Transcript 2003 Full Year Results Wednesday 26 November 2003 Andrew Lindberg, Managing Director Content: • Result highlights • Financial performance (Paul Ingleby, CFO) • Business streams •

2003 Full Year Results
Wednesday 26 November 2003
1
Andrew Lindberg, Managing Director
Content:
• Result highlights
• Financial performance (Paul Ingleby, CFO)
• Business streams
• Strategy
• Integration of Landmark
• Outlook
2
Full year results reflect severe drought
conditions
• Net profit after tax of $43.9m, down 59%, whilst export volumes
down 75%
• Total operating revenue of $2.2b, down 5%
• Earnings per share of 15.9 cents, down 59%
• Final dividend of 11 cents per share
• Drought impacted wheat crop of 9.7 million tonnes, down 61%
from the previous year (24.9 million tonnes)
• Loan book peaked at $1.6b in December 2002
• Gross Pool Value of $1.3b
3
AWB improved performance despite the
drought
Growth and diversification
- Successful strategic acquisition of Landmark
Secured tonnage to Iraq
- Sold and shipped 400,000 tonnes of wheat to Iraq despite logistical challenges
- Secured funding for the outstanding 800,000 tonnes
Added value over and above the Wheat Industry Benchmark
- Achieved $329m extra value for the 2001/02 AWB National Pool, over and above
the Wheat Industry Benchmark
Ring fencing structure implemented
- Achieved highest possible rating for Pool operations
- Cost effective sustainable base for the continued operations of the Group
Global operations
- Successful first full year of operation for AWB Geneva and the Over the Counter
(OTC) desk in Portland
Cost control measures implemented successfully
- 12% reduction in total overheads (excluding depreciation)
4
Paul Ingleby, Chief Financial Officer
Content:
• Statement of financial performance
• Cashflow
• Capital expenditure
• Statement of financial position
5
Statement of financial performance
For the year
ended
For the year
ended
30-Sep-03
30-Sep-02
2,211.9
2,319.6
(5%)
(1,889.2)
(1,926.3)
2%
Borrowing costs
(70.5)
(98.6)
28%
Depreciation & amortisation
(29.9)
(14.3)
(109%)
(163.4)
(127.2)
(28%)
Operating profit before tax
58.9
153.2
(62%)
Net profit
43.9
107.2
(59%)
$million
Revenue from ordinary activities
Cost of sales
Other
Change
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Cashflow
For the year
ended
$million
Operating profit before tax
Tax paid
Depreciation & amortisation
Write down in value of PP&E (to recoverable amount)
30-Sep-03
58.9
(54.3)
29.9
7.2
Working capital changes
439.2
Increase in net cash & short term deposits
(10.2)
Purchase of non-current assets
(92.6)
Payment of controlled entities (net cash acquired)
(542.8)
Purchase of investments
(122.6)
Dividends paid
(68.5)
Net new equity
148.6
Decrease in loan book
Decrease in debt
1,063.4
856.2
7
Capital expenditure
For the year
ended
For the year
ended
30-Sep-03
30-Sep-02
Grain centres construction
71.0
53.0
33.9%
System Development &
Other Plant & Equipment
18.91
28.7
(51.9%)
$million
New Building
3.2
-
Change
n/a
Total
93.1
81.7
14.0%
Depreciation
27.41
14.3
91.6%
1 Includes Landmark
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Statement of financial position
$million
As at 30-Sep-03
As at 30-Sep-02
Assets
Cash
54.7
69.9
1,012.6
2,141.1
Intangibles
583.6
0.2
Investments
12.9
17.0
Inventories
185.4
134.1
Property, plant & equipment
300.4
170.5
Other
266.2
108.3
2,415.9
2,641.1
336.1
122.7
1,062.9
1,637.5
Provisions
52.4
41.8
Other
32.6
49.6
1,483.9
1,851.6
932.0
789.5
Receivables
Liabilities
Payables
Interest bearing liabilities
Net Assets
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Business operations
$million
For the year
ended
30-Sep-03
For the year
ended
30-Sep-02
Change
Pool Management Services
23.3
17.4
34%
Grain Acquisition & Trading
29.7
68.6
(57%)
Grain Technology
(5.1)
(3.0)
(70%)
3.5
30.3
(88%)
(29.6)
(23.6)
(25%)
PBT Sub total
21.8
89.7
(76%)
Finance & Risk Management
64.1
88.5
(28%)
Supply Chain & Other Investments
Less: Interest expense
Rural Services (Landmark)
Goodwill Amortisation (Landmark)
Corporate
5.0
-
n/a
(2.4)
-
n/a
(29.6)
(25.0)
(18%)
Operating profit before tax
58.9
153.2
(62%)
Net profit after tax
43.9
107.2
(59%)
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Pool Management Services
For the year
ended
$million (EBIT)
30-Sep-03
Pool Management Services
23.3
For the year
ended
30-Sep-02
17.4
Change
34%
Breakdown of fees paid to AWB based on export tonnage of 19.6mt for
2001 Pool and 4.5mt for 2002 Pool:
For the year ended
For the year ended
30-Sep-03
30-Sep-02
($million)
Base Fee
Out performance
Administration costs
Total Pool Mgt Services
2001/02 Pool
2002/03 Pool
Total
2001/02 Pool
Total
6.0
41.8
47.8
54.0
54.0
14.0
15.3
29.3
14.3
14.3
-
(53.8)
(53.8)
(50.9)
(50.9)
20.0
3.3
23.3
17.4
17.4
11
Grain Acquisition & Trading
$million (EBIT)
Grain Acquisition & Trading
For the year
ended
30-Sep-03
For the year
ended
30-Sep-02
29.7
68.6
Change
(57%)
• Trading activity declined due to drought
- Domestic wheat trading volumes of 2.8mmt for 2002/03, down by
40% compared to last year
- Trading volumes in other grain (sorghum, barley, canola) also
down by over 60%
• AWB Geneva executed over 1.5mmt grain sales
12
Grain Technology
$million (EBIT)
Grain Technology
For the year
ended
30-Sep-03
(5.1)
For the year
ended
30-Sep-02
(3.0)
Change
(70%)
• EBIT loss due to drought. Net expenditure of $3.3m on R&D
• R&D will continue to be a major expenditure element in
protecting future revenue streams
• Opportunity to review technology and R&D operations across
the Group with the view to consolidating the businesses and
achieving scale benefits
13
Supply Chain & Other Investments
$million (EBIT)
Supply Chain & Other Investments
For the year
ended
30-Sep-03
3.5
For the year
ended
30-Sep-02
30.3
Change
(88%)
• Receivals through the Grain Centres down by 70% due
to the drought
• Grain throughput reduced at Melbourne Port Terminal
• Chartering made a strong contribution due to:
- Favourable margins from physical freight
- Successful deployment of a long trading strategy
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Finance & Risk Management
$million (PBT)
Finance & Risk Management
For the year
ended
30-Sep-03
For the year
ended
30-Sep-02
64.1
88.5
Change
(28%)
• Impacted significantly by lower tonnage
• Level of underwritten loan draw-downs was significantly lower
than for the previous year
• Decrease in underwriting revenue by 76%
• The size of the 2002/03 harvest has also had an impact on the
average loan book, which is smaller than in the previous year
15
Landmark
$million (PBT)
Rural Services (Landmark)
For the year
ended
30-Sep-03
5.0
For the year
ended
30-Sep-02
-
Change
n/a
• PBT contribution for September is $5m, mainly due to:
- Increase in cattle numbers and average price per head
- Increase in fertiliser sales due to improving conditions and drying
paddocks
- The above increases were offset by reduced sales in merchandising
due to ongoing dry conditions in QLD and NSW
16
Corporate
$million (PBT)
For the year
ended
30-Sep-03
Corporate
(29.6)
For the year
ended
30-Sep-02
(25.0)
Change
(18%)
• Net increase of $5m due to:
- Integration and restructuring costs associated with Landmark
- Write off of system development costs
• Dividends from Futuris of $3.6m included in result
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Strategy, Integration &
Outlook
Corporate strategy
Milling &
Processing
Shipping
Finance & Risk
Mgmt.
International other grains
& commodities
International wheat
Pool Mgmt.
Acquisition &
Trading
Australian other
commodities
Supply
Chain
Australian other grains
Rural
Services
Agricultural
inputs and
technology
Value adding products and services
Vision: “Australia’s leading global manager of agricultural
commodity assets, services and flows”
End-users
Relationships
Producers
Relationships
Australian wheat
Agricultural Commodities
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Landmark integration
“Total EBIT enhancement opportunities, derived primarily from
finance growth opportunities, assessed at $5 - $10 million in
FY2004 increasing to $30 - $40 million by FY2006”
• Detailed integration plan being implemented, including consolidation
of corporate functions to optimise service efficiency and costs
• On track to achieve Year 1 financial services growth, cost and
revenue synergies
- Landmark Rural Finance Managers trained to sell Harvest Loan products
- Products already being sold and new customers serviced
- Renegotiation of supplier agreements (direct and indirect)
- Network offices are being re-branded and consolidation of network has commenced
• Cross selling opportunities for fertiliser, merchandise, insurance are
being pursued. Bundled product offerings being piloted in SA
20
AWB is well positioned for 2003/04
2003-04 NPAT forecast upgraded to $110-$120 million
(pre goodwill amortisation including one off costs)
• Crop size
- Australian wheat production rebounds to 22-24mmt
- Positive impact on all business streams
• Financial Services
- Four Pool Payment Options available this year; forecast 70% take up of
total tonnes available for these options
- Cross selling between AWB Loan products and Landmark products to
customers has commenced
• Grain Centres
- All 21 Grain Centres will be operational for the coming harvest; forecast
throughput of at least 60% capacity
• Chartering
- Pool tonnes chartered to double in 2003/04
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AWB is well positioned for 2003/04 (continued)
• Rebound in merchandise and fertiliser
- Demand for farm inputs and fertiliser expected to recover due to increased
availability of land after the heavy de-stocking during drought.
- Forecast merchandise and fertiliser earnings to be at least 10% higher
than previous year
• Slower recovery on livestock
- Due to major de-stocking during drought, it will take a few years to recover
to pre drought levels
- However, livestock prices forecast to increase by at least 5%
• Global wheat outlook
-
Major exporters to rebound in 2003/04, approx. 80% of world wheat trade
Non-traditional exporters not a threat during 2003/04
Global Stocks-To-Use remain the tightest ever in recent memory
Wheat prices reasonable
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www.awb.com.au
For more information contact:
Delphine Cassidy
Head of Investor Relations
T: +61 3 9209 2404
F: +61 3 9670 1723
E: [email protected]
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