We'll begin the results session now. Just to note that this session is being recorded and will be made available after the session today. If you have any questions, please use the Zoom Q&A session button, and we'll answer that towards the end of the session. If you wish to ask your question verbally, please use the raise hand command and we'll allow you to ask your question in that way. We now have here Managing Director of Midway, Tony McKenna, and Financial Controller, Michael McKenzie. Testing the sound now. I just did that. Welcome to today's analyst and investor presentation on Midway's first half 2022 results. My name is Tony McKenna, and I've been Managing Director of Midway for one month now, so I'd ask that you bear with me as I develop my knowledge of the business and review its strategy and performance. However, I'll do my best to walk you through the results, the key drivers of those results, and the status of important business initiatives. I'll also give you an update on trading conditions in the first few months of the second half of 2022, and my initial perspective on the company strategy. With me this afternoon is Midway Financial Controller, Michael McKenzie. I'll refer to Michael where he is closer to the detail at this stage than I am. At the AGM last November, my predecessor, Tony Price, flagged that the first half 2022 results would be affected by the COVID-19 pandemic and the power cuts in China. The headline results are obviously very disappointing and are caused by a number of factors out of the company's control, as well as underperformance of some business units. Revenue and EBITDA was substantially down on expectations, and Midway recorded a modest loss after tax. The operating cash flow included AUD 6.7 million stock build-up, which is a normal part of the working capital cycle. Given the results, the directors decided not to pay an interim dividend. Despite our higher debt, our gearing ratio remains modest, just above our target, and we have adequate interest cover. I'm also pleased with the strength of the balance sheet and the opportunity it provides for a strategic reset. Remedial actions are being taken to address underperformance in some business units, and I will look hard at how this can be expedited. I'll approach this challenge with fresh eyes and am prepared to take whatever action necessary to return to profitability and improve shareholder returns. The cost-cutting initiatives at South West Fibre are beginning to show results, and the strong focus on securing key contracts for the WA Logistics business and the Tiwi Islands operations are gaining good traction. Looking at the financials. The numbers show what can only be described as a disappointing result. There's a lot of red ink on this page, which is primarily driven by a large drop in revenue. Much of it was due to factors outside of the company's control, but there are actions that we can and will take to improve. I'm clearly focused on understanding what is under our control and what the management team can do to turn around performance as quickly as possible. These numbers mask mixed performance by different business units across the company. The more recent acquisitions, Midway Logistics and Plantation Management Partners, remain loss-making and remain under review in the interim. However, I'm confident we have the plans in place to give the businesses the best chance of making the necessary turnaround. Looking at the key drivers of performance, the positives on this chart are the solid contribution by South West Fibre after the temporary closure of the Portland Mill in June 2020. Midway has also renegotiated an extension of the timber supply agreement with ABP that will see continued supply. Also, a solid performance by QCE in Brisbane, which has partly offset the volume loss at Geelong and in Tasmania. The Tiwi operations of Plantation Management Partners reopened after the COVID-19 lockdown, with the first Acacia shipment for some time in the first half of 2022. Prices were also higher on a PCP basis, but there was a mixed change with less higher margin globulus out of Geelong and native timber out of Bell Bay, and more softwood out of QCE in Brisbane. We've included a chart in the attachments for the first time to show shipments by port to help you better understand our business. The negatives on the chart are the significant drop in export volume from Geelong and Bell Bay due to power cuts in China in the first half 2022, and higher freight reducing demand for lower quality products. The high Eucalyptus globulus price worked as a disincentive for customers and suppressed demand as they searched for cheaper alternatives. The foreign exchange rate on a PCP basis is significantly higher at 75 cents first half of 2022, compared with 69 cents in the first half of 2021. The wetter La Niña weather conditions and a higher mix of timber from wetter areas, including Brisbane and Tasmania, contributed to a lower bone-dry component of sales. 55% in the first half, 2022 compared to 57.6% in the first half, 2021. Looking at the cash flow. The drop in sales volume and the AUD 6.7 million build in stocks affected our working capital position and contributed to the negative operating cash flow. This was a key driver in our net debt result, but we remain well supported by NAB, and as the next page shows, our balance sheet remains strong. Term debt remains at AUD 29 million, and our gearing ratio remains modest at 29%, and we have adequate interest cover of more than 4 x. Looking at the balance sheet. The bottom line here is that net assets increased by 2.7% to AUD 135 million. This was largely driven by a revaluation of property contributing AUD 12 million. It also benefited from an increase in the value of biological assets on the back of higher wood fiber prices on a PCP basis. Overall, the balance sheet is underpinned by AUD 155 million of property, plant equipment, which has Midway well-placed to leverage its strength and support strategic growth opportunities by recycling capital. Turning now to trading conditions. The good news is that we are seeing signs of improved trading conditions early in the second half, 2022. We will experience much better shipments from Geelong in the first quarter than we did in the first quarter last year, and we're seeing encouraging signs there. Demand seems to be returning as stocks normalize and pulp prices have stabilized. Customer inquiry has definitely improved from the first half, 2022. We are closely watching Japanese and Chinese paper prices and demand, which are not yet showing signs of returning to pre-COVID levels. We do not expect a quick turnaround, as the next slide shows lingering issues from COVID-19 supply chain disruptions, among other things. COVID-19 supply chain disruptions affected Midway both overseas and domestically. Ship and crew shortages saw the Baltic Dry Index increase greatly during the first half, and bunker fuel costs also increased significantly. Major customers in China tried to offset these rising freight costs by switching to lower-cost woodfibre from Vietnam and Thailand. This directly impacted sales volumes out of Geelong and Tasmania. Midway also experienced COVID-19 supply chain issues in Victoria and Western Australia, where lack of harvesting and haulage crews affected timber supply and operations. We expect these constraints to gradually ease as COVID-19 restrictions and supply chain bottlenecks are removed. Turning to the important business initiatives. Following the sale of the Upper Goulburn property, Midway is close to finalizing the sale of its plantation properties at Wandong, just north of Melbourne. The gain on this sale is expected to be around AUD 2.3 million above our book value. The net proceeds after buying back trees will be used to repay bank debt, fund the Bell Bay expansion in Tasmania and support growth and opportunities. The sale of surplus land allows us to focus on the plantation estate fund, which I'm pleased to say is progressing well. Midway is in an advanced stage of negotiation with a major investor to create the plantation estate fund. We anticipate being able to brief you with more details in the next few months. At a high level, the fund offers an opportunity to work with a major investor to build our plantation estate in the Geelong catchment. It also provides Midway with the opportunity to reposition the balance sheet, reducing the amount of lower-yielding land assets we are carrying. The Geelong Grain Terminal. The development of a grain terminal at our Geelong facility is an important strategic initiative for the company. It will increase capacity utilization and return on assets at the North Shore in Geelong and contribute volume towards our take-or-pay contract with the Geelong port. As the plantation fund increases timber supply, the grain terminal will complement our core business. We're in discussions with potential partners for the establishment of the facility and are considering leasing options as well as the previously mentioned JV concept. We are aiming to reach an agreement in the second half, 2022. The Tasmanian Bell Bay project. There's been solid progress towards establishing a Midway-controlled export site at Bell Bay in Tasmania. Unlike other catchments, Tasmania has a large uncommitted forestry resource and presents an appealing growth opportunity. The conveyor connecting Berth 7 to the TasPorts ship loader is complete. The first softwood shipment will depart Berth 7 in the second half 2022. Phase I of the Norfolk Street development is expected to be completed in July. This will enable us to expand our export options and the range of products we can sell from Bell Bay in Tasmania. Leading to the outlook. Overall, we are seeing improved customer interest, but the results aren't going to see an immediate turnaround. The main projects have good momentum and will start to show results in the second half 2022. We are working on initiatives to improve the performance of our underperforming businesses, and I will be conducting a complete strategic review looking at improving financial performance and determining the optimal strategic positioning for the company. I'd like to open it up for questions. We have some people with their hands up. I'll start with those people. Just make sure your microphone is enabled and ready in Zoom, and you will be able to ask your question once you are prompted. We'll start with Simon Conn. Tony, can you hear me? Yes, got you. Yeah. I suppose you've been in the role a couple of weeks now or a couple of months. Can you give us your impressions of the business, strengths, weaknesses? You know, obviously, we've reviewed the asset pool you've got. Just give us some high-level thoughts about where you wanna take the business. Yeah, sure. Clearly the results are disappointing, but there are some really good prospects there. I think the potential in Tasmania is very promising, and the infrastructure that we're putting there gives us a good toehold in that market. I think the Grain initiative goes a long way to helping defray take-or-pay costs with the Geelong Port and better utilizing the site there. The Wandong sale I think makes good sense. The work on the Plantation Estate Fund is progressing well. I see potential for, and I expect that we will see, improvements in the performance out of both the Tiwi Islands and the Western Australian logistics business and they're businesses that we're watching very closely, and, you know, we'll make hard calls as required. There's promising signs there with contracts, key contracts being signed. I think where we sit very naturally next to what's happening in carbon space presents a real opportunity for us, and we are building a capability there, recruiting some resources to start developing our own in-house expertise in that because it does sit so closely to what we're doing, and is a logical point for expansion. In summary, while disappointing, you know, first half results and difficult conditions that won't be fully resolved for the second half, I think the mid to long-term future very promising. Tony, you're sort of alluding to green shoots, but you're saying the second half's not gonna be much better? Or are you saying you will see some benefit in the second half? The second half will be better, but it's not the answer. There's still some hard work to do. There's, you know, where we've had issues with not having any demand, we're now having issues that teams aren't available, crew aren't available. We haven't got truck drivers to bring logs into yards, which is slowing us up on the supply side. Demand's not 100% back. Some of the life that we're seeing and the interest from customers is for first half of next year. Just last question. Can you give us just a further elaboration on the plantation estate development? What's the likely timing of that? You've been talking about this for some time. It was flagged at the AGM, but it still has been delayed. Yeah, I appreciate that. It is a complex transaction. It's certainly for this organization, it's a large transaction and it is complex, and then there is a counterparty who we have to bring along. It is progressing well and I am confident that we'll be announcing stuff later in this half. Okay, thank- Yeah. Thank you. Definitely progress happening. We'll now go to Charlie Kingston. Hi, Charlie. Hi, guys. Can you hear me? We can hear you, Charlie. Thanks, Tony. Again, I appreciate you've only just joined Midway, so it's certainly not your strategy. You're still working your way through the business. That being said, you know that there's a lot of talk in this presentation about organic growth opportunities and capacity, et cetera, which is being funded by selling land that's actually Sorry, Charlie. We're having trouble hearing you. We could hear you when you first started speaking, and then you faded. Where are you from? Simple question. You're expanding capacity when you've just mentioned demand is clearly an issue. You know, revenue's fallen 40%, but you're not making money off the current capacity that you have, and it's been a pretty bad period for three or so years. I mean, can you just give a simple explanation as to why you think the strategy of increasing your current capacity is actually gonna generate returns for shareholders when it hasn't done so for three or so years now? Sure. Is the expansion in capacity that you're talking about, does that relate to Tasmania? Yes. Yeah. I mean, we're seeing good demand for Tasmanian product, but particularly if we're able to segregate our products. We're bringing in a higher value product that's currently going through another mill and being sold at a lower grade. That would enable the same sales to be made, but with a higher margin going forward. There is, as I said before, plenty of resource there and it's at a lower price point, which gives us a good range of products that we're able to sell. When globulus is priced out of the market as it has been for the last, well, certainly the last half, then the other products are more attractive. I think the idea of expanding the capacity in Tasmania is sound, particularly in that it gives us the ability to do different products out of there. At the moment, we're looking at softwood and if we, or as soon as we have Norfolk Street finished or if we have it done now, we'd be doing some plantation hardwood and probably some native regrowth thinnings out of there. Having three products gives us a much better range of products to take to the market. That's our expansion. The other expansion that we're looking at is actually getting vessels out of the existing and getting wood chips out of our existing facilities in the Tiwi Islands or getting more out through Geelong, South West Fibre or QCE. Now, thanks. Just historically, as you know, Midway once upon a time did pay a nice dividend and market obviously rated it well in times when it was returning money to shareholders. There's zero mention of dividends or returns to shareholders in the presentation. You know, is that a focus of the board? I mean, you're selling off a lot of your key assets to fund certain growth opportunities, but is there any intention of actually resuming dividends to shareholders? Because, you know, it's been a long drought, and I think that would go a long way in actually reassuring shareholders that, you know, some of that NTA, which is significant, is actually gonna be of benefit to shareholders. For sure. Charlie, I appreciate the shareholders' desire for dividends, and that's something that certainly it would give me great pleasure to be back in a position where we're paying dividends back in a profitable situation. Ultimately, it's a decision for the board, and, you know, we need to look at our capital management. We need to be managing the bank's expectations, as well as making sure that we're investing. We've got a sustainable business that's gonna generate ongoing returns. I fully understand, and I don't think there's any controversy about the fact that profitability returns, we are looking to be a dividend paying share once again. Okay, thank you. We now go to Jack Dunn. Hi, Jack. Hi, Tony and Mike. Can you hear me okay? We can, Jack. Perfect. Thanks. Welcome aboard, Tony. I just want to clarify on a couple of questions that were just asked previously. I'm just gonna go onto the volumes in the second half. Obviously, soft first half. Just wanted to know, like, are you still comfortable with the sort of volume guidance that was provided at the AGM and FY 2021 presentation? Or is the lower volume in the first half gonna make it a bit too much of a gap to make that up in the second half? Yeah. Take that one Mike. From the AGM guidance, I think the volumes will come off slightly, Jack. That's really relating to our supply chains. We're having COVID-19 issues with supply chain getting availability of crews, particularly cartage. Volumes will come off slightly from what you saw previously. Along with that, on a PCP basis, we expect the second half to be down a little bit. That's volume. It will be up. However, our trading business will be down and obviously FX as well is gonna be down four cents on a PCP basis. Overall, slightly down, but it will still be much better than the first half. All right, perfect. Obviously there's been some good early shipments so far in the second half out of Geelong. Are you able to give us any sort of indication if that's like eased the inventory build and the cash position at the moment? Yes, certainly Jack. The working capital position is much better than what it was at the end of December, and certainly our operating cash flow for the second half will look much better than the first half. Yeah. As you know, a vessel is, you know, AUD 7 million-AUD 8 million worth of cash tied up in working capital. Once the vessels come, that gets liquidated very quickly. Perfect. On the plantation estate fund, I just wanted to clarify, I mean, I didn't see it in this presentation, but the intention from that is some of the proceeds would still be returned to shareholders. Is that still the intention of the board or, am I to read it that because it's not in the presentation that the board is thinking, along different lines now? I'm not sure that it's been specifically discussed or it hasn't. Just to explain, it's maybe a little premature, but the likely structure has proceeds being received over four to five years. There's obviously payments that need to be made upfront and then, as we go along, the repurchase of the trees to enable that transaction. It's not like that it'll be a lump sum, large amount that's immediately available on completion. It's something that plays out over an extended period. You know, dividends are a decision for the board depending on, you know, the position with our bank, with the debt, with the operating performance of the business, and the directors' views at the time. Again, I do understand the desire for shareholders to receive a dividend. All right. Perfect. Thank you. As one other point on the Geelong Grain Terminal, you said an agreement likely in the second half of 2022. Just wanna clarify, do you mean financial year 2022 or calendar year 2022 there? I'm hopeful that we get it in financial year 2022. We're dealing with counterparties that we don't control and, you know, it's a reasonably complex arrangement. It's a very important asset for us that we need to get right. We need to make sure the way we do this works well for the company and we won't go into something that's gonna create a long-term encumbrance on the business or the property. There is really good momentum with it and with the very critical parties, and I'm hopeful that we'll have something this half. All right. Perfect. Thanks, guys. Thank you. We also have a text question from Craig McGrath, wanting some more information about Japanese sales. I'm not sure if that's something you can help with there. The Japanese price was settled yesterday, I think, or the day before, and been formalized today at $180 for globulus at US$180. There is interest from Japan, but they're telling us that the demand in the paper market is up 4% on last year, but still 21% down on what it was pre-COVID in 2019. It is perhaps not at full strength. Sorry, can you hear me now? Yes. What is the total CapEx spend that you are planning on for Geelong and Bell Bay going forward? Around Geelong, it will depend on what the grain arrangements look like. If it's a lease, it will obviously be very different than if it's a JV or if we were to do it ourselves, which isn't the intention. That is still in flux, subject to where you have an arrangement with the counterparty we're talking to. On Bell Bay, it's around AUD 16 million. Yeah. Yeah. It's probably slightly higher than previous guidance, but overall the project is still tracking pretty well from an NPV perspective. So yeah, within the next probably six or seven months, we're looking at a AUD 9 million-AUD 10 million CapEx spend. Right. But Geelong, I mean, I think historically you've said 15 or thereabouts. Is that? What's the ballpark? That's the figure that's been spoken about, but it could be completely different if we go down a lease path. A lot higher or a lot lower? What's the- Actually, it should be, it'd be less a figure if we go down the path for the lease. Right. Just the carbon opportunity that you see. I appreciate it's a, you know, it's a big new market, but how do you see Midway positioned there and/or what would be the timing like on that? Yeah. As you say, it's a new market, but it's something that we are as well placed as anyone I think to be participating in. We have areas where we are in regular contact through our everyday business with owners and growers who are interested in it. We are working up the expertise to be able to present models to people and to do it ourselves, where we invest and get carbon credit income in the early stages, and then are able to get the income when the trees are harvested as well. We see, you know, potential. We're exploring potential in Tasmania. We're exploring potential in the Tiwi Islands. Really, all the operations guys have got their eyes open as we're developing this in-house expertise as where we can apply it to help one get us our own company exposure to owning and developing carbon and being part of the uplift that's happening there. Also to benefit from the improved economics that can come to other investors, encouraging them to plant more trees. Will that sit within the plantation fund, assuming that goes ahead or outside? The plantation fund is something that sits separately from the carbon initiatives. Okay. Thanks. Thanks, Charlie. Just a reminder, if there's any questions, please use the raise hand command if you wish to ask it verbally or use the Q&A box if you're happy for us to submit it in a text format. If that's all, we will end the session here. Thank you for your attendance. Just a reminder that this has been recorded and will be made available on the Midway website at some point after today's presentation. Again, thank you for your attendance, and we wish you a good day.