2017 Annual Results Presentation 13 November 2017 Disc iscla - PDF document

13 November 2017 2017 Full Year Financial Results Presentation Attached is the presentation of the financial results for the 12 month period ended 30 September 2017. Peter Hastings Company Secretary 1

Eld lders Lim imited 2017 Annual Results Presentation 13 November 2017

Disc iscla laim imer and im important in informatio ion Forward looking statements Non-IFRS information This presentation is prepared for informational purposes only. It contains This presentation refers to and discusses underlying profit to enable analysis forward looking statements that are subject to risk factors associated with the of like-for-like performance between periods, excluding the impact of agriculture industry of which, many are beyond the control of Elders. Elders’ discontinued operations or events which are not related to ongoing operating future financial results will be highly dependent on the outlook and prospect performance. Underlying profit measures reported by the Company have of the Australian farm sector, and the values and volume growth in been calculated in accordance with the FINSIA/AICD principles for the internationally traded livestock and fibre. Financial performance for the reporting of underlying profit. Underlying profit is non-IFRS financial operations is heavily reliant on, but not limited to, the following factors: information and has not been subject to review by the external auditors, but weather and rainfall conditions; commodity prices and international trade is derived from audited accounts by removing the impact of discontinued relations. Whilst every endeavour has been made to ensure the operations and items not considered to be related to ongoing operating reasonableness of forward looking statements contained in this presentation, performance. they do not constitute a representation and no reliance should be placed on those statements.

FY17 Year in FY in Review Ei Eigh ght Poin int Pl Plan an obje bjectiv ives achie ieved  Lost time injuries increase to 6 from 4, LTIFR increase to 1.5 from 1.0  Underlying net profit after tax of $57.7m, up $16.5m  Underlying EBITDA of $74.6m, up $14.7m  Underlying EBIT of $70.4m, up $14.3m  Operating cash inflow of $81.6m for the year, up $32.9m  Underlying return on capital of 26.8%, down from 28.1%  Underlying earnings per share 50.7 cents, up 4.9 cents  Cancellation of all hybrids resulting in a simplified capital structure  Final dividend declared at 7.5 cents per share and additional special dividend declared at 7.5 cents per share, both fully franked 3

FY FY17 Prio iorities Deliv liverin ing our pr prom omises to to stakehold lders Safety Operational Key Efficiency Performance Performance Relationships and Growth     $74.6m underlying EBITDA, up Strengthened relationships in Continued to drive branch efficiency Lost time injuries increased to 6 $14.7m on last year aligned financial service providers improvement program from 4, target is zero LTIs     $70.4m underlying EBIT, up Continued to work with retail key Real Estate footprint expansion in LTI frequency rate at 1.5 $14.3m on last year suppliers, including improved Western Australia  position in WA fertiliser market 52% decrease in days lost for   Underlying ROC at 26.8%, down Strategic acquisition of Ace Ohlsson FY17  from 28.1% at September 2016 Expanded digital client offerings to enhance horticulture capability  Risk based decision making    Leverage ratio improved to 1.8 Formalised rural charitable Drove organic growth through training developed and partnerships through launch of improving sales force performance implemented  Interest cover ratio improved “Elders Give It” and attracting high performers  from 6.4 to 10.3 Continued emphasis on   Continued to engage with key Further 10% acquisition of Elders employee and community safety  Commenced half yearly agricultural research bodies Insurance and 30% of StockCo health and wellbeing dividends, with final fully franked  dividend declared at 7.5c per Structured review process of capital share and cost initiatives   Additional special fully franked Cancellation of all hybrids resulting in dividend declared at 7.5c per a simplified capital structure share 4

Full Fu ll Year Fin Financial Perf rformance Change $ $ mill illion FY17 FY17 FY16 FY16 $m % Sales revenue 1,603.1 1,519.3 83.8 6% Underlying EBITDA 74.6 59.8 14.7 25% Underlying EBIT 70.4 14.3 25% 56.1 Underlying profit after tax 57.7 41.2 16.5 40% Statutory profit after tax 116.0 64.4 125% 51.6 Net debt 95.3 86.1 9.2 11% Operating cash flow 81.6 32.9 66% 48.7 Average working capital 223.1 216.3 6.8 3% Underlying return on capital (%) 26.8% 1% 5% 28.1% Underlying earnings per share (cents) 50.7 45.4 14.5 12% Final dividend declared – fully franked (cents) 7.5 7.5 100% - Additional special dividend declared – fully franked (cents) 7.5 - 7.5 100% 5

Perf rformance by Product Balance ced gro rowth acro ross the he por portf tfolio Underlying profit movement $ million Product margin 1.0 (0.2) 8.9 (16.9) 2.7 2.2 11.0 7.8 57.7 41.2 FY16 Interest, FY17 Retail Agency Financial Feed and Digital and Costs Real Estate Underlying Underlying Processing Technical tax & NCI Products Services Services Services Profit Profit Services  Retail benefited from improved summer cropping conditions and geographical expansion  Agency improved with strong cattle and sheep prices and benefit from footprint growth  Real Estate earnings improved with increased farm land and residential property turnover  Financial Services boosted by StockCo and Elders Insurance acquisitions  Feed and Processing earnings improved with increased utilisation at Killara feedlot  Higher costs to drive Eight Point Plan initiatives, including acquisitions and footprint growth, and increased variabilised incentives  Interest expense savings resulting from lower discount expense related to provisions and improved working capital financing terms 6

Perf rformance by Geography Imp mprovement across Au Australian geography, he headwinds for or inte ternational Underlying profit movement $ million (0.6) (1.2) 11.8 (8.4) 2.2 12.7 57.7 41.2 FY16 Northern Southern Western International Corporate and Interest, tax & FY17 Underlying Australia Australia Australia unallocated NCI Underlying Profit costs Profit Northern Southern Western Interest, FY17 Corporate and FY16 International Australia Australia Australia unallocated tax & NCI Underlying Underlying Profit costs Profit  Northern Australia benefitted from high cattle prices, improved summer retail performance, and upside from geographical expansion  Southern Australia performance driven by retail improvements, along with livestock agency upside from high sheep prices and footprint expansion  Western Australia impacted by a decline in retail earnings, offset by increased livestock and real estate agency earnings  High input costs continue to adversely impact the International margins  Higher corporate and unallocated costs from increased short term incentives resulting from improved profitability across the business  Interest expense savings resulting from lower discount expense related to provisions and improved working capital financing terms 7

Capital Employed Ex Exce ceeded 20% re retu turn on on capita tal target  As expected, slight decline in return on capital: Unde nderly lyin ing Retu turn on n Cap apit ital l 1 o Continued strong agency earnings, particularly livestock, which requires minimal working capital 28.1% 26.8% o Investment in aligned financial services providers which deliver a lower risk earnings profile Sep-16 Sep-17 o Stable retail earnings and capital mix Wor orkin king Cap apital  Lower working capital balances resulting from: Sep-16 Sep 16 Sep-17 Sep 17 Cha hange ge $ million o Increased activity in Retail Retail Products 131.3 136.8 4% Agency Services 40.3 19.4 52% o Variability of livestock activity leading up to Real Estate 1.1 1.6 45% balance date Financial Services (3.3) 11.4 n/m Feed & Processing Services 38.9 50.2 29% o Investment in Financial Services through Live Export Services 17.1 - 100% provision of shareholder funding to StockCo Other (33.7) (39.0) 16% o Increase in utilisation at the Killara feedlot Work Working g ca capi pital (ba balanc nce da date) e) 191. 91.6 180. 80.5 6% 6% Worki Wor king ng capi pital (averag age) 216. 16.3 223. 23.1 3% 3% o Lower Live Export balances post exit 1 Return on capital = Underlying EBIT / (working capital + investments + property, plant and equipment + intangibles (excluding brand name) – provisions (excluding forestry related)) 8