Australian Agricultural: All that investors need to know

AAC

Australian Agricultural Company Limited (ASX: AAC) is into Consumer Staples and is from the Food, Beverage & Tobacco group of industries. It is headquartered in Queensland, Australia.

On 11 February 2019, AAC confirmed that heavy rains and severe flooding throughout North Western Queensland had severely impacted four of AAC’s 21 properties. The four properties have been experiencing an unparalleled level of the flood which was never witnessed in the Gulf region before. The company’s primary attention is on the people, the well-being of the animals and the communities in which they function. The effects of the flood are being handled. The management of the company would keep on minutely observing the circumstances they were in and take measures to lessen the influence on their regular functionalities. 

Wondoola Station, an AAC’s gulf property had been influenced the most, and its present cattle counts stand at 30,000 head of cows and their calves who are anticipated to bear the losses. Canobie, Dalgonally and Carrum stations consist of an entire herd of circa 50,000 head of cows and calves, it is anticipated to have a lesser impact but had material losses.

Barkly in North region and South-West Queensland areas have most of the AAC’s properties which are experiencing below average rainfall and are facing severe hot weather. It was highlighted in the company’s 6- month report that the weather of the season impact would enhance the station’s expenses on operations front, especially grains and feeding and conveyance costs. The general influence of the season condition on AAC’s financial earnings for the 2019 FY which would end on March 2019 is supposed to be material and management.

On 1 February 2019, AAC published the change in interests for one of its directors Mr Hugh William Hudson Killen. The director now owns 2,042,476 Performance Rights against 113,800 Shares as compared to previously held 338,242 Performance Rights against 113,800 shares.

On 4 December 2018, AAC announced the change of interests of its substantial holders Mr Bryan A. Glinton of the AA Trust, Christopher D. Magnum (First Successor Trustee), Mr. Jason C. Callender (Second Successor Trustee), Joesph Charles Lewis (Settler& Protector), Vivienne Clare Lewis (First Successor Protector) and Charles Barrington Lewis (Second Successor Protector). The change of interest notice was effective from 30 November 2018. Before the notice, substantial holders collectively held fully 256, 080, 561 paid ordinary shares with the voting power of 42.48%. The present notice reflects 270,332,457 shares with the voting power of 44.85%.

On 20 November 2018, AAC announced the H1 19 interim results. The company continued to present a unique value proposition, its unrivalled ability to produce the highest quality beef at scale.

Tough business decisions were taken to create a simpler and more efficient AAC have proven to be sound. The Livingstone Beef suspension of operations were completed (early stage strategic options were being reviewed). Around 1824 supply chain was suspended.  The Operational efficiency drive yielded results throughout the supply chain.

Transition to premium branded beef business continued to progress. The Westholme launch in Dubai took place in October 2018. Despite macro headwinds, Westholme & Wylarah pricing held constant vs prior comparative period (PCP). The planning progressed on future launches in larger markets.

The World Class Executive team drove cultural transformation. The CMO was appointed and joined the company in January 2019 while CFO and COO commenced their duties in August 2018.

On the financial front, the Revenue increased by 11.1% to $219.2m vs $197.2m PCP. The Statutory EBITDA loss of $82.9m was recorded vs $36.5m PCP.The Key drivers behind statutory results were the $62.4m decline in market value of livestock, a 16% increase in the highest value Wagyu herd numbers and a 7% decline in lower value composite herd numbers.

The Significant headroom was in debt covenants. The gearing ratio was reported at 26.8% within the targeted range. The Operating cash inflow of $29.6m was noted vs $47.5m outflow PCP with $77.1m improvement.

The Operating Profit was $24.8m vs $6.8m PCP excluding Livingstone, and the operating profit stood at $34.6m vs $11.3m PCP. The Underlying Meat Sales were + 2.3% PCP.

By the closure of the trading session, the stock of the company stood at A$0.930 (as at 11 February 2019), down by 12.264% or 0.130 points


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