2003 full year results wednesday 26 november 2003
DESCRIPTION
2003 Full Year Results Wednesday 26 November 2003. Andrew Lindberg, Managing Director. Content: Result highlights Financial performance (Paul Ingleby, CFO) Business streams Strategy Integration of Landmark Outlook. Full year results reflect severe drought conditions. - PowerPoint PPT PresentationTRANSCRIPT
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2003 Full Year Results
Wednesday 26 November 2003
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Andrew Lindberg, Managing Director
Content:
• Result highlights
• Financial performance (Paul Ingleby, CFO)
• Business streams
• Strategy
• Integration of Landmark
• Outlook
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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
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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)
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Paul Ingleby, Chief Financial Officer
Content:
• Statement of financial performance
• Cashflow
• Capital expenditure
• Statement of financial position
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Statement of financial performance
$million
For the year ended
30-Sep-03
For the year ended
30-Sep-02 Change
Revenue from ordinary activities 2,211.9 2,319.6 (5%)
Cost of sales (1,889.2) (1,926.3) 2%
Borrowing costs (70.5) (98.6) 28%
Depreciation & amortisation (29.9) (14.3) (109%)
Other (163.4) (127.2) (28%)
Operating profit before tax 58.9 153.2 (62%)
Net profit 43.9 107.2 (59%)
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Cashflow
$million
For the year ended
30-Sep-03
Operating profit before tax 58.9
Tax paid (54.3)
Depreciation & amortisation 29.9
Write down in value of PP&E (to recoverable amount) 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 1,063.4
Decrease in debt 856.2
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Capital expenditure
$million
For the year ended
30-Sep-03
For the year ended
30-Sep-02 Change
Grain centres construction 71.0 53.0 33.9%
System Development &
Other Plant & Equipment
18.9 28.7 (51.9%)
New Building 3.2 - n/a
Total 93.1 81.7 14.0%
Depreciation 27.4 14.3 91.6%1
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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
Receivables 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
Liabilities
Payables 336.1 122.7
Interest bearing liabilities 1,062.9 1,637.5
Provisions 52.4 41.8
Other 32.6 49.6
1,483.9 1,851.6
Net Assets 932.0 789.5
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Business operations
$million
For the year ended
30-Sep-03
For the year ended
30-Sep-02Change
Pool Management Services 23.3 17.4 34%
Grain Acquisition & Trading 29.7 68.6 (57%)
Grain Technology (5.1) (3.0) (70%)
Supply Chain & Other Investments 3.5 30.3 (88%)
Less: Interest expense (29.6) (23.6) (25%)
PBT Sub total 21.8 89.7 (76%)
Finance & Risk Management 64.1 88.5 (28%)
Rural Services (Landmark) 5.0 - n/a
Goodwill Amortisation (Landmark) (2.4) - n/a
Corporate (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
$million (EBIT)
For the year ended
30-Sep-03
For the year ended
30-Sep-02Change
Pool Management Services 23.3 17.4 34%
($million)
For the year ended
30-Sep-03
For the year ended
30-Sep-02
2001/02 Pool
2002/03 Pool
Total 2001/02 Pool
Total
Base Fee 6.0 41.8 47.8 54.0 54.0
Out performance 14.0 15.3 29.3 14.3 14.3
Administration costs - (53.8) (53.8) (50.9) (50.9)
Total Pool Mgt Services
20.0 3.3 23.3 17.4 17.4
Breakdown of fees paid to AWB based on export tonnage of 19.6mt for 2001 Pool and 4.5mt for 2002 Pool:
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Grain Acquisition & Trading
$million (EBIT)
For the year ended
30-Sep-03
For the year ended
30-Sep-02Change
Grain Acquisition & Trading 29.7 68.6 (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
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Grain Technology
$million (EBIT)
For the year ended
30-Sep-03
For the year ended
30-Sep-02Change
Grain Technology (5.1) (3.0) (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
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Supply Chain & Other Investments
$million (EBIT)
For the year ended
30-Sep-03
For the year ended
30-Sep-02Change
Supply Chain & Other Investments
3.5 30.3 (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)
For the year ended
30-Sep-03
For the year ended
30-Sep-02Change
Finance & Risk Management 64.1 88.5 (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
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Landmark
• 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
$million (PBT)
For the year ended
30-Sep-03
For the year ended
30-Sep-02Change
Rural Services (Landmark) 5.0 - n/a
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Corporate
• 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
$million (PBT)
For the year ended
30-Sep-03
For the year ended
30-Sep-02Change
Corporate (29.6) (25.0) (18%)
Strategy, Integration & Outlook
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Corporate strategy
Vision: “Australia’s leading global manager of agricultural commodity assets, services and flows”
Australian other grains
Australian other commodities
Australian wheat
International wheat
International other grains & commodities
Producers Relation-
ships
End-users Relation-
ships
Rural Services
Agricultural inputs and technology
Finance & Risk Mgmt.
Acquisition & Trading
Supply Chain
Milling & Processing
Pool Mgmt.
Val
ue
add
ing
pro
du
cts
an
d s
ervi
ces
Agricultural Commodities
In
teg
rate
d V
a lu
e C
ha i
n
Shipping
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Landmark integration
• 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
“Total EBIT enhancement opportunities, derived primarily from finance growth opportunities, assessed at $5 - $10 million in
FY2004 increasing to $30 - $40 million by FY2006”
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AWB is well positioned for 2003/04
• 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
2003-04 NPAT forecast upgraded to $110-$120 million (pre goodwill amortisation including one off costs)
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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.auFor more information contact:
Delphine Cassidy
Head of Investor Relations
T: +61 3 9209 2404
F: +61 3 9670 1723