Monday 18 May 2020 2020 Half-Year Results Investor Presentation Attached is the investor presentation in connection with the financial results for the 6 month period ended 31 March 2020. Elders CEO, Mark Allison, and CFO, Richard Davey, will deliver this presentation by webcast and simultaneous teleconference at 10.00am (AEST) today. As advised on the Company’s announcement to ASX on Thursday 14 May 2020, you can register to view and listen to the live commentary of the presentation. For details, refer to that announcement. Further Information: Mark Allison Chief Executive Officer 0439 030 905 Media Enquiries: Meagan Burbidge Senior Communications Specialist 0417 841 092 Authorised by: The Board of Elders Limited Elders Limited ABN 004 3 Elders Limited ABN 34 004 336 636. Registered Office: 80 Grenfell Street, Adelaide SA Australia 5000
Elders Limited 1H20 Results Presentation 18 May 2020
DISCLAIMER AND IMPORTANT INFORMATION Forward looking statements This presentation is prepared for information purposes only. It contains forward looking statements that are subject to risk factors associated with the agriculture industry many of which are beyond the control of Elders. Elders’ future financial results wil l be highly dependent on the outlook and prospect of the Australian farm sector, and the values and volume growth in internationally traded livestock and fibre. Financial performance for the operations is heavily reliant on, but not limited to, the following factors: weather and rainfall conditions; commodity prices and international trade relations. Whilst every endeavour has been made to ensure the reasonableness of forward looking statements contained in this presentation, they do not constitute a representation and no reliance should be placed on those statements. Non-IFRS information This presentation refers to and discusses underlying profit to enable analysis of like-for-like performance between periods, excluding the impact of discontinued operations or events which are not related to ongoing operating performance. Underlying profit measures reported by the Company have been calculated in accordance with the FINSIA/AICD principles for the reporting of underlying profit. Underlying profit is non-IFRS financial information and has not been subject to review by the external auditors, but is derived from audited accounts by removing the impact of discontinued operations and items not considered to be related to ongoing operating performance.
Agenda ▪ 1H20 Key Highlights………………………..… 4 ▪ Delivery Against Our FY20 Priorities……………. 5 ▪ 1H20 Financial Performance……………….... 6 ▪ FY20 Market Outlook…………………………..…. 12 ▪ Strategic Priorities…………………………….…… 13 ▪ Appendix.............................................................. 20
1H20 KEY HIGHLIGHTS Strong first half across key focus areas ▪ 1 lost time injury (LTI), consistent with prior year with target of zero ▪ LTI frequency rate at 2.2, compared to 1.2 the pcp Safety ▪ Enhanced emphasis on employee and community safety, health and wellbeing in COVID-19 environment ▪ An executive committee was formed in March 2020 to guide the response to COVID-19 ▪ $52.1m Underlying EBIT (+53%) ▪ $11.8m Operating Cash Flow (+$24.9m) Financial Performance 1 ▪ 17.7% Return on Capital (+0.6%) ▪ 1.9x Leverage (-0.9x) ▪ 31.5 cents Earnings per Share (+30%) ▪ Delivering earnings uplift and capital reduction through business improvement initiatives ▪ Successful integration of AIRR and Titan acquisitions and delivery of expected benefits and synergies for the first half Strategy ▪ Ongoing business development activities to expand our business, enhance diversification and fill strategic gaps in geography, products and services ▪ Development of third Eight Point Plan progressing to guide our priorities through to FY23 1 Proforma as if AASB 16 Leases did not apply to enable a more meaningful comparison with the prior corresponding period (pcp) – impacts of AASB 16 Leases on page 18 and 19 4
DELIVERY AGAINST OUR FY20 PRIORITIES Implementation of second Eight Point Plan Safety Operational Efficiency and Key Relationships Performance 1 Performance 2 Growth ▪ ▪ ▪ ▪ 1 lost time injury (LTI), consistent with $48.1m underlying NPAT, up $19.8m Worked closely with industry and Continued integration of AIRR and prior year; target is zero LTIs clients to ensure continuity of Titan to deliver EBIT growth and ▪ $56.5m underlying EBITDA, operations and agricultural supply strategic presence in key ▪ LTI frequency rate at 2.2, compared to up $20.1m chains during COVID-19 geographical areas 1.2 the pcp ▪ $52.1m underlying EBIT, up $18.1m ▪ ▪ Implemented hardship relief to clients Continued growth of new Livestock ▪ 95 days lost, compared to 3 the pcp ▪ $11.8m operating cash in flow, up impacted by the summer bushfires via and Wool in Transit (LIT/WIT) delivery ▪ guarantees associated with Elders’ Continued emphasis on employee from an outflow of $13.1m the Elders Bushfire Assistance Facility and community safety, health and and donated $0.1m to the Foundation Agency Services ▪ Underlying ROC at 17.7% up from wellbeing in COVID-19 environment for Rural & Regional Renewal ▪ 17.1% Maintained focus on footprint ▪ Continued engagement with Rural expansion through acquisitions of ▪ Leverage ratio decreased to 1.9x from RDCs, government and tertiary Rural Products and Agency 2.8x institutions to enhance our agricultural businesses and personnel, partly ▪ 15.1x interest cover ratio, up from research, development and extension attributable to fall-out from industry 10.2x initiatives through the Thomas Elder consolidation Institute ▪ ▪ Underlying EPS of 31.5 cents, up 30% Continued to extract benefits from ▪ from 24.3 cents Achieving greater productivity for Business Improvement led initiatives clients through Thomas Elder Consulting 1 Excludes AIRR: AIRR safety integration expected to occur from 1 July 5 2 Proforma as if AASB 16 Leases did not apply to enable a more meaningful comparison with the pcp – impacts of AASB 16 Leases on page 18 and 19
1H20 FINANCIAL PERFORMANCE: SUMMARY Strong performance across the board 1H20 Year-on-Year Change 1H19 Financial Metric Result ($m) Result ($m) Direction $m % Pre-AASB 16 1 925.2 732.9 192.3 26% Sales revenue Underlying EBITDA 56.5 36.4 20.1 55% Underlying EBIT 52.1 34.0 18.1 53% 48.1 28.3 19.8 70% Underlying profit after tax Statutory profit after tax 52.5 27.4 25.1 92% 201.8 204.9 3.1 (2%) Net debt Operating cash flow 11.8 (13.1) 24.9 190% Total capital 728.1 450.4 277.7 62% Underlying return on capital (%) 2 17.7% 17.1% n.a. 0.6% Underlying earnings per share (cents) 31.5 24.3 7.2 30% Leverage ratio (times) 1.9 2.8 (0.9) 32% 1 Proforma as if AASB 16 Leases did not apply to enable a more meaningful comparison with the pcp – impacts of AASB 16 Leases on page 18 and 19 6 2 Return on capital = Rolling 12 months Underlying EBIT / (working capital + investments + property, plant and equipment + intangibles (excluding brand name) – provisions)
1H20 FINANCIAL PERFORMANCE: PRODUCT Additional earnings from AIRR acquisition and outperformance across most products and services ▪ Change in product margin ($million) 1, 2 Wholesale Network is up with AIRR acquisition contributing $17.4 million in gross margin Product margin 0.9 0.8 3.7 2.4 ▪ Retail Products gross margin boosted by recent winter crop 8.0 12.8 confidence and Titan, partially offset by poor summer crop season 5.1 1.7 17.4 ▪ Agency upside mostly in Livestock margin, primarily driven by high prices for both cattle and sheep 48.1 ▪ 28.3 Real Estate gross margin favourable to the pcp predominantly due to increased broadacre turnover ▪ Financial Services margin is up due to acquisition of Livestock in Transit (LIT) delivery warranty products, offset by lower Rural Bank Retail 1H19 Wholesale Agency Real Estate Financial Feed and Other Costs Interest, 1H20 Underlying Network 3 Products Services Services Services Processing Tax & NCI Underlying gross margin in line with the new distribution agreement Profit Services Profit ▪ Product margin by year ($million) 1, 2 Feed and Processing Services upside mostly from increased feed and improved commodity procurement 73.0 70.8 67.9 62.8 1H19 1H20 ▪ Other includes the accrual of the new network incentive program, which commenced this financial year 19.0 18.6 17.4 17.8 16.6 8.8 7.9 ▪ Costs up on the pcp due to AIRR acquisition, geographical footprint 0.0 0.3 growth and additional corporate initiatives, offset by savings from (3.4) new Rural Bank distribution agreement Wholesale Retail Agency Real Estate Financial Feed and Other Network 3 Products Services Services Services Processing Services 1 Proforma as if AASB 16 Leases did not apply to enable a more meaningful comparison with the pcp – impacts of AASB 16 Leases on page 18 and 19 2 Acquisition earnings are reflected within product margins 7 3 Wholesale Network represents AIRR margin
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