Ridley Corporation Limited

Thank you for standing by and welcome to the Ridley Corporation Limited full year 26 results presentation. 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 start key followed by the number 1 on your telephone keypad. I would now like to hand the conference over to Mr. Quinton Hildebrand, Managing Director and CEO. Please go ahead.

Thank you. Good morning to you all, and thanks for your attendance today. Chris Hofferman and I will be pleased to provide you with our financial performance for the 2026 financial year and the progress that we have made on the strategic front. We'll be talking to the slides that were uploaded on the ASX website this morning, starting at page two. FY26 was a year of growth for RIDNY. We purchased the Incitec for the fertilizers business successfully acquiring just the distribution business and getting it for a good price. Today, Ridley is a truly diversified agricultural business, providing more resilience and significant opportunity. Importantly, we operate at scale, with the number one position in the markets in which we operate. With the acquisition has come a step change in our earnings, almost doubling our earnings base, and we're achieving this with a purposely optimized capital structure of debt and equity. As we grow rigidly, the board is attuned to the need for us to have the people to make success of it, and we are deliberately enhancing our leadership capability and have established a PMO to execute on the integration and resetting of IPF. All this is with the purpose of delivering for you, our shareholders, through EPS growth, and the payment of a progressive dividend. And for this high earnings accretive acquisition, we conducted a capital raise through Anandria, providing all shareholders with the opportunity to participate. With the scaling of Ridley, the capability we have developed and support of shareholders, we have a platform for future growth. Moving to slide three, our FY26 financial highlights. Our underlying EBITDA lifted 61.8% to $157.8 million on the back of nine months earnings contribution from fertilizers at the high end of expectations and earnings growth in bulk stock feeds as well as the package feeds business units. It was just our ingredients business that underperformed as we spoke of at the heart. Seasonally, our cash generation was strong. which resulted in a headline leverage of 0.85 times which post acquisition was well down on the anticipated 1.3 to 1.4 times. The underlying NPAT ROFI was down at 8% which reflects the inclusion of the fertilizer ownership for just nine months. A final dividend of 5.35 cents per share fully franked reflects a payout ratio of 64% of underlying NPAT. These financial results include a number of ISIs associated with the acquisition. Uniquely, the gain on bargain purchase, which was offset by acquisition costs, integration and restructuring costs, but I'll leave that for Chris to take you through in detail. And we have also taken a non-cash impairment on Novac Pro. With the growth of Wrigley, Novac Pro is a diminished focus for the business. We continue to operate Novac Pro and seek strategic partners, but a write-down to Xero is considered the right course of action. Moving to slide four, to run through each of the business units. The fertilizer business unit achieved an EBITDA of $72.2 million in the first nine months of its acquisition. This was a pleasing result, and the IPF team have done a particularly good job in sourcing urea supply on the global market to replace the supply contracts that we had with Middle East producers. We benefited from higher margins as global fertilized prices rose, but this was partially offset by lower volumes as high prices in their time is to reduce demand. In the first nine months of ownership, we've restructured the business into a regional distribution model and reduced the number of roles in this business unit by 65. I will cover off in more detail on the other integration progress later in this presentation. For the avoidance of doubt, there was no earnings impact from the fuel and fertiliser security facility in FY26 and I'll cover this off on the next slide, page 5. The fuel and fertilizer security facility was established by the federal government in response to the concern that Australian farmers would be short of fertilizer for the upcoming season with the closure of the Strait of Hormuz, through which Australia was reliant for 60% of its urea. As reflected in the graph, global urea prices reacted after the start of the conflict on the 28th of February, and it became very risky for us and other importers to continue buying very expensive urea for the upcoming season. The questions at the time were, when will the war end? When will the price drop? What demand destruction would there be for farmers as they make alternative decisions with the high prices? All of this leading to corporate conservatism when making import decisions. So government intervention was necessary. We were invited to participate along with others, some of whom took it up and others who chose not to. And we entered into contracts for difference, CFDs, on four urea shipments. And under this arrangement, we got protection in a falling market and gave up gains in a rising market. These CFDs all settled in June and July, but none of the product from these four shipments was sold in FY26. Moving to slide 6, the bulk stock feed segment delivered an EBITDA of $50.3 million, up 5% year-on-year, which is also a pleasing result when you consider the $3.5 million in earnings from the Wasley feed mill, which was sold on the 30th of 2025. The drivers for this growth were increasing volumes, 7% in monogastric sales and 4% in rumen sales as we continue to support the growth of our customers and win over new customers. Our procurement team also did a good job navigating the volatile markets, supporting good margins over the full year. All in all, another very sound performance in bulk stock bids. Moving to slide seven, The packaged and ingredient segment delivered an EBITDA of $51.6 million. This was down $11.4 million year-on-year after being $10.1 million down at the first half. As described in February, we had operational challenges at Maruta with one process dam inoperable for the full year up until the last week of June. and at Pongol at Timaru where the design issues have hampered the commissioning of the greenfield plant and we've been steadily resolving these over the financial year. We also had ovine constraints as lamb slaughter numbers have been down across the industry impacting OMP. The bright spot in this segment was the packaged feeds business unit which grew year on year with the biggest contributor to this growth coming from the packaged dog food where we have grown 33% on the supply of existing and new private label contracts and the improved throughput rates of the plant. I'll now hand over to Chris who will take you through the financial results in more detail. Thank you, Corrigan. Good morning.

I'm starting on slide nine, the profit and loss. The groups for interest tax depreciation and amortization, EBITDA, and significant one-off items for the financial year 2026 were $157.8 million, up $16.3 million from the prior corresponding period. Clinton already covered the performance of our three business units, so I'll also go through the rest of the program loss, starting with corporate costs of $16.3 million, that were up $3.1 million for the period. This increase was mainly due to the combination of incentive payments across the larger employee base, and is set up in governance-related spend for their large segments following the acquisition of Inspectorate fertilisers during the first half of 2026. Appreciation and amortisation of $43.4 million increased $13.1 million due to the fertiliser take-home balances, in particular the larger leased asset base rate of the federal lease assets. Net finance costs of $32.2 million increased $22.5 million, driven by the combination of funding for the fertilisers acquisition, as well as non-cash interest relating to finance leases for fertilisers. Cash interest rate for the year was $22.8 million. Income tax underlying was $21.4 million for the year, with an effective tax rate of 25.8%, and that was primarily driven by temporary differences relating to the certified acquisition. The statutory infectious tax rate was 33% for the year. The impact from individually administered items after tax was a charge of $32.5 billion to the profit and loss for the period. I'll cover these in a bit more detail on the next slide. And lastly, the average per share for the financial year 2026 was $15.3 per share, up 18%. for the prior corresponding period. Turning to slide 10, I will highlight some of the key individually significant items that impacted the Group's 2026 financial results, starting with the gain on bargain purchase on the acquisition of insect pellet fertilisers of $37.5 million. This number is lower than the provisional estimate of $55.9 million that we spoke about at the half year, and was revised following the completion of independent external valuations on the fertiliser's assets and liabilities during the period. Acquisition and integration costs relating to the fertiliser acquisition of $33.8 million after tax include stand duties, advisory fees and IT integration costs. the group spent $13.3 million on OT integration during the period and remains on track to deliver the integration during the financial year 2027 and at a cost of $30 million in line with our previous guidance. The total one-off impact on the group's 2026 financial results from the supervisor acquisition was a net expense of $4.8 million after tax. And finally on the high side, During the period, the group recognized a non-cash after-tax write-off of $28.7 million relating to Novus Grace assets. As I mentioned, the commercialization of the business has been slower than previously expected, especially in light of geopolitical disruption that further impacted the end market for the products of this business. The group will continue to consider the strategic alternatives for the business and determine if there's any value that can be realized over the period of time. Standing now to slide 11, the group's net debt at 30 June 2026 amounts to $296 million, which is an increase from the net cash position of $64 million in the prior corresponding period. That number included the cash of $125 million that was from capital rights to fund or partially fund the fertilizers acquisition. The completion of the third item acquisition at the end of September 2025 was the primary driver behind the increase in net debt during the period. The group's headline leverage at the reporting date was 0.85 times. This number is calculated as net debt adjusted for inventory financing facilities divided by 12 months EBITDA and is consistent with the basis we used for the calculation of the half year. was below our target range of 1 to 2 times and reflects the sales patterns in the second half which resulted in earlier cash generation. Our typical leverage levels for June would be closer to the midpoint of our target range. We have a well-staged debt maturity profile out to 2028 and 2030 for our 3 and 5 year term debt facilities and we have $444 million of the good as the headroom at the reporting date. This provides us with balance sheet flexibility and sufficient capacity to fund our ongoing work capital requirements of the business. Now I'll turn to slide 12. The Group's working capital level stepped up following the acquisition of the fertiliser business, which has a longer working capital cycle, reflecting import lead times and the need to procure bulk shipments ahead of the season of the month. For context, you can see on the bottom left, there's a graph that shows the typical capital cycle for the fertilizer business, with the seasonal stock building to a high point during the third quarter of our financial year, followed by an unwind through subsequent first and second quarters. Our working capital position at 30 June was better than the historical trend, as we benefited from strong cash conversion that was driven by early seasonal demand, putting cash receipts forward at good margins. That is to slide 13 and capital expenditure. Our capital expenditure increased to $67 million in the financial year 2026, up approximately $31 million on the prior corresponding period. The set-up in maintenance and ESG capital was due to the accommodation of the token of the fertilizer business, as well as the spend on capital projects that were completed in the ingredient recovery business during the period. We expect that the spend on maintenance and ESG capital will moderate from the 2026 levels and will remain within our capital allocation framework target range. We spent $23 million on growth projects during the financial period, which is an increase of $3 million on the prior corresponding periods. Projects included the completion of the Timaru plant in New Zealand, our expansion of the Lara feed mill in Victoria, and investment in fertiliser value added capacity in several areas. We are set by growth projects against strict internal return levels and only proceed with those if they align to our strategy and meet those return rates. Staying on capital allocation on slide 14, our capital allocation framework remains unchanged. However, we did reset the maintenance and ESG capital target to 80% to 100% of depreciation. This was previously 60% to 80%, but has to be revised to reflect the impacts of the acquisition accounting on the fertiliser's assets. Importantly, our target spend level remained unchanged. The group's operating cash flow was $122 million for the financial year, which included one-off spend of $40 million on the fertiliser's acquisition, integration and restructuring costs during the period. Adjusting for these one-off items, we converted our EBITDA into cash during the year. And finally, the group's TSR was lower for the financial year 26, with the share price closing at $2.65 per share at 32. However, we continue to exceed our greater than 50% target over the long term. Thank you, and I'll now hand back to President Galvano for the presentation.