Highlights• Commodity management’s EBITDA was$100.9m up from $88.4m in the pcp• <strong>AWB</strong> Harvest Finance and <strong>AWB</strong> Australiaaccredited to export wheat• A new rail freight agreement with El Zorroand the commissioning of 84 newrail wagonsSupply chain and other investmentsAn EBITDA loss of -$4.7m reflected the impact of two years ofdrought across the east coast of Australia. Continued low receivalvolumes adversely affected GrainFlow, although the better thanexpected sorghum harvest on the east coast partially offsetlower wheat volumes. The utilisation of Melbourne Port Terminalcontinued to be disappointing due to ongoing drought conditionsin the catchment area.International Commodity ManagementThe International Commodity Management businesses of<strong>AWB</strong> Brasil, <strong>AWB</strong> Geneva and <strong>AWB</strong> India delivered an EBITDAcontribution of $24m, down 66% from the pcp.<strong>AWB</strong> Brasil<strong>AWB</strong> Brasil’s EBITDA contribution was -$9.8m. <strong>AWB</strong> Brasil is now inits second full year of operation and had a disappointing tradingperformance for the year, due in part to unexpected increasesin inland freight costs and reliance on soy bean origination. Thebusiness model is now being adjusted to reduce working capitalrequirements in part with the addition of cattle feedlotting to thegrain origination business to diversify earnings.Australian Commodity ManagementACM’s EBITDA increased to $61.9m, up from $5.6m in the pcp,with continued strong activity across the domestic grain portfoliofor wheat, canola and pulses as the business broadened itscommodity profile ahead of wheat marketing deregulation.The container market performed well during the year; however,this business is expected to slow as bulk sea freight prices declineas slower global economic growth impacts all vessel types. Thedomestic chartering business is expected to be increasinglycompetitive with the entrance of 16 accredited bulk wheatexporters.Pool ManagementThe implementation of new wheat marketing arrangementsintroduced changes to wheat pooling operations, with <strong>AWB</strong>Imanaging the final National Pool in 2007-2008. This pool recordedthe highest ever estimated pool return of $420 per tonne, on theback of record high commodity prices.Pool Management Services costs were contained on the back oftwo small previous National Pools and this has positioned thebusiness to manage future competitive pools in a deregulatedenvironment.The 2006-2007 National Pool was finalised and final paymentsmade in April 2008.During the year, <strong>AWB</strong> Brasil entered into a joint venture cattlefeedlot business with LASA, which is located in Goias Province.The business also entered into a joint venture called Nova Agri,with AG Angra, an investment fund with a focus on agriculturalinfrastructure and Agristock, a management company. <strong>AWB</strong> Brasiltransferred three upcountry warehouses and operations into theJV, which allows growers to warehouse their product and selectmarketers rather than being obliged to sell to the owner of thewarehouse.<strong>AWB</strong> Geneva<strong>AWB</strong> Geneva’s EBITDA contribution was $31.9m, down 39% onthe pcp. <strong>AWB</strong> Geneva delivered a solid performance, particularlyin trading oilseeds and freight and also through structuredtrade finance. The business is the linkage point that creates anintergrated model between <strong>AWB</strong> India, <strong>AWB</strong> Brasil and <strong>AWB</strong>Australia by facilitating trade flows and custom managementcoordination from point of origin through to the end customer.<strong>AWB</strong> Geneva is in the early stages of developing a start upoperation in the Ukraine that will replicate aspects of the businessmodels of Australia, Brazil and India, with a presence capable oforiginating grain from the farm gate.<strong>AWB</strong> India<strong>AWB</strong> India’s EBITDA contribution was $1.9m, down 74% from thepcp. Following its start-up phase, <strong>AWB</strong> India focused on a broaderrange of activities, including warehousing and grain, pulse andoilseed origination and some exports in feed grains. Investmentswere made during the year in warehousing, storage and handlinginfrastructure and there are plans to expand the network to meetthe significant demand for improved storage infrastructure.In future, <strong>AWB</strong>’s pooling options will be offered through <strong>AWB</strong>Harvest Finance <strong>Limited</strong>.www.awb.com.au 17
CorporateCredit ratings<strong>AWB</strong> maintains a dual credit rating structure whereby <strong>AWB</strong> Harvest Finance and <strong>AWB</strong> <strong>Limited</strong> are separately rated by Standard & Poor’s.On 12 September 2008, Standard & Poor’s reaffirmed the investment grade ratings of <strong>AWB</strong> Harvest Finance and <strong>AWB</strong> <strong>Limited</strong>.<strong>AWB</strong> Harvest Finance has a short term rating of A-1 and a long term rating of A (Negative Outlook). The A-1 rating reflects the structuralprotection and credit enhancements provided by the ring-fenced corporate structure.<strong>AWB</strong> <strong>Limited</strong>’s BBB- (Negative Outlook) long-term corporate credit rating was reaffirmed.Following the official closure of the US Commercial Paper program in May 2008, <strong>AWB</strong> Harvest Finance requested that Moody’s removetheir short term rating on 5 September 2008.Current <strong>AWB</strong> credit ratings<strong>AWB</strong> Harvest Finance <strong>Limited</strong>Standard & Poor’sA-1 (short term)A (long term)OutlookNegative<strong>AWB</strong> <strong>Limited</strong>Standard & Poor’sOutlookBBB-Negative18 www.awb.com.au
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