Ridley Corporation Limited (RIC) Earnings Call Transcript & Summary

Thank you, Kaley, and good morning to everybody. Thank you for your attendance at short notice today. Just before we get our presentation underway, it's Richard Betts, CFO and myself. I just need to run through some housekeeping. Given the fact that there are U.S. legal requirements, we do have restrictions to what we can discuss on this call. So I just need to read out some formalities. Due to legal restrictions, we're unable to discuss any details around the equity raising other than the basic terms referred to in the acquisition and equity raising announcement and investor presentation released on the ASX today. Please refrain from asking questions beyond the specific details of the equity raising as we are legally restricted from answering those questions on the call. Thank you. With those formalities out of the way, Richard and I will be referring to the presentation that was loaded up earlier this morning on the ASX. And if I can commence on Slide 6. And by way of introduction, Ridley is due to acquire from Dyno Nobel, the fertilizer distribution assets for $300 million with a put and call option to acquire the Geelong North Shore property for $75 million. The overall summary of the transaction is that we're buying the #1 fertilizer distribution business in Australia with a 46% market share, and I'll explain why scale is important later. Importantly, this excludes the manufacturing assets that are held by Dyno Nobel as those are either being retained or being transitioned to closure, and Dyno Nobel is remediating those costs. For Ridley, this provides a new growth pillar. We have 3 pillars at Ridley, the Bulk Stockfeeds, the Packaged and the Ingredients, and they all have their own growth prospects going forward. And importantly, this provides a fourth pillar for Ridley and builds us into the leading diversified agricultural -- Australian agricultural services company. The footprint of the business we're buying is similar to the Ridley operations on the -- predominantly on the East Coast of Australia. And the skill set is common as commodity risk management and logistics, supply chain management and customer relationships. So we see this as a highly complementary acquisition, and Richard will spend more time on the financial returns, which we believe to be compelling. If we move across to Slide 7. Why this acquisition? Ridley has, for a number of years, been following the Incitec Pivot divestment plans and sought ways to introduce ourselves into this process. It is the opportunity to buy a complementary business and hold a competitive position. Why Ridley? We believe we have the capability in the same skill sets as that held by the fertilizer distribution business. And we have common customers through the rural retail market. And some of the customers for Incitec Pivot Fertilizer are suppliers of grain to Ridley. And why now? Well, a combination of the fact that this business is now a distribution business, which is the most consistent in earnings operating in the middle of the supply chain. And so with the exclusion of the manufacturing assets, this business presents itself to a nice alignment with the existing Ridley business. So that's only been possible through the most recent sale process that Dyno Nobel has run. And lastly, why now? Well, we believe that this timing with Ridley being in a good position, having taken a bit of a run-up, got our capacity for -- to digest such a transaction and from a balance sheet point of view, together with the attractive price at which we believe we've acquired the business for. I'll next bounce to Slide 14, which describes the position of Incitec Pivot Fertilizers relative to other players in the market. You can see there with a 46% market share, it's 2.4x the size of the next biggest distributor in Australia. And we also have a surplus distribution center capacity. And this is really important in -- as the business transitions from being a manufacturing-led fertilizer business in Australia to an import-only manufacturing business in Australia. So as we convert this business from the manufacturing footprint to being import-led, we'll be competing on an even footing with those other 3 competitors in Australia. And importantly, scale makes a difference. You can appreciate that when you're importing boat loads of 50,000 tonnes, if you can sell that product in a shorter period of time, there's working capital advantages, there's throughput advantages through your storage and distribution network. And there's a number of cost fundamental cost advantages that we will have relative to other competitors. So this is a key focus area for us and something that we diligenced quite heavily through the process. I refer to Slide 15, where you can see where the distribution footprint of Incitec Pivot is, and it's pretty aligned there with the footprint of the existing Ridley businesses. And so in and amongst that, you will find quite a lot of incremental synergies that we see we could enhance over time. Moving on then to Slide 19. I wish just to bring to your attention back a number of years, the Incitec Pivot Fertilizers business assumed the offtake agreement for the Perdaman facility. Perdaman is a urea facility that is being built with a targeted commissioning of financial year '28. And Incitec Pivot entered into an agreement with the holding party of Perdaman to take responsibility for the sales of the entire Perdaman contract. As was announced by Dyno Nobel today, that contract has been sold to Macquarie Commodities. And as we, Ridley have negotiated a back-to-back offtake arrangement with Macquarie for a minimum of 700,000 tonnes on terms that will give us some import parity advantage in both the pricing against the Middle East benchmarks as well as capturing some of the freight advantage. And so going forward, we see the ability to underpin our competitiveness and grow our earnings from the commencement of the commissioning of the Perdaman urea plant. So just to highlight, that is not in the base financial assessment that has been presented in the numbers today. However, we see the benefit of this being akin to the benefits that we will be achieving in the next 12 months from the sale of the product from Phosphate Hill. And as we've called out in this analysis, that's about $8 million, which the Incitec Pivot Fertilizers business will make over the period through to September 2026. And beyond that, we cannot be certain that Phosphate Hill will continue, but should it continue, we would receive incremental earnings on -- from there on. And again, that has been excluded from the calculations to give you the earnings accretion of 25% per our modeling. So just in summary, both the offtake agreement from Phosphate Hill and the future agreement of the Perdaman supply arrangements are not in the 25% base case presented today. My last slide before handing over to Richard, if I can ask you to go to Slide 27. The relevance of this is Ridley sees an opportunity to operate the Incitec Pivot Fertilizers business in a similar fashion to the journey that the Ridley business has been over -- been on over the last 5 years. So those who are shareholders in Ridley or have followed the Ridley journey, Ridley 5 years ago was already the largest in the country. There was opportunity for us to streamline and focus on our execution for customers in Australia. We reviewed the footprint. We were only operating at 72% utilization of our feed mills. And we were able over time to reduce our operating costs, share that with customers, grow our market position and as you can see, steadily increase our returns. And we see much the same opportunity here within Incitec Pivot Fertilizers. Incitec Pivot Fertilizers has been a manufacturing -- domestic manufacturing business. That won't be the case going forward. This will be an import model. We see the opportunity for us to realign the business to match that model. We see the opportunity for us to integrate further through the supply chains to meet the needs of our customers. We see opportunity to invest as this business is coming out of an explosives-led business where it wasn't the primary destination for capital expenditure, and we see it being part of an agricultural business, which is well capitalized and has the capability to invest in our operational capacity that we can drive the cost leadership as well as the market share of Incitec Pivot going forward. So that's our thesis for this business. We have provided $7.5 million in synergies in this model that's been presented in the financial modeling that's been presented today. It is -- those are more generic corporate kind of cost benefits. However, we do see that we can bring further integration benefits over time. We have our thoughts on how that might come about, but it will only be when we are in the business and have had sufficient time to work it through with the experienced management team of Incitec Pivot Fertilizers that we will be able to work up the plan going forward. And we would hope that by the end of this calendar year, we're in a position to communicate to the market where the key areas of opportunity are and what the profile and plan is for us to unlock value from this acquisition. So that's the plan as we see at this point in time. And those -- the benefits from that process are not in the base financial model. I'll now hand to Richard just to take you through the financial metrics of this transaction.

Thanks, Quinton, and good morning all. Quinton's just aligned the acquisition to the Ridley journey of the last 6 years. And as such, I thought it was appropriate that we started at Page 34, which those who have been involved in our journey have seen many times, which is our capital allocation model. This is the tool or the road map upon which we run our business and indeed make all our investment decisions. And in negotiating the acquisition of IPF, this has been no different. Running down through the list of priorities under the capital allocation model, our key focus has always been to ensure that we are able to recapitalize the underlying business through the management of maintenance capital and also through the tight management of working capital. To this extent, we have ensured that the model prioritizes the spending of maintenance capital to ensure the business is able to and does align to the expected Ridley standard. Moving to our balance sheet. Our intended range through all parts of the cycle is that we run a leverage ratio or net debt to EBITDA of 1 to 2x. Our balance sheet as a result of this transaction, and I'll cover the funding sources in a bit more detail later on. Our balance sheet is expected to be geared to 1.3x pre-AASB and the reported ratio would be 1.1x. So well within our range and providing still the flexibility around how we manage the transaction going forward. In terms of our dividend ratio, it is assumed that we will remain within the 50% to 70% of NPAT range with an intention for the dividend to continue to be progressive. Pulling all these factors together, the transaction aligns very well with the capital allocation framework that we've put in place and have used in terms of running our business for a number of years now. Turning to the detailed transactions themselves and Page 21 and the historical EBITDA. The distribution model traditionally has had a more consistent earnings profile than the operations than the [ IPO ] business, including the manufacturing operations. Similar to our bulk operations, it trades against indices for both the supply of product and the subsequent sale to customers. In terms of the individual years outlined on the page, you can see that the distribution volumes have remained relatively constant over the 4 years that are shown here. And the EBITDA years have largely been consistent with the exception of the FY '23 year, which marked the outbreak of the Ukraine war. During this period, for a very short period of time, the business was exposed to price lags. Since then, the business has looked at its governance and management of the import model more closely and has changed its policies to ensure imported product is significantly locked away against customer contracts before products sale on boats, therefore, reducing any exposure to even lags associated with very high periods of volatility, which over the journey have not been traditionally common. The LTM as at March represents a point midway through the season. And with the drier conditions in South Australia, the business is still expecting that there will be some delay in terms of the season starting in those southern states, but is aiming to do approximately $80 million in FY '25. However, as noted in the commentary box on the right-hand side, if the business were to miss these targets, there is an adjustment mechanism within the purchase price. However, generally speaking, the distribution business has a much more consistent earnings profile than the overall Incitec Pivot business. The other issue to note in regard to the financials is that our bulk and their fertilizer business have the ability to partially offset each other across different seasons with our bulk business being countercyclical to the traditional agricultural seasons, i.e., we generally get a benefit of somewhere around $5 million EBITDA uplift in terms of our bulk business through drier periods as we see more feeding within the ruminant sector of our business. This allows some form of offset in the event of drier conditions within the fertilizer business and vice versa in terms of other parts of the cycle. Therefore, there is a very strong alignment between our bulk business and the Incitec Pivot Fertilizer business, distribution business. Turning now to Page 28 and the overall detail of the transaction. The business will be acquired via a combination of core debt with our existing banks, which will be extended by $200 million to $350 million, with 50% of that debt maturing in 3 years' time and the remaining 50% extended to a 5-year facility. The terms of these facilities are favorable to our existing terms, delivering an overall benefit associated with scale. An entitlement offer and placement has been announced today for $125 million being made up of a $90 million renounceable rights offer and a $30 million -- $35 million placement. The third component of the structure is a vendor note of $50 million. The vendor note will be treated as equity and the distribution rate of 9% will be partially funded through the use of our excess franking credits. As noted, our LTM on an LTM basis pre-AASB 16 leverage will be 1.3x, which is well within our desired leverage range as per the capital allocation model. The funding mix that we have negotiated in terms of the components of debt, the equity raise and the vendor notes, we believe provides the maximum funding mix in terms of providing flexibility and optionality to drive the best return for shareholders. Finally, now turning to Page 29. The implied multiple for the business is 5x post synergies. The acquisition is expected to be 25% EPS accretive in FY '26 on a pro forma basis post synergies. And as Quinton spoke about earlier, this number does not include the $8 million benefit associated with the Phosphate Hill earnings in that particular year. If this was to be included, the EPS accretion in year and as will be reported will be north of 30%. We have assumed synergies of $7 million per annum to be delivered over the first 2 years post-acquisition. These synergies will come from the benefits of consolidating corporate functions, i.e., insurance, IT costs and people costs. The EBITDA reported -- to be reported will be approximately $86 million. The cost of IT integration is expected to be a one-off cost of $13 million in year 1 with ongoing finance capital requirements for the business in the range of $25 million to $27 million. The reported EBITDA, as I said, excluding Phosphate Hill is expected to be $86 million. I will now hand back to Quinton for further remarks before we take questions.

Thank you, Richard. So in summary, we believe we're buying a good business with upside potential. We consider the price to be attractive as supported by the financial metrics. And we consider Ridley to be well positioned to execute on the transition requirements for the Incitec Pivot Fertilizers business to an import model as well as the overall integration into Ridley. So I'll open that up for questions.

[Operator Instructions] Your first question comes from James Ferrier with Wilsons Advisory.

Can I firstly ask you about -- and you touched on this earlier, Quinton, in your comments, but if you look at Ridley's existing business, the animal nutrition business, it's very much strategically focused on volume growth and operating leverage. And there's been a more modest exposure and sort of proactive risk management around commodity price movements and the influence that can have on the earnings of the business. When you look at IPF as a business, do you think it changes that dynamic more or less? Do you see it operating with a similar quantum of earnings variability associated with commodity price movements or perhaps more?

Thanks, James. So the overall supply chain is very similar. So as we -- in our Bulk Stockfeeds by grain and address the variability and the volatility within that grain price, as you say, we've always taken a conservative process on that, largely back-to-backing the buy-sell differential and just being able to work around the edges to add value to that. So a small amount of volatility is good for us. Significant shocks isn't good for that business. Equally, we see the similar model for the Incitec Pivot Fertilizers business. acquiring commodities based on indexes, needing to manage the buy/sell differential and how we manage that. So through our diligence, we've spent a fair bit of time understanding how Incitec Pivot manage that risk. I think fair to say they're gaining in expertise in that area as they transition from a domestic manufacturing to a greater import model. And in recent times, have been successful in managing that differential. That's a key area of focus for us going forward. And we think that bringing our combined skills and focus on that area, we can continue to manage it. I think as you appreciate, Ridley is a nice portfolio of assets. The bulk business has some earnings variability. The Ingredient Recovery business has some earnings variability, the package sector less. We see the Incitec Pivot businesses as bringing stable earnings, albeit, I would say, marginally more earnings variability just given the length of the supply chain from import to domestic sale. That said, within the portfolio, I think it's a pretty robust portfolio. And to the extent that there's seasonality in terms of dry conditions, wet conditions, as Richard referred to earlier, there's a bit of countercyclicality there. So overall, we see this as complementary to having an agricultural services business that would have predominantly reliable earnings profile going forward.

Second question, just on the various changes or potential changes to the sourcing models. So I'm just probably initially clarifying your comment in your prepared remarks there. So in a scenario where the Phosphate Hill volumes going forward are sourced from global markets, that would leave the business, the EBITDA, $8 million worse off, but that would be essentially offset by an $8 million benefit from the Perdaman supply arrangement. Did I understand that correctly?

I think just for clarity on that. So yes, you've understood it broadly correctly. The first point to make is the benefit of having the domestic Phosphate Hill marketing contract means that we're making money on the export of some of those Phosphate Hill sales. But given the seasonality of the demand in Australia, the IPF business is already importing in peak periods and then exporting out of peak periods. So yes, the $8 million is made around the benefit of having that Phosphate Hill supplier contract, and we've only used that through to September 2026. And yes, that's $8 million. There might be a delay -- there may be a timing component here. We don't know how long Phosphate Hill will continue for. If it did cease production in September '26, there would be a gap until Perdaman commenced, which we expect in FY '28. But yes, there would be an offsetting -- more than offsetting quantum of dollars coming in from the Perdaman contract as we see it. Obviously, if Phosphate Hill was to continue on past FY '28, that will all be incremental.

And James -- sorry, James, just to clarify in terms of what we've financially modeled, as it's indicated on Page 29, as Quinton just said, we've obviously taken off the impact of the Phosphate Hill. We've included in our numbers the run rate synergies, but that is what we've modeled. There is no assumptions in the distribution business in relation to Perdaman.

And the final element to that dynamic around potential changes to sourcing, the cessation of the single super phosphate manufacturing at Geelong, how has that been reflected in your financial projections?

Yes. So we have assumed that the business will transition over the course of the next 6 to 9 months to an import-only model. So from an underlying EBITDA, that has been assumed in all our numbers going forward. And we have assumed that there will be a slight buildup of working capital through the course of the next 6 months to ensure that, that is a smooth transition, and we see no impact on -- negative impact on the EBITDA as a result of not having stock on the ground. So we've taken a pretty conservative view to all of that in the numbers, James.

Yes. Okay. So compared to historical earnings performance, it's a largely immaterial impact under that transition to import.

Yes. And longer term, though, as much as I said, we will be building up inventory. As we transition through to the import model, one of the benefits is we will carry less inventory on -- in the longer-term basis, which is included in these numbers.

[Operator Instructions] Your next question comes from James Ferrier with Wilsons Advisory.

Looks like it's a one-man show today, Quinton and Richard.

You're welcome.

Richard, can I ask you a bit about the balance sheet? Because obviously, it's a far more variable working capital profile to Ridley's existing business. And simplistically, you're sort of buying the business at $300 million versus Slide 39, showing where the balance sheet sits today effectively at peak. So can you just talk to us a bit about that working capital cycle, the quantum of movement peak to trough, the timing of it, et cetera?

Yes. Yes. So in terms of what we've bought, James, we have assumed an underlying or a maintainable working capital number of around about $280 million, which is the average across the 12 months. As you rightly said, this is a business that does have some larger seasonal movements. So that $280 million at the bottom of the cycle can be as low as $180 million and at the top side can be as high as sort of $480 million, $500 million. In order to manage that increase in the cycle, we have negotiated an inventory facility, which will be secured directly against any excess inventory purchased that will -- that will sit outside our leverage calculations in terms of the funding side of things. But that is on very favorable terms against our core debt because as you can imagine, it's leveraged against the excess inventory. In terms of the peaks and troughs, June is sort of on the way down from a peak. Obviously, their peak periods are periods building from February through to April, and then it comes down quite quickly. June, we don't expect there will be a significant amount of inventory. The challenge, obviously, is though you are partway through a season. That's more from an operational perspective and how far and what your mix is. So a little bit like our business in December, where we talk about the transition from new crop to old, they're only partway through their season. But working capital-wise, it lines up quite -- there's not a massive peak at our balance sheet dates. But in that period from sort of around about the March, April, May, they are at pretty lofty levels. That has been fully accounted for both in terms of an interest cost and the facilities that we will use to fund that.

Yes. Okay. Makes sense. You mentioned that some of the inventory funding will be similar to the existing business and the securitized payables facility you've got, it will be considered outside of the core debt facility. So when you talk about 1.3x leverage, we know already that excludes the $50-odd million you have in securitized payables for the existing business. And am I right in saying it also excludes the portion of debt that you're talking about today?

In the periods where we're utilizing that facility, yes. It basically the 1.3x assumes the $285 million of average working capital.

Right. And at that point in time and with those assumptions, would you be drawing down on that facility?

No. [indiscernible] when you're above that number, you would be drawn down on that.

Okay. Great. The vendor note, just explain why you've chosen to go down that path in the context of the capital allocation framework and perhaps how you see it playing out in terms of redemption, et cetera?

So in terms of the vendor note, there's a number of components to that, James. Some of that was also part of a risk mitigation strategy that we had and aligning our optimum funding mix. But originally, when we started talking about the vendor note, it was a different time. It was around liberation day. We felt that note gave us certainty around our ability to raise money in the environment. Having said that, we have brought down our expectations against that vendor note quite considerably, but we feel it is a very flexible tool to be using as part of our ultimate funding mix. As we said, I think we see it as reasonably attractive form of finance. It provides flexibility. It allows us to use the -- use excess franking credits. So it's cost effective from that perspective. We are able to pay that down through the course of the 3 years based around how the business is performing. So it gives us optionality and also flexibility around how we fund would be the key component.

And last one. On the CapEx, in your remarks earlier, Richard, you mentioned, I think it was a $20 million to $25 million. I just wasn't sure whether that was a reference to -- or sorry, $25 million to $27 million. Was that a reference to ongoing CapEx?

Yes. Yes, and that would be the expectations for the business going forward, excluding obviously, that the one-off cost for the IT integration of $13 million.

Yes. Okay. Understood. Just in the presentation, it talks about $13 million of depreciation and $20 million of maintenance CapEx. So how does that reconcile to the $25 million to $27 million?

So the maintenance capital is only a portion of that. There is a small amount of growth capital included in those numbers as well, James.

Your next question comes from Richard Amland with CLSA.

Just wanted to have a quick chat through Page 26, if I could. Just noting that there is quite a bit of separation between the 2 businesses. Can you talk through a little bit of your commentary around customer overlap proportion? How much is the customer overlap in terms of the incoming sales? Is it sort of like 25%? Or is there 50%? Or is it -- just so can you give an idea?

So the main area of customer overlap, Richard, is where Incitec Pivot Fertilizers uses the rural distribution network. So that's the Elders, Nutrien and others supply chains to sell through to the end customer, the farmer. And obviously, Ridley's largest customers on the packaged product side are exactly the same customer network. So that's the major area of overlap. Then there are some overlaps in supplier customer relationships, a, on the broadacre grains side, Ridley's Bulk Stockfeeds business is buying from customers -- from suppliers, who are customers of the Incitec Pivot Fertilizers business. And then in some of the dairy sectors, particularly in Victoria and Tasmania, again, you've got direct sales down to the customer and -- from Incitec Pivot Fertilizers, and they're also a customer of the Ridley Stockfeeds business. So there are overlaps there and opportunities for us to bring some incremental value to customers.

Okay. Just continuing on the first piece you answer there because it was a follow-up question. Sales channels, of the Incitec business, how much of the sales is wholesale to end customer versus wholesale to third-party distributors like Elders and Nutrien?

Yes. So the higher portion of the business is sold through the like of those key customers, the retail supply chain. So I think if you look at Slide 24, you can see the key customer set there. That is the lion's share of the Incitec Pivot customers. There are direct to farmer models in certain geographies.

Okay. Okay. Thank you for pointing that out. Question around the site footprints of the 2 businesses. In due course, is it envisaged that there will be the opportunity to consolidate sites? Or are they different purposes, Therefore, they remain separate?

Yes. As far as site footprints, I don't believe that there's a lot of overlap. There are some benefits at the margin. So for example, in Townsville, Ridley has got a supplements facility. It's -- one of its key inputs is urea. Incitec Pivot is a supplier, and there can be a sharing of infrastructure. But by and large, across the business, they are independent facilities with different purpose. I think we just will take some time to review and optimize the Incitec Pivot network on its own merits, given that it's transitioning from a manufacturing base to an import-only base. So it's more that driver in reviewing the network than the combination benefits of the former Ridley and the Incitec Pivot business.

Okay. That's fair. And just to confirm and clarify, so the CapEx comment from the previous questioner of $25 million to $27 million per annum, that's the go forward for the combined business, not just for the acquired business. Is that correct?

That is for the acquired business, Richard?

Acquired business only?

Yes. So you would have your underlying business as well.

The existing business is sort of that sustaining about 15 to 20. So this is on top of that. Okay. Okay. That's fine. And then just a technical question. So going forward, we -- the market can expect the fertilizer business to be reported as a new segment. Is that correct?

That's correct. It will be a separate segment.

Your next question comes from Paul Jensz with PAC Partners.

Richard, Quinton, just 2 quick questions. Just the competitive tension with the acquisition, are you able to talk through that? It's been a fairly long process.

So this process commenced at the start of the year. And Ridley -- we've been interested in these assets for some time, as I indicated previously. And with the business being sold as a distribution-only business, that really gave us the key opportunity there. I think our real strength in this process has been the fact that Ridley doesn't have ACCC considerations given we're not directly in the fertilizer distribution currently and obviously, no foreign investment review board. So making sure that we could deliver a solution that was clean and timely was all part of -- to our advantage. So Dyno Nobel has run a competitive process that's for them to explain. We've evaluated it to our best advantage and being able to execute, including ensuring we have ongoing access to the Perdaman urea supply and for as long as it survives the Phosphate Hill supply. So those were key deliverables for us in this process.

And you also have some transfer of land, I think, around the Geelong area as well, which looked a little bit complex, but looks rather good for you guys?

Well, the important thing there is the North Shore operation in Geelong. So in Geelong, there's 2 Incitec Pivot fertilizer operations. One is North Shore that you're referring to, which is historically the manufacturing single super phosphate plant with a distribution center of single supers. And then 2 kilometers up the road also in the Geelong port is Oyster Cove, which receives the imported fertilizer products. Now the opportunity exists for us -- well, firstly, the manufacturing of the single supers plant is being wound down by Dyno and will be finishing before the end of this calendar year. That was disclosed by Dyno previously. So we opted not to take on the remediation of that site, and that remains with Dyno. And at the point at which they have concluded that, they have a put and we have a call for us to settle on that land for $75 million. In the interim, we will continue to use the primary distribution center on that land, and we have a peppercorn lease for access to that. And we will be working through the future requirements for that site, be it can we rationalize to the other facility at Oyster Cove with some investment there? Or do we need going forward, ongoing access to this lease facility at the North Shore? And at that point, we've got options as to whether we sell the North Shore facility, whether we finance it through a sale and leaseback or something like that or how integral it is for the go-forward model. Bearing in mind, it's traditionally been the primary distribution center for the single supers manufacturing with distribution into Victoria, into South Australia and into Tasmania. Well, going forward, if you're not producing manufacturing there and you're importing, can you import and take product directly into the PDCs in South Australia in Tasmania. And then you have a lesser volume that can come into Geelong and can that be accommodated through the Oyster Cove -- expanded Oyster Cove facility. So hence, the reference to optionality around the Geelong North Shore facility.

There are no further questions at this time. I'll now hand back to Mr. Hildebrand for closing remarks.

Great. Well, thank you very much for your attendance today. I'm sure there's a fair bit to digest there, and we look forward to taking you through this and on the journey in the coming weeks, months and years. Just to summarize, we believe we're acquiring a good business with upside potential. We believe we're buying it at a point in time and an attractive price that will be strongly earnings accretive for our shareholders, and we're focused on the execution of this transaction. So to quote the Ridley Chairman, last night, we've now got to the start line and the hard work will start from here. And we look forward to this opportunity to deliver value for shareholders. Thank you for your attendance today.