: Half Year FY04 Results Summary
Half Year FY04 Results Summary Operating Conditions . Cattle & Carrum Station Acquisitions . Outlook for Second Half FY04 & Guidance Questions
Slide 3: I. Half Year FY04 Results Summary
l. Half Year FY04 Results Summary
Slide 4: Half year financial results (A$ millions)
AS millions 31 Dee 03 31 Dec 02 Comment Total Revenue EBIT before One-off Items One-off Items NPAT Operating Cash Flow (pre interest & tax) 55.2 3.3 (3.4) (2.9) (11.6). 43.3 7.1 0.0. 3.8 5.7 Higher cattle numbers and increased prices over the period - Higher priced grain purchased during drought; In
Slide 5: Cash receipts and cattle sales
31 Dec 03 31 Dec 02 Change Cash Receipts from Customers ($m) 58.0 : 45.3 pN Beef Sold (DW kg millions) 19.7 17.8 rN Average Sale Pricelkg (DW) $3.07 $2.77 bs Average Gross Sales Proceeds 74 7 (per head) $746 $704 fs Cattle Sales (head) : - Grain-fed Cattle Sales 43,738 35,478 rN - Grass-fed Cattle S
Slide 6: Cash payments
A$ millions 31 Dec 03 31 Dec 62 Change Payments for cattle purchases 16.9 6.2 h Payments for grain purchases 12.7 5.8 rN Payments to other suppliers, 27.1 219 A employees & others Payments to reduce 30 June creditors 108 38 As balances Stanbroke Payments relating to 18 - hs Tender Process * Invested
Slide 7: Strategic decisions and seasonal impacts on cash flows
Strategic Decisions Effect on Cash Fiows Continued investment in Breeding Herd Aronui feedlot cattle purchases Additional trade creditor payments Increasing breeder numbers ensures future production is ~ maintained, but requires initial cash investment Additional cattle purchases to convert Aronui f
Slide 8: Balance sheet
AS millions 31 Dec 03 30 June 03 Change Livestock 240.3 230.1 a Property, Plant & Equipment 225.5 223.2 x Total Assets SS go 491.5 A. Interest-bearing Debt 135.0 105.0 A Shareholders Equity : 301.3 307.1 WV NTA (per Share) $1.48 $1.54 Steady « 23,000 fewer cattle on hand at 31 Dec 03 compared to 30
Slide 9: II. Operating Conditions
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Slide 10: Grain-fed and grass-fed cattle sales
= 100 AACo Price Jul 01 GRAIN-FED CATTLE SALES (exc! Wagyu) | [1M Volume —® Grain-fed Indicator Price ] * Grain-fed sales increased with Aronui feedlot acquisition 12 months ago — move to company-owned cattle will see sales further increase in grain-fed sales in second half FY04 « Prices have been v
Slide 11: Herd numbers by head
Head 31 Jan 04** 31 Dec 03 30 June 03 31 Dec 62 Breeding Cattle ...~ 226,000 196,419 » 188,796 190,886 Trading Caitle 227,000 198,721 229,252 202,250 Total Cattle 453,000 395,140 418,048 393,136 “Includes Carrum & Lawn Hill cattle * AACo’s strong balance sheet has allowed the company to hold on to i
Slide 12: Rainfall and impacts of the wet season
Austrian Government Bureae of Metewrology Australian Aaintall Deciles 1 November 2009 1031 January 2004, Risnibution Resed on Gridded Data Product of fhe Nattonal Clmate Contre apn pawn ger rat 8 Comuenecaih of fartaks 2004, Comman call Daca ol Mckay WD cod IDCRDAA AWGN 1WEAOIO I lag ed RU High volu
Slide 13: Production map of stations and feedlots
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Slide 14: Production in 2004
Production in 2004. co Townsville Ne, Dalgonatt ny nw ig y La y . . , oe é y, Growing Stations Rockhampton Downs Downs Dy " 5 Carrum eo = Feedlot Meteor Downs: lentana Aronui @ Feedlot e; Brisbane
Slide 15: III. Cattle & Carrum Station Acquisitions
ill. Cattle & Carrum Station Acquisitions
Slide 16: Cattle and Carrum Station acquisitions
* $8,000 cattle Austaion Aarevtorai company sitions = = Carrum station to become integral part of AACo production system * Demonstrates capacity to grow herd Acquired 40,000 cattle to be agisted on part of Lawn Hill station y Acquired Carrum under management | Station with capacity . . for 8,000 cat
Slide 17: Key statistics and strategic rationale
Key Statistics Strategic Rationale Purchased Carrum station (50,613 ha) and 58,000 cattle (Brahman & Brahman composite breeds) Brings AACo’s cattle herd to approximately 460,000 Acquired for. $50 million & funded by term debt facility Long-term agistment arrangement for Lawn Hill station (adjacent t
Slide 18: IV. Outlook for Second Half FY04 & Guidance
IV. Outlook for Second Half FY04 & Guidance
Slide 19: US BSE case and impact on prices
USDA announced on 24 December that a confirmed case of BSE (“Mad Cow Disease”) had been identified in the US herd All importing countries banned US beef — Australia’s biggest export competitor in Asia, however US exports only 10% of its production US market fell initially, now recovered to 10% below
Slide 20: Improvement in average cattle prices expected
Improvement in average cattle prices expected US BSE situation still early days — initial impact to export markets however US domestic prices are recovering AUD appreciation impacting AUD returns on exports Japanese and Korean prices very strong. Lack of supply is the major constraint Feed grain pri
Slide 21: Improved second half seasonal conditions
Greatly improved second half FY04 seasonal conditions compared to first half FY04: ~ Increased cattle weights ~ Lower feed grain costs Additional rains would produce an above-average wet season Cattle prices expected to be stronger than first half Focus on productivity improvements on existing AACo
Slide 22: V. Questions
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Slide 23: re hd
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Slide 24: Feed wheat and sorghum prices
400 150 T 1 T 1 T 1 T 1 T 1 T T T T T Jul Sep- Nov- Jan- Mar-~ May- Jul Sep- Nov- Jan- Mar- May- Jul Sep- Nov- Jan- 01 01 Of #02 02 02 O02 O02 O2 O03 03 03 O38 03 O38 04 mo Feed Wheat umn Sorghum Source: MLA Grain purchases timed to minimise supply risk Reduced grain prices improve average feedlot m
Slide 25: Herd numbers
Herd Numbers 500,000 ~ 400,000 - 418,048 41,898 80,910 20,699 P 4,595 395,140 300,000 30 Jun03 Purchases Natural Sales Natural 31 Dec 03 Herd Increase Deaths Herd
Slide 26: Livestock valuation under AASB1037 SGARA
Livestock is valued in accordance with AASB1037 SGARA — ‘Self Generating & Regenerating Assets’ Net increases or decreases in the market value of livestock are recognised as SGARA revenue or expense in the Statement of Financial Performance at each reporting date Cattle assets vary in value accordin
Slide 27: Trading and breeding cattle valuation
@ @ Trading Cattle ~ Prices quoted to AACo at reporting period date ~ Qld Cattle Market Index (QCM): an indicator only -~ Roma, Queensland cattle store sales Breeding Cattle ~ Large cattle property sales inclusive of breeding stock ~ Australian breeding herd outlook ~ US breeding herd & beef supplie
Slide 28: Cattle types and 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 Ca
Slide 29: Glossary of terms
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 BSE Bovine Spongiform Encephalopathy, commonly known as ‘mad cow disease’ Case
Slide 30: Se oe oe oe oe ce oe oe ce ae ae a ce oe
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Australian Agricultural Company — H1 FY04 Earnings Presentation on 6ix