Investor Presentaiton

30 The dairy industry in Tasmania Dairy conversions return on capital The financial performance of the model conversion farms is summarised below. For a 700 cow conversion, the model suggests an 4.3 per cent return on capital before interest and tax (EBIT) before any capital gain. For the 1000 cow conversion, the model shows a 5.1 per cent return. The indicative budgets suggest some economies of scale associated with the larger farm. This is associated with better utilisation of expensive farm infrastructure and an assumed higher labour efficiency with the larger farm: 130 cows per FTE for the 1 000 cow farm versus 110 cows per FTE for the 700 cow farm. However, managerial requirements are higher for a 1 000 cow farm. The costs and returns outlined below are intended as indicative examples only. All potential dairy conversions have individual circumstances and should be fully assessed on an individual basis. Table 15: Dairy conversion investment - indicative returns Cows milked 700 1 000 Capital invested Total $8.24m $11.27m Per effective ha $27 752 $26 369 Per cow $11 775 $11 273 Per kg milk solids $31.40 $29.66 Income $'000 $'000 Milk sales 1 365 1976 146 Stock trading Total income Expenses Shed and cow costs 1 511 $'000 122 231 2 207 $'000 175 Pasture and feed costs 576 874 Tractor and plant operating 30 49 Wages 328 390 Repairs to structures and improvements General overheads and insurance یں میں یہ 35 60 35 50 38 Capital replacement (depreciation) per effective ha Total expenses Profit (EBIT) Return on capital (ROC) 1. Earnings before interest and tax. 27 | 153 1 636 358 571 4.3 per cent 5.1 per cent Note: New dairy farm conversion might take two or three years to reach its potential. The financial returns outlined assume that three years have passed since the conversion took place. Income may be less and costs higher in the earlier years. Source: Macquarie Franklin, April 2017 A guide for investors 31

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