Inghams Group Limited (ING) Earnings Call Transcript & Summary

Ladies and gentlemen, thank you for standing by, and welcome to the Inghams Group Limited 2020 Annual General Meeting. I'd now like to hand over to our Chairman, Mr. Peter Bush. Thank you. Please go ahead.

Thank you. Good morning, ladies and gentlemen. I'm Peter Bush, Chairman of Inghams Group Limited. And on behalf of the Board, I'd like to welcome all shareholders and guests to our 2020 Annual General Meeting. It's now 10 a.m., and there being a quorum present, I declare the 2020 Annual General Meeting of the Inghams Group Limited open. Before I move on, I would like to extend my sincere sympathies to the Ingham's family following the passing of Bob Ingham in September. While I did not know Bob personally, we are proud to continue to support the family's legacy and build on this great company that was conceived in 1918 and continues to go from strength to strength. Today's virtual meeting reflects our response to government restrictions on public gatherings and our ongoing commitment to keeping our stakeholders safe throughout the COVID pandemic. So while we're not able to be together for the meeting today, we hope this AGM -- to make this AGM as interactive as possible for shareholders. You will be able to listen in real time, submit questions online in writing and shareholders, proxy holders and shareholder company representatives may vote online. Please note that eligible voters can submit questions at any time beginning now, and we will do our best to answer them during the meeting. I'm joined in the room today by non-Executive Director and Chair of the Finance and Audit Committee, Mike Ihlein, non-Executive Director and Chair of the Risk and Sustainability Committee, Jackie McArthur, non-Executive Director and Chair of People and Remuneration, Helen Nash; our Managing Director and Chief Executive Officer, Jim Leighton; our Chief Financial Officer, Gary Mallett; and Company Secretary, David Matthews. Due to COVID restrictions, non-Executive Directors, Rob Gordon, Linda Bardo-Nicholls and Andrew Reeves are joining us online. Also joining me in the room and representing our external auditor is KPMG partner, Julie Cleary. Today's meeting will include my address, the Managing Director and Chief Executive Officer's address and the formal items of business and resolutions set out in the Notice of Meeting. A guide to the online virtual meeting was lodged with the ASX and was also made available on the Investor Center on our website. In brief, today's virtual meeting enables shareholders to listen to the AGM proceedings online and view the supporting presentation. The slide on the left-hand side of the screen will show a picture of the speaker, and you can follow the presentation slides on the right. At the bottom of the shareholder's screens, there are 3 interactive boxes that allow shareholders to get a voting card, ask questions or download relevant AGM documents. Only those who have logged on to the meeting as shareholders will have the ability to vote and ask questions. All items of business will be voted on by poll, which is now opened. You may vote at any time during the meeting, and voting will be closed -- will close 5 minutes after the normal items of business. A timer at the top of the online meeting platform will count down to the close of voting. The final voting results will be released to the market as soon as they are available after voting has closed. [Operator Instructions] During the items of business, relevant questions will be read out to the meeting by our Company Secretary, David Matthews, and we will make every intent to answer all questions. If time constraints prevent us from doing this, responses to unanswered questions will be posted on the Investor Center of Inghams' website after the meeting. I'd like to thank shareholders who took the opportunity to ask questions in advance of today's AGM. These questions have been reviewed, and will be responded to either during the course of the presentations or when we address the relevant items of business. Any questions received from shareholders prior to the AGM or online today may also be aggregated where there are similar questions. I, along with some of my Board and management colleagues, met with Alan Goldin and Elizabeth Fish from the Australian Shareholders' Association a couple of weeks back answering a large number of questions. We also received questions that raised similar relevant matters, and so far as possible, have incorporated these into speeches today to avoid repetition. If shareholders experience technical difficulties, using the online platform, please call 1 (800) 990-363. Should we experience technical difficulties in broadcasting the AGM to shareholders, we will pause in the meeting and aim to recommend -- sorry, and recommence at the earliest opportunity. If these difficulties persist, we'll adjourn the meeting until 3:00 p.m. today and lodge the adjournment details with the ASX and publish them on our website's Investor Center. Shareholders, proxy holders and guests who have registered, joined the meeting today will be notified of the adjournment by text message. Link Market Services is the returning officer for this meeting. I'll now move to my address. Today, I'll cover some of the challenges of the unprecedented operating environment of the last 12 months, and what the Board and management have done to ensure business continuity. Jim will provide you with more detail of some of the actions taken over that time and provide us with a trading update. Financial year 2020 will no doubt go down for most of us as the most remarkable year on record. Paradoxically, many of the events of FY '20 have faded into the distance and almost been forgotten in the face of COVID. So I do want to take a moment to reflect and remind us all of the months leading up to the pandemic. For 3 years, the country was dealing with the effects of the drought, and for Inghams, this manifested in record-high feed prices. To give that some perspective, feed input costs to the business in the previous 6 years had risen not by millions but by tens of millions of dollars. We dealt with this through a combination of cost and efficiency initiatives, astute forward feed purchasing price adjustments and good management. Most of us have direct or indirect experience with the bushfires over the November to January period, and Inghams escaped a close call or close calls at our Tahmoor and Bargo sites. Thanks to our people, and in particular, New South Wales Rural Fire Service. Additionally, during this time and over many weeks, our operations team persistently found creative solutions to get products to customers when routes were blocked by fires. Despite the drought and fires, financial performance was ahead of target when COVID hit. At the time, the Board were confident we would hit and likely exceed our EBITDA target. Today, we have all adjusted our lives to deal with this pandemic, and it's easy to overlook how, as an essential service, the Inghams business had to assess and accommodate an enormous raft of challenges and changes to keep our people safe, our operations compliant and our products moving to customers and consumers. This included close collaboration with governments, unions, customers and other stakeholders to ensure continuity of supply. Success of which is a testimony to Jim, his management team and our some 8,000 employees across Australia and New Zealand, who worked tirelessly and continue to do so today. We forget that New Zealand pretty much closed down for business for 4 weeks. Restaurants and fast food on both sides of the Tasman shut down and consumer switch from buying barbecue chicken to factory produced tray-packs, which all put enormous burden on our people, production facilities and costs. It's also clear that the many strategic capital projects in our plants over the previous 18 months began to bear fruits through efficiency, effectiveness and flexibility and, most importantly, cost improvements. The business was guided through the year by an experienced leadership team and adherence to the blueprint of our 5-year plan. In spite of this, the disruption from COVID produced financial results that fell slightly short of our targets, including additional poultry inventory provisions of some $9 million. I can remind you that we delivered a statutory net profit after tax of $40.1 million and $78.8 million on an underlying basis. The underlying results exclude the $23.7 million impact of the adoption of the new AASB 16 lease accounting standard and other nonrecurring items. This result, combined with strong cash generation enabled us to provide shareholders with a fully franked dividend of $0.14 per share for the full year. This reflects the payout ratio of 66% of underlying net profit after tax pre-AASB 16. We were pleased to be able to reward shareholders with a dividend when many companies chose to suspend it in the face of COVID challenges. The management and the Board recognize the critical nature of dividends to shareholders. And we are pleased to announce today that following the adoption of AASB 16, we have changed the dividend policy -- sorry, we have changed the dividend payout ratio from 60% to 70% of underlying NPAT before the impact of AASB 16 to 60% to 80% of underlying NPAT, inclusive of the AASB 16 to give flexibility to continue to provide, among other things being equal, cash dividends similar to historic payouts. This revised dividend policy will be the first plank in our capital management strategy platform we plan to detail by the half year. Shareholders will note the Board exercised its discretion to approve a reduced STI capped at 45% of the on-target dollar amount. The Board believe this decision reflects a fair and balanced assessment of the management team's performance, given the business was on track to meet or exceed the $190 million EBITDA target established pre-COVID. The initiatives taken by the management team to protect our people, transform operational performance in a commercial environment turned upside down, focused on improving customers' engagement scores, ensured the business would continue to operate and get back on track. The Board notes the voting received from shareholders prior to today's meeting in relation to resolution 5 on the remuneration report, and the resolution 6 regarding the CEO's FY '20 TIP. In the course of preparation for the AGM, there has been considerable discussion regarding these resolutions. And today's voting outcomes reflect the feedback from shareholders that the Board's decision on executive remuneration in FY '20 were not in line with shareholder expectations. The Board takes this feedback from shareholders extremely seriously, and provide an undertaking to maintain an open dialogue on remuneration with shareholders as we move forward from today's AGM. We welcome new appointments to the Board and senior management team over the past year. I'd like to welcome Mike Ihlein to the Board, who is standing for election today. Mike complements our Board skills with his experience as the Chief Executive Officer and Chief Financial Officer in major ASX-listed companies, including Brambles, Coca-Cola and Coca-Cola Amatil. Mike is Chairman of our Finance and Audit Committee. Ricky Lau retired from our Board on the 30th of June this year. I thank Ricky for his contribution as a Director of Inghams Group from 2013 as a representative of TPG. Chief Financial Officer, Gary Mallett, joined the team in October 2019. He brings more than 30 years of experience in a range of senior financial roles with companies, including Brambles, Origin Energy and Senex Energy. Mike and Gary's experience in listed companies bolsters our bench strength on proven financial management to the benefit of our long-term profitable growth and returns to shareholders. During the year, we conducted an independent review of Board composition and performance. This review concluded that we had an appropriately diverse and skilled group of directors able to add value to our business. This review also considered Board development and succession, which continues to be work in progress. Our biggest shareholder, Australian Super, expressed an interest in having better knowledge and understanding of the detail of our Director's backgrounds, particularly their experience as it applies to the Inghams' Board. We will, as a result, be updating our website with more detailed background on directors and senior management in the coming weeks. We have detailed our commitment to safety, animal welfare and operate sustainability in both our business sustainability report and our corporate governance statement in our annual report. While I do not intend covering these today, I commend them to you to better know and understand our policies and commitments. While we've all been challenged by COVID-19, Inghams has fared well at the company through the crisis, and our products continue to be viewed by customers as the healthier and more economic protein choice. We will continue to focus on keeping our people safe, maintaining pressure on continuous improvement and a bias for action. This, along with the Board's confidence in our leadership team and business model to deliver against our 5-year plan, I am certain will deliver results in the more consistent, predictable and reliable returns for shareholders. Other encouraging signs worth mentioning are that Australia's status as a leading agricultural sector and having a reputation providing safe and clean produce, augers well for our export; total retail chicken volume is growing above the historical 3-year run rate. Australia is one of the world's top 5 countries for per capita poultry consumption, and New Zealand is not far behind. The Inghams brand has the highest brand awareness of any poultry brand in Australia at 83%. And chicken continues to be the most affordable protein, averaging 1/4 of the price of beef and 1/2 the price of pork. And finally, speculation is that the wheat crop will be the best in 25 years and the feed prices will reduce as a result in time. Furthermore, in the Prime Minister's recent address to the National Press Club in October, he proposed to allocate $1.5 billion towards manufacturing industry across 6 primary sectors, one of which is food and beverage, a sector that is one of the country's fastest-growing and large employers. While it remains unclear precisely how Inghams will benefit from these investments, we are already in conversations with the government. I'd now like to hand over to our Managing Director and Chief Executive Officer, Jim Leighton. Jim will take you through further operational highlights, and more of the details that underpin our continued improving performance. Thanks, Jim.

Thank you, Peter. I want to start by saying how proud I am of Inghams' team and all they've achieved. Echoing the Chairman's address, our 5-year plan and our people have helped us to navigate through a challenging year, and have enabled us to continue to nourish our communities as an essential service provider. We presented our 5-year plan to investors in October 2019. Our plan was anchored by our purpose to Nourish our World and our commitment to make a positive difference in our products, our people, our partners, plants as well as our profits. This integrated approach was designed to deliver our objective, and that is to deliver more consistent, predictable, reliable returns to our stakeholders. It was incredibly fortunate to have the solid 5-year plan in place for what has been a year like no other. Throughout our first year of implementing the plan, it has enabled us to deliver profitable results and remain dynamic and adaptable during a volatile trading environment. It's proven its value. Our plan has 3 strategic pillars geared for growth. We are optimizing the core of our operations through continuous improvement. This has included the commissioning of new leg auto-deboning equipment at Te Aroha in New Zealand as well as Bolivar in South Australia. Taking Bolivar's new leg auto-deboning equipment as an example, this capital investment was projected to deliver a payback within 13 months. Pleasingly, we delivered a payback on this investment in just 8 months, and our production throughput on this line has doubled. We have also brought online 2 new spin chillers at Somerville in Victoria, which have unlocked an additional 40% capacity. This new equipment increases chilling capacity to maintain a lower temperature, therefore, allowing us to run the line more efficiently. We will also start installing a new spin chiller in Osborne Park. These 2 projects are examples of how we are investing in the right technology to add value to our business. We are also investing in our people and processes to create more value for our shareholders. For example, a project to address overall equipment efficiency, OEE, across the business has delivered a 10% efficiency gain and save millions of dollars across our primary processing plants. The implementation of an integrated business planning process and new project management office is now in place and delivering short as well as long-term benefits. Through integrated business planning, we've extended our planning horizon to a 52-week plan. And within the next 2 months, we will be extending out further to a 72-week horizon to enable us to better forecast performance, mitigate risks and execute our strategy. This enhanced capability is critical in effectively planning and managing our entire business to achieve or exceed financial targets. We are transforming for tomorrow by embracing new ways of thinking and thus working. In an Australian-first, we are constructing 2 new HatchCare hatcheries that are global best practices when it comes to animal welfare by providing greater nutrition to our day-old chicks. This will translate into a lower feed conversion ratio and overall lower cost of production. We're also excited to continue to bring new products to the market under our strategic pillar to create the new. This includes launching some new brands, including the FREE RANGER and plant-based brands, including the Plant Collective and Let's Eat. Our strategy is consumer-centric with our ambition to be the most trusted food producer in our market. And we are working closely with our partners to leverage consumer and shopper analytics to drive our actions. This is a win for our customers. And we will provide products that will help grow the category and optimize our collective profitability. The 2020 financial results have delivered a practical demonstration of the value of our 5-year plan, its impact on increasing resilience of the business and our ability to deliver profitable growth to our shareholders. It has long been our focus to ensure the health, safety and well-being of our people. This deeply embedded safety culture has enabled us to stay safe in continuing delivering products to our communities during COVID. Importantly, through COVID, our people trusted us to keep them safe and they showed up with both passion and pride. And this is in stark contrast to offshore poultry and meat companies that had to shut down because their people didn't feel safe at work. Since the pandemic emerged in February and March, we have taken many steps to keep our people and community safe. Just to give you some perspective on this and the enormity of the task, we successfully undertook throughout the pandemic, responding quickly to 50% surge in demand in retail chicken sales by shifting the product mix from our operations to match the fast-changing needs of customers from deli tray-pack products. We recorded more than 4,000 truck movements a week across Australia as we transported grain, feed, eggs, chicken, chicken meat and products for both domestic and international customers. We kept our 100 sites operational during the financial year with 0, let me repeat that, with 0 interruption of overall supply and kept our 8,000 people safe and employed while also supporting our staff during school lockdowns with flexible shifts and working-from-home arrangements and we installed 400 protection dividers across our operations to support physical distancing within our plants. In addition, when the second wave hit Victoria, we worked closely with the government to support our status as an essential service while educating and influencing more appropriate restrictive measures. We also worked hard to keep up with the customer demand while operating with government-imposed reductions workforce in Victoria by streamlining our product line. The scale of response required has been enormous, but made possible by the amazing effort of every one of our employees working together to keep our people safe and our operations running. With COVID remaining a threat, we'll continue to meet the highest safety standards. Unfortunately, our people and our operations, although resilient, have not been immune to COVID. In May, we had 2 people in New Zealand test positive for COVID. Fortunately, the swift reporting and contract tracing meant that we didn't have to close the facility. And we proactively closed our Victorian Thomas Further Processing Plant -- Thomastown Further Processing Plant in July for 2 weeks when 5 of our employees tested positive for COVID. Despite the challenges of COVID, our reduced -- we reduced our lost time injury frequency rate by 45%, down to 3.8 and total recordable injury frequency rate, down 63% to 8.1. Sadly, however, one of our team members sustained a serious incident at our Tahmoor facility in February. We are supporting him and his family with the ongoing recovery rehabilitation. This injury served as a soft reminder of the importance of staying safe. The priority on our people's safety and wellbeing is further reflected in the recent completion of an organizational culture survey, where we established the baseline and actions to move us even closer to our desired state. The food and beverage retail sector has had a very challenging year, which included unprecedented and unpredictable demand during the panic-buying period at the beginning of COVID. I would like to commend our people who received several notes of thanks from our many customers during this time for outstanding support and service in meeting this demand. It's pleasing to see that chicken continues to be a protein of choice for families across both Australia and New Zealand. It's predicted there will be a 4% boost of another 1 million people around the Christmas table this year due to travel restrictions. The retail sector is, therefore, likely will benefit, and that's great news for Inghams and our ambitious growth plans in our new products. We're also working closely with our quick-serve restaurant customers to develop new in-store products to maximize sales. This includes, but certainly isn't limited to, a new chicken menu at McDonald's that launched in October, which is highly successful. We will continue to build on the foundations of our great partnerships with our customers by driving quality, innovation, a robust supply chain and, most importantly, trust. Having completed the first quarter of trading for FY '21, we have today provided earlier a business update to the ASX. In our first quarter, we achieved an increase in core poultry volumes sold up 6.2% on the prior comparative period in FY '20. This result is also up 7.5% on the last quarter of FY '20. This reflects strengthened demand across our customers to with trading now at near pre-COVID levels. We've also reduced poultry inventory levels by $16 million in the first 17 weeks of FY '21. We will continue with initiatives to further reduce inventory resulted from COVID by the end of the current financial year, supported by Christmas demand. There's also further upside expected with Australia's wheat crop production projected this harvest to be at or close to historical highs. Rabobank's recent 2020/'21 Winter Corp Production Outlook has cited wheat production of 91% year-on-year with an estimated 28.8 million tonnes. With a significant crop, we expect feed pricing to reduce. However, there is likely to be a lag before it translates into lower costs due to our feed purchasing strategy and the time between harvest and delivery of our finished products. We do expect the improvements in the cost of grain to have a favorable impact on our financial results fully by Q4 of this financial year and importantly, flow into the next financial year. Pleasingly, our recent report on La Nina and agricultural stock winners and losers report is also favorable with the report citing that expects Inghams to be positively impacted. While we cannot perfectly predict the year ahead due to the uncertainty of COVID, we have proven the resilience of our plan, our business model and people as we work hard to deliver more consistent, predictable and reliable returns to our shareholders. Before I turn it back to our Chairman, I would like to close by recapping on the seeds that we have planted for long-term growth: one, we have built a solid foundation for profitable growth and have demonstrated our resilience; two, we know where we are, we know how to get there; and three, we have the right people in place and the right resources to do so; four, we are beginning to see the benefits of improvement of the initiatives we have in place now that we've implemented those and they're showing up in our results. On that note, I would like to thank the Inghams team for their ongoing commitment to providing quality products that our customers and consumers love and trust, enabling profitable growth, capital return and value creation for our shareholders. It is my great pleasure, privilege and pride to continue to build upon the legacy of the Inghams' name, heritage and brand. I would also like to thank our Board of Directors and our shareholders for your continued support of Inghams. Thank you, and I will now hand it back over to the Chairman.

Good. Thank you, Jim. I'll now address the formal items of the business for meeting. The Notice of Meeting dated 6th October 2020 was lodged with the ASX and is also available on the Inghams' website Investors section. I propose the Notice of Meeting be taken as read. Each resolution set out in the Notice of Meeting is to be considered as an ordinary resolution to be approved by a simple majority of votes cast by shareholders entitled to vote. We will display the votes by both shareholders and proxies received prior to this meeting on the slide following the discussion of each item of business. The Inghams Group Limited directors and executives identified as key managed personnel who will not be voting their own shares or undirected proxy votes in relation to item 5, the remuneration report. For all other business, where undirected proxies have been given to the Chairman or any of my fellow directors, we will be voting in favor of these items. Jim Leighton will not be voting on item 6 and 7 regarding the FY '20 transformational incentive plan and the FY '21 long-term incentive plan. Poll results will be released ASX on the company announcements platform and the Inghams Group Limited's website as soon as they're available. The first item of business is to receive and consider the Inghams Group Limited financial report and the reports of the directors and auditor for the year ended June 27, 2020. This item of business is for discussion only, and the Corporation Act directs there is no vote required. As I said at the outset, joining us today is our auditor for the 2020 financial year, audit partner, Julie Cleary from KPMG. Julie is available to respond to questions relevant to the conduct of the audit, and the preparation and content of the independent auditor's report and the independence declaration. David Matthews, our company Secretary, will read out any questions to the meeting. David, are there any questions regarding the financial report?

Yes, Chairman. We have a question from [ Mark Ringana ] and [ Mark Ringana ] submitted prior to the AGM. They ask, how are you keeping people safe from COVID? And has COVID affected sales? And have you had to reduce staff at production units due to COVID? We had a similar question from [ Timothy Clifton ].

Thank you, David. Both, I think, the presentation which has covered our responses to COVID in considerable detail. In FY '20, we did not reduce staff in our production units. In FY '21, we have been required to reduce staffing levels in Victoria due to the Stage 4 lockdown. The impact of our people has actually been mitigated due to some absenteeism, allowing us to supplement this with our casual employees. This has minimal overall impact on total work available for our people. David, any more questions?

Yes, Chairman. There was a second part to [ Timothy Clifton's ] question, which was submitted prior to the AGM. He asked, what indications are there that the 2 HatchCare hatcheries will provide hatch chicks with immediate access to food and more supplies. And will this new technology reduce operational costs in the hatcheries?

You heard, I think, some of this from Jim in his presentation. But the new HatchCare technology was purchased overseas, where the technology has been operating successfully. The cost savings are expected to result from improved feed conversion ratio as a result of greater nutrition provided to the chicks from day 1. David, another question?

Yes, Chairman. We had a question from a company shareholder called Superannuation Fund Proprietary Limited, and that was again submitted prior to the AGM. They asked, can you please advise the shareholders what plans are in place to increase shareholder value and reduce company debt levels.

Thank you, David. Look, our 5-year plan positions us for the long-term growth and creating shareholder value by focusing on our strategic pillars of optimizing the core, transforming for tomorrow and creating new. This was talked about in detail in today's presentation. The second part of the question, with long-term growth, we expect to increase earnings, which can be applied to the payment of dividends to shareholders, reinvestment to create our future and also to reduce debt. Next, David, any more questions?

Yes, Chairman, another question from the same shareholder, Superannuation Fund Proprietary Limited, again, submitted prior to the AGM. They ask, what is the Inghams' Board doing to reduce debt? And do forecast earnings support fiscal ability to cover liabilities as the rise in total liabilities is a concern. Chairman, this question was addressed to the auditor.

Well, thank you, David. This question is not in relation to the audit and the procedures performed by KPMG. So I'll put this question to the Chair of our Finance and Audit Committee, Mike Ihlein. But before I do, I know that the question regarding debt reduction has already previously been answered. Mike?

Thank you very much, Peter. That's correct. The FY'20 balance sheet certainly does reflect increased liabilities due to the transition to the new accounting standard, AASB 16. What's important to remember, though, is that the lease liabilities are noncash, and they do not affect our external debt nor our availability to service that debt. And it's important to note that the leases we have across our operational sites were, in fact, in place before the adoption of AASB 16. And those facilities are essential to our network and our integrated supply chain. Thank you, Chairman. Back to you.

Good. Thank you, Mike. David?

Yes, Chairman, there's a further question also again from Superannuation Fund Proprietary Limited. And they asked, does the Board see the fall in the share price as a concern and reflection of management, notwithstanding COVID-19. And how is increasing balance sheet debt being arrested.

Thanks, David. Look, the share price is a matter to the market, and we believe that today's presentation will give shareholders confidence in the business. On the second part of the question, as I said earlier, the long-term growth will come increased earnings, which can be applied to the payment of dividends to shareholders, reinvest shareholders and reinvested to create future value and also reduce debt. David, any more questions?

Yes, Chairman, the next question is from [ Luke and Susan Gleason ], and they asked, how is the company addressing climate change?

Thanks, David. I'll refer this question to our Chair of the Risk and Sustainability Committee, Jackie McArthur. Thanks, Jackie.

Thanks, Peter. The annual reports business sustainability section details our commitment and plans for climate change, adaptation and resilience. An example would be to achieve sustainable water management, we proactively manage water catchment, usage and the treatment of wastewater. And all sites have a bespoke environmental management plan, which measures greenhouse gas emissions, water usage and landfill waste. As the Chairman noted in his address, we commence shareholders to better understand our sustainability policies and commitments as outlined in our annual report. Back to you, Chairman.

That's very good. Thank you, Jackie. David?

Yes. Chairman, there was a long comment from a shareholder, essentially are -- expressing concern about the quality of our product in one of our retail stores and asking why Inghams is doing so badly when chicken is a meat of choice for most families, when pork and beef, et cetera, are so expensive in comparison.

With regard to the quality of products in our stores, we have passed the detailed feedback from this shareholder on to our quality team to be addressed. With regards to our performance, as outlined in my speech and Jim's, the company has performed very well through COVID-19 and delivered over the year, and we will continue to deliver. David?

Chairman, we've had a question come through online during the meeting from Elizabeth Fish at the Australian Shareholders' Association. And Elizabeth asked, what is the current situation regarding the cost of feed. We noted impacted profitability in FY '20.

Thank you. Elizabeth and the Australian Shareholders' Association. Look, I think Jim answered the question in quite good detail during his speech. And I think the essential outcome is that there is great speculation that the wood crop is the best in 25 years. But there will be a lag effect and likely -- and unlikely to hit our P&L until at least the fourth quarter. David, are there any further questions?

Yes, Chairman. We have a further question from a shareholder. Do shares, held in escrow, pay dividends and have voting rights. And again, that's from Elizabeth Fish from the Australian Shareholders' Association.

I think we might have to take that question on notice, and we will come back.

So I can answer that question. There are some shares held in escrow. And those shares do pay dividends, but they don't currently have voting rights. So they are shares that are issued and on the register, and so dividends are paid to.

Well done, David. Thank you. Any more questions?

No, no further questions.

So if there are no further questions on this item of business, so I will move to the next item. The next item of business is the election of directors. There are 3 resolutions proposed for the election of Mike Ihlein, the reelection of Jackie McArthur and Helen Nash. The Board considers and supports the reelection of Mike, Jackie and Helen. I'll first address the election of Mike Ihlein as a Director. Mike was appointed as a non-Executive Director on April 16, 2020. Under the company's constitution, he will retire at the conclusion of the meeting and be eligible, is nominated for reelection as Director during the meeting. Appropriate background checks were completed before Mike was appointed to the Board, and the Board considers him to be independent. Mike serves the Chair of the company's Finance and Audit Committee and is a member of the People and Remuneration Committee. Mike's appointment to the Board was in recognition of the need for public company Boards to have a suitably qualified Audit Committee Chair with appropriate accounting or related financial management, credentials and expertise. Before I ask Mike to say a few words, shareholders have raised questions of the workloads that Mike and Jackie, both of whom currently hold a total of 4 NED roles, including Inghams. I can assure our shareholders that Mike and Jackie have attended diligently to all their duties, are available for meetings even in short notice and really support management as and when required. Both are experienced and capable directors with vast experience in their respective fields and have proved to be genuine assets to the Board and company. I'd now like to invite Mike to say a few words on his experience and expertise in support of his election.

Thank you, Peter, and good morning, fellow shareholders. I'm very pleased to present myself today for election to the Inghams' Board. I've already found my experience at the company, albeit short, to be very valuable and very much looking forward to contributing to the continued growth and development of Inghams as the leading poultry company in Australia and New Zealand. My background, as some of you may know, is originally in finance, and I've had extensive experience in that field, both in executive life and now as a non-executive director. I am, as Peter has indicated, Chair of the company's Finance and Audit Committee and believe I can continue to significantly contribute in that role if I am elected today. I've also had extensive experience as a senior executive of the major Australian-listed company, Brambles and Coca-Cola Amatil, with periods as Chief Executive Officer and Chief Financial Officer. My membership of other Boards provides me with additional perspectives that I believe assist my insights in my role on your Board. I believe that I have the energy, I have the passion and the time and most importantly, the commitment to devote to our company to help make it a continued success. I present myself today for election, and it would indeed be an honor to have your support for my role as a director. Inghams has a wonderful future, and I would welcome the opportunity to be part of that future. Thank you very much.

Thank you, Mike. And I can say that around the Board table here today, people are nodding, he has made a great contribution since joining the Board. Thank you, Mike. Are there any questions, Dave, on this item of business?

No. Chairman, there are no questions at the moment.

Good. Thank you, David. Then the total valid proxy for this item of business are now displayed on screen. And I think congratulations is in order, Mike. Thank you.

Thank you.

The next is the reelection of Jackie McArthur as a Director. Jackie was appointed as a non-Executive Director on the 19th of September 2017, and elected by shareholders on the 31st of October -- on the 31st October 2017. Under the company's constitution, Jackie will retire at the conclusion of the meeting, and being eligible is nominated for reelection as a director today. Jackie is Chair of the company's Risk and Sustainability Committee and a member of the People and Remuneration Committee. I would now like to invite Jackie to say a few words on her experience and expertise in support of the reelection.

Thank you, Chairman. It has been a privilege to serve on the Board of Inghams since 2017 and now to be considered for reelection. I have more than 2 decades of experience in agri supply chains, food manufacturing and technology systems, logistics, product innovation, global and regional supply chains, crisis and risk management. And although I never in the past have felt the need to mention it, pandemic and infectious disease controls for both humans and animals as well as zoonotic diseases has also been in my remit. My career so far has afforded me the opportunity to have had significant exposure to nearly every major food processor and logistics service provider, both in Australia and in the Asia Pacific, Middle East, Africa region. I have a deep belief that Australia supplies some of the best food products in the world. The Board has since I joined it overseen a new CEO and senior leadership group transition, new strategic capital projects, a drought, a pandemic, supply and demand disruptions born through bushfires and COVID. So I feel I bring a very relevant skill set to continue my contribution, both at the Board and now as Chair of Risk and Sustainability. Thank you, and I hope to have your support for reelection. Thank you.

Thank you, Jackie. A very impressive and relevant resume. David, is there any questions on this item of business?

Yes, Chairman, there's a question asked by [ Edmond Karu ] and his question is, Ms. McArthur is not just a Director of ING, but also as a competitor for [ share of mouth ], Tassal Group. Salmon and chicken compete in retail as well as foodservice. Is it really appropriate to have a director who also advises at Board level, a competitor? Isn't this a corporate governance question? What steps does Ms. McArthur take to ensure that information she receive regarding the company's detailed strategy isn't, even if just casually, communicated somehow to a direct competitor of Inghams.