Thank you for standing by, and welcome to the Elders Limited HY24 Results Retail Investor Briefing. All participants are in a listen-only mode. If you wish to ask a question via the phones, you will need to press the star key followed by the number one on your telephone keypad. If you wish to ask a question via the webcast, please enter it into the Ask a Question box and click Submit. I would now like to hand the conference over to Mr. Mark Allison, Managing Director and CEO. Please go ahead. Thank you very much, and welcome everyone to the retail briefing. So, following feedback last year with our retail briefing, we've taken a few points on board, and we've decided to do it this year as a fireside chat, with Sarah asking questions of Paul and myself, to begin with, and then we'll open up the session for questions from the audience. So, thank you once again for coming along, and look forward to a good session, and I'll hand over to Sarah. Good evening, everyone. Welcome, and also welcome to Mark and Paul. Okay, I'll start. Mark, Elders recorded a reduction in lost time injuries in the H1 of FY 2024. Can you provide an overview of safety initiatives this year, and why safety is so important in Elders? Yeah, certainly. So, I think the journey for Elders on safety, on a refreshed focus, probably goes back to the first Eight Point Plan. In the first Eight Point Plan, at that stage, so that would have been almost 10 years ago, we had 34 lost time injuries in the business, and we were determined to reset that, and make sure that everyone at Elders went home in a safe and sound manner. So we put a bunch of initiatives in place. I think with the... journey has been a long and solid journey. On the process, all the way through to the H1 of this year of one lost time injury, but it does come up in all of our staff surveys as the most important thing at Elders, is safety. And I think going back to the original Eight Point Plan, one of the key premises of the safety focus, apart from obviously caring for all of our people, was that a safe business is always a well-run business and a profitable business. So our feeling is that it's win, win, win around all of the spectrum of stakeholders, with our people coming home safely, with the team being committed to each other, with our shareholders and suppliers and customers also getting the benefit. So it's a really important journey, and I think, well and truly embedded. One of the nuances of the safety culture, and particularly with our strategy around bolt-on acquisitions, is that, when new businesses join Elders, we do have to go through that process of kind of reaffirming the safety culture, the really basic, important reasons of wanting to look after your teammates, wanting to look after your customers, and making sure that everyone gets home at night safely. Thank you, Mark. Paul, the H1 presented some challenges for Australian agriculture. Can you describe these challenges and how conditions improved throughout the Q2, especially livestock prices? Yes. Excuse me, certainly, Sarah, and I might talk to slide 16 of the investor presentation for this one. But certainly I'd describe it as two very distinct quarters comprising the H1. This slide, I think, tells the story quite well. But as we started the Q1, we had a forecast of very hot and dry conditions associated with the El Niño climate driver. And what that did was delay the summer cropping region in dry land areas. And it also put significant downward pressure on livestock prices. There's a couple of other slides in the pack that speak to that. And what that did was, you know, put downward pressure on client sentiment as well. And so we saw, you know, certainly significant pressure in terms of animal health sales, and certainly downward pressure on the agency services in there. The chart out to the right, you know, provides a non-financial indicator of, you know, pressure, you know, from Q1 to Q2. So you can see the pressure generally across all products in Q1. What happened in December, we saw widespread rainfall down the East Coast and through much of Southern Australia as well. That precipitated, pardon the pun, a turnaround in livestock prices in the Q2, and sentiment more broadly. You can see all but retail turned around in the Q2. Retail was a little different in terms of facing the substantially lower crop protection and fertilizer prices against prior corresponding period. So whilst the summer crop turned out okay, the retail business continued to suffer headwinds, you know, through the Q2. But in general terms, yeah, a very, very soft quarter in Q1, and a pleasing recovery in Q2. Thank you. Mark, FY 2024 has been a busy year for acquisitions. Can you provide an overview of activity this year, and where the focus has been from a product perspective? Yeah. I think a really good question, because the way we've run Elders from the beginning of the Eight-Point Plan period has been around having a portfolio of different products and services, and having a nice balance, which gives us that diversification at that level, and ensuring that we keep the balance on track. The approach we've taken to our bolt-on acquisitions is that we have a fairly standard template to preserve our return on capital for our shareholders. And the template is that we pay 3x-5x EBIT of the business. And it may go above that if it's a bigger EBIT, if it's AUD 6 million, AUD 7 million, AUD 8 million, AUD 9 million, or AUD 10 million EBIT. But we stick in that range, so we at a high level get the return on capital that we need. We have normalized working capital, 50% payment on completion, 25 year one, 25 year two, so we're able to keep the vendors in the business. And then at the end of that, we take decisions on whether we rebrand the business or whether we leave it as it is. So we call it a light touch, but we're actually quite involved from a safety, values, and financial transparency viewpoint, and clearly, we're providing capital. An interesting stat around that is that something close to 90% of our vendors stay at Elders after the earn-out period. So, clearly, they feel that the culture and the flow of the business fits them as well. In terms of this year, we completed. At half year, we completed 10 acquisitions, and given that we bought AIRR and Titan a few years ago, which balanced the portfolio more towards a rural products portfolio, we've been targeting real estate and agency businesses, so with livestock agency businesses. And when you see some of the acquisitions we've announced with Charles Stewart and with some of the Emms Mooney acquisitions, and the Knight Frank acquisition, you know, where it's either real estate or a blend of real estate and agency services. So we do pay a very strict attention to the businesses we buy. We do multiple assessments, probably reject maybe 70% of those that come to us, and then, you know, there might be only 10% at the end that we actually complete on. So it's a very disciplined, financially driven process, but critically, there has to be a cultural and values fit. Understood. Okay. Paul, post half year balance date, Elders purchased the business that was known as Knight Frank Real Estate Tasmania. Can you speak to the scale of this business, and the adjacent opportunities that it brings to Elders? Yes, certainly, Sarah, and I might just move to slide 20 of the investor presentation, and further to Mark's comments. Yeah, more broadly around real estate, so as Mark suggested, you know, real estate has been a focus of our business development team over recent years, and you can see that that's manifested in, you know, significant growth across the real estate business. You can see also the diversification between property management, broadacre, and residential sales. And you can also see on this slide, you know, the opportunity for future growth with Elders, notwithstanding being a substantial player in Australian real estate, we're still only 3.34% of the addressable market that we play in. In terms of Knight Frank, we can see, you know, some of the numbers there. It is a diversified business, across property management, substantial property management business, 1,500 properties, but it's also got a substantial commercial and valuations business. Both of those, both commercial and valuation, represent potential adjacent opportunities for Elders more broadly across the business. And, you know, from that, from that context, it's a very exciting acquisition for Elders, and, you know, we certainly welcome, the Knight Frank team to the Elders real estate team. Excellent. Mark, backward integration is another pillar of Elders' growth strategy for FY 2024. Can you describe what this strategy is, and provide an update on progress to date? Yeah, certainly. So, the core basis of the backward integration strategy, if we start with crop protection, is that, with products that we source ourselves and supply ourselves through our own brand, there's something like a 10%-15% gross margin uplift. And the, particularly with crop protection, the Australian crop protection market is largely a broadacre market with our dry land winter crops and summer crops, but also some irrigated summer crops. And it's predominantly a herbicide market, that 85% of this chemistry is off patent, so it's largely a generic market. So what this means is that, from an access viewpoint, with the acquisition of Titan AG, a crop protection company, we're able to secure, I think it was over 160 regulatory packages for crop protection products, and we're able to do it ourselves. Our plan was to of the addressable market within Elders, so this is the amount of crop protection products that are off patent. There are generally two levels of patent, one at active ingredient level, at molecule level, and one at formulation level. So given that both of those were out of patent, then we can copy them and sell Titan product throughout the business at a higher margin. The strategy is not to have 100% of our off-patent product with Titan labels. It's to get it to 70%, and our thinking in taking it to 70% is that this allows 30% of the volume that we have in off-patent products that we can use with third-party suppliers, who are largely proprietary global suppliers with proprietary chemistry in order to maintain access to this specialized chemistry. So these are companies like Adama, Syngenta, Corteva, BASF, FMC, Bayer. So, well, so the strategy has been to do it over a number of years, so that we don't, so yeah, we're able to flag it to our suppliers without destroying their businesses overnight. We started with about 20% of our addressable market, backward integrated, got to 54% last year, and our target this year is 60%, and we're, we're on track to hit that 60%. Two other areas of backward integration are in our animal health products or the veterinary products, and we have regulatory packages or regulatory packages for off-patent veterinary products that we acquired when we bought AIRR, the wholesale business. And it's the same deal where we, in veterinary products, there's an uplift of could be 15%-25% margin by having your own brand. And we're gradually rolling Pastoral Ag brand, which is the veterinary brand, out through the Elders network with that uplift. We're about 20% progressed with veterinary products, so a way to go. And also, without making it too complicated, we sell our crop protection products through Elders under the Titan Ag brand. We sell our crop protection products through AIRR under the Apparent brand. So it, it allows for any farmer in any town may get two quotes for a product, and it may be Apparent from the AIRR member being quoted against Titan from Elders. So in either case, it allows us to gain the business. The third smaller area of backward integration is around specialty fertilizers, so fertigation-type products that go through drip lines in orchards and glasshouses, et cetera. And we're developing that, and there's also an uplift in margin with those. Thank you, Mark. Paul, Elders is modernizing its business with investments and systems, alongside growth initiatives, including acquisitions and new build business, such as Elders Wool. Can you speak to the impact this is having on costs in FY 24, and what Elders is doing to minimize pressure on costs? Yeah, certainly, Sarah, and I'll speak to slide 23 of the investor presentation in regards to this question. So I'd put it this way, that FY 2024 is very much a foundational year for our fourth Eight Point Plan. Excuse me. And we're investing, you know, to achieve the 5%-10% growth through the cycles through this fourth Eight Point Plan. So it is a foundational year. You can see on this slide what we've done, you know, noting that our cost has increased by AUD 24 million half-on-half, which is about 11%. But what we see on this slide is, if we separate out the additional cost that relates to acquisitions, Elders Wool or transformational projects, the majority of that number is depreciation. Then what we see is that the base growth in our cost base is about AUD 3.9 million, or 1.8%, so, you know, well below the run rate for inflation. I think that's an important distinction, you know, when analyzing the cost base this year. Thank you. Mark, Project Streamline is aimed at improving in procurement and supply chain efficiency. Can you provide an update on progress and when benefits are expected to be realized? Yeah. Yeah, sure, thanks, Sarah. So Project Streamline is our rural products supply chain optimization project. And, the story starts a couple of years ago, where we owned assets all along the rural product supply chain. So, we own a formulation facility in Eureka, in Victoria. We own a supply business in Titan, and also, Hunter River, that produce the veterinary products. We own a wholesale business in AIRR, and we own a retail business in Elders, the branded Elders front end. So what we, all of these businesses had been running independently of each other from a supply chain viewpoint, and we felt there was significant advantage to be gained by streamlining the businesses, taking out the overlap, the magnification of the inventory, safety inventory levels. So we brought L.E.K., a supply chain consultant, into the business, did an assessment of how we could do it without disrupting the front end, without disrupting the business, and we came up with the Streamline project. So our sense. And And it includes all the way from sales and operational planning, demand forecasting, all the way to executive S&OP for Paul and myself to sign off on. The size of the prize is AUD 10 million-AUD 18 million in NPAT. Our sense is that the balance of that prize will be in FY 2025 and FY 2026, and there's AUD 50 million-AUD 80 million of capital reduction through this project. And we see the benefit of that is weighting towards FY 2024 and into FY 2025. So a really great project, real benefits to the business, and you've seen some of the numbers in this half-year presentation, where we're getting traction on the inventory front. Yeah, that's fantastic. Paul, Systems Modernisation is a multi-year project aimed at transforming Elders' systems and processes. Can you provide an overview of progress to date and the benefits for Elders over time, please? Yes, absolutely. So I'll speak to slide 30 of the pack for this one. So SysMod is a six-wave project. Where are we in the process? We've completed wave one toward the end of FY 2023, and importantly, that was completed on time and on budget. Currently, we're working on waves two and three. Wave two will implement systems across Microsoft Dynamics 365 for our retail business. And wave three will cover the livestock business, implementing Salegate in that regard. Wave two is quite advanced, so we're through solution playback to the business, and just about to enter end-to-end testing, after which we'll move on to UAT, and importantly, a single branch pilot in South Australia, where we will refine the solution before we roll it out across the business. I think that's an important distinction from a quarantining perspective, and so very well advanced on wave two. We expect to complete that rollout towards the end of 2024, potentially into 2025, as well. In terms of wave three, that's well progressed as well, and implementation will follow wave two, probably towards the end of the H1 in 2025. Thanks, Paul. Mark, the Elders wool handling site in Ravenhall, Victoria, commenced operations in January this year, and has steadily built volume in the months since. Can you talk about this investment and how it will benefit the wool industry? Yeah, it's super exciting. This year, as you can see by the slide, is our 185th year, and the wool industry is core to our DNA as regional rural Australia, and the communities of regional rural Australia are to our Elders. So, it's, you know, it was with great excitement and pride, I think, for Elders, that we agreed, signed off the business case to invest AUD 25 million in two automated facilities, one in Perth, one in Melbourne, with a capacity of 380,000 bales of wool. It's the first major investment in wool in Australia for many, many years, and really gives us a significant point of difference. There are significant cost benefits in terms of moving away from our old provider of wool handling. The facilities themselves are magnificent. We were in the Melbourne facility a few weeks ago, and it's quite impressive to see the automated machines moving back and forward. In fact, we've decided to have an investor day there on November 21st to really allow everyone else, our stakeholders, to be impressed like we were impressed. So a great investment. The return on the investment, which we believe is around 80%, so it fits all of our metrics, and will flow out with benefits to our clients, to ourselves, to wool quality, et cetera, et cetera. So again, it's a really exciting, like, a real core Elders sort of investment. Sounds great. Paul, working capital efficiency has been noted as a priority for FY 24. Can you describe progress to date and the outlook for the remainder of FY 24? Yes, certainly, Sarah, and I'll speak to slide 24 for the investor presentation for this one. We have seen, and as evident on this slide here, an increase in working capital over FY 2022 and FY 2023, and there's good reasons for that. We saw a material increase in both fertilizer and crop protection prices through those years. Prices came off in FY 2023, as we know, for both crop protection and fertilizer. We hadn't seen any benefit of that at the half in FY 2023, and in fact, working capital was more elevated. We saw in that financial year an increase or quickening of supply chains leading up to half year, and that, you know, manifested in higher working capital on FY 2022, even. Pleasingly, what we've seen this year is a $180 million decline at balance date against prior corresponding period. There's a couple of reasons for that. We more tightly aligned our procurement to supply chains, which are far more efficient year on year, but also, we can see the benefit of lower input prices through our working capital. So I think a really pleasing outcome at the half, but I think also there's opportunities for further efficiency in the H2. Okay, thanks, Paul. Another one for you. There is pressure evident on some of Elders' financial metrics, including accounting leverage and return on capital, as a result of trading conditions in the H1. Can you speak to the outlook of these metrics and the pathway back to target? Yeah, certainly. And specifically, we're seeing pressure on leverage and return on capital. So slide 26 of the investor presentation certainly shows this. From a leverage point of view, we can see that accounting leverage has increased from 2.2x to 2.6x, and that's above our internal target of 1.5x-2x. Return on capital is now below our 15% hurdle, down to 11.4%. The primary reason for both of those is the very flat EBIT that was generated in Q1, and we see a gradual improvement in both of these metrics in the H2. We don't expect these metrics to return to target until half year FY 2025. And at that point, we will have-... you know, replaced, you know, the Q1 FY 24 with what we expect to be, you know, a return to normal conditions, in FY 25. So, you know, we're alert, not alarmed, you know, about the metrics here, because we see gradual improvement going forward. Sure. Thank you. Mark, final question. Elders gave FY 2024 EBIT guidance on April 8 for between AUD 120 million and AUD 140 million. Can you provide an update on current seasonal conditions and the outlook for the H2? Yeah, certainly, yeah. So, when we gave the guidance, we took a quite a conservative view, and, with the idea that, you know, although think momentum was changing and we could see green shoots coming through, that, we wanna make sure that we delivered to the middle, to the top of that range. So when we look at what's happened since then, there has been momentum in our business performance. We've seen the East Coast rainfall very strong and early break with winter crop, 10 days before Anzac Day, with Anzac Day being the optimal planning time. So, through Eastern Australia, that's been positive and the planning's well and truly on the way. There are spots in Victoria and in South Australia that are still dry. Western Australia has also been dry, but there's over 50% of the crop there has been dry seeded. And this means that there are sandier soils in Western Australia and parts of South Australia. So the seeds are planted with a small amount of inputs, and then the rain, when the late rain comes through, they emerge and grow. So from our viewpoint, we'd say that Eastern Australia it's probably at average or above average, apart from the spots in Victoria and South Australia. But Western Australia, it's probably below average, but the break will come through, and it's not uncommon for later breaks in Western Australia. I think the positive aspect from a cropping viewpoint is that where crops are planted as dry seeded crops, they haven't got pre-emergent product or if they have, the efficacy of it may be questionable if it takes a little while to rain. And then the fertilizer inputs are also lower. So as the crop grows, there'll be more post-emergent activity, herbicide required, recommendations, agronomic advice, and also sidedress fertilizer. So I think for the range, we feel comfortable in that respect. From a livestock viewpoint, although a number of market punters are saying that livestock prices might ease up a little, we've taken the assumption for that AUD 120-AUD 140 range that they'll stay where they are, which is elevated from Q1, but not to the levels some market punters are talking about. And then I think for other areas of our business, like real estate, it remains quite solid. Within the property management part of our real estate business, which is around 30% now, so it's grown significantly. That's a constant flow for our farmland part of our real estate business, maybe 20%. There's a correlation with livestock prices, so it's firming. And then for regional, rural residential and city residential and franchise city metropolitan residential interest rates have softened it, but it's ticking along. Our financial services business is also going well, with insurance going well. And our feed and processing business is also okay. So our thinking is that there are headwinds, but there are probably more tailwinds for the H2. And then as Paul mentioned, we'd expect with a normalized Q1, so the last three calendar months of this year, a normalized FY 2025 Q1, I think the average for the last five years has been AUD 37 million EBIT, and that was down to close to zero. So with that coming back in, then we see our the financial ratios improve, and we start to get back to a normal growth pattern through to the end of FY 2026. That's it. No, no more questions from me. Thank you. Okay. Thanks, Sarah, for that. I wonder now if we could open up to other questions that those in the audience may have. Thank you. If you wish to ask a question via the phones, you will need to press the star key followed by the number one on your telephone keypad, and if you wish to ask a question via the webcast, please type it into the Ask a Question box. I'll pause a moment for questions to register. Once again, to ask a question via the phones, please press star one. Thank you. There are no questions at this time. I'll now hand back to Mr. Allison for closing remarks. Okay. Well, thank you very much, everyone, for coming along. Thanks, Sarah and Paul, for joining me. Yeah. I trust it was an informative and enjoyable session for you as well. So, thank you very much for coming to this call. Thanks.