2017 Half lf Year Results Presentation 15 May 2017 Disc iscla - PDF document

Monday, 15 May 2017 2017 Half-Year Results Investor Presentation Attached is the investor presentation in connection with the financial results for the 6 month period ended 31 March 2017. Elders CEO, Mark Allison, and CFO, Richard Davey, will deliver this presentation by webcast and simultaneous teleconference at 10.00am (AEST) today. As advised to the ASX on Thursday 11 May 2017, you can register to view and listen to the live commentary of the presentation. For details, refer to that announcement. Peter Hastings Company Secretary 1

Eld lders Lim imited 2017 Half lf Year Results Presentation 15 May 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 many of which 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.

FY FY17 Half Year in in Review Solid lid pe performance for or financia ial l me metr trics  Lost time injuries increase to 5 from 2  Statutory net profit after tax of $38.3m, up $13.7m  Underlying net profit after tax of $34.9m, up $12.3m  Underlying EBIT of $41.3m, up $13.2m  Operating cash outflow $5.3m for the half, down $19.2m  Underlying return on capital of 30.2%, up from 26.4% at March 2016  Realisation of all hybrids resulting in a simplified capital structure  Underlying earnings per share 29.7 cents, up 10.6 cents 3

Progress on FY FY17 Prio iorities Deliv liverin ing our pr prom omises to to stakehold lders Safety Operational Key Efficiency Performance Performance Relationships and Growth     $41.3m underlying EBIT, up Strengthened relationships in Continue to drive branch efficiency Lost time injuries increase to 5 $13.2m on last year aligned financial service providers improvement program from 2, target is zero LTIs     Underlying ROC at 30.2%, up Continue to work with retail key Real Estate footprint expansion in LTI frequency rate at 1.7 from 26.4% at March 2016 suppliers, including improved Western Australia  position in WA fertiliser market 50% decrease in days lost, March   Retail ROC improved from 13.3% Driving organic growth through 2017 year to date  to 22.2% Expanded digital client offerings improving sales force performance  and attracting high performers Risk based decision making   Leverage ratio steady at 2.3 Formalised rural charitable training developed  partnerships through launch of Further 10% acquisition of Elders   Interest cover ratio improved “Elders Give It” Insurance Continued emphasis on from 7.9 to 8.2 employee and community health   Continue to engage with key 30% acquisition of StockCo and wellbeing  On track to resume ordinary agricultural research bodies  dividends for FY17 Structured review process of capital and cost initiatives  Realisation of all hybrids resulting in a simplified capital structure 4

Half Year Fin Financial Perf rformance Change $ $ mill illion 1H 1H FY17 FY17 1H 1H FY16 FY16 $m % Sales revenue 698.2 615.0 83.2 14% Underlying EBIT 41.3 28.1 13.2 47% Underlying profit after tax 34.9 22.6 12.3 54% Reported profit after tax 38.3 24.6 13.7 56% Net debt 170.4 126.0 44.4 35% Operating cash flow (5.3) 13.9 19.2 138% Average working capital 235.5 227.5 8.0 4% Underlying return on capital (%) 30% 26% 4% 15% Underlying earnings per share (cents) 29.7 19.1 10.6 55% 5

Perf rformance by Product Margin imp Ma mprovement across pr prod oduct ct ra range Underlying profit movement $ million Product margin (0.2) (3.8) 4.7 (1.2) 0.6 5.8 6.5 34.9 22.6 1H FY16 Interest, 1H FY17 Feed and Costs Retail Agency Real Estate Financial Underlying Underlying Processing tax & NCI Products Services Services Services Profit Profit Services  Retail benefited from improved summer cropping conditions and geographical expansion  Agency uplift with continued strong livestock prices and benefit from footprint growth  Real Estate earnings improved with high farm land property turnover  Financial Services boosted by StockCo and Elders Insurance acquisitions  High input costs continue to adversely impact the overseas Feed and Processing businesses  Higher costs to drive Eight Point Plan initiatives, including acquisitions and footprint growth  Tax and non-controlling interests higher due to improved performance in partnerships 6

Perf rformance by Geography Imp mprovement across Au Australian bu business un units ts, he headwinds for or inte nternational segm gment Underlying profit movement $ million (0.4) (0.6) 2.8 (1.2) 5.4 6.4 34.9 22.6 Northern Southern Western Corporate and Interest, 1H FY17 1H FY16 International Australia Australia Australia unallocated tax & NCI Underlying Underlying Profit costs Profit  Northern Australia benefitted from high cattle prices, normalised summer retail performance, and upside from geographical expansion  Southern Australia performance driven by retail improvements and acquisitions, along with livestock agency upside from both high cattle prices and footprint expansion  Western Australia improvement through higher livestock agency earn and increased farm land real estate sales  High input costs continue to adversely impact the International margins  Higher corporate and unallocated costs from increased incentives resulting from improved profitability across the business  Tax and non-controlling interests higher due to improved performance in Australian partnerships 7

Capital Employed Retu Re turn on on capital well in n exce cess of of targeted 20% Unde nderly lyin ing Retu turn on n Cap apit ital  Underlying return on capital drivers: o Increased profitability of the Retail business o Continued strong Agency earnings, particularly Livestock, which requires minimal working capital 30.2 30 .2% 28.4 28 .4% 26 26.4 .4%  Higher working capital balances, arising from: o Increased activity in Retail Mar-16 Sep-16 Mar-17 o Increase at balance date due to higher livestock activity in the Agency business o Investment in Financial Services through Wor orkin king Cap apital provision of shareholder funding to StockCo Ma Mar-16 16 Mar-17 Ma 17 Change $ million o Higher livestock prices and increase in Retail Products 119.3 134.9 13% occupancy at the Killara feedlot Agency Services 30.2 64.2 113% o Lower Live Export balances due to reduced Financial Services (1.5) 5.6 Nm shipping activity Feed & Processing Services 48.4 54.8 13% Live Export Services 45.1 8.1 -82% Other (35.4) (36.0) -2% Working capital (ba Wor balance ce dat date) 206.1 231.6 12% 12% Wo Work rking capital (aver erage) 227.5 235.5 4% 4% 8

Operating Cash Flo Flow Positive EB Po EBITDA A of offset by by working capital mo movements  Strong EBITDA cash conversion, offset by Cash flow Working capital movements $ million increased working capital usage (4.8)  Working capital usage reflects: o Higher activity in the Agency business (22.1) leading up to balance date 44.5 (1.4) o Investment in Financial Services through (8.9) provision of shareholder funding to StockCo (16.1) (1.1) (5.3) (7.2) (2.7) 7.2 (1.8) o Increased occupancy and higher cattle prices in the Feed and Processing feedlots o Reduction in Live Export working capital Retail Real Financial Feed and Live Interest, Free Agency Operating EBITDA Other Capex balances in line with reduced shipping Products Estate Processing Export tax & Cash Services Services Cash Flow Services Services Flow dividends activity Retail Agency Real Financial Feed & Live Other Total $ million Products Services Estate Services Process Export EBITDA adjusted 18.7 24.2 6.7 4.8 3.7 0.1 (13.8) 44.5 Working capital (4.8) (22.1) (1.4) (8.9) (16.1) 7.2 (1.1) (47. 7.1) Interest, tax and dividends (2.7) (2.7) 7) Operating cash flow 13.9 2.1 5.4 (4.1) (12.4) 7.3 (17.5) (5.3) 3) 9