Boundary Bend Limited ‘Australia’s premier olive company’ AGM Presentation by Rob McGavin (Executive Chairman) 25 October 2013
Today’s Program • Chairman's Presentation • Formal business of meeting • Questions • Tour of facility • Light lunch
Who are we?
Fully Vertically Integrated
Australia’s #1 olive oil company Australia’s largest and most awarded olive grower and producer of olive oil One of the largest single owners of olive groves in the world Overwhelming share of Australia’s total olive oil production from owned groves (68% in 2013) #1 and #2 market share for Australian produced extra virgin olive oil ( Cobram Estate and Red Island ) Largest exporter of Australian olive oil (65% by volume) Most awarded Australian olive oil brand including unprecedented two of three best in show awards at 2011 Los Angeles International olive show and 2013 Most successful exhibitor at New York International olive oil show. In-built organic yield growth with 36% of Boundary Bend’s groves are aged 6 years or less.
Highlights for 2013 Purchased Red Island - #2 Australian produced retail brand Contracted all of the oil produced from the Red Island grove until 2024. Won most successful exhibitor at New York international olive oil show Successful harvest of 13.5m litres Trading profit after tax of $25.8m
Financial Results Profit and Loss 2013 2012 Year ending 30 June: ($’000) ($’000) Trading profit/(loss) 28,710 (9,153) Provision of onerous contract (water lease - (5,601) termination) Goodwill and investment revaluation - - (1,260) profit/(loss) Change in fair value of olive grove - profit/(loss) 40,079 9,133 Loss on revaluation of property - (839) Income tax (expense) / benefit (15,346) - Profit/(loss) after income tax expense 53,443 (7,720) • The trading profit before tax was $28.71 million ($25.39 million after tax or $0.52 per share). • The key driver of the higher than expected trading profit was the better than expected harvest and the excellent sales growth of Cobram Estate and Red Island.
Financial Results Cashflow • For the year to 30 June 2013 we reported an operating cashflow deficit of $0.05 million (2012: deficit of $0.79 million). This was in line with forecast. • The actual cash profit from the 2013 oil production will be realized when it is sold in the following financial year (FY 2014). • Although the trading profit each year is likely to be volatile (due to variations in harvest yields from year to year), we anticipate that monthly cash trading profits will be reasonably stable. This is because sales are reasonable consistent over the whole year and in a year of a low crop (eg 2012) we only use 2012 harvest to supply customers for say 9 or 10 months in the year and in a high yielding year such as 2013 this oil will be used to supply for 14 or 15 months.
Financial Results Balance Sheet 2013 2012 Net Assets ($’000) $129,230* $75,111 Ordinary Shares on Issue (#) 48,884,320 48,839,320 $2.64 $1.54 Net assets per Share ($) • Net assets per share increased as a result of the trading profit and increase in grove valuation. • *Note Cobram Estate and Red Island are only valued at $6.35m in accounts which is at cost.
BBL Capital Structure Shares 49.03m shares on issue (as at 25 Oct 2013) (Replacement value is over $5.00 share) Assets of $232.8m Inventory, oil and receivables of $69.9m Groves and buildings $133.2m Plant and equipment $21.2m Intangibles $6.5m (mostly Cobram Estate and Red Island) Other $2m Liabilities of $103.6m Borrowings of $70.1m (mostly CBA will reduce to $65.1m after scheduled $4m repayment this year) Trade creditors of $10.8m Water lease provision of $2.8m Deferred tax liability of $15.3m (only payable if we sell the groves at valuation) Other $4.6m
Financial Results Bank Debt and Gearing (at 30 June 2013) Facility Unused ($’000) ($’000) Core Debt Facility (CBA) $45,000 - Harvest Facility (CBA) $17,000 $1,500 RedIsland Acquisition Facility (CBA) - $4,000 Total $66,000 $1,500 • The above facilities have been extended to November 2016 – $45 million for a three year term through to August 2016 – $13 million for a two year term through to August 2015; and – $4 million for a 12 month term (reviewed annually) • Financial position of the company has lead to a significantly cheaper facility pricing • The Red Island acquisition facility of $4 million will be repaid this financial year.
Financial Results Bank Debt and Gearing • During FY2014, BBL will permanently repay $4m debt (Redisland Acquisition Facility) • Gearing (external debt / tangible assets) at 30 June 2013 of 30.82%, compared to 41.72% at 30 June 2012 • The Board is comfortable with group debt levels, and feel that these levels are appropriate, given that – Nearly all Assets are tangible in nature – Future earnings outlook of the company is positive and shows increasing cash and decreasing debt – Core debt locked in for 3 years with no Cashflow or Profit covenants
Financial Results Outlook • BBL’s profitability correlates closely with its total olive oil production and the global olive oil prices (as costs are mostly fixed) • It is very hard to predict accurately all of the variables that can influence profit, particularly currency, world prices, crop levels and the retail pricing environment. However, we are currently forecasting trading profit before tax of $13.6 million for the 2014 financial year • For the 12 months to 30 June 2015 we expect crop levels to return to levels more in line with 2013 which we expect will deliver a trading profit before tax similar to the $28.7 million achieved this year. • 1 st Quarter profit $1m better than budget.
Financial Results Dividend • Fully franked dividend of 10 cents per share • Record date 31 January 2014 • Payment date of 17 February 2014 • Our forward planning and projections provide for an ongoing 10 cent dividend payable each year. This is of course subject to the performance of the company. 14
What next • We continue to assess opportunities and invest in our business. – New grove planting will continue at approximately 100,000 trees per year – Likely to increase plantings significantly from 2015 to meet expected demand – New bottling line planned for next year to cope with volumes being bottled 15
Australian Olive Industry Boundary Bend’s Groves
Location of BBL Operations Maqtec: Olive harvester manufacturing (leased site) Wemen: 833 ha grove Boundary Bend: 2,673 ha grove and processing plant Boort : 2,569 ha grove and processing plant South Bank: Marketing/Cobram Estate office (leased site) Corio – nursery, bottling, storage, laboratory and head office
BBL Business Divisions/Assets • Retail Brands: • Cobram Estate is currently the number one selling brand of EVOO in Australia by units and value with over 30% market share, and accounts for over 60% of Australian EVOO sales by volume and value. Of total domestic retail sales, Cobram currently represents 22% of total olive oil sales and 14% of total cooking oil sales • Red Island is currently the number 2 selling Australian EVOO and the number 3 EVOO overall, representing almost 5% of total cooking oil sales . • Marketing and Sales: The BBL Group is Australia’s largest marketer of Australian olive oil (approximately 80% of Australia’s total production), supplying branded, private label and bulk Australian olive oil to Australian customers. BBL exports to a number of countries including the USA, Canada, China, Spain and Italy. • Grove Operations: The BBL Group has owned and managed olive groves since 1999 and now owns 6,075 ha of irrigated olive groves, making it the largest single grower of olive oil in the world. • Processing: BBL owns and operates 2 large, modern, sophisticated processing plants that individually are both in the top 10 in the world by capacity. • Storage: BBL has approximately 11m litres of stainless steel storage all housed in purpose built sheds to control temperature stability and quality control.
BBL Business Divisions/Assets • Bottling: Our Lara facility (9.22ha freehold with 19,000m2 of high quality shedding) houses Australia’s largest o live oil filling and packaging business capable of producing 4,000 bottles per hour. • Technical Advice and Laboratory Services: Advisory services, covering all aspects of the olive industry relating to project development, technical advice and applied research. The BBL Group also owns and operates a NATA accredited olive oil laboratory located at Corio. • Nursery: A specialist olive nursery supplying olive trees to commercial growers, wholesale and retail nurseries and national chain stores. Harvesting Technology : In partnership with MaqTec in Argentina, the BBL Group has developed and sold the Colossus olive harvester in the Australian market. BBL holds the exclusive licence to manufacture, service and market the Colossus in Australia.
Key BBL milestones 30 June 1999 First funds raised from investors (approx. $6m) to fund 200 ha of olives at Boundary Bend. May 2002 First commercial harvest (80,000 litres). 1 November 2004 Commenced managing Boort Olive Grove. June 2005 First Australian company to produce over 1 million litres of oil.
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