Bega Cheese Limited (BGA) Earnings Call Transcript & Summary

Good morning, everybody, and welcome to the Financial Year 2020 Bega Cheese Annual General Meeting. Bega Cheese virtual -- we are holding this virtual meeting due to COVID-19 and associated restrictions. As we have a quorum, I now declare the meeting open. Details about how shareholders can participate have been set out in the notice of meeting and online virtual AGM guide. Both documents are also available to view and download at the bottom of your screen. I appreciate that some shareholders may have to leave before the conclusion of the meeting. I, therefore, formally open the poll on resolutions and encourage shareholders to submit their written questions online. Questions will be moderated for relevant and duplication and read to the meeting. I will then respond to requests for each item of business or where a relevant ask either the Chief Executive Officer, the Chief Financial Officer, Company Auditor or one of my fellow directors to respond. All polls will remain open until the conclusion of today's meeting. At today's meeting, we have a number of formalities to deal with, including the consideration of the group's 2020 Annual Report, the adoption of the Remuneration Report and the election of directors. I am pleased to welcome new shareholders and our long-term shareholders who know the company so well and have support of the strategy and directors of the company over so many years. Let me introduce my fellow directors. Raelene Murphy, Patria Mann, Peter Margin, Richard Parbery, Terrence O’Brien and Rick Cross. I'm also pleased to welcome Patty Carney, representing our auditors, PricewaterhouseCoopers. Our legal counsel, David Ferguson from Addisons and July Soc from Link Market Services and a number of BGA staff. And a particular welcome to Pete Findlay, our new CFO, who joined us in November 2019 and is attending his first AGM in his new capacity. I have received no apologies. We will now move on with the formal part of the meeting and the presentation of last financial year's annual report. I'm pleased to present, along with Bega Cheese, CEO, Paul van Heerwaarden, the fiscal year 2020 annual report. We are delighted to present our results for FY 2020. It has been a year like no other, as we have dealt with market changes, environmental challenges and community up people. Top of mind for many people continues to be the impact of COVID-19, and how we are managing it, both now and into the future. When reviewing the financial year 2020, it is important to remember that there were a number of other significant events throughout the year that had the potential to impact our business. They include what was one of the most brutal droughts that we have every experience, followed by the most frightening 5 that we have ever seen, particularly in the Biga and Gilan regions. Our priority in difficult circumstances is always the safety and well-being of everyone we work with, including our dairy farmers, staff, suppliers, customers, shareholders and community. Our focus is to address challenges and work together on the things that we know make us strong and take the business forward. The Bega Cheese team's ability to respond to changed circumstances quickly reflect the clear strategy, management capability and a strong culture, which reinforces our confidence in both our long-term strategy and our ability to manage prices. The business continued to grow in FY 2020, delivering stable financial performance. Importantly, the business generated significant positive cash flow, which enabled both debt reduction and the execution of important business initiatives. Our major capital expenditure project this year was the Koroit lactoferrin facility. This facility is an investment of $38 million and now sees Bega as one of the largest producers of lactoferrin in the world. Our team managed to commission the facility on time despite the fact that a number of our international technical specialists had to prematurely return home when the seriousness of COVID-19 became evident in early March. As we have previously reported, the company has been undertaking an organization and process review, which is currently being implemented. Following a period of significant acquisition and the installation of a new IT platform, it was very appropriate that we review our organizational structure and our business processes to make sure that we are as competitive and as efficient as we possibly can be. While business review programs can create uncertainty, particularly for staff, we have endeavored to implement the program in as collaborative a manner as possible, and the required changes are now well progressed with some benefit being realized this financial year and the majority of benefit to be realized in FY 2021 and subsequent years. In addition to our organization and process review, we have also reviewed our processes capacity and taken the decision to rationalize some of the production between our Bega and Strathmerton facilities. The decision to transfer volume did impact employment levels at our Ridge Street site in Bega. It is, however, important to ensure we remain globally competitive in respond to changes in the market for processed cheese. With regard to milk supply conditions, we have been delighted to see improved environmental conditions in all our dairy regions. I think this is 1 of those rare occasions in recent times that we are seeing good weather conditions in each of our dairy regions and a significant grain crop to be harvested imminently. One of the benefits of this is, we are seeing supply growth across the industry and more positive farming circumstances for our suppliers, resulting in a more stable dairy procurement environment. For myself, and for all at Bega Cheese, the values of this company are extremely important. They represent the best of this company and are at the core of why we have been able to manage so effectively the challenges that FY 2020 has brought us. I think in uncertain times, then in periods of volatility, it is your values that see you through. The way we react to challenge, how we work together and indeed work with everyone in the community, it makes an enormous difference and has been so well demonstrated this year, particularly in managing the devastating fires and COVID-19. Ladies and gentlemen, the company that I present to you today is much change from that of a decade ago or even 5 years ago. It is a company that demonstrates the value of consistent and careful strategy and combined that strategy with the agility to recognize and respond to change. In the last year, we have faced drought, fire, flood and pandemic. We have seen global geopolitical tension drive volatility in both market and currency, dramatic changes in customer channels, particularly foodservice and the Diagou channel into China. I am pleased to say the business has been in the position to deal with each of those challenges because of our knowledge, experience and strategy. While not wishing to dwell too much on the past, I think it is important to note that we began our most recent transformation with the purchase of the Mondelez Grocery Business, becoming the owner of the wonderful Vegemite brand, building on the strength of Peanut butter and adding new products such as B honey. This created the foundations of a great branded food business with a diversified product and brand portfolio, which sees our business better able to manage market volatility and continue to grow sales and value in both Australia and internationally. It is always important to recognize that in our business, we must be alert to more than changes in the market. We must also ensure we alert to and recognize opportunities and challenges across our entire supply chain. We, of course, recognized for some time, the challenges faced in Northern Victoria in milk supply, given the increased frequency of drought and our people associated with government water policy. We have refined our business at Tatura to focus on high-value nutritionals and cream cheese and purchased the Koroit facility in Western Victoria, thereby increasing our geographic footprint, adding to our product and customer portfolio and reducing climate risk impacting supply. Successful transformation requires deliberate strategy and careful execution. As I mentioned earlier, the adoption of a new ERP system has been our most recent acquisitions fully integrated into our business delivering stronger and more stable financial performance and creating greater resilience and capability to deal with ever-changing circumstances in both supply and market. Ladies and gentlemen, in food and agriculture strategy is vital. We have unfortunately seen far too often, the consequences of inconsistent strategy or a lack of understanding of the risks and opportunities. I think if someone had said a year ago that within one financial year, you would deal with the consequence of the drought, fire, flood, pandemic, global market collapse and dramatic changes in customer need, government policy and community behavior. You would have smiled and said that could not possibly happen. I am pleased and proud to stand before you, albeit virtually, and report that we have managed and continue to manage all that came before us in 2020. In fact, we have done better than that. We have delivered growth, stable financial performance, strong cash flow, debt reduction, new infrastructure and a business positioned well for whatever opportunity or challenge that will come before us. I will not dwell further on change and transformation. I'm sure you all recognize both the short and long-term value we are endeavoring to create and the strength of the business already created, which will be further reinforced, as Paul presents in more detail, the business performance of FY 2020. Referring to the more financial parts of the report, it is pleasing, as I mentioned in my opening comments, to see revenue increase in a year that was quite volatile. We have increased our revenue to $1.5 billion and importantly, generated a very strong operating cash flow of $138 million. The strong operating cash flow has meant that we have been able to make significant debt reduction of some $52 million. Export sales have increased by 15% to $523 million. And we have further improved inventory management with a reduction of $15 million to $257 million. There has been a small decrease in normalized EBITDA by some 2% to $103 million. Normalized profit after tax has increased 3% to $32 million. Statutory profit after tax increased to $21 million, which was a substantial increase on the previous year, reflecting a reduction in normalized items. Paul will provide more detail on the financial and operational performance of the business. I would comment that in broad terms, the strong performance in our international business and particularly in our retail business, has been offset by a decrease in margins in dairy ingredients and in some components of our nutritional business, which demonstrates both the value of our strategy. And the agility of our business. I will now hand over to Paul to take you through the financial results and the details of the operational performance. Paul?

Thanks, Barry, and good morning, everyone. Following on from the performance highlights and the increase in both statutory and normalized profit after tax. This next slide provides a reconciliation of our normalized costs that were adjusted from the statutory result of the total $10.6 million after tax. We incurred just over $9.6 million of legal costs, mostly related to the case with Fonterra. There was also a small overhang of cost related to the Kraft case this year. And we expect that costs associated with both costs will significantly reduce in FY 2021. The $5 million of ERP costs were predominantly related to the implementation of the new system. Now moving to the balance sheet. I would like to draw your attention to the improvement in working capital, in particular, inventory and trade and other receivables. Each of these improvements have been the result of tighter cash management. Which has been enabled by the new ERP system, along with a more consistent and stable sales pattern compared to the prior year. The working capital improvement is reflected in the reduction of net debt that Barry referred to earlier. Leverage reduced from 2.7x down to 2.35x, and we will certainly look to reduce this further in FY 2021. Overall, we had a strong cash flow result with and an additional $37 million of cash generated from operating activities. This improvement was fundamentally due to the working capital reduction mentioned on the previous slide. Over $57 million of expenditure was offset by the $5 million of proceeds from [indiscernible] facility. We expect capital expenditure to reduce in FY 2021 and be in the range of $35 million to $40 million. Given that we have now completed the lactoferrin plant and the ERP system implementation. This level of capital expenditure is now more aligned with the level of depreciation we incurred. Financing activities predominantly comprised of a reduction in debt levels and the payment of $19.5 million in dividends. You will note in the report that we have changed our segment reporting with the 2 new segments being bulk which includes dairy ingredients and nutritionals and branded, which includes our branded and consumer packaged goods business. Most of you will recall that since August 2011, when we listed, our 2 segments were Bega Cheese and to Tatura Milk Industries. As the company has significantly transformed, particularly in recent years, both segments were no longer aligned to how the Board and management look at the business. The segments have been structured to align with our strategy, how we report business performance, make our capital decisions and reflect business priorities. Our bulk segment includes our milk processing assets, our business-to-business bulk dairy ingredient sales and our dairy nutritional products. The consumer packaged goods segment incorporates our secondary processing assets and our retail and foodservice brands, as well as third-party and private label consumer products. On the next slide, you can see a breakdown of sales between the 2 segments. This is further classified into domestic and export sales with a comparison to FY 2019. If I can draw your attention to branded products, you can see the strong growth for both domestic and export markets. This is aligned with our strategic objective of having 70% of sales coming from the branded packaged goods segment by 2023. Moving now to commercial operations on Slide 15. You can see that in FY 2020, we achieved sales growth in excess of 5% to $1.49 billion. We have a strong track record of sales growth despite several of our market channels coming under pressure in recent years. It is particularly pleasing to see the strong growth in our branded foods business, both in the domestic market and internationally, as I outlined on the previous slides. We have seen very strong growth of 10.5% in the domestic retail grocery market. This is primarily due to both food price inflation across the year and the impact of COVID-19 for mid-March, which resulted in [indiscernible] rejoin. This impact was relatively shortened and began to settle down from mid-April. Our year-on-year growth was in line with expectations. In FY 2020, we launched 2 new brands, Happi, which is a range of baby and kids nutraceutical products, in B honey, which is a range of Australian-sourced honey and is associated with the development of the Purple Hive Project, an important innovation that supports our local B industry from the risk of the [indiscernible] mine. We've also launched a number of new products in our core range of Vegemite and Simply Nuts and had good growth in income from Vegemite royalties and our e-commerce store. There have been a number of significant changes in our dairy and nutritionals and ingredients business in recent years, including the impact on our milk suppl from Koroit and competition, particularly in Northern Victoria, the expansion of our dairy and nutritional manufacturing network with the acquisition of Koroit, the closure of our cheese manufacturing facility at Coburg and the implementation of various toll processing arrangements. Importantly, there have also been a number of changes in our customer base in infant formula. As demand from some of our longer-term customers has declined in recent years, we are focused on developing new business opportunities such as goat-based products and new markets, such as Indonesia. COVID-19 has impacted our bulk segment, in particular, our infant formula business into China coming into fiscal year 2021. With a significant reduction in the Diagou [indiscernible] . In recent years, we have continued to diversify our geographic and customer base, which should reduce this exposure in future. The commissioning of the Koroit Lake deferred plant and the commencement of shipments in quarter 4 of FY 2020 will provide stronger earnings growth into FY 2021 and beyond. Moving on to dairy commodity and farm gate milk price you can see on the fresh agenda chart that during this year, we saw dairy commodity prices rise very quickly and to historic highs from about October through to February. While global demand growth has been in line with expectations at around 1.4% to 1.5%. We did not see supply growth keeping up. This was particularly the situation in both Europe and the United States. And of course, in March, we saw the global demand shock from the impact of COVID-19, with prices dropping up to 30% for some commodities. Milk supply in Australia remains tight and competition is strong. We were very pleased to see high rainfall across Eastern Australia earlier in the year, and this has continued through to today. Improved on-farm conditions saw an increase in milk supply in the second half of FY 2020, which has resulted in a more stable milk procurement environment. It is also important to note the implementation of the new mandatory dairy code. A number of the provisions of the core were already a part of our practice which meant that adopting the management code was relatively seamless. The fundamental changes from the DoD impact how we contract and communicate with dairy farmer suppliers the changes were successfully implemented, notwithstanding the added complication of being unable to meet suppliers in person due to COVID-19 restrictions. Moving to Slide 18. And this slide lists the main activities that have been implemented or are ongoing to ensure we maintain a globally competitive supply chain. These initiatives are imperative as we continue to grow and take advantage of opportunities in both domestic and international markets. The implementation of these initiatives have taken place mainly from the second half of FY 2020 onwards and have been challenging with many start working remotely throughout this period, which remains the situation today. These initiatives have required a significant level of organizational change, including redundancies and role changes. And I would like to thank all staff for their support during these changes, which have continued into FY 2020. I will finish with some comments regarding our approach to corporate social responsibility. Bega has a strong track record in CSR, including, [indiscernible] four on-farm management system. Which has been operating for over 10 years and has significantly improved farm practices, inclusive of resource management, animal welfare, the preservation of [ baby ] vegetation and a number of other farm practices that have resulted in improved sustainability and a reduced impact on the environment. Bega Cheese endeavors to include its communities in it's CSR programs, the Bega Cheese corporate event and the top two hundred have raised a considerable amount of money for worthy charities and organizations that support people in need, in our local communities. A few years ago, the Board incorporated corporate social responsibility as part of our strategic planning process, which has focused our attention on areas where we believe we can make a difference. These include food nutrition, diversity, greenhouse gas emissions, packaging and water sustainability. I won't go into any further details on the slide, other than to say we have made good progress in each of these focus areas. Further details are included in the FY 2020 sustainability report, which is available on our website. Thank you. And I will now hand you back to Barry.

Thank you, Paul. I think it is important to reflect on where we are today and the stability and strategy that is demonstrated by this year's results. The path to a diversified value-added food company is progressing well, as Paul outlined. Of course, the impact of COVID-19 on all aspects of the economy and society has been significant. We are very proud of how our people have approached managing COVID-19, how they've demonstrated their ability -- their adaptability and the importance of caring for one another as we work through a significantly difficult time. There is some global uncertainty relating to dairy demand and locally, the impact of significantly disrupted Diagou channels on nutritionals. There was an initial significant price correction in global dairy commodities early in the pandemic, but it is fair to say, prices have been relatively stable since then with some price improvement. From a competitive perspective, the relative strength of the Australian dollar is currently having more impact than demand changes. As already mentioned, we are very pleased to see good seasonal conditions and more positive farming circumstances for all our dairy farmers, which also creates a more stable milk procurement environment. Indeed, there is an expectation that milk supply across the country will continue to grow this year. The business improvement initiatives that Paul touched on are well progressed. We continue to always look for opportunities to improve. It is not common for the business to create a number of redundancies. Occasionally, that has to be done in order to ensure that we remain competitive and the business performance needs to exceed expectations. We do still await the legal outcomes of both the Fonterra and Kraft cases. We are well through each of those cases and all waiting the court decision. In terms of our priorities, we continue to invest in the strategy that we have outlined over many years. We will continue to invest in our brands and capability in markets, both in Australia and internationally and respond to opportunities to further grow the business. As demonstrated by the results this year, we are focused on cash generation and cost to ensure that this business is well positioned in an environment that is volatile. The stability that Bega presents to the market is a result of consistent strategy, a diversified business and channel strategy and strong knowledge and experience within the business. There is still greater opportunity for us in leveraging our existing assets and product capacity. We have a wonderful network of manufacturing capability and assets, and it is now a matter of making sure that we create the most value we can from those assets. I don't think I need to emphasize further the challenges the dairy industry has faced in FY 2020. Bega Cheese has had a long-term strategy to not only protect the milk supply we have, but to diversify on those supply regions to ensure that we have a have a relative stability of supply regardless of what might be occurring in a particular region. This strategy was particularly important last year and provide strong foundations for future growth. As mentioned earlier, we will complete the implementation of our organization and process review and capacity rationalization, which will further strengthen our business in these uncertain times. I've been asked a number of times in recent months, my view on industry consolidation opportunities. All I can say is what I have consistently said and have been talking about for a very long time, which is, I believe that industry consolidation will create additional value in the industry and that we at Bega Cheese always endeavor to be ready to participate in or examine opportunities as they arise. So ladies and gentlemen, that brings me to the end of the presentation. And of course, as always, I think, all involved in assisting and particularly, Paul, and we're very happy to take any questions. I'll hand to a company Secretary, Brett Kelly, to relay any questions.

Mr. Chairman, the first question is from Michael Whelan. What is the company's strategy for managing gross debt levels as opposed to net debt levels? And are there any amortization arrangements required under those debt facilities.

Thank you, Brett, and thank you, Michael, for the question. I think it's probably appropriate, given that we have a new Chief Financial Officer in Pete Findlay that I invite him to participate in this year's AGM by answering that question. So Pete, if you're on the line, could I hand you to answer that question.

Thank you, Chairman. We don't have any formal amortization step-downs in our current agreements. But obviously, with our debt reducing quite dramatically over the last 12 months. We'll look at our facilities as and when they become up [indiscernible] to decide that we require them on.

Thank you, Peter. Brett, Further questions?

Yes, Mr. Chairman, Michael Whelan's asked the second question. What is the company's strategy with the old Coburg site?

Thank you, Brett, and thank you again, Michael. As mentioned in Paul's presentation, we have sold the Coburg site. We did redeploy some equipment into other facilities where we could make good use of it. And indeed, we have stored some equipment for future development.

Mr. Chairman, a final question from Michael Whelan. What have been some of the process improvements initiated by the company in fiscal year 2020? And what improvements are being initiated in FY 2021?

I thank you again for the further question. I think it's probably appropriate that I hand that question to Paul. And Paul, I might ask you to answer that question.

Thanks, Barry. Thanks, Michael, for your question and attending the meeting today. In answering the question, and we covered some of this in the presentation, but it's worth reflecting on where we were a few years ago when we we're operating multiple ERP systems across the business. We'd also made the acquisition of the Mondelez Grocery Business. And at the time, we stated that the acquisition did not come with any significant synergies, but did provide diversification growth outside of dairy. We also said at the time, that we would initially run this business somewhat independently and ensure that it settled down appropriately. As we ended FY 2020, we're in the final stages of the implementation of the group-wide integrated ERP system. And also after a couple of years of operating Bega Foods, the business has settled down and achieving the outcomes as we expected. These 2 points enable the organization of process review and with the support of the Boston Consulting Group, we were able to identify a number of savings across supply chain and back office activities. So in FY '20, specifically to answer your question, we're able to consolidate some of our sales and customer service activities, which resulted in an improvement in customer service and cost efficiencies. And unfortunately, as Barry mentioned, this resulted in a number of redundancies and we limited the impact of these by initiating a hiring freeze early in the financial year. And we are also able to redeploy a number of employees. This project has continued in FY 2021. And we've seen a number of saving initiatives already implemented this year in areas including our logistics network, lab and testing services. And the centralization of financial transaction processing. And the team has recently deploy the use of robot imaging and algorithm technology to automate a number of the processes in financial transaction process. So we'll be able to provide a further update on this project at our first half results presentation early next year. Thank you.

Thanks, Paul. Brett. Further questions?

Yes, Mr. Chairman. The next question is from John Marston. How are the former Mondo lease products other than Vegemite and Peanut but are performing, for example, dips, dressings and BOTOX?

As Paul mentioned his report, we're very pleased with how we're performing in the overall business, but I might throw it to Paul again to give some more detail on the smaller part of that business. Thank you.

Thanks for the question, John. So those categories that you call out are certainly relative to the spreads categories of Peanut butter and Vegemite are sort of relatively small in the portfolio. And in the categories in which they compete, they are certainly not the #1 or 2 brand in those categories. So they certainly come under a little bit of pressure. We've been able to deal with that with the spread of retailers and channels that we sell into. And also where we have seen a bit of drop-off in a couple of those categories, we've been able to pick up other business to utilize those assets. So as a group, we're pretty pleased with how they've sort of been consolidated into our earnings stream, but they certainly haven't sort of seen the growth or presence that we have with those core products and brands that we've got with the likes of Vegemite and Peanut butter.

And it might be worth mentioning and now B honey as well Paul, which has obviously been growing very well.

Absolutely. And the relevance in that spreads area. And the -- it's important to just sort of briefly call out to Barry, the the importance of that strategy of farm gate to the retail products, and that's something that's certainly been implemented as part of B honey, we've got that direct relationship with the farmers and indeed with the varroa destructor mite initiatives supporting biosecurity at that part of the supply chain right through to the retail area. And that presence particularly in that spreads area of the supermarket does give us the opportunity to further expand that portfolio, and we're gaining good share in that honey category already.

Thank you, Paul. Any further questions, Brett?

Yes, one follow-up question, Mr. Chairman from John Martin. As Bega planning to sell B honey in Coles and also in Woodwards.

Again, I might let Paul answer that question given what we're just telling that B honey so, Paul, over to you.

Thanks, Barry and thanks again, John, for the question. So we are already selling in Coles. Indeed, the brand was launched several months ago in Coles. So if you pop down your label store, you should be able to see it they're in pride of place on the supermarket shelf, unless, of course, it's been a run on it's been sold out, which has been a bit of a challenge for us. The bigger challenge that we've had, John, and why we've had to have a controlled launch is that the -- with the bushfires that Barry referred to earlier, that's had a reasonably significant impact on honey supply at this time. And put a bit of pressure on that part of the supply chain. So we've had to sort of time and limit our launch plans accordingly. So we're in Coles. We've been in Coles for some time now. We are starting to pop up in a few of the independents, IGA in Tasmania, for example, and you'll see more and more of that on the mainland in the coming months. And then ultimately, across to the other retailers sometime in the coming months into next year. So but early signs, very pleased with how that new and brand and product has been performing and looking forward to seeing the things settle down a bit in the supply chain in the next year.

Thank you, Paul. No further questions?

No further questions, Mr. Chairman.

Thank you, Brett. Ladies and gentlemen, we have now come to the formal part of the meeting. A poll is being held on all resolutions at this meeting. If leaving early, please ensure you have completed voting using your online voting system. For each item of business, I will first open the floor for discussion, and then we'll put the motion for that item to the meeting and ask you to complete your online voting in relation to that item. Share register is Ms. Julie Stokes of Link Market Services will act as returning officer in relation to the poll. If there are any aspects regarding voting that you are uncertain about, please ask one of the registrar staff. The result of the poll will now be available -- will not be available before the end of the meeting. You can, however, obtain the results of the poll later today by visiting the company's website or the ASX announcement web page. Ladies and gentlemen, the first resolution is the adoption of the remuneration report for the year ended 30th of June 2020. Firstly, to into the notice of meeting, the remuneration report on Pages 17 to 26 of the annual report outlined and remuneration for the Board, executive and other key personnel. In center remuneration, the Nomination and Remuneration Committee refer to market and external advisers. I would inform the meeting that the following proxies have been received in respect to the remuneration report. I will be casting the undirected proxies in favor of the motion. I'll refer to back to questions. Are there any questions, Brett?

No Chairman, no questions.

Given there are no questions, I will now move to the remuneration report for the period ended 30th of June 2020, be adopted. I will now put the motion to the meeting. If you haven't already done so, please record your vote in relation to Resolution 2. [Voting]

I'll now move to the election of directors. Please refer to item 3 of the notice of meeting, offering themselves for election and reelection, Terry O’Brien and Mr. Peter Margin. I now move to the election of Terry O’Brien. Terry O'Brien, invite you to say a few words.

Thanks, Barry. Look, I'm really pleased to offer myself for reelection to the Bega Cheese Limited board. I believe I've played my part in the performance of the Board over my first 3 years as a director. I came on to the Board largely due to my experience in the fast-moving consumer goods sector. Especially in relation to running a branded food business in the retail environment, Simplot Australia. And my 5 years as Chairman of the Australian Food and Grocery Council. Vega has made a significant investment in the FMCG sector as a balance to the commodity dairy sector. And this has proven to be a wise move and a move that has more promise ahead. COVID pushed consumers away from the foodservice market, albeit temporarily and towards the retail market. Having such a strong stable of retail brands has given Vega stability over the COVID period. I'm active on the Board around strategy. And in that regard, able to provide insight from my many years at the helm of Simplot Australia. I'm Chair of the Nomination, Remuneration and Human Resources Committee, and a member of the Audit and Risk Committee. I look forward to your support for my ongoing tenure. Thank you, Barry.

Thank you, Terry. Before we proceed, I would like to inform the meeting that we have the following proxies in respect to Terry's election. I will be casting the undirected properties in favor of the motion. Are there any questions, Brett?

No Mr. Chairman.

As there are no questions, I will now move that Terry O’Brien be elected to the Board. I will now put the motion to the meeting. If you haven't already done so, please record your vote in relation to the resolution. [Voting]

I now move to the election of Peter Margin. Peter, I invite you to say a few words.

Thank you, Chairman, and good morning, ladies and gentlemen, and thank you for the opportunity of being able to address you here today. As many of you would be aware of was previously on the Board at Bega Cheese, but retired because of executive commitments. So I was absolutely delighted when Barry recently asked me if I rejoining the company. By way of background on a food sides by training and have spent all of my career in the food, beverage and agriculture sectors. With my 3 most recent executive roles being Chief Executive of National Foods, Chief Executive of Goodman Fielder and more recently, Executive Chairman of Asahi Holdings Australia. I have a strong knowledge and a real passion for the dairy industry and believe I can make a valuable contribution to the future development of the Bega Cheese business and certainly represent the interest of all stakeholders in our professional and an ethical manner, like Barry, I share a dream of building a great Australian food company and feel quite privileged that we collectively have that opportunity with Bega Cheese Limited. Appreciate your support, and I'll hand back to our Chairman. Thanks, Barry.

Thank you, Peter. Very nice to have you back. Before we proceed, I would like to inform the meeting, we have the following proxies in respect to Peter's election. I will be casting the undirected proxies in favor of the motion. Are there any questions? Brett?

No, Mr. Chairman.

As there are no questions, I will now move that Peter margin to be elected to the Board. I will now put the motion to the meeting. If you haven't already done so, please record your vote in relation to Resolution 3b. [Voting]

I will now move to retiring. Directors. It has been a year like no other in many ways. And I will save my words for the conclusion of the meeting, but we have had a number of retirements from the Board this year for a variety of circumstances. Max Roberts, as many would be aware, was intended to retire last year before my sickness. But volunteered to step into the chair, while I was all and did a wonderful job retiring on my return. And I would like to formally thank Max long service and great contribution to the company. As Max has been retired off the Board for a reasonable period, he has elected not to not to speak today, but we have Richard Parbery, whose retirement is today and Jeff Odgers who retired at the end of June. So I would like to invite each of them to say a few words. Firstly, Richard, would you like to say a few words.

Thanks, Mr. Chairman. Bega Cheese is a very proud heritage, being a company over 100 years old. And I've been a proud board member for an excess of 30 years. When I joined the Board in '88 and Barry in '89, I think we're employing approximately 67 people and we knew each of their names. Our growth once Barry Irvin became Chairman has been extraordinary, and I congratulate him for his amazing achievements over the many years. Previous Board members, including Max Roberts, Tom Darcy, Richard Latz, Jeff Odgers have all made very valuable contributions towards the success of the company. We have been so fortunate with current and prior employees for their loyalty and dedication they have given and continue to give our company. To my fellow remaining directors, Barry Irvin, Peter Margin, Norton back, Tero, Brian, Rick Cross, Railer Murphy and Peter Mann. Congratulations for all value or contributions towards the success of our company. To our Executive team of Paul van Heerwaarden, Pete Findlay, Cole Griffin, Adam Mcnamara teams, Mark McDonald, Hamish Rud, Dave McKinnon and Steve Ray, it has been a great pleasure working with you all. Our company is very fortunate to have such a clever and dedicated team. So to conclude, I'd just like to wish Bega Cheese continued success in the future. Thank you.

Thank you, Richard. And typically, Richard, he's acknowledged everybody else's effort and take a little pride a little praising felt, but let me say on behalf of the company that your contribution has been invaluable to where we stand today in that long, steady strategy that you and I have both been involved in Richard, is testament to the dedication you've showed the company and the dedication put to the work that have got us to this point through both easy times and bad times. I think we've probably been through more droughts together and more floods and deed fires and global market collapses that go back to the GFC and on wood and always your contribution was always very even handed at 30, getting that balance right between understanding the needs of our suppliers and our and our shareholders, which I think has been vital and I will shout. I wish you well in the future, and I know that there would be a number of shareholders and suppliers that hope they get the chance to thank you over beer at some point in the future. Jeff, I'll now move to you if you are on the line, Jeff Odgers.

Thanks, Barry, and good morning, everyone. One of to live your dreams. And as a young man, I had a great interest in and rented farming. But I also recognize the importance of what happened next in the chain. The essential value-adding and what that meant for the community. And so I thought about extending my passion for farming into broader spaces, which eventually found me becoming a small part of the Bega Cheese story. And what I love about Bega Cheese is that, as Richard said, from small beginnings, it has continued to grow and shape not just the Australian dairy industry and Australian agri business. But it is with iconic brands there as a constant in the daily lives of many of us. It represents much of what we all really care about, vibrant and sustainable regional communities. The courage to keep reaching for a better future, valuing people everywhere and great Australian food. So thank you, Bega Cheese. And all of you for the opportunity to be part of that. I look forward to the company's continued evolution. Thank you.

Thank you, Jeff and thank you for those wonderful words. I would say, Jeff and I first came across one another at when Bega Foods its first step in becoming a multi-site operation when we purchased to Tatura Milk Industries. And I met Jeff who indeed shared dreams and had great vision, and we became great friends. And we've worked together significantly with common values and common goals. And I, of course, missed both Jeff and Richard, but I also know that those goals and visions and values are shared by all on the Board. And I think then for the mentoring that they have given new directors that they have come on to make sure that the core of what has made Cheese Bega successful is maintained well into the future. So thank you, both. And again, I'd reinforce my thank you to Max as well for the wonderful contribution of Alma. Ladies and gentlemen, that does bring us to the closing of the Annual General Meeting. Thank you very much for your attendance this year. Hopefully, next year, we will be able to meet in person. The voting will remain open for a further 5 minutes. If you haven't already voted, please do so now. The results of the resolutions will be announced on the ASX later today and available on our website. I now declare the meeting closed.