Thank you for standing by, and welcome to the Costa Group Holdings Limited First Half Calendar Year 2023 Results Call. All participants are in a listen-only mode. There will be a presentation followed by a question-and-answer session. If you wish to ask a question, you will need to press the star key followed by the number one on your telephone keypad. I would now like to hand the conference over to Mr. Marc Werner, Deputy CEO, Mr. Wayne Johnston, CFO, and Mr. Harry Debney, Interim CEO. Please go ahead. Good morning, everyone, and welcome to the Costa Group Holdings Limited Results Presentation for the first half year in the calendar year 2023. My name is Marc Werner, and I'm the Deputy CEO of Costa. Joining me in this presentation is Wayne Johnston, Costa Group's CFO, and Harry Debney, our interim CEO, who will be available for Q&A after the presentation. Now on to the presentation, and I'd like to begin with the key highlights. The international segment delivered +32.8% revenue growth versus the previous period, offsetting a mixed domestic performance, contributing to a group EBITDA-S of AUD 150.2 million, which is +7.2% versus the previous period, and an NPAT-S of AUD 37.8 million. Pleasingly, both China and Morocco contributed to an impressive international performance, further demonstrating the superiority of Costa's blueberry genetics. International segment EBITDA-S was +43.5% versus the previous period. As noted at the AGM in late May, the citrus season was circa 3 weeks behind staffing, meaning virtually all the citrus harvest earnings will fall into the second half of calendar year 2023. Despite the early 2PH citrus season fruit being well received in export markets, there has been a disappointing deterioration in outlook for later season fruit quality, contributed to by calendar year 2022 weather impacts. Together with southern region volume downgrade and La Niña overhang contributing to fruit size being below expectations, full year EBITDA-S impact is currently estimated at AUD 30 million. Industry-wide table grape harvest was circa 40% lower versus the previous period, due to calendar year 2022 weather, with an EBITDA-S impact of AUD 9 million in the first half. The Monarto mushroom facility continues to consistently exceed production capacity, averaging 259 tons per week over the first half, which was a positive +3.3% increase compared to the previous period. The Mernda facility yields were lower compared to forecast, mainly due to weather impact on compost, contributing to flat category revenue growth compared to the previous period. The performance of the berry... Tomato sales volume was positive to forecast, with a greater snacking sales share compared to previous period. However, lower than expected summer months pricing and demand meant overall aggregate pricing was subdued for the first half, resulting in lower revenue and earnings compared to the previous period. Avocados saw a recovery from prior year, with pricing at improved levels versus previous year for most of the first half, and we saw the successful completion of first trial shipment of East Coast product into India. As per the announcement to the ASX on the 24th of August, 2023, discussions with Paine Schwartz Partners are continuing, and they were advised of the latest trading conditions as part of the ongoing due diligence process. It remains uncertain if a transaction with Paine will eventuate and at what price. Costa expects to be able to provide an update in relation to the transaction in mid to late September. Costa shareholders do not need to take any action at this time. Moving to the financial headlines for the half year. Revenue was 8.7% higher against the previous period, with an EBITDA-S of AUD 150.2 million, which is 7.2% up compared to the previous year. NPAT-S was at AUD 37.8 million, which is 6.2% lower compared to the previous period. Segment earnings performance by EBITDA-S saw the international segment deliver a 32.8% increase on the prior year. The produce segment was down by 53.5% on the prior year, and Costa Logistics was down by 36.1%. Moving to the next two slides, which detail the performance of the international segment for the half. As noted, revenue for the segment was up by 32.8% compared to the previous year, with EBITDA-S growing by 43.5%. China revenue growth was a strong 53%, with African Blue growing revenue by 13%, and genetics licensing revenue was up 24% on the prior year. The share of revenue for the half saw China contribute 54%, African Blue 41%, and genetics licensing 5%. Now moving to the international segment highlights and starting with China. There was strong and sustained demand over the entire season, supported by a 46.3% increase in blueberry volume compared to the previous season. This was made possible by the newly planted Agrip ark development, producing volumes in excess of forecast. Volumes from the Baoshan and Banna farms were also ahead of expectations. In African Blue, the increase in revenue was driven by higher overall pricing for the duration of the season, helped by reduced volume across the industry. Costa's own farm volumes were 16.8% lower compared to the previous year, mainly due to Northern Farm replantings and colder weather over the early part of the year. Our newly planted blueberry varieties are showing positive early promise with respect to yield and pricing, including Cascade, Breeze, Eterna, and Velvet varieties. Genetics licensing activity continues its upward trajectory, and over the first half was driven by VIP varieties and higher China volumes. Work is continuing on expanding Costa's global blueberry licensing network into potential new regions. The performance of the domestic produce segment was mixed over the half. This was reflected in marginal revenue growth of 1.6%, with mushroom growth being flat, tomato revenue declining 11%, berry revenue up 12%, citrus and grapes being down 1%, and avocados up 11%. In the citrus category, the first half revenue was marginally below the previous year. Table grape yields were affected by downy mildew, which also affected quality. As noted, the citrus season was circa three weeks behind starting, with approximately 600,000 less cartons sold in the first half as a result. The 2PH Afourer harvest was completed in June, with invoicing and revenue booked in the second half. The early season fruit was well received in export markets. Unfortunately, there was a deterioration in outlook for the later season 2PH fruit quality, contributed to by calendar year 2022 weather impacts. This has included the Murcott mandarin crop. The southern region forecast season volumes were downgraded, and the fruit size affected due to La Niña overhang, meaning the combined 2 PH and southern regions issues are expected to contribute a current estimated full-year EBITDA-S category impact of circa AUD 30 million. In the berry category, there was a challenging period over the first quarter, which takes in the Tasmanian season due to crop timing and competitive industry-wide volumes, pushing prices lower. However, volumes were overall positive for the half. Blueberry volumes were 26% higher on previous year, and raspberry volumes were up 37.2%. The FNQ blueberry season saw favorable yield and pricing. Arana exports also delivered a strong return, +20% per kilogram versus the previous period. At the end of the half, more than 50% of all Costa domestic blueberry plantings are now in substrate. As mentioned, mushroom revenue was flat compared to the previous period. Pleasingly, the Monarto facility averaged 259 tons per week over the first half, which is +3.3% compared to the previous period. Due to weather impacts on compost, the yields from the Mernda facility were lower than forecast, and although largely offset by above forecast Monarto yields, sales volume was marginally below expectations for the first half. Prepack, as a share of total sales, continued to grow, being up 6%. In the tomato category, lower than expected summer months pricing and demand meant aggregate pricing for the first half was subdued. Sales volume was down compared to the previous period, reflective of softer consumer demand, while production volume was positive versus expectations, but still marginally down versus the previous year. In avocados, revenue growth was aided by steady pricing recovery from the previous year. Own farm sales volume was also well ahead of the previous year. The average avocado trade sale price was up by 42%. Our review of the avocado portfolio is ongoing, and during the first half, we completed the sale of the Gunalda FNQ farm. We also remain focused on continuing to drive efficiencies across our remaining farms. WA exports to Japan continue to increase year-on-year, but our overall volumes are still small. Lobbying is ongoing for East Coast access to increase export volumes. The final segment to report on is farms and logistics. Although there was positive revenue growth year-on-year, weakness in wholesale market margins and increased energy costs over the half contributed to reduced EBITDA-S versus the previous year. Farms market trading was marginally below forecast, with servicing revenue driven by strong berry volumes, including from third-party customers, which saw increased revenue versus the previous year. In logistics, there was additional third-party warehousing volume completed, contributed to revenue uplift versus the previous period. Unfortunately, Select Fresh performed below expectations, impacted by the underperformance of retail-facing trade. I would like now to hand over to our CFO, Wayne Johnston, to talk to the financial slides. Thank you, Marc, and good morning to everyone on today's call. Starting with the group financial results. Revenue for the first six months of calendar 2023 was AUD 770.7 million, an increase of 8.7% over CY 2022. As Marc discussed, our international segment was the standout performer for the period, with sales up AUD 51 million. China contributed AUD 39 million of this increase, underpinned by additional harvest land at Agrip ark in Baoshan and strong yields across the entire portfolio. Average yields of 21 tons per hectare were 6% up on prior year, which was above industry and also our own original expectations for this season. Pricing in China was also robust, with realized blueberry pricing up 6.5% on CY 2022, and a strong premium for jumbos also continued. It is equally pleasing to report an improved harvest year for Morocco, with our African Blue business increasing net sales despite lower volumes, given our replanting program. With low industry volumes across Europe and Northern African farms delivering lower yields and assisting with improvement in average pricing. Our domestic produce segment reported a 1.6 improvement in sales versus prior, reflecting improved pricing and yields from the avocado category, and berries, also increasing net sales versus prior year from higher volumes. Tomatoes were down 11%, as high industry volumes in quarter one impacted average pricing, and slowing demand started to have an impact in quarter two for our snacking varieties. As discussed at the AGM in May, our citrus business had a delayed start, with the impact of approximately 600,000 less cartons sold in the first half versus internal expectations. Mushroom sales were flat on lower yields, mainly from our Mernda facility, which experienced compost issues for most of the first half, and slightly improved average pricing on robust demand. Group EBITDA-S of AUD 150.2 million was AUD 10 million above prior year. The international segment delivered a record result for Costa, up by AUD 37 million or 43% versus the prior year. As I discussed, strong sales in China from improved yield and average pricing led to an exceptional result. African Blue also saw earnings improvement year-on-year after a difficult couple of years due to poor climatic conditions. The produce segment overall was down versus prior and our own internal expectations. The delay in the citrus season and low average price realization of tomatoes outweighed the positive impact of an improved result in avocados relative to prior year. Berries experienced a slow start to the year, with the Tasmanian season impacted by high mainland blueberry industry volumes, and also above average raspberry volumes across all growing regions impacting net margins. We will discuss costs in a later slide, but as envisaged, we did see increased costs across most cost categories that also impacted net returns. NPAT-S of AUD 37.8 million was below prior year by AUD 2.5 million. Material items include costs relating to the responding to the Paine Schwartz Partners' takeover proposal, an impairment loss on the sale of the avocado property at Gunalda in Far North Queensland, and other restructuring costs. Interest expense increased by AUD 8 million in the half year, with the majority of this increase relating to bank debt, of which AUD 6.1 million related to rate increases and the remainder from an increase of average daily debt balances. Lease interest of AUD 14.2 million was in line with prior year. In the appendices to the presentation, we include a full year estimate for our total interest cost for CY 2023 of AUD 56 million. Given the level of growth CapEx in the last 24 months, particularly in China and Morocco, depreciation and amortization increased to AUD 69.6 million from AUD 65.5 million last year. Moving to cash flow. We delivered a strong operating cash result relative to the prior year, despite the traditional working capital investment in the first half that was accentuated by the delay in citrus sales. In keeping with our traditional harvest seasonality, we would expect the majority of the working capital build to be released in the second half. We did receive the benefit in the first half of the tax refund from last year's return of AUD 28 million. Operating CapEx of 33.1 million was in line with expectations and include bearer plant costs of 18.9 million. Growth CapEx was only 3.7 million, as the main CY 2023 projects are largely related to our international assets, for which the capital works are primarily performed in the second half of the year, in our non-harvest period. Additionally, as foreshadowed, the company has completed the additional Conaghan's land option at 2 PH just this week at a cost of AUD 37 million. We expect total CapEx for the full year to be approximately AUD 110 million. This is lower than the previous guidance of AUD 125 million, as a number of the projects won't be completed this year, and maintenance CapEx will be managed lower, given the weaker outlook for the financial performance in our domestic produce segment. We will have tax payments of approximately AUD 33 million in the second half, resulting in a net AUD 6 million for the full year. While largely an internal transaction, we will bring back dividends from China, back to the JV partners in the second half. Although still below the cash generation of the business units, given we are still rebuilding retained earnings and have remaining growth plans that will need to be funded by existing cash on hand. The next slide is the balance sheet. As discussed on the previous slide, we had a higher investment in working capital in the year versus prior, mainly due to the citrus season delays. This should reverse in the second half. This is most evident in the increase in receivables and in inventories. By December year-end, sorry, relative to December year-end, CY 2022, net debt has improved by AUD 2 million to AUD 350 million. The international earnings and strong cash conversion was a standout. Cash balances reflect the international result and timing of pay down of debt. As discussed, we will bring some cash out of China in the second half through internal dividends. I'd expect net debt will increase in the second half, given the growth CapEx, the Conaghan's transaction, and tax requirements, and I'll discuss these a little bit later. Sorry, I'll discuss those earlier. On capital and debt management, given the debt refinancing last year of our main corporate syndicated debt facility, the first maturity date is still 24 months away. Unused debt capacity for this facility was AUD 160 million at half year. As always, we appreciate the continued and ongoing support from the group's banking syndicated members. Our total leverage ratio improved from December to 2.31x from 2.46x. The long-term preferred levels remain within the range of 1.5x-2x. Given discussions with Paine Schwartz are continuing, the board has deferred any consideration of an interim dividend. The next slide provides a summary of cost impacts on our key farming inputs. The foreshadowed increase in these costs largely played out as expected, but regardless, we did see significant inflationary input pressures, including ferts and chems, domestic freight, and packaging. Energy costs, specifically electricity and gas, were up AUD 13.7 million to AUD 20 million, although in part, this increase reflects the rollout of long-term contracts that were set at favorable rates in CY 2022 versus the underlying market conditions. Relative to prior year, farming labor, including harvest labor, were impacted by minimum wage determinations, with the June 2022 increase of 5% impacting the half-on-year comparisons. The increase from 1 July 2023 is approximately 6% and slightly above our original expectations that we called out in February. On a more positive note, we are starting to see some relief from various input cost lines. Shipping costs have fallen in the last six months relative to the sharp increases we saw in CY 2021 and 2022. This will benefit the second half, given the weighting of our citrus exports, and we are hopeful for further improvements over the next 12 months, given the refrigerator container pricing tends to track behind dry container pricing movements and as more capacity opens up. We are starting to see input costs for packaging, ferts, and chems come back, although further reductions may stagnate in the short term, given the AUD-US dollar exchange rate. The graph on this slide highlights the key movements versus prior year, avocados and citrus, of approximately 5%. That concludes the commentary on the financial slides, and I'll now hand back to Marc to conclude the presentation. Thank you, Wayne. To conclude with the outlook for the year, as noted, a deterioration in late season 2PH fruit quality in southern region volume, and fruit size downgrades are currently estimated to have a AUD 30 million impact on full-year EBITDA. The contributing factors are considered non-structural, with the ongoing health and productive capacity of the trees unaffected. There has been stable weather and positive pricing over the early part of the main Northern New South Wales berry season, together with an expected solid Arana crop, pointing to strong second half berry earnings versus the previous year. Mushroom demand steadily improved, consistent with cooler winter months, with demand overcoming period expected to level off. Monarto facility production remains ahead of capacity, while Mernda facility volumes continue to improve, aided by more stable compost supply. The softening in demand, in tomato demand is expected to continue through the second half, impacted by higher industry-wide volumes, including from field crops. Insourcing of specific seasonal labor continues, which is contributing to ongoing improved security of labor supply. Taking into consideration the above full year, calendar year 2023, EBITDA is expected to be ahead of calendar year 2022 results. Thank you very much. We are now going into the Q&A session. If you wish to ask a question, please press star, then one on your telephone and wait for your name to be announced. If you wish to cancel your request, please press star, then two. If you are on a speakerphone, please pick up the handset to ask your question. The first question today comes from Craig Woolford with MST Marquee. Please go ahead. Good morning, Marc and Wayne. Just wanted to ask a question, if I could, about the citrus. You know, in that outlook slide, you said that the factors contributing are considered non-structural, with ongoing health and productivity of the trees unaffected. Can you give us some justification or further details to explain that for us? Thanks. As we referred to in our presentation, we currently estimate a deterioration versus our previous expectation in the vicinity of AUD 30 million. The tree health is intact as both as far as the health is concerned, as well as productivity is unaffected. So, from our perspective, as of today, we do not see any substantial deterioration of the trees going forward. So just to be clear, is the AUD 30 million impact, Yeah, any attribution or, or sense we can get of the contribution from reduced volumes versus lower prices received? It's Wayne, Craig. Good morning. Predominantly, it relates to somewhat volume, particularly in the southern parts of our farm, our portfolio. The 2PH impact is more around a quality mix and therefore price realization. So, we saw the 2PH, what we're seeing, particularly with our Murcotts at the back end of their season, a downgrade in quality, and therefore, what's ending up in the, particularly the premium boxes, is below expectation and therefore price realization. So, yeah, as I said, the southern farm is probably more related to a volume issue. The northern farm is more around quality. Okay. And lastly, just what's the rationale for delaying the dividend by the board? No, nothing other than that I think, given there is a potential transaction coming up for a change of control, and any dividend or potential dividend that the company may pay this year will clearly be part of that conversation. It was best just to defer that until that potential transaction was to be clearer to us. But as I said, and as per the slides, we're not expecting any update in relation to that until mid-September, and at that time, we'll give the market more updated. Okay. Thanks, Wayne. Appreciate it. The next question comes from Richard Barwick, from CLSA. Please go ahead. Good morning, guys. Can we just thinking about some of the quality issues that you talked about with citrus and relating to last year's weather. Is there anything that you could have done differently to have identified this problem earlier? Or the, I guess, well, the flip side to that is anything that you've learnt having sort of been through this experience now and so you're backward-looking, going, "Hey, yes, last year's weather did impact this year's quality." Is there a learning there that would better equip you going forward, so we'd not caught with this sort of surprise? The Costa agronomy team is applying best industry practices when it comes to pest and disease management and in particular. So the deterioration of the crop quality only unfolded late in the season. There are certainly some learnings to be drawn, but overall, we can confirm that we are continuously applying best industry practices across all of our categories. So what are those learnings? So for example, if you were to go through a similar experience, have you learned anything here that would give you an earlier warning of crop, you know, quality issues? Or is it one of the things that it's impossible to identify until so late in the season, and so, you know, if you're cycling similar conditions, then you'd go into the next crop more cautious. We had two severe wet weather events at the beginning of the year, which contributed to the deterioration of the quality, which only became apparent late in the season. And these are definitely end learnings that we are looking into going forward. Richard, you know, no, no two seasons are the same, so you know... Mm. Clearly, whilst we'll, you know, the team will always do a very deep dive, as we always do on all farms, whether it be citrus or other categories. Certainly, you know, the learnings we felt we come up with for this year will certainly be applied in future years. But, as Marc implied, it's important that, you know, we have, you know, we allow the experts who, you know, we believe are best in class in Australia in relation to each of our categories, and we, you know, heavily rely on that team to deliver on the, you know, the best economical practices. So yes, we'll do learnings- Mm-hmm. But, you know, it's no two seasons the same. And as importantly, as per the previous questions, you know, the tree health remains robust, and we feel confident in relation to as we move into next year. Okay. And can I just clarify the volume component that you're talking about, contributing to the AUD 30 million EBITDA impact? You talked about southern region volume downgrade, but then La Niña contributing to smaller fruit size. Is the southern region volume downgrade relating to La Niña as well, or is the southern region volume an impact from last year's weather? Just trying to, you know- Well- Are the two the same? Those last two volumes the same or they, they're different drivers? The same issue. It's La Niña's issue? Correct. Yes. It's Harry, Richard, just to add to that, La Niña had a long overhang. It didn't complete till about the end of March, which was later than all of us expected. And the early season fruit was actually about 1-1.5 size grades down, which was manageable. But as we got into the later crop, particularly the late navels as well as the Afourer mandarins, we were down three to four size grades, and we attribute that to continuing fortnightly cold, wet weather going right through to most of the growing season, particularly affecting the late grades. Mm. The late varieties. Okay. Right. That's helpful. Thank you. The next question comes from David Pobucky with Macquarie Group. Please go ahead. Mark, Wayne, and Harry, hope you're well. Thanks for taking my questions. Just on Citrus, and sorry to harp on it, again. In terms of the volume issue in the southern farms, was there a portion of the crop that was just thrown away? It's Wayne, David. Yeah, good morning. As you'd appreciate it, you know, in any tree, there's varying grades or quality on any tree. What we saw, as Harry suggested as well, a fruit downgrading in size means that the quality levels or the grading of the fruit does change. It does imply that less fruit ends up in a box. Correct. Okay. Thank you. And, what's the... On a go-forward basis, what's the risk of sudden death in some of those trees? I mean, I'm not a horticulturalist, but I read it can occur months or even years after, you know, bad water damage. How do you think about the risk around that? Yeah, I'll take that one. So, we've got very good subsurface drainage on all of our farms in the three regions, so we didn't suffer, even though we've had heavy rainfall and continuing rainfall from any, if you like, retained water in the root zone. So that's not an issue. In fact, most of our soils are more like sandy loams than clay soils, so no issue there. Thank you. That's very useful. Maybe just one last one for Wayne. You mentioned you expect non-controlling interest pre-SGARA to be AUD 20 million for the full year. Do you have the post-SGARA number on hand for that non-controlling interest? I think it's about 25, I think so, so, but I'll confirm that for you and drop you an email. Okay, great. Thank you very much, guys. Appreciate it. The next question comes from Evan Karatzas with UBS. Please go ahead. Morning, all. Wayne, maybe for you to start, just on the chemicals, just on that, that cost slide that you gave, which was, was pretty helpful. Just on the, the chemicals and ferts, I'm a bit surprised they're up sort of 30-odd% in the half, just given, I guess, how weak they've been in the last, you know, nine, 10, maybe even 12 months. Can you, can you just talk to the procurement practices for chemicals and ferts? Do you, do you lock in prices in advance or purchase in advance of the season there, please? Yeah, I think our procurement practices, you know, we're obviously one of the largest buyers of ferts and chems in Australia, so we certainly, I think, overweight our negotiation ability with the key suppliers. We're coming off a period as sort of coming back to the citrus messaging. You know, a lot of wet weather meant that, you know, our levels of spraying programs and management of trees were at a heightened level, so the usage is certainly component of that increase. Price decreases, I guess you're correct, and then I think I might have highlighted in my script that we are starting to see some decreases, particularly as international freight costs are coming back. So prices are coming back. I wouldn't, Evan, I wouldn't have said that, you know, chems and ferts have been, you know, prices have been coming back. I think you used the word up to six to nine months. I think that's probably a little bit-... probably beyond really where the market was at. So, but very comfortable where we're at around, our ability to negotiate, and looking forward to, you know, further opportunities around price, reductions as, as, I guess, as we see further, input cost reductions in the next sort of six to 12 months. Okay, great. So maybe just sort of for the next six months, just one more on those key input costs. Should we, I guess, in terms of this, the first half, annualize most of those numbers and maybe add a little bit, except for, I guess, chems and first? Or is it, I'm just trying to understand how they sort of play out the next six months, some of those key input costs. Yeah. If you look at, if you look at that graph that's on slide 20, I think the one that you wouldn't just double and say that's the annual cost is shipping, international shipping- Ah. because there is a bias towards our export program and citrus towards the second half. So that will be slightly higher in relation to second half costs versus first half. But the others, largely, our usage across the entire portfolio are largely, you know, fairly fairly smooth and stable. Yeah, okay. That's super helpful. Just last one for me. I won't touch citrus, but just on berry, you know, pretty impressive performance, I guess globally from the berry business. I guess, reflection of the IP you have. Just on the domestic berry business, can you just talk to the drivers of the, you know, really strong domestic volume or berry volume growth, please, if you can? Well, the key driver is certainly our ongoing focus on not only blueberry production, but definitely across on all the four different berry types. And leveraging the high standard of quality that we have, as well as our world-class genetics in that space, which enjoy a high demand and thereby generate premium pricing. Also, we are paying a lot of attention on export opportunities, in particular from Jumbo and Arana. Export opportunities that we are leveraging, and we're seeing good progress in these Southeast Asian markets in particular. Well, just to add to that, I think we were very pleased again with our Far North Queensland blueberry crop. As we called out in February and prior year, that last year was a very successful program, and I think this year was equally successful. So, first half certainly impacted by positively impacted by another strong FNQ season. And as we sort of implied through the presentation, we're moving into the Northern New South Wales crop, and with our main Corindi farm, and so far, you know, from what we're seeing around, I guess, the condition of the farm generally and also the condition of the plants, and, you know, we're quite excited around the remaining season. We're obviously towards the back end of the year. We start our Tasmanian season, so that's still very, too way too early to call, but again, that's, you know, something that is quite important to the overall result for the group. Okay, great. Thanks for your time. I'll pass it over. The next question comes from Jonathan Snape with Bell Potter. Please go ahead. Yeah. Hey, guys. Can I just ask on a different side, the grapes business in the first half? Like, I'm assuming that's caught in the citrus balance of crop number. And the tonnage looked like it was back down towards the, I guess, the 2021 levels, when you had all that hail damage rip through. And I think at the time, that cost you about AUD 25 million back then. How big an impact was the grape yield issue and the, and this mildew thing in the first half? Because it looks like it was quite material. Yeah. No, that's a good call, John, and I think Marc did mention through his presentation, and maybe just to clarify those comments. So the industry was down about 40%, largely related to a mildew issue that was quite prevalent through, particularly the Sunraysia area. So volume's down considerably. Marc called out, I think, AUD 9 million being the impact, so that's the EBITDA impact versus internal expectations, so quite material to the group. And as I said, you know, the mildew issue, you know, we believe, largely related to the La Niña conditions that we saw through CY 2022. Okay. And look, can I just ask on SGARA while we're there? I think back at the full year, if memory serves me, you were looking for, like, an AUD 13 million odd dollar number coming through in 2023, and it was quite a big negative drag in the first half. I mean, how's your thinking around the contribution from SGARA for this year? Yeah. So, so it's obviously a point-in-time calculation. Yeah ... John, and so if you think about the first half, two major matters that impact the, I guess, that P&L line. One is that, which is, you know, a positive thing in relation to that, we, at the beginning of the year, we have, obviously, our crop in international businesses that is yet to be picked. So for SGARA purposes, we put a value on it. As we pick and harvest that crop, obviously, that SGARA line unwinds, and we take a charge to the P&L.... I guess the other thing, which is more of a negative issue, and it sort of gets back to the theme of citrus, is that our expectation of the value of the crop at 30, you know, at balance day 1 July, this year, is below, you know, previous expectations. So a greater charge to the P&L relating to expectations for citrus for the second half. Okay. So when I'm thinking about the full year, it's likely to still be a drag? That's correct. It's not gonna reverse and be a massive positive, is it? No. No, it's not. No, it's not. All right, great. Thank you. The next question comes from Ben Gilbert with Jarden. Please go ahead. Hi, good morning, all. Just, first quick, just on the dividend again, just following up from Craig's question. I thought that paying under the indicative proposal, giving you guys the option to pay up to a AUD 0.04 divvy. So it just surprised me, and I don't know if I'm reading too much into it. Is it concerns around cash flow, or is it... It just surprised me. I'm not really sure how to interpret it. Yeah, it's Wayne, Ben, and good morning. Yeah, reading too much into it. You know, it's simple as the board deferred any consideration of the payment of dividends subject to receiving a proposal, a binding proposal of paying for it. Clearly, we don't have that binding proposal, and as implied by the ASX release and also today's commentary, we may not receive a binding proposal, so we'll just have to see how that plays out. And just, you know, the board will consider a dividend at the appropriate time. But please, you know, there's no hidden messages other than, you know, we're just... It's appropriate for us to see if there was to be a binding proposal come, and the structure of that proposal before we consider what we do in relation to a dividend to the shareholders. Okay, thanks. And then just a couple of others, just on the, on the Moroccan business. So you obviously had some impact. I think you obviously did some replanting, and you put a new packing shed about a year or so ago. The, the new plantings, should that get you up to run rate, where you should be able to grow that, volumes, pricing, or sequence next year from your own farms in Morocco? Yeah, look, you know, we've had... This is the second year of replanting, so it's about, each year is about 450 tons less than the prior year. We would expect another year of replanting, but we're quite excited about where this business could go once those replantings are done, 'cause as you'd appreciate, Ben, not only are we replacing older plants, but we're also replacing them with our newer genetic varieties, so which, you know, we've got a high degree of excitement about. So yes, we do expect this business to improve once we get through this replanting. We're very pleased, and I think it's probably one of the highlights of the results, is actually the result of Morocco, has had a couple of difficult years, and the team have, you know, had exceptional this year, this year. As I said, the replanting program, whilst we've probably got another 12 months of that, but from the year after, we'll start to see growth in that business, given the, the replanting program will be finished, and also we'll be taking advantage of the, the better varieties. Great. So then final for me, just on freight. I appreciate freight costs in terms of outbound freights going up, but your citrus volumes have all been pushed into the second half. And as you said, your export outbound, or the export freight in terms of your shipping is pretty big cost, given where that's going all over Asia. Why did it go up so much? Because on a like-like basis, if it's just largely outbound, it must have been up, like, 30%-40%, given the shift in volumes and citrus, isn't it? Just seem like a big increase, given what your citrus volumes are doing this season like. Yeah, I think if it's, if you're looking at flight 20, I think you're probably looking at freight, which is domestic freight, But that's all domestic there, is it? There's no- Yeah. - international in there. Yeah. Okay. Correct. Okay. Yeah, yeah. And, and look, it won't be a surprise to anyone on this call that, you know, domestic freight is challenging, for any, any major users of it. And we, you know, the consolidation that's gone on recently, but then the, certainly the withdrawal of Scotts, from the refrigerated space, probably means for at least the next 24 months, we're not expecting any real relief around, pricing in that space. Although, as talked through in our slides, we are seeing some benefits in international freight. So, the only real, issue there is, whilst dry containers have pricing, have probably gone, if not, at least or below pre-COVID levels, the availability of, slots for refrigerated containers is not back to where it was two years ago. So while we have seen some improvement in pricing, until further slots or capacity opens up, we're not expecting too much further reductions. But, you know, I think market forces will probably mean, you know, the capacity will open over the next 12 months. Quick, Wayne, one final one. Do you-'cause you touched on it there, the, the Scotts side of material distribution, 'cause I think Woolies picked up a few of those facilities. Did you look at those? No. No, no. We weren't a- Okay. They weren't, they weren't a supplier to us, so it actually didn't, didn't actually touch our supply chain, but I think as it's probably implying, it's gonna, it will impact, I guess, the ability for, generally for that, the industry to have any full price release for a couple of years. Yeah. Okay. Thanks. Appreciate it. ...Once again, if you wish to ask a question, please press Star and One on your telephone and wait for your name to be announced. The next question comes from Belinda Moore with Morgans. Please go ahead. Thanks for your time, guys. So, Wayne, I think you said net debt will increase year-end, just given your funding costs. Can you give us a bit more flavor, how you're thinking about your gearing metrics at year-end? Then also, just on tomatoes, can I get clarity? I mean, is it sort of, is it unprofitable? And then on avocados, if you wouldn't mind going through your, you know, outlook expectations for the second half, just given industry supply. And then, lastly, just given, you know, planting sort of pause, in China, and you're still replanting in Morocco, is it fair comment to say international earnings will be, will be down in- Yeah, I might... Good morning, Belinda, and thanks for joining the call. I might answer the first and last question, and then pass to Marc on tomatoes and avocados. So, I guess your question on where I think gearing will end up, sort of implies that I'll be giving guidance on earnings, so I won't go there. But certainly, I think debt will increase largely because we had a lower expectation around citrus earnings. And secondly, we are funding the Conaghan's land deal for 2PH, which we'd already previously flagged. So I think it's important to point out that these are investments in the future. So, while we'll have some minor adjustment to our gearing or leverage ratios for in the short term, they are transactions that will better, better the group and although will take a number of years for the earnings to come through. In relation to China and international, look, it's fair to say it was an exceptional result, and while in head office, we always, you know, probably ask the management team to develop plans to continue to grow the business. To deliver that type of pricing and yield outcome year on year with growth in it, embedded, will be a challenging number. So, so very difficult for us to be able to repeat that number on the same footprint that we have in both China and Morocco. As envisaged, we still have growth plans in relation to extra land in both of those regions. We have been able to identify some of our 100-hectare expectations for 2025. We haven't got all the land yet for China, and we continue to look for land, particularly in the Agadir, so southern Morocco. Both regions around finding suitable land at the right price is challenging. There's a lot of competition across all growing categories, but, you know, we still see growth in those businesses. So, on a like-to-like, to answer your question, you know, difficult to sort of see an improvement in that business given how strong the result was. But our growth plans remain on track, and, you know, we see, definitely see growth beyond where we are now in the, in the category, beyond this, beyond the next few years. I'll pass back to Marc. Yeah, thanks, Wayne. Maybe starting with tomatoes. So as I was referring to in my presentation earlier on, the tomato category is expecting or has seen some lower summer months pricing compared to our internal expectations, in particular, off the back of significant truss supply from a few crops, which we haven't seen arguably in the last two to 2.5 years. So that is something that the team is currently working through when it comes to making the necessary production adjustments in the glasshouse. So it's certainly something that we are on top of in order to manage supply and demand going forward. As far as red snacking is concerned, we've seen significant production yields over the first half year and will continue to do so due off the back of favorable growing conditions, light conditions in particular. So as far as the tomato category overall is concerned, we have to make production adjustments when it comes to truss. But overall, we are quite optimistic about the forthcoming months, in particular, as we move into the summer months, where we generally see a significant volume and demand increase as per the previous years. When it comes to avocados, and again, referring back to the presentation, just some highlights. We have spent a lot of significant time in terms of optimizing our avocado footprints, as well as we sold 1 avocado farm in FNQ, and we'll continue to do so in terms of reviewing our optimal footprint when it comes to avocado farming, as well as looking at export opportunities. We have been quite successful in securing WA avocado supply, which we are able to export into the Southeast Asian markets, and we'll continue to do so. Also, pricing, compared to our internal expectations, has been favorable. And so overall, I think we are on a pretty good path as far as avocado and the avocado category is concerned going forward. Thank you. That does conclude our conference for today. Thank you for participating. You may now disconnect.