Nufarm Ltd

Thank you and good morning everyone. Welcome to New Farm's Financial Year 25 results presentation. Joining me today are Brendan Ryan, New Farm's CFO, Brent Zacharias, Group Executive of Sea Technologies, as well as Rico Christensen, who's the Group Executive Portfolio Solutions, and as you'll see from this morning's announcement, CEO Designate. I will talk to the transition in more detail later in the presentation. But in terms of the call today, I will speak to the financial year 25 results, Brendan will speak to the financials, and Rico will cover priorities for financial year 26 and the outlook. Before we move to the presentation, I draw your attention to the disclaimer on slide two, and in particular, the wording related to forward-looking statements. To the result, since the half year we have delivered on key profitability and leverage unwind targets that we communicated to the market in August. We are very pleased with the performance of crop protection delivering an earnings increase of 18% with importantly growth across all regions. We have concluded the review of seed technologies and the board has determined that a reprioritised strategy is expected to deliver the best value for shareholders. We have taken steps during the year to reduce cost and capital requirements across the SEEDS business and we are in very good shape to deliver upside from the business in the future. We reported a statutory loss of $165 million, which includes $142 million of mainly non-cash material items relating to the outcomes of the seed technologies review and the broader performance improvement program across the business. We are confident that the action that we have taken sets the business up well for the future. We reduced net debt by $538 million from the half and ended the period with leverage of 2.7 times. This reflects both the seasonal unwind that's inherent in our business, as well as our ability to de-lever through internal discipline and efficiency. We are in good shape to deliver earnings growth and further leverage reduction this financial year through growth in crop protection and improved performance in seed technologies. Meaningful positive cash flow generation and a lower capex profile is expected to support further deleverage at the end of the 2026 financial year. I'll now cover some of the highlights across financial year 25. In crop protection, as I said, we delivered a strong result with growth in profitability in all regions and EBITDA margin improvement of 140 basis points. In North America, We recorded a record year for profitability in the turf and ornamental segment, and in APAC, a record profit in Asia. In Europe, a 22% uplift in profitability, and this reflects the focus that we've had on improving returns in that business. Across seed technologies, we have made good progress on the repositioning, which includes a reduction in cash costs. Our focus is on growing our profitable hybrid seeds business, and we are really pleased with the increased revenue and profitability in South America. In bioenergy, as the market fundamentals have continued to strengthen, we increased the planted area in Carinata. The market has evolved as expected, with a shortage of feedstocks to supply the demand creation by the implementation of the Renewable Energy Directive in Europe and the subsequent mandates. We have a long track record in developing solutions for farmers through innovation with a capital life technology partnership model. We have a very strong near and medium term pipeline and have delivered multiple product launches in multiple markets across our seeds and crop protection platforms. New product launches in crop protection contributed around 15% of financial year 25 revenues. And on operating performance, we are pleased with the gross margin improvement of 100 basis points. Good internal discipline around working capital and cost has supported the net debt unwind in the second half. As you know, we announced a review of our seed technologies business in May of this year. The review considered a thorough assessment of our strategy, as well as the potential for a sale and bringing in a capital partner. After a considerable amount of work, the board has determined the highest value outcome for shareholders is expected to be continued ownership under a reprioritised strategy, where we are focused on growing our hybrid seeds business, a reduction in the cash requirements for Omega-3, and expanding our bioenergy business with BP. We have already taken action to reduce cash costs and capital requirements across the business. We are focusing on the continued growth of hybrid seeds in markets where we have established positions and strong growth prospects, particularly in South America and Australia. We plan to grow bioenergy supported by our agreement with BP and expected demand growth coming from biofuels mandates. In Omega 3, our near-term focus is on supporting customers with the existing inventory and managing to a cash flow neutral outcome. We have the opportunity to reposition production over the medium term to South America with the aim of lowering our cost of production and improving our competitive position. We have a clear path to generate benefits for shareholders as we partner with downstream customers and optimize to a lower cost position. We are really pleased with performance across crop protection with underlying EBITDA up 18%. We focused on profitable growth in a flat volume environment. Revenue and profit grew with the benefit of both mix and margin. And the team did a really good job on inventory management, and we are seeing the benefits coming from the performance improvement plan, predominantly in Europe. Turning now to the regional crop protection businesses, underlying earnings increased 10% in APAC, a good result considering the impact of dry weather in Australia. We delivered record revenue and profitability in Asia, and the margin uplift was driven by improved COGS goods, and product mix. In North America, we grew underlying earnings by 19% across the year, with momentum building in the second half, which was up 30% on the second half of 2025. It was an excellent result, given the team were navigating some dynamic market conditions in relation to tariffs and anti-dumping duties. The turf and ornamental segment had a very good year, delivering a record result primarily driven by improved demand in the golf and lawn care sectors. Margin uplift was driven by improved COGS and product mix. As I mentioned earlier, we also had a very good year in Europe with underlying EBITDA increasing by 21%. Margins expanded from improved mix and the benefit improvement program. Performance also benefited from better seasonal conditions and market conditions driving volume growth. The business has good momentum with more upside to come from the continued execution of our performance improvement plans in the current year. Turning now to seed technologies, we thought it would be helpful to give you more visibility on the segments. So we have split out our earnings from hybrid seeds and the emerging technologies, which includes bioenergy and omega-3s. Hybrid seeds performed well with EBITDA of 67 million with the lower earnings on the prior period mainly a result of dry weather in Australia which impacted canola seed sales. South America saw them in sunflower where ahead of the prior year. We have streamlined our European and North American operations as we focus on the markets which are most attractive and where we have the strongest positions and growth potential. In bioenergy, we had the benefit of growth in hectares planted and resulting seed margin. However, this was offset by lower licensing fees from our agreement with BP. We have seen strong recovery in GHG market values in Europe, which is driving increased oil demand and value outlook for Carinata. Omega-3 earnings were impacted by the fall in fish oil prices. Inventory has been carried into this financial year and will provide us with the ability to serve customers while we look to shift production to South America where we are targeting a lower cost of goods. We are advancing towards customer offtake agreements to improve both volume and price predictability. And as I said before, we have significantly reduced the cost and capital profile for our omega-3 business. As a final point, I'd like to emphasize that as a result of our review, we have shifted the cash requirements of the seed technologies business to become more self-funding. I will now hand over to Brendan to cover the financials.

Thanks, Greg. I'll begin with a summary of the financial year at 25 performance. The result presented today is consistent with the market update provided in August. For financial year 25, we delivered a solid top-line growth, with revenue up 3% year-on-year. Gross profit increased by 7%, and the gross profit margin expanded by 1 percentage point to 26.1%, driven by strong crop protection margins and a favorable mix. EBIT after material islands was a loss of $74 million. Net financing costs were $101 million, down 6% year-on-year. The reported statutory loss was $165 million, impacted by two significant factors. Material items of $142 million, primarily from the seed technologies review. I'll provide more detail on this shortly. And $53 million of early stage losses from emerging platforms, principally Omega-3 related to the fall in fish oil prices. Underlying EBITDA was $302 million compared to $311 million in the prior year. Importantly, excluding emerging platform losses, underlying EBITDA was up 10% year-on-year, reflecting a strong improvement in crop protection profitability and resilient hybrid seeds performance. Now to more detail on the material items. The after-tax impact of material items was $142 million, which is predominantly non-cash, with a financial year 25 cash impact of approximately $30 million. The key components and material items were 118.7 million from seed technologies, asset rationalization and restructuring. In hybrid seeds, we've scaled back our European sunflower operations as the prolonged and more severe Russia-Ukraine conflict has significantly reduced the attractiveness of that market. This resulted in the impairment of sunflower IP and a write-down on associated seed inventories. representing the majority of this material item. Also included in this material item is a scale back on omega-3 plantings in North America, with plans to move production to South America to achieve more competitive cost of goods sold. This has resulted in the write-down of the excess omega-3 seed inventory. There are also associated redundancy costs with the cost of program from workforce reductions. Separately disclosed, So primarily connected with the seeds review is 5.4 million of legal and advisory costs. We also incurred 13.4 million restructuring costs and crop protection. These costs include redundancy costs with the cost of program and some asset rationalization. In financial year 26, we expect to see clear benefits from the action taken in financial year 25. With reduced capital expenditure, more focused capital allocation, and lower staff and operating costs. Turning now to margin and costs. Underlining gross margin increased by 80 basis points, with crop protection delivering a strong 140 basis points improvement, driven by cost of goods efficiencies and favorable mix. Operating costs remain an important focus. Underlining SG&A increased by 10% year on year, and when expressed relative to revenue, was up 140 basis points. This growth reflects inflationary pressures, increased investment in R&D, marketing and business development to support growth to the top line. Looking ahead, operating cost discipline is a priority. Full period benefit of the $50 million cost savings program is expected to broadly offset natural cost inflation in financial year 26. Now to the balance sheet. Average networking capital sales improved to 38.2%, improving by 440 basis points and firmly within our 35 to 40% target range under our capital management framework. The improvement was primarily driven by inventory efficiency, supported by a focused program and inventory reductions across all crop protection regions. Average inventory days improved by 16, while receivables days were down four, reflecting strong cash collections during the second half seasonal unwind. Table days remained flat, reinforcing that the net working capital progress was largely an inventory story. Working capital management remains a key focus with further improvement targeting financial year 26. In respect of capital expenditure, it was broadly consistent with the prior year. Spend on property, plants, and equipment focused on health, safety, and environmental priorities and plant reliability. Proper tech's intangible CapEx continues to deliver value through the product pipeline. Investment in seed technology's growth platforms was also similar to prior years. For financial year 26, we are targeting CapEx below $200 million, reflecting disciplined capital allocation. The reduction will come from lower manufacturing spend following significant investment in recent years. Prop protection R&D focused more on the near-term priorities and reduced capital for seed technologies aligned to the reposition strategy. It's worth noting that CapEx in the first half of 2026 is expected to be a significant reduction compared to the prior period, given the spend last year was first half weighted. In terms of free cash flow, it was negative $131 million. reflecting several key factors. While networking capital movements excluding omega-3 were positive, these gains were offset by the omega-3 position. The outflows on interest, tax, capex, lease, and step-up security distributions contributed to the overall cash flow result. Looking ahead, we are strongly positioned to deliver meaningful, positive free cash flow in financial year 26, supported by anticipated continued improvement in working capital efficiency, planned CapEx below $200 million, reflecting disciplined investment, significantly lower cash requirements for Omega-3, and expected EBITDA growth year-on-year. In terms of net debt, net debt reduced by $538 million in the second half of 2025, reflecting the normal seasonal unwind, demonstrating strong second-half cash conversions. Year-end net debt was $824 million, with unfavorable FX movements and omega-3 inventory contributing to the year-on-year increase. Leverage closed at 2.7 times below the guidance provided in August. Reducing leverage remains a priority, supported by the actions outlined earlier to deliver positive free cash flow in financial year 26. In terms of funding, Gross debt, excluding leases, was $1.154 billion at year-end. Liquidity remains strong, with $345 million of undrawn facilities, consistent with the prior period, and $475 million in cash. Our diversified and flexible debt facilities are underpinned by a covenant-like financing structure and a stated maturity profile. The short-term Omega-3 trade facility has been successfully refinanced into a two-year amortizing loan facility with a maturity of September 2027. Looking ahead, we are well-positioned to support seasonal working capital bills. We anticipate that this year's bills will be lower. CapEx will be $50 million lower in the first half. Omega 3 cash requirements will be significantly lower, and there is further benefit from the improvement in earnings. New Farm's capital structure is designed to accommodate seasonal funding demands. There are no expected short-term refinancing needs for the group's primary debt facilities, other than the standby liquidity facility, which the extension to November 2027 is well advanced, and the ABL facility matures in November 2027. Importantly, New Farm's capital structure is designed to deal with seasonal fluctuations. In concluding, New Farm enters financial year 26 with a solid base of profitability and a strong liquidity position. Profit protection and profitability improved across all regions, and our hybrid seeds business is generating strong profits. Our funding structure remains flexible, supported by $345 million of undrawn facilities and $475 million in cash at the balance state. Second half 2025, Net debt had the usual seasonal unwind of $538 million. We are continuing actions to reduce costs and deleverage. We're expected to deliver further benefits in financial year 26. We are expecting positive cash flow with anticipated further reduction in net working capital, disciplined capital management with capital expenditure below $200 million and EBITDA growth. To help with your models, we are giving the following guidance on some key items for financial year 26. Depreciation and amortization, circa $225 million. Net interest expense, circa $105 million. And the effective tax rate, circa 30%. I will now hand you back to Greg.

Thanks, Brendan. Rico is now going to cover the outlook and priorities for the year ahead. But before he does, I would just like to make some introductory remarks. As you would have seen from our ASX announcement, Rico has been appointed CEO and Managing Director of New Farm, commencing in the role in the new year. Rico joined New Farm to run portfolio solutions four and a half years ago, having spent over two decades in the industry. He's done an excellent job in that role. and brings considerable global experience running businesses in the Americas, Europe and Asia before his time at Newfarm. I'm looking forward to working with Rico over the coming weeks and months to support the transition. I would also like to take the opportunity to thank our shareholders for their support over the last 10 years. It's been a fantastic opportunity to lead this business and I'm very confident in the future of Newfarm under Ricoh's leadership. Over to you, Ricoh.

Thanks, Greg. First, let me start by thanking the board for the trust they have shown in appointing me CEO designate of New Farm, and also to Greg for his support over the last four and a half years in the business. I am honored that I will be leading New Farm, a great Australian company that I deeply respect. In agriculture, New Farm is known and admired far beyond the borders of Australia. When I talk to farmers and channel partners in Brazil, in Canada, in Spain, and other countries, we have instant brand recognition and respect. We are known for our solutions and our dedication to be easy to do business with. We are a leader in key geographies, in core crops, and in key product segments. We are known for our innovative mindset, thinking of new ways to support agriculture as it continues to evolve. I have more than two decades of experience from the agricultural industry, running businesses in Europe, South America, North America, and Australia. I've spent most of my career competing against Google. Taking that outsider's view, I cannot emphasize enough how valuable our brand is, how valuable our leading positions are, and how valuable our relationships the relationships we have built with farmers, channel partners, and technology partners for more than 100 years of doing business. I have regular conversations with partners about our innovations across crop protection and seeds. We are known and respected for our innovation and our partnership model. That means our R&D cost is many times lower than our competitors. This is the new farm way. Above everything else, We have a team of dedicated, hardworking people who show up every single day with fire in their eyes, wanting to do better for Nubank, for our customers, and for our shareholders. What we have, all of those things I just mentioned, is very valuable, and our competitors envy us for it. My job, with the help of all of our people around the globe, is to translate that hard-fought position into strong financial performance and returns to our shareholders, and position NuFarm for improved performance through the cycle. This leads me to my priorities for FY26. First, we are already taking action to instill a strong cost and capital deployment discipline. We are doing that through a range of changes in our processes, accountability, and ways of working, which combined will result in a positive free cash flow to support production in depth and leverage. We will extend that by embedding that cost and capital discipline into our corporate culture by refining structure, delegations, and incentives. The aim is to ensure not just a one-time improvement in performance, but that this remains a focus through the years and is reflected in our performance through the cycle. FY25 showed positive signs in the performance and profitability of our crop protection business. We plan to build on our leading positions across geographies and crops. A great example is our phenoxy portfolio, which has growth potential that can be unlocked through partnerships and market presence. To that point, our pipeline looks healthy in the short, medium, and long term. Combined with a stronger focus on launch excellence, we expect to accelerate the impact of the near-term pipeline. We have also made good progress improving our networking capsule in crop protection, and we have plans on the way to deliver further improvement. Third, the seed review has provided us with valuable learnings. Most importantly, we need to be more focused in our efforts. We are repositioning our strategy and capital allocation to deliver improved performance and returns over time. We've already taken action in FY25 to reduce cash expenditure and capital requirements, in particular in OMB3. We expect to benefit from these actions in financial year 26. Our hybrid seat is a high-quality cash-generative business. It has unique and valuable IP that we are looking to scale in southern hemisphere markets. With the appropriate focus and attention, we see a clear runway for future growth, and that will be a priority in FY26. We are committed to building on our strategic partnerships and emerging platforms to improve future capital and earnings profile. Turning now to outlook and how these initiatives provide confidence in FY26. We are expecting strong EBITDA growth assuming normal seasonal and market conditions. In crop protection, we expect continued growth in EBITDA, moderating on the 18% growth we saw in financial year 25. In hybrid seeds, we also expect growth in EBITDA, and we are targeting approximately 30 million improvement in EBITDA in our emerging platforms. We are targeting a leverage of 2.0 times at the end of FY26 compared to 2.7 times at the end of FY25. We also expect meaningful positive free cash flow coming from improved earnings, improvements in net working capital, and from a step down in capital expenditure to less than $200 million. For the first half, we expect net debt similar to the prior period, but with a leverage below prior period coming from improved earnings. I would like to close by saying that I am looking forward to leading Lufarm. While my immediate priority is on delivering on FY26, I'm looking forward to speaking with you more in the future about longer-term growth plans across the business. Greg, Brendan, and I will be joined now in Q&A by Brent Zacharias. We'll now hand back to the operator.

Thank you. If you wish to ask a question, please press star one on your telephone and wait for your name to be announced. If you wish to cancel your request, please press star two. If you're on a speakerphone, please pick up the handset to ask a question. Your first question comes from John Purtell with Macquarie. Please go ahead.

Good morning, Greg, Brendan, and Rico. Just had a couple of questions, please. Firstly, just in terms of the... the siege review process, can you provide some further colour there, particularly regarding the decision to hold on to the business and also the degree of third party interest in the business?

Yeah, thanks for the question, John. Look, there was broad market engagement with multiple parties and the review, as I said in our presentation, the review allowed us to challenge ourselves around the cost structure, around capital allocation, and around strategic focus. So the review was quite broad, widespread, encompassed the whole strategy. It wasn't just about a sale of the business or bringing in a capital partner. And as we said, we've concluded that we believe the best value for shareholders will be realised by implementing on that reprioritised or repositioned strategy.

Thank you. And just a second question. And Greg, just beforehand, just wanted to wish you all the best going forward. And thanks for all your help over the years. Just the second question around what you're seeing in terms of the broader ag care ministry. It's obviously been a tough few years You know, cost of goods sold looks to have reset, which is good, but pricing still looks subdued and markets remain competitive. So I just want to get your thoughts on that. Thank you.

Yeah, and, John, thanks for the comments. So, look, I would say the overall outlook is positive. Seasonal conditions generally around all of our markets are positive. Grain pricing supports demand for both crop protection and our oilseeds sales. I think the important point is that active ingredient prices have stabilized. So we've replenished inventory at competitive cogs. And as a general statement, I'd say that general inventories, particularly in North America where it's been a little stubborn, have normalized. So I would say in terms of 2026, we would continue to see some volume improvement in In Europe, I would expect sort of APAC to probably be broadly flat with last year. And in North America, you know, we've had strong growth in the turf and ornamental business. And that's to some extent as a result of the lower spend, particularly in golf and in lawn care coming out of COVID. I think a more sort of normalized tariff situation that seems to have settled down now. The tariff benefits on phenoxys and stable active ingredient pricing, I think, are key drivers for our business in North America. So generally, I would say going into 26 in what is a pretty positive environment.

Thank you.

Our next question comes from William Park with Citi. Please go ahead.

Good morning, and thanks for taking my question. Can I just ask about the $30 million of earnings recovery you're expecting across emerging platforms? Just looking at your slide now, you've alluded to $29 million of non-cash inventory revaluation hit that you've taken above the line this year. Is that basically the unwind of that $29 million or are there any other sort of changes you've made across the emerging platform? You've alluded to sort of moving production from North America to South America, but just wondering whether that 30 million recovery, you know, whether if you would need to see some recovery in fish oil price or lower costs going forward, that would effectively contribute to delivering that. Please, thank you.

Yeah, thanks for the question. There's two elements. All right. Apologies, sorry, there's two elements to the question. Yes, as part of the repositioned strategy, we have reduced the cost and the capital profile of the business. And as you mentioned, the second aspect is related to the carrying value of the inventory that were taken into the current year and financial year 26, which is effectively assuming that 29 million will come through, largely reflective of where official pricing is today.

Brent, if you wouldn't mind probably providing a little more color around fish oil pricing.

Yes, certainly. I think as everyone's understood, fish oil pricing had come down from historic highs and persisted at levels of about $2,500, $2,600 through calendar year 2025 and that was really due to very large back-to-back quotas that we hadn't seen in more than 10 years. So the comments about our position going into 2026 and the 30 million improvement in emerging businesses is based on the understanding of our inventory and position based on fish oil prices as of September, which were around the $2,600 level. So, obviously, then if fish oil prices improve throughout the year, that does provide likely support for upward pricing. The other thing I would add is that in recent weeks, we've seen the recommended North Atlantic quota come out at 35% down from last year. And we've also seen the Peruvian quota announced at about 35% down from last year as well. So hopefully that provides a little more colour for you, Lou.

Thank you. And just staying with the megatree, you committed to sort of selling off your inventories there, but you were alluding to sort of cash flow neutral outcome. I'm just curious to know what you mean by that. Thank you.

In terms of the cash flow neutral outcome, it gets supported by the reduced cost of the capital profile of the business. The exact timing on cash flow is obviously dependent on when we sell through on the inventory. And obviously that's a consideration in terms of how optimally we do that over the next one to three years.

Thank you. And then just one last question I had is obviously now with seed treatment business sitting in crop protection, how are you sort of internally thinking about the growth profile for the seed treatment business? Does it sort of trend in line with hybrid seeds business, you know, the earnings growth that you're expecting through hybrid seeds business. Just any color around seed treatment will be appreciated.

Thank you. Yeah, the reclassification in terms of the change of the segment, though, in terms of taking seed treatment, which is approximately 20 million in the financial year, 25 even there, from including the seed technology segment to the crop protection segment, So following the review of the seed technology, we felt that was appropriate. It has no impact from an overall group perspective on the P&L or the balance sheet. And in terms of sort of future profile, there's no significant change seen with a predominantly, I guess, source sort of North America and Europe.

And I think, Will, just if I can add, there's no direct link between our seed treatment business and our hybrid seeds business. Seed treatment provides chemical applications for the broader seed market, not just our hybrid seeds business.

Your next question comes from Ramon Lizar with Jesse. Please go ahead.

Good morning guys and welcome Ricco and Greg, best of luck in your future endeavours. Just had a couple of questions, one on the crop protection, just a point of clarification there on the growth driver. So it sounds like a bit of volume growth, but are you assuming continuing improvement in that gross margin profile through 26?

Yeah, that is correct. So what we've talked about in the past is that when we look at the profile coming in through our product launches, the MPIs, they are generally at a higher margin than the existing business. That's something we've spoken to the past, and it continues to be the case looking forward. And I would also say that over the coming years, what we know about the pipeline today, that is pretty consistent, that they come in with a higher margin than the existing business. which you then will see reflected in the margin for the business overall.

Okay, that's pretty clear. And then I just had a question on the emerging platform, particularly Omega 3. I mean, it sounds like you're going to manage the cash requirements of that business more tightly. I mean, can you maybe just talk about, I guess, how that potentially impacts the potential growth profile of that Omega 3 platform. Is there anything else also you can do to potentially improve the cost profile of that business, just given the volatility that we've seen over the last year or so?

Yeah. So we have, as part of the review, we have reduced the cost and the capital profile of the Omega 3 business with the focus on selling through on the current inventory. in terms of really the customer supply requirements over the next couple of years. The focus also is looking at how do we improve our cost of goods, competitive positioning, and that's planned with a change in the production zone to the southern hemisphere. That's underway in terms of that activity today. We'll continually look at the capital profile and the cost profile knowing that there have been significant steps already taken and they will continue to be a focus throughout the financial year 26.

And I just want one other point there in relation to the Carinata bioenergy business. The capital contributions from BP support the growth in that platform as well.

Okay, okay. But I guess to get it back to a break-even position, so you need to see either a further improvement in fish oil pricing or some of these shifting of growing to some of these lower cost regions before the earnings get to a break even. I guess, do you have some sort of timeframe on when you could get back to break even? It doesn't sound like 26 obviously, but maybe 27?

Well, we've said we're not going to grow a crop in calendar year 2026. We have said that we will start. So we're talking specifically about omega-3 now. What we have said is we will start to plant in South America small volumes in 2026 and then grow through 2027, 2028. I think the other point I just remind everybody of is that a big catalyst, value catalyst in this platform is global deregulation. And we still believe we're on track to achieve that in 27, 28. In relation to the hybrid seeds business, that is cash generative, so in effect it funds itself. And as I said, just to be clear, the relationship with BP, they are continuing to support us with the ramp up both through SG&A and R&D support to accelerate the growth of that platform. So you're right, it's fundamentally an Omega 3 issue.

Got it. Thank you.

The next question comes from Jonathan Snape with Bell Porter. Please go ahead.

Yeah, thanks, guys. Can you hear me okay? Great. Look, I'm going to ask three questions at a time because they're for three different people. First of all, I just want to touch on the seeds. And I know you've gone through it in a bit of detail, but that 30 million improvement in the emerging platform looks like it's like really three buckets going on there. If I can talk about, you know, obviously one's Carinata. I think you said the plantings are up. I didn't catch if you said how much they're up this year, but I imagine that has some kind of earnings benefit to New Farm. Sounds like the second bucket in, there's this Omega-3, you're planting less of it. So imagine the losses just from simply planting less. They're going to be lower in 2026 when you sell 25. Poppington, the inventory...

there and then it's the fish oil component and i think you've referenced pricing to go to the 26th sorry sorry jonathan well i got the first part of the question which was um increased taranata um so the impact on seed sales or seed revenue seed margin and oil We didn't get the signal.

The omega-3, it's like the reduced plantings, how much that kind of contributes into the omega-3 loss reduction year on year. And then I'm trying to figure out this year because the prices in Peruvian and Chilean ports last week took quite a big jump. And I'm trying to think, it doesn't sound like you've put any of that in your thought process at the moment. And I think that's the first reference price since the AMAPE numbers came out. So if that was to hold or continue, that would be a benefit to the sell-through, I imagine, of the inventory. Is that kind of how I should think about it? But with the latter bit, probably not in your thinking at this point.

Thanks for the question, Jonathan. Brent, do you want to have a crack at that?

Sure. Hey, Jonathan. Just some comments on fish oil pricing first. Yes, we have seen some indications of that jump that you referenced in the Peruvian market, but it's just important to recognize that very little volume has actually traded yet until the quotas are actually caught. So, yeah, we're alive to it. But you're right, our $30 million improvement target for emerging platforms is based on where fish oil prices were trading as of September, which was about $2,600 on the North Atlantic, which is the one we tend to track and follow because they sell into certified fisheries. So absolutely, you're right. If we do see some upward movement that creates upside to that $30 million improvement target, it was really based around the $2,600 range. that we saw as of September. All right. Karen Otter.

Go ahead. I was interested in Karen Otter's thought and how much that contributes.

Yeah, Karen Otter, you know, it's great covered in his script. We're starting to see some really strong fundamentals with the increase in GHG values. Just a comment on that. A year ago, the German GHG ticket price was $75 for a ton of carbon. Today, it's trading at over $250 as referenced by Argus. So that's encouraging us. And as you noted, we did increase our plantings last year and will continue to scale further going into 2026, which creates Seed margin, as well as with rising fundamentals on GHGs, should expand a little. Premiums that we share with BP as well. All right.

And look, can I ask, this is the next question, it's around active ingredients prices. I noted you said they're kind of stabilised, and I think some of your competitors have said that as well in the recent week. If I look at ex-China factory gate prices and some of the actives, there's actually started to be kind of an upward movement, like high single-digit year-on-year gains in some of those commodities. So when you're looking into 2026 and your baseline thoughts, are you kind of assuming a fairly benign environment for actives and therefore sell-through prices? Or do you factor in that there has been kind of this upward movement the last two or three months in actives? And if you find anything, it's a carry on active.

So we definitely use the current pricing for budgeting and forecasting for the coming years. But obviously, we also are very attuned to changes in the prices coming out of China. And it does feel like not just when we look at our own momentum in the second half, but also looking across the industry. It does feel like we're beginning to see the industry as such, beginning to climb out of that pricing depression we've had in the last couple of years. So we hope that we will see that continue in FY26. All right.

And look, my last question is balance sheet as always. The off balance sheet facility utilization was down quite materially year on year, like you shifted a hundred million bucks from off to on. which obviously says operating cash flow is probably a little bit better. But if I'm looking at it right, I think that's the lowest utilisation of the off-balance sheet facilities by New Farm that I can find. Is there any particular reason why you're utilising those facilities materially less than you have in the past? Is it age stock? Is it something else? It just looks like an exceptionally low number.

No, it's not. So, Jonathan, just on the supplier financing, there's just the one facility. The balance at the... It's about $26 million at the balance state. Why it's lower is primarily related to the arbitrage. I guess just in interest rates, particularly between the Chinese, right? And I guess just to reinforce, if you look at our payable stays, they remain flat. So there's no trade-off between, I guess... you know, terms of trade versus debt.

Yeah. Okay. But if you were to use those, like, closer to the historical average, obviously it would move debt off your own balance sheet. So it's just an interest rate arbitrage thing, is it? It's nothing else?

Yeah.

That's correct. All right. Thank you.

The next question comes from Owen Burrell with RBC. Please go ahead.

Good morning, guys. Look, first question for me, just again on the Omega-3. I just wanted to get a better indication from you as to your current Omega-3 oil inventory position. Just wanting to get a sense as to how much oil was actually produced through 25 and therefore what's your carryover inventory into 26. And just acknowledging the comment that you said about no crop being grown in 26, does that mean there's going to be zero oil generated in 26?

Yeah, thanks for the question. Just clarifying on Omega 3 inventory position, along cold metric tons, that's quite commercially sensitive. But what we have is a carryover of the inventory into 26 from the crop last year. And that's been valued at the current North Atlantic fish oil pricing, which one person referred to a $29 million non-cash revaluation. So that's effectively a benefit that carries through to the sales profile in financial year 26. In terms of new crop, there is a legacy crop coming from the FY25 plantings. We're factoring in that there will be some revaluation on that crop relative to where fish oil pricing may go in the future. So that's a factor of that. And then I guess overall the focus is on managing that inventory in terms of optimally getting a cash position from it. And that's in parallel then with managing the demands, requirements from our customers.

I note effectively the 29 mil write-down of that inventory position, but are you able to give us a sense as to what the value of that inventory sits on your books at now? Post that write-down.

The value of that books is probably close on the majority of the Omega 3 facility, which is disclosed in the account. So it's in the order of, I'll give an approximate of about 100 million, which is pretty close to the...

Okay, and just a second question, just on the bioenergy platform, you mentioned quite extensively this sort of new capital light model, but I'm just wondering if you can give us a sense, I guess, functionally or operationally, how has the model changed from what you were previously doing?

The model hasn't previously changed. So the model hasn't changed in terms of three years into the agreements. It's a capital-like model in terms of, from our perspective, as we take no balance sheets, so no inventory comes onto our balance sheet. And also through the partnership, some of the supporting costs and capital requirements are co-funded.

So previously you were taking that inventory on your balance sheet? Is that what I'm reading?

No. No. We're taking no inventory to the balance sheet previously.

So the capital-like...

There you go. Sorry, just other than the underlying Carinata seed. No oil, no Carinata oil or biofuel oil on our balance sheet.

Okay, but it sounds like the Capital Light is very much that the capital contributions are coming from BP rather than from yourself. Is that the difference?

It's co-funded between us and BP.

Okay, I'm just trying to understand what's actually different? What's changed? You're talking about a Capital Light model. But it doesn't sound like anything's actually changed.

Nothing has changed. Okay. I'm just stating that it's a capital-like model.

Oh, okay. Okay, fine. I understand. Thanks for that.

The next question comes from Scott Ryle with Reimer Equity Research. Please, go ahead.

Hi there, thank you very much. My first question relates to slide 13 and the talk about R&D expenditure. I just want to make sure I heard Brendan correctly that the R&D expenditure, broadly speaking, is expected to continue to grow. Did I catch that right? And if so, I guess I'm looking at the material item slide, the slide before. where you've impaired some intellectual property on Sunflower and Canola. And I'm just wondering, and the question stands regardless of what the outlook for R&D is, but how do you make sure that you get your real bang for buck? And how are you ensuring that you learn from whatever's gone wrong with that intellectual property and how does that fit within your re-prioritisation, please?

Well, thanks for the question. Just on R&D, just to clarify, so the expenditure going forward into financial year 26 has a lower level of expenditure than financial year 25, and that's primarily driven by the near-term focus on the research and development pipeline. Sorry, what was your second part of the question? R&D generally.

Just R&D and making sure that you're not your material items in the future aren't writing off intellectual property, which presumably is where the R&D has gone to. How does that fit within the repro reservation, please?

Thanks for that. In terms of material items, the material item relating to the sunflower is a result of the position or the conflict going on in Ukraine and Russia. It's been much more prolonged and severe than we initially anticipated, and given it's a significant sunflower market, that was the driver in terms of the impairment around the sunflower IP. In terms of more broadly managing the benefit that comes from our investment in R&D, there's a rigorous process around your identifying the research and development pipeline that provides, I guess, a balance both in the short term and the medium term, followed with a disciplined approach around stage gating and review in terms of monitoring the progress in terms of the delivery of the benefits. I might pass to Rico. He might add a few more comments just around that. Yeah, sure.

I think we expect the R&D cost to be lower in FY26 compared to FY25. It's due to some of those reasons that As Brendan mentioned around more efficiency around stage-gauge processes and so on, and also because we did have some one-offs in our R&D costs in 25 that we've announced in different press releases. We've done agreements with different partners. Again, those are capsule-like models compared to different, what different companies are doing on R&D. So generally speaking, we do spend a lot less on our competitors because of those partnerships that we have.

Okay. All right. Thank you. And then, Rico, my last question is just for you. Sorry for the football result overnight, by the way. So you've been on board in Nissan for more than three years. I guess I'm just wondering... how do you think the position of New Farm will change over the next three to five years relative to what you've observed the position has changed over the last three? What do you really think is going to be the change in direction for the company, please?

I think it's a good question. I also spoke to it a little bit about in the priorities and the outlooks. That was just for one day, right? Yeah, well, exactly. So as I said in my comments, the short-term focus is really around capital discipline and cash discipline. We want to get our leverage down as we've stated. But at the same time, obviously, we also have to solve for the growth for tomorrow in new farms. And we continue to do that through our investments in R&D in both seeds and crop protection, where we have a strong near-medium and long-term pipeline. And I think, as we talked about earlier, when you see the impact of our new product introductions across the business in crop protection, we've said overly it's around 15% on revenue. But in fact, it is a little bit more when we talk about gross margin. And what you will see over time is that as those new products coming into the portfolio, they will keep improving our gross margin profile and therefore also the earnings for the company.

All right. Thank you.

There are no further questions at this time. I'll now hand the call back to Rico Christensen for closing remarks. Please go ahead.

Thank you. I just wanted to end up by saying thanks for dialing in. I look forward to catching up with many of you over the coming days. And this then concludes our call.