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Elders Field Days 2009 | December 2-3 2009For
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Speaker: Malcolm Jackman - Chief Executive Officer
Subject: Elders Ltd
Elders Field Days 2009
For
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The New Elders ASX Small to Mid Cap Conference Hong Kong October 29 2009
3* FY2010 Prospectus forecast
Income streams concentrated on agribusiness
^ includes Banking and insurance
$73
$14
$7
($10)
Agribusiness^
Forestry
Automotive
Corporate / Other
$88
$16
$22
($10)
Agribusiness^
Forestry
Automotive
Corporate / Other
$1,983
$121
$232
Agribusiness^
Forestry
Automotive
$84$117$2,336
EBIT*EBITDA*Sales*
Agribusiness
Automotive
Forestry
Forestry
Automotive
Agribusiness
Automotive
Forestry
Agribusiness
EBIT (Underlying)
$84 million
EBITDA (Underlying)
$117 million
Sales
$2,336 million
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Elders’ strategic position is at the farm gate ….where farm production intersects with local and global markets
Concentration on rural distribution and associated leverage points…
– Built around linkages and relationship with our clients
– Maximisation of inherent value within Elders network
– Aligned partnerships that offer best product and best outcome for the client
– Exit from manufacturing, non-core, non-value adding associates/JV’sFor
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Aligned Partnership Model
� Shift from control and ownership to focus on capital efficiency and leveraging the value of the Elders network
� Grain
– Elders Toepfer Grain joint venture
� Financial Services
– Banking: Rural Bank (40% shareholding) with Bendigo and Adelaide Bank
– Insurance: Elders Insurance now an (25:75) MGIA joint venture with QBE
– Wealth Management: Elders Funds Management now a (49:51) joint venture with M3 (subsidiary of ING Australia)
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Managing the business
One Elders
– Safety
– Sales focus
– Performance culture
– Core values
Executive Management Team
– Monthly review
– Includes CEO Rural Bank and CEO Elders Insurance
– Group Investment Committee
– Group Risk Committee
– Safety
Management structure
– Re-organised around single management team
– Futuris Automotive fully involved but ring-fenced
– Progressively integrating all corporate/support functions
– Separate operational management for Automotive & Forestry
– Monthly operational reviews
Board
– Key performance indicators
– Key areas of responsibility
– Management interactions
– Renewal
Elders Limited
CEO
Malcolm Jackman
COOMike Guerin
CFOMark Hosking
CIOShaun Hughes
GM HR & Support ServicesRob Tanti
GM Investor & Public
RelationsDon Murchland
GM Legal & Corporate
DevelopmentMichael Sadlon
ITCMD
Vince Erasmus
Futuris Automotive
MDMark De Wit
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2010 Management imperatives
� Meet prospectus forecasts
� Complete asset divestments
– ITC Timber (December 2010)
– Hi Fert
– Aquaculture
� De-leveraging
� Cash and balance sheet management
� Margin improvement - Elders business transformation
Ongoing management values…
� Returns
� Cash
� Strategic fit
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Speaker: Mike Guerin – Chief Operating Officer
Subject: Rural Services
Elders Field Days 2009
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Rural Services at a glance, serving supply and demand needs of primary producers in chosen markets
FY2009 Sales: $1,475m FY2009 Sales: $135m FY2009 Sales: $428m
AUSTRALIAN NETWORK NEW ZEALAND NETWORK LIVESTOCK TRADING
Wool
Livestock
Farm supplies
Real estate
Grain
Banking
Other
Live export: Breeder Cattle (ULE)
Live export: Feeder cattle (NACC)
Feedlots
Rural Services
Sales: $2,147m
Margin: $340m
Wool
Livestock
Farm supplies
Real estate
Insurance
FY2009 Sales: $109m
NETWORK RELATED
Elders Toepfer Grain (50%)
AWH (50%)
Wool Trading
Overseas operations (e.g. China)
Banking
Insurance
Note: financials relate to 12 mths to 30 Sep 09
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Rural Services sources of Sales and Gross Margin
Gross Margin
$340m
Sales
$2,147m
* financials based on management accounts for 12 months to 30 Sep 09
$340$2,147
$278
$21
$34
$7
Australian Network
NZ Network
Livestock Trading
Network Related
$1,475
$135
$428
$109
Australian Network
NZ Network
Livestock Trading
Network Related
Gross Margin*Sales*
Livestock Trading
NZ Network
Network Related
Australian Network
Australian Network
NZ Network
Livestock Trading
Network Related
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Geographic Leadership
(Supply Side)
Support to GTM
(Demand Side)
Integrated Support Functions
� Australia(John Molenaar)
� New Zealand(Stuart Chapman)
� Livestock Trading
(Hamish Browning)
� Elders Toepfer Grain(Mark Thiele)
� Wool Trading
� Supply Chain(Jim Lynch)
� Marketing(Mark Geraghty)
� Operations(Miriam Silva)
KPI’s:
� Geographic Profit & Loss
� COFE*
� GTM delivery
� OH&S
KPI’s:
� Product Profit & Loss
� COFE*
� Demand side growth via network
� OH&S
Chief Operating Officer
Mike Guerin
Our business is structured for our new orientation
KPI’s:
� Delivery of work programs
� SLA’s to customer businesses
� OH&S
*Contribution on funds employed
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The path to margin improvement
5 key factors to advance our margin objectives…
� Go-to-Market strategy – establishing Elders as the productivity partner of choice
� Supply Chain – buying and moving stock in the most effective and efficient manner
� Operational Excellence – delivering a standardised and cost efficient platform for our business
� Cost control – continuously improving cost management while achieving overall business targets
� People – performance management and sales training for front line delivery
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Go-To-Market Strategy Supply Chain
� Initiated better systems to gather and analyse client data and target marketing/sales
� Develop the right technical capability and product range in under-represented markets
� Increase relevance to farmer clients
� Centralised procurement to improve margins and lower our cost to-serve
� Preferred product access particularly in tight markets, but requires preferred supplier adherence
� Requires whole of business ownership
Operational Excellence Cost Control
� Taking our best processes from localised operating environments and replicating across the network
� More efficient support for our sales people
� Cost management processes continue to be improved and refined
� Maintain and improve on the cost reductions achieved to date
� Key performance indicator for every direct report and sub-report
Key projects currently in trainF
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Speaker: Mike Guerin – Chief Operating Officer
Subject: New Zealand Network
Elders Field Days 2009
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NZ presents an attractive market place for Rural Services
Rural Services is a natural player in NZ market …..
� NZ Farmers have similar needs to Australian farmers and competitive environment is similar
� There are significant potential synergies between Australia and NZ –Supply Chain and Operational Excellence Marketing being 3 of the biggest
� Our productivity partner value proposition appeals to NZ farmers
� NZ is physically close & convenient, and we are already there
….. with significant earnings potential
� NZ has a profit pool potential about 1/3rd of Australia – predominantly Livestock and Dairy
� Agriculture is concentrated in specific regions meaning the market can be served with a relatively small footprint
� The right business model can generate reasonable returns
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New Zealand Network Overview
A$50m Merchandise sales
12 mths to 30 Sep 09Statistics
A$135m Total NZ sales
457kSheep sold
142k Cattle sold
40,000Clients
404Employees
18Branches
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New Zealand: improving performance through application of Elders strategy and management framework
� Transition to regional management structure
– Change from product structure to customer orientated regional structure
– Completed
� Implementation of Go to Market Model & rationalisation of branches
� Change in sales orientation from product to customer
– Focus on cross-sell and lifting product penetration from current level of 1 percustomer
� Sales and performance management
� Introduction of demand-side market options
– Previously supply focussed
– Expansion of live export accumulation
– Wool market development plan
� Leveraging the scale of the Australian network and fixed cost base of its support centresFor
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Speaker: Mark Geraghty – GM Marketing
Subject: Go-To-Market
Elders Field Days 2009
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The need for a new go-to-market strategy
500k - 1m
<200k
200k - 500k
>1m
Source: ABS data; team analysis
CAGR (%)Number of Farms
The consolidation of the farm sector has driven the need to change……
Farm Turnover ($’s)
-3.5
2.3
12.4
8.7
1995 2000 2005
147,112 146,372
129,934
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Average rating of Key buying factors across all customers
The need for a new go-to-market strategy
6
6
7
10
15
15
18
22
Security of supply
Price
Responsiveness
Knowledge
Local branch
Range
Finance terms
On farm visits
Customers see little differentiation in the market
Source: Customer interviews; Team analysis
Very poor Average Very good
Elders Average Aggregated Others average
No perceived differentiation in the market place…
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Elders’ go-to-market strategy at a glance
� Shift from a ‘current-value’ segmentation to one that incorporates profit potential, industry and needs
� Serve all parts of the market but gain:
– Representative share of horticulture, dairy and major accounts
– Disproportionate share of more attractive segments (mid-market, service, progressive)
� Overall value proposition – productivity partner of choice
� Different value propositions/superiority claims for 4 industries(livestock, cropping, horticulture, dairy) and needs-based segments
� Perceived as competitive on price
– Low price leader on certain SKUs in fert and ag chem
� Shift from one-size-fits-all branch – based model to 6 channels to market with radically different costs-to-serve and differentiated branch formats by locality
– Key account managers for top 200 potential clients
– Field sales for sweet-spot middle market
– Low cost channels (branch, phone) for small clients
– Direct sales shifting to online purchasing option with differentiated pricing for all segments
Who
What
How
Enablers
Capabilities
Lean organisational
structure
Lean processes
Culture
Value proposition
and products
Procurement & logistics
Regional management
Sales excellence
Segment marketing and pricing
Channel and sales strategy
Target markets
Go
-to
-mark
et
str
ate
gy
Aspiration
Finance, credit &
& IT
Performance
management
Capability
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Elders go-to-market strategy at a glance
NEEDS
INDUSTRY
Cropping
Dairy
Horticulture
Livestock Progressive
Traditional
Price
LARGE (PLATINUM)
MEDIUM (DIAMOND, GOLD & SILVER)
SMALL (BRONZE)
2
PROFIT POTENTIAL
Service
3
1A
ND
S
UB
–IN
DU
ST
RIE
S
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What is the opportunity?
� By segment and product (e.g. downstream links for livestock producers)
� By customer experience (seamless service delivery for key accounts)
� Inside sales vs. field sales
� Currently over 85% of clients are ‘small’ (<$5k profit pool)
– Should be 55%
– Balance the need to served a different way (in branch, phone & online)
� Cross-sell (capture full opportunity)
� Key account penetration (50% growth)
� Dairy & Horticulture (5-10% to 20%)
Strengthened & Differentiated Value Proposition
Reduced Cost-to-ServeIncreased Market Share
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Progress to date
�Top level dairy strategy agreed�Detailed planning to penetrate dairy
underway�Horticulture strategy developed and
in execution
� Market share
� Supplier leverage
Representative share of industry
Low penetration of industry
Dairy & Horticulture
� In operation�Margin improvement in controlled
products� Increased competitiveness on
shopped products
� Pricing control & probity
� Increased margins
� Discount leakage
Central pricing management with managed local discretion, based on regional intelligence
Branch based discretionary pricing with significant variance
Price Book
Elders as the preferred partner, based on functional differentiation
Industry oriented sales team and support structure, capable of selling multiple products
TargetElement Previous Benefit Status
Cross-sell Product based sales people and support structure limited cross sell
� Sales
� Market share
� Cost to serve
�Cross-sell and referral marketing programs developed
�Target clients identified�Embedded in branch action plans�Long term goal to develop superior
sales capability
Value proposition
Limited differentiation
� Client loyalty
� Market share
� Decreased volatility
�Value proposition and detailed superiority claims developed and embedded in marketing plans.
�Direct to client communications underway
�Differentiation through sales interface a long term task.F
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Speaker: John Molenaar – Head of Australia
Subject: Australian Network
Elders Field Days 2009
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Australian Network Overview
12 mths to 30 Sep 09Statistic
$1.9bProperties turnover
$1.2bFarm supplies sales
443kTonnes fertiliser
475kWool bales sold
12.7mSheep sold
2.2mCattle sold
$1.5bRevenue
1,809Employees (FTE’s)
267Branches
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Elders Day-to-Day Interaction
SEASONAL FINANCE
GENETICSBIOLOGICAL
ASSETSANIMAL HEALTH
FEED SALES
�������� ���� ����������������Elders Participation
STRATEGIC INTERFACE RIGHT ACROSS THE LIVESTOCK VALUE CHAIN
ABATTOIRS
FEEDLOTS
LIVE EXPORT
�
�
����
SEASONAL FINANCE
SEEDSFERTILISER
& CHEMICALS
FUEL FREIGHTSTORAGE
& HANDLING
ACCUMU-LATION
������������ ���� ����������������Elders Participation
STRATEGIC INTERFACE RIGHT ACROSS THE CROPPING VALUE CHAIN
PROCESSING
DOMESTIC
EXPORT
�
�
����
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Managing the Australian Network
� Contribution
� Contribution on Funds Employed (COFE %)
� Expenses / Gross Profit ratio
� Year on Year growth %
� Stock turns
� Cost of discounting
� OH & S indicator
� Head Count (FTE)
8 KPI’s
Region based management structure…
John MolenaarHead of Australia
GM South GM North
8 RSM’s : Regions 5-1212 RSM’s : Regions1-4,
13-20
155 Branch Managers 112 Branch Managers
National Sheep & Cattle
National ESM (KAM)
National RE
Financial Services
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Value Proposition – Productivity Partner of Choice
� Seasonal and term finance
− Complete product range
� Differentiated marketing options
− Livestock: live export, feedlots
− Cropping: cash based products
− Wool: Indent, open cry, mill direct
� Demand creation and continuity
− Customer solutions management
� Agronomic advice
− Production planning (whole of farm)
� Animal Production
− ELMS
− Sheep and Cattle
− intensive/extensive
� Genetics – seed stock
� Livestock and wool assessment
− Down stream linkage campaign
Better ServicesBetter Advice
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How we are improving
� Initiated� Understanding of the business drivers
� Focus from common financial language
� Ability to review / change as required
Formalised monthly reviews at all levels of the business around P&L, key financial drivers, key revenue drivers and monthly activity
P&L and product based discussions held quarterly
Performance Management Process
� Initial target of 10,000 clients
�Campaign designed
�Second quarter (pre broad acre) execution
� Cost per product
� Strength of relationships
Move avg to 4 products of our top 10,000 accounts (excl KAM)
Product focused marketing and sales programs
Cross Sell focus
�National structure in place 14 KAM’s & 240 accounts
�Account management Process created
� Relevance to clients - long term arrangements
� Investment in the account
� Volume & supplier leverage
� Forecasting ability
Trading relationships with the top 300 agricultural producers in Australia, across our targeted market segments
Branch / state based service offerings -using price as the key point of differentiation. Little to no national coordination
Key Account Management
�Completed� Market and customer
feedback / corresponding
due to management being
closer to the customer
� Execution of initiatives / controls
20 individual regions based on agri-orientated farmer requirements
State based management structure
Regional Management Structure
StatusBenefitTargetPreviousElement
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Speaker: Mark Thiele – MD Elders Toepfer Grain
Subject: Elders Toepfer Grain
Elders Field Days 2009
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Domestic BuyersDomestic Buyers International BuyersInternational Buyers
ToepferToepfer
Elders NetworkElders Network
ETGETG
Accumulation MarginSupply
Trading
Contract & Trading
Farmer ClientsFarmer Clients
SupplyCommission
Interface & Accumulation
Operating Model
50:50 joint venture between Elders and Toepfer International
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Strategy
Customer partnerships drive demand….
� Key accumulation relationships
– Shareholder
– Key local and international relationships
� High volume demand
– Supply customers not trade with them
� Lower margins, lower risks, supply management
� Rapid market intelligence and access
Create efficient supply chains…..
� Access not ownership
� Grain market regulatory environment
� Efficient channels to meet client / customer needs
� Reward asset owners who give guarantees
� Alternative solutions
Farmer client relationships support supply..
� Elders network position nationally
� Preferred productivity partner
� Products provide certainty to farmer clients
� Simple clear transparent product offering
� Cash flow and payment security
� Rapid market intelligence
Market InterfaceSupply ChainClient Interface
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� 2007 ~ 800� 2008 ~ 1,900� 2009 ~ 4,100
� 4,143 active clientsFarmer / Client Relationships
� Volume and growth customer� Best in segment� Customer alignment
� International: 54% of business� Domestic: 46% of business� Top 20 Customers: 88% of business
Customers
� Field: 5� Corporate: 21
� Active grain accumulation:� Branches: 139� Toepfer global network: 44 countries
� Direct
� Indirect
Staff Numbers
� Wheat: 1.7 million mt� Barley: 0.5 million mt� Sorghum: 0.7 million mt� Other: 0.2 million mt
�3 million mt (est.)Volume
StatisticsState of PlayMeasurement*
Overview
*12 mths ending 30 November 09
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0
1,000,000
2,000,000
3,000,000
4,000,000
07/08 (Actual) 08/09 (Actual)
Financial Year
To
nn
es
Sales volumes
0
1,000,000
2,000,000
To
nn
es
07/08 Actual 08/09 Actual
WHEAT
BARLEY
SORGHUM
OTHER
Financial Year
07/08 Actual 08/09 Actual
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Initiatives to challenge the status quo
Supply Chain
Client Interface
�Work in progress�Operating for 2010 harvest
� Cost to ETGReduced logistics costs of $1 /mt by road
Leveraging growing scale of ETG volumesRoad transport alliancesBack loading
Bulk logistics efficiencies
�Scoping & product development
� Revenue
� Cash flow options for farmers
Cross sell to 10% of client base in 2010 harvest
Deposit schemes & on farm warehouse finance
Bundled finance products
�First growers accredited by December 1
� On farm storage
� Flexibility in supply chain
� Cost to farmers
1 million mt by 2010 harvest
Partnership with SGS for accreditation of on farm storage
Independent on-farm warehouse accreditation program
StatusBenefitTargetDescriptionElement
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� Farmer clients driven increasingly via cash flow management
� More transparent marketplace - supply chain cost focus
� Continued innovation to current product offering
� Rapid and contestable communication of pricing signals, trends and market drivers
� New service providers will challenge current incumbents
Future directionF
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Speaker: Hamish Browning – GM Livestock Trading
Subject: Livestock Trading
Elders Field Days 2009
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Livestock Trading
Providing livestock supply solutions to downstream customers leveraging the supply capabilities of the Elders network while providing marketing options to farmers
� Live export of feeder and breeding cattle
� Grain fed beef cattle from feedlots in Australia (2) and Indonesia (1)
FarmGate
Live Export Feedlot
Processor Wholesaler Retailer Consumer
� Indonesia 8-10k processed
�Approx 350k cattle traded pa
�Elders Networks
�2.2m cattle sold
�12.7m sheep sold
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Business Units & Management Structure
Hamish Browning
GM Livestock Trading
Killara Feedlot Charlton FeedlotLive Export
Feeder Cattle (NACC)
Live Export Breeder Cattle
(ULE)PT Indonesia
�Feedlot –7,000 head capacity
�Abattoir – 200 head per week capacity
�Approx 35k head pa operation
�Approx 200k head pa operation
�100% owned
�20,000 head capacity
�53% JV with Taiwan Sugar
�20,000 head capacity
Management structure defined by operation type and location…
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Feedlot profitability is a function of cost to produce and the price realised on sale… we must produce a kilogram of beef for less and sell it for more
� Supply chain operations involving 110,000 head per annum in Australia & Indonesia
− Sales $135 million & Gross Margin $12 million
� Australia
– Australia’s 5th largest feedlot operator
– #1 supplier of grain fed beef cattle to Woolworths, Coles, Cargill, & Teys
– Feedlots at Charlton (Western Victoria) & Killara (Northern NSW)
– Produce 70 day grain fed (principally domestic) & 100 day grain fed (principally export)
– Production cost KPI’s
• Feed conversion ratio, mortality rates, capacity utilisation
– Price realisation KPI’s
• Cattle specification, meat yields, meat quality
− Safety KPI’s
� Indonesia
– Feedlot near Lampung
– Abattoir at Bogor near Jakarta
FeedlotsF
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� 30% market share of live cattle exports
� Supply of feeder and breeder cattle to world markets
� Sales $294 million & Gross Margin $33 million
� S.E. Asia Feeder Cattle Trade
– Approx 200k head pa
– Cattle shipped to be put on feed or direct to slaughter
– High volume low margin commodity focus – 1 to 2 shipments per week
– Supply to Japan, Indonesia, Philippines, Malaysia and Vietnam
� International Breeding Cattle Trade
– Approx 35k head pa
– Cattle shipped for development of herds, primarily in developing nations
– Low volume high margin focus – 1 to 2 shipments per month
– Supply to China, Russia, Mexico, Saudi Arabia and Pakistan
� Key operational challenge is execution – sourcing cattle to specification within a set time frame while working with a stringent regulatory environment and managing sea/air logistics
Live ExportF
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Strategy
� Increased feedlot capacity – additional 4,000 head
� Wet market volumes
� ‘Sterling Beef’ margins
� Integrated feedlot operating model
� High residency strategies
� Improved pricing through customer quality KPI benchmarking (i.e. WORLD)
� Counter cyclical capacity expansion
� Network supports trend to reliable suppliers –target new markets, new customers, as well as increase in share of existing base
� Grow alternative country of origin supply
� Long term charter arrangements
PT IndonesiaFeedlotsLive Export
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Speaker: Rob Tanti - GM Human Resources
Subject: People and Performance
Elders Field Days 2009
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Focus of People & Performance initiatives
� Operational excellence and efficiency
– Remuneration
– Recruitment
– Fleet
� Cultural alignment
� High performance culture
– Performance management and development
– Performance incentives
� Sales force effectiveness
� Management and leadership capability
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Operational Excellence – benchmarking and optimising back office activities and policies
� Remuneration
– Template employment contracts and terms
– Single review cycle
– Single benchmarking and reporting platform
– Single point of governance
� Recruitment
– Centralised transactional activity
– Bolster in-house capability and lever national/local strategic partnerships
– Clarify engagement protocols
� Fleet
– Rationalise fleet
– Change vehicle mix
– Sale and lease back company owned commercial/motor vehicles and equipment
– Build internal controls and outsource management
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Cultural Alignment …Building the Elders Way
Programs & Processes
Myths andLegends
What we do
Our Values
The EldersWay
Awards Results
Rewards Guidance
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Cultural Alignment … Embedding a High Performance Culture focused on results.
� Performance management and development
– KPI's and objectives classified into; financial, operational, customer, safety, people and behaviours
– Review and budget cycle integration
– Development needs based on job requirements and aspirations
– Automated system under review
� Performance incentives
– Executive Short Term Incentive Program (STIP)
• Weighted against financial KPI's and safety
– Long Term Incentive Program (LTIP)
• Weighted against financial KPI's, EPS and safety
– Governed and reviewed annually by the Board and Remuneration Committee
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Sales Force Effectiveness …
� Technical capability
� Executive sales management and strategic account management
� Support management cadence
� Building sales management framework “selling the Elders way”
– Collaboration between Australia and New Zealand to develop a single management framework and selling proficiency
� Sales management dashboard
� Multiple incentive programs
– Sales commission
– Branch earnings
– Individual
– Collective (referrals)For
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Management and Leadership … building best in class bench strength
� Elders leadership competency matrix
– Talent management
– Succession management
– Recruitment and selection
� Performance management
� Business management
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Speaker: Jim Lynch – GM Supply Chain
Subject: Supply Chain
Elders Field Days 2009
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The Big Plan
“…optimising the balance between service and cost through better buying, reduced
working capital and efficiencies in physical logistics”
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Elder’s Supply Chain
Elders’ Farm Supplies Business is………………
� $1B+ p.a. spend
− Spread across Ag Chem, Fertiliser, Animal Health & General Merchandise
� Active stock items reduced by 26% over last 2 years (from approx 40,000)
� 2,000+ Active suppliers
� 115,000 end customers serviced through 285 geographically dispersed Stores across Australia and New Zealand
− Australia deliveries funnelled via a mix of 3 Distribution Centres (DC's), & direct-to-store
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The need for change
The need to change was driven by the need to….
� Align with the Go-To-Market strategy
� Buy better - Drive margin gains through procurement
� Control of our offering - What we sell, to whom, when, how much
� Optimise logistics - Lower cost-to-serve
� Reduce working capital - Lower carrying costs and associated risk
80% of purchase orders were accounting for 30% of sales and only10% of product volume
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Better Buying
�Embedding of processes continues
�Wins measured against business targets
�Accelerating savings
�“Best Deal”
�Probity
�Focus on cost-
downs
�Alignment to marketing direction
Formal, structured, transparent & robust process
“Loose”tendering
Robust Processes
�Broken down category management
�Created strategic procurement function
�Bolstered technical skills in marketing to support
�Alignment of procurement to marketing direction
�Sales buy-in to offering
�Legacy inventory
Procurement “pulled” by marketing defined demand
Category Management model purchased then “pushed” on sales team to sell
Demand Driven
�Key categories consolidated
�Controls in place and discipline improving
�Embedding of processes ongoing
�Buying power
�Negotiation power
�Control of offering
Centrally controlled, strategic procurement
250+ individual branch-based deals
Consolidate the spend
StatusBenefitTargetPreviousElement
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Improved Physical Logistics
�Freight review due for completion Dec 2009
� Service
� Compliance
� Visibility
� Costs
� Subsidising competitors
Centrally managed freight contracts.
Primarily via DC providers but tested on route-by-route basis by internal team.
250+ individual store negotiated deals
Carrier compliance
risks
Suppliers making margin
Subsidising competitors
Freight
�3 DC’s implemented�Fast tracking improvement
initiatives around systems integration, KPI reporting
�Developing framework to secure DC rebates (supplier cost-downs from DC efficiencies)
� Inventory
� Carrying risk
� Admin costs
� Transport costs
� Service levels
Deliver & hold selected lines in 3 National DC's
Direct to 250+ individual stores. Suppliers control costs.
Develop Distribution Centre (DC) Infrastructure –Australia Only
StatusBenefitTargetPreviousElement
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Better Planning
�Forecasting software implemented
�Collaboration from front-line sales staff on forecast now occurring
� Improvement ongoing with time & experience
� Network ownership
� Tech-supported forecast
� Service
� Inventory/working capital
�System generated forecast
�Validated & owned by front-line sales team
Category Managers “pushed” a manually calculated forecast
“Best of Breed”forecasting tools
�Formal mechanism to align & optimise Marketing direction with Sales execution, Supply Chain & financial objectives
�Beginning to deliver benefits�Ongoing development required
� Planning, through single “demand”figure
� Responsiveness
� Service
� Inventory/working capital
�Supply chain deliverables match sales execution & aligns to the intended market offering
�All consistent with financial objectives
“Loose”alignment
Functional alignment via Sales & Operations Planning
StatusBenefitTargetPreviousElement
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2006 Elders’ Australian Supply Chain – Basic Design
50+ Major suppliers
200+ Regional supplier DCs
5 State based Elders warehouses
267 Elders merchandise branches
Customers
� 30% of volume flowing through Elders DCs
� 500kg median branch delivery size
� Daily deliveries with heavy use of local carriers
� Heavy use of urgent orders & deliveries
− peak season 45%
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2010 & Beyond Elders Supply Chain – Compared to 2006
50+ Major Suppliers
Reduction of Elders use of Supplier DCs
3 Elders DCs – Perth, Brisbane & Melbourne
267 Elders merchandise branches
Customers
� Targeting 70+% volume flow via DC's
� Median branch shipment weight increased by 150-450%
� Reduced Supplier Purchase Orders by 70-75%
� Peak-season, Urgent Branch Orders reduced to <15%
� Reduction of inventory by >40%
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Timelines for Implementation & Benefits
Nov 2009
Mar2010
Jun2010
Sept2010
Dec2010
BasicImplementation
Better Planning
Improved Physical Logistics
Better Buying
Demand Driven
Develop DC Infrastructure
DC Rebates
Freight Review
Forecasting Technology
Sales & Ops. Planning
Robust Processes
Consolidate the spend
Benefits EmergingBasic Implementation
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Speaker: Miriam Silva – GM Commercial Operations
Subject: Operational Excellence
Elders Field Days 2009
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The Big Plan
“……..creating a sustainable base for growth by implementing operational best practice to reduce risk, support sales and free up capacity to focus on customers”
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The need for change
Non-standard processes across our business. Elders needs…
� Better process links to customer service standards and customer value propositions (Supply Chain and Go-To-Market )
� Improved understanding of customer requirements and cost to serve
� A better spread of skills and expertise needed for the support of specialist areas
� Standardised and common processes across the board
� A cheaper, standardised operating model and easily scalable back office to support sales and revenue growth
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How are we doing it?
� DMAIC & Lean 6 Sigma structured program to reduce operating costs & improve efficiency
� 19 projects to be conducted over 15 months
� First 6 months focussed on Branch Network (including Farm Supplies, Livestock & Real Estate) and HR.
� High strategic significance – central to Go-to-Market, Supply Chain & Cost initiatives
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Establishing the Standardisation Program
Building a platform to support our customer facing operation….
� Reviewing existing documentation within the business (10 years old, ambiguous and state oriented)
� Selecting the ‘best process’ currently existing within the business to standardise for national roll out
� Established an easy to use template
� Policies and procedures will be delivered over the intranet
� Business leads and team selected to ensure subject matter expertise and network acceptance
� Proof of concept underway
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Timelines
Pilot & Plan
Prototype development.
Pilot to proceed December 1.
Prioritisation & planning workshops.
Proof of Concept39 Policies & Procedures delivered across:
1. HR2. Farm Supplies3. Livestock4. Real Estate
1
Full Stream Delivery 1. HR2. Farm Supplies3. Livestock4. Real Estate5. Livestock Export & Trading6. New Zealand (Improve)
2
Standardisation and Process Improvement Roll-out
7. Finance8. Property9. Ops Support10. Wool11. Admin12. Reconciliations13. IT114. PMO15. Payments16. IT217. Treasury18. Risk19. Marketing
3
2010 2011
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Outcomes
To support Elders Transformational Program by providing….
� Improved customer experience
– Efficient, standardised and common processes measured to customer requirements
– Better customer service
� Consistency
– Across all branches and geographies
– Increased staff capability
� Flexibility and Agility
– Operations centres of excellence leveraged by all regions and geographies where appropriate
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Speaker: Tim Plant – CEO Elders Insurance
Subject: Elders Insurance
Elders Field Days 2009
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Elders Insurance – Business snapshot
Product & DistributionElders Insurance (Underwriting Agency) Pty Ltd (EIUA)
– 75:25 JV between QBE & Elders
Underwriter• QBE Insurance Group
- Elders Insurance Limited (QBE owned APRA licensed insurer)- QBE Insurance (Australia) Limited
Key facts
Gross Written Premium (GWP) $500mCustomer numbers 250,000Policies 290,000Agents & Salespeople 209
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Farm
31%
Personal
21%Agency
11%
Business
29%
HO
Commercial
8%
GWP by Product GWP by State
NSW
27%
Vic
22%WA
18%
Qld
16%
SA
14%
NT
1%
Tas
1%ACT
1%
GWP Break DownF
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163Total
44%71Rural Services Branches
20%33Shared High Street
36%59Stand Alone High Street
% of TotalNumberFit with Elders
Elders Insurance locationsF
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Elders Insurance Operating Model
Customers
Product Claims
Tied Franchised Agents
Primary customer contact
�All Claims above $10k including:
−Liability,
−Third Party &
−Fraudulent Claims
� Underwriting Authority
� Product Development
− Farm
− Livestock
− Crop
Policy issuanceLocal claims settlement - $10k or less
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Leveraging the best of Elders and QBE
Unique Franchise Agency Agreement
� Tied Agency Network
� 20-year tenure protected by the Franchise Code
� Ability to on-sell servicing rights
� Exclusive access to Elders Insurance products
� Exclusive access to Elders Ltd client base
Quality of Relationship & Service
� Agents located within the community
� Knowledge of key local underwriting factors
� Local underwriting and claims authority
� Local claims service providers utilised
� Agents qualified to provide personal advice
� Local policy issuance capability For
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Competitive positioningF
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Key market opportunities from formation of EIUA
Transition to QBE systems
� Implementation of c.ch@nge will improve front-end efficiency
Enhancement of Agent model and sales capability
� Agent segmentation
� Growth in SME business
Increased utilisation of QBE Products
� EIUA to ‘manufacture’ products which provide differentiation - Farm, Crop & Livestock
� Source remaining product from QIA or QBE U/W Agencies
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“…..one strong future”
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RURAL BANK LIMITED2nd December 2009
Adelaide
Paul Hutchinson
Managing Director & CEO
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Agenda
Background
› Legal / Operating Structure
› Current Market Position
› Business Dimensions
› Structure and Governance
- Customer Strategy
- Customer Value Proposition
- Segmentation
- Product and Price Competiveness
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Background - Legal / Operating Structure
Legal / operating structure
� RBL is a 60:40 joint venture between Bendigo and Adelaide Bank Limited (BEN), and Elders Limited (ELD) established in 2000
� RBL today leverages capabilities in the Elders and BEN including adjacent product lines and a significant distribution footprint
� RBL operates alongside a very wide variety of product lines servicing the rural community in Australia and thus identifies and responds to the operating and capital needs of agribusiness customers
� Commodities: livestock, wool, grain, merchandise
� Services: real estate, home loans, insurance, banking, wealth, agronomy
� RBL “sells” product through a number of channels
� Elders Distribution: District Banking Managers (DBM's) and District Banking Officers (DBO's) attached to over 200 branches
� BBL network of branches
� Direct sales of AMIS to high net worth customers
� Elders Online for direct sales of Term Deposits
� Emerging business banking capability
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Background – Current Market Position
Current market position
� Operates in a market that is dominated by the Big 5 banks (NAB, CBA, ANZ, Westpac and Rabobank), as well as a number of smaller regional players (St George, Bank West, Suncorp Metway, Landmark)
� To-date RBL’s market penetration strategy has mainly been to:
� Focus exclusively on Agribusiness’on-farm needs
� Focus predominantly on loan products (term and seasonal)
� Build a customer base from the overall Elder’s customer base of about 100,000, having now achieved ~11% penetration into this market
� Growth has been very strong, achieving 21% CAGR since 2000 within a rural debt market that has been growing at a background rate of 10%
� RBL loan book is very evenly weighted across geographic borders
� RBL’s risk appetite and sales focus has favoured the cereal and pastoral (livestock) sectors
NSW
21%
VIC/TAS
14%
QLD
24%
SA/NT
15%
WA
26%
Grain
6%
Grain, Sheep &
Beef
31%
Sheep & Beef
14%
Sheep
7%
Beef
28%
Dairy
5%
Hort & Vit
3%
Other
6%
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Background - Key Business Dimensions
• Retail deposits (both network and treasury) comprise over 95% of RBL’s overall funding requirement with a commensurately low reliance on wholesale activities.
• Geographic spread and maturity profiles continue to be strength of the Bank. Significantly greater levels of deposits are now originated in metropolitan cities.
•RBL has access to wholesale (govt guarantee) and securitisation markets for alternative funding if required.
Retail Funding Composition
At Call
15%
0-1mth
21%
2-3 mths
31%
4-6 mths
18%
7-12 mths
11%
Over 12
mths
4%
NSW
24%
VIC/TAS
14%
QLD
22%
SA/NT
15%
WA
25%
1,8462,262
2,6872,976
3,526 3,6750
60
205255
20378
$0
$500
$1,000
$1,500
$2,000
$2,500
$3,000
$3,500
$4,000
Jun 04 Jun 05 Jun 06 Jun 07 Jun 08 Jun 09
Millions
Retail Wholesale
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Background – Structure & Governance
Operating Model & Executive Management Structure
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Agenda
⟩ Customer Strategy
› Customer Value Proposition
› Segmentation
› Product and Price Competiveness
⟩ Background
› Legal / Operating Structure
› Current Market Position
› Business Dimensions
› Structure and Governance
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Strategic Direction – Brand and Marketing
⟩ Rural Bank has unparalleled industry specific knowledge underpinned by a team of industry experts.
⟩ Rural Bank is committed to helping regional and rural business grow and making it easier to do business.
⟩ We partner with local representatives who are uniquely placed to understand your needs.
⟩ Rural Bank is accessible, with a growing network of over 250 branches Australia-wide.
⟩ Rural Bank provides value for money through access to a range of relevant, competitively priced products and services.
Rural Bank is the Country’s Bank.
For Agribusiness
We are an agri-finance specialist partnering with industry experts to deliver a unique solution that achieves your financial goals.
For township and metropolitan customers
Rural Bank is Australian owned, and reinvests every cent of its deposits back into Australia's rural and regional communities.
Customer Value Proposition
Proof Points
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Strategic Direction - Sales Capability Effectiveness
Market Segmentation Driving Sales Planning Process
Step 1: Determine VALUE of LSR Districts
i. By LSR district estimate total indebtedness and total deposits
ii. By LSR district estimate total value of production (i.e. turnover) –better proxy for performance
� On-going development process directing sales capability at hunting in geographies / industry sectors with the highest potential / sustainable yield and returns
Step 2: Determine RISK of LSR Districts
i. By LSR district profile risk using RBL’s risk scoring – i.e. Low, medium and high
Step 3: Determine PREFERENCE of client groups
i. Determine broad preferences of different client groups – i.e. their specific needs, wants, and what they demand
ii. Adapt elements customer value proposition according to client group preferences – service, channel, product, price
Step 4: TARGET specific LSR
Districts and industry sectorsi. Mine data to identify specific LSR districts / industry sectors to hunt in
Step 5: ALIGN sales and channel model to segmentation
i. Reorganise (structure and capability) to ensure sales channel can credibly deliver CVP to target segments
ii. Align physical network and virtual channel to segmentation
Step 6: OPERATIONALISE info through sales planning tools
i. Ensure segmentation is ‘alive’ by providing sale force with practical tools and information that they can act on
ii. Migrate information to interactive platform
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Strategic Direction - Sales Capability Effectiveness
-
1,000
2,000
3,000
4,000
5,000
6,000
$50m + $20m to <$50m $5m to <$20m 500k to <$5m <500k
-
500
1,000
1,500
2,000
2,500
Client Numbers Total Limits
Client Groups – Targeted Penetration
� RBL to move customer base distribution curve to the left, growing penetration (through sales planning) targeting tier three and four client groups
� As the value (i.e. production) of the client group increases, so to does the inherent complexity of their operations and hence their banking needs – places a premium on improving sales force capability
Customer Groups Tier One Tier Two Tier Three Tier Four Tier Five
Estimated turnover per farm1
$10m $2m $0.7m $0.3m $0.1m
Turnover range1 >$5m $5-1m $1-0.5m $0.5-0.2m $0.2-0m
Indebtedness range1
>$50m $50-20m $20-5m $5m-0.5m <$0.5m
Targeted Distribution of RBL Customers Across Client Groups
Clie
nt N
um
bers
$m
RBL – FY09-11 STRATEGY
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Strategic Direction - Product & Price Competiveness
Product Development
� Simplicity
� Target Market
� Value
Marketing
� New customer acquisition
� Improved product penetration
� Sales support
< $200k
> $200k
Stockbuilder
Harvest
Leasing
Loan Product Levers
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Speaker: Vince Erasmus - Chief Executive ITC Limited
Subject: ITC Limited
Elders Field Days 2009
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Overview of ITC
� Now focused on forestry
– Manager of Forestry estate of 170,000 ha
– ITC manages trees owned by MIS growers and participates in harvest proceeds
– ITC owns a small minority of trees in its own right
– Port infrastructure at Albany (50% share) and Bell Bay (through 50% interest in Smartfibre)
– 13.5% shareholding in FEA
– Lead Australian negotiator with Japan on woodchips
– 108 Employees, 400 Contractors
– Leading certified forester in Australia
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Plantation & port footprint
Kununurra1,640 ha Indian sandalwood
Bunbury 16,070 ha pulp440 ha sawlogs
Albany35,650 ha pulp430 ha sawlogs130 ha Aust Sandalwood
Esperance50,290 ha pulp
Green Triangle32,100 ha pulp1,000 ha sawlogs
Tasmania200 ha pulp600 ha sawlogs
Gladstone13,130 ha pulp1,380 ha sawlogs
Area (ha) Owned Leased Total
Western Australia 22,353 82,297 104,650
Green Triangle 1,407 31,693 33,100
Queensland 27,686 4,464 32,150
Tasmania 0 800 800
Total 51,446 119,254 170,700
Portland
Third party port Bell Bay (50%
interest)Controlled port
Mackay11,280 ha pulp
Mourilyan2,010 ha Teak4,270 ha Red Mahogany80 ha Indian Sandalwood
Albany PPT
Certification
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Forestry to end markets
Eucalypts (93%) Red Mahogany (2.5%)
Teak (1.2%) Sandalwood (1.1%)
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Transition from ITC to Elders Forestry
ITC is to be renamed Elders Forestry…
� Recognition of Elders’ involvement
� “One Company under the Elders’ brand” philosophy
� Rebranding to support marketing of future MIS (and institutional) sales
� Forestry business to be an asset light operator and service provider to the Forestry sector
� Integration of management structure to deliver revenue synergies and cost savings where it makes sense
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Differentiating features of ITC MIS business model
Differentiating Factor Elders Forestry
Focus � Dedicated forestry business
Revenue Diversification � Diversified revenue from MIS - 3rd party timber and port infrastructure
Co-investors � ITC retains significant equity over life of the project to harvest proceeds
Prudent Investor Policy � Stringent credit criteria on behalf of 3rd party financier
� Loan book of $20m at 31-Mar-2009 with $0.6m doubtful debt provision
Product Distribution � Distribute through National Institutions and Financial Planning Groups and Advisers who have no exclusivity to sell ITC products
MIS Income Recognition � Evenly distributed earnings
– $5,000 upfront fees (2008 pulp)
– 25% to 41% of net harvest proceed backend fees (2008)
Capital Intensity � 25% of forestry land owned, remaining 75% leased
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Diversification of revenue streams
MIS
Port andexport
services
Manage thirdparty forests
Emergingmarkets
Timberlandfunds
� MIS forestry projects (both existing and future sales) will be an ongoing source of revenue
� Alternative forestry investment structures and investors being investigated (e.g. institutional, wholesale, sovereign wealth funds etc.)
� Full ownership of Albany Chip Terminal provides greater opportunity to handle third-party woodchips and provide an access to markets
� Already have a number of plantation services agreements in place
� Emerging opportunity with limited capital requirements (e.g. farm forestry, carbon sinks for corporates etc.)
� Carbon
� Biomass
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Features of Australian forestry
Premium Product – Eucalyptus Globulus
� Faster growing relative to other species leading to increased forest returns
� Higher pulp yield leading to price premium
� Improved processing benefits leading to price premium
� FSC certified
Proximity to Key Customers
� Australia is well positioned to supply China and other growing Asian countries
� Asia’s share of global paper & paperboard demand is forecast to increase from 38% in 2007 to over 50% in 2025 (Poyry 2007)
� Australia’s geographic proximity to Asia provides significant time & cost advantage relative to other countries
Origin Sailing Days to Japan
Vietnam 7
Australia, Albany 15
Australia, Portland 16
South Africa 24
Chile 30
Brazil 34
Established Industry
� Quality plantation land
� Established markets and export infrastructure
� Consolidation following industry corporate failuresF
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Positive long-term outlook for pulpwood
Source: Poyry Dec 2007
Primary Market for ITC
Global growth will focus in Asia
Source: ABARE actuals, Poyry December 2007 and ITC Forecasting
0
2
4
6
8
10
12
14
16
18
20
1998 2000 2002 2004 2006 2008 2010 2012 2014 2016f 2018f 2020f
Mm
3
Native
Sawmill Residue
Plantation
Plantation is replacing native timber supply
� GFC has resulted in a temporary decline in demand for pulp
� Australian hardwood chip price has maintained its price after a period of strong growth
� Plantation fibre continues to trade at premium to native fibre - availability of native chip is expected to continue to contract
� Whilst demand from Japan is expected to be stable, strong import demand from China is expected to support price and volume
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Woodchip supply contracts
� ITC is lead Australian negotiator for plantation woodchip exports with Japan
� Typically annual negotiations
� Priced in A$, current price $207.40 per bone dry metric tonne
� Long term agreements with Oji, Nippon Paper, and other leading Japanese paper houses for 1.6m tonnes of certified woodchip over the next five years
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Certification
The first Australian retail forestry company to achieve Forest Stewardship Council certification
First in world to certify Indian Sandalwood
FSC Australia Forest Manager of the Year 2009
Partners with WWF Australia to encourage responsible forestry
Forest Stewardship Council is the highest level of environmental certification available in the world. Demanded by Japanese paper companies, entrenched in Europe and USA, growing demand in China and Asia
Australian Forestry Standard is recognised under the European Programme for the Endorsement of Forest Certification (PEFC) and under Australian StandardsF
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99
How forestry generates returns
Structural
Industrial grade
Veneer or peeler log
Biomass & PulpwoodNot suitable for lumber
Knotty
Low knot incidence
Minimum defect
Defect free
Defect free joinery
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GM
T (
millio
n)
0
0.5
1
1.5
2
2.5
Harvesting operations have only commenced in recent years
ITC harvested volumesITC harvested volumes
9190 92 93 94 95 96 97 98 99 0100 02 03 04 05 06 07 08
Source: ITC Management
2000s
09 1110 12 13 14 15 16 17 18 19 20
1998
– First pulpwood project
1991-97
– Planted pulpwood and sawlog plantations in W.A.
2001
– First ITC branded Indian Sandalwood project
2006
– First red mahogany and teak project, planted in Queensland
2005
– Commissioned JV woodchip export facility at Albany, W.A.
2008
– First diversified sandalwood project
(Indian and Australian sandalwood)
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Speaker: Ockert La Roux – GM Forestry
Subject: Forestry
Elders Field Days 2009
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Key Facts ITC Forestry
� Land
– Owned 52k ha $291m
– Leased 119k ha
� Trees
– Growers & direct clients 158k ha
– ITC Owned 8k ha
� Staff numbers– ITC 68– Contractors 400
� Annual Costs (12 mths to Jun 09)– Silviculture $39m– Harvesting, Chipping, Haulage $14m– Woodchip handling $4m– Land costs (rental etc) $24m– Staff $10m
Plantation Estate
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Ma
rke
ts
Finance
Safety, Health, Environment, Quality management systems
Human Resources
Forestry Planning
Funds Management
Business Structure
Research & Propagation
Tree Plantations
Procured Timber
Stump to hull logistics
Forestry Value Chain
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Geographic and Species Diversity
Kununurra1,640 ha Indian sandalwood
Bunbury 16,070 ha pulp440 ha sawlog
Albany35,650 ha pulp430 ha sawlog130 ha Aust Sandalwood
Esperance50,290 ha pulp
Green Triangle32,100 ha pulp1,000 ha sawlog
Tasmania200 ha pulp600 ha sawlog
Gladstone13,130 ha pulp1,380 ha sawlog
Portland
Mackay11,280 ha pulp
Mourilyan2,010 ha Teak4,270 ha Red Mahogany80 ha Indian Sandalwood
Tropical� High value timbers� Tropical pulp species
Temperate� Pulpwood� Sawlogs
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Pulpwood - Seedling to Stump
95 96-05
6
8
10
12
14
16
18
20
22
24
8 10 12 14 16 18 20 22 24
FELLING AGE (years)
ME
AN
AN
NU
AL
IN
CR
EM
EN
T (
t/h
a/y
r)
Pre harvest inventory assessment
Mid rotation fertiliser
MonitoringLand
preparationResearch &
development
Year: 2
Ripping
Mounding
Weed control
Fertilising
Week: -4
Infilling
Pest & insect control
Tree breeding
Fire control
Best practice forestry
Year: 9Week: 5-6Ongoing
Ready for harvestFirst inventory assessment
2nd year opsPlantingPropagation
Replanting
Weed control
Planting density 1,000 spha or 2.5m x 4m spacing
Seed to seedling
Private nurseries
Year: 10Year: 5Week: 50Week: 0Week: -16
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Pulpwood - Stump to Market
95 96-05
Woodchips converted into pulp and paper products
Vessel sails for Japan market
Woodchips reclaimed & conveyed to ship loader
Weighing, screening & re-sizing of woodchips
Whole trees debarked & chipped at roadside using in-field chippers
Whole tree harvesting with mechanised feller bunchers
Year: 10Year: 10Year: 10Year: 10Year: 10Year: 10
Woodchips offloaded at market
Vessel loaded 22k BDMT or 44GMT
Woodchips conveyed onto stockpile
On road haulage of woodchips to port export facility
Skidder extraction of whole trees to roadside
Year: 10Year: 10Year: 10Year: 10Year: 10
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Propagation and Tree Breeding
Seed from genetically superior
parents
ClonalForestry
eucalypt hybrid cuttings
TECHNOLOGY
SeedlingForestry
pure species seedlings
TIME
� In house R&D team and facility� Focus on selection and breeding: “elite trees from superior parents”� Genetic gains trials conducted since 1994, gains exceed 25%; potential for moreF
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Measuring Tree Productivity
Establishmentphase
Rapid growthphase
Mature phase
Ste
m w
ood p
er
hecta
re
Stand age
Mean Annual Increment
6
8
10
12
14
16
18
20
22
24
8 10 12 14 16 18 20 22 24
FELLING AGE (years)M
EA
N A
NN
UA
L IN
CR
EM
EN
T (
t/h
a/y
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Stand development over time
1 y
ear
2 y
ears
3 y
ears
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Future Harvest Estimates
2,640 2,5132,085
1,549990 1,035
1,5401,989
2,8892,361
1,045 618178123
1,608
4299
2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032
86 174 263 1,1771,158 1,854
6,2729,839
2,148 879
5,229
2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032
Sandalwood (air dried tonnes)
Pulpwood (‘000 green metric tonnes)
Teak (‘000 cubic metres )
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Long term agreements with leading Japanese paper and pulp companies
End User RegionSupply Volume
(GMT ‘000)
Oji Paper Albany 440
Green Triangle 400
Nippon Paper Group Green Triangle 600
Esperance 200Hokuetsu Paper Mills
High quality wood fibre
Reliable volumes
Requirement for certified
products
Supply an average 1.6m tonnes of FSC certified woodchip for the next five years…
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Future Forestry Focus
Pulpwood Consolidation current temperate estate to 125k haConsolidation current temperate estate to 125k ha
Red Mahogany Grow current estate form the current 4,3k ha to 10k ha Grow current estate form the current 4,3k ha to 10k ha
Teak Grow current estate form the current 2k ha to 5k ha Grow current estate form the current 2k ha to 5k ha
Sandalwood Maintain Indian and Australian Sandalwood estate Maintain Indian and Australian Sandalwood estate
Ports
R&D
Harvesting
Land
Advance construction of Esperance facility Advance construction of Esperance facility
To maximise grower returns through improving operational efficiency, genetic gains and resilience to pest and disease threats
To maximise grower returns through improving operational efficiency, genetic gains and resilience to pest and disease threats
Progress the further planning of the tactical preparation for the Esperance and Green Triangle harvesting and logistics operations
Progress the further planning of the tactical preparation for the Esperance and Green Triangle harvesting and logistics operations
Divest 52k ha for leaseback at optimal market price Divest 52k ha for leaseback at optimal market price
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Speaker: Linda Pickering – GM Funds ManagementAndrew Bendall – CFO ITC Limited
Subject: MIS
Elders Field Days 2009
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0
200
400
600
800
1000
1200
1999/00 2000/01 2001/02 2002/03 2003/04 2004/05 2005/06 2006/07 2007/08 2008/09
MIS Market SizeC
apital ra
ised (
$m
)
Source: AAG End of Year report (ex 2010 Forecast)
$800
$500
$300(F: $198m)
$345(F: $255m)
$665(F: $505m)
$1024(F: $768m)
$1140(F: $698m)
$1139(F: $667m) $1090
(F: $710m)
$250(F: $225m)
$294(F: $265m)
FY2010 forecast
2003/04 - 93% growth
2004/05 - 54% growth
$400(F: $360m)
20% 15%
20% - 18% growth
15% - 60% growth
Non-forestry
Forestry
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Market Share
� 2009 Market Share
TFS Willmott
ITC Gunns
Forest Enterprises Aust Great Southern
Timbercorp Other
TFS Willmott
ITC Gunns
Forest Enterprises Aust Great Southern
Timbercorp Other
2008 Market Shares2008 Market Shares 2009 Market Shares2009 Market Shares
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Strategy
InvestorsAdvisersAFSL’sITC MIS
Decision Factors• Product ratings• Finance• Ease of doing business• Relationship• Education
Financial Planning Strategies• Wealth accumulation• Tax planning• Diversified asset allocation
Decision Factors• Product ratings• Listed v unlisted• Adviser education• Financial strengthF
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Product Development
ResearchATO rulingFinanceDesign
1 July 31 Jan
Diversified Forestry Project� Multiple species� Multiple locations� Multiple cash flows� Choice of fee options� Investor protection
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2010 Diversified Forestry Product – Cash Flows to ITC
50/50 Single Upfront and Annual Payment – NPV $2,732
Diversified Project - Cash Flow to ITC - 1 Unit
-$4,000
-$2,000
$-
$2,000
$4,000
$6,000
$8,000
2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032
Annual Cash Flow Post-Tax
Cumulative Cash Flow Post-Tax
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2010 Diversified Forestry Product – P&L to ITC
Annual after tax profit margin recorded to ITC
Diversified Project - Annual Margin to ITC - 1 Unit
$-
$200
$400
$600
$800
$1,000
$1,200
$1,400
$1,600
$1,800
$2,000
2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032
Deferred Management margin
Establishment - Secondary
Establishment - Upfront
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Historical Forestry Revenue - Breakdown
2009 ($m) 2008 ($m)
MIS 2009 Sales Establishment Income 13.0 -
MIS 2008 Sales Establishment Income 17.8 13.4
MIS 2007 Sales Establishment Income 7.2 26.2
MIS 2006 Sales Establishment Income - 5.7
Establishment Income Total 38.0 45.3
Management Fees – Accrued 18.1 13.2
- Cash 4.2 5.2
Land Rental Income - Accrued 20.6 22.4
- Cash 10.7 11.2
Harvest & Port Fees 23.4 23.0
Total Forestry Income 115.0 120.3
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