2021 FULL YEAR RESULTS PRESENTATION - HOTCOPPER
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Monday, 15 November 2021
2021 Full Year Results Presentation
Attached is the Elders Limited (ASX:ELD) presentation of the financial results for the 12 month period
ended 30 September 2021.
Further Information:
Mark Allison, Chief Executive Officer, 0439 030 905
Media Enquiries:
Tom Russo, Executive General Manager, Real Estate, Brand and Communications, 0409 873 837
Authorised by:
Peter Hastings, Company Secretary
Elders Limited ABN 34 004 336 636.
Registered Office: Level 10, 80 Grenfell Street, Adelaide SA Australia 5000
15 November 2021 Presented by Mark Allison CEO Tania Foster CFO
DISCLAIMER AND IMPORTANT INFORMATION
The material in this presentation has been prepared by Elders Limited and is general background about Elders' activities and performance at the date
of this presentation. The information is in summary form, does not purport to be complete and where derived from publicly available sources has not
been independently verified. Information in this presentation is not advice or a recommendation to investors or potential investors in relation to
holding, selling or buying Elders shares and does not take into account a reader's investment objectives, financial situation or needs.
Forward looking statements
This presentation is prepared for informational 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 will 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.
2
Agenda
Business Update
Financial Results
Business Performance
Growing our Business
Market Outlook
Questions
3
FY21
Highlights
PEOPLE CUSTOMERS COMMUNITY SHAREHOLDERS
0.7 #1 $0.3m 96.7 cents
LTIFR most trusted to RFDS through underlying earnings
agribusiness brand renewed sponsorship per share
78% 53 $2.1m 42.0 cents
employee net promoter sponsorships and dividends
engagement score donations per share
41% +23 840 43%
female diversity1 additional locations local community dividend
sports teams and payout ratio
+256 For Australian events sponsored
FTE Agriculture
campaign launch
1Excludes China, Indonesia and casuals
4
FY21 Financial Summary
SALES GROSS MARGIN EBIT
$2.5b $529.4m $166.5m
+22% +21% +38%
from $2.1b from $437.5m from $120.6m
COSTS COST TO EARN RATIO RETURN ON CAPITAL
Costs / gross margin EBIT/ avg net operating assets
$362.9m 69% 22.5%
+15%
from $316.9m from 72% from 18.9%
CASH CONVERSION LEVERAGE RATIO GEARING RATIO
Operating cash flow / NPAT Average net debt / EBITDA Average net debt / closing equity
94% 1.4 times 38.6%
from 132% from 2.0 times from 47.2%
5
Comparison vs FY20
Safety, Health &
Well-Being
Lost time injury (LTI) 3
lost time injuries
in FY21
-16%
9
6
16%
5
reduction in lost time
Average injuries over the last five
3
years with LTIFR at 0.7
2
for the year
FY17 FY18 FY19 FY20 FY21 3
critical risk teams LEXIE HICKS
Lost time injury frequency rate (LTIFR) established to reduce the RURAL PRODUCTS SALES REP – BLACKALL, QLD
risks of livestock handling,
remote driving and “Incorporating safety into our day-to-day activities is a
manual handling real priority in my branch.
-8.5%
“We want to provide our customers with a safe
2.2 environment when they visit us, and we want our
$1.9m workplace to be safe for staff as well.
invested in safety capital “It’s an important part of working here at Elders.
1.0 1.0 expenditure
0.5
0.7
“ We are focusing on creating a safe
space with clear directions, which
FY17 FY18 FY19 FY20 FY21
allows the work to flow not only
safely but efficiently.
” 6
Sustainability
We provide our customers We support our people We do our part to look We operate ethically and
and clients with the goods and the industries and after the environment and to the highest standard
and services they need communities in which we animals in our care
operate
▪ Most trusted agribusiness brand ▪ $2.1 million in sponsorships and Targets set to reduce our Scope 1 and 2 ▪ Publication of our first Modern Slavery
among regional Australians donations, supporting local greenhouse gas emissions2: Statement
communities, charities and industry ▪ 100% renewable electricity in all
▪ Launched Elders Carbon Farming Australian sites by 2025 ▪ Progressed alignment of climate-
advisory service ▪ 535 new hires ▪ 50% reduction in Scope 1 and 2 related disclosures with the Taskforce
emissions intensity (tCO2e/$m on Climate-related Financial Disclosures
▪ Over 40,000 agricultural chemical ▪ Record scores achieved on employee revenue) by 2030, against a baseline (TCFD) Recommendations
containers diverted from landfill engagement (78%) and enablement year of 2021 (subject to commercially
(79%)1 viable technology being available to
address feedlot cattle emissions)
▪ Net zero Scope 1 and 2 emissions by
2050ᶟ
12021 Korn Ferry Elders Employee Effectiveness Survey
2Scope 1: direct emissions from owned or controlled sources. Scope 2: indirect emissions from the generation of purchased electricity
7
3Targets based on Elders’ financial year ending 30 September
8
Ready
FY21 Financial Performance: Summary
Strong performance across our key metrics
Key metrics ($m) FY21 FY20 Var %
Sales revenue 2,548.9 2,092.6 456.3 22%
Gross margin 529.4 437.5 91.9 21%
Costs 362.9 316.9 46.0 15%
Earnings before interest and tax 166.5 120.6 45.9 38%
Underlying net profit after tax 151.1 107.7 43.4 40%
Statutory net profit after tax 149.8 122.9 26.9 22%
Return on capital (%)1 22.5% 18.9% 3.6% n/a
Net debt 216.9 237.5 (20.6) 9%
Leverage ratio (times) 1.4 2.0 (0.6) (30%)
Operating cash flow 142.2 142.3 (0.1) (0%)
Underlying earnings per share (cents) 96.7 69.9 26.8 38%
Dividend per share (cents) 42.0 22.0 20.0 91%
1Returnon capital = Rolling 12 months Underlying EBIT / (working capital + investments + property, plant and equipment + right of
use assets + intangibles (excluding Elders brand name) – DTL on acquisitions – lease liabilities – provisions) 9FY21 Financial Performance: Summary
Consistent growth over the last five years
Sales Revenue ($m) EBIT ($m)
2,549 167
+12.7% +23.8%
2,093 121
1,599 1,626 71 75 74
1,583
FY17 FY18 FY19 FY20 FY21
FY20 to FY21 gross margin uplift contribution
FY17 FY18 FY19 FY20 FY21 22% 48% 30%
Acquisitions Organic Market
SG&A ($m) vs Cost to Earn (%) Underlying Earnings per Share (cents)
97
+8.0% 363 +17.2%
317
280 278 70
267
51 55 53
72.0%
79.0% 79.0% 79.0% 69.0%
FY17 FY18 FY19 FY20 FY21 FY17 FY18 FY19 FY20 FY21
10FY21 Financial Performance: Product
Favourable performance across all products, with the exception of Feed and Processing businesses
Change in product margin ($m)
RETAIL FINANCIAL
▪ growth and improved market
PRODUCTS ▪ increased sales activity +22% SERVICES
conditions in our Insurance
FY20 U’NPAT 107.7 2020 2021 ▪ improved summer and winter
business
cropping driving demand
▪ full year of new livestock funding
▪ backward integration strategy
Retail product
48.1 175.5 223.6
Products
Wholesale 44.0 61.2 FEED &
17.2 WHOLESALE
Products ▪ full year of AIRR acquisition PROCESSING
PRODUCTS
▪ sales growth in line with seasonal SERVICES ▪ pricing pressures on feeder cattle
Agency 127.2 140.0 conditions +34% on margin at Killara Feedlot
12.8
Services ▪ further uptake from the Elders ▪ lower cattle volumes sold (-8%)
network
Real Estate 38.2 50.7
12.5
Services
+43.4
(+40%) AGENCY COSTS
Financial 37.1 41.3
4.2 SERVICES ▪ high livestock prices ▪ more people
Services
(cattle +31%, sheep +9%), partially ▪ increased performance incentives
offset by reduced volumes ▪ acquisitions
Feed & Processing 15.5 12.6
Services
(2.9) ▪ improved seasonal conditions ▪ Systems Modernisation
Costs (46.0) (316.9) (362.8)
REAL ESTATE INTEREST, TAX
SERVICES ▪ residential turnover (+69%) & NCI1
Interest, Tax ▪ historically low interest rates
(2.5) (12.9) (15.4)
& NCI ▪ farmland turnover (+28%)
▪ B&W Rural EBIT outperformance
▪ ongoing network expansion
(up 113%)
▪ favourable market conditions
FY21 U’NPAT 151.1 107.7 151.2
Underlying net profit after tax is calculated as total comprehensive income for the period (owners of the parent), add/subtract other comprehensive profit/(loss), add/subtract non-underlying items
1NCI – Non controlling interests 11Ready
FY21 Financial Performance: Gross Margin
A diversified business model across product categories
+10.1% Total Gross Margin
+35.7% 529
438
140.0
130.4
127.2
FY20 FY21
96.1
FY20
FY21
+39.1%
+32.7%
+24.9% 61.2 +11.3%
+20.1% 50.7
38.1
+3.6% 44.0
38.2
41.3
37.1
30.5 32.3 -18.7%
26.9
22.0 22.8
15.5
12.6
AgChem Fertiliser Animal Health Other Retail Wholesale Agency Real Estate Financial Feed &
Products Services Services Services Processing
Retail Products Services
7.0% 6.0% 4.0% 10.0% 8.0% 2.0%
12.0%
25.0% 26.0%
Pie charts represent percentage of total FY21 margin
12FY21 Financial Performance: Geography
Strong growth across all geographies, with dispersion of our EBIT reducing risk
Western Australia Queensland & 10.0%
26.0%
Northern Territory
+35.7% +53.6%
55 22
40 14
FY20 FY21 FY20 FY21
South Australia New South Wales
15.0% 16.0%
+23.7% +35.3%
32 34
26 25
FY20 FY21 FY20 FY21
Tasmania 3.0% Victoria & Riverina
30.0%
+13.2% +28.1%
6 63
5 49
FY20 FY21 FY20 FY21
Excludes Corporate Overheads 13FY21 Financial Performance: Costs
Investment in people and strategic initiatives driving increased costs
PEOPLE SYS MOD & IT ▪ costs associated with first wave of
FY20 Costs 316.9 2020 2021 ▪ investment in network growth +116 COSTS Systems Modernisation
FTE
implementation
▪ additional Corporate Services +23
People 20.0 187.9 207.9 FTE
▪ financial and reporting software and
▪ increased incentives
program upgrades
Acquisitions 15.1 23.4 38.5
ACQUISITIONS INSURANCE
▪ additional activities, assets and
Property &
(0.2) 33.8 33.6 ▪ AIRR full year impact, increased
Lease Costs turnover
FTEs (29), incentives and more
▪ market related insurance premium
warehouses
increase
Depreciation &
Amortisation
1.3 8.0 9.3 ▪ livestock prices and turnover driving
▪ 9 acquisitions, including 88 FTEs
higher debtor insurance
+46.0
Motor Vehicle 0.2 21.6 21.8
(+15%)
PROPERTY & ADVERTISING &
Sys Mod & LEASE COSTS ▪ includes net property lease SPONSORSHIP ▪ marketing and “For Australian
4.0 12.0 16.0 expenses and other property costs Agriculture” brand campaign
IT Costs
▪ small savings in property ▪ sponsorships and donations,
Insurance 1.5 5.3 6.8 maintenance costs including to local communities
Advertising &
1.6 4.7 6.3
Sponsorship DEPRECIATION OPERATING &
& ▪ increased capital expenditure, OTHER ▪ includes consulting, telephone,
Operating & AMORTISATION
2.5 20.2 22.7 focused on safety and sustainability travel and entertainment,
Other Expenses
professional service fees and other
▪ amortisation on acquisitions expenses
FY21 Costs 362.9 316.9 362.9
14FY21 Financial Performance: Capital
Return on capital increasing
Return on Capital (%) Average Working Capital ($m)
+3.6 +85.0
22.5% 487.7
402.7
288.6
3 Year Avg 19.9%
18.9%
18.2%
FY19 FY20 FY21 FY19 FY20 FY21
Trade & Other Receivables ($m) Inventories1 ($m) Trade & Other Payables ($m)
735 378 668
677
602 301 321
574 524 509
481 242 413
433 376
179 181 324
FY19 FY20 FY21 FY19 FY20 FY21 FY19 FY20 FY21
Average Balance Date
1Including Livestock 15FY21 Financial Performance: Cash Flow
Growth in debtors in line with sales activity; debtor days consistent
Operating cash flow ($m) Cash conversion (%)
244.4 -38%
(1.0)
38.0 132%
94%
40.9
166.5 (133.0)
(35.1) 142.2
FY20 FY21
143.2
(77.3)
Working Capital to Sales (%)
-0.1%
EBIT Depreciation Other non Interest, tax EBITDA (Inc)/dec in (Inc)/dec in Inc/(dec) in Other Operating 19.2% 19.1%
& amortisation cash items and dividends adjustment trade and inventories trade and movements1 cash flow
for non other other payables
cash items receivables
Key metrics ($m) FY21 FY20 Var
FY20 FY21
Underlying EBITDA adjustment for non cash items 244.4 187.7 56.7
Movements in assets and liabilities (102.2) (45.4) (56.8) Net Cash Flow ($m)
Cash from operating activities 142.2 142.3 (0.1) -46.1
(-106%)
Investing cash flows (35.5) (123.1) 87.6 43.4
Financing cash flows (109.3) 24.2 (133.5)
Net cash flow (2.7) 43.4 (46.1)
(2.7)
FY20 FY21
1Other movements includes other non cash movements in provisions, balances acquired and other non cash movements 16FY21 Financial Performance: Net Debt
Debt reducing, improving leverage, interest cover and gearing ratios
Net debt, balance date ($m) Leverage ratio Interest cover Gearing ratio
Average net debt / EBITDA EBITDA / net interest Average net debt / closing equity
-20.6
+6.1
237.5
216.9 -0.6 -8.6
Including AASB 16
2.0 23.6 47.2
Borrowings 183.7 154.3 38.6
1.4 17.5
Lease 110.7
104.5
Liabilities
Cash 50.7 48.1
FY20 FY21
FY20 FY21 FY20 FY21 FY20 FY21
Leverage ratio Interest cover Net worth
Net debt, average ($m) 3.5 times >$250 million
-16.9 -2.7 +31.5 +532.0
Banking covenants1
317.6 300.7 2.5
35.0 782.0
Borrowings 221.8 230.0
250.0
Lease 3.5
112.9 95.2
Liabilities -0.2
17.1 24.5 Covenant FY21 Covenant FY21 Covenant FY21
Cash
FY20 FY21
Undrawn facilities at 30 September 2021 was $293 million out of total committed facilities of
$450 million and significant headroom in our banking covenants
1Calculated pursuant to definitions in group syndicated facilities, with AASB 16 Leases and debtor securitisation facility as material exclusions 17Dividend & Capital Management
Earnings and dividends per share continue to grow
Underlying earnings per share (cents) Dividends per share (cents)
97 42
+17.2% Final
70
Interim +53.8%
22
55 53
51 22
18 18
13
9 9
8 20
8 9 9 9
0
FY17 FY18 FY19 FY20 FY21
FY17 FY18 FY19 FY20 FY21
Franking credit balance ($m) Dividend Payout Ratio (%)
25 43%
20 34%
33% 31%
16
13
11
14%
FY17 FY18 FY19 FY20 FY21 FY17 FY18 FY19 FY20 FY21
Note: Prior year dividends were franked at 100%. FY21 dividends were partially franked at 20%. 18Tax Losses Expected to be Used by FY24
Elders will report income tax expense from FY22 onwards
Tax losses Deferred tax asset (tax losses) $m
▪ Elders estimates it will utilise all tax losses 159 Utilised Carried forward
recognised as a Deferred Tax Asset by FY24
49
Change in reporting disclosure
▪ In FY21 (and prior years) the recognition of the tax 110 110
benefit has been reported as a tax credit offsetting
prima facie tax expense
FY21 FY22
▪ As a consequence the tax benefit has been treated
as “non-underlying” profit to avoid artificially inflating Impact of tax on NPAT ($m)1
underlying profit
Tax impact -45
▪ From FY22 onwards tax expense will be recognised NPAT with 30% tax expense 150
in the profit and loss. This is consistent with the 108 45 105
guidance provided by AASB 112. However, no tax is 0
32
forecast to be paid until FY24
105 105
76
▪ Elders will cease the practice of reporting tax
expense (benefit) as non-underlying earnings, tax FY20 FY21 FY21 (incl tax)
expense will be reported as underlying earnings
Impact of tax on EPS ($m)1
Impact on financial metrics Tax impact -28.8
EPS with 30% tax expense
▪ The impact of these accounting changes is a reported 95.8
reduction in statutory NPAT ($45m) and EPS (28.8 28.7
69.9 67.0
cents per share) based on FY21 performance 0.0
21.0
67.1 67.0
48.9
FY20 FY21 FY21 (incl tax)
1Assumes 30% tax expense on NPAT
1920
Rural Products
Gross margin improving year on year via our backward integration strategy
Sales Revenue ($m) Gross margin ($m) vs (%)
+390 +65
+24% +30%
2,027 285
1,637
220
13.4% 14.1%
FY20 FY21 FY20 FY21
Elders own brand vs third party1 ($m) FY21 gross margin by category (%)
Other Retail
8% Wholesale Products
Animal Health
21%
11%
26%
24%
13% Fertiliser
74%
76%
46%
AgChem
FY20 FY21
Own Brand Third Party Suppliers
1Excludes product categories where Elders does not sell own brand products
21Agency Services
Cattle and sheep volumes down as a consequence of re-stocking
Cattle Volumes (million) Sheep Volumes (million)
+1.3% +1.0%
1.8 9.9 9.6
1.7 9.5 9.4
1.5 1.6 9.0
1.5
FY17 FY18 FY19 FY20 FY21 FY17 FY18 FY19 FY20 FY21
Wool Bales (‘000) AuctionsPlus Volumes (million)
+1.5%
371 371
349
+12.3% 1,328
289
263
977
835
772 736
FY17 FY18 FY19 FY20 FY21 FY17 FY18 FY19 FY20 FY21
22Real Estate Services
Strong demand for farmland and residential property
Farmland sales ($b) Residential sales ($b)
1.60 1.46
+12.1%
+21.4%
1.26
1.12
1.01 1.05
0.87
0.67 0.71 0.73
FY17 FY18 FY19 FY20 FY21 FY17 FY18 FY19 FY20 FY21
Properties under management (‘000) Gross margin by category ($m)1
Farmland Residential Property Management Other
+6.1%
10.5
9.3 9.3 +12.3% 50.7
8.3 8.3
38.2 18.8
31.9 33.6 34.3
14.7
13.1 12.5 12.8
19.8
9.8 9.9 11.7
9.2
10.4 11.4 11.8 -0.1 12.4 14.0
-0.7 -1.9
-0.9 -0.2
FY17 FY18 FY19 FY20 FY21 FY17 FY18 FY19 FY20 FY21
1Other includes: franchise revenue, water broking activities, Elders Home Loans and other earnings and direct costs 23Financial Services
Market conditions support growth in Insurance products
Rural Bank Loan and Deposit Book ($b) StockCo book ($m)
+3.2%
+5.8% 98.0
82.1
78.1
71.7
Loan 3.0 3.0 3.0 3.0 60.7
2.8
book
Deposit
(1.6) (1.6) (1.7) (1.7) (1.6)
book
FY17 FY18 FY19 FY20 FY21 FY17 FY18 FY19 FY20 FY21
Livestock Funding balance ($m) Gross written premiums ($m)
+159.9% +8.3% 899.8
781.8
16.9 737.3
653.5 689.9
New in FY20
6.5
0.0 0.0 0.0
FY17 FY18 FY19 FY20 FY21 FY17 FY18 FY19 FY20 FY21
Principal positions are held by Rural Bank, StockCo and Elders Insurance Underwriting Agency 24Feed and Processing Services
Sustained higher cattle prices impacting number of cattle sold
Killara Feedlot (cattle sold 000s) Elders Fine Foods sales ($m)
+3.9%
63.2 65.1 +8.1% 17.8
60.2
56.0
51.6 13.7 14.4
13.0
10.9
FY17 FY18 FY19 FY20 FY21 FY17 FY18 FY19 FY20 FY21
▪ Sustained high cattle prices and seasonal conditions ▪ Despite higher costs of inputs for beef products,
lowering the number of cattle sold at Killara Feedlot in Elders Fine Foods sales improving on prior year due
FY21 compared to previous years to COVID-19 recoveries in the market
▪ Supply chain challenges have been partly mitigated by ▪ Extended supply chain difficulties and on-going
early procurement through Killara’s backgrounding COVID-19 constraints in China have impacted the
operations business
2526
Compelling shareholder returns Industry leading sustainability outcomes Most trusted Agribusiness brand
OUR 2023 5-10% EBIT and EPS growth through the cycles across health and safety, community, environment in rural and regional Australia
AMBITION at 15% ROC and governance
OUR
BUSINESS
UNITS R U R AL AG E N C Y R E AL E S T AT E F I N AN C I A L T ECHNIC AL FEED &
PRODUCT S SERVICES SERVICES SERVICES PROCESSING
1 Win market share across all 2 Capture more gross margin 3 Strengthen and expand our 4 Optimise our feed 5 Develop a
OUR products, services and geographies in Rural Products through service offerings, including and processing sustainability
STRATEGIC through client focus, effective sales optimised pricing, backward Livestock and Wool Agency, businesses in Killara program that is
and marketing and strategic integration and supply chain Real Estate, Financial and Feedlot and Elders authentic and
PRIORITIES acquisitions efficiency Tech Services Fine Foods industry leading
OUR 6 Systems Modernisation Program – invest in best of breed 7 Attract, retain and develop the best people 8 Maintain unflinching financial discipline
solutions to improve customer experience, drive process and and provide a safe and inclusive working and commitment to cost and capital
ENABLERS administration efficiency and better accommodate change environment efficiency
OUR VALUES
CUSTOMER
INTEGRITY FOCUSED AC C O U N T AB I L I T Y T E AM W O R K I N N O V AT I O N
27Delivering on our Eight Point Plan (8PP)
1 5 ▪ interim targets to 2025 and 2030, net zero emissions by 2050
DEVELOP A
WIN
MARKET SHARE ▪ nine acquisitions SUSTAINABILITY ▪ most trusted agri-business brand
PROGRAM ▪
▪ focus continues on recruitment of high quality personnel and over 40,000 agricultural chemical containers collected
building new client relationships ▪ $2.1m in sponsorships and donations
▪ increased our points of presence by 23 locations ▪ publication of our first Modern Slavery Statement
▪ progressed alignment of climate-related disclosures
2 6
CAPTURE MORE SYSTEMS ▪ $18.9m wave 1 capital and operating expenditure
GROSS MARGIN IN MODERNISATION
RURAL PRODUCTS ▪ backward integration strategy via AIRR and Titan AG businesses PROGRAM ▪ enhanced customer experience
▪ preferred supplier ranging ▪ cyber security and cloud technologies
▪ enhanced pricing and margin management ▪ mobile and digitally enabled employees
▪ operational efficiency
3 7
STRENGTHEN AND ▪ new product lines and brands ▪ operating safely
EXPAND OUR SERVICE ▪ growth in Financial Services offerings, including livestock funding PEOPLE AND SAFETY
OFFERINGS ▪ $1.9m investment in safety capex
product and Livestock in Transit delivery warranty
▪ 256 net additional people to support growth
▪ Elders Carbon Farming launched
▪ highly engaged (78%) and enabled (79%) employees
▪ investment in solutions to improve customer productivity and
efficiency ▪ improving diversity
4 8
▪ developments in technology, innovation and expansion at Killara COST AND CAPITAL
OPTIMISE OUR FEED
AND PROCESSING Feedlot EFFICIENCY ▪ 22.5% return on capital, up on 15% 8PP target
BUSINESSES ▪ maintaining a target of 100% occupancy at Killara to drive ▪ 69% cost to earn ratio, improved 3%
efficiency and throughput ▪ 1.4 leverage ratio, down 0.6 times
▪ on track to achieve key safety, environmental and sustainability ▪ 23.6 interest cover, up 6.1 times
targets at Killara
28Our Ambition
#1 most trusted agri brand and clients who promote us
Elders is the most trusted agribusiness brand in regional Australia Over half our client base are active promoters of our business
Agribusiness unprompted net trust scores, July 2021 vs. July 2020 1,2 Net promoter score
+7
15 53
+5
46
10
Jul-20 Jul-21 Q4 2020 Q4 2021
Key findings of our trust scores Key drivers of our NPS – what our promoters are saying
Trust score ~3x> than next most trusted brand Excellent service
Largest improvement vs. peers in 2021 Understand individual needs
Friendly staff
Product range and knowledge
Source: Roy Morgan Elders Brand Trust Research, July 2021 and July 2020; 2021; Internal NPS survey of clients who have transacted with Elders during relevant quarter
1 Net trust calculated as % of survey respondents who trust brand less % of respondents who distrust brand
29
2 Elders was most trusted brand in the unprompted & prompted trust categories; Unprompted lower than prompted, as it asks respondents to name brands they trust without a prompting listFor Australian Agriculture Digital Interactions
Launched new campaign anchored by four key pillars Increase across our websites
& social media platforms
Brand
Our renewed investment in the
brand supports our improved
trust scores and growth, while ~700k
our clients are becoming Users of
more engaged Eldersrural.com.au
in FY21
+18% vs. last year
Activated across physical field days, social and paid
media including TV
68.6k
Followers across social media Platforms
+13% vs. last year
30Strengthening our Service Offerings
More branches, more people, more agronomists supporting our clients
More points of presence More FTEs More agronomists
3.4% CAGR
560 10.0% CAGR 2,294 10.9% CAGR 183
524 537
2,038
1,897 148 153
FY19 FY20 FY21 FY19 FY20 FY21 FY19 FY20 FY21
Growth: 2.5% 4.3% Growth: 7.4% 12.6% Growth: 2.8% 19.6%
Points of presence: Includes Elders Owned Branches, branded operating facilities (e.g. saleyards, warehouses, depots) AIRR Owned Branches, Elders Owned Real Estate and Real Estate / Insurance
franchises, wool handling centres, Feed & Processing Services locations, head offices (including states)
FTE: includes permanent and fixed-term employees and China and Indonesia; excludes casuals and contractors 31
Agronomists: includes Graduate Agronomists, Agronomists and Senior AgronomistsStrengthening our Service Offerings
Ongoing investment in innovative solutions to improve customer productivity and efficiency
Innovation Digital Research Strategic Partnerships
▪ Elders’ new Carbon Farming Program ▪ Launch of the Struan and Kybybolite ▪ Genomics ▪ Charles Sturt University sponsored
launched in 2021 Best Practice Demonstration Farm tertiary training
virtual tour ▪ Machine learning and crop management
▪ Launch of new products and brands ▪ Australian Research Council (ARC)
via Titan AG, Pastoral AG and Hunter ▪ Demand and adoption of AgTech ▪ Meat and Livestock Australia Research Hub for Smart Fertiliser
River, and new Optifert speciality Co-Innovation
fertiliser product range ▪ Growth in online livestock selling via ▪ University of Adelaide on research and
AuctionsPlus ▪ De-risking broadacre cropping options extension opportunities
▪ Expansion of seed genetics business, - 37% and 27% growth in sheep for Northern Queensland
EPG Seeds, formerly known as Elders and cattle sales
Plant Genetics - 48% increase in user registrations ▪ Deep ripping to improve lentil production
and 78% increase in website in acid soils
audience
- range of new features including ▪ Faba bean nutrient omission trial
livestreaming, enhanced filters,
search functionality and real-time
estimates
32Systems Modernisation Program
Embarking on a Systems Modernisation program aimed at delivering a more customer centric, cost efficient and enabled team
Wave
Internal financial and people foundation
1
$18.9m Wave
2 Supply chain and in-branch retail
Wave 1 Investment
(Capex + Opex)
Wave
3 Livestock and trading settlements
Enhanced customer
experience
Wave
4 New ERP is the source of truth
Cyber security and
cloud technologies
Wave
Online retail
Mobile and digitally 5
enabled employees
Wave
Continuous improvement
Operational efficiency 6
33Female non-executive
A Highly Engaged & Directors
Diverse Workforce
60%
Engagement1 (%)
+2 Women in
76 76 78 management positions
18% KAREL WALKER
Rural Products Sales Manager
Karel has never forgotten how tough it was when she
FY19 FY20 FY21
took on her first merchandise sales job at Elders in
Female Lake Grace back in 2005.
team leaders “Back then, I was a young mother from a farming
background with experience in banking, so I saw Elders as
Enablement1 (%) a good career opportunity and quickly learned how
important the company was to the local community.
+2 35%
77 79 “18 months later, I took on the very challenging role of
76
branch manager, adding the livestock agency, insurance,
real estate, banking in those days to the merchandise
functions and a much bigger area to look after.
Female diversity2 “I was also responsible for eight staff at Lake Grace and
two more employees at a satellite branch at Newdegate.
FY19 FY20 FY21
41% “ And despite all the change at Elders in those
days, the training was excellent and I had a
12021 Korn Ferry Elders Employee Effectiveness Survey
2Excludes China, Indonesia and casuals
lot of opportunities to develop my career.
”
3435
ABARES September Outlook Update
Improved summer cropping expected in 2021-22 to support Rural Products margin growth; livestock prices remain high as rebuild continues
Beef & Veal Sheep Wool Cropping
Average saleyard prices (c/kg) Average saleyard prices (c/kg) Eastern Market Indicator (c/kg) Area planted to summer crop (‘000 ha)
+3.1% +0.9% +16.4% +23.7%
682 703 784 791 1,390 1,289
1,194 1,042
2020-21 2021-22 2020-21 2021-22 2020-21 2021-22 2020-21 2021-22
Production (kt) Production (kt) Sheep shorn for wool production (kt) Area planted to summer crop (kt)
+7.2% +8.1% +5.8% +32.8%
1,922 2,061 629 680 293 310 4,436
3,341
2020-21 2021-22 2020-21 2021-22 2020-21 2021-22 2020-21 2021-22
Favourable weather conditions expected to Flock rebuild in eastern states expected to Favourable climatic conditions across Australia Favourable spring outlook, high expected returns
support continued herd rebuilding, with strong continue, following high rainfall in sheep- will promote sheep flock rebuilding as global and availability of irrigation water support positive
prices to put pressure on our Killara Feedlot producing regions economic recovery drives increased retail activity cropping outlook
business and demand for natural fibres
ABARES Australian Agricultural Outlook: September quarter 2021
https://www.agriculture.gov.au/abares/research-topics/agricultural-outlook 36Market Outlook
FY22 has started positively with livestock prices remaining elevated and favourable summer crop outlook
▪ positive summer crop outlook, with area planted forecast to rise 24% to
1.3 million hectares1
▪ second year of earnings and continued uptake of our livestock funding
▪ current 2021-22 winter crop expected to produce 54.8 million tonnes 1, product forecasted to provide margin upsides
which supports continued optimism for the following winter crop season
next year ▪ continued growth in our Livestock in Transit product, promoted by further
customer opt ins to the add-on product
▪ active management underway to mitigate global supply chain constraints
RURAL FINANCIAL ▪ favourable market conditions to support demand for our Insurance and
▪ completion of Sunfam acquisition to grow presence in the Bundaberg other Agri Finance offerings
PRODUCTS region, as well as expanding our operations around irrigation design and
SERVICES
fabrication
▪ positive start and strong demand from customers with increases in
▪ prices for beef and lamb in 2021-22 are anticipated to remain high in the
margins for both domestic and export supply chains despite ongoing
medium term (up year on year 3% to 703c/kg and 1% to 791c/kg
high feeder cattle prices
respectively2) driven by limited supply and strong domestic re-stocker
demand
▪ backgrounding and irrigated farming operations are expected to support
the Killara supply chain to ensure high utilisation and throughput at the
▪ continued wool market recovery expected in 2021-22, with a 16%
increase year on year in EMI to 1,390c/kg2, driven by increased demand FEED AND feedlot
AGENCY in China and Europe, which is supported by favourable conditions for PROCESSING ▪ investment in environmentally sustainable and growth initiatives to drive
SERVICES production
SERVICES efficiencies at Killara
▪ high levels of demand for farmland is expected to continue, fuelled by ▪ costs are expected to increase in line with sales growth while
favourable commodity price outlook, low interest rates and good maintaining a stable cost to earn ratio
seasonal conditions
▪ footprint and acquisition growth, continued investment in our Eight Point
▪ significant price appreciation in the residential property market across Plan and the first phases of our Systems Modernisation program
REAL ESTATE Australia and strong demand for rental properties anticipated to COSTS &
continue3 ▪ continued low interest rate environment
SERVICES CAPITAL
1Department of Agriculture, Water and the Environment, ABARES Australian Crop Report: September edition
2Department of Agriculture, Water and the Environment, ABARES Agricultural Outlook: September quarter 2021 37
3Core Logic Residential Real Estate Property Data: September 202138
FY21 Business Model
Diversification by product, service, market segment and geography
RURAL PRODUCTS FEED & DIGITAL AND
REAL ESTATE FINANCIAL
AGENCY SERVICES PROCESSING TECHNICAL
WHOLESALE SERVICES SERVICES
RETAIL PRODUCTS SERVICES SERVICES
PRODUCTS
Fee for Service
Rural Products Rural Products Livestock Farmland Agri Finance Killara Feedlot
(170+ agronomists)
Fertiliser Pet Supplies Wool Residential StockCo (30%) Elders Fine Foods AuctionsPlus (50%)
Grain Property Management Elders Insurance (20%) Elders Weather
LIT & WIT Delivery Clear Grain Exchange
Franchise
Warranty (30%)
Key metrics
$1.7b retail sales $0.3b wholesale sales 9.4m head sheep $1.6b farmland sales $3.0b loan book 60k Killara cattle head AuctionsPlus
$1.6b deposit book
$17m livestock funding
144k head cattle
223 stores 372 member stores 1.6m head cattle $1.5b residential sales $98.0m StockCo book $18m China sales 1.2m head sheep
424 APVMA registrations 371k wool bales $0.9b GWP 7.6m Elders Weather users
10.5k properties under
management
978 tonnes fertiliser 41% LIT penetration rate CGX 0.2m tonnes
Gross margin
$223.6m $61.2m $140.0m $50.7m $41.3m $12.6m Included in products
Working capital
$246.1m $83.8m $53.8m $4.1m $32.3m $59.7m Other – ($34.6m)
39Profit Sensitivity
Movements in market factors are mostly mitigated by our diversified portfolio
$10m
$5m
+500k head +$50 +500k head +$25m +50bps +100bps +100bps
+$50 +100bps
+10%
$0m
-10%
-$50 -500k head -500k head -100bps
-$50 -$25m -50bps -100bps -100bps
-$5m
-$10m Cattle Price Cattle Volumes Sheep Price Sheep Volumes Retail Sales Retail GM% AgChem GM% Fertiliser GM% Killara Utilisation SG&A
Based on FY21 statistics 40Strategic Opportunities
Significant growth opportunities to gain market share in new
geographies, with our multiple product and service portfolio
Focus on increasing market share and
Retail presence in high value areas, including
Products Western Victoria, South Coast WA,
Northern Queensland and Central NSW
Agency Growth in targeted locations through
Services footprint expansion and personnel gains
Expansion of owned sites and franchise
Real Estate
locations in key regional centres
Services
across Australia
Expand livestock in transit and finance
Financial
products, alongside our general insurance
Services
partnership in all regions
Feed &
Opportunities to expand offerings in
Processing
central NSW region Victoria
Services
EBIT Scale ($)
Rural Products
Real Estate
$4m+
$3m
$2m AgencyYou can also read
