GRAINCORP LIMITED — Interim / Quarterly Report 2004

May 26, 2004

GrainCorp Limited ABN 60 057 186 035

For immediate release

Thursday, 27 May 2004

GRAINCORP DECLARES HALF YEAR PROFIT OF \$12.5 MILLION AND SPECIAL DIVIDEND TO ORDINARY SHAREHOLDERS

Leading Australian agri-food business GrainCorp Limited ("GrainCorp") today announced a halfyear after-tax profit of \$12.5 million for the six months to 31 March 2004. The after-tax profit represents a 27.5 percent increase on the corresponding period last year.

GrainCorp has also declared a special half-year dividend of 10 cents per share in addition to the interim dividend of 17 cents per share for ordinary shareholders. The special dividend has been declared as a result of the sale of assets and the Company's capacity to pay, following the improved half year performance. In addition, this special dividend provides for a distribution of surplus franking credits to shareholders. The special dividend will be payable on 1 July 2004 along with the ordinary interim dividend, and will bring the total forecast dividend (including special dividend) for the full year to 36-40 cents per share.

"GrainCorp is on track to achieve the forecast full year profit of \$24-26 million despite the predicted subdued start to the year. We remain focused on organic growth and disciplined restructuring as we continue the transition away from the drought of 2002/03," said Tom Keene, Managing Director of GrainCorp.

"Our Half Year result has been influenced by the near record low levels of carry over grain coming into the 2003/04 harvest and a slow first six months for grain exports. Grain exports are expected to pick up in the second half.

"GrainCorp's strategy of geographic and earnings diversification is bearing fruit; with the Oueensland operations on track to achieve the forecast \$10-12 million in merger synergies and GrainCorp Marketing returning strong earnings of \$7 million (EBITDA) to 31 March 2004," said Mr Keene.

Revenue & Earnings

Revenue at 31 March 2004 was \$439.6 million, up from \$304.7 million at the previous half year. Revenue for GrainCorp Storage & Handling was \$142.1 million and for GrainCorp Marketing it was \$273.6 million. EBITDA for the period was \$54.1 million, which is up from \$42.2 million for the corresponding period last year.

Grain Receivals

The receival figure for the first Half Year to 31 March is 11.1 million tonnes which comprises 10.8 million tonnes of winter crop and 300,000 tonnes of summer crops. This represents a significant increase on receivals for the corresponding six months last year of 1.8 million tonnes.

Despite a strong start to the season, the Sorghum crop in Central Oueensland encountered difficulties as a result of little or no rain since planting. As a result the company has revised its Summer Crop forecast down by 200,000 tonnes to 0.8 million tonnes which is slightly above the long term average. The Full Year receivals forecast has been revised accordingly to 11.6 million tonnes.

Grain Throughput

The forecast throughput for the Full Year is 22 million tonnes (comprising 11.6 million tonnes total receivals and both export and domestic out-loading of 10.4 million tonnes). At 31 March 2004, the total out-loading figure stands at 4.2 million tonnes of grain. It is expected that export activity will increase in the second half of the year and as a result the forecast remains unchanged. Carry over to the $2004/2005$ financial vear is forecast to be 2.6 million tonnes.

In addition, the company has exported 395,000 tonnes of woodchips and is forecasting a total export figure of 920,000 tonnes for the year.

Capital Expenditure

Capital expenditure to 31 March 2004 was \$15.6 million. The expected total expenditure for the year of \$30 million is below depreciation and in line with previous market guidance. The previous year capital expenditure of \$10 million reflected the drought conditions and demonstrated the ability of the company to manage its variable costs.

Oueensland Operations

Following the acquisition of Grainco Australia on 1 October 2003 the company has implemented and completed an effective restructuring program. This has involved staff changes and redundancies, sale of surplus assets and capital investment in selected facilities. The Oueensland operations are well on track to achieve the forecast merger synergies of \$10-12 million.

Allied Mills

Allied Mills is in the midst of a three year restructuring program to optimise its staffing, product mixes and logistics. This has seen staffing levels reduced from 800 to 600 over the past eighteen months, and changes to product lines.

The company continues to enjoy a long term supply agreement with Burns Philp for their Quality Baking Australia (OBA), In Store Bakeries (ISB), and Food Services divisions. The forecast contribution to GrainCorp earnings (60% share) for the 2003/04 year from Allied Mills is \$3-4 million, while the half-year contribution is \$1 million, including interest earned after providing for significant restructuring costs.

Capital Management

As part of the company's ongoing capital management program, GrainCorp has announced a special dividend of 10 cents per share, payable alongside the ordinary interim dividend. The special dividend allows GrainCorp to distribute excess franking credits to shareholders. GrainCorp's dividend payout policy remains at 65% of after tax profit attributable to shareholders.

The first instalment on the GrainCorp RPS of \$3.245 was paid on 31 March. The second instalment will be paid 30 September 2004 with a record date of 16 September 2004.

Outlook

Forecast full year profit remains at \$24-26 million. GrainCorp will issue its first winter crop receival forecast in July.

Media contact: Mario Falchoni, Corporate Relations Manager (02) 9325 9132 or 0418 401 415