AWB Limited - 2003 Annual Report

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Year in brief • Traded more than three million tonnes of grain, increasing volumes sold to the domestic market from 2002/03 despite the drought. • Successful first full year of operation for AWB Geneva, which traded 1.5 million tonnes of grain. • Developed Washout Assistance Loan, which was applied to more than 450,000 tonnes. • Worked, in collaboration with other business divisions, to provide bundled grain, marketing, finance and risk management packages to growers, domestic and overseas customers. • Expanded oilseed market in Japan in collaboration with the AWB’s Japanese 51% owned subsidiary Zen-noh Corporation. Akira Yoshii and Toru Sano, Customers and Ken Hudson, Regional Manager 18 Adrian Hyland, Krissy Dixon, Mitch Morison and Tim Glass, Trading division
grain acquisition and trading Grain Acquisition Products AWB’s Trading division retained its leading position in securing grain supplies during 2003. AWB was able to forward contract one million tonnes of grain prior to the 2002/03 harvest, a solid result given the reduced crop size. However, drought induced production shortfalls meant about 450,000 tonnes of grain contracts were cancelled, or “washed out”. To manage the contract cancellations, the Trading division provided growers with the flexibility of same day washout values, and implemented the innovative Washout Assistance Loan (WAL). The WAL provided a finance offering to help alleviate the cash flow impact caused by the washouts, and highlighted AWB’s innovation in the face of unusual market circumstances. AWB has taken a conservative approach to provisioning against this exposure. Domestic Trading Drought conditions during 2002/03 produced a unique dynamic in the domestic grain market, with volatile and historically high prices encouraging traders to import as much as 350,000 tonnes of feed grain. AWB’s Trading division did not import any grain, but remained the major buyer in the domestic market, and was the major trading house in terms of volume of supplies across 2002/03. Backed by its national grower services network and relationships with more than 50 domestic customers, AWB Domestic Trading was able to increase the volume of grain sold to the domestic market in 2002/03. By accessing AWB National Pool grain stocks through the public Pool tender system, AWB Domestic Trading was able to provide grain supply solutions to a wide cross-section of domestic consumers. With the drop in domestic production, grain exports were down sharply in 2003. A pleasing result was that AWB was able to secure export sales of canola and sorghum into the Japanese market through its subsidiary trading company with Zen-noh Corporation (AZL) based in Tokyo. With a better production season ahead, AWB Domestic Trading will be able to build upon the business it has developed during the 2002/03 season and maintain its prominent position in the market. Global Trading AWB Global Trading completed its first full year of operation in 2002/03, delivering tangible benefits to growers, customers and shareholders. With drought reducing the ability of AWB National Pool to meet all customer demand, AWB was able to tailor other origin supplies through its Geneva based Global Trading operations to some of its long term customers. This provided a commercial return for AWB, but also retained customer relationships for AWB as it looks toward significantly larger crop levels again in 2003/04. AWB Geneva was also able to secure contracts in markets that AWB National Pool considered not in the best interests of its participants. It allows improved access to customers in the Mediterranean basin and in west and north Africa, and facilitates the supply of grain from the European Union, the former Soviet Union and subcontinent to these markets. This business is governed by the strict guidelines of the AWB National Pool, which has the right of veto over any wheat export sales. A strong contributor to the Global Trading operation was the performance of the oilseed book into markets that AWB has not serviced previously, notably, soybean exports to Indonesia. The ability to expand the range and volumes of grains under management is a key platform for growth for AWB. Outlook The significantly higher national wheat production in 2003/04 will improve prospects for the Trading division, with larger grain volumes available for contracting though its acquisition products. As a result, AWB is also poised to export much larger tonnages of non-wheat grain in 2003/04, and to further capitalise on joint venture opportunities through AZL. AWB is expecting a consolidation of the solid first year performance of its Global Trading operations. ($m) 50 40 30 20 10 0 Diversification and investment. 2000 2001 2002 2003 NPBT – Grain Acquisition and Trading 19
Page 1 and 2: Annual Report 2003 imagine the futu
Page 3 and 4: During the past year, Australia has
Page 5 and 6: FINANCIAL PERFORMANCE SUMMARY Droug
Page 7 and 8: There are six key business streams
Page 9 and 10: chairman’s and managing director
Page 11 and 12: As a gesture of AWB's appreciation
Page 13 and 14: pool management services AWB Nation
Page 15 and 16: For the 2001/02 Pool, AWB managed a
Page 17 and 18: finance and risk management Harvest
Page 19: Through “ring fencing”, AWB was
Page 23 and 24: supply chain and other investments
Page 25 and 26: Children of AWB employees enjoying
Page 27 and 28: grain technology AWB Grain Technolo
Page 29 and 30: landmark Overview Landmark is Austr
Page 31 and 32: our people and systems People AWB e
Page 33 and 34: AWB has committed itself to a thoro
Page 35 and 36: Charles Stott Group General Manager
Page 37 and 38: the chairman, Mr Robert Barry and M
Page 39 and 40: Identification and Management of Si
Page 41 and 42: Birchip in Victoria and a former Vi
Page 43 and 44: Brendan Stewart Chairman, Non-execu
Page 45 and 46: international presence 43
Page 47 and 48: INNOVATION FOCUS TO DELIVER NEW OPP
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Page 51 and 52: DIRECTORS' MEETINGS (continued) Dir
Page 53 and 54: STATEMENT OF FINANCIAL POSITION AS
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Page 57 and 58: (h) Derivatives (continued) transac
Page 59 and 60: 2. REVENUE FROM ORDINARY ACTIVITIES
Page 61 and 62: 4. TAXATION Consolidated AWB Limite
Page 63 and 64: 8. OTHER ASSETS Consolidated AWB Li
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Page 69 and 70: 16. PROVISIONS Consolidated AWB Lim
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20. OUTSIDE EQUITY INTERESTS Consol
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24. REMUNERATION OF DIRECTORS Conso
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27. RELATED PARTY DISCLOSURES (cont
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28. SEGMENT INFORMATION (continued)
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31. EMPLOYEE BENEFITS AND SUPERANNU
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32. FINANCIAL INSTRUMENTS (continue
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32. FINANCIAL INSTRUMENTS (continue
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33. DEED OF CROSS GUARANTEE Pursuan
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34. CONTROLLED ENTITIES (continued)
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35. EARNINGS PER SHARE Consolidated
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INDEPENDENT AUDIT REPORT TO MEMBERS
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FINANCIAL CALENDAR - 2004 Annual Ge
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AWB GROUP LOCATIONS ROYCE DESIGN AW
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AWB Limited - 2003 Annual Report

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