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.

Thanks, Chris. I'm not going to talk to the progress on the FY26 to FY28 growth plan. And those of you who were able to attend our investor strategy day on the 10th of March in Toronto will be familiar with all of this. If we look at page 16, this is really just a summary of that strategy on one page. And if we move to slide 17, you'll recall this is the indicative graph reflecting our anticipated financial outlook and I'm pleased to say that at the end of the first year of the plan we're on track with the green dot on the graph denoting where we have landed to the right of the slide is the list of the efficiency and growth initiatives that we called out in our plan with the ticks indicating that we have completed two of these initiatives and the green lights indicating where we have started delivering value from this initiative, and there is more to come. It's really just the international sales of Novac Pro that are behind where we would have expected and expect for the paying period. Moving through each of the business units from page 18, as far as the reset of the network is concerned in fertilizers, the new 3P PDC in Brisbane is now operational. significantly improving on the service to customers from what was the former Gibson Island PDC. In Townsville, we are finalizing the lease of a facility adjacent to our Townsville PDC, which will increase our storage capacity and consolidate our volumes into a single operation. The new regional model, which we announced in February, is delivering more customer responsiveness and cost savings. One of the initiatives in our value-added product stream was to scale the UAN offering to the East Coast market. And with the Middle East conflict, UAN provides a useful alternative source of nitrogen. So we brought this initiative forward and over the past five months have spent capital to repurpose tanks in two of our primary distribution centres in Adelaide and Portland, and we'll bring in a full UAN cargo next month. The URP migration onto the Ripley system is on track for the financial year, and the benefits of Pertman are expected on schedule next financial year. Moving to slide 19. The flywheel strategy in bulk stock feeds will get a push along with the Lyra feed mill de-bottlenecking project, which we have now completed. We've commenced another at Terrain in the western districts of Victoria to support our growth in dairy, and there are other expansion options in the pipeline, subject to customer off-take commitments. On the efficiency side, the raw material segregation is underway at Pakenham Mill. using our NIR to optimize ingredient usage. And finally, in package and ingredient segment, we've made progress on various initiatives to climb the wall of value, including the execution of long-term private label dog food contracts in packaged feeds, the completion of the OMP facility in Timaru, the sales of bone and agency products through Oceana Pet Food Solutions, our one-stop shop in Australia, and the establishment of a direct supply chain into Thailand to get our ingredients into this Asian pet food manufacturing hub. As mentioned previously, the Novak Pro commercialization is the one that is yet to meet our expectations. And so our last slide, page 22, the FY27 article statement, British diversified business provides the group with opportunities and resilience in weather extremes, biosecurity threats and commodity cycles. In FY27, Ridley expects group earnings growth in each segment, driven by the transition and integration benefits of fertilisers with a full year earnings contribution, volume growth and capacity utilisation in livestock feeds, and the operational performance recovery and improved commodity outlook in packaged and ingredients. Rivian intends to continue its existing capital allocation framework, targeting a dividend payout ratio of between 50% and 70% of impact. I'll now hand back to the moderator who can facilitate the question time. Thanks.

Thank you. If you wish to ask a question, please press star 1 on your telephone and wait for your name to be announced. If you wish to cancel your request, please press star 2. If you are on a speakerphone, please pick up the handset to ask a question. Your first question comes from James Ferrier from Calacord, Genovese. Please go ahead.

Thank you. Morning, Quentin and Chris. Thanks for your time and congratulations on the results. Can I first of all ask you about the operational issues at Maruta and also the commissioning at Timaru. Can you just give us some more colour around where you're at in that process to complete those works and get them up to the sort of level of operating efficiency that you're targeting?

Morning James. So just starting with Maruta. the slip on the dam wall took place on the 6th of May 2025 and in the last week of June 2026 we completed and returned to use that dam so it required a full reconstruction and lining of that dam through under Environmental Protection Agency surveillance to return it to use and so at the end of FY26 we have returned Maruta back to full form. Moving to Timaru, we commissioned, we shifted from the previous facility to the Greenfield facility in October 25 and the there have been a number of design shortcomings in that process. So we've battled and have continued to redesign and spend some incremental capital to get that facility to meet our expectations. And we've progressively been improving on that. and by the end of the financial year, FY26, we had got it to an acceptable level. There's still some optimisation still to go at that site, but I think the significant setbacks that we incurred in FY26 are behind us.

That's pleasing to hear and perhaps to the extent that you can, can you quantify what sort of earnings benefit you would expect in FY27 on both the Maroondah and Timaru front given the works are completed and understandable if there's probably some more benefit you would be targeting in Timaru but just where you're at today, what sort of earnings benefit that gives you in 27?

Obviously the impact in 26 was, you know, was 11 million down on the prior year. There are a few other moving parts within that as we do call out, you know, the availability of our vine meals and other vine raw materials and the like. but I would expect that we'll see a recovery of, you know, to the extent that would take us back up to closer to FY25 levels.

Yeah. Yeah, absolutely. Second question I wanted to ask about was the bulk. business which it was a very good result and it came off the back of an exceptionally strong first half so we saw probably a more pronounced first half skew within the FY26 results I'm interested in a bit more colour around what drove that Yes as you summarised it exactly we came off a strong first half and we were also seeing a strong second half in

FY25. The main difference can be attributed because as we call out, the volumes were booked in the second half. The main difference is just the opportunity to make some margin around the commodity positions. The markets have been volatile in the last six months. Little less opportunity in this last six months than we'd had in the prior two halves actually from a raw material procurement perspective.

Understood. Okay, that's helpful. And then third and last topic I wanted to ask about was on the fertiliser front and there's sort of really two parts to this question. It's been an abnormal selling season for various reasons. keen to hear your thoughts around what activity levels are like to start this new financial year and then secondly what's the status of the phosphate hill offtake and and what does that mean for Ridley's position on the supply of phosphates into first half 27. questions thank you so the

you know growing conditions have been promising notwithstanding you know anticipation around El Nino most of the growing areas particularly in the south have had good growing conditions and you know there is fertilizer top dressing going into the winter crop the the first start of July and through to today. A little measured in terms of demand. There was some anticipation of shortages of product and so some buying took place earlier. And so we've started what is typically a busy period, a little lower in terms of demand but you know there's a long way to play through as we go forward. So that's how I would describe the start of the fertiliser season in FY27 and then regards to Phosphate Heal as you know from when we acquired the business we have the off-take contract for both domestic and to perform the exports out of Prospect Hill through to March 27 and we're in discussions with Mayfair regarding the extension of that. Mayfair being the new owner of this facility. but at this point we haven't fully extended that. As regards to supply of phosphates into next season, we are taking a conservative position and making sure that we're holding on to MAP and DAP to the extent that we can to make sure that we have physical availability for domestic requirements.

Right, so relative to historical norms, you're probably holding more of that phosphate yield offtake domestically in anticipation of selling domestically, whereas in the past you might have skewed more to offshore distribution.

That's right. The key demand period would be sort of February, March. And so typically we would... be exporting out of Phosphate Hill through this period, and then we would buy in to augment the Phosphate Hill supply from December through to February. Whereas, as we said today, we're being a little more conservative on exporting to keep physical availability. Understood.

Thanks for all the colour. Appreciate it. Pleasure.

Thank you. Your next question comes from Apurva Sehgal from Chardon. Please go ahead.

Hey, good morning, Clinton and Chris. How are you? Morning. First question, or first topic on the fertiliser business. $72 million of nine-month EBITDA. What would a 12-month pro forma number have been? And the reason I ask is, I think like mid-cycle for fertiliser, is probably like $85, $86 million. It's based in history. But this year, there's obviously been like a one-off margin gain from the urea prices. So I just want to make sure going into FY27, we're working off the right baseline rather than like extrapolating what's been uniquely strong for you. So what would like a 12-month number have been pro forma?

You see, we're not going to make a projection on that. But... What I would say to you is that the business we bought had a sort of longer term or recent maintainable earnings of the 86 that you talk of. And I think that we are looking to drive some cost reductions and the like. So I think in FY26, there are a number of moving parts, price movements, some purchases that might have been brought forward. So amongst all of that, I would say that the sales and the performance in FY26 was pleasing and good. I would hope that from a FY27 perspective, if we go back to what the recent maintainable earnings are, that we could build on that with the other initiatives we have.

I understood. Okay. So let's just assume for now we sort of grow into 27 off of more of a historical baseline, just to be conservative. Now, I just run through a few kind of initiatives that you talked about before, just to see if they're still kind of correct. So if we start with sort of the IT thingy, is it still the... You have the $7 million in calendar year 27, so you get six months of fiscal 2017, like three and a half from the IT synergy to start with?

Yes, that's fair. We said the $7 million would come in over the first two years, which we hold to, yeah. Correct.

And then you get the full $8 million of headcount cost reductions in 2017? That is the plan. Yep. And then... Bank those savings. Okay, good. And then the procurement cost savings, that was something you discussed at the event today. You had like $5 to $10 million of group-wide procurement cost savings. Presumably a few million dollars of that would relate to the fertilizer segment as well. That will come through in 2027?

That's right. We said that we would make the $5 to $10 million over the planned period, which is through to FY28. And we've been able to execute some of those. So in FY28, Y27 will see the commencement of some of those procurement benefits.

Okay, and then the final piece of that puzzle, just on the DC upgrades, I think you're spending, I've got the number, a certain amount of capex for a five or some sort of payback on DC upgrades in the fertiliser business, but I'm presuming there's something that'll roll in for fertilisers as well in Y27 for that?

Yeah, I think the benefits out of those will be longer term. So, you know, I've have called out today the Brisbane Fisherman's Island which was already commenced under Dino's ownership and that's come online as planned so yes we hope to recover some market share in that region because we had market share lost under the previous inefficient PDC. That's a build over time. And then the other one that we've called out in Townsville requires us to do a bit of a fit out and the benefits will only come in the following, in the next season. So in Townsville, it's mostly the sugar season which would start, you know, be through this time next year. So I think in terms of the network, those are longer term benefits and I would not expect benefits in FY27 to a large degree.

Okay, but it all sounds like the initiatives are further on track. Okay, I wanted to then just switch to a bit of a follow-up to James' questions on the package business. Just to clarify, if you go back to the first half result and what sort of has ended up being for the full year, there were kind of four issues. The Maruta Dam, the Timaru Commission delays, I think it's the lower protein meal and oil prices and the O&P supply issues. Now, you said that the Maroondah Dam and the Timaru delays, they seem like they've all been fully fixed, which is good. But the other two issues I just wanted to clarify, the lower protein meal prices that had impacted you before and also those O&P supply issues, are they kind of fully fixed on a run rate basis as of kind of one July?

Yeah, that's observant. In the first half, we called out the lower meal prices. and we didn't call it out the full year. And the reason for that is that was offset to some degree by stronger hello prices in the second half as we've seen a bit of an uptick. So we haven't called out the commodity position because by the full year that was the meaningful contributor to the numbers. it really came down to the operational issues that we've spoken of and then the OMP raw material supply has been something that we've dealt with for most of the year and we've been able to get some additional an additional supplier which has assisted with that but it's a pretty competitive market at this stage as lamb slaughter numbers are lower than the long-term average and there's a fair bit of competition for that. So that's still an active management for us to ensure we get the supply that we need. Okay.

And something you said on the previous questions as well was you said that into FY27, it sounds like you think you can get back to FY25 in that package business, which is about $63 million. The only thing is, though, at 25, the both halves are quite different. Like the first half of 25 was 35.7 mil. Second half was 27.2. I mean, that's the first half 25 number of 35.7. If the issues that impacted you this year have basically resolved, and you've got the benefit of a teller price that's going higher as well, that helps, and also the volume gains, the private label, the stuff you're talking about. Could that first half 25 outcome of 35.7 be achievable in first half 27 or second half 27?

I would just need to have a look at where the commodity prices were trading at that time. So my inclination and based on what our forecasts are is to say that it's unlikely that we would bounce to that strength of the first half 25. I mean, it does depend on meal prices and tariff prices, but based on where they are trading today, we would fall short of that.

Okay. Okay, cool. I'll jump back in the queue. Thanks for the time.

Thank you. Your next question comes from Richard Barwick from CLSA. Please go ahead.

Good morning, guys. I think I've been left with sort of the final line item, corporate costs. The question is, is $16 million the new base year? Because obviously you talked about why that lifted. Is that the right number, the way we should be thinking about, 27, or is there some sort of annualization that we also need to take into account, and so therefore 27 will be a bit higher?

Hi, Richard. Yes, there's really a slight step up. I mean, slight from that 16 number on an annualized basis. As I talked to you on the presentation, three things like additional audit fees you have for a larger group and the like. That's the governance I was referring to. But then depending on how the results play out next year, on the larger employee base, if you have a similar good afternoon as we had this year, and you have similar type of payout levels, you probably have a similar type of corporate class for next year. That was a big driver.

Okay. All right. And then the other one I was going to ask around was, this is more of a clarification, It's talking about the, it seems like a bit of a change in the way you're thinking about, this is the CapEx target, 80 to 100% of depreciation. And the depreciation, what we had in for the year was 43. Again, there's a bit of an annualization we need to think about there and sort of calibrate our CapEx off that number.

Yes, I think it is, you correctly need to analyze. The 80 to 100% from the 60 to 80, that's purely a mathematical adjustment that we've made there. So as I said, the level of cash spend that we have in our forecast has unchanged. And what I mean by mathematical change, when we took the fertilizer business on, Part of that requires adjustments to the carrying value of some of those assets, meaning that where we've had a reduction in those, we'd use the depreciation number. So if you have a low depreciation, then you both run it by 10H.

Okay, that makes sense.

That's all for me. Thank you.

Thank you. Your next question comes from Belinda Moore from Morgan. Please go ahead.

Good morning, everyone. Maybe one for you, Chris. You know, you've obviously had some cash flow benefits. How we should think about 27 cash flow conversion? And then secondly, where are you expecting that tax rate to sort of normalize in 27? Quinton, maybe for you, just talking a bit more about fertiliser supply, given sort of the volatility and the war, and sort of how long will the government sort of underpin this price volatility? And then maybe if you could just talk about sort of, you know, the company's strategy in regards to bird flu and, you know, if it hits some of your farmers, how we should think about sort of feed demand, meal prices, et cetera. Thank you.

Thank you, Belinda. So we were near to focus on strong cash conversion for the time of 2017. We had a pretty strong performance for 2026, as I mentioned. So that resulted in capital levels probably being slightly lower than where we would typically sit this time of year. So if you assume a more normal type of flow, of fertilizers then that will pick up slightly at the end of next year but we will need to focus on strong working capital and always have our targets to try and be something close to our industry generation but 30 June is smack-drang in the middle of the fertilizer season and that could always either pull forward or push out a bit of your cash position and your working capital at the time. In relation to the tax question, we were on an underlying basis at 25.8%. This acquisition of the fertiliser business has had an impact on the number being that low. So, going forward for the next few years, we're probably set at something between that 26% and 30%. Right.

And, Padunda, regarding the questions on fertiliser and the ward, so at this point we've been sourcing urea from other markets as you'd be aware with the arrangements established in Indonesia and drawing from other Southeast Asian suppliers and as the graph that we had on page 5 shows the urea price has has dropped quite significantly global urea prices, which is quite an anomaly when you think that we've lost 30% of the world's urea production. To some degree, that's timing, and we'll see how it plays out from here. The government has suspended the CFD arrangements, given that global prices are back to pre-war levels. And so that's not on offer at this point, but it is suspended. And I think should we in the future find a similar kind of circumstance, we would hope that that gets considered again. As per the question earlier from James, phosphates become the next factor globally. Sulfur production, and supply for phosphate manufacturing and other parts is impacted by the closure of the Strait of Hormuz and so I think globally there could be phosphate limitations going into the start of calendar 27 and that's and hence why we're managing as we are. So yeah I think there will be a lot to pay out as there's no resolution to the wall. The other impacts on the farming community, as I indicated, there are some areas where they still have dry conditions and have had below normal rainfall, but those are pretty isolated and the bulk of the grain production is looking promising for this season and there's a fair amount of domestic stocks as at times during this year exports weren't competitive internationally due to various factors. So there's a fair amount of grain in country and there appears to be a promising crop on the way. So as far as feed supply for this year, we see it as a period of plentiful supply and we watch the longer term forecasts with El Nino to see whether that has any impact towards the back end of the season. I hope that general overview is of some benefit.

That's a great overview and just maybe just a bit of an update on your company's strategy regarding bird flu and worst case if it did hit Australian agriculture, just how we should think about implications for Ridley. Thank you.

We're obviously monitoring this very closely and the increasing incidence in wildlife birds is of concern. We've together with our major customers have ratcheted up our biosecurity controls and we're as prepared as we can be at this point and just waiting to manage it. As far as implications and if I go to the most recent avian influenza experience we had in 2024 when a handful of layer businesses were impacted. We had two impacts to the Wrigley business. One, we lost some feed supply to those of the layer businesses that we supplied. So there was some impact on feed sales and then the other impact was the export of poultry meal out of Australia is to some Asian markets is gets suspended because of avian influenza in commercial production. So that was the experience we had last time and combined for that incident, we had about a $1 to $2 million EBITDA impact. So hard to extrapolate and hard to anticipate how or where and when this will impact our business, but that's sort of a data point from our previous experience. And I would say that, you know, within our bulk stock feeds business. We've got quite a lot of diversity in terms of geographical customer spread, the species that we supply, and then now as you aggregate that to a group level, you know, bulk stock feeds, and then on the ingredient recovery, the meal exports. are part of what is an increasingly diversified portfolio. So I think practically we're ready to deal with avian influenza, and financially I think we're a pretty robust business for the various challenges that could come our way.

Thank you, that was very helpful. Maybe if I could just ask one last one. Just whereabouts are you seeing tallow and meal prices currently?

Yeah, so tallow prices are around $1,800 and that's as of current today. In the last half year, we were sort of averaging around the 1500 level. And so it's a little firmer now, which is encouraging. Meal prices and our biggest meal price being component being poultry is round about the 1100 level. And then meat and bone meal round about the 600 level. both of those have been fairly packed for the last 18 months. So those are not, you know, those are less encouraging at the levels they're at at the moment. Go to the next question, please.

The next question comes from Paul Jens from PactPartners. Please go ahead.

Thank you. Just a question on allocating capital to, I suppose, the trading across your three divisions there, Quentin and Chris. Have you got to a steady state type arrangement with allocating your value at risk across the two or three buckets there or is there still another six months to go on the cash flow side of trading?

If you're talking about the working capital side is that

I suppose inside that yeah I'm just because you are now essentially allocating capital across the feed, fertiliser and other buckets and there's been a lot of volatility going through you've done a really good operating cash flow number I'm just trying to see do we spring off that number and then diving into that bit as to are we in a sort of a steady state with allocating capital across your buckets there

Okay, thanks. Good. So I'll just kick off and then hand it to Chris. But as far as how we're looking at the business, the fertilizer business has got much longer supply chains and therefore, you know, requires a higher allocation of working capital. The working capital allocations within bulk and packaged ingredients of fertilizer there's no real change there, but there is a significant difference with the working capital requirements of the fertiliser business. As far as other capital allocations as in CapEx, I think we continue to keep our maintenance CapEx program in the bulk and package and ingredients ongoing. We're where haven't adjusted those post the fertilizer acquisition. And the fertilizer run rate that we took on was, you know, we're probably spending money in slightly different places to where it was before. But I think the slide that Chris covered on CapEx gives you the indication on that. So I would say we're in a steady state on that and I'll hand to Chris just to talk about the nuances of this year's fertilizer cash flows which obviously you know will need to be unwound to some degree in FY27. Excellent.

So as I mentioned on that slide 12 of ours you could so we laid there in the graph a typical working capital cycle and costs to carry that over a period of three years. And it is slightly, I'll say at least $50 million higher than where we were at June this year. And it's really, as I was saying, a result of where your season land, but I'll say, If you have to model it forward, for the June months, I'll probably run with a number that's slightly higher at 50, and that's a pretty stable number. December should be similar type of numbers, because then you build oil, you're still sitting on some of your summer crop, but that is a different product. You're sitting in on small states rather than your area that you have at June. So I'll say steady state is slightly higher than what we landed this year.

I'm just trying to reconcile, Chris, maybe I misheard it a bit, but I thought you were saying you were slightly lower on fertilizer in some cases than higher. So I was just trying to tease that out a bit because I think you said you've obviously kept extra DAP and things, so we can sort of put that in place. But I thought at one stage you were saying you had slightly lower fertilizer in the tree. But maybe I misheard. So you're saying $15,000 extra for the lifer?

Yeah, all right. Then overall with capital numbers, that includes inventory, receivables and payables. And that number for the third lifer business is lower at June than what it would typically be at June. Yep. As I said, it should be about $50 million higher if you take use three over the last three years. Okay, okay. So that's the $50 million, right. Sorry.

Okay. so going forward extra 50 and then just allocating capital across your I suppose your trading side because you do trade a little bit of grain as I think we mentioned before the volatility has come up a little bit so can we see extra capital going into trading grain in the next periods or not?

I don't think you know we will make the right commercial decisions based on our position that's our market outlook but you know in our bulk stock feeds business it is predominantly a back to back business and we only at the margin will we go a little longer based on physical positions that we think would suit our book but it really is at the margin and I would say it's probably insignificant in terms of capital allocations relative to working capital in the fertiliser business.

Okay, that's the top of the hour, so I'll come back and talk to you later in the week. Thank you. Thank you Paul. Thank you Paul.

Thank you.

Your next question comes from Paul from Charlotte.

Please go ahead. Oh, thanks Chris for the extra time. I just want to ask a couple more ones if I can. The net finance cost was a fair bit higher than sort of what people had and so if you think today it was sort of 30 million bucks a little bit higher. Chris, maybe just quickly step us through that. I'm sorry if it's lease interest related, but just under 27, any comments on the outlook there for the total net interest bill?

Yeah, thanks, AP. So, yeah, in our plan for slide 25, we did give a bit of a break up to the aftermarket first stage. This is part of funding costs which are out of $33 million for the year. So I think if you extrapolate that to your full-time funds, that gets you close to $30 million. We'll probably land slightly better than that on next year for our shipping interest rates and the like to stay where they are. And then for the lease components, that's a number which I think the market probably didn't have all the detail on. and that was still a moving bit as we were finalising that addition of the fertilizer business. As a result of those fair value adjustments I was talking about before, some of our leases were uplifted and the lease liabilities and that's got a non-cash unwind which finds its way through both interest and depreciation lines. So that's really that additional step up to what we have right now. $10 million on a going forward basis. That's non-cash.

Okay. And then just, Quinton, do you want to know back a quick question? I've just noted the non-cash in PEM you guys have put through. Was that some sort of a major drag on EBITDA in the second half at all? Are they able to quantify anything?

Not major. We've been running it relatively leanly. So I think, you know, we're going to continue operating it on that basis. But, you know, it's under a million dollars there. Of course, loss.

Yeah.

Okay, cool. All right, thanks, guys. Thank you.

Thank you. Once again, if you wish to ask a question, please press star 1 on your telephone and wait for your name to be announced. There are no further phone questions at this time. I will now hand back to Mr. Heidelberg for closing remarks.

Thank you, Ryan, and thank you to everybody for your attendance today. I appreciate your interest in Ruby. and we look forward to meeting those who we will on the forthcoming roadshow. Have a good day. Thank you. Thank you.

That does conclude the conference for today. Thank you for participating. You may now disconnect.