ELDERS LIMITED — Investor Presentation 2015

Apr 27, 2015

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28 April 2015

Presentation to the 12[th] PAC Partners Agribusiness and Food Conference

Attached is a presentation delivered today by Elders’ CEO Mark Allison to the 12[th] PAC Partners Agribusiness and Food Conference.

Peter Hastings Company Secretary

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1 2 t h PA C P a r t n e r s A g r i b u s i n e s s a n d F o o d C o n f e r e n c e M a r k A l l i s o n , M D & C E O E l d e r s 2 8 A p r i l 2 0 1 5

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Agenda

 FY13 : The transformation

 FY14 : The turnaround

 FY15 : The consolidation

 FY17 : The galvanising

 Market Outlook

 Industry Context

 Year 3 to 5

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FY13 : The transformation

• Elders has transitioned from a complex and highly geared conglomerate to an agribusiness focused company with lower costs and substantially lower debt

• Elders is an Australian agribusiness that seeks to create real value for all its stakeholders in Australian and international markets

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Our business model

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$888m retail sales 9.6m head sheep $2.9b loan book Killara 47k head 144k head short haul
685k tonnes fertiliser 1.7m head cattle $1.5b deposit book Indonesia 19k head 42k head long haul
352k wool bales $580m gross written China $11m sales
premium
1.2m grain tonnes
$1.4b real estate sales
Online Platforms
Agsure Auctions Plus (50%)
Wool Grain
Fertiliser Livestock Banking Insurance
Farm Supplies Real Estate Killara Feedlot Elders China
Elders Indonesia
Short haul livestock Long haul livestock
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Based on FY14 statistics, excluding discontinued operations

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FY14 : The turnaround

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Safety
Performance
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Operational
Performance
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Leadership
Renewal
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Capital
Management
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• Lost time injuries from 33 to  $77.3m underlying profit  Board renewal with two new  ROC improved in line 20 turnaround NEDs and new Chair with renewed focus

• Target is to be LTI free  All segments have lifted  Experienced agribusiness  Average working capital earnings contribution CEO appointed with track reduced 27% from FY13 record of delivering value

• Eight Point Plan developed  Capital raising and being implemented  Executive Committee completed in October established to align structure 2014 to eliminate term

• EBIT margin lifted to 2% from with strategy debt ‐3%  Ongoing investment in  Refinance completed in

• ROC at 12% up from ‐10% leadership renewal and October 2014 with development appropriate working capital facilities for seasonal and live export demand

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FY14 financial performance

$ million	30 Sept 2014	30 Sept 2013	Change from 2013
Sales revenue	1,431.5	1,422.1	+ 9.4
Underlying EBIT	27.3	(48.9)	+ 76.2
Underlying profit / (loss) after tax	8.8	(68.5)	+ 77.3
Reported profit / (loss) after tax	3.0	(505.3)	+ 508.3
Net debt	(137.6)	(255.2)	‐ 117.6
Term debt *	(34.1)	(143.8)	‐ 109.7
Reported net financing costs	(23.2)	(33.2)	‐ 10.0
Operating cash flow	15.1	(81.6)	+ 96.7
Return on capital	11.7%	(9.5)%	+ 21.2%

• Term debt subsequently eliminated

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Eight Point Plan

Our strategic vision for becoming an efficient user of capital and a business that generates returns for its stakeholders

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FY15 : The consolidation

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Safety
Performance
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Operational
Performance
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Key
Relationships
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Efficiency and
Growth
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• Continued emphasis on safety • Increase underlying EBIT

  • Create a values, safety and performance based culture

• Implement employee safety • Improve ROC

• engagement plan

• Maintain high levels of

• • Implement remuneration for employee effectiveness and

• • Target is to be LTI free agency employees that drives enablement performance

• Build mutually beneficial

• • Margin management program relationships with key for selected and non price stakeholders sensitive retail products

• Develop capital light business model for farm supplies and fertiliser

• Ongoing emphasis on cost control

• Implement comprehensive branch benchmarking program

• Investigate expansion of online platforms

• Implement growth strategies for agency businesses

• Supplier rationalisation for farm suppliers and fertiliser

• Explore opportunities to expand and establish domestic and international red meat supply chains

• FY15 AOP implementation

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FY17 : The galvanising

EBIT opportunities $ million

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FY14 Values, Geographical Retail Products Agency Services Financial Services Feed & Processing Live Export Services Costs, Capital & FY17
Performance & Coverage & Services Efficiency
Brand Distribution
Channel
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Current projects within Elders

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Agronomic
Centre of
Excellence
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Meat Branding
Project
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National Brand
Campaign
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• Conceptualised an industry leading platform for agronomic best practice and stewardship

• Launched new agronomy graduate program, and employed first intake

• Conducting internal skills audit of agronomy team

• Developing branded meat  Addressing perceptions of product lines for Elders through national international markets media campaign

• Introduced to Elders’ existing Chinese and Indonesian supply chains in coming months

• Television, online and print media advertising to be launched May 2015

• Targeted sponsorship in areas with opportunity for improvement

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Market outlook

• Grains and oilseeds

• Sugar

• Cotton

• Horticulture

• Cattle, beef and veal

• Live cattle exports

• Sheep & lamb

• Wool

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Grains and oilseed production to rise

• Australian grain and oilseed production is forecast to rise over the next five years to reach 42.6 million tonnes by the end of the decade.

• The total area planted in 2015‐16 to grains and oilseeds is forecast to remain largely unchanged at 22.4 million hectares.

• The national wheat crop is expected to rise by 3% in 2015‐16 to 24.4m tonnes, driven by an assumed increase in yields.

• Barley production is forecast to fall by 6% to 7.5 million tonnes, reflecting a projected fall in planted area.

• Canola production is forecast to fall by 4% to 3.3 million tonnes, resulting from a decline in average yield, which more than offsets the increase in area planted.

• Total grain and oilseeds exports are predicted to rise by 1.7% a year to reach 29.3m tonnes by the end of the decade.

Source: ABARES Agricultural Commodities Outlook, March 2015

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Sugar - growth in plantings, prices and exports

• The world sugar glut will push down mill‐gate returns to Australian cane growers by 1% to $36 a tonne in 2014‐15, the lowest since 2007‐08.

• Prices will rise to $39 a tonne in FY16 on the back of the lower Australian dollar and higher sugar content in cane .

• The area of sugarcane harvested in Australia is expected to expand to 409,000 hectares in 2019‐20, higher than the 10‐year average of 380,000ha.

• Australian sugar production is predicted to grow at an annual rate of 1% from 2016‐17 to reach 5.3 million tonnes in 2019‐20 .

• Sugar exports were forecast to hit 3.8m tonnes by the end of the decade.

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Source: ABARES Agricultural Commodities Outlook, March 2015

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Cotton – growth expected next season

• Australian cotton production is projected to increase over the medium term (on the back of better seasonal conditions) almost doubling from a forecast low of 470,000 tonnes in 2014‐15 to 818,000 tonnes by 2019‐20.

• In 2014‐15, the area planted to cotton is estimated to have declined by 46% in response to low cotton prices and dry seasonal conditions.

• Based on lower world cotton prices, Australian gin‐gate cotton prices in 2014‐15 are projected to average $490 a bale (227 kilograms) of lint (including the value of cottonseed and net of ginning costs), 6% lower than the previous year and the lowest price since 2005‐06.

• Prices are expected to drop a further 8% in 2015‐ 16 to $449 a bale.

• Over the medium term ABARES expects world cotton prices to recover, reflecting projected lower world stocks as growth in consumption exceeded production.

Source: ABARES Agricultural Commodities Outlook, March 2015

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Horticulture - increasing gradually

• The gross value of horticultural production is expected to increase gradually to $9.8 billion in 2019‐20.

• For some fresh lines , the weaker Australian dollar and increased opportunities in Asia are expected to stimulate an increase in exports.

• Export opportunities are expected to be enhanced by new trade agreements with Korea, Japan and China.

• The weaker dollar will improve the competitiveness of Australian processors, but pressure from imports will continue to be felt.

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• Export demand for Australian fruit and nuts is expected to continue to Australian production.

• Vegetable production is forecast to expand in line with domestic requirements.

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Source: ABARES Agricultural Commodities Outlook, March 2015

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Cattle prices to remain strong

• Driven by reduced supply and solid export demand , underpinned by a low Australian dollar.

• Herd rebuilding following two years of drought has to date only put a slight check on the supply of cattle slaughter ‐ largely because the continued threat of drought is by no means absent.

• ABARES expects the high slaughter rate to continue in 2014‐15 (as higher cattle prices encourage producers to offload) before falling 6 per cent in 2015‐16 to 8.9 million head as herd rebuilding begins in earnest.

• The Australian cattle herd has fallen hard from its high of 29.3 million (2013) and is expected to reach 27 million in mid 2015.

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Source: ABARES Agricultural Commodities Outlook, March 2015

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Strong demand for Australian beef to continue

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• Supported by an assumed lower Australian dollar and tariff reductions in some major markets (as a result of recent FTA’s)

• The United States is likely to remain Australia’s largest beef export market out to 2019

• Beef exports to Japan are expected to lift by 7% in FY15 and FY16 , as the results of the FTA begin to reduce import tariffs. Australia’s competitiveness against the US in Japan is likely to be also improved by appreciation of the $US against the yen, compared to the $AUD

• Beef exports to China will fall by about 25% in FY15 due to the higher prices for Australian beef, and greater competition from South America. Between July‐November 2014, Australian exports to China fell 41 per cent on the previous year, while Uruguay’s beef exports to China rose 28 per cent in the same time

• Shipments of beef to China are expected to steadily rise out to 2019, as the FTA comes into effect

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Source: ABARES Agricultural Commodities Outlook, March 2015

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Live cattle exports to remain high

• In FY15 live feeder and slaughter cattle exports are forecast to remain at 1 million head, before falling 10% in FY16 as supplies of exportable cattle shrink

• ABARES expects those numbers to rise back to a million head by 2019‐20, supported by growth in Indonesian beef consumption, and increased demand from Vietnam and Malaysia

• New demand may come from China, Thailand and Lebanon if supply chains are developed

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Source: ABARES Agricultural Commodities Outlook, March 2015

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Lamb and sheep prices to rise

• The national sheep flock is expected to decline by 3% to 70.7 million head by 2014‐15, before commencing a gradual rebuilding phase to reach 76 million head by 2019‐20

• Lamb slaughter will riser to 22.3 million in 2014‐15, the highest number for 43 years , as producers enjoy an expected 7% increase in the saleyard price

• Sheep prices are expected to increase 17% in 2016‐17 as turn‐off decreases and producers begin to rebuild flocks

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Source: ABARES Agricultural Commodities Outlook, March 2015

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Lamb production and exports growth in FY15

• Domestic lamb consumption is expect to remain at the current level over the next few years.

• Lamb exports are predicted to reach a record 240,000 tonnes in 2014‐15 , driven by strong demand from the US and the Middle East, and corresponding forecast rise in lamb slaughter.

• Export volumes are forecast to fall by 10% in 2015‐16, in response to decline in lamb slaughter as a result of flock rebuilding.

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Source: ABARES Agricultural Commodities Outlook, March 2015

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Wool prices to rise in FY16

• The EMI is forecast to decline 2% in 2014‐15, before rising 3% in 2015‐16 , driven by an increase in the demand for woollen clothing and a lower Australian dollar.

• Shorn wool production is expected to slip 2% in 2015‐16 to 328,000t greasy, and then rebound slowly to reach 345,000 tonnes in 2019‐20.

• Flock rebuilding is predicted to reduce live sheep exports by 6% to 2.3m head in 2015‐16.

• The proportion of non‐breeding adult sheep in the flock ‐ particularly wethers ‐ is expected to fall, reflecting the shift away from wool production.

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Source: ABARES Agricultural Commodities Outlook, March 2015

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Market context

Growing global demand for food and fibre, particularly from Asia, presents opportunities for Australian agriculture and Elders

Population growth

World population 8 billion by 2025 85% of growth from Asia

Increased food demand

To rise 75% in first half of 21[st] century

 [Diversified geography and product base]

 [Ample land and water supply]

 [Proximity to Asian markets]

 [Deregulated markets driving competition]

Rising middle class

An example is Indonesian middle class growing by 20‐25 million every 3‐5 years

Increased urbanisation

An example is that 50% of Chinese population lives in cities and spends 270% more than rural counterparts

Decreasing arable land

Due to urbanisation and environmental contamination

 [World leading biosecurity]

 [Best practice farming methodologies]

 [First world infrastructure]

 [Politically stable]

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Proximity to growth markets

• Operations in Indonesia, Vietnam, China, Mexico and Pakistan and access to world markets

• Proximity to Asia provides opportunity to capitalise on growing middle class demand for premium agricultural products

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Industry context

Pursuing $60M EBIT and 20% ROC by 2017

EBIT by Rural Service Company

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Per cent
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Market share by Rural Service Company (2014 )

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100%
Elders
Other
80% ~17%
~29%
60%
40%
~33%
20%
21%
Landmark
0%
Ruralco
FY13 A FY14 A FY15 F FY16 F FY17 F
Elders Landmark Ruralco Other
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Source: PAC Partners Equity Research

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Looking forward : Year 3 to 5

 Solid domestic growth platform

 Industry consolidation options

 Capital structure optimisation

 Strong international growth

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Summary

 Focussed agribusiness

• Strong brand

 Well positioned

 Stable growth platform

 Solid progress

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