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Management Presentation 27 th September 2002. Corporate Strategy Andrew Lindberg Managing Director 27 th September 2002.

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Presentation on theme: "Management Presentation 27 th September 2002. Corporate Strategy Andrew Lindberg Managing Director 27 th September 2002."— Presentation transcript:

1 Management Presentation 27 th September 2002

2 Corporate Strategy Andrew Lindberg Managing Director 27 th September 2002

3 Our financial objectives are clear Target: 15% ROE Consistent trend EPS growth Stable dividend Improve quality of earnings Efficient capital management

4 The global asset manager model defines long term growth as being both vertical and horizontal Australian other grains Australian other commodities Australian wheat International wheat International other grains & commodities Solid domestic base enables domestic value chain integration and international growth Grower Relation- ships Customer Relation- ships Value adding products and services Rural Services Inputs Seed & Grain Tech. Shipping Finance & Risk Mgmt. Grain Acq. & Trading Supply Chain Milling & Processing Pool Mgmt.

5 Maximise value for growers, customers & shareholders In order to achieve our objectives, AWB has clearly defined strategies Win grower mandates Create value through supply chain efficiencies Sustain trading out performanceLead in grain technology Maintain growth and diversify revenue streams Strengthen stakeholder support Secure end user demand Strengthen organisational capability and performance

6 Specific near term initiatives will support our strategies Diversify domestically and offshore –Expand finance & risk management offerings –Strengthen position in Asia and Middle East and develop global trading business (Geneva) – Step up investigation of M&A opportunities Increase grains under management Strengthen our rural services base Supply chain investments that provide commercial returns Active capital management Ensure effective cost control

7 In 2001/02 AWB strengthened its core business … Strengthen core business to sustain performance Further improvement to a key under-performing business area - Chartering Strengthening of the performance of the Single Desk and implementation of new performance based remuneration model Broaden financial and risk services to growers and customers Strengthen grower/rural services and financial advisory networks Development of AWB supply chain network with capacity of around 3mt Development of superior grain varieties through a JV with Syngenta Establishment of new business processes, systems and product development capability

8 Diversification … through acquisitions, other grain trading, non-pool chartering and global trading will result in a lower reliance on Australian wheat receivals (f) = AWB forecast (p) = AWB Plan Other grain and non-Aust wheat & Diversification Wheat related NPAT Diversification ($m) 97% 90%80% 3% 10% 20%

9 M&A activity is important to assist diversification Less than 80% reliant on wheat by 2004/05 15% ROE target Establishment of platforms for further growth and diversification Efficient capital management Further pursue and review opportunities in the value chain, other grains, other commodities Assess other opportunities for strategic fit as they become available Continue to manage current overseas investments Review of management of Single Desk in 2004 Increased competition from domestic and global players Rationalisation of domestic supply chain Opportunities in other commodities, other grains Offshore opportunities Planned Outcomes InitiativesEnvironment

10 Investment highlights Significant expertise and scale in global wheat marketing One of the largest integrated global wheat managers Large existing customer base Manager of the Single Desk Potential to broaden range of products, services and customers in Australia and overseas Strong balance sheet and dividend paying capacity

11 QUESTIONS Corporate Strategy

12 Capital Management, Risk Management & Financial Services Paul Ingleby Chief Financial Officer 27 th September 2002

13 Efficient capital management 01/02 Shareholders’ funds (average)$772m PAT (midpoint of range)$105m ROE13.6% EPS38 cps DPS25-28 cps

14 Capital allocation Capital is allocated (notionally to businesses) Main businesses that use capital are: - Finance & Risk Management Products - Grain Acquisition & Trading - Supply Chain & Other Investments Other business streams include: - Grain Technology - Pool Management Services

15 Capital management We allocate capital using a top-down and bottom-up approach We consider a range of factors such as targeted credit rating, value at risk and the universe of agricultural operations and product companies As an indication, for 2001/02 we allocated: -Finance & Risk Management Products$150m -Grain Acquisition & Trading $200m -Supply Chain & Other Investments$100m Other main capital uses include corporate assets As we diversify we will allocate capital accordingly

16 Capital management (cont) Capital management means getting maximum value from capital through leverage within risk range We target rating levels and to some extent this will determine if we have excess capital We are continually looking at ways to grow the business - Organically - Investments in end use assets - Investments in supply chain - Acquisitions

17 Capital management (cont) Commercial Paper We fund the company and therefore businesses through 3 commercial paper (CP) programs – AUD, US & EURO We have a relationship bank panel of 16 throughout the world. These banks provide liquidity support i.e. ability to fund company at all times even when markets are tight Last year AWB issued over $US5b in CP We are an active participant in the FX, Options and Swaps markets

18 Capital management (cont) We are constantly looking at the mix of capital and debt in relation to the opportunities available to us Depending on the range and size of these opportunities we will consider the structure of the balance sheet for maximum value to shareholders This will include raising some long term debt (none currently) which could take the form of medium term notes, private placement, or hybrid securities. We will consider a share buy back if this makes sense for shareholder value

19 Risk management AWB comprises of a range of businesses with a range of risk profiles. AWB has a focus on risk management: -Corporate Risk Board Committee (CRBC) -Corporate Risk Review Committee (CRRC) -Corporate Risk Unit (CRU) Key factors are: -Physical sales -Foreign exchange management -Wheat price management -Administration -Governance

20 Financial services product range has been expanded to provide more flexibility to growers Pool payment options take-up above 65% Enhanced relationship with growers from more flexible product suite Improved skill set and product knowledge of staff in marketing financial services Improve ‘time to market’ Wealth creation pilot program New Group GM of Financial Services, Marcus Kennedy Expand loan products: -Harvest Loan -Flexible Drawdown Loan -Pre Delivery Loan New payment products: -Advanced Payment -Deferred Payment Strengthening of grower services network 6 new Regional Financial Services Managers as on- ground product experts Reliant on value of national wheat export crop Increase in cash purchases decreases market available for loans Increased competition from banks, particularly NAB, ANZ and CBA Expand financial services to offer more cashflow choices for grain marketing decisions Opportunity to introduce wealth creation products and strategies to growers Planned OutcomesInitiativesEnvironment

21 QUESTIONS Capital Management, Risk Management & Financial Services

22 Grower Interface Tim Goodacre Group General Manager Corporate 27 th September 2002

23 Grower profile 35,000 grain growers Average wheat yield = 1.91* tonnes per hectare Average wheat grower cash income = $113,503* Average size of grain cropping per farm = 500ha Average wheat tonnage produced per grower = 600t Average wheat delivered to AWB per grower = 480t Grower attitudes** -88% support the Single Desk -88% support AWB’s management of the Single Desk *Average over 3 years to 2001-02, source = ABARE ** Independent Survey, 2002

24 The relationship with growers will be enhanced by a stronger rural presence Continue to enhance existing deep relationship with growers Maximise market penetration Retention of Single Desk beyond 2010 Expanded grower services network -63 AWB regional staff (plus 6 financial advisers) -25 AWB regional offices -10 agencies Increased competition by banks and bulk handlers New more flexible suite of AWB products Growers perceive AWB is heading in the right direction 88% grower support for Single Desk marketing Planned Outcomes InitiativesEnvironment

25 Strategy to further enhance grower relations Formation of Grower Relations Division with mission to: Maintain and build grower support for AWB and AWB managed Single Desk Further align AWB with the commercial needs of growers

26 QUESTIONS Grower Interface

27 National Pool and the Pool Services Management Model Sarah Scales General Manager National Pool 27 th September 2002

28 AWB Growers Business services Pool payments Wheat deliveries AWBI Export markets Wheat marketing Monitor performance of AWBI Wheat Export Authority Relationship of the WEA, AWB & AWBI

29 Performance Based Remuneration Retention of Single Desk beyond 2010 Performance based remuneration system fully integrated into business Continued maximisation of returns to growers through pool out- performance Focus on performance improvement Management of the relationship with the WEA OPI implementation About 50% decreased crop value in 2002/03 compared to 2001/02 2002-03, second year of OPI arrangements -First year of OPI entitlement from previous year Review of management of Single Desk in 2004 Planned Outcomes InitiativesEnvironment Note: OPI = Out Performance Incentive

30 AWB(I)’s Mandate Maximise net returns to National Pool Growers Maximise USD FOB price obtained Minimise USD/AUD rate Minimise domestic supply chain costs deducted from growers Actively manage the main harvest risk exposures Management of wheat price, currency and domestic supply chain cost exposures Total harvest coverage Accept delivery of all grades of Australian wheat (subject to minimum quality standards) Sell all Australian wheat delivered to the National Pool in the pool period

31 AWB(I)’s Pool Management Performance Benchmark - WIB 1. USD Wheat Price Sub- benchmark 2. FX (AUD/USD) Sub- benchmark 3. Domestic Supply Chain Sub- benchmark WIB designed to measure AWBI performance consistent with mandate Integrated nature of risk and return -Price -FX -Supply Chain costs Applicable to market: -World/Competitor prices -Liquidity, demand, capacity constraints. Seasonal pool basis – applicable to management and growers WIB Pool Benchmark

32 A performance hurdle is necessary to reconcile AWB(L) decision making ability with the full AWB(I) mandate Hurdle Components Freight advantage: Reflect price advantages/ disadvantages available to any Australian wheat exporter Single Desk Advantage: Reflect the market power available to any manager of the Single Desk System

33 Performance Based Remuneration Model 1.Base Fee 1.5% of Gross Pool Value(GPV) Subject to a cap of AUD$60m and a floor of AUD$45m (CPI indexed) Effectively covers operating costs to provide services to AWB(I) Reduces risk to both AWB(I) and AWB(L) 2.Out-Performance Incentive (OPI) Calculated as 20% of revenue generated above the WIB plus hurdle: = [GPV – {WIB + HURDLE}] x 20% Total cap of 3% of GPV, limiting risk to AWB(I) The performance based remuneration model has a two- tiered payment system consisting of:

34 Conclusion Consistent with the Pool mandate: -Strives for out-performance within defined risk parameters - balancing grower risk and grower rewards (Pool Returns) - Does not strive for maximum returns regardless of risk Transparent, objective, auditable Provides incentive to the manager to maximise grower returns Grower preference: reflects main revenue and cost drivers for the National Pool & links AWB(L) remuneration to Pool Performance Practically applicable to the business & consistent with industry standards Quantifies and limits remuneration risk to AWB(I) and AWB(L) Encourages AWB(L) to invest in achieving out-performance

35 QUESTIONS National Pool and the Pool Services Management Model

36 Grain Acquisition & Trading Peter Geary Group General Manager Trading 27 th September 2002

37 Domestic and global trading Grain Acquisition & Trading DomesticGlobal Establish global trading business in Geneva Establishing new trade flows with new customers 02/03 opportunity to supply existing customers other origin wheat Global trading to trade  1.5 million tonnes in 2002/03 Contract Acquisition Products -70 Regional based representatives -2 million tonnes committed prior to harvest 2001/02 Domestic Trading -Wheat and other grains -50 domestic customers -Grain traders -Pool transfers -Normally trade 4.5 to 5 million tonnes Non Wheat exports -Canola, sorghum, barley

38 Our domestic trading strategy Grain is predominately accumulated incrementally from growers Grain is physically priced with customers or priced in the derivatives market leaving a basis position to trade AWB also trades with other grain companies which increases the volume of grain trade and liquidity to close physical positions Positions will be built and transferred to the Pool in the appropriate circumstances Major factors impacting trading strategy for growers in 02/03 Domestic regional shortages in high domestic demand areas

39 Mix of traded grain 2002/03 we could see: Forward contracting approaching 2000/01 levels East coast cash prices are outstripping national pool returns and will be primarily trade for cash Transfers to the pool, (other than on east coast) but at reduced levels (p) = AWB projection mt

40 Trading risks and how we manage them Local production – volume traded Price volatility – production in exporters & importer Foreign exchange exposure – active management Hedging is used to price physical exposures (not to speculate) Basis trading – requires correctly positioning physical product in line with movements in basis Drought conditions result in contract washouts replacement cost to protect position credit risk of collecting washout settlement

41 Grower demand for risk products increasing Increased take-up of Riskassist Stronger relationship with growers Contribution to securing end user demand through solution selling Expanded range of risk management products: -Basis Pool -Riskassist – Basis Pool Products -Riskassist – Fixed Basis Contracts -Riskassist – Consumer Risk Services Grower demand for risk products increasing Opportunity to expand the range of contract alternatives to growers Opportunity, as part of trading group, to provide solution selling to end users Planned Outcomes InitiativesEnvironment

42 QUESTIONS Grain Acquisition & Trading

43 Supply Chain Investments & Chartering Jill Gillingham Chief Operating Officer 27 th September 2002

44 Agenda Objectives for supply chain Outline of supply chain strategy Examples of returns Chartering

45 Objectives for supply chain Reduce costs Improve efficiency Secure grain for the long-term Commercial return on capital invested East Coast: Compete West Coast: Collaborate Strategy

46 Domestic supply chain strategy Supply chain optimisation Deliver a return on investment above weighted average cost of capital OPI for supply chain sub- benchmark Increase AWB’s ability to access the wheat flow Strategic hedge against deregulation New grain centres built On farm storage pilot being conducted during the 2002/03 harvest in Southern NSW Investment in NSW rail and grain handling infrastructure via joint rail freight agreement with FreightCorp Purchase of rail wagons – leased to Freight Australia Port options being investigated JV / Merger options being investigated with CBH and Grain Pool of WA Supply chain costs of $1.4b Domestic supply chain inefficient Old infrastructure BHCs have geographic monopolies and employ traditional uniform pricing structures Freight companies with traditional monopolies have also employed uniform pricing structures Susceptible to competition from new entrants with modern infrastructure and differential pricing Planned Outcomes InitiativesEnvironment

47 Expenditure on AWB grain centres* Number of Sites (Cumulative) CapacityLocation Capital Cost (Cumulative) 1999/001200kVIC$11M 2001/0271m 4 VIC 3 NSW $58M 2002/03162.9m 4 VIC 9 NSW 3 SA $130M 2003/04Up to 224.0mTBAUp to $175m * 17 Grain centres have been announced

48 Grain Centres – Dimboola Grain Centre 1999/002000/012001/02f Tonnes Received (kt)89203232 EBITDA ($m) EBIT ($m)(0.1)0.51.0 Asset WDV$10.5m$9.7m$8.9m ROI(1.0%)5.0%11.0% Investment of $11.3m in 1999 Note: WDV = written down value

49 Grain Centres – Standard new site Year 1Year 2Year 3Year 4Year 5 Tonnes Received (kt)100125168 EBITDA ($m) EBIT ($m)(0.2)0.20.7 Asset WDV$6.7m$6.1m$5.5m$5.0m$4.5m ROI(3.0%)3.3%12.7%14.0%15.6% Investment of $7.3m for each site

50 Current Investments – Melbourne Port Terminal Note: AWB’s financial year differs from the contract period. High payment rates for initial tonnages are spread between alternate years leading to the variation in financial results shown above. 2000/012001/02f Tonnes Received (kt)1,2571,222 EBITDA ($m)3.93.1 EBIT ($m)3.12.3 Asset WDV$17.8m$17.0m ROI17.0%13.5% Investment of $18.6m in 2000

51 Current Investments – Rail Wagons Year 1Year 2Year 3 EBITDA ($m)1.15 EBIT ($m)0.8 Asset WDV$4.8m$4.4m$4.0m ROI16.8%18.2%19.8% Investment of $5.4m in 2001

52 Customer Chartering National Pool/Trading External CFR or FOB+FR FR One Parcel of Grain Three AWB Contracts Freight offer by Chartering “Market on the Day” No margin Net of Adcom Chartering Position Takers plus Success Fee 1 2 3 Chartering contract flow

53 Objective is to increase non-pool chartering Increase tonnes sold CFR to around 55% by 2004/05 Triple non pool chartering tonnes by 2004/05 (to 1.6mt) Charter 2.0 million tonnes from Geneva office by 2003/04 Increase pool tonnes sold CFR Build a chartering program to achieve economies of scale thereby enabling globally competitive rates for non pool chartering Develop freight function in Geneva to complement Global Trading Pool chartering dependent on size of export crop Market conditions putting pressure on trading margins Opportunity to expand non pool business Opportunity to increase market penetration of chartering through global trading Planned Outcomes InitiativesEnvironment

54 Summary Reduce costs Improve efficiency Secure grain for the long-term Commercial return on capital invested

55 QUESTIONS Supply Chain Investments & Chartering

56 Presentation Supplement

57 Finance & Risk Management Products

58 Wheat receivals currently have significant impact on profit Sensitivity Analysis Key Drivers Incremental change Impact on 2002-03 NPAT National Wheat Crop (mt) +/- 1mt USD Wheat Price (US$) +/- US$5.00 USD/AUD Exchange Rate-/+ $0.05 Domestic Interest Rate (%) +/- 1.0% +/- $6 - 7m +/- $1m +/- $3m - 4m +/- $2m - 3m

59 Opportunity to introduce wealth creation products and strategies to growers $3.5-$5B in gross pool value per annum Each crop farm has $70,000 in liquid assets ($31k shares, $17k deposits) Average balance of Farm Management Deposit account is $40,000 (medium/long term investment product) Succession planning issues for growers AWB has strong brand name with growers Pilot program in 2003 Source: ABARE, Australian Farm Surveys Report 2001. Dept of Fisheries, Agriculture and Forestry Australia

60 Strengthening our financial services manufacturing and distribution capability Marcus Kennedy, new Group General Manager Financial Services - Strong financial services background Grower Services Division - 63 regional staff, 25 regional offices and 10 agencies 6 new Regional Financial Services Managers - On-ground product experts Product Development Division - Improving ‘time to market’ capability New SAP system which enables products to be built in-house rapidly

61 AWB business sensitivities Climate -Impact on domestic and offshore crop production International prices & exchange rates -Wheat price impacts -AUD relative to USD -Increase in US and European farm subsidies Global Markets -Instability in Iraq -Increasing role of minor exporters Regulatory -Review of management of Single Desk in 2004 by WEA -ACCC Competitive -Rationalisation of domestic supply chain -Banks and bulk handlers providing financial services -Global traders entering domestic market

62 Pool management services risk profile OperationRiskControl / Risk Mitigator National Pool OPI Fee Return Price Risk (Flat & Basis) * FX Risk * Interest rate risk * Sales risk * Crop size * Logistics risk * Credit risk * Hedge Policies & Benchmarks Board Committees Oversight Position Reporting Mgt Risk Committee Monitoring Credit Limits on Counter-Parties Internal/External Audit Reviews Credit Risk Transfer Insurance * Grower risks

63 Finance & risk management products risk profile OperationRiskControl / Risk Mitigator Financial services products Underwriting Risk Size of Pool Margin on Loans Underwriting Fees Reduced Take-up of Harvest Payment Products Loan Book Interest Rate Competition Underwriting risk model mgt Grower Services relationship management Interest Rate risk management policies Product design flexibility and speed to market Basis Pool Management Basis Pool Receival Tonnes Management & underwriting fee Grower Services relationship mgt Discretionary Treasury Trading Market risk FX & IR risk limits Mgt Risk Committee Monitoring Riskassist Tonnes Managed by Risk Assist Risk Assist Fee Grower credit risk Contracting policy limits Grower Services relationship mgt Insurance to mitigate potential

64 Grain acquisition & trading risk profile OperationRiskControl / Risk Mitigator Domestic Trading Trade Execution Management Credit Risk Market Risk VAR & Trading Limits Board Committee oversight Position reporting Mgt Risk Committee Monitoring Grain Contract Acquisition Products Credit Risk Grower Services relationship management Grower Services "Almanac" Policies

65 Grain technology risk profile OperationRiskControl / Risk Mitigator Agrifood Technology Testing result inaccuracies Business Risk OH&S Risk ISO accreditation Insurance Governmental Regulation AWB SeedsBusiness Risk Commercial protocol maintenance R&D Unrewarding research Intellectual Property risk Non commercial development Customer services Investment and mgt of skills Identifying opportunities Quality Assurance & Hygiene Grain value reduction and quality GMO Risk Customer service risk Receival standards Care custody and Control Standards Governmental Regulation AWB GMO Policy

66 Supply chain & other investments risk profile OperationRiskControl / Risk Mitigator Chartering Pool Receival Tonnes Chartering Price risk National Pool service FX and Chartering Price Risk Limits Insurance Domestic Investments (Grain Centres) Tonnes Handled/Received OH&S Risk Operational Risk Business/Grower relationship management O,H&S Risk management strategy Insurance Offshore Investments Country/Political Risk Market Risk Business Risk Active Board Management and Oversight Risk limits and policies

67 Pool Management Services

68 AWB National Pool AWB Pool Management Services International Sales & Marketing Managing the Wheat Supply Chain Risk Management Services Research & Development Grower Services AWB Limited manages AWB National Pool to maximise net pool returns to growers and provide Pool Management Services

69 AWB National Pool National Pool AWB Limited CustomersGrowers Receival & Bulk Handling Freight Port Maintains “paddock to plate” Integrated value chain Increases competition & drives cost savings

70 Managing to achieve AWB(I)’s Mandate Management behaviour consistent with mandate: Maximise Pool Returns within defined risk parameters Performance Monitoring Models drives behaviour Performance Monitoring Models consistent with mandate Remuneration also drives behaviour Remuneration therefore consistent with mandate and performance assessment of achieving mandate

71 Management of “paddock to plate” marketing National Pool generates value for growers through managing the value chain from farm-gate to end user “Line of sight” is maintained between customer and grower to ensure customers get the product they want and growers are rewarded for providing the product National Pool shapes the quality profile of the crop by: Setting receival standards Developing binning and segregation strategies Operating payment programs like Golden Rewards National Pool meets customers’ growing requirements through sophisticated site selection of cargoes based on specific quality attributes of the grain from a region or even receival point. Uses its customer relationships, its marketing ability and its confidence to back up the quality of the product to extract premiums and maintain and enhance market share

72 In an effort to achieve cost reductions, the National Pool is becoming involved in tactical management of the supply chain Strategic management of grain flows Direct negotiation with service providers Coordinating interface between storage and handling, freight and port services Tactical management is increasingly allowing the National Pool to manage logistics and select most efficient distribution channels for specific parcels of grain National Pool returns all value generated back to growers in full – efficiency gains, blending and swap revenues Integrated management of the value chain

73 Driving competition in the supply chain National Pool involvement at the tactical level critical to it carrying out its marketing program today and into the future. New players prepared to invest in new assets eg. AWB, ABA, movement across borders Incumbents investing in up grades and new sites to maintain their market position Similar reductions have been seen where competition has been introduced in rail freight services In NSW, have witnessed savings of between 8.3% and 17.5% depending on the level of competition on freight routes These are real savings being passed on to growers in the form of lower costs A more efficient industry will benefit all participants

74 The benchmark aims to represent average USD price achieved for a passively managed portfolio of Australian Wheat (of known grade mix and volume) sold into global markets (of known global demand) It has three core elements: -an expected price for Australian wheat based on the market prices of world traded wheat grades that can be related to Australian wheat prices -a sell-down (allocation to market) profile which takes account of capacity and demand constraints -a return from wheat price hedging in accordance with the Hedging Policy USD Wheat Price Sub-benchmark

75 FX Sub-Benchmark: The FX benchmark aims to represent the currency outcome a passive manager could expect to achieve given the AWB(I) FX mandate and a passively managed $US wheat price exposure Supply Chain Sub-Benchmark: The Supply Chain benchmark, unlike export wheat and FX, there is no ‘market’ in supply chain services. AWB is the price maker. The benchmark index aims to reflect the expected/passive outcome for supply chain costs, It adjusts for cost changes outside the control of the pool manager, such as those caused by different harvest sizes. It has three main components, Freight Costs, Bulk Handling costs & Port Costs FX (AUD/USD) and Supply Chain Sub-benchmarks

76 Grain Acquisition & Trading

77 AWB Geneva office established Business activities Australian wheat sales Non Australian wheat and feed-grain sales Freight Structured finance products/services Risk management products/services Investment structure 100% AWBL ownership US$20m capital investment via AWBL Tonnes traded 1.5mt in 2003 Management Skill and capability of core team is strong Office of 12

78 Supply Chain & Other Investments

79 Supply chain history in Australia Established more than 60 years ago yet remains remarkably unchanged Minor cost savings, competition and efficiency gains achieved in this time Competition in the supply chain has historically been limited – only small number of new entrants Incumbents still enjoy monopoly or near monopoly positions in their markets Incumbents enjoy high profit margins on storage and handling business – up to 50% BHC’s charge uniform prices across storage facilities leads to inefficient use of infrastructure

80 Supply chain costs demand attention Export Customer On-Farm Storage & Transport $250m Domestic Customer Feed Wheat $40m Milling Wheat $100m Total supply chain costs = $1.4 billion Land- Based $750m Sea- Freight $260m Note: based on wheat production of 24 million $50.45 supply chain cost

81 High capacity Shuttle Trains Werris Creek GCF Stockinbingal GCF Branchline Shuttle Trains High capacity Shuttle Trains Objective is to maximise asset utilisation Grain consolidation facilities (GCF) provide coverage to all of network – including branchlines GCFs resolve Port access issues GCFs create two supply chains to allow train cycling on a 24 hour basis

82 Typical efficiency drivers for grain train transport CharacteristicsEfficient OperatorsTraditional Silo load rate1,000 t/hr200 t/hr Sliding length42 wagons15 wagons Operating hours24hrs / 7 days8 hrs / 5 days Track23t axle loads 15t – 19t axle loads Track speed80km/hr30km/hr Wagon capacity67t – 72t<50t *AWB grain centre sites designed for optimal interface with rail transport providers

83 Grain Technology

84 LongReach Plant Breeders JV Research & Germplasm Enhancement Commercial Breeding Seed, Product Development & Distribution Grower Services & Supply Chain Management Risk Mgt Marketing Customer Mgt Specific research projects Bundles of grower products & services under collaboration agreement: Seed, Agronomic Inputs, Finance & Risk Mgt, Contract Production systems Crop Management Solutions Millers, End Users, Consumers AWB Product Management: Acquisition, Segregation Mgt, Logistics, Marketing, Technical Services, Agrifood Grain Products AWB Grain Technology, AWB Seeds, Syngenta Seeds, Agrifood, Grain Development, Seeds Management, Distribution, End Product & Processing R&D Product Development Long Reach Plant Breeders AWB Market Intelligence, Syngenta Technology, Genomics, Cereal Chem, Disease Biology, DNA Diagnostic, and Product Quality Performance Trends Market Feedback (direction from AWB) GrainGene AWB/GRDC/CSIRO/Syngenta

85 Measuring efficiency & effectiveness of AWB R&D processes Product/Market Development View DiscoveryImplementationCommercialisation No. of successful discoveries No. of usable suggestions from the user groups Effectiveness of R&D alliances Return on development investments No. of registered patents Success and/or quota of outcomes Time-to-market No. of marketing partners Market shares Innovation revenues (revenues of products younger than 2 years) Brand value Key drivers in R&D/Grain Technology

86 Wheat Statistics

87 El Niño patterns generally last 12 & 18 months Volume (mt) Price ($AUD) El Niño Source: ABARE f = forecast. Note: 5 – 20 yr averages include 2002-03 forecast Production: 5 yr ave = 21.1 mt 10 yr ave = 19.0 mt 20 yr ave = 17.3 mt f Area: 5 yr ave=11.8 m/ha 10 yr ave=10.7 m/ha 20 yr ave=10.4 m/ha

88 International supply & demand 2002-03 world consumption expected to again exceed world production 2002-03 carryover stocks forecast to decline for the fourth consecutive year EU is the only major exporting country forecast to increase production for 2002-03. Continued competition from minor exporting countries despite production forecast to be slightly less than 2001-02. Prod & Cons (mt) Closing Stocks(mt) Source: USDA June 2002 & ABARE March 2002 (mt) = million tonnes (f) = forecast (z) = Projection 2002-03 Global Prod 597mt, Cons 604mt

89 Senior Management

90 Senior management Office of the MD Richard Fuller Company Secretary Michael Thomas Head of Investor Relations Jean-Luc Boulanger GM, Strategy & Performance Mgt. Paul Ingleby CFO, 50 Joined AWB 1998 Responsible for Finance & Admin, Treasury, Trade Finance, Risk Mgt & Compliance, Legal, and Commercial Managers. Tim Goodacre Group GM, Corporate, 48 Joined AWB 1990 Responsible for Grower Services, Public Affairs and HR. Sarah Scales Group GM National Pool, 36 Joined AWB 1992 Responsible for managing National Wheat Pools and the Single Desk. Peter Geary Group GM, Trading, 41 Joined AWB 1985 Responsible for Domestic & Global Trading and International Sales & Marketing. Jill Gillingham Chief Operating Officer, 52 Joined AWB 2000 Responsible for Information Systems, Supply Chain Mgt, Chartering and Grain Technology. Andrew Lindberg MD, 49 Joined AWB 2000 Charles Stott Group GM, Bus. Development, 43 Joined AWB 2000 Responsible for Investments, Mergers and Acquisitions. Marcus Kennedy Group GM, Financial Services, 43 Joined AWB 2002 Responsible for Financial Services & Product Development.

91 For more information contact: Michael Thomas Head of Investor Relations Ph: +61 3 9209 2064 Email:

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