Nufarm Limited (NUF) Earnings Call Transcript & Summary

Hello, and welcome to Nufarm's 2022 Investor Event. I'm Rachel Scully, General Manager Investor Relations here at Nufarm. We're hosting a this meeting from Melbourne today and are on the lands of the Wurundjeri people of the Kulin nation. Nufarm acknowledges the traditional owners of country throughout Australia and recognizes the continuing connection to land, waters and communities. We pay our respect to Aboriginal and Torres Strait Islander peoples and to their elders past, present and emerging. Before we start today's program, I'd like to draw your attention to the disclaimer on Page 2 of our presentation that you can find on our website and on the ASX, particularly the section on forward-looking statements. Joining me today here in Melbourne are Greg Hunt, our CEO and Managing Director; and Paul Townsend, our Chief Financial Officer. You'll hear from both Greg and Paul in today's program, along with presentations from Rico Christensen, Group Executive Portfolio Solutions; and Brent Zacharias, the Group Executive of our Nuseed business. Today's program is a mix of prerecorded and live content. You're welcome to ask questions via our online platform at any stage throughout the program, and we'll endeavor to address them at the end when our management team will join us on the live stream. I'm now very pleased to hand over to our CEO and Managing Director, Greg Hunt.

Thanks, Rachel, and good morning. A warm welcome to everyone, and thank you for taking the time to join us today. Whilst it would have been ideal to present this session in person, and we were looking forward to showing you around our operations here at Laverton, COVID requires that we get together virtually. We are going to use the time today to talk to you about Nufarm's growth aspirations. We believe today is an exciting time to be a part of the global agricultural industry. The mega trends reshaping agriculture right now may very well present the biggest opportunities for growth that our industry has seen in decades. We see a reinvigorated Nufarm at the very center of this evolution. Our business is evolving to meet these industry needs and to capture value from the opportunities that they present. The bulk of our presentation today will focus on what we see as the core drivers for our growth and, that is, the development of our crop protection portfolio and the acceleration of our seed technologies platforms. We obviously can't and don't intend to provide you with any detailed financial forecast today. However, we do want to give you an idea of the potential scale of the opportunity and to share our aspirations for what we want to achieve over the next 5 years. I have our global leadership team on the call with us today, and we've structured the session so that there will be time for discussion with the team at the end of the presentation. So please use the opportunity to ask them any questions that you might have about our growth plans. Before we get into the presentation, I'm aware that there has been commentary and questions about global supply chains, about COVID impacts and about market conditions generally. So let me cover off on what we are experiencing in the market at the moment. Seasonal conditions in most of our major markets are generally very favorable. Relatively high grain prices, and therefore, increased plantings, are driving stronger demand for our products in all of our key markets. Global supply chains continue to be tight, and Nufarm has been impacted by this. And we have not been able to supply all of our customer requirements. However, for the most part, we've fared reasonably well, and this has been due, I think, to the investments that we've made in our supply chain capability over recent years and, in particular, the establishment of our China-based procurement hub. Our revenues for the first quarter of financial year '22 are up 36% over the first quarter of last year. Higher revenues are translating to higher earnings. Nufarm is experiencing upward pressure on costs due to raw material costs and global logistics challenges. However, this is being offset by the increased revenues. The disruption to global supply chains is making inventory very tight. This is having a positive impact on our working capital. Average net working capital to sales for the first quarter was under 35% which, of course, is helping to support our cash generation. The COVID impacts that we saw last year on salmon demand are easing, and we are now seeing improved demand for our omega-3 canola oil. Our 2022 canola plantings are on track to enable an increase in our oil production for next year. On Tuesday, we announced the 10-year BP supply contract and have secured additional carinata plantings to support the first year of this partnership. And last week, we announced the completion of our high yield bond refinancing, further strengthening our capital structure. Our performance improvement program continues to deliver to plan. And we look forward to our full year, assuming no significant demand, supply or pricing shocks, we are increasingly confident of delivering both revenue and earnings growth in financial year '22. We believe earnings will once again be skewed to the first half of the year. That means that we can expect to announce a strong first half result. Today is a very important day for Nufarm. And given that things can change so quickly, I recorded a video earlier this week that I'd now like to play. I want to start by talking about our aspiration for the next 5 years. I do want to make it clear that we are not presenting our financial forecast for the business out to 2026. What we are presenting is more detail on how we believe that we will achieve our aspiration in both Crop Protection business and our seed technologies platforms. Over the next 5 years, our ambition is to reach annual turnover exceeding $4 billion. Improving our sustainability credentials is also important to us, and we will invest in technologies and partnering agreements to help us achieve our goal of a 30% reduction in our admissions by 2030. When we step back to consider these aspirations relative to our industry, we believe that we have a credible plan. The crop protection industry forecast anticipate that the market will grow at 2.3% out to 2025. Our ambition for crop protection in 2026 is to be a $3.7 billion to $3.8 billion business. This equates to compound annual growth of 5.3%. We believe this growth is achievable because when you look at our historical performance over the last 5 years and we take out the European acquisitions and the South American sale, our compound annual growth rate has been greater than 6%. You will also hear today about some of the investments that we are making to support that growth. For our Seed Technologies business, our aspiration is for turnover to grow from the $241 million that we delivered in 2021 to around $650 million in 2026. The omega-3 canola and carinata will be the main drivers for growth. However, we also have a very valuable base seeds platform that will continue to contribute to our growth aspiration. This underlying growth was also demonstrated in our 2021 results. Before Rico and Brent provide more detail on our portfolios, I'd like to remind you of the market dynamics and the macro trends that Nufarm is poised to take advantage of to support our growth aspirations. I know many of you understand the demand drivers for our business. However, as things are changing quickly, I wanted to spend some time on the trends that we see being able to contribute to Nufarm's growth. The first trend is global nutrition. This has always underpinned the attractiveness of the agricultural sector, growing populations wanting to eat higher quality and higher protein foods will drive the fundamentals of agriculture. Predictions are that as we approach 10 billion people, we will need to grow as much as 50% more food in some parts of the world. However, we won't simply be able to find more land. We will have to farm and grow in smarter ways that deliver increased yields and improve farming practices. The crop protection industry has always helped farmers to increase yields. We will continue to help in this area. However, we need to think more holistically than we have in the past. This is where the third trend of sustainability will become increasingly important to our customers, our employees, our communities and our shareholders. The need to limit our impact on the environment and improve our oceans, air, waterways and soil is critical. Nufarm is not only supportive of this trend but evolving to meet and benefit from it. We believe that our Beyond Yield strategy has the potential to contribute significantly to the global environmental agenda. And lastly, modern agricultural technology will play a critical role in addressing these mega trends. As agricultural practices evolve, new markets will evolve, with sources of value not even imagined yet. At Nufarm, we continue working hard to turn world-leading scientific breakthroughs into sustainable local solutions. We believe that the underlying dynamics of our key markets are strong. The crop protection market is expected to grow steadily to $68 billion by 2025. And in our Seed Technologies business, industry experts forecast that sustainable aviation fuel market will need to grow to 119 billion gallons by 2050 for the aviation industry to meet its net zero carbon emission goals. There is a lot of detail on this slide, and you'll have the chance to absorb the detail later. However, the point that I want to make is we have been on a journey to improve the company. While we have made progress, we are prouder of the fact that we've actually built a team that is focused on continuous improvement. It is this execution capability that has strengthened Nufarm's business and there is no clearer evidence of this than our financial results from last year. At the start of our transformation journey, we had 3 very simple metrics: increase margins, reduce net working capital and improve our return on funds employed. These changes had an immediate impact on our financial bottom line within 3 years. Having a stronger and healthier business allowed us to reinvest in the business. We made the acquisition of the carinata platform, we invested in a global ERP system, we continued to invest in our base portfolios of both seeds and our crop protection and we were able to make the European portfolio acquisitions in 2018. These deliberate choices have set us up for future growth. More recently, the sale of the South American business in April of 2020 has strengthened our balance sheet and refocused our business on the segments we believe will generate stronger cash returns. The first stage of our transformation is now complete. We now have a strong business that is globally diversified. This helps to mitigate exposure to adverse weather and commercial pressures in any single one of our segments. In terms of revenue by geography, we are well balanced across our key markets. Our Seed Technologies business contributes 7% of our revenues today. However, our aspiration is to grow this significantly over the next 5 years. We are focused on achieving relevant market positions in the segments in which we operate. We believe that this focus, deeper rather than broader, will allow us to generate better returns. In our Crop Protection business, we have leading position in both the Australian and the New Zealand market, a leading global position in phenoxy herbicides, a leading position in the turf and ornamental segment in the United States and a strong position in serial herbicides in Europe. In seeds, we have meaningful positions in our sorghum, sunflower and canola platforms and a world-leading position in omega-3 canola and a very exciting opportunity with carinata. Our crop protection strategy is very targeted. We do not invest large amounts of capital in early-stage research and development. Our product offer is a combination of the basic products farmers need every season and solutions that deliver particular benefits or meet specific needs. These solutions are generally rewarded with higher margins. We focus most of our activities and resources on 5 core crops. We have chosen those crops because of a combination of their size, their growth potential and our ability to leverage our strengths both in terms of our portfolio and our distribution reach. Scale in our target segments also allows us to develop partnerships with manufacturers who have invested in large-scale heavy manufacturing and need a strong, reliable partner for distribution. This allows us to maintain a competitive position with our channel partners and, together, meet the needs of our shared customers. In our Seed Technologies platform, we are taking a different approach. Yield improvements will continue to be important. However, our focus is more aligned to output traits or, as we call it, Value Beyond Yield. Importantly, we have developed the capacity, capability and the resources to deliver on our aspirations. Nufarm has a history of successful partnerships which provide us with opportunities to expand our portfolio. One of the most important partnerships established in 2010 is with the Sumitomo Chemical Company. We have collaboration agreements covering distribution, development and marketing and manufacturing of various products. This has been a very successful partnership for both companies. We also have a reputation of being able to make complex collaborations work. The omega-3 canola product was the combination of a collaboration with world-leading science through the CSIRO, a good understanding of what grain growers want through the Grains Research Development Council and how to commercialize and build new business models provided by Nuseed. Rico is going to talk in more detail around some of these relationships. However, I wanted to pause here for a moment and share a short video interview from the CSIRO about what it means to partner with Nufarm. Take a look. [Presentation]

I hope you enjoyed that video and it gave you some insight into how our technology partnerships work. Many people think we are just a generic off-patent ag chem company, but we believe we have found a way to have access to leading-edge innovations without having to spend large amounts of capital that early-stage research can involve. I would like to spend some time on the subject of sustainability. There is a lot of public discussion about perceived and real impacts of sustainability, especially about the agricultural chemical market. These perceptions can tend to distort the real picture. The fact is that Nufarm is, on balance, more likely to benefit from the shift to more sustainable solutions than not. We are supportive and evolving to meet the challenges that shifts to more sustainable farming means, and we have the potential to contribute to the global environmental agenda. Nufarm's crop protection products enables sustainable farming practices such as minimum and no tillage cropping, which play a key role in sustainable farming practices by improving soil health, conserving moisture and reducing erosion. We are also working towards a 30% targeted reduction in Scope 1 and Scope 2 greenhouse gas emissions by 2030. My last point on sustainability is that our Seed Technologies business is effectively a sustainability business. It is developing crops that look to positively impact global environmental issues and provide new economic opportunities to farming communities. I would now like to quickly touch on our execution capability. Over the past 5 years, we have assembled a highly experienced management team to lead our global operations and to drive the next phase of our growth. Our team comprises a good mix of deep industry expertise and broader global experience that bring a fresh perspective and boost our execution capability. Our leadership group is supported by a capable and experienced local management teams in each of the regions in which we operate. We are also pleased to be supported by a strong, cohesive and experienced Board led by Chairman, John Gillam. John joined the Board in July of last year following a 20-year career with Wesfarmers. We are fortunate to benefit from his extensive commercial and leadership experience. So to sum up my introductory comments, we believe that Nufarm is uniquely positioned to meet its growth aspirations. Why do we believe this? There are 4 areas where we believe that we have a competitive advantage. Firstly, we are a customer-focused operation. The customer is at the heart of our strategy. Our teams think about what is important to customers and how we can provide growers with better solutions and our channel partners with commercial offers that will help them achieve their business goals. We talk about being a partner for growth, and we live this value every day, growing together with our customers. Our style and values are about being down to earth. We find that this style opens doors, wins a share and our customers enjoy the experience of working with us. We're not big, so we can be agile. And we are excited about the future that digital technologies, data and systems bring to smaller players like us. Historically, we've outperformed the market. Our teams have managed to consistently win share. This builds momentum and a reputation that is strengthening our relationships with our key customers. Secondly, we have a relevant portfolio that is increasingly encompassing emerging technologies. We know agriculture is changing. Nufarm is at the leading edge of these changes with our approach to Beyond Yield in Seed Technologies and the range of new and exciting technologies in our crop protection pipeline. None of this matters, of course, if you can't deliver. This is why we have invested in our people, our systems, upgrading our existing facilities and building new ones. All of these changes are designed to have a well-performing supply chain able to meet the needs of our customers. We have built expertise and deep relationships in the important supply markets of China and India, and we've positioned our manufacturing in areas where we can be close to our customers and provide local flexibility to meet their needs. We are ready to now execute against our aspirational growth targets. Today is about sharing our aspirations and the rationale behind how we believe that we can continue to grow. We have set clear strategic priorities that support our growth aspirations. We are focused on driving organic growth and leveraging the mega trends that I outlined earlier. We have an aspiration to grow beyond $4 billion in revenue by 2026. The breakdown of this revenue is shown in the waterfall chart on this slide. I reiterate again, this is not meant to represent financial forecast to 2026. It does represent management's aspirations for the business. Over the next 5 years, we anticipate delivering $300 million of organic growth in crop protection, and we have a pipeline that will deliver new product introductions of around $850 million. We are, however, expecting portfolio cannibalization and regulatory impacts to reduce the impact by around $300 million, resulting in net growth of $500 million to $600 million off the 2021 base. These aspirations are, of course, influenced by future market drivers, regulatory approvals and industry demand at the time of product launch. The commercialization of our seed technologies is a key contributor to our growth aspirations. We have done much of the heavy lifting associated with developing our omega-3 canola and carinata platforms. The next few years will see the many years of research and development crystallize in accelerated revenues and earnings. The BP agreement is an example of what is possible. We can see a path to the Seed Technologies business contributing revenues of $650 million by 2026. We are excited by what lies ahead for Nufarm, and the entire team is committed to delivering on our growth aspirations. Up next, we're going to hear from Rico Christensen, our Group Executive, Portfolio Solutions. Rico joined us in 2021 and has substantial experience in various markets within the crop protection industry, and I'm excited by the contribution that I believe he can bring to Nufarm. We'll just take a very short break, and then it's over to Rico. [Break]

Hello. Today, I'll take you through highlights from Nufarm's global portfolio strategy and how we partner for growth, including details on our pipeline and key projects that haven't been shared externally before. We hope that after today, you will have a clear understanding of the long-term growth opportunities for our Crop Protection business and how we intend to capitalize on those. Our portfolio strategy remains focused on meeting our customers' needs with 3 main categories of products in our portfolio: foundational, differentiated and innovative. Foundational products are quality, off-patent products that meet the basic needs of farmers and ensure we remain relevant to our channel partners. Differentiated products are new solutions that have innovative characteristics and deliver new benefits for farmers and channel partners. And lastly, we have innovative products that bring unique, high-value benefits to the farmers and help ensure long-term engagement from our channel partners. The following key metrics from Nufarm's Crop Protection business put our portfolio activities into perspective. Last financial year, Nufarm spent approximately 3.4% of our revenue on R&D, including both CapEx and OpEx, a level of our R&D investment above some of our strategic competitors, albeit less than typical discovery companies. It is our ambition to outgrow the market, and we believe we can do that with an innovation strategy that is modeled to overachieve, which we will outline later in this presentation. We have one of the most comprehensive and broadest portfolios in the industry, consisting of 280 active ingredients, setting the stage for organic growth. However, we take a laser-focused approach where we only register molecules in key markets, in line with our crop strategy, to ensure we are not flooding the business with meaningless SKUs which is otherwise common in the industry. Today, we are managing more than 3,000 registrations in our business. This reflects different molecules, various formulations of those molecules in different countries and different packaging sizes. While we are continuously adding new registrations to our business as our pipeline reaches commercial stage, we are also continuously pruning our portfolio through SKU rationalization. Since 2015, we have reduced our SKUs from more than 7,000 to less than 5,000, a reduction of 33%. We are currently running approximately 248 projects across the globe. This pipeline is a mix of new, innovative solutions as well as differentiated and foundational products. These 248 projects consist mostly of life cycle management projects, but there are also new molecules and technologies in there as well as well as new biological substances. We are also currently evaluating around 39 leads from external R&D partners, with open source approach continuing to produce a constant stream of new leads, some of which become projects and, ultimately, commercial products. In the 2021 financial year, more than 20% of our crop protection revenue came from products that have been launched in the last 5 years, demonstrating our ability to turn ideas into leads, into projects and, finally, into commercial products. Lastly, I want to direct your attention to the bottom sentence. We are pleased to announce for the first time to our investors that all our crop protection projects combined are targeted to generate sales of approximately AUD 500 million to AUD 600 million by 2026. This number is not a forecast as there are many variables that need to be managed over a 4-year period. However, we believe this target is achievable, and I will explain the rationale for that belief in more detail shortly. Our global strategy is to focus on APAC, EMEA and North America in soybeans, corn, cereals, TNVV which is trees, nuts, vines and vegetables; and turf and ornamental and pasture, or T&O, as we call it. We have prioritized the markets in segments that are most attractive to Nufarm from a commercial and financial perspective, so we are able to achieve more with less. At the same time, scale is important to give us products and pipeline economy of scale. So we build road maps around our key molecules in order to maximize their use and drive growth through differentiated formulations. By staying focused on selected markets and crops while, at the same time, maximizing the opportunity within those chosen markets and segments, we ensure the best possible return on our portfolio investment. The 5 largest companies in the crop protection industry spend approximately USD 2.5 billion on new chemistry R&D. This number does not include seed technology. Combined, these 5 companies have 16 molecules in their development pipeline. In comparison, other R&D companies, typically based in Japan, China and South Korea, together spend USD 600 million to USD 800 million on new chemistry research. And combined, these companies have 36 molecules in development, some of which are licensed out to the 5 major R&D companies. Many of these 36 molecules are accessible to Nufarm through our partners, and we are currently working on bringing some of them to market in different geographies. Our innovation strategy is modeled to overachieve. We do not invest in basic research and discovery. But as a partner for growth, we invest in building relationships with third-party research companies, universities and other like-minded organizations and institutions. This open source approach give us access to far more funding and thousands of researchers across many fields of advanced and disruptive technologies. This model not only saves money, but it also saves time in taking new concepts to market. It's a strategy that is asset-light and, therefore, has the potential to provide good returns. Nufarm's partners for growth initiative has cemented our reputation as a strong commercial partner for R&D companies and institutions. And we have formalized development and commercial agreements with numerous partners in 3 different categories. The first category is the previously mentioned manufacturers engaged in chemistry discovery, which are typically based in Japan, China and South Korea, such as Sumitomo Chemicals, Nihon Nohyaku, KAKEN, ISK, Nippon Soda and others. The second category consists of independent research organizations, such as CSIRO, various universities and Enko. Lastly, we also work with a range of biocontrol and alternative crop protection companies, such as Agrauxine, Futureco, crop.zone, among others. I'd now like to share a short video with you that we recorded with crop.zone and demonstrates how Nufarm is a true partner for growth. [Presentation]

That's just one example of our partnerships. As I've outlined for you, we have multiple angles of approach which, in return, gives us multiple, if not unlimited, points of access and sources of innovation. After more than 200 projects in our pipeline, 22 projects are particularly important to us. They are all in the development stage which, from a practical perspective, means they are approved and funded projects. Except for one, which we'll discuss later, they have all passed the proof-of-concept stage and are now in the stage of formulation development, regulatory studies, field development, et cetera. Most of the projects mentioned here will be launched prior to 2026 and, therefore, have associated revenue included in our financial target. You will notice that we have a broad range of projects, a healthy mix of herbicides, insecticides, fungicides and some in the others category. The projects with names written in green are biological in nature, meaning they are either fully or partially sustainable. Nufarm has a solid and expanding pipeline. The projects are a mix of foundational, differentiated and innovative products, but what they all have in common is that they are all designed to meet the unique and evolving needs of farmers. The 22 key projects are targeting a market of approximately USD 6.6 billion or AUD 9 billion, but they come with an even higher potential as we broaden our geographic scope and add more crops in alignment with our crop strategy. Altogether, our complete pipeline has 15 projects containing new IP-protected molecules and 9 projects containing new, innovative biological substances. Most of these projects have come from our external partners. Combined, all our development-stage projects have the potential to deliver revenue growth of AUD 500 million to AUD 600 million to our Crop Protection business by 2026. We are also currently evaluating 39 leads, of which 5 are new IP-protected molecules and 15 are new, innovative biological substances. It's worth highlighting that we have not included the potential revenue from these leads in our financial aspirations. When it comes to assessing the potential of these innovations, we do not rely only our internal expertise but also leverage external advisers who sit on our innovation Advisory Council. Dr. David Jones is a Nufarm Board member and Chair of the Innovation Subcommittee. Before joining the Board, he was a member of our Innovation Advisory Council and has spent his entire career in the crop protection industry working for Syngenta and is a member of various Boards of active companies. Tim Hassinger and David Pullan are both members of our Innovation Advisory Council. Tim has extensive experience in the crop protection industry, having been CEO of Dow AgroSciences prior to the merger with DuPont and the formation of Corteva. He's currently the CEO of Intelinair and also serves on several Boards. David is also a very experienced innovator, having worked his entire career in the crop protection industry, most recently as Head of R&D in Syngenta. He currently serves on several Boards of different ag tech companies and research institutions. In addition to our external experts, we have our own internal experts on the council. Along with myself, there's James Barkhouse as the Group Executive, Customer and Marketing and Commercial Excellence; and Mike Pointon as the Global Lead, Transformational Projects. It's also worth noting that we have 150-member-strong global portfolio solutions team. Together, we bring different experiences, expertise and insights that allow us to comprehensively evaluate our innovation opportunities. I want to take this moment to dive into a few specific examples for you. The first is an existing product, Duplosan, where we are doing new development work. Duplosan is part of the group of products called propionics that are a subgroup of the phenoxy herbicides but have some unique characteristics that we are developing. Although the propionics have been around for quite some time, including as part of our portfolio, we believe they are underutilized in the marketplace. We have proprietary know-how that enables us to reinvent these molecules and position them in a way that will increase their market potential significantly. The phenoxy market is attractive. It is projected to grow twice as fast as the rest of the crop protection market from AUD 3.5 billion in 2021 to AUD 4.5 billion in 2026. And Nufarm is one of the market leaders and well positioned to capitalize on this market growth. We are building a road map of new formulations and mixtures around Duplosan that helps farmers with resistance management and control of hard-to-kill weeds. We also may have the added benefit of potentially reducing application rates, making this an attractive technology for the European market. Overall, we expect significant growth over the coming years in this product, with CAGR targeted to be more than 60% of our existing sales. The next example is Trunemco, which we acquired from BASF in 2019. Trunemco is a proprietary, innovative bionematicide made up of Bacillus amyloliquefaciens and cis-Jasmone. This combination provides superior management of the most harmful nematodes with the added benefit of being a biological solution, which means it's fast to register in many key markets. The market for bionematicide is strong and getting stronger, growing 4x faster than the rest of the crop protection market. Currently set at AUD 275 million, it is expected to grow with a CAGR of 13.6%, reaching AUD 520 million in 2026. Trials made internally and through external partners and research institutions show that Trunemco has a good control of nematodes such as soybean cyst nematodes and root-knot nematodes. These nematodes can cause crop losses of 5% to 20%, depending on crop and geography. Trunemco has been registered and is already doing well in the U.S. market. Plans are coming along for a launch later this year into Brazil through our partners in South America. We believe that Trunemco has significant growth potential beyond our original acquisition case. New crops, like cotton and sugarcane, are adding new markets, and we are also working to position this product in the important upstream seed market in mainly corn but also soybeans. If successful, we believe that Trunemco could deliver revenue growth to the extent of 140% CAGR. Even the base case, which is included in our financial aspirations, is targeted to deliver a CAGR of 90%. Next up, I want to tell you a bit about NUCROP. NUCROP crop is a potentially disruptive technology which we are developing in collaboration with crop.zone whom you heard from in the video interview a few moments ago. We made an equity investment in crop.zone in 2021 because we believe in the tremendous potential of this technology. NUCROP is a unique hybrid weed control and crop desiccation solution, combining conductive liquid and electrophysical weeding. The solution works in 2 ways, as it sprays an eco-friendly conductive liquid to target leaves and stems and then applies an electric current to target plants, killing or desiccating them with high efficacy. The outcome is similar to conventional herbicides, which makes it an excellent alternative in the European regulatory environment. Currently, our focus is on potato desiccation, but we have our eyes on larger markets in Europe and elsewhere. We have currently modeled a CAGR growth of 90% from 2022 to 2027, and this is included in our financial aspirations. Now I want to switch gears and give you a glimpse at what is going on beneath the hood of our transformational pipeline. The transformational pipeline are projects where we are investing in defining and validating the proof of concept. Some projects are terminated and never come to operation. Others move into the development stage where they evolve into projects and are eventually taken to market. One of these transformational projects is actinobacteria. Actino is an innovative IP-protected biological fungicide, which was originally discovered by CSIRO and licensed to Nufarm in 2018. This unique biofungicide has shown promising results to control Sclerotinia in oilseed rape in Australia. The global market for this segment is estimated at AUD 300 million with only a few solutions available to farmers today. In addition to Sclerotinia in oilseed rape, we are currently also testing the product in a variety of crops and geographies that could broaden the spectrum and market potential. Although this product is still in research stage, it is moving into development stage with an increasing likelihood of market launch. While we do aspire to launch in 2025 to 2028 and have modeled growth delivering 40% CAGR, we have not included sales from actino in our 2026 aspirations. In 2021, we made 2 strategically significant investments in 2 very different, but equally exciting, companies. The first was in crop.zone, which we discussed a few slides ago. The second investment was in U.S.-based Enko. Enko is a chemistry discovery company that uses a unique combination of DNA-enhanced libraries and machine learning to discover and screen new molecules for crop protection faster and cheaper than traditional R&D companies. We invested in Enko because their discovery process could generate breakthrough chemistry, and we now have a front row seat. They have many promising leads, and we are engaging on a continuous basis to determine which one of those leads are relevant to Nufarm. Our industry is heavily regulated. For outsiders, this sometimes seems confusing and frightening. But for us, we live and breathe it every day. It's just a normal part of our business. We have a strong regulatory team in all key markets that assess in not only registering new products but also defending our existing products with science and data. We are keenly aware of the debate around the safety of pesticides on a political level and more broadly in society and engage actively invest debate through industry associations or directly to inform and educate, always based on science and data. In 2020, the EU launched the Farm to Fork initiative with the intent to improve food security and sustainability in European agriculture which may have an impact on conventional crop protection products in long term. To the extent that we know the impact, we have adjusted for that in our financial aspirations for 2022 to 2026. Additionally, for every single molecule at risk, we have a mitigation plan in place, for example, NUCROP. We are also encouraged by the work we see from member states in Europe. Last year, the Assessment Group on Glyphosate, consisting of France, Hungary, the Netherlands and Sweden, concluded that glyphosate does indeed meet the criteria for approval with a few immaterial adjustments. We now must wait for the member states to decide whether they agree with this science-based recommendation. In APAC and North America, we have made good progress on some of our key molecules. Generally, we do not foresee material issues for our key molecules. Should there be outright bans or situations where we decide not to defend due to prohibitive costs, we adjust our long-term financial projections accordingly. Let us take a closer look at the financial impact of this portfolio and pipeline. By 2026, the existing crop protection portfolio is modeled to deliver approximately $300 million revenue growth over 2021. We are achieving that through our focused approach in markets and crops combined with pricing discipline. We've also equipped our commercial teams with the necessary tools to capture value so we can work with focused channel partners. Our new product introductions are modeled to deliver additional $500 million to $600 million in revenue over 2021. And we are achieving that through some of the exciting projects we presented to you today. Often, these comes from external technology partners that are attracted to Nufarm, our market presence and our market relevance. With these portfolio movements, and all else being equal, we have an aspiration that our crop protection business will deliver between $3.7 billion and $3.8 billion revenue by 2026. Thanks for tuning in today.

I trust you enjoyed that insight into our portfolio. Rico is joining us on the livestream for our Q&A segment. So if you have any questions for him please feel free to send them in via the platform. We'll now take a 2-minute break and be back with Brent Zacharias who will take you through our Nuseed strategy. [Break]

Good morning, and thank you for joining us today. The Nuseed strategy and current technology position is very distinct, unlike any others in our industry. While some of you have heard me speak about our strategy and technology previously, today, I plan to provide some key new information and intend to highlight 3 key themes: number one, Nuseed's opportunity to continue to build and generate value by responding and capitalizing on world mega trends towards sustainable feedstocks and novel ingredients; number two, share key milestones that we have recently achieved, particularly with respect to technology adoption, new downstream customer expansion and our readiness to scale; and number three, we want to outline some of the building blocks and value aspirations of our transformational growth journey. Our Nuseed strategy is trademarked as Value Beyond Yield. That phrase is a reflection of the opportunity we have seized to move forward beyond a seed, grain and commodity yield mindset while adding a multiplier to our existing agriculture system and supply chain. Nuseed achieves that using a seed technology platform to deliver output traits and new value chains that fundamentally change the application and value of a crop to create new sustainable plant-based solutions, creating whole new markets for agriculture. Nuseed has built capability and technologies that address major nutrition and sustainability challenges as well as make greater use of our land base in between traditional crops. Nuseed is opening downstream markets that, combined, are over 100x the size of our traditional seed markets enabled by our output trait and downstream strategy, Value Beyond Yield. Plant-based solutions like carinata and omega-3 are ready now to scale and enable our customers to achieve new sustainability goals. A key element of Nuseed's advantage is the creation of a comprehensive set of capabilities that enable value creation, linking capabilities and partnerships through the value chain from seed innovation to upstream agriculture, to midstream supply chain, to downstream application, all with a focus on the creation of true value and impact to industries and environments. Over recent years, the Nuseed capabilities and internal expertise has grown dramatically, particularly in the downstream application areas, including carbon verification, biofuel regulatory science, aquaculture nutrition, human nutrition and secondary process technology. Our ability to identify, partner and leverage capabilities with other like-minded leaders in the value chain is proving to be a very distinctive component of our strategy. Nuseed is focused on enabling, verifying and delivering impact to the new markets that can be generated from our Value Beyond Yield strategy. So how does this translate to our growth aspirations? Our seed technology platform has an aspiration to grow revenues to $600 million to $700 million by 2026 and achieve greater than $1.5 billion in revenue by 2030 at 25% to 30% EBITDA margins. These aspirations are built on a conservative bottom-up view of the scale-up plans we are currently focused on with existing technologies that are in commercial stage. I don't think we yet know what the timing of full potential peak of our carinata and omega-3 platforms could be, but we expect continued growth well beyond 2030. As you can see, we anticipate an acceleration of our growth curve and expanding margins over time from the very healthy base established in recent years. We are in a much greater position of confidence, with all of our growth platforms having completed core technology development, having achieved significant customer adoption and now ready to scale. We have a highly valuable pipeline and proprietary technology position with line of sight to revenues and continuous margin generation from our first-mover advantage and a strong global base position we have secured. So let's have a look at each of the primary building blocks. First, our omega-3 platform. Omega-3 canola is a technology achievement as the first commercialized, plant-based, long-chain omega-3 and is a key growth platform for Nuseed. It is important to highlight the key elements of our first mover and proprietary position. The technology is underpinned by proprietary genetics, traits, regulatory approvals and stewardship practices. We have an ability to sustainably grow and scale omega-3 oil, an essential and finite nutrient from farmland on a renewable and cost-competitive basis. Aquaterra has been validated through codevelopment research with the downstream aquaculture industry, proving fish performance, health, skin and fillet quality and improved survivability. Nutriterra is the first plant-based source of total omega-3 for human nutrition. It offers significant levels of DHA, EPA and ALA fatty acids as a single product. Nutriterra has completed a proprietary clinical trial demonstrating human health and safety and has been advanced from the seed into a nutraceutical product using proprietary know-how. Evidence from our human clinical trial and the white paper has provided safety impact to blood lipids and reduced risk of all-cause mortality, cardiovascular events and cognitive deterioration. All of this is enabled by seed as a center point of our innovation, a global patent position and an ability to deliver a new solution to downstream customers in a now proven supply chain. Our operating model in this business is to utilize the technology we have created in the seed to work with our agriculture partners, including farmers and crushers, to then directly sell the resulting oil product to aquaculture and human nutrition customers. Together, these cornerstone building blocks generate the capability and capacity for Nuseed to contribute to a doubling of the world's supply of omega-3 essential fatty acids. Turning now to key milestones for this technology. I'm excited today to share greater context and detail of what has been achieved. Since the beginning of this technology development project, there has been a continuous delivery of milestone achievements. On this slide, we are highlighting some of the major milestones over the last 36 months, and these projected within the next 2 to 3 years. 2018 to 2020 were key years for regulatory approvals, product development, supply chain testing and customer experience. Importantly, in 2021, we have shifted from a technology development project to a business, having commenced commercial customer deliveries; achieved UN Sustainable Ocean Business recognition; achieved FDA recognition as a safe, new dietary ingredient; achieved Friend of the Sea sustainability certification; verified Nutriterra clinical trial evidence and delivered our first bulk vessel order in addition to many container-based deliveries. Even more impactful are the outcomes achieved within the market in our first 15 months of commercial operation. Aquaterra has achieved commercial end-use validations and reuse sales with each of our major customers in our first target market in aquaculture being Chile. While we will not be providing revenue updates by platform within Nuseed on an ongoing basis, we feel it's appropriate to share that Nuseed has now achieved technology adoption with over $30 million of sales orders now achieved, with a large portion already delivered. In 2021, we estimate that we achieved 4% market share in Chilean salmon aqua feed formulations. And we delivered a meaningful sustainability impact. Our sales orders of plant-based Aquaterra to date represent the equivalent of having to catch and supply fish oil for more than 150 million 1-kilogram wild-caught forage fish, such as anchovy and herring from the ocean. Let me repeat that. Our supply to date of sustainably produced omega-3 oil equates to fish oil that would otherwise be provided from 150 million 1-kilogram wild-caught fish. Having now achieved these milestones, we are focused on the next steps, customer expansion, launch of second-generation genetics, technology adoption of Nutriterra, moving to new markets, scaling our operations, expanding our margins and achievement to further import market approvals are key outcomes over the next 2 to 4 years. We are currently contracting crop with farms in the United States for planting in 2022, targeting expanded Aquaterra sales orders and delivery into FY '23. Moving to the next slide. Given the impact that COVID-19 had on the market and the significant recovery that is now underway, we felt it is important to come back to the fundamental market drivers for the omega-3 business. It is expected that with unconstrained supply, the omega-3 oil market growth potential can exceed 200% of current levels over a 10-year period. After a COVID-induced slowdown period, the key global salmon industry associations, market researchers and leading companies have all restated growth trajectories, investments and expectations of cost and growth resuming to be equal or greater than the 4% to 5% levels previously assumed. Just the cost and growth assumptions under existing management practices will add the equivalent of 300,000 metric tons of fish oil equivalent demand over and above the existing world fish oil supply of 925,000 metric tons. Nofima research and independent salmon farms are recognizing and recommending a return to higher inclusion rates of omega-3 in farm salmon feed formulations which, historically, was at 5% to 6%. Moving from the current low base of 1.5% up to 3% EPA and DHA inclusion and feed formulas would result in a further 350,000 metric tons of demand in an unconstrained model. Industry experts and our customers are looking to Aquaterra to increase the levels of omega-3 in the feed formulas to enable greater fish health, proportionately achieve higher levels of top-grade fillets in a harvest and to deliver greater nutritional benefit in the final fillet to consumers. Importantly, the global industry has been supportive of our Aquaterra launch as a leading complement and option to fish oil. Additionally, looking to human applications, the combination of expanded pharma uses and plant-based source availability to vegetarian and expansion markets can conservatively add a further 200,000 and 100,000 metric tons respective demand for human markets. Combined, the forecasted opportunity for unconstrained demand is approximately 1.9 million metric tons of fish oil equivalent over the next 10 years. So what other drivers are shaping the market? Fish oil price trajectory has strengthened. In the last 3 years, the average price of fish oil has moved from approximately USD 1,500 per metric ton to now over $2,400 per metric ton. Additionally, sustainability practice to preserve finite ocean marine resources is getting more attention. We are witnessing even greater pressure and attention to sustainability metrics in fisheries, quotas and salmon farming operations. Two of the leading fisheries that deliver fish oil are restricted on quotas or lost their sustainability certifications in recent months. And farm customers are now specifying Aquaterra in their feed formulas, a key enabler to demonstrate sustainability to their end-use customers in response to increasing ESG requirements in the industry. Given the milestones we have achieved, combined with these market drivers, we continue to estimate that the total future market value pool for omega-3 plant-based technologies to be worth greater than AUD 850 million of EBITDA potential for new technologies. This assessment conservatively assumes that plant-based omega-3 will complement and fill the additional unconstrained demand over and above the existing 925,000 metric tons of fish oil in the market. The reality, however, is that consumers, salmon farms and fisheries are all starting to respond to the sustainability mega trends as Nuseed scales our operations and achieves even greater cost of goods advantage over the next 3 to 5 years. We will also be in a position to enable customers' movement away from marine ingredients should they choose to. Moving to the next slide. Nuseed has ambition to continue to be the leading global supplier of plant-based nonmarine omega-3 technology. With our plant-based competitive cost position versus algal technologies and leading commercial position versus other plant-based technologies, Nuseed aims to continue to be the leader in the evolution of this market. Aquaterra and Nutriterra can enable aquaculture and human nutrition industry growth and play an integral role in the achievement of improved sustainability metrics. The demand and interest in technology adoption, support from industry for this transformational technology, is very encouraging. Shifting now to carinata, another Value Beyond Yield technology that delivers carbon stewardship and new renewable feedstocks from farm to fuel. Carinata is a highly scalable business platform for Nuseed with first-mover advantage and a suite of proprietary positions. It starts with the proprietary hybrid genetics and traits platform to deliver seed to farm under our Nuseed production contract system. In 2022, we will be launching carinata and hybridized genetics, a first for cover crops. Nuseed has developed know-how with extraction and crush process patents for the resulting oil and meal, and we have also generated proprietary carbon modeling data, e-farm verification processes and commercial market pathways with our own scientific and digitally enabled approach to deliver oil into regulated low-carbon fuel markets. And we have built a system approach towards stewardship and an audited supply chain system that delivers oil, meal and proof of sustainability certificates to end users that are third-party verified and audited on a field-by-field and end-to-end system approach. Our resulting oil holds several key attributes for the low carbon fuel industry. Carinata's a nonfood oilseed cover crop growing between primary crop rotations, providing net additional feedstock oil from an existing land base that doesn't compete with food production. It delivers a high-quality oil that is specifically suited as an advanced feedstock for renewable biofuels. The oil has been qualified as a drop-in feedstock for biojet, otherwise referred to as sustainable aviation fuel, or SAF, but is also used for renewable diesel production and in coprocessing with petroleum products. We have achieved qualification for carinata oil into several large biofuel markets. As previously disclosed, carinata has been verified and commercially proven to enable up to 1.5 metric tons of greenhouse gas savings per metric ton of oil produced. Importantly, in 2021, carinata was listed by ICAO, the International Civil Aviation Organization, as a listed feedstock for SAF. The ICAO carinata listing includes a base default rating and classification for carinata with significantly greater carbon benefit than any other currently listed agricultural field crop and similar in carbon life cycle rating to that of waste products like used cooking oil. Why is this so relevant in the current world market? Carinata is a ready-now technology solution to the very large and growing market demand for low-carbon fuels and feedstocks which is driven by the need to access sustainable sources of energy to help achieve global greenhouse gas reduction targets. The graph on the left shows industry intentions of committed and announced capital expansions for new hydro-treated vegetable oil, or HVO, refining capacity which will more than double to almost 30 million metric tons by 2025. These facilities who are demanding low-carbon feedstocks will be converted to renewable fuel products with the same chemical and physical properties of fossil-based fuels. Another key transformational change is occurring in aviation. In 2021, the global aviation industry utilized 57 billion gallons of fossil-based jet fuel. Converting from fossil-based jet fuel to SAF reduces greenhouse gas emissions by 80%. Industry associations' governments have stated key milestones for SAF inclusion. In the short term, such goals include the International Aviation Transport Association goal of 2% SAF achievement by 2025, a 3 billion gallon SAF goal from the White House administration in the U.S.A. by 2030 and a 5% goal recommendation from the European Commission's ReFuelEU report. The scale and size of the short- and longer-term ambitions form a great opportunity for agriculture and energy industries to work together. Moving to our next slide. You can see the significant impact that is possible. According to Rabobank research, there are over 170 million hectares of land that are suitable and could benefit from cover cropping practices in North America, Europe and Central South America alone. These hectares today sit bare and unused for productive parts of the year or today are simply planted to a green forage that gets tilled back into the soil with no economic return for farms. Using just 1.5% penetration of these available cover crop hectares, carinata could grow enough feedstock for 1 billion gallons of sustainable aviation fuel production annually from 2030. Under a very conservative modeling, this will remove 8 million metric tons of carbon dioxide per year. This equates to over 2 million metric tons of actual carbon. Carinata as the most productive and first-to-be-hybridized oilseed cover crop was proven to be adaptable to multiple continents and can be scaled step by step. It has potential to obviously scale far beyond 1.5% of available cover crop area in the longer term to support the 2050 industry aims. As we have assessed the impact that is possible, Nuseed began a process of selecting a major downstream cornerstone partner that could bring aligned vision, market position and complementary capabilities to expand carinata. Turning to the next slide. I'd like to now address a major development recently announced, the offtake and market development agreement between Nuseed and BP. The agreement is transformational for the Nuseed carinata business as it helps to underwrite the rapid and immediate expansion of production and sales while also generating positive cash flow and strong returns on the company's investments in the carinata platform. Some of the highlights of this agreement are shown in this slide. Nuseed has entered into a long-term commercial offtake and market development agreement with BP. The agreement will accelerate sustainable production of carinata as a nonfood low-carbon fuel feedstock. BP is committed to a funding schedule subject to certain milestones that underwrites and supports additional scale-up and expansion of supply. Nuseed will expand farm customers and industry partners to grow certified sustainable crop and oil production, and BP will market the sustainable carinata oil and resulting sustainable fuel to the market. Together, we can help decarbonize transportation by reducing carbon emissions with fossil fuel replacement, plus removing atmosphere carbon and restoring carbon to regenerate soil health as the nonfood crop grows between main crops. The agreement represents a strategic alignment between BP and Nuseed, with BP standing as a committed buyer of feedstock and marketer of resulting fuels which also mitigates Nuseed risks associated with market factors, pricing and working capital. Nuseed's carinata platform and this agreement clearly demonstrate Nuseed's opportunity to respond to and capitalize on world mega trends towards sustainable feedstocks and ingredients. It is an exceptional development for agriculture, for downstream fuel customers and for climate impact. Turning to the next slide. I think one of the most exciting aspects of this development is the immediacy: our combined capability to grow sustainable energy now. The agreement leverages the respective strengths of BP and Nuseed and our aligned vision to accelerate bioenergy. BP will bring the capabilities and global footprint from BP products, bp global trading & shipping (sic) [ bp trading & shipping ] and Air bp. Air bp is one of the world's largest aviation suppliers with over 700 locations in 55 countries. And as outlined in our announcement, BP aims to quadruple its total bioenergy portfolio by 2030. With the support of this agreement, Nuseed will immediately be initiating additional plans to scale carinata development and production at pace. With additional resources, we intend to expand our R&D investment for carinata with breeding stations, molecular science, traits and process technologies. In addition, Nuseed will be expanding agronomy, field sales, regulatory and stewardship capability. In total, we expect to add up to 100 additional personnel over the next 3 years to support carinata expansion. Nuseed has already been conducting product validation and development work in all 4 continents with carinata. In terms of next steps, we intend to expand supply from our current base in Argentina and Uruguay in 2022. We'll then launch in the U.S.A. in 2023, followed by Brazil in 2024, while simultaneously advancing further product development in Europe and Australia for future launch. We have strong existing management and commercial capabilities in each of these geographies within Nuseed that can be leveraged. So how does the business model work? And how is additional value created? Nuseed is in the business of building value chains. In this case, creating value from energy transition. We've already been successful operating this value chain with carinata for the past 2 years. It starts with seed and carbon modeling research and development and then contract-based certified crop production with farms, including field-by-field third-party sustainability verification; a purchase of the resulting grain, including logistics and export coordination with industry partners; and oilseed crushing, treatment and sale of resulting oil and sale of the protein side fractions into animal feed. Saipol has been an exceptional partner in the development of this business model. And Saipol is Europe's largest oilseed crusher and a leader in both bioenergy feedstocks and advanced plant proteins. The oil from Saipol processing is further verified, then sold with a sustainability certificate. BP will acquire the oil and market the feedstock and/or resulting products to the downstream industry. So how does this translate to value? This value chain and proof-of-sustainability model enables distinct value creation over and above the physical commodity value of oil and protein. While low-carbon feedstock market values and regulatory frameworks are still evolving, a good, publicly available market report that could be looked at as a barometer of value in sophisticated markets is the California Air Resources Board dashboard, otherwise known as CARB. As shown here, CARB has evolved from about USD 50 per metric ton of carbon credit in 2013 to over $150 per metric ton of carbon credit value today. Using today's CARB value as a proxy, along with our 2030 aspiration of 1 billion gallons of sustainable aviation fuel and over 2 million metric tons of verified carbon reduction, Nuseed carinata would enable GHG and carbon offset premium creation of over USD 300 million or approximately AUD 400 million to be shared between ourselves and value chain members to reward key roles and enable growth. I should note that Nuseed is still finalizing our regulatory pathway approval to trade into the CARB system, but we have been successful in positioning carinata into more valuable but less transparent EU markets under Renewable Energy Directive 1 with our partners. Going forward, we anticipate carinata oil selling into a range of markets at varying value points above the intrinsic oil value governed by the low carbon framework in each jurisdiction. Nuseed also expects seed revenue generation of approximately AUD 100 of revenue per hectare planted to carinata. So now let me come back to where it all begins, our seeds platform. Seeds are the foundation of our innovation and farm supply chain capabilities. Said another way, seeds are the chassis and drivetrain or the hardware and the software of our business. Our Omega-3 and carinata businesses cannot exist without our seeds innovation and supply chain capabilities. Selling seed to farm is strategic and very meaningful to our growth plans. The vast majority of our revenue and EBITDA margins today are generated from our seeds activities. Our rich pipeline in seeds has been enabling double-digit growth rates well above the industry growth rate. This is due to the strength of our pipelines with top quartile genetic performance, our ease of doing business and our ability to leverage local value beyond yield business models, creating new markets and new opportunities for growers. Our multistage gate R&D advancement process provides us with clear line of sight and performance data on continuous flow of products that will be launched and scaled over the coming 5 years. Some of the key positions of note are our Australia canola position, which is going through a consistent expansion through the conversion toward hybrid technology from a base market, which is still today approximately 50% open pollinated and farm safe seed. Nuseed is a clear leader in Australian canola. Our sunflower pipeline holds a full new suite of stacked trait technologies being launched successively over the next 2 to 5 years, including advanced genetic or bounce resistance, new generation mild resistance, herbicide tolerance and ultra-early maturity genes. And sorghum remains a strong position for the business, demonstrating excellent growth in South America and the United States with an exciting early maturity trait that cuts 15 to 20 days off the crop, enabling new farming practices, crop expansion and fits low water use cropping. So let me quickly summarize. Seed enabled value chains have incredible potential to solve world problems. We are well advanced in our mission to build and generate value beyond yield by responding to world megatrends with sustainable feedstocks and novel ingredients. We have significant growth and impact aspirations. We have validated our transformational technologies in the market, and we are now implementing significant scale-up plans. We have exceptional support from our partners and customers, and we are accelerating. Thank you for tuning in today. I want to leave you with a very quick video. It's difficult to convey the speed at which we are responding to mega trends and the enthusiasm to do so with the new teams and customers. So I thought you would enjoy a short video from our carinata team in South America, which I think helps to show you this project firsthand. Take a look. Thank you. [Presentation]

That video certainly helps to highlight the scale of the carinata production underway in Argentina. I hope you enjoyed Brent's presentation. He'll also be joining us on the live stream for our Q&A segment. So if you have any questions for him, please do send them in via the platform. Now it's over to our CFO, Paul Townsend. Paul?

Thanks, Rachel. We've heard from the team on our growth aspirations. I'm now going to spend some time outlining the financial capacity and capital management approach to support the growth. From a balance sheet perspective, Nufarm's credit metrics have noticeably improved since the sale of the South American crop protection business, with net debt having fallen by 48% in FY '21 and leverage net debt to underlying EBITDA at 0.9x as at 30 September 2021. Further, last week, we closed the refinancing of the company's 2026 high-yield bonds. This was an outcome of a review of our capital structure and capital management principles, which I'll talk to shortly. The refinancing results in a reduced the face value of the notes to USD 350 million, down from USD 475 million, a lower fixed coupon from 5.75% to 5% and an extension of tenor to 2030. The ongoing annualized coupon saving of USD 9.8 million provides additional P&L and cash flow benefits. There is, however, a one-off impact of USD 13.7 million, representing the coal price premium payment for early redemption and a noncash P&L impact of $5.3 million for acceleration of deferred borrowing costs associated with the refinanced notes. The new notes provide ongoing funding diversification and increase in new farms debt maturity profile, resulting in an overall strengthening of Nufarm's capital structure. With a stronger balance sheet, Nufarm has additional flexibility to undertake cost-efficient financing arrangements, ensure appropriate levels of liquidity and mitigate balance sheet risk. Moreover, this capacity provides Nufarm with the optionality to explore M&A and other growth options. We remain committed to implementing strategic initiatives to continue to improve the underlying business operations, drive sustainable profit growth and maximize cash flows. Now turning to Slide 53. This slide serves as a reminder of the group's substantial free cash flow generation capacity. For 2021, Nufarm's cash flow was bolstered by a significantly higher underlying EBITDA, together with an improved net working capital position, which resulted in net operating cash flows of $424 million. The significant increase in net operating cash flows was driven by improved revenues and earnings following favorable seasonal conditions and soft commodity prices, contributing to increased demand for crop protection products and seed technologies. Free cash flow of $257 million was reported for the 2021 financial year. Improved cash flow generation provides Nufarm with greater optionality and flexibility on the application of available free cash flow to growth projects, small bolt-on acquisitions, debt repayment, ordinary dividend payments and other forms of capital returns. Turning now to Slide 54. My overarching approach or vision for financial management for Nufarm is to achieve financial resilience through the cycles. What this means is to target at least breakeven free cash flow at the low point in the cycle but for any working capital build. This requires Nufarm to have a capital structure that complex through the cycles and absorb any adverse working capital movements. Towards the end of last financial year, we completed a review of our capital structure and capital management principles. The overarching aim for this review was to ensure we understood the various cyclical cash flow scenarios Nufarm was exposed to and to overlay a capital structure and funding platform to enable financial resilience during the cycles. This ultimately reduces Nufarm's balance sheet risk and enhances levels of liquidity. This approach also requires disciplined approaches to cost and capital management across the business, together with a continuous improvement mindset to net working capital management, given its significance to driving a sustainable operating cash flow position for Nufarm. Our capital management framework provides the basis for capital allocation decisions, including the application of free cash flow. It is intended that Nufarm applies a cascading approach to the use of free cash flow derived from business operations in the following manner. Firstly, apply free cash flow to investment growth projects and/or small bolt-on acquisitions where the projected return satisfied internal return on funds employed measures that exceed Nufarm's weighted average cost of capital. Secondly, consideration of the payment of a dividend linked to free cash flow subject to compliance with a core statutory leverage range of a minimum of 1.5 to 2x under the adoption of a new dividend policy. And finally, consideration of any excess capital return to shareholders in circumstances where Nufarm is below its targeted leverage metrics and insufficient growth opportunities exist to utilize excess free cash flow. These capital return measures may include special dividends and share buybacks. The Board has adopted a change in the dividend policy, ensuring elevated attention to cash generation, especially net working capital management and greater focus on maintaining an appropriate capital structure for the group. In terms of capital expenditure, the chart on the left shows the last 3 years CapEx and depicts the distinction between the investment in property, plant and equipment and intangibles. For 2021, most of the property plant investment is maintenance or stay in business, but there is an element of growth CapEx in the intangible spend, which is investment in new products, product innovation, et cetera in both crop protection and the seeds business units. For 2022, CapEx spend is estimated at $190 million as flagged in our full year '21 results, approximately $35 million of which is new growth projects across the manufacturing plants. This spend is part of a broader investment program over the next 3 years, which is estimated to be around $100 million and includes phenoxy capacity increases at Wyke, water affluent treatment facility at Wyke, 2,4-D plant upgrade at Laverton and Chicago Heights formulation improvement spend. Ongoing CapEx by FY 2020 -- by FY 2026 to support Nufarm's revenue ambition is estimated to be around $190 million to $200 million compared to say, $150 million today. The increase in investment is projected intangible investment in crop protection and seed technologies to support Nufarm's growth ambition. And finally, the growth ambition is expected to be self-funding through positive cash flow generation. Thank you, and I will now hand back to Greg.

Thanks, Paul. I hope that our program today has given you a better insight into our growth aspirations. We believe that the scale of the opportunity before us is very significant. We believe that our aspirations are achievable. The past 5 years of internal restructuring and capability building has transformed our business. We have created a stronger distribution network, a more efficient supply chain, refocused our portfolio, and we've improved our financial performance. Nufarm today is less about seasonal and regional factors, and it's much more about innovation and focus. Our deeper rather than broader strategy, our wide-ranging partnerships, our investment in new technologies, our strengthened balance sheet and strong management, all combined into a more evolved company with a strong growth story. The next phase of our growth and evolution will be driven by innovation. The technologies we have invested in to meet the future needs of our industry will form the core of our growth engine. Our strategy is deliberate. It is future-focused and it's one that we have the skills and the commitment to implement. I am excited, and our team is excited about delivering this next phase of growth for Nufarm. I welcome you now to join in the discussion. So I'll hand over to Rachel to take some questions. We've got plenty of time. So please get those questions in.

Thanks very much, Greg. As a quick reminder, please type in your questions into the chat window on your screen, and we will get to as many as we possibly can before we finish at 11:30 Melbourne time. First off, I'd like to welcome back Rico and Brent, who you've already heard from today. Greg, Paul and I are available in the studio and joining us virtually are our Regional General Manager. So Hildo in Europe, Brett in Australia, and Brendan in the U.S. Also joining us, we have Elbert Prado, Group Executive supply Chain; James Barkhouse, Group Executive Customer and Commercial; and Michelle Monteiro, Group Executive for Growth. Welcome to the Nufarm executive team, and I'm great to have you on the line here with us today. All right. To kick us off. And we have a lot of questions coming through the platform. So apologies in advance if we don't get to all of them, but we will endeavor to follow up individually with each of you post the session today. To kick us off, Greg, we have a couple of questions here from Belinda Moore at Morgans. I'll just go through the questions first, and then we can touch on them. One area of focus is the regulatory position in Europe and the potential impact on Nufarm. How are you feeling about how this will play out? Second question is, there's been some commentary about Australia about the 2021 result being as good as it gets. Would you care to comment? And the final one, where are the areas for growth in the North American market? And can we continue to grow at the same rates that we have been?

Okay. Thanks for the questions, Belinda. I think we're obviously going to cover around the grounds with those. So why don't we throw to Hildo to -- I mean, I guess Rico has touched on some of the regulatory issues in Europe. But Hildo, can you give us a bit more color?

Yes. There's, of course, a lot of debate about the Farm to Fork EU policy that has been proposed recently by EU Commission. What we need to emphasize, it's not legislation yet, and there will be further nuances applied when we look at the outcome of further impact assessment studies, but also the base on the political level. We have a very detailed understanding with all the regulatory expertise we have, but also we closely linked with our industry attestation CropLife Europe to understand the implications. And on the -- when we analyze the possible scenarios, there is no strong indication that the long-term market value of crop protection in the EU will be negatively influenced. And this is also confirmed by independent market research sources like [indiscernible] investors. Of course, there's going to be some downside and this depends on the country, this depends on the baseline taken. But there also will be plenty of upside opportunities. And Nufarm with the portfolio that we have in the region, with the product pipeline that Rico referred to, and the partnerships, we are well placed to maximize those opportunities as they arise. And as Rico mentioned earlier, we have taken full account of the known regulatory headwinds in our forward forecast. And on balance, we believe our new product introductions and our organic growth opportunities will allow our region Europe to demonstrate ongoing growth even if we account for these anticipated losses and are fully integrated in the financial forecast. Thanks, Greg.

Thanks, Hildo. And I think the second question was about Australia as good as it gets. It sounds like one for Brent. Brett?

Brett?

You there, Brett?

Yes, I'm here, Greg. So no, look, we don't anticipate what it gets -- from a seasonal perspective, conditions have certainly been favorable through 2021, yet weather will always have its ups and downs, I guess, especially we made important challenges to our cost base in Australia. And in our cost of service, we're more resilient to weather impacts. We've consolidated 5 factories into 2 to balance domestic formulation capacity to the appropriate level for the market. And we've simplified our offer and consolidated 2 brands into 1. So we believe the earnings profile in our legacy [Technical Difficulty] business is a $50 million to $60 million related through the cycle. There is upside exposure in years and seasonal conditions are growing. But we'll keep growing the earnings and the future is adding more relevant portfolio. We heard quite a bit from Rico about that earlier. I really -- but a really good example of this is carried off. This is a new proprietary herbicide we launched in 2021 in conjunction with our key partner from Korea. It's got excellent set in the Australian market and the product is highly complementary with our existing portfolio. So there's good growth capital.

Thanks, Brett. I guess another comment I'd make there is that if we look at the revenues that have been generated from the Australian business since 2006. Pretty much average about is just the Australian business, about $450 million, and we all know the impact of the drought in the second half of '18, all of '19, first half of '20, but revenues in Australia 2019 were just around $300 million. So the drought in effect cost us $150 million in revenues and probably $20 million in under-recoveries in manufacturing. So I think at that point, we'd probably forgotten just how valuable our Australian business is. And of course, in the last 18 months, we've seen that business bounce back very, very strongly. Great result last year. And at this stage anyway, certainly on track for a good result in 2022. And I think the other question was in relation to North America. Just before I pass to Brendan, earlier, we sort of referenced the deep industry experience in our manufacturing team, and so a blend of that experience and youthful exuberance. And I just want to mention that Brendan achieved a milestone this week of 40 years with Nufarm. And I really believe that part of the success that I hopefully he's going to talk about, we certainly had it in the last 4 or 5 years and he'll talk about the future. But I do believe that his very deep industry experience, his customer knowledge and his leadership has been a large part of the success in North America over the last 4 or 5 years. So with that, build up Brendan, it's over to you.

Looks like we got of a technical glitch. We might come back to that question order in the pace. Let's change tack. So a couple of questions here from Evan, UBS. So specifically on the BP contract, how should we think about the phasing of -- well, sorry, one on the BP contract, how does the BP arrangement work with the agreement you already have with Saipol? And the second question on the Nuseed piece, how should we think about the phasing of the $700 million over the next 5 years?

Okay. It might pay to put the carinata slide up, I think, which shows the business model. And Brent, we'll let you talk to that.

Sure. Yes, thanks for the question. Just to recap on the business model. So just quickly around the circle, if you will, at start of the seed innovation as well as all the regulatory work that we do at an early stage to validate the GHG reduction properties of the crop that forms our regulatory papers as we moves the carinata product into various different countries. The second icon that you see as you go around the wheel is the harvest are there. So we're in the business of -- we're working with growers to contract the crop. And that's fairly involved in the fact that we're working with growers to select fields. We have a lot of digital enablement to capture an incredible amount of data off the farm, as well as we -- third-party verify and audit every single field that's produced to carinata. But then creates grain that gets purchased back from the farm that goes to grain elevators and logistics partners that facilitate the aggregation of the grain and the export. And then getting to your question as you move around to the right-hand side at about 2 o'clock, you see that we do the oil crush and have traceable non-GM plant protein and oil that comes out of the resulting green. And that's right there that Saipol has been playing, as I think I mentioned in my presentation, they have been a great partner. They're one of Europe's largest oilseed crushers and are experts in bioenergy feedstock generation. And they're very, very pleased and excited to be working with us and the announcement of BP in the fact that they will play this critical role as partners in our supply chain, but then sell that oil on to BP that finish the circle on the bottom right-hand side of the fuel pump in terms of then taking that feedstock oil and converting it into low-carbon biofuel. So it really is, I guess, a business where we're in the business of trading and facilitating this value chain from end to end. And the last thing I'd say is that through every step of that, we're verifying the carbon value or the GHG reduction properties on a whole system approach, and tracing right back to individual fields and that creates the additional value that then gets shared over and above the physical value of the oil back proportionally to everyone in the value chain, including ourselves. I guess the second part, I think, of your question was related just to the growth profile of carinata as we look out over the time horizons that I talked about at 2026 and 2030. Recognizing that we're still starting from a relatively slow base -- low base of this crop, the investment and the funding that we are pleased to be getting through the BP agreement will help us to scale quite significantly. And I think as I pointed out, we will be scaling to margin tenure way this year. We intend to be launch into the U.S. and then into Brazil. And then from each of those countries, we can start to grow our businesses. And typically, we would start a launch year with several thousand hectares and then able to grow quite quickly, probably with an objective of doubling the hectares per year in each of the countries post launch. So you end up with a growth curve that's quite steep as we -- just after launch, really looking at probably 2023 to 2029 as being the steepest growth years for carinata coming up.

Thanks, Brent. I might just follow that one off. I've just seen a question pop up from Grant Saligari from Credit Suisse. Would, Brent, please expand the carinata hectare is feasible by 2025 to 2030 and does the 1.5% illustration reflect a realistic long-term Nuseed aspirational target?

Yes. I think what we're trying to outline is that from 2030, we believe that, that is a achievable aspiration to be able to be generating that 1.5% of the 170 million hectares of cover crop potential, rough math, I would say that's 2.5 million hectares by that point in time. And that's -- that to us is a realistic aspiration for us to move towards considering the amount of hectares that are available for cover cropping in our initial target markets of Argentina, Brazil, Uruguay and then moving into the U.S. So that's to ensure you can follow the math in that, that would be moving from a relatively low base to that 2.5 million hectare type of mark by 2030. And I think as I mentioned, the key difference, I think, with carinata is the fact that now, especially with the BP agreement, it's all about scale. In this model, the demand side is enormous, and it's about how fast can we scale to meet that demand. And as I mentioned, our ability to now staff up, add approximately 100 people is what we're planning over the next 3 years as well as further R&D and launch into these different marketplace is obviously a huge opportunity, but we have the confidence at this stage too also in the genetics with the ability to launch our hybrid program. And it's -- I think as the video had probably expressed the enthusiasm not just from our staff, but from farmers to actually have a cash crop option in a period of the year when they typically get 0 revenue off of their land is very compelling. So we're seeing some real momentum building back out in the country and our ability to meet the opportunity that's in front of us.

Great. Thank you, Brent. I can see that we have Brendan back on the screen. So Brendan, welcome back. I hope you got to hear Greg's opener. It was a lovely segue into your question. So can we continue to grow at the same rates we have been in North America, Brendan?

Sure. And look, sorry for dropping off right at the moment. And thanks, Greg, for the recognition on aging, but it's been a pleasure being part of the Nufarm team for us [ about ] the last 4 years. Look, around continued growth, most definitely not just in one of our segments, but actually across all 4 of our segments in North America. And this is driven by our investments in our plants at Greenville in Chicago. You saw a video on Greenville before, allowing us to grow our volume capacity delivering to the market in a timely manner while remaining globally competitive. But with that, we work on towards our customers and our focus on our key customer groups. I mean, deeper relationships have seen us as a partner for growth. I mean Nufarm strategy aligns with our customer. It does not compete. This is a position appreciated by our channel partners. And then growth that you've heard from Rico in our portfolio, I mean, new formulations, which is a real strength to our business, brand acquisitions, expansions into Trunemco, [ India ] and the [ pairs ] or brands as an example, will see our relevance continue to grow. Both of these strategies are differentiated solutions and our focus on foundational products and the core crops we've spoken to will continue to answer growers challenges. And that's why we're here. So in the next 3 to 5 years, we would expect to see our growth rate to remain at a very similar pace to what we have seen over the last 5 years. So thanks, Rachel.

Thank you, Brendan.

Thanks, Brendan. Brent, just a quick follow-up. I think part of the previous question was the relationship with Saipol, we've been growing in carinata -- in Argentina for the last couple of years and supplying that through to Saipol. So I think the question was if we're now supplying to BP, what happens to the relationship with Saipol?

Yes, I can answer that pretty simply on the fact that Saipol is very excited about the agreement that's been announced with BP, they're core partners of ours. So they basically evolve the relationships that they currently have with us, whereby they now have a committed person at the next stage of the value chain that is acquiring the oil. So they'll be working right in the value chain to help support the BP agreement and are very excited to be part of it with us.

Great. Thanks, Brent. Just looking at questions here. How can Nufarm with your small size compete against the bigger players in the market really?

That's how long have we got? Well, maybe we'll -- I'll ask James Barkhouse to answer that question. For those of you who don't know, James, I met James probably 30 years ago when some starting to show my age to Brendan when he was the head of Syngenta here in Australia. So James has had 30 years with Syngenta. So I think he's probably best placed to answer how do we beat someone like that, James?

Thanks, Greg. You're right. It's a tough one to answer in a short period of time. But I think if we think about the old model, the R&D platforms that I came from were very much around he who spends the most wins. And that was primarily the reason that we saw all of those mega mergers back in 2000 or the early 2000s and lastly, the Monsanto, Bayer merger. And while that's worked to some extent, I think most people would recognize it hasn't really worked. And those innovation platforms have remained somewhat sclerotic. And that shouldn't be surprising to us because we've seen it before in the pharmaceutical industry. And what's generally happened is innovation has drifted towards the small start-ups at there more nimble and more agile. The track is talent more recently. They do have the tendency of leaping from one capital raise to the next, and they're constantly looking for partners to bring their new technology to the marketplace. As I said, we saw that in the pharmaceutical industry. And the R&D big players don't always represent the opportunity to be the best partner to bring that technology to the marketplace. They're either linked by their own technology or they have competing technology, frankly, that they're trying to bring from their own R&D houses. And that presents Nufarm with a tremendous opportunity, which we can see they're grasping through some of the examples that we've seen today, particularly from Rico and Brent. We present a good opportunity for them because we are relevant, and we've got a global position and we have that attraction to the start-ups. For us, of course, as we've already mentioned, there's no big capital outlay for us. And from my experience, when I came out of one of the big R&D houses and joined Nufarm 3 or 4 years ago, I was really amazed by the level of innovation and projects for innovation that we're already incumbent in Nufarm that only accelerated over the last couple of years. And I have to say that Nufarm does punch above its weight in this space. Thanks, Greg.

Thanks, James. What do we got next?

We have a couple of questions from Andrew Scott at Morgan Stanley. In Rico's bar chart on Slide 32, what allowance has been made for the negative of deregistration than any other product bands or other renewals?

Okay. Slide 32, is it?

Yes.

Thanks for the question, Andrew. I think the best way to think about that is, if we take the $2.9 billion, what we've done is sort of add $300 million, which is just trying to impute the 2.3% forecast out to 2025. And then I think in my presentation, I said we had $850 million of new product introductions. So whatever that adds to just over $1 billion. And of that, what we've modeled is $170-odd million of portfolio cannibalization and about $130 million of regulatory outs. And I think previously, I've talked about the regulatory out in Europe. So we take that $130 million, about $100 million of that thinking out to 2026 is in Europe. So there's about a AUD 30 million impact in 2022, about another AUD 30 million impact in 2023, and the balance then would be '24, '25 and '26. And what we are saying is that certainly in the first couple of years that those regulatory outs will largely be largely, if not completely, offset by the acquired so-called Century and [ Serve ] portfolios.

Thanks, Greg. John Purtell from Macquarie actually had a very similar question on the $300 million. So I think we can -- we've just covered off on that question as well. The second question from Andrew was around what would your margin expectations be if you can deliver on your aspirational revenue targets in line with current margins higher or lower?

Do you want to take that one, Paul?

Yes, thanks for the question. So the way we've looked at this with the improvement in crop protection through the NPIs and other initiatives, together with the capital investment, we see some crop protection growth in margins together with obviously the additional revenue mix -- improved mix with seeds and the incremental margins there. So we see overall, when you net those out, there should be around about 300 basis point improvement from where we are from FY '21.

Thanks, Paul.

Great. Next question is from James Ferrier of Wilsons. Please provide color on phenoxy competitive position in relation to: a, cost of production relative to peers; b, regulatory influences across herbicides; and c, R&D company trends, for example, Enlist.

Okay. I might track only the regulatory piece of that. And Elbert that will give you a chance to think about the competitive piece. But in terms of the regulatory profile for phenoxies Australia has recently completed its review with no issues. The U.S. is in the final stages of review, and we don't anticipate any material changes there. And 2,4-D was recently reviewed in the EU and has been registered now out to 2030-'32. So certainly from our point of view, our phenoxies franchise from a regulatory point of view is in pretty solid shape. Elbert, are you on the line? Can you handle the issue around our competitive position on phenoxies generally?

Yes, Greg. There is -- I will put phenoxies in 2 categories. First, the phenoxy that we produce in Wyke, in England, we produce MCPA and other smaller phenoxies. So we are the market leaders for that -- at presently. So because of that, we have a competitive advantage in terms of scale for 2 reasons, first, we can secure raw materials at competitive prices, but also we can absorb costs, the conversion cost better than the model players. So as I say, we are a big producer in the world. Now the other part is the 2,4-D and we have 3 sources of 2,4-D. One is, our own plant in Laverton, Australia and the production in Australia space in Australia, the majority of Laverton, in Australia. So that will take care of visualized logistics between regions and countries. And the other 2 suppliers are a key strategic supplier in China and Corteva. And those 2 are the largest producers in the world. So -- and we have published, as I said, [indiscernible] with them as well. So that will give us a very good position internal competitive costs across the half at phenoxy franchise.

I think there was another part to that question, too, which was around the Enlist technology. And I guess the way we think about that is volumes that are produced in the U.S. are likely to go over the top because that's where you would maximize the return. So that leaves the preplant and the burn down as a market that we will target our volumes on. So we would see the Enlist technology, certainly in North America being a net benefit for us, frankly.

Great. Thank you, Greg. A question here. We didn't hear anything today on technology, data, systems, everything you're going to need to get to your growth target. Can you give us some color?

That sounds like a question I should give to Michelle. Michelle, can you -- just so people know. Michelle Monteiro, probably been with us for about 4 or 5 years. Michelle has the title of Group Executive, Growth. And really, these are the types of projects, if you like, or technologies that Michelle spends a lot of her time on. So thanks, Michelle.

Yes. Thanks, Greg. I think there's a tendency, especially in such a scientific-based organization to think that innovation comes from products. And we all have that bias. But I think for any of us who probably booked their holiday on BNB or go to work today with an Uber, we know that technology can fundamentally change the customer experience. And so our investments in data and systems and analytics is all about how can we actually improve the customer experience and have more people want to deal with Nufarm. That's where our time and energy is going. The second piece that we're looking at is how can technology potentially improve our productivity. And we're quite excited by new technologies that are emerging, such as robotic process automation, and we can start to see real benefits that can come to our teams and free them up to spend all time on solving customer problems and far less time on admin. So I hope that helps, Greg.

Thanks, Michelle.

Absolutely.

What do we got next?

A couple of questions, which I'll link together, 1 from John Purtell at Macquarie and 1 for Grant Saligari at Credit Suisse relating to Nuseed business. So Brendan, may I go straight to you for these. Were you Omega-3? Any update on FDA approval status.

And what was the other one?

Cover both good point. Are the -- and the one from Grant Saligari, are the carbon benefits for carinata shared between Nuseed and BP? Does Nuseed captured the entire $100 seed revenue? Thanks, Brent.

All right. First question, in terms of FDA earlier, in -- sorry, in 2021 -- late 2021, we did achieve the new dietary ingredient achievement with the FDA, which is the critical approval that we were seeking to be able to launch our Nutriterra product and the key one to be able to move our Nuseed product forward into nutraceuticals, which is the largest human market being based in the U.S. The other component, I think, of the question is that -- there still is a voluntary approval that you can -- that we have been working through with the FDA for essentially a food safety approval or safety letter. It's actually not approval and its voluntary that is still pending with the FDA. Frankly, we're not as focused on that as we were on the new dietary ingredient, which we do have in place to be able to pursue the human nutrition market. So that one is still pending, and there still is some slowness within the FDA getting that out, but we do anticipate it will continue to come forward, but isn't as big a focus as the prior one was for us. And sorry, Rachel, can you just remind me the second question?

The economics of the $100 and how we share between Nuseed and BP?

Another $100 is the seed revenue.

Yes. Sure. So yes, we were just indicating on this slide that within the carinata business model, we do as part of the contract that we have with the farm. We do sell the seed to the farm and that approximately, we would generate $100 of revenue direct to Nuseed in terms of the seed sales on a per hectare basis. So that is completely a new seed platform that we work with to the farm gate.

Great. Thank you, Brent. A question here from John Purtell at Macquarie. What per annum CapEx is required to achieve seeds aspirational targets? Is BP carinata deal exclusive? Can carinata deal with other customers? Maybe we'll start with the first bit with you, Paul.

I'll deal with the first bit. So you may recall in my presentation, I spoke about the incremental CapEx. Normally, we're around about $150 million and the intangibles been about $100 million PPEs, about $50 million. That's our sustaining CapEx, sort of, if you like, at the moment. Going forward we said we'd get to about $190 million to $200 million. So that incremental and good core $40 million is all intangible investment and it split roughly around 2/3 Crop Protection, 1/3 seed. So the answer to -- the specific answer to the question, what proportion is it that's basically 1/3 of that $40 million, and that's a -- I guess, it's a fairly steady ramp up. And it really follows the ambition that Brent spoke about.

Okay. I might actually, Paul, well -- well, we have you before we go back to yourself, Brent for the BP question. Is there any particular reason why you have consistently run very large cash holdings when your debt costs are probably 4% higher not from [ Campbell Dawson ]?

Yes. I guess having high cash holdings is a good problem to have. And it's probably and I think we went through the cash flow of FY '21 results, talking about the real drivers to that. One of those was working capital. So if you back out working capital movement, which is I think it was about -- maybe about $150 million in that result. You also take out a normal if you like, cash holdings in the organization is another $150 million, so that's $300 million that comes off to $700 million. But then we also realize that with that surplus cash we have, and that's one of the reasons why we reduced the face value of the notes from USD 475 million to USD 350 million. So there's another $175 million that came out of that as well. So our normalized cash position is, whilst it's obviously very healthy, it's accounted in the sense that there are some reasons why we carry it. And there's also, as I said before, we have taken that down, we reduced it by the $175 million with the reduction in the face value of the notes.

Right. Thanks, Paul. Brent, I'll come back to you then. So on the second half of John Purtell's question, is BP carinata deal exclusive? Can carinata deal with other customers?

So the way we characterize it as a BP is a major and primary [ offtaker ] of carinata. So we wouldn't use the word exclusive, but the significance of the agreement is obviously very focused on now supplying and scaling to their needs with them as a standing buyer of the carinata platform. But it goes beyond that. It actually -- the agreement is characterized as a market development and offtake agreement. So there's a significant enablement that's occurring with our BP relationship to help develop the market in the downstream for the resulting low carbon fuels, particularly in aviation as well as the capability that I outlined in terms of their BP capabilities as well as their global trading and shipping capabilities.

Great. Thank you, Brent. And we have another question for you. What is the AUD 850 million EBITDA opportunity in Omega-3 represent on $1 per ton basis? What share does Nuseed expect to achieve of this market opportunity?

Yes, probably can ask the math on $1 per ton basis as there's numerous factors. And I think what we're indicating is that the value of that technology is going to continue to move upward over time, particularly as we see the trends in the Omega-3 ingredient market with fish oil as well as the premium or the value that could be recognized or realized as we see the pressure on sustainability moving upward. In terms of our share, I think what we're trying to state in a different way than we ever had before is that we already are the market leader in terms of new Omega-3 technology over and above the marine and fish oil that's available. And given the position that we're in, both in terms of a market-leading position, as well as the market adoption that we're seeing and the pace at which that we can move, it is our aspiration objective to continue to be the leader, which means there are other potential technologies that can play in that space. But our goal is to continue to maintain a leadership position both in terms of shaping the market with new novel technologies as well as being the leader in terms of the position that we hold in that market.

Great. Thank you very much for that, Brent. A question from Alex Paton from Citibank. Could we please get some more color on the quantum or size of the supply chain costs you're seeing at the moment? And how much price or volume growth are providing an offset in the first quarter of '22? We might hand that one to Elbert. And if you could Elbert, that would be great.

Thanks. What it varies -- it is not even across the board. So in some cases, raw materials have increased double, the price is double. Logistic costs have also increased substantially in some cases. Now given the constraint that we have in supply chain when documented across the industry, our volumes are similar to the volume that we produce for the last couple of years. So the upside is not coming from volume in the plants on absorption costs, but is coming more from price management for our branded industrial sales in the regions.

I think there was a second part to that, too, which is, I think, to what extent were we able to cover that by either volume and/or price increases? And I think as I said in the trading update, we are covering the raw materials, the raw material cost increases, the supply chain -- additional supply chain costs are being covered in the first quarter by both volume and price increases.

Great. Thank you, Greg. I might give with 5 minutes to go. I might stop with the Q&A now. We will respond to everybody individually on the questions that we haven't managed to answer today. But Greg, in our last few minutes, I might hand to you for some final comments.

Thanks, Rachel, and thanks to my team for joining in. But I guess I hope you've enjoyed the program this morning. We know many of you have more questions, and we're keen to have further discussions with you in the coming days. So please call Rachel directly to set up those conversations. Thanks again for your time and for your interest in Nufarm. I'm going to be available as well if people have some questions, and I very much look forward to presenting what I'm certainly hoping in this stage is going to be a very solid set of results for the half year in -- it's the 18th of May from memory or in May. But again, thanks for your time. Thanks for your interest in Nufarm. And as I said, we very much look forward to delivering on our growth aspirations. Thank you.