Annual Report - AWB Limited

Highlights• Strongest result to date with EBITDAup 66%, to $90m• Improved processes, margin controland efficiency gains• National relaunch of the Landmark brandFertiliser gross profit was $39.5m, up 73% (excluding Hi-Fert).The business benefited from strong early demand as farmers builtup reserves in the first half of the year, particularly across SouthAustralia and Western Australia. On the east coast of Australia,the business buys, holds and sells fertiliser and benefited fromthe price rally. On the west coast, the business on-sells fertiliserand makes a volume gain when agricultural activity is buoyant, asin the first half of the financial year.LivestockLivestock gross profit was $61.8m, up 7%. The livestock businesswas impacted by lower national sales as stock was held back torebuild herds. The strong Australian dollar also affected exportvolumes. Overall, cattle volumes were down 1% and sheepvolumes were down 4.4%. The business benefited froma range of process changes to improve commission controls.WoolWool gross profit was $11.2m, down 21%. Bale volumes sold weredown 13.6% on the pcp, particularly in Western Australia. Volumeswere down generally across the market due to the continuedreduction in flock numbers.Real EstateGrowing high-value client relationships has also been a focusduring the year. With 13,000 clients generating more than 80%of Landmark’s EBIT, this is one of the keys to building a sustainablebusiness. The business is working to improve merchandisestandards, ranging and density and provide better retail trainingfor customer facing employees. Supporting this work is extensiveresearch into customer segmentation and the national relaunchof the Landmark brand.In addition, the business introduced a national rewards program– Landmark Rewards – where customers earn points every timethey make a purchase from the program range at participatingLandmark outlets.Merchandise and FertiliserMerchandise gross profit was up 34% to $172.1m, generatedby a combination of improved margin management and price.Improved weather conditions drove an early start to the seasonon the east coast of Australia and record global commodity pricesand chemical and fertiliser prices increased business activity.Real Estate gross profit was $22.7m, up 6%, due to stronger salesin the pcp in Victoria and Queensland. The business also secureda large proportion of the iconic rural properties offered for saleduring the year including S Kidman & Co in the Western AustraliaKimberley, Clyde Agricultural properties in Queensland and NewSouth Wales and Tipperary in the Northern Territory.Other investmentsThe contribution to net profit from our joint venture businesses –Hi-Fert, RD1 and AWH – was $18.5m, up 68%.Landmark Rural Services’ share of the Profit After Tax (PAT) ofHi-Fert was $10.2m, as a result of rising fertiliser prices andincreased volume. Landmark has a 50% share in this joint venture.Landmark Rural Services’ share of the PAT from the RD1 jointventure with Fonterra was $2.1m on the back of strong globalmilk prices. RD1 is New Zealand’s largest retailer of agriculturalproducts and services to the dairy sector with a national networkof more than 50 branches.Landmark Rural Services’ share of AWH’s PAT was $3.2m andreflects the reduced wool volumes in the market during the year.AWH is Australia’s only complete end-to-end service provider fromfarm gate to ship, handling approximately two-thirds of Australia’sannual wool clip.www.awb.com.au 13