Annual Report - AWB Limited

Highlights• Sustained earnings in a challenging globalfinancial environment• Increase in insurance commission of 17%• Controlled asset growth of 10% in LandmarkFinancial Services• Increased tonnage and higher commodityprices benefited Harvest FinanceInsurance commission was up 17%, following an increase in overallgross written premiums in conjunction with higher crop insurancelevels in Western Australia and South Australia.During the year, the business continued to diversify its financialservices offering. In June, it formed an alliance with E*TRADE tofacilitate access to online share trading services.In July, the business acquired 100% of livestock leasing business,Stocklease Pty Limited. Stocklease is a niche provider of finance,focusing on established operators who are looking to free uppart of the working capital in their business. Livestock leasingis a good option for farmers in a strong financial position withwell established industry experience and will be a key area forgrowth in the short to medium term.Landmark Financial Services has grown conservatively during2007-2008 and is focused on further developing relationshipswith viable and sustainable customers. The business will continueto utilise the strength of the Landmark network for cross-sellingand referral opportunities.AWB Harvest Finance LimitedLandmark Financial ServicesLandmark Financial Services sustained earnings in an increasinglychallenging credit environment. Deposit growth, fee income andinsurance commission performed well; however, these activitieswere partially offset by increased funding costs. A focus onmaintaining margins, a strong credit portfolio and prudentlymanaging growth resulted in an increased EBITDA contributionof $27.6m, up 2% vs. the pcp.Loan balances grew to $2.3 billion (as at 30 September 2008),with controlled asset growth of 10%. Despite tightening ofthe financial credit market, and prolonged drought in partsof regional Australia, the loan portfolio continues to showstrong credit quality.The net interest margin on the loan portfolio was 2.02%, downslightly on last year’s result. This was mainly due to an increasein funding costs following the extension of funding in the ratedcommercial paper trust.In its final season providing pool products to the AWB NationalPool under the old wheat marketing arrangements, AWB HarvestFinance Limited benefited from increased tonnage and highercommodity prices, compared to drought conditions of the pcp.An increase in EBITDA of 164% to $14.5m resulted from thefinalisation of both the 2005-2006 and the 2006-2007 pools inthis financial year. Harvest Finance’s average loan book was also6% higher at $461.7m and its operating expenses decreased by55% to $3.3m. This reflected the reduction in scale of the businessas it prepared for the deregulation of the export wheat market.AWB Harvest Finance’s short term credit rating is A1 and it has along term credit rating of A from Standard & Poor’s.From 1 October 2008, AWB Harvest Finance will be managedand reported as part of Australian Commodity Management.www.awb.com.au 15