Thank you for standing by, and welcome to the Inghams Group Limited half year 2022 results conference call. All participants are in a listen only mode. There will be a presentation followed by a question and answer session. If you wish to ask a question, you will need to press the star key followed by the number one on your telephone keypad. I would now like to hand the conference over to Mr. Andrew Reeves, CEO and Managing Director. Please go ahead. Thank you, and good morning, everyone. My name is Andrew Reeves, Managing Director and Chief Executive Officer of Inghams, and it is my pleasure to welcome you to Inghams' half year 2022 results presentation. On behalf of Inghams, I would like to respectfully acknowledge the traditional owners, both past and present, as custodians of this land we are meeting on today. Joining me for today's presentation is our Chief Financial Officer, Gary Mallett. At the conclusion of the formal presentation, we will take any questions you may have on our results and the business. Turning now to the highlights of the first half. The results we've released this morning reflect the effective management of the challenging environment that the business has had to navigate during the first half of FY 2022, which has been characterized by extended lockdowns and operational disruptions caused by COVID-19. Pleasingly, our headline results are broadly in line or ahead of the half year outcomes we presented in February last year. We also made good progress on strategic initiatives throughout the period. However, this progress was disrupted towards the end of the half due to COVID-19. This is a particularly pleasing outcome since during the half, while the company saw strong growth in volumes, in part reflecting the seasonal demand that comes with the Christmas holiday period. The ongoing effects of the pandemic and associated impacts on various channels resulted in excess supply into the wholesale channel. As the first half came to a close, the impacts of the Omicron COVID-19 variant began to be felt, with the main effects expected to be reflected in the second half of FY 2022. Looking ahead, I believe the resilience and the agility of our business and the commitment of our people to continue to deliver great outcomes for our customers and consumers leaves Inghams well placed to respond to the future challenges the pandemic may present and capable of recovering relatively quickly as market and business conditions permit. Our balance sheet remains strong, with leverage at this time prudently towards the lower end of our policy range. Moving now to the financial highlights on slide four. As in previous presentations, Gary will cover the financials in more detail shortly. Before I hand over to Gary, there are a few highlights I would like to note. As noted at the outset of this presentation, our key financial metrics are broadly in line or above the prior corresponding period. This is despite challenging market conditions that we continue to face, with lockdowns and the effect of public health guidelines creating significant labor supply challenges, resulting in increased labor costs and impacting our manufacturing capability. Group core poultry volume grew by 5.6% on the prior corresponding period, with all the volume growth coming from the Australian business, with New Zealand volumes unchanged on the PCP. While volume growth was strong, the extended COVID-19 lockdowns in New South Wales, Victoria, and Auckland have impacted customer demand, channel mix, and revenue in the first half. Our statutory EBITDA of AUD 220.4 million increased by 2.2%, while statutory NPAT increased by 8.8% to AUD 38.4 million, which includes the reversal of a tax provision in the amount of AUD 2.2 million. The company has declared a fully franked dividend of 6.5% per share, which is consistent with the PCP and represents a payout ratio of 60.9% of underlying NPAT. This is in line with our policy target of 60%-80% of underlying NPAT post AASB 16 adjustments. The balance sheet remains well positioned. While net debt is up slightly on June 2021, it is AUD 63 million or 19% lower than the PCP. I'd now like to make some comments about how the pandemic conditions have been affecting Inghams and what this means for the business. The first half was characterized by market and operational disruption due to extended COVID-19 lockdowns and isolation requirements. The new financial year commenced with Greater Sydney in a state of lockdown, a new lockdown in Victoria in mid July, followed by regional New South Wales in August, and border controls aggressively applied by many states and territories during the period. New Zealand remained closed to international travelers and heightened restrictions, particularly on the trading conditions of some of our customers, were in place for the majority of the period. The results we have delivered in the first half are underpinned by our considered response to the challenging operating conditions that enabled Inghams to maintain operations and continuity of supply. I would like to take a moment to acknowledge the effort of our people during this period who continue to show great resilience and the ability to respond quickly and effectively to the challenges faced by the business. While Inghams' health and safety policies and procedures have been very effective in protecting the well being of our people and our operational continuity, our Victorian operations did experience operational disruptions due to COVID-19, which impacted the supply of some products. In late December, Australia experienced a rapid spread of the Omicron variant, the effects of which have been widely reported and of which we provided a market update in early January of this year. While we have minimized the operational disruptions wherever possible, meaningful cost and operational pressures have been experienced through increases in overtime, transport, and compliance costs resulting from heightened health and safety procedures and operational adjustments that have been necessary as a part of our COVID-19 response. We expect such costs to remain elevated as a result of ongoing COVID-19 situation, general health and safety requirements, and our desire to protect and support our people. While our approach to health and safety has been effective, Inghams has not been immune to the effect on staff availability as this new variant has spread with significant staff shortages across all major locations. This severely limited our ability to process both the volumes and the formats required to meet customer demand. We also needed to make volume and production mix adjustments, resulting in the temporary suspension of some products and a loss of sales. The combined effects of these also resulted in increased volumes being directed through the wholesale channel, leading to a current oversupply in this area, while wastage rates have also increased. As a result of the combined effects of these factors, we estimate that for the first seven weeks of the second half of FY 2022, underlying unaudited EBITDA and NPAT are approximately AUD 35 million and AUD 24 million respectively lower than the same period last year. We welcome government changes to public health guidelines, which relieve some of the workforce pressure being experienced. However, staff shortages remain a feature of the current operating environment and are continuing through the third quarter. While the challenges in the first half have been many and varied, we continue to work tirelessly to mitigate the impacts on our business wherever possible. Turning now to a review of the various customer channels during the half. In retail, Australian sales experienced stronger growth in the first quarter, driven by stronger consumer demand due to government restrictions in New South Wales and Victoria. The easing of restrictions early in quarter two saw a slowing in this growth. In New Zealand, retail demand remained elevated during the period as a result of the ongoing restrictions in place in the first half. In quick service restaurants, Australian volume levels were similar to the prior period, reflecting the effect of the COVID-19 restrictions on customer demand, with reduced promotional activity and limited in store dining options, particularly in quarter one. Demand improved in quarter two, supported by new product launches and the easing of restrictions. New Zealand QSR demand was softer due to government imposed operating restrictions. The food service channel recorded modest growth in Australia, with demand improving in the second quarter as domestic travel activity reopened, resulting in stronger channel growth in regional centers. New Zealand demand growth was also stronger during the period. As we've discussed in previous presentations, the wholesale channel is quite diverse from a customer perspective, and during the half, we continued to make significant progress establishing new business relationships in this channel, which will support longer term growth in this area. However, from a volume perspective in the first half, softer demand across other channels resulted in a sharp increase in supply from all producers to this channel, depressing wholesale prices. The export channel recorded some strong volume growth in the first half versus the prior corresponding period, which had been impacted by restrictions that had been imposed due to the avian influenza outbreak. While New Zealand recorded a decline in volume versus PCP as the prior period volumes were higher due to surplus inventory reduction. I'm gonna now hand over to Gary to present the final results, financial results in further detail. Thanks, Gary. Thanks, Andrew, and good morning, everyone. As for the past few periods, our financials are presented inclusive of AASB 16 adjustments, unless we have stated otherwise. In the appendix to this presentation, you'll find additional information and reconciliations that provide some additional detail on the results we are presenting today. Turning to slide eight, now profit and loss. As Andrew noted earlier, the group recorded strong core poultry volume growth, driven by a 6.5% increase in Australian volumes as a result of growth, primarily in the wholesale and export channels. Revenue growth was modest at 1.8%, reflecting an unfavorable revenue mix and lower net selling prices by 2.7%, principally from the oversupplied wholesale market in Australia. The group delivered statutory EBITDA of AUD 220.4 million in the first half, representing growth of 2.2% on H1 2021, while statutory NPAT for the half grew 8.8% versus the PCP to AUD 38.4 million. Those of you who follow Inghams would be well acquainted with our operational efficiency programs, and I'm pleased to report that these programs continue to contribute positive results for the group, as can be seen in our cost of sales growing at a slower rate than volume growth. However, there has been some disruption to some of these in the first half, due to COVID-19, and more recently, with the high staff shortages with the onset of the Omicron variant. The company's effective tax rate reduced to 24.9% following the resolution of the historical tax matter and the partial AUD 2.2 million reversal of the related provision. Turning now to the balance sheet. I'm pleased to report that our balance sheet is in good shape and our leverage is towards the lower end of our target range. Total inventories increased in the first half by AUD 45.8 million as we secured higher volumes of grain directly from growers during the period, accounting for a AUD 46 million increase. In the same period, poultry inventory has decreased AUD 12.2 million. The group's payable balance has also increased due to an increase in the inventory procurement trade payable, which offsets the inventory increase from those grain purchases, so the two net each other. Our net debt at period end has increased slightly on the prior period. However, it is AUD 62.9 million lower than H1 2021 or December 2020. Moving to the cash flow slide on slide 10. Our cash conversion ratio was broadly in line with the PCP at 83.5%, and this outcome reflects the seasonal working capital requirements that we see every year. Capital expenditure of AUD 24 million during the first half was lower than the PCP, reflecting capital discipline as the business continues to navigate the challenges of COVID-19 and related project delays and supply chain disruptions. Key expenditure items during the half included the AUD 5 million completion spend on the new hatcheries, AUD 8 million on the new New South Wales breeder triangle, which will service our Queensland facilities, and AUD 4 million on the Auckland further processing fully cooked line. The group received AUD 3.8 million in asset sale proceeds during the half, largely from the sale of the Bungonia property in New South Wales. Now looking at our capital management outcomes. As already noted, our net debt is AUD 264 million, and our leverage is at the lower end of our stated range at 1.3 times. This represents a strong improvement on our leverage level of 1.7 times at December 2020 and just above the 1.2 times level at June 2021. Our sustaining capital spend this period of AUD 7.2 million represented 26% of depreciation below the target range once again due to ongoing COVID-19 lockdowns and delays in equipment being shipped and in accessing some sites. A fully franked dividend of AUD 0.065 has been declared, representing a payout ratio of 60.9%, placing us at the lower end of our stated payout range of 60%-80% of underlying NPAT post AASB 16 and AUD 0.01 lower than H1 2021. The interim dividend reflects a solid first half and has regard to the financial results from the first seven weeks of the second half of FY 2022 and continuing uncertainty in the short term outlook due to COVID-19. Moving to slide 12. For the second season in a row, Australia recorded a bumper wheat harvest. While this is great news, as we have previously noted, grain pricing in the first half has remained firm as Australia continues to export a high amount of grain due to strong global demand for Australian wheat due to supply shortages and adverse northern hemisphere weather conditions. The market for soy meal has also seen prices begin to rise due to drier than expected conditions in the crop growing areas of South America, combined with higher shipping costs. While the first half settled feed cost is similar to the prior corresponding period, feed costs in the second half will be higher than the prior corresponding period due to these market movements. Inventory levels for grain have also increased as we've increased physical holding of grain in the system, primarily as a result of buying direct from the grower. Inghams continues to maintain forward cover between three and nine months to secure supply, which is in line with our procurement strategy. I'll now hand back to Andrew to discuss the first half segment performance. Thanks, Gary. Turning now to the Australian segment results on slide 14. The first half results for the Australian business were broadly in line with the first half of 2020. While core poultry volumes increased 6.5% during the period, revenue growth was more modest at 2.2% due to a shift in channel mix, weighted to the wholesale channel, while feed revenue declined by 2% as customers transitioned supply away in preparation for the closure of our WA feed mill. Statutory EBITDA was flat versus the prior corresponding period at AUD 183 million. Across the channels, retail, QSR, and food service volumes were largely flat and were disrupted by COVID-19 lockdowns and softer than expected demand as lockdowns were lifted in Q2. By contrast, the wholesale and export channels volume growth was delivered through greater coverage of the wholesale channel and the reopening of export markets. However, pricing in wholesale softened due to oversupply and weaker quarter two demand conditions. In New Zealand, core poultry volumes were flat on the prior period, reflecting the reintroduction of lockdowns, including a period of alert level four. Core poultry revenue grew by 3.6% as we were successful in introducing price increases across all channels to help offset increasing feed costs and inflationary pressures related to supply chain disruption. As we have noted in previous results, the decline in feed volumes of 28% reflects the sale of the Hamilton feed mill in March 2021. Total revenue grew modestly to NZD 205 million, an underlying EBITDA growth of 13%, reflecting continued mix and operational improvements. As we noted in August last year, the royalty payment from New Zealand to Australia was reduced with a neutral outcome on the group. I would like to make a few comments on our progress on sustainability, specifically an exciting new product launch for the company in New Zealand. At the full year announcement in August, I talked at some length about the importance Inghams places on sustainability and some of the work we have done over a long period of time to embed sustainability into our business, which as a result has led us becoming a recognized industry leader in water stewardship, sustainable agriculture, and sustainable food production. Reflecting this philosophy and approach, I am proud to say that in November, as a result of a lot of hard work by our team members in New Zealand, our Waitoa free range chicken brand became New Zealand's only independently certified product of net carbon zero chicken. Waitoa commenced 14 years ago, receiving SPCA certification for their animal welfare practices in 2013, and has been at the forefront of free range chicken farming in New Zealand. Sustainability is the heart of everything we do, and the business there is well known for their focus on the natural environment and animal welfare. The internationally recognized certification was awarded by Toitū, a subsidiary of Landcare Research and a New Zealand government owned Crown Research Institute, and is a result of a stringent review process involving measuring the carbon footprint at every step of the supply chain, from raw materials and production through to distribution and packaging. Excuse me. Waitoa has also partnered with Toitū-approved local projects in Marlborough and offshore to offset unavoidable carbon emissions to achieve net carbon zero emissions. Excuse me. The financial year to date has not been without its challenges, and the first weeks of the second half have seen these challenges continue. The effects of the Omicron variant have been felt widely across the economy and the operations of most, if not all, businesses in some way. For Inghams, as I have noted earlier, operating conditions have been significantly affected by Omicron since the start of the new year, which has been more impactful than previous COVID-19 variants. We remain confident of the longer term prospects for Inghams, and believe that as the operating conditions improve, in particular staffing and transport, the business can recover relatively quickly to meet customer and consumer demand, and with it, profitability. We are already seeing improvements in workforce availability, and we are working to promote confidence for our people when returning to work, supporting health and wellbeing to drive increased attendance levels. Some pandemic-related adjustments to operational practices will be retained for a further period to ensure a safe work environment. As I outlined earlier, we expect costs related to these initiatives to remain elevated as a result of the ongoing COVID-19 situation, general health and safety requirements, and our desire to protect and support our people. There will be some adjustment to agricultural operations to bring farming stocks back into balance, the timing of which will depend on operating and demand conditions. From an inventory standpoint, we expect this to bring this back into desired levels and mix systematically over the six month period. We're also thinking about the implications of the last two years on the group's longer-term strategy, and work has already begun and is underway to understand how customer and consumer preferences have changed, to identify emerging trends for new product opportunities, production enhancements and the future investment in our network. The first half has been a very challenging period for the business and for our customers and our consumers as a result of these prolonged lockdowns, COVID-related operational disruptions, and more recently, the emergence of Omicron. While Australia continues its transition to a state of living with the COVID-19 virus, New Zealand is once again operating under increased restrictions, having moved to red traffic light conditions in early January following the detection of Omicron cases. We expect the pandemic will have an influence on economic and business activity beyond this variant wave, and the recovery in business conditions will be variable. Another strong wheat harvest in Australia has resulted in some recent price stabilization. Ongoing strong global demand for Australian wheat due to supply shortages and adverse Northern Hemisphere weather conditions is expected to result in price remaining firm. Combined with recent increases in soy meal pricing, we expect to see some growth in feed costs as we progress through the second half. As we have discussed with you previously, our procurement procedures ensure that we continue to hold between three and nine months forward cover. In closing, while it's difficult to predict the exact timing of a recovery, we expect the business to recover relatively quickly when conditions permit. On behalf of our management team, I'd like to thank you all for joining us today. With that, I'll hand you back to the operator, and we'll take your questions. Thank you. We will now begin the question and answer session. To ask a question, you may press star then one on your touch tone phone. If you are using a speakerphone, please pick up your handset before pressing the keys. If at any time your question has been addressed and you would like to withdraw your question, please press star then two. At this time, we will pause momentarily to assemble our roster. The first question comes from Michael Peet with Goldman Sachs. Please go ahead. Oh, hi, Andrew and Gary. Thanks for taking my questions. Just wanted to drill down a little bit further on the first seven weeks, and just the bounce back maybe. I know it's hard to predict, but, is that sort of, have you sort of started to recover here? I'm just sort of looking at what you made in the second half last year, sort of AUD 55 million profit at about AUD 2 million a week. That would say sort of 15 odd million or 14-15 in seven weeks. So you're 24 below, that's sort of suggesting the business is in losses at the NPAT line and probably EBITDA at the moment. Is that correct? Just sort of trying to get a sense of how quickly that can bounce back. Hi, Michael. It's Gary. Thanks for the question. Not surprised that's the first topic on the agenda. So in short, at an NPAT level, yes, there was losses for the first seven weeks. At an EBITDA, it depends if you're talking about pre or post AASB 16. The AUD 35 million EBITDA number we reported and the AUD 24 million NPAT number we reported are post AASB 16, as we report all of our numbers. But I can say that at a pre-level, they are the same delta anyhow. So you are correct. It is a loss that we've been making the last seven weeks at an NPAT level. We are making a profit at an EBITDA level. As far as recovery, I would say that we can't predict the recovery. As far as the commentary about an improving trend, that is true. I would caution that it is an improving trend, but the numbers are still quite challenging right at the moment as well. Slightly improving trend in the last couple of weeks, but you can work out the averages across the seven. Okay. Just one follow-up, if I may. Just the inventory looks as though it's okay from a finished goods point of view, but is there inventory there that's gonna be difficult to clear? Are we at risk here? I know you've said you wanna clear that rationally. If wholesale, sounds like that's the channel you might do it through, or I just want to get a bit more color on that finished goods inventory, which doesn't appear to be elevated in itself, but wondering what sort of products are there. Yeah. At the half year, the poultry inventory was AUD 12 million down on June, which was pleasing. Through the seven weeks, it's actually fallen a little further. We are conscious of moving the product through this period of time. You would have noticed that at thirty first of December, our provision remained the same as at June. I believe we're well covered to any risk of that inventory, and the actual levels have been falling. I don't think we have any particular risk per se, although that is part of clearing some of that product is part of the financial results we've seen in the first seven weeks. Okay. Thanks for that color. Thank you. The next question comes from Craig Woolford from MST Marquee. Please go ahead. Morning, Andrew and Gary. I'm gonna have another go at the, I guess, current trading conditions. Just in terms of the impacts on EBITDA, there'd be both revenue impacts because of the mix of sales as well as cost of production impacts. You know, is the sales component of that's caused a drop in earnings likely to improve more quickly, or is that gonna take a longer period of time? You've talked about better workforce availability, so we can probably make a judgment on the cost side, but I'm just interested on the revenue impacts and what's causing them and what sort of path we might see on recovery. Yeah. Thanks. Hi, Craig. It's Andrew. I think we can be quite optimistic about the revenue and volume piece as we look forward. It really comes down to us getting people back to work and being able to get back to a full range of product offering. The demand is certainly there. Our customers are certainly looking to buy the product, and as soon as we can make it, they'll be buying it from us. I think that element will bounce back very quickly, and as I say, the demand is out there, and the fundamentals of the category haven't changed because of this short term disruption. Cost issues are going to be, you know, I guess, a bit harder to deal with as we get this, the whole network back into balance and that's right across the supply chain. It's our supply chain, it's our customers' supply chain, so it's quite a complex issue at this point. Maybe Gary might have some further comments on that. Yeah, I'll try and just give a bit more color on the first seven weeks and the drivers of it. It does stem with the very severe labor shortages that we've seen across our facilities, but also across our supply chain and also in the impacts that we've seen at some of our customers as well. All of those shorter labor rates have caused partly this result. What that has ultimately meant is that we can't make some products that we would normally make, and our customers can't necessarily deal with some of the products that they normally want. As a result, this is not a demand issue coming from consumers. It's a lack of our ability and our customers' ability to get all the products that the consumers want available to them. As a result, as you would know, we've still got our growing of our chickens coming through, so we're still producing largely the same amount of chicken coming through there. If we're not producing the normal product mix, the balance or the oversupply or the difference between those two numbers is either going into our wholesale channel, into our export channel, or into increased wastage rates or rendering. That's the mix that you're seeing. What's then happening is you've got an oversupply in those markets, so the prices are being quite impacted as a result of that. Further, that's on the revenue side. We see that demand will change, so when we've got the capacity to make the products, then we see that will recover very quickly. On the cost side, we're clearly not making the same mix as we normally do. With the labor shortages, we've got sick pay, we've got overtime, we're running extra shifts, extra casuals, so our costs have increased quite dramatically as a consequence of that. We have some incentive payments for our workforce through this period of ensuring attendance through this period of time. Our costs have gone up, therefore our unit cost of producing poultry has also increased in this period of time. It's definitely an impact on both sides of the equation. There's a substantial impact in the revenue, thus through to, I guess, your normal margin, and then there's a substantial impact coming through from the cost side as well, which extends to the other products. Hopefully that gave you a bit more color on where the results come from, and how we see that it'll bounce back quite quickly, when we've got those conditions improved from now. Yeah, that's very helpful. It does feel like, you know, if we see these case numbers reducing then, hopefully your operations and your business have improved. You know, you said the inventory was in a good position, but then that bullet on you're preparing for recovery, expect to bring inventory to the desired levels and mix systematically over coming months. What do you exactly mean by that? Our overall levels are good. When we return back to, let's say, what we consider an efficient place or a good place in our operations, we wanna make sure that we come into that period with the right chickens in the field at the right weights, at the right ages, and then we have our inventory levels at the right levels. We've got the right amount of products per customer, so we basically wanna come out of this in a very good, balanced position to go forward in the business. Okay. Understood. Yeah. What's your guidance for CapEx for the second half? You know we're not big on giving guidance. If you look forward to the projects that we've got coming on, there'll be more spend on the New South Wales breeder triangle. The hatcheries are done. There'll be a bit more on the—I think a fully cooked line in Auckland, and back at the full year, we talked about our red area in Murarrie being replaced, and we'll kick that one off, and also a water treatment plant in Osborne Park in WA, which we'll kick that one off as well. In saying all of that, it's not as easy to spend money as we would like to at the moment. Getting equipment from overseas is a challenge. Getting into some of the plants is a challenge, having the available labor to put things into the plant. I think looking at the first half level is a good indication. Okay. Thanks, Gary. Thanks, Andrew. The next question comes from Alexander Patten with Citi. Please go ahead. Morning, Andrew and Gary. Just got a couple of questions. I'm gonna try and dig a little bit, I guess, deeper into the first seven weeks. I'm just keen to understand how volumes have trended, I guess, week by week, and then, I guess, your reference to a bit of a recovery, is that on the volume side or more, I guess, the sales side? I'll say now we are not gonna give a week by week flow description on this. Volumes total probably haven't changed dramatically, 'cause we've still got our flock of birds coming in the front end. Volumes in total haven't changed dramatically. What we have seen is a bit of a change in mix into more of the products that we want to make and normally make. That's where we have seen the improvement coming through. Volumes per se haven't changed much. Okay, that's clear. Thanks, Gary. I guess, since things are going to remain elevated on the feed cost side of things looking forward, you did flag potential increases in market pricing at your AGM last year. Has that materialized at all? Do you expect to be able to offset some of this feed cost pressure in Australia like you did in New Zealand in the first half? Yeah. Look, I think we do have that opportunity. We have been able to take some price increases in the Australian market, as we've reflected in the presentation, and you've noted, we've had some good price increases in the New Zealand market, and we'll certainly be looking at our price position with major customers over the balance of this half, which is not only gonna be important for this year, but it'll be important for next year as well. That's certainly part of our current thinking. Great. That's all for me. Thanks, guys. The next question comes from David Fabris with Macquarie. Please go ahead. Morning, Andrew and Gary. Thanks for taking my questions. Look, I won't ask about the first seven weeks, but look, gearing was 1.3 times in the first half. How's your comfort around the balance sheet and where do you expect it to land for the full year in relation to your target range? I think it's good having run into this Omicron issue and having a poor start to the second half. I think it's good that we're at the lower end of our leverage range and quite happy with where our net debt was. As far as guidance, I'm not gonna give a guidance on a leverage rate. I think you would know that leverage is calculated net debt on EBITDA, and if our EBITDA is under some pressure from the first seven weeks, then that would show some corresponding increase in leverage through that period of time, depending where we end up for the full year. I'd say based on that, directionally your leverage might go up a bit. Thanks, Gary. Just in terms of New Zealand, the EBITDA margin was 9.3%, well above the PCP. What were the moving parts around that uplift? Maybe if you can just talk to the royalty payment from New Zealand to Australia as well, which I'm assuming is fed into that. That's right. I think we should be clear that we have reported the results as they land, but there is a AUD 3.2 million swing between New Zealand and Australia in that first half compared to PCP. So if you take normalized for that, New Zealand was in essence flat. I think it was up 0.1. So their margin wasn't sort of at the 9.8%. That's probably in comparison higher because of the royalty. And the royalty, as we discussed at the half, sorry, at the full year, was due to getting in the discussions with our tax authorities across both sides of the Tasman and getting that royalty at the right level. You won't see that at the full year. It'll be back in apples and apples by that point in time. New Zealand was slightly up, and Australia was slightly down when you take away those 3.2 royalties. It is actually a pretty major swing. In New Zealand, you had inflationary pressures and you had feed cost pressure in New Zealand, which largely got offset with price, with volumes that were pretty flat. In Australia, you had some of the inflationary pressures, had a much larger increase in volume, but we had more price pressure. That would be the summary of the two segments. The royalty is a factor given that it's quite close to the difference in New Zealand. That's clear. Thanks, Gary. I'll turn it over. Thank you. The next question comes from Rod Fleet with Zimmer Equity Research. Please go ahead. Hi, Andrew. Hi, Gary. Thank you very much for your time and taking my questions. I'm gonna come back to the wholesale oversupply because of product mix that's resulting from difficulty in parts of your processing at the moment. Could you perhaps give us. Or perhaps I just wanna try and understand what's happening there. What you're saying is you still got the same number of chickens coming through the farms, and implicitly, what you're saying is your primary processing is running at full capacity 'cause you're still processing those chickens. But then you're short on capacity in further processing. Is that how I should understand that? Therefore, you're pushing out lower margin products into the wholesale sector, and have a shortage of high margin product, or further processed product. Perhaps you could give us some more anecdotes around that. Sure. I can see why you would say that. In some parts, that makes sense. The bit of information that would help you is that a lot of products we make are in the primary processing facility. The further processing facility is our cooked range. All of our fresh products are made in our primary processing facilities. It's impacting both our further processing and our primary processing facilities. The range of products that are coming out of both of those is different to what we would optimally like and what we would normally do. Does that makes sense? If I was to really try and simplify that, perhaps by exaggeration, does that mean there's more effectively whole chickens that have been going into the wholesale market rather than portioned chickens? Yeah, I think, absolutely. Yeah. While we can't comment on competitors, I don't know about competitors, what we're seeing in the wholesale market would suggest that that's an industry wide impact as well. Okay, great. Despite what you've just said about not being able to comment on competitors, I just wanna check that you don't feel that there is a structural change in the competitive environment. I mean, obviously, you know, Baiada have spent a lot of money in the Riverina to quite dramatically increase their potential capacity there during the pandemic. Has that flowed into any increased industry supply that wouldn't have been there otherwise? No. Is the industry acting rationally? Yeah. I think the industry structure is largely as it has been. That change is yet to come through into the market, to be honest, and it certainly hasn't been apparent in the first half in our results. I'd just say that the industry structure is pretty much as it has been and is, you know, working as it has been in recent years. No significant change there. Great. Okay. I just wanted to clarify just two other things that you mentioned in the presentation. Firstly, with regard to the increase in inventory, you said reflects higher volume of grain procured directly from growers. I just wanted to understand what that meant. Does that mean you've changed your purchasing process somehow, or does that just suggest that you are holding more grain in stock than you have historically? It's partially to do with accessing liquidity to grain, because obviously with the very, very high and attractive prices from the export market. Mm-hmm. It's been easier to get grain directly from growers than it has been to get it through the trading companies and what have you. It's just been our way of accessing it, that's a little bit different from the past. Okay. By going direct, you tend to buy, you know, guaranteed to buy larger amounts. Is that? Uh. The dynamic that leads to the high Yeah. The dynamic that leads to it, we tend to be when we buy direct from growers, we take physical delivery. When you buy from the trade, you buy on a forward basis. Right. Great. Okay. The last thing I was just gonna ask about was, I think you mentioned in the presentation, possibly in the appendix, but you mentioned possibility of a new ERP system. I know, Gary, I think that's something that you spoke about not long after you arrived at Inghams. Could you perhaps just elaborate on what stage that project is at? If you're able to, any expectation of rollout time, cost, potential disruption risk, those sorts of general questions. Yeah. We're at the first phase of that. We're finalizing our scoping, finalizing our design, finalizing how we think we'll implement it, how we'll deal with change in the organization, the benefits that will come, what it'll end up costing, et cetera. That's the phase we're in now. It's that detailed work phase. From there, you then move into implementation, which will be a three year type program. Great. Brilliant. Thank you very much. The next question comes from Phil Kimber with E&P. Please go ahead. Hi, guys. My first question was just around you've done a good job on your inventory, but just wanted to understand industry inventory, 'cause I think I recall last time Australia had their lockdowns, the channels stayed oversupplied for a little while and it wasn't necessarily your problem, but obviously you get caught up in that if it's other people's excess inventory. So I just wanted to check whether the channels are still oversupplied. Is that a sort of two to three months once these issues stop, is it a couple of months before that clears through, or can it clear quicker? I think from our commentary on the first seven weeks, you can conclude that some of our channels probably got less than they would like. You would conclude that they don't have any inventories at all. Then therefore, we've called out the export market and we've called out the wholesale channel. That would be where that potentially could be in the case. I think on an export side, we're a mere blip in the ocean of the export world. For the wholesale market, there's potentially that there has been some stock build within that market, but I have no visibility of what that is. Okay. Then the second one, thanks for the guidance around the first seven weeks. Obviously, it's completely abnormal, but the air pocket is pretty big. I think pre-AASB second half, you know, normally make about AUD 100 million of EBITDA. You said you're 35 below the run rate so far. Depending on how long it goes, the air pocket could be large. How do you work on that? I mean, how does it work with bankers? Because, you know, do they, do they take 12 month annual earnings when they look at ratios? Clearly it's abnormal. Do they just ignore periods like this? I just wanted to understand that or preempt because they're the questions we're gonna get asked. Sure. I'm not going to disclose our covenants or our banking arrangements in detail. Yes, they tend to have a look at a 12 month period. I think we've previously talked about having substantial headroom in our covenants. I'm still happy to say that comment today as well. We've got substantial headroom in that area. I don't wanna speculate on what would happen should things get close or need to, 'cause I don't think that's the situation that we're in. Okay, that's great. The flip side of that is, you know, these sort of issues present opportunities, you know, for growth and, you know, because if, you know, you're feeling pain, then everybody else in the industry is, and you're probably better placed than most to absorb it. Do you think there's some material opportunities here, either, you know, people falling out, winning contracts, things like that? There's no evidence of that at the moment. I mean, we've got our long term supply agreements are in good shape. We're not, we've not got people knocking on the door asking us to pick up business that's been lost elsewhere. I mean, I think you know it's a pretty disruptive and very challenging time, but it is only a couple of months, and hopefully we'll come out of it reasonably well. You know, we can't predict the end of it, but let's hope we're getting closer to that. At the moment, there's no obvious opportunities from those sorts of things turning up. You know, we don't wanna You know, we've learned a lot through this last couple of years, and we don't really wanna waste a crisis. I think, you know, we're thinking about our longer term strategies. We're thinking about our product range. We're thinking about opportunities for automation. How do we create greater resilience in the network? Yeah, there's gonna be product opportunities. Dealing with customers, there's gonna be obviously conversations around that sort of thing. You know, it's a bit early to go into the detail of it, but certainly we are turning our minds to, you know, how do we learn from this, and how do we create longer term advantage from this? Yeah, that's great. Thank you, guys. Thanks, Phil. The next question comes from David Errington with Bank of America. Please go ahead. Morning, Andrew. Morning, Gary. Andrew, can I get things back to a very simplistic basis? 'Cause, you know, you've given a lot of detail, but I must admit, I'm a little bit confused as to what went on within your business. You know, as you know me pretty well, I like to keep things really simple. Omicron basically cut your labor. Basically, that was the guts of it. Like Omicron absenteeism, and the plants couldn't run the way you wanted it to. Yep. That's it, really, isn't it? That's it. Is that it in a nutshell? Because of that, it completely disrupted the efficient process. It shut down. It gridlocked you, basically. It all stems from labor availability. Is that it in a nutshell? That's where it starts, David. Absolutely correct. Now, it's got a stack of knock on effects, but when half of your workforce isn't available in a business that relies very much on a lot of people processing a lot of product, that is absolutely the fundamental issue that's caused all this problem. That was it. Everything was running according to plan, everything's going well, and then Omicron hits you. Half your workforce goes down. You probably could process the birds, but you couldn't do any further value add because you didn't have the people to be able to do it, so you just have to pump it out in the wholesale market, and it. Everything just flowed on for everything. You gave, I think Gary gave about a hundred and ten, not being rude, but gave about ten different flow-ons. Everything flowed from the fact that your absenteeism went through the roof. Is that right? Correct. Right. Okay. Now why will it then, the next one on page 20, it will take some time for the supply chain to return to normal operating levels. What do you mean by that? What? Why take some time? I know you've made it very clear you're not gonna give guidance, but once your absenteeism drops off and maybe we get back to normal people, hopefully by about March, what are you saying? Why will it take time? Will it just to get the machines going again? What are we talking, weeks? What are we talking? Because we- Yeah. The challenge, David, is we just don't know when this whole Omicron thing will end. Let me just, you know, a bit more color. We're just starting to get Omicron cases in our facilities in New Zealand in the last couple of years. We've got WA yet to come on stream. You know, we are. Absenteeism certainly is improving. Absolutely. But it's still not where it needs to be. We're not where we are in terms of our normal staffing levels. Also just to remind everybody, there's just a significant ongoing trend of labor shortage. You've got the, you know, you've got that. That's there already, and you've got the, you know, absenteeism caused by people getting COVID. It's just that's the key issue. When we can get fully rostered shifts, then, you know, it's not, you know, we can fire up the plants and we can start producing product in the right formats and the right mix. As soon as we can get back to that, we'll get there. It's just really difficult to know exactly when that's gonna be. Yeah. I suppose it's with the trucks and everything like that too, right through the whole supply chain, it's just gridlocked. When we could have supplied. I'll give you an example. You know, back in early January, we could have supplied Woolworths with whole birds that they could have cut up and put under glass in the delicatessen, but they said, "No use to us, we haven't got the people here who can process those birds. Yeah. We could have sold them to them, but they couldn't get them into a configuration that their customers wanted. I suppose the more efficient you've driven toward, you know, the machine, and it's made it worse in effect because the machine you can't get it running again. It's just a complete, what you call, I won't say the word, but you know which way I'm going. It's all hit you all at once. Hopefully. Yeah. Everything's just on labor, so there's nothing wrong. Everything. You can tell us as investors, it just, you just got whacked because it just, this 50% absenteeism just stone-dead gridlocked you. Once we're through that, hopefully we get back to normal. Yeah, there's no other significant issue in the network that we have to worry about. We've just gotta have the people that we can drive that network, you know, at scale and at its most efficient and get everything out into the marketplace that we can sell. There's nothing structurally damaged here. It's just a short-term thing that once you get the labor running the machines again. Wastage. Is it a big wastage bill likely? I mean, have you had to throw things out or anything like that, or the birds? Is anything there or so. If that's all in your. Everything's okay there, it's all going into the wholesale market. Yeah, I mean, that's one of the issues. You've got birds on the farm. They've gotta be processed. You can't just leave them there. You know, there were periods. Yeah. where birds came into the plant and they were rendered, for example, which isn't a great outcome, you know? Yeah. you know, those things will go away once we can process in a you know, let's say a relatively normal environment. Yeah. David. Yeah. All of those things can happen, but they've been included in those results in those first seven weeks and will continue to be included. We're not building them up. Yes. later on. Yeah. Yeah. Yes. Hopefully the faster you went down will be the how fast you go back up, but it doesn't work that way, as we all know. Well, thanks, Andrew. Thanks, Gary. Hopefully that did clear things up. It made me feel a little bit more comfortable. Thank you. That's great. This concludes our question and answer session. I would like to turn the conference back over to Mr. Andrew Reeves for any closing remarks. Thank you. Thanks for everyone's time this morning. I hope we've been able to help, give you a little better understanding of the situation and, we're certainly looking forward to things improving in the coming months. Thank you. The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.