By building a better beef program and improving on the quality genetics that we possess, I indicated that we would involve dedicated and targeted programs for our best bulls and our best cows, helping us breed and grow animals with traits that ultimately produce more desirable meat and other qualities for our customers. I flagged that we would strategically invest in opportunities with key partners that can help us build our market-leading positions and innovate for the future. As I've said for some time since I've been on the board, the two areas that this company has a significant competitive advantage in are marketing and innovation, and we want to develop those to the fullest.
As we possess pastoral assets and properties that are recognized as being amongst the highest quality in the world, I explained that our strategy would leverage their size, scale, and location to pursue new opportunities and new revenue streams. I also talked about a review of the Livingston Beef Facility, a review that's ongoing, but we anticipate it reaching a final stage in the very near future. What I've just re-shared about our strategy refresh will sound familiar to those who joined Managing Director Dave Harris and Chief Financial Officer Glen Steedman for the full-year results call in May. During that presentation, Dave and Glen referred to three strategic focus areas: better beef, partner and invest, and unlocking the value of the land. Better beef is how we refer to those dedicated and targeted cattle programs that I spoke of and continued to development of our brands.
Partner and invest is how we view developing those strategic opportunities with key partners to solve problems for AACo, but also the broader agricultural community. Unlocking the value of the land is the way we realize the opportunities which can be unlocked from our spectacular pastoral assets and properties. There are three streams of work that will become the foundation of activities in the foreseeable future. Whilst the shift in strategy might appear subtle, indeed the fundamentals remain the same, with nature continuing to lead our ambition and cattle production remaining at our core. I can assure you that the opportunities are significant and potential benefits equally so. We are already delivering in some of these areas. For example, our first soil carbon project was registered with the regulator during the period, as well as being another demonstration of our efforts to be more sustainable and produce nature-led beef.
It is just one of the potential ways we can unlock the value of our land. Let me say, that project is not an experiment. It's big enough, and several thousand acres of land are being put under that so we can see that this works at a commercial level or how it works at a commercial level. Of course, many of the opportunities under these strategic focus areas will take some time to realize. Anyone familiar with agriculture knows that this industry comes to life in cycles over time, whether they be climatic patterns and rainfall, breeding programs, political terms, or even consumer preferences. Changes on our properties or in our supply chain can also take time to bear fruit through improved productivity and efficiencies. To realize our ambitions, we can't just look one, three, or even five years into the future.
We have to look beyond that because the life cycle of an animal in our business is three years from the time it's conceived to the time it reaches a plate. That alone shows you just the cycle times that some of these things take. We have to look beyond that, which is what we have done with this refresh and our strategy. While we remain firmly fixed on extracting as much value out of our operations and our extraordinary people, land, and animals, we also need to undertake work across our operations to help set us up for the future. It's an approach that's served us well over time, more recently with the expansion of the Gannu Feedlot property, a decision that has quickly provided tangible proof of the value that can come from investing in the business.
An increased supply from the first full year of expansion helped offset price challenges during this period. Going further back, it was focusing on the future that first drove us to the move in premium beef and prompted the purchase of the Westholme Wagyu herd in 2006. That move into branded beef almost 20 years ago has demonstrated its success now many times over, most recently in this year's full results that I spoke of earlier. The 2025 year was among our best operating outcomes, with the highest operating profit and second highest operating cash flows since 2007. Even more pleasing to the board, though, is the trend of those results, with the FY 2025 being the third consecutive full-year operating profit above $50 million.
Notwithstanding the various challenges in recent times, from flood and drought to the COVID pandemic and a range of other macro and geopolitical considerations, consistency in our strategy and approach to date has enabled us to produce steady and pleasing outcomes. When combined, the consistency in company performance to deliver and execute by the management team and the benefits that we're seeing from our investments give the board confidence now is the right time for the strategic refresh I've spoken about. We see a potential through this refresh that lies beyond what we have achieved to date. Our aim should always be to strive for more and that is where we are going.
With that in mind, we are also firmly of the view that now is the right time to continue making those big investments that we require in order for our new strategic focus areas to realize success in the future. AACo's business investment surpassed $31 million in 2025, which went towards a range of initiatives and activities across our property, including station facility upgrades, fleet optimization, conductivity, completion of our solar bore program, and the expansion of our feedlot capacity. This level of investment is why we have a positive operating cash flow, but a negative free cash flow of $11.9 million. This approach to investment is why we will not be paying a dividend for the 2025 financial year. Investing cash outflows reflects the board's continued focus and investment in optimizing programs for the future.
We also delivered on the commitment the company made in previous years to build long-term resilience and strengthen the supply chain for the future. We are buoyed by the opportunities for further investment, particularly connected to those strategic focus areas. While Dave will talk more about those strategic focus areas and our operating environment shortly, it's worth pausing for a moment to reflect on a matter that is on everyone's minds, and that is in US tariffs. Earlier, I talked about the evolving market and trading conditions, and this is yet another example. We are treating and working to respond to the latest headwind, whatever that might be, with the same level of determination that we have other market-based challenges in recent years, and of course, COVID was a massive one. The situation regarding tariffs is fluid, both in the U.S.
and with respect to how that impacts the supply and demand dynamics of other markets that we operate in because we are operating in a world market. We will continue to monitor the circumstances and respond as appropriate, leveraging the strong presence that we have in our global markets, along with our distribution relationships and product allocation strategy. As well as a refresh strategy, we'll enter year 2026 with a refreshed board, with the appointment of Nicole Sparshot. Nicole replaces Jessica Rudd, who retired recently. I certainly want to thank Jessica very much for her service to the company over the years. She's been a very valuable contributor to the board and the many difficult discussions that we've had on the board. I certainly want to thank Jess for all the work that she did and her support for the company, myself, and the board.
Just as a business considers the capabilities it requires to achieve its objectives, the same is true with the board when we make the opportunities to do so. A range of factors are considered in appointing new board members, including appropriate skills and, of course, diversity. Nicole's appointment brings new skills and expertise to the board that will serve us well in the next chapter, whilst maintaining the level of diversity that we've had in recent years. I look forward to working with Nicole, along with the rest of the board, in 2026. I also look forward to seeing that all your business can achieve in 2026 and beyond. I want to recognize the entire leadership team and all employees who helped us deliver for you every day with what they produce and the pleasing results that we had in 2025.
The board remains committed to the success of the company. We are united with the executive team leadership as we move into our next century of operation, refreshed and ready to build on AACo's rich legacy. Thank you very much, and I'll hand over to Dave Harris, our Chief Executive Officer, to give a more detailed report on the business.
Thank you, Mr. Chairman, and good morning, everyone. It's a pleasure to join you here today at the Australian Agricultural Company 's 2025 Annual General Meeting. To everyone joining online and here in the room, welcome and thank you for your support over the past year. Financial year 2025, like the Chairman just mentioned, was a milestone year for this company, both in celebrating our 200th anniversary and taking the first significant steps into the next century through refreshing our strategic focus areas. This company's 200th year of operation was celebrated by groups of people across Australia in the past year, honored by the country's leaders, recognized in numerous media reports, and became another source of pride for employees here and around the world.
In May 2024, we were even joined by the Prime Minister, Anthony Albanese, along with around 400 other guests at a special lunch celebration at Beef Australia in Rockhampton. AACo's arrival in Australia was effectively the beginning of large-scale corporate agriculture for Australia. As the country's oldest beef and cattle producer, it is wonderful to celebrate with the industry. It was also an opportunity to share more about the company and its history, something I had the pleasure of doing with a range of audiences throughout the year. While each audience was different, whether it be the Northern Territory Cattlemen Association Conference, the Australian Wagyu Association, or Queensland's Rural Press Club, the sentiment was similar on each one of those occasions. While AACo itself has gone through many changes over those 200 years, the foundation of who and what we are remains the same today.
It is our people, our land, and our animals. Staying true to who we are has enabled us to weather the many challenges that we have focused on and had to face throughout that time, and that we will continue to come up against in the future. That desire to remain authentically AACo was front of our mind as we refreshed our purpose, our vision, and our values in FY 2025, alongside the strategy refresh that the Chairman spoke to earlier on today. Our renewed purpose, reimagining Australian agriculture to share with the world, reflects AACo's desire to think beyond what is possible today, to challenge assumptions, and to create a real difference to the world of agriculture. I think it's fair to say that AACo has been doing this and pushing those boundaries over the course of its history.
It is fitting we step into the next period of our growth with this purpose. Our vision for the future is to be the leading food and agricultural company delivering nature-led solutions at scale. This defines our ambitions to leverage our scale, to innovate, and to lead, with a continued focus on nature and sustainability across the entire supply chain. While the need to manage the land productively has been at AACo's core throughout its entire existence, the importance of doing so may never have been greater than it is today. Our three new values: to be curious, be generous, and to own our impact were developed by the people within the organization to help guide and drive how they show up and how they contribute to the business every day.
As I said in the full-year presentation earlier on, we will be a purpose-led and a values-driven organization as we continue to unite across the entire company and achieve our vision and embark on the next stage of our growth. We are entering that next period on the back of a pleasing year as we posted operating results that are amongst the best in recent times. FY 2025 was the company's highest operating cash flow and second highest operating profit for some time, as the Chairman mentioned earlier. The operating profit of $58.4 million w as up 7.3% compared to the prior period, and the operating cash flow of $27.1 million was up almost $18 million on FY 2024.
Both the operating profit result and the operating cash flow were achieved by using higher sales volumes to offset some of those challenging global meat sales and market conditions, supported by a disciplined approach to managing costs across our supply chain. Alongside increased revenue, which was up around $52 million- $387.9 million for the period, these operating results are the best indication of AACo's performance and progress. The statutory net loss after tax of $1.1 million in FY 2025 was a $93.5 million improvement on the prior period, driven by an improved mark-to-market value of the herd compared to that prior period. As we've indicated in previous periods, the statutory outcomes include those mark-to-market movements, which are largely unrealized and generally outside the control of management. They have limited connection to our day-to-day operational performance, which is why we emphasize operating results as the best indicator of our progress.
Particularly pleasing for me as the CEO of the business is how we further demonstrated our resilience to achieve these positive operating results. Years of planning by management, the way that we have established our supply chain, our in-market presence, the strategy we've used to allocate our Wagyu product around the world, all put us in the best possible position to respond to these challenges as they arrive. That served us well through FY 2025 as we faced dynamic markets, evolving trade conditions, price pressures in our key regions, supply and demand constraints, and a global economy and consumer sentiment still recovering after a number of years of both high inflation and generally low confidence. AACo was able to remain agile to respond to these challenges quickly and appropriately with greater volume sold, supported by a disciplined approach to managing costs across the supply chain.
AACo's herd remained largely stable for the period at around 456,000 head. I think this is a really noteworthy point when considering our meat sales volume increased 21% compared to prior period, and cattle sales volumes increased 38% to PCP. Being able to maintain our herd size at the same time as increasing both our meat and our cattle sales volumes is a further sign of stability and one of the benefits of having control of our cattle move through that value chain. While we've been impacted by external factors, including the numerous droughts and floods that I've spoken to you about earlier, we also now have an increased level of sophistication and planning across the supply chain with an even better understanding of that supply chain and the requirements and the drivers in our markets, which then give us the ability to respond accordingly.
This is what I meant when we talked previously about herd optimization, being able to grow, manage, and then adjust our herds and the rates and the levels that we're optimizing both from a market perspective and from a strategic perspective, and then the effect that those have on our properties. That approach helps us underpin the better beef strategic focus area that the Chairman spoke to earlier. Our FY 2025 financial performance was supported by both increased meat and cattle sales volumes, as I said before, which helped us offset those significant global market and price pressures. The Wagyu beef sales price per kilogram was down 10% on PCP, impacted by those challenging market conditions for the first half, including most significantly the prolonged herd liquidation in both the U.S. and in the Korean domestic markets.
Much of that price movement came in the first half of the year before the average beef sales price improved for the second half, as supply dynamics and global inflationary pressures started to ease. In fact, as we noted during our full-year presentation in May, market reports indicate that local beef supply is expected to contract in some of AACo's key markets, particularly the U.S., where that drought-fueled herd liquidation appears to have reached its conclusion. Of course, as the Chairman spoke to you about earlier, global market dynamics remain fluid, with the US tariffs adding another layer of consideration as we execute our better beef program. We are keeping a close eye on how that situation evolves, both in the US market and then how it influences other markets around the world.
Our integrated supply chain positions us well to respond to these movements, including where local supply may contract and demand for Australian beef may increase, as well as where opportunities might change in response to the tariffs. It is, though, the same approach to what we took in FY 2025, responding to the challenging conditions by strategically allocating and moving products around our global markets, and then executing on a range of different marketing programs and initiatives to help protect price in those key regions. There was a 9% overall increase in sales value across AACo brands for the period: Westholme, Darling Downs, and the newly refreshed ADEN24, with new branded menu placements in established restaurants and expanded offerings in gourmet marketplaces, amongst some of the highlights. Westholme successfully launched its new positioning, nature-led Australian Wagyu, supported by some really unique activations in key markets globally.
While food service pricing in some of Westholme's key markets was impacted by the inflationary pressures and that increased local supply, the period was used to position the brand for future growth opportunities. In-market education and marketing support helped establish the nature-led positioning, which reflects Westholme and AACo's desire to keep nature as the foundation of its premium beef production. Darling Downs continued to experience growth, with targeted promotions and in-store brand activations supporting this well-known brand, which is now found in 134 different locations across Korea. That contributed to a 19% increase in volume and enabled the brand to maintain a strong presence in its market, despite the increased supply of Hanwoo product domestically. The brand's footprint also expanded across Asia, now available in an increased number of locations here in Australia as well.
FY 2025 was the first full year of our relaunched brand ADEN24, which honors the 200-year history of this business. We're pleased with how ADEN24 is being received in the market with increased value and volume. The brand also achieved a 9% increase in price, which demonstrates its potential and continues to establish itself in Australia and gain momentum internationally as well. The brand we think will play a really important role in our market mix, capturing volume that was previously excluded from the Darling Downs and the Westholme brands. We're extremely proud of our brands and our cattle at the foundation of the consistent, high-quality beef that we're able to produce and our expansive properties that nourish and help our cattle grow, as well as the people that help manage all of this.
The properties in particular have been the focus of significant business investment, supported by higher operating cash flows that I spoke to earlier. As the Chairman said, we spent more than $31 million in a range of activities across the supply chain, including upgrading station facilities, a program to optimize AACo's substantial fleet of vehicles and machines, improved connectivity infrastructure across our remote properties, and our solar bore program, which has been a good example of our desire to be more sustainable. Our broader sustainability initiatives are also included in this investment. The work we undertake in this really important area is significant, and the activities are now more embedded across operations, as well as the BAU activities within the business.
As well as these things, such as the involvement in the beef cattle herd management scheme that we've spoken about previously, we also undertook a significant amount of work mapping our connection to nature, further demonstrating our desire to contribute to nature and a positive future. You may have noticed this year, for the first time, we released our sustainability information, including highlights and metrics within our annual report. This change in how we report on sustainability is in line with how we integrate ourselves and our sustainability initiatives throughout our operations. As custodians of close to 1% of Australia's land mass and one of the largest cattle herds in Australia, we understand the impact that we can have on climate and nature, and we understand the responsibility to continually enhance our reporting on this. We encourage you to take a read and welcome any feedback on the updated report.
The optimization programs that I spoke to earlier deliver on the commitments the company has made in previous years to build a long-term resilient business and to strengthen that business for the future. AACo will continue to make investments in line with our new strategic focus areas: building better beef, partnering and investing, and unlocking the value of the land. You would have heard me talk previously about AACo's three principal activities, which are focused on maximizing the potential of our assets. Firstly, the marketing and distribution of high-quality branded beef into global markets. Secondly, the breeding, growing, lot feeding, and trading of our animals. Lastly, the ownership, operation, and development of the amazing pastoral properties that we are fortunate to have stewardship over today. Our principal activities have been core to who and what AACo is for the last 200 years, and that won't change.
With those refreshed strategic focus areas, along with our new purpose, vision, and values, AACo is poised for a new era of growth and opportunity. We are mindful that challenging market conditions may persist, and we are well prepared to respond as required. However, the company's management looks forward with optimism, supported by passionate teams of people across the world. Thanks again to the entire company, our employees, the executive team, the board for their dedication to this business through FY 2025. Thank you to shareholders again for your continued support. Thank you.
Thanks, Dave. I'll now outline further procedural matters for the meeting. There'll be an opportunity for comment and question in respect of each item of business. After receiving the microphone, you're requested to please identify yourself and confine your questions or comments to one minute, in fairness to all shareholders. I shall be reasonable and flexible in approach, but will request speakers to wind up their remarks if they become, excuse me, overly extended. Note that not all questions are guaranteed to be answered during the meeting, but we will do our best to address as many as possible. If any questions asked during the meeting have already been answered in the materials released to the ASX, we will not answer that question during the meeting, but will instead refer shareholders to the relevant ASX announcements.
Thank you to those shareholders who took time to pre-submit questions via our share registry, MUFG. I keep having to remember how to say that as distinct from last year. Where we have received similar questions on the same subject, we will consolidate these questions into one where one answer will cover to answer all those questions as best we can. After each item of business, we will start by firstly addressing any pre-submitted questions. We'll then move to addressing questions from the shareholders attending here and in person. I just want to go through the voting process, and then we'll go to the various parts of the report and questions. I briefly summarize the voting procedures, which will apply to this meeting. In accordance with AACo's legal and regulatory requirements, the results of voting, including proxy voting, will be released following the AGM.
The company believes this approach encourages broader shareholder participation and supports debate and engagement from all investors. Each resolution will be conducted as a poll. As shareholders are aware, no formal vote is required on item one of the agenda. A poll will be conducted on the remaining two to six items. On entering the meeting, shareholder representatives, attorneys of shareholders, as well as proxy holders, should have received a yellow voting card. Relevant voting instructions on all resolutions are printed on the voting cards. I encourage shareholders and their representatives to complete their voting cards after each item has been discussed. However, voting cards will only be collected at the conclusion of discussions of all items of business. The votes simply place a mark in one of the four against or abstain boxes for each motion.
If you mark the abstain box, your votes will not be counted on that motion. If you wish to cast some votes for the motion and some against, simply mark the actual number of votes or percentage for or against. Your vote will be invalid if the total shareholding vote shown in the for and against and abstain boxes for the motion is more than your total shareholding for the share on the share register. If relevant, please indicate whether you'll be voting as an attorney or representative. At the time of voting, if you're uncertain about any of the voting procedures or require any assistance, please raise your hand and a representative from MUFG Corporate Markets will be happy to help you.
At the conclusion of the meeting, please ensure that you have marked all votes for the respective resolutions and give your completed voting cards to the representatives of MUFG Corporate Markets. I appreciate that some shareholders may have to leave before the end of the meeting. I therefore formally open the poll for voting on each of the relevant items for the business. With the poll on these now open, if you need to leave early as possible, lodge your votes by providing the completed voting cards to MUFG. This doesn't mean that you have to vote now. You can wait for the discussion on each item and then vote. Following discussion of all items, shareholders will be given a reasonable time to complete their voting cards and then give their voting cards to MUFG. After this time, I will announce the poll closed.
I will now outline the procedure for proxy votes. Shareholders had the opportunity to apply to appoint a proxy prior to the meeting. If you have already sent in your proxy forms, you do not need to vote again. If you are a proxy holder by law, if you exercise your right to vote as proxy, you must vote in accordance with any instructions given to you by the relevant shareholder. Subject to the restrictions set out in the voting exclusion statements and notice of meeting, any undirected proxies on a given item may be voted by the proxy holder as they choose, with some votes on the motion, some against, and some abstaining if so desired. Any proxies that are not voted at the meeting will be automatically default to me as Chair of the meeting.
In respect of any directed proxies that default to me as Chair, I'm required to vote those proxies as directed by the shareholder. Subject to any applicable voting restrictions in respect of any open proxies that have been received by me as Chair of the meeting or any of the directors, those votes will be lodged in favor of each resolution. I'll now outline the procedure for counting. Your votes will be counted by personnel from Share Register, FUFG, and Corporate Markets. After the meeting closes, the results for each poll will be announced via the ASX as soon as possible after this meeting, and will also be displayed on our website. Before I go into the next round of items of business, I'll open both my address and Dave's address for questions. Yes, we have one here. We have the microphone.
Good morning, Chair. I appreciate a few lady-made comments, but one being done here. It's allowed under the Corporations Act, just because we're aware.
Would you just identify yourself for the room? Thank you, Dave.
Congratulations on a long and distinguished career. However, in the 15 years you've been Chair, sadly, there has been zero sole shareholder return. Fifteen years ago, Chair, when you became Chair, in the annual report 15 years ago, you stated, "The company has now turned the corner and is embarking on a new era of profitability and growth." That hasn't happened, Chair. There's been zero share price growth in 15 years and zero dividends. What's gone wrong with AACo? It covers six and a half million hectares. It's around 1% of Australia. It's half the size of England and only slightly smaller than Scotland. At its current share price of $1.40 and adding its debt, it has an enterprise value of near $1.3 billion. That's about the same value, Chair, as the top 10 houses in Sydney, not a huge amount of money for 1% of Australia.
As you say, the company's had a 200-year history, but unacceptable return for 15 years. This year's annual report states, "We're setting the foundation for future growth, generating resilient results." Given the lack of growth in share price, can shareholders have any confidence in that statement, or is it just a trite platitude? AACo briefly got to $3 around 2008. In 2022, Andrew Forrest paid over $2 a share to Hadesbury, but the shares are now $1.40. Let's look at the NTA, Chair. It's increased in the last year from $2.51- $2.55. The AACo shares are trading at a massive 45% discount. There's $1.54 billion of shareholders' funds in the balance sheet, but the market cap is a poor $850 million. Chair, that's a deficit of $650 million. Let's look at the earnings. Overall, the directors and management have delivered a poor return. The overall results are feeble.
In the last five years, the average statutory result share is $91 million, some losses, some gains, an average of below $20 million a year, unacceptable off the shareholders' funds. Let's look at the directors. There are two large shareholders in AACo, but the directors also have a fiduciary duty to the other 6,800 shareholders. The directors need to take responsibility for the poor results. Concerningly, Chair, in the annual report, there are five pages devoted to risk management and a mere one paragraph to shareholder value. Let me read it because it's very important. Page 15. The board is committed to increasing shareholder value and during the period has completed a review of the company's strategic direction. The strategy development involves various alternative areas for value generation through unlocking the value of our vast asset base. I'll come back to that as a question, Chair.
Most of the independent directors have been on the board for many years, so they can't argue that they haven't had a fair crack of delivering a return on investment. Dave Harris, nine years. Stuart Black, director since 2011. Anthony Abraham, since 2014. Neil Reisman, since 2016. Mark Blazer, 2019. Two Tavistock people recently, and then Nicole to be confirmed today. Apart from the Chair, all independent directors have tiny shareholdings of 20,000 to 40,000 shares, whereas their annual director's fee is $120,000- $160,000, so a pretty poor commitment. In my view, there's an excessive number of directors on the board. It just seems an independent directorship on this company is like a job for a decade. Let's cut to the chase. In my opinion, and I am experienced, there's been a complete failure of this company over 15 years to deliver shareholder value.
In my opinion, if the board acts in the interest of shareholders, they would do what Macquarie Bank are doing with Paraway and sell the assets, because if you can't deliver a proper return over 15 years, in my view, you should hand the keys to someone else. Yes, I understand it's a cyclical game, but that's why I've gone back, Chair, over 15 years. I've gone back to your personal statement in the annual report 15 years ago, which in my opinion, you haven't fulfilled on, because there's been, at the end of the day, shareholders buy shares for two reasons: capital growth or dividends. This board has delivered neither. Neither! There's been no capital growth and no dividend, and yet all we hear today is continuation of the same. A couple of questions, Chair. What is the target return on investment of the board and management?
Does the board apologize to shareholders for its failure to deliver a fair total shareholder return/return on investment to shareholders for 15 years? Secondly, what action is being taken as a result of the strategic review? Will the directors, who seem to be incapable to deliver any total shareholder return, move to urgently break the company up as Macquarie is doing? Thank you.
Short answer to your last question is absolutely not. This company's been around for 200 years. It's invested the long term. It's developed assets over those 200 years to where we are today, and there is absolutely no intention of breaking this company up.
As a follow-up, Chair, though, if you don't deliver a return to the people.
No, just sit down and I'll answer your questions, please. We're not having a debate in that form here, so sit.
You did say before the meeting that you were prepared to engage in some discussion.
I am, but not like this. Now sit down, and I'll answer your questions.
There are two issues here, and you've only identified one and not identified the other and where the responsibility lies for those two. There is shareholder value as determined by the market, and there is enterprise value as determined by the growth and the value of the assets. The board's role is to respond by running the company as well as we can, developing the assets, which are many and varied and with a huge amount of opportunity, which take cash to do that. It's not our proposal to pay dividends out of our earnings and then borrow significant amounts of money to develop the business in the way we do.
The object that the board has taken in all of the investments, and we do have a view about the return on the investments we make in the company in terms of enterprise value, it's not our job to determine how the share market views the value of the shares. There are a whole lot of factors that determine that, and as a sophisticated investor, you know that very well. Liquidity is a very big one, and there is not a lot of liquidity in this company because there are two large shareholders who fundamentally and absolutely support the program that we're in place. That is a program that the board supports fully and 100% to keep investing and growing the value of this business over time. What happens in the share market is a matter for the market and a matter for shareholders to take a view on.
When I spoke about that in the earlier report, you've taken it out of context to the extent that what I was saying at that time is we are changing the nature of this business from a string of separate enterprise properties running as individual properties to an integrated supply chain with the ability to market the product. The two things we looked at at the time and talked this over in great depth with our major shareholders and everyone else, the two areas that this company, because of its scale, has an advantage which no one else has got, are in marketing and innovation.
To move to an integrated supply chain with a marketing capacity, and I said at the time we would probably have to invest nearly as much money in the marketing end as we do in the properties themselves, and the properties themselves have huge potential for us to invest in. We have invested in the marketing, we have invested in the properties, we have developed the properties, and we are producing a product that is absolutely top of the market. I was in Harrods a few months ago, and Westholme is on the menu there in Australian dollars at $300 a plate, and it's one of their biggest sellers. We are producing a product which sells in the marketplace. Now, moving into that marketing approach does require effort, time, and money, and we're investing that, and I think we're doing that in a way which is returning.
We're investing in the properties. As you quite rightly pointed out, the actual underlying value of those properties has continued to increase quite significantly over that time. We do have a target. We certainly like to see any investment we make return its cost of investment in three to four or five years in that sort of timeframe. In some cases, it takes longer than that, and things like the investment in our water and fencing will take a bit longer than that. We're taking big properties like Brunette Downs, taking 100,000 acre paddocks and fencing them down into 20,000 acre paddocks. All of the yards and handling facilities were built in the 1970s with a deep, deep tech program. We need to replace those, and we're going through a program of replacing those.
There are real efficiencies in that, but there are also significant safety questions for both the cattle and the people we employ. Those are the things that we invest in, but we do want to see, and I think are seeing, a significant increase in the value of the underlying asset because of those investments. Your concern about the share market, look, I'm a shareholder. We're all shareholders. I've got a reasonable number of shares. Obviously, that's an issue to me. You know, having come from a family with nearly 200 years of our own in agriculture in this country, my family came here in the 1850s. I understand this goes in cycles. It goes up and down, and you invest in your underlying asset in order to go into the future.
Whilst I understand there is frustration on both our sides that we'd like to see the share price higher, there are a number of factors that drive that, and our job is to run the business really well, and I believe we're running it really well. Changing from a string of independent properties to an integrated supply chain was a big project. It's now been substantially completed. We have a completely new group of young people out there managing the properties today. They're incredibly impressive and understanding the things that we need to understand. Our market now requires us to be open, transparent, and consider very carefully how we run these businesses in order that they will buy our product at the sort of prices we need. That's requiring investment as well, David. Just two brief follow-throughs, Chair.
When you joined the board as Chair 15 years ago, the NTA per share was only slightly below what it is today. What's happened is that the share count has gone up dramatically in your 15 years. Secondly, Chair, we're all reasonable people. We accept it's a cyclical game. We accept CapEx is required periodically. To me, I do not know a company of such longstanding tenure that has failed to pay a dividend, I think I'm correct, for the entire 15 years you've been Chair, not one dividend. To me, that's sort of patronizing to the shareholders, and it's very disturbing, Chair.
I have been very clear right from day one. We were going to invest in this company, and that was where our resources would go. I have made that very clear to shareholders so they understood that. Obviously, the nature of the shareholding has changed now to two very big shareholders. That makes a fundamental difference. I would remind you that we had to raise capital during that process. The reason we had to raise capital is because money was being spent on dividends and on investments by borrowings, and that was not sustainable. We did have to introduce capital into the company to make that up. You need to take that into account in your calculation.
It is fair to say, though, that over your 15 years, I don't believe you've paid one dividend.
No, we haven't. I'm not arguing that.
Secondly, while the value of the assets has gone up, the share count's gone up. The actual growth in NTA per share is fairly marginal. If you look at it, and I accept your point, Chair, that there's a difference between enterprise value and share price. I accept that. It's an illiquid stock. What I don't accept is that you are continuing to go on with the same old, same old, back me for the future, another 15 years, another 200 years, and yet you're delivering a zero dividend to the people who own the company. That would be okay if the capital value was going up, Chair, but the capital value on a per-share basis is not going up. The market is clearly not accepting your strategy because it's pricing the company, I accept it's illiquid, at a 45% discount.
There's a $650 million deficit between what the auditors are signing off on as the NTA per share compared to what the market cap is, which is a huge difference, Chair. Are you going to do something about that to finally reward the people who are trusting you? You're all up there as directors acting in the interests of all shareholders, and yet in my view, you're not delivering a good outcome.
I think we have a difference of opinion, David. I've made it very clear in the board, and the two major shareholders in particular are very clear about the strategy that we've adopted in terms of running the business. How the share market responds to that is another matter, and these are matters for shareholders to make their own decisions about.
Will there be a dividend in the next three years, Chair?
There won't be a dividend this year, and that's as far as I'm telling you. When I look at the amount of investment that we have to do, we will need to almost double our feedlot capacity over the next few years as we bring more high-quality animals into the herd. We've got a significant amount of work to do. If you take a property like Brunette, if we water it properly and fully, we could probably run another 30% of cattle on that property. That will all be reflected in the underlying value of the business. That's the strategy the board has adopted. We will continue to do that. I absolutely respect the points you make, and I understand them fully, and as a shareholder, I understand them very fully.
I don't want, I've made it very clear from the start that as we make these big investments in the business, they will come out of money that we generate, not out of further borrowings, because I just don't think that works in agriculture. I've seen too many failures in agriculture. We're not in the business of moving in like Macquarie did and moving out. We've been around for 200 years, and our plan is to be around for another 200. Further questions?
Yes. He came around a long time, shareholder. The gentleman there made various comments. I don't agree with him. I respect what he said, and he expressed himself very well, probably better than I can. I have a lot of confidence in the board, and I like to see a bit of experience and long-term knowledge, and that gives me a sense of stability. I'm quite happy with the board, and I think they do a very good job, and it's always a pleasure to come to these meetings. I've only got two little questions to ask. The first one, I usually ask each year about the Livingston Beef Facility up in the Northern Territory. What's the present situation there? Will it ever start up again or whatever? The second question is unlocking the value of the company and those huge land holdings that the company has.
I worry a little bit about unlocking the value of what that really means. As the Chairman said it before, like on Brunette Downs, it means fencing off more properties into smaller areas. I can see the logic behind that. Upgrading the water facilities and so on, all that makes sense to me. I'm just wondering that under the terms of the pastoral leases, what scope have you got to, say, diverge into agricultural pursuits like growing cotton or some of those sorts of things that have been a bit controversial up in the Northern Territory? Are you thinking along those lines at all, or is it just more or less upgrading what you've got rather than going off on sidetracks?
Yeah, look, you make a very good observation about the fact that the pastoral leases have limitations. Even within those limitations, there are a lot of things that we're able to do. For instance, we've got quite a significant investment and expanding a program on Lyrian, canopy Lyrian in the Gulf Country, where we've been starting to grow crops. Under the rules, we largely have to confine that to areas that will benefit the pastoral industry. Whilst we're growing some grain there, in fact, the part of that that's been the most successful is hay production, which we can then send around to all the other properties. What we've been able to do because of the very low cost of production up there, even though there's a fair transport cost in moving hay around the properties, we're still doing that at a very successful outcome.
We're learning a lot up there, I have to say, season-wise, soil-wise. No one's done this before. It's part of the innovative approach that the company has to things, and we're prepared to take some risks around those things because in the scheme of things, they're relatively small in the totality of the business, but the potential returns are quite significant. That's quite an important one. We think there are other ways. We don't want to talk about those until the risk in this situation is, particularly a listed company, we start hairs running, and I don't think that's fair at all on potential buyers or current buyers of stock. There are opportunities, and then there are other things that we're having a look at. I mean, just the vastness of the country has some attractions. In terms of Livingston, we've been reviewing it, obviously.
The question I keep being asked by lots of people, will the live export trade continue? Of course, we've seen what's happened with sheep in Western Australia. It is a vastly different situation with cattle from the north because we're only talking about relatively short trips to different markets. You just don't know. The world is not on our side in that area, and it has to be done properly. What happens with the live export trade, what happens with Livingston, is still quite uncertain. We've been spending a lot of money each year and keeping it in very good condition so that we can either reopen it ourselves or maybe pass it on to somebody else who may be better equipped to manage it.
I think to understand, since we made the decision to build that, the strategy of moving into the high-end beef and marketing ourselves, and indeed moving the Wagyu cattle further and further north, which has surprised us all with their resilience in doing that. Livingston is much less of a strategic investment from our point of view, and we're now looking at how best to take it forward. I would be very confident it will reopen at some stage, perhaps not too far down the track, when the opportunity is there. Certainly, from an industry point of view, having that facility there, and I know there are a number of other bigger producers much more committed to the live export trade than we are, who are very keen to see that facility reopen. You made the point about the growth in the cotton industry in the territory.
What I think will happen in due course, and I have no idea when, I mean, it's fine to think you know that something's going to happen, but when it happens is another story. I think there will be a feedlot industry in the north at some stage in the future because the cotton industry does require a rotation that usually involves some feed grains in the whole process. I think the opportunity would be there at some point. Who knows what those will be? We've been thinking about all those things. We'll make a decision on the future of Livingston, I think I can say fairly soon. Everything we've been doing and will do will be to try and see that that thing reopens and continues as part of the industry in the north. Further questions? Okay, we've got, oh, sorry, one down the same.
Sorry, I wasn't looking down that way.
Thank you. Good morning, Mr. Chair. Steve Mabb. I'm representing the Australian Shareholders Association today. I've just got a couple of questions for you, following on from Mr. Kingston's comments, who I don't know personally, but we have some of the same concerns that he raised. Given the very large shareholding of our two major shareholders and yourself, a genuine question, what is the motivation to stay a public company? It seems to us that the smaller shareholders are a source of frustration for some of you. What is the reason to stay a public company rather than potentially look at another way to have this company structured long-term?
That is a good question. You probably should go back to when it was first made a public company and ask the question then. It is like a lot of these things, once you are in there, it is often not that easy to get out. How that would take place is a very good question. I do not have a view on that. We are what we are. I have a personal view on that, but that is not the way we need to run the business. We have two big shareholders continuing to buy shares, develop the holding. I certainly said about Joe Lewis that he was the only 80-year-old I knew with a 50-year plan. Now he is in his 90s. I still think he has got a 50-year plan.
I keep in touch with Tadarang with their shareholding, and they have indicated a very strong view that they support the situation now. I do not think we are in a position for a management buyout, are we, Dave, are you going to go with that? I do not think we are quite there. What happens in that respect is in the hands of the market, in the hands of the big players. Of course, it is not my job to tell them what they should be doing, or the small shareholders. Everyone has to make up their mind as a shareholder, as I make up my mind, and the other directors do the same in their personal capacity. If I had my way, there would never have been a public company. I do not think it suits, particularly in the Australian investment environment.
What is fascinating is the superannuation industry outside Australia loves long-term investments. The superannuation industry in Australia does not like long-term investments because of the structure of it. Particularly illiquid and volatile industries like agriculture are not something, and if you look, there are almost no large land holding public companies in the business. I think there is a reason for that. It is what it is from our perspective. Our job is to run this business, to do the best we can, build the value in it, and who knows what the market will do in due course.
Thank you. The second question, I know we've got some directors up for election today, which we'll ask a couple of questions here later. In terms of the ownership of the directors in general, there's lots of long-serving directors on this board that don't have any skin in the game like you do. I know you've expressed comments on this in the past, but I'd just like to put it on the table again. Is there any consideration of a change of policy here to bring yourself in line with most other large successful companies where there is a minimum shareholding requirement for long-serving directors?
We've discussed this a number of times, and my view of it is that the directors we have on this company, and we review the performance of directors and the board on a regular basis, is unrelated to their shareholding. They do their best to run this company, decide the strategy, employ the senior management, run the business on the basis of their skill and knowledge and understanding of the business. I know some companies have, I've been in companies with a requirement to have a certain shareholding. I've been in companies that haven't, and I'd have to say that hasn't had any effect on my view as to how we run the business. I'm certain that applies to the people here. The way they frame their own investment decisions is their business. What I'm concerned about is how well they contribute to the board.
We review that on a regular basis. They review me and put me through the ringer on a regular basis, entirely appropriately, if a little uncomfortable at times. I think that helps run the business. I just want directors here who know how to run this business and run it well. As you can see, we're changing the nature of the board towards more sales and marketing and that area of the business with Nikki coming in. She's an extremely experienced executive in that area. Jessica was great, but it was a bit time-focused, and she said it's the longest job she's ever held when she was with us. She's moved on to other directorships, and that opened up the opportunity to bring a new director in, and Nikki's come in, and we're delighted to do that.
It is around the performance of the directors as directors that we support their continued appointment and continued appointment to the board. Any more?
Just a few comments. Chair, the respect you referred to, no one borrows a dividend, but borrowing is not the only source of cash the company has. Since 2020, it got its total amount of operating cash flow to bank something in the order of $115 million, and over that same...
Thank you. Tell me to start again.
No, I think we can hear you, yeah. Over that same... Acoustics, you can hear pretty good, actually.
Since 2020, AACo's total net operating cash flow has been something in the order of $115 million, and since that time, $118 million has been spent on property, plant, and equipment. You are generating cash flow, but the board's capital strategy is to reinvest 100% or in some years more than 100% of the operating cash flow into property, plant, and equipment. Shareholders aren't seeing any returns on that at all, and you seem to make comments in the guise of that the market will make its own determination of the share price, and that's not within the board's control. The board does have some influence on the share price because markets are very efficient and very good at looking carefully at whether the board are good custodians of the company's capital.
If there's a capital structure that is not one that is good for the shareholders in the long term, then the current shareholders are the ones who will get penalized for that. I understand and I acknowledge the focus on the business and the operations. However, focusing on the business and acting in the best interests of shareholders are not mutually exclusive, and they never should be. I would like to see a legitimate attempt to generate a return to shareholders via dividend or a share buyback. Investing 100% of the operating cash flows into assets has shown over a number of years to be a strategy that is not delivering a return to shareholders, and in particular to minority shareholders who, unlike Joe, do not have a 50-year plan for their shareholding in the company.
Sensible capital strategies are within control of the board, and it's disappointing to not see any attempt whatsoever to close the gap between NTA per share and the share price. Thank you.
I think that's more of a statement than a question, and in support of the serious discussion we had a little while ago with David. We take all these matters into account, and we think about them very regularly and obviously make the decisions we make on the basis of the balance of all the things that we need to take account of. Thank you for the comments. I really appreciate them. Understand them, respect them. The board understands them and respects them, but we will make the collective decisions that we make on what we see as the appropriate approach, and that is to continue to grow this business. You know, the reality is there are so many opportunities to expand the value of this business that it is a long-term exercise.
Just the change in changing it from a string of single properties being sort of collectively run to an integrated supply chain has taken us nine years. That's longer than we'd hoped it would, but it has been a significant change in the business. The benefits of that are now starting to come through. The benefits of moving into the higher value product, the opportunity of having more Wagyu genetics through the business over the next few years, which will then require us to have more feedlot capacity and more marketing capacity, all of which require significant investment. What I will try and continue to try and do is explain to everybody that that is the strategy of. Following,
That is the way we'll be doing it. We will not be increasing debt. I mean, it goes up and down a little bit, and the NTA goes up and down a bit because often that's reflected in the cattle prices, which can go up and down quite a lot. Land prices, not so, much more stable, but cattle prices do go up and down quite a lot. All of those things are there that we take notice of. I absolutely hear what you say, absolutely hear what David says, and you're not the only ones who've expressed this view to me, I can assure you, and certainly we don't dismiss it. I also want to make certain that shareholders understand the strategy, where we're coming from in running the business, and the possible outcome, the more likely outcome of that in at least the foreseeable future. Any more questions?
Yep, go.
Just a follow-up question. Just to clarify, you're saying that going forward you feel like a permit capital strategy is to continue to reinvest 100% or more of the operating cash flow and have no regard for anything else that could be done that might generate a higher return for shareholders?
We will look at all those opportunities. I mean, when we think about doing a feedlot expansion, we look at what's the likely return of that to the business, and we'll do that with... The one thing I will say, though, is we're not in the business of selling land. That is not something... Unless, you know, we may swap one property for another or something if that's more appropriate. We've been building this land since the million acres of New South Wales that George IV granted to us. We've done it in a way which I suppose you need to think about the history. We've always been moving outwards. We've always been moving into new areas that required significant investment. That's what the company has been doing. Now, we've kind of reached the stage where we can't go further.
The Timor Sea is a bit of a problem in terms of going further away. The land we have, these big pastoral areas, are so undeveloped in so many ways. The great thing about it now is that we understand the nature-led part of the business. How can we develop these properties in a way that gives us more capacity to produce more animals and make greater value in the business without damaging the quality of that land? Indeed, a lot of what we can see that we can do is, in fact, improve the value of the land in the way that we do it. That is the approach. We will consider if there's something appropriate that comes along that gives us another opportunity, we'll have a look at it. We have a very...
I mean, we've laid out in the strategy refresh the areas we're looking at, where we're going, and we'll continue down that path. We'll always be looking at other opportunities. Yeah. Go ahead, David.
Thanks, Chair. I respect what you said earlier, that the share price is one barometer, but underlying value is perhaps a clearer one.
I think it's different.
I did take the opportunity to go back to the 2010 annual report while you were talking. It shows that the NTA per share in 2010 was $2.24. The shareholders' funds were much lower, but the share count was much lower. Your finance people can check that, but that's my calculation.
Yeah, no, as I said to you, Dave Harris, we had to borrow some money. We had to issue capital at that stage. We were confronted by a situation where some bad decisions were made in the lead-up to then, and we had to recapitalize.
Okay, nice.
You're quite right. I mean, that was something we had to do, and that had an impact.
Okay. What that means, Chair, is that over 15 years you've been Chair, the NTA has gone up from $2.24- $2.55. There's been zero dividends. We don't need a calculator. It means the total...
Yeah, look, you've made that point, David. I'm happy to have another question, but you've made your point. You made that point very strongly and very clearly, and it's well heard, and I've made an answer to it. I don't think we need to go over it again.
I clarified, though, because I went back to the report because you were uncertain. I thought it was useful to clarify what the NTA was 15 years ago.
Sure.
The total shareholder return's been 1% per annum.
Did you subtract the capital we had to raise from that to work out how that took it?
You only raise capital, Chair, if there's a return on investment. You don't raise it just to blow it away.
True, you start from a certain point. That point was where we had to raise capital, and it has gone on from there. It's certainly set us back in terms of the number of shares that you were dividing the total capital by in terms of the NTA. That's a fairly simple calculation. I haven't got it in my head, but it's there. I think you need to acknowledge that in the analysis that you've done.
Just one quick question. Is this a chronically flawed business? We understand it's cyclical. We understand it's challenging. If you're a very capable guy, a very distinguished career, but in 15 years, 1% TSR, does that mean that the company is in a chronically flawed business?
It's in a different business. I wouldn't say it was chronically flawed because if you look at the people who invest in this business, in the industry, there are some very, very capable and smart people who keep investing in the beef industry in the north. I would completely reject the concept that it's fundamentally flawed. Any further questions? Okay, we'll press on. The next item is the financial reports and the auditors' report. The first item of business in the notice of meeting is to consider the financial statements and reports. I now table the Directors' statutory report and the financial report of the financial year, 31 March 2025. The independent audit report on the financial report is item one of your notice of meeting. These documents are made available to shareholders. The financial statements and reports are placed on the agenda for comment only and questions.
There is no voting on this item. Please note that Scott Goose from KPMG, who oversaw the conduct of the audit, is present. Any shareholder may direct questions to Mr. Goose, which are relevant to the conduct of the audit, the preparation and content of the independent audit report, the accounting policies adopted by AACo in relation to the preparation of the financial statements, and the independence of the auditors in relation to the conduct of the audit. I'll start by addressing some of the pre-submitted questions which have not already been covered in the speeches. In the interest of brevity, there were several questions from shareholders which were all similar in their approach. We'll answer the questions in combination and choose the answer which covers best the majority of those questions.
Would you believe we'd had questions regarding the share price, which I think we've covered very significantly in the question, and I do appreciate the effort that went into studying those questions and asking those questions on behalf of all the shareholders. Are there any further questions on the audit? David?
Thanks, Chair. I've got a question for the auditor. Make sure they earn their money. Don't overthink it.
Bear in mind the rules about what questions you can ask them, and I'm sure as a sophisticated investor, you understand what the rules are.
Thank you. It cuts to a key issue, NTA of $2.55 a share. There's basically two ways you can value properties: on a comparable sales basis or alternatively on a discounted cash flow basis. I'd just be interested in the auditor's assessment as to whether the underlying value of the properties is fair. Have you reviewed it closely? Are you focusing more on a DCF valuation basis or on a comparable sales basis? At the end of the day, the underlying cash flow from the assets is pretty meager, whereas the balance sheet value is pretty substantial. If the auditors could clarify, thank you.
It's bloody market, man.
Okay.
I agree.
Got it. Thanks for that question. Look, our audit report on page 139 of the report sets out that the property valuation is certainly a key audit matter that we focus on as external auditors. It sets out in a fair bit of detail what are the steps that we do and the conclusions that we reach in performing those procedures. To answer your question specifically, obviously the company engages their own external specialist to do a valuation, LAWD. That valuation is done on two bases. One being a fair value of the market properties, so they compare it to other properties in the industry that have been sold and come up with their own value for that property. They also do a second valuation, which is done on an adult equivalent head basis.
They get an expert in to look at how many cattle can actually be housed on a particular property. Based on that number of cattle, they assign a valuation to it. We as auditors look at both those valuations, and both those valuations are pretty much line ball to each other. You have two alternative approaches to coming up with the valuation. KPMG internally, I use a specialist who is an expert property valuer in the agribusiness, who actually reads the LAWD report, has conversations with them, looks at the methodology, the assumptions. We do our own reasonable checks of property valuations and sales in that area, and therefore we come up with our own conclusions, which independently support the valuations that management and the board have booked in the accounts. They are done on a fair market value, not a DCF basis per se.
Briefly, the value of any business is the value of the cash flows over a long period of time. Most property valuations do have a cross-check, comparable sales, but also DCF. Almost all property valuations do that. Have you actually cross-checked that, given the history of pretty meager cash flow coming out of this company, that that actually reconciles on a DCF basis with the property values that you're signing off on? Thank you.
No, there is no DCF done by the organization or by us. There are two methods, as I've set out, one being the fair value of property sales and the other one being adult equivalent. We're very comfortable that using two methodologies that comes up with basically the same answer gives us enough audit evidence. Most companies only use one valuation method. This company uses two, and we're very comfortable with both.
Chair, maybe for next year, I think it'd be great if they could also do DCF.
It's not up to us to do a DCF if we're very comfortable with it.
We'll give that consideration, but the real issue here in terms of what the shareholders see underlying is the value of the assets. Agriculture is a very different industry, whether you're valuing a business with almost no real assets, whether you're valuing a business with a lot of very significant real assets, or a house in Sydney. They're all done differently, but at the end of the day, it's the market value that actually matters. All the rest of it can only go to giving you a view of what you think the market value should be. We know with properties, there are properties on the market all the time. We obviously see what those are. We're not in the business of selling land, but we also see what other properties are making, people buying and selling them. Paraway will be interesting.
We're watching that with some interest to see the very different nature of the business there, of course, than the one we've got. It's market value to us. That's the one, and that's the one we've agreed with the auditors. We'll have a look at that, and obviously, again, I don't dismiss your question without giving it proper consideration, but I do want to give you a reasonably clear answer to our thinking at the moment.
Just briefly, Chair, you mentioned Paraway, which I think is obviously timely, but the press reports, which quite often are not accurate, are contemplating a value of $2.5 billion. I appreciate they're different properties, but at the end of the day, you have more acreage or hectares. You also have.
Oh, that's a pretty silly thing to say. I mean, we've got properties like Headingley, 2 million acres that run 16,000 cattle. You can't compare that to a cotton property. I'm happy to have you, but don't sort of distort the discussion by, you've got to look at each individual property. As Scott said, we look at the market, we look at carrying capacity. One thing that's very interesting is we've been doing a lot of work in showing that actually by reducing the actual number of cattle on some of the properties, like Headingley, for instance, they're actually more profitable.
That's something we spent a lot of time talking to the valuers about exactly how, and because we're looking at a supply chain where we need to market, have a product for Andrew O'Brien to sell 12 months out, we want to keep the stocking rates as close as possible. As Dave pointed out, we've had a very stable carrying number of cattle, even though we've been able to push the amount of product up and we can sell, and part of that's come from our better breeding programs that are giving us the best ever conception and calving rates that we've ever seen in the north. There's a whole lot of ways in which you can put value, but at the end of the day, it's what a buyer will pay for it that is the valuation that I think shareholders are interested in.
You've got roughly 450,000 cattle. They've got a similar amount of livestock, but half of them are sheep. You've actually got a much higher value of cattle and sheep than they have. It's an interesting barometer, Chair, if they're going to get $2.5 billion, and yet your enterprise value at the moment is $1.3 billion.
First of all, I think we want to be careful about what the press say.
Yep.
We saw the Faulkner operation in the Riverina looking like it was going to make a big price, and then it didn't happen. These things come and go, and it depends on who's buying, and Thurb has an issue, and there's a whole range of questions that come up. There is no comparison en bloc between the two businesses, and to try and make a comparison en bloc between the two businesses is either ill-informed or misleading. Any further questions? Right. There's no voting on this resolution. We now move to the remuneration report. The second item of business is a non-binding resolution to adopt the remuneration report. Please note that the vote on this resolution is advisory only and does not bind the directors or the company. However, the board and the company will take into account any feedback that we receive in developing our future remuneration framework.
Voting exclusions apply to this resolution as set out in the notice of meeting. I'll start by addressing some of the pre-submitted questions, which have not already been covered. We've received questions regarding the tenure, composition, and diversity of the board and leadership team, as well as appropriateness of their remuneration. Thank you for your questions. Regarding board diversity, I refer to the Chair's address, a copy of which was provided to the ASX this morning. More broadly, AACo remains strongly committed to equal opportunity and diversity across the organization, as outlined in our diversity policy and the FY 2025 corporate governance statement.
In this year's annual report, we're proud to report the 53% female representation across our senior executive level leadership team as part of our sustainability metrics, and following the recent appointment of Bernadette Knight as Chief Marketing Officer, the executive leadership currently contains 50% female representation. Regarding the composition of our board, AACo 's nomination committee is responsible for overseeing board structure and succession, supporting director development, and evaluating overall performance. In forming the board, AACo aims to achieve a balanced mix of directors who bring deep experience and knowledge in the business and its operating environment, including stakeholders, the industry, and the global markets, alongside those who offer fresh perspectives and other relevant industry experience. We combine this to ensure continuity, robust governance, and effective decision-making. The board is also committed to ensuring that executive remuneration remains competitive, performance-based, and aligned with shareholder interests.
The board is responsible for seeing the CEO's remuneration, and the CEO determines the remuneration of the executive leadership team. With oversight from the board via the People and Culture Committee, this committee engages Korn Ferry, an independent remuneration consultant, to provide benchmarking against comparable roles in relevant industry peer groups. This independent advice helps ensure the remuneration decisions affect both market practice and company performance. It's also important to note that the remuneration report includes accounting-based entities such as amortization of long-term incentives, which may not represent actual cash paid during the period. Taking all of this into account, the board is satisfied that the executive remuneration for the year is appropriate and aligned with both performance and market expectations. Are there further questions from the room?
Welcome to the conference center. Please hold for an operator.
You're on. Dave, I think you had your hand up.
Thanks, Chair. Look, I'm all for a substantial executive remuneration. I come from an investment banking background. The greater the return to shareholders, the greater should be the incentive for management. However, given the issues I've tabled, which I won't repeat, I do think, Chair, that a total remuneration for the top five executives of over $5 million in aggregate is excessive, given the, in my view, 1% return on a TSR basis for shareholders. Secondly, Chair, I'm surprised that the short-term incentive, given the, in my view, weak results delivered to shareholders, has averaged in the 80% level for the 5 KMP. I note there's deferred equity as well, but that's okay. 80% of the possible allocation has been granted by the company to the top five.
Obviously, the long-term incentives are not going to be worth anything because they were issued at a VWAP of between $2.02 and $2.78, so they're a bit academic. I'm just concerned, Chair, that $5.3 million for the top five, given the lack of a dividend to shareholders, lack of TSR, and I don't know how the STI is actually granted. It's based on a number of different perspectives. To me, 80% allocation of short-term incentive is excessive, given the pretty weak performance for shareholders. Thank you.
Yep. Let me take that in two parts. One is we have to have good people, and good people don't come ridiculously cheap. I don't think our people are overpaid at all compared to what I see in some other places. We do benchmark that against others. This is a complex business to run, and we're making it more complex because of the marketing and the operations overseas and the way the business is. Every party on that team is assessed against the marketplace, and certainly they're not being paid an excessive amount against the marketplace. If we were to go for lesser quality people at lower prices, I think you'd see that reflected in a poor performance in the business or a worse performance in the business. We make that decision on the basis of what we have to have to enjoy.
We've just recruited a very senior executive into the marketing area, and we had to meet the market. We had to meet the market, and we will have to meet the market every time we replace somebody. If we don't meet the market, we won't have the quality of people we need to run the business. That's the first thing. Second, in terms of the way the STI, we set a number of KPIs for the executives to meet, which is what we require them to do. That is on a somewhat of a sliding scale between significantly less than total remuneration, and it can, if everything exceeds the market, go beyond that. We do set standards for the management team.
We hold them to those standards, and the performance of the management team over the last 12 months in terms of managing the business was at the level that we determined in the STI payment. Further questions? Yes.
One of the things I noticed that changed this year with the STI was that you removed making Australian agriculture a great place to work as one of the criteria, and it was a curious removal. I've led a business where we did receive Gallup's great place to work on 37 companies globally. I saw the benefits that came from that. I also saw the problems that came from it when management changed, and we regressed from that position. Why would you remove that as one of the key performance indicators for your management team? There's 400+ employees at the company at the moment. I'm sure Dave's wonderful, but he can't do this on his own. I'm interested in why you thought that was.
I thought Dave Harris could.
That would be great. Yeah, why was that decision made to remove making the company a great place to work? If others are not familiar, that's about having a really happy, engaged team that want to be there and are brought into the vision.
Part of it was simplification, but Anthony , do you want to give a more detailed comment?
Yeah. Thanks for the question. We set the KPIs, which then set up the STI based on the type of things we want the management team to focus on each year, and they change from year to year. When the board says, you know, these are the things that we think are important to get achieved this year, which will give us long-term profitability, we set those. When they're in place and they become BAU, we sort of just take that as part of the job, and we move on to the next number of things that we want them to do to go on. Those KPIs change each year, and they reflect the things that we think we need to do to get to the future.
Making it a great place to work for us now is BAU, and that's just part of the underlying job spec that we want the guys to do, and they then get assessed on their performance at their normal level on that.
Are you continuing to measure and report that?
Pardon?
Are you continuing to measure and report how you're performing then against Great Place to Work?
Yes, we do. We have engagement surveys and all sorts of things where we actually understand where the team are. We do engagement surveys with the team, and we get reports. I chair the People and Culture Committee. We get regular reporting throughout the year on how the staff are going, where the engagement is, where the issues are, what programs the team are looking to achieve, and what we're very focused on is having an engaged, skilled workforce that allows us to achieve the company's strategic objectives.
Okay, thank you.
Any further questions? If there are no further questions, the proxies that were received in this resolution are now shown on the screen. Give you a chance to have a look at those, and then we'll move on to item three, the election of directors. The first item three is the election of Anthony Abraham. Anthony's offering himself for reelection. The resolution to be considered under this item is an ordinary resolution. With the exception of Mr. Abraham as abstaining from this resolution, the reelection of Mr. Abraham has unanimous support of the AACo board, and I commend this motion to you. I now invite shareholders and property holders to ask any questions regarding the reelection of Anthony. David.
You'd probably be disappointed if I didn't ask a question, Chair.
Oh, I don't know about that, Dave Harris.
I'll be frank. I don't mind you asking a question, but don't ask the same one again in a different guise, all right?
It'll be directed to a different person. Anthony, you've got an excellent CV in finance. You work for Rock Partners, which is well credentialed. You wouldn't tolerate a TSR of 1% for 15 years in Rock Partners.
I'm not going to have that question asked to individual directors. You directed it at the board, and I answer on behalf of the board. Chair, that's it. Ruling, done. We've asked this question. The board acts as a group. If a director has a difference of view, then they can express it some way, but we're not going to enter into this sort of debate at an annual meeting. I've never allowed that in any one of the many annual meetings I've held, and I won't allow this one.
Chair, that's the purpose of the question, to see if he does have a different perspective. You just mentioned that if he had a different perspective, he wouldn't be on the board. Let me ask a slightly different question. Let's accept the return as being as it has. Anthony, as a finance guy involved in taking investment decisions in this sector, is this business chronically flawed?
Look, I'm going to go back to what I said. Questions of that nature are to the board, not to individual directors.
Chair, what's the point in having questions to people up for reelection when people are considering whether to vote for them or against without hearing their views on such a critical issue, Chair, a critical issue that I think every shareholder here today would be pleased to hear his answer?
The approach that I believe is appropriate is a cabinet approach to directorships. All the directors have their opportunity to make their points of view known within the board. Outside that, they keep those opinions to themselves. In terms of, let me say, Anthony has supported the board's position 100%. He has strong views on a whole range of things, and he puts those propositions to us. At the end of the day, the board makes its decisions, and that's what we report to shareholders. The board has taken, as we review each director's performance, now, that's not to conclude that we restrict people's capacity to have a view within the board. If they have a different view, they can express that in another way. I'm not going to allow the question. I'm answering the question for you.
Thanks, Chair. Let me ask a different question, if I may.
Okay.
Intellectual jousting. Anthony, you've clearly been a successful guy. You've got a very credible background. I'm sure you can make a credible contribution to this board. Why have you got such a feeble personal investment in this company? Does that mean you don't believe in its future?
Firstly, let me say that my commitment to the company comes from my passion for the company and my passion for agriculture. I'm not a person who's generally driven by money, so the amount of time and effort I put into this company reflects the belief I have in this company. I'm a director on four or five different boards, most involved in agriculture. There's no company that I'm involved in where I do more work than I do on this company. In this company, I'm involved extensively. I've recently stepped up to be the Chair of the People and Culture Committee and work very closely with the team. I speak to management regularly, and I put in maybe two to three times the amount of effort. When I'm looking at the company, when I assess the company, I'm doing it with my time and effort.
The investment that I've got in the company is an investment that I made some time ago. It doesn't reflect my view of the company. It doesn't reflect my view at all. I think the time, commitment, and effort that I put into the company reflects my view of the company and what we're doing.
It would give everyone more confidence if you had a similar holding to what the Chairman does.
Thank you.
You know, we go through this process with the directors, and that answer that Anthony gave is the one that he gives to us when we talk about his commitment to the company, as all the others, which is why I let that one go. I'm not going to let that go again with any other director either. We will assess the directors on their performance on the board, and you as shareholders assess the performance of the board and then reflect that in your votes and your shareholding. Okay. Are there any other questions about Anthony's reelection? If not, I'll put up the proxies, please.
Don't.
Nothing. Sorry, I'll just move you down that end of the room.
That's all right. I'll just invert the question then, Anthony. What are you most proud of? You've been on the board for 11 years. Obviously, you know, got a great background. What are you most proud of? What's the thing that you think you've added the most value for shareholders during that period?
I think the thing that I'm most proud of, and this is in relation to the company, we have something really unique here. This is the first time I've seen what agriculture can be in Australia. From going from being a commodity producer to being a supply chain, and the amount of work that has gone into that transformation has been phenomenal. As Donald said, we started off with 19 different companies, all operating individually, doing their own thing. That now works as a supply chain. To get us to where we are today, we had to get the operations in a position. We had to get the processes and the systems into place. We've developed a brand. We're on the world stage. The work that's been done while I've been on the board working with my colleagues has been amazing.
The work that's continuing to happen, as we look at our strategy going forward, they're the sort of things that make me proud to have been a part of a board that's been able to transform this company into something which I think is unique in Australian agriculture. I think it's a wonderful model as to where agriculture can go in Australia and the sort of value we can add, not only to our product, but to the people who invest with us.
Better look right around the room instead of just down one side. Any further questions? All right, we'll put up the proxies. Okay, we'll move to item four, which is the election of Mark Blazer. Now, Mark, as you probably know, is based in New York, and we didn't think we try and bring the directors out here for at least two major meetings a year, the half-yearly, full-year meetings, and the strategy and budgeting sessions. Otherwise, they do most of what they do on Teams, which has worked pretty well. Obviously, if money was no object, and it is an object, he would probably come more often. Mark's been listening to this on the phone, but I will answer any questions in relation to Mark. It's an ordinary resolution. He has the unanimous support of the board.
When we do that process, each individual director is excluded from the board discussion when we make that decision to support or otherwise their reelection. Mark is up for reelection. Are there any questions?
Through you, Chair. Great to see you've got some people on the board with excellent experience. Mark, can you hear us?
No, he can't. He can only.
Yes, I can.
Oh, you answered that. Yes, he can hear. Okay. We know they can hear. Sorry.
Very good experience, Mark. It is good to have you on board and a key guy at Cantor Fitzgerald, which is high profile in America. Can I just ask a question, Mark? Out of the strategic review, which the annual report states includes various alternative areas for value generation through unlocking the value of our vast asset base, could you just explain to the shareholders here today, Mark, what are the key issues that came out of that strategic review whereby the value enhancement for shareholders will improve from the previous disappointing returns? Thank you.
That is in the early stages of development, obviously. We've obviously talked about better use of the land, the cattle buildup, the other use, the fact that there are potentially other uses of the land. Some of those were in discussion with partners that might have some value. At this stage, none of those are at a stage where we would feel it appropriate to talk about those publicly. One of the things that Mark has brought to the board is a very New York view, and he knows our top-end customers. He's had quite an influence on us putting a grass-fed product into the marketplace. One of the things that we do is bring chefs from all around the world to see the properties, to see what we do. That's been very successful, and Mark has been a major contributor to developing that program. Any further questions on Mark?
If not, I will put up the proxies. The next item is item five, the election of director Sarah Gentry. Again, it's an ordinary resolution with the exception of Sarah, who abstained from the resolution. The board unanimously supports her reelection. Are there any questions?
Thank you, Chair. I appreciate the questions go through you, but I think this one's a little bit different because she represents, she's a nominee of the 53% shareholder. I'd be grateful, and I'm sure everyone else would be grateful, Chair, if Sarah was able to amplify a little bit on the plans and the objectives of Travis Stock, whether they're happy with the 1% TSR over 15 years. You mentioned before, slightly in jest, Chair, that Joe is the only person you know in the 1980s or 1990s who has a 50-year plan. That's certainly scary, Chair, if there's no dividend for 50 years, but it'd just be great with shareholders here today. It's the one and only AGM every year. It's enshrined in the Corporations Act to give shareholders the right to ask questions and make comments.
It'd be great if Sarah could clarify a little bit more on Travis Stock's objectives and give some comfort to shareholders that they're not investing in a moribund company with zero return. Thank you.
To make it quite bluntly, directors on this company represent the company. Obviously, they have a particular view of their own in various ways, and we have looked at diversity across various views. When a director comes to this company, no matter where they come from, they represent the company. Talking about the individual investments of other businesses is not something that's appropriate in a situation such as this. The reality is they have continued to buy shares in the company and continue to support the, as you can see by the voting, continue to support the strategy in the company as it's being run right now. Any further questions? If not, we'll put up the proxies for Sarah. Item six is the election of Nicole Sparshot. This is again an ordinary resolution.
We appointed Nikki to the board a few months ago, and of course, under the rules, she comes up for endorsement by the shareholders at the first available annual meeting or first available company meeting, which we're now doing. She has the unanimous support of the board. Not surprising seeing we just appointed her, but she has the unanimous support of the board. I'd have to say in the brief period that she's been with us, she's been an enormous contributor. She brings a deep understanding of strategy and marketing at an international level and a high-value product level, which was one of the things that really attracted us to when we were looking at a director for this position. What we've done, and this is a bit difficult, she's in China at the moment. That was a meeting that was logged in sometime before we appointed her.
I understood that when we made the appointment. She apologized for not being here today, but what we've done is we've set up a line so that she can actually say something. I thought it might be useful for her to be able to introduce herself to you. We have done that with any new directors over the last few years. They've been given the opportunity to introduce themselves. I think, are we in a position for Nikki to have a few words? If we are, please go ahead.
Thank you, Donald, and good morning, everybody. I'm both honored and incredibly excited to be joining AACo's board. I have to say I was drawn to the company's strong values, innovative mindset, incredibly rich history and foundations, and probably more so what I believe is going to be an even brighter future for AACo with our renewed strategy. For those of you that don't know me, I bring 30 years of experience building brands and businesses across international markets, and I also lead enterprise transformation at scale in a way that is purpose-led, sustainable, and profitable, all in equal measure. I really look forward to working alongside this incredibly experienced team at AACo and contributing my perspective to its continued growth and in executing our strategic priorities with absolute excellence. Thank you again for this opportunity, and next time I do hope to be there in person with you all.
Thanks again.
Thanks, Nikki. Are there any questions?
Last resolution, Chair, so this will be my last question. You'll be pleased to know. Nikki, welcome. You're the sole woman on the board, so I'm...
No, that's not correct. You just voted for one a moment ago.
Sorry, apologies, Chair. Independent Director, I meant. You've got big shoulders to hopefully handle the pressure. Nicole, the thing that excites me about your CV, and the Chair will disagree with me, but that's fine. Adults can disagree. You are a change agent, Nicole. Change agent, that's in your CV. In my humble opinion, unsophisticated shareholder that I am, this company needs huge change. If you're a change agent, Nicole, and you can make change, I think every shareholder will benefit. Other than that, welcome and good luck. Thank you.
Let me say we've made massive changes in this company in recent times in the way we run it, moving it from a collection of individual properties to an integrated supply chain with a significant marketing capacity. The development of that marketing capacity is very much the change agent that Nikki has, along with everything else. I mean, she's an experienced director of business. She'll contribute to us in every way, but she will certainly help us develop that marketing capacity and develop our brands. There's a real change agent there and a real job to be done. I have every confidence that between she and Bernadette, the other executive appointment that we've made recently, we will see that part of the business develop very rapidly and contribute to the performance of the business. Any further questions on Nikki? Okay, we'll have the proxies, please. Thank you.
That brings us to the end of the formal part of the business and to the close of the meeting. We've actually dealt with all the items of business in the notice of meeting, and I ask you now to ensure that your voting cards have been completed for each resolution put to you today. Representatives of our share registry, MUFG Corporate Markets, will collect your completed voting cards shortly. If you are uncertain in any way about any of the voting procedures or require assistance, please just raise your hand and a representative of MUFG Corporate will be happy to help. With each item of business meeting having been dealt with, I now formally ask MUFG Corporate Markets' returning officer to count the votes following the closure of this meeting. I now propose to bring the proceedings to an end.
The result of this meeting will be released through the ASX as soon as possible and will also be displayed on our website. On behalf of the board and management, thank you to everyone who attended today's AGM and all those who engaged with us by submitting questions in advance and during the meeting. That includes the official part of the meeting. Let me say, look, I really appreciated the fact that we had some serious questions, some probing questions. I think that helps us as a board a great deal. I have to say they're all questions we ask ourselves on a regular basis and will continue to do so, and we'll make decisions on the basis of what we think is best. I'm very pleased to lead such a competent and experienced Board, which David, I think you alluded to in pretty much every one of your questions.
They're all making decisions on the basis of what they believe is the best thing for this business, and we will continue to do so. We all look forward to, both within the company and within our shareholder base, another 200 years of success. Thank you all for joining us. I think we've got some nibbles outside to keep your sustenance up. Thank you very much, and the meeting is closed.