Talking Money To Us | Mark Allison – MD & CEO – Elders Limited

Candice: [00:00:11] Hello and welcome to talk money to me. This is your need to know financial podcasts. Thanks for joining us. I'm Candice Bourke. [00:00:17][5.9]

Felicity: [00:00:17] And I'm Felicity Thomas. Now, thank you, everyone, for joining us today. We're bringing you another one of our special guest episodes featuring someone from the world of business. And this business is actually listed on the ASX. So today we're joined by Mark Allison from Elders. Welcome to the show, Mark. [00:00:34][16.9]

Mark Allison: [00:00:35] Great to be here. Thank you very much. [00:00:36][1.0]

Felicity: [00:00:36] Now the code for Elders is actually a day on the ASX. It's actually one of our order pad stock picks. Now our analyst Phillip Pepe actually has a 12 month price target of now $20 on elders, which is absolutely fantastic. [00:00:52][15.8]

Candice: [00:00:53] That's right. So share price sort of upside from where we are, over 50% cent. So let's hope he proves right. [00:00:59][5.3]

Felicity: [00:00:59] I hope so, too. It's a bit of a tough market at the moment. Now, Mark joined Elders as a non-executive director in December 2009. He also served as chairman and executive chairman before being appointed managing director and chief executive officer in May 2014. Now, Mark actually oversaw the development and implementation of Elders eight point plan in 2014, which returned the company to a pure play agri business and resulted in the first shareholder distribution in nearly a decade. Since 2014, Elders has grown from a market cap of 50 million to 1.9 billion. That is huge. Well done, Mark. [00:01:39][40.5]

Mark Allison: [00:01:40] Thank you. I think all credit goes to the team, our clients and and our suppliers who can all work together as we got there. [00:01:46][6.3]

Candice: [00:01:47] Very humble indeed. We can't wait to get into this episode to chat to you about the whole sector, you know, your thoughts on what's going on in the market. But before we do that, just a quick disclaimer. Just for all of our audience listeners. As always, our chat is not considered personal advice, even though we are registered financial advisors at sharing partners. Please note that this podcast and the content discussed does not constitute as financial advice, nor is a financial product. All right, Mark, so we're safe. We can talk in general, talk money back. Yeah, exactly. So let's kick off the conversation, I guess, to paint a picture. Can you tell us in your opinion, what you're seeing at the moment in the Australian agricultural sector? [00:02:26][39.0]

Mark Allison: [00:02:26] Yeah, well it's it's quite fascinating because we've got all the uncertainty in the geopolitical environment, the supply chain issues, inflation issues and the micro and macro macro economic issues in agriculture. It's very, very positive. So we've had great seasonal conditions and see how the drought and the drought in Eastern Australia broke. So there's good seasonal conditions across broadacre cropping, winter cropping and also summer cropping, which has been struggling for a few years. So the dams of all the rivers are full. That's positive in terms of commodity prices. They're strong and the Russia-Ukraine dynamic has had a significant impact on the broadacre cereal commodity prices on a livestock front. We've also had the herd has dropped to about the cattle herd has dropped to around 23 million and is slowly rebuilding and with good seasonal conditions. We have a lot of restocking for for sheepmeat. It's also a very strong market and for wool it's been okay, so horticulture has been okay. So across the board it's quite a positive situation and has been for a couple of years and looks to be for another few years into the future. [00:03:40][74.0]

Felicity: [00:03:41] Some analysts are calling it saying that we've basically seen the agricultural cycle peak, not our analyst, though. Do you agree with that? I mean, I would say you probably don't based on what you've just said. [00:03:51][10.5]

Mark Allison: [00:03:52] Well, I think on numbers and charts, it may look that way, but with a bit of a dose of reality that we have. If we look at summer crop, for example, so a big driver, there is stored water for irrigation because a lot of the summer crops like cotton and rice to a lesser extent sorghum irrigated crops. So there's no water in the dams for the next two or three years as well as strong commodity prices. So we can't see that into the future dropping off. It's like back to normal, back to average where it previously it had been below average. If we look at winter crop, we've got the winter crop in areas around Australia awash with money and we've had a great build up to this season. Global commodity prices with a big chunk of the global production being in the Ukraine and through the Black Sea ports, this has been diminished and it's also droughts in the Northern Hemisphere. So that outlook looks very positive. In terms of the horticultural market, it's similar. So I think the as good as it gets up and I decide to myself is that when the share price was $0.50, we had an analyst calling as good as it gets. So I think that's fine. But the reality is it's a very, very strong. Strong. [00:05:02][70.2]

Felicity: [00:05:03] For our audiences benefit. Could you explain a little bit more about some a crop and winter crop and what that really does mean in your industry? [00:05:09][6.7]

Mark Allison: [00:05:10] So winter crop across Australia is crops like wheat, barley, triticale in Australia it's predominantly dry land. And so when a crop is grown, you know, Anzac Day is the prime planting day for winter crop across Australia and then it goes through the winter months. Now because it's a broadacre rain fed crop, the inputs are lower and there's less profitability in that because the product itself is released more variable. Although you know this is a dominant crop in Australia. Summer crop on the other hand, because it's going through the summer periods and this is mostly cotton, rice and sorghum as I mentioned, corn, the yields are much higher, the inputs much higher because it's grown, it's not grain fed, it's actually grown with irrigation. It's a much stronger input based crop that starts maybe in October and goes through to march and harvest. [00:06:00][49.7]

Candice: [00:06:01] Easier to control because of there's less impact on the weather, I guess, which is the biggest variable. [00:06:05][4.4]

Felicity: [00:06:06] Not this year but last summer. [00:06:07][1.9]

Mark Allison: [00:06:08] Yeah. So too much rain and not enough rain. And so, yes, similar upsides and downsides. [00:06:13][4.6]

Candice: [00:06:13] You were very instrumental in implementing the eight point management plan. You know, what was Elders as a business looking like back in 2014 when you did set that up? [00:06:22][8.6]

Mark Allison: [00:06:22] Previously, six other companies are in the biggest competitor, the biggest suppliers to elders. And I actually came to Elders as a non-executive director when the business was in bad bank during that period. Obviously with a reasonable experience across the industry, 30 or so years across the industry running compared to suppliers. I was asked to be chairman and then executive chairman. At that point it seemed to me that Elders, if run properly, could be a highly profitable business with a very high return on capital. And then we sat down at the Grace Hotel in Sydney with 40 of our senior managers and we developed the eight point plan, and therefore plan is told by management, by the leaders in the business, and it's fundamentally said. So to give you the picture we put up or I put up a matrix of a bid on one side and return on capital on the other. And then we allocated all the parts of the business into boxes of low end at higher rates, etc. And from there we developed the portfolio are a C portfolio managed approach to elders, which is why we can continue to make money through bad seasons and good seasons because it's a highly diversified return on capital base to portfolio. [00:07:33][70.9]

Candice: [00:07:34] Yeah, and it's definitely proven to be such a good strategic model that you just keep reinventing each time. So that's fantastic. I guess looking ahead now, you know, versus the next 12 months outlook compared to what the the company used to look like all those years ago, is it almost that sit down boardroom style that you have with all the managers and the directors? Is it just part of your DNA, part of part of how you live and breathe at elders? [00:08:02][27.4]

Mark Allison: [00:08:02] Yeah, I think so, because it's very intensive, very operational type of business. So if you if you want to turn it into a really good slick PowerPoint presentation, you'd have to do a bit of work to make it super, super interesting because it's fundamentally a with running these sorts of businesses. Certainly from my experience, you like farming, you reduce the cost in capital to the point where you make good money in bad seasons and then in good seasons you make great money, but you never make bad money. So from from our viewpoint, we've got another there's a third open plan. So it completes at the end of FY 23 and you know, we set our target at 28 15% return on capital and 5 to 10% growth through the cycles and the return on capital. The half year a couple of months ago was just a 28% return on capital and the growth over the last of the open plan period there, maybe 25 or 30% or something like that. [00:08:59][56.3]

Candice: [00:08:59] Yeah, those numbers are really fantastic and they speak for themselves. I guess another question that just is one that a lot of managers and directors are always facing is the question of talent, you know, so you do come from a history of the competitors. How do you find the talent market and looking for, you know, those who are really quality people in the business? Because that's what a lot of great business people say, is it's the people in the business that help you grow. So how are you finding at the moment? [00:09:25][25.8]

Mark Allison: [00:09:26] I think it's we share the same concerns and difficulties as most businesses in regional rural Australia. It's very difficult to find people. We've, we've got 100 vacancies that seem to roll on as 100 vacancies. And you know, we used to get people out of local communities and our farms, but you know, the farmers kids aren't coming to us because they're making so much money on their farms that they're staying there. The, you know, the community, the Kiwis in the east and the Germans who normally come out with CO. But that's dried up a lot. But clearly in our industries, in horticulture, seasonal workers have dried up. It is very, very difficult. And I think we certainly try to make it pretty easy running a big business. But you can't come from Pete's trade or Bourke Street and things don't apply in the same way. As an example, the share of wallet concept that a lot of financial services businesses have where they sell insurance and banking, they get a whole portfolio of add on products in regional rural Australia. Our producers share the products around with the competitors to ensure that the local community stays alive. So the drivers and the issues to say they won't give us all of all products because then they'll know that more people will need the local town. It is quite a different approach. Elders has been around in regional rural Australia for 483 years and I know with melody and the pink shirts are all over the place. You know, it's it's not it's not uncommon to see major events like that with pink shirts supporting veterans. And we've done that for a long time. [00:10:55][89.6]

Felicity: [00:10:56] So, yeah, that's really interesting. 180 years. Wow. Look, it's common knowledge that the company also likes to manage the business through the average cycle. Right. Which you just discussed. Could you tell us in a little bit more detail what kind of levers you do pull with the different conditions, you know, when it's good versus when it's tough? [00:11:14][18.4]

Mark Allison: [00:11:15] Yeah. Well, I think the overwhelming management tool for us is the getting the cost of capital base to a level where you make good money and bad news. So that's the first part. And we did that. We took 30 or so million out of the cost base back then, and we haven't let it get away since then. The second key component is the diversification. So it's clear we've got diversification by products and services. We've got, you know, fertiliser, crop protection, animal health. We do grain, sheep, cattle, but we've got insurance for banking and we've got all that said that diversification is critical. We tend to have one playing against the other. So if cattle prices are up, our agency business does very well. But our feed processing business may not do as well because the cost of the COGS for their production increases and vice versa. The we also have diversification of the classic geographical diversification that tends not to be in drought in everywhere in Australia at the same time. So that tends to be in the East Coast, the West Coast and south and not everywhere. And we've also got diversification of our business model because we have a principal position in our retail business, but most of the other businesses are agency, so we don't have any capital exposure, which is part of the reason our are so strong. And more recently we've had channel diversification where we now have the retail channel, which is the the Elders branch take. We're building a wholesale channel with our acquisition of M. So and they're normally a different geography. So we have these multiple diversification and we tend to have a low pass rate and be quite methodical. So we don't suddenly change. We covered, we didn't suddenly change anything. We just kept didn't blink, kept on a tactical approach, look after our people, look after our communities, and it's going to in that way. [00:12:58][103.2]

Felicity: [00:12:58] Now we're going to hear about Mark's thoughts on commodity prices, the Australian Crop Report and Aussie farmers. But first let's hear from our sponsors. [00:13:05][7.1]

Candice: [00:13:08] And we're back. So, Mark, with everything that's been going on in the world, you know, rising commodity prices, high energy prices that we're seeing throughout the country and the globe, increased demand for food products, but still some, you know, supply chain issues thanks to COVID and as the world gets back to normal. But how are the Aussie farmers out there coping at the moment and what are you guys saying? [00:13:29][20.4]

Mark Allison: [00:13:30] I think there's great resilience as a core position for regional rural Australia and that's a starting point. And I think the current situation is that it's very, very positive. We joke about when lentils are being harvested from farms in Victoria, but they seem to go on to take them off the property because the, you know, it's like gold in terms of market access. So Australia produces about 80 billion pre farmgate of production and that's up from nothing. It's got as low as 45 million being in during the during the drought in eastern Australia. So in terms of the world market, that's a minor part of the world market and in terms of market access. So I guess what I'm building up is from a production position, it's very positive. Generally, commodity prices are discussed earlier. A positive from a from an input viewpoint of supply chain impacts have driven inflation of input costs like crop protection, fertiliser, etc.. Although you're going to go to my favourite matrices if if you've got high input costs and poor market conditions, it's not good in the box where you have good market conditions and high input costs. The growers invest because they're going to get a significant return. So I think from that viewpoint it looks positive from a from a market access viewpoint, but being able to sell the products. But we've, we, we export 67% of our production and that that doesn't touch the bottom globally. So from a market access viewpoint there's a lot of talk around, well the Chinese FTA may not be as positive, but we've actually hit our limits on that with beef. So we've hit the negotiated limits where there where we've got to this volume, we get extra tariffs. So the extra tariffs are part of actually the FTA. It's not punishment or retribution. So from that viewpoint, the market is is quite solid from the comprehensive South Asian Trade Agreement, the FTA. It's we just announced the Indian Trade Agreement, although excluded chickpeas. It's pretty solid. We've got the the UK agreement through Brexit. So and we've got a middle Eastern agreement. So I think generally, I mean farmers always talk about too much rain or not enough rain, rather it's just perfect. We're in a pretty good spot and it looks if we manage it appropriately, it looks to be extending for for the next couple of years and recession. [00:16:01][150.9]

Candice: [00:16:01] That's the big word that everyone's talking about. Would you say that just taking a step back on the broader Australian agricultural, you know, market, how do you think we're set up for this? And people are talking about food inflation in particular. You know, what are your thoughts on on that as well? And as we as we go through the next potentially two years of this condition? [00:16:21][20.2]

Mark Allison: [00:16:22] Yeah, well, I think I mean, the investment industry is saying name for sentiment driving a reality. I mean, my sense is that we aren't headed that way. And my sense if I if I focus in on the because we tend to be that the rhetoric tends to be in the Senate, tends to be ahead of the reality, in the facts. I, I think from the agricultural industry, you know, we've, we've got a target pre farmgate of 100 billion production by 2030 and we're well on track to achieve that post farm gate. We've got a target from Chair Vegetables Australia and we've got a target post of 200 billion. And so that's in the processing area. We're well ahead of that. And you know, as well as being the most noble industry in agriculture and feeding people, you know, it's an essential industry because people have to eat. So so maybe if it does tighten significantly in metropolitan Australia, the trade offs will be to where will not be to to the negative of food and agriculture in. [00:17:22][59.7]

Felicity: [00:17:22] Agriculture really is recession proof. Like he said, people do need to wait. And you know Australia, you know from what you've said and what we've done research on is pretty self-sustainable when it comes to food as well, which is fantastic, you know. Turning our attention to probably the most important factor when it comes to the agri sector and you've said it earlier in this episode, the weather so recently in the June 2022 report, the Australian Crop Report actually released by the Australian Bureau of Agricultural and Resource Economics and Sciences, bodes well for elders. So it in the report it stated a national winter crop planting for 2223 is forecasted to be the second highest on record at 23 point. 4 million hectares. Only very slightly below the previous year. Now, with the summer crops, production in 2021 to 2022 also estimated to reach a new national record of 5.5 million tonnes. Can you tell us your take on the findings? Are these estimates a surprise to you or do you actually model something very similar. [00:18:26][64.5]

Mark Allison: [00:18:28] And that I might be able to give you a surprise? [00:18:29][1.2]

Felicity: [00:18:30] Okay. [00:18:30][0.0]

Candice: [00:18:30] Yeah, we love surprise. [00:18:31][1.3]

Mark Allison: [00:18:32] Okay. So, you know, given that this is the seventh egg company I've run, I think about five, eight companies ago are then weather maps and their forecasts from management meetings and board rooms and have adopted the strategy of the plan of controlling what you control. So to directly answer your question. [00:18:50][18.0]

Felicity: [00:18:51] It's a good way to look at it. [00:18:52][1.1]

Mark Allison: [00:18:53] Yeah, it's a tricky question. I'm not surprised. I think it's quite consistent with what we're seeing. They build it up from ground level and we've got turn out 10,000 people around Australia at ground level with these people. Really I think it's the and the analyst reports so what they do. But from our viewpoint we really do like to control what we can control because it is the La Nina occurring. So the question is whether it's going to be wetter than normal. So is that good or bad? And my answer to that is, well, you know, that falls three quarters of the way through the winter crop. It's got to be fantastic because there will be a fungal activity and warmer conditions and they're high margin products and they'll need economic services. If so, it'll be wonderful grounds. If it falls two weeks later, ahead form the yield may be way down. So it won't impact us this year. But next year there may be less cash flow with the firms. So so it's actually quite nuanced, the impacts, the if that makes sense. [00:19:48][55.9]

Candice: [00:19:49] Yeah, no, it definitely does. And that's because you've done such a great job, I think, of really, truly diversifying the whole business. So let's go there now. You know, you you obviously are in the retail and wholesale agricultural sector in those markets, food and processing, as you've spoken, agency services and real estate services as well, plus financial services. So there's a lot of moving pieces to the pie, so to speak, in the Elders business. I guess my question to you is, Mark, do you see any expansion into any new product or service on the horizon that you can talk about? [00:20:21][32.3]

Mark Allison: [00:20:23] I think opportunistically there may be adjacent expansions, but I think if we sit down the quiet of day and then we look at each of those products and services, then you have real estate where at about eight or nine we might be about 8% market share of our segments and crop protection it may be 18%. Well it's probably, I don't know, 25% or more with fertilisers and I guess and insurance, it'll be by 3% instead in the other financial services it might be 5%. So I think for us if we had a low pulse rate, we're methodical about it. We say, well, you know what, we have got so much opportunity to grow in areas that we're actually strong. And so taking on adjacencies or different business models where we aren't strong and we don't have expertise, that increases the risk profile. And in many ways it's a bit like control which you can control. I think we we see that we've got even geographical gaps around Australia. We've got multiple hundred 83 years later, we've got multiple geographical gaps in blue chip farming areas. [00:21:29][66.2]

Candice: [00:21:30] So where are they? Where have you identified those spots? [00:21:32][1.9]

Mark Allison: [00:21:32] Well, just to grab a couple of you know where I'm from in far north Queensland, the sugar cane coast and tropical horticulture. There are many gaps along the coast. We've got gaps in a number of gaps in Queensland. We've got gaps in New South Wales. We fill the few where we can dairy in the northern rivers of New South Wales, relatively weak. I mean we go around Australia. It's gets quite interesting for us too. You have gone from, you know, when I took over as chair, the first AGM was a half a billion dollar loss and to have a a guidance this year in the order of 230 million profit and we're still sitting at 80% market share and it's at know just under 20% return on capital. We've got a lot of opportunity just by doing what we're doing and controlling what we control. [00:22:14][41.4]

Felicity: [00:22:15] And your gearing is also very low as well. So there's no real concern there moving into this type of financial climate. [00:22:20][5.8]

Mark Allison: [00:22:21] I think that's right. And we when we bought air, we sent an 18 month pathway to what we thought was an acceptable gearing, and we think significantly under that number there. [00:22:30][9.4]

Felicity: [00:22:31] Yeah, that's good to hear. Now, look, with the rise of ESG investing, so this would obviously come up a lot. Climate change targets and government plans to reduce greenhouse gases around the globe. Do you believe that we're going to be able to hit those targets? [00:22:45][14.4]

Mark Allison: [00:22:46] Yeah, I think agriculture is kind of well on the way. It's quite fascinating. I as chair of Your Business Australia, we got together 30 of the top ag CEOs about ten months ago in Sydney. We focussed on labour availability and sustainability and ESG issues. All the CEOs around the table have their own targets around. Approaches. But we agreed as a collective that we wanted to take a collective approach to all of these issues across Australia because we felt there was quite a misunderstanding of the many, many initiatives and also the commitment. And it's probably worth noting as well. The but one of the issues that came out of the report prior to the CEO summit and the report that was stated was on the changing community expectations and the implications for agri business. And that report showed that the the average metropolitan person and the regional, rural and cultural person had exactly the same aspirations on history. And the fundamental difference difference was that the city people wanted the targets achieved straight away, whereas the agri business and regional rural wanted a commercial transition where we were able to couple productivity, profitability and sustainability rather than decimating farms and communities. So from an elders, people we've set out, we've set our targets and we're we're on our way to achieving the the three sets of targets. The 2050 target is a step one to a net zero. The 2030 target is 50% reduction and that includes our feedlot which has 59% of the emissions are cattle. And so in setting that target, we qualified that with the emergence of technology like these back offices that can help in reduce emissions. And then we had our 2025 targets, 100% renewable electricity for the business. [00:24:42][115.8]

Felicity: [00:24:42] So we hear a lot about, I guess, regenerative farming. Is that where you guys are involved in that with the difference? [00:24:49][6.5]

Mark Allison: [00:24:49] And to your earlier question, I didn't I didn't complete the answer to the earlier question. So we've got we've got three levels of our technical support around agronomic issues, sustainability issues, carbon farming issues, regenerative farming issues. So we have a, it's like a triangle and we, we compare it with the Nike triangle that Phil Knight put together when he launched Nike all those years ago. At the top of the triangle at the apex is Thomas Elder Institute. And that equates to the Olympic athletes and from that was working on with Nike. So so that's so we have the Thomas Elder Institute, which works closely with Syracuse universities and it's like the top end in the middle of the triangle where we have the Nrlw, the Nike example, the for us, we have Thomas Elder Consulting, which is, which is fee for service. So we don't sell any products, we just don't give agronomic advice, carbon farming advice, which ended agriculture advice. And I think there are about 50 of them. And then at the bottom of the triangle, which is the average person who puts on a Nike T-shirt and feels better, that's our agronomists, and we've got a couple hundred agronomists throughout Australia. And so, so we add support and advice around all of these precision agriculture, variable rate technologies, reducing nitrogen in soils, nitrogen runoff in sugarcane. That's a part of what we do every day. [00:26:09][80.0]

Candice: [00:26:10] One question if I was a fly on the wall is what about, you know, the lab grown food? Is that a big risk? You know, the push towards that side. [00:26:18][8.6]

Felicity: [00:26:19] Cellular agriculture, I think is one of the other names for it. [00:26:23][3.3]

Candice: [00:26:23] Yeah. Do you see that as a big red flag in your industry and what are your thoughts on it? [00:26:27][3.6]

Mark Allison: [00:26:27] Yeah, there is one other name and that's fake food, fake me. But I won't provide any judgement that. [00:26:35][8.0]

Candice: [00:26:36] No I. [00:26:37][1.0]

Felicity: [00:26:37] No, nobody ought to make the mark. [00:26:38][1.3]

Mark Allison: [00:26:39] No it's quite the opposite actually. I think there's room for all the technologies. I mean, I was in the Netherlands two weeks ago and there was a tissue based organisation who was who was using cell culture, you know, taking, taking biopsies of meat, fat and sinew, and then putting some sprinkle dust in the lab and having a steak at the end of it all. I mean, I think it's thought there was a 300 it. [00:27:04][24.7]

Candice: [00:27:04] Did you. [00:27:04][0.2]

Mark Allison: [00:27:04] $300,000 seed. You know I haven't that but I haven't tasted that when I have tasted a couple of the others. I mean, to be honest, I had a very open day in my mind. The world needs protein, whatever the source of the protein is good. I one of the industry's concerns, whether it's dairy all the way through to meat, etc., is, is what call it something that it's not. So if it's plant based protein, when I call it plant based protein, so there's a bit of parochialism around that. I personally don't see it being very open minded. You know, most of most of the Asian countries are actually plant based protein diets. So it's not actually but I'm not a fan of the marketing and the positioning because it just an interesting point on it because certainly in this discussion we had with the founders in the Netherlands that they their point of difference was emissions free, but the timing was another ten years. And it was fascinating because when we talked to of them in ten years with the technologies that we've got in the beef industry in Australia when you launch. Our emissions free meat, normal meat will be emission free, somewhat punishing. So it is not very open minded to free up the money. [00:28:14][70.0]

Felicity: [00:28:15] Yeah. I suppose a lot of them are coming from the viewpoint where it's also cruelty free as well, potentially. But you did say a $300,000 stake. I mean, that's outrageous. No one's going to be able to that. [00:28:27][12.7]

Mark Allison: [00:28:28] Well, I mean, you know, that's what happens early days with every technology. But I think I think on the animal welfare front, it is a game. It is worth noting the significant progress and also the overwhelming desire of people who raise animals in in agriculture to look after their animals. Even if you're a person who enjoys being cruel to an animal, it's still a three, $3,000 animal. So if it's just financial but you know, I think we've had some bad examples. The industry is obviously overwhelmingly supportive of of of high standards of animal welfare. Yeah. [00:29:05][37.8]

Candice: [00:29:06] Which is great to say. Let's look ahead now the next 12 months. We did touch on it, but I just want to hear from your perspective, what's Elder going to look like in the next 12 months? Give us your outlook perspective. [00:29:17][10.8]

Mark Allison: [00:29:17] So the next 12 months will see the completion of the third eight point plan and we said 5 to 10% growth through the cycles and 15% minimum ROIC. So I suspect it might be in the twenties and the ratings may be in the mid to mid-twenties as well. So from an Elders viewpoint, it's likely that we'll continue our backward integration strategies, our bolt on acquisitions strategies, our business improvement strategies and control. We can control from a seasonal viewpoint. I suspect the season will be better than most of the payments are predicting through through the next 12 months, and I suspect there'll be very positive improvements as well. So I think it is low pass rate, so maybe it's not as exciting, but you know that 5 to 10% growth that we target in EPS and even that came from us surveying our shareholders. [00:30:06][48.4]

Felicity: [00:30:07] Right. [00:30:07][0.0]

Mark Allison: [00:30:07] Do you want Big Bang or do you want a high return, 5 to 10% growth? And that's where we got to. [00:30:12][4.7]

Felicity: [00:30:13] There'll be no chance that Elders would get involved in cellular agriculture down the track. Could that be something that you may eventually branch out into? [00:30:20][7.1]

Mark Allison: [00:30:20] I'm not sure if it plays to our strengths because, I mean, a lot of the cellular agriculture is actually land based and university and like fermenting facility based, which is which is not really what we do. We're capital. [00:30:36][15.8]

Candice: [00:30:37] Regional Australia. [00:30:37][0.4]

Mark Allison: [00:30:38] Yeah. [00:30:38][0.0]

Felicity: [00:30:39] I was just very interested. Yeah. Yeah. Thank you so much for your time. Now as a fun way to end our conversation, we really like to ask all of our guests the same question. So what is your preference? Coffee, tea or tequila. [00:30:50][11.6]

Mark Allison: [00:30:52] These days to actually take this. [00:30:54][2.5]

Felicity: [00:30:55] Interest in any particular tea. [00:30:56][1.3]

Mark Allison: [00:30:57] I suspect. Ginger. Tea. Excellent. [00:30:59][2.0]

Felicity: [00:31:00] Ginger. I do actually really like Ginger. It's meant to be very good for you, so. Yeah. Well, thank you so much for taking the time to chat with us. [00:31:08][7.3]

Mark Allison: [00:31:08] Okay, thanks very much. [00:31:09][0.7]

Candice: [00:31:10] That was amazing. I love listening to CEOs when they're really passionate and have such good insights into the markets and what they're saying. What did you think? [00:31:17][7.7]

Felicity: [00:31:18] Yeah, honestly, he really knows his staff and it's really impressive to see how Aldis has continuously grown to be such, you know, an Australian household name. And I think in this tricky environment, you know, investing in food and agriculture is probably a no brainer. It's a no brainer, right? Because everyone's going to eat. [00:31:37][18.5]

Candice: [00:31:37] That's right. And there's so well diversified and they almost have the whole supply chain, like he was saying, just with the ESG factor, the Nike scenario from the top to the bottom and the triangle. I see that model also throughout the whole business, right? From helping the farmers food processing services, insurance is everything, the whole gamut. He's got it. [00:31:56][18.9]

Felicity: [00:31:56] Well, that's it. So many different revenue streams, which is important for everyone. And I think what was also really interesting of the total addressable market, they've only actually really they're under 20%, there's so much more room for growth. [00:32:06][10.5]

Candice: [00:32:07] As well and only control what you can control. You know, we can't control the weather, we know that. [00:32:12][4.7]

Felicity: [00:32:12] So you should take that into life as well. You can only control what you can control. Don't try other things that you cannot. [00:32:19][6.7]

Candice: [00:32:19] So as always, guys, we're going to sign off now with our final disclaimer. Although we are financial advisors, we can only control what we know. We don't know your personal circumstances, for example, a good way to do that. So don't take this personal advice. And unfortunately, it's not a financial product either. As always, go out and seek professional advice before you make your own decisions. And today's episode and what we were speaking about with Mark is all based on at the time of recording and the facts known at the time, which is the 28th June 2022. [00:32:49][29.5]

Felicity: [00:32:50] That's it. And look, make sure you follow us on at Talk Money to Me podcast for daily market updates. And if you enjoyed this podcast or even if you didn't, please make sure you give us a five star review on Apple Podcasts. Spotify five star only. If you have a problem, feel free to. Also email us at MTM at Equity Mates dot com. Or if you just want to ask us any questions or have any good ideas of new episodes that we can put on because we're always looking for new, exciting, interesting content. Until next time, stay safe. [00:33:20][30.5]

Candice: [00:33:21] See you then. [00:33:21][0.3]