New Zealand King Salmon Investments Limited (NZK) Earnings Call Transcript & Summary

[Audio Gap] chairman from tomorrow. More about that later. I will now provide a concise overview of the year under review plus the period ahead, then Graeme will take you through a more detailed presentation of our operations and intentions. We will then have the opportunity for questions, which will be followed by the more procedural ASM requirements. And I'll finish up with a few comments on our governance. So they say what a difference a year makes. A year ago, we were recording your and our bitter disappointment at the financial result as a consequence of the substantial and early marine heat wave that pervaded our marine farms, especially in the Pelorus Sound. We outlined to you the strategies we have developed and would deploy in the summer of 2023, essentially to husband our marine grow-out stocks by placing the most vulnerable of them along with harvest priorities within the traditionally cooler waters of the Tory Channel. We could not change the summer mortality losses, which spread into the first quarter. A lot of work was needed, and there were many challenges within that 12 months to now. After 13 years, our Chief Executive resigned, and we wished Grant well. Graeme Tregidga, our long-standing General Manager of Sales, was appointed Acting Chief Executive and a search for replacement was commenced. Our sales market intelligence provided scope for further increases in price globally. Management looked again at the staff needed to manage efficiently the production and processing needs, plus worked on the culling of lower-performing costs. As you have seen from the full year result, we managed to reverse the previous year's loss of $73 million to a small profit of $2 million in the fiscal year. What was remarkable about that result is that our sales volume was down 24%, some 1,800 tonnes, but sales value only down 4%. Summer mortalities this year were at their lowest level in 6 years. In addition, the management team focused on cost-saving initiatives. The average FOB price rose 32%, a little skewed by less frozen sales compared to the previous year, but strong demand gave us stronger pricing. Furthermore, a year ago, we had some questions around the sustainability of our Omega Plus pet food business, especially as we underwent the crucial company rebuild. But today, we can report this division is making a fully cost of return contribution and while small, has the potential for good profitable growth not just domestically but also in China, the U.S.A. and Australia. So it was a significant turnaround, and it continues. Global demand is high and challenged. The world's largest producing country, Norway, has had a 25% additional tax levied on salmon producers as has neighboring producers in the Faroe Islands. Canada is limiting and looking to contract production, and Chile is struggling with a range of production issues. It's a credit to the team that the company's fortunes are stronger across the divisions, and we particularly commend Graeme, as the Acting Chief Executive, who has marshaled this committee team to that end with strong morale demonstrated. We farm Chinook salmon, aptly called King Salmon given its size and high nutritional qualities. Globally, no one understands the husbandry and biological nuances of this species better than Grant Lovell and his team. Richard Smith leads a processing team able to maximize the variability of harvests and multiplexity of product SKUs to ensure correct and timely delivery. No one knows better how to connect and measure value from the best restaurants and [ consumers ] around the world than Graeme's sales team. And all are very well served by the backroom needs of health and safety, compliance and food safety, marketing, IT, HR, sustainability, including climate mitigation, and not least, the reporting, analytical and measuring functions provided by finance, treasury and accounting under Ben's leadership. The company is doing well at present, and our outlook is positive. For the first quarter, our unaudited results indicate sales revenue up 12% to $47 million on the prior year and an EBITDA of $6 million compared to a loss of $15 million a year ago. It's early days, but good to see strong positive results so far. However, we do have still 7.5 months to complete the year. So at this stage, we will maintain our market guidance for an EBITDA of between $21 million and $25 million. We are pleased to notify the market that the appeals against our Blue Endeavour license have now been settled, and subject to a formal acknowledgment of that outcome, we can exercise the resource consent that has been granted. Blue Endeavour was the largest, most expensive application under the RMA ever in any form of New Zealand aquaculture. It was first launched in July 2019 after some 18 months of proprietary work by your company in scoping the needs, monitoring the proposed and other possible sites for their conditions and suitability, studying the technology already being used in the Northern Hemisphere and engaged -- and engaging with interested third parties, both supportive and some maybe a little concerned. The 3 [ learned ] commissioners appointed by the Marlborough District Council called for public submissions on the 18th of October 2019. 56 were received, of which 39 supported the application, 14 were opposed and 3 neutral. The commissioners had 5 periods of meetings totaling 11 days. A significant amount of work was done by correspondence between the commission with the parties involved. Some 26 witnesses gave evidence from the company. And of the submitters, 26 also gave evidence, as did 9 council officers. We are very grateful to the company team, especially to Grant, Mark Preece, Mark Gillard and Zac Waddington, plus the legal team of Gascoigne Wicks led by Quentin Davies for their continued diligence, application and aptitude in seeing this through to a positive conclusion. Approval of the application was released by the commissioners on behalf of the council on the 10th of November 2022, with the decision runs to 199 pages, including appendices. So over 5 years in the making, $7 million in fees and research by your company to say nothing of the distraction from the team's day jobs. And subject to the formal lodgment, we now have the resource consent for 2 farms under acceptable conditions within an area of 1,000 hectares just 5 kilometers north of Point Lambert at the top of the Marlborough Sounds. The real work begins now, as they say. We will be taking a measured approach to the utilization of Blue Endeavour. Some of it will be back to the drawing boards, looking at the new generation of technology, nets, anchors, walkways, feed discharge, cameras and logistics being proven elsewhere. Further monitoring and measurements over reasonable time periods will be required and likely, we will start with small cohorts to test and assure that we've optimized performance and security before scale up. This will all take time, and we will regularly report progress. In addition, we will continue to consider other options for looking to grow using established consents and new conditions, including genetic thermal improvement, larger and more resilient smolt input and further focus on the Tory Channel along with other opportunities. So a lot of work to be done. We have the team that can do it, and your Broad and management remain confident that we can continue to grow our profits with a strategic approach while preparing the way for Blue Endeavour. [Foreign Language] And so that completes my address. I'll now ask Graeme to go through more detail in the presentation here. And after that, we'll have some questions.

Okay. [Foreign Language] Welcome. Welcome to all, and welcome to those joining us online today. Thank you, Paul. My name is Graeme Tregidga, and I am the Acting CEO for New Zealand King Salmon. Today, I'm going to take you through the highlights for our last financial year, which was FY '23, and also update you on our efforts around sustainability, our business and operations update, our outlook for the coming year and Blue Endeavour and further growth opportunities. All right. Moving into the first slide here today, slide -- this slide provides a bridge on how we achieved our FY '23 pro forma result from the FY '22 year. The financial highlights for FY '23 include revenue, which is down on the prior period due to a reduction in the available harvest volume following the summer mortality event. But we're able to partially offset that by improvements in the pricing and product mix that we sold. The cost of goods benefited from a decrease in harvest volume on a total basis. However, this benefit was partially offset by the rising cost of raw materials. And like many global producers, we incurred rising costs related to feed and labor, et cetera; also, scale inefficiencies caused by fixed or semi-variable costs, which needed to be covered by the lower harvest volume. The increase in mortality on the first half year of FY '23 reflects the previous summer's mortality event, which started at the end of FY '22 and carried on into the first half of FY '23. The past summer mortality is significantly down from the prior year and it, in fact, has been our lowest in the last 6 years, as Paul mentioned. Freight is favorable due to a reduction in the available harvest post the summer mortality event. And on a kg basis, freight rates have continued to improve slightly. However, rates are still well above pre-COVID levels. There have been no early closeouts of foreign exchange contracts in the FY '23 year compared to FY '22. Now on this slide, you can see that our harvest for FY '23 year was 6,014 tonnes. The lower volume represents the fallowing of 3 farms in the Pelorus Sound and reduced biomass from the mortality that occurred in the previous year's summer. We have a good geographic spread, operating in about 20 countries, but New Zealand and the U.S.A. remain centrally important. We have also resumed sales of fresh chilled salmon to China. The 2 charts on the right show our GAAP NPAT, or net profit after tax, and pro forma EBITDA results. Net profit turnaround was predominantly due to goodwill and asset impairments of FY '22, an increase in the fair value of our biological assets of salmon in FY '23 and an increase in our operational performance as a result of price increases in all markets and good cost discipline. On the previous slide, we spoke about the various ups and downs across FY '23 that led to our FY '23 pro forma EBITDA result. Within New Zealand King Salmon cultural values, there are 3 core principles: safety always, we look after our people; food safety, we pride in the quality and consistency and safety of the products that we produce; and importantly, sustainability, we minimize the impacts on the environment in how and where we operate. So we remain committed to reusable, recyclable or compostable packaging across our business. And currently, this is at 52%. We are preparing for the incoming Aotearoa New Zealand Climate Reporting Standards, and that is effective for our financial year, which is FY '24. And that will be a major focus for us throughout the business year. We have again achieved a Best Aquaculture Practices 4-star certification. And that's the highest rating that can be achieved, and we've done that in FY '23 again. We are proud to receive the Sustainability Award at the Marlborough Chamber of Commerce Business Awards, an endorsing that we are on the right pathway with our sustainability strategy. On this slide, we talk to our fish health and welfare. New Zealand King Salmon fish health has improved dramatically in the past 12 months, and this is being driven by the recognition of risk factors for adverse health -- fish health outcomes. We have employed targeted strategies to support the improvement of our fish health. Temperature is the biggest single risk factor affecting fish health and has been shown to be sustained water -- warm water temperatures. As a result, in 2022, the company made the decision to avoid stocking fish at sites with this temperature profile wherever possible. This meant fallowing 3 of our Pelorus sites and undertaking seasonal harvest at other sites. To address this risk longer term, we have also revamped our breeding program to aggressively select for both summer survival in challenging environments and breeding highly thermotolerant fish, both of which have shown promise. In stress, we have looked at -- additionally looked at minimizing other stress factors to support our fish welfare. These include the optimization of our net cleaning process, predator exclusion and rigorous feed quality assurance and feed quality control. For vaccine, we continue to work on immune resilience, and it's also been shown as being a major focus for our team with a new vaccine having shown good effect in both laboratory and field settings. Other efforts in improved nutrition and the above-mentioned mitigators are also helping the immune function of our fish. New Zealand King Salmon employs a New Zealand-licensed specialist aquatic veterinarian -- he's actually here with us today, Zac -- to help -- to oversee the health and welfare program. We also involve numerous academic and governmental research agencies within New Zealand and internationally to ensure we get the best advice available on fish health and welfare. So navigating the COVID era necessitated that we trim back -- oh, I missed one slide there. Changes to the farming model via our summer farming strategy have now been implemented. As a reminder, New Zealand King Salmon is now avoiding farming in those warm water sites through the summer months with the intention of more reliable and consistent production. And also to note, as Paul has already mentioned, the Blue Endeavour site, which is labeled at the top right there off Cape Lambert, decision has been reached and the subsequent mediation has been resolved. Navigating the COVID era necessitated that we trim back on our marketing investment. Through FY '24, we will embark on rebuilding our brand equity and seeking out the higher-value opportunities. We will be connecting with our key chef advocates through the Ora King Global Ambassador Programme and holding in-market events. For our retail brand, Regal, we will be predominantly engaged with consumers via social and digital media. Our Omega Plus range of pet food sales strategy has moved towards specialty retail outlets. Resumption of international travel has seen our customers return to New Zealand for famil visits. These successful visits result in a huge reach across social media channels as they post updates on their travels. Inflation pressure and cost of living crisis saw us reduce the 200-gram hot smoked range to a 100-gram size. This has been extremely well received by consumers after a successful launch. Moving to our operational updates and highlights. The first shipment of feed via the new direct shipping route from Tasmania, Australia, arrived this year, increasing the surety of our feed supply. Takaka freshwater site undertook the largest harvest of Ora King TYEE. These very rare and highly sought-after fish, which are greater than 13.6 kilograms, sell for over $75 per kilogram. Our new 320-tonne barge, Kai Hamana, is operational at our Clay Point farm. And our new net cleaning vessel, Ika Ma, which -- both of those are pictured there, so the Kai Hamana is the green vessel on the top and the Ika Ma is the blue vessel on the bottom there, is -- they're both now operational. And we introduced fish to Tentburn's new first feeding facility, and we have sold our Waiau freshwater facility. We've also just completed construction of our new plant for the Regal smoked salmon dip range. And as a treat here for everybody today, we have a pottle each to take home from one of those first production runs. Apologies for those online, you're unable to take up that offer.

[ They can try to get them at the ] supermarket.

Paul is correct. They can be purchased at the supermarket near you in New Zealand. So for those of us joining overseas, that's not yet available. Right. And outlook. We remain focused on optimizing the core business to maximize earnings. The seasonal harvest and fish management in the financial year '23 proved a successful strategy, and we need to ensure the learnings provide an adaptive tool for future changing summer conditions. Globally, demand remained strong, and limited supply has provided strong price support. Freight and supply chain challenges are easing, but they are still prevalent. But as a positive example, for the first time in 3 years, we resumed sending a container of over $0.5 million worth of product direct from Nelson to a North American customer. And hopefully, more of those to come. Forecast in FY '24 has harvest volumes of around 6,600 metric tons, and our forecast guidance of -- for FY '24 EBITDA of $21 million to $25 million remains. Our growth CapEx for FY '24 is focused on further optimizing the core business. However, we're continuing to investigate several growth options, including Blue Endeavour. For Blue Endeavour, our ambition is to significantly grow our fish volume. Blue Endeavour is a part of this ambition, and we are delighted that this has passed its final hurdle to become a reality. We will progress the project in a structured manner to minimize risk. This will include using the knowledge gained from our recent summer farming strategy changes. The global focus on offshore fish farming has seen technological advances in recent years. Blue Endeavour has the potential to add up to 10,000 tonnes of harvest volume in conjunction with our nursery sites when it is fully developed. Full capacity of existing sites plus Blue Endeavour is around 17,000 tonnes. We believe that other initiatives and opportunities exist for further volume growth over the next 5 to 8 years. We will be exploring these through the next year to evaluate the potential in realizing these opportunities. I'd also like to call out here the entire team of 450 hardworking people at New Zealand King Salmon who contribute and make great things happen. Their tireless work and passion have set the business on the right track to attain our guidance for FY '24 of $21 million to $25 million. I would also like to thank you, the shareholders, for your continued support and belief in our business. We're also grateful and wish to recognize the services and consumable products that our supply partners provide to New Zealand King Salmon. We value these relationships to ensure that our finest King Salmon are grown and reach our customers in pristine condition. To our customers and community, we thank you, and we recognize your support for our business and our products. I would also just like to take this opportunity to thank our Chairman, Mr. John Ryder, for his 13 years of service to New Zealand King Salmon. John has been a guiding force for our business over these years as we navigated some of the most challenging times. We have valued and respected his immense business experience. So thank you, John, for your leadership and your guidance. We wish you all the very best for your future focus on your other business interests. So thank you. Back to you, Paul.

So we'd now like to open up to questions on our performance and outlook that you've just heard from myself and Graeme. We do already have some online from those attending by Vimeo and also welcome questions from the floor. Please indicate your name as a shareholder and your question.

Wendy McGuinness. Look, looking at the annual report on Page 5 and page -- sorry, I'm just [ clicking ], 85 talking about mortality, I was just trying to understand your comment in terms of being the lowest mortality in the last 5 years, but then also comparing the decrease due to mortality that's in the financial statements, which goes from in 2022 was $25 million and in 2021 was $20 million. So is that difference -- I just wondered if you could explain that.

You're looking at that graph there, and the red line on that is this last summer in 2023 and that is the lowest mortality level in the last 6 years.

But the cost of mortality in the financial statements is actually still increasing, isn't it, because here, it's $25 million. And 2022 and then 2020 -- sorry, I'll say it the other way. The financial year to 2023 was $25.943 million, and in 2022 financial statements, it was $20.841 million. So in terms of cost, the mortality is actually going up.

The cost of fish, of course, went up tremendously over COVID and [ like, too, so ] the cost of feed going in was a much higher cost [ full year ]. That may explain what looks like an apparent anomaly. But Grant, do you want to...

Ben's [ here ].

[Foreign Language] Wendy, I think the other thing probably to reference would be summer spans financial years for us. So when we look at summer, we look at -- I'm looking at Grant -- probably look at the December to March, April period was our financial statements will run from January to February period. So when we reference our lowest summer, that would span 2 financial years but be a calendar summer.

I completely get that. Apparently, the landfill in Blenheim in 2022 has hit 20,000 tonnes of salmon in the whole year. Does that ring a bell?

That might be very difficult, not from us.

Marlborough District Council provide that.

[indiscernible]

[indiscernible] online.

No, I think it's just a really important issue in terms of getting mortality under control...

So in terms of the mortality, FY '23, we're not currently in FY '24, FY '23 was the highest mortality. The mortality event started at the end of FY '22 and carried through into early parts of FY '23. So obviously, the financial year being -- starting on February 1, February, March, April were very poor months, and that's where the vast majority of that mortality has come from. When we look through -- you'll see the reduction in mortality costs coming through in the FY '24 statements, not FY '23, which is obviously last year's annual report.

Sorry, Wendy, but that graph is just the summer. It's not a financial year-end.

Yes. Yes. No, so I understand that. Sorry. I was -- just wanting to clarify then if these 2,000 tonnes of dead salmon going to the landfill in Blenheim in 2022, which is Marlborough District Council figures.

Yes, that's -- it's not all salmon, but yes.

Yes. Okay. And so is mortality in terms of tonnage increasing or decreasing?

Decreasing. That graph on the chart is a tonnage graph. So the line -- this particular year is significantly lower than we have seen for certainly last year, which was our highest mortality ever. We have not hidden from the fact that the issues we faced last year and the changes we've made to resolve that. And we are pleased that pre-summer, from December through to now or end of May, has resulted in the lowest mortality tonnage in the last 6 years.

So my only suggestion might be that you might [ put ] the tonnage figures in because it would be terribly useful.

Yes, but also useful for our competitors as well.

Okay. No, we take that on board, Wendy. Any other points?

I actually have 3 other ones, [ if I could ]...

Yes, please.

If NZ King Salmon is exploring ways to grow and process 100% land-based salmon farm, what do you see as the constraints and what do you see as the next steps in that process?

So land-based salmon farming has been around for some time. It has proven very difficult to be economic, globally. However, in the last 10 years, there has been more and more investment in such technology both from small farms and from large farms. There has been fortunes loss and in some cases, smaller farms, it is proving a lot more economic than the scale-up [ stuff ]. Our longer-term vision, if you want, in 50 years, I suspect that a lot of this will all be done in controlled environment systems not just here but around the world. It's not that easy for us because we're a small producer by world standards, and it costs a lot of capital. And that's why we are going into looking at Blue Endeavour, for instance, [indiscernible] sea farms, but we're looking at that. It's going to be a reasonably high capital cost with some measured approach to it. And the same will be true of a measured approach into RAS systems, as they call, recirculating systems. And the first ones may well be at our hatcheries for smolt and being able to grow them out in a more safer environment and at different levels of resiliency by their age and their weight. A 500-gram smolt is far more resilient than a 50-gram smolt. So it's here. It's coming. It's not going to be stopped. But it's way, way away from us yet.

So MPI -- in terms of the investment in Blue Endeavour, MPI in a 2021 report was quoted as saying that there's 150 million that would be required to produce ocean farming 10,000 tonnes, basically the Blue Endeavour. Have you considered -- or what sort of model are you looking at in terms of getting that investment for the company to get those -- that level of funds to invest in Blue Endeavour?

Well, we'll be growing our own funds with a continued good performance. We are now more strongly anticipating. We'll be looking at other ways, as I said, of increasing our biomass in that process through the natural ways we -- tools at our disposal. And then we'll have to see what we may have to go out and obtain from outside the company.

Yes, I suppose my point...

But that's still 2 or 3 years away, at least.

Yes. I supposed my point is that we're already spending $25 million on mortalities in terms of the current business model that we've got at the moment.

Well, we're not spending that now. We spent that at one year. That was the worst year we've had in years.

That's 2022 financial statements. Yes. So then the very last question I had actually is in relation to -- I'm just going to see if I can get it -- [ put it ] well. So I'll just say -- so in terms of -- you're looking -- I mean, I'm looking for the exact word you used. But in Page 19 of the annual report, it indicates the company is currently looking at applying to renew applications for sea farm consents that expire in 2024, and it's a comment that you've already raised. If -- do you -- there's obviously, I think, 6 of them that expire next year. What's your strategy in that? I mean Queen Charlotte Sound, for example, has always been considered to be cleaned up. Basically, those farms are meant to be expired, and the Marlborough District Council have sort of generally, and I'm going to use very generally, discussed that remaining -- once that expire, not having farms in it. Are you looking at all expired farms to renew? Or do you have a specific strategy of not touching the Queen Charlotte Sound and [ leaving them expired ]?

No, no, no. We don't. We are looking at -- because of a situation [ we're in ], we do want to have that ability to place strategically within the farms. And if we have the opportunity for those license to be renewed, we will take it. The oldest farm in New Zealand is Ruakaka, and that's coming up shortly. And that is less in terms of environmentally friendly during the summer than Tory Channel. Tory Channel has some of the coldest water in New Zealand, as was proven last summer. But we still need that even if it's a staging post for a grow-out until it can move on to another farm or the reverse, going through. Do you want to make any comment on that?

[ But at this stage -- so -- actually, no ], we are looking at applying to renew all farms. The process to do that, well, we're not quite sure of at the moment with variation 1A being removed from the council, we'll learn about that over the next week period. But the [ colder spaces are ] incredibly hard to come by, full stop. And we will treasure our water space, and we will be looking at applying to renew those contents.

Okay. Any other questions? Any online questions?

[indiscernible] Paul, question might be best aimed at Grant Lovell or Zac. What precise diseases are you vaccinating against? Part one. Part two, will Blue Endeavour mitigate attacks from orcas, sea lions and sharks? And part three, at what stage will Blue Endeavour require more capital? So maybe, Zac, parts one and two?

I hope they mean -- well, [indiscernible] I hope they mean repel rather than mitigate attacks from sharks and the like.

Yes. So currently -- or the current vaccine that we're using is an autogenous vaccine, meaning that it's based on endemic strains of bacteria isolated from New Zealand. So we're currently vaccinating against rickettsia type I as well as Tenacibaculum maritimum. We -- the new vaccine which we're going to be applying -- or the new iteration of this vaccine which we're going to be applying from October forward will also have rickettsia type II. So that will cover both strains which our fish encounter. And then that's an ongoing work to isolate and determine causative or potentially causative bacteria. And anything we can put into the vaccine to boost the immune resilience of our fish is certainly something that we're looking into.

You might like to explain rickettsia and the types of things we are guarding against there in terms of their invasion in other parts of salmon-producing countries.

Yes. So rickettsia is a type of bacteria. They're obligate intracellular bacteria, so they can only live within the -- or live and reproduce within the cell of a host. They're related to a family of bacteria called Piscirickettsia salmonis, known to cause salmonid rickettsial septicemia, which is a disease encountered around the world. Our manifestation is not that. We do not have SRS. We have a similar disease. It's much milder. It tends to only manifest in the skin. And we're seeing very good results from the vaccine, although it's early days.

Thank you. Okay. Next question.

I think the next one was around Blue Endeavour and the ability of that farm to repel well attacks from seals, orca and so forth. Look, it's been designed with very strong, thick nets. We're don't -- we're not anticipating that there would be any issues at Blue Endeavour versus our inshore farms. But again, these will be all taken care of as part of our pilot farm. We will test this. There are no predator nets at Blue Endeavour. There will be a single net. So a lot of our inshore farms have a grow-out net and then a predator net. That is not the case for Blue Endeavour. We have been trialing inshore these large single nets, which are very thick, very strong nets that protect the fish. And they've been proving very successful. That is a style of net that we will be looking at deploying at Blue Endeavour. And our own modeling is indicating we should not have a problem here. However, again, it's part of the pilot farm, and the work that we do will verify that.

What was the last one?

Last 1 might be for you, Paul, at what stage will Blue Endeavour will require more capital?

When it's ready to go. And people want to know definitively, but we can't on that. We do want to make sure this is one of the biggest investments that will be made in New Zealand aquaculture. We're putting a lot of fish out there into 9 miles north of Marlborough Sounds. We've got to make sure it's secure. We've got to make sure it works. We're not going to have the risk on that on our heads. It requires a lot of preparatory work, challenge, testing and the like. And as Grant says, we'll probably put smaller farm in there, smaller pins in there to start with and just make sure that what we told becomes reality. So I would imagine, I don't know, 3, 5 years, more likely 5. I mean there's a thing in aquaculture. It costs more and it takes longer. And so probably worth more than 5 years. Okay. That's all. Well, that's got off lightly there. Thank you very much. Okay. So now we want to go on to the formal resolutions. And the Resolution 1 is the Board has also raised to fix the auditor's remuneration for the year ending 31st January, 2024. Are there any questions on that resolution? This is by [indiscernible], every year, we ask the shareholders to allow the Board to appoint the auditors. If not, I commend that resolution to your favorable approval. And while you're doing that, we'll move on to Resolution 2, which is a little bit more interesting. Resolution 2 is that the directors pool be increased by $80,000 per annum from a total pool of $520,000 to $600,000 per annum, effective from the close of the annual meeting, which that sum to be divided amongst the directors as the Board may from time to time determine. Now further details on this resolution were contained with the earlier circulated order paper. We have had questions on this. We appreciate it may be in Congress that we seek an increase while the company is still in recovery mode. We did increase the fee pool in 2019. However, COVID arrived within months, with an uncertain downturn so we didn't utilize any of the increase approved. In late 2021, we determined that an increase in our director numbers was appropriate for additional experience and also diversity. And after an appropriate search, Victoria Taylor was appointed and confirmed by you last year. In essence, we're now looking to regain some measure of parity with peer groups of our size. It is important not to be too far out of step as Board members retire and new talent is sought. We recognize that for shareholders and remember most directors to shareholders, this may be a difficult resolution. Nevertheless, the Board unanimously recommended for your favorable support. Do I have any questions, I think, on that? Okay. Resolution 3, having retired in accordance with NZX Listing Rule 2.7.1, that Jack Porus will be elected as a director. As I mentioned, Jack is in Europe at the moment. It's probably about 5 a.m. there and I was asked that I make the following statement on his behalf. "I present my apologies for being unable to attend this Annual Shareholders Meeting as I am currently in Europe. I am offering myself for a reelection as a director of the company as 1 of the 2 representatives of the major shareholder, Oregon Group Limited. I have been a business adviser to the Oregon Group since 1990. And in the mid-1990s, I assisted it to rationalize and effectively save the Salmon family industry by taking control of Regal Salmon and Southern Ocean Seafoods and combine them to become New Zealand King Salmon. I believe that my continuation as a director offers stability, with preservation of institutional knowledge at a time when we are seeing the departure of our Chairman, John Ryder; and in the near future, Paul Steere, both of whom have been long-term directors." Again, the Board commenced that resolution for your favorite approval. Resolution 4 is another director, having retired in accordance with NZX Listing Rule 2.7.1, that Catriona MacLeod be elected as a director. Catriona is online. However, rather than risk the contingencies of Internet interference as Vimeo always want to do, I similarly have a statement from Catriona to read. "Firstly, I'm sorry on not to be able to join you all in person today. As you are aware, I am putting forward for reelection to the New Zealand King Salmon Board. Whilst there have been significant challenges over the last 3 years, it has been a real privilege to be able to contribute to the Board and support the management team to make the substantial changes to our farming model and strategies that were needed to reposition the company for success. Overcoming the welfare and fish husbandry issues associated with a combination of particularly warm waters and COVID fallout has been particularly challenging, but ultimately, I believe those challenges have enabled the development of a robust road map for success going forward, one that has climate future proofing at its core. We have been able to clearly demonstrate our commitment to sustainable farming practices and now have full endorsement for the Blue Endeavour initiative. As Chair of the Health, Safety and Risk Committee, I am particularly pleased with the many improvements the management team have made in this space over the last 3 years, putting safety and our people at the center of business. I'm looking forward to continuing to work with the Board to support the senior management in developing our sustainability reporting and engagement strategies, so we can further demonstrate our commitment to the communities in which we live and work. Whilst based in Australia, I attend all Board and committee meetings, attending in person all Board meetings when the Health, Safety and Risk Committee meet. I believe in my experience as a senior scientist at the University of Tasmania, and my global networks and peer community in aquaculture production, environmental interactions and sustainability and especially fish health and welfare, ensure I am kept informed on international developments relevant to New Zealand King Salmon and this ensures my input in this field is very much leading each for the company. That was that one. And again, the Board commenced the reappointment of Catriona. So I'll stand down now, Graeme, you take the chair because the Resolution 5 is my own reelection. Let me just say on that. With John's standing down, today's his last day with Mark coming in new, I was -- I just wanted to have another 6 months or so to remain with the company and help with that transition. I do go back a long way. I'm older than I look, I hope. But I do go back to the early '90s when, as Jack mentioned, we had both companies, Southern Ocean and Regal, and a lot of difficulty, and we rationalized the industry with that, that really does save the salmon industry. We went on to, in the late 1990s to GDAS, a challenge there where the feed was not being consumed properly by the fish, and we were near in solvency. And again, our shareholders, Oregon came to the party. We then went with a change in the shareholding with Direct Capital coming in, which was -- gave us quite a fill-up. And then on, of course, some growth and then the listing. So it's been an exciting time. I am passionate about the company, I'm passionate about the product. So I think it's the world's best salmon. And bear with me for another 6 to 9 months, depending on when we finish up the audit for this current financial year. I'm sure that there are younger talent out there, possibly with more energy, and over time, I'll get them as much wisdom, and I want to see them come in place. So that's me. Okay. So that completes the formal resolutions that we want to put for you. But I want to have a few words on governance. As I mentioned today, is John Ryder's last as a Director and Chair. John is a well-known New Zealand Company Director, investment analyst, property investor and writer on investing. His achievements and service were recognized with John become a laureate in the New Zealand Business Hall of Fame in 2020. John's original claim to fame came from his modernization of retirement living with the advent of Ryman Healthcare in 1984. I first met John when the owner of Oregon Group decided to release some of their holding to assist with their purchase of the Kinloch paper mill in 2009. [ Macquarie ] has managed the process of securing a new partner. And of the shortlist Direct Capital stood out for the understanding that King Salmon was not just an accumulation of assets, but a primary producer of real value in the world's fight of salmon. John was Chair of Direct Capital's current investment fund then, and I think still is, and he came on our Board as Chair later that year. Throughout his tenure, John has encouraged, mentored and supported both the Board and executives in their endeavors. He has underpinned the worth of the business seeking to ensure that the aspirations of growth and value were identified and measured. John has sought to ensure that effective responses were made through a range of challenges, whether it be COVID, environmental, regulatory or partnership related. With extensive knowledge of capital markets, John was reassuring and tempering voice during the demanding days leading up to our listing in 2016. Simply, John made sure the focus well on recovery and rightsizing the company a year ago. John's manner, firstly, listening, then providing quiet, yet [ resolutive ] direction, explains with examples of consequences as the leadership trait second to none. It has been a privilege to work with John in the last 14 years. Our company and its senior people are the better for it, and John will owe you a debt of gratitude for your service and confidence in our future. On behalf of the Board and shareholders, thank you. So John, I know you're online there somewhere, and I've got to talk through that, do I? Apparently, I have to talk through a separate microphone, John, if you can hear me, now it's the time for you to say a few words. Are you there, John?

I am online. Thanks, Paul.

Yes. Good. All right. I mean we all go, we can hear you quite clearly.

Okay. Thank you, Paul. I'm actually younger than I look, which is different from yourself. Thank you for those kind words. It is indeed time for me to resign after 13 years as a director. Yes I'm here. Okay. Thank you, Paul, for your kind words. It is indeed time for me to resign.

That's quick. John, I'm sorry, we lost you. We've lost you again, John, sorry.

Yes. Sorry, Paul.

No, it's probably our end, don't -- you keep going, John.

Okay, giving a bit of -- I've got a delayed feedback here. But anyway, I'd like to say that it is appropriate for me to resign. Okay. So I'd just like to point out that -- I'm not sure what's happening now?

John, you're coming in for 1 or 2 sentences, then you'll cut out and stop. So what we're going to do is we're going to bring you and get you on the phone, and we'll be able to broadcast that around on by microphone. So just bear with us while we do that because that's the only solution, I think we can find. And we'll then go to another part of the agenda. And let me do that. It actually means that John has the last word. So the next part of it was really to talk about Mark and introduce Mark to you and get him say a few words as well. So he becomes our Chair tomorrow and comes with a strong leadership background in New Zealand's agriculture sector primarily in dairy, which I happen to know is New Zealand's preeminent business school. His early association was with Tatua Dairy company renowned for its efficiencies and successful added value strategies and with whom Mark continues as a director today. He went on to work with Frontera managing their ingredients business in Asia and then became the Chief Executive of Livestock Improvement Corporation for 7 years before being appointed Chief Executive for Pyne Gould Guinness Wrightson. And Mark initiated, as a serious turnaround -- a successful turnaround at PGG, doubling the EBITDA and shareholder value, yet also setting the company on a strong growth path. Having an acute understanding of primary production, genetics, international marketing, the environmental effects and the importance of clear strategic intentions, Mark is welcome to our company, and we look forward to his stewardship as Chair. I therefore invite Mark to say a few words.

Thank you, Paul. Thank you, everybody. My name is Mark Dewdney. Just a few words today. First, I would like to acknowledge John Ryder who has chaired the business for a long time. He leaves very big shoes for me to fill, and I'll do my very best to serve you all in a way that was consistent with John's beliefs in the company, his passion for us and his desire to see the company succeed. I'd like to thank my fellow directors for voting me in. Without them, I wouldn't be here. And I would really like to acknowledge shareholders. It has been a challenging last 2 or 3 years, and it's a credit to you all for your patience, perseverance, commitment and ongoing support to the business. And we say -- I hope to serve you for a number of years. And working with Graeme and the management team, we'll do our very best to run a good business sensibly, taking advantage of the growth opportunities that we believe are out there and that we will be able to pursue over the years to come. I love the product. That was the first attraction when the recruitment company called and asked if I would be interested in putting my name forward for the Board? I love salmon. And I live in Mount Maunganui with my wife and Graeme tells me the scan data through the new world and Mount Maunganui has just gone through the roof since I started my wife buy salmon too frequently, but it's been great. I've been lucky enough to spend Monday here with the teams through the business. I was able to travel through almost all of the factories. I met a large number of staff. And I was really, really impressed. Everybody I met was bright-eyed, was passionate, clearly was enjoying what they were doing and had a great belief in the company. It was obvious that there are some challenges in the physical processing assets. Factories are a bit old. Some of the flow is not so great. But the people that I met had a huge amount of expertise and a lot of passion. And I think I've always believed in my own executive career that no matter what product you're making and selling, it actually comes down to the people. And if you have the right people and they feel safe and they are motivated and they believe in the purpose of the organization, then they will do great things. And if people who work for you do great things, then customers will be happy. They'll buy more. And generally success will happen. And I was just so impressed with the people that I met through the business. I think that bodes really, really well. Paul's spoken of my career. I think he's made it sound a little bit flasher than it actually was. I'm a farmer at the core. I have farms that milk cows, farms that milk sheep and farms that run dry stocks. So I love farming. Farming is -- farming, people and business are my 3 passions. And I think with the New Zealand King Salmon, there's a great opportunity to put the 3 together and that's what I'm looking forward to do. I won't stand here today and pretend that I know everything about the business. I have all the answers, and I don't. I want to immerse myself into the company. I want to learn as much as I can. I want to work with the teams that we've got, both through management and through the Board. And collectively, we'll take today's strategy, and we will try to improve it and build on it. And I look forward to being able to report back to you all in the years to come. We look forward to being able to meet as many of you as I possibly can. And I'm just really excited to be here. Thank you very much.

Have we got you there, John?

Yes.

This is kind of your old school, right. Okay. Right. You're using your own microphone here, John, so please -- please go...

Yes. Thank you, Graeme. And I'd like to say that it is probably the appropriate time for me to resign after 13 years as a director because of the significant turnaround, as Paul has mentioned, such the climate change induced mortality crisis that in the financial year ended 31st of January 2022. But we should all appreciate that the financial year just finished, still had legacy months from the 2022 summer period when mortalities were the high. And this is not the case for the year ahead. We are off to a good start. The company should experience another strong uplift in the earnings. And at the same time, Blue Endeavour provides us with an exciting pathway and we're consistently building the business over the next decade or so. We have a platform, and we have a future. Salmon farming is a remarkable industry, combining the positive signs of growing a valuable protein product for the world at large against the negative signs of climate warming that threatens our planet. That means we have opportunities that we also have responsibilities. Overall, we're seeing company's progress with interest. You have a remarkable product with a remarkable team in a country well suited to growing the species. I'd like to thank the staff of the Board for their support over the years and the shareholders for their ongoing support. And in particular, I'd like to thank the 2 major shareholders, Oregon and China Resources who have always been there when we need them. Thank you for putting up with me over the years.

Well done, John. You've got the last word. All right. He's not here, right, to say something else now. So that concludes our addresses. The voting, as you can see, has now been tabulated. We'll post the results the way I anticipate they will be supporting the resolutions. Thank you very much for your attendance today, both here and online. [indiscernible] it, if you like. Look, I thank you, shareholders. We don't underestimate the trust you have placed with us to protect and grow your investment. And I just confirm we are committed to that of course. So I close the meeting and invite those shareholders present to enjoy some refreshment and meet members of our wider team and those on Vimeo to make sure they go to their supermarket and pick up some smoked salmon. Thank you very much.