Ridley Corporation Limited · ASX:RIC
Ridley — FY2005 Earnings Presentation
38 slides from Ridley's earnings presentation, 2005
Slide 1: Ridley Corporation 2005 Annual Results Presentation
RIDLEY CORPORATION 2005 ANNUAL RESULTS PRESENTATION
Slide 2: Main Features
Main Features • Strong recovery in Australian Feeds • Ridley Inc - ongoing improvement in 2nd half • Cheetham Salt - Dry Creek acquisition • Continuing strong cash flow • Significant Item - Tax Consolidation • Canadian legal claims
Slide 3: Results
Results A$ million z Sales 1,154 -2% z EBITDA 73 +4% z EBIT 49 +4% z Net Operating Profit 25 +24% z Net Profit (after significant items) 35 +95% z Dividends 6.5 cps* +13% * Interim 3.25cps unfranked * Final 3.25cps 50% franked
Slide 4: Sales By Division
Sales By Division A$ million 2 1 (7) 5 (16) 37 (47) 1179 1154 2004 RNS Salt Feed Feed Feed Discontinued Currency 2005 Australia USA Canada Operations
Slide 5: Net Profit
Net Profit A$ million (3.2) 12.1 (3.3) 2.8 34.6 1.3 (1.5) 2.0 (1.9) 1.0 7.6 17.7 2004 EBIT EBIT EBIT EBIT EBIT EBIT EBIT EBIT Borrowing Significant 2005 Feed Feed USA Feed Canada RNS Salt Discontinued Legal and Corporate costs, Items Australia Operations restructuring Costs tax,outside costs equity
Slide 6: Feed - Australia
Feed - Australia A$ million Sales 443 +1% EBIT 15 +108% Features - Improvement in poultry, beef and supplements volumes - Flat grain markets - Costs contained - Industry consolidation - JV’s / acquisitions
Slide 7: Feed – Australia Sales Volumes
Feed – Australia Sales Volumes Tonnes (12) 5 37 10 6 33 46 1558 1433 2004 Beef Poultry Supplements Sheep Dairy Raws Swine 2005
Slide 8: Feed – Australia EBIT
Feed – Australia EBIT A$ million (1.4) 1.0 1.2 0.7 14.6 4.7 7.0 2004 Volume Margins Overheads JV 2005
Slide 9: Cheetham Salt
Cheetham Salt A$ million Sales 72 +8% EBIT 18 -7% Features - Volumes up / product mix - Dry Creek - Energy / transport / packaging - Export – freight availability
Slide 10: Cheetham Salt EBIT
Cheetham Salt EBIT A$ million (1.2) 0.4 (0.4) 0.8 (1.1) 19.6 18.1 2004 Manufactured Bulk Fuel, Dry Creek Japan/Other 2005 Product Shipments Freight, Packaging
Slide 11: Feed - USA
Feed - USA A$m US$m Sales 380 -7% 285 -1% EBIT 14 -18% 11 -10% Features - Trade environment - Volume - Margins - Volatile ingredient market - Cost reductions
Slide 12: Feed – USA EBIT
Feed – USA EBIT US$ million 0.6 0.8 (3.8) (1.5) 0.6 (0.4) 2.5 12.0 10.8 2004 Volume Margins Volatile Receivables Restructuring Claims Overheads 2005 Ingredient Settlement markets
Slide 13: Ridley Nutrition Solutions
Ridley Nutrition Solutions A$m US$m Sales 99 +58% 74 +66% EBIT 10 +15% 7 +23% Features - Sweetlix acquisition July 2004 - Hurricanes / transport disruption / plant shutdown 1st half - Ongoing border closure – US border closed 26 months - Molasses - ethanol / margins
Slide 14: Ridley Nutrition Solutions EBIT
Ridley Nutrition Solutions EBIT US$ million (1.4) (0.8) 0.4 (0.4) 2.1 7.3 6.0 2004 Volume Margins Overheads Sweetlix 2005
Slide 15: Feed - Canada
Feed - Canada A$m C$m Sales 159 -11% 149 -10% EBIT Operating 5 -33% 4 -35% Plant Closure (1) (1) Features - Lower volumes - Volatile ingredient markets - Cost reduction programme - Plant closure
Slide 16: Feed – Canada EBIT
Feed – Canada EBIT C$ million 6.7 (1.1) 1.0 (0.9) (0.3) (2.9) (4.6) 3.0 3.8 2004 Volume Margins Volatile Restructuring Overheads Plant Closure 2005 Ingredient markets
Slide 17: Feed – Canada EBIT F2002 – F2005
Feed – Canada EBIT F2002 – F2005 C$ million 1.4 1.2 1.0 0.8 0.6 `` 0.4 0.2 l l l l p p p p n n n n ov ov ov ov ar ar ar ar ay ay ay ay Ju Ju Ju Ju Se Se Se Se Ja Ja Ja Ja M M M M N N N N M M M M (0.2) 2002 2003 2004 2005 (0.4) (0.6)
Slide 18: Financial Performance
RIDLEY CORPORATION 2005 FINANCIAL PERFORMANCE
Slide 19: Cashflow
Cashflow A$ Million F2005 F2004 EBITDA 73 71 Capex (23) (20) Borrowing costs (9) (10) Tax (14) (5) Dividends (12) (12) Working capital & other 19 10 Cash generated 34 34 Acquisitions (79) (7) Net (45) 27
Slide 20: EBITDA
EBITDA A$ Million F2005 F2004 Feed Australia 21 14 Cheetham Salt 21 22 Feed USA 21 27 Feed Canada 7 11 RNS 13 12 Discontinued Operations 0 (2) Other (10) (9) TOTAL 73 71
Slide 21: Debt Movement
Debt Movement A$ Million Net Debt - June 2004 123 Acquisition funding 79 Repayments (34) Currency translation (4) Net Debt – June 2005 164
Slide 22: Gearing
Gearing F2005 F2004 F2003 Net Debt 164 123 151 Equity 382 369 365 Ratio 0.43:1 0.33:1 0.41:1
Slide 23: Net Debt
Net Debt A$ Million F2005 F2004 F2003 Australia 113 69 69 Ridley Inc 51 54 82 Total 164 123 151
Slide 24: Working Capital
Working Capital A$ Million F2005 F2004 F2003 Receivables 107 103 120 Inventory 110 106 107 Accounts Payable (131) (111) (117) Other & Provisions (6) (4) (5) Total 80 94 105 Days Sales Outstanding 29 29 30
Slide 25: Key Ratios
Key Ratios F2005 F2004 F2003 Net Debt/EBITDA 2.2 1.7 1.5 EBITDA/Net Interest 7.4 6.6 7.6 EBIT/Net Interest 5.0 4.4 5.3 ROSF* 7.8% 6.4% 12.0% ROFE* 9.0% 8.8% 13.1% EPS (fully diluted)* 9.3 7.6 13.9 * Before significant items
Slide 26: Currency Impact
Currency Impact A$ Million F2005 As reported At F2004 rates Variance Ridley Inc - EBIT 24 26 -2 - Net to Ridley Corp 9 10 -1 Exchange Rate .7495 . 6964
Slide 27: Canadian Legal Claims
\ CANADIAN LEGA® CLAIMS
Slide 28: Canadian Legal Claims
Canadian Legal Claims • In 2003 a BSE infected cow was identified in Alberta • Legal claims made against the Canadian Federal Government, Ridley Inc and Ridley Corporation • Alleged Ridley Inc supplied feed contaminated with BSE • Alleged Ridley Corporation responsible for the acts of its subsidiary
Slide 29: Canadian Legal Claims
Canadian Legal Claims • Both Ridley Inc and Ridley Corporation are strenuously defending the claims • The claims are ‘novel’ and not readily recognised under Canadian law • Canadian Federal Government, Ridley Inc and Ridley Corporation have sought to have the Ontario action struck out before trial –
Slide 30: Canadian Legal Claims
Canadian Legal Claims • Legal costs - $1.1m F2005; est - $4.2m in F2006 - Impact net earnings est - $2.3m in F2006 • Potential exposure presently remains unknown • Insurance – discussions continuing with insurers • Management
Slide 31: Dry Creek Salt Field Acquisition
DRY CREEK SALT FIELD ACQUISITION
Slide 32: Cheetham Salt Limited Dry Creek
Cheetham Salt Limited Bowen Port Alma Bajool WSR (JV) Kevin Lochiel Price Wakool DRY CREEK Sea Lake Corio Salt Field Moolap Lara Refinery
Slide 33: Location of Dry Creek Salt Field
Location of Dry Creek Salt Field Amcor Glass Plant Scale: 10kms (35kms from Penrice) DRY CREEK SALT FIELD PENRICE PLANT brine pipeline OI (ACI) Glass Plant (10kms from Osborne) ADELAIDE CBD
Slide 34: Business Description
Business Description ¾ Location: Dry Creek Salt Field is located on 9,000 Ha of land on the outskirts of Adelaide. ¾ History: Established in the 1930’s, the field has a long history of salt production. ¾ Capacity: The salt field is the largest solar salt operation in Eastern Australia producing an a
Slide 35: Acquisition Rationale
Acquisition Rationale ¾ Cash Generative Acquisition: Forecast to earn $7.0m EBITDA in F2006 with minimal capex requirements. ¾ Security of Supply: The ‘Take or Pay’ agreement with Penrice underpins approximately 80% of yearly salt sales. ¾ Contract Details: Contract signed with Penrice for a term of
Slide 36: Acquisition Financials
Acquisition Financials Purchase Price $ 54.5m Stamp Duty $ 3.0m Legal & Incidental Costs $ 0.7m Total Acquisition Cost $ 58.2m Goodwill Component $ 4.5m EBITDA F2006 $ 7.0m Depreciation $ 0.8m
Slide 37: Penrice - Security of Contract
Penrice - Security of Contract ¾ Viability of the Penrice business is underwritten by the following key factors: Only domestic manufacturer of Soda Ash and Sodium Bicarbonate – vital ingredients in products such as glass, detergents and stock feed. Strategically located near to both suppliers of
Slide 38: Ridley
~~ RIDLEY