GRAINCORP LIMITED — Regulatory Filings 2012

Mar 27, 2012

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Company announcement

GrainCorp Limited ABN 60 057 186 035

Date: 28 March, 2012 To: The Manager Announcements

Company announcements office

PUBLIC ANNOUNCEMENT

GrainCorp Presentation to Investor Conferences

Ms Alison Watkins, GrainCorp’s Managing Director and Chief Executive Officer, will deliver the following presentation at the Octa Phillip Agribusiness Conference on 28 March and the UBS Australian Emerging Companies Conference on 3 April.

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Betty Ivanoff General Counsel

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GrainCorp Limited Level 26, 175 Liverpool Street, Sydney NSW 2000 PO Box A268, Sydney South NSW 1235 Telephone: (02) 9325 9100 Facsimile: (02) 9325 9180 www.graincorp.com.au

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March/April 2012
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(Managing Director and CEO)
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INVESTOR CONFERENCES Octa Phillip grA ibus ness –i 28 March UBS Australian Emerging Companies – 3 April

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Focused strategy to drive growth

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GrainCorp’s business...

• Core grains → focus on wheat, barley and canola

• Business model → add value to these grains with our integrated business and international presence

GrainCorp’s objectives...

• I mprove s h are h o ld er re urns t th roug h th e us ness cyc e b i l

• Manage variability and maintain strong cash flow to fund dividends and rowth

• g

Well positioned to participate in growth opportunities...

• Growth in global grain demand and grain trade

• Opportunity for increased Australian participation

• Australia’s policy priorities → ports and supply chain infrastructure

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Our business model

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� Assets and capabilities

→ Operating along the grain chain

• Three interlinked grain businesses

→ Storage & Logistics, Marketing and Processing

• Three core grains

• → Focus on wheat, barley and canola

• Three grain export focused geographies

→ Operating in Australia, North America and Europe

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Assets and capabilities along the grain chain

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• • •

• 280+ sites in Manage 19+ trains 7 bulk elevators → Flour eastern Australia → → 5mmt capacity 15mmt capacity • 8 mills → 0.8mmt • •

• 20mmt storage M anage mm + 1 t 2 con a ner ac t i f iliti es produced capacity serving road capacity • Handle 2mmt non- Malt 10,000 growers • grain commodities 5 plants →→ 0.3mmt

• 5 plants →→ 0.3mmt capacity

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Canada

Canada

Malt

• Canada In house ocean • 10 sites for barley charter manager accumu at on l i Marketing

• 14 plants (Canada, US , UK , ermany G ) → 1.1mmt capacity

• • Distribution (North America)

• 1 bulk elevator

• 1 container facility

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• Australia : 3-4mmt includin ~35% of rain elevated throu g g g h GrainCorp ports

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• International : Sales to ~25 countries with offices in Europe (Hamburg and UK), Asia (Singapore and Beijing agency) and Canada (Calgary)

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Integrated grain activities

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Marketing

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Driving grain through the network

• Creates a market place at GrainCorp sites → links grower to local and overseas consumers

• Captures value along the grain chain

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Storage & Logistics

Processing

Supply push through the network

• Infrastructure → storage, accumu a l ti on, qua lit y assurance

• Transport → delivery execution

• Competitive infrastructure and logistics capability secures grain

Demand pull through the network

• Adds value to grain → grain procuremen an t d r s i k managemen t

• Understanding grain characteristics and customer requirements

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Focus on core grains

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– Australian Grain Exports[(1)] % by major grains

– Rest of World Grain Exports[(1)] % by major grains

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Sorghum Canola
Barley 2% 2%
3%
Corn
23%
Wheat
30%
Soybean
32%
Other
8%
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Canola
Sorghum 6% Barley 2% 2%
3%
4%
Corn
23%
Barley
19% Wheat
30%
Wheat
Soybean
71%
32%
Other
8%
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• GrainCorp participates in ‘drier climate’ grains → wheat, barley, canola, sorghum

• These grains represent ~40% of global export trade grains

• GrainCorp is building a competitive difference in these grains:

• International presence → insight into ~60% of the export trade of these grains

• Integrated model → complementary value and insight from storage, handling and processing activities (wheat and barley)

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(1) Average of annual exports in the period 2007-2011. Source: USDA

International presence

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• Malt business geographies → provides a platform in major grain exporting regions

• Grain business with international linkages → provides competitive insight

• Europe Marketing � Hamburg office

• Saxon Agriculture

• Scotgrain

• Processing � Bairds Malt � S c hill M a z l

• Australia North America Storage & Logistics Storage & Logistics � � Country Operations, Elevators and bulk port Logistics and Ports Marketing

• Marketing � Calgary office � Domestic sales Processing

• International sales

• Processing

• Canada Malting Co

• � G rea t W es ern t M a lti ng � Country Malt

• Barrett Burston Malting

• � Allied Mills

Marketing presence

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Strategy driven by three corporate objectives

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2 Manage Variability

3 Growth

1 Improve Returns

Manage earnings through Scale through accretive the cycle and pay organic and acquisitive consistent dividends growth

Increase underlying shareholder return

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Five strategic themes

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• 1 1. Maintain a strong market presence → leading grain supply chain service

• 22. Operate along the grain chain → “end to end” supplier 33. Increase participation in grain processing → (a) broader and competitive malt offering; (b) downstream opportunities in flour

44. Grow as an international agribusiness → organic and acquisitions 5. Build supporting capabilities → capital and organisation model

5

Targeting ~$40M additional underlying EBITDA[(1)] over 3 years ending FY14

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(1) Excluding acquisitions

Improve underlying shareholder return

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• Broader grain business provides scale and diversified earnings

• Strategic initiatives underway to increase underlying EBITDA → targeting ~ $ 40M

• Conservative balance sheet → strategy to maintain core debt gearing <25%

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Net [(1)] / Core [(2)] Debt and
NPAT ($M) and ROE (%)
Grain Marketing Inventory - $M
180 15% 500
150 12%
400
120 9%
300
90 6%
200
60 3%
100
30 0%
0
$M0 (3%) $M
(30) (6%) (100)
FY04 FY05 FY06 FY07 FY08 FY09 FY10 FY11 FY04 FY05 FY06 FY07 FY08 FY09 FY10 FY11
NPAT ($M) Annual ROE (%) Rolling 3 yr avg ROE (%) Net debt(1) Grain Marketing Inventory Core debt(2)
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• (1) Net Debt is Total Debt less Cash

(2) Core Debt is Total Debt less Cash less Grain Marketing Inventory

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Strong cash flow, capex and dividends

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• Strong operating cash flow → fund capex (maintenance and growth) and dividends

• Growth capex (~$60M) includes strategic initiatives to increase underlying EBITDA

• Dividend policy to pay 40-60% of NPAT through the business cycle

• Targeting to pay a dividend each year and flex via Special dividend → 74% and 64% payout ratios in FY10 and FY11 respectively

Operating Cash Flow and Capex[(][1] [)] ($)

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350
300
250
200
150
100
50
$M0
(50)
FY04 FY05 FY06 FY07 FY08 FY09 FY10 FY11
Operating Cash Flow Capex
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Dividend and Earnings Per Share ($)

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1.0
0.8
0 6.
0.4
0.2
0.0$
(0.2)
(0.4)
FY04 FY05 FY06 FY07 FY08 FY09 FY10 FY11
Interim and Final DPS Special DPS EPS
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(1) Excludes acquisitions. Capex includes Maintenance and Growth

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Manage earnings variability

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• An integrated grain chain strategy enables GrainCorp to manage earnings:

• Exposure to different agribusiness cycles → reduce ROE volatility

• Complementary activities leverage competitive advantages → apply grain origination and logistics capability in the marketing and processing of grain

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EBITDA [(1)] % Contribution EBITDA ($M) and
Process ng i % of Total EBITDA
FY10 FY11 450 80%
400 70%
Allied Mills Country & Allied Mills 350 60%
10% Logistics 6% Country & 300
50%
13% Logistics
Malt 18% 250
Ports 40%
20% 24% 200
Malt 30%
150
45% Marketing Ports
Marketing 20%
12% 34% 100
18%
50 10%
$M0 0%
FY04 FY05 FY06 FY07 FY08 FY09 FY10 FY11
(2) (1)
Grains EBITDA Total EBITDA Processing % of Total EBITDA
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• (1) Includes 60% share of Allied Mills EBITDA, excludes Corporate Costs and Merchandising EBITDA (2) Country & Logistics, Ports and Marketing EBITDA

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A history of growth

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1916 – NSW 1998 – listed 2000 – merged with 2009 – acquired 2011 – acquired
Government Grain on ASX Victorian based Vicgrain United Malt Schill Malz and
Elevators Holdings Kirin Australia
1990 1995 2000 2005 2010
1992 – acquired from 1996 – 2002 – 2003 – 2008 – 2009 – raised
Government by NSW established acquired acquired grew rail ~$800M equity for
grain growers grain trading Allied Mills QLD based logistics acquisitions and
capability via JV Grainco capability to retire debt
Market Capitalisation [(1)] - $M
1,750
1 500,
1,250
1,000
750
500
250
‐
$M
FY04 FY05 FY06 FY07 FY08 FY09 FY10 FY11
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(1) Based on closing Shares on Issue and average daily closing share price over the financial year

Pursuing international growth

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• An international presence focused on three core grains improves GrainCorp’s ability to grow earnings and manage variability through:

• ~35% of assets[(1)] and >50% sales located outside of Australia

• Access to markets in overseas countries secures demand for our businesses

• Operations in overseas countries improves our customer offering

Grain Sales by Geography

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Cont. UK/Other
Europe 4%
2%
Middle
East/Africa
23%
Australia
49%
Asia
22%
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Malt Sales by Geography

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Middle
East/Africa
Australia
3%
7%
Latin
America Nth
9% America
Cont. 37%
Europe
9%
UK
16%
Asia
19%
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(1) Non-current assets including 60% share of Allied Mills

Australia’s global grain opportunity

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Drivers of Global Grain Demand Growth to 2050[(1)]

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‐10% 30% 70% 110% 150%
Asia (ex China)
Middle asE t & Nth Afr cai
Sub‐Saharan Africa
Sub‐Continent Asia
China
World
Popluation Increase Food Grain / Capita Feed Grain / Capita
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• Global grain demand to increase by 1 billion tonnes or 50% by 2050, driven by: � Population growth

• Increased demand for animal protein (meat and dairy) requiring feed grains

• This growth will be concentrated in developing countries , who are currently import dependent for their grain supply

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(1) Source – Forecasts from UN and FAO

Australia’s global grain opportunity

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•
Global Wheat Trade to 2050 [(1)] – mmt Export trade wheat volumes to
250 double to >225mmt by 2050 , driven
by demand growth in:
200
•
Australia’s traditional markets in
150 A s a, i Middl e as E t & Nth Af r ca i
→ already import >50% of grain
100
requirements
50 •
New markets in Sub-Saharan
mmt‐ Africa and possibly Sub-
1960s 1970s 1980s 1990s 2000s 2010s 2020 2030 2050 Continent Asia
Asia, Middle East & Nth Africa
Sub‐Saharan Africa & Sub‐Continent Asia
Other Importers
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GrainCorp is well positioned to benefit from increased global grain trade

• Capability → origination and marketing with international presence

• � Well located → competitive freight rates into major growth markets

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(1) Source – USDA and Forecasts from US Wheat Associates 2011

Australian public policy priorities

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• For Australia to best participate in global grain trade growth opportunities, the country ’ s grain supply chain must be free of regulation and bottlenecks:

• × Bottlenecks limit ability to service increased export demand

• × Supply chain regulation limits operational flexibility and incentive to innovate

Country to port rail bottlenecks limit our export service...

• T rac k requ res nves men i i t t t o ncrease capac i it y pro / d uc ti v it y

• • Recent Government policies have skewed investment to road

• Rainbow line upgrade an example of appropriate investment

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Port regulation is a competitive disadvantage...

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• Peculiar to the grain industry and to this country

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• GrainCorp is committed to open access service → in our and Australia’s best commercial interest

• Government supports Productivity Commission[(][1] [)] findings and GrainCorp is working with industry on a Voluntary Code

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(1) 2010 Productivity Commission Report

Strong FY12 earnings guidance

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• Record carry-in, large receival and export tasks and sound Malt contribution

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EBITDA [(1)] - $M
Guidance $350-380M
400
350
contribution
300
250 •
Volume guidance:
200
•
150
•
100
50 •
$M0
•
Main variables:
FY04 FY05 FY06 FY07 FY08 FY09 FY10 FY11 FY12(g)
•
200 NPAT - $M Guidance $165-185M •
175
150 to port
125 •
100
75
•
50
25
$M0
(25)
FY04 FY05 FY06 FY07 FY08 FY09 FY10 FY11 FY12(g)
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• Volume guidance:

• Country receivals 11.5-12.5mmt

• • Grain exports 8.8-9.8mmt

• Malt sales ~1.3mmt

• Sorghum receivals

• Rail and road freight availability to port

• Marketing margins and year end mark to market adjustments

• Malt foreign exchange impact

(1) Excludes Marketing interest expense of $15‐20M and includes 60% share of Allied Mills’ NPAT

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FY12 strategic focus

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1 2 3 4/5
Maintain a Operate Increase activity Grow as an
strong market along the grain in grain international
chain
presence processing agribusiness
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St & L i ti orage og s cs	M k ti ar e ng	P i rocess ng	G i C ra n orp
�Handle record	�Deliver strong	�Integrate Schill Malz	�Maintain strong
carry-in and large	domestic and	�Identify and progress	offshore sales
harvest	international sales	sustainability and	�Leverage Malt
�Create a strong	�Commence Hamburg	efficiency initiatives	network and assets
market place for	trading activity	�Developintegrated	�Strengthen
buyers and sellers	�Leverage UK	global Malt and	organisation model
�Improve rail and	merchanting business	Marketing solution	�Maintain
road freight	�Develop new global	�Grow Allied Mills	conservative
productivity	t di t ra ng sys em	l dd ti it va ue a ac v y	i gear ng
�Expand non-grain	�Assess market	�Decide on reinstating	�Support grain
port activity	opportunities in	lost Allied Mills	Marketing growth
�Grow container	Canada	Toowoomba capacity
packing activity

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Disclaimer

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This presentation includes both information that is historical in character and information that consists of forward looking statements. Forward looking statements are not based on historical facts, but are based on current expectations of future results or events. The forward looking statements are subject to risks , uncertainties and assumptions which could cause actual results or events to differ materially from the expectations described in such forward looking statements. Those risks and uncertainties include factors and risks specific to the industry in which GrainCorp operates, as well as matters such as general economic conditions.

While GrainCorp believes that the expectations reflected in the forward looking statements in t hi s presentat on are reasona i bl e, ne t i h er ra n G i C orp nor ts rectors or any ot i di h er person named in the presentation can assure you that such expectations will prove to be correct or that implied results will be achieved. These forward looking statements do not constitute any representation as to future performance and should not be relied upon as financial advice of any nature. Any forward looking statement contained in this document is qualified by this cautionary statement.

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