Thank you for standing by, and welcome to the Elders HY 2021 Results Investor Briefing. All participants are in the listen-only mode. There will be a presentation, followed by a question-and-answer session. If you wish to ask a question, you may press the star key followed by the number one on your telephone keypad. I would now like to hand the conference over to Mr. Mark Allison, CEO. Please go ahead. Thank you very much. Welcome to all for the Elders half-year results presentation for FY 2021. Thank you for joining Vanessa and myself for this session. Vanessa is our Group Financial Controller and will stand in for our newly appointed CFO, Tania Foster, until her commencement date of May 31st this year. I'd also like to take the opportunity to acknowledge our previous CFO, Richard Davey, who worked tirelessly over the major turnaround period and made a major contribution through this period with Elders. He'll be with Elders until the end of June this year. This is the first six months of our third Eight-Point Plan, and as you are all aware, the philosophy that Elders has from the first Eight-Point Plan has been to control what we can control and not to dwell too much on what we can't control, and to have a cost and capital structure to allow us to make good returns in bad years and to make great returns in good years. This half's result is an example of good returns in good market conditions. We use our multiple diversifications by product, service, geography, crop segment, commercial model, and channel to market and our financial discipline to deliver consistent and high returns for our stakeholders over multiple years. Now, the performance of Elders' clear and consistent strategy, multiple diversifications, its high financial discipline, and hard-working, committed team, and enduring customer anchor as the most trusted brand in Australian agriculture, has been outstanding for the first year, first half results. The result is strong in safety, sustainability, profit, strong in Return on Capital back above the 20%, strong in cash, and strong in strategic delivery. The market conditions and commodity prices have been positive, as we're all aware, although it should be noted that the contribution of market conditions to the result is in the order of 35% of the upside, with bolt-on acquisitions contributing some 21% of the results and organic or self-help activities, things we can control, contributing some 44% of the growth. This is strongly aligned to the focus of our third Eight-Point Plan. The approach for today is that I'll provide an overview of the results. Vanessa will go into the detail of our financial performance, and then I'll provide an update on the focus areas of the third Eight-Point Plan and also the outlook. Just looking at the first slide on slide four, in terms of the key highlights, strong outcomes across safety, with two lost time injuries for the first six months, and a significant improvement in a number of other areas as we've worked through and coming out of the COVID-19 period. In terms of financial performance, a solid uplift in EBIT of 40%, acceptable and quite good operating cash flow given the circumstances in the build-up to the winter crop, leverage down, and importantly, significant improvement in earnings per share. Elders will pay an interim dividend of AUD 0.20 per share, AUD 0.20 frank, this is compared to AUD 0.09 at the same time last year. I'd also note that we didn't access any of the government supports, such as JobKeeper, during this period. From a strategic viewpoint, on track across a number of the strategic areas. When we look at the Eight-Point Plan, I'll go into the detail of that, largely on track or ahead of where we believe we would be at this stage. The key enabler for the third Eight-Point Plan, the Systems Modernization Program, we've completed the service design phase and also look on track as we roll it out throughout this Eight-Point Plan period. Moving to the next slide. Again, on track with our operational safety. Our sustainability initiatives, good work there with our report released last year, our Modern Slavery Statement, ethical contracting frameworks launched, action plan for 41 TCFD recommendations on track, the ongoing significant contribution that we look to make to regional and rural communities. Efficiency and growth, also on track, with our core relationships across the spectrum of our business, on track. Looking at the next slide, on slide six, just to highlight a few of the key financials before Vanessa goes into the detail. You can see underlying EBIT at AUD 73.8, some 40% up on last year. Underlying profit after tax at AUD 67 million, 41% up on last year. Operating cash flow at AUD 23.9 million. Underlying Return on Capital at 20.1%. You'll recall that we reset the ROC target for the third Eight-Point Plan at 15%, and for the first half, we're operating at the 20.1%. Strong growth in underlying earnings per share and a reduction of the leverage ratio. With that, I'd like to hand over to Vanessa, and she'll go through the detail as we show the strong growth across all products, all geographies, all services. Thanks, Vanessa. Thanks, Mark. Favorable performance was achieved across most products through a mixture of acquisition, organic, and market benefits. As highlighted in gray, performance by product area at a gross margin level was up approximately 18% on the prior comparative period. Retail products increased by 25%, benefiting from our strategic initiatives relating to optimized pricing and backward integration throughput. Favorable conditions produced a strong summer crop result, increasing our gross margins and winter crop remains to have a positive outlook. Wholesale products performed strongly in the first half and is up 68%, due to increased sales predominantly from backward integration. High livestock prices have strengthened our agency services business. Some adverse impacts have been seen within our feed and processing business, as the Killara Feedlots has endured price pressures on their margins. Real estate margins have improved by 27% across most service offerings, with earnings from residential being the feature, which is up 70% on the prior comparative period. Financial services 10% uplift has mainly come from favorable earnings from equity accounting investments, as well as growth from our Livestock- in- Transit Delivery Warranty product and implementation of our new livestock funding product. Branch incentives, which is in its second year, have increased in line with EBIT growth in the business. Costs were up 11% or AUD 16.5 million on last year. This is comprised of approximately 44% from acquisitions. The remainder relates to increased insurance costs of AUD 1.6 million, Systems Modernization costs of AUD 1.3 million, and investment in strategic areas. For example, business improvements, Retail Academy, sustainability, and customer solutions to name a few. We also recognized a corporate debt provision of 2.75 million for the first time at half year, due to strong first half performance and positive outlook for the second half. Moving on to slide eight. Looking at the result by geography. All states are up compared to the prior comparative period. Key drivers of this include improved sales across segments, particularly in rural products. Wholesale products strong performance translated to an EBIT uplift of 6.7 million. A strong retail product result was a feature in New South Wales EBIT uplift, with renewed summer cropping activity, including drought-affected areas producing higher sales. Backward integration initiatives were also a contributor. Queensland and Northern Territory performed favorable in all key product areas and included acquisition growth of AUD 400,000. Confidence in winter crop outlook was a key driver in Victoria and the Riverina results, boosting retail product sales in chemical and fertilizer products. SA performed strongly on the prior comparative period, in part mostly due to retail products with uplift in both sales and margins, and contributed also by the YP Ag acquisition on the 1st of December 2020. Tasmania is slightly up on last year. Despite showing some gains in retail product margins, this was partially offset by lower livestock volumes. Like Queensland and Northern Territory, Western Australia outperformed the prior comparative period in all key areas, with improvement in retail, real estate, and livestock. Corporate and other costs increased as a result of investment in new initiatives, initial system modernization costs, higher insurance costs, and performance initiatives as previously mentioned. Moving on to slide 9. ROC for the group finished at 20.1% at the half and 18.5% over a three-year average. ROC at the half is 1.2% up on financial year 2020 and 2.1% above the prior comparative period. The key driver of this result pertains to improved earnings across rural products, more than offsetting increased acquisition and working capital. Average capital increased by AUD 98.3 million to AUD 483 million for the half. Rural products comprises around 74% of this increase, mostly due to increased retail product debtors, which is typical at this time of the year, as well as inventory build-up to support quarter three sales and higher wholesale working capital associated with acquisitions and organic growth. High livestock prices have impacted average capital across both our agency services and feed and processing businesses, with prices driving an increase in livestock turnover, which in turn has lifted the average working capital. While Killara Feedlot's working capital is largely driven by higher inventory due to both price and volume. Moving on to slide 10. Operating cash flow for the period was AUD 23.9 million, which equates to cash conversion of 35% on underlying Net PAT. This is a typical cash conversion rate for this time of the year, and we expect to achieve our target of 80% by year-end. Operating cash flow is comprised largely of EBITDA of AUD 94.3 million, offset by movement in assets and liabilities of AUD 62.2 million. Key drivers of movement include growth in rural products, with increased debtors for both retail and wholesale, and higher retail inventory to support quarter 3 sales and favorable debtor prices. Timing of livestock receipts from large clients during March and higher cattle inventory at Killara. Investing and financing cash flow movements relate to the purchase and funding of the AIRR acquisition in the first half last year. Turning now to slide 11. Debt levels at Elders have decreased partly due to the impact of AASB 16 leases, with lower debt due to payments more than offsetting new additions in the half. There is also lower investing cash flows, as stated previously, with the prior year including the AIRR acquisition. Average debt is slightly up on the prior comparative period due to increases in our trade receivables facility in line with higher retail product debtors from sales growth. After removing the impact of AASB 16 leases, all our key ratios have improved on the prior comparative period, contributed largely by increased earnings. We are also well-placed within our banking covenants, with significant headroom in all three as highlighted in the slide. We also have significant undrawn facilities. Turning now to slide 12. Elders will pay an interim dividend of AUD 0.20 per share for the first half, franked at 20%. The increase in the dividend from AUD 0.13 to AUD 0.20 more than offsets the post-tax impact of the reduction in franking percentage. Elders no longer have sufficient franking credits to pay fully franked dividends due to its significant carry-forward tax losses that are likely to be fully exhausted around 2025. Elders will not be in a position to pay fully franked dividends until then. Current forecasts indicate that a partial franking rate of 20% is sustainable based on dividend forecasts from non-wholly owned interests and the current number of ordinary shares on issue. Elders has carried forward tax losses of AUD 141.9 million tax effective, AUD 119.6 million on-balance sheet and AUD 22.3 million off-balance sheet. It is anticipated that all losses will be on-balance sheet by year-end. Whilst Elders only pays a minimal amount of corporate taxes due to a significant amount of carry forward tax losses, it has contributed to the Australian economy with the payment of payroll tax, FBT, and GST. I will now hand back over to Mark. Thanks, Vanessa. Just moving to the next slide, on slide 13. This is the third Eight-Point Plan that many of you would have already have seen at our full year last year. Our ambition through to 2023 with the third Eight-Point Plan is 5% growth in EBIT and earnings per share through the cycles at above 15% Return on Capital, to have an industry-leading sustainability outcomes across our health, safety, community, environment, and governance, and also to maintain the position as the most trusted brand in agriculture and regional rural Australia. It is worth noting that this is the third Eight-Point Plan. For the first Eight-Point Plan, we took the business from AUD 27 million to AUD 71 million EBIT at above 20% Return on Capital. The second Eight-Point Plan from AUD 71 million to AUD 119 million EBIT at an average through the period above 20% Return on Capital. The plan of 5% growth, which we've exceeded in the last two, three-year periods, it looks like it's on track if we're looking at the outlook and the initiatives. I think it's quite important because there is consideration that Elders is tapering off, and we've turned around, consolidated, and we've had the growth that we can deliver. Clearly, as we look through all the initiatives and our plans, we've really reset the platform for significantly greater growth as we move through this period and through to the next 5 to 10 years for the business. When we look at the strategic enablers in the third Eight-Point Plan for winning market share, capturing more gross margin, strengthening of our service offerings, optimizing our feed and processing businesses, and developing our sustainability program. Details of the achievements in these will be shown on the next slide, and I'm sure we'll go through many of those in detail with the question time. Then the enablers of the third Eight-Point Plan, the Systems Modernization Program, that we've started the investment and development of attracting and retaining the best people and then maintaining a very strong financial discipline. If we can move to the next slide and just touch on a few of these areas. As I say, a number of these will be fleshed out in much greater detail in questions where there's specific interest. It is worth noting that through this period, if we look at winning market share, which is largely around our acquisition of bolt-on strategy and capturing gross margin, which is largely around the self-help organic growth. Just to reiterate my initial comments, of this half year results, 35% came from the market, 21% from the bolt-on aspect, and 44% from the self-help areas. In terms of the control that we can control, I think this philosophy has been running strongly as we look at the results. From a bolt-on viewpoint, you would have noted in the details, we've had six greenfield sites established through this period and also six bolt-ons through this period. These spread across multiple products and services and also multiple geographies. If I refer you to the slide in the appendix that shows the strategic gaps by geography and by product and service, you can see that there are multiple further opportunities. When we look at the business development pipeline, currently there are 17 active candidates in the business development pipeline, obviously they all won't come to fruition. From our viewpoint, they are generally low multiple in the area of AUD 500,000 EBIT to AUD 5 million EBIT. We weigh heavily that the people in these businesses fit the culture, fit the values, and fit the outlook that we have for the business. Just going to another area within the gross margin aspect, the synergies for AIRR, you recall, the average position when we bought AIRR was that over a two-year period, we'd extract AUD 8 million of synergies. Given that we part-owned AIRR for the first period, we thought it would be split AUD 3 million and AUD 5 million over the two-year period. For the first period, the actual number was in the order of AUD 5 million rather than AUD 3 million. For the second period, we're taking AUD 5 million. Our sense is that we should be around double that. The synergies from AIRR and the ongoing momentum of AIRR has continued very strongly under Elders ownership. I think the final point I'd make around winning market share and capturing more gross margin, one of our sets of targets and KPIs or the metrics that we measure from the actually, we put in place the thinking prior to Nutrien buying Ruralco was to gain some of the former, both as acquisitions, as people and as customers. Last year for the full year, it was just under 500 customers from Nutrien come across to Elders. It's quite interesting, for the first, we'd always talked about waves of activity in terms of competitive activity. For the first six months of this year, including acquisitions, to be fair, there's over 900 customers have come across in the same period. Similarly, there were four acquisitions from the Nutrien stable last year for the whole year. To this point, we've had one, but five others in play at the moment. Last year, 23 people. These are revenue earning front-end people had come across. For the first six months, about eight people had come across. There's good progress on those fronts. In terms of the sustainability program, also good progress being made there. The next slide highlights some of the other issues. We won't move to that as yet. Good progress. I think from an Elders viewpoint, we don't want to be box ticking in this area. We want to be authentic, we want to be real, and we want to be practical. We've got a massive platform of activity and initiatives to allow us to contribute significantly across major areas of the community, in health, in water availability, animal welfare, in energy and waste management, in governments across regional rural Australia. We'll highlight a few of those in the next slide. On the Systems Modernization Program, Viv Da Ros has been appointed as the new CIO, and he's making great progress. I think there's a very strong comfort level throughout the business in terms of the Systems Modernization Program. It's rolling out as a five-year program, so it'll run across this financial period and enable into the next. There have been some interest around the phasing of the program and the costs. At this point, we don't have a signed off program, we can't validate costs and benefits because the business case hasn't been completed and signed off at this stage. It's worth noting that year two, we're expecting 15% of spend, year three, 36% of spend. Over the period of the program, the five-year period, we're thinking that 30% of the expenditure will be OpEx and 70% will be CapEx. Until we have a signed off program, I think they're the details that we can provide. I can say that we feel very comfortable that we're on track with this program and see it as a significant platform for our ongoing growth. Moving to the next slide, in terms of sustainability, the sustainability report was launched last year with the annual results. Again, good progress. I know we're in at least one ESG fund already. We've made good progress there. If we just take it to the practical and we say, "Well, what actually is happening?" If we look at the community impact, we look at all of the work that we do around Australia with local communities, charities, the Royal Flying Doctor Service program that we're involved with, and many other activities, which are just part of being, I guess, make up being the most trusted brand in regional rural Australia, having been around for 182 years. In terms of health and safety, with our safety week, Agsafe partnerships, the multiple safety action teams, safety steering committees, et cetera, and also the employee assistance program, which offers counseling for both our people and our communities. Significant work there. The climate change area, the carbon footprint analysis that we've done, climate transition opportunities assessments, the carbon farming advisory services we're providing are just the start. We see us moving more in that area. Water availability as well. If you look at the severe weather events that have occurred, whether it be in the East Coast or Northwestern Australia, where we play a significant role. Lastly, very practical things like extending payment periods so that the last thing that people need to worry. In fact, I have a story last week from a guy up north in Western Australia where he had one of his producers come in saying, "Hey, the place has been blown away. I don't know what bills I owe. Can you tell me? I don't want to be a late payer," even though he was in crisis himself and the guy was brought to tears and we said, "We'll waive it and allow you to pay when you can pull this together." This happens every day with people wearing pin shirts all around Australia, has for a long time. Looking at the waste management area, the drumMUSTER program we support, reusable check pellets, the branch chemical drum collection program, cleansing and redistribution, and the organic waste management program that we have in place in Killara. As well as on the energy front, with the solar panels and branches, hybrid vehicles in our Elders fleet, developing an organization-wide emissions reduction strategy and setting our targets. There's lots of detail around that. I felt it was worth just highlighting a couple of areas. That detail is in the sustainability report, and we're happy to talk to any investors who want to talk in detail around those initiatives. If we move to the next slide on market outlook. I think it's fair to say that most people are aware that the outlook for agriculture is quite strong. When we look through rural products, there's a lot of talk around winter crop and the GrainCorp presentation. I know Rob talked about outlook and the public figures and the positive nature there. I think it's worth also noting that the strong environmental conditions and rainfall that occurred six weeks, eight weeks ago, has also brought a lot of the irrigation country back up to a reasonable position, and we would expect to have a very strong summer crop that flows out through late September, October, November, through the east coast of Australia, and particularly Darling Downs, but also the Murrumbidgee Irrigation Area. That outlook remains positive. The agency services through livestock, sheep, and cattle, a lot of debate around cattle prices. As a simplistic North Queenslander, rather than all the modeling, I just look at all the graphs that's available. The national herd is down significantly. We're still drawing significant northern cattle into Vietnam and Indonesia with live exports. There are a lot of producers who have sold cattle at very high prices and can't get back into the market. In terms of supply, the Brahman cattle as far south as Armidale and Glen Innes now. Great Brahman cattle. Good luck for winter, guys. The sense to me is supply and demand says that this remains firm. Our internal position is always to be highly conservative, and we see cattle prices softening and dropping off. However, it remains a significant safety net for the business. Real estate, a similar scenario where we had thought that the pipeline and demand may drop off late last year, but it's remained very strong, as I think we're all aware, and the outlook looks strong. Interestingly, with the reduction in Chinese investment money coming into Australia through the ramped-up FIRB conditions, that Canadian money and other money and large family money is actually filling the gap and keeping the market quite buoyant. Financial services moving along nicely. We have a system with the larger loans and for the on-balance sheet less than AUD 100,000 loans. We've also had a very positive result, largely pitched at the restocker market that StockCo is also involved in. This is outside the StockCo frame. Feed processing, I guess the one area of the business that has the downside, and this is the cost of diversification, that where you had upside, you had downside. Killara, through good seasonal conditions, has grown its own forage, its own forage sorghum and maize that's used in rations. That's offset the cost of increased cattle prices by in the order of 25%. We haven't been able to fully offset the increase of feedstock, and that will be reflected in the, or is reflected in the results. The Chinese business, Elders Fine Foods, is immaterial and operates at breakeven every now and then, but obviously it's never been material in the scheme of things at any rate. The final comment I'll make around outlook, and this may go to questions, firstly on the mouse plague that's got a lot of media coverage. Again, you'll be aware this is mostly in New South Wales. The government has allocated AUD 50 million to fund eight grain treatment sites. There's also been fast-tracking of the active ingredient registration for control through the APVMA, the regulatory body, for the control of mice. Then historically, through mouse plagues, as it gets colder, the mice build up and it stops and the next cycle occurs three or four years later. In terms of impact on Elders for this forum, minimal impact, although we're doing what we can to support our clients in these areas. The second area that I'd like to put a particular focus on is around the geopolitical issues and implications for Elders. I think everyone's, again, very aware of China-Australia-U.S. issues. In terms of implications for Elders, it's quite minimal. The way our trade and access agreements are set up as Australian agriculture forges ahead to the AUD 100 billion target pre-farm gate by 2030, we've always had an eye to diversifying markets. We've currently got the, I think it's the seventh or eighth round of the Indian Free Trade Agreement running through. Clearly, there won't be beef in that agreement, but there is lamb and other commodities in that agreement. We have the EU agreement and the U.K. Free Trade Agreement also running parallel, which opens up further markets. We also had last year in November, December, the Regional Comprehensive Economic Partnership through ASEAN countries signed. I think from an Australian agricultural viewpoint, there are other markets. Barley has shown that with the Vietnamese market. I think it's also worth noting that our biggest competitors here for a lot of our commodities are bearing down on our traditional markets at any rate. Canada, in particular, and the U.S., but also the Chinese beef market was always being targeted by Brazil and Argentina, as they've been doing with the Indonesian market. This is normal business as usual. In terms of implications for Australian agriculture and for Elders, our sense is that it's not material in the scheme of things as we move through these cycles. The other example is around wine and I guess Treasury is the one that's been highlighted here. We work closely with Treasury Wine. They're a great partner and we've had a long relationship with them. I guess it's the same boat as Australia, finding other markets, diversifying our business, as you should be. Lobster is in Western Australia, quite a unique example, where the market was actually created by the Chinese and we were able to take advantage of it, and as it's turned out, they've taken that market away. I'll just finish on there heading to questions. In the appendix, you'll see the business model, our segmentations, our sensitivities, our points of presence, our strategic gaps, and also a longer-term outlook from ABARES to consider. I think with that, we'll go to questions. Thank you. If you wish to ask a question, please press star one on your telephone and wait for your name to be announced. If you wish to cancel your request, please press star two. If you're on speakerphone, please pick up the handset to ask your question. Your first question comes from Alex Paton with Citi. Please go ahead. Good morning, Mark and Vanessa, and congratulations on the result. Thank you. Just got a couple of questions. First one, you mentioned some benefits from additional backward integration throughput. Just keen to hear a bit more detail on how much was due to Titan Ag, sorry, versus Pastoral Ag, and how you think penetration of your generic sales pools in those two categories is going? Yeah. Good question. Predominantly, it's through Titan Ag and Apparent. The crop protection brand that's within the AIRR business. I think last year, when we kind of washed it all out between the two brands, Titan Ag and Apparent, there was around 25% of the addressable generic market. For this first half, I think it's fair to say, Vanessa, it's at the 30%-35%. Correct, Mark. Yeah. 30%, 35%. Largely, it's coming out of there because we've had both the market growth with the volume of product, a minor impact of products coming off patent, but most of it's come from there. In terms of Pastoral Ag, the animal health products through AIRR have taken an increase. Vanessa might be able to help me on the proportion, but as you're aware, we kicked that off in full this year. If you go out into the branch network now, you will see Pastoral Ag products in the majority of our branches having replaced off-patent animal health products as well. Got it. On the Pastoral Ag side, as I understand, you had about 20 parasiticides in that portfolio. Yeah. How have you seen uptake there and also penetration of that sales tool similar to what you gave for Titan Ag? Yeah. If I go to broad numbers, I think the target area there may have been as small as about AUD 20 million? AUD 20 million, yeah. AUD 20 million target area, we're addressing that. I guess the fundamental difference is that for the Titan Ag margin increase, it is going to be 10%-15%, whereas the animal health products, it is 20%-30%. I think by full year, on the numbers, certainly that you have run, I think we would probably be close to aligning to that, all things being equal. Then the third area that we haven't budgeted for, but we are actually getting some traction is in the general merchandise area. Okay, great. Just one more on the flagged commodity price increases in the outlook. I assume this relates to the crop protection and fertilizer side of things. Can you maybe elaborate on what kind of pricing techniques we'll see offset these increased input costs? Do you think these costs could be entirely passed on to customers given the strong demand environment at the moment? I think that's generally what happens with these lags. The trick for a well-managed business, and I guess over many years I've learned the hard way with glyphosate and with urea and prosulfocarb, et cetera, is to ensure as the increasing cost profile is there, that you're actually passing on the costs. Interestingly, in fertilizer, we've seen it in a number of examples, particularly in the east, where we've been able to commit to volume or tonnage, but not price, and the price is provided to us at a later date because of the increasing price claim with suppliers not wanting to get caught. For us, the one to watch is glyphosate, big volume and increasing claim, and being sure that at the end when the price starts to go down, that we're not caught with high price stock. Largely, that's why we're in the market. Okay. That's great. Thanks. That's all from me. Yeah. Thank you. Your next question comes from Michael Peet with Goldman Sachs. Please go ahead. Hi, Mark and Vanessa. Just first question on the wholesale side of the business. Just trying to get a sense of seasonality there, Mark. Look, we've never seen a first half result from that business, and you mentioned the extra synergies. What should we expect for the second half? What's the normal seasonality of this business versus your others? Yeah. I think it generally aligns. What we're seeing with AIRR is that under Elders ownership, they're able to expand and pick up more wholesale customers. We're looking at new warehouse distribution facilities in Central Queensland, in Tasmania. We've got the second year of Western Australia. I think what we're seeing is a very strong growth phase. In fact, you can see that in the numbers. It has been a very strong growth phase. It's interesting because when we talk around the AIRR board and what's happening, it's largely under Elders ownership and the governance and the capital availability that we're able to grow at a faster rate with great confidence. I would expect that AIRR put out an internal target for the whole business of getting the business to that revenue of AUD 1 billion over a five-year period, and they're running hard on that. In terms of aligning with the Elders' five-year plan, that fits very comfortably within the growth that we're targeting. A lot of it, they're picking up new wholesales, they're picking up new geographies, expanding. There's ongoing fallout in that area from CRT. There are a couple of competitive challenges with startups for wholesale businesses that are also trying to provide an anchor with fallout from Ruralco wholesale business and Landmark wholesale business. There hasn't been great traction at this point. It's not a matter of saying it and it happens. You need distribution centers, you need a sophisticated logistics system as AIRR has. Yeah. I guess just to follow up on that, we've got a lot of history on your other segments. Wholesale, should that be a bigger contribution in first half or second? Just so we get a broad sense of that. Yeah. I'm just trying to think of the balance. Given that there's a chunk of it, there's 120 members that are co-op farmers wholesale members, and they wouldn't run seasonally at all. They're strong in New South Wales, AIRR is strong through New South Wales and Victoria, so you'd expect that to be strong. Maybe we come back to you on it and give you a more precise thought, but it doesn't jump out at me as a significantly different kind of balance. Okay. Just on synergies, you mentioned that it looks like you're going to be double what you thought initially for year two, so around AUD 10 million in the second year. What's actually driven that? Can you give us an idea of what the actual projects or where you've captured that extra money? Yeah. It's across multiple areas, to be honest, and hand-in-hand with our business improvement area, whether it be the sourcing of the animal health products, whether it be general merchandise. Elders branch network is using AIRR warehouses and smaller delivery mechanisms, so significantly greater. There's a chunk that's been out of our trading terms because we've combined all our trading terms with the third-party suppliers. There are multiple areas. Vanessa, do you want to highlight some of those areas, see if you've got them in front of you? The majority has been through Elders access to AIRR by now. We're looking for over the two years about AUD 6 million to be contributed from that, and also through higher AIRR ag chem margin. That's another big contributor, looking at AUD 3.5 million over the two years. Yeah. What we're seeing, Mark, was a continuation of the momentum from last year with the introduction of the branch network incentives. With every branch having its profitability on a dashboard and all the metrics of its profitability and the significant impact of both Titan backward integrated products and AIRR sourced products. AIRR are providing all the animal health products, Pastoral Ag products, and also general merchandise. There are no barriers to the synergies we targeted. In many examples where I've run companies previously, there's been an internal fight to deliver synergies because it means that someone wins and someone loses. In this case, in the AIRR Elders case, both win. As you know, the key AIRR managers are significant shareholders in Elders as well. Just a final question, just on Return on Capital overall for the group. Obviously sitting nicely at above 20% at the moment, which is well above your 15% target minimum, I guess. Any reason why that shouldn't remain there, at least for the second half, given we've got working capital being released in the second half, annualization of some of these acquisitions? I would've thought it should stay around that level. Is that a fair comment? I guess we're predicting it to stay around the 20%. Great. Thanks, Vanessa. Yeah, exactly for the reasons you've mentioned. Yeah. That's all I got. Thank you. Thank you. Your next question comes from James Ferrier with Wilsons. Please go ahead. Hi, Mark and Vanessa. Thanks for your time this morning. Vanessa, can I ask you to recap a couple of comments you provided on slide seven in relation to the increased costs? I think you gave a little bit of an itemization there. Could you just run through those again? I missed those, unfortunately. Yeah, no worry. You're on Netflix though, James? What's that, Mark? Were you on Netflix? Yeah, that's right. Yeah. I just got a bit distracted. Yeah, no worry. In relation to the AUD 16.5 million, approximately 44% is from acquisitions, so around AUD 7 million. That's the cost, I think. Oh, yeah, that's right. Oh, sorry. Okay. AUD 7 million from acquisition costs, mainly that's one and a half months of AIRR contributing AUD 3.2 million and YP AG AUD 1.2 million. The remainder was increased insurance costs of AUD 1.6 million, systems modernization program cost of AUD 1.3 million, AUD 3 million in relation to other strategic areas, so business improvement, retail academy, sustainability, and customer solutions. We also have the corporate STIP that we've approved for the first time this half year of around AUD 2.8 million. Sorry, that was the corporate, then like STI, et cetera? Yeah, correct. Yeah. James, you recall historically we haven't provided for that in the first half, and we took a changed view this year, and I suspect it'll be an ongoing position now, with making those provisions in the first half as well. Yeah. Okay. That's helpful. Thank you. Mark, second question. Perhaps a little bit more color on the retail products contribution there. The fertilizer component was up 35%, gross margin up 35%. Volume or margin-driven? I think just to set a bit of a backdrop, well, Vanessa gets the volume margin trade-off. The first year after a drought, this will be eastern state, the first year after a drought, there is normally an accumulation of nutrients in the soil because they haven't been taken out. The first year out is normally a low fertilizer year, which was last year, a low nutrients year. The second year, generally returns to normal or above average. I'm not sure if you've got the volumes there. My suspicion is it would be volume-based, James, but I'll confirm that with you. Yeah. No, that does make sense. We'll come back on that, James. Don't have the exact numbers in front of me. I guess similarly, the farm supplies component of that profile was up 20% year-on-year. Yeah. Is that sort of skewed to crop inputs, or is there a bigger contribution, relatively speaking, from aspects like general merch and animal health? Yeah. No, it would have been due to crop inputs. We also had, through that period, we had summer rain occurring in areas of Eastern Australia with that early rainfall. Yeah. Actually, that's an interesting point you make, Mark. March last year was an exceptionally strong month, and I'm just wondering how, as you look back now, how Elders actually performed in March 2021, just to sort of isolate a month and get a bit of a sense of that balance date cut off, how Elders performed March 2021 versus PCP? Yeah. It's a good question, because last year, you will recall that, I think it was early March, Nufarm out of MCPA and had talked publicly about supply chain issues through China, and there was a bit of a COVID rush buy that occurred in March for us last year. I think we believed that this year we may be down in March because of that, because of the extraordinary volume last year. The result was actually at or above. There is a seasonal impact. It will be interesting on Thursday, the Nufarm's result for Australia, if they have seen the same. That's helpful color. W.A., I think on that slide eight where you show the geographic splits, there's an AUD 5.1 million uplift in W.A. Just thinking about the relative sizes and sort of weightings of the Elders network geographically, for New South Wales to be up AUD 3.7 million and W.A. to be up AUD 5.1 million shows you how strong the knockdown spray season was over in W.A. Am I reading it correctly in saying that? Yeah, I think so. There's that component, but there's also, we've grown a significant agency business in W.A. as well, in Broome, and also a rural products outlet in Broome. That would also be impacting. You're also aware that there's significant sheep, there's over 1 million sheep have been kind of still flowing to eastern states from W.A. Of course. Yep. Okay. That makes sense. On the financial services business, you mentioned that on balance sheet, livestock funding that sort of is sitting there side by side with your investment in StockCo. What's the balance sheet exposure now, the total liability that Elders has in relation to livestock funding on balance sheet? Yeah. I think the last time we spoke, James, we talked about AUD 5 million trial, and then an AUD 10 million trial. Vanessa's just getting the number in front of her. It'll be in that order, AUD 10 million or AUD 15 million. Yeah. Okay. So Do you have a sense of how large you'd want to grow that? We debate it on a regular basis, in terms of how far we go with the balance sheet, because obviously the impact implications for Return on Capital. Our thinking is that for the partnership with StockCo, they're dealing with the above business and that's going quite well. We're really meeting a customer need, and it doesn't need to be dominant. It's an ongoing debate based on our mixed portfolio and returns. Yeah. Okay. Last question from me, the systems modernization program. If I understood you correctly, you're sort of still in that scoping part of the project, so you don't really want to commit to specifics around total cost and likely benefits. I guess in some ways, it's a little bit strange that you've got quite a specific plan in terms of the rollout and the expected staging of the costs. Yeah. You don't have a cost number that you can give to the market. Well, the reason that we talked about OpEx versus CapEx and the phasing of those expenditures was that that's been consistent feedback that I've got from shareholders, that even if we haven't got a signed off business case, it would be helpful to provide that information. That's the reason it's been provided, James. The business case hasn't gone to the executive committee and hasn't gone to the board with benefits and costs at this point. It's just a guess. That's actually the driver behind making those comments. Yeah. Okay. No, that's good. Can we assume that it's probably more likely a November in conjunction with the Elders full year result announcement, that you would be likely in a position to give those additional details? Yeah, that's right. Yeah. Okay. Thanks, Don. Yeah, James, I think the sort of details we'd be giving would be the implications for outlook and the Eight-Point Plan. It'll be that sort of level of information. Yeah. Okay, great. Thank you. The next question comes from Philip Pepe with Blue Ocean Equities. Please go ahead. Excuse me. Hi, guys. Thanks for taking my question. Look, most of mine have been answered, and I was watching Netflix as the other questions were going on, so just a bigger picture stuff, given a lot of my questions have been asked. In the last few years, you've talked about managing the business through the Ag cycle average. First time in a while now, we're coming at the average from above the longer term, whatever you look at, ROI, commodity prices, et cetera. Is there anything you do differently in the next 12 months versus the previous seven years? What's the thinking of your potential acquisition targets in terms of selling now to you at current multiples versus what may happen if bonds mean revert in a couple of years' time? Yeah, thanks, Phil. Yeah, it's a good question because I think through all of the Eight-Point Plans, somewhere we've had some sort of safety net, whether it be a cost lever, whether it be an equity lever, whether it be a seasonal lever. That's been helpful to allow us to manage the droughts, floods, bushfires, et cetera, that we've had. Just on your last question first, in terms of the bolt-on strategy that we apply, the template we're using for these bolt-ons is 3 x-5x multiple of EBIT. The normalized working capital an earn-out period has an average three-year EBIT as the starting point. Then the final payment is around, obviously, the final EBIT and then reconciled. We're quite protected against upturns and downturns, in that context. If it goes up, they win, we win. If it goes down, they lose, and we don't win as much. I'm not so concerned there. I take your point on the other areas. The systems modernization program running through as is perfectly timed to ensure that we have the most efficient platform from a core infrastructure and data infrastructure viewpoint that allow us the efficiencies should things change significantly. In terms of the balance of our business, having the wholesale and retail channels to market and having those markets diversified by townies and hobby farmers versus hardcore pastoralists and hardcore cropping businesses is also helpful. I think for us, what we need to watch is where the bolt-ons go, the geographies and the products, to ensure that we're not heavy and we're not over by in riskier areas. Very good. Thank you. Thanks, Philip. Your next question comes from David Pobucky with Macquarie Group. Please go ahead. Morning, Mark and Vanessa. Congratulations on the result. I just had a follow-up on one of the previous questions in terms of seasonality. Could you just clarify if you saw some pull forward in demand in the first half from the second half on the rural product side that would result in your first half, second half skew not being what you would typically see in an average year? Yeah. Thanks, David. We did last year, and my point was that we didn't this year. There hasn't been any panic buying. There haven't been stock outs that have driven it, and there also haven't been supply chain issues through China, apart from the supply chain issues that everyone across all industries are feeling with container availability and the blocked ports and the Suez issue, et cetera. Thanks, Mark. That's clear. Second question, just on corporate costs. I think you've mentioned corporate costs to increase in the second half. Is that versus this first half or versus PCP? What's the expectation for the full year and for FY 2022, if you can provide that color? Yes. It'll be similar to the first half, the cost. Thanks, Vanessa. Sorry, just one last question. In terms of the summer crop, how much of an earnings benefit do you receive from this summer crop versus virtually no summer crop in the PCP? Sorry, what was the question? How much summer crop uplift? That's the question, is that how much summer crop uplift? Yeah, that's the question. Yeah, AUD 4.6 million was the uplift from the prior year. Great. Thank you very much. That's it from me. Thanks, David. Thank you. Your next question comes from Paul Jensz with PAC Partners. Please go ahead. Hello, Mark, Vanessa. Just on the AgTech side, just a question around Thomas Elder and your Weatherzone and other things you've got there. Are you able to give us an idea as to the contribution from your online business now and where you might see that going in the next two to three years? It's not material in the scheme of things to this point. We've done a lot of work. In fact, we had Thomas Elder Institute and Thomas Elder Consulting, and TEM for that matter, in talking to us last week around the strategy. At this point, as with a lot of these areas, Paul, you'd be well aware, there's a lot of investment. There hasn't been significant return apart from the Thomas Elder Consulting fee for service activity that occurs around Australia on a regular basis, and that's AUD 3 million or AUD 4 million on average in a good year, which obviously is very high ROC. Our question, I know it's a question that you've also been contemplating, is where to go hard, where not to go hard. We've taken the decision to put the AgTech initiatives under our Chief Information Officer, under Viv, and with the great alignment there, and obviously we're doing work with Telstra and Microsoft and a bunch of others around trying to get greater alignment with our systems modernization and the platforms we're developing for AgTech. The following question then is just with, I suppose, real estate and finance giving about the same contribution around that sort of 8%-9%. Can you see, I suppose, finance with this work that Viv and the team are doing, stepping up with your online business? Is that something where we could see that becoming a significant part of the business? I think it's a dream. It's a dream. Well, the multiple financing options that occur in agriculture through most of the commodities, our sense is they must be able to be done much more efficiently and much more effectively. Historically, we haven't had our own base system platform to be able to advance them. We're hopeful that we can move this on, and we've decided to boycott supply chain financing for the moment and just leave that alone. All right. Thanks for that. Thanks, Vanessa. Talk to you later in the week. Yeah. Thanks, Paul. Thanks. Once again, if you wish to ask a question, please press star one on your telephone. The next question comes from Jonathan Snape with Bell Potter Securities. Please go ahead. Yeah. Hi, can you hear me, okay? Yeah. How you going, John? Yeah, good. Thanks, Mark. Just a quick one on the tax. I just want to pick up on a comment before that was made about that. I think in your balance sheet, you've got AUD 22 million unrecognized, which it sounds like you're going to bring the rest of that to account in the next half, which would suggest that you're going to start having a corporate tax expense through the P&L in 2022 and 2023. You probably won't pay cash tax until, what, about the first half of 2024. Is that the right way to think about it? Yes, that's exactly spot on. Okay. Thank you. Oh, there's a danger telling him he's spot on. You see, Richard would never have done that. I thought she'd let him have a farewell tour at least. Okay. Any other questions? There are no further questions at this time. I'll now hand back to Mr. Allison for closing remarks. Okay, well, thanks very much and look forward to talking with you individually or in small groups as we run through this week. Thank you for coming to the call. That does conclude our conference for today. Thank you for participating. You may now disconnect.