Australian Agricultural Company Limited · ASX:AAC
Australian Agricultural — H1 FY2017 Earnings Presentation
17 slides from Australian Agricultural's earnings presentation, Nov 23, 2016
Slide 1: Dear Shareholders: Journey from Pastoral Company to Luxury Brand Business
For personal use only 23 November 2016 Dear Shareholders, Our Journey from Pastoral Company to a Luxury Brand Business You would notice a lot of change if you first invested in AACo 5 years ago. We are still the leading beef producer in Australia. We still have the largest Wagyu herd in the world. W
Slide 2: Shareholder letter conclusion
While a better operated company is an admirable goal, ultimately it must translate into profits. We committed to developing consistent high quality earnings. Our latest results demonstrate this progress: increased earnings, increased average sales price for our Wagyu products, reduced operational ex
Slide 3: Financial Results Presentation for the Half Year ended 30 September 2016
For personal use only AUSTRALIAN AGRICULTURAL COMPANY Financial Results Presentation for the Half Year ended 30 September 2016 23 November 2016
Slide 4: Important information
Important information Summary information only For personal use only This presentation contains general information about the Australian Agricultural Company Limited and its consolidated entities (“AACo”) and its activities current as at the date of this presentation. It is provided in summary and d
Slide 5: Agenda
Agenda For personal use only 1. Half year in review – Jason Strong 2. Financial performance – Andrew Slatter 3. Q&A 3
Slide 6: AACo H1 2017 vs H1 2016 – at a glance
AACo H12017 vs H12016 – at a glance For personal use only • Operating EBITDA of $13.9m up $2.4m Financials • Cattle inventory build was $41.4m (at standard cost) up $36.0m • Operating cash flow of ($34.5m) down $31.4m • Production costs decreased 25% to $2.09/kg from $2.77/kg Operations • Livingston
Slide 7: Intentional actions resulted in tangible outcomes
Intentional actions resulted in tangible outcomes For personal use only • Intent – secure consistent supply for our branded beef programs Inventory • Action – purchased cattle in H1 for supply in H2FY17 and H1FY18 • Outcome – absorbed $41.4m within operating cash flow in H1; inventory will be moneti
Slide 8: One year is not equal to twice the first half
One year is not equal to twice the first half For personal use only • Northern Australian cattle operations naturally fall into three trimesters with each having significantly different operational and cash flow profiles • Costs that regularly occur in the 2nd trimester can fall before or after 30 S
Slide 9: Implementing a differentiated branding strategy
Implementing a differentiated branding strategy For personal use only Our new brand offerings, Westholme & Wylarah, represent our intent to change the global luxury beef segment • Commenced joint business planning with strategic customers • Local launch in Singapore on October 4th 2016 • Company str
Slide 10: Applying innovation and technology to the business
Applying innovation and technology to the business For personal use only • AACo Scientific Advisory Board established with highly credentialed members chaired by Dr Megan Clark AC, former CSIRO CEO • Nucleus Biologics investment is extending our supply chain into downstream value- added pharmaceutic
Slide 11: Safety significantly improved
Safety significantly improved For personal use only • People & culture – we continued to focus on training and development for our people • Our efforts have significantly reduced our lost-time injury frequency rate (“LTIFR”) 59 52 40 29 22 Sep-14 Mar-15 Sep-15 Mar-16 Sep-16 AACo LTIFR 9
Slide 12: Agenda
Agenda For personal use only 1. Half year in review – Jason Strong 2. Financial performance – Andrew Slatter 3. Q&A 10
Slide 13: Improved operating margins and profit before tax
Improved operating margins and profit before tax For personal use only • Increased operating EBITDA and margins on lower revenue • Total sales revenue for 1HFY17 was lower than H1FY16 because of key decisions: • We increased wagyu days on feed which limited wagyu product available for sale • We redu
Slide 14: AACo 2017 H1 earnings – at a glance
AACo 2017 H1 earnings – at a glance For personal use only $m FY17 H1 FY16 H1 Change Branded beef sales 195.9 224.3 (28.4) Cattle sales 18.2 36.4 (18.2) Total sales revenue 214.1 260.7 (46.6) Processing & logistics costs (43.4) (56.5) 13.1 Total sourcing & production costs (177.5) (195.7) 18.2 Innova
Slide 15: AACo 2017 H1 cash flow – at a glance
AACo 2017 H1 cash flow – at a glance For personal use only • External purchases in FY17 H1 contributed to a $41.4m live cattle inventory build for Livingstone Beef and our branded beef programs; resulted in negative operating cash flow • All cash needs funded by operations and drawing on existing ba
Slide 16: AACo 2017 H1 balance sheet – at a glance
AACo 2017 H1 balance sheet – at a glance For personal use only • Adjusted days working capital (which excludes livestock) improved due to leveraging systems to manage finished goods inventory and tighter control of debtors • Subsequent to balance date, AA Trust converted 59 Convertible Notes for 25,
Slide 17: Agenda
Agenda For personal use only 1. Half year in review – Jason Strong 2. Financial performance – Andrew Slatter 3. Q&A 15
Australian Agricultural Company — H1 FY2017 Earnings Presentation on 6ix