Rivco Australia Ltd (RIV) Earnings Call Transcript & Summary

Okay, the time is now 2:00, so I'd like to welcome everyone to our eighth Annual General Meeting of Duxton Water Limited. A very warm welcome to those who are in the room with us today and to those who are dialed in to the live stream. For those of you who don't know me: My name is Brendan Rinaldi, independent director of Duxton Water Limited. And it is my pleasure to be the stand-in Chair for today's Annual General Meeting. For those who have attended our AGMs before, you would know that it is our company Chairman, Ed Peter, who usually opens our meetings. Unfortunately, Ed is unable to be present today, as he has business overseas. However, we are pleased with that we have technology so he can still join us today. So he's up on the screen. Ed, would you like to say a quick hello to everyone? Can you unmute, Ed, if you're on mute?

Mine -- my sincere apologies for not being able to be there [ with everybody there ] in Adelaide. It is I'm -- leaving you with -- in the capable hands of Brendan. And I'm excited about the year coming up. And while I couldn't be there in person, I wouldn't miss this for anything in the world.

Thank you, Ed.

Thank you, Brendan.

In addition to Ed, we also have Mr. Dirk Wiedmann, also an independent director for Duxton, who is dialing in from Switzerland. We've got Ed up on -- Dirk up -- yes. Hi, Dirk. Would you like to say hello to everyone?

Yes. Hello, everyone. It's actually quite early on mine time. It's 6:30, so I had to take a couple of coffees. I'm used to it. And we had a couple of difficult years in agricultural businesses, but one good thing is we are very used to video conferencing. And I think the quality in the meantime is actually pretty good, so -- and this is a very important meeting, so I'm looking forward to it.

Thank you, Dirk. And thanks, to Ed and Dirk. It's great to see you both up there. Just a quick piece of housekeeping. If you haven't already, could I please ask you to put your mobile phones to silent? Usual disclaimer up there. To commence proceedings, I would firstly like to introduce my fellow Board meetings (sic) [ members ]: Mr. Ed Peter and Mr. Dirk Wiedmann, who were just up on screen; Mr. Steve Duerden here; Dr. Vivienne Brand; and Mr. Dennis Mutton. And we also have Katelyn Adams in the second row, who is our company Secretary. So you can read more about our Board members in the company's latest report or in the appendix section of the presentation which was released to the ASX this morning. Over to the Duxton Water team who is responsible for running the day-to-day operations of our business. In the front row, we have the Lachies, Lachie Campbell and Lachie Beech, who are the key operational members of the team. We also have Mercedes, Harry and Carolyn; and our finance team who's here today as well, Michael, James, Marcus and Tanya; and Sam Venning as well. So thank you, to the Board and the management team, for all your efforts over the last 12 months. You've contributed immensely to the operations of our company in what's been a very challenging year. I advise that, in accordance with the company's constitution, a quorum is present today. In accordance with the Corporations Act, I advise that the notice of Annual General Meeting was dispatched to all shareholders on the 29th of April 2024. Accordingly, I declare the meeting properly constituted and open. Today, I'll be providing an overview of our performance in 2023. Lachie Beech will provide a portfolio update and then Lachie Campbell will provide an outlook for FY '24. We will then look to cover off the formal items of business and finish up with any shareholder questions. I would kindly ask you, please, hold your questions until the relevant section of the meeting. When you registered for today's meeting, you should have been given either a blue, pink or white attendee card. If you'd not received this card, please go to the reception or the registration desk at the front of the room and collect one. Only those people holding a blue or pink attendee card are entitled to speak or ask questions at today's meeting. If you received a blue card, this will be used for voting in the polls which will be opened at the end of the meeting. Where a proxy vote has been given to the Chairman without voting instructions, I intend to vote in favor of the resolution. The Corporations Act and the company's constitution empowers the Chair to call for a poll on a resolution put to the general meeting. Today, I'll call for a poll on each of the resolutions to be considered at this meeting. I'll refer to the Chairman's report in the company's annual report to the year ended 31 December 2023 and provide the following overview. Over the last 12 months, we're pleased to have delivered on both of our dividend targets in what was a more challenging year for Australian agriculture generally. The industry continues to feel the effects from the 2022 and 2023 floods, the worst floods the Murray-Darling Basin has seen since 1956. Crop loss; damage to machinery, roads, irrigation, infrastructure and the like were just some of the operational challenges faced by many basin irrigators in 2023. Last year, in September, the Bureau of Meteorology declared the presence of an El Niño and a positive IOD. Both of these weather events tend to cause much drier conditions over the Murray-Darling Basin. This was of particular importance, as these drivers have not been seen together since 2006 which was during the millennium drought. Fast forward, today, we know the dry conditions expected over the Murray-Darling Basin didn't eventuate. However, it is worth noting that parts of New South Wales and Southern Queensland did experience significant drought-like conditions into the spring of last year. And late summer, into autumn, has seen extremely dry conditions for WA, SA, Tasmania and Western Victoria. We were just talking before about how King Island has had the driest years in 142 years, and I'm not sure how to cope with no water infrastructure there. With high-decile rainfall over the Southern Murray-Darling Basin, particularly over December and January, it meant prices remained lower over the peak irrigation period. Dam storages remain relatively high, and with an average rainfall forecast over the next few months, we're expecting once again to receive strong allocations in our general security assets into the upcoming water year. While the persistent wet conditions over the past 4 years continued to impact underlying operational performance of high security water assets, our general security assets have continued to perform well over the last few years, seeing annual cash yields of up to 8% and strong capital growth. Around 20% of our portfolio are allocated to general security, which continues to provide us with natural hedge against wet weather due to increased allocation. We know that Australia has a volatile and at times extreme climate, and we -- and given we just had 4 wet years in a row, we anticipate more normal weather conditions aren't too far away. It's also worth mentioning here that, towards the end of 2023, we saw the company's share price trade at a small premium to NAV for the first time since mid-2019, which was great to see. We will touch on some of the other key metrics on the screen in front of you throughout this presentation. When we started this business in September 2016, our aim was to partner with farmers, both large and small, to offer choice and flexibility when it comes to water usage. We're proud to say that, over the last 7 years, we've helped and supported hundreds of Australian farming businesses with their annual water requirements; and we will continue to do so for years to come. While our industry has seen some challenges over the last 1 to 2 years, we would like to thank all of our shareholders for their support and investment in our company since inception. Since forming 7 years ago, we are proud to have generated total shareholder returns of approximately 90%, consisting of both dividends and share price appreciation. To ensure the company is able to generate enough earnings to meet our dividend targets, one of our key focus areas has been to maintain a stable leasing revenue stream. While we don't want to overextend our lease position in the middle of a wet cycle, we have been cautious [ to remain ] a relatively healthy lease percentage. Our lease percentage was 60% at the end of December and has provided a stable revenue stream and a great hedge against the persistent lower allocation prices that have been seen over the last few years. In doing so, we've also strengthened our WALE out to 3.1 years, which is up from 1.4 years in the 12 months prior. Other key events worth mentioning include the $39 million acquisition and leaseback of water entitlements from Treasury Wine Estates that occurred in July last year. This was one of the largest transactions for Australian water entitlements the market has seen in recent years. This type of transaction is a great example of what the company can achieve. And we see material upside in partnering with corporate farming businesses to provide long-term water security at scale. To fund this transaction, we completed our first capital raise since 2019. We successfully raised $51.5 million from both new and existing shareholders, which was a fantastic result in what was such a challenging market. We would like to sincerely thank everyone who was involved in helping us with this raise. Finally, we also issued existing eligible shareholders with a bonus option. The options we issued to shareholder is at no cost on a 1-for-4 basis. And they have an exercise price of $1.92 per share, with an expiry date of the 10th of May 2026. The options were issued to reward our shareholders for their investment in the company and potentially provide an additional source of capital that can be used to expand the company's portfolio in a cost-effective manner. I'll now move through some of the key points in relation to the company's 2023 financial statements. As we look to the P&L: The company generated a net profit after-tax of $6.3 million for FY '23. This was down from $10 million in the prior year. This difference is largely attributed to a timing difference with respect to the company selling-down its unleased water allocations when compared to the prior year. This is illustrated by comparing the fair market value of the company's water allocations on hand at 31 December '22 of only $100,000 versus 31 December '23 where the company still held $4.2 million of water allocation. The lower P&L result is mainly attributable to the higher interest rate environment and a noncash impairment on the company's water portfolio of almost $1 million. Attainable yields on the company's high security water assets continue to be suppressed by the continued wet weather conditions for the fourth consecutive year. I would also like to make mention that, over the last couple of years, we have recorded material statutory profits on the turnover of our water entitlement portfolio. Each year, we aim to turn over around 5% to 10% of the portfolio when we see opportunities to generate value for our shareholders. Rebalancing part of the water entitlement portfolio not only results in overall cash benefits to the company from buying assets at below-market value and selling them at above-market value, but because we have significant lower cost basis of some of these assets, we book significant accounting profits. This has enabled us to continue to meet our dividend guidance in an environment where attainable yields on the company's high security water assets remain below average. Going forward, more normal weather conditions -- and in a slightly different economic environment, we expect to have much less reliance on trading profits over the course of the year, as we will be able to rely on our operating profits. To cover some of the lease portfolio metrics quickly. Our lease revenue remained relatively stable at around $8 million in 2023. We closed the year at 60% leased, which is up from 54% in the prior year. During the year, we increased our WALE from 1.4 years out to 3.1 years as of December '23. We look forward to building our lease portfolio back to a percentage of our -- long-term target of 70% to 80%. The normalizing of weather conditions and an increased demand for leases will be the driving forces behind us once again achieving this target. Over to the balance sheet. In July '23, our total portfolio valuation exceeded $400 million for the first time since inception. While it has since dropped below this valuation, it is considered a key milestone for the company. The company's NAV from a fair market value perspective at 31 December was $1.62 per share. This represents a 28% (sic) [ $0.28 ] decrease when compared with the prior year. The recent reduction in NAV can largely be attributed to the following: $0.07 paid out as a fully franked dividend, $0.07 of dilution from the company's recent capital-raising activities and approximately $0.14 coming from the softening of water entitlement values during the year. In 2023, the Aither Entitlement Index, which is an index that tracks the prices of major groups of Southern Murray-Darling Basin water entitlements, fell by approximately 9%. This is the largest single decrease the index has seen in over a decade. It is not uncommon in wetter years with full storages and high allocations to see water entitlement values decline. The recent softening has likely been further exacerbated by the need for working capital for farmers, as operating costs and interest rates have sharply increased against a backdrop of low water allocation prices, lower commodity prices and knock-on effects from the 2023 floods which are still being felt by many. Water licenses as a homogeneous, tradable and liquid asset become an increasingly popular source of liquidity for irrigators looking to generate cash to get through the next farming season; even more so when conditions are wet, allocation prices are low and irrigators can access super cheap water on the spot market. [ On to ] capital management. Our loan-to-value ratio remained relatively stable during the year, ending at 29%. This remains well below the company's maximum LVR limit of 40%. The company's effective cost of borrowings has, however, increased in line with the cash rate rises seen over the last 12 to 18 months. For the year ending 31 December '23, the company had an effective cost of borrowings of 5.2%, which is up from 3% in the prior year. We also reduced our drawn debt position during the year from $125 million at the end of '22 to $116.5 million at 31 December '23. This gives the company balance sheet flexibility to capitalize on well-priced water entitlements as they come to market. The cash received from the company's recent sale of water entitlements to Treasury Wine Estates is expected to be offset against the company's debt in the interim, further reducing the company's interest costs. The company doesn't currently have any fixed-rate swaps in place. However, as a Board, we are actively reviewing our hedging strategies and closely monitoring interest rate markets for further opportunities. During the '23 year, the company delivered on both its dividend targets, paying fully franked dividends of $0.069 per share during the year. This is up from $0.065 fully franked in 2022. Including the most recent dividend, the company has now paid out total dividends of $0.413 per share since November 2017, with each dividend increasing over time. The last 11 company dividends have also been fully franked. We have provided shareholders with a stable and consistent income stream from investing in Duxton Water since inception. This consistent growth in dividends paid has resulted in shareholders benefiting from a 6% annual growth rate in dividends since inception. Since the end of '23 financial year and keeping with our previously stated dividend targets, the company has paid its 14th consecutive and increasing dividend of $0.036 per share, fully franked, on 26th of April 2024. We are pleased to reaffirm our dividend guidance for the remainder of 2024, and we are targeting a $0.037 per share fully franked dividend to be paid to shareholders in the second half of this year. The company anticipates it will provide a further update in relation to its dividend guidance for FY '25 in the second half of this year. I'll now hand over to Lachie Beech, who will provide a portfolio update. So over to you. Thanks, Lachie.

Thanks, Brendan. Firstly, I'd like to thank everybody for coming today. Your interest and support is much appreciated. For those of you who haven't attended one of our AGMs before: My name is Lachie Beech. Today, I'm going to cover off on the portfolio performance, portfolio diversification; and provide you with an update on our lease portfolio. Following this, I'll hand over to my colleague Lachie Campbell, who will provide you with an update on the business going forward. During the year, our portfolio exceeded $400 million for the first time since inception. This is a major milestone for the company as it looks to position itself as a go-to partner of choice for Australian farming businesses looking for water security. During the year, we increased the size of the portfolio by 6,700 megaliters or 8%, primarily through the acquisition of premium high security water licenses not only as part of the TWE deal but also by acquiring some additional licenses in other zones. Our general security entitlements have continually performed very well in wet conditions. We've seen a double-digit value appreciation on most general security assets over the last couple of years. These assets have also generated mid- to high single-digit yields at the same time. High security assets have continued to trade at the bottom end of [ their ] cycle in both valuations and yields. However, we see significant upside in those assets in both the short and long term as the macro demand-and-supply remains very strong. We expect cash use to be influenced by the normalization of weather conditions and dam storage levels, whereas valuations will be influenced by more so the macro factors such as the cost of capital and increased permanent plantings and improving commodity prices. The government buyback program may be something that impacts the value of water entitlements. However, Lachie will walk through this shortly in the business outlook. We will continue to seek well-priced trade opportunities and actively manage our portfolio to work within the climatic cycle. The Duxton Water portfolio has been assembled in a strategic and targeted manner. The composition allows for a dynamic approach when it comes to delivering our lease obligations as well as being able to maximize our return from our deployed capital. Our portfolio composition of owning both high and general security assets means the portfolio will continue to generate returns across all parts of the climatic cycle. High security assets tend to generate higher yields in dry parts of the climatic cycle. And general security assets generally yield much higher in the wetter parts of the climatic cycle. When deploying capital, we look at where future demand is likely to come from and what areas of the river system gives us the most flexibility in delivering our water supply products to the market. We continue to monitor the markets outside of the Southern Murray-Darling Basin. However, we believe there is still significant value within this region, as the market remains somewhat fragmented and there continues to be permanent crops put in the ground. To finish off this slide. The key takeaways in terms of diversification for our strategy is diversification is paramount. Scale is key. And having strong relationships with our lessees, customers and other market intermediaries such as brokers is critical to our strategy going forward. One of the main key focus areas for 2023 was to continue building out our relationships with irrigators and to expand our lease book. Due to the extremely wet conditions, demand for appropriately priced leases has reduced. This is because irrigators can continue to take advantage of the well-below-average spot prices that have been seen over the last 3 to 4 years. During the year, our lease revenue of $8 million remained relatively consistent when compared to last year. We did a number of -- we have a number -- we had a number of existing leases roll off at 30 June. However, these were largely replaced by the TWE leases that commenced at 1 July 2023. The company's lease percentage was 60% at 31 December 2023. This is below the company's long-term average of 70% to 80%. However, that was strategic, as the company did not want to lock a material percentage of its portfolio into long-term leases at cyclically low lease rates. Further to this, our lease portfolio continues to act as a strong hedge against persistent lower allocation prices. Moving forward, we will continue to engage with existing and new customers in order to lock in further long-term leasing arrangements, which will continue to support our weighted average lease expiry and our leasing revenue stream as [ varying ] leases roll off annually. The company maintains its view of building back up to having 70% to 80% of the portfolio locked in to long-term leases as weather conditions normalize. I'll now hand over to Lachie Campbell.

Thank you, Lachie. And hello to those who are sitting in front of me and listening in to our live stream this afternoon. My name is Lachie Campbell. And it is my absolute pleasure to be standing before you again, once again, I should say, at Duxton Water's eighth Annual General Meeting. Today, I'm going to provide you with a little bit of an overview with regards to some of the key points in relation to the outlook for our business. So the weather remains an interesting topic of conversation this year because in late -- or if we start to go back and look at what's transpired: In late 2022 and early 2023, the Murray-Darling Basin saw some of the worst flooding events since 1956. We then saw El Niño and positive IOD declared in September of '23, which suggested we may be moving back to drier conditions. However, those expectations were short lived, as we continued to see above-average rainfall across most of the Southern Murray-Darling Basin during summer, so where do we sit now? We've seen lots of rainfall across Northern and Coastal New South Wales over the last few months. However, we've seen much drier conditions and below-average subsoil moistures across various regions of Australia, including WA, SA, Tasmania and western parts of Victoria. From a dam storages point of view, Dartmouth and Hume are currently sitting at 94% and 60% capacity, respectively, which is well down on this time last year when they were sitting at 96% and 91%, respectively. This, to us, indicates that there is less water available in the system today when compared to this time last year. So building on from this quickly. On the 14th of May 2024, a couple of weeks ago, the Bureau of Meteorology declared a La Niña watch. History tells us that La Niña events tend to form around 50% of the time from when a La Niña watch is declared. And as we know, La Niña events tend to cause above-average rainfall over the eastern half of Australia. And if this was to eventuate, this would be Australia's fourth La Niña in as many years, something that has never occurred in our history before. Complicating things further, the Bureau of Meteorology, along with many of the other global major weather agencies, are forecasting a positive IOD event to occur in the coming months. As we know, a positive IOD event tends to cause drier conditions over the eastern half of Australia. And this was what was actually the driving force behind the drought that we did see in Australia throughout 2018, 2019. Now weather conditions influence rainfall. This impacts dam storage levels, which dictates water allocation percentages. Therefore, water -- available water supply then flows through to impact the spot price for water, which in -- then in turn impacts yields that we can achieve on our water entitlements, so given the uncertainty in weather at the moment, we're remaining relatively conservative in our approach to the upcoming water year. We have contingencies and strategies in place to accommodate for all weather scenarios, including wet, average or dry, whichever way the weather may be. So obviously, government water buybacks. This is a very topical area for discussion at the moment. So as a quick reminder: The Australian government has, over time, been acquiring back water licenses from the market through voluntary water purchases. These licenses are then redirected away from agricultural use. And the government holds onto them, where they are used for environmental purposes, so what this practice does is it actually reduces the total supply of water available to agriculture. And over the last 15 years or so, the Australian government has recovered about 25% of the water entitlements that are on issue. Now in the last year, so December last year, legislation was changed that allows the government to conduct further large-scale voluntary water buybacks from the market over the next 4 years. So that was late last year. Early this year, the government released a draft framework that outlines exactly how they plan to recover up to 450,000 megaliters of water licenses from the market. This volume of water is equal to approximately 6% to 7% of the total free float of licenses on issue in the Southern Murray-Darling Basin. Now when I say free float, I mean all of the water licenses that are on issue, less what the government already holds, which as we know is about 25%. Now while this doesn't seem like an overly exaggerated number, that -- in a context of market depth, what the government is looking to buy back represents a significant percentage of what is traded in our water markets every single year. The federal budget that was -- that came out a couple of weeks ago indicated that the government plans to recover 100,000 megaliters of licenses from the market between 1 July of this year and 30 June next year. And they've allocated $613 million from what's called the WESA account to do this. The budget also discloses that the government anticipates recovering a further 100,000 megaliters the year after, a further 100,000 megaliters the year after and up to 150,000 megaliters the year after that. You then overlay this with the fact that it's the entitlement sellers who are the ones that actually dictate the price that the government pays to acquire these licenses. We believe the size and the scale of these buybacks may have an influence on entitlement values in the coming years. So to summarize very quickly. We maintain that water is well positioned to outperform traditional asset classes going forward. While the trading conditions over the last 12 months have presented some challenges, we have adapted and actively managed our portfolio to work within both the economic and climate conditions currently facing us. We plan to continue targeting biannual dividends franked to the greatest extent possible. We will continue to build long-term strategic partnerships with Australian farming businesses of all sizes. And we will continue to seek opportunities to scale and grow our portfolio. This will ultimately lead to improved market liquidity and greater flexibility when it comes to how we manage our portfolio. And we will continue to monitor investment opportunities outside of the Murray-Darling Basin to add further diversification to the portfolio. That being said, we still believe there is significant value to be unlocked from within the Murray-Darling Basin. So finally. We remain confident in our strategy to continue to deliver the most prudent returns possible to our shareholders. I'll hand back now to Brendan to close out the informal part of today's meeting. Thank you very much.

Thank you to both of our Lachies. You can see, for quite a simple business, there's a lot going on and a lot coming down the chain as well. So a big thank you. And I would like to thank everyone for the opportunity today. And for those online: We actually have a full house. We actually have people standing in the back, so it's great to see the support here today. While this year hasn't been without its challenges, I'm proud to say we've navigated our way through, with a great result being delivered to shareholders. As a Board, we have a great confidence in the outlook and the future of our business. Our objective is to ensure we can continue to deliver value for both our customers and our shareholders on a consistent basis. I now table the notice of meeting, which was made available to all shareholders on 29th of April 2024. And if there is no objection, I propose that the notice of meeting be taken as read. I advise that no notice of any other items for today's agenda have been received and therefore declare the only matters for our meeting today that can be dealt with are those set out in the notice of meeting. We will open the poll after all items in the notice have been introduced and discussed. I will then ask all shareholders holding a blue card to vote on their attendee cards, which will be collected once the poll closes. I'll conduct the meeting by referring to the resolutions in the PowerPoint presentation behind me. Should any member have a question with regard to any of the motions being considered, there will be an opportunity to ask prior to the voting on each resolution. I now refer to those matters set out in the notice of meeting. I should also note I'm going to read the first one in full from my script and will then move through the others in short form. The first item of business today is to receive and consider the financial report, directors' report and independent auditor's report for the financial period ended 31 December 2023. I wish to advise that a copy of the company's annual report for the period ended 31 December 2023 was lodged with the ASX on the 29th of February 2024 and sent to those shareholders who requested a hard copy. A copy of the company's FY '23 annual report is also available for download on the company's website, and we also have copies here today. Please note that Mr. Neil Ediriweera from KPMG, the company's auditors, is also present today, if you have any questions for him -- you can put your hand up -- here he is in the front here. We're not required to formally adopt these reports. However, I invite any discussion or questions in relation to the company's annual financial statements. Are there any discussions on this matter that anyone would like to raise? Yes.

My name is [ Greg Kotlin ]. I represent the Australian Shareholders' Association. So today, I represent -- sorry. We have 10 proxies that I'm representing, and I'll be voting 244,941 open shares. Just for the record, I'd like to let you know that at this stage we expect to be voting those shares in favor of all of the motions. I don't have a particular question to ask.

Okay, thank you, [ Greg ]. Is there any other further discussion points? If not, I'll now move on to the next item, the remuneration report. I inform the meeting that explanatory notes accompanying the notice of meeting and the company's financial statements provides the background and details of the remuneration report. I now move the motion to consider and, if thought fit, to pass, with or without amendment, the resolution as shown on the screen as an ordinary resolution. Please note the key management personnel of the company, including directors and their closely related parties, are excluded from voting on this resolution, as set out in the notice of general meeting. Also, in accordance with Section 250R(3) of the Corporations Act, this resolution is advisory only and does not bind the directors of the company. The slide behind me shows the details of votes received by proxy. The directors unanimously recommend that shareholders vote in favor of adopting the remuneration report. I now invoke discussion of that motion. If there's any questions, please advise. Voting on this resolution will be held over until the conclusion of the final item of business, to allow the poll to be conducted. I'll move over to item 3, which is the election of Dr. Vivienne Brand. More background can be found in the explanatory notes. And I'll now move to motion; and to consider, if thought fit, to pass, with or without amendment, the resolution as an ordinary resolution that Vivienne Brand, having retired as director in accordance with Clause 17.3 of the constitution and for all other purposes, be reelected as a director of the company. The slide behind me shows the details of votes received by proxy. Each of the directors other than Vivienne, who abstains, recommend shareholders vote in favor of the resolution. I would now like to invite any discussion of this motion. Voting on this resolution will be held over until the conclusion of the final item of business, to allow poll to be conducted. I'll now move to item 4, reelection of director, Mr. Stephen Duerden. Again more background can be found in the explanatory notes. I now move the motion to consider and, if thought fit, to pass, with or without amendment, the resolution as shown on the screen as an ordinary resolution that Stephen Duerden, having retired as director in accordance with Clause 17.3 of the constitution and for all other purposes, be reelected as a director of the company. The slide behind me shows the details of the votes received by proxy. Each of the directors other than Stephen, who abstains, recommend shareholders vote in favor of the resolution. I would now like to invite discussion or questions of this motion. Voting on this resolution will be held over until the conclusion of the final item of business, to allow the poll to be conducted. And then I'd now like to move to item 5, approval of the previous issue of shares. Again more background can be found in the explanatory notes. I now move the motion to consider and, if thought fit, to pass, with or without amendment, the resolution, shown on the screen, as an ordinary resolution. Please note the company will disregard any votes cast in favor of this resolution by or on behalf of persons who participated in the issue of shares and/or associates of those persons. The screen is showing those votes received by proxy. The directors unanimously recommend that shareholders vote in favor of the resolution, and I now invite any discussion or questions on this motion. Voting on this resolution will be held over until conclusion of the final item of business, to allow the poll to be conducted. I'll now move to item #6, appointment of the auditor. Again more background can be found in the explanatory notes. The company appointed KPMG as its auditor when it listed in 2016. While the Board has been very pleased with the services provided by KPMG over the last 7 years, the company has now elected to appoint Grant Thornton as its auditor from FY '24. I now move the motion to consider and, if thought fit, to pass, with or without amendment, the resolution, shown on the screen, as an ordinary resolution. The screen is showing these votes received by proxy. The directors unanimously recommend that shareholders vote in favor of the resolution. And I would now like to vote -- to invite discussions or any questions on this motion. Voting on this resolution will be held over until the conclusion of the final item of business, to allow the poll to be conducted. I now move to item 5 (sic) [ 7 ], approval of the 10% placement capacity. Again more background can be found in the explanatory notes. And as the approval of 10% placement is a special resolution, I note that, in order to pass, it requires the approval of 75% of the votes cast by shareholders on this resolution. I now move the motion to consider and, if thought fit, to pass, with or without amendment, the resolution as shown on the screen as a special resolution. The screen is showing those votes received by proxy. And the directors believe that this resolution is in the best interest of the company and unanimously recommend that shareholders vote in favor. In particular, the ability of the company to issue new shares under the 10% placement capacity will enable the company to issue shares in circumstances where it might otherwise be subjected to the costs, delay and uncertainty of having to go back to shareholders for approval. The additional flexibility and speed to conduct capital raising will better position the company to pursue its interests in the prevailing market conditions. I should mention here that, should this resolution be passed, it doesn't necessarily mean the company will raise capital, in line with the resolution. The screen is showing those votes received by proxy. The directors unanimously recommend that shareholders vote in favor of the resolution, and I now invite any discussion or questions on this motion. Okay, we will now vote on all the resolutions included in the notice of meeting. I appoint the Computershare representative, [ Ms. Gemma Kosha ], to be the returning officer and to conduct the poll. [ Gemma ] has power to co-opt as her agents members of her staff and staff of the company. Over to you, [ Gemma ].

Good afternoon. Firstly, if there is any person present who believes they are entitled to vote but has not registered to vote, would you please raise your hand for assistance? The persons entitled to vote on this poll are all shareholders, representatives and attorneys of shareholders and proxy holders who hold blue admission cards. On the reverse of your blue admission card is your voting paper and instructions. I will now go through the procedures for filling in the voting papers. Proxy holders who -- have, attached to their admission card, a summary of proxy votes which details the voting instructions for business items [ on the ] appointment documents in your favor. By completing the voting paper when instructed to vote in a particular manner, you are deemed to have voted in accordance with those instructions. In respect of any open votes a proxy holder may be entitled to cast, you need to mark a box beside the resolution to indicate how you wish to cast your open votes. Proxy holders should refer to the summary of proxy votes form attached to your voting paper for further information. Shareholders also need to mark a box beside the resolution to indicate how you wish to cast your votes. Please ensure you print your name where indicated and sign the voting paper. When you have finished filling in your voting paper, please lodge it in a ballot box which will be circulated to ensure your votes are counted. If you require any assistance, please raise your hand. Would you please indicate, by raising your hand, if you require more time to complete and lodge your voting paper... [Voting]

Okay, back to you, Brendan.

Thank you, [ Gemma ]. Can I just reconfirm that all the votes have been cast? If anyone has still got their voting card, please let us know. It doesn't look like it. Okay, I now declare the poll closed and formally charge [ Gemma Kosha ] as returning officer to count the votes. The votes will be tallied, and the results will be placed and available on the ASX announcements platform following this meeting. Okay, so we'll now look to take some questions from the floor. And can we please ask that you start your name prior to asking the questions? And our team members are walking around with the microphones. So we'll move over to any questions.

My name is [ Colin Pilcher ]. And this is just a personal view of my -- and the dividend reinvestment plan is somewhat generous, okay, which I take advantage of to its fullest extent. The only question I'm asking is the money you collect. I'm, we're hopeful that you're using it to the best interest of the shareholders and actually furthering the usefulness and the strength of the company. That's what I'm on about, that you don't just collect the money and do nothing with it. Do something positive with it to improve the shareholders' value.

Yes. It's a good question. Thank you, [ Colin ], for asking. Lachie Campbell, would you like to respond to that one?

Sure.

[ This way ]. Or you come up here, yes.

Thank you for the question. So we sort of ask ourselves: We have $1. Where are we best placed to spend it? So we can do several things with that $1. We can retire debt. We can buy more water entitlements. Or we could buy back our own shares, for example. So the example that you've given with regards to the DRP, what are we doing with the cash? Well, at the moment, we utilize that cash to offset against our debt facility, which saves us around about 5.75% as an interest rate, but it also provides us with greater flexibility in terms of building out more capability within our balance sheet so that we have more ability to buy well-priced water entitlements when we believe the time is right for the right asset in the right zone.

Thank you. [ We'll just go ] one at the back. And then we'll come to [ Peter ], yes.

My name is [ David Hall ]. Recently I read a newspaper article that says Israeli scientists have perfected a way of extracting water from air. Putting the current situation to one side, my question is this. Given that Israel is a world leader in water use, do you have any links at an academic level with any of the leading people in the universities over there?

I might throw this one again to you, Lachies, from an operational side of things.

Not specifically, to answer that question in short. I'd be happy, for any of the other directors, if they have any viewpoints on that topic, to share their thoughts.

Is this working?

[ Yes ]...

It's a really good question. So I think one of the jobs of the Board is to keep an eye on the long horizon as well as the short horizon. And research in relation to efficient water use is a topic close to all of our hearts. It's something the company cares about a lot, so I think those are the kinds of things we've got in the back of our minds at all times but no formal links at this stage.

Thank you. Okay, [ Peter ] has got a question [indiscernible]. Thank you, [ David ].