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Investor presentation July 2003

AWB Limited. Investor presentation July 2003. Overview. 2003 Half year results Corporate strategy Key issues Global supply & demand Outlook Presentation supplement - Financials - Background / introduction to AWB. 2003 Half-year results impacted by drought.

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Investor presentation July 2003

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  1. AWB Limited Investor presentation July 2003

  2. Overview • 2003 Half year results • Corporate strategy • Key issues • Global supply & demand • Outlook • Presentation supplement - Financials - Background / introduction to AWB

  3. 2003 Half-year results impacted by drought • Net profit after tax of $29.9m, down 61% • Total operating revenue of $1.03b, down 34% • Earnings per share of 10.9 cents, down 61% • Interim dividend of 14 cents per share • Drought impacted wheat crop of 9.7 million tonnes • Loan book peaked at $1.6b in December 2002 • Gross Pool Value at $1.3b

  4. Business operations

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

  6. Key issues • Iraq • Strategic investment in Futuris • Single Desk

  7. AWB will continue supplying Iraq • Wheat supply is continuing via the UN Oil-For-Food program under direction from the World Food Program • The UN Oil-For-Food program has been extended to November 2003 • The UN and the US administration will continue to honour contracts previously awarded • Australian wheat is widely used and recognised throughout the Middle East region as a clean quality white wheat • Australia has been supplying Iraq with this wheat for more than 54 years. AWB expects to retain a strong market share in Iraq in the future

  8. Strategic investment in Futuris • AWB currently owns 14.2% in Futuris – we are the largest single shareholder • The primary objective is to maximise the value of our investment and to pursue opportunities with Elders (namely, their distribution network) • In order to increase stake above 15%, we have lodged an application to the Treasurer • This is all about keeping our options open

  9. Single Desk • The 2004 WEA Review is limited to a review on AWBI’s performance as manager of the Single Desk. This will be overseen by an independent panel. • It will not incorporate National Competition Policy (NCP) principles or the broader industry issues • The Single Desk system legislation will be reviewed in 2010 under the NCP principles

  10. Global export market share 2003-04 • Australian, Canadian and US wheat crops expected to rebound significantly • 2003-04 total exports by major exporting countries forecast to increase to 81.5mt, an increase of 18.2mt from 2002-03 • Major wheat exporting countries continue to face competition from non-traditional exporters in 2003-04 All figures are forecasts. Source: USDA June 2003

  11. Non-traditional exporters • Non-traditional exporters have increased their export program over the last two years due to good production, large carryover stocks and increased investment in transport and infrastructure • However, some of these exporters will produce significantly lower tonnage in 2003-04, reducing total exports by non-traditional exporters to only 11.7mt compared with 34.3mt in 2002-03 (f) = forecast. (e) = estimate Source: USDA June 2003

  12. Global supply and demand • 2003-04 world wheat production is forecast to fall for the 2nd consecutive year by around 1% due to limited production in non-traditional exporters, particularly Russia, Eastern Europe and the Ukraine. • Carryover stocks are at relatively low levels, representing approximately three months supply. • Production in major exporting countries are forecast to increase (e) = estimate (f) = forecast. Source: USDA June 2003

  13. Outlook • AWB is forecasting full-year NPAT result in the range of $40-$45m • AWB has forecast 2003-04 wheat production between 20-22mt • Stable dividend payment for 2002-03 despite reduction in earnings. The Board intends to maintain a stable dividend policy • Strategic investment in Futuris Limited • Capital management and ring fencing • Expand Finance and Risk Management products • Further growth and diversification – aim to be less than 80% reliant on the wheat crop by end of 2004

  14. Presentation Supplement • Financials • Background / introductory information on AWB

  15. Statement of financial performance

  16. Cash flow

  17. Capital expenditure

  18. Statement of financial position

  19. AWB … an introduction Australia's major grain marketer & one of theworld's largest wheat managers and marketers – over 60 years experience in marketing Australian wheat. AWB markets wheat and other grains to more than 40 countries and is the world’s second largest wheat exporter with 16% global market share (based on 2001-02). The AWB National Pool is a significant contributor to the Australian economy, accounting for around 3% of the total value of Australia’s exports. AWB employs more than 570 people, with a network of 43 offices in Australia and around the world. AWB is chosen by most Australian wheat and grain growers to market and finance their grain. AWB operates and manages the AWB National Pool on behalf of AWB (International) Ltd via the Single Desk system.

  20. Evolution 2003 Shareholders equity = $815.9m (as at 31-Mar-2003). Of the $215.5m in dividends paid since Dec-2000, $196.3m has been paid to grower shareholders 2001 Listed on the ASX 1999 Privatised. (shareholders equity = $607m) • Wheat Industry Fund converted to B class shares • A class shares issued to wheat growers • Government guarantee of AWB borrowings removed 1998 Corporatised 1989 Domestic market deregulated and Wheat Industry Fund established Australian Wheat Board established as a statutory authority 1939

  21. AWB has a dual class ownership structure

  22. Corporate structure AWB - Pool management services - Grain acquisition and trading - Supply chain and other investments - Finance and risk management products - Grain technology Business services Monitors performance of AWBI Wheat Export Authority Wheat marketing AWBI Export markets Wheat deliveries Pool payments Growers

  23. Risk allocation Grower risk AWB risk National Pool Financing Principal trading / other • Final net pool return • final sale price • foreign exchange • Supply chain logistics • Credit risk management outcomes • Chartering and Quality Assurance costs • Underwriting risk if Pool return falls below guaranteed return (currently at 81.8)% • Size of pool impacts revenue derived from products and services • Margin on loans • Underwriting fees • Fees from basis pool contracts • Principal positions in wheat and other grains • Multi-varietal and fixed grade contracts • Credit risk management • Trade execution management • Grain centres management • Riskassist advisory services • Incentive in pool management fee

  24. 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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