GrainCorp Limited

Thank you for standing by and welcome to the Grand Corps Limited first half 26 result. All participants are in a listen-only mode. There will be a presentation followed by a question and answer session. If you would like to ask a question, you'll need to press the star key followed by the number one on your telephone keypad. I would like to hand the conference over to Robert Spurway, Managing Director and Chief Executive Officer. Please go ahead.

Thank you and good morning, everyone. Thank you for joining us. We're presenting to you today from Sydney and I wish to acknowledge the Gadigal people of the Eora Nation and pay our respects to elders and leaders past and present. This morning you'll hear from me with just some brief opening remarks including our half year performance and the operating context. I'll then hand to Ian Morrison, our Chief Financial Officer, who will talk through the detail of the first half financial performance and drivers, an update on our balance sheet and capital management and then I'll round out the conversation with an update on strategy and the progress we're making and some comments on the outlook. As I work through the presentation, I will update you on the pages we're on for those of you following online. So starting with the summary of the results on page six. It's been a disciplined half of execution and effective risk management and resilience in the current environment. A half-year underlying EBITDA of $136 million was reported today, delivered through strong operational performance across multiple areas of the business. We have a remaining strong balance sheet and importantly today we're reaffirming our guidance. As we've said before, we have seen a global oversupply of grains which have constrained margins in the first half of 26. We've also seen the evolution of the Middle East conflict. And today we want to share with you that there is sufficient fuel and fertiliser available for planting, despite input pricing remaining elevated. We'll make some comments on that shortly. But importantly, grain corp supply chain is operating as normal despite these geopolitical events. Well, I'll update you today on our strategy to deliver and drive long-term value creation. We continue to grow and diversify our earnings capabilities in bulk materials and animal nutrition. We're progressing release one of our business transformation program, and we'll provide some updates on that. And we're seeing positive momentum in the Agri-Energy Growth Initiative. So these and many other examples are areas that we capitalise on the attractive long-term fundamentals to create through the cycle value for shareholders. As I said at the start of this slide, today we are reaffirming our financial year 26 earnings guidance of between $200 and $240 million. Moving to slide seven, the numbers slide, which you can all read faster than I can keep up with you on. So I'll just call out some of the highlights on that. We've talked about the $136 million in underlying EBITDA for the half. We've also today, the board has declared an ordinary interim dividend of $0.14 per share fully franked. The operating highlights are important in terms of the metrics because they are, in many cases, the areas that we can control, particularly if you look at our oilseed crush volumes at 277,000, so continued strong performance in terms of the volume and inputs in that part of our business. with increased bulk materials handled from 1.2 to 1.5 million tonnes, and animal nutrition sales continue to grow up to 390,000 tonnes from 370 in the previous corresponding period. On page 8, I want to take a moment to talk to you about how we're responding to the evolving markets and controlling what we can control to manage risks and, importantly, to capitalise on opportunities. As we've previously communicated, the global grain markets have seen a cyclical oversupply of grain and resultant lower prices that have reduced grower selling activity and compressed margins across the value chains. The Middle East conflict saw some short-term disruptions of diesel and fertiliser, which have now stabilised, and as I said earlier, we're pleased to see good volumes available for the planting season now well underway. Grain Corp's supply chain, as I said earlier, continues to operate normally and will continue to work with government, industry and other stakeholders to monitor developments emanating from that conflict. In terms of the outlook, which I'll come back to at the end of the presentation, weather, of course, remains a key driver of growing planting decisions. Planting is now well underway for the 26 and 27 East Coast winter crop, with good soil moisture levels in southern New South Wales and Victoria, but rainfall required in northern New South Wales and South Queensland. How are we responding to the current environment? Reiterating what we said at the full year and indeed at the AGM, we are continuing to focus and accelerate cost reduction programs. We're driving operational efficiency to lower cost and improve performance across the business. We remain very focused on capital discipline, ensuring that capital is deployed in the areas where it can return the greatest results. We do continue to target investments and growth opportunities and diversify earnings. In terms of our portfolio optimisation, we announced at the full year the sale of our Grains Connect Canada joint venture, and we expect that to complete and close in the second half of financial year 26. We continue to review opportunities to improve returns across our portfolio. In summary, I'd say Grain Corp absolutely has a track record of demonstrating resilience and navigating disruptions, including the current disruption that we see in the Middle East. We've demonstrated that over the years, and both continue to manage the downside and identify and capitalise on opportunities as they arise. Returning to health and safety on page nine, Whilst, of course, it's frustrating to see our lost time injury rate up slightly and the overall injury rate broadly flat, we do remain absolutely committed to zero harm and it's something we manage not just on the half but daily, weekly and monthly as we crack out performance and focus on some of the lead areas and inputs. including reinforcing the fundamentals of pre-start site inspections and hazard identification and reduction. Sustainability on slide 10 for those of you following. It's been a half of good progress. We announced our commitment to the science-based target initiative and in the half we've released our first annual progress report demonstrating a 4.3% reduction in scope one and two emissions from the 22 baseline year. This year, of course, we will report at the end of the year against the ASRS standards, and we're well equipped and prepared for that. We've also joined the Climate Leaders Coalition, demonstrating, I think, the opportunities that exist for agriculture alongside the obligations that we have. And Grain Corp Next is a really good example of that where we align commercial and sustainability outcomes together. We're in year three of that program. We continue to expand the number of farmers engaged in it. We'll look to do so in the year ahead. And in a nice intersection of one of the venture investments we've made, we've launched BioScout units into that program. Just to remind you, BioScout is one of those initiatives that identifies disease early on farm, improving crop outcomes and therefore sustainability. We're delighted to see in the social areas the recognition of 10 years of silo art, especially across the communities we live and work in in regional Australia. and we continue to support those communities through our Grain Cork Community Foundation. I'm now going to hand to Ian Morrison to talk through the details of our financial performance in the first half and some of the drivers behind that. Over to you, Ian.

Thanks, Robert, and good morning all. I'll now move on to slide 12 with our summary of our financial performance for the first half. At a headline level, our agribusiness segment result was lower year on year, and that's mainly as a result of lower tons handled and margins in our East Coast Australia business. That was partially offset by an improved result in our international business. In nutrition and energy, a lower reported result year on year, Part of that reflects mark-to-market timing impacts on derivatives in the first half, and I'll come back to that more later. And also, we did see lower edible oil sales volumes and a lower agri-energy contribution. I'll come back to a more detailed update on the two-segment results shortly. Pleasingly, our underlying corporate costs were in line with the prior period as we look to maintain a strong focus on costs in general. There are two items highlighted here that we've excluded from underlying EBITDA as we'd highlighted in our earnings guidance back in February. The first one being the business transformation OPEX costs of 17 million and broadly consistent with the prior year half. And also in this half, we've recognized an estimated 16 million loss on the exit of our stake in Brains Connect Canada, which we expect to complete in the second half. And just other call-outs on this summary, our interest expense was lower in the first half, and that's as a result of lower commodity volumes, but also a commodity mix that on balance had lower values. I'll now move on to slide 13 and our agribusiness segment, starting off with East Coast Australia. We saw total grain production of 34.9 million metric tonnes reported by ABERJ for 2025-26, and that's in line with the 34.7 from the prior year. Carry-in of 2.3 million tons in our network was slightly lower than the prior year, and overall total grain handled was 26.5 million tons. A key feature of this year's volumes and overall performance has been the strong global grain production and associated low pricing for grain. This had an impact on grain being brought to market and being delivered to our network, seeing lower receivables year on year, and it also had an impact on margins in our ECA business. Despite these headwinds from market impact, our ECA business operational performance has been really strong in the half. And in particular, I'd like to call out our ports that executed 3.3 million tons of exports in the half, and that's actually ahead of the prior year half of 3.2 million tons. Also to call out in the ECA results, it includes an impact, a P&L impact of $8 million from the crop production contract, and $6 million of that being the annual premium, and $2 million being a fair value movement. And just as a reminder, there was no cash payout against the contract over and above the premium as we've reached the cumulative cap under that last year. Finally, in line with our strategy, we continue to focus on diversifying our revenue streams through the utilization of our ports for bulk material handling. And it's pleasing to see in the first half another strong performance from that part of our business with an increase in volumes from 1.2 million tons up to 1.5 million tons this year. I'll now move over the page to slide 14, and our international business. A record West Australian crop resulted in an improved financial contribution from our international business. In particular, we capitalized on a good opportunity off the back of strong demand for barley at a WA in the half. Moving on to Grains Connect Canada, and as I touched on earlier, back in December, we signed a sale agreement to sell our 50% share of Grains Connect Canada to following the completion of a strategic review of that business, and the transaction is now nearing completion, which we expect to cut in the second half of 26. I'll now move on to our nutrition and energy segment on slide 15. We've continued to see strong crush volumes in the half, with 277,000 tons of canola crushed, and that's in line with the prior half year In terms of margins, underlying crush margins are relatively flat year on year. However, the timing of mark-to-market and movements on derivatives has impacted the reported results in this half. You may recall me last year referencing timing impacts in the opposite direction. So I'll just briefly explain what's driving that. At this point in the year, we will have bought the seed for crushing for the full year, and we'll also have largely sold the meal for the year. But we would still have a portion of oil to sell. So to hedge that risk against unsold oil, we would enter into derivatives to, in essence, hedge that price risk. But under accounting rules, we mark to market the derivatives at the point in time based on the values. But the unsold seed and oil, we hold at cost. So with the rise in values we've seen over the last couple of months, that's led to a mark to market loss being recorded on the derivatives. But we would expect that to unwind in the second half as we effectively realize a higher margin on the sale of oil in the second half. And overall, we'd expect our reported FY26 crush margins to be broadly in line with 25. Also, in human nutrition, though, we did see edible oil sales volumes lower than the prior period. and that's off the back of some softer customer demand, in particular for bulk oils. Now, moving over the page onto agri-energy and animal nutrition. Agri-energy sales volumes were lower in this half, and that's off the back of demand into renewable fuel sector amidst U.S. biofuel policy uncertainty, and that's also had an impact on margins in the period. However, the Middle East conflict has seen oil refining margins globally rise, and the U.S. has also announced its biofuels policy, and both of those factors have seen sentiment improve for the second half in the agri-energy segment. Now, moving on to animal nutrition. It's pleasing to report record sales volume in the half, which have increased 5% year on year. And that's off the back of larger herd size in Australia, boosting demand for liquid feed supplements. We're also continuing to see strong demand from the dairy sector in New Zealand with the continued strong milk price. I'll now move on to balance sheet and capital management. starting off on slide 18. We finished the half with a core cash position of 163 million, and that's down on the balance at prior year end, but remains in a strong position overall. Year on year, our core cash is lower as a result of investment in the business and noting the strong ongoing capital returns we've delivered to shareholders over the past 12 months. On the right-hand side, you can see a graph of net working capital. And as is typical at this time of the year, you can see that we're at the peak of the working capital cycle at the half-year point. And that's partially reflecting the strong export program I talked about earlier that we've seen in recent months. We'd anticipate this net working capital balance to unwind in the second half of FY26. similar to what we saw last year. Overall, our balance sheet remains in a strong position and gives us the flexibility to continue investing for growth and providing returns to shareholders. Now moving on to CapEx and DNA. So firstly, with CapEx, $30 million in the first half of 2025, and that includes sustaining CapEx of $15 million slightly lower relative to the prior half in ECA, and that's off the back of lower receivables partly. For the full year, we're expecting total capex across the group to be in the range of 85 to 90 million off the back of various investments across the business. That 85 to 90 million includes the upgrade underway at West Footscray that we provided an update on back at our year-end results in November. On the right-hand side in relation to DNA, the first half of 26 is slightly below what we saw at the first half last year with some assets rolling off their useful life and things like tarpaulins, which have shorter useful lives. And then in terms of looking ahead to the second half, we'd expect DNA to be modestly up from the first half. Now, moving on to slide 20 and shareholder returns. As Robert noted earlier, the board has declared an ordinary dividend of 14 cents per share fully franked for the half. In line with our capital management framework, that ordinary dividend is based on through the cycle earnings. And the declaration of that $0.14 per share continues our strong track record of capital management and returns to shareholders. We'll continue to assess capital management against growth opportunities in line with our capital management framework. And just moving on to slide 21 and a summary of the half-year results and updates. Our teams delivered a strong operational performance in a challenging margin environment and that's allowed us to report the $136 million of underlying EBITDA for the half. Our balance sheet remains strong with $163 million of core cash at the half. We continue our strong track record of shareholder returns by declaring a $0.14 ordinary dividend for the half. And finally, we are reaffirming our FY26 earnings guidance for underlying EBITDA of $200 to $240 million and underlying NPAT of $20 to $50 million. With that, I'll now hand back to Robert to give an update on strategy.

Thank you, Ian. So at page 23 in our PEC, we've reiterated our strategy. which I expect many of you are familiar with. It highlights our ambitions and enhance, expand and evolve. And over the next few slides, I'll share some progress points, proof points and examples in our program with you. But first, on page 24, I do want to remind you of the very attractive long-term fundamentals that BrainCorp is exposed to. In the top left hand corner of that chart you can see the growing population in Australia's 20 largest grain export markets. For those of you that follow us closely and see that chart, you'll notice that the population has increased significantly over what we've reported previously, and that's a result of growth in export flows to India and inclusion of India in that top 20. I think that underpins and highlights the excitement we have about the growing population and the very strong correlation, of course, between population growth and demand for our products in food, feed and biofuels. Supplies also increasing, as we've said in the bottom left-hand side of the chart. Despite volatility in Australian crops, the long-term average remains very solid at 2.9% annual growth over a 10-year rolling average, and the chart here goes back about 30 years that shows the consistency of that growth over time. And it's testament to the investment that farmers make and the capability they have managing the environment and producing better yields and better crops. On the top right-hand side of the slide, we have diverse and attractive end markets. Not only are they growing, but their diversity provides optionality for companies like GrainCorp, and we do a good job at capitalising on those opportunities as they come along. Finally, on the right-hand bottom slide, the demand for growing nutrition and in particular protein consumption across the globe and in particular in the markets close to us across Asia has seen an increase in the cattle on feedlot in Australia, the demand for feed for those cattle, but also demand for feed into markets in Asia that are consuming that protein. So very strong and attractive fundamentals. We go to page 25 and some examples of how Grain Corp is capitalising on that. I touched earlier on the growth we've seen in our bulk materials handling, up to 1.5 million tonnes in the half, as we continue to enhance and fully utilise the port assets that we have and identify opportunities to increase onsite capacity and product offerings to customers in that space. Ian mentioned briefly the $30 million upgrade that we're completing on key equipment at our West Footscray plant that will complete through financial year 27. That will lower our ongoing operating costs and improve product quality for customers and create a more sustainable operating footprint. Finally, on animal nutrition, we're frank before our expansion at Kyson in Victoria. Our animal nutrition portfolio is supported by those strong industry fundamentals and GrainCorp, our assets, and importantly, our team, are capitalising on that, demonstrated through the growth we've seen in volumes half on half. Our business transformation on page 26. Just to recap on the overall rationale for the program, we're looking at our business end-to-end, looking at how we unlock efficiencies and drive returns, and we're also using it as an opportunity to address an end-of-life version of SAP and upgrading that. In terms of progress in the half, the technical build of the SAP upgrade is complete, with testing now underway ahead of deployment. We expect deployment in the second half of 26. Importantly, the business-wide program is designed to deliver savings, and we flagged at the full year our expectation of a run rate exit from 26 of 5 to 10 million savings, and I'm pleased to confirm today that that is well on track, and overall we expect to deliver 20 to 30 million in EBITDA uplift on our through-the-cycle earnings following the program completion. We've been able to accelerate those benefits through running them in parallel with the build of the technical program and leveraging the capability and learnings we make as we look at all parts of our business. Finally, in terms of key strategic initiatives, renewable fuel understandably has had a lot more focus over recent months as we look to the importance of sovereign capability and sustainability in Australia. We already are exposed to significant opportunities in agricultural waste products and feedstocks, including the used cooking oil we handle. And we were encouraged by the announcements in the federal government budget earlier this week around a commitment to introduce demand-side measures for low-carbon liquid fuels. And, of course, ARENA is open to applications in their $1.1 billion cleaner fuels program. Specifically, our progress in that space is leveraging our existing position as a leading supplier of Australian feedstocks. We're working closely and strongly aligned with our MOU partners, Ampol and IFM, to develop a renewable fuel refining supply chain, and the business context of that is being developed to underpin the initial investment process. In summary, the conditions are strong, the fundamentals are there, and we're working hard with our partners to bring that to fruition. I want to just finish on some comments around our outlook. We are today reaffirming our earnings guidance of between $200 and $240 million at EBITDA and underlying net profit after tax of between $20 and $50 million. As we've said, we have seen a market that has seen strong supply of grain and oilseeds, and we'll be watching how that develops, evolves and changes over time. Grain and oilseed prices have increased following the outbreak of conflict in the Middle East, and that's reflective of commodity markets recognising the higher input costs and providing resilience in terms of the model that GrainCorp operates in. Favourable planting conditions exist in Victoria and southern New South Wales and planting is well underway in those regions. We do expect that northern New South Wales and Queensland will require ongoing autumn and winter rainfall and we are encouraged by the short-term forecast and along with growers, we'll be looking for more follow-up rain in those regions in the coming weeks and months. ABEZ provide their first estimate of the 26-27 crop on the 2nd of June and of course the weather between now and harvest remains as always important. Just on page 30 I do want to finish by reminding you of our through the cycle track record of earnings and in particular the very significant upside leverage that we have when conditions allow. We've demonstrated repeatedly our ability to access those opportunities and deliver the results, and we have confidence in our through-the-cycle average earnings of $320 million as we look forward from where we are today. In closing, on page 31, BrainCorp has demonstrated its ability to respond to variable conditions. We have very attractive long-term fundamentals in the markets in which we operate, Our strategic infrastructure assets are of extraordinary value as we capitalise on those opportunities. We've demonstrated supply chain resilience. We have a strong balance sheet, disciplined capital management and a track record of shareholder returns. Thank you for your time today. I'll now hand back to the moderator for any questions.

Thank you. If you would like to ask a question, please press star 1 on your telephone or if your name to be announced. If you would like to cancel your request, please press star 2. If you are on a speakerphone, please pick up the handset to ask your question. Your first question today comes from Owen Birrell from RBC. Please go ahead.

Good morning, guys. A few questions from me. The first one, I just wanted to focus on your core cash position. It looked like it was somewhat lower than we and I guess the broader market was expecting. I can acknowledge the lower EBITDA initial impact there. But I'm wondering if you could talk a little bit more about – I know you've talked about the derivative impact in terms of the mark-to-market. Can you firstly just confirm that you expect – or how much of that impact do you expect to revert in the second half? And can you also talk to the working capital movement in that core cash? Because, you know, what is that representing because given that inventories are excluded from the core cash definitions?

Yeah, I can take that one, Owen. Thanks for the questions. I'll start off with the core cash. So back on slide 18, if you look at the networking capital graph on the right, so you're right that commodity inventory is excluded. But remember that once the inventory comes out of effectively our commodity inventory funding facilities and moves into effectively an export task, It is still typically up to a 21-day period where you've effectively got export sales to be collected. So it moves into the data book effectively. So that's where you see that cyclicality of networking capital. As I touched on earlier in the call, the strong export program we saw in the first half, that means we do have higher typically, and that is normal at the half year. You can see on the right-hand side of page 18, it was pretty similar last year in terms of the working capital balance. And then you can see a fairly significant unwind into the second half last year, and we'd expect to see that again into the second half. And so I think that covers off the core cash question. In terms of the mark to market of derivatives, we'd expect that to fully unwind into the second half. The year on year movement is is more exacerbated because last year we had the opposite effect. You might recall me calling out that actually the first half result for nutrition energy was slightly stronger than expectations as a result of, in essence, values being lowered over the period into the half and therefore having gains on the derivatives. So we actually had a relatively speaking, heavier weighting to the first half than typical in G&E last year, whereas this year in nutrition and energy, we'd actually expect to see a stronger second half overall, which isn't typical, and that's just the impact of the derivatives and the unwinding of that.

Can I also ask, there's a 17 mil impact from the business transformation costs in the period in terms of cash flow. Are there any other sort of one-offs that you're expecting to come through into the second half that we should be aware of?

No, just the two items we've identified of business transformation and grains connect.

Okay, excellent. Just a second question for me, just on the agribusiness. I guess your trading updates through December and into February were sort of highlighting the increase in on-farm storage and the lack of those grains coming to market because of softer global pricing. Robert, you mentioned that global pricing has been improving. Just wondering whether that has instigated some of that on-farm storage to come to market or is it likely being offset by higher freight costs and therefore the margins to the farmers are just not attractive yet?

It's a little bit of all of the above and other factors, Owen, including the outlook for next year and the decision farmers will make around that. So I think it's a little bit early to call what's actually happening there. As Ian said, we're seeing strong export volumes. We are seeing the market switch more to domestic demand in Australia, which is as we expected. And I think it'll be over the next... number of weeks and arguably the next couple of months as the outlook for the crop develops and becomes more certain where you'll see where the market in Australia heads. There's still been a reasonably strong correlation between Australia and global markets as you'd expect because the conflict in the Middle East of course impacts all markets and as I've touched on we'll also be watching the outlook for the Northern Hemisphere crop Just earlier in the week, USDA came out indicating some dryness in North America. Some other sorts of early signals we'll look at as to the timing of effectively the cyclical return to a more normal supply-demand balance, which fundamentally drives prices and therefore margins in the grain sector.

Can I ask just on that supply side from Australia? We're seeing higher diesel costs, we're seeing higher first costs. Have you seen any or have you witnessed any change in the way that farmers are planting in the early period in Victoria and southern New South Wales in terms of the types of crops they're planting or the acreage that they're planting as a result of those impacts?

Again, it's a little early to have that view. We'll be seeing what intel that ABARES might have on that. We are very well connected, of course, directly to farmers, and the short answer would be no material changes in that. As I said, the reports are that they all have sufficient fertiliser to cover planting. Diesel shortages that were reported back in May late March and early April have abated so there's plenty of diesel and certainly the farmers I've spoken to directly in the last couple of weeks have been well underway in southern regions with a full plant and a typical rotation of the sort of crops that they've put in. So we're encouraged by the resilience of the sector in that respect.

That's great. Thank you.

Thank you. Your next question comes from a port of Seagal from Jardin. Please go ahead.

G'day. Good morning, Rob and Ian. Just on the nutrition and energy segment, please. So through the cycle, you've looked after that segment, it's about $117 million, roughly. That's just implied from your pie chart. Now, the 46 mil in the first half, clearly there's a material impact on the derivative market, which sounds isolated. You've got Canadian sort of board crush margins at pretty strong levels at the moment. and the agri-energy policy might be a bit better short term. So Ian, is that 117 mil through the cycle outcome actually achievable for Fi26 with a strong second half, or do you think we still fall a bit short?

Thanks, Aparv. I can take that question. Probably we'd expect to be lower than through the cycle in the second half, although crush margins are probably probably pretty similar year on year and really the impact in the first half is more timely. Crush margins would still be a bit below through the cycle and we call that out at the time of guidance in terms of effectively the lower canola crop in southern regions and the impact that has and then also you are seeing pretty strong crops globally from a canola and soybeans. So that was the kind of backdrop for this year, and a lot of that has been set. In terms of looking forward, though, you're right that the fundamentals are definitely improving. So you're seeing values improve and demand into the renewable fuel sector grow. improve off the back of just energy prices. So that's certainly a positive. And cropping conditions in the south have got off to a positive early start. So that's also favorable in terms of canola planting and canola crop. But it's also pretty early to talk to 27 and what the margins might look like. So hopefully that kind of covers the crushing side. And in terms of agri-energy, The first half was a weaker result. We would expect better performance in the second half with sentiment improving and that improved clarity on biofuel policy in the U.S. But the first half lower earnings relative to prior year and relative to through the cycle, we probably wouldn't expect to fully recover that in the second half unless margins improve quite considerably. Hopefully, that gives you a little bit of colour of the main drivers and where we'd expect things to come through into the second half.

Sure. And this is the cross ladder, like the Canadian... forward crush margins are powered to record highs and some of the producers there are talking to a pretty positive outlook. Are you seeing that improved crush margin outlook in the last couple of months as we speak or is it a case that what's happening in the northern hemisphere is one thing but it's all about the domestic either coast crop over here and we've had a bit of tightness so we have to wait and see what the upcoming canola crop here looks like.

Probably more of the latter. At this stage, you wouldn't have a good visibility of actually being able to buy any real amount of new crop seed. So just from a liquidity point of view and point of view in the year. you can't really quite get ahead to FY27 crush margins. It's just too early. And that's just point of view. But certainly from a global perspective, you're definitely seeing improved crush margins in all of the Northern Hemisphere regions, which is certainly positive, but the East Coast conditions and how things develop in terms of new crop and then where our demand points at at that point in time in terms of into export markets, that will have a bigger bearing on crush margins as we look into 27.

Okay, that's great. Can I give it to the ERP, Business Transformation Program, please? So Release One Spend, In total, if I sum up the numbers in your present, it looks like it's going to be about $105 million, like from the start of when you began Release 1 to the outlook. I'm curious on Release 2. When does spending begin for that, and how is the spend likely to compare versus Release 1? I think in the past, if I'm not mistaken, it's been suggested that Release 2 could be a bit above the Release 1 spend number.

I can take that one. We hadn't indicated that previously in terms of being above. At this stage, we're just fully focused on delivering release one and having put in place the firmed up plans for release two. We'll definitely take a measured and disciplined approach to how we tackle that.

as Robert has seen strong supply of grain and oilseeds, and we'll be watching how that develops, evolves, and changes over time. Grain and oilseed prices have increased following the outbreak of conflict in the Middle East, and that's reflective of commodity markets recognising the higher input costs and providing resilience in terms of the model that GrainCorp operates in. Favourable planting conditions exist in Victoria and southern New South Wales and planting is well underway in those regions. We do expect that northern New South Wales and Queensland will require ongoing autumn and winter rainfall and we are encouraged by the short-term forecast and along with growers we'll be looking for more follow-up rain in those regions in the coming weeks and months. ABEZ provide their first estimate of the 26-27 crop on the 2nd of June and of course the weather between now and harvest remains as always important. Just on page 30 I do want to finish by reminding you of our through the cycle track record of earnings and in particular the very significant upside leverage that we have when conditions allow. We've demonstrated repeatedly our ability to access those opportunities and deliver the results, and we have confidence in our through-the-cycle average earnings of $320 million as we look forward from where we are today. In closing, on page 31, BrainCorp has demonstrated its ability to respond to variable conditions. We have very attractive long-term fundamentals in the markets in which we operate, Our strategic infrastructure assets are of extraordinary value as we capitalise on those opportunities. We've demonstrated supply chain resilience. We have a strong balance sheet, disciplined capital management and a track record of shareholder returns. Thank you for your time today. I'll now hand back to the moderator for any questions.

Thank you. If you would like to ask a question, please press star 1 on your telephone or if your name to be announced. If you would like to cancel your request, please press star 2. If you are on a speakerphone, please pick up the handset to ask your question. Your first question today comes from Owen Birrell from RBC. Please go ahead.

Good morning, guys. A few questions for me. The first one, I just wanted to focus on your core cash position. It looked like it was somewhat lower than we and I guess the broader market was expecting. I can acknowledge the lower EBITDA initial impact there, but I'm wondering if you could talk a little bit more about, I know you've talked about the derivative impact in terms of the mark-to-market. Can you firstly just confirm that you expect, or how much of that impact do you expect to revert in the second half? And can you also talk to the working capital movement in that core cash? Because, you know, what is that representing because given that inventories are excluded from the core cash definitions?

Yeah, I can take that one, Owen. Thanks for the questions. I'll start off with the core cash. So back on slide 18, if you look at the networking capital graph on the right, so you're right that commodity inventory is excluded. But remember that once the inventory comes out of effectively our commodity inventory funding facilities and moves into effectively an export task, And that is still typically up to 21 day period where you you've effectively got export sales to be collected. So it moves into the data book effectively. And so that's what you that's where you see that cyclicality of networking capital. As I touched on earlier in the call, the strong export program we saw in the first half, that means we do have higher typically, and that is normal at the half year. You can see on the right-hand side of page 18, it was pretty similar last year in terms of the working capital balance. And then you can see a fairly significant unwind into the second half last year, and we'd expect to see that again into the second half. So I think that covers off the core cash question. In terms of the mark-to-market of derivatives, we'd expect that to fully unwind into the second half. The year-on-year movement is more exacerbated because last year we had the opposite effect. You might recall me calling out that actually the first half result for nutrition energy was slightly stronger than expectations as a result of in essence, values being lower over the period into the half and therefore having gains on the derivatives. So we actually had, relatively speaking, heavier weighting to the first half than typical in G&E last year, whereas this year in nutrition and energy, we'd actually expect to see a stronger second half overall, which isn't typical, and that's just the impact of the derivatives and the unwinding of that.

Can I also ask, there's a 17 mil impact from the business transformation costs in the period in terms of cash flow. Are there any other sort of one-offs that you're expecting to come through into the second half that we should be aware of?

No, just the two items we've identified of business transformation and Grains Connect.

Okay, excellent. Just a second question for me, just on the agribusiness. I guess your trading updates through December and into February were sort of highlighting the increase in on-farm storage and the lack of those grains coming to market because of softer global pricing. Robert, you mentioned that global pricing has been improving. Just wondering whether that has instigated some of that on-farm storage to come to market or is it largely being offset by higher freight costs and therefore the margins to the farmers are just not attractive yet?

It's a little bit of all of the above and other factors, Owen, including the outlook for next year and the decision farmers will make around that. So I think it's a little bit early to call what's actually happening there. As Ian said, we're seeing strong export volumes. We are seeing the market switch more to domestic demand in Australia, which is as we expected. And I think it'll be over the next, number of weeks and arguably the next couple of months as the outlook for the crop develops and becomes more certain where you'll see where the market in Australia heads. There's still been a reasonably strong correlation between Australia and global markets as you'd expect because the conflict in the Middle East of course impacts all markets and as I touched on we'll also be watching the outlook for the northern hemisphere crop Just earlier in the week, USDA came out indicating some dryness in North America. So that's the sorts of early signals we'll look at as to the timing of effectively the cyclical return to a more normal supply-demand balance, which fundamentally drives prices and therefore margins in the grain sector.

Can I ask just on that supply side from Australia? We're seeing higher diesel costs, we're seeing higher FERTS costs. Have you seen any or have you sort of witnessed any change in the way that farmers are planting in the early period in Victoria and southern New South Wales in terms of the types of crops they're planting or the acreage that they're planting as a result of those impacts?

Again, it's a little early to have that view. We'll be seeing what intel that ABARES might have on that. We are very well connected, of course, directly to farmers. And the short answer would be no material changes in that. As I said, the reports are that they all have sufficient fertiliser to cover planting. Diesel shortages that were reported back in May late March and early April have abated so there's plenty of diesel and certainly the farmers I've spoken to directly in the last couple of weeks have been well underway in southern regions with a full plant and a typical rotation of the sort of crops that they've put in. So we're encouraged by the resilience of the sector in that respect.

That's great. Thank you.

Thank you. Your next question comes from Paul Segal from Jarden. Please go ahead.

Good morning, Rob and Ian. Just on the nutrition energy segment, please. So through the cycle, you've been down to that segment, about $117 million roughly. That's just implied from the pie chart. Now, the 46 mil in the first half, clearly there's a material impact from the derivative mark to market, which sounds isolated. You've got Canadian sort of board crush margins at pretty strong levels at the moment. and the agri-energy policy might be a bit better short term. So Ian, is that 117 mil through the cycle outcome actually achievable for FY26 with a strong second half, or do you think we still fall a bit short?

Thanks, Aparv. I can take that question. Probably we'd expect to be lower than through the cycle in the second half, although crush margins are probably pretty similar year on year and really the impact in the first half is more timing. Crush margins would still be a bit below through the cycle and we called that out at the time of guidance in terms of effectively the lower canola crop in southern regions and the impact that has. And then also you are seeing pretty strong crops globally from a canola and soybeans. So that was the kind of backdrop for this year and a lot of that has been said. In terms of looking forward though, you're right that the fundamentals are definitely improving. So you're seeing values improve and demand into the renewable fuel sector improve off the back of just energy prices. So that's certainly a positive and cropping conditions in the south have got off to a positive early start. So that's also favorable in terms of canola planting and canola crop. But it's also pretty early to talk to 27 and what the margins might look like. So hopefully that kind of covers the crushing side. In terms of agri-energy, the first half was a weaker result. We would expect better performance in the second half with sentiment improving and that improved clarity on biofuel policy in the US. But the first half lowered earnings relative to prior year and relative to through the cycle. We probably wouldn't expect to fully recover that in the second half unless margins improve quite considerably. Hopefully that gives you a little bit of color of the main drivers and where we'd expect things to come through into the second half.

Sure. And just the crush margins, like the Canadian board crush margins are powered to record highs and some of the producers there are talking to a pretty positive outlook. Are you seeing that improved crush margin outlook in the last couple of months as we speak? Or is it a case that what's happening in the Northern Hemisphere is one thing, but it's all about the domestic East Coast crop over here and we've had a bit of tightness. So we have to wait and see what the upcoming canola crop here looks like.

Yeah, it's probably more of the latter. At this stage, you wouldn't have a good visibility of actually being able to buy any real amount of new crop seed. So just from a liquidity point of view and point of view in the year, you can't really quite get ahead to FY27 crush margins. It's just too early. And that's just point of view. But certainly from a global perspective, you're definitely seeing improved crush margins in all of the Northern Hemisphere regions, which is certainly positive. But the East Coast conditions and how things develop in terms of new crop And then where our demand points at that point in time in terms of into export markets, that will have a bigger bearing on crush margins as we look into 27.

Okay, that's great. Can I pivot to the ERP business transformation program, please? So release one spend. In total, if I sum up the numbers in your present, it looks like it's going to be about $105 million, like from the start of when you began Release 1 to the outlook. I'm curious on Release 2, when does spending begin for that and how is the spend likely to compare versus Release 1? I think in the past, if I'm not mistaken, it's been suggested that Release 2 could be a bit above the Release 1 spend number.

I can take that one. We hadn't indicated that previously in terms of being above. At this stage, we're just fully focused on delivering Release 1 and having put in place the firmed up plans for Release 2. We'll definitely take a measured and disciplined approach to how we tackle that. As Robert touched on earlier as well, we're very much focused on how we deliver benefits from overall business transformation over and above just what we would get from an ERP implementation. So we'll certainly take a much more measured and disciplined approach and be careful about how we commit to future releases of the overall implementation. But is the likelihood... Yeah, sure.

Sorry, Rob.

Sorry. We're very focused on leveraging the investment to deliver the results, which is why we're comfortable to signal the $20 million to $30 million in our confidence in that as we complete certainly the major part of the program in Release 1. And as Ian said, any further investment in Release 2 is still subject to business case, and that business case would obviously need to identify the fundamental reasons why we're progressing on what basis and cost and therefore what returns we'd be able to achieve. So that's how we're looking at it.

So as a base case though, is release two likely to actually go ahead at all?

Look, I think if we look at where we're at now, it's not likely to be a big feature of the next 12 months. As Ian said, our focus is on release one and benefits realisation. But of course, all subject to business case As we've said, release one throughout its journey has taken a little longer than we originally envisaged. It's therefore cost a little more, which has allowed us to really learn from that, but focus on accelerating the benefits. And I think that's the confidence we have that we've approached it in a measured and risk-managed way to ensure that the benefits are there and We're pleased today to be able to reiterate that run rate exit from 26 and our confidence in the forward full savings and benefit of our overall transformation.

Okay, and one final quick one just for Ian. Just to follow up from an earlier question, the network and capital balance, so you said that'll unwind into the second half, similar to what we saw last year. Are you indicating that the net working capital position at September should be broadly stable year-on-year, or is it still going to reflect a reasonable step up? I'm just trying to get a sense for how the net cash position should look like by September.

We'd probably expect the closing position to be broadly in line with what we saw last year. Look, I'll always caveat that, though, it depends on export vessels. One individual vessel can be anywhere between 30 and 60 million, depending on the commodity and value. So I'm always wary of calling a specific lens on it. But typically, we'd expect the balance we finished last year end to be about a normal balance at a 30 September date.

Thanks, guys. Appreciate the time.