Apiam Animal Health Limited (AHX.AX) Earnings Call Transcript & Summary

Good morning, ladies and gentlemen. On behalf of the Board, it is my pleasure to welcome you to Apiam Animal Health Limited's 2021 Annual General Meeting. Thank you for your attendance this morning via our teleconference facility. I'm Professor Andrew Vizard, Chairman of the Board. Allow me to begin by introducing my fellow Directors who are all in attendance: Dr. Chris Richards, our Managing Director; Mr. Rick Dennis, Non-Executive Director; Dr. Jan Tennent, Non-Executive Director; and Michael van Blommestein, Non-Executive Director. Also in attendance is Matthew White, our Chief Financial Officer; and Brian Scutt, our Chief Operating Officer. The Company Secretary, Eryl Baron, is also in attendance, as are the company's auditors, Grant Thornton, represented here today by Crystel Gangemi, the partner responsible for the company's audit for the 2021 financial year. As you are all no doubt aware, today's meeting is being held online via the Lumi platform. This allows shareholders, proxy holders and guests to attend the meeting virtually. In addition, shareholders and proxy holders have the ability to ask questions and submit votes during the meeting. Questions can be submitted at any time. [Operator Instructions] Only shareholders, proxy holders or shareholder representatives may ask questions, and we will identify you and announce your name ahead of asking your question. Please note that while you can submit questions from now on, I will not address them until a relevant time in the meeting. Please also note that your questions may be amalgamated together if we receive multiple questions on one topic. It is past 9 a.m., and the company secretary advises me that we have a quorum present. So I will now declare the meeting open. The notice for this annual general meeting was circulated to shareholders within the required period, and further copies of the notice are available electronically via the BoardRoom InvestorServe portal. If there are no objections, I would like to move that the notice be taken as read. I will now describe the voting procedures that will apply to the meeting. Votes on each resolution will be taken by way of a poll. The results of the poll will be notified to the ASX following the meeting. If we could please change the slide. Only Apiam's shareholders or their duly appointed representatives or proxies are eligible to vote at this meeting. The screen you are viewing has the photo of who is speaking and the company's slide presentation on the right-hand side of the screen and the voting section on the left-hand side of the screen. The meeting guide provides a step-by-step approach on how to participate in this meeting. As this is a virtual meeting, the meeting platform provides for electronic voting. If you are eligible to vote at this meeting, a new polling icon will appear. Selecting this icon will bring up a list of resolutions and present you with voting options. To cast your vote, simply select one of the options. There is no need to hit a submit or enter button as the vote is automatically recorded. You do, however, have the ability to change your vote up until the time I declare voting closed at the end of the meeting. We will let you know as we approach the close of voting, but we will keep it open for 15 minutes after the close of the meeting, so you have that time to make any changes before or during the meeting. If you are having any technical difficulties and the online meeting guide isn't addressing them, please phone the toll-free number on the top of the web page. This number is also on the bottom left of the second last page of the online guide. If we experience technical difficulties during the meeting that prevent us from continuing, we will adjourn the meeting and release an announcement to the ASX on when the meeting will recommence or when we will hold another meeting. If you are a proxy holder, you must comply with the direction of the shareholder if you wish to lodge a valid vote. If a shareholder or its proxy holder votes today in relation to its shareholding for which a proxy has been appointed, the earlier proxy will be revoked in favor of the new vote. Do any proxy holders have questions regarding the voting procedure? Eryl, have there been any comments or questions?

None.

Thank you. Each resolution will be tabled in turn, and we will allow time for questions and answers regarding the resolution before proceeding to the next resolution. [Operator Instructions] I will endeavor to give all shareholders who wish to ask a question a reasonable opportunity to do so. However, in order to allow for an effective meeting, may I ask that you please keep your questions related to the matter at hand and as succinct as possible? At this meeting, there will be 11 items of business, including 10 resolutions. Each resolution will be proposed and voted on as a simple majority to be carried. There have been [Audio Gap] are considered. As mentioned in the Notice of Meeting, it is intended that any undirected proxies given to the Chair will be voted in favor of the relevant resolution. Only people who are actually registered here as shareholders or as proxies, representatives or attorneys for absent shareholders are entitled to ask questions. [Operator Instructions] Where appropriate, I will call on specific directors, management, the auditor or other advisers to respond to shareholder questions. However, I do ask that all questions be put through me as Chair. There will be an additional opportunity for questions on each resolution that relate to that particular resolution. But before we move on to the formal business of today's meeting, I will address shareholders in relation to company performance, and I will then invite our Managing Director, Dr. Chris Richards, to deliver a presentation to shareholders. A copy of my address, the Managing Director's address and the Managing Director's presentation have been lodged with the ASX and will be published in Investors section of the company's website. I will now begin my Chairman's address. The past year was undoubtedly a challenging year for the communities right across Australia. In our heartland of regional and rural Australia, our customers and our staff have pivoted quickly from managing the effects of drought and bushfires over prior years to this year, managing the impacts of a global pandemic. Our company's performance for the 2021 financial year continued to be strong, and the Board believes this is a testament to our success of our ongoing regional expansion strategy with growth being driven by successful organic business initiatives developed by our management team as well as our acquisition strategy. Your Managing Director will provide details about Apiam's performance during the previous financial year during his address. Rather than preempt what Chris will say, I am taking this opportunity to stand back from the immediate and to change focus to the issues that the Board and management spend most of their time considering. In brief, this is how we seek to build a bigger, better, more resilient Apiam, a company with durable competitive advantages that enhance our long-term profitability, our ability to service our clients and our ability to remain innovative. We've asked ourselves questions such as how will future veterinary workforces change. What future needs are our clients and their animals likely to have? What will the food production industry require? And through that process, we have developed a strategy that involves 4 key strategic pathways: firstly, extending our footprint and our strength in regional Australia; secondly, delivering best-in-class services, products and advice; thirdly, providing leadership and innovation in disease prevention, monitoring and control to the Australian livestock industries; and fourthly, building a great workplace. Let me now speak to and provide examples of our progress against these key strategies one at a time. Firstly, extending our footprint and strength in regional Australia. This includes both growth through acquisitions and organic growth. But today, I'd like to talk a little more about our acquisition strategy. There are 3 acquisition targets I will focus on today. Firstly, acquisition of further dairy and mixed animal vet clinics that can be rapidly integrated into our existing dairy and mixed regional structure. Our agreement to acquire Horsham Veterinary Hospital announced in October of this year is an example of this. This acquisition fits directly into our existing Western Victorian clinic network, and there are many immediate operating benefits and synergies identified. A second type of acquisition target that we seek are clinics in the fast-growing, under-serviced corridors of regional Australia. These are often veterinary clinics, which deal predominantly with companion animals, dogs, cats and horses. Our agreement to acquire the Golden Plains Group announced in August this year is an example of this. The Golden Plains Group has 2 high-performance veterinary clinics, one in Bannockburn, on the outskirts of Geelong; and one at Smythesdale, near Ballarat. These locations are currently among the fastest-growing regions in Victoria. These, together with our nearby start-up clinics at Highton and Torquay North, mean that Apiam now has a significant presence in this peri-urban region. We are sharing staff and leveraging our cost base across our clinic network in the area and are in a very strong position to capture the long-term potential of this high growth region. The final acquisition target that I will speak to today is within the equine industry. The veterinary equine industry in Australia is currently highly fragmented, and we see considerable opportunities from expansion and harnessing the scale, skill and assets that Apiam currently possesses. Our acquisition strategy is to acquire large high-performance equine clinics in key regions for the Australian equine industry. The acquisition of Scenic Rim Veterinary Services in Queensland and Agnes Banks Equine Clinic in New South Wales are both examples of this. These are 2 high-performance equine cornerstone clinics that will form a base for continued expansion within the equine sector in each respective state as well as offering feeder clinics access to specialist equine skills and knowledge from which to leverage revenue opportunities and industry-leading resources in their local markets. One last important point on our acquisition strategy. The peri-urban regions of Australia and the Australian equine market not only offer significant growth opportunities for Apiam but also offer stable revenue streams with low correlation to the revenue generating from our pig feedlot and dairy businesses. Thus, through these acquisitions, we expect not only to build a larger Apiam, but we also expect to build a more resilient Apiam. I will now move to our second strategy, delivering best-in-class services, products and advice. While generic product lines can be commoditized, quality service and unique product lines are less likely to be. Apiam is committed to delivering best-in-class services, products and advice not only because it is in the clear interest of our clients to do so but also because of the enduring competitive advantages that accrue to Apiam when clients know they are properly serviced. We consider an appropriately skilled and committed workforce as a key element of this strategy. And this is also an area where we can use our scale to our advantage. Apiam is consistently reinforcing and maintaining our impressive team of expert staff who, together, hold a complete range of specialist skills and expertise that are required to fully service a client. This can be at an individual level or alternatively shared across the team, providing specialist and expert advice to other staff members regardless of location. For example, in early 2021, Dr. John Carr joined Apiam to reinforce our already strong swine team, pig team. John is Australia's only practicing registered specialist in swine medicine and has a wealth of experience across the globe. He has authored 25 books, published over 32 peer-reviewed scientific papers, and has presented papers or been invited as a keynote speaker at veterinary and pig industry events on more than 500 occasions. Apiam has employed John not only to provide consultancy services to our pig clients but also to train and upskill our own staff. To help maintain our own skill base, Apiam has also developed strong links and partnerships with several of the veterinary schools in Australia and offer a range of internships and post-graduate training opportunities to new and recent graduates. In addition, all Apiam employees are required to undertake and record their development activities, and detailed development plans are an important commitment from the company to ensure that we continue to develop and -- our talent and future leaders. We also consider a provision of key resources as a required element to deliver best-in-class service. And once again, this is an element where we can use our scale to our advantage. For example, computerized tomography, CT machines, something that you might have seen in human medicine, can also significantly improve diagnostic capacity in small animal medicine, but they are rarely purchased by regional and rural veterinary clinics because of their high cost. In 2019, Apiam purchased a CT scanner located in Bendigo that is accessible to all our Northern Victorian clinics. We are now installing another CT scanner in our clinic in Maffra that will provide regional access to all our Gippsland clinics, thereby enhancing our capacity to deliver best-in-class services for our dog and cat clients in that region. I will now move to our third strategy, providing leadership and innovation in disease control to the Australian livestock industries. Farming trends and consumer expectations in relation to animal health, food safety and product integrity are continually evolving. Apiam has positioned itself to be at the forefront, offering innovative products and services that meet these evolving needs. One such example is that livestock industries need to reduce reliance on traditional antibiotic solutions to disease problems. Our decision to acquire ACE Laboratories in 2019 was strongly influenced by their skill and experience in producing autogenous or bespoke vaccines, which can be used as alternatives to antimicrobials in livestock production. And through ACE, we recently received the necessary Australian regulatory approval to produce a unique and innovative vaccine to protect against a disease pathogen called Histophilus somni, a widespread but misunderstood disease that can cause high levels of morbidity in intensively raised cattle,, sheep and goats. We will now commence production of this vaccine locally at ACE in Bendigo, and we plan for this type of innovation to be an important driver of our business growth thereafter. You may have also seen that last week, we announced we have entered into an exciting distribution agreement with Aurora Pharmaceuticals, a large U.S. company headquartered in Minnesota. This distribution agreement is in respect of Zoono's unique antimicrobial surface protectant technology, for which we have the exclusive U.S. distribution rights for the veterinary, agriculture and livestock industry. The technology is a first of its kind to show enhanced duration of efficacy in animal housing, where independent university studies have demonstrated continued surface protection for 21 days against economically important animal viral pathogens. It's an important addition for the industry. One final innovation I will mention is Data Pig, which we just released for the pig industries. Data Pig is an electronic swine health recording program used by piggery workers, managers and veterinarians. It is a simple, intuitive pen-side tablet application complemented by cloud data storage that synchronizes with veterinary prescribed medication lists, provides accurate treatment and vaccination and dosage instructions. It also includes additional features such as performance monitoring. Data Pig has several unique attributes. We see it as having the potential for significant penetration within the pig industry, both nationally and even internationally. As well as contributing positively towards national antimicrobial resistance strategies, Data Pig ensures compliance with quality assurance systems through comprehensive report -- recording, replacing unreliable and inconsistent paper records, and allows critical decisions to be made with the whole team input, including owner, manager and veterinarian. I'll now move to our fourth strategy, building a great workplace. Apiam's employees are our greatest asset, and we maintain a strong focus in improving the well-being and development of our people. Simply, we aim to be the employer of choice in our industry. Flexible workplace practices, market-leading remuneration policies and enabling our staff the room to manage and drive their own careers are increasingly important in the veterinary industry to attract and retain the best talent. And through our work in this area, we have identified, sadly, a few grim industry statistics relating to employment of veterinarians in Australia that Apiam is committed to turn around. One of them is mental health. Apiam has been at the forefront of implementing a mental health strategy to address the underlying issues. We have trained 51 mental health first aid offices that support our locations, and we have also put in place an employee assistance program where our team can access professional counseling sessions with a qualified psychologist or social worker. Apiam has also introduced an additional paid leave day to support mental well-being and has joined forces with Smiling Mind to help promote mindfulness across our 700-plus person workforce. Another of the company's major initiatives to address work-life balance issues often associated with rural and regional practices that are expected to service their communities 24 hours a day, 7 days a week is the implementation of Apiam's proprietary software-based triage service. This is a service run by experienced veterinary nurses who manage after-hours calls and triage cases, is giving busy veterinarians the ability to remain focused on real emergency cases. Since its launch in late 2020, Apiam's triage service has reduced the number of after-hours calls going to our vets by around 60%. We have also successfully used technology over the past year to improve the safety and well-being of our workforce and have taken a leadership role in the Australian cattle industry through our innovative approach to reduce the risk of injuries when handling cattle in yards and in crushes. As the business grows, your Board will continue to pursue excellence in environmental, social and governance standards, and we have made significant progress in these areas in 2021. Respect for the environment, sustainable farming practices and antimicrobial stewardship are fundamental to the day-to-day lives of our rural and regional customers, and we are acutely aware of the need to continuously improve and innovate in these areas. We are on track to launch our corporate sustainability strategy in the current financial year and expect to report our progress in this area on a periodic basis moving forward. To close, I am confident that we have the right strategies to build a bigger, better, more resilient Apiam with durable competitive advantages that enhance our long-term profitability, our ability to service our clients and our ability to remain innovative. And although it is work in progress, I'm also confident that management is executing these strategies in a timely and proper fashion as I hope the examples I have just provided demonstrate. Before I hand over to Chris for his operational update, I wish to acknowledge our management team and the entire Apiam workforce for their commitment and drive over the past 12 months, particularly as we have all continued to navigate the impacts of COVID-19 on our personal and professional lives. In particular, I'm impressed by the resilience our team has shown in continuing to fulfill their roles as essential service providers during this unprecedented period. Our staff have not compromised their high standards of animal care right across the wide range of species that we service from livestock to small companion animals. Thanks to all of them. I also thank my fellow Board members for their ongoing guidance. And finally, thank you to our shareholders who continue to support our company in its growth journey. I will now hand over to our Managing Director, Chris Richards, to make a presentation on Apiam's activities and financial results for the financial year '21 year as well as an update on the trading to date. Thank you.

Thank you, Andrew, and welcome, everyone, this morning to our AGM. Despite the uncertain environment for many businesses in 2021, Apiam has delivered another strong performance as we continue to execute our core business strategies. We made significant progress in executing our acquisition pipeline. We captured growth in attractive regional markets, and we further diversified our revenue streams. Today, I'll provide additional detail on our FY '21 performance and further context on our growth strategy, both via organic business initiatives and acquisitions. I'll also provide an update on Apiam's current trading for the year-to-date and our outlook for FY '22. I want to start by reviewing our key business priorities for FY '21 and the progress we've made in each area. As Andrew has mentioned, we developed and implemented a number of organic business initiatives, many of which were market-leading and innovative within the animal health segment. In our intensive animal businesses, we have strategically transitioned our business focus to new antimicrobial products and services, while at the same time [Technical Difficulty] Sorry, I'll go back a little bit. So as Andrew mentioned, we've developed and implemented a number of organic business initiatives, many of which were market leading and innovative within the animal health segment. In our intensive animal businesses, we have strategically transitioned our business focus to new antimicrobial products and services while, at the same time, reducing our reliance on wholesale sales of lower-margin traditional products. We've invested in new vaccine development and continued to successfully grow our customer-centric service programs, which I'll talk to later in the presentation. In terms of acquisitions, this has been a highly productive year, having completed 7 acquisitions in the past 12 months and announcing a further 4, which will complete in December. We've targeted our acquisitions to capture growth in regions where populations and animal ownership is growing rapidly. In addition, the changing nature of veterinary markets in terms of the -- sorry, the changing nature of veterinary markets in terms of the complexities of running large business operations with staff challenges and so on, this meant our acquisition pipeline is strong with many opportunities presented to us to assess. We continue to execute only the most attractive opportunities. And once the terms are agreed, we're very experienced to quickly and efficiently integrating these regional businesses into the broader Apiam Group. I will cover the financial highlights of our FY '21 performance on the next slide, which delivered operating leverage and increasing profit margins as a result of successful execution of our business model. We have delivered strong trends in this area over the past financial year, and the fast growing contribution of our dairy and mixed animal clinics as a result of our service and operating model has resulted in very strong bottom line profit growth. This part of our business accounted for 60% of our total revenue in FY '21. In terms of the operating profile of the business, we added 10 new clinic locations during FY '21 via our acquisition program and 2 new greenfield locations as well as around 50 additional veterinarians. Now turning to a summary of our full year results for the 12 months to 30 June. Firstly, our revenue for the period increased 6.6% to $126.2 million with 24% revenue growth in our dairy and mixed animal clinic segment. Market cycles continue to impact the performance of Apiam's beef feedlot and pig segments due to several factors. The feedlot segment saw a reduction in the number of cattle on feed during the year as a result of the rebuilding of the national cattle herd. And in the pig segment, we continue to reduce our reliance on wholesale sales of lower-margin traditional antibody products in line with Apiam's strategic transition to sustainable antimicrobial products and services. Our gross margin momentum was strong, delivering an 11.2% uplift in gross profit to $71.1 million. The growing contribution of higher-margin dairy and mixed animal clinics improved revenue capture as well as organic business initiatives, which have driven this performance. Control of operating expenses and the excellent 44.5% EBIT growth in the companion animal and dairy segment in FY '21 drove a reported NPAT increase of 24.1% to $5.1 million. We were also very pleased with our cash flow performance with net cash flow from operating activities up 82.5% in FY '21 due to efficient working capital management and the strong growth in earnings. This supported the Board to increase Apiam's dividend payment for the year. On a like-for-like basis, which is excluding the part year impacts of acquisitions made in this and the previous period, revenue grew 0.5% and gross profit grew 1.5%. This slide provides a brief summary of our performance over the past 4 years on 2 key metrics: revenue and gross profit. The reason that this is important is that it highlights the benefits of our diversified business model and shows the resilience of our business in the face of the industry challenges: the bushfires of early 2020, the drought of many years before that and the COVID-19 pandemic for the past 2 years. Our business revenues have continued to increase in the face of these factors, and I believe that we've structured our business very solidly to ensure diversification and resilience, limiting downside risk and providing a platform to provide exceptional growth. As you know, we also invested for many years in optimizing our business model, our company infrastructure and our business mix with a focus on driving long-term sustainable increases in our margins. If you look to the chart on the right, you'll see that the green bars, which represent our gross profit, have increased 38% since FY '18, but this isn't simply just because of the growing size of our revenue base. The gray line denotes our gross profit performance and shows a significant improvement has been achieved since FY '18, where the margin was around 48% to today where it is roughly 8 percentage points higher. But now I'd like to turn to the growth strategy section of our presentation today and highlight some of the key areas of focus over the past 12 months. In FY '21, we have executed a significant acquisition program to drive clinic growth in targeted regional locations. Veterinary markets continue to benefit from rapid changes in regional population demographics and animal ownership following the emergence of COVID-19 in Australia, and the lifestyle changes, many of us have made as a consequence. For Apiam, this has had many positive impacts as significant opportunities have arisen for the company to capture market share and the strong veterinary industry growth. During FY '21 and FY '22 year-to-date, Apiam has completed 7 strategic acquisitions, and these are set out on the table on the right-hand side of the page. These acquisitions -- yes, these acquisitions have delivered a material increase in the scale of the company's Queensland operations, which you can see also from the map and have more than doubled Apiam's clinic presence in the state. We've also strategically identified attractive opportunities in the equine veterinary segment. And in July, we acquired Scenic Rim Vets, a leading equine market player in Southern Queensland. Last week, we also announced an agreement to acquire Agnes Banks Equine Clinic, a specialized equine practice in New South Wales. We see significant growth opportunities in equine veterinary services as the industry continues to grow rapidly and customers are increasingly demanding more specialized levels of veterinary care. You'll note in the bottom highlighted section of the table, we have 4 acquisitions, including 2 announced this morning, which will settle in December, further increasing our presence in important regional hub locations and increasing our exposure to attractive companion animal services. Turning to organic growth initiatives. I want to provide a quick update on the performance of the Best Mates and ProDairy subscription programs, which were developed in-house and launched in FY '20, before turning to some newer initiatives on the following slides. Best Mates, our annual subscription companion animal wellness program, grew 76% in FY '21 in terms of member numbers, and we expect further growth in the year ahead. At the end of Q1 FY '22, 7.3% of active Apiam customers are members, so we still have plenty of potential for this program with immediate strong conversions often seen in our new acquisition and greenfield clinics. The ProDairy program, which is a specialized care program to support our dairy farm customer base, also continues to grow exceptionally well and in the most recent quarter, grew its membership base 27.3%. In the year ahead, we're looking to expand this program further into New South Wales and Tasmania. Over the past year, we've also been working hard to deliver innovative solutions and products with significant market potential. Our distribution partner, Aurora Pharmaceutical, was provided U.S. EPA notice to market Xtend 21 antimicrobial surface protectant in the U.S. market. This product is based on Zoono's Microbe Shield technology for which we have the exclusive rights for livestock use in North American markets. Iowa State University, which is one of the most highly regarded independent global research institutions in the area of agriculture and animal health, have demonstrated that the Xtend 21 surface protectant continued to show enhanced surface protection 21 days after application. This is a first of its kind for the animal sector, and we see this as a very -- as very attractive for customers that face antimicrobial surface challenges across their animal facilities. This product is now in the process of receiving final state approvals where required, and Aurora Pharmaceutical is expected to commence a full market launch in January 2022. The other exciting aspect of this initiative is that it extends our working relationship with Aurora Pharmaceutical, who is an important market player in the veterinary pharmaceutical development and manufacturing industry. They're headquartered in Northfield, Minnesota and have over 10,000 veterinary customers. Importantly, they also have a highly specialized technical and sales team, and we look forward to working collaboratively with them, sharing ideas and learning as we progress the product rollout next year. There are 2 other new product and service innovations, I would like to now comment on. As Andrew mentioned, we recently received APVMA approval for a new vaccine developed through our ACE Laboratories business that we acquired in late 2019. This approval relates to a vaccine targeting Histophilus somni, and we expect it to improve the health of beef cattle -- beef feedlot cattle as well as sheep and goats. Histophilus somni is a misunderstood pathogen, which can cause high levels of mortality and morbidity in intensively raised cattle. And despite being commonly found in the nasal cavity of cattle, it can invade blood vessels and organs and cause vascular damage. Our goal when we acquired ACE Laboratories was to develop and manufacture new vaccines, filling gaps in the market to improve the health of farm animals. And this is the third new vaccine we have commercialized since we took ownership of the business. Vaccine development formed part of our antimicrobial leadership strategy, particularly as the market is increasingly demanding alternatives to traditional antibiotic solutions in production animals. This type of vaccine is also a first for the Australian livestock industry, and we think it'll be well received by the market. In FY '21, we also launched Data Pig, a proprietary data platform designed for our pig customers. A pilot program undertaken in Western Australian piggeries has now been successfully completed, and this technology is in the early stages of being commercialized across our broader pig client base. I'd now like to talk about some of the ESG initiatives we have been working on at Apiam this year. We released our first modern slavery statement in March and are on track to launch our corporate sustainability strategy this financial year. I won't go through each of the ESG initiatives listed here in detail other than to say that, from an environmental perspective, we are focused on implementing more sustainable solutions in our day-to-day operations and to ensure our business does its bit in this area. At a Board and management level, we also continue our focus on ensuring we meet market best practice governance standards. Our ESG efforts will continue to progress over the next 12 to 24 months, and we recognize the importance of these initiatives for our shareholders, staff, customers and our local communities. The most important part of our business is our people. This last 12 months is a period where this has become a major focus, and we're committed to ensuring that we execute on our strategy. Safety is our utmost priority. And in addition to a highly successful COVID-safe workplace, we have implemented other safety initiatives such as our mental health strategy, including an additional leave day, a tele-triage platform to reduce the after-hours workloads on our vets, and we're about to relaunch an advanced Hendra policy to enhance the safety for our veterinarians that provide services to the equine industry. We've also continued to invest in both personal and professional development of our team, and we'll be engaging in further initiatives over the coming year to further develop an innovative and agile customer-centric business. To conclude, I would like to turn to the outlook for the year ahead. The management team and I remain committed to the execution of our regional expansion strategy and capturing further market share in the rural and regional veterinary markets. We see significant room for growth, innovation and enhanced services in many areas and intend to pursue this to deliver results for our shareholders and better outcomes for our customers and their animals. Due to the changing nature of veterinary markets, we expect to continue to see attractive acquisition opportunities, and we'll continue to assess each on their merits. The excellent growth momentum we've been seeing in our dairy and companion animal clinics shows no signs of slowing. And as we head closer to the end of the first half period, we expect this side of our business to contribute close to 70% of total Apiam revenues. We've had a solid start to FY '22, and set out on the right-hand side of the slide is our trading performance for the first 4 months of FY '22. Our revenue over July to October is 19.8% higher than in the same period last financial year. Gross margins continue to trend higher as well driving a gross profit improvement of 28.6% for the FY '22 year-to-date period. Our pig and feedlot business, however, has continued to be challenged by market cycles that have affected these segments in FY '20 and '21. We do expect to see improved performance from these businesses in the second half of the year, and we've implemented initiatives to capture market share as these sectors rebound. To close, I would like to thank the leadership team for their commitment in delivering these outcomes. Thank you also to all our Apiam team members for their drive and hard work in ensuring we continue to provide the highest standards of care to both the animals to whom we provide services but also to each other throughout our business. I look forward to updating you on further developments in the coming months. Thank you, Andrew.

Thank you, Chris. Now moving to the formal component of the meeting in which the only items of business to come before the meeting today will be those specified in the Notice of Meeting. Only questions relating to a particular business item will be taken during this time. The first item of business of this meeting is consideration of the audited financial statements and related reports for the year ended 30th of June 2021. The Corporations Act requires that the audited financial statements and related reports for the 2021 financial year be considered at the meeting. I now declare that these reports, which were made available to shareholders on 30th of August 2021, have been laid before the meeting. Although shareholders are not required to formally vote on these reports, I welcome any discussion or questions on the reports. I will also take questions on general matters, so please note, this is your opportunity to ask any general question. As I mentioned previously, the company's auditors are Grant Thornton and Crystel Gangemi, the partner responsible for the company's -- is available to answer the questions on the conduct of the audit or the conduct -- or the content of the auditor's report. I'm advised by the auditors that no relevant questions for their attention were received prior to the meeting. The financial and related reports have been circulated to shareholders, and I have provided an update on the year performance as has Chris and the outlook on this meeting, so no further background is required on this resolution. I will ask our company secretary to advise whether any questions have been received in relation to the annual report or arising from my address and presentation or any other general questions. Eryl?

Chair, a general question has been received. I have sent it to you. Would you like me to read it out?

Yes, please.

It appears the beef and pig feedlot business has not performed as well as you would like despite good grain harvest and high beef prices. You sometimes mention the rebuilding of the national herd as an issue. Can you give us an overview of how this business works for Apiam? How big is it? And how are the current trends and the medium-term prospects looking as we go ahead? What is going to make them rebound?

Chris, I'll hand that over for you to answer, please.

Thanks, Andrew. Yes. So in terms of the size of that business, we're expecting, by the end of this financial year, that will make up about 30% of our revenue of the entire company. If I drill into those 2 parts of the business, so in the pig business, we made a strategic decision to move away from our reliance on wholesaling antibiotics. The industry is changing to more sustainable production systems. And as part of our antimicrobial stewardship program, we made a strategic decision about 2 years ago actually to invest in the ACE Laboratories business so that we could develop vaccines to replace antibiotics. So we've been reducing our reliance on those wholesale business in -- of antibiotics, and we're starting to grow the other more sustainable parts of our business being vaccines as well as other programs that are mentioned today such as Data Pig and the Zoono product. Now in relation to the feedlot business, so the national cattle herd, breeding herd has been growing. As you would be aware that as that herd grows, those cattle then have progeny and then those progeny, a number of months down the track, then go into feedlot. So what's been happening is that the breeding herd is increasing. There's been, as a result of that, a reduction in cattle that would come into the feedlots because they're being retained to build the breeding herd. We're starting to see more progeny that are available to come into feedlots. At the moment, because of the fantastic season that we're having and we're in late November now and it's still green in most of the country, those cattle are remaining on pasture longer. So we're expecting that cattle coming into feedlots will increase into the autumn period, and then -- and that's where we would see our revenues increase from the autumn period in next year, so from March in 2022. This really correlates with what you will have seen that AACo put out earlier this week where they made a statement that they expect sales of their products to increase in early 2023. And we -- they sell their cattle around 250 to 300 days after we receive them in the feedlot where we generate our revenue. So both those -- my statement and their would correlate in terms of timing.

Thank you, Chris. Are there any other questions or comments that anyone wishes to make?

There are no questions.

Okay. So this is your opportunity to ask any general questions. So I'm taking there are no further general questions anyone wishes to take. So on that basis, I confirm the audited financial and related reports for the year ended 30th of June 2021 have been received and considered by shareholders. So now I move to resolution 1. The next item of business, resolution 1, is a nonbinding resolution to adopt the company's remuneration report, which is set out in the company's 2021 annual report. The resolution and details of the valid proxy votes on the resolution appear on the screen, and I will take these as being read. Eryl, have there been any comments or questions regarding this resolution?

No, there have not.

So I formally put this resolution to the meeting. If you have not already done so, please submit your vote now. I will now move to resolution 2. The next item of business, resolution 2, relates to the reelection of Dr. Jan Tennent as a Director. Jan was appointed to the Board in September 2018 as a Non-Executive Director, and her qualifications, background and experience are summarized in the Notice of Meeting. The resolution and details of the valid proxy votes on the resolution appear on the screen, and I will take these as being read. Has there been any questions or comments on this resolution?

None.

I formally put this resolution to the meeting. If you have not already done so, please submit your vote now. I will now move to resolution 3. The next item of business, resolution 3, relates to the issue of the January placement shares. These shares were issued as part consideration to the acquisition of Grampians Animal Health. The resolution and details of the valid proxy votes on the resolution appear on the screen, and I will take them as being read. Do we have any questions or comments regarding this resolution?

We have none.

I formally put this resolution to the meeting. If you have not already done so, please submit your vote now. Resolution 4. The next item of business, resolution 4, relates to the issue of April placement shares. These shares were issued as part of consideration of the acquisition of Knox Veterinary Clinic. The resolution and details of the valid proxy votes on the resolution appear on the screen and I take these as being read. Do we have any comments or questions regarding this resolution?

There are none.

I formally put this resolution to the meeting. If you have not already done so, please submit your vote now. Resolution 5. The next item of business, resolution 5, relates to the issue of the institutional placement shares. These shares were issued to raise funds to accelerate Apiam's regional expansion strategy. The resolution and details of the valid proxy votes on the resolution appear on the screen, and I will take these as read. Do we have any comments or questions regarding this resolution?

There are none.

I formally put the resolution to the meeting. If you have not already done so, please submit your vote now. Moving to resolution 6, the next item of business, which relates to the issue of the May placement shares. These were shares that were issued as part of consideration to the acquisition of Clermont Veterinary Clinic. The resolution and details of the valid proxy votes on the resolution appear on the screen, and I take these as being read. Do we have any comments or questions regarding this resolution?

There are none.

I formally put the resolution to the meeting. If you have not already done so, you can submit your vote now. I will now move to resolution 7, which relates to the issue of the June placement shares. These shares were issued as part consideration for the acquisition of Samford Valley Veterinary Hospital. The resolution and details of the valid proxy votes on the resolution appear on the screen, and I take these as being read. Do we have any comments or questions regarding this resolution?

There are none.

I formally put this resolution to the meeting. And if you have not already done so, please submit your vote now. On to resolution 8, which relates to the issue of July placements. These shares were issued as part consideration for the acquisition of Scenic Rim Veterinary Service and Boonah Veterinary Hospital. The resolution and details of the valid proxy votes on the resolution appear on the screen, and I take these as being read. And do we have any comments or questions regarding this resolution?

There are none.

So I formally put the resolution of the meeting once again. And if you have not already done so, please submit your vote now. On to resolution 9, which relates to a proposed issue of performance rights to Managing Director, Dr. Chris Richards, under the company's employee equity incentive plan. The resolution and details of the valid proxy votes on the resolution appear on the screen, and I will take these as being read. Eryl, do we have any other comments or questions regarding this resolution?

There are none.

I formally put this resolution to the meeting. If you have not already done so, please submit your vote now. So to the final resolution, resolution 10, the next item of business, which requests approval of an additional 10% share placement capacity under ASX Listing Rule 7.1A. The resolution and details of the valid proxy votes on the resolution appear on the screen, and I will take these as being read. Eryl, have there been any comments or questions regarding this resolution?

There are none.

I formally put this resolution to the meeting. If you have not already done so, please submit your vote now. So now as all resolutions at this meeting have now been put to shareholders, we will move on to the poll procedure. We will allow 15 minutes for voting to be completed. Does anyone have any questions in relation to the voting procedure? Are there any questions regarding this, Eryl?

There is a further general question.

Okay. I'll take it.

The beef and pig area issues are presumably putting pressure on gross profit margins. Despite this, these figures have shown good improvement in any case. What extra GP margin would have been seen if the beef and pig was taken out and the rest of the business was looked at in isolation?

Chris, would you like to answer that?

So yes, so we don't disclose our gross profit margins at a segment basis. But as an industry goes, the margins that are in the pig and feedlot business are at a far lower margin than what's in the dairy and companion animal business.

Thank you. Any other questions that anyone else got to anyone?

No, there no none.

Okay. We have -- I will remind you that voting will close in 15 minutes. Please note, as Boardroom Pty Limited will need time to count and audit all the votes submitted online today, the results of the [Audio Gap] And as that concludes the business of the meeting, I thank members for their attendance and now declare the meeting closed. Thank you for your attendance.

Thank you, Chair.