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Macquarie Securities Conference

Macquarie Securities Conference. 5 th May, 2005. AWB - a snapshot…. Australian Wheat Board created in World War I, privatised in 1999 and listed as AWB Limited (AWB) on Australian Stock Exchange in August 2001

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Macquarie Securities Conference

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  1. Macquarie Securities Conference 5th May, 2005

  2. AWB - a snapshot… • Australian Wheat Board created in World War I, privatised in 1999 and listed as AWB Limited (AWB) on Australian Stock Exchange in August 2001 • Market capitalisation of $1.5 billion; revenues of $9 billion (including Pool revenue) and shareholder funds in excess of $1 billion • Consistently out performed the S&P / ASX 200 since listing • Markets wheat to more than 50 countries • Australian footprint includes more than 430 outlets across Australia with a spread of more than 2,700 staff reaching about 100,000 farmers

  3. 100,000 customers Grain $5-$6b revenue Fertiliser 1.2m tonnes Livestock 2.0m cattle 11m sheep Wool 500k bales Real Estate $1bn sales Finance & Insurance $2.5bn loan book $600m on deposit $150m premium 2,700 employees 431 outlets What we are today … Merch $1.2b sales

  4. Business characteristics…

  5. Business characteristics… (contd)

  6. Our scorecard to date… Return on average equity* Net Profit* & Production volume Earnings per share* & Dividend per share Share price since listing *Pre goodwill & amortisation

  7. What we have achieved… • Acquired Landmark in August 2003 for around $825 million enterprise value: • Integration of Landmark 95% complete • EBIT enhancements for 2003/04 of $13 million exceeded target of $5-10 million. On track to achieve $20 - $25 million this year. • Established fertiliser joint venture – ELF • AWB constructed 21 grain centres with a total capacity of over 3 million tonnes • Strategic focus on customer management, introduction of CMS system • Successful development of international business – Geneva, India • Sold 2.5 million tonnes to China, the first significant sale since 1996 • Positioned to tap into growing Asian markets • Progressive business expansion

  8. AWB Strategy

  9. Leading position in Australian rural services People and Capability Leading rural financial services and insurance provider Australia’s leading global grain trading business A solid foundation to our strategy To be Australia’s Leading Agribusiness AWB’s overarching goal is to implement anIntegrated Business Model...

  10. Three growth areas… • Fertiliser and merchandise are the main areas targeted for growth • Cross selling • Leverage buying power in the network • Improve merchandise and supply chain effectiveness Leading position in Australian rural services • Increase product base – build on AWB’s natural advantage to provide a wider range of products, better interest rates, and streamline credit processes • Specific areas targeted for growth include lending, deposits, wealth management and general insurance Leading rural financial services and insurance provider • Continue to focus on mandate to maximise grower returns • Expand the suite of commodities, origins and risks managed • Strengthen the differentiated position for Australian wheat Australia’s leading global grain trading business

  11. Strengthen core business, in particular preserve and enhance the value of the Single Desk system Grow and diversify to improve the quality of the earnings base and reduce wheat harvest volatility The way ahead… “To be both the primary producer’s and end-use consumers’ business partner of choice” • Acquisition expected to achieve target 15% ROE by FY2005 • EPS accretive in FY 2004 and by more than 35% in FY2006 • % of PBT not related to Australian wheat: >20% in 2004/05 • Landmark will diversify AWB’s earnings base and reduce volatility of AWB’s earnings • AWB Group will achieve 15% ROE in the medium term

  12. Financial objectives… Return on equity - Achieve 15% return on equity for the AWB Group in the medium term Solid EPS growth - Landmark acquisition to be more than 35% EPS accretive (pre-goodwill, post synergies, post one-off costs) by 2005-06 Stable dividend payment - Expect to maintain dividend payment at current levels for 2004-05 Improve quality of earnings - Reduce exposure to crop by achieving more than 20% of PBT not related to Australian wheat by 2004-05

  13. Outlook

  14. Outlook… • 2004/05: • Forecast comparable earnings to previous year 2005/06: Wheat Crop: • Assuming normal seasonal conditions, wheat production expected to average around 22-23 million tonnes • Conditions in WA very good at present • SA, VIC, NSW and QLD remain largely dry and experiencing delayed planting Broader Agricultural Market: • Lamb prices set to remain positive with increased demand from export markets • Beef prices tipped to tail off with increased export competition from North and South America • Promising rural Real Estate market • Strong medium term growth for Financial Services business • Reduced commodity prices expected to impact Rural Services business

  15. Going forward… • Despite a difficult outlook, we are confident that Australian agriculture can be globally competitive • We have “comparative advantage” • Freight advantage to Asian region • Progress on trade reform will improve market access • AWB and Landmark can continue to capitalise on opportunities with our business model

  16. Supplementary Information

  17. Global wheat market • Australia is the most export oriented grains industry in the world • Changes in the global wheat market impact directly on the Australian wheat industry • Traditional wheat exporters are increasingly under threat from new exporters, particularly Eastern Europe and South America • The number of companies involved in wheat and grain trade has shrunk, with a handful of multinational conglomerates dominating world grain trade • Developing countries now make up the majority of Australia’s customers • These countries (particularly in Asia) are undergoing rapid economic development, contributing to the substitution of rice for wheat-based products • Following major food scares around the world, the developed world is becoming more discerning

  18. World wheat production and consumption Source: USDA

  19. Major wheat exporters Source: USDA

  20. Australia poised for continued success in the global market • Australia’s grain industry is well poised to meet changes in the global market: • National acreage sown to wheat is continuing to rise, in contrast to other countries such as the US where wheat acreage is in decline • Australia’s share of the global market has been increasing • Australian growers are producing a better quality and more specialised crop • AWB sells a differentiated product tailored to meet the needs of its customers, eg. selling over 4 million tonnes of wheat as targeted or niche products in Asia alone • National Pool marketing strategy is focused on Asia, aiming to have 65% of AWB’s wheat export program going to Asia by 2009

  21. www.awb.com.au For more information contact: Delphine Cassidy Head of Investor Relations Ph: +61 3 9209 2404 Email: dcassidy@awb.com.au

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