Australian Agricultural Company Limited (AAC) Earnings Call Transcript & Summary

Well, ladies and gentlemen, good morning. My name is Donald McGauchie. And as Chairman of the Australian Agricultural Company gives me great pleasure to welcome you to AACo's 2026 Annual Meeting. I'm going to apologize in advance for my voice, the weather at home in Victoria has been pretty awful and cold. And I was coming up to Brisbane to get some nice warm sunny weather to help my voice through today, but guess what happened. It is now past 10 a.m., and I have been advised that a quorum is present. I declare this Annual General Meeting of Shareholders open. The AACo properties are the historical lands of many traditional custodians, we acknowledge them and offer our respects to their elders past and present. We recognize their culture and honor their deep connection to the land, waters, animals and skies, especially across the places we have lived and worked for our 2 centuries of operation. As a food and agricultural company, there is much to learn from their approach to community and their knowledge and care of country. Now some housekeeping matters. Can you please ensure that your mobile phones are turned off? I'd also like to point out that the emergency exits that are at the back of the room. The Notice of Meeting was provided to shareholders on Thursday, the 18th of June, and that will be taken as read. Today's AGM retains the flexibility of recent years, including a live video webcast to allow shareholders and interested parties to observe the meeting online. The link to the live video webcast can be found on the Notice of Meeting. I'd like to remind shareholders and interested parties that the live video webcast is view only and shareholders who joined the live webcast video webcast will not be able to vote or ask questions. We appreciate the various views put forward by shareholders on the format of the AGM and recognize the importance of accessible and inclusive shareholder engagement. After careful consideration, the Board resolved to proceed with an in-person AGM, supplemented by a live webcast. Having a fully hybrid AGM increases both significantly the cost and the technical complexity of running the meeting. Holding an in-person AGM supplemented by webcast viewing reflects the current -- company's current operational and logistics considerations and aligned with our objective to ensure the meeting is conducted efficiently and transparently. Shareholders have been encouraged to take advantage of the opportunity to pre-submit questions prior to the AGM. That said, the Board remains committed to ongoing engagement with all shareholders and we'll continue to assess the developments in meeting technology and shareholder preferences for future AGMs. I'd like now to introduce my fellow nonexecutive directors, some of whom are here in person and some of whom are joining us via telephone: Mr. Stuart Black; Mr. Anthony Abraham; Mr. Marc Blazer; Ms. Sarah Gentry, Mr. Josh Levy; Ms. Nicole Sparshott; and Zoe Kenneally. Please note that Zoe is standing for election, while Josh and myself, Donald McGauchie, are each standing for reelection. Details of this have been included in the Notice of Meeting. I'd also like to introduce Dave Harris, our Managing Director and Chief Executive Officer; Emily Bird, our General Counsel and Company Secretary; and Glenn Steedman, our Chief Financial Officer. We also have with us today, Mr. Jason Adams, representing AACo's auditors, KPMG. Mr. Adams is available to answer questions relevant to the conduct of the audit, the preparation and content of the independent external auditor's report. We also have in the room representatives of MUFG Corporate Markets, our share register. Before moving to the formal part of the meeting, I will just address some procedural matters, then we'll proceed with the business of the day as set out in the Notice of Meeting. The financial statements and reports will be discussed first, then we'll deal with each of the remaining items set out in the Notice of Meeting, being the remuneration report, election of directors and amendments to the constitution of AACo. There will be an opportunity for comments and questions in respect of each of these items of business. So now let me turn to my address to the company and once again, to welcome you all to this meeting. It's again a pleasure to be here with you for the Australian Agricultural Company's '26 Annual General Meeting. We are joined at the Royal International Convention Center by some of Australian and international-based directors and executive management. Our remaining directors are joining us over the phone. Whether in person or online, it's a pleasure to be with you and to reflect on another successful year for the Australian Agricultural Company. I am pleased to report that your company remains in a strong position with sound foundations, experienced management and a committed team of extraordinary employees across the business. The strategy renewal announced last year is gaining the momentum that we were looking forward to do and we look forward to updating you on the progress that we've so far achieved. Our strong performance is driven by the quality and scale of the great assets that we own. The experience of our people, the disciplined execution of strategy through our properties, cattle production systems and portfolio of brands. Our properties are well set up for the future, benefiting from continued investment, favorable seasonal conditions in key regions and our focus on improving resilience and enduring land value. Our cattle continued to demonstrate improved quality and productivity, supported by ongoing investment in genetics, herd management and initiatives to optimize herd efficiency across the value chain. Our people continue to build capability across the business, supported by stability within our senior management team and executing with discipline, strengthening our culture and brands as we scale and evolve the company. FY '26 was a strong year. with a record operating profit result underpinned by consistent performance and a disciplined approach to the management of our assets, capital and costs. As a Board, we're encouraged not only by the result itself, but indeed by what it reflects: a business with a focused strategy that continues to strengthen and is well placed for sustainable growth. Agriculture has always been an industry that rewards patience, discipline and long-term thinking. And of course, our 200-year stands testament to that. Performance is not defined by any single season or year, but by the quality of decisions made over time, particularly in how we invest, how we manage our land and livestock and how we respond to change. That perspective continues to guide the Board. The impact of another significant flooding event in North Queensland coupled with ongoing geopolitical uncertainty and evolving market conditions underscores the importance of continuing to strengthen resilience right across the business. Our preparedness, operating model and people, particularly help minimize the effect of these challenges on our operations. I'll leave Managing Director and CEO, Dave Harris, to expand on the financial results shortly when he addresses you. Importantly, though, those results are not simply a reflection of favorable conditions. They are the product of deliberate strategic choices made over a number of years, and that is where I'd like to turn next. This time last year, we spoke about the refresh of our strategy, which we look at all the time, but certainly very much on an annual basis. And we have now moved firmly into execution of that strategy. Our focus remains on 3 key strategic areas: better beef, unlocking the value of the land and partner, investing. These are not new ideas for AACo. They are built on over 200 years of history, providing greater clarity and focus on where we believe the business can create the most value now and into the future. Together, these strategic priorities reflect our focus on creating enterprise value by improving profitability, strengthening cash flow and increasing the value of our unique portfolio of assets. They provide a clear foundation for capital allocation and investment decisions, ensuring management remains focused on disciplined execution, sustainable growth and stronger returns over time. AACo's core strengths remain unchanged as they have throughout its lifetime. It lies in the combination of the scale and quality of our land and herd. The depth and sophistication nowadays of our branded beef supply chain and the capability of our people to execute with discipline through changing and demanding conditions. Our largely integrated business model connects land, livestock brands and markets in a way that gives AACo greater control, resilience and value capturing right across that supply chain. It is this integration supported by scale and quality that continues to differentiate AACo. Importantly, we also see increasing opportunity to unlock additional value from our land base over time beyond its traditional production role. Capturing that opportunity requires patience, discipline and the commitment to invest for the long term, which is something we as a Board, remain very focused on. In FY '26, we continue to invest into the business, including in herd genetics, finishing capacity, carbon projects and innovation initiatives. These investments are very deliberate. They reflect a disciplined approach to how we allocate capital, balancing near-term performance with long-term value creation. They're designed to strengthen capability, improve resilience and create additional sources of value over time. Some of these will take more time than others to realize but they are already beginning to underpin the improved performance that we are seeing today. The Board recognizes the importance of creating enterprise value and delivering sustainable returns. We regularly consider a range of balance sheet capital management options, including dividends, share buybacks and having regard to the company's strategic priorities, financial position and growth opportunities. Of course, these decisions are made against the backdrop of an operating environment that continues to evolve, both here in Australia and across our international markets. Our operating environment remains dynamic. During the year, we have seen ongoing geopolitical uncertainty, evolving trade conditions and continued cost pressures across the supply chain and some of those have been pretty extreme. The Board has been encouraged to see management use our global distribution network to respond to shifting market conditions, managing risk and capturing opportunities to maximize returns while maintaining focus on the priorities of the business. As I mentioned earlier, we experienced a significant flooding event in North Queensland this year. The lessons learned and infrastructure investment improvements made since the 2019 floods helped us minimize the impact on the business and on -- of course, on our cattle, reinforcing the value of our people, processes and previous investments in resilience. These experiences demonstrate the importance of building a business that can perform through changing conditions and reinforce the Board's confidence in AACo's future. We remain very confident in the path ahead, supported by our clear strategic direction, disciplined capital allocation and improved operating performance. As we continue to execute on our strategy, we remain focused on growing value, improving profitability and strengthening financial flexibility. This will support our ability to invest in existing assets, pursue new opportunities and consider future capital management options. A key focus of the Board is ensuring the business continues to improve core free cash flow and net beef margins. And Dave will talk quite a bit more about that shortly. We've charged the executive team with delivering further progress in these areas, which will provide the financial flexibility that I've outlined. Net beef margin ensures measures the profit generated from AACo's core beef production activities. And as beef sales represent the majority of our revenue and continue to grow, we regard it as one of the clearest indicators of the underlying performance and profitability of the business. While operating profit remains an important measure, it also reflects the impact of live cattle sales and other income streams. As our strategy continues to progress and we capture more value through our largely integrated supply chain and branded beef programs, net beef margin is becoming an increasingly important measure of success. Stronger net beef margins support stronger cash generation, creating greater flexibility for capital management and decisions and improved value for shareholders. On behalf of the Board, I'd like to thank my fellow Board members, including Jessica Rudd and Neil Reisman, who retired in the last year or so. And our new Board members, Nicky Sparshott and Zoe Kenneally, who have recently joined us and bring very new and strong capabilities and diversity to the Board. I'd also like to thank Dave Harris and the executive leadership team. All of the people across our business for their very strong efforts throughout the FY '26 year. And finally, I'd like to thank you all, our shareholders for your continued support for the business. We look forward to the year ahead with confidence. So thank you once again, and I'll now hand over to Dave for him to give you a more detailed address on the business.

Thank you, Donald, and good morning, everyone. It's great to be here with you all today. 2026 was an extremely important year for AACo. We're building on more than 200 years of history, but we're very much focused on being intentional about our future. This year, we delivered the strongest operating profit result since the measure was introduced, improved cash performance and continued to make progress against our strategic priorities. Importantly, we did so whilst continuing to invest in the future of the business and navigating as Donald said earlier, some really dynamic operating environment. The result we reported for 2026 reflect progress against multiple parts of our business. Our brands our operations, our people and our land portfolio. Put simply, we are seeing increased evidence that the strategy we have been executing on in recent years is translating into operating performance, improved cash generation and stronger business resilience. It's worth spending a moment on that result because it tells an important story about where AACo is today and where we're headed. So let me step through our results. Revenue increased in FY '26 to $422.1 million, which was a 9% increase from the prior year. Our operating profit reached $71.6 million, up 23% on the prior year. Operating margin importantly improved 6.6 percentage points and we generated a better underlying cash performance with core free cash flow up $11.4 million. While there is certainly more work to do, the improvement in core free cash is an important milestone for us. As Donald mentioned earlier, generating stronger and more consistent cash flow remains a key focus for management because it supports the strategy execution, strengthens our balance sheet and provides greater flexibility in capital allocation. Our overall performance reflects years of disciplined investment across our properties our cattle herds, brands and our supply chain more generally. It also demonstrates a business that is becoming more efficient, being more productive and better positioned to improve margins and the value generated from our asset base. It's important to reflect on the operating conditions over the past 12 months, which provides context on the strength of the results. The 2026 financial year benefited from favorable cattle prices and consecutive positive seasons. At the same time, though, AACo experienced several external market headwinds, including the United States trade and tariff uncertainty, which certainly created challenges for us. In China, the softer economic conditions and consumer sentiment affect premium food spending. And in South Korea, we continued to navigate a really competitive market requiring ongoing investment to build demand and brand awareness in that market. Improvement in global supply and demand conditions, though in the second half of the year, in particular, supported our overall performance. The investments made in the first half of the year across brand and our distribution ecosystem supported our ability to capitalize as markets rebalanced, including navigating the emerging conflict in the Middle East right at the end of that financial year period. We also managed, as Donald mentioned, and as you would have heard me spoke about at results, a really significant flood in the North Queensland region of our asset base, without losing focus on genuinely executing on the strategy. We delivered stronger pricing across both branded and live cattle. I believe we had disciplined cost management, improved market margin performance and improvements in our properties and increasing net tangible assets and setting the business up for a strong future of branded beef growth. The strong FY '26 results showed the value we are continuing to build as we execute our strategy and strengthen the connection between our cattle, our customers and our brands. Just as importantly though, it demonstrates AACo has more consistently delivered improved performance across its key measures, whilst building resilience and growing for the future. These outcomes are the result of thousands of decisions made across our operations and supply chain and our customer relationships. A significant part of that story is the continued strength of our branded beef business and the way that we're positioning our product in global markets. During the year, we continued to optimize our global distribution and improve partnerships across our key markets. As a result, we achieved 8% higher average beef sales prices, whilst maintaining volume, reflecting both strong demand for our high-quality Wagyu and the way that we strategically allocate it across the globe. This was achieved by leveraging our brand portfolio and that marketing network rather than relying on a single type of customer or one specific region. This diversification is a significant strength of AACo's business model and help support earnings through diverse global market conditions. We are increasingly using the breadth of our branded portfolio to match products to customers' needs. So whether that be premium, nature led Australian Wagyu through Westholme, or a more retail-focused opportunity through Darling Downs or the broader market opportunities through our 1824 brand. Key highlights from our brands over this period include launching a new premium product tier, Westholme Pure and Westholme Forage focused at the real top end of the markets in the U.S., U.K. and Europe, expanding Westholme into additional North American markets, including high-end culinary opportunities in both Hawaii and Mexico and improving allocation of product with a focus on customers with global reach, expanding Darling Downs into Asia, including Hong Kong, Thailand and Indonesia. What we're seeing in our markets is that customers are becoming more deliberate in what they buy. They're looking for consistency, for quality and a story behind the product. And we think that plays directly into AACo strengths. Across our key global markets, we've continued to deepen customer relationships and our position -- and to position our product where it delivers the most value. We're improving data behind our decisions. We're using the better understanding from our customers to inform and execute on our AACo's commercial and brand building strategies. At last year's AGM, we outlined the elements of our strategy. and we have made meaningful progress on those priority areas in FY '26. Under the Better Beef part of the strategy, we're executing on initiatives targeted at improving the quantity, quality and consistency of our Wagyu beef that the customers are demanding. This year, we progressed several initiatives that support that objective, including continued investment in genetic improvement, to enhance the herd product performance and carcass outcomes, expansion of finishing capacity through our feedlot operations and improved data and supply chain decision-making, whilst ongoing work to improve productivity, consistency and utilization across our production system. The embryo transfer program we conducted in FY '26 was one of the largest in beef cattle ever carried out in Australia. And we expect that this will accelerate performance of our herd in a substantial way. Supporting this is the improved data capture at feedlots, allowing us to better understand the marbling potential of our animals and to optimize our intensive feeding programs. Collectively, our Better Beef initiatives are strengthening the quality and the value of our product, creating growth in revenue, margin and brand equity. We are seeing these improvements translate into stronger customer demand, with our brands being endorsed by top chefs, as you heard earlier, retailers and requested by distributors serving some of the best leading restaurants around the globe. Under Unlocking the Value of the Land, we recognize that our 6.5 million hectare landholding provides a unique platform not only for cattle production, but also for creating additional sources of value that leverage that scale, quality and strategic location of our assets. During the year, we progressed several initiatives aligned with this objective, including registering our Glentana soil carbon project, which is now eligible for ACCUs, achieving Accounting for Nature Certification, implementing a more focused and disciplined approach to how we operate across our 26,000 hectare cropping footprint, to better align the production of that with our broader supply chain. Our existing Beef Cattle Herd Management program registered with the Clean Energy Regulator also continued to strengthen our balance sheet over the period, with approximately $5 million worth of ACCUs recently awarded for the FY '26 time frame, bringing the total value of these intangible assets to $27 million, with 752,000 units on our books. As ACCUs are generated, they will provide AACo additional strategic flexibility. Over time, they may create opportunities to support our own emissions objectives, participate in carbon markets or generate additional value, subject to market conditions and the company's more broader strategic priorities. Unlocking the value of the land is an area where opportunities will mature over different time frames. The initiatives we pursue reflect a deliberate and a disciplined approach to extracting greater value from our land assets with the aim of continuing to enhance the land's productivity, resilience and performance. Complementary to both build Better Beef and Unlocking the Value of the Land is the third piece of our strategy, Partner and Invest. Now this is targeted at supporting innovation and technologies that solve challenges both for AACo and the broader agricultural industry and whilst also creating future opportunities for growth. Through investments made to date, we are collaborating on innovation that will embed future value for our operations and the industry. We're extremely excited by the trials being undertaken by Sorensis to develop the world's first contraceptive technology and the development we're working on with Athian to extend its carbon-insetting marketplace to beef production here in Australia. Our current and our pipeline of investments are all building blocks for the future. As these initiatives mature, they are intended to provide diversification and further strengthen our overall performance. Within each of our strategic areas, sustainability plays a really fundamental role. Our sustainability initiatives continue to be embedded across our operations with momentum building in areas such as carbon, productivity, nature-led land management. This year, we also made meaningful progress in how we measure and manage those emissions across our business, with our Accounting for Nature certification providing a baseline for improving how we assess and how we track natural capital outcomes. We also continue to prepare for the future market and regulatory requirements over the period. During the year, we progressed our readiness for the European Union Deforestation regulation and made further preparation for upcoming mandatory climate reporting -- climate-related disclosure reporting. We also continued to report on our sustainability metrics, which show our performance across several areas of the business. Pleasingly, our emissions intensity reduced in FY '26 and whilst our overall herd numbers actually slightly increased, showing improvements in supply chain efficiency and the strengthening productivity and resilience of our business. We saw this resilience apply with those North Queensland flooding event that I mentioned earlier. Whilst this had a real impact on parts of the business, it also demonstrated, I believe, how far we've come. The investments made in planning and infrastructure and systems after the 2019 flood meant that we were better placed and better prepared to respond more efficiently and effectively than we have in the past. Our previous flood bank development and flood management plans allowed us to reduce the impact of our -- reduce the impact of that flood on our operations and our financial performance. We have already taken learnings from this latest event and built more resilience into our supply chain. We're currently in the process of investing in areas which further mitigate flood risk for the future. This event also highlighted the importance of our management practices. By operating within a sustainable stocking model, our land recovered more quickly and our cattle losses were also limited through this preparation. As a result, there was a significantly lower capital requirement for remediation of these properties this year. And at this stage, we expect to meet our future customer demand and branded beef growth aspirations. I'm particularly proud of how our people responded during this challenge. They supported each other, adapted quickly and kept the business moving. And I think that says a lot about the culture of continued improvement that we have built in this business. Our latest One AACo survey results show our overall engagement has improved. Our team are excited about our strategy, which has become an important driver of how we execute and operate with a collective mindset across the enterprise. This is also a key driver of our improved outcomes and the clarity we move forward with to execute on future areas of growth. If I look ahead, we recognize that the operating environment will continue to evolve. We continue to monitor global trade tariffs, global trade settings, geopolitical tensions cost pressures, specifically across energy, freight and other inputs. And at the same time, demand for high-quality beef remains really strong and our diversified market access and global customer relationships provide us with the flexibility in how we respond to these changing conditions. Whilst we are not capable of predicting every market movement or geopolitical development, we are continuing to build a stronger, more resilient business that is capable of executing on the opportunities in front of us. We saw this in action with the Middle East conflict emerging towards the end of this FY '26 period, where we are able to remain agile and actively manage opportunities, to minimize the overall impact on our operations and performance so far. If we look to the next phase of our strategy execution, our priorities are really clear: improved profitability and cash generation through initiatives targeted at building net beef margin performance, increased productivity and overall efficiencies, which are expected to set the growth trajectory for the next 2 to 3 years and maintain focus on cost and capital management and continue the disciplined investment into areas to support value and stronger returns for the future. We believe by working as One AACo across the supply chain here in Australia and in our global markets, we're improving business outcomes and are in the best position we have ever been to create enterprise value. When I step back and look at the year, what gives me great confidence is that we're seeing positive progress again across all parts of the business. Our assets, including our land and infrastructure are in excellent condition and our productivity has improved. Our margins have demonstrated positive momentum as Wagyu market demand continues to strengthen. And I think this shows that we've delivered stronger performance today, whilst also continuing to build the foundations for tomorrow. I'm proud of what the business has delivered this year, and I think it reflects the strength of our strategy, the quality of our assets, the capability of our people. And as we enter into the next phase of strategy execution with positive momentum and confidence in our ability to capitalize on the opportunities that are ahead of us. Our focus remains on creating sustainable growth, improving resilience, cash generation and enterprise value. Thank you to the Board, all of the AACo team and to all the shareholders for their continued support. And now I'll hand back over to Donald.

Well, thank you, Dave. What I'll do now is outline further procedural matters for the meeting. So we know where we're heading. There will be an opportunity for comments and questions in respect of each item of business. After receiving the microphone you're requested to please identify yourself and confine your questions or comments to 1 minute. In fairness to all shareholders, I should be reasonable and flexible in approach, but will request speakers to wind up if the remarks become overly extended. Please note that not all questions are guaranteed to be answered during the meeting, but we will do our best to address as many as reasonably possible. If a question asked during the meeting has already been answered in the materials released to the ASX, we will not answer that question during the meeting but will instead refer shareholders to the relevant announcements. Thank you to those shareholders who took the time to presubmit questions via our share registry, MUFG Corporate Markets, where we have received similar questions on the same subject. We will consider -- consolidate those questions into 1 and answer them during the items of business. After each item of business, we will start by addressing any pre-submitted questions. I'll then move to addressing questions from the shareholders attending here in Brisbane. To briefly summarize the voting procedures, we will apply to this meeting. In accordance with AACo's legal and regulatory requirements, the results of voting, including proxy voting will be released following the AGM. The company believes this approach encourages broader shareholder participation, supports debate and engagement from all shareholders. Each resolution will be conducted as a poll. As shareholders are aware, no formal vote is required on Item 1 of the agenda. A poll will be conducted on the remaining Items 2 to 6. On entering the meeting, shareholders' representatives, attorneys and shareholders as well as proxy holders have received a yellow voting card. Relevant voting instructions and all resolutions are printed on the voting cards. I encourage shareholders and their representatives to complete their voting cards after each item is being discussed. However, voting cards will only be collected at the conclusion of discussion of all items of business. To vote simply place a mark in 1 of the 4 against or abstain boxes for each motion. If you mark the abstain box, your vote will not be counted for that motion. If you wish to cast some votes for the motion, some against simply mark the actual numbers or percentages for or against. Your vote would be invalid if the total shareholding shown for the for or against and abstain boxes for the motion is more than your total shareholding in the register. If relevant, please indicate whether you're voting as an attorney or representative. At the time of voting, if you are uncertain about any of the voting procedures or require any assistance, please raise your hand and a representative from MUFG Corporate Markets will be happy to help. At the conclusion of the meeting, please ensure that you mark your votes for the respective resolutions and give your completed voting card to the representatives of MUFG Corporate Markets. I appreciate that some shareholders may have to leave before the end of the meeting. I, therefore, formally open the poll for each voting for voting on each relevant item of business now with the poll on these items now open. If you need to leave early, it is possible to lodge your vote providing your completed voting cards to MUFG Corporate Markets. This doesn't mean that you have to vote now. You can wait for the discussion on each item and then vote following the discussion on those items. Shareholders will be given a reasonable time to complete their voting cards and give their voting cards to MUFG. After this time, I will announce the poll has been closed. I will now outline the procedure for proxy votes. Shareholders have the opportunity to appoint a proxy prior to the meeting. If you have already sent in your proxy form, you do not need to vote again. If you are a proxy holder by law, if you exercise your right to vote as a proxy, you must vote in accordance with the instruction given to you by the relevant shareholders. Subject to the restrictions set out on the voting exclusion statements in the notice meeting any undirected proxies on a given item may be voted by the proxy holders they choose with some votes for the motion, some against and some abstaining if you so desire. Any proxies that are not voted at the meeting will automatically default to me as Chair of the meeting. In respect of directed proxies that default to me as Chair, I'm required to vote those proxies as directed, which I will do. Subject to any applicable voting restrictions and subject to any open proxies that have been received by me as Chair of the meeting or any of our directors, those proxies will be voted in favor of each resolution. I'll now outline the procedure for counting. Your votes will be counted by personnel from share register MUFG Corporate Markets after the meeting closes. The results of each poll will be announced via the ASX as soon as possible after the meeting and will also be displayed on our website. I'll now move to the formal business of the meeting. Item 1, financial statements and auditor's report. This first item of business in the Notice of Meeting is to consider the financial statements and reports. I now table the directors' statutory report and the financial report for the financial year ended 31st of March 2026 and the independent auditor's report on the financial report being Item 1 of your Notice of Meeting. These documents have been made available to shareholders. The financial statements and reports are placed on the agenda for comment and question only. There is no voting on this item of business. Now please note, Mr. Jason Adams from KPMG, who oversaw the conduct of the audit is present. Any shareholder may direct questions to Mr. Adams. Those questions must be relevant to the conduct of the audit, preparation and content of the independent audit report and the accounting policies adopted by AACo in relation to preparation of the financial statements and the independence of the auditor in relation to the conduct of the audit. I'll start now by addressing some of the pre-submitted questions on the financial statements and auditor's report, excluding the remuneration report, which is covered in Item 2, where the questions have not already been covered in the speeches or elsewhere. In the interest of brevity, we have received several questions from shareholders, which are similar. We will answer the question in combination to choose the answer to the question that best represents the majority of those questions. Question one, we've received a number of pre-submitted questions regarding dividends, share buybacks and the gap between AACo's NTA and share price. So thank you all for your questions on this matter. As I touched on earlier, the Board regularly considers all capital management and allocation options that are open to us. This includes dividends, share buyback, debt reduction, reinvestment in the business and where appropriate, asset sales. We recognize the discount between AACos share price and NTA, a number of areas which impact on the NTA. And it is important to note that a significant contributor to the increase in NTA over recent years has been the appreciation in the value of our pastoral properties, which has been driven by considered investment and infrastructure, including management practices. Those assets form a critical part of AACo's integrated production system, supporting our herds, brands, supply chain and long-term growth strategy. The Board's current judgment is that continuing to improve the quality, productivity and performance of our asset base together with disciplined investment in opportunities across Better Beef, Unlocking Value of the Land and Partner and Invest will create greater enterprise value. We're already seeing that our strategy on these investments are contributing to stronger profitability, improving cash flow, enhancing the value of the company's assets and progressing our strategic priorities for the future. As the business continues to execute this strategy, our objective is to build a stronger, more profitable, more cash-generative company with greater flexibility in how capital is allocated over time. Rather than applying a specific threshold, it would automatically trigger a dividend, a buyback or asset sales, the Board considers a broad range of factors, including operating performance, cash generation, strategic opportunities, market conditions, balance sheet strength and the relative value of alternative uses of capital. These matters are reviewed and considered on an ongoing basis. Ultimately, our focus remains on executing the strategy improving the business performance and creating long-term enterprise value. We believe the progress being made across the business is creating to conditions of greater capital allocation flexibility over time while maximizing the value for shareholders. We received a pre-submitted question from a shareholder who asked about the company's approach to ensure that the improvement and sustainability of the soil on our AACo properties. They ask what is being done to reduce water use, increase revegetation with indigenous species to improve soil and reduce vulnerability to reduce to drought. And what is being done to protect and restore natural habitat so that the environment can assist farmers with control of insects and pests. Thank you again for that question. The health and resilience of our land is fundamental to the long-term success of AACo. Our nature-led approach is designed to improve both environmental outcomes and business performance. We have invested in developing industry-leading sustainable land management and raising practices that are science-based, data backed. We continue to focus on building more resilient landscape to support improvements in ecosystem condition, soil health, water management and long-term productivity. We're also growing our soil carbon program and investing in tools such as rangeland carbon by satellite, which helps us better understand and measure changes in soil and landscape conditions over time. Water management is also a key focus. We continue to invest in infrastructure that improves water efficiency and resilience across our properties. And one example of that is replacing the old turkey nests with tanks. Our nature-led approach recognizes the importance of healthy ecosystems in supporting productive agriculture. Through accounting for nature, we've established an independently verifiable ecological baseline across our highest value ecosystems, helping us identify opportunities to protect and improve those ecosystems over time and measure our progress. While we do not have currently a specific program focused on micro bats, which is what somebody asked, we have identified 12 keystone faunal species that are a focus for the business. Healthy ecosystem support a wide range of native species and ecological functions, including natural pest management, pollination and biodiversity outcomes that underpin our production systems. Ultimately, our objective is to leave our land in better condition over time while continuing to produce high-quality beef. We believe that healthier soils, sustainable water management and resilient ecosystems are important contributors to the both for the long-term sustainability of our operations and our enterprise value. Another question we received is on the status of the strategic view -- review of the future of the Livingstone facility. And again, I thank you for that question. The strategic review of Livingstone facility remains ongoing. We are open-minded about its potential and continue to see value in the asset. At this stage, there is no material update beyond what has previously been disclosed. But I'd point out to you that we've been doing quite a bit of work on this. But at this stage, there is nothing to report on that, that hasn't already been talked about or at least disclosed to the market. We will continue to evaluate opportunities relating to the asset, and we'll update shareholders if there are any developments that are appropriate for disclosure. We have final -- one final pre-submitted question and this shareholder asks in view of the recent revelations of KPMG serious breach of client trust and misuse of client confidentiality. What steps has the Board taken to seek assurances from our auditor, KPMG, there has been no similar breach and there will not be any in the future. So again, I thank you for this very important question. The Board takes matters relating to auditor independence, confidentiality and professional conduct very seriously. We saw the formal response from KPMG, including confirmation that no unauthorized access to AACo's engagement files had occurred. Details of the controls and governance processes in place to prevent a recurrence and confirmation that AACo's audit team did not include any of the individuals alleged to be involved. We are satisfied with KPMG's response. KPMG have acknowledged the seriousness of the matter, outlined additional remedial measures being undertaken and has committed to keeping AACo informed of relevant developments. The Board and Audit Risk Management Committee will continue to monitor this matter, auditor independence and audit quality remain important considerations in our ongoing assessment of our external report.

I now invite shareholders and proxy holders in the room to ask further questions regarding the financial statements, my report and Dave's report. So if there are questions, if you could take the mic, identify yourselves, and ask the questions, please. Go ahead. Do we have any questions? I'm sure we do.

[ Tom Patterson ]. Well done, to Dave and the team on a great result this year increased revenue, gross profit, net profit after tax, NTA. The thing that I want to talk about was some of the comments that have been made this morning previously about maximizing the value to the shareholders. This year, $25.6 million was spent on property, plant and equipment. That's a 44% increase on the 5-year average. So there's still a significant focus on CapEx as a use of funds as opposed to other options for maximizing shareholder returns. I understand growing the value of the business. However, as a shareholder, I don't own the assets of the business, I own the shares. And so I just like to hear some commentary around how you consider shareholder value being maximized by increasing the assets when over a 5-, 6-, 10-year period, take your pick. Those sorts of actions have not generated shareholder returns.

Yes. Tom, this is a question that we frequently get asked and as a shareholder myself as well as a director. I look at that matter quite carefully. I think it's probably best to go back a decade or more to the point at which we had to look at the business where it was, what the competitive advantage we have in this business over the big family operations and the smaller operations and how we perform. And it occurred to the Board and a number of us that we had 2 things that we could do that others were not capable of doing at our scale. And of course, our scale has costs, which others and particularly being a listed company, has costs that almost nobody else has. And the point we made at that time was that marketing and innovation were 2 things that we could do that others would really struggle to do as well as they needed to be done. And so we turned 21 individual properties that have been run pretty much separately by very competent station managers and decisions being made with a relatively small executive team to just oversee that and do all the appropriate administration. So we set about developing an integrated supply chain, which meant all of the properties had to work in concert with each other. So the investment in those properties had to be consistent with that. And then we started building a marketing team that we've now built to a world standard. And the additions to those teams over the last couple of years have added to that strength. And I've certainly seen that strength in our team around the world, and it's very much put us ahead of the pack. Interestingly enough, and I'm sort of addressing a wee bit here, but I'll do it because I think it's worth doing it to show just where this is taking us. In each of the 4 main parts of the market around the world, the United States, Korea, the Middle East and the U.K. and Europe. There is very much a different operating model. I mean, when we started in the U.S., we were hoping that we could take more control of the market ourselves and more control of the distribution. That's very difficult in the U.S. because of the size and structure of the market. And so we work with some very strong supply customers there who work with the market. In the Middle East and the U.K., and I think to an extent, within Europe, we're seeing a much greater opportunity for us to take more control of our own product so that we can deal direct with the sort of chefs and others that -- and restaurants, the U.S. market for us is made up of a lot of sales. But there are some very large individual customers there. I mean I think we probably have 3 customers this year who will do at or close to $1 million of our meat through 1 restaurant or a couple of restaurants, whereas Europe, in U.K. and Middle East is going to be a lot of smaller customers that will require a different approach. And so we're looking at how we manage that. Korea, very, very good distributor there that sells a lot of the product. So the point about all that means we are building that marketing team. And I keep telling the station operators that a lot of our capital, a lot of our spare cash is going into building that team. But we're ahead of the pack. Many others who didn't think we were on the right track a decade ago are now copying us but they don't have the capacity to have people on the ground and to have that marketing skill that we have with BK and Andrew O'Brien and others to execute that. So there's been a big investment going to that. We're obviously looking at how we reinvest. I mean we've got a lot of cattle yards at a 1970s model, and they've been replaced. And I can tell you they're getting more and more expensive every time we do one, but they're very important from the management of the properties, the management of staff and the management of the land. Moving from turkey nests to tanks, troughs and pipelines is a huge improvement in water efficiency and grazing efficiency because the cattle aren't concentrated in smaller numbers around certain water points. We've taken an approach, which I think Dave has got exactly right with respect to investing in assets. And again, a lot of the old assets. What we used to do was spend money each year -- give every station some money to maintain assets. We've now, whilst we're not letting things fall apart, we're concentrating investment on the really important things and the management team across the stations participate in this in a way that allows them to tell us what the priorities are. And so the assets we're rebuilding yards, other facilities are being invested in at a much higher level to see us through the next 50 years. And so investing in all of them at once with small amounts was just taking us further towards a day when we had to invest a lot more. And so doing what we're doing, we think will set us up in a much better condition. And of course, as you know, all of these things have become more expensive, inflation has become pretty staggering. So to answer your question -- one part of your question, yes, we have invested more in a lot of those things, but we need to and the benefits of that will flow through. Investing in the marketing team has been absolutely essential, and we're seeing the benefit of that flowing through. And so coming back to the point of your question about shareholders, the enterprise value of this operation in the last 10 years has increased by $1 billion. We have really built a strong operating business. We manage our stocking rates now so that grass -- we manage grass first and then the stock next and a property like Headingley that when I first came on the board in a poor year, had 60,000 head of cattle on it. I reckon I could have fit more cattle in this room than that property was able to do at the time. More recently, we've cut that numbers back to a much more manageable number. And that helps with Andrew O'Brien and BK in terms of their marketing because they can project forward better. And we've been able, through use of all the science-based material we have to show to the valuers that even though we're running less stock, they are much better properties and more valuable properties. And we see that in recovery from drought and flood. They recover more quickly. So all of those investments are going into the long term. And the 10 years or so of developing over the integrated supply chain to where we are now, which, as Dave has indicated, is really now starting to show cash and really showing you to opportunities. And we will significantly increase the number of Wagyus and Wagyu genetics in the herd. I mean there's several hundred young bulls that have been breed from our top 10 bulls in our top 100 cows out of a 5,000 cow herd that will go out for breeding purposes next year, which will then flow through into higher-quality meat, higher-quality cattle right through the system over the next few years, and we'll continue that program. So all that investment costs a lot of money. And I know as a farmer myself and having been investing in a Poll Merino stud in our own operation for 90 years in my grandfather's time and all of my lifetime, the benefits of that investment come back to you in due course. And as we look further at net meat value, net meat margin, we will generate more cash. We'll add to the enterprise value, but we'll also give ourselves the opportunity to have greater flexibility in the way we manage capital, including all the things that we all want to see. So we believe that the benefits that we've generated in the business by doing what we've done have been right, and that will take us into the future. So people have said to me, look, don't you ever intend to pay dividends? No, of course, we don't never intend to pay dividends. I mean in due course, that will be very much in -- is a consideration and will continue to be a consideration in our capital management, but not just yet. Further questions? Yes.

Thanks, Mr. Chairman. A pleasure to be here at the meeting once again. I've been a shareholder now for 25 years. I think it is since the company was floated on the ASX. Now there are a lot of positives in today's report. I'm pleased to see that. And the one thing that you mentioned, particularly last year, unlocking the value of the land, I see that good progress has been made on that. And I compliment you on that. I hope that continues. A couple of little negatives, of course, the flood in the Gulf country in January. Another one that I don't -- didn't pick up any mention of it this morning that event in Southwest Queensland, I think it was just before Christmas last year during a terrible heat wave, when some cattle perished near a watering spot. So looking at the infrastructure and the upgrading of that on the various properties, maybe there's still more work to be done there. I'm a little bit facetious in some of the questions I asked, but both of those events happened during the -- what you call the wet season or the peak season when a lot of people go on holidays. We all like to go on holidays around Christmas or New Year. So I wonder with all the staff on deck during those times, during the event in Southwest Queensland and the flood in the Gulf country because maybe that's the time of the year when we need every -- all hands on deck.

Well, let me start with the flood. Yes, it was the second very significant flood we've had in a very relatively short space of time back to '19. And I'd point out to you that the impact of that flood this year was managed a great deal better because of what we learned from last time. And we've been experimenting with the cattle refuses, the banks that we build in the properties to save the cattle. The ones that were built very early in my time were done, I think, with a sense of efficiency around the building of them. And so they weren't as high as we needed, and they were built straight. And they were built in a way where people thought that was the direction in which the water ran. What we found was, first of all, they weren't built high enough. That was one of the things. And so some of the ones were just completely washed away. The other thing is because we've got a multitude of rivers that run through the property that Gulf country, you never really know which direction the water is going to come to the extent that it all goes north, obviously, eventually. But if one river is coming faster than the other, then the water might go that way. And if the river is over here, it goes that way. And that hit some of those facilities and hit them -- knock them out because they got the full force of the water on their flat side. And indeed, we saw what happened with fencing. I mean we had to replace 700 kilometers of fencing after '19. which is about the distance between Melbourne and Sydney, which I keep telling people about to their amazement. So what did we learn? We learned that we needed to build more of the refuses. We needed to build them bigger. We need to build them higher. And there's a lovely story that I recall to people that when we were looking at where we were going to build them and how we were going to build them, there was a team of engineers and very well-paid senior executives and others out looking at this, and they were sort of saying, well, the water will come this way or will come that way or it will do this. And there was an old chap who was on a front-end loader, who was like a lot of those bushes who've been around for a long time. Who didn't have a lot of teeth and go -- roll your own and hang on the bottom of his lip. And he looked at them all and he said, why don't you build them round? Now the logic of that is so overwhelming, and it was -- it took somebody -- a really good practical individual to make that comment. So we built them round, which meant we use less dirt to build them higher and build them bigger. And what we've seen in this flood is they worked wonderfully well. So we're now building more of them. I think we've done 2 new ones, Dave, and I think we'll build another 10 or build 10 altogether this year. With the fencing, we -- the fencing we've lost this year is much less. So first of all, we lost a lot less cattle. The fencing is a lot less losses. And again, I think having snow on the job watching this as it took place and seeing how it will work. And who I have to say is one of the sharpest observers of the way things work of anyone I know. We'll manage the fencing again a little differently so that we can move cattle more quickly if something occurs. One of the problems we had was the cattle -- we managed to get the cattle on to the banks and the buggers walked off. And so in some cases, we put them back a couple of times, most of them stayed where they were and the number of calves that were born on those banks, which would have died for sure out in the floods was quite strong. So it's -- the 2 things we'll do a lot more with the floods from the second learning. The lost cattle was a tragic experience for us. Two different outcomes on different properties that happen to occur at the same time. Obviously, we've looked at the circumstances the one where the water, unfortunately appeared to be turned off, and we think the cattle managed to do that by fiddling around with it, which cattle would want to do. That one's pretty easy. In fact, it's fixed, and that can't happen again. That's all protected. The other one was an unusual circumstances no one can quite explain. It was actually not on the property we own, but the people who own the property who are adjusting the cattle were very, very good about the whole thing, and they were I think at least as distraught about as we were that this happened. We're trying to understand why it happened, but we still don't fully understand. We know what happened, but why it happened, why the cattle behave the way they did because they walk past water and then didn't come back and they were thirsty and no one can tell us why they did that. It doesn't -- they weren't locked off it. They didn't get through a fence that they couldn't get back through. Any of those things, nothing like that. They just didn't come back to the water. Now we know from 200 years and longer of history of running cattle, they're very good at finding water. So why that happened? We just don't know. In terms of staff, look, clearly, we have a seasonal condition for staff. And that seasonal condition runs around the wet and the dry season. So once the season dries up, the young staff come in, in larger numbers, and their job is first around muster marking, managing the cattle. They just couldn't do that in the wet season. And so there is no point in them being there. We keep a very strong staff on the ground to manage the properties. And so neither of these events were the result of there not being sufficient staff or people are not paying attention. They just -- the things that happened and most regrettable. I mean none of us like to see beautiful cattle or any animals or anything in that condition, but they did happen. But bear in mind, we've got nearly 0.5 million cattle, over 6.5 million hectares of land, and we try to do our very best -- we do, do our very best to look after them. And I think we've got an exemplary record and we're being challenged a bit in Europe by talking -- the European farmers would argue that we don't have the animal welfare standards. We absolutely disagree with that. I talked to the Trade Commissioner in London a few weeks ago about that very issue. And I offered for us to go and explain to the British farmers who -- many of them I know through the NFU, just how strong our animal welfare requirements are and the way we apply them. Further questions? Okay. Sorry, one over here.

[ France's ] question just then led me into a bit of a comment before a question as well. I do challenge myself as a -- shareholder, [ Leigh Churchill], to question myself as to if I wasn't looking what would I ever hear about this company. I'm sort of put a bit of a tick, okay, heard about them when I wasn't looking in the media. And I'd just comment that, that issue just raised about the tap turned off, cattle deaths was probably the only company reference that would have just popped to me in about 18 months, I'd say, if I wasn't actually already looking as a shareholder, which ties into what I'm about to say. Sea Forest, the collaboration there and the testing there, I probably should have submitted the question. I'd love to hear if anyone can -- because this is a really good news story potentially, how much of a game changer, is it possibly, I mean, the companies, the Sea Forest and there's a similar company on the West Coast, Fremantle Seaweed, and some of the hype is 8% increase in growth of cattle, the methane abatement and it's a very good news story that should be out there. How practical is it with this supplement for a company that owns 0.85% of the Australian continent? Is this something that can really fit in because apparently, it's not changing the taste of the product and the test was successful. I'm asking it as a multi-pronged question because I'd really like some information on it. And to get this as a good news story out there if it's going to be something real into the future.

Well, I'll ask Dave to answer the more detailed part of his question because he's more across it. I mean one of the things we've been very careful to do is to say things that aren't fully supported by evidence. We're conscious, obviously, of the charge of greenwashing. But I'm also conscious of making certain that we don't mislead people even inadvertently. And we only say things which we can prove. And as Emily, our general counsel, says to me on many occasions, is it true? And can you prove it? And I think you need to answer both those questions before you, in our position, say too much. But yes, look, it's an interesting development in managing the carbon issue. And Dave, I'll get you to fill in a bit more of the detail.

Now it's Sea Forest is on the ASX, I'm feeling like, okay, they've got to be backing these up a bit better than the unlisted companies you're making these...

Yes. True enough. But I mean I think anyone who is making -- there's a lot of scrutiny on greenwashing quite appropriately because, boy, was there some based on a lot of people.

This is why I want to hear about that. Yes.

Dave, go ahead.

So I think the overarching comment to that is we definitely see opportunity for methane mitigants in the market. Yes, we did do a trial with Sea Forest. At this point in time, there isn't anything further in play. We are also looking at trials of other methane mitigants as well. It's fair to say at the time we were right at the pointy end of the Sea Forest piece. And so not wanting to speak too specifically about that product via others. They had challenges with production quantities, cost of production and a few things like that, which meant to your question, is it actually applicable over the whole piece at that time, it certainly -- there wasn't a cost benefit there for it. There's a couple of ways to look at these methane mitigants. There's obviously, do you essentially just want to have a better outcome for the environment. Is there also a market in which you can help pay for some of these things? And then do you get productivity improvement or something else. So there's cost of production conversations and metrics that need to be taken into account. The really difficult part at the moment is that not all of those are answered, yes, is the challenge. And so we'll continue to work with a lot of different products in that space. It is certainly why we made -- one of the reasons we made the investment into Athian that we spoke about earlier because that, we think, will create a platform for us to be able to monetize some of the cost of these things because they are significant. The real whilst in the intensive part of the business is the easiest way to apply these kind of technologies. The real opportunity for us is actually in the Rangelands and the pastoral side of the business. So we're looking at how do you get them into lick blocks or waters or some of those other sort of things. Also while we invested in Zero Net Emissions Ag CRC because they're running a lot of these trials now. So which ones do we have to run ourselves versus can participate at arm's length or support and use other people that are more specific there. So in specific answer to your question, we don't have anything ongoing with Sea Forest at this point in time. We are looking at other methane mitigants as well. I do think they have a place at this point in time. Most of them don't stack up from a cost of production -- cost benefit, sorry, perspective. But I -- we're all hoping they do. And we're also investing in building that marketplace so that they hopefully can have a cost benefit.

One little thing is that Sea Forest with the limitation because this is land based on basically...

Hang on for the mic.