Slide 1: A Platform to Generate Real Value
For personal use only A Platform to Generate Real Value Capital Raising Presentation 15 September 2014
Slide 2: Disclaimer
Disclaimer For personal use only This presentation (Presentation) has been prepared by Elders Limited ACN 004 336 636 (Elders). Summary information This Presentation contains summary information about Elders and its activities current as at 15 September 2014 . The information in this Presentation do
Slide 3: Disclaimer: International Offer Restrictions
Disclaimer For personal use only International Offer Restrictions This document does not constitute an offer of new fully paid ordinary shares (New Shares) of Elders in any jurisdiction in which it would be unlawful. New Shares may not be offered or sold in any country outside Australia or New Zeala
Slide 4: Contents
Contents For personal use only Introduction Capital raising Debt reduction & new banking facilities Elders moving forward Outlook and summary Key risk factors Appendices
Slide 5: Introduction
Introduction For personal use only • Elders has transitioned from a complex and highly geared conglomerate to an agribusiness focused company with lower costs and substantially lower debt • Elders is one of the leading suppliers of rural services to the Australian farm sector through traditional bra
Slide 6: Introduction: ELD Key Statistics
Introduction For personal use only ELD Key Statistics* ELD Price Performance ASX Code ELD 0.40 30.00mm 0.35 25.00mm Share Price $0.21 0.30 20.00mm 0.25 52 Week High / Low $0.27 / $0.092 0.20 15.00mm 0.15 10.00mm Ordinary Shares on Issue 455m 0.10 5.00mm 0.05 Market Capitalisation $95.6m 0.00 0.00 Ma
Slide 7: ELDPA - Key Terms
Introduction For personal use only ELDPA - Key Terms (ASX: ELDPA)* • 1,500,000 issued in 2006 • $100 face value ($150 million raising) • Perpetual (no maturity date), subordinated, convertible, unsecured notes • Quarterly distributions, subject to Board approval. Distribution rate is (the higher of)
Slide 8: Experienced agribusiness CEO
Experienced agribusiness CEO For personal use only Mark Allison appointed CEO in May 2014 Deep agribusiness experience throughout entire supply chain Track record of developing and implementing successful corporate strategy Supported by executive team with functional excellence and industry expertis
Slide 9: Board renewal: Agribusiness focus
Board renewal: Agribusiness focus For personal use only Board renewal undertaken in 2014 Every director has agribusiness experience Strong finance and corporate strategy capability Hutch Ranck, Chairman Appointed Chairman in April 2014. Mr Ranck spent 31 years with DuPont leading business in ANZ and
Slide 10: Capital raising
For personal use only Capital raising
Slide 11: Capital raising
Capital raising For personal use only Placement and Entitlement Offer to raise a total of approximately $57m. Funds raised will be used pay down existing debt Placement • Placement of 68.25m shares at an offer price of $0.15 to raise $10.2m Entitlement Offer • 3 for 5 non-renounceable entitlement of
Slide 12: Rationale
Rationale For personal use only On completion of the capital raising and debt refinancing, Elders will have appropriate funding to optimise performance and the ability to direct capital into high return opportunities • Financial position stabilised with new supportive banking syndicate – New debt fa
Slide 13: Details of the capital raising
Details of the capital raising For personal use only Placement • 68,251,999 shares to be issued under 15% placement capacity (LR 7.1) Offer structure • Shares issued to institutional and sophisticated investors (s708) • $0.15 per share Offer price • 28% discount to 1 month volume weighted average pr
Slide 14: Indicative capital raising timetable
Indicative capital raising timetable For personal use only Event Date Trading halt announced Thursday, 11 September 2014 Placement completed, capital raising announced and shares recommence trading Monday, 15 September 2014 Shares trade “ex” entitlements Wednesday, 17 September 2014 Placement settle
Slide 15: Debt reduction & new banking facilities
For personal use only Debt reduction & new banking facilities
Slide 16: 1H F14 Net Debt
1H F14 Net Debt For personal use only Elements of net debt $ million 314.1 Other Self- 255.2 149.4 liquidating 236.6 149.4 123.6 Term debt 231.1 143.8 118.3 Cash Mar-13 Sep-13 Mar-14 Term debt halved year-on-year; reduced 18% over period Capital management strategy to shift towards more flexible and
Slide 17: Term debt reduction
Term debt reduction For personal use only Term Debt $million (19) (14) (10) 118 (54) 21 31 March 2014 Elders Insurance New Zealand Charlton Capital raising Pro-forma Term Debt Term Debt (converting to working capital facilities) Term debt reduced from $118m at 31 March 2014 to $21m on a pro-forma ba
Slide 18: Proposed new working capital facilities
Proposed new working capital facilities For personal use only Retail debtor facility $198 million Total working capital facilities $308 million $84m 42% $114m 58% $114m Live Export and General 37% $163m working capital facilities $110 million 53% $10m $10m $21m 3% $79m 9% 7% 72% $21m 19% New debt pa
Slide 19: Improved debt position after refinancing
Improved debt position after refinancing For personal use only New syndicated facilities of $308m, drawn to $145m with 3 current syndicate members Working capital facilities will have up to three year tenure* $60m stand-by letter of credit and bank guarantee facility to reduce to $30m within 3 month
Slide 20: Pro-forma balance sheet
Pro-forma balance sheet For personal use only Pro-forma Pro-forma balance sheet shows impact of Net proceeds Balance Sheet the following events as though they had As at Divestment from capital as at $ million 31 March 2014 of assets raising Refinance 31 March 2014 occurred on 31 March 2014: Cash and
Slide 21: Elders moving forward
For personal use only Elders moving forward
Slide 22: Elders now: what we are
Elders now: what we are For personal use only Retail Financial Feed & Agency Services Live Export Products Services Processing ` Short haul livestock Long haul livestock Elders Indonesia Farm Supplies Killara Feedlot Elders China Real Estate Livestock Insurance Fertiliser Banking Grain Wool $1b reta
Slide 23: Elders now: what we are
Elders now: what we are For personal use only Margin generated by product * Margin generated by geography * Financial Services South Agency Services West 10% 43% 46% 14% Feed & Processing Services 5% International Live Export 8% Services 6% Retail North 33% 35% Diversification in product offerings a
Slide 24: Elders now: where we are
Elders now: where we are For personal use only Approximately 2,000 employees in 370 locations in Australia Operations in Indonesia and China, and access to world markets Proximity to Asia provides opportunity to capitalise on growing middle class demand for premium agricultural products 24
Slide 25: Elders today: the opportunity
Elders today: the opportunity For personal use only Growing global demand for food and fibre, particularly from Asia, presents opportunities for Australian agriculture and Elders Global trends Australian competitive advantage Population growth World population 8 billion by 2025 Diversified geography
Slide 26: Elders' turnaround
Elders’ turnaround For personal use only Turnaround on track with significant milestones achieved Recapitalisation underway Recapitalisation will provide capital structure to optimise business and enable Elders to grow Operational Ongoing Transition Four priorities performance and Eight Point Plan R
Slide 27: Delivering on four priorities
Delivering on four priorities For personal use only Capital Operational Leadership Safety Management Performance Renewal Performance Ongoing ROC focus Up to $77m Board renewal: 2 new Lost time injuries almost Underlying EBIT NEDs and new chair halved Average working capital turnaround in FY14 reduce
Slide 28: Strategy
Strategy For personal use only Agency Retail Services Livestock Financial Farm Supplies Services Insurance Banking Fertiliser Real Estate Feed & Processing Wool Live Indonesia Export Feedlots Short Haul Live Export Elders Fine Foods Long Haul Live Export Grain (Indicative) 28
Slide 29: The Eight Point Plan
The Eight Point Plan For personal use only 29
Slide 30: The Eight Point Plan in action
The Eight Point Plan in action For personal use only Values, Performance and Brand • delivering Elders’ strategies through values, safety and performance based culture that maximises the iconic Elders brand and positioning Geographical Coverage and Distribution Channels • branch optimisation plan •
Slide 31: Outlook and summary
For personal use only Outlook and summary
Slide 32: FY14 outlook
FY14 outlook For personal use only Profit: Reported and Underlying (September year end) FY14 Underlying EBIT expected to be in the range of $million FY14 FY13 * Change $23m – $28m Underlying EBIT: Low High Low High Network ^ 49 51 16 33 36 Key improvements include: Feed and Processing Services 3 4 4
Slide 33: Pathway to higher profits and returns
Pathway to higher profits and returns For personal use only Eight Point Plan Opportunities Geographical Coverage & Distribution Channels EBIT Average • Branch benchmarking and improvement plan $ mil lion Low High Capi tal * • Wholesale Farm Supplies (On line platform capex $1m) 1. Values, Performanc
Slide 34: Investment summary
Investment summary For personal use only Elders A focussed Australian agribusiness with lower costs and lower debt A board and management team with deep rural services experience A leading supplier of rural services to the Australian farm sector Presence in all significant Australian agricultural re
Slide 35: Key risk factors
For personal use only Key risk factors
Slide 36: Key Risk Factors
Key Risk Factors For personal use only • Introduction – Before applying for New Shares applicants should consider whether the New Shares are a suitable investment. Applicants should be aware that there are risks associated with an investment in the New Shares and Elders generally, many of which are
Slide 37: Key Risk Factors
Key Risk Factors For personal use only • Livestock export business – Elders is engaged in the livestock export business. This business may be adversely affected by the imposition of tariffs or free trade agreements, export bans or embargos which may reduce Elders' competiveness, or ability to operat
Slide 38: Key Risk Factors
Key Risk Factors For personal use only • Litigation and disputes – Legal and other disputes may arise from time to time in the ordinary course of operations. Any such dispute may impact on earnings. – On 23 July 2014 Elders made an ASX announcement regarding an award against Elders of $2.7m (at then
Slide 39: Key Risk Factors
Key Risk Factors For personal use only • Risks associated with economic factors and regulatory changes – Set out below are risks associated with investment in Elders and the New Shares. These risks may impact the financial performance and prospects of Elders and the demand for Elders securities. • C
Slide 40: Key Risk Factors
Key Risk Factors For personal use only • Dilution risk – If you do not take up all or part of the New Shares offered to you under the Offer, then your percentage shareholding in Elders will be diluted. • Dividends – The payment of dividends by Elders is determined by the Elders Board from time to ti
Slide 41: Appendix
For personal use only Appendix
Slide 42: Pro-forma balance sheet
1 Pro-forma balance sheet For personal use only Pro-forma Basis of Preparation Net proceeds Balance Sheet as As at Divestment of capital at $ million 31 March 2014 of assets raising Refinancing 31 March 2014 The Pro-forma Balance Sheet has been prepared for illustrative purposes Current assets only,
Slide 43: Profit sensitivity
2 Profit sensitivity For personal use only Underlying NPAT $(10m) $(7.5m) $(5m) $(2.5m) NPAT +$2.5m +$5m +$7.5m +$10m Sheep price -$20 -$10 +$10 +$20 Cattle price -$100 -$50 +$50 +$100 Sheep volum e -1m hd -500k hd +500k hd +1m hd Cattle volume -200k hd -100k hd +100k hd +200k hd Retail sales -$50m
Slide 44: Debt refinance – Facility overview
3 Debt refinance – Facility overview For personal use only Drawn as at Type Limit Undrawn Term (months) 31 March 2014 pro-forma Working Capital Facilities Revolving working capital cash advance facility $45m $21m $24m 36 Working capital liquidity facility $15m - $15m 36 Farm Supplies debtor securiti
Slide 45: For personal use only
For personal use only 45