Thank you for standing by, and welcome to the Elders Limited FY24 Results Retail Investor Briefing. All participants are in a listen-only mode. If you wish to ask a question via the phone, you'll 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 enter it into the Ask a Question box and click Submit. I would now like to hand the conference over to Mr. Mark Allison, CEO and Managing Director. Please go ahead. Thank you very much, and welcome everyone to the Retail Investor Fireside Chat that we're conducting this afternoon. So with me here today is Paul Rossiter, our CFO, and we also have Sarah Post, who will be conducting an interview with us in the format of a fireside chat on a number of questions and common questions that have come up over the last two days of investor meetings and analyst meetings. So what we'll do, the process will be we'll run through the questions, and then we'll open up to any questions from the floor at the end of the session. So Sarah, over to you. Thank you, Mark. Mark, I'll start with this one. Elders gave FY24 EBIT guidance on April 8 for between AUD 120 million and AUD 140 million and finished just below the midpoint at AUD 128 million. Did the winter cropping season unfold as expected? Yeah, I think a good question. So at the half-year, when we reported the half-year results, we talked about the quite problematic first quarter, the first half of the first half. And in that quarter, where we on average over the last few years, we'd be delivering somewhere close to 32 million EBIT, we were close to break-even due to a number of market difficulties that we outlined at the half-year. Now, at that time, given that we were well behind, we decided the most appropriate approach was to give guidance so that there was a much clearer understanding of what was in front of us. We thought in the second half that there'd be some recovery in livestock prices and in a couple of other areas of the business, and that our rural products area would also strengthen. We'd have steady real estate and financial services. Largely, that's how it unfolded. The range of AUD 120 million-AUD 140 million took into consideration that steady improvement. We did have a few bumps in the third quarter, and that was largely in rural products where there was some margin leakage with competitive pricing, but that recovery gained back to where we thought in Q4. As you've indicated, we ended up just below the midpoint of the range at AUD 128 million. Just on the point, and possibly we'll talk about it a little later, it did mean that the Q1 impact did have a downside impact on our leverage and also our return on capital. Thanks, Mark. And Paul, on a similar theme, what second-half factors reduced the result from the top-end of guidance? Yeah, excellent question, Sarah. So firstly, I'd say that the second half was the third biggest second-half performance that Elders has ever had. So it was a really strong turnaround in the business, but certainly it wasn't as good as it could have been. And as Mark pointed to, one of the factors was a very competitive marketplace, particularly in Western Australia and South Australia, who had a very dry late start to winter crop. And that resulted in some strong competitive pressure. And I'd say in terms of general conditions in winter crop in the second half, the East Coast was better than the West and Southern Australia. And it's worth noting that SA and WA are two of our largest states. In FY 2023, those two states combined delivered 41% of EBIT. In FY 2024, that dropped to 33%. That was the other part of that delta from 128 to 140. Okay. Mark, can you provide an update on current seasonal conditions and the outlook for FY25 and how the business performed in October? Yeah, yeah, sure. I think part of our thesis with FY25 is that the first quarter would return to average or normalize as it has been in previous years, as opposed to the FY24 first quarter. Indications six weeks in are that our thinking was largely on track. So we're comfortable in that respect. I think also the outlook remains positive. We always assume a normal or average season. What we can see is, and so we've taken that assumption across the rural products and livestock, in fact, all of our products and services. What we can see as being slightly different would be due to the higher planting of chickpeas in Northwest New South Wales this year. It's likely the dryland cotton will be slightly down. But all in all, it's unfolding, and we're viewing it as an average season. And in an average season, Elders performs quite well. Excellent. Thank you. Paul, return on capital in FY24 declined to 11.3%, well below Elders' hurdle rate of 15%. Can you speak to the key drivers of this result and the outlook for FY25? Absolutely. And certainly, return on capital is not where we'd like to see it. It's important to note as well that it dropped from 10% in FY23. And the main drivers of that, firstly, is the first quarter impact. So the lost EBIT from the first quarter of FY24. And so that accounted for a 2.8% drop in return on capital. So adjusted for that, return on capital would increase from 11.3% to 14.1%. The other things weighing on return on capital is our transformation projects. And the reason is because we spend the capital upfront before the benefits flow through. FY24 was a very big year for transformation. We had spend across Systems Modernizationion, Elders Wool, and also the Killara Feedlot. And none of those initiatives delivered significant earnings in FY24. The good news is Elders Wool, Elders Wool Handling is now up and running and will deliver benefits in FY25, as will the investment in the Killara Feedlot, so the new feed mill out there, and so we will get some earnings flowing through in FY25. SysMod, as with most IT implementations, has a big CapEx spend before you see benefits come through. We expect to see some in FY25, but the majority of the first full year of benefits will occur in FY26. Okay. Thank you. Mark, FY24 has been a busy year for bolt-on acquisitions. Can you provide an overview of activities here and contribution to EBIT? Yeah, it's been a bigger year than normal for us with bolt-on acquisitions. So we reviewed many. We acquired 13, and the annualized EBIT of those acquisitions, or cumulative annualized EBIT, is AUD 14 million. And so when we consider the impacts on FY24 and the upside impacts on FY25, about AUD 8 million of that EBIT was reflected in '24. So roughly AUD 6 million upside for FY25 when we look at the financial contributors to the business. I think it's worth noting that with the poor first quarter of FY24 and the balance sheet considerations and leverage considerations, we have taken the call to tighten our bolt-on acquisition spend through the next 12 months with a view that we've basically overachieved our acquisitions in FY24. And so we can tone it down a little in FY25. But all in all, very positive business development activity. We had focused in on real estate and financial services, bolt-on acquisitions, to keep our portfolio balanced given that we've had strengthening of our rural products component of the portfolio. Very good. Thank you. Paul, leverage came in at 3.1 times against Elders' target rate of 1.5-2 times. What are the drivers of higher leverage, and what is the outlook for FY25? Yeah, thanks, Sarah. And firstly, I'll note that we're talking about accounting leverage here at 3.1 times, whereas covenant leverage, which is imposed upon us by our financiers, there's ample headroom there. So we're currently at 1.3 times, which is well underneath our cap of two and a half times. So we don't have a leverage problem from that perspective, but against our internally imposed measure, certainly it's higher than where we'd like it to be. Once again, one of the key drivers is the first quarter earnings dip in FY24. And if we adjust leverage for that, it would reduce to two and a half times from 3.1 times. So we see that normalizing in FY25, as Mark suggested, and we're on track for that to occur. Outside of that, we saw a meaningful increase in net debt in FY24, and there's a couple of reasons for that. Firstly, we had a big year for both acquisitions and transformation, as we've discussed, and combined, they added AUD 141 million to net debt. Offsetting that, we had a great result in terms of decreasing inventory. And when combined with an uplift in creditors, we released AUD 115 million of capital, but that was fully offset by an increase in debtors. Debtors increased by AUD 157 million in FY24 due to a combination of factors, but mostly a later winter crop season. More demand for seasonal finance on the way through, and to a far lesser extent, an uplift in debtor arrears greater than 90 days. We have very sophisticated policy and procedure to manage debtors. We're not worried about the debtor position. Approximately AUD 120 million of debtors will fall due in the next five weeks or so. So if we measured the balance sheet at the end of December, it would look very different. Interesting. Thank you. Mark, Elders was targeting backward integration of 60% of the addressable market. Sorry, was targeting. Elders was targeting backward integration of 60% of the addressable market. Was this achieved in FY24? Yeah, well, it's a good question. And I might just revisit the backward integration strategy. And the thinking that we have with our backward integration strategy, largely in crop protection, but also in animal health and some specialty fertilizers, is that in the Australian market, we have a large proportion of our crop protection products that are off-patent, either at active ingredient level or at formulation level. And our ability to source those products directly from their manufacturing sources, largely in China, and brand them with our own brand can add 10%-15% margin that's within our control and flows through to the business. And so our position has been in the acquisition of Titan, that we would expand our Titan brand. We chose a target of 70%. At the time that we started the strategy a few years ago, we were sitting at around 20%. And the idea is that we would cap it at 70% of the off-patent products of our crop protection portfolio, with the view that a number of the proprietary chemistry suppliers also have generic components of their product range. And this would allow them to bundle proprietary products with generic products if we stopped the backward integration at or we capped it at 70%. And so in order to preserve our supplier relationships, we decided we'd do that over a three to five-year period. Last year, we were at 50%. We targeted 60% this year. We had a slow start to the year with our first half and low volumes, or relatively low volumes. Given that the bulk of the crop protection market is occurring over winter crop and running into the second half of the year, we felt confident that we could transform that to 60% of our addressable off-patent market. We got there on a volume basis, about 58% of the addressable market at a revenue basis. With the view now that in FY25, we take that to 65%. Of course, with this extra volume, extra profit flows through the business. Excellent. Thank you. Paul, Systems Modernizationion 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? Absolutely. And firstly, just noting that SysMod, what is it? It's a six-wave program to migrate Elders from an AS400 green screen to Microsoft Dynamics. We started at wave zero, so we're currently working on the third wave, which is wave two and covers the retail part of the business. This is the largest and most significant wave in the six-wave program. It's also the wave where there is, in our view, the most benefits. The great news is that we went technical go-live yesterday on wave two, and we'll migrate the first branch over the next week. We intend to do two branches prior to Christmas before commencing the full rollout from February next year. So really exciting time for the project. At the same time, in parallel, we are working on wave three, which covers the livestock business. That is a much smaller piece of work for the business and will be implemented in 2025, immediately following wave two. And so, yeah, really busy time for the project, but really exciting time as well. Sounds good. Thank you. Mark, the acquisition of Delta Ag is a significant transaction for Elders. How does this align to Elders' growth strategy, and what does this mean for Elders? Yeah, well, it's very, very exciting and aligns perfectly with our growth strategy. As many are aware, we've been over the last 10 years since the first Eight Point Plan, our bolt-on strategy has been to fill gaps in products, services, geographies, and the strategy with larger acquisitions is to, like a Delta or an AIRR for that matter, was to find a target that adds to our diversification because it's such a critical part of our business model to offset seasonal and commodity impacts, and also to find a target that brings a specific IP and with the financials being pre-synergies EPS accretive. Now, with the Delta acquisition, we've been talking with them for many years, 10 years or so, and we found a sweet spot for this acquisition. It brings geographical diversification. They're particularly strong in New South Wales, Northwestern Victoria, parts of South Australia, and particularly the wholesale business in Western Australia. So they add significantly to the gaps we've got with our current business. They also bring significantly in terms of their regulatory packages for animal health products and crop protection products, and also their agtech precision agriculture and technical expertise. So it's a really nice fit. The business is a good business, good people, and will add significantly to Elders going forward. Excellent. And Paul, how will Elders fund the acquisition of Delta? Yeah, good question. So it'll be funded through a mixture of cash and scrip. So 60% cash and 40% Elders scrip, which means new Elders shares that will be issued to the current shareholders of Delta Ag. So the cash component will be funded through two means. So AUD 196 million equity raise, the institutional portion of which completed yesterday and was very well supported by shareholders. The second component of that will open on November 25th. So I'd encourage all retail shareholders to have a look at that offer when it comes through. The other component of it is a new AUD 110 million debt facility, which has been raised on a certain funds basis across Elders' existing financier and pleasingly under the same terms as our current multipurpose working capital facility. So all of that funding is in flight or raised or committed already. In addition to that, we're also raising an additional AUD 50 million of equity for future growth opportunities given the need to balance acquisitive growth and leverage over the next six to 12 months. Sure. Sounds good. Thank you. Mark, are you able to provide some indicators as to the size of Delta and where it operates and what it brings to Elders, please? Yeah, sure. Sure. Well, I think it's quite fascinating because in the most trusted brand stakes, Elders holds that position and has for a number of years now. But Delta Ag is also up in that most trusted brand. So they're right around Australia, so there are 68 branch locations. In Western Australia, there are 40 wholesale locations in addition, operating in all states of Australia. And as I mentioned, very helpful for us in states and areas that we're less represented. In terms of revenue, AUD 835 million revenue, EBITDA of AUD 53 million, and that converts to EBIT of AUD 43 million. So quite a strong business, 450 people, around 450 people. I think when we go to what they're bringing to the party in terms of IP and expertise, 92 APVMA crop protection regulatory packages and 14 animal health regulatory packages, 80 consultants and agronomists and five precision ag specialists. And importantly, they're a 38% minority share owner of Goanna Ag, which is a highly rated state-of-the-art tech platform. So they bring a lot to the party. When I talk about the APVMA packages or the regulatory packages, we should note the AUD 12 million of synergies that we've identified with Delta as we go forward as part of the post-synergies EPS double-digit accretion. Those synergies are largely in crop protection, some animal health, backward integration. So complemented with the regulatory packages that Elders have. And again, with a slow burn in terms of movement from 20%-25% backward integration now for Delta up to that 70% over a two to three-year period. So I think quality business, quality people, well located, and, as I mentioned earlier, highly complementary to Elders. Excellent. Thank you. Paul, what will Elders do with the proceeds from the equity raising if the transaction does not complete? Certainly an outcome, firstly, that we don't expect to happen. But in the unlikely event that it did, we'd turn to our capital management framework and consider alternative uses for some or all of that capital. But one likely scenario is that we'll be returning it to shareholders. Okay. Thank you. Mark, the Delta acquisition is subject to ACCC approval. What does this process involve, and how long do you think this will take? Yes. Well, as we went through the process, I think when Delta founders and myself reached a view that there could be a sweet spot for us to come together, the first thing we did was to consider the ACCC position. They did work with their legal specialists in that area, and we did work with our competition lawyers as well. Came up with where we thought there may be some areas that could create some issues from an ACCC viewpoint, and we combined our view. In fact, once we felt comfortable that our potential exposure to ACCC-based divestments was an acceptable low level, then we proceeded with the exclusivity agreement and all the rest of the DD for the acquisition with us announcing that result yesterday. But in terms of the process, we gave the ACCC a heads-up last week of the announcement. Gerard, the CEO and co-founder of Delta, and I will be talking with the commissioner next week. And we're quite confident in knowing that the commissioner has experience with the Ruralco-Landmark deal. And so in terms of the rural services ecosystem, we'll be familiar with that ecosystem. The normal process is that the ACCC will take public submissions, consultations, and then obviously a submission from us, and then we'll make a call on that. And we're thinking it's probably a March-April outcome there. But having said that, we feel that the work that we've done has provided good guidance and comfort to us in terms of the final decision they'd make. We've also put some safety mechanisms in our agreement to ensure that we share any downside through divestments to a level and have a threshold that we can act on should there be much greater requirements than we expected. Sure. Okay. Thank you. Mark, a final question. Given the scale of the transaction, have you committed to continue in your role as Delta transitions to the Elders group? Yeah. Yeah. So when the board asked me to stay on last year, my thinking was that I would stay to the end of the fourth Eight Point Plan, which is the end of 2026. And that hasn't changed. And I'd indicated I saw that as a minimum. But with regard to Delta, in terms of continuity and smooth transition, that's two years on from the announcement. I think it's also worth noting that in the period since that announcement, the chair and the directors have instigated a board refresh. So we have a number of directors coming on. And we've also instigated an internal succession planning process with four candidates internally and Derwent running that process. So I think when we get to that point in time, we will have the internal candidates well developed and the board well across pros and cons, and we'll be in a much stronger position for that transition. Excellent. Thank you. That's all from me. Okay. Well, thank you, Sarah, for facilitating that discussion with Paul and myself. I'd like now to open up to those on the line, any retail investors on the line who may have some questions. Thank you. If you wish to ask a question via the phone, you will need to press the star key followed by the number one on your telephone keypad. If you wish to cancel your request, please press star two, and if you're on a speakerphone, please pick up the handset to ask your question. We'll pause a moment for questions to register. Thank you. There are no questions at this time. I'll hand back to Mr. Allison for any closing remarks. Okay, well, thanks very much for attending the fireside chat today. I trust that the information that Sarah was able to extract from Paul and myself was helpful, and I look forward to speaking with you if there are further questions you'd like to ask directly, so thank you very much, and we'll close the session. Thank you.