PAC PARTNERS AGRIBUSINESS & FOOD CONFERENCE CONTROLLING YOUR DESTINY 28 April 2017 1
AGEND GENDA Ridley Drivers of Destiny Maximising the customer value delta Innovation at Ridley Case study – CSIRO and Novacq TM Destiny within our grasp 2
DRIVE DRIVERS S OF OF DES DESTINY TINY – JAWS WS OF V OF VAL ALUE UE “Our Mission is to improve the cost of feed to yield ratio for our customers” Livestock Yield / Performance Quality - Innovation - Nutrition – DIFOTIS, Ridley’s Mission - and its delivery in Formulation of develop new full, on time, diets, better destiny - is driven by our value adding in spec feed conversion ability to deliver and extend raw rates (FCR) our customers’ delta between materials, the cost of our feed and the ingredients & by-products performance of their animals Logistics - Merchandising - backloading, bulk, off farm, to improve - in terms of yields of milk, proximity to expertise, output and meat, eggs & well-being grain, 1.9mt market reduce cost in/outbound presence Cost of Ridley Feed 3
MAX AXIMISI IMISING NG THE HE CUS CUSTOM OMER R DE DELTA Quality - adoption of the highest standards to reliably deliver the feed ordered by our livestock farmers, in spec and on time. Merchandising - using widespread network of regional supply sources to provide raw materials at competitive prices. Nutrition - developing the optimal combination of raw materials to deliver nutrition solutions which drive down Feed Conversion Ratios. Logistics - optimisation of freight routes and loads with backhaul facilitated through scale and supply chain efficiencies. Being best in class in all of the above generates a competitive customer delta which delivers core business opportunities and healthy tension for capital e.g. feedmill at Lara & proposed for Tasmania, rendering efficiencies, Narangba test extruder etc. However , none of the above is unique to Ridley. What will drive our destiny is: Innovation - the ability to provide a unique and sustainable offering to prise open the jaws of value and deliver a customer value proposition unable to be matched by competitors. 4
INNO INNOVATIO ION N AT RID RIDLEY LEY Talent - Technical experts are employed for each of its business sectors. - Stringent recruitment processes and standards are in place to recruit highest calibre personnel. - A multi-disciplinary internal Applied R&D team meets quarterly to manage and monitor all formal projects, screen potential projects, and ensure appropriate focus on commercial outcome. - Full time dedicated R&D Coordinator employed to oversee stage gate process for approved projects. - Sponsorship of Ridley personnel for PhD studies in relevant fields. Relationships - strategic & other relationships maintained with research institutions e.g. CSIRO , James Cook University, Monash and Deakin Universities, QUT, Universities of Melbourne, Queensland and N ew England, CRC’s. - applied studies and trials sponsored by Ridley to test hypotheses and prove up theories which have the potential to deliver positive commercial outcomes. Once in a blue moon, a destiny- changing opportunity may present itself….. 5
CASE CASE STUD STUDY Y CSIR CSIRO O & & NO NOVACQ CQ ™ - NO NOVEL VEL FEE EED D ING INGREDIE REDIENT NT CAP CAPAB ABLE E OF OF CHAN CHANGIN GING G THE THE LANDSCAPE LANDS CAPE After drying/processing “pure” Novacq TM After After drying grinding 6
CSIR CS IRO & & NO NOVACQ CQ TM TM History - in August 2011, 9t of CSIRO-discovered novel feed ingredient Novacq TM was provided to Ridley, incorporated into feed, and successfully trialled at Bribie Island CSIRO facility. Destiny-changing Licence - An exclusive licence for crustacean applications in Australia, Malaysia, Indonesia and Philippines was negotiated in 2013, China and Vietnam having already been licensed. Start of five year program of Applied R&D to prove technology & commercialise the opportunity. Destiny outside our control - China, Vietnam, other potential species applications & rest of world crustacean market. Bring destiny within our control by developing the technology and securing: Step 1 - any available opportunities in China and Vietnam Step 2 - Thailand territory for crustacean application Step 3 - all remaining available crustacean markets Step 4 - all non-crustacean applications for all markets. 7
TM DE ST STEP EPS S 1-3 3 – SE SECURIN CURING NO NOVACQ CQ TM DEST STINY INY Step 3: CSIRO licensed Novacq TM to Step 1: Ridley’s executed licence enables Ridley for Rest of World, excluding sale of Australian made Novacq TM licensed products into “locked out” China and Vietnam, on 27 March 2017 . 7,000 markets of China and Vietnam. 6,000 5,000 3,056 2,772 2,631 4,000 2,479 ('000 metric tonnes) 2,310 3,000 1,304 1,366 1,464 1,595 2,000 985 156 283 367 423 367 794 737 1,000 793 450 232 958 937 403 259 685 683 628 213 - 1990 2000 2010 2011 2012 2013 2014 ('000 metric tonnes Original Ridley licensed territories Thailand Rest of World Locked out countries 5,418 Total tonnes: 884 1,478 4,718 5,260 5,616 5,955 FCR is Feed Conversion Ratio, the ratio of how many kilos of feed an animal eats to put on a 1kg of weight of the prawn. Step 2: Thailand The lower the FCR, the better the return to the prawn farmer. A conservative 1.3 FCR has been assumed in producing the market secured above estimates of demand for feed, but in reality varies by country, feed quality and species of shrimp/prawn. 8 in August 2016, Source: FAO; Prawn FCR is Ridley estimate
STEP ST EP 4 4 – OTHE THER R MARKE MARKETS S & APP & APPLICA LICATIO TIONS NS Controlling destiny - execution in March 2017 of a long term strategic research Alliance with CSIRO: Objective to conduct collaborative research to maximise Novacq ™ applications beyond crustaceans. Ridley cash contribution of $1m per annum matched in kind by CSIRO for a minimum five year period, with an option to extend for a further five years. Alliance to follow an annual program of research approved by a Management Committee of equal representation. Alliance to target and trial the most likely range of species for potential inclusion of Novacq TM as a stock feed additive. Ridley now jointly controls the destiny of this innovation wherever and in whatever species are shown via the Alliance to be most positively impacted by the inclusion of Novacq TM into their feed. Can the Alliance identify & develop another unique and innovative opportunity to alter the destiny of 9 (CSIRO and) Ridley?
TM – DE NO NOVACQ CQ TM DESTINY INY IN IN OUR OUR GRA GRASP 5 year program of applied R&D to target and trial the most likely range of species for potential inclusion of CSIRO Livestock Novacq TM as a stock feed additive Yield / Alliance Performance Enhanced Disease Optimum Brood stock / resistance to Ridley’s efficacy & diet larvae feeding viral/bacterial inclusion rates Novacq TM attacks increasing Improved Reduction in Ridley destiny survival rates conversion harvest cycle / internal delta Up to 40% of annual from different larger prawns / tropical shrimp carbon sources risk mitigation production is lost to disease (>US$3bn). Aeration and Farmed shrimp Drying process production expected to filtration grow 50-60% through to 2030 # . Cost of Ridley Feed 10 # World Bank (2013) Fish to 2030
Ridley Corporation Limited ABN 33 006 708 765 Level 4, 565 Bourke Street Melbourne, VIC. 3000 Australia www.ridley.com.au 11
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