ELDERS LIMITED — Interim / Quarterly Report 2011

May 22, 2011

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23 May 2011

2011 Half Year Results Presentation

Attached is a presentation on Elders Limited’s results for the half year ended 31 March 2011 to accompany the Company’s conference call being held at 9.00am Eastern Standard Time today (Monday 23 May 2011). The conference call may be joined using the telephone numbers advised in the Company’s announcement to the ASX on Friday 20 May 2011.

This presentation is also available as a webcast via the Company’s website (www.elders.com.au) to be displayed simultaneously with the conference call.

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Peter Hastings Company Secretary

1

H1 2011

Results for the six months to 31 March 2011

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Key messages

Clear improvement and progress in areas under our control

• Weather and other events have had significant positive and negative impacts on Elders’ various operations

• Network operations showed good improvement. Sales have been increased, and costs reduced

• Achieving desired improvement in “cost to serve” together with sales and margin generation per employee

• Further debt reduction. Agreed improvements to financing terms and conditions.

• Forestry strategy moved to Staged Capital Realisation

• Revenue, earnings and cash expected to show customary lift in second half……. but expectations are being moderated as headwinds increase

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2

2011 First Half main features

Sales and earnings improvement, balance sheet stronger

• Continuing sales revenue up 6% to $1,086.4m

• Underlying EBIT up 94%, rising from $10.3m to $20.0m

• Underlying PBT of $3.9m up from pcp and guidance figure of $2.1m

• Underlying NPAT of $1.0m up from pcp loss of $(2.4)m

• Statutory loss of $(14.6)m compared to 2010 H1 loss of $(165.9)m

• Continuation of balance sheet restructuring with sale of Rural Bank shareholding

• Gross borrowings reduced 22%, gearing down from 43% to 37%

• Strong improvement from Elders’ Australian and NZ networks

• Forestry earnings down on MIS collapse and lower 3[rd] party wood sales, increased uncertainty from Japan and A$. Strategy shifting to Staged Capital Realisation

• Auto results impacted by volume downturns

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3

Profit and loss

Significantly improved NPAT and EBIT

$ million	H1 11	H1 10
Sales revenue from continuing operations 1,086.4 1,025.0
Underlying EBIT 20.0 10.3
Net underlying borrowing costs (16.1) (8.2)
Underlying profit before tax 3.9 2.1
Tax on underlying profit 0.0 (1.3)
Non-controlling interests (2.9) (3.2)
Underlying profit/(loss) to shareholders 1.0 (2.4)
Non-recurring items after tax (15.6) (163.5)
Reported net profit/(loss) to shareholders (14.6) (165.9)

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4

Reconciliation of statutory and underlying profit Non-recurring items

$ million six months to March 2011 2010 Key items in H1 11 Reported Loss after tax (14.6) (165.9) Non-recurring items: Rural Services 9.0 18.1 Rural Bank (dividend $6.4,netprofit on sale $16.4), HiFert -10.6 Forestry (9.2) (173.8) Cyclone impact -$10.7, gain on land sale $1.5m - - Automotive Debt restructuring costs -$12.1, impairment of non-core assets -$1.5, legal costs for tax case -$1.0; reclassification of $2.8 Corporate (17.4) (14.3) interest attributable to Rural Bank shareholding now discontinued Net tax impact 2.0 6.5 Non-recurring items after tax (15.6) ( 163.5 ) Underlying NPAT to shareholders 1.0 (2.4)

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5

Underlying EBIT movement

Driven by Rural Service improvement and cost reductions

Movement in underlying EBIT $m

$ million	H1 11	H1 10
Rural Services 14.1 1.6
Forestry 4.0 7.4
Automotive 4.7 8.6
Corporate (2.8) (7.3)
Total EBIT 20.0 10.3

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- 3.4
-3.9 + 4.5
+ 12.5
20.0
10.3
H1 10 Rural Forestry Auto Corporate H1 11
Services
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6

Cost reduction progress and targets

$16m savings in first half

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F11 H1 Total Cost Savings ($m)
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$201m
$16m
$185m
F10 H1 Cost Savings F11 H1
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Employee FTEs
2,796
307
2,506 2,521
17
June 10 FTE Reduction Vet Supplies March 11 Target
Acquisitions
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• Includes Rural Services, Forestry, Support and Corporate (Auto excluded)

• ** Revised target includes acquisitions and additional areas

• Costs down from $201m to $185m for H1 11

• Employee reduction of 307 FTEs or 11% achieved

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F11 H1 Cost Savings by Business Unit ($m)
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• Focus has been on non-customer facing roles

• Managing trade off between cost management and maintaining sales momentum

• Potential headwinds in 2[nd] half include higher employee costs due to tight labour market, resources boom and higher fuel costs.

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1.4 Network Operations
3.9
New Zealand
Forestry
5.9
1.9
Support, Corp & Others
Automotive
3.2
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Key balance sheet items

Increased sales and seasonal trends in working capital movements

$ million	H1 11	FY 10	H1 10
Inventory & livestock	303.6	226.0	276.8
Trade debtors	504.7	471.2	476.6
Trade creditors	(420.0)	(357.0)	(353.4)
Working capital	388.3	340.2	400.0
Cash 38.3 80.0 83.6
Current borrowings	(305.3)	(279.5)	(118.5)
Non-current borrowings	(81.5)	(218.1)	(300.0)
Gross Borrowings	(386.8)	(497.6)	(418.5)
Hybrid equity	(145.2)	(145.2)	(145.2)
Shareholders Equity	979.5	1,006.1	1,062.2

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8

Cash flow

Seasonal pattern sees outflow in first half and inflow in second half

$ million six months to 31 March 2011	Total	Rural Services	Forestry	Auto	Corporate
Operating cash flow:
before working capital	(1.5)	22.2	(15.2)	12.8	(21.3)
working capital movement	(48.1)	(33.2)	2.9	(13.4)	(4.4)
Total Cash from operations (49.6) (11.0) (12.3) (0.6) (25.7)

 Seasonal pattern typically sees cash outflow in first half; inflow in second half driven by cropping spending

 2011 first half:

Rural Services inventory build in advance of third quarter peak sales season plus higher prices

Automotive inventory build in advance of new contract commencement

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9

Debt

Total reduced 22%, term debt cut 63%; increased use of seasonal facility

$ m as at:	H1 11	FY 10
Debt subject to covenant	190.1	313.7
Trade debtor financing	111.2	111.2
Other non bank debt	85.5	72.7
Gross debt	386.8	497.6
Debt related Derivatives	13.4	17.6
Cash	(38.3)	(80.0)
Net debt	361.9	435.2
Gearing
Covenant metrics	19%	31%
Total	37%	43%

Debt composition $m

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Plexicor and
73 other debt
Debtor
financing
111
86 Revolver
75 Term Debt
111
102
239
88
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Mar 11

Sept 10

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10

Finance

Finances restructured; executing strategy to reduce term debt

Covenant	Metric	March 11 Actuals	March 11 Covenant	Sept 2011 Covenant
Leverage ratio Gross Debt / EBITDA 3.2x <4.5x <3.75x
Interest cover ratio EBITDA / Interest 2.6x >2.0x >2.5x
Gearing ratio Gearing (Gross Debt / Equity) 19% <55% <55%

■ Continued focus on structuring facilities towards working capital requirements whilst reducing term debt

■ Restructuring of debt achieved post sale of remaining investment in Rural Bank

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term debt paid down

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Bendigo & Adelaide Bank joined banking syndicate

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extended seasonal finance facilities to December 2011

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less restrictive terms and conditions including AF& C requirement reduced, voting changed etc

■ Operated within financial covenants throughout period

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Seasonal conditions

Rain, rain, rain and more rain driving markets and sales trends

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• Unseasonably good rainfall in all but parts of S W Western Australia

crop yields high but extensive downgrades feed and water resources replenished

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flooding disruption to livestock sales

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■ Farm supplies

cotton plantings up in the east, demand in west affected by dry conditions increased demand for fungicide, insecticide fertiliser demand impacted by wet conditions

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■ Livestock

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restocking and tight supply

■ Real estate

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activity levels down substantially equity levels and access to capital

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■ Commodity prices and exchange rates

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Rural Services earnings growth

Improved network earnings generation the driver

Underlying EBIT movement $ million

+ 2.7 + 1.8 - 1.6 - 6.1 + 15.7 14.1 1.6 Underlying Australian New Zealand Trading Support Equity Underlying EBIT FY10 network network Centres Earnings EBIT FY 11 H1 H1

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13

Network performance

Growth in sales, margin and improved cost to earn

H1 11 vs H1 10	Sales	Gross Margin
AgChem +32% +30%
Fertiliser +3%1 + 1%
Farm Supplies (total) +10% +12%
Livestock +17% +15%
Wool - 3% + 18%
Real Estate -16% -11%
Total Australian Network +10% +9%
Earn per employee +13% +21%
Cost-to-earn ratio n.a - 13%

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1 fertiliser sales based on turnover for consistency due to variation in sales model mix

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Trading performance Cattle-related business was down on markets, weather; wool trading results up

■ Feedlot trading

• sales up with move to 100% shareholding in Killara and higher prices

• margins down on cool wet weather

• tight supply markets

$ million	H1 11	H1 10
Sales revenue 280.0 271.0
Gross Margin 13.8 15.0
Total EBIT 2.9 4.5

■ Live export

• Indonesian market restrictions & Q1 demurrage

• strong performance from breeder/long haul trade

■ Wool

• high prices on strong demand

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15

Network Related Equity Earnings

Impacted by 2011 harvest downgrades on ETG trading

 Elders Insurance

 AWH

• earnings down as high prices saw wool in

• stock reduced

 Elders Toepfer Grain

• historically unprecedented crop downgrades resulted predominance of feed over milling grade grain

$ million	H1 11	H1 10
Elders Insurance 3.1 2.8
Australian Wool Handlers 2.2 2.4
Elders Toepfer Grain (6.6) 0.7
Other 1.1 -
Total EBIT (0.2) 5.9

– widening of benchmark spreads

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Go to client

Work progressing around 4 streams to rebuild Elders as a client-centric high performance sales organisation

Network structure	Sales Excellence	Client -Centricity	Sustainable Comp advantage
Adjust network	Inside sales	Instituting Client-	Technical hubs
structure		centric policies,
Adjust Zone	SalesPlus+Phase 1	procedures and day to day operations	Align capability &
management structure			product around client
Appoint Zone Sales	SalesPlus+	Develop sales
Performance	Continuation	offering by sector,	Farm plans
Managers		product, geography &
Appoint Zone	SalesPlus+Max	client
Product Coordinators
Workforce plan	Branchise
Admin & Tech hubs			Completed
			Work in progress
			In development

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SalesPlus[+]

Creating and embedding a High Performance Sales Culture within Elders

• “Sales 101” sales management and performance program introduced to increase the vigour, focus and effectiveness of Elders’ day to day sales

• 1,280 staff trained since November 2010

• Management and reporting:

• sales reporting management systems implemented

• backed by appointments of new Zone Sales Performance Managers

• Independent review and assessment completed

• Measurement reporting shows early improvement in sales activity with double-digit increases in month on month:

• planned and unplanned client visits

• cross-sell referrals with existing clients

• number of new client visits

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Forestry

Costs and business activity being managed in line with financial impact of 2010 MIS collapse

■Earnings down on low 2010 MIS sales, and lower 3rd party woodfibre sales ■Cyclone damage to Northern Qld with likelihood that Red Mahogany plantations will be terminated ■First tranche of Central Qld land sold (5,900 ha for small gain over book) ■Costs reduced 25%	$ million	H1 11	H1 10
	Sales revenue 32.8 46.2
	Underlying EBIT 4.0 7.4
	Non-recurring items (9.2) (174.4)
	Reported EBIT (5.2) (167.0)

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Forestry Staged Capital Release Strategy Balancing asset value, cash and capital allocation goals through difficult near term markets

 Strategic intent is to balance maximisation of value for shareholders, minimise cash outflows and redirect capital to sustainable and value accretive investment

 Forestry involves a mix of different activities, end products, markets, investment horizons, scale thresholds, cash profiles and ownership/lease arrangements

 Elders sees its long term core focus being plantation pulpwood management and export

 Where we don’t have optimal scale in High Value Timber species we will investigate opportunities that would be in the best interests of growers and shareholders.

• Current and short term markets adverse…but longer term fundamentals sound

• Staged Capital Release strategy to be influenced by:

• timing of projects, yields and commitments

• operating expense profile

• execution of necessary simplification

• value and cash flow characteristics

• Cash positive, or neutral expected for foreseeable future as capital is realised

 Near term divestment priorities with $180m approx of book value:

• surplus Central Queensland and North Queensland land

• Smart Fibre

• sandalwood assets

• maturing pulpwood

• loan book

• Progressive realisation of capital from retained assets as maturities, market and value permits

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Automotive operations Results reflective of vehicle industry trends

■ Sales and margin impacted by lower volumes

• Australian passenger vehicle build down 17% yoy; although some marques down by up to 33%

• Futuris sales revenue down 20% before sales increment of $35.6m from consolidated JV’s

■ Breakeven result from joint ventures

• Chery volume lower due to scheduled completion of current programs and delay in new programs

$ million	H1 11	H1 10
Sales revenue 142.7 134.2
Futuris Auto EBIT 4.7 8.0
Joint ventures EBIT - 0.6
Total EBIT 4.7 8.6

• additional volume from new Hefei facility (for JAC)

 Strong contracting performance

• replacement contracts for current Territory seats, Camry interiors; MY14 Commodore

– New business

• Australia (GMH Cruze & CCPPV)

• China (Brilliance & Gonow)

• Thailand (Ford and GM)

• US (Tesla, Fisker)

 Second half outlook downgraded due to further

schedule reductions

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Second half outlook

Rural conditions and demand good, headwinds building from A$ and other markets

■ Rural Services

• very good conditions for demand but WA still a risk

• strong demand and activity so far in line with customary H2 lift

• high A$ starting to impact farm incomes and activity

• margin pressure in Farm Supplies from ample supply

• cost pressure from high fuel prices and wages

• tightening livestock volumes threatening supply

• ETG result should stabilise

• farmer working capital concerns

■ Forestry

• costs weighted to second half

• weaker Japanese demand

• higher A$ impacting woodchip demand and particularly price

■ Auto

• slower local manufacturing driven by tsunami and demand

• supply chain issues with some OEM’s

• higher A$ impact on Australian manufacturing competitiveness

• Trading update expected post Q3 (July) to inform market on outlook post the critical third quarter sales season.

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Appendices

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Elders Rural Services network

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• Elders Branch
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Rural Service Branches
Queensland 48 New South Wales 52 Western Australia 46
Tasmania 6
South Australia 33
Northern Territory 3
Total Australian Network 223
New Zealand (Farm Supplies stores) 14

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Rural Services sales revenue

$ million continuing, six months to March	2011	2010	Change %
AgChem 147.2 111.3 + 32% Fertiliser 133.5 121.1 + 10% Other Farm Supplies 162.5 162.2 -
Farm supplies (total) 443.2 394.6 + 12%
Livestock agency 62.5 53.5 +17%
Wool 28.8 29.7 - 3%
Real Estate 25.5 30.3 - 16%
Other 15.2 14.6 +4%
Total Australian Network 575.2 522.7 + 10%
New Zealand 55.6 51.0 + 9%
Feedlot trading 71.1 63.1 + 13%
Live export 100.4 143.3 - 30%
Wool trading 89.4 46.1 + 94%
Other trading 19.1 18.5 + 3%
Total 910.8 844.7 +8%

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Elders Forestry Operations

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Area (ha)	Owned	Leased	Total
South-West WA	10,075	37,538	47,613
Esperance	10,925	39,022	49,947
Kununurra	1,162	618	1,780
Green Triangle	2,555	32,968	35,523
North Queensland	5,039	1,796	6,835
Tasmania	0	800	800
Total	29,756	112,742	142,498

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Automotive operations

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■ Global facilities
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established
in construction
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Automotive operations

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no image
available
Commodore from 1996 Cruze from 2011 31UX SUV from 2012 Camry & Aurion from 2006
 seating  seating  seating  headliner
 door trim  headliner  various trim for GM  nvh product
 headliner  floor carpet via Futuris Australia  spoiler
 floor carpet  aftermarket
 nvh product
 aftermarket
Model S from 2011
Falcon from 2002 Territory from 2004 Focus from 2012  seating
 seating  seating  floor carpet  trim from Futuris Thailand
 steering  steering  parcel shelf  frames from Futuris Thailand and
 pedals  pedals  trunk trim Futuris China
 beam axle  window regulators  nvh product
■ Global customers headliner  headliners  various trim for Ford
 floor carpet  floor carpet via Futuris Australia no image available
 nvh product  nvh product
 airbag systems  airbag systems Nina from 2012
 aftermarket  aftermarket  seating
 trim from Futuris Thailand
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no image no image
available available
Multiple models Multiple models Multiple models G5 SUV model
from 2007 from 2010 from 2011 from 2011
 seating  seating  seating  seating
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In South Africa Futuris supplies floor carpet as a tier two supplier to Mercedes (via Feltex) and to Ford in Australia (via Futuris)

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