GrainCorp Limited

Thank you for standing by and welcome to the GrainCorp Limited FY20 results conference call. All participants are in the listen-only mode. There will be a presentation followed by a question and answer session. If you wish to ask a question, you 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. Luke Thrum of GrainCorp.

Please go ahead. Thanks, Ari, and thank you, everybody, for joining us today. As Ari mentioned, we're going through our financial results for FY20, and joining me here today is Robert Spurway, our Managing Director and CEO, and Ian Morrison, our CFO. After the call, we'll have an archive of the webcast, which we'll put up on our website. I'll now hand over to Robert.

Thank you, Luke, and good morning, everyone. It's Robert Spurway here, Managing Director at GrainCorp, Indeed, good afternoon to those of you that are joining from time zones outside of Australia. Before we get into the presentation, I just wanted to take a couple of moments to reflect on my first eight months at GrainCorp. I've had 25 years in the food and agriculture industry, and one of the features of that industry is the resilience of people, and I've seen that loud and clear at GrainCorp. Our people, our growers are incredibly resilient. I've seen really great progress and I'm pleased with the result we've reported today in terms of the momentum we are developing across the business. In a word, there's a real sense of the business doing what we say we'll do and I think it's important to reflect on the fact that when I first started there was still smoke in Sydney and a very severe drought, in fact third year of drought across East Coast Australia. You'll see today our commitment as a more focused grain corp to be much more transparent about the business, the value drivers behind it and indeed the way we're able to comment on the future and the outlook and share with you aspects of our strategy. We are confident about the direction the business is heading in and in terms of some early observations, whilst it's been a disrupted year for many people around COVID-19, I've had the opportunity to get out and about around New South Wales and for a short period of time even into Queensland. And as a new chief executive, when you go out and meet people across the business, the one thing that most people have done when I get to a grain site or a port is they take me to the top of the silo to see the view. And over many, many months now, what was really apparent from the top of those silos is just the quality and the extent of the crop that was in the ground at that point. And it's really exciting to see that now starting to turn into harvest. And I'll talk about that through the presentation as I saw that firsthand just last weekend up in northern New South Wales. The other really compelling observation from the top of some of those towers was particularly at our ports. And that's the unique and incredibly high-value nature of the integrated assets we have. We are extraordinarily well-placed to collect grain in Australia. connect it through rail and through our port exports and port facilities and export it extremely efficiently. That combined with the wider assets we have in the business and our passionate, capable team is something that's really stuck with me in my first few months in the business. So as we get into the results, I hope you can see that commitment to greater transparency and the excitement and growing excitement we have about being into harvest on East Coast Australia. but at the same time the momentum and focus we're seeing across all parts of our business. For those of you following the presentation, we'll just move to page four now, which is headed Grain Corp at a glance. I thought it appropriate just to touch on that. We do have a set of high-quality strategic infrastructure assets, and we service customers worldwide. So beyond just talking about our reporting segments, I wanted to call out a few areas of the business. That integrated ECA network, the East Coast Australia network, is a leading bulk handling facility. It connects us with the world. It's supported by our processing assets, which I've described previously as being best in class, particularly our facilities at Namurka and West Footscray. We're very pleased with the progress that we're making in our joint ventures, and in particular the origination capability we have in Canada and indeed in the Black Sea. And our international business has done a tremendous job improving our resilience in that space, but also diversifying the number of markets that we trade with over the last 12 months, up from around 30 to more than 50 countries and over 340 customers. If we move to page five, which is the highlights, we are building momentum. It has been a year of transformation at GrainCorp. Our statutory... net profit after tax $343 million, reflecting the really significant work that's gone on in the business to de-merge United Malt Group. We've retained a stake in that business to provide additional financial flexibility. It's left us in a really strong position associated with the other restructuring, like the sale of the bulk liquid terminals. We are a new leadership team. You'll hear shortly from Ian Morrison, our CFO, who despite being appointed to the role only a few months ago has nearly 10 years of experience in our business and is very well placed to join me on the executive team to take us into the future. If we look at our F20 performance, underlying EBITDA for the continuing operations, significant turnaround and uplift in momentum, $108 million up from a loss of $107 million last year. That financial performance, as I touched on in the opening, is despite the third year of severe drought, and I think it's very important we remember that as we get into the excitement of the harvest currently underway. We are delivering on our promises. We've followed through on the operational initiatives, and we've delivered those and continue to see momentum as grain moves through our network, particularly in the agribusiness. We're delighted after two years to be able to declare a dividend of seven cents. I'll talk more about that as we get into the presentation. We are well positioned for growth and for the future. As I said, we've got a strong set of assets. We've got a conservative and very appropriate balance sheet with minimal core debt. We will talk about the confidence we have in the crop and the outlook and what that means, not just for F21, but F22. And we're also seeing strong global demand for grain and oilseeds, and Australian prices are very competitive in the world at the moment. So that's the strength we have right at the moment going into the current financial year. Moving to page six, just the headline summary. I've touched on the NPAT and the underlying EBITDA. We've also reported a small loss in underlying NPAT from continuing operations at a normalised level. As I said, really a feature of the drought but strong momentum that we're seeing in the business. The $0.07 dividend after two years represents the benefit of the crop production contract, the payment we received there, the strong balance sheet core debt of only $37 million, and indeed it's a sustainable approach to our confidence in future earnings and the business outlook. Also I want to touch on safety. It is critical to what we do. Of course, people make up a business and keeping our people safe and continuing to see that improve is an important part of our priorities. Moving to slide seven, COVID has been extraordinarily disruptive for many people and many sectors of the economy. Grain Corps, and a part of the economy, is a food and agricultural supply chain that's essential and somewhat isolated from that. We've worked very hard to make sure we protect our people, protect our business and in doing so protect our future. I want to call out a few things that we've been able to put in place through the year and indeed it moves to the heart of the capability and the innovation we have in some of our digital products that we've been able to accelerate the adoption of CropConnect and Fastway and move to a contactless harvest this season. That means it's a COVID-safe harvest for our people and our growers, and it's also a more efficient harvest, and I think ironically something that we've been able to accelerate as a result of really focusing on those safety aspects and efficiency aspects. Showing the confidence we have, we have employed over 3,000 harvest casuals, not only as we gear up and prepare for, but as we now get into the 2021 harvest. Importantly, through the year, we've sought nor received no government financial support, again underpinning the resilience of this business across all of our operating segments. Just on page eight around safety, I have a personal and absolute belief that all injuries are avoidable, and Grain Corp's belief is a commitment to zero harm. So really pleasing to see the improvement in our frequency rate across all types of injuries, That's really driven through the culture we're driving throughout the organisation, the strong safety management systems that we continue to invest in and improve. And importantly, it's about supporting the health and wellbeing of our people. And indeed, this year we've made sure that that also includes the mental health and wellbeing of our people in a year that's been somewhat disrupted for many. Sustainability on page nine is fundamental to everything we do at GrainCorp. It's critical to our growers' success and, of course, to our future. We're enormously proud of some of the progress that we've made this year, and I want to call out a few examples of how that's being embedded in our business. A future feed, which we've talked about previously, is a partnership with CSIRO. We genuinely believe it's a game changer in the animal feed industry, and as that comes to commercialisation, the opportunity to have a product that materially cuts methane emissions in the animal feed sector and increases productivity is exciting to be a part of. Diversity and inclusion as part of our commitment to wider ESG initiatives is also a big part of GrainCorp and we've got some fabulous diverse people across our workforce. This year we launched the Accord program which is an initiative to develop and celebrate women leadership across our business. The crop production contract I'll talk about specifically, that is unique. It's a very valuable product, delivering what we expect it to. By smoothing our cash flows, it provides enhanced long-term decision-making and an important part of our sustainability strategy. We've also continued to support communities, supporting the silo art movement and engaging with communities, including through sponsorship, and as I touched on earlier, supporting the recovery from the bushfires in Australia. Today, however, though, is of course a focus on F20, the financial year 20 results and the financial results. One of the things I'm really delighted with, as I said, is the momentum in the business, but on page 11, as you can see, the improvements are right across the business in all areas that we report. So that's very pleasing. It's great to see that momentum, and it's great to see our team delivering on those commitments that we've made. I'm going to hand across to Ian Morrison now, who you'll be hearing from for the first time, and he'll provide a little more detail, as we've committed to, around the segments, the way you should be thinking about the business, and indeed the outlook associated with that. So over to you, Ian.