ELDERS LIMITED — AGM Information 2011

Dec 19, 2011

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20 December 2011

2011 AGM - CEO’s Presentation

Attached is a copy of the Chief Executive Officer’s presentation to the 2011 Elders Limited Annual General Meeting being held in Adelaide today.

Peter Hastings Company Secretary (08) 8425 4964

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Chief Executive’s Presentation

Malcolm Jackman Chief Executive

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Elders operations

Elders is now focussed around two businesses

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Network
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Trading
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• Australia’s largest auto components supplier

• 230 Rural Services branches in Australia and New Zealand

• 96 Real Estate and Insurance stores

• 158 Real Estate Franchises

• Sales $1,367m

• Turnover of $6b approximately

• Feedlots, live export, wool trading, abattoir and China trading operations

• Major supplier of feeder cattle to Indonesia

• Largest global supplier to long haul breeder markets including China, Russia, Kazakhstan, Tatarstan, Pakistan, Middle East, Africa

• Sales $470m

• Seats, interior systems and manufactured solutions

• Developing from an Australian-centric business to an integrated supply partner to Asia-Pacific OEM platforms

• Australia, China, Thailand and US

• Sales of $315m

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Network

Turnaround in sales and margin but further improvement required and targeted

■ Improved performance in sales, margin generation and costs

■ All areas recorded improvement except lifestyle/residential real estate

• Maintained market share

■ Further improvement required, and targeted:

• Sales; need to move from maintaining market share to growth

• Margin; focus on GM % improvement

• Capital employed; need to improve capital efficiency around inventory, receivables and payables

Sales $ million

Gross Margin $ million

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1,368
1,215
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295
270
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2010

2011

2010

2011

$ million

Trading FY11 impacted by external events, FY12 looking positive for long haul live export

• External factors drove lower results in FY11:

• live export impacted by market access and disruption

• feedlots impacted by weather and high AUD/USD

• Live Export operations:

• cattle only

• Australia’s leading exporter of dairy heifers to long haul markets

• Indonesian feedlot and abattoir operated and managed to Australian standards

• live export of cattle to Indonesia managed to ESCAS

• Positive outlook for FY12 due to combination of market share growth and strong demand in long haul live export market

• FY12 order book virtually fully committed, and now negotiating FY13

• 4 year MOU signed with major Chinese customer, plus new business from Russia, Kazakhstan, Pakistan and Qatar

• Indonesia market uncertainty

Gross Margin

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37
28
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2010 2011
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Live export volume

‘000 head

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207
135
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2010

2011

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Futuris Automotive

Australia’s largest automotive components supplier with a growing Asia-Pacific footprint

• Steady but solid sales and financial performance in FY11 given industry and economic conditions

• sales growth provided by joint ventures consolidated at September 2010

■ Australia

• commenced production for GM Holden Cruze sedan and hatchback

• awarded MY14 GM Holden Commodore new supply contracts

■ International

• won new business for 2012 in China, Thailand and USA

• opened new manufacturing facilities in Thailand and China

• Developing business outside automotive sector that leverages design and manufacturing capabilities

• cleantech manufacturing such as MicroHeat water heater

• communications and public transport infrastructure including tram interiors and rail seating

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Futuris automotive contract outlook

New business won in FY10 and FY11 has diversified revenue base outside Australia and provided for significant ramp-up in sales from mid-FY12 onwards

USA Fisker Nina seating Tesla Model S seating GreenTech seating Thailand GM Trailblazer seating Ford Focus interior trim China GAC GoNow seating Brilliance seating JAC seating (multiple models) Chery seating (multiple models) Australia Toyota Camry & Aurion interior trim Ford Falcon seating & interior trim Ford Territory seating & interior trim GM Holden Cruze seating & interior trim GM Holden Commodore seating & interior trim

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GM Holden Commodore MY14 seating & interior trim

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CY 2011 CY 2012 CY 2013 CY2014
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Futuris non-automotive contract outlook

New business won in Australia through selective diversification strategy provides incremental revenue and growth opportunities from FY12 onwards

Australia Woven Image acoustic tiles manufacturing MicroHeat electric water heater manufacturing eWood solutions (wood replacement) manufacturing Bombardier Tram interiors manufacturing Queensland Rail / Downer seating design Infrastructure (various, eg DOT, Sigtec) Telecommunications (various, eg Telstra, APN)

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CY 2011 CY 2012 CY 2013 CY2014
design manufacturing planned
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Business cornerstones

Generating improved returns for our clients and shareholders by being the best at understanding and serving client needs

Developing and applying technology to improve outcomes while meeting cost and service standards

High Supply performance chain sales excellence Cost- and Superior servicecapital effective management technology

Procuring and moving the right product at the right time most efficiently

Managing the Company’s financial resources to advantage efficient operation and improve shareholder value

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Building a High Performance Sales Organisation FY11 saw an intensive effort to upgrade sales capability, focus and accountability that is delivering results

■ Sales capability

• 2,188 individual structured 2/3 day sessions delivered 6000 days of training

■ Sales management and reporting systems (AIMS/WRAPS)

• introduction of SalePlus[+] weekly bottom-to top reporting and planning

■ Branch management focus

• Branchise program launched for FY12

Generating improved returns for our clients and shareholders by

being the best at understanding and serving client needs

■ Incentivisation of sales force and branch staff

• new remuneration and short term incentive program for FY12

■ Management resources and support

High performance sales

• appointment of specialist Zone Sales Performance Managers

• appointment of Group General Manager Australian Network

■ Network organisation and focus

• refinement of network organisation into three zones: North, South and West and 15 regions

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Project Connect

Introducing a new enterprise system and standardised processes across the business to deliver leading practice for sales, capital management and supply chain capabilities

• Project Connect began in 2011 and is the first significant renewal of technology at Elders in 20 years

• Project Connect will implement a client focussed (single client view), simplified, industry-standard technology platform that is being externally supported by Accenture and HP

• 4 year, multi-release program designed to cater for change impact and solution complexity

• Release 1 is currently in progress and will deliver the foundational core of Finance/HR and Indirect Procurement. Release 1 will be deployed in H1 FY12 on-time, and on budget

Developing and applying technology to improve outcomes while meeting cost and service standards

Cost- and serviceeffective technology

• Release 2 covering broader Supply Chain, Sales and Marketing solutions will commence in H2 FY12

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Supply Chain Excellence Continuing the 5 year transformation through end-to-end integration

• FY10 moved to Distribution Centre structure, company-wide procurement and introduction of new Sales and Operations Planning process

• focused on developing business disciplines at the ‘back end’ of the business, supported by a collaborative forecasting process

• Focus in FY11 was on embedding new processes through constant measurement and improvement, and better integrating the supply chain with the front end of the business

• Supply Chain and Sales & Marketing functions integrated to create an ‘end to end’ view from forecasting through to sales

• ensuring product ranging and procurement delivers sales requirements in an efficient manner, to achieve the best customer reliability at a lower cost

Stock Turns times

Inventory to sales %

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16.8
15.9
15.3
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Procuring and moving the right product at the right time most efficiently

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Supply
chain
excellence
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6.2 5.8 5.9 2009 2010 2011

2009

2010

2011

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Superior Capital Management

Changing to a capital-light structure appropriate for a seasonal business

• FY11 achieved 21% reduction in net debt, although gearing up on lower shareholders’ equity

• Secured new financing facility with increased cash lines and greater flexibility

• new syndicate including ANZ, CBA, NAB, Rural Bank and RaboBank replaced old syndicate of 8 banks + 19 USPP noteholders

• Cessation or divestment of capital intensive/low return operations

■ Capital efficiency initiatives including:

Managing the Company’s financial resources to advantage efficient operation and improve shareholder value

• inventory, accounts payable, accounts receivable

• application of forestry divestment proceeds to debt reduction

• increased use of securitisation & seasonal facilities

Net debt

Superior capital management

$ million

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869.5
435.2
345.5
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Forestry divestment strategy Escalation of Staged Capital Release to total withdrawal from sector

• Announced Staged Capital Release program in May targeting selected assets. Escalated to staged total divestment at October

• Assets held for sale $181m, and provisions made for onerous leases and other costs

■ Asset sales initiated in May advanced through:

• sale of Central Queensland properties close to completion for proceeds of $39m

• Northern Queensland property sales at an early stage, with sales to date of $7m

• negotiations with parties in respect of sandalwood estate

• Sales process on other assets initiated, including liaison with the responsible entities of the MIS Projects with a view for an orderly exit

• Due to complexity it is expected that completion will take most, if not all, of FY12

• Proceeds will be applied to further reduce corporate debt and working capital requirements

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FY12 Priorities

Maintain positive underlying momentum to drive further progress on debt, sales and profit

• Successful execution of Forestry Divestment Program

• Achieve further reduction in debt and working capital requirements

• Maintain positive turnaround in Network operations with further gains in sales, GM% and operating efficiencies

• Return Trading Operations to traditional levels of profitability, particularly around live export

• Ongoing development of Futuris Automotive in Asia-Pacific and successful commencement of new contracts in Thailand, China, USA and South Africa

• Deliver improved financial outcome for shareholders

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