David Akers - Mark L. Palmquist - Managing Director, Chief Executive Officer and Executive Director Donald C.

Taylor - Non-Executive Chairman, Member of Business Risk Committee and Member of Safety, Health Environment & Governance Committee Alistair G. Bell - Group Chief Financial Officer

Mark Wilson - Deutsche Bank AG, Research Division Stuart A. Jackson - JP Morgan Chase & Co, Research Division Jordan Rogers - UBS Investment Bank, Research Division Todd Curby - Wilson HTM Investment Group Limited Grant Saligari - Crédit Suisse AG, Research Division Matthew McNee - Goldman Sachs JBWere Pty Ltd, Research Division

Good morning, and welcome to GrainCorp's FY '14 results briefing. The briefing is being webcast live and accordingly will be made available in our website later in the day.

The results materials released to the ASX this morning are also available on our website. Let me hand over to our Managing Director and CEO, Mark Palmquist, to start the briefing.

Thanks, David. And thanks, everyone for dialing in or joining the webcast.

I have to tell you, I'm just absolutely delighted to be at GrainCorp. I've been here for a little bit over 7 weeks, and I'm getting to know the company a lot better.

I'm getting a good appreciation for the business, but I'm still learning. But I will say the one thing I am definitely confirming and that is GrainCorp is a great company, and we've got a good base to work from and continue the success as we go forward.

For the briefing today, I'm going to ask Don Taylor, our Chairman and ex-interim CEO, to walk through the fiscal year '14 results and also talk about some of the business unit performance. Then, I'm going to switch it over to Alistair Bell, our CFO, to update you on the balance sheet and the CapEx.

And then, from there, I'll take it back and I'm going to walk through what I'm looking out for outlook for fiscal year '15 and also update you on our strategic initiatives and just give you, again, where I'm at in terms of my view as CEO and where I think we're going. So with that, Don, I'll turn it over to you.

Yes, thanks very much, Mark. And good morning, everyone.

Obviously, being part -- being in the agriculture industry, the weather is a strong determining factor on our performance each year. The weather, obviously, we have no control over, and therefore, we have no control over what grain volumes are actually produced in the bush.

And it's no surprise to all of you that last year's production was on the low side. But what we are focusing on is matters that we can control, and we'll take every opportunity to capture benefits for the company as they come along.

So I want to start out on Slide 4 in your pack, if you have the packs, just dealing with our people and our dedication to safety. Obviously, people are a very important part of any business, and we've spent a lot of time focusing on our people, around our safety and, obviously, around development of our people.

And it's really pleasing to see that our safety performance this year has improved substantially on last year. And going forward, we'll be looking for another substantial increase in the performance or reduction in due rate within the business.

So delighted to see that happening. We've been waiting on this area for 3 or 4 years, and now, we're starting to see the fruits of those -- of that work.

Just moving on, I might just touch briefly on the environment and as well, on this year, for the first time, the company's actually releasing a sustainability report which will be up in our website for your information, and we're delighted to have been able to achieve that. So moving on to Slide 5 which is sort of the summary of the financial performance of the business.

Obviously, with the significantly lower volumes, that's affected our Storage & Logistics business. But we're pleased with the result that we've seen this year with a net profit before significant items of $95 million.

Just like to touch briefly on the significant items and the components, thereof. The $25 million, part of that, that significant amount, it was $25 million of it is in relation to the restructure costs associated with a number of the projects we've got going, particularly the Oils project, the Delta, which involves the closure of the production plant in Brisbane and the redevelopment of the West Footscray facility.

Accounting standards require us to bring that -- those adjustments to account when we announced the project, even though that project won't be finished until the end of '16. Also included in that amount is some costs associated with closure of some other minor facilities.

But the major part of that is actually in relation to the Delta project. And we have also included a $19 million after-tax increase in the claims provision.

We believe it's prudent to increase this provision -- pardon me, for claims to manage the increased likelihood of compensation for out-of-position grain. This is due to the record low levels of grain in the network, not just at downstate [ph], but even subsequent to [indiscernible] up until the start of the next harvest, our grain in the network has got down to one of the lowest levels we've seen in the business.

And obviously, on the way we operate, we operate a common stock system. So when we bring the grain in [indiscernible] or bring the grain into the system, it's not necessarily the same kind of grain that's turned out to the customers.

And under our Storage & Handling agreements, we compensate customers for freight differentials. Now we're confident that the provision is sufficient to cover any claims that may come in terms of compensating our customers for this out-of-position grain.

Of course, having closed a number of depos during the regeneration project, this is obviously added to the likelihood of those claims as well as the fact that it's a very low carry-out year. Moving on to the other issues, in terms of -- on the highlights slide, is the dividend for the year, for the full year, a final dividend of $0.05 to make a total of $0.20 for the year.

And that dividend has been able to be kept at that -- made at that level, but substantially around our diversification program, which we'll see later in the presentation that these new businesses have added to our performance for the year. Very pleased with the strategic initiatives we've announced throughout the year, including the investment in our Oils business, totaling $195 million and our project rationalization to revitalize the Storage & Handling business.

That's project regeneration, which will restructure that business and take cost out of that business, given the new paradigm of competition and also to take complexity out of the network. It's never easy to make these changes.

But by and large, I'd have to say, our growth community have received the changes very well. But the proof will be in the pudding, and actually getting those changes implemented and in place.

I won't go through the other business performances because we'll cover them off in the next slide. Let me turn this to Slide 6.

Earnings profile, the slide provides a good summary of our earnings profile. And the left chart shows that [indiscernible] has changed significantly over the last 6 years.

Weighting shift we've seen the movement from S&L being the predominant business, 87% of our business, going back -- pardon me. In the early years and 2/3 of the processing, and now, it's 2/3 in processing in the year '14.

Although of course, S&L had a very low-volume year. Looking at the split over the 5-year period, the diversifications of earnings for the Malt and Oils have provided almost half of these earnings.

We should note though that although we've reduced variability in the S&L business by reducing its complexity and adding non-grain volumes in marketing and by broadening our grain origination footprint. EBITDA growth has shown here from '09 through the '14, growing by 83%.

So I might just move on to Slide 7 in terms of the sales bridge. I don't want to go through this in detail, but obviously the big breakdown shows a dramatic effect of bridges volumes in the bush.

The other movement in items is pretty much in line with what you see as a consequence of the reduction, the S&L business. Obviously, it's shown as a green box and the thing is a lot of taxation on the right hand side, actually like to be paying a whole lot more tax and making a whole lot more profit.

So I'm more amazed bemused on these bridges when I see the lower tax bid. But that's just the sum of some of the movements for the year.

Moving on to Slide 8. The final dividend, the board has declared a final dividend of $0.05 per share.

As I said, taking the total dividend for the year up to $0.20. And this represents a payout.

I'm using the underlying NPAT of 48% for the year, which means that we're in the middle of the range of our policy of paying between 40% and 60% throughout the cycle. Over the 6 years, we've paid out, if you add the 6 years up now, we've paid out 60% of the top end of our range for the 6 years.

And if you look at this year, and the year going forward, we're looking at next year, Mike will talk about that a bit later, it's still another lower crop year. And the fact that we've announced financial capital programs, we think it's prudent to maintain the dividend that or to make the dividend at $0.05 for the final half-year.

Moving on to Slide 10. That's a slide, a good summary across the businesses, the movements between the year and I won't spend much time on that.

So moving through to Slide 11, which is the Storage & Logistics business. Obviously, the lower volumes, it's been a tough year for this business.

And our farmers, particularly if you look at the distribution of the crop last year, it was actually very skewed to the South and many of the farmers in the North haven't made crops at all which made it very tough for them. Grain production volume down, it says down 10% but that depends on where you actually were located.

Some of them down almost 100%. And exportable surplus, down almost 25%.

So you can see the cumulative effects, lower volumes, lower exportable surplus, similar introductions in company receivables and receivables direct to port. And the cost of domestic market always takes the first, I guess, around 6 million tonnes but we never get near our system.

So we always have the first call. Our throughput obviously goes down.

But our shift market share also goes down and if you look at our throughput for the year, it was down 35%, lower than last year. It sounds like a pretty tough year.

Notwithstanding that, we understand this business is a volume business. And we've made big changes to that business and through the project regeneration.

So we're very comfortable with this business. We're taking complexity and cost out of the business and going forward, we're actually positioning this business to actually be in really good shape when seasons return and production volumes go up.

And particularly, if we see a big year, I think we're in even -- position the company even better in terms of outlook going forward. Of course, we're really taking a lot of cost out of this business and taking a lot of complexities.

It's a hard -- these are hard challenges to make but they need to be done to position this business for the years ahead. Moving on to Slide 12.

Marketing. Actually, marketing's results down on last year.

But given the volumes available, that's not surprising. And I'm actually really delighted over the performance of the marketing division given -- and I'm not sure how much truth you can place or how much reliability you can place in some of the comments of the marketplace.

But given that I've heard in the marketplace that many of our competitors have actually lost quite a lot of money in the previous 12 months, We've actually turned in quite tidy profit given the volumes we've had to trade. It's been a very difficult trading year because there've been very little volatility in the marketplace which makes it difficult to trade on the margins.

And also a lot of domestic demand and that's always trade at a much lower, lower margin. But I am pleased that we've expanded our footprint into Western Australia and South Australia and internationally and the ground volumes in that business are starting to show results and that's coming through.

So while it's a down result in terms of compared to previous years, I'm actually very pleased with the performance of that business. Moving on to the Malt business.

It's been a great year in the Malt business. Sales of 1.3 million tonnes means that we're very close to full capacity utilization within that business.

And if you back out the compensation repayments in relation to the Vancouver Port and the FX changes, we've seen a really strong underlying improvement performance across the business. Strategic initiatives that we've talked about for a couple of years now are now embedded in that business.

And we continue to see this business produce quality malt, especially for the craft and the distilling markets which is an area where we are particularly strong in North America and in Scotland. We've also made the decision and part of that -- part of the significant items includes the closure of a small plant in East Germany, which we after our best attempts couldn't find a way of making that sustainable and profitable and we've closed it down.

Moving on to the Oils business, Slide 14. Overall, a solid result, not spectacular.

And it's actually been, the businesses has had some significant ups and significant downs, I suppose, or ups and downs. The crushing business had higher sales volumes and this is the upside.

The liquid terminals business has very high-capacity utilization and Mark may touch on later some of the growth in that area in the terminals business. And those earnings are growing.

And our complementary business has performed well in that business and it's a bit ironic in the sense that one of those small businesses in that is liquid feeds business in Australia and New Zealand and the performance of the liquid feeds business, which is actually providing drought feeding for the farmers, for their livestock, is actually performing incredibly well with probably I would've preferred to see higher volumes, which would have been more rewarding but it actually demonstrates the diversity of the earnings of the business. On the downside, our foods business has faced some very strong challenges, particularly relating to customer volumes.

It's no secret that the Australian market, the first 6 months of '14 were particularly challenging in the third sector. And we're part of that.

We saw declines in customer volume declines and we also declines in infant formula categories. We worked really hard in terms of replacing those volumes.

But it's a slow process building back up and while I'm not overly pessimistic about the business, it is a challenging area. But I think that the team are really working hard to take up some opportunities and there are opportunities there to reposition that business at the right, in the right place in the market.

And I think the West Footscray development will play a big part in that. Moving forward to Slide 15.

Allied Mills, the milling market is a very mature market. So not much growth in that in the topline there.

So we have to get growth in that business from continuing to diversify and develop more value-added products. That's what we're doing.

We've expanded in New Zealand and we're also expanding in Australia in terms of taking the flare and turning it into higher-value items for the marketplace. So everyone, that's my first and my last, see your full year wrap up.

I wasn't expected to be here for quite so long. But then delighted, I'm very proud of the team.

I think they've done an outstanding job in a quite a difficult set of circumstances, made even more difficult by the fact that we came out of a very disruptive period post the rejection of the takeover by the Treasurer. And I'm actually proud to have been part of that team.

So thanks, very much. And I'll hand over to Alistair to go through the balance sheet.

Thank you, Don. Good morning, everyone.

I'm just going to cover off on the balance sheet and CapEx profile and give you a bit of an update on the debt funding as well. If we move to Slide 17.

You can see that it shows our balance sheet is in a good position. And it's in good position to have the capital investment program that we've got underway.

Don has touched on it, and Mark will give further updates later. Just as a reminder to everyone, our debt facilities match our asset life.

So we look at core debt as a long-term debt portfolio. While we generally fund our commodity inventory with short-term facilities as these are seasonal and turn over annually.

So if we look at our core debt, it's remained relatively constant now for a number of times. For this year and our core debt, core gearing was 22% at $483 million, and it increased in line with what we're expecting and reflects the rollout of all of the strategic initiatives and the total CapEx in the year of $167 million.

We paid dividends of $80 million. And so that included the file of last year but also the interim.

And we've also incurred expenditure out of the significant items. So our core debt ratio will get closer to the 25% as we continue to spend the CapEx ahead of the new earnings streams coming online.

Whilst we talk about court debt, our bank covenants are different. And yet, core debt is a good measure for ensuring we maintain appropriate headroom against all our banking covenants.

And it's pleasing to report that as of this year end, we still maintain very good headroom on all of our covenants. Moving on to Slide 18.

I'm not planning to talk to this, you'll be familiar to it. But it does demonstrate that our inventory levels match our short-term debt position.

Half-on-half, it shows the seasonal fluctuation in the levels of commodities that we hold. And at year-end, you can see the significant decrease from the half-year.

And that's expected as we out-load the grain from one season to next. And as the new season rolls in, we'll start accumulating and, by half year, we'll have run that up again.

So moving to the CapEx slide on -- 19. A lot of this is for background information for everyone.

And we split the stay-in business capital from our growth CapEx. For the -- it's the second year that we've included oils in our stay-in business and you can see year-on-year, it's stay-in business CapEx consistent around the $70 million mark.

That's in line with the range of $60 million to $80 million that we have there. Over the last 2 years, we've spent $111 million on CapEx associated with the strategic initiatives.

These initiatives are important, and we're well underway of rolling out those programs. So in relation to fiscal year '15, the year ahead, we're expecting the growth CapEx to be in the range of $160 million to $200 million.

As it relates to the strategic initiatives, we've set out some details in Slide 36. So we do have a big program ahead.

And as I've touched on, we've got the right debt structure to match those funding programs over the next couple of years as we bring on those new earnings. So I'll hand it back to Mark.

Thanks, Alistair. And thanks, Don.

I appreciate the report on the fiscal '14. I'm going to move on to looking at the outlook for fiscal '15 and so if we can go to Slide 21.

And I do want to set the tone and I'm just going to put it out there that it's going to be a challenging year from a crop production side. And it's something that we're going to have to work through and it's primarily due to second year of below normal grain production in Eastern Australia.

So it will impact the go-forward earnings on Storage & Logistics and Marketing. But I do want to stress, these are both very good businesses.

And these are businesses that have had to work through cycles in the past and we're going to work through them in fiscal '15 as well. I've worked in the Ag business for a long, long time.

So I understand the variability on these areas. And it just means we'll be focused and disciplined in terms of cost and we'll be focused, making sure that every dollar we spend on the CapEx side is a good dollar for us to spend.

But the underlying fundamentals are as strong as ever and with the delivery of project regeneration, Storage & Logistics actually is positioned better. As we move forward in the future, we'll have greater flexibility to deal with crops that are larger and crops that are smaller.

So I'm very pleased about where we're going, and I'll talk about that in a little bit. So fundamentals for Storage & Logistics, just to point it out again, it's for cash it was lower production.

Domestic demand, as Don had mentioned, is quite consistent around 10 million tonnes per year. So that just means the exportable surplus is going to be lower for us so our port volumes will be down.

We're also likely to see a higher proportion of the crop going directly from growers to domestic consumers as well. So the big swing factor for us as we start off the end of the year is going to be watching the weather in Queensland and Northern New South Wales to see what the summer crop is going to be, particularly the sorghum.

So for GrainCorp, we've got a lower carry-in and likely end up with lower receivables and exports are going to be down from last year and certainly down a lot from 2 years ago. So it's going to make it kind of a tough year on earnings.

But I can assure you, we're going to do everything we can to keep our cost down, but continue to maintain excellent levels of customer service. So we ensure we maximize the year as best as we can.

And the impact on marketing, of course, is going to reflect very consistently with Storage & Logistics with the smaller crop. But we'll watch the conditions up North, that could be one positive point that we have.

Going to Slide 22, it just kind of shows the numbers, the changes from fiscal '14 and fiscal '15. So you can see the slight reduction on the crop production, see the difference in the carry-ins.

And also you can see what we're receiving so far. And I looked at it this morning, I think we're just over 3 million tonnes.

So we're on track to where we think we would be, but again it's going to be lower than last year. And grain exports is starting off slow with Australian wheat prices not being very competitive in the world marketplace up until very recently.

But we certainly have a quality here, and I think that's going to help us improve our export sales. Going out to Slide 23, just talk about processing a little bit here.

As Don mentioned, malt really has been a great business and there's still strong demand for Malt particularly for the good quality malt. And that fits in very well in the sectors and where we have a very good competitive position, being in the craft area and the distilled area as well.

Foreign exchange, getting a weaker Australian dollar, certainly could help us on this side. But we also have barley production, particularly quality issues sitting in North America that they're working through right now.

We've got pretty heavy rains in the U.S. areas, and we got snow on the Canadian crop before a lot of that got harvested.

So we're working through that and our guys are on top of it. Oil side also.

That's a great business, crushing business, looks like it will run at high capacity for fiscal '15. Volumes on the refining side, looks like it's stabilized here after a pretty tricky fiscal '14, and we certainly are on path to continue to grow the liquid terminal business and again, we're looking for high levels of capacity utilization there as well.

I want to take an opportunity here just to kind of move beyond '15, give an update in terms of where we're at with our objectives and our strategic initiatives and then finish up again with kind of my views at where I see things at for now. So let's go to Slide 25.

I just want to talk through the corporate objectives here a little bit. And I think it's good to reflect back on where this business was back in 2009.

And it is remarkably different. And you can see by the pie charts going from '09 to '14, just how hard GrainCorp has worked to try to diversify its EBITDA base.

And just looking at '14 and '15, that certainly has been the right path to take. You can see as we go forward here that during that time period, that we've actually had an improvement from '09 to '14 by about 50% in the NPAT.

But if you look over on the return side on this thing, return on equities is not at a level that we find acceptable. And that's something that we're going to work on.

But we think we're on the right path going forward. And we do believe it is continuing the diversity in the earnings, but it's also improving the capabilities.

And the flexibility of the Storage & Logistics will also help narrow the variability on return on equity. Moving on to 26.

I just want to walk through the CapEx here a little bit with the strategic initiatives. And I've stacked this differently than probably how you've seen it in the past.

You can see the initiatives and they're sitting underneath the various business units. And I just want to show where these initiatives are being owned and where they're being executed.

And then you can see how the CapEx comes in towards the bottom. And you can see what has been spent during the fiscal years '13 and '14 and what is on balance.

And we definitely feel that we are on track and we're moving forward. And I'm going to highlight some of those issues here as we look at each one of the business units and how they're progressing on the initiatives.

So if we go to Slide 27 with Storage & Logistics. Obviously, the big one here is project regeneration.

As I mentioned, I think we're on track. Don had mentioned we've been closing some of the sites.

We are developing our track plans. We're going through and putting our cluster model in place.

We're also getting the export direct program put in place, and customers have so far seen a good take-up on that and have really liked the changes we've done. And we continue to work with the governments, and we've had very encouraging dialogue in terms of looking at rail investments and improvements in the country.

Also we've come a long ways on port flexibility. Code of conduct is starting to level the playing field for us in Eastern Australia and is really providing a pathway for reduced regulation in the future.

The ACCC has just recently provided exemption for our Carrington terminal, and we're going to look at potential opportunities for further exemptions in the next year. Moving on to Slide 28.

Marketing is definitely going to have some challenges with the reductions in volumes for '15. But as Don mentioned, this is a business unit that is really heading in the right direction.

What's very important for marketing is to make sure that they stay relevant to their customers overseas so that we can continue to participate in a very competitive way. The other component Don had walked through as well is we're going to keep expanding the origination footprint.

We're going to look beyond Australia. We've been working in Canada in the container business, and we're going to look at other supply chains with origination that allows us to have a diversified supply chain so that we can be competitive, we can have consistent quality and we can perform in terms of timing for our customers.

And we're going to do that. But I also want to make sure that you understand is that we're going to do it with appropriate levels of risk.

This is an area that in my past experience that I have worked through expanding supply chains around the world and I know what it takes and I know how to manage it, and we're going to apply that as we go forward. Moving onto Malt on Slide 29.

Again, this is the processing business. So we continue to find ways to manage our cost out.

We've been working on initiatives that looks at energy and water usage and waste, and they're doing a very good job. But that also means we have to continue to work on producing the quality malt that GrainCorp malt is known for.

It allows us to very much have a good market position in the niche markets that have really shown a growth out here, and that's in the craft sector and also in the distilling sector. And we think there's good potential and a pretty good, long runway on both of those marketplaces.

So we are definitely working on that. And that is key to our strategic initiatives in Malt.

Looking at Oils on Slide 30. I'll just highlight the programs that they've been working on and again, this network footprint and optimizing is on track.

It's $125 million project. We're still working through it and it will take us 2 years.

But we are definitely moving forward and very confident that we're going to get to that point and get the savings out of that. The liquid terminals expansion, we've had $70 million of growth.

That's on track, Fremantle and Port Kembla, both just recently completed. We have a substantial portion of the capacity is already leased up.

And we're going to continue to look for further growth in this area. I would also tell you is that they went through a very large IT integration into our SAP programs.

And that has come off without a hitch as well. So that will give you kind of an update in terms of what we've looked at on the strategic initiatives.

I just want to give you an overall impression now that I've been here for just shy of 2 months. And I've known GrainCorp in the past.

And I've always had a high regard and a high respect for GrainCorp. And I can just tell you that certainly in first impressions, I have not been disappointed.

This is very much a world-class organization. It's focused on the right areas.

It has a very good commitment to the values that Don had walked through on the front end. Safety is definitely a high, high priority and we live and breathe it through multiple levels inside of the company.

And that is really about the passion that we have with our people. They're very dedicated to the roles they perform.

They're also very dedicated to safety and very dedicated to the success of GrainCorp. And a big component of that is a very strong focus on customers all the way from the grower to our international customers as well.

So our immediate focus is just going to look a lot like what I just went through in the '15 outlook. We're going to continue to execute the portfolio of our organic strategic initiatives.

They all fit in well for our continued success into the future and so we've got to drive those with the utmost in discipline. Again, every dollar we're spending on here, we're going to make sure it's in the right place at the right time, and we have that strong focus on all of that and a very good discipline in investments that we're making.

Long-term outlook. There's still strong fundamentals.

We're just working through natural cycles that happen in Ag business periodically. But we've got a very strong balance sheet.

We're extremely well positioned in the whole-grain supply chain. And we've got great natural advantages inside of GrainCorp that we're going to make sure that we continue to work on enhancing those capabilities and really building out further on the model that we're putting in place here with greater flexibility and better performance in the country, better performance at our port facilities, expansion in our processing areas and working on a much broader footprint from great origination base.

So with that, we're done with our formal presentation. I left -- made sure we left time for questions so we'd be very happy to take those questions.

So I'll ask the operator to please let those through now.

I just wanted to focus on the strategic initiatives and the CapEx that relates to those projects. I'm wondering whether you are fully committed to withstanding that capital or whether there could be refinements over the next 1 to 2 years?

And then with the balance sheet. Should we get another below normal season?

Can the balance sheet still accommodate the full extent of the spend or would you have to put those programs on hold?

Well, thanks for the question. And I'll take the first part.

This is Mark. And I'm going to hand the second component off to Alistair because we have certainly done some stress testing.

And I'll have him walk through that a little bit. I am committed to the strategic initiatives.

They all make great sense to me. You can again see what that has done for us in a low-cycle year.

And so, I want to keep driving those forward. The Storage & Logistics, which is the bigger capital spend we have out here, I believe is absolutely imperative.

And it's not just about a stay-in business or hold market share, it really is about trying to reduce our cost, make sure that we stay competitive in the marketplace and make sure we actually improve our performance to our customers. Now we will be very disciplined.

We are looking at everything. And every time that we go forward, we're learning more, and we'll continue to, of course, correct where it makes sense.

But everything that I see in front of us today makes full sense for us to continue to drive forward with the capital programs as I have them outlined on Slide 26. Alistair, maybe you want to address the balance sheet issue for us?

Yes, thank you. As Mark mentioned, we've been doing as we always have -- stress tested our future balance sheet.

And so we always run scenarios to ensure we maintained adequate headroom against our banking covenants. That's the main area that we have to be mindful of.

In doing that, bank covenants around interest cover gearing ratio and the net tangible asset, the -- and we feel very comfortable that we can manage this program. The scenarios that we run about is always about a low carryover and a double drought.

And as Mark said, we remain very comfortable we can fund all these capital projects.

I just wanted to sort of get an idea what the -- how about [indiscernible] detail around the malt turnaround second half of the year. Now I know in the second half of last year, there was likely some issues around your malt procurement.

But you've had a balance of about $30 a tonne in terms of your EBITDA per tonne, second half over second half. How much of that comes through [indiscernible] versus some of the game changers benefits which was supposed to deliver sort of $10 million a year of annual benefit at the EBITDA line?

And when we look at the proper per tonne in malt, is that a new base that we should be looking for from a sustained perspective on a half year basis? Or should we look at the full year number rather than second half?

I'll take that, Stuart. I mean, there's a number of things that you've raised, and they're all relevant.

I mean, firstly, this $4 million of debt from the Port of Vancouver, so that's included. It was their last year.

So -- but it will come off next year, so that's an area that you need to look at. And there's about a $6 million translation number in that.

So if you back that number out, if you're looking like on like, I guess trying to do a comparison, that's the -- in terms of the numbers. Now the dollar -- the decline in the dollar is -- has an immediate translation effect.

But also it makes Australia much more competitive into Asia which is probably important looking at going forward. I think malt margins have certainly, definitely reached their bottom.

But how much upside is in them, I'm not sure. It will depend on capacity utilization.

We're pretty much at the top-end of capacity utilization. So in terms of changing the sort of the formula for the margins, certainly, we're not going to see them go any lower in my view.

But you need to back out that one-off FX if you're looking like-on-like comparisons to try and get a view going forward. If the dollar stays lower, obviously, all our U.S.

currency translations come back, we'll have the benefit of that lower dollar in them. So rolling forward, it will be there.

But I'm just trying to get you sort of a base of looking at the margins which was really around the question you asked Alistair, do you have anything else?

Stuart, I'll just also add you'll notice a slight improvement in volumes. And we found during last year the barley quality held up and allowed us to achieve those incremental sales volumes.

And as Mark touched on going into next year, we've closed a plant in Germany. So those volumes won't be there.

We'll also -- the North American barley quality, we're expecting some additional cost to deal with that, given the quality of the barley that we've taken in from the last half or so. It's probably a bit early to call that as our new base going into the new year.

We'd -- as Don mentioned, we'd probably raise it slightly.

For volumes, you put in there the timing forecast for each crop, each crop production with barley, canola and sorghum is around 16.2%, which at 14.6% share that indicates sort of the 7.5 million tonne receivable number. Is that something that's reasonably -- something that in line with what your sort of thinking is at this stage of the game?

Obviously, that share number will depend on the regional split. But it does look like it's skewed to the South again this year.

Nice try, Stuart. But I'll try and give you some help with that.

I mean we go on the Australian crop forecasters numbers, and they are what they are. There is a bit more crop in the North this year.

But it's very highly sought after because there was no grain up there last year, so we still got the big consumption up there. The lower crop, in terms of guidance, you've got to always take out the domestic that we don't see grain first in terms of when you're doing a percentage.

So we would anticipate that our crop share certainly won't go up, I would think, and it may come down in relation to how much lower the crop turns out to be because the domestic market that doesn't need to use any system always gets the first grab. Now that's not the whole of the domestic consumption.

But it is a big slab of it. So if you're just doing the numbers, you're going to have to maintain your position competitively in the bush.

But that factor that never goes near a system actually changes, it's the denominator which actually changes the percentage. And I don't see the percentage going up.

I can probably see it on the downside rather than the upside.

And how much further down can you carry that comp down? I mean, historically, it's gotten as low as sort 1.3, 1.4.

But and you came to 1.9, which was higher than what you're guiding to. That provided 400,000 tonnes of throughput this year from rundown.

What's the outlook for next year? Can you actually take it lower again and throughput which would then obviously flow through negative in '16, as that's going to be rebuilt.

But [indiscernible] is that as low as it's going to go?

Look, it's a really good question and it's something we agonize over all the time. I don't have an answer.

But what we've seen, when it gets down around that 1.5, the domestic market then steps in and starts to take a lot of ownership to make sure they're protected. I'm not saying the marketplace has changed dramatically since the deregulation of the weak market.

So the big carryovers we saw during the sole ownership days I don't think are gone forever. But I know reluctant to say, it will never go below that 1.5.

But I mean, I think it's probably -- we just see the domestic market move in and safe to start to take ownership when it gets down around those levels.

Just a question for Mark. Just your comments around container stuff in Canada?

And also that you said you'd plan for FY '15 that it's down on improvements, I'm just wondering, which potential offshore expansion. Are there a bunch of things that you're working on now for sort of October 1 next year?

Is that how we should be thinking about it or is it going to be more incremental?

Still working through that. Again, I've got about 7 weeks underneath me.

It's -- the big thing for us is to focus on our core commodities. So if we look at wheat and we look at barley, whatever we can do to complement those with our international customers, that's what we're going to look at.

I will just tell you, certainly on the front end, we're going to be very asset-light. So it's more about gaining supplies so that we can fit it into our international customers.

So for fiscal '15, I wouldn't look for any major splashes or acquisitions. So it'd be more incremental in nature.

Okay, and is FY '16 similar?

Well, I'm still working on '15. So I'll give you a heads up on '16 when we get further down the road.

Sure, fair enough. And just a question for Don.

I know you said when the contract came out for Mark, that the LTI targets have been the discretion of the board and are you going to be disclosing those through the cycle ROE targets like you have in the past? And how are you thinking about ROE going forward?

Yes, look it's been a real focus and I would say it's an area that we're working on. We'll continue our practice in terms of disclosing them, but we always disclose them close to the year and we'll continue that practice.

There'll be no change in that process. But we are looking at the mechanisms that we have in place there just to make sure they're fair both to our shareholders and also to our employees.

So it's an area of concern given that we're heading into a probably a pretty ordinary return on equity. And we just want to make sure that balance is right.

I just had couple of questions. I guess just first, if you could talk about the sort of competition, price competition you might be seeing in the North New South Wales catchment area for grain, just with the competition here obviously [indiscernible] season.

Well, again, we've got a reduced crop and supply in that area. So the competition really comes from domestic market as much as anything else.

It's a deficit of feed in that area that we need to work through. And the wheat supplies up there certainly are getting fairly tight as well.

So when I look at the competition, it's really more domestic versus export. And that it's really going to push down on the export percentage.

Are you able to talk at all at what the step looks like when you cancel at the moment? I assume -- as I've seen the pricing behavior particularly to raise the behavior by the international traders on the Eastern [ph] port?

I don't have it in front of me. But I don't think, it's probably wouldn't be a surprise to say competition for East Coast stand this year is not going to be high given the exportable surplus is going to be significantly below what we've seen in the last few years.

So the other thing that we're seeing is where last year, we saw -- in the year before, particularly, we saw an almost obscene haste of the grain dashing out of the country. It's almost the opposite this year.

Australian grain internationally has been quite uncompetitive, given the domestic chain on the grain. So export is not rushing to load ships at the moment, quite the opposite.

It is a lot of ship book for the same but they're probably asking us to route them to January. So there is a change in the export pattern.

But a lot of that is driven by the fact that the Australian wheat prices they have come more into line in the last week or so. But up until then, we were particularly uncompetitive in the world marketplace.

Sure, okay. Just one other, if I could.

One other if I could. Just in terms of your origination activities out of Western Australia and South Australia, you mentioned that you're going to get increasing contribution presumably you're talking volume.

I was wondering whether you can talk a little bit more about how you're going about that and with the degree to which you're happy with the profitability of that activity?

Yes, okay. Well we actually don't operate the individual books.

We operate world books for all our commodities. We don't actually break out the things.

But it is around volume. But it actually comes back from our customers.

Our customers have demand for Australian wheat. And when it's not available in the East Coast, obviously, they still have a preference for Australian wheat because of its milling qualities.

And we've been working with our customers to make sure, first, that we have stem in Western Australia and South Australia to be able to export and also procure grain in those marketplaces. So I'm not going to give you the volumes.

But we've seen substantial growth in exports from non-East Coast Australia in the last 2 years. And the year going forward is going to be no different from that.

We're going to see good contribution from volumes from those 2 marketplaces. And we're very comfortable with that.

And our customers, particularly our international customers, want us -- if we're supplying the majority of their grain, want us to manage the Australian part of the puzzle. So it's really an essential part of our business going forward.

And we'll look to continue to grow those volumes. It's a different -- it's only a margin in terms of marketing.

We don't have the -- obviously the logistics space. That's a very important part of keeping our international customers well supplied with grain from Australia.

And we look to work with them around the world and to find other destinations where we can assist them. And that's where I think Mark will play an enormous role because he has great experience in that area.

Just one -- I'm sorry, did I cut you off?

No, that's fine. Carry on.

Just one final one, if I could. Just the capacity of the German malt plant that you shut, approximately.

I don't know to be honest

It's around about 25,000.

It's a small plant.

Yes, it's a small, old plant.

We have one more question. I do know if we just take one more and then if there are any others, we'll come back to you.

Look, I'm just after a little bit more detail on that significant item, the claims and losses. It's not something I've seen before and to me to be honest it looks like normal course of business.

Like, if you've already taken a benefit [ph], and you're now taking the hit below the line. So just an explanation I have that calculated is that how you estimate that.

Yes, it's what we do is -- I mean, we've had distribution for a number of years. So it's not a new item.

But what we do is we actually look for -- we actually don't have any claims in front of us in terms of things. But we look at past performance, what's happened in the past years.

It's a bit of a legacy issue coming out of the AWB where we had just 1 owner in Australia. And now, we have all these multiple owners.

So the 1 owner was a bit indifferent about where the stocks came from. But of course, individual owners now have a much farther focus on that.

It's actually looking at what we do as we estimate what we anticipate given previous year's records of what the claims are likely to be. It's actually compensation for out-of-position stock.

And it's really calculated on that basis. It is an estimate.

It's not actually -- there's not a whole bunch of claims sitting in the company. It's an estimate going forward.

But given our -- looking at our low carryover in another light year, and based on past experiences, we believe it's -- it should be a one-off in our view. I mean, it is an estimate.

So you can never say never. But you've got it absolutely right because we don't actually have any claims.

And if it turns around and it's growing everywhere in the network, it becomes a total nonissue. So it's just the peculiarities of this year.

We believe it's one-off for those reasons.

So you're saying it relates to quality of grain transport...?

No, it's more about location things. We operate a network across the whole of East Coast of Australia.

And last year, obviously, we saw no crop in the North and crop in the South. So there's a lot of out-of-position grain.

A lot of big demand from the North carrying out the legacy from the old AWB where we just had one great big pool of grain whereas now it has to be broken up into the 28 owners of that grain. And then probably even more of that if you take the domestics into account.

So it's really looking at that and looking at our past claims history when we had a low year, what the likely outcome is. But it is just an estimate.

It's not actually, doesn't represent a number of claims that have been lodged on the company. It's more of a prudence method than an actual -- these are the claims that we're seeing sitting in front of us.

Okay, well thanks everyone for joining. I know there are a couple more queued up questions.

But please get in touch with me during the day. Thanks for joining the call.

The webcast will be made available on the -- on our website later in the day as well. Thanks a lot.